by Chibuike Oguh

NEW YORK (Reuters) – Blackstone (NYSE:) Inc said on Thursday its second-quarter distributable earnings fell nearly 40%, mainly due to a sharp decline in asset sales from its real estate and credit businesses.

Distributable earnings, which represent cash used to pay dividends to shareholders, fell to $1.2 billion from about $2 billion a year ago. This resulted in distributable earnings of 93 cents, compared with the average analyst estimate of 92 cents compiled by Refinitiv.

Blackstone said its net profit from asset sales fell 82% to $388.4 million from $2.2 billion in the year-ago period, as higher interest rates, sticky inflation and economic uncertainty continued to weigh on its merger-and-acquisition activity.

A large portion of the lower asset disposals came from Blackstone’s real estate unit, where its net profit plunged 94%, while its credit division declined 46%.

Still, its private-equity business saw a 20% increase in performance fees, driven by a secondary share sale of Blackstone’s stake. London Stock Exchange Group (LON: ) and Gates Industrial (NYSE: ) Corporation.

Blackstone said its corporate private-equity fund grew 3.5% during the quarter, compared with an 8.3% increase in the benchmark. Its private credit funds increased by 3.3% while hedge fund assets increased by 1.9%. Opportunistic real estate funds were flat.

Under generally accepted accounting principles (GAAP), Blackstone’s net income was $601.3 million, while the net loss was $29.4 million due to a jump in revenue from performance fees and core investments.

Blackstone’s total assets under management reached the $1 trillion milestone for the first time, and was in line with its previous outlook, which was based on strong fund raising of $30.1 billion in the quarter. It also had approximately $195 billion in unspent capital and declared a quarterly dividend of 79 cents per share.

(This story has been corrected to say the analyst average estimate in paragraph 2 was 92 cents)