Blackstone Inc.

Good day and welcome to the Blackstone third quarter 2023 investor call. Today's call is being recorded. At this time, all participants are in a listen-only mode. If you require operator assistance at any time, please press star zero. If you would like to ask a question, please signal by pressing star one on your telephone keypad. If you're using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment. At this time, I would like to turn the conference over to Weston Tucker, Head of Shareholder Relations. Please go ahead.

Thank you, Katie, 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 in a few weeks. 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 factor section of our 10-K. 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 an interest in any Blackstone fund. This audio cast is copyrighted material of Blackstone and may not be duplicated without consent. On results, we reported gap net income for the quarter of $921 million. Distributable earnings were $1.2 billion, or 94 cents per common share, and we declared a dividend of 80 cents, which will be paid to holders of record as of October 30th. With that, I'll turn the call over to Steve.

Good morning, and thank you for joining our call. Before we begin, wanted to take a moment to acknowledge the recent events in Israel. We were shocked by the horrific terrorist attacks that occurred, which are an affront to our shared human values. We are deeply saddened by the violence and tragic loss of life unfolding in the region. Our thoughts are with the people of Israel, our colleagues there, and all of those enduring pain and hardship throughout the region. Turning to our results, the third quarter of 2023 was a volatile period for global markets, including a dramatic increase in bond yields. Most major equity indices have declined, and the median US stock is negative on a year-to-year basis. Higher interest rates, along with the confluence of other factors, including economic uncertainty, geopolitical turbulence, high fiscal deficits, political dysfunction, and labor unrest have adversely impacted investor sentiment. Today's environment is an extremely challenging one for investors to navigate. Against this backdrop, Blackstone generated distributable earnings of $1.2 billion in the third quarter, which were stable with the second quarter. The environment today is less favorable for realizations, so we've chosen to sell less. But the firm's underlying earnings power continues to build. We remain focused on executing the operating plans for our companies and driving the long-term value of our holdings. Our limited partners continue to benefit from the favorable positioning of our portfolio with resilient fundamentals in the sectors where we focused, which John will discuss further. The result is that nearly all of our flagship strategies outperformed market indices in the third quarter, as they have for nearly 40 years. The firm's global scale gives us deep insights into what's happening in the real economy, which inform how we position the firm and construct our portfolios amid changing conditions. We've been saying consistently that we believe the Fed will keep rates higher for longer, and we didn't share the previous consensus view that they would cut rates by the end of this year. What we are seeing in the data is an economy that's strong today, but decelerating. We also see that significant progress is being made on inflation. perhaps more so than other market participants based on the movement in bond yields recently. In our portfolio, we estimate input costs were largely flat year over year. Wage growth is moderating, and job openings are declining. While it will take time, we believe the collective weight of central bank actions will bring about the intended effect cooling the economy, leading to the conditions for a more accommodative Fed stance and eventual easing of the cost of capital. Meanwhile, Blackstone's unique diversity and breadth, with over 70 distinct investment strategies, position us extremely well to navigate any environment. The balance of our firm allows us to pivot to where we see the greatest opportunities at a given point in a cycle. For example, our credit businesses are thriving today in the context of a very favorable operating environment, given higher base rates along with challenges to traditional lenders. Investment performance has been outstanding, including 14.4% appreciation over the last 12 months in our private credit strategies and 4.6% just in the third quarter. Unsurprisingly, client demand in this area is accelerating across all channels, institutional, insurance, and individuals. In keeping pace with this evolving opportunity, we recently announced the integration of our corporate credit asset-backed finance and insurance groups into a single new unit, BXCI. We expect this integration will create a more seamless experience for clients and borrowers, allowing us to offer a one-stop solution across corporate and asset-based private credit, including both investment grade and non-investment grade. We believe these changes will further accelerate growth. And the BXCI, real estate credit collectively, could grow AUM from approximately $370 billion today to $1 trillion within the next 10 years, given the powerful secular tailwinds and strength of our platform. In addition to credit and insurance, we are seeing compelling near-term dynamics and several other areas where Blackstone has established leading businesses, such as infrastructure, notably including digital infrastructure, energy transition, and life sciences. The private wealth channel also remains a tremendous long-term opportunity for the firm. John will discuss the positive developments in these areas in more detail. Overall, limited partners continue to move away from the traditional 60-40 liquid portfolio. And despite market headwinds, they are allocating more capital to the best alternative managers across more asset classes. Blackstone is extremely well positioned to capture future opportunities for growth in the alternatives area, which remains early in its long-term development. We are the reference institution among global LPs, a position that has been continually reinforced across market cycles of nearly 40 years. We have led the industry's evolution and I expect we will continue to lead it in the future. Last month, we were gratified that S&P Dow Jones chose Blackstone as the first major alternative manager to be included in the S&P 500. the largest benchmark index and the last one the Blackstone was not yet a part of following our conversion to a corporation in 2019. This milestone is a further reflection of the firm's leadership position in our industry and the broader market, as well as our progression as a valuable and widely owned public company. Most importantly, We've continued to generate exceptional long-term results for both our fund investors and our shareholders. This is our mission. It's what drives us forward as a firm. While the market environment will undoubtedly present challenges, we'll also provide opportunities we are well positioned to capitalize upon with over $200 billion of dry powder. These are the times that best highlight the distinctiveness of our firm and the enduring nature of our culture. Everyone at Blackstone is completely focused on delivering for all of our stakeholders. And with that, I'll turn it over to John.