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Hey there, Max here…

Blackstone has become infamous as the largest alternative asset manager in the world. As well as being the company responsible for buying up thousands of homes, driving up prices and making it impossible for real people to buy the places they wish to live in.

But over the last 2 years, they’ve become infamous for something else as well… Failure.

The company has had a pitiful performance over the last 24 months. Their flagship investment product is the Blackstone Real Estate Investment Trust (BREIT).

And over the 2 decades it’s existed they’ve scaled this behemoth to more than $300 Billion in assets under management alone.

And yet, a number of their properties are saddled with huge amounts of debt, and Blackstone has been defaulting on more and more of their loans.

At first it was just a few properties and developments focused on office space, an industry that has understandably been hit hard by the work-from-home changes to our lives.

But the contagion has started to spread, and Blackstone is now defaulting on Blue Chip properties that have no easy excuses behind their failures.

$200 million here, $300 million there. Even one behemoth $800 million loan has been defaulted on, with Blackstone simply saying they won’t pay it.

The apologists have been quick to claim that these loans are a small deal in terms of how large Blackstone is, and so this is nothing to be concerned about.

But one simple question remains to be answered… If these loans really are so small and inconsequential, then why can’t Blackstone afford to pay their obligations?

But frankly, this is old news at this point. This hole has ben getting deeper for nigh on 2 years at this point.

The crazy thing that needs to be addressed however, is that despite this incredibly public failure, Blackstone’s CEO and Founder Larry Schwarzman has been making a killing from his pay packages.

Back in 2022, Schwarzman took home more than $1.37 Billion in total compensation, right as is companies pride and joy was falling apart.

And over 2023, Schwarzman took home another $900 Million, as the problems continued to mount.

And how has BREIT performed over this period where Schwarzman has made more than $2 Billion?

Well a category of their investments they call “opportunistic bets” fell 6.3% over the last year, and their “core investments” fell 4.3% as well.

In fact the value of BREIT has returned -1% over the entirety of the last 2 years, which seems incredulous when you consider how well the CEO is being compensated for watching over this failure.

And as if it were a literal death knell, Blackstone came out and announced a new slant in their marketing in an attempt to drive new investors and stop their decline.

And how did they choose to announce this new direction?

With what can only be described as the worst Christmas advert an asset manager has ever released in history.

Here’s the link for it in case you want to cringe for 5 minutes straight

What is clear here is that this company is not moving in the right direction, that it’s leadership is rinsing it for all they can, and that their investors are paying for the failures.

Some will say that the investors deserve what they get, after all they knew the risks in getting involved with a company like Blackstone.

But the truth is that many of these Blackstone investors don’t know they’re invested through Blackstone at all.

They’re simply thrown into this cabal through their pension schemes of which they have no control over at all.

Were it only willing participants who are getting hurt, I can’t say I’d much care about this myself. But real innocent people, including literally millions of American’s are suffering under this debacle, and most of them don’t even know that they’re exposed at all.

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If you haven’t noticed, Stoic Markets and Stoic Finance are getting more and more active by the day.

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Max