Attached files
| file | filename |
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| 8-K - 8-K - Blackstone Group Inc | d909926d8k.htm |
Exhibit 99.1
|
Blackstone Reports Second Quarter 2018 Results
New York, July 19, 2018: Blackstone (NYSE:BX) today reported its second quarter 2018 results.
Stephen A. Schwarzman, Chairman and Chief Executive Officer, said, “Despite renewed turbulence in global markets, our investment funds delivered compelling returns to our limited partner investors, driving excellent second-quarter results for the firm’s shareholders. Revenue and earnings rose sharply from the prior year, while our fundraising hit new record levels, with gross inflows of $120 billion over the last twelve months including $20 billion of inflows in the quarter. We continue to expand our leading position in a growth industry, and we now head into another fundraising supercycle with our global flagship funds beginning to raise capital in the next several months.”
Blackstone issued a full detailed presentation of its second quarter 2018 results, which can be viewed at www.blackstone.com.
Distribution
Blackstone has declared a quarterly distribution of $0.58 per common unit to record holders of common units at the close of business on July 30, 2018. This distribution will be paid on August 6, 2018.
Quarterly Investor Call Details
Blackstone will host a conference call on July 19, 2018 at 11:00 a.m. ET to discuss second quarter 2018 results. The conference call can be accessed via the Investors section of Blackstone’s website at www.blackstone.com or by dialing +1 (877) 391-6747 (U.S. domestic) or +1 (617) 597-9291 (international), pass code 149 943 55#. For those unable to listen to the live broadcast, a replay will be available on www.blackstone.com or by dialing +1 (888) 286-8010 (U.S. domestic) or +1 (617) 801-6888 (international), pass code 279 310 39#.
About Blackstone
Blackstone is one of the world’s leading investment firms. We seek to create positive economic impact and long-term value for our investors, the companies we invest in, and the communities in which we work. We do this by using extraordinary people and flexible capital to help companies solve problems. Our asset management businesses, with approximately $440 billion in assets under management, include investment vehicles focused on private equity, real estate, public debt and equity, non-investment grade credit, real assets and secondary funds, all on a global basis. Further information is available at www.blackstone.com. Follow Blackstone on Twitter @Blackstone.
The Blackstone Group L.P.
345 Park Avenue
New York, New York 10154
T 212 583 5000
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, financial performance and unit repurchase and distribution activities. You can identify these forward-looking statements by the use of words such as “outlook,” “indicator,” “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, 2017, 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.
Investor and Media Relations Contacts
| Joan Solotar Blackstone Tel: +1 (212) 583-5068 solotar@blackstone.com |
Weston Tucker Blackstone Tel: +1 (212) 583-5231 tucker@blackstone.com |
Christine Anderson Blackstone Tel: +1 (212) 583-5182 Christine.Anderson@blackstone.com |
2
 July 19, 2018 Blackstone’s Second Quarter 2018 Earnings |
 Blackstone 1 Blackstone’s Second Quarter 2018 GAAP Results GAAP Net Income was $1.6 billion for the quarter, and $2.4 billion year-to-date. GAAP Net Income Attributable to The Blackstone Group L.P. was $742 million for the quarter and $1.1 billion year-to-date. n/m = not meaningful. Effective January 1, 2018, Blackstone adopted new GAAP guidance regarding revenue recognition. All prior periods
have been conformed to the new guidance. % Change
% Change (Dollars in Thousands, Except per Unit Data) (Unaudited) 2Q'17 2Q'18 vs. 2Q'17 2Q'17 YTD 2Q'18 YTD vs. 2Q'17 YTD Revenues Management and Advisory Fees, Net 690,857 $
721,384 $
4% 1,336,341 $ 1,450,233 $ 9% Incentive Fees 40,303 19,378 (52)% 86,814 31,944 (63)% Investment Income (Loss) Performance Allocations Realized 602,662 503,376 (16)% 1,714,567 773,016 (55)% Unrealized 95,532 440,351 361% (29,089) 1,068,440 n/m Principal Investment Income (Loss) Realized 125,058 129,197 3% 376,402 171,342 (54)% Unrealized 7,275 103,468 n/m (32,913) 215,242 n/m Total Investment Income 830,527 1,176,392 42% 2,028,967 2,228,040 10% Interest and Dividend Revenue 33,703 40,073 19% 62,198 75,458 21% Other (59,664) 675,343 n/m (63,876) 616,026 n/m Total Revenues 1,535,726 2,632,570 71% 3,450,444 4,401,701 28% Expenses Compensation and Benefits Compensation 367,203 427,479 16% 718,792 816,882 14% Incentive Fee Compensation 21,032 9,743 (54)% 43,497 16,405 (62)% Performance Allocations Compensation Realized 195,738 186,398 (5)% 562,216 298,460 (47)% Unrealized 86,910 189,991 119% 94,443 444,426 371% Total Compensation and Benefits 670,883 813,611 21% 1,418,948 1,576,173 11% General, Administrative and Other 119,552 145,828 22% 228,938 272,541 19% Interest Expense 41,089 39,320 (4)% 81,335 77,991 (4)% Fund Expenses 49,669 17,622 (65)% 73,745 72,607 (2)% Total Expenses 881,193 1,016,381 15% 1,802,966 1,999,312 11% Other Income Net Gains from Fund Investment Activities 110,054 73,519 (33)% 176,186 184,118 5% Income Before Provision for Taxes 764,587 $
1,689,708 $ 121% 1,823,664 $ 2,586,507 $ 42% Provision for Taxes 29,608 138,731 369% 87,045 193,226 122% Net Income 734,979 $
1,550,977 $ 111% 1,736,619 $ 2,393,281 $ 38% Net Income (Loss) Attributable to Redeemable Non-Controlling Interests in Consolidated Entities
991 905 (9)% 2,991 (370) n/m Net Income Attributable to Non-Controlling Interests in Consolidated Entities
112,944 129,078 14% 251,629 284,577 13% Net Income Attributable to Non-Controlling Interests in Blackstone Holdings
283,637 678,952 139% 692,683 999,160 44% Net Income Attributable to The Blackstone Group L.P. ("BX") 337,407 $
742,042 $
120% 789,316 $
1,109,914 $ 41% Net Income per Common Unit, Basic 0.51 $
1.09 $
114% 1.19 $
1.64 $
38% Net Income per Common Unit, Diluted 0.50 $
1.09 $
118% 1.18 $
1.63 $
38% |
 Blackstone 2 Blackstone’s Second Quarter 2018 Segment Highlights Economic Net Income (“ENI”) was $1.1 billion ($0.90/unit) in the quarter, up 56% year-over-year, on $2.0 billion of Total Segment Revenues. • ENI was $1.9 billion ($1.55/unit) year-to-date, up 13% year-over-year, on $3.6 billion of Total Segment Revenues. Distributable Earnings (“DE”) was $700 million ($0.56/unit) in the quarter, driven by $523 million of Realized Performance Revenues, comprised of Realized Incentive Fees and Realized Performance Allocations. • DE was $1.2 billion ($0.97/unit) year-to-date on $805 million of Realized Performance Revenues. Fee Related Earnings (“FRE”) was $315 million in the quarter, up 1% year-over-year, on $723 million of Net Management and Advisory Fees. • FRE was $647 million year-to-date, up 8% year-over-year, on $1.5 billion of Net Management and Advisory Fees. Total Assets Under Management (“AUM”) of $439.4 billion, up 18% year-over-year. • Inflows were $20.1 billion in the quarter, bringing the last twelve months (“LTM”) inflows to a record $120.2 billion. • Fee-Earning AUM increased 18% year-over-year to $333.0 billion. Quarterly and year-to-date capital deployed were $8.4 billion and $18.5 billion, respectively. Returning approximately $200 million to our unitholders through a special cash distribution of $0.10 and repurchase of 2.2 million units in the quarter as part of our previously announced buyback program. Blackstone declared a second quarter distribution of $0.58 per common unit payable on August 6, 2018. The changes in carrying value, fund returns and composite returns presented throughout this presentation represent those of the
applicable Blackstone Funds and not those of The
Blackstone Group L.P. |
 Blackstone 3 Blackstone’s Second Quarter 2018 Segment Earnings Performance Revenues collectively refer to Realized Incentive Fees and Performance Allocations.
% Change % Change (Dollars in Thousands, Except per Unit Data) 2Q'17 2Q'18 vs. 2Q'17 2Q'17 YTD 2Q'18 YTD vs. 2Q'17 YTD Management and Advisory Fees, Net 696,836 $ 722,994 $ 4% 1,346,417 $ 1,459,038 $ 8% Performance Revenues 739,106 963,483 30% 1,773,487 1,874,030 6% Principal Investment Income 67,720 146,773 117% 171,679 189,444 10% Interest, Dividend and Other Revenue (28,766) 136,143 n/m (8,557) 111,634 n/m Total Revenues 1,474,896 1,969,393 34% 3,283,026 3,634,146 11% Total Expenses 755,069 864,873 15% 1,576,484 1,719,689 9% Taxes 24,168 20,026 (17)% 42,973 38,254 (11)% Economic Net Income 695,659 $ 1,084,494 $ 56% 1,663,569 $ 1,876,203 $ 13% ENI per Unit 0.58 $
0.90 $
55% 1.39 $
1.55 $
12% Fee Related Earnings 311,183 $ 314,621 $ 1% 601,925 $ 647,494 $ 8% FRE per Unit 0.26 $
0.26 $
0% 0.50 $
0.54 $
8% Distributable Earnings 781,365 $ 700,142 $ (10)% 2,011,503 $ 1,202,197 $ (40)% DE per Common Unit 0.63 $
0.56 $
(11)% 1.65 $
0.97 $
(41)% Total AUM 371,056,281 $ 439,386,656 $ 18% 371,056,281 $ 439,386,656 $ 18% Fee-Earning AUM 281,934,511 $ 332,978,145 $ 18% 281,934,511 $ 332,978,145 $ 18% |
 Blackstone 4 Private Equity 9.5% 2Q’18 Increase in Corporate Private Equity Carrying Value $2.1 billion 2Q’18 Realizations $119.5 billion Total AUM up 20% YoY Corporate Private Equity carrying value increased 9.5% in the quarter, driven by appreciation in publics and mark-ups in the private portfolio from announced sales, and increased 25.9% over the LTM. • Quarterly carrying value increase represents the highest appreciation since the second quarter of 2014. Invested $2.6 billion in the quarter across the Private Equity segment. • Committed an additional $1.9 billion during the quarter that has not yet been deployed. Realizations of $2.1 billion in the quarter were driven by activity across Corporate Private Equity, Tactical Opportunities and Strategic Partners, bringing LTM realizations to $9.9 billion. Raised $5.0 billion of capital for the new Infrastructure platform, including post-quarter inflows of $400 million. • BCP Asia held its final close reaching its hard cap of $2.3 billion. Total AUM increased 20% year-over-year to $119.5 billion, driven by Total AUM inflows of $6.3 billion and portfolio appreciation in the quarter. • Fee-Earning AUM increased 15% year-over-year to $78.0 billion. % Change % Change (Dollars in Thousands) 2Q'17 2Q'18 vs. 2Q'17 2Q'17 YTD 2Q'18 YTD vs. 2Q'17 YTD Management and Advisory Fees, Net 191,220 $ 203,950 $ 7% 371,912 $ 394,812 $ 6% Performance Revenues 198,177 636,445 221% 596,380 1,110,884 86% Principal Investment Income 15,276 116,847 665% 56,048 140,553 151% Interest, Dividend and Other Revenue (8,202) 38,216 n/m (3,341) 30,351 n/m Total Revenues 396,471 995,458 151% 1,020,999 1,676,600 64% Compensation 90,676 103,798 14% 174,279 203,527 17% Performance Compensation 85,279 262,260 208% 227,556 474,107 108% Interest Expense 10,728 12,773 19% 21,155 22,906 8% Other Operating Expenses 28,592 36,047 26% 56,353 67,198 19% Total Expenses 215,275 414,878 93% 479,343 767,738 60% Economic Income 181,196 $ 580,580 $ 220% 541,656 $ 908,862 $ 68% Total AUM 100,019,716 $ 119,524,518 $ 20% 100,019,716 $ 119,524,518 $ 20% Fee-Earning AUM 68,029,670 $ 78,045,697 $ 15% 68,029,670 $ 78,045,697 $ 15% |
 Blackstone 5 Real Estate 2.7% 2Q’18 Increase in Opportunistic Funds’ Carrying Value $119.4 billion Total AUM up 15% YoY
$4.3 billion
2Q’18 Realizations
Opportunistic
funds’
and
core+
funds’
carrying
value
increased
2.7%
and
2.4%,
respectively,
in
the
quarter.
