BREIT fund exodus continues; KKR to buy BREIT student housing assets

S&P Global Market Intelligence offers our top picks of real estate news stories published throughout the week.

Blackstone's real estate fund for individual investors continues to pay out investors more than it brings in, a sign that investors remain wary about the backdrop of the real estate sector, The Wall Street Journal reported.

Excluding reinvested dividends by existing investors, Blackstone Real Estate Income Trust Inc. (BREIT) raised $228 million in March and smaller amounts in both January and February. In contrast, the fund was receiving $2 billion to $3 billion a month in the first half of 2022, according to the report, citing data from Robert A. Stanger & Co.

In February and March, BREIT's redemption requests went down to $961 million and $799 million, respectively, low enough to pay all of them.

Individual investors remained concerned about commercial real estate amid recent turbulence in the market and the latest signals from the US Federal Reserve that it might not begin to cut rates in 2024, according to the report.

CHART OF THE WEEK: Short interest in real estate stocks up in end-March

⮞ Short interest in real estate stocks grew 20 basis points to 3.28% as of end-March from the end of December 2023.

⮞ Office REITs were the most shorted stocks among the real estate industries as of end-March, with short interest of 5.78%.

⮞ Healthcare REIT Medical Properties Trust Inc.'s stock was the most shorted as of March 31, with short interest climbing to 34.5% versus 25.8% at the end of 2023.

Top deals

– KKR & Co. Inc. agreed to acquire 19 purpose-built student housing properties from BREIT for nearly $1.64 billion. The portfolio contains more than 10,000 beds.

– AvalonBay Communities Inc. reached a preliminary deal to sell the 398-unit luxury apartment tower called AVA Theater District in Boston to Carmel Partners, Green Street's Real Estate Alert reported. Carmel Partners' $215 million offer emerged as the top bid for the 30-story property at 45 Stuart Street.

– Alexandria Real Estate Equities Inc. invested $155.3 million to newly created joint ventures that own 285, 299, 307 and 345 Dorchester Ave. in South Boston, the Boston Business Journal reported, citing a securities filing. The REIT plans to develop a life science campus on the parcels spanning more than 1 million square feet, according to the report.

US hotel performance

The average daily rate (ADR) and revenue per available (RevPAR) room of US hotels were up during the week ended April 20, STR reported, citing data from CoStar, which provides information and analytics on property markets.

ADR was $158.60, up 1.5% from the comparable week in 2023. RevPAR was 1.2% higher at $105.94. Occupancy fell 0.3% to 66.8% during the period.

Among the top 25 markets, Philadelphia reported the largest year-over-year improvement in occupancy and RevPAR. Washington, DC, saw the largest jump in ADR.

Click here to see key people moves in North America real estate.

REIT Replay: Industrial REIT stocks plummet during week ended April 19