Blackstone Redemption Payments Reach $7.5B

Blackstone’s Real Estate Income Trust (BREIT) disclosed Thursday that the $70B fund received $4.4B in redemption requests in May and paid out $1.3B, or about 30%, of those requests.

The company told GlobeSt. it has now paid out $7.5B to BREIT investors since it began prorating withdrawals on November 30. “An investor that has been submitting repurchase requests since November 30^th when proration began has received approximately 90% of their money back,” Blackstone said.

Since the end of November, BREIT has been exercising its right to limit withdrawals after requests exceeded 5% of the net asset value of the fund.

The company said it redeemed $1.3B, or 29%, of the $4.5B of withdrawal requests it received in April, more than double the $666M (15%) that were redeemed in March. BREIT also received redemption requests totaling $5.3B and $3.9B in January and February, respectively.

BREIT did not respond to a request to provide an estimate of the total amount of redemption requests the company has received since November—or whether a majority of the requests it is receiving each month are repeat requests.

Although Blackstone has previously referred to the redemption requests as a “backlog,” the fund has told BREIT investors they must resubmit redemption requests each month in order to get the full amount they want to withdraw.

BREIT’s letter to shareholders states that “under the Repurchase Plan, unfulfilled repurchase requests are not carried over automatically 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,” the letter said.

In a statement, Blackstone said “BREIT is a semi-liquid product and is working exactly as designed. Approximately 96% of our US investors and 94% of investors overall chose to remain in the fund in May.”

Jon Gray, Blackstone’s president, said in a Q1 earnings call that he expects that the overall performance of the fund will be the most important factor in addressing investors’ concerns in coming months. According to the company, BREIT has delivered a 12% annualized net return since its inception and nearly three times the public REIT index.

“What’s going to impact the redemptions? I think it will be multiple months of positive performance. We’ll show people and give them confidence as volatility in the marketplace [comes] down,” Gray said. “Right now, we’re seeing investors cautious really towards all equity vehicles.”

“If we deliver, given the portfolio we built, the structure we’ve got here, this is working for investors—12% since inception, triple the public REIT index—that’s ultimately what matters,” Gray said.

“The portfolio positioning, that what’s matters, and then as that performance shows up, as markets become a little less volatile, then I think you’ll see a resumption of more positive flows,” he added.

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.

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 in recent months.