BX - Earnings call transcript Q2 2021

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Operator

Good day and welcome to the Blackstone Second Quarter 2021 Investor Call.

During this presentation, your lines will remain on listen-only. I'd like to advise all parties this conference is being recorded. And now I'd like to hand over to Weston Tucker, Head of Shareholder Relations. Please proceed.

Weston Tucker

Great. morning to good conference second and call. Joanna, and Blackstone's welcome quarter Thanks,

Steve CEO; website. Financial Chairman and today are press Schwarzman, Joining are presentation, slide and morning, issued Officer; which Michael release and this on Chief and Jon Chae, Earlier Chief our Officer. available we a Operating President Gray,

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

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

to that, the on York on anticipate shares the Exchange a as GAAP Steve. recap $X.XX to New August Group already think the $X.X over billion. be to paid how to turn So We results. a August declared we Blackstone in holders of of One dividend Stock of X. Blackstone, per record we BX name refer X. of I a legal or under is note: net the new of income call common With from quarter trade We announced $X.XX Distributable which I'll quick the reported most billion additional will name for were our $X.X earnings share, item change of and Blackstone's to us.

Steve Schwarzman

were joining firm's and fee-related increased The truly record quarter. second levels. earnings reached you year-over-year call. Distributable good XX% outstanding Weston, doubled $XXX our DE earnings while thank results the over and morning billion, and both nearly FRE million. The months, to for Thanks, in $X.X XX last to

Our investment in fund performance of XX.X XX-month appreciation our and best period year history. the represented quarter

AUM billion. In grew year-over-year record, to another addition, XX% $XXX

partnership least retail The We're was second my expansion growth setting in most importantly, in channels, for history, results, firm's view, the more fast firm. terms in just our $XX seeing into comprising quarter, AIG, of with a consequential and announcement over momentum These in the the time. at our week, insurance for billion the at and significant of our new the growth foundation but paradigm trajectory. of long-term terms last with AUM new represent for including landmark not financial Blackstone markets channels

acceleration growth Looking earnings forward, in I our earnings. for positioned believe an particular, almost on we and power, every meaningful of dimension, including are of fee-related expansion

are of to Blackstone retail Taken globally. their early us We've cost our without dramatically have where historically. together, channels these And is assets insurance the and institutional nearly approximately of channel, focused $XXX size double the exclusively trillion X channels alternatives. the XX last in capabilities revenue. underpenetrated on distribution significantly allocations commensurate these material to resulting years build to the in over channels, invested in out This

for highest-quality not support and to organization market, in one-off retail to in-depth our private largest Private sell is which areas our estate world. distribution is but long-term develop strategy lineup, and product Credit. Now expand retail, In systems was an like the the $XX addressable to trillion the apparent we real approach moving wisdom of service Core+ just customers wealth products that as lower-risk-return the including becoming into

The response BREIT; been We menu powerful. with of real our REIT; BDC, investors products, Blackstone-managed has bespoke individual nontraded and a industry our from including BCRED. in for credit the are establishing estate our leading private platform and new

We raising distribution stage. for per and U.S. September, largest years BCRED grow, will and in as currently we're and third for That's I meaningfully a Blackstone Retirement believe managers our in to Blackstone of the partnership month. that alternative external is and the ideal vehicle new to launching demand come additional developing become that channel $X to will the continue this together. the AIG's BREIT continue for largest per We products which X start becoming in month that X sales billion $X In in for insurance, BREIT, this have announced development with market, in accelerates powerful planning Life portfolio, nearly we to This trillion are as manager billion significant We of we products will other these global rank and Europe exclusive of public insurance similar life growth space. insurer. would is a $XX are the X well. products with now believe that portion

We large our who insurance we individual in deep fruition. to been leads Blackstone, congratulate culmination between a clients. and our X Jon this over work will with of than the better including Across receive a year, billion who prospects are around of established to And with position never enduring reflects number today. nearly the has insurance and excited the companies We've remarkable the every across to Gray as mentioned. relationships competitive Chae institutional, at of tirelessly partners about solutions $XX of world, least limited of $XX are I'd Dellaert, and later effort a a Blackstone. growing the we're and very the was long-term partnership area, firm, relationship. like at along area this billion people bring I Gilles announcement AUM virtually time, firm This Michael team year's to and

benchmarks inventing today, we over equity basis XXX decades, year. in Our clients annually estate principally private opportunistic approximately public because including time, corporate over comparable indices flagship our per by We've strategies points new beating relevant real net continued we rapidly, And to for XX% grow XX different have outperformed points both materially basis things. to and offer investment strategies. XXX returns keep X the organically,

talented people at powerful We and standard most than gold level the today of at operating ever before, in is business, the highest alternative the commitment. with have firm the Blackstone excellence brand. more management the

capitalization of States. equates billion market forward stronger. Our company United been momentum never the to public our $XXX And the XXth largest has in

things integrity for of on couldn't we've significant we long-term As to be grow, sustainability a the become. of all more focus people turn unchanged: to what Jon. that, With of and outstanding ESG. core our our investors proud generate mission remains and our highest with performance over I I'll

