# Blackstone limits REIT redemptions



## Money172375 (Jun 29, 2018)

Blackstone's $69 bln REIT curbs redemptions in blow to property empire


Blackstone Inc limited withdrawals from its $69 billion unlisted real estate income trust (REIT) on Thursday after a surge in redemption requests, an unprecedented blow to a franchise that helped it turn into an asset management behemoth.




www.reuters.com


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## AltaRed (Jun 8, 2009)

This is yet another lesson in assuming the world will remain constant without major curve balls. Companies, like people, make assumptions that a 5-10 year gravy train in which they have been successful will continue down that track, e.g. cheap credit is the best current example. The pandemic is another.

Those who do not have backstops in place to cover their flanks will sooner or later have their heads handed back to them. A reason why I have no empathy for the wringers people and businesses often put themselves into.

Added later: To carry this rant one step further, look at the mess variable rate mortgage holders have put themselves into. Banks are now saying amortization periods are now going beyond 30 years due to negative equity payments. Surprise! There was not anything inherently wrong with going with a lower rate variable mortgage to be more financially efficient. The issue is that those same mortgage holders were not banking the difference between the two interest rates into a reserve fund to be used to mitigate (backstop) against a turn of events. The fools apparently pissed it away on other consumer goods instead.


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## james4beach (Nov 15, 2012)

The Blackstone story is also a lesson in liquidity. There are various exotic investments that are pitched to people which lack liquidity. This includes hedge funds, exotic credit, and various alternative products.

Standard, low fee ETFs may be boring but they certainly are liquid and I think that's a beautiful thing. 



AltaRed said:


> Added later: To carry this rant one step further, look at the mess variable rate mortgage holders have put themselves into.


Do you remember when the common wisdom was that it's OK to keep a mortgage, and there's no need to rush to pay it off, because "everyone knows" interest rates will stay low forever and "you can obviously" earn a higher return in either real estate or stocks?


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## james4beach (Nov 15, 2012)

Let's also not forget the "common wisdom" that Canadian home prices always go up, and an easy path to riches is to aggressively leverage into multiple investment properties.

That's an extremely popular idea. In areas like BC and the GTA, countless people are doing this, and are very highly leveraged. The general public thinks it's a great idea, and they're encouraged by family members, friends, coworkers, and thousands of seminars and courses.


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## londoncalling (Sep 17, 2011)

james4beach said:


> Let's also not forget the "common wisdom" that Canadian home prices always go up, and an easy path to riches is to aggressively leverage into multiple investment properties.
> 
> That's an extremely popular idea. In areas like BC and the GTA, countless people are doing this, and are very highly leveraged. The general public thinks it's a great idea, and they're encouraged by family members, friends, coworkers, and thousands of seminars and courses.


It certainly was an easy path to riches. Perhaps not any longer or more likely not for the next while. We may need to look at what the US did in 2008 as my guess is our government and bankers will refer to it should we see SHTF with our own real estate collapse.


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## AltaRed (Jun 8, 2009)

Leverage works until it doesn't. Winners in the RE market were the buyers, governments with tax revenue/GDP, FIs from mortgages, and consumer good corporations. What happened in GTA and GVR was akin to the 'streets paved with gold; boom of oil in AB 2 or 3 different times. It generally always comes home to roost with high leverage being the trigger and there is a lot of excess yet to be worked off. It ain't over yet.


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## james4beach (Nov 15, 2012)

AltaRed said:


> Leverage works until it doesn't. Winners in the RE market were the buyers, governments with tax revenue/GDP, FIs from mortgages, and consumer good corporations. What happened in GTA and GVR was akin to the 'streets paved with gold; boom of oil in AB 2 or 3 different times. It generally always comes home to roost with high leverage being the trigger and there is a lot of excess yet to be worked off. It ain't over yet.


Or maybe they'll just drop interest rates again, like every other time this came close to unravelling?

This leveraged RE mania has been going on for 20 years now.


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## Covariance (Oct 20, 2020)

deleted


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