Table of Contents
 
 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
10-Q
(Mark One)
☒
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED JUNE 30, 20202021
OR
☐
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM              TO             
Commission File Number:
001-33551
The
Blackstone Group Inc.
(Exact name of Registrant as specified in its charter)
Delaware
(State or other jurisdiction of
incorporation or organization)
 
20-8875684
(I.R.S. Employer
Identification No.)
345 Park Avenue
New York, New York 10154
(Address of principal executive offices)(Zip Code)
(212)
583-5000
(Registrant’s telephone number, including area code)
 
Securities registered pursuant to Section 12(b) of the Act:
 
Title of each class
 
  Trading Symbol(s)  
 
Name of each exchange on which registered
Class A Common Stock BX New York Stock Exchange
Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.                     Yes
☒
No
☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation
S-T
(§ (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).                                                                                         Yes
☒
No
☐
Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a
non-accelerated
filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule
12b-2
of the Exchange Act.
 
Large accelerated filer
☒
   
Accelerated filer
☐
Non-accelerated
filer
☐
   
Smaller reporting company 
☐
    
Emerging growth company
☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
☐
Indicate by check mark whether the Registrant is a shell company (as defined in Rule
12b-2
of the Exchange Act). Yes
☐
No
☒
As of July 31, 2020,30, 2021, there were 671,050,687685,948,545 shares of Class A common stock, 1 share of Class B common stock and 1 share of Class C common stock of the registrant outstanding.
 
 
Table of Contents
Table of Contents
 
Page
Part I.
Financial Information
Financial Information
Item 1.
Financial Statements
   
6 
Item 1.
Financial Statements
6
  
Unaudited Condensed Consolidated Financial Statements:
  
  
Condensed Consolidated Statements of Financial Condition as of June 30, 20202021 and December 31, 20192020
6
   6 
Condensed Consolidated Statements of Operations for the Three and Six Months Ended June 30, 20202021 and 20192020
8
   8 
Condensed Consolidated Statements of Comprehensive Income for the Three and Six Months Ended June 30, 20202021 and 20192020
9
   9 
Condensed Consolidated Statements of Changes in Equity for the Three and Six Months Ended June 30, 20202021 and 20192020
10
   10 
Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 20202021 and 20192020
14
   14 
Notes to Condensed Consolidated Financial Statements
16
   16 
Item 1A.
Unaudited Supplemental Presentation of Statements of Financial Condition
63
   64 
Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
65
   66 
Item 3.
Quantitative and Qualitative Disclosures About Market Risk
130
   134 
Item 4.
Controls and Procedures
134
   134 
Part II.
Other Information
Other Information
Item 1.
Legal Proceedings
   
134 
Item 1.
Legal Proceedings
134
Item 1A.
Risk Factors
135
   135 
Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds
135
   135 
Item 3.
Defaults Upon Senior Securities
136
   136 
Item 4.
Mine Safety Disclosures
136
   136 
Item 5.
Other Information
136
   136 
Item 6.
Exhibits
137
136 
Signatures
138
 
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Forward-Looking Statements
This report may contain forward-looking statements within the meaning of Section 27A of the U.S. Securities Act of 1933, as amended, and Section 21E of the U.S. Securities Exchange Act of 1934, as amended, which reflect our current views with respect to, among other things, our operations, taxes, earnings and financial performance, share repurchases and dividends. 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,” “scheduled,” “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. We believe these factors include but are not limited to the impact of the novel coronavirus
(“COVID-19”),
as well as those described under the section entitled “Risk Factors” in our Annual Report on
Form 10-K
for the year ended December 31, 2019 and in our Quarterly Report on Form
10-Q
for the quarter ended March 31, 2020, as such factors may be updated from time to time in our periodic filings with the United States Securities and Exchange Commission (“SEC”), 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 report and in our other periodic filings. The forward-looking statements speak only as of the date of this report, and we undertake no obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise.
Website and Social Media Disclosure
We use our website (www.blackstone.com), Facebook page (www.facebook.com/blackstone), Twitter (www.twitter.com/blackstone), LinkedIn (www.linkedin.com/company/blackstonegroup), Instagram (www.instagram.com/blackstone), SoundCloud (www.soundcloud.com/blackstone-300250613), PodBean (www.blackstone.podbean.com), Spotify (https://spoti.fi/2LJ1tHG), YouTube (www.youtube.com/user/blackstonegroup) and Apple Podcast (https://apple.co/31Pe1Gg) accounts as channels of distribution of company information. The information we post through these channels may be deemed material. Accordingly, investors should monitor these channels, in addition to following our press releases, SEC filings and public conference calls and webcasts. In addition, you may automatically receive email alerts and other information about Blackstone when you enroll your email address by visiting the “Contact Us/Email Alerts” section of our website at http://ir.blackstone.com. The contents of our website, any alerts and social media channels are not, however, a part of this report.
 
 
Effective July 1, 2019, The Blackstone Group L.P. (the “Partnership”) converted from a Delaware limited partnership to a Delaware corporation,August 6, 2021, The Blackstone Group Inc. (the “Conversion”). This report includes the results for the Partnership priorchanged its name to the Conversion and The Blackstone Group Inc. following the Conversion. In this report, references to “Blackstone,” the “Company,” “we,” “us” or “our” refer to (a) The Blackstone Group Inc. and its consolidated subsidiaries followingsubsidiaries.
Effective February 26, 2021, Blackstone effectuated changes to rename its Class A common stock as “common stock,” and to reclassify its Class B and Class C common stock into a new “Series I preferred stock” and “Series II preferred stock,” respectively (the “share reclassification”). Each new stock has the Conversionsame rights and (b) the Partnershippowers of its predecessor. All references to common stock, Series I preferred stock and its consolidated subsidiariesSeries II preferred stock prior to the Conversion. All references to shares or per share amounts prior to the Conversionreclassification refer to units or per unit amounts. Unless otherwise noted, all references to shares or per share amounts following the Conversion refer to shares or per share amounts of Class A, Class B and Class C common stock. All references to dividends prior to the Conversion refer to distributions.stock, respectively. See “Part I. Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations – Organizational Structure.”
“Class C Shareholder”Series I Preferred Stockholder” refers to Blackstone Partners L.L.C., the holder of the sole outstanding share of our Series I preferred stock.
“Series II Preferred Stockholder” refers to Blackstone Group Management L.L.C., the holder of the sole outstanding share of our Class C commonSeries II preferred stock.
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“Blackstone Funds,” “our funds” and “our investment funds” refer to the funds and other vehicles that are managed by Blackstone. “Our carry funds” refers to funds managed by Blackstone that have commitment-based multi-year drawdown structures that pay carry on the realization of an investment.
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We refer to our flagship corporate private equity funds as Blackstone Capital Partners (“BCP”) funds, our energy-focused private equity funds as Blackstone Energy Partners (“BEP”) funds, our core private equity funds as Blackstone Core Equity Partners (“BCEP”), our opportunistic investment platform that invests globally across asset classes, industries and geographies as Blackstone Tactical Opportunities (“Tactical Opportunities”), our secondary fund of funds business as Strategic Partners Fund Solutions (“Strategic Partners”), our infrastructure-focused funds as Blackstone Infrastructure Partners (“BIP”), our life sciences private investment platform, Blackstone Life Sciences (“BXLS”), our growth equity investment platform, Blackstone Growth (“BXG”), our multi-asset investment program for eligible high net worth investors offering exposure to certain of our key illiquid investment strategies through a single commitment as Blackstone Total Alternatives Solution (“BTAS”) and our capital markets services business as Blackstone Capital Markets (“BXCM”).
We refer to our real estate opportunistic funds as Blackstone Real Estate Partners (“BREP”) funds and our real estate debt investment funds as Blackstone Real Estate Debt Strategies (“BREDS”) funds. We refer to our real estate investment trusts as “REITs”,“REITs,” to Blackstone Mortgage Trust, Inc., our NYSE-listed REIT, as “BXMT”,“BXMT,” and to Blackstone Real Estate Income Trust, Inc., our
non-exchange
traded non-listed REIT, as “BREIT”.“BREIT.” We refer to our real estate funds which target substantially stabilized assets in prime markets, as Blackstone Property Partners (“BPP”) funds. We refer to BPP and BREIT collectively as our core+Core+ real estate strategies.
��
“Our hedge funds” refers to our funds of hedge funds, hedge funds, certain of our real estate debt investment funds, including a registered investment company, and certain other credit-focused funds which are managed by Blackstone. “BIS”
We refer to our business development companies as “BDCs,” to Blackstone Private Credit Fund as “BCRED” and to Blackstone Secured Lending Fund as “BXSL.”
“BIS” refers to Blackstone Insurance Solutions, which partners with insurers to deliver bespoke, capital-efficient investments tailored to each insurer’s needs and risk profile.
Effective January 1, 2020, the Credit segment was renamed Credit & Insurance. There was no changeWe refer to the composition of the segment or historical results.our separately managed accounts as “SMAs.”
“Total Assets Under Management” refers to the assets we manage. Our Total Assets Under Management equals the sum of:
 
 (a)
the fair value of the investments held by our carry funds and our
side-by-side
and
co-investment
entities managed by us plus (1) the capital that we are entitled to call from investors in those funds and entities pursuant to the terms of their respective capital commitments, including capital commitments to funds that have yet to commence their investment periods, or (2) for certain credit-focused funds the amounts available to be borrowed under asset based credit facilities,
 
 (b)
the net asset value of (1) our hedge funds, and real estate debt carry funds, BPP, certain
co-investments
managed by us, certain credit-focused funds, and our Hedge Fund Solutions drawdown funds (plus, in each case, the capital that we are entitled to call from investors in those funds, including commitments yet to commence their investment periods), and (2) our funds of hedge funds, our Hedge Fund Solutions registered investment companies, and BREIT,
 
 (c)
the invested capital, fair value or net asset value of assets we manage pursuant to separately managed accounts,
 
 (d)
the amount of debt and equity outstanding for our collateralized loan obligations (“CLO”) during the reinvestment period,
 
 (e)
the aggregate par amount of collateral assets, including principal cash, for our CLOs after the reinvestment period,
 
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(f)
the gross or net amount of assets (including leverage where applicable) for our credit-focused registered investment companies, and
 
 (g)
the fair value of common stock, preferred stock, convertible debt, term loans or similar instruments issued by BXMT.BXMT, and
 
(h)
borrowings under and any amounts available to be borrowed under certain credit facilities of our funds.
3
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Our carry funds are commitment-based drawdown structured funds that do not permit investors to redeem their interests at their election. Our funds of hedge funds, hedge funds, funds structured like hedge funds and other open-ended funds in our Real Estate, Hedge Fund Solutions and Credit & Insurance segments generally have structures that afford an investor the right to withdraw or redeem their interests on a periodic basis (for example, annually or quarterly), typically with 30 to 95 days’ notice, depending on the fund and the liquidity profile of the underlying assets. Investment advisory agreements related to certain separately managed accounts in our Hedge Fund Solutions and Credit & Insurance segments, excluding our BIS separately managed accounts, may generally be terminated by an investor on 30 to 90 days’ notice.
“Fee-Earning
Assets Under Management” refers to the assets we manage on which we derive management fees and/or performance revenues. Our
Fee-Earning
Assets Under Management equals the sum of:
 
 (a)
for our Private Equity segment funds and Real Estate segment carry funds, including certain BREDS and Hedge Fund Solutions funds, the amount of capital commitments, remaining invested capital, fair value, net asset value or par value of assets held, depending on the fee terms of the fund,
 
 (b)
for our credit-focused carry funds, the amount of remaining invested capital (which may include leverage) or net asset value, depending on the fee terms of the fund,
 
 (c)
the remaining invested capital or fair value of assets held in
co-investment
vehicles managed by us on which we receive fees,
 
 (d)
the net asset value of our funds of hedge funds, hedge funds, BPP, certain
co-investments
managed by us, certain registered investment companies, BREIT, and certain of our Hedge Fund Solutions drawdown funds,
 
 (e)
the invested capital, fair value of assets or the net asset value we manage pursuant to separately managed accounts,
 
 (f)
the net proceeds received from equity offerings and accumulated coredistributable earnings of BXMT, subject to certain adjustments,
 
 (g)
the aggregate par amount of collateral assets, including principal cash, of our CLOs, and
 
 (h)
the gross amount of assets (including leverage) or the net assets (plus leverage where applicable) for certain of our credit-focused registered investment companies.
Each of our segments may include certain
Fee-Earning
Assets Under Management on which we earn performance revenues but not management fees.
Our calculations of assets under managementTotal Assets Under Management and
fee-earning
assets under management Fee-Earning Assets Under Management may differ from the calculations of other asset managers, and as a result this measure may not be comparable to similar measures presented by other asset managers. In addition, our calculation of assets under managementTotal Assets Under Management includes commitments to, and the fair value of, invested capital in our funds from Blackstone and our personnel, regardless of whether such commitments or invested capital are subject to fees. Our definitions of assets under managementTotal Assets Under Management and
fee-earning
assets under management Fee-Earning Assets Under Management are not based on any definition of total assets under management and
fee-earning
assets under management that is set forth in the agreements governing the investment funds that we manage.
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For our carry funds, total assets under managementTotal Assets Under Management includes the fair value of the investments held and uncalled capital commitments, whereas
fee-earning
assets under management includes Fee-Earning Assets Under Management may include the total amount of capital commitments or the remaining amount of invested capital at cost, depending on whether the investment period has expired or as specified by the fee terms of the fund. As such,
fee-earning
assets under management in certain carry funds Fee-Earning Assets Under Management may be greater than total assets under managementTotal Assets Under Management when the aggregate fair value of the remaining investments is less than the cost of those investments.
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“Perpetual Capital” refers to the component of assets under management with an indefinite term, that is not in liquidation, and for which there is no requirement to return capital to investors through redemption requests in the ordinary course of business, except where funded by new capital inflows. Perpetual Capital includes
co-investment
capital with an investor right to convert into Perpetual Capital.
This report does not constitute an offer of any Blackstone Fund.
 
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Part I. Financial Information
 
Item 1.
Financial Statements
The Blackstone Group Inc.
Condensed Consolidated Statements of Financial Condition (Unaudited)
(Dollars in Thousands, Except Share Data)
 
 
                                                                                                            
  
June 30,
 
December 31,
  
June 30,
 
December 31,
  
2020
 
2019
  
2021
 
2020
Assets
  
 
 
 
     
Cash and Cash Equivalents
  
 $
1,976,512
 
 
 $
2,172,441
 
   $2,467,444   $1,999,484 
Cash Held by Blackstone Funds and Other
  
 
343,201
 
 
 
351,210
 
   109,676   64,972 
Investments (including assets pledged of $122,971
and $196,094
at June 30, 2020 and December 31, 2019, respectively)
  
 
18,973,373
 
 
 
22,281,682
 
Investments (including assets pledged of $80,027 and $110,835 at June 30, 2021 and December 31, 2020, respectively)
   22,163,322   15,617,142 
Accounts Receivable
  
 
498,600
 
 
 
975,075
 
   582,542   866,158 
Due from Affiliates
  
 
2,431,512
 
 
 
2,594,873
 
   3,159,829   3,221,515 
Intangible Assets, Net
  
 
362,008
 
 
 
397,508
 
   321,780   347,955 
Goodwill
  
 
1,869,860
 
 
 
1,869,860
 
   1,890,202   1,901,485 
Other Assets
  
 
501,351
 
 
 
382,493
 
   556,714   481,022 
Right-of-Use
Assets
  
 
568,663
 
 
 
471,059
 
   723,539   526,943 
Deferred Tax Assets
  
 
1,319,301
 
 
 
1,089,305
 
   1,322,144   1,242,576 
  
 
 
 
Total Assets
  
 $
    28,844,381
 
 
 $
    32,585,506
 
   $    33,297,192   $    26,269,252 
  
 
 
 
 
Liabilities and Equity
  
 
 
 
     
Loans Payable
  
 $
10,839,568
 
 
 $
11,080,723
 
   $5,594,648   $5,644,653 
Due to Affiliates
  
 
1,268,571
 
 
 
1,026,871
 
   1,226,504   1,135,041 
Accrued Compensation and Benefits
  
 
2,551,056
 
 
 
3,796,044
 
   5,789,662   3,433,260 
Securities Sold, Not Yet Purchased
  
 
51,395
 
 
 
75,545
 
   35,783   51,033 
Repurchase Agreements
  
 
80,620
 
 
 
154,118
 
   57,247   76,808 
Operating Lease Liabilities
  
 
637,946
 
 
 
542,994
 
   841,152   620,844 
Accounts Payable, Accrued Expenses and Other Liabilities
  
 
919,195
 
 
 
806,159
 
   1,205,182   717,104 
  
 
 
 
Total Liabilities
  
 
16,348,351
 
 
 
17,482,454
 
   14,750,178   11,678,743 
  
 
 
 
 
Commitments and Contingencies
  
 
 
 
 
 
   0    0  
 
Redeemable
Non-Controlling
Interests in Consolidated Entities
  
 
68,564
 
 
 
87,651
 
   65,568   65,161 
  
 
 
 
 
Equity
  
 
 
 
     
Stockholders’ Equity of The Blackstone Group Inc.
  
 
 
 
     
Class A Common Stock, $0.00001
par value, 90
billion shares authorized, (676,874,583
shares issued and outstanding as of June 30, 2020; 671,157,692
shares issued and outstanding as of December 31, 2019)
  
 
7
 
 
 
7
 
Class B Common Stock, $0.00001
par value, 999,999,000
shares authorized, (1
share issued and outstanding as of June 30, 2020)
  
 
—
 
 
 
—
 
Class C Common Stock, $0.00001
par value, 1,000
shares authorized, (1
share issued and outstanding as of June 30, 2020)
  
 
—
 
 
 
—
 
Common Stock, $0.00001 par value, 90 billion shares authorized, (691,093,463 shares issued and outstanding as of June 30, 2021; 683,875,544 shares issued and outstanding as of December 31, 2020)
   7   7 
Series I Preferred Stock, $0.00001 par value, 999,999,000 shares authorized, (1 share issued and outstanding as of June 30, 2021 and December 31, 2020)
   0   0 
Series II Preferred Stock, $0.00001 par value, 1,000 shares authorized, (1 share issued and outstanding as of June 30, 2021 and December 31, 2020)
   0   0 
Additional
Paid-in-Capital
  
 
6,272,040
 
 
 
6,428,647
 
   6,282,600   6,332,105 
Retained Earnings (Deficit)
  
 
(574,295
) 
 
 
609,625
 
Retained Earnings
   2,133,794   335,762 
Accumulated Other Comprehensive Loss
  
 
(36,758
) 
 
 
(28,495
) 
   (10,245)   (15,831) 
  
 
 
 
Total Stockholders’ Equity of The Blackstone Group Inc.
  
 
5,660,994
 
 
 
7,009,784
 
   8,406,156   6,652,043 
Non-Controlling
Interests in Consolidated Entities
  
 
3,900,429
 
 
 
4,186,069
 
   4,860,442   4,042,157 
Non-Controlling
Interests in Blackstone Holdings
  
 
2,866,043
 
 
 
3,819,548
 
   5,214,848   3,831,148 
  
 
 
 
Total Equity
  
 
12,427,466
 
 
 
15,015,401
 
   18,481,446   14,525,348 
  
 
 
 
Total Liabilities and Equity
  
 $
28,844,381
 
 
 $
32,585,506
 
   $33,297,192   $26,269,252 
  
 
 
 
 
continued...
See notes to condensed consolidated financial statements.
 
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The Blackstone Group Inc.
Condensed Consolidated Statements of Financial Condition (Unaudited)
(Dollars in Thousands)
 
 
 
The following presents the asset and liability portion of the consolidated balances presented in the Condensed Consolidated Statements of Financial Condition attributable to consolidated Blackstone Funds which are variable interest entities. The following assets may only be used to settle obligations of these consolidated Blackstone Funds and these liabilities are only the obligations of these consolidated Blackstone Funds and they do not have recourse to the general credit of Blackstone.
 
                                                
   
June 30,
  
December 31,
   
2020
  
2019
Assets
    
Cash Held by Blackstone Funds and Other
   $343,201    $351,210 
Investments
   7,937,625    8,371,899 
Accounts Receivable
   175,554    220,372 
Due from Affiliates
   6,264    7,856 
Other Assets
   1,308    1,204 
  
 
 
 
  
 
 
 
Total Assets
   $          8,463,952    $          8,952,541 
  
 
 
 
  
 
 
 
Liabilities
    
Loans Payable
   $6,232,787    $6,479,867 
Due to Affiliates
   186,940    142,546 
Securities Sold, Not Yet Purchased
   42,000    55,289 
Repurchase Agreements
   80,620    154,118 
Accounts Payable, Accrued Expenses and Other Liabilities
   301,270    301,355 
  
 
 
 
  
 
 
 
Total Liabilities
   $6,843,617    $7,133,175 
  
 
 
 
  
 
 
 
                                                
   
June 30,
  
December 31,
   
2021
  
2020
Assets
    
Cash Held by Blackstone Funds and Other
   $109,676    $64,972 
Investments
   1,871,269    1,455,008 
Accounts Receivable
   80,374    120,099 
Due from Affiliates
   11,144    8,676 
Other Assets
   549    262 
   
 
 
   
 
 
 
Total Assets
   $          2,073,012    $          1,649,017 
   
 
 
   
 
 
 
   
Liabilities
          
Loans Payable
   $99    $99 
Due to Affiliates
   101,879    65,429 
Securities Sold, Not Yet Purchased
   23,830    41,709 
Repurchase Agreements
   57,247    76,808 
Accounts Payable, Accrued Expenses and Other Liabilities
   33,614    37,221 
   
 
 
   
 
 
 
Total Liabilities
   $216,669    $221,266 
   
 
 
   
 
 
 
See notes to condensed consolidated financial statements.
 
