INVH - Private REITs 101 Revisited: Do You Invest In BREIT Or A Diverse Public REIT Portfolio?
2024-05-03 07:00:00 ET
Summary
- Blackstone's NAV REIT, BREIT, raised $66 billion from 2017 to 2022, surpassing all publicly-listed REITs in equity raised in 2022 alone.
- BREIT's ability to redeem shares at reported NAV distinguishes it from other non-traded REITs.
- Despite its strong performance, BREIT faces challenges such as high front-end loads, front-end dividends, and high management fees.
This article was co-produced with Christopher Volk
This is a follow-up to an August 2022 article I wrote on non-traded REITs. At the time I wrote the last piece, I was curious. A new breed of private REITs (NAV REITs) was touted for its higher level of efficiency, improved liquidity options and name-brand sponsorship.
The recent NAV REIT stampede was impressively led by Blackstone, whose Blackstone Real Estate Investment Trust ('BREIT') raised a jaw-dropping $66 billion from its 2017 introduction through 2022.
In fact, in 2022 alone, raising less money than the prior year, BREIT took in more equity than all publicly listed REITs combined. By the end of first quarter 2024, the REIT had an equity net asset value of $59 billion, which would currently place it as the nation's fourth-largest public REIT if it were listed.
Last year marked the first year when BREIT redeemed more shares than it issued. In 2023, the REIT issued nearly $7 billion in new shares. New share issuance would have been much lower were it not for a $4.5 billion investment received in the first quarter from the University of California ("UC") in no-load Class I shares....
Private REITs 101 Revisited: Do You Invest In BREIT Or A Diverse Public REIT Portfolio?