The head of The Blackstone Group, Stephen Schwarzman, has spoken openly about withdrawals from its $69 bn (€65 bn) property fund.
As previously reported, following a surge in redemptions at its flagship Breit vehicle, the company took steps to block further outflows.
But, speaking at the Goldman Sachs financial services conference in New York, Schwarzman said ‘the idea that something is going wrong’ at the fund because some people were redeeming was 'incorrect'.
His comments have been reported in the mainstream financial press including the Financial Times, which said Schwarzman tied redemptions to investors facing stress in Asia.
‘The idea that there is something going wrong with this product because people are redeeming is conflating completely incorrect assumptions,’ Schwarzman reportedly said.
‘This was not meant to be a mutual fund with daily liquidity. These are pieces of real estate.’
He confirmed that many of the redemption requests came from Asia, where investors tend to use more borrowed money to back positions and needed to raise cash to meet margin calls when markets soured earlier this year. Those investors faced ‘excruciating financial pressure’, reported the FT.
Schwarzman acknowledged Breit could face continued pressure and slower inflows amid rising market volatility. ‘[We] are in a cycle where retail investors are less apt to be investing in things . . . [People] get scared. It is completely normal and not a concern. I look at this and say this is just a pause - an expected pause - of people pulling money out.’
Schwarzman said Breit’s portfolio continued to perform well, with income from its properties rising 13% this year.
‘In a way, Breit is some of our best work,’ he said, before adding fears over the fund were a ‘bit baffling’.
