Blackstone's Earnings Rebound With Market -- WSJ
July 24 2020 - 3:02AM
Dow Jones News
By Miriam Gottfried
This article is being republished as part of our daily
reproduction of WSJ.com articles that also appeared in the U.S.
print edition of The Wall Street Journal (July 24, 2020).
Blackstone Group Inc.'s second-quarter results rebounded as the
surging stock market lifted the value of the private-equity giant's
portfolio.
The New York company swung to a profit after posting a steep
loss in the first quarter as the S&P 500 recorded its biggest
percentage gain in more than two decades and finished up 20% in the
period. The value of its private-equity portfolio climbed by 12.8%
compared with a 21.6% decline in the first quarter.
Blackstone said Thursday that it posted net income of $568.3
million, or 81 cents a share, for the second quarter. That compares
with a profit of $305.8 million, or 45 cents, a year earlier.
Blackstone's distributable earnings, or the amount of cash that
could be returned to shareholders, fell to $548 million, or 43
cents a share, from $708.9 million, or 57 cents, as the company
sold off fewer investments.
Assets under management were about $564 billion, up from $538
billion at the end of the first quarter. The company has set a goal
of reaching $1 trillion in assets by 2026.
Blackstone raised $20 billion during the quarter, leaving it
with a record $156 billion of unspent cash. It has put some of that
to work, continuing a focus on investing in fast-growing companies,
one of President Jonathan Gray's strategies for navigating an
expensive market.
In June, Blackstone's real-estate business said it was taking a
49% stake in a venture that will own three Hollywood film-studio
lots and five adjacent office buildings, valuing the properties at
$1.65 billion. Last week, the company said it was the lead investor
in a $200 million fundraising round for oat-milk maker Oatly AB.
Blackstone's life-sciences business has also been active.
But opportunities to write big checks have been limited.
In an interview, Mr. Gray said the large leveraged buyouts the
company has traditionally been known for are still challenging to
get done.
"It felt before the resurgence of the pandemic that deal
activity was really going to pick up," he said. "Right now, it
feels like it might take a little more time because there's a lot
of uncertainty out there."
Mr. Gray, heir-apparent to Chief Executive Stephen Schwarzman
after making a name for himself building Blackstone's formidable
real-estate operation, said he sees opportunity longer term in
offices and hotels, which have been severely affected by
coronavirus shutdowns.
About 80% of Blackstone's existing real-estate portfolio has
been resilient to the virus, including its significant holdings of
warehouses used by e-commerce companies, Chief Financial Officer
Michael Chae said on a call with analysts to discuss the results.
Roughly 90% of Blackstone's office holdings target tenants in
sectors the company says have remained strong, including life
sciences, Indian technology companies and tech hubs on the West
coast of the U.S.
Much of the company's U.S. residential portfolio is concentrated
in suburban garden-style apartments where occupancy has remained
more stable. Hospitality and retail, two of the most
coronavirus-affected areas, make up 13% of Blackstone's portfolio,
The company's retail properties include grocery stores and Asian
malls, which have held up better. Blackstone owns no enclosed U.S.
malls, Mr. Chae said.
The company's hedge-fund business posted a gross return of 6%,
its highest quarterly return since 2000.
Blackstone distributed $590 million through dividends and share
repurchases during the quarter. It said it would pay a dividend of
37 cents a share, versus 48 cents a year earlier.
Blackstone shares were little changed in midday trading.
Write to Miriam Gottfried at Miriam.Gottfried@wsj.com
(END) Dow Jones Newswires
July 24, 2020 02:47 ET (06:47 GMT)
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