Active
investment
pace
with
$4.6
billion
deployed
in
the
quarter,
including
the
privatization
of
a
Canadian
industrial
REIT
in
core+
and
acquisition
of
three
North
American
landmark
destination
resorts
in
BREP.
• Committed an additional $6.0 billion during the quarter, including five large public company transactions. Realizations of $4.3 billion in the quarter driven by the sale of Blackstone’s remaining ownership stake in Hilton and three U.K. office properties. Total AUM up 15% and Fee-Earning AUM up 20% year-over-year to $119.4 billion and $88.8 billion, respectively. • Total AUM inflows of $5.1 billion in the quarter primarily driven by $2.6 billion in the core+ platform. • Core+ Total AUM up 88% year-over-year to $31.6 billion, less than five years after launching the business. Carrying value for core+ funds excludes BREIT. % Change % Change (Dollars in Thousands) 2Q'17 2Q'18 vs. 2Q'17 2Q'17 YTD 2Q'18 YTD vs. 2Q'17 YTD Management Fees, Net 238,934 $ 269,754 $ 13% 454,542 $ 517,700 $ 14% Performance Revenues 484,007 202,446 (58)% 998,716 584,572 (41)% Principal Investment Income 37,080 22,155 (40)% 72,806 39,532 (46)% Interest, Dividend and Other Revenue (8,472) 44,951 n/m 472 38,582 n/m Total Revenues 751,549 539,306 (28)% 1,526,536 1,180,386 (23)% Compensation 110,266 109,599 (1)% 212,968 222,423 4% Performance Compensation 191,477 63,683 (67)% 390,558 199,246 (49)% Interest Expense 14,787 11,389 (23)% 29,422 25,538 (13)% Other Operating Expenses 33,379 36,026 8% 64,243 65,443 2% Total Expenses 349,909 220,697 (37)% 697,191 512,650 (26)% Economic Income 401,640 $ 318,609 $ (21)% 829,345 $ 667,736 $ (19)% Total AUM 104,034,287 $ 119,399,973 $ 15% 104,034,287 $ 119,399,973 $ 15% Fee-Earning AUM 73,710,243 $ 88,776,501 $ 20% 73,710,243 $ 88,776,501 $ 20% |
 Hedge Fund Solutions
1.5%
2Q’18 BPS Composite Gross Return
$3.0
billion
2Q’18 Total AUM Inflows
$77.4
billion
Total AUM up
7% YoY The BPS Composite gross return was 1.5% in the quarter (1.3% net), and 2.7% year-to-date (2.3% net), continuing positive momentum in returns for hedge fund strategies. Total AUM inflows of $3.0 billion during the quarter and $6.9 billion year-to-date, driven by customized solutions and individual investor and specialized solutions. • Record Total AUM inflows of $13.4 billion over the last twelve months. • July 1 subscriptions of $2.1 billion are not yet included in Total AUM. Total AUM increased 7% year-over-year to $77.4 billion, driven primarily by appreciation across strategies. • Total AUM for BAAM’s individual investor solutions platform of $9.0 billion, up 24% year-over-year. • Fee-Earning AUM up 6% year-over-year to $71.9 billion. The BPS Composite gross and net returns are based on the BAAM Principal Solutions (“BPS”) Composite, which does not include
BAAM's individual investor solutions (liquid alternatives), ventures (seeding and minority interests), strategic opportunities (co-invests), and advisory (non-discretionary) platforms, except for investments by BPS funds directly into those platforms. BAAM-managed funds in liquidation and non fee-paying assets (net returns only) are also excluded. The funds/accounts that comprise the BPS Composite are not managed within a single fund or account and are managed with different mandates. There is no guarantee that BAAM would have made the same mix of investments in a stand- alone fund/account. The BPS Composite is not an investible product and, as such, the performance of the Composite does not represent the performance of an actual fund or account. % Change % Change (Dollars in Thousands) 2Q'17 2Q'18 vs. 2Q'17 2Q'17 YTD 2Q'18 YTD vs. 2Q'17 YTD Management Fees, Net 130,394 $ 130,365 $ (0)% 259,121 $ 259,938 $ 0% Performance Revenues 21,844 17,200 (21)% 55,343 32,438 (41)% Principal Investment Income 11,803 2,925 (75)% 29,464 4,005 (86)% Interest, Dividend and Other Revenue (6,046) 22,771 n/m (3,659) 17,295 n/m Total Revenues 157,995 173,261 10% 340,269 313,676 (8)% Compensation 47,361 48,086 2% 94,965 98,386 4% Performance Compensation 10,330 7,864 (24)% 24,069 16,499 (31)% Interest Expense 6,688 5,900 (12)% 13,231 12,171 (8)% Other Operating Expenses 16,318 18,494 13% 32,697 37,279 14% Total Expenses 80,697 80,344 (0)% 164,962 164,335 (0)% Economic Income 77,298 $ 92,917 $ 20% 175,307 $ 149,341 $ (15)% Total AUM 72,476,444 $ 77,403,078 $ 7% 72,476,444 $ 77,403,078 $ 7% Fee-Earning AUM 67,824,464 $ 71,889,290 $ 6% 67,824,464 $ 71,889,290 $ 6% Blackstone 6 |
 7 Blackstone Credit $5.7 billion 2Q’18 Total AUM Inflows $123.1 billion Total AUM up 30% YoY 2Q’18 Composite Gross Returns Performing Credit 4.5% Distressed 3.8% Strong composite gross returns of 4.5% for Performing Credit and 3.8% for Distressed Strategies for the quarter. Investment pace remained active across the platform with $2.4 billion of capital deployed or committed during the quarter and $3.8 billion year-to-date. Continued strong realization activity across funds of $1.8 billion in the quarter and $10.0 billion for the LTM. Total AUM increased 30% year-over-year to $123.1 billion, despite the conclusion of GSO’s investment sub- advisory relationship with FS Investments. • Total AUM inflows of $5.7 billion in the quarter include: $1.5 billion of capital raised from two new CLOs (one U.S. and one European), $721 million of subscriptions related to the launch of two leveraged loan separately managed accounts, and $435 million of capital in the quarter for a successor credit alpha fund. • Raised $890 million of capital for the second energy credit fund, including post-quarter inflows of $446 million. % Change % Change (Dollars in Thousands) 2Q'17 2Q'18 vs. 2Q'17 2Q'17 YTD 2Q'18 YTD vs. 2Q'17 YTD Management Fees, Net 136,288 $ 118,925 $ (13)% 260,842 $ 286,588 $ 10% Performance Revenues 35,078 107,392 206% 123,048 146,136 19% Principal Investment Income 3,561 4,846 36% 13,361 5,354 (60)% Interest, Dividend and Other Revenue (6,046) 30,205 n/m (2,029) 25,406 n/m Total Revenues 168,881 261,368 55% 395,222 463,484 17% Compensation 56,954 55,907 (2)% 112,072 129,381 15% Performance Compensation 16,594 52,325 215% 57,973 69,439 20% Interest Expense 8,091 8,823 9% 15,936 16,508 4% Other Operating Expenses 27,549 31,899 16% 49,007 59,638 22% Total Expenses 109,188 148,954 36% 234,988 274,966 17% Economic Income 59,693 $ 112,414 $ 88% 160,234 $ 188,518 $ 18% Total AUM 94,525,834 $ 123,059,087 $ 30% 94,525,834 $ 123,059,087 $ 30% Fee-Earning AUM 72,370,134 $ 94,266,657 $ 30% 72,370,134 $ 94,266,657 $ 30% Performing Credit Strategies include mezzanine lending funds, middle market direct lending funds and other performing credit strategy
funds. Distressed Strategies include credit alpha strategies, stressed / distressed funds and energy strategies. The composite gross returns represent a weighted-average composite of the fee-earning funds exceeding $100 million of fair value at each respective quarter end for each
strategy. Composite gross returns exclude the Blackstone Funds that were contributed to GSO as part of Blackstone’s acquisition of GSO in March 2008. Performing Credit Strategies’ net composite returns were 3.6%, 5.9% and 8.1% for 2Q’18, 2Q’18 YTD and 2Q’18 LTM. Distressed
Strategies’ net composite returns were 3.1%, 2.3% and 7.4% for 2Q’18, 2Q'18 YTD and 2Q'18 LTM. The breakdown of Total AUM for 2Q’18 is as follows: Distressed Strategies
$25.3 billion (13% Incentive Fee, 87% Performance Allocations), Performing
Credit Strategies $22.0 billion (4% Incentive Fee, 96% Performance Allocations), Long Only $44.7 billion, Blackstone Insurance Solutions $20.0 billion, and Harvest $11.0 billion. The breakdown of Fee-Earning AUM for
2Q’18 is as follows: Distressed Strategies $10.5 billion (27% Incentive
Fee, 73% Performance Allocations), Performing Credit Strategies $9.9 billion (10% Incentive Fee, 90% Performance Allocations), Long Only $43.0 billion, Blackstone Insurance Solutions $20.0 billion, and Harvest $10.9 billion. |
 Blackstone 8 $84.7 $94.5 $123.1 $68.6 $72.5 $77.4 $103.2 $104.0 $119.4 $99.7 $100.0 $119.5 $356.3 $371.1 $439.4 2Q'16 2Q'17 2Q'18 $64.8 $72.4 $94.3 $65.0 $67.8 $71.9 $66.7 $73.7 $88.8 $69.5 $68.0 $78.0 $266.0 $281.9 $333.0 2Q'16 2Q'17 2Q'18 Fee-Earning AUM by Segment (Dollars in Billions) Total AUM by Segment (Dollars in Billions) Assets Under Management Total AUM increased $68.3 billion, up 18% year-over-year, to $439.4 billion driven by $120.2 billion of inflows.
