Blackstone Inc.

Good day everyone and welcome to the Blackstone first quarter 2020 investor call. My name is Deborah and I'm your event manager. During the presentation, your lines remain on listen only. If you require assistance at any time, please key star zero on your phone and a coordinator will be happy to assist you. You may also key star one to ask questions throughout the call and we'll queue those up accordingly for the question and answer time. So that's star one for your questions. I'll just advise you all that the conference is being recorded, and now I'll hand over to Weston Tucker, Head of Investor Relations. Thank you, Weston. Please go ahead.

Terrific. Thanks, Debra. And good morning, and welcome to Blackstone's first quarter conference call, which we're hosting remotely given the office closure is still in effect in New York City. Joining today's call are Steve Schwarzman, Chairman and CEO, John Gray, President and Chief Operating Officer, and Michael Che, Chief Financial Officer. Earlier this morning, we issued a press release and slide presentation, which are available on our website. We expect to file our 10-key report early next month. I'd like to remind you that today's call may include forward-looking statements which are uncertain and outside of the firm's control and may differ from actual results materially. We do not undertake any duty to update these statements. For a discussion of some of the risks that could affect results, please see the risk factors section of our 10-K. We'll also refer to non-GAAP measures, and you'll find reconciliations in the press release on the shareholders' page of our website. Also note that nothing on this call constitutes an offer to sell or a solicitation of an offer to purchase an interest in any Blackstone fund. This audio cast is copyrighted material of Blackstone and may not be duplicated without consent. So a quick recap of our results. We reported a gap net loss for the quarter of $2.6 billion. Distributable earnings were $557 million, or $0.46 per common share, and we declared a dividend of $0.39 to be paid to holders of record as of May 4th. With that, I'll turn the call over to Steve.

Good morning and thank you for joining our call. The COVID-19 pandemic has created a truly unprecedented set of challenges for the global economy, markets, and society at large. The human cost of the crisis has been tragic and our deepest sympathies go out to those who've lost loved ones. We'd also like to express our sincere gratitude to all the frontline workers, hospitals, EMS, doctors and nurses, fire, police, municipal workers, and everyone else putting their safety on the line to protect others. I would like to convey support for everyone who has been sheltering in place throughout the world and has experienced the dislocation of relative isolation and its real psychological costs and discomfort. Economically, for the first time in US history, the country has voluntarily shut much of itself down, creating massive unemployment, which you saw with the numbers this morning continuing. This resulted in some of the largest ever declines across almost all asset classes and drove market volatility to an all-time high. The government's quick action in terms of fiscal stimulus and support from the Fed helped stabilize markets. Altogether, Stimulus programs could equate to 20% or more of U.S. GDP and will be critically important in supporting the country as we navigate the path to recovery. At Blackstone, we are hopeful that major advances in vaccine development and mass testing could accelerate a return to work and normal life, but we're also preparing for what may be a long and gradual process. Over the firm's 35-year history, we've successfully managed through multiple periods of severe dislocation and learned a lot in the process. Most importantly, we've seen how our business model has created the advantage of patience during times of crisis. With an asset-light model and third-party capital typically under very long-term contracts, we do not face the same pressures to sell as others do when values are low we saw this play out during the global financial crisis when despite initially significant declines in asset values we were able to hold assets until things ultimately rebounded and normalized our experience with Hilton Worldwide which we purchased in October 2007 ahead of the market crash and it is an excellent illustration. At the worst point in the financial crisis, our $6 billion equity investment was marked down to 31 cents on the dollar. But the firm's staying power allowed us to focus on executing our operating plan. When the world eventually recovered, Hilton generated 10 times that marked down value. with $14 billion of profit for our investors, which may be the largest in private equity history. Michael will tell you more about the recovery in values overall that we experienced. Although the current crisis is much more formidable than the global financial crisis, our firm's operating and financial position is much more formidable today as well. We are exceptionally secure financially, with over $4 billion of cash and liquid investments. We recently completed the major fundraising initiatives we discussed at our 2018 Investor Day, driving fee-earning AUM up 20% year-over-year to record new levels and generating fee-related earnings growth of 25%. We now have $152 billion of dry powder capital, more than anyone in the industry, which uniquely positions us to invest during this period of historic dislocation. Despite the headline gap numbers for the quarter, which were primarily driven by unrealized marks, we generated $557 million of distributable earnings for shareholders in the first quarter, and $2.9 billion over the last 12 months. While we were not immune to the market backdrop in terms of portfolio marks, they are just that, unrealized marks. They reflect a point-in-time valuation and not an estimate of the value we ultimately expect to realize. In real estate, our largest business, which produces over half of the firm's earnings, our performance held up quite well reflecting the superior sector selection of the portfolio, which John Gray talked about on television this morning on CNBC. In BAM, our institutional business largely did its job of protecting capital for investors. Corporate private equity and credit returns were basically in line with the S&P 500 and high-yield indices, respectively. with our public securities and energy holdings negatively impacting both significantly. Our publics have rebounded meaningfully, as you might have expected, since quarter end, although energy, of course, has remained depressed. John and Michael will discuss our portfolio in more detail. At Blackstone, our people have not missed a beat during this period. All of our groups have been working incredibly hard from home. We have a full team in place that is developing return-to-work plans for our various offices. But in the meantime, our technology team has done a remarkable job keeping us all connected despite the physical separation. I've never been more proud of our people and the enormous dedication they are showing to serving our investors and shareholders. I'm also incredibly proud of the important work we're doing to support our communities and frontline workers. We've mobilized the full resources of our firm and our portfolio companies to help in many, many ways, including making an anchor $15 million contribution to the New York State First Responders Fund and other organizations serving first responders and vulnerable populations in New York City. the donation of supplies and housing for medical workers, the rent-free donation of facilities, including our very large NEC Conference Center in Birmingham in the UK to serve as a field hospital, similar to how the Javits Center is being used in New York City, along with many, many other initiatives. I'll leave you with an image of which we're particularly proud of here at Blackstone. One of our portfolio companies, Team Health, which is providing staffing for emergency rooms during this crisis, captured and tweeted a wonderful picture of a husband and wife nurse team tenderly embracing in between treating COVID-affected patients. These images have gone viral on the internet, and I was amazed to see it featured on the NBC nightly news a few nights ago. I think it embodies the spirit of courage and devotion that is helping sustain all of us during these times. Blackstone remains entirely committed to being a force for good in our society. Together, we will face these unprecedented challenges and emerge from this crisis stronger than ever. With that, I'll now Turn things over to John.