Blackstone posts strong third-quarter earnings on fund gains
Blackstone Group LP , the world's largest listed alternative asset manager, said on Thursday third-quarter earnings were its third best since going public in 2007 as its funds appreciated in value and performance fees soared.
The New-York based manager of private equity, real estate, credit and hedge fund assets beat analysts' profit estimates as the value of its holdings jumped on a buoyant stock market, while the firm raked in more fees from exiting investments.
Blackstone reported that adjusted third-quarter economic net income, a measure of its profitability using mark-to-market valuation of its portfolio, swung to a profit of 55 cents per unit from a loss of 34 cents per unit a year earlier.
Analysts expected Blackstone to return to profitability but in a Thomson Reuters poll the consensus view was for 42 cents per unit.
The stock rose nearly 2 percent to $15.32 in early trading.
Underpinning the robust performance was a strong appreciation in the value of Blackstone's assets. Its private equity portfolio was up 7.1 percent for the quarter while its real estate holdings gained 4.9 percent.
This allowed Blackstone to mark up the performance fees it expects to receive when it exits investments. Carried interest -- its cut of fund profits -- originating from actual sales of investments was $83.8 million in the third quarter, its highest since the first quarter of 2011.
A bleak spot was in the performance of the financial advisory business. Revenues were down 29 percent from the same quarter last year, mainly due to delays in deal closings, although the backlog of deals they are advising on remained healthy, Blackstone said.
Blackstone, which has investments in The Weather Channel, Pinnacle Foods and SeaWorld Parks & Entertainment, said distributable earnings, reflecting actual cash available to pay dividends, rose to $189.6 million from $125.7 million a year ago.
Assets under management totaled a record $205 billion at the end of September, up 30 percent from a year earlier. Fee-earning assets under management were up 27 percent year on year to a record $169 billion.
Blackstone said in September it had raised just over $2.5 billion for its first energy-focused private equity fund, as it seeks to ride a wave of energy deals in the United States.
Earlier this month, Blackstone said it raised $13.3 billion for its latest real estate fund, the largest private real estate fund ever.
The company also declared a quarterly distribution of 10 cents per common unit.
Blackstone is the first of the major publicly listed alternative asset managers to report quarterly results. KKR & Co LP is scheduled to post its results on October 26.
(Reporting by Greg Roumeliotis in New York; Editing by Jeffrey Benkoe)