US investment giant Blackstone beat analyst earnings expectations in the third quarter of 2026, but recorded a decline in distributable earnings of more than nine percent. The private equity firm attributed this setback largely to pressures in the commercial property sector resulting from persistently high interest rates. Distributable earnings fell by 9.2 percent year on year to $1.72 billion, or $1.32 per share. Analysts had previously forecast a figure of $1.26 per share.
Pressure from global interest rate trends
Stephen Schwarzman, Chairman and Chief Executive Officer of Blackstone, described the past quarter as a highly complex market environment. A historic rise in global government bond yields, with US Treasuries reaching their highest levels in decades, pushed capital costs noticeably higher. This affected transaction activity as well as investor behaviour and triggered significant volatility across the markets.
Revenues in the group's property segment fell by ten percent to $1.68 billion. While core-plus real estate funds posted a value appreciation of 1.6 percent during the quarter, opportunistic funds saw a devaluation of 3.2 percent. At the same time, the firm's flagship vehicle, the unlisted real estate fund BREIT, raised $1.3 billion in fresh capital in the third quarter.
Focus on logistics and data centres
Jon Gray, President and Chief Operating Officer of Blackstone, explained that increased interest rate volatility led to an expansion in capitalisation rates across the portfolio. This factor was the primary driver of value corrections in opportunistic vehicles. Nevertheless, Gray sees the company remaining robustly positioned in commercial property. Strong demand for logistics space and data centres significantly supports the business; these two segments now account for 54 percent of the global real estate portfolio.
Although Gray acknowledged that legacy debt and equity holdings, particularly in low-growth sectors, are likely to face ongoing yield pressures, he noted that targeted capital allocation and the quality of the portfolio place it in a comparatively advantageous position.
Total assets under management at Blackstone increased by ten percent year on year to $1.37 trillion at the end of the quarter. Net inflows reached $63.3 million in the third quarter, with $167.9 million recorded over the past twelve months. Schwarzman also emphasised that investments in data centres in particular hold promise for long-term growth. Demand for computing power for artificial intelligence applications continues to accelerate, while the supply of suitable locations remains historically severely constrained.