•
Total AUM increased despite realizations of $42.0 billion during
the LTM. Fee-Earning AUM of $333.0 billion up 18%
year-over-year as $110.3 billion of inflows outpaced $65.8 billion of realizations and outflows. Private Equity Real Estate Hedge Fund Solutions Credit |
 Blackstone 9 $179.2 $18.6 $96.3 $294.1 $14.9 $37.3 $75.5 $51.5 $179.2 $36.4 $26.5 $3.5 $21.8 Additional Capital Detail Uninvested Not Currently Earning Performance Revenues Currently Earning Performance Revenues Private Equity Real Estate Hedge Fund Solutions Credit $88 billion 2Q’18 Total Dry Powder $294 billion Performance Revenue Eligible AUM $44 billion Not Currently Earning Management Fees Performance Revenue Eligible AUM Currently Earning Performance Revenues of $179.2 billion includes $51.5 billion for Private Equity
(Corporate Private Equity $30.2 billion, Tactical Opportunities
$13.4 billion, Strategic Partners $7.9 billion), $75.5 billion for Real Estate (BREP $43.1 billion, core+ $24.9 billion, BREDS $7.6 billion), $37.3 billion for Hedge Fund Solutions, and $14.9 billion for Credit (Distressed Strategies $7.3 billion, Performing Credit Strategies $7.0 billion, Long Only and Master Limited Partnership
(“MLP”) $596 million). Undrawn
capital
(“Total
Dry
Powder”)
was
$88.3
billion,
despite
$48.9
billion
of
capital
deployed
over
the
LTM.
Performance
Revenue
Eligible
AUM
reached
$294.1
billion
at
quarter
end,
up
7%
year-over-year,
despite
significant
realizations
in
the
Real
Estate,
Private
Equity,
and
Credit
segments.
$16.8
$2.4
$11.3
$13.7
$44.3
Hedge Fund Solutions Private Equity Real Estate Credit |
 Blackstone 10 At June 30, 2018, Blackstone had $ billion in total cash, cash equivalents, and corporate treasury investments and $ billion of cash and net investments, or $9.26
per
unit.
Blackstone
has
no
net
debt,
a
$1.5
billion
undrawn
credit
revolver
and
maintains
A+/A+
ratings.
Deconsolidated Balance Sheet Highlights
Balance Sheet Highlights are preliminary, and exclude the consolidated
Blackstone Funds. GP/Fund Investments include Blackstone investments in Private Equity, Real Estate, Hedge Fund Solutions, and Credit, which were $727 million, $867 million, $110 million, and $334 million, respectively, as of June 30, 2018. Cash and Net Investments per unit
amounts are calculated using period end DE Units Outstanding (see page 30, Unit Rollforward). A+/A+ Rated by S&P and Fitch $1.5 billion Undrawn Credit Revolver with August 2021 Maturity $5.2 billion Total Cash and Corporate Treasury Cash and Net Investments (Per Unit) (Dollars in Millions) 2Q’18 Cash and Cash Equivalents $ 1,710 Corporate Treasury Investments 3,518 GP/Fund Investments 2,038 Net Accrued Performance Revenues 3,872 Cash and Net Investments $ 11,138 Outstanding Bonds (at par) $ 3,552 $7.61 $8.48 $9.26 2Q'16 2Q'17 2Q'18 11.1 5.2 |
 Blackstone 11 $2,121 $1,984 $1,893 $1,064 $1,028 $1,657 $3,312 $3,257 $3,872 2Q'16 2Q'17 2Q'18 $718 $1,125 $1,170 $475 $630 $330 $1,306 $1,881 $1,739 2Q'16 LTM 2Q'17 LTM 2Q'18 LTM Performance Revenues Net Realized Performance Revenues (Dollars in Millions) Net Accrued Performance Revenues (Dollars in Millions) Private Equity Real Estate Credit Hedge Fund Solutions $3.9 billion Net Accrued Performance Revenues at 2Q’18 $3.22 per unit Net Accrued Performance Revenues at 2Q’18 Net Accrued Performance Revenues per unit is calculated using period end DE Units Outstanding (see page 30, Unit
Rollforward). Net
Accrued
Performance
Revenues
were
$3.9
billion
($3.22/unit),
increasing
19%
year-over-year
with
strong
appreciation,
generating
$2.3
billion
of
additional
Net
Accrued
Performance
Revenues
that
offset
$1.7
billion
of
Net
Realized
Performance
Revenues. |
 Appendix |
 Blackstone 13 Total Segments (Dollars in Thousands) 2Q'17 3Q'17 4Q'17 1Q'18 2Q'18 2Q'17 YTD 2Q'18 YTD Revenues Management and Advisory Fees, Net Base Management Fees 671,368 $
669,902 $
696,163 $
707,156 $
692,915 $
1,314,326 $ 1,400,071 $ Transaction, Advisory and Other Fees, Net 38,892 32,295 45,407 37,066 40,912 79,114 77,978 Management Fee Offsets (13,424) (10,215) (9,178) (8,178) (10,833) (47,023) (19,011) Total Management and Advisory Fees, Net 696,836 691,982 732,392 736,044 722,994 1,346,417 1,459,038 Performance Revenues Realized Incentive Fees 40,303 35,513 122,057 12,566 19,504 86,814 32,070 Realized Performance Allocations 603,096 434,994 1,422,830 269,642 503,555 1,715,044 773,197 Unrealized Performance Allocations 95,707 407,425 (484,486) 628,339 440,424 (28,371) 1,068,763 Total Performance Revenues 739,106 877,932 1,060,401 910,547 963,483 1,773,487 1,874,030 Principal Investment Income (Loss) Realized 100,887 60,188 72,225 28,693 94,647 303,781 123,340 Unrealized (33,167) 17,384 (16,488) 13,978 52,126 (132,102) 66,104 Total Principal Investment Income 67,720 77,572 55,737 42,671 146,773 171,679 189,444 Interest Income and Dividend Revenue 33,703 37,885 42,836 36,385 41,727 62,199 78,112 Other (62,469) (34,144) (35,151) (60,894) 94,416 (70,756) 33,522 Total Revenues 1,474,896 1,651,227 1,856,215 1,664,753 1,969,393 3,283,026 3,634,146 Expenses Compensation 305,257 302,798 306,034 336,327 317,390 594,284 653,717 Performance Compensation Realized Incentive Fees 21,032 18,332 43,450 6,662 9,743 43,497 16,405 Realized Performance Allocations 195,738 162,505 557,244 112,062 186,398 562,216 298,460 Unrealized Performance Allocations 86,910 175,534 (166,183) 254,435 189,991 94,443 444,426 Total Compensation and Benefits 608,937 659,169 740,545 709,486 703,522 1,294,440 1,413,008 Interest Expense 40,294 40,749 72,345 38,238 38,885 79,744 77,123 Other Operating Expenses 105,838 106,617 115,949 107,092 122,466 202,300 229,558 Total Expenses 755,069 806,535 928,839 854,816 864,873 1,576,484 1,719,689 Economic Income 719,827 $
844,692 $
927,376 $
809,937 $
1,104,520 $ 1,706,542 $ 1,914,457 $ Economic Net Income 695,659 $
822,140 $
891,370 $
791,709 $
1,084,494 $ 1,663,569 $ 1,876,203 $ Fee Related Earnings 311,183 $
306,708 $
327,586 $
332,873 $
314,621 $
601,925 $
647,494 $
Distributable Earnings
781,365 $
625,566 $
1,239,146 $ 502,055 $
700,142 $
2,011,503 $ 1,202,197 $ Total Assets Under Management 371,056,281 $ 387,449,746 $ 434,128,243 $ 449,613,826 $ 439,386,656 $ 371,056,281 $ 439,386,656 $ Fee-Earning Assets Under Management 281,934,511 $ 285,698,425 $ 335,343,998 $ 344,650,797 $ 332,978,145 $ 281,934,511 $ 332,978,145 $ Weighted Average Fee-Earning AUM 281,966,547 $ 284,114,581 $ 311,353,064 $ 343,211,044 $ 328,594,512 $ 281,109,401 $ 334,643,503 $ LP Capital Invested 7,799,624 $ 10,043,022 $ 18,663,837 $ 9,323,329 $ 8,026,698 $ 17,509,554 $ 17,350,027 $ Total Capital Invested 8,382,583 $ 10,925,170 $ 19,529,797 $ 10,119,519 $ 8,351,772 $ 20,223,496 $ 18,471,291 $ |
 Blackstone 14 (Dollars in Thousands) 2Q'17 3Q'17 4Q'17 1Q'18 2Q'18 2Q'17 YTD 2Q'18 YTD Revenues Management and Advisory Fees, Net Base Management Fees 177,684 $
182,764 $
187,664 $
182,961 $
195,521 $
354,390 $
378,482 $
Transaction, Advisory and Other Fees, Net
17,289 8,748 15,411 11,094 12,780 33,465 23,874 Management Fee Offsets
(3,753) (1,088) (976) (3,193)
(4,351)
(15,943)
(7,544)
Total Management and Advisory
Fees, Net 191,220
190,424
202,099
190,862
203,950
371,912
394,812
Performance Revenues
Realized Performance Allocations
198,168 101,918 274,421 77,123 138,171 780,849 215,294 Unrealized Performance Allocations
9 80,326
90,929
397,316
498,274
(184,469)
895,590
Total Performance Revenues
198,177 182,244 365,350 474,439 636,445 596,380 1,110,884 Principal Investment Income (Loss)
Realized 41,168 7,077 25,298 6,338 32,600 122,462 38,938 Unrealized (25,892) 17,300 (2,303) 17,368 84,247 (66,414) 101,615 Total Principal Investment Income
15,276 24,377 22,995 23,706 116,847 56,048 140,553 Interest Income and Dividend Revenue
7,922 9,046 9,209 8,543 11,549 14,583 20,092 Other (16,124) (8,346) (9,392) (16,408) 26,667 (17,924) 10,259 Total Revenues 396,471 397,745 590,261 681,142 995,458 1,020,999 1,676,600 Expenses Compensation 90,676 96,166 92,229 99,729 103,798 174,279 203,527 Performance Compensation
Realized Performance Allocations
63,060 48,019 111,832 33,045 68,513 244,693 101,558 Unrealized Performance Allocations
22,219 45,484 42,748 178,802 193,747 (17,137) 372,549 Total Compensation and Benefits
175,955 189,669 246,809 311,576 366,058 401,835 677,634 Interest Expense
10,728 10,804 19,170 10,133 12,773 21,155 22,906 Other Operating Expenses
28,592 32,166 32,478 31,151 36,047 56,353 67,198 Total Expenses 215,275 232,639 298,457 352,860 414,878 479,343 767,738 Economic Income
181,196 $
165,106 $
291,804 $
328,282 $
580,580 $
541,656 $
908,862 $
Total Assets Under Management
100,019,716 $ 102,453,979 $ 105,560,576 $ 111,414,214 $ 119,524,518 $ 100,019,716 $ 119,524,518 $ Fee-Earning Assets Under Management 68,029,670 $ 67,538,062 $ 70,140,883 $ 72,398,415 $ 78,045,697 $ 68,029,670 $ 78,045,697 $ Weighted Average Fee-Earning AUM 68,194,287 $ 67,606,365 $ 68,815,882 $ 71,881,372 $ 73,587,774 $ 68,729,881 $ 72,839,192 $ LP Capital Invested 3,846,841 $ 3,725,919 $ 4,614,237 $ 3,301,949 $ 2,356,960 $ 8,583,229 $ 5,658,909 $ Total Capital Invested 4,221,479 $ 4,279,062 $ 4,929,609 $ 3,955,198 $ 2,586,395 $ 10,970,338 $ 6,541,593 $ Private Equity |
 Blackstone 15 (Dollars in Thousands) 2Q'17 3Q'17 4Q'17 1Q'18 2Q'18 2Q'17 YTD 2Q'18 YTD Revenues Management Fees, Net Base Management Fees 227,865 $
224,048 $
222,399 $
226,526 $
249,680 $
425,744 $
476,206 $
Transaction and Other Fees, Net
16,087 20,616 24,799 23,088 23,859 37,366 46,947 Management Fee Offsets
(5,018) (4,232) (3,134) (1,668) (3,785) (8,568) (5,453) Total Management Fees, Net
238,934 240,432 244,064 247,946 269,754 454,542 517,700 Performance Revenues
Realized Incentive Fees
4,878 3,778 20,094 4,375 11,394 7,760 15,769 Realized Performance Allocations
