Asset Owners Show Caution on Commercial Real Estate, While Blackstone REIT Limits Withdrawals
Posted on 12/05/2022
Hodes Weill & Associates and Cornell University’s Baker Program in Real Estate conducted the Institutional Real Estate Allocations Monitor between May 2022 and October 2022. The survey was of 173 global institutional investors, including pension plans, insurance companies, sovereign wealth funds, endowments, and foundations with a combined US$ 11 trillion total assets. The survey found that these global asset owners had witnessed their commercial real estate portfolio allocation increase from 10.7% in 2021 to 10.8% in 2022. The key thing here is that there was not a planned increase to real estate, but rather these investors experienced outperformance in commercial real estate compared to other asset classes like stocks and bonds, which fared poorly in 2021.
Taking Profits and Leaving
Even Blackstone Inc. moved to limit fund withdrawals from its mega US$ 69 billion unlisted real estate income trust (Blackstone Real Estate Income Trust, Inc.) on December 1, 2022. This was after a slurry of fund redemption requests. The unlisted REIT for Blackstone makes up 17% of its earnings. Blackstone Real Estate Income Trust had US$ 145 billion in total assets as of September 30, 2022. Investors can redeem up to 5% of their holdings in a quarter. Blackstone Real Estate Income Trust is mostly concentrated holding properties in the West and South of the U.S. 55% is in rental housing, 23% industrial properties, and 7% are net lease properties. Blackstone Real Estate Income Trust is heavily marketed to high-net-worth people.
Even the Starwood Real Estate Income Trust is trying to limit fund redemptions as withdrawal requests have exceeded the REIT’s monthly limit.
Keywords: Blackstone Group Inc.