Blackstone Reports First Quarter 2012 Results

Economic Net Income was $432 million for the first quarter of 2012, driven by strong growth and appreciation across Blackstone's funds. Distributable Earnings were $162 million for the first quarter of 2012.

GAAP Results Attributable to The Blackstone Group L.P. were net income of $58 million in the first quarter of 2012, which includes net IPO and acquisition-related charges.

Total Assets Under Management increased 27% to $190 billion at March 31, 2012 from $150 billion at March 31, 2011, while Fee-Earning Assets Under Management increased 26% to a record $156 billion at March 31, 2012, from $124 billion at March 31, 2011.

Blackstone declares a quarterly distribution of $0.10 per common unit.

NEW YORK--()--The Blackstone Group L.P. (NYSE: BX) today reported its first quarter 2012 results.

Economic Net Income (“ENI”) was $432.3 million for the first quarter of 2012, a decrease of $138.7 million compared to ENI of $571.0 million for the first quarter of 2011. The decrease in ENI was principally due to a lower rate of increase in the carrying value of assets in the first quarter of 2012 compared to the first quarter of 2011, partially offset by an increase of $71.1 million, or 17%, in Management and Advisory Fees to $496.8 million.

Blackstone’s managed assets demonstrated consistently strong growth with Fee-Earning Assets Under Management and Total Assets Under Management rising to a record $156.3 billion and $190.1 billion, respectively, at March 31, 2012, driven both by inflows and investment appreciation during the quarter. The Blackstone funds had $37.8 billion of committed but uninvested capital, or “dry powder”, at the end of the first quarter of 2012.

For the first quarter of 2012, Total Segment Revenues were $974.1 million, down from $1.2 billion for the first quarter of 2011 due to lower Performance Fees and lower Investment Income. Total Management Fees increased to $496.8 million, up 17% from $425.7 million for the first quarter of 2011, principally due to the increase in Fee-Earning Assets Under Management. Performance Fees decreased 36% to $385.8 million for the first quarter of 2012 driven by decreases in the Real Estate and Private Equity segments. The decreases in Performance Fees and Investment Income in the Real Estate and Private Equity segments were due to a slowing in the appreciation in the carrying value of assets compared to the prior year quarter.

Total Segment Expenses were $473.8 million for the first quarter of 2012, a decrease from $504.6 million for the first quarter of 2011, primarily due to the decrease of $67.6 million in Performance Fee Compensation. Compensation was up 13% to $254.8 million, principally as a result of increased investment across Blackstone supporting its continued strong growth in assets under management. Blackstone’s non-compensation expenses were up 6% from the first quarter of 2011 driven mostly by professional fees, financing activities and occupancy costs related to continuing global expansion and the launch of new products.

GAAP results for the first quarter of 2012 included Revenues of $952.0 million, compared to $1.2 billion for the first quarter of 2011, and Net Income Attributable to The Blackstone Group L.P. of $58.3 million, compared to a net income of $42.7 million for the first quarter of 2011.

Stephen A. Schwarzman, Chairman and Chief Executive Officer, said, “Blackstone’s first-quarter results demonstrate our ability to generate strong returns for our investors through market cycles and across asset classes, and attract new capital. Every one of our investing businesses experienced both net capital inflows as well as value appreciation in the quarter. This resulted in total assets under management of $190 billion, a firm record, up an impressive 27% year over year. We continue to invest in the firm’s ability to identify and source exclusive transactions on a global basis, as well as our operations capabilities, to sustain our outperformance over the long-term. And as markets continue to heal, we are well positioned to take advantage of more opportunities to convert value creation to both returns for our limited partners and cash earnings for our public unit holders.”

The table below details Blackstone’s ENI, Net Fee Related Earnings from Operations, Distributable Earnings and Fee-Earning Assets Under Management as of, and for, the quarters ended March 31, 2012 and 2011. ENI, Total Segments includes unrealized gains (losses) and the direct compensation impact related to those gains (losses), but excludes IPO and acquisition-related charges.

  As of and for the Three  
Months Ended March 31, Variance
2012   2011 $   %
 
(Dollars in Thousands, Except per Unit Amounts)
Economic Net Income, Total Segments $ 500,268 $ 659,671 $ (159,403) -24%
Provision for Income Taxes (a)   67,932   88,631   (20,699) -23%
Economic Net Income, After Taxes $ 432,336 $ 571,040 $ (138,704) -24%
 
Economic Net Income, After Taxes per Adjusted Unit (b) $ 0.39 $ 0.51 $ (0.12) -24%
Net Fee Related Earnings from Operations $ 138,025 $ 98,546 $ 39,479 40%
Distributable Earnings $ 162,121 $ 201,915 $ (39,794) -20%
Distributable Earnings per Common Unit (c) $ 0.15 $ 0.18 $ (0.03) -17%
 
Fee-Earning Assets Under Management
Private Equity $ 37,323,635 $ 35,892,804 $ 1,430,831 4%
Real Estate 36,647,462 26,454,012 10,193,450 39%
Hedge Fund Solutions 40,543,772 35,847,002 4,696,770 13%
Credit Businesses   41,746,577   25,838,878   15,907,699 62%
Total Fee-Earning Assets Under Management $ 156,261,446 $ 124,032,696 $ 32,228,750 26%

(a) Represents the implied provision for income taxes calculated using a similar methodology applied in calculating the tax provision for The Blackstone Group L.P.

(b) Adjusted Units represents the weighted-average unit count for Economic Net Income purposes. A reconciliation of this item to the comparable GAAP measure is presented in Exhibit 4 to this release.

(c) See Exhibit 4 for the calculation of Distributable Earnings Units Outstanding.

SEGMENT REVIEW

Private Equity

Private Equity had revenues of $170.7 million for the first quarter of 2012, compared to $273.7 million in the first quarter of 2011. The decrease from the first quarter of 2011 was principally due to a $76.9 million decrease in Performance Fees, a $17.2 million decrease in Transaction and Other Fees, and a $16.7 million decrease in Investment Income.

The carrying value of the segment’s investments increased by 4.9% in the first quarter of 2012 due to positive performance from investments in the retail/consumer and industrial sectors in the general Private Equity funds in addition to the positive performance of the segment’s publicly traded companies. The Private Equity portfolio continued to perform well with a majority of the portfolio companies exhibiting year over year revenue and EBITDA growth in 2011 and for the first quarter of 2012. As of March 31, 2012, the unrealized value and cumulative realized proceeds, before carried interest, fees and expenses, for Blackstone’s contributed Private Equity funds was 1.5 times investors’ original investments. On a realized/partially realized basis, this multiple was 2.2 times investors’ original investments.