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The Blackstone Group Inc.
Condensed Consolidated Statements of Operations (Unaudited)
(Dollars in Thousands, Except Share and Per Share Data)
 
 
  
                        
   
                        
   
                        
   
                        
                                                                                                             
  
Three Months Ended
 
Six Months Ended
  
Three Months Ended
 
Six Months Ended
  
June 30,
 
June 30,
  
June 30,
 
June 30,
  
2020
 
2019
 
2020
 
2019
  
2021
 
2020
 
2021
  
2020
Revenues
  
 
 
 
 
 
 
 
          
Management and Advisory Fees, Net
  
 $
969,728
 
 
 $
840,378
 
 
 $
1,904,560
 
 
 $
1,650,104
 
   $1,212,549   $969,728   $2,390,364    $1,904,560 
           
 
 
 
 
 
  
 
Incentive Fees
  
 
15,300
 
 
 
21,915
 
 
 
27,461
 
 
 
34,047
 
   33,207   15,300   69,331    27,461 
           
 
 
 
 
 
  
 
Investment Income (Loss)
  
 
 
 
 
 
 
 
          
Performance Allocations
  
 
 
 
 
 
 
 
          
Realized
  
 
101,910
 
 
 
332,520
 
 
 
269,440
 
 
 
574,895
 
   808,620   101,910   1,342,987    269,440 
Unrealized
  
 
1,067,923
 
 
 
157,732
 
 
 
(2,385,158
) 
 
 
821,731
 
   2,697,170   1,067,923   5,161,667    (2,385,158) 
Principal Investments
  
 
 
 
 
 
 
 
          
Realized
  
 
61,102
 
 
 
145,040
 
 
 
109,797
 
 
 
218,301
 
   152,060   61,102   507,098    109,797 
Unrealized
  
 
331,762
 
 
 
(37,345
) 
 
 
(627,603
) 
 
 
131,699
 
   328,835   331,762   968,150    (627,603) 
           
 
 
 
 
 
  
 
Total Investment Income (Loss)
  
 
1,562,697
 
 
 
597,947
 
 
 
(2,633,524
) 
 
 
1,746,626
 
   3,986,685   1,562,697   7,979,902    (2,633,524) 
           
 
 
 
 
 
  
 
Interest and Dividend Revenue
  
 
23,924
 
 
 
43,686
 
 
 
59,008
 
 
 
87,770
 
   31,017   23,924   62,429    59,008 
Other
  
 
(55,580
) 
 
 
(17,120
) 
 
 
82,600
 
 
 
(6,870
) 
   27,896   (55,580)   88,200    82,600 
           
 
 
 
 
 
  
 
Total Revenues
  
 
2,516,069
 
 
 
1,486,806
 
 
 
(559,895
) 
 
 
3,511,677
 
   5,291,354   2,516,069   10,590,226    (559,895) 
           
 
 
 
 
 
  
 
Expenses
  
 
 
 
 
 
 
 
          
Compensation and Benefits
  
 
 
 
 
 
 
 
          
Compensation
  
 
458,457
 
 
 
438,521
 
 
 
935,000
 
 
 
909,918
 
   507,104   458,457   1,049,742    935,000 
Incentive Fee Compensation
  
 
8,432
 
 
 
8,886
 
 
 
14,954
 
 
 
14,292
 
   14,431   8,432   27,756    14,954 
Performance Allocations Compensation
  
 
 
 
 
 
 
 
          
Realized
  
 
38,569
 
 
 
125,825
 
 
 
110,992
 
 
 
212,220
 
   347,423   38,569   560,450    110,992 
Unrealized
  
 
454,813
 
 
 
64,518
 
 
 
(942,565
) 
 
 
351,533
 
   1,150,219   454,813   2,200,188    (942,565) 
           
 
 
 
 
 
  
 
Total Compensation and Benefits
  
 
960,271
 
 
 
637,750
 
 
 
118,381
 
 
 
1,487,963
 
   2,019,177   960,271   3,838,136    118,381 
General, Administrative and Other
  
 
169,051
 
 
 
175,308
 
 
 
326,617
 
 
 
321,370
 
   205,057   169,051   390,179    326,617 
Interest Expense
  
 
39,276
 
 
 
43,596
 
 
 
80,920
 
 
 
85,598
 
   44,322   39,276   89,305    80,920 
Fund Expenses
  
 
4,083
 
 
 
5,586
 
 
 
8,688
 
 
 
8,473
 
   3,774   4,083   6,157    8,688 
           
 
 
 
 
 
  
 
Total Expenses
  
 
1,172,681
 
 
 
862,240
 
 
 
534,606
 
 
 
1,903,404
 
   2,272,330   1,172,681   4,323,777    534,606 
           
 
 
 
 
 
  
 
Other Income (Loss)
  
 
 
 
 
 
 
 
          
Change in Tax Receivable Agreement Liability
  
 
76
 
 
 
—
 
 
 
(519
) 
 
 
—
 
   (392)   76   2,518    (519) 
Net Gains (Losses) from Fund Investment Activities
  
 
158,297
 
 
 
61,131
 
 
 
(169,077
) 
 
 
191,456
 
   127,116   158,297   247,469    (169,077) 
           
 
 
 
 
 
  
 
Total Other Income (Loss)
  
 
158,373
 
 
 
61,131
 
 
 
(169,596
) 
 
 
191,456
 
   126,724   158,373   249,987    (169,596) 
           
 
 
 
 
 
  
 
Income (Loss) Before Provision (Benefit) for Taxes
  
 
1,501,761
 
 
 
685,697
 
 
 
(1,264,097
) 
 
 
1,799,729
 
   3,145,748   1,501,761   6,516,436    (1,264,097) 
Provision (Benefit) for Taxes
  
 
147,415
 
 
 
38,736
 
 
 
(11,288
) 
 
 
79,891
 
   288,250   147,415   287,803    (11,288) 
           
 
 
 
 
 
  
 
Net Income (Loss)
  
 
1,354,346
 
 
 
646,961
 
 
 
(1,252,809
) 
 
 
1,719,838
 
   2,857,498   1,354,346   6,228,633    (1,252,809) 
Net Income (Loss) Attributable to Redeemable
Non-Controlling
Interests in Consolidated Entities
  
 
(3,426
) 
 
 
1,095
 
 
 
(18,895
) 
 
 
3,575
 
   637   (3,426)   1,266    (18,895) 
Net Income (Loss) Attributable to
Non-Controlling
Interests in Consolidated Entities
  
 
294,378
 
 
 
80,744
 
 
 
(350,699
) 
 
 
267,577
 
   431,516   294,378   818,366    (350,699) 
Net Income (Loss) Attributable to
Non-Controlling
Interests in Blackstone Holdings
  
 
495,128
 
 
 
259,330
 
 
 
(384,989
) 
 
 
661,590
 
   1,116,193   495,128   2,351,977    (384,989) 
           
 
 
 
 
 
  
 
Net Income (Loss) Attributable to The Blackstone Group Inc.
  
 $
568,266
 
 
 $
305,792
 
 
 $
(498,226
) 
 
 $
787,096
 
   $1,309,152   $568,266   $3,057,024    $(498,226) 
           
 
 
 
 
 
  
 
 
Net Income (Loss) Per Share of Class A Common Stock
  
 
 
 
 
 
 
 
Net Income (Loss) Per Share of Common Stock
          
Basic
  
 $
0.81
 
 
 $
0.45
 
 
 $
(0.74
) 
 
 $
1.17
 
   $1.82   $0.81   $4.27    $(0.74) 
           
 
 
 
 
 
  
 
Diluted
  
 $
0.81
 
 
 $
0.45
 
 
 $
(0.74
) 
 
 $
1.16
 
   $1.82   $0.81   $4.27    $(0.74) 
           
 
 
 
 
 
  
 
 
Weighted-Average Shares of Class A Common Stock Outstanding
  
 
 
 
 
 
 
 
Weighted-Average Shares of Common Stock Outstanding
          
Basic
  
 
698,534,168
 
 
 
673,655,305
 
 
 
677,041,769
 
 
 
674,079,074
 
   721,141,954   698,534,168   715,121,029    677,041,769 
           
 
 
 
 
 
  
 
Diluted
  
 
      1,204,411,957
 
 
 
      673,985,944
 
 
 
      677,041,769
 
 
 
      1,200,592,276
 
         721,265,180         1,204,411,957         715,622,208          677,041,769 
           
 
 
 
 
 
  
 
See notes to condensed consolidated financial statements.
 
8
Table of Contents
The Blackstone Group Inc.
Condensed Consolidated Statements of Comprehensive Income (Unaudited)
(Dollars in Thousands)
 
 
   
                        
   
                        
   
                        
   
                        
 
 
  
Three Months Ended
  
Six Months Ended
 
  
June 30,
  
June 30,
 
  
2020
 
2019
  
2020
 
2019
Net Income (Loss)   $1,354,346   $646,961    $(1,252,809)   $1,719,838 
Other Comprehensive Income (Loss), Currency Translation Adjustment
   8,316   8,753    (11,903)   15,936 
                   
Comprehensive Income (Loss)   1,362,662   655,714    (1,264,712)   1,735,774 
                   
Less:                  
Comprehensive Income (Loss) Attributable to Redeemable
Non-Controlling
Interests in Consolidated Entities
   (3,426)   1,095    (18,895)   3,575 
Comprehensive Income (Loss) Attributable to
Non-Controlling
Interests in Consolidated Entities
   294,378   80,744    (350,699)   267,577 
Comprehensive Income (Loss) Attributable to
Non-Controlling
Interests in Blackstone Holdings
   498,669   263,195    (388,629)   668,592 
                   
Comprehensive Income (Loss) Attributable to
Non-Controlling
Interests
   789,621   345,034    (758,223)   939,744 
                   
Comprehensive Income (Loss) Attributable to The Blackstone Group Inc.   $573,041    $310,680    $(506,489)   $796,030 
                   
                                                                                                             
   
Three Months Ended
 
Six Months Ended
   
June 30,
 
June 30,
   
2021
  
2020
 
2021
  
2020
Net Income (Loss)
   $2,857,498    $1,354,346   $6,228,633    $(1,252,809) 
Other Comprehensive Income (Loss), Currency Translation Adjustment
   2,124    8,316   10,055    (11,903) 
   
 
 
 
  
 
 
 
 
 
 
 
  
 
 
 
Comprehensive Income (Loss)
   2,859,622    1,362,662   6,238,688    (1,264,712) 
   
 
 
 
  
 
 
 
 
 
 
 
  
 
 
 
Less:
                   
Comprehensive Income (Loss) Attributable to Redeemable Non-Controlling Interests in Consolidated Entities
   637    (3,426)   1,266    (18,895) 
Comprehensive Income (Loss) Attributable to Non-Controlling Interests in Consolidated Entities
   431,516    294,378   818,366    (350,699) 
Comprehensive Income (Loss) Attributable to Non-Controlling Interests in Blackstone Holdings
   1,117,108    498,669   2,356,446    (388,629) 
   
 
 
 
  
 
 
 
 
 
 
 
  
 
 
 
Comprehensive Income (Loss) Attributable to Non-Controlling Interests
   1,549,261    789,621   3,176,078    (758,223) 
   
 
 
 
  
 
 
 
 
 
 
 
  
 
 
 
Comprehensive Income (Loss) Attributable to The Blackstone Group Inc.
   $      1,310,361    $      573,041   $      3,062,610    $      (506,489) 
   
 
 
 
  
 
 
 
 
 
 
 
  
 
 
 
See notes to condensed consolidated financial statements.
 
9
Table of Contents
The Blackstone Group Inc.
Condensed Consolidated Statements of Changes in Equity (Unaudited)
(Dollars in Thousands, Except Share Data)
 
 
                                                                                                                                                                                                                                                                              
 
Shares of
The Blackstone
Group Inc. (a)
 
The Blackstone Group Inc. (a)
         
Shares of

The Blackstone

Group Inc. (a)
 
The Blackstone Group Inc. (a)
        
         
Accumulated
         
Redeemable
         
Accumulated
         
Redeemable
         
Other
   
Non-
 
Non-
   
Non-
         
Other
   
Non-
 
Non-
   
Non-
         
Compre-
   
Controlling
 
Controlling
   
Controlling
         
Compre-
   
Controlling
 
Controlling
   
Controlling
 
Class A
 
Class A
 
Additional
 
Retained
 
hensive
   
Interests in
 
Interests in
   
Interests in
     
Additional
 
Retained
 
hensive
 
Total
 
Interests in
 
Interests in
   
Interests in
 
Common
 
Common
 
Paid-in-
 
Earnings
 
Income
   
Consolidated
 
Blackstone
 
Total
 
Consolidated
 
Common
 
Common
 
Paid-in-
 
Earnings
 
Income
 
Stockholders’
 
Consolidated
 
Blackstone
 
Total
 
Consolidated
 
Stock
 
Stock
 
Capital
 
(Deficit)
 
(Loss)
 
Total
 
Entities
 
Holdings
 
Equity
 
Entities
 
Stock
 
Stock
 
Capital
 
(Deficit)
 
(Loss)
 
Equity
 
Entities
 
Holdings
 
Equity
 
Entities
Balance at March 31, 2020
  676,630,489  $7  $6,298,093  $(871,948)  $(41,533)  $5,384,619  $3,591,160  $2,530,263  $11,506,042  $72,066 
Net Income (Loss)
  —   —   —   568,266   —   568,266   294,378   495,128   1,357,772   (3,426) 
Balance at March 31, 2021
  690,569,563  $7  $6,446,829  $1,408,768  $(11,454)  $7,844,150  $4,390,594  $4,524,898  $16,759,642  $65,546 
Net Income
  —   —   —   1,309,152   —   1,309,152   431,516   1,116,193   2,856,861   637 
Currency Translation Adjustment
  —   —   —   —   4,775   4,775   —   3,541   8,316   —   —   —   —   —   1,209   1,209   —   915   2,124   — 
Capital Contributions
  —   —   —   —   —   —   170,282   —   170,282   —   —   —   —   —   —   —   204,933   2,551   207,484   — 
Capital Distributions
  —   —   —   (270,613)   —   (270,613)   (155,525)   (203,354)   (629,492)   (76)   —   —   —   (584,126)   —   (584,126)   (166,518)   (441,687)   (1,192,331)   (615) 
Transfer of Non-Controlling Interests in Consolidated Entities
  —   —   —   —   —   —   134   —   134   —   —   —   —   —   —   —   (83)   —   (83)   — 
Deferred Tax Effects Resulting from Acquisition of Ownership Interests from Non-Controlling Interest Holders
  —   —   2,806   —   —   2,806   —   —   2,806   —   —   —   9,535   —   —   9,535   —   —   9,535   — 
Equity-Based Compensation
  —   —   73,455   —   —   73,455   —   55,442   128,897   —   —   —   77,083   —   —   77,083   —   55,046   132,129   — 
Net Delivery of Vested Blackstone Holdings Partnership Units and Shares of Class A Common Stock
  56,662   —   (2,398)   —   —   (2,398)   —   —   (2,398)   — 
Repurchase of Shares of Class A Common Stock and Blackstone Holdings Partnership Units
  (2,000,000)   —   (114,893)   —   —   (114,893)   —   —   (114,893)   — 
Net Delivery of Vested Blackstone Holdings Partnership Units and Shares of Common Stock
  273,659   —   (4,860)   —   —   (4,860)   —   —   (4,860)   — 
Repurchase of Shares of Common Stock and Blackstone Holdings Partnership Units
  (3,174,598)   —   (289,055)   —   —   (289,055)   —   —   (289,055)   — 
Change in The Blackstone Group Inc.’s Ownership Interest
  —   —   4,006   —   —   4,006   —   (4,006)   —   —   —   —   11,322   —   —   11,322   —   (11,322)   —   — 
Conversion of Blackstone Holdings Partnership Units to Shares of Class A Common Stock
  2,187,432   —   10,971   —   —   10,971   —   (10,971)   —   — 
Conversion of Blackstone Holdings Partnership Units to Shares of Common Stock
  3,424,839   —   31,746   —   —   31,746   —   (31,746)   —   — 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance at June 30, 2020
  676,874,583  $7  $6,272,040  $(574,295)  $(36,758)  $5,660,994  $3,900,429  $2,866,043  $12,427,466  $68,564 
Balance at June 30, 2021
  691,093,463  $7  $6,282,600  $2,133,794  $(10,245)  $8,406,156  $4,860,442  $5,214,848  $18,481,446  $65,568 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(a)
FollowingDuring the Conversion,period presented, Blackstone also hashad one share outstanding of each of Class BSeries I and Class C commonSeries II preferred stock, with par value of each less than one cent. After initial issuance, there have been no changes to the amounts related to Class B and Class C common stock during the period presented.
 
continued...
See notes to condensed consolidated financial statements.
 
10
Table of Contents
The Blackstone Group Inc.
Condensed Consolidated Statements of Changes in Equity (Unaudited)
(Dollars in Thousands, Except Share Data)
 
 
 
                                                                                                            
       
The Blackstone Group L.P.
        
         
Accumulated
         
Redeemable
         
Other
   
Non-
 
Non-
   
Non-
         
Compre-
   
Controlling
 
Controlling
   
Controlling
         
hensive
   
Interests in
 
Interests in
 
Total
 
Interests in
     
Common
 
Partners’
 
Income
   
Consolidated
 
Blackstone
 
Partners’
 
Consolidated
     
Units
 
Capital
 
(Loss)
 
Total
 
Entities
 
Holdings
 
Capital
 
Entities
Balance at March 31, 2019
    665,331,887  $6,501,072  $(32,430)  $6,468,642  $3,852,346  $3,688,772  $14,009,760  $136,941 
Net Income
    —   305,792   —   305,792   80,744   259,330   645,866   1,095 
Currency Translation Adjustment
 
                  
   —   —   4,888   4,888   —   3,865   8,753   — 
Capital Contributions
    —   —   —   —   129,771   —   129,771   — 
Capital Distributions
    —   (248,947)   —   (248,947)   (193,522)   (204,430)   (646,899)   (36,726) 
Transfer of
Non-Controlling
Interests in Consolidated Entities
    —   —   —   —   (36)   —   (36)   — 
Deferred Tax Effects Resulting from Acquisition of Ownership Interests from
Non-Controlling
Interest Holders
    —   2,849   —   2,849   —   —   2,849   — 
Equity-Based Compensation
    —   49,341   —   49,341   —   38,801   88,142   — 
Net Delivery of Vested Blackstone Holdings Partnership Units and Blackstone Common Units
    41,256   (1,362)   —   (1,362)   —   (3)   (1,365)   — 
Repurchase of Common Units and Blackstone Holdings Partnership Units
    (6,555,885)   (273,065)   —   (273,065)   —   —   (273,065)   — 
Change in The Blackstone Group L.P.’s Ownership Interest
    —   (12,305)   —   (12,305)   —   12,305   —   — 
Conversion of Blackstone Holdings Partnership Units to Blackstone Common Units
    1,771,111   12,522   —   12,522   —   (12,522)   —   — 
   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance at June 30, 2019
    660,588,369  $6,335,897  $(27,542)  $6,308,355  $3,869,303  $3,786,118  $13,963,776  $101,310 
   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                                                                                                                       
  
Shares of

The Blackstone

Group Inc. (a)
 
The Blackstone Group Inc. (a)
        
          
Accumulated
         
Redeemable
          
Other
   
Non-
 
Non-
   
Non-
          
Compre-
   
Controlling
 
Controlling
   
Controlling
      
Additional
 
Retained
 
hensive
 
Total
 
Interests in
 
Interests in
   
Interests in
  
Common
 
Common
 
Paid-in-
 
Earnings
 
Income
 
Stockholders’
 
Consolidated
 
Blackstone
 
Total
 
Consolidated
  
Stock
 
Stock
 
Capital
 
(Deficit)
 
(Loss)
 
Equity
 
Entities
 
Holdings
 
Equity
 
Entities
Balance at March 31, 2020
  676,630,489  $7  $6,298,093  $(871,948)  $(41,533)  $5,384,619  $3,591,160  $2,530,263  $11,506,042  $72,066 
Net Income (Loss)
  —   —   —   568,266   —   568,266��  294,378   495,128   1,357,772   (3,426) 
Currency Translation Adjustment
  —   —   —   —   4,775   4,775   —   3,541   8,316   — 
Capital Contributions
  —   —   —   —   —   —   170,282   —   170,282   — 
Capital Distributions
  —   —   —   (270,613)   —   (270,613)   (155,525)   (203,354)   (629,492)   (76) 
Transfer of Non-Controlling Interests in Consolidated Entities
  —   —   —   —   —   —   134   —   134   — 
Deferred Tax Effects Resulting from Acquisition of Ownership Interests from Non-Controlling Interest Holders
  —   —   2,806   —   —   2,806   —   —   2,806   — 
Equity-Based Compensation
  —   —   73,455   —   —   73,455   —   55,442   128,897   — 
Net Delivery of Vested Blackstone Holdings Partnership Units and Shares of Common Stock
  56,662   —   (2,398)   —   —   (2,398)   —   —   (2,398)   — 
Repurchase of Shares of Common Stock and Blackstone Holdings Partnership Units
  (2,000,000)   —   (114,893)   —   —   (114,893)   —   —   (114,893)   — 
Change in The Blackstone Group Inc.’s Ownership Interest
  —   —   4,006   —   —   4,006   —   (4,006)   —   — 
Conversion of Blackstone Holdings Partnership Units to Shares of Common Stock
  2,187,432   —   10,971   —   —   10,971   —   (10,971)   —   — 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance at June 30, 2020
  676,874,583  $7  $6,272,040  $(574,295)  $(36,758)  $5,660,994  $3,900,429  $2,866,043  $12,427,466  $68,564 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(a)
During the period presented, Blackstone also had one share outstanding of each of Series I and Series II preferred stock, with par value of each less than one cent.
continued...
See notes to condensed consolidated financial statements.
 
