Blackstone Q4 2024 Earnings Report

Blackstone EPS Results

• Actual EPS: $1.69
• Consensus EPS: $1.50
• Beat/Miss: Beat by +$0.19
• One Year Ago EPS: N/A

Blackstone Revenue Results

• Actual Revenue: N/A
• Expected Revenue: $3.81 billion
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

Blackstone Announcement Details

• Quarter: Q4 2024
• Date: 1/30/2025
• Time: Before Market Opens
• Conference Call Date: Thursday, January 30, 2025
• Conference Call Time: 9:00AM ET

Blackstone (NYSE:BX) is a leading American alternative investment management company headquartered in New York City. Founded in 1985 by Peter G. Peterson and Stephen A. Schwarzman, who had previously worked together at Lehman Brothers, Blackstone has emerged as a global powerhouse in the investment industry. The company operates through various business segments, including private equity, real estate, credit, hedge funds, infrastructure, secondaries, and growth equity.

The company's mission is to create long-term value for its investors, partners, and clients by leveraging its deep industry expertise and global network. Blackstone focuses on delivering exceptional risk-adjusted returns by investing across a range of asset classes and geographies.

Blackstone's key products and services span multiple sectors. In private equity, the company specializes in leveraged buyouts, minority investments, corporate partnerships, and industry consolidations. The real estate division actively acquires and manages commercial properties, while the credit segment focuses on debt investments, mezzanine funds, and closed-end mutual funds. Blackstone's hedge funds offer investment opportunities across different strategies, and the infrastructure division targets infrastructure-related assets. 

The company primarily caters to institutional investors such as pension funds, insurance companies, endowments, high-net-worth individuals, and sovereign wealth funds. Blackstone's key customers are sophisticated investors seeking attractive risk-adjusted returns and diversification across asset classes. With a track record of successful investments, the company has earned the trust of its clients and established itself as a leader in the alternative investment space.

Blackstone boasts a highly experienced and talented management team that drives the company's success. At the helm is Chairman, Chief Executive Officer, and Co-founder Stephen A. Schwarzman, a visionary leader who has played a pivotal role in shaping the company's growth strategy. Schwarzman brings extensive industry knowledge and a deep understanding of global markets to his role. Assisting Schwarzman is President and Chief Operating Officer Jonathan D. Gray, who has been instrumental in expanding Blackstone's real estate business and driving its investment performance. With a strong background in finance, Gray has been a key driver of the company's growth and strategic initiatives.

Blackstone has consistently demonstrated mixed financial results, as indicated by its revenue growth over the past few years. This may indicate the company's inability to consistently identify attractive investment opportunities and generate value for its investors. Additionally, Blackstone's earnings metrics indicate it has successfully generated profits and may have identified long-term value-creation opportunities.

The company's profit margin metrics indicate efficient cost management and the ability to generate an average return on its investments. Blackstone's prudent approach to managing debt ensures a healthy financial position, maintaining a balanced capital structure and mitigating the risks associated with excessive leverage.

Valuation is an essential consideration for investors, and comparing Blackstone's valuation metrics to industry peers helps assess its relative attractiveness. The company's strong track record, diversified investment portfolio, and consistent returns drive its valuation. It is important to note that changes in investor sentiment, market conditions, and the regulatory environment can impact Blackstone's valuation.

Blackstone is a leading alternative investment management company in a dynamic and competitive industry. A comprehensive analysis of the broader industry in which Blackstone operates is vital to understand the company's competitive positioning. The company has established a strong reputation and competitive advantage through its deep industry expertise, global network, and track record of successful investments. This positions Blackstone favorably in the industry, enabling it to source attractive investment opportunities and deliver value to its clients.

Blackstone is well-positioned to capitalize on various growth opportunities within the alternative investment landscape. The company's strong financial position, global network, and experienced team enable it to identify and pursue compelling investment opportunities. Blackstone's competitive advantages, including its deep industry knowledge, extensive resources, and established relationships, support its ability to drive growth and generate attractive risk-adjusted returns for its investors.

While Blackstone has a successful track record, it is not immune to risks and challenges. Potential risks include market volatility, economic downturns, regulatory changes, and unexpected events impacting the industries in which the company invests. Blackstone's risk management strategies and expertise in risk assessment help mitigate these potential challenges. Additionally, the company's broad investment portfolio and diversified approach provide some level of protection against specific risks.

Blackstone Q4 2024 Earnings Call Transcript

Presentation

[Operator]

Good day, and welcome to the Blackstone 4th Quarter and Full Year 2024 Investor Call.

[Operator]

Today's call is being recorded. At this time, I'd like to turn the conference over to Weston Tucker, Head of Shareholder Relations. Please go ahead.

[Weston Tucker, Head of Investor Relations & Senior MD at Blackstone]

Great. Thanks, Katie, and good morning, and welcome to Blackstone's Q4 conference call. Joining today are Steve Schwarzman, Chairman and CEO John Gray, President and Chief Operating Officer and Michael Chae, Vice Chairman and Chief Financial Officer. Earlier this morning, we issued a press release and slide presentation, which are available on our website. We expect to file our 10 ks report later next month.

[Weston Tucker, Head of Investor Relations & Senior MD at Blackstone]

I'd like to remind you that today's call may include forward looking statements, which are uncertain and may differ from results materially. We do not undertake any duty to update these statements. For a discussion of some of the factors that could affect results, please see the Risk Factors section of our 10 ks. We'll also refer to non GAAP measures and you'll find reconciliations in the press release on the Shareholders page of our website. Also note that nothing on this call constitutes an offer to sell or solicitation of an offer to purchase an interest in any Blackstone fund.

[Weston Tucker, Head of Investor Relations & Senior MD at Blackstone]

This audio cast is copyrighted material of Blackstone and may not be duplicated without consent. Quickly on results, we reported GAAP net income for the quarter of $1,300,000,000 Distributable earnings were $2,200,000,000 or $1.69 per common share and we declared a dividend of $1.44 per share, which will be paid to holders of record as of February 10. With that, I'll turn the call over to Steve.

[Stephen Schwarzman, Chairman, CEO & Co-Founder at Blackstone]

Thank you, Weston, and good morning and thank you for joining our call. Blackstone just reported one of the best quarters in our history. Distributable earnings increased 56% year over year to $2,200,000,000 as Weston mentioned, underpinned by record cap already. Our limited partners entrusted us with $57,000,000,000 of inflows just in the 4th quarter and $171,000,000,000 for the year, reflecting strong momentum in both the institutional, insurance and private wealth channels. On particular note, we raised $28,000,000,000 in private wealth in 2024, including $23,000,000,000 in the perpetual strategies, nearly double, to repeat that, nearly double what we raised from individuals in these strategies in the prior year.

[Stephen Schwarzman, Chairman, CEO & Co-Founder at Blackstone]

All signs point to further acceleration in 2025. After quarter end in January, we raised an additional $3,700,000,000 for our private wealth perpetuals, including the launch of our new infrastructure vehicle, representing a powerful affirmation of our unique position in this channel. We believe our $260,000,000,000 private wealth business is multiples of the size of our next largest competitor. Largest single contributor to the firm's financial results in the Q4 was our dedicated infrastructure strategy VIP, which generated $1,200,000,000 of fee revenues. VIP has delivered remarkable investment performance since inception only 6 years ago, including 17% net returns annually for the commingled strategy.

[Stephen Schwarzman, Chairman, CEO & Co-Founder at Blackstone]

This performance has fueled exceptional growth with AUM today of $55,000,000,000 up 34% just in the past year alone. BIP anchors a broader infrastructure platform as a firm that exceeds $120,000,000,000 across equity, credit and sector. In a relatively short period of time, we've established one of the world's largest infrastructure business. Our success in this area is a powerful illustration of how we build an enduring leading business at Blackstar. It reflects the same blueprint for how we've been able to grow from 400,000 dollars in startup capital in 1985 more than $1,100,000,000,000 of AUM today, the largest alternative asset manager in the world.

[Stephen Schwarzman, Chairman, CEO & Co-Founder at Blackstone]

And why I believe we will continue to achieve strong growth in the future. It starts with innovation as a core competency of the firm as we're always working to identify the next paradigm shift in the market. We evaluate whether we can create something truly differentiated for our limited partners, but the opportunity can be scaled significantly if we have the right team to lead it, drawing upon the firm's deep well of talent. Importantly, any new area also add to the firm's intellectual capital and create synergies with our other businesses to make the rest of the firm better. We have carefully considered infrastructure as a standalone business for a number of years.

