Blackstone Inc.’s $69 billion real estate fund for wealthy individuals said it will limit redemption requests after breaching limits this quarter, sending the private equity firm’s stock down the most in more than five months.

Blackstone Real Estate Income Trust Inc. said withdrawal demands exceeded the 2% of the net asset value monthly limit and 5% of the quarterly threshold. The fund’s withdrawal structure is designed to prevent a liquidity mismatch. Blackstone shares fell nearly 8% to $84.22 at 10:46 a.m. in New York.

Blackstone’s real estate fund became a massive player in the industry, snapping up apartments, suburban homes and dorms in recent years. It grew rapidly in an era of ultra-low interest rates as investors sought yield. In effect, it became a popular fixed-income substitute.

It also posted impressive returns prior to the pandemic and in 2020 and 2021 with what was considered an investor-friendly fee structure by the standards of the private REIT market. Now, soaring borrowing costs and a cooling economy are rapidly changing the landscape for the fund, causing BREIT to caution that it could limit or suspend repurchase requests going forward.

“If BREIT receives elevated repurchase requests in the first quarter of 2023, BREIT intends to fulfill repurchases at the 2% of NAV monthly limit, subject to the 5% of NAV quarterly limit,” BREIT said in a letter Thursday.

Some wealth advisors have been growing cautious about client exposure to illiquid assets in recent months, with some advisers at UBS Group AG reducing exposure to BREIT. A major chunk of redemptions has come out of Asia this year, said a person familiar with the matter who asked not to be identified citing private information.

“The BREIT outflow bear case is playing out, impacting shares this morning, and we expect it to remain an overhang on shares in the coming quarters,” Michael Brown, an analyst at Keefe Bruyette & Woods, said in a note titled “The Gates are Going Up.”

“Growth of the retail channel has been a key driver of BX’s success in recent years and the growth challenges facing the company on the retail side could continue to weigh on BX’s valuation,” Brown said.

This article was provided by Bloomberg News and FA News.