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Blackstone Real Estate Income Trust (BREIT) (NYSE:BX) said Thursday that it has been facing withdrawal requests exceeding its quarterly limit.
As a result, the firm said it will need to limit repurchase requests, so it does not exceed the repurchase structure that was designed to prevent a liquidity mismatch and maximize long-term shareholder value.
Following the news, Evercore ISI said the pick-up in BREIT redemption requests is hurting Blackstone.
“Blackstone released a notice to BREIT shareholders that BREIT redemption requests have picked up and that Blackstone will be repurchasing ~$3bn so far in the quarter (for October and November) and, going forward, Blackstone will stick to the 2% of NAV monthly limit or 5% of NAV quarterly limit repurchases. If you do the math on the current ~$69bn of NAV, that equates to a maximum repurchase of ~$3.45bn per quarter,” wrote the analysts.
“We think this is a unique case as investors may be having some concerns about the real estate market and selling a strong performing product (9.3% YTD return, 4.4% pre-tax yield or 6.9% tax-equivalent annualized distribution rate, 15.5% 3-year annualized return) for liquidity & fears of what higher rates mean to housing & the economy. Our sense is most of the repurchase requests are coming from non-U.S. investors as the strong dollar is playing a role here too,” they added.
Elsewhere, BMO Capital Markets analysts stated they expect investors will reassess the multiple they place on Blackstone earnings from more procyclical Retail Alts products.
“We are surprised that BREIT is limiting redemptions at this point, given recent comments around liquidity levels/other flexibility. In the near term we expect BREIT inflows to drop to essentially zero, while there will presumably be a significant increase in new redemption requests, which will only be filled on a prorated basis. This naturally creates a backlog of redemption requests that we expect will take a number of quarters to be digested,” they wrote.
Blackstone shares are down over 6% so far Thursday.
