Blackstone's Q2 Results: A Tale of Two Markets
High interest rates have boosted Blackstone's credit assets, but weighed on its real estate value. Despite this, the company has seen a 3% rise in distributable earnings.
BlackstonePrivate EquityCreditReal EstateAlternative AssetsReal EstateJul 18, 2024
The New York-based investment firm's results highlight the contrasting effects of high interest rates on its business. On one hand, high rates have boosted the worth of its credit assets, helping to tame inflationary pressures. On the other hand, they have weighed on its real estate value and made dealmaking more expensive.
Despite these challenges, Blackstone has capitalized on the market rally, cashing out on several of its companies at top dollar. The company's distributable earnings, which represent cash that can be used to pay dividends, totaled $1.3 billion in the second quarter.
Blackstone's private equity unit saw a 16% increase in distributable earnings, while its credit arm posted a 51% jump. In contrast, its real estate division saw a 19% drop in distributable earnings.
The company's core private equity funds appreciated 2% in the quarter, and Blackstone took advantage of the elevated market valuations to cash out on $7.8 billion of its private equity assets. Its opportunistic real estate funds appreciated 0.3% in the quarter, and the firm cashed out on $5.5 billion of real estate assets.
Blackstone's private credit funds posted a gross return of 4.2%, and the firm cashed out on $9.5 billion of credit assets. The company saw about $40 billion inflows to its funds and deployed $34 billion in capital from them in the second quarter, the highest level of investment activity in two years.
In real estate, Blackstone has focused on logistics and rental housing, and has been wary of the troubled office sector. The firm has invested $15 billion since the start of the year, nearly 2.5 times what it deployed over the same period last year.
Blackstone Chief Executive Stephen Schwarzman highlighted artificial intelligence as a major area of growth, noting that the firm held $55 billion in data center assets that are developed or under construction and had identified another $70 billion of potential investments in the sector.
Blackstone's President Jonathan Gray expressed confidence in the company's growth drivers, which include digitization, advances in life sciences, and the growth of the private credit industry.
The company's fee-related earnings declined 3% to $1.1 billion year-on-year, while its total assets under management reached a record $1.1 trillion in the quarter, up 7% year-over-year. Blackstone also declared a quarterly dividend of 82 cents apiece.
About Blackstone Blackstone is a global leader in alternative asset management. Founded in 1985, the company has over $1 trillion in assets under management, including private equity, real estate, credit, and hedge funds.
Frequently Asked Questions
What was the increase in Blackstone's distributable earnings in its second-quarter results?
3%
What has boosted the worth of Blackstone's credit assets?
High interest rates
What has weighed on Blackstone's real estate value?
High interest rates
How much did Blackstone's private equity unit see an increase in distributable earnings?
16%
What is the total value of Blackstone's data center assets that are developed or under construction?
$55 billion
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