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5 Charts That Show How Blackstone's Asset Allocation Helps YTD Outperformance

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5 Charts That Show How Blackstone's Asset Allocation Helps YTD Outperformance

So far in 2015, The Blackstone Group L.P. (NYSE: BX) is handily outperforming both the overall financial sector as represented by the Select Sector Financial Slct Str SPDR Fd (NYSE: XLF), and the broader market represented by the SPDR S&P 500 ETF Trust (NYSE: SPY).

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On January 26, Blackstone hit a new 52-week high of $36.48 during intra-day trading.

One of the keys to Blackstone's relative outperformance appears to be that it derives a much higher percentage of its fee income from real estate assets under management (AUM).

XLF - Industry By Percentage

REITs represent just over 13 percent of the XLF, (by far the largest financial sector ETF), a much smaller percentage of total assets than the Blackstone portfolio.

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Blackstone AUM - 9/30/14

Blackstone is the largest publicly traded alternative asset manager with close to $285 billion of assets under management (AUM). Notably, Blackstone has ~$80 billion of global real estate AUM, its largest business segment -- comprising over 28 percent of total AUM.

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2015 YTD Results Comparison

The REIT sector, as represented by the Vanguard REIT Index ETF (NYSE MKT: VNQ) has started off 2015 on fire, up almost 9.5 percent in just over three weeks.

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Blackstone Group is outperforming the overall financial sector XLF returns by over 11 percent, and the broader S&P 500 by over 7.5 percent YTD.

XLF - SPDR Financial Sector Holdings - 9/30/14

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The Top 10 XLF holdings besides conglomerate Berkshire Hathaway, are all banks and insurance companies, and represent almost 50 percent of holdings weighted by market cap.

Blackstone YTD - Business As Usual

The Blackstone real estate mantra is "Buy It, Fix It, Sell It." Here are three recent examples:

Asia Pacific: On January 26, Blackstone announced that it had entered into an agreement to sell part of its Valad portfolio, Gold Fields House in Sydney, Australia, to a major Chinese real estate developer, Dalian Wanda Group, for A$414.7 million ($327 million USD). Valad was acquired by Blackstone in a public to private transaction in 2011 and was Blackstone's first, major real estate investment in Australia.

“Blackstone has built a diverse real estate portfolio in Australia of over A$3.5bn of assets and we are committed to pursuing acquisitions and disposals that benefit our investors and joint venture partners,” according to Chris Heady, Blackstone's Head of Real Estate Asia.

Europe

Earlier this week, Blackstone announced on January 23, that it had acquired three industrial facilities in Germany totaling over 1,700,000 square feet outside of Dusseldorf and Cologne, on behalf of its European logistics operating company, Logicor. The facilities are 100 percent leased to the logistics arm of a leading German department store.

U.S. Portfolio 

On January 21, Blackstone announced that it had purchased 36 properties containing 11,000 garden-style apartment units valued at $1.7 billion on behalf of its Chicago based LivCor portfolio company. About half of the units were reportedly located in California, Washington D.C., and Boston.

Related Link: Blackstone Just Bet On This Red Hot REIT Sector (Hint: It Centers On Apartments)

Bottom Line

Blackstone began assembling its huge real estate portfolio opportunistically after liquidity dried up and prices plunged during the Great Recession.

Investors looking to diversify their financial holdings to include more real estate exposure may want to consider Blackstone as a possible choice.

Income investors may also be attracted by a very competitive dividend, currently yielding just over 4.8 percent. However, investors should also keep in mind that private equity firms manage patient capital, so asset realizations and dividend distributions may vary widely Q/Q.

Posted-In: Chris HeadyREIT Sector ETFs Broad U.S. Equity ETFs Top Stories Trading Ideas ETFs Real Estate Best of Benzinga

 

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