FAIR VALUE MEASUREMENTS OF FINANCIAL INSTRUMENTS (Tables)

The following tables summarize the valuation of the Partnership’s financial assets and liabilities by the fair value hierarchy as of June 30, 2012 and December 31, 2011, respectively:


	June 30, 2012
	Level I		Level II		Level III		Total
Assets
Investments of Consolidated Blackstone Funds (a)
Investment Funds	$	—	$	3,590	$	713,287	$	716,877
Equity Securities		83,439		28,506		212,309		324,254
Partnership and LLC Interests		183		490		547,915		548,588
Debt Instruments		—		720,111		21,363		741,474
Assets of Consolidated CLO Vehicles
Corporate Loans		—		10,426,445		1,000,762		11,427,207
Corporate Bonds		—		191,512		37,229		228,741
Freestanding Derivatives — Foreign Currency Contracts		—		38,247		—		38,247
Freestanding Derivatives — Interest Rate Contracts		—		8,203		—		8,203
Other		328		16,495		7,291		24,114

Total Investments of Consolidated Blackstone Funds		83,950		11,433,599		2,540,156		14,057,705
Blackstone’s Treasury Cash Management Strategies		281,089		457,597		200		738,886
Money Market Funds		135,663		—		—		135,663
Freestanding Derivatives
Interest Rate Contracts		609		51,400		—		52,009
Foreign Currency Contracts		—		173		—		173
Loans and Receivables		—		—		104,207		104,207
Other Investments		2,977		6,352		21,162		30,491

	$	504,288	$	11,949,121	$	2,665,725	$	15,119,134

Liabilities
Liabilities of Consolidated CLO Vehicles (a)
Senior Secured Notes	$	—	$	—	$	10,534,253	$	10,534,253
Subordinated Notes		—		—		701,648		701,648
Freestanding Derivatives — Foreign Currency Contracts		—		31,133		—		31,133
Freestanding Derivatives — Interest Rate Contracts		—		4,103		—		4,103
Freestanding Derivatives
Interest Rate Contracts		235		2,330		—		2,565
Foreign Currency Contracts		—		125		—		125
Credit Default Swaps		—		110		—		110
Securities Sold, Not Yet Purchased		—		88,153		—		88,153

	$	235	$	125,954	$	11,235,901	$	11,362,090


	December 31, 2011
	Level I		Level II		Level III		Total
Assets
Investments of Consolidated Blackstone Funds (a)
Investment Funds	$	—	$	5,119	$	723,951	$	729,070
Equity Securities		113,007		608		232,172		345,787
Partnership and LLC Interests		—		—		492,911		492,911
Debt Instruments		—		594,276		12,783		607,059
Assets of Consolidated CLO Vehicles
Corporate Loans		—		7,259,204		635,944		7,895,148
Corporate Bonds		—		150,653		3,000		153,653
Freestanding Derivatives — Foreign Currency Contracts		—		22,016		—		22,016
Freestanding Derivatives — Interest Rate Contracts		—		7,270		—		7,270
Other		28,900		21,973		3,008		53,881

Total Investments of Consolidated Blackstone Funds		141,907		8,061,119		2,103,769		10,306,795
Blackstone’s Treasury Cash Management Strategies		176,297		509,362		200		685,859
Money Market Funds		257,423		—		—		257,423
Freestanding Derivatives
Interest Rate Contracts		159		609		—		768
Foreign Currency Contracts		—		1,016		—		1,016
Derivative Instruments Used as Fair Value Hedges		—		67,668		—		67,668
Loans and Receivables		—		—		8,555		8,555
Other Investments		8,066		360		19,964		28,390

	$	583,852	$	8,640,134	$	2,132,488	$	11,356,474

Liabilities
Liabilities of Consolidated CLO Vehicles (a)
Senior Secured Notes	$	—	$	—	$	7,449,766	$	7,449,766
Subordinated Notes		—		—		630,236		630,236
Freestanding Derivatives — Foreign Currency Contracts		—		7,687		—		7,687
Freestanding Derivatives — Interest Rate Contracts		—		10,867		—		10,867
Freestanding Derivatives
Interest Rate Contracts		1,105		186		—		1,291
Foreign Currency Contracts		—		103		—		103
Securities Sold, Not Yet Purchased		—		143,825		—		143,825

