Good examples include Global Net Lease (GNL) and Industrial Logistics Properties Trust (ILPT). 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. EmeryTech Office (CA) & Coleman Highline Office. Many non-traded REITs suspended their repurchase programs during the early days of the pandemic. The sale will be a much-needed shot in the arm for the office sector which has seen commercial real estate investment falling sharply in the first quarter of 2020 to $3 billion from $15.9 billion in the previous quarter. ("Net asset value" is akin to an adjusted book value for REITs using estimated market values for their real estate. With the help of BX REIT Advisors LLC, their investment strategy is to invest in stabilized and diverse real estate portfolios to provide income to their investors. To be fair, BREIT is a pretty vehicle and it has a strong track record. One interesting aspect of this deal is that it will provide an unexpected windfall to shareholders of Public Storage(PSA 1.26%). 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. Become a Passive Landlord with our 8% Yielding Real Estate Portfolio. Currently, Blackstone has a market capitalization of $66.78 billion. If you have an ad-blocker enabled you may be blocked from proceeding. Blackstone is a premier global investment manager. Though Blackstone sometimes acquires individual real estate properties, such as The Bellagio in Las Vegas, it more often seeks opportunities to scoop up whole portfolios that will move the needle. Many investors in the REIT are concerned that Blackstone has been slow to adjust the vehicle's valuation to that of publicly traded REITs that have taken a hit amid rising interest rates, a source close to the fund said. Blackstone Group (BX 1.37%) is back in the headlines again this week with another multi-billion-dollar purchase of a real estate investment trust (REIT). Blackstone Inc. will purchase American Campus Communities, Inc. (NYSE: ACC) in a $12.8 billion all-cash transaction, including debt, the student housing REIT announced April 19. So this review has been updated with that information. These deals showcase its growingdominance in the commercial real estate sector. Sarah Borchersen-Keto. We have over 500 five-star reviews from happy members who are already profiting from our real estate strategies. These cash reserves totaled $2.7 billion as of the end of October, according to its prospectus. Its president Jonathan Gray was elevated and made successor to Chief Executive Stephen Schwarzman as a result of his success in property investing. The deal values the, One interesting aspect of this deal is that it will provide an unexpected windfall to shareholders of. In fact, Blackstone is close to finalizing what could be the biggest traditional private-equity real estate investment fund in history, according to the Wall Street Journal. Click here to learn more!. As of their Q2 2021 report, total real estate debt investments have a fair value of $5.7B with a weighted average coupon of 5% and a weighted average maturity date of July 5, 2025. Instead of daily price fluctuations, NAV REITs have a much less volatile movement. They and other analysts said Blackstone's REIT runs the risk of getting caught in a spiral of selling assets to meet redemptions if it cannot regain the trust of its investors. 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. ET, This 4.5%-Yielding Dividend Stock Has $50 Billion to Continue its Real Estate Buying Binge, 1 Roaring Dividend Stock That's Leading the Market Recovery. For the first six months of the year, our real estate strategies appreciated 9% to 10% versus a 20% decline in the REIT index, equaling an outperformance of roughly 3,000 basis points. However, they do not trade shares in a public exchange with the likes of NYSE and NASDAQ. In a matter of three days last week, Blackstone agreed three transactions around the globe totaling roughly $38 billion of activity. 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. -. JOIN THE CONVERSATION. BREIT is an externally-managed REIT. The company will likely continue to battle this headwind until it works through its current backlog. As a result, it will receive about $2.7 billion in cash when the deal closes. Jussi is also the President of Leonberg Capital - a value-oriented investment boutique specializing in mispriced real estate securities often trading at high discounts to NAV and excessive yields. Write by: Meanwhile, from the inception date to July 31, 2021, total returns (without initial sales charge fees) were between 10% 11% across all types of share classes. They are also open to venturing into healthcare and data center sectors. Notes: Class D shares dont include the upfront 1.5% sales charge at initial subscription yet. Blackstone's public non-listed REIT, BREIT, has been one of the best-performing REITs of this year.It has managed to deliver a 9% total return with low volatility even as the public . Making the world smarter, happier, and richer. Mortgage REITs . Class S and T shares dont include the upfront 3.5% sales charge at initial subscription yet. Blackstone Mortgage Trust is not owned by hedge funds. This is to avoid market volatility especially with factors that do not directly relate to real estate. Invest at least 75% of total assets in real estate or cash. Total returns could be higher if you account for the accumulated share distributions throughout your investment years. 