Earlier this month, investors in the Blackstone fund BREIT (Blackstone Real Estate Income Trust) learned that limits were being put on how much money they could pull out of the fund. Blackstone executives put the brakes on withdrawals after redemptions exceeded the fund’s quarterly limits. The move understandably made big news in the real estate industry. Launched just five years ago, the non-traded private REIT has grown to be one of the largest in the world at $69 billion, owning real estate assets in several sectors, the majority of which are multifamily properties. It has grown rapidly every year since its inception and has become massively popular with investors. Seeing so many investors of such a popular investment vehicle running for the exit set off alarm bells for many people in the industry and signaled to many that more pain would be ahead for the commercial real estate market.
Hitting the limit
Blackstone’s BREIT is available to wealthy investors through certain financial advisors. Those looking to invest must put a minimum of $2,500 into the fund as well as meet certain income and net worth requirements. The fund has a three-year annualized return rate of 15.5 percent and a distribution rate of 4.4 percent, according to Blackstone. At the beginning of December, Blackstone said the fund had hit its quarterly redemption limit because of a doubling in redemption requests for November, while subscriptions saw a substantial drop-off to less than $500 million, down from $880 million in September, according to Barclays.
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