Consider These Alternative Real Estate Investments. Total returns could be higher if you account for the accumulated share distributions throughout your investment years. Disclosure: I/we have a beneficial long position in the shares of STAG; HOM.U either through stock ownership, options, or other derivatives. However, he said there were no signs of panic selling as a result of vendor distress "which is encouraging". 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. A real estate private equity firm with over 20 years of successful performance, are currently looking to add a Property Accountant to their team. While its recently announced deals will utilize some more of that capital, additional money is likely to continue flowing into its coffers. Blackstone limited withdrawals from its $69 billion unlisted REIT on Thursday after redemption requests hit pre-set limits amid investor concerns it was slow to adjust valuations as interest rates . But I think that public REITs are today far more opportunistic than BREIT. Therefore, I continue to accumulate real estate through the public market. The real estate group of Blackstone, Blackstone Real Estate, is our sponsor and an affiliate of BX REIT Advisors L.L.C. Jika diperluas, akan tampil daftar opsi pencarian yang akan mengganti input pencarian agar sesuai dengan pilihan saat ini. If you can't get your money back, does the "paper valuation" then have any meaning? While they will be a headwind for Blackstone's growth in the near term as the company works through its backlog, they aren't due to any issues with that investment vehicle. I have no business relationship with any company whose stock is mentioned in this article. ("Net asset value" is akin to an adjusted book value for REITs using estimated market values for their real estate. Blackstone's purchase of American Campus makes student housing a fully privately held asset class in the US. 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. The unconsolidated investments come from their joint venture with MGM Growth Properties LLC, wherein BREIT owns 49.9% of interest. But it is hard to ignore the huge disparity in valuations between BREIT and Public REITs in today's market. Please disable your ad-blocker and refresh. ) Herbert Smith Freehills, JLL and Cushman & Wakefield advised on the sale. As a result, it will receive about $2.7 billion in cash when the deal closes. 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. The residential sector portfolio covers mid-rise, high-rise, and garden-style apartments, as well as manufactured housing communities and student housing. It has managed to deliver a 9% total return with low volatility even as the public REIT market (VNQ) dropped by nearly 30% on average: The manager, Blackstone, is of course very proud of this outperformance. Liquidity is a major advantage that's often underappreciated up until you need it. . Its president Jonathan Gray was elevated and made successor to Chief Executive Stephen Schwarzman as a result of his success in property investing. 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. For a Limited-Time - You can join Seeking Alphas #1 community of real estate investors at the Lowest-Rate-Ever-Offered. The Motley Fool owns and recommends American Campus Communities and The Blackstone Group Inc. It is a lot cheaper and offers better upside potential going forward. To ensure this doesnt happen in the future, please enable Javascript and cookies in your browser. Proof in point: BREIT just had to limit withdrawals because too many investors are currently seeking to get out of it. STAG offers an attractive, 4.7% dividend yield with a payout ratio slightly below 70%. LONDON, Dec 2 (Reuters) - While there has been little wider fallout from this week's surge in redemption requests at an unlisted Blackstone real estate income trust (REIT), it is being read by some as a warning sign. Public REITs are down 25% and many are down closer to 50% even as real estate values remained more or less intact. This covers BREITs direct property investments, equity in public and private real estate-related companies, and unconsolidated investments. It owns mainly rental housing and industrial properties. 