Blackstone REIT (BREIT) Securities Investigation

Are you worried about your investment in Blackstone Real Estate Income Trust (BREIT)?

Although BREIT has been promoted as a stable way to access institutional-quality real estate, investors continue to face challenges with redemptions and concerns over its valuation practices. While Blackstone recently announced a $330 million investment in Tricon Residential, the bigger questions for many investors remain: Can I get my money out, and is my investment really worth what Blackstone says it is?

BREIT’s Investment in Tricon Residential

In August 2023, BREIT committed $330 million to Tricon Residential (OTC: TCNGF), a North American rental housing company with more than 30,000 single-family and multi-family units. The deal was structured through a private placement of exchangeable units, giving BREIT a minority stake in Tricon. While this investment expands BREIT’s exposure to the rental housing market, it does not resolve ongoing concerns over redemptions and valuations.

BREIT’s Redemption Challenges

One of the most pressing issues for BREIT investors has been its failure to meet redemption requests. In November 2022, BREIT began restricting withdrawals for the first time in its history after redemption requests exceeded its 5% quarterly limit.

• In 2023, redemption requests peaked at $5.3 billion in a single month, far beyond what BREIT could honor.
• Many investors found themselves only able to redeem a fraction of their holdings, effectively leaving them “trapped” in the fund.
• According to Blackstone’s reports, as of February 2024 BREIT finally met 100% of redemption requests, totaling $961 million that month—a sharp decline from the prior year’s levels.

While this improvement is notable, redemption restrictions highlighted a core risk of non-traded REITs: investors cannot always liquidate when they need cash.

Questionable Valuations

Another major concern for investors has been whether BREIT’s net asset value (NAV) accurately reflects the true value of its holdings.

• Despite weakness in commercial real estate markets post-COVID, BREIT’s NAV remained relatively high compared to peers.
• A MacKenzie Capital Management tender offer in October 2023 valued BREIT shares at $9.27—38% below Blackstone’s reported NAV of $14.88 per share.
• BREIT shares also traded at a discount on LODAS Markets, a secondary market for alternative investments.

These discrepancies have raised questions about whether Blackstone is overstating BREIT’s true value. Media outlets like The New York Times and Business Insider have highlighted these concerns, pointing to the risk that investors may be overpaying for their shares or unable to exit at reported valuations.

Risks of Investing in Non-Traded REITs

• Illiquidity – Redemption limits can prevent investors from accessing their money when needed.
• High Fees & Commissions – Brokers may earn more than 9% in upfront fees, reducing investor returns.
• Valuation Concerns – Internally determined valuations may not reflect true market value.
• Sensitivity to Interest Rates – Rising rates increase borrowing costs, which can squeeze returns.
• Suitability Issues – These investments are generally appropriate only for wealthy or sophisticated investors.

Broker Duties and Investor Protection

Brokerage firms recommending BREIT were required to perform due diligence and ensure that it was suitable for each client’s financial profile. If your broker failed to explain the redemption risks or questionable valuations, you may have grounds to pursue a claim.

Class Action vs. FINRA Arbitration

If you have suffered losses in BREIT, you may be wondering whether to join a class action lawsuit or pursue an individual FINRA arbitration.

• Class Actions: Often result in minimal recovery per investor.
• FINRA Arbitration: Allows investors to bring individual claims against the brokerage firm that recommended BREIT, often with a better chance of meaningful recovery.

Free Consultation – Recovering Investment Losses in BREIT

If you invested in Blackstone REIT and are concerned about redemption restrictions or questionable valuations, The White Law Group may be able to help you recover losses. Contact us at 1-888-637-5510 for a free consultation or visit www.WhiteSecuritiesLaw.com.

FAQs

1. Is BREIT still limiting redemptions? As of early 2024, BREIT reported that it fulfilled all redemption requests for the first time since 2022. However, prior oversubscription shows that liquidity risk remains a serious concern.

2. Why are BREIT’s valuations being questioned? BREIT’s reported NAV has remained high even as commercial real estate values have dropped. Tender offers at steep discounts and secondary market trades suggest the true value may be significantly lower.

3. Can I recover losses if my broker recommended BREIT? Yes. If your broker failed to disclose liquidity risks or the speculative nature of non-traded REITs, you may be eligible to file a claim through FINRA arbitration to recover damages.