Bloomberg: Blackstone Enters Nontraded REIT Market With New Fund
According to Bloomberg: Blackstone Group LP is seeking to raise $5 billion for its first nontraded real estate investment trust, targeting individual investors in a market that has been plagued by conflicts of interests, high commissions and poor performance.
“Historically, the fee load has been pretty significant for retail investors to get into these vehicles,” said Dirk Aulabaugh, a managing director in the advisory and consulting unit of Green Street Advisors LLC, a Newport Beach, California-based real estate research firm. Blackstone’s new fund appears to be “better aligned than what has historically been the case in the nontraded REIT space, and I think investors are going to welcome that, and they’ll be successful in raising capital along those lines.”
Returns from nontraded REITs generally lagged behind their publicly traded counterparts, shares of which also are easier to buy and sell, Aulabaugh said. Other nontraded REITs are looking at ways to reduce fees, he said. Blackstone’s track record of delivering strong returns in real estate ought to help it raise money for its new REIT, Aulabaugh said.
“They’re going to make the business better,” he said. Blackstone’s entry “will force other players in the space to raise their game.”
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