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DATE

Thursday, April 23, 2026 at 9 a.m. ET

CALL PARTICIPANTS

  • Chairman & Chief Executive Officer — Stephen Allen Schwarzman
  • President & Chief Operating Officer — Jonathan D. Gray
  • Chief Financial Officer — Michael S. Chae
  • Head of Shareholder Relations — Weston M. Tucker

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TAKEAWAYS

  • GAAP Net Income -- $13 billion for the quarter, as directly reported at the outset of the call.
  • Distributable Earnings -- $1.8 billion, a 25% increase year over year, equating to $1.36 per common share.
  • Dividend -- $1.16 per share declared, payable to holders of record as of May 4, 2026.
  • Total Inflows -- $69 billion for the quarter, with nearly $250 billion collected over the last twelve months across fundraising channels.
  • Total Assets Under Management (AUM) -- Exceeded $1.3 trillion, representing 12% growth year over year, reaching a new all-time high.
  • Flagship Strategy Appreciation -- Nearly all flagship strategies achieved positive returns in the quarter despite declines in major equity and credit indices, led by infrastructure.
  • Fee-Related Earnings (FRE) -- $1.5 billion for the quarter, up 23% year over year, or $1.26 per share.
  • Fee Revenues -- Increased 20% year over year to $2.6 billion, driven by growth in both management and performance fees.
  • Total Management Fees -- Record $2.1 billion in the quarter, up 13% year over year, with private equity, credit & insurance, and BXMA segments contributing double-digit base management fee growth.
  • Transaction and Advisory Fees -- Nearly doubled year over year to $212 million, marking a record for Blackstone's capital markets business.
  • Fee-Related Performance Revenues -- $488 million, up 66% year over year, boosted by strong results from BREIT and BXPE.
  • Net Realizations -- $448 million for the quarter, marking a 26% increase year over year.
  • Gross Performance Revenues -- $780 million, up 70% year over year, delivering the highest result for a calendar Q1 in four years.
  • Infrastructure AUM -- $84 billion, up 41% year over year, with the BIP strategy achieving 19% net returns annually since inception.
  • BXMA AUM -- Surpassed $100 billion, rising 15% year over year, with its flagship strategy posting a positive return for the twenty-fourth consecutive quarter.
  • Life Sciences Flagship, BXLS VI -- Raised $6.3 billion, setting an industry record and nearly 40% larger than the prior vintage.
  • Asia Private Equity Flagship -- Raised nearly $12 billion, nearing its $13 billion hard cap and double the size of the predecessor fund.
  • Secondaries Platform -- Raised $6 billion for its latest private equity flagship, totaling $11 billion to date and surpassing $100 billion in AUM.
  • Opportunistic Credit Fund, OSP V -- Final close with over $10 billion of investable capital, described as "meaningfully oversubscribed."
  • Credit & Insurance AUM -- $536 billion, up 15% year over year, with $40 billion of inflows in the quarter.
  • Investment-Grade Private Credit Platform -- $130 billion in AUM, reflecting 23% growth year over year.
  • Insurance Channel AUM -- $280 billion, up 18% year over year.
  • BCRED Gross Sales and Net Flows -- BCRED posted $1.9 billion in gross sales but net outflows of $1.4 billion, as repurchases increased in the quarter.
  • BXP Fundraising and Performance -- Raised $2.5 billion and delivered an 18% annualized net return, helping lift NAV to $21 billion within nine quarters.
  • BREIT Fundraising and Flows -- $1.2 billion raised, up 44% year over year, with repurchases down 41%, resulting in positive net inflows for two consecutive months.
  • BREIT Returns -- Achieved a 9.3% net return in its largest share class since inception, 60% above the public REIT index.
  • Net Accrued Performance Revenue -- Rose 9% year over year to $7 billion, or $5.69 per share, marking the highest level in three and a half years.
  • Performance-Revenue-Eligible AUM -- Hit a record $635 billion, up 9% year over year.
  • Infrastructure Fund Q1 Performance -- 7.8% appreciation for the quarter, totaling 25% over the past twelve months.
  • Corporate Private Equity Funds Returns -- 3.2% appreciation for the quarter, and 16% for the trailing twelve months.
  • Non-investment-grade Private Credit Strategy -- Reported a gross return of 0.6% in the quarter, and 9% for the last twelve months.
  • Real Estate Credit -- Non-investment-grade funds appreciated 2.3% in the quarter and over 14% in the trailing twelve months.
  • BXMA Q1 Returns -- Gross return of 1.7% for flagship Absolute Return Composite and over 12% for the last twelve months.
  • BREP Core+ Funds -- Appreciated 0.8% during the quarter, with BREIT cited for strong positive performance.

SUMMARY

Blackstone (BX 6.27%) executives highlighted a record level of total AUM, strengthened by $69 billion in inflows and over $13 billion in reported GAAP net income for the quarter. The firm cited broad momentum across flagship strategies, with infrastructure, data centers, and private credit outperforming despite adverse macro environments. Management described noteworthy investor demand for new cycles of flagship funds in life sciences, Asia private equity, and secondaries, showcasing a diversified fundraising engine and significant scaling of investment platforms. Executives further detailed strategic positioning around AI infrastructure, asset-based credit, and an expanding insurance channel, while reiterating a capital-light, all-weather business model. Leadership noted that portfolio rebalancing favors hard assets and that durable regulatory and distribution innovation, including potential 401(k) inclusion, are strategic tailwinds for future growth.

  • Executives attributed strong IPO pipeline expectations to "diversity of our firm and really our strong presence in the physical world and, frankly, around AI infrastructure."
  • Jonathan D. Gray noted, "Our biggest exposure would be in software, and that is less than 7%, so pretty small as a percentage of the firm’s AUM."
  • Private wealth AUM grew 14% year over year, with ongoing investments to expand FTE to 450 and increased global market penetration in underpenetrated regions such as Canada and Japan.
  • Significant dry powder in credit & insurance, at $74 billion, was described by Michael S. Chae as mostly earning fees upon investment and being a meaningful contributor to future management fees over time.
  • In the retail wealth segment, Jonathan D. Gray reported that large investors accounted for the majority of redemption activity in BCRED and BREIT, stating, "Contrary to this popular idea that it is small investors leading the charge, it is actually a smaller number of large investors."
  • Management outlined direct engagement with CoreBridge post-merger, reaffirming the contractual right to manage $92.5 billion of assets as long as performance targets are met, and positioning for potential expansion with Equitable.
  • The firm stated that its capital-light model "gives us the greatest flexibility. Operating a business with virtually no net debt and no insurance liabilities means that if we need to use capital to do something at the firm level, it is available."
  • Jonathan D. Gray discussed discipline regarding deploying new capital in sectors impacted by AI, noting increased focus and portfolio re-underwriting where necessary and that "biggest investments we made in the quarter were a Spanish waste company, another data center company, a residential services business, and another business in the energy electrical equipment space."

