Blackstone Raises $7.5B for New Life Science Fund, Will Target San Francisco

By Jon Peterson

New York City-based Blackstone has raised $7.5 billion of equity capital for its new life science office perpetual commingled fund, as stated by the real estate manager publicly in its 2020 third quarter earnings report.

Blackstone declined to comment when contacted for this story.

Two of the targeted markets for the commingled fund will be the San Francisco Bay Area and Seattle, according to sources familiar with the fund’s investment strategy. These two areas are considered to be among the leading innovation markets in the United States. Others considered to be part of this strategy include Boston/Cambridge and San Diego.

The perpetual commingled fund means that it will always be open to accept new commitments from limited partners going forward. This fund is a vehicle created by the manager out of its core-plus investment platform in which BioMed Realty, an entity affiliated with Blackstone, will become the anchor holding enterprise. There is no indication at this time the percentage of the fund that BioMed holds.

Blackstone’s investing in the core plus space is done through its open-ended commingled fund called Blackstone Property Partners. This commingled fund was formed in 2014. It has a current value of $41.4 billion, and it is producing a net IRR of 8 percent, according to information stated in the manager’s third quarter 2020 earnings report.

Life science is one of three property types that is on the shopping lists of many pension funds and institutional investors around the country. “Everyone seems to be looking at life science, industrial and single-family rental in the near term,” says Anthony Breault, senior real estate investment office for Oregon State Treasury, which oversees the investments for the Oregon Public Employees Retirement System. He works on the pension fund’s $8.4 billion real estate portfolio.

The life science sector of the real estate market has several attributes that make it attractive currently. BioMed is an example of this. It has a portfolio in the United States that is 97 percent occupied and 100 percent of typical rent collections.

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