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The Truth behind Blackstone's Record 1Q17 Numbers

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Part 3
The Truth behind Blackstone's Record 1Q17 Numbers PART 3 OF 8

Blackstone’s Real Estate Sees High Realizations, Lower Fund Raising

Blackstone in real estate

Blackstone Group’s (BX) Real Estate division has been one of the strongest performers in the industry, backed by strong liquidity, networking, and diversified investments. In 1Q17, the division posted a 72% rise in total revenues to $785.6 million, as compared to $457.2 million in 1Q16.

The division’s opportunistic funds’ carrying value rose 5.7%, while the core funds’ carrying value rose 3.1% in 1Q17 due to gains in private investment values. The division posted an economic net income of $429.3 million, which represents a rise of 86% YoY (year-over-year).

Blackstone&#8217;s Real Estate Sees High Realizations, Lower Fund Raising

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Blackstone was managing $102.1 billion in its Real Estate division on March 31, 2017—a rise of 1% YoY. Of the company’s total assets, this division contributed $71.9 billion toward its fee-earning assets, which represents a rise of 7% YoY.

The company’s EPS (earnings per share) rose 50% in 2016. The EPS of its major competitors in 2016 were as follows:

  • KKR & Company’s (KKR) EPS fell 42%.
  • Apollo Global Management’s (APO) EPS rose 245%.
  • Carlyle Group’s (CG) EPS increased from negative to positive.

Remember, Blackstone faces competition from traditional and alternative asset managers that make up part of the iShares Dow Jones US Financial ETF (IYF).

High realizations

Blackstone garnered record realizations of $6.7 billion in 1Q17, aided by the sale of 25% in Hilton and the sale of a Japanese residential property portfolio. Blackstone’s Real Estate division raised $2.5 billion in 1Q17, including $1.1 billion in core plus funds, $630 million toward its BREDS (Blackstone Real Estate Debt Strategies) funds, and $478 million in the initial launch of Blackstone’s non-traded REIT (real estate investment trust). The division made investments of $2.7 billion for the quarter, driven primarily by OfficeFirst, an office-focused German real estate business.

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