11
Table of Contents
The Blackstone Group Inc.
Condensed Consolidated Statements of Changes in Equity (Unaudited)
(Dollars in Thousands, Except Share Data)
 
 
   
            
   
            
   
            
   
            
   
            
   
            
   
            
   
            
   
            
   
            
 
 
 
Shares of
The Blackstone
Group Inc. (a)
 
The Blackstone Group Inc. (a)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Accumulated
 
 
 
 
 
 
 
 
 
Redeemable
 
 
 
 
 
 
 
 
 
 
Other
 
 
 
Non-
 
Non-
 
 
 
Non-
 
 
 
 
 
 
 
 
 
 
Compre-
 
 
 
Controlling
 
Controlling
 
 
 
Controlling
 
 
Class A
 
Class A
 
Additional
 
Retained
 
hensive
 
 
 
Interests in
 
Interests in
 
 
 
Interests in
 
 
Common
 
Common
 
Paid-in-
 
Earnings
 
Income
 
 
 
Consolidated
 
Blackstone
 
Total
 
Consolidated
 
 
Stock
 
Stock
 
Capital
 
(Deficit)
 
(Loss)
 
Total
 
Entities
 
Holdings
 
Equity
 
Entities
Balance at December 31, 2019
  671,157,692  $7  $6,428,647  $609,625  $(28,495)  $7,009,784  $4,186,069  $3,819,548  $15,015,401  $87,651 
Net Income (Loss)
  —   —   —   (498,226)   —   (498,226)   (350,699)   (384,989)   (1,233,914)   (18,895) 
Currency Translation Adjustment
  —   —   —   —   (8,263)   (8,263)   —   (3,640)   (11,903)   — 
Capital Contributions
  —   —   —   —   —   —   372,961   —   372,961   — 
Capital Distributions
  —   —   —   (685,694)   —   (685,694)   (305,797)   (569,055)   (1,560,546)   (192) 
Transfer of Non-Controlling Interests in Consolidated Entities
  —   —   —   —   —   —   (2,105)   —   (2,105)   — 
Deferred Tax Effects Resulting from Acquisition of Ownership Interests from Non-Controlling Interest Holders
  —   —   15,200   —   —   15,200   —   —   15,200   — 
Equity-Based Compensation
  —   —   124,279   —   —   124,279   —   94,100   218,379   — 
Net Delivery of Vested Blackstone Holdings Partnership Units and Shares of Class A Common Stock
  1,740,156   —   (17,639)   —   —   (17,639)   —   (7)   (17,646)   — 
Repurchase of Shares of Class A Common Stock and Blackstone Holdings Partnership Units
  (6,969,237)   —   (368,361)   —   —   (368,361)   —   —   (368,361)   — 
Change in The Blackstone Group Inc.’s Ownership Interest
  —   —   13,785   —   —   13,785   —   (13,785)   —   — 
Conversion of Blackstone Holdings Partnership Units to Shares of Class A Common Stock
  10,945,972   —   76,129   —   —   76,129   —   (76,129)   —   — 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance at June 30, 2020
  676,874,583  $7  $6,272,040  $(574,295)  $(36,758)  $5,660,994  $3,900,429  $2,866,043  $12,427,466  $68,564 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                                                                                                                       
  
Shares of

The Blackstone

Group Inc. (a)
 
The Blackstone Group Inc. (a)
        
          
Accumulated
         
Redeemable
          
Other
   
Non-
 
Non-
   
Non-
          
Compre-
   
Controlling
 
Controlling
   
Controlling
      
Additional
 
Retained
 
hensive
 
Total
 
Interests in
 
Interests in
   
Interests in
  
Common
 
Common
 
Paid-in-
 
Earnings
 
Income
 
Stockholders’
 
Consolidated
 
Blackstone
 
Total
 
Consolidated
  
Stock
 
Stock
 
Capital
 
(Deficit)
 
(Loss)
 
Equity
 
Entities
 
Holdings
 
Equity
 
Entities
Balance at December 31, 2020
  683,875,544  $7  $6,332,105  $335,762  $(15,831)  $6,652,043  $4,042,157  $3,831,148  $14,525,348  $65,161 
Net Income
  —   —   —   3,057,024   —   3,057,024   818,366   2,351,977   6,227,367   1,266 
Currency Translation Adjustment
  —   —   —   —   5,586   5,586   —   4,469   10,055   — 
Capital Contributions
  —   —   —   —   —   —   412,230   5,259   417,489   — 
Capital Distributions
  —   —   —   (1,258,992)   —   (1,258,992)   (408,718)   (1,024,657)   (2,692,367)   (859) 
Transfer of Non-Controlling Interests in Consolidated Entities
  —   —   —   —   —   —   (3,593)   —   (3,593)   — 
Deferred Tax Effects Resulting from Acquisition of Ownership Interests from Non-Controlling Interest Holders
  —   —   19,714   —   —   19,714   —   —   19,714   — 
Equity-Based Compensation
  —   —   168,606   —   —   168,606   —   120,941   289,547   — 
Net Delivery of Vested Blackstone Holdings Partnership Units and Shares of Common Stock
  1,986,972   —   (23,059)   —   —   (23,059)   —   —   (23,059)   — 
Repurchase of Shares of Common Stock and Blackstone Holdings Partnership Units
  (3,174,598)   —   (289,055)   —   —   (289,055)   —   —   (289,055)   — 
Change in The Blackstone Group Inc.’s Ownership Interest
  —   —   3,877   —   —   3,877   —   (3,877)   —   — 
Conversion of Blackstone Holdings Partnership Units to Shares of Common Stock
  8,405,545   —   70,412   —   —   70,412   —   (70,412)   —   — 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance at June 30, 2021
  691,093,463  $7  $6,282,600  $2,133,794  $(10,245)  $8,406,156  $4,860,442  $5,214,848  $18,481,446  $65,568 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(a)
FollowingDuring the Conversion,period presented, Blackstone also hashad one share outstanding of each of Class BSeries I and Class C commonSeries II preferred stock, with par value of each less than one cent. After initial issuance, there have been no changes to the amounts related to Class B and Class C common stock during the period presented.
continued...
See notes to condensed consolidated financial statements.
12
Table of Contents
The Blackstone Group Inc.
Condensed Consolidated Statements of Changes in Equity (Unaudited)
(Dollars in Thousands, Except Share Data)
 
 
                                                                                                            
       
The Blackstone Group L.P.
        
         
Accumulated
         
Redeemable
         
Other
   
Non-
 
Non-
   
Non-
         
Compre-
   
Controlling
 
Controlling
   
Controlling
         
hensive
   
Interests in
 
Interests in
 
Total
 
Interests in
     
Common
 
Partners’
 
Income
   
Consolidated
 
Blackstone
 
Partners’
 
Consolidated
     
Units
 
Capital
 
(Loss)
 
Total
 
Entities
 
Holdings
 
Capital
 
Entities
Balance at December 31, 2018
 
                  
   663,212,830  $6,415,700  $(36,476)  $6,379,224  $3,648,766  $3,584,317  $13,612,307  $141,779 
Net Income
    —   787,096   —   787,096   267,577   661,590   1,716,263   3,575 
Currency Translation Adjustment
    —   —   8,934   8,934   —   7,002   15,936   — 
Capital Contributions
    —   —   —   —   289,276   —   289,276   — 
Capital Distributions
    —   (639,210)   —   (639,210)   (335,020)   (544,476)   (1,518,706)   (44,044) 
Transfer of
Non-Controlling
Interests in Consolidated Entities
    —   —   —   —   (1,296)   —   (1,296)   — 
Deferred Tax Effects Resulting from Acquisition of Ownership Interests from
Non-Controlling
Interest Holders
    —   5,016   —   5,016   —   —   5,016   — 
Equity-Based Compensation
    —   101,200   —   101,200   —   79,613   180,813   — 
Net Delivery of Vested Blackstone Holdings Partnership Units and Blackstone Common Units
    1,853,730   (10,613)   —   (10,613)   —   (6)   (10,619)   — 
Repurchase of Blackstone Common Units and Blackstone Holdings Partnership Units
    (8,100,000)   (325,214)   —   (325,214)   —   —   (325,214)   — 
Change in The Blackstone Group L.P.’s Ownership Interest
    —   (23,270)   —   (23,270)   —   23,270   —   — 
Conversion of Blackstone Holdings Partnership Units to Blackstone Common Units
    3,621,809   25,192   —   25,192   —   (25,192)   —   — 
   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance at June 30, 2019
    660,588,369  $6,335,897  $(27,542)  $6,308,355  $3,869,303  $3,786,118  $13,963,776  $101,310 
   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                                                                                                                       
  
Shares of
The Blackstone

Group Inc. (a)
 
The Blackstone Group Inc. (a)
        
          
Accumulated
         
Redeemable
          
Other
   
Non-
 
Non-
   
Non-
          
Compre-
   
Controlling
 
Controlling
   
Controlling
      
Additional
 
Retained
 
hensive
 
Total
 
Interests in
 
Interests in
   
Interests in
  
Common
 
Common
 
Paid-in-
 
Earnings
 
Income
 
Stockholders’
 
Consolidated
 
Blackstone
 
Total
 
Consolidated
  
Stock
 
Stock
 
Capital
 
(Deficit)
 
(Loss)
 
Equity
 
Entities
 
Holdings
 
Equity
 
Entities
Balance at December 31, 2019
  671,157,692  $7  $6,428,647  $609,625  $(28,495)  $7,009,784  $4,186,069  $3,819,548  $15,015,401  $87,651 
Net Income (Loss)
  —   —   —   (498,226)   —   (498,226)   (350,699)   (384,989)   (1,233,914)   (18,895) 
Currency Translation Adjustment
  —   —   —   —   (8,263)   (8,263)   —   (3,640)   (11,903)   — 
Capital Contributions
  —   —   —   —   —   —   372,961   —   372,961   — 
Capital Distributions
  —   —   —   (685,694)   —   (685,694)   (305,797)   (569,055)   (1,560,546)   (192) 
Transfer of Non-Controlling Interests in Consolidated Entities
  —   —   —   —   —   —   (2,105)   —   (2,105)   — 
Deferred Tax Effects Resulting from Acquisition of Ownership Interests from Non-Controlling Interest Holders
  —   —   15,200   —   —   15,200   —   —   15,200   — 
Equity-Based Compensation
  —   —   124,279   —   —   124,279   —   94,100   218,379   — 
Net Delivery of Vested Blackstone Holdings Partnership Units and Shares of Common Stock
  1,740,156   —   (17,639)   —   —   (17,639)   —   (7)   (17,646)   — 
Repurchase of Shares of Common Stock and Blackstone Holdings Partnership Units
  (6,969,237)   —   (368,361)   —   —   (368,361)   —   —   (368,361)   — 
Change in The Blackstone Group Inc.’s Ownership Interest
  —   —   13,785   —   —   13,785   —   (13,785)   —   — 
Conversion of Blackstone Holdings Partnership Units to Shares of Common Stock
  10,945,972   —   76,129   —   —   76,129   —   (76,129)   —   — 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance at June 30, 2020
  676,874,583  $7  $6,272,040  $(574,295)  $(36,758)  $5,660,994  $3,900,429  $2,866,043  $12,427,466  $68,564 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(a)
During the period presented, Blackstone also had one share outstanding of each of Series I and Series II preferred stock, with par value of each less than one cent.
See notes to condensed consolidated financial statements.
 
1
313 
Table of Contents
The Blackstone Group Inc.
Condensed Consolidated Statements of Cash Flows (Unaudited)
(Dollars in Thousands)
 
 
                                                       
   
Six Months Ended June 30,
   
2020
 
2019
Operating Activities
         
Net Income (Loss)   $(1,252,809)   $1,719,838 
Adjustments to Reconcile Net Income (Loss) Net Cash Provided by Operating Activities         
Blackstone Funds Related         
Net Realized Gains on Investments   (261,870)   (817,759) 
Changes in Unrealized (Gains) Losses on Investments   744,335   (243,959) 
Non-Cash
Performance Allocations
   2,385,158   (821,731) 
Non-Cash
Performance Allocations and Incentive Fee Compensation
   (821,798)   574,630 
Equity-Based Compensation Expense   238,721   223,979 
Amortization of Intangibles   35,500   35,500 
Other
Non-Cash
Amounts Included in Net Income (Loss)
   (175,677)   2,332 
Cash Flows Due to Changes in Operating Assets and Liabilities         
Accounts Receivable   562,123   (23,512) 
Due from Affiliates   203,698   (198,164) 
Other Assets   (120,679)   (37,961) 
Accrued Compensation and Benefits   (443,534)   (251,331) 
Securities Sold, Not Yet Purchased   (26,840)   (18,851) 
Accounts Payable, Accrued Expenses and Other Liabilities   (182,034)   (271,284) 
Repurchase Agreements   (73,498)   (14,526) 
Due to Affiliates   85,380   19,638 
Investments Purchased   (3,786,662)   (4,208,546) 
Cash Proceeds from Sale of Investments       4,381,268       4,626,572 
          
Net Cash Provided by Operating Activities   1,490,782   294,865 
          
Investing Activities
         
Purchase of Furniture, Equipment and Leasehold Improvements   (25,453)   (33,524) 
          
Net Cash Used in Investing Activities   (25,453)   (33,524) 
          
Financing Activities
         
Distributions to
Non-Controlling
Interest Holders in Consolidated Entities
   (305,914)   (347,836) 
Contributions from
Non-Controlling
Interest Holders in Consolidated Entities
   355,599   288,119 
Payments Under Tax Receivable Agreement   (73,881)   (84,640) 
Net Settlement of Vested Class A Common Stock and Repurchase of Class A Common Stock and Blackstone Holdings Partnership Units   (386,007)   (335,833) 
Proceeds from Loans Payable   —   668,640 
                                                       
   
Six Months Ended June 30,
   
2021
 
2020
Operating Activities
         
Net Income (Loss)
   $6,228,633   $(1,252,809) 
Adjustments to Reconcile Net Income (Loss) to Net Cash Provided by Operating Activities
         
Blackstone Funds Related
         
Net Realized Gains on Investments
   (1,949,167)   (261,870) 
Changes in Unrealized (Gains) Losses on Investments
   (1,140,654)  744,335 
Non-Cash Performance Allocations
   (5,161,667)  2,385,158 
Non-Cash Performance Allocations and Incentive Fee Compensation
   2,780,561   (821,798) 
Equity-Based Compensation Expense
   305,422   238,721 
Amortization of Intangibles
   37,476   35,500 
Other Non-Cash Amounts Included in Net Income (Loss)
   (153,350)  (175,677) 
Cash Flows Due to Changes in Operating Assets and Liabilities
         
Accounts Receivable
   346,505   562,123 
Due from Affiliates
   109,163   203,698 
Other Assets
   (55,225)   (120,679) 
Accrued Compensation and Benefits
   (440,034)   (443,534) 
Securities Sold, Not Yet Purchased
   (14,925)   (26,840) 
Accounts Payable, Accrued Expenses and Other Liabilities
   13,373   (182,034) 
Repurchase Agreements
   (19,562)   (73,498) 
Due to Affiliates
   19,836   85,380 
Investments Purchased
   (2,718,024)  (3,786,662) 
Cash Proceeds from Sale of Investments
   5,007,907   4,381,268 
   
 
 
 
 
 
 
 
Net Cash Provided by Operating Activities
       3,196,268       1,490,782 
   
 
 
 
 
 
 
 
Investing Activities
         
Purchase of Furniture, Equipment and Leasehold Improvements
   (34,811)   (25,453) 
   
 
 
 
 
 
 
 
Net Cash Used in Investing Activities
   (34,811)   (25,453) 
   
 
 
 
 
 
 
 
Financing Activities
         
Distributions to Non-Controlling Interest Holders in Consolidated Entities
   (409,577)   (305,914) 
Contributions from Non-Controlling Interest Holders in Consolidated Entities
   407,738   355,599 
Payments Under Tax Receivable Agreement
   (51,366)   (73,881) 
Net Settlement of Vested Common Stock and Repurchase of Common Stock and Blackstone Holdings Partnership Units
   (312,114)   (386,007) 
 
continued...
See notes to condensed consolidated financial statements.
 
1
414
Table of Contents
The Blackstone Group Inc.
Condensed Consolidated Statements of Cash Flows (Unaudited)
(Dollars in Thousands)
 
 
 
                                                                                                            
  
Six Months Ended June 30,
  
Six Months Ended June 30,
  
2020
 
2019
  
2021
 
2020
Financing Activities (Continued)
        
Repayment and Repurchase of Loans Payable  $(1,896)  $(1,886)    $0   $(1,896) 
Dividends/Distributions to Shareholders and Unitholders   (1,254,749)   (1,183,686)    (2,278,390)   (1,254,749) 
       
 
 
 
Net Cash Used in Financing Activities   (1,666,848)   (997,122)    (2,643,709)   (1,666,848) 
       
 
 
 
Effect of Exchange Rate Changes on Cash and Cash Equivalents and Cash Held by Blackstone Funds and Other   (2,419)   (327)    (5,084)   (2,419) 
       
 
 
 
Cash and Cash Equivalents and Cash Held by Blackstone Funds and Other
        
Net Decrease   (203,938)   (736,108) 
Net Increase (Decrease)
   512,664   (203,938) 
Beginning of Period   2,523,651   2,545,161    2,064,456   2,523,651 
       
 
 
 
End of Period
  $     2,319,713  $    1,809,053    $    2,577,120   $    2,319,713 
       
 
 
 
  
Supplemental Disclosure of Cash Flows Information
        
Payments for Interest  $93,645  $86,095    $102,524   $93,645 
       
 
 
 
Payments for Income Taxes  $42,330  $45,966    $289,244   $42,330 
       
 
 
 
Supplemental Disclosure of
Non-Cash
Investing and Financing Activities
        
Non-Cash
Contributions from
Non-Controlling
Interest Holders
  $16,033  $233    $6,076   $16,033 
       
 
 
 
Non-Cash
Distributions to
Non-Controlling
Interest Holders
  $(75)  $(31,228)    $0   $(75) 
       
 
 
 
Notes Issuance Costs  $—  $5,409 
     
Transfer of Interests to
Non-Controlling
Interest Holders
  $(2,105)
 
 $(1,296)    $(3,593)   $(2,105) 
       
 
 
 
Change in The Blackstone Group Inc.’s Ownership Interest  $13,785  $(23,270)    $3,877   $13,785 
       
 
 
 
Net Settlement of Vested Class A Common Stock  $71,978  $59,302 
Net Settlement of Vested Common Stock
   $124,386   $71,978 
       
 
 
 
Conversion of Blackstone Holdings Units to Class A Common Stock  $76,129  $25,192 
Conversion of Blackstone Holdings Units to Common Stock
   $70,412   $76,129 
       
 
 
 
Acquisition of Ownership Interests from
Non-Controlling
Interest Holders
        
Deferred Tax Asset  $(148,838)
 
 $(31,248)    $(167,433)  $(148,838) 
       
 
 
 
Due to Affiliates  $133,638  $26,232    $147,719   $133,638 
       
 
 
 
Equity  $15,200  $5,016    $19,714   $15,200 
       
 
 
 
The following table provides a reconciliation of Cash and Cash Equivalents and Cash Held by Blackstone Funds and Other reported within the Condensed Consolidated Statements of Financial Condition:
 
                                                       
   
June 30,
  
December 31,
   
2020
  
2019
Cash and Cash Equivalents  $1,976,512   $2,172,441 
Cash Held by Blackstone Funds and Other   343,201    351,210 
           
   $     2,319,713   $    2,523,651 
           
                                                       
   
June 30,
  
December 31,
   
2021
  
2020
Cash and Cash Equivalents
   $2,467,444    $1,999,484 
Cash Held by Blackstone Funds and Other
   109,676    64,972 
   
 
 
 
  
 
 
 
    $    2,577,120    $    2,064,456 
   
 
 
 
  
 
 
 
See notes to condensed consolidated financial statements.
 
