• Blackstone has taken heat over the past week for limiting withdrawals from its $69 billion private REIT.
• President and Chief Operating Officer Jon Gray defended the positioning and structure, noting that investors knew BREIT had limits on redemptions.

Investors nervous about Blackstone's real estate investment trust should view it as a long-term vehicle that's well positioned for the future, the firm's president said Thursday.

Blackstone has taken heat over the past week for limiting withdrawals from the $69 billion private REIT, the Blackstone Real Estate Income Trust, or BREIT. That move followed redemption requests that exceeded previously set limits. The company's stock has fallen 8% over the past five days amid a controversy that included a Barclays downgrade of the alternative investment firm.

Blackstone President and Chief Operating Officer Jon Gray defended the positioning and structure, noting that investors knew BREIT had limits on redemptions.

"We set up the product with limitations on liquidity," Gray told CNBC's David Faber during a live "Squawk on the Street" interview. "We described it as semi-liquid because we knew at some point there would be a period of volatility, and we didn't want to sell assets at the wrong time under pressure."

In exchange for their patience, investors have benefited from a fund that Gray said has delivered 13% compounded returns for six years in a challenging environment.

Publicly traded REITs have gotten slammed this year amid a rising interest rate environment that has hit the real estate market especially hard, raising questions about the actual values of holdings in private funds such as Blackstone's BREIT. The $35 billion Vanguard Real Estate ETF, for example, has tumbled 26% year to date.

"The key theme here is that performance has delivered and the structure we put in place is operating exactly as we intended six years ago, and we are incredibly proud of the performance and the structure," Gray said.

Investors should "look at Blackstone and say, 'You guys have done an incredible job at deploying our capital in exactly the right geography, in exactly the right sectors with the right balance sheet,'" he added. "I think they have confidence in us."

Yet the fund was hit by a doubling in redemption requests for November while subscriptions saw a substantial drop-off, to less than half a billion dollars from $880 million in September, according to Barclays.

Gray said the firm can sell assets to meet redemptions but can do so over a time horizon that will be beneficial.

"We can sell if needed," he said. "That's what gives us a lot of confidence."

Blackstone shares rose about 2% in early trading Thursday following the interview.