Blackstone reported a blockbuster third-quarter this week — the best in its 36-year history.
Earnings more than doubled year-over-year to $1.28 per share, trouncing the average Wall Street analyst estimate of 91 cents. And assets under management swelled 25 percent to $731 billion, besting industry records, said Stephen Schwarzman, the firm’s chairman and CEO.
A workhorse behind that growth: real estate.
A look at the firm’s assets under management shows real estate investment grew to $230 billion — the highest percentage increase among Blackstone’s segments, which include private equity, hedge fund solutions and credit and insurance.
Behind private equity, real estate investments posted the greatest appreciation at 36 percent year-over-year. For investors, the segment brought in the thickest slice of distributable earnings at $2.6 billion.
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The firm’s Core+ business, long-term investments in residential, office and life sciences, plus the private real estate investment trust BREIT accounted for much of those gains. Core+ was the largest driver of perpetual capital and fee-related earnings, said Jonathan Gray.
Institutional and retail investors raised $10 billion for the platform in the quarter, and $7.9 billion of that funneled into BREIT, Gray said, topping a record second-quarter.
Behind the top-tier figures were deals for the books and aggressive investment in its favorite sectors.
Late last month, Blackstone closed on its $5.6 billion sale of The Cosmopolitan of Las Vegas, a hotel and casino on the Strip. The deal was the most profitable single-asset sale in history, said the firm, which stood to make $4 billion, or 10 times the equity it invested.
True to its second-quarter promises, Blackstone re-entered the hospitality sector and purchased the land on two Las Vegas Strip hotels for $3.89 billion with plans to lease it back to prior owner MGM Resorts International.
The mammoth company finalized its acquisition of single-family rental firm Home Partners of America for $6 billion and privatized the data-center operator QTS Realty Trust for $10 billion.
Those buys add to the firm’s ongoing industrial play. In August, BREIT snapped up WPT Industrial Real Estate Investment Trust for $3.1 billion. In the past year, Blackstone has picked up warehouses in California, northern New Jersey and Pennsylvania for $358 million and secured $944 million in financing for a West Coast logistics portfolio.
During the earnings call Thursday, Gray said $30 billion in deals were still pending and named rental housing as one of the quarter’s largest investments still in the works.
Looking forward, the firm touted its European expansion through the Blackstone European Property Income Fund, which offers individual investors access to institutional-quality real estate, according to the business’ website. Blackstone expects to see money from BEPIF next quarter.
“It’s early days,” Gray said. “But we’re a bit of a trailblazer like we were with BREIT when we revolutionized the non-traded REIT market.”