Blackstone REIT Redemptions Decline to 5-Month Lows

For the 11th straight month in September, Blackstone’s Blackstone Real Estate Income Trust (BREIT) received limited investor redemption requests from its $67 billion real estate trust for high-net-worth investors.

According to a letter received by Bloomberg, BREIT recorded $2.1 billion in investor outflows in September, which was 28% less than the amount sought in August. The good news is that withdrawal requests have dropped to their lowest level since October 2022.

However, BREIT only delivered $625 million, or approximately 29% of the requested amount, as the real estate trust continues to gate redemptions to limit outflows.

Approximately 80% of the BREIT fund is invested in rental housing, industrial, and data centers. BREIT restricted withdrawals in late 2022 when redemption demands increased and affluent individuals got concerned about having money tied up.

“A shareholder who began submitting repurchase requests when proration began has received approximately 97% of their money back and the semi-liquid structure is working as intended,” BREIT said in the letter.

Meanwhile, Morgan Stanley expects commercial real estate office prices to fall 27.4% from peak to trough in 18 to 24 months this cycle, similar to the 34.9% drop in 34 months during the Great Financial Crisis, with drops ranging from 15% for apartments to a stunning 40% for office.