Q2 2025 Blackstone Inc Earnings Call
Assistance. Please press Star Zero, if you would like to ask a question. Please signal by pressing star one if you're using a speaker phone. Please make sure. Your mute function is turned off to allow your signal to reach our equipment at this time I'd like to turn the call over to Weston Tucker head of shareholder Relations. Please go ahead.
Speaker Change: Great. Thank you Katie and good morning, and welcome to Blackstone's second quarter Conference call. Joining today are Steve Schwarzman, Chairman and CEO, Jon Gray, President and Chief operating Officer, and Michael Chang, Vice Chairman and Chief Financial Officer.
Speaker Change: Earlier. This morning, we issued a press release and slide presentation, which are available on our website, we expect to file our 10-Q report in a few weeks.
Speaker Change: I'd like to remind you that today's call may include forward looking statements, which are uncertain and may differ from actual results materially we.
Speaker Change: We do not undertake any duty to update these statements.
Operator: Good day and welcome to the Blackstone second quarter 2025 investment. Today's call is being recorded. At this time, all participants are in a listen-only mode.
Speaker Change: For a discussion of some of the factors that could affect results. Please see the risk factors section of our 10-K.
Speaker Change: We will also refer to non-GAAP measures and you'll find reconciliations in the press release on the shareholders page of our website.
Operator: If you require operator assistance, please press star- if you would like to ask.
Speaker Change: Also note that nothing on this call constitutes an offer to sell or a solicitation of an offer to purchase an interest in any Blackstone fund. This audiocast is copyrighted material of Blackstone may not be duplicated without consent.
Operator: Sid Nolbe, Presidio. Please make sure your mute function is turned off to allow your signal to reach our At this time I'd like to turn the call over to Weston.
Speaker Change: The results, we reported GAAP net income for the quarter of $1 6 billion.
Weston Tucker: Great, thank you, Katie.
Good day, and welcome to the Blackstone. Second quarter 2025 investor call. Today's call is being recorded at this time. All participants are in a listen? Only mode. If you require operator assistance, please press star zero. If you would like to ask a question, please signal by pressing star 1. If you're using a speaker-phone, please make sure your mute function is turned off to allow your signal to reach our equipment. At this time, I'd like to turn the call over to Weston Tucker head of shareholder relations. Please go ahead.
Speaker Change: Distributable earnings were also $1 6 billion or $1 21 per common share and we declared a dividend of $1 <unk> per share, which will be paid to holders of record as of August 4th.
Weston Tucker: And good morning, and welcome to Blackstone's second quarter conference call. Joining today are Steve Schwarzman, Chairman and CEO, John Gray, President and Chief Operating Officer, and Michael Chae, Vice Chairman and Chief Financial Officer. Earlier this morning, we issued a press release and fly presentation, which are available on our website.
Weston Tucker: Great. Thank you, Katie and good morning, uh, and welcome to Blackstone second quarter conference call.
Steve Schwarzman: With that I'll turn the call over to Steve.
Steve Schwarzman: Good morning, and thank you for joining our call.
Weston Tucker: We expect to file our 10-Q report in a I'd like to remind you that today's call may include forward-looking statements which are uncertain and may differ from actual results. We do not undertake any duty to For a discussion of some of the factors that could affect results, please see the risk factors section of R10-K. We'll also refer to non-GAAP measures, and you'll find reconciliations in the press release on the shareholders page of our website.
Steve Schwarzman: Blackstone reported outstanding results for the second quarter <unk>.
Speaker Change: Joining today are Steve schwarzman, chairman and CEO John Gray, president and Chief Operating Officer and Michael Chay, Vice, chairman and Chief Financial Officer earlier this morning. We issued a press release in slide presentation which are available on our website. We expect to file our 10q report in a few weeks.
Steve Schwarzman: Distributable earnings increased 25% year over year to $1 $6 billion.
Weston Tucker: I'd like to remind you that today's call may include forward-looking statements, which are uncertain and may differ from actual results materially.
Steve Schwarzman: As Tim mentioned.
Weston Tucker: We do not undertake any duty to update these statements.
Steve Schwarzman: Fee related earnings grew a remarkable 31% year over year and represented one of the best quarters in our history.
Weston Tucker: For discussion of some of the factors that could affect results. Please see the risk factor section of our 10K.
Weston Tucker: Also note that nothing on this call constitutes an offer to sell or a solicitation of an offer to purchase an interest in any Blackstone fund.
Steve Schwarzman: The strength of these results notwithstanding muted backdrop for realizations reflects the significant expansion of the firm's earnings power.
Weston Tucker: We'll also refer to non-gaap measures and you'll find reconciliations in the press release on the shareholders page of our website.
Operator: This audio cast is copyrighted material of Blackstone and may not be duplicated without consent.
Steve Schwarzman: That has been underway as we continue to innovate and scale key growth initiatives.
Michael Chae: On results, we reported GAAP net income for the quarter of $1.6 billion. Distributable Earnings were also $1.6 billion, or $1.21 per common share.
Weston Tucker: To sell or solicitation of an offer to purchase an interest. In any Blackstone fund this audiocast is copyrighted material of Blackstone may not be duplicated without consent.
Steve Schwarzman: These include our platforms and private wealth.
Weston Tucker: On results. We reported gaap net income for the quarter of 1.6 billion.
Steve Schwarzman: Credit and insurance and infrastructure.
Michael Chae: We declared a dividend of $1.03 per share, which will be paid to holders of record as of August.
Weston Tucker: Distributable earnings were also 1.6 billion or 1.21 cents per common share.
Steve Schwarzman: Along with the launch of multiple new funds in our drawdown area.
Steve Schwarzman: The firm's expansion is also powering our fundraising.
Stephen Schwarzman: With that, I'll turn the call. Good morning and thank you for joining our call. Blackstone reported outstanding results for the second quarter. Distributable earnings increased 25% year over year to $1.6 billion, as Weston mentioned. Fee-related earnings grew a remarkable 31% year over year and represented one of the best quarters in our history. The strength of these results, notwithstanding a muted backdrop for realizations, reflects the significant expansion of the firm's earnings power that has been underway as we continue to innovate and scale key growth initiatives. These include our platforms and private wealth. Credit and Insurance, and Infrastructure, along with the launch of multiple new funds in our Drawdown area.
Weston Tucker: and we declared a dividend of 1 and 3 cents per share, which will be paid to Holders of record as of August, 4th,
Steve Schwarzman: With that, I'll turn the call for Steve.
Steve Schwarzman: With inflows, reaching $52 billion in the second quarter.
Steve Schwarzman: Good morning, and thank you for joining our call.
Steve Schwarzman: And 212 billion for the last 12 months lifting assets under management, 13% year over year to a record $1 two trillion dollars.
Steve Schwarzman: Blackstone reported outstanding results for the second quarter.
Weston Tucker: distributable earnings increase, 25% year-over-year to 1.6 billion dollars as Weston mentioned
Steve Schwarzman: In addition, there were reports that the U S administration.
Steve Schwarzman: Soon issue an executive order that could help opened another vast new market for the firm.
Speaker Change: Be related to earnings. Grew a remarkable 31% year-over-year and represented 1 of the best quarters in our history.
Steve Schwarzman: To deliver superior returns and diversifications for investors.
Steve Schwarzman: The 12 trillion dollar U S defined contribution channel.
Weston Tucker: The strength of these results, notwithstanding a muted backdrop for realizations reflects the significant expansion of the firm's earnings power.
Steve Schwarzman: The foundation of Blackstone's exceptional long term growth of course is investment performance.
Weston Tucker: That has been underway as we continue to innovate and scale key growth initiatives.
Weston Tucker: These include our Platforms in private wealth.
Steve Schwarzman: We continued to deliver for our limited partners in the second quarter represented the highest amount of.
Weston Tucker: Credit and insurance and infrastructure.
Stephen Schwarzman: The firm's expansion is also powering our fundraising. with inflows reaching $52 billion in the second quarter and $212 billion for the last 12 months, lifting assets under management 13% year over year to a record $1.2 trillion.
Steve Schwarzman: Overall fund depreciation in nearly four years.
Weston Tucker: Along with the launch of multiple new funds in our draw down area.
Steve Schwarzman: The firm achieved these results in a turbulent quarter for markets, which began with the S&P 500, following 14% amid collapsing investor sentiment to the tariffs policy uncertainty and geopolitical instability.
Weston Tucker: The firm's expansion is also powering our fundraising.
Weston Tucker: With inflows, reaching 52 billion in the second quarter.
Stephen Schwarzman: In addition, there were reports that the U.S. administration may soon issue an executive order that could help open another vast new market for the firm to deliver superior returns and diversifications for investors. the $12 trillion U.S. defined contribution channel. The foundation of Blackstone's exceptional long-term growth, of course, is investment performance. We continued to deliver for our limited partners, and the second quarter represented the highest amount of overall fund depreciation in nearly four years. The firm achieved these results in a turbulent quarter for markets, which began with the S&P 500 falling 14% amid collapsing investor sentiment due to tariffs, policy uncertainty, and geopolitical instability.
Weston Tucker: And 212 billion for the last 12 months. Lifting assets under management 13% year-over-year to a record 1.2 trillion dollars.
Steve Schwarzman: At the time, we advised patients to allow for trade negotiations to take place.
Weston Tucker: In addition.
Steve Schwarzman: And to give tariff diplomacy.
Steve Schwarzman: <unk> to work its way through the system.
Weston Tucker: There were reports that the US Administration. May soon issue an executive order that could help open another vast New Market for the firm.
Steve Schwarzman: Despite this significant external uncertainty.
Weston Tucker: To deliver Superior returns and diversification for investors.
Steve Schwarzman: We were encouraged by the fundamental strength of the economy.
Steve Schwarzman: The accelerating pace of technological innovation as a major growth catalyst.
Weston Tucker: The 12 dollar US Define contribution Channel.
Steve Schwarzman: What we were seeing on the ground in terms of declining inflation.
Weston Tucker: The foundation of blackstone's exceptional long-term growth of course is investment performance.
Steve Schwarzman: We consistently shared our view that inflation was below the fed's target when adjusting for lagging shelter cost based.
Weston Tucker: We continue to deliver for our limited partners and the second quarter represented the highest amount.
Weston Tucker: Of overall, fund depreciation.
Based on the proprietary data from our large scale portfolio.
Weston Tucker: It nearly 4 years.
Steve Schwarzman: Our unique position and real estate is always the.
Steve Schwarzman: The firm's insights informed our views on and investing.
Steve Schwarzman: And we continue to lean into areas, where we have high conviction.
Speaker Change: The Firm achieved these results in a turbulent quarter for markets, which began with the S&P 500 falling 14% amid collapsing, investor sentiment due to tariffs.
Steve Schwarzman: We invested $33 billion in the second quarter.
Stephen Schwarzman: At the time, we advised patience to allow for trade negotiations to take place. and to give tariff diplomacy a chance to work its way through the system. Despite the significant external uncertainty. We were encouraged by the fundamental strength of the economy. The accelerating pace of technological innovation as a major growth catalyst. and what we were seeing on the ground in terms of declining inflation. We consistently shared our view that inflation was below the Fed's target when adjusting for lagging shelter costs. based on the proprietary data from our large-scale portfolio and our unique position in real estate.
Weston Tucker: Policy uncertainty and geopolitical instability.
Steve Schwarzman: 145 billion in the last 12 months.
Speaker Change: At the time, we advise patients.
Steve Schwarzman: One of the most active 12 month periods in our history.
Speaker Change: To allow for trade, negotiations to take place.
Steve Schwarzman: Setting the foundation for future value creation, and what we believe is a favorable time.
Speaker Change: And to give tariff diplomacy a chance to work its way through the system.
Steve Schwarzman: Our deployment has emphasized areas benefiting from long term secular mega trends.
Speaker Change: Despite the significant external uncertainty.
Speaker Change: We were encouraged are the fundamental strength of the economy.
Such as digital and energy infrastructure.
Steve Schwarzman: Digital commerce.
Speaker Change: The accelerating pace of technological innovation, as a major growth catalyst.
Steve Schwarzman: Private credit.
Steve Schwarzman: Life Sciences in India.
Speaker Change: And what we were seeing on the ground in terms of declining inflation.
Steve Schwarzman: These areas have also been among the largest drivers of appreciation in our funds.
Speaker Change: We consistently shared our view. That inflation was below the fed's target when adjusting for lagging shelter costs.
Steve Schwarzman: In particular, the enormous need for debt and equity capital to build the infrastructure powering the artificial intelligence Revolution has created extremely positive dynamics for our business.
Stephen Schwarzman: As always, the firm's insights informed our views on investing.
Speaker Change: Based on the proprietary data from our large-scale portfolio and our unique position in real estate. As always.
Stephen Schwarzman: And we continue to lean into areas where we have high conviction.
Speaker Change: The firm's insights informed, our views on investing.
Steve Schwarzman: In real estate specifically.
Stephen Schwarzman: We invested $33 billion in the second quarter. and $145 billion in the last 12 months. one of the most active 12-month periods in our history.
Speaker Change: And we continue to lean into areas where we have high conviction.
Steve Schwarzman: We called the bottom of the cycle 18 months ago.
Speaker Change: We invested 33 billion dollars in the second quarter.
Steve Schwarzman: And since then we've been actively investing across our real estate equity and debt strategies.
Speaker Change: And 145 billion in the last 12 months.
Stephen Schwarzman: Setting the foundation for future value creation and what we believe is a favorable time. Our deployment has emphasized areas benefiting from long-term secular megatrends. such as digital and energy infrastructure. Digital Commerce. Private Credit Life Sciences, and India. These areas have also been among the largest drivers of appreciation in our funds. In particular, the enormous need for debt and equity capital to build the infrastructure powering the artificial intelligence revolution has created extremely positive dynamics for our business.
Steve Schwarzman: We also said it wouldn't be a V shape recovery.
Speaker Change: 1 of the most active 12-month periods in our history.
Steve Schwarzman: That is what's happened.
Steve Schwarzman: Private real estate markets have appreciated gradually over this period.
Speaker Change: Setting the foundation for future value creation. And what we believe is a favorable time.
We are now seeing promising signs with new supply falling sharply.
Speaker Change: Our deployment has emphasized areas, benefiting from long-term. Secular Mega trends.
Speaker Change: Such as digital and energy infrastructure.
The cost of debt capital coming down and transaction activity picking up.
Speaker Change: Digital Commerce.
Speaker Change: Private credit.
Steve Schwarzman: Overall, despite ongoing uncertainties in the environment.
Speaker Change: Life sciences and India.
Steve Schwarzman: There are multiple supportive tailwind for our business.
Speaker Change: These areas have also been among the largest drivers of appreciation in our funds.
Speaker Change: In particular.
Steve Schwarzman: In terms of the economy.
Steve Schwarzman: Backdrop remains favorable with a resilient growth.
Steve Schwarzman: See inflation remaining muted.
Speaker Change: The enormous need for debt and Equity Capital to build the infrastructure. Powering the artificial intelligence Revolution.
Steve Schwarzman: With the likelihood for an increasing goods inflation.
Stephen Schwarzman: real estate specifically.
Steve Schwarzman: But decelerating wage energy and shelter insulation.
Speaker Change: Has created extremely positive Dynamics for our business.
Stephen Schwarzman: We called the bottom of the cycle 18 months ago. And since then, we've been actively investing across our real estate equity and debt strategies. We also said it wouldn't be a V-shaped recovery, and that is what's happened. Private real estate markets have appreciated gradually over this period. We are now seeing promising signs with new supply falling sharply, the cost of debt capital coming down and transaction activity picking up. Overall, despite ongoing uncertainties in the environment, there are multiple supportive tailwinds for our business. In terms of the economy, the backdrop remains favorable with resilient growth. We see inflation remaining muted.
