Bank Run on Blackstone? Real Cap Daily #23

Blackstone is one of the worlds largest REITS or real estate investment trusts at $69B in its global private equity investment funds. BREIT stated it received $1.8 billion in redemption requests in November and December. Is there a run on the bank or in this case Blackstone brewing?

Hello, my name is Dennis Maynard. I am a real estate broker and CCIM in Los Angeles. Please don’t forget to like, subscribe, and follow.

BREIT, Blackstone Real Estate Investment Trust, is a non-traded REIT meaning, you can’t buy stock on the stock exchange. It is one of the largest private equity funds in the world. It also means, it can set rules for how liquid the investment is as opposed to being able to sell stock immediately on a stock exchange. 

Earlier this year, BREIT sold the Cosmopolitan Casino and Hotel in Las Vegas for $5.65 billion. The company stating its most profitable transaction to date. This week it announced two more sales of stake holdings in the MGM Grand and the Mandalay Bay for another $5.5 billion in $1.27 billion in cash and releasing $3 billion in debt to Vici Properties.

But why?

The $1.8 billion in redemption requests or 2.7% of the net asset value are the cause. BREIT has a policy of only allowing a 2% of NAV monthly, and a 5% quarterly NAV. This announcement sent Blackstone stock plummeting 10%. 

But who?

70% of the redemption requests are coming from Asia. Non-US investors only make up 20% of the fund. BRIET has further announced only 0.3% of the redemption requests will be honored in December. So why is Asia specifically seeking to cash out right now? And if BREIT has to continue to liquidate holdings, what further impacts will that have on commercial real estate? More over, how will Blackstone allocate requests? Will it be its preferred client list first or by sequential order?

Blackstone has been a powerhouse, but if there are more requests for funds, we could watch a run on Blackstone as investors seek the exit at the same time which will translate into more liquidation, profit or not.

What are your thoughts on the Blackstone story? Do you think even more requests will be waiting next quarter? How will this impact the market?

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