389,441 307,932 971,996 151,309 351,630 909,314 502,939 Unrealized Performance Allocations
89,688 273,731 (498,562) 226,442 (160,578) 81,642 65,864 Total Performance Revenues
484,007 585,441 493,528 382,126 202,446 998,716 584,572 Principal Investment Income (Loss)
Realized 57,599 44,449 34,276 14,690 50,199 177,178 64,889 Unrealized (20,519) (8,319) (9,529) 2,687 (28,044) (104,372) (25,357) Total Principal Investment Income
37,080 36,130 24,747 17,377 22,155 72,806 39,532 Interest Income and Dividend Revenue
14,493 15,461 16,036 15,128 14,494 26,587 29,622 Other (22,965) (13,108) (12,202) (21,497) 30,457 (26,115) 8,960 Total Revenues 751,549 864,356 766,173 641,080 539,306 1,526,536 1,180,386 Expenses Compensation 110,266 105,753 108,490 112,824 109,599 212,968 222,423 Performance Compensation
Realized Incentive Fees
2,711 1,967 10,203 2,210 5,820 4,044 8,030 Realized Performance Allocations
124,512 104,112 364,410 54,183 109,233 304,468 163,416 Unrealized Performance Allocations
64,254 105,640 (172,254) 79,170 (51,370) 82,046 27,800 Total Compensation and Benefits
301,743 317,472 310,849 248,387 173,282 603,526 421,669 Interest Expense
14,787 15,028 26,891 14,149 11,389 29,422 25,538 Other Operating Expenses
33,379 33,256 38,543 29,417 36,026 64,243 65,443 Total Expenses 349,909 365,756 376,283 291,953 220,697 697,191 512,650 Economic Income
401,640 $
498,600 $
389,890 $
349,127 $
318,609 $
829,345 $
667,736 $
Total Assets Under Management
104,034,287 $ 111,298,844 $ 115,340,363 $ 119,575,884 $ 119,399,973 $ 104,034,287 $ 119,399,973 $ Fee-Earning Assets Under Management 73,710,243 $ 75,081,521 $ 83,984,824 $ 87,284,578 $ 88,776,501 $ 73,710,243 $ 88,776,501 $ Weighted Average Fee-Earning AUM 73,320,319 $ 74,340,895 $ 77,626,395 $ 86,670,284 $ 88,050,906 $ 72,769,703 $ 86,744,980 $ LP Capital Invested 2,371,918 $ 3,778,790 $ 10,845,388 $ 4,254,201 $ 4,538,154 $ 4,962,337 $ 8,792,355 $ Total Capital Invested 2,379,922 $ 3,841,972 $ 11,008,356 $ 4,342,936 $ 4,600,382 $ 5,031,887 $ 8,943,318 $ Real Estate |
 Blackstone 16 (Dollars in Thousands) 2Q'17 3Q'17 4Q'17 1Q'18 2Q'18 2Q'17 YTD 2Q'18 YTD Revenues Management Fees, Net Base Management Fees 128,698 $
129,410 $
129,472 $
129,228 $
129,553 $
257,166 $
258,781 $
Transaction and Other Fees, Net
1,696 48 977
345 812
1,955 1,157 Management Fee Offsets
- (28)
(65) -
- -
- Total Management Fees, Net
130,394 129,430 130,384 129,573 130,365 259,121 259,938 Performance Revenues
Realized Incentive Fees
6,548 12,186 74,031 8,171 6,887 20,635 15,058 Realized Performance Allocations
447 2,031
44,416
2,006
383
1,044 2,389 Unrealized Performance Allocations
14,849 10,327 (35,647) 5,061 9,930 33,664 14,991 Total Performance Revenues
21,844 24,544 82,800 15,238 17,200 55,343 32,438 Principal Investment Income (Loss)
Realized 225 1,316
8,165
640
7,766 (407) 8,406
Unrealized
11,578 12,723 (1,582) 440 (4,841)
29,871
(4,401)
Total Principal Investment
Income 11,803
14,039
6,583
1,080
2,925
29,464
4,005
Interest Income and
Dividend Revenue 4,674
5,316
7,538
4,812
5,152
8,671
9,964
Other
(10,720) (5,859) (6,191) (10,288) 17,619 (12,330) 7,331 Total Revenues 157,995 167,470 221,114 140,415 173,261 340,269 313,676 Expenses Compensation 47,361 44,347 37,470 50,300 48,086 94,965 98,386 Performance Compensation
Realized Incentive Fees
4,097 5,862 20,159 4,034 4,155 11,111 8,189 Realized Performance Allocations
265 1,022
14,626
2,415
937
568 3,352
Unrealized Performance
Allocations 5,968
3,541
(12,814)
2,186
2,772
12,390
4,958
Total Compensation and
Benefits 57,691
54,772
59,441
58,935
55,950
119,034
114,885
Interest Expense
6,688 6,763 11,624 6,271 5,900 13,231 12,171 Other Operating Expenses
16,318 17,958 17,610 18,785 18,494 32,697 37,279 Total Expenses 80,697 79,493 88,675 83,991 80,344 164,962 164,335 Economic Income
77,298 $
87,977 $
132,439 $
56,424 $
92,917 $
175,307 $
149,341 $
Total Assets Under Management
72,476,444 $ 74,219,563 $ 75,090,834 $ 78,657,551 $ 77,403,078 $ 72,476,444 $ 77,403,078 $ Fee-Earning Assets Under Management 67,824,464 $ 69,037,961 $ 69,914,061 $ 73,570,498 $ 71,889,290 $ 67,824,464 $ 71,889,290 $ Weighted Average Fee-Earning AUM 69,301,130 $ 68,957,501 $ 71,101,632 $ 72,979,993 $ 73,635,114 $ 68,853,830 $ 73,269,990 $ LP Capital Invested 89,985 $
360,748 $
328,640 $
755,818 $
112,753 $
211,842 $
868,571 $
Total Capital Invested
93,191 $
363,420 $
383,070 $
785,874 $
113,108 $
215,079 $
898,982 $
Hedge Fund Solutions |
 Blackstone 17 Credit (Dollars in Thousands) 2Q'17 3Q'17 4Q'17 1Q'18 2Q'18 2Q'17 YTD 2Q'18 YTD Revenues Management Fees, Net Base Management Fees 137,121 $
133,680 $
156,628 $
168,441 $
118,161 $
277,026 $
286,602 $
Transaction and Other Fees, Net
3,820 2,883 4,220 2,539 3,461 6,328 6,000 Management Fee Offsets (4,653) (4,867) (5,003) (3,317) (2,697) (22,512) (6,014) Total Management Fees, Net 136,288 131,696 155,845 167,663 118,925 260,842 286,588 Performance Revenues Realized Incentive Fees 28,877 19,549 27,932 20 1,223 58,419 1,243 Realized Performance Allocations 15,040 23,113 131,997 39,204 13,371 23,837 52,575 Unrealized Performance Allocations (8,839) 43,041 (41,206) (480) 92,798 40,792 92,318 Total Performance Revenues 35,078 85,703 118,723 38,744 107,392 123,048 146,136 Principal Investment Income (Loss) Realized 1,895 7,346 4,486 7,025 4,082 4,548 11,107 Unrealized 1,666 (4,320) (3,074) (6,517) 764 8,813 (5,753) Total Principal Investment Income 3,561 3,026 1,412 508 4,846 13,361 5,354 Interest Income and Dividend Revenue 6,614 8,062 10,053 7,902 10,532 12,358 18,434 Other (12,660) (6,831) (7,366) (12,701) 19,673 (14,387) 6,972 Total Revenues 168,881 221,656 278,667 202,116 261,368 395,222 463,484 Expenses Compensation 56,954 56,532 67,845 73,474 55,907 112,072 129,381 Performance Compensation Realized Incentive Fees 14,224 10,503 13,088 418 (232) 28,342 186 Realized Performance Allocations 7,901 9,352 66,376 22,419 7,715 12,487 30,134 Unrealized Performance Allocations (5,531) 20,869 (23,863) (5,723) 44,842 17,144 39,119 Total Compensation and Benefits 73,548 97,256 123,446 90,588 108,232 170,045 198,820 Interest Expense 8,091 8,154 14,660 7,685 8,823 15,936 16,508 Other Operating Expenses 27,549 23,237 27,318 27,739 31,899 49,007 59,638 Total Expenses 109,188 128,647 165,424 126,012 148,954 234,988 274,966 Economic Income 59,693 $
93,009 $
113,243 $
76,104 $
112,414 $
160,234 $
188,518 $
Total Assets Under Management
94,525,834 $ 99,477,360 $ 138,136,470 $ 139,966,177 $ 123,059,087 $ 94,525,834 $ 123,059,087 $ Fee-Earning Assets Under Management 72,370,134 $ 74,040,881 $ 111,304,230 $ 111,397,306 $ 94,266,657 $ 72,370,134 $ 94,266,657 $ Weighted Average Fee-Earning AUM 71,150,811 $ 73,209,820 $ 93,809,155 $ 111,679,395 $ 93,320,718 $ 70,755,987 $ 101,789,341 $ LP Capital Invested 1,490,880 $ 2,177,565 $ 2,875,572 $ 1,011,361 $ 1,018,831 $ 3,752,146 $ 2,030,192 $ Total Capital Invested 1,687,991 $ 2,440,716 $ 3,208,762 $ 1,035,511 $ 1,051,887 $ 4,006,192 $ 2,087,398 $ |
 Blackstone 18 Unitholder Distribution Generated $0.56 of Distributable Earnings per common unit during the quarter, bringing the year-to-date amount to $0.97 per common unit. Blackstone declared a quarterly distribution of $0.58 per common unit, which includes a $0.10 special cash distribution, to record holders as of July 30, 2018; payable on August 6, 2018. % Change % Change (Dollars in Thousands, Except per Unit Data) 2Q'17 3Q'17 4Q'17 1Q'18 2Q'18 vs. 2Q'17 2Q'17 YTD 2Q'18 YTD vs. 2Q'17 YTD Distributable Earnings 781,365 $ 625,566 $ 1,239,146 $ 502,055 $ 700,142 $ (10)% 2,011,503 $ 1,202,197 $ (40)% Add: Other Payables Attributable to Common Unitholders 29,808 9,448 52,216 7,028 29,379 (1)% 36,440 36,407 (0)% DE before Certain Payables 811,173 635,014 1,291,362 509,083 729,521 (10)% 2,047,943 1,238,604 (40)% Percent to Common Unitholders 56% 56% 56% 56% 57% 55% 56% DE before Certain Payables Attributable to Common Unitholders 451,302 353,193 720,124 285,633 414,071 (8)% 1,134,775 699,704 (38)% Less: Other Payables Attributable to Common Unitholders (29,808) (9,448) (52,216) (7,028) (29,379) (1)% (36,440) (36,407) (0)% DE Attributable to Common Unitholders 421,494 343,745 667,908 278,605 384,692 (9)% 1,098,335 663,297 (40)% DE per Common Unit 0.63 $ 0.52 $ 1.00 $ 0.41 $ 0.56 $ (11)% 1.65 $ 0.97 $ (41)% Less: Retained Capital per Common Unit (0.09) $ (0.08) $ (0.15) $ (0.06) $ (0.08) $ (11)% (0.24) $ (0.14) $ (42)% Special Cash Distribution per Common Unit - $ - $ - $
- $
0.10 $ n/m - $ 0.10 $ n/m Actual Distribution per Common Unit 0.54 $ 0.44 $ 0.85 $ 0.35 $ 0.58 $ 7% 1.41 $ 0.93 $ (34)% Record Date Jul 30, 2018 Payable Date Aug 6, 2018 A detailed description of Blackstone’s distribution policy and the definition of Distributable Earnings can be found on page 31, Definitions and Distribution Policy. DE before Certain Payables represents Distributable Earnings before the deduction for the Payable Under Tax Receivable Agreement and tax expense (benefit) of wholly owned subsidiaries. Per
Unit calculations are based on end of period Total Common Units Outstanding (page 30, Unit Rollforward); actual distributions are paid to unitholders as of the applicable record date. Retained capital is withheld
pro-rata from common and Blackstone Holdings Partnership unitholders. Common unitholders’ share was $55 million for 2Q’18 and $95 million for 2Q’18 YTD. |
 Blackstone 19 2Q’18 Total AUM Rollforward (Dollars in Millions) 2Q’18 LTM Total AUM Rollforward (Dollars in Millions) Inflows include contributions, capital raised, other increases in available capital, purchases, multi-asset product allocations to
other strategies and acquisitions. Outflows represent
redemptions, client withdrawals and other decreases in available capital.
