Blackstone's $69 billion real estate fund limiting redemptions
I'm sure most of you have seen the news on BREIT, curious as to what you all think the implications will be on pricing, leasing activity, and which sectors will get hit hardest vs which ones skate by. Of course circumstances are less than ideal at the moment, but some people/sectors will weather the storm better. Want to hear about strategies, adjustments to make, and overall outlook for the coming years
[{"id": "iymqp1t", "text": "Ticker?", "replies": [{"id": "iyn0jec", "text": "It\u2019s a non traded REIT", "replies": [], "depth": 2}], "depth": 1}, {"id": "iymvu0w", "text": "I don't think we know yet.  IIRC they've done this in the past and redemptions are already rather limited per the fund terms.  Its pretty much designed to limit a sell off of their assets when fund holders have liquidity issues, so I'd say that may be working well", "replies": [{"id": "iynjzvn", "text": "According to the Barron's article I read this is the first time they've imposed any withdrawal limits.", "replies": [{"id": "iynl2jd", "text": "If you see it again link it please.  I read earlier its the first time they enforced the limit, they just have been under the cap.  I'm not educated enough about this to know for sure though", "replies": [{"id": "iynq1sg", "text": "https://www.google.com/amp/s/www.barrons.com/amp/articles/blackstone-reit-51669913002\n\nWhen funds are gated, it can spur redemption requests from jittery investors who want liquidity. Just as important, it may be difficult for Blackstone to attract new money to BREIT because potential investors could balk at putting money into a gated fund. This is the first time that BREIT has imposed any withdrawal limits.\n\nBREIT is a nontraded REIT, meaning that its shares don\u2019t trade on an exchange. Instead, Blackstone issues and redeems shares monthly based on the REIT\u2019s net asset value, which is like a stock price. Blackstone allows redemptions of 2% of the REIT\u2019s NAV each quarter and 5% per quarter.\n\nBREIT said in its letter dated Thursday that it received redemption requests for $1.8 billion, or 2.7% of NAV, in October. BREIT honored those requests in full which were above the 2% monthly limit. BREIT said it \u201cnow has received repurchase requests exceeding both the 2% of NAV monthly limit and 5% quarterly limit.\u201d As a result, BREIT is prorating redemption requests, meaning it is honoring only a portion of them.", "replies": [], "depth": 4}], "depth": 3}, {"id": "iynppjz", "text": "My understanding is that the limits were already in place as part of the fund structure, this is just the first time they are actually enforcing it. They did not  arbitrarily create a new withdrawal limit that didn\u2019t exist before this week.", "replies": [{"id": "j1p3jcv", "text": "First time they\u2019ve needed to use the limit. They\u2019ve always had more capital rolling in then being redeemed. Now they are in the opposite position. NTRs all have a limit structure similar to Blackstone\u2019s.", "replies": [], "depth": 4}], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "iymxvy6", "text": "Interested to see their performance in the next year, given the bulk of it's come through marking up their portfolio. Makes sense to rush out before the NTRs start to get forced to take some hits on those marked up assets.", "replies": [], "depth": 1}, {"id": "iyn45rz", "text": "Nice", "replies": [], "depth": 1}, {"id": "iyncnkb", "text": "Their redemption cap doesn\u2019t equate to a lot of deals. I can say on the multifamily side they have about 5 deals out now on the market across the country, not enough to move pricing. If other open ended funds are facing similar redemptions I guess it can eventually add up but there just hasn\u2019t been a whole lot of volume at all lately.", "replies": [], "depth": 1}, {"id": "iynpofm", "text": "I\u2019m not exactly sure what you\u2019re asking, are you thinking that BREIT limiting redemptions will cause some sort of macro shock? What\u2019s the question?", "replies": [{"id": "iyo01v3", "text": "Wording was iffy, more so was just saying that this news had me questioning people's views on overall market conditions. definitely dont think the redemption limit has any effect on the market, but indicated a shift in peoples mindsets", "replies": [], "depth": 2}], "depth": 1}, {"id": "iyns46x", "text": "No impact, this isn\u2019t some sort of catastrophic news. We\u2019re talking about 2% of fund which is a relatively small segment of the entire CRE market", "replies": [{"id": "iynzs85", "text": "Agreed that this wont specifically affect anything. Wording was a bit confusing, more so just thought it was emblematic of a market shift to some degree", "replies": [], "depth": 2}], "depth": 1}, {"id": "iyol87h", "text": "I wonder if Q1 redemption window stays open more than a month.  People I know raising deal by deal went from not allowing new investors to hiring capital brokers to find equity real quickly.  People with closed end funds are having to inform there investors the double digit irrs of the last 10 years are done.  Not the end of the world but don't expect recent price growth post COVID to be here any longer.", "replies": [], "depth": 1}]