Higher interest rates, economic uncertainty, geopolitical turbulence, high fiscal deficits, political dysfunction and labor unrest have "adversely impacted investor sentiment," Schwarzman said.
Against this backdrop, Blackstone executive have chosen to sell fewer assets, he said.
Even so, Schwarzman noted that nearly all of Blackstone's flagship strategies outperformed indices in the third quarter. He said that the investment performance of Blackstone's private credit portfolio has been "outstanding," with gross returns of 4.6% (3.5% net) in the third quarter and 14.4% (10.5% net) in the year ended Sept. 30.
Blackstone's liquid credit had a gross return of 3.3% (3.2% net) in the third quarter and 12.7% gross return (12.1% net) in the 12-month period.
Private and liquid credit are part of Blackstone's credit and insurance business which reported $297 billion in assets under management at the end of the third quarter, up 1% from $295 billion at the end of the prior quarter and a 10% increase from $269 billion as of Sept. 30, 2022.
"We are the reference institution among global LPs, a position that has been continually reinforced across market cycles of nearly 40 years," Schwarzman said. "We have led the industry's evolution, and I expect we will continue to lead it in the future."
Blackstone's largest business, real estate, reported $332 billion as of Sept. 30, about flat with $333 billion at the end of the second quarter, but up 4% from $319 billion year-over-year. The firm's opportunistic real estate portfolio depreciated 2% in the third quarter and 4.5% in the year ended Sept. 30 , while its core plus portfolio appreciated 0.3% in quarter but depreciated 1.1% in the year ended Sept. 30.
The majority of Blackstone's real estate portfolio is in logistics, data centers and student housing, "which continue to benefit from robust fundamentals," said Jonathan Gray. Blackstone president and chief operating officer during the same call.
"Our data center business, QTS, held in BREIT (nontraded REIT Blackstone Real Estate Income Trust), BPP (core plus fund Blackstone Property Partners), and our infrastructure vehicle was the single largest source of appreciation at the firm, driven by explosive growth in data creation that is being accelerated by the AI revolution," Gray said.
Blackstone Infrastructure Partners, BREIT and BPP acquired and took private real estate investment trust QTS Realty Trust in 2021 in a $10 billion transaction at a price that represented a 21% premium to QTS' June 4, 2021 share price, QTS and Blackstone announced at the time.