Blackstone’s net income fell during the fourth quarter, and the investing giant’s assets under management came in shy of the $1tn target it expected to reach in 2022 as fundraising weakened in some of its strategies aimed at individual investors.
The New York investment firm reported net income of $557.9m, or 75 cents a share, compared with a profit of $1.4bn, or $1.92 a share, during the same period a year earlier.
A drop in the value of Blackstone’s real estate investments contributed to the profit decline. Valuations fell by 2% and 1.5% from the previous quarter for its two main strategies.
Blackstone’s assets under management rose to $974.7bn, up from $950.9bn in the prior quarter and $880.9bn a year earlier. The firm raised $43.1bn in the quarter and $226bn for the full year.
That wasn’t enough to push Blackstone past its goal set in 2018 of reaching $1tn in assets by 2026, which it had since said it expected to reach in 2022.
Breit, Blackstone’s nontraded real-estate investment trust aimed at individual investors, posted a return of 8.4% in 2022. Yet the vehicle experienced an uptick in requests from investors to sell shares in the fourth quarter. That caused Blackstone to limit redemptions and led to a big drop in its stock. The shares have since recovered much of that ground.
READ Why Blackstone’s BREIT is a cautionary tale for private funds
Breit and Blackstone’s nontraded business-development company, Bcred, have been big drivers of its asset and fee growth in recent quarters as the portfolios of institutions such as pension funds and sovereign wealth funds become saturated with private assets.
On 3 January, Breit struck a deal with UC Investments, the entity that manages the endowment for the University of California system. Under the agreement, UC Investments said it would put $4bn into Breit and hold the shares for six years. Blackstone is contributing $1bn of its own Breit shares to the venture, effectively backstopping UC’s returns until its commitment is exhausted.
On 25 January, UC Investments said it was committing another $500m to Breit under the same terms.
“We’re north of $14bn of liquidity, and that makes us feel pretty good, not only to help meet investor requests but also for potential deployment,” Blackstone president Jonathan Gray told The Wall Street Journal.
Blackstone reported comparable cash flows were up 13% across Breit’s portfolio in 2022, and Gray said the tone of Blackstone’s conversations with financial advisers had improved in recent weeks.
The firm said the value of its corporate private equity portfolio climbed by 3.8% in the quarter. That compares with a gain of more than 7% for the S&P 500.
Blackstone’s private credit portfolio, which is nearly all floating-rate debt, appreciated by 2.4% in the quarter as interest rates rose. Blackstone’s hedge-fund investments climbed by 2.1%.
Distributable earnings, or cash that could be handed back to shareholders, came in at $1.3bn, or $1.07 a share, compared with $2.3bn, or $1.71 a share, a year earlier, as the firm sold off fewer assets.
Earlier this month, Blackstone said it finished raising a $25bn fund dedicated to secondaries, a type of transaction in which the fund buys interests in other private equity funds from existing investors.
Perpetual capital assets under management climbed by 18% to $371bn.
Blackstone in October struck a deal to buy a majority stake in the climate technologies business of Emerson Electric in a deal that valued the unit at $14bn.
Write to Miriam Gottfried at Miriam.Gottfried@wsj.com
This article was published by The Wall Street Journal, a fellow Dow Jones Group brand
Banks should be on alert for Russian oligarchs attempting to circumvent U.S. sanctions by investing in commercial real estate, a U.S. Treasury Department watchdog said.
Wealthy Russians with ties to the Kremlin are likely attempting to evade the economic sanctions placed on them in the U.S. by moving money into the commercial-real-estate sector, where complex financing methods and opaque ownership structures can help bad actors hide funds, the Treasury’s Financial Crimes Enforcement Network, better known as FinCEN, said Wednesday.
FinCEN, which serves dual roles as the U.S.’s financial intelligence unit and anti-money-laundering regulator, is the recipient of the suspicious activity reports that financial institutions are required to file if they suspect a transaction may be illicit in nature. Law-enforcement officials can consult the reports when conducting investigations into financial crimes.
The Biden administration has targeted wealthy Russians as part of its response to President
invasion of Ukraine last year, placing those with close ties to the Russian government on blacklists that are intended to prevent them from accessing the U.S. financial system.
The alert issued by FinCEN on Wednesday is the Treasury’s latest effort to prevent sanctioned Russians from finding ways to evade such financial restrictions. In an 11-page report, FinCEN listed a number of potential red flags and typologies it said banks should be on the lookout for.
