UPDATE 1-Blackstone launching Asian real estate fund

Wed Dec 5, 2012 5:59pm EST

* Follows dedicated property funds for Europe and U.S.

* Real estate is Blackstone's most profitable business

NEW YORK, Dec 5 (Reuters) - Blackstone Group LP is starting a new real estate fund focused on Asia as it seizes on a "golden moment" to buy and sell in the property market, its president said on Wednesday.

Blackstone, founded by Stephen Schwarzman and Peter Peterson in 1985, is still best-known for its private equity business, yet is now the world's largest private real estate firm with $53.5 billion of property assets under management.

"Right now we are offering an Asian real estate fund. There is not another pan-Asian real estate fund in existence," Blackstone President Tony James told the Goldman Sachs financial services conference in New York, without offering details on the new fund.

Even though it makes up about a quarter of its assets, real estate is Blackstone's most profitable business, accounting for close to half its profit in the third quarter. In October, the New York-based firm said it had raised $13.3 billion for its latest global property fund, the largest opportunistic real estate fund ever.

"We have virtually a unique position. Before the meltdown in real estate our key competitors were Goldman Sachs and Morgan Stanley, Bear Stearns, Lehman Brothers. They are all out of the business," James said.

Blackstone is no stranger to Asian property deals thanks to its global fund as well as MB, a $2 billion-plus Asian real estate fund that the private equity firm took over from Bank of America-Merrill Lynch in 2010.

Schwarzman, Blackstone's CEO, said in October he expected the firm to be among the largest buyers of commercial real estate in Australia and India. Blackstone also has a European real estate fund and a U.S. real estate debt fund.

James said that Blackstone's strategy of snapping up distressed real estate assets and turning them around allowed it to score 20 percent returns by selling them to parties looking for safer, "core" properties with 5 or 6 percent returns.

"I have never seen, almost or very rarely in any market do you see a huge market where it is simultaneously a great time to buy and a great time to sell. That is what real estate is today. It is a golden moment," James said.

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