Blackstone Inc. Q4 FY2025 earnings call

Management Statement and Operational Highlights

• Record Year: 2025 was a record year for Blackstone with distributable earnings increasing 20% to $7.1 billion, AUM rising 13% to nearly $1.3 trillion, and inflows totaling $240 billion for the full year.
• Thematic Focus: The firm leaned into thematic areas such as digital infrastructure, private credit, life sciences, India, and Japan. These areas drove significant appreciation in funds.
• IPO and M&A Activity: IPO and M&A activity accelerated, with Medline's $7.2 billion IPO in the fourth quarter being a key example of the firm's ability to generate strong returns on large-scale control deals.
• Fundraising Success: Strong inflows in private wealth (53% YOY growth in 2025 to $43 billion), institutional drawdowns with $5 billion initial close for PE secondaries, and growth in credit and real estate funds contributed to the firm's success.
• Investment Performance: Infrastructure, corporate private equity, BXMA, and credit strategies delivered strong returns. Real estate showed a gradual recovery with positive signs like sharp declines in construction starts and improving logistics demand.

Segment Performance

• Private Wealth: AUM grew 16% year over year to over $300 billion. Q4 total sales exceeded $11 billion, up 50% year over year. BCRED had record gross sales of over $14 billion in 2025. BXP, a private equity flagship, achieved an annualized net return of 17% since inception and has grown to $18 billion in two years. BX Infra (infrastructure strategy) was ~$4 billion one year after launch. BREIT had a net return of 8.1% in 2025, nearly three times the public REIT index.
• Institutional: AUM grew 13% year over year to nearly $1.3 trillion. Inflows reached $71 billion in the fourth quarter (highest in 3.5 years) and $240 billion full year. Fundraising in private wealth increased 53% year over year in 2025 to $43 billion. Infrastructure AUM grew 40% year over year to $77 billion. BXMA (multi-asset investing) had AUM of $96 billion, up 14% year over year, with $6.3 billion of net inflows in 2025.
• Credit: Managed $520 billion of total assets across corporate and real estate credit, up 15% year over year. Inflows exceeded $140 billion in 2025. Non-investment grade private credit strategies had a gross return of 11% for the year, and real estate credit had 17%. Investment-grade private credit AUM was $130 billion, up 30% year over year.
• Real Estate: AUM was $271 billion, up 18% year over year. The firm invested or committed over $50 billion in real estate since the cycle trough two years ago. Real estate values appreciated ~1.5% in 2025, with data centers and logistics showing strength.

Guidance

• 2026 Outlook: Management fees are expected to continue on a strong positive trajectory, driven by growth in private equity, credit, insurance, and multi-asset investing segments. Net realizations are expected to be strong, particularly in drawdown funds. The firm remains confident in the multiyear outlook with structural tailwinds supporting growth.
• Dry Powder: The firm has nearly $200 billion of dry powder to take advantage of future opportunities as the deal cycle accelerates.

Risks

• Market Volatility: Geopolitical uncertainties, tariff issues, and government shutdowns can impact market performance and the firm's results.
• Regulatory Changes: Proposed rules like the DOL's rules facilitating alternatives in 401(k) plans introduce uncertainty, though potential long-term benefits exist if favorable outcomes occur.
• Redemption Risks: Potential redemptions in non-investment grade credit, though portfolio metrics (e.g., high single-digit EBITDA growth for direct lending borrowers) remain healthy.

Question and Answer

Q: On the record IPO pipeline, what sectors and industries will you be leaning into? Will some of that spill over into real estate, or is it too early?

A: Mostly concentrated in the corporate space, broad-based with focus on energy, electricity, and picks and shovels around AI. More US-focused but also activity in India, with real estate activity likely to increase there.

Q: How does the sale of limited partners' cash back at a blended MOIC of two times affect fundraising as LP liquidity profiles rebound?

A: As LPs get capital back and gains, it makes it easier for them to allocate more capital to Blackstone, aiding the flywheel of fundraising.

Q: How are you thinking about other types of M&A besides IPOs?

A: Strategics are becoming more active due to strong stock market performance and more conducive regulatory environment. Expect a mix of IPOs, strategics, and financial buyers in M&A activity.

Q: On the outlook for eCredit flows, how is the reception for the product and approach to marketing in Europe?

A: Reception is positive with $700 million of equity raised in Q4. Marketing in Europe is being approached by addressing the complex regulatory apparatus, with consistent strong performance driving growth.

Q: What's the outlook for performance in multifamily real estate?

A: Multifamily in the US has seen slow growth, but lower new starts (down two-thirds from peak) are supportive of rental values over time. Healthy economy and population growth should create favorable dynamics.