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BREIT forges ahead on comeback trail

Blackstone fund posted strongest return in 10 months after limiting withdrawals

A photo illustration of Blackstone president Jon Gray (Getty)

A photo illustration of Blackstone president Jon Gray (Getty)

Blackstone’s real estate investment trust continued its climb out from under a mass of redemption requests that landed in recent months, with June posting its strongest returns in nearly a year.

Blackstone Real Estate Income Trust recorded a 0.96 percent return last month, the Commercial Observer reported. It was the third straight month of positive returns for BREIT, which is posting a 1.3 percent return year-to-date.

BREIT is a non-traded entity, but the $68 billion net asset value fund is rising along with the rest of the REIT market, a sign of adjusting investment strategies and an increased focus on deal activity after the Federal Reserve’s interest rate hikes all but froze transaction activity.

The Blackstone fund brushed up against trouble starting last year when investors made a plethora of redemption requests, leading BREIT to limit withdrawals for several straight months. The origins of the investor pullback emerged a year ago when there was a selloff in Asia.

In January, however, BREIT’s fortunes started to turn when the University of California provided a $4 billion endowment, a common equity commitment locked in for six years in connection to a $1 billion commitment from Blackstone itself. The university later added $500 million to the pot.

Another helpful push for BREIT came from a shift in its holdings. It has continued to double down on the multifamily market, industrial real estate and data centers in the Sun Belt, combining to represent a large majority of the REIT’s portfolio. It has no exposure to commodity offices and malls — two property sectors struggling in the post-Covid world.

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“Where you invest matters,” a Blackstone spokesperson said in a statement to Commercial Observer.

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While BREIT seems to have taken a turn for the better, there is still a heavy amount of redemption requests coming in, even if it’s not as many as the peak. In an investor letter released earlier this month, Blackstone revealed BREIT received $3.8 billion in redemption requests in June, down 29 percent from a high in January.

BREIT fulfilled approximately $628 million in redemption requests, equal to 1 percent of the fund’s net asset value and 17 percent of the shares requested for redemption.

— Holden Walter-Warner

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Blackstone GroupREITS