Blackstone’s beleaguered real-estate fund stems exodus

livemint.com:

For signs that the turbulent commercial real-estate market is beginning to stabilize, look at Blackstone’s largest real-estate fund, known as Breit. The firm was able to fulfill all investor redemption requests in February and March for the first time since late 2022, when a flurry of withdrawals compelled it to limit how much it could pay out. “We believe commercial real estate is at an inflection point, with real estate values bottoming," Blackstone said in an April letter to Breit shareholders, who are mostly individual investors.

But that is only part of the story. Breit fundraising hasn’t returned to its previous robust levels. Investor withdrawals continue to greatly exceed new cash coming in, a sign of lingering worries about the backdrop for commercial properties.

Financial advisers who work with individual investors say most of their clients remain wary of commercial real estate, citing recent turbulence in the market and the latest signals from the Federal Reserve that it might not cut interest rates this year. Investors also fret over rising default levels and over supply that is putting downward pressure on apartment rents in some markets. “People are afraid of real estate," said Rick Kahler, founder of Rapid City, S.D.-based Kahler Financial Group.

“There’s no good news." Blackstone’s more bullish outlook reflects a number of positive trends its executives think are being masked by negative headlines. They note that even without rate cuts by the Fed, real-estate borrowing costs have declined. They point to the surge in new commercial mortgage-backed securities issues in the first quarter.