Thanks, Katie, and good morning and welcome to Blackstone's third quarter conference call. Joining today are Steve Schwarzman, Chairman and CEO, Jon Gray, President and Chief Operating Officer, and Michael 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 report in a few weeks. I'd 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 factor section of our 10-K. We'll also refer to non-GAAP measures, and you'll 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. Quickly on results, we reported GAAP net income for the quarter of $1.2 billion. Distributable earnings were $1.9 billion or $1.52 per common share, and we declared a dividend of $1.29 per share, which will be paid to holders of record as of November 3. With that, I'll turn the call over to Steve.
Good morning, and thank you for joining our call. Before we begin, I want to take a moment to acknowledge the horrific shooting that occurred at our New York City offices on July 28. The random attack resulted in multiple deaths, including our beloved colleague, Wesley Lopatner. Wesley was a wife and mother and a dear friend and mentor to many within and outside of our firm. We will greatly miss Wesley. We'll continue to honor her legacy. We're also grateful for the bravery of her building security team, along with the New York Police Department, who responded that day and who put themselves in harm's way every day to protect others. Turning to our results, Blackstone reported an outstanding third quarter.
Distributable earnings increased nearly 50% year-on-year to $1.9 billion, as Weston mentioned, underpinned by a 26% growth in fee-related earnings and a more than doubling of net realizations. Inflows reached $54 billion, the fourth consecutive quarter in excess of $50 billion, and totaled $225 billion for the last 12 months. Our fundraising success lifted assets under management to a new industry record of $1.24 trillion. Looking forward, I believe our prospects for growth are as strong today as at any point in the firm's history. The structural tailwinds driving the alternative sector are accelerating with Blackstone as the reference firm. More investors are being introduced to the benefits of private market solutions than ever before, with growing adoption across the vast private wealth and insurance channels. Following the U.S. administration's recent executive order, we expect the defined contribution market to open to alternatives over time as well.
In these areas, the powerful advantages of our brand, scale, and breadth of capabilities are even more pronounced. At the same time, institutional limited partners are increasing their allocations to alternatives in multiple areas, and they're consolidating relationships with the best performing managers who can provide comprehensive multi-asset solutions. Meanwhile, in terms of deployment, the scope of where we invest continues to expand significantly as we scale our platforms in digital and energy infrastructure, private credit, Asia, the secondaries market for alternatives, and other key growth areas. We are in the early innings of penetrating markets of enormous size and potential. In addition to these secular forces, we're also now seeing the deal cycle turn, creating another significant tailwind for the firm.
The combination of a resilient economy, declining cost of capital, and equity markets at all-time highs is leading to a resurgence in capital markets activity, including global IPO issuance, which more than doubled year-over-year in the third quarter. Notwithstanding the current government shutdown, more conducive capital markets should lead to greater realizations for Blackstone, which in turn support fundraising and deployment. In the last three months, we executed three successful IPOs, and our IPO pipeline for the next 12 months, if converted, would translate to one of the largest years of issuance in our history. Despite all these positive developments, over the past several weeks, there's been a significant external focus on the implications of certain credit defaults in the market. These events have been erroneously linked to the traditional private credit market as a result of misunderstandings and misinformation.
Importantly, the defaults in focus resulted from bank-led and bank syndicated credits, not private credit. Moreover, these situations are widely believed to involve the fraudulent pledging of the same collateral to multiple parties. The traditional private credit model is characterized by direct origination in the context of a long-term hold strategy, with due diligence performed by sophisticated institutional managers and rigorously negotiated documentation. For Blackstone, our $150 billion+ direct lending platform is comprised of over 95% senior secured debt, with low loan-to-value ratios of less than 50% on average, meaning there is significant borrower capital subordinate to our positions in nearly all cases from companies backed by financial sponsors or public companies.
