Blackstone Dominates The Nontraded REIT Space With Plans To Raise Another $10B

Blackstone Group is tripling its fundraising efforts for Blackstone Real Estate Income Trust, its first nontraded REIT, which launched in January 2017.  

Blackstone plans to raise another $10B for the REIT in addition to the $5B goal it initially set, the Wall Street Journal reports. The rate at which BREIT is selling shares would cause the company to hit its $5B goal before the end of the year.

Blackstone’s move, revealed in recent Securities and Exchange Commission filings, speaks to the resurgence of nontraded REITs, which were once an attractive real estate investment strategy following the financial crisis. Concerns regarding fee structures and a lack of transparency in the space caused fundraising efforts to plummet in recent years. Investment News reports the industry posted its lowest fundraising levels last year since 2002. 

Since its initial filing, BREIT has acquired $8B worth of apartment, industrial and other commercial assets totaling more than 100 properties. These purchases were made using both raised capital and debt. 

As of the end of April, BREIT had accounted for 67% of the $3.5B raised by the top 10 nontraded REITs in the space, Robert A. Stanger & Co. Managing Director Kevin Gannon told the Journal. The private equity giant is focusing its investment strategies on growth-oriented sectors insulated from interest rate hikes, Blackstone President and Chief Operating Officer Jonathan Gray told investors during a conference call in April. Roughly 50% of Blackstone’s portfolio will be centered around the logistics space. The REIT will also invest in other growth opportunities, including life science real estate.