INDUSTRY GLOSSARY

  • BREIT: Blackstone Real Estate Income Trust, a non-traded REIT focused on income-producing real estate assets.
  • BXP: Blackstone Private Equity perpetual vehicle, providing access to private equity investments for wealth clients.
  • BCRED: Blackstone Private Credit Fund, providing access to private credit strategies and direct lending.
  • BIP: Blackstone Infrastructure Partners, the dedicated infrastructure investment strategy targeting institutional capital.
  • BXMA: Blackstone Multi-Asset Investing platform, managing commingled and customized hedge fund solutions and multi-asset class strategies.
  • FRE: Fee-Related Earnings; recurring earnings generated from management and advisory fees, excluding performance-based components.
  • OSP V: Blackstone's fifth Opportunistic Credit Fund for institutions, specializing in higher-return, flexible credit investments.
  • BXLS VI: Sixth flagship fund in Blackstone's life sciences platform, focused on biopharma and medical technology investments.
  • BREP: Blackstone Real Estate Partners, a series of global real estate opportunistic funds.

Full Conference Call Transcript

Quickly on results, we reported GAAP net income for the quarter of $13 billion. Distributable earnings were $1.8 billion, or $1.36 per common share, and we declared a dividend of $1.16 per share which will be paid to holders of record as of May 4, 2026. With that, I will turn the call over to Steve.

Stephen Allen Schwarzman: Good morning, and thank you for joining our call. Blackstone Inc. reported outstanding results in the first quarter. Distributable earnings increased 25% year over year to $1.8 billion, as Weston mentioned, underpinned by 23% growth in fee-related earnings and a 26% increase in net realizations. Inflows reached $69 billion in the first quarter and nearly $250 billion over the last twelve months, reflecting broad-based strength across our fundraising channels. Total assets under management grew 12% year over year to a new record level of more than $1.3 trillion. Most importantly, nearly all of our flagship strategies reported positive appreciation in the quarter compared to declines in major equity and credit indices, led by exceptional strength in infrastructure.

We achieved these results amid a volatile market backdrop which was impacted by geopolitical turbulence including the war in Iran, and AI disruption fears. We have also been navigating an intensely negative campaign against the private credit sector despite the strong long-term returns generated in this area, resilient fund structures, and continued healthy demand from institutional investors and insurance companies.

First, with respect to the market backdrop, since 2020 alone, we have experienced five market-moving events around this same time of year: the COVID shutdown in 2020; the Ukraine invasion in 2022; the regional banking crisis in 2023; the tariff announcements in 2025; and now the conflict in the Middle East, which triggered the largest quarterly increase in oil prices in over thirty-five years. In each of these prior events, having patience was the key. When the world ultimately normalized, risk appetite returned and investors refocused on fundamentals. To that end, what we see through the lens of our extensive global portfolio is an economy that has been highly resilient through the macro shocks of the past several years.

The AI revolution—an extraordinary level of investment taking place in data centers, equipment, chips, energy infrastructure, and other related areas—continues to power economic growth, and we see no signs of that engine slowing down. At Blackstone Inc., we began thinking about the transformative potential of AI many years ago. I personally became active in the field in 2015, spending time with key industry figures that would define the AI revolution. Today, we believe Blackstone Inc. has become the largest investor in AI-related infrastructure in the world, and we have a front-row seat to the remarkable advancements underway in this ecosystem. In 2021, well before ChatGPT arrived, we privatized QTS, which would become the cornerstone of our data center strategy.

Our total portfolio now consists of over $150 billion of data centers globally, including facilities under construction, and it continues to grow rapidly, with an additional $160 billion in prospective pipeline development. In addition to developing data centers, two weeks ago, we filed to launch a new public company that will acquire stabilized, newly constructed data centers leveraging our deep expertise in this area. We have also become one of the largest investors in the modernization and growth of the U.S. electric grid, given the rising demand for energy, including to power data centers. Specifically, we are the most active private investor in the utility sector over the past several years.

Our portfolio also includes the longest cross-country network of natural gas pipelines in the U.S., with this resource expected to account for approximately half of data center power generation within the next five years. Additionally, we are major providers of private credit to energy companies. Alongside our expansive platforms in digital and energy infrastructure, we have also invested in several of the leading innovators driving the AI revolution itself, such as Anthropic and OpenAI, primarily through our wealth platform. In addition to these winning areas, we expect AI to catalyze new opportunities across other Blackstone Inc. business lines such as life sciences, where we believe AI will accelerate advancements in biomedical research.

At the same time, the firm has significant exposure to physical assets which we believe are well insulated from disruption and benefit from their own positive tailwinds, including logistics, residential real estate, transportation and communications infrastructure, and many forms of asset-based credit. We also own fast-growing franchise businesses that are effectively royalty streams on physical assets, alongside a significant portfolio in the health care and industrial sectors. Overall, we believe Blackstone Inc. is extraordinarily well positioned for an AI-enabled future. Of course, some sectors and companies will see disruption. Software in particular has come into focus as an at-risk area and we expect the range of outcomes here.

The sector will have to adapt to AI, and there will be winners and losers, with mission-critical platforms likely to be more resilient. As technology moats narrow, advantages will increasingly come from proprietary data, deep workflow knowledge, customer trust, being embedded in systems of record, and the speed and strength of execution. At Blackstone Inc., we will continue to drive preparations in our own portfolio to help our companies address and incorporate these innovations. Turning to private credit, where it is worthwhile to separate fact from fiction. External assertions have ranged from the sector posing systemic risk to the prospect of significant losses of investor capital.

These assertions and their dissemination have negatively impacted capital flows in the wealth channel to private credit strategies including to our flagship vehicle in the space, BCRED. Despite the external noise, our institutional and insurance clients—representing 75% of our credit platform AUM—have continued to commit large-scale capital to the asset class. Of note, BDCs and credit interval funds with redemption features represent less than 10% of the U.S. non-investment-grade credit markets. Meanwhile, the Treasury Secretary, leaders of the Federal Reserve and the SEC, and the heads of numerous financial institutions have now acknowledged they do not see systemic risk from private credit.

The key question is whether private credit is a good product for investors and can it continue to deliver premium to liquid credit over time. At Blackstone Inc., we have generated 9.4% net returns annually in our non-investment-grade private credit strategies since inception nearly twenty years ago—roughly double the return of the leveraged loan market. This track record crosses market and economic cycles, periods of high and low interest rates, and multiple credit default cycles. We believe we are moving toward a period of lower base rates once we work through the impact of the Iran war. And we also expect defaults to move higher from historic lows, as we have stated previously.

But we have designed our funds with these cycles in mind, with low fund leverage, high current income generation, and the equivalent of meaningful reserves for future potential losses. We remain highly confident in our ability to continue to achieve a premium return to liquid markets over time. Meanwhile, our overall credit platform is expanding significantly, including to the investment-grade private credit area which Jonathan will discuss further. Performance and innovation have been the foundation of the outstanding results we have achieved in credit. As with every business at Blackstone Inc., we believe they will continue to drive our growth in credit going forward. In closing, the firm remains laser focused on delivering for our investors in these dynamic markets.

We have established leading businesses across virtually every part of the alternatives industry, with over 90 distinct investment strategies providing a unique platform for future growth and profitability. Our people are more innovative than ever, and we are relentlessly pursuing new markets and asset classes. We remain steadfast in our mission to be the best in the world at whatever we do, and we have no intention of slowing down. I will now turn the call over to Jonathan.

