The Real Deal New York

Blackstone buys real estate funds in $3B record-breaking deal

CalPERS sale marks largest-ever secondary transaction

November 12, 2015 04:10PM

From left: Blackstone's headquarters at 345 Park Avenue and CalPERS' CEO Anne Stausboll

From left: Blackstone’s headquarters at 345 Park Avenue and CalPERS’ CEO Anne Stausboll

A Blackstone fund agreed to buy $3 billion worth of stakes in private real estate funds from California’s public pension fund CalPERS in what it claims is the real estate industry’s largest-ever secondary-market deal.

Blackstone Strategic Partners, a so-called fund of funds that doesn’t buy assets directly but invests in other private funds, is taking over stakes in 43 global and U.S. real estate funds through the deal.

CalPERS has announced plans to manage more of its private portfolio actively – as opposed to relying on fund managers – and the $3 billion sale appears to be part of that strategy.

The deal is a secondary transaction, meaning Blackstone isn’t buying any real estate assets directly, but rather shares in funds that own real estate.

“This is a marquee transaction for the real estate secondaries industry,” Mark Burton, Head of Strategic Partners’ Real Estate business, said in a statement. “We partnered with CalPERS to deliver a solution for a premier organization seeking to reduce its non-strategic portfolio through the sale of non-core holdings.”

Blackstone bought Strategic Partners from Swiss bank Credit Suisse in 2013. – Konrad Putzier