The Blackstone Group said on Thursday that its profit more than doubled in the fourth quarter as it reaped big gains on its investments in private equity and real estate.
Blackstone said its quarterly profit â€" reported as economic net income, which includes unrealized gains from investments â€" was $1.5 billion, compared with $670 million in the period a year earlier. The earnings amounted to $1.35 a share, handily beating the average analyst estimate of 83 cents as compiled by Standard & Poor’s Capital IQ. For the full year, it earned $3.5 billion, an increase of 76 percent from 2012.
A chief driver of Blackstone’s earnings was a big increase in performance fees, as it harvested some of its investments. Blackstone, the first of the publicly traded private equity giants to report its fourth-quarter results, said its performance fees were $1.7 billion in the fourth quarter, 259 percent higher than those in the period a year earlier.
Over all, the firm’s distributable earnings, a metric that reflects the fees it earns, amounted to $820.6 million in the fourth quarter, a 46 percent gain from results in the period a year earlier.
Blackstone’s shares were up nearly 10 percent in pre-market trading.
“I am very pleased with our fourth-quarter results, which capped a record year for Blackstone,†Stephen A. Schwarzman, the chairman and chief executive of Blackstone, said in a statement. “These investments provide a good illustration of how our long-term fund structures benefit our investors, and how our patient approach toward improving assets can ultimately drive better earnings growth and fund performance.â€
Last year was a strong one for private equity over all. With stock markets buoyant, many firms were big sellers of their holdings, returning piles of cash to investors. Buyout funds also raised the most capital since 2008, with half of that money going to the biggest funds.
Blackstone completed four successful initial public offerings in the fourth quarter, including those of Hilton and Merlin Entertainments, which operates the Madame Tussauds wax museums. In the Hilton deal, Blackstone increased the value of its investment by nearly $10 billion.
The firm’s private equity segment reported economic net income of $360 million in the fourth quarter, 82 percent higher than a year earlier. Its performance fees quadrupled, Blackstone said.
In real estate, Blackstone earned $932 million in the quarter, compared with $246 million in the period a year earlier. Its revenue in that segment was $1.4 billion, compared with $403.9 million a year earlier.
Still, Blackstone said it earned less profit in its credit business, with economic income of $104.7 million, 2 percent lower than a year earlier.
Its assets under management grew to $265.8 billion, an increase of 26 percent.
Blackstone believes that economic net income is a better reflection of its performance. According to generally accepted accounting principles, the firm earned $621.3 million in the fourth quarter, compared with $106.4 million in the period a year earlier.
Blackstone said it would pay a quarterly dividend of 58 cents a share on Feb. 18.
