The Blackstone Group made a GAAP net loss of USD176m for the third quarter of 2009, compared to a GAAP net loss of USD340m for the third quarter of 2008.
Total segment revenues were USD603.8m, up USD200.2m from USD403.6m for the second quarter of 2009 and up USD833.0m from USD(229.2)m for the third quarter of 2008.
The year-over-year change was driven by net appreciation of the underlying portfolio investments in the corporate private equity and credit and marketable alternatives segments, as well as stabilization in the fair value of the real estate segment’s underlying portfolio investments.
These increases were partially offset by decreased advisory fees earned in the financial advisory segment.
For the nine months ended 30 September 2009, total segment revenues were USD1.1bn up significantly from USD179.3m for the same period in 2008.
Total segment expenses totalled USD325.4m, up from USD230.8m for the second quarter of 2009 and from USD280.0m for the third quarter of 2008. The largest component of segment expenses, total segment compensation and benefits was USD249.9m for the third quarter of 2009, up from USD159.1m for the second quarter of 2009 and from USD197.9m for the third quarter of 2008. The change from 2008 was driven by an increase in carried interest related compensation allocations and accruals in the corporate private equity, credit and marketable alternatives and real estate segments.
The company says most global equity and debt markets continued to move higher in the third quarter of 2009 as investors anticipated a bottoming of the global economy. Emerging markets experienced the greatest increase consistent with generally more favourable economic growth prospects as compared with the US and Europe. Credit markets experienced similar improvement, as credit spreads tightened sharply. Credit delinquencies and charge-offs continue to be weak and unemployment, particularly in the US, remains high.
There has been some improvement in lending markets, with lower borrowing rates and an improved willingness on the part of banks to increase lending. Access to equity capital markets has improved and volumes of both IPOs and secondary equity markets have increased considerably throughout 2009. If these favourable trends are sustained, Blackstone’s funds could participate in an increased number of acquisitions and dispositions.
Commercial real estate trends in the US and Europe continued to worsen in the third quarter of 2009, with lower occupancy and pricing trends. Global hospitality trends also declined, including revenue per available room. Commodities prices were relatively flat during the third quarter although materially higher than one year ago. The dollar continued to weaken against most global currencies, although it rose modestly against the Pound Sterling.
Stephen A. Schwarzman, chairman and chief executive officer, says: “It has been just over a year since the onset of the global financial crisis. Equity and debt markets have continued to heal, many companies have reduced expenses and inventory levels, the cost of borrowing has declined and the availability of credit is slowly increasing. We believe the worst is behind us though a recovery could be gradual and uneven. We see many opportunities to deploy our substantial available capital across each of our asset management businesses with attractive potential risk-return for our fund investors.”
Blackstone has declared a quarterly distribution of USD0.30 per common unit to record holders of common units at the close of business on 30 November 2009. This distribution will be paid on 11 December.