	$	1,105	$	162,668	$	8,080,002	$	8,243,775

(a)

Pursuant to GAAP consolidation guidance, the Partnership is required to consolidate all VIEs in which it has been identified as the primary beneficiary, including its investments in CLO vehicles and other funds in which a consolidated entity of the Partnership, as the general partner of the fund, is presumed to have control. While the Partnership is required to consolidate certain funds, including CLO vehicles, for GAAP purposes, the Partnership has no ability to utilize the assets of these funds and there is no recourse to the Partnership for their liabilities since these are client assets and liabilities.

The following table summarizes the fair value transfers between Level I and Level II:


	Three Months Ended		Six Months Ended
	June 30, 2012		June 30, 2012
Transfers from Level I into Level II (a)	$	15,924	$	45,440
Transfers from Level II into Level I (b)	$	529	$	801

(a)	Transfers out of Level I represent those financial instruments for which restrictions exist and adjustments were made to an otherwise observable price to reflect fair value at the reporting date.

(b)	Transfers into Level I represent those financial instruments for which an unadjusted quoted price in an active market became available for the identical asset.

The following table summarizes the quantitative inputs and assumptions used for items categorized in Level III of the fair value hierarchy as of June 30, 2012. The disclosure below excludes financial instruments for which fair value is based on unobservable but non-quantitative inputs. Such items include financial instruments for which the determination of fair value is based on prices from prior transactions or third party pricing information without adjustment and financial instruments for which fair value is determined by net asset value.


	Fair Value at June 30, 2012		Valuation Techniques	Unobservable Inputs	Ranges
Financial Assets
Equity Securities	$	124,105	Discounted Cash Flows	Discount Rate Revenue CAGR Exit Multiple	8.1% - 25.0% 1.6% - 83.4% 5.8x - 17.0x

		1,931	Market Comparable Companies	Book Value Multiple EBITDA Multiple	0.8x 6.5x - 8.3x

Partnership and LLC Interests		533,520	Discounted Cash Flows	Discount Rate Revenue CAGR Exit Multiple Exit Capitalization Rate	3.1% - 22.5% -5.6% - 62.0% 4.5x - 14.8x 1.0% - 9.5%

Debt Instruments		8,499	Discounted Cash Flows	Discount Rate Exit Capitalization Rate Default Rate Recovery Rate Recovery Lag Pre-payment Rate Reinvestment Rate	10.7% - 48.0% 7.5% 2.0% 70.0% 12 months 20.0% 3.2%

		772	Market Comparable Companies	EBITDA Multiple	3.5x - 8.3x

Assets of Consolidated CLO Vehicles		128,694	Discounted Cash Flows	Discount Rate	6.0% - 18.0%

		86,555	Market Comparable Companies	EBITDA Multiple Liquidity Discount	2.0x - 10.6x 1.0% - 25.0%

Loans and Receivables		104,207	Discounted Cash Flows	Discount Rate	6.8% - 23.3%

Financial Liabilities

CLOs	$	11,235,901	Discounted Cash Flows	Default Rate Recovery Rate Recovery Lag Pre-payment Rate Reinvestment Rate Discount Rate	2.0% - 5.0% 30.0% - 70.0% 12 months 5.0% - 20.0% 3.2% 1.1% - 80.0%


CAGR		Compound annual growth rate.
EBITDA		Earnings before interest, taxes, depreciation and amortization.
Exit Multiple		Ranges include the last twelve months EBITDA, forward EBITDA and price/earnings exit multiples.


