GSO Capital Partners' first quarter revenues fell by 7 percent from Q1 2013 totals, according to an earnings report released by the firm on Thursday. The Blackstone Group’s credit arm attributed the declines to a decrease in performance fees.
“Revenues declined in the quarter … due to performance fees coming in below last year’s very high levels,” said firm president Tony James during a morning media call.
James did not go on to specify what may have influenced such outsized returns last year. A Blackstone spokesperson was unavailable for comment at press time.
Revenues generated by credit-related performance fees declined by 22 percent from Q1 2013, falling from $124.5 million to $96.6 million. Fees from realised carried interest dropped to $19.2 million from $85.5 million last year.
The firm’s mezzanine and rescue lending funds, which account for $16.5 billion AUM, grossed 4.3 percent and 5.3 percent on the quarter, according to an earnings report. During the same period last year, those funds were up 8.3 percent and 5.7 percent, respectively.
Although GSO’s performance was disappointing compared to last year’s Q1 totals, the firm still managed to grow assets under management by 14 percent to $66 billion, according to the earnings report. The firm launched a European CLO and a new global credit fund during the first quarter, boosting AUM by $1 billion.
“Robust inflows and strong appreciation more than offset distributions to limited partners,” James said. “Realizations and capital returns to investors were $3.2 billion for the quarter and a whopping $13.5 billion over the last 12 months.”
In addition to discussing his firm’s performance, James also addressed the myriad regulatory issues that arose in recent weeks as conversations surrounding the tax treatment of carried interest and the deductibility of interest payments, as well as a possible tightening of regulations pertaining to banks’ issuance of leveraged loans, intensify.
“There are a bunch of things out there that could happen. However, given the gridlock in Washington, I’m not sure anything much could happen,” James said. I’m not sure we have any more insight on that than you do.
“Whatever they do down there won’t affect the way we do business.”