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Wednesday, February 1, 2023

Blackstone’s $69B CRE Fund Hit Month-to-month Redemption Restrict in January

(Bloomberg)—Blackstone Inc.’s $69 billion actual property belief hit a month-to-month redemption restrict in January, because the agency’s crown jewel continues to wrestle with a line of traders in search of to get cash out.

Blackstone Actual Property Earnings Belief advised traders Wednesday that it fulfilled repurchase requests for two% of its internet asset worth. That accounted for about 25% of what traders wished to drag out, based on a letter. January repurchase requests have been north of $5 billion, based on Bloomberg calculations.

Blackstone constructed BREIT into a large actual property belief proudly owning properties from Las Vegas’s lavish Bellagio lodge and on line casino to pupil housing and storage facilities. Its success helped develop the non-public fairness agency’s attain with wealthy people.

However the belief confronted challenges final yr as extra traders sought to drag cash out, given risky markets. BREIT hit redemption limits towards the top of final yr, inflicting it to limit how a lot traders may take out in December.

Executives have reiterated their assist for BREIT in latest months, with Blackstone Chief Government Officer Steve Schwarzman beforehand saying the agency is dedicated to bringing its experience to particular person traders.

“We stay assured that BREIT’s portfolio can ship robust efficiency and a tax-advantaged distribution yield,” BREIT stated within the letter Wednesday. “We consider we have now chosen the correct sectors and geographies and positioned our steadiness sheet to proceed to supply significant cash-flow development.”

In response to analysts’ questions on the agency’s newest earnings name, Blackstone President Jon Grey stated a bit of redemptions in January concerned unfulfilled requests from November and December.

The backlog might be resolved finally, Grey stated, with out offering a timeline.

Earlier this yr, BREIT secured a $4 billion money infusion from the College of California’s funding workplace, giving the belief a longer-term supply of capital throughout a risky time within the markets. The college later added $500 million extra to BREIT.

The business actual property market, which BREIT invests in, has been going through challenges as a surge in borrowing prices drove down values. US business property costs fell 13% in 2022, based on Inexperienced Road.

© 2023 Bloomberg L.P.

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