New York CNN  — 

The ongoing commercial real estate slowdown has a new victim: Blackstone, the largest owner of commercial real estate globally. The company saw its distributable earnings — the profit distributed to shareholders after expenses — plunge 36% since last year. That’s raising eyebrows on Wall Street as investors assess the fallout from last month’s regional banking crisis.

Blackrock’s decline was driven by an easing of value in its real estate investments. The company’s real estate segment’s distributable earnings fell 58% since last year. Profits from sales fell 54% to $4.4 billion, down from $9.5 billion last year, for the amount of total commercial real estate assets sold. But that number is a reflection of fewer assets sold, not necessarily of lower prices, a spokesperson for Blackstone told CNN.

After decades of thriving growth bolstered by low interest rates and easy credit, the $20 trillion commercial real estate industry has seemingly hit a wall. Office and retail property valuations have been falling since the pandemic brought about lower occupancy rates and changes in where people work and how they shop. The Federal Reserve’s efforts to fight inflation by raising interest rates have also hurt the credit-dependent industry.

Recent banking stress has added to those woes. Lending to commercial real estate developers and managers largely comes from small and midsize banks, where the pressure on liquidity has been most severe. About 80% of all bank loans for commercial properties come from regional banks, according to Goldman Sachs economists.

Recently, short-sellers have stepped up their bets against commercial landlords, indicating that they think the market will continue to fall as regional banks limit access to credit. Real estate is the most shorted industry globally and the third most in the United States, according to S&P Global.

Still, on an earnings call Thursday morning, CEO Stephen Schwarzman said that Blackstone was prepared to weather “adverse market conditions.”

Blackstone president Jonathan Gray emphasized on Thursday’s earnings call that the company has diversified its investments, and more-troubled office real estate only makes 2% of their holdings. That’s down from 61% in 2007.

Gray told Bloomberg on Thursday that the collapse of Silicon Valley Bank and Signature Bank and the turmoil in the sector has created opportunity for Blackstone. The company, he said, has been talking to smaller banks to help lend to their clients as they look to tighten their credit.

The banking crisis, he said, and banks’ subsequent retreat from loose lending policies, could create a “golden moment” for credit and provide more opportunity for Blackstone to provide financing, he said.