[Stephen Schwarzman, Chairman, CEO & Co-Founder at Blackstone]

We've been investing successfully in energy infrastructure projects for over a decade, both our private equity and credit funds, which along with our extraordinary real estate franchise made infrastructure natural extension as a new business line. In 2017, we saw a historic investment opportunity emerging in the U. S. And around the world, made the decision to launch a dedicated strategy. We identified a talented individual in our private equity energy area, our partner, Sean Klumsak, who lead the new business.

[Stephen Schwarzman, Chairman, CEO & Co-Founder at Blackstone]

We began raising capital in 2018 supported by an anchor commitment from an important limited partner. Today, with $55,000,000,000 an outstanding investment performance, VIP has exceeded our initial and predictably very high expectations. The team has done an exceptional job portfolio construction focused on compelling thematic areas, including digital infrastructure, energy and power and critical transportation infrastructure. And we see enormous runway ahead. Massive funding needs for projects globally mean there are more opportunities and available capital.

[Stephen Schwarzman, Chairman, CEO & Co-Founder at Blackstone]

We envision a growth path for our infrastructure business that parallels that of our real estate business, including geographic expansion, new client channels, moving across the capital structure and risk return spectrum. We started raising a European infrastructure perpetual vehicle last fall. And earlier this month, as I mentioned, launched a vehicle designed to give individual investors access to the full breadth of our infrastructure platform. Over time, we also see opportunities in Asia and the potential for sector specific strategies. The growth of our infrastructure business was greatly helped by the other businesses at Blackstone and the firm's resources around the globe.

[Stephen Schwarzman, Chairman, CEO & Co-Founder at Blackstone]

These advantages include sourcing opportunities from and investing alongside our other funds. For example, VIP joined our real estate team in 2021 to privatize the QTS data center business, which has become the largest and fastest growing data center platform in the world. And now our leadership position in data centers is creating additional synergies across the firm, enabling us to address many new opportunities. And as VIP has continued to scale, it has in turn enhanced the firm's intellectual capital, relationships and deal flow, supporting our growth in other areas, including our $90,000,000,000 infrastructure and asset based credit platform, our infrastructure secondaries business and our dedicated energy and energy transition focused funds. What I'm pointing what I'm outlining this morning is just one compelling proof point of the power of the Blackstone platform.

[Stephen Schwarzman, Chairman, CEO & Co-Founder at Blackstone]

Design the firm from the beginning to work this way, with each business making the other stronger. This network effect sets Blackstone apart in the asset management area and underpins the strength of our brand. PACS is an accelerant for the firm's overall growth. Our clients have a positive experience in one area. They're much more likely to invest in additional Blackstone products and support our expansion.

[Stephen Schwarzman, Chairman, CEO & Co-Founder at Blackstone]

Building things organic from the ground up is challenging, takes time, involves upfront costs. However, we think our approach ultimately creates a stronger more integrated firm as well as significant economic benefits as compared to a strategy for cultural acquisitions. And it preserves and perpetuates our unique culture, which is foundational to the firm's success. As we head into the New Year, we're moving into an environment where we see consequential tailwinds for our overall business. Market participants have been focused recently on volatility in the U.

[Stephen Schwarzman, Chairman, CEO & Co-Founder at Blackstone]

S. Treasury yields, reflecting persistent inflation concerns in the context of resilient U. S. Economic growth as well as policy uncertainty. With respect to inflation, what we see based on our expansive portfolio and our proprietary data that the U.

[Stephen Schwarzman, Chairman, CEO & Co-Founder at Blackstone]

S. Is continuing on a path of disinflation, albeit at a more moderate pace than before. In policy, where there are different factors to consider, I believe the direction of travel fundamentally is toward policies that are pro growth and pro deregulation, which ultimately should be quite positive for our business. Closing, the power of Blackstone's platform will continue to drive us forward. Our positioning has never been stronger nor our prospects brighter.

[Stephen Schwarzman, Chairman, CEO & Co-Founder at Blackstone]

I couldn't be prouder of our people and their dedication to serving our investors. With that, I'll turn the ball over to John.

[Jonathan Gray, General Partner, President, COO & Director at Blackstone]

I will catch you. Thank you, Steve, and good morning, everyone. This was an outstanding quarter for Blackstone. Steve highlighted the power of our platform and I'll take you through 3 areas where that power was on full display. 1st, our large scale deployment secondly, our continued momentum in credit and insurance and third, the acceleration in our fundraising, including both private wealth and the institutional channel.

[Jonathan Gray, General Partner, President, COO & Director at Blackstone]

Starting with deployment. Over the past 12 months, we've been talking about a strengthening transaction environment and our desire to invest significant capital in anticipation of improving markets. We're pleased to say that we deployed $134,000,000,000 in 2024, up 81% year over year, planting the seeds of future value at what we believe is a favorable time. The combination of a healthy U. S.

[Jonathan Gray, General Partner, President, COO & Director at Blackstone]

Economy, historically tight financing spreads, greater debt availability, the prospects of a more business friendly regulatory climate and importantly accelerating technological innovations have given us confidence to deploy capital at scale. We invested or committed $62,000,000,000 in Q4, our most active pace in 2.5 years. New commitments in the quarter included fast growing franchise business and very tasty Jersey Mike's, the privatization of a grocery anchored retail REIT, our 3rd take private in real estate in 2024 and a luxury mixed use complex in Tokyo representing the largest ever real estate transaction in the country by a non Japanese investor. In credit, we reported record deployment for both the quarter and full year including a $3,500,000,000 financing for EQT Corp, one of the largest natural gas producers in the United States. This venture is an excellent illustration of the scale of what we're doing today in the investment grade private credit space and our position as a trusted solutions provider to many of the world's leading corporations.

[Jonathan Gray, General Partner, President, COO & Director at Blackstone]

We leveraged the full breadth of our platform to design a custom solution across the capital structure for the borrower secured by the long term contractual cash flows of their critical pipeline infrastructure. For our clients, we provided access to a high quality directly originated investment and we executed the transaction as always without taking on balance sheet risk. We see a significant opportunity for more corporate partnerships over time given the scale of our platform and our reputation. Stepping back, our credit and insurance business continues to see huge momentum following a remarkable 2024. We built a private credit juggernaut and the largest third party business of its kind in the world with over $450,000,000,000 of total assets across corporate and real estate credit.

[Jonathan Gray, General Partner, President, COO & Director at Blackstone]

Inflows through the combined platform exceeded $100,000,000,000 in 2024 comprising 60% of the firm's total inflows. Our non investment grade private credit and real estate credit drawdown strategies appreciated 16% 18% respectively for the year. These are extraordinary results for performing credit underpinning robust investor interest in these areas. We're also seeing strong traction for our investment grade private credit offerings as I noted and now manage over $100,000,000,000 in that area up nearly 40% year over year, virtually all on behalf of insurance clients. But we are now seeing receptivity from pensions and other LPs as well.

[Jonathan Gray, General Partner, President, COO & Director at Blackstone]

In the insurance channel specifically, our business has reached nearly $230,000,000,000 up 19% year over year invested across IG Private Credit, Liquid Credit and other strategies. Today, we have 23 SMA clients in addition to our 4 large strategic relationships. We placed or originated $46,000,000,000 of A- rated credits on average for our private IG focused clients in 2024, up 38% year over year, which generated nearly 200 basis points of excess spread over comparably rated liquid credits. We've achieved these results while remaining true to our capital light, brand heavy, open architecture model designed to serve a multitude of insurance clients without taking on any liabilities. Resolution Life, one of our 4 strategic relationships is a perfect validation of our model.

[Jonathan Gray, General Partner, President, COO & Director at Blackstone]

Last month, Nippon Life, the largest Japanese life insurer and an existing Resolution shareholder announced it would acquire the remainder of the company it didn't already own at a $10,600,000,000 valuation. Blackstone had taken a small 6% stake in Resolution in 2023 alongside other limited partners in connection with becoming the company's asset manager for private and structured credit. Nippon's investment will monetize our stake, deliver an attractive gain to our limited partners and the firm all while positioning Resolution to accelerate growth under an extremely well capitalized and capable parent. Importantly, we will remain Resolution's investment manager going forward and we are excited to partner with Nippon on this next stage of the company's development. Turning to Private Wealth, where our momentum accelerated significantly in 2024, 2025 is also off to a terrific start.

