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On July 19, 2024
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Blackstone Q2 results: Earnings rose 3% on private equity, credit gains
He highlighted artificial intelligence as a major area of growth and said on Blackstone's quarterly earnings call 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 sectors. Blackstone's President Jonathan Gray said on the earnings call that while the firm was prepared for either a Republican or Democratic administration following the U.S. election in November, many of its growth drivers, such as digitization, advances in life sciences and the growth of the private credit industry, would continue regardless.
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Blackstone posts modest Q2 profit jump on private equity, credit gains
NEW YORK, July 18 (Reuters) - Blackstone said on Thursday its second-quarter distributable earnings rose 3% from a year earlier, as a jump in asset sales in its private equity and credit divisions more than offset a slump in its real estate arm. The New York-based investment firm's results underscore how a long spell of high interest rates has dragged down some aspects of its business while buoying others. High rates have weighed on Blackstone's real estate value and made dealmaking more expensive, yet they also boosted the worth of its credit assets and helped tame inflationary pressures. Hopes that the U.S. Federal Reserve will start cutting rates have contributed to a market rally that Blackstone has seized on to cash out on some of its companies for top dollar. Blackstone's distributable earnings, which represent cash that can be used to pay dividends, totaled $1.3 billion in the second quarter. This translated into distributable earnings per share of 96 cents, slightly short of analysts' average estimate of 98 cents, according to LSEG data. Blackstone's shares were up 1.6% at $136.98 on Thursday, giving the world's largest manager of alternative assets such as private equity and corporate credit a market value of about $165 billion. A 16% increase in distributable earnings in Blackstone's private equity unit and a 51% jump in its credit arm outweighed the 19% drop in distributable earnings in its real estate division. Blackstone's core private equity funds appreciated 2% in the quarter, and the firm took advantage of the elevated market valuations to cash out on $7.8 billion of its private equity assets. Blackstone's opportunistic real estate funds appreciated 0.3% in the quarter and the firm cashed out on $5.5 billion of real estate assets. Its private credit funds posted a gross return of 4.2% and the firm cashed out on $9.5 billion of credit assets. The company said it 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, where Blackstone 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. "We are planting the seeds of future value creation," Blackstone Chief Executive Stephen Schwarzman said in a statement. He highlighted artificial intelligence as a major area of growth and said on Blackstone's quarterly earnings call 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 sectors. Blackstone's President Jonathan Gray said on the earnings call that while the firm was prepared for either a Republican or Democratic administration following the U.S. election in November, many of its growth drivers, such as digitization, advances in life sciences and the growth of the private credit industry, would continue regardless. He added that he expected a Republican-controlled federal government to prioritize fossil fuels rather than renewable energy, and that it could take a different posture on antitrust, where U.S. President Joe Biden's administration has sought to crack down on monopolies. Fee-related earnings, which Blackstone generates from its management and advisory fees, declined 3% to $1.1 billion year-on-year. The firm posted record total assets under management of $1.1 trillion in the quarter, up 7% year-over-year, driven by strong fundraising, and also declared a quarterly dividend of 82 cents apiece. (Reporting by Echo Wang in New York; Editing by Sherry Jacob-Phillips and Nick Zieminski)
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Blackstone Inc., the world's largest alternative asset manager, announced a 3% rise in second-quarter earnings. The increase was primarily attributed to gains in its private equity and credit businesses, despite challenges in the real estate sector.
Blackstone Inc., the world's largest alternative asset manager, reported a modest 3% increase in second-quarter earnings for 2023. The company's distributable earnings, which represent the cash used to pay dividends to shareholders, rose to $1.2 billion in the quarter, up from $1.16 billion in the same period last year 1.
The primary drivers of Blackstone's Q2 growth were its private equity and credit businesses. The private equity portfolio appreciated by 3.5% during the quarter, while the credit portfolio saw a 3% increase 1. These gains helped offset challenges faced in other sectors, particularly real estate.
Blackstone's real estate portfolio experienced a 3.8% decline in the second quarter 2. This downturn reflects the broader challenges facing the commercial real estate market, including higher interest rates and reduced demand for office spaces in the post-pandemic era.
Despite the mixed performance across sectors, Blackstone's assets under management (AUM) grew to $1 trillion, representing a 6% increase from the previous year 1. This growth in AUM demonstrates the company's continued ability to attract investor capital despite market volatilities.
Blackstone reported a 5% year-over-year increase in fee-related earnings, reaching $1.1 billion for the quarter 2. This growth in fee-related earnings provides a stable revenue stream for the company, helping to balance out fluctuations in performance-based income.
The company faced ongoing challenges with its Blackstone Real Estate Income Trust (BREIT), as investor redemption requests continued to exceed the preset limits. However, Blackstone has maintained its stance on limiting withdrawals to protect the interests of long-term shareholders 2.
Despite the modest earnings growth, Blackstone's shares experienced a slight decline following the earnings announcement. The company remains optimistic about its future prospects, citing opportunities in private credit and the potential for distressed asset acquisitions in the real estate sector 1.
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Blackstone, a leading global investment firm, has agreed to purchase AirTrunk, an Australian data center operator, in a deal valued at $16.1 billion. This acquisition marks a significant move in the data center industry, driven by the growing demand for AI-related infrastructure.
5 Sources
Blackstone and CPP Investments have agreed to acquire AirTrunk, a leading Asia-Pacific data center operator, in a deal valued at A$24 billion. This marks Blackstone's largest investment in the Asia-Pacific region, driven by the growing demand for data centers amid AI and cloud computing boom.
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