Blackstone Inc.

2020 Investor Call, hosted by Weston Tucker, Head of Investor Relations. My name is Deborah, and I'm your event manager. During the presentation, your lines do remain on listen only. If you require assistance at any time, you can key star zero on your phone, and a coordinator will be happy to assist you. And you can cue to raise your questions, and just keying star one should you wish to raise a question, and you'll still be able to hear the conference as we go through. but star one to queue for questions. I would like to advise all parties the conference is being recorded, and now I'll hand on to Weston. Thank you, Weston. Please go ahead.

Great. Thanks, Deborah. And good morning, and welcome to Blackstone's third 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 next week. 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 10-Q filings. 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 gap net income for the quarter of $1.7 billion. Distributable earnings were $772 million, or $0.63 per common share, and we declared a dividend of $0.54 per share to be paid to holders of record as of November 9th. With that, I'll turn the call over to Steve.

Good morning. Thanks, Weston, and thank all of you for joining our call. Blackstone reported excellent results for the third quarter, with strong growth in distributable earnings and record fee-related earnings. The valuations of our investments continued to rebound sharply. We're experiencing renewed momentum in both capital deployment and realizations. Two weeks ago, we announced the sale of our life science office company, Biomed, which represents one of the most successful investments in the firm's history. And we raised nearly $90 billion over the past 12 months, driving our assets under management to an industry record of $584 billion. Blackstone is the best positioned firm in the world to help our limited partners, whose beneficiaries include millions of public and corporate pensioners, meet their objectives. The investment solutions we offer are more critical today than ever before, as ultra low interest rates have made it an extraordinarily challenging environment for global investors to earn an acceptable return through traditional asset classes alone. At the same time, The pandemic is continuing to create enormous disruption and uncertainty in the global economy and society at large. We're seeing it in the markets today, of course. As history has shown, it is in the difficult periods that distinguish the best asset managers. We saw this during the global financial crisis when the competitive landscape was dramatically altered. Whether it was in credit, hedge funds, or most notably in real estate, many of the largest managers were either put out of business or severely damaged. Blackstone's performance, however, was highly differentiated, and we emerged from the financial crisis even stronger than before. We extended our leadership position in every area, launched multiple new business lines and strategies, and meaningfully deepened our LP relationships. The current dislocation is again highlighting Blackstone's distinctive position. This is particularly true in real estate, where despite concerns over the impact of the pandemic, our funds continue to outperform significantly. That's because we've concentrated actively our portfolio in fast-growing resilient sectors. Logistics, for example, now comprises 36% of our global real estate portfolio, or nearly 90 billion of gross asset value, including debt. As a result, while the public REIT index has declined 18% over the last 12 months, our opportunistic funds have seen positive appreciation of 3.5%. That's 2,150 basis points of outperformance. Our Core Plus funds, including B-REIT, appreciated 4.9% over the same period. So that's almost 2,300 basis points of outperformance. After declining amidst the first quarter market downgrade, B REIT is up nearly 11% over the past two quarters, with strong performance leading it to a reacceleration of demand that I anticipate will continue. Michael Che will discuss our investment performance in more detail. Since founding Blackstone with my partner Pete Peterson in 1985, we have faced many challenging periods. And each one has validated the trust our limited partners place in us and further widened the moat around the firm. This month, we celebrated the firm's 35th anniversary. By delivering strong performance through cycles and by innovating, Blackstone has grown tremendously over the last 35 years, becoming one of the largest 110 public companies in the United States by market cap. We have over 3,000 employees across 24 offices worldwide and have created something truly special in virtually every area of alternatives. Our reputation and brand represent the gold standard in our sector. The foundation of our success is our unique culture. Everyone at Blackstone shares the same core values, including the drive to win, the highest standards of integrity, and an unwavering dedication to serving our investors. It is our culture that has allowed the firm to continue to operate with the same standards of excellence in a remote environment since the start of the pandemic. And the desire to protect and perpetuate our culture that informed our focus on reopening our offices once we were confident it could be done safely. There is no substitute for the benefits of in-person collaboration in our work and in our culture. and we must also train our newest professionals in our values and processes. In this context, we began a careful reopening of our New York headquarters in July and meaningfully expanded that effort in September. We've implemented extensive safety measures, including providing mandatory weekly COVID testing and specialized contact tracing technology on all of our devices. We're performing enhanced cleaning measures across our facilities, and we're providing transportation subsidies to support commuting. While attendance remains entirely voluntary, we're gratified that the majority of our investment professionals have been coming into the office. We take immense pride in being consistently ranked as the best place to work in our industry. And in this extraordinarily challenging environment, we believe we're going as far as any workplace to protect our people and our culture. In closing, despite the substantial difficulties the world is facing, Blackstone will continue to be an anchor of stability for our investors. As always, We are enormously alert to risk and attuned to changing conditions. And we remain totally committed to supporting our employees, portfolio companies, and clients. With that, I'll now turn things over to John.