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Blackstone, the largest commercial property owner worldwide, has reported record earnings to investors, having successfully sold off and cashing out of investments at a profit of almost $1 billion.
The “world’s largest alternative asset manager” saw fourth-quarter results rise 3% to $2.24 billion ($1.75 a share). According to CEO Stephen Schwarzman, this is the firm’s most successful period in its forty-year history. Net proceeds from the sales and exit of other investments increased 59% to $957 million, highlighting the record year for Blackstone.
AI boosting Blackstone profits
The company has benefited from its investments into a more advanced AI framework, with its private equity infrastructure business posting an 8.4% return during the fourth-quarter, the strongest performance of its segments. One of Blackstone’s more important holdings is QTS, one of the world’s largest data centre providers, which has been a important driver to the firm’s recent figures.
Aside from QTS, Blackstone has multiple investments in digital infrastructure, an asset class that includes data centres and the power systems that run them. Schwarzman cited that this has “been among the largest drivers of appreciation” in Blackstone’s record assets.
Jon Gray, Blackstone President and Operating Chief, spoke on AI’s importance, saying the “AI revolution is creating generational opportunities to invest private capital at scale, both debt and equity, while creating attractive gains in multiple sectors.” He also added that the deal environment has “reached escape velocity on the back of moderating cost of capital.”
Core-plus real estate’s moderate returns. Alternative investments dominate
Blackstone’s core-plus real estate division, which invests in lower risk properties, saw a 1.5% return, supported by a strong performance from its real estate fund, itself returning 8.1% in 2025. The returns were largely down to a surging demand for data centres. Blackstone did experience a loss in the quarter with its higher-risk, opportunistic real estate strategy posting a small decline of 0.3%.
In the last quarter, Blackstone recorded “continued strength in data centres” which was “partly offset by headwinds in certain areas, like life sciences, office, and UK student housing.” This is according to Blackstone Chief Financial Officer, Michael Chae.
The quarter saw Blackstone raise $71.5 billion from investors, the most in over three-and-a-half years, with $8.3 billion coming from real estate. Investors favoured real estate credit and more reliable core-plus investments. The New York company’s total assets under management hit a record $1.3 trillion in value, equating to a hold of around 50% of private wealth revenue among major investment firms, making Blackstone a dominant player in private wealth.
Deals on the rise
During the last quarter, Blackstone spent $42.2 billion on deals, on top of $138 billion, the highest amount in four years. According to Gray, the real estate market is in the early phase of a recovery. He said: “We said the cycle was bottoming two years ago, but that the recovery would not be a straight line. Since then, US private real estate values have been slowly improving.”
However, Gray said Blackstone’s real estate investments have been “a little bit lumpy” as sellers are “reluctant because people obviously want to see higher prices [and] the sector recover.” Despite this, Gray noted that the firm will not step back on the pursuit of large deals such as those dominating the US data centre sector, and will “continue to invest in AI infrastructure”, citing such investments as important growth areas.
Although real estate values remain low, down 16% since the Federal Reserve introduced higher rates in 2022, Gray believes “real estate has plenty of room to run.”
Blackstone’s investments include $50 billion spent over the last two years. Gray indicated investments have been made to capitalise on “choppy investor sentiment.” With positive signs on the horizon, Gray believes there is a “better year ahead” for Blackstone. There is potential further growth in the construction of logistics and multifamily housing in the US, which had fallen to its lowest value. This which may lead to lower borrowing costs and increased transactions.
With Blackstone’s US portfolio performing well in logistics during the last quarter, the company is poised to perform well as the demand for these commercial infrastructure and property continue to grow.
(Image source: “Commercial Real Estate” by danielfoster437 is licensed under CC BY-NC-SA 2.0.)
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