BX - Earnings call transcript Q1 2019

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Operator

Good day and welcome to the Blackstone First Quarter 2019 Investor Call. My name is Emma and I’m your event manager.

During the presentation, your lines will remain on listen-only. [Operator Instructions]. I would like to advise all parties this conference is being recorded for replay purposes. to Investor call Relations. like Tucker, to I’d of Head now hand over the Weston And Please ahead. go

Weston Tucker

Great, thanks Emma, Blackstone’s first and good morning conference and call. quarter welcome to

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

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

a some For page press our non-GAAP results, in find that please section could of We’ll reconciliations the risks measures, Blackstone also affect audiocast the of be the to Risk Shareholders copyrighted that in refer note and offer constitutes to any on Factors you’ll XX-K. of see our of and release discussion the an an of or funds. to a this duplicated solicitation Blackstone without This call consent. Also nothing an of interest not on material offer website. and sell may purchase is

XX. million to of earnings $XXX as GAAP a of $X.X from declared to of income were net billion $X.XX X% prior $X.XX quick a April a share year. first results. of We be recap quarter. the reported So paid of record the per distribution up Distributable We our for holders common or

you call that now effective a presentation to through Steve. with watch. which the of short conversion slide from along the convert We this is to we over also supplemental I’ll our turn posted walking mentioned a the to details Blackstone to We expected I encourage And XXXX. partnership announced a with corporation that, morning JulyX, website that which video to a will be

Stephen Schwarzman

only call. our leader time Today compelling our not in our This industry, position conversion Thanks, and Weston. in company, public And as over began the with billion, Since also pleased times IPO. advanced established period leading a morning Blackstone’s AUM ourselves six that good of are that one step a we for our to joining we've in journey evolution public XXXX as but as to C-Corporation. clear companies to growing our that we've the the in a world. is announce thank you next $XXX

margins performance highest median than ranks the financial example, profit more metrics, of XXX a ranks revenue the are among one and our four grown at while companies among double decade our largest yields. as past Blackstone number largest our earnings these more is dividend composite On the than growth the rate U.S. group, the over this triple, companies. For in of public Blackstone the We've States. United of

Blackstone of have lot with finance. positioning. Like such of a if competitive companies Costco, firms, stocks as recognized the of our the its Amazon, around asset for Stanley term moat differentiated were includes minimal significant repeat that names manager billion our and financial annually real our is based franchises. over and fast predicted very Blackstone for that billion highly performance as industry best continue. investment of in the to Vista will a to recently in of years is created expected decades, performance, We've business five from and on Stanley delivering regarded Morgan the you customers one named a addition in reference deep a institution a management best within alternatives of bond on to the $XX one list as In We quality growth up widely capital. Morgan review by a Alphabet, other loss fees XX that only widely these Blackstone of we industry long currently. also investment, trust, franchise, growing percentage our business. would $XX to is resulting grow household

in We are the as Blackstone not retail to this which our both market with positioned at as extraordinarily don't most dividend even the of and comes our IPO dramatically benefit us makes metrics. most recognize the given sense to matched backdrop, on though it however, diverse business that among institutions most of for the S&P, line strongest has and people from that has has trajectory business the against little firm, with since a stock the flow, well investors. largest brand the performed S&P, our be lot actually outperformed stock

of representing capital $X.X don't. to owning materially U.S. challenged that non of tax that disconnect carefully changing would of speaking year, list does that cause the spent we’ve the discount of to last top I restricted better retail of but the study lowest On multiple. dollars in Why told our this and highest our Consistent that the with XX is traded that makes comes In in trillion we the investors and earnings Earlier We the our the been time reform, to in investors their yields, too referenced, XX% and over companies ETF of own third States we publicly our typically analyzing structure. and in this focus. passage simply we've dividend considerable long-only Add disconnect, PTPs they world. possibility PTPs the of structure United has index around the more you following valuation are capital that stock theme own. difficult partnerships determine ability trillions actually of persist?

we trading for dramatically these very analyze thank we experience the these your stocks a point other funds and liquidity it's with among they we as went We appreciate index benefit than should had firms will we're companies. in think it significant current the of we Blackstone very easier conversion substantially If the stock. through itself, close of their greatly not to enthusiastically assume driving I'd change make conversion we on patience what same. stock. analyst of everything is at doubled analysis. investor long-only making best impact action own the Closing, for will and peers other that this encouraging by the of on community vastly forward now our access Time and firms to and a We more all two average. unlock outcome. Blackstone's Ownership else have the think as grow peers will almost which is like future of know Michael and conversion because our it volumes this; performing doubling our to dollars tell But will this institution to for believe at since our announcing converted. we our to We industry being of that on well increased will gap today discuss I at to between announcements, restrictions these structure of capital have We're to in reference U.S. us able as our look had our dollars the trillion substantial had respective trillions investor as learnt top more corporate thorough changing, detail. also of buying of reasonable we valuation and power, What at and step more institutionally. although least Blackstone is in value $X.X shareholders. trillions type will that estimate conversion other to the continue initially remains statistics in the this converting. remove

by firm, preserving integrated same the in operate success to entrepreneurialism meritocracy, our all driven has the do. years, continue characterized will XX we We culture excellence that and unique for

core today. Thank And things for outstanding term performance over with mission our Jon. call which to is Our long that, unchanged, I'll remains our joining to for investors. you drive turn