	Level III Financial Assets at Fair Value Three Months Ended June 30,
	2012												2011
	Investments of Consolidated Funds			Loans and Receivables			Other Investments			Total			Investments of Consolidated Funds			Loans and Receivables			Other Investments			Total
Balance, Beginning of Period	$	2,390,276		$	105,004		$	21,791		$	2,517,071		$	1,741,692		$	14,034		$	20,970		$	1,776,696
Transfer In Due to Consolidation and Acquisition (a)		—			—			—			—			9,570			—			—			9,570
Transfer Out Due to Deconsolidation		(1,599	)								(1,599	)
Transfer In to Level III (b)		171,916			—			—			171,916			4,607			—			—			4,607
Transfer Out of Level III (b)		(59,315	)		—			—			(59,315	)		(112,780	)		—			—			(112,780	)
Purchases		232,684			39,657			100			272,441			308,430			119,861			117,200			545,491
Sales		(173,516	)		(41,872	)		(541	)		(215,929	)		(154,861	)		(7,719	)		(531	)		(163,111	)
Settlements		—			(186	)		—			(186	)		4,933			(71	)		—			4,862
Realized Gains (Losses), Net		(12,264	)		—			541			(11,723	)		(3,764	)		—			531			(3,233	)
Changes in Unrealized Gains (Losses) Included in Earnings Related to Investments Still Held at the Reporting Date		(8,026	)		1,604			(529	)		(6,951	)		40,026			1,003			543			41,572

Balance, End of Period	$	2,540,156		$	104,207		$	21,362		$	2,665,725		$	1,837,853		$	127,108		$	138,713		$	2,103,674


	Level III Financial Assets at Fair Value Six Months Ended June 30,
	2012												2011
	Investments of Consolidated Funds			Loans and Receivables			Other Investments			Total			Investments of Consolidated Funds			Loans and Receivables			Other Investments			Total
Balance, Beginning of Period	$	2,103,769		$	8,555		$	20,164		$	2,132,488		$	1,602,371		$	131,290		$	19,672		$	1,753,333
Transfer In Due to Consolidation and Acquisition (a)		122,565			—			—			122,565			9,570			—			—			9,570
Transfer Out Due to Deconsolidation		(1,599	)		—			—			(1,599	)
Transfer In to Level III (b)		253,608			—			—			253,608			11,162			—			—			11,162
Transfer Out of Level III (b)		(103,280	)		—			—			(103,280	)		(134,243	)		—			—			(134,243	)
Purchases		320,312			142,908			100			463,320			436,529			126,090			117,200			679,819
Sales		(229,623	)		(49,251	)		(541	)		(279,415	)		(217,826	)		(129,900	)		(531	)		(348,257	)
Settlements		—			(46	)		—			(46	)		—			(1,441	)		—			(1,441	)
Realized Gains (Losses), Net		(9,093	)		—			639			(8,454	)		4,087			—			531			4,618
Changes in Unrealized Gains (Losses) Included in Earnings Related to Investments Still Held at the Reporting Date		83,497			2,041			1,000			86,538			126,203			1,069			1,841			129,113

Balance, End of Period	$	2,540,156		$	104,207		$	21,362		$	2,665,725		$	1,837,853		$	127,108		$	138,713		$	2,103,674


	Level III Financial Liabilities at Fair Value Three Months Ended June 30,
	2012									2011
	Collateralized Loan Obligations Senior Notes			Collateralized Loan Obligations Subordinated Notes			Total			Collateralized Loan Obligations Senior Notes			Collateralized Loan Obligations Subordinated Notes			Total
Balance, Beginning of Period	$	10,984,018		$	857,772		$	11,841,790		$	6,023,892		$	567,436		$	6,591,328
Transfer In Due to Consolidation and Acquisition (a)		—			—			—			1,829,899			95,567			1,925,466
Issuances		227			—			227			204			—			204
Settlements		(140,736	)		(238	)		(140,974	)		(73,830	)		(228	)		(74,058	)
Realized Gains (Losses), Net		(1	)		—			(1	)		2,319			—			2,319
Changes in Unrealized Gains (Losses) Included in Earnings Related to Liabilities Still Held at the Reporting Date		(309,255	)		(155,886	)		(465,141	)		77,043			43,874			120,917

Balance, End of Period	$	10,534,253		$	701,648		$	11,235,901		$	7,859,527		$	706,649		$	8,566,176