1
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Table of Contents
The Blackstone Group Inc.
Notes to Condensed Consolidated Financial Statements (Unaudited)
(All Dollars Areare in Thousands, Except Share and Per Share Data, Except Where Noted)
 
1.    Organization
Effective July 1, 2019, The Blackstone Group L.P. (the “Partnership”) converted from a Delaware limited partnership to a Delaware corporation,
The Blackstone Group Inc. (the “Conversion”). This report includes the results for the Partnership prior to the Conversion and The Blackstone Group Inc. following the Conversion. In this report, references to “Blackstone”, together with its consolidated subsidiaries (“Blackstone” or the “Company” refer to (a) The Blackstone Group Inc. and its consolidated subsidiaries following the Conversion and (b) the Partnership and its consolidated subsidiaries prior to the Conversion. All references to shares or per share amounts prior to the Conversion refer to units or per unit amounts. Unless otherwise noted, all references to shares or per share amounts following the Conversion refer to shares or per share amounts of Class A common stock. All references to dividends prior to the Conversion refer to distributions.
As a result of the Conversion, the financial impact to the condensed consolidated financial statements contained herein consist of (a) a partial
step-up
in the tax basis of certain assets resulting in the recognition of a net income tax benefit and (b) reclassification from partnership equity accounts to equity accounts appropriate for a corporation. See Note 13. “Income Taxes” for additional information and Note 14. “Earnings Per Share and Stockholder’s Equity”.
Blackstone, together with its subsidiaries,), is one of the world’s leading investment firms. Blackstone’s asset management business includes investment vehicles focused on real estate, private equity, public debt and equity, growth equity, life sciences, opportunistic,
non-investment
grade credit, real assets and secondary funds, all on a global basis. “Blackstone Funds” refers to the funds and other vehicles that are managed by Blackstone. Blackstone’s business is organized into
4 segments: Real Estate, Private Equity, Hedge Fund Solutions and Credit & Insurance.
Effective January 1, 2020, the Credit segmentAugust 6, 2021, The Blackstone Group Inc. changed its name to Blackstone Inc. Blackstone Inc. was renamed Credit & Insurance. There was no change to the composition of the segment or historical results.
initially formed as The Blackstone was formedGroup L.P., a Delaware limited partnership, on March 12, 2007, and, until the Conversion,2007. Prior to its conversion (effective July 1, 2019) to a Delaware corporation (the “Conversion”), Blackstone Inc. was managed and operated by Blackstone Group Management L.L.C., which is in turn wholly owned by Blackstone’s senior managing directors and controlled by 1 of
1of Blackstone’s founders, Stephen A. Schwarzman (the “Founder”). FollowingEffective February 26, 2021, the Conversion, the Company’s equity consistsCertificate of sharesIncorporation of Blackstone Inc. was amended and restated to rename Blackstone’s Class A BCommon stock as “common stock” and C common stock. Blackstone Partners L.L.C. is the sole holder of the single share ofreclassify Blackstone’s Class B common stock outstanding and Blackstone Group Management L.L.C. is the sole holder of the single share of Class C common stock outstanding.into a new Series I preferred stock and a new Series II preferred stock, respectively. All references to common stock, series I preferred stock and series II preferred stock prior to such date refer to Class A, Class B and Class C common stock, respectively. See Note 13. “Income Taxes” and Note 14. “Earnings Per Share and Stockholder’s Equity”.Stockholders’ Equity — Stockholders’ Equity.”
The activities of Blackstone are conducted through its holding partnerships: Blackstone Holdings I L.P., Blackstone Holdings AI L.P., Blackstone Holdings II L.P., Blackstone Holdings III L.P. and Blackstone Holdings IV L.P. (collectively, “Blackstone Holdings”,Holdings,” “Blackstone Holdings Partnerships” or the “Holding Partnerships”). Blackstone, through its wholly owned subsidiaries, is the sole general partner inof each of thesethe Holding Partnerships. Generally, holders of the limited partner interests in the Holding Partnerships may, four times each year, exchange their limited partnership interests (“Partnership Units”) for Blackstone Class A common stock, on a
one-to-one
basis, exchanging one Partnership Unit from each of the Holding Partnerships for one share of Blackstone Class A common stock.
2.    Summary of Significant Accounting Policies
Basis of PresentationIncentive Fees
The accompanying unaudited condensed consolidated financial statements of Blackstone have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and the instructions to
Form 10-Q.
The condensed consolidated financial statements, including these notes, are unaudited and exclude some of the disclosures required in audited financial statements. Management believes it has made all necessary adjustments (consisting of only normal recurring items) so that the condensed consolidated financial statements are presented fairly and that estimates made in preparing its
33,20715,30069,33127,461
 
1
6
Investment Income (Loss)
Performance Allocations
Realized
808,620101,9101,342,987269,440
Unrealized
2,697,1701,067,9235,161,667(2,385,158) 
Principal Investments
Realized
152,06061,102507,098109,797
Unrealized
328,835331,762968,150(627,603) 
Total Investment Income (Loss)
3,986,6851,562,6977,979,902(2,633,524) 
Interest and Dividend Revenue
31,01723,92462,42959,008
Other
27,896(55,580) 88,20082,600
Total Revenues
5,291,3542,516,06910,590,226(559,895) 
Table of Contents
Expenses
Compensation and Benefits
Compensation
507,104458,4571,049,742935,000
Incentive Fee Compensation
14,4318,43227,75614,954
Performance Allocations Compensation
Realized
347,42338,569560,450110,992
Unrealized
1,150,219454,8132,200,188(942,565) 
Total Compensation and Benefits
2,019,177960,2713,838,136118,381
General, Administrative and Other
205,057169,051390,179326,617
Interest Expense
44,32239,27689,30580,920
Fund Expenses
3,7744,0836,1578,688
Total Expenses
2,272,3301,172,6814,323,777534,606
Other Income (Loss)
Change in Tax Receivable Agreement Liability
(392) 762,518(519) 
Net Gains (Losses) from Fund Investment Activities
127,116158,297247,469(169,077) 
Total Other Income (Loss)
126,724158,373249,987(169,596) 
Income (Loss) Before Provision (Benefit) for Taxes
3,145,7481,501,7616,516,436(1,264,097) 
Provision (Benefit) for Taxes
288,250147,415287,803(11,288) 
Net Income (Loss)
2,857,4981,354,3466,228,633(1,252,809) 
Net Income (Loss) Attributable to Redeemable Non-Controlling Interests in Consolidated Entities
637(3,426) 1,266(18,895) 
Net Income (Loss) Attributable to Non-Controlling Interests in Consolidated Entities
431,516294,378818,366(350,699) 
Net Income (Loss) Attributable to Non-Controlling Interests in Blackstone Holdings
1,116,193495,1282,351,977(384,989) 
Net Income (Loss) Attributable to The Blackstone Group Inc.
 $1,309,152 $568,266 $3,057,024 $(498,226) 
Notes to Condensed Consolidated Financial Statements (Unaudited) - Continued
(All Dollars Are in Thousands, Except Share andNet Income (Loss) Per Share Data, Except Where Noted)of Common Stock
Basic
 $1.82 $0.81 $4.27 $(0.74) 
 
 
condensed consolidated financial statements are reasonable and prudent. The operating results presented for interim periods are not necessarily indicative of the results that may be expected for any other interim period or for the entire year. See “—
COVID-19
and Global Economic and Market Conditions” below. These condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements included in Blackstone’s Annual Report on
Form 10-K
for the year ended December 31, 2019 filed with the Securities and Exchange Commission.
The condensed consolidated financial statements include the accounts of Blackstone, its wholly owned or majority
owned subsidiaries, the consolidated entities which are considered to be variable interest entities and for which Blackstone is considered the primary beneficiary, and certain partnerships or similar entities which are not considered variable interest entities but in which the general partner is determined to have control.
All intercompany balances and transactions have been eliminated in consolidation.
Restructurings within consolidated CLOs are treated as investment purchases or sales, as applicable, in the Condensed Consolidated Statements of Cash Flows.
COVID-19
and Global Economic and Market Conditions
The ongoing
COVID-19
pandemic and restrictions on
non-essential
businesses have caused disruption in the U.S. and global economies. Despite significant market rebounds across many asset classes in the second quarter of 2020, the continued rapid development of this situation and uncertainty regarding potential economic recovery precludes any prediction as to the ultimate adverse impact of
COVID-19
on financial market and economic conditions. The estimates and assumptions underlying these condensed consolidated financial statements are based on the information available as of June 30, 2020, including judgments about the financial market and economic conditions which may change over time.
Consolidation
Blackstone consolidates all entities that it controls through a majority voting interest or otherwise, including those Blackstone Funds in which the general partner has a controlling financial interest. Blackstone has a controlling financial interest in Blackstone Holdings because the limited partners do not have the right to dissolve the partnerships or have substantive
kick-out
rights or participating rights that would overcome the control held by Blackstone. Accordingly, Blackstone consolidates Blackstone Holdings and records
non-controlling
interests to reflect the economic interests of the limited partners of Blackstone Holdings.
In addition, Blackstone consolidates all variable interest entities (“VIE”) in which it is the primary beneficiary. An enterprise is determined to be the primary beneficiary if it holds a controlling financial interest. A controlling financial interest is defined as (a) the power to direct the activities of a VIE that most significantly impact the entity’s economic performance and (b) the obligation to absorb losses of the entity or the right to receive benefits from the entity that could potentially be significant to the VIE. The consolidation guidance requires an analysis to determine (a) whether an entity in which Blackstone holds a variable interest is a VIE and (b) whether Blackstone’s involvement, through holding interests directly or indirectly in the entity or contractually through other variable interests, would give it a controlling financial interest. Performance of that analysis requires the exercise of judgment.
Blackstone determines whether it is the primary beneficiary of a VIE at the time it becomes involved with a variable interest entity and continuously reconsiders that conclusion. In determining whether Blackstone is the primary beneficiary, Blackstone evaluates its control rights as well as economic interests in the entity held either directly or indirectly by Blackstone. The consolidation analysis can generally be performed qualitatively; however, if it is not readily apparent that Blackstone is not the primary beneficiary, a quantitative analysis may also be performed. Investments and redemptions (either by Blackstone, affiliates of Blackstone or third parties) or amendments to the governing documents of the respective Blackstone Funds could affect an entity’s status as a VIE or the determination of the primary beneficiary. At each reporting date, Blackstone assesses whether it is the primary beneficiary and will consolidate or deconsolidate accordingly. 
 
1
7
Diluted
 $1.82 $0.81 $4.27 $(0.74) 
Weighted-Average Shares of Common Stock Outstanding
Basic
721,141,954698,534,168715,121,029677,041,769
Diluted
      721,265,180      1,204,411,957      715,622,208      677,041,769
See notes to condensed consolidated financial statements.
8 
Table of Contents
The Blackstone Group Inc.
Condensed Consolidated Statements of Comprehensive Income (Unaudited)
(Dollars in Thousands)
                                                                                                             
   
Three Months Ended
 
Six Months Ended
   
June 30,
 
June 30,
   
2021
  
2020
 
2021
  
2020
Net Income (Loss)
   $2,857,498    $1,354,346   $6,228,633    $(1,252,809) 
Other Comprehensive Income (Loss), Currency Translation Adjustment
   2,124    8,316   10,055    (11,903) 
   
 
 
 
  
 
 
 
 
 
 
 
  
 
 
 
Comprehensive Income (Loss)
   2,859,622    1,362,662   6,238,688    (1,264,712) 
   
 
 
 
  
 
 
 
 
 
 
 
  
 
 
 
Less:
                   
Comprehensive Income (Loss) Attributable to Redeemable Non-Controlling Interests in Consolidated Entities
   637    (3,426)   1,266    (18,895) 
Comprehensive Income (Loss) Attributable to Non-Controlling Interests in Consolidated Entities
   431,516    294,378   818,366    (350,699) 
Comprehensive Income (Loss) Attributable to Non-Controlling Interests in Blackstone Holdings
   1,117,108    498,669   2,356,446    (388,629) 
   
 
 
 
  
 
 
 
 
 
 
 
  
 
 
 
Comprehensive Income (Loss) Attributable to Non-Controlling Interests
   1,549,261    789,621   3,176,078    (758,223) 
   
 
 
 
  
 
 
 
 
 
 
 
  
 
 
 
Comprehensive Income (Loss) Attributable to The Blackstone Group Inc.
   $      1,310,361    $      573,041   $      3,062,610    $      (506,489) 
   
 
 
 
  
 
 
 
 
 
 
 
  
 
 
 
See notes to condensed consolidated financial statements.
9
Table of Contents
The Blackstone Group Inc.
Condensed Consolidated Statements of Changes in Equity (Unaudited)
(Dollars in Thousands, Except Share Data)
                                                                                                                                                       
  
Shares of

The Blackstone

Group Inc. (a)
 
The Blackstone Group Inc. (a)
        
          
Accumulated
         
Redeemable
          
Other
   
Non-
 
Non-
   
Non-
          
Compre-
   
Controlling
 
Controlling
   
Controlling
      
Additional
 
Retained
 
hensive
 
Total
 
Interests in
 
Interests in
   
Interests in
  
Common
 
Common
 
Paid-in-
 
Earnings
 
Income
 
Stockholders’
 
Consolidated
 
Blackstone
 
Total
 
Consolidated
  
Stock
 
Stock
 
Capital
 
(Deficit)
 
(Loss)
 
Equity
 
Entities
 
Holdings
 
Equity
 
Entities
Balance at March 31, 2021
  690,569,563  $7  $6,446,829  $1,408,768  $(11,454)  $7,844,150  $4,390,594  $4,524,898  $16,759,642  $65,546 
Net Income
  —   —   —   1,309,152   —   1,309,152   431,516   1,116,193   2,856,861   637 
Currency Translation Adjustment
  —   —   —   —   1,209   1,209   —   915   2,124   — 
Capital Contributions
  —   —   —   —   —   —   204,933   2,551   207,484   — 
Capital Distributions
  —   —   —   (584,126)   —   (584,126)   (166,518)   (441,687)   (1,192,331)   (615) 
Transfer of Non-Controlling Interests in Consolidated Entities
  —   —   —   —   —   —   (83)   —   (83)   — 
Deferred Tax Effects Resulting from Acquisition of Ownership Interests from Non-Controlling Interest Holders
  —   —   9,535   —   —   9,535   —   —   9,535   — 
Equity-Based Compensation
  —   —   77,083   —   —   77,083   —   55,046   132,129   — 
Net Delivery of Vested Blackstone Holdings Partnership Units and Shares of Common Stock
  273,659   —   (4,860)   —   —   (4,860)   —   —   (4,860)   — 
Repurchase of Shares of Common Stock and Blackstone Holdings Partnership Units
  (3,174,598)   —   (289,055)   —   —   (289,055)   —   —   (289,055)   — 
Change in The Blackstone Group Inc.’s Ownership Interest
  —   —   11,322   —   —   11,322   —   (11,322)   —   — 
Conversion of Blackstone Holdings Partnership Units to Shares of Common Stock
  3,424,839   —   31,746   —   —   31,746   —   (31,746)   —   — 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance at June 30, 2021
  691,093,463  $7  $6,282,600  $2,133,794  $(10,245)  $8,406,156  $4,860,442  $5,214,848  $18,481,446  $65,568 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(a)
During the period presented, Blackstone also had one share outstanding of each of Series I and Series II preferred stock, with par value of each less than one cent.
continued...
See notes to condensed consolidated financial statements.
10
Table of Contents
The Blackstone Group Inc.
Condensed Consolidated Statements of Changes in Equity (Unaudited)
(Dollars in Thousands, Except Share Data)
                                                                                                                                                       
  
Shares of

The Blackstone

Group Inc. (a)
 
The Blackstone Group Inc. (a)
        
          
Accumulated
         
Redeemable
          
Other
   
Non-
 
Non-
   
Non-
          
Compre-
   
Controlling
 
Controlling
   
Controlling
      
Additional
 
Retained
 
hensive
 
Total
 
Interests in
 
Interests in
   
Interests in
  
Common
 
Common
 
Paid-in-
 
Earnings
 
Income
 
Stockholders’
 
Consolidated
 
Blackstone
 
Total
 
Consolidated
  
Stock
 
Stock
 
Capital
 
(Deficit)
 
(Loss)
 
Equity
 
Entities
 
Holdings
 
Equity
 
Entities
Balance at March 31, 2020
  676,630,489  $7  $6,298,093  $(871,948)  $(41,533)  $5,384,619  $3,591,160  $2,530,263  $11,506,042  $72,066 
Net Income (Loss)
  —   —   —   568,266   —   568,266��  294,378   495,128   1,357,772   (3,426) 
Currency Translation Adjustment
  —   —   —   —   4,775   4,775   —   3,541   8,316   — 
Capital Contributions
  —   —   —   —   —   —   170,282   —   170,282   — 
Capital Distributions
  —   —   —   (270,613)   —   (270,613)   (155,525)   (203,354)   (629,492)   (76) 
Transfer of Non-Controlling Interests in Consolidated Entities
  —   —   —   —   —   —   134   —   134   — 
Deferred Tax Effects Resulting from Acquisition of Ownership Interests from Non-Controlling Interest Holders
  —   —   2,806   —   —   2,806   —   —   2,806   — 
Equity-Based Compensation
  —   —   73,455   —   —   73,455   —   55,442   128,897   — 
Net Delivery of Vested Blackstone Holdings Partnership Units and Shares of Common Stock
  56,662   —   (2,398)   —   —   (2,398)   —   —   (2,398)   — 
Repurchase of Shares of Common Stock and Blackstone Holdings Partnership Units
  (2,000,000)   —   (114,893)   —   —   (114,893)   —   —   (114,893)   — 
Change in The Blackstone Group Inc.’s Ownership Interest
  —   —   4,006   —   —   4,006   —   (4,006)   —   — 
Conversion of Blackstone Holdings Partnership Units to Shares of Common Stock
  2,187,432   —   10,971   —   —   10,971   —   (10,971)   —   — 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance at June 30, 2020
  676,874,583  $7  $6,272,040  $(574,295)  $(36,758)  $5,660,994  $3,900,429  $2,866,043  $12,427,466  $68,564 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(a)
During the period presented, Blackstone also had one share outstanding of each of Series I and Series II preferred stock, with par value of each less than one cent.
continued...
See notes to condensed consolidated financial statements.
11
Table of Contents
The Blackstone Group Inc.
Condensed Consolidated Statements of Changes in Equity (Unaudited)
(Dollars in Thousands, Except Share Data)
                                                                                                                                                       
  
Shares of

The Blackstone

Group Inc. (a)
 
The Blackstone Group Inc. (a)
        
          
Accumulated
         
Redeemable
          
Other
   
Non-
 
Non-
   
Non-
          
Compre-
   
Controlling
 
Controlling
   
Controlling
      
Additional
 
Retained
 
hensive
 
Total
 
Interests in
 
Interests in
   
Interests in
  
Common
 
Common
 
Paid-in-
 
Earnings
 
Income
 
Stockholders’
 
Consolidated
 
Blackstone
 
Total
 
Consolidated
  
Stock
 
Stock
 
Capital
 
(Deficit)
 
(Loss)
 
Equity
 
Entities
 
Holdings
 
Equity
 
Entities
Balance at December 31, 2020
  683,875,544  $7  $6,332,105  $335,762  $(15,831)  $6,652,043  $4,042,157  $3,831,148  $14,525,348  $65,161 
Net Income
  —   —   —   3,057,024   —   3,057,024   818,366   2,351,977   6,227,367   1,266 
Currency Translation Adjustment
  —   —   —   —   5,586   5,586   —   4,469   10,055   — 
Capital Contributions
  —   —   —   —   —   —   412,230   5,259   417,489   — 
Capital Distributions
  —   —   —   (1,258,992)   —   (1,258,992)   (408,718)   (1,024,657)   (2,692,367)   (859) 
Transfer of Non-Controlling Interests in Consolidated Entities
  —   —   —   —   —   —   (3,593)   —   (3,593)   — 
Deferred Tax Effects Resulting from Acquisition of Ownership Interests from Non-Controlling Interest Holders
  —   —   19,714   —   —   19,714   —   —   19,714   — 
Equity-Based Compensation
  —   —   168,606   —   —   168,606   —   120,941   289,547   — 
Net Delivery of Vested Blackstone Holdings Partnership Units and Shares of Common Stock
  1,986,972   —   (23,059)   —   —   (23,059)   —   —   (23,059)   — 
Repurchase of Shares of Common Stock and Blackstone Holdings Partnership Units
  (3,174,598)   —   (289,055)   —   —   (289,055)   —   —   (289,055)   — 
Change in The Blackstone Group Inc.’s Ownership Interest
  —   —   3,877   —   —   3,877   —   (3,877)   —   — 
Conversion of Blackstone Holdings Partnership Units to Shares of Common Stock
  8,405,545   —   70,412   —   —   70,412   —   (70,412)   —   — 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance at June 30, 2021
  691,093,463  $7  $6,282,600  $2,133,794  $(10,245)  $8,406,156  $4,860,442  $5,214,848  $18,481,446  $65,568 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(a)
During the period presented, Blackstone also had one share outstanding of each of Series I and Series II preferred stock, with par value of each less than one cent.
continued...
See notes to condensed consolidated financial statements.
12
Table of Contents
The Blackstone Group Inc.
Condensed Consolidated Statements of Changes in Equity (Unaudited)
(Dollars in Thousands, Except Share Data)
                                                                                                                                                       
