Blackstone's (BX) real estate arm weighed on the investment giant’s second-quarter results, as high interest rates crimped property valuations and investors pumped less money into the business. The world’s largest owner of commercial estate slowed the pace of real estate exits while it grappled with the markets’ shifting fortunes. Profit gains in credit and private equity weren’t enough to offset the drag on fee-related earnings, which fell 3% to $1.11 billion, New York-based Blackstone said Thursday in a statement. Distributable earnings, or profit available to shareholders, increased 3% from a year earlier to $1.25 billion, or 96 cents a share. That was 2 cents shy of the average estimate of analysts surveyed by Bloomberg. The firm confronted a spike in redemptions in the last two weeks of May after a real estate investment trust of rival Starwood Capital (STWD) dramatically limited investors’ ability to cash out. Blackstone’s $57 billion REIT held off on restricting outflows for two consecutive months even though withdrawal requests hit levels that would have allowed it. In June, BREIT investors requested 50% less in redemptions than they did in May. Market Overview:
- Blackstone’s real estate arm weighs on Q2 results.
- Fee-related earnings fell 3% to $1.11 billion.
- Shares of Blackstone rose 0.8% to $135.99.
- Distributable earnings increased 3% to $1.25 billion.
- BREIT redemptions decreased by 50% in June.
- Credit arm fee earnings rose 29%, distributable earnings surged 51%.
- Declining borrowing costs to fuel real estate deals.
- Moderating inflation may prompt Fed rate cuts.
- Blackstone aims to double credit assets to $1 trillion in a decade.