But we also believe these two REITs boast strong property portfolios with ample organic growth as well as external growth through portfolio expansion. To be fair, BREIT is a pretty vehicle and it has a strong track record. And, as you can see from the metrics above, this portfolio has exhibited incredibly strong organic performance so far this year. DISCLAIMER: Jussi Askola is not a Registered Investment Advisor or Financial Planner. I don't know many asset classes that perform -- outperform indexes by 3,000 basis points." The average annual cost of a public internally-managed REIT is around 0.6%, and some REITs like Realty Income (O) have it as low as 0.4%. Instead of daily price fluctuations, NAV REITs have a much less volatile movement. The deal will add a large-scale portfolio of business park, office, and industrial assets to Blackstone's burgeoning real estate portfolio. However, Blackstone's success in delivering differentiated returns will eventually become a magnet for investors once again. Blackstone Mortgage Trust, Inc. has a 12 month low of $20.87 and a 12 month high of $32.90. For a more comprehensive brief of BREITs real estate investment portfolio, refer to the table below. STAG offers an attractive, 4.7% dividend yield with a payout ratio slightly below 70%. Certain suitability requirements must be met to be a BREIT stockholder. Jupiter 12 Industrial Portfolio, Canyon Industrial Portfolio, Meridian Industrial Properties, etc. Editor's Note: This article discusses one or more securities that do not trade on a major U.S. exchange. 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. The company has a market cap of $3.67 billion, a P/E ratio of 14.90 and a beta of 1.31. With 8.1% and 4.3% of the shares outstanding respectively, BlackRock, Inc. and Blackstone Inc. are the second and third largest shareholders. Schwarzman took home more than $1.27 . Its president Jonathan Gray was elevated and made successor to Chief Executive Stephen Schwarzman as a result of his success in property investing. Click here to learn more!. This year, the company has set its sights particularly on acquisitions of real estate investment trusts ("REITs"). 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. It only fulfilled about a quarter of those redemptions because it hit its 2% monthly limit. More investors are entrusting it with more of their capital, giving it the funds to acquire more real estate. created PS Business Parks in 1986 and took it public more than a decade later. To liquidate their assets, BREIT must repurchase their shares, which is not guaranteed. BREIT is an externally-managed REIT. Retention remains high, and rent growth for new and renewal leases is rising rapidly. Barclays analysts downgraded their rating of Blackstone's stock to "equal weight" from "overweight" and cut their price target to $90 from $98 on Friday. The Vanguard Group, Inc. is currently the company's largest shareholder with 9.3% of shares outstanding. 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 If you want full access to our Portfolio and all our current Top Picks, feel free to join us for a 2-week free trial at High Yield Investor. Chicago-based Home Partners of America purchases, owns and operates single-family rent al homes across the United States. NAV REITs work differently from traditional publicly-traded REITs. Is this happening to you frequently? BREITs common stocks are priced at their fair value in terms of NAV net asset value. STAG is a ~$10 billion enterprise value industrial REIT specializing in higher yielding, single-tenant net leased properties largely in secondary and tertiary markets. BREITs occupancy rates are all above 90% for almost all sectors, with the exemption of the hotels/hospitality sector. 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. Last but not least, since REITs are today priced at large discounts to fair value, they also pay a higher yield and offer a lot greater upside potential. These properties are overwhelmingly concentrated in Texas, especially Austin, Dallas/Fort Worth, and Houston. Currently, Blackstone has a market capitalization of $66.78 billion. And apparently this is the new target. Do your own research or seek the advice of a qualified professional. The $71 billion Blackstone Real Estate Income Trust (BRET) saw investor withdrawals of nearly $9.9 billion last year. Is It a Buy Right Now? Blackstone will often claim that BREIT is superior to public REITs because it supposedly provides better diversification benefits. 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. . Making the world smarter, happier, and richer. 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. It had only deployed about $47.2 billion by the end of the first quarter. Per maggiori informazioni sulle modalit di utilizzo dei dati, consulta la nostra Informativa sulla privacy e lInformativa sui cookie. course argue that BREIT is the better investment opportunity because BREIT is uniquely attractive for a number of reasons: 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. Excellent. But most public REITs are internally-managed. This was followed by the Class I shares, Class D shares, and then the Class T shares. Public Storage expects to recognize a $2.3 billion after-tax gain, which it intends to distribute to its shareholders. What's more, the portfolio is performing quite well organically as well. At times, they might not even repurchase at all when you need the money urgently. The distribution of these capital shares is specified below. A real estate private equity firm with over 20 years of successful performance, are currently looking to add a Property Accountant to their team. 