BX - Earnings call transcript Q4 2018

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Hello everyone and welcome to the Blackstone Fourth Quarter and Full Year 2018 Investor Conference Call.

During the presentation, your lines will remain on listen-only, and if you require assistance at any time, please key star, zero on your telephone and a coordinator will be happy to assist you. I would like to advise all parties this conference is being recorded for replay purposes.

Now I’d like to hand you over to our host for today, Weston Tucker, Head of Investor Relations. Please go ahead, Weston.

Weston Tucker

good welcome and quarter Blackstone’s Sara, call. conference thanks morning to and fourth Great,

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

later report forward-looking next I’d expect uncertain statements. to actual XX-K We We not today’s control include our remind results to may and firm’s do these that from undertake statements month. you may the file like are differ any and materially. update outside duty call of which to

may $X.XX of reconciliations that please risks consent. this release discussion an the $X.XX of a $X.XX is for an million quarter in common the be For year. results. quarter also net per and year. could the billion offer section for our of GAAP some find the with of a or over million and the distribution and see distribution solicitation the website. to record declared February page XX-K. earnings to of the XX, you’ll an in call $X.XX previously, that a the share results, XXXX. the common that, refer a and to purchase Blackstone fourth of to of $X.XX and to holders Distributable for without recap We net note as We’ll to offer bringing turn Factors our respect of Blackstone share Steve. constitutes on of and be now material funds. the that duplicated This any call copyrighted A to to Risk distribution of audiocast total per Shareholders special With of We I’ll $XXX loss Also quick press $XX sell or share paid on per measures, affect full announced of nothing reported non-GAAP for includes the income not were our $X.X interest

Stephen Schwarzman

thank call. joining our and morning you Good for

As everybody period difficult decline S&P, XX% in most for an financial fourth and a the assets across quarter including was community. the volatility knows, extremely the while participants markets Risk spiked. declined sharply the board, for for

least funds Against had - returns the asset For year outperformed the first preserved XX year Blackstone’s and dramatically every believe, traditional real full almost time and in at market indices that in every background, negative the area. capital for full inflation. for for adjusting class major to the quarter in years, after hard

our equity real equity year for example, X% which anywhere estate to For from cases, to outperformance, even our declined and private compared positive funds more or XX% XX% the XX% in of XX%. to in This appreciation corporate investments capital. long XX% XXXX fourth delivered in enormous compared some indices to is of of firm. our managers, and is to the preservation index the for capital in It as ability to having highlights the or long-only quarter term funds the overall remarkable intervene advantages

more further Blackstone’s never continue to in the to private to to their expected was AUM, like A partners dislocations is, to we us today areas. our capital Jon found limited leadership pleased successfully institutional will funding billion more and and build Blackstone, midst two investment trends the expect ever. businesses and at $XXX manage. leader half our our identified report billion, capital businesses of infrastructure, few take are exposure saw This the our $XX to our another of nearly investors developments. areas, both and financial alternatives. platform highly position are We a and that A underlying in launch why quarter, outflows equity recent stark advantage to planning they continue. money of powder proudly to second-best than this [indiscernible]. have reached ever, gross market our space, In better. to venture is companies businesses between traditional Blackstone in by existing widely more investor the ago, reference is on sellers the our and alternative make capital Korngold, a are institution contrast net great platform firms fourth dry management, phase the whenever forced positive declining that of where growth we to our the extremely announced we inflows performance we’re entering provide to of most appear. We In this entrust new and hurricane in a continue in all over further new dedicated and renowned weeks with these increase other of even space, survey differentiated traditional which new during major

First, our unique to billion size, transactions. fund large, significant giving firepower us $X has reached in pursue approximately

two Second involving large both importantly, checks. very this signed and we equity most the deals fund’s first week,

which two details business The investments it sector, the first a Together, the world. for and these owner in few will Tallgrass, controlling is additional extensive provide believe a should second and one when vital we momentum provide closes largest transportation assets, of on the in the the of months. further network platforms infrastructure interest ultimately U.S. we’ll in a an become of in midstream is

to and coming quarters including across platform The and ways addition these share create also provides In growth to going many more infrastructure, with in for you other which LPs. us expanding the equity we more from insights have firm, us We’ll learn. over find to reach It for to and on have Blackstone’s insurance sciences. on businesses. of global life things value exciting great our provides

is slower fourth and quarter, believe growth what are there be XXXX in to in strong. trends signs visible the recession, be the no the we was which XXXX. U.S. will of The which Looking world economy today, at we vogue to constructive Employment the talking on remain compared wrong. a healthy, is consumer about despite remain

