Blackstone's BREIT Leans on Data Centers to Power Recovery

Investor sentiment rebounds as AI infrastructure and strong housing fundamentals drive performance.

December 09, 2025

Performance Trends Are Moving in the Right Direction

Blackstone Real Estate Income Trust (BREIT) is gaining ground again. The firm’s latest update shows consistent momentum, driven by continued investment in data centers and strong positioning across growth markets. At the same time, capital markets are opening up, creating more room for activity.

Leadership was also in focus this quarter. Katie Keenan has taken over as CEO, following the passing of Wesley LePatner. Keenan brings deep experience in real estate debt and capital markets, including her most recent role leading Blackstone Mortgage Trust. She steps in at a time when BREIT is actively positioning itself for long-term growth.

BREIT’s Class I shares returned 1.65% in Q3, bringing year-to-date gains through October to 5.6%. That marks ten straight months of positive performance. Since launching in 2017, BREIT has delivered an annualized return of 9.2%—a figure that puts it well ahead of public REITs and private real estate indices over the same time frame.

Tax treatment continues to play a role in net outcomes. In 2024, 96% of BREIT’s distribution was classified as return of capital, pushing the Class I distribution rate to a 7.5% tax-equivalent yield. The expectation is that this tax profile will remain consistent into 2025. Repurchase activity, which spiked during market volatility, is now sharply lower—down 96% from its peak. Net flows are nearing a positive turn.

Data Centers Are Leading the Charge

BREIT is leaning heavily into digital infrastructure—and the timing aligns with growing demand from AI. In Q3 alone, the trust committed $1.2 billion to data center development, bringing its 2025 year-to-date total to $3.7 billion. These investments run through QTS, Blackstone’s data center platform, where BREIT holds a 35% stake.

QTS has expanded rapidly since Blackstone acquired it in 2021. Leased capacity is up 12x. The land bank is 6x larger. And the pipeline—over $25 billion in development—is fully pre-leased to large global technology companies. With most leases running 15 to 20 years and tied to built-in rent escalators, the platform provides visibility into long-term cash flow.

QTS also has room to scale. Its 4,000-acre land bank supports an estimated $80 billion in additional projects. Many sites already have access to power, allowing development to proceed quickly. Recent leasing activity backs this up. QTS’ pipeline doubled in the past quarter, and forecasts show tech companies investing $415 billion in digital infrastructure this year—up 75% from 2024.

BREIT’s focus is on the development phase of the data center lifecycle. This is generally the highest-margin point of investment. The trust has avoided speculative builds. Every project underway has signed leases in place, minimizing exposure to demand risk.

Sunbelt Exposure and Real Asset Mix Provide Support

BREIT isn’t only betting on digital infrastructure. The trust is still deeply weighted toward physical real estate—namely rental housing and industrial. Together, these sectors make up around 90% of its real estate assets. A large portion of that footprint sits in Sunbelt markets, which continue to show strong population, job, and wage growth.

Rental housing accounts for nearly half of BREIT’s portfolio and spans multifamily, single-family, student, and affordable segments. That level of diversification is intentional. It allows the portfolio to remain steady across market cycles. BREIT’s core multifamily markets have moved past peak new supply, positioning them for potential rent growth in the near term.

Industrial assets continue to benefit from broader shifts in logistics and U.S. manufacturing. BREIT is focused on last-mile properties in dense areas and holds a strong presence in the Midwest and Sunbelt. As new manufacturing builds out, there’s growing demand for warehouse space. With market rents about 18% higher than current leases across BREIT’s industrial portfolio, the trust sees potential for embedded growth as leases roll over.

Supply Trends and Market Access Are Turning More Favorable

The real estate supply pipeline is contracting. Across BREIT’s key sectors—rental housing and industrial—new construction starts are down two-thirds from 2022 levels, reaching 10-year lows. With less supply coming online, the trust expects this to set the stage for firmer rent growth and stronger valuations.

Financing conditions are improving too. The cost of debt capital has fallen roughly 10% from last year and nearly 40% from 2023 highs. That shift is translating to higher CMBS issuance, increased transaction volume, and broader bidder participation. BREIT expects this momentum to continue if rates stay at or near current levels.

The trust is positioning accordingly. It sees the current moment as a rare opening—where asset values haven’t yet fully recovered, and access to capital is expanding. Compared to other asset classes that have already seen strong run-ups, like equities and high-yield bonds, BREIT views real estate as offering more room to run.

Lower Interest Rates Could Accelerate the Cycle

The 10-year Treasury yield has dropped around 90 basis points from its 2023 peak. That shift matters for real estate. Lower long-term rates support higher valuations and more investment activity. If that trend holds, it could give BREIT additional runway for gains.

Looking toward year-end, BREIT is focused on staying positioned for recovery. It’s drawing on core market trends—constrained supply, improving access to capital, and growing infrastructure needs tied to AI. The data center segment, through QTS, is at the center of that strategy. But more broadly, BREIT is maintaining exposure to core needs: places to live, facilities to support logistics, and the infrastructure that powers digital systems.

As markets reset and new trends take shape, BREIT’s message is clear: its current allocation is built for this part of the cycle—and it’s acting accordingly.