US pension fund commits €100m to new Blackstone fund

San Francisco Employees’ Retirement System (SFERS) has voted to commit up to €100 mln to Blackstone's new €7 bn European real estate fund.

Norm Nickens, the retirement board secretary, confirmed to PropertyEU that SFERS had backed the allocation during a board meeting on Thursday.

While Blackstone has still to make details of the fund public, it is expected to launch the new €7 bn European real estate fund in the first quarter of next year, creating its largest ever dedicated European real estate fund, according to those who track the market.

The fund will be the natural successor to Blackstone Real Estate Partners Europe IV (BREP IV), which closed in March last year having raised €5.1 bn in just six months. It marked Blackstone’s largest ever dedicated European real estate fund at the time.

Blackstone could not be reached for comment. However, analysts expect the new fund to have a net target return of 15%, down slightly on the 19% target return of BREP IV, which reflects increasing competition for assets across Europe.

Fundraising
According to fund data provider Preqin, Blackstone raised a staggering $40 bn across four funds this year. Blackstone Capital Partners VII had an interim close size of $17 bn, with Blackstone Energy Partners II, which closed in January, raising $4.9 bn. In addition, Blackstone Real Estate Partners VIII, which closed in September, raised $15.8 bn and its GSO Energy Select Opportunities Fund had an interim close size of $2.3 bn, according to Preqin.

Fund managers have been seriously ‘supersizing their funds this year’, creating funds that dwarf those launched last year. The average size of opportunistic funds has increased to $1.47 bn for funds closed in the first nine months of 2015, up from $460 mln for funds closed in 2014. Closed-end opportunistic private real estate funds raised $47.7 bn globally in the first nine months of 2015, already surpassing the $34.5 bn raised by such funds in the whole of 2014, Preqin said.