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Exploring the Key Factors that Affect BREIT Performance

Moneymagpie Team 24th Apr 2023 No Comments

Reading Time: 6 minutes

Welcome to the wonderful world of real estate investment trusts. The only thing better than buying low and selling high is buying quirky and selling quirky.

Let’s discover the key factors affecting BREIT’s performance, from the real estate market to the not-so-obvious, like the regulatory environment.

Gear up to learn how to build an effective investment portfolio for all your assets.

Analysis of BREIT Performance

To better explore how the factors mentioned below impact BREIT’s performance, it’s helpful to analyze BREIT’s historical and current performance.

In addition to studying historical and current performance, keeping up with BREIT news and announcements can provide valuable insights into the company’s performance and future prospects.

Historical Performance

BREIT’s track record is outstanding, with investors receiving stable returns since its debut in 2017. BREIT had a total return of 18.32% in 2019, surpassing the FTSE Nareit Equity REITs Index’s total return of 28.71%.

BREIT managed to give investors a total return of 10.55% in 2020, despite the hurdles provided by the COVID-19 epidemic. Several reasons contributed to this, including high demand for rental houses, cheap loan rates, and favourable economic conditions.

Current Performance

BREIT has a solid track record of success but is now experiencing significant headwinds affecting its performance. Rising interest rates are one of the most important concerns confronting the real estate sector, and hence BREIT.

The Federal Reserve has raised interest rates marginally, making it more expensive for businesses to borrow money. This has resulted in a slowdown in real estate investment, which may immediately impact BREIT returns.

Understanding the Key Factors that Affect BREIT Performance

Before diving into the specifics of how different factors affect BREIT performance, it’s important to have a general understanding of those factors.

1.  Real Estate Market

The real estate market is one of the most important variables influencing BREIT’s success. Because BREIT is a real estate investment trust, its performance is strongly related to the real estate market. Therefore, changes in the real estate market can have an impact on the success of BREIT.

For example, if there is a sudden spike in demand for rental homes, rental rates may rise. This can result in more income for BREIT and better returns for investors. In contrast, if the real estate market suffers a slump, BREIT investors may see lesser profits.

Moreover, BREIT can also be an attractive option for estate planning, as it allows investors to pass on real estate assets to their heirs without transferring ownership of individual properties.

2.  Interest Rates

Interest rates are another important aspect that might impact BREIT’s performance. When interest rates are low, it is easier for businesses to borrow money, which can lead to increased real estate investment. Again, this can benefit BREIT since it can lead to better returns.

If interest rates rise, it may become more expensive for businesses to borrow money. This can lead to a drop in real estate investment, which can negatively influence BREIT’s performance.

3.  Economic Conditions

Economic factors also have an impact on BREIT performance. When the economy is performing well, businesses prefer to spend more in real estate, resulting in greater BREIT returns. When the economy fails, businesses may reduce their real estate investments, resulting in poorer returns.

4.  Property Type

The sort of a real estate in which BREIT invests can also influence its success. For example, BREIT’s returns may suffer if BREIT has a big share of its investment in office properties and a sudden drop in demand for office space; BREIT’s returns may suffer.

On the other hand, if a BREIT invests in high-demand properties, such as residential rental properties, in a tight housing market, it can result in higher returns for investors.

5.  Management Quality

The calibre of BREIT’s management team is another crucial component that might impact its success.

A talented and experienced management team can more successfully discover profitable investment possibilities, make strategic decisions, and handle difficult market conditions than an inexperienced team. As a result, before investing in a BREIT, investors should consider the management team’s track record, expertise, and credentials.

6.  Regulatory Environment

The regulatory environment might also influence the performance of a BREIT. For example, changes in tax laws or rules governing real estate investments can substantially affect the returns of a BREIT.

For example, changes in tax regulations that make real estate investments less appealing might result in reduced returns for investors. As a result, investors must remain current on regulatory developments that may affect BREIT’s performance.

7.  Geographic Location

The geographical location of BREIT’s assets might also affect its success. For example, properties in areas with substantial population and job growth may be more appealing to renters, resulting in increased occupancy rates and rental income.

On the other hand, properties in locations with high vacancy rates or economic downturns may struggle to recruit tenants and create income.

8.  Competition

The degree of competition in the real estate market can also influence the performance of a BREIT. If a market has a high degree of competition, it may be more difficult for BREIT to buy assets at competitive prices, resulting in poorer returns. Conversely, reduced rivalry might lead to more investment options and, therefore, better profits for investors.

