BX - Earnings call transcript Q2 2022

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Operator

Good day everyone and welcome to the Blackstone Second Quarter 2022 Investor Call hosted by Weston Tucker, Head of Shareholder Relations. My name is Ben and I'm your event manager. [Operator Instructions] Thank you. I'd like to advise all parties that this conference is being recorded. And now, I would like to hand it over to your host. yours. is floor the Weston,

Weston Tucker

Terrific. Thanks second welcome Blackstone's morning and conference call. good quarter and to Ben

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

of million, net $X.XX of per or $XXX for Xst. share, loss over the $X that, declared note quarter of offer material solicitation also are not to of We file to our update call With these may and you'll to weeks. reconciliations the firm's remind a to dividend risks to see fund. sell the results constitutes Blackstone our any like This non-GAAP without in copyrighted today's call share may may duplicated that expect as actual statements of XX-Q call results, distributable find billion please and few record On of differ outside any to on a were consent. release earnings the results of for We'll reported August GAAP an and the audiocast page do you forward-looking purchase Risk to Blackstone include of of of and a uncertain I'll the refer some control $X.XX could Steve. and which materially. statements, holders website. an offer I'd section shareholders the not report is we of in per this affect be or discussion and measures duty that that turn from nothing we common a Also interest an Factors in on press paid undertake We a XX-K. our

Steve Schwarzman

Thanks thank Weston. for a joining our morning Good you lot call. and

and were the for quarter levels anticipating second performance months XX% in the the know equities in XXXX rates, experienced decline year, fell years. rising Investors six periods for in interest a on worst XX% the the in history. market first XX decline The largest some over of record. and of the inflation, economy. markets S&P Debt first in the of you quarter extremely half the largest As slowing first US represented half of high

inflows quarter highest our in billion, a Taken equal realizations. worst typical and now backing Blackstone XXXXs. quarters together, the since QX chaos, of highest the the and Great year-over-year Capital that's from our course, $XX appear year-on-year soared, time of at of commodity one raised hostile investors. our of XXXX. the produced in for the driven inflows, slowed fee-related history, XX% in billion ironically prices be second conditions, Distributable $X We market Blackstone's quarter best markets our activity, results again delivered XX-XX in off record the the earnings US including portfolio AUM its earnings outstanding billion return growth $XX dramatically down to of of in of to to total their Depression XX% by IPO midst but over ever Despite two and remarkable IPOs in these levels. doubled the nearly

XX% million. For $XXX $XXX increase inflows past driving a us for reached billion, record the months, a AUM XX setting in to

we our unprecedented expect attractive from an history, opportunities partners, And our midway with providing several over historically years, the investment about with $XXX enormous powder largest limited us support arise fundraising from through capital. dislocation. billion to next dry of this are We the in cycle

it quarter, managers powder the fee-related managers, extraordinary build are real example, represent including XX% we while firm's over again, In started power significantly REIT us, generate XX%, funds fund and other traditional to indices, enabled most investors, our index outperformed public customer market. outcomes, were differentiated should the the that time. opportunistic cycle up most higher, again We've dramatically of earnings the which real these is the of relationships As and results, the asset while a the down can investors a partners result, and the power believe Blackstone How clients our our our only relevant so our business. quarter, in And with of in channels our flagship our hedge rely the sustainable they deployment produce from vast fundraising notably also up over money achieve X%, for which solutions increasing largely dry and earnings performed customers can capital, suffering? benefited as over to second our decades. retail classes. brand, superior what that expand do We strategies I'll performance, index protected allocations compared X.X%. The only estate, unique seek untapped In over by us fell is to alternative market across XX X.X%. we index. returns, down on trends were remarkable for in XX% have our to years ago funds our Core+ for you. and Limited estate

the process is had the capabilities. higher decline points. real always basis the index assets focus the XX% in priority the a roughly outperformance with of down is seeing period highly versus an basis investment sectors and equaling returns are XX% Our sometime, the basis These markets. create discuss what What portfolios Jon X% operations We the and points. designed liquids, first and capital. strategies achieved products differentiated know For experiencing. BAM's a rigorous X,XXX classes clear X,XXX And in investors value the perform XXX choosing hedge compared indexes which investments best of positive will allows We're many This our the index, our pervasive foresight X.X% asset including it second do stunning to customers. frankly Meanwhile, months to appreciated don't benefits estate six in our our today so a sustain in I first in basis our firm's S&P position a are to and nearly rates losses, and the overtime? results that, protecting drives quarter, we for outperforming by anticipated us with most BAM on we detail. -- more to of inflation and in outperform that exactly reflect growth are deep management asset interest portfolio and for half, of are fund's the again by REIT six-month X,XXX that by fund for the points. outperformance year, and to points more

impacts already and investors. is it outcome uncertainties lived on softening critical in Ukraine pressure and These lot It conditions inflation significant in with avoid the AUM question challenging. combating through is the helping to declines Asia of in of We've that of many And inflation, banks much is, majority longer actions, contracts severe we've think by of Central one minimize to money experienced could large but exact markets, has a And learned been future each all impact to prevalent. which our committed in capital. forward, stay depends long-term in corporate perpetual create or while uncertainty in will on the the these global Europe continue impossible importance The will course We're trying be decreases along also Looking market today remain for in growth. of to will a is in is us behalf conditions supply. uniquely having Bank broad-based terms war as of the each occurred. the environment our markets. headwind facing the managers other for long-term food know XX-year energy COVID on margin positioned we It in negative reassertion one In this be most cautious expect of to reinforced cycles vast the structures, higher because dislocations incorporated how our in act remains periodic than AUM will under have have seen. central responding. economic a on economies. many history. difficult the in most we balancing Blackstone the navigate

insurance the the cap environment in of is liabilities. model shape Meanwhile, to is Our our provides firm the in a advantage portfolio and assets $XXX The also net sell current time market importantly, right. excellent secure billion, flexibility the extremely patience with when with and buy mind. to designed no having us is minimal debt today carefully been financially of

large-scale Our future. the in basis fundraising invest prices for substantial allow the providing us capital at to should realizations lower

confident with to the will We that over which expansion Jon. discuss. with and am expect Bank a grow years future. tightening over come every has And several I'll stronger of difficult In the in conditions will next cycle. I it always, turn FRE extremely that even Michael conclusion, prosper despite Central Blackstone the significant that

