Blackstone Inc.

the Blackstone fourth quarter and full year 2020 investor call hosted by Weston Tucker, Head of Investor Relations. My name is Lesley and I'm the event manager. During the presentation, your lines will remain on listen only. And if you require assistance at any time, please keep star zero on your telephone and a coordinator will be happy to assist you. You may also, if you wish to ask a question, and it's just star then one on your telephone. And I'd like to advise all parties that the conference is being recorded for replay purposes. And now I'd like to hand you over to your host for today, Weston.

Thanks, Leslie, and good morning and welcome to Blackstone's fourth 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-day report later 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 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 certain 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 in 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 $1.8 billion. Distributable earnings were $1.5 billion, or $1.13 per common share, and we declared a dividend of $0.96 per share to be paid to holders of record as of February 8th. With that, I'll turn the call over to Steve.

Thanks, Weston, and good morning, and thank you for joining our call. Blackstone reported exceptional results for the fourth quarter, including our best quarter for both distributable earnings and fee-related earnings in 35 years. Realizations rose to a record $21 billion as global markets recovered from the trough of the crisis. At the same time, we deployed $25 billion into new investments, also a new record, adding to the foundation of future value. The power of the Blackstone brand has never been stronger. We achieved nearly $100 billion of inflows in 2020, ending the year with industry record AUF of $619 billion. While these results would be remarkable in any environment, they are particularly so in a year where the world faced unprecedented challenges, including the steepest economic downturn in modern history. Our business is built to navigate the difficult periods and to deliver for our investors in good times and bad. Limited partners around the world know that by investing with the best alternative managers, they can generate better returns than by investing in traditional asset classes alone. That's why capital flows have increasingly migrated towards the alternatives asset class and to Blackstone in particular. We believe this trend will continue, particularly in an environment where interest rates are expected to remain historically low. Blackstone is the reference institution in our rapidly growing sector, as is readily acknowledged by third parties. For example, Morgan Stanley published a report entitled 30 for 21, naming Blackstone as one of the best companies in any industry based on its review of business quality and competitive positioning. We continue to take market share, raising well over $200 billion over the past two years, comparable to the fundraising of our next three largest peers combined. We have the most recognized brand of institutions and retail investors, and our unique culture continues to set us apart, characterized by the highest standards of excellence and an unwavering dedication to serving our clients. We have extraordinarily capable people at every level of the firm, as well as the ability to recruit exceptional talent in the occasional circumstance where we look externally for someone to help us build a business. Our investment process is highly differentiated, including a rigorous focus on choosing the best sectors and assets, always with a priority of protecting capital. This is evident in the way we concentrated nearly half of our state portfolio in global logistics and life science offices. in the years ahead of the recent downturn. Our positioning helped drive 1,100 basis points of outperformance for our opportunistic real estate funds last year as compared to the public REIT index. That's 1,100 basis points outperformance. And unlike investing in public stocks, we create value in our investments to our expansive portfolio operations and asset management capabilities. The result is the exceptional long-term investment performance that defines us as a firm, including 15% net returns annually in both corporate private equity and opportunistic real estate for three decades. The power of our brand has been continuously reinforced by our performance through market cycles of the past 35 years. This was particularly true during the global financial crisis, when we extended our leadership position in every area and launched multiple new businesses, setting the stage for the next decade of remarkable growth. Since our IPO, which immediately preceded the financial crisis, We've grown our AUM seven times, launched 34 new strategies, and significantly expanded our business internationally. We are similarly emerging from this most recent downturn with powerful momentum. John will describe the broad range of growth initiatives we have underway across the firm, many of which are in the earliest stages of their advanced potential. As we continue to grow, our capital base is shifting towards perpetual strategies such as real estate core plus, infrastructure, insurance solutions, and private credit. These areas are characterized by large-scale investor allocations, as well as a much larger universe of potential deployment opportunities than where we've focused historically. As the nature of the capital falls, so does our earnings mix to a steadier and more recurring fee-related earnings, which is highly valued by the market. For the full year, FRE reached $1.97 per share, effectively achieving our investor day target of $2 per share, but one year earlier and notwithstanding the pandemic. FRE comprised approximately two-thirds of total earnings in 2020, up from only one-third in 2017. Looking forward, we have great confidence in our continued FRE momentum, which should further support the revaluation of our earnings multiple that has been underway since our corporate conversion. As we move into 2021, all signs pointing with being another strong year for the firm. The pandemic will further impact the economy over the next several months. With the widespread and effective deployment of vaccines, which we anticipate will occur, we expect a robust recovery and global growth later this year. And as the economy accelerates, Blackstone is well positioned to continue strong growth ahead. I couldn't be more proud of our firm's people, our culture, and the prospects for the future for both our limited partners and our fellow shareholders. And with that, I'm very glad to turn it over to John.