Blackstone Earnings Fall to $1.22 Billion

The value of Blackstone’s corporate private-equity portfolio climbed by 2.8% in the quarter. That handily beat the S&P 500, which slid 4.9% over the period, but fell short of the portfolio’s 15% increase a year earlier.

Virtually all of the firm’s other major strategies gained in the quarter, led by its opportunistic real-estate portfolio, which climbed by 10%. Helping to drive the performance was Blackstone’s global portfolio of warehouses used for e-commerce.

“As we’ve grown larger, we have not sacrificed returns,” Chief Executive

Stephen Schwarzman

said on a call with analysts Thursday. “In the first quarter, while nearly every major asset class outside commodities declined, our funds delivered strong performance.”

Distributable earnings, or cash that could be handed back to shareholders, came in at $1.94 billion, or $1.55 a share, up from $1.19 billion, or 96 cents. The latest total was the second-highest in the firm’s history after the fourth quarter of 2021.

Shares of Blackstone, up more than 6% this week through Wednesday’s close, fell 2% in morning trading.

Blackstone has been busy amid a boom in private-equity deal making. It sold off $23.2 billion in assets during the quarter, reaping proceeds from financial company IntraFi Network LLC and home-healthcare equipment provider Apria Healthcare Group LLC, among others.

The firm has committed to four large transactions since the beginning of the year: a deal for Australian casino operator

Crown Resorts Ltd.

, the recapitalization of European warehouse business Mileway, a bid for Italian highway operator

Atlantia

SpA and, just this week, a deal for student-housing operator

American Campus Communities Inc.

“The biggest challenge is to avoid businesses that are highly exposed to rising rates and/or inflationary pressures that don’t have pricing power,” Blackstone President

Jonathan Gray

told The Wall Street Journal. “You want to find businesses that can produce revenue growth well in excess of these inflationary pressures.”

He said Blackstone’s credit business owns almost all floating-rate debt and its real-estate business has focused on properties with short-term leases like student housing. Its private-equity business is avoiding industrial companies with a lot of exposure to input costs.

Blackstone’s assets under management rose to $915.5 billion, up from $880.9 billion in the prior quarter and $648.8 billion a year earlier. The firm raised nearly $50 billion during the quarter, pushing it closer to its goal of reaching $1 trillion in assets by 2026.

Blackstone, which originally set that goal in 2018, has said it now expects to reach it this year.

Its perpetual capital assets under management more than doubled to $338.2 billion, helped by strong inflows into products targeting wealthy individuals such as nontraded real-estate investment trust BREIT and private-credit fund BCRED. The two products have helped the firm vastly expand the number of investors it serves.

Blackstone said it would pay a dividend of $1.32 a share, up from 82 cents a year earlier.

Write to Miriam Gottfried at [email protected]