BREIT- Gorilla in the room, or Canary in the coal mine?

[Michael Gansberg]

Not long ago, I remember the pundits talking about the impact of Blackstone's private REIT, known as "BREIT," on the commercial real estate market. The smart money(whatever that means) was flowing into BREIT at a breakneck pace of about $3 billion per month, essentially forcing BREIT(which I believe paid/continues to pay about a 4% yield on invested funds) to buy commercial properties hand over fist. I suppose people felt the incoming funds belonged to the hallowed "smart money set" because you have to be pretty well-off to invest in BREIT.

Now, the "smart money" is charging for the exits like a bull in a China shop, breaking BREIT's redemption limits and causing what looks like a run on the bank. By necessity, this will cause Blackstone to sell assets to fund the redemption requests(this is already happening- see the MGM deal for instance.)  As Blackstone sells properties, the buying pressure they once exerted will turn to selling pressure. The cap rates bought down by BREIT may now be sold up(meaning- sales pressure may result in lower prices/higher cap rates.)

Has BREIT, once known as the gorilla in the room, turned into the canary in the coal mine?