Blackstone reported $1 trillion in assets under management as of Dec. 31, up 3% from three months earlier and up 7% from a year earlier.
The alternative-investments manager attributed the new record AUM to its credit and insurance business.
"Total inflows reached nearly $150 billion for the full year, the third-best in our history, despite the challenging fundraising environment, highlighting the firm's expansive breadth of strategies," Blackstone CFO Michael Chae said on the firm's Thursday earnings call.
Net inflows for Blackstone's credit and insurance business in the year that ended Dec. 31 were $45.3 billion, compared with $38.3 billion in real estate net inflows, $20.7 billion for private equity and $1.5 billion in net outflows for hedge fund solutions.
Of the credit and insurance inflows, more than $30 billion came from Blackstone's four insurance company partners, Chae said.
"While changing market conditions take time to fully translate to our financial results, the fourth quarter reflected an acceleration in key forward indicators, including both fundraising and deployment," CEO Stephen A. Schwarzman said on the same call. "I believe that we'll look back at 2023 as the cyclical bottom for our firm."
One of the highlights for the firm in 2023 was that Blackstone was one of the first in its sector to be added to the S&P 500 index, Schwarzman said.
"We were pleased that BX shares ranked in the top 20 best-performing out of the 500 stocks in the S&P 500 index last year," Schwarzman said. "Blackstone is now the 55th-largest U.S. public company by market cap, exceeding the market value of all other asset managers."
In real estate, Blackstone President Jonathan D. Gray said on the same earnings call that redemption requests for its private real estate investment trust were down around 50% from the third quarter and 80% from the peak in January 2023.
"Over the past year, it took a little over four months on average [for its private REIT investors] to be substantially redeemed," Gray said. The private REIT, known as BREIT, had a net asset value of $60.7 billion as of Dec. 31.
As for real estate strategies, Gray said it is "a good time to be a commercial mortgage real estate lender because the sentiment is so poor."
Capital has pulled back from real estate, with banks trying to reduce exposure, Gray said. Blackstone has more than $70 billion in real estate debt.
"I think this is an area that can continue … to grow at a pretty good clip because I think you can earn very attractive returns relative to risk," Gray said.
However, on the real estate equity side, near-term performance of its life sciences office and U.S. multifamily holdings is falling due to new supply, "the residual effect of construction undertaken in a low-rate environment," Gray said.
However, in other parts of the credit sector, banks are coming back, Gray acknowledged in response to an analyst's question.
"Although their appetite for bridging things for long periods of time I still think is a little more limited," Gray said. "The good news … is we're seeing a pickup in transaction activity. And so although the supply of capital may be picking up here, I think the demand for that capital will grow."
Blackstone invested $31 billion in the fourth quarter, up 2.5 times from the third quarter, Gray said.
The firm had a limited number of exits for the year, particularly in the first three quarters of 2023. Blackstone had $425 million in realizations in the fourth quarter, up 64% from the third quarter and up 16% from the year-earlier quarter. Blackstone's total net realizations for all of 2023 were $1.3 billion, down 57% from 2022.
"In the fourth quarter, we took advantage of more favorable conditions to execute the sales of public stock across multiple holdings, along with a number of other realizations," Chae said.
However, Gray said he is optimistic about future private equity exits, as private equity realizations were up in 2023; while real estate is in transition, with exits not expected to pick up until the second half of 2024 and into 2025.
"I wouldn't expect a big surge in realizations in real estate in the first half of the year," Gray said. "We would expect as we look out over time it will pick up. It's possible you could do larger transactions with some public companies to get things done."