RE Slump Deepens Blackstone's Red Ink Pool

NEW YORK CITY-The Blackstone Group reported a loss of $827.1 million for the fourth quarter of 2008, capping a year in which the investment giant lost $1.33 billion. More than half the negative net income for Q4 ’08 came from its real estate operations.

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.