ENI for the Private Equity segment was $90.0 million for the first quarter of 2012, down from $176.8 million in 2011, principally as a result of lower Performance Fees.

Fee-Earning Assets Under Management were $37.3 billion at March 31, 2012 compared to $35.9 billion at March 31, 2011. The increase was due principally to the commencement of the investment period for the energy-focused fund and the final close of the BCP VI fund.

Limited Partner Capital Invested during the first quarter of 2012 was $643.4 million, essentially flat compared to $652.9 million during the first quarter of 2011. Dry powder for Private Equity was $16.9 billion as of March 31, 2012. Blackstone’s Private Equity segment’s funds had $128.9 million of Limited Partner Capital committed to transactions which had not yet closed as of March 31, 2012.

Real Estate

Real Estate had revenues of $427.2 million for the first quarter of 2012, compared to $555.6 million in 2011. First quarter 2012 revenues decreased $128.5 million from the first quarter of 2011, principally due to declines in Performance Fees and Investment Income, partially offset by a $52.4 million, or 55%, increase in Base Management Fees.

The carrying value of assets in contributed Real Estate funds, including fee-paying co-investments, increased 4.0% for the first quarter of 2012. The continued improvement in operating fundamentals and historically low levels of new supply as well as the strong performance of the segment’s publicly traded retail investments, resulted in increases in the carrying values of assets within the contributed Real Estate funds, including fee-paying co-investments. During the first quarter of 2012, RevPAR (Revenue per Available Room) of Blackstone’s significant hospitality investments increased between 6% and 11% compared to the first quarter of 2011. As of March 31, 2012, Blackstone’s significant office investments have seen occupancy levels increase 3.6% since March 31, 2011. On a trailing twelve month basis through the end of 2011, the latest period for which financial information is available, retail sales in the segment’s mall investments were up approximately 8%. As of March 31, 2012, occupancy levels at the grocery anchored retail centers were in excess of 88%, the highest levels achieved in over 18 months. As of March 31, 2012, the unrealized value and cumulative realized proceeds, before carried interest, fees and expenses, of Blackstone’s contributed Real Estate funds, including fee-paying co-investments, represented 1.4 times investors’ original investment. On a realized/partially realized basis, this multiple was 2.1 times investors’ original investments.

ENI for the Real Estate segment was $267.2 million for the first quarter of 2012, down from $361.9 million in the first quarter of 2011. The decrease was principally due to the revenue decline discussed above.

Fee-Earning Assets Under Management were $36.6 billion at March 31, 2012, compared to $26.5 billion at March 31, 2011. Fee-Earning Assets Under Management increased in 2012 principally due to the commencement of the BREP VII fund investment period.

Limited Partner Capital Invested during the first quarter of 2012 was $1.1 billion, up from $654.4 million during the first quarter of 2011. Dry powder for Real Estate was $13.3 billion as of March 31, 2012. Blackstone’s Real Estate segment’s funds had $654.8 million of Limited Partner Capital committed to transactions which had not yet closed as of March 31, 2012.

Hedge Fund Solutions

Hedge Fund Solutions had revenues of $117.2 million for the first quarter of 2012, compared to $105.4 million in 2011. First quarter 2012 revenues increased $11.8 million from the first quarter of 2011 principally due to increases in Performance Fees and Base Management Fees.

The returns for the underlying assets for Blackstone’s Hedge Fund Solutions’ funds were 4.0% for the first quarter of 2012.

ENI for the Hedge Fund Solutions segment was $66.4 million for the first quarter of 2012, up from $58.7 million in the first quarter of 2011. The quarterly increase was driven principally by the revenue increases discussed above.

Fee-Earning Assets Under Management for the segment grew 13% to a record $40.5 billion at March 31, 2012, compared to $35.8 billion at March 31, 2011. Net inflows for Blackstone’s Hedge Fund Solutions business came primarily from its customized and commingled investment products. Hedge Fund Solutions had $1.1 billion of net inflows of Fee-Earning Assets Under Management for the first quarter of 2012.

Credit Businesses

Credit Businesses had revenues of $180.9 million for the first quarter of 2012, compared to $156.7 million for the first quarter of 2011. The increase from the first quarter of 2011 was principally due to an increase in Base Management Fees, partially offset by a decrease in Performance Fees.

The returns of the underlying assets for Blackstone’s Credit Businesses for the first quarter of 2012 were 4.6% for the hedge funds, 7.5% for the rescue lending funds, and 6.5% for the mezzanine funds.

ENI for the Credit Businesses segment increased by 42% to $87.2 million for the first quarter of 2012 compared to $61.3 million for the first quarter of 2011. The first quarter 2012 increase in ENI was attributable principally to the higher Base Management Fees mentioned above.

Fee-Earning Assets Under Management for the segment increased $15.9 billion, or 62%, to $41.7 billion at March 31, 2012 from $25.8 billion at March 31, 2011. Acquisitions of Harbourmaster in January 2012 and the Allied Irish Banks’ CLOs during the second quarter of 2011 added $11.9 billion as of March 31, 2012. Capital returned to investors from realizations during the twelve months ended March 31, 2012 amounted to $4.0 billion. Net of these amounts and market appreciation, growth of the segment’s Fee-Earning Assets Under Management was $7.8 billion.

Dry powder of drawdown funds for the Credit Businesses segment was $6.1 billion as of March 31, 2012.

Financial Advisory

Financial Advisory had revenues of $78.2 million for the first quarter of 2012 compared to $72.8 million in 2011. The increase from first quarter 2011 was principally due to increases in Blackstone’s restructuring and reorganization business and in Blackstone Advisory Partners’ business, partially offset by a decrease in Blackstone’s fund placement business.

ENI for the Financial Advisory segment decreased $11.4 million from the first quarter of 2011 to a loss of $10.5 million primarily due to expense accruals which are calculated on a full year basis and fees related to deals that are announced but not yet closed.

CAPITAL AND LIQUIDITY

As of March 31, 2012, Blackstone had $1.1 billion in cash, Treasury cash management strategies and liquid Blackstone funds. Long-term debt totaled $1.0 billion in borrowings from the 2010 and 2009 bond issuances. Blackstone has no borrowings outstanding against its $1 billion revolving credit facility, which expires in April 2016.

DISTRIBUTION

The Blackstone Group L.P. has declared a quarterly distribution of $0.10 per common unit to record holders of common units at the close of business on May 15, 2012. This distribution will be paid on May 31, 2012.

