Blackstone Fund Withdrawals Subside in June

In what may be a sign that a tide of redemption requests has begun to ebb at Blackstone’s Real Estate Income Trust, the REIT reported a significant drop in requests in June.

In a letter to shareholders this week, BREIT said it received $3.8B in requests for withdrawals from the $70B fund in June, nearly a third lower than the peak reported in January.

“In June 2023, BREIT received $3.8 billion in requests under the Repurchase Plan, which is 29% lower than the peak in January 2023 and the lowest month of repurchase requests this year,” the firm said in the letter.

“We were pleased to see June repurchase requests decline meaningfully from the January peak,” Blackstone said, in a statement provided to GlobeSt.

BREIT said it fulfilled $628M, or about 17% of the shares submitted for repurchase in June. Since the end of November, BREIT has been exercising its right to limit withdrawals after requests exceeded 5% of the net asset value of the fund.

Redemption requests are not carried over from month to month—there’s no backlog—so BREIT investors must make several repeat requests to get the full amount they’ve requested.

Blackstone, which said this week it has thus far paid out a total of $8.1B to redeem shareholders since the proration began on November 30, also indicated that investors who have made repeat requests since November are closing in on getting full payment.

“BREIT is a semi-liquid product and is working exactly as designed. A shareholder that has been submitting repurchase requests since November 30^th when proration began has received over 90% of their money back,” Blackstone said.

BREIT disclosed last month that it received $4.4B in redemption requests in May, of which about $1.3B, or 30% were redeemed. The company said it redeemed $1.3B, or 29%, of the $4.5B of withdrawal requests it received in April, more than double the $666M (15%) that were redeemed in March.

BREIT also received redemption requests totaling $5.3B and $3.9B in January and February, respectively.

Jon Gray, Blackstone’s president, said in a Q1 earnings call that he expects that the overall performance of the fund will be the most important factor in addressing investors’ concerns in coming months. According to the company, BREIT has delivered a 12% annualized net return since its inception and nearly three times the public REIT index.

“What’s going to impact the redemptions? I think it will be multiple months of positive performance. We’ll show people and give them confidence as volatility in the marketplace [comes] down,” Gray said. “Right now, we’re seeing investors cautious really towards all equity vehicles.”

“If we deliver, given the portfolio we built, the structure we’ve got here, this is working for investors—12% since inception, triple the public REIT index—that’s ultimately what matters,” Gray said.

“The portfolio positioning, that what’s matters, and then as that performance shows up, as markets become a little less volatile, then I think you’ll see a resumption of more positive flows,” he added.

As a non-traded REIT, BREIT has thresholds on how much money investors can take out of its fund in order to avoid forced selling of assets. In a Dec. 1 letter to investors, BREIT said redemption requests had exceeded its 2% of net asset value monthly limit and its 5% quarterly threshold.

Starwood (SREIT) and KKR’s KREST fund, both non-traded REITs, also have limited fund withdrawals as retail investors—wealthy individuals, primarily from overseas—have bombarded the funds with redemption requests in recent months.