Release Date: January 30, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Blackstone Inc (BX, Financial) reported a record GAAP net income of $1.3 billion for the fourth quarter.
- Distributable earnings increased by 56% year over year to $2.2 billion, showcasing strong financial performance.
- The company raised $57 billion in inflows during the fourth quarter and $171 billion for the year, indicating strong investor confidence.
- Blackstone's infrastructure strategy, BIP, generated $1.2 billion in fee revenues, reflecting exceptional growth and investment performance.
- The firm's private wealth business saw significant growth, with $28 billion raised in 2024, highlighting its strong market position.
Negative Points
- Real estate equity-oriented funds experienced a decline in the fourth quarter, impacted by rising treasury yields and a stronger US dollar.
- The real estate market recovery has been slow, with expectations for improvement more back-end weighted in 2025.
- Despite strong performance, the overall level of yields in private credit is coming down due to tightening spreads.
- The firm faces challenges in the insurance sector as some companies look to manage private markets investments independently.
- There is uncertainty regarding the impact of potential tariffs or trade wars on Blackstone's in-ground portfolio, particularly in non-US markets.
Q & A Highlights
Q: Jon, could you expand on the fundamentals you're seeing in the real estate market that give you confidence in the recovery? How do you see this ramping in 2025?
A: Jonathan Gray, President and COO, explained that the real estate recovery is supported by a healthy US economy, declining supply, and improved capital availability. He noted that borrowing costs have decreased, and capital availability has improved, which is crucial for transaction activity. Gray emphasized that the path to recovery is clear, although the pace may vary.
Q: With the high stock market valuations and anticipated rise in IPOs, when do you expect Blackstone to become a net seller of assets in corporate private equity? How far behind is the real estate cycle relative to private equity?
A: Jonathan Gray noted that the environment is improving, with a strong economy and a healthier equity market. He expects private equity to see stronger realizations earlier, while real estate will take more time, likely seeing more activity in the latter half of the year.
Q: How are you thinking about the evolving investment opportunity around AI, particularly in the infrastructure layer with data centers and power?
A: Jonathan Gray stated that despite potential changes in AI models, the demand for data centers remains strong due to increased usage. He emphasized that Blackstone's data centers are leased long-term to major companies and are not built speculatively, ensuring a prudent approach to investment.
Q: Can you remind us where you're at in terms of distribution of BXPE and the potential to ramp flows above the current pace?
A: Jonathan Gray highlighted that BXPE has been expanding its distribution partnerships and has shown strong performance in its first year. He expressed confidence in the product's growth potential, driven by performance and the strength of Blackstone's brand.
Q: What are your expectations for further growth with your insurance partnerships, especially in Asia?
A: Jonathan Gray noted that the insurance industry is increasingly embracing private investment-grade credit, which has driven growth in Blackstone's insurance business. He sees opportunities for further expansion in Asia and Europe, emphasizing the importance of delivering higher returns at the same or lower risk.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
