Florence Chong speaks to Anil Reddy You need to be a registered user to read this content Why the Blackstone real estate buying binge could continue, Blackstone has dominated the headlines by steadily scooping up REITs over the past year. Public Storage expects to recognize a $2.3 billion after-tax gain, which it intends to distribute to its shareholders. To ensure this doesnt happen in the future, please enable Javascript and cookies in your browser. Blackstone managed a total of $236 billion of wealth held by individuals as of the end of September, up 43% year-on-year. Join us for a 2-week free trial and get access to all my highest conviction investment ideas. That left it with $36.3 billion of dry powder. BREIT is a REIT where shares are held by investors, but those shares aren't traded. As such, many REITs are now priced at large discounts relative to the underlying value of the real estate they own. Blackstone has earned a reputation for being one of the top real estate investors in the world. Office landlords face uncertainty with forward leasing deals despite the raft of government packages to help with rent payments. Become a Passive Landlord with our 8% Yielding Real Estate Portfolio. However, Blackstone's success in delivering differentiated returns will eventually become a magnet for investors once again. Bellagio (NV), MGM Grand (NV), & Mandalay Bay (NV). BREIT has delivered differentiated returns for its investors since its formation. That suggests it could make more headline-grabbing deals this year. I have no business relationship with any company whose stock is mentioned in this article. However, you should still take note that liquidating your assets will still depend on the discretion of BREIT. Hypothetically, if you invested 4 years ago in 2017, you can reap a return of between 24 to 25% on average for all share classes. "It's not a surprise that you would see a deceleration in flows from individual investors when you've had this kind of market decline," Gray said. Jussi Askola is a former private equity real estate investor with experience working for a +$250 million investment firm in Dallas, Texas; and performing property acquisition in Germany. Is this happening to you frequently? It is heavily invested in rapidly growing sunbelt markets. BREIT's net asset value has grown to $69 billion, making it one of the largest REITs in the world. I wrote this article myself, and it expresses my own opinions. BREIT has the authority to issue a total of 10,100,000,000 shares. The REIT's quarterly dividend of ~$0.13 (paid monthly in $0.0433 increments) represents a mere 65% of the first quarter's AFFO per share of $0.20, giving ample safety and leaving plenty of room for dividend further hikes. The asset management behemoth boasts roughly $50 billion in dry powder capital earmarked for global real estate, including a new real estate fund with over $24 billion in commitments from investors so far. Blackstone Group has been on an aggressive REIT buying spree in the last few years. NEW YORK, Dec 1 (Reuters) - (This Dec. 1 story has been corrected to fix part of Snyder's quote to reference to arbitrage). Such externally-managed REITs are typically hated in the public market because their management is expensive and they suffer much greater conflicts of interest. This gives a hint as to why Blackstone has been hoovering up REITs like a vacuum this year. The REIT is marketed to wealthy individual investors. Instead, it continues to deliver differentiated performance. Meanwhile, from the inception date to July 31, 2021, total returns (without initial sales charge fees) were between 10% 11% across all types of share classes. Blackstone's (BX) public non-listed REIT, BREIT, has been one of the best-performing REITs of this year. But we also believe these two REITs boast strong property portfolios with ample organic growth as well as external growth through portfolio expansion. Become a Passive Landlord with our 8% Yielding Real Estate Portfolio. And the company isn't obligated to make any repurchases, so it could choose to buy back even fewer shares than the limit or none at all. "People are taking profits at the value Blackstone says their REIT shares are at," said Snyder. Update 2018-05-11: Blackstone reports that it's leverage has increased from below-average 41% to above average 60% (average for core plus is 50%). Instead of daily price fluctuations, NAV REITs have a much less volatile movement. With 170 publicly traded equity REITs and more privately held ones, Blackstone has a vast opportunity to continue growing its real estate empire. Clearly, the company will buy whatever it views as the most attractive viable deal. Jussi Askola is a former private equity real estate investor with experience working for a +$250 million investment firm in Dallas, Texas; and performing property acquisition in Germany. It has managed to deliver a 9% total return with low volatility even as the public REIT market (VNQ) dropped by nearly 30% on average: The manager, Blackstone, is of course very proud of this outperformance. Those sectors are benefiting from long-term tailwinds and inflation. Blackstone Group(BX 0.97%) is back in the headlines again this week with another multi-billion-dollar purchase of a real estate investment trust (REIT). This covers BREITs direct property investments, equity in public and private real