Blackstone AUM surges to record in Q2

Updated with correction

Blackstone Group reported $545 billion in assets under management as of June 30, setting another record, as assets rose 6% from the prior quarter ended March 31 and 24% from June 30, 2018, according to alternative investment firm's earnings report released Thursday.

The firm attributed its year-over-year AUM increase to $151 billion of inflows over the 12-month period and positive investment performance — despite $65.1 billion in realizations and outflows in the second quarter.

"This has been a remarkable period for Blackstone," Chairman and CEO Stephen A. Schwarzman said during an earnings call.

Blackstone has extended its business to new investment areas, he added. Blackstone has grown to offering more than 50 distinct investment strategies to institutional and retail investors including a new non-traded real estate investment trust from two strategies when the firm started in 1985.

Jon Gray, president and chief operating officer, noted on the same call that Blackstone had about $100 billion in inflows in 2017 and 2018 and that firm executives expect to see significantly more inflows in 2019.

Blackstone's private equity business, remained the largest, with $171.2 billion in AUM as of June 30, up 7.7% from $159 billion at the end of the prior quarter on March 31 and up 43% as of June 30, 2018. The next largest business segment by AUM was real estate with $153.6 billion as of June 30, up 9% from March 31 and up 29% as of June 30, 2018. Credit had $139.3 billion in AUM as of June 30, up 53% from the end of the year-earlier quarter. Hedge funds had $81.4 billion as of June 30, up 15% from March 31 and a 52% increase from June 30, 2018.

Across its investment segments, Blackstone earned $840.4 million in management and advisory fees in the second quarter, compared with $809.7 million in management and advisory fees in the first quarter and $721.4 million in the second quarter of 2018. Incentive fees were $21.9 million in the second quarter, up from $12.1 million in the first quarter and $19.4 million in the quarter ended June 30, 2018. Realized principal investment income was $145 million, compared with $73.3 million in the first quarter and $129.2 million in the year-earlier quarter.

GAAP Net Income was $647 million for the quarter vs. $1.1 billion for the prior quarter Perpetual Capital AUM reached $91.7 billion across 13 funds, up 43% year-over-year.

Company officials also noted that Blackstone completed its transition to a corporation from a publicly traded partnership on July 1. The conversion will make Blackstone stock eligible for many market indexes, with the expectation that the stock will be added to those indexes in the coming months, Mr. Schwarzman said.