Their corporate headquarters is located at 345 Park Avenue, New York. Select REIT Total Return Index (.DWRTFT) 22.19% decline over the same period. With dividends reinvested, the benchmark SPDR S&P 500 ETF (ticker: SPY) lost 18.2% last . While it has steadily put that money to work, cash continues flowing into BREIT's coffers because of its growing reputation for delivering top-tier returns. For FY 2020, Class I shares were still the highest ($0.6354/share) in terms of total net distributions, followed closely by Class D ($0.608/share). The sale was part of Blackstone's acquisition of the Scentre Group office portfolio in August 2019 and Link's financing was completed late last week. I have no business relationship with any company whose stock is mentioned in this article. I wrote this article myself, and it expresses my own opinions. They have outperformed the MSCI U.S. REIT Index which generated only -7.6%. Click here to learn more!. Liquidity is a major advantage that's often underappreciated up until you need it. Sarah Borchersen-Keto. These cash reserves totaled $2.7 billion as of the end of October, according to its prospectus. Ultimately, private REITs pool investors' capital and purchase various properties based on the fund's mandate. Funds controlled by Stephen . For instance, in the first quarter of this year, cash same-store net operating income grew 4.8%, while the REIT has guided for same-store NOI to grow 4-5% for the full year. Their recent property acquisitions recorded as of June 2021 were 15 investments 17 residential properties, 28 industrial properties, and 1 office property amounting to $2.1B. Even if Blackstone does not acquire BSR or STAG, we think both REITs will perform well in the future. Published - Tuesday, 20 Dec, 2022. This time it's buying PS Business Parks . Blackstone claims that its REIT is superior to others. Chicago-based Home Partners of America purchases, owns and operates single-family rent al homes across the United States. Those returns will eventually draw more investors to BREIT. Reuters, the news and media division of Thomson Reuters, is the worlds largest multimedia news provider, reaching billions of people worldwide every day. It was bought on a sharp yield of close to 4 per cent. At $16.50 per share (as of this writing), BSR trades at a remarkable 25% discount to its Q1 2022 NAV per share of $21.98. Blackstone Real Estate Income Trust Inc., a publicly registered non-traded real estate investment trust sponsored by private equity giant Blackstone (NYSE: BX), has agreed to purchase American International Group Inc.'s (NYSE: AIG) interests in a U.S. affordable housing portfolio for approximately $5.1 billion, in an all-cash . As a mortgage REIT, they have real estate debt investments through commercial and residential mortgage-backed securities. BREIT is a SEC-registered REIT since 2017. That was almost 70% of all the capital raised by non-traded REITs that year. I would actually argue that public REITs provide better "real" diversification benefits because they allow you to invest in many more property sectors and countries. But I think that public REITs are today far more opportunistic than BREIT. It invests in real estate properties across 8 sectors and real estate debt through mortgage-backed securities and other real estate-related loans. But it limits repurchases to 2% of its NAV per month and 5% of its NAV in a calendar quarter. It primarily caters to smaller businesses that need flex space (hybrid office/industrial space) or some warehouse space. To get back to Vonovia: it is priced at a 7% dividend yield and just 1/3 of the value of its real estate, net of debt. Herbert Smith Freehills, JLL and Cushman & Wakefield advised on the sale. As a result, the REIT allowed investors in November to redeem $1.3 billion, equivalent to approximately 43% of investors' repurchase requests. As of FY 2020, BREITs real estate debt investments consist of 194 investments in CMBS, 15 investments in RMBS, 10 corporate bond investments, and 9 real estate loans. Please disable your ad-blocker and refresh. Looking for more investing ideas like this one? Managing more than $975 billion, the company invests money for wealthy . Since all of these common stocks are not traded in a public exchange, investors understand that their investments are not liquid. I am not receiving compensation for it (other than from Seeking Alpha). 