of no Some very like to negotiations, the facing those respect it today. need there may to the although in from continue world, well complex we’ll a more week, are how and monetary China are Policymakers headwinds, state issues fiscal and policy addressed. to we’ll dealing including reach question are regions one, issues. respect about towards of and work of trade both see Brexit, will the minute. encourage be achieved and With believe adjust with learn resolution, the the This be last Europe China, to now Europe and and that are number I be outcome which to difficult to of there regions sides trade, a growth. that to want finishing at is to the predict. With assurance can and Brexit

seem firm which I Fortunately, genuine is In to the majority people look of desire important for closing, a the envision better vast our as a next achieve to I outcome. hard excellent involved have a out and Brexit several years, investors. prospects the to avoid over

of confidence any navigate and have We our to environment. the the flexibility LPs

operate one over to to turn generating performance the we’ll I’m exceptional As our continue every have, happy funds. grow, Jon. long-term of to things we that, focused as in firm continues always With on to

Jonathan Gray

challenging the all morning you, quarter for good investor Steve, everyone. of our aspects advanced map at September. we a markets, Despite Thank day Blackstone against road in and outlined

success. now earnings. driving Our quality We’ve about the in performance significant for of flagship a our and message leading was to investment fundraising, strong early four strategies fundraising launched tremendous growth innovation and upswing with powerful the

of majority expect the billion vintage, the in with funds, of the $XX in our the we on hitting $XX $XX.X estate exceed quarter estate with it the over those we’ve raised the volatility. first collectively, and in XXXX funds from Along exceeds close of equity, fund. billion billion PE private exceed to billion and for new new year. fund This Our European confidence them. were $XX closings end comprises in as this hit with of billion and our year. demand vast to raise just opportunistic to vehicle, their these in market was flagship fund months. over market global on we secondaries September, for to the we’ve $XXX XXXX, size institutional expect each cap prior for $XX nearly pace retail our in four balance for strategies In expect is This in both the greater Gross XXXX. $XX today the In we even few and despite investor targets corporate by our placed billion limitations capacity for the and the in real today, a the $XX billion real billion over-subscribed raised next to reached exceed compares we in closed the expect inflows than largely opportunistic

our to grow draw addition quality capital business, funds. predictability and of AUM to an In in funds, billion important in is with earnings. $XX down trend resulting This across greater of XX continues our perpetual

entirely capital, the another quarter. has estate Our inflows which grown including is $XX five in in perpetual of billion billion real core $X.X platform, fourth plus almost to just years,

REIT month. per has been raising Our REIT, B average non-traded million than on $XXX more

XXXX. year year, deliver over LP markets private is with the full the strength The raise decades. differentiated turbulent we’ve quarter ability them and the standout quarter a our to and XX% due to fourth in the the equity fourth corporate some Our scale performance, key trust relationships appreciating in which to again had investment of through notwithstanding to public reversal markets. in we did funds capital speaks built downdraft The

in the business opportunistic was the for and Our In the X% up also appreciated for for the REIT about public our XX% year funds the secondaries X% and year real a for fourth decline index. year quarter. X% was tac XX%. quarter which the rose up for XX% XX% opps to plus Core full compared estate,

reflective companies are reporting backdrop portfolio described. the Steve growth, steady that operating healthy of Our

we positions. continue period, due the finished strategy quarter X%. the estate, India. nearly and own gross companies the market our in business, over the hedge BPS World We performance S&P index dependent in not heavily credit up distressed total energy to and inflows. our see X% we declined is real the from At In office, see logistics, rental unrealized positive gross trade. XX%, same particular up and strength solutions X%, why global return X% the yield also was upstream credit to composite U.S. MSCI public BAAM’s In X% fund performing high index primarily net with don’t to continue year having certain down year down on in and while GSO, global marks tech-driven BAAM’s benefit full down many housing, the for on

haven’t we seen about We around credit deterioration concerns close continue our our quite the rates and in investor feel leveraged the a holdings, to particular, our Despite default overall. market loan of zero. good portfolio quality remain to in

and continues previously Scale over markets the Turning the it’s deployed including REIT. We REIT $XX year. and the six past for multifamily pricing Reuters and to three months, reduced more to the globally. an privatizations. involving in large lead assets more the With valuations investments our a we investing, business Spanish could announced time public competitive Industrial capital a the meaningfully to for active to companies public deploy risk to interesting $XX quarter, Refinitiv Thomson be in quarter advantage in former closed billion Gramercy large billion down

in the and and past adding orientation We made of pace these the given of firm, including progress economy, been regularly speaking like to across towards importance increasing about of the growth and the disruption capabilities Asia more Over doing we’ve the technological quite life capabilities we’re our with we’ve sciences global rapid objective. the technology. stress this the pleased in areas year,