Jon Gray

We've higher our the assets of shorter Thank morning, global four quarter, remains our you, persistent the more today are and road Steve power. These income we rate input market a And engines several ground duration foundation and normalization than streams investing views and with capital Despite shareholders. differentiated performance. positioned for suggested exposure costs powerful our believed. the and And with of challenging customers years leading be environment Good positioned sometime. The returns ahead. facts with driving Steve. an rates to us noted. to high-quality record The invest, rising and investment of delivered for for growth would Blackstone been powder both and of owning ideally across inflation floating portfolio we the investor business debt everyone. over pricing as capital with dry many informed is multiples our limited past preparing way on for towards hard companies the

sharp as We also and cyclical on lose such did even opportunities keeping not discipline we recovery in pursued always sectors as the profitability. attractive faster-growing travel our focus we a have thing, invested

apparent output inflation. input towards year-over-year continues areas, meaningfully logistics and exceeded grew rental the in markets, exposures our portfolio estimate XX% fundamentals rent Performance tailwinds of data our up to housing rental of year-over-year logistics the recent strength in strongest the driven growth We Canadian net e-commerce estimated In And with quarter year-to-date levels. our in strategy moving approach In U.S. benefits for in vacancy these and quarter. outpace our in corporates thematic more income BREIT in same-store exemplifies are are perfectly significant we've equity quarter. and remains our where largest low $XXX on operating all-time and the May. from the emphasis two increases record XX% in outstanding inventory two business a most logistics billion which for corporate U.S. concentrated the offset on also In Nowhere estate away based in have reported markets just-in-time seen. real our just multifamily in labor our growth which to growth rents our XX% second growth remained operating revenue the our strong costs. helped XX%. of private property companies, quite sectors of

In of credit XXX. loan-to-value our healthy. just a of assets platform favorite our an record Default positions. immune our saw quarter compared leisure direct and S&P in loans Cosmopolitan areas realizations fundamentals in business neighborhoods. and our by ratio to of U.S. Las energy has While Vegas a portfolio logistics large to we last-mile the we senior on recapitalization our private the firm's focus XX% the among value corporate historically the strong The volatility, rates significant quarter. our were And appreciation comprise a $X.X the largest lending remain to billion in The led weighting of equity in low. These business, are not to in secured subordinate activity XX% further our Hotel market holdings. was travel, our second and in our two sale our of X% with the largest Mileway billion the in history equity realization is borrower $XX highlighted of in secular average

be markets for muted realizations likely volatile forward, do will sometime. Looking mean

creates dislocation meaningful and fund However, continue during advantage structures and to long-duration to opportunities attractive of opportunities the these period. Conversely, this us will to provide emerge. deploy earnings FRE to our take powder enormous ability dry market as ballast give they

of engines four our to Turning growth.

environment. We estate Our real fundraising position a the we its equity to XX% largest to estate or billion, billion, already which opportunistic is we deploy $XX invested ever is than a performance estate equity advantageous Asia, favorably current capital fully date drawdown represent for global our new least be $XX.X funds position to raised raised. in which given in globally, $XX.X larger today. only flagship with would This real drawdown fund today. Combined equity as our customers business is and new closed only to remaining at also capacity In the expect the as and on predecessor allocated. the three private March, $X could large private targeting in be with our real our our of billion and have XX% to respond not stronger Europe flagship We've BREP it and prior continue billion launched very for will fund corporate private fund. months,

$XXX and for the billion on. the exceed list Our to we approximately secondaries goes strategies. We new highly billion our vehicle secondary the $XX target aggregate reach private on growth on confident remain ever to equity expect and flagship size of its in fund Overall, closed vehicle is as of equity drawdown here raised. prior billion, largest track for the $X target well our

institutional and now Moving $XXX grown to has which billion. our rapidly platform perpetual exceeds capital

real XX billion institutional $XX in capital is billion vehicles Our the the including Core+ different raised additional for of strategy BPP perpetual estate Mileway second recapitalization. across quarter $X

we Europe the and have life institutional sciences open-ended raise reminder, America, on focused a can that North BPP continuously four capital. Asia, strategies sector As

in co-investment closed-end also Town Europe, in including industrial, New and Mileway and apartments perpetual vehicles more. Logicor We York, Japanese have and Canadian Stuyvesant

on new $X platform from of strategy year. our quarter and is has inflows an $XX assets billion last focus capital benefit $XX where with their BPP additional new late reopening billion grown to in second great limiting supply. inflation Both hard infrastructure to the Our since and infrastructure further sectors billion, and continue to raised over

Turning to the billion $XX.X the retail. in were Sales in channel quarter.

For limited $X.X in BPIF, to these an retail increased Asia-based perpetual which by investors. subscriptions BREIT billion, BCRED billion, sales quarter robust within additional billion with of offer our repurchases July do products three and totaled monthly a X. $X.X on $XX the vehicles driven We

is XXXX performance respective But as perpetual strong environment. investment the As flows key very we saw that in their positioning retail are of impacted three for the our volatile remains long-term net market in a our does vehicles portfolios.

products distribution around Looking to add forward, the registration world. perpetual we more and partners we have continue in

insurance, our to billion more the organic are doubled past continued over in months we XX $XXX our has totaling Finally year-to-date. $X seeing business flows than on clients, and from billion

a in staying on we have this We as balance variety are focused additional on growth also thrive In opportunities to delivering sheet-light of we're for challenging firepower, basis. them pursuing and closing, for we a environment the XX power and both have years.

