Blackstone Profit Misses Estimates as Real Estate Exits Slow

Blackstone Inc.’s real estate arm weighed on the investment giant’s second-quarter results, as high interest rates crimped property valuations and investors pumped less money into the business.

The world’s largest owner of commercial estate slowed the pace of real estate exits while it grappled with the markets’ shifting fortunes. Profit gains in credit and private equity weren’t enough to offset the drag on fee-related earnings, which fell 3% to $1.11 billion, New York-based Blackstone said Thursday in a statement.

Distributable earnings, or profit available to shareholders, increased 3% from a year earlier to $1.25 billion, or 96 cents a share. That was 2 cents shy of the average estimate of analysts surveyed by Bloomberg.

The firm confronted a spike in redemptions in the last two weeks of May after a real estate investment trust of rival Starwood Capital Group dramatically limited investors’ ability to cash out. Blackstone’s $57 billion REIT held off on restricting outflows for two consecutive months even though withdrawal requests hit levels that would have allowed it.

The worst is over for the real estate market, with the exception of offices, President Jon Gray said in an interview.