Jonathan D. Gray: Thank you, Steve, and good morning, everyone. The outstanding results we achieved in difficult markets are a testament to the breadth of our platform and the power of our brand. Blackstone Inc. is an all-weather firm. Meanwhile, multiple pillars of strength are driving us forward. Our institutional business is thriving, our credit platform is expanding despite the market noise, and our private wealth business continues to shine. Starting with our institutional business, which remains the bedrock of our firm, AUM in this channel is now approximately $715 billion, up more than 50% in the last five years, and we are seeing powerful momentum today across numerous areas.

Our dedicated infrastructure platform grew 41% year over year to $84 billion, underpinned by exceptional investment performance. The commingled BIP strategy has generated 19% net returns annually since inception seven years ago versus our original target of 10% to 12%. Data centers and energy infrastructure continue to be the largest drivers of gains in this area, as well as for the firm overall. As the AI revolution accelerates, we see a profound shift underway toward hard assets, and having one of the largest infrastructure platforms alongside the largest real estate business in the world should be quite favorable for our investors.

Sticking with our open-ended strategies, our multi-asset investing segment, BXMA, crossed the $100 billion milestone in the first quarter, up 15% year over year—its fastest organic growth in nearly twelve years. BXMA delivered its twenty-fourth consecutive quarter of positive returns in its largest strategy in Q1, despite the market downdraft. In our institutional drawdown area, we are raising a new cycle of funds across a number of highly successful and differentiated strategies, most of which we expect to be significantly larger than predecessor vintages.

In life sciences, our new flagship, BXLS VI, hit its hard cap in the first quarter, raising $6.3 billion—an industry record and nearly 40% larger than the prior vintage—on the back of 18% net annual returns in the prior funds since inception. The diversity of the sources of capital was remarkable, including from pensions, sovereign wealth funds, foundations and endowments, family offices, insurance clients, and the wealth channel, and 50% of total capital came from outside the United States. This outcome exemplifies the breadth and power of the firm’s fundraising engine.

In corporate private equity, we have raised nearly $12 billion to date for our new Asia flagship, including April closings, and we are approaching its $13 billion hard cap, compared to approximately $6 billion for the previous vintage. In secondaries, we raised an additional $6 billion in the first quarter for our latest private equity flagship, bringing it to $11 billion to date—halfway to our target of at least the size of its $22 billion predecessor. The secondaries platform, like BXMA, crossed over the $100 billion milestone in the first quarter. Post quarter-end, we closed an initial $1.7 billion for our fifth private equity energy transition flagship, which we expect to be substantially larger than the prior $5.6 billion vintage.

Finally, in credit, we held a final close for our latest opportunistic fund, OSP V, in the first quarter, which hit its cap and was meaningfully oversubscribed, reaching over $10 billion of investable capital—one of the largest institutional credit fundraises in our history. This success in fundraising is in sharp contrast to what one reads regularly in the press about weak institutional demand for private market strategies. Again, what matters is performance. Our opportunistic credit strategy has achieved 13% net returns annually since inception nearly twenty years ago.

Stepping back for a moment on our credit business, which continues to deliver strong results amid the noise, we now manage $536 billion of total assets across corporate and real estate credit, up 15% year over year, including $40 billion of inflows in the first quarter. The BXC&I segment specifically grew 18% year over year, and Q1 represented one of our best quarters of fundraising from institutions and insurance clients on record. The foundation of our growth in credit is innovation, which is powering our expansion beyond non-investment-grade strategies to many forms of investment-grade private credit. In Q1, our investment-grade private credit platform grew 23% year over year to approximately $130 billion.

We are becoming a key capital provider for the real economy, including infrastructure, residential and consumer finance, commercial finance, and aircraft leasing. The opportunity here is enormous. The need for capital to build out AI infrastructure exceeds the capacity of public markets. For our investors, our direct-to-borrower model is designed to produce a durable premium to comparably rated liquid credits by eliminating distribution costs while delivering borrowers greater certainty. Our model generated nearly 180 basis points of excess spread on credits we placed or originated over the last twelve months for our private investment-grade-focused limited partners.

In the insurance channel overall, our open-architecture, multi-client approach continues to resonate, with AUM growing 18% year over year to $280 billion—up fourfold in the past five years. In our non-investment-grade strategies, we continue to see strong demand, as I mentioned, underpinned by our institutional clients. That said, we have seen demand slow in the individual investor channel, as Steve noted, specifically for BCRED. In Q1, BCRED’s gross sales were $1.9 billion, a solid but decelerating number, while repurchases increased, resulting in net outflows for BCRED of $1.4 billion in the quarter. As we saw with BREIT, however, we believe what ultimately matters is long-term performance and delivering a premium to liquid markets.

BCRED has generated 9.4% net returns annually since inception over five years ago in its largest share class—nearly 60% higher than the leveraged loan index—through periods of both high and low interest rates. On a year-to-date basis, BCRED protected investor capital against the backdrop of widening spreads and declines in the public credit indices. It did so despite taking significant loss reserves. The portfolio now carries a weighted average mark of 96.4, including the bottom 5% of loans at less than $0.70. Meanwhile, BCRED’s borrowers reported low double-digit EBITDA growth for the most recent twelve-month period, while interest coverage has improved by approximately 40% over the past two years to 2.2x as rates have declined and earnings have grown.

Overall, our private wealth platform continued to shine in Q1. Our AUM in the channel increased 14% year over year to $310 billion and is up nearly threefold in the past five years, powered by our performance and brand. As one illustration of our differentiation in this channel, in a recent survey of financial advisers by Bank of America’s equity research team, Blackstone Inc. ranked number one in terms of brand quality for the fourth time in a row, with a score that was four times higher than our nearest competitor. Our total sales in private wealth were $10 billion in Q1, including $7 billion for the perpetual strategies.

BXP led the way with $2.5 billion raised and has achieved a remarkable 18% annualized net return in its largest share class, lifting NAV to $21 billion in only nine quarters. Our infrastructure vehicle in private wealth, BX Infra, saw its best quarter of fundraising since launch at approximately $900 million, bringing NAV to nearly $5 billion in just five quarters. BREIT, our largest private wealth vehicle by NAV, raised $1.2 billion in the quarter, up 44% year over year to the highest level in three years. Meanwhile, repurchases fell 41% over the same period, leading to positive net inflows for each of the past two months.

BREIT has generated a 9.3% net return for its largest share class since inception over nine years ago—60% above the public REIT index—including positive returns each of the past fifteen months. The vehicle’s portfolio positioning, including significant exposure to data centers—now at 23%—has enabled BREIT to navigate an extremely challenging period for real estate markets and deliver a highly differentiated experience for investors. Looking forward, we remain very optimistic about our prospects in the vast and underpenetrated private wealth channel. Our innovation is accelerating, and we have a multitude of products in the pipeline, including a new perpetual multi-strategy product targeting more liquid exposures called DXHF.