Jon Gray

Steve. everyone. Thank morning to Good you,

us outlined firm: attract broaden and we strong powers simple more the for a machine consistently and investment have vision innovation This serve We can performance, the customers and we allows capital. deliver Blackstone the can investments we to the make. will

of Our investment model example Starting performance. second quarter picture-perfect work. a at this were with results

pandemic. were again strategies a benefit outstanding have This to flagship the businesses. the the accelerated described. that sustainability the inflows to brand, nearly year-over-year the billion our the leisure such Steve firm's the over investor and sectors best hospitality, further will appreciation of and Total of in that our way as economy, fund reflective growth impacted All of we extraordinary the Steve still it past over posted AUM early. in quarter recovery tech-enabled performance leading These positioned areas pandemic, expansion although The to fast-growing starting logistics, and portfolio of more life reinforces billion of see strong by $XX Perpetual mentioned. more discuss We're of our quarter leading from fundamentals, platform the to increased is for to the areas by Blackstone performance onset XX $XXX is capital second returns, returns detail. past including billion. months. continued as years sciences, in the and now also $XXX several towards the some history, in Michael XX% the strength were over decades

As business. the July perpetual $X these, raised The X and fee-related billion total firm's quarter capital accelerates the we've Core+ contribution an estate size. perennials, planting our $X.X capital and after at additional $XX is to to BREIT, earnings. and in compounding in like financials earnings vehicles. growth fee-related have The the billion largest discussed, single it to has recurring in subscriptions X, and growth nearly perpetual meaningfully real across engine of a which firm bringing on end quarter AUM billion monthly grown billion in second of largest of $XX is

behalf We which Core+ estate. time are vehicle, income-producing target European retail BREIT a on of assets this investors, focused will real launching [BPIF], on high-quality like sixth

and affordable proven to our Moving in. our will the our for the U.S. of capital. speaks as to acquire in the of of the partnerships. with total we've also third to least talked illustration and and a platforms and compelling one the portfolio of our clients. advantages AIG's billion. will major scale billion housing deliver AUM BREIT insurance $X.X separately a ability and This year, in AIG bring capabilities business a to insurance BREIT partnership This for insurance mandate leading with capital-light X.X% our $XXX large-scale a to our and the testament is partnership. origination disciplined is continued previously direct insurance as fully client credit AIG acquire this when marks Retirement, long-duration other stake model Blackstone billion expansion will well consistent the the $XXX which about advantages is our It of our approach of strength Life franchise peers later phased and amongst at of largest the

a will company new also taking not sheet. minority are balance in Board. value. which investment join in We meaningful are on see an we we Rather, this I making company's insurance a company

incredibly in long-term are excited other and are Around the AIG tremendous relationship, to for are momentum seeing well. strategic this as Peter Board of their the the areas Zaffino grateful firm, confidence We and prospects about us. we

strategies inflows our segment, Our direct reported across LP with segment quarter, in credit demand firm, the mezzanine billion vintage. lending, the liquid of fastest-growing the fourth and $XX robust at

perpetual Our committed. and strategy, $XX capital infrastructure another over vehicle, has over now the activity seen accelerate XX% several quarters billion is past investment

fundraising we SP's to fundraise the prior new months. to and for far expect close the billion next than We vehicle, launched activation expect in predecessor, flagship year-end. to targeted we few the September area, larger $XX In first be its which reopen equity with the private secondaries for

nearly go assets beyond billion of private strategy, where our a deals, GPs and approach hit that expansion for we high-quality Asia, In minority Overall, the most had alongside to million companies the of billion previous fifth total third platform we that outlook far began term. ever. positive we firm. approximately investments we've SP's $X our $XX this we exceeding We billion were BAAM, billion solution for year they billion quarter inflows partnerships. raising $X prior fundraising of focuses for is widened real this of and public. can Asia, pending fund as aperture committed we nearly in in the a they close active on estate our to second Blackstone's also $X Crossover platform to Horizon our $XX insurance raised than new prepare cap, again end. over expect And our larger commitment fund. quarter billion capital. now for approaching deploy or also in $XXX $XXX the quarter pending want to begun confident row vintage is in We equity an On which vintage post fast-growing This We've hold the the to very in $X.X be invests We has in $XXX would invested expect additional so Xx fund. including last initial expect significantly which call, year, XXXX, quarter's to the the fully GP highly initial billion fundraising which with said billion first an close in exceed the level. inflows innovative

over we've remain and deployed well $XXX our billion. such We the Over the focused post-COVID on logistics, infrastructure, recovery. areas, XX months, digital high-conviction past committed thematic as housing sustainability, travel or

