In response to a significant increase in redemptions, Blackstone Group’s chief executive officer Steve Schwarzman defended the company’s flagship non-traded real estate investment trust against “completely incorrect assumptions.”
As reported by The DI Wire, Blackstone REIT’s redemptions have swelled during the second and third quarters of 2022, while their equity raise has declined significantly during the same time.
According to the CEO, who has been with the firm since its founding in 1985, redemptions were predominantly coming from Asia.
Schwarzman was speaking at the Goldman Sachs 2022 Financial Services Conference in New York earlier this week when he was asked about the large increase in redemptions and the vision for Blackstone’s private wealth efforts.
The CEO explained that the Hang Seng Index, a market value-weighted index comprised of the largest companies in Hong Kong, has dropped by 40% in recent months. Since investors in Asia tend to use more margin debt, they rushed to liquidate investments where they could after experiencing a serious drop in the market.
Considering that BREIT was earning 9% this year compared to a 7% average for long-term holders, Schwarzman said BREIT has a “very happy group of investors.”
According to Schwarzman, BREIT became the largest non-traded REIT in the industry due to its focus on warehouses and apartments, specifically 80% of the fund’s real estate. It was also noted that 70% of BREIT’s properties are in the American “sunbelt,” which has experienced five times the amount of population growth compared to the rest of the United States.
Blackstone Real Estate Income Trust Inc. is a publicly registered non-traded REIT sponsored by private equity giant The Blackstone Group (NYSE: BX). BREIT’s initial offering launched in August 2016 and has raised approximately $60 billion in three public offerings as of June 2022. The current offering has raised $6.6 billion, and as of Sept. 30, 2022, its aggregate NAV was $70.4 billion.