This vehicle will leverage the capabilities of the BXMA business and is another important building block alongside our flagship private wealth vehicles in real estate, private equity, credit, and infrastructure, enabling us to offer the full spectrum of these asset classes to individual investors. We plan to bring a number of multi-asset strategies to market over time, including through our strategic alliance with Wellington and Vanguard. Meanwhile, we are seeing positive developments in the defined contribution channel, with the regulatory rulemaking process well underway. Overall, there is huge runway before us in private wealth. In closing, as we demonstrated again in Q1, this firm is built to deliver for investors through good times and challenging ones.

We believe we remain tremendously well positioned to navigate the road ahead, whatever it may bring. And with that, I will turn things over to Michael.

Michael S. Chae: Thanks, Jonathan, and good morning, everyone. In the first quarter, the firm delivered 20% plus year-over-year growth across fee revenues, fee-related earnings, net realizations, and distributable earnings, while at the same time, our funds reported resilient investment performance—all against a backdrop of significant turbulence in the external environment. This broad-based strength highlights the exceptional balance and durability of our business. Starting with results, fee-related earnings grew 23% year over year to $1.5 billion, or $1.26 per share, representing one of the three best quarters of FRE in our history and the best outside of a calendar Q4. Fee revenues increased 20% year over year to $2.6 billion driven by strong growth in both total management fees and fee-related performance revenues.

Total management fees reached a record $2.1 billion, up 13% year over year, underpinned by double-digit growth in base management fees across three of our four segments, including 14% for private equity, 15% for credit & insurance, and 21% for BXMA. In real estate, base management fees declined moderately on a year-over-year basis in Q1, in line with the trajectory we previously outlined, due to harvesting activity in our opportunistic funds and headwinds in our institutional Core+ platform. At the same time, transaction and advisory fees for the firm nearly doubled year over year to $212 million, with a record quarter for our capital markets business. It is important to note that we generate these fees utilizing minimal capital.

As our franchise continues to scale, including in infrastructure and investment-grade private credit, we expect continued strength in this revenue stream. Fee-related performance revenues were $488 million in Q1, up 66% year over year, powered by a fourfold increase in these revenues at BREIT and a nearly 2.5x increase at BXPE, alongside contributions from BCRED, BXMPRA, and other perpetual strategies. Distributable earnings increased 25% year over year to $1.8 billion in the first quarter, or $1.36 per share. In addition to robust FRE, net realizations totaled $448 million in the quarter, up 26% year over year. Gross performance revenues grew 70% year over year to $780 million, reflecting the highest level for a calendar Q1 in four years.

Principal investment income was lower on a year-over-year basis, with the prior year including the sale of our internally developed Bistro software asset. Realization activity in the first quarter included numerous monetizations in the public portfolio, the sale to a strategic buyer of an aerospace and defense company, the recapitalization of a housing finance platform in India, and the sales of certain other energy positions. This disposition activity reflected a transaction environment that was strengthening in the latter part of 2025, entering 2026, allowing us to execute four IPOs last year. The significant recent market volatility and broader uncertainty has had the effect of pushing out exit pipelines and slowing realization activity in the near term.

That said, if there is a durable resolution of the conflict in the Middle East, we would expect robust activity in the second half of the year. Turning to investment performance, our funds delivered resilient returns in the first quarter, powered by the large-scale portfolio we have been building across the AI and energy ecosystem. Infrastructure led the way again in Q1 with 7.8% appreciation in the quarter to 25% appreciation for the last twelve months. Gains in the quarter were broad-based, with particular strength in data centers and in the energy portfolio.

The corporate private equity funds appreciated 3.2% in the first quarter and 16% for the last twelve months, with Q1 returns also powered by energy, both the private and public holdings, along with Medline’s strong post-IPO performance. These gains were partly offset by material declines in our software portfolio in the context of the significant contraction in software market multiples. Overall, our private equity operating companies have continued to report healthy underlying fundamentals, with revenue growth increasing sequentially in Q1 to 10% year over year.

In credit, our non-investment-grade private credit strategy reported a gross return of 0.6% in the first quarter, and 9% for the last twelve months, reflecting solid underlying credit performance across the vast majority of our holdings. In Q1, certain markdowns in the portfolio were more than offset by continuing substantial current income. At the same time, in real estate credit, our business generated healthy performance again in the first quarter, with the non-investment-grade funds appreciating 2.3% and over 14% for the last twelve months. Meanwhile, BXMA reported a gross return for the Absolute Return Composite of 1.7% in the first quarter, and over 12% for the last twelve months.

BXMA has achieved positive composite returns in each of the last twenty-four quarters, as Jonathan noted, notwithstanding multiple significant market drawdowns during this period. BXMA delivered this positive Q1 return in a quarter where public equities, liquid fixed income, and the HFRX hedge fund index were all negative. Indeed, since the start of 2021, BXMA has generated a 50% higher cumulative return than the 60/40 portfolio, equating to approximately 250 basis points on an annualized basis. This performance powered BXMA’s sixth consecutive quarter of double-digit year-over-year growth in AUM in Q1. Finally, in real estate, overall values were stable in the first quarter.

Significant strength in data centers was offset by declines in life sciences office, along with our public holdings in India in the context of a 15% decline in the country’s stock market in Q1. The BREP opportunistic funds reported modest depreciation in the first quarter. Outside of the India public portfolio, BREP values were stable. The Core+ funds appreciated 0.8% in the quarter, driven by BREIT’s strong positive performance. I would highlight three important factors with respect to the positioning of our real estate business.

First, funds across our global platform—including most recent vintages of our BREP Global and Asia strategies, our BPP U.S. institutional Core+ vehicle, and, of course, BREIT—have significant exposure to a rapidly growing data center platform portfolio. Second, in logistics, our largest exposure in real estate, as you have heard from us and other industry participants recently, we are seeing very positive momentum in leasing activity, including a record forward pipeline for our U.S. platform. Third, we expect the collapse of new supply will be very supportive of fundamentals over time across major sectors, including logistics and multifamily, where industry forecasts call for deliveries this year to be at their lowest levels in twelve years.

Overall for the firm, strong investment performance lifted the net accrued performance revenue on the balance sheet—our store of value—up 9% year over year to $7 billion, the highest level in three and a half years, equating to $5.69 per share. Meanwhile, performance-revenue-eligible AUM “in the ground” expanded to a record $635 billion in the first quarter, also up 9% year over year. The firm’s significant embedded earnings power continues to build. In closing, it has certainly been a complex operating environment broadly and for the firm, but our balance provides resiliency in these dynamic markets and creates a strong foundation for future growth. We believe we remain the partner of choice in private markets for investors around the world.

And we have greater investment firepower than ever before to capitalize on the many opportunities before us. Thank you for joining today’s call. We will now open the call for questions.

Operator: Thank you. We ask you limit yourself to one question to allow as many callers to join the queue as possible. We will take our first question from Craig Siegenthaler with Bank of America.

Craig William Siegenthaler: Thanks. Good morning, everyone. And Steve, John, hope everyone is doing well. Our question is on the IPO pipeline. You are sticking with your expectation for a record year of IPO activity despite the conflict in Iran. So what is driving the record IPO outlook? Because I think some of your peers are going to talk about a more muted 2026 in their upcoming calls. And do you expect that to translate into sizable realized performance fees in the second half of this year, or is that more of a 2027 event?