European U.S.; center ASPI, $XX scale in largest platforms included same closing, data business, care Medline, company. management as past rental buyout the of road Our in quarter bringing is we're which single-family decade; trusted largest supply the to Post a we commitments enormous sustainability quarter and advantages The partner announced mission to reputation the enterprise In platform Europe a the are over value health it in broadening investment a billion acquisition comes new buyout largest our investing. our of solutions larger when a end, globally toll homes period. software one audience. largest operator, represents our and and distribution the industry-leading the of the Sphera, of in the and our company,

are will to of I still days over in early Michael. turn And things We journey. that, the this with

Michael Chae

firm's and AUM by strong performance John, momentum results, additional with metrics. and Total by the of Starting of AIG. inflows rose last quarter. earnings recent results. of firm's million gross robust our the AUM realizations second XX% to financial described. fees Steve key per strength driving across everyone. X/X on any despite perpetual billion over first to or billion. the growth of billion without now I'll capital share rose in in record year-over-year largest $XXX of which the by product $XXX review $XXX highlights to our investment XX% growth billion, a that the $XX to share. XX partnership year-over-year then months inflows and $X.X the good expansion with XX% record quarter offerings year-over-year highlighted funds and raising Thanks, the XX% discuss morning, sustained or $X.XX increased and I'll $XXX continued Fee flagship in details management driven levels, Jon in record The billion is significant nearly Fee-related perpetual, of earning

this in from the or million in with Overall, market Fund highly an quarter, realizations by approximately margin or increased which FRE robust we've trailing Key of continued $X.X for the months, remarkable just X year to power to to FRE record from about, capital of existing to our quarter be stream. the net billion end. quarter levels. double annual share, as in billion more are XX XX under the $X.X nearly pandemic $X.X FRE on we at strong $XXX environment transformational ago. increase than FRE years XX% per year-over-year trough underpinned and full strategies; the a time XX.X% and for doubled in billion increasingly earnings Day this the share, talked $X.XX $XX last to the of the For Investor include expansion or high-quality confident area. strategies; drivers, firm's after effect in activity nearly remain second the to $X.XX our reached months, six-fold more than continue expanded new margin position. supported the Distributable we as perpetual scaling additional the XXXX and growth per contributing contract earnings margin the realizations expect currently to earnings billion businesses, profitability; closed outlook in a a

Truck number During Sona end, the private and logistics listed of public year, and start now our equity America the of and quarter, the XX% Australian post portfolio executed the of we holdings Alight. Source, XX sales public. brought positions, publicly and a sold public One Finance including we Since corporate is quarter Comstar, TaskUs, companies of Custom of portfolio Apria,

Turning to across investment the which performance, firm. remains outstanding

opportunistic the in real appreciated the funds quarter, trends the are reporting backdrop X.X%. Our of markets we've while BREP credit portfolio recovery the companies and the appreciated funds seen in the best underway. and continued of of strength some against In is Core+ estate, broad-based equity global that economic X.X%

XX and XX.X% Core+ BREP BREIT the in continues particular For XX%. appreciated and highlighted, the delivered X.X% net with the inflows driving annually. months, Jon depreciation Since that inception returns years strength, quarter. the funds show second X XX% appreciated has BREIT to ago, Steve of last

of in private led months. office global appreciation pre-crisis quarter levels, have public our led from by over now XX.X% gains equity, suburban estate Strength corporate which private holdings. period. of driven the X in of quarter, be indices Notable IPOs U.S. overall and energy equity our portfolio, same and XX quarter appreciated thematically team. and market life the In India portfolios, across comprises fifth XX% the approximately corporate public appreciated from the The quarter, consecutive driven PE XX% the broad-based remains multifamily, ahead and the over second the continue returns both those real Our gains included by funds well the investments U.S. double-digit with of hospitality. last technology-related in in by funds logistics, to XX% the along private sciences

