Blackstone Redemption Requests Drop 41% in December

The stream of monthly redemption requests from Blackstone Real Estate Income Trust (BREIT), which in January 2023 peaked at $5.3B, rapidly is drying up, with December’s total of $1.1B a 41% decline over the November amount.

“We were pleased to see December repurchase requests continue the monthly decline, [which is] 80% lower than the January 2023 peak. This is the lowest month of repurchase requests and the first month repurchase requests fell below the 2% monthly limit since September 2022,” Blackstone said, in a statement provided to GlobeSt.com.

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 $14.3B to investors, the company said in a Jan. 2 letter to shareholders.

BREIT said it is fulfilling $569M of the December requests, which is 53% of the shares submitted for repurchase.

“Shareholders who began submitting repurchase requests just two months ago have already received nearly all of their money back,” the company said in its Jan. 2 letter.

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.

The $70M BREIT fund was not the only non-traded REIT to deal with significant redemption requests in 2023. In fact, redemptions at non-traded REITs nearly doubled fundraising.

Non-traded REITs only raised $9.8B through November 2023, compared with $33.2B during all of 2022, according to a report last month from Robert A. Stanger, an investment firm that tracks the industry, which was reported in the Wall Street Journal.

Stanger’s report said redemptions by non-traded REITs totaled $17.4B at the end of November, compared with $12B that was redeemed by the funds in all of 2022.

Overall, non-traded alternative investment fundraising totaled nearly $64B as of the end of November, with non-traded business development companies leading at $17.9B, followed by interval funds at $17.3 and non-traded REITs at $9.8B.

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.

The letter notes that most 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, nearly three times the return of publicly traded REITs.