Blackstone’s record assets boost earnings

(Reuters) – Blackstone Group LP, the largest publicly listed alternative asset manager, reported higher first-quarter earnings as demand for its real estate and credit funds yielded more management fees.

Blackstone, whose performance is monitored closely by investors hoping to divine the fortunes of the upcoming initial public offering of peer Carlyle Group LP, reported net income rose 36.5 percent to $58.3 million.

“Every one of our investing businesses experienced both net capital inflows as well as value appreciation in the quarter,” Stephen Schwarzman, founder and chief executive of Blackstone, said in a statement.

Blackstone, whose investments include The Weather Channel, Pinnacle Foods and SeaWorld Parks & Entertainment, said economic net income (ENI), a metric of its profitability that takes into account changes in the market value of its portfolio, dropped to $432.3 million from $571 million a year earlier.

This was because the value of its assets increased at a slower rate in the first quarter of 2012 compared to that of 2011. The firm missed ENI expectations as determining the value of Blackstone’s portfolio with precision continued to be elusive.

“The firm showed lower unrealized gains than we expected, the mark-to-market valuations were less favorable. However, we think the firm’s long-term fundamentals remain strong,” said Sandler O’Neill analyst Michael Kim.

Blackstone’s shares are up 5.9 percent year to date, compared with a 10.1 percent rise in the S&P 500 Index and a 15 percent rise in the S&P Asset Management and Custody Banks Index, according to Thomson Reuters data.

Distributable earnings, which show actual cash available to pay dividends, came in at $162.1 million, down from $201.9 million the year before.

Total assets under management were $190 billion at the end of March, up 27 percent year on year. Fee-earning assets under management rose 26 percent to a record $156 billion.

The firm’s real estate portfolio increased to $48.3 billion at the end of March 2012 from $35 billion the year before while its credit businesses boasted $50.8 billion in assets compared with $31.5 billion the year before.

This boosted management fees as net fee-related earnings came in at $138 million from $98.5 million the year before. Total performance fees net of compensation plunged to $6.6 million from $81 million the year before.

Blackstone declared a quarterly distribution of 10 cents per common unit.

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