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Blackstone Posts Loss as Market Turmoil Hits Private-Equity Portfolio

Blackstone has embraced a thematic approach to investing, aiming to put money to work in fast-growing areas of the economy.
Photo: Andrew Kelly/Reuters

Blackstone Inc.
posted a loss in the second quarter as the value of its private-equity portfolio fell as the broader market tumbled.

The New York firm reported a net loss of $29.4 million, or 4 cents a share, compared with a profit of $1.31 billion, or $1.82, during the same period last year.

Blackstone said the value of its corporate private-equity portfolio fell by 6.7% in the quarter. The decline was smaller than that of the S&P 500, which slumped by 16.5%. Still, it was a far cry from a 13.8% increase a year earlier.

Portfolio valuations fell for most of Blackstone’s other strategies. One exception was the firm’s hedge-fund business, which was in the green for the quarter thanks to bets that benefited from market volatility.

Blackstone’s distributable earnings, or cash that could be handed back to shareholders, came in at $1.99 billion, or $1.49 a share, nearly doubling from $1.07 billion, or 82 cents, a year earlier. The latest total was the second-highest in the firm’s history.

Helping to generate that cash was the May closing of Blackstone’s deal to sell the Cosmopolitan hotel and casino in Las Vegas, which generated $4.1 billion in profit. The firm also recapitalized its European logistics business, known as Mileway, in a $24 billion deal.

Blackstone has embraced a thematic approach to investing, aiming to put money to work in fast-growing areas of the economy.

“It’s a more challenging environment than last year,” Blackstone President

Jonathan Gray
said in an interview. “We saw really strong revenue growth across our private-equity portfolio, and that helped offset very strong increases in costs” due to inflation.

Blackstone’s assets under management rose to $940.8 billion, up from $915.5 billion in the prior quarter and $684 billion a year earlier. The firm raised $88.3 billion in the quarter, pushing it closer to its goal of $1 trillion in assets, which it has said it expects to reach this year.

Blackstone is in the final stages of raising a $30.3 billion real-estate fund, which would be the largest vehicle of its kind, the Journal reported Wednesday.

Perpetual-capital assets under management more than doubled to $355.9 billion, helped by strong inflows into products such as the nontraded real-estate investment trust BREIT and the private-credit fund BCRED, which are aimed at wealthy individuals.

The firm, which has defied a challenging fundraising market, now has a record $170 billion in so-called dry powder, giving it the ability to write big checks if valuations continue to fall.

In the second quarter, Blackstone announced a deal to invest in Advarra Inc., a compliance business for the life-sciences industry. It also signed a deal with the environmental-engineering firm Geosyntec Consultants Inc.

The firm’s real-estate business in April agreed to buy

American Campus Communities Inc.,
a student-housing owner, in a deal valued at $12.8 billion including debt.

Blackstone said it would pay a dividend of $1.27 a share, up from 70 cents a year earlier.

Write to Miriam Gottfried at Miriam.Gottfried@wsj.com

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