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DATE

Thursday, Oct. 22, 2026

CALL PARTICIPANTS

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

TAKEAWAYS

• Total Assets Under Management -- $1.4 trillion, representing 10% growth year over year driven by $63.3 billion of quarterly inflows.
• Distributable Earnings -- $1.7 billion, or $1.32 per share, supported by stable fee related earnings generation during the quarter.
• Fee Related Earnings -- $1.6 billion, or $1.26 per share, increasing 6% year over year despite fewer realizations.
• Fee-Earning Assets Under Management -- $989.7 billion, an increase of 9% year over year as the firm scales its perpetual capital platforms.
• Perpetual Capital Assets Under Management -- $562.3 billion, growing 12% year over year and now representing 47% of total fee-earning assets.
• Total Quarterly Inflows -- $63.3 billion, contributing to a total of $271.6 billion in inflows over the last 12 months.
• Private Wealth Assets Under Management -- $330 billion, increasing 15% year over year with nearly $9 billion of sales in the quarter.
• Insurance Assets Under Management -- More than $300 billion, rising 14% year over year due to demand for excess spread and differentiated deal flow.
• Infrastructure Assets Under Management -- $97 billion, growing 40% year over year and nearing a 100 billion milestone eight years after launch.
• Net Accrued Performance Revenues -- $7.3 billion, or $5.84 per share, representing 12% growth year over year.
• Total Dry Powder -- $228.9 billion, available for future investment across the firm's global multi-asset platforms.
• Quarterly Realizations -- $33.1 billion, reflecting a 20% sequential decline in net realizations as management anticipated.
• Quarterly Deployment -- $30.1 billion, focused on digital infrastructure, energy transition, and direct lending.
• Real Estate Logistics and Data Center Concentration -- 54%, reflecting the firm's strategic focus on high-growth commercial real estate sectors.
• BXMA Assets Under Management -- $114 billion, increasing 22% year over year with record organic net inflows in the third quarter.
• BXP Sales -- $2.9 billion, bringing the net asset value of the private equity wealth flagship to $29 billion in less than three years.
• Investment Grade Private Credit Assets -- Nearly $150 billion, growing 24% year over year driven by infrastructure and corporate financing.
• Direct Lending Assets Under Management -- Nearly $170 billion, a 10% increase year over year despite muted retail flows.
• Secondaries Flagship Fundraising -- More than $16 billion raised to date, toward an overall target of at least $22 billion.
• Quarterly Dividend -- $1.12 per share, to be paid to record holders as of Nov. 2, 2026.
• Energy Transition Fund V -- $8.7 billion, hitting its hard cap post quarter end as the fifth major drawdown fund to do so this year.
• Corporate Private Equity Appreciation -- 2.8% for the quarter, with holdings in power and electrification representing the largest gains.
• Infrastructure Strategy Performance -- 6.4% appreciation in the third quarter and 29% for the last 12 months.

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RISKS

• Schwarzman stated, "There will be situations where investors do not have sufficient capital. And projects cannot procure power. Equipment, or the necessary approvals," highlighting potential bottlenecks in the build out of artificial intelligence infrastructure.
• Gray warned that legacy equity and debt investments in real estate may face renewed pressure from higher interest rates, specifically in sectors with lower growth such as multifamily housing.

SUMMARY

Blackstone Inc. (BX -1.23%) reported its third quarter financial results, noting a 10% increase in total assets under management to approximately $1.4 trillion. Management stated that the firm is focusing on secular investment themes, including artificial intelligence infrastructure and the global energy transition, to navigate current market volatility. The company reported establishing significant capital partnerships, including an initiative to deploy hardware financing for technology leaders. Vice Chairman and Chief Financial Officer Michael Chae indicated that the firm expects a significant increase in net realizations in the fourth quarter following a seasonal decline in the third quarter.

• NVIDIA Partnership: President Jonathan Gray stated, "NVIDIA named Blackstone as one of a small group of managers to work with them to deploy $500 billion of large scale GPU financing."
• Data Center Demand: Gray noted that the firm expects a threefold increase in data center leasing this year, targeting 6 gigawatts across its global platform.
• Private Wealth Opportunity: Gray indicated that global individual investors are currently only about 1% allocated to private assets, representing a significant long-term growth channel.
• Real Estate Fundamentals: Management reported record leasing activity in U.S. logistics holdings during the third quarter, even as higher rates impacted valuations in slower growth sectors.
• Insurance Strategy: The firm's non-investment grade credit platform grew to $170 billion, while its dedicated insurance solutions area expanded to include 40 global clients.
• BXMA Performance: Gray noted the firm's flagship absolute return strategy has outperformed a traditional 60/40 portfolio by 170 basis points per year since the start of 2020.

INDUSTRY GLOSSARY

• FRE (Fee Related Earnings): A performance measure focusing on predictable management fees, excluding performance-based compensation and investment gains.
• Distributable Earnings (DE): A non-GAAP measure used to assess the firm's ability to generate cash available for dividends to shareholders.
• AUM (Assets Under Management): The total market value of all the financial assets that an individual or financial institution manages on behalf of clients.
• Perpetual Capital: Investment vehicles with an indefinite term that do not require the return of capital to investors at a fixed date.
• Hyperscalers: Large-scale technology companies, such as cloud providers, that require massive data center and power infrastructure.
• Dry Powder: The amount of committed but unallocated capital available for a firm to invest.
• GPU (Graphics Processing Unit): Specialized electronic circuits used in high-performance computing and artificial intelligence applications.
• BXMA: Blackstone Multi-Asset Investing, the firm's segment focused on absolute return and hedge fund solutions.
• BXP: Blackstone Private Equity Strategies, a vehicle designed for individual investors in the wealth management channel.

Full Conference Call Transcript

Operator: Thank you for standing by. You are on hold for the Blackstone Third Quarter 2020 Investor Call. At this time, we are gathering additional participants and should be underway shortly. We appreciate your patience and ask that you continue to hold. Good day, welcome to the Blackstone Third Quarter 2020 Investor Call. Today's call is being recorded. At this time, participants are in a listen only mode. Please press 0. If you would like to ask a question, please signal by pressing 1. If you are using a speakerphone, please make sure your mute function is turned off to allow your At this time, I would like to turn the conference over to Weston Tucker Head of Shareholder Relations.

Please go ahead.

Weston Tucker: Great. Thanks, Katie, and good morning, and welcome to Blackstone's third quarter conference call. Joining today are Stephen Allen Schwarzman, Chairman and Chief Executive Officer Jonathan D. Gray, President and Chief Operating Officer and Michael S. Chae, Vice Chairman and Chief Financial Officer. Earlier this morning, we issued a press release and slide presentation, which are available on our website. We expect to file our 10 Q in a few weeks. I would like to remind you that today's call may include forward looking statements, which are uncertain and may differ from actual results materially. We do not undertake any duty to update these statements.

For a discussion of some of the factors that could affect results, please see the Risk Factors section of our 10-Ks. We will also refer to non GAAP measures, and you will find reconciliations in the press release on the shareholders' page of our website. Also note that nothing on this call constitutes an offer to sell or a solicitation of an offer to purchase an interest in any Blackstone fund. This audio cast is copyrighted material of Blackstone and may not be duplicated without consent. On results, we reported GAAP net income for the quarter of $1.3 billion Distributable earnings were $1.7 billion or $1.32 per common share and we declared a dividend of $1.12 per share.

Which will be paid to holders of record as of November 2nd. With that, I will now turn the call over to Steven.

Stephen Allen Schwarzman: Good morning. And thank you for joining our call. Third quarter of 2020 represented a highly complex environment characterized by an historic increase in bond yields globally including US treasury yields hitting the highest level in decades. Alongside continued geopolitical turbulence, wars in the Middle East and Ukraine, inflation concerns, high oil prices, sovereign debt worries, uncertainty over the US midterm elections, and other challenges. These challenges have continued post quarter end. On the 1 hand, the artificial intelligence revolution is powering robust growth in many areas. While on the other hand, a higher cost of capital has negatively impacted investor sentiment and transaction activity. And triggered significant volatility in the markets.

