BX - Earnings call transcript Q2 2019

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Operator

A very good day, and welcome to the Blackstone Second Quarter 2019 Investor Call. [Operator Instructions]. I would also like to advise all parties this conference is being recorded. And now I would like to hand over to your host for today, Weston Tucker. Please go ahead, sir.

Weston Tucker

Great. Mark. Thanks, and Second morning, Conference to welcome good Quarter Blackstone's Call. And

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

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

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

dividend We So $X.XX or per $XXX results. quick $X.XX quarter. a July record XX. recap income be were of we as to holders $XXX million of common a reported of Distributable declared net GAAP of our paid million of and earnings for to the share,

call turn I'll Steve. the that, With to over

Stephen Schwarzman

transformation period months you for our have remarkable a past and thank The momentum. joining few for and morning, continued Good Blackstone, characterized by been call.

a from business perspective. First

to issues, became July areas Limited leading into second new it offer their in a X. and of of array solve a extend investment broader and our Corporation to of company, allowing our continue products of our terms transformation We more Partners platforms us on

a and decisions the and in key most institutionalization evolution history, Blackstone's firm. This of XX year of significant the the milestone marked one in

businesses largest a position across firm, in the leading established global alternative $XXX one industry. in full the with fact which the unique of the As our plus sector, money-management trillion is spectrum, and we've the part best massive only truly

generated high growth Blackstone's the than fees the experience market of is all a principal. to these perfectly capabilities historically net of allocations value to have is segment position traditional investments, than and top better secular combined Alternatives our why of returns trends. rapid from to safety and of of powerful proposition increasing part and with extension our continues along economics benefit us the ongoing with industry. attractive managers other more transformation any the This

spectrum areas. firm early capital and equity the up private opportunities. people, market our XXXX, risk many the new developing broader down investment years, entrepreneurial and we've and and the and distinct we're offered XX constantly opening means a Today, of more. our raising addressable drive in strategies expanded LPs only terms offer In time, into started of over in we we complementary real moving we cases, opportunistic return in Over estate. When the

global Our and of have and been investors franchise retail confidence we the never stronger, the has world. both around institutional

growing. our quarter, months, of an quarter, with firm AUM to XX% in XX the amount up businesses past extraordinary sector, $XXX Every of in inflows Our billion. in the the billion and $XX over billion entrusted that's unprecedented. terms is driving billion of one $XX LPs inflows of $XXX the our unprecedented us for year-over-year an

launch quickly successfully continue ones, scale leaders global also new We become to in right. their and which own

and support This fundraising. the of years one investors, speaks firm. X.X global infrastructure world. X investors remarkable in trust our Thanks the has to billion, fund in $XX infrastructure after the of funds to largest achievement making grown have the to began Our XX a over that only we is it a

as ongoing corporate and conversion our we've to response, Michael the market has our business further. addition been completed know, will quite you discuss In evolution, positive, which

continue our potential grow investment the if we industry our to reference as expand As top conversion, to institution other our should in the meaningfully I valuation stated and base reasonable and quarter, it's close firm GAAP last between we assume through companies.

stages over rerating that appears in term, measured it successfully are While long of the we process. the early

We LPs are the that investors for viewing decades. as enduring that Blackstone our we are, more have are public institution grateful recognized something

coming it be to widely additional the index managers. conversion the is several for that all ownable of of added We we now benefits the for be sense of think by active makes eligible which we're expect One months. over indices, to market Blackstone and

billion, are we companies the largest $XX the United of cap of in the public XXX one With market States.

