Blackstone REIT Hit with influx of Redemption requests after Equity Raise Declines
Blackstone REIT (BREIT) reportedly limited redemptions on Thursday after an influx of redemption requests, according to an article in Business Today. Blackstone Inc.’s shares traded down 7.1% on the news.
Blackstone reportedly told investors in a letter it would limit withdrawals after it received redemption requests in November greater than 2% of its monthly net asset value and 5% of its quarterly net asset value. As a result, the REIT allowed investors to redeem $1.3 billion in November, equivalent to approximately 43% of investors’ redemption requests.
Many BREIT investors are concerned that Blackstone has been slow to adjust the REIT’s valuation compared to publicly traded REITs that have taken a hit amid rising interest rates, according to the article in Business Today. Rising interest rates have an effect on real estate values by making financing properties more expensive.
Blackstone has reported a 9.3% year-to-date return for its REIT, net of fees, a contrast to the publicly traded Dow Jones U.S. Select REIT Total Return Index 22.19% decline over the same period, according to the article, leading some to question the valuation of BREIT.
Blackstone REIT, which was targeted to wealty investors, reportedly focuses on “rental housing and logistics in the southern and western United States that have short duration leases and rents outpacing inflation,” according to the article.
The jump in redemptions of BREIT, the majority of which was from Asia, may be due to concerns about China’s economic prospects and political stability, according to analysts.
The REIT may run the risk of selling assets to meet redemptions if it cannot regain the trust of its investors, according to analysts. Blackstone reportedly announced on Thursday the REIT had agreed to sell its 49.9% interest in two Las Vegas casinos for $1.27 billion.
According to the DI Wire last week, for the first time in six years, Blackstone REIT had a significant reduction in its monthly equity raise, while requests for redemptions were off the chart.
During the second quarter, Blackstone REIT saw a quarter-over-quarter decline of 13.8%. Meanwhile, quarterly redemptions reportedly more than tripled to approximately $2.9 billion, or 26.8% of equity raised during the quarter, according to the DI Wire.
Non-Traded REITs are High-risk Investments
Non-traded REITs are complex and high-risk investments for several reasons. First, the investment itself is unsuitably risky because it is dependent on the overall health of specific sectors of the economy.
Non-traded REITs are often less regulated than other types of investments (i.e., mutual funds, stocks, etc.) and generally pay a higher sales commissions and fees than these other products. Further, non-traded REITs are generally illiquid, severely limiting the investor’s ability to access funds should the need arise.
To learn more about investing in non-traded REITs, please see:
Did your Financial Advisor Recommend Investing in Non-Traded REITs?
If you suffered losses investing in a Blackstone REIT you may be able to recover your losses through FINRA arbitration. Please call the securities attorneys of The White Law Group at 888-637-5510 for a free consultation.
The White Law Group, LLC is a national securities fraud, securities arbitration, investor protection, and securities regulation/compliance law firm with offices in Chicago, Illinois and Seattle, Washington.
The firm represents investors in FINRA arbitration claims throughout the country. For more information on the firm, visit https://www.whitesecuritieslaw.com.
Tags: Blackstone Inc., Blackstone REIT buyback, Blackstone REIT lawsuit, Blackstone REIT losses, BREIT claims, BREIT investigation, BREIT lawsuit, BREIT redemptions, BREIT SRP Last modified: December 2, 2022