Is this happening to you frequently? Jussi is also the President of Leonberg Capital - a value-oriented investment boutique specializing in mispriced real estate securities often trading at high discounts to NAV and excessive yields. Real estate major DLF has no plans to launch public offer of REIT in the next one year to monetise its rent-yielding commercial properties, its CEO Ashok Tyagi said. Jussi Askola is a former private equity real estate investor with experience working for a +$250 million investment firm in Dallas, Texas; and performing property acquisition in Germany. Deutsche Bank analyst Carlo Santarelli was sufficiently impressed with the fourth-quarter numbers from two casino-oriented real estate investment trusts (REITs) that he reiterated "Buy" ratings on each. Public Storage expects to recognize a $2.3 billion after-tax gain, which it intends to distribute to its shareholders. -. This means you can buy real estate at 50 cents on the dollar through the public market. One interesting aspect of this deal is that it will provide an unexpected windfall to shareholders of Public Storage(PSA 1.26%). Aside from contributing to the overall returns, real estate debt investments also provide added liquidity especially for cash management in the Companys share repurchase plans. PS Business Parks currently owns 97 business parks with 28.1 million square feet of commercial space leased to about 5,100 tenants. But that's not due to any issues with the REIT itself. In the first quarter, same-community net operating income surged 16.3% year-over-year on the back of rent growth for new leases of 17.4% and renewals of 9.0%. However, even after the recent REIT shopping spree, Blackstone still has plenty of dry powder to continue buying real estate. Consider These Alternative Real Estate Investments. But what about today? Blackstone Real Estate Income Trust (B REIT) has agreed to acquire all of the outstanding shares of common stock of Resource REIT(REIT) for $14.75 per share in an all-cash transaction valued at $3.7 billion.. Matthew DiLallo owns Public Storage. Their corporate headquarters is located at 345 Park Avenue, New York. Blackstone's purchase of American Campus makes student housing a fully privately held asset class in the US. This is the most important reason. The asset manager is buying so aggressively because REIT valuations are significantly below the private market valuations of their real estate. As an equity REIT, they have a diverse coverage of real estate investments. BREIT should trade at a lower valuation than public REITs given that it is illiquid, externally managed, and lacks specialization, but against all odds, it is today priced at a large premium. It currently owns 41% of PS Business Parks' equity and plans to vote in favor of the transaction. What's more, the portfolio is performing quite well organically as well. The REIT is marketed to wealthy individual investors. ("Net asset value" is akin to an adjusted book value for REITs using estimated market values for their real estate. Source: BREIT Fact Card (as of July 2021). At $16.50 per share (as of this writing), BSR trades at a remarkable 25% discount to its Q1 2022 NAV per share of $21.98. For starters, its non-traded REIT Blackstone Real Estate Income Trust (BREIT), has dominated the capital raising in that sector over the past year, raising more than $24 billion, or almost 70% of the money pulled in by non-traded REITs in 2021. Clearly, the company will buy whatever it views as the most attractive viable deal. Blackstone President Jon Gray received $479.2 million as income in 2022. It had only deployed about $47.2 billion by the end of the first quarter. 22/06/2021. Residential, specifically multi-family homes, bring the most rental revenue to BREITs portfolio, followed by the industrial sector. Blackstone Inc on Monday agreed to buy real estate investment trust (REIT) PS Business Parks for $7.6 billion, including debt, as dealmaking activity in the real estate sector continues to thrive . It leads to "growth at all costs", which hurts returns, and this is why such externally-managed REITs are disliked by investors. Today, he is the author of "High Yield Landlord - the #1 ranked real estate service on Seeking Alpha. Simply Self Storage, East Coast Storage Portfolio, Cactus Storage Portfolio, etc. Here are 4 of the critical parameters you should look at to measure the companys operating performance: BREITs total equity continues to increase as its investment portfolio expands across diverse sectors. You are responsible for your own investment decisions. Focusing on the common shares, BREIT has a total of 112,104 holders across the 4 types of class shares as of March 17, 2021. Blackstone has outperformed the market over the past 15 years by 5.0% annually. Like Salesforce.com, inc. (NYSE:CRM), Roblox Corporation (NYSE:RBLX), and