 Blackstone’s Third Quarter 2014 Earnings
October 16, 2014
Exhibit 99.2 |
| Blackstone’s Third Quarter 2014 Earnings
October 16, 2014
Exhibit 99.2 |
 “Long-term underlying growth fundamentals have
never been stronger, as evidenced by the momentum in
Blackstone’s earnings, distributions, assets and
investment activity.”
Stephen A. Schwarzman
Chairman and Founder
Blackstone
1 |
 Blackstone
Blackstone’s Third Quarter 2014 Highlights
Blackstone
reported
record
earnings,
distributions,
Assets
Under
Management
(“AUM”)
and
investment
activity for the third quarter and year-to-date.
Economic Net Income (“ENI”) was $758 million ($0.66/unit) for the
quarter, up 18% from last year, as Blackstone’s funds created $4.3
billion of value in the third quarter. •
ENI was $2.9 billion ($2.51/unit) year-to-date, up 47% from the same
period last year. Distributable Earnings (“DE”) more than doubled
in the quarter year-over-year to $672 million ($0.53/unit) on
$10.0 billion of realizations and rose 85% to $1.9 billion ($1.59/unit)
year-to-date. •
Fund activity generated $1.7 billion of Realized Performance Fees
year-to-date, up 120% from $791
million in the prior year period.
GAAP
Net
Income
was
$251
million
for
the
quarter,
net
of
certain
non-cash
IPO
and
transaction
related
expenses
and
exclusive
of
net
income
attributable
to
non-controlling
interests,
primarily
inside
ownership.
Total AUM reached a record $284 billion, up 15% year-over-year despite
returning $53.2 billion of capital to investors over the last twelve
months (“LTM”). •
Gross inflows were $13.1 billion for the quarter and $54.8 billion LTM.
•
Asset appreciation across funds created $34.8 billion of value for investors
LTM. Across Blackstone $24.4 billion of total capital was invested LTM, up
59%. On October 10, 2014, Blackstone announced the tax-free
spin-off of its financial advisory business to Blackstone unitholders.
The financial advisory business will combine with PJT Partners to create an
independent, world-class, publicly traded advisory firm.
2 |
 Blackstone
Blackstone’s Third Quarter 2014 Earnings
% Change
% Change
(Dollars in Thousands, Except per Unit Data)
3Q'13
3Q'14
vs. 3Q'13
YTD'13
YTD'14
vs. YTD'13
Fee Revenues
581,678
$
682,050
$
17%
1,719,076
$
1,957,938
$
14%
Performance Fees
544,936
891,087
64%
1,868,154
3,068,539
64%
Investment Income
99,172
80,766
(19)%
331,062
373,204
13%
Total Revenues
1,225,786
$
1,653,903
$
35%
3,918,292
$
5,399,681
$
38%
Total Expenses
570,763
816,028
43%
1,905,540
2,385,565
25%
Taxes
14,792
79,519
438%
40,975
115,863
183%
Economic Net Income (“ENI”)
640,231
$
758,356
$
18%
1,971,777
$
2,898,253
$
47%
ENI per Unit
0.56
$
0.66
$
18%
1.72
$
2.51
$
46%
GAAP Net Income
171,164
$
250,505
$
46%
549,947
$
1,033,138
$
88%
Fee Related Earnings (“FRE”)
178,596
$
217,291
$
22%
484,763
$
593,228
$
22%
Distributable Earnings (“DE”)
312,673
$
672,144
$
115%
1,042,070
$
1,928,053
$
85%
DE per Common Unit
0.26
$
0.53
$
104%
0.88
$
1.59
$
81%
Total Assets Under Management
248,064,888
284,414,936
15%
248,064,888
284,414,936
15%
Fee-Earning Assets Under Management
188,649,817
214,819,600
14%
188,649,817
214,819,600
14%
3 |
 Blackstone
Walkdown of Financial Metrics
(Dollars in Thousands, Except per Unit Data)
3Q'14
YTD'14
Results
Per Unit
Results
Per Unit
Base Management Fees
505,493
$
1,478,941
$
Advisory Fees
84,131
269,008
Transaction and Other Fees, Net
90,885
199,991
Management Fee Offsets
(22,763)
(59,625)
Interest Income and Other Revenue
15,411
75,224
Compensation
(324,426)
(953,986)
Other Operating Expenses
(131,440)
(416,325)
Fee Related Earnings
217,291
$
0.19
$
593,228
$
0.52
$
Net Realized Incentive Fees
17,811
68,795
Net Realized Carried Interest
452,749
1,018,332
Net Realized Investment Income
70,783
382,496
Taxes and Related Payables
(96,437)
(172,332)
Equity-Based Compensation
9,947
37,534
Distributable Earnings
672,144
$
0.53
$
1,928,053
$
1.59
$
Net Unrealized Incentive Fees
2,471
72,290
Net Unrealized Carried Interest
57,894
893,868
Net Unrealized Investment Income (Loss)
18,876
(14,893)
Add Back: Related Payables
16,918
56,469
Less: Equity-Based Compensation
(9,947)
(37,534)
Economic Net Income
758,356
$
0.66
$
2,898,253
$
2.51
$
4
See page 31, Walkdown of Financial Metrics – Calculation of Certain Non-GAAP
Financial Metric Components for the calculation of the amounts presented herein that are not the respective
captions on page 20, Total Segments. 3Q’14 Fee Related Earnings per Unit is based on
1,146,350,827 DE Units Outstanding; DE per Unit is based on 607,590,602 Total Common Units Outstanding;
and ENI per Unit is based on 1,154,835,647 Weighted-Average ENI Adjusted Units (see page
32, Unit Rollforward). |
 Blackstone
Private Equity
28.2%
3Q’14 LTM increase in fund carrying value
$1.1 billion
3x increase in YTD Economic Income
$1.13 per unit
3Q’14 Net Accrued Performance Fees
Record Total Revenues and Economic Income of $1.8 billion and $1.1 billion
year-to-date, respectively, which were more than double the prior
year period on consistent fund appreciation. •
Strong operating performance across the portfolio drove 3.7% appreciation during
the quarter and 28.2% LTM. •
BCP V generated $147 million of Performance Fees during the quarter and $766
million year-to-date. Private Equity generated realizations of
$14.7 billion LTM on a steady rise in realizations through strategic sales,
refinancings and public market exits.
Investment
activity
remained
robust,
opportunistically
deploying
capital
across
sectors
and
regions,
with
$3.2 billion total capital invested during the quarter and $8.9 billion
LTM. •
At
quarter
end,
an
additional
$2.5
billion
of
capital
was
committed
not
yet
deployed.
Strategic Partners held a final close of $1.2 billion of its sixth secondary fund
of funds ($4.4 billion total; nearly 2x larger than its predecessor fund)
and closed on an infrastructure and real assets SMA of $400 million.
Commencing
fundraising
for
seventh
global
private
equity
fund
and
second
opportunistic
fund
against
a
favorable
backdrop for alternative asset demand and strong returns in predecessor
funds. % Change
% Change
(Dollars in Thousands)
3Q'13
3Q'14
vs. 3Q'13
YTD'13
YTD'14
vs. YTD'13
Fee Revenues
116,005
$
158,891
$
37%
356,268
$
436,505
$
23%
Performance Fees
(1,179)
221,368
n/m
241,584
1,222,842
406%
Investment Income
35,116
7,667
(78)%
133,663
151,643
13%
Total Revenues
149,942
387,926
159%
731,515
1,810,990
148%
Compensation
55,800
79,007
42%
179,750
225,352
25%
Performance Fee Compensation
(16,374)
124,378
n/m
105,479
361,915
243%
Other Operating Expenses
30,024
34,109
14%
91,370
106,308
16%
Total Expenses
69,450
237,494
242%
376,599
693,575
84%
Economic Income
80,492
$
150,432
$
87%
354,916
$
1,117,415
$
215%
Total AUM
62,619,813
$
69,890,367
$
12%
62,619,813
$
69,890,367
$
12%
Fee-Earning AUM
43,645,106
$
43,817,741
$
0%
43,645,106
$
43,817,741
$
0%
5
SMA = Separately managed account. |
 Blackstone
Real Estate
28.1%
3Q’14 LTM increase in fund carrying value
$350 million
3Q’14 Realized Performance Fees
Record Total Revenues and Economic Income of $2.1 billion and $1.3 billion,
respectively, year-to-date reflects sustained strong operating
fundamentals across all of the sub-sectors of Blackstone’s global real estate portfolio.
Opportunistic
Real
Estate
funds’
carrying
value
appreciated
6.2%
for
the
quarter
and
28.1%
LTM,
significantly
outperforming
global
markets
as
demand
for
hospitality,
office
and
logistics
remained
robust.
Sustained high level of realization activity resulted in proceeds of $4.4 billion
during the quarter, primarily from partial realizations in the office
portfolio and Brixmor; realizations reached $16.0 billion LTM.
Investment
pace
was
active
with
$3.1
billion
of
total
capital
invested
during
the
quarter, and $12.3 billion LTM.
•
At
quarter
end,
an
additional
$2.8
billion
of
capital
was
committed
not
yet
deployed.
•
Largest global opportunistic fund platform enables large-scale capital
deployment anywhere in the world, and 58% of capital deployed LTM was
outside of North America. Raised
$1.6
billion
of
capital
during
the
quarter,
including
$402
million
for
Core+,
$430
million
in
debt
strategies
and $209 million for the Asia fund, bringing LTM capital raised to $12.3
billion. BXMT,
the
commercial
mortgage
REIT,
completed
a
common
equity
issuance
to
fund
continued
strong
origination
activity,
bringing
its
current
market
capitalization
to
$1.6
billion,
up
from
$726
million
a
year
ago.