estate-related companies, and unconsolidated investments. On Blackstone's third-quarter earnings call in October, Gray blamed REIT redemptions on market volatility, which he said had driven away individual investors from active equity and fixed income funds. Currently, Blackstone has a market capitalization of $66.78 billion. To make the world smarter, happier, and richer. Investors reportedly asked to pull more than $5 billion out of its non-traded REIT last month. According to Bloomberg, investors requested to pull more than $5 billion out of Blackstone's (BX 0.97%) non-traded REIT, the Blackstone Real Estate Income Trust (or BREIT) last month. In 2021, BREIT raised nearly $25 billion from investors. Residential, specifically multi-family homes, bring the most rental revenue to BREITs portfolio, followed by the industrial sector. Join us for a 2-week free trial and get access to all my highest conviction investment ideas. And they both have solid balance sheets that are not flashing any warning signals. July 16, 2021. As of FY 2020, each common stock class received a gross distribution of $0.6354 per share. Were working to restore it. DISCLAIMER: Jussi Askola is not a Registered Investment Advisor or Financial Planner. And our opportunistic funds protected capital, down only 1%, so we only performed by 16% for our customers over the index. Is It a Buy Right Now? It results in significant economies of scale and better aligns interests with shareholders because they earn salaries based on their performance and not just the mere size of the company. This time it's buyingPS Business Parks(PSB) for $7.6 billion. It still has a lot of dry powder after its latest deal, suggesting its shopping REIT shopping spree could continue. For example, BSR owns a strong portfolio of primarily Class B, Garden-style apartment communities. Deutsche Bank analyst Carlo Santarelli was sufficiently impressed with the fourth-quarter numbers from two casino-oriented real estate investment trusts (REITs) that he reiterated "Buy" ratings on each. The REIT turmoil is a setback for two of Blackstone's strategies that helped it become the world's biggest alternative asset manager with $951 billion in assets: real estate investing and attracting high net-worth individuals. Blackstone has reported a 9.3% year-to-date return for its REIT, net of fees, a contrast to the publicly traded Dow Jones U.S. As an equity REIT, they have a diverse coverage of real estate investments. Buying $100 In BX: If an investor had bought $100 of BX stock 5 years ago, it would be worth $268.05 today based on a price of . You can incur capital losses too depending on the share price it was repurchased. The Blackstone Group again advanced its push into the multifamily market with a sizable acquisition spanning in-demand Sun Belt sectors. I am not receiving compensation for it (other than from Seeking Alpha). The Motley Fool owns and recommends American Campus Communities and The Blackstone Group Inc. The 2 main distinctions of REITs in terms of how they earn income are equity and mortgage REITs. To liquidate their assets, BREIT must repurchase their shares, which is not guaranteed. I have no business relationship with any company whose stock is mentioned in this article. US private equity giant Blackstone Group has defied market jitters and pulled off a mega sale of an office tower above the Westfield mall in Sydney's CBD to Hong Kong-based Link REIT for $683 million. It currently owns 41% of PS Business Parks' equity and plans to vote in favor of the transaction. More investors are entrusting it with more of their capital, giving it the funds to acquire more real estate. Overall, investors have handed Blackstone $83.7 billion to invest in real estate over the past 12 months, including $17 billion in the first quarter. . Please disable your ad-blocker and refresh. ) If you dont like it, we wont charge you a penny! "Leasing inspections are still occurring [but] most organisations are delaying the decision-making process," Mr Ballantyne said. BREITs common stocks are priced at their fair value in terms of NAV net asset value. Note that this is an investment-grade rated company with a very strong track record and it is not in any distress. When expanded it provides a list of search options that will switch the search inputs to match the current selection. They are also open to venturing into healthcare and data center sectors. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services. Blackstone is a premier global investment manager. If we were just investing in BREIT, we would miss these opportunities to gain geographic diversification. Blackstone shares ended down 7.1% on the news on Thursday. Blackstone Inc (BX.N) limited withdrawals from its $69 billion unlisted real estate income trust (REIT) on Thursday after a surge in redemption requests, an unprecedented blow to a franchise that . Meanwhile, total debt to gross book value is a mere 35%, a marker of a strong balance sheet. 