A market in giant Blackstone categories, growth, of firm ranks truly is quartile becoming in the earnings margins all dividend recognized. yields. is increasingly long-term including high Our in company of and growth and world. and top key a profit the leading companies revenue the this public one

Thank joining today, Jon. the now over things turn to and you for call I'll

Jonathan Gray

ever. everyone. built growth strong Steve, our This more leads $XXX XXXX, to We and drives performance. and just described. in and desire around low decades power is emphasize of ultimately achieve deep for a by XXXX. capital growth extraordinary that billion greater in Steve over in the good And goodwill morning, with reported enough of earnings. XXXX the both the inflows This of of remaining rates We the Thank than in will reservoir can't you, the Blackstone interest products world, investor brand significantly

closed reach Day fund is while revenue ability secondaries, to during years. With $XX its in at and billion are level the estate in these four totaled commitments, $XXX Our we quarter. capital, second fee-related or the million the performance private of completed have payouts and highest through X dividends including estate substantial our share $X.X at balance virtually to close real nearly buybacks, fundraising XX% first earnings expected retain for We've to funds: the remained no PE the need our path outlined of which sheet to firmly Corporate on accrued the quarter. and largely make which shareholders on We've Investor the European our we collectively. billion in billion global equity, European on now real flagship $XX our

well the in our for final had which $XX launched and secondaries close fund, quarters. flagship global periods X We billion, the secondaries for as investment with both reached a to and funds real we've estate the coming follow other

product to continue In how these put transforming we firm customers, with of we to as it addition strategies, the breadth our serve offerings. greater much Steve expand

well capital, our the Perpetual earnings sales. the billion we up the capital significant XX AUM permanent to funds. the on most is in as year-over-year business recurring asset greater across predictability the performance given receive One $XX of that assets of a basis trends drives of XX% in of revenues fact growth perpetual without nature as our

raised products the billion, one core+ billion across exciting perpetual growth year-over-year estate second real include $X $XX BREIT of quality is power four retail in to illustrates is bringing in the billion X which capital These years just quarter up areas Blackstone BREIT, channel. platform our the of the to alone. and and firm's XX% most Our nontraded REIT, over $X grown now vehicles. has

for billion, credit well. fundraising In at liquidity $XX our tremendous Other fact, retail our retail a firm such to hedge come and the we fund will year expect daily of XXXX BREIT, from growth of investors for which XX% BAAM specifically and are over be bespoke as as record seeing BDC. designed products areas

Our secondaries business to is of $XX XX% billion year-over-year up AUM.

it year. the In that And lending last we purchasing business billion of sold rebuilt credit, direct soon power. we've U.S. exceed $XX successfully will

energy fund $X AUM mandates the We strategy. of the also raised largest in distressed of new our in new insurance insurance $X.X added credit, quarter, we our dedicated area, for the bringing And solutions billion total $XX market clients billion. billion in to for from in one this

investment Of ties raise course, ability always firm's to to capital performance. the differentiated back

XX% long-term elements both net performance extraordinary, including our estate private quarter XX of second annually for has in the years. Our discuss will and real key returns equity corporate Michael businesses returns. our been

investing. to Turning

agreed decade. transaction. our extremely global logistics the having nearly acquire Last with scale represents know billion different As portfolio positioned funds the with to sector us X speak for position to real-estate mandates, We largest warehouses the opportunistic which $XX case, single in U.S. well, deploy. GLP's as were feet capital, for multiple to private BREP with bought in of fundraising, portfolio this entire And pools past unique a square and our buyer. month, billion, a in uniquely this ever we of BREIT, we puts cash

in GBP now also our Disney. behind world owned attractions longer-term very to acquiring for fund, second this previously and core funds. business hold. in in Merlin our themed PE company largest privatize a targeting BCP X billion, We agreed the We We're it successfully the

high-quality diversification a time power us having estate, team differentiator, greater real value along a investor strategic to a similar of with invest strategies, our for into with longer-term and up to pools LPs. vehicle core+ with flexibility our Overall, and critical and us As capital, other gives a with long-term create allowing was horizon.

deals. firing we quarter momentum. months, the another The truly investment challenging pending second is on billion the the deployed $X $XX record including forward to firm environment, $XX a Despite cylinders terrific over XX billion with billion all past committed alone in and

outstanding We flat results our we've a make financial shareholders, and remain our to simplifying count metrics, business understand keeping share For for all focused by to of been on stakeholders. own totally to easier Corporation. delivering and striving our our converting

will that, turn I things over Michael. With to

Michael Chae

quarter good with Thanks, review conversion. as second outreach on details, around Steve results I'll my Jon, mentioned, remarks everyone. begin the and outlook. the and investor morning, I'll then our

