BREIT Blackstone and other real estate funds limit investor payouts

“Honestly, investors will find out which (open-end real estate fund) managers are good at managing liquidity during difficult times,” said Faris Mansour, Head of Americas and EMEA Business Development at PGIM Real Estate. As of June 30, PGIM Real Estate managed $136 billion in assets.

That means keeping affordable credit on hand, managing portfolios to always have some cash on hand, and managing your assets to stay ahead of loan repayments and the end of a tenant’s lease, according to Mr. Mansour.

Liquidity management is critical because “you don’t want to sell your best assets,” he said. However, in general, the highest quality assets in a portfolio have the most liquidity, he said.

At the same time, in such market conditions, capital inflows are not as strong, and managers cannot rely on the capital inflow of new investors into their funds as a source of liquidity, Mr. Mansour said.

PGIM Real Estate executives are trying hard not to block, which means reducing the release of investor money to zero, according to Mr Mansour.

“When they ask for it (the buyback), we have an obligation to make sure that investors can get liquidity in a reasonable way,” Mr. Mansour said. “It’s not always as fast as some (investors) would like.”

While a small number of investors are looking for redemption due to a significant change in strategy, such as moving most of their real estate portfolios to non-core from the mainstream, most investors are looking for liquidity to bring their real estate portfolios in line with allocation targets. he said.

Under PGIM’s open real estate strategies, the vast majority of buyout requests have come from core and core plus open funds, according to Mr. Mansour.

“We have open strategies with higher risk and higher returns and have not seen any major redemption requests,” he said.

“In this market, more risk can now bring higher returns,” said Mr. Mansour.

So in a down cycle, the first dollars are invested in opportunistic, riskier strategies, he said.

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