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Last week, Blackstone Inc announced that it had once again prevented investors from withdrawing money from its real estate income trust, which is worth $70 billion. This action was taken in March due to a high number of redemption requests, which the private equity firm had been experiencing. Blackstone has been using its authority to block investor withdrawals from BREIT since November, as the number of requests surpassed 5% of the fund’s net asset value.
Blackstone Inc reported in a letter to investors that it processed $666 million in withdrawal requests for March. This amount represents only 15% of the total $4.5 billion in redemption requests made that month. Although the number of redemption requests for March was 15% higher than in February, it was 16% lower than the $5.3 billion in requests received by Blackstone in January.
While talking to the press, a spokesperson from Blackstone stated that their product, BREIT, is not a mutual fund and has never experienced a gate closure. It is a semi-liquid product and is performing according to their plans. In fact, since November 30th, BREIT has paid out almost $5 billion to shareholders who redeemed their shares.
Blackstone’s President, Jonathan Gray, mentioned during earnings call in January that the high level of withdrawal requests is expected to become normal as they work through their backlog. Blackstone’s shares were down 4.2% at $84.10, which is consistent with the overall weaker market. However, the company’s shares have gained 18.4% in the first quarter of 2023, following a 43% drop in 2022
Last year, while the Dow Jones U.S. Select REIT Index fell 29%, BREIT’s net asset value increased by 8.4%. Credit Suisse analysts, led by Bill Katz, stated in a note to investors that they are aware of the reduced forward interest rate expectations, but they think that the acceleration in gross redemptions may negatively impact the shares.
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