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This is the only instance of seller financing in BREIT’s history. In these deals, it becomes a lender of sorts, forfeiting the right to be paid upfront in full. These financings — more typically used for struggling assets — also tend to make it easier for buyers to raise bids. BREIT sold $20 billion of real estate at a premium to its marks since 2022, and a majority of those deals did not have in-place transferable debt, according to the statement.
With seller financing, “you can make a deal work that otherwise seems to be stalled or seems to be undoable,” said Nicole Schmidt, managing partner of investment bank Oberon Securities. “It’s to help facilitate getting deals done, and getting them done much quicker.” But the trust has been dealing for months with redemption pressure. BREIT has also pivoted from a net buyer in 2022 to net seller in 2023 and secured a cash infusion from the University of California along the way. The firm said selling real estate in “lower growth” sectors gives it flexibility.
Blackstone said BREIT’s structure is working as designed and the trust has no plans to change its share repurchase program. A spokesperson for Starwood didn’t respond to requests for comment.Optics matter in the world of billion-dollar REITs aimed at retail investors, which are also offered by the likes of Brookfield Asset Management and Ares Management Corp.
“They were genuinely concerned about the perception of how BREIT was valued,” said Lodas Chief Executive Officer Brian King.
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