Blackstone Group reported a record $512 billion in assets under management as of March 31, up 8% from Dec. 31 and up 14% from March 31, 2018, according to the alternative investments firm's earnings report released Thursday.
Blackstone Group also announced that it is converting to a corporation from a publicly traded partnership.
Stephen A. Schwarzman, chairman and CEO, said switching to a corporation will make it "vastly easier to buy and sell Blackstone stock." He also said Blackstone executives decided to convert now, in part, due to the experiences of other publicly traded alternative investment management that have made the switch.
Ares Management, KKR & Co. and Och-Ziff Capital Management Group have all converted to corporations over the past 12 months.
While not naming the other firms, Mr. Schwarzman said the firms that have already converted to corporations have had "strong stock price performance, a meaningful pickup in trading volume and a significant increase in mutual and index fund ownership."
Meghan Neenan, managing director and head of North American non-bank financial institutions at rating agency Fitch Group, said in a statement, the conversion "could mean higher taxes, but it also expands the potential pool of equity investors which could improve stock valuations."
However, she added that Blackstone's conversion is not expected to "lead to a significant change in Fitch's credit views as we focus on pretax cash flows in assessing leverage."
In reference to Blackstone's first-quarter performance, Mr. Schwarzman attributed the AUM increase, in part, to $43 billion of capital inflows in the first quarter and a record $126 billion over the 12 months ended March 31.
Blackstone's private equity business, the largest by AUM, had the most growth in the year ended March 31, with $159 billion, up 21.6% for the quarter and up 42.7% year-over-year. Real estate assets were $140.3 billion as of March 31, a 30.1% increase from Dec. 31 and up 17.3% from March 31, 2018. Hedge fund AUM totaled $80.2 billion and was up 3% from three months earlier and 1.9% from a year earlier. Blackstone's credit business had assets under management of $132.3 billion, up 3.8% for quarter but down 6% year-over-year.
Across its investment segments, Blackstone earned $809.7 million in management and advisory fees in the first quarter, compared with $797.6 million in the fourth quarter and $728.8 million in the first quarter of 2018. Incentive fees were $12.1 million compared with $15.8 million in the quarter ended Dec. 31 and $12.6 million in the quarter ended March 31, 2018. Realized principal investment income was $73.3 million in the first quarter, compared with $109.9 million in the fourth quarter and $42.1 million in the first quarter of 2018.
GAAP net income was $1.1 billion for the quarter vs. a net loss of $79 million for the prior quarter and $842 million in the year-earlier quarter.
GAAP net income for the year ended March 31 was $3.5 billion, compared with net income of $3.3 billion for the year ended Dec. 31 and net income of $3.2 billion for the year ended March 31, 2018.