Blackstone real estate fund withdrawals - Effects on Investors
Withdrawals from Blackstone's $125 Billion Real Estate Fund Are Being Restricted. Following an increase in the number of withdrawal requests, the Blackstone Real Estate Income Trust Fund approved $1.3 billion in November 2022, which represented 43% of all withdrawal requests. 2nd December 2022 | Hong Kong.
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After a rise in the number of withdrawal requests in November 2022, the leading private equity firm Blackstone, which has $951 billion in assets under management (AUM), has restricted withdrawals from its $125 billion real estate fund. In November 2022, the Blackstone Real Estate Income Trust Fund gave its approval to redeem $1.3 billion, which was equivalent to 43 percent of all requests. The Blackstone Real Estate Income Trust Fund (BREIT) permits investors to redeem a maximum of 5% of their funds once every three months, with a monthly maximum of 2% of their total holdings. The fund's total value is $125 billion, but its net asset value is only $69 billion due to its obligations. In 2021, the fund's fifth year, the Blackstone Real Estate Income Trust Fund recorded returns of 28.7%, returns of 12.4% for Class S Shares (Class S shares with sales load of 24.4%), and a total asset value of $94 billion. Class S Shares were subject to a sales load of 24.4%. The annualized return over three years is 14.5%, and there is no sales load. The Residential and Industrial sector accounts for 82% of the fund, while the South and West areas of the United States each account for 73% of the fund's total holdings. (AUM = Assets under Management)
" BLACKSTONE LIMITS WITHDRAWAL FROM $125 BILLION REAL ESTATE FUND FOLLOWING INCREASE IN WITHDRAWAL REQUEST, BLACKSTONE REAL ESTATE INCOME TRUST FUND APPROVED $1.3 BILLION – 43% OF REQUESTS IN NOVEMBER 2022 " " BLACKSTONE REAL ESTATE INCOME TRUST FUND APPROVED $1.3 BILLION – 43% OF REQUEST
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Withdrawals from Blackstone's $125 Billion Real Estate Fund Are Being Restricted. Following an increase in the number of withdrawal requests, the Blackstone Real Estate Income Trust Fund approved $1.3 billion in November 2022, which represented 43% of all withdrawal requests. 2nd December 2022 | Hong Kong
After a rise in the number of withdrawal requests in November 2022, the leading private equity firm Blackstone, which has $951 billion in assets under management (AUM), has restricted withdrawals from its $125 billion real estate fund. In November 2022, the Blackstone Real Estate Income Trust Fund gave its approval to redeem $1.3 billion, which was equivalent to 43 percent of all requests. The Blackstone Real Estate Income Trust Fund (BREIT) permits investors to redeem a maximum of 5% of their funds once every three months, with a monthly maximum of 2% of their total holdings. The fund's total value is $125 billion, but its net asset value is only $69 billion due to its obligations. In 2021, the fund's fifth year of operation, Bla Please make use of the sharing facilities that can be accessed by clicking the share button that can be found at the top or side of articles. It is against the Terms and Conditions and Copyright Policy of FT.com to copy articles with the intention of sharing them with other people. To purchase additional rights, send an email to [email protected]. With the gift article service, subscribers can send up to 10 or 20 articles to friends and family each month. You can get further details by visiting the website at https://www.ft.com/tour. https://www.ft.com/content/e1ddc6f0-eb0a-4d52-8971-b1d9c2cb5c02 As investors scramble to get their hands on cash and concerns grow about the long-term health of the commercial property market, Blackstone has limited the amount of money that can be withdrawn from its $125 billion real estate investment fund in response to a surge in the number of redemption requests it has received.
According to a notice that was sent out to investors on Thursday, the private equity giant only granted 43% of the redemption requests that were submitted to its Blackstone Real Estate Income Trust fund in the month of November. There was as much as an eight percent decline in the price of Blackstone shares. The withdrawal limit highlights the risks that wealthy individuals have taken by investing in Blackstone's massive private real estate fund. The fund, which owns $69 billion in net assets after accounting for debt, consists of logistics facilities, apartment buildings, casinos, and medical office parks.
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JPMorgan analysts stated that "the availability of monthly liquidity" was a large part of "the allure for BREIT," but now that redemptions have been curtailed, they anticipate "advisors thinking twice before allocating additional capital to the fund." "In addition, we observe that the velvet rope is now being used to restrict redemptions, which may or may not cause more investors to request a larger portion of their original investment. They went on to say that "what may be a bit more troubling is that performance does not appear to be directly driving outflows considering returns are... about 9 percent up to October," which indicates that the fund has been performing well.
According to persons acquainted with the subject, over 70 percent of redemption requests have originated from Asia. This is a disproportionately high number when one considers that non-US investors account for only approximately 20 percent of BREIT's total assets.
According to a statement made by one of the fund's partners to the Financial Times, the recent dismal performance of Asian markets and economies may have put pressure on investors, who now require cash to meet their obligations as a result of the strain.
According to a recent research published by the National Association of Realtors, rising inflation and interest rates are exerting downward pressure on the value of commercial property in the United States. The real estate market has become more pessimistic on a global scale, and prominent investors have expressed concern about a shortage of capital in certain subsectors of the industry. The increase in demands for redemption comes on the heels of Blackstone's announcement that it will sell its almost 50% stake in the MGM Grand Las Vegas and Mandalay Bay Resort casinos in Las Vegas for a combined total of $1.27 billion. More than $5 billion in total debt was included in the deal's valuation of the properties.
According to one individual with knowledge of the situation, the proceeds from the sale, which were agreed upon at a premium to the carrying values of the properties, will help BREIT with liquidity as it meets redemption requests — or they will be reinvested in property assets that are expected to grow at a faster rate.
According to the analysts working for JPMorgan, "If there is any good news, it is that BREIT has plenty of liquidity with what appears to be an extremely remote likelihood of being a forced sale." BREIT received redemption requests in October totaling $1.8 billion, which is equivalent to approximately 2.7% of its net asset value. Additionally, the company has received redemption requests in November and December that have exceeded the quarterly limit.
In November, it consented to the withdrawal requests of investors totaling $1.3 billion, which is only 43 percent of the total redemption requests it received. According to the notification, Blackstone would only permit investors to redeem 0.3 percent of the fund's net assets this month. This information was included.
Private capital managers are increasingly looking to retail investors as a source of investment money. They argue that wealthy investors should have the same option to diversify away from public markets as pension and sovereign wealth funds. The argument that money managers put out is that investors can earn higher returns on their investments by forgoing some of their liquidity rights.