A Warning to Blackstone's BREIT Investors

This video is an important message to Blackstone’s BREIT investors. It is a warning that you could do better with publicly listed REITs. Please follow me on Twitter: https://twitter.com/askjussi and subscribe to my YouTube channel.

Blackstone's (BX) public non-listed REIT, BREIT, greatly outperformed the public listed REIT market in 2022. It believed a 9% return even as the publicly listed REIT market dropped by nearly 30% on average.

But here is an important message to Blackstone's BREIT investors:

I think that publicly listed REITs are today a lot more opportunistic than BREIT. If I owned it, I would sell it in order to invest in publicly REITs instead.

Here are 5 reasons why:

Reason #1: Publicly listed REITs are a lot cheaper today. Many of them are today priced at large discounts to the net asset value. In many cases, the discount is 30, 40, or even 50%. This means you can buy real estate at 50 cents on the dollar through the public market. Just to give you a few examples: Camden Property (CPT), AvalonBay Communities (AVB), BSR REIT (BSRTF), Prologis (PLD) all trade at large discounts to NAV. We think that it is should the opposite: BREIT should trade at a discount.

Reason #2: Publicly listed REITs are more cost-efficient. Blackstone gets paid a 1.25% of the NAV each year and 12.5% of the annual total return subject to a 5% hurdle. it also gets commissions upfront that can amount to up to 3.5% and servicing fees of up to 0.85% each year. That's a lot of fees. Publicly listed REITs are a lot more cost-efficient. Realty Income's G&A is only 0.3% of its total assets annually.

Reason #3: Publicly listed REITs offer better diversification potential. BREIT invests only in the US and mainly in low cap rate properties such as multifamily apartment communities and industrial facilities. With publicly listed REITs, you can get more diversified and invest in triple net lease properties, healthcare facilities, farmland, etc.

Reason #4: Publicly listed REITs are liquid. BREIT has a redemption plan, but it can be quite restrictive and Blackstone recently limited withdrawals. With publicly listed REITs, you have much more flexibility. You can buy or sell with minimal fees with just a few clicks of mouse.

Reason #5: Publicly listed REITs offer more upside. Since REITs are today priced at large discounts to fair value, they also pay a higher yield and offer a lot greater upside potential. They offer better margin of safety and risk-to-reward.

So my warning to you: BREIT is set to underperform publicly listed REITs. I think that investors could do better by investing in publicly listed REITs.

We also discuss:
Best REITs for 2023
My Top REITs to buy today
REIT investment opportunities
The risks of Blackstone
The risks of BREIT
BREIT dividend yield
BREIT redemption plan
BREIT withdrawal limitations
REITs vs. BREITs
Best REIT alternatives to replace BREIT
Why I would sell BREIT now
Should you sell BREIT
Will BREIT lose its value
Can I get my money back from BREIT
Blackstone real estate
Blackstone REIT review
Blackstone REIT redemption

Important Disclaimer: This video is impersonal and does not provide individualized advice or recommendations for any specific person. Viewers/readers should not make any investment decision without conducting their own due diligence and consulting their financial advisor about their specific situation. This video is for entertainment purposes only and you are responsible for your own investment decisions. The information is obtained from sources believed to be reliable, but its accuracy cannot be guaranteed. The opinions expressed are those of the publisher and are subject to change without notice. This YouTube channel is managed by Leonberg Research OÜ, a subsidiary of Leonberg Capital OÜ.