Blackstone exec sees light at the end of the REIT liquidity tunnel

Liquidity is coming back to the real estate market, with high-quality assets drawing more bidders than even a few months ago, according to Blackstone Inc.’s global co-head of real estate. 

“When you take an apartment building out to market today, we see three times as many bidders as we saw only six months ago,” Nadeem Meghji said Thursday in an interview with Bloomberg Television. “Buyers are seeing the cost of capital come down, and they’re seeing new supply come down. Liquidity is coming back into the private market.” 

The commercial-property market froze up last year as higher borrowing costs weighed on valuations. But buyers and sellers are starting to gain more confidence as deals are struck, bringing some visibility to what buildings are worth, and interest rates have steadied.

Meghji said Blackstone has seen that high-quality properties in the right asset classes today are still able to draw demand. And the firm has been able to pursue purchases, deploying nearly $20 billion of equity globally in just the last six months as now is the time to be “aggressive,” Meghji said.

But Blackstone hasn’t been immune to the commercial-property pain. After rival Starwood Real Estate Income Trust tightened its redemption limits last month, Blackstone’s $59 billion property trust saw an uptick in withdrawal requests. 

Meghji said that vehicle, Blackstone Real Estate Income Trust, has no plans to change its redemption structure. 

“We have more than $7 billion of liquidity,” he said. “We’ve proven over the last 18 months that the structure works as designed, and I want to be really clear that we have no plans to change that repurchase program and we have no plans to go below those limits.”