BREIT Redemptions Total $4.4 Billion in May; Says “Semi-liquid Structure” Working as Intended

Blackstone Real Estate Income Trust Inc., a non-traded real estate investment trust sponsored by Blackstone Group, received redemption requests totaling $4.4 billion in May, which decreased by 4% month-over-month and 18% lower compared to January 2023, according to the company. In accordance with their repurchase plan, BREIT is fulfilling approximately $1.3 billion, which is equal to 2% of NAV and represents 30% of the shares submitted for repurchase. May marks the seventh straight month during which BREIT has limited repurchases requests.

The company noted that it has repurchased a total of $7.5 billion of common stock since proration began in November, and that a hypothetical investor who continually requested redemption since then would have received approximately 90% of their investment back and that “the semi-liquid structure is working as intended” to prevent a liquidity mismatch and maximize long-term shareholder value.

BREIT noted that 96% of their U.S. investor base and 94% of investors overall elected to remain invested in BREIT this month. As The DI Wire previously reported, Blackstone Group’s chief executive officer Steve Schwarzman defended the company’s flagship non-traded real estate investment trust by claiming that redemptions were predominantly coming from overseas investors.

Blackstone REIT, for the first time in its six-year history, began to limit fulfillment of redemption requests in November, after large amounts of repurchase requests from investors exceeded the 5% quarterly limit of the company’s net asset value.

As John Grady, co-chair of ADISA’s Legislative and Regulatory Committee and general counsel with ABR Dynamic Funds, pointed out in a recent guest article in The DI Wire, long-standing US tax policy limits redemption programs offered by non-exchange listed REITs to 20% of their outstanding shares measured annually, which translates into a 5% per quarter limit. Exceeding that limit by itself could cause a non-exchange listed REIT to lose its favorable tax treatment under the Internal Revenue Code.

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