The S&P 500 index rose slightly in the third quarter with gains concentrated in the largest tech companies and the energy sector. Although most individual stocks declined and the median stock is now 15% below its recent high. Against this challenging backdrop, Blackstone reported strong distributable earnings of $1.7 billion in the quarter. Underpinned by continued year over year growth in fee related earnings notwithstanding fewer realizations as we indicated would be the case on our last call. Inflows reached $63 billion in the quarter. Reflecting sustained momentum across our major fundraising channels and exceeded $270 billion for the last 12 months. The highest level in 4 years.

Most importantly, in terms of investment performance, our flagship strategies outperform the relevant market indices in the third quarter led by infrastructure and our energy holdings. Overall, the unparalleled breadth of our firm and the leading platforms we have established across asset classes have allowed us to navigate changing market conditions. Deploy capital in the most compelling areas, and continue to build value for our limited partners and for shareholders, the firm's underlying earnings power continues to expand substantially and we are moving towards what we expect will be an outstanding 2027. Stepping back, the economy is strong today. The key catalyst, as I mentioned, is the historic level of investment taking place to facilitate the development of AI.

Including data centers, chips, equipment, power generation, construction and engineering services, and many other related areas. This engine is supporting exceptional corporate earnings momentum. As well as momentum in our own portfolio. We also believe we are in the earliest stages of an AI driven uplift in productivity. And consequently, an additional multiyear tailwind for corporate earnings and value creation. Rising productivity over time is also a potential mitigant for inflation. Over the past few weeks, however, we have seen an increased focus in the market on the sustainability and risk of AI related investment. The significant financing needs of companies involved in the AI build out in the context of higher interest rates. And the levels of valuations.

As we have stated before, we believe the transformative power of AI has precedent in the industrial revolution and the commercialization of electricity. And we are in the earliest stages of its development. Demand for compute is accelerating. And we see no signs of that slowing down. As AI use cases ramp, for both businesses and consumers, and the world increasingly engages with the vast potential of this technology. At the same time, there is a critical scarcity of supply. That is only intensified. Seldom my career have I seen such a supply constrained market. Of this scale? Current public attitudes towards data centers will likely only amplify this scarcity.

Over time, as the public comes to understand the advancements that have occurred in data center operations and construction. Including with respect to water usage, and the funding for electricity. These attitudes should change. We also anticipate new laws and regulations codifying these advancements. Will be implemented. Of course, there are risk factors to consider. There will be situations where investors do not have sufficient capital. And projects cannot procure power. Equipment, or the necessary approvals. At Blackstone, we approach investments in this area with the same rigor, and focus on risk adjusted returns that have defined our investment process for 4 decades.

In AI infrastructure, for example, our data center portfolio is built on durable, long term contracts with highly creditworthy counterparties. Overall, we keep coming back to the fundamental supply demand imbalance. Which supports our conviction that this is the right place to invest significant capital As the AI revolution progresses, the rising demand for capital is creating generational opportunities for those with the platform relationships, capabilities, and discipline. To meet this demand. Blackstone has become 1 of the most important capital providers in the AI ecosystem. We started with our data center development business. Focused on serving the major hyperscalers. Which provided the foundation for deep partnership with many of today's AI leaders.

And we have been teaming up with them in multiple ways. We have previously announced the launch of CoreWeave, our partnership with Google, to help address the shortage of compute. We have also created Adept with anthropic. To drive enterprise adoption of AI. And in August, NVIDIA named Blackstone as 1 of a small group of managers to work with them to deploy $500 billion of large scale GPU financing. At the same time, in the energy area, electrification, re industrialization, and of course, AI. Are leading to accelerating demand for power. Following decades of static demand. With 1 of the largest private energy investing platforms, across debt and equity Blackstone, is at the center of this megatrend as well.

We are actively investing across generation transmission, storage equipment, and services and more. In the third quarter, we invested in a leading developer of renewable projects in Europe. And committed to acquire a supplier of components for data center cooling systems. In August, our portfolio company Luminant, which is providing energy infrastructure to OpenAI's flagship data center in Texas. Announced a strategic investment from Nvidia to help fund its development of low cost scale power. And in credit, our energy business backed approximately 15% of solar and storage projects in the entire United States last year. And together with our equity business, has supported nearly 50% of LNG export capacity.

Of course, it is much more than AI and energy, driving our firm forward. Blackstone has established leading platforms to address other paradigm shifts we see shaping the economy and markets. Private credit is becoming a crucial source of financing for the real economy And we manage the world's largest third party focused private credit business. Advancements in drug development are accelerating, and we have built the largest sponsor backed life sciences platform India, continues its ascent as the fastest growing major economy and we are 1 of the country's largest private investors. Private markets themselves remain on a strong growth trajectory. Leading to significant opportunities in secondaries where we oversee 1 of the largest businesses.

And defense is an area that is in critical need of global capital. And we have been highly active here as well. Addressing this need in numerous ways. The firm's positioning across these and other areas powers our deployment fuels fundraising, and ultimately translates to greater earnings for shareholders. The virtuous circle underpinning our business. And as always, the Blackstone innovation engine continues to fire and we are investing today in the leading platforms of tomorrow. Despite the firm's extraordinary record of growth over 4 decades, and our unique positioning in the alternative sector Blackstone's stock along with the other alternative managers has been under pressure. This is due to some of the factors I discussed earlier.

Along with AI disruption, and private credit concerns. Over the past 2 years, while our shares are down meaningfully, our earnings have grown nearly 50%. With commensurate growth in our dividend. In my experience, disconnects of this type do not typically last We have seen similar drawdowns for Blackstone stock before and each time. Our shares ultimately recovered and dramatically outperformed any index comparison. On the way back up. Following the fundamental trajectory of our business. I have learned the most important thing during these periods is to keep our focus on delivering great results for limited partners. Pioneering new markets for investment, and expanding our fundraising channels all of which are occurring now. Our firm has enormous earnings power.

And we expect outstanding results in the years ahead. I believe the future for Blackstone will be remarkable. And with that, I will turn it over to John.

Jonathan D. Gray CIMA: Thank you, Steven. And good morning, everyone. In a world where demand for capital is rising, private markets are more critical than ever. Helping to bridge the funding gap and support continued technological innovation. Steven discussed our unique positioning across the world's most important investment themes, which is driving our results. At the same time, the markets from which we raise capital are expanding significantly. Including in the vast wealth and insurance channels. Meanwhile, in our institutional business, investor confidence in Blackstone remains extremely high. Which is translating to greater capital commitments in many areas, I will focus my remarks on these growing sources of inflows for the firm. Starting with private wealth. Where we delivered another outstanding quarter.

Our total AUM in the channel grew 15% year-over-year to a record $330 billion. With nearly $9 billion of sales in the quarter. Fundraising for our perpetual strategies was up materially from Q2, despite the slowdown in credit. And we launched a number of new products. Our private equity flagship in the wealth channel, BXP, reported record sales in the third quarter of $2.9 billion bringing its NAV to 29 billion in less than 3 years. The largest platform of its kind in the world. Of course, it is all about investment performance, and BXP has delivered achieving an 18% net annualized return since inception.

BREIT grew 9% year-over-year to $58 billion and saw its best regular way net flows in 4 years in the third quarter. BREIT has generated 21 consecutive months of positive returns approximately 11% net over the last 12 months for its largest share class. And BXInfera, reported its highest quarterly sales since launch nearly 2 years ago, at $1.1 billion bringing NAV to over $7 billion. Underpinned by 17% annualized net return for its largest share class. The exceptional portfolio positioning of these strategies continues to power our returns. For BCRED, gross sales were nearly $750 million in the third quarter. Repurchase requests were 10% of NAV above the 5% quarterly limit largely driven by carryover request from Q2.

