BREIT Leaders Tout Strong 2024 Metrics, Improving Economy

Blackstone (BX) Real Estate Income Trust (BREIT) is bullish on the CRE capital markets landscape in 2025, with senior leadership citing encouraging national economic data and positive trends across its investment portfolio that is levered into data centers, housing and industrial. 

On Tuesday, Blackstone President and Chief Operating Officer Jonathan Gray spoke to financial advisers and shareholders of BREIT — a private, non-listed real estate investment trust with $100 billion in assets under management — and praised the REITs performance in 2024, while noting the positive and more broader economic tailwinds. 

Nadeem Meghji, global co-head of Blackstone Real Estate, who was on the call, also outlined the REITs performance in 2024.

Gray said the 250 private equity companies within Blackstone’s portfolio averaged 7 percent revenue growth in the fourth quarter of 2024, and that of its 2,000 noninvestment-grade borrowers held a default rate of less than half of 1 percent. Moreover, expectations within BREIT (and among its executives) of a recession now stand at zero percent, according to Gray. 

“On the economy, we think we’ve got a pretty good story,” said Gray. “So there’s clearly a growing confidence. Part of that is after the election. Part of that is, as rates move down, people feel that the storm has been weathered.”

Gray emphasized that the data backs up BREIT’s optimistic outlook. He said shelter costs and rental housing costs are “running in the low single digits” across the fund’s portfolio, while the strengthening labor market — unemployment is currently running at 4.1 percent — has made it among the best times to hire in recent years. All in all, he said this points to inflation moderating.  

“We’ve got to see where this tariff diplomacy lands, that’s making markets more cautious, but a good sign for all of us investors is we continue to see inflation come down, even if the pace of disinflation is a little bit slower,” said Gray. 

He said that with a strong economy and low unemployment, the Federal Reserve has “the luxury of being patient” when it comes to cutting rates further than it already has since September. However, Gray suggested the market could see as many as two rate cuts to the federal funds rate in 2025. 

“I think, ultimately the weight of the data will allow them to cut rates a couple times this year, but they’ll do it in a deliberate fashion,” he said. “I fully understand why they want to be patient with this much uncertainty in the system.”

Finally, Gray told investors that it doesn’t make sense to wait for “an all-clear sign” before jumping back into a recovered capital markets ocean. He said the best investors don’t need to wait for the cost of capital and spreads to come down, or even for asset values to rise, before investing into U.S. real estate. 

“You’re generally better off moving sooner after you’ve been through a period of dislocation like we have,” said Gray, who noted the regulatory environment will allow transactions to happen and that the new AI technology will radically alter the investment and labor landscape in the years ahead. “I think of all that makes me want to invest more.” 

Blackstone saw a 42 percent increase in its deployment in the fourth quarter of 2024, and invested a total of $134 billion in capital in the last year, according to Gray.

Wesley LePatner, senior managing director at Blackstone and CEO of BREIT, spoke to the portfolio’s investment strategy in specific geographies and sectors, calling it “exceptionally well positioned,” and declaring that BREIT represents “Blackstone real estate’s best work.” 

LePatner listed the ways BREIT’s portfolio has evolved over the last five years. The REIT has gone from allocating 1 percent of its assets to data centers in 2020 to 13 percent today. And while industrial has dropped from 34 percent of BREIT’s assets to 25 percent, and multifamily has shrunk from 37 percent to 21 percent, other sectors have received capital in their place. 

Student housing makes up 10 percent of BREIT’s assets (up from 1 percent in 2020), while affordable housing and single-family housing each make up 9 percent of BREIT’s assets (up from zero five years ago), according to the firm. 

LePatner also emphasized that BREIT is mainly concerned in Sun Belt markets such as Florida, Georgia and Texas, three states with the largest portion of the fund’s investment concentration. 

“Sun Belt markets benefit from seven times higher population growth, three times higher job growth, and 10 percent higher wage growth than the rest of the country,” she said. “So if you were constructing a portfolio from scratch, we believe this is exactly where you want to be.”

LePatner called the firm’s 2021 investment in its QTS data center platform “a huge win for BREIT” and that the investment has yielded leasing metrics that are 15 times higher than what BREIT underwrote them for upon acquisition four years ago, and that the investment has generated several billions in implied profit.   

As for the REIT’s housing portfolio, LePatner said the U.S. faces a housing shortfall of from 4 million to 5 million units, and that demand for new homes is now twice as high as the long-term average, even as new deliveries begin to decline — all of which BREIT is positioned to capitalize on. 

“Most importantly we are at, or are past, peak supply in roughly 80 percent of our multifamily markets, and we believe we are about to enter an environment with very constrained supply while demand, particularly in the Sun Belt, should remain healthy,” she said. 

Finally, LePatner spoke to BREIT’s heavy investment in the industrial sector — the portfolio’s second largest exposure — which has been beset for moderating rent levels in the last year. 

She said the number of industrial leases BREIT signed in the second half of 2024 increased 25 percent year-over-year, and that today the portfolio is signing leases with rents 35 percent higher than the expiring leases. 

All this has made Gray confident that, in an evolving financial landscape, open-ended portfolios like BREIT will continue to attract both institutional and individual investors. 

“It’s why these products are so important. It’s why we focus so much on where we’re deploying the capital, and the teams we have on them, and we remain hugely confident that we’re in the early days of something that’s really going to be a sea change,” he said. “But it comes down to delivering performance — that’s what it’s all about.”

Brian Pascus can be reached at bpascus@commercialobserver.com