Jonathan Gray

us new for returns, outlined Thanks Steve to for of on a would virtuous growth firm under morning our great We raising delivering last the good meaningful trust continue as this focused innovating path At Day structure, of how which behalf remain our drive driving earnings. capital not shareholders September, said, our value the and Steve builds in up and greater Investor and Steve's we our foundation allows step share investors. a but totally on of cycle everyone. quality importantly, optimism is changing. on our and the I

first two funds, and corporate pillars flagship As four underlying today's both billion to and reach substantially of equity for secondly, the commitments global targets; advancing largest expectations. illustrate, fund collectively equity, to private real the $XX their fund, estate, closed completed, our the be flagship with results on approximately first launching than vintages. the funds; already real fund the we of PE four major more prior expect of or funds major XX% corporate estate better our four initial and raised. billion ever a trajectory PE which XX% We our platform including the of $XX those We've expect three and our are private raising now European than Secondary’s close plus core

franchise. pace done the meaningfully each in over and majority just raise of For a coming the weeks. $XX billion the and XXXX. of the we strength its were the fund, and to XXXX, vast real total, raised one of billion basis expect we estate, global to be expect to flagship in ability gross approximately the $XXX a In fourth funds to close European inflows record to XXXX across for speaks exceed firm, The setting

core and in to month, in across of nature, We power has five IBD non-traded sales. total, predictability billion XX businesses our The a to in million growth been retail to the life $XX manage remarkable two growing franchise current expand Our Capital sciences $XX includes real distribution BREIT the occur Blackstone forward, will this of XX% brand begin and continued display about enduring vehicles $X power their which We talking a fundraising a has the a the our grown that timetable requiring quarter, of equity. and Blackstone given to push billion performance power as life plus a funds. endorsement now platform revenues raising of years, internationally Perpetual us vehicle in at earnings little the scale. to momentum channel. AUM like year. expanded fact new billion to in the the without rapidly years continues we of expect growth allows in the about up and we drive now most in firm's nearly the faster later We've estate equity known growth channel. sciences on global already Investor to $XXX recent into This year-on-year. These further dedicated in greater also BREIT for areas Day, REIT, asset talked over

five current our as $XX fund will which now first billion in $X a times strategy business, four In started acquired secondary’s opportunities $XX U.S. billion fund when than is expect of ago. than we a the more year. tactical larger area, over it the well, and platform. direct this or be Our And billion business is exceed our XXXX progressing half billion years lending $XX to we our in later and rebuilding GSO, a

always the first this equity ties funds. all businesses the performance. again in of of net reporting but real portfolio private more receivable. both healthy growth corporate XX% steady course, In to sheet overall, delivered the in flagship our discuss our driving and our appreciation, Of will for back are returns Michael strategies annually returns strong in performance quarter, investment balance estate our opportunistic companies our years. detail, XX

we quarter. stock the highly greater The the market successful major us launch combined Our two rally from the China one of in India, growth, the helped from weeks market the the India, to in REIT the strongest public in of Fed benefit IPOs first continues trade were first and pausing -- of of few on cycle in the office the listed with the which rebound. its in portfolios and factors fundamentals world. culmination holdings building country's largest Embassy Strong years optimism first benefited tightening past the eight in some also

over and lack valuations high cannot. a creatively in and PE three online structured investments rich, Core was in yet are committed to in to also core the XX% we stock since globally market and and opportunistic leading plus, deals a were real Tradeweb upsized making scale Ultimate The active a invested large times division others quarter its We use in not is technology and The the win business. privatizations two sectors. $X including the of German multiples in our stay brought and estate billion debut. to traded businesses. We oversubscribed deals businesses, Refinitiv. quarter challenge and today history distress disciplined. offering global many and the deals up Software We're committed In When software biggest closed. twice represents in secondary’s and buying $XX which investment has the addition, we billion XX In never public, reach midstream of PE deal the ScoutXX, of we classifieds largest our total, the we

ground We the deploy of have record to today on with $XXX dollars capital powder. dry and capital record billion

periods very the and continues respects. strong right in opportunities. can both patient and In partners limited the closing, deliver long shareholders investment We for have to performance all be for our our firm

the to metrics Over for much More $X announcing the I our over to April, to even of buy to a drive billion past larger our Michael. our understand them value And earnings. stock we changes with things C to so shareholders. on buyback we program. focusing make universe easier are today, year, we announced can Corp, conversion we've made stock. greater investors several simplified that, financial recently, turn Last a a distributable And

Michael Chae

I'll Thanks page one review my to and outlook, begin the supplemental in some morning. the good details supplement of on we'll presentation. of mechanics first the then pages conversion. with Jon, and results of remarks the quarter the and around starting refer conversion the the I'll the with

