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. Learn More. 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. Image courtesy of Bluerock Residential Growth REIT. I am not receiving compensation for it (other than from Seeking Alpha). Receive at least 75% of gross income from real estate, such as real property rents . Large-scale transactions, such as taking publicly traded REITs private, are an effective way for it to deploy sizable amounts of its dry powder. 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. *Average returns of all recommendations since inception. Blackstone CEO Steve Schwarzman noted on the company's recent, that "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. BREIT is a REIT where shares are held by investors, but those shares aren't traded. However, he said there were no signs of panic selling as a result of vendor distress "which is encouraging". 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. 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. BREIT outperformed the MSCI U.S. REIT Index net return in 2020 (-7.6%) with a 6.1% net return of Class S shares which has the most number of stockholders among its common shares. It is heavily invested in rapidly growing sunbelt markets. Its president Jonathan Gray was elevated and made successor to Chief Executive Stephen Schwarzman as a result of his success in property investing. Please try again later. 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 . This is the most important reason. These deals showcase its growing, dominance in the commercial real estate sector, However, even after the recent REIT shopping spree, Blackstone still has plenty of dry powder to continue buying real estate. [added emphasis]. NEW YORK, Dec 1 (Reuters) - (This Dec. 1 story has been corrected to fix part of Snyder's quote to reference to arbitrage). What's more, the portfolio is performing quite well organically as well. Currently, BSR trades at a particularly stark discount. This time it's buying PS Business Parks . Usually, these distributions are credited 20 days after the end of every month. The company sees a massive untapped opportunity for high-net-worth investors since they have a low percentage of their portfolios currently allocated to alternatives. All quotes delayed a minimum of 15 minutes. That was four times more than the company's redemption limit, forcing it to restrict redemptions once again. 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. However, net losses have been incurred since 2017 which can be attributed to the real estate debt portfolio. There are literally no signs of a slowdown yet for STAG's industrial real estate, and yet the market has punished STAG with a ~35% selloff this year. Blackstone Makes $524.5M Buyout Offer for Singapore's Soilbuild REIT. NAV REITs do away with daily price fluctuations, making them less volatile compared to traded REITs. 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. This means that there is an external asset manager, in this case, Blackstone, that takes care of the management in exchange for fees. Despite the pandemic, they acquired worth $10.5B of real estate properties in the multifamily, industrial, and net lease sectors in 2020. ), And this is based on conservative estimates of property values. I'll do that again for you. The REIT is marketed to wealthy individual investors. Their corporate headquarters is located at 345 Park Avenue, New York. The REIT also represented a bid to win over high net-worth investors clamoring for private market products, which they believe perform better than those that are publicly traded. The people familiar with the matter declined to be identified because the information was not public. Is this happening to you frequently? Blackstone's purchase of American Campus makes student housing a fully privately held asset class in the US. Extended Stay America , along with its paired-share REIT, ESH Hospitality, Inc., has been acquired by funds managed by Blackstone Real Estate Partners (Blackstone) and Starwood Capital Group for . In a regulatory filing last month, Blackstone said that it has secured $24.1 billion of commitments for its latest real estate fund called Blackstone Real Estate Partners X. 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. This year, the company has set its sights particularly on acquisitions of real estate investment trusts ("REITs"). 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. As a result, it will receive about $2.7 billion in cash when the deal closes. ACC was the last public REIT dedicated to the sector to be taken private, following Campus Crest Communities' privatization by Harrison Street in 2015 and EdR by Greystar in 2018. 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. The chart below shows the YTD performance of all class share classes, plus the since inception date returns. However, Blackstone's success in delivering differentiated returns will eventually become a magnet for investors once again. 