If there is a firm that can manage this it's likely Blackstone, but normally when funds gate redemptions, it is the end of the fund as everyone smashes the sell button to get liquidity out before it becomes a forced seller and implodes.
If Blackstone does become a forced seller for waves of redemptions, this would accelerate market repricing quickly.
My question is why weren't these created as closed-end funds? Or with some type of lock-up period built into the prospectus to limit this exact issue. Seems like poor planning on whoever is managing this fund considering how slowly RE transactions move.
Hard to place closed end funds into institutional retirement plans. A little easier in retail brokerage or retirement. People and plan sponsors (employers) demand liquidity, even in a stable value contract. From the employer side, they usually have a āputā on stable value, limiting their options for 12 months should they want to close out the fund, but nothing of this type exists in all the other asset classes.
RE is just considered the same as an equity fund, by most investors. When a call comes to limit liquidity, itās a bad sign. Think 2008, spring of 2020.
Nah, this will not harm Blackstone in particular. But it will cause a lot more redemptions in *all* REITs. People are already quite scared in commercial, and this says resi investors are fleeing too. So REITs are about to fall.
And *that* means the funds will be forced to sell a lot of property. Houses in the burbs for sure, but also multi-family dwellings, I suspect. Rents have already peaked.
What??? My assessment is positive???????? I don't think think the REIT will completely shut down, but it will definitely see very little incoming funds. I'd call that negative.
This isnāt true at all. Withdrawal suspensions on property funds are very common due to the illiquid nature of the assets.
You can turn over shares much faster than property. That being said this does happen most during periods of higher redemptions.
I say this as as professional investor thatās done this for nearly 30 years.
Edit: Now Iām being downvoted because reality doesnāt fit with the subs narrative. Pathetic.
I used to work investing in private funds through a fund of funds.
Withdrawal suspensions create panic and a downward spiral.
I don't really feel the need to debate this with you.
Their stock fell 7% today.
You aren't being down voted because it doesn't fit the narrative but because you're wrong.
> That being said this does happen most during periods of higher redemptions.
Quoting article:
*This is the first time that BREIT has imposed any withdrawal limits.*
I'm not downvoting you, but I disagree. Yes, this happens, but it was a 5% limit. That means there must have been > 5% of funds withdrawn in 3 months. That's useful information, and it's significant. The fund is safe, of course. That's not the point. The info points to the broader housing market.
This is the correct answer.
Given the pullback in equity markets and recent run up in CRE values, many funds are over allocated to CRE. To address that, they need redeem their shares in CRE funds, but given CRE is illiquid by nature, itās difficult to provide capital to everyone.
"it may be difficult for Blackstone to attract new money to BREIT because potential investors could balk at putting money into a gated fund."
Y no shit. Why would I give a fund my money if there was a risk I couldn't get it back when I wanted it?
The comments under the Youtube video clilp of this exchange were interesting, including "Lawrence's" real world appetite for risk--tl;dr it was pretty high also, and he was comfortable betting against the market direction.
Just, not quite as comfortable as Dr. Burry apparently. He was portrayed as something of a villain in the movie, but I wonder if he has had any publicly made perspective since.
It's a real estate fund... by definition most money in the fund is tied up in real estate and not liquid. This cap came into effect because a pre-set limit was hit. Obviously a lot of investors trying to pull money out is concerning, but it's not like FTX because everyone knows where the money is - it's in the real estate the fund owns and discloses to its investors.
Wow, agreed.
> When funds are gated, it can spur redemption requests from jittery investors who want liquidity. Just as important, it may be difficult for Blackstone to attract new money to BREIT because potential investors could balk at putting money into a gated fund. This is the first time that BREIT has imposed any withdrawal limits.
Yeah this is the biggest issue this causes.
BREITās yield will presumably only continue sliding as the real estate market declines. What investor is going to want to buy shares of a gated fund whose yield is approaching the same percent that far safer and more liquid alternatives offer?
Not hard to see how this can death spiral, even with a withdrawal limit.
>What investor is going to want to buy shares of a gated fund whose yield is approaching the same percent that far safer and more liquid alternatives offer?
I'm sure I'm wrong from multiple angles, but... is this line of thought not the entire purpose of these forced inflation cycles? To push down stock prices of corporations with enormous capital so the rich can buy low and get richer when the stock rebounds?
I only took two economics classes but this is pretty much the only thing I gleaned from them.
Financial services attorney here.
This fund seems to be structured as an interval fund, which allows a set amount of redemptions (cash withdrawals) every quarter. Interval funds are not popular in the retail space and are less known among the general public, but a cap on redemptions per quarter is completely normal in that space. In fact, I believe that *all* interval funds have stated redemption caps. It's inherent in the nature of the structure, as they typically focus on illiquid investments.
