Blackstone Real Estate Investment Trust fulfilled 100 percent of repurchase requests in the month of February, according to a notice to stockholders issued by Blackstone on March 1.
“BREIT fulfilled 100 percent of repurchase requests in February and has now provided full liquidity to all investors seeking it,” Blackstone said in a statement. “BREIT’s semi-liquid structure worked as intended – offering investors the potential for higher net returns in exchange for a measure of liquidity.”
Requests totaled $961 million in February, according to the letter, down 82 percent from a peak of $5.3 billion in January 2023. This marks the first time all redemption requests for BREIT have been fulfilled since proration began. During the 15 months between the end of November 2022 and the end of January 2024, Blackstone returned more than $15 billion to BREIT investors.
February’s repurchase requests were below the monthly limit of 2 percent of net asset value, the letter said, and down 26 percent on January’s figure.
Such an outcome was expected by the New York mega-manager, after company president Jon Gray announced that “BREIT has weathered the storm in real estate markets” on the firm’s FY 2023 earnings call in January. Blackstone fulfilled almost 90 percent of the $1.3 billion in redemption requests for BREIT that month.
Indeed, the $961 million of repurchase requests in February was the lowest monthly total for the world’s largest non-traded REIT since it began prorating redemptions in November 2022.
In the notice, Blackstone cited “several reasons for optimism” in the real estate market outlook, which included the decline of both inflation and interest rates from their recent peaks. The Consumer Price Index from the US Bureau of Labor Statistics slid to 3.1 percent in January 2024, compared with 6.4 percent one year prior. Similarly, the 10-year US Treasury yielded 4.27 percent at the end of February, down from a 2023 peak of 4.98 percent in mid-October.
The firm wrote that this market dislocation has created an “opportunity to play offense for seasoned investors” and that it is continuing to deploy capital from BREIT. The non-traded REIT has delivered an annualized return of 11 percent since inception, more than double that of publicly traded REITs, according to the firm. The vehicle also outperformed its non-traded REIT peers by approximately 600 basis points in 2023, Blackstone said.
“BREIT’s differentiated portfolio in high growth sectors, including data centers, warehouses and student housing, and in fast-growing Sunbelt markets, has driven outperformance,” the firm said.
While the storm may have abated for BREIT, other non-traded REITs may not be out of the woods just yet, according to David Auerbach, chief investment officer at investment adviser Hoya Capital Real Estate. “Remember, there’s a lot of other smaller vehicles that may be going through it much worse than what Blackstone and Starwood are having to do,” he told PERE last month.
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