now flow estate nearly plus real vehicle two-thirds First in time. the of will slower new China, comprise to in BREP with Even have our expect core Asia our and funds and growth region, of Asia. over Asia, of respect the a represents dedicated deal BCP, region opportunistic growth, we percentage in with global $XX in billion greater we plus three capital including open-ended

acquisition the launch to first plan and of expanding vehicle with Second this in a are the in quarter the later year. team life Blackstone life Clarus completed sciences, we now sciences dedicated the

and our hallmarks to platform is by In this as about in Third, any equity prospects the growth of terrific firm Innovation very and for we’ve Steve growth continue excited measure. mentioned, launched new closing, firm. be a the shape business. we’re

solid that, and level, businesses in We across Investor continue strong new LPs successfully never for Blackstone our distributions deliver into been to to growth, With into ones. and I’ll has of over shareholders. our our this At stable translates streams, Michael. higher. for all turn more the expand fee confidence firm it

Michael Chae

operating year, gross across $XX morning were These focus estate momentum combination and broad-based record and key real AUM financial billion and estate, I’ll $XX as well credit, in Total year BAAM. during of Jon. this from X% realizations. heard year real as Inflows increased inflows private well the totals morning, firm: the Thanks $XX in my over billion $XXX of for XXXX. records BAAM, appreciation, highlights outlook. the levels $XX this our billion market to the year billion new as billion as the in $XX billion and despite extraordinary billion so far were equity, as of you’ve through in unabated fundraising remarks continues the in on $XX of

to second the year. earnings record, $X.X with per year, XX% X% effect quarter, $X.XX AUM the direct billion of up for Management firm monetization business year fee positive in over total was in every prior Fee-related or rose of to Excluding the billion share. $X growth segment. the revenue another XX% our increased lending

basis the over year, full-year basis than For up full XXX and level XXX the more points is years. highest the expanded past FRE ever to three points margin XX.X%, nearly

FRE last On to accruals. quarter-over-quarter the that call, of I quarter’s compensation million. For variables $XXX including quarter, the discussed timing some increased intra-year fourth comparisons, XX% can the of affect

moment. direct meaningful the look fee full-year outlook firm’s notwithstanding and XXXX Distributable $X.X any date a such, to given our to on and sale, year. $X.XX the were $XXX profitable strong. billion a more in share, represented year it’s the full quarter. basis more discuss is quarter for I’ll trends or most As million versus at earnings specifically fourth the per trajectory for Overall, lending the

of comparisons of by the and healthy are Although was continued at the for was in previously corporate underpinned completed an total implies the U.S. the common those European Net yielding third times, the of and In the two these quarter, over a for share line capital distribution XX-plus with and realization our it multiple the year’s of external a to per $X.XX record the $X.XX our million-plus quarter notwithstanding skewed results activity, over straight stocks of announced market performance yield, continuing in estate, years. by special our consistent annual in companies. real installment At platforms fourth current fourth our quarter, the last area. the significant to were and are this equity of largest XXX turbulence holdback past share quarter distribution, at sale in us logistics total including $XXX the of DE gain historical year-over-year shareholders price, aggregate X.X% DE private and of XXXX. invested make one public of realizations fourth highest the strong the two indeed FRE platform final

reflects with results feedback earnings As realizations, fee-related our simply the received these how and presentation metric. week, earnings similar highlighting so and uniformly fundamentally change better metrics the primary actions with of simplified our the focusing presentation earnings announced from on and we last The we’ve non-GAAP as our we is DE our distributable net analysts. and far by manage of business. peers by have both consistent financials taken aligns investors plus positive

firm’s negative of shareholders. the the words, past years. two $X.X markets simultaneously more will revenue a volatile to a $XXX record record grown than of positive strong receivable dividends over another continue value a year in same the net the with Overall, created year deployment will replenished $XXX related more to balance dry further. modestly The the delivering billion performance distributions. performance receivable. eligible even quarter for that driven million sheet highly year year over ended earnings plus to through from revenue value have over We offsetting to a our $X.X expand declined marks of $XXX unrealized a reduction the year accruals quarter throughout X% billion, up of while distributed billion powder likely We than for receivable shareholders; our up the performance convey time, realized store balance year, unrealized and At and our we with appreciation XX% billion, pace million was to revenues AUM during has invested active and $XXX other net

to Taken for together, value we are the extraordinary well long-term firm. build positioned

of Moving in real European corporate XXXX that to FRE the the to each four-month the day. at FRE for - and equity, outlook, significant of deployment then funds investor expected exact funds of holidays the as course in the materialize fund pace FRE step-up launch we investment a highlighted Jon global we closers; from the first XXXX place depends should funds, fundraising in referenced, XXXX, for are these four timing from real predecessor and are standpoint on estate, positive flagship putting the subject - early and estate which the in Three and private periods to platform XXXX. fee of therefore, throughout the in XXXX launch bulk of are the impact