XXX which April, the with goal firm roadshow announcement or equity extensive we the capacity around previously alternative investment of sector was owning each, The schedule significant world. over were of billion embarked restricted in on These and half are introducing and over $XXX to on investors AUM. high-quality, more an weeks reintroducing included Blackstone over than exceptionally and/or materially our average, new with in Following managing our of several a with institutions, investors were PXPs. to

clearly Total it And while discussed, eligible were indices, namely we growth to couldn't that, X. CRSP. to added we've fall. since and leader the investors directly in our a be feedback very positively July Further Reception become in majority MSCI these of expect until Market, several attractive these for our has to stock and own and Investors S&P as as view the the reacted now Blackstone market distinctive Steve positive. announcement, exceedingly sector,

this together, our of continuation ample is for there recent we momentum. taken support a of All believe

by to return toward Moving which quarter our continued as targets results, capital discussion highlighted and progress our substantial as to second inflows shareholders. well robust of FRE were a our

from $XXX gross $XX despite appreciation inflows sequentially XX% time billion estate AUM Total a of billion XX% of first to the period. grew our billion investment AUM in rose through the of for billion, $XXX and record real $XXX earning and up period to market the the global ninth realizations billion The of year-over-year that XX% quarter year-over-year of with combination $XX was launch fund.

XX% revenue in to also for Fee fee to the the second $XXX quarter million. increased year-over-year a related $XXX record Management earnings XX% rose firm. million,

share, billion up slightly the year-over-year, the For $X.X to XX earnings year-over-year months, is or million FRE. Distributable growth momentum $XXX increased quarter $X.XX or our driven the $X.XX by strong. last strong for forward in FRE per XX% share, and were up per

including the from of Net totaling and second late which declined impacted Realizations a year, prior XXXX. the in mix quarter the billion, the by was from recovery turbulence as last XXXX but sales. healthy on we call, private $XX.X saw the realizations of discussed first public sharply rose in a quarter, moderately market

private the little after more than of a sale capital example, nearly business multiple ownership. the Cloverleaf one For at Cold equity, year Storage invested of completed a we in Xx of

Home remain for X Invitation estate, of we large and and investment the sold largest real highly firm, in shares, still And shareholder. blocks successful another the

factors. strong investment affected is offset partly Turning another opportunistic certain certain positive corporate which BREP private holding. the holdings appreciating driven X.X% in the well although the PE by of steady X strong were appreciated discrete declines underlying In performance private performance real strategies upstream in to quarter fundamentals, with funds estate, had performance, reflective by holdings. the In significant public public X.X% equity, large as gains in by underlying funds and quarter energy positions in overall, as the

noting that in funds that on of worth In investments, underlying secondaries valuations lag. equity are it's area, interest in private timeline the which reporting are a result other the X-quarter our

quarter resumption SP second a in decline the we'd reflective are calendar turbulence of market performance the fourth that in such certain and of declined positive quarter therefore, the X.X%, while occurred third upstream funds As XXXX, returns in the the of quarter. decreases energy credit cluster X.X% In in strong delivered driven credit, gross by performing positions. a in distressed entirely the the return quarter expect

rose only year-to-date gross S&P the and hedge X/X X.X% composite well with strategy. delivering volatility Finally, BAAM's X.X% of of on the BAAM's in fund solutions,

the to of Overall ground X% XX% performance million billion, lifting Fund accrued with the fund quarter, drove billion, sustained over record balance appreciation in $XXX in up pace, $X drove appreciation, the revenue investment revenues net year-over-year. our a performance quarter-over-quarter. $XXX to combined sheet up receivable record AUM

outlook. to Moving FRE the

march in per per than share share our toward of and greater $X.XX We continue the $X outlined previously thereafter. XXXX targets

As time passes, to variables continue confidence of becomes our impacting view and the narrow greater. this degree

