Blackstone chief defends real estate fund amid rush for withdrawals

Blackstone chief defends real estate fund amid rush for withdrawals

Buyers nervous about Blackstone’s actual property funding belief ought to view it as a long-term car that is properly positioned for the longer term, the agency’s president stated Thursday.

Blackstone has taken warmth over the previous week for limiting withdrawals from the $69 billion personal REIT, the Blackstone Actual Property Revenue Belief, or BREIT. That transfer adopted redemption requests that exceeded beforehand set limits. The corporate’s inventory has fallen 8% over the previous 5 days amid an argument that included a Barclays downgrade of the choice funding agency.

Blackstone President and Chief Working Officer Jon Grey defended the positioning and construction, noting that buyers knew BREIT had limits on redemptions.

“We arrange the product with limitations on liquidity,” Grey informed CNBC’s David Faber throughout a stay “Squawk on the Street” interview. “We described it as semi-liquid as a result of we knew sooner or later there could be a interval of volatility, and we did not need to promote belongings on the fallacious time beneath stress.”

In alternate for his or her endurance, buyers have benefited from a fund that Grey stated has delivered 13% compounded returns for six years in a difficult atmosphere.

Publicly traded REITs have gotten slammed this yr amid a rising rate of interest atmosphere that has hit the true property market particularly exhausting, elevating questions concerning the precise values of holdings in personal funds equivalent to Blackstone’s BREIT. The $35 billion Vanguard Real Estate ETF, for instance, has tumbled 26% yr to this point.

“The important thing theme right here is that efficiency has delivered and the construction we put in place is working precisely as we supposed six years in the past, and we’re extremely happy with the efficiency and the construction,” Grey stated.

Buyers ought to “take a look at Blackstone and say, ‘You guys have executed an unbelievable job at deploying our capital in precisely the fitting geography, in precisely the fitting sectors with the fitting stability sheet,'” he added. “I feel they’ve confidence in us.”

But the fund was hit by a doubling in redemption requests for November whereas subscriptions noticed a considerable drop-off, to lower than half a billion {dollars} from $880 million in September, in keeping with Barclays.

Grey stated the agency can promote belongings to satisfy redemptions however can achieve this over a time horizon that will probably be helpful.

“We will promote if wanted,” he stated. “That is what provides us loads of confidence.”

Blackstone shares rose about 2% in early buying and selling Thursday following the interview.

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