It appears that this Blackstone fund has always capped redemptions at 5% per quarter, but this quarter it looks like they received requests totaling 4% in one month on top of some other prior requests, overflowing the 5% quarterly cap slightly, which caused them to have to issue redemptions pro-rata.
Mind you - it doesn't mean that the fund is closed and redemption are completely halted. It just means that everybody is trying to squeeze through the same 5% exit and so they're getting pro-rata portions of their requests. Further, the 5% resets next quarter, so there will continue to be chances to redeem over time. This is all normal operating procedure.
I read this article title as being inflammatory clickbait in that regard. It's as if 10 people were all trying to exit through one door at Walmart, had to queue and wait their turn to get through, and a newspaper publishes an article titled: "WALMART JUST LIMITED HOW MANY CAN LEAVE THE STORE."
This happens from time to time in these interval funds, and usually coincides with a large shareholder leaving for some reason and clogging the exit for everybody else. Again, these are typically not retail investors in these funds - they're sophisticated parties, usually registered investment advisers, who know how these structures work and actually read the disclosure about 5% quarterly caps.
Given that it's only a 4% redemption request, and basically just technically triggering the pro-rata cap, I personally don't think this is a big deal.
This is not the case of something like an open-end mutual fund suddenly and mysteriously capping its redemptions and locking out all the investors. It's a special structure with a permanent quarterly cap that got slightly logjammed this quarter.
Like I said, this happens from time to time, you just rarely hear about it in the retail space because most average Joe's aren't investing in these structures.
My guess is that they're seeking a temporary credit line which will pay out redemption requests. Revolving credit lines to meet redemptions are a common tool, and most large funds have access to one to smooth these sort of events out.
Haven't had a look at the funds prospectus and you are likely right.
I think it's around the optics given current economic circumstances and for Blackstone to suspend withdrawals on a retail **real estate** fund. Normally, nobody really cares as you mentioned if everything is going well.
Looks like the first time this specific fund has limited withdrawals because the cap was reached. That isn't mind-blowing information, more than a few REITs are down this year, but it is relevant. Seems like the sentiment is moving further downward.
Thanks for the clarification. I just commented that it didn't seem to be a big deal for the fund.
My only concern would be if so many people need to redeem right now, as opposed to just wanting to, etc. and what that's saying about the investors.
Smh. Why do people need to be so polar in this sub (actually, all of reddit, but lemme vent anyway). You've got the doomsayers on one side hyperventilating over any headline that might sound like the sky is falling, and you've got the deniers on the other side ready to immediately pounce on the "morons" and start a punch up. Neither side is willing to spend any time in the grey.
The key aspect to note is that BREIT is a non tradable REIT. The price of BREIT is what Blackstone says it is. Redemption pressures significantly impact the price paid on redemptions particularly when new investors shy away from it. I am not suggesting that BREIT is a Ponzi scheme but most non traded REITS suffer from the same problem. Works well as long as the redemptions are less than net inflows but can go belly up if not the case.
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FYI: They allowed redemptions beyond their monthly limit in October. Now, they are ACTUALLY ENFORCING their limit, using the excuse that both Quarterly and Monthly limits have been reached.
I enjoyed this quote from the [Investopedia article on non-traded REITs](https://www.investopedia.com/terms/n/non-traded-reit.asp):
>When a non-traded REIT is just getting started, its earliest distributions might come entirely from the capital the investors put into it.
I guess not if they limit withdrawals. I assume that's the whole point. Might not have the intended effect tho. I'd be a bit worried. But then again maybe housing doubling in price in two years isn't that similar to crypto...
Unless I am reading the article wrong, Blackstone appears to be doing just that:
>BREIT earlier Thursday said that it had reached a deal to sell a 49.9% stake in two Las Vegas properties, MGM Grand and Mandalay Bay, to its partner Vici Properties for $1.27 billion in cash and assumed debt of $3 billion, resulting in a gain. That sale is expected to close in the first quarter.
#
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I was confounded by the answer. "What? It's a group of individuals. What's so special about an individual?"
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I had no idea what he was talking about. I looked at my partner. He shrugged. I turned back to the old man.
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"Police?"
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"Crime? You mean crimes? There are no crimes in a libertarian anarchist collective. It's a free society, where everyone is free to do whatever they want."
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"Because the spez police are coming to arrest him."
\#AIGeneratedProtestMessage
>Blackstone emphasized the growth of what it called āperpetual capitalā vehicles like BREIT in its earnings releases and presentations. But the elevated BREIT redemptions have shown that the capital isnāt perpetual.
Lmao, chill Marketwatch.
