Blackstone has broken through the $1tn AUM milestone but sees a “vast opportunity for further expansion”.
The alternative asset manager’s latest quarterly results show total AUM increasing by 6% during the year to $1.4bn over the $1tn mark. It saw $30.1bn of inflows during the quarter and$158.4bn for the full year.
Chair and chief executive Stephen Schwarzman said: “Blackstone is the first alternative manager to surpass $1tn of assets under management. This milestone reflects the extraordinary trust we have developed with our investors – built through performance – as well as our distinctive position as an innovator. We believe we are in the early stages of the long-term growth of the alternatives industry, providing a vast opportunity for further expansion.”
Blackstone is slowly but surely shifting its emphasis to perpetual investment funds, meaning it is under no obligation to sell assets to make returns.
However, its distributable earnings for the second quarter fell by 39% to $1.2bn, as asset sales from its real estate business dried up.
Net realisations from its real estate arm fell 96% to $50m.
Adjusted EBITDA was more than a $1bn down on the same quarter last year, falling to $1.52bn.
But Schwarzman and his successor, president and COO Jon Gray, are more interested in future growth. Blackstone deployed $19.46bn over the quarter, but is currently sitting on total dry powder of $194.5bn, with $64bn allocated to direct investments in real estate.
In a call with investors, Gray said: “There is more negative sentiment, obviously, around commercial real estate, and there was a lot of focus here. The good news is share redemptions are down nearly 30% from where they were at the beginning of the year.”
But he acknowledged: “The subscriptions remain muted, but… some of the overall negative sentiment in markets and negative sentiment in commercial real estate abating will ultimately change that dialogue.”
He urged investors to focus more on the longer term picture.
Real estate AUM increased by 4% to $333.2bn with inflows of $7.9bn in the quarter and $49.2bn over the LTM.
Inflows in the quarter included $1.3bn for its seventh European opportunistic fund, $791m of capital raised in BREIT, and $203m in its fifth real estate debt strategies fund.
In addition, BREIT experienced $246m of subscriptions on 1 July, which have not been included in total AUM.
The real estate arm earned $589m over the quarter, 5% up from Q2 last year. However, earnings for the year to date were down 12% to £1.17bn.
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