Buyout firm Blackstone Q2 earnings grow but miss forecasts

[NEW YORK] Buyout firm Blackstone Group LP on Thursday reported quarterly earnings that grew but was a touch lower than expected, as strong gains in real estate holdings were eroded by a pullback in credit investment performance.

Blackstone earned an economic net income (ENI) of US$705 million in the second quarter, or 59 US cents a share, up 36 per cent from a year ago, but below the 62 US cents a share forecast of analysts, according to Thomson Reuters I/B/E/S.

ENI is a key metric for US private equity that accounts for unrealised investment gains or losses.

Distributable earnings, or actual cash available for paying dividends, climbed 58 per cent to US$781.4 million from a year ago. That, in turn, translated to 63 US cents a share.

In terms of performance, Blackstone's real estate arm, which made up 28 per cent of its total business, stood out as the firm sold property investments such as European warehouse firm Logicor for US$14 billion in the quarter.

Performance fees in the real estate business jumped 155 per cent to US$494.1 million while investment income leapt 236 per cent to US$37.1 million.

Credit investments had a less stellar quarter after a drop in commodity prices dragged on energy holdings. As a result, performance fees slumped 68 per cent to US$35 million between April and June compared to a year earlier.

Led by co-founder Stephen Schwarzman, who is an economic adviser to US President Donald Trump, New York-based Blackstone is the largest of US buyout firms and managed US$371 billion as of the end of the second quarter.

REUTERS