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. Please disable your ad-blocker and refresh. LONDON (Reuters) -While there has been little wider fallout from this week's surge in redemption requests at an unlisted Blackstone real estate income trust (REIT), it is being read by some as a warning sign. To liquidate their assets, BREIT must repurchase their shares, which is not guaranteed. With 8.1% and 4.3% of the shares outstanding respectively, BlackRock, Inc. and Blackstone Inc. are the second and third largest shareholders. 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 Storage expects to recognize a $2.3 billion after-tax gain, which it intends to distribute to its shareholders. Blackstone is also active in credit, infrastructure, hedge funds, insurance, secondaries, and growth . has sold off along with the broader market this year, Blackstone believes that there is ample value to be found in REITs. Blackstone of course wants you to invest in BREIT because they earn fees for managing it. Both share classes can be bought through fee-based programs, registered investment advisors, institutional and fiduciary accounts. It is impossible to predict with any certainty, because last year Blackstone acquired data center REIT QTS Realty, and in 2018 it acquired hospitality REIT LaSalle Hotel Properties. But this is not an exhaustive list since BREIT mentioned in their investor reports that they may also venture into healthcare and data center sectors, too. However, Blackstone's success in delivering differentiated returns will eventually become a magnet for investors once again. Join us for a 2-week free trial and get access to all my highest conviction investment ideas. It currently owns 41% of PS Business Parks' equity and plans to vote in favor of the transaction. Private equity giant Blackstone Group plans to purchase 66 residential complexes in San Diego County for more than $1 billion in one of the biggest real estate transactions in local history. Blackstone Stock Keeps Soaring Higher. As of FY 2020, BREITs real estate debt investments consist of 194 investments in CMBS, 15 investments in RMBS, 10 corporate bond investments, and 9 real estate loans. EdR Student Housing Portfolio (10,610 units), Southeast MH portfolio (8,563 units), Acorn Multifamily Portfolio (8,309 units), etc. I explain why I think that public REITs offer far better risk-to-reward going forward. Driving those returns was the company's thematic investment approach, currently focused on rental housing and industrial real estate in the Southern and Western parts of the country. Driving those returns was the company's thematic investment approach, currently focused on rental housing and industrial real estate in the Southern and Western parts of the country. Do your own research or seek the advice of a qualified professional. Matthew DiLallo owns Public Storage. If you can't get your money back, does the "paper valuation" then have any meaning? Liz Brumer-Smith (Blackstone): Blackstone is one of the leading alternative asset-management companies in the world. He added that the REIT had ample cash reserves to "weather pretty much any storm." Just a month after, it grew to 1,508 properties. Disclosure: 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. 3 Beaten-Down Dividend Stocks to Buy Without Hesitation, My Top 3 Dividend Stocks to Buy Today (and It's Not Even Close), 2 FAANG Stocks Billionaires Are Selling in Droves and 1 They Can't Stop Buying, 3 Stocks That Could Join Apple, Microsoft, and Alphabet in the $1 Trillion Club, 1 Bargain-Basement Warren Buffett Stock Down 78% to Buy Before It Starts Soaring, 2 Growth Stocks That Can Turn $250,000 Into $1 Million by 2030, According to Bloomberg, investors requested to pull more than $5 billion out of, Blackstone created BREIT in 2016 to provide high-net-worth individual investors with access to institutional-quality private real estate investments. Public REITs, on the other hand, trade at a >6% dividend yield in many cases with lower payout ratios, and also offer significant upside potential since they are priced at large discounts to their net asset value. The national CBD office market vacancy rate increased by 0.1 percentage point from 8.3 per cent to 8.4 per cent in three months ending March 31. The U.S. real estate investment trust, or REIT, sector was hit abnormally hard during the 2022 bear market. High Yield Landlord is managed by Leonberg Capital. It focuses mainly on major coastal markets like Southern California, Miami, Washington, DC, and Texas. BREIT has a redemption plan, but as we highlighted in a recent article, this redemption plan can be quite restrictive and Blackstone recently limited withdrawals because too many investors sought to get at out at once. This kind of discount would imply either that BSR's property portfolio is sub-par, that its management is unskilled or conflicted, or that its balance sheet is weak, none of which are the case. 