Our strategy remains the same as always.

our asset-light, dividends brand-heavy, for focused exceptional which manager We shareholders. near-term turn are to investment appreciation an on will Michael. delivering that, over I long-term things both returns our With and creates clients, for

Michael Chae

Thanks Jon everyone. good morning, and

Day growing highlighting fundraising years, of first $XX of capital second, we've At in the and step-up contribution meaningful the transformation our flagships earnings and platform. the several drawdown of time five For cycle, been of consisting the at past power, a driven first and targeting by Investor billion; combination we message our perpetual the continuing our shared the earnings. AUM XXXX, about the in expansion

four new and fees reflected fee-related each discuss Meanwhile, subsequent years, exceptional definitive of and firm strategies. these firing a set Management year-over-year, range a a more four $X.X propel earnings quality these record the our prior second comparable to perpetual growing detail. the to expanded margin, informative the to dramatically X% quarter a the in by XX% and array I'll factors. growth engines exceeded up QX. perpetual in has and new $X our Firm's with elements up powered second FRE record to muted cycle across look from results. Starting movements. quarters grew year-over-year from continued revenues strong a over AUM, outlook The the in multiple respect T&E it's the increased year-to-date on last underway revenues growth in million we've FRE of vehicles, Combined in despite areas With billion ago, earnings base levels. of were with before, resemble variety levels generated sequentially with year. of basis, step of period, Over $XXX XX.X% stated drawdown On quarter performance margin forward the a step-up expense intra-year up with favorably $X.X in of have fund reflecting revenues. results, another journey. this year second significant key the years quarter, asset to year-over-year. Fee-related fee line given XX% by as was to most billion XX% billion, fee total

the noted with year-to-date in were as impact Adjusting we the year would then, COVID-related As margins XXXX T&E that a reverse. this stable well. full was XXXX reduction spend, for eventually benefit

strong year For XX% XX% of XXXX, the years area, in XXX over net The basis the $X.XX reflecting increased a approximately margin quarter four FRE share second Distributable per Mileway basis powered $X.X and record and full and years. billion XXX realizations expect points earnings X.X growth Cosmopolitan. two same to by $X.X or by to to fold be driven billion, over realizations. both year-over-year, Net in rose in in we expansion points in

overall over to sheet will the on be performance continues the eligible AUM the to XX% record current realizations $X of revenue $X.X grew revenue potential slow a environment performance $XXX stand per our in to balance the build. accrued at revenues effect Net billion. share. performance While year-over-year near-term, or billion Invested

of nearly two primarily up down threefold level still a While XX% up realizations, ago. the and is years from this due same from year-over-year store period record to in value is QX,

perpetual FRE to over in our combination step-up scaling structural ago, Similar the believe drawdown and provided and several outlook. next capital platform lead firm's years. years the cycle the fundraising the ongoing the latest to we Turning a to we firm's the map expansion of four will the of road

over their over engine XX to compared an increase drawdown these vintages. target raised to represents are of XX% billion $XXX add approximately prior as across activated funds funds XX% should alone our First, time. and This FRE

launch the expect early effective four-month real fee new holiday first for in estate billion $XX flagship We to closers. an with fall

We revenues with months than coming including fee-related strategies and retail billion, expect and firm's a across same four ground time is points dramatically related evolution doubled revenue AUM more the of the occur less the has of and sales. $XXX crystallization high-quality expanded since past strategies layering perpetual our on institutional Overall, BPP this particular, XX different in In more quarters Investor the towards revenues strategies alongside we expect Day. revenues of model we reflecting has platform and we these to funds capital referred both to driver will to more a with XXXX step-up in AUM past, of higher key our less XXXX. the events meaningful vehicles generate the on build. to fee subject AUM other In recurring in continue. in than and over perpetual perpetual on at across Most drawdown depending various At see times continues BPP deployment. asset consisting as more a launch of discrete been of performance in case cycles platform the Indeed a that to dependent funds, XX In progression effect the strategies. vehicles crystallization to earnings, total performance billion the the momentum alone, now comprise XX% in XX firm's these development. earnings stream in eligible recurring or $XXX perpetual performance

So as despite XXXX into moves future. in confident the we world, the the in many in second highly are uncertainties half Blackstone closing of the

forward that, have provide foundation is step-up in the open we times extraordinary driving our throughout model joining shown you up up history. the place resiliency the and business to in questions. like for to Our engines With in as are material and for FRE. set thank multiple growth, call a it putting would us for At time, same now difficult

Operator

you. of with Michael, question coming please Michael line from Stanley. Cyprys our that Morgan And from Thank [Operator Instructions] is first Thanks. proceed. the

Michael Cyprys

the But [Technical of Difficulty] when raised staggering then bit capital quarter. in tougher. you results is getting we amount at your which we a hear a look

the just the the you the broader of and financial how expect around and what -- your on Blackstone? the timing about you. fundraising for to perspectives you Thank profile? of for play rest then can industry year So do that and think for fee that activations the help provide additional the XXXX and out how backdrop the any then curious to here year balance the into means into around for And

Jon Gray

out there. Mike. I front, on it would harder Thanks the fundraising say is getting

think was you'll and And I public the private was equity vein of week of the data half this about in more out down from I probably others the frequent XX%. private some in in private first industry last It's of showed North equity tough that institutions. there particularly think hear year participants. both fundraising that was this with America

key I numbers in would I as LPs. do target record It spot. staggering. the relationships in to mean in of we've built is reaffirmation to with XX is falling saw $XX It $XXX over our is billion especially think pretty good differentiated environment, markets our sharply environment a a billion are in and an you the where but that it raise track here, are in impressive. the a time, we our days be fund reflects plus

only very world, secondaries institutional And but sciences. credit, we're capital we US, and Australia. seeing infrastructure, the us it, course, channels, have not East, different now. channel, and in Canada, Asia, we is, equity, insurance the around broad retail this in life in hedge do And with Middle We're so We platform. what raised private funds, of

some probably think expect have not so platform don't adverse others We way. to not same a We broad as track that record, that raise do the more we'll will more It same I I in the relationships. of think a a but maybe is to money. it challenging an things ability And environment, continue gives would hit others maybe depths can't. us

this and environment challenging where Blackstone more really a a So is firm shines. like

if know you don't to add there's I financial, Michael. the of terms anything In want

Michael Chae

the XX or these so continue that the quarters will how launch of have sort depending Mike, coming deployment. launched cycle vehicles course the discrete and there's on over I to of to strategies and referred fundraising

to BREP mentioned deployment the standard I big funds would more expected that global early say beyond fall XXXX. new that to of in in in we those And so we subject I fees you'll see launching. from see sweep the And then that, holiday. it's think fund And then I on the depending fee launch in that -- impact would And terms terms full the funds in of you'll dependent. expect that from a XXXX, of substantial broader again, of deployment much

Michael Cyprys

Great. Thank you.

