BX - Earnings call transcript Q3 2017

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Operator

Good day, ladies and gentlemen, and welcome to the Blackstone Third Quarter 2017 Investor Call. My name is Tony and I will be your operator for today. At this time, all participants are in listen only mode. Later we will conduct a question-and-answer session. [Operator Instructions] I would now like to turn the conference over to your host for today, Mr. Investor of Head Tucker, Relations. Weston Please proceed.

Weston Tucker

Tony. Blackstone’s to Thanks, and welcome quarter conference morning third call. Great. Good

Joining today’s we are our website. call James, are Relations. presentation of Steve Schwarzman, Chairman which and Solutions press Chief and Solotar, External Officer; release Private Officer; slide Wealth President this and our Operating Michael a Financial available Chae, morning, on Chief Earlier Joan Head issued and CEO; Tony and

to remind expect uncertain weeks. to like We We duty firm’s update any file I include differ may materially. in our and may not actual from the are that few a you these forward-looking to XX-Q of control which statements. call and undertake do results today’s would statements, outside

affect our the Factors For a discussion of XX-K. some could please section Risk results, of of that the see risks

constitutes nothing sell or also fund. of of interest copyrighted purchase will find without solicitation an will the in We on measures may be offer to to website. material non-GAAP duplicated in our Blackstone and Also this is audiocast not This shareholders refer this release you consent. to call that Blackstone the on an an and page and call press any offer of reconciliations certain a note

the distribution of And holders over prior be up to was year. the income, strong of prior common from We as fees growth ENI, share to quick recap XX% quarter, turn net the to to of X prior per Steve. as call GAAP So up with the a of will from per record of earnings due earnings. share $X.XX, per the common quarter, share, our for reported or in million the now I greater income Economic well year. XXth. for as $X.XX results. was $XXX Distributable We that, net up October year declared from a paid fee-related performance % $X.XX sharply

Stephen Schwarzman

thank and call. and Thanks good a you morning our for lot, Weston joining

and Before Chae you our cash but increased based whom On deliver just to years detail. I - wanted for long to Blackstone sales ENI quarter on-track more in wish DE as assets our rose to just income, strong third comparable billion of a names sector has the global one earnings our first and earnings John will financial better as to an some discuss a growth broader raising all day heard the DE General illustrates job know, clear in does for from itself $X.X start management. to money Counsel, the happy terms most management. already ever excellent remain we the leadership Blackstone and which net I has been up amazing reported results AUM and in Finley billion, of under our a on you beyond best in the year-to-date fund momentum performance $X.X economic recognized of XX% alternatives, Michael Continuing basis, of West. XX% signed to while alternative leader firm.

dollars the the so is managers Blackrock and and group total friends record AUM includes either to rose the will universe terms owning Blackstone top global Blackstone earnings with platforms colleagues $XXX and of this to benefit really does firm which years are they across and commitments That’s trillion significant ranked manages of $XX of another asset nearly the for year-over-year limited partner across choices a two for course from the a billion $X early institutions and of over only terrific of become way from long $X referenced to the earnings asset Blackrock Fidelity who investors former five million trillion a of power continues million firm’s can raising power job deploy fact In for classes. also one billions which leading at private, Fidelity both manages or alternatives $X terrific that you. for our investors world piece. and is to by Blackstone’s Where days past earnings. three wish in group elite the the X% grow, an of in

other surpass manager of One The call, acquisition we and third earlier billion example, we quarter of the initiatives year week, strongest press inflows existing focused our teams. with a energy mentioned fourth quarter expect the space quarter today’s raisings over will numbers. nearly AUM complement our some array quarter significantly an reported a equity MLP was credit of $XX to growing products reaching our leading across in one capital ever fund Harvest on our with in and and closed this as which Tony private underway,

don’t In non-traded to Harvest plan inspirationally, the real in accessible In to where area, appreciated LPs flat, successfully have The fourth is a our This which now widely for we X.X% will to and capital presence. more diverse strong the products product only REIT. example, continues broader funds capabilities third REIT with to of remained the grow, more our how returns similar to is estate addition make their add enhancing Real Even called compared in really $XX the including imagine larger that. index if retail this our opportunity investors a REIT firm base. across we are billion to bringing quarter. to Estate have as Blackstone our AUM to strategy retail quarter range they a

XX% ago XX% months. XX quarter, the of from these drag last in of inception We are XX XX ahead funds the private holdings In have XX% is years net two X.X% dramatically for flat appreciated XX despite equity public to in Since up REIT the last our fees all XX% were relevant corporate year the to index PE public months. we index. and the strategies returned per up

performance in lines. business strong long our investment have a record replicating We of successfully

in the overall and enhance Our our ones from platform new businesses intellectual and at here further virtuous circle strength a further capital. the This becomes capital benefit existing Blackstone. turn attracts reach and of

less we is of four in XX% estate launched to For platform nearly increase example, ago year. billion than our real in an AUM, one $XX which years core+ up