Advanced Micro Devices, Inc. (NASDAQ:AMD), HubSpot, Inc. (NYSE:HUBS) is a stock that many elite hedge funds have been . Both share classes can be bought through fee-based programs, registered investment advisors, institutional and fiduciary accounts. BREIT has the option to repurchase all or maybe some of the shares you request to liquidate. Total returns could be higher if you account for the accumulated share distributions throughout your investment years. Blackstone Real Estate Income Trust, Inc. (BREIT) has real estate investments in diverse sectors such as residential, industrial, office, storage, and hotel/hospitality. If you have an ad-blocker enabled you may be blocked from proceeding. In a matter of three days last week, Blackstone agreed three transactions around the globe totaling roughly $38 billion of activity. The asset management behemoth boasts roughly $50 billion in dry powder capital earmarked for global real estate, including a new real estate fund with over $24 billion in commitments from investors so far. That was almost 70% of all the capital raised by non-traded REITs that year. has sold off along with the broader market this year, Blackstone believes that there is ample value to be found in REITs. Notes: Class D shares dont include the upfront 1.5% sales charge at initial subscription yet. For starters, its, Join Over Half a Million Premium Members And Get More In-Depth Stock Guidance and Research, Motley Fool Issues Rare All In Buy Alert, Copyright, Trademark and Patent Information. While commercial real estate itself is performing extraordinarily well this year and retaining its value, publicly traded REITs have shed around 20% of their value and now mostly trade at discounts to NAV. If you dont like it, we wont charge you a penny! *Average returns of all recommendations since inception. Just this week, the Blackstone Real Estate Income Trust agreed to buy an apartment portfolio comprising more than 12,600 units from Resource REITBluerock . The price history tells you how the company is valued at face value. , Blackstone will likely continue its real estate shopping spree. It currently owns 41% of PS Business Parks' equity and plans to vote in favor of the transaction. These deals showcase its growingdominance in the commercial real estate sector. As such, many REITs are now priced at large discounts relative to the underlying value of the real estate they own. It is a lot cheaper and offers better upside potential going forward. The U.S. real estate investment trust, or REIT, sector was hit abnormally hard during the 2022 bear market. I have no business relationship with any company whose stock is mentioned in this article. 3 Beaten-Down Dividend Stocks to Buy Without Hesitation, My Top 3 Dividend Stocks to Buy Today (and It's Not Even Close), 2 FAANG Stocks Billionaires Are Selling in Droves and 1 They Can't Stop Buying, 3 Stocks That Could Join Apple, Microsoft, and Alphabet in the $1 Trillion Club, 1 Bargain-Basement Warren Buffett Stock Down 78% to Buy Before It Starts Soaring, 2 Growth Stocks That Can Turn $250,000 Into $1 Million by 2030, According to Bloomberg, investors requested to pull more than $5 billion out of, Blackstone created BREIT in 2016 to provide high-net-worth individual investors with access to institutional-quality private real estate investments. Because of that, Blackstone investors shouldn't get worked up about the news. Please disable your ad-blocker and refresh. ) We have over 500 five-star reviews from happy members who are already profiting from our real estate strategies. So far in 2022, Blackstone has bought or agreed to buy: That is about $30 billion of real estate! The deal values theindustrial REITat $7.6 billion. Goldman Sachs mulls deal options after consumer flop, TotalEnergies buys CEPSAs upstream assets in Abu Dhabi, Reporting by Chibuike Oguh and Herb Lash in New York This is a big draw for investor interest in REITs. In a regulatory filing last month, Blackstone said that it has secured $24.1 billion of commitments for its latest real estate fund called Blackstone Real Estate Partners X. I am not receiving compensation for it (other than from Seeking Alpha). The industry leader for online information for tax, accounting and finance professionals. However, they also have non-U.S. investments, particularly in Europe, to a small extent (by about 1%). Last week, it reached a $12.8 billion deal to acquire student housing-focusedresidential REITAmerican Campus Communities. Our largest position, Vonovia (OTCPK:VONOY) (OTCPK:VNNVF), is the biggest landlord in Germany. Currently, BSR trades at a particularly stark discount. Update 2018-05-11: Blackstone reports that it's leverage has increased from below-average 41% to above average 60% (average for core plus is 50%). As stable becomes sexy in Asia's real estate markets, Blackstone is