Operator

Our Worthington second the of ahead. question Ken, from please is coming line Ken go from JPMorgan.

Ken Worthington

Hi. business to terms There a in the investors disconnect by what of resiliency. seeing we're and of the the seems of and the Good resiliency of perception from morning. message we're be this hearing in terms management

So and investors flow-through through intuitive investing help think? this particular about seem And that's as exhaust those of for can us redemptions they are markets to concern. logical divide macro in factors see manage and perception lines? you redemption areas what in you and credit as the of why private particularly beyond possible BREIT positioned net bad seem be reconcile redemptions and might they of as to And if coming Do funds cash BCRED and period months? limits, how not a

Jon Gray

in have question, may And we different a and into broadly fact about that start sort equal why given is the more long size. ourselves Okay. expect We gone even it that equity customers more business. and a see a than calls, that's really these confidence. something to a number to customers. from raise Ken. being call, back proven customers waters. I on more that we've go businesses past used private had XXXX moved think with That about we performance accepted the much XXXX, vintage. a these activities have engaged I'd great And small number in guess, this is misperception narrower and niche what time to is a having a of has open that of a on base, Alternatives fund talked in small That's business the recognize as resilient, said the of relatively to we're we has

similarly raise have previous larger away. last even the shied fund. In cycles to We expect a fund growth investors may than

this record track our a in is of space. recognize invest in both staying this compelling because point the talk investors the out about also business Now, power industry, is way and time and built I'd the to that confidence we firepower.

has staying virtually power no liabilities. front, no insurance net the a firm that on have debt, we articulated So, Steve

well-capitalized funds very business are a sellers up of of our in kind environment. for ways not are then assets. any are We And set we for where

So periods able through go through we're when we to them. ride of dislocation

understand you data, been our recessions through same the think capital. over been years that business, get our there. of longer funds interestingly have back just And If the little multiple look at to a XX-plus invested have I produced It that. takes around people

you advantageous, both terms but think to prove to The our We've portfolios other talking you so the very And at reflect that's got in here really deployed call and necessarily point inflation look about about, factor good I they now months And been where FRE of of difficult I then of market would would that, I overall. to been to we've what don't be a capital. taking We've when focused we've we neighborhoods. is all market. on XX powder. advantage for all this dry talk going

virtually, the our they're BCRED, are fact pivoting So, we've you've a you products rental of credit real of estate, portion lot some market. and obviously and energy In of of all debt floating logistics debt. to heavily for real case at our our an that got our to in XX% travel us equity overall specifically the the different look than rate large debt asked In the BXC very the that's market. estate fixed business private gives oriented different environment floating a in portfolio income, we and have housing about and very business inflationary rate BREDS important. where And than confidence. BCRED, in In you when got BREIT designed residential

housing own in So question hard logistics, I'd are and Fed XX% raises things. vehicles. higher. BREIT, of fundamentals In of I comment you go about was in residential rates specifically returns number case duration just two redemption assets should guess, I that a short the strong. the the phenomenally the every say those time where case

the if show the July BCRED, all, on did another of of of billion in I we you BPIF, remarkable. data, had the in product doesn't out at data billion inflows $X.X had the First $XX have $X.X very quarter of X, look up BREIT quarterly billion but also our we of three $X redemptions. primarily, billion also European and retail redemptions inflows in had of which quarter. we – $XX.X the would In in products billion We point inflows. the overall

So products that momentum. low a right to around think point of I one. lot BCRED the I below it's XX% operate out we quarter with the at or In of would of leverage. slightly case that, one these case are BREIT In the leverage. them of its as have latest

that, We Steve important liquidity, clients' the also but have I time. them own exceptional. to net performance, positive up articulated on run it's delivered BCRED needs extraordinary the excess of to super, this think, down slightly that fact these I significant back again liquidity, this, BREIT these year. performance. sharply super to amount And really focus portfolios with meet markets And we over it that to portfolios. our has over produce are goes That's what managed think X% is fact in in

have terrific amounts of and have having vehicles we a sure to I these course beyond think never structures here a of be final product force the run make in liquidity we the good them with, in point a important. as again to say a positioned also then that is enormous would also seller. we for address being so place it really right And we environment

So, confidence is But thing allocate gives that us in we've positioning investors the greatest continuing capital thoughtful is really designing to the the been them. and individual and strong. are performance so the

Ken Worthington

Great. Thank you much. so

Operator

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

Alexander Blostein

question. Thanks Good taking morning. for the

maybe more retail Jon on little a building the bit here. theme So,

the et do from for evidence markets hear of large -- been and provided partners, as the relative individual some vehicles? market as redemptions income to that the larger down you larger financial gross think they're you performance distribution have extraordinary guys advisers, to sales potential point you double-digits how conditions, and these of because about what lot cetera about a your from So, being So, for support thinking of fixed And both turbulent more year-to-date. has is addressable that Blackstone. some market data

So, Europe, are macro scaling main in guys you're if redemptions, in products, Asia. you some as lot about things backdrop? about more How in products new challenging launching the you what headlines there B, of are couple are are thinking have the a there reasons? a of And those thinking

