Blackstone's earnings rebound with market surge

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Blackstone Group Inc.'s second-quarter results rebounded as the surging stock market lifted the value of the private-equity giant's portfolio.

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The New York firm swung to a profit after posting a steep loss in the first quarter as the S&P 500 recorded its biggest percentage gain in more than two decades and finished up 20% in the period. The value of its private-equity portfolio climbed by 12.8% compared with a 21.6% decline in the first quarter.

Blackstone posted net income of $568.3 million, or 81 cents a share, for the second quarter. That compares with a profit of $305.8 million, or 45 cents, a year earlier.

TickerSecurityLastChangeChange %
BXBLACKSTONE GROUP58.00+0.38+0.66%

Blackstone's distributable earnings, or the amount of cash that could be returned to shareholders, fell to $548 million, or 43 cents a share, from $708.9 million, or 57 cents, as the firm sold off fewer investments.

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Assets under management were about $564 billion, up from $538 billion at the end of the first quarter. The firm has set a goal of reaching $1 trillion in assets by 2026.

Blackstone CEO Stephen Schwarzman as he visits “Maria Bartiromo’s Wall Street” at Fox Business Network Studios on Sept. 18, 2019, in New York City. (Roy Rochlin/Getty Images)

Blackstone raised $20 billion during the quarter, leaving it with a record $156 billion of unspent cash. It has put some of that to work, continuing a focus on investing in fast-growing companies, one of President Jonathan Gray's strategies for navigating an expensive market.

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In June, Blackstone's real-estate business said it was taking a 49% stake in a venture that will own three Hollywood film-studio lots and five adjacent office buildings, valuing the properties at $1.65 billion. Last week, the firm said it was the lead investor in a $200 million fundraising round for oat-milk maker Oatly AB. Blackstone's life-sciences business has also been active.

But opportunities to write big checks have been limited.

In an interview, Mr. Gray said the large leveraged buyouts the firm has traditionally been known for are still challenging to get done.

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"It felt before the resurgence of the pandemic that deal activity was really going to pick up," he said. "Right now, it feels like it might take a little more time because there's a lot of uncertainty out there."

Mr. Gray, heir-apparent to Chief Executive Stephen Schwarzman after making a name for himself building Blackstone's formidable real-estate operation, said he sees opportunity longer term in offices and hotels, which have been severely affected by coronavirus shutdowns.

Blackstone's significant holdings of warehouses have been a boon as they benefit from a surge in e-commerce.

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The firm's hedge-fund business posted a gross return of 6%, its highest quarterly return since 2000.

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Blackstone distributed $590 million through dividends and share repurchases during the quarter. It said it would pay a dividend of 37 cents a share, versus 48 cents a year earlier.

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