Blackstone Fulfills All Redemption Requests

It was designed with a semi-liquid structure, but the Blackstone Real Estate Income Trust (BREIT) fund finally delivered full liquidity to investors who requested redemptions in February.

After more than a year of proration, BREIT reported in a March 1 letter to shareholders that it fulfilled 100% of the redemption requests it received last month.

“We are pleased to report that BREIT fulfilled 100% of repurchase requests in February,” the letter said. “BREIT was designed with a semi-liquid structure, trading a measure of liquidity for the potential for higher net returns. We could not be more proud that this structure has worked as intended to both prevent a liquidity mismatch and maximize long-term shareholder value.”

BREIT’s letter said it received $961M in repurchase requests last month, which was below the fund’s 2% of net asset value monthly limit and 26% lower than the $1.3B in requests it received in January.

BREIT began prorating redemptions on November 30, 2022. As a non-traded REIT, BREIT has thresholds on how much money investors can take out of the $61B fund in order to avoid forced selling of assets.

In a December 1, 2022 letter to investors, BREIT said redemption requests had exceeded its 2% of NAV monthly limit and its 5% quarterly threshold. The redemption requests peaked in January 2023 at $5.3B, of which about $1.3B were redeemed that month.

“Historically, BREIT delivered full liquidity to redeeming stockholders in each month, and during proration, stockholders on average were substantially redeemed in just over four months,” BREIT’s March 1 letter said.

“Over 15 months of proration, we returned $15B+ of liquidity to BREIT stockholders in a deliberate and thoughtful way while continuing to generate resilient performance and preserve capital,” the letter said, noting that BREIT has delivered an 11% annualized net return on Class 1 for investors, more than twice the return of publicly traded REITs.

BREIT’s portfolio is concentrated in high-growth sectors, including data centers, warehouses and student housing, and in the fast-growing Sunbelt market. BREIT is the largest owner of student housing in the United States and also owns QTS, one of the fastest-growing data center companies.

“New construction in our key sectors has significantly declined, supporting pricing power of our existing assets,” BREIT’s March 1 letter to investors said.

Regarding the current economic environment, BREIT told its investors that “moments of volatility create dislocation and opportunity to play offense for seasoned investors, and we are continuing to deploy capital into BREIT’s high conviction themes.”

Several non-traded REITs were hit with significant redemption requests in 2023, with redemptions throughout the year nearly doubling fundraising by the funds.

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