Blackstone Fund Withdrawal Requests Drop Below $3B

Redemption requests for Blackstone Real Estate Income Trust’s (BREIT) $70B fund fell for the fourth consecutive month in August. 

BREIT said in a letter to stockholders that it received just under $3B in redemption requests in August, the lowest level of requests since the fund started prorating withdrawals in November, 44% lower than the peak for requests in January.

BREIT fulfilled $1.3B of the August requests, which represents 43% of the shares submitted for repurchase, the company said.

“We were pleased to see August repurchase requests decline significantly from the January peak to the lowest level since October 2022. A shareholder that has been submitting repurchase requests since November 30, when proration began, has received approximately 96% of their money back,” Blackstone said, in a statement provided to GlobeSt.

Since November 30,  the fund has returned $10.7B to investors. BREIT has been exercising its right to limit withdrawals after requests exceeded 5% of the net asset value of the fund. 

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.

Last week, in a transaction that was not related to BREIT, Blackstone sold a majority stake in a portfolio of 11 Manhattan multifamily properties to Atlas Capital Group. The $142.4M sale of the 51% interest in the properties included $90M in mezzanine debt, PincusCo reported.

In February, a $270M senior loan backed by the 11 buildings was sent to special servicing. The floating-rate loan, originated by Morgan Stanley in 2019, encompasses 637 units in buildings located in Chelsea, the Upper East Side and Midtown South. 

Blackstone acquired the portfolio in 2015 in a joint venture with Fairstead Capital from the Caiola family.

Blackstone reached an agreement with its lenders extending the senior loan, which is no longer in special servicing.

“This legacy urban apartment investment faced challenges because significant capital was required to bring [the] 60+ year-old product up to our standards and is not representative of the strength we’re seeing in our broader rental housing portfolio, which is nearly 40 years newer on average and highly concentrated in the SunBelt,” Jon Gray, Blackstone’s president, said in the company’s Q2 2023 earnings report.

Regarding redemption requests, Gray 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.

“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.