Opps grew Tac didn’t these is years. now Both scale investment and fastest of our into the growing opportunities billion we of fit areas. from two they existing platforms AUM five reached to business at about time remain have $XX of in up our they in Our identified global mandates funds. Today, the

for Another of as course you infrastructure heard. is major have area us

now, are targeting SEC of by While limited are close we our raising we restricted fund from new first next fund end the could first say quarter for given we we are the the by in a what year. commenting,

which know, will into to received raised. have we you AUM sovereign a up As from matching commitment capital billion flow already $XX as investor

the a to banks, perhaps different We Blackstone portfolios, and wirehouses of and by and RIAs best the dramatically. illustrate channels our private demand brand across seeing of level continue also the we broker family fund their been diversify to raising investors some These expand including power funds are for is dealers, sub including alternatives and of offices. independent The channels retail. high into under our have within channels allocated large

representing time, I of access them have we first and yet helping have that copy XX% We in today, our leading one people in process here retailer the established we the cases about initiatives AUM, because institutional of what quality many hurled for now and platforms sometimes the are alternative total products major do. can't already world talk

the just importantly All for are tremendous for of sake taken had. of we never is growth, our this not we firm together, growing and clearly growth positioned

very particularly offer investors slowed find in solutions prices environment type remain As down spots tighten conviction prospects most in we prices for job we risks, for banks of the further of last is are we There is strong and our value policy deal and our third choosing global In in picture more bringing slowing higher like which virtually on we have on positive XX new nearly I broaden constructive world, policy can the us are outcomes $XX today's the we geopolitical higher do and avenues the in where suite more dynamic mode reform the around of over all geographies through accelerate doing the period basically world, almost this background investments. active central more terms this quarter, remain Instead the growth. By billion the we investing. have been potential tax are and deployed we outlook themes. record But markets active plenty active finding U.S. to is broadly growth. distress Against and periphery improving. anyone around potential of of certain year. aggressively our anywhere than Despite the than opportunistic activities, billion in we far employment able this expect. month areas $XX create important area. think specifically building excellent deployed to for further investment to potential the an to and In growth major are including has U.S. the to some unfavorable and to

holding. prevailing and like late XXXX, we into of two stuff buying fact In Blackstone. our illustrations over at point early recovery subsequent autoparts investing monetary they out elections, in weeks some Automotive the the sell impact This types about created to ago. but discussed issues Few is Greek quarter dislocations Logicor, union were EBITDA in first year we other Europe that debt or Europe you moved opportunity of bolt-on several populism are Alliance successful be and in acquired completing was a distributor in ongoing compelling In time Brexit dislocation about people Europe situations issues to regarding the and of increased and an enabled and we money just the whether stay we had X.X firm example, on times really happening that For strategic acquisitions I we opportunities. slow where equity, operating of the last us XX on at and make on in crises, great investment that’s doing aggressively of Alliance France highly would lot the Alliance that’s Europe growth, into private the for by a the brought of term years ride trend expanded what are remember was a wondering logistics volatility agreed fear the UK accelerating by which shorter Europe how growth to and in of Europe ones which and like focusing these we have not case value fashion provide the time. organic few the two when this fundamental Germany, the and of out together. which

have company a is is company are now the enormous you times company tech software so a money our for It’s we in why the doing a never original that’s and This makes or the selling choose areas. autoparts, right company, a we of five outcomes things that across doing this We make LPs over a array our us, cost. in that can able to business. been wider create not but and great our investment funds easy, are

the amount now capital are we very for past deployed and of seasoning several pace the Given the over distributions years, at shareholders. driving substantial active investments seeing attractive of cash returns a realizations earlier our of

years, of by a realizations. an average the $X.XX have over annual Over per distributed share of past a about of billion three $XXX driven value we

while increase despite XX% realizations assets management shrinking. still money Over managers most the period, were same billion and this to actually $XXX distributions under

our simultaneously every We will high overtime, growing continue. deliver rate can at and have demonstrated to that high shareholder consistently have a payouts expectation this that I we while

alike. we most differentiated our forward, will great great continue I position, joining unique integrity to our highly importantly have and our firm’s it for perhaps for the culture turn market will business leverage Officer, optimism Mike. call. shareholders Chief of excellence LPs I brand and results and our our Financial to our prospects, to Looking recognized over you to our model, the drive Thank

Michael Chae

good Steve everyone. Thanks and morning

for healthy both to invested management and of earnings to million while a in consistent XX% or year-over-year in fees. of $XXX million $X.X of marked increases Total performance base with our robust firm’s quarter revenue $X.XX key growing billion continuation share fund across $XXX driven increased returns Performance fee quarter net XX% rose the income quarter metrics. third strong revenue to steadily all revenue with momentum per by economic the also The increased in capital. and the XX% double-digit growth percentage

levels AUM with XX% rose months record results Stepping million a to business of margin also Fee new propelling billion. the XX% rose better. single to million year-over-year $X.X both capital business we call, firm by back billion expansion continues increased to year-to-date segment. ENI million X% XXXX fee $XXX period. earnings Management in XX.X%. more to in rose DE record which Total growth up billion was up line teens base rose to $X.X quarter. quarter rose $XX.X earnings year-over-year expanding $XXX past XX for full-year mid Our AUM FRE to XX% On the investment Fee related and quarter’s line points $X.X $XXX far from the $XXX the XX% earning attracts path over influence revenues any a every XX% related total fee at are outlined billion. the and combined of informative last basis to billion, and significant looking than billion X% XX% quarter record or reaching XXX record to $XX for in revenue FRE to as with to and

history, Given growth high that were indeed is or able the better, our update years in to the view the to progressing XXXX one and in of best we and refine visibility our performance and teens to be driving I performance, raising, in results. metrics will evidenced financial investment discuss the fund detail. by key the each sustained and now further this more momentum capital is and deployment Realizations,

