Blackstone Bank Run Continues Real Cap Daily #36
Back in December I reported on a run on Blackstone with an unusual amount of redemption requests from its BREIT. Those redemption requests have continued through the beginning of this year.
BREIT is a non-traded REIT. It offers a generally large return, 12.3% annually as a semi-liquid product not traded on public exchanges. Per the previous video, BREIT had a series of redemption requests that capped the allowable paid through December. BREIT limits its redemption requests to 2% of net asset value monthly, and 5% quarterly. Currently it is a $70 billion fund, so $3.5 billion per quarter allowed. The company received $4.5 billion in requests in March, $3.9 billion in February. The company only redeemed 15% of March’s redemption requests.
Why not redeem more? Real estate is not a liquid asset such as cash or stocks. This prevents the forced sale of assets. However, most of the redemption requests are coming from wealthy individuals from overseas. BREIT did raise $14 billion with $4.5 billion coming from the University of California. However, in a letter from BRIET, unfulfilled redemption requests are not carried over to the next month. So investors are having to refile their requests each month. Other REITS are also experiencing a bombardment of redemption requests from foreign investors.
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