Blackstone’s BREIT Sells Storage Business for $2.2B as Withdrawals Abate

Blackstone’s $68 billion Blackstone Real Estate Income Trust is selling storage company Simply Self Storage to rival Public Storage for $2.2 billion, as the private equity firm reports that redemptions finally abated last month. The deal, expected to close in the third quarter of this year, will provide BREIT with more than $600 million in profit, Blackstone said.

“This sale is a terrific outcome for BREIT stockholders and enables us to further concentrate BREIT’s portfolio in its highest-growth sectors,” Nadeem Meghji, head of Blackstone Real Estate Americas, said in a release.

The sale includes 127 wholly owned properties and 9 million net rentable square feet located in 18 states, including those in markets with population growth that has been approximately twice the national average since 2018, the firm said. Approximately 65% of the properties are in what are considered high-growth markets in the Sun Belt.

Public Storage intends to integrate an additional 25 properties into its PS Advantage third-party management platform and will combine the Simply team with Public Storage’s platform. It also announced it has grown its portfolio by approximately 55 million net rentable square feet, or 34%, since 2019 through $10.6 billion of acquisitions, development and redevelopment.

“This acquisition reflects the continued execution of our multi-factor external growth platform, which includes acquisitions, development, redevelopment, expansion, and third-party management,” Public Storage CEO Joe Russell said in a release.

Last year, Blackstone faced an exodus of investors from BREIT, which has a cap on investor redemptions set at 2% per month of the fund’s net asset value, 5% per quarter. Blackstone announced in a letter to investors last year that the fund had almost reached its quarterly limit through November, and withdrawals were halted for the remainder of the year.

However, earlier this month, Blackstone sent a letter to investors informing them that redemption requests for BREIT declined in June after months of the firm limiting investor withdrawals.

“In June 2023, BREIT received $3.8 billion in requests under the repurchase plan, which is 29% lower than the peak in January 2023 and the lowest month of repurchase requests this year,” the letter stated.

BREIT invests primarily in stabilized, income-generating U.S. commercial real estate and, to a lesser extent, real estate debt investments.