Real estate boosts Blackstone’s profits in Q2

Fund manager’s property assets grow to $103.2B, Brexit had small impact

TRD New York /
Jul.July 21, 2016 11:01 AM

UPDATED, July 21, 11: 29 a.m.: The Blackstone Group’s profits rose in the second quarter in large part due to its growing real estate portfolio.

While the fund manager’s overall revenues fell by 3 percent in the quarter compared to a year ago, to $1.19 billion, the real estate division’s revenue grew by 35 percent to $440 million. Its real estate assets under management grew to $103.2 billion, up from $91.6 billion a year ago.

Real estate is Blackstone’s TRData LogoTINY largest division ahead of private equity, which had $99.7 billion in assets under management.

Despite the dip in overall revenue, Blackstone’s net income rose by 32 percent year-over-year to $463.1 million because it spent much less on employee compensation, carried interest and incentive fees.

In an earnings call with investors Thursday, Blackstone’s CFO Michael Chae said Blackstone marked down the value of its U.K. office portfolio in the wake of Britain’s June 23 vote to leave the European Union, but that Britain accounts for a mere 4 percent of the firm’s real estate assets under management and that the “overall financial impact on the firm was small.” CEO Stephen Schwarzman said he expects “Brexit to create many investment opportunities over time.”

Unlike most REITs, Blackstone doesn’t earn its profits directly from real estate. Instead it makes money from asset management fees and profit shares on its investment funds.

The company’s funds, taken together, are the largest buyer of commercial real estate in New York City over the past decade, accounting for $12.6 billion worth of acquisitions, according to Real Capital Analytics. Last year, the company partnered with Ivanhoe Cambridge to buy Stuyvesant Town-Peter Cooper Village for $5.3 billion. Last month it closed on the acquisition of office building 44 Wall Street for $111.3 million.


Related Articles

arrow_forward_ios
Blackstone's president Jonathan Gray and CEO Stephen Schwarzman (Credit: Gray via Drew Angerer/Getty Images; Schwarzman via Himanshu Bhatt/NurPhoto via Getty Images)

Blackstone: “We don’t need financing to get things done”

Blackstone: “We don’t need financing to get things done”
Blackstone’s Jonathan Gray and Starwood Capital Group’s Barry Sternlicht (Credit: Gray by  Drew Angerer/Getty Images; Sternlicht by Cindy Ord/Getty Images for 1 Hotels)

Blackstone, Starwood pick up stakes in Extended Stay America

Blackstone, Starwood pick up stakes in Extended Stay America
Clockwise from bottom left: 62-60 99th Street in Rego Park, 850-870 Third Avenue in Sunset Park and Square Mile Capital’s Craig Solomon with renderings of 550 Clinton Avenue in Brooklyn (Credit: Google Maps; Getty Images; Morris Adjmi Architects)

These were the top outer borough loans last month

These were the top outer borough loans last month
Blackstone's Jonathan Gray, Gaedeke Group's Sabine Gaedeke Stener and 44 Wall Street (Credit: Stener by Gaedeke Group; Gray by Drew Angerer/Getty Images, 44 Wall Street via Google Maps)

Blackstone sells office tower at 44 Wall Street for $200M

Blackstone sells office tower at 44 Wall Street for $200M
Brookfield Property Group’s Brian Kingston, Blackstone Group's Jonathan Gray and 1 Liberty Plaza (Credit: Google Maps)

Brookfield, Blackstone consider One Liberty Plaza sale

Brookfield, Blackstone consider One Liberty Plaza sale
Liberty View Plaza at 850 3rd Avenue and Marvin Schein (inset) (Photo by Axel Dupeux)

City lets Salmar bring office tenants to Brooklyn industrial property

City lets Salmar bring office tenants to Brooklyn industrial property
Brookfield's largest-ever $15B property fund has invested in properties from New York (666 Fifth Avenue) to Bangalore (the Leela Palace hotel) (Credit: Brookfield, Getty Images, Leela)

Real estate fundraising hits lowest level since 2013

Real estate fundraising hits lowest level since 2013
Blackstone's Jonathan Gray and an aerial of Industry City (Credit: Getty Images and Google Maps)

Industry City gets $720M refinancing

Industry City gets $720M refinancing
arrow_forward_ios

The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

Loading...