Blackstone defends BREIT redemptions, says rental property benefits

Blackstone Inc BX has been criticised over the past week for limiting withdrawals from its $69 billion private BREIT, or Blackstone Real Estate Income Trust.

What Happened: That action was taken in response to redemption requests that exceeded previously established limits - but Blackstone Chief Operations Officer Tony Gray defended the fund, telling investors that the fund benefits from below-market rents in its portfolio.

Gray told CNBC on Thursday that there was a chronic shortage of housing in the united states because of the financial crisis in logistics. We also have the benefit of below-market rents in our portfolio. A startling 55% of the $69 billion total NAV in BREIT is linked to rental property, implying that Blackstone may still hike rents in those less-market locations, providing some comfort to those anxious investors.

Blackstone shares have shed 15% since December 1, after the firm disclosed limited redemptions from the BREIT for the first time, sending shocks to investors concerned about the funds performance.

Why Does It Matter: The investment bank blamed the above-normal redemption requests on investors being roiled by market volatility rather than discontent with the fund.

If you're an investor with debt and your market goes down 40%, you can imagine what it is like to be one of those individuals as the world is busy shrinking and people get scared, according to Blackstone CEO Stephen Schwarzman.

Other similar funds have had large redemptions, with Starwood Capital alerting investors last week that its $14.6 billion non-traded REIT has also raised the gates, according to Reuters.

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