Real Estate Powers Record Metrics for Blackstone

NEW YORK CITY—The Blackstone Group's real estate operations continue to loom large in the asset management firm's overall performance. In reporting its fourth-quarter and full-year results Thursday, the asset management revealed that net realized and net accrued performance fees both hit record levels in 2014, largely on the strength of fees from real estate operations, which represented more than 50% of the totals for both metrics.

Blackstone said Thursday that its full-year earnings, assets and distributions reached record levels in 2014, with economic net income up 24% to $4.3 billion. On a year-over-year basis, Q4 ENI was down 6% to $1.45 billion, or $1.35 per share. However, this beat estimates; Bloomberg reported Thursday that 16 analysts it surveyed had forecast an average of 92 cents per share in ENI for the quarter.

The company's capital deployment for FY '14 was up 73% Y-O-Y to $26.4 billion, with real estate comprising the largest share at $11.5 billion. Private equity investment was only slightly behind at $11.2 billion.

For Blackstone's real estate segment, '14 saw total revenues and economic income of $3.0 billion and $1.9 billion for the year, respectively, reflecting “strong operating fundamentals and demand across the global real estate portfolio,” the company said Thursday. The company was a net seller during the year, setting a new record with about $20 billion of real estate dispositions; another $5.8 billion of dispositions were under contract at year's end or closed subsequent to Dec. 31.

Blackstone said that in the real estate space, it raised $9.7 billion of new capital during the year, spread across its fourth European fund, an Asia fund, debt strategies and core-plus. However, it may top all of these funds with a single vehicle: earlier this month, Blackstone registered its latest real estate opportunity vehicle, Blackstone Real Estate Partners VIII, with the Securities and Exchange Commission, and PERE reported that it's headed for a first close of about $10 billion in March, although the company declined comment.

“The $10-billion fundraise is an unprecedented amount for a first close for a fund that is on track to be the largest property vehicle ever raised,” PERE reported Wednesday. BREP VIII is seeking at least $13 billion in commitments.