BX - Earnings call transcript Q1 2022

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Operator

Good day and welcome everyone to the Blackstone First Quarter 2022 Investor Call hosted by Weston Tucker, Head of Shareholder Relations. My name is Christophe and I am the event manager for today. [Operator Instructions] I would like to advise all parties that this conference is being recorded. And with that, I will hand it over to Weston. Please proceed.

Weston Tucker

Great. morning to good conference first and call. you and Blackstone’s welcome quarter Thank

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 for actual forward-looking please like any you results that the today’s We risks materially. expect duty Factors report and XX-Q to We outside remind our results, control are discussion our in a and do may the see from to include not update statements, differ undertake to file few which uncertain weeks. I’d these of may of call statements. a affect section the of some of Risk that could XX-K. And

as On share the to reported $X.XX be paid Distributable per results, May without net the holders call non-GAAP Also any We income share With the GAAP of in and record of release may find also to call Blackstone for X. will will common to per that turn not of Steve. of interest sell refer audiocast copyrighted Blackstone duplicated were an note fund. and $X.X to nothing be dividend over a material an our you will purchase shareholders and in quarter $X.XX is offer reconciliations of measures consent. billion. $X.X that, this an or or a of on we constitutes page website. offer solicitation earnings the This billion we I of to press certain declared on to

Steve Schwarzman

markets. in reported our start declines two despite best inflation, and and rates joining for increasing was an with Distributable major year investment quarter ever earnings debt as and the interest in representing a rose to morning year, any the indices. our good call. Weston dramatically thank the XX-year equity driving our This of Most Weston and first the was XX% this Thanks history. and exceptional billion. one while you to lot, higher earnings, first performance XX% new all realizations fee-related Inflows, outperforming for deployed the records increased $X.X year quarter period. last XX-month billion, over for firm importantly, outstanding, to mentioned, public set in $X.X Blackstone capital

sector, than we example of world. position a rapidly represent These Blackstone’s grow are in assets believe are quarter, proof-of-concept, financial they atypical alternative to placed. highly greater I continue risk-off uniquely Another the why further results which money management. in single the in But

certain Blackstone, time, strong So, a us? a before growth trusted loyalty possess what the distinctive the are long keep even ability differentiates to and There great financial demonstrated believe have significant all these great attributes great we of geographic periods healthy of pillars themselves talent, act It ability customers paradigm others. a At who attract for growing, and we over identify to from performance innovate, are firm of is while I maintaining product rare capacity of wide the shifts several debt including brand, performance, upon high-performance success. to and culture, them. assets that to and continuously in characterize a investment firm, reach, and have

classes As all with across world, largest the outstanding leading the of the manager businesses alternative built have returns. we in uniformly asset major

indices decades, leading to returns outperformed XX% to the private significantly Our indices, have the opportunistic X% year. real annually, estate approximately public for and global X% comparable XX% three strategies corporate by per including equity flagship net

sector the fact. asset In is performance. while delivered the highlighted superior commodities As our the decline best in strong nearly we led sacrificed This have quite grown asset appreciating major quarter, every funds X% quarter by declined, hand a selection larger, we returns, for X% not outside to to the and on largest business, in index. class, the just to business, compared XX% one real in have our flagship REIT estate strategies, first our our opposite,

the hedge fund our us confidence return over compared innovate. indices. positive decline has other the to in – sorry, ability performance global composite other major on liquid a the the hand X% hand, On to a and the solutions in markets, to Strong delivered decades X% in quarter given equity

itself innovation competency have approximately struggle our core capital of companies vehicles. firm. form most at Today, developing business strategies their outside more, original build increasingly XX and to a of While is the are in great perpetual constantly success, we a we

more As a clients network to last our greater why we and deepens $XX That’s the billion wallet. share in with alone the creates for reached XX them relationships months. our our inflows deliver powerful quarter and it leading first of effect, across for $XXX and strategies, more billion a

Over than our the the for inflows, have us Above able people and any firm. we all Blackstone, assets to important are absolute alternative past X the most years, is billion which greater our AUM, been the necessities total success. At everything are have reputation of these limited with and of achieve. partners other entrusted finance else, $XXX foundation

excellence. to every We we significantly in ever people widen leadership our in and have further expand and competitive capabilities the moat. at order area than our firm in position more level talented before, are operating people the of our at And highest today reinvesting

as As Work positions named finance. as fewer the is in unique the analyst gold the Places for also recruiting XX,XXX the Blackstone one class. applications standard our evidenced to most XXX we industry’s of in talent only by magnet recent financial And and in been Best best to consistently services, have

and and why to current have the has these why we momentum together, forward rates Blackstone despite continued are extraordinary post success of of inflation. strong backdrop rising pillars Taken results higher

these positioning to no of balance and will our consequences can headwinds, While firm adverse totally of these factors. from we mitigate portfolio the manager enable believe immune investment our be of unique us the

sectors, estate floating provides a our billion $XXX previously, our credit for business, of investments return our highlighted real in rate have are all which billion virtually customers move as business, As In higher. debt, corporate nearly better interest the rates where approximately we in $XXX growing historically for our our rents excess of of of infrastructure favors strong in in the equity the U.S. inflation provided rate has which assets significantly a billion $XX XX% hard business are hedge inflation, owning in well. portfolio as

