Blackstone Inc. announced on Wednesday that it had prevented investors from withdrawing cash from their holdings in the company’s $71 billion real estate income trust (BREIT), as the private equity giant continues to deal with an onslaught of requests for redemption.
In a letter to investors, BREIT disclosed that it had satisfied redemption requests amounting to $1.4 billion for the month of February. This figure reflects only 35 percent of the nearly $3.9 billion in total withdrawal requests for the month, the company claimed.
According to the information provided by the company, the total BREIT redemption requests in February were 26% lower than the nearly $5.3 billion that was attained in January.
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“While gross redemptions for February are consistent with prior management commentary, the overarching data continue to align with our view around decelerating retail-oriented product organic growth broadly,” analysts at Credit Suisse led by Bill Katz said in a note to investors. “The overarching data continue to align with our view around decelerating retail-oriented product organic growth broadly.”
Blackstone’s stock received an underperform rating from Credit Suisse in November, in part due of the increase in investor redemptions from BREIT. During the afternoon session of trading on Wednesday, the price of a share of Blackstone fell by 0.25% to $90.57. The price of the stock dropped by 43% throughout the course of the previous year.
Since November of the previous year, when the number of requests reached a predetermined 5% of the net asset value of BREIT, which is marketed primarily to high net worth individuals, Blackstone has been exerting its legal power to prevent investors from withdrawing their money.
In an earnings call that took place a month ago, Blackstone’s President Jonathan Gray stated that the company anticipates continuing to deal with investor redemptions due to the fact that some BREIT investors are making larger withdrawal requests in anticipation of a reduction in the size of the company.
He went on to say that the company anticipates eliminating the backlog of unfilled requests over the course of time. Returns of 8.4% were achieved by BREIT in 2022, but the publicly listed Dow Jones U.S. Select REIT Total Return Index had a decline of 26% during the same period.
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