Jonathan D. Gray: So, Craig, I think it reflects the diversity of our firm and really our strong presence in the physical world and, frankly, around AI infrastructure. So we saw in the back half of last year we took two companies public in the U.S., Allegion and Medline. Those stocks are up 160%. So if you bring good companies that have real earnings momentum, the market wants that. So I would say it breaks into different buckets. It is AI beneficiary companies—obviously digital infrastructure, some of the tech companies that are going to go public this year. Then I would say the AI-unaffected companies—Medline would fall into that bucket. Those areas, investors, I think, have a lot of interest.

Where there will be less activity will be in professional services, information services, software—the white-collar world. But, again, given where we are exposed across our firm, we think we will be able to get a number of IPOs done. So I do think it is really a function of how people perceive this business. In terms of translating, I think you made the right point on timing: these things get public, then over time, you sell. Interestingly, in the case of Allegion and Medline, both have performed so well we have been able to do secondaries relatively quickly. But it is on the path towards liquidity.

And we would say once this war resolves and the markets stabilize a bit here, I do think we will see an acceleration. But I think our mix of businesses is favorable—maybe a little more favorable than others in this IPO regard.

Michael S. Chae: Hey, Craig. It is Michael. I would also just add that even today, partly based on the IPO activity that we have undertaken recently, if you look at our net accrued performance revenue receivable, within the corporate private equity portion of that, nearly a third is public. And so that puts us in position to more readily monetize these positions if we like the value and markets are right over time. And then on top of that, as Jonathan mentioned, subsequent new issue activity, assuming markets hold up.

Operator: Thank you. We will take our next question from Michael Cyprys with Morgan Stanley.

Michael J. Cyprys: Hey. Good morning. Thanks for taking the question. So with AI powering strong returns across Blackstone Inc.’s complex, curious where you see that showing up in growth and fundraising results. And as you look out across the business today, what do you see as the biggest drivers of growth over the next year versus the next three to five years, as you pursue new markets and asset classes?

Jonathan D. Gray: So, Michael, I would say it is broad based in terms of the impact of AI. Certainly, our infrastructure business, both for institutional clients and individual investors, is benefiting. Because there you have two very big engines: the data centers as well as what is happening in energy. I think as it relates to our energy transition business, which we talked about in the prepared remarks, given the performance there and the need for energy for not only data centers but for robotics and autonomous vehicles and reindustrialization, there you will definitely see strength.

In real estate, it is becoming a bigger and bigger part, and as you have seen in BREIT, it has clearly been a big beneficiary, and it allowed us to power through this difficult period of time. But even in our flagship U.S. Core+ fund, it has become a bigger share, and now beginning in some of our opportunistic vehicles. So there, I think it will start to have, over time, a very positive impact in terms of returns. And then on the credit front, asset-based finance is an area where credit investors are very focused. They have concerns about what is going to happen with various corporate credits.

They are saying, I am interested in asset-based finance, and again, AI infrastructure ties into that as well. So I would just say that it is broad based. I would also point out, by the way, in our private equity vehicle for wealth, a similar story there where we own some of the big LLMs and tech companies—three big companies likely to go public—and we also have a bunch of AI infrastructure. So when you look across our firm, this strategic decision that we made to go long AI infrastructure, I think, is going to be the single most important thing for the performance of our clients and ultimately the growth of our business.

It does not happen overnight, but you are beginning to see it move into our results. And I think it will really differentiate things, lead to inflows, and most importantly, lead to these positive returns for our customers.

Michael S. Chae: And, Mike, I would just add broadly, if you step way back, being in a position where we think we are probably the leading large-scale private capital provider to these areas around the ecosystem that need capital so badly to transform the world—that puts us in a really great position. That is sort of the big picture overlay, I would say, in the coming years.

Operator: Thank you. We will take our next question from Bart Jarski with RBC Capital Markets.

Bart Jarski: Great. Thanks, and good morning, everyone. I wanted to ask around private wealth, and you have a business plan to expand FTE to 450 by the end of this year. In the current environment, are you accelerating that business plan? Are you dialing it back? How is that evolving as you go through the private wealth channel?

Jonathan D. Gray: We continue to move in wealth, I would say, at a fairly rapid pace. Joan Solitar and her team have done a terrific job expanding who we are serving within the United States, but broadly around the globe. Canada for us is an exciting market. Japan, I think over time, will grow more in Europe, Middle East, Asia. There is a lot of opportunity. Wealth is so underpenetrated relative to what we see in the institutional world, which is, call it, a third or more allocated to alternatives; individual investors are low single digits, even very wealthy ones. So we see this as a big TAM.

And then, as I referenced, we have a pretty unique asset in our brand, recognition of who Blackstone Inc. is, the fact that people trust us as a steward of capital. Then we have this range of offerings—so for investors who want private equity or credit or real estate or infrastructure, now hedge funds—and then these multi-asset areas where we can offer a holistic solution to investors we think are very special. So we continue to invest around the globe, expanding our team, more boots on the ground, and delivering this product. And as customers have good experiences, like we experienced with institutional investors, they start with one product and then start to expand.

So this feels to us as an area that has a long runway. And interestingly, going through this moment in credit—we went through a moment, obviously, a few years ago in real estate—in showing that these products can deliver both in terms of their liquidity promises as well as their returns builds confidence with financial advisers and their underlying clients. So our confidence in this channel remains as strong as ever, and our positioning, we think, is quite unique.

Operator: Thank you. We will take our next question from Alex Blostein with Goldman Sachs.

Alexander Blostein: Good morning, everybody. Thank you. John, just to build on that last point, if you zoom out a bit, the wealth channel is clearly still growing, going through some growing pains. We see a quite significant reaction, not just for you guys, but for the whole space.

So curious if you take a step back, what are the lessons learned from the recent experience, which obviously the industry is still going through, with respect to redemptions—in terms of how the products are sold, how they are packaged, how you are thinking about the minimums that will be appropriate for clients to have in order to come into some of these products—as you continue on this path of expanding the footprint there? Thanks.

Jonathan D. Gray: Well, Alex, it is interesting. What has been more challenging is that some of the social media and press reporting is so different than the facts that we see. When you think about these products, they are sold not directly to individual investors; they are sold through financial advisers who are obviously sophisticated. There is incredible levels of disclosure when we are selling these products. If you look at BCRED, on the cover page, there are six bold highlighted lines talking about the liquidity limitations in the product.

To me, it is not a surprise that we have more than 300,000 customers, and yet, we have not heard complaints from them that they do not understand that they are trading away some liquidity for higher returns. And I think you just have to look back at the BREIT experience. There was a lot of noise at the time. We said the products are working; they are protecting individual investors. And so when you look back in the fullness of time, you have a product that has been around almost nine and a half years. For one year, you had more limitations on liquidity.