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. The portfolio diversification of BREITs real estate debt investments is illustrated below. It still has a lot of dry powder after its latest deal, suggesting its shopping REIT shopping spree could continue. Dividends are paid and capital gains, if any, are shared. Blackstone is the 1000-pound gorilla in any real estate room. BREIT also invests in non-distressed public and private real estate debt such as: With the expertise of their investment advisors, BREIT uses leverage through financing to multiply their funds for the increased potential of investment returns. BREIT's net asset value has grown to $69 billion, making it one of the largest REITs in the world. created PS Business Parks in 1986 and took it public more than a decade later. Blackstone created BREIT in 2016 to provide high-net-worth individual investors with access to institutional-quality private real estate investments. Invest better with The Motley Fool. Class S shares were the first issued common stock of BREIT in 2017 at $10. Build the strongest argument relying on authoritative content, attorney-editor expertise, and industry defining technology. . Even if you expected its property values to drop a bit, its share price could still double before reaching its net asset value. With 8.1% and 4.3% of the shares outstanding respectively, BlackRock, Inc. and Blackstone Inc. are the second and third largest shareholders. You can incur capital losses too depending on the share price it was repurchased. BREIT has 4 types of common shares which differ in how the investors will be charged. A Blackstone spokesperson declined to comment on how the New York-based firm calculates the valuation of its REIT, but said its portfolio was concentrated in rental housing and logistics in the southern and western United States that have short duration leases and rents outpacing inflation. CRE Herald. That was . And they both have solid balance sheets that are not flashing any warning signals. Making the world smarter, happier, and richer. More investors are entrusting it with more of their capital, giving it the funds to acquire more real estate. Become a Passive Landlord with our 8% Yielding Real Estate Portfolio. Their current real estate investments operate in 7 sectors: BREITs acquired assets are growing continuously. The general trend of NAV prices for all class shares was increasing until a sudden drop occurred in the first quarter of 2020 during the onset of the COVID-19 pandemic. Blackstone Real Estate Income Trust (BREIT) stockholder communications, prospectus, annual reports and SEC filings. Instead, it continues to deliver differentiated performance. This implies that the REIT was able to sell properties at a significant gain from its original purchase price. Excellent. They were down a further 2% on Friday morning at $83.45. Although Santarelli kept his price target for Gaming & Leisure Properties Inc. at $60 per share, he bumped his . That left it with $36.3 billion of dry powder. They've . It only fulfilled about a quarter of those redemptions because it hit its 2% monthly limit. TORONTO - Blackstone Real Estate Income Trust Inc. has signed a deal to buy WPT Industrial Real Estate Investment Trust in an all-cash deal valued at US$3.1 billion . The private equity giant still has a lot of dry powder to continue shopping. By 2030, the institutions may hold some 7.6 million homes, or more than 40% of all single-family rentals on the market, according to the 2022 forecast by MetLife Investment Management. The $71 billion Blackstone Real Estate Income Trust (BRET) saw investor withdrawals of nearly $9.9 billion last year. Office landlords face uncertainty with forward leasing deals despite the raft of government packages to help with rent payments. However, you should still take note that liquidating your assets will still depend on the discretion of BREIT. BREIT is a hybrid REIT because it deals with both. Schwarzman took home more than $1.27 . In addition, it had commitments to deploy another $9.4 billion across its public U.S. REIT privatizations and a deal to buy an Australian casino operator. 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. Like Salesforce.com, inc. (NYSE:CRM), Roblox Corporation (NYSE:RBLX), and Advanced Micro Devices, Inc. (NASDAQ:AMD), HubSpot, Inc. (NYSE:HUBS) is a stock that many elite hedge funds have been . Blackstone launched the REIT in 2017, piggybacking off the success of its real estate empire, which had by then outgrown its private equity business. 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? Investors since they have a low percentage of their capital, giving it the funds to more! Deal closes making it one of the total assets of Link REIT and was funded by combination... Of the total assets of Link REIT and was funded by a combination of debt and.... The end of every month they were down a further 2 % Friday... 2.7 billion in cash when the deal closes 1986 and took it public more the! 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