$2.38 per unit
3Q’14 Net Accrued Performance Fees
% Change
% Change
(Dollars in Thousands)
3Q'13
3Q'14
vs. 3Q'13
YTD'13
YTD'14
vs. YTD'13
Fee Revenues
161,714
$
192,535
$
19%
459,902
$
534,110
$
16%
Performance Fees
440,502
537,197
22%
1,197,119
1,414,677
18%
Investment Income
58,584
63,665
9%
177,634
172,628
(3)%
Total Revenues
660,800
793,397
20%
1,834,655
2,121,415
16%
Compensation
75,346
90,586
20%
218,597
256,401
17%
Performance Fee Compensation
140,799
173,445
23%
391,490
455,708
16%
Other Operating Expenses
30,614
36,138
18%
86,693
105,787
22%
Total Expenses
246,759
300,169
22%
696,780
817,896
17%
Economic Income
414,041
$
493,228
$
19%
1,137,875
$
1,303,519
$
15%
Total AUM
68,964,455
$
80,188,858
$
16%
68,964,455
$
80,188,858
$
16%
Fee-Earning AUM
44,715,985
$
52,308,175
$
17%
44,715,985
$
52,308,175
$
17%
6 |
 Blackstone
Hedge Fund Solutions
Total Revenues were up 8% for the quarter and 15% year-to-date to $158
million and $517 million, respectively, driven by a 22% increase in
Fee-Earning AUM from record organic inflows. Economic
Income
up
10%
to
$84
million
for
the
quarter
and
up
16%
to
$281
million
year-to-date
from
record
gross inflows and strong performance.
Despite more difficult markets globally, the composite gross return was up 1.5%
for the quarter and 10.3% LTM. BAAM had record
fee-earning gross inflows of $4.3 billion during the quarter driven by significant investments in
customized and commingled strategies.
•
October 1 subscriptions of $651 million are not yet included in Fee-Earning
AUM. Launched its first liquid alternative fund in Europe, a UCITS
structure, bringing its two 1940 Act mutual funds and UCITS fund Total AUM
to $2.1 billion. 10.3%
3Q’14 LTM Gross Composite Return
$34.0 billion
Incentive Fee Eligible AUM at 3Q’14
$4.3 billion
3Q’14 Record Fee-Earning Gross Inflows
% Change
% Change
(Dollars in Thousands)
3Q'13
3Q'14
vs. 3Q'13
YTD'13
YTD'14
vs. YTD'13
Fee Revenues
105,605
$
124,010
$
17%
300,461
$
362,555
$
21%
Performance Fees
34,528
32,156
(7)%
138,572
128,615
(7)%
Investment Income
5,841
1,525
(74)%
12,220
26,227
115%
Total Revenues
145,974
157,691
8%
451,253
517,397
15%
Compensation
37,611
41,940
12%
108,323
125,852
16%
Performance Fee Compensation
12,131
11,090
(9)%
49,771
45,292
(9)%
Other Operating Expenses
19,575
20,480
5%
51,269
65,061
27%
Total Expenses
69,317
73,510
6%
209,363
236,205
13%
Economic Income
76,657
$
84,181
$
10%
241,890
$
281,192
$
16%
Total AUM
53,162,174
$
64,183,863
$
21%
53,162,174
$
64,183,863
$
21%
Fee-Earning AUM
50,829,734
$
62,037,082
$
22%
50,829,734
$
62,037,082
$
22%
BAAM’s Principal Solutions Composite does not include BAAM’s long-only equity,
long-biased commodities, seed, strategic opportunities (external investments) and advisory platforms.
On a net of fees basis, the BAAM Principal Solutions Composite was up 1.3% for the quarter and
9.1% LTM. UCITS is undertakings for collective investment in transferable securities.
7 |
 Blackstone
Credit
Investment
Performance
represents
weighted-average
performance
of
the
assets
of
the
respective
flagship
funds
within
each
strategy
as
of
September
30,
2014.
Hedge
Fund
Strategies
net
returns
were
(1.6)%
for
3Q’14
and
9.6%
for
3Q’14
LTM,
Mezzanine
Funds
net
returns
were
12.2%
for
3Q’14
and
22.6%
for
3Q’14
LTM
and
Rescue
Lending
Funds
net
returns
were
6.2% for 3Q’14
and
27.3%
for
3Q’14
LTM.
Customized
Credit
Strategies
includes
business
development
companies
(“BDCs”),
closed-end
funds,
commingled
funds,
the
exchange
traded
fund
and separately managed accounts.
$70.2 billion
3Q’14 Total AUM
Investment Performance
Gross Returns
CLOs
Customized Credit
Strategies
Mezzanine
Funds
Rescue
Lending
Funds
Hedge Fund
Strategies
Strong
growth
with
$228
million
in
Total
Revenues,
up
25%
year-over-year
driven
by
GSO’s
ability
to
capitalize
on
global
opportunities.
Raised two CLOs totaling $1.2 billion in Fee-Earning AUM during the
quarter.
Launched a European listed CLO equity retention vehicle raising over
$400 million in permanent capital during the quarter.
Invested $888 million of total capital during the quarter, bringing total capital
invested to $2.3 billion LTM primarily across the energy, homebuilding,
gaming and equipment and service sectors.
Realization activity remains robust with $2.9 billion returned to investors
during the quarter and $10.3 billion LTM primarily from carry funds and
CLOs post their re-investment periods.
3Q'14
3Q'14 LTM
Hedge Fund
Strategies
(1.6)%
13.2%
Mezzanine
Funds
15.4%
29.8%
Rescue
Lending Funds
8.0%
34.4%
% Change
% Change
(Dollars in Thousands)
3Q'13
3Q'14
vs. 3Q'13
YTD'13
YTD'14
vs. YTD'13
Fee Revenues
111,283
$
119,208
$
7%
324,215
$
347,193
$
7%
Performance Fees
71,085
100,366
41%
290,879
302,405
4%
Investment Income (Loss)
(546)
7,932
n/m
9,157
20,826
127%
Total Revenues
181,822
227,506
25%
624,251
670,424
7%
Compensation
53,250
54,877
3%
154,712
156,939
1%
Performance Fee Compensation
31,837
51,249
61%
148,380
152,339
3%
Other Operating Expenses
23,451
20,860
(11)%
67,374
75,858
13%
Total Expenses
108,538
126,986
17%
370,466
385,136
4%
Economic Income
73,284
$
100,520
$
37%
253,785
$
285,288
$
12%
Total AUM
63,318,446
$
70,151,848
$
11%
63,318,446
$
70,151,848
$
11%
Fee-Earning AUM
49,458,992
$
56,656,602
$
15%
49,458,992
$
56,656,602
$
15%
$7.7
$8.5
$9.9
$25.1
$18.9
8 |
 Blackstone
Financial Advisory
% Change
% Change
(Dollars in Thousands)
3Q'13
3Q'14
vs. 3Q'13
YTD'13
YTD'14
vs. YTD'13
Fee Revenues
87,071
$
87,406
$
0%
278,230
$
277,575
$
(0)%
Investment Income (Loss)
177
(23)
n/m
(1,612)
1,880
n/m
Total Revenues
87,248
87,383
0%
276,618
279,455
1%
Compensation
57,491
58,016
1%
191,570
189,442
(1)%
Other Operating Expenses
19,208
19,853
3%
60,762
63,311
4%
Total Expenses
76,699
77,869
2%
252,332
252,753
0%
Economic Income
10,549
$
9,514
$
(10)%
24,286
$
26,702
$
10%
On October 10, 2014, Blackstone announced a tax-free spin-off of the
Financial Advisory segment to unitholders in 2015.
•
Blackstone
also
entered
into
an
agreement
to
combine
with PJT
Partners,
an
independent
investment
advisory
boutique, founded by Paul Taubman, who will serve as Chairman and CEO of the new
company. •
Blackstone will retain the capital markets business.
Blackstone Advisory Partners total revenues year-to-date increased 24%
due to improving global mergers and acquisitions
activity
as
well
as
a
greater
number
of
closed transactions.
•
The
current
backlog
for
the
balance
of
2014
and
2015
is
twice
as
large as it was at the same point last year,
reflecting strong and continuing demand for high quality independent advisory
services. Restructuring revenues increased 52% compared to the prior
year quarter as the business has increased market share and diversified
away from in-court restructurings. •
Ranked #1 year-to-date worldwide in completed and announced
restructurings in the league tables. Park Hill’s placement business
revenue was flat year-to-date with a strong pipeline as global demand for
alternative asset placement services grows.
League tables per Thomson Reuters.
9 |
 Blackstone
Assets Under Management
Total AUM by Segment
(Dollars in Billions)
Inflows include contributions, capital raised, other increases in available capital, purchases
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. Investments in successive funds count only those limited
partners who invested in the next successive fund. Fee-Earning AUM by
Segment (Dollars in Billions)
Record Fee-Earning AUM of $214.8 billion was up 14% over the last year as
$51.8 billion of gross inflows outpaced $30.4 billion of realizations and
outflows. •
Fee-Earning AUM drove record Base Management Fees for the quarter, up 16% to
$505 million. Record Total AUM increased 15% year-over-year to
$284.4 billion driven by $54.8 billion from gross inflows and $34.8
billion from consistently strong market appreciation across all investing businesses.
84% of new capital raised is sourced from investors in successive funds.
$248.1
$284.4
$204.6
$188.6
$214.8
$168.6
$38.5
$43.6
$43.8
$40.6
$44.7
$52.3
$43.6
$50.8
$62.0
$45.9
$49.5
$56.7
3Q'12
3Q'13
3Q'14
$50.2
$62.6
$69.9
$53.5
$69.0
$80.2
$46.2
$53.2
$64.2
$54.6
$63.3
$70.2
3Q'12
3Q'13
3Q'14
Hedge Fund Solutions
Credit
Real Estate
Private Equity
10 |
 Blackstone
Fee-Earning Assets Under Management
Inflows
include
contributions,
capital
raised,
other
increases
in
available
capital,
purchases
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.
