Blackstone Redemption Requests Down to a Trickle

It’s beginning to look like the tide has turned on the wave of redemption requests from Blackstone Real Estate Income Trust (BREIT) fund investors: what seemed like a flood at the beginning of the year now resembles a very manageable stream.

In a December 1 letter to shareholders, BREIT reported that its received $1.8B in redemption requests in November, an 18% drop from the previous month and a 66% decline from January, when the withdrawal requests peaked.

In the clearest sign that BREIT now is ahead of the curve on redemption requests, the $70B fund said in the Dec. 1 letter it was able to fulfill 67% of last month’s requests, about $1.2B, the highest percentage payout since BREIT began prorating redemptions.

“In November, 67% of repurchase requests were fulfilled, the highest payout since proration began,” Blackstone said, in a statement provided to Globe St. “Shareholders who began submitting requests just two months ago have already received nearly all their money back.”

Blackstone continues to remind investors that BREIT was built with “an all-weather strategy” that continues to offer exceptional performance as economic headwinds including high interest rates impact valuations in all asset classes.

“Not all real estate is created equal and where you invest matters,” BREIT’s letter to stockholders said. “We are seeing significant dispersion across real estate sectors and believe BREIT’s portfolio is very well positioned.”

The letter notes that 85% of the BREIT portfolio is concentrated in rental housing, industrial assets and data centers. BREIT is the largest owner of student housing in the United States and also owns QTS, one of the fastest-growing data center companies.

“We also have virtually no exposure to certain challenged sectors such as commodity office, for-sale housing and regional malls, or [in] weak urban markets,” the letter said, noting that the BREIT fund has delivered an 11.3% annualized net return since its inception in 2017, more than four times publicly traded REITs.

BREIT also has outperformed its non-traded REIT peers by nearly 700 basis points over the past year, the company said.

Since November 30, 2022, when BREIT began exercising its right to limit withdrawals after requests exceeded 5% of the net asset value of the fund, BREIT has returned $13.8B to investors.

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 2022 letter to investors, BREIT said redemption requests had exceeded its 2% of net asset value monthly limit and its 5% quarterly threshold.