Private equity giant Blackstone Group posted better-than-expected earnings on Thursday, driven by increased performance fees and improved valuations of its portfolios.

Private equity firms suffered in 2008-9 from sliding stock markets, which reduced the values of their investments, and from the limited availability of credit for new deals.

But both have improved, with valuations higher and increased debt available for new deals.

The availability of debt for... new transactions is back to normal, perhaps even above normal in terms of leverage levels, said Blackstone's Chief Operating Officer Tony James, although he stressed that was for mid-sized deals.

Blackstone said it marked its private equity portfolio up 7 percent for the quarter and up 12 percent for the year.

Despite a 31 percent drop in 2008, Blackstone's private equity portfolio is marked at 1.3 times its cost, it said.

The value of its real estate portfolio dropped 35 percent for the year, but was about flat for the quarter, and is valued at around 0.9 times its cost.

It is the first time we've seen stabilization in real estate values for a couple of years, said James.

Blackstone's fourth-quarter economic net income (ENI) was $329 million, compared with a loss of $764 million a year earlier. For the full year, ENI rose to $703 million, from a loss of $1.2 billion for 2008.

On an after-tax basis, ENI was 29 cents a share. Analysts expected, on average, 20 cents a share, according to Thomson Reuters I/B/E/S/.

Blackstone's shares were little changed, down 1 cent at $13.99.


Blackstone has had a difficult time exiting investments by taking them public during the recent volatility in the markets.

Earlier in February, Blackstone-backed airline ticketing company Travelport LLC called off its $1.78 billion London listing, postponing what would have been the biggest IPO in London in two years.

Merlin Entertainments, the Blackstone-owned theme park operator that was talking to bankers in October, said it has no near-term plans to go public.

But one of its companies, Graham Packaging Co Inc made its debut on the New York Stock Exchange on February 11, paving the way for an exit even though the firm did not get the price it wanted or sell the shares it planned.

James said that late in the year there was a sharp pickup in the number of its investments it exited.

We have a number of transactions pending, said James. They obviously won't all get done -- we withdrew the IPO of Travelport -- but there's a lot of activity on the realization side which is the first time in 18 months that's been true.

James also said that since the beginning of last year, Blackstone bought back, amended or extended about $23 billion of debt in its portfolios.

Blackstone said it would pay a quarterly distribution of 30 cents per unit.

Blackstone owns the Florida SeaWorld amusement park where a killer whale killed a trainer on Wednesday.

The thoughts of everyone here at Blackstone are with the trainer's family and loved ones, said a Blackstone spokesman at the beginning of the call on Thursday.

(Reporting by Megan Davies, editing by Maureen Bavdek, Dave Zimmerman)