Blackstone has limited investor redemption requests from its $68 billion real estate trust for high-net wealth investors for ten consecutive months while storm clouds gather over commercial real estate markets. The silver lining is that redemption requests are on the decline.
According to a shareholder letter, Blackstone Real Estate Income Trust (BREIT) recorded investor outflows of nearly $3 billion in August -- the lowest redemption requests since October. But the fund still gates redemptions, only returning $1.3 billion, or approximately 43% of what was requested. The trust limits redemptions to 2% of net asset value monthly and 5% quarterly to curb sudden runs.
"We were pleased to see August repurchase requests decline significantly from the January peak to the lowest level since October 2022," a Blackstone spokesperson told Bloomberg in a statement. They added, "A shareholder that has been submitting repurchase requests since November 30, when proration began, has received approximately 96% of their money back."
BREIT has been working through redemption requests since last November. Recall:
Recently, BREIT has been on a property-selling spree, notably finalizing a deal to sell Simply Self Storage to rival Public Storage for $2.2 billion in July. Then, it sold a 22% stake in Bellagio on the Las Vegas Strip.
Last month, a report from the Financial Times said BREIT was gearing up to "invest billions in data centers to feed the artificial intelligence boom."
Before diving into the AI bubble, the trust should prioritize meeting redemption requests (in full) and quell the ongoing panic withdrawals.
Investors are nervous about commercial real estate since the Federal Reserve has hiked interest rates to two-decade highs.
We've pointed out ("New "Big Short" Hits Record Low As Focus Turns To $400 Billion CRE Debt Maturity Wall") that the regional banking crisis kick-started CRE turmoil. JPM, Morgan Stanley, and Goldman Sachs have all joined the CRE gloom parade.
