NEW YORK CITY—The Blackstone Group's largest segment globally by assets under management has grown even larger. The investment giant said Thursday its real estate AUM increased 9% over the past 12 months to $111.3 billion, a faster year-over-year growth rate than that of the company's portfolio as a whole, with fee-earning AUM growing 14% from the year-ago period. Overall, Blackstone's AUM reached $387.4 billion in the third quarter, a new record for the company.
The gains in real estate asset management fees and the carrying value of Blackstone's funds in the real estate segment played a significant part in the company's Q3 earnings results, which beat analysts' estimates. Blackstone reported economic net income of 69 cents per share for Q3; the Zacks consensus estimate called for ENI of 57 cents per share, and Zacks noted Thursday that the estimate had moved downward in recent days.
Within Blackstone's real estate AUM, core-plus represented an especially fast-growing segment. The company said Thursday that core-plus AUM had reached $18 billion less than four years after the business was launched; its Y-O-Y growth was 36%.
Q3 was also active on both the acquisition and disposition fronts. Blackstone's real estate unit invested or committed $6.7 billion during Q3, with 60% of that activity occurring outside the US. The sum included Blackstone's commitment to take a majority stake in the Banco Popular portfolio of commercial properties and loans.
In the dispositions column, Blackstone realized $3.1 billion from public stock sales of Hilton companies, the sale of a UK office property and assets in Equity Office Properties and Trizec. Year to date, Blackstone has tallied $14.3 billion of real estate dispositions, a figure that will nearly double when the company finalizes its $13.8-billion sale of its Logicor platform of European logistics properties to China Investment Corp. The Logicor deal is expected to close by the end of Q4.
“We continue to successfully expand our global investment platforms, launching new products and channels, and delivering a broader range of solutions for our institutional and retail clients alike,” says Blackstone chairman and CEO Stephen A. Schwarzman. “The result is nearly $20 billion of capital inflows in the third quarter, propelling us to a new record for AUM of $387 billion, up 7% year-over-year. And I expect that record to be exceeded again in the fourth quarter.”
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Paul Bubny
Paul Bubny is managing editor of Real Estate Forum and GlobeSt.com. He has been reporting on business since 1988 and on commercial real estate since 2007. He is based at ALM Real Estate Media Group's offices in New York City.