“Thanks to international pressure and the economic restrictions that more than 30 countries have imposed on Russia for its brutal war against Ukraine, sanctioned Russian elites are increasingly left with fewer options for moving and hiding their ill-gotten wealth,” FinCEN Acting Director
Himamauli Das
said.
Sanctioned individuals may try to use pooled investment vehicles or offshore funds to avoid due-diligence processes, FinCEN said in its alert. Banks aren’t typically required to verify the identities of individuals who own less than 25% of a fund. Sanctioned individuals could keep lowering their stakes to avoid detection, while still maintaining control of the fund, FinCEN said.
Oligarchs also may use shell companies and multiple layers of legal entities or trusts, or transfer their assets to a family member or business associate to conceal their ownership, the Treasury bureau added.
Sanctioned individuals aren’t just investing in high-end or luxury properties, according to the alert. In some cases, they may seek out more inconspicuous investments that provide stable returns without drawing unwanted attention. Such sanction evasion strategies are just as likely to occur in small to midsize U.S. cities as they are in the largest metropolitan areas, FinCEN said.
FinCEN’s latest alert builds on a similar warning issued last year, in which the watchdog advised banks to pay close attention to transactions involving high-value assets such as artwork, luxury yachts and jewelry.
Federal prosecutors have warned that lawyers, consultants and other service providers who work for sanctioned individuals could run afoul of the law.
An indictment unsealed earlier this week charged a former high-level FBI agent and a former Russian diplomat with sanctions violations in connection with work they did for
Oleg Deripaska,
a raw-materials magnate who was placed on a sanctions blacklist in 2018.
Write to Dylan Tokar at dylan.tokar@wsj.com
Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8
By Robb M. Stewart
OTTAWA–New-house prices in Canada are projected to be muted this year after holding steady in December following three straight months of declines.
Elevated mortgage rates in the country, and the risk of further increases in 2023, coupled with a fall in lumber prices should continue to cool prices for new houses, at least during the first half of the year, Statistics Canada said Monday.
New-home prices rose 7.7% nationally in 2022–with a fall toward the end of the year as a jump in mortgage rates following a string of central bank policy-rate increases curbed demand–cooling from growth of 10.3% in 2021, the data agency said.
Statistics Canada’s new-house price index was unchanged in December from the month before, and was up 3.9% from a year earlier. Prices declined 0.4% from July to December after rising early in the year, the agency said.
A big driver of economic growth in 2021, Canada’s housing market cooled last year as the Bank of Canada drove one of the most aggressive rate-rising campaigns among developed-world central banks in an effort to tackle inflation. The bank raised its main interest rate by 4 percentage points over the course of the year to 4.25%, the highest level in almost 15 years, but has signaled it is at or near the end of its tightening campaign. The bank is set to decide monetary policy on Wednesday, and most economists forecast a further one-quarter percentage point increase.
Last week, the Canadian Real Estate Association said sales of existing homes edged 1.3% higher in December from the previous month, but remained sharply below the level of sales recorded a year earlier, while new listings were down 5.7% for the month. The association projected the number of properties that trade hands in 2023 will slip by 0.5% after a drop of about 25% in 2022, while average prices are expected to fall 5.9% after rising 2.4% last year.
Statistics Canada said lower softwood lumber prices, which were down 57.3% in December from a high in March, and higher mortgage rates are expected to weigh on new home prices this year. However, as mortgage rates stabilize and uncertainty in markets calms, housing demand and prices should edge up in the latter half of 2023. This and other factors, including increased immigration targets for Canada and continued inter-provincial migration, could lead to price increases for new homes, it said.
The new-house price data from Statistics Canada covers single-dwelling, semi-detached and row houses. It doesn’t incorporate prices for newly built condominium units.
Write to Robb M. Stewart at robb.stewart@wsj.com
By Robb M. Stewart
Canada is paving the way to become a launching pad for commercial space flights, with plans by Ottawa to establish regulations aimed at supporting launches by private entities.
The move promises to better position Canada to tap into increase in money that has poured into the space sector in recent years, as a number of countries have increased their level of space activity to join or take on industry titans like the U.S.
The federal government said Friday that while Canada is well positioned to support space launches, the regulatory framework needs to be modernized and a number of measures are planned to support commercial launch activities.
In the interim, the government said it plans to allow commercial space launches in Canada under existing legislation and regulations, on a case-by-case basis. During this period, which is expected to last three years, Transport Canada intends to work with other federal departments and agencies to develop regulatory requirements, safety standards and licensing conditions needed for commercial space launches in the country.
