By MICHAEL J. DE LA MERCED
Chester Higgins Jr./The New York Times
Stephen A. Schwarzman, the Blackstone Group’s chairman and chief executive
For the Blackstone Group, the first three months of the year were something of a blast from the past.
Blackstone said that it earned $568.1 million in the quarter on $1.2 billion in revenue. Its assets under management swelled 43 percent, to $150 billion. (The profit was reported as economic net income after taxes because it excludes charges tied to the company’s initial public offering of stock. On a generally accepted accounting principles basis, the company earned $43 million, a big swing from a $121 million loss in the period a year earlier.)
“Blackstone’s first-quarter results further demonstrated our ability to generate outstanding returns for our investors and attract new capital,” Stephen A. Schwarzman, Blackstone’s chairman and chief executive, said Thursday in a conference call with analysts.
The results again show how private equity firms have rebounded from the financial crisis. As the stock and credit markets have risen, the value of buyout shops’ holdings has risen, and their ability to strike deals for a variety of assets has improved as cheap financing remains readily available.
These firms have also benefited from their ability to sell their portfolio companies through initial public offerings, allowing them to realize profits.
Blackstone has seized upon these opportunities to bolster its businesses. It has held stock offerings for holdings like Nielsen, and it plans to hold more for other companies, like Vanguard Health, Freescale Semiconductor and Kosmos Energy.
And the company has struck a few deals, notably its $9.4 billion purchase of the American malls of the Centro Properties Group, its biggest purchase since its $25 billion deal for Hilton Hotels nearly four years ago.
The Centro deal was struck through Blackstone’s huge real estate arm, which propelled the firm’s quarterly profit. The division nearly quadrupled its revenue, to $555.6 million, thanks to an improvement in real estate values, especially for hotels and commercial office buildings. That has helped bolster performance fees.
Blackstone’s best-known division, its private equity unit, reported a small decline in revenue, to $273.7 million, and disclosed a drop in investment income. The value of its holdings rose about 5 percent in the quarter, and the average paper value of those assets was marked at 1.5 times their original investments.
Hamilton E. James, Blackstone’s president, suggested in a conference call with reporters that traditional leveraged buyout deals might be out of fashion for now. With corporations embarking on a buying spree, using their piles of cash and able to pay more because of greater cost savings, buyout firms are at a competitive disadvantage.
“There’s a lot of corporate competition that has come out of the woodwork,” he said. “That has made the plain vanilla buyout pricey.”
But Blackstone is seeking other investment opportunities, he added, including some in the energy industry and in emerging markets.
Blackstone still has plenty of money to invest, with $25.5 billion in uninvested capital between its private equity and real estate units. It has finished raising capital for its sixth buyout fund and is raising money for its seventh real estate fund.
Shares in Blackstone rose 1.6 percent on Thursday, to $19.31. They remain well below the firm’s initial offering price of $31.
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