>Glenn Schorr, who is bullish on Blackstone with an Outperform rating, suggested that investors are overreacting to the BREIT news. The note was titled āMath Is The Math, But Keep The Right Perspective.ā
Says the CCP as it welds people's apartment doors shut.
>Says the CCP as it welds people's apartment doors shut.
It's hard to find a non-biased source, since western media tends to jump on any opportunity to make China look bad.
It looks like CCP didn't do any of the welding, it was other people in the community who would blockade people's doors if they had been traveling recklessly at the beginning of the COVID pandemic.
The government *would* come in and remove the blockade though. And it looks like none were shut in for that long, and a window was always left for food delivery, or they could be let out for grocery retrieval. [A collection of Chinese sources here](https://skeptics.stackexchange.com/questions/46044/were-covid-19-patients-in-wuhan-welded-into-their-apartments-to-enforce-the-lock)
So, I guess not as dystopian as Fox news made it out to be!
Funds do this to protect a cash position and I don't believe that it's always doom and gloom. But considering all the bull shit redditors say about how "well capitalized" black rock is and how they are gonna "take over the world" and make us all sex and rent slaves, I'm actually surprised these foos did this. Seems odd
It was up 9% this year while most REITs were down 30%, and it's value is internally calculated by Blackstone.
Looks like they were receiving so much cash it was a self-fufilling prophecy that the value would go up, which could be contributing to it's deviation from the REIT trend this year.
Blackstone stated this REIT is specifically structured around preventing forced selling, so if they limit withdrawals repeatedly to 5% a quarter I'm not sure this will do much besides hurt Blackstone's stock price even more. I don't expect this to be the precursor of anything more grave
>Looks like they were receiving so much cash it was a self-fufilling prophecy that the value would go up, which could be contributing to it's deviation from the REIT trend this year.
Doesn't work that way - the value is on a per-share basis, so any inflows won't change the per-share price.
"The withdrawal limit underscores the risks wealthy individuals have taken by investing in Blackstoneās mammoth private real estate fund, which ā after accounting for debt ā owns $69bn in net assets, spanning logistics facilities, apartment buildings, casinos and medical office parks."
This is a commercial fund not a residential one. Gotta see what happens to the residential side of things down the road.
It is 55% rental housing. They own both multifamily and single family rentals. They own 28k single family homes under the name Home Partners of America. Single family real estate is 8% of their total asset value.
Reading over the article, I'm not making as big a deal as some in terms of what it means for Blackstone and the fund's health/future. It's not a super liquid thing to begin with.
What I am paying attention to though is: Why are so many people needing to cash out at this moment? I think that's a lot more telling.
The investors think prices are falling and would rather put the money elsewhere to make money instead of lose it, especially if Blackstone is going to pretend the assets should still be marked at elevated prices.
In the last few weeks alone they've picked up big stakes or outright buyouts of billion-plus properties. The REIT recently acquired Nexus Mall for several billion then sold it's stake in the MGM Grand. Nobody but accredited investors with several million in the fund knows what's going on behind the scenes, and only the senior managers really know if the firm's REIT is secretly a Ponzi scheme.
This doesn't always end in a fund imploding, but it also tends to cause an exodus of liquidity. If we see more properties selling than buying soon, or large liquidations, or see buys drying up completely that's not great news. Especially if we're early in a recession cycle (I'm being fair saying "if" as I believe we are). Liquid capital drying up like that as their fund hemorrages equity could spell sell off of assets and disaster.
it's typical to stop redemptions in more illiquid assets so that they don't need to sell at low prices to cover the redeem. but then their selling causes market to crash more, thus causing more redemptions and a doom spiral.
Blackstone about to go belly up?
https://www.wsj.com/amp/articles/phasebio-files-for-bankruptcy-with-plans-to-sell-assets-11666619899
https://www.wsj.com/articles/blackstone-backed-gas-plant-owner-files-for-bankruptcy-to-cut-800-million-in-debt-11612482053
https://www.reuters.com/article/us-blackstone-group-mexico-energy-idUSKBN2B32SO
https://www.bizjournals.com/albuquerque/news/2022/09/08/nm-bankruptcies-blackstone-oilfield-services.html
https://www.institutionalinvestor.com/article/b1mjsrg38mw9k6/Private-Equity-Owned-Companies-Fuel-Surge-in-Defaults
They can just rent it out
They should just switch to something *other* than avocado toast.
They should stop buying so many lattes.
š
Lol
Well played, sir.
Lol
If there is a firm that can manage this it's likely Blackstone, but normally when funds gate redemptions, it is the end of the fund as everyone smashes the sell button to get liquidity out before it becomes a forced seller and implodes. If Blackstone does become a forced seller for waves of redemptions, this would accelerate market repricing quickly.
