July 16, 2020
Even as its Strategic Partners unit closed its seventh real estate secondaries fund at $1.9 billion, the Blackstone Group is shutting down a real estate fund that used leverage to load up on CMBS, investments that have slumped during the COVID-19 pandemic. Pension & Investments reported that the Blackstone Real Estate Income Master Fund, with about $1.1 billion of total investments at year-end, will sell the assets and distribute the proceeds to shareholders.
The fund suffered a 24% decline in March as markets buckled. Previously it generated an average annual return of 5.52% over five years through 2019. Its net assets have declined from almost $773 million at year-end to $553 million as of May 31.
An orderly wind-down would provide shareholders with the “best path to maximize portfolio recovery,” Blackstone said in a regulatory filing late Monday. The funds recently built a strong cash position “and have begun to see a recovery in pricing since the recent trough related to the outbreak of COVID-19.”
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