Blackstone Group Inc Group, which has a heavy position in the US real estate market, suddenly encountered a storm. Blackstone Group Inc Group has urgently restricted redemptions of up to $125 billion (880 billion yuan) of real estate investment trusts due to a surge in redemptions from investors, Bloomberg reported. Some analysts pointed out that the main feature of real estate as a bottom asset is poor liquidity, once faced with redemption, even if the scale is small, it will trigger redemption restrictions, which can easily lead to liquidity runs.

While Blackstone Group Inc's real estate investment trust has suffered a wave of redemptions, the bubble in the US real estate market is becoming more and more dangerous. Recently, more and more Wall Street institutions have warned that the US housing bubble is bursting. Among them, Morgan Stanley believes that the adjustment of US house prices has just begun, and by the end of 2024, US house prices will fall by about 10 per cent from their peak.

At present, the "triple epidemic" facing the United States is becoming more and more serious. The latest report from the CDC estimates that so far this year, at least 8.7 million people have fallen ill, 78000 have been hospitalized and 4500 have died. With 44 states experiencing high levels of respiratory disease, Secretary of Health and Human Services Becerra said the Biden administration "stands ready to continue to support the health care system in terms of resources, materials and people."

880 billion funds suffer a "wave of redemptions"

A piece of news suddenly pushed Blackstone Group Inc Group, the world's largest private equity fund, to the forefront of the storm.

Blackstone Group Inc Group has urgently restricted redemptions of its $125 billion (880 billion yuan) real estate investment trust (BREIT) due to a surge in redemption requests from investors, Bloomberg reported.

According to a letter sent by Blackstone Group Inc to clients, the US $1.8 billion application for redemption has been fully cashed in October, but so much has been centrally redeemed since November that the company met only 43 per cent of the fund's investor redemption requests in November. a total of $1.3 billion; only a handful of redemption requests were met in December.

Under the terms of the fund, investors can redeem up to 5 per cent of their shares in any quarter and up to 2 per cent a month to prevent their illiquid real estate holdings from being sold off. Blackstone Group Inc added in the notice that investors were only allowed to redeem 0.3 per cent of the fund's net assets in December.

It should be pointed out that since its establishment in 2016, real estate investment trusts have been the "leading product" of Blackstone Group Inc Group, attracting a cumulative total of $70 billion in equity and a total size of $125 billion if leverage is taken into account.

Some analysts pointed out that only 1.8 billion of redemptions forced up to 125 billion of the funds to stop redemption. This reflects the characteristics of real estate as the underlying asset, that is, poor liquidity, once faced with redemption, even if the scale is small, it will trigger redemption restrictions, but this seemingly protective clause can easily lead to liquidity runs.

In December, only 0.3 per cent of the company's net assets were available for investors to redeem, according to Blackstone's letter to customers.

Wall Street institutions have warned that Blackstone Group Inc's restrictions on redemptions could spark concern among more investors and continue redemptions in 2023, while future inflows to the fund are likely to decline.

BenjaminBudish, an analyst at Barclays, said concerns that the net asset value of Blackstone Group Inc's real estate investment trust could continue to decline could have a knock-on effect, leading to a significant reduction in new capital inflows in the future. The analyst has downgraded Blackstone Group Inc Group from "overweight" to "shareholding wait-and-see".

Since 2022, Blackstone Group Inc real estate investment trust has still achieved a positive return of 9.3 per cent. By contrast, most real estate investment trust markets have fared slightly poorly this year, with Vangard real estate ETF returning-13% for the year.

It should be pointed out that, as a non-traded real estate investment trust, Blackstone Group Inc real estate investment trust is not traded on the exchange, and its issuance and redemption pricing are mainly based on the net asset value data released by Blackstone Group Inc every month.

78% of the fund's assets are invested in rental and industrial real estate, and more than 70% are located in the western and southern parts of the United States.

According to Blackstone Group Inc's official website, so far, Blackstone Group Inc has managed assets of up to 951 billion US dollars, including real estate, private equity funds, hedge fund Xiaobai Maimai Inc insurance and other four major business sectors. Among them, the real estate business accounts for a relatively high proportion, and the real estate portfolio under management is worth 565 billion US dollars.