3Q’14 Fee-Earning AUM Rollforward
(Dollars in Millions)
LTM Fee-Earning AUM Rollforward
(Dollars in Millions)
Private
Equity
Real
Estate
Hedge
Fund
Solutions
Credit
Inflows:
Asia
fund
($209
million);
Core+
($368
million);
BREDS
capital
raised
and/or
invested
($1.0
billion).
Realizations:
BREP
($1.1
billion)
primarily
from
partial
realizations
in
the
office
portfolio
and
Brixmor;
BREDS
($772
million).
Inflows:
Customized
solutions
($1.9
billion);
commingled
products
($1.2
billion);
specialized
solutions
($669
million);
individual
investor
solutions
($505
million).
Outflows:
Liquidity
needs
primarily
in
commingled
and
customized
products ($618 million).
Inflows:
Hedge
Fund
Strategies
($1.0
billion);
Mezzanine
funds
($346
million);
Rescue
Lending
Funds
($268
million);
two
new
CLO
launches
($1.2
billion:
US
fund
$616
million,
European
fund
$543
million);
BDCs
($962
million).
Realizations
/
Outflows:
Returns
to
CLO
investors
($706
million
US,
$1.0
billion
European);
Mezzanine
Funds
($438
million);
Rescue
Lending
Funds
($202
million).
Inflows:
Strategic
Partners
VI
final
close
($1.1
billion);
Strategic
Partners
funds
($250
million);
Tactical
Opportunities
investment
vehicles
($232
million).
Realizations:
Strategic
Partners,
BCP
IV
and
BCP
V
disposition
of
ICS
and
partial
dispositions
and
sales
of
secondary
shares
of
Pinnacle
and
Kosmos.
Private
Real
Hedge Fund
Equity
Estate
Solutions
3Q'13
43,645
$
44,716
$
50,830
$
49,459
$
188,650
$
Inflows
6,386
15,698
12,279
17,388
51,751
Outflows
(1,359)
(459)
(4,757)
(3,138)
(9,713)
Realizations
(5,204)
(7,428)
(486)
(7,531)
(20,649)
Net Inflows (Outflows)
(177)
7,811
7,036
6,720
21,390
Market Activity
350
(219)
4,171
478
4,780
3Q'14
43,818
$
52,308
$
62,037
$
56,657
$
214,820
$
YoY Increase
0%
17%
22%
15%
14%
Credit
Total
Private
Real
Hedge Fund
Equity
Estate
Solutions
2Q'14
42,889
$
52,824
$
58,084
$
56,117
$
209,914
$
Inflows
1,741
2,381
4,304
4,811
13,237
Outflows
(177)
(67)
(618)
(907)
(1,769)
Realizations
(546)
(2,439)
(105)
(2,372)
(5,462)
Net Inflows (Outflows)
1,017
(124)
3,582
1,532
6,007
Market Activity
(88)
(392)
372
(992)
(1,101)
3Q'14
43,818
$
52,308
$
62,037
$
56,657
$
214,820
$
QoQ Increase (Decrease)
2%
(1)%
7%
1%
2%
Credit
Total
11 |
 Blackstone
Total Assets Under Management
3Q’14 Total AUM Rollforward
(Dollars in Millions)
LTM Total AUM Rollforward
(Dollars in Millions)
Private
Equity
Real
Estate
Hedge
Fund
Solutions
Credit
Market
Activity:
6.2%
appreciation
driven
by
sustained
strong
operating
fundamentals
in
the
private
portfolio
(up
7.1%
/
$2.6
billion)
and
public
portfolio
appreciation
(up
4.3%
/
$802
million).
Inflows:
Launched
first
liquid
alternative
UCITS
structure
fund
($270
million).
Market
Activity:
BAAM’s
Principal
Solutions
Composite
up
1.5%
gross.
Market
Activity:
Mezzanine
Funds
($330
million);
Rescue
Lending
Funds
($288
million);
increases
were
offset
by
foreign
exchange
fluctuations
in
European
CLOs.
Inflows:
Strategic
Partners
VI
($1.2
billion);
recyclable
capital
from
disposition
activity
($521
million);
secondary
funds
infrastructure
and real
assets
SMA ($400
million);
Tactical
Opportunities
investment
vehicles
($306
million).
Market
Activity:
3.7%
appreciation
driven
by
the
private
portfolio
(up
5.7%)
in
services
and
hospitality/leisure
sectors.
Private
Real
Hedge Fund
Equity
Estate
Solutions
2Q'14
68,294
$
80,411
$
60,673
$
69,540
$
278,918
$
Inflows
2,669
1,719
3,877
4,831
13,097
Outflows
(247)
(34)
(638)
(959)
(1,878)
Realizations
(2,366)
(4,617)
(115)
(2,878)
(9,977)
Net Inflows (Outflows)
57
(2,932)
3,124
994
1,242
Market Activity
1,539
2,710
387
(382)
4,255
3Q'14
69,890
$
80,189
$
64,184
$
70,152
$
284,415
$
QoQ Increase (Decrease)
2%
(0)%
6%
1%
2%
Credit
Total
Private
Real
Hedge Fund
Equity
Estate
Solutions
3Q'13
62,620
$
68,964
$
53,162
$
63,318
$
248,065
$
Inflows
9,973
14,238
12,170
18,436
54,816
Outflows
(826)
(1,085)
(4,910)
(3,828)
(10,649)
Realizations
(14,704)
(16,967)
(639)
(10,270)
(42,580)
Net Inflows (Outflows)
(5,556)
(3,814)
6,621
4,337
1,588
Market Activity
12,827
15,038
4,401
2,496
34,762
3Q'14
69,890
$
80,189
$
64,184
$
70,152
$
284,415
$
YoY Increase
12%
16%
21%
11%
15%
Credit
Total
12
Inflows include contributions, capital raised, other increases in available capital, purchases
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. |
 Blackstone
13
Additional Capital Detail
Committed
undrawn
capital
(“Total
Dry
Powder”)
is
$42.3
billion,
of
which
$17.7
billion
was
eligible but not
currently earning Management Fees.
Performance Fee Eligible AUM reached $197.9 billion at the end of the quarter, up
20% year-over-year. Net inflows and strong investment performance
drove a 43% increase year-over-year in assets currently earning
Performance Fees to $148.8
billion.
$42.3 billion 3Q’14 Total Dry Powder
$198 billion Performance Fee Eligible AUM
Uninvested
Not Earning
Fees
Currently
Earning Fees
Credit
Hedge
Fund
Solutions
Private
Equity
Real
Estate
$18.0
$13.1
$2.4
$8.8
$74.1
$104.0
$148.8
$30.2
$22.5
$9.8
$33.8
$38.4
$39.4
$138.1
$164.9
$197.9
3Q'12
3Q'13
3Q'14
13 |
 Blackstone
At September 30, 2014, Blackstone had $2.9 billion in total cash, corporate
treasury and liquid investments and $10.0
billion of total net value, or $8.72 per DE unit, up 34% from $6.51 a year
ago. Illiquid
investments
of
$2.7
billion,
up
11%
from
last
year
driven
by
valuation
increases
in
Real
Estate
and
Private
Equity
of
6.2%
and
3.7%,
respectively.
Long-term
debt
of
$2.1
billion
at
quarter
end
resulted
in
a
Debt
to
Adjusted
EBITDA
ratio
of
0.68x
LTM.
There are currently no borrowings outstanding against the $1.1 billion revolving
credit facility expiring in 2019. Balance Sheet Highlights
Balance
Sheet
Highlights
are
preliminary,
and
exclude
the
consolidated
Blackstone
funds.
Liquid
Investments
are
primarily
Blackstone
investments
in
Hedge
Fund
Solutions
and non-
drawdown
Credit.
Illiquid
Investments
include
Blackstone
investments
in
Private
Equity,
Real
Estate
and
Other,
which
were
$965
million,
$1.4
billion
and
$402
million,
respectively,
as
of
September
30,
2014,
$922
million,
$1.3
billion
and
$257
million,
respectively,
as
of
September
30,
2013
and
$865
million,
$973
million
and
$215
million,
respectively,
as
of
September
30,
2012.
Cash
and
Investments
are
calculated
using
1,146,350,827
DE
Units
Outstanding.
(Dollars in Millions)
3Q’14
Cash and Cash Equivalents
$
944
Treasury Cash
Management Strategies
1,829
Liquid Investments
162
Illiquid Investments
2,727
Net Accrued Performance
Fees
4,334
Total Net Value
$
9,996
Outstanding Bonds (at par)
$
2,135
A+/A+
rated by S&P and Fitch
$1.1
billion
undrawn credit revolver with
May 2019 maturity
$2.9
billion
total cash, corporate treasury
and liquid investments
Cash and Investments
Net
Performance
Fees
Total Cash
and Liquids
Illiquids
$8.72
$6.51
$5.66
$1.83
$2.44
$1.83
$2.16
$2.38
$2.01
$1.92
$2.56
3Q'12
3Q'13
3Q'14
$3.78
14 |
 Despite record LTM Net Realized Performance Fees of $1.5 billion, asset
appreciation across all investing businesses drove Net Accrued Performance
Fees to a record $4.3 billion ($3.78/unit), up $1.6 billion from the prior
year. Net Accrued Performance Fees grew at a 45% CAGR since the third
quarter of 2012, primarily driven by continued appreciation in Real Estate
and Private Equity. Performance Fees
$1.5 billion Net Realized
Performance Fees
$768
$1,542
$147
$4.3 billion Net Accrued
Performance Fees
$2,769
$4,334
$2,049
Credit
$4.3 billion
Record Net Accrued
Performance Fees
64%
Net Accrued
Performance Fees
Related to Publics/Pending
Exits
$1.5 billion
Record LTM Net Realized
Performance Fees
Hedge Fund Solutions
Real Estate
Private Equity
$236
$327
$267
$861
$188
$197
3Q'12 LTM
3Q'13 LTM
3Q'14 LTM
$591
$589
$1,294
$1,189
$1,890
$2,730
$227
$215
$240
3Q'12
3Q'13
3Q'14
15
Blackstone |
 Blackstone
Unitholder Distribution
A
detailed
description
of
Blackstone’s
distribution
policy
and
the
definition
of
Distributable
Earnings
can
be
found
on
page
33,
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
Total
Common
Units
Outstanding
(page
32,
Unit
Rollforward);
actual
distributions
are
paid
to
applicable
unitholders
as
of
the
record
date.
