Investors Receive Limited Returns From Blackstone’s REIT for 12th Consecutive Month

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Investors in Blackstone (BX)’s real estate investment trust (REIT) may be suffering from withdrawals as the $66 billion fund limited redemptions again for the 12th month in a row.

Blackstone returned $1.3 billion to investors as opposed to the $2.2 billion requested in October, according to a notice to investors issued Wednesday morning. Bloomberg first reported the news.

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While the lending environment leading to a higher cost of capital and fewer construction starts were cited in the notice as a concern, a spokesperson for Blackstone said that redemptions were based on pre-determined thresholds rather than interest rates.

But the REIT doesn’t quite see the abridged returns as a bad thing, with a spokesperson saying that investors are still getting better bang for their buck than elsewhere. Annualized net return for institutional investors has been about 12 percent, four times higher than other publicly traded REITs, according to Blackstone.

“We were pleased to see October repurchase requests decline meaningfully from the January peak and to fulfill 56 percent of share repurchase requests in the month, the highest level since October 2022,” Blackstone said in a statement. “A shareholder that has been submitting repurchase requests since Nov. 30, when proration began, has received 99 percent of their money back. Even a shareholder who started submitting just three months ago already has 82 percent of their money back.”

Blackstone’s non-listed REIT, known as BREIT, first started withdrawing redemptions on Nov. 30 and has given back $12.5 billion to investors since then, Bloomberg reported. Its value also dropped from $70 billion in April — which it paid out 29 percent of the $4.5 billion investors requested — to its current $66 billion.

“Rising interest rates continue to impact valuations in all asset classes, including real estate,” Blackstone’s notice to investors read. “This is the highest payout percentage since proration began. … Looking ahead, we remain confident that BREIT’s portfolio will continue to be well positioned and provide investors access to the diversification benefits of high-quality real estate as a core portfolio holding.”

BREIT’s portfolio consists mostly of rental housing, industrial properties and data centers in the Southeastern and Southwestern United States.

Mark Hallum can be reached at mhallum@commercialobserver.com.