* Total assets under management up 26 pct to $265.8 bln
* Q4 ENI up 130 percent to $1.54 billion
* Q4 distributable earnings up 46 pct to $820.6 million
* Shares up 4.6 pct
By Greg Roumeliotis
NEW YORK, Jan 30 Blackstone Group LP
reported on Thursday that fourth-quarter profit surged 130
percent, capping a record earnings year and far exceeding
analysts' expectations, with its real estate business behind
much of the gains.
The property business of Blackstone, the world's largest
alternative asset manager, got a lift from the initial public
offerings of Hilton Worldwide Holdings Inc, Extended
Stay America Inc and Brixmor Property Group Inc
Profit also soared in Blackstone's private equity and hedge
fund units as the value of its assets rose amid red-hot capital
markets and the firm cashed out on many of its investments.
Blackstone shares were up 4.6 percent in afternoon trading
Merlin Entertainments Plc, an operator of amusement
parks and the Madame Tussauds museums which is one of
Blackstone's private equity fund investments, also went public
in the fourth quarter.
"In the fourth quarter alone, we completed four IPOs,
including Hilton, Extended Stay, Brixmor and Merlin, which ended
the year valued 35 percent above just their third quarter mark,"
Blackstone co-founder and Chief Executive Stephen Schwarzman
said on a conference call with analysts and investors.
Blackstone said economic net income (ENI) - a metric of its
profitability that takes into account the mark-to-market
valuation of its portfolio - was $1.54 billion in the fourth
quarter of 2013, more than double the $670 million of a year
This translated into ENI per unit of $1.35 per share,
beating even the most optimistic estimate of $1.30 per share of
analysts polled by Thomson Reuters. The average estimate in the
poll was 83 cents a share.
"Another strong quarter for Blackstone that demonstrates the
true earning power of the firm as the economy improves," RBC
Capital Markets LLC analyst Bulent Ozcan wrote in a note.
ENI in real estate surged 279 percent year-on-year in the
fourth quarter, private equity was up 82 percent and hedge fund
solutions were up 63 percent. ENI in its credit business,
impeded by an environment of low interest rates, bucked the
trend to fall 2 percent year-on-year, as it failed to beat a
very strong 2012 fourth quarter.
The value of Blackstone's private equity funds rose 11.5
percent in the quarter, while the value of its real estate funds
appreciated 13.1 percent.
Distributable earnings, which show actual cash that is
available to pay dividends, jumped 46 percent in the fourth
quarter to $820.6 million.
REAL ESTATE FUNDS
Blackstone, whose investments also include SeaWorld
Entertainment Inc and Pinnacle Foods Inc, said
it had a record $46.8 billion as available capital for
investments as of the end of December. This included of $17.7
billion in available capital for investments in private equity
and $17.1 billion in real estate.
Total assets under management were $265.8 billion as of the
end of December, up 26 percent year-on-year. Fee-earning assets
under management rose 18 percent to $198 billion.
Blackstone said it had raised $3.2 billion by the end of
December for its first Asian real estate fund, which has a $5
billion fundraising limit, and $5.6 billion for its fourth
European real estate fund, which has a $6.9 billion fundraising
It said that "tactical opportunities," a strategy it
launched two years ago to invest across alternative asset
classes that are usually not a target for Blackstone's other
units, had raised $5.1 billion thus far.
Media reports this month have linked Blackstone to an
auction for JPMorgan Chase & Co's commodities unit.
In a conference call with reporters on Thursday,
Blackstone's President Tony James did not comment specifically
on the JPMorgan unit but said commodities was an area that
Blackstone had mulled getting into for the past three years.
"I don't think we have got that figured out just yet," James
said, referring to the capital requirements and liabilities
associated with expanding Blackstone's investment platform into
the physical commodities business.
Blackstone declared a quarterly distribution of 58 cents per