For
the
periods
presented,
Net
Cash
Available
for
Distribution
per
Common
Unit
equals
the
Actual
Distribution
per
Common
Unit.
Retained
capital
is
withheld
pro-rata
from
common
and
Blackstone
Holdings
Partnership
unitholders.
Common
unitholders’
share
was
$53.4
million
for
3Q’14.
Generated
$0.53
of
Distributable
Earnings
per
common
unit
during
the
quarter,
up
104%
year-over-year.
•
Record year-to-date Distributable Earnings per common unit were $1.59, up
81% from the prior year period. Declared
a
quarterly
distribution
of
$0.44
per
common
unit
to
record
holders
as
of
October
27,
2014;
payable
on
November
3, 2014.
•
Year-to-date distributions of $1.34, up 76% from the prior year
period. % Change
(Dollars in Thousands, Except per Unit Data)
3Q'13
4Q'13
1Q'14
2Q'14
3Q'14
vs. 3Q'13
Distributable Earnings (“DE”)
312,673
$
820,629
$
485,112
$
770,797
$
672,144
$
115%
Add: Other Payables Attributable to
Common Unitholders
17,694
58,103
19,856
29,884
69,707
294%
DE before Certain Payables
330,367
878,732
504,968
800,681
741,851
125%
Percent to Common Unitholders
52%
52%
53%
53%
53%
DE before Certain Payables Attributable to
Common Unitholders
170,216
455,291
265,378
423,209
393,197
131%
Less: Other Payables Attributable to
Common Unitholders
(17,694)
(58,103)
(19,856)
(29,884)
(69,707)
294%
DE Attributable to Common Unitholders
152,522
397,188
245,522
393,325
323,490
112%
DE per Common Unit
0.26
$
0.68
$
0.41
$
0.65
$
0.53
$
104%
Less: Retained Capital per Common Unit
(0.03)
$
(0.10)
$
(0.06)
$
(0.10)
$
(0.09)
$
200%
Actual Distribution per Common Unit
0.23
$
0.58
$
0.35
$
0.55
$
0.44
$
91%
Record Date
Oct 27, 2014
Payable Date
Nov 3, 2014
16 |
 Blackstone
Summary Walkdown of GAAP to Non-GAAP Financial Metrics
GAAP
Economic Income
“EI”
Fee Related Earnings
“FRE”
Distributable Earnings
“DE”
Income Before Provision for Taxes
+
IPO and Acquisition-Related Charges
–
Impact of Consolidated Funds
–
Net Performance Fees
–
Fund Investment Income
+
Net Realized Performance Fees
+
Realized Investment Income
–
Taxes and Related Payables
+ Equity-Based Compensation
=
Distributable Earnings
(Dollars in Millions)
See pages 29-30, Reconciliation of GAAP to Non-GAAP Measures for details.
3Q’14
$
672
=
Economic Income
=
Fee Related Earnings
$
217
$
593
$
1,928
$
838
$
3,014
YTD’14
$
633
$
2,649
17 |
 Blackstone
GAAP Statement of Operations
% Change
% Change
(Dollars in Thousands, Except per Unit Data) (Unaudited)
3Q'13
3Q'14
vs. 3Q'13
YTD'13
YTD'14
vs. YTD'13
Revenues
Management and Advisory Fees, Net
531,095
$
640,949
$
21%
1,591,951
$
1,833,632
$
15%
Performance Fees
Realized Carried Interest
182,654
638,676
250%
660,112
1,613,958
144%
Realized Incentive Fees
30,884
35,445
15%
130,729
118,743
(9)%
Unrealized Carried Interest
290,052
222,105
(23)%
924,105
1,213,181
31%
Unrealized Incentive Fees
37,713
(6,163)
n/m
144,449
112,709
(22)%
Total Performance Fees
541,303
890,063
64%
1,859,395
3,058,591
64%
Investment Income
Realized
19,507
91,142
367%
137,350
459,878
235%
Unrealized
100,341
38,445
(62)%
263,141
62,754
(76)%
Total Investment Income
119,848
129,587
8%
400,491
522,632
30%
Interest and Dividend Revenue
19,892
18,107
(9)%
46,263
47,516
3%
Other
4,707
720
(85)%
5,688
1,583
(72)%
Total Revenues
1,216,845
1,679,426
38%
3,903,788
5,463,954
40%
Expenses
Compensation and Benefits
Compensation
465,631
525,093
13%
1,396,042
1,511,085
8%
Performance Fee Compensation
Realized Carried Interest
60,369
186,003
208%
225,716
595,702
164%
Realized Incentive Fees
14,599
19,029
30%
60,121
61,173
2%
Unrealized Carried Interest
82,341
164,132
99%
350,637
319,158
(9)%
Unrealized Incentive Fees
11,084
(9,002)
n/m
58,646
39,221
(33)%
Total Compensation and Benefits
634,024
885,255
40%
2,091,162
2,526,339
21%
General, Administrative and Other
119,435
128,015
7%
346,106
400,061
16%
Interest Expense
26,268
31,615
20%
80,286
86,129
7%
Fund Expenses
6,678
10,253
54%
18,714
20,241
8%
Total Expenses
786,405
1,055,138
34%
2,536,268
3,032,770
20%
Other Income
Net Gains from Fund Investment Activities
87,952
8,682
(90)%
196,128
217,422
11%
Income Before Provision for Taxes
518,392
$
632,970
$
22%
1,563,648
$
2,648,606
$
69%
Provision for Taxes
57,477
79,108
38%
164,552
216,487
32%
Net Income
460,915
$
553,862
$
20%
1,399,096
$
2,432,119
$
74%
Net Income (Loss) Attributable to Redeemable Non-Controlling Interests in Consolidated
Entities 51,188
(23,328)
n/m
135,870
44,950
(67)%
Net Income Attributable to Non-Controlling Interests in Consolidated Entities
30,231
55,491
84%
48,723
239,513
392%
Net Income Attributable to Non-Controlling Interests in Blackstone Holdings
208,332
271,194
30%
664,556
1,114,518
68%
Net Income Attributable to The Blackstone Group L.P. ("BX")
171,164
$
250,505
$
46%
549,947
$
1,033,138
$
88%
Net Income per Common Unit, Basic
0.29
$
0.41
$
41%
0.94
$
1.70
$
81%
Net Income per Common Unit, Diluted
0.29
$
0.41
$
41%
0.93
$
1.69
$
82%
18 |
 Appendix |
 Blackstone
Total Segments
(Dollars in Thousands)
3Q'13
4Q'13
1Q'14
2Q'14
3Q'14
YTD'13
YTD'14
Revenues
Management and Advisory Fees, Net
Base Management Fees
437,294
$
469,092
$
476,878
$
496,570
$
505,493
$
1,271,715
$
1,478,941
$
Advisory Fees
83,602
139,158
69,963
114,914
84,131
271,356
269,008
Transaction and Other Fees, Net
42,806
59,733
59,910
49,196
90,885
147,244
199,991
Management Fee Offsets
(8,271)
(43,752)
(16,644)
(20,218)
(22,763)
(28,468)
(59,625)
Total Management and Advisory Fees, Net
555,431
624,231
590,107
640,462
657,746
1,661,847
1,888,315
Performance Fees
Realized Carried Interest
182,654
283,846
333,623
641,659
638,752
660,112
1,614,034
Realized Incentive Fees
31,238
343,501
53,837
39,291
36,840
130,832
129,968
Unrealized Carried Interest
290,052
1,233,905
330,288
660,712
222,026
924,105
1,213,026
Unrealized Incentive Fees
40,992
(173,033)
61,266
56,776
(6,531)
153,105
111,511
Total Performance Fees
544,936
1,688,219
779,014
1,398,438
891,087
1,868,154
3,068,539
Investment Income (Loss)
Realized
11,492
66,283
111,917
202,199
75,832
104,188
389,948
Unrealized
87,680
290,460
4,550
(26,228)
4,934
226,874
(16,744)
Total Investment Income
99,172
356,743
116,467
175,971
80,766
331,062
373,204
Interest Income and Dividend Revenue
21,539
19,394
22,362
22,094
23,585
51,542
68,041
Other
4,708
4,621
869
(6)
719
5,687
1,582
Total Revenues
1,225,786
2,693,208
1,508,819
2,236,959
1,653,903
3,918,292
5,399,681
Expenses
Compensation
279,498
262,688
306,545
323,015
324,426
852,952
953,986
Performance Fee Compensation
Realized Carried Interest
60,369
31,485
149,398
260,301
186,003
225,716
595,702
Realized Incentive Fees
14,599
140,794
23,635
18,509
19,029
60,121
61,173
Unrealized Carried Interest
82,341
616,080
40,690
114,336
164,132
350,637
319,158
Unrealized Incentive Fees
11,084
(70,297)
23,531
24,692
(9,002)
58,646
39,221
Total Compensation and Benefits
447,891
980,750
543,799
740,853
684,588
1,548,072
1,969,240
Other Operating Expenses
122,872
129,171
139,774
145,111
131,440
357,468
416,325
Total Expenses
570,763
1,109,921
683,573
