Blackstone Inc Q4 2024 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Dan Fannon - Jefferies LLC - Analyst : Thanks. Good Morning. Jon, I was hoping you could expand on some of the fundamentals you're seeing in the real estate market that gives you the confidence on the recovery. And while the recovery has been slow, as you highlighted in 2024, how do you see that ramping in terms of 2025.

Question: Dan Fannon - Jefferies LLC - Analyst : Thank you.

Question: Craig Siegenthaler - Bank of America - Analyst : Good morning, Steve, John, hope you're both doing well. We wanted to circle back on Michael's monetization commentary and the expected ramp in transaction activity. Blackstone is still a net buyer of assets, but given the macro setup, with the high stock market valuations and anticipated rise in IPOs, when do you expect to inflect and be a net seller of assets in corporate private equity. And then on Michael's prepared comments again, how far behind is the real estate cycle relative to private equity?

Question: Michael Cyprus - Morgan Stanley - Analyst : Great. Thanks so much. Good morning. Just a question on AI and data centers. Just curious how you're thinking about the evolving investment opportunity around AI, particularly in the infrastructure layer with data centers and power. We've seen a lot of capital flow into the space, and you guys at Blackstone have been quite active in this space in particular. But just given some of the recent developments, for example, like with Deep Seek over the weekend that suggests that AI models maybe could be a bit less capital and energy intensive. Just curious how attractive do you see the infrastructure layer here moving forward? How much more capital investment do you guys see needed across the industry? And how are you thinking about potential shifts for investment opportunities across into the application layer.

Question: Michael Cyprus - Morgan Stanley - Analyst : Great, thank you.

Question: Kyle Voigt - Keefe, Bruyette & Woods, Inc. - Analyst : Hi Good morning, everyone. Maybe a question on BXPE the last few quarters have been in a healthy $1 billion to $2 billion zone in terms of quarterly fundraising. I guess, first, can you remind us where you're at in terms of distribution of the product, whether that's number of platforms or international breadth and what the runway looks like to expand that. And then with respect to the $1 billion to $2 billion quarterly inflow range, is that the pace that you are really comfortable growing this type of product or now with having some investment track record and entering the second year of the product. Is there comfort in ramping the flows above that $1 billion to $2 billion quarterly pace if there is demand?

Question: Kyle Voigt - Keefe, Bruyette & Woods, Inc. - Analyst : Great. Thank you.

Question: Will Katz - TD Cowen - Analyst : Okay. Thank you very much for the commentary. You didn't talk at all about retirement. I know it's an area that the whole industry is sort of incrementally focused on, but you did sort of mention the perhaps a more favorable regulatory backdrop. How do you sort of see the evolution of the commentary coming out of your conversations with the regulators as that sort of takes shape into 2025 on the Trump administration. What should we be looking for, for that opportunity set to potentially open up from a real estate perspective?

Question: Kaimon Chung - Evercore ISI - Analyst : This is Kaimon Chung in for Glenn Schorr. Some of the insurance companies seem to be looking to do more on their own in private markets. I'm just curious what you're seeing and your expectations of further growth with your insurance partnerships. And also I heard your comments about Nippon Life. Just want to get more thoughts on the growth opportunities for insurance and credit in Asia? And what else are you doing in that region?

Question: Alex Blostein - Goldman Sachs & Companies, Inc. - Analyst : Hey, good morning, everybody. Thank you for the question. So staying on credit for a second, really strong fundraising across the platform, and it was really well balanced, which is obviously great to see as well. Can you give us a sense of the amount of capital that's sitting on the platform now that's not earning fees yet that will turn on upon deployment? And I guess, in that context, can you talk a little bit about your expectations for credit deployment over the next kind of 12 months or so? And including maybe some of the partnerships, Jon, that you highlighted earlier, I think you said that you've expanded or trying to expand more corporate partnerships in that part of the business.

Question: Alex Blostein - Goldman Sachs & Companies, Inc. - Analyst : Thank you.

Question: Brian Bedell - Deutsche Bank - Analyst : Great. Thanks, good morning folks. Thanks for taking my question. Maybe just to, Michael, on the FRE margin outlook for '25. Just you're highly likely to get back to solid double-digit base fee growth, not even considering FRPR. So just wondering what your outlook for the FRE margin might be in '25, even just not even considering fee-related performance revenue. And then I guess on top of that, I mean that can certainly create a lot of delta to the margin given the compensation on performance, fee related performance revenue. But then I guess, if that creates a lot of uncertainty into that outlook, to what extent is that compensation fungible across the firm so that you can, therefore, scale that margin and improve that this year versus last year?

Question: Brian Bedell - Deutsche Bank - Analyst : Great. Thank you.

