UPDATE 4-Blackstone posts loss from IPO charges, shares off
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NEW YORK, Nov 12 (Reuters) - Blackstone Group LP (BX.N) on Monday reported a quarterly loss from charges and posted a 44 percent drop in real estate revenues, missing analysts' estimates and sending its shares down more than 6 percent.
Blackstone's results revealed how the subprime mortgage meltdown has hit the private equity industry -- and how investors and analysts still struggle to understand the firm's sprawling business.
Under a measure known as economic net income (ENI) after taxes, Blackstone earned a third-quarter profit of $234 million, or 21 cents a share, compared with $239.1 million, or 21 cents a share in the previous year.
Analysts polled by Reuters had expected ENI after taxes of 32 cents per share.
ENI is net income excluding income taxes, noncash charges related to vesting of equity-based compensation and amortization of intangible assets. Blackstone prefers to focus on ENI because of the huge payouts associated with its more than $4 billion IPO in June.
On a generally accepted accounting principles basis, Blackstone posted a net loss of $113.2 million, or 44 cents a share. That compares with net income of $372.5 million a year earlier.
The loss included $802.6 million of non-cash charges associated with compensation arising from IPO unit awards and the amortization of intangibles, Blackstone said.
Blackstone, with $98 billion of assets under management through its private equity, real estate, and hedge fund divisions, said overall revenue rose to $526.7 million from $461.5 million.
"Results in the private equity segments were well below our expectations," Bank of America analyst Michael Hecht said in a research note.
Hecht measures Blackstone's quarterly success on adjusted cash flow from operations, which was 29 cents per share, a penny below expectations.
The analyst said part of the fall-off came from a slowdown in the recognition of realized gains from its assets. Blackstone said it deployed $2.34 billion to its private, institutional investors during the quarter, up from $915.3 million a year before.
Real estate revenue fell 44 percent to $109.1 million from $196.1 million. Blackstone said weakness in the subprime residential lending area spread to general commercial real estate lending. The firm's real estate and private equity division closed the purchase of Hilton Hotels last month.
It was Blackstone's second earnings announcement since the company's $31 per share IPO in June, which raised $4.1 billion. Blackstone's stock was down $1.77 or 7.3 percent to $22.51 in afternoon New York Stock Exchange trading.
Corporate private equity revenues rose to $227.3 million from $159.6 million in the year-ago period. The asset management group saw revenues rise to $124.9 million from $66.5 million, while its M&A advisory group saw revenues rise to $84.3 million from $52.6 million. Continued...