885,964
816,028
1,905,540
2,385,565
Economic Income
655,023
$
1,583,287
$
825,246
$
1,350,995
$
837,875
$
2,012,752
$
3,014,116
$
Economic Net Income
640,231
$
1,542,098
$
813,934
$
1,325,963
$
758,356
$
1,971,777
$
2,898,253
$
Fee Related Earnings
178,596
$
260,706
$
174,829
$
201,108
$
217,291
$
484,763
$
593,228
$
Distributable Earnings
312,673
$
820,629
$
485,112
$
770,797
$
672,144
$
1,042,070
$
1,928,053
$
Total Assets Under Management
248,064,888
$
265,757,630
$
271,745,583
$
278,917,713
$
284,414,936
$
248,064,888
$
284,414,936
$
Fee-Earning Assets Under Management
188,649,817
$
197,981,739
$
203,599,604
$
209,913,760
$
214,819,600
$
188,649,817
$
214,819,600
$
Weighted Average Fee-Earning AUM
185,628,676
$
196,309,547
$
200,246,002
$
204,671,392
$
213,525,423
$
182,031,703
$
210,597,134
$
LP Capital Invested
3,378,067
$
5,382,770
$
4,468,527
$
5,426,511
$
6,664,365
$
8,796,934
$
16,559,403
$
Total Capital Invested
3,536,365
$
6,115,856
$
4,807,663
$
5,858,210
$
7,619,737
$
9,134,430
$
18,285,610
$
20 |
 Blackstone
Private Equity
(Dollars in Thousands)
3Q'13
4Q'13
1Q'14
2Q'14
3Q'14
YTD'13
YTD'14
Revenues
Management Fees, Net
Base Management Fees
95,281
$
99,998
$
98,584
$
103,204
$
108,236
$
268,148
$
310,024
$
Transaction and Other Fees, Net
16,052
18,135
42,847
27,616
48,996
78,853
119,459
Management Fee Offsets
(2,080)
(1,173)
(1,713)
(4,246)
(5,837)
(4,510)
(11,796)
Total Management Fees, Net
109,253
116,960
139,718
126,574
151,395
342,491
417,687
Performance Fees
Realized Carried Interest
85,121
101,081
119,805
212,394
124,913
228,912
457,112
Unrealized Carried Interest
(86,300)
385,560
167,065
502,210
96,455
12,672
765,730
Total Performance Fees
(1,179)
486,641
286,870
714,604
221,368
241,584
1,222,842
Investment Income (Loss)
Realized
11,495
30,783
60,535
74,812
20,421
57,243
155,768
Unrealized
23,621
85,329
(9,033)
17,662
(12,754)
76,420
(4,125)
Total Investment Income
35,116
116,112
51,502
92,474
7,667
133,663
151,643
Interest Income and Dividend Revenue
5,231
4,136
5,228
4,666
5,346
11,466
15,240
Other
1,521
1,948
864
564
2,150
2,311
3,578
Total Revenues
149,942
725,797
484,182
938,882
387,926
731,515
1,810,990
Expenses
Compensation
55,800
56,370
73,307
73,038
79,007
179,750
225,352
Performance Fee Compensation
Realized Carried Interest
19,824
2,006
85,771
112,720
30,944
36,947
229,435
Unrealized Carried Interest
(36,198)
274,201
(27,148)
66,194
93,434
68,532
132,480
Total Compensation and Benefits
39,426
332,577
131,930
251,952
203,385
285,229
587,267
Other Operating Expenses
30,024
32,767
33,006
39,193
34,109
91,370
106,308
Total Expenses
69,450
365,344
164,936
291,145
237,494
376,599
693,575
Economic Income
80,492
$
360,453
$
319,246
$
647,737
$
150,432
$
354,916
$
1,117,415
$
Total Assets Under Management
62,619,813
$
65,675,031
$
66,142,945
$
68,294,162
$
69,890,367
$
62,619,813
$
69,890,367
$
Fee-Earning Assets Under Management
43,645,106
$
42,600,515
$
41,150,728
$
42,888,756
$
43,817,741
$
43,645,106
$
43,817,741
$
Weighted Average Fee-Earning AUM
43,886,763
$
43,290,792
$
41,815,672
$
43,702,379
$
43,838,483
$
44,293,199
$
44,328,213
$
LP Capital Invested
524,320
$
1,017,985
$
2,029,019
$
1,857,330
$
2,277,861
$
1,550,597
$
6,164,210
$
Total Capital Invested
548,173
$
1,330,606
$
2,271,273
$
2,159,178
$
3,172,660
$
1,619,523
$
7,603,111
$
21 |
 Blackstone
Real Estate
(Dollars in Thousands)
3Q'13
4Q'13
1Q'14
2Q'14
3Q'14
YTD'13
YTD'14
Revenues
Management Fees, Net
Base Management Fees
136,721
$
153,115
$
159,336
$
157,869
$
155,089
$
412,067
$
472,294
$
Transaction and Other Fees, Net
19,205
32,317
13,564
13,514
38,312
47,358
65,390
Management Fee Offsets
(2,385)
(6,838)
(9,224)
(7,702)
(8,977)
(15,983)
(25,903)
Total Management Fees, Net
153,541
178,594
163,676
163,681
184,424
443,442
511,781
Performance Fees
Realized Carried Interest
93,878
180,641
194,658
417,826
349,237
306,132
961,721
Realized Incentive Fees
3,737
7,931
(26)
6,070
1,159
37,931
7,203
Unrealized Carried Interest
340,406
771,246
140,237
119,461
187,175
880,454
446,873
Unrealized Incentive Fees
2,481
(1,355)
2,737
(3,483)
(374)
(27,398)
(1,120)
Total Performance Fees
440,502
958,463
337,606
539,874
537,197
1,197,119
1,414,677
Investment Income (Loss)
Realized
928
23,320
31,357
122,664
49,173
29,039
203,194
Unrealized
57,656
201,606
5,379
(50,437)
14,492
148,595
(30,566)
Total Investment Income
58,584
224,926
36,736
72,227
63,665
177,634
172,628
Interest Income and Dividend Revenue
6,060
6,809
6,110
8,009
7,135
14,754
21,254
Other
2,113
1,678
317
(218)
976
1,706
1,075
Total Revenues
660,800
1,370,470
544,445
783,573
793,397
1,834,655
2,121,415
Expenses
Compensation
75,346
75,625
80,233
85,582
90,586
218,597
256,401
Performance Fee Compensation
Realized Carried Interest
38,942
29,027
51,833
143,442
64,187
119,810
259,462
Realized Incentive Fees
1,919
4,502
(16)
3,081
592
19,376
3,657
Unrealized Carried Interest
99,323
299,853
56,985
27,339
108,789
266,984
193,113
Unrealized Incentive Fees
615
(335)
1,382
(1,783)
(123)
(14,680)
(524)
Total Compensation and Benefits
216,145
408,672
190,417
257,661
264,031
610,087
712,109
Other Operating Expenses
30,614
29,698
33,107
36,542
36,138
86,693
105,787
Total Expenses
246,759
438,370
223,524
294,203
300,169
696,780
817,896
Economic Income
414,041
$
932,100
$
320,921
$
489,370
$
493,228
$
1,137,875
$
1,303,519
$
Total Assets Under Management
68,964,455
$
79,410,788
$
81,333,562
$
80,410,988
$
80,188,858
$
68,964,455
$
80,188,858
$
Fee-Earning Assets Under Management
44,715,985
$
50,792,803
$
53,490,834
$
52,823,975
$
52,308,175
$
44,715,985
$
52,308,175
$
Weighted Average Fee-Earning AUM
44,163,396
$
50,568,609
$
50,954,956
$
48,653,930
$
52,764,267
$
42,928,397
$
53,590,344
$
LP Capital Invested
2,365,224
$
3,986,610
$
1,692,232
$
3,017,193
$
3,046,867
$
5,754,667
$
7,756,292
$
Total Capital Invested
2,438,725
$
4,333,419
$
1,746,460
$
3,128,232
$
3,071,425
$
5,916,314
$
7,946,117
$
22 |
 Blackstone
Hedge Fund Solutions
(Dollars in Thousands)
3Q'13
4Q'13
1Q'14
2Q'14
3Q'14
YTD'13
YTD'14
Revenues
Management Fees, Net
Base Management Fees
103,392
$
113,025
$
113,384
$
123,008
$
121,484
$
296,296
$
357,876
$
Transaction and Other Fees, Net
295
263
93
126
161
360
380
Management Fee Offsets
(1,200)
(1,149)
(1,455)
(1,531)
(1,099)
(2,238)
(4,085)
Total Management Fees, Net
102,487
112,139
112,022
121,603
120,546
294,418
354,171
Performance Fees
Realized Incentive Fees
5,320
174,861
39,845
7,973
6,683
32,874
54,501
Unrealized Incentive Fees
29,208
(97,980)
18,085
30,556
25,473
105,698
74,114
Total Performance Fees
34,528
76,881
57,930
38,529
32,156
138,572
128,615
Investment Income (Loss)
Realized
(598)
13,691
16,820
2,394
2,693
13,922
21,907
Unrealized
6,439
(7,604)
4,431
1,057
(1,168)
(1,702)
4,320
Total Investment Income
5,841
6,087
21,251
3,451
1,525
12,220
26,227
Interest Income and Dividend Revenue
2,523
1,988
2,661
2,340
2,724
5,617
7,725
Other
595
262
122
(203)
740
426
659
Total Revenues
145,974
197,357
193,986
165,720
157,691
