Antoine Antoniol/Bloomberg NewsStephen A. Schwarzman, the head of the Blackstone Group.
The Blackstone Group said Thursday that it lost $341.9 million for its third quarter, wounded by market volatility and a tough environment for private equity firms to make money.
Blackstone’s results were driven by markdowns in the value of the firm’s private equity and real estate holdings. The loss was a sharp swing from a $339.3 million profit at the same time last year, and the firm reported negative revenue of $124.1 million as well.
On a generally accepted accounting principles basis, Blackstone reported a net loss of $274.6 million and negative revenue of $124.1 million for the quarter.
Still, the investment giant still managed to increase its assets under management 32 percent, to $158 billion.
“The third quarter presented extremely challenging market conditions, dominated by risk aversion and volatility,” Stephen A. Schwarzman, Blackstone’s chairman and chief executive, said in a statement.
As one of the biggest publicly traded private equity shops, Blackstone is often looked at as a proxy for other so-called alternative investment firms. The gyrations of the markets and the increasing reluctance of banks to lend money to riskier borrowers has made it difficult for these firms to carry out their core business of deal-making.
And a prolonged economic malaise is likely to hurt the value of their diverse holdings. Blackstone alone counts Hilton Worldwide, BankUnited of Florida and the software company SunGard among its portfolio companies.
Most of Blackstone’s core businesses — private equity, real estate and hedge funds — suffered in the quarter, hurt by declining performance fees and investment income. The firm’s buyout arm reported $285.1 million in negative revenue, while the enormous real estate division reported $15.2 million in negative revenue.
Its hedge fund of funds and its GSO debt-trading business reported significant declines in revenue for the quarter as well.
Blackstone’s financial advisory unit, which advises companies in mergers and in corporate reorganizations, reported flat revenue for the quarter at $87.4 million.
Still, should economic conditions improve, Blackstone has plenty of uninvested capital that it can deploy. The firm reported $16.9 billion in dry powder held by its private equity arm and $10.1 billion in its real estate unit.
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