Blackstone Real Estate Income Trust, the alternative asset manager’s flagship fund for wealthy investors, paid out more to investors than it generated last year.
BREIT paid out more than $2.8 billion in distributions during 2023, exceeding cash flows of $2.7 billion, according to its annual report. The fund’s performance was hit by investor requests for their money back, which prompted it to sell assets and keep cash in liquid investments. Distributions included both payouts in BREIT stock and those that elect to receive cash.
Blackstone Inc. launched BREIT in 2017 as it looked to branch out to retail investors, quickly building it into a $70 billion giant. But the rapid rise in interest rates spooked investors, leading the fund to restrict redemptions from November 2022 until February of this year, when it fully paid out withdrawal requests. The fund’s net asset value had fallen back to about $60.7 billion as of the end of last year.
“Breit covered more than 95% of 2023 distributions with cash flow from operations,” Blackstone said in a statement. “Any excess distributions are fully reflected in Breit’s reported net asset value, resulting in zero impact on total returns.”
Where distributions are not covered by cash flow they can be funded by borrowing more, selling properties and repaying debt investments, according to BREIT’s annual report. The Financial Times earlier reported the distributions.
Blackstone President Jon Gray said last month that real estate prices may be bottoming, meaning there’s opportunities to buy real estate at beaten-down prices.
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