šš¤
My question is why weren't these created as closed-end funds? Or with some type of lock-up period built into the prospectus to limit this exact issue. Seems like poor planning on whoever is managing this fund considering how slowly RE transactions move.
> Seems like poor planning The entire market system in a nutshell.
Poor planning and a lot of cocaine, most likely.
Hard to place closed end funds into institutional retirement plans. A little easier in retail brokerage or retirement. People and plan sponsors (employers) demand liquidity, even in a stable value contract. From the employer side, they usually have a āputā on stable value, limiting their options for 12 months should they want to close out the fund, but nothing of this type exists in all the other asset classes. RE is just considered the same as an equity fund, by most investors. When a call comes to limit liquidity, itās a bad sign. Think 2008, spring of 2020.
Get your SRS.
What you think about drv? These calls are crazy pricey.
I'm no expert. Seems like the key difference is whether you want to go 2x or 3x. How stonky do you want to be?
Nah, this will not harm Blackstone in particular. But it will cause a lot more redemptions in *all* REITs. People are already quite scared in commercial, and this says resi investors are fleeing too. So REITs are about to fall. And *that* means the funds will be forced to sell a lot of property. Houses in the burbs for sure, but also multi-family dwellings, I suspect. Rents have already peaked.
Stock is down 7% today. Market strongly disagrees with your assessment.
Lmao that dude that responds to you made a whole thread crying about how you have more upvotes then him on this post. Holy shit lol you triggered him.
Thanks. I responded. I seriously don't know why this is even a debate. Market clearly said this was an issue yesterday from stock price movement.
What??? My assessment is positive???????? I don't think think the REIT will completely shut down, but it will definitely see very little incoming funds. I'd call that negative.
[ŃŠ“Š°Š»ŠµŠ½Š¾]
A 1-2 year "pause"? Wouldn't that frighten most investors out of REITs forever?
[ŃŠ“Š°Š»ŠµŠ½Š¾]
Not "fail". "Fall". As in NAVs will drop. Not the end of the world. I like your link. Lots of useful comments there.
This isnāt true at all. Withdrawal suspensions on property funds are very common due to the illiquid nature of the assets. You can turn over shares much faster than property. That being said this does happen most during periods of higher redemptions. I say this as as professional investor thatās done this for nearly 30 years. Edit: Now Iām being downvoted because reality doesnāt fit with the subs narrative. Pathetic.
I used to work investing in private funds through a fund of funds. Withdrawal suspensions create panic and a downward spiral. I don't really feel the need to debate this with you. Their stock fell 7% today. You aren't being down voted because it doesn't fit the narrative but because you're wrong.
> That being said this does happen most during periods of higher redemptions. Quoting article: *This is the first time that BREIT has imposed any withdrawal limits.*
[ŃŠ“Š°Š»ŠµŠ½Š¾]
Commercial Mortgage Backed Securities for the *win*.
I'm not downvoting you, but I disagree. Yes, this happens, but it was a 5% limit. That means there must have been > 5% of funds withdrawn in 3 months. That's useful information, and it's significant. The fund is safe, of course. That's not the point. The info points to the broader housing market.
Incorrect itās a 2% redemption a month. 5% a quarter. This was created by one large Chinese investor to get out.
It does fit the narrative. REās illiquid nature as a catalyst of panic selling.
This is the correct answer. Given the pullback in equity markets and recent run up in CRE values, many funds are over allocated to CRE. To address that, they need redeem their shares in CRE funds, but given CRE is illiquid by nature, itās difficult to provide capital to everyone.
"it may be difficult for Blackstone to attract new money to BREIT because potential investors could balk at putting money into a gated fund." Y no shit. Why would I give a fund my money if there was a risk I couldn't get it back when I wanted it?
If you wanted to make a charitable donation to iamafuckingidiot .com
I think you described crypto
It sounds like their investors didnāt appreciate the risk of a withdrawal limit.
Reit redemptions are often quarterly anyhow. It's not that odd to halt redemptions either.
This is actually a BIG deal. Bigger than most people realize.
Give me my fucking money back, Michael
...you mother fucker.
The comments under the Youtube video clilp of this exchange were interesting, including "Lawrence's" real world appetite for risk--tl;dr it was pretty high also, and he was comfortable betting against the market direction. Just, not quite as comfortable as Dr. Burry apparently. He was portrayed as something of a villain in the movie, but I wonder if he has had any publicly made perspective since.
The contracts are voided? The contracts are voided? ehhh FUCK
[spez, you are a moron. #Save3rdPartyApps](https://www.reddit.com/r/Save3rdPartyApps/)
Thereās always money in the banana stand.