We fulfilled approximately 50% of total requests resulting in net outflows of $1.4 billion in the third quarter. Investors who requested a redemption each of these 2 quarters of proration received 75% of their capital back. In about 90 days. Another illustration of the semi liquid structure working as designed. Meanwhile, our innovation in the wealth channel is accelerating. Our new perpetual hedge fund product, BXHF, had a strong start out of the gate raising approximately $400 million including October 1st subscriptions. This strategy adds another core building block to our suite of solutions. We also launched a new vehicle outside of the US and invest across our wealth strategies. Blackstone private markets funds, or BXPM.

Which we refer to as Blackstone in a box. And the first 2 funds in our alliance with Wellington and Vanguard went live in the third quarter, including WVB Blackstone all privates fund. Which gives investors in the US access to Blackstone's platform in a single allocation. The opportunity in private wealth continues to expand for the firm. Moving to the insurance channel where our AUM grew 14% year-over-year to more than $300 billion Insurance companies continue to turn to private markets for excess spread. And they are turning to Blackstone for our open architecture multi client model and access to differentiated deal flow.

We have established the largest non captive insurance platform in our industry, including 40 clients in our dedicated insurance solutions area. Representing leading global firms. Of which over half expanded their relationship with us in the past 12 months. Our investment grade private credit platform specifically grew 24% year-over-year to nearly $150 billion This platform is comprised primarily of insurance capital today, but our engagement with pension, sovereign wealth funds, and other LPs is growing. Stepping back, there are 2 key developments underpinning the mass secular shift underway toward investment grade private credit. First, the build out of digital energy and transportation infrastructure is creating compelling deployment opportunities of very significant scale.

Second, large IG rated corporates are increasingly looking to private markets for bespoke nondilutive capital solutions backed by specific assets to support their balance sheet objectives and fund growth. Blackstone is well positioned to be the partner of choice given the breadth of our platform capabilities and reputation. Our recent activity includes large scale financings and numerous sectors around the world, including communications infrastructure and an airline loyalty program in Canada, residential real estate in Australia, and digital and energy infrastructure globally. For our clients, we are originating high quality, long duration investments with favorable counterparty risk all while generating a premium yield over comparably rated liquid credit.

At the same time, our non investment grade credit platform continues to perform quite well. Our flagship funds reported healthy returns in the third quarter, which Michael will discuss. In direct lending, AUM grew 10% year-over-year to nearly a $170 billion despite muted flows for BCRED. Inflows from our institutional LPs remain robust and they are looking to deploy in a lending backdrop that has become more attractive. Overall, our institutional business continues to show solid momentum with AUM up 7% year-over-year. In infrastructure, our dedicated platform grew a remarkable 40% year-over-year to $97 billion. We are approaching the $100 billion milestone only 8 years after launch achieved entirely organically.

Underpinned by 19% net annual return since inception in the commingled VIP strategy. Our multi asset investing business, BXMA, has reemerged as a growth engine for the firm. AUM increased 22% year-over-year $114 billion with record organic net inflows in Q3. BXMA delivered its 20 sixth consecutive quarter of positive returns for its largest strategy. In our drawdown fund area, it was another active quarter of fundraising, We held additional closings for our new private equity flagship secondaries vehicle with over $16 billion raised to date toward a target of at least $22 billion Along with our real estate secondaries vehicle.

We also raised additional capital for our fifth private equity energy transition fund BTEP V, which hit its $8.7 billion hard cap post quarter end. More than 50% larger than the prior fund. This represents the 4th major drawdown fund at Blackstone to hit its hard cap this year. All of which were meaningfully larger than predecessors and had excess demand. And we expect a 5th, our asset based finance drawdown and credit to hit its $4.2 billion hard cap soon. Institutional investor interest clearly remains strong, for high performing Blackstone strategies. Looking forward, we launched fundraising for our new credit energy transition and infrastructure vehicle, targeting a larger size than the prior $7.1 billion vintage.

And we will soon begin raising our 3rd longer dated core private equity vintage. I will finish my remarks today with a comment on real estate. Where we have been navigating a volatile interest rate environment. In the third quarter, we increased valuation cap rates across our holdings in response to the increase in base rates, which led to depreciation in our opportunistic real estate funds. Importantly, while higher rates are a headwind to the sector's recovery, strengthening fundamentals are a tailwind. In 2022, in contrast, when the Fed began its rate hiking cycle, cash flow growth was decelerating across many areas of commercial real estate due to meaningful new supply coming online.

Today, are 3 positive dynamics that did not exist in 2022. First, demand is accelerating in key sectors, including data centers, where we expect a 3x increase in leasing this year across our global platform. And logistics, where our U. S. Holdings saw record leasing activity in Q3. These 2 sectors represent 54% of our global real estate portfolio. Second, new supply has fallen to a decade plus low across many types of real estate. While the cost to build continues to increase A development further accelerated by higher rates and crowding out from the AI infrastructure bill. And third, real estate debt markets have remained resilient unlike in 2022, with the availability of debt up sharply this year.

This does not mean there will not be legacy equity and debt investments in real estate that will face renewed pressure from higher rates, particularly in lower growth sectors. But in this cycle, as with past cycles, we believe we are in a differentiated position overall given where we have concentrated our capital and the quality of our portfolio. In closing, the firm's commitment to our clients is as strong as ever. And we are laser focused on delivering for them. For shareholders, Blackstone remains brand heavy asset light with minimal net debt and a compelling recurring revenue model. And we firmly believe with a lot of growth ahead. With that, I will turn things over to Mr. Chae.

Michael S. Chae: Thanks, John, and good morning, everyone. The firm delivered resilient financial results and overall fund performance in the third quarter. And for the first 9 months of the year, generated double-digit year-over-year growth across fee revenues, fee-related earnings, realized performance revenues, and distributable earnings. All against a backdrop of significant external volatility. Starting with results. The firm's expansive breadth lifted AUM to new record levels. Total AUM rose 10% year-over-year to approximately $1.4 trillion with double digit growth across 3 of our 4 segments. Including robust momentum in private equity and BXMA, and healthy growth in credit, notwithstanding declines in real estate, as we have discussed.

Total fee revenues for the firm rose 8% year-over-year to $2.7 billion Base management fees reached record $2 billion in the quarter, trending on the path we previously outlined underpinned by year over year growth of 13% in private equity and 22% in BXMA. Transaction and advisory fees increased 34% year-over-year to $210 million in Q3, reflective of the continued expansion of the firm's platform. Fee related performance revenues grew 19% year-over-year to $540 million with contribution from 10 perpetual strategies, including BREIT and Real Estate, BCRED and credit, VIP and BXMA for infrastructure, and BXP in private equity. Fee related earnings were $1.6 billion in the quarter. Up 6% year-over-year, equating to $1.26 per share.

Distributable earnings were $1.7 billion or $1.32 per share, underpinned by the strong FRE generation. With respect to net realizations, we said on our last call that we expected a sequential decline in Q3. And net realizations were down 20% quarter-over-quarter. Even so, we were able to execute a number of dispositions, with the largest source of multiple exits in our Asia portfolio. Specifically in Japan and India. Stepping back, the firm has delivered strong financial performance in 2026, despite the year's considerable geopolitical disruptions and market volatility. For the year to date period through Q3, total fee revenues and FRE both grew 17% year-over-year. Realized performance revenues were up 12%. And DE increased 12% as well.

All while seeing positive momentum across fundraising, investment activity and fund appreciation, the key leading indicators of future financial performance. And as we move towards year end and into 2027, the setup is quite favorable. First, with respect to Q4, we anticipate a significant step up in net realizations in the fourth quarter. Including the sales of multiple companies. In addition, BXMA crystallizes performance revenues in the fourth quarter of each year for most of its open ended strategies. With strong returns year to date. As do a number of strategies across the credit complex.

