Blackstone Stock Gains as Investors Shrug Off Real Estate, Earnings Woes

Blackstone reported distributable earnings—profit the firm can return to shareholders—of 96 cents per share, 2 cents below analysts’ forecasts, according to FactSet data. The figure was up from 93 cents a year ago.

Two of Blackstone’s main property businesses, which it calls opportunistic real estate and core-plus real estate, lost 5.3% and 3.1%, respectively, in the past year. The core-plus unit includes BREIT, a large fund that has come under pressure.

A period of elevated borrowing costs in the U.S. has hit the wider real estate market, posing a challenge for the company.

Real estate, the largest slice of Blackstone’s $1.08 trillion of assets, was the only segment where its funds lost ground over the 12 months through the second quarter. The private-equity, credit and insurance, and multi-asset investing segments each rose in that time, according to the company’s report.

Jon Gray, Blackstone’s president and chief operating officer, has said that real estate prices are bottoming out and the market will find relief as investors expect the Federal Reserve to cut interest rates.

Overall net income of $444 million fell from $601 million a year ago. The consensus forecast among Wall Street analysts was for a net profit of $760 million.

The firm’s nearly $40 billion of inflows and $34 billion of capital deployment during the second quarter reflected “the highest level of investment activity in two years,” Chief Executive Officer Stephen Schwarzman said in a statement.

Citi analyst Christopher Allen said in a note to clients on Thursday that while Blackstone’s overall performance was mixed, the outlook appears to be improving given fund-raising and deployment trends.

The

S&P 500

rose 0.3% on Thursday. Blackstone shares are up 7% this year, while the S&P 500 has gained 17%.

Write to Rebecca Ungarino at rebecca.ungarino@barrons.com