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 . The 2 main distinctions of REITs in terms of how they earn income are equity and mortgage REITs. 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. Please be aware of the risks associated with these stocks. If you dont like it, we wont charge you a penny! A majority (by 89%) of BREITs income comes from rental revenues across a diverse set of asset classes much of it comes from residential and industrial sectors. It is heavily invested in rapidly growing sunbelt markets. -. I wrote this article myself, and it expresses my own opinions. Our Standards: The Thomson Reuters Trust Principles. In many cases, the discount is 20, 30, 40, or even 50% in extreme cases. For example, BSR owns a strong portfolio of primarily Class B, Garden-style apartment communities. CRE Herald. They have outperformed the MSCI U.S. REIT Index which generated only -7.6%. Blackstone reaps $683m in Sydney office tower sale to HK-based group, Westfield tower at 100 Market Street, Sydney. Today, he is the author of "High Yield Landlord - the #1 ranked real estate service on Seeking Alpha. *Average returns of all recommendations since inception. So this review has been updated with that information. 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. BREIT outperformed the MSCI U.S. REIT Index net return in 2020 (-7.6%) with a 6.1% net return of Class S shares which has the most number of stockholders among its common shares. 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. HPA's unique, resident-led business model expands housing access and choice, while providing a clear path to . A disadvantage of non-traded REITs is the higher management fees as compared to traded REITs. Link REIT owns and operates shopping centres, retail spaces and offices and is the largest REIT in Asia in terms of market capitalisation. Youre reading a free article with opinions that may differ from The Motley Fools Premium Investing Services. We have over 500 five-star reviews from happy members who are already profiting from our real estate strategies. ", stunning outperformance continued last year. Blackstone has reported a 9.3% year-to-date return for its REIT, net of fees, a contrast to the publicly traded Dow Jones U.S. Since inception date to July 31, 2021, total returns (without initial sales charge fees) were between 10% 11% across all types of share classes. They've . The Blackstone Group again advanced its push into the multifamily market with a sizable acquisition spanning in-demand Sun Belt sectors. As of FY 2020, each common stock class received a gross distribution of $0.6354 per share. Those sectors are benefiting from long-term tailwinds and inflation. That was four times more than the company's redemption limit, forcing it to restrict redemptions once again. ET, This 4.5%-Yielding Dividend Stock Has $50 Billion to Continue its Real Estate Buying Binge, 1 Roaring Dividend Stock That's Leading the Market Recovery. Their corporate headquarters is located at 345 Park Avenue, New York. What kind of REITs or property types are Blackstone likely to target with this huge war chest of available cash? I am not receiving compensation for it (other than from Seeking Alpha). Image courtesy of Bluerock Residential Growth REIT. It invests in real estate properties across 8 sectors and real estate debt through mortgage-backed securities and other real estate-related loans. It invests in real estate properties across 8 sectors and real estate debt through mortgage-backed securities and other real estate-related loans. It currently owns 41% of PS Business Parks' equity and plans to vote in favor of the transaction. Dollar Tree Inc forecast annual profit well below estimates on Wednesday, hurt by elevated freight and investment costs and as consumers rein back spending on discretionary items. "Our business is built on performance, not fund flows, and performance is rock solid," the spokesperson said. "Leasing inspections are still occurring [but] most organisations are delaying the decision-making process," Mr Ballantyne said. For the first six months of the year, our real estate strategies appreciated 9% to 10% versus a 20% decline in the REIT index, equaling an outperformance of roughly 3,000 basis points. 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. Clearly, that is Blackstone's view. 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. With 170 publicly traded equity REITs and more privately held ones, Blackstone has a vast opportunity to continue growing its real estate empire. The surge in redemptions at BREIT continues to get a lot of attention. Blackstone also said in the prospectus it had access to $9.3 billion in "immediate liquidity.". 2021 YTD returns were the highest because BREIT has recovered well from the effects of the COVID-19 pandemic. Blackstone shares ended down 7.1% on the news on . 