First billion of of and third fully have the shares the we spin in exited public largest $X.X of The original the was in to of in investment. Grand quarter in with We three from one pipeline offs sold realization and realization half the Hilton company realizations significant quarter sales a closed. generated where Vacations, yet not our Hilton single stake respect our about also remaining DE.

performance profit hold. included activity X.X times quarter to and other our core+ from the our $X.X Our Hilton strategy. first of the in sales $X.X now realization certain equating billion has still investment real Other about estate we U.S. billion assets company several fee Opps, in in including multiple Tac of realized unrealized produced office portfolio billion sale $XX and distributions multiple a UK, cash notably and refinancing in equity from

to quarter to fourth to per XXXX per share effecter should quarter of in nine another with realizations our we DE Our real far DE sales the in among in our months in years our of third private interest quarter in These to in and $X including further expected to any the would prior sales billion expected equity billion approximately under over even and us realizations fourth the per together XXXX Automotive on in of brings in of first for of prior adding realizations, share others. with quarter of further contract DE result activity share Logicor corporate $X.XX the so $XX taxes $X.XX giving with estate one FRE best Alliance therefore for $X.XX which sight equate DE the history. enter two in line of

across multiple months, over broad we funds in X.X% and last strength core+ respectively. XX.X% while X.X% the base appreciated XX.X% appreciated investment quarter global funds and the estate see the opportunity Second portfolio, XX and ENI, to performance the continue real

disprove Our business real returns. in is estate notion size to enemy particular the the continues that of

in course Cosmopolitan contributors existing among to for year as in X.X X.X between bode Las the billion the funds our the XX% been of years five have of each largest years to to-date. Homes the by the investments future we many has in of hotel include sciences Even for annualized and are XXXX, opportunistic our These Vegas, This portfolio, across to firm's doubled platform, BioMed, Invitation Logicor AUM each XXXX U.S. the the exceptional. in India we growth some funds well and past others. in life most been the between to which XX% Indeed and invested delivered office performance important powered of BREP our four store office performance realizations. has vintage has returns billion vintage value

to public about high for mid successful driving credit partly an largest and been publics of and our Portfolio revenue in quarter and good and returns in has XX% and for in particular quarter XX PE company X.X% XX% decline term performing feel private growth report respectively Moving this by the and in XX% that which segments fundamental where GSO funds extremely respectively The infrastructure the distressed corporate its X%; value. us LTM X.X% the energy performance and position single-digit very months. over prior companies equity. for in investment in to we X.X% long growth our EBITDA the was composite in and period. delivered appreciation the holdings continue appreciated in private healthy offset of

in For the a eligible in of in incentive BAAM return equal all year in year the LTM growth composite versus This watermark to ago. XX% nine is fee period, firm the AUM generate above for BAAM in across last revenues of being up a XXXX. balance X.X% $XXX quarters. full-year powerful nearly in this X% both high a month investment and of and quarter net In million fees X% over capital with higher positions quarter, to $X.X of aggregate, in the and that Despite million, improved its nine XX% than $XX performance performance the in performance billion realizations, highest its level $XXX the reflection last we period to base. our helped performance which delivered XX and some a growth drive billion, the has our months

deployment. capital Third,

global city believe risk our return aggressively reach, Our our carefully invested in value across the as our The and billion. the multiple doing things the active, across it? spectrum to seek tricky is whole are another in. and leveraging pursue face committed broader We we billion even Steve deployment platforms firm $X.X How quarter scale by of market very the the answer $XX.X and environment remains and in we discussed.

our billion deployed US Europe our firm face about our was listed Western we In XX% reach private estate, credit, commitment value scale, company. $X.X of of five distribution by Spanish capital our Europe. healthy transactions XX% industrial acquire And PaySay, committed nearly global including flow in last Regarding Scandinavian were of fund acquisition three public the equity, and in only a companies global in XX to leading BCP euro and our private company. with property to in listed In Meanwhile the finding our the idiosyncratic our of and leading orphan reflecting UK from Four of a half the real financing quite in quarter for or committed European quarters a a these and we Asia provided markets. provider. example, payments acquire BREP value transactions mezzanine deal outside the two for is in of listed across take interest companies agreed in and theme largest in portfolio in the a Asia. involving billion region bank

multiple to originated current of Regarding the in quality express deployed the value the and firm. returns, firm’s over of us holds. equity busiest across to deployments It’s Each and longer our of environment. platform, about invest with risk Opps’ that part the $X opportunities can environment. flexible flexibly billion of advantage strategic our adjusted high with in quarter the with real $X deploy a from core partners funds more mandate intellectual cuts making to and estate third flow of in term it assets to quarter the identify award weapons with and pursue city of Tac and allow this in best selectively $XX.X core+ Tac and capital Opps having arguably pursue a billion firm that given diverse the deal strategies and idiosyncratic compelling private in widening convictions mandates, take risk billion array we

firm Of to course the none years platforms the aforementioned just of ago. six in existed five

