Blackstone yesterday sent shockwaves through the real estate sector after it blamed a large number of redemption requests from Asian investors for its decision to limit withdrawals from its massive real estate investment fund.
In a notice to investors, the private equity group said it approved $1.3bn worth of requests for withdrawals from its $125bn Real Estate Income Trust fund in November, equivalent to 43 per cent of total requests, following returns of $1.8bn in October. Blackstone said redemption requests this month would be temporarily limited — or gated in the financial parlance — to just 0.3 per cent of the fund’s net asset value of $69bn. Blackstone’s shares fell more than 7 per cent on the news.
About 70 per cent of redemption requests have come from Asia, according to people familiar with the matter.
The Breit fund allows for 2 per cent of assets to be redeemed by clients each month, with a maximum of 5 per cent allowed in a calendar quarter.
The private real estate fund has been one of Blackstone’s crown jewels, buying up logistics facilities, apartment buildings, casinos and medical office parks since its 2017 launch.
The notice was sent on the same day Blackstone announced the sale of its near 50 per cent interest in the MGM Grand Las Vegas and Mandalay Bay Resort casinos in Las Vegas for $1.27bn.
In recent years, the fund has been a big source of Blackstone’s growth in assets under management, alongside a private credit fund called BCRED.
“Our business is built on performance, not fund flows, and performance is rock solid,” said Blackstone in a statement sent to the Financial Times.
Read more: Robert Armstrong, writing in this morning’s edition of Unhedged, has another theory as to why investors are withdrawing funds from Breit that is at odds with the company’s explanation.
Five more stories in the news
1. Joe Biden’s push for peace The US president said he was “prepared to speak with” Vladimir Putin about the war in Ukraine if Russia’s leader shows an interest in bringing the nine-month conflict to an end. The remarks, made at a press conference in Washington, DC, during a bilateral summit with French president Emmanuel Macron, mark the furthest Biden has gone in expressing openness to discuss the war with Putin.
2. IMF head warns of ‘exceptional’ uncertainty Kristalina Georgieva, the managing director of the IMF, warned Asia’s leaders and central bankers to brace themselves for “exceptional” uncertainty as China’s zero-Covid policy hurts its economy and inflationary pressures from Russia’s invasion of Ukraine hit the region. Speaking at a conference in Singapore, Georgieva noted how inflation was rising across Asia and the problems stemming from currency depreciation against the dollar.
3. Cyril Ramaphosa’s presidency hangs in the balance South Africa’s ruling African National Congress will meet today to decide Cyril Ramaphosa’s fate, with his presidency hanging by a thread in the wake of a damning parliamentary report into a scandal over the theft of bundles of cash from his private game farm. Read more about the scandal rocking South Africa’s president.
4. Donald Trump suffers legal defeat over Mar-a-Lago document probe The former president is not entitled to have a special master review documents seized from his Mar-a-Lago home by federal investigators, a US appeals court ruled yesterday. Lawyers for Trump had tried to argue that some of the documents seized during a search of his home in August were covered by executive or attorney-client privilege.
5. Defence start-up Anduril raises almost $1.5bn Established five years ago by Oculus co-founder Palmer Luckey, Anduril has raised nearly $1.5bn in the second-biggest venture capital round in the US this year. The fundraising marks a milestone for young tech companies trying to break into the notoriously difficult field of defence procurement.
How well did you keep up with the news this week? Take our quiz.
The days ahead
Economic data Growth in the US jobs market is slowing, data from the Bureau of Labor Statistics are expected to confirm later today. Non-farm payrolls are set to have increased by 200,000 last month, according to a consensus forecast compiled by Bloomberg, a step down from the 261,000 jump recorded in October and the 315,000 rise in September.
Prince William and Kate to meet Biden The Prince and Princess of Wales are in Boston today for the Earthshot Prize ceremony. They are expected to meet US president Joe Biden, who is in the city for a Democratic fundraising event, at the John F Kennedy Presidential Library. (CBS)
World Cup It is the final round of group matches today, with Cameroon taking on favourites Brazil and Serbia playing Switzerland in Group G. In Group H, Ghana play Uruguay and South Korea play Portugal. Today’s matches follow a dramatic night in Doha that saw 2014 champions Germany knocked out of the tournament.
Opec+ meeting Oil ministers and their allies will meet virtually on Sunday, a day before the European embargo on seaborne Russian crude goes into effect. Premium subscribers can read more about the conundrum facing Opec+ in this week’s Energy Source newsletter.
What else we’re reading
Simon Schama: art versus the tyrants With the streets of China and Iran recently “alive with infuriated, chanting crowds, so tired of being institutionally deceived”, the historian reflects on how poetically charged words, images and music can be deployed as unlikely weapons. “Culture can do this because it can connect with human habits, needs and intuitions in ways that expose the inhuman hollowness of official propaganda,” he writes.
Inside the Covid revolt in ‘iPhone City’ Managers at the world’s largest iPhone factory in Zhengzhou, China, breathed a sigh of relief when local officials lifted a five-day lockdown on most of the city this week. But the troubles are far from over for Apple’s contract manufacturer Foxconn, which is struggling to staff assembly lines for the pre-holiday high season.
Musk’s experiment in chaos management at Twitter 2.0 As with much of his behaviour since the takeover of Twitter, this week’s spat with Apple has shown Elon Musk’s restless appetite for controversy and attention. Most people who take public companies private are only too eager to retreat from the public eye. For Musk, the opposite has applied, writes Richard Waters.
Ukraine war exposes ‘hard reality’ of west’s weapons capacity Nearly 10 months into Russia’s full-scale invasion of Ukraine, the allies that have backed Kyiv’s war effort are increasingly concerned by the struggle to increase ammunition production as the conflict chews through their stockpiles. “What matters is production. Production really matters,” said one expert.
Football’s VAR is a lesson in flawed technology The use of video assistant technology in the World Cup provides an intriguing case study of how difficult it can be to achieve optimal product-market fit in a highly pressured environment that matters hugely to millions of fanatical followers, writes John Thornhill.
Your women of 2022 — FT readers respond Yesterday we featured a range of women who have stood out in their fields this year — from politicians to actresses, sportswomen and entrepreneurs. Today, we profile the trailblazers who have inspired FT readers. We received dozens of suggestions via FT.com and Instagram. Here is a round-up of some of the nominations.
Holiday gifts
Yinka Ilori, Brendon Babenzien, Tata Harper, Jody Williams, Rita Sodi and others share their secrets for buying the best gifts for fashion, beauty and the home this holiday season.
Source: Economy - ft.com
