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How Blackstone’s Real Estate Segment Performed in 4Q17

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Metrics

The Blackstone Group’s (BX) Real Estate segment’s metrics, such as its total AUM (assets under management), deployments, and realizations, benefited from the company’s global reach and large scale in 4Q17.

The carrying value of the segment’s opportunistic funds witnessed a rise of 5.2% in the quarter. During the same period, the carrying value of its core-plus funds rose 3.3%.

The Real Estate segment’s realizations stood at $10.2 billion in 4Q17 thanks to the company’s sale of Logicor. The segment’s total revenue stood at $664.8 million in 4Q16, while in 4Q17, it stood at $752 million. An increase in performance fees aided this rise.

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Total expenses

The Real Estate segment incurred total expenses of $269.3 million in 4Q16, while in 4Q17, it incurred total expenses of $369.3 million, reflecting a 37% rise mainly due to increased interest expenses. The segment incurred interest expenses of $13.1 million in 4Q16. In 4Q17, it incurred interest expenses of $26.8 million.

The Real Estate segment’s performance fee compensation stood at $195.3 million in 4Q17 compared to $136.3 million in 4Q16, reflecting a 43% increase. The segment witnessed a rise of 13% in its total AUM and a rise of 17% in its fee-generating AUM on a YoY basis in 4Q17.

Blackstone’s net income margin is 20.7% on a trailing-12-month basis. Peers (XLF) Ares Management (ARES), Oaktree Capital Management (OAK), and Ameriprise Financial (AMP) have net income margins of 1.2%, 19.2%, and 12.4%, respectively, on a trailing-12-month basis.

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