01—Abstract
Summary
Summary of the 10-K filed March 1, 2019. Cited figures are marked; the original filing is the authoritative source.
Blackstone Inc. (BX) reported robust performance in its 2018 Annual Report (10-K), underscoring its position as a leading global alternative asset manager.
The firm managed $472.2 billiona in total assets under management as of December 31, 2018, spread across its four core segments: Real Estate, Private Equity, Hedge Fund Solutions, and Credit. These segments collectively demonstrated growth in assets under management and generated significant fee-related earnings and investment income, reflecting successful capital deployment and value creation for investors. The report highlights Blackstone's solutions-oriented approach, diversified business model, and long-term investment performance, which are crucial factors for investor confidence.
The company navigated a dynamic market environment characterized by slowing global growth and increased volatility in late 2018, while still capitalizing on opportunities across its investment strategies. While management fees saw an increase driven by growth in Real Estate and Private Equity assets, total revenues saw a slight decrease year-over-year primarily due to lower investment income, reflecting the challenging market conditions in the latter part of the year.
Expenses also decreased, primarily driven by lower performance allocation compensation, which was a direct result of the lower investment income. Blackstone's strategic initiatives, including the acquisition of Clarus Ventures to expand its life sciences capabilities, signal a continued focus on growth and diversification.
02—Key points
Key Highlights
- Total Assets Under Management (AUM) reached $472.2 billion as of December 31, 2018, up from $434.1 billion at the end of 2017, showcasing continued growth in capital deployment.
- Management and Advisory Fees, Net increased by 10% to $3.03 billion in 2018, driven by growth in the Real Estate and Private Equity segments, indicating strong recurring revenue streams.
- Segment Distributable Earnings for the Real Estate segment saw a decrease of 35% to $1.37 billion in 2018, primarily due to lower net realisations compared to a record 2017, though Fee Related Earnings increased significantly.
- The Private Equity segment's Segment Distributable Earnings decreased by 28% to $870.3 million in 2018, impacted by lower net realisations, but Fee Related Earnings showed a 9% increase.
- Hedge Fund Solutions Segment Distributable Earnings decreased by 25% to $320.6 million in 2018, primarily due to lower performance revenues across several strategies.
- The Credit segment's Segment Distributable Earnings decreased by 33% to $266.1 million in 2018, largely impacted by the conclusion of the FS Investments sub-advisory relationship and lower net realisations.
- Blackstone completed the acquisition of Clarus Ventures, a life sciences investment firm, in November 2018, launching a new private investment platform, BXLS, indicating strategic expansion into new sectors.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2018filed March 1, 2019Financial Statements
FY2018 against FY2017
| Line item | FY2018FY2017 | Change |
|---|---|---|
| Revenue | $6.83B$7.15B | −4.4% |
| Operating Expenses | $3.51B$3.75B | −6.4% |
| Interest Expense | $163.99M$197.49M | −17.0% |
| Net Income | $1.54B$1.47B | +4.8% |
| EPS (Basic) | $2.27$2.21 | +2.7% |
| EPS (Diluted) | $2.26$2.21 | +2.3% |
| Shares Outstanding (Basic) | 678.85M665.45M | +2.0% |
| Shares Outstanding (Diluted) | 1.21B666.25M | +81.2% |
05—Questions
Frequently Asked Questions
What was Blackstone's total AUM at the end of 2018, and how did it change from the previous year?
Blackstone's total Assets Under Management (AUM) reached $472.2 billion as of December 31, 2018, an increase of $38.1 billion from $434.1 billion at December 31, 2017. This growth was driven by inflows across its Real Estate, Credit, Private Equity, and Hedge Fund Solutions segments, partially offset by outflows and realizations.
How did Blackstone's different business segments perform in 2018?
Blackstone's Real Estate segment's Segment Distributable Earnings decreased by 35% primarily due to lower net realisations compared to a record 2017. The Private Equity segment's Segment Distributable Earnings decreased by 28%, also due to lower net realisations. The Hedge Fund Solutions segment saw a 25% decrease in Segment Distributable Earnings, and the Credit segment experienced a 33% decrease, both primarily impacted by lower performance revenues and net realisations.
What were the key drivers of Blackstone's revenue in 2018?
Total revenues were $6.8 billion in 2018, a slight decrease from $7.1 billion in 2017. The decrease was primarily due to lower Investment Income and Incentive Fees, partially offset by increases in Management and Advisory Fees, Net (driven by Real Estate and Private Equity growth) and Other Revenues (notably from the FS Investments sub-advisory relationship conclusion).
What is Blackstone's strategy regarding capital allocation and future growth?
Blackstone's strategy is focused on growing its investment businesses and expanding into new strategies, geographic markets, and businesses, including through strategic acquisitions. The firm aims to deploy capital and ideas to help businesses succeed and grow, leveraging its scale, diversified business, and long track record. The acquisition of Clarus Ventures for its life sciences platform exemplifies this growth strategy. Blackstone also maintains a strong focus on rigorous investment processes and risk management across all its funds.
06—Continue