Blackstone’s general partner maintains the right to determine the amount to be distributed from The Blackstone Group L.P.’s net after-tax share of its annual Distributable Earnings. Distributable Earnings will only be a starting point for the determination of the amount to be distributed to unitholders because in determining the amount to be distributed Blackstone will subtract from Distributable Earnings any amounts determined by its general partner to be necessary or appropriate to provide for the conduct of its business, to make appropriate investments in its business and funds, to comply with applicable law or any of its debt instruments or other agreements, or to provide for future distributions to its unitholders for any ensuing quarter. The aggregate amounts of Blackstone’s distributions to unitholders will typically be less than its Distributable Earnings for that year.

Blackstone’s current intention is to distribute to its common unitholders substantially all of The Blackstone Group L.P.’s net after-tax share of annual Distributable Earnings less the amount of its realized investment gains and returns of capital from investments and acquisitions. This determination was made based on the continued pace of organic and inorganic growth and the potential for further strategic initiatives and the retained amount will be used for those purposes. The retained cash will be deducted from the fourth quarter distribution which is made in the first quarter of the ensuing calendar year. All distributions are subject to Blackstone’s discretion to retain additional amounts from the amount of annual Distributable Earnings to be distributed as described above.

Because Blackstone will not know what its Distributable Earnings will be for any fiscal year until the end of such year, Blackstone expects that its first three quarterly distributions in respect of any given year will remain unchanged at $0.10 per unit. For the fourth quarter of each year Blackstone expects to pay the remaining amount of the year’s Distributable Earnings less realized investment gains and returns of capital from investments and acquisitions. As such, the distributions for the first three quarters are expected to be smaller than the final quarterly distribution in respect of such year.

All of the foregoing is subject to the qualification that the declaration and payment of any distributions are at the sole discretion of Blackstone’s general partner and the general partner may change its distribution policy at any time.

Because the subsidiaries of The Blackstone Group L.P. must pay taxes and make payments under the tax receivable agreements described in Blackstone’s Annual Report on Form 10-K, the amounts ultimately distributed by The Blackstone Group L.P. to its common unitholders in respect of each fiscal year are expected to be different, on a per unit basis, than the amounts distributed by the Blackstone Holdings partnerships to the Blackstone personnel and others who are limited partners of the Blackstone Holdings partnerships in respect of their Blackstone Holdings partnership units.

Blackstone will host a conference call on April 19, 2012 at 11:00 a.m. ET to discuss first quarter 2012 results. The conference call can be accessed by dialing (877) 391-6747 (U.S. domestic) or +1 (617) 597-9291 (international), pass code 14994355. Additionally, the conference call will be broadcast live over the internet and can be accessed by all interested parties through the Investor Relations section of The Blackstone Group’s website http://ir.blackstone.com. For those unable to listen to the live broadcast, a replay will be available on Blackstone’s website or by dialing (888) 286-8010 (U.S. domestic) or +1 (617) 801-6888 (international), pass code 89888968, beginning approximately two hours after the event.

Blackstone expects to host conference calls to report its 2012 results as follows: second quarter results, July 19, 2012; third quarter results, October 18, 2012 and fourth quarter and full year results, January 31, 2013.

About The Blackstone Group

Blackstone (NYSE:BX) is one of the world’s leading investment and advisory firms. Blackstone seeks to create positive economic impact and long-term value for its investors, the companies invested in, the companies advised and the broader global economy. Blackstone does this through the commitment of its extraordinary people and flexible capital. Blackstone’s alternative asset management businesses include the management of private equity funds, real estate funds, hedge fund solutions, credit-oriented funds and closed-end mutual funds. Blackstone also provides various financial advisory services, including financial and strategic advisory, restructuring and reorganization advisory and fund placement services. Further information is available at www.blackstone.com. Follow Blackstone on Twitter @Blackstone.

Forward-Looking Statements

This release may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 which reflect Blackstone’s current views with respect to, among other things, Blackstone’s operations and financial performance. You can identify these forward-looking statements by the use of words such as “outlook,” “believes,” “expects,” “potential,” “continues,” “may,” “will,” “should,” “seeks,” “approximately,” “predicts,” “intends,” “plans,” “estimates,” “anticipates” or the negative version of these words or other comparable words. Such forward-looking statements are subject to various risks and uncertainties. Accordingly, there are or will be important factors that could cause actual outcomes or results to differ materially from those indicated in these statements. Blackstone believes these factors include but are not limited to those described under the section entitled “Risk Factors” in its Annual Report on Form 10-K for the fiscal year ended December 31, 2011, as such factors may be updated from time to time in its periodic filings with the Securities and Exchange Commission, which are accessible on the SEC’s website at www.sec.gov. These factors should not be construed as exhaustive and should be read in conjunction with the other cautionary statements that are included in this release and in the filings. Blackstone undertakes no obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise.

This release does not constitute an offer of any Blackstone Fund.

THE BLACKSTONE GROUP L.P.

Exhibit 1. Consolidated Statements of Operations

(Unaudited, Dollars in Thousands, Except Per Unit Data)

 
Quarter Ended March 31,
2012   2011
Revenues
Management and Advisory Fees, Net $ 471,676 $ 412,738
Performance Fees
Realized 18,839 96,203
Unrealized   365,931   512,401
Total Performance Fees   384,770   608,604
Investment Income
Realized 16,335 12,783
Unrealized  

72,826

  107,395
Total Investment Income  

89,161

  120,178
Interest and Dividend Revenue 7,636 9,490
Other  

(1,207)

  2,259
Total Revenues   952,036   1,153,269
Expenses
Compensation and Benefits
Compensation 495,255 659,483
Performance Fee Compensation
Realized 12,190 14,543
Unrealized   97,322   162,525
Total Compensation and Benefits 604,767 836,551
General, Administrative and Other 142,766 129,386
Interest Expense 14,518 13,803
Fund Expenses   21,742   11,124
Total Expenses   783,793   990,864
Other Income
Net Gains (Losses) from Fund Investment Activities   288,142   (45,191)

Income Before Provision for Taxes

456,385 117,214
Provision for Taxes   38,753   38,850
Net Income 417,632 78,364

Net Income Attributable to Redeemable Non-Controlling Interests in Consolidated Entities

39,609 22,025

Net Income (Loss) Attributable to Non-Controlling Interests in Consolidated Entities

212,293 (93,081)

Net Income Attributable to Non-Controlling Interests in Blackstone Holdings

  107,405   106,716
Net Income Attributable to The Blackstone Group L.P. $ 58,325 $ 42,704
Net Income per Common Unit, Basic $ 0.12 $ 0.10
Net Income per Common Unit, Diluted $ 0.11 $ 0.09

THE BLACKSTONE GROUP L.P.