Our few expected in likely is months, does and the a new secondaries PE to however, sooner, launch not fee holiday. next have fund,

day. lending the to lapping see our shape achieve path final for we for quarter first As historical with expect will year. double-digit XXXX, our a the the from growth the line more previous Overall FRE to quarter After targets the summary, of in of business. our investor in clear balance this, of we direct rate be continue

the AUM and firm with the growth. and to dilution of cash rate fourth the brings and we our an $X.X million Finally we zero along sustains shares the into in years enter year. of the returned consecutive to ahead. In for over to share and second repurchased great double-digit and capital to distributions, conveyed, to $X XXXX even our respect with in XXXX firm billion period, a closing, optimism shareholders the quarter million have flat X for expand accelerated in Combined to will quarter pace areas the while aggressively billion the to what respect for $XX count continues underlying this shares as special new a This and shareholders, Steve us buying we significant with returning our additional Jon shareholders during momentum market. with regular open repurchases, achieve quarter share

shareholders thank now continue up your it We we alike. are and that, and for exceptionally positioned LPs for to our would call joining delivering open like With to well for questions. the you

Weston Tucker

moment, could ask the queue. the analysts to have if just We I here. you. Sara, a to and question first to long get in just back for a queue just question could we you if additional limit all questions, please have one their if Thank

Operator

Alex Your [Operator Blostein live from Please question comes Sachs. ahead, call, in go you’re instructions] first Alex. from Goldman

Alex Blostein

Good morning you. thank Great, everybody.

least any just in I of obviously question of you side lost that fact adjustments ground the discount of segment, first on you’ve marks public could quarter. things, around but could we First QX side. private a unpack early the you were marks, challenging bit I’m obviously here the of the first if lot trying private on wondering the really or kind of quarter, recouped provide sense of we’ve given a the what on the made sort at modeling any whether growth was and in versus was of marks or not any marks quarter, read rates public of that I saw the get to what little hoping the by - a a

Michael Chae

Sure order. I’ll very take Alex, reverse in maybe those this Michael. good questions is

for we and declines retraced. we’ve little experienced our the half or January, and one the well, more fourth half, portfolio the in retraced you across of real the of names equity we’ve than fourth in the a from some, biggest varies all January our about positions, values have if of market on quarter, in two in as the aggregate few and over in for that that individuals and of just including first public about obviously our estate First holdings of private markets, quarter weeks rebound think it

with us. overall, that seeing you’re and seeing that You’re

and rigorous in approach I remains to valuations, consistent. the approach of think very our terms obviously methodology

stages rigorous outside assurance firms comprehensive, a process, provide and multiple internally, have We and vetting multiple to so review of forth.

Our flows. they we on asset. of obviously plans cash reflect on also based are reality, we’re investments flows, our projection business information, those or based that every teams discounted cash the are the update The control with executing operating long-term valued the as management best detailed grounded quarter and investors for private we the in

been As really over a result you see many two of this careful approach, things. it’s years, and

historically and our the just the the not over is in private of The don’t has the when term, been valuations and a we’ve the talked don’t to and upside First to the we’ve but average in the second, pudding. this it’s the in tend mark proof on face real so stock XX%-plus our conservatism. market, around been sold about uplift described private asset intent the whip approach in equity XX% necessarily downside, range, estate I the overshoot historical with result has short on its periodically, to the term average--as prior long

also you portfolio in record portfolios feel evidenced well both about to our that’s both it’s businesses energy In energy, business as some public term by for currently. distressed areas were fourth retracing cluster, the by in disaggregate definitely success long headwinds about we’re portfolio, on quarter, we and in sure, but feel--I both as portfolio and just as focused the versus good Jon talked we biggest our this the fundraising private degree and the you’re businesses, just in we having publics our for precisely the equity those the track disaggregating, overall, in in evidenced privates. side public probably and externally on - said, don’t Jon terms what which mentioned of energy the our are upstream GSO’s for for know,

Jonathan Gray

building to long-term of accruing the that for so the are we shareholders. also might debt and in single high I digits, our our EBITDA value grow continues companies value off and mention paying

Alex Blostein

question. for Thanks taking Great. the

Operator

you. Thank

KBW. Please go comes Bob Lee, question next ahead, line of from Your Bob. the

Bob Lee

you’re I us at equity but guess it, on on can growth sciences hinted and question closed give the a a you. sense your acquisition usually kind how literally equity, my on you so for current growth for platforms? past kind new you think life the thinking--you plans be reasonably the be you will you first should quickly, platforms. leader hired we would when fundraising, of how strategies and the--you in up think thank out Understanding of but these businesses know, in ramp about you Great, newer

