BXBlackstone Inc.

“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 12 months. Gains in the quarter were broad-based with particular strength in data centers and in the energy portfolio.”

“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.”

“We've also become 1 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 5 years.”

“If you look at our software exposure and DCD, 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 remarkably good. In fact, in our credit portfolio, our software businesses were the best-performing sector”

“I'd start with acknowledging you're right, this does go beyond software. It does include, as I mentioned, information services, professional services, really sort of the broader white collar world. our biggest exposure would be in software, and that's less than 7%. So pretty small as a percentage of the firm's AUM.”

“The vehicles portfolio positioning, including its 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.”

“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 doesn't happen overnight, but you're 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.”

“It's AI beneficiary companies. Obviously, electricity, digital infrastructure, some of the tech companies that are going to go public this year, then I'd 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.”

“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 1 of the largest infrastructure platforms alongside the largest real estate business in the world, should be quite favorable for our investors.”

“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'll definitely see strength.”

“funds across our global platform, including the most recent vintages of our BREP Global and Asia strategies, Our BPP U.S. Institutional Core+ vehicle and of course, BREIT has significant exposure to a rapidly growing data center portfolio.”

“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've got to be thinking about what are the risks in this world?”

“the biggest investments we made in the quarter were a Spanish waste company, another data center company that we invested in a residential services business, another business in the energy, electrical equipment space.”

“in our private equity vehicle for wealth, a similar story there where we own some of the big LLN and tech companies, the 3 big companies likely to go public. and we also have a bunch of AI infrastructure.”

“In addition to developing data centers, 2 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.”

“Today, we believe Blackstone 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.”

“we've also invested in several of the leading innovators driving the AI revolution itself, such as anthropic and open AI, primarily through our wealth platform.”

“These gains were partly offset by material declines in our software portfolio in the context of the significant contraction of software market multiples.”

“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 modes 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.”

“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.”

“being in a position where we think we're 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.”

“The need for capital to build out AI infrastructure exceeds the capacity of public markets.”