Blackstone’s
$70 billion retail real estate fund limited withdrawals for the sixth straight month in April after seeing no letup in outsize redemption requests.
The Blackstone Real Estate Income Trust, known as Breit, said it received $4.5 billion of withdrawal requests in April and paid out 29% of those requests to investors, or $1.3 billion, according to the Breit website on Monday. The fund limits monthly withdrawals to 2% of its net asset value and 5% a quarter.
The April withdrawal requests were flat relative to March and were up from the $3.9 billion in February. Peak requests were $5.3 billion in January. Blackstone (ticker: BX) initially limited withdrawals in November.
Breit has paid out $6.2 billion to investors since November. The continuing gating of the fund may be frustrating investors who want immediate liquidity.
But Breit said Monday its structure, which is “designed to both prevent a liquidity mismatch and maximize long-term shareholder value” is “working as intended.” Breit said an investor who began submitting withdrawal requests in November has received 84% of their money back.
Breit is a nontraded real estate investment sold through major brokerage firms and financial advisors. Its shares don’t trade publicly and investors rely on the fund to provide liquidity. The 6-year-old fund is focused on apartments and warehouses, two of the strongest sectors on the commercial real estate market.
The persistently large redemption requests have been a concern for investors since late 2022 given the importance of Blackstone’s industry-leading retail business among alternative managers. But shares of Blackstone have rallied this year, gaining 20% to $89, and topping those of most of its major rivals.
Breit has vastly outperformed comparable public REITs since the start of 2022, which may be creating incentive for Breit investors to redeem their shares. So far this year, Breit has had a negative total return of 0.5% based on its largest share class.
On Monday, Breit said: “We are seeing significant dispersion across real estate sectors and believe BREIT is very well positioned with +9% estimated cash flow growth in the first quarter.”
It added: “We have virtually no exposure to certain challenged sectors such as commodity office, for-sale housing and regional malls.”
Breit has returned about 12% annualized since its inception, compared with the 4% yearly total return for a key REIT index.
Write to Andrew Bary at andrew.bary@barrons.com
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