Liquidity, less liquidity, liquidity (or suddenly very much less), very little liquidity... and suddenly major institutional investors cannot get their money out of highly illiquid, generally private, investment vehicles because they are "gated" - investment withdrawals limited to cash available and with very high redemption fees!!
Lars has absolutely zero, zilch trust (or confidence in) that any statement made by the investment advisor to $BREIT, Blackstone Group is true. More importantly, DO NOT TRUST OR RESPECT the statements by Blackstone President Jon Gray who said the firm can sell assets to meet redemptions but can do so over a time horizon that will be beneficial. “We can sell if needed,” he said. “That’s what gives us a lot of confidence.”
The BREIT fund is "gated" because there is virtually zero liquidity in the illiquid commercial real estate sector, especially at a valuation anywhere near when that real estate was valued based on a Net Asset Value ("NAV") basis generated by an appraisal near the start of 2022.
That is a mouthful, but a long way of stating they cannot sell the illiquid crap anywhere near where it was last valued. In short, it is better for Blackstone as the asset manager to force the institutional investors to hold on at whatever the new NAV mark will be rather than "hitting the bid" and realizing an actual loss vis-a-vis the last NAV valuation. Meanwhile, Blackstone will continue those investors more than 3.00% investment management fees.
For those not that agile with math, 3% of $69 Billion is $2,070,000,000 income for the investment manager. Yes, there are some real costs from the property management, services offered, and property appraisals, but in total those expenses are not even close to $2 BILLION per year. No wonder some institutional investors are absolutely berserkly livid with Blackstone and Starwood.
Little birdies are sharing with Lars that by no means will these two non-traded REITs be the only ones "gated". There are many "copy cat" funds that are slower to gate than Blackstone. Just wait as the scores of complaints begin to rise...