My favorite story from the Global Financial Crisis is about a risk model, because I am a nerd that way. But it captures the whole thing, it captures all the blind spots. The story goes that one of the banks that got blindsided did so because of a flawed risk model. Their risk model accounted for the chances of declining home prices in a given year, and it accounted for the chances of increased mortgage bond defaults in a given year. But it didn’t account for the correlation between the two.
Flawed analysis, I spoke to Blackstone directly. There valuation data is based on current transactions. They are selling all the time and have real time data on sale values. There assets are only in strong markets that still have migration and are growing. Also their expiring leases are 10-20% below the current market. Remember people who are unable to purchase single family properties due to increased interest rates have to rent! The rental market will not get soft like housing!
Funny thing: Marc Rowan (Apollo) saying "There's no liquidity in public markets. There's liquidity on the way up..there's no liquidity on the way down"
There current 8k filing breaks down their valuation and exit cap rates, none of which are below 5.2%. I am unsure how you can calculate their exit values without their DCF data including their expiring leases renewing at current market rates. Please explain factually how you come up with 3.8% exit cap rates you speak of for their valuation estimates?
Plus their leverage ratio is only 47%. They have 14 billion of liquidity which covers over 6 quarters of redeptions fully gated. Their interest rate costs are about 4% and their interest rate risk is covered by swaps with duration average of 7 years. Their loan portfolio sits at avg 6 years. Your analysis is completely flawed!
Top notch commentary and analysis!!
Flawed analysis, I spoke to Blackstone directly. There valuation data is based on current transactions. They are selling all the time and have real time data on sale values. There assets are only in strong markets that still have migration and are growing. Also their expiring leases are 10-20% below the current market. Remember people who are unable to purchase single family properties due to increased interest rates have to rent! The rental market will not get soft like housing!
Funny thing: Marc Rowan (Apollo) saying "There's no liquidity in public markets. There's liquidity on the way up..there's no liquidity on the way down"
https://youtu.be/cSsLvTiuap0&t=1872
https://www.breit.com/breit-faq-private-vs-public-real-estate/
https://www.breit.com/wp-content/uploads/sites/33/2022/11/BREIT-Stockholder-FAQs.pdf?v=1671472761
There current 8k filing breaks down their valuation and exit cap rates, none of which are below 5.2%. I am unsure how you can calculate their exit values without their DCF data including their expiring leases renewing at current market rates. Please explain factually how you come up with 3.8% exit cap rates you speak of for their valuation estimates?
Plus their leverage ratio is only 47%. They have 14 billion of liquidity which covers over 6 quarters of redeptions fully gated. Their interest rate costs are about 4% and their interest rate risk is covered by swaps with duration average of 7 years. Their loan portfolio sits at avg 6 years. Your analysis is completely flawed!