[Jonathan Gray, General Partner, President, COO & Director at Blackstone]

We are uniquely positioned in the wealth channel given the breadth of our product lineup, our performance and the power of our brand. Sales in the channel exceeded $28,000,000,000 in 2024 as Steve noted. Decred led the way raising over $12,000,000,000 for the year driving 36% year over year growth in NAV. Our private equity strategy BXP has already grown to over $8,000,000,000 in its 1st year including January sales. And for B REIT, flows trended favorably with net repurchase request in December down 97% from the peak.

[Jonathan Gray, General Partner, President, COO & Director at Blackstone]

We raised an additional $3,700,000,000 for the private wealth perpetuals in January as Steve highlighted, marking their best month of fundraising from individuals in over 2.5 years. This included more than $1,000,000,000 each from BCRED, BXP and our new infrastructure strategy. The launch of the infrastructure strategy marked the largest ever first close for a vehicle of its kind and was 5 to 6 times the size of competitors' product launches. To give you the sense of the strength of our brand in this channel, over 90% of advisors who allocated to this strategy had previously allocated to another Blackstone perpetual vehicle and over 50% allocated to all 4 of our perpetual flagships. B rate's exceptional performance 9.5 percent net annual return since inception for its largest share class through a real estate superstorm has helped us here a lot.

[Jonathan Gray, General Partner, President, COO & Director at Blackstone]

We're now in the process of launching our multi asset credit product as discussed previously targeting the first half of this year. We see enormous opportunity ahead in the $85,000,000,000,000 private wealth market. Our drawdown fund area is also benefiting from robust client engagement today with the tenor of discussions feeling far better than it has in several years. We held major closings in Q4 for our real estate credit flagship bringing it to $7,100,000,000 so far. European Real Estate, which has raised $9,500,000,000 to date and our private equity energy transition strategy, which has raised $5,200,000,000 all of which will soon complete fundraising.

[Jonathan Gray, General Partner, President, COO & Director at Blackstone]

We raised additional capital for our opportunistic credit strategy bringing it to over $4,000,000,000 and held initial closings of $1,600,000,000 for our new life sciences flagship targeting at least the size of the prior $5,000,000,000 fund. We will also soon begin raising the new vintages of a number of other highly successful strategies including Private Equity Asia for which we expect very significant closings in the coming months along with private equity secondaries, GP stakes and tactical opportunities. Overall, the fundraising outlook is quite positive for the firm. Investor affinity for Blackstone is as high today as ever and it all ties back to investment performance. As you'll hear from Michael in a moment, we again reported strong returns across nearly every area of the firm in the Q4.

[Jonathan Gray, General Partner, President, COO & Director at Blackstone]

Our LPs have benefited significantly from the way we've positioned the firm and their capital, including building the largest third party credit complex, the largest data center business, one of the largest energy infrastructure platforms in leading life science business and what we believe is the largest alternatives platform in India. These areas have continued to outperform and we believe will drive outstanding future results for our clients as well. In real estate, however, our equity oriented funds were down in the 4th quarter as the portfolio absorbed the 80 basis point increase in the 10 year treasury yield and our non U. S. Holdings were also impacted by the stronger U.

[Jonathan Gray, General Partner, President, COO & Director at Blackstone]

S. Dollar. We wouldn't expect to see a move of this magnitude in treasury yields going forward given the underlying inflation data. And while disappointing in the near term, our portfolio is in excellent shape with cash flow growing solidly overall across virtually all our real estate strategies. 1 year ago, we said that real estate values were bottoming, but that the recovery would take time and was unlikely to be V shape.

[Jonathan Gray, General Partner, President, COO & Director at Blackstone]

That's exactly what happened. We remain firm believers that a sustained commercial real estate recovery is underway. Debt markets have vastly improved as borrowing spreads tightened by approximately 50% from the 2023 wide and CMBS issuance was up nearly threefold in 2024. At the same time, new construction starts are down dramatically from virtually all types of real estate, including by 2 thirds from 22 levels in U. S.

[Jonathan Gray, General Partner, President, COO & Director at Blackstone]

Logistics and apartments, our largest sectors. Meanwhile, demand is resilient with the potential for acceleration in the context of a stronger U. S. Economy. Given our conviction, we deployed $25,000,000,000 in real estate in 2024, up nearly 70% year over year and we expect to continue to deploy at scale.

[Jonathan Gray, General Partner, President, COO & Director at Blackstone]

Real estate is a cyclical asset class that has been through a cyclical downturn and we believe Blackstone is the best positioned firm in the world to benefit from the recovery. In closing, the firm is in terrific shape by any measure. We expect to achieve great things on behalf of all of our investors. And with that, I will turn things over to Michael Jay.

[Michael Chae, Chief Financial Officer at Blackstone]

Thanks, John, and good morning, everyone. Our Q4 results represented an exceptional finish to an outstanding year, and we entered 2025 in a position of significant strength. I'll first review financial results and we'll then discuss investment performance and the outlook. Starting with results. We reported the best quarter of fee related earnings in the firm's history and one of the 2 best quarters of distributable earnings.

[Michael Chae, Chief Financial Officer at Blackstone]

We saw the full benefit of multiple drawdown funds that were activated throughout the year. Key perpetual strategies continue to scale significantly, including the very notable contribution from the BIP infrastructure business. And we believe net realizations have begun to move off cyclical lows. First, with respect to fee related earnings. In the Q4, FRE grew a remarkable 76% year over year to a record $1,800,000,000 or $1.50 per share.

[Michael Chae, Chief Financial Officer at Blackstone]

Management fees rose 12 percent to a record $1,900,000,000 including the 60th straight quarter of year over year base management fee growth at the firm. We activated the investment periods for multiple major drawdown funds in 20 24, which contributed full fees in Q4. Alongside that, key perpetual strategies BIP, BCRED and BXPE continue to grow in scale and contribution to the firm's financials with their combined NAV up nearly 50% year over year. Fee related performance revenues increased more than 8 fold year over year in Q4 to $1,400,000,000 driven by VIP's major scheduled crystallization event with respect to 3 years of substantial accrued gains, BXP's 1st significant crystallization event with respect to full year 2024 gains and the steadily growing contribution from BCRED and our direct lending platform overall with a 47% year over year increase in these revenues for the Credit and Insurance segment. In terms of distributable earnings, DE grew 56% year over year to $2,200,000,000 in the 4th quarter or $1.69 per common share.

[Michael Chae, Chief Financial Officer at Blackstone]

In addition to the strong growth in FRE, net realizations increased 42% year over year to $601,000,000 the highest level in 10 quarters. We executed a number of realizations across both the public and private portfolios in the quarter, concentrated in corporate private equity. These included the sale of public energy positions along with the IPO and sale of a portion of our stock in an India based company at a multiple of invested capital of over 5 times with the stock trading up further since then. In addition, our multi asset investing segment, BXMA, generated outstanding investment performance in 2024, including the best year for the absolute return composite in 15 years. The XMA crystallizes incentive fees for most of its open ended strategies annually in Q4 and the segment's performance revenues increased 144% year over year to $338,000,000 Now turning to the full year.

[Michael Chae, Chief Financial Officer at Blackstone]

The firm delivered strong results amid a complex external environment in 2024 with robust growth across all key financial and operating metrics. Distribulal earnings grew 18% to $6,000,000,000 Fee related earnings increased 21% to a full year record of $5,300,000,000 Net realizations rose 12% to $1,400,000,000 supported by the strong performance in VXMA and yet another example of the benefits of our diverse business mix. The firm's expansive breadth of growth engines lifted total AUM up 8% to more than $1,100,000,000,000 another record with $171,000,000,000 of inflows for the year. Inflows deployment and overall fund appreciation all accelerated meaningfully in 2024 expanding the foundation of future value. We achieved these results against a backdrop where the market for large scale realizations was very challenged for much of the year and the significant underlying earnings power of our real estate business has yet to reemerge, reflecting the breadth and power of our platform that Steve and John described.

[Michael Chae, Chief Financial Officer at Blackstone]

Moving to investment performance. The firm delivered strong returns in almost every area in the 4th quarter. Corporate Private Equity and Funds appreciated 4.9% 17% for the full year. Our operating companies overall reported stable mid single digit year over year revenue growth in the quarter along with continued notable margin strength. Our infrastructure business reported 4.8% appreciation in the 4th quarter and 21% for the year.

[Michael Chae, Chief Financial Officer at Blackstone]

In credit, our non investment grade private credit strategies generated a gross return of 3.1% in the 4th quarter and 16% for 2024. We continue to see resilient fundamentals across the credit portfolio and the LTM default rate across our 2,000 plus non investment grade credits remained under 50 basis points. The XMA reported a 3.7% gross return for the absolute return composite, the 19th consecutive quarter of positive performance and 13% for the year. BXMA has generated compelling all weather returns in liquid markets, helping to insulate our LPs from the volatility of the past several years. Indeed, since the start of 2021, DXMA's cumulative absolute return composite, net of fees, is 34% or nearly double the traditional sixty-forty portfolio.