451,253
517,397
Expenses
Compensation
37,611
28,147
40,571
43,341
41,940
108,323
125,852
Performance Fee Compensation
Realized Incentive Fees
1,954
53,701
13,271
2,918
2,312
12,092
18,501
Unrealized Incentive Fees
10,177
(34,823)
6,761
11,252
8,778
37,679
26,791
Total Compensation and Benefits
49,742
47,025
60,603
57,511
53,030
158,094
171,144
Other Operating Expenses
19,575
15,697
19,480
25,101
20,480
51,269
65,061
Total Expenses
69,317
62,722
80,083
82,612
73,510
209,363
236,205
Economic Income
76,657
$
134,635
$
113,903
$
83,108
$
84,181
$
241,890
$
281,192
$
Total Assets Under Management
53,162,174
$
55,657,463
$
58,262,659
$
60,672,759
$
64,183,863
$
53,162,174
$
64,183,863
$
Fee-Earning Assets Under Management
50,829,734
$
52,865,837
$
55,571,357
$
58,084,020
$
62,037,082
$
50,829,734
$
62,037,082
$
Weighted Average Fee-Earning AUM
48,933,335
$
51,794,518
$
54,715,882
$
56,793,206
$
60,009,283
$
47,203,844
$
57,522,469
$
LP Capital Invested
248,422
$
8,681
$
167,170
$
188,236
$
473,233
$
422,594
$
828,639
$
Total Capital Invested
262,309
$
8,681
$
202,674
$
196,348
$
487,398
$
446,309
$
886,420
$
23 |
 Blackstone
Credit
(Dollars in Thousands)
3Q'13
4Q'13
1Q'14
2Q'14
3Q'14
YTD'13
YTD'14
Revenues
Management Fees, Net
Base Management Fees
101,900
$
102,954
$
105,574
$
112,489
$
120,684
$
295,204
$
338,747
$
Transaction and Other Fees, Net
7,058
8,152
3,344
7,064
3,025
20,434
13,433
Management Fee Offsets
(2,606)
(34,592)
(4,252)
(6,739)
(6,850)
(5,737)
(17,841)
Total Management Fees, Net
106,352
76,514
104,666
112,814
116,859
309,901
334,339
Performance Fees
Realized Carried Interest
3,655
2,124
19,160
11,439
164,602
125,068
195,201
Realized Incentive Fees
22,181
160,709
14,018
25,248
28,998
60,027
68,264
Unrealized Carried Interest
35,946
77,099
22,986
39,041
(61,604)
30,979
423
Unrealized Incentive Fees
9,303
(73,698)
40,444
29,703
(31,630)
74,805
38,517
Total Performance Fees
71,085
166,234
96,608
105,431
100,366
290,879
302,405
Investment Income (Loss)
Realized
496
(627)
3,071
2,223
3,040
4,725
8,334
Unrealized
(1,042)
9,519
3,079
4,521
4,892
4,432
12,492
Total Investment Income (Loss)
(546)
8,892
6,150
6,744
7,932
9,157
20,826
Interest Income and Dividend Revenue
5,288
4,240
5,861
4,892
5,968
13,906
16,721
Other
(357)
119
(259)
11
(3,619)
408
(3,867)
Total Revenues
181,822
255,999
213,026
229,892
227,506
624,251
670,424
Expenses
Compensation
53,250
31,802
50,752
51,310
54,877
154,712
156,939
Performance Fee Compensation
Realized Carried Interest
1,603
452
11,794
4,139
90,872
68,959
106,805
Realized Incentive Fees
10,726
82,591
10,380
12,510
16,125
28,653
39,015
Unrealized Carried Interest
19,216
42,026
10,853
20,803
(38,091)
15,121
(6,435)
Unrealized Incentive Fees
292
(35,139)
15,388
15,223
(17,657)
35,647
12,954
Total Compensation and Benefits
85,087
121,732
99,167
103,985
106,126
303,092
309,278
Other Operating Expenses
23,451
29,566
32,839
22,159
20,860
67,374
75,858
Total Expenses
108,538
151,298
132,006
126,144
126,986
370,466
385,136
Economic Income
73,284
$
104,701
$
81,020
$
103,748
$
100,520
$
253,785
$
285,288
$
Total Assets Under Management
63,318,446
$
65,014,348
$
66,006,417
$
69,539,804
$
70,151,848
$
63,318,446
$
70,151,848
$
Fee-Earning Assets Under Management
49,458,992
$
51,722,584
$
53,386,685
$
56,117,009
$
56,656,602
$
49,458,992
$
56,656,602
$
Weighted Average Fee-Earning AUM
48,645,182
$
50,655,628
$
52,759,492
$
55,521,877
$
56,913,390
$
47,606,263
$
55,156,108
$
LP Capital Invested
240,101
$
369,494
$
580,106
$
363,752
$
866,404
$
1,069,076
$
1,810,262
$
Total Capital Invested
287,158
$
443,150
$
587,256
$
374,452
$
888,254
$
1,152,284
$
1,849,962
$
24 |
 Blackstone
Financial Advisory
(Dollars in Thousands)
3Q'13
4Q'13
1Q'14
2Q'14
3Q'14
YTD'13
YTD'14
Revenues
Advisory Fees
83,602
$
139,158
$
69,963
$
114,914
$
84,131
$
271,356
$
269,008
$
Transaction and Other Fees, Net
196
866
62
876
391
239
1,329
Total Advisory and Transaction Fees
83,798
140,024
70,025
115,790
84,522
271,595
270,337
Investment Income (Loss)
Realized
(829)
(884)
134
106
505
(741)
745
Unrealized
1,006
1,610
694
969
(528)
(871)
1,135
Total Investment Income (Loss)
177
726
828
1,075
(23)
(1,612)
1,880
Interest Income and Dividend Revenue
2,437
2,221
2,502
2,187
2,412
5,799
7,101
Other
836
614
(175)
(160)
472
836
137
Total Revenues
87,248
143,585
73,180
118,892
87,383
276,618
279,455
Expenses
Compensation
57,491
70,744
61,682
69,744
58,016
191,570
189,442
Total Compensation and Benefits
57,491
70,744
61,682
69,744
58,016
191,570
189,442
Other Operating Expenses
19,208
21,443
21,342
22,116
19,853
60,762
63,311
Total Expenses
76,699
92,187
83,024
91,860
77,869
252,332
252,753
Economic Income (Loss)
10,549
$
51,398
$
(9,844)
$
27,032
$
9,514
$
24,286
$
26,702
$
25 |
 Blackstone
Net Accrued Performance Fees
Net
Accrued
Performance
Fees
are
presented
net
of
performance
fee
compensation
and
do
not
include
clawback
amounts,
if
any,
which
are
disclosed
in
the
10-K/Q.
Net
Realized
Performance
Fees
are
included
in
DE.
When
these
fees
are
received,
the
receivable
is
reduced
without
further
impacting
DE.
Per
Unit
calculations
are
based
on
1,146,350,827
DE
Units
Outstanding
(see
page
32,
Unit
Rollforward).
Blackstone had $4.3 billion of accrued performance fees, net of performance fee
compensation and distributed Realized Performance Fees, at the end of the
third quarter. $4.3 billion
Net Accrued Performance Fees at 3Q’14
$3.78 per unit
Net Accrued Performance Fees at 3Q’14
57% increase
in Net Accrued Performance Fees since 3Q’13
26
Change vs.
(Dollars in Millions, Except per Unit Data)
2Q'14
3Q'14
Per Unit
2Q'14
Private Equity
BCP IV Carried Interest
383
$
343
$
0.30
$
(40)
$
BCP V Carried Interest
558
572
0.50
14
BCP VI Carried Interest
233
265
0.23
32
BEP Carried Interest
81
79
0.07
(2)
Tactical Opportunities Carried Interest
19
32
0.03
13
SP V Carried Interest
1
2
0.00
1
Korea Carried Interest
-
1
0.00
1
Total Private Equity
1,275
1,294
1.13
19
Real Estate
BREP IV Carried Interest
2
4
0.00
2
BREP V Carried Interest
618
679
0.59
61
BREP VI Carried Interest
1,389
1,244
1.09
(145)
BREP VII Carried Interest
459
545
0.48
86
BREP Int'l I Carried Interest
2
-
-
(2)
BREP Europe III Carried Interest
144
187
0.16
43
BREP Europe IV Carried Interest
10
25
0.02
15
BREP Asia Carried Interest
9
12
0.01
3
Core+ Carried Interest
1
8
0.01
7
BREDS Carried Interest
18
16
0.01
(2)
BREDS Incentive Fees
3
2
0.00
(1)
Asia Platform Incentive Fees
9
8
0.01
(1)
Total Real Estate
2,664
2,730
2.38
66
Hedge Fund Solutions
Incentive Fees
57
70
0.06
13
Total Hedge Fund Solutions
57
70
0.06
13
Credit
Carried Interest
176
186
0.16
10
Incentive Fees
69
54
0.05
(15)
Total Credit
245
240
0.21
(5)
Total Blackstone
Carried Interest
4,103
4,200
3.66
97
Incentive Fees
138
134
0.12
(4)
Net Accrued Performance Fees
4,241
$
4,334
$
3.78
$
93
$
Memo: Net Realized Performance Fees
239
$
241
$
0.21
$
2
$
Net Accrued Performance Fees
|
 Blackstone
Investment Records as of September 30, 2014
Notes on next page.
