MacKenzie Capital Offers to Buy BREIT Shares at Steep Discount

Shareholders of Blackstone Real Estate Income Trust, a publicly registered non-traded REIT sponsored by private equity giant The Blackstone Group (NYSE: BX), received a mini-tender offer from MacKenzie Capital Management LP to purchase Class S shares of common stock at a purchase price of $9.27 per share.

“The share repurchase program is oversubscribed,” says Robert Dixon, managing director of MacKenzie, in a letter to BREIT shareholders. “If you submitted each and every month over the past 6 months, you would have redeemed about 90% of your shares, and about 97% over the past year, which leaves thousands of investors like you trapped in an investment they cannot liquidate completely or quickly.”

As The DI Wire previously reported, Blackstone REIT, for the first time in its six-year history, began to limit fulfillment of redemption requests in November 2022, after large amounts of repurchase requests from investors exceeded the 5% quarterly limit of the company’s net asset value. The company has continued to receive redemption requests in excess of the quarterly limit since, but they have steadily declined in recent months.

“Times are tough,” says Dixon. “Investment capital that is tied up in a non-traded investment is money that cannot be quickly invested in other opportunities.”

MacKenzie’s offer will purchase up to 1.5 million shares, or $13.9 million, and expires on Dec. 11, 2023.

The purchase price is a 38% discount to BREIT’s estimated net asset value of $14.88 per Class S Share as of Aug. 31, 2023. BREIT shares have most recently traded at a 4% discount to NAV on LODAS Markets, an online secondary market for non-traded alternative investments.

Blackstone told Bisnow via email that MacKenzie’s offer of a near 40% discount for shares “when BREIT’s semi-liquid structure provides monthly liquidity to shareholders with no discount” is misleading shareholders.

Blackstone Real Estate Income Trust’s initial offering launched in August 2016 and the company had received net proceeds of $72.8 billion from selling shares of its common stock via three public offerings as of June 30, 2023. The current offering has raised $12.5 billion, including shares issued pursuant to its distribution reinvestment plan, as of Sept. 19, 2023. Its aggregate NAV is currently $66.6 billion.

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