Blackstone See’s Dip in Real Estate Revenue, Posts Loss For 3rd Quarter

A softer real estate market has affected The Blackstone Groups earnings for the 3rd quarter. Revenue from the real estate division were down nearly 50 percent from 2006 as the company brought in only 109 million. After the buyout of Office Equity and Hilton Hotels, the company is digesting the purchases in a softer commercial market. The company recorded a loss for the quarter of 113 million with most of the expense attributed to the IPO earlier this year.

“Gains in the portfolio were down this quarter compared to last year, because the real estate market isn’t seeing the same sort of price appreciation as last year,” said Stephen Schwarzman, Blackstone’s chairman & CEO, during this morning’s conference call about the company’s third quarter returns. “Indeed, commercial real estate prices are softer in general.”

Nevertheless, Schwarzman put an optimistic spin on things, saying that Blackstone’s portfolio is doing comparatively well. “In major cities on the coasts, commercial rents are increasing,” he said. “In the hotel market, RevPAR (revenue per available room) is holding up, and replacement costs are still rising, with the cost of construction going up.”

Schwarzman also made a point to say that Blackstone owns “very little housing assets–less than half a percent of the total.” That comment came not long after he said that “the mortgage black hole is worse than anyone thought–deeper, darker and scarier than what the banks thought.”