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New Jersey pledges $100m to Blackstone debt fund

The New Jersey State Investment Council (NJSIC) approved a $100 million commitment to the Blackstone Real Estate Debt Strategies (BREDS) Fund III.

The New Jersey State Investment Council (NJSIC) approved a $100 million commitment to the Blackstone Real Estate Debt Strategies (BREDS) Fund III at a meeting on 27 January, Real Estate Capital’s sister publication Private Debt Investor reported.

The fund is raising $4 billion and recently held a first close at $1.3 billion, as revealed in Blackstone’s fourth quarter earnings report. It invests predominantly in mezzanine debt globally.

Chris McDonough, New Jersey’s director of investments, wrote in a memo to the council that the fund’s geographic diversification, experienced team and attractive fee structure made a good case for the commitment.

Michael Nash, who heads the real estate debt business, has been with Blackstone since 2007. He previously led the real estate principal investment team for the Americas at Merrill Lynch. The group also hired Jonathan Pollock as its chief investment officer last year. He was previously the global head of commercial real estate at Deutsche Bank.

The fund charges a management fee of 1.5 percent only on invested capital. A waterfall structure provides for a 6 percent preferred return and 15 percent carry with a 50 percent catch-up, said the NJSIC documents.

The first BREDS fund posted a 12.5 percent net IRR, while the second is delivering about 10 percent.

NJSIC’s real estate consultant RVK advised on the investment.

BREDS also won commitments of $100 million each from the Pennsylvania Public School Employees Retirement System and the Illinois Municipal Retirement System last year.

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