As we look ahead to 2027, expect to return to double-digit year-over-year growth in base management fees, with key drivers including the onset of fees from multiple new drawdown funds in private equity, continued expansion of our perpetual platform, growth in credit and insurance, and the very positive momentum in BXMA. At the same time, the firm's increasingly diversified and scale base fee related performance revenues is a source of strength including notably our institutional infrastructure strategy, which will see its next large scale crystallization of these revenues in 2027. In the context of its remarkable investment performance.

And the surface area for generating transaction fees continues to expand, an underappreciated engine of fee revenue growth for the Meanwhile, the firm's embedded realization potential has continued to build. The net accrued performance revenue receivable on our balance sheet the firm's store value, now stands at $7.3 billion up 12% year-over-year, equating to nearly $6 per share. Nearly 1 third of the receivable in corporate private equity is public and liquid, while the receivable in our private equity energy business has more than doubled year over year. This brings me to investment performance. Amid rising interest rates and significant market volatility, nearly all of our flagship strategies generated positive appreciation in the third quarter, and outperformed comparable indices.

Our dedicated infrastructure platform appreciated 6.4% in Q3, underpinned by continued extraordinary leasing momentum in our global data center portfolio as John highlighted. For the last 12 months, our infrastructure platform appreciated remarkable 29%. Compared to a 4% return for the global infrastructure index over the same period. The corporate private equity funds appreciated 2.8% in the third quarter, and 15% for the last 12 months. With our holdings in Power and Electrification representing the largest gains in the quarter. Overall, our private equity operating companies continue to report healthy underlying fundamentals. Including low double digit revenue growth and strength in margins.

In credit, our non investment grade private strategies reported a gross return of 2.6% in the quarter, and 7% for the last 12 months. Reflecting stable underlying credit performance across the vast majority of our holdings alongside steady current income. Meanwhile, BXMA reported a 0.5% gross return for the absolute return composite in Q3, compared to a decline in the HFRX hedge fund index and 13% for the LTM period. Which was more than double the hedge fund index. The XMA seeks to outperform liquid markets over time with less volatility, and it has done just that. Beating the traditional 60/40 portfolio by 170 basis points per year since the start of 2020.

Finally, in real estate, the Core Plus funds reported positive appreciation of 1.6% in the third quarter, while the BREP opportunistic funds declined 3.2%. Widening cap rates were partially offset by leasing momentum in data centers as well as interest rate hedges. Areas with lower growth were more impacted, including our multifamily housing portfolio. Despite the cost of capital headwinds, favorable portfolio positioning led to positive performance across all 3 of the most recent vintages of BREIT strategies in Q3. Global Asia and Europe. And double digit appreciation in these funds over the last 12 months including 17% LTM appreciation for our latest BREP Global fund. 24% for Asia, and 13% for Europe.

In closing, the firm continues to demonstrate resiliency, and fundamental strength. In a very challenging environment, we have delivered double digit growth across AUM revenue and earnings. And we believe we are very well positioned for the road ahead. Thank you for joining today's call. We would like to open it up now for questions.

Operator: Thank you. We ask you limit yourself to 1 question to allow as many callers to join the queue as We will take our first question from Michael Cyprys with Morgan Stanley.

Michael Cyprys: Hey, good morning. Thanks for taking the question. So the market seems to be reacting to perceived risks from AI related investments. In the context of a higher cost of capital backdrop. So just curious how sensitive in your view is this financing build out to higher rates More broadly, where are you seeing risks here? And how are you protecting your capital from risk of lower than expected returns at the AI complex? I know you have talked about long term contracts, high quality counterparties, but what risk do those contracts not protect you against?

Jonathan D. Gray CIMA: Well, Mike, obviously, it is an area the market is very focused on today. I would start with where we have really focused. Which is on providing compute, which seems to be the area where there are the greatest constraints. We continue to see very significant demand at our companies. Spending it on models is up 20x over the last year. We see all sort of productive uses continuing to expand across our portfolio And we think demand will grow. And the challenge, of course, is chips and data centers and power and amassing capital at scale. And we think at Blackstone, we are very unique because we can provide integrated solutions. We can provide power solutions.

We can provide financing solutions. We can obviously provide data center solutions. And the vast majority of what we are doing is long term contracted. And in the case of the data centers, as you pointed out, these are assets with 15 to 20 year contracts with companies who have $2.5 trillion market caps on average. So I would say for our data center business in particular, the fact that we wait till we have these long term contracts before we put the vast majority of capital on the ground that seems to be a very disciplined approach to deploying capital.

And if anything, all the pushback and the squeeze on capital availability and a bit of the shakeout that we are seeing puts us in, I think, a pretty unique space. The fact that we have expertise and that we can amass capital, we can do very interesting things. it is happening in credit. it is it is obviously happening in real estate and infrastructure. Here for us. So we are aware of the risk whenever you have this kind of large investment boom which is why we focus so much on the picks and shovels.

Why we focus so much on long term contracted assets, why we focus on not doing things on a speculative basis, all of that makes us feel very good. And if anything, as I said, the shortage of compute is growing. And that is making what we build, the entitled sites we have, that are powered, they are actually more valuable today. And I think we will begin to see even larger sites, more concentrated, and more integrated with some of our energy solutions. So we understand that it is a world where people are focused but the CapEx cycle and the need for compute will continue. There seem to be fewer players who can do this.

And that puts us and our investors, we think, in a very good spot.

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

Bart Zarski: Great. Thanks for taking the question, and good morning, everyone. Just wanted to ask around the private wealth fundraising momentum that you are seeing. We are seeing acceleration in 3 of 4 asset classes. Maybe you can talk through I know performance was mentioned, but some of the key drivers and momentum sustaining into 2027, and an early read on BXPM would be great. Thanks so much.

Jonathan D. Gray CIMA: So the drivers, as always, are the performance. that is the key thing. The brand, of course, and the reach of our wealth team around the world and our relationships That is a very powerful combination Performance and it was in the numbers you heard exceptional performance really across the board. If you look at what we have done in private equity, relative to the marketplace, infrastructure, same story. Real estate, our gap versus other competitors is incredibly wide. In credit, where there was all this talk of some sort of private credit apocalypse earlier this year. Course, of that has come to pass. And so we are delivering for the customers and that is the key thing.

And this market, as you know, is very underpenetrated. You know, investors globally are probably about 1% allocated to private assets. And then to the expansion point, we are. We have got a new hedge fund product that we are excited about, had a very good start out of the box. And it is super early days. In some of these, multi asset approaches. That will take time because it is a new offering. People are used to buying you know, individual products. We are gonna have to educate the market about this. But we have done this before.

When we started BREIT, when we started BCRED the early days, took some time I would expect here the reaction from the marketplace has been positive. But it is gonna take some time to build those particular products.

Operator: Thank you. We will take our next question from Craig Siegenthaler with Bank of America.

Craig Siegenthaler: Thanks. Good morning, everyone. Our question is on the evolution of Blackstone's capital markets business. You are still keeping at Capital Light, the HoldCo. While expanding across asset class and geography with investment grade private credit, an increasingly important driver as we just saw in the Broadcom transaction. Transaction. Could you update us on how the business has evolved and how we should think about the long term growth of transaction fees?

Jonathan D. Gray CIMA: Well, I will just start. Do want. Yeah. I would just say, generally, what we see, Craig, is as our platform grows, there is just more transaction activity connected to it. More debt and equity offerings as our wealth business grows, as our institutional business grows, So it. it is it is associated with the overall growth of our AUM and our activity. And we are helping our clients get better execution by using our scale. And then the second component of this is in private credit specifically some of these large bespoke solutions in real assets. Require.

You know, we are using our very large now $300+ billion insurance platform Some of our institutional clients, particularly on the junior pieces, But in some cases, we distribute a bit as well. And so that is growing as that business grows. So we are continuing with this capital light approach. that is what we think is the best way for our shareholders. But we are still at the same time seeing this pretty rapid growth in transaction and advisory.

