Blackstone Group will manage a $2-billion-plus Asian real estate fund of Bank of America-Merrill Lynch, in a deal that will close in the third quarter, sources familiar with the situation told Reuters.

Merrill, which had invested $700 million of its own money in the Asian Real Estate Opportunities Fund, will remain a limited partner, one of the sources briefed on the deal told Reuters.

The fund had closed in late 2008, raising $2.65 billion from investors in North America, Europe, the Middle East and Asia.

The management of the fund has been outsourced to Blackstone, one of the sources said.

The fund's purpose was to invest in real estate assets and property companies mainly in Japan, China, South Korea and India.

A Financial Times report said the portfolio of the fund is valued at about $2 billion, excluding debt.

The sources declined to be named because the deal has not been made public.

Blackstone and Bank of America-Merrill Lynch declined comment.

The arrangement took more than a year to get finalized, after Merrill Lynch had started looking for a company to manage the fund in 2009, sources had told Reuters earlier.

In another sign of how Wall Street banks were moving away from directly managing real estate assets, U.S. private equity firm Apollo Management in March reportedly agreed to buy Citigroup's real estate investment division called Citi Property Investors.

(Reporting by Megan Davies in New York and Saeed Azhar in Singapore; Editing by Muralikumar Anantharaman)

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