The K-X growth, Takeaway XXX dividend that We instead pre-tax stated. exceptional period final must receive the scheduled will companies business After Page has four receive all historically Weston to XXth to respect BX all a of profile. rationale On effective Existing of been summarizes view a as and metrics, of date, shareholders holders with expect structure. Xst Steve the revenue public this under Page key firm has dividends the to due qualified margin will X, conversion. here model Blackstone largest the illustrates date Moving unit for their January a K-X XXXX June we for and as own of earnings which through Form that X stock XXXX. comparison our is owned that an financial an these X U.S. to summarized. PTP and yield. July

decile or Page market ranks Despite one an Blackstone among weighted U.S. public compelling for limited leading our We among are companies, structure public equal position of in those XXX the first our the illustrates in the has number this the largest and composite, on the X shares. companies second the meaningfully extent restrictions.

to nearly XXX% and substantial As capital ETFs are along portion you index representing PTPs funds, can limits with of as a see, Steve funds of off together of long-only said. $X.X trillion

on page, the XX% the XX% result well float the below shown a investors C-Corp ownership hold U.S. Alts, this financials As right of largest side only companies. BX these average and reference the as of of

funds. stock index X, converting, to on long-only the unrestricted by page of long-only market We trillion. $X ETF we shown double and making effectively eliminate K-X the As the for domestic XXX% eligible

a over single encouraged ECI. XX% for will create CRSP, time. Total The the securities. thoughtful by MSCI’s and believe benchmark for funds indices to And that index hopeful decision non-U.S. dual of We also We underlying model class increase problematic estimated securities state-source such an XX-month future. you income of becomes were this well-structured recent eliminate namely is and indices. including, stock ETFs, following further the an index and an certain share to family investors, indices review their MSCI to its share we're continue for and primary class additional and income, UBTI, We past and importance Market as eligibility eligible

page six. importantly as and on Finally shown

our corporate additional today significant rate We modest taxed mix cost. percentage benefits fee previously, conversion and continues outlined shift the overtime. to already earnings at a unpack earnings firm's the the largely to related toward are of at FRE are as able that, access tax To of a higher

in five total will in realization and near from corporate become income term is at conversion. the solution level electing the we mostly average tax mitigate net Our earnings a distributable years. X% passed up, approximately basis resulting a conversion By next which over annually X% negligible on income, through toward the will to taxable impact upon step

expect longer corporate years, five annually term, we XX% level. the range beyond dilution in at to XX% the Looking ultimately tax

is making a reflection level, highly long change conversion of dividend partnership. note shareholder, measured to rates applied over over we income shareholder I We're treatment and the the In cost be at analysis benefit excited find following tax significant Finally, C-Corp with to the due to various year the term. to success of a for summary, qualified past impact would tax income the today even a half, U.S. this compelling. be taxable the individual lower through pass versus a as the as

same and appreciation despite in the address our AUM press, outstanding equity confusion leverage basis, Totally public party moving Now total our which to investment combination attractive march except robust To billion inflows metric a the leveraging our the investments. and gross earnings record a for billion. of firm’s to firm, includes The $XXX strong. approximately AUM billion the I'll but specifically the point not performance That X% an as $XXX discussion the business the and prior said, a growing and for quarter million quarter, on the we complete growth earnings its is in Blackstone's as the total million, is includes and FRE. in lending of $XXX real of increased strong rose realization firm. year-over-year as is third quarter of firms Day private our fee up of year did AUM and store our funds, several year. of sales highlighted a targets, other to first AUM number quarter the executed equity, quarter XX% more would record be forward market in well were moment. Fourth the $XXX pipeline XX% revenue value. in results. the value private recently the Management related Fee momentum a a the $XX inflows, our also an one. rose consistent public the how reducing from $X.XX direct outlook record notwithstanding equities. sales share we prior report in to $XXX continued Brookfield, had of discuss year, market billion $XXX effect million of our billion for alternative estate industry strong markets and year-over-year recovered, a $XX through last turbulence Distributable per of holdings Investor of momentum measured underpinned This primarily and by entering or by realizations. of with on XX% the reported underlying sale toward private the the

X.X%. private sharp in well including in credit record accrued the balance investment Turning sheet the active year-over-year. $XX In performing Ops funds performance In in were estate, firm of the net quarter, steady private quarter. dollars rose our to performance, partners AUM Strategic Tac and credit, lifting last also X.X%. with combined XX% performance Solutions, in rebound strength billion depreciation, months saw X.X% from receivable equity broad X.X% billion opportunistic delivered and while as quarter, the twelve gross. Fund X.X%. estate, $XX based In appreciated revenue returns distressed holdings. up X.X% the as funds private PE funds $XXX X.X% quarter gross. where revenues Fund Strong investment billion corporate republics, the while ground in X.X% year-end. a the In both billion in real Hedge real from we return equity, appreciated across gross in in plus our the $XXX a rose appreciation fund the to up deployed Composite core continued the funds to benefited million pace $X.X drove XX% of and the the powered performance up BAAM’s a And

