Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Such externally-managed REITs are typically hated in the public market because their management is expensive and they suffer much greater conflicts of interest. BREIT had been a big growth driver for Blackstone. Since its inception in 2017, BREIT has consistently issued monthly distributions to its stockholders. Become a Passive Landlord with our 8% Yielding Real Estate Portfolio. 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. Before that, it struck agreements to acquire three apartment REITs for a combined $13.1 billion, an industrial REIT for $3.1 billion, and a data center REIT for $10 billion. 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). Just a month after, it grew to 1,508 properties. Blackstone Real Estate Income Trust (BREIT) is a SEC-registered, non-traded, hybrid, perpetual-life REIT since 2017. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. 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.". ), And this is based on conservative estimates of property values. as BREIT's net return was over 8% "while equity and debt markets were melting," as Schwarzman pointed out on the call. 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. That has put STAG at a 30% discount to NAV, one of the steepest discounts in its history as a public REIT. Click here to learn more!. Image courtesy of Bluerock Residential Growth REIT. 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. Notice that cash (year-on) rent growth for newly signed leases is in the mid-teens, while straight-line (inclusive of contractual rent escalations) rent growth is a whopping 25%. High Yield Landlord is managed by Leonberg Capital. 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. Liz Brumer-Smith (Blackstone): Blackstone is one of the leading alternative asset-management companies in the world. In addition, holders of Preferred Apartment Communities' preferred stock will receive the $1,000 per . BREIT is a hybrid REIT because it deals with both. 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. Even if Blackstone does not acquire BSR or STAG, we think both REITs will perform well in the future. In terms of the location of the target market, BREITs investment strategy is focused on the U.S. market. As an equity REIT, they have a diverse coverage of real estate investments. The 2 main distinctions of REITs in terms of how they earn income are equity and mortgage REITs. Today, he is the author of "High Yield Landlord - the #1 ranked real estate service on Seeking Alpha. Select REIT Total Return Index 22.19% decline over the same period. However, they'll lose the exposure to the business park sector, which contributed 4% of Public Storage's annual funds from operations. PS Business Parks owns a 27 million square foot portfolio of industrial, business park, traditional office, and multifamily properties located primarily in California, Miami, Texas, and . BREITs common stocks are priced at their fair value in terms of NAV net asset value. July 16, 2021. I am not receiving compensation for it (other than from Seeking Alpha). . Their corporate headquarters is located at 345 Park Avenue, New York. Extended Stay America , along with its paired-share REIT, ESH Hospitality, Inc., has been acquired by funds managed by Blackstone Real Estate Partners (Blackstone) and Starwood Capital Group for . Try it Free for 2-Weeks. When expanded it provides a list of search options that will switch the search inputs to match the current selection. 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. Those returns will eventually draw more investors to BREIT. 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 deal values the, One interesting aspect of this deal is that it will provide an unexpected windfall to shareholders of. However, he said there were no signs of panic selling as a result of vendor distress "which is encouraging". They've . They were down a further 2% on Friday morning at $83.45. In addition to having passed all CFA exams, Jussi holds a BSc in Real Estate Finance from University Nrtingen-Geislingen (Germany) and a BSc in Property Management from University of South Wales (UK). Blackstone managed a total of $236 billion of wealth held by individuals as of the end of September, up 43% year-on-year. 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. When expanded it provides a list of search options that will switch the search inputs to match the current selection. In July, we saw another example of this accretive capital recycling as STAG sold two properties for $82 million at a 5.2% cap rate after having purchased them several years prior at an average cap rate of 6.2%. Youre reading a free article with opinions that may differ from The Motley Fools Premium Investing Services. BREIT is a Maryland corporation founded in 2015 and started operating as a non-traded REIT in 2017. BREIT is an externally-managed REIT. KentWeakley. Price as of February 28, 2023, 4:00 p.m. The curbs came because redemptions hit pre-set limits, rather than Blackstone setting the limits on the day. I wrote this article myself, and it expresses my own opinions. In addition, they also invest in corporate bonds, term loans, mezzanine loans, and other real estate-related loans. Herbert Smith Freehills, JLL and Cushman & Wakefield advised on the sale. That means Blackstone will undoubtedly continue making headline-grabbing deals. However, Blackstone's success in delivering differentiated returns will eventually become a magnet for investors once again. . The average annual cost of a public internally-managed REIT is around 0.6%, and some REITs like Realty Income (O) have it as low as 0.4%. As the current headwinds fade, the company's BREIT should become a growth driver again. Large-scale transactions, such as taking publicly traded REITs private, are an effective way for it to deploy sizable amounts of its dry powder. Is It a Buy Right Now? I wrote this article myself, and it expresses my own opinions. 