[Michael Chae, Chief Financial Officer at Blackstone]

In real estate, the opportunistic funds declined 5.1% in the 4th quarter and 4% for the full year, while the core plus funds declined 0.8% in the quarter and were stable for the year. As John discussed, the Q4 was impacted by the sharp increase in treasury yields and the stronger U. S. Dollar. Outside of our major reported business lines, the growth and performance of other key strategies further highlight the firm's ability to innovate and build businesses.

[Michael Chae, Chief Financial Officer at Blackstone]

Our dedicated life sciences platform delivered standout performance in 2024 with the funds appreciating 11.3% in the 4th quarter and 33% for the full year, driven by the achievement of positive milestones for multiple treatments under development. Our real estate credit high yield drawdown funds appreciated 4.4% in Q4 and 18% for the year underpinned by resilient credit performance in its real estate loan portfolio. And our GP Stakes business appreciated 4.1% in the 4th quarter and 28% for the year, reflecting its focus on top performing managers in private markets. The resiliency and strength of the firm's investment performance continues to power our growth. Turning to the outlook.

[Michael Chae, Chief Financial Officer at Blackstone]

The firm is advancing with strong momentum across multiple drivers. 1st, in our drawdown fund area, in 2025, we will see the full year benefit from funds that were activated throughout 2024. 2nd, our platform of perpetual strategies has continued to expand overall, now comprising 46% of the firm's fee earning AUM, setting a higher baseline for management fees as we enter 2025. In addition, BXP is now eligible to generate fee related performance revenues on a quarterly basis and our infrastructure strategy for individual investors in its 1st year will be eligible in Q4 of 2025 with respect to full year 2025 gains. And while BIP's significant Q4 crystallization event will not recur in 2025, we do expect smaller crystallizations periodically starting in the Q2 of this year.

[Michael Chae, Chief Financial Officer at Blackstone]

3rd, there is significant underlying momentum in our credit insurance business as you've heard this morning. The segments FRE and DE grew 26% 24% respectively in 2024. And with robust inflows and record deployment, the business is exceptionally well positioned to deliver strong financial performance again in 2025. Finally, with respect to realizations, we see a much more constructive environment for realizations in 2025. In the near term, we would expect disposition activity to be concentrated in our private equity strategies as real estate exit markets strengthen over time and for overall activity levels to be meaningfully higher in the second half of the year.

[Michael Chae, Chief Financial Officer at Blackstone]

Meanwhile, net accrued performance revenue on the firm's balance sheet stood at $6,300,000,000 at year end or $5.14 per share and performance revenue eligible AUM in the ground reached a record $561,000,000,000 These are strong indicators of our future realization potential. In closing, we are highly confident in the multiyear picture of growth at Blackstone. The power of our platform has driven extraordinary results for our investors and we believe it will continue to do so in the future. With that, we thank you for joining the call. I would like to open it up now for questions.

[Operator]

Thank We'll take our first question from Dan Fannon with Jefferies.

[Dan Fannon, Managing Director - Research Analyst at Jefferies & Company Inc]

Thanks. Good morning. John, I was hoping you could expand on some of the fundamentals you were seeing in the real estate market that gives you the confidence on the recovery. And while the recovery has been slow as you highlighted in 2024, how do you see that ramping in terms of 2025?

[Jonathan Gray, General Partner, President, COO & Director at Blackstone]

Good question. I would say when we think about the conditions for real estate recovery, you look for a number of things. First, you obviously want demand, which is tied to economic growth. And we've got a pretty healthy U. S.

[Jonathan Gray, General Partner, President, COO & Director at Blackstone]

Economy, which leads to demand for logistics and apartments and hotels. So I think if the economy accelerates further, that's certainly a positive. Then of course supply, which I think is the key element here. We've seen a decline from 3 plus percent new supply starts back in 2022 in logistics and rental housing, our biggest areas. That's declined now to 1%, so a 2 thirds decline, which is very helpful.

[Jonathan Gray, General Partner, President, COO & Director at Blackstone]

So we think cash flows as we move over time will be pretty good. They actually have been strong throughout this challenging period the last few years, which really hit real estate of course has been the cost of capital. And there what we see is spreads have tightened quite a bit, sort of overall borrowing costs have gone from say 9% to 6%. That's obviously helpful. And the availability of capital has improved.

[Jonathan Gray, General Partner, President, COO & Director at Blackstone]

So CMBS last year was up threefold, and that's obviously very important for transaction activity. In the near term, that 80 basis points move as you saw in our numbers obviously had a negative impact, But that's now been absorbed by the market. And so I think the combination of favorable cash flows and probably a more stable rate environment going forward gets us on this path. Ultimately hard assets have to revert to replacement costs. With a growing economy, you need more real estate.

[Jonathan Gray, General Partner, President, COO & Director at Blackstone]

And so rents and ultimately values have to grow. So the path of travel is clear. The slope may be a little different, but the reason we're leaning in is because we see that we're firmly on this recovery path for real estate.

[Dan Fannon, Managing Director - Research Analyst at Jefferies & Company Inc]

Thank you.

[Operator]

We'll take

[Operator]

our next question from Craig Siegenthaler with Bank of America.

[Craig Siegenthaler, Managing Director at Bank of America]

Good morning, Steve, John. Hope you're both doing well. We wanted to circle back on Michael's monetization commentary and the expected ramp in transaction activity. Blackstone is still a net buyer of assets, but given the macro setup with the high stock market valuations and anticipated rise in IPOs, when do you expect to inflect and be a net seller of assets in corporate private equity? And then on Michael's prepared comments again, how far behind is the real estate cycle relative to private equity?

[Jonathan Gray, General Partner, President, COO & Director at Blackstone]

So Craig, I think a few things. The environment is clearly here getting better. Again, the strength of the economy, the health of the equity market, the S and P being up 60%, the IPO market, the pipeline for IPOs now is double where it was a year ago. Those are very constructive facts. We think large profitable companies can go public.

[Jonathan Gray, General Partner, President, COO & Director at Blackstone]

The debt markets improving are certainly helpful both investment grade and high yield spreads are basically at record tight. Base rates are still a bit elevated, but the debt market is very constructive. We've got a regulatory climate for M and A that is far better for us. Strategics can now start to buy again and some of those dialogues are picking up. And then you do have this sort of desire for people to get transactions after 3 years being on the sidelines.

[Jonathan Gray, General Partner, President, COO & Director at Blackstone]

So we sort of see the ingredients for a very positive M and A cycle coming together. We did see a little bit of a slowdown in the 4th quarter given the election and some volatility around rates, but I think it's going to build during the year. To your question and Michael's comments, private equity is definitely going to be stronger. I think there we have a number of things where we'll see realizations earlier on. Real estate, we need this recovery to take a little more time.

[Jonathan Gray, General Partner, President, COO & Director at Blackstone]

So we see that as more back half of the year, certainly not the beginning of the year, just given the nature of that market sort of healing over time. So overall, I think a better environment certainly in 2025 and 2024, but more back end weighted and first half of the year definitely more private equity focused.

[Craig Siegenthaler, Managing Director at Bank of America]

Thank you.

[Operator]

We'll take our next question from Michael Cyprys with Morgan Stanley.

[Michael Cyprys, Analyst at Morgan Stanley]

Great. Thanks so much. Good morning. Just a question on AI data centers. Just curious how you're thinking about the evolving investment opportunity around AI, particularly in the infrastructure layer with data centers and power.

[Michael Cyprys, Analyst at Morgan Stanley]

We've seen a lot of capital flow into the space. And you guys at Blackstone have been quite active in the space in particular. But just given some of the recent developments, for example, like with DeepSeq over the weekend that suggests that AI models maybe could be a bit less capital and energy intensive. Just curious how attractive do you see the infrastructure layer here moving forward? How much more capital investment do you guys see needed across the industry?

[Michael Cyprys, Analyst at Morgan Stanley]

And how are you thinking about potential shifts for investment opportunities across into the application layer?

[Jonathan Gray, General Partner, President, COO & Director at Blackstone]

So, Mike, we've obviously been spending a lot of time the last week, looking at the impact of DeepSeq. I'd start with our data center business, which is the largest in the world. We have $80,000,000,000 of leased data centers. The good news in that business is these are long term leased data centers with some of the biggest companies in the world. And we do not build data centers speculatively anywhere in the world.