Speaker Change: in real estate specifically,
Steve Schwarzman: These factors should give the third room to lower interest rates over time.
Speaker Change: 18 months ago.
Steve Schwarzman: Which is positive for asset values.
Speaker Change: And since then, we've been actively investing across our real estate, equity and debt strategies.
Steve Schwarzman: In terms of policy, we continue to believe the focus of policy actions ultimately is to support growth.
Speaker Change: We also said it wouldn't be a v-shaped recovery that is what's happened.
Steve Schwarzman: Tax cuts have now been passed into law.
Speaker Change: Private real estate markets have appreciated gradually over this period.
Steve Schwarzman: And a number of trade agreements have been reached with many more under active negotiation.
Speaker Change: We are now seeing promising signs with new Supply falling sharply.
Speaker Change: The cost of debt Capital coming down.
It remains to be seen how individual negotiations will play out but the direction of travel is toward more resolutions.
Speaker Change: And transaction activity picking up.
Speaker Change: Overall despite ongoing uncertainties in the environment.
Steve Schwarzman: As the policy environment settles.
Speaker Change: There are multiple supportive Tailwind for our business.
Steve Schwarzman: We expect transaction activity that benefit including realizations.
Speaker Change: In terms of the economy.
Speaker Change: The backdrop remains favorable with resilient growth.
Steve Schwarzman: Greater clarity will lead to greater confidence for companies and financial sponsors and market participants.
Stephen Schwarzman: with the likelihood for an increase in goods inflation, but decelerating wage, energy and shelter inflation. These factors should give the Fed room to lower interest rates over time. which is positive. for Asset Values. In terms of policy, we continue to believe the focus of policy actions ultimately is to support growth. Tax cuts have now been passed into law. and a number of trade agreements have been reached. with many more under active negotiation. It remains to be seen how individual negotiations will play out, but the direction of travel is toward more resolution. As the policy environment settles.
Speaker Change: We see inflation remaining muted.
Steve Schwarzman: We're seeing this dynamic start to take effect.
Speaker Change: With the likelihood for an increase in Goods inflation but decelerating wage energy and shelter inflation.
Steve Schwarzman: But the U S stock market at record levels.
Steve Schwarzman: M&A.
Steve Schwarzman: Particularly sponsor M&A accelerating.
Speaker Change: These factors should give the FED room to lower interest rates over time.
Speaker Change: Which is positive.
Steve Schwarzman: And the IPO market reopening.
Speaker Change: For asset values.
Steve Schwarzman: Two weeks ago.
Steve Schwarzman: We successfully executed sizable IPO in Europe.
Steve Schwarzman: The first from our private equity or real estate portfolios outside of India in several years.
Speaker Change: In terms of policy, we continue to believe the focus of policy actions. Ultimately is to support growth.
Speaker Change: Tax cuts have now been passed into law.
Steve Schwarzman: And we are preparing a number of other companies for public offerings over the coming quarters.
Speaker Change: and a number of trade, agreements have been reached
Speaker Change: With many more under active negotiation.
Steve Schwarzman: More conducive capital markets, if sustained should lead to the acceleration of realizations for Blackstone overtime.
Speaker Change: it remains to be seen how individual negotiations will play out, but the direction of travel
Speaker Change: is toward more resolution.
Steve Schwarzman: In closing.
Stephen Schwarzman: We expect transaction activity to benefit, including realization. Greater clarity will lead to greater confidence for companies, financial sponsors, and market participants. We're seeing this dynamic start to take effect with the U.S. stock market at record levels. M&A, particularly sponsor M&A, Accelerating.
Speaker Change: As the policy environment Settles.
Steve Schwarzman: We are tremendously well positioned to navigate today's dynamic backdrop on behalf of our investors.
Speaker Change: We expect transaction activity, the benefit, including realizations.
Steve Schwarzman: Our portfolio is in excellent shape.
Steve Schwarzman: Concentrated in compelling sectors and.
Speaker Change: Greater Clarity will lead to Greater confidence for companies financial sponsors and Market participants.
Steve Schwarzman: And we have $181 billion of dry powder to take advantage of opportunities.
Speaker Change: We're seeing this Dynamic start to take effect.
Speaker Change: But the US Stock Market record levels.
Steve Schwarzman: Since our founding four decades ago.
Speaker Change: M&a.
Stephen Schwarzman: and the IPO market reopening.
Steve Schwarzman: Blackstone has continued to innovate and advance the frontier of alternative assets.
Speaker Change: Particularly sponsor m&a accelerating.
Stephen Schwarzman: Two weeks ago, we successfully executed sizable IPO in Europe.
Speaker Change: And the IPO Market reopening.
Speaker Change: To weeks ago.
Steve Schwarzman: We are never standing still.
Stephen Schwarzman: the first from our private equity or real estate portfolios outside of India in several years. and we are preparing a number of other companies for public offerings over the coming quarters. more conducive capital markets, if sustained, should lead to the acceleration of realizations for Blackstone over time.
Speaker Change: We successfully executed sizable IPO in Europe.
Steve Schwarzman: And I believe the best is ahead for the firm and for our investors.
Steve Schwarzman: With that I'll turn it over to John.
Speaker Change: The first from our private Equity or real estate portfolios outside of India in several years.
John: Thank you, Steve and good morning, everyone. This was a terrific quarter for Blackstone.
Speaker Change: And we are preparing a number of other companies. For public offerings, over the coming quarters.
John: <unk> distinctive competitive advantages continue to drive us forward in multiple areas, leading to expanding earnings power as Steve noted.
Stephen Schwarzman: In closing. We are tremendously well positioned to navigate today's dynamic backdrop on behalf of our investors. Our portfolio is in excellent shape.
Speaker Change: More conducive Capital markets have sustained should lead to the acceleration of realizations for Blackstone overtime.
Speaker Change: In closing.
John: I will highlight three of these areas. This morning first a robust growth in private credit second our market leading position in private wealth and third our strong momentum in the institutional channel overall.
Speaker Change: We are tremendously. Well, positioned to navigate. Today's Dynamic backdrop on behalf of our investors.
Stephen Schwarzman: Concentrated in Compelling Sectors. We have $181 billion of dry powder to take advantage of opportunities. since our founding four decades ago. Blackstone has continued to innovate and advance the frontier of alternative assets. We are never standing still.
Speaker Change: Our portfolio is an excellent shape.
Speaker Change: Concentrated in compelling, sectors.
John: Coal recovery in transaction activity alongside multiple secular growth engines is a powerful combination for our hall.
Speaker Change: And we have 181 billion dollars of dry powder to take advantage of opportunities.
Speaker Change: since our founding 4 decades ago,
John: Starting with private credit.
Speaker Change: Blackstone has continued to innovate and Advance the frontier of alternative assets.
John: <unk> has built the largest third party focused credit business in the world with $484 billion. Okay.
Stephen Schwarzman: And I believe the best is ahead for the firm and for our investors.
Speaker Change: We are never standing still.
John: Across corporate and real estate credit up threefold in the past five years.
Jonathan Gray: And with that, I'll turn it over to Jon. Thank you, Steve, and good morning, everyone. This was a terrific quarter for Blackstone. The firm's distinctive competitive advantages continue to drive us forward in multiple areas, leading to expanding earnings power, as Steve noted. I will highlight three of these areas this morning. First, our robust growth in private credit. Second, our market-leading position in private wealth. And third, our strong momentum in the institutional channel. Overall, a cyclical recovery in transaction activity, alongside multiple secular growth engines, is a powerful combination for our firm. Starting with private credit, Blackstone has built the largest third-party focused credit business in the world with $484 billion across corporate and real estate credit, up threefold in the past five years.
Speaker Change: And I believe the best is ahead for the firm and for our investors.
John Gray: With that, I'll turn it over to John.
John: Over the same period revenue from this platform has increased more than fourfold.
John: Today, we offer clients and borrowers a one stop solution across the risk spectrum with leading businesses in direct lending leveraged loans real estate lending asset based finance and numerous forms of investment grade private credit is.
John Gray: Thank you, Steve. And good morning everyone. This was a terrific quarter for Blackstone, the firm's distinctive competitive advantages, continue to drive us forward in multiple areas, leading to expanding earnings power as Steve noted.
John: Scale and breadth of our platform.
John: <unk> origination capabilities connectivity with borrowers across the market and our open architecture multi client model in the insurance channel are significant advantages.
John Gray: I will highlight 3 of these areas this morning. First a robust growth in private credit second. Our Market leading position in private wealth and third, our strong momentum in the institutional Channel.
John: In insurance, specifically, our decision to be an asset manager foreign insurance companies, rather than becoming one positions us well to address to 40 trillion global insurance market.
John Gray: Overall a cyclical recovery and transaction activity, alongside multiple. Secular growth engines, is a powerful combination for our firm.
John: We manage over $250 billion.
On behalf of insurers across private credit liquid credit and other strategies up 20% year over year. Our platform now includes 30 strategic and SMA relationships and we continue to add more <unk>.
Jonathan Gray: Over the same period, revenue from this platform has increased more than fourfold. Today, we offer clients and borrowers a one-stop solution across the risk spectrum. with leading businesses in direct lending, leverage loans, real estate lending, asset-based finance, and numerous forms of investment-grade private credit. The scale and breadth of our platform, distinctive origination capabilities, connectivity with borrowers across the market, and our open architecture, multi-client model in the insurance channel are significant advantages. In insurance specifically, our decision to be an asset manager for insurance companies rather than becoming one positions us well to address the $40 trillion global insurance Today, we manage over $250 billion on behalf of insurers across private credit, liquid credit, and other strategies, up 20% year-over-year.
John Gray: Starting with private credit Blackstone is built the largest third-party focused credit business in the world. With 484 billion dollars across corporate and real estate credit up threefold in the past 5 years.
John Gray: Over the same period revenue from this platform has increased more than 4 Folds.
John: Two weeks ago, we announced a partnership with leading UK based insurer in the country's largest asset manager legal and general and which will provide investment grade private credit solutions to support the rapidly growing pension risk transfer and annuities businesses.
John Gray: That's been great, private credit.
John: We will also work together to develop public private credit products for the U K wealth and retirement markets, we're targeting up to $20 billion for this partnership in the next five years.
John Gray: The scale and breadth of our platform, distinctive origination capabilities, connectivity with borrowers across the market and our open architecture. Multi-client model in the insurance channel are significant advantages.
John: Our expansion in the insurance channel is powering tremendous growth for our private investment grade platform specifically with.
John: With AUM up 38% year over year to $115 billion in the quarter.
John Gray: In Insurance, specifically our decision to be an asset manager of for insurance companies, rather than becoming 1 positions us. Well, to address the 40 trillion dollar Global Insurance Market.
John: As always the key is investment performance since the start of last year, we play store originated $68 billion in credits for our private investment grade focus clients rated a minus on average which generated approximately 190 basis points of excess spread over comp.
Jonathan Gray: Our platform now includes 30 strategic and SMA relationships, and we continue to add more.
John Gray: Today we manage over 250 billion dollars on behalf of insurers across private credit liquid credit and other strategies up 20% year-over-year.
Jonathan Gray: Two weeks ago, we announced a partnership with a leading UK-based insurer and the country's largest asset manager, Legal & General, in which we'll provide investment-grade private credit solutions to support their rapidly growing pension, risk transfer, and annuities businesses. We will also work together to develop public-private credit products for the UK Wealth and Retirement Markets. We're targeting up to $20 billion for this partnership in the next five years. Our expansion in the insurance channel is powering tremendous growth for our private investment grade platforms specifically. with AUM up 38% year-over-year to $115 billion in the quarter. As always, the key is investment performance.
John Gray: Now, includes 30, strategic and SMA relationships. And we continue to add more
John: Probably rated liquid credits.
John: Back Blackstone's innovation in private credit and allowing many borrowers to access this market for the first time, while dramatically widening our aperture to invest.
John: For example, we previously discussed a very substantial opportunity emerging with investment grade rated corporates illustrated by the bespoke solutions, we designed for Rogers Communications and EQT Corporation.
John Gray: 2 weeks ago, we announced the partnership with leading uk-based insurer and the country's largest asset manager legal in general, in which we'll provide investment. Grade private Credit solutions to support their rapidly growing pension risk, transfer and annuities businesses. We will also work together to develop public private credit products for the UK wealth, and retirement markets.
John Gray: We're targeting up to twenty billion dollars for this partnership in the next 5 years.
John: Close to $5 billion Rogers investment last month, alongside Canada's preeminent pension plan as co investors.
John Gray: Our expansion in the insurance channel, is powering tremendous growth for our private investment grade platform specifically,
John: We believe few other investment firms could have executed this transaction given the size complexity and the depth of relationships meeting.
John Gray: With AUM up 38% year-over-year to 115 billion dollars in the quarter.
Jonathan Gray: Since the start of last year, we've placed or originated $68 billion of credits for our private investment-grade focused clients rated A- on average, which generated approximately 190 basis points of excess spread over comparably rated liquid credit. Stepping back, Blackstone's innovation in private credit is allowing many borrowers to access this market for the first time while dramatically widening our aperture to invest. For example, we previously discussed the very substantial opportunity emerging with investment-grade rated corporates, illustrated by the bespoke solutions we designed for Rogers Communications and EQT Corporation. We closed a $5 billion Rogers investment last month alongside Canada's preeminent pension plan as co-investors.
John: Blackstone has become a trusted mission critical solutions provider to many of the world's leading corporations and we expect more of these type of partnerships over time.
John: Turning to private wealth, where we continue to advance our market leading position.
John Gray: As always, the key is investment performance. Since the start of last year, we placed our originated 68 billion of credits for our private investment grade focused clients. Rated A minus on average which generated approximately 190 basis points of excess spread over comparably rated liquid credits.
John: In this vast channel 140 trillion, including mass affluent and high net worth individuals a new generation of investors is gaining access to the benefits of alternatives, which is in development led by Blackstone.
John Gray: Stepping back blackstone's, Innovation and private credit is allowing many borrowers to access this market for the first time while dramatically widening our aperture to invest.
John: We started raising private wealth capital 23 years ago, and established a dedicated organization nearly 15 years ago growing to almost $280 billion today by far the largest private wealth alternative platform in the world.
John Gray: For example, we previously discussed the very substantial opportunity, emerging with investment grade, rated corporates illustrated, by the bespoke solutions. We designed for Rogers, Communications and eqt Corporation
John: Each of our flagship U S. Perpetual vehicles is the largest or amongst the few largest of its kind.
Jonathan Gray: We believe few other investment firms could have executed this transaction given its size, complexity, and the depth of relationships needed. Blackstone has become a trusted, mission-critical solutions provider to many of the world's leading corporations, and we expect more of these types of partnerships over time.
John Gray: We closed the 5 billion dollar Rogers Investments last month. Alongside Canada's preeminent, pension plan as co-investors.
John: Revenue from these vehicles exceeded $700 million in the second quarter alone.
John Gray: We Believe few other investment firms. Could have executed this transaction given its size complexity and the depth of relationships needed
John: <unk> to approximately $50 million in the same quarter five years ago.
John: We credit our scale is a major advantage in the wealth channel alongside our extensive network of relationships with advisers and distributors, our broad menu of high performing products and the power of our brand which is built on that performance.
Jonathan Gray: Turning to private wealth, where we continue to advance our market leading position. In this vast channel, $140 trillion, including mass affluent and high net worth individuals, a new generation of investors is gaining access to the benefits of alternatives, which is a development led by Blackstone. We started raising private wealth capital 23 years ago and established a dedicated organization nearly 15 years ago, growing AUM to almost $280 billion today, by far the largest private wealth alternative platform in the world. Each of our flagship U.S. Perpetual vehicles is the largest or amongst the few largest of its kind.