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

Alexander Blostein: Thank you. Good morning. I was hoping to go back to the AI discussion and maybe just double clicking to the first question for Mike. Obviously, we have seen wider credit spreads and CDS levels move up for Neo Clouds and some extent, some of the more established players. Can you help us just understand to what extent that kind of capital markets move impacts your own valuation, whether it is on the equity side and things like data centers or anything you guys are doing on the debt financing.

And as a follow-up, I guess, to that, as public markets become more constrained, was hoping you could frame the fundraising opportunity you see across Blackstone to fill some of that gap. Thank you.

Jonathan D. Gray CIMA: So from a valuation standpoint, you know, there is a little bit of an impact, obviously, on the present value of stabilized assets which we tend to carry pretty conservatively. So it impacts you know, the multiples a bit. Interestingly, Alexander, on the new assets that you have not yet leased, think you will be able to command a higher yield to absorb this. And you may end up actually in a better spot because it is getting harder to deliver particularly at scale. So we do not really see a massive impact When we commit to these large scale projects, we line up the financing at the same time.

We are very disciplined on how we think about financing this. For the Neo Clouds, I think the key is will they be able to deliver on their compute promises? We have done a number of things in that area providing financing on a secured basis against long term contracts with the biggest hyperscalers We are creating a Neo Cloud but that business is just getting off the ground. The key for those businesses is the deliverability. Compute prices are actually up 50% year-on-year. there is a lot of value in legacy h 100 chips. Before people thought they would depreciate much more quickly.

So for us, you know, in a lot of ways, a world where capital is more constrained and where we have the scale, the expertise, and access to capital. And this gets to the end of your question. That should be beneficial for us. And the ultimate finish product in a world where there is more scarcity of compute should be worth more. And so in terms of fundraising you know, we are continuing to be able to raise capital. Obviously, investors are asking the same questions around AI. But what we continue to see is demand and usage of the AI going up faster than the compute.

And again and again, what we are focused on is what we think of the most senior part of the stack. Either lending or investing against the energy which is a very large area for us, the electrical equipment, and or the. And the data centers that sort of physical infrastructure that is supporting what is happening that we really like to risk return. And if anything, I think the yields will be going up because it is getting harder to deliver that both physically and because of the need to aggregate financial capital to your point, which is getting tougher.

Operator: Thank you. We will take our next question from Chris Kotowski with Oppenheimer.

Analyst: Yes. Following up on that last point, I mean, people talk about data center finance like it is all 1 thing. And you have all these different assets with different risk reward profiles. The land, the envelope of the building, the power source, the chips that go inside. And I guess, how do you see, like, the next 3 to 5 years playing out? I mean, it seems to me like you are your role in all this is being kind of the matchmaker between the capital needs and the and the capital sources. And do you see more of the opportunity on the like investment grade, drawdown funds, opportunistic side?

Or is it or is it investment grade and to insurance companies? Or all of the above? If you could just flesh that out a bit more.

Jonathan D. Gray CIMA: that is funny. that is what I was gonna say. All of the above. Because the needs of capital here are so enormous. it is unprecedented in our lifetimes, amount of capital. And so much of it has to come from the private markets because so much of this is development it is not cash flowing. And so having the ability to do FIP financings either on a junior basis potentially with 1 of the big model companies, or on a senior basis wrapped by 1 of the big hyperscalers or chip companies themselves. We are doing that at scale.

We are obviously, you know, providing financing to, utilities and pipeline companies LNG, renewable developers, all of that is part of this. They need enormous amounts of capital. And that, again, is on both the debt and equity side. And then in the data centers and some of the equipment that goes inside, there is an enormous need for capital. So Should as long as the productivity continues that we see at our companies, their ability to serve their customers much more efficiently, to create new products, and their demand continues to grow. Then I think there is gonna be a continued pull for the need for this compute. And we see ourselves as this holistic solution provider.

1 of the great benefits of Blackstone is that we can play in all these different areas. From investment grade to more opportunistic equity. We can do it in The US, Europe, and Asia. We have got all different platforms. We have expertise. We have obviously got relationships with the big hyperscalers, the model companies the chip companies. And we are utilizing all that ultimately in our core mission. Which is to deliver great returns for our customers. And despite all the negative things you are reading about AI today, when we look across our business, this continues to be the area where we are driving the highest returns.

In the AI infrastructure, a little bit, of course, in the model companies as well. So being able to speak at scale with the key counterparties and be a solution provider Everything from energy through to chips debt to equity, we think that is a very good place to be. And doing it, I would just add, in a very disciplined way.

Michael S. Chae: And I just add to that, from a risk reward standpoint, the consistent comm denominator, whether it is our equity or our lending activities in this AI infrastructure area, are tenants on our leases and customers on our customer contracts who are the largest most creditworthy counterparties in the world.

Analyst: Yeah. I am just curious. Just as a follow-up, In the coming years, should we expect things like drawdown funds for, you know, to finance GPUs for various providers, or do you anticipate that most of the funding is gonna come in kinda with. Within the traditional you know, real estate and for a private equity kind of fund structures and be commingled with other kinds of investments.

Jonathan D. Gray CIMA: You know, it is a possible here we will have a bit of both. I would say in the credit area, we are doing things on a senior basis on investment grade counterparties. that is being done with a range of insurance companies and pension funds. Those are obviously highly rated underlying securities. And then we are we are taking a little more risk on the junior side of some of these transactions In some cases, there are separate SMAs, and you could see us have something focused, for instance, in chip financing specifically But, again, the breadth of what we have in credit $500+ billion, that enables us to do a lot.

And so I think you could see some dedicated products. But at the same time, customers also want some diversification. And we spend a lot of time obviously talking about AI in this infrastructure. If you look across our trillion 4 of assets today, between debt and equity, it is about 7% of our total. Which is still a very large number given our scale. But our clients also want other things. They want exposure to defense. They want exposure to life sciences. They want exposure to India and Japan. They want exposure to sports. there is warehouses, hotels, and travel.

So we have gotta be mindful of delivering everything There will be, in some cases, make sense to have dedicated vehicles but in many cases, it will be in broader commingled vehicles.

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

Glenn Schorr: Hi there. You definitely partially just answered this, but may ask it anyway because I think there is a little more color to have. So recognizing this amazing AI CapEx super cycle might be once in a lifetime, and huge demand for compute in the capital. I am curious on as you pursue going all in on this as I and I get it. You balance the potential of technological obsolescence and then concentration limits for both the fund level and the firm. I am just curious how that comes up in your LP conversations. When you say 7% of $1.4 trillion, I am like, ah, no big deal. Anyway, thanks.

Jonathan D. Gray CIMA: Yeah. I. We spent a lot of time, Glenn, thinking about that. I do think to emphasize the importance of our focus on the physical infrastructure and the focus on long term contracted assets. So the vast majority of that 7% is in data centers that have 15 to 20 year lease terms at initiation with 96% investment grade counterparties with an average market cap of $2.5 trillion. So when we think about risk, that does not feel particularly risky to us. There are things we do with model companies Some of what we are doing in our BXN 1 area with application software companies, and what we have done in our private equity vehicle for individual investors.

Has involved some exposure to the underlying technology Now to date, that has worked out incredibly well, but we recognize there are risks. But we are playing across this entire space And at the same time, you know, we have a huge push into energy which is benefiting from the data centers. It will benefit from robotics, autonomous vehicles. But also just from this large reindustrialization we are seeing and really the electrification of everything. And, again, lots of what we do there is long term contracted.

You know, building power plants off our utilities, the financings that we are doing for energy companies, for LNG companies, So I would say this is a place that focus a ton on risk, on downside, Steven's always stressed the importance of not losing capital We are very wide eyed about what we are doing here. And the way we are deploying capital the contraction. Contracted nature of most of what we are doing and the scale and creditworthiness of the counterparties all of that gives us a lot of comfort.

Operator: Thank you. Take our next question from Bill Katz with TD Cowen.

