Real estate is Blackstone’s best neighborhood in 36 years of history

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Stephen A. Schwarzman, CEO of the Blackstone Group (Getty Images, iStock)

Blackstone announced a third quarter blockbuster this week – the best of its 36-year history.

Profit more than doubled year-over-year to $ 1.28 a share, beating the Wall Street analysts’ average estimate of 91 cents. And assets under management increased 25% to $ 731 billion, breaking industry records, said Stephen Schwarzman, chief executive officer of the company.

A hobbyhorse behind this growth: real estate.

A review of the firm’s assets under management shows real estate investments topped $ 230 billion – the largest percentage increase among Blackstone’s segments, which include private equity, hedge fund solutions and credit and insurance.

Behind private equity, real estate investments posted the strongest appreciation at 36% year-on-year. For investors, the segment generated the thickest slice of distributable income at $ 2.6 billion.

The company’s Core + business, long-term investments in residential, office and life sciences, as well as private real estate investment trust BREIT accounted for a large portion of these gains. Core + was the primary driver of perpetual capital and expense earnings, said Jonathan Gray.

Institutional and retail investors raised $ 10 billion for the platform in the quarter, of which $ 7.9 billion was funneled to BREIT, Gray said, breaking a record in the second quarter.

Behind the top figures were transactions for the books and aggressive investments in his favorite industries.

At the end of last month, Blackstone closed its $ 5.6 billion sale of The Cosmopolitan of Las Vegas, a hotel and casino on the Strip. The deal was the most profitable single asset sale in history, said the company, which is expected to make $ 4 billion, or 10 times the capital it invested.

True to its second quarter promises, Blackstone re-entered the hospitality industry and bought land for two Las Vegas Strip hotels for $ 3.89 billion with the intention of leasing it to former owner MGM. Resorts International.

The mammoth company completed its $ 6 billion acquisition of single-family home rental company Home Partners of America and privatized data center operator QTS Realty Trust for $ 10 billion.

These purchases are in addition to the company’s ongoing industrial game. In August, BREIT bought out WPT Industrial Real Estate Investment Trust for $ 3.1 billion. In the past year, Blackstone purchased warehouses in California, northern New Jersey and Pennsylvania for $ 358 million and secured $ 944 million in financing for a logistics portfolio on the west coast.

During Thursday’s earnings call, Gray said $ 30 billion in deals was still on hold and named rental housing as one of the biggest investments for the quarter still underway.

Looking ahead, the company has touted its European expansion through the Blackstone European Property Income Fund, which provides individual investors with access to institutional-grade real estate, according to the company’s website. Blackstone expects to receive money from BEPIF in the next quarter.

“This is the start,” Gray said. “But we’re a bit of a pioneer like we were with BREIT when we revolutionized the non-traded REIT market. “


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