The plunge of the stock market during the summer has weighed on the portfolio value of Blackstone, event as it was generating additional cash.
Blackstone’s real estate, private equity, hedge fund and corporate credit assets all dropped in value during the just ended third quarter.
The majority of the firm’s capital is locked into long term funds, which do not need to sell assets if the valuations are lower, so these losses were for the most part on paper and not realized.
The earnings at Blackstone will be affected seriously if there is a continuation of the corporate valuation being suppressed over a number of quarters. In addition, if the market for initial public offerings stays challenging as it has this week Blackstone would be hampered in the ability to exit some of its investments in private equity.
During the most recent quarter that just ended, the company continued generating cash through its sale of assets at selectively high valuations and said it was expecting bargains to arrive in the market.
The company said that its ENI or economic net income, which use the mark to market valuation for its portfolio, sustained a loss for the quarter of $416 billion, versus a profit one year ago of more than $758.3 million.
The negative per share rate of ENI sat at 35 cents, versus an average of 29 cents negative expected by Wall Street analysts.
The private equity funds at Blackstone depreciated by 2.3% during the quarter, whilst the value of opportunistic funds in real estate were lower by 0.1%.
Its distributable earnings, which have the actual cash that is available to pay for dividends, was up 1% to more than $692 million on asset divestments.
Assets under its management were $333.8 billion, which is a record and up 17% from the same period one year ago.