  
Shares of
The Blackstone

Group Inc. (a)
 
The Blackstone Group Inc. (a)
        
          
Accumulated
         
Redeemable
          
Other
   
Non-
 
Non-
   
Non-
          
Compre-
   
Controlling
 
Controlling
   
Controlling
      
Additional
 
Retained
 
hensive
 
Total
 
Interests in
 
Interests in
   
Interests in
  
Common
 
Common
 
Paid-in-
 
Earnings
 
Income
 
Stockholders’
 
Consolidated
 
Blackstone
 
Total
 
Consolidated
  
Stock
 
Stock
 
Capital
 
(Deficit)
 
(Loss)
 
Equity
 
Entities
 
Holdings
 
Equity
 
Entities
Balance at December 31, 2019
  671,157,692  $7  $6,428,647  $609,625  $(28,495)  $7,009,784  $4,186,069  $3,819,548  $15,015,401  $87,651 
Net Income (Loss)
  —   —   —   (498,226)   —   (498,226)   (350,699)   (384,989)   (1,233,914)   (18,895) 
Currency Translation Adjustment
  —   —   —   —   (8,263)   (8,263)   —   (3,640)   (11,903)   — 
Capital Contributions
  —   —   —   —   —   —   372,961   —   372,961   — 
Capital Distributions
  —   —   —   (685,694)   —   (685,694)   (305,797)   (569,055)   (1,560,546)   (192) 
Transfer of Non-Controlling Interests in Consolidated Entities
  —   —   —   —   —   —   (2,105)   —   (2,105)   — 
Deferred Tax Effects Resulting from Acquisition of Ownership Interests from Non-Controlling Interest Holders
  —   —   15,200   —   —   15,200   —   —   15,200   — 
Equity-Based Compensation
  —   —   124,279   —   —   124,279   —   94,100   218,379   — 
Net Delivery of Vested Blackstone Holdings Partnership Units and Shares of Common Stock
  1,740,156   —   (17,639)   —   —   (17,639)   —   (7)   (17,646)   — 
Repurchase of Shares of Common Stock and Blackstone Holdings Partnership Units
  (6,969,237)   —   (368,361)   —   —   (368,361)   —   —   (368,361)   — 
Change in The Blackstone Group Inc.’s Ownership Interest
  —   —   13,785   —   —   13,785   —   (13,785)   —   — 
Conversion of Blackstone Holdings Partnership Units to Shares of Common Stock
  10,945,972   —   76,129   —   —   76,129   —   (76,129)   —   — 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance at June 30, 2020
  676,874,583  $7  $6,272,040  $(574,295)  $(36,758)  $5,660,994  $3,900,429  $2,866,043  $12,427,466  $68,564 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(a)
During the period presented, Blackstone also had one share outstanding of each of Series I and Series II preferred stock, with par value of each less than one cent.
See notes to condensed consolidated financial statements.
13 
Table of Contents
The Blackstone Group Inc.
Condensed Consolidated Statements of Cash Flows (Unaudited)
(Dollars in Thousands)
                                                       
   
Six Months Ended June 30,
   
2021
 
2020
Operating Activities
         
Net Income (Loss)
   $6,228,633   $(1,252,809) 
Adjustments to Reconcile Net Income (Loss) to Net Cash Provided by Operating Activities
         
Blackstone Funds Related
         
Net Realized Gains on Investments
   (1,949,167)   (261,870) 
Changes in Unrealized (Gains) Losses on Investments
   (1,140,654)  744,335 
Non-Cash Performance Allocations
   (5,161,667)  2,385,158 
Non-Cash Performance Allocations and Incentive Fee Compensation
   2,780,561   (821,798) 
Equity-Based Compensation Expense
   305,422   238,721 
Amortization of Intangibles
   37,476   35,500 
Other Non-Cash Amounts Included in Net Income (Loss)
   (153,350)  (175,677) 
Cash Flows Due to Changes in Operating Assets and Liabilities
         
Accounts Receivable
   346,505   562,123 
Due from Affiliates
   109,163   203,698 
Other Assets
   (55,225)   (120,679) 
Accrued Compensation and Benefits
   (440,034)   (443,534) 
Securities Sold, Not Yet Purchased
   (14,925)   (26,840) 
Accounts Payable, Accrued Expenses and Other Liabilities
   13,373   (182,034) 
Repurchase Agreements
   (19,562)   (73,498) 
Due to Affiliates
   19,836   85,380 
Investments Purchased
   (2,718,024)  (3,786,662) 
Cash Proceeds from Sale of Investments
   5,007,907   4,381,268 
   
 
 
 
 
 
 
 
Net Cash Provided by Operating Activities
       3,196,268       1,490,782 
   
 
 
 
 
 
 
 
Investing Activities
         
Purchase of Furniture, Equipment and Leasehold Improvements
   (34,811)   (25,453) 
   
 
 
 
 
 
 
 
Net Cash Used in Investing Activities
   (34,811)   (25,453) 
   
 
 
 
 
 
 
 
Financing Activities
         
Distributions to Non-Controlling Interest Holders in Consolidated Entities
   (409,577)   (305,914) 
Contributions from Non-Controlling Interest Holders in Consolidated Entities
   407,738   355,599 
Payments Under Tax Receivable Agreement
   (51,366)   (73,881) 
Net Settlement of Vested Common Stock and Repurchase of Common Stock and Blackstone Holdings Partnership Units
   (312,114)   (386,007) 
continued...
See notes to condensed consolidated financial statements.
14
Table of Contents
The Blackstone Group Inc.
Condensed Consolidated Statements of Cash Flows (Unaudited)
(Dollars in Thousands)
                                                       
   
Six Months Ended June 30,
   
2021
 
2020
Financing Activities (Continued)
         
Repayment and Repurchase of Loans Payable
   $0   $(1,896) 
Dividends/Distributions to Shareholders and Unitholders
   (2,278,390)   (1,254,749) 
   
 
 
 
 
 
 
 
Net Cash Used in Financing Activities
   (2,643,709)   (1,666,848) 
   
 
 
 
 
 
 
 
Effect of Exchange Rate Changes on Cash and Cash Equivalents and Cash Held by Blackstone Funds and Other
   (5,084)   (2,419) 
   
 
 
 
 
 
 
 
Cash and Cash Equivalents and Cash Held by Blackstone Funds and Other
         
Net Increase (Decrease)
   512,664   (203,938) 
Beginning of Period
   2,064,456   2,523,651 
   
 
 
 
 
 
 
 
End of Period
   $    2,577,120   $    2,319,713 
   
 
 
 
 
 
 
 
   
Supplemental Disclosure of Cash Flows Information
         
Payments for Interest
   $102,524   $93,645 
   
 
 
 
 
 
 
 
Payments for Income Taxes
   $289,244   $42,330 
   
 
 
 
 
 
 
 
Supplemental Disclosure of Non-Cash Investing and Financing Activities
         
Non-Cash Contributions from Non-Controlling Interest Holders
   $6,076   $16,033 
   
 
 
 
 
 
 
 
Non-Cash Distributions to Non-Controlling Interest Holders
   $0   $(75) 
   
 
 
 
 
 
 
 
Transfer of Interests to Non-Controlling Interest Holders
   $(3,593)   $(2,105) 
   
 
 
 
 
 
 
 
Change in The Blackstone Group Inc.’s Ownership Interest
   $3,877   $13,785 
   
 
 
 
 
 
 
 
Net Settlement of Vested Common Stock
   $124,386   $71,978 
   
 
 
 
 
 
 
 
Conversion of Blackstone Holdings Units to Common Stock
   $70,412   $76,129 
   
 
 
 
 
 
 
 
Acquisition of Ownership Interests from Non-Controlling Interest Holders
         
Deferred Tax Asset
   $(167,433)  $(148,838) 
   
 
 
 
 
 
 
 
Due to Affiliates
   $147,719   $133,638 
   
 
 
 
 
 
 
 
Equity
   $19,714   $15,200 
   
 
 
 
 
 
 
 
The following table provides a reconciliation of Cash and Cash Equivalents and Cash Held by Blackstone Funds and Other reported within the Condensed Consolidated Statements of Financial Condition:
                                                       
   
June 30,
  
December 31,
   
2021
  
2020
Cash and Cash Equivalents
   $2,467,444    $1,999,484 
Cash Held by Blackstone Funds and Other
   109,676    64,972 
   
 
 
 
  
 
 
 
    $    2,577,120    $    2,064,456 
   
 
 
 
  
 
 
 
See notes to condensed consolidated financial statements.
15
Table of Contents
The Blackstone Group Inc.
Notes to Condensed Consolidated Financial Statements (Unaudited) - Continued
(All Dollars Are in Thousands, Except Share and Per Share Data, Except Where Noted)
Assets of consolidated VIEs that can only be used to settle obligations of the consolidated VIE and liabilities of a consolidated VIE for which creditors (or beneficial interest holders) do not have recourse to the general credit of Blackstone are presented in a separate section in the Condensed Consolidated Statements of Financial Condition.
Blackstone’s other disclosures regarding VIEs are discussed in Note 9. “Variable Interest Entities”.
Revenue Recognition
Revenues primarily consist of management and advisory fees, incentive fees, investment income, interest and dividend revenue and other.
Management and advisory fees and incentive fees are accounted for as contracts with customers. Under the guidance for contracts with customers, an entity is required to (a) identify the contract(s) with a customer, (b) identify the performance obligations in the contract, (c) determine the transaction price, (d) allocate the transaction price to the performance obligations in the contract, and (e) recognize revenue when (or as) the entity satisfies a performance obligation. In determining the transaction price, an entity may include variable consideration only to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized would not occur when the uncertainty associated with the variable consideration is resolved. See Note 18. “Segment Reporting” for a disaggregated presentation of revenues from contracts with customers.
Management and Advisory Fees, Net
 — Management and Advisory Fees, Net are comprised of management fees, including base management fees, transaction and other fees and advisory fees net of management fee reductions and offsets.
Blackstone earns base management fees from limited partners of funds in each of its managed funds, at a fixed percentage of assets under management, net asset value, total assets, committed capital or invested capital. These customer contracts require Blackstone to provide investment management services, which represents a performance obligation that Blackstone satisfies over time. Management fees are a form of variable consideration because the fees Blackstone is entitled to vary based on fluctuations in the basis for the management fee. The amount recorded as revenue is generally determined at the end of the period because these management fees are payable on a regular basis (typically quarterly) and are not subject to clawback once paid.
Transaction, advisory and other fees are principally fees charged to the limited partners of funds indirectly through the managed funds and portfolio companies. The investment advisory agreements generally require that the investment adviser reduce the amount of management fees payable by the limited partners to Blackstone (“management fee reductions”) by an amount equal to a portion of the transaction and other fees paid to Blackstone by the portfolio companies. The amount of the reduction varies by fund, the type of fee paid by the portfolio company and the previously incurred expenses of the fund. These fees and associated management fee reductions are a component of the transaction price for Blackstone’s performance obligation to provide investment management services to the limited partners of funds and are recognized as changes to the transaction price in the period in which they are charged and the services are performed.
Management fee offsets are reductions to management fees payable by the limited partners of the Blackstone Funds, which are based on the amount such limited partners reimburse the Blackstone Funds or Blackstone primarily for placement fees. Providing investment management services requires Blackstone to arrange for services on behalf of its customers. In those situations where Blackstone is acting as an agent on behalf of the limited partners of funds, it presents the cost of services as net against management fee revenue. In all other situations, Blackstone is primarily responsible for fulfilling the services and is therefore acting as a principal for those arrangements. As a result, the cost of those services is presented as Compensation or General, Administrative and Other expense, as appropriate, with any reimbursement from the limited partners of the funds recorded as Management and Advisory Fees, Net. In cases where the limited partners of the funds are determined
1
8
Table of Contents
The Blackstone Group Inc.
Notes to Condensed Consolidated Financial Statements (Unaudited) - Continued
(All Dollars Are in Thousands, Except Share and Per Share Data, Except Where Noted)
to be the customer in an arrangement, placement fees may be capitalized as a cost to acquire a customer contract. Capitalized placement fees are amortized over the life of the customer contract, are recorded within Other Assets in the Consolidated Statements of Financial Condition and amortization is recorded within General, Administrative and Other within the Consolidated Statements of Operations.
Accrued but unpaid Management and Advisory Fees, net of management fee reductions and management fee offsets, as of the reporting date are included in Accounts Receivable or Due from Affiliates in the Condensed Consolidated Statements of Financial Condition.
Notes to Condensed Consolidated Financial Statements (Unaudited)
(All Dollars are in Thousands, Except Share and Per Share Data, Except Where Noted)
1.    Organization
The Blackstone Group Inc., together with its consolidated subsidiaries (“Blackstone” or the “Company”), is one of the world’s leading investment firms. Blackstone’s asset management business includes investment vehicles focused on real estate, private equity, public debt and equity, growth equity, opportunistic, non-investment grade credit, real assets and secondary funds, all on a global basis. “Blackstone Funds” refers to the funds and other vehicles that are managed by Blackstone. Blackstone’s business is organized into
4 segments: Real Estate, Private Equity, Hedge Fund Solutions and Credit & Insurance.
Effective August 6, 2021, The Blackstone Group Inc. changed its name to Blackstone Inc. Blackstone Inc. was initially formed as The Blackstone Group L.P., a Delaware limited partnership, on March 12, 2007. Prior to its conversion (effective July 1, 2019) to a Delaware corporation (the “Conversion”), Blackstone Inc. was managed and operated by Blackstone Group Management L.L.C., which is wholly owned by Blackstone’s senior managing directors and controlled by 
1of Blackstone’s founders, Stephen A. Schwarzman (the “Founder”). Effective February 26, 2021, the Certificate of Incorporation of Blackstone Inc. was amended and restated to rename Blackstone’s Class A Common stock as “common stock” and reclassify Blackstone’s Class B common stock and Class C common stock into a new Series I preferred stock and a new Series II preferred stock, respectively. All references to common stock, series I preferred stock and series II preferred stock prior to such date refer to Class A, Class B and Class C common stock, respectively. See Note 13. “Income Taxes” and Note 14. “Earnings Per Share and Stockholders’ Equity — Stockholders’ Equity.”
The activities of Blackstone are conducted through its holding partnerships: Blackstone Holdings I L.P., Blackstone Holdings AI L.P., Blackstone Holdings II L.P., Blackstone Holdings III L.P. and Blackstone Holdings IV L.P. (collectively, “Blackstone Holdings,” “Blackstone Holdings Partnerships” or the “Holding Partnerships”). Blackstone, through its wholly owned subsidiaries, is the sole general partner of each of the Holding Partnerships. Generally, holders of the limited partner interests in the Holding Partnerships may, four times each year, exchange their limited partnership interests (“Partnership Units”) for Blackstone common stock, on a one-to-one basis, exchanging one Partnership Unit from each of the Holding Partnerships for one share of Blackstone common stock.
2.    Summary of Significant Accounting Policies
Incentive Fees
 — Contractual fees earned based on the performance of Blackstone Funds (“Incentive Fees”) are a form of variable consideration in Blackstone’s contracts with customers to provide investment management services. Incentive Fees are earned based on fund performance during the period, subject to the achievement of minimum return levels, or high water marks, in accordance with the respective terms set out in each fund’s governing agreements. Incentive Fees will not be recognized as revenue until (a) it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur, or (b) the uncertainty associated with the variable consideration is subsequently resolved. Incentive Fees are typically recognized as revenue when realized at the end of the measurement period. Once realized, such fees are not subject to clawback or reversal. Accrued but unpaid Incentive Fees charged directly to investors in Blackstone Funds as of the reporting date are recorded within Due from Affiliates in the Condensed Consolidated Statements of Financial Condition.33,20715,30069,33127,461
Investment Income (Loss)
 —
Performance Allocations
Realized
808,620101,9101,342,987269,440
Unrealized
2,697,1701,067,9235,161,667(2,385,158) 
Principal Investments
Realized
152,06061,102507,098109,797
Unrealized
328,835331,762968,150(627,603) 
Total Investment Income (Loss) represents the unrealized
3,986,6851,562,6977,979,902(2,633,524) 
Interest and realized gainsDividend Revenue
31,01723,92462,42959,008
Other
27,896(55,580) 88,20082,600
Total Revenues
5,291,3542,516,06910,590,226(559,895) 
Expenses
Compensation and losses on Blackstone’s Performance Allocations and Principal Investments.Benefits
In carry fund structures, Blackstone, through its subsidiaries, invests alongside its limited partners in a partnership and is entitled to its
pro-rata
share of the results of the fund (a
“pro-rata
allocation”). In addition to a
pro-rata
allocation, and assuming certain investment returns are achieved, Blackstone is entitled to a disproportionate allocation of the income otherwise allocable to the limited partners, commonly referred to as carried interest (“Performance Allocations”).Compensation
507,104458,4571,049,742935,000
Incentive Fee Compensation
14,4318,43227,75614,954
Performance Allocations are made to the general partner based on cumulative fund performance to date, subject to a preferred return to limited partners. At the end of each reporting period, Blackstone calculates the balance of accrued Performance Allocations (“Accrued Performance Allocations”Compensation
Realized
347,42338,569560,450110,992
Unrealized
1,150,219454,8132,200,188(942,565) that would be due to Blackstone for each fund, pursuant to the fund agreements, as if the fair value of the underlying investments were realized as of such date, irrespective of whether such amounts have been realized. As the fair value of underlying investments varies between reporting periods, it is necessary to make adjustments to amounts recorded as Accrued Performance Allocations to reflect either (a) positive performance resulting in an increase in the Accrued Performance Allocation to the general partner or (b) negative performance that would cause the amount due to Blackstone to be less than the amount previously recognized as revenue, resulting in a negative adjustment to the Accrued Performance Allocation to the general partner. In each scenario, it is necessary to calculate the Accrued Performance Allocation on cumulative results compared to the Accrued Performance Allocation recorded to date and make the required positive or negative adjustments. Blackstone ceases to record negative Performance Allocations once previously Accrued Performance Allocations for such fund have been fully reversed. Blackstone is not obligated to pay guaranteed returns or hurdles, and therefore, cannot have negative Performance Allocations over the life of a fund. Accrued Performance Allocations as of the reporting date are reflected in Investments in the Condensed Consolidated Statements of Financial Condition.
Performance Allocations are realized when an underlying investment is profitably disposed of and the fund’s cumulative returns are in excess of the preferred return or, in limited instances, after certain thresholds for return of capital are met. Performance Allocations are subject to clawback to the extent that the Performance Allocation received to date exceeds the amount due to Blackstone based on cumulative results. As such, the accrual for potential repayment of previously received Performance Allocations, which is a component of Due to Affiliates, represents all amounts previously distributed to Blackstone Holdings and
non-controlling
interest holders that would need to be repaid to the Blackstone carry funds if the Blackstone carry funds were to be liquidated based on
 
1
9
Total Compensation and Benefits
2,019,177960,2713,838,136118,381
General, Administrative and Other
205,057169,051390,179326,617
Interest Expense
44,32239,27689,30580,920
Fund Expenses
3,7744,0836,1578,688
Total Expenses
2,272,3301,172,6814,323,777534,606
Table of Contents
Other Income (Loss)
Change in Tax Receivable Agreement Liability
(392) 762,518(519) 
Net Gains (Losses) from Fund Investment Activities
127,116158,297247,469(169,077) 
Total Other Income (Loss)
126,724158,373249,987(169,596) 
Income (Loss) Before Provision (Benefit) for Taxes
3,145,7481,501,7616,516,436(1,264,097) 
Provision (Benefit) for Taxes
288,250147,415287,803(11,288) 
Net Income (Loss)
2,857,4981,354,3466,228,633(1,252,809) 
Net Income (Loss) Attributable to Redeemable Non-Controlling Interests in Consolidated Entities
637(3,426) 1,266(18,895) 
Net Income (Loss) Attributable to Non-Controlling Interests in Consolidated Entities
431,516294,378818,366(350,699) 
Net Income (Loss) Attributable to Non-Controlling Interests in Blackstone Holdings
1,116,193495,1282,351,977(384,989) 
Net Income (Loss) Attributable to The Blackstone Group Inc.
 $1,309,152 $568,266 $3,057,024 $(498,226) 
Notes to Condensed Consolidated Financial Statements (Unaudited) - Continued
(All Dollars Are in Thousands, Except Share andNet Income (Loss) Per Share Data, Except Where Noted)of Common Stock
Basic
 $1.82 $0.81 $4.27 $(0.74) 
Diluted
 $1.82 $0.81 $4.27 $(0.74) 
Weighted-Average Shares of Common Stock Outstanding
Basic
721,141,954698,534,168715,121,029677,041,769
Diluted
      721,265,180      1,204,411,957      715,622,208      677,041,769
See notes to condensed consolidated financial statements.
8 
Table of Contents
The Blackstone Group Inc.
Condensed Consolidated Statements of Comprehensive Income (Unaudited)
(Dollars in Thousands)
                                                                                                             
