News that New York City–based Blackstone was limiting withdrawals from its $69 billion Blackstone Real Estate Income Trust, also known as BREIT, flooded the financial press last week and led many multifamily executives and analysts to wonder if some of the apartment units that the private REIT collected over the past couple of years might come back on the market.
“I think the biggest concern is the amount of assets that may hit the market and what that may do to asset values,” said Haendel St. Juste, managing director of REITs for investment bank Mizuho Securities. “I don’t think Blackstone is a distressed seller, but what does that do to the market?”
Blackstone limited withdrawals after redemption requests exceeded previous set limits, according to press reports. At the same time, subscription requests dropped. In an interview with CNBC, Blackstone President and Chief Operating Officer Jon Gray said that investors knew BREIT had limits on redemptions.
Gray described the REIT as “semi-liquid” because the firm knew there would be volatility and didn’t want to sell “at the wrong time under pressure.” However, he did leave open the possibility of selling assets to meet redemptions, though it could do it over a time horizon that is “beneficial.”
Although Gray said that the company may need to sell assets to meet redemptions, many signals still point to a firm committed to rental housing.
For instance, a company spokesperson told Multifamily Dive in an email that “BREIT is structured to never be a forced seller of assets.”
What’s more, BREIT is only one of Blackstone’s vehicles for acquiring apartments. Earlier this year, the firm raised roughly $30 billion for the latest version of its real estate fund — Blackstone Real Estate Partners X.
Blackstone’s interest in rental housing was reaffirmed on Dec. 1 when it entered into an agreement to sell its 49.9% interest in MGM Grand Las Vegas and Mandalay Bay Resort for $1.27 billion to New York City–based VICI Properties, which owns 50.1% of the properties.
“The sale of these assets is an excellent outcome for our BREIT investors and enables us to further concentrate BREIT’s portfolio in its highest growth sectors, including logistics and rental housing,” said Scott Trebilco, senior managing director of Blackstone Real Estate, in a press release announcing the sale.
A major player
Over the past couple of years, BREIT has been an apartment acquisition powerhouse.
In 2021, BREIT ranked as the No. 1 buyer of apartments with more than $10 billion in purchases, according to information shared with Multifamily Dive from MSCI Real Assets, a New York–based firm that provides tools and services for the global investment community. But it didn’t stop there. Blackstone’s non-REIT buying activity came in second.
BREIT’s activity surpassed non-traded REITs, including Starwood’s SREIT vehicle, which came in third. In all, non-traded REITs bought a record $213.9 billion of U.S. apartment buildings last year, according to MSCI.
Recent BREIT deals include:
- December 2021: BREIT bought a $5.1 billion portfolio of affordable housing from AIG.
- May 2022: BREIT bought Resource REIT for $3.7 billion.
- June 2022: BREIT purchased Preferred Apartment Communities for $5.8 billion.
- August 2022: BREIT, along with other company funds, closed the acquisition of Austin, Texas–based American Campus Communities in a $13 billion deal.
Kathleen McCarthy, global co-head of Blackstone Real Estate, said during the opening session of the Urban Land Institute’s annual fall meeting that increasing obstacles to homeownership could bode well for apartments.
“What’s happening in the for-sale market in terms of the upward cost and ownership is really driving more demand for rental housing in all forms,” McCarthy said.
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