NEW YORK CITY—A key element in one of the Blackstone Group‘s strongest second quarter on record, the company’s real estate operations saw double-digit quarter-to-quarter gains in economic income and performance fees for Q2. However, an even more impressive showing in Blackstone’s Q2 results, announced Thursday, was its private equity platform.
For the real estate platform, economic income rose 32% to $489 million in Q2. In a presentation discussing its quarterly results, the company attributes the increases to “strong global real estate fundamentals, including improving rents and occupancy across Blackstone’s diversified real estate portfolio.”
Net accrued performance fees for the real estate platform rose 10% from Q1 to $2.7 billion, notwithstanding “significant realizations.” In fact, Q2 was a record quarter for divestments, generating $6.7 billion of proceeds, driven by partial realizations in Hilton Worldwide and Brixmor Property Group. The tally did not include the $2.1-billion sale of five Boston-area office towers in May to a group led by Toronto-based Oxford Properties Group, which didn’t close by quarter’s end.
Blackstone said its opportunistic real estate funds’ carrying value appreciated 6% for the quarter and 28.3% year over year. It raised $2 billion of capital during Q2, including $1 billion for its Asia fund, $226 million for core-plus and $858 million in debt strategies.
The company also deployed a sizable amount of capital during Q2, making $3.1 billion of investments for a total of $11.6 billion over the past 12 months. There is $2.5 billion in capital that has been committed but not yet deployed as the quarter ended. Blackstone’s commercial mortgage REIT, Blackstone Mortgage Trust, finished Q2 with a market capitalization of $1.4 billion, compared to $80 million a year earlier.
On the private equity side, total revenues rose 164% to $939 million Q2, while economic income was up 278% to $648 million. Fund carrying value rose 8.4% during Q2 and 28.3% Y-O-Y.
Companywide, profits rose 89% Y-O-Y to $1.33 billion in Q2. In terms of both economic net income and distributable earnings, Blackstone’s Q2 was “one of our best ever,” says Stephen A. Schwarzman, chairman and CEO. “As more of our assets under management have seasoned, we’ve been increasingly active in harvesting the value we’ve created over several years.”
At the same time, though, ENI remains “at record levels, reaching $4.3 billion for the past 12 months,” says Schwarzman. “Despite our sharp increase in realizations to $39 billion over the past year, continued capital inflows and strong investment performance brought us to another record for total assets under management, reaching $279 billion at quarter end, up 21% year over year.”