Blackstone profit jumps 25% on retail, evergreen fees

Blackstone Inc. reported a 25% jump in distributable earnings for the second quarter, buoyed by profits from its retail and evergreen funds.

A private equity vehicle for wealthy investors and Blackstone’s big property trust were among funds that generated a burst of incentive fees for the world’s largest alternative asset manager.

Those so-called perpetual funds take such fees without having to actually cash out of bets — a break from the traditional private equity playbook — as long as they deliver sufficient paper gains to meet minimum thresholds.

That sent so-called “fee-related performance revenues” skyrocketing 167% from a year earlier, Blackstone said Thursday in a statement.

The $472 million windfall mitigated the pain that has been dogging Blackstone and its rivals on another front: Dealmakers are still struggling to profitably cash out of investments they made during an era of extremely low interest rates.

It’s a reminder of how Blackstone’s retail machine provides ballast for the firm during a sluggish stretch for dealmaking amid higher rates and President Donald Trump’s trade wars.

Blackstone President Jon Gray touted the perpetual fund business as a source of strength in a lackluster dealmaking climate. 

“It has given us the capability to have significant incentive fee earnings in a more challenging realization environment,” he said. “It all speaks to the breadth of what we have.”

Distributable earnings, or profit available to shareholders, rose to $1.57 billion, or $1.21 a share, beating the $1.10 average estimate of analysts surveyed by Bloomberg.

Blackstone shares rose 2.8% to $176.81 at 10:04 a.m. in New York.

Incentive fees weren’t the only reason Blackstone topped Wall Street expectations. New flows contributed to a 13% increase in management fees, with about a fifth of the $52 billion raised during the period coming from private wealth channels. 

As of midyear, Blackstone oversaw $280 billion on behalf of private wealth clients, about a quarter of its $1.2 trillion of assets under management.

Still, Blackstone’s second-quarter net realizations were just 63% of what they were four years earlier. Some businesses fared better than others. Net realizations at the firm’s private equity arm climbed 12% from a year ago, while they fell 37% at the real estate business.

In property markets, “the recovery is underway but hasn’t yet reached escape velocity,” Gray said, adding that the lower cost of debt for deals and a pullback in supply is cause for optimism. 

Blackstone’s credit and insurance arm continued to hum, accounting for more than half of the firm’s net flows during the quarter. Its inflows over the past 12 months surpassed all other key business lines. 

Gray added that Blackstone’s deal pipeline has swelled after a slowdown that followed Trump’s April 2 “Liberation Day” tariffs. 

The firm’s pipeline of taking companies public is the biggest since 2021, he said in a Bloomberg Television interview. 

“The US economy has shown incredible resilience,” Gray added.

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