Non-Traded REITs had “The Best of Times and the Worst of Times” in January
According to the latest industry report from Robert A. Stanger & Co., non-traded alternative investment fundraising reached $7.8 billion in January with non-traded REITs posting the second highest fundraising month on record at $4.6 billion, just behind the $4.7 billion raised in December 2021.
However, according to Kevin T. Gannon, chairman and chief executive officer of Stanger, “a look behind the curtain reveals it’s both the best of times and the worst of times.”
As The DI Wire previously reported, Blackstone’s BREIT received a $4.5 billion investment from the Regents of the University of California. Stanger says that without this investment, January non-traded REIT fundraising would have totaled just $596 million, the lowest monthly level since December 2009.
In addition, Stanger reports that heightened levels of redemption activity continues. Net asset value REITs satisfied an estimated $4.6 billion of requests in the fourth quarter of 2022, equal to approximately 4.2% of net asset value at the beginning of the period. To date four NAV REITs sponsored by Blackstone (Blackstone Real Estate Income Trust), Starwood (Starwood Real Estate Income Trust), KKR (KKR Real Estate Select Trust) and RREEF (RREEF Property Trust) reported 2023 redemption requests exceeding monthly or quarterly limits. January 2023 redemptions totaled approximately $1.7 billion, or 1.6% of net asset value at the beginning of the period, for the NAV REITs that have reported at this time. Stanger expects that the redemption overhang will continue to drag on net fundraising for most of 2023.
“The industry has successfully met redemptions up to the 2% monthly and 5% quarterly caps to date, with sufficient liquidity sleeves on the balance sheets to fund redemptions without tapping real estate asset sales, and we expect to see the same in 2023,” Gannon said.
Stanger’s survey of “top sponsors” tracks fundraising of all alternative investments offered via the retail pipeline including publicly registered non-traded REITs, non-traded business development companies, interval funds, non-traded preferred stock of traded REITs, Delaware statutory trusts, opportunity zone, and other private placement offerings. The top January alternative investment sponsors identified by Stanger include Blackstone ($4.5 billion), Cliffwater ($419 million), Blue Owl ($395 million), Apollo Global Management ($121 million) and Bluerock Capital Markets ($117 million).
Robert A. Stanger & Co., Inc., founded in 1978, is an investment banking firm specializing in providing investment banking, financial advisory, fairness opinion and asset and securities valuation services to partnerships, real estate investment trusts and real estate advisory and management companies in support of strategic planning and execution, capital formation and financings, mergers, acquisitions, reorganizations and consolidations.
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