Exhibit 2a. Economic Net Income and Net Fee Related Earnings from Operations

(Unaudited, Dollars in Thousands)

 

The tables below detail Blackstone’s Economic Net Income and Net Fee Related Earnings from Operations. Net Fee Related Earnings from Operations is a supplemental measure of after tax performance used to highlight earnings from operations excluding the income from and related profit sharing expenses of Blackstone’s performance fees and investment income, except for interest income. The reconciliation of Economic Net Income to Net Fee Related Earnings from Operations is presented in Exhibit 2b to this release.

 
Three Months Ended
          Mar 31, 2012 vs.
Mar 31, Jun 30, Sep 30, Dec 31, Mar 31, Mar 31, 2011
2011 2011 2011 2011 2012 $   %

Economic Net Income, Total Segments

Revenues
Management and Advisory Fees
Base Management Fees $ 305,587 $ 316,474 $ 322,371 $ 336,753 $ 395,506 $ 89,919 29%
Advisory Fees 70,252 102,243 86,178 123,567 75,846 5,594 8%

Transaction and Other Fees, Net *

58,363 103,561 41,793 43,796 38,471 (19,892) -34%
Management Fee Offsets **   (8,536)   (8,675)   (7,703)   (8,479)   (13,050)   (4,514) -53%

Total Management and Advisory Fees

  425,666   513,603   442,639   495,637   496,773   71,107 17%
Performance Fees
Realized 95,600 60,215 7,897 64,224 18,839 (76,761) -80%
Unrealized   505,197   612,843   (465,176)   293,726   366,917   (138,280) -27%
Total Performance Fees   600,797   673,058   (457,279)   357,950   385,756   (215,041) -36%
Investment Income (Loss)
Realized 23,499 30,732 31,647 16,697 23,492 (7) 0%
Unrealized   102,577   106,837   (165,753)   39,028   59,914   (42,663) -42%

Total Investment Income (Loss)

126,076 137,569 (134,106) 55,725 83,406 (42,670) -34%

Interest Income and Dividend Revenue

9,448 9,283 10,110 10,003 9,345 (103) -1%
Other   2,259   1,128   (1,667)   5,695   (1,207)   (3,466) N/M
Total Revenues   1,164,246   1,334,641   (140,303)   925,010   974,073   (190,173) -16%
Expenses
Compensation and Benefits
Compensation 224,532 272,392 238,207 225,438 254,772 30,240 13%

Performance Fee Compensation

Realized 14,543 27,711 10,543 46,730 12,190 (2,353) -16%
Unrealized   162,525   118,097   (111,435)   47,998   97,322   (65,203) -40%

Total Compensation and Benefits

401,600 418,200 137,315 320,166 364,284 (37,316) -9%
Other Operating Expenses   102,975   99,363   96,932   122,072   109,521   6,546 6%
Total Expenses   504,575   517,563   234,247   442,238   473,805   (30,770) -6%

Total Economic Net Income (Loss)

$ 659,671 $ 817,078 $ (374,550) $ 482,772 $ 500,268 $ (159,403) -24%
 

Total Net Fee Related Earnings from Operations

 

$ 98,546 $ 143,563 $ 107,642 $ 152,344 $ 138,025 $ 39,479 40%
 

* Transaction and Other Fees, Net, are net of amounts, if any, shared with limited partners including, for Private Equity, broken deal expenses.

** Primarily placement fees.
continued

THE BLACKSTONE GROUP L.P.

Exhibit 2a. Economic Net Income and Net Fee Related Earnings from Operations - Continued

(Unaudited, Dollars in Thousands)

 
  Three Months Ended
              Mar 31, 2012 vs.
Mar 31, Jun 30, Sep 30, Dec 31, Mar 31, Mar 31, 2011
2011 2011 2011 2011 2012 $   %
Private Equity
Revenues
Management Fees
Base Management Fees $ 79,935 $ 82,297 $ 85,534 $ 84,231 $ 85,789 $ 5,854 7%

Transaction and Other Fees, Net *

35,342 52,353 21,430 23,879 18,097 (17,245) -49%
Management Fee Offsets **   (7,889)   (7,629)   (6,498)   (5,057)   (3,782)   4,107 52%
Total Management Fees   107,388   127,021   100,466   103,053   100,104   (7,284) -7%
Performance Fees
Realized 82,389 1,362 (17,966) (28,392) 3,933 (78,456) -95%
Unrealized   32,537   187,190   (270,014)   83,777   34,051   1,514 5%
Total Performance Fees   114,926   188,552   (287,980)   55,385   37,984   (76,942) -67%
Investment Income (Loss)
Realized 17,907 3,021 20,548 3,512 13,911 (3,996) -22%
Unrealized   29,126   76,947   (121,688)   25,091   16,469   (12,657) -43%

Total Investment Income (Loss)

47,033 79,968 (101,140) 28,603 30,380 (16,653) -35%

Interest Income and Dividend Revenue

3,505 3,197 3,396 3,651 2,420 (1,085) -31%
Other   811   665   141   193   (215)   (1,026) N/M
Total Revenues   273,663   399,403   (285,117)   190,885   170,673   (102,990) -38%
Expenses
Compensation and Benefits
Compensation 54,924 64,633 52,388 45,611 52,547 (2,377) -4%

Performance Fee Compensation

Realized 7,718 49 (2,443) (3,859) 320 (7,398) -96%
Unrealized   5,464   29,309   (44,955)   7,953   (1,052)   (6,516) N/M

Total Compensation and Benefits

68,106 93,991 4,990 49,705 51,815 (16,291) -24%
Other Operating Expenses   28,713   30,124   27,588   34,493   28,881   168 1%
Total Expenses   96,819   124,115   32,578   84,198   80,696   (16,123) -17%

Total Economic Net Income (Loss)

$ 176,844 $ 275,288 $ (317,695) $ 106,687 $ 89,977 $ (86,867) -49%
 

* Transaction and Other Fees, Net, are net of amounts, if any, shared with limited partners including, for Private Equity, broken deal expenses.

** Primarily placement fees.
continued

THE BLACKSTONE GROUP L.P.