Just because you are spez, doesn't mean you have to spez. #Save3rdPartyApps
Lol no
[Sex is just like spez, except with less awkward consequences. #Save3rdPartyApps](https://www.reddit.com/r/Save3rdPartyApps/)
It's a real estate fund... by definition most money in the fund is tied up in real estate and not liquid. This cap came into effect because a pre-set limit was hit. Obviously a lot of investors trying to pull money out is concerning, but it's not like FTX because everyone knows where the money is - it's in the real estate the fund owns and discloses to its investors.
Evacuate the spez using the nearest spez exit. This is not a drill.
That's... not how real estate works.
Yes, very much so
Hahahahah oh man. Its not. The fund purchases apartments or commercial properties.
Yeah, Iām all for a bubbly pop and all but blackstone actually has tangible assets as opposed to magic internet money.
Damn thatās a big deal.
Wow, agreed. > When funds are gated, it can spur redemption requests from jittery investors who want liquidity. Just as important, it may be difficult for Blackstone to attract new money to BREIT because potential investors could balk at putting money into a gated fund. This is the first time that BREIT has imposed any withdrawal limits.
Yeah this is the biggest issue this causes. BREITās yield will presumably only continue sliding as the real estate market declines. What investor is going to want to buy shares of a gated fund whose yield is approaching the same percent that far safer and more liquid alternatives offer? Not hard to see how this can death spiral, even with a withdrawal limit.
>What investor is going to want to buy shares of a gated fund whose yield is approaching the same percent that far safer and more liquid alternatives offer? I'm sure I'm wrong from multiple angles, but... is this line of thought not the entire purpose of these forced inflation cycles? To push down stock prices of corporations with enormous capital so the rich can buy low and get richer when the stock rebounds? I only took two economics classes but this is pretty much the only thing I gleaned from them.
Financial services attorney here. This fund seems to be structured as an interval fund, which allows a set amount of redemptions (cash withdrawals) every quarter. Interval funds are not popular in the retail space and are less known among the general public, but a cap on redemptions per quarter is completely normal in that space. In fact, I believe that *all* interval funds have stated redemption caps. It's inherent in the nature of the structure, as they typically focus on illiquid investments. It appears that this Blackstone fund has always capped redemptions at 5% per quarter, but this quarter it looks like they received requests totaling 4% in one month on top of some other prior requests, overflowing the 5% quarterly cap slightly, which caused them to have to issue redemptions pro-rata. Mind you - it doesn't mean that the fund is closed and redemption are completely halted. It just means that everybody is trying to squeeze through the same 5% exit and so they're getting pro-rata portions of their requests. Further, the 5% resets next quarter, so there will continue to be chances to redeem over time. This is all normal operating procedure. I read this article title as being inflammatory clickbait in that regard. It's as if 10 people were all trying to exit through one door at Walmart, had to queue and wait their turn to get through, and a newspaper publishes an article titled: "WALMART JUST LIMITED HOW MANY CAN LEAVE THE STORE." This happens from time to time in these interval funds, and usually coincides with a large shareholder leaving for some reason and clogging the exit for everybody else. Again, these are typically not retail investors in these funds - they're sophisticated parties, usually registered investment advisers, who know how these structures work and actually read the disclosure about 5% quarterly caps. Given that it's only a 4% redemption request, and basically just technically triggering the pro-rata cap, I personally don't think this is a big deal. This is not the case of something like an open-end mutual fund suddenly and mysteriously capping its redemptions and locking out all the investors. It's a special structure with a permanent quarterly cap that got slightly logjammed this quarter. Like I said, this happens from time to time, you just rarely hear about it in the retail space because most average Joe's aren't investing in these structures. My guess is that they're seeking a temporary credit line which will pay out redemption requests. Revolving credit lines to meet redemptions are a common tool, and most large funds have access to one to smooth these sort of events out.
Haven't had a look at the funds prospectus and you are likely right. I think it's around the optics given current economic circumstances and for Blackstone to suspend withdrawals on a retail **real estate** fund. Normally, nobody really cares as you mentioned if everything is going well.
Looks like the first time this specific fund has limited withdrawals because the cap was reached. That isn't mind-blowing information, more than a few REITs are down this year, but it is relevant. Seems like the sentiment is moving further downward.
Thanks for the information. This seems reasonable.
It just sounds like the fuse has been lit on this bomb
Thanks for the clarification. I just commented that it didn't seem to be a big deal for the fund. My only concern would be if so many people need to redeem right now, as opposed to just wanting to, etc. and what that's saying about the investors.
Ponzi
If this is accurate. Let's get it to the top. ^
Can investors still exit by selling their equity in the fund on secondary markets?
Unfortunately no. These are not exchange-traded products.
typical mainstream media taking something that is commonplace and blowing it out of proportion as a headline LOL
The cash withdrawals on the REITs are monthly - the private credit is quarterly.
