Blackstone Hits Two-Year Investment High as Revenue Surges 44% in Q3

Blackstone booked $1.3 billion in distributable earnings in the third quarter, up 5.5 percent from a year earlier, with the private equity titan having deployed and committed $54.1 billion in capital during the period – its highest quarterly total in over two years.

The company grew its fee related earnings 4.5 percent from the same period in 2023 to a two-year high of $1.2 billion. On a GAAP basis, revenue surged 44.1 percent to $3.7 billion from a year prior, while attributable net income for July through September jumped 41.5 percent to $780.8 million.

Manhattan-based Blackstone’s chairman and CEO Stephen Schwarzman hailed the results as indicative of a broad-based acceleration across the business, with the firm having deployed $123 billion in the 12 months ended 30 September, doubling the amount deployed over the corresponding period a year ago.

“Blackstone reported strong third-quarter results, highlighted by broad-based acceleration across our business,” Schwarzman said in a release on Thursday. “We invested or committed $54 billion in the quarter — the highest in over two years — and deployed $123 billion in the last twelve months since the cost of capital peaked. The third quarter also represented the highest amount of overall fund appreciation in three years, and our limited partners entrusted us with over $40 billion of inflows.”

Data Centres Outperform

The company’s assets under management reached a record $1.1 trillion by 30 September, of which real estate accounted for 29.3 percent. The fund manager had $171.6 billion in dry powder as of that date, including $55.1 billion allocated to real estate.

During the quarter, Blackstone’s opportunistic and core-plus real estate strategies posted gross returns of 1.1 percent and negative 0.5 percent respectively. Those results compare to appreciation of 6.2 percent, 5.5 percent, and 3.6 percent for the company’s corporate private equity, infrastructure, and private credit strategies over the same period, respectively.

The fund manager highlighted its data centre investments as the single largest driver of appreciation in its infrastructure and real estate businesses, as well as for the firm overall during the third quarter. Blackstone, which bills itself as the world’s largest data centre provider, currently manages $70 billion of data centre assets with prospects for another $100 billion, including projects under development and Australia’s AirTrunk which it agreed to acquire in a $16 billion deal announced last month.

“Data centres we’ve talked about at length has been a huge theme for us in real estate,” Schwarzman said in an earnings call. “It’s really powered a number of our vehicles.”

Schwarzman pointed to a “broad-based recovery” in commercial real estate amid improving valuations and sentiment as the cost of capital begins to decline. The fund manager continues to favour the digital infrastructure, logistics, and rental residential sectors, while selectively assessing higher quality office assets and grocery-anchored retail properties.

“We’re trying to capture that (real estate recovery) as much as possible,” Schwarzman said. “US, Europe and Asia, deploying capital. As we work through the cycle and values recover, you’ll see a pickup in sales, and you can feel that happening now.”

Blackstone deployed $3.7 billion in its real estate business and committed an additional $4.2 billion during the quarter, including the AirTrunk deal. The segment’s distributable earnings and fee related earnings declined 3.0 percent and 8.3 percent year-on-year, respectively.

Credit Business Shines

During the third quarter Blackstone’s credit and insurance business for the first time ranked as the company’s largest division with $354.7 billion of assets, up 21.9 percent from the same period last year. Following that increase, Blackstone’s credit and insurance business represented 32 percent of the company’s total assets under management as of 30 September.

The firm’s private credit and liquid credit strategies generated gross returns of 3.6 percent and 2.4 percent respectively during the quarter, while appreciating 16.7 percent and 10.4 percent in the twelve months ended 30 September.

“The third key development we’ve been speaking about regularly is the secular rise of private credit and the integrated platform we’ve been building to offer clients and borrowers a one-stop solution across the full spectrum of credit strategies,” Blackstone president and COO Jonathan Gray said. “Today, we manage the largest third-party private credit business in the world with $432 billion across corporate and real estate credit, up a remarkable 20 percent year-over-year.”

During the period Blackstone deployed $18.4 billion under its credit business, which ranked as its second-largest quarterly total ever in the category. That total represents a jump of over 50 percent from the previous quarter, with much of the increase linked to the company’s global direct lending as well as its infrastructure and asset-based credit strategies, Gray said.