Europe and Asia
The Blackstone Group’s (BX) Real Estate division has seen higher fund increases and performance fees over the past couple of years. The division saw relative outperformance in 2015 as well as average performance in 2016. This division is riding on major investments in China, Europe, and the US. In 2017, the division could see marginal growth on a year-over-year basis considering peak valuations and relatively lower investment opportunities at subdued valuations.
On December 31, 2016, Blackstone managed $102 billion in its Real Estate division, a rise of 9% on a year-over-year basis. Of the company’s total assets, the division contributed $72 billion toward its fee-earning assets.
In 4Q16, Blackstone’s (BX) Real Estate division posted an 85% rise in total revenues to $669.5 million, compared to $361.3 million in 4Q15. The division’s opportunistic funds’ carrying value rose 4.6% in the last quarter, and the core fund’s carrying value rose 2.0% due to gains in commercial and residential holdings.
The company’s earnings per share (or EPS) rose 50% in 2016. Let’s compare this with the rise in the EPS of its competitors during the same period:
- KKR & Co.’s (KKR) EPS fell 42%.
- Apollo Global Management’s (APO) EPS rose 245%.
- Carlyle Group’s (CG) EPS rose from negative to positive.
Blackstone faces competition from alternative and traditional fund managers that form part of the iShares Dow Jones US Financial ETF (IYF).
Realizations can rise in 2017
The Blackstone Group (BX) garnered realizations of $3.5 billion in 4Q16, reflecting a year-over-year rise in improved valuations. The company has managed more than $5 billion in realizations that are expected to close in early 2017, reflecting a strong trend of exits. Blackstone has raised funds across its core-plus funds, BREDS (Blackstone Real Estate Debt Strategies) funds, and the fifth European opportunistic fund.
In the next part of our series, we’ll study Blackstone’s hedge fund performance.