The Blackstone Group L.P. (BX) reported record-breaking second-quarter earnings on Thursday, based on strong performance across all funds.
Economic net income (excluding costs related to the firm’s 2007 IPO) was $1.3 billion, or $1.15 per unit, up 89% year-over-year (YoY) while GAAP net income was $517 million, up 145% YoY. Blackstone’s distributable earnings were $771 million, up 128% YoY.
Blackstone declared a quarterly dividend of 55 cents per unit on Thursday, which will be paid on August 4, to unit holders.
Over the last year, value creation was $37 billion and inflows were $62 billion. Through this, the firm was able to increase its total assets under management (AUM) by 21% YoY to $279 billion even though $50 billion worth of capital was returned to investors last year.
Blackstone Group chairman and CEO Stephen Schwarzman said the group may have $100 billion of low-risk real estate, under management, in a decade. He also mentioned that Blackstone is aiming for a 10-12% return on core-plus assets, which consists of high quality and well leased properties (office buildings, apartment towers & shopping malls) that need little refurbishing to increase value.
Private equity contributed 48% - the highest share - in the economic net Income for this quarter. The second highest share was from the real estate segment, which contributed 36.2%.
Private equity fund value rose 8.4% quarter-over-quarter (QoQ) and 28% YoY, driven by a strong portfolio performance.
Hilton was acquired by Blackstone in 2007, for $26 billion and after restructuring its debt, Hilton was made public in 2013. The fund acquired Sea World Entertainment for $2.3 billion in 2009. In June 2014 Blackstone sold Hilton stock, raising $2 billion along with $518 million worth of Sea World stock. According to Schwarzman, Blackstone recorded a $12 billion gain on the Hilton Investment, which is the largest private equity gain in history.
Real estate fund value rose 6% QoQ and 28% YoY, owing to strong real estate fundamentals, which included rising rent and increasing occupancy rates across the portfolio. Realization activity in this segment reached a record $6.7 billion after selling off shares of Hilton and Brixmor Property Group Inc. (BRX).
The $5.4 billion acquisition of the Gates Corporation in April was the only leveraged buyout this quarter.
Blackstone stock was up 0.47% to $34.14 yesterday, which was 3.67% below its 52-week high. The stock has increased 46% in one year. The company has a forward P/B of 5.61 and a forward P/E of 9.48.