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BREIT's Annual Dividend Payouts Exceed Cash Flow For First Time

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For the first time in its eight-year history, Blackstone Real Estate Income Trust paid out more in dividends to investors than it received in cash flow.

Blackstone’s giant nontraded REIT paid out more than $2.8B in dividends but received $2.7B in cash flow. The results were revealed in the REIT’s annual report filed with the Securities and Exchange Commission and first reported by The Financial Times.

REITs tend to use the vast majority of cash flow on dividend payouts, according to the FT. Ninety percent is typical, but over 100%, such as BREIT was forced to use in 2023, can signal trouble. 

“BREIT covered more than 95% of 2023 distributions with cash flow from operations,” a BREIT spokesperson told Bisnow in an emailed statement. “Any excess distributions are fully reflected in BREIT's reported net asset value, resulting in zero impact on total returns.”

Investors have a choice to take out dividends in cash or more shares. BREIT’s cash flow covered its cash dividend payouts, the spokesperson said.

Taken over its lifetime, BREIT’s cash flow has covered 103% of its dividend payouts. 

Two of BREIT's smaller competitors, nontraded REITs managed by Starwood Capital and Brookfield, also reported dividends that surpassed cash flows last year, the FT reported. 

This isn’t the first time concerns have been raised around the nontraded REIT’s finances in recent years. 

BREIT, the largest nontraded real estate investment fund in the world, raised red flags in December 2022 when it started limiting withdrawals to “prevent a liquidity mismatch.” Since the REIT is privately traded, it can limit investor payouts. It continued limiting withdrawals for more than a year, but it resumed fulfilling all requests in February.

The $60B fund, which is heavily invested in apartment buildings, industrial properties and data centers, reported a net loss of $980M in 2023, according to its SEC filing.  

It also says the fund raised $7.7B from common stock and private sales of shares. But it repurchased $13.3B in shares from investors over the course of the year, pointing toward hesitation in investing in the commercial real estate market.

BREIT touts a 4.6% return in marketing materials, the FT reported.