John Gray: Blackstone has become a trusted Mission critical Solutions provider to many of the world's leading corporations and we expect more of these type of Partnerships over time.
John Gray: Turning to private wealth where we continue to advance, our market-leading position.
John: In the second quarter, our sales in the wealth channel increased 30% year over year to $10 billion <unk> led the way raising $3 7 billion.
John Gray: In this vast channel, 140 trillion dollars, including Mass affluent and high net worth individuals, a new generation of investors is gaining access to the benefits of Alternatives which is a development led by Blackstone.
John: Underpinned by performance, 10% net returns annually since inception.
John: DXP raised $1 7 billion in the second quarter, bringing its NAV to $12 $5 billion in only six quarters with an annualized platform net return of 17% towards largest share class.
John Gray: We started raising private wealth Capital, 23 years ago and established a dedicated organization nearly 15 years ago. Growing AUM to almost 280 billion dollars today by far, the largest private wealth alternative platform in the world.
John: <unk> had its best quarter regular way fund raising in two and a half years and the second quarter and $1 1 billion, while were purchases continued on their downward trajectory.
Jonathan Gray: Revenue from these vehicles exceeded $700 million in the second quarter alone, compared to approximately $50 million in the same quarter five years ago. As with credit, our scale is a major advantage in the wealth channel, alongside our extensive network of relationships with advisors and distributors, our broad menu of high-performing products, and the power of our brand, which is built on that performance. In the second quarter, our sales in the Wealth Channel increased 30% year-over-year to $10 billion. BCRED led the way, raising $3.7 billion, underpinned by performance, 10% net returns annually since inception. BXP raised $1.7 billion in the second quarter, bringing its NAV to $12.5 billion in only six quarters, with an annualized platform net return of 17% for its largest share class.
John Gray: Each of our Flagship us. Perpetual Vehicles is the largest or amongst the few largest of its kind.
John: The REIT highly differentiated portfolio positioning has led to 9% net returns annually since inception, eight and a half years ago approximately double the public REIT index on accumulative basis, including over 3% year to date for its largest share class. This has resulted in <unk> <unk>.
John Gray: Revenue from these vehicles, exceeded 700 million dollars, in the second quarter alone, compared to approximately $50 million in the same quarter of 5 years ago.
John Gray: As with credit, our scale is a major advantage in the wealth Channel. Alongside our extensive network of relationships with advisors and Distributors, our broad menu of high-performing products and the power of our brand which is built on that performance.
John: <unk> consecutive quarter of generating fee related performance revenues for the firm.
John Gray: In the second quarter, our sales in the wealth Channel, increased 30% year-over-year to 10 billion dollars.
John: Finally, <unk> saw healthy sales roughly $600 million in the quarter, despite still only being on a small number of distributors.
John: We launched <unk>, our multi asset credit product in May which provides individual investors greatly expanded access to the private credit universe, and we will be ramping up distribution over the coming quarters, along with other products in development and our previously announced alliance with Wellington and Vanguard, we're quite excited.
Jonathan Gray: BeReef had its best quarter of regular wave fundraising in two and a half years in the second quarter at $1.1 billion, while repurchases continued on their downward trajectory. BeReach's highly differentiated portfolio positioning has led to 9% net returns annually since inception eight and a half years ago, approximately double the public read index on a cumulative basis, including over 3% year to date for its largest share class. This has resulted in BeReach's second consecutive quarter of generating fee-related performance revenues for the firm. Finally, BX Info saw healthy sales of roughly $600 million in the quarter, despite still only being on a small number of distributors.
John Gray: Bcred led the way raising 3.7 billion dollars underpinned by performance. 10%, net returns annually. Since Inception bxp, raised 1.7 billion in the second quarter, bringing its nav to 12 and a half billion dollars in only 6 quarters with an annualized platform, net return of 17% for its largest share class.
John: <unk> about our continued prospects in the private wealth channel.
John: Moving to our institutional business, where we are seeing strong momentum across key open ended and drawdown strategies.
John Gray: B rate at its best quarter of regular way fundraising in 2 and a half years in the second quarter and 1.1 billion dollars while we're purchases continued on their downward trajectory.
John: This channel again, the advantages of our brand scale breadth of products and of course, our long term investment performance position us extremely well in an environment, where limited partners are consolidating their manager relationships favoring the largest and strongest firms and infrastructure are dedicated plant.
John Gray: Led to 9% net returns annually since Inception 8 and 1/2 years ago, approximately doubled the public read index on a cumulative basis including over 3% year to date for its largest share class.
John Gray: This is resulted in be reached second consecutive quarter of generating fee related performance revenues for the firm.
John: <unk> continues on its powerful growth trajectory.
John: AUM rose, 32% year over year to 64 billion.
Jonathan Gray: We launched BMAX, our multi-asset credit product, in May, which provides individual investors greatly expanded access to the private credit universe, and will be ramping up distribution over the coming quarters.
John Gray: Finally, BX info saw healthy sales of roughly 600 million in the quarter. Despite still only being on a small number of distributors.
John: Ported by remarkable investment performance, 17% net returns annually that are co mingled VIP strategy since inception.
John: Our multi asset investing business <unk> reported its fastest growth in nearly seven years with AUM up 13% year over year to a record 90 billion again led by performance Q2 marked the 20 <unk> consecutive quarter of positive composite returns would be <unk> larger.
Jonathan Gray: Along with other products in development and our previously announced alliance with Wellington and Vanguard, we are quite excited about our continued prospects in the private wealth channel.
Jonathan Gray: moving to our institutional business, where we are seeing strong momentum across key open ended and drawdown strategy. In this channel, again, the advantages of our brand, scale, breadth of products, and of course, our long-term investment performance position us extremely well in an environment where limited partners are consolidating their manager relationships, favoring the largest and strongest firm.
John Gray: We launched B-Max our multi-asset credit product in May, which provides individual investors greatly expanded access to the private credit universe and we'll be ramping up distribution over the coming. Quarters, along with other products and development. And our previously announced the alliance with Wellington and Vanguard, we are quite excited about our continued prospects in the private wealth Channel.
John: Strategy.
John: And our drawdown fund area.
John Gray: Moving to our institutional business where we are seeing strong momentum. Across key, open-ended and draw down strategies.
John: <unk> significant capital in the second quarter, we closed an additional $3 5 billion for our new private equity Asia flagship, bringing the total raised to date to $8 billion.
John: Already 25% larger than its predecessor.
Jonathan Gray: In infrastructure, our dedicated platform continues on its powerful growth trajectory. AUM rose 32% year-over-year to $64 billion, supported by remarkable investment performance. 17% net returns annually to the commingled VIP strategy since inception.
John Gray: In this channel, again the advantages of our brand scale, breadth of products and of course, our long-term investment performance position us extremely well, in an environment where limited partners are, consolidating their manager relationships, favoring the largest and strongest firms.
John: And we expect to exceed our original $10 billion target.
John: In our 91 billion secondaries business, which has doubled in the last five years, we raised additional capital for fourth infrastructure vehicle, bringing it to over $5 billion.
John Gray: in infrastructure are dedicated platform continues on its powerful growth trajectory
John Gray: AUM wrote 32% year-over-year to 64 billion dollars supported by remarkable investment performance.
John: Nearly 40% larger than the prior vintage and we launched fundraising for our new PE secondaries flagship targeting at least the size of the prior $22 billion fund with a first close expected in the fourth quarter.
Jonathan Gray: Our multi-asset investing business, BXMA, reported its fastest growth in nearly seven years, with AUM up 13% year-over-year to a record $90 billion, again led by performance. Q2 marked the 21st consecutive quarter of positive composite returns with BXMA's largest strategy.
John Gray: 17% net returns annually, to the comingo bip strategy since Inception.
John: Other strategies, we are raising include life sciences opportunistic credit GP stake and tactical opportunities overall Lps continue to recognize the substantial benefits of investing in private assets. Despite the cyclically slow realization backdrop.
Jonathan Gray: In our drawdown fund area, we raised significant capital in the second quarter. We closed an additional $3.5 billion for our new private equity Asia flagship, bringing the total raised to date to $8 billion, already 25% larger than its predecessor. And we expect to exceed our original $10 billion target.
John Gray: Our multi-asset investing business bxm8, reported, its fastest growth in nearly 7 years with AUM up 13% year-over-year to a record 90 billion dollars again led by performance. Q2 marked to 21st consecutive quarter of positive composite returns would be Xmas largest strategies.
John Gray: In our draw down fund area.
John: Looking forward importantly, we believe the dealmaking pods is behind us.
John: As Steve noted the environment, we are seeing is emerging from.
John Gray: We raised significant capital in the second quarter, we closed an additional 3 and a half billion dollars for our new private Equity. Asia. Flagship bringing the total rates to date to 8 billion dollars already 25% larger than its predecessor.
John: I'm sorry as noted the environment, we see emerging of lower short term interest rates less uncertainty and continued economic growth combined with the pent up desire to transact is the right recipe to reignite M&A and IPO activity for.
Jonathan Gray: In our $91 billion secondaries business, which has doubled in the last five years, we raised additional capital for our fourth infrastructure vehicle, bringing it to over $5 billion, nearly 40% larger than the prior venture. And we launched fundraising for our new P Secondaries flagship, targeting at least the size of the prior $22 billion fund, with a first close expected in the fourth quarter. Other strategies we are raising include life sciences, opportunistic credit, GP stakes, and tactical opportunities. Overall, LPs continue to recognize the substantial benefits of investing in private assets, despite the cyclically slow realization backdrop.
John Gray: and we expect to exceed our original 10 billion dollar Target,
John: Blackstone, we have the largest forward IPO pipeline since 2021.
John: These trends should be very favorable for disposition exiting this year and into next year.
John Gray: In our 91 billion, secondary business, which is doubled in the last 5 years, we raised additional capital for fourth infrastructure vehicle, bringing it to over 5 billion dollars, nearly 40% larger than the prior vintage and we launched fundraising for our new P. Secondary Flagship targeting, at least the size of the prior 22 billion dollar fund.
John: In closing we are highly optimistic about the road ahead supported by multiple powerful engines of growth.
John Gray: With a first close expected in the fourth quarter.
Speaker Change: Blackstone's value proposition for both our limited partners and our shareholders is stronger than ever with that ill turn things over to Michael J.
Other strategies, we are. Raising include life sciences, opportunistic, credit, GP stakes, and tactical opportunities.
Jonathan Gray: Looking forward, importantly, we believe the dealmaking pause is behind us. As Steve noted, the environment we see emerging of lower short-term interest rates, less uncertainty, and continued economic growth, combined with a pent-up desire to transact, is the right recipe to reignite M&A and IPO activity. For Blackstone, we have the largest forward IPO pipeline since 2021. These trends should be very favorable for dispositions exiting this year and into next.
John Gray: Overall, LPS continue to recognize the substantial benefits of investing in private assets. Despite the cyclically slow realization backdrop.
Speaker Change: Thanks, John and good morning, everyone.
Speaker Change: We previously outlined the building blocks for the favorable step ups in the firm's earnings power that has been underway. These.
Looking forward importantly, we believe the deal-making pause is behind us.
Speaker Change: These included the onset of management fees for multiple drawdown funds exiting the holidays.
Speaker Change: Turning a perpetual capital strategies and they are expanding financial contribution both in terms of base management fees and recurring fee related performance revenues.
Speaker Change: Robust growth of our credit insurance business and our healthy margins.
John Gray: As Steve noted the environment we are seeing is emerging from oh I'm sorry as noted the environment we see emerging of lower short-term interest rates less uncertainty and continued economic growth combined with a pent-up desire to transact is the right recipe to reignite m&a and IPO activities.
Speaker Change: <unk> second quarter results, our fleet illustrate these building blocks coming to fruition.
John Gray: For Blackstone we have the largest forward IPO pipeline since 2021.
Speaker Change: At the same time, our significant embedded potential for net realizations.
Jonathan Gray: In closing, we are highly optimistic about the road ahead, supported by multiple powerful engines of growth. Blackstone's value proposition for both our limited partners and our shareholders is stronger than ever.
Phil: <unk> Phil.
John Gray: These Trends should be very favorable for dispositions exiting this year and into next year.
Phil: I'll first be financial results, followed by investment performance and the forward outlook.
Phil: Starting with the results.
John Gray: In closing, we are highly optimistic about the road ahead supported by multiple FAA. Powerful engines of growth.
Speaker Change: Steve and John highlighted the continued scaling of the firm's platforms key growth channels and the powerful effect that is having on assets under management inflows and FRE.
Michael Chae: With that, I'll turn things over to Michael Chae. Thanks, John, and good morning, everyone. We've previously outlined the building blocks for the favorable step-up. Power. That has been These included the onset of... for multiple drawdown funds exiting fee holidays. both in terms of NAB-based management fees and recurring fee-related performance. Robust Growth, Mark Credit Insurance helped emerge.
John Gray: Blackstone's value proposition for both our limited partners and our shareholders is stronger than ever.
John Gray: With that.
Turn things over to Michael, Chad.
Speaker Change: Total <unk> increased 13% year over year to one two trillion.
John Gray: Thanks John and good morning everyone.
Speaker Change: Underpinned by inflows of 212 billion.
Speaker Change: Last 12 months, while fee, earning AUM rose, 10% year over year to 887 billion.
Speaker Change: Base management fees increased 14% to a record $1 9 billion in Q2.
Speaker Change: Representing the third consecutive quarter of double digit growth.
We've previously outlined the building blocks for the favorable step up in the firm's earnings power that has been underway. These included the onset of management fees for multiple draw down funds, exiting fee holidays, the seasoning of professional Capital strategies, and their expanding Financial contributions. Both in terms of nav based management fees and recurring fee, related performance reps.
Speaker Change: Transaction and advisory fees rose, 25% year over year with a record contribution from our capital markets business related to the firms significant investment activity in the quarter, including in private credit and infrastructure.
Michael Chae: Our second quarter results perfectly illustrate these building blocks coming to fruition. continues.
John Gray: Robust growth of our credit Insurance business, and our healthy margin positions.
Firms second quarter results, perfectly illustrate. These building blocks coming to fruition.
John Gray: That realization.
Michael Chae: I'll first brief financial results, followed by investor reports at the forward end. starting with results. Stephen John highlighted the continued scaling of diverse platforms and key growth channels. and the powerful effect that it's having on assets under management. Loews, and. Total AUM increased 13% year-over-year to $1.2 trillion. And by inflows of $212 billion over the last 12 months. while fearning AUM rose 10% year-over-year to 887. Base management fees increased 14%. to a record $1.9 billion in Q2, representing the third consecutive quarter. Transaction and advisory fees rose 25%. with a record contribution from our capital market.
John Gray: Continues to build.
Speaker Change: Fee related performance revenues reached $472 million up.
John Gray: I'll first read Financial results. Followed by investment performance at the forward Outlook.
Speaker Change: Over two minute apples from last year's second quarter generated by eight different perpetual strategies, including fee credit SSL and credit.
John Gray: Starting with results.
John Gray: Stephen. John highlighted, the continued, scaling of the firm's platforms and key growth channels.
Speaker Change: <unk> in private equity.
John Gray: And the powerful effect that is having on assets under management inflows and fr.
Speaker Change: In infrastructure <unk>.
Speaker Change: And real estate, along with smaller contributions.
Speaker Change: Right.
Speaker Change: These drivers taken together lifted total fee revenues to $2 $5 billion in the second quarter, a remarkable 27% year over year and.
