Blackstone Eyes Real Estate Deals;Expects Big Distressed Cycle

Blackstone expects between $500 billion and $1 trillion in upcoming company defaults, a range that puts the next distressed cycle "four to eight times" larger than the one in 2001 and 2002.

"That will provide a lot of credit opportunities," James said. Blackstone's credit hedge-fund, GSO Capital Partners, will invest in many of those situations.

While the company does have a lot of money to invest, James said that of the $41 billion it's currently investing, Blackstone has written down 50% of its real-estate holdings compared to their original cost, and 30% of its private-equity holdings. Credit investments, on the other hand, have been marked up 30% from its cost.

Still, the fact that Blackstone still has so much money to deploy shows how cautious it's being.