   
Three Months Ended
 
Six Months Ended
   
June 30,
 
June 30,
   
2021
  
2020
 
2021
  
2020
Net Income (Loss)
   $2,857,498    $1,354,346   $6,228,633    $(1,252,809) 
Other Comprehensive Income (Loss), Currency Translation Adjustment
   2,124    8,316   10,055    (11,903) 
   
 
 
 
  
 
 
 
 
 
 
 
  
 
 
 
Comprehensive Income (Loss)
   2,859,622    1,362,662   6,238,688    (1,264,712) 
   
 
 
 
  
 
 
 
 
 
 
 
  
 
 
 
Less:
                   
Comprehensive Income (Loss) Attributable to Redeemable Non-Controlling Interests in Consolidated Entities
   637    (3,426)   1,266    (18,895) 
Comprehensive Income (Loss) Attributable to Non-Controlling Interests in Consolidated Entities
   431,516    294,378   818,366    (350,699) 
Comprehensive Income (Loss) Attributable to Non-Controlling Interests in Blackstone Holdings
   1,117,108    498,669   2,356,446    (388,629) 
   
 
 
 
  
 
 
 
 
 
 
 
  
 
 
 
Comprehensive Income (Loss) Attributable to Non-Controlling Interests
   1,549,261    789,621   3,176,078    (758,223) 
   
 
 
 
  
 
 
 
 
 
 
 
  
 
 
 
Comprehensive Income (Loss) Attributable to The Blackstone Group Inc.
   $      1,310,361    $      573,041   $      3,062,610    $      (506,489) 
   
 
 
 
  
 
 
 
 
 
 
 
  
 
 
 
See notes to condensed consolidated financial statements.
9
Table of Contents
The Blackstone Group Inc.
Condensed Consolidated Statements of Changes in Equity (Unaudited)
(Dollars in Thousands, Except Share Data)
                                                                                                                                                       
  
Shares of

The Blackstone

Group Inc. (a)
 
The Blackstone Group Inc. (a)
        
          
Accumulated
         
Redeemable
          
Other
   
Non-
 
Non-
   
Non-
          
Compre-
   
Controlling
 
Controlling
   
Controlling
      
Additional
 
Retained
 
hensive
 
Total
 
Interests in
 
Interests in
   
Interests in
  
Common
 
Common
 
Paid-in-
 
Earnings
 
Income
 
Stockholders’
 
Consolidated
 
Blackstone
 
Total
 
Consolidated
  
Stock
 
Stock
 
Capital
 
(Deficit)
 
(Loss)
 
Equity
 
Entities
 
Holdings
 
Equity
 
Entities
Balance at March 31, 2021
  690,569,563  $7  $6,446,829  $1,408,768  $(11,454)  $7,844,150  $4,390,594  $4,524,898  $16,759,642  $65,546 
Net Income
  —   —   —   1,309,152   —   1,309,152   431,516   1,116,193   2,856,861   637 
Currency Translation Adjustment
  —   —   —   —   1,209   1,209   —   915   2,124   — 
Capital Contributions
  —   —   —   —   —   —   204,933   2,551   207,484   — 
Capital Distributions
  —   —   —   (584,126)   —   (584,126)   (166,518)   (441,687)   (1,192,331)   (615) 
Transfer of Non-Controlling Interests in Consolidated Entities
  —   —   —   —   —   —   (83)   —   (83)   — 
Deferred Tax Effects Resulting from Acquisition of Ownership Interests from Non-Controlling Interest Holders
  —   —   9,535   —   —   9,535   —   —   9,535   — 
Equity-Based Compensation
  —   —   77,083   —   —   77,083   —   55,046   132,129   — 
Net Delivery of Vested Blackstone Holdings Partnership Units and Shares of Common Stock
  273,659   —   (4,860)   —   —   (4,860)   —   —   (4,860)   — 
Repurchase of Shares of Common Stock and Blackstone Holdings Partnership Units
  (3,174,598)   —   (289,055)   —   —   (289,055)   —   —   (289,055)   — 
Change in The Blackstone Group Inc.’s Ownership Interest
  —   —   11,322   —   —   11,322   —   (11,322)   —   — 
Conversion of Blackstone Holdings Partnership Units to Shares of Common Stock
  3,424,839   —   31,746   —   —   31,746   —   (31,746)   —   — 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance at June 30, 2021
  691,093,463  $7  $6,282,600  $2,133,794  $(10,245)  $8,406,156  $4,860,442  $5,214,848  $18,481,446  $65,568 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(a)
During the period presented, Blackstone also had one share outstanding of each of Series I and Series II preferred stock, with par value of each less than one cent.
 
continued...
See notes to condensed consolidated financial statements.
10
Table of Contents
The Blackstone Group Inc.
Condensed Consolidated Statements of Changes in Equity (Unaudited)
(Dollars in Thousands, Except Share Data)
                                                                                                                                                       
  
Shares of

The Blackstone

Group Inc. (a)
 
The Blackstone Group Inc. (a)
        
          
Accumulated
         
Redeemable
          
Other
   
Non-
 
Non-
   
Non-
          
Compre-
   
Controlling
 
Controlling
   
Controlling
      
Additional
 
Retained
 
hensive
 
Total
 
Interests in
 
Interests in
   
Interests in
  
Common
 
Common
 
Paid-in-
 
Earnings
 
Income
 
Stockholders’
 
Consolidated
 
Blackstone
 
Total
 
Consolidated
  
Stock
 
Stock
 
Capital
 
(Deficit)
 
(Loss)
 
Equity
 
Entities
 
Holdings
 
Equity
 
Entities
Balance at March 31, 2020
  676,630,489  $7  $6,298,093  $(871,948)  $(41,533)  $5,384,619  $3,591,160  $2,530,263  $11,506,042  $72,066 
Net Income (Loss)
  —   —   —   568,266   —   568,266��  294,378   495,128   1,357,772   (3,426) 
Currency Translation Adjustment
  —   —   —   —   4,775   4,775   —   3,541   8,316   — 
Capital Contributions
  —   —   —   —   —   —   170,282   —   170,282   — 
Capital Distributions
  —   —   —   (270,613)   —   (270,613)   (155,525)   (203,354)   (629,492)   (76) 
Transfer of Non-Controlling Interests in Consolidated Entities
  —   —   —   —   —   —   134   —   134   — 
Deferred Tax Effects Resulting from Acquisition of Ownership Interests from Non-Controlling Interest Holders
  —   —   2,806   —   —   2,806   —   —   2,806   — 
Equity-Based Compensation
  —   —   73,455   —   —   73,455   —   55,442   128,897   — 
Net Delivery of Vested Blackstone Holdings Partnership Units and Shares of Common Stock
  56,662   —   (2,398)   —   —   (2,398)   —   —   (2,398)   — 
Repurchase of Shares of Common Stock and Blackstone Holdings Partnership Units
  (2,000,000)   —   (114,893)   —   —   (114,893)   —   —   (114,893)   — 
Change in The Blackstone Group Inc.’s Ownership Interest
  —   —   4,006   —   —   4,006   —   (4,006)   —   — 
Conversion of Blackstone Holdings Partnership Units to Shares of Common Stock
  2,187,432   —   10,971   —   —   10,971   —   (10,971)   —   — 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance at June 30, 2020
  676,874,583  $7  $6,272,040  $(574,295)  $(36,758)  $5,660,994  $3,900,429  $2,866,043  $12,427,466  $68,564 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(a)
During the period presented, Blackstone also had one share outstanding of each of Series I and Series II preferred stock, with par value of each less than one cent.
continued...
See notes to condensed consolidated financial statements.
11
Table of Contents
The Blackstone Group Inc.
Condensed Consolidated Statements of Changes in Equity (Unaudited)
(Dollars in Thousands, Except Share Data)
                                                                                                                                                       
  
Shares of

The Blackstone

Group Inc. (a)
 
The Blackstone Group Inc. (a)
        
          
Accumulated
         
Redeemable
          
Other
   
Non-
 
Non-
   
Non-
          
Compre-
   
Controlling
 
Controlling
   
Controlling
      
Additional
 
Retained
 
hensive
 
Total
 
Interests in
 
Interests in
   
Interests in
  
Common
 
Common
 
Paid-in-
 
Earnings
 
Income
 
Stockholders’
 
Consolidated
 
Blackstone
 
Total
 
Consolidated
  
Stock
 
Stock
 
Capital
 
(Deficit)
 
(Loss)
 
Equity
 
Entities
 
Holdings
 
Equity
 
Entities
Balance at December 31, 2020
  683,875,544  $7  $6,332,105  $335,762  $(15,831)  $6,652,043  $4,042,157  $3,831,148  $14,525,348  $65,161 
Net Income
  —   —   —   3,057,024   —   3,057,024   818,366   2,351,977   6,227,367   1,266 
Currency Translation Adjustment
  —   —   —   —   5,586   5,586   —   4,469   10,055   — 
Capital Contributions
  —   —   —   —   —   —   412,230   5,259   417,489   — 
Capital Distributions
  —   —   —   (1,258,992)   —   (1,258,992)   (408,718)   (1,024,657)   (2,692,367)   (859) 
Transfer of Non-Controlling Interests in Consolidated Entities
  —   —   —   —   —   —   (3,593)   —   (3,593)   — 
Deferred Tax Effects Resulting from Acquisition of Ownership Interests from Non-Controlling Interest Holders
  —   —   19,714   —   —   19,714   —   —   19,714   — 
Equity-Based Compensation
  —   —   168,606   —   —   168,606   —   120,941   289,547   — 
Net Delivery of Vested Blackstone Holdings Partnership Units and Shares of Common Stock
  1,986,972   —   (23,059)   —   —   (23,059)   —   —   (23,059)   — 
Repurchase of Shares of Common Stock and Blackstone Holdings Partnership Units
  (3,174,598)   —   (289,055)   —   —   (289,055)   —   —   (289,055)   — 
Change in The Blackstone Group Inc.’s Ownership Interest
  —   —   3,877   —   —   3,877   —   (3,877)   —   — 
Conversion of Blackstone Holdings Partnership Units to Shares of Common Stock
  8,405,545   —   70,412   —   —   70,412   —   (70,412)   —   — 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance at June 30, 2021
  691,093,463  $7  $6,282,600  $2,133,794  $(10,245)  $8,406,156  $4,860,442  $5,214,848  $18,481,446  $65,568 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(a)
During the period presented, Blackstone also had one share outstanding of each of Series I and Series II preferred stock, with par value of each less than one cent.
continued...
See notes to condensed consolidated financial statements.
12
Table of Contents
The Blackstone Group Inc.
Condensed Consolidated Statements of Changes in Equity (Unaudited)
(Dollars in Thousands, Except Share Data)
                                                                                                                                                       
  
Shares of
The Blackstone

Group Inc. (a)
 
The Blackstone Group Inc. (a)
        
          
Accumulated
         
Redeemable
          
Other
   
Non-
 
Non-
   
Non-
          
Compre-
   
Controlling
 
Controlling
   
Controlling
      
Additional
 
Retained
 
hensive
 
Total
 
Interests in
 
Interests in
   
Interests in
  
Common
 
Common
 
Paid-in-
 
Earnings
 
Income
 
Stockholders’
 
Consolidated
 
Blackstone
 
Total
 
Consolidated
  
Stock
 
Stock
 
Capital
 
(Deficit)
 
(Loss)
 
Equity
 
Entities
 
Holdings
 
Equity
 
Entities
Balance at December 31, 2019
  671,157,692  $7  $6,428,647  $609,625  $(28,495)  $7,009,784  $4,186,069  $3,819,548  $15,015,401  $87,651 
Net Income (Loss)
  —   —   —   (498,226)   —   (498,226)   (350,699)   (384,989)   (1,233,914)   (18,895) 
Currency Translation Adjustment
  —   —   —   —   (8,263)   (8,263)   —   (3,640)   (11,903)   — 
Capital Contributions
  —   —   —   —   —   —   372,961   —   372,961   — 
Capital Distributions
  —   —   —   (685,694)   —   (685,694)   (305,797)   (569,055)   (1,560,546)   (192) 
Transfer of Non-Controlling Interests in Consolidated Entities
  —   —   —   —   —   —   (2,105)   —   (2,105)   — 
Deferred Tax Effects Resulting from Acquisition of Ownership Interests from Non-Controlling Interest Holders
  —   —   15,200   —   —   15,200   —   —   15,200   — 
Equity-Based Compensation
  —   —   124,279   —   —   124,279   —   94,100   218,379   — 
Net Delivery of Vested Blackstone Holdings Partnership Units and Shares of Common Stock
  1,740,156   —   (17,639)   —   —   (17,639)   —   (7)   (17,646)   — 
Repurchase of Shares of Common Stock and Blackstone Holdings Partnership Units
  (6,969,237)   —   (368,361)   —   —   (368,361)   —   —   (368,361)   — 
Change in The Blackstone Group Inc.’s Ownership Interest
  —   —   13,785   —   —   13,785   —   (13,785)   —   — 
Conversion of Blackstone Holdings Partnership Units to Shares of Common Stock
  10,945,972   —   76,129   —   —   76,129   —   (76,129)   —   — 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance at June 30, 2020
  676,874,583  $7  $6,272,040  $(574,295)  $(36,758)  $5,660,994  $3,900,429  $2,866,043  $12,427,466  $68,564 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(a)
During the period presented, Blackstone also had one share outstanding of each of Series I and Series II preferred stock, with par value of each less than one cent.
See notes to condensed consolidated financial statements.
13 
Table of Contents
The Blackstone Group Inc.
Condensed Consolidated Statements of Cash Flows (Unaudited)
(Dollars in Thousands)
                                                       
   
Six Months Ended June 30,
   
2021
 
2020
Operating Activities
         
Net Income (Loss)
   $6,228,633   $(1,252,809) 
Adjustments to Reconcile Net Income (Loss) to Net Cash Provided by Operating Activities
         
Blackstone Funds Related
         
Net Realized Gains on Investments
   (1,949,167)   (261,870) 
Changes in Unrealized (Gains) Losses on Investments
   (1,140,654)  744,335 
Non-Cash Performance Allocations
   (5,161,667)  2,385,158 
Non-Cash Performance Allocations and Incentive Fee Compensation
   2,780,561   (821,798) 
Equity-Based Compensation Expense
   305,422   238,721 
Amortization of Intangibles
   37,476   35,500 
Other Non-Cash Amounts Included in Net Income (Loss)
   (153,350)  (175,677) 
Cash Flows Due to Changes in Operating Assets and Liabilities
         
Accounts Receivable
   346,505   562,123 
Due from Affiliates
   109,163   203,698 
Other Assets
   (55,225)   (120,679) 
Accrued Compensation and Benefits
   (440,034)   (443,534) 
Securities Sold, Not Yet Purchased
   (14,925)   (26,840) 
Accounts Payable, Accrued Expenses and Other Liabilities
   13,373   (182,034) 
Repurchase Agreements
   (19,562)   (73,498) 
Due to Affiliates
   19,836   85,380 
Investments Purchased
   (2,718,024)  (3,786,662) 
Cash Proceeds from Sale of Investments
   5,007,907   4,381,268 
   
 
 
 
 
 
 
 
Net Cash Provided by Operating Activities
       3,196,268       1,490,782 
   
 
 
 
 
 
 
 
Investing Activities
         
Purchase of Furniture, Equipment and Leasehold Improvements
   (34,811)   (25,453) 
   
 
 
 
 
 
 
 
Net Cash Used in Investing Activities
   (34,811)   (25,453) 
   
 
 
 
 
 
 
 
Financing Activities
         
Distributions to Non-Controlling Interest Holders in Consolidated Entities
   (409,577)   (305,914) 
Contributions from Non-Controlling Interest Holders in Consolidated Entities
   407,738   355,599 
Payments Under Tax Receivable Agreement
   (51,366)   (73,881) 
Net Settlement of Vested Common Stock and Repurchase of Common Stock and Blackstone Holdings Partnership Units
   (312,114)   (386,007) 
continued...
See notes to condensed consolidated financial statements.
14
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The Blackstone Group Inc.
Condensed Consolidated Statements of Cash Flows (Unaudited)
(Dollars in Thousands)
                                                       
   
Six Months Ended June 30,
   
2021
 
2020
Financing Activities (Continued)
         
Repayment and Repurchase of Loans Payable
   $0   $(1,896) 
Dividends/Distributions to Shareholders and Unitholders
   (2,278,390)   (1,254,749) 
   
 
 
 
 
 
 
 
Net Cash Used in Financing Activities
   (2,643,709)   (1,666,848) 
   
 
 
 
 
 
 
 
Effect of Exchange Rate Changes on Cash and Cash Equivalents and Cash Held by Blackstone Funds and Other
   (5,084)   (2,419) 
   
 
 
 
 
 
 
 
Cash and Cash Equivalents and Cash Held by Blackstone Funds and Other
         
Net Increase (Decrease)
   512,664   (203,938) 
Beginning of Period
   2,064,456   2,523,651 
   
 
 
 
 
 
 
 
End of Period
   $    2,577,120   $    2,319,713 
   
 
 
 
 
 
 
 
   
Supplemental Disclosure of Cash Flows Information
         
Payments for Interest
   $102,524   $93,645 
   
 
 
 
 
 
 
 
Payments for Income Taxes
   $289,244   $42,330 
   
 
 
 
 
 
 
 
Supplemental Disclosure of Non-Cash Investing and Financing Activities
         
Non-Cash Contributions from Non-Controlling Interest Holders
   $6,076   $16,033 
   
 
 
 
 
 
 
 
Non-Cash Distributions to Non-Controlling Interest Holders
   $0   $(75) 
   
 
 
 
 
 
 
 
Transfer of Interests to Non-Controlling Interest Holders
   $(3,593)   $(2,105) 
   
 
 
 
 
 
 
 
Change in The Blackstone Group Inc.’s Ownership Interest
   $3,877   $13,785 
   
 
 
 
 
 
 
 
Net Settlement of Vested Common Stock
   $124,386   $71,978 
   
 
 
 
 
 
 
 
Conversion of Blackstone Holdings Units to Common Stock
   $70,412   $76,129 
   
 
 
 
 
 
 
 
Acquisition of Ownership Interests from Non-Controlling Interest Holders
         
Deferred Tax Asset
   $(167,433)  $(148,838) 
   
 
 
 
 
 
 
 
Due to Affiliates
   $147,719   $133,638 
   
 
 
 
 
 
 
 
Equity
   $19,714   $15,200 
   
 
 
 
 
 
 
 
The following table provides a reconciliation of Cash and Cash Equivalents and Cash Held by Blackstone Funds and Other reported within the Condensed Consolidated Statements of Financial Condition:
                                                       
   
June 30,
  
December 31,
   
2021
  
2020
Cash and Cash Equivalents
   $2,467,444    $1,999,484 
Cash Held by Blackstone Funds and Other
   109,676    64,972 
   
 
 
 
  
 
 
 
    $    2,577,120    $    2,064,456 
   
 
 
 
  
 
 
