Blackstone increases profit by $500M, raises $3B for new real estate fund

July 21, 2011 10:28AM

Private equity firm the Blackstone Group has raised about $3 billion for a new real-estate fund and expects a first closing for its seventh real-estate fund in the third quarter, according to the Wall Street Journal. Overall, the firm has indicated, it is targeting about $10 billion for the fund.

The firm said second-quarter profit more than tripled on gains in the value of its buyout and real estate investments, Bloomberg News reported, with profit increasing to $703 million, or 63 cents per share, from $205 million, or 18 cents per share, a year earlier.

“A material portion of the increase in revenues was due to the impact of the ‘catch-up’ provisions of the real estate funds’ profit allocations,” Blackstone said in the statement. The provisions “specify that once a fund’s preferred return hurdle has been reached, Blackstone is entitled to a disproportionately greater share of the profits until it effectively reaches its full share of performance fees.”

In June, it was reported that Blackstone will borrow up to $1.35 billion to refinance the debt on a portfolio of office buildings largely comprised of California properties. Blackstone acquired most of the properties through its purchases of CarrAmerica Realty and Trizec Properties in 2006. 

The group is also planning a “no expense spared” renovation of the legendary Waldorf-Astoria hotel, with interiors by famed designer Alexandra Champlimaud. [WSJ and Bloomberg]