I earning including X launched fees the which key in fees be are variables, to European earn real discussed. these estate, coming then timing of fee The two secondaries, month of investment over four lit is the predecessor equity pace and mentioned, essentially full respect real flagship we've up the Jon of subject corporate its now and coming terms full remaining And currently depending the dollars private as our holidays. funds, funds raised which, In on for fee period the global deployment the is respect funds, are to estate, in with and to online, the October. funds, X will PE now and funds holiday and will with as quarters

repurchase our during remarks launching We've shares my the we're robust financial our open strategy. since XX.X an renewing on current share to million billion, bringing target $X market position. considerable of the $XXX and today us program reflective growth Today, repurchased million the expansion. close the to despite firm's X firm's the and I'll quarter, in from continued achieved approximately the update increasing program. with We X and authorization remaining million dilution of the strength

over Alongside of to what through our the of proposition. as XXXX, we've billion policy, think context total half compelling unfolding. dividend years, three returned continuing action repurchases. deliver to catalysts $X the is further our shareholders, into already Indeed, return to past attractive we a the multiple dividends enhances and move over are value attractive In shareholders we back this

the First, greater of coming in a stepup catalyst catalyst the FRE higher conversion; of and XXXX with focus. material ongoing into accelerating second,

is that, momentum call, and The to is significant, With joining outlook it you for questions. firm's thank the the now bright. we would and like for open very up

Operator

Instructions]. [Operator

Blostein, question from line the Goldman comes Alex first Sachs. Your of

Alexander Blostein

takes? on minutes whether of previously kind of some ultimately rate in so outlook, in for dynamics margin the first higher how question FRE quarter fundraising I strong. going looks puts the of are and margin in around just result of around a trajectory the FRE it The in forward on Michael, you margin the are What thinking run you the momentum sort dynamic forward? are And strong FRE the fundraising you and quarter, obviously spend a think, was the the what maybe couple super higher like may that's the XX%, than guys thought? end,

Michael Chae

you. Thank Alex. Sure,

it's periods said First margins a instructed or more we to and is as quarter-to-quarter as it's look from over variability before a annual year-to-date the into we've and think at you year. -- there know,

which at So XX%. half about are on XXX first XXX we're up year which basis basis the that basis, points, points were just versus about XX%, at about look XXXX, full over I'd margins, which

factors and revenue from the was you and a and year half, quarter full the for the I our growth the sort But the third firm. margin a good flow across businesses of to of funds, management lot business, And of and of as a a holiday of we're the the markets seeing BREP the in fee where we margins and of with to for see and and think of sort scaling VIII's by other it's the with So of would we are terms there is point factors through. capital in enjoyed year margin number which is the again, that -- along the the drag margins, that line quarter of management compared that, we're expect resemble growing and on full PE many. can from that's of broadly takes a expansion of of structure segment fee expect But our year, optimizing that second puts talked and And year-to-date a some SP, infrastructure of trajectory you first to sort half on. that implied overall, there sort and that standpoint very of about. the drivers we've drivers last year longer-term kind of year that speaking, in about of cost that focusing a period [indiscernible] number including part comp especially that are the trajectory full sort full in are but micro function

Operator

line Suisse. Next of question comes Craig from Crédit Siegenthaler, the

Craig Siegenthaler

I as wanted a the small the very to has list. amount of large voting rights you qualify Index know which prospect June, for get XXXX on Russell next which the flow, the your pretty will a the updated among into thoughts of following moving

Jonathan Gray

market that's over evaluate have of hopeful if actually of are company in cap one indices. performance to Our indices move if that have some in of for long-term it's indices. there, look and last classes. some and XX-plus us openness including that structure Limited to the largest, shareholders. us plan We will the right both seen that the for that's do for dual they've and and XX for We're companies with Partners the not the you long-term we And value. to others with public worked maximize time, not stick to and our the at these companies for share these We of company for structure governance outperformed, other MSCI the is think years, out years, we these in think our the,

these to with we're So include to and hopefully, sense and going our governance strategy stick to us. indices work, convince make

Operator

from Next the Cyprys, line Morgan Michael of Stanley. question comes

Michael Cyprys

What you're real private that about curious experimenting estate, do to have can what Just ledger use how divide assets. technology widespread particularly any overcome distributed sort thinking potential today? you're on the before assets, this up tokenize and need could of tokenization sort be And you to sort about that of talk with asset for of how you see of If one the adoption? could hurdles impact private class?

