Blackstone Group, the world's largest manager of alternative assets, said second-quarter profit rose two per cent as it earned more from real estate sales.
Economic net income, a measure of earnings that reflects both realised and unrealised investment gains, increased to $520 million, or 44 cents a share, from $508 million, or 43 cents, a year earlier, New York-based Blackstone said in a statement Thursday. Analysts had expected earnings of 39 cents a share, the average of 15 estimates compiled by Bloomberg.
Blackstone mined a string of mostly small gains during a period when US equity markets rose despite a late-June swoon. Its private equity and real estate realisations totalled $7.2 billion for the quarter, driven by sales of office property investments and private equity secondaries, or stakes in other buyout firms’ funds.
“Despite the notable market disturbances in the quarter, our funds delivered good investment performance across our businesses,” Chief Executive Officer Steve Schwarzman said in the statement.
Blackstone reported results before the start of regular trading in New York. The stock closed Wednesday at $25.84, down 12 percent in 2016.
The firm said its private equity portfolio, including companies it’s taken public and still owns, appreciated 2.5 percent in the quarter, compared with 3.5 percent in the same period last year. Firms mark the value of the investments they hold -- a key determinant of economic net income -- in line with the market. The S&P 500 index of large U.S. companies was up 1.9 percent in the quarter.
Blackstone’s biggest stake, in hotel chain Hilton Worldwide Holdings Inc., now valued at about $10.9 billion, was little-changed in the quarter. The firm unloaded $200 million to $400 million slugs of stock in at least six companies, including Performance Food Group Co., drug products maker Catalent Inc. and Scout24 AG, a German digital advertising company.
Blackstone’s largest public stock sale last quarter, of about $1 billion in Brixmor Property Group Inc. shares, generated little in the way of performance fees. That was because most of the cash went to pay off a margin loan Blackstone took in 2015 to reap a faster payback on its investment in the company. The firm also sold parts of its Equity Office Properties Trust portfolio and a stake in Hong Kong-based real estate company Tysan Holdings Ltd.
Distributable earnings, which reflect cash gains on asset sales, were $503 million, compared with $1 billion a year earlier. Blackstone said it will pay stockholders a dividend of 36 cents a share on Aug. 8.
Blackstone, whose executives have said deal values are generally too high, had a quiet quarter for acquisitions. Its deals included the $1.9 billion purchase of 49 shopping centers from RioCan Real Estate Investment Trust.
With $356 billion in assets, Blackstone is viewed as a bellwether for the alternative-asset industry given its size and reach across markets. KKR & Co. and Carlyle Group are scheduled to report results next week.
News by Bloomberg, edited by Hospitality Ireland