27
Committed
Available
Unrealized Investments
Realized Investments
Total Investments
Net IRRs (d)
(Dollars in Thousands, Except Where Noted)
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
199,298
247,105
1.2x
-
2,619,040
1.4x
2,866,145
1.3x
7%
6%
BCP IV (Nov 2002 / Dec 2005)
6,773,138
227,215
3,593,646
1.9x
59%
17,661,391
3.1x
21,255,037
2.8x
45%
37%
BCP V (Dec 2005 / Jan 2011)
21,032,374
1,747,662
19,030,489
1.7x
56%
14,576,830
1.7x
33,607,319
1.7x
9%
8%
BCP VI (Jan 2011 / Jan 2017)
15,177,339
7,188,270
10,338,093
1.4x
14%
1,399,204
1.8x
11,737,297
1.4x
48%
19%
BEP (Aug 2011 / Aug 2017)
2,432,161
1,174,162
2,038,876
1.7x
35%
508,112
2.0x
2,546,988
1.8x
52%
44%
Total Corporate Private Equity
53,739,945
$
10,536,607
$
35,248,209
$
1.6x
42%
50,947,822
$
2.2x
86,196,031
$
1.9x
20%
16%
Tactical Opportunities
5,728,538
3,252,279
2,934,886
1.2x
3%
400,577
1.1x
3,335,463
1.2x
12%
18%
Strategic Partners
17,008,267
6,416,599
5,968,412
2.1x
n/a
11,180,006
1.3x
17,148,418
1.5x
n/a
15%
Other Funds and Co-Invest (e)
1,276,598
98,021
648,978
0.8x
48%
22,622
1.0x
671,600
0.8x
n/m
n/m
Total Private Equity
77,753,348
$
20,303,506
$
44,800,485
$
1.6x
34%
62,551,027
$
1.9x
107,351,512
$
1.8x
20%
16%
Real
Estate
Dollar
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
-
2,531,613
2.1x
2,531,613
2.1x
19%
19%
BREP III (Apr 1999 / Apr 2003)
1,522,708
-
-
n/a
-
3,328,504
2.4x
3,328,504
2.4x
21%
21%
BREP IV (Apr 2003 / Dec 2005)
2,198,694
-
1,404,550
1.0x
27%
3,144,774
2.3x
4,549,324
1.7x
63%
14%
BREP V (Dec 2005 / Feb 2007)
5,539,418
-
6,257,320
1.9x
20%
5,323,220
2.1x
11,580,540
2.0x
18%
11%
BREP VI (Feb 2007 / Aug 2011)
11,058,605
614,440
16,782,010
2.2x
54%
7,694,626
2.2x
24,476,636
2.2x
16%
14%
BREP VII (Aug 2011 / Feb 2017)
13,456,842
4,083,122
15,034,443
1.5x
2%
2,077,623
1.6x
17,112,066
1.5x
38%
27%
Total Global Real Estate Funds
35,496,028
$
4,697,562
$
39,478,323
$
1.8x
28%
25,773,258
$
2.2x
65,251,581
$
1.9x
25%
17%
Euro
BREP Int'l (Jan 2001 / Sep 2005)
824,172
€
-
€
121,874
€
1.5x
-
1,238,480
€
2.2x
1,360,354
€
2.1x
25%
23%
BREP Int'l II (Sep 2005 / Jun 2008)
1,629,748
51,633
1,554,087
1.3x
39%
394,456
1.6x
1,948,543
1.4x
10%
4%
BREP Europe III (Jun 2008 / Dec 2013)
3,204,714
504,161
4,038,495
1.6x
7%
908,722
2.5x
4,947,217
1.7x
32%
20%
BREP Europe IV (Sep 2013 / Mar 2019)
5,151,424
3,248,760
2,295,419
1.1x
-
115,111
1.2x
2,410,530
1.1x
73%
19%
Total Euro Real Estate Funds
10,810,058
€
3,804,554
€
8,009,875
€
1.4x
11%
2,656,769
€
2.1x
10,666,644
€
1.5x
24%
13%
BREP Co-Investment (f)
5,518,708
$
-
$
8,784,882
$
1.9x
73%
2,054,622
$
2.0x
10,839,504
$
2.0x
14%
17%
BREP Asia (Jun 2013 / Dec 2017)
4,653,087
3,541,587
1,358,049
1.1x
-
4,400
1.0x
1,362,449
1.1x
n/a
14%
Total Real Estate
59,814,925
$
13,120,011
$
60,365,671
$
1.7x
31%
31,343,587
$
2.2x
91,709,258
$
1.8x
24%
17%
Core+
1,774,518
$
196,140
$
1,763,982
$
1.1x
-
-
$
n/a
1,763,982
$
1.1x
n/a
n/a
BREDS (g)
6,744,553
$
2,207,654
$
2,637,612
$
1.1x
-
3,410,839
$
1.3x
6,048,451
$
1.2x
14%
12%
Credit (h)
Mezzanine I (Jul 2007 / Jul 2012)
2,000,000
$
139,685
$
965,641
$
1.6x
-
3,836,547
$
1.6x
4,802,188
$
1.6x
n/a
18%
Mezzanine II (Nov 2011 / Nov 2016)
4,120,000
2,611,409
2,053,592
1.3x
-
1,216,317
1.5x
3,269,909
1.4x
n/a
28%
Rescue Lending I (Sep 2009 / May 2013)
3,253,143
501,159
3,000,186
1.5x
-
2,921,620
1.5x
5,921,806
1.5x
n/a
16%
Rescue Lending II (Jun 2013 / Jun 2018)
5,125,000
4,135,729
1,343,697
1.3x
-
3,795
1.0x
1,347,492
1.3x
n/a
n/m
Total Credit
14,498,143
$
7,387,982
$
7,363,116
$
1.4x
-
7,978,279
$
1.5x
15,341,395
$
1.5x |
 Blackstone
Investment Records as of September 30, 2014 –
Notes
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,
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 September
30, 2014 IRR on total invested capital based on realized proceeds and unrealized value,
as applicable, after management fees, expenses and Carried Interest. Net IRRs for BREP
Europe IV, BREP Asia and BREDS II are calculated from commencement of their respective investment periods
which, being less than one year, are not annualized.
(e)
Returns for Other Funds and Co-Invest are not meaningful as these funds have no or little
realizations. (f)
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.
(g)
Excludes Capital Trust drawdown funds.
(h)
The Total Investments MOIC for Mezzanine I, Mezzanine II, Rescue
Lending I and Rescue Lending II Funds, excluding recycled
capital during the investment period, was 2.0x, 1.8x, 1.7x and 1.3x, respectively. Funds
presented represent the flagship credit drawdown funds only.
28 |
 Blackstone
Reconciliation of GAAP to Non-GAAP Measures
Notes on next page.
(Dollars in Thousands)
3Q'13
4Q'13
1Q'14
2Q'14
3Q'14
YTD'13
YTD'14
Net Income Attributable to The Blackstone Group L.P.
171,164
$
621,255
$
265,617
$
517,016
$
250,505
$
549,947
$
1,033,138
$
Net Income Attributable to Non-Controlling Interests in Blackstone Holdings
208,332
675,289
299,505
543,819
271,194
664,556
1,114,518
Net Income Attributable to Non-Controlling Interests in Consolidated Entities
30,231
149,834
43,961
140,061
55,491
48,723
239,513
Net Income (Loss) Attributable to Redeemable Non-Controlling
Interests in Consolidated Entities
51,188
47,445
45,792
22,486
(23,328)
135,870
44,950
Net Income
460,915
$
1,493,823
$
654,875
$
1,223,382
$
553,862
$
1,399,096
$
2,432,119
$
Provision for Taxes
57,477
91,090
54,097
83,282
79,108
164,552
216,487
Income Before Provision for Taxes
518,392
$
1,584,913
$
708,972
$
1,306,664
$
632,970
$
1,563,648
$
2,648,606
$
IPO and Acquisition-Related Charges
(a)
190,525
166,514
177,024
178,568
209,240
556,193
564,832
Amortization of Intangibles
(b)
27,525
29,139
29,003
28,310
27,828
77,504
85,141
(Income) Associated with Non-Controlling Interests of Consolidated Entities
(c)
(81,419)
(197,279)
(89,753)
(162,547)
(32,163)
(184,593)
(284,463)
Economic Income
655,023
$
1,583,287
$
825,246
$
1,350,995
$
837,875
$
2,012,752
$
3,014,116
$
Taxes
(d)
(14,792)
(41,189)
(11,312)
(25,032)
(79,519)
(40,975)
(115,863)
Economic Net Income
640,231
$
1,542,098
$
813,934
$
1,325,963
$
758,356
$
1,971,777
$
2,898,253
$
Taxes
(d)
14,792
41,189
11,312
25,032
79,519
40,975
115,863
Performance Fee Adjustment
(e)
(544,936)
(1,688,219)
(779,014)
(1,398,438)
(891,087)
(1,868,154)
(3,068,539)
Investment (Income) Adjustment
(f)
(99,172)
(356,743)
(116,467)
(175,971)
(80,766)
(331,062)
(373,204)
Investment
Income
(Loss)
-
Blackstone's
Treasury
Cash
Management
Strategies
(g)
(712)
4,319
7,810
6,684
(8,893)
(23,893)
5,601
Performance Fee Compensation and Benefits Adjustment
(h)
168,393
718,062
237,254
417,838
360,162
695,120
1,015,254
Fee Related Earnings
178,596
$
260,706
$
174,829
$
201,108
$
217,291
$
484,763
$
593,228
$
Realized Performance Fees
(i)
138,924
455,068
214,427
402,140
470,560
505,107
1,087,127
Realized Investment Income
(j)
11,492
66,283
111,917
202,199
75,832
104,188
389,948
Adjustment Related to Realized Investment (Income) Loss -
Blackstone's Treasury Cash Management Strategies
(k)
6,672
8,873
(1,344)
(1,059)
(5,049)
4,321
(7,452)
Taxes and Related Payables Including Payable Under Tax Receivable Agreement
(l)
(31,756)
(68,610)
(31,054)
(44,841)
(96,437)
(88,124)
(172,332)
Equity-Based Compensation
(m)
8,745
98,309
16,337
11,250
9,947
31,815
37,534
Distributable Earnings
312,673
$
820,629
$
485,112
$
770,797
$
672,144
$
1,042,070
$
1,928,053
$
Interest Expense
25,268
26,607
30,398
34,082
34,221
77,297
98,701
Taxes and Related Payables Including Payable Under Tax Receivable Agreement
(l)
31,756
68,610
31,054
44,841
96,437
88,124
172,332
Depreciation and Amortization
8,956
8,726
10,373
7,170
7,557
26,715
25,100
Adjusted EBITDA
378,653
$
924,572
$
556,937
$
856,890
$
810,359
$
1,234,206
$
2,224,186
$
29 |
 Blackstone
Reconciliation
of
GAAP
to
Non-GAAP
Measures
–
Notes
Note:
See page 33, Definitions and Distribution Policy.
