The New York State Teachers Retirement System (NYSTRS) has reportedly struck a deal for its first real estate debt mandate with Blackstone through a $500m (€460m) separate account that will target the US and UK.
The pension noted that stricter regulations are limiting banks’ appetite for loans on mezzanine and transitional assets, creating an opportunity for non-bank lenders.
Blackstone will provide first mortgage loans and subordinate debt on office, industrial, retail and multi-family assets, but will not not make construction loans, targeting returns of 7 percent gross IRR or 6 percent net IRR, IPE Real Estate reported.
NYSTRS previous commitments, $860 million worth, were made through funds. And though this is the first separate account mandate with Blackstone, the pension has worked with the private equity firm before: in 2013 with a $75m allocation to Blackstone Real Estate Debt Strategies II and in 2014 with a €147.6m commitment to Blackstone Real Estate Equity Partners Europe V.
NYSTRS has also renewed CMBS portfolio contracts with BlackRock Financial Management and Torchlight Investors, IPE noted.
The news comes after 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. That fund fund is raising $4 billion and recently held a first close at $1.3 billion. It invests predominantly in mezzanine debt globally.