Blackstone encountered “redemption”! Big trouble is coming for US real estate

04/12/2022
As the Federal Reserve continued to raise interest rates, troubles in the US real estate industry began to emerge, and a storm similar to the Lehman crisis in 2008 was brewing. On Thursday local time, Blackstone restricted withdrawals from its $125 billion real estate investment fund BRIET (Blackstone Real Estate Income Trust) due to a surge in redemption requests from investors. According to Blackstone’s notification, the company satisfied only 43% of the redemption requests of BRIET investors in November. However, if the liquidity crisis is contagious and spreads, it may fall into a vicious cycle of selling assets-satisfying redemption-net value decline-more investors redemption, triggering a liquidity crisis like in 2008. | Related Reading (Wall Street Insights)

Ni Xiaying

Blackstone’s uncharacteristically restricting investors’ withdrawals this time is directly due to the surge in investors’ redemption requests, and the fundamental reason behind it is actually the fluctuation of interest rates. Rising interest rates are putting pressure on real estate values. The news put some pressure on product values ​​as rising interest rates would make real estate financing more expensive, sending Blackstone shares down 10%, the biggest drop since March. But anyone with a discerning eye can see that although it seems that only Blackstone has a problem now, this crisis will have an impact on the entire real estate sector in the United States sooner or later.

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