The government said the transportation department also will establish an interdepartmental review process to ensure any launch is considered and approved in a way consistent with domestic legislation, international treaties, and national security and foreign policy interests.
“A long-term Canadian commercial space launch regulatory framework is key to maintaining Canada’s leading role in outer space exploration and development and represents an important evolution in Canada’s space activities,” said Annie Koutrakis, parliamentary secretary to the minister of transport. “Canadian space launch capability will create lasting economic opportunity for the Canadian space sector, encourage innovation and research, and support national security.”
Since the early 1980s, nine Canadian Space Agency astronauts have flown to space 17 times. The government said that in 2020, the Canadian aerospace industry contributed more than $16 billion and close to 207,000 jobs to the country’s economy.
In a report released Friday, McKinsey & Co. said the space sector has experienced massive growth in investment, with public and private markets globally injecting $10 billion in fresh capital into space companies in 2021, compared with $300 million a decade earlier. And while the U.S. remains in the lead for funding, with a civil space budget that represents more than 40% of the worldwide total, many countries are raising their level of space activity and about 70 have established national space agencies, the consulting firm said.
A first attempt to launch satellites from British soil reached space earlier this month, though fell short of reaching its target orbit. In November, India tested its first privately developed rocket with a suborbital launch that was a step forward in its efforts to develop a commercial space industry.
Maritime Launch Services Inc., which is developing a launch site in the eastern province of Nova Scotia that will provide satellite delivery services to clients, welcomed Canada’s support for commercial launch activities.
“With today’s announcement, the global space industry can be confident that commercial launch in Canada is not only here, but it has this government’s support,” Maritime Launch Chief Executive Stephen Matier said.
Write to Robb M. Stewart at robb.stewart@wsj.com
Last Updated: Jan. 21, 2023 at 2:48 p.m. ET
First Published: Jan. 20, 2023 at 9:24 a.m. ET
Even as mortgage rates come off of recent highs, buyer demand remains constrained. And that’s affecting listing and asking-price decisions among sellers, according to a new report.
The report by Redfin RDFN, which tracked home-sale prices for the four weeks ending Jan. 15, found that the median price of a house sold in the U.S. was up 0.9%…
Even as mortgage rates come off of recent highs, buyer demand remains constrained. And that’s affecting listing and asking-price decisions among sellers, according to a new report.
The report by Redfin
RDFN
,
which tracked home-sale prices for the four weeks ending Jan. 15, found that the median price of a house sold in the U.S. was up 0.9% from a year ago, at $350,250.
While home prices on a national level hold steady, property markets in some parts of the country are showing weakness.
Prices of homes sold fell on a year-over-year basis in 18 of the 50 most populous metro areas in the U.S., with San Francisco leading the way. In San Francisco, selling prices were down 10.1% from a year earlier, Redfin said.
That sale-price decline was followed by that of nearby San Jose, Calif., where prices fell by 6.7%. Austin, Texas, saw home-sale prices drop by 5.5%, and Detroit by 4.3%.
Phoenix, a boomtown earlier in the pandemic, saw home-sale prices fall by 3.7%.
The median asking price of newly listed homes in the 50 top U.S. metropolitan areas was $357,200, up 3.9% year over year, the biggest increase in two months, though the median listing price verged on $400,000 last spring.
A drop in mortgage rates has prompted some buyers to rush into the market. The rate on a typical 30-year fixed-rate mortgage fell to 6.15%, Freddie Mac said on Thursday.
Mortgage demand has surged 28%. The Redfin report identified a 25% rise in mortgage applications over the week ending Jan. 13.
But mortgage payments are still high compared with a year ago. The monthly payment for a median-priced home is $2,262, Redfin said. Monthly mortgage payments are up 30% from a year ago.
Got thoughts on the housing market? Write to MarketWatch reporter Aarthi Swaminathan at aarthi@marketwatch.com
By Anthony O. Goriainoff
Gateley (Holdings) PLC said Wednesday that pretax profit rose for the first half of fiscal 2023 as revenue from its consultancy services grew, but flagged a more challenging second half.
The legal and professional services group said for the six months ended Oct. 31 pretax profit was 8 million pounds ($9.8 million) compared with a pretax profit of GBP7.3 million for the first half of fiscal 2022.
Revenue rose to GBP76.1 million from GBP62.3 million in the year-prior period. The company said revenue from consultancy services grew substantially to GBP18.2 million from GBP8.9 million the year before.
The board proposed an interim dividend of 3.3 pence a share, up from 3.0 pence a share in the year-prior.