Realizations represent realizations from the disposition of assets. Market Activity represents gains (losses) on portfolio investments and impact of foreign exchange rate fluctuations. In the Real Estate segment, carrying value for core+ funds excludes BREIT. Total Assets Under Management Private Equity Real Estate Hedge Fund Solutions Credit Inflows: BREDS ($2.1 billion); BPP U.S. and co-invest ($1.5 billion); BREIT ($750 million); BPP Europe and co-invest ($331
million); final close for BREP Asia II ($200
million). Realizations: BREP opportunistic funds and co-invest ($3.2 billion); BREDS ($694 million); core+ funds ($398 million). Inflows: Individual investor and specialized solutions ($1.4 billion); customized solutions ($1.2 billion); commingled products
($423 million). Outflows and Realizations: Customized solutions ($2.3 billion); commingled products ($1.5 million); individual investor and specialized
solutions ($890 million).
Inflows:
Long
only
and
MLP
($4.6
billion);
two
new
CLOs
and
three
CLO
refinancings
($2.1
billion);
distressed
strategies
($982
million);
Blackstone Insurance Solutions ($484 million); mezzanine funds
($302 million); partially offset by $2.8 billion of allocations from insurance multi-asset products to other strategies. Outflows and Realizations: BDCs ($17.8 billion); distressed strategies ($2.9 billion); long only and MLP ($1.2 billion); capital returned to
investors
for
CLOs
outside
investment
periods
($575
million);
mezzanine
funds
($466
million);
Blackstone
Insurance
Solutions
($316
million).
Inflows:
Infrastructure
($4.6
billion);
Tactical
Opportunities
($1.0
billion);
Corporate
Private
Equity
($569
million);
Strategic
Partners
($128
million).
Realizations: Corporate Private Equity ($862 million); Tactical Opportunities ($706 million); Strategic Partners ($490 million).
Market Activity:
Carrying value increase of 9.5% within Corporate Private Equity.
Private
Real Hedge Fund Equity Estate Solutions 1Q'18 111,414 $ 119,576 $ 78,658 $ 139,966 $ 449,614 $ Inflows 6,283 5,124 2,995 5,687 20,089 Outflows (401) (1,003) (4,544) (21,648) (27,596) Realizations (2,059) (4,327) (126) (1,792) (8,303) Net Inflows (Outflows) 3,823 (205) (1,675) (17,752) (15,810) Market Activity 4,288 29 421 845 5,583 2Q'18 119,525 $ 119,400 $ 77,403 $ 123,059 $ 439,387 $ QoQ Increase (Decrease) 7% (0)% (2)% (12)% (2)% Credit Total Private Real Hedge Fund Equity Estate Solutions 2Q'17 100,020 $ 104,034 $ 72,476 $ 94,526 $ 371,056 $ Inflows 18,093 26,062 13,432 62,608 120,196 Outflows (1,500) (1,473) (10,470) (26,550) (39,994) Realizations (9,898) (20,272) (1,903) (9,959) (42,032) Net Inflows 6,694 4,317 1,059 26,099 38,170 Market Activity 12,810 11,049 3,867 2,434 30,161 2Q'18 119,525 $ 119,400 $ 77,403 $ 123,059 $ 439,387 $ YoY Increase 20% 15% 7% 30% 18% Credit Total |
 Blackstone 20 2Q’18 Fee-Earning AUM Rollforward (Dollars in Millions) 2Q’18 LTM Fee-Earning AUM Rollforward (Dollars in Millions) Private Equity Real Estate Hedge Fund Solutions Credit Inflows: BREDS ($2.7 billion); BPP U.S. and co-invest ($1.5 billion); BREIT ($750 million); BPP Europe and co-invest ($624 million); BREP opportunistic funds and co-invest ($272 million). Realizations: BREP opportunistic funds and co-invest ($1.1 billion); BREDS ($1.0 billion); core+ funds ($360 million). Inflows: Customized solutions ($1.2 billion); individual investor and specialized solutions ($815 million); commingled products ($398
million). Outflows and Realizations: Customized solutions ($2.2 billion); commingled products ($1.4 billion); individual investor and specialized solutions ($770 million). Inflows: Long only and MLP ($4.4 billion); two new CLOs and three CLO refinancings ($2.1 billion); distressed strategies ($913 million); Blackstone Insurance Solutions ($484 million); mezzanine funds ($424 million); partially offset by $2.8 billion of
allocations from insurance multi-asset products
to other strategies. Outflows and Realizations: BDCs ($17.8 billion); distressed strategies ($2.8 billion); long only and MLP ($1.2 billion); capital returned to
investors
for
CLOs
outside
investment
periods
($575
million);
Blackstone
Insurance
Solutions
($316
million);
mezzanine
funds
($268
million).
Inflows: Infrastructure ($4.5 billion); Tactical Opportunities ($1.2 billion); Core Private Equity ($743 million); Corporate Private
Equity ($617 million); Strategic Partners ($140 million). Realizations: Tactical Opportunities ($466 million); Strategic Partners ($372 million); Corporate Private Equity ($163 million). Fee-Earning Assets Under Management Inflows include contributions, capital raised, other increases in available capital, purchases, multi-asset product allocations to
other strategies and acquisitions. Outflows represent
redemptions, client withdrawals and other decreases in available capital.
Realizations represent realizations from the disposition of assets. Market Activity represents gains (losses) on portfolio investments and impact of foreign exchange rate fluctuations.
Private Real Hedge Fund Equity Estate Solutions 1Q'18 72,398 $ 87,285 $ 73,570 $ 111,397 $ 344,651 $ Inflows 7,057 5,938 2,379 5,579 20,954 Outflows (618) (1,382) (4,356) (21,548) (27,904) Realizations (1,000) (2,459) (100) (1,414) (4,974) Net Inflows (Outflows) 5,439 2,097 (2,077) (17,384) (11,925) Market Activity 208 (605) 395 253 252 2Q'18 78,046 $ 88,777 $ 71,889 $ 94,267 $ 332,978 $ QoQ Increase (Decrease) 8% 2% (2)% (15)% (3)% Credit Total Private Real Hedge Fund Equity Estate Solutions 2Q'17 68,030 $ 73,710 $ 67,824 $ 72,370 $ 281,935 $ Inflows 15,390 27,543 11,509 55,838 110,280 Outflows (1,164) (4,170) (9,436) (26,217) (40,988) Realizations (4,732) (10,654) (1,714) (7,732) (24,832) Net Inflows 9,494 12,718 359 21,890 44,460 Market Activity 522 2,348 3,706 7 6,583 2Q'18 78,046 $ 88,777 $ 71,889 $ 94,267 $ 332,978 $ YoY Increase 15% 20% 6% 30% 18% Credit Total |
 Blackstone 21 Net Accrued Performance Revenues $3.9 billion Net Accrued Performance Revenues at 2Q’18 $3.22 per unit Net Accrued Performance Revenues at 2Q’18 $577 million Increase to Receivable from Net Performance Revenues in 2Q’18 $310 million Decrease to Receivable from Net Realized Distributions in 2Q’18 Net Accrued Performance Revenues (Dollars in Millions, Except per Unit Data) 1Q'18 2Q'18 2Q'18 Per Unit QoQ Change Private Equity BCP IV 70 $
99
$
0.08 $
29 $
BCP V
70 87 0.07 17 BCP VI 783 911 0.76 128 BCP VII 59 94 0.08 35 BEP I 91 142 0.12 51 BEP II 34 50 0.04 16 Tactical Opportunities 138 152 0.13 14 Strategic Partners 81 91 0.08 10 BTAS 19 30 0.02 11 Other 3 1 - (2) Total Private Equity 1,348 $
1,657 $
1.38 $
309 $
Real Estate
BREP IV 10 14 0.01 4 BREP V 205 159 0.13 (46) BREP VI 184 132 0.11 (52) BREP VII 606 592 0.49 (14) BREP VIII 288 317 0.26 29 BREP Europe III 61 33 0.03 (28) BREP Europe IV 220 211 0.18 (9) BREP Europe V 41 61 0.05 20 BREP Asia I 112 110 0.09 (2) BPP 174 194 0.16 20 BREIT 14 10 0.01 (4) BREDS 32 29 0.02 (3) BTAS 25 31 0.03 6 Total Real Estate 1,972 $
1,893 $
1.57 $
(79) $
Total Hedge Fund Solutions
19 $
23
$
0.02 $
4 $
Total Credit
266 $
299
$
0.25
$
33
$
Net
Accrued Performance Revenue 3,605
$
3,872
$
3.22
$
267
$
Memo: Net
Realized Performance Revenues 50
$
33 $
0.03
$
(17)
$
Net Accrued