Exhibit 2a. Economic Net Income and Net Fee Related Earnings from Operations - Continued

(Unaudited, Dollars in Thousands)

 
  Three Months Ended
              Mar 31, 2012 vs.
Mar 31, Jun 30, Sep 30, Dec 31, Mar 31, Mar 31, 2011
2011 2011 2011 2011 2012 $   %
Real Estate
Revenues

Management Fees

Base Management Fees $ 95,439 $ 97,467 $ 97,925 $ 103,947 $ 147,802 $ 52,363 55%

Transaction and Other Fees, Net *

21,543 49,288 19,551 19,128 14,412 (7,131) -33%
Management Fee Offsets **   (505)   (745)   (880)   (2,820)   (8,627)   (8,122) N/M
Total Management Fees   116,477   146,010   116,596   120,255   153,587   37,110 32%
Performance Fees
Realized 2,593 20,832 5,308 3,740 8,616 6,023 N/M
Unrealized   368,104   429,458   (120,176)   239,690   229,414   (138,690) -38%
Total Performance Fees   370,697   450,290   (114,868)   243,430   238,030   (132,667) -36%
Investment Income (Loss)
Realized 2,919 11,394 7,313 6,346 7,812 4,893 168%
Unrealized   61,406   37,332   (26,060)   19,970   25,912   (35,494) -58%

Total Investment Income (Loss)

64,325 48,726 (18,747) 26,316 33,724 (30,601) -48%

Interest Income and Dividend Revenue

3,288 2,989 3,195 3,430 2,552 (736) -22%
Other   860   515   (1,390)   (1,046)   (709)   (1,569) N/M
Total Revenues   555,647   648,530   (15,214)   392,385   427,184   (128,463) -23%
Expenses
Compensation and Benefits
Compensation 57,627 70,651 54,986 53,507 68,889 11,262 20%

Performance Fee Compensation

Realized 1,230 9,382 2,251 1,804 4,079 2,849 N/M
Unrealized   106,501   91,021   (30,510)   57,234   58,043   (48,458) -46%

Total Compensation and Benefits

165,358 171,054 26,727 112,545 131,011 (34,347) -21%
Other Operating Expenses   28,366   22,971   23,495   29,027   28,924   558 2%

Total Expenses

  193,724   194,025   50,222   141,572   159,935   (33,789) -17%

Total Economic Net Income (Loss)

$ 361,923 $ 454,505 $ (65,436) $ 250,813 $ 267,249 $ (94,674) -26%
 

* Transaction and Other Fees, Net, are net of amounts, if any, shared with limited partners.

** Primarily placement fees.
continued

THE BLACKSTONE GROUP L.P.

Exhibit 2a. Economic Net Income and Net Fee Related Earnings from Operations - Continued

(Unaudited, Dollars in Thousands)

 
  Three Months Ended
              Mar 31, 2012 vs.
Mar 31, Jun 30, Sep 30, Dec 31, Mar 31, Mar 31, 2011
2011 2011 2011 2011 2012 $   %
Hedge Fund Solutions
Revenues
Management Fees
Base Management Fees $ 75,612 $ 79,290 $ 79,355 $ 81,606 $ 81,821 $ 6,209 8%

Transaction and Other Fees, Net *

727 861 740 470 92 (635) -87%
Management Fee Offsets **   (124)   (196)   (258)   (402)   (335)   (211) -170%
Total Management Fees   76,215   79,955   79,837   81,674   81,578   5,363 7%
Performance Fees
Realized 893 667 5,764 4,148 3,298 2,405 N/M
Unrealized   19,253   3,441   (19,861)   (2,059)   23,187   3,934 20%
Total Performance Fees   20,146   4,108   (14,097)   2,089   26,485   6,339 31%
Investment Income (Loss)
Realized 1,341 12,855 1,023 2,503 503 (838) -62%
Unrealized   7,120   (12,864)   (10,034)   (3,253)   8,371   1,251 18%

Total Investment Income (Loss)

8,461 (9) (9,011) (750) 8,874 413 5%

Interest Income and Dividend Revenue

516 472 500 537 386 (130) -25%
Other   104   (38)   18   7,818   (127)   (231) N/M
Total Revenues   105,442   84,488   57,247   91,368   117,196   11,754 11%
Expenses
Compensation and Benefits
Compensation 28,093 31,674 30,667 38,525 28,233 140 0%

Performance Fee Compensation

Realized 300 253 2,257 688 1,378 1,078 N/M
Unrealized   5,358   2,955   (7,214)   (865)   7,294   1,936 36%

Total Compensation and Benefits

33,751 34,882 25,710 38,348 36,905 3,154 9%
Other Operating Expenses   13,008   16,075   14,421   21,568   13,934   926 7%
Total Expenses   46,759   50,957   40,131   59,916   50,839   4,080 9%
Total Economic Net Income $ 58,683 $ 33,531 $ 17,116 $ 31,452 $ 66,357 $ 7,674 13%
 
* Transaction and Other Fees, Net, are net of amounts, if any, shared with limited partners.
** Primarily placement fees.
continued

THE BLACKSTONE GROUP L.P.

Exhibit 2a. Economic Net Income and Net Fee Related Earnings from Operations - Continued

(Unaudited, Dollars in Thousands)

 
  Three Months Ended
              Mar 31, 2012 vs.
Mar 31, Jun 30, Sep 30, Dec 31, Mar 31, Mar 31, 2011
2011 2011 2011 2011 2012 $   %
Credit Businesses
Revenues
Management Fees
Base Management Fees $ 54,601 $ 57,420 $ 59,557 $ 66,969 $ 80,094 $ 25,493 47%

Transaction and Other Fees, Net *

745 849 (26) 312 5,725 4,980 N/M
Management Fee Offsets **   (18)   (105)   (67)   (200)   (306)   (288) N/M
Total Management Fees   55,328   58,164   59,464   67,081   85,513   30,185 55%
Performance Fees
Realized 9,725 37,354 14,791 84,728 2,992 (6,733) -69%
Unrealized   85,303   (7,246)   (55,125)   (27,682)   80,265   (5,038) -6%
Total Performance Fees   95,028   30,108   (40,334)   57,046   83,257   (11,771) -12%
Investment Income (Loss)
Realized 1,235 3,236 2,807 4,021 683 (552) -45%
Unrealized   4,532   5,437   (7,800)   (2,877)   9,211   4,679 103%

Total Investment Income (Loss)

5,767 8,673 (4,993) 1,144 9,894 4,127 72%

Interest Income and Dividend Revenue

453 902 1,404 610 2,425 1,972 N/M
Other   98   (47)   (132)   (772)   (238)   (336) N/M
Total Revenues   156,674   97,800   15,409   125,109   180,851   24,177 15%
Expenses
Compensation and Benefits
Compensation 29,549 33,071 40,533 25,435 37,143 7,594 26%

Performance Fee Compensation

 

Realized 5,295 18,027 8,478 48,097 6,413 1,118 21%
Unrealized   45,202   (5,188)   (28,756)   (16,324)   33,037   (12,165) -27%

Total Compensation and Benefits

80,046 45,910 20,255 57,208 76,593 (3,453) -4%
Other Operating Expenses   15,357   10,226   11,210   13,162   17,096   1,739 11%
Total Expenses   95,403   56,136   31,465   70,370   93,689   (1,714) -2%

Total Economic Net Income (Loss)

$ 61,271 $ 41,664 $ (16,056) $ 54,739 $ 87,162 $ 25,891 42%
 
* Transaction and Other Fees, Net, are net of amounts, if any, shared with limited partners.
** Primarily placement fees.
continued

THE BLACKSTONE GROUP L.P.