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 . Please disable your ad-blocker and refresh. ) Philadelphia, PA, January 24, 2022 - Resource REIT, Inc. (the "REIT" or the "Company"), a publicly registered non-traded real estate investment trust, announced today that it has entered into a definitive agreement with Blackstone Real Estate Income Trust, Inc. ("BREIT"), under which BREIT will acquire all of the outstanding shares of common stock of the REIT for $14.75 per share . 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. This is to avoid market volatility especially with factors that do not directly relate to real estate. The index is down 17%, we were up 2.3%. The company has a market cap of $3.67 billion, a P/E ratio of 14.90 and a beta of 1.31. Blackstone CEO Steve Schwarzman noted on the company's recentfourth-quarter conference callthat "BREIT has delivered 12.5% net returns annually since inception six years ago for its largest share class, earning over three times the public REIT index.". And apparently this is the new target. Those sectors are benefiting from long-term tailwinds and inflation. HPA's unique, resident-led business model expands housing access and choice, while providing a clear path to . For FY 2020, Class I shares were still the highest ($0.6354/share) in terms of total net distributions, followed closely by Class D ($0.608/share). If you have an ad-blocker enabled you may be blocked from proceeding. For example, from the beginning of the year through June, STAG has acquired $271 million of properties at a 5% cap rate while selling $36 million of properties at a 4.4% cap rate. "Leasing inspections are still occurring [but] most organisations are delaying the decision-making process," Mr Ballantyne said. 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. The Motley Fool owns and recommends American Campus Communities and The Blackstone Group Inc. With billions of dollars in dry powder across its real estate private equity funds and cash continuing to pour into its funds, Blackstone will likely continue its real estate shopping spree. They earn income by leasing out rental spaces to clients. BREIT has 4 types of common shares which differ in how the investors will be charged. Source: BREIT Prospectus (as of June 30, 2021). Ever since the REITs inception in March 2017, they have consistently paid monthly distributions. They both have quality management teams with significant skin in the game. This time it's buying PS Business Parks . Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services. 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. Blackstone President Jon Gray received $479.2 million as income in 2022. The information in his articles and his comments on SeekingAlpha.com or elsewhere is provided for information purposes only. Making the world smarter, happier, and richer. Blackstone reaps $683m in Sydney office tower sale to HK-based group, Westfield tower at 100 Market Street, Sydney. Is now still a better time to invest in BREIT, or should you rather consider public REITs? I don't know many asset classes that perform -- outperform indexes by 3,000 basis points." There is no upper limit on the size of this new fund, so it could potentially grow significantly larger. 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. BREITs common stocks are priced at their fair value in terms of NAV net asset value. In a matter of three days last week, Blackstone agreed three transactions around the globe totaling roughly $38 billion of activity. Blackstone is a premier global investment manager. Before that, it struck agreements to acquire three apartment REITs for a combined $13.1 billion, an industrial REIT for $3.1 billion, and a data center REIT for $10 billion. I think that the risk-to-reward of these discounted public REITs are far better. LONDON, Dec 2 (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. Some investors are seeking liquidity to cover losses incurred elsewhere. It only fulfilled about a quarter of those redemptions because it hit its 2% monthly limit. That was almost 70% of all the capital raised by non-traded REITs that year. To make the world smarter, happier, and richer. The information in his articles and his comments on SeekingAlpha.com or elsewhere is provided for information purposes only. Blackstone will often claim that BREIT is superior to public REITs because it supposedly provides better diversification benefits. 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. Excellent. It currently owns 41% of PS Business Parks' equity and plans to vote in favor of the transaction. Is this happening to you frequently? Nexus Select Trust has a portfolio of 17 operational shopping malls . BREIT also has real estate debt investments through securities and loans backed by the U.S. market. Even if you expected its property values to drop a bit, its share price could still double before reaching its net asset value. TORONTO - Blackstone Real Estate Income Trust Inc. has signed a deal to buy WPT Industrial Real Estate Investment Trust in an all-cash deal valued at US$3.1 billion . Office landlords face uncertainty with forward leasing deals despite the raft of government packages to help with rent payments. I don't know many asset classes that perform -- outperform indexes by 3,000 basis points. That was . Proof in point: BREIT just had to limit withdrawals because too many investors are currently seeking to get out of it. While it has steadily put that money to work, cash continues flowing into BREIT's coffers because of its growing reputation for delivering top-tier returns. Access unmatched financial data, news and content in a highly-customised workflow experience on desktop, web and mobile. Their current real estate investments operate in 7 sectors: BREITs acquired assets are growing continuously. Per maggiori informazioni sulle modalit di utilizzo dei dati, consulta la nostra Informativa sulla privacy e lInformativa sui cookie. Both share classes can be bought through fee-based programs, registered investment advisors, institutional and fiduciary accounts. On Thursday, the firm said the REIT had agreed to sell its 49.9% interest in two Las Vegas casinos for $1.27 billion. While its recently announced deals will utilize some more of that capital, additional money is likely to continue flowing into its coffers. 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