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Blackstone REIT Limits Redemptions Again; Provides Third Quarter Update

Blackstone REIT Limits Redemptions Again; Provides Third Quarter Update. Alternative investments, Blackstone, Blackstone REIT, investment, NAV, net asset value, real estate, real estate investment trust, Realty Income Corporation, redemptions, REIT, share, shareholders
Blackstone REIT Limits Redemptions Again; Provides Third Quarter Update. Alternative investments, Blackstone, Blackstone REIT, investment, NAV, net asset value, real estate, real estate investment trust, Realty Income Corporation, redemptions, REIT, share, shareholders

Blackstone Real Estate Income Trust Inc., a publicly registered non-traded REIT sponsored by private equity giant The Blackstone Group (NYSE: BX), announced that they’ve limited investor redemptions for October 2023, marking the twelfth consecutive month of prorations.

In a stockholder update, the company announced that they have returned $12.5 billion of liquidity to investors since Nov. 30, 2022, when proration began, while “maintaining strong performance.” BREIT says a shareholder who began submitting repurchase requests when proration began has received 99% of their money back, and those who began submitting just three months ago have received 82% of their money back.

In October 2023, BREIT received $2.2 billion in requests under the repurchase plan. This represents a 58% decline from the peak in January 2023. In accordance with their repurchase plan, BREIT is fulfilling approximately $1.3 billion, which is equal to 2% of NAV and represents 56% of the shares submitted for repurchase. BREIT says this is the highest payout percentage since proration began.

“We are pleased that BREIT has generated a +12% annualized net return (Class I) since inception almost seven years ago, 4x publicly traded REITs. In the third quarter, BREIT (Class I) returned +2.0% and, over the last year, it has delivered 800 basis points of outperformance vs. our non-listed REIT peers,” says the company.

BREIT’s portfolio is more than 50% concentrated in sectors which are experiencing “high single digit or greater market rent growth,” and 70% concentrated in Sunbelt markets where they say population, job and wage growth are higher than the rest of the country. The company says this has resulted in 6%+ estimated cash flow growth year to date across BREIT’s portfolio, nearly 2x inflation today. Additionally, the company says market rents are 16% above BREIT’s in-place rents today, meaning as leases expire, they “have the potential to adjust rents to prevailing market rates even in the absence of future rent growth.”

“Our early investment in data centers is a prime example of the power of both exceptionally strong demand and constrained supply. Large technology companies are in the midst of an AI arms race which we believe will be a once-in-a-generation engine for future growth in data centers,” says BREIT. “Today, we continue to see record setting demand with 22% market rent growth for 2023.10 At the same time, data center vacancy is at frictional levels (less than 3%) driven by limited supply and the need for continued development in the space.”

Since Blackstone’s acquisition of QTS Data Centers in 2021, the company says they have tripled the size of the company and amassed a $15 billion data center development pipeline pre-leased to major technology companies at 50% profit margins. BREIT’s exposure to data centers is now 8% of the portfolio, and the company says data centers have been the single largest contributor to BREIT’s returns this year.”

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