Blackstone's real estate partners once got up to $15 million in carry. Now nearly a third have walked out
Weak fund returns have choked off carried interest at the world's biggest property investor, the WSJ reports. Blackstone says its senior partner count is unchanged.
Nearly a third of the senior managing directors in Blackstone's real estate business have left the firm over the past three years, the Wall Street Journal reported over the weekend. The Journal's core finding is about money. Senior dealmakers who once collected as much as $15 million a year in carried interest on top of a roughly $2 million salary and bonus are now seeing those payouts dry up, because the funds they run are not earning enough to pay it.
The exits include the man at the top. Nadeem Meghji, global head of real estate, leaves at the end of 2026. Blackstone pushes back on the idea of a brain drain. It says the number of senior partners in the group has not changed.
The post that spread the story#
The Wall Street newsletter Short Squeez posted the Journal's headline numbers on Monday. Its post says the "key reason" for the exits was that partners "were no longer making as much money as they had in their best years."
We checked the post against the Journal's reporting as summarized by CRE Daily, eFinancialCareers and InvestmentNews. The "nearly a third" figure and the three-year window match. The pay framing matches the Journal's own headline, "Dwindling Pay Fuels High-Profile Exits." One caveat: the Journal also said people left for a mix of reasons. Some were tired of constant travel and being "on call non-stop," and others were eased out or retired, per eFinancialCareers. Pay is the main thread, not the only one.
Why the money stopped#
Carried interest, or "carry," is the share of fund profits that goes to the people who run the fund. It only pays out once a fund clears a minimum return for investors, called a hurdle. When funds miss the hurdle, the partners get little or nothing beyond salary.
That is what has happened at Blackstone real estate. In its 2025 annual report, four of 13 real estate funds that had finished investing were below the threshold for paying carry, according to CRE Daily's summary of the Journal.
The gap between an old fund and a newer one shows the problem.
Source: CRE Daily, citing the Wall Street Journal
Show the numbers
| Fund | Net return |
|---|---|
| 2012 fund ($13.3B) | 14% |
| 2019 fund ($20.5B) | 3% |
The $13.3 billion fund that closed in 2012 has earned 14% a year after fees and produced about $3 billion of carry, with roughly $1 billion going to employees, compensation experts told the Journal. The $20.5 billion fund that closed in 2019 has returned just 3% a year. That fund was raised right before the pandemic and then ran into sharply higher interest rates.
| Pay item | Senior MD, per year |
|---|---|
| Salary and regular bonus | About $2 million |
| Carried interest, good years | Up to $15 million |
| Carried interest, now | Much lower, per WSJ |
Source: recruiters and former executives cited by the Journal, via CRE Daily and eFinancialCareers.
The bets that went wrong are specific. Blackstone put money into data centers, life sciences offices, student housing and logistics. Only data centers have clearly worked, per eFinancialCareers. One student housing investment was sold for 70% below its purchase price, the Journal reported.
Who has left#
The departures run from the top down.
- Co-head Kathleen McCarthy leaves after 15 years
- Nadeem Meghji becomes sole global head
- Meghji's year-end exit confirmed; Levine and Cutaia named co-heads
- Ex-Blackstone dealmaker Tyler Henritze raises $1.9 billion for his own firm
- WSJ reports nearly a third of senior MDs gone in three years
Source: PERE, Mingtiandi, CRE Daily
Meghji joined in 2008 and became sole head in January, after co-head Kathleen McCarthy left. He is leaving to spend time with his young family, according to an internal memo cited by Mingtiandi. David Levine and Giovanni Cutaia will take over as co-heads. Two top real estate credit executives went to rival Starwood Capital, and the head of strategic investments in the Americas started his own firm.
The clearest sign of what talent can earn elsewhere came in October. Bloomberg reported that former Blackstone dealmaker Tyler Henritze's firm raised $1.9 billion for its second fund, beating its target by more than 25%.
When Meghji's exit was first reported in September, Bloomberg posted that he was leaving and would be replaced by two veteran executives.
Blackstone's side#
Blackstone disputes the idea that its bench is thinning. A spokeswoman told the Journal: "Our real-estate business has enormous continuity and tremendous talent, including 45 partners with an average tenure of 14 years at the firm." The firm also said the number of senior partners in the group is unchanged.
President Jon Gray made a similar case in September. "People sometimes don't recognize our real estate business has 800 people, 45 of which are partners with an average of 14 years," he told PERE. In their memo, CEO Steve Schwarzman and Gray called real estate "one of the most compelling investment environments we have seen in years."
Both things can be true. The headcount can hold steady while the most senior, best-paid people walk out and are replaced by newer partners.
Why it matters beyond Wall Street#
Blackstone manages more than $300 billion in real estate. Pensions, endowments and wealthy savers are the money behind those funds. Greg MacKinnon, head of research at the Pension Real Estate Association, told the Journal that investors in these funds have to be worried when executives leave.
The pay squeeze is not just a Blackstone story either. Private equity and property firms across the industry are struggling to sell assets at a profit, which is what turns carry into cash. For the wider picture of who is cutting staff this month, see our roundup of layoffs at Boeing, PepsiCo, Canva and Qualcomm.
The next test is the 2019 fund. If it climbs back over its hurdle, the carry machine restarts. If it does not, more senior partners may decide $2 million a year is not enough to stay.
Cite this article
Patrick Karsh. “Blackstone's real estate partners once got up to $15 million in carry. Now nearly a third have walked out.” 567 Business. Published 2026-11-10. https://567business.com/news/blackstone-real-estate-partners-exodus-carry
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