[Jonathan Gray, General Partner, President, COO & Director at Blackstone]

So we have a very prudent approach when we think about data centers. The real question and the heart of your question is what is demand going forward? And on that front, we would echo what you're hearing I think from a lot of commentators, which is the cost of compute is coming down pretty dramatically. But at the same time, that's going to lead to more usage, to more adoption. And so what does that mean for the physical infrastructure side?

[Jonathan Gray, General Partner, President, COO & Director at Blackstone]

I'd go to the calls last night for both Meta and Microsoft. They talked about the importance of physical infrastructure. Mark Zuckerberg said that he thought it was a strategic advantage for them, but they did acknowledge that some of this may need to be more fungible. Maybe there's a little less training that's done as a result of less intensity, but at the same time there's more inference. Maybe there's more cloud, maybe there's more to do with enterprise.

[Jonathan Gray, General Partner, President, COO & Director at Blackstone]

So we have a sense in talking to our clients also that there's a belief as usage goes up significantly, there's still a vital need for data centers. The form of that use may change. And related to that power usage, we think will continue because our lives are migrating online and all these questions, there'll be even more questions coming even if the amount of power used on an individual question goes down. So we still think there's a vital need for physical infrastructure, data centers and power. Some of it may change.

[Jonathan Gray, General Partner, President, COO & Director at Blackstone]

And the good news for our investors is we're not doing things speculatively. It's based on the demand signals from our tenants. That's when we go out and spend the big dollars to build these things. So we still think it's a very important segment and there's a way to run, but obviously we're watching what's happening very closely.

[Michael Cyprys, Analyst at Morgan Stanley]

Great. Thank you.

[Operator]

We'll take our next question from Kyle Voigt with KBW.

[Kyle Voigt, Managing Director - Equity Research at Keefe, Bruyette & Woods (KBW)]

Hi. Good morning, everyone. Maybe a question on BXPE. The last few quarters have been in a healthy $1,000,000,000 to $2,000,000,000 zone in terms of quarterly fundraising. I guess first, can you remind us where you're at in terms of distribution of the product, whether that's number of platforms or international breadth and what the runway looks like to expand that?

[Kyle Voigt, Managing Director - Equity Research at Keefe, Bruyette & Woods (KBW)]

And then with respect to the

[Kyle Voigt, Managing Director - Equity Research at Keefe, Bruyette & Woods (KBW)]

$1,000,000,000 to $2,000,000,000 quarterly inflow range, is that the pace that you are really comfortable growing this type of product? Or now with having some investment track record and entering the 2nd year of the product, is there comfort in ramping the flows above that $1,000,000,000 to $2,000,000,000 quarterly pace if there is demand?

[Jonathan Gray, General Partner, President, COO & Director at Blackstone]

Well, we've been steadily building out our partnerships with distributors on BXP. This is always the way you start with a smaller number. As you work your way through the 1st 2 or 3 years, you steadily expand within the United States and geographically. We're sort of on that path. I don't know if we quote exactly how many distributors we use, but the number continues to grow.

[Jonathan Gray, General Partner, President, COO & Director at Blackstone]

We've had some good success in places like Canada recently. The key for these products is investment performance and BXP did a terrific job the 1st year and the 1st year is the hardest year because you're just getting the product started, you don't have existing assets, you're sort of going from a standing start. We delivered very strong performance and it really speaks to I think the unique scale we have. We have obviously large scale corporate private equity. We do it in the U.

[Jonathan Gray, General Partner, President, COO & Director at Blackstone]

S, Europe and Asia. We've got core private equity, tactical opportunities. We've got growth. We've got life sciences. We've got secondaries.

[Jonathan Gray, General Partner, President, COO & Director at Blackstone]

The breadth of that platform has allowed us to deploy the capital real time. In terms of where we go from here, we had a terrific month in terms of fundraising for BXP in January. But I think it will be driven by performance. We have the capabilities to deploy more at scale. I feel great confidence at that.

[Jonathan Gray, General Partner, President, COO & Director at Blackstone]

I just think it's we deliver performance, we deliver for the clients. They're going to get more and more comfortable. We're going to open with more distributors and the product will continue to grow. We've done this in the past with both B REIT and B Cred. We think this is a similar model.

[Jonathan Gray, General Partner, President, COO & Director at Blackstone]

But again, we've got to deliver for the customers. We've got to deploy the capital. I've got a lot of confidence in those areas. And given our strength in the channel and our brand strength, it's really powerful. I mean, the fact that 50% of our financial advisors who invested in BX Infra are invested in all four of our products just speaks to that powerful network effect.

[Jonathan Gray, General Partner, President, COO & Director at Blackstone]

And financial advisors and their underlying clients know and trust the Blackstone name and that is so important. And so we're dedicated to delivering for them. If we do that, this can grow a lot just like our other products in the space.

[Kyle Voigt, Managing Director - Equity Research at Keefe, Bruyette & Woods (KBW)]

Great. Thank you.

[Operator]

We'll go next to Bill Katz with TD Cowen.

[William (Bill) katz, Senior Equity Analyst at TD Cowen]

Okay. Thank you very much for the commentary. You didn't talk at all about retirement. I know it's an area that the whole industry is sort of incrementally focused on, but you did sort of mention perhaps a more favorable regulatory backdrop. How do you sort of see the evolution of the commentary coming out of your conversations with the regulators as that sort of takes shape into 2025 under the Trump administration?

[William (Bill) katz, Senior Equity Analyst at TD Cowen]

What should we be looking for that opportunity set to potentially open up from a realistic perspective?

[Jonathan Gray, General Partner, President, COO & Director at Blackstone]

Well, I guess where we start is the way the defined contributions and retirement business has evolved. And I do think it's created a bit of a sort of have, have not environment. So if you think about it, wealthy individuals are able to access our products through financial advisors and get the benefit of strong long term returns and compounding. If you were an employee at a major corporate sort of pre-two thousand and five, you probably have the benefit of a pension fund where people are working hard every day to deliver these returns, allocating to alternatives. If you work at a state pension fund today, you also are getting that same benefit.

[Jonathan Gray, General Partner, President, COO & Director at Blackstone]

But for the vast majority of private sector workers in the United States, they are given a 401 plan where because of the litigation environment, they basically focus on the lowest fees and it's not about long term performance. And it would seem highly logical to us that at some point in, for instance, target date funds with the right gatekeepers and controls, picking the right managers that you would put private assets into this marketplace. So individual investors, all individual investors could get the benefit for retirement. When you think about who should be in the position to do that, if the regulation changes, Blackstone given our brand, our performance, the breadth of what we've done and the range of perpetual products we've created, we seem to be uniquely positioned. So I think this will happen.

[Jonathan Gray, General Partner, President, COO & Director at Blackstone]

It's a question of when and when it does, as I said, I think we'll be in a good spot. It certainly seems logical given the way the markets developed over time and we really want to democratize access to these products into higher returns, so people can generate more for their retirements.

[Operator]

Thank you. We'll take our next question from Glenn Schorr with Evercore ISI.

[Kaimon Chung, MD - Equity Research at Evercore ISI]

Hi, this is Kaimon Chung in for Glenn Schorr. Some of the insurance companies seem to be looking to do more on their own in private markets. I'm just curious what you're seeing and your expectations of further growth with your insurance partnerships. And also heard your comments about Nippon Life, just want to get more thoughts on the growth opportunities for insurance and credit in Asia and what else you're doing in that region?

[Jonathan Gray, General Partner, President, COO & Director at Blackstone]

Well, I think the biggest change that we've seen in the insurance industry over the last few years is that moving beyond just commercial mortgages into broader private investment grade credit has gone from something people saw as novelty to a necessity. And so I think now if you're competing in the annuity space, certainly in the life space, even the P and C companies now are looking at this that if you can get comparably rated A- credits and get 200 basis points higher spread, that makes you more competitive with your sales organization. And what we're seeing sort of across the landscape is an embracing of this model where they move a greater percentage of their assets into private investment grade credit. And for us, the reason we're up nearly 20%, we're at $230,000,000,000 in insurance is because of this dynamic. And I would say the number of conversations, the scale of the conversations, it seems to be accelerating.

[Jonathan Gray, General Partner, President, COO & Director at Blackstone]

And the other comment I would make is the fact that we have an open architecture model. We are not an insurance company ourselves with 100 of billions of liabilities. We are not out there selling these products. We're just a third party manager The way the liquid managers used to manage liquid credit and still do on behalf of insurers, they see us as an attractive place to allocate capital. We're trusted and the scale is really important because no insurer wants too much concentration given their important risk aversion, they need diversification.