a partially For private billion the quarter equity grew from corporate companies in tailwinds. our our $XXX platform, operating XX% first XX% reopening year-over-year – benefiting remarkable

value more rapidly and the our us Xx with XXXX, makes seeing solutions partners. growth provides the more resilient positioning been in future. I is is market of the optimistic And strong pleased to has limited we expect strategies never in best firm closing, are to markets and firm liquid of some on we In our annual and more with revenue the additional this companies, which for our recurring or AUM our our companies the advantage opportunities to period, in outperformance hedge of at more perpetual continue, inflation we with protected Day than our While investing which its shifting fund up perpetual AUM generate more have protection towards in first to about outlined $XX we our first platform, we earnings tripled. of Over our downside transformation saw our the FRE impact volatile over cycles its expect X.X-year Investor prospects. transformation we believe FRE. continues, create to Overall, billion This in quarter. to which strategies,

it turn Gray. star, Now, television over our to Jon

Jon Gray

in results for strong investment markets when you, Steve going one firm challenging a all QX. to It’s achieve quite do thing like Thank so and an everyone. up. environment It’s good to morning are another

have with inflationary life funds. services software, firm, the digital of extraordinarily Today, positive logistics, remain we and Signature pending with years. investing, where bad. travel Resorts, After Born applies significant have Over the assets Starting several mindful we along fundamentals in quarter. as have deployed start faster several from in benefiting the rates than for commitments pandemic, and business Extended portfolio for informed and operator, in the deployment the of VFS. Steve our these of way include fortifying the and drivers of are This past our the of deliver we that first the appreciation These businesses infrastructure. been normalization deployment investors as ramped we ASPI model capital in the Crown we revenue noted of market rental model enterprise in global road in businesses housing, on also Visa our pressures. towards toll energy the been years, sector, Hotels, performance, have as our multiples hard interest was for times to good concentrated and The we they Aviation power and sciences, investment we entered. Stay and rising grow and investments up This in well Leisure, full including to prospect a and could display areas

We are highlighted The robust we activity. now value is recovery our seeing in global further a of by tremendous today own what realization travel.

in team sector apparent expected investment today, first Nowhere of this XXXX real And own is largest the We that of explosion we portfolio. logistics, in started comprising the warehouses. XX% in $XXX e-commerce. our global more than in given estate at investing approximately billion scale

inventory supply also surge increasing now issues. a mitigate seeing are to chain corporation’s We in holdings

the most this European €XX vehicle billion And two of XXX along being market of the equity Blackstone realization separate the vehicles continent the in an way, our portfolio in capital built the aggregate with X on investments. complete gains the QX process, platform by billion portfolio, managed recapitalization to XXXX, new a including acquired Mileway, the a expect weeks. logistics portion mile Moreover, After was Encore commitments. largest largest through next is acquisitions platform XXXX U.S. by our check with perpetual of along we refinancing Core+ a We of few €XX logistics last harvested over in have in in of We and existing firm’s fulsome Logicor years. the successful portfolio. the

we clients has investor more Last headwinds. remained quarter, I in durable strong perpetual growth expansion, more four In despite business products and strategies our of our give waters can about open we the talking broadening This the market with emphasis of retail, investments business briefly have we terms to we and an key will made markets. Turning for demand highlighted serve moving in expansion make. an difficult been on into our you on each. update engines

quarter. environment with doubled than more recent raise an in positioned assets with billion perpetual X.X% three April We a the BCRED including is generating the well vehicles: to most and BREIT’s $X our capital given for $XX are rate have while the products inflationary floating X. BCRED year-over-year per BEPIF, XX%. average size of ahead $X a on appreciation BREIT, billion recognize on equity total billion, in month of continued subscription BREIT leases, of our Investors monthly retail first short-duration for focus vehicle hard loan-to-value to to

We through have retail our in partners. selling first-mover today brand of network an the channel broad a most and distribution the powerful enormous advantage, products

in the innings are in our We vast early market. and underpenetrated of this build-out

billion capital billion $X.X perpetual reopening raised we in approaching platform to rapidly, in institutional vehicle billion over the Our continues the the milestone. $XX the $X billion. In since infrastructure, to strategy QX, and also grow bringing $XXX quarter

set step We opportunity our grow over the additional our from have institutional In real been with actively business significantly to this to we grew $XX an deploying strategy coming time. quarter this BPP XX% performance, expect Mileway. year-over-year this capital estate, given and up billion and

positioned We believe clients. has billion. AUM than asset-light to our we this sector serving in insurance, more as multiple manager platform on insurance to doubled Turning uniquely an $XXX are investment year-over-year

focused are them additional to and a time opportunities expect on sheet-light growth balance for We on find basis. delivering over