In the private investment grade area, we've concentrated our activities in multi-trillion dollar markets, where Blackstone is often a leading player, including data centers, energy infrastructure, and real estate, with our loans secured by underlying assets of excellent quality. Our long-term, highly disciplined approach to investing in credit is the foundation of the strong results we've produced in this area, as with every business at the firm. Our non-investment grade private credit strategies have generated 10% returns annually, net of all fees, since inception nearly 20 years ago. In direct lending specifically, we've experienced annual realized losses of only 0.1%, including through the global financial crisis. Our investment-grade focused private credit platform in BXCI has experienced zero realized losses to date. Of course, as the cycle progresses, it's reasonable to assume we'll see some increases in defaults, but we believe our structural advantages will continue to produce superior results.
Performance has powered our growth in private credit, and we believe it will continue to power our growth in the future. Stepping back, this month we celebrate Blackstone's 40th anniversary. It's been, I can assure you, an extraordinary journey. The firm has grown from a startup in 1985 to the largest alternative asset manager in the world today. I'm one of the 50 largest public companies in the United States. Importantly, we achieved almost all of this growth organically, which is quite distinctive among large firms in our industry. We are business builders at Blackstone, not business buyers. While it's harder to build a business than buy it, over the past 40 years, we methodically planted seeds that would grow into major market-leading platforms in nearly every area in which we operate.
What we've achieved over the past four decades would not have been possible without the efforts of three extraordinary individuals who worked alongside me to either start the firm or to take it to the next level. Pete Peterson, my co-founder, gave us the necessary credibility that provided the launchpad for our growth. He was joined in 2002 by Tony James, who helped professionalize the organization and led us into many new business areas. Jon Gray took over in 2018 and has done a remarkable job managing the firm and pioneering a plethora of new business lines and products. Jon also redefined our investment approach to emphasize thematic positioning, resulting in our concentration today in data centers, where we're the largest in the world, energy and power, logistics, private credit, and India, among other winning areas.
Jon, as did Tony and Pete during their time at Blackstone, demonstrates an unstoppable work ethic and profound care for the firm, its reputation, and its people. Each of them changed the destiny of the firm and have been the best partners for me that I could have imagined. I owe them all an enormous debt of gratitude. Looking forward, what's been built at Blackstone is ideally designed for the environment we see before us and to capture the generational shifts underway in the global economy and markets. In terms of where we raise capital, we believe Blackstone is the partner of choice to bring the best of private markets to a rapidly expanding universe of investors.
In terms of where we invest, the future requires massive capital solutions across all forms of equity and debt capital to power the AI revolution, to develop the infrastructure needed to meet the rising global demand for energy, to fund the extraordinary advancements in drug development in the life sciences area, to partner with large investment grade-rated corporates who are increasingly looking to private credit to meet their objectives, to help India meet its incredible growth potential, and to drive forward other transformative megatrends that will define the investment landscape for decades to come. Alternatives will play a vital role in this future, and we see Blackstone leading the way with the largest and broadest platform and the deepest investment capabilities underpinned by the power of our brand. The firm has achieved much in the past 40 years, but I strongly believe the best is ahead.
Thank you to our shareholders for joining us on this adventure. The adventure continues. With that, I'll turn it over to Jon.
Thank you, Steve, and good morning, everyone. What Steve has done to both create and continue to drive this firm for 40 years is the stuff of legend. I'd also like to emphasize what Steve said about Wesley. She was an extraordinary woman, colleague, and dear friend. Simply the best of the best. We will miss her a ton. Moving to the quarter, this is an exciting time for the firm and our investors. The deal dam is finally breaking, and we have a bunch of secular tailwinds driving us forward as well. I'm going to focus my remarks specifically on the growing sources of capital inflows at the firm. In corporate and real estate credit, we crossed the $500 billion milestone, up a remarkable 18% year-over-year. In private wealth, our AUM in the channel grew 15% year-over-year to nearly $290 billion.
