Although Blackstone Group is one of the newest players in the nontraded REIT space, the firm continues to outpace every one of its peers. Blackstone Real Estate Income Trust has raised $3.1 billion of equity capital since its launch in 2016. That is just less than one-third of all equity raised by the entire industry. It has also been the most active in terms of investing its capital; the company has $7.4 billion of assets that it funded with $5.6 billion of debt.
According to Summit Investment Research, the giant investment manager raised $772 million of equity during second quarter 2018. That amounted to 66 percent of the $1.17 billion raised by all active nontraded REITs during the period. Griffin-American Healthcare REIT IV, the second most-active player in the sector during second quarter 2018, raised $66 million. Cole Real Estate Income Strategy was not far behind with $57 million.
Blackstone Real Estate is one of several novel nontraded REITs that have a perpetual life and adjust their net asset value on a regular basis. Nontraded REITs were traditionally structured with finite lives. Until a few years ago, they did not adjust their values, keeping their shares at their initial sales prices (usually $10).
Blackstone last calculated its net asset value at the end of July, setting it at $10.80 for its class-S shares. That compares with $10.32 per share a year ago, when the company only had $1.7 billion of assets. Among its larger deals in recent months was its $1.8 billion purchase of 146 industrial properties — with square footage totaling 21.7 million square feet — from Cabot Industrial Value Fund IV.
Of the other nontraded REITs still actively raising capital, JLL Income Property Trust has raised $1.5 billion since its launch in 2012. It was followed by Carter Validus Mission Critical REIT II, which has raised $1.3 billion since its launch in 2014.
The $1.17 billion of equity raised by the sector during the latest quarter was a 28 percent increase from the $914 million raised during the first quarter. About $1.02 billion was raised during second quarter 2017.
In addition to Blackstone, a number of other institutional sponsors, namely Starwood Capital Group, Oaktree Capital Management and TH Real Estate, have entered the nontraded REIT sector. Each is just getting its capital-raising efforts under way.
Orest Mandzy is managing editor of Commercial Real Estate Direct.