 
See notes to condensed consolidated financial statements.
15
Table of Contents
The Blackstone Group Inc.
Notes to Condensed Consolidated Financial Statements (Unaudited)
(All Dollars are in Thousands, Except Share and Per Share Data, Except Where Noted)
1.    Organization
The Blackstone Group Inc., together with its consolidated subsidiaries (“Blackstone” or the “Company”), is one of the world’s leading investment firms. Blackstone’s asset management business includes investment vehicles focused on real estate, private equity, public debt and equity, growth equity, opportunistic, non-investment grade credit, real assets and secondary funds, all on a global basis. “Blackstone Funds” refers to the funds and other vehicles that are managed by Blackstone. Blackstone’s business is organized into
4 segments: Real Estate, Private Equity, Hedge Fund Solutions and Credit & Insurance.
Effective August 6, 2021, The Blackstone Group Inc. changed its name to Blackstone Inc. Blackstone Inc. was initially formed as The Blackstone Group L.P., a Delaware limited partnership, on March 12, 2007. Prior to its conversion (effective July 1, 2019) to a Delaware corporation (the “Conversion”), Blackstone Inc. was managed and operated by Blackstone Group Management L.L.C., which is wholly owned by Blackstone’s senior managing directors and controlled by 
1of Blackstone’s founders, Stephen A. Schwarzman (the “Founder”). Effective February 26, 2021, the Certificate of Incorporation of Blackstone Inc. was amended and restated to rename Blackstone’s Class A Common stock as “common stock” and reclassify Blackstone’s Class B common stock and Class C common stock into a new Series I preferred stock and a new Series II preferred stock, respectively. All references to common stock, series I preferred stock and series II preferred stock prior to such date refer to Class A, Class B and Class C common stock, respectively. See Note 13. “Income Taxes” and Note 14. “Earnings Per Share and Stockholders’ Equity — Stockholders’ Equity.”
The activities of Blackstone are conducted through its holding partnerships: Blackstone Holdings I L.P., Blackstone Holdings AI L.P., Blackstone Holdings II L.P., Blackstone Holdings III L.P. and Blackstone Holdings IV L.P. (collectively, “Blackstone Holdings,” “Blackstone Holdings Partnerships” or the “Holding Partnerships”). Blackstone, through its wholly owned subsidiaries, is the sole general partner of each of the Holding Partnerships. Generally, holders of the limited partner interests in the Holding Partnerships may, four times each year, exchange their limited partnership interests (“Partnership Units”) for Blackstone common stock, on a one-to-one basis, exchanging one Partnership Unit from each of the Holding Partnerships for one share of Blackstone common stock.
2.    Summary of Significant Accounting Policies
Basis of Presentation
The accompanying unaudited condensed consolidated financial statements of Blackstone have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and the instructions to Form 10-Q. The condensed consolidated financial statements, including these notes, are unaudited and exclude some of the disclosures required in audited financial statements. Management believes it has made all necessary adjustments (consisting of only normal recurring items) so that the condensed consolidated financial statements are presented fairly and that estimates made in preparing its condensed consolidated financial statements are reasonable and prudent. The operating results presented for interim periods are not necessarily indicative of the results that may be expected for any other interim period or for the entire year. These condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements included in Blackstone’s Annual Report on Form 10-K for the year ended December 31, 2020 filed with the Securities and Exchange Commission.
The condensed consolidated financial statements include the accounts of Blackstone, its wholly owned or majority owned subsidiaries, the consolidated entities which are considered to be variable interest entities and for which Blackstone is considered the primary beneficiary, and certain partnerships or similar entities which are not considered variable interest entities but in which the general partner is determined to have control.
All intercompany balances and transactions have been eliminated in consolidation.
16
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The Blackstone Group Inc.
Notes to Condensed Consolidated Financial Statements (Unaudited) - Continued
(All Dollars are in Thousands, Except Share and Per Share Data, Except Where Noted)
Restructurings within consolidated collateralized loan obligations (“CLOs”) are treated as investment purchases or sales, as applicable, in the Condensed Consolidated Statements of Cash Flows.
COVID-19
and Global Economic Market Conditions
The ongoing novel coronavirus
(“COVID-19”)
pandemic has caused disruption in the U.S. and global economies. More recently, broad-based economic recovery and activity in the U.S. have accelerated following meaningful progress on vaccine distribution, the easing of shutdowns and other restrictions and support from previously implemented fiscal and monetary stimulus. Nevertheless, both in the U.S. and abroad, there is continued uncertainty regarding the trajectory of a continuing recovery, particularly given the strength of the Delta variant. Accordingly, this recovery remains uneven with dispersion across sectors and regions. The estimates and assumptions underlying these consolidated financial statements are based on the information available as of June 30, 2021 for the current period and as of June 30, 2020 or December 31, 2020, as applicable. The estimates and assumptions include judgments about financial market and economic conditions which have changed, and may continue to change, over time.
Consolidation
Blackstone consolidates all entities that it controls through a majority voting interest or otherwise, including those Blackstone Funds in which the general partner has a controlling financial interest. Blackstone has a controlling financial interest in Blackstone Holdings because the limited partners do not have the right to dissolve the partnerships or have substantive kick-out rights or participating rights that would overcome the control held by Blackstone. Accordingly, Blackstone consolidates Blackstone Holdings and records non-controlling interests to reflect the economic interests of the limited partners of Blackstone Holdings.
In addition, Blackstone consolidates all variable interest entities (“VIE”) for which it is the primary beneficiary. An enterprise is determined to be the primary beneficiary if it holds a controlling financial interest. A controlling financial interest is defined as (a) the power to direct the activities of a VIE that most significantly impact the entity’s economic performance and (b) the obligation to absorb losses of the entity or the right to receive benefits from the entity that could potentially be significant to the VIE. The consolidation guidance requires an analysis to determine (a) whether an entity in which Blackstone holds a variable interest is a VIE and (b) whether Blackstone’s involvement, through holding interests directly or indirectly in the entity or contractually through other variable interests, would give it a controlling financial interest. Performance of that analysis requires the exercise of judgment.
Blackstone determines whether it is the primary beneficiary of a VIE at the time it becomes involved with a variable interest entity and continuously reconsiders that conclusion. In determining whether Blackstone is the primary beneficiary, Blackstone evaluates its control rights as well as economic interests in the entity held either directly or indirectly by Blackstone. The consolidation analysis can generally be performed qualitatively; however, if it is not readily apparent that Blackstone is not the primary beneficiary, a quantitative analysis may also be performed. Investments and redemptions (either by Blackstone, affiliates of Blackstone or third parties) or amendments to the governing documents of the respective Blackstone Funds could affect an entity’s status as a VIE or the determination of the primary beneficiary. At each reporting date, Blackstone assesses whether it is the primary beneficiary and will consolidate or deconsolidate accordingly.
Assets of consolidated VIEs that can only be used to settle obligations of the consolidated VIE and liabilities of a consolidated VIE for which creditors (or beneficial interest holders) do not have recourse to the general credit of Blackstone are presented in a separate section in the Condensed Consolidated Statements of Financial Condition.
Blackstone’s other disclosures regarding VIEs are discussed in Note 9. “Variable Interest Entities.”
17
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The Blackstone Group Inc.
Notes to Condensed Consolidated Financial Statements (Unaudited) - Continued
(All Dollars are in Thousands, Except Share and Per Share Data, Except Where Noted)
Revenue Recognition
Revenues primarily consist of management and advisory fees, incentive fees, investment income, interest and dividend revenue and other.
Management and advisory fees and incentive fees are accounted for as contracts with customers. Under the guidance for contracts with customers, an entity is required to (a) identify the contract(s) with a customer, (b) identify the performance obligations in the contract, (c) determine the transaction price, (d) allocate the transaction price to the performance obligations in the contract, and (e) recognize revenue when (or as) the entity satisfies a performance obligation. In determining the transaction price, an entity may include variable consideration only to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized would not occur when the uncertainty associated with the variable consideration is resolved. See Note 18. “Segment Reporting” for a disaggregated presentation of revenues from contracts with customers.
Management and Advisory Fees, Net
 — Management and Advisory Fees, Net are comprised of management fees, including base management fees, transaction and other fees and advisory fees net of management fee reductions and offsets.
Blackstone earns base management fees from limited partners of funds in each of its managed funds, at a fixed percentage of assets under management, net asset value, total assets, committed capital or invested capital. These customer contracts require Blackstone to provide investment management services, which represents a performance obligation that Blackstone satisfies over time. Management fees are a form of variable consideration because the fees Blackstone is entitled to vary based on fluctuations in the basis for the management fee. The amount recorded as revenue is generally determined at the end of the period because these management fees are payable on a regular basis (typically quarterly) and are not subject to clawback once paid.
Transaction, advisory and other fees are principally fees charged to the limited partners of funds indirectly through the managed funds and portfolio companies. The investment advisory agreements generally require that the investment adviser reduce the amount of management fees payable by the limited partners to Blackstone (“management fee reductions”) by an amount equal to a portion of the transaction and other fees paid to Blackstone by the portfolio companies. The amount of the reduction varies by fund, the type of fee paid by the portfolio company and the previously incurred expenses of the fund. These fees and associated management fee reductions are a component of the transaction price for Blackstone’s performance obligation to provide investment management services to the limited partners of funds and are recognized as changes to the transaction price in the period in which they are charged and the services are performed.
Management fee offsets are reductions to management fees payable by the limited partners of the Blackstone Funds, which are based on the amount such limited partners reimburse the Blackstone Funds or Blackstone primarily for placement fees. Providing investment management services requires Blackstone to arrange for services on behalf of its customers. In those situations where Blackstone is acting as an agent on behalf of the limited partners of funds, it presents the cost of services as net against management fee revenue. In all other situations, Blackstone is primarily responsible for fulfilling the services and is therefore acting as a principal for those arrangements. As a result, the cost of those services is presented as Compensation or General, Administrative and Other expense, as appropriate, with any reimbursement from the limited partners of the funds recorded as Management and Advisory Fees, Net. In cases where the limited partners of the funds are determined to be the customer in an arrangement, placement fees may be capitalized as a cost to acquire a customer contract. Capitalized placement fees are amortized over the life of the customer contract, are recorded within Other Assets in the Condensed Consolidated Statements of Financial Condition and amortization is recorded within General, Administrative and Other within the Condensed Consolidated Statements of Operations.
Accrued but unpaid Management and Advisory Fees, net of management fee reductions and management fee offsets, as of the reporting date are included in Accounts Receivable or Due from Affiliates in the Condensed Consolidated Statements of Financial Condition.
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The Blackstone Group Inc.
Notes to Condensed Consolidated Financial Statements (Unaudited) - Continued
(All Dollars are in Thousands, Except Share and Per Share Data, Except Where Noted)
Incentive Fees 
— Contractual fees earned based on the performance of Blackstone Funds (“Incentive Fees”) are a form of variable consideration in Blackstone’s contracts with customers to provide investment management services. Incentive Fees are earned based on fund performance during the period, subject to the achievement of minimum return levels, or high water marks, in accordance with the respective terms set out in each fund’s governing agreements. Incentive Fees will not be recognized as revenue until (a) it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur, or (b) the uncertainty associated with the variable consideration is subsequently resolved. Incentive Fees are typically recognized as revenue when realized at the end of the measurement period. Once realized, such fees are not subject to clawback or reversal. Accrued but unpaid Incentive Fees charged directly to investors in Blackstone Funds as of the reporting date are recorded within Due from Affiliates in the Condensed Consolidated Statements of Financial Condition.
Investment Income (Loss)
 — Investment Income (Loss) represents the unrealized and realized gains and losses on Blackstone’s Performance Allocations and Principal Investments.
In carry fund structures, Blackstone, through its subsidiaries, invests alongside its limited partners in a partnership and is entitled to its pro-rata share of the results of the fund (a “pro-rata allocation”). In addition to a pro-rata allocation, and assuming certain investment returns are achieved, Blackstone is entitled to a disproportionate allocation of the income otherwise allocable to the limited partners, commonly referred to as carried interest (“Performance Allocations”).
Performance Allocations are made to the general partner based on cumulative fund performance to date, subject to a preferred return to limited partners. At the end of each reporting period, Blackstone calculates the balance of accrued Performance Allocations (“Accrued Performance Allocations”) that would be due to Blackstone for each fund, pursuant to the fund agreements, as if the fair value of the underlying investments were realized as of such date, irrespective of whether such amounts have been realized. As the fair value of underlying investments varies between reporting periods, it is necessary to make adjustments to amounts recorded as Accrued Performance Allocations to reflect either (a) positive performance resulting in an increase in the Accrued Performance Allocation to the general partner or (b) negative performance that would cause the amount due to Blackstone to be less than the amount previously recognized as revenue, resulting in a negative adjustment to the Accrued Performance Allocation to the general partner. In each scenario, it is necessary to calculate the Accrued Performance Allocation on cumulative results compared to the Accrued Performance Allocation recorded to date and make the required positive or negative adjustments. Blackstone ceases to record negative Performance Allocations once previously Accrued Performance Allocations for such fund have been fully reversed. Blackstone is not obligated to pay guaranteed returns or hurdles, and therefore, cannot have negative Performance Allocations over the life of a fund. Accrued Performance Allocations as of the reporting date are reflected in Investments in the Condensed Consolidated Statements of Financial Condition.
Performance Allocations are realized when an underlying investment is profitably disposed of and the fund’s cumulative returns are in excess of the preferred return or, in limited instances, after certain thresholds for return of capital are met. Performance Allocations are subject to clawback to the extent that the Performance Allocation received to date exceeds the amount due to Blackstone based on cumulative results. As such, the accrual for potential repayment of previously received Performance Allocations, which is a component of Due to Affiliates, represents all amounts previously distributed to Blackstone Holdings and non-controlling interest holders that would need to be repaid to the Blackstone carry funds if the Blackstone carry funds were to be liquidated based on the current fair value of the underlying funds’ investments as of the reporting date. The actual clawback liability, however, generally does not become realized until the end of a fund’s life except for certain funds, including certain Blackstone real estate funds, multi-asset class investment funds and credit-focused funds, which may have an interim clawback liability.
Principal Investments include the unrealized and realized gains and losses on Blackstone’s principal investments, including its investments in Blackstone Funds that are not consolidated and receive pro-rata allocations, its equity method investments, and other principal investments. Income (Loss) on Principal
19
Table of Contents
The Blackstone Group Inc.
Notes to Condensed Consolidated Financial Statements (Unaudited) - Continued
(All Dollars are in Thousands, Except Share and Per Share Data, Except Where Noted)
Investments is realized when Blackstone redeems all or a portion of its investment or when Blackstone receives cash income, such as dividends or distributions. Unrealized Income (Loss) on Principal Investments results from changes in the fair value of the underlying investment as well as the reversal of unrealized gain (loss) at the time an investment is realized.
Interest and Dividend Revenue 
— Interest and Dividend Revenue comprises primarily interest and dividend income earned on principal investments not accounted for under the equity method held by Blackstone.
Other Revenue
 — Other Revenue consists of miscellaneous income and foreign exchange gains and losses arising on transactions denominated in currencies other than U.S. dollars.
Fair Value of Financial Instruments
GAAP establishes a hierarchical disclosure framework which prioritizes and ranks the level of market price observability used in measuring financial instruments at fair value. Market price observability is affected by a number of factors, including the type of financial instrument, the characteristics specific to the financial instrument and the state of the marketplace, including the existence and transparency of transactions between market participants. Financial instruments with readily available quoted prices in active markets generally will have a higher degree of market price observability and a lesser degree of judgment used in measuring fair value.
Financial instruments measured and reported at fair value are classified and disclosed based on the observability of inputs used in the determination of fair values, as follows:
●
Level I – Quoted prices are available in active markets for identical financial instruments as of the reporting date. The actual clawback liability, however, generallytypes of financial instruments in Level I include listed equities, listed derivatives and mutual funds with quoted prices. Blackstone does not become realized untiladjust the end ofquoted price for these investments, even in situations where Blackstone holds a fund’s life except for certain funds, including certain Blackstone real estate funds, multi-asset class investment fundslarge position and credit-focused funds, which may have an interim clawback liability.a sale could reasonably impact the quoted price.
●
Principal Investments include the unrealized and realized gains and losses on Blackstone’s principal investments, including its investments in Blackstone Funds thatLevel II – Pricing inputs are not consolidated and receive
pro-rata
allocations, its equity method investments, and other principal investments. Income (Loss) on Principal Investments is realized when Blackstone redeems all or a portion of its investment or when Blackstone receives cash income, such as dividends or distributions. Unrealized Income (Loss) on Principal Investments results from changes in the fair value of the underlying investment as well as the reversal of unrealized gain (loss) at the time an investment is realized.
Interest and Dividend Revenue
 — Interest and Dividend Revenue comprises primarily interest and dividend income earned on principal investments not accounted for under the equity method held by Blackstone.
Other Revenue
 — Other Revenue consists of miscellaneous income and foreign exchange gains and losses arising on transactions denominated in currencies other than U.S. dollars.
Fair Value of Financial Instruments
GAAP establishes a hierarchical disclosure framework which prioritizes and ranks the level of market price observability used in measuring financial instruments at fair value. Market price observability is affected by a number of factors, including the type of financial instrument, the characteristics specific to the financial instrument and the state of the marketplace, including the existence and transparency of transactions between market participants. Financial instruments with readily available quoted prices in active markets, generally will have a higher degreewhich are either directly or indirectly observable as of market price observabilitythe reporting date, and a lesser degreefair value is determined through the use of judgment used in measuring fair value.
models or other valuation methodologies. Financial instruments measuredwhich are generally included in this category include corporate bonds and reported atloans, including corporate bonds and loans held within CLO vehicles, government and agency securities, less liquid and restricted equity securities, and certain over-the-counter derivatives where the fair value is based on observable inputs. Senior and subordinated notes issued by CLO vehicles are classified within Level II of the fair value hierarchy.
●
Level III – Pricing inputs are unobservable for the financial instruments and disclosed based onincludes situations where there is little, if any, market activity for the observability offinancial instrument. The inputs used ininto the determination of fair values, as follows:value require significant management judgment or estimation. Financial instruments that are included in this category generally include general and limited partnership interests in private equity and real estate funds, credit-focused funds, distressed debt and non-investment grade residual interests in securitizations, certain corporate bonds and loans held within CLO vehicles and certain over-the-counter derivatives where the fair value is based on unobservable inputs.
In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, the determination of which category within the fair value hierarchy is appropriate for any given financial instrument is based on the lowest level of input that is significant to the fair value measurement. Blackstone’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the financial instrument.
●
Level I – Quoted prices are available in active markets for identical financial instruments as of the reporting date. The types of financial instruments in Level I include listed equities, listed derivatives and mutual funds with quoted prices. Blackstone does not adjust the quoted price for these investments, even in situations where Blackstone holds a large position and a sale could reasonably impact the quoted price.
●
Level II – Pricing inputs are other than quoted prices in active markets, which are either directly or indirectly observable as of the reporting date, and fair value is determined through the use of models or other valuation methodologies. Financial instruments which are generally included in this category include corporate bonds and loans, including corporate bonds and loans held within CLO vehicles, government and agency securities, less liquid and restricted equity securities, and certain
over-the-counter
derivatives where the fair value is based on observable inputs. Senior and subordinated notes issued by CLO vehicles are classified within Level II of the fair value hierarchy.
●
Level III – Pricing inputs are unobservable for the financial instruments and includes situations where there is little, if any, market activity for the financial instrument. The inputs into the determination of fair value require significant management judgment or estimation. Financial instruments that are included in this category generally include general and limited partnership interests in private equity and real estate funds, credit-focused funds, distressed debt and
non-investment
grade residual interests in securitizations, certain corporate bonds and loans held within CLO vehicles, unfunded loan commitments and certain
over-the-counter
derivatives where the fair value is based on unobservable inputs.
20
Table of Contents
The Blackstone Group Inc.
Notes to Condensed Consolidated Financial Statements (Unaudited) - Continued
(All Dollars Are in Thousands, Except Share and Per Share Data, Except Where Noted)
In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, the determination of which category within the fair value hierarchy is appropriate for any given financial instrument is based on the lowest level of input that is significant to the fair value measurement. Blackstone’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the financial instrument.
LevelCompensation and Benefits
Compensation
507,104458,4571,049,742935,000
Incentive Fee Compensation
14,4318,43227,75614,954
Performance Allocations Compensation
Realized
347,42338,569560,450110,992
Unrealized
1,150,219454,8132,200,188(942,565) 
Total Compensation and Benefits
2,019,177960,2713,838,136118,381
General, Administrative and Other
205,057169,051390,179326,617
Interest Expense
44,32239,27689,30580,920
Fund Expenses
3,7744,0836,1578,688
Total Expenses
2,272,3301,172,6814,323,777534,606
Other Income (Loss)
Change in Tax Receivable Agreement Liability
(392) 762,518(519) 
Net Gains (Losses) from Fund Investment Activities
127,116158,297247,469(169,077) 
Total Other Income (Loss)
126,724158,373249,987(169,596) 
Income (Loss) Before Provision (Benefit) for Taxes
3,145,7481,501,7616,516,436(1,264,097) 
Provision (Benefit) for Taxes
288,250147,415287,803(11,288) 
Net Income (Loss)
2,857,4981,354,3466,228,633(1,252,809) 
Net Income (Loss) Attributable to Redeemable Non-Controlling Interests in Consolidated Entities
637(3,426) 1,266(18,895) 
Net Income (Loss) Attributable to Non-Controlling Interests in Consolidated Entities
431,516294,378818,366(350,699) 
Net Income (Loss) Attributable to Non-Controlling Interests in Blackstone Holdings
1,116,193495,1282,351,977(384,989) 
Net Income (Loss) Attributable to The Blackstone Group Inc.
 $1,309,152 $568,266 $3,057,024 $(498,226) 
Net Income (Loss) Per Share of Common Stock
Basic
 $1.82 $0.81 $4.27 $(0.74) 
Diluted
 $1.82 $0.81 $4.27 $(0.74) 
Weighted-Average Shares of Common Stock Outstanding
Basic
721,141,954698,534,168715,121,029677,041,769
Diluted
      721,265,180      1,204,411,957      715,622,208      677,041,769
See notes to condensed consolidated financial statements.
8 
Table of Contents
The Blackstone Group Inc.
Condensed Consolidated Statements of Comprehensive Income (Unaudited)
(Dollars in Thousands)
                                                                                                             
   
Three Months Ended
 
Six Months Ended
   
June 30,
 
June 30,
   
2021
  
2020
 
2021
  
2020
Net Income (Loss)
   $2,857,498    $1,354,346   $6,228,633    $(1,252,809) 
Other Comprehensive Income (Loss), Currency Translation Adjustment
   2,124    8,316   10,055    (11,903) 
   