[Jonathan Gray, General Partner, President, COO & Director at Blackstone]

So what we're finding is there's desire to talk to us on a larger strategic basis. We've got 4 of those clients. We now have 23 SMA clients, which is up 3 from where we were at the end of last quarter. This feels like it's going to continue to grow. It's obviously started in the U.

[Jonathan Gray, General Partner, President, COO & Director at Blackstone]

S. You referenced Nippon Life, which is a terrific company. We've seen Asian insurers who are also open to this idea. So I think there's opportunity there. There's select opportunity in Europe as well.

[Jonathan Gray, General Partner, President, COO & Director at Blackstone]

The key again is do we deliver performance? Can we deliver them higher returns at the same or lower risk? We believe we can. And as we continue to scale up with our origination capabilities, being able to speak for larger transactions like we did this $3,500,000,000 EQT transaction in the midstream space, that's going to put us in a better and better spot. So I think you will see this business continue to grow in a material way.

[Jonathan Gray, General Partner, President, COO & Director at Blackstone]

And as an aside, as I mentioned in the prepared remarks, we're also seeing interest in investment grade private credit now from some of our pension and sovereign wealth funds. It's very early days, but it feels like that's going to grow in momentum. But overall, insurance feels like an area where we're going to see a lot of growth in the years ahead, particularly at Blackstone.

[Operator]

Thank you. We'll take our next question from Alex Blostein with Goldman Sachs.

[Alex Blostein, Managing Director at Goldman Sachs]

Hey, good morning everybody. Thank you for the question. So staying on credit for a second, really strong fundraising across the platform and it was really well balanced, which is obviously great to see as well. Can you give us a sense of the amount of capital that's sitting on the platform now that's not earning fees yet that will turn on upon deployment? And I guess in that context, can you talk a little bit about your expectations for credit deployment over the next kind of 12 months or so?

[Alex Blostein, Managing Director at Goldman Sachs]

And including maybe some of the partnerships, John, that you highlighted earlier. I think you said that you've expanded or trying to expand more corporate partnerships in that part of the business?

[Jonathan Gray, General Partner, President, COO & Director at Blackstone]

Well, as the business grows and broadens, as we continue to move beyond it started as you know more opportunistic direct lending. But as we move into this asset based area where the penetration from us in the industry is very small, we think this is going to grow a lot. And I think you'll see us partnering more and more with banks, oftentimes sort of on a white label basis where there may not be a big announcement, but they want to move some things off their balance sheet as they want to try to drive higher ROEs. We just see we see a lot of these sort of corporate solutions transactions like EQT. I think we'll see more and more of those.

[Jonathan Gray, General Partner, President, COO & Director at Blackstone]

I see investment pace growing basically with the capital that's coming in. And it's not different than direct lending or opportunistic, which is obviously very tied to transaction activity. What's nice about the private investment grade and the ABF, it's really just tied to the basic economy. It's tied to things like consumer finance and railcar finance and a bunch of fundamental things in commercial residential real estate that are just the essence, the nuts and bolts of the U. S.

[Jonathan Gray, General Partner, President, COO & Director at Blackstone]

Economy. So as capital comes in, I see this continuing to ramp up. We're not going to put a percentage number, but I would expect that it will keep up with the inflows. Michael, you have the specifics.

[Michael Chae, Chief Financial Officer at Blackstone]

Yes. Alex, it's Michael. Out of our AUM base, we have $375,000,000 in BXC total AUM, dollars 265,000,000 fee earning AUM, about $40,000,000,000 is not yet is eligible for management fees and not yet earning it, to put it in perspective. And there's another $9,000,000,000 or so in the breads business within real estate.

[Alex Blostein, Managing Director at Goldman Sachs]

Thank you.

[Operator]

We'll take our next question from Brian Bedell with Deutsche Bank.

[Brian Bedell, Director at Deutsche Bank Securities]

Great. Thanks. Good morning, folks. Thanks for taking my question. Maybe just to Michael on the FRE margin outlook for 2025.

[Brian Bedell, Director at Deutsche Bank Securities]

Just you're highly likely to get back to solid double digit base fee growth, not even considering FERPA. So just wondering what your outlook for the FRE margin might be in 'twenty five even just not even considering fee related performance revenue? And then I guess on top of that, I mean, I can certainly create a lot of delta to the margin given the compensation on performance fee related performance revenue. But then I guess if that creates a lot of uncertainty into that outlook, to what extent is that compensation fungible across the firm so that you can therefore scale that margin and improve it this year versus last year?

[Michael Chae, Chief Financial Officer at Blackstone]

Hey, Brian. So I'll just step back on the question margins. You've heard me and Brian do this before, but I'll say it again, it's early in the year, so we don't want to get too granular. And as always, we encourage you to look at it on a full year basis. We did throughout the year last year.

[Michael Chae, Chief Financial Officer at Blackstone]

And I think that approach hopefully was validated when you look at the full year performance. There are different variables to consider. You touched on at least one. But I just start by saying we continue to feel really good about our margin position fundamentally. And again, the idea of margin stability as a starting point at the beginning of the year.

[Michael Chae, Chief Financial Officer at Blackstone]

A few items I'll just note in terms of those variables. First, and you hit this, on management fees and OpEx in terms of the baseline. So on management fees, we have this embedded ramp, the full year benefit in 25 in flagship vehicles activated in 2024. So that lifted our base management fees in the 4th quarter. It's 10% year over year after more like single digit growth throughout the course of the year.

[Michael Chae, Chief Financial Officer at Blackstone]

And we consider that growth rate a reasonable starting point as we enter 2025. And at the same time on the OpEx side, and I think we talked about this in prior quarters, and we talked about, I think, in the 3rd quarter, how we saw in the 4th quarter, it would come in, in that low double digit area and that was sort of a better run rate. We came in at 11% in the Q4. And again, I would say that is a good starting point as we enter 2025. So to your point, that relationship between management fee growth stepping up from last year from 2024 and the OpEx growth, I think is a good thing.

[Michael Chae, Chief Financial Officer at Blackstone]

2nd, as we've said before, there is a level of sensitivity to fee related forms revenues as core plus and B Rippers as we call them generally carry higher incremental margin as those are direct lending platform. So that is of note. To your question, we do manage compensation ultimately holistically across the firm. So that's in play, but I think it is worth noting that sensitivity. And then 3rd, as you heard this morning, we continue to build out a number of really significant new initiatives, which are in investment mode today, but will be meaningfully additive over time.

[Michael Chae, Chief Financial Officer at Blackstone]

So we are investing to grow and scale these new products, these new platforms to very significant ultimate profitability, but we are investing to do that in real time. So I'd just say those are some of the ultimate pillars around this. But again, stepping back, we've got a robust underlying margin position, multiple engines of growth and ultimately high degree of control we feel over our cost structure. And this ability to scale products is the key over time. So whether it's in the private well space or any other space, being subscale does not lead to I think compelling profitability, but we approach it a little differently.

[Brian Bedell, Director at Deutsche Bank Securities]

Great. Thank you.

[Operator]

We'll take our next question from Mike Brown with Wells Fargo Securities.

[Mike Brown, Managing Director at Wells Fargo Securities]

Okay, great. Good morning, everyone. I wanted to ask on the new multi asset credit fund that is set to launch. I think you said in the first half of this year. I was just hoping to compare and contrast that fund versus BCRED.

[Mike Brown, Managing Director at Wells Fargo Securities]

So the new fund will invest across a variety of credit strategies. So it sounds like it's kind of like a broad exposure to your credit business. Curious how that will be kind of marketed, just to ensure it doesn't cannibalize BCRED? And then given it's an interval fund, does that mean it has potential to be kind of distributed differently into a wider array of distributors?

[Jonathan Gray, General Partner, President, COO & Director at Blackstone]

Well, I'm looking at my general counsel and how I can answer this question. What I would say is the product will have the breadth of what we do in credit as opposed to just direct lending and have a piece of that, but a bunch of other things we obviously do at this firm related to asset backed finance and real estate finance, things on a global basis. So and it will be in a different structure that we believe will be more accessible to investors, but I don't think there's much more I can say about this.

[Mike Brown, Managing Director at Wells Fargo Securities]

Okay. Well, thank you for that color. Thanks, John.

[Jonathan Gray, General Partner, President, COO & Director at Blackstone]

Thanks, Mike.

