BX Q3 Deep Dive: Private Credit and Real Estate Trends Dominate as Margins Face Pressure

Alternative investment manager Blackstone (NYSE:BX) missed Wall Street’s revenue expectations in Q3 CY2025, but sales rose 20.2% year on year to $2.93 billion. Its GAAP profit of $0.80 per share was 34.8% below analysts’ consensus estimates.

Is now the time to buy BX? Find out in our full research report (it’s free for active Edge members).

StockStory’s Take

Blackstone’s third quarter saw the company deliver strong year-over-year revenue growth, but results fell short of Wall Street’s expectations, leading to a negative market reaction. Management attributed robust inflows and fee-related earnings to continued momentum in private credit, infrastructure, and private wealth channels. However, higher-than-anticipated expenses weighed on profitability. Distributable earnings and net realizations saw significant acceleration year over year, as highlighted by management. President and Chief Operating Officer Jon Gray acknowledged that while transaction and advisory fees nearly doubled year-over-year, margin performance reflected the mix of revenue streams and seasonal expenses.

Looking forward, Blackstone’s outlook is shaped by rising demand for alternative investments across institutional and private wealth channels, as well as increasing opportunities in real estate and energy infrastructure. Management emphasized the importance of product launches and expansion into defined contribution markets. CEO Stephen Schwarzman noted, "We are in early innings of penetrating markets of enormous size and potential," while Gray highlighted the firm’s positioning to benefit from a cyclical resurgence in capital markets activity and the sustained growth of its credit and insurance platforms.

Key Insights from Management’s Remarks

Management linked the quarter’s revenue growth to strong fundraising and expansion across private credit and infrastructure, but acknowledged margin considerations and the importance of ongoing discipline as primary focus areas.

• Private credit platform momentum: Blackstone’s direct lending and asset-based credit businesses grew rapidly, with the infrastructure and asset-based credit segment expanding 29% year-over-year. Management highlighted disciplined underwriting, low loan-to-value ratios, and a focus on investment-grade opportunities as key differentiators from recent headline credit defaults in the broader market.
• Wealth channel expansion: The private wealth platform achieved nearly $290 billion in assets under management (AUM), up 15% year-over-year. Fundraising in this channel more than doubled, with products like BCRED (private credit fund) and BXP (private equity fund) leading inflows. Management cited targeted marketing and new product launches as supporting this growth.
• Real estate sector recovery: Blackstone’s real estate platform, including BREIT (real estate income trust), saw improving performance after commercial property values bottomed in late 2023. The company pointed to increased transaction activity, declining new construction, and strong demand for logistics and data center assets as positive indicators for future appreciation.
• Fee-related earnings growth: Total fee-related earnings rose 26% year-over-year, driven by higher management fees in private equity, insurance, and credit. CFO Michael Chae noted that while YTD margin expansion was healthy, FRE margin in Q4 could be sequentially lower due to seasonal expense factors, but the firm is tracking favorably for the full year.
• Multi-asset and global product launches: Blackstone is preparing for an active 2026, with a focus on launching multi-asset strategies and expanding distribution, particularly in regions like Asia and channels such as registered investment advisors (RIAs). Strategic partnerships with firms like Vanguard and Wellington are expected to support this initiative.

Drivers of Future Performance

Blackstone anticipates that continued product innovation, broader access to alternative investments, and a cyclical recovery in real estate and capital markets will guide its growth outlook.

• Product launches and market access: Management expects a busy year ahead with new product launches, especially multi-asset offerings targeting both institutional and retail investors. Expansion into defined contribution channels and partnerships are seen as major growth drivers.
• Real estate and capital markets recovery: Leadership believes that improving transaction volumes and a rebound in real estate valuations will support higher realizations, particularly as capital markets activity increases globally. However, timing of these benefits depends on sustained market improvement and investor sentiment.
• Margin and fee growth outlook: CFO Michael Chae noted that while management fees are projected to rise, the pace of growth could moderate in Q4 due to prior private equity flagship fund step-ups in the prior-year period and some sequential slowing in real estate, but overall momentum remains positive for 2026.

Catalysts in Upcoming Quarters

Looking ahead, key developments to watch include (1) the pace of real estate transaction activity and signs of recovery in core sectors like logistics and data centers, (2) progress on new product launches and expansion into defined contribution and RIA channels, and (3) the ability to sustain fundraising momentum in private credit and insurance. Execution against these milestones will indicate whether Blackstone can maintain growth through evolving market cycles.

Blackstone currently trades at $155.32, down from $161.79 just before the earnings. Is there an opportunity in the stock?Find out in our full research report (it’s free for active Edge members).

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