Blackstone's retail-oriented real estate fund, the Blackstone Real Estate Income Trust (Breit), has limited withdrawals by investors for the ninth consecutive month, as it grapples with a significant number of cash-out requests.
In July, Breit received redemption requests totaling $3.7 billion and paid out 34% of that amount, equivalent to $1.3 billion, to investors. The fund restricts monthly redemptions to 2% of its net asset value and 5% per quarter.
Although the redemption requests in July decreased slightly compared to June's $3.8 billion, they were still the lowest recorded this year. The highest volume of redemption requests occurred in January at $5.3 billion, and even though Breit has paid out $9.4 billion to investors since implementing withdrawal limits in November, the amount of requests remains substantial.
Breit stated that the "semi-liquid structure" of the fund is functioning as intended, with one shareholder already receiving approximately 94% of their money back. Since Breit shares are not publicly traded, investors rely on the fund to facilitate redemptions.
The limitation on withdrawals is designed to safeguard Breit's investor base by preventing wholesale asset sales in response to redemption requests. Breit currently holds a portfolio consisting of $122 billion in assets, mainly concentrated in the Sunbelt region, and focuses on apartments and warehouses, which are considered to be strong sectors in the commercial real estate market. However, these types of assets can be difficult to sell quickly when investors seek immediate cash.
Breit has reported a cash flow growth of over 7% in the first half of this year. As of June, the fund has generated a year-to-date return of 1.3% based on its largest share class and an annualized return of 11.7% since its establishment in 2017.
Blackstone's stock (ticker: BR) saw a marginal increase of 0.2% on Tuesday, reaching $104.96. Although the shares have experienced a significant rise of over 40% this year, they remain below their peak of approximately $150 in late 2021.
Breit serves as Blackstone's flagship retail product and experienced rapid growth in 2021 and part of 2022. However, it has recently encountered a plateau as withdrawal requests escalated in late 2022.