Exhibit 2a. Economic Net Income and Net Fee Related Earnings from Operations - Continued

(Unaudited, Dollars in Thousands)

 
  Three Months Ended
              Mar 31, 2012 vs.
Mar 31, Jun 30, Sep 30, Dec 31, Mar 31, Mar 31, 2011
2011 2011 2011 2011 2012 $   %
Financial Advisory
Revenues
Advisory Fees $ 70,252 $ 102,243 $ 86,178 $ 123,567 $ 75,846 $ 5,594 8%

Transaction and Other Fees, Net

  6   210   98   7   145   139 N/M

Total Advisory and Transaction Fees

  70,258   102,453   86,276   123,574   75,991   5,733 8%
Investment Income (Loss)
Realized 97 226 (44) 315 583 486 N/M
Unrealized   393   (15)   (171)   97   (49)   (442) N/M

Total Investment Income (Loss)

490 211 (215) 412 534 44 9%

Interest Income and Dividend Revenue

1,686 1,723 1,615 1,775 1,562 (124) -7%
Other   386   33   (304)   (498)   82   (304) -79%
Total Revenues   72,820   104,420   87,372   125,263   78,169   5,349 7%
Expenses
Compensation and Benefits
Compensation   54,339   72,363   59,633   62,360   67,960   13,621 25%

Total Compensation and Benefits

54,339 72,363 59,633 62,360 67,960 13,621 25%
Other Operating Expenses   17,531   19,967   20,218   23,822   20,686   3,155 18%
Total Expenses   71,870   92,330   79,851   86,182   88,646   16,776 23%

Total Economic Net Income (Loss)

 

$ 950 $ 12,090 $ 7,521 $ 39,081 $ (10,477) $ (11,427) N/M

THE BLACKSTONE GROUP L.P.

Exhibit 2b. Reconciliation of Income (Loss) Before Provision (Benefit) for Taxes to Total Segments, Economic Net Income (Loss), of Total Segments, Economic Net Income (Loss) to Net Fee Related Earnings from Operations, of Net Fee Related Earnings from Operations to Distributable Earnings and of Earnings Before Interest, Taxes and Depreciation and Amortization from Net Fee Related Earnings from Operations to Net Fee Related Earnings from Operations

(Unaudited, Dollars in Thousands)

  Three Months Ended
         
March 31, June 30,

September 30,

December 31,

March 31,
2011 2011 2011 2011 2012

Income (Loss) Before Provision (Benefit) for Taxes

$ 117,214 $ 248,796 $ (994,412) $ 740,603 $ 456,385
IPO and Acquisition-Related Charges (a) 427,227 430,829 264,068 147,808 244,897
Amortization of Intangibles (b) 44,174 44,905 45,665 51,178 50,888

(Income) Loss Associated with Non- Controlling Interests in (Income) Loss of Consolidated Entities (c)

  71,056   92,548   310,129   (456,817)   (251,902)
Total Segments

Total Segments, Economic Net Income (Loss)

659,671 817,078 (374,550) 482,772 500,268
Performance Fees Adjustment (d) (600,797) (673,058) 457,279 (357,950) (385,756)
Investment Income (Loss) Adjustment (e) (126,076) (137,569) 134,106 (55,725) (83,406)

Investment Income (Loss) - Blackstone's Treasury Cash Management Strategies (f)

1,302 4,038 (3,011) 2,271 6,310

Performance Fee Compensation and Benefits Adjustment (g)

177,068 145,808 (100,892) 94,728 109,512
Taxes Payable (h)   (12,622)   (12,734)   (5,290)   (13,752)   (8,903)
Net Fee Related Earnings from Operations 98,546 143,563 107,642 152,344 138,025
Realized Performance Fees (i) 81,057 32,504 (2,646) 17,494 6,649
Realized Investment Income (j) 23,499 30,732 31,647 16,697 23,492

Adjustment Related to Realized Investment Income - Blackstone's Treasury Cash Management Strategies (k)

(1,010) (2,343) (309) (2,395) (5,897)

Other Payables Including Payable Under Tax Receivable Agreement

  (177)   (13,578)   (10,589)   (5,954)   (148)
Distributable Earnings $ 201,915 $ 190,878 $ 125,745 $ 178,186 $ 162,121
 

Earnings Before Interest, Taxes and Depreciation and Amortization from Net Fee Related Earnings from Operations (l)

$ 137,423 $ 183,770 $ 140,190 $ 255,702 $ 178,596

(a) This adjustment adds back to Income (Loss) Before Provision (Benefit) for Taxes amounts for Transaction-Related Charges which include principally equity-based compensation charges associated with Blackstone’s initial public offering and long-term retention programs outside of annual deferred compensation and other corporate actions.

(b) This adjustment adds back to Income (Loss) Before Provision (Benefit) for Taxes amounts for the Amortization of Intangibles which are associated with Blackstone’s initial public offering and other corporate actions.

(c) This adjustment adds back to Income (Loss) Before Provision (Benefit) for Taxes the amount of (Income) Loss Associated with Non-Controlling Interests in (Income) Loss of Consolidated Entities and includes the amount of Management Fee Revenues associated with Consolidated CLO Entities.

(d) This adjustment removes from ENI the total segment amount of Performance Fees.

(e) This adjustment removes from ENI the total segment amount of Investment Income (Loss).

(f) This adjustment represents the realized and unrealized gain on Blackstone’s Treasury cash management strategies which are a component of Investment Income (Loss) but included in Net Fee Related Earnings.

(g) This adjustment removes from expenses the compensation and benefit amounts related to Blackstone’s profit sharing plans related to Performance Fees.

(h) Represents an implied payable for income taxes calculated using a similar methodology applied in calculating the current provision for The Blackstone Group L.P.