In our institutional business, we're seeing strong momentum across numerous areas in our drawdown and open-ended vehicles. Diving into credit, private credit markets are expanding from their origins in non-investment grade corporate credit and direct lending to become a key mechanism for financing the real economy, including commercial finance, consumer and residential finance, fund finance, and of course, infrastructure. Blackstone is tremendously well-positioned to lead this evolution as the largest third-party investment manager in credit globally, alongside our continuous innovation. Notably, our infrastructure and asset-based credit business grew 29% year-over-year to $107 billion, one of the fastest growing areas at the firm. Our scale gives us access to what we believe is a broader set of opportunities across the risk spectrum, which we can offer holistically to clients.
As a result, we're seeing robust demand for multi-asset credit solutions across our three I's: institutions, insurance companies, and individual investors. Another important development underway in credit markets is the rising opportunity to partner with large investment grade-rated corporates, which we've discussed previously. Fortune 500 companies with substantial funding needs are increasingly looking to private credit for customized long-duration capital solutions, which are difficult to replicate in public markets. Scale and reputation are key, and Blackstone has established ourselves as a partner of choice, following our landmark transactions with EQT Corp and Rogers Communications. In the third quarter, we executed another major partnership, a $7 billion investment. We are leading an adventure with energy infrastructure company Sempra to support construction of a liquefied natural gas project on the Gulf Coast.
These corporate partnerships provide our clients with access to high-quality, directly originated investment in a sector where we have high conviction, as always, without taking on balance sheet risk. Meanwhile, in the insurance channel, our AUM grew 19% year-over-year to $264 billion across IG private credit, liquid credit, and other strategies. Our open architecture, multi-client approach is a major advantage. Our platform now includes 33 strategic and SMA relationships, and we continue to add more. Importantly, in the past 12 months, nearly 2/3 of our clients have expanded their relationship with us, the strongest testament to the value we deliver for them. In our IG-focused area overall, we generated over 170 basis points of incremental spread year-to-date versus comparably rated liquid credit.
Our farm-to-table model, which brings clients directly to borrowers, is designed to produce a structural premium to liquid markets, particularly vital in an environment where spreads and interest rates are tightening. Turning to private wealth, where our platform has grown to nearly $290 billion, as I mentioned, up threefold in the past five years. To put our scale in perspective, a recent Goldman Sachs research report highlighted that Blackstone has an estimated 50% share of all private wealth revenue among nine major alternative firms. To put our momentum in perspective, we raised over $11 billion in the channel in the third quarter, more than doubled year-over-year to the highest level in over three years. BCRED led the way, raising $3.6 billion, and is on pace for a strong Q4. BXPE raised $2.1 billion in the third quarter, bringing its NAV to $15 billion in only seven quarters.
BRE generated healthy sales of roughly $800 million in the third quarter, while repurchases continued on their downward trajectory to the lowest level in three and a half years. Finally, BX Infra raised over $600 million in Q3, with its NAV exceeding $3 billion only three quarters after launch. In private wealth, as with every business at Blackstone, it all comes back to investment performance. BCRED has achieved 10% net returns annually since inception nearly five years ago. BRE has generated 9% net returns for its largest share class for nearly nine years, a 60% premium to public real estate markets, including approximately 5% net for the first three quarters of the year. BRE's exposure to data centers, now almost 20%, continues to be extremely helpful in driving its results. BXPE has delivered a 16% annualized net return for its largest share class since inception.
Our investment performance powers our fundraising along with our ability to innovate. Looking forward, we expect 2026 to be our busiest year yet in terms of product launches, with a significant focus on multi-asset opportunities. We're also broadening distribution in several major markets around the world and moving deeper into key sub-channels, including the RIA channel. With these developments, alongside our strategic alliance with Wellington and Vanguard, our partnership with LNG in the U.K. wealth and retirement markets, and the massive potential in the U.S.-defined contribution channel over time, the opportunity in private wealth continues to expand for Blackstone. Moving to our institutional business, which has grown by 64% over the last five years and has strong momentum across multiple areas. In infrastructure, our dedicated platform grew 32% year-over-year to $69 billion, including over $3 billion raised in the third quarter.
