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Blackstone REIT Redemptions Up Again in May; Blames It on Starwood REIT Tightening Its Share Repurchase Plan

Blackstone Real Estate Income Trust Inc. – a publicly registered non-traded real estate investment trust sponsored by private equity giant The Blackstone Group – issued a stockholder letter to report on 2024 performance and unpack the effects of Starwood Real Estate Income Trust’s decision to impose stricter limits on investors.

BREIT reported four consecutive months of positive performance to start 2024, returning +2.2% for Class I shares.

In the latter half of May 2024 however, Starwood REIT – the second largest non-traded net asset value REIT with nearly $9.8 billion in aggregate net asset value – lowered the capacity under its share repurchase plan, beginning with May 2024 redemptions. As previously reported by The DI Wire, the monthly redemption limit will decrease to 0.33% of stockholder NAV as of the end of the prior month, and, beginning July 1, the quarterly redemption will decrease to 1% of stockholder NAV as of the end of the prior quarter.

Repurchase requests for BREIT steadily declined from January 2023 until the last two weeks of May 2024 when, as the $59 billion REIT said in its stockholder letter, “another non-listed REIT amended its share repurchase program to significantly reduce liquidity to its shareholders. Even so, BREIT’s repurchase requests for May 2024 are 70% below January 2023 levels. Importantly, BREIT’s liquidity profile, portfolio positioning and approach to valuations are materially different than this non-listed REIT.”

BREIT reported that it had fulfilled 100% of repurchase requests for February, March, and April 2024. It said it will do so again in May, as BREIT’s majority independent board of directors approved exceeding the 2% of net asset value monthly limit to fulfill 100% of repurchase requests. Across April and May, BREIT has returned about 4.4% of its NAV to investors.

Blackstone REIT said it had “no plans” to change its share repurchase program, which allows for share redemptions equal to 2% of NAV per month up to 5% quarterly.

Since inception more than seven years ago, BREIT reported that it has delivered an annualized net return for investors of more than 10.4%, nearly three-times the return of publicly traded REITs over the same period.

Finally, BREIT reminded stockholders of its focus: high-growth sectors and markets experiencing secular growth tailwinds, such as approximately 85% rental housing, industrial, and data centers; and approximately 70% in the Sunbelt markets. In addition, BREIT noted its balance sheet has close to 90% fixed-rate debt for the next five years.

BREIT has about 20% exposure to data centers and student housing, which it said has driven its outperformance over the last year. In addition, over the last two years, BREIT has been proactive in managing its liquidity, including executing more than $20 billion in asset sales at a premium to carrying values on average, and had approximately $7.5 billion of immediate liquidity as last reported.

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