Global real estate giant Blackstone Real Estate has filed to create a $5 billion non-traded real estate investment trust (REIT) that will primarily invest in income-oriented real estate, potentially including senior living. The new REIT will be called Blackstone Real Estate Income Trust, Inc. and will be externally managed by its adviser BX REIT Advisors LLC, an affiliate of New York-based The Blackstone Group L.P. (NYSE: BX).
The non-traded REIT will offer up to $5 billion in shares of common stock with a minimum initial investment of $2,500. Common stock will be valued at $10 per share. The new investment platform will invest in a wide range of commercial real estate, according to a public filing with the Securities and Exchange Commission (SEC).
“Our investments in primarily stabilized income-oriented commercial real estate in the United States will focus on a range of asset types,” the SEC filing reads. “The may include office, hotel, industrial, multifamily and retail assets, as well as others, including, without limitation, health care, student housing, senior living, data centers, manufactured housing and storage properties.”
Blackstone declined to comment to Senior Housing News about the potential extent of senior living investments.
Global investment manager Blackstone, which has $356 billion of total assets under management, has been toying with the idea of sponsoring a non-traded REIT since the beginning of the year, but may have entered the field during a precarious time.
The recent implementation of a new fiduciary rule could have potentially upset the non-traded REIT industry. Indeed, sales of non-traded REITs recently “fell off a cliff,” Investment News reported.
“Over the first five months of the year, sales of full-commission REITs, which typically carry a 7% payout to the adviser and 3% commission to the broker-dealer the adviser works for, have dropped a staggering 70.5% when compared with the same period a year earlier,” the article stated.
Another major real estate investment company, AR Capital LLC (ARC), halted fundraising for its senior housing REIT late in 2015 amid “regulatory and market uncertainty” that affected capital raising related to the fiduciary rule, the company said. ARC is one of the largest sponsors of non-traded REITs, and sold ARC Healthcare REIT to Ventas, Inc. (NYSE: VTR) in 2014 for $2.6 billion.
However, it appears Blackstone has greater ambitions and confidence in selling the REIT via financial wirehouses such as Merrill Lynch and Morgan Stanley instead of independent broker-dealers, Investment News reported.
One indication that the new REIT is aiming outside the traditional broker-dealer strategy—and therefore outside some of the criticism that non-traded REITs typically carry high fees—is its structure, which caps commission loads close to 9%, compared to a typical 12% load at the time of sale, according to Investment News.
Written by Amy Baxter