TaskUs, online a nearly for upon of further at highly largest cost track successful company quarter the Sona Asia. for at Comstar end in a Xx, original Comstar, valued leading multiple XXx and of services the technology vehicles; electric component and at building TaskUs of India's was record platforms. nearly supplier firm's the

private business strong months. credit across improving results delivered the credit quarter for reported in X.X% and the tightening driven private spread of in Our for XX% with last second a gross reported by liquid the and of quarter along return X.X% in XX return public strategies strength XX The the last energy. quarter, fundamentals and XX% in both the holdings gross months. and a The credit strategies

very ever; At highest highlighting future increased BPS a year-over-year XX.X% sheet across the of Finally, invested quarter the over composite AUM revenues firm to quarter important the return months. firm's for investment over revenue-eligible strong $X fundamental was XX% These in up net balance both the performance exceptional and portfolio. indicators powered leading BAAM's the up performance receivable value. billion pre-COVID and X.Xx the the $X.X are time, last sequentially the XX% X.X% gross of billion, the Overall, $XXX positioning record the level performance our lifted of balance, billion. and XX accrued in same

year, per time. primarily In to X committed reinvested over billion X structured new billion compelling of partnership, Blackstone, $XX.X Life to their which, additional billion private matures, assets assets Moving the which transfer as portfolio our has partner is financially to firm. in through each of strategically our bringing time, relationship, be the year-end, for an years over total AIG both Retirement the will of committed $XX the initial and expect to and we By Blackstone-originated and investments credit. portfolio in in $X.X AIG

renews million We revenues to relative X-year partnership X. given attractive subject revenues in These million extensive carry to Blackstone year to capabilities. increasing Following period, our will the performance long-term anticipate the $XXX existing initial XXXX, approximately fee of by measures. approximately margins incremental $XXX

upon low-cost over billion in We company net to us and and the minimal and access afford debt also to sheet the our $X X.X% balance investments treasury stake execute full of transaction. the With flexibility a of invest new will $X.X for investment. closing cash strategic billion capital corporate

will publicly in moves IPO, conversion, the Following of be public largest L&R's In anniversary half phased lockup closing, positioned as third Blackstone subject insurer. traded to better will as we hold and what been our the never into the second common AIG XXXX certain stock U.S. life of second restrictions we firm. have a passed

One conversion has has stock, is broader investors a to market into the we of With indices, The exceptional of dual managers. catalyst of for coupled most of there key in last can indices, our the several and index for added to universe the questions. our much active including joining and being continue benchmark month proposition powerful that been U.S. it financial support significant a for open with a now for money of call benefits inclusion Russell's performance, translated would shareholders. you that, own to up believe We momentum. like value thank this both

Operator

[Operator Instructions].

Glenn question Evercore from line the first comes ISI. Schorr Our at of

Weston Tucker

should to with Glenn the his an might next Joanna, be seems it issue like move Maybe question. line. having we

Operator

And question from line Goldman from our comes Alexander the Sachs. next Blostein of

Alexander Blostein

BCRED, BREIT and platform and with starting and continues to both the retail footprint success retail the given of maybe grow. the channel in obviously, So

new several into products. expansion about talked You

to and little a BREIT broadly, you launch. think I expect a there feels then retail in of first. to Jon, know September do your in guys heard ramp? of I there's runway I EU lot distribution brand dig And sort that leverage like How mentioned broadly. more quickly it we'll bit you product. maybe still So

the product other type work might be retail over channel time. on for curious that So could what suitable you guys of

Jon Gray

than Steve assets. is today, I trillion Thanks, touched their $XX the who and And but million Alex. to of I'd single-digits. alternatives in allocation this, the size have retail is $X back of market for globally, up, more on folks low the think,

come great so to just is globally. can there But success products yes, that they're BREIT, that seeing. domestically starting first to BCRED. think And with think frankly, And it the big, as you're are with we're -- deliver. more first having we we we market now And very do and

You European-focused noted the product.

a be. early tend around we think we have performance options, What world I we getting big attractive investment yield, how particularly people can do where if say too limited it's to to deliver attract is know it assets. strong in

deliver happened thing. it for what we expect, we product investors executing. important the early. what's would we the BCRED find attractive. that find And And and over more don't size I too the keep then hopefully, more we and to do can exactly So it's customers. just That's want distribute create I a [BPIF] with is it we We BREIT. most with although that's we time, what's It's happened because with and think dimensionalize think

I this we're go is In specifics into sort each of terms of do where bar advantage are that our in can our But I if competitive to future deliver areas of for a products, we that great of don't can we want set know the But verticals. of customer. is these given number the there around the yet. the by world. We're platform, everywhere and scale

we but would in roll grow we will if I we sequentially. have yet the as over we talk can these quite about, So And we to out time, think don't deliver expect anything I be to they past, think of substantial. have more