Performance Revenues are presented net of performance compensation and do not include clawback amounts, if any, which are disclosed in the 10-K/Q. Net Realized Performance Revenues are included in DE. Net Realized
Performance Revenues above represent Performance Revenues realized, but not yet
distributed as of the reporting date and included in the Net Accrued Performance Revenues balance. When these fees are received, the receivable is reduced without further impacting DE. Per Unit calculations are based on end of period DE Units Outstanding (see page 30, Unit
Rollforward). |
 Blackstone 22 Investment Records as of June 30, 2018 (a) Continued... (Dollars in Thousands, Except Where Noted) Committed Available Unrealized Investments Realized Investments Total Investments Net IRRs (d) Fund (Investment Period Beginning Date / Ending Date) Capital Capital (b) Value MOIC (c) % Public Value MOIC (c) Value MOIC (c) Realized Total Private Equity BCP I (Oct 1987 / Oct 1993) 859,081 $ - $
- $
n/a - 1,741,738 $ 2.6x 1,741,738 $ 2.6x 19% 19% BCP II (Oct 1993 / Aug 1997) 1,361,100 - - n/a - 3,256,819 2.5x 3,256,819 2.5x 32% 32% BCP III (Aug 1997 / Nov 2002) 3,967,422 - - n/a - 9,184,688 2.3x 9,184,688 2.3x 14% 14% BCOM (Jun 2000 / Jun 2006) 2,137,330 24,575 17,086 1.3x - 2,953,649 1.4x 2,970,735 1.4x 7% 6% BCP IV (Nov 2002 / Dec 2005) 6,773,182 207,524 872,299 0.9x 50% 20,677,725 3.2x 21,550,024 2.9x 42% 36% BCP V (Dec 2005 / Jan 2011) 21,022,164 1,052,763 2,256,568 1.1x 30% 36,189,148 2.0x 38,445,716 1.9x 9% 8% BCP VI (Jan 2011 / May 2016) 15,190,523 1,800,629 17,512,669 1.8x 32% 8,990,744 2.1x 26,503,413 1.9x 23% 15% BEP I (Aug 2011 / Feb 2015) 2,436,904 168,684 2,947,107 1.7x 36% 1,416,870 2.0x 4,363,977 1.8x 29% 15% BEP II (Feb 2015 / Feb 2021) 4,874,208 1,698,584 2,884,607 1.4x - 65,371 2.9x 2,949,978 1.4x n/m 15% BCP VII (May 2016 / May 2022) 18,494,651 12,230,285 5,644,440 1.4x - 311,717 1.2x 5,956,157 1.4x n/m 17% BCP Asia (Dec 2017 / Dec 2023) (e) 2,369,469 2,208,544 13,992 n/a - - n/a 13,992 n/a n/a n/m Total Corporate Private Equity 79,486,034 $ 19,391,588 $ 32,148,768 $ 1.5x 24% 84,788,469 $ 2.2x 116,937,237 $ 2.0x 17% 15% Tactical Opportunities 18,427,737 8,426,505 9,781,454 1.2x 10% 5,287,948 1.7x 15,069,402 1.4x 26% 12% Tactical Opportunities Co-Investment and Other 5,119,604 1,409,243 3,670,283 1.2x 2% 1,198,810 1.6x 4,869,093 1.3x n/a 18% Strategic Partners I-V and Co-Investment (f) 11,913,113 1,796,921 2,020,522 n/m - 15,588,672 n/m 17,609,194 1.5x n/a 13% Strategic Partners VI LBO, RE and SMA (f) 7,402,171 2,070,236 3,500,627 n/m - 2,739,347 n/m 6,239,974 1.5x n/a 21% Strategic Partners VII (f) 7,669,970 2,334,958 4,876,510 n/m - 350,751 n/m 5,227,261 1.3x n/a 54% Strategic Partners RA II (f) 1,806,807 1,446,595 262,612 n/m - 12,940 n/m 275,552 1.2x n/a 24% BCEP (Jan 2017 / Jan 2021) (g) 4,755,620 2,605,464 2,214,439 1.0x - - n/a 2,214,439 1.0x n/a 3% Other Funds and Co-Investment (h) 1,621,936 442,069 68,639 0.9x 22% 637,161 0.9x 705,800 0.9x n/m n/m Real Estate Pre-BREP 140,714 $ - $
- $
n/a - 345,190 $ 2.5x 345,190 $ 2.5x 33% 33% BREP I (Sep 1994 / Oct 1996) 380,708 - - n/a - 1,327,708 2.8x 1,327,708 2.8x 40% 40% BREP II (Oct 1996 / Mar 1999) 1,198,339 - - n/a - 2,531,614 2.1x 2,531,614 2.1x 19% 19% BREP III (Apr 1999 / Apr 2003) 1,522,708 - - n/a - 3,330,406 2.4x 3,330,406 2.4x 21% 21% BREP IV (Apr 2003 / Dec 2005) 2,198,694 - 313,328 0.4x 30% 4,259,530 2.2x 4,572,858 1.7x 35% 12% BREP V (Dec 2005 / Feb 2007) 5,539,418 - 1,181,187 2.3x 31% 12,230,080 2.3x 13,411,267 2.3x 12% 11% BREP VI (Feb 2007 / Aug 2011) 11,060,444 556,530 1,554,579 1.6x 3% 25,908,690 2.6x 27,463,269 2.5x 14% 13% BREP VII (Aug 2011 / Apr 2015) 13,495,034 2,058,135 11,964,442 1.7x 19% 16,641,294 2.1x 28,605,736 1.9x 29% 18% BREP VIII (Apr 2015 / Oct 2020) 16,419,603 8,407,055 11,023,120 1.4x 2% 4,003,140 1.5x 15,026,260 1.4x 27% 17% Total Global BREP 51,955,662 $ 11,021,720 $ 26,036,656 $ 1.5x 11% 70,577,652 $ 2.3x 96,614,308 $ 2.0x 19% 16% BREP Int'l (Jan 2001 / Sep 2005) 824,172 € - € - € n/a - 1,369,016 € 2.1x 1,369,016 € 2.1x 23% 23% BREP Int'l II (Sep 2005 / Jun 2008) (i) 1,629,748 - 140,384 0.5x - 2,294,647 2.0x 2,435,031 1.7x 10% 8% BREP Europe III (Jun 2008 / Sep 2013) 3,205,167 463,758 1,154,882 1.3x - 5,199,477 2.5x 6,354,359 2.2x 21% 16% BREP Europe IV (Sep 2013 / Dec 2016) 6,709,145 1,333,963 4,903,348 1.5x 10% 6,316,424 2.0x 11,219,772 1.8x 25% 18% BREP Europe V (Dec 2016 / Jun 2022) 7,855,686 4,256,899 4,164,195 1.2x 4% 14,155 n/m 4,178,350 1.2x n/m 19% Total Euro BREP 20,223,918 € 6,054,620 € 10,362,809 € 1.3x 7% 15,193,719 € 2.1x 25,556,528 € 1.7x 17% 14% BREP Asia I (Jun 2013 / Dec 2017) 5,096,522 $ 1,881,675 $ 4,253,540 $ 1.4x - 2,508,819 $ 1.8x 6,762,359 $ 1.5x 23% 16% BREP Asia II (Dec 2017 / Jun 2023) 7,105,707 7,008,667 262,033 n/m - - n/m 262,033 n/m n/m n/m BREP Co-Investment (j) 6,892,347 146,573 2,098,516 1.7x 51% 11,800,844 2.1x 13,899,360 2.1x 16% 16% Total BREP 95,817,573 $ 27,054,144 $ 44,954,095 $ 1.4x 11% 104,310,222 $ 2.2x 149,264,317 $ 1.9x 19% 16% BPP (k) 25,307,653 $ 2,882,693 $ 25,930,125 $ 1.2x - 2,678,843 $ n/a 28,608,968 $ 1.2x n/m 12% BREDS (l) 13,247,759 $ 4,600,992 $ 2,966,415 $ 1.1x - 9,474,771 $ 1.3x 12,441,186 $ 1.3x 12% 11% |
 Blackstone 23 Investment Records as of June 30, 2018 (a) – Continued The returns presented herein represent those of the applicable Blackstone Funds and not those of The Blackstone Group L.P.
n/m Not meaningful. n/a Not applicable. (a) Preliminary. (b) Available Capital represents total investable capital commitments, including side-by-side, adjusted for certain expenses and
expired or recallable capital and may include leverage, less
invested capital. This amount is not reduced by outstanding commitments to investments. (c) Multiple of Invested Capital (“MOIC”) represents carrying value, before management fees, expenses and Carried Interest, divided
by invested capital. (d)
Net Internal Rate of Return (“IRR”) represents the annualized
inception to June 30, 2018 IRR on total invested capital based on realized proceeds and unrealized value, as applicable, after management fees, expenses and Carried Interest.
(e) Includes foreign currency gain or loss on invested undrawn capital, if any. (f) Realizations are treated as return of capital until fully recovered and therefore unrealized and realized MOICs are not
meaningful. (g)
BCEP, or Blackstone Core Equity Partners, is a core private equity fund which
invests with a more modest risk profile and longer hold period.
(h) Returns for Other Funds and Co-Investment are not meaningful as these funds have limited transaction activity.
(i) The 10% Realized Net IRR and 8% Total Net IRR exclude investors that opted out of the Hilton investment opportunity. Overall BREP
International II performance reflects a 9% Realized Net IRR and a
6% Total Net IRR. (j)
BREP Co-Investment represents co-investment capital raised for various
BREP investments. The Net IRR reflected is calculated by aggregating each co-investment’s realized proceeds and unrealized value, as applicable, after management fees, expenses and Carried Interest.
(k) BPP represents the core+ real estate funds which invest with a more modest risk profile and lower leverage. Excludes BREIT.