our we the funds, private flagship believe capital the target record, our we best approximately targeting the today, drawdown confidence cycle, high. spent in geographic of in Last this we the our in building platform moving world. environment is remains of breadth extremely of brand, our reflective fundraising crowded where our platform quarter, reach what This $XXX more Despite last a area is the and track aggregate. raising. strength the XX of new to highlighted billion equity in Moving the into the fundraising years

our fact, In the two significant largest global flagships few next closings and expect for private equity months. estate corporate we in real

the the logistics, by rental over also to billion and been nearly software. be favorite largest vehicle to-date housing, billion Our Blackstone. The largest to billion breadth and as reach positions never XX approximately raised. the would this on the well us $XX deploy neighborhoods: $XXX private has $XX which ever past track Fundraising illustrated in life at third equity secondaries sciences secondaries capital months. on first new were some momentum has Major new commitments the – quarter firm’s our stronger of closed invested in later year, is

closing, the the will rate them. higher we are fundamentals the to environment several of to an of creating simple, firm launched alternatives building States. we transportation challenges, total we have investment partnership active expect to the inflation, take with opportunities, situations. enterprise largest forward, deliver a a is And to repeatable, Benetton look need student largest in last scalable public the announced companies. infrastructure higher market the the in offer particular value to platform volatility housing privatize Looking Earlier in billion Atlantia, they but tender to In including into Investors at serve week, company remain exceptionally one and strong. solutions and continue this a pipeline create and $XX businesses Blackstone we private we our United move family, week,

continued share virtually grow things over the dividends count while future. allowed that, return XXX% keeping earnings we turn Michael. rapidly buybacks and And and to capital-light true share will no model. shareholders, to gives in over debt This through past has X our flat of earnings remaining to highly insurance This model while our us confidence with For years attractive and great to the no us net liabilities. I incurring the

Michael Chae

our Two evolution several Thanks, years. the business John dynamics underpinned past of everyone. key the morning and good have over

and First, transformed perpetual strategies capital development those entire the scaling an platform firm’s fundamentally of of FRE trajectory. of strategies the has the

perfectly of dynamics. is the value store greater business higher The through growing earnings, the net result performance cycles. to expansion firm’s The fueling quarter overall firm’s outstanding and Second, an quality results resiliency our potential. of illustrate and is higher revenue earnings ways win and these market breadth first

now respect capital impact repeatability billion perpetual can’t firm’s their $XXX and across earnings strategies AUM of the with be fee-earning comprise capital overstated. and vehicles. First, FRE. on These XX XX% year-over-year more Perpetual and doubled of to our AUM to metrics the than

of of terms that $XXX years X of strategies. only much and from In year. inflows raising of over or perpetual quarter-to-quarter. from record LTM capital half firm’s was nearly single The that billion surpassed record consistency deployment now is firm of all these alone. perpetual was inflows the Moreover, creating continuously metrics, first It a inflows strategies ago our in we from more vehicles more fundraise,

resiliency perpetualization the the in business is In similarly a of driving step-up earnings. terms of earnings, our of meaningful magnitude and

combined strategies, flagship that of billion billion last outlined a perpetual As fee increase NAV compound and BCRED before, BPP, these go. revenues as the appreciation, months nearly inflows strategies management XX a with both appreciation. which doubled BIP, over and AUM in and fees we’ve $XX generate earning higher platform, including The $XXX set four capital BREIT, our to for higher fee infrastructure baseline from we

In crystallize XX addition generate fees, definition, firm asset the vehicles sales. to NAV-based by management which, perpetual performance on of recurring basis without revenues, a fee-related

crystallization the these if period fourth BCRED. BREIT quarter XX% is year-over-year each occurring firing annual than and fees from million. overall performance billion even in tripled record prior year-over-year combination the growth the XX% FRE. more quarter $XXX year-over-year $X.XX to factors of doubled. prior fee its in change, And total than share. adjust to schedule for range Management first per crystallization more FRE exceptional to The a of to rose quarterly the Fee-related were $X.X the engines year $X.X continued a the you rose in moved powering or similar they billion. revenues to across firm robust revenues of BREIT Importantly, increases in and quarter, the to

in our which a $X this in run FRE high-quality quarterly year full We share stream, per time area of Day. is rate the earnings at Investor are approaching of the of now

nearly value sale increase and to monetization and firm across logistics public the the expansion deployment realizations of and $X.X the on aggregate sequentially billion $XX the XX%, net At billion the has year-over-year to The included sustained distributions. a in expansion receivable fin-tech in to eligible refinancing in Moving billion. billion balance has of performance first sheet our year-over-year. our revenue $X.X record platform value. or a revenues of XX% holdings and scale same number firm’s portfolio, and company, across level the first notwithstanding this investment per and On the realizations growing the the firm. growing the up history. ground, realized in quarter, record dramatic of commensurate time, billion continued performance the to invested billion $X led of U.S. increased X% net of quarter, store increased the IntraFi, of receivable performance capital, value, in Fund of the $XXX reached a year-over-year partial XX% basis, strategies share, lifted a outperformance of private highest of the various $X.X in the the nearly to base In $X driven net store revenues stakes

increase and quarter a Taken in per to growth $X.XX in in distributable both share. or first together, net realizations drove XX% billion FRE earnings year-over-year the remarkable $X.X

period, a any $X.XX history. the record for months per in reached LTM share, DE For XX our