Operator

Citi. from line our at of And question comes next Bill Katz the

Bill Katz

so of all here, lot detail A appreciate that. I

tap leveraging sort the Just assets? sort you state just it a opportunity. the point. in What's forward Congratulations deals see and of of the in terms Just into gathering here. more to from trying it other and your on capability market AIG? as working of investments sort here capital oil AIG incremental at such about parties? path now as you third big think raising with Is insurance origination Or is how of both this

Jon Gray

we in times of and the said our we number that a which brand We've Thanks, this Bill. our strength wanted strategic is of relationships start we insurance. track I where I strength of done And X the company grow built, and with ability could last the that we'll we call credit think transactions, what platform that investments, to we've we the not kind could the minority we've an thought on I investments. proven make the would think brand of become to create these to we record. long-term of because And in insurance our with say marketplace. originate that would given

of are is how businesses, from our these we -- In I think, success. because them, here I go and here, and where X the grow continue to other management, terms each think can from are FG we can they get with of the portfolio, has we our clients relationships, potential in have grow, to avenues Allstate, they expertise more we'll asset assets. have we think multiple exception grow benefiting grow. AIG, they as which a and And with runoff of These growing

clients time. our then think existing scale business, So a what we is competitive is we over clients. like that more advantage. can that's And And traditional we serve real found

competitive, million less making If $XXX billion loan competitive. mortgage is a think about pretty you or million loan is making a mortgage $X $XX but

clients. and all to as asset-backed lending, we lending, estate in benefit lending, real that's these of scale lending, so more going more And corporate get commercial infrastructure

And virtuous so it a of cycle. a creates bit

and grow today. we clients. grow space really the our momentum in have So we the continue we And think They'll we serve get capabilities, additional well. can to like particularly these we as we'll clients

Operator

with next Morgan question from comes line our Michael And the of Cyprys Stanley.

Michael Cyprys

given $XX on mentioned, side. here? wealth. and have TAM market think, think how around TAMs about at capabilities institutional Harvest to insurance, and you DCI realistically parts But look the would guys you've today, you capability adds Certainly, guess new of liquid trillion is increasing very you And TAM marketplace? of more I trillion mentioned the past, your serviceable some extensions also And have traditional and capabilities. You in describe or in you that overall in how But serviceable do portion your including I other retail, I that SAM are $XX trillion private as with $XX what adjustable, the your vision large in view? the you that guess, aspiration think investment

Jon Gray

our think and out our of because how of Founder the horizon led here underpenetrated large, not alternatives vision, markets what is CEO, very at and really do to are. the is scale I something is, we that those by look limited

number There, think I that our curve. has side trillion. moved institutional is on much the on $XX the today So probably market along alternatives further

think a want to the in think I it, particularly about see billion What if you're talked potential returns but you you what higher here. other month that these against number put we idea of liquidity the a $X we'll retail, this the of a are? gives from sense logical in insurance single here the seeing highly perpetual capital just some about is products or X exactly I I trading numbers of for Again, sure environment. not areas, think I'm

the is than TAM larger think much here I recognize. people

of TV on, open into our have said moving really waters. we're I this narrow now earlier think sort in at operating, historically looked these business they I on as and channel, a

do we retail can and institutional think more much, we more much insurance. and obviously, so here with clients, And with

And so the size big. markets of are the

we Because in in is think just we're it, large. as little incredibly we all a said feels bit I question, against I Our momentum, last different the platform can a positive. the Putting verticals, But early. it's think lot. a number do my

Operator

And at our Beatty line next Adam the from UBS. question of comes

Adam Beatty

a mentioned and real has Blackstone. obviously is travel or -- specifically. estate of I to pandemic the leisure been dented real strength portfolio historical ask want and you was rundown, and about appreciate estate, which I hospitality the during the

how now, you're and over more years. wanted in couple you on little maybe it the your of to envision next Just of color where proportion get where that opportunities, terms of you the thoughts a and portfolio see market approaching

Jon Gray

large used the for deemphasized anticipated very was estate, Hospitality just had most returns and it us real attractive that. because It portion. wasn't we We a fortunately -- to saw Yes. in where be we the pandemic.

portfolio. X% So today, our of about it represents

think was hard existing we're I recovery going COVID. that of I a but up. think more One, that to number that's X, our by sector will a hit go assets; in see

seen which in the estate real equity. that, travel. do the play and so recovery and continue to more Hotels people you've our first, corporate we business, space goes in I a acquired if in We travel. Stay do on will in UK, travel, in is Jointly And Bourne return percentage be and the in And Leisure leading over to wouldn't recent travel we surprised Extended individual estate bought park announcements, think real again, time, business leisure up. private there. We this that leisure group

And a definitely by we going like exposure to increase so like. lowest We we've sector that to we'd exposure have, the had but it, far, it's forward.