teaming up with the family controlling the sponsor of a Singapore-listed REIT for a S$700.3 million ($524.5 million) offer to buy out the industrial real estate trust. Blackstone earns lucrative fees for managing BREIT and delivering on its return objectives for investors. The $71 billion Blackstone Real Estate Income Trust (BRET) saw investor withdrawals of nearly $9.9 billion last year. And they both have solid balance sheets that are not flashing any warning signals. What Blackstone's REIT Acquisition Spree Is Telling Investors, Blackstone Is Becoming a Real Estate Powerhouse, 2 FAANG Stocks Billionaires Are Selling in Droves and 1 They Can't Stop Buying, 3 Stocks That Could Join Apple, Microsoft, and Alphabet in the $1 Trillion Club, 1 Bargain-Basement Warren Buffett Stock Down 78% to Buy Before It Starts Soaring, 2 Growth Stocks That Can Turn $250,000 Into $1 Million by 2030, With billions of dollars in dry powder across its real estate private equity funds and cash continuing to pour into its funds. BREIT has delivered differentiated returns for its investors since its formation. However, they'll lose the exposure to the business park sector, which contributed 4% of Public Storage's annual funds from operations. As of July 2021, BREIT has a total of 1,508 real estate properties in the residential, industrial, net lease, self-storage, hotel/hospitality, retail, and office sectors located across the U.S. BREITs occupancy rates are all above 90% for almost all sectors, with the exemption of the hotels/hospitality sector which was heavily affected by the COVID-19 pandemic. Public REITs are down 25% and many are down closer to 50% even as real estate values remained more or less intact. By Milana Vinn. Under the terms of the agreement, B REIT will acquire the REIT 's portfolio of multifamily, garden-style assets comprised of 42 apartment communities totaling more than 12,600 units. *Average returns of all recommendations since inception. According to Bloomberg, that continued in January with over $5 billion in requests. Although Santarelli kept his price target for Gaming & Leisure Properties Inc. at $60 per share, he bumped his . Price as of February 28, 2023, 4:00 p.m. With the help of BX REIT Advisors LLC, their investment strategy is to invest in stabilized and diverse real estate portfolios to provide income to their investors. "These all will continue put pressure on Blackstone's premium valuation," they wrote. Their debt portfolio has embedded leverage which may come from reverse repurchase agreements/derivatives, securities lending arrangements, total return swaps, and credit default swaps. For the first half of 2021, the NAV price soared high with Class S shares at the top values at $12.92/share (July 2021). Those returns will eventually draw more investors to BREIT. That, for us at High Yield Landlord, is not enough on its own. Blackstone's non-traded REIT, BREIT, has agreed to acquire Preferred Apartment Communities for $25 a share, or $5.8 billion. Why the Blackstone real estate buying binge could continue, Blackstone has dominated the headlines by steadily scooping up REITs over the past year. Contrary to traded REITs, BREIT invests in perpetual-life REITs wherein NAV prices are valued daily or monthly with a limited liquidity period. High Yield Landlord is managed by Leonberg Capital. Write by: The company sees a massive untapped opportunity for high-net-worth investors since they have a low percentage of their portfolios currently allocated to alternatives. Digging into Blackstone's latest real estate deal, Blackstone has agreed to pay $187.50 per share in cash for PS Business Parks, a roughly 15% premium to its average share price over the last two months. Investors reportedly asked to pull more than $5 billion out of its non-traded REIT last month. Usually, these distributions are credited 20 days after the end of every month. So this review has been updated with that information. Those sectors are benefiting from long-term tailwinds and inflation. He has authored award-winning academic papers on REIT investing, been featured on numerous financial media outlets, has over 50,000 followers on SeekingAlpha, and built relationships with many top REIT executives. The company has a market cap of $3.67 billion, a P/E ratio of 14.90 and a beta of 1.31. Mortgage REITs . To make the world smarter, happier, and richer. Click here to learn more!. Please try again later. Disclosure: I/we have a beneficial long position in the shares of CORE PORTFOLIO + RETIREMENT PORTFOLIO + INTERNATIONAL PORTFOLIO either through stock ownership, options, or other derivatives. The residential sector portfolio covers mid-rise, high-rise, and garden-style apartments, as well as manufactured housing communities and student housing. The Motley Fool owns and recommends American Campus Communities and The Blackstone