So Blackstone just announced it is limiting withdrawals from its 70 billion dollar Real Estate Income Trust. The company is limiting withdrawals from its 69 billion real estate fund. This follows a big jump in Redemption Request Now, when the 70 billion dollar rate does that? I Pay attention now. Irid is a real estate investment trust, which is nothing but a fancy name for a company that holds property.

It makes income and it pays it out to investors. The concept is very similar to a mutual fund or an ETF, but just with real estate. Now most REITs operate like this: A property is owned. a rent is collected.

It's paid out to shareholders in the form of dividends. Now here's the important part: REITs Don't pay corporate tax as long as they distribute at least 90 percent of the taxable earnings to shareholders every single year and only the shareholders actually pay the income taxes on those dividends. It's a nice little tax benefit, and most reads are actually public, but some can be privately held. So Blackstone one of the largest asset managers in the world is actually dealing with the massive Bank Run on its Flagship private read: Blackstone Wrote that Redemption requests were above the five percent quarterly limit that is set for the fund.

There's a lot of world investors out there and this is a very interesting story. So basically their solution was to announce a limit on withdrawals of 0.3 percent of net assets per month. but that just seemed to make things much much worse. That's in shares down by more than 10 percent in earlier trading.

The biggest drop that we've seen for Blackstone since March When you tell a bunch of Rich investors, they can't take out their own money hey, it's me. knock knock so uh, you got, uh, you got my money. Don't be surprised when you have a lot of bad PR Ank Now this specific read owns about 70 billion dollars worth of assets spanning from warehouses, apartment buildings, hotels, casinos, even Office Buildings Mainly, it's residential real estate. Somehow, they're dealing with a liquidity crisis.

now. Yesterday, we heard they're actually selling their Holdings in the MGM Grand and Mandalay Bay Resort in Vegas for 1.27 billion dollars, hoping to create enough liquidity to pay investors trying to get their money out and avoid a PR disaster. But this doesn't change the fact that this whole sandwich is a major red flag for the entire real estate investment industry. and you have to understand how crazy this thing really is.

Now this is a private read: you have to be invited in. This fund is only sold to super super rich conducted investors and it's not available for you and me for the general public. Hi I'm A He Penny Packer I'm a wealthy American industrialist. You got to know somebody to have a shot at investing in it if this fund is limiting withdrawals, If it's struggling, things in real estate are getting much worse than even I Initially, Imagine now Blackstone is much more than just a real estate investment firm, right? They have over 950 billion dollars in assets under management, and this specifically, it's about seven percent of its entire assets.

And yet immediately when these news broke out, the shares of Blackstone dropped by. Exactly. You guessed it, Seven percent. So think, think about it.

Investors are terrified. A whole lot about what's actually going on here. Now, as far as the Re, they make money on two ways, right? One is a management fee of 1.25 from AUM assets under management. the other one is twelve and a half percent from returns, which is only triggered once The actual investors make about five percent on their money.

Now, once money is being pulled out out of the Reit and assets are being liquidated to allow the redemptions, the fees that the Reit is collecting is going to suffer tremendously. But that's not the end of the world for this read: The problem is what this whole thing actually means. You see, Blackstone has almost had a limit on the draws. That's a normal thing.

You know. they put it in place to avoid having to sell real estate really really quickly and really really cheaply. When you're panicking and you're trying to sell something quick, you're never gonna get full price. now.

the limit is actually there, and it's usually two percent of net asset value per month and five per quarter in October. They've received 1.8 billion in Redemption requests. That's 2.7 percent of net assets, same in November, same in December. Which means this read has exceeded its monthly limits for redemptions for three months in a row and the entire quarter.

Actually, Now, if there's redemptions, limit is being hit consistently every single month now, this could be a sign that the entire reaps performance is in the toilet. and if the best in the business is struggling, what does it mean for the entire industry? This specific read is actually a great barometer for the entire U.S housing market. Most of its assets are Apartments And if you needed further proof that there's a Slowdown in the U.S housing market, this is it. Now, the cost of money has gone up over the past few months.

We know that for a fact, there's less money to be spent, there's less rents to be collected, because the prices are dropping, and this is just the entire industry basically coming into a halt. The bottom line here is very, very simple. Black Stones Read is a barometer. It's a flagship fund, right? if it's facing Redemption issues.

That is a clear warning sign though. Any real estate investor that the real estate market is not only slowing down, it's about to hit a freaking wall now. I'm here just to warn you about it, because mostly in the news you're going to hear about FDX you're going to hear about John Powell A whole bunch of nonsense. but nobody's talking about the fact that Blackstone is limiting redemptions far beyond the original limit.

It's a huge deal and I want you guys to be aware of what's going on now. As always, this is just my opinion by being accurate, might be wrong by the Rams of amendment. Don't click nothing, don't smash nothing. Don't buy nothing.

See you in the next video.