Blackstone REIT hits key milestone, lifts redemption limit

investmentnews.com:

A major Blackstone Inc. property trust flashed the strongest signal yet that investor pressure for cash is abating.

The firm’s $60 billion real estate trust for wealthy individuals is finally letting customers draw money without any constraints for the month. Blackstone Real Estate Income Trust said Friday that redemption demands fell below a key threshold, meaning the trust could return as much as investors wanted to pull out. 

Since November 2022, BREIT has returned less money than investors requested each month, enforcing a key limit that helps it avoid forced selling. BREIT allows withdrawals of as much as 2% of the fund’s net asset value monthly or 5% each quarter.

Investors pulled back from real estate as high borrowing costs cut into property values. Now, the Federal Reserve has signaled its monetary tightening campaign is winding down. And investors have a greater sense of clarity about what properties might be worth in sale.

Investors sought to pull $961 million from BREIT in February, according to a shareholder letter. That’s 26% lower than a month earlier and down 82% from the peak in January 2023. The fund fulfilled all withdrawal requests in the month. It also returned more than $15 billion to shareholders during the 15 months it restricted redemptions.

The firm’s view is that BREIT has passed the test. 

“We believe it’s performed as designed and the structure has worked,” Nadeem Meghji, Blackstone’s co-head of real estate, said in an interview.

Meanwhile, Blackstone has directed cash into big deals, purchasing rental housing company Tricon Residential Inc. and snapping up a stake in a venture for Signature Bank property loans. Blackstone’s real estate transaction pipeline is now the largest in two years. 

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