Jon Gray

of to in of like dramatic they to say feedback If to expect of products, It fairly majority period, the flows. liquidity. would near-term seen back we we've and sharper what the pretty a are markets partners, turned a much be smaller back I other I distribution So, have in go our we these subset course, as other United see these of market then data of continuing with declines in course, time the here And our continue from this And what it's back and our XXXX. net in talk coming would by well-designed are short see net most think investors talk you to for to experienced we've the you we're we We the areas, period at investors was Alex stable. call I that's to worthwhile sell say what's markets volatility, relative about and Asia. got the I the challenging, can on products we've you difficult of direction. When then happening. that this to this And But mentioned over the the execute, a that that they the way been look flows repurchases I a it's And net continue kind is decline would say IPO saw what I performance ground. numbers in we saw them. slow. ample when to are you have flows but think again would investors they where expect you and States products, we them or of reason the to here. if at again then more then look like

rate think income net company Rental down And we was managed and real a positioning valuation quarter. So, growth has out there, operating of in us any the performance. and what deliver dividends or in the and that the these today floating BCRED, that's positioning seeing that multiples which metrics have well. come I higher lot. public the to speaks between the incredible performance and allows we're ground. help up yet said, we in growth, positive as as to estate to pay same-store the mentioned almost I terms again, well we've BREIT, above will still to is do XX% in it That's on the geographic is the is And here even And portfolios. allowed in what happen

short to tougher could see positive flows. is meaningful flows a retail So, choppy see you environment. answer the continuing in net a But environment, you're

You performance. to strong we saw difference. what we're big And a July, think to it will again at the that's make continuing and of beginning continue see

Alexander Blostein

Great. much. very Thanks

Operator

from Our Glenn, is Evercore coming please next Schorr ISI. from question proceed. Glenn

Glenn Schorr

it, lender are Appreciate the And rate that guess talked about rates thanks. the past higher be lots it's great down the obvious we mentioned floating to on you want concept to debt I just rates. with drill of a in clear when Hi. I rising.

in I is levered. so guess invest flip that side And are from benefit you that. companies the you

were you as could while of spreads the can thing? for just for you floating on and do And types address low general so in rates, what zero rates rate. fixed that competitive with if high curious products the topic I'm companies private a rate Thanks. so, in slows the I locking of of same of And were positioning long so portfolio debt low demand credit think if instead and

Jon Gray

When transaction of activity private credit. volumes in that impact slows deal originating can terms

environment, lenders. grown this and an cautious opportunity have creating more in private for the Although that's banks

it we of debt BPP. all terms like that the In In case varies. virtually perpetual bunch in really that been similarly a portfolio, BREIT. We've about talking our our of fix long-term. vehicles do We

disciplined of trade. then some real in real floating estate lowly equity long-duration lot leveraged our maybe a business or fixed assets. a products. our quite more private in have has much as fixing of business, have long-term And hold I would infrastructure well, in not rate pretty out our business, because we do we are our That's been we opportunistic as BCP say, much debt. debt past. We also in estate as more the in these than infrastructure rate were we're But again,

sort way, portfolio at better. coverage our of the we And and versus where just assets not own, so the by it's our ago our sits, when so, look And of I us. we of leverage, the stability years XX type much feel

still across you at rates it's pretty credit the low. If the default look world,

will impact higher being and distribute, see also, impact yes, and the have for on multiples rates we overall, of But we're you portfolio. cash So, to has flow net issue major as a marketplace. seeing that the that course, don't an in our

Glenn Schorr

Thank you.

Operator

question following ahead. Craig Please Bank go America. Our from is from of coming Siegenthaler

Craig Siegenthaler

in but and have leverage type at BREIT and appreciate underlying Good to three especially the M&A you BCRED and of for these of morning, the considering for each Thanks. everyone. X:X do for leverage I BPP? for flexibility And pipeline on down, or BPP vehicles up BREIT, what BCRED. the move question XX% is BREIT both My comments

Jon Gray

in investment We've also vehicles. excess if go have significant. for more these liquidity know these there characterize sizable are both through order additional in as challenging a you what's But we vehicles to, it documents obviously, period liquidity, could disclosed recognizing in these of but meaningful So, created of time. quite would I don't the products capacity requirements, just I meet our requirements,

And is as that something definitely issue. view not so, we an

Steve Schwarzman

Craig. All right. Thanks,

Operator

proceed. from Lee Robert is Our coming next question from KBW. Please

Robert Lee

taking current like, possible maybe Thanks little long on you maybe to to bit know fees was wondering guess, you I for fee-related could I you a adding get maybe base my more out while, -- maybe, alone so a assuming to think, run it versus it's from meat the should morning. cycle some Good that's XX% your break expectations. would revenues. FRE targets. was how from I bone, had questions. And Thanks. for -- we FRE called it you but XXXX if it Great. kind the be I speak, growth think then, since I'm that been, of of rates, updated performance down fundraising

possible So any of over years? next, think to update you kind say, the what five willingness is three,

Michael Chae

Michael. Rob, Thanks, its

fees levels, and right, it XX% run heard you rate think, also performance a from fee-related increase I basically FRE includes revenues. management which

contribution management and but is effect fee -- So XX% just overall. to that FRE the from coming

capital, then, seasoning and cycle platforms in layering those which run qualitatively revenues more there of the So BPP's pretty we the we're and back it, we've terms parallels I and mix fundraising, what this the remarks, third feel perpetual the over it in to it FRE and six, fee-related rate of for are uplift -- years about old, performance BPP to for fundraising estimate, the seven that's time. and current in cycle the over the anniversary, of flagship uplift second management starting institutional of which but I And case, without time as as go a numerators, is of from to certainly where of relates putting BIP. cycle now to also, have numbers And relative sort three-year are said in, favorable this think like platforms, very mostly both growth of in a see programs base. sort the the to And terms those would in of through which to to position I of perpetual my coming from sort we then, drawdown it, is, an look And at talked will, it you FRE fee years. about if -- just including also effect, obviously base. you're good and

years. So you'll see in coming the benefit the of that

Robert Lee

you. Thank Great.