9.  Market Volatility

Market volatility may substantially influence the success of a BREIT. For example, changes in stock prices and interest rates can generate fluctuations in the value of real estate assets, affecting the returns of BREIT. Furthermore, market volatility can influence investor mood, resulting in swings in demand for BREIT shares.

10.  Market Sentiments

Market sentiment, or investors’ overall mood or attitude toward the market, can also influence BREIT’s performance. For example, if investors are optimistic about the real estate market, they may be more ready to invest in real estate investment trusts like BREIT, causing its share price to rise. If investors feel pessimistic, they are more inclined to sell their shares, resulting in a price fall.

Advantages of Investing in BREIT

Passive Income

REITs, such as BREIT, produce money from their real estate holdings, which they then pay to shareholders as dividends. This can give investors a consistent supply of passive income, which is especially appealing for individuals searching for a consistent source of cash flow.

  • Professional Management

One of the benefits of investing in a REIT like BREIT is that seasoned people with real estate investing skills manage it. This is especially useful for people needing more time or finances to manage their real estate assets.

  • Access to Large-Scale Real Estate Management

Investing in real estate can be expensive, particularly if you want to invest in large-scale properties. However, by investing in a REIT like BREIT, investors can gain exposure to these types of investments without investing significant capital.

  • Inflation Hedge

Real estate investments may be an effective inflation hedge since property prices and rental rates tend to grow with inflation. As a result, investing in a real estate investment trust (REIT) like BREIT can help safeguard your portfolio from the erosion of buying power caused by inflation.

  • Potential for Capital Appreciation

While REITs are primarily income-generating assets, long-term capital appreciation is also possible. If the value of the properties in which BREIT invests rises over time, the value of the shares may also rise, giving investors financial gains.

  • Tax Benefits

REITs like BREIT can also offer tax benefits to investors. For example, they’re required by law to distribute at least 90% of their taxable income to shareholders, which can result in favorable tax treatment. Additionally, investors can defer capital gains taxes by reinvesting their dividends into additional shares of the REIT.

Risks of Investing in BREIT

  • Market Risks

REITs like BREIT are subject to market risk, which means that the value of the shares can fluctuate in response to changes in the overall stock market. For example, a broader market downturn could negatively impact the value of BREIT shares, even if the underlying real estate holdings remain strong.

  • Interest Rate Risks

As mentioned earlier, interest rates can significantly impact the performance of REITs like BREIT. If interest rates rise, it can increase the cost of borrowing for the companies in which BREIT invests, which can lead to lower returns for investors.

  • Real Estate Market Risks

The performance of BREIT is directly tied to the real estate market’s performance, which can be affected by a range of factors such as supply and demand, pricing trends, and economic conditions. If the real estate market experiences a downturn, it can negatively impact the performance of BREIT.

  • Property-Specific Risks

Even though BREIT invests in a diversified portfolio of properties, there’s still the potential for property-specific risks. For example, if one of the properties in which BREIT invests experiences damage or a decline in value, it could negatively impact the overall performance of the REIT.

  • Regulatory Risks

REITs like BREIT are subject to a range of regulatory requirements, which can change over time. Changes in regulations or tax laws could negatively impact the performance of the REIT or increase its operating costs.

  • Management Risks

Although REITs like BREIT are professionally managed, there’s still the potential for managing risk. For example, if the management team makes poor investment decisions or fails to effectively manage the properties in the REIT’s portfolio, it could negatively impact the performance of the REIT.

  • Liquidity Risks

While REITs like BREIT offer liquidity to investors, there’s still the potential for liquidity risk. A sudden increase in the number of investors looking to sell their shares could put downward pressure on the share price and make it more difficult for investors to sell their shares at a fair price.


So there you have it, folks! Many key factors affect BREIT performance when investing in BREIT.
From the regulatory environment to the management team’s quality and even the type of properties BREIT invests in, it’s important to watch the changing landscape.
By staying informed and making smart investment decisions, you’ll be on your way to reaping the rewards of this exciting real estate investment trust!

Disclaimer: MoneyMagpie is not a licensed financial advisor and therefore information found here including opinions, commentary, suggestions or strategies are for informational, entertainment or educational purposes only. This should not be considered as financial advice. Anyone thinking of investing should conduct their own due diligence. 

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Jasmine Birtles

Your money-making expert. Financial journalist, TV and radio personality.

Jasmine Birtles

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