(i) Represents the adjustment for realized Performance Fees net of corresponding actual amounts due under Blackstone’s profit sharing plans related thereto.

(j) Represents the adjustment for Blackstone’s Investment Income (Loss) - Realized.

(k) Represents the elimination of Realized Investment Income attributable to Blackstone’s Treasury cash management strategies which is a component of both Net Fee Related Earnings from Operations and Realized Investment Income (Loss).

(l) Earnings Before Interest, Taxes and Depreciation and Amortization from Net Fee Related Earnings from Operations represents Net Fee Related Earnings from Operations adding back the implied cash taxes payable component from the Distributable Earnings reconciliation presented above, which is included in (h), segment interest and depreciation and amortization, and segment amortization of non-cash deferred compensation awards. The cash taxes payable component of (h) was $12.6 million, $12.7 million, $5.3 million, $13.8 million and $8.9 million for the three months ended March 31, 2011, June 30, 2011, September 30, 2011, December 31, 2011, and March 31, 2012, respectively. Interest was $12.7 million, $13.1 million, $12.6 million, $14.8 million and $13.6 million for the three months ended March 31, 2011, June 30, 2011, September 30, 2011, December 31, 2011, and March 31, 2012, respectively. Depreciation and amortization was $8.2 million, $7.8 million, $8.3 million, $8.5 million and $10.3 million for the three months ended March 31, 2011, June 30, 2011, September 30, 2011, December 31, 2011, and March 31, 2012, respectively. Amortization of non-cash deferred compensation was $5.4 million, $6.6 million, $6.4 million, $66.3 million and $7.8 million for the three months ended March 31, 2011, June 30, 2011, September 30, 2011, December 31, 2011, and March 31, 2012, respectively.

THE BLACKSTONE GROUP L.P.

Exhibit 3. Distributable Earnings

(Dollars in Thousands)

 

The following table calculates Blackstone’s Distributable Earnings. Distributable Earnings is a supplemental measure of performance to assess amounts available for distributions to Blackstone unitholders, including Blackstone personnel.

 
Three Months Ended
March 31,
2012   2011
Fee Related Earnings
Revenues
Total Management and Advisory Fees (a) $ 496,773 $ 425,666
Interest and Dividend Revenue (a) 9,345 9,448
Other (a) (1,207) 2,259
Investment Income - Blackstone's Treasury Cash Management Strategies (b)   6,310   1,302
Total Revenues   511,221   438,675
Expenses
Compensation and Benefits - Compensation (a) 254,772 224,532
Other Operating Expenses (a) 109,521 102,975
Cash Taxes (c)   8,903   12,622
Total Expenses   373,196   340,129
Net Fee Related Earnings from Operations   138,025   98,546
Performance Fees, Net of Related Compensation
Performance Fees - Realized (a) 18,839 95,600
Compensation and Benefits - Performance Fee Compensation - Realized (a)   (12,190) (14,543)
Total Performance Fees, Net of Related Compensation   6,649 81,057
Investment Income and Other
Investment Income - Realized (a) 23,492 23,499

Adjustment Related to Realized Investment Income - Blackstone's Treasury Cash Management Strategies (d)

(5,897) (1,010)
Other Payables Including Payable Under Tax Receivable Agreement   (148)   (177)
Total Investment Income and Other   17,447   22,312
Distributable Earnings $ 162,121 $ 201,915

(a) Represents the total segment amounts of the respective captions.

(b) Represents the inclusion of Investment Income (Loss) from Blackstone’s Treasury cash management strategies.

(c) Represents the provisions for and/or adjustments to income taxes that were calculated using a similar methodology applied in calculating the current provision for The Blackstone Group L.P.

(d) Represents the elimination of Realized Investment Income attributable to Blackstone’s Treasury cash management strategies which is a component of Net Fee Related Earnings from Operations.

THE BLACKSTONE GROUP L.P.

Exhibit 4. Total GAAP Weighted-Average Common Units Outstanding—Basic and Diluted and Reconciliation of Total GAAP Weighted-Average Common Units Outstanding—Diluted to Weighted-Average Economic Net Income Adjusted Units with End of Period Economic Net Income Adjusted Units Outstanding and Reconciliation of Total GAAP Common Units Outstanding to Distributable Earnings Units Outstanding

The following table provides Blackstone’s Total GAAP Weighted-Average Common Units Outstanding—Basic and Diluted.

   
Three Months Ended
March 31,
2012 2011
Total GAAP Weighted-Average Common Units Outstanding - Basic 506,985,529 447,742,389
Adjustments:
Weighted-Average Unvested Deferred Restricted Common Units 10,404,029 9,910,527
Total GAAP Weighted-Average Common Units Outstanding - Diluted 517,389,558 457,652,916

The following table provides a reconciliation of Blackstone’s Total GAAP Weighted-Average Common Units Outstanding—Diluted to Weighted-Average Economic Net Income Adjusted Units and presents the end of period Economic Net Income Adjusted Units Outstanding.

   
March 31,
2012 2011
Total GAAP Weighted-Average Common Units Outstanding - Diluted 517,389,558 457,652,916
Adjustments:
Weighted-Average Blackstone Holdings Partnership Units 602,817,069 658,290,684
Weighted-Average Economic Net Income Adjusted Units 1,120,206,627 1,115,943,600
 
Economic Net Income Adjusted Units, End of Period 1,119,829,138 1,113,420,282

The following table provides a reconciliation of Blackstone’s Total GAAP Common Units Outstanding to Distributable Earnings Units Outstanding.

  March 31,
2012   2011
Total GAAP Common Units Outstanding (a) 510,868,415 464,502,284
Adjustment:
Blackstone Holdings Partnership Units 597,566,417 639,228,191
Distributable Earnings Units Outstanding (b) 1,108,434,832 1,103,730,475

(a) Common unit holders receive tax benefits from deductions taken by Blackstone’s corporate tax paying subsidiaries and bear responsibility for the deduction from Distributable Earnings of the Payable Under the Tax Receivable Agreement and certain other tax-related payables.

(b) Excludes units which are not entitled to distributions.

THE BLACKSTONE GROUP L.P.