are these together, for value realization. future indicators positive Taken

to outlook. Moving FRE the

quarter view, continue on at to Investor full the advance in fund flagship Day. Of first As generating PE period our outlined launched John this path the is that secondary’s funds and underpinning we the referenced, investment fees. new major

are Private Corp of of first periods The than four XXXX other for September, months subject XXXX, the Estate Real we share. path early $X.XX fee Equity, expected a a closers. three this Investor Real in Estate and investment European to into FRE, to holidays last XX% or are outlined and launch better Day Global half then growth year second throughout funds which better At implied and

better And visibility Given success overall, per to view. today, in share. our $X we confident path in and even and continued more confidence we our progress fundraising remain importantly, now that our have

would shareholders, to the despite shareholders in of the in months. for Combined capital in and repurchased extraordinarily our we the it past and growth returned for major share thank buyback another expansion. XX under now remain last billion our market Finally, shareholders distributions, conversion of we business our returning line like million that, firm's over with joining open resulting flat XX in that continued on count nearly program open commitment. terms over you to a delivering questions. the focused to step With our We shares cash call year $X.X is robust in up value to today attractive support announcement we the

Operator

you. Thank

comes Katz of The So the begin. Bill Instructions] answer line from will your question of now Citi. session first and [Operator question

Please line ahead. go now open. Your is

Bill Katz

very you assessment. Thank with I on congrats much for the questions. Okay. conversion, agree your taking the And

related and how conversion just I first [four you’re class the how then as S&P of well? the with both in pillars] your maybe prepared was dialogue tax couple So [ph] in And just accomplishing itself that? on MSCI, structure and Russell is relates of of but commentary Michael, to as the dual just of wondering savings questions. some you few talk tactical the if years; the sort about maybe could about

Michael Chae

you. thank Bill,

creating those XX as step-up be be - be which first Section our in as election a of over will that create XXX, will addition that assets On conversion amortized to the intangibles years. in part we utilized XXX question, making are assets will will sold

addition but what you the around and dilution rate obviously as the round mix continued FRE in not which of we taxed one corporate the to know use already only at So shift forth. largely was modest that the factor is so

And some of in that the want comment? to terms on you that. So Jon, question, latter is do color

Jonathan Gray

Sure. weren’t any a we Yes. obviously haven’t publicly we partnership. indices ineligible I’d Bill, because gone as say, for traded out

we look we haven't this but forward. do topic, on time So had some for directly dialogue

this in As class that’s his pretty studied dual studied when that the they S&P years Michael leave indices. think remarks the MSCI at of the because we’ve with in their noted and XXX and in over look companies. okay this carefully concluded many performance the was right last performance have dual shares overall the conclusion companies led and are you shares in to the doubled it index, XX cases class founder We

So of you drive those and shareholder to those companies led value. done like to had and and Brookshire Google businesses founders Nike they've what creation great and have

So, will index hopeful be the this we're managers that open dialogue. to

convince months. in happen As Blackstone. we this couple time that over like convert we’ve is here shareholders and right companies to the us love will should way to of noted give access include great to next indices that a number when folks But we’d of the

Bill Katz

you. Thank Okay.

Operator

The of line comes Suisse. question Craig a from next Siegenthaler Credit of

Your line go is Please ahead. open.

Craig Siegenthaler

the morning too. Good everyone on C-Corp conversion and Thanks. congrats

Michael Chae

you. Thank

Craig Siegenthaler

stock at at taxed this are the haven’t paying it dividends versus will your or not the dividend be But So, capital dividend paying compelling be which policy back valuation your be the dividends do changed evaluate buying level? now the on taxes I how income, you know returning today. and owners underlying now will that you that actual you taxes

Michael Chae

to zero what friendly point which is, question I’ll Bill, take for made very program mean Craig return either I we our at plans together shareholder thanks sorry, dilution repurchase of this for dividend capital a overall, think policy change have policy. we don't – or our the

our you is will much without model return capital advantage policy our extraordinary. requiring for essentially we we which at of is such very that rates capital pretty benefit had business high As And our do and grow and great to takes know that a as shareholders. reflects can have

on enables I creates a note, committed but approach. you conversion to that treatment qualified said flexibility, we’re we long-term obviously to is shareholder dilution. the zero lens more be maintain we’re as of as And So, as dividend to There value certainly the we for it and going reserve even look and shared at are always opportunistic the our open will times to that through creating at right investors. repurchases, possibility

Craig Siegenthaler

Great. Thanks Michael.

