Real Estate: Blackstone Faces Toughest RE Market Since BREIT’s Founding

April 16, 2020 | News, Real Estate

Blackstone’s non-traded real estate fund (BREIT) faces the most challenging environment since its 2017 inception.

BREIT has $34 billion in total assets. The group has been a big part of the firm’s real estate fundraising efforts in the past few years. Concerns exist that non-traded REITs like Blackstone’s offering are currently over-inflating their asset value. Publicly-traded REITs have seen their asset values fall by 20% or more in the past month. The REIT is priced once a month with the help of outside sources.

LPL Financial, a major financial services firm that works with independent advisors, has shut down new purchases of non-traded REITs. These suspensions include the Blackstone fund. LPL fears that these firms’ net asset values do not reflect the actual value of the assets in the current environment.

BREIT and Its Property Challenges

BREIT entered the current tumultuous period with a portfolio that had invested primarily in two of the strongest sectors of the commercial real estate markets.

They have significant holdings of industrial properties that benefitted from strong demand for warehouse and shipping space by e-commerce companies like Amazon (NASDAQ: AMZN). The fund also has a strong presence in apartment complexes. These funds have fared well despite the number of U.S. renters who did not pay April rent.

Blackstone’s fund is likely underwater on its most recent purchases in the Las Vegas market, however. As the market peaked, Blackstone purchased the casino and hotel operations of the Bellagio from MGM Resorts International (NYSE: MGM) for $4.25 billion late last year. They also teamed up with MGM Growth Properties to buy MGM Grand and Mandalay Bay Resorts in February for $4.6 billion.

BREIT has returned about 10% a year since inception based on Blackstone’s monthly pricing. The value of the funds’ shares has only declined in tow months since the fund started. However, many expect the most recent pricing to show a third monthly decline due to the economic shutdown.

Related: Private Equity: BlackRock Reports Earnings for Q1 2020

Free Industry News

Subscribe to our free newsletter for updates and news about alternatives investments.

  • This field is for validation purposes and should be left unchanged.


Latest Alternative Investment News
Alternative Investments/Real Estate: The New Guardian i3 Global REIT ETF
August 13, 2020     Alternative Investments, News, Real Estate

The inaugural suite of five ETFs from Guardian Capital comprises two Directed Outcomes solutions that combine high conviction ideas with derivative overlays to seek high income and risk mitigation and…
Venture Capital: Gong Secures Unicorn Status With $200M Series D
August 13, 2020     News, Venture Capital

Gong, the startup which helps businesses glean “revenue intelligence” from customer interactions, achieved unicorn status when it raised $200 million at a valuation of $2.2 billion. Coatue led the Series…
Digital Assets: NPP, A Blockchain Solution for Governments Considering a CBDC
August 13, 2020     Digital Assets, News

Apollo Fintech announced Wednesday the completion of its National Payment Platform (NPP), the first of its kind, blockchain-based, cashless national currency platform. It enables a central bank to issue a…
FinTech: Done With Beta, Revolut Preps For Australian Launch
August 13, 2020     FinTech, News

Revolut, the UK-based neobank led by Nikolay Storonsky, on Tuesday called an end to its beta mode operations in Australia. Country CEO Matt Baxby said the fintech was now readying…