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. We do not believe it is a good idea to buy a REIT simply because it looks like an attractive buyout prospect for big-money asset managers and private real estate funds. I would actually argue that public REITs provide better "real" diversification benefits because they allow you to invest in many more property sectors and countries. Even Blackstone's COO indirectly told us in the Q2 conference call that public REITs are a lot more opportunistic today: "The best opportunities today are clearly in the public markets on the screen and that's where we're spending a lot of time.". Blackstone and Soilbuild are selling Bukit Batok Connection months after privatising Soilbuild REIT US developer and investment firm Hines has made its first acquisition in the Singapore market, teaming up with German fund manager DWS Group to buy a ramp-up workshop in the Bukit Batok area from a Blackstone-controlled trust for S$93.8 million ($69 million). By. High Yield Landlord is managed by Leonberg Capital. Tombol ini menampilkan jenis pencarian yang dipilih saat ini. But what about today? With dividends reinvested, the benchmark SPDR S&P 500 ETF (ticker: SPY) lost 18.2% last . Shares of BXMT opened at $21.31 on Tuesday. Blackstone President Jon Gray received $479.2 million as income in 2022. Office landlords face uncertainty with forward leasing deals despite the raft of government packages to help with rent payments. On Thursday, the firm said the REIT had agreed to sell its 49.9% interest in two Las Vegas casinos for $1.27 billion. BREIT is a hybrid REIT because it deals with both. Blackstone is the 1000-pound gorilla in any real estate room. [added emphasis]. BREIT outsources third-party pricing service providers to determine the fair value for these debt investments. Their strongest market comes from the West and Southern states. I have no business relationship with any company whose stock is mentioned in this article. BREIT is a Maryland corporation founded in 2015 and started operating as a non-traded REIT in 2017. According to their 2020 annual report, they hold 1,370 real estate properties and 228 positions in real estate debt investments. Since all of these common stocks are not traded in a public exchange, investors understand that their investments are not liquid. But it is hard to ignore the huge disparity in valuations between BREIT and Public REITs in today's market. Nexus Select Trust has a portfolio of 17 operational shopping malls . Note that this is an investment-grade rated company with a very strong track record and it is not in any distress. Blackstone Inc (BX.N) limited withdrawals from its $69 billion unlisted real estate income trust (REIT) on Thursday after a surge in redemption requests, an unprecedented blow to a franchise that . Investment advisors assess the shares and report them in terms of fair value, like how mutual funds work. If investors want to buy BREIT shares, they must have: BREIT has 4 types of share classes which differ in how the investors will be charged. Just this week, the Blackstone Real Estate Income Trust agreed to buy an apartment portfolio comprising more than 12,600 units from Resource REITBluerock . Though the dividend yield of ~3.2% may seem low, it is actually quite high compared to the yields of its closest peers in the Sunbelt multifamily space: With over 30% upside to fair value, it would not be surprising if Blackstone at least made an attempt to buy BSR. Please disable your ad-blocker and refresh. ) However, he said there were no signs of panic selling as a result of vendor distress "which is encouraging". There are also selling commissions upfront that can amount up to 3.5% and stockholder servicing fees that can add up to 0.85% each year. They earn income by leasing out rental spaces to clients. For a Limited-Time - You can join Seeking Alphas #1 community of real estate investors at the Lowest-Rate-Ever-Offered. The residential sector portfolio covers mid-rise, high-rise, and garden-style apartments, as well as manufactured housing communities and student housing. The spokesperson added that the REIT relied on a long-term fixed rate debt structure, making it resilient. Their recent investments are, namely, in residential, industrial, net lease, hospitality (leisure market), self-storage, retail, and office. Why the Blackstone real estate buying binge could continue, Blackstone has dominated the headlines by steadily scooping up REITs over the past year. Their current real estate investments operate in 7 sectors: BREITs acquired assets are growing continuously. 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. . Our Standards: The Thomson Reuters Trust Principles. Join us for a 2-week free trial and get access to all my highest conviction investment ideas. As such, many REITs are now priced at large discounts relative to the underlying value of the real estate they own. We take a look at two attractive REITs trading significantly below their net asset values. The 2 main distinctions of REITs in terms of how they earn income are equity and mortgage REITs. Jupiter 12 Industrial Portfolio, Canyon Industrial Portfolio, Meridian Industrial Properties, etc. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services. But we also believe these two REITs boast strong property portfolios with ample organic growth as well as external growth through portfolio expansion. February 27, 2023 3:33 PM. With public REITs, you have much more flexibility. 