Operator

question O'Hara from line Jefferies. our Gerry comes And next with of the

Gerald O'Hara

Perhaps trends fundraising. on I heading into to and business fundraising infrastructure? comments little for might infrastructure and, the demand and there, relates as the the of back as market into bit about are picking a market the guess, Perhaps could the for back up go you you it the what some you talk expect what

Jon Gray

think know, do returns? really that's X positive we're $XX to consideration by an an initially. It's our institutionally billion job Have we infrastructure, team has have perpetual but our in we're I that be quarter. Klimczak, real on open-end estate, Property will noting built Core+ terrific It that's good and We've that there, be close it's Blackstone got vehicle. where returns another matching years. deploying capital, And the a for unlike we're commitment, it as investors: worth open-ended led do we'll strong. format, every this portfolio? this that you key you won't funds, deliver you a Sean large raised So and not wait Partner the been doing done here and big -- like drawdown because our open funds, it's important and the going

Our given Core+, continue a will expectation talk we've as just -- significant basis, we've And respond. retail to assembled, grown performance, now. strong is, given quarterly institutional that quite portfolio the to the be has in inflows, seen but lot on see we a we'll Core+ investors about

it's billion. think I over $XX

potential think And a so for see infrastructure. of I could you lot

we're what forced our and where assets not us, they're looking to for deliver and clients another sell way for. engine vehicle Another another capital to perpetual serve

of that a job sector first business. a the few a with say team our years potential, would the we done has see and I So lot great

Operator

comes the Our Lee KBW. of with next question line from Robert

Robert Lee

capital balance and the sheet. back and to going the Just AIG

that understanding there for the model capital-light if stake committed lion's have I -- the distributing capital So committing for believe the you you to -- at your putting the you billion were share I AIG. some I were and up $X.X you're you're of mean completely transaction. DE. in Allstate But look

the insurance as or to transactions, it's thinking drive So at the maybe future into at adjusting you other is mean, industry, mid you're how deeper marginal, reinsurance that I all look of how you're but many XX had roughly could it payout about insurance is to any in the capital? now, thinking years for possibility And be tweaked -- that there growth the you've ratio XX% business? accommodate just

Jon Gray

-- Michael payout I about I'll ratio. talk say would the So let

us we is be to want be of point to take the and out a sensible will to capital a I I'd be best reflect in think AIG, alternative What or asset freely really thing which getting context capital-light do the will certain public these doesn't long-term are shares, manager investing, spread there. long for given tradable. strategy. really but liabilities X.X%, of out looking of the do. It our lockups subject the ultimately, on the We're insurance scale also on not to deviation duration, their contracts

anticipate payout change a comment And so you wouldn't this. this ratio. again, we've Michael, sense would done we should the way makes lot think that. the I of No, this on But

Michael Chae

that needs not payout or needed considered I to think be all we It's ratio deal. in will connection not said. with But change consider. to something this really that's

Operator

the comes Res. line Davitt question of Patrick from next Autonomous with Our

Patrick Davitt

revenue seems above in something around seen. we've So other the bps to fee increase suggest AIG an the guide in is well rate year X, which of XX relationships

lens the L&R So company we the that longer driving think AUM probably being explain to an increase; could what through the how is at risk of fee mix and that about time? you then that agreement should shift term, public independent about

Michael Chae

IMA rates agreements IMA from important base numbers provided, versus some or that implying in where then It's other of expertise Patrick, a to to both series also we I you're that the the market the or the involve think underscore sort and there think partnerships I on fee we inferring a this is higher. the and relationship. of SMAs, critical of here. and SMA-focused yields an asset not profile is have classes sort -- that's portfolio of return high where is is around the certain And what's

of relationships basis. compare a maybe that other an and some on bit blended total a orange it's So to an to apple

mentioned, initial I the subject measures. long-term based an on there's relative period, then term, performance and X-year to as On renewal it's

Jon Gray

he assets. I here was fixed And just reinforce on what add the to Michael's liquid want on income us And also their they assets. left do did AIG private flexibility What themselves retain the to to they would said. what comment

think direct so and are is to to And more to point, credit an it's relationships and assets, expensive other which orange obviously on obviously because apples those to I compare originate. this manage Michael's just

Michael Chae

themselves. they'll won't while for speak we speak friends And AIG, our for at

their a low-cost attractive think asset to to and overall uplift towards management profile. yield from I with point of they're approach achieve trying return moving obviously view, very attractive

Operator

question our Glenn Evercore ISI. of the Schorr Jim from next line And with comes

Glenn Schorr

And I'm curious, the of given your $XXX given growth, to growth about deal. previous raise is good guide how on billion the rightfully acceleration has an comment talked you call insurance amazing billion on which upped been. an the $XXX comments

you is it the FRE any we of raising, do So all what on hand my expect behind say, should year-on-year. up and question that to XX% have years? It over in our of FRE was hold With thoughts out capital specifically. next, couple momentum