Total awe increased 13% year-over-year to 1.2 trillion dollars under pin by inflows. 22 billion dollars over the last 12 months, while fear earning a rose 10% year-over-year to 887 billion.
Speaker Change: And up 14% sequentially from Q1.
Speaker Change: Coupled with confirms strong margins.
Speaker Change: Related earnings rose, 31% year over year to $1 5 billion.
John Gray: Base management fees increased 14% to a record 1.9 billion dollars in Q2 representing the third consecutive quarter of double digit growth.
Speaker Change: Good quarter or $1 19 per share.
Speaker Change: Distributable earnings increased 25% year over year to $1 6 billion in the second quarter for $1 21 per share for.
Michael Chae: related to the Farm Significant Investment Act. including in private credit. Year-related performance revenues reached $472 million. up over two-and-a-half holes from last year's second quarter, generated by eight different perpetual strategies, including d-credit, d-XSL, in-credit, d-XPE, and private equity. VIP, and Infrastructure. Be read and real. along with smaller contributions. These drivers, taken together, lifted total fee revenue... $2.5 billion in the second quarter, up a remarkable 27% year-over-year, and up 14% coupled with the firm's strong margin. Year-related earnings rose 31% year-over-year to $1.5 billion. for $1.90. $1.6 billion in the second. for $1.21. For the LTM period, DE rose 26% to $6.4 billion, or $5.3 billion.
Speaker Change: For the LTM period day rose, 26% to $6 4 billion.
John Gray: Transaction and advisory fees Rose 25% year to year with a record contribution from our Capital markets, business related to the firm's significant investment activity in the quarter including in private credit and infrastructure.
Speaker Change: Our $5 per share despite net realizations remaining at <unk> levels, leading to 26% growth in the dividend so $4 26 per share.
John Gray: Be related to Performance revenues. Reached 472 million in Q2 up over 2 and a half folds from last year's, second quarter generated by 8 different, professional strategies, including
Speaker Change: This equates to a two 4% yield on the current share price doubled the yield of the S&P 500.
Speaker Change: And the forward outlook is favorable as I'll discuss further in a well.
John Gray: The credit and bxsl in credit bxpe and private Equity bip and infrastructure. Be written real estate, along with smaller contributions from other strategies.
Speaker Change: Moving to investment performance, our funds generated strong overall appreciation in the second quarter, the highest amount in nearly four years as Steve noted despite the volatile environment.
Speaker Change: Private equity funds appreciated five 1% in the quarter and 17% for the last 12 months frankly broad base. Despite the macro uncertainties at the outset of the quarter, our operating companies generated high single digit year over year revenue growth along with resilient margins.
John Gray: These drivers taken together. Lifted total fee revenues to 2.5 billion dollars in the second quarter of a remarkable. 27% year-over-year and up, 14% sequentially from q1.
John Gray: Coupled with the firm's strong margin position.
The related earnings Rose 31% year-over-year to 1.5 billion dollars in the second quarter for a $1.19 cents per share.
Speaker Change: In addition to corporate private equity or other PE strategies delivered strong returns in the quarter.
John Gray: Distributed earnings increased 25% year-over-year to 1.6 billion dollars in the second quarter for a $1.21 cents per share.
Speaker Change: Tactical opportunities funds appreciated four 1%.
Michael Chae: Despite net realizations remaining at a muted level. leading to 26% growth in the dividend. $4.20. This equates to a detracted 2.4% yield on the current share. Double the Yield of the S&P 500.
Speaker Change: At 14% over the LTM period.
Speaker Change: <unk> secondaries funds appreciated six 6%.
Speaker Change: And the context is well positioned portfolio.
Speaker Change: Sizable recent investments executed in price.
Speaker Change: For the LTM period De Rose, 26% to 6.4 billion dollars worth 5 dollars per share. Despite that realization remaining at UD levels leading to 26% growth in the dividends. So, 4 dollars in 226 cents per share.
Speaker Change: Yes people and depreciated, 11% for the lgs.
Michael Chae: The Forward Outlook is capable, as I'll discuss further.
Speaker Change: This equates to an attractive 2.4% yield on the current share price double the yield of the S&P 500.
Speaker Change: Our dedicated infrastructure platform depreciated, two 9% in the second quarter and.
Michael Chae: Moving to investment. Our funds generated strong overall appreciation in the second quarter, the highest amount in nearly four years, as Steve noted, despite the volatile environment. Corporate private equity funds appreciated 5.1 percent in the quarter and 17 percent in the last 12 months. Despite the macro uncertainties at the outset of the quarter, our operating company has generated high single-digit year-over-year revenue. along with Brazilian art. In addition to corporate private equity, our other PE strategies deliver strong returns in the court. Tactical Opportunities Funds Appreciated $4.1 14% over the elder. FD secondary funds appreciated 6.6 percent. context and well-positioned work.
The Ford Outlook is favorable as I'll discuss further as well.
Speaker Change: 19% in the last 12 months notwithstanding a decline in the public portfolio in Q2 open market.
Speaker Change: Depreciation underpinned by continued significant momentum in data centers, along with other digital infrastructure, our transportation related holdings.
Speaker Change: Moving to investment performance, our funds generated strong overall appreciation in the second quarter, the highest amount in the early 400s is Steve noted despite the volatile environment.
Speaker Change: Real estate values were largely stable overall in the second quarter, the depreciation and the opportunistic funds theory led by strength in data centers.
Speaker Change: Corporate private Equity Funds appreciated 5.1% in the quarter and 17% for the last 12 months strength was broad-based.
Speaker Change: despite the macro uncertainties that the outset of the quarter,
Speaker Change: our operating companies generated High single digit year Revenue growth
Speaker Change: In the core plus platform.
Speaker Change: along with Brazilian margins.
Speaker Change: <unk> modestly driven by our life Sciences office portfolio, which was impacted by new supply coming online and increased tenant caution.
Speaker Change: In addition to corporate private Equity. Our other PE strategies, delivered, strong returns in the court.
Speaker Change: The Tactical opportunities funds, appreciated 4.1.
Speaker Change: Overall, our real estate platform remains well positioned.
Speaker Change: 14% over the LTM period.
Speaker Change: Data centers logistics and rental housing comprising approximately 75% of the global equity portfolio.
Speaker Change: The SP secondary is funds. Appreciated 6.6%, second quarter.
Speaker Change: In the context of the wealth Edition portfolio.
Speaker Change: 90% of the speakers.
Michael Chae: The S.P. Fund appreciates 11% for the L.A. Our dedicated infrastructure platform appreciated 2.9%. And 19% for the last 12 months, notwithstanding a decline in the public portfolio in C2 in March. appreciation underpinned by continued significant momentum of data. along with other digital infrastructure, power, and transportation. Real Estate. Values were largely stable overall in the second quarter. appreciation and the opportunistic funds in Beery led by Strength and Davis. in the core plus plot.
Speaker Change: That benefited, the precise little recent Investments, executed in favor of prices.
Speaker Change: In credit our non investment grade private credit strategies reported a gross return of three zero percent in the second quarter and over 13% Bridge LTM here.
Speaker Change: The SP funds appreciate the 11% for the LCM, period.
Speaker Change: Our dedicated infrastructure platform appreciated 2.9% in the second quarter.
Speaker Change: Fault rate across our 2000, plus non investment grade credits remains in the area of 50 basis points over the last 12 months with no new defaults and private credit in the second quarter.
Speaker Change: And 19% for the last 12 months. Notwithstanding a decline in the public portfolio in C2. And then the market turns,
Speaker Change: <unk> reported a two 8% gross return for the absolute returns and positive in Q2 to 12% for the last 12 months.
Speaker Change: With appreciation underpinned, by continued significant amounts of data centers along with other digital infrastructure, power and transportation related Holdings.
Speaker Change: Notably <unk> has delivered positive composite returns each of the past 27 months.
Speaker Change: In real estate values, were largely stable overall the second quarter with appreciation in the opportunistic funds and B led by strength and data centers.
Michael Chae: I'm Jonathan Gray All of you. Overall, our real estate platform remains well Data Centers, Logistics, and Rental Housing comprising approximately 75% of the population. Global Equity. nearly 90. In credit, our non-investment grade private credit strategies reported a gross return of 3.0% in the second quarter and over 13% for the LTM. The default rate across our 2000-plus non-investment-grade credits remains in the area at 50 basis points over the last 12 months, with no new defaults in private credit in the second quarter. The XMA reported a 2.8% gross return for the absolute return from five... 12% in the last 12 months.
Speaker Change: <unk> achievement in liquid markets in any case, and particularly so given the historic volatility let's characterize this period.
Speaker Change: One final note on returns are dedicated life Sciences business reported outstanding performance again in the second quarter, depreciating, six 7% and 27% over the LTM period.
Speaker Change: Within the core Plus platform, the BPP funds declined, modestly driven by our life sciences office portfolio, which has been impacted by new Supply coming online and increase tenant caution.
Speaker Change: The quarter benefited from positive developments number of investments portfolio are.
Speaker Change: overall, our real estate platform remains well, positioned with data centers Logistics, and Rental housing comprising, approximately 75% of the global Equity portfolio, nearly 90% of the
Speaker Change: Our life Sciences platform provides investors with exposure to innovation and exciting growth area in a way that we believe is largely uncorrelated to broader public markets. Our prior 5 billion flagship has achieved annualized returns of 20% since inception net of fees.
Speaker Change: In credit are non-investment grade private credit strategy for quarter de Grasse return of 3.0% in the second quarter and over 13% for the LCM period.
Speaker Change: Yes.
Speaker Change: Overall strength in the firm's investment performance continues to power our growth.
Speaker Change: Default rate across our 20000 plus non-investment, grade credits remains in the area of 50 basis points for the last 12 months with no new defaults in private Credit in the second quarter.
Speaker Change: Turning to the outlook, whereas you've heard this morning, there is a very positive multiyear picture of the firm.
Michael Chae: Notably, the XMA has delivered positive from positive. Each of the past 27 months, a remarkable achievement in liquid markets in any field. Particularly so given the historic... characterized.
Speaker Change: 12% in the last 12 months.
Speaker Change: In terms of FRE.
Speaker Change: All of the earnings stream is favorable with a few drivers of note.
Speaker Change: Second half of this year.
Speaker Change: Base management fees to continue on a strong positive trajectory with the rate of year over year growth in the second half resembling that of the first half.
Michael Chae: One final note on Our dedicated life sciences visits reported outstanding performance again. appreciating 6.7% 27% over the LTN. quarter benefited from positive developments for a number of investments in the portfolio.
Speaker Change: Notably. The xma has delivered positive composite returns in between each of the past 27 months. A remarkable achievement in liquid markets, in any case, and particularly. So given the historic volatility as characterized this period,
Speaker Change: Transaction fees following a very strong first half we would anticipate a lower baseline in the second half with potential upside from rising transaction and market action.
Speaker Change: Looking forward to 2026 and beyond.
Michael Chae: Our life sciences platform provides investors with exposure to innovation and an exciting growth area in a way that we believe is largely uncorrelated to broader For more information visit www.fema.gov Prior $5 billion flagship has achieved annualized returns of 20% since inception. Overall, strength in the ferns and dusting performance continues to power Turning to the outlook, or as you've heard this morning, there is a very positive multi-year First, in terms of that already set up for this high-quality. with a few drivers to note that will affect the second half this year. I expect base management needs to continue on a strong positive trajectory with the rate of year-over-year growth in the sector.
Speaker Change: 1 final note on returns are dedicated Life Sciences, business reported outstanding performance again in the second quarter, appreciating 6.7% and 27% over the LTM period. The quarter benefited from positive developments for a number of Investments portfolio.
Speaker Change: Structural momentum in FRE, driven by the firms multiple engines.
Speaker Change: In terms of net realizations in the second half of this year, we expect to close the sales of <unk>, 6% stake in resolution life.
Speaker Change: Our life sciences platform provides investors with exposure to Innovation and an exciting growth area in a way that we believe is largely uncorrelated to broader public markets.
Speaker Change: Connection with the sale of the company.
Speaker Change: Online.
Speaker Change: With respect to fund dispositions, we believe we're entering a more constructive environment as Steve and John discussed and that we're well positioned to see an acceleration of net realizations exiting this year and moving into 2026.
Prior 5 billion flagships as achieved. Annualized returns of 20% since Inception, net of fees.
Speaker Change: Overall strengthens investment requirements continues to power our growth.
Speaker Change: Returning to the Outlook. Whereas you've heard this morning, there is a very positive multi-year picture for the front.
Speaker Change: Performance revenue eligible AUM in the ground a record $604 billion at quarter end up 14% year over year.
First, in terms of f, set up for the side quality earnings stream is favorable with a few drivers to note that will affect the second half of this year.
Speaker Change: Meanwhile, net accrued performance revenue on the balance sheet firm's store of value.
Michael Chae: resembling that of the first.
Speaker Change: <unk> grew sequentially to $6 6 billion.
Michael Chae: Transaction Fees Following a Very Strong First Half, We Would Anticipate a Lower Baseline in the Second Half.
Speaker Change: Or $5 30 per share.
Speaker Change: Expect based management fees to continue on a strong positive trajectory with the rate of year of your growth in the second half, resembling that of the first half.
Speaker Change: These are positive indicators of future realizations.
Speaker Change: In closing the FERC continues on its path of extraordinary long term growth powered by our brand investment performance ultra of innovation.
Speaker Change: On transaction fees following a very strong first half, we would anticipate a lower Baseline in the second half.
Michael Chae: Looking forward to 2026 and beyond. us, Structural Momentum, and FRE, driven by the. The second half of this year, we expect to close the sale to firm 6% stake in Resolute. connection with Estelle, the company, and J.T. Potluck. Mr. Space, Mr. Spector, fondness. We believe we're entering a more constructive environment, as Steve and John discussed, and that we're well positioned to see an acceleration... exiting this year and moving into Performance Revenue Eligible AAUM a record $604 billion a quarter. 14% year. Meanwhile, net accrued performance revenue on the balance sheet firms store of value. resequentially to $6.6 billion or $5.30 per share.
Speaker Change: The backdrop of significant secular tail.
Speaker Change: As always we remain totally focused on delivering for our investors.
Speaker Change: With potential upside from rising transaction and Market action. Looking forward to 2026 and Beyond robust structural momentum and F driven by the firm's multiple tensions. Grow
Speaker Change: In terms of net realization.
Speaker Change: With that we thank you for joining the call and we'd like to open it up for questions.
Speaker Change: the second half of this year, we expect to close the sale of the firm 6% stake in resolution like
Speaker Change: with the sale.
Speaker Change: Thank you.
Speaker Change: As a reminder, please press star one to ask a question. We ask that you limit yourself to one question to allow as many callers join the queue as possible. We will go first to Alex <unk> with Goldman Sachs.
Speaker Change: With respect to fund dispositions, we believe we're entering a more constructive environment as Stephen John discussed, and that will well positioned to see an acceleration of net realizations.
Speaker Change: Thank you good morning, I appreciate the question.
Exiting this year and moving into 2026 performance Revenue eligible, aoun in the ground.
Speaker Change: I wanted to start with a question around credit obviously incredibly powerful driver for you guys and the industry broadly it's been fueling growth for for a couple of years now.
A record 6004 billion dollars in quarter rent.
Speaker Change: A 14% year-over-year.
Speaker Change: At the same time, we're clearly seeing compression in credit spreads and I'm curious, how that's playing into your client conversations where the premium to liquid market is still there, but perhaps might start narrowing whenever theres more capital coming in there so any conversations around demand for private credit whether it's from retail channels institutional channels and any implications on fee.