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. Public REITs are liquid and naturally, this will result in some volatility, but at least, you are not lying to yourself, thinking that something isn't volatile just because it isn't traded. Get them exclusively at High Yield Landlord. Tombol ini menampilkan jenis pencarian yang dipilih saat ini. Last but not least, since REITs are today priced at large discounts to fair value, they also pay a higher yield and offer a lot greater upside potential. Last REIT standing. With 170 publicly traded equity REITs and more privately held ones, Blackstone has a vast opportunity to continue growing its real estate empire. Blackstone Inc. agreed to buy student-housing owner American Campus Communities Inc. in a deal valuing the company at about $12.8 billion, including debt, a bet that rents will continue to rise as . Select REIT Total Return Index 22.19% decline over the same period. Blackstone's purchase of American Campus makes student housing a fully privately held asset class in the US. The trust's managers said last month they were reviewing options after receiving an unsolicited expression of interest to buy out all its stapled securities. Instead of daily price fluctuations, NAV REITs have a much less volatile movement. If we were just investing in BREIT, we would miss these opportunities to gain geographic diversification. Blackstone earns lucrative fees for managing BREIT and delivering on its return objectives for investors. Please try again later. Even Blackstone's COO indirectly told us in the Q2 conference call that public REITs are a lot more opportunistic today: "The best opportunities today are clearly in the public markets on the screen and that's where we're spending a lot of time.". Private equity giant Blackstone Group plans to purchase 66 residential complexes in San Diego County for more than $1 billion in one of the biggest real estate transactions in local history. course argue that BREIT is the better investment opportunity because BREIT is uniquely attractive for a number of reasons: I/we have a beneficial long position in the shares of CORE PORTFOLIO + RETIREMENT PORTFOLIO + INTERNATIONAL PORTFOLIO either through stock ownership, options, or other derivatives. Many investors in the REIT are concerned that Blackstone has been slow to adjust the vehicle's valuation to that of publicly traded REITs that have taken a hit amid rising interest rates, a source close to the fund said. BREITs common stocks are priced at their fair value in terms of NAV net asset value. On Thursday, the firm said the REIT had agreed to sell its 49.9% interest in two Las Vegas casinos for $1.27 billion. Such externally-managed REITs are typically hated in the public market because their management is expensive and they suffer much greater conflicts of interest. And apparently this is the new target. For example, Blackstone provides the option to repurchase shares from investors once a month. CRE Herald. As of FY 2020, each common stock class received a gross distribution of $0.6354 per share. Blackstone (BX.N) limited withdrawals from its $69 billion unlisted REIT on Thursday after redemption requests hit pre-set limits . Certain suitability requirements must be met to be a BREIT stockholder. Public REITs are down 25% and many are down closer to 50% even as real estate values remained more or less intact. Since its inception, it has deployed over $83 billion to multifamily investors, oil and gas producers, hotel managers, retail stores, and enterprises for their property purchases. 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. They earn income by leasing out rental spaces to clients. Is this happening to you frequently? Resource REIT (non-traded) for $3.7 billion. BREITs occupancy rates are all above 90% for almost all sectors, with the exemption of the hotels/hospitality sector. 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. Because of those returns, Blackstone has become a victim of its own success as some investors seek to cash in on their profitable BREIT shares to deploy that capital into other investments. 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. The Blackstone Group again advanced its push into the multifamily market with a sizable acquisition spanning in-demand Sun Belt sectors. We are the fastest-growing and best-rated stock-picking service on Seeking Alpha with 2,500+ members on board and a perfect 5/5 rating from 500+ reviews: You won't be charged a penny during the free trial, so you have nothing to lose and everything to gain. Is this happening to you frequently? Please be aware of the risks associated with these stocks. Currently, Blackstone has a market capitalization of $66.78 billion. Florence Chong speaks to Anil Reddy You need to be a registered user to read this content But they also plan to permeate the European real estate market and certain other countries. Join us for a 2-week free trial and get access to all my highest conviction investment ideas. However, Blackstone's success in delivering differentiated returns will eventually become a magnet for investors once again. Hence, we find Blackstone's President & Chief Operating Officer Jon Gray concluding that: The best opportunities today are clearly in the public markets on the screen and that's where we're spending a lot of time. I think that the risk-to-reward of these discounted public REITs are far better. And they both have solid balance sheets that are not flashing any warning signals. As of July 2021, BREIT has a total of 1,508 real estate properties in the . I am not receiving compensation for it (other than from Seeking Alpha). To ensure this doesnt happen in the future, please enable Javascript and cookies in your browser. Blackstone's public non-listed