Blackstone earnings are up despite commercial real estate woes

Blackstone’s bet on logistics facilities and life sciences continues to pay off despite the broader headwinds facing commercial real estate.

The New York-based investment manager reported in its third-quarter earnings call that net income increased to $794.7 million in the third quarter, from $779.4 million the previous year. The company’s fee-related earnings from its real estate assets increased to $283 million, from $187 million during the same time period.

Blackstone’s total assets under management increased to $584.4 billion in the third quarter, up 5 percent year-over-year, and its real estate assets increased 11 percent to $173.8 billion.

In recent years, Blackstone — one of the largest commercial landlords in the country — has diversified its portfolio by investing in the industrial sector, including logistics and last-mile distribution centers, as well as life science buildings. Those have performed well this year, despite the broader economic downturn.

“In real estate, we have been underscoring the importance of sector selection,” Blackstone president Jonathan Gray said on an earnings call with analysts.

In the third quarter, Blackstone sold Cheniere Energy Partners to Brookfield Asset Management and Blackstone Infrastructure Partners for $7 billion. After the third quarter ended, the company recapitalized BioMed Realty Trust, life-sciences real estate investment trust, for $14.6 billion to another Blackstone-controlled fund. It also recently acquired Simply Self Storage’s 8 million-square-foot portfolio from Brookfield Asset Management for $1.2 billion.

Blackstone deployed $2.1 billion in capital in real estate in the third quarter, which included acquiring a 49 percent stake in Hudson Pacific Properties’ Hollywood production studio and office portfolio in August.

Top of mind for analysts during the earnings call was the forthcoming presidential election. Gray said if Democrats were to sweep, the company could see higher corporate taxes as well as more regulatory scrutiny. But he said there could also be some benefits to Blackstone’s infrastructure and renewable business. In addition, urban centers like New York and San Francisco, which are facing fiscal crises, could see more funding from the federal government, according to Gray.

Blackstone’s stock price is down 2 percent to $50.84 since opening on Tuesday.