Question: Mike Brown - Wells Fargo Securities - Analyst : Okay, great. Good morning, everyone I wanted to ask on the new multi-asset credit fund that is set to launch. I think you said in the first half of this year. I'm just hoping to compare and contrast that fund versus BCRED. So the new fund will invest across a variety of credit strategies. So it sounds like it's kind of like a broad exposure to your credit business. Curious how that will be kind of marketed just to ensure it doesn't cannibalize BCRED. And then given it's an interval fund, does that mean it has potential to be kind of distributed differently into a wider array of distributors?

Question: Mike Brown - Wells Fargo Securities - Analyst : Okay. Well, thank you for that color. Thanks John.

Question: Brennan Hawken - UBS - Analyst : Good morning. Thanks for taking my question. I have a couple of questions on FRPR, specifically within credit, one on the fourth quarter and then one more forward-looking. So a nice uplift here in the quarter. Is it possible to quantify what impact you saw from spread tightening working through the FRPR line here this quarter? And then how should we think about, on a forward-looking basis, how should we think about the impact of base rates and tighter spreads on excess return and therefore, FRPR generation going forward?

Question: Brennan Hawken - UBS - Analyst : Great. And spread tightening, did that have an impact in 4Q? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JANUARY 30, 2025 / 2:00PM, BX.N - Q4 2024 Blackstone Inc Earnings Call

Question: Brennan Hawken - UBS - Analyst : Great. Thanks for taking my question.

Question: Ken Worthington - J.P. Morgan Securities LLC - Analyst : Hi, good morning. I wanted to dig a bit deeper into the big four insurance relationships, if I could. So maybe setting the stage of the $230 billion you called out a couple of times in insurance assets about how much come from the Big 4. As we think about '25, what are the contractual commitment obligations expected from the Big 4? And then lastly, given the acquisition of resolution by Nippon Life, you mentioned, I think, that the IMA remains intact. Does the transaction impact the remainder of the $60 billion of resolution flows expected over the next few years.

Question: Ken Worthington - J.P. Morgan Securities LLC - Analyst : Okay, great. Thank you.

Question: Steven Chubak - Wolfe Research - Analyst : Hi, good morning. So, wanted to ask a question on BREIT. The second derivative on BREIT growth in net flows appears to be improving. That being said, given stickier rates at the long end. Just wanted to better understand the catalyst for retail allocations into BREIT to increase from here, what the feedback has been from retail partners? And how do you see BREIT flows evolving over the medium term relative to history, given your outlook?

Question: Ben Budish - Barclays - Analyst : Hi, good morning and thank you for taking the question. I was wondering if you could talk a little bit more about the trajectory, the potential trajectory for BIP, FRPR. I understand you said that I think they should start to pick up in Q2. But as we sort of look back over the last several years, there's been a not in substantial amount of fundraising quarterly since the beginning of 2022. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JANUARY 30, 2025 / 2:00PM, BX.N - Q4 2024 Blackstone Inc Earnings Call So just curious if there's anything else you can share in terms of what the shape of FRPR looks like, just given the size of that fundraising and the performance? And any other nuances we should be aware of around the FRPR margin side? It seemed like that came in maybe a little better than expected, but (technical difficulty) it has to do perhaps with the timing of BXPE, I'm wondering if we could see something like that next, this year in Q4. Yeah, thank you so much.

Question: Ben Budish - Barclays - Analyst : Understood. Thank you very much.

Question: Patrick Davitt - Autonomous Research - Analyst : Hey, good morning, everyone. Thank you. I know there's still a lot of uncertainty on the direction of the new administration's policies, but sure you guys have been running different scenarios internally, like others have said they are. So through that lens, curious if you have any initial thoughts on how the in-ground portfolio could be impacted either positively or negatively by more significant tariffs or a trade war. And within that theme, more specifically, give us an update on the invested capital exposure to Europe, Asia and then specifically China. Thank you.

Question: Crispin Love - Piper Sandler Companies - Analyst : Thank you and good morning everyone. Can you just discuss your outlook on interest rates as Steve stated, you are seeing disinflation based on your data, but there are some worries more broadly on inflation, just shown by treasury yields recently. Would you expect more rate cuts than currently priced in or perhaps a rally in rates. I'm just curious on how that could impact PE activity, real estate performance in 2025 just based on your in-house views.

Question: Arnaud Giblat - BNP Paribas Exane - Analyst : Yeah, good morning. Just if we you could look at the perpetual products, if we look five years out from now and assuming a continued acceleration in flows in these products in the US and in the global private wealth channels. I'm just wondering how we might see your distribution evolve. In other words, how much AUM are you currently set up to distribute today? And do you require a lot of investment in distribution over the next two, three, five years? I'm just wondering about the shape. Thank you.