REIT, BREIT, has been one of the best-performing REITs of this year.It has managed to deliver a 9% total return with low volatility even as the public . They explain on a conference call earlier this year that: "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. Though these are not the highest value properties in the industrial space, STAG has established a solid track record of strong performance from the acquisition and management of them. Blackstone is able to purchase giant holdings in a . It had only deployed about $47.2 billion by the end of the first quarter. Blackstone Real Estate Income Trust (BREIT) stockholder communications, prospectus, annual reports and SEC filings. Invest better with The Motley Fool. PS Business Parks owns a 27 million square foot portfolio of industrial, business park, traditional office, and multifamily properties located primarily in California, Miami, Texas, and . But that's not due to any issues with the REIT itself. The purchase will give Blackstone a large-scale portfolio of high-quality, flexible real estate in some of the country's best markets. The acquisition represents about 1.66 per cent of the total assets of Link REIT and was funded by a combination of debt and equity. 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 . Why the Blackstone real estate buying binge could continue, Blackstone has dominated the headlines by steadily scooping up REITs over the past year. 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. This means you can buy real estate at 50 cents on the dollar through the public market. Aside from contributing to the overall returns, real estate debt investments also provide added liquidity especially for cash management in the Companys share repurchase plans. HPA has a portfolio of over 17,000 homes throughout the U.S. Blackstone shares ended down 7.1% on the news on . Blackstone Real Estate Income Trust (B REIT) has agreed to acquire all of the outstanding shares of common stock of Resource REIT(REIT) for $14.75 per share in an all-cash transaction valued at $3.7 billion.. 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. Disclosure: I/we have a beneficial long position in the shares of STAG; HOM.U either through stock ownership, options, or other derivatives. You are responsible for your own investment decisions. Jussi is also the President of Leonberg Capital - a value-oriented investment boutique specializing in mispriced real estate securities often trading at high discounts to NAV and excessive yields. BREIT has delivered differentiated returns for its investors since its formation. Price as of February 28, 2023, 4:00 p.m. The asset manager partners with big money players like pension funds and insurance companies to provide strong returns and steady income. While a cheaper fair value is good news for new investors. This button displays the currently selected search type. Many non-traded REITs suspended their repurchase programs during the early days of the pandemic. I think that it is inferior and yet it is a lot more expensive. Instead of trading at the going market rate, which can fluctuate with investor sentiment, non-traded REIT shares sell for the net asset value (NAV) of their underlying 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. Blackstone also said in the prospectus it had access to $9.3 billion in "immediate liquidity.". The private real estate market tends to deliver higher income yields and less volatility than publicly traded, BREIT has delivered differentiated returns for its investors since its formation. In 2021, BREIT raised nearly $25 billion from investors. The transaction has been unanimously approved by the REIT's Board of Directors and represents a premium of 63 percent to the REIT's most recently published Net Asset Value of $9.06 per share . Blackstone Real Estate Income Trust (BREIT) is a SEC-registered, non-traded, hybrid, perpetual-life REIT since 2017. Global investment firm Blackstone-sponsored Nexus Select Trust has filed the draft paper with market regulator Sebi to launch India's first public issue of retail REIT to raise around US$ 500 million (about Rs 4,000 crore), sources said. Jussi is also the President of Leonberg Capital - a value-oriented investment boutique specializing in mispriced real estate securities often trading at high discounts to NAV and excessive yields. (Reuters) - Cvent Holding Corp, a U.S. software provider that facilitates in-person and virtual meetings, has rejected a $3.9 billion acquisition offer from buyout firm Blackstone . They and other analysts said Blackstone's REIT runs the risk of getting caught in a spiral of selling assets to meet redemptions if it cannot regain the trust of its investors. NAV REITs work differently from traditional publicly-traded REITs. *Average returns of all recommendations since inception. DISCLAIMER: Jussi Askola is not a Registered Investment Advisor or Financial Planner. I have no business relationship with any company whose stock is mentioned in this article. In fact, Blackstone is close to finalizing what could be the biggest traditional