Blackstone’s Profit Soars 86% as Hilton, Holdings Gain

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  • Hilton, firm’s biggest public asset, jumped 19% in quarter
  • Fundraising, sales, deployment was ‘robust’: Jefferies

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Blackstone Group LP, the world’s biggest private equity firm, reported an 86 percent jump in fourth-quarter profit as holdings including Hilton Worldwide Holdings Inc. appreciated.

Economic net income, a measure of earnings that reflects both realized and unrealized investment gains, was $811.6 million, or 68 cents a share, compared with $435.7 million a year earlier, New-York based Blackstone said in a statement Thursday. Analysts had expected earnings of 66 cents a share, the average of 14 estimates compiled by Bloomberg.

“Performance remained strong quarter-over-quarter while fundraising, realization activity and investment activity all continued at a robust pace,” analysts at Jefferies Group LLC led by Dan Fannon said in a note to clients after the results were announced.

Shares of Blackstone rose 1.7 percent to $31.14 at 9:58 a.m. in New York, extending gains this year to 16 percent.

Blackstone, led by Chief Executive Officer Steve Schwarzman, sold $3.8 billion of private equity holdings during the quarter, including part of its stakes in food-service distributor Performance Food Group Co. and cement maker Summit Materials Inc. Its real estate business, which oversees $102 billion, disposed of $3.5 billion in assets, including the DoubleTree hotel in London, the Burlington hotel in Dublin and the Hyatt Regency Pier 66 hotel in Fort Lauderdale, Florida.

Hilton, Blackstone’s biggest public holding, jumped 19 percent during the quarter. The firm has been paring its Hilton stake through share sales and through an agreement to sell about $6.5 billion of the stock to China’s HNA Group.

Those private equity and real estate sales helped fuel $691.8 million of distributable earnings, which reflect cash profits on asset disposals and fund management fees, compared with $878 million a year earlier. Blackstone said it will pay stockholders a dividend of 47 cents a share on Feb. 13.

LBO Gains

The firm’s private equity portfolio appreciated 4.5 percent in the quarter, outpacing the 3.3 percent gain posted by the S&P 500 index of large U.S. companies. Peers including Carlyle Group LP, KKR & Co. and Apollo Global Management LLC are scheduled to report results in the coming weeks.

Publicly traded private equity firms must mark their holdings to the market each quarter, even though their typical strategy is to hold assets for years. That makes economic net income, which in part reflects these unrealized changes in value, merely a snapshot of assets that may have a long runway before being sold.

Overseeing $366.6 billion across private equity, real estate, credit and hedge funds, Blackstone is viewed as a bellwether for the alternative-asset industry. The firm stepped further into the public spotlight when real estate head Jon Gray met with Donald Trump in November to discuss becoming U.S. Treasury Secretary and Schwarzman was named as chairman of President Trump’s strategic and policy forum in December.

Peter Grauer, chairman of Bloomberg LP, the parent of Bloomberg News, is a non-executive director at Blackstone.

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