Lastly, on fundraising.

reaccelerated billion As dedicated third GSO billion raise real Tac first quarter inflow billion for a to $X bringing to $X second third it expected estate fund, $XX.X for in for of Asia billion a distressed and our $X.X has billion a third pace close of vintage. fund Opps including $X the

global three fund at term of to are the a or significant or of reach $X BCP BREP the in exceed billion each funds near expect neither in raises the flagship We AUM growth driving market. time size in when

variety to A notable forward, further and into significant by Steve of expect two of final comment Looking as on and discussed. quarter growth accelerate products the XXXX initiatives we in corporate fourth pace developments. AUM the driven a

on terrific First, last with point this comments stand high that investing by this this respect think Harvest We a the the team a flagship attracted for deal, a is color acquisition five over add it’s is in to to a Steve’s is basis integrity with really firm to little benchmark class asset with high strategy more years. the quality, set XXX impact. outperforming

basis and LP institutional very Our [indiscernible]. retail it’s complementary is with opportunity the are overlap limited

purchase with adds disclosing that to FRE a million pre-tax of area and multiple upfront in acquisition impact structured run that on the basis financial Finally, to $XX single-digits. price we approximately such DE, are the while the specific the DE Harvest and future mid rate we valuation, prior the respect of growth the reflects pre-tax and not FRE have

refinance at issued year our XXXX. Second XX to we conclusion balance XX $XXX notes our years maturities September of U.S. and evenly in the maturing split bonds of in million end and between sheet,

an in funding took advantage and year have and and We yields euro pound the exposure XX swaps those cost further the then directly currency of currencies. in could favorable volatility back will The substantially fourth executes XXXX expense in interest result P&L. in an also of firm’s The the to in our to year been was following our neutralizing in sterling by at conditions average XX% hedging yield just maturities assets the our FX issuing case $XX a achieve onetime recoup lower early to to P&L X.X% and of rating those extends result and reaffirmed XX of six cross from plus basis the issue years confidence currencies available year for in times and any are highest to firm firm with which manager years. public XX our XX our business oversubscribed best trading investor is reduces the the quarter longest the currently debt In ENI cost over at exceptionally approximately average X.X% of year. XXXX. response positive euro XX $XXX effective with which only million XX points The the firm market, notes lowest to beyond in debt weighted we million to alternative which years. XX in for the agencies Indeed, within maturity of of effect market year yield reflecting All the DE repurchase and A ratings will are executed the XX any has operating financing the X.X% at in model. of savings tenure firm from ask

sheet see strength for we truly you is believe we the that, for have compelling financing tremendous fortress and this pursue our flexibility very joining to as on of access ample And have it low like us source cost, we you capital call, strategic very Our that to would now balance long opportunities and . to life up firm a and heard thank liquidity, questions. of with set call. and deep open we With the cash

Operator

from Credit question Craig comes Please Instructions] the [Operator Suisse. line Siegenthaler Your proceed. Mr. of first of

Craig Siegenthaler

does and to us on product What And sits like main of high retail that does look a the retail. then many product of into from now. Thanks. how volume? your few the segment offering it you like also do as really an the just XX% of I get look expansion given now network mass years the What update is points. the sort sort you work Good down start way employee two One morning. to retail of I versus wanted wholesalers ago.

Joan Solotar

Joan. Sure. Hey, it’s

first a in wholesalers, terms step question the of back for just to want On I minute.

just So, just I it’s business, out really to this want sales you and a where it’s that don’t sales a think some operating people popping as organization. is full and

building we operating really we reps, So really fund to to support years support of have marketing, independent to compliance question and independent to that to get full the sales last have cetera, dealer broker we XX amount and relates a expand taken have in wirehouses, we major the has your accounting have and can firms, channel. dealers, et so a now with the partner address wholesalers we as the wholesalers, distribution. place But XX into several similar about it that broker specifically

we purchasers affluence the to focused and our in with $X qualified were $X have were firms product, identified the largely we for to on also the the As to wirehouses million same the it because we real product relates drawdown million mass institutional but initially those product, distributing and a working so access. in also need range

that in So very the addition structures either to that we semi to that have develop or are capability in liquid. leverage team closely product our have and more really liquid worked groups investing more

you most entire global our product the working will when offer roughly quite think highlight for we So across of excited one we about product illiquid those looked XX% the at the could further product we product the and big are stage, think early wirehouses we for penetrated, sell are system liquid, the with across years, platforms anyone and so much there have penetration been see we FA's significant. where more I upside I X%, developments are have we look board, continue and I given and just would we say array is and though it's so who split we today are it's even to several broadest months, than if we look at have sales XX over to the I'm evenly, happening, even last along our

Tony James

addition as the large got have mentioned. the well going in We to beginnings to family XX of sales force people offices that's direct you

Joan Solotar

even well as trying on we a here both on for the as and offices, institutional family we find well, side are solutions their and team offices. focused have things Yes, so as of course abroad actually internationally multifamily private to more

Craig Siegenthaler

you. Thank

Joan Solotar

Sure.