Speaker Change: Mean Wilde, net acrew performance revenue on the balance sheet confirmed store a value.
Michael Chae: These are positive indicators of future realization potential. Our firm continues on its path of extraordinary long-term growth, powered by our brand, investment performance, and culture of innovation, against the backdrop of significant secular tailoring.
Speaker Change: Through sequentially to 6.6 billion dollars or $5.30 per share. These are positive indicators of future realization potential.
Speaker Change: Rates longer term as we think about this.
Operator: As always, if you remain totally focused...
Speaker Change: This product continues to grow.
Speaker Change: In closing, the firm continues on his path of extraordinary. Long-term growth powered by our brand investment, performance culture of innovation against the backdrop of significant secular Talent.
Speaker Change: Great question Alex.
Operator: With that, we thank you for joining the call and would like to open it up. Thank you. As a reminder, please press star 1 to ask a question.
Speaker Change: As always if you remain totally focused on delivering for our investors.
Speaker Change: I would say on the credit front Brian.
Speaker Change: Demand remains extraordinarily robust and we're seeing it broadly.
With that, we thank you for joining the call and would like to open it up my request.
Alex Blostein: We ask that you limit yourself to one question to allow as many callers We'll go first to Alex Blostein with Thank you. Good morning. Appreciate the question. I wanted to start with a question around credit, obviously an incredibly powerful driver for you guys and the industry broadly. It's been fueling growth for a couple of years now.
Speaker Change: Non investment grade investment grade credit, which as you know it's early days, we're seeing it in the United States and we're seeing it around the world.
Speaker Change: Thank you. As a, reminder, please. Press star 1 to ask a question. We ask that you limit yourself to 1 question to allow as many callers to join the queue as possible.
Speaker Change: We'll go first to Alex, Bostin with Goldman Sachs.
Speaker Change: And I would say clients are recognizing that base rates have come down short rates are likely to come down more spreads have tightened gradually but what I think the clients are finished.
Alex Blostein: At the same time, we're clearly seeing compression in credit spreads, and I'm curious how that's playing into your client conversations where the premium to liquid market is still there, but perhaps might start narrowing when there's more capital coming in there. So any conversations around demand for private credit, whether it's from retail channels or institutional channels, and any implications on fee rates longer term as we think about this product continuing to grow.
Speaker Change: Curious about as we are as well is that enduring premium between the liquid markets and private credit and that's what they're focused on and so long as that continues to exist.
Speaker Change: This makes it a very attractive space in the.
Speaker Change: Second quarter for our insurance clients, we delivered that a rated premium.
Unnamed Speaker: Thanks.
Alex Bostin: Thank you. Good morning, appreciate the question. Um, I wanted to start with a question around credit. Um, obviously incredibly powerful driver for you guys and the industry broadly, it's been fueling growth for for a couple of years. Now, um, at the same time we're clearly seeing compression and credit spreads and I'm curious how that's playing into your client conversations where the premium to liquid Market is still there, but perhaps might start narrowing if there's more Capital coming in there. So any conversations around, uh, demand for private credit. Whether it's from retail channels or institutional channels and any implications on fee rates longer term as we think about uh, this product continuing to grow. Thanks.
Unnamed Speaker: Great question, Alex. I would say on the credit front, the demand remains extraordinarily robust. And we're seeing it broadly, non-investment grade, investment grade credit, which as you know, is early days. We're seeing it in the United States, and we're seeing it around the world. And I would say clients are recognizing that base rates have come down, short rates are likely to come down more, spreads have tightened gradually. But what I think the clients are enthused about, as we are as well, is that enduring premium between the liquid markets and private credit. And that's what they're focused on.
Speaker Change: Of the eight 185 basis points 190 over the last 18 months. So that's really what the clients are focused on and to me. That's the key to this that's why I think it will continue to grow also I think theres some areas here, where private credit has a unique capability some of these court.
Speaker Change: <unk> solutions, we've done with Rogers, and EQT Corporation, which really work much better in a private format and then tied to this.
Speaker Change: Enormous investment spend around data centers and energy infrastructure again, that's harder to bring to the public market.
Speaker Change: And it lends itself to private credit so I would say today, we continue to see very strong demand for business you can see it in the numbers in terms of the rate of growth.
Unnamed Speaker: And so long as that continues to exist, I think this makes this a very attractive space. In the second quarter for our insurance clients, we delivered that A-rated premium of 185 basis points, 190 over the last 18 months. So that's really what the clients are focused on. And to me, that's the key to this. That's why I think it will continue to grow.
Speaker Change: 20% insurance, 16% overall between credit insurance corporate and real estate debt. It feels to US like this will continue and the key is yes absolute returns may come down a bit but the relative premium for private credit and what private credit can view and how it can solve solutions for Bob.
Speaker Change: Great question, Alex. Um, I would say on the credit fund front, the, uh, demand remains extraordinarily robust and we're seeing it, broadly. Um, non-investment grade investment grade credit which as you know, is early days, we're seeing it in the United States and we're seeing it around the world. And I would say, clients are recognizing that base, rates have come down, short rates are likely to come down, more spreads have tightened gradually, but what I think the clients are, uh, enthused about is we are as well. Is that enduring premium between the liquid markets and private credits and that's what they're focused on. And so long as that continues to exist, I think this makes this a very attractive space in the um, second quarter for our insurance clients. We delivered that a-rated
Speaker Change: Does that continue so I would say our optimism looking forward in this space and doing it the way we do it which is purely as an investment manager with no capital risks and that open architecture, which allows us to serve a broader universe, we like all of that and we have a lot of confidence looking forward.
Unnamed Speaker: Also, I think there are some areas here where private credit has a unique capability. Some of these corporate solutions we've done with Rogers and EQT Corporation, which really work much better in a private format. And then tied to this enormous investment spend around data centers and energy infrastructure, again, that's harder to bring to the public market and it lends itself to private credit. So I would say today, we continue to see very strong demand. The business, you can see it in the numbers in terms of the rate of growth, 20% insurance, 16% overall between credit and insurance, corporate and real estate debt.
Speaker Change: Okay.
Speaker Change: Thank you.
Speaker Change: Thank you we'll take our next question from Glenn Schorr with Evercore ISI.
Speaker Change: Hi, Thanks.
Speaker Change: Good lead into this question because I feel like everything is going pretty darn good at Blackstone with the exception of the real estate.
Speaker Change: In general in.
Speaker Change: In this environment. So the question is maybe can you give us some mark to market of of the expected recovery in terms of what's going to drive it meaning pricing financing deal flow client flows to the asset class.
Unnamed Speaker: It feels to us like this will continue. And the key is, yes, absolute returns may come down a bit, but the relative premium for private credit and what private credit can do and how it can solve solutions for borrowers, that continues.
Speaker Change: So that's really what the clients are focused on and to me that's the key to this. That's why I think it will continue to grow. Also I think there's some areas here where private credit has a unique capability, some of these corporate Solutions we've done with Rogers and eqt corporation which really work much better in a private format and then tied to this um enormous investment to spend around data centers and energy infrastructure again that's harder to bring to the public markets and it lends itself to private credit. So I would say today we continue to see uh very strong demand for business. You can see it in the numbers, in terms of the rate of growth, um, 20% Insurance 16% overall between credit and Insurance corporate, and real estate debt. It feels to us like this will continue, and the key is just absolutely returns now.
Speaker Change: A weak oil and on waiting on lower rates.
Speaker Change: What is the incremental over the next say year or two that's going to drive demand.
Unnamed Speaker: So I'd say our optimism looking forward in this space and doing it the way we do it, which is purely as an investment manager with no capital risk and that open architecture, which allows us to serve a broader universe. We like all of that and we have a lot of confidence looking forward. Thank you.
John: For your real estate products. Thanks, John.
Speaker Change: Thanks, Glenn I would say the good news now is it's all about a question.
Speaker Change: Of when not ads because the building blocks for this recovery are clearly coming into place.
Speaker Change: When they come down a bit but the relative premium for private credit and what private credit can do and how it can solve solutions for borrowers. That continue. So I'd say our optimism looking forward in the space and doing it the way we do it, which is purely as an investment manager with no Capital at risk and and that open architecture which allows us to serve a broader Universe. We like all of that and we have a lot of confidence looking forward.
Speaker Change: The first and most important one is new supply coming down and that takes time to work through the system. Because you start a project two or three years ago. When it comes online.
Speaker Change: Thank you.
Glenn Schorr: We'll take our next question from Glenn Schorr with Evercore ISI. That's a good lead-in to this question, because I feel like everything is going pretty darn good at Blackstone, with the exception of the real estate in general in this environment. So the question is, maybe you could give us the mark-to-market of the expected recovery in terms of what's going to drive it, meaning pricing, financing, deal flow, client flows to the asset class, are we all in on waiting on lower rates, what is the incremental over the next, say, year or two that's going to drive demand for your real estate?
Speaker Change: Thank you, we'll take our next question from Glenn Shore with evercore isi.
Speaker Change: Excess capacity now because of the two thirds decline in building in the U S from the peaks in terms of logistics and apartment construction youre going to begin as we get towards the end of this year and into next year to have a much more favorable supply demand dynamics.
Speaker Change: Other areas cost of capital some of its base rates, which you highlighted and obviously the fed cutting rates will be helpful. But some of it spreads and those have come back now back to pre liberation day levels, they're down significantly from the Wides in 2023, and you are beginning to see those early green shoots in terms of.
Glenn Schorr: Thanks, Glenn.
Speaker Change: Hi, thanks. That's a good lead into this question because I feel like everything is going pretty darn. Good at Blackstone with the exception of the, the real estate in general, um, in this environment. So, the question is, maybe you could give us the mark to Market of of the expected recovery in terms of what's going to drive it. Meaning pricing financing deal flow. The client flows to the asset class. Are we are we all in on waiting, on lower rates? What, what is the incremental over the next say year or 2? That's going to drive demand, uh, for your real estate products. Thanks. John.
Unnamed Speaker: I would say the good news now is it's all about a question of when, not if. Because the building blocks for this recovery are clearly coming into place. The first and most important one is new supply coming down. And that takes time to work through the system, because you start a project two, three years ago, then it comes online, it's excess capacity. Now, because of the two-thirds decline in building in the U.S.
Speaker Change: A faster recovery transaction activity for smaller asset is definitely gotten better.
Speaker Change: You see that for both departmental logistics in the U S is a little more liquidity in Europe now as well.
Speaker Change: And that to me is an important side and then on the customer side, which you referenced there is definitely now more openness to allocating to this space.
Speaker Change: We're having more conversations there we raised some capital for a dedicated core plus real estate industrial strategy of a couple billion dollars. We had as we've seen we announced the best quarter of fund raising regular way and be REIT that we had in 253 years. So it's the early signs.
Unnamed Speaker: from the peak, in terms of logistics and apartment construction, you're going to begin, as we get towards the end of this year and into next year, to have a much more favorable supply-demand And so, I think that's a big part of why we're so excited about this recovery. And so, I think that's a big part of why we're so excited about this recovery. The other area is cost of capital. Some of its base rates, which you highlighted, and obviously the Fed cutting rates will be helpful, but some of it spreads, and those have come back now, back to pre-Liberation Day levels.
Speaker Change: Thanks Glenn. I I would say the the good news now is it's all about a question of of when not if because the the building blocks for this recovery, are clearly coming into place the first and most important 1 is new Supply coming down and that takes time to work through the system because you start a project 2 3 years ago then it comes online. It's it's excess capacity now because of the 2/3 decline in building in the US from the peaks in terms of logistics and apartment construction. You're going to be begin as we get towards the end of this year.
Speaker Change: and into next year to have a much more favorable Supply demand dynamic,
Speaker Change: This recovery if rates come down faster, obviously, there were recoveries quicker if they don't and new supply will continue to be muted and then the recovery will take a little more time, but ultimately we know the path of travel it's not as if we're going to dis intermediate apartments or last mile warehouses, So I'd say our cause.
Unnamed Speaker: They're down significantly from the wides in 2023, and you're beginning to see those early green shoots in terms of a faster recovery. Transaction activity for smaller assets has definitely gotten better. You see that for both apartments and logistics in the U.S. There's a little more liquidity in Europe now as well, and that to me is an important sign. And then on the customer side, which you referenced, there's definitely now more openness to allocating to the space. We're having more conversations there. We raised some capital for a dedicated core plus real estate industrial strategy of a couple billion dollars.
Speaker Change: <unk> on the ultimate outcome high.
Speaker Change: And we're getting closer and closer to that tipping point, where real estate will start to move we haven't quite gotten to that escape velocity, yet, but it's feeling better and better given some of these key things, but cost of capital and the decline in new supply are very supportive as you start to look forward.
Speaker Change: Thanks, John.
Speaker Change: Thank you we'll go next to Craig Siegenthaler with Bank of America.
Unnamed Speaker: We had, as we've seen, we announced the best quarter of fundraising regular way in B-REIT that we'd had in two and a half, three years. So it's the early signs of this recovery. If rates come down faster, obviously the recovery's quicker. If they don't, then new supply will continue to be muted, and then the recovery will take a little more time, but ultimately we know the path of travel. It's not as if we're gonna disintermediate apartments or last mile warehouses.
Craig Siegenthaler: Hey, Good morning, Steve John Hope everyone's doing well we had a question on strategic partners. So in your secondary spine returns accelerating <unk> and there is a one or two quarter delay there too so maybe they should get even better with endowment and a few Asian institutions selling European states some discounts wider.
The other areas cost of capital, some of its base rates which you highlighted. And obviously the FED cutting rates will be helpful but some of it spreads and those have come back now, back to pre-liberation day levels, they're down significantly from the widest in 2023 and you're beginning to see those early green shoots in terms of a a faster recovery transaction activity for smaller assets is definitely gotten better. Um, you see that for both apartments and the logistics in the US there's a little more liquidity in Europe now as well. Um and that to me is an important sign and then on the customer side, which you reference, there's definitely now more openness to allocating to the space. Um, we're we're having more conversations there. Uh we raised some capital for a dedicated core Plus real estate industrial strategy of a couple billion dollars. Uh, we had as we've seen, we announced the best quarter of fundraising regular way and bereet that we
Craig Siegenthaler: So I wanted to see if you could update us on the investment return and fund raising outlook for second half.
Speaker Change: Hey, Greg It's Michael on the return portion as I mentioned in my remarks. It was a combination of factors that really drove a pretty robust returns.
Unnamed Speaker: So I'd say our confidence on the ultimate outcome high, and we're getting closer and closer to that tipping point where real estate will start to move. We haven't quite gotten to that escape velocity yet, but it's feeling better and better given some of these key things, the cost of capital and the decline in new supply are very supportive as you start to look forward.
Speaker Change: Had in 2 and a half 3 years so it's the early signs of this recovery. If rates come down faster, obviously the recovery is quicker. If they don't then you supply will continue to be muted and then the recovery will take a little more time, but ultimately we know the path of travel it's not as if we're going to disintermediate apartments or Last Mile warehouses. So I'd say our comp
Craig Siegenthaler: It does reflect.
Craig Siegenthaler: The purchase gains from very significant large new purchase one of our biggest secondary deals.
Craig Siegenthaler: History and that hadn't been additional specs.
Craig Siegenthaler: And then in terms of the underlying funds, we had good appreciation, which contributed to that return as well.
Unnamed Speaker: Thanks, John. Thank you.
Speaker Change: Confidence on the ultimate outcome High. Um, and we're getting closer and closer to that Tipping Point, where real estate will start to move. We haven't quite gotten to that escape velocity yet, but it's feeling better and better given some of these key things, the cost of capital and the decline in new supplier, very supportive as you start to look forward.
