Blackstone’s profit rises 2 percent on better sales

Bloomberg

A group led by US real estate investor Blackstone Group LP, the world’s largest manager of alternative assets, said second-quarter profit rose 2 percent as it earned more from real estate sales and its credit portfolio gained.
Economic net income, a measure of earnings that reflects both realized and unrealized investment gains, increased to $520 million, or 44 cents a share, from $508 million, or 43 cents, a year earlier, New York-based Blackstone said in a statement.
Analysts had expected earnings of 39 cents a share, the average of 15 estimates.
Blackstone mined a string of mostly small gains during a period when U.S. equity markets rose despite a late-June swoon. Its real estate and private equity realizations totaled $7.2 billion for the quarter, driven by sales of office property investments and private equity secondaries, or stakes in other buyout firms’ funds. Blackstone also reduced expenses 7 percent from a year earlier, and costs are down by a quarter this year from the same period in 2015.
The firm had “stable but not out-sized earnings,” President Tony James said on a conference call with media Thursday. “Realizations for the quarter remained strong. We expect to be in active disposition mode for the balance of this year.”
Shares of Blackstone rose by nearly 3.4 percent to $26.72 at in New York. The stock was down 12 percent this year.

The firm, led by Chief Executive Officer Steve Schwarzman, said its private equity portfolio appreciated 2.5 percent in the quarter, compared with 3.5 percent in the same period last year. Firms mark the value of the investments they hold — a key determinant of economic net income — in line with the market. The S&P 500 index of large U.S. companies was up 1.9 percent in the quarter.
Blackstone’s biggest stake, in hotel chain Hilton Worldwide Holdings Inc., now valued at about $10.9 billion, was little-changed in the quarter. The firm unloaded $200 million to $400 million slugs of stock in at least six companies, including Performance Food Group Co., drug products maker Catalent Inc. and Scout24 AG, a German digital advertising company.
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