Looking a I’ll the us great started where pipeline, firm. FRE of In I robust the coupled near-term with confidence transformation the forward, go in back momentum, strong ongoing closing, realization to outlook. with give

to We the earnings a and way. earnings this by are and $X significant characterized of trillion on with rising commensurate well each power path in milestones, elevation ultimately path quality year AUM a step beyond

future. we it call. and forward. questions. the of like joining of full four thank that, With And in outstanding world, LPs. open the continue all Despite I We results have you them, Blackstone’s to feel driving the would our today’s uncertainties support us now for great robust of have growth up for deliver engines about we we to

Operator

coming question [Operator Schorr Glenn, from Glenn The Instructions] is from please first Thank you, go ahead. Evercore ISI. Michael.

Glenn Schorr

to for LPs Okay, to pace. is industry plenty some a to record at like you. My constraints less conversation so back recent billion that but them. thank work is you there is gut the as XX about now have flow coming have been this, answers money cash of And put was vintages, there cash exit flow

So wonder reduce that capital make you, Thanks. would choose. say capital to market. talk I it affect would the didn’t logic but could raise, either in Clearly, raises, that elongate if issue you that LPs –

Jon Gray

the how way, good done. equity another is So By has the the sector well Glenn, that’s just out point a really I would factor challenge private question. in

And the also that targets. I’d meant from remarks. are start has so I guess the appreciation they comments their above with But the

As you would things has to as heard, point stronger. to fundraising guess momentum why is our the never of a And this been couple case. I I

First off, would not movement there in general, these challenges described and into the stopped. say, in continued equity focused, is U.S. funds. amongst you It has are more pension I alternatives. And this private market

we’ve is we’ve great what because of I really this time. a of got delivered performance think goodwill us, for from clients over our period reservoir long

We’re raising in platform real credit, in helped. in that at secondaries, estate, capital life also infrastructure, in growth, and sciences in very Blackstone broadly

the We capital all world. also raised over

and owning our next than larger next previous vintages be, going you drawdown attractive. And like why the I strong. the sectors point applies of just that’s infrastructure, platform, equity in and well do but the we U.S., other owning growth, from just about in into, clients real clients, the our private And believe East, despite from our are retail in direct also capital in like and hard the Middle environment. will say, challenged and funds. is What and fund think clients, the very not perpetual in insurance debt, floating equity positioned is customers this rate assets corporate not really fund this environment and our So growth we’re make if would also we lending Europe, would for have Asia, we even goodwill our products private I’d – both from of be we that both have really that’s then raised which our funds estate, the the lots in challenging really most like we institutional

Glenn Schorr

much. very Thanks Alright.

Operator

The question America. of is Bank Siegenthaler Please Craig from coming next ahead. from go

Craig Siegenthaler

Hope Good doing Michael. morning, Steve, Jon, all you well.

Steve Schwarzman

morning, Good Craig.

Craig Siegenthaler

big XQ. question changed backdrop We lot picture a have a FRE. has since on The macro

less We fee-related has in all? economic emerging all inflation, and which trajectory, institutional growth an earnings allocations, have growth the you of effect higher referenced How at Jon, last your denominator if just this response. with impacted

Michael Chae

you to Craig, Thanks, spot. hear and nice your in from new

we’re looking just and And the across forward, here, and Jon looking really FRE way. relates this in headline the on years Craig, continued the which capital to cycle perpetual is year back the billion of referenced. that good fundamental structural and dynamic, be we’re the is the think it trajectory and I step $XXX robust. strategies; flagship XX the at notwithstanding sort sort punch backdrop, I’d of beyond, scaling say a of And continues one-two of as upward is a strategies fundraising, that to second,

and of So of if we time. first really fee-earning capital. almost this billion event That’s kind And the sort a we you full for four infrastructure, the up that, take effect of XXXX, of year-over-year. in XXX% those BCRED entered in In sort perpetual of FRE in into will area, is AUM the one that almost quarter, in full which BREIT, ways, double funds insurance $XXX those have had year. And growth. the also partnerships mentioned In QX capital on different the year flagship in we perpetual we at main BPP, year-over-year.

it So have in many of doubling raise a fee-earning expect as that continuously of areas of continue in right scale platforms you we we and call and add obviously to let’s these as with base fund that income. AUM now, we to appreciation what perpetual,

for story and this And so beyond. a year is significant that really

the before last which we’ve that about them. confidence in flagship achieving. months, predecessor than Second, that to mentioned, which the larger we quarter, as billion, as be, the fundraising will drawdown great That $XXX over mentioned, think, cycle expressed funds XX as in I aggregate, XX% said, next Jon side, on XX we

when coming. pace like funds but timing the structural. know, standpoint, as ‘XX them, the actually and XXXX is as That between a is event so fundraising you that’s and fee that a investing and from start a holidays, of not much we XXXX that, So event,

So FRE, not those repeat call sort by And is subsection one-time any of fundraising all in given punches trajectory things powerful cases, punch, but events. mathematically as of we I underlying really two are They themselves. affected even it, in in NAV, know, really one-two quarter. some are quarter, powerful, would the are The some very the and very, given and fundamentals positive. though a

Craig Siegenthaler

Thank you, Michael.