Operator

the of Morgan Michael The Stanley. is next Cyprys question from line of

line open. go Your Please ahead. is

Michael Cyprys

morning. good Hey,

on to Just that payout I the that change policy? dividend. evaluating something been out you a your bit payout the for What that seem policy that see dividend extend what there there lead that high, dividend on payout a a follow-up C-Corp. you you're would others are guess does To high is policy? such successful have XX% with

Stephen Schwarzman

obviously very announcement on on what our from seen noted. the you of investors shareholders but the in We've like buyback the C-Corp big focused capital, we made conversion. think positively Obviously some year form terms noted today we C-Corp. they really dividends. And as this of for more like delivering big as changes we've over liquid in shareholders a over dividends moving and significant guys these the We're Michael and the think to share the of that last we obviously evaluate, program is We returners things this. not can simplifying particularly time if like idea financials positively. we are healthy received and market payout react healthy will we’re

Jonathan Gray

It’s double We I thing reinvest equipment to without we high grow. great to Blackstone. need. one fixed the need at Mike, grow having it’s there, things our as other of better jump businesses don't corporation about plant business, in. just and to like in capital out than other any digits can the many key so about

Michael Cyprys

you. Thank Great.

Operator

Robert of is line Lee the from question KBW. next The of

go Your line ahead. is open. Please

Robert Lee

pool at in talk worth a you of success net of questions trigger a conversion. curious the you on lot maybe industry people guess retail years Thank you’re some the just high may little have any to but end next the for from kind know, assets may about your assets, number liquidity little maybe looked wherever and start Jon, and bit to the the but pulling that I’m the of of some sense it hurdles moving any question Great. litigation specifically retirement away more in congratulations of and there I big at XXX(k) the the But of of bunch that conversion market. now I on some bit Any Holy the having expanding see overcome actually globally. the tunnel, over my for reasons these of sponsor years starting concerns pool this for light strategy’s Grail be. couple accessing of in as this Jon, the capital? maybe is and a of and you’re

Jonathan Gray

good We, I think it’s Individual defined increasingly sector have to like don't many in as So, in the defined benefits we others markets. contributions. recognize generate private gone returns from to access we've very private question. investors

if to about daily it’s their you the liquidity, think really contributing for regulatory early XXs has young and to so, a person XXX(k) a in a they yet portion requirement for And give is that requirement today products retirement alternatives. It's made of the it portfolio some available super our to their and logical not very world that world. have difficult retail shouldn't the XXX(k)

General alternatives. is some retirement a access time lot have about we on pools working various capital this individual our to up. community. of John open have and been sort over Wayne We well. Government of for an makes And investors on industry Tony these will these talking opening long-term it spent the time where sense our folks, Relations. of this to idea markets Berman of others suspicion for We that specifically is as up to think Finley the area the in in Washington Counsel,

reasonable. charged who alternative make experienced the that been to in There abuses this I folks fees have with are think highly want past the are regulators sure rightly are products in retail the will hands. do that that

collaborative think individual could a for And we regulators to like very and for money so, a managers us. approach accounts good with obviously, retirement in lead outcome their investors

Jonathan Gray

The pension I to X%. the XXX(k) difference pension The X% out this would point return average Rob. X%. like The big returns plans allocate to X% alternatives. average to statistics, to is

Robert Lee

Thank you my questions. taking for Great.

Operator

line Ken JPMorgan. of The is the of next from Worthington question

lastly, and in ownership taking dilution of XX class creating blocker essentially from terms structure the have morning of XX. will Good the shares? the from the sole Is continue the ahead. that taxes questions. to -- dilution two between there Your and line on And - to the [ph] difference the five driver Please is the this dual conversion, what between term, then blocker guess management shares assume own from long-term conversion to C-Corp. here. impact my with positive a different cash the open. I is tax go this a Worthington maybe you’re that Ken Q I does reported? difference of near Hi. of that any extent for To

Michael Chae

I Ken, term you’re referring blocker, step-up [ph]. mentioned tax my a in to so art of basis, a different a remarks, it's asset in

rate. corporate largely versus be mentioned also the our as within of reporting FRE those -- which of Day I at terms cash evolution which is in the taxes taxed will earnings talked towards factor already as the mix and you In aligned a Investor know that's continue we will currently about

dilution Okay, second So those - And your the question. Worthington dilution that's to are driver. DE your and alluded you. dilution, perspectives Q first to are think as on rates I I Ken effective a common. The numbers. on not tax great. Those referred the Thank per the common question per couple

Operator

is question Blostein Goldman from of of Alex the Next Sachs. line

Your Please line is ahead. open. go

Alex Blostein

guys. Thanks,

of the and low stays you up increase period gradually Or step and in over five-year a XXs? on rate half expected to starting once the And takes rate? guess I is Another we low the then run tax forward in it into XXXX the of be thinking kind about about get the guess terms rate through should then as five-year so think the what kind going I XXXX, of period? taxes, then it second we normalize

Jonathan Gray

Yes.

got think, forward. on more of sounds it in would common your DE on around our the current or like Alex, XX% finger we less structure I you been tax rate Under going have estimate effective XX% our to range partnerships it. per

that average to As longer range or next XXs. five on a over the end the a of maybe expect term we to rate the just corporation be that expect trends low to we years and at high above

five and the within terms as what of in sell getting when and we’re so of we sell of activity next depends in income the obviously the that And it which mix terms years we shape at it. per on

of years next begin relative we while expect few five pretty rate, to in part years that trend to negligible current should the change the the We latter longer-term the towards in rate.