The company said that although it has started seeing transactional activity levels being slightly reduced from the unprecedented highs of fiscal 2022 and the first half of fiscal 2023, “we are also seeing revenues beginning to pivot towards some of our more counter-cyclical lines.”
“Growing, diversified and resilient business model, combined with a strong first half fiscal 2023 performance, leaves the group well-placed to navigate the more challenging economic environment that is beginning to emerge in the second half of the financial year,” the company said.
Shares at 0805 GMT were up 3 pence, or 1.6%, at 192 pence.
Write to Anthony O. Goriainoff at anthony.orunagoriainoff@dowjones.com
Dear MarketWatch,
I’m from New Jersey. My daughter and I are looking to invest in a multi-family unit for our family. I’m retired and live in a luxury apartment paying $2,000 a month for rent, soon to increase to $2,200.
My daughter is a homeowner and her property currently has $75,000 to $100,000 in equity.
We would like to know if it would make sense for my daughter to sell her home (she would make at least $75,000 at the rates homes are selling in her area), and we move together into a rental home for $3,300 a month, and plan to wait a year for the housing prices to go down before purchasing a multi-family?
Thank you.
Timing the market
‘The Big Move’ is a MarketWatch column looking at the ins and outs of real estate, from navigating the search for a new home to applying for a mortgage.
Do you have a question about buying or selling a home? Do you want to know where your next move should be? Email Aarthi Swaminathan at TheBigMove@marketwatch.com.
Dear Timing,
Given the headwinds in the housing market right now, I’d say, go for it: Sell now, and slowly start looking for a home to buy.
As a buyer, the environment isn’t great. The number of homes for sale is low, as homeowners are locked in to ultra-low mortgage rates. They’re not going to give that up easily, so you have few options. That will also keep prices relatively high in New Jersey.
Plus, mortgage rates are still above 6% still, which means you’re gonna have to budget for higher monthly payments.
Interest rates may fall this year. “I think 2023 will be a year of volatility. The economy is already performing better than many expected, which is giving the Fed less of an incentive to cut rates,” Mohannad Aama, a portfolio manager at Beam Capital, recently told MarketWatch.
But as a seller, this same environment presents a great opportunity.
“We have an extreme lack of inventory that is causing the market to favor sellers at almost every price point,” Melissa Rubenstein, a Realtor for Christie’s Real Estate New Jersey, told MarketWatch.
“‘We have an extreme lack of inventory that is causing the market to favor sellers at almost every price point.’”
But do adjust your expectations. The house may not fetch the price you both have in mind. According to one study by Wharton, some homeowners list their home prices higher than the market rate. As a result, homes stay on the market longer and, as the Wharton report notes, listing a house at above the market rate creates a “psychological dependence on the original purchase price [and] generates an aversion to losses that is 2.5 times larger than the prospect of gains.”
Timing the sale before the spring may work out for you. Spring is generally the start of the home-shopping season.
“I would take advantage of that situation and get the most money possible for your daughter’s home before any rush of inventory in the spring,” Rubenstein added.
So yes, it may make sense to move ASAP on selling the home. But wait before you buy, either for rates or prices to drop, or inventory to rise.
Plus, homeowners are starting to turn to the rental market for cash flow, so you may actually get a discount on rents too, in New Jersey.
But be warned: There are no guarantees when trying to time the market.
By emailing your questions, you agree to having them published anonymously on MarketWatch. By submitting your story to Dow Jones & Company, the publisher of MarketWatch, you understand and agree that we may use your story, or versions of it, in all media and platforms, including via third parties.
By Emon Reiser
Commercial Metals Co. is encountering starkly different markets across the globe for its steel products. The Irving, Texas-based metal manufacturer reports economic tailwinds in North America, while headwinds flare up in Europe. The company discussed macroeconomic factors that could drive demand for steel on its most recent earnings call.
On metals:
“While we anticipate margins over scrap in both North America and Europe to remain elevated in relation to historical levels, they are likely to compress from the first quarter levels.
“As it relates to the infrastructure bill … there has just been a massive increase year over year in infrastructure, preplanning, and then moving into the design phase. And once it’s into the design phase, then of course it moves into active projects and bidding and then orders for steel.
“Beyond the near term, we believe there are structural trends underway that will support strong domestic construction activity. The first, which I’ve already mentioned, is the federal infrastructure package signed into law a year ago. At full run rate, this plan is expected to increase federal funding for core rebar consuming projects such as highways, bridges and related structures by 65% compared to the FAST Act that it replaced.