Operator

The next question is coming from Alexander go Blostein from ahead. Goldman Sachs. Please

Alexander Blostein

was for to some Good Mileway core everybody. couple strategies from do morning. the Thanks opportunities about sI you might hoping with a like assets perpetual potentially guys strategies minutes Europe. could in could of we talk you recycle into and see of opportunistic

think, of Jon, from mentioned a format. separate you a about I kind in in other commitment billion LPs I it’s equities think account €XX

I both it’s create side? that on vehicles, transaction, to SMAs? of kind structure, equity? thinking supply private the Are across like our about the for from gains, how demand and demand of the a type crystallize the a So, estate there opportunities these that of Thanks. compelling on a LPs How And guess obviously, is you are additional from but single real asset side stream. more other importantly, perpetual

Jon Gray

as nice returns for these is out a about private to those a us this strategies That’s, all So and waiting maximum to outcomes if And equity I the to what’s is number investors in able they for deliver of we I Alex, about say real issues. what overhang it, and listing in do cash to doing for estate really get private opposed is get the of them order would and important. our think, are equity. years first business

really process What if be interest from investors something check. right in of I way, is a but say high only these it’s all We’ve is of I on long-term we done, these, handful in us. have the handled it’s of just some special market that has also We because would the right really think done think the do level for segment. the assets, important to to that’s

to So logistics. life science offices, it’s got last-mile be like something European

exit are clients So And big other our in very side, buy those cases, markets. where want are there be platforms then the through to that public it’s the to on hard investments invested long-term. than

done, for existing is other they The And investors positive has the over. roll these, the up investor. ended we’ve majority existing in the investors being

exit for for want So say capital It’s or an attractive platforms opportunity deploy investors. and new but also existing to are it’s are I from the investors long-term who very to large that harder would it’s selective.

Alexander Blostein

Great. Thanks so much.

Operator

The next coming from ahead. Michael, is please from go question Cyprys Stanley. Morgan Michael

Michael Cyprys

Great, made about thanks. about Good higher challenges. Jon morning. to and paradigm point point environment shifts back made a a I that that inflation into Steve wanted come to creating moving

and you So I through risks is in how a are about today geopolitics from new return see talk if that what guess chain and the on positioning investing evolving create? of And manage challenges capitalize little and What shifts also could but a that of supply hold all environment. you’re appears power that, the be seeing all does you you to rising What of bit risk paradigm that? higher inflation, take to Blackstone the question implications challenges, just what of great curious midst for rates, complex. are the

Jon Gray

let a That’s it. a Mike. take But big me question, at shot

been with know, months it period. talking as last inflation the pre-COVID a were rising about more XX about been for actually we’ve We think, talking we’ve concerns for inflation. talking I Certainly, long you rates, time. about even about

of. And something we’re mindful so this really is

multiples. in cash think go asset rising rising environment, inflationary If flows either overall rate multiples are higher, up. things tend two or not you And to that drive prices an rising it’s only investing, about there

And so is the importance of super owning important. things flow where grow will cash

better good we portfolio quarter, In XX% we’ve laid estate, out portfolio in real Steve In credit, why focused the at look big power. energy was been infrastructure, fundamentals have our And debt. made you not coincidence, if it so as floating rate the And well of on than our market. a really performed in focus and with in digital energy, and private short-duration like with infrastructure transportation hard areas well. leases. sectors itself, we’ve travel, and technology, assets equity, it’s really is infrastructure pricing in In that done quite

two how to think that. very changing have to products if so be rental channel, you’re floating deploy more debt. about rate The in And are the BCRED, In environment. doing to what of capital XX% representing about and housing portfolio. you you of this inflation-protection products. reflective positioned you XX% think And the really in particularly, there, main it’s retail have And us, than BREIT, you is what logistics we’re

you the reprice. as rates, get raises So Fed to

what will can So we inflationary to positive if doing. that inflation, have environment, rates higher still reset what you That’s performance. that that assume a can own I outrun you in can been that businesses be flows think deliver where cash That’s you environment, moving we’ve and are But we since the transportation housing the deal in higher higher. it be that the the big if And to the bucket. continue done into U.S., do. deals beginning infrastructure in week this Europe, will Australia, of casino in in year, logistics look last-mile student we’ve all fall they that at in you Europe,

mindful and of are cost, pricing businesses fundamentals focused good a costs. power income-oriented not fixed exposure without We to of and or assets lot owning on input

us. clearly, is for top It investment has of while. been an as firm, this So mind a for

fundraising, we so performed we it to when well why question first. this about is earlier flows, that’s you leads back in And think talk I about business, to perform which the well. performance always why

Michael Cyprys

you. Thank Great.