[Operator]

We'll take our next question from Brennan Hawken with UBS.

[Brennan Hawken, Senior Analyst - Equity Research at UBS Group]

Good morning. Thanks for taking my question. I have a couple of questions on FRPR, specifically within credit, one on the Q4 and then one more forward looking. So nice uplift here in the quarter. Is it possible to quantify what impact you saw from spread tightening working through the FRPR line here this quarter?

[Brennan Hawken, Senior Analyst - Equity Research at UBS Group]

And then how should we think about the on a forward looking basis, how should we think about the impact of lower base rates and tighter spreads on excess return and therefore FRPR generation going forward?

[Jonathan Gray, General Partner, President, COO & Director at Blackstone]

I would just say, I'll leave Michael some of the technical answers here. I would just say that there has been some of the excess spread coming out of the credit business really over the last 18 months. You've seen it broadly across investment grade, non investment grade credit. Spreads have been tightening, we've seen base rates come down. But our vehicles as you've seen in the numbers have continued to produce very strong results.

[Jonathan Gray, General Partner, President, COO & Director at Blackstone]

And I think the key thing to remember for investors is, yes, they may not be able to produce mid teens returns in private credit on a go forward basis, but the relative returns and the spread premium to fixed income to liquid fixed income is continuing to endure. And so that's what gives us a lot of confidence that we'll continue to generate favorable returns for our customers is that this farm to table model we have where we bring investors right up to borrowers and avoid those origination, distribution, securitization costs. That's going to continue and that's why we think this private credit area has so much room to run both non investment grade and investment grade. But yes, the overall level of yields are coming down as spreads are tightening. But I think this bigger trend is really the key to the growth of that business.

[Michael Chae, Chief Financial Officer at Blackstone]

And Brandon on the math, I'll just say that approximate math is across our current BCRED platform that the 50 basis point decline in base rates impacts our fee related performance revenues on a run rate basis by about 4%. It's like a low single digit number. And we obviously absorbed that and more in the last 12 months and PIRFERS overall in BCRED grew at 18%. So through the NAV appreciation, through the growth in inflows, that's been the net.

[Brennan Hawken, Senior Analyst - Equity Research at UBS Group]

Great. And spread tightening, did that have an impact in 4Q?

[Jonathan Gray, General Partner, President, COO & Director at Blackstone]

Spread tightening, I mean most of what we have is floating rate. So spread tightening generally doesn't credit quality is frankly more important because you don't have a lot that trades above par. So I don't think spread tightening was a big driver of what you're seeing.

[Brennan Hawken, Senior Analyst - Equity Research at UBS Group]

Great. Thanks for taking my question.

[Operator]

We'll take our next question from Ken Worthington with JPMorgan.

[Ken Worthington, Financial Analyst at JP Morgan]

Hi, good morning. I wanted to dig a bit deeper into the big four insurance relationships, if I could. So maybe you're setting the stage of the $230,000,000,000 you called out a couple of times in insurance assets, about how much come from the big four? As we think about 2025, what are the contractual commitment obligations expected from the big 4? And then lastly, given the acquisition of Resolution by Nippon Life, you mentioned, I think that the IMA remains intact.

[Ken Worthington, Financial Analyst at JP Morgan]

Does the transaction impact the remainder of the $60,000,000,000 of resolution flows expected over the next few years?

[Michael Chae, Chief Financial Officer at Blackstone]

Great, Ken. It's Michael. I'll start with your first question on the numbers. At the end of 2024 across the big four, we had $156,000,000,000 of AUM.

[Jonathan Gray, General Partner, President, COO & Director at Blackstone]

And what I would say is, I think in virtually every one of our situations, we've been allocated more capital than what was in there faster than what was in there contractually that our partners here are extremely pleased with what we've been doing. So the relationship with Corbridge is rock solid with resolution, with Fidelity Guaranty and with EverLake, the former Allstate Life and Retirement business. And what I think is interesting is by making these vehicles more competitive with our work, they're going to continue to grow. And I think having Resolution now owned by Nippon with their capital and their expertise, this I think will be a very good development in terms of the future. So we view these partnerships and our model is very powerful.

[Jonathan Gray, General Partner, President, COO & Director at Blackstone]

As you're seeing in resolution, we'll return that capital. I think it's a good example of what we're doing. We use capital at the beginning of these partnerships. We did back with Fidelity Guaranty. We ultimately recycle that capital and we continue to stay with these partners long term as they grow their asset bases and we make them more competitive.

[Jonathan Gray, General Partner, President, COO & Director at Blackstone]

And so we think the strategic partnership model is working extremely well. We see a bright future for it. We are really will continue to be the dedicated asset manager for these folks. And as we talked about before, we're not going to do it by taking on insurance liabilities and everything that comes with this. For us, our partners are greatly appreciative of what we're doing and I actually see accelerating growth with our strategic partners given what we're delivering for them and their ambitions.

[Ken Worthington, Financial Analyst at JP Morgan]

Okay, great. Thank you.

[Operator]

We'll take our next question from Steven Chubak with Wolfe Research.

[Steven Chubak, Managing Director at Wolfe Research LLC]

Hi, good morning. So I wanted to

[Steven Chubak, Managing Director at Wolfe Research LLC]

ask a question on BREIT. The second derivative on BREIT gross to net flows appears to be improving. Now that being said, given stickier rates at the long end, just wanted to better understand the catalyst for retail allocations into BREIT to increase from here? What the feedback is getting from retail partners? And how do you see BREIT flows evolving over the medium term relative to history given your outlook?

[Jonathan Gray, General Partner, President, COO & Director at Blackstone]

Look, it's all tied to performance. I think we did an excellent job navigating the difficult period for real estate providing liquidity to customers. We've been providing now full liquidity the last 11 months. We've seen this 97% decline in net redemptions. And I think the key to your question is when does this turn on and become a growth vehicle?

[Jonathan Gray, General Partner, President, COO & Director at Blackstone]

And I would tie it to performance. Once SPREIT starts showing good performance, the customers have had a good experience. And so what they're waiting to see is a few months of positive NAV growth in a meaningful direction. And I think if that happens, then we'll begin to see it. It may take a little bit of time, but we think it will build.

[Jonathan Gray, General Partner, President, COO & Director at Blackstone]

And when you look at what BREIT owns, the fact that it is got this terrific rental housing portfolio where there's a structural shortage in the U. S, it's got a terrific exposure to logistics where of course the movement to e commerce continues and now there's a reshoring underway and then the data centers which have been very important in the last few years in terms of adding value to BREIT, all of that and the geography in the South and Southwest of the United States, all of that gives us confidence. But I think from the investor standpoint, they want to see a steady number of months of solid performance. We believe that as we get rates to settle in here, and we see the continued growth in cash flow, interestingly, BEAT last year was up 4% in same store NOI. As cash flow continues to grow, rate settles out, there's this lack of new supply.

[Jonathan Gray, General Partner, President, COO & Director at Blackstone]

We think BREIT will again at some point here become a growth vehicle. And we've got to remember the customers have had a very good experience here. They have a lot of confidence in Blackstone and Blackstone Real Estate, but I do think you're going to need to see that before you really start to see an acceleration.

[Operator]

Thank you. We'll take our next question from Ben Biddish with Barclays.

[Ben Budish, Vice President at Barclays]

Hi, good morning and thank you for taking the question. I was wondering if you could talk a little bit more about the trajectory there are the potential trajectory for BIP FRPR. I understand you said that I think they should start to pick up in Q2. But as we sort of look back over the last several years, there's been a not insubstantial amount of fundraising quarterly since the beginning of 2022. So just curious if there's anything else you can share in terms of what the shape of FRPR looks like just given the size of that fundraising and the performance?

[Ben Budish, Vice President at Barclays]

And any other nuances we should be aware of around the FRPR margin side? It seemed like they came in maybe a little better than expected, but it has to do perhaps with the timing of BXPE. I'm wondering if we could see something like that next this year in Q4. Yes, thank you very much.

[Jonathan Gray, General Partner, President, COO & Director at Blackstone]

I would just say and then hand it to Michael that the momentum in our VIP, our infrastructure business is extraordinary. When you deliver 17% net in an open ended format where the capital is invested in the ground and you build up the kind of portfolio they have in digital infrastructure, in power and energy and in transportation, you have a lot of happy customers. And so the fundraising momentum there continues to be quite strong exactly as Steve laid out in his remarks. Michael, I'll

[Jonathan Gray, General Partner, President, COO & Director at Blackstone]

hand it to you.