Exhibit 5. Assets Under Management

(Dollars in Thousands)

   
As of and for the Periods Ended
March 31,
2012 2011
Total Assets Under Management
(End of Period)
Private Equity $ 47,624,013 $ 43,955,392
Real Estate 48,322,760 34,990,590
Hedge Fund Solutions 43,351,275 39,542,086
Credit Businesses   50,776,119   31,475,397
$ 190,074,167 $ 149,963,465
Fee-Earning Assets Under Management
(End of Period)
Private Equity $ 37,323,635 $ 35,892,804
Real Estate 36,647,462 26,454,012
Hedge Fund Solutions 40,543,772 35,847,002
Credit Businesses   41,746,577   25,838,878
$ 156,261,446 $ 124,032,696
Weighted-Average Fee-Earning
Assets Under Management
(For the Three Months Ended)
Private Equity $ 37,491,735 $ 35,775,826
Real Estate 35,983,336 26,454,180
Hedge Fund Solutions 39,904,474 35,320,896
Credit Businesses   40,974,525   25,482,707
$ 154,354,070 $ 123,033,609

THE BLACKSTONE GROUP L.P.

Exhibit 6. Limited Partner Capital Invested Metrics

(Dollars in Thousands)

   
As of and for the Periods
Ended March 31,
2012 2011
Limited Partner Capital Invested
(For the Three Months Ended)
Private Equity $ 643,383 $ 652,947
Real Estate 1,143,555 654,428
Hedge Fund Solutions 4,661 196,642
Credit Businesses   928,173   154,298
$ 2,719,772 $ 1,658,315
 
Fund Level Unrealized Value (a)
(End of Period)
Private Equity
Cost $ 22,582,054 $ 20,262,265
Unrealized Value $ 25,625,328 $ 22,646,168
Real Estate
Cost $ 22,115,141 $ 16,637,075
Unrealized Value $ 29,148,492 $ 20,805,296
Credit Businesses
Cost $ 5,715,164 $ 3,668,448
Unrealized Value $ 6,219,299 $ 4,418,781

(a) Cost and unrealized value represent the limited partners’ share, including co-investments arranged by Blackstone, of those fund level investments on which carried interest can be earned, before carried interest allocations to Blackstone, when a fund achieves cumulative investment returns in excess of a specified rate.

THE BLACKSTONE GROUP L.P.

Exhibit 7. Definitions of Non-GAAP Financial Information

Blackstone discloses the following financial measures that are calculated and presented on the basis of methodologies other than in accordance with generally accepted accounting principles in the United States of America (“non-GAAP”) in the attached press release:

  • Blackstone uses Economic Net Income, or “ENI”, as a key measure of value creation, a benchmark of its performance and in making resource deployment and compensation decisions across its five segments. ENI represents segment net income before taxes excluding transaction-related charges. Transaction-related charges arise from Blackstone’s initial public offering (“IPO”) and long-term retention programs outside of annual deferred compensation and other corporate actions, including acquisitions. Transaction-related charges include equity-based compensation charges, the amortization of intangible assets and contingent consideration associated with acquisitions. ENI presents revenues and expenses on a basis that deconsolidates the investment funds Blackstone manages.
  • Economic Net Income After Taxes represents ENI adjusted to reflect the implied provision (benefit) for income taxes calculated using a similar methodology as applied in calculating the tax provision (benefit) for The Blackstone Group L.P. but consistent with the ENI concepts as noted above.
  • Blackstone uses Net Fee Related Earnings from Operations as a key measure to highlight earnings from operations excluding: (a) the income related to performance fees and related carry plan costs, (b) income earned from Blackstone’s investments in the Blackstone Funds, and (c) realized and unrealized gains (losses) from other investments except for such gains (losses) from Blackstone’s Treasury cash management strategies. Blackstone uses Net Fee Related Earnings from Operations as a measure to assess whether recurring revenue from its businesses is sufficient to adequately cover all of its operating expenses and generate profits. Net Fee Related Earnings from Operations equals contractual fee revenues, investment income from Blackstone’s Treasury cash management strategies and interest income, less (a) compensation expenses (which includes amortization of non-IPO and non-acquisition-related equity-based awards, but excludes amortization of IPO and acquisition-related equity-based awards, carried interest and incentive fee compensation), (b) other operating expenses, and (c) cash taxes due on earnings from operations as calculated using a similar methodology as applied in calculating the current tax provision (benefit) for The Blackstone Group L.P.
  • Blackstone uses Earnings Before Interest, Taxes and Depreciation and Amortization from Net Fee Related Earnings from Operations (“EBITDA-NFRE”) as a measure of segment performance and an indicator of its ability to cover recurring operating expenses. EBITDA-NFRE equals Net Fee Related Earnings from Operations before segment interest expense, segment depreciation and amortization, segment amortization of non-cash deferred compensation and the cash taxes included in Net Fee Related Earnings from Operations.
  • Distributable Earnings, which is derived from Blackstone’s segment reported results, is a supplemental measure to assess performance and amounts available for distributions to Blackstone unitholders, including Blackstone personnel and others who are limited partners of the Blackstone Holdings partnerships. Distributable Earnings is intended to show the amount of net realized earnings without the effects of the consolidation of the Blackstone Funds.

    Distributable Earnings, which is a component of Economic Net Income, is the sum across all segments of: (a) Total Management and Advisory Fees, (b) Interest and Dividend Revenue, (c) Other Revenue, (d) Realized Performance Fees, and (e) Realized Investment Income (Loss); less (a) Compensation, (b) Realized Performance Fee Compensation, (c) Other Operating Expenses, and (d) Cash Taxes and Payables Under the Tax Receivable Agreement. Distributable Earnings is reconciled to Blackstone’s Consolidated Statement of Operations. It is Blackstone’s current intention that on an annual basis it will distribute to unitholders all of its Distributable Earnings, less realized investment gains and returns of capital from investments and acquisitions, in excess of amounts determined by its general partner to be necessary or appropriate to provide for the conduct of its business, to make appropriate investments in its business and funds, to comply with applicable law, any of its debt instruments or other agreements, or to provide for future distributions to its unitholders for any ensuing quarter.

Reconciliations of these non-GAAP financial measures to the most directly comparable financial measures calculated and presented in accordance with GAAP are included within this press release. These non-GAAP financial measures should be considered in addition to and not as a substitute for, or superior to, financial measures presented in accordance with GAAP.

Contacts

The Blackstone Group
Investor Relations:
Joan Solotar, +1 212-583-5068
solotar@blackstone.com
or
Weston Tucker, +1 212-583-5231
tucker@blackstone.com
or
Media Relations:
Peter Rose, +1 212-583-5871
rose@blackstone.com

Sharing

Contacts

The Blackstone Group
Investor Relations:
Joan Solotar, +1 212-583-5068
solotar@blackstone.com
or
Weston Tucker, +1 212-583-5231
tucker@blackstone.com
or
Media Relations:
Peter Rose, +1 212-583-5871
rose@blackstone.com