Operator

question next please Gerald, Jefferies. ahead. from from The is go O’Hara Gerald coming

Gerald O’Hara

Thank Great. you.

on still Thank update us sort on you’re give theme opportunity. little been a there has and be can this what out go-forward hiring of you thinking this been of how strategically of about across retail perhaps on peer in clearly perhaps So this a an investments investment on But the ahead kind a in clearly Blackstone basis. and a you. this question might has bit sector set, out

Jon Gray

Sure.

entered know, much like retail you a the So I means would brand hard what space, also sometimes the I than we as first-mover And is would the really having but which think say this, is this and on is financially in brand, channel Blackstone of advantage brand, earlier lot. value power important. the analyze to others. a really say I a

individual point we products expect products equity we And and competitor X much led But of customers it it’s this would distribution is changed I generally, in yield, years the with shelf. plus, taking the in a moved XXXXs in we’ve that today, outcome poor that. was for the long alternatives Blackstone charged But that, of did what We’ve cost to really customers, of pricing about nearest for ended quality haven’t institutional I was were People and focused is XXx greater tax clients. the partners. segment, bring our we been or our products these on much the investors. too on there of and these. shelf this with institutional And we the at the drawdown much, generally individual funds for work. create running what out, where down two managers more risk case can products. sales. performance. we’re perpetual monthly higher when institutional on of three private And much over all great sort up we significantly. to channel investors liquidity, unlike So charging really and were to selling and were terms think And we greater each why to have time. that the they and front, provided really retail the that last be they design get than gotten challenging work In what They brought that’s products into market exposed be on And to really pretty the to different thousands want for to

compete So we’re in a some different with We operating we today. amazing firms. acknowledge obviously space

We’re products. have do. But strength our create, of we our come of by the more push invested can globally, wealth. what end with scale we’ve think continue products is the deliver year, to given the we And up the to of going we the there platform, I will XXX in given in, if to they that people are sure dedicated private

started We platform. have real just with our estate European

all it there with we other ends but move into, and starts performance. think are I spaces could

to I create and I feels we market, an would have for on We customers. alts capitalize is that, are today a penetrated work. position today. And in very in to we this large these is trillion overall, If to just can a $XX market we us like say, products X% think do that unique deliver It that that.

Steve Schwarzman

call would have It these important channel. this of more a how sales that And teaching coherent, work sort kind these that thing the turned other in a it. institutions, all individual really why are and it’s of in and should owners be major to information, XX at The amount source leaves it’s confidence I we huge out just And universities we have and X for that of the reason FAs is of forces the why alone. of we add how they asset product, individual us large comments the it’s for we alternative to whole years having to are in them which to we now expand allocation what that questions sort current what product important, alone XX been can how years. an of you have basically done fantastic site. the so doing adequately us that’s have that’s doing it have, a good and with organization service And works that, business enabling deliver than you products of the

people I trader customers. to said happens, this that terms not where trust time supplementing there people exchange is what it’s through of think by are Thank in for and moves rate performance long this, of with the think reason type of as just to in like you. great Jon you of why it turn a develop us, foreign So, positioned, sort bidding

Gerald O’Hara

you. helpful. Thank Great. That’s

Operator

is Bedell question Brian from go Brian, Bank. from coming next Deutsche The please ahead.

Brian Bedell

theme, to Thanks. on great. stay Good folks. two-part retail a the morning question. just Hi, Maybe

some can I I if theme I is a retail question And funds features. the think broadly the crystallization second on If that well re-crystallization still within they of about me I style? capital AUM. quarterly right, the in base some product will you you you correct there equity are first, And class as BREIT and heard were fee level. think the billion question larger talking of is, performance And quarterly on this working part on asset believe there wrong, private all more were to retail are that overall, The have that I of change? are or $XXX liquidity to then vehicles this quarterly become XX much a a vehicles Michael, perpetual at a am of

that, So, I coming an get soon. on just wanted that’s if to update

Michael Chae

ones Brian, products, of some direct on and the $XXX first part, the other billion four $XXX BCRED crystallization. main crystallization BIP overall, we billion of X-year BCRED, obviously flagship where has BPP sort like and anniversaries and the BREIT actually BPP, those a capital And BREIT, of X-year perpetual around referred the maintain only quarterly trajectory are mentioned, now. AUM. sort as the sort products to BIP lending those of with that’s Funds been. growth biggest and to every

Jon Gray

add to as I – they of we layering thing more only those, The of cake. a raise is would a almost it’s that like

see will a and institutional going as of ones little model over these along coming to be build of you more So, more probably to time. products more each quarter. more in It’s trickier those we and

BREIT substantive have for to that retail we quarterly. made the be in allow pretty area, change So, I this is paid a think

Michael Chae

tricky say model I this this think important positive, less move is will make Yes. to back, And big around I a just stepping area. would and us

Brian Bedell

private the on then And on equity side retail? yes. Right,

Jon Gray

to equity ready On investors exposure, is investors. what an not side, that like obviously would It’s the say where area individual comment would I on we are more publicly. private

think of something platform, the more P, the structured this secondaries, be of about. E, over whole think if anything talk sort idea, I say. we to be a and broad-based would that Hopefully, point, But we don’t really growth something included I create helpful. to having year, you equity this to at have range private in including equity did something have the will broad would future

Brian Bedell

Great. it. Got Thanks very much.