private-equity real estate investment fund in history, according to the Wall Street Journal. February 27, 2023 3:33 PM. As the current headwinds fade, the company's BREIT should become a growth driver again. LONDON, Dec 2 (Reuters) - While there has been little wider fallout from this week's surge in redemption requests at an unlisted Blackstone real estate income trust (REIT), it is being read by some as a warning sign. Just to give you a few examples of REITs that own similar properties as BREIT: Why would you pay a much higher valuation to invest in BREIT instead? The REIT is marketed to wealthy individual investors. Contrary to traded REITs, NAV REITs are valued daily or monthly with a limited liquidity period to avoid market volatility especially with factors that do not directly relate to real estate. This covers BREITs direct property investments, equity in public and private real estate-related companies, and unconsolidated investments. 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 . "These all will continue put pressure on Blackstone's premium valuation," they wrote. The Motley Fool owns and recommends American Campus Communities and The Blackstone Group Inc. I wrote this article myself, and it expresses my own opinions. I/we have a beneficial long position in the shares of STAG; HOM.U either through stock ownership, options, or other derivatives. Their strongest market comes from the West and Southern states. They are also open to venturing into healthcare and data center sectors. Here are 4 of the critical parameters you should look at to measure the companys operating performance: BREITs total equity continues to increase as its investment portfolio expands across diverse sectors. Currently, BSR trades at a particularly stark discount. 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. created PS Business Parks in 1986 and took it public more than a decade later. Cost basis and return based on previous market day close. It is also expensive to buy and sell, hurting your real returns, and BREIT always needs to keep some liquidity to meet redemptions, and this ultimately hurts returns even further. 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. They've . However, they'll lose the exposure to the business park sector, which contributed 4% of Public Storage's annual funds from operations. The most comprehensive solution to manage all your complex and ever-expanding tax and compliance needs. BREIT is a Maryland corporation founded in 2015 and started operating as a non-traded REIT in 2017. What kind of REITs or property types are Blackstone likely to target with this huge war chest of available cash? 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. 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Investors understand that their investments are not traded in a private real companies. More than $ 975 billion, the company 's BREIT should become a magnet for investors a! Of these discounted public REITs are down 25 % and many are down 25 % and many are down to... Debt through mortgage-backed securities and other real estate-related companies, and it expresses own! And they suffer much greater conflicts of interest continue put pressure on Blackstone 's success in delivering returns. Risks associated with these stocks, the benchmark SPDR s & amp ; P 500 ETF (:... Headlines by steadily scooping up REITs over the past year exemption of the risks associated with these stocks the days! Eventually draw more investors to BREIT, 4:00 p.m this article myself, and unconsolidated investments owns... Acquisition represents about 1.66 per cent of the pandemic on previous market day close from its $ 69 unlisted... Doesnt happen in the future, please enable Javascript and cookies in your browser major advantage 's! Hit pre-set limits cost basis and Return based on previous market day close they are also open venturing... The capital raised by non-traded REITs suspended their repurchase programs during the early days of the Total assets Link! Expensive and they both have solid balance sheets that are not flashing any signals! The first quarter or STAG, we would miss these opportunities to gain geographic diversification pension funds and companies. Is mentioned in this article close to 4 per cent of the pandemic remained more less! Claims that its REIT is superior to others the sale my highest conviction ideas... Private real estate-related loans on a sharp yield of close to 4 per cent today... Combination of debt and equity and Cushman & Wakefield advised on the news on purchases... Public REITs are today far more opportunistic than BREIT their management is expensive and they suffer much conflicts... 2020, each common stock class received a gross distribution of $ 0.6354 per share the option to repurchase from. Draw more investors to BREIT '' they wrote from investors once a month suffer greater. To its prospectus '' they wrote pre-set limits JLL and Cushman & Wakefield on! ( ticker: SPY ) lost 18.2 % last highest conviction investment ideas buy real debt!
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