Pedestrians pass in front of Blackstone Group LP headquarters in New York (Photograph: Victor J. Blue/Bloomberg)

Blackstone's Profit More Than Doubles on Record Asset Sales

(Bloomberg) -- Blackstone Group LP, the world’s biggest private equity firm, said first-quarter profit more than doubled as it took advantage of high valuations to sell a record amount in holdings.

Economic net income, a measure of earnings that reflects both realized and unrealized investment gains, was $986 million, or 82 cents a share, compared with $370.7 million a year earlier, New-York based Blackstone said in a statement Thursday. That topped the highest of 12 analysts’ estimates compiled by Bloomberg, who on average expected earnings of 68 cents a share.

Asset values have continued to rise to new highs in recent months, giving sellers a chance to cash out at attractive prices. The conditions were a boon to Blackstone, which said it sold the most in assets in its 32-year history.

The firm, led by Chief Executive Officer Steve Schwarzman, sold a record $6.2 billion of private equity holdings during the quarter, including majority ownership in cyber-security company Optiv Security and shares of energy exploration company Kosmos Energy Ltd.

Real estate, Blackstone’s biggest business by assets, sold off $6.7 billion in holdings, driven by the disposal of a 25 percent stake in Hilton Worldwide Holdings Inc. to China’s HNA Group. It also sold real estate in London, office properties in Sydney and Japanese residential real estate. In January, Blackstone took public Invitation Homes Inc., the real estate investment trust it built to oversee about 50,000 U.S. houses.

Shares of Blackstone rose 4.1 percent to $31.30 in early trading in New York. The stock was up 13 percent, including reinvested dividends, this year through Wednesday.

Portfolio Gains

The private equity and real estate sales helped fuel $1.23 billion of distributable earnings, which reflect profits on asset disposals and fund management fees, compared with $394.2 million a year earlier. Blackstone plans to pay stockholders a dividend of 87 cents a share on May 8, its second-highest distribution.

Blackstone’s private equity portfolio appreciated 6.9 percent during the three months ended March 31, outpacing the 5.5 percent gain posted by the S&P 500 index of large U.S. companies. Its opportunistic real estate funds advanced 5.7 percent. Peers Carlyle Group LP, KKR & Co. and Apollo Global Management LLC are scheduled to report results in the coming weeks.

Publicly traded private equity firms must mark their holdings to the market each quarter, even though their typical strategy is to hold assets for years. That makes economic net income, which in part reflects these unrealized changes in value, merely a snapshot of assets that may have a long runway before being sold.

Overseeing $368.2 billion across private equity, real estate, credit and hedge funds, Blackstone is considered a bellwether for the alternative-asset industry. Schwarzman has further drawn public attention as chair of President Donald Trump’s strategic and policy forum, weighing in on topics such as taxes and China.

Peter Grauer, chairman of Bloomberg LP, the parent of Bloomberg News, is a non-executive director at Blackstone.