Blackstone’s recent earnings call raises questions about how tariff implementations have affected commercial real estate investment. In short, the giant asset manager says the waterfall of causes and effects is slowing down what was starting to build into a recovery.
Blackstone had been looking more positively at where CRE was moving. Its 2024 Q4 was hot with year-over-year net income up by 1117%. The entire 2024 saw a 1225% increase.
Meanwhile, Q4 opportunistic real estate investment performance was -5.1% and core plus, -0.8%. For all of 2024, opportunistic was -3.7%; core plus was almost flat at 0.1%. However, there were multiple dynamics in Blackstone’s CRE activities and comments. It suggested a bottoming in real estate values and recognition of CRE private debt as a strong investment.
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Some actions in 2025 demonstrated their conclusions. In February 2025, the company secured a $2.78 billion commercial mortgage-backed security (CMBS) that will be financed for its $4 billion acquisition of Retail Opportunity Investments Corporation (ROIC), which it completed earlier that month. It looked to fund a Manhattan office purchase with an $800 million loan. March 2025 saw Blackstone raise $8 billion for its Real Estate Debt Strategies V fund.
The 2025 Q1 earnings call became the time for the company to publicly reassess its view since the Trump administration set forth on an unpredictable rollout of the tariff policy. The company had a strong quarter, though not as spectacular as 2024 Q4. Distributable earnings were up 11% year-over-year. It increased assets under management by $62 billion, the highest its seen in 3 years, and by $200 billion over the last 12 months.
Then came the qualifications. “I'd say that $62 billion in the quarter is worth noting,” said Stephen Schwarzman, co-founder, chairman, and chief executive officer. He pointed to a “turbulent market backdrop” that produced challenges.
Uncertainty around tariffs and their potential impact on economic growth and inflation has dramatically impacted investor sentiment,” Schwarzman cautioned. “It's early, it's too early to assess the full implications of tariffs, which depend on the outcome of unprecedented multilateral negotiations with perhaps over 100 countries around the world. The complexity of the situation means that patience and staying power are key.”
Other executives took up the same theme. “I think [conditions] can change very quickly with policy changes,” said President and Chief Operating Officer Jonathan Gray. “There's just a lot of underlying momentum. “If this tariff diplomacy is resolved more quickly, I think you could see markets recover. And we've seen it in the past. And then you could see things open up again.”
“With respect to the environment going forward, that positioning provides a strong foundation as we enter a complex backdrop that will continue to evolve,” said Chief Financial Officer and Vice Chairman Michael Chae. “It will take time to see how tariff developments unfold, as Steve noted, and how they translate to the real economy and corporate earnings. As always, the breadth and diversity of our global portfolio is a source of strength.”
Extrapolating from their observations, investors without sufficient diversity in their portfolios might find current uncertainty and volatility challenging to navigate.
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