Private equity firm Blackstone reports $827 million Q4 loss

27 February 2009

Blackstone Group LP, the world's biggest private-equity firm, reported a fourth-quarter loss of $827.1 million as it marked down the value of private-equity and real estate holdings.

The buyout shop, which makes its money buying distressed companies and then selling them for a profit, said it lost $415.2 million, or $1.52 per common unit, during the quarter. Blackstone lost $170 million, or 65 cents per common unit, during the same quarter a year earlier.

The company's "economic net loss," which excludes compensation charges tied to its initial public offering, totalled $827.1 million during the fourth quarter, compared with income of $128.2 million during the same quarter in 2007. Blackstone went public at the peak of the private equity boom in June 2007.

Blackstone, run by Stephen Schwarzman, posted its third loss in four quarters amid a leveraged-buyout drought and global recession that's slashed the firm's fees and hampered it from selling what it already owns. The firm wrote down the value of holdings to match a global decline in prices for assets. The Standard & Poor's 500 Index dropped 23 per cent during the fourth quarter.

Blackstone has declined 88 per cent since its initial public offering at $31 a share in June 2007. The stock fell 18 cents, or 4.5 per cent, to $3.69 at 9:41 a.m. in New York Stock Exchange composite trading. Earlier, it fell to $3.55.

The firm said today it wouldn't pay a distribution to its shareholders for the fourth quarter after paying a total of 90 cents a share during the first three. Blackstone may not be able to pay the planned $1.20-a-share in distributions this year either, according to the statement.