Blackstone Real Estate Earnings up 15% in First Quarter

Data centers are Blackstone’s new warehouses.

So-called “digital infrastructure” led earnings in the private equity company’s real estate group in the first quarter.

“Just as we recognized the rise of e-commerce nearly 15 years ago and started buying warehouses, we anticipated the paradigm shift around the demand for data centers,” Blackstone chairman Steve Schwarzman said on the company’s first-quarter earnings call Thursday morning.

Blackstone has $50 billion invested in data centers, demand for which Schwarzman said has in the past been driven by content creation and cloud adoption and now is being accelerated by the revolution in artificial intelligence.

Earnings in the real estate segment were about $616 million for the first quarter, up 15 percent from the first quarter of 2023. Over the previous 12 months, however, earnings were down 34 percent to $2.3 billion.

Company president Jon Gray said Blackstone is starting to deploy cash into real estate despite persistent reports of distress.

“There will still be plenty of challenging headlines from assets that were financed in a different environment as they work their way through the system,” he said. “It’s almost as if something happened to a ship at sea and then it comes ashore.”

Blackstone recently announced a $10 billion deal to acquire the apartment landlord AIR Communities.

Gray noted that new supply is trailing off, which means less future competition for owners of real estate assets. From their peaks, new starts are down 80 percent in logistics and 50 percent in multifamily, he pointed out.

“I would think about this period of time as a time of seed planting, that you want to be investing into this dislocation because there’s a lot of uncertainty,” he said. “There may be forced selling; there may be public companies trading at discounts.”