February 4, 2023

Raven Tribune

Complete News World

Blackstone boss defends real estate fund amid rush to cash out

Blackstone boss defends real estate fund amid rush to cash out

The company’s chairman said Thursday that investors worried about real estate investment confidence in Blackstone should view it as a well-positioned long-term vehicle for the future.

Black stone He has been heavily criticized over the past week To reduce withdrawals From the $69 billion private REIT, the Blackstone Real Estate Income Trust (BREIT). This move followed refund requests that exceeded pre-set limits. The company’s stock has fallen 8% over the past five days amid controversy involving Barclays downgrading the alternative investment firm.

John Gray, Blackstone’s president and chief operating officer, defended the situation and structure, noting that investors know BREIT has limitations on redemptions.

“We built the product with liquidity restrictions in place,” Gray told CNBC. David Faber during livewhoop in the street“an interview”. We called it semi-liquid because we knew at some point that there was going to be a period of volatility, and we didn’t want to sell assets at the wrong time under pressure.

In return for their patience, investors benefited from a fund that Gray said delivered compound returns of 13% for six years in a challenging environment.

Publicly traded REITs have come under fire this year amid an environment of rising interest rates that have hit the real estate market in particular, raising questions about the actual values ​​of properties in private funds such as Blackstone BREIT. The $35 billion Al-Talia Real Estate ETFfor example, is down 26% year-to-date.

“The main idea here is performance delivered and the chassis we put in works exactly as we aimed six years ago, and we’re incredibly proud of the performance and the chassis,” said Gray.

See also  Elon Musk-funded XPRIZE Decarbonization Contest reveals 15 winners of 'Achievement Round'

Investors should “look at Blackstone and say, ‘You’ve done a great job of deploying our capital in just the right geography, in just the right sectors with the right balance sheet,'” he added. “I think they trust us.”

However, the fund was hit by a doubling of redemption requests for the month of November, while subscriptions saw a significant drop, to less than half a billion dollars from $880 million in September, according to Barclays.

Gray said the company could sell assets to meet redemptions but could do so over a period of time that would be advantageous.

“We can sell if necessary,” he said. “That gives us a lot of confidence.”

Blackstone shares rose about 2% in early trading Thursday after the interview.