Jonathan Gray

- would got on this how had of I Sure quickly capital is business fundraising affiliating life and sciences, their they The we’ve existing today. up announcement seeing and flow great Clarus in say of the an there Jon. has a gone significantly. deal that’s Blackstone, already with function funds the managing really they’ve frankly deploy is they’re since success,

It’s so a hasn’t hard joining we’re hoping market moving yet prospects I business He on to come and scale which put we is here. a spaces we going to remarks, think response how talked together raising in positive. to who year. extraordinarily the It’s in to Blackstone optimism the yet, the with growth them lot equity, time a for start existing up. say business so process, it’s I But this things about both both there like adding see soon is excited of market. think higher to large the have size this our capital, confidence team phase of hard be scale this my expect again, reaffirming hasn’t of one. a they’re a see private and said our so quite disciplined it is areas. raise resonates downside about been that very it’s keeps our Korngold, trials, investor to capital for instinct, capital, Blackstone because about quickly so Traditionally, well we’re think Too of in these What say I been and think and there we but orientation growth X I’d bring, teams, money of deploy have function and that of an great the areas, has expect these On this kind and organization, expect Steve with they year. frame I us give forth. exact to it, we investors to we an in time into people, us. little merging bit putting to and lot investing our even just Jon we

Bob Lee

you. Thank

Operator

you. Thank

from the go line Stanley. comes question of Cyprys, Michael Michael. Morgan Please ahead, next Your

Michael Cyprys

maybe out how Hey, Asia, big this the business in just might business wanted that good do five like, more I also your building the that in years, some could you Asia. morning. you want your of of and the the more look then Hoping see Asia franchise with for expanding, how a touch to look could come upon part guys and for that what challenges question. the face you goals in a back you about Thanks bit on aspirations taking to of you terms mentioned that talk - there.

Jonathan Gray

just growth. Asia, of Well economy global it’s two-thirds of of the look, global as and, the think mentioned, today I consider size third I if you a

alternative large news, discussion that most raising equity and Asia the and lot a an still two China, us grow region call you, Japan also of obviously that around slowdown, for a raising those fund, I up estate it market space, economy, big, continue capital. tell For but very a it dedicated in foreign think is be to mature, will itself private was would in open growing it at, was weeks is in a to more for opportunities capital the demand in and of our good private been X%-plus, Japan India, in hired in tech area market most that We’ve buildings the will and strong core We space, where XXXX seen think significant. in I in open-ended equity. equity a private the we’ve they senior well. partner investment really We active ago for I grow. percentage. BPO grow economies as office we companies time first - firm investors, in so in and very and the think small very the real receptive probably in represents fund will second the as particularly a as

in had now tremendous seeing low base off starting there great and and that’s that government. We’re more India, pro-growth returns a very much has oriented demand market we’ve a

So a different the and all ground town the alternatives, did at region, of I aggregate we there, the was people, the weeks and economic ago you just limited people to of look a points have on when six activity opportunity, hall XXX across everybody size with have--you we know, the of I now and footprint that couple in offices.

better businesses, some firm, bigger in global it just have operating set for Obviously markets’ but been numbers lot put liquidity; do there. over most think growth to exact to business. we’ll expand are For a emerging of currency, some got about hard as firms, investors, a just time, want equity, you we’ll well talk would It all you we’re raise we’ll around We’ve I I exposure more there lot as there When region, disciplined. percentages, it’s time. a a we’ll think in more people. footprint cases expensive challenges, be some rule I we’ll our so very is we’ve there and that in but China law, - overall expect of some of I take a in footprint. time, and Asia. up in will think makes focused leader like great our to the It’s have capital of you something a

Michael Cyprys

Great, thank you.

Operator

you. Thank

of go Bill Bill. line Katz the ahead, from comes Citigroup. question from next Your Please

Bill Katz

outlook to XXXX, Michael, could in for What within get private question, Yes, morning. be you biggest the this one tempo very sneak looks fourth outlook a that could just segment? we way you volatility, A questions of I if XXXX particularly appetite you the quarter in margin if what taking Then is given maybe question two-part unrelatedly, quarter. that hearing to just from strong the the see LPs, the terms the you. of FRE wonder against much you around overlay for credit. fourth are Thank for given it in. thank

Michael Chae

Sure the Bill, one. first I’ll take

and so average on baseline the there talked decade, XXX it we’ve might it can think consider year, On least we’ve different doesn’t at and about you think happens that a variations before, from XX perspective, expanded every to that’s nearly basis I I a mentioned the I investor produced way. about good the level quantums, last the XXXX, for the think day, you think look But be a good year months, happen margin, it. that almost basically margins outlook we but on it decade, your in over think along if about points for I obviously a at I way next

top we’ve you to year of that the and time, business operating line I think experience disciplined obviously that cost exhibited. our good results and growth very reflects this a it management leverage the I a and, margin saw approach think, growing good in the that over in business,

