Blackstone preps nontraded real estate fund for the fee-only crowd

Fund comes with no sales load but 12(b)-1 fee, performance fee and expense ratio

Dec 30, 2013 @ 12:04 pm

By Jason Kephart

Private-equity powerhouse The Blackstone Group Inc. is raising funds for a new nontraded real estate mutual fund designed to appeal to fee-only financial advisers.

Blackstone is raising money for the Blackstone Real Estate Income Fund II, which will offer shares that are not subject to a sales load, according to a filing with the Securities and Exchange Commission.

Sales loads on nontraded real estate investment trusts, which are typically more than 10%, have made the products popular in the independent broker-dealer community, but have also been a major point of criticism from financial adviser channels that are more focused on fees, such as independent registered investment advisers.

Instead of a sales load, the Blackstone Real Estate Income Fund II will have an ongoing 12(b)-1 fee of 25 basis points and also have a 1.5% expense ratio and 15% performance fee, similar to a hedge fund.

The fund will invest in the usual smorgasbord of real estate investments, such as commercial mortgage-backed securities, private real estate debt and loans.

Blackstone expects to complete its fundraising by March 31, according to the filing.

Peter Rose, a spokesman for the firm, declined to comment while the fund is in a quiet period.

The Blackstone fund is the latest sign of innovation in the booming nontraded real estate fund space.

In January, Bank of America Merrill Lynch became the first wirehouse to sell a nontraded REIT through its advisers. The Jones Lang LaSalle Income Property Trust that Merrill chose comes with a 2.5% sales load.

Nontraded real estate investment trusts recorded a record $20 billion in sales in 2013, up from $10.3 billion in 2012, and industry watchers expect another strong year of growth in 2014.

0
Comments

What do you think?

View comments

Recommended for you

Sponsored financial news

Featured video

INTV

When can advisers expect an SEC fiduciary rule proposal and other regs this year?

Managing editor Christina Nelson and senior reporter Mark Schoeff Jr. discuss regulations of consequence to financial advisers in 2018, and their likely timing.

Recommended Video

Path to growth

Latest news & opinion

Cutting through the red tape of adviser regulation is tricky

Don't expect a simple rollback of rules under the Trump administration in 2018 — instead, regulators are on pace to bolster financial adviser oversight.

Bond investors have more to worry about than a government shutdown

Inflation worries, international rates pushing Treasuries yields higher.

State measures to prevent elder financial abuse gaining steam

A growing number of states are looking to pass rules preventing exploitation of seniors.

Morgan Stanley reports a loss of advisers after exiting the protocol for broker recruiting

The firm said it lost 47 brokers in the fourth quarter, the most in any quarter of 2017.

Morgan Stanley's wealth management fees climb to all-time high

Improvement reflect firm's shift of more clients into fee-based accounts priced on asset levels, which boosts results as markets rise.

X

Hi! Glad you're here and we hope you like all the great work we do here at InvestmentNews. But what we do is expensive and is funded in part by our sponsors. So won't you show our sponsors a little love by whitelisting investmentnews.com? It'll help us continue to serve you.

Yes, show me how to whitelist investmentnews.com

Ad blocker detected. Please whitelist us or give premium a try.

X

Subscribe and Save 60%

Premium Access
Print + Digital

Learn more
Subscribe to Print