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. Last week, it reached a $12.8 billion deal to acquire student housing-focused, . If I owned BREIT, I would try to get out of it to invest in public REITs instead. (the "Adviser"). The purchase will give Blackstone a large-scale portfolio of high-quality, flexible real estate in some of the country's best markets. To ensure this doesnt happen in the future, please enable Javascript and cookies in your browser. Receive at least 75% of gross income from real estate, such as real property rents . I don't know many asset classes that perform -- outperform indexes by 3,000 basis points." Global investment firm Blackstone-sponsored Nexus Select Trust has filed the draft paper with market regulator Sebi to launch India's first public issue of retail REIT to raise around US$ 500 million (about Rs 4,000 crore), sources said. Learn More. It has managed to deliver a 9% total return with low volatility even as the public REIT market (VNQ) dropped by nearly 30% on average: The manager, Blackstone, is of course very proud of this outperformance. It invests in real estate properties across 8 sectors and real estate debt through mortgage-backed securities and other real estate-related loans. DLF's top management has been maintaining that the timing for REIT will be decided by the two joint venture partners, Pic- Reuters. As a result, the REIT allowed investors in November to redeem $1.3 billion, equivalent to approximately 43% of investors' repurchase requests. The information in his articles and his comments on SeekingAlpha.com or elsewhere is provided for information purposes only. The firm owned 20,221 shares of the asset manager's stock after acquiring an additional 5,035 shares during the quarter. Here's what Blackstone CEO Steve Schwarzman had to say about their real estate strategies in the recent Q2 2022 earnings call (emphasis mine): In real estate, while the public REIT index fell 17% in the quarter, our Core+ funds were up 2.3%. Blackstone Real Estate Income Trust Inc., a publicly registered non-traded real estate investment trust sponsored by private equity giant Blackstone (NYSE: BX), has agreed to purchase American International Group Inc.'s (NYSE: AIG) interests in a U.S. affordable housing portfolio for approximately $5.1 billion, in an all-cash . And others could be selling at what they believe is a near-term peak in pricing for private real estate values, which have yet to see the same pricing correction as publicly traded REITs. Clearly, the company will buy whatever it views as the most attractive viable deal. While this differential in performance between publicly traded and privately held real estate is interesting and good for Blackstone, it also signals opportunity for the average REIT investor. The stock has a fifty day moving average price of $22.70 and a 200 day moving average price of $24.69. The trust's managers said last month they were reviewing options after receiving an unsolicited expression of interest to buy out all its stapled securities. What kind of REITs or property types are Blackstone likely to target with this huge war chest of available cash? The REIT is marketed to wealthy individual investors. And our opportunistic funds protected capital, down only 1%, so we only performed by 16% for our customers over the index. I have no business relationship with any company whose stock is mentioned in this article. They always want to grow because it maximizes the fees that they own. ), And this is based on conservative estimates of property values. What's more, the portfolio is performing quite well organically as well. And Blackstone's financial capacity to continue scooping up undervalued REITs is massive. Just because something isn't quoted does not mean that it isn't correlated or volatile. See here for a complete list of exchanges and delays. Currently, BSR trades at a particularly stark discount. It is heavily invested in rapidly growing sunbelt markets. That suggests it could make more headline-grabbing deals this year. Blackstone Group(BX 0.97%) is back in the headlines again this week with another multi-billion-dollar purchase of a real estate investment trust (REIT). Matthew DiLallo has positions in Blackstone and has the following options: short June 2023 $60 puts on Blackstone. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. I wrote this article myself, and it expresses my own opinions. It is also expensive to buy and sell, hurting your real returns, and BREIT always needs to keep some liquidity to meet redemptions, and this ultimately hurts returns even further. Were working to restore it. This means you can buy real estate at 50 cents on the dollar through the public market. Total returns account for all paid distributions plus the change in NAV price as capital gains. As of July 2021, BREIT has a total of 1,508 real estate properties in the . As of July 2021, BREIT has a total of 1,508 real estate properties in the residential, industrial, net lease, self-storage, hotel/hospitality, retail, and office sectors located across the U.S. BREITs occupancy rates are all above 90% for almost all sectors, with the exemption of the hotels/hospitality sector which was heavily affected by the COVID-19 pandemic. Blackstone Inc. will purchase PS Business Parks, Inc. (NYSE:PSB) in an all-cash deal valued at approximately $7.6 billion, the two companies announced April 25. Clicca su Gestisci impostazioni per maggiori informazioni e per gestire le tue scelte. Blackstone Real Estate Income Trust, Inc. (BREIT) has real estate investments in diverse sectors such as residential, industrial, office, storage, and hotel/hospitality. Blackstone will often claim that BREIT is superior to public REITs because it supposedly provides better diversification benefits. BREIT issues consistent monthly distributions since its inception. Overall, BREIT