(Bloomberg)—Blackstone Inc.’s $69 billion real estate trust hit a monthly redemption limit in January, as the firm’s crown jewel continues to wrestle with a line of investors seeking to get money out.
Blackstone Real Estate Income Trust told investors Wednesday that it fulfilled repurchase requests for 2% of its net asset value. That accounted for about 25% of what investors wanted to pull out, according to a letter. January repurchase requests were north of $5 billion, according to Bloomberg calculations.
Blackstone built BREIT into a massive real estate trust owning properties from Las Vegas’s lavish Bellagio hotel and casino to student housing and storage centers. Its success helped expand the private equity firm’s reach with rich individuals.
But the trust faced challenges last year as more investors sought to pull money out, given volatile markets. BREIT hit redemption limits toward the end of last year, causing it to restrict how much investors could take out in December.
Executives have reiterated their support for BREIT in recent months, with Blackstone Chief Executive Officer Steve Schwarzman previously saying the firm is committed to bringing its expertise to individual investors.
“We remain confident that BREIT’s portfolio can deliver strong performance and a tax-advantaged distribution yield,” BREIT said in the letter Wednesday. “We believe we have selected the right sectors and geographies and positioned our balance sheet to continue to produce meaningful cash-flow growth.”
In response to analysts’ questions on the firm’s latest earnings call, Blackstone President Jon Gray said a chunk of redemptions in January involved unfulfilled requests from November and December.
The backlog will be resolved eventually, Gray said, without providing a timeline.
Earlier this year, BREIT secured a $4 billion cash infusion from the University of California’s investment office, giving the trust a longer-term source of capital during a volatile time in the markets. The university later added $500 million more to BREIT.
The commercial real estate market, which BREIT invests in, has been facing challenges as a surge in borrowing costs drove down values. US commercial property prices fell 13% in 2022, according to Green Street.
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