Blackstone's Realizations, PE to Be Major Drivers in 2017

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Part 6
Blackstone's Realizations, PE to Be Major Drivers in 2017 PART 6 OF 8

Blackstone’s Shareholder Rewards, Realizations Could Rise in 2017

Performance-driven rewards

Blackstone Group (BX) stock has risen 16% over the past three months on improved performance across its subsegments, high growth in 4Q16, and rising holdings valuations. The company rewards its shareholders with dividends at a yield of 5%–7%. Its dividends can rise in 2017 on an absolute basis, mainly due to higher expected economic net income, realizations in private equity, and real estate.

Blackstone&#8217;s Shareholder Rewards, Realizations Could Rise in 2017

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In 4Q16, Blackstone’s distribution stood at $0.47 per share, translating to an annualized yield of 6.2% at its current price. The dividends rose compared to $0.41 in 3Q16, mainly due to improved operating performance.

Blackstone managed distributable earnings of $692 million, backed by $500 million in net realized performance fees. Its competitors’ yields are as follows:

  • Apollo Global Management (APO): 5.9%
  • Carlyle Group (CG): 11.5%
  • KKR & Co. (KKR): 4.4%

Together, these companies form 1.6% of the Financial Select Sector SPDR ETF (XLF).

Realizations rate key for 2017

The Blackstone Group (BX) has maintained a high rate of realizations over the past few years. The valuations across holdings have risen in 2017, which can result in higher realizations, especially in the private equity space and the real estate space. The company managed strong realizations in the last quarter, with its highest exits totaling $3.5 billion in real estate and $3.8 billion in private equity.

In 2016, Blackstone distributed $57.7 billion to its limited partners or institutional investors, backed by strong realizations. The company managed higher assets under management despite strong payouts and capital returns, which were mainly due to high inflows of $69.7 billion. The trend reflects reinvestment of profits and attracting new clients for offerings across asset classes.

In the next part of this series, we’ll study Blackstone’s valuations in 2017.


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