Blackstone’s core-plus real estate business has grown from zero to $27bn (€21.7bn) in four years, according to its end-of-year figures released today.
The alternatives fund manager, more commonly associated with higher-return real estate strategies, has moved into core-plus activities in response to widespread institutional demand for income-producing investments.
Its report for the fourth quarter of last year shows that its core-plus assets under management (AUM) rose 91% year on year during the period.
Blackstone moved into core-plus real estate in early 2014. Later that year IPE Real Assets reported that Blackstone planned to launch its first core-plus fund.
Late last year, Jon Gray, head of real estate at Blackstone, told IPE Real Assets that there was no target size for the core-plus business, “but we see lot of potential for growth”.
He said: “Four years ago, core-plus was at zero dollars. It’s still early days for this business and we’re keeping our focus on delivering returns for our investors.”
Blackstone’s total real estate AUM has risen from $102bn in Q4 2016 to $115bn at the end of 2017.
But its credit business has grown faster – from $93.3bn to $138bn – meaning real estate is no longer the largest business line of Blackstone.
Its total AUM, including private equity and hedge funds, rose from $367bn to $434bn.
Blackstone attributed much of the growth of its credit business to inflows from its new Blackstone Insurance Solutions platform, and its acquisition of Harvest Fund Advisors.
Despite suggestions of a slowdown in real estate capital raising last year, Blackstone’s real estate inflows were $23.8bn in 2017.
It also made $24.5bn in realisations and deployed $19.9bn in capital.
Blackstone is also building up a $100bn infrastructure business from scratch. Earlier this month, IPE Real Assets reported that a US pension fund had been confirmed as an investors in its debut fund.
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