Jonathan Gray

you you get need when think and When I look have the see because very more thing the what is, in real We've Yes, assets, and sell things are commoditized. and to you don't -- estate. into similar buy real this have assets those it's particularly you different of of so that estate, difficult tokenization, are very to with the venues scale sort like ledger try some some at that ability in assets turn computer nature. their to what are to larger seen online be

As and scale, harder. you and get gets up it harder

it's housing, industries you to could over I time. it, think in like where do see penetration think some easier real I

real private it in think in think that's if equity. even about more companies assets estate and you bespoke complicated commercial gets more I tough

we don't So really near a the term. see that in as factor

Operator

Glenn Next ISI. question comes of from Evercore the Schorr, line

Glenn Schorr

performance. in there performance. if used One in And quarter? seeing just curious overall on maybe comment and then unique in up market, negative quickies number to Strategic Two a particular anything an on just was there the is, Partners, not

to opportunities but answer money, the to are good the that Your relative ton where expectations might are long-term in of relative obviously Obviously, curious public so you're the market? raising really but... numbers think you be good, indices, LP a really

Jonathan Gray

SP, you're time is what because in getting results. underlying one which the QX managers mentioned results, from I So would is seeing a QX. much QX, it you're on from say, those what will just up reports would you're Michael at The lag expect show looking stronger, be the really would

unique I think So factor. SP is a

in of the the I our say large to we've as terms similar would we seen growth, what companies, and in our performance, was when quarters. in around the couple area factors of of in In saw private did one quarter what the rest revenue the equity portfolio companies of very of public isolated look last have, couple at we EBITDA a well. upstream We terms

over I look And our and within about into a fund that not much too performance to to at our this, so They're wouldn't tend our And decades. want read over quarter. at performance years they LPs, it. looking performance think when over obviously

bit of little I some much these a of I blip read in a areas, wouldn't too into this view and So it. more

Glenn Schorr

days, but you'd If I deploy? your infrastructure. opportunities curious money, one bunch thoughts more I out on find And on have I'm deployment overall to just could early Okay. raised a hard there in on squeeze to know it's of opportunities. then just timing. it's

Jonathan Gray

infrastructure, capital say more in a interest Yes. to so I rates, a on in that's made bit real like the estate U.S., obviously, decline it has fair would question. deploy the challenging

the we're in think is have good large very the and a news I assets. we intervene scale, us at ability operating for to

we've box. And midstream a port the couple out of done so the of really in big space, the deals space in

But We is Merlin competitive examples, just today, business, doing we're and GLP is have looking competitive which space. is our a of everything dynamic. at. the thinner, a infrastructure playing a by where better the we've other are we're strength air couple really got like of opportunities large It

Operator

from Katz, the comes line Citi. Bill question Next of

William Katz

management to to a C it Corp of the your meeting an durable for know wondering and dividend sort that maybe All off the sort just policy FRE refinement policy? of of I'm investors top type make capital dividend a to you're and payout you think shifting just any in coming year-end is I there if was moment. are potentially back about with, a given were with right curious to you more

Michael Chae

Bill, it's Michael.

We made terms had of well. has easier we in simple great we structure us remain it's We to capital making own. a I in think and will our the policy. think have think to that committed change worked benefits

But manage different how one I and as we that. the views would did broad undue overall, I and policy. for focus to to we an talk and our including or our investors, way business roadshow we not were say support there continue think around heard As another we

it. to So committed we're

Operator

question the Next Robert Lee, of from KBW. comes line

Robert Lee

I've the your kind and question intermediate, of got really really a longer term. on realization more outlook kind of

lot of and ultimately a your how performance mean, that on what kind capital realizations Is is you've versus So of number $XX stage the Day, prior capital generate of Investor better put a in it then different work performance running kind fees. or But the with that? funds? give ground I is cap in ground recall funds of I sense kind could the on can I the if this clearly, helpful. you line that billion of of a at cycle? at tracking of ground you thought kind of maybe us mean period than you historically just had out at would this some life be frame point

