MacKenzie Capital Announces Tender Offer To BREIT Investors At 38% Discount

buildings

MacKenzie Capital Management is offering shareholders of Blackstone Real Estate Income Trust $9.27 per share, which the company says represents a 38% discount to BREIT's estimated net asset value of $14.88 per share.

The California-based private real estate investor stressed that it is offering an immediate cash payment for the shares, albeit at a discount.

The practice of offering quick cash for nontraded REIT shares is known as a mini-tender offer, and it isn't new.

“It should be noted that you would receive more over time if you repeatedly submit your shares into the REIT’s share repurchase plan, but our offer may be particularly attractive to those who desire liquidity and have not been able to redeem their shares completely,” MacKenzie said in a statement detailing the offer.

Blackstone told Bisnow by email the move by MacKenzie is an attempt to mislead and take advantage of shareholders, offering nearly a 40% discount for shares "when BREIT's semi-liquid structure provides monthly liquidity to shareholders with no discount."

The company further noted it has satisfied $11.3B of monthly repurchases since Nov. 30, 2022, when proration began, and a shareholder that has submitted repurchase requests throughout this time has received 97% of their money back.

“Even a shareholder who started submitting as recently as May 2023 already has 84% of their money back, and repurchase requests have declined meaningfully, with the most recent month 60% lower than the peak in January 2023,” the email said. For about a year, redemption requests in the nontraded REIT sector have outpaced payouts.

In September, BREIT met 29% of its redemption requests, despite a drop in such requests for the fifth consecutive month. The nontraded REIT received $2.1B in repurchase requests last month, down 28% from August.

BREIT's net asset value increased by 0.9% at the end of August, despite the continued high volume of redemption requests. Since the beginning of 2022, the trust has sold $15B worth of real estate, used in part to pay out $11.3B to shareholders.

“I think almost everybody in the industry would agree that there is a need for liquidity options for investors,” A. Yoni Miller, co-founder of QuickLiquidity, told Wealth Management in 2022. “Where it becomes a debate is what is a fair discount?”

MacKenzie's offer is for as many as 1.5 million shares, or $13.9M, and expires in December.

UPDATE, OCT. 25, 4:17 P.M. ET: This story has been updated to include comments from Blackstone.

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