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. For FY 2020, Class I shares were still the highest ($0.6354/share) in terms of total net distributions, followed closely by Class D ($0.608/share). Learn More. Blackstone is a premier global investment manager. There are also selling commissions upfront that can amount up to 3.5% and stockholder servicing fees that can add up to 0.85% each year. 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). BREIT had been a big growth driver for Blackstone. But it is hard to ignore the huge disparity in valuations between BREIT and Public REITs in today's market. That has put STAG at a 30% discount to NAV, one of the steepest discounts in its history as a public REIT. The people familiar with the matter declined to be identified because the information was not public. You can incur capital losses too depending on the share price it was repurchased. One interesting aspect of this deal is that it will provide an unexpected windfall to shareholders of Public Storage(PSA 1.26%). (the "Adviser"). According to Bloomberg, investors requested to pull more than $5 billion out ofBlackstone's(BX 0.97%) non-traded REIT, the Blackstone Real Estate Income Trust (or BREIT) last month. New York, June 22, 2021 - Blackstone Real Estate Income Trust, Inc. ("BREIT") announced today that it has entered into a definitive agreement to acquire Home Partners of America ("HPA"), valuing the company at $6.0 billion. The 28,385 square metre building is 10-storeys and was redeveloped in 2010-11 as part of the Westfield Sydney redevelopment. In fact, Blackstone is close to finalizing what could be the biggest traditional private-equity real estate investment fund in history, according to the Wall Street Journal. Try it Free for 2-Weeks. All of these are made possible through sponsorship from the Real Estate Group of The Blackstone Group, Inc. with decades of real estate experience. BREIT is a hybrid REIT because it deals with both. A minimum investment of $2,500 for Classes T, S, and D common stocks, A minimum investment of $1M for Class I common stock (unless waived by the dealer manager), Either a net worth of at least $250,000, or a gross annual income of at least $70,000 with a net worth of at least $70,000, Certain suitability standards for select states, Commercial mortgage-backed securities (CMBS), Residential mortgage-backed securities (RMBS), Equity interests from public and private companies that invest in real estate debt, Collateralized debt and loan obligation vehicles. Last week, it reached a $12.8 billion deal to acquire student housing-focused, . For instance, in the first quarter of this year, cash same-store net operating income grew 4.8%, while the REIT has guided for same-store NOI to grow 4-5% for the full year. KentWeakley. See here for a complete list of exchanges and delays. 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. Is this happening to you frequently? As such, many REITs are now priced at large discounts relative to the underlying value of the real estate they own. 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. They earn income by leasing out rental spaces to clients. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services. Build the strongest argument relying on authoritative content, attorney-editor expertise, and industry defining technology. "People are taking profits at the value Blackstone says their REIT shares are at," said Snyder. Editing by Rosalba O'Brien and Sam Holmes, Investors pull around $6 billion out of Binance's stablecoin, Revolut auditor flags concern about $576 mln of revenue in long-delayed 2021 accounts, Analysis: Traders relaxed as ECB starts running down massive bond holdings, Analysis: Rebounding U.S. dollar a growing headache for investors, Dollar Tree sees weak 2023 profit as costs mount, shoppers curb spending, Concerns about prospects of COVID vaccine maker Novavax sink shares, Russian internet speeds drop on hardware shortage, research finds, EU silence over Pfizer COVID contract talks is problem that won't go away -watchdog, Kohl's swings to surprise loss as margins crumble on steep discounts, Exclusive news, data and analytics for financial market professionals. 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. I think that the risk-to-reward of these discounted public REITs are far better. There is no upper limit on the size of this new fund, so it could potentially grow significantly larger. That was . Therefore, I continue to accumulate real estate through the public market. Usually, these distributions are credited 20 days after the end of every month. Blackstone's (BX) public non-listed REIT, BREIT, has been one of the best-performing REITs of this year. The company will likely continue to battle this headwind until it works through its current backlog. 