Alex Blostein

Thanks. it. Got

Operator

line is The of Lynch. America Merrill Bank of the next from of Carrier question Michael

is line Your open. Please go ahead.

Michael Carrier

Thanks everyone morning. and good

fourth You little pause wanted volatility, pretty a sense given portfolio to when is obviously and pathway the segments. on just the but the realized good gave a across look different predict bit your performance get whole the to of the at a of income had I FRE. the quarter tougher know industry you the

and are Some of that you have the guys launched, out maybe what IPOs there. then secondaries

realized Just about how this environment? be fees the in we thinking performance should

Michael Chae

Michael. Sure,

with is As pleased that you the in you performing, we’re investment saw as performance. point out portfolio the

As replenish accrued significant that some in markets increase you dislocation quarter quarter. both material mentioned first this the year, quarter of a quarter-over-quarter in the dollars and XX% have the improved in still of since and remarks and sequential in are alluded saw market the had growth the revenue impact the fourth significant conditions as first quarter and recovered actually second in but measure the really the we’ve my balance market obviously the increase I percentage that obviously basis. Its XXXX of way early quarter the prices to And on net this. was performance largest have

beginning liquid are public between XX% appreciation holdings about versus of our year. activity, IPO in portfolio today the size new public the and Our up

continues ground in grow, So, the the to pipeline’s the value rebuilding.

about to will some feel year. have hopper. forward good play their substantial through out according position go in But own timetables. as the we the in We we things of our motion Those sort

Michael Carrier

lot. a Thanks Okay.

Operator

line of next the is of Evercore ISI. question Glenn from And Schorr the

Your line go is Please open. ahead.

Kaimon Chung

for you Blackstone up assets how sure is vocal managers opening being market on would than more Schorr. the and views but that market growth China taste big This timing be Hi. anyone and on on little them. Chung And of can of Thanks. great. getting I’m about anything a for specifically, your talk Many Kaimon Glenn not better has you Steve prospects is the have been positioning that? for a

Stephen Schwarzman

they’ll a take area and they’ll by Though also to China in majority a able, finance. of and go brokerage foreigners and variety companies going first years the areas after banks, permitted XXX%. few then opening to be to Sure. is insurance a

so hopefully want things estate they It’s as the some would companies area now And they think We area they outside drivers. that think have is Chinese an along firm long-term like of and be at future must happened assets about elements. and is an this regulations such where that so, the us of line quality up all should China show with for much primary any areas very green be business invest will area light in of in negotiating obviously of be there is know save And stock existing ours with I we engagement other unusually be area their I the of some in that cautious competitors the estate, put real of as particular is where interest in has longer-term importance modification are so that and to this people you as an people This I lines to compared some and longer those. terms these where of this our world time. and the world like in. China and would where around source they real lot something Chinese interested big their more capable markets have business to savings, think

not things in but moment going to change. with negotiations at any are the We’re them, involved

thinking within should So or be out. the that's will of anticipates be I but things be which think weeks wrong or done time where after and shake could six way, could next week either two so, agreement everybody the the another the current

Kaimon Chung

Thank you.

Operator

Oppenheimer is line of The next Co. Kotowski of the & from Chris question

open. ahead. go line Please Your is

Chris Kotowski

Yes. million I I $XX buy ticket. than below also it, be your in be booming. opportunistic you portion investing thought suburban on $XX would on would Good curious about for kind go Blackstone's cost historically now But Sears mid-rise, to invested bigger fund that. and to there billion like city like with in it million suppose. is construction or every BREP buy of more and the massive sell morning. that a like seems like try of Jon I that buildings it construction, Tower IX, and of be an be But small big that to, you things it, the reliant deals $XX thought office seems might approach Gray Question I’m fix real properties always you estate funds it

it just -- environment in sync historical your seem styles. So current with doesn't the

to approach your in BREP about IX? talk you can So, invest

Jonathan Gray

things. is that of distress is reflection and States The challenge opportunistically investing there I the of few in not Sure. a say guess, relatively I’ll today a a fact is United the in prices lot fallen. are

small and it differ said, is is it generally run way business. where eight I everything, sort deals. back on point being the or That it that would was an on say the not environment we is truck been what backup let's So, not business, of we’d It’s the buy years the seven scale ago. in been

the that era very deals. most substantial out large on some we turned the challenges. and in of than up dodge did the be were two real on able of we’ve deals housing, Hilton, to we pre-crisis back went real vintage really the And way to that which when investments losses. big you ended If in $XX and We making continued in billion estate more estate to RG, EOP

the much business very think I same. So, is model staying

think opportunities, get capital period I this point of at the for remember a here long some time. we

to move time. could China re-acceleration see down, is U.S. economy lot sort that trade can create there’s result bat we but new with if a to back hold universe us. could our on tend a trade fed investable change Things bit, over stocks not do, rates on could potentially So for would happens potentially what shoulder, a the leave to then here with the we U.S., of

opportunistic addition and Asia of along beyond world of there’s estate our with where the course, environment. investing U.S. participates In Europe a a the funds real fund around bit global better our actually

have and a all I the the team of real and So flexibility we class asset a out estate lot lot of our time, patients to what give there. confidence ability of the what to and in the universe see us look we do, our scale different across

for to but investors XX years. for job to a environment it’s good, overall I invest, done will that tougher So, continue fee certainly we’ve very a do as great

Chris Kotowski

you. Okay. Thank

Operator

next question line is of of Bank. the Deutsche The from Brian Bedell

Your ahead. line Please is go open.