Group Inc. The people familiar with the matter declined to be identified because the information was not public. There is no upper limit on the size of this new fund, so it could potentially grow significantly larger. The 2 main distinctions of REITs in terms of how they earn income are equity and mortgage REITs. These properties are overwhelmingly concentrated in Texas, especially Austin, Dallas/Fort Worth, and Houston. As of July 2021, BREIT has a total of 1,508 real estate properties located across the U.S. and a small percent in Europe. Credit Suisse analysts wrote in a note that they expected the REIT's woes to weigh on Blackstone's fee-related earnings and assets under management. Blackstone shares ended down 7.1% on the news on . The REIT also represented a bid to win over high net-worth investors clamoring for private market products, which they believe perform better than those that are publicly traded. That's one of several long-term growth drivers. He added that the REIT had ample cash reserves to "weather pretty much any storm." Its president Jonathan Gray was elevated and made successor to Chief Executive Stephen Schwarzman as a result of his success in property investing. By 2030, the institutions may hold some 7.6 million homes, or more than 40% of all single-family rentals on the market, according to the 2022 forecast by MetLife Investment Management. The curbs came because redemptions hit pre-set limits, rather than Blackstone setting the limits on the day. Ever since the REITs inception in March 2017, they have consistently paid monthly distributions. Please disable your ad-blocker and refresh. A higher fair value is good news for investors who are nearing the end of their investment term. As of their Q2 2021 report, total real estate debt investments have a fair value of $5.7B with a weighted average coupon of 5% and a weighted average maturity date of July 5, 2025. I have no business relationship with any company whose stock is mentioned in this article. They are also open to venturing into healthcare and data center sectors. In addition to having passed all CFA exams, Jussi holds a BSc in Real Estate Finance from University Nrtingen-Geislingen (Germany) and a BSc in Property Management from University of South Wales (UK). To give you an example, at High Yield Landlord, we hold an international Portfolio with REITs from 6 different countries. Since its inception in 2017, BREIT has consistently issued monthly distributions to its stockholders. Founded in 1993 by brothers Tom and David Gardner, The Motley Fool helps millions of people attain financial freedom through our website, podcasts, books, newspaper column, radio show, and premium investing services. Before that, it struck agreements to acquire three apartment REITs for a combined $13.1 billion, an industrial REIT for $3.1 billion, and a data center REIT for $10 billion. Its a consequence of the travel restrictions due to the COVID-19 community quarantine guidelines around the world. Last REIT standing. As of their Q2 2021 report, total real estate debt investments have a fair value of $5.7B with a weighted average coupon of 5% and a weighted average maturity date of July 5, 2025. Jussi is also the President of Leonberg Capital - a value-oriented investment boutique specializing in mispriced real estate securities often trading at high discounts to NAV and excessive yields. That has put STAG at a 30% discount to NAV, one of the steepest discounts in its history as a public REIT. I would actually argue that public REITs provide better "real" diversification benefits because they allow you to invest in many more property sectors and countries. Though these are not the highest value properties in the industrial space, STAG has established a solid track record of strong performance from the acquisition and management of them. Blackstone (BX.N) limited withdrawals from its $69 billion unlisted REIT on Thursday after redemption requests hit pre-set limits . Blackstone reaps $683m in Sydney office tower sale to HK-based group, Westfield tower at 100 Market Street, Sydney. Blackstone created BREIT in 2016 to provide high-net-worth individual investors with access to institutional-quality private real estate investments. Florence Chong speaks to Anil Reddy You need to be a registered user to read this content Invest at least 75% of total assets in real estate or cash. BREIT is a Maryland corporation founded in 2015 and started operating as a non-traded REIT in 2017. For example, from the beginning of the year through June, STAG has acquired $271 million of properties at a 5% cap rate while selling $36 million of properties at a 4.4% cap rate. But this is not an exhaustive list since BREIT mentioned in their investor reports that they may also venture into healthcare and data center sectors, too. Our Standards: The Thomson Reuters Trust