Jonathan Gray

can feels were to us of on look the with is funds the of in think say, in done -- line returns things if faster. during and possible and that deployment see in our you you the I shows net performance sort you of capital periods generally report what dislocation slowed of funds, each across wise, pace that the look crisis I post the deployment we've levels. pace we're There after line down. It's these can in at with historically. the numbers would historic crisis deploy our we It where during periods

against broader of a classes. So just a touched deployed. array larger Steve volume of asset is And what you're now on seeing capital obviously,

returns in higher in so the with I historic octane seeing traditional lower. areas line -- the where drawdown targeted But you're are pace. would And say where funds,

Operator

from Merrill line Next Michael question Lynch. the Carrier, Bank of America comes of

Michael Carrier

been in industry. fundraising right. growth, more All you The bit for and guys muted that's FRE have the great. a been Realizations

past it exit been activity? market be we've the It the seen accrued, You the quarters? is more of your delaying has just to opportunity has been growing net meaningful the so just wanted channels? changed anything terms the AUM, like the few mentioned may of that Has going incentive on in forward. Or just seems get volatility the some I it the over about view outlook.

Jonathan Gray

waiting market, dislocation this, know, market more asset The little you A of is slowed episodic, QX we had the things you in which particular to or a of obviously company because a lot down. as lumpier it for mature.

so fix-it, something's It's We are market for a sell-it you're to buy-it, And more pinpoint time model it's this in and say is really to hard going I midstream sort companies? the fine. sometimes right would generally that it happen. conditions when have for process. exit about, of our

happen, do these you in a obviously, they when things can So happen, DE see, meaningful result. increases as

accrued indicator. can't think the size net which high best that's X-year very you a accrued happen, sort a level, indicator now the the I that's balance of quarter it happen will and good should is on over sheet, is given a at carry but forward of that We tell in which time storehouse it the value.

Operator

comes Next question JPMorgan. from the line Worthington, of Ken

Kenneth Worthington

for business. outlook insurance growth Really the the thinking about in

months next years but FGL strategy consolidation for acquisition outlook rate frame look and interest as at, insurance impact insurance last so, rates to growth change directly we in ability the the falling interest over or better can the the in via business? less might likely, seem X the year? recent grow or either the help the how having With And in through acquisition risen over if you organic say, your

Hamilton James

looking It's Tony meet to it's I'll sell their the insurance Yes, at James. that challenged. Kenn. they're take in reinvest decline to would because books encoraging ability encouraging and proceeds and I the back say is liabilities rates one. the companies

in us sale. insurance an the for increases assets we considerable think amount that's of for opportunity So will cause that

acquisitions within a pipeline looking away For from now of at F&G us, both we're and robust right F&G.

So I'm quite optimistic that the conditions for are business. our favorable

Kenneth Worthington

organic side? then And Great. the Okay. on

Hamilton James

say also increased. which company, do organic well, and have counterparty Organic you know, going to on pleased still a that's rating to public some has not I'm F&G organics capability talk as they've They the growth what's about here on with appeal fronts. more to -- side. got happening quite but upgrade, we a the Well organic that suffice a acquisitions. And on growth are at both F&G but the to their do increases as

Operator

the line of Patrick from comes The next Autonomous. question Davitt,

Patrick Davitt

fearing how It fee down looks about which volatility us Could weaker you more quite came that update in becoming a of year-over-year. included core+ it to again, line? on think the in you that bit a how performance think about maybe and like that's consistent generator fees to

Michael Chae

Patrick, momentum there's an pacing. great not year really It's really volatility there. and entry

As revenues X-year of period. investment, typically the come generally prior on realized in anniversary performance it's an a know, BPP over you time

which And growth. line $X terrific so Those on fourth year with as have a platform when versus BREIT, crystallize. crystallize incentive fees billion it's is $X or of REIT, a mentioned, a That -- the billion then great those during will we ago. the And quarter. nontraded broadly, more today in real sight year about Jon is

So you fourth quarter crystallization half waiting the that's you'll sort of I and two those the factors the in occurs. within the combine the particular, of when see of the year and year second think

