* Total assets under management up 21 pct to $230 bln
* Q2 ENI 62 cents/share vs Street view 49 cents
* Q2 distributable earnings up 73 pct to $338 mln
* Shares rise 5.1 percent
By Greg Roumeliotis and Ilaina Jonas
July 18 Blackstone Group LP, the largest
alternative asset manager, said on Thursday that second-quarter
earnings more than tripled as the value of its funds rose and it
cashed out on parts of its portfolio, including SeaWorld.
Despite market jitters in the second half of the quarter
over the Federal Reserve ending its bond buying program,
Blackstone's private equity and real estate funds appreciated
more than 5 percent, surpassing analysts' expectations, while
its hedge and credit funds posted strong gains.
Blackstone shares rose 5.1 percent to $23.08. Up to the end
of trading on Wednesday, they had risen 41 percent year-to-date,
compared to a 30 percent rise for competitor KKR & Co LP
, a 41 percent rise for Apollo Global Management LLC
and a 3 percent rise for Carlyle Group LP.
Blackstone, whose investments include The Weather Channel,
Hilton Worldwide and Pinnacle Foods Inc, reported
economic net income (ENI) of $703 million, up from $212 million
in the second quarter a year ago. ENI takes into account changes
in the market value of its funds.
This translated into ENI of 62 cents per share versus the
average analyst projection of 49 cents, according to a Thomson
"The unrealized performance fee strength in real estate as
well as private equity drove the beat on ENI," Jefferies
analysts wrote in a note.
Distributable earnings, which show cash available to pay
dividends, rose 73 percent to $338 million as Blackstone took
advantage of strong capital markets to exit more of its
At the end of the quarter, SeaWorld Entertainment Inc
, which completed a $702 million initial public offering
in April, was valued at three times Blackstone's investment.
Also, Blackstone sold shares in PBF Energy Inc,
Travelport Ltd and TV ratings company Nielsen Holdings NV
at an average valuation of 2.6 times its investment.
In real estate, Blackstone Mortgage Trust Inc
raised $660 million through a secondary offering, while
Blackstone exited from General Growth Properties Inc
making 2.3 times its money. Overall, Blackstone realized $2.1
billion in real estate asset sales and $1.6 billion in private
equity asset sales in the quarter.
"Robust realizations allowed us to generate significant
returns for our fund investors and higher distributable earnings
for our unitholders," Blackstone Chief Executive Stephen
Schwarzman said in a statement.
GROWING REAL ESTATE REALIZATIONS
Real estate is Blackstone's biggest earner, accounting for
about half its profits in the last quarter. The improving U.S.
economy and limited new construction have continued to work in
Blackstone's favor, pushing up the value of its properties by
5.7 percent for the quarter and 11.9 percent versus a year ago.
Its theory of buying real estate has been to buy, fix and
sell. In line with that strategy, on Blackstone on Thursday
filed for an IPO for Brixmor Property Group, its
grocery-anchored shopping center business it created after it
bought most of the U.S. assets from Australia's Centro
Properties Group two years ago more than $9 billion.
The IPO is likely to occur next quarter, Blackstone
President Tony James told reporters on a conference call.
"They'll continue to be a growing series of real estate
realizations as we go forth over next 12 to 18 months," James
said. "In general, it will be lumpy. There will be some
variability but you can expect it to ramp up over the next
The United States represents the bulk of Blackstone's real
estate holdings. But the New York-based firm is seeing more
opportunities abroad, where Europe's distressed real estate is
finally becoming available for sale and Asia's financial
problems are creating opportunities, making them more attractive
than the higher priced U.S. market, James said.
Assets under management totaled $230 billion at the end of
June, up 21 percent year on year. Fee-earning assets under
management rose 12 percent to $176 billion.
Blackstone completed the first fundraising period of its
inaugural Asian real estate fund in June, with $1.5 billion in
total commitments from investors, while its latest real estate
debt strategies drawdown fund has so far raised $3.5 billion.
Blackstone's second rescue lending fund had raised $5
billion by the end of the quarter, hitting its fundraising
limit, while its tactical opportunities investment vehicles had
amassed $3 billion.
Blackstone's capital raised from investors that is available
for deals -- so-called dry powder -- reached a record $38.5
billion at the end of the quarter. Of this, $15.6 billion was
available for private equity and $11.9 billion for real estate.
Blackstone declared a second-quarter distribution of 23
cents per common unit.