There are other businesses (hedge fund solutions, credit) but about half of revenue comes from real estate and the other half from private equity.
Management emphasizes Fee Related Earnings (“FRE”) and Distributable Earnings (“DE”). For FY21, there was $7B in management and advisory fees plus performance revenue minus $3B in compensation and other expenses for FRE of $4B. There was also $4B in “realized performance revenues” (what is this?) which when added to FRE of $4B, net of expenses, was about $6.2B in DE.
Could someone please explain to me what these metrics mean? Which ones include revenue from real estate (as opposed to revenue from private equity)?
Also BX doesn’t deploy much capital in its PE business and generates revenue as a percentage of clients funds. But it would seem that buying lots of real estate would require lots of capital no? For $1 invested in BX roughly what percentage is valued on the discounted future cash flow of management fees vs the value of underlying real estate/future rents from real estate? Am I thinking of this correctly?
Thank you very much.
Leave a Reply