Blackstone suffers a 65% blow | Stoic Markets

And the future looks even worse for them

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The king of dominating the housing market and damaging ordinary people’s lives Blackstone, is in some serious trouble.

They recently announced their financial reporting for 2023, and their profitability has now officially fallen by more than 65%.

Their flagship investment product, the Blackstone Real Estate Investment Trust (BREIT) has been getting hammered by investors turning their backs on the product and walking away.

Now, more than $15 Billion has exited the fund over the last year, and these inflows have been incredibly difficult for Blackstone to handle.

In fact their redemption limit was met all the way back in December 2022, and it had continued to be met every single month, for 15 months in a row.

If Blackstone were a bank, this would be the literal definition of a bank run, but as Blackstone are masters of fine-print, this is all written into their legalese and so investors have had no opportunity for recourse.

That flagship fund in fact, lost its investors money for the first time in its history over 2023, with returns hitting -0.5% and even that number being padded by the redemptions being refused, meaning Blackstone has not been forced to sell its holdings at a loss, and their losses don’t need to be reported on.

And to tip things over the edge of the cliff, Blackstone is about to have debtors knocking at their doors, because they are now in possession of defaulted loans that amass well above the $1 Billion mark.

Their creditors are actually trying to flog a $308 million loan off to some other sucker, for less than 50% of its face value, indicating they really aren’t too optimistic about getting Blackstone to pay their debts.

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Worry not though, because even as Blackstone is suffering, the companies founder and CEO Stephen Schwarzman is still managing to enrich himself.

Despite profitability dropping a monumental 65% from what it was seeing back in 2021, costing the companies tens of billions from where it used to be, Schwarzman still took home a $897 million pay package over 2023.

And that’s on top of the $1.27 Billion he took home in when their earnings had also dropped more than 50%.

The company has a supposed solution to their problems, which will target overseas investors, and deals akin to private equity involving buying up small to mid-size firms and squeezing them of all the juice they possibly can.

Supposedly this is because it’s where the best opportunities lie in the near future, but in reality this is a company that owes its entire being to commercial real estate, and it’s been heavily underperforming for well over 2 years in that sector.

The grass is always greener, and how this trillion dollar firm expects to be able to uproot its foundations, hop across the pond and suddenly succeed in an entirely new endeavour, no one truly knows.

What is clear is that Blackstone’s disastrous Christmas advert did nothing to help their business.

And just a few short months ago they announced they would be targeting young American’s to try and drive future growth, but that didn’t last long at all.

Well, at least we know they deserve it…

For a deeper, longer… (and much more aggressive) look into Blackstone and their current downfall, hop on over to my YouTube channel Stoic Finance, subscribe and turn notifications on as on Thursday the 21st of March I’ll be releasing a video breaking this all down in much more detail.

Stay Stoic,

Max

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