(a)
This adjustment adds back to Income (Loss) Before Provision (Benefit) for Taxes amounts for
Transaction-Related Charges which include principally equity-based compensation
charges associated with Blackstone’s initial public offering and long-term retention
programs outside of annual deferred compensation and other corporate actions.
(b)
This adjustment adds back to Income (Loss) Before Provision (Benefit) for Taxes amounts for
the Amortization of Intangibles which are associated with Blackstone’s initial
public offering and other corporate actions. (c)
This adjustment adds back to Income (Loss) Before Provision (Benefit) for Taxes the amount of
(Income) Loss Associated with Non- Controlling Interests of Consolidated Entities
and includes the amount of Management Fee Revenues associated with Consolidated CLO
Entities. (d)
Taxes represent the current tax provision (benefit) calculated on Income (Loss) Before
Provision (Benefit) for Taxes. (e)
This adjustment removes from EI the total segment amount of Performance Fees.
(f)
This adjustment removes from EI the total segment amount of Investment Income (Loss).
(g)
This adjustment represents the realized and unrealized gain on Blackstone’s Treasury Cash
Management Strategies which are a component of Investment Income (Loss) but included in
Fee Related Earnings. (h)
This adjustment removes from expenses the compensation and benefit amounts related to
Blackstone’s profit sharing plans related to Performance Fees.
(i)
Represents the adjustment for realized Performance Fees net of corresponding actual amounts
due under Blackstone’s profit sharing plans related thereto.
(j)
Represents the adjustment for Blackstone’s Investment Income (Loss) -
Realized.
(k)
Represents the elimination of Realized Investment Income (Loss) attributable to
Blackstone’s Treasury Cash Management Strategies which is a component of both Fee
Related Earnings and Realized Investment Income (Loss).
(l)
Taxes and Related Payables Including Payable Under Tax Receivable Agreement represent the
current tax provision (benefit) calculated on Income (Loss) Before Provision (Benefit)
for Taxes and the Payable Under Tax Receivable Agreement.
(m)
Represents equity-based award expense included in EI.
30 |
 Blackstone
Walkdown
of
Financial
Metrics
–
Calculation
of
Certain
Non-GAAP
Financial
Metric
Components
Unless otherwise noted, all amounts are the respective captions from the Total Segment
information. (a)
See pages 29-30, Reconciliation of GAAP to Non-GAAP Measures for this
adjustment. (b)
Represents equity-based award expense included in Economic Income.
(c)
Represents tax-related payables including the Payable Under Tax Receivable Agreement,
which is a component of Taxes and Related Payables. (Dollars in Thousands)
3Q'14
YTD'14
Interest Income and Dividend Revenue
23,585
$
68,041
$
Other Revenue
719
1,582
(8,893)
5,601
Interest Income and Other Revenue
15,411
$
75,224
$
36,840
129,968
(19,029)
(61,173)
Net Realized Incentive Fees
17,811
$
68,795
$
638,752
1,614,034
(186,003)
(595,702)
Net Realized Carried Interest
452,749
$
1,018,332
$
Realized Investment Income
75,832
389,948
(5,049)
(7,452)
Net Realized Investment Income
70,783
$
382,496
$
9,947
$
37,534
$
(96,437)
$
(172,332)
$
(6,531)
111,511
9,002
(39,221)
Net Unrealized Incentive Fees
2,471
$
72,290
$
222,026
1,213,026
(164,132)
(319,158)
Net Unrealized Carried Interest
57,894
$
893,868
$
4,934
(16,744)
8,893
(5,601)
5,049
7,452
18,876
$
(14,893)
$
16,918
$
56,469
$
Investment
Income
(Loss)
-
Blackstone's
Treasury
Cash
Management
Strategies
(a)
Realized Incentive Fees
Less: Realized Incentive Fee Compensation
Realized Carried Interest
Less: Realized Carried Interest Compensation
Unrealized Carried Interest
Less: Unrealized Carried Interest Compensation
Unrealized Investment Income (Loss)
Adjustment
Related
to
Realized
Investment
(Income)
-
Blackstone's
Treasury
Cash
Management
Strategies
(a)
Less:
Investment
Income
(Loss) -
Blackstone's
Treasury
Cash
Management
Strategies
(a)
Less:
Adjustment
Related
to
Realized
Investment
(Income)
-
Blackstone's
Treasury
Cash
Management
Strategies
(a)
Unrealized Incentive Fees
Less: Unrealized Incentive Fee Compensation
Related Payables
(c)
Net Unrealized Investment Income (Loss)
Equity-Based Compensation
(b)
Taxes and Related Payable
(a)
31 |
 Blackstone
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.
3Q'13
4Q'13
1Q'14
2Q'14
3Q'14
Total GAAP Weighted-Average Common Units Outstanding - Basic
589,643,844
592,129,570
601,527,299
606,690,740
611,684,213
Adjustments:
Weighted-Average Unvested Deferred Restricted Common Units
3,276,951
4,536,624
4,141,865
3,207,089
3,294,657
Total GAAP Weighted-Average Common Units Outstanding - Diluted
592,920,795
596,666,194
605,669,164
609,897,829
614,978,870
Adjustments:
Weighted-Average Blackstone Holdings Partnership Units
551,916,623
549,773,866
549,327,240
544,158,132
539,856,777
Weighted-Average Economic Net Income Adjusted Units
1,144,837,418
1,146,440,060
1,154,996,404
1,154,055,961
1,154,835,647
Economic Net Income Adjusted Units, End of Period
1,145,675,305
1,150,867,868
1,154,889,678
1,154,840,023
1,155,075,985
Total Common Units Outstanding
584,860,157
588,165,949
599,372,943
603,270,771
607,590,602
Adjustments:
Blackstone Holdings Partnership Units
550,274,903
547,021,277
541,129,472
538,074,958
538,760,225
Distributable Earnings Units Outstanding
1,135,135,060
1,135,187,226
1,140,502,415
1,141,345,729
1,146,350,827
32 |
 Blackstone
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:
•
Blackstone uses Economic Income, or “EI”, as a key measure of value creation, a
benchmark of its performance and in making resource deployment and compensation
decisions across its five segments. EI represents segment net income before taxes excluding
transaction-related charges. Transaction-related charges arise from
Blackstone’s initial public offering (“IPO”) and long-term retention
programs outside of annual deferred compensation and other corporate actions, including
acquisitions. Transaction-related charges include equity-based compensation charges,
the amortization of intangible assets and contingent consideration associated with
acquisitions. EI presents revenues and expenses on a basis that deconsolidates the investment funds Blackstone manages.
•
Economic Net Income, or “ENI”, represents EI adjusted to include current period
taxes. Taxes represent the current tax provision (benefit) calculated on Income (Loss)
Before Provision for Taxes.
•
Blackstone uses Fee Related Earnings, or “FRE”, as a key measure to highlight
earnings from operations excluding: (a) the income related to performance fees and
related carry plan costs, (b) income earned from Blackstone’s investments in the
Blackstone Funds, and (c) realized and unrealized gains (losses) from other investments
except for such gains (losses) from Blackstone’s Treasury cash management strategies. Blackstone uses FRE as a 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, investment income from
Blackstone’s Treasury cash management strategies and interest income, less (a) compensation expenses (which includes amortization of non-IPO and
non-acquisition-related equity-based awards, but excludes amortization of IPO and
acquisition-related equity-based awards, carried interest and incentive fee
compensation), and (b) other operating expenses.
•
Distributable Earnings, or “DE”, which is derived from Blackstone’s segment
reported results, is a supplemental measure to assess performance and amounts available
for distributions to Blackstone unitholders, including Blackstone personnel and others who are
limited partners of the Blackstone Holdings partnerships. DE is intended to show the
amount of net realized earnings without the effects of the consolidation of the Blackstone Funds. DE, which is a component of ENI, is the sum across all
segments of: (a) Total Management and Advisory Fees, (b) Interest and Dividend Revenue,
(c) Other Revenue, (d) Realized Performance Fees, and (e) Realized Investment Income
(Loss); less (a) Compensation, excluding the expense of equity-based awards, (b) Realized Performance Fee Compensation, (c) Other Operating
Expenses, and (d) Taxes and Related Payables Including the Payable Under Tax Receivable
Agreement. DE is reconciled to Blackstone’s Consolidated Statement of
Operations.
•
Blackstone uses Adjusted Earnings Before Interest, Taxes and Depreciation and Amortization, or
“Adjusted EBITDA”, as a measure of segment performance and an indicator of
its ability to cover recurring operating expenses. Adjusted EBITDA equals DE before segment interest expense, segment depreciation and amortization,
and the taxes and related payables including the Payable Under Tax Receivable Agreement.
•
Net Cash Available for Distribution to Common Unitholders is The Blackstone Group L.P.’s
share of Distributable Earnings, less realized investment gains and returns of capital
from investments and acquisitions, in excess of 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, taking into account both the
extent of realized investment gains and returns of capital from investments and
acquisitions, and the amounts determined by Blackstone’s general partner to be necessary or appropriate as described in the preceding sentence.
Distribution Policy. Blackstone’s intention is to distribute to common unitholders each
quarter substantially all of its Net Cash Available for Distribution to Common
Unitholders, subject to a minimum base quarterly distribution of $0.12 per unit. In
circumstances in which the Net Cash Available for Distribution to Common Unitholders
for a quarter falls short of the amount necessary to support such per unit distribution,
Blackstone intends to correspondingly reduce subsequent quarterly distributions below
the amounts supported by the Net Cash Available for Distribution to Common Unitholders by the amount of the shortfall, but not below $0.12 per unit. 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 at
any time, including, without limitation, to reduce the quarterly distribution payable to
common unitholders to less than $0.12 per unit or even to eliminate such distributions
entirely. 33 |
 Blackstone
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 and financial performance. 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, 2013, 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.
34 |