Blackstone’s BREIT Fulfills 100% Redemption Requests for First Time Since 2022

BREIT has cleared its backlog of redemption requests amounting to $961 million in February.

March 3, 2024

Blackstone's BREIT Fulfills 100% Redemption Requests for First Time Since 2022

BREIT has cleared its backlog of redemption requests amounting to $961 million in February.

Jordan B.
March 03, 2024

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Good morning. Welcome to the weekend edition of CRE Daily. Here's what we have lined up for you this Sunday.

📰 Feature: BREIT finally fulfilled all redemption requests.
⏪ Catch up: The most read stories from the week.
👍️ Reviews: 4 new product reviews on CREDaily.com.
📈 Chart: A snapshot of NYCB CRE loan portfolio.

Today’s issue is brought to you by Calvera Partners.

INVESTOR CONFIDENCE

Blackstone's BREIT Fulfills All Redemption Requests for First Time Since 2022

Jonathan D. Gray, President of the Blackstone Group

Blackstone's $60 billion real estate income trust, BREIT, fulfilled 100% of its investors' redemption requests in February, following a more than yearlong frenzy of investors fleeing from the non-traded fund.

What happened: For the first time since November 2022, the trust is lifting limitations on investor redemptions for the month, allowing unrestricted withdrawals. This move comes as redemption demands drop below critical levels, showcasing a significant recovery in investor confidence.

High Waters: The backdrop of this comes after a period of constrained liquidity, as BREIT enforced monthly and quarterly withdrawal caps to prevent forced sell-offs amidst a real estate downturn fueled by rising borrowing costs. This maneuver was in response to the Federal Reserve's hints at easing its monetary tightening, offering investors a clearer outlook on property valuations.

A turning point: February saw a notable decline in withdrawal requests, with investors seeking to redeem $961 million, a 26% decrease from the previous month and an 82% plunge from its peak in January 2023. Over the past 15 months of restrictions, BREIT has managed to return over $15 billion to its shareholders, affirming the trust's resilience as an income machine.

Making moves: While the last two years have been nothing short of a roller coaster for the PE giant, Blackstone hasn't shied away from deploying capital. The firm acquired Tricon Residential Inc. and invested in a venture for Signature Bank property loans, marking the largest real estate transaction pipeline Blackstone has seen in two years. As of January 2024, Blackstone had roughly $200 billion of dry power and over $1 trillion in AUM.

➥ THE TAKEAWAY

Zoom out: The past challenges have not only tested BREIT's operational resilience but also provided insights into how the largest property owner manages highly illiquid assets for individual investors. BREIT continues to showcase strong performance, with a notable 11% annualized net return since its inception, outpacing many public equivalents. The trust's focus remains on sectors with potential for growth, such as data centers and student housing, despite the broader challenges faced by the real estate sector.

2024 Calvera Partners Investor Letter

At Calvera, fostering investor relationships goes beyond delivering strong multifamily real estate returns. We're committed to building trust through transparency, accessibility, and leadership.

For the first time, we're offering exclusive access to our 2024 Investor Letter to a select group of real estate investors. Dive into our reflections on 2023 and our outlook for 2024, gaining insights into the multifamily real estate market.

⏪ Weekend Wrap-Up

Catch up on the most clickworthy stories of the week.

Fear and Greed: The latest Burns + CRE Daily Fear and Greed Index shows investors in a holding pattern yet poised to boost investments in the next six months.
Office vacancies: JLL's analysis finds that 60% of office vacancies are concentrated in a mere 10% of buildings.
Slightly downward: The U.S. GDP grew at a 3.2% annual rate in Q4 2023, slightly below the initially estimated 3.3%, reports the Bureau of Economic Analysis.
Banking crisis: NYCB's shares dropped over 20% Thursday evening after revealing an internal controls issue and CEO change.
Crown jewel: A storied New York real estate family is marketing nine prized retail and residential assets for $300 million.
New venture: Former Silverstein CEO Marty Burger unveils Infinity Global Real Estate Partners, targeting conversions and mixed-use developments.
Renting: Miami remains the most competitive rental destination to start 2024, with these Midwest markets on its heels.
Loan stress: CLO distress rates have quadrupled and many banks are overexposed with vacancy tight at 4.3%.
Triple Net lease: The latest NNN market analysis by Northmarq reveals that average closing cap rates are lower, with potential valuation growth on the horizon.
No recession: JPMorgan’s Jamie Dimon expects CRE issues to remain minimal if the U.S. avoids recession, citing manageable stress levels.