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. To make the world smarter, happier, and richer. Having invested in data centres in the US and Europe, Blackstone has eyes on Asia-Pacific - starting with India. I have no business relationship with any company whose stock is mentioned in this article. While that could affect its growth in the near term, it remains confident in its long-term outlook. The Motley Fool has positions in and recommends Blackstone. Select REIT Total Return Index 22.19% decline over the same period. ("Net asset value" is akin to an adjusted book value for REITs using estimated market values for their real estate. That suggests it could make more headline-grabbing deals this year. Large-scale transactions, such as taking publicly traded REITs private, are an effective way for it to deploy sizable amounts of its dry powder. The residential rental market is another. EmeryTech Office (CA) & Coleman Highline Office. Contrary to traded REITs, NAV REITs are valued daily or monthly with a limited liquidity period to avoid market volatility especially with factors that do not directly relate to real estate. Blackstone Group (BX 1.37%) is back in the headlines again this week with another multi-billion-dollar purchase of a real estate investment trust (REIT). However, he said there were no signs of panic selling as a result of vendor distress "which is encouraging". And the company isn't obligated to make any repurchases, so it could choose to buy back even fewer shares than the limit or none at all. Blackstone continues making major deals across the multifamily sector by planning to acquire Bluerock Residential Growth REIT in an all-cash . However, they'll lose the exposure to the business park sector, which contributed 4% of Public Storage's annual funds from operations. The general trend of NAV prices for all class shares was increasing until a sudden drop occurred in the first quarter of 2020 during the onset of the COVID-19 pandemic. Investors always going with the big names to their detriment. 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. Mortgage REITs . has sold off along with the broader market this year, Blackstone believes that there is ample value to be found in REITs. See here for a complete list of exchanges and delays. Blackstone Real Estate Income Trust, Inc. (B REIT) has agreed to acquire Home Partners of America (HPA) for $6 billion. Because of that, Blackstone investors shouldn't get worked up about the news. Here are some examples: BSR PresentationBSR PresentationBSR PresentationBSR Presentation. 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. Clearly, the company will buy whatever it views as the most attractive viable deal. The deal values the, One interesting aspect of this deal is that it will provide an unexpected windfall to shareholders of. Residential, specifically multi-family homes, bring the most rental revenue to BREITs portfolio, followed by the industrial sector. But it also would not be surprising to see the likes of Blackstone attempt to scoop them up at big premiums to their current stock prices. Become a Passive Landlord with our 8% Yielding Real Estate Portfolio. BREIT, the non-traded real . So far, its highest total net distribution (includes deductions of corresponding fees already) was Class I shares in FY 2019. 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. The stock has a fifty day moving average price of $22.70 and a 200 day moving average price of $24.69. But I think that public REITs are today far more opportunistic than BREIT. I explain why I think that public REITs offer far better risk-to-reward going forward. The asset manager partners with big money players like pension funds and insurance companies to provide strong returns and steady income. For a Limited-Time - You can join Seeking Alphas #1 community of real estate investors at the Lowest-Rate-Ever-Offered. Alex Snyder, a portfolio manager at CenterSquare Investment Management LLC in Philadelphia, said the arbitrage between the value Blackstone has assigned to its real estate portfolio and the value of publicly traded REITs caught the eye of investors. This limits your ability to get in and out of the real estate market, increasing risks, and potentially also limiting your ability to act on new investment opportunities. They both have quality management teams with significant skin in the game. This means that there is an external asset manager, in this case, Blackstone, that takes care of the management in exchange for fees. 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. Is now still a better time to invest in BREIT, or should you rather consider public REITs? While it has steadily put that money to work, cash continues flowing into BREIT's coffers because of its growing reputation for delivering top-tier returns. They were down a further 2% on Friday morning at $83.45. 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. The Motley Fool has a disclosure policy. PS Business Parks owns a 27 million square foot portfolio of industrial, business park, traditional office, and multifamily properties located primarily in California, Miami, Texas, and . The private equity giant still has a lot of dry powder to continue shopping. Were working to restore it. Driving those returns was the company's thematic investment approach, currently focused on rental housing and industrial real estate in the Southern and Western parts of the country. But the better way to gauge a REITs performance is through its FFO. According to their 2020 annual report, they hold 1,370 real estate properties and 228 positions in real estate debt investments. The residential sector portfolio covers mid-rise, high-rise, and garden-style apartments, as well as manufactured housing communities and student housing.