Blackstone Group LP said on Wednesday its third-quarter distributable earnings rose 9% year-on-year, as the world’s largest manager of alternative assets such as private equity and real estate took advantage of a rise in corporate valuations to cash out on some of its leverage buyout investments.
Distributable earnings – cash available for paying dividends to shareholders – totaled $772 million, up from $710 million a year earlier. This translated into distributable earnings per share of 63 cents, surpassing analysts’ average estimate of 57 cents, according to data compiled by Refinitiv.
Blackstone said its private equity portfolio appreciated 12.2% in the quarter, compared with an 8.5% rise in the benchmark S&P 500 stock index over the same period. Opportunistic and core real estate funds rose 6.4% and 3.5% respectively. Blackstone’s shares were down 2.9% in afternoon trading, in line with the broader market.
Blackstone completed the $7 billion sale of Cheniere Energy Partners to Brookfield Asset Management and Blackstone Infrastructure Partners in the quarter, as well as the $625 million initial public offering of India’s second real estate investment trust (REIT), Mindspace Business Parks.
“The record fee-related earnings and management fees is what investors focus on and kind of renewed momentum in deployments and realization shows the defensibility of the portfolio through this pandemic,” said Jefferies analyst Gerald O’Hara.
Under generally accepted accounting principles (GAAP), Blackstone reported net income of $794.7 million as growth in investment income was partly offset by compensation expenses.
Total assets under management rose to $584.4 billion as of the end of September from $564.3 billion in the previous quarter, driven by strong fundraising. Blackstone had $152.4 billion of unspent capital as of the end of September.
Asked by analysts about the impact of a possible Democratic victory in the Nov. 3 U.S. election, Blackstone executives said they took account of likely future higher tax rates when the firm converted to a corporation last year. They said they expected any new tax changes to result in only a low-single digit reduction in earnings.
Blackstone said it would pay a quarterly dividend of 54 cents per share.