The Real Deal About REIT Investing (and what's going very wrong with Blackstone's BREIT)- Phil Bak, CEO of Armada ETFs

INVESTOLOGY: re-think investment management

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2y ago 41:29

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Phil Bak is the CEO of Armada ETFs. Phil has been innovating in the ETF industry for over 15 years. Armada specializes in REIT ETFs, and we go on a deep dive into real estate investing, how investors can use REITS and what’s going on with the Blackstone BREIT Fund.

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EPISODE LINKS

https://philbak.substack.com/

https://twitter.com/philbak1

https://www.armadaetfs.com/

https://www.breit.com/

QUOTES

“I started looking deeper and deeper into the REIT market, and it, you know, really found some, some very interesting things that I thought nobody was talking about. And you know, specifically, the definition of what a REIT is had been expanding and things that you and I would not consider real estate. And what that means is that investors who are in traditional REIT funds, especially index-based market cap weighted funds, are getting exposure to things that they don't really know that they're getting exposure to that they might not really want.”

"The correlations between the different sub-sectors of REITs are very low, meaning that they trade differently than themselves. They're different economies within the REIT world. So where within REITs would you want to be in a more difficult market environment? And for us, that answer is very clearly in the residential space because, the residential REITs are generating their income through rents paid."

ABOUT BREIT

“ I feel like this fund is now standing on the edge of a cliff, at a precipice, right? Not through mismanagement the opposite, right? Through their success, they are, in fact a victim of their own success. And how does that happen? Well, embedded in this fund is a lot of leverage, and they have raised a tremendous amount of assets.

And they own about 120 billion worth of real estate. And they've had so much success and so many assets coming in that they've been buying all along the way, and all along at the top.“

TIME STAMPS

00:00 Intro

01:05 Phil Bak's background in product and ETFs

04:38 Real estate is a special asset - Gone with the wind

05:00 Different ways to access real estate and real assets

06:15 Introducing REITs

08:19 REIT rules

10:23 Equity REITs example of HAUS US residential REITS

15:40 REITs in a global portfolio

17:39 Hedging your home purchase with REITs?

19:39 Let's talk about Blackstone's BREIT

20:47 What's happening with private real estate

21:57 The issues and outlook for BREIT

24:32 BREIT and the extraordinary University of California deal

25:32 BREIT's liquidity issue

28:16 Zooming on BREIT's NAV

29:44 Tackling misconceptions about liquidity

32:49 Are public valuations stupid?

33:22 Financial advice from Tony Soprano

34:11 Should we worry about private assets

37:10 Fundamental questions that investors should ask themselves about private assets

37:53 Armada's merger plans

40:07 Conclusion & where to follow Phil Bak

ABOUT

Investorama is your guide to the future of investing without the hype. In each episode, reformed investment banker and marketer George Aliferis and his guests take a deep dive into a key topic that shapes our financial future.

George is the founder of Orama.tv (podcast & video company), as well as its content arm Investorama, a podcast, YouTube channel and Newsletter.

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