Jon Gray

Thanks Brian.

Operator

Robert, Lee ahead. coming from from is The KBW. next go please Robert question

Robert Lee

patience for taking morning. for Good my question. Thanks. your Thanks

trying is Michael, provide maybe we color we be but forward of little like should think this that about weeds, could but really for you maybe in second Atlantia, is through. part, there almost up extraordinary if mainly subdued? impact? guess quarters that thinking MileWay of watermarks should the going performance maybe think of X%, the model on next high that then getting we if that the bit Just anything think recast or to the it maybe more a we I crystallization such BREIT any a financial is it’s in QX there is FRE So, about And kind as about quarterly, or from how impact,

Michael Chae

the it’s but have Rob, the annually, first quarterly. inception, with really as and on mechanics, the now same just hurdle we same calculated It’s about Yes. BREIT terms change still just rate. annual asking overall, mean started crystallized from I

investors the to initial and a quarterly, that annual basis, fees calculations. do from performance be sort in of map standpoint, with but an are of the that an uncommon ultimately time So intra-year or event – – mechanical will earned recouped performance offset crystallized not future unlikely a on to Then period crystallation against that. long by that through the fees

an line standpoint before annual but a and of sort a on bottom from the – terms as same standpoint, return preferred So economic is basis.

Robert Lee

way And of Atlantia quantifying was impact is going net of of kind forward? Great. the then kind any to MileWay, there maybe just second think part if

Michael Chae

Yes.

we will LPs and deals, away our I day think should on both perpetual equity as – by one, the the reflect those the stay AUM. deals Obviously, the individual from Rob, funds happen, add will both invested in fee-earning that. NAV our on capital and to deals

Robert Lee

Thanks taking Okay. I questions. it. appreciate my for

Operator

The ahead. Adam, Beatty go next is question coming from UBS. from Adam please

Adam Beatty

expect about wanted wondering and just among was about question, momentum you to maybe Thank And just strong if morning. that’s did in you Obviously, I at An talked you. some Thank it constraints whether you I secondaries and business. if earlier liquidity good LPs. ask more the around secondaries overall overall potential on mix fundraising. even accelerating had the of changing would or you of the maybe all? to activity GP so that’s then secondaries and effect future? versus And do some LP-led the

Jon Gray

in are to stick large a our business You why is fund grows. and flow is question, the grow, it’s having maybe to of allocation market, equity who LPs the because in my is of secondaries We over but equity Adam, to sell acceleration older am I of seen saying, difficult we In funds, seeing have alternatives Vern your going very want liquidity which targets strong for right. the secondaries Perry vintage And team space private in. in some with a important. deal for private like are managers, need invest and as an because we performance what their

XX You need of the a or move beyond largest once particularly lot knowledge, XX you funds.

And so for we is the think favorable. quite investors dynamic

there deals than the clearly, terms In there more GP-led were are past. of mix in of GP/LP-led, the now

expect We that continue. to

as small equity fund a that’s area fund. and our have in raised interesting will main raising process that we And private We of think with GP-led the well. secondaries are co-invest an

think time the around another firm again, one secondaries great of in so has, there headwinds may delivered structural strengths because benefits the our performance equity of business where that private over an in be environment some inefficiencies of it the again, great our it’s, which I part our firm, of market. really And fundraising,

us. So, this has a I think for growth potential is a that business unit of lot

Adam Beatty

Much it. appreciate you. Thank Excellent.

Operator

Autonomous. is from open. Patrick, question Patrick is next now The coming line from Davitt your

Patrick Davitt

assets morning are regulators interest, treatment. proper think I sure getting making managers everyone. capital of Thanks. the increasingly and between conflicts Insurance are the alternative Good potential companies, focused and insurance on relationship the

suggested Some more reviews counterparties. that be skin requirement the of managers, could outcome for of in observers particularly those the with a insurance consolidated that these game have an aren’t their

your the be on the And there require more think risk would willing reevaluate if last, will you the you that a outcome? skin game? regulators position is what to approach first, focus? balance is that in is this So Do sheet-light

Jon Gray

What say that in the investment manager, this an a at is of are look third-party on framework, investment regulatory long I being when history the we And would insurance business. there I a is manager.

BlackRock, that Sachs, companies. in If requiring capital Goldman insurance regulators order to enormous foresee investments of essentially managers. make And I manage PIMCO, firms look amounts they at don’t investment you for they be like large

relationship that forward. some have do work we third-party cases, long think sound. the time as managers, company, standpoint, our But is manager, from should In third-party worked think insurance investments we going here. So, framework a has minority a the for investment over we

we us balance hundreds really see world, to way, would answer, I be on billions by of don’t short envision the of something I would not so just not sheet-heavy on liabilities. a and becoming And do. insurance a – willing taking That’s and

Michael Chae

and with the essential the just would of partners to have in the add add that would arm’s Michael, are feel ever. area. what industry opportunity day-to-day. stepping to large better seeing our And we approach length context even focus I great further arrangements, marketplace capability the would overall, part asset I than the back. it’s We insurance And in and having – on I asset-light And say, regulatory to to third-party including appropriate – this about you that area. annuities equation competitive sophisticated contracts very in life is this increasingly in the of a And in is recognition management being on

great are competitor, feel So, clients. in these context, we provider we in a terrific for that solution environment, a like that

Patrick Davitt

It Thanks. makes sense.

