According to financial results released Friday, Blackstone's real estate segment generated negative revenues of $477.8 million for Q4, compared to negative revenues of $273.7 million for Q3 2008 and $113.5 million in positive revenues for Q4 2007. The company says the decline was driven principally by "a net depreciation in the fair value of certain investments in the office and hospitality portfolios, which reflects both increases in capitalization rates and revised operating projections."

Similarly, the real estate segment produced negative numbers for the year as a whole, losing $718 million in '08 where it generated $1.3 billion in revenues for '07. Here, the company attributed the reversal to "a net depreciation in the fair value of the portfolio holdings in the real estate funds." Q4 saw a total deployment of $258.6 million in limited partner capital. That compares to $4.04 billion deployed in Q4 '07.

In a release, Blackstone cites a host of macroeconomic trends as the backdrop for its Q4 performance: declining world markets that brought the full-year results to "the worst experienced since the Great Depression"; a combination of de-levering by institutional investors and their need for liquidity, "which further stressed already weak markets across many asset classes"; a 40% to 60% decline in equity markets across North America, Europe and Asia; steeply declining commodity prices; comparable declines in credit indices; "very limited" securitization markets during '08; and weakening commercial real estate fundamentals. The company's performance last year was hardly unique among private equity firms, as the sector in general took a drubbing.