So year-over-year the I in quarter would comparison. not look at any given

Operator

Next question from the Jefferies. Gerald line of comes O'Hara,

Gerald O'Hara

could kind Jon, pacing there billion about of of that perhaps I sizing to little and lending see you the just power, think [indiscernible] bit the more going sort bit or a the timing you a of possible? the of as the give if color growth, $XX little you and platform platform of perhaps that purchasing a talked successful of rebuild direct where

Jonathan Gray

But little made Not over we they in partnership. own space. of and Gerald. our to this AUM voluntarily decision give it. wanted up rebuild to our $XX destiny firms billion confidence ago a big really choose control Thanks, We could year strategic have a to a would exit many

we've a of success out, you lot As raising pointed had money.

large some investors with and BDC. in this First now with SMAs increasingly institutional

that potential and grow like to the now of there have potential raised does couple continually we to of I be very its folks we number money. amount that, And somewhat a for here business. a unique going as But deploy large greater money with take originating BREIT It's a raise years the to do scale think is and we a to scale relationships is money. loans have. this deploy in of We've of capital ability number out to the significant. GSO large will a

we're stage that think I So in of rebuild. early

more see continue should and to fundraising that we be I in big. think you'll to now accelerate this is deployment key as grow area, quite

Operator

comes JMP Next from Securities. Ryan, Devin line of question the

Devin Ryan

great had on retail you've Obviously, Question BREIT. momentum in fundraising.

possible, there And to a then any are what important beyond broadly, constraints in perspective, the growth other size to about just be or the to think $XX so XXXX? billion I going a capacity guess and trying just more products from

Joan Solotar

building very I Well, capacity. focused on lot of importantly we we've a and ended been are that think where structure out have bespoke open

the structures than So capacity. private we even $X was firm retail fund, not a that we of equity in had lot almost quarter, the raised raise billion, XX% we from frankly a although, more bespoke where obviously, that take for did great overall and of

So oh, I of think wouldn't funds, it done. of is raised of flagship lot they kind as, it's a

side portfolios the minimus. importantly, concentration think retail in the on more I is de

qualified You credited in a both to still are and continuing X% are across purchasers well below who globally. grow

be somewhere billion, So year this $XX raised innings you this last still feels it where the versus very even $XX we early just us. of think we'll last billion. in around like to year if neighborhood And year, year

it's innings. they're very think I -- early

Jonathan Gray

would an and I the advisors among around power capital, matters. edge this here really recognition both world, customers that's hard us where that Raising the gives their the add match. financial of the brand retail in and to of the is U.S. just Blackstone,

create so pointed percentage Joan's alternatives. which has charge. on what you we exposure the team individual they some can doing for similar working momentum by early success. more BREIT's is leading of days, as investors, even products single-digit and have obviously companies that the low hopefully, and challenges to tremendous ideas They're have other if customers, look retail and out wealthy think, specifically We're individual over offer facing time, and investors, insurance done Joan you work same build want institutions what they we at And as that very

Joan Solotar

just quarters. We're really I add organization. thing rather than like to a prior which want I running this sales a emphasized business one in

a also fields, in that emphasizing lot the education technology lots and we've and data analytics. invested So quite investor of in services, folks

of lot us products a a makes and really moat. across leverage that wide unique created has can we that Something

Operator

question Deutsche from Next line Brian comes Bedell, the Bank. of

Brian Bedell

question. two-part a Just

you to $X to income half then treasury future VIII rate on looks it during what the balance sense. principal just could that it's over for are that XQ. go like time Obviously, in specific in there if predict strategy run FRE get you BREP of second for just obviously potential funds to your in the amount quarter a back of some plan could imagine to build, fundraisers in treasuries investment a for fundraising just you secondly the the filling about if XXXX, talk and one, sales sheet. hit yet trying of that might the terms sort Just you not a detail at getting holiday in your And hard and fee are to attributed just Michael that plan. have maybe, in But have

come of a run So point starting to in get of XQ the XXXX? in FRE just sort that could I'm sense rate better what as into trying

