After witnessing redemption pressure, Blackstone’s (NYSE:BX) Real Estate Income Trust (BREIT) has landed an investor. Per the announcement, UC Investments, an investment arm of the University of California, will infuse $4 billion in the form of equity into BREIT Class I shares. Blackstone’s stock closed 2.63% higher yesterday.
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Per the arrangement, UC Investments will put up its $4 billion worth of equity in BREIT, and Blackstone will add $1 billion of its current holdings to a new strategic venture. The venture will generate a minimum annualized net return of 11.25% for UC Investments.
Furthermore, Blackstone will receive a 5% incentive fee if net returns exceed the specified minimum rate. However, if net annualized returns come in below the minimum rate, Blackstone will make up the difference through its $1 billion holdings in the venture. However, unlike other stockholders, who can sell shares monthly, UC Investments has committed to holding its investment for six years.
For Blackstone, the $4B infusion will provide additional capital for deployment and increase balance sheet flexibility. Most importantly, the investment validates the high quality of BREIT’s portfolio. BREIT Class I shares have delivered an annualized net return of 12.7% in the last six years.
What is the Price Target for BX?
Per analysts, BX stock has an average price target of $102.19. This implies 34.23% upside potential. The stock has received nine Buy, five Hold, and one Sell recommendations for a Moderate Buy consensus rating.
While most analysts are bullish, hedge funds and insiders sold BX stock. Hedge funds reduced their holdings by 213.8K shares in the last three months. Meanwhile, insiders sold BX stock worth $3.7M. Blackstone stock has a Smart Score of six, implying a Neutral outlook.