Instead of one month, it took you four months to get substantially all your money back. And in exchange for that, you produced a 60% premium annualized in returns. And that is the business. And so these caps on redemptions are not a bug; they are a feature of these products. If you are good in any of these products over a ten-year period, there will be a moment, a cycle. The key question is, are you offering a premium in exchange for giving up this liquidity? Have you properly disclosed this? So I feel very good about what we have done. I think, ultimately, the products will continue to produce this premium as they have in BREIT and BCRED.

And I think these tests are helpful. I do not think it deters the long-term trend line, which is for individual investors to get the exposure, the higher returns, the diversification benefit, the opportunity to invest in some of the fastest-growing companies in the world, real estate and infrastructure. I think that all holds together. We are going to get through this like we have always gotten through these moments, and the products will continue to grow.

Operator: Thank you. We will take our next question from Bill Katz with TD Cowen.

William Raymond Katz: Okay. Thank you very much. I want to mix up my question a little bit, given the first set of questions. You seemed to spend a lot of time this quarter in particular talking about BXMA. I was wondering if you could maybe step back and talk a little bit about what you are seeing in terms of institutional allocations, and then within the wealth segment, how are financial advisers repositioning from BCRED? Where do you see the demand going, and would that also include the hedge fund complex at large? Thank you.

Jonathan D. Gray: So, Bill, you have been a follower of us for a long time. You know we have not talked a lot about our absolute return business because it had been pretty flat for a long time. It had protected investor capital, but since we brought Joe Dowling on, the business has really inflected in terms of performance. We have delivered, I think, 250 basis points a year of premium here since Joe joined us more than five years ago. We have had twenty-four quarters in a row of positive performance, as we talked about, in our flagship strategy. And that, of course, attracts investors’ attention.

If you can deliver a downside-protected vehicle that delivers a premium to 60/40 and you have liquidity, that is a powerful combination. And at the same time, I think investors are recognizing in a world with a lot of volatility, to be able to protect their capital in something that is more liquid is very valuable. And I do believe as base rates have come down, and I think over time will come down further, these products become more and more important. So I would say the receptivity in the institutional meetings I have has really picked up. I would guess, in the individual channel, we will see more and more receptivity. The multi-managers have done quite well.

I think the product offerings we will bring will be attractive over time to individual investors as well. So this is an area of the firm that, as I noted, has been pretty flat but is now growing again—up 15% year on year—which is remarkable. And I think, again, performance drives everything for us. What they have done in BXMA bodes very well for the future of that business.

Operator: Thank you. We will take our next question from Glenn Schorr with Evercore.

Glenn Paul Schorr: No problem. So I wanted to ask on credit and the different moving ins and outs on fees. So maybe you could help separate the headwinds and tailwinds to help us talk about the future. We saw a drop in credit fee-paying AUM during the quarter and the resulting impact on management fees. Credit deployment was down in the quarter, but I am wondering how much of this is timing. You raised a boatload of institutional money between last quarter and this quarter on the institutional side in private credit. Maybe talk about the timing of deployment and how we should think about that translating to management fees. I appreciate it.

Michael S. Chae: Certainly. Yes, there are a number of moving parts. Fee AUM was up 14% year over year in the quarter. We saw $37 billion of inflows. The platform is broadening in scale and diversity. There obviously is some near-term deceleration in the BDC area. But overall, I think the breadth of the platform is the story over time. As part of that, our asset-based finance area, which we call ABF/IGPC, was up 29% year over year in fee-earning AUM. We do have substantial dry powder not earning management fees—$74 billion of dry powder in the credit & insurance area. And the vast majority of that earns fees upon investment, so you will see that brought in over time.

Those are some of the key drivers. Quarter over quarter, there was a sequential decline of 1%. Again, there are puts and takes, but it was mostly attributable to a one-time benefit in the fourth quarter related to some insurance partnerships and an annual adjustment there. So lots of moving parts. The direction of travel, we think, over the medium and long term is very good. You will see in the very near term some deceleration, but the breadth of the platform across strategies and, as you are pointing out, this building dry powder that will earn fees as invested make us continue to be very positive over time.

Jonathan D. Gray: I would just add to that, Glenn, it is striking the difference in terms of what we have seen from the institutional and insurance clients relative to the wealth channel to all the noise about private credit. It is as sharp a contrast as I have seen, and I think it does bode very well for our credit platform.

Glenn Paul Schorr: I wonder if I could ask just a very quick follow-up. If software helps—I should say AI helps more than it hurts—software spreads have widened a ton in credit. I am wondering how you think about balancing the opportunity versus too much concentration risk, while things are wide like this?

Jonathan D. Gray: Look, I think when you have these moments where markets gap out—it could be on the non-investment-grade side, frankly it could be on the investment-grade side in the fund finance areas—people get nervous. That does create opportunity. Interestingly, the market has held up much better than the headlines. The leveraged loan market at this point has recovered quite a bit for everything really but the software names. I think there will probably be some in technology. I do think there is going to be a heterogeneous outcome for different software companies. So you have to be thoughtful in terms of where you focus. But overall, I think it is attractive.

And the fact that we raised more than $10 billion of investable capital for our OSP fund, I think that will prove to be very well timed. So if we see big trade-offs or subsectors where we have differentiated insights, I do think we will be able to deploy capital into that. We have done a few things, but it has been interesting how resilient this market has been despite the headlines.

Operator: Thank you. We will take our next question from Dan Fannon with Jefferies.

Daniel Thomas Fannon: Thanks. Good morning. Last quarter, you talked about strong management fee growth for 2026. Based on the previous comments, it sounds like credit is slowing a bit here as we think about the near term. But maybe if you could talk more broadly about the other large segments as we think about the rest of the year in management fee growth.

Michael S. Chae: Sure, Dan. Stepping back, if you look at the first quarter, three of our four business segments—outside real estate—grew combined management fees 15% year over year. So that is carrying forward the healthy momentum from 2025. In terms of some of the building blocks of that and the outlook: on the positive side, we talked about the new drawdown fundraising cycle that is underway. We will see an embedded upward ramp from these, mostly later in the year. SP X (our Strategic Partners fund) was activated in late Q1 and will continue to fundraise; our third Asia private equity fund and our energy transition fund we expect to activate in the near term.

Now, those will all have fee holidays, so the impact will really be in the second half of the year, especially in the fourth quarter. You will continue to see the seasoning and expansion of our perpetual strategies overall—it is nearly half of our firm-wide PE AUM now. The power of BXP scaling—$21 billion in NAV in two years, more than doubling year over year. BX Infra has emerged—about $5 billion, up 3x year over year. And, of course, infrastructure overall—up 41% year over year—including BX Infra and related new products. As we discussed, BXMA obviously has terrific momentum. On the caveat side, we just talked about the deceleration in credit, notwithstanding many of the positives within that platform.

And then, as we referenced last quarter, some slowing in our real estate segment, reflecting two things: harvest activity in our opportunistic funds and some headwinds in BPP, as I mentioned. Those are the key factors and sort of the architecture of the year.

Operator: Thank you. We will take our next question from Ken Worthington with JPMorgan.

