Blackstone REIT Withdrawal Requests Surge as Payments Drop

For the fifth month in a row, Blackstone’s Real Estate Income Trust (BREIT) faced an onslaught of redemption requests in March from investors, who since the beginning of November have put in multibillion-dollar requests each month to pull their money out of the $70B fund.

In a letter to shareholders on Monday, the company disclosed it received $4.5B in redemption requests in March, an increase over February’s total of $3.9B. In the letter, BREIT noted that the surge came “in a month of tremendous market volatility and broad-based financial stress.”

In a sign that the hemorrhaging from its fund might be exceeding the pace of the REIT’s efforts to add new liquidity—BREIT announced in February it had raised $14B, including a $4.5B infusion from the University of California—the company limited withdrawals in March to $666M, or about 15% of the redemption requests it received.

Blackstone paid out 35%, or about $1.4B, of the $3.9B in redemption requests BREIT received in February; in January, 25% ($1.3B) of the requests were fulfilled.

As a non-traded REIT, BREIT has thresholds on how much money investors can take out of its fund in order to avoid forced selling of assets. In a Dec. 1 letter to investors, BREIT said redemption requests had exceeded its 2% of net asset value monthly limit and its 5% quarterly threshold.

In its letter to shareholders this week, Blackstone said the limitations on withdrawals from the BREIT fund are “designed to both prevent a liquidity mismatch and maximize long-term shareholder value, and [are] working as planned. In fact, BREIT has paid out nearly $5B to redeeming shareholders since November 30, 2022, when proration began.”

“Strong performance is what matters and BREIT has delivered: 12.3% annualized net return since inception,” a Blackstone spokesperson told GlobeSt. “As for March redemptions, they remain 16% below their January peak despite elevated market volatility. BREIT is not a mutual fund and has never gated. It is a semi-liquid product and is working exactly as planned.”

In an earnings call in January, Blackstone President Jon Gray said the company expects redemption requests to “remain at an elevated level but [to] normalize over time as BREIT works through it backlog.”

Nadeem Meghji, Blackstone’s head of Americas real estate, also referenced working through a “backlog” when he announced that BREIT had raised $14B in liquidity that would enable it to fulfill the tide of investor withdrawal requests.

However, as Monday’s letter to shareholders indicated, unfulfilled redemption requests “are not carried over to the next month.”

“If you would like to resubmit any unsatisfied portion of your current repurchase request for repurchase in the future, you will need to submit a new repurchase request for these shares prior to 4:00 p.m. (ET) on the second -to-last business day of the applicable month,” the letter said.

Starwood (SREIT) and KKR’s KREST fund, both non-traded REITs, also have limited fund withdrawals as retail investors—wealthy individuals, primarily from overseas—have bombarded the funds with redemption requests.