Blackstone Writes Down Its Real Estate Values

Blackstone has written down the value of assets in its large opportunistic real estate fund business, as the recovery in property prices the firm long anticipated has been pushed further out. In its third-quarter results, the world's largest real estate manager said values in its opportunistic vehicles fell 3.2% over the past three months and are down 4% over the past 12 months, which it attributed to higher-for-longer interest rates. By contrast, the value of assets in its core-plus business rose 1.6% in the quarter and is up 4.3% over the past year. Opportunistic real estate was the only part of the business to see values drop.

Blackstone told analysts the write-downs were concentrated in older funds, while more recent opportunity funds have performed well. Values were up 17% over the past 12 months in its most recent global opportunity fund and 13% in its most recent European fund. Blackstone President Jon Gray, speaking on an analyst call Thursday, argued that while higher rates are a headwind to the sector's recovery, strengthening fundamentals are a tailwind. He contrasted the current backdrop with 2022, when the Fed hiked rates against slowing cash flow growth and significant construction pipelines. This time, Gray said, real estate is supported by record low levels of new construction and liquid debt markets.

Gray highlighted strong leasing in the data center portfolio, which will triple this year to about 6 gigawatts, and in logistics, where U.S. leasing is up 45% this year. Those two sectors make up 54% of Blackstone's real estate portfolios and are expected to offset weaker areas such as multifamily. Gray said demand for compute is rising faster than supply and that roughly 96% of Blackstone's data center leases are backed by long-term contracts with blue-chip companies. "When we look across our business, [AI] infrastructure continues to be the area where we're driving the highest returns," he said.

Real estate assets under management total $309B, down from $320B a year earlier. Real estate earnings fell 10%, even though performance fees rose 29%. The decline reflected a 25% drop in fees from asset sales and in investment income from the firm's own capital alongside clients, as well as lower fees from a smaller pool of managed assets. Blackstone sold $7B of assets in the quarter, including offices in India and logistics in Japan, compared with $7.3B in the third quarter of 2025. It invested $6.3B in real estate, nearly double the $3.6B a year earlier, including the $280M purchase of the Hyatt Regency Embarcadero in San Francisco in June. The firm has $47B of capital available for real estate and raised $6.3B for its real estate funds in the quarter, up from $3.8B a year earlier, led by its core-plus ($3.3B) and debt ($2.3B) businesses.