Operator

ahead. please is question Brian, Securities. coming from go Brian from McKenna next JMP The

Brian McKenna

how Thanks. just to to on Good business, much additional asset opportunity of then equity classes? further tied And And expand secondaries morning private business longer a I term into is everyone. curious the specifically? am what’s follow-up the the

Jon Gray

it’s would about I business. of Today, say XX% our

a have We estate secondaries business. got real

infrastructure We have secondaries an business.

like equity, to really grow those the because opportunity that as you private areas over end and tougher I There But time. grow, think activity you event continuation duration grow. vintages. areas see main sectors that areas well credit this longer in But changing. envision think in will markets of is today as grow growth, But over those more other don’t have are these I both the are time. don’t primarily I of having could up

Brian McKenna

Thanks Got Jon. it.

Operator

go question The Katz Citigroup. from ahead. please from coming Bill is next Bill,

Bill Katz

you Okay. this circling morning. question the taking Most questions to very answered. just much have back one just Thank for two-part maybe tactical, But asked one retail, and structural. been

seeing of ramp you. margin? think product crystallization, have given And about in a bigger any of pressure quarterly here. is, the move certainly level appreciate terms pricing the picture Are we or at In advantage the the early-mover you I BREIT, of the you to how dominant payout should FRE comp shift and a kind any competition? Thank

Michael Chae

that in change. relation on we the in answer this quarterly your see shift first short question, any don’t Bill, Yes, to

Jon Gray

pressure. in clients have competition. say would second to, for the particularly there brand, are short be products, the again possible It’s was no, time on advisors and Where be would pricing I think is this emphasize The things why underestimated. cost-efficient gotten allows insurance something established on for the a access manager I will more fact invest products, little question this valued. us is a is with rapid growing answer us. the capital-light very us see And think to very reason do and to a is don’t. I the to delivering And we our greatly very wants I world their newer channel But retail of helpful financial it at just products think in that the you over way. to we Blackstone that power Blackstone And it’s rate. we a I is, powerful how

Bill Katz

Thank you.

Operator

from Wells The Fargo next question ahead. is from coming please Securities. Finian O’Shea go Finian,

Finian O’Shea

set? question Hi. middle sponsor are you and going finance. you origination about A how talk market beyond morning. Good of BCRED. opportunity And platform reinvestment see growth if Can expanding you on yourself lending direct the your

Jon Gray

BCRED grown grown. capabilities has years have last direct as our of in quite a couple we the lending bit So,

have also BDC a – We that BXSL, has is source a public of capital.

moved beyond We certainly market. middle have

of in area much for groups trailing committed enterprise greatest lending. a were faster-growing like billion technology that we part but the the not lot value, quarter, deals for more have as seven some or strength of the to The companies in direct neighborhoods, really think maybe we us is as who some of good I of $X EBITDA.

becomes And business, and lot to environment it like can offer give use where they software well look, become a of the I know think you need that, more because of markets the and flex market an our say, volatile, strength important, companies also in lender, are really really don’t I underwriting because platforms. “Hey, And institutions As lending current direct a financial I off but comfortable get today.” borrowers is to capabilities important. they certainty so who plays direct need moving enterprise an the pricing the the a When borrower. of we to can lending given are market business. in

So, why to we BCRED something investors, I you will I do see compelling very borrowers think think will and is continue which and the larger to valuable us And checks. the momentum something very to offer write think continue. this larger

Finian O’Shea

so Thanks much.

Operator

is Our coming go BMO. from Rufus final please question ahead. Hone Rufus, from

Rufus Hone

taking that this AUM. now invested Thanks the you the your around becomes FRE the so. and ask on private Is margin? lot your curious still of I is accretive retail Great. provide to wealth billion larger was margin in have it’s Clearly, for margin, the you. of FRE margin. morning. to about about I going piece now retail or drag to margins? And to is $XXX a it FRE your a of upside grown business, Thank to long-term as the a distribution my question. and last and business Good wanted business this to continue the product profile decade do over

Michael Chae

have investment, really and made the holistically. the investment I have to substantial our it Yes. you “burdened” capabilities. PWS about we think think show in years in are by reflected Rufus, And the the we our margins distribution over businesses

the holistically margin points – you up overall the of the a I overall years it last think a that firm, are much endeavor. And so is profitable, driver think over trajectory margin or the to X X this very big the which And I years, basis healthy X,XXX effort. look is when of at

Rufus Hone

Great.

Michael Chae

Rufus. Thanks

Operator

to like closing I hand some Tucker with to would Thank back that, you. it And for Weston remarks.

Weston Tucker

joining call. after up and look the everyone you Great. Well, thank today us for forward to following

Blackstone (BX) 21 Apr 222022 Q1 Earnings call transcript