William Katz: Great. Thank you very much. Loved hearing the substantial increase in realizations into the fourth quarter and the affirmation of the double digit base management fee growth for next year. Maybe unpack or click into that maybe 1 more level. Where do you see the opportunity and the realizations? And then, Michael, as think about the double digit growth, is there any way to sort of frame that range out a little bit and or which segments you really see the greatest opportunity when you look across the businesses?

Michael S. Chae: Thank you. Sure. Thank you, Bill. On the realization part, just to flesh that out a bit more, As we mentioned, let's take the fourth quarter first. We do we are in the middle of the quarter now. We have high visibility into a significant step up in net realizations in the quarter. that is driven by closings on a number of previously announced sales, primarily in revenue equity. And I, you know, I would say that what we have under contract that is expected to close in terms of carry realizations alone in the fourth quarter is expected to surpass the total net realization levels for the firm from the third quarter. So that is a positive.

And then as you know, we have the scheduled year end crystallizations in BXMA in the context of very strong year to date performance as well as a number of year end crystallizations in our credit drawdown funds. So that is a, you know, that is a very constructive outlook for the fourth quarter, and we see that as well for 2027. Right? I would just step back and say broadly, whether it is a fourth quarter or next year, you know, in an exit environment that is not been easy, obviously, for the broader industry, we feel like we really do benefit from how we position the portfolio around areas the market wants.

So whether it is energy, as we have talked about, power and electrification, our energy private equity NAPER balance for the doubling year over year, as we mentioned, Life sciences, Japan, India, and Europe actually will see a pretty robust slate of exits this year. Recently in the leisure and gaming area. And then from a public market standpoint, you know, in an IPO market that is been open but highly selective, we completed, as you know, 9 IPOs since the summer of 2020, 5 this year. The pipeline remains strong.

And that is allowed us to liquefy a good portion of our carry receivable, especially in private equity And to be able to be opportunistic going forward, we find windows in the market with particular securities to monetize our position. So that is a bit of the backdrop. there is obviously an inherent lumpiness with realizations quarter to quarter. As you are seeing and you will be seeing throughout this year, But overall, the underlying realization potentially, I think, remains substantial.

And just stepping back further versus other firms, the evolution of our firm towards more perpetual capital means about half of or nearly half of our invested performance revenue eligible AUMs in perpetual vehicles which is, you know, generating incentive fees without requiring asset sales. So that think is a fundamental advantage for our model. You know, on base management fees, I would just, you know, step back and say that in terms of the path ahead, you know, there are a handful of key drivers, and I hit those in my remarks. there is the full year benefit next year of private equity drawdowns. The third Asia Fund was activated in September.

The fifth energy private equity energy fund hit its hard cap just after the end of the third quarter. We are finishing the SP10 fundraise So we expect the contribution of management fees from these new funds to build through the first half next year as fee holidays conclude and, remaining fundraisers progress in areas like SP That. that is number 1. Second, this powerful expansion perpetual strategies you know, our infra AUM is up 40% year-over-year. Our BXP NAV is up nearly double year over year. BX infra NAV 2.5 times year over year. Then strong events have been BXMA, VA when they are up 24%. Year over year, record organic net inflows in Q3.

Strong growth in credit insurance, across the institutional insurance channels alongside inevitable and eventual stabilization of retail flows in the BDC area. And then the fifth piece is ultimately stabilization in real estate. So, I think when you take those pieces together, those are the building blocks, and that is why we feel like we are well positioned in terms of the path ahead.

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

Daniel Fannon: Thanks. So wanted to follow-up on your comments around the real estate environment, obviously higher rates. So curious just a little bit more detail around the fundamentals and what you are seeing in that asset class.

Jonathan D. Gray CIMA: So there really are, Daniel, some crosscurrents underway here. Obviously, rates went up, and that has an impact particularly on slower growing assets multifamily in The US, some of the assets in Europe. But at the same time, we are seeing accelerating fundamentals. So the sharp drop off in supply that started, call it, 3 years ago is now beginning to show up And when that limited new supply of real estate meets a very healthy economy, so strong demand, you are seeing cash flows growing nicely. In logistics, we had a 45% increase in leasing in our US plat large. it is our largest holding in our real estate business.

Hotels nationally, same store sales are up 6% this year. The industry was flat last year. Obviously, data center leasing very strong. Across our various platforms. We are gonna do 6 gigawatts this year. We think, which is 3x what we did last year. And those 3 categories, when you look at Blackstone real estate, that is over 60% of our exposures are in those 3 asset class. So that is very helpful there. At the same time, the debt market, which 3 years ago was facing a lot of challenges in real estate, has been healthier. There are legacy deals that may be challenged, of course.

And as I said, slower growth assets will be more hit by the rise in rates. But overall, the underlying fundamentals mean there is going to be a recovery here over time. that is really the key thing. And so that is what I think do. I think that is the reason why the REIT market despite the rise in rates, is still up double digit in the public REIT market. So I said, cross currents, but accelerating fundamentals.

Operator: Thank you. We will take our next question from Devin Ryan with Citizens Bank.

Devin Ryan: Thank you. Good morning. A question on the Vanguard and Wellington products now that they have launched. I appreciate it is small today,. But curious how to think about these partnerships and how to think about kind of the expansion for Blackstone into kind of new markets and new customers and, you know, kind of making sure that it is it is incremental versus kind of cannibalistic But 1 thing kinda thinking about is whether this could meaningfully kind of increase exposure into retirement and other advised assets that have historically been pretty difficult for private markets to reach. So I am just curious kind of the bigger picture of kind of where partnerships like this could be going.

Jonathan D. Gray CIMA: Well, I think it. it is very incremental. Because in many cases, we are trying to get to customers we have an access Some of it is structural. So a number of our products to give them maximal flexibility in investing are QP qualified purchaser limited and, therefore, accredited investors can access them. When you put these in a vehicle, with a third party, in this case, Wellington sitting on top, you have a broader universe of investors you can sell to. that is obviously helpful. There are some advisers, and we think underlying customers who wanna be able to push an easy button to not have to subscribe to 4 different funds or different funds plus different liquid products.

So we are we are trying to access that market. And then you point out in retirement, being able to give holistic integrated solutions with best in class products we think that is very helpful. Now we are still. You know, the administrative process is still going through. In DC. We do think when we get some clarity on that, that will help the retirement space. Again, that is gonna be a bit of a journey But being able to make it easier to access alternatives is a path we have really been on for a quarter-century with individual investors. And, you know, 10 years ago, it took a step function up when we created these perpetual products.

We have been moving obviously, globally now, and we have a lot of strength in places like Canada, Australia, Japan. Hong Kong, Singapore, The Middle East, even Europe, Now this is another sort of leg on that journey We are expanding the products. We are making them easier to access. This sort of 1 stop shopping. So I think this is just another step on that journey. it is still early days. But we do think there is a lot of expansion potential here.

Operator: Thank you. We will take our next question from Daniel Finn with Wells Fargo.

Analyst: Hi, good morning. The insurance segment is running mid teens. And you mentioned today more than 20 clients have expanded their relationship in the past 12 months. You talk about the competitive backdrop and the ability to sustain this growth? And then also maybe touch on the fee rate of the incremental mandate in insurance versus the existing portfolio. Thanks.

Jonathan D. Gray CIMA: Sure. I will let you handle the fee part, Michael. On the on the competitive dynamic in the market overall, we really like our position in the insurance market. Because we are independent and we are not insurance companies ourselves selling products against others, And our focus is on being a third party investment manager it gives us a pretty big universe to serve. And what we are seeing with our clients is they are starting in 1 area, with a separately managed account, and then broadening.

We are continuing to get more and more exposure And it really started with, you know, sort of the big 4 strategic accounts which growing the fastest today are the rest of the clients. Who are getting more and more exposure. And what they are finding is that as capital intensity is going up in the economy, the ability to access these investments from someone like us an independent third party manager, who has expertise in underwriting data centers or energy infrastructure or all sorts of companies and hard assets. And the fact that we can aggregate that at scale and deliver them call it, a 150-basis-point premium for comfortably rated public credit.

