Property valuations on shaky grounds
The largest private equity firm, Blackstone, announced that it will limit withdrawals from its US$69 billion Blackstone Real Estate Income Trust (Breit) last week.
It is the first time that the fund has hit its pre-set limit of 5% withdrawal. Being a low-liquidity property fund, it would need to sell the underlying assets in order to pay cash to investors.
Indeed, the withdrawals have spurred Blackstone to sell two Las Vegas properties. But the sale was a good one as the fund reaped US$700 million profits in under three years.
The overall performances have been fantastic too - 13% annualized net return since inception nearly 6 years ago.
So why are investors pulling out?