A dangerous real estate bubble

While Blackstone Group Inc's real estate investment trust has suffered a wave of redemptions, the bubble in the US real estate market is becoming more and more dangerous.

Recently, more and more Wall Street institutions have warned that the US housing bubble is bursting. Among them, Diane Swonk, chief economist of KPMG, predicts that US house prices may fall by 15 per cent in 2023; Morgan Stanley believes that US house prices adjustment has only just begun, and the case-Schiller national house price index will fall 4 per cent year-on-year in 2023 and about 10 per cent from its peak between June 2022 and the end of 2024.

At the same time, the consensus among most US real estate investment trusts is that the US real estate market is slowing sharply. More and more investors believe that house prices have not yet fallen in place, real estate investment trusts and the real estate industry will face further decline.

Before that, us house prices were crazy, rising by an astonishing 42 per cent between march 2020 and June 2022, according to the s & p CoreLogic Case-Shiller national home price index.

Since 2022, the Fed has raised interest rates at an increasingly crazy pace, causing the average interest rate on 30-year fixed mortgages in the US to soar from 2.98 per cent to 7.1 per cent, breaking 7 per cent for the first time since 2002, which has seriously affected the demand of home buyers.

Mortgage purchase applications fell 41 per cent year-on-year, according to the mortgage bankers association (Mortgage Bankers Association). In fact, there are fewer applications today than they were during the financial crisis in 2008.

Under the collapse in demand, house prices across the United States have fallen in both volume and price. According to the latest house price data released in the United States, house prices in 20 cities fell 1.2% month-on-month in September, the third consecutive month of decline.

In addition, according to data released by the National Association of Realtors (NAR), the total number of existing home sales in the United States in October recorded an annual record of 4.43 million units, the lowest since December 2011, down 5.9% from the previous month, the longest consecutive decline in history, and even exceeded that of the subprime mortgage crisis in 2008.

The rapid slowdown in US real estate transactions and the continued decline in house prices may put Blackstone Group Inc Group's real estate investment business in a difficult situation.

The "Triple epidemic" hits the United States

Under the impact of the "triple epidemic", the health care system in the United States is facing a huge test.

At present, a series of respiratory diseases are breaking out in the United States, including respiratory syncytial virus, novel coronavirus, influenza virus and so on, which worsens the situation of influenza in winter 2022.

According to a report released by the Centers for Disease Control and Prevention (CDC) on Dec. 2, nearly 20, 000 people in the United States were hospitalized with flu last week, almost double the previous week.

CDC estimates that so far this year, at least 8.7 million people have fallen ill, 78000 have been hospitalized and 4500 have died.

In addition, the latest CDC report also shows that 44 states in the United States are currently experiencing high levels of respiratory disease.

Among them, 31 US jurisdictions, including the Territory and Washington, D.C., had "very high" levels of respiratory disease, while 16 jurisdictions had "high" levels. In addition, 11 states, including California, Texas and Virginia, have the highest levels of respiratory disease.

Currently, only New Hampshire, Vermont, Michigan and Alaska have the lowest or lowest respiratory diseases, while West Virginia and Hawaii are in the middle.

CDC data show that the proportion of outpatients with respiratory diseases in this flu season is significantly higher than in any other flu season since at least 2017-2018.

The number of confirmed cases of COVID-19 in the US has remained largely stable in recent weeks, but health experts have warned that the US is facing a "triple epidemic" as the COVID-19 epidemic persists, flu cases rise and respiratory syncytial virus (RSV) cases surge.

Among them, RSV is a common and usually mild virus that most children have been infected with before the age of 2. CDC monitoring in the United States shows that the number of visits and hospitalizations in emergency departments related to RSV testing and RSV has increased in many areas, and some areas are close to seasonal peak levels.

Health experts warn that the flu season in the United States is likely to be more severe than normal because this winter will be the first winter for many people to return to normal activities. During the novel coronavirus pandemic, the incidence of influenza was historically low because people abided by hygiene regulations, wore masks and kept their distance from others.

On Dec. 2, U.S. Secretary of Health and Human Services Becerra warned that influenza and other respiratory viruses are putting increasing pressure on the U.S. health care system. The Biden administration "stands ready to continue to support the health care system in terms of resources, materials and personnel."