What happens when alternative asset managers go after traditional institutional clients as well as retail money and then face a bear market?<\/p>\n

Blackstone Real Estate Income Trust and other privately held REITs on how asset managers could be hurt when retail investors try to redeem en masse during tough times. , is giving a warning.<\/p>\n

Starwood Capital Group, KKR&Co. and Blackstone, non-trading real estate investment trusts, have curbed redemptions from their funds last year as market volatility increased, all three non-trading REITs told the SEC. This was revealed in the submitted report.<\/p>\n

This means that only a portion of the investor’s funds will be returned. In filings with the SEC, all three alternative-money managers generally demand reimbursement if they exceed a vehicle’s insurance limits or place an undue burden on the vehicle’s liquidity or operations. He said he could not respond to all of them.<\/p>\n

Industry experts like Kevin Gannon expect the gates to remain in place until the third quarter of 2023, and possibly for the rest of the year.<\/p>\n

Mr. Gannon is chief executive officer of Robert A. Stanger & Co., an investment bank and real estate financing advisory firm based in Shrewsbury, New Jersey that tracks non-trading REITs.<\/p>\n

This was a disrespectful wake-up call for mostly wealthy investors in non-trading REITs accustomed to more liquid instruments. It will also be a disappointment for alternative investment managers that have built their businesses for retail investors at a time when funding from traditional institutional clients is declining.<\/p>\n

For example, Blackstone’s $70 billion Blackstone Real Estate Income Trust, known as BREIT, had a redemption claim of 2% of its monthly net asset value and 5% of its quarterly NAV limit in November and December. , it said in its March 28 SEC filing. As a result, BREIT has fulfilled 43% of his requests in November and his 4% of repurchases requested in December. According to Blackstone’s letter to investors, BREIT fulfilled a 15% share buyback requirement in March.<\/p>\n

in response to pension and investment<\/i>\u201cBREIT is not a mutual fund and has never been gated,\u201d Blackstone said. We have paid nearly $5 billion to redeeming shareholders since the date,” the company said.<\/p>\n

\u201cWhat matters is the strong performance, with BREIT achieving an annualized net profit of 12.3% since its inception.\u201d<\/p>\n

\u201cAs I have said many times, the BREIT valuation multiples have been adjusted to reflect the high interest rate environment,\u201d Blackstone said. \u201cIn fact, since 2022, we have sold more than $6 billion of real estate at a premium to book value.\u201d<\/p>\n

Some non-trading REITs, including the BREIT, have had institutional investors in the past, but one investor took advantage of a need for cash to prepare for redemption, according to industry sources.<\/p>\n

in January, University of California<\/a> The Auckland board invested $4 billion in BREIT shares. But that capital came with the following problems: 6 years lockup<\/a> Also guaranteed is an 11.25% annualized net income backed by up to $1 billion in Blackstone BREIT shares, putting UC in a significantly different position from BREIT’s predominantly high net worth investors.<\/p>\n

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