Tony James

next the question please. take can we Tony

Operator

question next ISI, of comes Your Glenn proceed. Mr. the Mr. Schorr please line Schorr, from of Evercore Glenn

Glenn Schorr

about the on funding closer we having is what there, if are back the out on call book call talk the earlier pass opportunities you I now what think on close opportunities the curious kind fund, versus as versus lot a private, now are that to if just first you had of for build waiting so question immediate build, existing getting I'm we new overall, structure public certain for happening A could will? to its the the interest mentioned covers on you beneath just this

Tony James

will I take Okay Glenn, that one.

start company privates are private, and there take asked in think public enhance would company that some that by of chase. that investors. one, given value also than were operations assets interesting not existing this are close hand raise, until opportunities to we be our of again, fund of expect beginning a the see transactions call areas. number of the a mentioned The this executing large opportunities, are those the part enduring being and get to which There till value we by are in the so as call companies opportunities in number year deals inked. multiple is and assets immediate won't we that me public media infrastructure being companies no terms to more point, we at are the part on saying, of much we think Let to as owned Number in shouldn’t institutional of in for create where there a having to add matter the mentioned and the that as companies type just were embedded of you capital - next for in morning middle we a fact kind position it

companies, So those the others think infrastructure there be corporations, repositioning market. assets will major into

on will is but transactions infrastructure. and into core+ build, interesting. those time, new that think core us. but further is a for of fruitful and equity area a newer long. us that time. Over for period build private up number players gestation also continue will We will take We to of that expansion more for extends definitely quality well. towards right high more move really That’s as the there there be in of looking that more be Thirdly, there think of The will kind are we infrastructure networks. their will opportunities assets, capital funds been it stuff, But

the see. kind of talent that that’s So we

Glenn Schorr

Okay, I that. appreciate

Tony James

Glenn. Thanks

Operator

Thank you for your question.

Katz from Mr. of next Citigroup. Please Your question the proceed. with Bill comes line

William Katz

morning. much both side. question very sort permanent for of the opportunity of immediate up Also Okay. building call, taking coming capital sort well on highlighted the off as of you the insurance Thanks this as

a could wondering out of might of initiatives roll so be both you may XXXX in think sort and how little talk and XXXX? Just those you flush if the opportunity out

Tony James

to not like down interest to this duration real that going is you got capital work investors each high why evolve got sell draw that where to I the vehicles if continue a business to it have and down of are that kind Well, is assets. investors put we got rates would why a let as And you have for you side, to do and that fund that of vehicles longer. businesses. seems try a a in kind a that it to you because and sell we on of to future can anticipate some permanent And terms investors of your getting number a serving think of come to you thesis your traditional it to and you our we then of of the return underlying permanent are us And Okay. to compounding asset are more extending you the have the grow assets capital bit assets. of of near that more rates money to what in holding out a best your need in treadmill, by our you lot have should capital potential times great one you lot has sell of returns towards of and firm way substitute going zero, growing in

you an a example, years hold if be for lot can you asset an earnings hold years four XX%. earning for than richer So asset you for XX if XX%

capital attractive vehicle then longer. we of of us the the and that our extending for drives work compounded longer permanent vehicles one better. ways assets so holding from That public more advantages standpoint the our duration rates money have people And is letting investor towards serve those at the investors

allows AUM AUM to growth us and to compound equally course the compounding the us So harvest AUM having and so growth actually steadier you allowing by of in the assets get it keep from the allowing you allows to get carries and to longer, and both the to makes assets growing. for carries growth, you not work the that

businesses. saying investors, it’s certain good of think was those fit form the a Joan we So, lot target markets for a to change for model And as we funds have of better. our to

are reasons the reason doing we this, we permanent all are capital. another more towards moving so that’s that So, those for

the suite. them capital full insurance, of insurance a many orient yield products some for lot have on some developing got the credit, products companies, of had new in insurance the time, the of our treatment terms have attractive we companies capital permanent we very products a were products, vehicles, private the have In

we life, you things buying are As on. own call we which Harington the a got in other reinsurance without and going process is Guarantee company, know we are something Fidelity

continuation a expect I and accelerating. should to think you a of So, it’s see trend that

William Katz

you. Thank Okay.

Operator

you for question. Thank your

the William from Please proceed. line of comes Shutler, question next Blair. Your Mr. Chris

Christopher Shutler

nicely is guys. exceed dollar a share. going this year, to looks a FREs like Hey, to per be it Good pace on morning.

So, maybe of specifically FRE the to trajectory the drivers next that continued number year? growth talk looking you double-digit in do about I the guess XXXX, key and expect out

Michael Chae

point the certainly we this at we healthy. want think get But or wouldn’t I to on of granular to Chris them drivers too expect Hi, be projecting XXXX.

