Blackstone Group Inc, the world's largest manager of alternative assets, said on Wednesday its fourth-quarter distributable earnings rose 60% year-on-year, driven by a surge in asset sales across its private equity and real estate business lines.
Distributable earnings -- cash available for paying dividends to shareholders -- totalled $1.46 billion, up from $914 million a year earlier. This translated into distributable earnings per share of $1.13, outperforming analysts' average estimate of 89 cents, according to financial data provider Refinitiv. Blackstone's stock was up 3% at $66.78 in afternoon trading in New York on Wednesday.
"They are entering 2021 with substantial momentum especially in insurance," said JMP analyst Devin Ryan.
"There may be market volatility in the near term and short-term risks to performance, but they're well positioned to navigate it given that we just went through a real life stress-test," he said.
"During the quarter, Blackstone completed the $14.6 billion sale of BioMed Realty Trust, America's largest private owner of medical office buildings, and the divestment of its 36% shareholding in UK insurer and annuity provider Rothesay Life. A sharp rise in investment income helped Blackstone report net income of $748.9 million under generally accepted accounting principles (GAAP), up 55% from the previous year," he added.
Blackstone said its private equity portfolio appreciated 10.6% in the quarter, compared with an 11.7% rise in the benchmark S&P 500 stock index over the same period. Opportunistic and core real estate funds rose 4.3% and 5.5%, respectively.
On Tuesday, Blackstone agreed to acquire most of the life insurance business of U.S. insurer Allstate Corp for $2.8 billion. The deal is expected to increase Blackstone's assets under management by $28 billion.Blackstone said it expects to do more deals with insurance firms given prevailing low interest rates.
"What's driving what you're seeing us do and a number of firms in our industry is the extremely low level of interest rates out there, which is creating the need for greater returns for insurance company assets," Blackstone Chief Executive Stephen Schwarzman said in a conference call with analysts on Wednesday.
Blackstone's total assets under management rose to $618.6 billion, from $584.4 billion in the previous quarter, driven by strong fundraising. It ended the quarter with $147.7 billion of unspent capital.
Blackstone said it would pay a quarterly dividend of 96 cents per share.