Blackstone Group expects to reach the $1bn mark for its first non-traded Real Estate Investment Trust (REIT) by the end of the month, people with knowledge of the matter said. The asset manager had gathered $875mn from more than 6,500 investors as of June 1, said the people, who asked not to be identified. Blackstone, which is targeting $5bn for the REIT, has been raising about $125mn a month for the pool, the people said.
Blackstone Real Estate Income Trust, formed last year, is the firm’s latest effort to add lower-risk property investments to its offerings. It’s also part of New York-based Blackstone’s push to attract individual investors after relying primarily on institutional clients to build its real estate business over more than two decades. BREIT has a minimum investment of $2,500, compared with the $5mn to $20mn minimums typical for the alternative-asset management sector’s largest funds.
“What this product is about is democratising access to great real estate, institutional-quality management and investment expertise, and the right fees and structure and alignment,” Jon Gray, Blackstone’s global head of real estate, said in a video on BREIT’s website.
Blackstone, the largest manager of alternative assets, is the world’s biggest real estate investor, with $102bn under management in the sector as of March 31. Its real estate business invests across opportunistic equity deals, real estate debt and core-plus property, or those that might require only light renovation or leasing work to increase values. Last year, real estate accounted for about 48% of Blackstone’s pretax profit.
BREIT will have a perpetual life and invest in commercial properties including offices, apartments, shopping centres and hotels that generate stable rental income, according to the website. Its target allocation is at least 80% for property, with the remainder going to real estate debt, according to the website.
The pool’s assets are about 40% leveraged and almost all of the money raised so far has been invested, with the trust buying more than $1.2bn in income-producing real estate, the people said. Its holdings include apartment complexes in Atlanta and Las Vegas, two Hyatt Place hotels in California, a retail centre in Philadelphia and an industrial park in Stockton, California.
Blackstone charges BREIT investors a 1.25% annual management fee and, if the fund generates a return of at least 5%, it takes 12.5% of annual gains, according to the website. Some share classes are also charged upfront for sales commissions or a dealer manager fee, or are billed ongoing servicing fees. Blackstone also manages a traded REIT, Blackstone Mortgage Trust, which makes loans to commercial property owners in North America and Europe.