UPDATE 4-Blackstone earnings rise, real estate gains

* Adjusted ENI 18 cents/share vs Street view 14 cents

* Sees IPOs of portfolio companies, but financing harder

* Financial services sector "under assault"

* Shares up 4 percent

(Adds analyst quote)

By Megan Davies

NEW YORK, July 22 (Reuters) - Private equity firm Blackstone Group (BX.N) reported higher second-quarter results, beating analysts' expectations, helped by a rebound in the value of its vast real estate portfolio and smaller gains from its private equity assets.

The firm, which has investments in companies including Hilton Hotels and casino company Harrah's Entertainment, said the value of its private equity portfolio rose 3 percent during the quarter, while its real estate portfolio jumped 19 percent.

Blackstone isn't anticipating a double-dip recession, Chief Executive Stephen Schwarzman said on a conference call, but he expressed concern about the impact of politics on business.

Consumer and business confidence has been hit by "harsh anti-capitalist and anti-wealth-creation rhetoric and policy initiatives in the political area," Schwarzman said.

Chief Operating Officer Tony James said the Obama administration and Congress have "made a lot of people ... just feel they're being villainized."

"I frankly think the whole financial services sector is under assault from the political powers in Washington and it is having an effect on the extension of credit in this country," James said.

Blackstone said its economic net income or ENI for the second quarter was $205 million, up from $181 million a year earlier. Adjusted ENI per share was 18 cents, ahead of analysts' average forecast of 14 cents, according to Thomson Reuters I/B/E/S.

ENI strips out items such as noncash charges for vesting equity-based compensation and the amortization of intangible assets. It is the measure that private equity firms prefer to report and that analysts follow.

Robert Lee, analyst at Keefe, Bruyette & Woods, said in a research note released earlier on Thursday that the results "seem to confirm that business is on an upward trend as portfolio company results and the environment stabilizes."

DEALS, IPOS

Blackstone said it expects to either take public or sell a number of its investments in the near future and that the calendar for exiting investments is pretty robust.

One potential exit Blackstone might make is chipmaker Freescale, which is considering an IPO and has started initial talks with banks, sources told Reuters. Blackstone led the consortium that invested in Freescale in 2006. [ID:nN21180824]

James said that Blackstone's new investment pipeline is very active and the current backlog of deals is the highest in several years.

But getting financing for new deals is tougher, as banks are less willing to take on refinancing risk and rates are higher, James said.

Private equity firms were effectively shut off from doing large leveraged buyouts when the credit crisis severely limited access to financing. Deals have been creeping back, but large leveraged buyouts have yet to return.

A consortium of buyout funds, including Blackstone, was in talks earlier this year to buy Fidelity National Information Services Inc (FIS.N) for about $15 billion. Those talks fell apart late in May over price, but the buyout firms managed to get financing to support a deal.

"(Large leveraged buyouts) are harder right now, when the credit markets are backed up, but you'll definitely see mega buyouts (return) at some point for the industry," James said.

FUND-RAISING

Blackstone recently finished raising its sixth buyout fund, BCP VI, although a few investors are still finalizing documents. The company anticipates the final amount raised will be around $13.5 billion. [ID:nN14159017]

Its previous buyout fund is a $21 billion fund called BCP V. Blackstone has about $3 billion of that remaining to invest. That fund's valuation had dipped in value but is now marked at cost, Blackstone said.

That fund had been invested heavily in North American companies, although more recently the focus shifted to Asia and emerging markets.

"I think fund VI picks up where fund V left," said James. "(That) will be a big dose of Asia and emerging markets and not too much in Europe in the near term, and a continuing high level of activity in North America."

Blackstone Real Estate Partners VI, a $10.9 billion fund it finished raising in 2008, is valued at 85 cents on the dollar, up from 49 cents on the dollar in September 2009, Blackstone said.

Blackstone shares were up 4 percent to $10.73 in late afternoon trade. The shares sold for $31 in the company's 2007 initial public offering.

Unitholders will receive a distribution of 10 cents per share for the quarter, Blackstone said.

The company previously said it expected to distribute 10 cents per unit for each of the first three quarters and a larger amount in the fourth quarter. (Reporting by Megan Davies; Editing by Lisa Von Ahn, John Wallace, Phil Berlowitz)