Blackstone Q4 Earnings Up 56% on Infrastructure Strength as Real Estate Slumps

Blackstone reported $2.2 billion in distributable earnings in the fourth quarter, up 56 percent from the year-earlier period, as strong fee income from infrastructure strategies overcame high interest rates that punished the private equity titan’s real estate funds.

The Manhattan-based firm led by Stephen Schwarzman grew its fee-related earnings by 76 percent year-on-year in the final quarter to a record-high $1.8 billion, boosting full-year FRE to $5.3 billion, up 21 percent from 2023. Attributable net income in the quarter reached $703.9 million, up from $151.8 million a year earlier, on revenue of $3.1 billion, up from $1.3 billion.

“Blackstone reported one of the best quarters in our history,” Schwarzman said Thursday in a release. “Earnings growth accelerated sharply, while the key drivers of our business — inflows, investment activity and realisations — all reached their highest levels in two-and-a-half years.”

The biggest contributor to the quarterly results was the firm’s $43 billion Blackstone Infrastructure Partners strategy, which generated $1.2 billion in fee revenue during the period. The 2019-vintage open-ended infrastructure fund has returned 17 percent annually since its inception, according to the NYSE-listed group.

Property Under Pressure

Blackstone’s total assets under management rose to $1.13 trillion at the end of 2024, up 8 percent from a year earlier, with $57.5 billion in inflows during the fourth quarter and $171.5 billion for the full year. Fee-earning AUM stood at $830.7 billion, up 9 percent year-on-year.

Among private strategies, real estate remained a weak spot as opportunistic and core-plus funds posted gross returns of negative 5.1 percent and negative 0.8 percent, respectively, for the fourth quarter. Those results compared with appreciation of 4.9 percent, 4.8 percent and 3.1 percent for Blackstone’s corporate private equity, infrastructure and private credit strategies over the same period.

Blackstone Real Estate Partners Asia III, the firm’s latest opportunistic fund, held steady at $8.2 billion in committed capital at the end of the fourth quarter and drew down $1.3 billion of available capital during the three months. Blackstone said its BREP funds contributed to the firm’s $2.6 billion buy of the Tokyo Garden Terrace Kioicho commercial complex and the $16 billion acquisition (with Canada’s CPPIB) of Asia Pacific data centre platform AirTrunk.

The investment giant, which bills itself as the world’s largest data centre provider, took time during a Thursday earnings call to address the impact of DeepSeek, after this week’s launch of the artificial intelligence app stirred fears that China had devised a cheaper and less energy-hungry AI model.

President and chief operating officer Jonathan Gray acknowledged that Blackstone had spent “a lot of time” studying DeepSeek but concluded that there remains a vital need for the physical infrastructure of data centres and power.

“And the good news for our investors is we’re not doing things speculatively,” Gray said. “It’s based on the demand signals from our tenants. That’s when we go out and spend the big dollars to build these things. So we still think it’s a very important segment, and there’s a way to run. But obviously, we’re watching what’s happening very closely.”

Poised for Recovery

Blackstone deployed $25 billion in real estate funds in 2024, up nearly 70 percent from the previous year, and plans to continue to deploy at scale, according to Gray, who said property portfolios absorbed an 80-basis-point rise in the 10-year US treasury yield during the fourth quarter as non-US holdings were hit by the stronger dollar.

“We wouldn’t expect to see a move of this magnitude in treasury yields going forward given the underlying inflation data,” said Gray, who spearheaded Blackstone’s early real estate initiatives. “And while disappointing in the near term, our portfolio is in excellent shape with cash flows growing solidly overall across virtually all our real estate strategies.”

Gray expressed his conviction that real estate is a cyclical asset class which underwent a cyclical downturn, with Blackstone now the best-positioned company in the world to benefit from the recovery.

“In closing, the firm is in terrific shape by any measure,” he said.