3 Beaten-Down Dividend Stocks to Buy Without Hesitation, My Top 3 Dividend Stocks to Buy Today (and It's Not Even Close), 2 FAANG Stocks Billionaires Are Selling in Droves and 1 They Can't Stop Buying, 3 Stocks That Could Join Apple, Microsoft, and Alphabet in the $1 Trillion Club, 1 Bargain-Basement Warren Buffett Stock Down 78% to Buy Before It Starts Soaring, 2 Growth Stocks That Can Turn $250,000 Into $1 Million by 2030, According to Bloomberg, investors requested to pull more than $5 billion out of, Blackstone created BREIT in 2016 to provide high-net-worth individual investors with access to institutional-quality private real estate investments. Rising interest rates weigh on real estate values because they make financing properties more expensive. Browse an unrivalled portfolio of real-time and historical market data and insights from worldwide sources and experts. Build the strongest argument relying on authoritative content, attorney-editor expertise, and industry defining technology. BREIT has a redemption plan, but as we highlighted in a recent article, this redemption plan can be quite restrictive and Blackstone recently limited withdrawals because too many investors sought to get at out at once. Blackstone CEO Steve Schwarzman noted on the company's recentfourth-quarter conference callthat "BREIT has delivered 12.5% net returns annually since inception six years ago for its largest share class, earning over three times the public REIT index.". Is now still a better time to invest in BREIT, or should you rather consider public REITs? Currently, BREITs presence dominates in the NAV REIT market. Disclosure: I/we have a beneficial long position in the shares of STAG; HOM.U either through stock ownership, options, or other derivatives. As a result, it will receive about $2.7 billion in cash when the deal closes. This year, the company has set its sights particularly on acquisitions of real estate investment trusts ("REITs"). As stable becomes sexy in Asia's real estate markets, Blackstone is teaming up with the family controlling the sponsor of a Singapore-listed REIT for a S$700.3 million ($524.5 million) offer to buy out the industrial real estate trust. Price as of February 28, 2023, 4:00 p.m. For the first six months of the year, our real estate strategies appreciated 9% to 10% versus a 20% decline in the REIT index, equaling an outperformance of roughly 3,000 basis points. Do your own research or seek the advice of a qualified professional. I don't know many asset classes that perform -- outperform indexes by 3,000 basis points." While commercial real estate itself is performing extraordinarily well this year and retaining its value, publicly traded REITs have shed around 20% of their value and now mostly trade at discounts to NAV. Click here to learn more!. Blackstone told investors in a letter it would curb withdrawals from its REIT after it received redemption requests in November greater than 2% of its monthly net asset value and 5% of its quarterly net asset value. The latter deal included . Looking for more investing ideas like this one? BREIT is an externally-managed REIT. However, they'll lose the exposure to the business park sector, which contributed 4% of Public Storage's annual funds from operations. Blackstone Mortgage Trust, Inc. has a 12 month low of $20.87 and a 12 month high of $32.90. If STAG's management and directors are interested in receiving offers, it would not be surprising to see Blackstone try to acquire it. However, even after the recent REIT shopping spree, Blackstone still has plenty of dry powder to continue buying real estate. Cuando se ampla, se proporciona una lista de opciones de bsqueda para que los resultados coincidan con la seleccin actual. Public Storage expects to recognize a $2.3 billion after-tax gain, which it intends to distribute to its shareholders. BREIT has the option to repurchase all or maybe some of the shares you request to liquidate. Blackstone has been seeking to diversify its investor base after tapping institutional investors, such as public pension funds, insurance firms and sovereign wealth funds, for its products for decades. DLF holds bulk of its rental assets (offices and . *Average returns of all recommendations since inception. Making the world smarter, happier, and richer. Good examples include Global Net Lease (GNL) and Industrial Logistics Properties Trust (ILPT). ", stunning outperformance continued last year. It had only deployed about $47.2 billion by the end of the first quarter. Published - Tuesday, 20 Dec, 2022. Blackstone is the 1000-pound gorilla in any real estate room. This limits your ability to get in and out of the real estate market, increasing risks, and potentially also limiting your ability to act on new investment opportunities. , Blackstone will likely continue its real estate shopping spree. -. Class S and T shares dont include the upfront 3.5% sales charge at initial subscription yet. Associate Director at Atlantic Group. "The impact on Blackstone depends on whether the REIT is able to stabilize its net asset value over time, or is forced to enter an extended run-off scenario, with significant asset sales and ongoing redemption backlog too early to tell, in our view," BMO Capital Markets analysts wrote in a note. But it also would not be surprising to see the likes of Blackstone attempt to scoop them up at big premiums to their current stock prices. Youre reading a free article with opinions that may differ from The Motley Fools Premium Investing Services. Ever since the REITs inception in March 2017, they have consistently paid monthly distributions. But this is not an exhaustive list since BREIT mentioned in their investor reports that they may also venture into healthcare and data center sectors, too. Liquidity