The co-mingled BIP strategy has generated remarkable 17% net returns annually since inception. Our multi-asset investing business, BXMA, grew 12% year-over-year to a record $93 billion, again driven by performance. Q3 represented the 22nd consecutive quarter of positive composite returns for BXMA's largest strategy. Investors are responding favorably, with BXMA generating year-to-date net inflows of over $5 billion, the highest in nearly 15 years. In our drawdown fund area, it was another quarter of fundraising. We held additional closings for our new private equity Asia flagship, bringing it to over $9 billion as of quarter end, already significantly larger than the prior $6 billion vintage, and we expect to meaningfully exceed our original $10 billion target. We also raised additional capital for our next life sciences flagship, bringing it to $3.3 billion, already more than 2/3 the size of the prior $5 billion vintage.
In credit, we held an initial close of $1.6 billion for our new high-yield asset-based finance strategy, targeting $4 billion. In secondaries, we finished raising the largest ever infrastructure vehicle at $5.5 billion, and we're now raising our next PE secondaries flagship, targeting at least the size of the prior $22 billion vintage, with the first major close expected in the fourth quarter. Also in Q4, we expect to launch fundraising for the fifth vintage of our private equity energy transition strategy, with the prior vintage already approximately 70% committed only 16 months after starting the investment period. Other drawdown strategies we are raising include opportunistic credit, tactical opportunities, and GP stakes. Overall, we believe investor confidence in Blackstone is as high today as ever, which, as you've heard, is translating to growing capital commitments across many areas.
In real estate specifically, investor sentiment is starting to improve following the downturn. We remain firm believers in the sector's recovery and that flows ultimately follow performance. Commercial real estate values bottomed in December 2023 and since then have been slowly improving. We think they're now approaching a steeper point in that recovery curve. The cost and availability of capital have been steadily strengthening, and transaction activity has been increasing, including by 25% year-over-year in U.S. logistics in the last 12 months. In a market driven by supply and demand, the dramatic decline in new construction starts, including to the lowest level in over a decade in U.S. logistics and apartments, our largest sectors in real estate, should be very positive for values over time.
As we've stated before, we believe Blackstone is the best positioned firm in the world to benefit from the recovery underway in real estate markets. In closing, the firm is in outstanding shape by any measure. A cyclical resurgence in transaction activity, alongside multiple secular growth engines, should be very positive for our shareholders. With that, I will turn things over to Michael.
Thanks, Jon, and good morning, everyone. Over the past several quarters, we've highlighted how the scaling of the firm's platforms in key growth channels is driving robust momentum in fundraising, assets under management, and FRE. In addition, we've outlined a path of accelerating net realizations over time as capital markets strengthen. The third quarter was an excellent illustration of these dynamics at work and reinforces a favorable multi-year picture for the firm. Starting with results, AUM continued to advance to new record levels. Total AUM rose 12% year-over-year to $1,242 billion, while fee-earning AUM grew 10% to $906 billion. Management fees increased 14% year-over-year to a record $2 billion, underpinned by continued double-digit growth in base management fees, including 23% growth in base management fees for the private equity segment, 18% for credit and insurance, and 15% for BXMA.
At the same time, transaction and advisory fees for the firm nearly doubled year-over-year to $156 million, with our capital markets business reporting one of its two best quarters in history following a record Q2. While we expect a lower baseline of these revenues in the fourth quarter, the expanding scope of the firm's investment activity is widening the aperture of activity for the capital markets business. Fee-related performance revenues grew 72% year-over-year to $453 million in the third quarter, generated by nine different perpetual strategies, including BCRED and multiple other vehicles across the credit complex, BRE in real estate, BXPE in private equity, and BIP in infrastructure. Overall, total fee revenues for the firm grew 22% year-over-year to $2.5 billion in the third quarter.
