Blackstone’s BREIT, the UC System’s New Investment Darling, Faces Scrutiny

Everybody likes to talk about Blackstone, especially when it’s less-than-positive news about the world’s largest private REIT. This was the case with the release of Blackstone’s first quarter 2023 earnings report. The REIT’s Class 1 shares recorded a negative net return of 0.5 percent, belying the fact that BREIT has yielded an annual 12 percent net returns since its establishment as a REIT in 2017. It turns out, no one is impervious to the consequences of economic uncertainty and market turmoil. Excluding the $4.5 billion commitment from the University of California System, Blackstone reported $1 billion in capital raised in its non-listed BREIT in the first quarter of 2023, which is down compared to $2 billion of inflows in the fourth quarter of 2022.  When the big kid on the block logs lackluster numbers, everyone wants to know why.  

BREIT, which predominantly invests in stabilized income-generating commercial real estate across the United States, has come a long way in a short time. While one might assume a gargantuan player like BREIT would be limited to institutional investors, such is not the case. BREIT only requires a minimum initial investment of just $2,500, and its suitability standards call for an investor to have a minimum net worth of $250,000 or a gross annual income of at least $70,000. After an offering of up to $5 billion in shares of common stock in 2016, by the close of 2018 (a year after the company had elected to be taxed as a REIT) the

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