Kenneth Brooks Worthington: Hi, good morning, and thanks for taking the question. As we think about the Middle East conflict and fundraising from that geographic customer segment, how big have Middle Eastern clients been historically to Blackstone Inc.? And do you see the conflict impacting fundraising from these clients in the near to intermediate term? And on the other side, does the conflict change where, what, and how big investing looks in the Middle East for Blackstone Inc.?

Jonathan D. Gray: Thank you, Ken. I would say we have seen remarkable resilience from those clients so far in terms of continuing to make commitments to our vehicles. It is possible some of them may make some different choices in terms of reinvesting at home for a period of time, but right now, we have continued to see strong interest. I would say in terms of our platform, as you know, we are very diverse. There is no country outside the United States that represents more than low single digits to our overall firm. It is really the way Steve built the firm, and I think it provides real resilience to the overall firm as well.

In terms of those countries, I think it is a mistake to bet against the Middle East—either the GCC countries or Israel. These countries are really embracing capitalism, investment, growth, and I think once this conflict is resolved, that pattern will be restored. We think these countries will continue to be quite strong. Reflecting that, we made two commitments during this war period—one in Abu Dhabi to help build a payments company, and one in Dubai in the aerospace area, aircraft leasing. So we continue to be believers in that part of the world, and we think this will prove to be temporal.

Operator: Thank you. We will take our next question from Brian Bedell with Deutsche Bank.

Brian Bedell: Great. Thanks. Thanks for taking my question. Within the retail wealth product space, just in terms of what you are hearing from financial advisers and the composition of the clients that are asking for redemption requests: I think for BREIT, it was a minority of customers, and I suspect that is the case for BCRED as well, as most people understand the long-term viability of the products. But if you could just characterize what you are hearing from that phase, and to what extent you think it is just the risk-off environment that might impact flows in the near term.

And then, given your brand strength, do you expect to actually gain market share in this channel, given not just the brand and performance, but also the breadth of product?

Jonathan D. Gray: Brian, I would start with your last question on market share. I do believe that when these shakeouts happen—we saw this in the real estate area—I think the number of competitors has diminished, and I think it positions BREIT very well as real estate starts to pick up in an upcycle. And the way we managed through that proved important. I think there is a likelihood as well here in credit that the combination of how people manage transparency, liquidity, valuations, returns can be beneficial also. So I do think we could see a changing of the guard or winnowing a little bit through this process, so yes to that. On the profile of the redeemers: you are exactly right.

Contrary to this popular idea that it is small investors leading the charge, it is actually a smaller number of large investors who are double the size, on average, of the typical account in these vehicles. They are the ones—we saw this if you went back to BREIT, and it is the same story here with BCRED. The great mass, by number, of smaller investors tends to stick with the product over a long period of time. It is the bigger boulders, as opposed to the pebbles, where you get more movement in terms of redemptions. And that has proven to be similar again—different than the popular perception.

Operator: Thank you. We will take our next question from Brian McKenna with Citizens.

Brian McKenna: Okay, great. Thanks. We have seen time and time again that capital and liquidity become a lot more valuable during periods of volatility. I appreciate the benefits of this from a deployment standpoint. But from a business perspective, can you remind us why you operate a capital-light model? And what are some of the strategic and competitive advantages of having this kind of balance sheet during all parts of the cycle—from a business growth perspective and your ability to always be in a position to lean into longer growth opportunities across the business?

Jonathan D. Gray: We appreciate that question because running capital light can be a harder business model—you have to raise money from third parties as opposed to borrowing large amounts of money and earning a spread on that. But we do believe that, given what can happen when the environment changes and what the regulatory climate can look like, being an investment manager gives us the greatest flexibility. Operating a business with virtually no net debt and no insurance liabilities means that if we need to use capital to do something at the firm level, it is available. There is no moment where we are facing any sort of liquidity crisis.

As you know, we pay out basically 100% of our earnings between our dividends and our stock purchases. We like this capital-light model. We like being an open-architecture third-party manager for our investors. We think that is the right long-term approach. And particularly when you get to moments of volatility, you are not going to see redemption risk at a firm level. There is no credit risk at a firm level. We think this is an all-weather business model. It is why we have been through a lot of volatility, particularly in the last six years, and Blackstone Inc. keeps powering ahead.

So we are going to continue to be a capital-light investment manager, focusing on delivering performance—that is what really matters—building our brand, building this reservoir of trust. And if we do that, you will continue to see very strong capital flows and strong financial performance. That remains the hallmark of our firm.

Operator: Thank you. We will take our next question from Brennan Hawken with BMO Capital Markets.

Brennan Hawken: Good morning, John. Good morning, Michael. A couple questions, a little more modeling oriented. Quarter-over-quarter base fee growth has slowed in recent quarters. We understand you have several large funds on fee holidays, but can you help us get an idea about what that might look like over time as we progress through the year and make our way closer to those big funds coming off the holiday? And then, also, a second component—stock-based comp ticked up a bit here. How should we think about stock-based comp over the course of the year and next couple of years? Thanks.

Michael S. Chae: Sure. Thank you, Brennan. I will take the second one first. On stock-based comp, if you step back, as Jonathan just hit it, if you look over the long term at our capital return policy—nearly 100% of our cash earnings—and at the same time our approach around keeping our share count effectively flat, over the last eight years our share count has basically grown about 0.3% a year while our AUM has compounded about 14% per year. We like that relationship. There is seasonality to SBC growth over the course of the year. The rate of growth in the first quarter was below that of a year ago, which was sort of the preview that we gave.

And I do think, for the full year, you will see that rate of growth end up being materially lower than the first quarter—materially lower. On base management fees for the course of the year, I gave some of the building blocks a couple questions ago. Sequentially, you are seeing—probably this quarter and next quarter—some more moderate growth across the firm. We expect that to accelerate in the latter part of the year in part based on those drawdown funds coming online and getting through their fee holidays, as well as continued momentum elsewhere, which I outlined.

You do have these headwinds in the real estate area, and we think those will, in a sense, bottom out in the middle part of the year and also accelerate sequentially as we exit the year into the early part of next year.

Brennan Hawken: Great. Thanks for taking my questions.

Operator: Thank you. We will take our next question from Steven Chubak with Wolfe Research.

Steven Joseph Chubak: I wanted to drill down into some of the comments on AI exposure. You spoke about sizable exposure to companies that are certainly well placed for AI transformation across utilities and data centers, and I know you cited a couple of other examples. At the same time, there are growing concerns around disintermediation risk. You cited the challenges facing the software sector, but the threat of AI admittedly extends beyond software. Was hoping you could speak to your process for how you are re-underwriting AI risk across your portfolios, and what are some of the actions you are taking to better position the book to navigate this looming threat?

Jonathan D. Gray: I would start with acknowledging you are right. This does go beyond software. It includes, as I mentioned, information services, professional services—really a broader white-collar world. Our biggest exposure would be in software, and that is less than 7%, so pretty small as a percentage of the firm’s AUM. Nevertheless, we are quite focused on working with our companies to adapt to an AI-forward world. Many of these software companies have very valuable incumbency models that should enable them—if they become adroit with AI—to do quite well, and other companies are more exposed. Nevertheless, I think these management teams are capable, and many of them will shift to the new world.

