* Total assets under management up 25 pct y/y to $272 bln as of end-March
* 1st qtr ENI per share of 70 cts vs 55 cts in Thomson Reuters analyst poll
* 1st qtr distributable earnings at $485 mln, up 24 pct y/y (Adds closing share price paragraph 2)
By Greg Roumeliotis
NEW YORK, April 17 Blackstone Group LP, the world's largest alternative asset manager, reported a 30 percent increase in first-quarter earnings on strong gains in its private equity arm which more than offset small declines in its real estate unit.
The results, buoyed by asset sales and a strong appreciation in Blackstone's buyout funds that outpaced the wider stock market, beat most analysts' expectations. Blackstone's shares closed 1.3 percent higher at $31.34 on Thursday after rising as much as 3.4 percent earlier in the session.
Blackstone said economic net income (ENI), a measure of profitability that takes into account the mark-to-market valuation of its portfolio, was $813.9 million in the first quarter versus $628.3 million a year ago.
That translated into ENI per share of 70 cents, more than the 55 cents that analysts forecast on average in a Thomson Reuters poll.
"The beat was driven by a combination of both realized and unrealized performance fee strength across platforms, as well as lower than forecast comp and taxes," Jefferies LLC analysts wrote in a research note.
On an earnings call with analysts, Blackstone Chief Executive and co-founder Stephen Schwarzman said the private equity and real estate divisions generated in the first quarter a combined multiple of 3.4 times the firm's invested capital.
"Investors give us money so that they can make money, and an example of 3.4 times across two of our biggest asset classes for investments sold in this period gives you a sense of why the alternative investing area is a great one and is going to continue to grow," Schwarzman said.
Private equity was Blackstone's star performer in the quarter. Its buyout funds fired on all cylinders, appreciating by 7 percent in the quarter, while realized and unrealized performance fees soared by 413 percent.
By contrast, the firm's real estate portfolio appreciated by 3.8 percent and its realized and unrealized performance fees fell 5 percent.
The realized performance fees in real estate, however, rose 171 percent to $195 million, as Blackstone continued to cash out on its global office portfolio, including the Broadgate Estate, Equity Office Properties, CarrAmerica and Trizec assets.
In Blackstone's credit investment arm, ENI was down 18 percent, as performance fees dropped 22 percent. Blackstone's unit that invests in hedge funds reported a 21 percent increase in ENI.
REAL ESTATE FUNDRAISING
Distributable earnings, which show actual cash that is available to pay dividends, rose 24 percent in the first quarter to $485 million.
Total assets under management reached a record $272 billion as of the end of March, up 25 percent from a year ago. Fee-earning assets under management rose 19 percent to $203.6 billion.
Schwarzman said fundraising for Blackstone's first Asia real estate fund was going well, with $3.5 billion raised so far and the fund expecting to hit its cap of $5 billion. Blackstone is also developing a "core-plus" strategy in real estate, which so far comprises four separate accounts with investors, he added.
Blackstone has also raised $5.6 billion for its tactical opportunities pool, a multi-asset strategy that pursues investments outside the scope of the firm's private equity, real estate, hedge fund and credit units.
Strategic Partners, an asset manager that buys private equity fund investments in the secondary market and which Blackstone acquired from Credit Suisse Group AG last year, has raised $1.5 billion so far for its new fund and is on track to meet its fundraising target of more than $3 billion, Schwarzman said.
Blackstone said it had returned $11.5 billion of capital to its fund investors during the first quarter. It also invested or committed $7.4 billion of capital in the quarter.
Blackstone declared a quarterly distribution of 35 cents per common unit.
Blackstone shares were up 1.6 percent at $31.42 on the New York Stock Exchange on Thursday afternoon, off an earlier high at $32.00. (Editing by Franklin Paul, Paul Simao and Matthew Lewis)