Blackstone Inc. (NYSE: BX) closed the most recent trading day at $74.19, moving -0.75% from the previous trading session. The company is facing growing investor scrutiny over its flagship real estate trust, Business Development Company (BREIT), and a rival's fund too, as redemptions reach their pre-set limit.
In a world increasingly demanding liquidity, Blackstone is selling illiquidity. The fund has been under pressure to redeem shares as investor, particularly those in retail, have sought to cash out of private equity funds.
Blackstone President and COO Jon Gray defended the fund, noting that investor knew BREIT had limits on redemptions. He noted that the fund had "operated as it was intended" since it began trading in April 2019.
investor and the SEC are taking a closer look at the private equity's flagship real estate trust and a rival's fund too. Blackstone Inc said redemptions from its $50 billion non-traded business development company reached its pre-set limit for the first time in August 2020.
The SEC has also been looking into Blackstone's moves to limit redemptions for two of its funds. In October 2020, the SEC sent a letter to the firm alleging that it had failed to adequately inform investor of the restrictions.
Gray has defended the restrictions, saying that the fund was intended to be a long-term investment, and that the move to limit redemptions was in the best interests of all investor, not just retail investor.
Blackstone shares have slid 36% year to date, way outdoing the 16% slide for the S&P 500. investor remain cautious of the company's real estate funds, particularly in light of the SEC's investigation into their practices.
The company has been looking to diversify its holdings, most recently by acquiring music rights. Justin Bieber is reportedly nearing a deal to sell his music rights to Blackstone-backed Hipgnosis Songs Capital.
Blackstone has also been trying to diversify its real estate holdings. In December 2020, the company formed a joint venture with Starwood Capital Group to acquire a portfolio of real estate assets.
The company has also been investing in technology and healthcare. In November 2020, Blackstone announced the closing of its fifth healthcare fund, bringing its total investment in the sector to over $20 billion.
Blackstone has also been looking to expand its presence in the retail sector. In January 2021, it acquired a majority stake in the global eyewear business, Luxottica, for $8 billion.
Despite its efforts to diversify its portfolio, Blackstone's real estate trust remains under scrutiny. investor are likely to remain cautious of the company until the SEC's investigation is concluded.
Despite the headwinds, Blackstone remains optimistic about its future prospects. The company recently announced that it has raised a record $140 billion for private equity investment in 2020, the most ever raised by a private equity firm in a single year.
Blackstone has been able to successfully navigate the economic headwinds of 2020, and the company is well positioned to continue its success in 2021.