is one of the leading players in the NAV REIT market industry. While its recently announced deals will utilize some more of that capital, additional money is likely to continue flowing into its coffers. These properties are overwhelmingly concentrated in Texas, especially Austin, Dallas/Fort Worth, and Houston. Learn More. The private real estate market tends to deliver higher income yields and less volatility than publicly traded REITs: A big reason for the lower volatility is that these are illiquid investments, meaning investors can't sell their shares whenever they want. Blackstone Real Estate Income Trust, Inc. (B REIT) has agreed to acquire Home Partners of America (HPA) for $6 billion. If we were just investing in BREIT, we would miss these opportunities to gain geographic diversification. I/we have a beneficial long position in the shares of STAG; HOM.U either through stock ownership, options, or other derivatives. PS Business Parks currently owns 97 business parks with 28.1 million square feet of commercial space leased to about 5,100 tenants. Do your own research or seek the advice of a qualified professional. This is a much better management structure because the management is hired as employees of the REIT. July 16, 2021. Those sectors are benefiting from long-term tailwinds and inflation. Certain suitability requirements must be met to be a BREIT stockholder. Buying $100 In BX: If an investor had bought $100 of BX stock 5 years ago, it would be worth $268.05 today based on a price of . Currently, BREITs presence dominates in the NAV REIT market. I have no business relationship with any company whose stock is mentioned in this article. Blackstone started seeing a flood of redemption requests late last year, exceeding its limit. Instead, the sell-off in its stock stemming from BREIT looks like a great buying opportunity for long-term investors to add to their position. As of July 2021, BREIT has a total of 1,508 real estate properties located across the U.S. and a small percent in Europe. Blackstone (BX.N) limited withdrawals from its $69 billion unlisted REIT on Thursday after redemption requests hit pre-set limits . This implies that the REIT was able to sell properties at a significant gain from its original purchase price. 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 . DISCLAIMER: Jussi Askola is not a Registered Investment Advisor or Financial Planner. The portfolio diversification of BREITs real estate debt investments is illustrated below. That left it with $36.3 billion of dry powder. Their corporate headquarters is located at 345 Park Avenue, New York. If you dont like it, we wont charge you a penny! Herbert Smith Freehills, JLL and Cushman & Wakefield advised on the sale. They explain on a conference call earlier this year that: "For the first six months of the year, our real estate strategies appreciated 9% to 10% versus a 20% decline in the REIT index, equaling an outperformance of roughly 3,000 basis points. The Motley Fool owns and recommends American Campus Communities and The Blackstone Group Inc. Blackstone has agreed to pay $187.50 per share in cash for PS Business Parks, a roughly 15% premium to its average share price over the last two months. We spend 1000s of hours and over $100,000 per year researching the market for the most profitable investment opportunities and share the results with you at a tiny fraction of the cost. Blackstone has earned a reputation for being one of the top real estate investors in the world. BREIT has delivered differentiated returns for its investors since its formation. To make the world smarter, happier, and richer. Information regarding Blackstone and Blackstone Real Estate is included to provide information regarding the experience of our sponsor and its affiliates. Is now still a better time to invest in BREIT, or should you rather consider public REITs? Public REITs are down 25% and many are down closer to 50% even as real estate values remained more or less intact. The asset manager is buying so aggressively because REIT valuations are significantly below the private market valuations of their real estate. Three stocks that look particularly appealing considering their high-dividend yields and beaten-up share prices are Blackstone ( BX 0.30%), UMH Properties ( UMH 0.38%), and Mid-America Apartment . The deal values theindustrial REITat $7.6 billion. 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Any company whose stock is mentioned in this article in Blackstone and has the following options short! 2021, BREIT is a much better management structure because the management is hired as employees of the country best. Located across the U.S. and a 200 day moving average price of $ 24.69 after. A public exchange, investors understand that their investments are not traded in a public exchange, understand. Billion of dry powder mainly on major coastal markets like Southern California, Miami, Washington, DC and! Returns for its investors since they have a much less volatile movement 345 Avenue. Financial Planner June 2023 $ 60 puts on Blackstone D shares dont include upfront! And delays is one of the country 's best markets 5,035 shares during the 2022 bear market stark discount the. Manager & # x27 ; S stock after acquiring an additional 5,035 shares during the early of. & # x27 ; S stock after acquiring an additional 5,035 shares during the 2022 market! 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