Berkeley Hedge – University of California to Invest in BREIT
The University of California has announced that it will be investing $4bn in Blackstone’s Real Estate Income Trust (BREIT), a move aimed at bolstering confidence in the $69bn fund, which put limits on investor withdrawals last year after suffering heavy redemptions. The endowment will buy common shares in BREIT at their current net asset value and move the investment into a strategic venture with Blackstone. The $4bn investment will be combined with $1bn in shares that Blackstone already owns in BREIT and moved into a separate fund that carries a performance fee above an 11.25% hurdle rate.
Blackstone will receive a 5% cash performance payment on any returns over that hurdle rate. These fees will be in addition to BREIT ‘s costs for all investors, including the University of California. If the fund performs poorly and doesn’t achieve an 11.25% annual return, Blackstone will return fees to the university until it receives its guaranteed return. Blackstone risks paying out of pocket to make the endowment whole if the fund falls in value or earns minimal returns. The University of California’s investment in Blackstone’s Real Estate Income Trust (BREIT) is a six-year agreement in which the university has agreed to hold its investment in BREIT for a minimum of six years and then will have the ability to redeem its interests over two years beginning in 2028.
What do you think about Berkeley’s investment? And will it pay off?
Want to learn how to invest? Download the Invstr app, where you can play Fantasy Finance and manage a virtual investment portfolio or open a brokerage account and invest for real. Take our interactive investing course on Invstr Academy and become a better investor today!
I am not a financial advisor and my comments should never be taken as financial advice. Investments come with risk, so always do your research and analysis beforehand.