Michael S. Chae: They are finding that highly attract. And I would say the openness to what we are doing with insurance clients not just in The US, but in Europe and Asia increasingly. That is really growing. So we think that scale in this market's important. it is hard to enter. Because you have gotta be. Have the ability to write multibillion dollar checks We have that ability with our model. And we are doing it, as you know, on an asset light basis.

And so I just think this is it is something that the insurance market from a competitive standpoint is now recognizing that they need to have this capability when they are looking for third party managers there are. there is not a big universe of people doing this at scale. And the other alternative managers who have different models who own insurance companies, they are obviously very capable Their competitors in this field But it is a pretty limited universe of who can write checks and underwrite these transactions. And so we would expect we will continue to see growth in this insurance space and continue to see a lot of growth around asset based financing.

And by the way, 1 other thing I would add is the fact that we have such, robust institutional business for the junior piece of these transactions is a very helpful component when we are out there competing. On the fee rate part, there is a range, of course, and it is client specific. And it is strategy specific. And we have IMAs and SMAs, as you know, as well as sort of what the scale of the relationship is overall. I would say it averages in a range of 40 to 50 basis points. But, again, there is variability there. The margins are attractive, and it is very scalable. We talked about crossing the 300 billion AUM mark.

And more importantly, our ability to originate and deliver excess spread to our clients scales as well. Thank you.

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

Brian Bedell: Great, thanks. Good morning, folks. Thanks for taking my question. Maybe, Michael, just to go back to following up on Bill's question on the base management fee growth and particular, the double digit range. Just I guess in terms of you laid out all the different conditions that are going to contribute to that, which is great. 1, a couple I wanted to touch on were, the dry powder and credit, which is now. You know, has expanded pre pretty substantially. The potential for deployment to contribute to that fee growth? And then what would what would hold it back from getting into, say, the mid teens, I guess, on a year over year basis?

And then just to the extent that you are able to generate, you know, solid double digit base management fee growth, how do you view scaling the margin, you know, Prior earlier in this decade, obviously, that we had. We saw a very robust margin expansion along with a really strong case management fee growth too. Would you expect to see, you know, a better scaling in the next 1 to 2 years versus the prior 2 to 3 years?

Michael S. Chae: Yeah, Brian. A few parts to that from a. In terms of credit and deployment, you mentioned the dry powder balance. It is substantial. $87 billion, just for the BXCI portion. If you include bread, it is $96 billion. And I think you are seeing particularly in the infrastructure and asset based credit area, which overlaps heavily with private investment grade, that deployment, and we talked about the qualitative drivers behind that, really is, it is a robust environment. We do see acceleration there. The AUM in our IABC area was up 31% year-over-year. And that will come more and more into fee earning AUM as invested. The opportunity set is broad, and, obviously, we continue to fundraise there.

So I think that is how to think about the dynamics in credit. I think in terms of what could sort of constrain it 1 way or the other, I think it is fair to say the. You know, a bunch of that is embedded. Obviously, those drawdown funds that are gonna have full years, full year fees next year are more in the private equity side in particular. Those are more or less built in The big portion that perpetual fund fee growth a tremendous sort of, again, built in NAV growth, broader base entering 2027.

You know, 1 variable, at the margin 1 where the other is obviously somewhat market dependent around performance and flows in the course of the year. And then finally, a fact is clearly the sort of stabilization and inflection point around the real estate segment as it relates to base management fees and also the BDC portion of credit. So the timing of that, we, you know, we know what. We believe we know what the endgame is. Which is stabilization inflection, but the timing of that you know, is a variable as well. And then I just think on scalability and margins.

We see it as scalable with the operating leverage built into that we have seen, you know, across our firm over the long term.

Operator: that is great color. Thank you. We will take our next question Brennan Hawken with BMO Capital Markets.

Brennan Hawken: Good morning. Thanks for taking my question. I actually Michael, have another follow-up on that. So you just activated your secondary flagship. You spoke to robust. Fundraising that you expect through next year. So that is gonna contribute some catch up fees. Is the low double digit expectation on a core basis or would that include the catch up fees? And then also, earlier in the year, you guys spoke to 4Q potentially benefiting from some of this these great things that you had highlighted in driving that Will 4 q. How will Q4 bridge us as we get into 2027? Last quarter, you had given a lot of clarity on this quarter.

So should we see a step up, and what kind of order of magnitude would that be? Thanks.

Michael S. Chae: Sure. On the second part, in terms of Q4, I think we expect to see I would call it, modest sequential growth quarter over quarter before this acceleration into 2027. And I think I mentioned earlier especially as these drawdown funds, you know, start to season in. You will see in the middle of the year, I think, that step up even further. And then in terms of your other question, on the first question. Yeah. Was. It was really that was really around the step up shape and management. Oh, sorry. Yeah. You.

Yeah. that is a simple answer, which is when we talk about low double digits, we are talking about the full year of base management fees over the full year of. In 2026. Okay. So inclusive of all of the above. Got it. Thank you. Yes.

Operator: We will take our next question from Mike Brown with UBS.

Michael Brown: Great. Good morning. Thanks for taking my question. Can you just talk a little bit more about the retail channel right now, just what are you kind of seeing in terms of demand across the platform? And as we think about this, higher rate backdrop, what are you observing in terms of asset allocation shifts in terms of new dollars being put to work? And then on some of these newer perpetual products, any view into how these could scale relative to some of your other successful products like BXPE and BX infra? Thank you.

Jonathan D. Gray CIMA: You know, what we have seen overall has been more resilience than I think market participants expected. We had all this noise around private credit And the flows into that area obviously slowed in response. And yet, we raised $9 billion in wealth in the third quarter. There was also a lot of volatility on the screen. And our AUM in this space is up 15% year-on-year. So to me, that says there is a lot of desire for the type of products we are offering with the structure and the performance we are delivering you know, if markets go down a lot, that can impact things. Headlines are tough, But what we have been watching here is steady growth.

And we expect this growth to continue. We think it will be more and more global. It. It will be through the wirehouse and the RIAs and it will be new products. I think the hedge fund product is particularly exciting. Again, it speaks to the scale and breadth of Blackstone that we are the leader in that space globally. You know, for institutions. Now we can offer something very targeted for individual investors. And, again, what we have to do is deliver strong performance. And in that case, limited volatility And if we do that, that can scale and grow to be a large product.

And I think there is more we can do over time This platform we have is remarkable. And the strength of the Blackstone brand is remarkable. And it is what enabled us to run a business on a capital light basis since we started. Know, since Steven created this firm, we use very limited capital for what we do. And we rely on our expertise, our people, our track record, and delivering strong performance. And in the wealth channel, I think we have done that exceptionally well across asset classes, and that bodes well both for the existing products and for new products we will create.

Michael S. Chae: I might just also add, to put a fine point on that. On BX infra, I would say it is quote only $7 billion Our distribution strategy around that has been intentional and selective globally. And so, the performance has been terrific. The asset class is obviously so large on a global basis. So I think we see a lot of runway on that to scale. John mentioned the hedge fund area where I would just add the hedge fund area, I think broadly has come back into favor with a lot of investors.

I think that is been driven particularly by multi strategy strategies that have shown you can deliver double digit absolute returns with less correlation, more market neutrality And a lot of what we are doing are our version of that. Leveraging our platform, and I think very compelling fees and liquidity provision. So And that is an area that is been hard to access in terms of that performance. So we are very bullish about that. As John said, there is other white space. There are things in the lab around new flagship strategies. And then this multi asset space is, that is a long term game, but ultimately a very scalable Thanks, both.

Operator: Thank you. We will take our next question from Benjamin Budish with Barclays Capital.

