Blackstone’s REIT Hits January Redemption Limit

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Property giant Blackstone’s real estate investment trust (REIT) hit its redemption limit in January as investors continue to try to pull money out of its $69 billion fund.

Blackstone Real Estate Income Trust (BREIT) let shareholders repurchase up to 2 percent of the fund’s net asset value, about 25 percent of the more than $5 billion that investors wanted to take out, Bloomberg reported. 

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The non-listed REIT faced similar demands at the end of last year and hit its November redemption limit after rising interest rates and a drop in the Chinese stock market encouraged investors to try to extract their cash from BREIT, Reuters reported. 

A spokesperson for Blackstone (BX) told Commercial Observer that the January repurchase requests were “in line with the aggregate unfulfilled amount for November and December” and that the “backlog” will “normalize over time.” 

Blackstone’s president John Gray believes its shareholders are requesting more money than they actually want to get out, with the expectation that they won’t get all their cash, Bloomberg reported. In a Wednesday letter to investors, BREIT managers said they remained confident in the fund. 

“We believe we have selected the right sectors and geographies and positioned our balance sheet to continue to produce meaningful cash-flow growth,” the letter said. “Generating strong performance remains our top objective.”

Blackstone’s REIT, which invests in a collection of mostly rental housing and logistics properties in the Southern and Western United States, makes up about 17 percent of Blackstone’s overall earnings, Reuters reported. Blackstone’s shares were down 1.8 percent to $94.26 Wednesday afternoon.

While Blackstone mostly markets BREIT to wealthy individuals, the fund scored a $4 billion investment from the University of California this year and the school coughed up another $500 million in March, according to Blackstone’s fourth-quarter earnings report

Celia Young can be reached at cyoung@commercialobserver.com.