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--(BUSINESS WIRE)--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 [phone] (U.S. domestic) or [phone] (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 [phone] (U.S. domestic) or [phone] (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.