Craig Siegenthaler: And then there was a minor portion of actually currency benefits as well. So it's a combination of those factors, but I think what really kind of outsized returns in the quarter as the benefit of that very large exciting deal that we just closed in the quarter.
Craig Siegenthaler: We'll go next to Craig Siegenthaler. Hey, good morning, Steve, John, hope everyone's doing well. We had a question on strategic partners. So in your secondary funds, returns accelerated in 2Q. And there's a one or two quarter delay there too. So maybe they should get even better with endowments, and a few Asian institutions selling their P stakes and discounts wider. So I want to see if you could update us on the investment return and fundraising outlook for secondary Hey, Craig.
Speaker Change: Thanks John.
Speaker Change: With Bank of America.
Craig Siegenthaler: I would say in the broader segment.
Craig Siegenthaler: It's really in a sweet spot today.
Craig Siegenthaler: Obviously, there are investors, who want liquidity deal volume investment volume I think for US is up something like is it 40.
Craig Siegenthaler: <unk> I want to say roughly in the first half of the year over last year.
Speaker Change: Hey, good morning, Steve John, hope everyone's doing well. Um, we had a question on strategic Partners so in your secondary funds, returns accelerated in 2q. And there's a 1 or 2 quarter delay there too. So maybe they should get even better with endowments and a few Asian institutions, selling their peace stakes and discounts wider. So I want to see if you could update this on the investment return and fundraising outlook for that.
Michael Chae: It's Michael. On the return portion, as I mentioned in my remarks, it was a combination of factors that really drove a pretty robust It does reflect the gains from various... This is one of our biggest... And then in terms of the underlying funds, we had good appreciation, which contributed to that. And then there was a minor portion of actually current. So it's a combination of those factors. I think what really kind of outsized returns in the quarter is the benefit of that very large exciting And I would say on the broader segment, it's really in a sweet spot today.
Craig Siegenthaler: And the pipeline looks pretty good on the deployment front. The returns have been very strong over time in this area.
Craig Siegenthaler: And that's making it attractive to investors, we announced the progress we've made on the secondaries infrastructure Fund. We've just started on the flagship secondaries private equity fund, we expect we will get a really good response given the performance over time. So this is an area of the firm it's doubled over the last I guess five years.
Speaker Change: Hey, Greg, it's Michael on the return. Portion, as I mentioned in my remarks, it was a combination of factors that really drove pretty robust returns. Um, it does reflect, um, uh,
Speaker Change: The purchase the games from a very significant large.
Craig Siegenthaler: Yes.
Craig Siegenthaler: I expect that it will continue to grow quite a bit and it's another reason why Blackstone has this exceptional platform.
Craig Siegenthaler: Other firms have strength in one area or another they are just so many areas and so when we travel around I personally travel around and talk with <unk> around the world the ability to talk about a range of solutions a range of investing areas. They may be today more cautious on real estate or regular way buyouts, but theyre excited about Asia private equity.
Michael Chae: Obviously, there are investors who want liquidity. Deal volume, investment volume, I think for us is up something like, is it 40%, I want to say, roughly in the first half of the year over last year. And the pipeline looks pretty good on the deployment front. The returns have been very strong over time in this area, and that's making it attractive to investors. We announced the progress we've made on the secondaries infrastructure fund. We've just started on the flagship secondaries private equity fund. We expect we'll get a really good response given the performance over time. So this is an area that the firm, it's doubled over the last, I guess, five years.
Craig Siegenthaler: They love what we're doing in secondaries, that's really the power of Blackstone, It's true in the institutional channel. It's true in the retail channel and secondaries is a powerful example.
Speaker Change: Purchase 1 of our biggest, secondary deals um in history uh and that has beneficial effect. Um, and then in terms of the underlying funds, we had good appreciation which contributed to that return as well. Uh and then uh there was a, a minor portion of of actually currency benefits as well. So, it's a combination of those factors, but I think what wrote really kind of outside return to the quarter, is the benefit of that very large exciting, uh, deal that we did. I closed in the quarter and I would say on the broader segments, um, it's really in a sweet spot today. Um, obviously there, there are investors who want liquidity deal, volume investment, volume, I think for us is up something like, is it 40%? I want to say roughly in the first half of the year over last year. Um,
Jon Michael: Jon Michael Thank you.
Speaker Change: Thank you we'll take our next question from Michael Cyprus with Morgan Stanley.
Speaker Change: Hey, good morning, Thanks for taking the question just wanted to ask about 401, K and the retirement opportunities that I was hoping you could maybe elaborate a bit on how you see the path unfolding for all to accessing the form 8-K retirement cattle. It seems that target date, it's perhaps maybe the most likely vehicle just curious to get your views on that how meaningful of an allocation could this.
Michael Chae: I expect that it will continue to grow quite a bit. And it's another reason why Blackstone has this exceptional platform. Other firms have strength in one area or another, there are just so many areas. And so when we travel around, I personally travel around a ton, talk with CIOs around the world. The ability to talk about a range of solutions, a range of investing areas, they may be today more cautious on real estate or regular way buyouts, but they're excited about Asia private equity and love what we're doing in secondaries. That's really the power of Blackstone.
Speaker Change: Be within the target date vehicles, not just for ultimate also considering fixed income replacement and other types of strategies that you have or may have in the future.
Speaker Change: And just Bob broadly how you see this playing out and talk about some of the steps that you guys are taking.
Speaker Change: Thanks.
Speaker Change: Well it starts with we'll wait and see if there is an executive order and then ultimately world, making so.
Speaker Change: And and the pipeline looks pretty good on the deployment front, the returns have been very strong over time in this area. Um, and that's making it attractive to investors. We announced uh, the progress we've made on the secondaries infrastructure fund. We've just started on the flagship, secondaries private Equity Fund. We expect, we'll get a really good response given the performance over time. So this is an area that the firm. It's doubled over the last, I guess, 5 years, um, I expect that it will continue to grow quite a bit and it's it's another reason why Blackstone has this exceptional platform. You know, other firms have strength in 1 area or another. There are just so many areas and so when we travel around I personally travel around a ton talk with cios around the world. The ability to talk about a range of solutions, a range of investing areas. They may be today more cautious on real estate or regular way buyouts but they're excited about Asian private Equity. They love what we're
Speaker Change: I think we all need to be patient here, but as we've talked about in the past. We think this is compelling for individual investors today in the defined contribution world the access to alternatives, both the returns and diversification benefits. So.
Michael Chae: It's true in the institutional channel, it's true in the retail channel, and secondaries is a powerful example.
Speaker Change: Doing in secondaries, that's really the power of Blackstone. It's true in the institutional channel, it's true in the retail Channel and secondaries is a powerful example.
Unnamed Speaker: Sean Michael, thank you. Thank you.
John Michael: John Michael. Thank you.
Michael: We'll take our next question from Michael. Hey, good morning. Thanks for taking the question. I just wanted to ask about 401k and the retirement opportunity set. I was hoping you could maybe elaborate a bit on how you see the path unfolding for alts accessing the 401k retirement title. It seems that target date, it's perhaps maybe the most likely vehicle. Just curious to get your views on that. How meaningful of an allocation could this be within the target date vehicle, not just for alts, but also considering fixed income replacement and other types of strategies that you have or may have in the future?
Speaker Change: We would expect this is going to happen at some point over time, but again, we have to wait and see in terms of.
Speaker Change: Thank you. We'll take our next question from Michael Cyprus, with Morgan Stanley.
Speaker Change: Where it will happen the size I think we've got to wait I do think it's logical that it happens more in the target date funds.
Speaker Change: Obviously more appropriate for somebody.
Speaker Change: Earlier, and they're there for the lifespan as opposed to somebody just on the cusp of retirement and so I think the target date funds, where we will see this initially take hold.
Unnamed Speaker: And just more broadly, how you see this playing out and talk about some of the steps that you guys are taking. Thank you. Thanks.
Speaker Change: Obviously, it's a very large market and for US specifically the fact that we have created.
Speaker Change: Hey, good morning, thanks for taking the question. I just wanted to ask about 401k and the retirement opportunity said I was hoping you could maybe elaborate a bit on how you see the path unfolding for all accessing the 401K retirement Channel. It seems that Target date is perhaps maybe the most likely vehicle, just curious to get your views on that, how meaningful of an allocation because this be within the target date vehicle. Not just for alts, but also considering fixed income replacement and other types of strategies that you have or may have uh in the future. Uh and just more broadly how you see this uh playing out and talk about some of the steps that you guys are taking. Thank you.
Unnamed Speaker: Well, it starts with we'll wait and see if there is an executive order and then ultimately rulemaking. So I think we all need to be patient here. But as we've talked about in the past, we think this is compelling for individual investors today in the defined contributions world, the access to alternatives, both the returns and diversification benefits. So we would expect this is going to happen at some point over time. But again, we have to wait and see. In terms of where it'll happen, the size, I think we've got to wait. I do think it's logical that it happens more in the target date funds.
Speaker Change: Created scale perpetual products that have track records that can absorb large amounts of capital that is a real competitive advantage I do not believe drawdown funds will be the structure.
Speaker Change: Given the complexity of those four defined contributions and so I think it's going to be about large scale perpetuals is going to be about firms with brand names and the right legal approaches.
Speaker Change: And track record.
Speaker Change: That capital can get allocated to so obviously the dollars in this space are large our positioning in this space I think will be fairly unique in the range of offerings, we have across asset classes again pretty unique to be a partner with distributors in this space, but we've got to wait and see is there an executive.
Unnamed Speaker: It's obviously more appropriate for somebody earlier in their sort of lifespan as opposed to somebody just on the cusp of retirement. And so I think the target date funds is where we'll see this initially take hold. Obviously, it's a very large market. And for us specifically, the fact that we have created scale, perpetual products that have track records that can absorb large amounts of capital, that is a real competitive advantage. I do not believe drawdown funds will be the structure, given the complexity of those four defined contributions. And so I think it's going to be about large scale perpetuals.
Speaker Change: Thanks. Um, well, it starts with we'll wait and see if there is an executive order and then ultimately rule making. So, um, I think we all need to be patient here, but as we've talked about in the past, we think this is compelling for individual investors today in the defined contributions world. Uh, the access to Alternatives both the returns and diversification benefits. So we would expect this is going to happen at some point over time. But again we have to wait and see in terms of um where it'll happen the size. I I think we've got to wait. I do think it's logical that it happens more in the Target date funds you know it's obviously more appropriate for somebody um earlier in their their um sort of lifespan as opposed to somebody just on the cusp of retirement.
Speaker Change: Border, how it rolls out it will take time, but I do think there is a potentially significant opportunity here.
Speaker Change: Great. Thank you.
Speaker Change: Thank you we'll take our next question from Bill Katz with Jay Cowan.
Speaker Change: Great. Thank you very much for taking the question. So just coming back to some of your forward looking guidance can you unpack a little bit how you sort of see the into play for the FRE margin very strong quarter. This quarter and then relatedly as we think through the realization up cycle. How do we think about the payout rate on that that's been pretty steady.
Unnamed Speaker: It's going to be about firms with brand names and the right legal approaches and track record that capital can get allocated to. So obviously, the dollars in the space are large. Our positioning in the space, I think, will be fairly unique. And the range of offerings we have across asset classes, again, pretty unique to be a partner with distributors in this space. But we've got to wait and see, is there an executive order, how it rolls out, it will take time. But I do think there is a potentially significant opportunity here.
Speaker Change: And the mid Forty's should we assume that that's still the same kind of payout going forward just trying to think through the overall earnings Gary here. Thank you.
Speaker Change: Adults Michael Thank you for the question look on the margin.
Speaker Change: Outlook and dynamics, we're obviously pleased with the performance year to date, it's the result of healthy double digit management fee growth.
Speaker Change: Wrong underlying margin position, we also benefited from higher fee related performance revenues and transaction fees, which carry attractive incremental margins.
Speaker Change: I think in the second half a few variables to consider there is there.
Bill Katz: Great, thank you. I'll take our next question from Bill Katz with Great. Thank you very much for taking the question. So, just coming back to some of your forward-looking guidance, can you unpack a little bit how you sort of see the interplay for the FRE margin? Very strong quarter this quarter. And then, relatedly, as we think through the realization up cycle, how do we think about the payout rate on that? That's been pretty steady in the mid-40s. Should we assume that that's still the same kind of payout going forward? Just try to think through the overall earnings gearing here.
Speaker Change: Legal um, approaches and and and track record uh, that that Capital can get allocated to. So obviously the dollars in the space are large, are positioning in the space. I think will be fairly unique and the range of offerings. We have across asset classes. Again, pretty unique to be a partner with distributors in this space, but we've got to wait and see. Is there an executive order? How it rolls out? It will take time, but I do think there is a potentially significant opportunity here
Great. Thank you.
Speaker Change: There's a level of sensitivity to fee related performance revenues release as we've commented in the past.
Speaker Change: Thank you, we'll take our next question from Bill. Catch with TD Cowen.
Speaker Change: There is as we also said seasonally higher opex in the second half of the year, but.
Speaker Change: I think in that area. We've previously pointed to low double digit growth in 2025 overall and we've reiterated that view, but look overall for the fiscal year.
Speaker Change: We're tracking favorably against the initial view, we gave in January a sort of stability as a guidepost, but.
Speaker Change: But as I mentioned Theres always a few variables that could ultimately impact us, but long term, we feel obviously very good about our positioning and the ability to generate operating leverage.
Bill Katz: Thank you.
Bill: Great. Thank you very much for taking the question. Um, so just coming back to some of your forward-looking guidance. Can you unpack a little bit? How you sort of see the interplay for the F margin, very strong quarter, this quarter and then relatedly as we think through the realization upcycle, how do we think about the payout rate on that? That's been pretty steady in the mid 40s. Uh should we assume that that's still the same? Uh kind of payout, going forward? Just trying to think through the overall earnings gearing here. Thank you.
Michael Chae: Hey Phil, it's Michael. Thank you for the question. Look, on the margin outlook and dynamics, we're obviously pleased with the performance here today. We also benefited from higher fee-related performance revenues and transaction fees, which carry attractive I think in the second half, you know, a few variables to consider, there's, you know, there is a level of sensitivity to people like performance revenues, as we've commented in the past. There's, as we've also said, seasonally higher OPEX in the second half of the year. But I think in that area, we've previously pointed to low double-digits. But look, overall, for the fiscal year, we're tracking favorably against the initial view we gave in January.
Speaker Change: On realizations and the sort of performance fee.
Speaker Change: The margins in comp ratios.
Speaker Change: Broadly speaking you should expect stability that varies with the mix of funds and strategies.
Speaker Change: What are the sources of revenues.
Speaker Change: Revenues in a given quarter.
Speaker Change: We have had the ability to.
Speaker Change: Manage the mix of compensation between fee compensation and performance revenues.
Speaker Change: And we will still be able to do that which I think will be beneficial to FRE margins directionally.
Speaker Change: And my tradeoff performance revenue margins.
Speaker Change: Somewhat as a result, but I think thats more directional at the March.
Speaker Change: But we feel very good about our sort of our levers to drive margins.
Speaker Change: Across the across the P&L.
Michael Chae: It's sort of stability as a guidepost, but as I mentioned, there's always a few barriers. We feel very good about our positioning and the ability to generate opportunities. On realizations and the sort of performance fee margins and comp ratios, yeah, I think broadly speaking, you should expect stability that varies with the mix of, you know, funds and strategies that are the source of performance revenues in a given quarter. We have had the ability to, you know, manage the mix of compensation between fee compensation and performance revenues, and we'll still be able to do that, which I think will be beneficial to FRE margins directionally and might trade off performance revenue margins.
