2008 CPN Goldbook - (Page 6) GIANTS The Blackstone Group L.P. I nvestor Blackstone Real Estate Advisors is one of four business segments within The Blackstone Group L.P. To date, the real estate group has raised more than $10 billion for its sixth U.S./global real estate fund and almost $3 billion for its third European fund. It has made real estate investments—ranging from single assets to large, multi-asset public companies—in a variety of sectors and locations. The fund’s broad investment mandate crosses almost all asset classes, allowing CHAD PIKE the group to source and execute Senior Managing Director & transactions through several trans- Co-Head-Real Estate Group action structures, including direct- The Blackstone Group L.P. equity investments, mortgage and mezzanine-debt investments, privately placed securities and joint ventures. Blackstone has been the leading global player in public-toprivate real estate transactions, executing 13 in the past four years, with a combined enterprise value of more than $106 billion. The firm’s leveraged-buyout expertise, coupled with extensive experience in the real estate sector, has allowed it to source, evaluate and execute a number of these complex transactions in a short time. Since 2006, Blackstone Real Estate Advisors has acquired three major U.S. office REITs: CarrAmerica Realty Corp. in July 2006, Trizec Properties Inc. in October of that year and Equity Office Properties Trust in February 2007. In the lodging sector, Blackstone has built its hotel portfolio via the acquisitions of Extended Stay America—which The Lightstone Group L.L.C. bought in JONATHAN GRAY 2007—Prime Hospitality Corp. Senior Managing Director & and Boca Resorts in 2004; WyndCo-Head-Real Estate Group The Blackstone Group L.P. ham International Inc. in 2005; LaQuinta Corp., MeriStar Hospitality Corp. and Center Parcs UK in 2006; and Hilton Hotels Corp. in 2007. The firm now owns interests in more than 4,700 hotels encompassing 750,000 guest rooms. California Public Employees’ Retirement System T he California Public Employees’ Retirement System has a $20 billion real estate portfolio, double its size five years ago. It continues to shift its holdings from mostly domestic properties to assets that create greater global diversity in order to capitalize on new investment opportunities and sectors that have the most attractive risk-return prospects. For example, CalPERS committed $500 million in September 2007 to its new ARA Asia Dragon Fund and earmarked an additional $500 million for potenRUSSELL READ tial private real estate co-investChief Investment Officer California Public Employees’ ment opportunities with the fund. Retirement System CalPERS has begun restructuring its real estate program to significantly beef up the asset class’ presence within its holdings and to focus more sharply on adding value above industry benchmarks in order to position the pension fund for future growth. Once the board acts on the new policy, which could occur as early as March, the fund will strive to increase the international share of its portfolio from the current 20 percent, or $4 billion, to 50 percent over the following five to 10 years. Staff would have discretion to invest between 10 and 60 percent in the international market, compared with the current allowable range of zero to 50 percent. The fund’s revised emphasis on real estate reflects the strong performance of its program in recent years and the fact that emerging markets, particularly in Asia and Latin America, offer significant opportunities to generate superior returns on investment. By spring 2008, CalPERS THEODORE ELIOPOULOS also proposes to set new global Senior Investment OfficerReal Estate real estate benchmarks, initiate a California Public Employees’ new environmental investment Retirement System policy, reorganize and expand staff and restructure the portfolio into core, value-added and opportunistic holdings. 6 Commercial Property News 2008 Goldbook
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