After more than a year of redemption requests, Blackstone Real Estate Income Trust (BREIT) finally has caught up to its retreating investors.
BREIT received $1.3B redemption requests in January and redeemed $1.1B. The $1.3B in withdrawal requests, a slight uptick from December's total of $1.1B, is a much brighter picture than January 2023, when the onslaught of monthly redemption requests peaked at $5.3B.
"We're pleased that BREIT fulfilled nearly 90% of repurchase requests in January, which is the highest payout percentage since proration began and essentially clears the repurchase backlog," Blackstone said, in a statement provided to GlobeSt.com.
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BREIT's redemption payments weren't actually a backlog because the fund requires investors to resubmit them each month in order to be fully paid.
However, the fund's ability this month to redeem almost all of the requests in the month they initially were submitted is an important benchmark, compared to the situation early last year when only a fraction of the requests got paid each month.
"The trend line of repurchase activity has declined meaningfully over the last several months and we believe the outlook is favorable," Blackstone said.
Since November 30, 2022, when BREIT began exercising its right to limit withdrawals after requests exceeded 5% of the net asset value of the fund, BREIT has returned $15.5B to investors, the company said in a February 1 letter to shareholders.
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 2022 letter to investors, BREIT said redemption requests had exceeded its 2% of net asset value monthly limit and its 5% quarterly threshold.
Several non-traded REITs were hit with significant redemption requests in 2023, with redemptions throughout the year nearly doubling fundraising by the funds.
Non-traded REITs only raised $9.8B through November 2023, compared with $33.2B during all of 2022, according to a report from Robert A. Stanger, an investment firm that tracks the industry. Stanger's report said redemptions by non-traded REITs totaled $17.4B at the end of November, compared with $12B that was redeemed by the funds in all of 2022.
The combination of redemptions and diminished fundraising in 2023 clearly took a toll: BREIT, which prior to the wave of redemptions had a net asset value that exceeded $70B, is now worth $61B, according to a fact sheet provided by the company.
Blackstone continues to remind investors that BREIT was built with "an all-weather strategy" that continues to offer exceptional performance as economic headwinds including high interest rates impact valuations in all asset classes.
Since its inception seven years ago, BREIT has delivered an 11% annualized net return on Class I for investors, outperforming non-traded REIT peers by 600 bps in 2023.
Most of the BREIT portfolio is concentrated in rental housing, industrial assets and data centers. BREIT is the largest owner of student housing in the United States and also owns QTS, one of the fastest-growing data center companies.
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