Blackstone marks record $1 trillion in assets with earnings slump (updated)

Gates Industrial

20/07/2023 13:40

(Adds share reaction)
    By Chibuike Oguh
       NEW YORK, July 20 (Reuters) - Blackstone Inc  BX.N  said
on Thursday its second-quarter distributable earnings dropped
39% amid a slump in asset sales, overshadowing a key milestone
of the firm becoming the first manager of alternative
investments such as private equity and real estate to amass $1
trillion in assets. 
        Blackstone crossed the threshold after raising $30.1
billion of new capital in the quarter, leaving behind Brookfield
Asset Management Ltd  BAM.TO , its biggest rival that has $825
billion in assets. Blackstone's shares dropped 3% in pre-market
trading, as investors focused on the earnings decline.
  
    Distributable earnings, which represent cash used to pay
dividends to shareholders, fell to $1.2 billion from nearly $2
billion a year earlier. This resulted in distributable earnings
of 93 cents, only marginally higher than the average analyst
estimate, as compiled by Refinitiv, of 92 cents. 
    Blackstone said its net profit from asset sales plunged 82%
to $388.4 million from $2.2 billion in the year-ago period, as
higher interest rates, sticky inflation, and economic
uncertainty have continued to weigh on its
merger-and-acquisition activity.
     A major share of the reduced asset disposals came from
Blackstone's real estate unit, where its net profit sank 94%,
while that of its credit division dropped 46%.
    Still, its private-equity business saw a 20% growth in
performance fees, driven by secondary share sales of
Blackstone's stake in London Stock Exchange Group  LSEG.L  and
Gates Industrial Corporation  GTES.N .
    Corporate private-equity funds appreciated by 3.5% during
the quarter, compared with 8.3% growth in the benchmark S&P 500
index  .SPX , Blackstone said. Its private credit funds gained
3.3% while hedge fund assets grew 1.9%. Opportunistic real
estate funds were flat.
    Under generally accepted accounting principles (GAAP),
Blackstone's net income came in at $601.3 million, versus a net
loss of $29.4 million due to a rebound in revenue from
performance fees and principal investments. 
    Blackstone also had about $195 billion of unspent capital
and declared a quarterly dividend of 79 cents per share.

 (Reporting by Chibuike Oguh in New York; Editing by Sherry
Jacob-Phillips and Nick Zieminski)
 ((Chibuike.Oguh@thomsonreuters.com; +332-219-1834; Reuters
Messaging: chibuike.oguh.thomsonreuters.com@reuters.net))