March 30, 2015 / 7:05 PM / 3 years ago

Blackstone Group raises $15.8 billion for real estate fund: source

(Reuters) - Blackstone Group LP (BX.N), the world’s largest private equity investor in real estate, has almost finished raising its next flagship global real estate fund, amassing $15.8 billion, a person familiar with the matter said on Monday.

From buying single-family homes in the United States to distressed commercial property in Europe, real estate has overtaken private equity as Blackstone’s most high-profile and lucrative business. It accounted for 43 percent of the New York-based firm’s economic net income in 2014.

Blackstone declined to comment on the fund, called Blackstone Real Estate Partners VIII. The Wall Street Journal first reported on the end of the fundraising process earlier on Monday. Reuters reported in October that Blackstone had started to market the fund with a $13 billion target.

    Blackstone has enjoyed phenomenal success in the sector. Its previous fund, Blackstone Real Estate Partners VII, which raised $13.4 billion in 2012, reported a net internal rate of return of 27 percent as of the end of December.

    As a result of Blackstone’s success in the sector, its head of real estate, Jonathan Gray, is being viewed as a potential successor to Chief Executive Stephen Schwarzman, who is a co-founder of the firm, people familiar with the matter have previously told Reuters.

    The $26 billion leveraged buyout of Hilton Worldwide Holdings (HLT.N), carried out jointly by Blackstone’s real estate and private equity funds in 2007, ended up being the most profitable deal in the firm’s history.

    Reporting by Greg Roumeliotis and Mike Stone; Editing by Cynthia Osterman

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