Blackstone reports boost in Q3 net income; eyes more industrial buys

In the earnings call, CFO Michael Chae took a swipe at companies that have stumbled recently in their initial public offerings

Blackstone Chief Financial Officer Michael Chae (Credit: iStock; Blackstone)
Blackstone Chief Financial Officer Michael Chae (Credit: iStock; Blackstone)

Blackstone Group, which has been on an industrial-buying binge, reported a jump in overall net income in the third quarter compared to the same period last year.

Blackstone’s $779 million in net income from July through September was up more than 75 percent from the $442 million it reported over the same period in 2018, the company announced Wednesday.

The numbers were also higher than the second quarter, when Blackstone reported a net income of $305.8 million.

From July through September, distributable earnings also rose, to $708.9 million, or 58 cents per share. Distributable earnings from its real estate division were up 10 percent, to $401 million.

In an earnings call following the quarterly release, Blackstone CFO Michael Chae took a swipe at — but did not identify — businesses that have recently encountered problems with their initial public offerings.

“The idea you can sort of show up with the business and say, ‘hey, look, I’ll start making money six or seven years from now,’ that’s becoming increasingly difficult,” he said. “I think the danger in markets is when you get excesses, when you get bubbles.”

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Companies like Lyft and Peloton have stumbled after their IPO in recent months, WeWork pulled its offering, and this week was taken over by SoftBank.

Blackstone also signaled that it may be on the hunt for ever more last-mile warehouse space, after the record-setting $18 billion purchase of the GLP warehouse portfolio earlier this summer.

In June, Blackstone purchased the GLP portfolio, which has 1,300 properties and spans 179 million square feet. It has also continued its industrial acquisitions in the months that have followed, closing deals ranging from one-off property acquisitions to a partial selloff of that newly-acquired portfolio. The firm is also eyeing another warehouse portfolio near New York’s JFK airport. The largest tenant in the GLP portfolio is Amazon, making Blackstone the e-commerce giant’s landlord.

“We bought more than a billion square feet around the world over the last nine years, and we continue to like that area and you saw two big transactions,” said CEO Stephen Schwarzman.

Blackstone also reported $554 billion in assets under management, up from $456 billion over the same period last year. That included $157 billion in real estate, up from $120 billion. The firm also announced $16 billion in pending deals.

The company said it was bullish about acquiring what it called “idiosyncratic” companies where it can take an active role in operations and drive up value.

“There’s always under-managed or under-capitalized companies out there or pieces of real estate where there’s value to be created if you have good management,” said executive vice chairman Hamilton Evans James.