Blackstone Inc on Tuesday said it had secured a $4 billion investment from the University of California in its unlisted real estate income trust (BREIT) that has been plagued by investor redemptions, after the private equity firm committed $1 billion to backstop the university's returns in the fund.
Signage is seen outside The Blackstone Group headquarters in Manhattan, New York, U.S., November 12, 2021. REUTERS/Andrew Kellyon Tuesday said it had secured a $4 billion investment from the University of California in its unlisted real estate income trust that has been plagued by investor redemptions, after the private equity firm committed $1 billion to backstop the university's returns in the fund.
While the BREIT's returns have remained robust -- it gained 8.4% net of fees in 2022 versus a 26% decline to the publicly traded Dow Jones U.S. Select REIT Total Return Index UC Investments, the University of California's investment arm, agreed to hold its investment in BREIT for at least six years. In exchange, Blackstone will offer $1 billion of its own investment in BREIT as collateral, allowing for that money to go to UC Investments to make up for any shortfall if the university does not achieve a minimum 11.25% annualized net return through January 2028.
Blackstone said it will receive 5% of all profit generated above the 11.25% threshold return guaranteed to UC Investments.
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