RPT-BREAKINGVIEWS-Blackstone’s message: trust the plan

By Jonathan Guilford

NEW YORK, Jan 29 (Reuters Breakingviews) - Blackstone’s BX.N investors haven’t heard the good news. On Thursday, the titan of private equity, credit and real estate, now managing $1.3 trillion, unveiled surprisingly strong earnings, nearly replicating the pandemic era’s giddy peak. Shares promptly fell 3%. Boss Steve Schwarzman’s empire is doing more deals than ever. The problem is getting nervous onlookers to trust the plan.

Distributable earnings, industry argot for cash available to dole out to shareholders, hit $2.2 billion in the last quarter of 2025, less than 1% below a record set four years earlier. That golden era received a massive boost as Blackstone’s secret weapon, BREIT, began pumping out fees. The unlisted real-estate fund sold to individual investors heralded a new era for so-called alternative assets, which were previously the domain of gigantic institutions. With no set end date, such vehicles could simply gather small-dollar backers and keep printing revenue.

Then came inflation, and the Federal Reserve’s rate-hiking campaign. Real estate slumped and withdrawals from BREIT soared. In private equity, expensive buyout debt and tumbling valuations left dealmakers stuck. Blackstone’s earnings fell 47% to their nadir in 2023.

Schwartzman nonetheless declared that the bottom was in a few months later. That now looks prescient. With interest rates down, asset sales soared to a record $46 billion. Investor inflows and spending on new deals reached their fastest pace in years. Every key metric beat analysts’ expectations.

Moreover, Blackstone has sought to repeat BREIT’s success, launching a clutch of similarly-acronymed retail vehicles – BCRED, BXPE, BXINFRA – across private credit, equity and infrastructure.

And yet its own investors are unmoved. There are reasonable causes for caution. While private equity benefits from lower rates, 26% of Blackstone’s earnings now come from credit, where lower rates mean less yield. Institutional investors might accept that private loans still earn more than liquid ones, but BCRED customers aren't necessarily consoled. Withdrawals from the vehicle have risen notably.

BREIT’s stumble, moreover, is a warning. Ever since the fund’s rough patch, growth in real estate management fees and assets has flatlined. Maybe a revival is coming, as Blackstone promises. If not, it raises the possibility that initial growth for any retail product may never recover if a bad economic cycle exposes possible mismatches between vehicles holding illiquid assets and investors demanding the right to sell.

That’s not to even mention concerns about overheated lending after blow-ups like First Brands or Tricolor. Sure, Schwarzman can point to today’s strong results. The fuller plan, however, is yet to come to fruition.

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CONTEXT NEWS

Private equity, credit and real estate-focused asset manager Blackstone said on January 29 that it generated $2.2 billion in earnings available to be distributed to shareholders, in the fourth quarter of 2025. The figure represents an increase of 19% from the prior three-month period, and is within 1% of the firm’s record final quarter of 2022.

Realizations, a measure of asset sales, marked a new record of $46 billion. The firm deployed $42 billion of capital, its fastest pace of spending since mid-2022. Investor inflows into its funds reached $71 billion, again the highest level for three years.