I think software will be very important sitting on top of these large language models, but the outcomes will be quite differentiated. So for us, working with our portfolio operations team and our AI experts with our portfolio companies is super important. As we think about deploying new capital, yes, you have to be thinking about what are the risks in this world and what are the multiples.

If you look in the quarter, our biggest investments—and this really does not speak to a change, but just how deep we are in the physical world—the biggest investments we made in the quarter were a Spanish waste company, another data center company, a residential services business, and another business in the energy electrical equipment space. Our exposure in those areas is really going to pay off.

And I think, by the way, interestingly, real estate—which has been the sleeping giant at Blackstone Inc. here—as investors pivot back to hard assets, as we get some calming after the war, and as the performance picks up along the lines Michael was talking about, particularly around logistics where we are seeing very favorable supply-demand fundamentals, I think that is an area where we could start to see an acceleration. But no question, today this is top of mind when we are investing capital, particularly in those white-collar affected areas. And with our existing portfolio companies, it gets a huge amount of focus.

Steven Joseph Chubak: That is great. And, at the risk of breaching the one-question rule, I was hoping—at the risk of this not getting covered—if you could speak to the DOL and the provisional guidance that was offered on alts inclusion in 401(k)s.

Jonathan D. Gray: Well, I think what is interesting in 401(k)s, which people do not fully realize, is that fiduciaries today can put private assets into 401(k) plans—defined contribution plans. What has really held it back, of course, is the long history of litigation. And so what you end up with is individuals who are not in a defined benefit plan end up getting no exposure to alternatives, and yet their colleagues who may have joined their company ten years earlier have a huge DB plan and a third of their assets in alternatives.

We think it makes a ton of sense for there to be the benefits of diversification and returns—exposure to some of the fastest, most innovative companies in the world; exposure to real estate and infrastructure, which are mostly in the private market. What this DOL ruling—and it is still working its way through the system—does is start to establish a safe harbor, like annuities got a decade ago, so that a plan sponsor can put this in the mix. It will be a minority of assets but will give individual investors the opportunity to get this exposure. It is still a very regulated system between the sponsors, consultants, the ERISA standards. But I think this is a good development.

It will take time, but we see interest here. This is an area that we think over time has a lot of potential.

Operator: Thank you. We will take our next question from Arnaud Giblat with BNP Paribas.

Arnaud Giblat: Yeah. Good morning. My question is regarding the CoreBridge–Equitable merger. I was wondering how this will affect your investment management partnership with CoreBridge. Are there risks to the assets, or is there perhaps a growth opportunity to grow the partnership through the merger? And also, what is your plan for your 12% stake in CoreBridge? Thank you.

Jonathan D. Gray: We view this as an exciting opportunity for CoreBridge with their merger with Equitable. As it relates to our existing IMA with them, we have a contractual relationship where we are entitled to manage $92.5 billion of assets, so long as we meet certain performance thresholds. I think we are at around $80 billion today. We expect that will continue to grow. More importantly, we have delivered very strong performance for CoreBridge and its balance sheet. On average, across our insurance clients, as we mentioned, we have delivered a 180 basis point premium relative to comparably rated investment-grade credit. Our hope here is, as the joint balance sheet expands, that we can do similar things for Equitable.

Obviously, we have not gotten into any of the details—it is early days and the merger has not been approved—but we would love to try to expand what we do for the combined company. Our base business remains, and we look at this as a potential opportunity to expand because we think we can continue to deliver these premiums for insurance policyholders on the Equitable side, but we will have to wait and see. On our stake, obviously now we are in a merger period. We are going to wait and see. We think CoreBridge represents very compelling value on the screen of where it trades today. This merger has to go through. We are long-term investors.

We believe in the compounding in the combination of these companies. Ultimately, at some point—because we run a capital-light business—we will recycle that capital, but we do not expect that in the near term.

Operator: Thank you. We will take our next question from Patrick Davitt with Autonomous Research.

Michael Patrick Davitt: Hey, good morning, everyone. The market is still having a lot of trouble framing how to think about the refinance risk in the software loan portfolios. Given that it is still many years out and the loans are generally still performing really well, it feels like we are in a state of limbo. Could you better frame what options or levers your credit team has, if any, to proactively work with the backing sponsors well ahead of those maturities to help give some tangible outcomes that nip this concern in the bud preemptively?

Michael S. Chae: Thank you.

Jonathan D. Gray: It is interesting. If you look at our software exposure in BCRED, for instance, the average borrower put up $3 billion of equity. So they have a lot of incentives here to make these investments work. And as you said, Patrick, the performance of the companies has continued to be good. In fact, in our credit portfolio, our software businesses were the best-performing sector. I think when it comes to options, when you have years away, there are a lot of things that could happen. Right now, sentiment is quite negative. The market is going to see how these companies perform as AI continues to roll out.

Given the low levels of leverage—using BCRED again as an example—these were 37% loan-to-value loans. In many cases, the EBITDA has grown quite substantially. So I think for those that are well performing, with this “wall of maturities,” people find a way, either through refinancing or extensions. These things tend to happen. I think the challenge is less around performing companies and more around if you have a business that is struggling—what do you do? That becomes harder, and those are the situations where we have taken meaningful marks in the portfolio. That, I think, is what happens. But generally, if performance continues, I think you will find a receptive market. It may take a bit of time.

Right now, the uncertainty quotient is very high.

Operator: Thank you. We will take our final question from Crispin Love with Piper Sandler.

Crispin Love: Thank you. I appreciate you squeezing me in here. I just have a follow-up on the 401(k) question and the retail channel noise we have seen recently. How do you think that may impact the 401(k) opportunity longer term? 401(k)s definitely have less need for near-term liquidity, and private markets exposures may make sense here as you have articulated. But is it worth the risk and potential headaches for the alts, for the plan sponsors to get involved with a less sophisticated investor base compared to private wealth, given the pushback you would likely see from senators, headlines, etc.?

Jonathan D. Gray: You made an important point, which is obviously near-term redemptions are not the focus in retirement savings. We think the rational argument—getting the benefit of long-term compounding from high-performing alternatives—is quite compelling. It may have, in some cases, raised some questions from some of the plan sponsors. But again, I think how this ultimately plays out: I do not believe you are going to see large losses of the kind that you read in the press coming from these private credit sponsors. If the products perform and we get through the redemption cycle again, I think people will see—like we did with BREIT—that these products are more resilient than the skeptics argue.

As a result, that, combined with the nature of the long-term hold of the 401(k) vehicles, I think people will see these are quite beneficial. To me, the fact that we have this enormous institutional market—most of which is anchored by defined benefit plans for U.S. retirement workers—and then somehow that same worker who works for a different company today, or no longer works for a state that has a pension plan, is no longer entitled to a dollar of exposure—it just does not seem fair. It does not seem rational. So the key again will be showing people that these products are run in a responsible way and deliver premium performance.

In the fullness of time, that is going to win the argument.

Operator: Thank you. That will conclude our question and answer session. At this time, I would like to turn the call back over to Weston Tucker for any additional or closing remarks.

Weston M. Tucker: Great. Thank you, everyone, for joining us today, and we look forward to following up after the call.