Breits Blues | Finance times

good morning. Yesterday it looked as if the World Cup group E was delivering a perfect result for a short moment: the underdogs Japan and Costa Rica continue, the overdogs Spain and Germany. Finally Spain crept through. But it was a great moment. Send your tips for the round of 16 by email to robert.armstrong@ft.com and ethan.wu@ft.com.

wide

Well, that's interesting:

Blackstone has limited the withdrawals from his $ 125 billion real estate investment fund after an increase in the withdrawal applications, since investors demand cash and grows the concern for the long-term health of the commercial property market.

The private equity group approved only 43 percent of the withdrawal applications in their Blackstone Real Estate Income Trust Fund in November, as can be seen from a message that it sent to investors on Thursday. Blackstone's shares fell by up to 8 percent. . .

In October in October, rejection applications in the amount of USD 1.8 billion or about 2.7 percent of its net inventory value received return applications in November and December that exceeded the quarterly limit. . .

Nowadays we are all a little nervous about liquidity problems and hidden leverage and bank-run-like situations, which has to do with rising interest rates, the British pension crisis and this boy with the shameful hair that hunts his crypto casino. It is therefore important to note that this is almost certainly not any of these situations.

wide is not particularly foreign (the ratio of debts to equity has been 1.6 since September), and less than 10 percent of the debts secured by its real estate are due in the next two years. The call for the call has high -quality properties. And if someone can raise liquidity on Wall Street, it is Blackstone.

Apart from that, why do some wide investors suddenly want their money back? Here again the FT story:

About 70 percent of the withdrawal applications come from Asia, according to the matter, an oversized proportion, considering that non-US investors only make up about 20 percent of the total assets.

A partner of the fund told the Financial Times that the poorest recent performance of the Asian markets and economies may have put pressure on investors who now need cash to meet their obligations.

The stock markets in Shanghai, Hong Kong, Taipei, Seoul and Mumbai have not developed much worse this year than the US indices, so this is not a fully satisfactory explanation. We want to speculate about another.

Below is a diagram of the net inventory value of the class I broad shares compared to the stock market performance of some listed real estate investment trusts. The real estate mix of Breit includes 55 percent residential properties, mainly apartments, and 23 percent industry, so I selected two large competitors who specialize in these sectors, plus a wide riding index:

Here is a pattern. The markets have reduced about a quarter of the value of publicly. The internal models from Blackstone see things more optimistic. David Auerbach, who runs the Residential Reit Income ETF, sums up the mystery: "How can it be that the reviews of everyone else drop and climb?"

It could be that the Breit team is correct with the evaluation and the markets are wrong. But it is not run round, especially in apartment buildings.

Rick Palacios by John Burns Real Estate Consulting points out that the increase in demand for apartments that began in 2020 and lasted until the beginning of this year was an artifact of the Coronavirus pandemic and the work from home and has quickly subsided. "All public homes are of the opinion that the real estate values ​​have dropped by 10 to 20 percent since the beginning of the year, and there is still a wave of offers" in the first half of the next year. Palacios' company expects rents to drop by a few percentage points nationwide next year.

But let's say that I still like the long -term prospects for real estate. Let us also assume that I have some wide shares that I can redeem at maximum value when I get a good place in line. Couldn't I sell them and buy a public riding with a 25 percent discount? Seems to be a nice little trade.

The big picture of the Bitcoin bubble

Sam Bankman-Fried should stop giving interviews. In several interviews this week, he offered a report on the collapse of FTX, which on "I had no idea what I was doing, made mistakes and everything that could possibly go wrong". (Alex Scaggs from the FT has the impact-for-strike.) His report made no sense for us. We will see how it will last after John Ray, the new Chief Executive from FTX, speaks to the congress on December 13th.

Remember, Bankman-Fried was crypto's adult in the room. How far the industry has fallen. The Bank of America published this reasonably serious chart last month (H/T Brent Donnelly ):

The whole sector wobbles. Kraken, a large stock exchange, released 30 percent of employees on Wednesday. Some crypto miners are in arrears with loans because the price of Bitcoin drops under its production costs; Lendingers confiscated their mining rigs as security. The Digital Currency Group, a holding company that includes one of the oldest funds from Krypto and the most important Prime broker, faces difficult questions after Genesis, its subsidiary for Prime Broker, has come into a liquidity crisis last month. According to reports, Genesis is considering bankruptcy.

In this context, we recently read a paper from the bank for international payment compensation. The authors examined the use of over 200 different crypto trading apps all over the world from 2015 to 22, and their results were ugly:

• The Bitcoin bull run in early 2021 attracted 511 million new monthly active users around the world. At the climax of Bitcoin in November 2021, almost 33 million people with crypto acted on an average day.

• When Bitcoin prices rise, buy smaller Bitcoin owners and large owners. The most eager buyers of rising prices are the little ones who have less than 1 Bitcoin. Owner of 100,000 or more bitcoins, which are often referred to as whales, used rising prices for payment.

• about four fifths of the Bitcoin investors have probably lost money. This is a rough estimate based on questionable assumptions. But the high number of four fifths reflects the fact that 73 percent of the merchants of crypto telephones have downloaded their app when Bitcoin was over $ 20,000. It is now less than $ 17,000.

• The crypto dealers were disproportionate men under 35. This demographic profile fits other studies from El Salvador, which show that Bitcoin users were largely educated, young, technically versed and male.

This is all to say that Bitcoin is mainly a speculative toy - no surprise. But our question is: Can a bladder that burned dozens or hundreds of millions of global investors to blow again? ( ethan wu )

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