(l) Excludes Capital Trust drawdown funds. (m) BSCH, or Blackstone Strategic Capital Holdings, is a permanent capital vehicle focused on acquiring strategic minority positions in alternative asset managers. (n) Funds presented represent the flagship credit drawdown funds only. The Total Credit Net IRR is the combined IRR of the eight credit
drawdown funds presented. (Dollars in Thousands, Except Where
Noted) Committed
Available Unrealized Investments Realized Investments Total Investments Net IRRs (d) Fund (Investment Period Beginning Date / Ending Date) Capital Capital (b) Value MOIC (c) % Public Value MOIC (c) Value MOIC (c) Realized Total Hedge Fund Solutions BSCH (Dec 2013 / Jun 2020) (m) 3,298,575 $ 2,356,290 $ 973,480 $ 1.0x - 256,301 $ n/a 1,229,781 $ 1.3x n/a 6% BSCH Co-Investment 276,000 164,877 102,280 0.9x - 24,167 n/a 126,447 1.1x n/a 9% Total Hedge Fund Solutions 3,574,575 $ 2,521,167 $ 1,075,760 $ 1.0x - 280,468 $ n/a 1,356,228 $ 1.3x n/a 6% Mezzanine I (Jul 2007 / Oct 2011) 2,000,000 $ 97,114 $
45,909 $
0.8x - 4,770,221 $ 1.6x 4,816,130 $ 1.6x n/a 17% Mezzanine II (Nov 2011 / Nov 2016) 4,120,000 1,146,274 2,535,690 1.1x - 4,100,043 1.6x 6,635,733 1.4x n/a 13% Mezzanine III (Sep 2016 / Sep 2021) 6,639,133 3,457,539 2,547,038 1.1x - 636,892 1.5x 3,183,930 1.2x n/a 13% Stressed / Distressed Investing I (Sep 2009 / May 2013) 3,253,143 175,000 417,641 0.7x - 5,568,943 1.5x 5,986,584 1.4x n/a 11% Stressed / Distressed Investing II (Jun 2013 / Jun 2018) 5,125,000 648,283 2,846,622 1.1x - 2,968,264 1.4x 5,814,886 1.2x n/a 13% Stressed / Distressed Investing III (Dec 2017/ Dec 2022) 7,356,380 6,329,287 769,329 1.1x - 23,341 n/a 792,670 1.1x n/a n/a Energy Select Opportunities (Nov 2015 / Nov 2018) 2,856,867 1,108,540 1,875,069 1.2x - 415,064 1.7x 2,290,133 1.2x n/a 19% Euro European Senior Debt Fund (Feb 2015 / Feb 2019) 1,964,689 € 1,560,617 € 1,811,098 € 1.0x - 656,896 € 1.5x 2,467,994 € 1.1x n/a 11% Total Credit 33,616,933 $ 14,784,215 $ 13,151,845 $ 1.1x - 19,235,263 $ 1.5x 32,387,108 $ 1.3x n/a 14% Credit (n) |
 Blackstone 24 Notes on page 25. Reconciliation of GAAP to Non-GAAP Measures (Dollars in Thousands) 2Q'17 3Q'17 4Q'17 1Q'18 2Q'18 2Q'17 YTD 2Q'18 YTD Net Income Attributable to The Blackstone Group L.P. 337,407 $ 377,920 $ 304,138 $ 367,872 $ 742,042 $ 789,316 $ 1,109,914 $ Net Income Attributable to Non-Controlling Interests in Blackstone Holdings
283,637 340,202 359,438 320,208 678,952 692,683 999,160 Net Income Attributable to Non-Controlling Interests in Consolidated Entities
112,944 113,446 132,364 155,499 129,078 251,629 284,577 Net Income (Loss) Attributable to Redeemable Non-Controlling Interests in Consolidated Entities 991 3,215 7,600 (1,275) 905 2,991 (370) Net Income 734,979 $ 834,783 $ 803,540 $ 842,304 $ 1,550,977 $ 1,736,619 $ 2,393,281 $ Provision for Taxes 29,608 59,512 596,590 54,495 138,731 87,045 193,226 Income Before Provision for Taxes 764,587 $ 894,295 $ 1,400,130 $ 896,799 $ 1,689,708 $ 1,823,664 $ 2,586,507 $ Transaction-Related Charges 57,831 55,714 (347,055) 52,489 (470,078) 114,810 (417,589) Amortization of Intangibles 11,344 11,344 14,265 14,873 14,873 22,688 29,746 Impact of Consolidation (b) (113,935) (116,661) (139,964) (154,224) (129,983) (254,620) (284,207) Economic Income 719,827 $ 844,692 $ 927,376 $ 809,937 $ 1,104,520 $ 1,706,542 $ 1,914,457 $ (Taxes) (c) (24,168) (22,552) (36,006) (18,228) (20,026) (42,973) (38,254) Economic Net Income 695,659 $ 822,140 $ 891,370 $ 791,709 $ 1,084,494 $ 1,663,569 $ 1,876,203 $ Taxes (c) 24,168 22,552 36,006 18,228 20,026 42,973 38,254 Performance Revenues (d) (739,106) (877,932) (1,060,401) (910,547) (963,483) (1,773,487) (1,874,030) Principal Investment Income (e) (67,720) (77,572) (55,737) (42,671) (146,773) (171,679) (189,444) Other Revenues (f) 62,469 34,144 35,151 60,894 (94,416) 70,756 (33,522) Net Interest (Income) Loss (g) 6,591 2,864 29,509 1,853 (2,842) 17,545 (989) Performance Compensation (h) 303,680 356,371 434,511 373,159 386,132 700,156 759,291 Equity-Based Compensation - Non-Performance Compensation Related (i) 25,442 24,141 17,177 40,248 31,483 52,092 71,731 Fee Related Earnings 311,183 $ 306,708 $ 327,586 $ 332,873 $ 314,621 $ 601,925 $ 647,494 $ Net Realized Performance Revenues (j) 429,177 293,339 948,412 167,384 329,829 1,201,957 497,213 Realized Principal Investment Income (k) 100,887 60,188 72,225 28,693 94,647 303,781 123,340 Net Interest Income (Loss) (g) (6,591) (2,864) (29,509) (1,853) 2,842 (17,545) 989 Taxes and Related Payables Including Payable Under Tax Receivable Agreement (l)
(53,291) (31,805) (79,568) (25,042) (41,797) (78,615) (66,839) Distributable Earnings 781,365 $ 625,566 $ 1,239,146 $ 502,055 $ 700,142 $ 2,011,503 $ 1,202,197 $ Interest Expense (m) 40,294 40,749 72,345 38,238 38,885 79,744 77,123 Taxes and Related Payables Including Payable Under Tax Receivable Agreement (l)
53,291 31,805 79,568 25,042 41,797 78,615 66,839 Depreciation and Amortization 6,392 6,027 6,593 6,251 5,986 12,608 12,237 Adjusted EBITDA 881,342 $ 704,147 $ 1,397,652 $ 571,586 $ 786,810 $ 2,182,470 $ 1,358,396 $ (a) |
 Blackstone 25 Reconciliation of GAAP to Non-GAAP Measures – Notes Note: See page 31, Definitions and Distribution Policy. (a) This adjustment removes Transaction-Related Charges. Transaction-Related Charges arise from corporate actions including
acquisitions, divestitures, and Blackstone’s initial public
offering. They consist primarily of equity-based compensation charges, gains and losses on contingent consideration arrangements, changes in the balance of the tax receivable agreement resulting from a change in tax law or similar event, transaction costs and any gains or losses associated with these corporate actions.
(b) This adjustment reverses the effect of consolidating the Blackstone Funds and the elimination of non-controlling interests in the
Blackstone consolidated operating partnerships.
(c) Taxes represent the total GAAP tax provision adjusted to include only the current tax provision (benefit) calculated on Income (Loss)
Before Provision for Taxes and adjusted to exclude the tax impact
of any divestitures. (d)
This adjustment removes total segment Performance Revenues.
(e) This adjustment removes total segment Principal Investment Income (Loss).
(f) This adjustment removes total segment Other Revenues. (g) This adjustment removes total segment Interest and Dividend Revenue less total segment Interest Expense.
(h) This adjustment removes the total segment amount of Performance Compensation, comprised of Incentive Fee Compensation and
Performance Allocations Compensation.
(i) This adjustment removes the component of total segment Compensation that is equity-based.
(j) This adjustment adds the total segment amounts of Realized Incentive Fees and Realized Performance Allocations, net of realized
Performance Compensation.
(k) This adjustment adds the total segment amount of Realized Principal Investment Income.
(l) Taxes and Related Payables Including Payable Under Tax Receivable Agreement represent the total GAAP tax provision adjusted to include only the current tax provision (benefit) calculated on Income (Loss) Before Provision for Taxes and to exclude the tax impact on any
divestitures and the Payable Under Tax Receivable
Agreement. (m)
This adjustment adds back the total segment amount of Interest Expense.
|
 Blackstone 26 Notes on page 27. Continued... Reconciliation of GAAP to Total Segment Measures (Dollars in Thousands) 2Q'17 3Q'17 4Q'17 1Q'18 2Q'18 2Q'17 YTD 2Q'18 YTD Management and Advisory Fees, Net GAAP 690,857 $
685,922 $
729,059 $
728,849 $
721,384 $
1,336,341 $ 1,450,233 $ Consolidation and Elimination Adjustment (a) 5,979 6,060 3,333 7,195 1,610 10,076 8,805 Total Segment 696,836 $
691,982 $
732,392 $
736,044 $
722,994 $
1,346,417 $ 1,459,038 $ Performance Revenue GAAP Incentive Fees 40,303 35,513 120,187 12,566 19,378 86,814 31,944 Investment Income - Realized Performance Allocations 602,662 434,982 1,422,262 269,640 503,376 1,714,567 773,016 Investment Income - Unrealized Performance Allocations 95,532 406,649 (483,033) 628,089 440,351 (29,089) 1,068,440 GAAP 738,497 $
877,144 $
1,059,416 $ 910,295 $
963,105 $
1,772,292 $ 1,873,400 $ Elimination Adjustment (b) 609 788 985 252 378 1,195 630 Total Segment 739,106 $
877,932 $
1,060,401 $ 910,547 $
963,483 $
1,773,487 $ 1,874,030 $ Principal Investment Income GAAP Investment Income - Realized Principal Investment Income 125,058 74,805 184,562 42,145 129,197 376,402 171,342 Investment Income - Unrealized Principal Investment Income 7,275 96,085 (20,567) 111,774 103,468 (32,913) 215,242 GAAP 132,333 $
170,890 $
163,995 $
153,919 $
232,665 $
343,489 $ 386,584 $ Consolidation and Elimination Adjustment (c) (64,613) (93,318) (108,258) (111,248) (85,892) (171,810) (197,140) Total Segment 67,720 $
77,572 $
55,737 $
42,671 $
146,773 $
171,679 $ 189,444 $ Interest, Dividend and Other Revenue GAAP Interest and Dividend Revenue 33,703 36,974 40,524 35,385 40,073 62,198 75,458 Other (59,664) (35,572) (33,781) (59,317) 675,343 (63,876) 616,026 GAAP (25,961) $
1,402 $
6,743 $
(23,932) $
715,416 $
(1,678) $
691,484 $ Consolidation and Elimination Adjustment (d) (2,805) 2,339 942 (577) (579,273) (6,879) (579,850) Total Segment (28,766) $
3,741 $
7,685 $
(24,509) $
136,143 $
(8,557) $
111,634 $ Total Revenues GAAP 1,535,726 $ 1,735,358 $ 1,959,213 $ 1,769,131 $ 2,632,570 $ 3,450,444 $ 4,401,701 $ Consolidation and Elimination Adjustment (e) (60,830) (84,131) (102,998) (104,378) (663,177) (167,418) (767,555) Total Segment 1,474,896 $ 1,651,227 $ 1,856,215 $ 1,664,753 $ 1,969,393 $ 3,283,026 $ 3,634,146 $ Compensation GAAP 367,203 $
359,209 $
364,484 $
389,403 $
427,479 $
718,792 $ 816,882 $ Consolidation Adjustment (f) (61,946) (56,411) (58,450) (53,076) (110,089) (124,508) (163,165) Total Segment 305,257 $
302,798 $
306,034 $
336,327 $
317,390 $
594,284 $ 653,717 $ |
 Blackstone 27 This analysis reconciles the summarized components of Total Segments (pages 3-7) to their respective Total Segment amounts (page 13) and to their equivalent GAAP measures, reported on the Consolidated Statements of Operations (page 1). (a) Represents (1) the add back of net management fees earned from consolidated Blackstone Funds which have been eliminated in consolidation,
and (2) the removal of revenue from the reimbursement of certain expenses by the Blackstone Funds, which are presented gross under GAAP but netted against Other Operating Expenses in the Total Segment measures.
(b)
Represents the add back of performance revenues earned from consolidated
Blackstone Funds which have been eliminated in consolidation.
(c) Represents (1) the add back of Principal Investment Income, including general partner income, earned from consolidated Blackstone Funds
which have been eliminated in consolidation, and (2) the inclusion of Principal Investment Income on non-consolidated Blackstone Funds which in GAAP is recorded as Other Income (Loss) - Net Gains (Losses) from Fund Investment Activities. (d) Represents (1) the add back of Other Revenues earned from consolidated Blackstone Funds which have been eliminated in consolidation, and
(2) the removal of certain Transaction-Related Charges. For the three and six months ended June 30, 2018, Transaction-Related Charges included $580.9 million of Other Revenues received upon the conclusion of Blackstone’s investment sub-advisory relationship with FS
Investments’ funds. (e)
Represents the reversal of all revenue-related consolidation and
elimination adjustments. (f)
Represents transaction-related equity compensation that is not recorded in
the Total Segment measures. (g)
Represents interest expense associated with the Tax Receivable
Agreement. (h)
Represents the removal of (1) the amortization of transaction-related
intangibles, and (2) certain expenses reimbursed by the Blackstone Funds, which are presented gross under GAAP but netted against Other Operating Expenses in the Total Segment measures. (i) Represents the reversal of (1) GAAP Fund Expenses, which are attributable to consolidated Blackstone Funds and not a component of the
segments, and (2) all expense-related consolidation and elimination adjustments. (j) Represents the inclusion of Other Income (Loss) which is included in GAAP but not as a component of the Total Segment measures.