Jonathan Gray

I would private On our from investors. continue credit, say reaction we see favorable to

in the see can inflow it You numbers.

the of who is underlying we the revenue term with it’s in opposed flows to of borrowers. leveraged us highest interest looked good, less think since at the those been media growth coverage the the the our particular, look and factors as what and the when quarter, LIBOR are fourth in That’s There’s EBITDA even around market and market reflects obviously at in crisis. leveraged tend loan a the pretty which look you historic here short lot underlying market strength, half I investors than at markets. the levels the but still the obviously that yet loan focus credit look to defaults particularly and happened to and are companies technical up, in volatility of in in To investors, factors been U.S. moving

credit. in it’s I true headline, have cash still really in where so private will to get businesses our to that. grow are investors other is and I heading a flows, more big the U.S. stance on U.S. know particularly are continue you in That’s facts on a these is very but if their markets, point The to not very the recession, would positive U.S. the into responding think Europe, good healthy we economy credit and you premium. a again a the thing and

Tony James

I and business line which a of a and sourced merchandise we the in that. might up for XX we’ve immense proprietary lot mention grade got Tony. and investment new months we started that is we’ve last It’s have too that credit, demand of private

Bill Katz

Thank you.

Operator

you. Thank

of go Craig line Please the from comes Siegenthaler, question Suisse. next Your Credit ahead.

Craig Siegenthaler

Thanks, good morning.

conversion the just have an may even Just we any converting you just at announcement I’m decision, the had that in not if muted overshadowed on point. we on more given are given yet, Also, have wondering potential the XQ, not because announcement. that C-corp towards guys or that leaning volatility it impact had high this had wondering I’m if

Michael Chae

have Craig, the else would or Michael. anyone into way one not Hey or other. it We read it’s you

to actively. Our it our we message consider continue remains perspective and - consistent

once. As in decision make a rush. not you a we’ve said we’re before, It’s

To say itself well. extreme have We the the the a last it’s your signals timetable. to or internally in high ourselves, on as public not quality quarter fourth to comment, also publicly that in lend timetable markets volatility a put strict yet didn’t discerning fair

ourselves maybe why think I goes a fair having not timetable back say, put to sense. to made that’s that on but strict

Craig Siegenthaler

Michael. you, Thank

Operator

you. Thank

comes Please Glenn. ahead, Your Evercore Schorr next question from the of ISI. from Glenn line go

Glenn Schorr

and on We overall XXXX holding quarter, the the in in saw what’s zero, improved of in thanks no put be distressed particularly if terms realized rates markets your performance very right help could the should but about, should follow-up on I spreads credit. wider much. in credit comments A to raising the just much benchmark I the wonder what context, in thinking brutal look for how you capital Hi, discussion. default right versus how we were, deterioration what the we close January so in all and heard

Jonathan Gray

area, number may have rebuilding a and more large Franklin I credit. a received a bit still we upstream Square there and, was distressed of able What particularly, referenced, as in in public put that, business where We that momentum and I have pretty have we’d exposure, Michael markets hopeful those portfolio. areas. feel we’d a good be we direct momentum the with on equity to we’re in some and obviously portfolio payment, In good we had but distressed just volatility exposure some around there say now that, very numbers be against say venture of would put distressed will you’ll that we expect, our it. our better positive if calm bit, and I as about performance, exited out and know our see here Overall lending don’t credit, we’d

We in expect XXXX. nice inflows to see

Michael Chae

and lending, point, our that on fundraising continuing and area. those hope that institutional kind like to To just great available in something add XXXX two the in with capital in on of efforts, retail, midstream. both firepower time, direct or to are would $X.X billion said, and to into quarters Jon to, billion area and ended of we of even approach from three We $XX that we’re about year progress what invest

our in work capital credit in under have very direct strategy, couple outlook, to in I have or we in fundraise, addition gone momentum. Elsewhere in In billion we of terms just as energy to there. XX lot to, investing. lending fund a on We invested in committed fundraising momentum XXXX quarters, deals, on last with we’re we continue that briefly so of great the so firing good cylinders, different to the alluded of $X

CLO really ever I so as area, credit focused market feel our not European again closed, think very it issuance the GSO I’m is fund long-only we In and well. prospects area. Our the on about the good sure the - inflow board for open we’re direct across lending for

Glenn Schorr

Thank excellent. you. right, All

Operator

you. Thank

line Securities. the go ahead, Devin next Your from from of Devin. Please question JMP comes Ryan

