Blackstone Raises US$10bn for Europe-Focused Property Fund & Maybourne Refinance

Main Photo: Claridge’s, owned by Maybourne, recently re-opened to house NHS staff

Date: April 2020

Location: Europe

Name: TBA

No. of Keys: TBA

Who: Blackstone Group has raised €9.8bn for its latest and largest European real estate fund, despite the economic upheaval created by the coronavirus pandemic.

Blackstone Real Estate Partners Europe VI is almost 26% bigger than its predecessor. Blackstone raised €7.8bn for its fifth European property fund before closing it in 2017.

The New York-based firm began collecting commitments for the new fund in May 2019, accumulating almost $8.77bn by Aug. 31, regulatory filings show. By Dec. 10, $999m had been added to the fund and another $877m came in by its final close Wednesday, filings with the Securities and Exchange Commission show, reflecting the dollar equivalents of euro commitments.

Blackstone made its first deal through the new Europe-dedicated real estate fund in September 2019, with a $6.2bn agreement to acquire office and logistics assets in Western Europe from Canada’s Dream Global Real Estate Investment Trust. Dream Global said the cash deal closed in December.

Limited partners in the latest fund include the Oregon Investment Council, a state entity that committed $300m, and the Tennessee Consolidated Retirement System, which committed $150m.

Blackstone’s fifth European property fund generated a net internal rate of return of 16% and a 1.4 times multiple on invested capital, while the firm’s total Europe-focused real estate portfolio generated a net IRR of 14% and a 1.7 times multiple as of 31 December, according to Blackstone’s annual report for 2019.

Blackstone’s real estate business was established in 1991 and has $163bn of investor capital under management, including almost $45.7bn of assets to invest in the sector at the end of last year.

And in a separate move, companies controlled by Sheikh Hamad bin Jassim Al Thani got a 10-year loan to refinance a £392m ($485 million) loan against London hotels the Connaught and the Berkeley.

Citigroup Inc. arranged the mortgage, which was financed by a German lender, a U.K. investment manager and a U.K.-based debt fund, said Russell Gould, Citigroup’s co-head of commercial real estate finance for Europe, Middle East and Africa.

This “speaks to the resilience of the London luxury hotel market, which continues to attract interest from investors, and points to an obvious flight to quality,” Gould said.

Known as HBJ, Al Thani was a prolific dealmaker during his time as prime minister and head of the state’s sovereign wealth fund. He spearheaded the Gulf nation’s investments in Harrods, Volkswagen AG and the Canary Wharf financial district. He was also a key broker in Glencore Plc’s takeover of Xstrata and the 2008 bailout of Barclays Plc, in which Al Thani personally invested alongside the state. Since stepping down in 2013, he’s also invested on his own behalf.

Constellation Hotels, linked to Al Thani’s family office, bought Maybourne Hotel Group in 2015 from investors including the billionaire Barclay brothers.

Maybourne runs the Connaught, the Berkeley and Claridge’s, another five-star hotel in London where rooms typically cost more than $700 a night. The group acquired its first U.S. hotel last year, the Montage Beverly Hills in the heart of the California city’s luxury shopping district.

Maybourne’s press office didn’t respond to a call and email seeking comment on the debt.

The new loan replaces one with Qatar’s Barwa Bank QSC, which would have matured in 2022.

Interest rates in the U.K. have tumbled to a record low because of the coronavirus, but hotels have been hit by measures to stop the pandemic. Maybourne shut its three hotels in late March, though Claridge’s in Mayfair reopened to cater to National Health Service staff.

THPT Comment: Blackstone, no stranger to hotels, confident of the short-term future of property in Europe. The last acquisition in Greece was for five hotels at €179m off Louis Group.…and good to see Citigroup still has faith in lending on hotel assets.

First SeenFinancial News London and Bloomberg

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