(k)
Represents all consolidation and elimination adjustments between GAAP and Total
Segment measures. Reconciliation
of GAAP to Total Segment Measures – Continued (Dollars in Thousands) 2Q'17 3Q'17 4Q'17 1Q'18 2Q'18 2Q'17 YTD 2Q'18 YTD Performance Compensation GAAP Incentive Fee Compensation 21,032 $
18,332 $
43,450 $
6,662 $
9,743 $
43,497 $ 16,405 $ Performance Allocations Compensation - Realized 195,738 162,505 557,244 112,062 186,398 562,216 298,460 Performance Allocations Compensation - Unrealized 86,910 175,534 (166,183) 254,435 189,991 94,443 444,426 GAAP 303,680 $
356,371 $
434,511 $
373,159 $
386,132 $
700,156 $ 759,291 $ Total Segment 303,680 $
356,371 $
434,511 $
373,159 $
386,132 $
700,156 $ 759,291 $ Interest Expense GAAP 41,089 $
41,545 $
74,606 $
38,671 $
39,320 $
81,335 $ 77,991 $ Consolidation Adjustment (g) (795) (796) (2,261) (433) (435) (1,591) (868) Total Segment 40,294 $
40,749 $
72,345 $
38,238 $
38,885 $
79,744 $ 77,123 $ GAAP General, Administrative and Other to Total Segment Other Operating Expenses
GAAP 119,552 $
121,036 $
138,608 $
126,713 $
145,828 $
228,938 $ 272,541 $ Consolidation and Elimination Adjustment (h) (13,714) (14,419) (22,659) (19,621) (23,362) (26,638) (42,983) Total Segment 105,838 $
106,617 $
115,949 $
107,092 $
122,466 $
202,300 $ 229,558 $ Total Expenses GAAP 881,193 $
904,511 $
1,044,901 $ 982,931 $
1,016,381 $ 1,802,966 $ 1,999,312 $ Less: GAAP Fund Expenses (i) (49,669) (26,350) (32,692) (54,985) (17,622) (73,745) (72,607) Consolidation and Elimination Adjustment (i) (76,455) (71,626) (83,370) (73,130) (133,886) (152,737) (207,016) Total Segment 755,069 $
806,535 $
928,839 $
854,816 $
864,873 $
1,576,484 $ 1,719,689 $ GAAP Income Before Provision for Taxes to Total Segment Economic Income GAAP Revenues Less Expenses 654,533 830,847 914,312 786,200 1,616,189 1,647,478 2,402,389 Other Income (j) 110,054 63,448 485,818 110,599 73,519 176,186 184,118 GAAP 764,587 $
894,295 $
1,400,130 $ 896,799 $
1,689,708 $ 1,823,664 $ 2,586,507 $ Consolidation and Elimination Adjustment (k) (44,760) (49,603) (472,754) (86,862) (585,188) (117,122) (672,050) Total Segment 719,827 $
844,692 $
927,376 $
809,937 $
1,104,520 $ 1,706,542 $ 1,914,457 $ |
 Blackstone 28 Walkdown of Financial Metrics (Dollars in Thousands, Except per Unit Data) 2Q'18 2Q'18 YTD Results Per Unit Results Per Unit Management and Advisory Fees, Net 722,994 $
1,459,038 $ Fee Related Compensation (285,907) (581,986) Other Operating Expenses (122,466) (229,558) Fee Related Earnings 314,621 $
0.26 $
647,494 $
0.54 $
Net Realized Performance Revenues
329,829 497,213 Realized Principal Investment Income 94,647 123,340 Net Interest Income 2,842 989 Taxes and Related Payables (41,797) (66,839) Distributable Earnings 700,142 $
0.56 $
1,202,197 $ 0.97 $
Net Unrealized Performance Revenues
250,433 624,337 Unrealized Principal Investment Income 52,126 66,104 Other Revenue 94,416 33,522 Add Back: Related Payables 21,771 28,585 Less: Equity-Based Compensation (34,394) (78,542) Economic Net Income 1,084,494 $ 0.90 $
1,876,203 $ 1.55 $
See page 29, Walkdown
of Financial Metrics
– Calculation of Certain Non - GAAP Financial Metrics for the calculation of the amounts presented herein that are not the respective captions on page13, Total Segments.
2Q’18 Fee Related Earnings per Unit is based on end of period
DE Units Outstanding; 2Q’18 DE per Unit is based on DE attributable to Common Unitholders (see page 18, Unitholder Distribution) and end of period Total Common Units Outstanding; and 2Q’18 ENI per Unit is based on Weighted - Average ENI Adjusted Units. 2Q’18 YTD per Unit represents the sum of the last two quarters. See page 30, Unit
Rollforward. |
 Blackstone 29 Walkdown of Financial Metrics – Calculation of Non-GAAP Financial Metrics Unless otherwise noted, all amounts are the respective captions from the Total Segment information.
(a) Represents the equity-based compensation expense component of Compensation.
(b) Represents the total equity-based compensation expense component of Realized Incentive Fees Compensation and Realized Performance
Allocations Compensation. (c)
See page 24, Note (l), Reconciliation of GAAP to Non-GAAP Measures – Quarters for this adjustment. (d) Represents tax-related payables including the Payable Under Tax Receivable Agreement, which is a component of Taxes and Related
Payables. (e)
Represents all equity-based compensation expenses included in Economic
Income. This excludes all transaction-related equity-based charges. (Dollars in Thousands) 2Q'18 2Q'18 YTD Compensation (317,390) $ (653,717) $ Less: Equity-Based Compensation - Non-Performance Compensation Related (a) 31,483 71,731 Fee Related Compensation (285,907) $ (581,986) $ Realized Incentive Fees 19,504 32,070 Realized Performance Allocations 503,555 773,197 Less: Realized Incentive Fees Compensation (9,743) (16,405) Less: Realized Performance Allocations Compensation (186,398) (298,460) Plus: Equity-Based Compensation - Performance Compensation Related (b) 2,911 6,811 Net Realized Performance Revenues 329,829 $ 497,213 $ Interest Income and Dividend Revenue 41,727 78,112 Less: Interest Expense (38,885) (77,123) Net Interest Income 2,842 $ 989 $
Taxes and Related Payables (c)
(41,797) $ (66,839) $ Unrealized Performance Allocations 440,424 1,068,763 Less: Unrealized Performance Allocations Compensation (189,991) (444,426) Net Unrealized Performance Revenues 250,433 $ 624,337 $ Related Payables (d) 21,771 $ 28,585 $ Equity-Based Compensation - Non-Performance Compensation Related (a) 31,483 71,731 Plus: Equity-Based Compensation - Performance Compensation Related (b) 2,911 6,811 Equity-Based Compensation (e) 34,394 $ 78,542 $ |
 Blackstone 30 Unit Rollforward Common Unitholders 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 Tax Receivable Agreement and certain other tax-related payables. Distributable Earnings Units Outstanding
excludes units which are not entitled to distributions.
2Q'17 3Q'17 4Q'17 1Q'18 2Q'18 Total GAAP Weighted-Average Common Units Outstanding - Basic 664,681,299 667,384,727 668,781,321 674,479,140 681,794,492 Adjustments: Weighted-Average Unvested Deferred Restricted Common Units 998,974 663,474 702,960 198,934 216,118 Weighted-Average Blackstone Holdings Partnership Units 534,326,066 532,454,091 - 535,895,780 - Total GAAP Weighted-Average Units Outstanding - Diluted
1,200,006,339 1,200,502,292 669,484,281 1,210,573,854 682,010,610 Adjustments: Weighted-Average Blackstone Holdings Partnership Units - - 531,139,507 - 528,872,187 Weighted-Average Economic Net Income Adjusted Units 1,200,006,339 1,200,502,292 1,200,623,788 1,210,573,854 1,210,882,797 Economic Net Income Adjusted Units, End of Period 1,199,890,628 1,200,559,970 1,200,553,187 1,210,853,058 1,208,784,937 Total Common Units Outstanding 665,503,840 667,027,762 668,733,356 676,168,743 682,801,258 Adjustments: Blackstone Holdings Partnership Units 530,678,056 532,235,827 530,472,212 528,967,264 520,175,306 Distributable Earnings Units Outstanding 1,196,181,896 1,199,263,589 1,199,205,568 1,205,136,007 1,202,976,564 In the first quarter of 2018, Blackstone increased its unit repurchase authorization to $1 billion. Blackstone repurchased 2.2 million units in the quarter resulting in Distributable Earnings Units Outstanding of 1,203 million units. • Available authorization remaining was $928 million at June 30, 2018. |
 Blackstone 31 Definitions and Distribution Policy 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 this presentation:
• Economic Income, or
“EI”, represents segment net income before taxes and is used as a
key measure of value creation, a benchmark of performance and in making resource deployment and compensation decisions across Blackstone’s four segments. EI presents revenues and expenses on a basis that deconsolidates the investment funds Blackstone manages, and excludes the amortization of intangibles and other transaction-related
charges. o
Transaction-Related Charges
arise from corporate actions including acquisitions, divestitures, and
Blackstone’s initial public offering. They consist primarily
of equity-based compensation charges, gains and losses on contingent
consideration arrangements, changes in the balance of the tax receivable agreement resulting from a change in tax law or similar event, transaction costs and any gains or losses associated with these corporate actions.
• Economic Net Income,
or “ENI”, represents EI adjusted to include current period taxes. Current period taxes represent the total GAAP
tax provision adjusted to include only the current tax provision (benefit) calculated on Income (Loss) Before Provision for Taxes and adjusted to exclude the
tax impact of any divestitures.
• Fee Related Earnings, or “FRE”,
is
used as a performance measure to assess whether recurring revenue from its businesses is sufficient to adequately cover all of its operating expenses and generate profits. FRE equals contractual fee revenues less (a) cash compensation expenses (which excludes
Performance Compensation), and (b) Other Operating Expenses. FRE
represents EI adjusted to exclude: (a) the income related to Performance Revenue and related Performance Compensation, (b) income earned from Blackstone’s investments in the Blackstone Funds, (c) net interest income (loss),
(d) equity-based compensation, and (e) Other Revenue.
• Distributable
Earnings, or “DE”, which is derived from Blackstone’s segment reported results, is a supplemental measure used 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. DE is intended to show the amount of net realized earnings without the effects of the consolidation of the Blackstone
Funds. DE is the sum across all segments of: (a) Total
Management, Advisory and Other Fees, Net, (b) Interest and Dividend Revenue, (c) Realized Incentive Fees, (d) Realized Performance Allocations, and (e) Realized Principal Investment Income (Loss); less (a) Compensation, excluding the expense of equity-based awards, (b) Realized Incentive Fee Compensation, (c) Realized Performance Allocations Compensation, (d) Interest Expense, (e) Other Operating
Expenses, and (f)
Taxes and Related Payables Under the Tax Receivable Agreement. DE is reconciled
to Blackstone’s Consolidated Statement of Operations.
• Adjusted Earnings Before Interest, Taxes and Depreciation and Amortization, or “Adjusted EBITDA”, is a supplemental measure used to assess performance derived from Blackstone’s segment results and may be used to assess its ability to service its
borrowings., •
Performance Revenues collectively refers to: (a) Incentive Fees, and (b) Performance Allocations. • Performance Compensation collectively refers to: (a) Incentive Fee Compensation, and (b) Performance Allocations Compensation. Distribution Policy. Blackstone’s intention is to distribute quarterly to common unitholders approximately 85% of The Blackstone Group L.P.’s share of Distributable Earnings, subject to adjustment by amounts determined by Blackstone’s 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 cash requirements such as tax-related payments, clawback obligations and distributions to unitholders for any ensuing quarter. The amount to be distributed could also be adjusted upward in any one quarter. 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 may change its distribution policy at any time, including, without limitation, to eliminate such distributions entirely. |
 Blackstone 32 Forward-Looking Statements This presentation 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, financial performance and unit repurchase and distribution activities. You can identify these forward-looking statements
by the use of words such as “outlook,”
“indicator,” “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, 2017, 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 presentation
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 presentation does not constitute an offer of any Blackstone Fund. |