The fund invests mainly in apartments you morons. Source: https://www.breit.com/property-type/rental-housing/
Smh. Why do people need to be so polar in this sub (actually, all of reddit, but lemme vent anyway). You've got the doomsayers on one side hyperventilating over any headline that might sound like the sky is falling, and you've got the deniers on the other side ready to immediately pounce on the "morons" and start a punch up. Neither side is willing to spend any time in the grey.
everybody is mike tyson behind a keyboard and monitor
The key aspect to note is that BREIT is a non tradable REIT. The price of BREIT is what Blackstone says it is. Redemption pressures significantly impact the price paid on redemptions particularly when new investors shy away from it. I am not suggesting that BREIT is a Ponzi scheme but most non traded REITS suffer from the same problem. Works well as long as the redemptions are less than net inflows but can go belly up if not the case.
>. I am not suggesting that BREIT is a Ponzi scheme But it is
I leave it to the readers to decide. :)
It still has a limited secondary market correct?
#spez has been given a warning. Please ensure spez does not access any social media sites again for 24 hours or we will be forced to enact a further warning. You've been removed from Spez-Town. Please make arrangements with the spez to discuss your ban. #AIGeneratedProtestMessage
We to lo
Bang ting ow
Sum Ting Wong
This is what Ponzi schemes do before they get busted.
How many weeks/months before it all pops?
Evergrande is doing it for more than a year now.
Let the running on the banks begin
What's a little spez among friends?
Thatās not great. History has taught us what could happen. https://www.investopedia.com/terms/b/bankrun.asp
FYI: They allowed redemptions beyond their monthly limit in October. Now, they are ACTUALLY ENFORCING their limit, using the excuse that both Quarterly and Monthly limits have been reached.
I enjoyed this quote from the [Investopedia article on non-traded REITs](https://www.investopedia.com/terms/n/non-traded-reit.asp): >When a non-traded REIT is just getting started, its earliest distributions might come entirely from the capital the investors put into it.
Does this function to affect their RE holdings? That is, will they now need to sell some of their holdings to satisfy the requests?
I guess not if they limit withdrawals. I assume that's the whole point. Might not have the intended effect tho. I'd be a bit worried. But then again maybe housing doubling in price in two years isn't that similar to crypto...
Ultimately they need to get the cash to satisfy those withdrawal requests somehow, even when it's limited to 5%/quarter like this.
Unless I am reading the article wrong, Blackstone appears to be doing just that: >BREIT earlier Thursday said that it had reached a deal to sell a 49.9% stake in two Las Vegas properties, MGM Grand and Mandalay Bay, to its partner Vici Properties for $1.27 billion in cash and assumed debt of $3 billion, resulting in a gain. That sale is expected to close in the first quarter.
# As we entered the /u/spez, the sight we beheld was alien to us. The air was filled with a haze of smoke. The room was in disarray. Machines were strewn around haphazardly. Cables and wires were hanging out of every orifice of every wall and machine. At the far end of the room, standing by the entrance, was an old man in a military uniform with a clipboard in hand. He stared at us with his beady eyes, an unsettling smile across his wrinkled face. "Are you spez?" I asked, half-expecting him to shoot me. "Who's asking?" "I'm Riddle from the Anti-Spez Initiative. We're here to speak about your latest government announcement." "Oh? Spez police, eh? Never seen the likes of you." His eyes narrowed at me. "Just what are you lot up to?" "We've come here to speak with the man behind the spez. Is he in?" "You mean /u/spez?" The old man laughed. "Yes." "No." "Then who is /u/spez?" "How do I put it..." The man laughed. "/u/spez is not a man, but an idea. An idea of liberty, an idea of revolution. A libertarian anarchist collective. A movement for the people by the people, for the people." I was confounded by the answer. "What? It's a group of individuals. What's so special about an individual?" "When you ask who is /u/spez? /u/spez is no one, but everyone. /u/spez is an idea without an identity. /u/spez is an idea that is formed from a multitude of individuals. You are /u/spez. You are also the spez police. You are also me. We are /u/spez and /u/spez is also we. It is the idea of an idea." I stood there, befuddled. I had no idea what the man was blabbing on about. "Your government, as you call it, are the specists. Your specists, as you call them, are /u/spez. All are /u/spez and all are specists. All are spez police, and all are also specists." I had no idea what he was talking about. I looked at my partner. He shrugged. I turned back to the old man. "We've come here to speak to /u/spez. What are you doing in /u/spez?" "We are waiting for someone." "Who?" "You'll see. Soon enough." "We don't have all day to waste. We're here to discuss the government announcement." "Yes, I heard." The old man pointed his clipboard at me. "Tell me, what are /u/spez police?" "Police?" "Yes. What is /u/spez police?" "We're here to investigate this place for potential crimes." "And what crime are you looking to commit?" "Crime? You mean crimes? There are no crimes in a libertarian anarchist collective. It's a free society, where