Tuesday, January 31, 2023

Blackstone REIT secures $4bn allocation from University of California

Blackstone real estate investment trust (BREIT), which has faced redemptions pressure in recent months, has secured a $4bn injection from the University of California.

The deal, announced on Tuesday, will boost the $69bn unlisted pool’s cash position. Blackstone CEO Stephen A. Schwarzman said it gave BREIT “increased balance sheet flexibility and capital.”

In exchange for the investment, Blackstone has put aside $1bn of its own BREIT holdings to guarantee an 11.25% annual return to UC Investments for six years.

“In the current environment, investors can benefit from stable cash-flowing investments that can grow with high global inflation,” said Jagdeep Singh Bachher, the University of California’s CIO. 

“We consider BREIT to be one of the best positioned, large-scale real estate portfolios in the US.”

UC Investments has been invested with Blackstone for more than a decade and has more than $2bn in the New York manager’s products.

The BREIT Class I shares, which UC is investing in, have generated a 12.7% annualised net return since starting six years ago. But Blackstone exercised its right to limit redemptions from the fund in November after pullout demands exceeded 5% of NAV.


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