Blackstone Fiddles as BREIT Burns
By Craig McCann and Regina Meng.
You can download a pdf of this article to print or email here.
In December, we argued that Blackstone Real Estate Income Trust ("BREIT") smoothed and inflated its reported returns for years, leading to large investor inflows.  We predicted that a run on the bank had started because of Blackstone's prior conduct, leaving it with two very bad options. BREIT could honor redemption requests at posted NAVs and see its NAV cut in half as the NAV...
Blackstone's Choice: Let BREIT Crash or Collapse It Slowly?
By Craig McCann and Regina Meng.
Last week, Blackstone Real Estate Income Trust ("BREIT") announced that it was not going to honor redemption requests from investors in excess of 2% per month and 5% per quarter. In response, Blackstone's stock price fell 7% the first day and another 7% over the following week.
In this note, we explain how BREIT smoothed and inflated its reported returns for years, leading to extraordinary accolades, a prominent role in important regulatory...
First National Realty Partners Reg D Offerings: Muppets Do Commercial Real Estate
By Craig McCann, Susan Song, Chuan Qin, and Mike Yan.
You can read our previous posts Reg D offerings:
1) "Reg D Offerings Summary Statistics" here,
2) "$8 Trillion of Broker-Sold Reg D Offerings" here,
3) "HJ Sims Reg D Offerings: Heads Sims Wins, Tails their Investors Lose" here, and
4) "Inactive and Delinquent Reg D Issuers" here.
You can download and print or email this post by clicking here.
In a recent note, we explained how HJ Sims executives formed 91 separate...
Regulation D Offerings Summary Statistics
By Craig McCann, Chuan Qin and Mike Yan.
Securities issuers can either register their securities with the Securities and Exchange Commission, making extensive information about their business and the offering publicly available, or they can sell unregistered securities making almost no information available to regulators. Issuers of unregistered securities file Form D reports with the SEC on which the issuers provide cursory information and claim an exemption from...
SLCG Research: Priority Senior Secured Income Fund
In our experience, retail investors are being sold increasingly obscure and non-conventional investments. An investment that raised our eyebrows recently is the Priority Senior Secured Income (PSSI) Fund. The PSSI Fund is the first regulated investment company that invests primarily in leveraged loans and collateralized loan obligation (CLO) tranches lower in their capital structures.
Unlike the mutual funds with which most retail investors are familiar, PSSI Fund investors are not able to...
SLCG Research: Tenants-in-Common Interests
While we've spent a great deal of time talking about non-traded REITs on this blog, so far we've given less attention to another kind of real estate investment that has also been sold to investors based on questionable merits: tenants-in-common (TIC) interests. TICs are private placement investments that were very popular during the real estate boom of 2002-2008, but have suffered tremendously when the markets turned sour. We discussed TICs in our paper on non-traded REITs, but we felt that...
SLCG Research: Non-Traded REITs
We've posted a new working paper on our website that brings together much of our research related to non-traded Real Estate Investment Trusts (REITs). In it, we discuss the history and structure of non-traded REITs as well as differences between non-traded REITs and other avenues for gaining exposure to real estate. We highlight the dizzying array of fees and conflicts of interest embedded in these companies. We demonstrate that non-traded REITs are often misleadingly valued, heavily...