The $67B Blackstone Real Estate Income Trust fulfilled less than a third of redemption requests last month even as it sheds assets and withdrawal requests slowly decline.
BREIT received $2.1B in repurchase requests in September, down 28% from August and the fifth consecutive monthly decline in requests. But the investment giant said in a letter to stockholders that it was fulfilling only $625M in requests, or 29% of the shares submitted for repurchase, as it continues a nearly yearlong restriction on buybacks that began in November.
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September repurchase requests were the lowest they have been since October 2022, according to Blackstone, and 60% lower than the peak in January. BREIT received $3B in redemption requests in August, $3.7B in July and roughly $3.8B in June.
BREIT’s share repurchase plan allows it to buy back up to 2% of net asset value in any month and up to 5% of NAV in a quarter. It limited redemptions in September to 1% of NAV after fulfilling requests at 2% of NAV in the prior two months.
“BREIT is continuing to meet redemptions up to the 2% per month/5% per quarter limit,” Robert A. Stanger & Co. CEO Kevin Gannon said in an email. “This is an extraordinary level of redemptions met and should be celebrated by this space.”
The investment fund’s monthly NAV was up 0.9% across all share classes at the end of August, with Class S shares rising to $14.88 from $14.80.
BREIT has sold $15B worth of real estate, generating $3B in profits, since January 2022, a shareholder letter issued Monday says. Most recently, the nontraded REIT sold its 22% stake in the Bellagio hotel and casino for $300M in an August deal with Realty Income that valued the Las Vegas asset at $5.1B. A month earlier, BRIET sold Simply Self Storage to Public Storage for $2.2B. It also shed around 14M SF of industrial assets in a June deal with Prologis worth $3.1B.
Proceeds from the sales have gone toward paying out $11.3B to shareholders since Nov. 30, 2022, when restrictions on withdrawals began.
“A shareholder who began submitting repurchase requests when proration began has received approximately 97% of their money back and the semi-liquid structure is working as intended,” the shareholder letter says.
The continued slowdown of repurchase requests comes as BREIT President A.J. Agarwal began a nine-month sabbatical on Sept. 15 to attend classes at Stanford University for a continuing education stint. Agarwal was replaced by Rob Harper, who had served as the head of the fund’s asset management division, but Agarwal remains an observer of the board.
The investment fund’s holdings are 84% concentrated in rental housing, industrial and data centers, with 70% of assets in Sun Belt markets. The letter says BREIT has “virtually no exposure to certain challenged sectors such as commodity office, for-sale housing and regional malls, or weak urban markets.”
“Today, inflation is increasingly moving into the rearview mirror which should ultimately lead to more favorable market conditions,” the letter says. “Furthermore, new supply in rental housing and industrial is down 22% and 63%, respectively, which should support fundamentals in the medium term.”
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