Blackstone Aggressively Courts Small Investors with Huge Non-Traded REIT
February 4, 2022 | Ted Jackson | ConnectCRE.com
Money management behemoth Blackstone Group Inc., whose commercial real estate efforts until now have been focused almost exclusively on the very largest institutional investors, is aggressively blazing new trails by offering small investors access to its CRE platform.
The Wall Street Journal reports that Blackstone’s efforts have been so successful that the firm’s non-traded REIT, the Blackstone Real Estate Income Trust, or BREIT, is now Blackstone’s largest CRE fund at more than $50 billion.
Underpinning the success in selling BREIT shares – investments can be as small as $2,500 – have been savvy investment calls on hot pandemic CRE sectors such as warehouses and apartment blocks. That has enabled sizzling annual yields for BREIT of between 4% and 5% which are, of course, very much higher than in most fixed income markets like corporate bonds, for example.
BREIT, which was founded five years ago, is clearly among the most successful of growing efforts to offer alternative investments to small investors. CRE plays very prominently in the small investor alternative investment push, but natural resources – forestry products, for example – also feature as do managed commodities funds and even crypto products like Bitcoin.
And the list of alternative investment products on offer to the retail investor continues to grow. Alternative investment data analytics firm Preqin CEO Mark O’Hare says total alternative asset AUM will hit $17.2 trillion by 2025, growing by 9.8% annually.
But CRE will grow at twice the overall annual rate through 2025, Preqin predicts. Experts say much of the CRE alternative asset fund growth will be due to efforts to open up institutional CRE platforms to retail investors.
And top Blackstone real estate executives have spent much time and effort to create a new kind of non-traded REIT with BREIT. They stress that with BREIT and the way Blackstone’s non-traded REIT has been structured, the interests of BREIT shareholders and those of Blackstone are closely aligned.
That means that Blackstone has a deep interest in achieving long-term success with BREIT. Previously critics of non-traded REITs said this was lacking in the way non-traded REITs were structured with inadequate disclosure leading investors to get sideswiped by high fees, among other things.
Clearly, investors do not appear to be concerned about past non-traded REIT problems. The WSJ reports that investors have been pouring money into BREIT at a staggering pace, throwing in more than $2 billion a month in the final months of 2021, or 70 percent of all funds invested in non-traded REITs during the period.