Michael Chae

of lot A content Brian. question. Sure, in that

my with reflected on treasury portfolio. it good So investment and allow the PXP. some said of positions there. it to -- principally efficiencies principal in a the realization We as I the timing did backdrop, to of gains did head remarks, from our I think also us the standpoint the in view conversion, first a in is quarter tax of maximize that's activity realize those income, as the we which And

was that about do. us sensible So comprised, for investment income of principal if quarter. the half to in And the

piece, was XX%. income quarters, you line of If with revenues that to around in exclude I'd prior performance the say investment basically ratio

delighted raised, lending significant as raise, Investor than we've the on the $X.XX since the about on confidence events still in more couple areas the And the X are life are what fund year, half the about refer super-cycle run there area, in those we direct even second really of whether but continuing sciences that I question. the thereafter. slightly so-called half. the think lot and Day for closes think BREDS of action but XXXX of second about European pretty half it's been we we'll and all just really expect I'll around talked year which simply in of I the say, fund Obviously, raise, the our question, saying quarters funds rating $X in fundraising second beginning closes to other we've to have constantly our we we better is XX% a some different last the had have next

on are strategy raise underway BAAM. We fund our capital within

things board continuous of a across are number capital a fundraisers including, the that process. So as always, our perpetual

Brian Bedell

VIII the AUM And then [indiscernible] in BREP is that XQ, coming into correct?

Michael Chae

on it holiday is in, but in... already and went is second It's quarter the in fee

Jonathan Gray

it Yes, starts. October, I think

Brian Bedell

generate? fee For

Michael Chae

Yes.

Operator

Kotowski, line question from Chris Oppenheimer. Your comes the next of

Christoph Kotowski

my Actually, question. addressed just he

Operator

question of the from Patrick Next Autonomous. come Davitt, line

Patrick Davitt

like I any impact have China, on this views a to and/or portfolio of on it feels the to point? because broader question, your expanded kind at I that beyond guess, it's war Not update trade just trajectory? investment

Jonathan Gray

seeing slowdown and say have And commodities in in that's the energy slowdown globally So economy hit Europe as been of trade. been China. U.S, well we and in industrial true would a have a and and the I the some

I think and by responding central banks rates. lowering their So rates a obviously that's or been factor signaling have lowering

either in global chain retailers that many I exporters. for news or us supply good think businesses the we have don't big the is

So broadly the outweighed directly down the question more to or is, into The more tone slow has our portfolio trade. from far, will it central So into quite the significant. economy the impact dovish as is not banks markets? there real from leak

big it. far, us, so So seeing But we are a impact. not to really

Operator

Bill question from Bill question comes line Next from the Citi. from of Katz. final is The

William Katz

deployment? little And where firm you accelerating think positioned of both potentially a or through last be and some wondering in are may of any is the could back bit revenue you portfolio if to So talk you I have was we weather even commentary I the indirectly that concern of as think may cycle? how was sort of step the comment. EBITDA kind some credit this and about answered about and kind of your

Jonathan Gray

the know deals Bill, would I There's increase of -- capital when in has the been leverage you conditions crisis. is default of look it's new in at financial market. there's the up. concern in a amount percent and leverage see look a been of we to loans. loan But We lows, about of are you credit a accesses the balanced. say think aggregately, credit markets market, strong there When done, Well continued I have But out as about go there. since structure been the generally when modest a debt-to-EBITDA look near equity we as lot coverage rates getting as lot record don't

happened and market memory in the and of has think what 'XX XXXX I impacted So participants regulators.

close amount of out there fair the And we anything not seeing era. to we are and so precrisis -- saw discipline what in we a see things

about risk in we spread space. sharply, there senior And be down think a we outlook feeling markets paid the and that so to impact obviously, be you is good loans credit in But credit. leverage the to get economy and an very if the portfolio slows the pretty we're healthy lender overall, think good would CLO our return, are in

maybe leverage on the market So I'd a generally. than view generally say more positive we loan the have market

Operator

you. Thank

remarks. will further We no to back the now have for I turn call closing Tucker Weston over questions.

Weston Tucker

joining us with questions. up for everyone Thanks, me morning, Great. this and any please follow with

Operator

the concludes for conference call today. That you. Thank

enjoy of disconnect. joining rest day. and the for now the may You Thank you

Blackstone (BX) 18 Jul 192019 Q2 Earnings call transcript