Speaker Change: Okay.
Speaker Change: Thanks, Bill. Thank you, we'll go next to Dan Fannon with Jefferies.
Speaker Change: Thanks, Good morning, John I wanted to follow up on your comments around the deal making pauses behind us.
Bill: But like, overall for the fiscal year, um, we're tracking favorably against the initial view. We gave in January of sort of stability as a guidepost. Um, but as I mentioned, there's always a few variables that can ultimately impact those. But long term. We feel obviously very good about our positioning and the ability to generate operating Leverage
Speaker Change: Get a little bit more color on your confidence around this we've obviously been here before and waiting for activity to pick up but you obviously sounded much more confident here. This morning, So just would love a little more color there.
Speaker Change: Well, it's a fair question, because I think we expressed some confidence similarly.
Speaker Change: The outset of the year.
Speaker Change: And then we had.
Speaker Change: The tariff issues and that slowed things down.
Speaker Change: You can feel things sort of tumblers falling into place. It's the combination of equity markets recovering to record levels. Its debt spreads now back to the preliminary <unk> data types.
Bill: Um on realizations and the sort of performance uh fee uh margins and compare ratios. Yeah, I think broadly speaking you should expect stability that varies with the mix of, you know, funds and strategies. Um, uh, that are the source of funds revenues and G in a given quarter. Um, uh, we have had the ability to, you know, manage the mix of compensation between fee, compensation and performance revenues, um, and we'll still be able to do that, which I think will be beneficial to F margins directionally. Um, and and and uh,
Michael Chae: somewhat as a result, but I think that's more directional. But we feel very good about our leverage to drive margins across the P&L. Thanks.
Bill: and might trade off performance Revenue margins. Um,
Speaker Change: It's general business confidence, particularly for businesses away from manufacturing and retailing, who are in the teeth of of some of the issues around goods in the cost of those goods and so there is there is overall a more constructive environment Theres also more favorable regulatory environment and there has been in a few years of course for M&A.
Bill: we feel very good about our sort of our levers to, um,
Bill: To drive margins and, and, and across the across the pnl.
Dan Fannon: Thank you. We'll go next to Dan Fannon with Jeffreys. Thanks. Good morning. John, I wanted to follow up on your comments around the deal-making pauses behind us. Just get a little bit more color on your confidence around this. We've obviously been here before and waiting for activity to pick up, but you obviously sounded much more confident here this morning, so just would love a little more color there. Well, it's a fair question, because I think we expressed some confidence similarly at the outset of the year. And then we had the tariff issues, and that slowed things down.
Speaker Change: Thanks, thank you. We'll go next to Dann Fannon with Jeffries.
Speaker Change: And when you just look at the levels of M&A and IPO volume over the last three plus years its running about two thirds below historic levels as a percentage of market cap of the stock market. So theres just a lot of pent up demand in the system and then when we look at our proprietary data we've got the busiest pipeline we've had.
Uh, thanks, good morning. Uh, John wanted to follow up on your comments around the deal making pauses behind us. Um, just want to get a little bit more color on your confidence around this. We've obviously been here before and waiting for activity to pick up but you obviously sounded much more confident here this morning so just would love a little more color there.
Speaker Change: Since 2021 potential Ipos, we talked about getting one done in Europe here, a couple of weeks ago, and then deal screenings.
Jonathan Gray: You know, you can feel things, sort of the tumblers falling into place. It's the combination of equity markets recovering to record levels. It's debt spreads now back to the pre-Liberation Day tights. It's general business confidence, particularly for businesses away from manufacturing and retailing, who are in the teeth of some of the issues around goods and the cost of those goods. And so there's overall a more constructive environment. There's also a more favorable regulatory environment than there's been in a few years, of course, for M&A. And when you just look at the levels of M&A and IPO volume over the last three-plus years, it's running about two-thirds below historic levels as a percentage of market cap of the stock market.
Speaker Change: On the <unk> credit side up 50%, new deals sort of coming in the door that we're looking at versus the end of the year. So lots of things are coming together.
Speaker Change: Yes, you need a level of Terra firma, but if this holds I do expect we will see a step function increase in transaction activity.
Speaker Change: That of course on the realization side as Michael noted takes a little bit of time, it's like moving the playing out to the runway before it ultimately takes off but those signs of getting companies public public companies, becoming more active debt markets. There's been a ton of refinancing activity as cost of capital comes down in the last few weeks all of those things are coming.
Well, it's a fair question because uh, I think we expressed some confidence. Similarly, uh, at the outset of the year, um, and then we had the, the Tariff issues and and that slowed things down, um, you know, you can feel things sort of the Tumblers falling into place. It it's the combination of equity markets recovering to record levels. Its debt spreads. Now, back to the pre-liberation day, tights, um, it's General business confidence, particularly for businesses, away from manufacturing and retailing, who who are in the teeth of of of some of the issues around goods and and the cost of those goods. And so there's there's overall a more constructive environment. There's also a more favorable regulatory environment than there's been in a few years, of course for m&a. And when you just look at the levels of m&a and IPO volume over the last 3 plus years, it's running about 2/3 below historic levels as a percent.
Jonathan Gray: So there's just a lot of pent-up demand in the system. And then when we look at our proprietary data, you know, we've got the busiest pipeline we've had since 2021 of potential IPOs. We talked about getting one done in Europe here a couple weeks ago. And then deal screenings, you know, on the BXCI, the credit side, up 50 percent, new deals sort of coming in the door that we're looking at versus the end of the year. So lots of things are coming together. Yes, you need a level of terra firma. But if this holds, I do expect we'll see a step function increase in transaction activity.
Speaker Change: Into place and that's what's giving us confidence your hair.
Speaker Change: Thank you.
Speaker Change: Yes.
Speaker Change: We will take our next question from Brian Mckenna with citizens.
Speaker Change: Okay, great. Good morning, everyone. So real estate performance eligible AUM totals around $200 billion today net accrued performance fees stands at less than $1 billion. Today. So I'm curious how much of the $200 billion is currently generating performance revenue and then is there a way to think about how much of this AUM.
Speaker Change: Call it 10% away from the hurdle I'm, just trying to get a sense of the trajectory of accrued performance fees in real estate from here as performance and underlying trends begin to normalize.
Jonathan Gray: That, of course, on the realization side, as Michael noted, takes a little bit of time. It's like moving the plane out to the runway before it ultimately takes off. But those signs of getting companies public, public companies becoming more active, debt markets, there's been a ton of refinancing activity as cost of capital comes down in the last few weeks. All the things are coming into place.
Speaker Change: Thanks for the question yes.
Speaker Change: You mentioned the balance of performance.
Speaker Change: <unk>.
Speaker Change: Dollars and real estate is about it's over $200 billion I would just frame it that about 60% of that is above.
Speaker Change: Their respective hurdles.
Jonathan Gray: And that's what's giving us his confidence, you hear.
Speaker Change: In terms of the components and breath and opportunistic importantly, as it relates to carry as you know.
Brian McKenna: Thank you. We'll take our next question from Brian McKenna. Okay, great.
Companies Public public companies becoming more active debt markets. There's been a ton of refinancing activity as costs of capital comes down in the last few weeks. All the things are coming into place and that's what's giving us this confidence, you here.
Speaker Change: Thank you.
Speaker Change: The vast majority, 80% plus of the AUM is above hurdle.
Speaker Change: We'll take our next question from Brian, McKenna with citizens?
Unnamed Speaker: Good morning, everyone. So real estate performance eligible AUM totals around $200 billion today. Net accrued performance fee stands at less than $1 billion today. So I'm curious, how much of the $200 billion is currently generating performance revenue? And then is there a way to think about how much of this AUM, call it, is 10% away from the hurdle? I'm just trying to get a sense of the trajectory of accrued performance fees in real estate from here as performance and underlying trends.
Speaker Change: And then as I said that really represents the bulk of our crude carry in real estate, 100% of the region is also above that hurdle.
Speaker Change: So that's sort of the structure of it.
Speaker Change: And.
Speaker Change: And so I think for us.
Speaker Change: John just referenced with <unk>.
Speaker Change: We expect the realization cycle to accelerate probably more in private equity real estate and ultimately in real estate.
Speaker Change: And in those funds as it relates to net realizations, that's the positioning relative to hurdles, which is a fib.
Uh, okay, great. Good morning everyone. Um, so real estate performance. Eligible AUM, totals around hundred billion dollars today. Net acred performance fee stands at less than a billion dollars today. So you know, I'm curious how much it 2 of the hundred billion dollars is currently generating performance revenue and then is there a way to think about how much of this AUM call it, you know, is 10% away from the hurdle. I'm just trying to get a sense of the trajectory of of a crude performance fees in real estate, from here, as performance and underlying Trends, you know, begin to normalize.
Unnamed Speaker: Thanks for the question. Yeah. As you mentioned, the balance of performance earnings eligible dollars in real estate is about, it's over $200 billion. I would just frame it that about 60% of that is above their respective hurdles. In terms of the components in breadth and opportunistic, importantly, as it relates to carry, as you know, The vast majority. of the AUM as a father of her own. And as I said, that really represents the bulk of our accrued fairing real estate. 100% of B-REIT is also...
Speaker Change: Great. Thanks, Michael.
Speaker Change: Thank you we'll take our next question from Stephen <unk> with Wolfe Research.
Speaker Change: Good morning.
Speaker Change: Thanks for the question. Yeah. Uh as you mentioned the balance of performance through an eligible um dollars in real estate, it's about it's over 200 billion. I would just frame it that about 60% of that. Um,
Speaker Change: Maybe it sounds like Stephen we lost him. Please can you, even though I'm sorry about that no Washington I'm here as you can hear me I'm, sorry, I was muted.
um, in terms of the components, uh, in breath, and opportunistic, importantly, as it relates to carries, you know,
David: Good morning, David.
Speaker Change: My my apologies good morning, everyone regarding the <unk> launch I was hoping you could speak to your confidence level as to whether this could scale at a similar pace to some of your other retail vehicles just trying to gauge the early reception any additional color you can offer on some of the retail products in the pipeline that were referenced in some of the earlier.
The vast majority, you know, 80% plus of the AUM is above, heardle.
Unnamed Speaker: So, that's sort of the structure of it, and so I think we're, you know, as John just referenced, you know, with time, we expect the realization cycle to accelerate, probably more in private equity before real estate, then ultimately in real estate, and in those breadth funds as it relates to net realizations, that's the positioning relative to hurdles, which is a favorite. Great. Thank you.
Speaker Change: As I said that really represents the bulk of our crew carrying real estate 100%. It'd be really is also above that hurdle.
Speaker Change: Um, so that's sort of the structure of it.
and um,
and so I think we're, you know, as, as John just referenced
David: Our prepared remarks.
David: Sure I think on the Max It will take some time, we've launched this in a little bit of a different way in the RIAA channel to start.
You know, with time, um, we expect the realization cycle to accelerate probably more in private Equity before real estate, but then ultimately in real estate. Um, and in those breath funds, as it relates to net realizations, that's the positioning, uh, relative to hurdles, which is a big
David: We've gotten good reception, but I think we will.
Speaker Change: Great. Thanks. Michael.
Steven Chubak: I'll take our next question from Steven Chubak with Wilfrid. Thank you. Good morning. It sounds like Stephen, uh, we lost him. I mean, Stephen, you started that. No, Weston, I'm here, if you can hear me. Sorry, I was... Good morning, Stephen. My apologies. Good morning, everyone.
David: We have a number of interesting things in the marketplace today.
Speaker Change: Thank you. We'll take our next question from Stephen chebakia.
David: Thanks. This is obviously a little different as an inaugural interval fund and what we're finding with.
Speaker Change: Research.
Speaker Change: I see you. Good morning.
David: New platforms in the marketplace people want to see that track record start to grow and build.
David: Because this is easier to access on the interim revolt fund basis, I think the ultimate potential is quite significant but I would expect to ramp up to take a bit of time.
Speaker Change: Katie. It sounds like Stephen. Uh, we lost him. Oh, sorry about that. No, I watched it. I'm here. If you can hear me. Sorry, I was muted.
Unnamed Speaker: Regarding the BMAX launch, I was hoping you could speak to your confidence level as to whether this could scale at a similar pace to some of your other retail vehicles, just trying to gauge the early reception, any additional color you can offer on some of the retail products in the pipeline that were referenced in some of the earlier prepared remarks. Sure. I think on BMAX, it will take some time. We've launched this in a little bit of a different way in the RIA channel to start. We've gotten a good reception, but because we have a number of interesting things in the marketplace today, I think this is obviously a little different as an interval fund.
David: If you look at our track record of course.
David: The flagship products, we've had great success, obviously be read and be Craig DXP. In just 18 months is remarkable where it's going to be essentially the market leader in this space in a short period of time.
Speaker Change: Good morning. Stephen my my apologies. Good morning everyone. Um regarding the beemax launched. I was hoping you could speak to your confidence level as to whether this could scale at a similar Pace to some of your other retail Vehicles, just trying to gauge the early reception, any additional color, you can offer on some of the retail products in the pipeline.
David: Our <unk>.
David: Platform, we talked about is on a small number of distributors.
Speaker Change: That were referencing. Some of the earlier prepared, remarks.
David: We are a European credit platform, that's picking up some momentum so the.
David: Conversations with our wealth partners is incredibly positive.
David: Sort of a blackstone positioning in that space because of the track record we have the breadth of products. The fact, we've been added so long is really special.
David: Youll continue to see us introduce new products and I think we will continue to get good reception and it'll be increasingly on a global basis, each product will have its own sort of pace to how it picks up and part of it is where we decided to launch these based on a whole variety of considerations, but the overall path is pretty darn good.
Unnamed Speaker: And what we're finding with new platforms in the marketplace, people want to see the track record start to grow and build. Because this is easier to access on the interval fund basis, I think the ultimate potential is quite significant, but I would expect a ramp up to take a bit of time. If you look at our track record, of course, in the flagship products, we've had great success. Obviously, Beaverton, BCRED, BXP in just 18 months is remarkable where it's gone to be essentially the market leader in the space in a short period of time. Our platform we talked about is on a small number of distributors.
Speaker Change: Great. Thanks for taking my question.
Speaker Change: Thank you we'll take our next question from Benjamin Brutish with Barclays.
Speaker Change: Hi, Good morning, and thank you for taking the question I wanted to ask something kind of specific on your fee related performance revenues. It looks like the performance in the quarter or at least the outperformance versus a lot of expectations was driven by private equity, which I would assume is more bits than people were expecting I know thats, one that can be a bit lumpy based on the timing of fundraising and deployment with the big.
Unnamed Speaker: We have a European credit platform that's picking up some momentum. So, the conversations with our wealth partners is incredibly positive. And sort of the Blackstone positioning in that space, because of the track record we have, the breadth of products, the fact we've been at it so long is really special. I think you'll continue to see us introduce new products, and I think we'll continue to get a good reception, and it'll be increasingly on a global basis. Each product will have its own sort of pace to how it picks up. And part of it is where we decide to launch these based on a whole variety of considerations.
Speaker Change: Three year crystallization, but any color you could share in terms of what FRP or Ken or might look like over the at least the next couple of quarters would be helpful. Just for modeling purposes. Thank you.
Speaker Change: Yes, I think just as it relates to VIP, which.
Speaker Change: Point of your question.
Speaker Change: And I think at the end of last year in the last couple of quarters gave a sense of the shape of the year after that very large presentation of the fourth quarter.
Speaker Change: Generally as you know.
Unnamed Speaker: But the overall path is pretty darn good.
Speaker Change: Infrastructure subject to.