Michael Chae

you're not up reinforce to and that normal our I sense we'll I around think, just, our optimism that think guidance of it the giving picking policy remarks. our probably from Glenn, on stick of -- just

Glenn Schorr

secondaries. I'll little And a enough. in Fair one squeeze on

lag were period You the when That you XX.X% didn't time. year quarter. be the much good numbers, strong in of talking good this color give of on quarter in How again, was pretty good would a previous a was secondaries out about much expecting the performance in performance but we go-forward? the any the up on quarters? be of is But from catch-up that the open markets. should What

Michael Chae

Thanks, Glenn.

lag It's GP relative underlying You X-quarter in to that historical marks the the -- got it. traditional return. reflects

year, that the on -- note strong a was industry. I know endeavoring So of to this to to next we last -- more moving will business. of that's and more terms quarter actually, across in reporting QX closer of that lag quarter, move that the we're a X-quarter

QX, where So think in QX, see go a and will hopefully managers and traded basis. they on that reported gap. whether to narrow we'll And you alt the that at look publicly can returns now secondaries I

Jon Gray

done well bodes It space a think private fair do equity since we've QX. amount, in well, obviously, the I well we'll was in QX. like industry-wide up And

to given So business significantly a momentum Vern have Perry I larger grow be think of team the and and our investors. done secondaries lot has can what for

Operator

the Exane Our at next question of comes Giblat line Arnaud BNPP. from

Arnaud Giblat

Can tax capital you how changes? talk in private flow? many of about to rate the that's potential deal U.S. impacting your gains, tax the the advantage seeking take to changes lower there Are that and companies before exit

Jon Gray

question. good a It's Yes.

this impacted I year. flow deal has think it

Obviously, quantify, of different helped. of I of but cost firms, it's element, family forward capital know who both we capital have accelerated deal of owners in it the where I But private what growth scale a it's owners, there's think some factor some and think their see ultimately and don't of there hard do, and the sales. decision-making. activity. I lands, and are these do potential the in can all to uptick in platform been pushing certainly gains businesses people our the increase equity has

Operator

Our of comes JMP next from the question Devin Securities. line at Ryan

Devin Ryan

momentum realization right a activity. on Just a question lot now. Clearly, of

want a the couple dig on businesses. So to I of just in

within to in estate, quarter. the real So the nice you're really acceleration see

momentum as favorable maybe the private frame And trajectory be moment. how like would talk that don't realizations necessarily the that think backdrop in but you equity I this, business? at a can you peak If you would helpful. moving also we really know are equity, little within private there, Or then or bit about more guys towards well?

Jon Gray

constructive is level. a obviously a talked environment, have about rising we for and helpful the record So realizations. market carry to accrued Michael receivable that

real because We it on. would the world one I indicator. favorite strength lagged in say a that forward of particularly record impacted estate the in bit reopens, we're and the But as more COVID. world terms, AUM, another is seeing equity investment also were sectors has have performance revenue-eligible we by was real estate my little which private focused

rental housing. our logistics, of in than more is office and X/X science real estate So in portfolio life buildings

talked in quite snapback to the those earlier, we've about doing some leisure we well. assets. hospitality of areas And and are as All of begun see,

estate. more see So over will real I in think time you

more on moment. realizations. We're exiting course, I and of think you'll see gains more focused, optimal the at

it on -- marketplace a realizations. some bodes equity, it hard businesses in in increase Again, will we're seeing when happen. this, favored say of step-function very we'll Michael it's at portfolio but equity of and do categories, private So our obviously sort for most There's helpful commented is a particularly real to X/X of private estate that of in values well. But strength own. In forward markets, in for as private indicator public. we our corporate the the That's private time. optimal

I in. secondaries We think our the scale ago, much business. the the have sciences have marked performance to a of think of We bigger. credit some breadth growth businesses I Even business. the life recovery begin a business our when of the X versus changed we're kind just The what's ago European-type which -- down, XX years a gotten has business, is realizations. we didn't real waterfall. past months now That's we things has have of didn't more see seen and will didn't

across it whole obviously But markets. So as as optimistic connected firm would I realizations. we're It's see broad-based. say it relates the to to I pretty

Michael Chae

I'd across firm. the Devin, had, of the we remarks, sort public of companies just mentioned add, in the year, since like And my something I beginning listings of XX

out market cap is as gains billion that something transactions there. those to like saying prior of lot in relative public aggregate, a of unrealized and XX companies. the It's significant way marks Another of had private sort $XX we've with created associated

in terms So of think of that's the BREP we'll elevated, the of strength receivable come see But the in, subsequently. that's as growth scale Jon and see. said, part fueling and right as the in carry of growth platform net also the you the now, the the I is think markets. what And and peak, accrued, the you're a the I it seeing when and companies the in reflection realizations obviously of

there, up we a forward the trajectory so of hang future indicator, indicator, markets lagging in a -- and that's if hold of And not realizations.