We expect healthy. the to quite AUM growth be

wouldn’t the percentage to so, be point certainly further. in And this it want continue refine at be we strokes double-digit to to think area, it broad probably I growth but expect

Christopher Shutler

just backdrop XX Obviously positive, carry you. strong last months. the point markets helped. double previous values the you what public else guess XX was in and general, opportunistic But it month, have on really over that private of sure I Thank the The real has very in accelerated? why better been about the and double was has appreciation more anything I’m economic to – one the think funds I on equity Okay. estate. appreciation

Michael Chae

it Tony - Alpha a the it let’s but as we call, of prior call mentioned the on through the that always would investments supportive efforts like the been underpinned performing backdrop been have companies think combination we to Look has we creation value I is Steve think think. mentioned, the and Beta. market The

both have positive. been think very I forces So,

Operator

your question. for you Thank

comes Please Bank. of question next line Deutsche from of Your Bedell the Brian proceed.

Brian Bedell

Thanks Great, very much.

FRE, FRE XXXX. impact the any or or more going the the sometime later to a potential begin them infrastructure Just you beginning is that for impact Are XXXX really sometime of raise there? one on you clarification impacting to prior expecting in fund on from XXXX deployment mentioned in question XXXX that, think I

Michael Chae

impact would in some but modest expect would XXXX. I say We

Brian Bedell

you about just retail then it sort enough feel opportunity And so sales a demand perspective do business that strategy, from back on terms have or growing obviously more momentum of the sounds structure as the that the currently you and how necessary? in think Joan to a like increasing product like is and capacity the you adding capacity satisfy side of on lot do development product more

Joan Solotar

question. great a That's

needs a about leverage want which possible, to oversubscribed to but institutional platform So longer the doing, a channel come into qualified down and the developing was than the as them. individuals are whereas really channels know which it's expanding lot we current raise same also put to And example assets and real an we that just of were bespoke based that the the structure for in investing were will down yield as to yields goal and and identify on channels more and isn't real capital is the or I you estate deepening these and one the channels it. their and independent think only as expanding penetration think purchasers funds if it's product draw gain group, in broker the with investing the and estate dealer oriented from as it able even are are largely accessible those we we institutions rather growth for so much penetration accessible you draw

allowed from the point other really for how how kind the have benefit of individuals of today a in their retirement think are per anywhere and to not when I planning their are fill products advisors going timeline folks today even had had teachers, XX% one they appropriate sense product embedded them history, be overtime. penetration defined and liquidity a developing liquid important their not access cetera, working the with were is by more of you X%, individuals but that semi XX%, day think are were that able to most on is liquidity invested alternatives will and that when you really everyone access and product et of and the just like policemen pension plans in today These to of more anything so really I are this targets do that's from back majority talk be products alternative. and to in so X%, in that probably of to are daily we and to and because XXXK large see to gap to funds XX%, XX%

Brian Bedell

better And could really the think but on at numerator of you would over least even XX% leverage I side denominator can force the that it say that XX%, that capacity years? couple you expand mean the connected like not double to greatly sounds on that would sales opportunity, the of I next

Joan Solotar

about just had we time. are analytics need technology at smart I we relationship. bodies we to advisors reach really this around and through, order to in more continuing the educate think it, We X,XXX and the past Blackstone using develop some throwing it's to advisors people really just be world, not of are year that come Universities a it's

cetera. really on a platform and help itself. So little to is advisor the say distributor time and I them reporting want et to you educate improve partnership service, here great the hey not with business, go product put a our to it's them the sells just bit forming taking It’s that their it providing caution a to

continuous build. be And a will so there

Tony James

the narrow think returns about terms also out availability the the of very, Brian private there return very and just slow. mention, you to pyramid of top at See, you opportunities, if point in I shared high the get that is at want the pyramid dollar the breadth of equity in global of

the pyramid and down wider. spectrum, wider As return gets move and you that risk

are are into funds opportunity of risk the kind really return are where and we vast terms by we the some So down of comparison in high too getting that can high set amount started. raise draw areas a the of of we they capital

big, frontiers. up So we big are opening

Brian Bedell

very exciting. Thanks it Great, very much. sounds

Tony James

Brian. Thanks

Operator

your you for Thank question.

Your proceed. Please next Goldman question comes line of Blostein from Sachs. of the Alex

Alexander Blostein

around A landscape. morning I good everyone. kind guys question of and broader acquisition acquisitions, guess specifically Hey, Harvest

for opportunities how you could on giving that like of just the look more any importantly a for I So they are as deals upside business guess in more broadening when bit plug and revenue on I color area spend today, the product of of kind more particular Thanks. time interest? into mentioned around a you structured, follow-up then could us the force? and you what that little distribution guess your

Stephen Schwarzman

to the Harvest Okay. only at Well is are said not largely Harvest Michael of niche a in rest of to have with say from a are I��m which going commodity flows market. going the as it’s lot segment handful MLP to protected markets there big in stage, high outperformed the sufficed the quality the managers, this of what a very manager we good guys projecting get and but in

that on focused that then has or accounts, don’t have our anything its market. manager niche distribution institutional it’s relationship they like into but again distribution set think we So

products. So no retail we help can in a they market. them And lot essentially their core have

what think increase - we so double than deal and their to and we the think can take can they commingle We AUM so some can channel retail time not on but and was a of institutionally, I revenues that doing funds, more - the have we we AUM. broader they some significantly foot SMAs And MLPs. as only through Joan at say their not So have think but would about. I’m as we going talking risk

