Blackstone's $70bln Real Estate Investment Fund is continuously withdrawn

In March 2023, a wave of capital withdrawals hit Blackstone's real estate investment fund known as the Blackstone Real Estate Investment Trust (BREIT). This saw investors request a massive $4.5 billion withdrawal from the fund. This was a 15% increase from the previous month, signaling a growing concern among investors.

The withdrawal frenzy was worsened by the collapse of Silicon Valley Bank, leading to more investors pulling their funds out of BREIT. However, thanks to the withdrawal limits, Blackstone only had to pay $666 million, which is only 15% of the withdrawal request.

BREIT was launched in 2017, with an aim to provide real estate investments to wealthy individuals. The fund's withdrawal terms only allow clients to withdraw 2% of their total net assets (NAV) per month and up to 5% per quarter.

Blackstone, a leading financial management firm, has been assuring investors of brighter opportunities in the real estate sector. However, the March events indicate that investors are still hesitant about this sector, and their confidence needs to be restored.

Blackstone has spent $5 billion to meet investor withdrawal requests since November 30, 2022, indicating that investor confidence has been waning over time. Clients in Asia have led the withdrawal requests, with investors from outside the United States dropping about 50% of their money in BREIT over the past 12 months.

The total amount required to withdraw in March 2023 is 16% lower than the peak in January 2023. This could be good news for Blackstone since it may indicate an end to the withdrawal frenzy sooner than anticipated.

NewEdge Wealth is a major investor in the BREIT fund, and the company is likely watching developments closely. It remains to be seen how Blackstone will restore investors' confidence and prevent future withdrawal demands from happening.