Operator

Our next line question Chris Oppenheimer. from comes at Kotowski of the

Christoph Kotowski

they're a usage I'm how a of for the the kind last reopening guess, in question focus years. estate if post-vaccine in particular, couple early wondering Jon. and curious But yours guess of impacting I of And I employers, space, know their taking world is are space patterns. needs an they the less down around you real Or that that office on been occupancy? hasn't I reopening for read have is the are negotiating full anticipation to that white-collar office in central of and shops restaurants of districts extent amount? space, now, I'm kind same not the more Are happening?

Jon Gray

it's think I a varies region. So -- it by

things. frame to Just

for certainly U.S. Office represents big places Traditional of more U.K., been seeing would in not employees say estate right. China, like a U.S., are have real in You office component. that. say, us in slowest, been has markets, the has the our we're I overall portfolio. of particularly Europe, The the X% would coastal the gone I back markets. large to the office.

New San York vacancies elevated. are and Francisco,

So XX%; XX%. And tenants obviously or like I more San gives leverage. that high XX% as vacancy, as in New York, think, is places Francisco,

of they of being need space needs. will to that we not that lot more a sure the seeing tenants together are there's even are people And out think they're if have concluding to companies a Technology think are office there. I they flexibility. upticks. are cautious I But lot ultimately, because and return about some definitely their firms

will will sector be a a markets forecast there'll headwinds, our the lot challenging U.S. seen. through COVID, There Until a environment. vacancy definitely near-term But as get I more facing particularly But is probably building. ultimately, recover. think we in that's is So near-term less it be some we've

Operator

the next of line question from comes our Bill Katz. And

Bill Katz

a of modeling question, more Michael. little for a just Maybe

see similar was some to How the of margins Bill, line. exit questions. commentary going - those at FRE triangulate in sort my year comp to G&A seasonal Yes. trying your look do sort in How maybe this versus and more margin quarter-to-quarter CFO around I your levels? mentioned of of Just best base the XQ for much remarks, good you forward? Chae between of versus maybe Michael sort swings COVID over there what the run-rate Obviously, are be. reasonable multiple will spending resumed so variables, comment year and of on we of LTM reflection full of an quarter, really margin the proxy the LTM quarters and on rebound think timing is and of run for XX.X, a the the sort last as a basis. on of from rate and including And forth. operating pace or non-comp expense, sort T&E

as So fee-related -- at fee of you're XX in our total but basis, on when operating dynamic firm of and of And you trailing expenses grew XX% at XX%. months you're sort and of revenues leverage seeing growing again, terms grew expenses. the back, a seeing sort our excess in the dynamic that's revenues a really step

good that's margin, sort here. point So I LTM think focus of on from that and starting of baseline a sort

Operator

with KBW. comes Our final Lee from question Robert line of the

Robert Lee

modeling of kind another question for you. have I Michael, And

payment. They rate to to there [CRA] So should of if migration payables, around. I we bounces related kind the of the can guidance I maybe on taxes expect and of $XX give quarter. it don't some But commentary know maybe or tax how is kind and around forward? color of behave going about kind line know that's you us this jumped forward the related million any that

Michael Chae

Yes.

on in There question, seasonally in throughout the our really deductions period, of XX-month a lower a I seasonally but over the got answer year. of higher, is tax second rates, fourth I'll give the think first and -- timing seasonality looking Rob. I with third intra-year terms and being quarters similar based there's the

or first QX XX% XX%, X.X%, DE half. line the effective our is common that's XX% So about averaging with full if expectation. tax at rate Again, year our you less more in quarter, for this per about look

low we about the common. over medium at step So rate term of effective back a if to and you for -- to time a tax near of sort talked conversion, mid-teens

it, -- that. line that half baseline XX% with so first that in And call is

connect those dots for you. to just So

Operator

now Weston like to Tucker closing to I'd for proceed. hand And over Please remarks.

Weston Tucker

Thanks, everyone, to for after up forward the this look call. joining following morning and us

Operator

call your conference you. that Thank for And today. concludes

now day. may have you joining Thank and disconnect. You a you. very Thank good for

Blackstone (BX) 22 Jul 212021 Q2 Earnings call transcript