Blackstone Has First Loss Since 2011 as Stock Market Tumblesby and
Stake in hotel operator Hilton fell more than $2 billion
CFO Chae says most of loss reversed in Q4; stock rises
Blackstone Group LP posted its first quarterly loss since 2011 because of a stock-market slump. Shares of the company rose after executives said most of the loss has reversed in the fourth quarter.
The world’s largest alternative-asset manager reported a third-quarter loss of $416 million, or 35 cents a share, compared with a profit of $758 million, or 66 cents, a year earlier, according to a statement Thursday. The results, which fell short of the 30-cent per-share loss expected by 16 analysts in a Bloomberg survey, come six months after the New York-based company recorded its most profitable quarter ever.
A market rout hit Blackstone’s holdings, including its stake in Hilton Worldwide Holdings Inc., which lost more than $2 billion of value in the period. The Standard & Poor’s 500 Index had its biggest quarterly decline in four years, spurred by investor concern that China’s economy is slowing.
“Long-term strength was masked in our reported financials by stock market volatility at the end of the quarter,” Tony James, Blackstone’s president, said Thursday on a conference call with reporters. “The earnings of our portfolio companies and real estate assets continue to grow.”
Blackstone’s shares rose 2.1 percent to $34.25 at 12:20 p.m. in New York, extending gains this year to 3.2 percent.
Private-equity firms hold unlisted businesses, whose values are in part marked to the market, and shares of companies they have taken public. Both are affected by stock-market moves.
Blackstone’s public holdings in private equity and real estate are up more than 7 percent in the fourth quarter so far, Chief Executive Officer Steve Schwarzman said on a conference call with investors and analysts. That has mostly reversed the economic net income loss of the third quarter, Chief Financial Officer Michael Chae said on the call.
Blackstone’s distributable earnings, which reflect cash gains on sales of holdings, were $692 million, up 1 percent from a year earlier. It notched gains by selling stakes in holiday-park operator Center Parcs UK, the New York Times Building in Manhattan, Summit Materials Inc., Michaels Stores Inc. and Scout24 Holding GmbH.
Continued volatility will create new investment opportunities, especially in energy and emerging markets, James said. Blackstone has $85 billion in so-called dry powder, or money committed to the firm to be invested. It finished collecting $15.8 billion this month for the biggest-ever opportunistic real estate fund, and it’s gathered $17.5 billion for its latest leveraged-buyout pool.
Blackstone’s assets under management rose to $333.9 billion from $332.7 billion at the end of the second quarter. The company said it will pay stockholders a dividend of 49 cents a share on Nov. 2.