BREIT Soars During 2021 as Portfolio Expands Amid Significant Fundraising

Blackstone (BX) is well known for raising funds from large institutions via endowments and pension funds, but its Blackstone Real Estate Income Trust is succeeding by targeting individual investors. In fact, fund increments are sold for as low as $2,500 apiece. Since launching just five years ago, BREIT has raised $50 billion, rebounding from a sharp decline during the early months of the pandemic.

Blackstone has used the fund to acquire office buildings, casinos, warehouses, and rental-apartment buildings, with mid-2020 marking the point when investment started to pick up significantly. Throughout last year, BREIT raised over $2 billion per month on average, accounting for nearly 70% of the money invested in private real estate investment trusts.

Blackstone Fund Growth Driven By Attractive Yields, Property Types

Analysts say BREIT is able to attract investors by offering attractive annual returns ranging from 4% to 5%. These yields outpace both corporate and government bonds while still providing the relative security associated with real estate. Furthermore, the fund has invested in property classifications that have risen in value amid pandemic-fueled changes, such as warehouses and rental apartments.

Some analysts wonder if this type of growth can continue for BREIT, as industrial and apartment properties have experienced an exponential boost in value that’s expected to level off. Investors may also steer their preference toward different asset classes, as rising interest rates could make bond yields more attractive by comparison.

Competition Grows As Others Look to Mimic BREIT Fundraising Model

There are a number of other funds looking to replicate Blackstone’s business model when it comes to REITs and targeting individual investors. Industry watchers point out that during 2021, Brookfield Asset Management (BAM) and KKR & Co. (KKR) launched private real estate investment trusts. That sort of expansion is likely to grow, according to analysts.

But Blackstone executives remain confident, noting the fund’s robust growth will lead to investment in sectors like student housing, data centers, and storage — all of which are on the rise. BREIT’s fundraising success is undeniable. Now, investors will closely watch how the fund navigates rising inflation, which applies further pressure on any real estate portfolio’s debt service.

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