University of California Plans to Invest $4B in Blackstone’s BREIT

The investment arm of the University of California, UC Investments, which manages a portfolio of about $152bn, and alternative asset manager Blackstone announced “a long-term strategic venture” where UC Investments will invest $4bn in the Blackstone Real Estate Income Trust (BREIT).

Blackstone will add $1bn of its current BREIT holdings to support an 11.25% return for UC Investments over a six-year holding period.

The venture is aimed at rebuilding confidence in Blackstone’s $69bn fund, which announced in December that it had limited withdrawals from its BREIT after large numbers of investors sought redemptions.

“We start with a big win for the University of California, for Blackstone and for BREIT. This is a massive affirmation of the quality of what we’ve built with BREIT,” said Jon Gray, Blackstone President and COO, in a CNBC interview.

“If I was building a real estate portfolio from scratch, BREIT is exactly what I would have created,” Jagdeep Singh Bachher, the University of California’s Chief Investment Officer, told Gray.

Simpson Thacher & Bartlett LLP is acting as BREIT’s legal counsel and Goodwin Procter LLP is acting as UC Investments’ legal counsel.