New York, July 20, 2023: Blackstone (NYSE:BX) today reported its second quarter 2023 results.
Stephen A. Schwarzman, Chairman and Chief Executive Officer, said, “Blackstone is the first alternative manager to surpass $1 trillion of assets under management. This milestone reflects the extraordinary trust we have developed with our investors — built through performance — as well as our distinctive position as an innovator. We believe we are in the early stages of the long-term growth of the alternatives industry, providing a vast opportunity for further expansion.”
Blackstone 2Q23 Earnings Soundbites
- "We surpassed $1T of AuM, the first alts manager to do so and 3+ years ahead of the aspirational road map we presented at our Investor Day in 2018."
- "Total inflows reached $30B in 2Q23 and $158B the past 12 months, positioning us with record dry powder of nearly $200B."
- "The greatest demand today is for private credit solutions. And our corporate credit insurance and real estate debt businesses comprised over 50% of Q2 inflows."
- "For BREIT, June was the lowest month so far this year in terms of share redemption requests, down nearly 30% from the January peak."
- "In real estate, the Core+ funds appreciated 1.7% in 2Q23, while the BREP opportunistic funds were stable. We are seeing sustained strength in our key sectors in terms of cash flow growth."
- "Half of our owned real estate is in logistics, student housing and data centers, which have experienced double-digit year-over-year growth in market rents."
- "In our U.S. rental housing holdings overall, fundamentals are stable with cash flows increasing at a high single-digit rate."
- "For BREIT, over 80% of the portfolio is concentrated in these sectors, leading to strong same-store NOI growth of approximately 7.5% 1H23."
- "Looking forward, an environment of lower inflation and lower interest rates should be very favorable for our real estate portfolio overall."
- "Everybody has been surprised, given the rapidity at which the Fed has raised rates and how high they've taken rates, that there hasn't been more distress."
- "Interestingly today, if you look at the overall market, leveraged loan default rates at 2.7% are still below the long-term average of 3%. They got up to 13%, 14% during the GFC. In our own portfolio, those defaults are still less than 1%."
- "If the economy does moderate as we expect, rates stay elevated, would you expect more defaults going forward? And I think the answer to that is yes. But I don't think this is like '08/'09."
- "I don't think we have the kinds of overleverage we had back then. And just to point it out, if you look at BCRED, our non-traded BDC, its average loan to value was 43% on its book."
- "Certain sectors face real underlying fundamental headwinds notably US office space, which is less than 2% of our own portfolio."
- "I still think we have a ways to go in terms of what will be, I think, continued challenges in US office going forward. And there will be more foreclosures and more markdowns coming in portfolios."
- "At some point here, 12-24 months from now, the Fed will start to take the short end down. That's obviously positive. Because cap rate pressure is very tied to rates. And so if we're at a point in the cycle where the risk of rates going much higher is off the table, that's helpful to real estate."
- "The other helpful pitch in real estate is you're seeing a sharp decline in new supply. So in logistics, for instance, we've seen a decline of new starts around 40-50%, depending on markets. Housing supply is down aggregately about 20-plus percent from where it was. And you're seeing it in hotels and other areas."
- "Today, the area we're most active in is actually European real estate, particularly in logistics, because the sentiment around European real estate is so negative. And yet if you look at, for instance, rental growth in U.K. logistics, it's incredibly strong."
