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Dealmaking rebound boosts Blackstone earnings

Blackstone has reported stronger-than-expected earnings for the fourth quarter of last year, fuelled by a resurgence in dealmaking and early signs of stabilisation in the troubled commercial real estate (CRE) sector, according to a report by Reuters.

The reports cites LSEG data as revealing that the world’s largest alternative asset manager posted a 56% surge in distributable earnings, reaching $2.2bn, or $1.69 per share, surpassing analyst expectations of $1.46.

The company’s fee-related earnings climbed 76% to a record $1.84bn in the quarter, as private equity activity and investment realisations reached their highest levels in more than two-and-a-half years.

Executives at Blackstone signalled that CRE, which had suffered from high interest rates and low post-pandemic office occupancy, is now showing signs of a turnaround.

“We remain firm believers that a sustained commercial real estate recovery is underway,” said Blackstone President Jonathan Gray during an analyst call.

The expected stabilisation in CRE is seen as a positive development for financial firms, including asset managers and banks, that have significant exposure to the distressed industry.

With interest rates expected to decline, leveraged finance activity is forecasted to rebound, allowing private equity firms to execute more acquisitions with lower borrowing costs.

Blackstone’s fourth-quarter inflows totalled $57.5bn, bringing full-year inflows to $171.5bn. The firm deployed $41.6bn in capital during the quarter, with $4.7bn allocated to opportunistic real estate investments—far outpacing the $1.5bn in inflows to its real estate funds.

The firm also highlighted a growing pipeline of companies preparing for initial public offerings (IPOs), stating that twice as many companies are now eyeing IPOs compared to a year ago.

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