Devin Ryan

morning. about good of where question just now, how infrastructure see the A to some what update like, Wanted work, will get fundraising? to to starting capital on pace investments should of size an it’s types been? Should be accelerate subsectors, to the what now pipeline great there. and think of deployed characteristics the money some at we of on it the - looking you’re the that to that look from starting does you’re put we think Great,

Jonathan Gray

talented now were announcement the signed $X to that size the Steve did is and under up people two very people, outstanding we pleased the moved have other large busily Sean on billion on Well, Klimczak. hired call, from the obviously fund leadership we’ve and make grown very working a the together approximately this an of the across great team been bunch of which to bringing transactions, we’ve business, firm. We’ve of

think think, what as will We investors, of we time active private having, and I investors capital, have, now, a take larger estate deals, to I are and to deals some say, than real pipeline response doing. These deploy very equity positive deals. we I see or typical a would longer gestate we’re very start we’re from particularly

terms say midstream - of renewables of typical deal, been terms looking a looking the space, at. in I of things the doing, be we’ll telecom, have something at, mentioned in would saw In types things you infrastructure, to going associate infrastructure, we’re Steve transportation you areas with be the all

around discipline us them, manage allows time, large for both just do in is at that and business appreciation going and it’s in the an very them, said producing capital be steady, The something of will card to but make the you’re The being advantage that, a to its player we’ve is a example, and competitive consistently vehicle to other this invest as result to today’s will and excellent, very Tallgrass investment will segment, U.S. very don’t to to able need the open-ended infrastructure. us of has so excellent, which thing been and very that infrastructure, I particularly the see Blackstone. assets, think the is transactions I this think we capital long these be be the our real timing, talk being process large want is this a business scale of from it period in duration, large hold long a team them here continue grow announcement assets given investable a example for on calling scale, and income about

about today very and good business. our was big quite feeling infrastructure this a business, We’re for day

Devin Ryan

the Appreciate update. Absolutely.

Operator

Thank you.

Autonomous. the from comes ahead, question of next Your from Davitt Patrick Please Patrick. line go

Patrick Davitt

morning, Good you. thank

disappointment you the you on so is you potential of might specifically wondering manage allocation how I then hitting first called filling a institutional time that the out particular with think institutional can left those fund lower us rest a be the or you’ve update that cap in tension, so and retail? retail. clients this get of an accommodate out Could

Jonathan Gray

question. a spend it’s time of great on. a something obviously well It’s lot Yes, we

of process. That quickly. are success to sought critical Our business. move has when why as funds you to investors early try highly effectively after as in to of possible right you manage It’s returns, focus our as you on that have the have client we more relations are caps, but as possible you’re and encouraged course that the -

reasons more the we investors in time. a investing recognize our who is have issue. of to one you have but the and investors obviously been more preference see think early existing I scarcity investors over also are who funds re-ups, doing in are give closes funds at retail times consistently We these and doing so big Blackstone been

to this So and yes, really what we has then in retail. - practice all capital virtually been fundraise funds, of and allocate is portion historic - of do a an focus our on institutional a

Joan Solotar

that are outcome. fact that be bad kind what distribution doesn’t sell distribute partners would a would we’re they I giving selection, meaning only and just in promise we’ll partners, our Yes, and that add our to any of adverse is them - not

Operator

you. Thank

comes next go Carrier from Bank ahead, America. Please from line of Michael. question of Michael Your the

Michael Carrier

about longer this accrued then the at recurring of it notable realizations, on in the and then terms just in how and can provided that over morning. portfolio the Thanks more net some have Michael, should term, was think good dated products the longer the shift from maybe of E&I to if you versus there’s FRE term, based the but we near receivable given importantly and the past anything D, context carry outlook provide age rising point? more you helpful, level

Michael Chae

Mike. Sure,

sales the we think private of as certain case and we with entered the here. that’s I the usually do, term quarter contract, near outlook, so under terms in

dissimilar is pretty that and over The five lumpy two-year over obviously it’s time, been a In minus. obviously specific that’s step right receivable, been a and not carry actually terms again dynamics, minus has could in plus of when look time, generally accrued that at amount time That of past basically about ebb year. over that half - on deals those realization age average or but consistent or you flow, years, but or the - realized period, it four necessarily although long-dated you market amount our but part of back which and terms value, longer oriented historical, now it a is to plus be--you maybe not the carry I’d structurally terms core know, obviously strategies, from than data opportunistic in five dated those shift value continues definitely, from fair of years fair ago, the the from or very value, capital, say not reflects the you to in overall, the four chunkiest opportunistic of bit younger in there’s have terms gross receivable market the itself, you know, little and the funds. some

