Blackstone Group is refunding some performance fees earned during the commercial real estate boom, the first time fund investors have clawed back cash from executives at the world’s largest private equity company.
Blackstone’s repayments were included in an Aug. 6 regulatory filing that didn’t name the funds.
But a person with knowledge of the payments said that Blackstone and some of its managers returned $3 million in carried interest to investors in Blackstone Real Estate Partners International during the second quarter. They may pay back an estimated $15.7 million this quarter to another fund, Blackstone Real Estate Partners IV, according to the person and the regulatory filing.
Blackstone’s property buyout funds recorded performance fees totaling $1.74 billion, some of which was allocated to the firm’s partners, as the market for office towers, hotels and apartments soared from 2004 to 2007. Prices have slumped about 39% since then.
Blackstone real estate buyout funds averaged gains of 33% in the first half as commercial property values reached a bottom or began improving in most of the world, CEO Stephen Schwarzman said during a July 22 conference call with analysts, according to a transcript.
The funds recorded about $37.4 million of performance fees during the second quarter, reversing a $47.4 million decline during the same period last year, Blackstone’s financial statements show.
“We anticipate that all of our funds will be profitable and any final clawbacks will be insignificant,” Peter Rose, a Blackstone spokesman, said in an e-mailed statement.