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Blackstone Acquires Stake in Rockpoint Group

Deal Puts PE Firm in Mix for Future Ownership of Huge Brooklyn Housing Complex Starrett City
March 13, 2018
Blackstone (NYSE: BX) has acquired a passive, minority equity stake in Rockpoint Group LLC, a Boston-based global real estate investment management firm. The private equity firm tapped its Strategic Capital Holdings Fund to make the investment.

Terms of the transaction were not disclosed.

The stake in Rockpoint puts Blackstone into the mix for a potential deal to acquire Starrett City, a 5,881-unit, federally subsidized, affordable housing community in Brooklyn, NY. The property is under contract to Brooksville Co. and Rockpoint for a reported $850 million.

Brooksville Co. was formed by Andrew MacArthur, a former managing director at CWCapital Asset Management. MacArthur oversaw the foreclosure, stabilization and sale of The Riverton and Peter Cooper Village/Stuyvvesant Town communities in New York City for $5.3 billion to Blackstone and Ivanhoe Cambridge in one of the largest real estate transaction in U.S. history.

A New York State judged cleared the way for the Starrett City sale to Brooksville and Rockpoint earlier this year after a minority number of shareholders in the property tried to block the sale after it had been approved by 70% of stakeholders.

The sale of the large affordable housing property is not without a measure of political controversy. The Donald J. Trump Revocable Trust is a minority investor in Starrett City, and the sale has to be approved by the U.S. Dept. of Housing & Urban Development, headed by Trump-appointee Dr. Ben Carson.

"The proposed change in ownership must be evaluated on the merits, based solely on what is in the best interest of the residents of Starrett City. Nothing more, nothing less," said U.S. Rep. J Hakeem Jeffries (D-NY) whose district covers Starrett City.

Commenting on the Blackstone investment, Rockpoint co-founder Bill Walton said: "This permanent capital investment by Blackstone is a testament to our team and investment programs. It will further strengthen our firm while preserving its entrepreneurial culture."

Blackstone's Strategic Capital Holdings Fund, a permanent capital vehicle which specializes in acquiring long term interests in leading alternative asset managers, is managed by Blackstone Alternative Asset Management (BAAM), the firm's hedge fund solutions business.

Jon Gray, Blackstone President and COO, said: "Blackstone's real estate business has had the privilege of working alongside Rockpoint on a number of debt and equity transactions over the years. It is an extraordinarily high-quality and high-integrity investment firm."

Evercore served as financial advisor to Rockpoint. Kirkland & Ellis LLP served as legal counsel to Blackstone and Simpson Thacher served as legal counsel to Rockpoint.
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