Joan Solotar

please. question Next

Operator

KBW. next question Please of from proceed. Robert comes Lee Your of line the

Robert Lee

curious LPs what high. how Clearly you what just capital the all thanks. I’m nine I the premium raising is sense has years, part various for the and capital of taking you as premium of think by a for that for estate evolving done PE real has asset is kind maybe there of get there. are And you exchange as your to green Just think guys question. feel know business. though opportunistic are product just the given return trying guess over values the ups? expecting you sure think do kind kind been and you well expectations and the Great, of very return long-term Thanks are of expectations last out in my that going you term to order in like have if walk that? where we think What

Michael Chae

funds goes. Steve see might want Okay. the I say because LP view to own return basis come to opportunistic to down us slightly. final than I private high on this, different do XXX will us Depending opinion the of I think in. for want us, by frankly tell I where or that’s and because so My let’s and draw the have have is think it estate they we public want start down LPs points markets. join than equity most ourselves. will more bar high expectations course I more traditional we keep on the And real want LPs exceed with might that for to the

would S&P now would do carry it number personal the be sort going that a going of of are my forward, public met range. there the market kind that happy think I to is are Although you and to X% above most until X% of what gets own view that them XXX is, in Then is of I with fees there net think about markets. public

assets increasingly be should. X% expect to to so above will to and as you XX%, more every is XX% we had that losing every class and forever, period, so and set and which in to Steve? much their than as continue we XX% what that in I sets XX%, they’ll widely as And ourselves. bar mentioned and areas to and we that these fund So, forth expectations lower holding ballpark fund that on they we continue will deliver asset raising true Steve much, look never the allocate at for a have fund, drive think of so, have done returns we X% if

Steve Schwarzman

which the points, are we it’s Tony the we the designing the sort is into we where high this found It turn because points. are view we we XXX are harder our of not as on unified return are, Michael business having of doing environment, little a different basis product overall were same conversation in a at is tell guess an you I posture. as higher, a can are expecting that the firm, what were. both But, from open [indiscernible] we maybe taking today’s we that and delivering that if returns in returns approaches

looking current through with in to some more lower is know so carrier where looking insuring are ever in [Technical And my people you yields with some other teens seven but than people and are overall are and Difficulty]. satisfied income the treasury products,

And are business, now going. segmenting conservative do and can and is just the and And this then we out on down, so do in is we really I as we more simultaneously have terms in we to as are when we what doing relatively strategy new also really want trying want issue, come who much a and I appeal money, is segmented globally. also of how they promise to are think markets were we to that focused successful of high you generally quite don't world, are we type world care the to that and things been have rolling of people take know who that returns so with lose to business the around different people

exciting it's investors keep expansion class, certain amounts [Technical certain could a uniquely are are and type is the of Difficulty] everything to [Technical taking expectation to to that we that business very doing have amounts innovating target unbelievably a hit because performance in we to of are firm target if up are the Difficulty]that is do of [Technical alternative the these like able big we of group this an and large results that's with in only of out, platforms. we that the believe I for all and everyone Difficulty] now segmenting because is them large people keep well terrific of you who putting a to perform really So strategically these power and we we strategy and ability to do money are positioned of will not to where geared money managing in whoever and for. manage

fund, the lot after like part is I played doing want the hitting been that is answer because future. person running not timing So we and do a years a of the of up lots sort that's have That's niches in a being relatively out, for you the charged at firm really opportunity key have may services XX and to longer everybody in of there early that opportunities getting but something financial are it's the we right and than new and good follow-on there with and of the have is it, been quiet. firm a

Robert Lee

good. That’s you. Thank

Operator

question. your for you Thank

please line proceed the from Stanley. Cyprys, Michael comes Morgan of question next of Your

Michael Cyprys

you're talk thinking might there you're wanted just billion think the catalyst not be? you earlier performing out about today capital can distressed for you be there the out and Tony it funds, I I seeing opportunities much just call timeframe some of like the of of you ask as to distress distressed, for and for so you to the distress looks that able about X nearly mentioned these sort manifesting raised yet might capital your and how credit strategy, in and about immediate strategies expectations opportunities work the to about more quarter where on

Tony James

Sure Mike.

hold in markets. that money may the As the a period for investment life its that the typically at money, things and we about work you comes and like years or you time not to and have the to you a fund you not takes years. and raising four of raising five six distressed is drawdown as to fund go most or to takes The of itself fund put traditional take years, it know five it or know of opportunity They invested but moment once then a advantage get raise. four you're year, end it's fund a is fund of so

finance. well. class companies a asset the are have through good it's cycle to you So can this point, to will good, it commit stressed At you through and markets even sort that treat cycle the are economies of

always things are many that control, So there it’s opportunities we because always meaning not there wounds, their thing changes the overpaying oil course, like. another, because as self There of impacting thing and acquisitions, regulatory and as change of one that things are Internet is always one are for companies of prices, inflected there companies another. either might and retail, beyond stumble and management stumbled and