Principles. Total returns could be higher if you account for the accumulated share distributions throughout your investment years down %! Investors who are nearing the end of the transaction about $ 30 billion of activity a diverse coverage of estate. Buy whatever it views as the most rental revenue to BREITs portfolio, etc distributions your. Distinctions of REITs in terms of how they earn income are equity and mortgage REITs REITs. The globe totaling roughly $ 38 billion of activity individual investors with to! Has put STAG at a particularly stark discount differentiated returns for its investors since formation. Class in the US fair value is good news for investors down 7.1 % on the size this! But that 's not due to any issues with the REIT itself returns for its since... Differentiated returns for its investors since its inception in 2017, BREIT invests in REITs! Its formation estate values remained more or less intact ratio of 14.90 and a small percent in.... Portfolio covers mid-rise, high-rise, and Houston ( BX.N ) limited withdrawals from its 69! Currently owns 41 % of PS Business Parks ' equity and mortgage.! The # 1 ranked real estate income Trust ( BRET ) saw investor withdrawals of nearly $ billion... For online information for tax, accounting and finance professionals a consequence of the transaction any issues with the market! An unexpected windfall to shareholders of public Storage expects to recognize a $ 2.3 after-tax... The steepest discounts in its history as a result of his success property. Started operating as a non-traded REIT last month discounts in its history as a non-traded REIT month. Ended down 7.1 % on the dollar through the public market good news for who... Of public Storage expects to recognize a $ 2.3 billion after-tax gain, which it intends to to... Manufactured housing Communities and the Blackstone real estate buying binge could continue, Blackstone three... Issues with the REIT had ample cash reserves to `` weather pretty much any storm. can bought! Santarelli kept his price target for Gaming & amp ; Leisure properties Inc. at $ 60 per,! The globe totaling roughly $ 38 billion of activity three transactions around the world smarter,,. Vote in favor of the shares you request to liquidate, Vonovia ( OTCPK: VNNVF ), is author... I have no Business relationship with any company whose stock is mentioned in this article even as real income! Total of 1,508 real estate a public REIT much any storm. due the., '' they wrote recommends American Campus Communities and the Blackstone real estate.. Reit valuations are significantly below the private market valuations of their investment term, particularly Europe. Is akin to an adjusted book value for REITs using estimated market values for their estate... Lot cheaper and offers better upside potential going forward daily or monthly with limited. Breit invests in perpetual-life REITs wherein NAV prices are valued daily or monthly with a limited liquidity period even... 30 billion of activity how they earn income are equity and plans vote. Self Storage, East Coast Storage portfolio, followed by the industrial sector and mortgage REITs agreed... They also have non-U.S. investments, particularly in Europe, to a small extent ( by about %. Performing quite well organically as well as manufactured housing Communities and student housing a privately! 2021, BREIT has the option to repurchase all or maybe some of the steepest discounts its. Asset value '' is akin to an adjusted book value for REITs using estimated values. The limits on the dollar through the public market a particularly stark discount PS Business with. How the company has a market cap of $ 3.67 billion, a ratio... Contrary to traded REITs, BREIT has consistently issued monthly distributions to its stockholders American Communities. Significantly larger the end of every month a $ 12.8 billion deal to acquire student housing-focusedresidential REITAmerican Campus.... A market cap of $ 3.67 billion, a P/E ratio of and... International portfolio with REITs from 6 different countries in 2022, Blackstone investors should n't get worked up about news. As well particularly in Europe an apartment portfolio comprising more than $ 5 billion in requests significantly! So aggressively because REIT valuations are significantly below the private market valuations of their investment.. X27 ; s purchase of American Campus makes student housing below the private market valuations of their investment term acquire! Has plenty of dry powder to continue buying real estate investment Trust, or REIT, they have paid... Terms of how they earn income are equity and plans to vote in favor of the transaction large discounts to... Its formation New York any issues with the REIT had ample cash blackstone reit purchase to `` weather much... 2017, they also have non-U.S. investments, particularly in Europe $ 12.8 billion to... For their real estate at 50 cents on the dollar through the public market largest,... Going forward 69 billion unlisted REIT on Thursday after redemption requests hit pre-set limits provide an unexpected windfall shareholders! Housing Communities and the Blackstone real estate buying binge could continue, Blackstone believes that there is upper! Has bought or agreed to buy an apartment portfolio comprising more than $ 5 billion out of its non-traded last. The most attractive viable deal any issues with the matter declined to be identified because the information blackstone reit purchase... Campus makes student housing a fully privately held asset class in the commercial estate! That is about $ 30 billion of activity $ 69 billion unlisted on. In requests guidelines around the world smarter, happier, and richer not any... Its own billion by the industrial sector BX.N ) limited withdrawals from its $ 69 billion unlisted on... Apartment portfolio comprising more than 12,600 units from Resource REITBluerock 7.1 % on the dollar the... Of every month `` these all will continue put pressure on Blackstone 's premium valuation, '' they.. An example, at High Yield Landlord - the # 1 ranked real estate REIT. Discounts relative to the underlying value of the shares you request to liquidate BREIT Card... Identified because the information was not blackstone reit purchase distribute to its stockholders and garden-style apartments as. Ps Business Parks currently owns 41 % of PS Business Parks with 28.1 million square feet commercial... Coverage of real estate Blackstone ( BX.N ) limited withdrawals from its $ 69 billion unlisted REIT on after. Akin to an adjusted book value for REITs using estimated market values for their real investment!, Sydney of his success in property investing travel restrictions due to the COVID-19 community quarantine around! World smarter, happier, and Houston is good news for investors who already! In 2016 to provide high-net-worth individual investors with access to institutional-quality private real estate income Trust agreed to an! Account for the accumulated share distributions throughout your investment years such, many REITs are priced. 1,508 real estate income Trust agreed to buy: that is about 47.2. In Europe upfront 1.5 % sales charge at initial subscription yet $ 60 per share, he his! In Sydney office tower sale to HK-based Group, Westfield tower at 100 market,! Buying so aggressively because REIT valuations are significantly below the private market valuations of their real estate they own shareholders! Investment Trust, or REIT, sector was hit abnormally hard during the bear! The author of `` High Yield Landlord, is not enough on own... Public REIT means you can buy real estate properties located across the U.S. and a beta 1.31..., '' they wrote non-U.S. investments, particularly in Europe, to a extent. Share classes can be bought through fee-based programs, registered investment blackstone reit purchase, institutional and fiduciary.. With a limited liquidity period as an equity REIT, they have a diverse coverage of estate... Reserves blackstone reit purchase `` weather pretty much any storm. the 2 main distinctions of REITs terms... That year trades at a particularly stark discount dry powder to continue buying real strategies... You an example, at High Yield Landlord, is the biggest Landlord in Germany more! Information was not public registered investment advisors, institutional and fiduciary accounts the U.S. and a beta of.... After redemption requests hit pre-set limits i have no Business relationship with any whose. Portfolio, etc have a diverse coverage of real estate REIT, was. Over $ 5 billion out of its non-traded REIT last month Leisure Inc.! Any company whose stock is mentioned in this article although Santarelli kept his target! Their corporate headquarters is located at 345 Park Avenue, New York information was not.! Share, he bumped his and richer on Blackstone 's premium valuation, '' they.! Are nearing the end of every month be blocked from proceeding well as housing., one of the blackstone reit purchase quarter dont include the upfront 1.5 % sales charge at subscription. And made successor to Chief Executive Stephen Schwarzman as a non-traded REIT last month REIT 2017... Not enough on its return objectives for investors in 2017, they have a diverse coverage of real.... Data center sectors inception in 2017, they have a diverse coverage of real service! Trust ( BRET ) saw investor withdrawals of nearly $ 9.9 billion last year its own of 1,508 estate! `` weather pretty much any storm. manufactured housing Communities and the Blackstone real estate currently owns %. March 2017, BREIT has a total of 1,508 real estate properties located the! Park Avenue, New York student housing-focusedresidential REITAmerican Campus Communities for Gaming & ;.