Blackstone chief defends real estate fund amid rush for withdrawals

Investors tense astir Blackstone's existent property concern spot should presumption it arsenic a semipermanent conveyance that's good positioned for the future, the firm's president said Thursday.

Blackstone has taken vigor implicit the past week for limiting withdrawals from the $69 cardinal backstage REIT, the Blackstone Real Estate Income Trust, oregon BREIT. That determination followed redemption requests that exceeded antecedently acceptable limits. The company's banal has fallen 8% implicit the past 5 days amid a contention that included a Barclays downgrade of the alternate concern firm.

Blackstone President and Chief Operating Officer Jon Gray defended the positioning and structure, noting that investors knew BREIT had limits connected redemptions.

"We acceptable up the merchandise with limitations connected liquidity," Gray told CNBC's David Faber during a unrecorded "Squawk connected the Street" interview. "We described it arsenic semi-liquid due to the fact that we knew astatine immoderate constituent determination would beryllium a play of volatility, and we didn't privation to merchantability assets astatine the incorrect clip nether pressure."

In speech for their patience, investors person benefited from a money that Gray said has delivered 13% compounded returns for six years successful a challenging environment.

Publicly traded REITs person gotten slammed this twelvemonth amid a rising involvement complaint situation that has deed the existent property marketplace particularly hard, raising questions astir the existent values of holdings successful backstage funds specified arsenic Blackstone's BREIT. The $35 cardinal Vanguard Real Estate ETF, for example, has tumbled 26% twelvemonth to date.

"The cardinal taxable present is that show has delivered and the operation we enactment successful spot is operating precisely arsenic we intended six years ago, and we are incredibly arrogant of the show and the structure," Gray said.

Investors should "look astatine Blackstone and say, 'You guys person done an unthinkable occupation astatine deploying our superior successful precisely the close geography, successful precisely the close sectors with the close equilibrium sheet,'" helium added. "I deliberation they person assurance successful us."

Yet the money was deed by a doubling successful redemption requests for November portion subscriptions saw a important drop-off, to little than fractional a cardinal dollars from $880 cardinal successful September, according to Barclays.

Gray said the steadfast tin merchantability assets to conscionable redemptions but tin bash truthful implicit a clip skyline that volition beryllium beneficial.

"We tin merchantability if needed," helium said. "That's what gives america a batch of confidence."

Blackstone shares roseate astir 2% successful aboriginal trading Thursday pursuing the interview.