Private credit funds, investment vehicles that make loans directly to companies, were not so long ago a Wall Street darling. But lately, these funds are struggling to attract new money while existing investors are looking to cash out, redeeming their shares at a growing pace.
Those redemptions often happen when investors lose confidence in a fund's outlook and exercise their right to exit by selling their shares back to the fund, a pattern that's become familiar.
A different type of investment also has experienced redemptions in recent years: nontraded real estate investment trusts that own commercial property but don't trade on public stock exchanges. These REITs had a problem with more money going out than coming in as investors looked for opportunities elsewhere — but their real estate now appears to be drawing increased interest.
No firm sits at the center of this shift in sentiment more squarely than New York-based Blackstone, the private equity giant that happens to run both the largest private credit fund, Blackstone Private Credit, and the largest nontraded real estate fund, Blackstone Real Estate Income Trust.
Blackstone Private Credit, known as BCRED, is the largest nonlisted business development company, or BDC, by net asset value, at $48.2 billion. BCRED on Thursday reported redemption requests totaling about 7.9% of net asset value so far this year, according to investment banking firm Robert A. Stanger & Co. To satisfy requests to return investments, Blackstone had to raise the repurchase limit from 5% to 7% and inject another $400 million from the firm and employees.
It's a stark turnaround after nonlisted BDCs had extraordinary growth in the private credit boom in recent years, fueled by high interest rates and strong investor demand for credit strategies. The sector expanded from $3.5 billion in capital formation in 2020 to $63.1 billion in 2025, making it one of the fastest-growing parts of the alternative investment market, according to Stanger. But fundraising momentum has since slowed sharply — falling nearly 50% from its early 2025 peak.
Other major private credit funds have also been hit by investor redemption pressure.
On Friday, BlackRock — the world's largest asset manager — in a Securities and Exchange Commission filing said its HPS Corporate Lending Fund received shareholder requests to repurchase about 9.3% of shares outstanding, exceeding its 5% limit for the first time since its inception.
That's not all. Blue Owl Technology Income, a fund managed by private capital firm Blue Owl Capital, has also stood out this year, repurchasing over 15% of shares from investors looking to cash out after increasing its original offer from 5% to about 19%.
Real estate poised for comeback
With private credit cooling, investor capital could start rotating back into real estate, and that could benefit REITs.
As interest rates come down, the business of lending money to companies looks less attractive. But that same dynamic raises the prospects for making money off buying and selling properties, boosting return expectations for REITs, said Greg DiSalvo, managing director at Stanger.
"In the interim, we are seeing mortgage REITs and net lease REITs — also quasi-credit plays — attract the most capital," he said.
Early data supports that view. Nonlisted REITs raised $593.1 million from investors in January, up sharply from $466.8 million in December and $416.3 million in November, according to Stanger.
And even before this quarter, nonlisted REITs had begun reporting increases in net real estate investments over two consecutive quarters, according to CoStar data.
The recovery follows a prolonged downturn: Nonlisted REITs active in the second half of 2022 logged 11 consecutive quarters of declining portfolio values, with holdings shrinking 12.5% over that stretch. Portfolio values began turning higher again in the third and fourth quarters of last year, CoStar tracking shows.
Blackstone stands to benefit
Private credit had been big, according to Johnathan Rickman of investment research firm Blue Vault Partners, but "2026 is likely to see the rise of private real estate." He points to the impact of falling borrowing costs and stabilizing — and in some cases improving — property fundamentals.
That change stands to benefit Blackstone REIT, which has dominated the nonlisted REIT sector since its 2016 launch. Blackstone REIT led the sector with $786 million in public capital raised in the third quarter, capturing a 53.7% market share, and has raised an estimated $83.3 billion since inception, according to Rickman.
Blackstone REIT's net investment in real estate stood at $95.7 billion as of the end of January, per CoStar data.
The REIT has posted positive capital inflow in recent reports. Fundraising has been steadily increasing, and repurchases are at their lowest levels since February 2022. The last time the REIT’s inflows were a net positive was in September 2022.
"BREIT’s net positive flows reflect its highly differentiated performance since inception," a Blackstone spokesperson told CoStar News in an email. Blackstone REIT "remains exceptionally well-positioned amid the cyclical recovery in real estate, supported by its differentiated portfolio, which includes its data center company, QTS, and its massive logistics platform."