Blackstone Results, Private Equity Close to Returning (BX)

The Blackstone Group, L.P. (NYSE: BX) posted results that show a turn for the better in private equity is either afoot or much closer than before.  It said that its economic net income was a loss of $93 million for the first quarter of 2009, compared with a loss of $827 million in the fourth quarter of 2008 and a loss of $94 million in the first quarter of 2008.  Total segment revenue was $48.0 million, compared with -$621.4 million for the fourth quarter of 2008 and $32.3 million for the first quarter of 2008.

Net “fee related earnings from operations” were $90 million for the first quarter of 2009, up about 32% from the first quarter of 2008.  Its adjusted cash flows from operations were $75 million rather than the -$4 million for the first quarter of 2008.  Management & Advisory fees were $344.6 million, up from $320.8 million in the first quarter of 2008 and down from $389.2 million in the fourth quarter of 2008.

Blackstone’s GAAP net loss attributable to holders was -$232 million, including transaction related charges of $192 million, as compared to a GAAP Net Loss of -$251 million in the first quarter of 2008, which included transaction-related charges of $226 million.

Blackstone also appears to have plenty of cash on the surface with some $776.3 million in available cash, $400.1 million invested in liquid Blackstone Funds and $81.9 million in outstanding borrowings.

Blackstone also declared a quarterly priority distribution of $0.30 per common unit. Public common unit holders will continue to receive a priority distribution ahead of Blackstone personnel and others through 2009, but the private equity operator said that the amount of those distributions in respect of 2009 will be based on the amount of adjusted cash flows from operations generated in 2009 available for distributions and could fall below $1.20.  Futhermore, the group said that no distributions will be paid in respect of the first quarter of 2009 to Blackstone personnel and others with respect to their Blackstone Holdings partnership units.

Blackstone units are up 3.6% at $12.60, and the 52-week trading range is $3.55 to $20.98.  The good news is that it almost looks like a return to normalcy is close.  But there is still this notion that the public price of the units has also recovered more than 200% from the lows.

JON C. OGG