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 traders searching for to get cash out.

Blackstone Actual Property Revenue Belief advised traders Wednesday that it fulfilled repurchase requests for two% of its web asset worth. That accounted for about 25% of what traders needed to drag out, based on a letter. The January repurchase requests have been north of $5 billion, based on 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 have been “in keeping with the combination unfulfilled quantity for November and December,” Blackstone mentioned in an announcement Wednesday. “We anticipate it can take a while to work by this backlog and that flows will normalize over time as BREIT continues to ship for traders.”

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 increase the non-public fairness agency’s attain with wealthy people. 

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

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

“We stay assured that BREIT’s portfolio can ship robust efficiency and a tax-advantaged distribution yield,” BREIT mentioned within the letter Wednesday. “We imagine we’ve got chosen the suitable sectors and geographies and positioned our stability sheet to proceed to provide significant cash-flow progress.”

Request Backlog

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

Grey has mentioned that some BREIT traders have been making bigger requests than they really wish to obtain, in expectation that they will not obtain all the a reimbursement. Which may trigger redemptions to be elevated initially of the yr, he mentioned final month on Blackstone’s earnings name. 

“We predict over time, we’ll be capable to work down this backlog,” he advised analysts, with out offering a particular timeline.

Earlier this yr, 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 yr, 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 dealing with challenges as a surge in borrowing prices drove down values. U.S. commercial-property costs fell 13% in 2022, based on Inexperienced Road. 

This crucial second for BREIT will likely be a key take a look at for the chief atop the enterprise that homes the fund. Blackstone not too long ago promoted Wesley LePatner to lead its “Core+” actual property enterprise, taking up from Frank Cohen. Cohen will stay chairman and chief government officer of BREIT.