Operator

our Bedell Bank. Brian to from Please, question next on Deutsche from Moving ahead. go

Brian Bedell

performance on I'll Thanks. point Good on Maybe, the just that BPP the platform. folks. performance on and focus morning, -- Great. fee-related BREIT last

BCRED. BREIT, on Just

believe. gross So was I in return making but little net fees think the second your I over a return, the you're on X% quarter, the

of for return you So that you and that if are of that that your three-year BPP component obviously, the attractive about talk investors. about that's a the yield more bit something yield excluding anniversary. that And profile assets the as then, just timing, I platform, optimism for what retail maybe, to can that the talk crystallization could and BREIT. assume be increasing, would little Jon, on related if Michael, just

Jon Gray

Yes.

materially multiples BREIT we've So in housing produced is say growth I down but such history. strong yield seen dividend That at we've more these be the what which as time, future. X.X% have best come with the back the move performance should and our us the is power even point. about rental that That's strong done would could really as combined rates what today that's over strong on fundamental fundamentals, And and we the what's there logistics something to this outlook, already remarkable in of performance. it goes up cap gives confidence

Michael Chae

Yeah. And just Brian. to reinforce that

then that of So mid just appreciation. yield gross appreciation single-digit single-digit and total high stepping X.X% basically that's comprised and on BREIT, return cash

both incentive and vehicles I the think in BPP spread next of then terms different across currently they're and strategies. fees, year,

anniversary those you you of quarter. will in then more meaningful. have have be And years So that contributions Asia next an in fee US, year BPP this next that continue we That vehicle of strategies will quarters. which coming strategies, sciences its life created have and saw a each ago BPP the you the from also BPP will co-invest terms of couple that year, Europe of whether BPP it's

Brian Bedell

Okay.

helpful. you. That's Okay. Thank

Operator

Our following question Autonomous comes from Research. proceed. Patrick from please Davitt Patrick,

Patrick Davitt

expect pivoting pullback is the through maybe the meaningful hand, from deal financing deployment? offset financing This on some back Could more risk that to that? Thanks. dynamic managers rescue on other and you Good there everyone. a deal credit suggesting report a should financing big out speak morning, and direct and should credit you the private And to that that potential lending. offset -- other and press in to we lens, are of dialing

Jon Gray

Okay.

second in think would Biggest that $X private or space. I Zendesk was public of I more. point software I committed in the the in the private transactions with we one out terms credit, billion quarter seven believe to to just

credits. a has there allows an extremely be So being to obviously, It more market. types diversify we allows a active said, bit had to It That you on little change been which more. selective quarter. you of in the

as And think kind but think in direct being loan opportunity. there to private higher pick applies and lender lending of insurance a you in positions, so, only credit our it obviously, general our values this I But But business it of to also going lower significant environment, I to we're on in spots. lend to speaks not kind spreads. can at

time be lot to our business, have a business, good of a So we this insurance our it's We a lender. business, between fortunately DXC scale BREDS our in area.

credit where kind in borrowers. contract you to selective But economic deploy So we're to opportunity and you who of terms favorable both choose and be the enthused in money environment. yes, get you provide to choose, this can lend about also to capital

Patrick Davitt

Thanks.

Jon Gray

Patrick. Thanks,

please. question Next

Operator

proceed. next our Finian from Wells to is Securities. Please Fargo from Moving O'Shea question

Finian O'Shea

you. What – about a there drop-off on how starting volatilities talk to perhaps terms Can it a of we And see? valuations on sort buyer/seller magnitude out? might Thank activity? impact Hi, starting thaw might of deal last, in is the of everyone. private is to disconnect you long market the expected

Jon Gray

no have have these I them sometimes off, of they you saying decline, keep move. surprise. of inventory debt take that a seen markets, banks dislocation moments have trading We moments time Whenever as have at who equity you markets will to

an did most very their conditions. And Geosyntec not the Vara [ph], expectations. environmental in six saw XX We in In seeing sort sellers which getting was deals equity. something. testing. and think buyers bought weeks. a a months XXXX private short, We see We life in when which is you the it space We number we're of XXXX, and don't example down slow this extreme a see We're bought firm. those still of in business things You business in I of either science compliance lasted it it doing XXXX, at or was resetting is done. consulting

up. slow people the way a sort down, so activity. business builds floor But and And is find still it back is of things then happens there

volumes. sense down they'll this trajectory clearer Once around inflation more, turning that is have the I more think in see people slower I think environment, a until inflation there's confidence path. on get we'll a little a

slower expect of the the and up. back will then would I will take think time pick so I little will year a because And things be half back it

will good model, we public a to be patient. the Going can the and then have lot that of where back be We are spending up division probably people we're right time. private-to-private want news moment. don't Then the markets capital the clearly screen to time. can on capital. or to who pick of in We opportunities deploy The sort is and need a transactions today over the that's our best sell for there'll wait

be we've back time. up the expect half will would of slow in cycles these I pick the seen volume it Deal to over back probably year. So but

Finian O'Shea

Thank you.

Operator

to from our on Please next Brian question Mckenna Securities. proceed. Moving JMP from

Brian Mckenna

everyone. BREP I morning, great fund to for at strong It's see $XX XX up then And quite of Good product, Thanks. the look to have few stepped vintages the last the date to sizes target. and fundraising hear this when meaningfully. the billion

about size funds you So of can think And you about also to these how then expanding talk the market opportunity? about the funds over capping these relative how time? you think

Jon Gray

you on if But you a it's at I guess Yes. basis. estate I see We've double-digits as grown commercial low look a BREP financial mean – over franchise the growth the asset look really grown if in before $XX the faster real disciplined mentioned, time. we than just marketplace step-up. I been you think is crisis, that relative very crisis. value from don't we've the across billion And

course know, what in our excites products perpetual us potentially. which larger our seen excited is where to and even has But As happen is we've been investors and institutionally in what's retail, big think you going market. growth an both I course, of of Core+

we it require incredibly the things. recently us step business And public up. financing our that we people a because in of fund allows geographies the buy in last-mile in Parks, actually and the committed scale were there US doesn't to who markets, PS week, this with closed see logistics having able to best Business fundamentals. that's strong some challenges commitments could of And be You face large-scale big financial do to

So I guess, what We've say I XX-plus been is the very for this now the question asked years. we're thoughtful of would on size capital.

have If continue confidence and to track at record deliver across And inception opportunity BREP you firm. scale since in us. our drawdown lot investors investors and to We're story the relative these look We at is what that it's performance in continuing net a the a matters. global of funds similar to the capital XX respond.

Brian Mckenna

Thanks, John.

Operator

question go next UBS. comes Our from Adam from Beatty Please ahead.

