Blackstone Inc said on Wednesday it had blocked investors from cashing out their investments at its $71 billion real estate income trust (BREIT) as the private equity firm continues to grapple with a flurry of redemption requests.
BREIT said it fulfilled redemption requests of $1.4 billion in February, which represents only 35% of the approximately $3.9 billion in total withdrawal requests for the month, the firm said in a letter to investors.
The total BREIT redemption requests in February were 26% lower than the approximately $5.3 billion reached in January, the firm said.
"While gross redemptions for February are consistent with prior management commentary, the overarching data continue to align with our view around decelerating retail-oriented product organic growth broadly," Credit Suisse analysts, led by Bill Katz, said in a note to investors.
Credit Suisse downgraded its rating of Blackstone's stock to underperform in November partly because of the rise in investor redemptions from BREIT. Blackstone's shares were down 0.25% at $90.57 per share in afternoon trading on Wednesday. The stock lost 43% of its value last year.
Blackstone has been exercising its right to block investors' withdrawals since November last year after requests hit a preset 5% net asset value of BREIT, which is marketed to mostly high net worth individuals.
Blackstone expects to continue dealing with investor redemptions because some BREIT investors are making larger withdrawal requests in anticipation of a reduction in its size, its President Jonathan Gray told an earnings call last month.
But the firm expects to work through the backlog of unfulfilled requests over time, he added.
BREIT generated returns of 8.4% in 2022 compared with a 26% decline to the publicly traded Dow Jones U.S. Select REIT Total Return Index.