“We estimate the impact will be a 1.5 million tons of incremental annual rebar demand within a domestic market of roughly 9 million tons, representing an approximately 17% increase in consumption. Spending is expected to ramp up over five years and assuming typical timeframes for project approvals, bidding and awarding, we should begin to see some impact on construction activity in calendar year 2023.
“Another meaningful structural trend is the reshoring of critical industries. We have previously mentioned the massive scale and pace of construction of new semiconductor facilities. Currently, there are at least 11 facilities planned to be constructed with related total investment of over $275 billion. CMC is already shipping to several of these projects, but most are yet to break ground and impact rebar consumption.
“In the case of the war [between Russia and Ukraine], as time has gone on, we’ve seen the supply chain begin to adjust and in particular alloy costs have continued – have started to abate and prices have adjusted downward as we’ve found other sourcing options and as the uncertainty has started to become clearer.
“As a result of the ongoing energy crisis, industrial activity in Central Europe has been in contraction since the summer of 2022. This has impacted demand for merchant bar and some wire rod products. On the other hand, energy prices have moderated somewhat from recent market peaks and the current mild temperatures should also provide some relief.
“Shipments of rebar, merchant bar and wire rod in the first quarter were all well above the long term quarterly average, despite a lackluster demand backdrop [in Europe].”
By Joe Hoppe
Braveheart Investment Group PLC shares fell Tuesday after it said that portfolio company Phasefocus Holdings Ltd.’s 2022 sales were lower than forecast.
Shares at 0816 GMT were down 1.75 pence, or 18% at 7.75 pence.
The London-listed investment company–which holds 44.69% of Phasefocus–said that since its interim results in October, Phasefocus has increased its stock holding of critical components to provide customers with shorter lead times. However, due to the loss of Cytena as lead distributor, sales in 2022 missed forecasts.
Phasefocus is now marketing and selling in the E.U. and U.S. directly and has already developed a promising pipeline of sales, Braveheart said. The company said it remains optimistic about Phasefocus’s future prospects and intends to participate in a proposed further funding round of 300,000 pounds ($365,550).
Braveheart also said that wholly-owned portfolio company Paraytec Ltd.’s clinical study to develop rapid tests continues to recruit participants, running alongside the Sheffield Teaching Hospitals National Health Service Foundation Trust existing drive-through coronavirus test service. However, the program has recently experienced further delays due to a shortage of available NHS staff to collect additional swab specimens for analysis, and initial test results are now expected in February.
“The commercial justification for the second phase, a longitudinal study, will then be determined after consideration of the prevailing coronavirus test market,” Braveheart said.
Write to Joe Hoppe at joseph.hoppe@wsj.com
These money and investing tips give you tools for the stock market's 'January Defect'
Don’t miss these top money and investing features:
Sign up here to get MarketWatch’s best mutual funds and ETF stories emailed to you weekly!
INVESTING NEWS & TRENDS
These top athletes are investing in corn instead of crypto
Joe Burrow, Blake Griffin and other top-flight professional athletes have purchased a corn and soy farm in Iowa. Read More
Earnings season is coming — what to look for
Profit margins play a crucial, but underappreciated, role. Read More
How you can use the stock market’s ‘January Defect’ to your advantage
S&P 500 is in a downtrend, but a test of resistance at 4100 looks possible. Read More
These numbers make Delta Air Lines’ stock the best bet among U.S. carriers for 2023 and 2024
A close look at estimates shows the Atlanta-based carrier is expected to stand out by important measures in 2023 and 2024. Read More
SBF and FTX peddled a crypto fraud that makes scammer Bernie Madoff look like an amateur
Crypto market’s collapse exposes a giant, unregulated casino, hijacked by greed. Read More
FTX says it’s recovered $5 billion in assets as the embattled crypto giant navigates bankruptcy process
Sam Bankman-Fried was arrested last month and is facing criminal fraud charges in the U.S. — SBF was released on a $250 million bail. Read More
18 stock picks in a ‘Goldilocks’ scenario for U.S. consumers
Jefferies analysts expect declining inflation, strong employment and a pile of cash to bode well for the consumer discretionary sector. Read More
Stocks are picking up speed but bulls should watch for danger signs
More 52-week highs than lows for the stock market doesn’t mean the bear market is over. Read More
Most people can’t answer this one life-and-death question
How can you plan for retirement when you don’t have any idea how long it may last? Read More
These 15 Dividend Aristocrat stocks have been the best income builders
Most stocks on a new screen have outperformed the S&P 500 in the long term. Read More
Source link