Blackstone posts 10 percent drop in second-quarter distributable earnings

By Joshua Franklin

NEW YORK (Reuters) - Blackstone Group LP on Thursday reported a 10 percent drop in quarterly distributable earnings, which it uses to pay dividends, as assets sales slowed even as many of its funds appreciated much more than the stock market.

Blackstone, the world's largest manager of assets such as private equity and real estate, said its buyout funds increased in value by 9.5 percent in the second quarter, significantly outperforming the benchmark S&P 500 index's 2.9 percent rise.

Distributable earnings fell to $700.1 million from $781.4 million on a decline in total proceeds from asset sales, which help drive performance fees. Still, Blackstone declared a quarterly dividend of 58 cents per common unit, up from 54 cents a year ago.

Blackstone shares were up 1.1 percent to $36.62 in premarket trading.

Second-quarter economic net income per unit, which reflects the mark-to-market valuation of gains or losses on Blackstone's portfolio, rose 55 percent to 90 cents from 58 cents a year ago. Analysts expected 75 cents, according to Thomson Reuters I/B/E/S.

Blackstone is starting its own direct lending business through GSO Capital Partners, its credit platform, after ending its partnership with debt investment company FS Investment Corp.

The FS Investments tie-up concluded in April, resulting in a one-time hit to Blackstone's assets under management - which totaled $439.4 billion at the end of June, down from $449.6 billion three months earlier.

Overall, the New York-based firm took in $20.1 billion in assets in the three months to the end of June with assets under management up 18 percent year on year.

Chairman and Chief Executive Stephen Schwarzman said the company is heading into another fundraising cycle with its global flagship funds beginning to raise capital in the next several months.

In January, Blackstone agreed to buy a majority stake in the Financial and Risk business of Thomson Reuters Corp, the parent of Reuters News, in a $20 billion deal. Reuters News will remain part of Thomson Reuters.

(Reporting by Joshua Franklin in New York; Editing by Jeffrey Benkoe)