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. I wrote this article myself, and it expresses my own opinions. Source: BREIT Fact Card (as of July 2021). The national CBD office market vacancy rate increased by 0.1 percentage point from 8.3 per cent to 8.4 per cent in three months ending March 31. This is a big draw for investor interest in REITs. This is why they are today two of our largest holdings in our Core Portfolio. Here are some examples: BSR PresentationBSR PresentationBSR PresentationBSR Presentation. Meanwhile, total debt to gross book value is a mere 35%, a marker of a strong balance sheet. This gives a hint as to why Blackstone has been hoovering up REITs like a vacuum this year. Is this happening to you frequently? That was almost 70% of all the capital raised by non-traded REITs that year. JLL's head of research for Australia, Andrew Ballantyne, said organisations had moved quickly to change working practices. The company has a market cap of $3.67 billion, a P/E ratio of 14.90 and a beta of 1.31. Jupiter 12 Industrial Portfolio, Canyon Industrial Portfolio, Meridian Industrial Properties, etc. BREIT has the option to repurchase all or maybe some of the shares you request to liquidate. PS Business Parks currently owns 97 business parks with 28.1 million square feet of commercial space leased to about 5,100 tenants. Dividends are paid and capital gains, if any, are shared. A Blackstone spokesperson declined to comment on how the New York-based firm calculates the valuation of its REIT, but said its portfolio was concentrated in rental housing and logistics in the southern and western United States that have short duration leases and rents outpacing inflation. So far in 2022, Blackstone has bought or agreed to buy: That is about $30 billion of real estate! "People are taking profits at the value Blackstone says their REIT shares are at," said Snyder. They claim that, unlike public REITs, BREIT is uncorrelated with the public stock market because it is a non-listed real estate investment vehicle. I wrote this article myself, and it expresses my own opinions. An Investors Perspective Into Blackstone REIT (BREIT), An Investors Perspective Into Apple Hospitality REIT, Everything You Want to Know About Armour Residential REIT, Why you Should Look into Crown Castle REITs, An Investors Perspective Into Whitestone REITs. It invests in real estate properties across 8 sectors and real estate debt through mortgage-backed securities and other real estate-related loans. 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 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. Those sectors are benefiting from long-term tailwinds and inflation. According to their 2020 annual report, they hold 1,370 real estate properties and 228 positions in real estate debt investments. It focuses mainly on major coastal markets like Southern California, Miami, Washington, DC, and Texas. 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). Do your own research or seek the advice of a qualified professional. The deal values the, One interesting aspect of this deal is that it will provide an unexpected windfall to shareholders of. In the . In 2021, BREIT raised nearly $25 billion from investors. Join us for a 2-week free trial and get access to all my highest conviction investment ideas. If you have an ad-blocker enabled you may be blocked from proceeding. Looking for more investing ideas like this one? 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. They have outperformed the MSCI U.S. REIT Index which generated only -7.6%. [added emphasis]. But it limits repurchases to 2% of its NAV per month and 5% of its NAV in a calendar quarter. Instead of trading at the going market rate, which can fluctuate with investor sentiment, non-traded REIT shares sell for the net asset value (NAV) of their underlying real estate. With public REITs, you have much more flexibility. See here for a complete list of exchanges and delays. Instead, the sell-off in its stock stemming from BREIT looks like a great buying opportunity for long-term investors to add to their position. ), And this is based on conservative estimates of property values. Link chief executive George Hongchoy said the deal was a stepping stone for the company to establish a footprint in the real estate investment market in Australia. As such, many REITs are now priced at large discounts relative to the underlying value of the real estate they own. 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. Become a Passive Landlord with our 8% Yielding Real Estate Portfolio. Those returns will eventually draw more investors to BREIT. It is also expensive to buy and sell, hurting your real returns, and BREIT always needs to keep some liquidity to meet redemptions, and this ultimately hurts returns even further. Blackstone continues making major deals across the multifamily sector by planning to acquire Bluerock Residential Growth REIT in an all-cash . The stock has a fifty day moving average price of $22.70 and a 200 day moving average price of $24.69. We take a look at two attractive REITs trading significantly below their net asset values. "Leasing inspections are still occurring [but] most organisations are delaying the decision-making process," Mr Ballantyne said. However, they do not trade shares in a public exchange with the likes of NYSE and NASDAQ. July 16, 2021. Please try again later. However, it recovered by the end of 2020 and soared in the first half of 2021. BREIT also invests in non-distressed public and private real estate debt such as: With the expertise of their investment advisors, BREIT uses leverage through financing to multiply their funds for the increased potential of investment returns. 