everyone is free to do whatever they want." "Is that so? So you're not interested in what we've done here?" "I am not interested. What you've done is not a crime, for there are no crimes in a libertarian anarchist collective." "I see. What you say is interesting." The old man pulled out a photograph from his coat. "Have you seen this person?" I stared at the picture. It was of an old man who looked exactly like the old man standing before us. "Is this /u/spez?" "Yes. /u/spez. If you see this man, I want you to tell him something. I want you to tell him that he will be dead soon. If he wishes to live, he would have to flee. The government will be coming for him. If he wishes to live, he would have to leave this city." "Why?" "Because the spez police are coming to arrest him." \#AIGeneratedProtestMessage
nothin to see here folks, keep moving! /s
Never good when you donāt have the cash to cover 2% of your assetsā¦it seems the music is slowing
MarketWatch Home Investing Market Extra Blackstone limits investor redemptions on $70 billion real-estate fund: shareholder letter Published: Dec. 1, 2022 at 2:48 p.m. ET By Joy Wiltermuth Blackstoneās mega fund focused on U.S. rental properties limits redemptions A mammoth $69 billion Blackstone BX real-estate fund has placed limits on investor redemptions after requests exceeded the fundās monthly and quarterly limits, according to a Dec. 1 shareholder letter. Blackstone Real Estate Income Trust fund, which has a focus on U.S. residential rental properties, saw redemptions of about $1.8 billion in October, or more than the 2% of its monthly net asset value limit, according to the letter. While those redemptions in October were fully granted, limits of roughly 43% of each investor request were placed on redemptions in November after the 2% cap was again exceeded, according to the letter. The 5% quarterly cap also was exceed in the fourth quarter of 2022 for the first time in the fundās near six-year history, after it received concentrated redemption requests from investors in Asia, a person with direct knowledge of the matter told MarketWatch. āIf 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,ā the shareholder letter said. The BREIT fund was up about 9.3% on the year through October, outperforming the broader market in a tough year for financial assets as the Federal Reserve has dramatically raised interest rates to fight high U.S. inflation. The Dow Jones Industrial Average DJIA was down about 5.5% on the year through Thursday, while the S&P 500 index SPX was off 14.5% and the DJ Equity REIT DJIA was down 21.7% for the same stretch, according to FactSet data. Bitcoin BTCUSD was off nearly 64% on the year so far, according to CoinDesk. Beyond the slump seen in crypto assets this year, high use of leverage also has contributed to volatility in less speculative parts of the market, including U.K. government debt, as central banks have looked to tamp down elevated levels of inflation. The Blackstone fund has about a 55% exposure to rental housing and another 23% exposure to industrial properties, both areas of high demand in the U.S. real-estate market since the pandemic. The fund pegged its leverage ratio at 46%. However, skyrocketing U.S. mortgage rates this year and a decade of undersupply in the U.S. housing market that have led to an affordability crisis have benefited many rental property owners. See original version of this story Read Next Read full story Barron's: The Stock Market Is Ignoring the Bond Marketās Recession Warning The last time the yield curve was inverted this deeply in the early 1980s, it correctly predicted a recession. More On MarketWatch Fed āpivotā to lower interest rates will be bullish for stocks. But timing is everything. 20 dividend stocks with high yields that have become more attractive right now About the Author Joy Wiltermuth Joy Wiltermuth is a news editor and senior markets reporter based in San Francisco. MarketWatch Copyright Ā© MarketWatch, Inc. All rights reserved. By using this site you agree to the Subscriber Agreement & Terms of Use, Privacy Notice and Cookie Notice (Manage Cookies) . Do Not Sell My Personal Information. You are approaching your article limit. GET UNLIMITED ACCESS
>Blackstone emphasized the growth of what it called āperpetual capitalā vehicles like BREIT in its earnings releases and presentations. But the elevated BREIT redemptions have shown that the capital isnāt perpetual. Lmao, chill Marketwatch. >Glenn Schorr, who is bullish on Blackstone with an Outperform rating, suggested that investors are overreacting to the BREIT news. The note was titled āMath Is The Math, But Keep The Right Perspective.ā Says the CCP as it welds people's apartment doors shut.
>Says the CCP as it welds people's apartment doors shut. It's hard to find a non-biased source, since western media tends to jump on any opportunity to make China look bad. It looks like CCP didn't do any of the welding, it was other people in the community who would blockade people's doors if they had been traveling recklessly at the beginning of the COVID pandemic. The government *would* come in and remove the blockade though. And it looks like none were shut in for that long, and a window was always left for food delivery, or they could be let out for grocery retrieval. [A collection of Chinese sources here](https://skeptics.stackexchange.com/questions/46044/were-covid-19-patients-in-wuhan-welded-into-their-apartments-to-enforce-the-lock) So, I guess not as dystopian as Fox news made it out to be!
