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By Chibuike Oguh
(Reuters) -Blackstone Inc said on Thursday its first-quarter distributable earnings jumped 63% as a strong performance from its real estate and credit businesses offset a weak showing from its hedge funds unit.
The world's largest manager of alternative assets saw distributable earnings, which represent the cash used to pay dividends to shareholders, rise to $1.9 billion from $1.2 billion a year earlier.
That resulted in distributable earnings per share of $1.55, which exceeded the average estimate of $1.06 per share of analysts compiled by Refinitiv.
Blackstone said it changed the way it accounts for the fee-related performance revenue at its real estate income trust business, booking such earnings quarterly rather than annually. That helped to boost its overall earnings beyond what analysts had expected.
"This will likely have the effect of making ongoing quarterly fee-related earnings somewhat higher, but also somewhat more volatile," Oppenheimer analysts wrote in a note to investors on Thursday.
Blackstone has been mindful of the prospect of rising inflation and higher interest rates for years, which has informed its decision to concentrate its investments in hard assets such as warehouses, rental housing, enterprise software, and digital and energy infrastructure, President Jonathan Gray said during an analyst earnings call on Thursday.
"We've been mindful of the prospect of rising interest rates and a normalization of market multiples for several years. This informed our investing, and we concentrated our deployment towards hard assets in the businesses where revenue could grow faster than inflationary pressures," Gray said.
Blackstone's shares were down 3.5% at $116.21 per share in late morning trading, in line with other listed private equity firms. The benchmark S&P 500 stock index and Dow Jones Industrial Average index were both trading higher.
EARNINGS BEAT
For its quarterly fund performance, Blackstone said its real estate opportunistic and core plus funds appreciated by 10.3% and 7.9%, respectively. Private credit funds gained 1.7% while its private equity portfolio rose 2.8%. That compares with a decline of nearly 5% for the S&P 500 index.
Blackstone generated $23.2 billion in proceeds from asset divestments across its portfolio. That included the sale of its majority stake in medical services provider Apria Healthcare to Owens & Minor Inc in a $1.6 billion take-private deal.
During the quarter, Blackstone spent $22.8 billion on new acquisitions, including its $6.4 billion takeover of Australian casino operator Crown Resorts and a $5.8 billion deal to take real estate income trust Preferred Apartment Communities Inc private.