Blackstone's real estate-related revenues rose to $100.2 million in Q3, up from negative $18.9 million in Q2 and up even more sharply from the loss of $273.7 million in Q3 2008. The company attributed the difference from Q3 '08 to an increase in management fees and stabilization in the fair value of the real estate segment's underlying portfolio investments. Year-to-date, the real estate segment has generated negative $131.3 million in revenues.
The portfolio's fair value depreciated by 0.4% in Q3 2009, versus a 10% drop in the same time period a year earlier. Fee-earning assets under management increased $167.1 million from Q2 and $1.1 billion from Q3 '08 to $23.7 billion.
In a release, Blackstone says its real estate funds have seen an increase in potential investment opportunities over the past few months. Although only $35 million in limited partner capital was deployed during Q3, compared to $252.7 million in Q2, the quarter also saw $179.7 million of capital committed to deals by the segment's funds and not yet deployed. Since Q3 ended, over $165 million of that capital was deployed, and over $375 million of capital was committed to new transactions.
The release notes that lending markets have seen "some improvement," with lower borrowing rates and an improved willingness on the part of banks to increase lending. "Access to equity capital markets has improved and volumes of both IPOs and secondary equity markets have increased considerably throughout 2009," the release states. "If these favorable trends are sustained, Blackstone's funds could participate in an increased number of acquisitions and dispositions."
Stephen Schwarzman, Blackstone's chairman and CEO, says in a statement, "We believe the worst is behind us, though a recovery could be gradual and uneven. We see many opportunities to deploy our substantial available capital across each of our asset management businesses with attractive potential risk-return for our fund investors."
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Paul Bubny
Paul Bubny is managing editor of Real Estate Forum and GlobeSt.com. He has been reporting on business since 1988 and on commercial real estate since 2007. He is based at ALM Real Estate Media Group's offices in New York City.
