Blackstone has written down the value of the assets in its massive real estate opportunity fund business, as the recovery in prices long predicted by the investor is pushed further out. 

The world’s largest real estate manager said in third-quarter results that values in its opportunistic vehicles had fallen 3.2% in the past three months and are down 4% over the past 12 months. That is the result of higher-for-longer interest rates, it said. 

The value of assets in its core-plus business rose 1.6% in the quarter and is up 4.3% over the past year. Opportunistic real estate was the only part of its business that saw values drop. 

The write-downs were in older funds, Blackstone told analysts, with its more recent opportunity funds having performed well: Values were up 17% over the past 12 months in its most recent global opportunity fund and 13% in its most recent European fund. 

“Importantly, while higher rates are a headwind to the sector's recovery, strengthening fundamentals are a tailwind,” Blackstone President Jon Gray said on a call with analysts Thursday, making the positive case for the property sector compared to 2022, when the Fed hiked rates against a backdrop of slowing cash flow growth and significant construction pipelines.

This time, real estate is bolstered by record low levels of new construction and liquid debt markets, he said.

Gray flagged in particular strong leasing in its data center portfolio, which will triple this year to about 6 gigawatts, he said, and in its logistics portfolio, which is seeing strong demand, with U.S. leasing up 45% this year. Those two sectors make up 54% of its real estate portfolios.

That will counterbalance weaker sectors like multifamily, the company said. 

Gray remained bullish on the resilience of investment in the artificial intelligence ecosystem. Demand for compute is rising faster than the ability to supply it, he said, and Blackstone expects that trend to continue as businesses grasp the productivity gains offered by AI and increase adoption.

Roughly 96% of Blackstone's data center leases are backed by long-term contracts to blue-chip companies, Gray said.

“When we look across our business, [AI] infrastructure continues to be the area where we're driving the highest returns,” Gray said.

Its real estate assets under management now total $309B, compared with $320B at the same point last year. Earnings from its real estate division were down 10%, even though fees from outperforming benchmarks were up 29%. 

That was due to big drops in fees earned from selling assets and profits from investing its own money alongside clients, which both fell 25%, as well as a drop in fees from managing a smaller pool of assets. 

Blackstone sold $7B of assets in the quarter, including offices in India and logistics in Japan. That was compared with $7.3B sold in the third quarter of 2025.

The company invested $6.3B in real estate during the quarter, almost twice the $3.6B it put out a year prior. It flagged its acquisition of the Hyatt Regency Embarcadero in San Francisco, which it bought for $280M in June. 

Blackstone has $47B of capital available to spend on real estate, it said. The company raised $6.3B for its real estate funds in the quarter, a big jump on the $3.8B raised in Q3 last year. Its core-plus and debt businesses accounted for the vast majority of that capital, raising $3.3B and $2.3B, respectively.