Blackstone has limited withdrawals from its $125 billion real estate investment fund following a surge in redemption requests, as investors clamor to get their hands on cash and concerns grow about the long-term health of the commercial property market.
The private equity group approved only 43% of redemption requests in its Blackstone Real Estate Income Trust fund in November, according to a notice it sent to investors on Thursday. Shares in Blackstone fell as much as 8%. The withdrawal limit underscores the risks wealthy individuals have taken by investing in Blackstone’s mammoth private real estate fund, which — after accounting for debt — owns $69 billion in net assets, spanning logistics facilities, apartment buildings, casinos, and medical office parks.
Analysts at JP Morgan said that part of “the allure for BREIT had been the availability of monthly liquidity” but with redemptions capped they envisioned “advisors thinking twice before allocating new capital to the fund”.
“Furthermore, we see the velvet rope now limiting redemptions possibly if not likely driving more investors to ask for more of their money back. What may be a bit more concerning is that performance does not appear to be directly driving outflows given returns are up roughly 9% through October.
Source: Financial Times