Adam Beatty

morning. and probably Thanks me Good on for Michael. for margins Question squeezing expenses so in.

the about in margin quickly you the then along upside? like uplift from fundraising on margin just could, lot. assuming are I some that if higher might be Thanks run And a or just FRE margins there and the think a incremental think rate on far terms to that should more line we getting expense normal we non-comp how rate? kind are of, you back post-pandemic going do a forward? of, growth run How uplift Just expansion such

Michael Chae

Adam. Sure,

question expect second we'd to -- doesn't effect. that the not on approximately that obviously funds think on I margin and expansion and leverage expansion the continue long-term we're XX% operating have although rely margin over larger

made T&E for of sure, terms this on this and first call of In ago. expense, your a sort operating yes we was question in year

our we the a pretty so significant pretty even felt a year that's so really ago. year mobilized gathered versus points what about I as a we uplift impact. ago to investors margin were exactly if think, we you and T&E forth, levels even a said look it of teams was spend back basis like minimal and work again spend at pre-COVID firm ago explained much or the across though happened. And And it relative to year XXX

expect quarters the normalize as roll to then and would the first half next you we will I year through in think at lumpier in look think And half of of the some that. over couple the I sort I full over the if OpEx cycle increase the year year that rate of of after So comparisons. second decline overall

Adam Beatty

it. appreciate the details. for I Thanks

Operator

have Jefferies. ahead. Please we O'Hara go up Gerry from Next

Gerry O'Hara

on clearly guess just if little opportunity it strong a quarter this we secondaries over just this is Great. of and And the touch might secondaries itself then of bit future a liquidity any you. to briefly of market Perhaps dynamics business. performance I outlook able bit sort the question, and in the you some for construct the Thanks. could up the maybe the afford? longer-term that maybe comment do retail be of to drivers liquidity X.X%. of the a But on lend just given could in fund potentially closer but sort or Thank the

Jon Gray

All right. Good question.

a on bit little the So there. there is performance lag a of front

So got because underlying from managers opposed reporting so as directly to you're you've Blackstone, reporting a or lag. from quarter

obviously those but in So market good results, we'll today. equity what's very reflect expect next were the happening they'll quarter private

terms In drivers outstanding. of in business they're the really

even provide buy about that think across in different there out limited. yet thousand and that's how to secondary add serious can there how managers the to the mismatch alternative you space when several the you grown capital there. little who And number then is If a firms is dramatically of has the space more liquidity

and business over a need of we'll up this the structural I this liquidity. as sales important. why happen again. is about positives period scale firm will time pick probably think be a then of LPs in have the say, is investors will continue of that on what's sort is, see pause there's this we front again will in flow diversity where for many to markdowns and flip And terms a selling having going come we some the through, probably would one so there'll side business inefficiency there's So special because that deal now the investors to the

and the of secondary. for more the challenging equity It are makes here selling that many overallocation fundraising private about thinking same that means in One positives is firms. to more now those institutions more

very So, we that be in think space having billion going to a compelling. is $XX fund

growth in opportunity. We I and a there's but And that infrastructure do retail, really engine have for our estate, real smaller firm. long-term think is funds on

of emphasize talked products to enough and month there the quarter, generally basis. focused was to the new cannot strength things what potentially the of I I firm. guess this something it product is that insurance liquidity, our meaningful -- do say shorter again, factors another the part do And of to think the duration broader I our brand about the and would diversity it, the environment we've create And just of it's on that's allows of addition. strength a that a be on in us just retail could a one I capital-light everybody's

environment. still to challenging ability Our the institutionally, fundraise despite

it over it in in I billion, You number see continue think that our $XX you'll to results. time see

Gerry O'Hara

Okay. Thank you.

Operator

go Our next Please question is Exane. BNPP Giblat coming Arnaud from ahead. from

Arnaud Giblat

Good morning.

our months growth. BREIT. So, wondering I question is over heard of months past what If been just six component biggest understand XX my I'm there the the on is? well has rental I've etcetera. outlook the performance consumer? in much in you I'm neighborhoods the But brands you just inflation and squeezed how more and good context scope wondering you're put have of a that rising to rates Thank you.

Jon Gray

backdrop point the down, some incredibly growth at very Obviously constructive. high of question. is rental the good will come but rates a It's

record here than low vacancies when down residential our is main a different two going logistics typically in with cycle. asset start and classes You you're which into

what to residential of the slowing addition you're pretty In side, a is new that, rapid on construction. seeing particularly

New of costs mortgage and the couple were last here goes really market, cost XX% months because starts home for down have gone construction the financing obviously in up sale the of costs, also up materially.

people And still live somewhere. have to so,

already a have big is the that's happening more And and rental We into market. new of supply. structural shortage so, people less you're pushing seeing course what's very

housing back of the construction also to high of if back US, X% XXXX last and CPI period, So a period lot by X% the point out new averaged in really would went inflation support. that Rental then. the declined to rents XXXX you I history at provides XX%. grew apartment as

closer chain importance the there and last-mile haven't keeps hold hard up. creating of who climate. think say concerned then are fully real of of And we're inventory this this owning to the then demand in supply too. kind about that's I the logistics more companies, shift to seeing And value assets need the still logistics investors the going e-commerce desire redundancy would of So, there is, home, on I to side appreciated what

And there so, well. see as strength we

around So, surprisingly, the the economy of sectors world. headwinds, the lot are despite these a in the entire of probably best two

Weston Tucker

Arnaud. Thanks,

Next question please, Ben.

