Blackstone Inc.

Good day and welcome to the Blackstone second quarter 2020 investor call. My name is Joanne and I'm your event manager. During the presentation your lines will remain on listen only and if you require assistance at any time please key star and zero on your telephone and a coordinator will be happy to assist you. If you wish to ask a question please key star and then one on your telephone. I'd like to advise all parties this conference is being recorded and And now I'd like to hand over to Weston Tucker, Head of Investor Relations. Please proceed.

Great. Thanks, Joanne. And good morning, everyone, and welcome to Blackstone's second quarter conference call. Joining today 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-Q 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 and most recent 10-Q. We'll also refer to non-GAAP measures on this call, 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 quick recap of our results. We reported GAAP net income for the quarter of $1.4 billion. Distributable earnings were $548 million or $0.43 per common share. And we declared a dividend of $0.38 per share to be paid to holders of record as of August 3rd. With that, I'll turn the call over to Steve.

Thanks, Weston, and good morning, and thank you for joining our call. The second quarter, saw an extremely strong rebound in virtually every liquid asset class from their March lows as governments around the world implemented unprecedented fiscal and monetary stimulus to counter the economic impact of the COVID-19 pandemic. In the United States, fiscal support has equaled to approximately 15% of GDP and will likely exceed 20% with the expected passage of a fourth bill by the end of the summer, as we estimated for you on our April earnings call. In addition, the Federal Reserve has increased its balance sheet thus far by $3 trillion, supporting new credit and liquidity facilities with potentially trillions more at their discretion, if needy. The global economy has started to reopen, but as we discussed previously, The road to recovery will be uneven, with divergent trends across regions and sectors. Asia is clearly further along, as is Europe, both of which were impacted by COVID-19 first. In the U.S., the economy was surprisingly strong in terms of employment gains in May and June, with 7.5 million jobs added and a reduction in the unemployment rate from 14.7% to 11.1%. We've learned that people are anxious to reestablish their lives on a personal level and in terms of their work. However, with persistent or accelerating infection levels in many states, we're seeing some reversals of reopening plans, which will likely reduce the pace of future employment gains. While no one knows the exact course of the U.S. economy, it is likely to be slower than anticipated over the next several months as a result. However, once infection levels subside, a stronger economic recovery should occur. On a positive note, a large number of vaccine candidates are in development with several demonstrating strong efficacy in early trials. Some of the vaccines will move into phase three trials soon, which will provide better insights not only into effectiveness, but also any side effects. To the extent side effects are not a significant factor, I would anticipate having a vaccine in large-scale production within a year. Against this backdrop, Blackstone remains the partner of choice in the alternatives world. and an anchor of stability for our investors. Our LPs entrusted us with over $20 billion of inflows in the second quarter, driving AUM to $564 billion. We have a remarkable $156 billion of dry powder, by far the most in the industry, uniquely positioning us to deploy capital. We successfully completed the major fundraising initiatives we discussed at our 2018 Investor Day, and as a result, fee-related earnings grew 28% for the quarter. The valuations of our investments rebounded strongly from the unrealized marks experienced in the first quarter, which, as we said at the time, represented a point-in-time valuation and not the ultimate outcome we expect to achieve. In private equity, credit, and hedge fund solutions, our returns have already retraced much of those declines. In fact, BAM, our hedge fund solution unit, reported its best composite gross return in 20 years. In real estate, where we are the global leader our performance remains highly differentiated, positively so, as our investors have come to expect. In the first half of the year, our opportunistic BREP funds outperformed the public REIT index by 1,100 basis points, a good reason to invest with Blackstone. Our performance and our platform overall continues to benefit from superior sector selection and asset quality, and is not overly concentrated in shopping malls or hotels, like many other real estate funds, which has negatively impacted their performance. In our BREIT vehicle, the largest non-traded REIT, approximately 90% of our real estate investments are in The well-performing asset class is logistics, multifamily housing, and net leased assets, which are performing extremely well relative to other sectors in this environment. Michael will discuss our portfolio and returns in more detail. Throughout this challenging period, our employees have been working remotely and have continued to operate with the same level of quality and intensity. Our culture, where teamwork is paramount, is built on many core principles, including communication. Each of our businesses is fully integrated with a global investment committee that has utilized video conferencing for over 20 years in order to remain connected across all of our offices. This model helped us transition seamlessly to a remote work environment. That said, We believe it is important to be together physically to train new people and reinforce our culture. To that end, our offices in New York and London began a careful and voluntary reopening last week. It's wonderful to see many of our senior people back in the office smiling and not looking like they just came back from a four-month camp out in a national park. In order to work at Blackstone, you must embrace the core values that has distinguished us for 35 years. The firm was built on the idea that by having an inclusive environment and embracing diversity of ideas and perspectives, we can create better outcomes. We have been deeply disturbed by the terrible acts of racial injustice that have been observed in recent months. We believe it is imperative to speak out against discrimination of any type, and we have repeatedly done so. And we are redoubling our efforts, both internally and externally, to support diversity and equality of opportunity. Blackstone remains committed to be a force of positive change in our society. In closing, I'm extremely proud of our Blackstone family and the spirit of perseverance they've shown during these difficult times. We remain alert and hardworking with unwavering dedication to serving our investors. Whatever course the world follows, our firm is exceptionally well positioned to navigate the road ahead. And with that, I'll now turn things over to John.