Private equity giant Blackstone Group paid investors a $16.2 million “clawback” on one of its real estate funds during the third quarter, Reuters reported. A clawback is paid when a fund fails to meet its targets, and general partners have to refund profits that were taken earlier in a fund’s life. Such obligations are down compared with last year, Reuters reported. As of Sept. 30, Blackstone’s clawback obligations were $392 million, down from $485.3 million as of Dec. 31, 2009.
(Reuters) – Private equity firm Blackstone Group (BX.N) paid a $16.2 million “clawback” to investors on a real estate fund in the third quarter, although its obligations to refund investors fell overall.
A clawback is paid when a fund fails to meet targets and the private equity executives, or “general partners,” have to refund to investors profit that may have been taken in the early life of the fund.
The actual clawback liability is not realized until the end of a fund’s life except for Blackstone’s real estate funds, which may have interim liability come due after a loss is realized, according to a regulatory filing on Friday.
Of the interim cash clawback paid during the quarter, $13.7 million was paid by Blackstone Holdings and $2.5 million by current and former Blackstone personnel, Blackstone said in a U.S. Securities and Exchange Commission filing.
Blackstone paid a $3 million clawback to investors on a real estate fund in the quarter ended June 30. [ID:nN27102745]
As of Sept. 30, the firm’s clawback obligations were $392 million, down from $485.3 million as of Dec. 31, 2009.
Obligations related to real estate funds fell to $205.3 million from $299.8 million over the same period.
Last month, the firm said the value of its real estate funds rose 19 percent in the third quarter.
General partners typically take 20 percent of the profit of a fund after a certain performance target has been reached, typically a roughly 8 percent return on investment. (Reporting by Paritosh Bansal; Editing by Richard Chang)