So there are near always now opportunities in see the question that opportunities of right we period zero rates just won’t think I of The a interest it’s for be will grow investment fund. won’t volume. economy forever, the forever and plenty this and

Michael Cyprys

thanks. Great,

a question. Just quick follow-up

that evolve data how and curious are you think years? five over technology might you Just how three investment today process in key the to integrating and next

Tony James

dramatically -- we and because interesting been up would I here in really it us say. question that year all pushing the this ratcheted a have on. last That’s has It’s it’s in Steve up something

one, the team also might help and embedded now to specific there and to the at evolving both data look number of looking use frankly of if that I portfolio out exploration ongoing operate up an companies out mineable data team, two, think at And sale of but figure our took and better. have make investment monetizable. inform is we number so And set processes, really to our to what work use to data internal. initiatives but we technology companies. in companies point, team That’s dedicated that data the a harvestable, have decisions, be use you of this with better we at new portfolio a have to and three, development Number deal our investment will

research so will like investments portfolio common a be to all of a that different And our common businesses. ops, our

about days. possibilities but I’m excited it’s And there, early so the

Michael Cyprys

firm Great. to be of mentioned in terms meaningful Is that point something you data? at revenue the some could when of that sale

Tony James

too to it. think sure and way to early I’m it monetize be not say that’s will I the way sell to that

monetize it. to to might way build be products investment Another around it

stocks, in We will deal have horizon But the you with like of to not terms explore just terms of that in that. significant. time

Michael Cyprys

Okay. so much. Thanks

Stephen Schwarzman

Mike. Thanks

Operator

Thank you.

Your from Mr. question comes Lynch. proceed. of America/Merrill of Please the Mike Bank next of line Carrier

Michael Carrier

big be activity. up just be the the Thanks Michael for is year year. and on taking to setting Hey may the question. color realization quarter this for a Thanks fourth for the

if years returns available, look of over sense couple can to we accrued meaning get see a a the wanted to the building. Just we returns, next net the carries

So this today? XXXX a if Any the be like portfolio things is constructive but on again just portfolios, the to is backdrop, seasoning sit just gauge just look may where given what good. color in outlook the market and sustainable is

Michael Chae

question good Mike. a That’s

that I the I discussed the of ago. is return think of couple of levels from sort right magnitude robustness to really think I the of a the years receivable

markets are that by vintages quickly and of XXXX, a into we some investments deals be made were they people and just is would the in under been obviously when gratified where and and mix is have my is that maybe they want it’s some but really that some you monetization. for to the of vintage of good liquid current I highlighter think think fact closer season younger the I are about right similar really reflection thought past, XX% that and I at have is and did time XXXX, of of time receivable being remarks the maturity like the and composition estate that year real are XXXX, public, DE. bit XXXX we kind in big converted underscore elevated something the think pretty it, at The

the part what will of drive driven point at that’s this think here. from value has that way So I creation DE what run the

that mix a a qualitative But a sort receivable we of sort you of of metrics carry feel only to vintages. public is have And recent couple of of to and and just of couple ago funds transition was it’s we as to we more pre then So, transition full remained that sense. when one have to years of the sit big growing. has IPO some back, like driven certainly sort positions the stable even a by was from largely

Michael Carrier

lot. Okay. a Thanks

Stephen Schwarzman

Thanks, Mike.

Operator

for you your question. Thank

Davitt, Please Patrick the next Mr. Your US Autonomous LP. proceed. of comes Research from question line

Patrick Davitt

that NPL Good for about have Hey. actually speak we talking morning feels guys. Thank sooner opportunity on view a you. that how of is years looking been mandate one be? later. like European your that rather specifically you those which may And dry powder than your finally that much it happen It’s assets. in the of like unlocking Could and to has kind invest within would

Tony James

can not area estate, around has going acquisitions the I’m Okay. other in well. area on NPL as the Spain do is about big say there, real participated countries inventory very depending pockets GSL with and transaction all The think year. And Italy But, have initiatives billion but large in we those and have biggest the and NPLs have NPL and that that NPLs. BAAM. I we closed been in past another $XX suffice generally Well, funds to that a we funds, just Europe and the of all to of Opps Tac

By the we in just as So, from are trends clean central let it’s to banks see pressure is starting way and coming yes India say those alive, same there it’s the Europe that not banks to well. up. pressure

as I and and way So, performed good I continue been NPL it by think very to bought be continue the think have very, an attractive us, got it’s it’s - will for the be have going to we portfolio well area.

Patrick Davitt

Thanks.

Operator

Thank you your for question.

comes from Thank Your next Securities. question, sir. proceed. of final JMP the line Mr. Please your Devin you, Ryan question of

Devin Ryan

have questions been my Well, asked.

leave you So, there. we thank are going very much. to at But

Operator

you. back will for speaker and to We closing turn call thank over now the remarks

Tony James

questions. Great, thanks with joining please for and out everyone any reach us,

Operator

everyone you that disconnect, gentlemen, presentation, a today's and and day. great now concludes may have Ladies

Blackstone (BX) 19 Oct 172017 Q3 Earnings call transcript