Blackstone Hints at More After Proclaiming Historic Quarter

Blackstone, the world’s largest alternative asset manager, sees signs of a commercial real estate recovery taking shape. This year, it plans to put its foot on the gas.

During Thursday’s earnings call, Blackstone chair Stephen Schwarzman hailed the company’s last three months as “one of the best quarters in our history” as income, revenue and distributable earnings surged.

“All signs point to further acceleration in 2025,” Schwarzman said, citing multiple company strategies.

Net income for the quarter totaled $1.3 billion, or $0.92 per share, in a 1,120% increase from $109 million a year earlier.

Its real estate segment’s inflows exceeded $8 billion for the quarter and nearly $28 billion for the fiscal year. Highlights of the fourth-quarter inflows included $1.9 billion from a real estate debt strategies fund and $905 million of capital raised through Blackstone Real Estate Income Trust.

There were headwinds, though. The firm’s opportunistic real estate funds declined 5.1 percent in the fourth quarter and 3.7 percent for the full year for the full year, which the company tied to an 80-basis point surge in 10-year Treasury yields and a stronger U.S. dollar.

“The path of travel is clear,” Blackstone president Jon Gray said during the earnings call. “With a growing economy, you need more real estate. Rents — and ultimately values — have to grow.”

Supporting his optimistic outlook are improvements in debt markets. Borrowing costs declined from approximately 9 percent to 6 percent over the past year. CMBS issuance surged nearly threefold in 2024, indicating renewed opportunity in real estate financing.

Notably, construction starts have plummeted across property types. In logistics and apartments, Blackstone’s largest sectors, supply starts dropped by two-thirds from 2022 levels. The decline in development, combined with resilient demand and potential economic acceleration, sets the stage for what Blackstone believes will be a sustained recovery.

The firm poured $25 billion in real estate last year, a 70 percent increase from the previous year. Notable transactions included the $4 billion privatization of grocery-anchored REIT Retail Opportunity Investment Corporation and what the firm described as the largest ever real estate transaction in Japan by a non-Japanese investor, the $2.6 billion acquisition of Tokyo Garden Terrace Kioicho.

BREIT also showed signs of stabilization. After weathering a challenging period, net repurchase requests were down 97 percent from their peak in December. The vehicle has provided full liquidity to investors for the past 11 months and increased profits at existing locations in 2024.

Blackstone expects the real estate recovery to continue gaining momentum, though the company cautioned that significant transaction activity and realizations may not materialize until the second half of 2025.

Gray also brushed off concerns about data centers in light of last weekend’s DeepSeek emergence (“we have a very prudent approach when we think about data centers”) and tariffs (“we don’t have a lot of businesses who export physical goods at scale to the United States”).

“Real estate is a cyclical asset class that has been through a cyclical downturn,” Gray noted. “And we believe Blackstone is the best positioned firm in the world to benefit from the recovery.”

Blackstone’s stock took a dive after the earnings call and was down 2.6 percent on the day to $180.66 as of 2 p.m.