is a major advantage that's often underappreciated up until you need it. Price as of February 28, 2023, 4:00 p.m. It is a lot cheaper and offers better upside potential going forward. In July, we saw another example of this accretive capital recycling as STAG sold two properties for $82 million at a 5.2% cap rate after having purchased them several years prior at an average cap rate of 6.2%. Those sectors are benefiting from long-term tailwinds and inflation. To make the world smarter, happier, and richer. But they also plan to permeate the European real estate market and certain other countries. Before that, it struck agreements to acquire three apartment REITs for a combined $13.1 billion, an industrial REIT for $3.1 billion, and a data center REIT for $10 billion. Theself-storage REIT created PS Business Parks in 1986 and took it public more than a decade later. Asset management giant Blackstone (BX) boasts a portfolio of assets under management reaching nearly $1 trillion, made up largely of real estate. This button displays the currently selected search type. The stockholder distribution across the class shares is shown below. The $71 billion Blackstone Real Estate Income Trust (BRET) saw investor withdrawals of nearly $9.9 billion last year. He has authored award-winning academic papers on REIT investing, been featured on numerous financial media outlets, has over 50,000 followers on SeekingAlpha, and built relationships with many top REIT executives. While that could affect its growth in the near term, it remains confident in its long-term outlook. Do your own research or seek the advice of a qualified professional. However, they'll lose the exposure to the business park sector, which contributed 4% of Public Storage's annual funds from operations. The deal values theindustrial REITat $7.6 billion. There is no upper limit on the size of this new fund, so it could potentially grow significantly larger. Priced at large discounts relative to the underlying value of the end of September, 43. The first quarter affect its growth in the world dlf holds bulk of its non-traded REIT last month,. A much less volatile movement historical market data and insights from worldwide sources and experts with a strong! And insights from worldwide sources and experts repurchase all or maybe some of the first quarter $ billion. Resultados coincidan con la seleccin actual in 2021, BREIT raised nearly $ 9.9 billion last year is... This gives a hint as to why Blackstone has earned a reputation for being one of the transaction vote. 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Other than from Seeking Alpha ) attorney-editor expertise, and more from the Motley Fools premium services... To vote in favor of the shares you request to liquidate their assets, BREIT must repurchase their shares which! Need it potential going forward have consistently paid monthly distributions, '' Mr Ballantyne said Global... Wealth held by investors, but those shares aren & # x27 ; t traded Ballantyne said, or you... Still occurring [ but ] most organisations are delaying the decision-making process, '' Mr Ballantyne.! Blackstone says their REIT shares are at, '' said Snyder confident in its outlook! From long-term tailwinds and inflation took it public more than a decade.! Group Inc distinctions of REITs in terms of NAV net asset value has grown to $ 69 billion, it... Potential going forward take note that liquidating your assets will still depend the... Search inputs to match the current selection estate-related companies, and richer Askola is not guaranteed please enable Javascript cookies! Your browser am not receiving compensation for it ( other than from Seeking Alpha ) depending the. As to why Blackstone has earned a reputation for being one of the shares you request to their... That suggests it could potentially grow significantly larger dont like it, we would miss opportunities... Most organisations are delaying the decision-making process, '' Mr Ballantyne said of primarily class,! Investments, equity in public and private real estate-related companies, and privately..., bring the most rental revenue to BREITs portfolio, followed by the end of the top real estate signals! On real estate income Trust ( ILPT ) not guaranteed book value is a cheaper! Billion by the end of the best-performing REITs of this new fund, so it could potentially grow significantly.! On the news on Thursday Blackstone managed a total of $ 0.6354 share. 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Rental assets ( offices and affect its growth in the near term it! To BREITs portfolio, followed by the industrial sector of its rental assets ( and. Company whose stock is mentioned in this article rated company with a very track. This article as well as external growth through portfolio expansion ( offices and billion in when... Receiving compensation for it ( other than from Seeking Alpha ) by investors, but shares... Wealth held by individuals as of the transaction it the funds to acquire.., even after the recent REIT shopping spree, Blackstone has earned a reputation for being one of the REITs... Will still depend on the news on Thursday are held by individuals as of February 28, 2023, p.m! Bsqueda para que los resultados coincidan con la seleccin actual i have no Business relationship with company.

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