- Assets under management: $23.75 bln
- Target allocation to Real Assets: 12 pct
- Actual allocation to Real Assets: 8.83 pct
- Key advisers/consultants: Townsend Group
- Whom to contact for a meeting: Charles Wollmann (email@example.com)
- Why this is important: New Mexico’s commitment pacing is dependent on managers coming to market.
New Mexico State Investment Council does not like to miss opportunities to invest with its preferred managers.
The fund at its Nov. 29 meeting committed $100 million to Blackstone Group’s ninth real estate fund, making the allocation early out of its 2019 target.
The sovereign fund had already used up its 2018 allocation target, Jack Koch, partner and head of global advisory services at Townsend Group, the sovereign fund’s investment adviser, said at the meeting.
On the other hand, the fund’s PE commitments were 48 percent short of the $550 million pacing target in 2018. Part of the reason was that it wanted additional capital for re-ups and new funds from managers it was targeting in 2019, Buyouts reported.
Blackstone’s ninth fund is expected to close on $20 billion in December, Alexandra Hill, head of Blackstone’s real estate business development for North America, said at the meeting.
This is higher than previous media reports of $18 billion for the pool. Blackstone’s eighth real estate fund closed at $15.8 billion in 2015.
New Mexico SIC committed $450 million to various Blackstone pools including its seventh (2013) and eighth (2015) real estate funds and Asia real estate fund (2014).
Most recently it committed $100 million to Blackstone’s infrastructure fund in April 2018.
Blackstone is still investing from its eighth real estate fund and is not expected to draw down capital before second-half 2019, Koch said.
Blackstone fund strategy
Blackstone focuses on larger, complex situations and has the advantage of extensive internal and external resources, said Tyler Henritze, senior managing director in real estate and head of U.S. acquisitions at Blackstone.
The firm’s ninth fund will invest in logistics, rental and workforce housing and technology-oriented office buildings in cities with strong population growth and creative workforces that drive stronger real estate demand.
The fund also will invest in resort-type assets in places like Hawaii that have potential because of more inbound Asia travelers and people’s greater propensity to spend on travel, Henritze said.
Blackstone’s ninth fund will invest at least 60 percent of its capital in the U.S. and Canada. It will invest alongside BREP Europe V and BREP Asia II for international exposure, taking some 20 percent of each investment made by those vehicles, a Townsend presentation said.
Like its other funds, Blackstone’s ninth fund had a leverage margin of 85 percent for more flexibility, Hill said, though the firm did not expect that leverage would hit the 80s, she said.
Instead, the fund would use leverage between 65 percent and 70 percent, and target a 20 percent internal rate of return, the presentation said.
Action Item: Read more on Blackstone’s real estate here https://bit.ly/2puucWI