[Michael Chae, Chief Financial Officer at Blackstone]

And then on sort of the sequencing of incentive fees from here. As I mentioned in my remarks, in Q2, we will realize a more modest but a material amount of incentive fees. And so you can expect in the next 4 quarters in 2025, you won't see infrastructure incentive fees and FPRPERS in the 1st and fourth quarter. You'll see a modest amount in the second and third quarter. As we talked about margins on that, we sort of gave this forward look last year that given the development mode we're in on that, the effective FERPA margin for infrastructure would be a bit lower than the overall firm and that was the case obviously on very big dollars.

[Michael Chae, Chief Financial Officer at Blackstone]

So that was a happy event. And I think in terms of looking ahead to Q4 this year versus Q4 this year and what was or wasn't anticipated, not a

[Michael Chae, Chief Financial Officer at Blackstone]

lot of color to add on.

[Ben Budish, Vice President at Barclays]

Understood. Thank you very much.

[Operator]

Thank you. We'll take our next question from Patrick Davitt with Autonomous Research.

[Patrick Davitt, Partner at Autonomous Research]

Hey, good morning, everyone. Thank you.

[Patrick Davitt, Partner at Autonomous Research]

I know there's still a

[Patrick Davitt, Partner at Autonomous Research]

lot of uncertainty on the direction of the new administration's policies, but sure you guys have been running different scenarios internally like others have said they are. So through that lens, curious if you have any initial thoughts on how the in ground portfolio could be impacted either positively or negatively by more significant tariffs or a trade war? And within that theme, more specifically, give us an update on the invested capital exposure to Europe, Asia and then specifically China? Thank you.

[Jonathan Gray, General Partner, President, COO & Director at Blackstone]

So what I'd say at the headline level, Patrick, is we don't have a lot of businesses who export physical goods at scale to the United States. So I think that's obviously the area at most risk. The other thing I would say is, I think we got to wait and see where this settles. Clearly tariffs are going to be higher, but we don't know which countries, which industries and what the level is. And there seems to be a lot of negotiation.

[Jonathan Gray, General Partner, President, COO & Director at Blackstone]

This tariff diplomacy as we saw in Colombia a week ago can move pretty dramatically in a short period of time. So I think we have to wait and watch. The good news overall for us is very few of our businesses are really reliant on exporting goods into the United States, the physical goods. And so we just don't see it either in Europe and Asia having a major impact on our business.

[Michael Chae, Chief Financial Officer at Blackstone]

And then just on the geographic dimension, Patrick, if you step back at the whole firm, so these are sort of gross numbers, but we have heavy concentration as international and global as we are in the U. S. About 3 quarters of our portfolio is in the U. S. And that's a pretty historical level about 15% or so in Europe and then a quite modest single digit amount in Asia.

[Michael Chae, Chief Financial Officer at Blackstone]

So we're a global firm, but the nature of our business is that sort of more, I think, manageable exposure to non U. S. Markets.

[Weston Tucker, Head of Investor Relations & Senior MD at Blackstone]

Thanks, Patrick.

[Operator]

Thank you. We'll take our next question from Kristen Love with Piper Sandler.

[Crispin Love, Director at Piper Sandler Companies]

Thank you and good morning everyone.

[Crispin Love, Director at Piper Sandler Companies]

Can you just discuss your outlook on interest rates? As Steve stated, you are seeing disinflation based on your data, but there are some worries more broadly on inflation just shown by treasury yields recently. Would you expect more rate cuts than currently priced in or perhaps a rally in rates? I'm just curious on how that could impact PE activity real estate performance in 2025 just based on your in house views. Thank you.

[Jonathan Gray, General Partner, President, COO & Director at Blackstone]

Always dangerous to predict interest rates, but what I would say is our confidence comes from our portfolio on the inflation data. So we're obviously a very major owner of rental housing and shelter is the biggest component of CPI. It's 36% today. The Fed's data is 4.6%. We would say what we're seeing is closer to 1% in that area.

[Jonathan Gray, General Partner, President, COO & Director at Blackstone]

And what we've seen steadily is the government data is catching up to what's happening sort of on the ground in the real world. And so if you take a 36% weighting and you slowly bring that down, I think that's going to give the Fed some air cover. The other thing we'd say right now is in the labor market, we survey our CEOs and they would say basically, it's the easiest to hire that it's been since the post COVID period. Wages for hourly workers are at the lowest level of 3.7%. Now it's possible things could change if we get a resurgence in economic activity.

[Jonathan Gray, General Partner, President, COO & Director at Blackstone]

But right now the labor market seems to be in balance and so that should be helpful as well. As to what the Fed is going to do, I think they have the luxury of being patient. I think the fact that the economy is so strong, they want to see what kind of policies are coming from this administration. I think they're going to wait and see. But I do think the inflation data will generally be supportive.

[Jonathan Gray, General Partner, President, COO & Director at Blackstone]

It is showing us inflation continues to come down, although the pace of that disinflation is slower.

[Operator]

Thank you. We will take our final question from Arnaud Gebat with BNP Paribas.

[Arnaud Giblat, Research Analyst at BNP Paribas]

Yes, good morning. Just if you could look at the perpetual products, if we look 5 years out from now and assuming a continued acceleration in flows in these products in the U. S. And in the global private wealth channels, I'm just wondering how we might see your distribution evolve. In other words, how much AUM are you currently set up to distribute today?

[Arnaud Giblat, Research Analyst at BNP Paribas]

And does do you require a lot of investments in distribution over the next 2, 3, 5 years? I'm just wondering about the shape. Thank you.

[Jonathan Gray, General Partner, President, COO & Director at Blackstone]

Well, it's clearly an area where we have a significant amount of optimism. I think you could see this grow quite substantially. The good news is we've made an enormous investment in this area ahead of others. We really started on this We've built these products with track records, which is We've built these products with track records, which is pretty differentiated. We think the opportunity to distribute these more broadly in different formats is going to grow.

[Jonathan Gray, General Partner, President, COO & Director at Blackstone]

And this is really where the power of the Blackstone brand is so important. Sometimes it's hard to quantify when you're doing financial models. But our ability to launch new products, to sell to different distribution partners, the fact that we have a differentiated brand that allows us to sell more, to expand on a capital light basis. All of that is very favorable for our shareholders. We think it's early days in this.

[Jonathan Gray, General Partner, President, COO & Director at Blackstone]

If you think about the big picture, we think there's close to $90,000,000,000,000 of wealth of people who have more than $1,000,000 in savings around the world. And we think it's allocated around 1% to private assets. If you think about our institutional partners, they're 30% allocated. And so we've come out of a difficult period the last 2 or 3 years with this cost of capital shock. People are reemerging, risk appetite is going up, short term rates are going down.

[Jonathan Gray, General Partner, President, COO & Director at Blackstone]

So people are starting to think about moving out of deposits into other assets. And at Blackstone, given the breadth of what we've got and the track record and the investment we've made in people, we think we're really well positioned. So I wouldn't be surprised if this is far larger than it is today 5 years from now.

[Operator]

Thank you. With no additional questions in queue, I'd like to turn the call back over to Mr. Tucker Weston for any additional or closing remarks.

[Weston Tucker, Head of Investor Relations & Senior MD at Blackstone]

Thanks so much for joining us today and look forward to following up after the call.

Participants

Executives

• Weston Tucker, Head of Investor Relations & Senior MD
• Stephen Schwarzman, Chairman, CEO & Co-Founder
• Jonathan Gray, General Partner, President, COO & Director
• Michael Chae, Chief Financial Officer

Analysts

• Dan Fannon, Managing Director - Research Analyst at Jefferies & Company Inc
• Craig Siegenthaler, Managing Director at Bank of America
• Michael Cyprys, Analyst at Morgan Stanley
• Kyle Voigt, Managing Director - Equity Research at Keefe, Bruyette & Woods (KBW)
• William (Bill) katz, Senior Equity Analyst at TD Cowen
• Kaimon Chung, MD - Equity Research at Evercore ISI
• Alex Blostein, Managing Director at Goldman Sachs
• Brian Bedell, Director at Deutsche Bank Securities
• Mike Brown, Managing Director at Wells Fargo Securities
• Brennan Hawken, Senior Analyst - Equity Research at UBS Group
• Ken Worthington, Financial Analyst at JP Morgan
• Steven Chubak, Managing Director at Wolfe Research LLC
• Ben Budish, Vice President at Barclays
• Patrick Davitt, Partner at Autonomous Research
• Crispin Love, Director at Piper Sandler Companies
• Arnaud Giblat, Research Analyst at BNP Paribas