Blackstone’s REIT Experienced Strongest Month in June Since August 2022
By Andrew Coen July 14, 2023 5:48 pm
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Blackstone’s real estate investment trust (REIT) appears to have found its footing again on the heels of the property giant suffering large-scale redemption requests.
In June, the $68 billion Blackstone Real Estate Income Trust (BREIT) recorded its strongest month since August 2022 with a 0.96 percent return, Commercial Observer can first report. The June showing marked the third month in a row of positive performance bringing the non-listed REIT to 1.3 percent year-to-date aided by particular strength in its data center investments, Blackstone (BX) announced late Friday afternoon.
The positive trajectory for BREIT comes seven months after it was forced to limit withdrawals following a surge of redemption requests last December while the market suffered blows from rising interest rates. Shareholders sought to get $4.5 billion out of BREIT in March and it limited redemptions for the sixth straight month in April. In June, redemption requests totaled $3.8 billion.
Jeffrey Krauth, spokesperson for Blackstone, noted that BREIT has produced a 12 percent annualized return since its inception six years ago, which is three times the public REIT index. The REIT has pivoted during the COVID-19 pandemic with 80 percent of its portfolio concentrated in rental housing, industrial and data centers in Sun Belt markets. It also now has no exposure to the commodity office and malls.
“Where you invest matters, and BREIT has delivered strong performance because its portfolio is concentrated in the Sun Belt among top-performing sectors including logistics, data centers and student housing,” Krauth said in a statement.
BREIT has sold or contracted to sell around $9 billion in properties since January 2022. This included selling the JW Marriott San Antonio Hill Country Resort & Spa to Nashville-based Ryman Hospitality Properties for $800 million in early June to net a $275 million profit.
Jonathan Morris, founder of the REIT Academy and a former executive at three REITs, said the value of BREIT’s portfolio will continue to go up because of the sectors it is exposed to as well motivation by many investors to conduct deals after a lengthy period of inactivity since the Federal Reserve began hiking interest rates 16 months ago. Morris noted that the MSCI U.S. REIT index is up 9 percent year-to-date, which reflects a healthy outlook for CRE investments that are focused on healthy property classes such as multifamily, industrial, data centers and cell towers.
“If you’re interested in participating in the commercial real estate business via a public REIT, private retail or public non-traded REIT, if you ask me I would say now’s the time to invest, if not yesterday, and I think things will certainly get going by the fall if not by Thanksgiving,” Morris said. “But it’s all sector related and you have to be in the right sectors, and I wouldn’t even think about office or malls or anything else.”
Andrew Coen can be reached at acoen@commercialobserver.com
