Blackstone Inc. — 2023 Form 10-K Summary
Business context and reporting period
Blackstone filed its annual report for the fiscal year ended December 31, 2023; this is a full-year filing, not a standalone fourth-quarter report. The firm manages alternative investment strategies across real estate, private equity, credit and insurance, and hedge fund solutions. It reported $1.040 trillion of total assets under management (AUM) at year-end.
Key financial metrics
| Metric | FY 2023 | Comparison |
|---|---|---|
| Total GAAP revenue | $8.023 billion | Down 6% from $8.518 billion |
| Management and advisory fees, net | $6.671 billion | Up 6% |
| Income before taxes | $2.958 billion | Down 15% |
| Net income attributable to Blackstone Inc. | $1.391 billion; $1.84 diluted EPS | Down 20%; diluted EPS was $2.36 in 2022 |
| Distributable Earnings (non-GAAP) | $5.061 billion | Down 24% from $6.633 billion |
| Total Segment Distributable Earnings (non-GAAP) | $5.625 billion | Down 25% from $7.456 billion |
| Fee Related Earnings (non-GAAP) | $4.349 billion | Down 1% from $4.413 billion |
| Cash provided by operating activities | $4.057 billion | Down from $6.336 billion |
| Total AUM / fee-earning AUM | $1.040 trillion / $762.6 billion | Up 7% / 6%, respectively |
GAAP investment income was $233 million, compared with $1.233 billion in 2022. Realized performance allocations fell to $2.224 billion from $5.382 billion; unrealized performance allocations remained negative at $1.692 billion, an improvement from a $3.435 billion unrealized loss in 2022. These volatile performance-related items materially affected reported results.
At December 31, 2023, cash and cash equivalents were $2.956 billion. Blackstone also reported $803.9 million in corporate treasury investments and $4.3 billion in other investments, including $4.0 billion of liquid investments. Blackstone had $10.7 billion of senior-note borrowings and no borrowings outstanding on its $4.325 billion revolving credit facility, extended to December 2028. Consolidated loans payable were $11.304 billion, including fund-related borrowings. Cash and cash equivalents plus cash held by funds declined $1.222 billion during the year to $3.272 billion.
The company reported 2023 common-stock dividends of $3.35 per share for the year’s quarters. Its stated policy targets quarterly dividends of approximately 85% of Blackstone Inc.’s share of Distributable Earnings, subject to board discretion, liquidity, legal and other requirements. The company repurchased 3.7 million shares for $351.3 million during 2023; $756.8 million remained under the repurchase authorization at year-end.
Material changes versus the prior comparable period
- Revenue declined as lower realized investment income, particularly in Real Estate, more than offset higher management fees and improved unrealized results.
- Management and advisory fees rose primarily from fee-earning AUM growth in Real Estate and Credit & Insurance. Fee-earning AUM increased by $44.2 billion, including strong inflows in Credit & Insurance.
- Real Estate Segment Distributable Earnings fell 47% to $2.265 billion, primarily due to lower realized performance revenues and lower fee-related performance revenues.
- Private Equity Segment Distributable Earnings increased 2% to $1.773 billion. Credit & Insurance increased 17% to $1.172 billion, while Hedge Fund Solutions increased 3% to $415 million.
- Perpetual Capital AUM increased $25.2 billion to $396.3 billion. However, BREIT repurchase requests and proration contributed to outflows; the filing says requests had decreased 76% by January 2024 from their January 2023 peak.
- Interest expense increased 36% to $432 million. Blackstone amended its revolving credit facility in December 2023, increasing availability and extending maturity.
Outlook, management commentary, risks and contingencies
Management reported that 2023 markets were volatile amid high interest rates, inflation, geopolitical instability and subdued deal activity. It described real estate valuations and realizations as pressured, especially in traditional office and other challenged sectors, while identifying demand and operating strength in areas such as digital infrastructure, logistics and student housing. Management believes lower future supply in some sectors and a possible moderation in cost of capital could support real estate over time, but acknowledged that realizations may remain muted until conditions improve.
Credit results benefited from floating-rate exposure and strong private-credit demand. Management cautioned that sustained high rates could increase borrower defaults, while lower rates or wider credit spreads could make it harder to repeat 2023 performance. Private Equity faced muted realizations and a demanding fundraising environment, including for its flagship corporate private equity fund. Blackstone states that it does not provide quarterly or annual operating guidance.
- Key risks include market and interest-rate volatility, lower investment realizations, fund underperformance, fundraising competition, redemption requests in certain vehicles, subjective valuations, and possible clawback of previously distributed performance allocations.
- Regulatory, litigation, cybersecurity, privacy, AI, tax, climate and ESG matters may increase costs or affect fundraising, investment activity and reputation. The filing describes an SEC request for information about retention of electronic business communications; Blackstone said it is cooperating.
- Blackstone said it was not subject to pending legal proceedings expected to have a material impact on consolidated financial statements, while noting that outcomes are uncertain. It described ongoing Kentucky litigation involving Blackstone Alternative Asset Management and Kentucky Retirement Systems-related matters; Blackstone disputes the claims.
- Potential clawback obligations recorded at year-end were $281.5 million. Blackstone also disclosed that, in the remote scenario all carry-fund investments were worthless, potential clawback could reach $6.4 billion after tax, with Blackstone Holdings potentially liable for $6.0 billion if personnel failed to pay their share.
- Blackstone’s tax receivable agreements require payment of 85% of specified realized tax savings to certain holders. The company estimated future payments of $1.7 billion over 15 years, subject to assumptions including sufficient taxable income.
- Effective January 2024, corporate credit, asset-based finance and insurance were integrated into BXCI; additional segment renaming and reporting changes were scheduled for 2024.
The auditor issued an unqualified opinion on the financial statements and internal control over financial reporting. The audit identified fair valuation of certain underlying investments used to calculate performance allocations as a critical audit matter.
Most important facts for investors to verify
- How much of earnings and cash generation depends on realized performance revenues versus recurring management fees, and how the non-GAAP Distributable Earnings measure reconciles to GAAP results.
- BREIT repurchase levels, proration and net flows, along with liquidity terms in other perpetual-capital products.
- Real estate valuation marks and the timing and value of realizations, particularly in office and other pressured sectors.
- Portfolio-company credit quality, refinancing needs, defaults and the sensitivity of credit performance to interest-rate changes.
- Clawback exposure, the related contingent obligations and the adequacy of liquidity if obligations are triggered.
- Cash available after capital commitments, debt service, tax receivable agreement payments, dividends and repurchases; distinguish Blackstone corporate resources from assets held by consolidated funds.
- Changes to segment reporting and the placement of Harvest and GP Stakes in 2024, for comparability with later filings.