Blackstone Bank Run Continues Real Cap Daily #36

Back in December I reported on a run on Blackstone with an unusual amount of redemption requests from its BREIT. Those redemption requests have continued through the beginning of this year.

BREIT is a non-traded REIT. It offers a generally large return, 12.3% annually as a semi-liquid product not traded on public exchanges. Per the previous video, BREIT had a series of redemption requests that capped the allowable paid through December. BREIT limits its redemption requests to 2% of net asset value monthly, and 5% quarterly. Currently it is a $70 billion fund, so $3.5 billion per quarter allowed. The company received $4.5 billion in requests in March, $3.9 billion in February. The company only redeemed 15% of March’s redemption requests.

Why not redeem more? Real estate is not a liquid asset such as cash or stocks. This prevents the forced sale of assets. However, most of the redemption requests are coming from wealthy individuals from overseas. BREIT did raise $14 billion with $4.5 billion coming from the University of California. However, in a letter from BRIET, unfulfilled redemption requests are not carried over to the next month. So investors are having to refile their requests each month. Other REITS are also experiencing a bombardment of redemption requests from foreign investors.

What are your thoughts on the state of commercial real estate? Please post your comments below. As always, if you need help buying selling or investing in real estate, please reach out. My team is ready to help.