Fee-related earnings increased 26% year-over-year to $1.5 billion, or $1.20 per share, one of the three best quarters of FRE in our history, driven by the growth in fee revenues along with healthy margin expansion. With respect to margins, as we've stated before, it's most informative to look over multiple quarters given entry-year movements. On a year-to-date basis, FRE margin was 58.6%, reflecting expansion of over 100 basis points versus the prior year comparable period. While we expect FRE margin in the fourth quarter to be sequentially lower due to seasonal expense factors, for the full year 2025, we are tracking favorably against the initial view of margins we provided in January. Distributable earnings increased 48% year-over-year to $1.9 billion in the third quarter, or $1.52 per share, powered by the strong double-digit growth in FRE alongside a significant acceleration in net realizations.
We generated $5.05 billion in net realizations in the quarter, more than double the prior year period, and up 55% sequentially in Q2. The largest single realization in the third quarter was the sale of an interest in the GP stakes portfolio within our secondaries platform at the end of September. We also completed the full exit of Hotwire, sales of certain U.S. energy assets, and a number of other realizations across the private and public portfolios. Looking forward in terms of fund dispositions, we have a robust pipeline of processes underway amid the improving transaction backdrop, and we believe we're moving toward acceleration in 2026, concentrated in private equity with expanding contribution from real estate over time. The firm's underlying realization potential is significant.
The net accrued performance revenue on our balance sheet, our store of value, stood at $6.5 billion at quarter end, or $5.30 per share, while performance revenue eligible AUM in the ground has reached a record $611 billion. Turning to investment performance, our funds delivered healthy returns overall in the third quarter. Infrastructure led the way with 5.2% appreciation in the quarter and 19% for the last 12 months, reflected in broad-based gains across digital infrastructure, including continued notable strength in our data center platform, along with gains in our power and transportation-related holdings. The corporate private equity funds appreciated 2.5% in the quarter and 14% for the LTM period. Revenue growth at our operating company strengthened to 9% year-over-year in the third quarter, while margins have remained resilient, supported by labor market conditions that are in balance and continuing to moderate.
In credit, our non-investment grade private credit strategies reported a gross return of 2.6% in the quarter and 12% for the LTM period, reflecting healthy underlying credit performance. Default rates across our non-investment grade holdings overall ticked up slightly but remain minimal. In our direct lending portfolio specifically, realized losses were only 12 basis points over the last 12 months. BXMA reported a 2.9% gross return for the absolute return composite in Q3 and 13% for the last 12 months. Notably, BXMA has delivered positive composite returns in each of the past 30 months, which is leading to strong inflows in the segment's fourth consecutive quarter of double-digit AUM growth in Q3. In real estate, values were stable overall in the third quarter. The core plus funds appreciated modestly, driven by the third straight quarter of positive performance by BRE.
The opportunistic funds declined slightly in the quarter, with positive overall appreciation in the underlying real estate, offset by the negative impact of foreign currency movement. In total, our real estate platform remains well-positioned. Three of our highest conviction sectors, which are supported by very positive long-term fundamentals: data centers, logistics, and rental housing, comprise approximately 75% of the global equity portfolio and nearly 90% of BRE. Overall, our investors have continued to benefit significantly from the firm's positioning, with leading platforms to address many of the most important market opportunities globally, including the largest data center business, the leading energy infrastructure platform, the largest third-party focused private credit business, one of the largest private market secondaries platforms, a leading life sciences business, and what we believe is the largest alternative business in India.
These platforms have powered our investment performance and our growth, and we expect we'll continue to do so in the future. In closing, Blackstone is exceptionally well-positioned, supported by both cyclical and secular tailwinds. The breadth and diversity of our global portfolio is a source of strength, while the firm's culture of innovation continues to drive us forward, leading to outstanding financial performance for shareholders. With that, we thank you for joining the call and would like to open it up now for questions.