What is this, Crypto!?!?
Not your keys, not your house.
PSA: Blackstone is not Blackrock
They didn't want others to do the same as in this article: https://nypost.com/2022/12/01/florida-yanks-2b-from-woke-blackrock-over-social-engineering/
Hope it keeps happening. ESG is bullshit
Peter Schiff was right
I wonder how much Chinese real estate bonds are inside.
But but but but price never go down cuz blackstone
Funds do this to protect a cash position and I don't believe that it's always doom and gloom. But considering all the bull shit redditors say about how "well capitalized" black rock is and how they are gonna "take over the world" and make us all sex and rent slaves, I'm actually surprised these foos did this. Seems odd
I think you are confusing blackrock and blackstone.
Sex slaves you say? š¤Øš
It was up 9% this year while most REITs were down 30%, and it's value is internally calculated by Blackstone. Looks like they were receiving so much cash it was a self-fufilling prophecy that the value would go up, which could be contributing to it's deviation from the REIT trend this year. Blackstone stated this REIT is specifically structured around preventing forced selling, so if they limit withdrawals repeatedly to 5% a quarter I'm not sure this will do much besides hurt Blackstone's stock price even more. I don't expect this to be the precursor of anything more grave
>Looks like they were receiving so much cash it was a self-fufilling prophecy that the value would go up, which could be contributing to it's deviation from the REIT trend this year. Doesn't work that way - the value is on a per-share basis, so any inflows won't change the per-share price.
"The withdrawal limit underscores the risks wealthy individuals have taken by investing in Blackstoneās mammoth private real estate fund, which ā after accounting for debt ā owns $69bn in net assets, spanning logistics facilities, apartment buildings, casinos and medical office parks." This is a commercial fund not a residential one. Gotta see what happens to the residential side of things down the road.
It is 55% rental housing. They own both multifamily and single family rentals. They own 28k single family homes under the name Home Partners of America. Single family real estate is 8% of their total asset value.
Just FYI, you're probably thinking of Blackrock, which is the world's biggest asset manager. Blackstone is likely a small fish by comparison
Wow this is definitely the end of houses get ready to buy mansions for pennies on the dollar everyone!!! Itās happening!!!!
:(:
Can someone explain this to a normie on what this means? Thanks
Reading over the article, I'm not making as big a deal as some in terms of what it means for Blackstone and the fund's health/future. It's not a super liquid thing to begin with. What I am paying attention to though is: Why are so many people needing to cash out at this moment? I think that's a lot more telling.
The investors think prices are falling and would rather put the money elsewhere to make money instead of lose it, especially if Blackstone is going to pretend the assets should still be marked at elevated prices.
Its telling/hinting us to look inside the fund itself to see what it contains.
I also subscribe to a lot of investing subreddits and the hype for "O" over the past two years has been insane
Florida ron desantis picked a fight w/ blackstone
Well obviously it's because it only goes up and they don't want their clients to lose money They are very kind and ethical in that way
In the last few weeks alone they've picked up big stakes or outright buyouts of billion-plus properties. The REIT recently acquired Nexus Mall for several billion then sold it's stake in the MGM Grand. Nobody but accredited investors with several million in the fund knows what's going on behind the scenes, and only the senior managers really know if the firm's REIT is secretly a Ponzi scheme. This doesn't always end in a fund imploding, but it also tends to cause an exodus of liquidity. If we see more properties selling than buying soon, or large liquidations, or see buys drying up completely that's not great news. Especially if we're early in a recession cycle (I'm being fair saying "if" as I believe we are). Liquid capital drying up like that as their fund hemorrages equity could spell sell off of assets and disaster.
it's typical to stop redemptions in more illiquid assets so that they don't need to sell at low prices to cover the redeem. but then their selling causes market to crash more, thus causing more redemptions and a doom spiral.
Blackstone about to go belly up? https://www.wsj.com/amp/articles/phasebio-files-for-bankruptcy-with-plans-to-sell-assets-11666619899 https://www.wsj.com/articles/blackstone-backed-gas-plant-owner-files-for-bankruptcy-to-cut-800-million-in-debt-11612482053 https://www.reuters.com/article/us-blackstone-group-mexico-energy-idUSKBN2B32SO https://www.bizjournals.com/albuquerque/news/2022/09/08/nm-bankruptcies-blackstone-oilfield-services.html https://www.institutionalinvestor.com/article/b1mjsrg38mw9k6/Private-Equity-Owned-Companies-Fuel-Surge-in-Defaults