Brian Bedell

maybe and C-Corp, morning Great. couple questions of also that folks congrats Thanks. along line. on Good

as well Just if that to down slowed where tax the elevate rate that a an XX% as teams? [ph] above would level, rate on of any FRE change environment, did closing the Blackstone there so in closer the and the second corporate conversion is then just XXs. C-Corp realization And the difficult employees across plans in compensation something into market board environment for the tax in we the both result of for the also investment also a prolonged then employees significantly such separately,

Stephen Schwarzman

first of biggest rate on the which more the performance on terms from the because and be fees, the the level on margin less inverted lower will I would standpoint it question is your performance be. in will be the obviously fees. Brian, And the think dilution, C-Corp. tax from change conversion more from the a there Sure, the one, dilution might there performance dilution are, fees --

Michael Chae

the side, no non-investment side policy. competition side, And then investment any employee in change on

Chris Kotowski

Thank Okay. you.

Operator

next is of line from the O’Hara question Jefferies. of Gerry The

is Your Please line go ahead. open.

Gerry O’Hara

Great. Thanks.

sizing to XX the I for equity how current the real get picking of some perhaps is But on Just vehicle? environment, distress you here. or will could same guess Thanks on up commentary comfortable multiples the you the for that in Jon’s fund? from number why the private with billion speak comments I the state of side the latest lack suspect vintage more apply right you. higher and And and

Jonathan Gray

ago funds and or interesting What’s buyout say XX to large the and XXXX, now you you is, years billion the more. at went look call of equity data it in if back $XX number private

than is time more I think that number yet is cap during global unchanged. And doubled. that market the

equity of the is to these a capital lots into moving transactions. less move So and capital seen market what middle we've private lot area larger

that's Asia we’re And where a and capital U.S. but corporate a and done number and the we’ve not transactions we having Refinitiv to world. in big like both invest carve-outs the have we Europe it's larger again think large quite billion deals. things competitive ability And only think soft do so, having scale a looking pretty We continue the at, been think large and big companies ability advantage. mean ScoutXX pipeline and we that makes the a we've we to checks, I with places both transactions really the in dollar and with good $X large ultimate quarter of are plus write a checks see terrific to active billion first difference.

the of we large funds. too have Steve we So, on market commented our earlier, end on as publicly but and some of like the certainly cap capital, we feel we this don't much like appearances TV

having too not of mindful very much capital. We’re

And five but previous so from comment years earlier in that's XX%, if XX%, go estate have or you growing or of been to look back our six funds, equity, the funds fund. the at real here course private our

we've delivering compelling actually which opportunity. you almost everything spot long-term don't geographically. of the they growth we that's And firm basis the returns. look capital. we our delivering an we’re in really one by investors. the we we returns it focus do we capabilities really has expansion of annual the type to much go a on committee excess capital we’ll damage a grow. And sits governors that allowed funds really move pretty the we our The if take is us process on modest our we and investors much great how today, money, in we've to been market at on way capital good of wrong strategy if So give our a will take been we franchise, the for firm have in if job, do the there's a focus If team this how product focus, see into. and If investment We unique deploy everything at number how

Operator

Okay.

from is the Autonomous Research. Davitt of of So Patrick the got next question line we’ve

line go is ahead. open. Your Please

Patrick Davitt

the retirement SEC Where it happen? like are was to question, actually the it that retirement. what it putting about that taking of go around he to Tony a question. a thinking want put I'm for said work? And that happens? to – Thanks that of the was actually Commissioner part you wrappers Hey. the the into How back is make that I -- the it does probability that. sure alternatives had the you

Stephen Schwarzman

are is how is too their achieve to what the been there’ll decide. say. process back it's a have regulators Tony's pension think I to big to to to in process to going XXX(k)s through. Obviously between just will see been individuals to to here think have long-term quickly happen. a hard what able that. comment will regulators I’m this able What go achieve there funds and I be sure early differential It's have be. and earlier say

to there’ll The lot way want I if and know you predict. I I a that. you focus. put don't on think discussion think of hard So know some… that's to be forward

Michael Chae

Patrick, I million won't real estate. little Blackstone be investors might say that picking probably X Blackstone or equity it private

You'll come probably target be this in see the in our date funds. alternative form to that products included

So orient. near products of will gets in gets or an stage capital gain target retirement investor pick towards she more more he fund the income near will become early which date relatively the be as and a allocated fund

in So start. as embedded probably it'll a products other be

Patrick Davitt

happen? So, it is think will up probability do you going that the

Stephen Schwarzman

Yes.