	Level III Financial Liabilities at Fair Value Six Months Ended June 30,
	2012									2011
	Collateralized Loan Obligations Senior Notes			Collateralized Loan Obligations Subordinated Notes			Total			Collateralized Loan Obligations Senior Notes			Collateralized Loan Obligations Subordinated Notes			Total
Balance, Beginning of Period	$	7,449,766		$	630,236		$	8,080,002		$	5,877,957		$	555,632		$	6,433,589
Transfer In Due to Consolidation and Acquisition (a)		3,419,084			149,225			3,568,309			1,829,899			95,567			1,925,466
Issuances		4,620			838			5,458			404			—			404
Settlements		(272,609	)		(2,984	)		(275,593	)		(235,273	)		(12,481	)		(247,754	)
Realized Gains (Losses), Net		43			—			43			7,715			—			7,715
Changes in Unrealized Gains (Losses) Included in Earnings Related to Liabilities Still Held at the Reporting Date		(66,651	)		(75,667	)		(142,318	)		378,825			67,931			446,756

Balance, End of Period	$	10,534,253		$	701,648		$	11,235,901		$	7,859,527		$	706,649		$	8,566,176

(a)	Represents the transfer into Level III of financial assets and liabilities held by CLO vehicles as a result of the acquisition of management contracts on May 16, 2011 and the Harbourmaster acquisition on January 5, 2012.

(b)	Transfers in and out of Level III financial assets and liabilities were due to changes in the observability of inputs used in the valuation of such assets and liabilities.

- Definition

Tabular disclosure related to assets and liabilities by class, including financial instruments measured at fair value that are classified in shareholders' equity, if any, that are measured at fair value on a recurring and/or nonrecurring basis in periods after initial recognition. Disclosures include, but are not limited to: (a) the fair value measurements recorded and the reasons for the measurements and (b) the level within the fair value hierarchy in which the fair value measurements are categorized in their entirety (levels 1, 2, 3) as well as transfers between levels 1 and 2.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Statement of Financial Accounting Standard (FAS)

-Number 157

-Paragraph 6

-Footnote 4

-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 2: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Accounting Standards Codification

-Topic 820

-SubTopic 10

-Section 50

-Paragraph 2

-Subparagraph (a,b,bb)

-URI http://asc.fasb.org/extlink&oid=7578670&loc=d3e19207-110258

Reference 3: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Statement of Financial Accounting Standard (FAS)

-Number 157

-Paragraph 32

-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 4: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Accounting Standards Codification

-Topic 820

-SubTopic 10

-Section 50

-Paragraph 2C

-URI http://asc.fasb.org/extlink&oid=7578670&loc=SL7498348-110258

Reference 5: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Accounting Standards Codification

-Topic 820

-SubTopic 10

-Section 50

-Paragraph 3

-URI http://asc.fasb.org/extlink&oid=7578670&loc=d3e19279-110258

Reference 6: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Accounting Standards Codification

-Topic 820

-SubTopic 10

-Section 50

-Paragraph 1

-URI http://asc.fasb.org/extlink&oid=7578670&loc=d3e19190-110258

Reference 7: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Statement of Financial Accounting Standard (FAS)

-Number 157

-Paragraph 33

-Subparagraph a, b

-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

+ Details

- Definition

Tabular disclosure of the fair value measurement of assets using significant unobservable inputs (Level 3), a reconciliation of the beginning and ending balances, separately presenting changes during the period attributable to the following: (1) total gains or losses for the period (realized and unrealized), segregating those gains or losses included in earnings (or changes in net assets) and gains or losses recognized in other comprehensive income (loss), and a description of where those gains or losses included in earnings (or changes in net assets) are reported in the statement of income (or activities); (2) purchases, sales, issues, and settlements (each type disclosed separately); and (3) transfers in and transfers out of Level 3 (for example, transfers due to changes in the observability of significant inputs), by class of asset.

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- Definition

Tabular disclosure of the fair value measurement of liabilities using significant unobservable inputs (Level 3), a reconciliation of the beginning and ending balances, separately presenting changes attributable to the following: (1) total gains or losses for the period (realized and unrealized), segregating those gains or losses included in earnings (or changes in net assets), and gains or losses recognized in other comprehensive income (loss) and a description of where those gains or losses included in earnings (or changes in net assets) are reported in the statement of income (or activities); (2) purchases, sales, issues, and settlements (each type disclosed separately); and (3) transfers in and transfers out of Level 3 (for example, transfers due to changes in the observability of significant inputs) by class of liability.

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