BREIT Fulfills 35% Of Investors' February Withdrawal Requests

Blackstone Real Estate Income Trust fulfilled just over a third of the repurchase requests it received from investors in February, totaling about $1.4B, according to a shareholder letter posted Wednesday.

BREIT received $3.9B in repurchase requests last month, down 26% from January, but redemptions in any given month can only total 2% of the REIT’s net asset value.

The company’s monthly aggregate NAV increased in January but was down on a per-share basis, according to a filing with the Securities and Exchange Commission. BREIT pegged its aggregate NAV in January at more than $71.2B, up from $68.5B in December.

BREIT is the largest nontraded REIT, an investment vehicle deep-pocketed investors have plowed cash into since they were created after the Global Financial Crisis. As commercial real estate markets deteriorate and yields on treasury bonds rise, many are trying to get their money back out.

The nontraded REIT structure allows investors more liquidity in commercial real estate investments than a traditional equity fund, but it also allows the fund sponsors to limit investors' ability to access their capital if redemption requests exceed a certain threshold, typically 2% of NAV per month and 5% per quarter.

BREIT limited redemptions for the first time in November to avoid what it called a “liquidity mismatch.” The fund met 43% of redemption requests for November, or $1.8B. It met 25% of requests in January. Several of its nontraded REIT counterparts have also limited withdrawals. Starwood Real Estate Investment Trust also started limiting redemptions last year, and KKR raised the gate on its KKR Real Estate Select Trust in January after investors exceeded the maximum redemption threshold for the entire first quarter.

Blackstone CEO Stephen Schwarzman stood up for BREIT during the company’s Q4 earnings call, saying that the market fluctuations and their impact are “highly predictable.”

While BREIT has seen more investors seek to pull their money out of the fund than ever before, it also locked down a major new capital infusion in recent months, with UC Investments, the investment vehicle of the University of California, agreeing to invest $4.5B in the fund.

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Related Topics: Blackstone , BREIT , Stephen Schwarzman
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