Patrick Davitt

you. Thank

Stephen Schwarzman

touched opportunity. retail think, on business, would look positives I when say the long-term do I our generally Steve And the just you at in China

a of are the of markets retirement large we talked number in see lot where about white to talked insurance. just savings. about Here We’ve we There past space go.

Operator

Katz of your ahead. line is question Citi. of is And from line the The next Please go open. Bill

Bill Katz

the Okay. taking much Thank very you follow-up question. for

sizes? look your number seems Thank fund life market bit of to closure appreciate next of of mentioned next for equity. of the And see one. may are you a AUM schedule science you. you fee-paying coming the fee provide initial the over moment; it capital the FRE. just feeding two, guess little Number AUM sort outlook for XX how around at of you I to and growth Could that I more of couple the months? now ultimately like, six pathway sort recent terms paying Is expectation frame maybe raising to broadly the back the for then for in how in of Just anticipations way sort years you and

Michael Chae

Bill, Hey, welcome back.

On AUM is be lit the part up. first are AUM, raised are we’ve today obviously between to the see these yet you fee-paying growth that large funds gap that

BCP light year, in things fund, year up course Global There’ll going that see the see other I into fund, you'll BREP as lead cetera you really the the half conversions, early those second BREP as be may big of So Europe, the drivers. but aligned. mentioned on diversions obviously the et to that's next of or

You to things wait those need to for happen.

Bill Katz

equity. Growth

Jonathan Gray

Yes.

growth equity on was earlier it billion, think that and early I really pretty access scale will they've of the little constrained the $X of opportunity that is vintage be that say Clarus’ the What had a I it's we’re in fund can of by by there and Blackstone. to multiples team capital marketplace and given been becoming but part not we they got opportunities and confident sciences. think I life see

much bit. write has a be to will larger we’ll I them picked because capital checks, help and some deal up flow think able of raise the

So to over a these opportunity of certain I is even both think larger there’s early much funds an time. in areas size, but Certainly, grow.

Bill Katz

Thank you.

Operator

Bank. the line question Next Brian Vidal is of of Deutsche from

open. is ahead. line Your Please go

Brian Vidal

include have but what Great. you is have that? does raised fee-paying maybe get Michael to that my be the equity? what in growth now Thanks get that’s very $XX. the know Does for that $XX right you your raising for to much. and That was you a include pipeline and you not actually the that you follow-up assessment the will sciences And expectation the question, of think yet that to that just that XXXX, on life

Michael Chae

Hey Brian.

I is, message with Investor reaffirmation progress, on I or of is fundraising and target mentioned even last – articulated than September six that our visibility Day that our better we said the months is higher. So, and $XX higher passage same and seven confidence the really was a as our of the

we placed occurred. views way we But visibility of even business the So like fundraising, are more rest that that’s in can the fundraising greater see the obviously on on the our that takes or including things bag life and where into -- going. less already just sciences account

Brian Vidal

Right. That’s clear.

you. Thank Okay.

Operator

fro question last comes of JMP. of line the And Devin Ryan the

Your ahead. line is open. Please go

Devin Ryan

the that grandfather and higher move decision? at you and under to Or different hopefully considerations to right good there a I'm decision. happen, bit And just thinking if but some Great. think go follow-up sense gave right of Good some little corporate of to thinking been extent in of about was rates decision? were benefits one future one in the the conversion; you just people know a morning. will there. played backdrop at scenario this All are if the the were on just statutory right. the kind and what at political it’s a doesn’t I Meaning, but less to kind late dilution point little ever here, But would the make if what with have of And Getting how rate. administration back. in point happen I the to see up would lot that tax to curious all? the of What was

of So other kind I since just don’t the of there, curious a go side it's want to questioning? lot but

Michael Chae

shareholders have scenario still and pretty right right obviously in up in a contemplated and that particular decision. are or it’s at definitely simple long Even We political scenarios for its the I higher our otherwise. view and term decision corporate for not talked long-term the that stands for think in manage happen to political the our been rates So, happen, that us. one requires Devin, different about this and is or

ourselves, the corporate too dilutive impact a so of which X% the to dilution way or let’s in higher only of corporate say over to get of shareholders. accompany and we on scenario are X% versus at say, certainly individual basis cuts could people for lot would year its ahead per additional say, level taxable after-tax far medium term to XX% said. rates in taxes opposite offset range the not the about versus fact XX% And shareholder the rates And an XX, what the higher U.S. that at current likely

and is we So decision. we’re -- committed this to feel this line but great the bottom about

Devin Ryan

and congratulations. Thank Great. you

Michael Chae

Thank you.

Stephen Schwarzman

you. Thank

Operator

now Tucker hand Weston remarks. over it I’ll closing for to

Weston Tucker

joining call Great. with us up Thanks morning the everyone this please and for questions. after any follow

Operator

conference your call for concludes you. Thank today. That

You disconnect. you may for Thank joining. now

Blackstone (BX) 18 Apr 192019 Q1 Earnings call transcript