Blackstone Group LP will be starting a new real estate fund dedicated to the Asian market. The company is focusing on what it describes as a “golden moment” to buy and sell in the region.
Founded by Stephen Schwarzman and Peter Peterson in 1985, the Blackstone Group is a well-known private equity business. It is also the largest private real estate company in the world with $53.5 billion of property under its management.
The new Pan-Asian estate fund is the only one of its kind in existence, according to company President Tony James. He made the comment at the recent Goldman Sachs financial services conference in New York, but did not offer any further details about the new fund.
Real estate makes up about 25 per cent of the Blackstone Group’s assets and is highly profitable for the corporation. In the third quarter alone, this segment of the business accounted for approximately half the company’s profit. In October, Blackstone announced that it has raised $13.3 billion for the new global property fund.
James commented that the company is currently in a unique position. Before the real estate meltdown, its key competitors were Morgan Stanley, Goldman Sachs, Lehman Brothers, and Bear Stearns. All of these players are now out of the business, and Blackstone Group is the only one left standing.
Blackstone Group is already familiar with the Asian commercial property market, due to its global fund. The company also took over an Asian real estate fund from Bank of America-Merrill Lynch in 2010 worth over $2 billion.
The company has set some ambitious goals for itself going forward. In October, Schwarzman said that he wanted the company to be one of the largest buyers of commercial real estate in India and Australia. The company also has a U.S. real estate debt fund and a European real estate fund.
Blackstone Group buys distressed properties and turns them around for profit. This strategy results in 20 per cent returns for the company by allowing it to sell to investors who are in the market for safer investments which will bring returns of around 5 to 6 per cent.
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