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. Each type of share has a par value of $0.01. Raven Select Service Portfolio, Hyatt Regency Atlanta (GA), JW Marriott San Antonio Hill Resort (TX), etc. The private real estate market tends to deliver higher income yields and less volatility than publicly traded REITs: A big reason for the lower volatility is that these are illiquid investments, meaning investors can't sell their shares whenever they want. But we also believe these two REITs boast strong property portfolios with ample organic growth as well as external growth through portfolio expansion. Last week, it reached a $12.8 billion deal to acquire student housing-focusedresidential REITAmerican Campus Communities. BREIT has a redemption plan, but as we highlighted in a recent article, this redemption plan can be quite restrictive and Blackstone recently limited withdrawals because too many investors sought to get at out at once. Blackstone is the 1000-pound gorilla in any real estate room. The stock, however, is only traded over the counter in the US as well as on the Toronto Stock Exchange under the ticker symbol HOM.U. This is the most important reason. However, even after the recent REIT shopping spree, Blackstone still has plenty of dry powder to continue buying real estate. It is today priced at just 35 cents on the dollar due to the war in Ukraine and we think that it is very opportunistic. These cash reserves totaled $2.7 billion as of the end of October, according to its prospectus. The U.S. real estate investment trust, or REIT, sector was hit abnormally hard during the 2022 bear market. US private equity giant Blackstone Group has defied market jitters and pulled off a mega sale of an office tower above the Westfield mall in Sydney's CBD to Hong Kong-based Link REIT for $683 million. That's a 39% premium to its stock price on Feb. 9, when news broke that . It gets paid a 1.25% of the NAV each year as well as 12.5% of the annual total return subject to a 5% hurdle. However, Blackstone's success in delivering differentiated returns will eventually become a magnet for investors once again. Associate Director at Atlantic Group. Blackstone is able to purchase giant holdings in a . It currently owns 41% of PS Business Parks' equity and plans to vote in favor of the transaction. This means you can buy real estate at 50 cents on the dollar through the public market. Blackstone of course wants you to invest in BREIT because they earn fees for managing it. There are literally no signs of a slowdown yet for STAG's industrial real estate, and yet the market has punished STAG with a ~35% selloff this year. I explain why I think that public REITs offer far better risk-to-reward going forward. The REIT's quarterly dividend of ~$0.13 (paid monthly in $0.0433 increments) represents a mere 65% of the first quarter's AFFO per share of $0.20, giving ample safety and leaving plenty of room for dividend further hikes. Asset management giant Blackstone (BX) boasts a portfolio of assets under management reaching nearly $1 trillion, made up largely of real estate. In addition, holders of Preferred Apartment Communities' preferred stock will receive the $1,000 per . I'll do that again for you. Global investment firm Blackstone-sponsored Nexus Select Trust has filed the draft paper with market regulator Sebi to launch India's first public issue of retail REIT to raise around US$ 500 million (about Rs 4,000 crore), sources said. Blackstone Inc. is an American alternative investment management company based in New York City.Blackstone's private equity business has been one of the largest investors in leveraged buyouts in the last three decades, while its real estate business has actively acquired commercial real estate. Residential, specifically multi-family homes, bring the most rental revenue to BREITs portfolio, followed by the industrial sector. The price history tells you how the company is valued at face value. Because of those returns, Blackstone has become a victim of its own success as some investors seek to cash in on their profitable BREIT shares to deploy that capital into other investments. The most comprehensive solution to manage all your complex and ever-expanding tax and compliance needs. Making the world smarter, happier, and richer. As an equity REIT, they have a diverse coverage of real estate investments. 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. Like the BPP funds, BREIT doesn't buy fixer-uppers. . Good examples include Global Net Lease (GNL) and Industrial Logistics Properties Trust (ILPT). 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