Analyst: Hi, good morning and thanks for taking my question. I wanted to follow-up on, I think this Glenn's question from earlier. I think he had asked about Blackstone's concentration in AI. I am curious you could talk about how your insurance LPs are thinking about concentration in AI related debt. It seems like the press and some of the kind of industry data out there would suggest small but growing very rapidly. So as you know, AI CapEx infrastructure financing is picking up, how much like incremental appetite is there from your insurance clients?

And to the extent that they may start to get tapped out, is this where the sort of third party kind of traditional institutional IG credit narrative comes into play? Or how else do you think about placing all of that all of those assets?

Jonathan D. Gray CIMA: Well, it is an important question. Our insurance clients, their exposure, as you would imagine, are to the biggest hyperscalers What we are seeing them do in a number of cases is potentially sell liquid corporate bonds in exchange for some of the asset back. So you have exposure to Microsoft or Meta or so forth. And they are thinking about their exposure to an individual name And when they look at what we are doing in asset based financing and the additional spread they can earn for the same underlying credit as well as the support of the physical asset they think about that as an attractive trait.

So we are seeing some of that But, yes, they are mindful of their exposure. 1 thing that I think will evolve over time is an understanding that compute itself has value. When you look at the airline business, you know, lending against aircraft is an investment grade business, not because Spirit Airlines or an emerging market airline has great credit themselves, but it is because of the shortage of commercial aviation in the world. Today, when it comes to compute, be it data centers or chips, people are not putting much value on the underlying assets. They are solely looking at the credit of the counterparties.

I think that will evolve over time, which will expand some of the capacity these insurance companies have. But I do think it is fair to say today right now, there is focus on that. I do think that means a broadening of I do think for us, it means pension funds and wealth funds starting to look at the excess spread in the private investment grade market I think over time, obviously, there will be more ownership by mutual funds and others as well.

So I think this does need to broaden But I do think the most positive thing here is the underlying asset class has a lot of value and we have not yet tapped into that. there is really just focus on the underlying name without any credit for the actual assets themselves.

Analyst: Okay. Thanks, John.

Operator: Very helpful. We will take our next question from Kenneth Worthington with JPMorgan.

Kenneth Worthington: Hi, good morning, and thanks for taking the question. Multi asset, strong inflows in Q3, I think by far a record Can you give us more color on the sales success you had for the quarter? And then what is the organic growth look like as we think about 2027? And can you expand the fee rate from here? Thanks.

Jonathan D. Gray CIMA: Yeah. You know, this is really exciting for us. Our absolute return or hedge fund business, BXMA, had been pretty flat for a long time. And under Joe Dowling, new leadership there, not so new anymore, 6+ years, he is done an extraordinary job turning around performance. The fact that we have beaten 60/40 over that period of time by nearly 200 basis points annually and doing it without any down quarters in the flagship strategy is extraordinary. And clients are responding to that. And we are seeing that growth, to your question, in sort of the general absolute return business that we have there We are seeing strong performance in the multistrat business.

We have begun to build a very high end wealth business there for a select group of clients that is also performing incredibly well. And then we have a liquid business harvest focused on MLPs and energy infrastructure that is doing well. And now we have a new engine here with VXHF And so when we look at this aggregately, this feels like a business that should continue to grow. I do not know what the right number is it 20+% a year? it is obviously a function of what happens inside of the business in terms of returns.

But strong returns with less in the way of net outflows, more in inflows All of that makes us feel like this is a business that is on a path again to really start to scale.

Michael S. Chae: And I would just add, Kenneth, you asked about sort of fee rate and pricing. As John mentioned, different component businesses what you see in aggregate as a blend. But, it is a very positive fixture at the individual division level. And our absolute return area you have seen versus historical trends, the stabilization of average fee rate that is both because they commingled portion of that has, I think, resurged in popularity at a at a higher blended fee. Relative to customized.

In the multi strat area, we are seeing flows growth there and performance growth, and that is, given the nature of the strategy, at a higher fee rate And then you have, things like our total portfolio management wealth area, which average comes obviously at a lower fee rate with very good growth. So the output of that, I think, is you know, is a positive and a positive versus sort of what the dynamics were around fees and pricing a number of years ago.

Analyst: Wonderful.

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

Arnaud Giblat: Yeah. Good morning. A quick ask question for me. You have got a number of funds coming up to their 10-, 11-, 12-year anniversaries. Which is usually the end of their investment period. I Should we expect some step downs in the coming quarters? Thank you.

Michael S. Chae: Yes, Arnaud, that it is obviously sort of that is been built into our results for many years. You saw actually in this quarter in the breadth area, Last quarter, in the middle of the quarter, breadth 8 reached the end of its fund life. there is a termination that actually we had a full quarter of that, of that this quarter, which actually was the sort of the management fee quarter over quarter dynamics. And then, you know, there is other dynamics around that. Across the suite of, older legacy funds in our business. But that would be the most notable 1.

But it is just I would say it is occur as it has been for years in our business. But when there are meaningful developments like the 1 I just mentioned, we will, we will expect to, you know, call it out for you.

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

Patrick Davitt: Hey, good morning, everyone. I am is on direct lending dynamics. You mentioned institutions leaning into what looks like a better deployment opportunity But broader deployment data, we can see, you know, range pretty constrained. Could you give a bit more specifics on how direct lending pipelines are looking? And to what extent the improved spread in terms many players have been talking about has continued and or improved through today. Thank you.

Jonathan D. Gray CIMA: So, Patrick, what I would say is as transaction activity slowed in the third quarter with the volatility, obviously, that had a direct impact on direct lending. Activity. So I do not think that is a surprise On the pricing, what is been beneficial has been the rise in base rates. In both The US and Europe, We have not seen a lot of spread widening. You know, spreads have hung in there pretty well, and tied to the fact that underlying portfolios are really strong. I mean, we saw in our B credit portfolio double digit EBITDA growth for our borrowers. Debt service coverage ratios are 2.3x. We are just seeing.

You know, there is a tail of some of the legacy older deals but that is a small minority. Overall, we are seeing pretty good credit health out there. And on new deals, it is competitive. I would say it is balanced. In terms of capital. So benefit from higher base rates, but spreads, I would say, pretty constant. And seeing any improvement in pipelines? I would not say as of now. I mean, I think, again, all the volatility has slowed the deal business, but there is a desire, I think, for a lot of transactions activity. And as we have talked about companies are performing really well.

I mean, if you look across the Blackstone portfolio, double digit revenue growth. So I think as soon as we get a little bit of tariff firma in the overall sort of geopolitical world, I think you will see a step function increase in transaction activity.

Operator: Thank you. We will take our next I am sorry, we will take our final question from Crispin Love with Piper Sandler.

Crispin Love: Thank you. Good morning. Can you just dig into the real estate management feature directory. At Palm, the quarter was flat there, but management fees were down in that appreciate that the transaction and other fees was a driver of total fees. But what is the outlook for the base management fees in that segment? What needs to happen for those to stabilize and turn positive? Just curious on some of the puts and takes there. Thank you.

Michael S. Chae: Yeah. I think. Actually, Crispin, just hit for the in terms of the third quarter and sequentially, on the dynamics there. I think with Arnaud's question that the biggest factor there was this fund termination of BREP 8 late in the second quarter, which we had a full quarter effect of this quarter. We mentioned before with think, to a lesser extent this quarter, BPP, where there have been headwinds there around lower NAV and certain fee incentives to encourage duration of capital. So those are some of the dynamics there. I think in terms of the outlook, we would expect real estate base management fees to remain broadly stable through the year through year end and into 2027.

And then and sort of the structural dynamics, as you know, are. We are currently in a period between major drawdown fund raises which has its effect on that sequential growth. And then the core plus institutional headwinds I mentioned. But offsetting that, BREIT being back in growth mode with improving flows and obviously, strong performance. So I go back to, in terms of the outlook, we see from here sequential stability in the coming quarters.

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 Tucker: Great. Thank you, everyone, for joining us today, and we look forward to speaking after the call. Take care.