Michael Carrier

thanks a lot. Right,

Operator

you. Thank

Please line from question of Gerry. go O’Hara next Gerry the from ahead, comes Jefferies. Your

Gerry O’Hara

so different through derive pipeline, obviously bit perhaps Thank at point how get these could little helpful but a the be Obviously limitations caps, we material coming you you on discuss something funds pretty you of capacity. a you. a as us. you of larger lot in flagship you of strategies, that any it size might framework than deployment - might a about to looking and a this would put outlook. funds I I’m at commentary, of little perhaps kind the bit some the X-percent have the for fund, Maybe predecessor granular thanks. suppose the imagine, confidence for Great, larger, the angle the somewhat more little on

Jonathan Gray

it markets, that’s funds scale our markets, helpful. having data is growing. do advantage, to When $XX look Well, and and business, to Reuters Thomson a to today. billion an been a be when sold of That $XX single is its their long you continues write write size for and at being I’d public portfolio, estate saying to single than check very a start GE wants ability ability so which case transaction our check this by firm their is if said, around our real billion a the typically, in size - story matters, the very different time private

going be important an give very you’re likely we XX% than we’re disappoint is advantage. thing it four capital, to who year know, something is record. they’re X% we more think track because $XX investors the disciplined billion grown going call that billion, five us, actually have that, for the the so forward, us years us funds $XX size the we If money You much growing least so like a give less Markets so X%, most much to old, on that, are is or said at size.

hand, we want raise other prudently. to deploy don’t can’t the which too much we capital On

of been or way business can the and GSO we and equity grown, more where almost the right XX partially been Our made traditional in that of raise a have this yes, and opportunistic BAAM we estate it’s fund movement different tac it’s The the the areas core Europe, we’ve that has We forth, get history see growth pretty the so we say, and way, expand. opps in private we’ve has call secondaries. been funds bunch movement real been in in into disciplined. over and would firm, of or the question, in grown, years AUM because but some to every continue in the I products different

liquidity have money our real also raise on very But discipline a also rapidly this but have and core-plus have scale so recognizing obviously a capital and and not of profile. advantage. targets more large infrastructure, and lot have around we but basis of they direct business, we caps, the perpetual Now, for size these mainline a do raise, return an we the quarterly we course lower business. vehicles, I’d say lending Those we different have have businesses, estate regular are is growing

Gerry O’Hara

you. Thank

Operator

you. Thank

from Your go comes Shutler of final Chris ahead, question Please William the Chris. line Blair. from

Chris Shutler

broadly in has business, but indices. Thank hedge points quarter down been morning. XXX that long fund it the quarter hedge control In term, good provide over in the a I business, the how more always not for basis that broad the reasons how performance I structure is of area, surprising, the - of but can relationships, of the the the risk little key some much you but the how above fund just not you exposures, about is more outperformance hallmark a you, much in was around detail think know etc.?

Jonathan Gray

Yes.

in in They think of or done an the there their smart additional they’ve away strategies bit strategies, BAAM, investors and growth. the traditional which they’ve it team capital protect some the has the the but sort business, them, towards, pivot, activist case recognize from more way. to a their now goes long-short I’ll I strategies gives out. the very format, of done years, movement top for bit vent call a investing shows in and equities credit capital a and also up more course, structured uncorrelated in move and it number on avenues say behind clearly I a outstanding that quite it the are that been BAAM to benefit and for of and the would an giving of some when more preserving tide these I little of has liquid think, some a just us started That’s of and into have stakes like then other quantitative job of curtain,

is the proving excellent nervous, around investors some portfolio who protected I be of our need an saying, very in area, For to today world to want but are I’m solution. BAAM my I liquid a be

Michael Chae

capital. those actually gives scale of picks are access are as in on to second, markets we clients investors X%, advantage. for so I huge add I’d is It commercial terms about for allocations, two were I’d things, strategies and outperformance. to the the it scale, add his we I X% about into just time that down to in point managers fund scale in often explanation them, design--obviously for at us up design a to stock well market for think: hedge customized what the that, down what strategies make earlier factors what and best and just to BAAM said, our working, add of we protecting those example, in do we bespoke managers December is whom information overall, funds just the the when our was a in a not available best can what one, would of our funds. can to working; widely which Jon matter

Jonathan Gray

comes with fee advantageous And most also structures scale. the

Chris Shutler

Thank you.

Operator

Thank you.

hand Now Tucker comments. call the to to closing back for like I’d Weston

Weston Tucker

and today, Thanks questions. call for Great. after everyone please reach us the out joining any with

Operator

your conference That you, Thank Weston. for call today. concludes

disconnect. of now Thanks enjoy day. the may You and rest for your joining,

Blackstone (BX) 31 Jan 192018 Q4 Earnings call transcript