Blackstone Group was suddenly all over the news, and every article had an extremely eye-catching title: Lehman Brothers moment again, another financial bomb, the largest private equity fund collapsed, etc. It looked like the sky was about to fall.

So, is this really the case?

  • 1 Introduction

Blackstone Group, also known as "Blackstone Group", is a well-known American private equity investment and investment management company. It was founded in 1985 by Stephen Schwarzman and Peter George Peterson. Its headquarters is located in Manhattan, New York, USA, and it has offices in more than ten major cities around the world. In October 2010, Blackstone abandoned the name "Blackstone" and changed its Chinese name to "Blackstone". Blackstone currently manages approximately US$951 billion in assets, making it a real behemoth.

Blackstone has a long history with China. In 2007, under the auspices of former Hong Kong Financial Secretary Antony Leung, China Investment Corporation (China Foreign Exchange Investment Corporation) invested $3 billion in Blackstone Group at a cost of about $29.605 per share. If you are not familiar with Leung, you should have an impression of his wife, the former diving queen Fu Mingxia. However, affected by the subprime mortgage crisis, in February 2009, the share price of Blackstone Group once fell to $3.55, and this investment by China Investment Corporation was questioned by many parties:)

  • 2 Current situation

Like most US stocks, Blackstone's stock price has been falling this year. Although Blackstone's stock price has fallen, its business is relatively stable, and it even delivered a record revenue report last year. However, affected by the overall performance of the industry, it suffered a quarterly loss in the second quarter of this year.

The fund that was widely reported by Chinese media this time is Blackstone Real Estate Income Trust, abbreviated as BREIT. This fund was founded in 2017 and has performed very well over the years. It currently manages approximately US$125 billion in assets. This fund has an annualized rate of return of 5%. When the return is higher than 5%, a management fee of 1.25% and a profit share of 12.5% ​​will be charged.

The reports of bank runs are not because it is insolvent, but because it has strict redemption settings. BREIT is designed to be a perpetual fund to meet the needs of the real estate industry with heavy assets, long investment cycles and low liquidity. The fund only allows customers to redeem no more than 2% per month and no more than 5% per quarter. The reason for the large number of redemptions is not that BREIT has problems in its operations, but it may be due to tight user liquidity in Asia or the fund's performance this year. The fund's total return this year is 9.3%, while US-listed real estate investment trusts have fallen by about 20%.

To meet the withdrawal demand, Blackstone sold a minority stake in two Las Vegas casinos that it invested in three years ago. In this transaction, Blackstone earned about 2 times the profit. From this, we can see that Blackstone's operation is still very good.

  • 3 Impact

Although BREIT is facing liquidity issues, many people directly associate it with the 2008 subprime mortgage crisis, and assume that stampede and collapse will inevitably occur. In fact, this is not the case. The core problem of the 2008 subprime mortgage crisis is that the United States issued a large number of bad housing loans, and the default wave triggered a liquidity crisis in the entire financial market. This incident did not show any signs of serious problems. Some self-media shouted Lehman moments without any basis, and did not pay attention to the fundamentals at all. It is really shameless. We still have to have our own independent judgment, and don't be misled by those eye-catching headlines. We should think that the United States is in dire straits and will soon be doomed!

The economy has cycles, but it doesn’t turn like a fan.