Blackstone sees asset sales delivering more cash

Thu Oct 17, 2013 4:45pm EDT
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By Greg Roumeliotis and Ilaina Jonas

(Reuters) - Blackstone Group LP (BX.N: Quote), the largest publicly listed alternative asset manager, said on Thursday it had nearly $20 billion of its assets in companies that have filed to go public as it seeks to capitalize further on strong capital markets.

Blackstone, which took SeaWorld Entertainment Inc (SEAS.N: Quote) public this year and is preparing to take Hilton Worldwide Holdings Inc public next year, said realizing investments helped it generate 59 percent more cash to pay dividends in the third quarter than a year earlier.

"The pipeline for realizations is really growing. The potential, although nothing is guaranteed, obviously is very high for large amounts of realizations and consequent gains," Blackstone chief executive and co-founder Stephen Schwarzman told analysts on a conference call held to discuss earnings.

Blackstone's headline earnings metric rose 3 percent in the third quarter, edging past analysts' expectations. Blackstone shares rose 0.6 percent in afternoon trading on the New York Stock Exchange. They are up more than 73 percent year-to-date, outperforming a 21 percent rise in the S&P 500 index .INX.

Over the last 12 months, Blackstone's asset sales totaled $26 billion, dwarfing the $8 billion reported over the 12 months preceding that period, Schwarzman said.

More is to come through initial public offerings (IPOs), Blackstone said. At the end of the third quarter, 31 percent of Blackstone's private equity assets and only 1 percent of real estate investment assets were public. But if the companies on file go public at current valuations on paper, private equity assets will be nearly 50 percent public and real estate will be 40 percent public, Blackstone chief financial officer Laurence Tosi said on the call.

Blackstone's real estate business had $1.6 billion of proceeds in the third quarter from asset sales while its private equity arm had $2.5 billion of proceeds.

Among real estate exits in the third quarter was a sale of the majority of a U.S. shopping center portfolio it acquired just last year. Blackstone's almost doubled its $350 million investment there, Schwarzman said.   Continued...