A fund launched by Blackstone five years ago that has become one of the firm’s main profit drivers is make less money investors in a context of deteriorating market conditions. Blackstone Real Estate Income Trust, or BREIT, owns $70 billion in real estate, including multi-family, single-family homes, student housing, data centers, retail and hotels, including the hotel and casino Bellagio on Las Vegas’ Sunset Strip. While other REITs are traded on public exchanges, BREIT is privately funded and has been marketed as a way to bring real estate investment to the general public. But the possibility of falling property values and reduced access to cheap debt due to rising interest rates is a major test for Blackstone’s central fund.
While BREIT is generating good returns and outperforming stocks in September, inflows into the fund are slowing and redemptions are up, according to Bloomberg. In the third quarter of this year, funds paid into BREIT reached $1.2 billion, compared to around $7.7 billion from the same period last year, while withdrawals from the fund increased by 15 approx. Nadeem Meghji, head of Blackstone Real Estate Americas, told Bloomberg that BREIT, with a portfolio of mostly multifamily and industrial properties in the Sunbelt, was built to withstand tough market conditions. “It’s exactly what you want to have in an environment like the one we find ourselves in today,” he said.
Blackstone first launched BREIT as an unlisted REIT in 2017 as a platform for individual investors, starting at just $2,500. BREIT’s success has led other alternative asset managers to create similar REITs, including Starwood Capital Group and KKR, and is part of the reason Blackstone has such a strong following. a strong brand. In the fourth quarter of 2021, the main driver of Blackstone’s earnings was BREIT, which absorbs 1.25% of assets in fees and 12.5% in returns. Most recently, BREIT took over single-family rental giant Home Partners of America and expanded its portfolio of affordable housing assets with a $5.1 billion purchase from American International Group. The current investment climate appears to be the biggest challenge for BREIT in its five-year history, but despite a more cautious approach from investors, the REIT remains one of the best performers in the industry.