Operator: And our next question is coming from Adam Beatty from UBS. Please go ahead.
Adam Beatty: Thank you, and good morning. Just a follow-up on BPP. You talked a little bit about kind of slowing new commitments in the near or medium term. Just wondering in terms of existing clients and redemption requests, if those are elevated at all, whether that might be driven maybe by liquidity as in the retail channel or just buy some other reallocation. Also on that, to the extent that redemption requests were to be elevated either now or in the future does that impact at all your ability to collect performance fees? Thank you.
Jon Gray: Yeah. So on BPP, as we talked about, it’s $73 billion. It’s made up of a lot of vehicles. The majority, I believe, of which are today not open on redemptions. We have in aggregate. I think the number is about 7% outstanding redemption requests across that entire platform. But importantly, as we talked about earlier, institutional investors understand that liquidity comes from new inflows. And that’s very different than the expectations in the private wealth channel. And so I think that’s why it’s just a different dynamic. And the short answer is, yes, I talked about it earlier in this kind of environment for a variety of reasons we expect we’ll see less in the way of flows in some of these vehicles. They’re not all the same.
There may be more interest, for instance, in Core+ Asia real estate than maybe other geographies or other sectors. But this is an area, as I said, I expect the growth, the net growth in the near-term will be far more muted. But because if you look at it aggregately, where we position the portfolio, we feel quite good. So if you look at this in BPP, we’ve got something like €“ I think we’ve delivered 11% net across this platform over time. When you look at life science office buildings, logistics, residential, that’s something like 70% of that portfolio. And so I think that, again, will be the key determinant. But right now, there are some near-term headwinds in that space.
Adam Beatty: Very helpful. Thank you.
Operator: Our next question is coming from Patrick Davitt with Autonomous Research. Please go ahead.
Patrick Davitt: Hi, good morning everyone. Could you update us on how — I know it’s early, obviously, but how LP, like, institutional LP commitment discussions have evolved as we restarted the process in January. More specifically, any signs that the backup and PE fundraising is starting to clear? And then more broadly, could you frame any asset classes that you’re seeing any meaningful shift in demand for positively or negatively?
Jon Gray: I would say this; the desire for our alternatives remains very strong. Here in the US, New York State, the legislature actually increased the allocation for the big three pension funds here by roughly one-third. You’ve heard some other CIOs publicly talk about wanting to increase allocation to alternatives I was in Europe a couple of weeks ago meeting with some large insurance companies and institutional investors. They wanted more in alternatives. There are some constraints today certainly related to over allocation in the PE area, specifically with US clients. There are some currency headwinds that’s made it a little harder for overseas investors. And I would say there is a little bit of a shift. I think private credit is considered more attractive today.
And so we see a lot of people moving in that direction. Infrastructure that we talked about earlier is considered quite attractive, secondary. And I would say opportunistic real estate, we’ve had a very good response both to our global fund, of course, and I expect we’ll do fine with our European product as well. So I think these things tend to ebb and flow, but the overall path of travel is towards more alternatives, and that’s obviously positive for the industry and positive for us.
Weston Tucker: Thanks. Next question please.
Operator: The next one is coming from Ben Budish with Barclays. Please go ahead.
Ben Budish: Hi. Thanks so much for taking my question. I wanted to ask about the FRE margin profile. You beat the consensus expectations up pretty nicely in the quarter. Just thinking about in fiscal 2023 and over the next few years, you’ve kind of indicated a sizable step-up in FRE. You indicated very high turns business to scale. Just wondering, if you could share your thoughts around FRE margin expectation for fiscal 2023 and how it should grow over the next couple of years? Thanks.
Michael Chae: Sure, Ben. I mean, I think look, the big pick — as you know, we don’t give spot guidance on every margin targets in the short-term. But our track record over time of sustained expansion, I think, is obviously evident. And I think in general, substantively, we do feel like we have a high degree of control and an appropriate level of discipline with respect to our cost structure. I would just say in terms of the near-term outlook, we remain confident in margin stability over the next year and also for the potential for continued expansion over time. In OpEx, I would kind of highlight, you did see we talked a lot sort in the course of 2022 about the resumption of T&E and sort of the difficult comparisons. And you did see a flattening of that year-over-year growth rate in other OpEx in the second half of the year.
And so what I would say is in 2023, especially I think in sort of the last three quarters of the year, that year-over-year comparison will be even easier. So I would just say, in general, without giving specific targets, we feel good about margin stability and the possibility and potential for continued expansion over time without putting an exact time frame.
Ben Budish: Okay. Great. Thank you so much.
Operator: Our next question is coming from Brian McKenna with JMP Securities. Please go ahead.
Brian McKenna: Thanks. Good morning everyone. So you’re clearly in a great position to deploy capital into the dislocation across markets with $187 billion of dry powder. A lot of this capital sits within your traditional drawdown funds and strategies. So how should we think about deployment activity moving forward for some of your retail products?
Jon Gray : Well, for the retail products, I think this is one of the reasons why getting this large slug of institutional capital was helpful. It gives us the potential to start doing that. Obviously, the activity levels, though overall will be related to flows. There’s a correlation, of course, if we get new flows, net flows into BREIT and BCRED. And we think it is a good time, because you can buy assets, in some cases, at attractive prices because of the dislocation. So I think that’s how we see the world today, and that’s why over time, as we think capital comes back here, that will allow us in these private wealth channels to deploy more capital, that would be a very favorable thing.
Brian McKenna: Thank you.
Operator: And there are no further questions in the queue. So let me hand it back over to Weston Tucker for closing remarks.
Weston Tucker : Great. Thank you, everyone, for joining us today and look forward to following up after the call.