Speaker Change: It will be subject to more frequent crystallization related to the layering in of new investors and the open end fund raising over time.
Unnamed Speaker: Thanks for taking my question. Thank you.
Unnamed Speaker: We'll take our next question from Ben. Hi, good morning and thank you for taking the question. I wanted to ask something kind of specific on your few related performance revenues. It looked like the performance in the quarter, or at least the outperformance versus a lot of expectations, was driven by private equity, which I would assume is more BIP than people were expecting.
Speaker Change: In the second quarter, we did have nearly $100 million of revenues to actually give you some specifics around that.
Speaker Change: In the quarter, we'd expect about half of that in the next quarter from a scheduled crystallization from the institutional fund and then nothing in the fourth quarter from the institutional funds. We do expect a modest amount from VX in for them on the private wealth infrastructure products from its first crystallization in the fourth quarter, which will then be quarterly thereafter, which was <unk>.
Unnamed Speaker: I know that's one that can be a bit lumpy based on the timing of fundraising and deployment with the big sort of three-year crystallizations, but any color you could share in terms of what FRPR can or might look like over at least the next couple of quarters would be helpful just for modeling purposes. Thank you. Yeah, I think that just as it relates to VIP. on your question. I think we, at the end of last year and the last couple quarters, gave a sense of the shape of the year after that very large crystallization in the fourth quarter.
Speaker Change: DXP structure when it started as well so.
Speaker Change: There are some fairly granular.
Speaker Change: Sense of.
Speaker Change: Infrastructure people infrastructure.
Speaker Change: I would just say generally the layering of various products will be powerful to earnings power over time.
Speaker Change: Yeah.
Speaker Change: Yeah.
Speaker Change: Okay. Thank you for that.
Unnamed Speaker: Generally, as you know, infrastructure will be subject to more frequent crystallizations related to the layering in of new investors and the open-ended fundraising over time. In the second quarter, we did have nearly $100 million in revenues, just to actually give you some specifics around that. We'd expect about half that in the next quarter from a scheduled crystallization from the institutional fund, and then nothing in the fourth quarter from the institutional fund. We do expect a modest amount from VXN for the private wealth infrastructure product from its first crystallization in the fourth quarter, which will then be quarterly thereafter, which was the VXP structure when it started as well.
Speaker Change: Thank you we'll take our next question from Ken Worthington with JP Morgan.
Ken Worthington: Hi, good morning, Thanks for taking the question.
Ken Worthington: With regard to legal and general so thanks for the highlight you mentioned 20 billion over the next five years is this based on new products expected to be developed and distributed or is there an IMA or more immediate asset management element of the partnership as well.
Ken Worthington: And then last quarter, you mentioned Wellington and Vanguard can you give us an update on product development, how thats progressing and where might we might see those products start to hit the market.
Ken Worthington: Sure with LNG.
Ken Worthington: Our partnership focused around.
Unnamed Speaker: So. There's some early granules. Sansevier. Structuring, and people. I would just say generally the layering of various products will be powerful to earnings power over. Okay, thank you for that. Thank you.
Ken Worthington: Credit and insurance.
Ken Worthington: I'd say a couple of things $20 billion is ultimately our aspiration here with them.
Ken Worthington: I'd say, it's a combination of things.
Ken Worthington: The main element of it will be managing investment grade private credit for their pension risk transfer and annuities business.
Ken: We'll take our next question from Ken. Hi, good morning. Thanks for taking the question. With regard to legal in general, so thanks for the highlights. You mentioned $20 billion over the next five years. Is this based on new products expected to be developed and distributed, or is there an IMA or more immediate asset management element of the partnership as well? And then last quarter, you mentioned Wellington and Vanguard.
Ken Worthington: Something obviously, we do for large clients here in SMA clients.
Ken Worthington: So thats the relationship to make them, even more competitive in that marketplace in the UK and then we also said we're going to try to do some things together in wealth, creating some products together for the UK market and then potentially in retirement there in defined contribution again with our credit.
Unnamed Speaker: Can you give us an update on product development, how that's progressing, and when we might see those products start to hit the market? Sure. With L&G, it's a partnership focused around credit and insurance. I'd say a couple things, $20 billion is ultimately our aspiration here with them. I'd say it's a combination of things. The main element of it will be managing investment-grade private credit for their pension risk transfer and annuities business, something obviously we do for large clients here and SMA clients. So that's a relationship to make them even more competitive in that marketplace in the UK.
Ken Worthington: <unk>, so it's broad range.
Ken Worthington: They are the leading insurer and asset manager in that market. We were very excited to be able to partner with a company of that quality and scale and there is a real entrepreneurial energy now.
Ken Worthington: Antonio there and we're excited about what we can do with them together.
Ken Worthington: On on Vanguard Wellington.
Ken Worthington: There is a limit to what I can say I think legally.
Ken Worthington: At this point, we can say that Wellington has filed for our first product together, obviously that that process of FCC approval will take some time.
Ken Worthington: But we're excited as we talked about on the previous call just the idea of bringing our best in class private capabilities with Vanguard and Wellington best in class and active and passive debt and equity and we think for for a portion of the wealth market. This could be particularly attractive just sort of one stop.
Unnamed Speaker: And then we also said we're going to try to do some things together in wealth, creating some products together for the UK market, and then potentially in retirement there and to find contributions again with our credit products. So it's broad range. They are the leading insurer and asset manager in that market. We were very excited to be able to partner with a company of that quality and scale. And there's a real entrepreneurial energy now with the CEO, Antonio, there, and we're excited about what we can do with them together.
Ken Worthington: Shopping, but I can't really speak to specifics other than this one filing that's been made.
Ken Worthington: Great. Thank you.
Speaker Change: We will take our next question from Patrick Davitt with Autonomous research.
Patrick Davitt: Hi, everyone. Good morning.
Patrick Davitt: You mentioned the life Sciences performance and the divergence between PE and real estate and have obviously built a great business there, but there seems to be a fairly significant cut to government research and science funding coming through the pipe do you have any early thoughts on how much exposure your portfolios could have to that and does that cut in funding changed.
Unnamed Speaker: On Vanguard Wellington, there's a limit to what I can say, I think, legally at this point. We can say that Wellington has filed for our first product together. Obviously, that process of SEC approval will take some time. But we're excited, as we talked about on the previous call, just the idea of bringing our best-in-class private capabilities with Vanguard and Wellington best-in-class and active and passive debt and equity. And we think for a portion of the wealth market, this could be particularly attractive, just sort of one-stop shopping.
Patrick Davitt: Your view on the life Sciences investment opportunity from here. Thank you.
Patrick Davitt: So it has certainly added to the uncertainty in this space.
Speaker Change: Michael talked a little bit about the on the tenant demand side in our life Science office area I think the key thing, though is there is just enormous innovation happening in life Sciences that the AI is likely to accelerate that that there are huge capital needs both from the pharmaceutical.
Unnamed Speaker: But I can't really speak to specifics other than this one filing that's been made.
Patrick Davitt: Great, thank you. We'll take our next question from Patrick Davitt with a Hey everyone, good morning. You mentioned the life sciences performance and the divergence between PE and real estate and have obviously built a great business there, but there seems to be a fairly significant cut to government research and science funding coming through the pipe. Do you have any early thoughts on how much exposure your portfolios could have to that and does that cut in funding change your view on the life sciences investment opportunity from here? Thank you. So it has certainly added to the uncertainty in this space.
Speaker Change: Companies, who want to find partners to accelerate their phase III process for products as well as for smaller life science companies, who don't want to issue equity and it is definitely a marketplace, where we think we have a pretty unique offering and capability.
Speaker Change: It is possible that.
Speaker Change: We could see some changes in terms of reimbursements and MFN outside the United States, but overall the market is quite substantial need for these products is substantial and the number of groups with expertise at scale to do these partnerships is limited so we still see a very big investment opportunity here.
Speaker Change: Your view on the life Sciences investment opportunity from here. Thank you.
Speaker Change: So it has certainly added to the uncertainty in this space.
Stephen Schwarzman: You know, Michael talked a little bit about this on the tenant demand side in our life science office area. I think the key thing though is there is just enormous innovation happening in life sciences that the AI is likely to accelerate that, that there are huge capital needs both from the pharmaceutical companies who wanna find partners to accelerate their phase three process for products, as well as for smaller life science companies who don't wanna issue equity. And it is definitely a marketplace where we think we have a pretty unique offering and capability. It is possible that we could see some changes in terms of reimbursements and MFNs outside the United States.
Speaker Change: The final thing I would add in life science offices as John mentioned.
Speaker Change: Michael talked a little bit about the tenant demand side in our life Science office area I think the key thing, though is there is just enormous innovation happening in life Sciences that AI is likely to accelerate that that there are huge capital needs both from the pharmaceutical.
Speaker Change: Supply coming down in real estate and applied personnel as it applies to.
Speaker Change: This sector as well starts were down something like 80% plus it's sort of their peak a few years ago. So that is ultimately going to be a real benefit for the sector.
Speaker Change: Companies, who want to find partners to accelerate their phase III process for products as well as for smaller life science companies, who don't want to issue equity and it is definitely a marketplace, where we think we have a pretty unique offering and capability.
Speaker Change: Thank you we will take our final question from Arnaud <unk> with BNP Paribas.
Arnaud: Hey, good morning, one.
Speaker Change: One quick question on <unk>. Please.
Speaker Change: There's clearly been a little appetite for this product I'm, just wondering how youre thinking about sizing of this production in relation to capacity to deploy.
Speaker Change: It is possible.
Speaker Change: That we could see some changes in terms of reimbursements in MF and outside the United States, but overall the market is quite substantial need for these products is substantial and the number of groups with expertise at scale to do these partnerships is limited so we still see a very big investment opportunity here.
Speaker Change: In retail and particularly as you might be thinking about the diversification how should we be thinking about the potential.
Stephen Schwarzman: But overall, the market is quite substantial. The need for these products is substantial. And the number of groups with expertise at scale to do these partnerships is limited. So we still see a very big investment opportunity here. The final thing I'd add to life science offices, as John mentioned.
Speaker Change: Divergence in construction between.
Speaker Change: This will put us in your flagship thank you.
Speaker Change: Yes.
Speaker Change: Well I would say at Blackstone, our greatest strength has always been our capacity to deploy and do it in a way that delivers strong returns we designed DXP with the idea that this is a product that takes in capital on a regular basis.
Speaker Change: The final thing I'd add in life science offices, as John mentioned, the supply coming down real estate and applied peripherals implies too.
Unnamed Speaker: Apply coming down in real estate, apply, personal estate, apply. This sector as well, starts are down something like 80%. a few years ago.
Speaker Change: This sector as well starts are down something like 80% plus that's sort of their peak a few years ago. So that is ultimately going to be a real benefit for the sector.
Speaker Change: As we experienced with be read and decrypt and therefore, we wanted the widest aperture possible. So the product can invest in the U S Europe and Asia. It can do it in control private equity minority hybrid equity secondaries life Sciences growth opportunistic credit we actually.
Arnaud Giblat: So that is ultimately going to be a... We will take our final question from Arnaud Giblat with BNP. Yeah, good morning. One quick question on BXP, please. So there's clearly been a lot of appetite for this product. I'm just wondering how you're thinking about sizing of this product in relation to capacity to deploy in retail, and particularly as you might be thinking about vintage diversification, how should we be thinking about the potential divergence in construction between this wealth product and your flagship?
Speaker Change: Thank you, we'll take our final question from Arnaud <unk> with BNP Paribas.
Arnaud: Hey, good morning.
Arnaud: One quick question on <unk>. Please.
Speaker Change: Sacrificed a bit in terms of the market potential by making it only eligible to qualified purchasers. So that we had the flexibility to deploy capital across these variety of areas to date. The performance has been exceptional and I just think at Blackstone, we're able to find lots of opportunities serve.
Arnaud: So there's clearly been a lot of appetite for this product I'm, just wondering how youre thinking about sizing of this production in relation to capacity deployed in retail and particularly as you might be thinking about vintage diversification, how should we be thinking about the potential.
Arnaud: Divergence in construction between.
Jonathan Gray: Thank you. Well, I would say at Blackstone, our greatest strength has always been a capacity to deploy and do it in a way that delivers strong returns. We designed BXP with the idea that this is a product that takes in capital on a regular basis, as we experienced with B-REIT and B-CRED, and therefore we wanted the widest aperture possible. So the product can invest in the U.S., Europe, and Asia. It can do it in control, private equity, minority, hybrid equity, secondaries, life sciences, growth, opportunistic credit. We actually sacrificed a bit in terms of the market potential by making it only eligible to qualified purchasers so that we had the flexibility to deploy capital across these variety of areas.
Arnaud: This will put us in your flagship thank you.
Speaker Change: Our institutional clients, which you were asking about which obviously it's critically important both in terms of the main funds and also their co investment desires, but also create a whole new range of additional investment opportunities across the firm. So I feel very good about our ability to deploy capital, we certainly been able to show.
Arnaud: Okay.
Speaker Change: Well I would say at Blackstone, our greatest strength has always been our capacity to deploy and do it in a way that delivers strong returns we designed DXP with the idea that this is a product that takes in capital on a regular basis.
Speaker Change: As we experienced with <unk> and <unk> and therefore, we wanted the widest aperture possible. So the product can invest in the U S Europe and Asia. It can do it in control private equity minority hybrid equity secondaries life Sciences growth opportunistic credit we actually.
Speaker Change: Across credit we did it in real estate, we have the capabilities to scale up and this is obviously beneficial in the wealth channel as it grows its one of the things that really differentiates Blackstone as a firm.
Speaker Change: Thank you that will conclude our question and answer session. At this time I would like to turn the call back over to Weston Tucker for any additional or closing remarks.
Speaker Change: Sacrificed a bit in terms of the market potential by making it only eligible to qualified purchasers. So that we had the flexibility to deploy capital across a variety of areas to date. The performance has been exceptional and I just think at Blackstone, we're able to find lots of opportunities serve.
Weston Tucker: Alright, well. Thank you everyone for joining us today and look forward to following up after the call.
Speaker Change: Yes.
Jonathan Gray: To date, the performance has been exceptional. And I just think at Blackstone, we're able to find lots of opportunities, serve our institutional clients, which you were asking about, which obviously is critically important, both in terms of the main funds and also their co-investment desires, but also create a whole new range of additional investment opportunities across the firm. So I feel very good about our ability to deploy capital. We've certainly been able to show across credit. We did it in real estate. We have the capabilities to scale up. And this is obviously beneficial in the wealth channel as it grows.
Speaker Change: That will conclude today's call. We appreciate your participation.
Speaker Change: Our institutional clients, which you were asking about which obviously it's critically important both in terms of the main funds and also their co investment desires, but also create a whole new range of additional investment opportunities across the firm. So I feel very good about our ability to deploy capital, we've certainly been able to show.
Speaker Change: Across credit we did it in real estate, we have the capability to scale up and this is obviously beneficial in the wealth channel as it grows its one of the things that really differentiates Blackstone as a firm.
Jonathan Gray: It's one of the things that really differentiates Blackstone as a firm.
Weston Tucker: And that will conclude our question and answer session. At this time, I'd like to turn the call back over to Weston Tucker for any additional questions. Great.
Speaker Change: Thank you that will conclude our question and answer session. At this time I would like to turn the call back over to Weston Tucker for any additional or closing remarks.
Weston Tucker: Well, thank you everyone for joining us today and look forward to following up after the call.
Weston Tucker: Alright, well. Thank you everyone for joining us today and look forward to following up after the call.
Weston Tucker: That will conclude today's call. We appreciate your participation.
Weston Tucker: [music].