Friday, Aug 27, 2010
Commercial property Ponzi scheme unwinding
Real Estate: Blackstone investors claw back real estate fees
Private-equity firm returns $3 million in performance fees and may pay back nearly $16 million more amid the commercial property slump... 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, leaving New York-based Blackstone and its rivals in a position similar to that of venture capital firms about a decade ago, when the collapse of technology stocks forced them to return profits earned on Internet companies during the 1990s. “The acute situation for clawbacks is when you have had a very successful period of gains and then the remaining deals don't do well,” said Michael Harrell.
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