Blackstone once more hits brakes on withdrawals from non-traded REIT

Blackstone $69 billion actual property belief hit a month-to-month redemption restrict in January, because the agency’s crown jewel continues to wrestle with a line of buyers looking for to get cash out.

Blackstone Actual Property Earnings Belief informed buyers Wednesday that it fulfilled repurchase requests for two% of its web asset worth. That accounted for about 25% of what buyers wished to drag out, in line with a letter. The January repurchase requests had been north of $5 billion, in line with Bloomberg calculations.

Blackstone President Jon Grey had beforehand cautioned {that a} chunk of redemptions in January concerned unfulfilled requests from November and December. 

January requests had been “in step with the mixture unfulfilled quantity for November and December,” Blackstone stated in a press release Wednesday. “We count on it’s going to take a while to work by means of this backlog and that flows will normalize over time as BREIT continues to ship for buyers.”

Blackstone constructed BREIT into a large actual property belief proudly owning properties from Las Vegas’s lavish Bellagio resort and on line casino to pupil housing and storage facilities. Its success helped develop the non-public fairness agency’s attain with wealthy people. 

However the belief confronted challenges final 12 months as extra buyers sought to drag cash out, given unstable markets. BREIT hit redemption limits towards the tip of final 12 months, inflicting it to limit how a lot buyers may take out in December. 

Executives have reiterated their assist for BREIT in current months, with Blackstone Chief Govt Officer Steve Schwarzman beforehand saying the agency is committed to bringing its experience to particular person buyers.

“We stay assured that BREIT’s portfolio can ship sturdy efficiency and a tax-advantaged distribution yield,” BREIT stated within the letter Wednesday. “We consider we have now chosen the precise sectors and geographies and positioned our steadiness sheet to proceed to supply significant cash-flow development.”

Request Backlog

The fund is closely concentrated in rental housing and warehousing. In a submitting, BREIT stated it estimates same-property web working revenue climbed 13% in 2022.

Grey has stated that some BREIT buyers have been making bigger requests than they really need to obtain, in expectation that they will not obtain the entire a reimbursement. That may trigger redemptions to be elevated firstly of the 12 months, he stated final month on Blackstone’s earnings name. 

“We predict over time, we’ll have the ability to work down this backlog,” he informed analysts, with out offering a particular timeline.

Earlier this 12 months, BREIT secured a $4 billion money infusion from the College of California’s funding workplace, giving the belief a longer-term supply of capital throughout a unstable time within the markets. The college later added $500 million extra to BREIT.

Returns totaled 8.4% for BREIT’s hottest share class final 12 months, in contrast with a 28% loss for a Bloomberg index of publicly traded actual property funding trusts.

Industrial actual property, which BREIT invests in, has been going through challenges as a surge in borrowing prices drove down values. U.S. commercial-property costs fell 13% in 2022, in line with Inexperienced Road. 

This essential second for BREIT shall be a key check for the chief atop the enterprise that homes the fund. Blackstone lately promoted Wesley LePatner to lead its “Core+” actual property enterprise, taking on from Frank Cohen. Cohen will stay chairman and chief government officer of BREIT.