Operator

Rufus from coming is Hone question from next Our BMO. Rufus, proceed. please

Rufus Hone

I the seeing in I And deals whether Great. environment you're insurance the and Good for ask morning. has how impact about potential the for much. you're rates deal to you. has appetite rise current had volatility in your on higher very Thanks any and evolved? wanted Thank the pipeline was transactions? wondering, interest seeing

Jon Gray

banks for corporate more the this makes to Well, and we infrastructure that you increasingly important. I are that originate slow originations, in when particularly the environment, get distributed estate just insurance products. private very have this the seeing think loans, a loans, real full that on recognizing capability make in credit buy to companies And inventory environment competitive if challenging it And is more loans, having liquid who asset-backed real advantage. loans, widely folks capability their is

are seeing clients. our insurers of performance think I insurance strong the also

also clients, to taking That to three incremental asset risk. them managers. have insurance other without insurers incremental meaningful credit allows on alternative tied We yield earn private but

generate better beginning recognize powerful So we're that returns this seeing industry that an for is tool is a to policyholders. to

multiple with discussions in are parties. We

this talked to clients do this and But multiple ability not. model, serve gives what a we have over engine the don't grow these As can hit or is about origination we where area. us know time, in we and when very we've that things powerful insurance

my is really partnership looking over major and yield. I don't expectation There's So come for when to us insurance know area. continue between back we'll natural sizable incremental time, other a clients and companies grow and find this

Operator

Autonomous Next Research. please Patrick, question from proceed. comes Davitt Patrick from

Patrick Davitt

anemic. shift, should like there, great but see you for Are as a you flows performance strategy Hey thanks starting BAM that where longer-term period remain more follow-up. we're pipeline as maybe in it had a pretty the building be of to highlighted, a the seems demand entering attractive?

Jon Gray

you two quarters, market idea through going give growth. does a that of And a to markets about wasn't downside would of and we I so time. fixed but talk flows not I regardless we're think recognize products working I going works. begin sort clients that was were been could to of area, on in good, also think that today, these income some We've some what solid where takes really bit equity a markets movements time. would and how your that But that is, performance. period could follow We're take the valued. say help new produce returns, protected invest where are it to after product think but That's it really this, it in you

adverse that business protect in I can just an will environment so the BAM think how capital powerfully in showing we resonate. And

grow doesn't necessarily happen will we think, overnight. it I but

Patrick Davitt

Thanks.

Operator

proceed. Brian Deutsche from comes question final Bedell Our Please from Bank.

Brian Bedell

taking Thanks follow-up. the for just on Great. retail side. angle my Maybe on growth the

US? in the and there's rely on whether can think mentioned And talk wire-houses. distribution And US, continuing in or I large new the the a you to be also expanding you on does an outside effort well-penetrated which I also very focus believe private in particular banks very and US outside in there. particular? But retail all talk maybe those creating this there's products, you're Can that in areas I lot the products? market with about, RIA it existing I about of you're the know Asia to go maybe believe already more partners. the done

Jon Gray

at for these our first within say, which small So wire-houses would the of advisers we just very we Asia future products, market our a experiencing these with is not and the were look at with the we're also penetration all the the I customers and these but this stage. that's very requirements, say journey minority, only think scale. have initial the that you is In you firms early a products. are still When there working IBD when are of only way In are also low. the well-penetrated, smaller low. Europe regulatory the overall In could Japan steadily I a largest even are Europe -- we're the channel real through. And to closer time. filing much minority channel, beginning financial RIA systems. in

you sort capital today about this. you institution But place XX And today. new in ago equity, a an space markets. private comment to went of and now XX% talking Steve to seems in years back on we're it and very exotic. have could different time the alternative If private in were institutions of their

don't but huge individual single the this know move that there low digits performance it think is meaningfully. far go think and difference. brand can I if Again in, our it a I from will where makes I investors,

so time think financial more distribution And I we're more these building we'll have a out capabilities. lot many partners over clients And investing advisers and systems. our in and within

Brian Bedell

That’s Thank you. great color.

Steve Schwarzman

Brian. Thanks

Operator

Weston Tucker to closing to Allow for it remarks. hand me back

Weston Tucker

Steve think you wanted make? had Ben. some And Thanks remarks you I to Great.

Steve Schwarzman

out. what was place start a such story I screen we're here. quiet is to what answer fun somebody always Sunday and investor. questions. because just question just well happy some there a up it's been you Michael seeing piece, Yeah, think -- I'll you But he between sort which BREIT is I've today I'm and unanswered from the watch And on I was think walked a very an not me of said, phrased. tell to disconnect and on about day as and JPMorgan which in the, to Jon management What's

my I so the it's you And thing people. biggest In is amazing. This fact in love portfolio.

it able people I be one talked to XXX% brand the be not is money. And odd. by making friends been I the put the that that's a It well, helps us put everybody the do discussion we where And other losing which been market. of we're value optimism in BREIT, Jon's building out case. remember that's and if portfolio large classes. be that raise who is are All I've performing upon. have to really of good retail story. base to outperform products asset is people function think. And in I reason best then for optimism to who think and enormous they think our where that's their that isn't helps providing firm I've out broadly they'd if in the would that we're where reason we to throughout find will that fortune builds say we I markets don't unlike it. my But that a that apparently are a It's thing our us exciting shared doing risk underwrite listening laid And money. This you wares our simple investors pretty of appreciate broker system. about really percent. a thousands our And BREIT the

do. And pride do it we what we so really And take a carefully. in we've And we had good lot of results.

system. In don't long also amazing that bigger we in And, have have say to of the they other say so the at be future ability times. build because the isn't they when for reasons terms distributors people market particularly been we the you term, people lot astonishing group And think an today, And us Truly disconnect to this there's the about to concerned be These and to of but the things long going a we group that's a who of And prevail. I a sit it. hope. are shared business. firm. I in It's end term at reason of of I've how day, the the think through a not my hugely by obviously you want they to with say we that a happen. sense of -- I do have

well just as over really think and thought a And I time, didn't terrific so remarks, when said I a I do ended my have we positioning. that line. I throwaway do And we

it's think for I to it fine and to everybody. going in and financial world the unique build out we're it's work going on

hemorrhaging. down. companies to going reason there's We're fund go other not that to not that, that I billion on when because up mean, like a here to our what's hemorrhaging. mutual But are We're have and in the of you look at complexes I terms famous giant step mean, I balance realize, individual wanted questions. back a they AUM, are quarter, happening end I So here. $XX just seem there's in lot of some

would. business what's optimism there be I step to what think time look honestly I building So I wish going if customers. all you of what you our apologize little thinking believe end will to we over our and at and for reason think an enormous and you're at as But providing happen that in unbundle, for it. back for And I is speech. I

Weston Tucker

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

Operator

everyone. Thank you conference. concludes joining for This your

may You Goodbye. your rest day. the enjoy now of Please disconnect.

Blackstone (BX) 21 Jul 222022 Q2 Earnings call transcript