 
 
 
  
 
 
 
 
 
 
 
  
 
 
 
Comprehensive Income (Loss)
   2,859,622    1,362,662   6,238,688    (1,264,712) 
   
 
 
 
  
 
 
 
 
 
 
 
  
 
 
 
Less:
                   
Comprehensive Income (Loss) Attributable to Redeemable Non-Controlling Interests in Consolidated Entities
   637    (3,426)   1,266    (18,895) 
Comprehensive Income (Loss) Attributable to Non-Controlling Interests in Consolidated Entities
   431,516    294,378   818,366    (350,699) 
Comprehensive Income (Loss) Attributable to Non-Controlling Interests in Blackstone Holdings
   1,117,108    498,669   2,356,446    (388,629) 
   
 
 
 
  
 
 
 
 
 
 
 
  
 
 
 
Comprehensive Income (Loss) Attributable to Non-Controlling Interests
   1,549,261    789,621   3,176,078    (758,223) 
   
 
 
 
  
 
 
 
 
 
 
 
  
 
 
 
Comprehensive Income (Loss) Attributable to The Blackstone Group Inc.
   $      1,310,361    $      573,041   $      3,062,610    $      (506,489) 
   
 
 
 
  
 
 
 
 
 
 
 
  
 
 
 
See notes to condensed consolidated financial statements.
9
Table of Contents
The Blackstone Group Inc.
Condensed Consolidated Statements of Changes in Equity (Unaudited)
(Dollars in Thousands, Except Share Data)
                                                                                                                                                       
  
Shares of

The Blackstone

Group Inc. (a)
 
The Blackstone Group Inc. (a)
        
          
Accumulated
         
Redeemable
          
Other
   
Non-
 
Non-
   
Non-
          
Compre-
   
Controlling
 
Controlling
   
Controlling
      
Additional
 
Retained
 
hensive
 
Total
 
Interests in
 
Interests in
   
Interests in
  
Common
 
Common
 
Paid-in-
 
Earnings
 
Income
 
Stockholders’
 
Consolidated
 
Blackstone
 
Total
 
Consolidated
  
Stock
 
Stock
 
Capital
 
(Deficit)
 
(Loss)
 
Equity
 
Entities
 
Holdings
 
Equity
 
Entities
Balance at March 31, 2021
  690,569,563  $7  $6,446,829  $1,408,768  $(11,454)  $7,844,150  $4,390,594  $4,524,898  $16,759,642  $65,546 
Net Income
  —   —   —   1,309,152   —   1,309,152   431,516   1,116,193   2,856,861   637 
Currency Translation Adjustment
  —   —   —   —   1,209   1,209   —   915   2,124   — 
Capital Contributions
  —   —   —   —   —   —   204,933   2,551   207,484   — 
Capital Distributions
  —   —   —   (584,126)   —   (584,126)   (166,518)   (441,687)   (1,192,331)   (615) 
Transfer of Non-Controlling Interests in Consolidated Entities
  —   —   —   —   —   —   (83)   —   (83)   — 
Deferred Tax Effects Resulting from Acquisition of Ownership Interests from Non-Controlling Interest Holders
  —   —   9,535   —   —   9,535   —   —   9,535   — 
Equity-Based Compensation
  —   —   77,083   —   —   77,083   —   55,046   132,129   — 
Net Delivery of Vested Blackstone Holdings Partnership Units and Shares of Common Stock
  273,659   —   (4,860)   —   —   (4,860)   —   —   (4,860)   — 
Repurchase of Shares of Common Stock and Blackstone Holdings Partnership Units
  (3,174,598)   —   (289,055)   —   —   (289,055)   —   —   (289,055)   — 
Change in The Blackstone Group Inc.’s Ownership Interest
  —   —   11,322   —   —   11,322   —   (11,322)   —   — 
Conversion of Blackstone Holdings Partnership Units to Shares of Common Stock
  3,424,839   —   31,746   —   —   31,746   —   (31,746)   —   — 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance at June 30, 2021
  691,093,463  $7  $6,282,600  $2,133,794  $(10,245)  $8,406,156  $4,860,442  $5,214,848  $18,481,446  $65,568 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(a)
During the period presented, Blackstone also had one share outstanding of each of Series I and Series II Valuation Techniquespreferred stock, with par value of each less than one cent.
continued...
See notes to condensed consolidated financial statements.
10
Table of Contents
The Blackstone Group Inc.
Condensed Consolidated Statements of Changes in Equity (Unaudited)
(Dollars in Thousands, Except Share Data)
                                                                                                                                                       
  
Shares of

The Blackstone

Group Inc. (a)
 
The Blackstone Group Inc. (a)
        
          
Accumulated
         
Redeemable
          
Other
   
Non-
 
Non-
   
Non-
          
Compre-
   
Controlling
 
Controlling
   
Controlling
      
Additional
 
Retained
 
hensive
 
Total
 
Interests in
 
Interests in
   
Interests in
  
Common
 
Common
 
Paid-in-
 
Earnings
 
Income
 
Stockholders’
 
Consolidated
 
Blackstone
 
Total
 
Consolidated
  
Stock
 
Stock
 
Capital
 
(Deficit)
 
(Loss)
 
Equity
 
Entities
 
Holdings
 
Equity
 
Entities
Balance at March 31, 2020
  676,630,489  $7  $6,298,093  $(871,948)  $(41,533)  $5,384,619  $3,591,160  $2,530,263  $11,506,042  $72,066 
Net Income (Loss)
  —   —   —   568,266   —   568,266��  294,378   495,128   1,357,772   (3,426) 
Currency Translation Adjustment
  —   —   —   —   4,775   4,775   —   3,541   8,316   — 
Capital Contributions
  —   —   —   —   —   —   170,282   —   170,282   — 
Capital Distributions
  —   —   —   (270,613)   —   (270,613)   (155,525)   (203,354)   (629,492)   (76) 
Transfer of Non-Controlling Interests in Consolidated Entities
  —   —   —   —   —   —   134   —   134   — 
Deferred Tax Effects Resulting from Acquisition of Ownership Interests from Non-Controlling Interest Holders
  —   —   2,806   —   —   2,806   —   —   2,806   — 
Equity-Based Compensation
  —   —   73,455   —   —   73,455   —   55,442   128,897   — 
Net Delivery of Vested Blackstone Holdings Partnership Units and Shares of Common Stock
  56,662   —   (2,398)   —   —   (2,398)   —   —   (2,398)   — 
Repurchase of Shares of Common Stock and Blackstone Holdings Partnership Units
  (2,000,000)   —   (114,893)   —   —   (114,893)   —   —   (114,893)   — 
Change in The Blackstone Group Inc.’s Ownership Interest
  —   —   4,006   —   —   4,006   —   (4,006)   —   — 
Conversion of Blackstone Holdings Partnership Units to Shares of Common Stock
  2,187,432   —   10,971   —   —   10,971   —   (10,971)   —   — 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance at June 30, 2020
  676,874,583  $7  $6,272,040  $(574,295)  $(36,758)  $5,660,994  $3,900,429  $2,866,043  $12,427,466  $68,564 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(a)
During the period presented, Blackstone also had one share outstanding of each of Series I and Series II preferred stock, with par value of each less than one cent.
continued...
See notes to condensed consolidated financial statements.
11
Table of Contents
The Blackstone Group Inc.
Condensed Consolidated Statements of Changes in Equity (Unaudited)
(Dollars in Thousands, Except Share Data)
                                                                                                                                                       
  
Shares of

The Blackstone

Group Inc. (a)
 
The Blackstone Group Inc. (a)
        
          
Accumulated
         
Redeemable
          
Other
   
Non-
 
Non-
   
Non-
          
Compre-
   
Controlling
 
Controlling
   
Controlling
      
Additional
 
Retained
 
hensive
 
Total
 
Interests in
 
Interests in
   
Interests in
  
Common
 
Common
 
Paid-in-
 
Earnings
 
Income
 
Stockholders’
 
Consolidated
 
Blackstone
 
Total
 
Consolidated
  
Stock
 
Stock
 
Capital
 
(Deficit)
 
(Loss)
 
Equity
 
Entities
 
Holdings
 
Equity
 
Entities
Balance at December 31, 2020
  683,875,544  $7  $6,332,105  $335,762  $(15,831)  $6,652,043  $4,042,157  $3,831,148  $14,525,348  $65,161 
Net Income
  —   —   —   3,057,024   —   3,057,024   818,366   2,351,977   6,227,367   1,266 
Currency Translation Adjustment
  —   —   —   —   5,586   5,586   —   4,469   10,055   — 
Capital Contributions
  —   —   —   —   —   —   412,230   5,259   417,489   — 
Capital Distributions
  —   —   —   (1,258,992)   —   (1,258,992)   (408,718)   (1,024,657)   (2,692,367)   (859) 
Transfer of Non-Controlling Interests in Consolidated Entities
  —   —   —   —   —   —   (3,593)   —   (3,593)   — 
Deferred Tax Effects Resulting from Acquisition of Ownership Interests from Non-Controlling Interest Holders
  —   —   19,714   —   —   19,714   —   —   19,714   — 
Equity-Based Compensation
  —   —   168,606   —   —   168,606   —   120,941   289,547   — 
Net Delivery of Vested Blackstone Holdings Partnership Units and Shares of Common Stock
  1,986,972   —   (23,059)   —   —   (23,059)   —   —   (23,059)   — 
Repurchase of Shares of Common Stock and Blackstone Holdings Partnership Units
  (3,174,598)   —   (289,055)   —   —   (289,055)   —   —   (289,055)   — 
Change in The Blackstone Group Inc.’s Ownership Interest
  —   —   3,877   —   —   3,877   —   (3,877)   —   — 
Conversion of Blackstone Holdings Partnership Units to Shares of Common Stock
  8,405,545   —   70,412   —   —   70,412   —   (70,412)   —   — 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance at June 30, 2021
  691,093,463  $7  $6,282,600  $2,133,794  $(10,245)  $8,406,156  $4,860,442  $5,214,848  $18,481,446  $65,568 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(a)
During the period presented, Blackstone also had one share outstanding of each of Series I and Series II preferred stock, with par value of each less than one cent.
continued...
See notes to condensed consolidated financial statements.
12
Table of Contents
The Blackstone Group Inc.
Condensed Consolidated Statements of Changes in Equity (Unaudited)
(Dollars in Thousands, Except Share Data)
                                                                                                                                                       
  
Shares of
The Blackstone

Group Inc. (a)
 
The Blackstone Group Inc. (a)
        
          
Accumulated
         
Redeemable
          
Other
   
Non-
 
Non-
   
Non-
          
Compre-
   
Controlling
 
Controlling
   
Controlling
      
Additional
 
Retained
 
hensive
 
Total
 
Interests in
 
Interests in
   
Interests in
  
Common
 
Common
 
Paid-in-
 
Earnings
 
Income
 
Stockholders’
 
Consolidated
 
Blackstone
 
Total
 
Consolidated
  
Stock
 
Stock
 
Capital
 
(Deficit)
 
(Loss)
 
Equity
 
Entities
 
Holdings
 
Equity
 
Entities
Balance at December 31, 2019
  671,157,692  $7  $6,428,647  $609,625  $(28,495)  $7,009,784  $4,186,069  $3,819,548  $15,015,401  $87,651 
Net Income (Loss)
  —   —   —   (498,226)   —   (498,226)   (350,699)   (384,989)   (1,233,914)   (18,895) 
Currency Translation Adjustment
  —   —   —   —   (8,263)   (8,263)   —   (3,640)   (11,903)   — 
Capital Contributions
  —   —   —   —   —   —   372,961   —   372,961   — 
Capital Distributions
  —   —   —   (685,694)   —   (685,694)   (305,797)   (569,055)   (1,560,546)   (192) 
Transfer of Non-Controlling Interests in Consolidated Entities
  —   —   —   —   —   —   (2,105)   —   (2,105)   — 
Deferred Tax Effects Resulting from Acquisition of Ownership Interests from Non-Controlling Interest Holders
  —   —   15,200   —   —   15,200   —   —   15,200   — 
Equity-Based Compensation
  —   —   124,279   —   —   124,279   —   94,100   218,379   — 
Net Delivery of Vested Blackstone Holdings Partnership Units and Shares of Common Stock
  1,740,156   —   (17,639)   —   —   (17,639)   —   (7)   (17,646)   — 
Repurchase of Shares of Common Stock and Blackstone Holdings Partnership Units
  (6,969,237)   —   (368,361)   —   —   (368,361)   —   —   (368,361)   — 
Change in The Blackstone Group Inc.’s Ownership Interest
  —   —   13,785   —   —   13,785   —   (13,785)   —   — 
Conversion of Blackstone Holdings Partnership Units to Shares of Common Stock
  10,945,972   —   76,129   —   —   76,129   —   (76,129)   —   — 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance at June 30, 2020
  676,874,583  $7  $6,272,040  $(574,295)  $(36,758)  $5,660,994  $3,900,429  $2,866,043  $12,427,466  $68,564 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(a)
During the period presented, Blackstone also had one share outstanding of each of Series I and Series II preferred stock, with par value of each less than one cent.
See notes to condensed consolidated financial statements.
13 
Table of Contents
The Blackstone Group Inc.
Condensed Consolidated Statements of Cash Flows (Unaudited)
(Dollars in Thousands)
                                                       
   
Six Months Ended June 30,
   
2021
 
2020
Operating Activities
         
Net Income (Loss)
   $6,228,633   $(1,252,809) 
Adjustments to Reconcile Net Income (Loss) to Net Cash Provided by Operating Activities
         
Blackstone Funds Related
         
Net Realized Gains on Investments
   (1,949,167)   (261,870) 
Changes in Unrealized (Gains) Losses on Investments
   (1,140,654)  744,335 
Non-Cash Performance Allocations
   (5,161,667)  2,385,158 
Non-Cash Performance Allocations and Incentive Fee Compensation
   2,780,561   (821,798) 
Equity-Based Compensation Expense
   305,422   238,721 
Amortization of Intangibles
   37,476   35,500 
Other Non-Cash Amounts Included in Net Income (Loss)
   (153,350)  (175,677) 
Cash Flows Due to Changes in Operating Assets and Liabilities
         
Accounts Receivable
   346,505   562,123 
Due from Affiliates
   109,163   203,698 
Other Assets
   (55,225)   (120,679) 
Accrued Compensation and Benefits
   (440,034)   (443,534) 
Securities Sold, Not Yet Purchased
   (14,925)   (26,840) 
Accounts Payable, Accrued Expenses and Other Liabilities
   13,373   (182,034) 
Repurchase Agreements
   (19,562)   (73,498) 
Due to Affiliates
   19,836   85,380 
Investments Purchased
   (2,718,024)  (3,786,662) 
Cash Proceeds from Sale of Investments
   5,007,907   4,381,268 
   
 
 
 
 
 
 
 
Net Cash Provided by Operating Activities
       3,196,268       1,490,782 
   
 
 
 
 
 
 
 
Investing Activities
         
Purchase of Furniture, Equipment and Leasehold Improvements
   (34,811)   (25,453) 
   
 
 
 
 
 
 
 
Net Cash Used in Investing Activities
   (34,811)   (25,453) 
   
 
 
 
 
 
 
 
Financing Activities
         
Distributions to Non-Controlling Interest Holders in Consolidated Entities
   (409,577)   (305,914) 
Contributions from Non-Controlling Interest Holders in Consolidated Entities
   407,738   355,599 
Payments Under Tax Receivable Agreement
   (51,366)   (73,881) 
Net Settlement of Vested Common Stock and Repurchase of Common Stock and Blackstone Holdings Partnership Units
   (312,114)   (386,007) 
continued...
See notes to condensed consolidated financial statements.
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The Blackstone Group Inc.
Condensed Consolidated Statements of Cash Flows (Unaudited)
(Dollars in Thousands)
                                                       
   
Six Months Ended June 30,
   
2021
 
2020
Financing Activities (Continued)
         
Repayment and Repurchase of Loans Payable
   $0   $(1,896) 
Dividends/Distributions to Shareholders and Unitholders
   (2,278,390)   (1,254,749) 
   
 
 
 
 
 
 
 
Net Cash Used in Financing Activities
   (2,643,709)   (1,666,848) 
   
 
 
 
 
 
 
 
Effect of Exchange Rate Changes on Cash and Cash Equivalents and Cash Held by Blackstone Funds and Other
   (5,084)   (2,419) 
   
 
 
 
 
 
 
 
Cash and Cash Equivalents and Cash Held by Blackstone Funds and Other
         
Net Increase (Decrease)
   512,664   (203,938) 
Beginning of Period
   2,064,456   2,523,651 
   
 
 
 
 
 
 
 
End of Period
   $    2,577,120   $    2,319,713 
   
 
 
 
 
 
 
 
   
Supplemental Disclosure of Cash Flows Information
         
Payments for Interest
   $102,524   $93,645 
   
 
 
 
 
 
 
 
Payments for Income Taxes
   $289,244   $42,330 
   
 
 
 
 
 
 
 
Supplemental Disclosure of Non-Cash Investing and Financing Activities
         
Non-Cash Contributions from Non-Controlling Interest Holders
   $6,076   $16,033 
   
 
 
 
 
 
 
 
Non-Cash Distributions to Non-Controlling Interest Holders
   $0   $(75) 
   
 
 
 
 
 
 
 
Transfer of Interests to Non-Controlling Interest Holders
   $(3,593)   $(2,105) 
   
 
 
 
 
 
 
 
Change in The Blackstone Group Inc.’s Ownership Interest
   $3,877   $13,785 
   
 
 
 
 
 
 
 
Net Settlement of Vested Common Stock
   $124,386   $71,978 
   
 
 
 
 
 
 
 
Conversion of Blackstone Holdings Units to Common Stock
   $70,412   $76,129 
   
 
 
 
 
 
 
 
Acquisition of Ownership Interests from Non-Controlling Interest Holders
         
Deferred Tax Asset
   $(167,433)  $(148,838) 
   
 
 
 
 
 
 
 
Due to Affiliates
   $147,719   $133,638 
   
 
 
 
 
 
 
 
Equity
   $19,714   $15,200 
   
 
 
 
 
 
 
 
The following table provides a reconciliation of Cash and Cash Equivalents and Cash Held by Blackstone Funds and Other reported within the Condensed Consolidated Statements of Financial Condition:
                                                       
   
June 30,
  
December 31,
   
2021
  
2020
Cash and Cash Equivalents
   $2,467,444    $1,999,484 
Cash Held by Blackstone Funds and Other
   109,676    64,972 
   
 
 
 
  
 
 
 
    $    2,577,120    $    2,064,456 
   
 
 
 
  
 
 
 
See notes to condensed consolidated financial statements.
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The Blackstone Group Inc.
Notes to Condensed Consolidated Financial Statements (Unaudited)
(All Dollars are in Thousands, Except Share and Per Share Data, Except Where Noted)
1.    Organization
The Blackstone Group Inc., together with its consolidated subsidiaries (“Blackstone” or the “Company”), is one of the world’s leading investment firms. Blackstone’s asset management business includes investment vehicles focused on real estate, private equity, public debt and equity, growth equity, opportunistic, non-investment grade credit, real assets and secondary funds, all on a global basis. “Blackstone Funds” refers to the funds and other vehicles that are managed by Blackstone. Blackstone’s business is organized into
4 segments: Real Estate, Private Equity, Hedge Fund Solutions and Credit & Insurance.
Effective August 6, 2021, The Blackstone Group Inc. changed its name to Blackstone Inc. Blackstone Inc. was initially formed as The Blackstone Group L.P., a Delaware limited partnership, on March 12, 2007. Prior to its conversion (effective July 1, 2019) to a Delaware corporation (the “Conversion”), Blackstone Inc. was managed and operated by Blackstone Group Management L.L.C., which is wholly owned by Blackstone’s senior managing directors and controlled by 
1of Blackstone’s founders, Stephen A. Schwarzman (the “Founder”). Effective February 26, 2021, the Certificate of Incorporation of Blackstone Inc. was amended and restated to rename Blackstone’s Class A Common stock as “common stock” and reclassify Blackstone’s Class B common stock and Class C common stock into a new Series I preferred stock and a new Series II preferred stock, respectively. All references to common stock, series I preferred stock and series II preferred stock prior to such date refer to Class A, Class B and Class C common stock, respectively. See Note 13. “Income Taxes” and Note 14. “Earnings Per Share and Stockholders’ Equity — Stockholders’ Equity.”
The activities of Blackstone are conducted through its holding partnerships: Blackstone Holdings I L.P., Blackstone Holdings AI L.P., Blackstone Holdings II L.P., Blackstone Holdings III L.P. and Blackstone Holdings IV L.P. (collectively, “Blackstone Holdings,” “Blackstone Holdings Partnerships” or the “Holding Partnerships”). Blackstone, through its wholly owned subsidiaries, is the sole general partner of each of the Holding Partnerships. Generally, holders of the limited partner interests in the Holding Partnerships may, four times each year, exchange their limited partnership interests (“Partnership Units”) for Blackstone common stock, on a one-to-one basis, exchanging one Partnership Unit from each of the Holding Partnerships for one share of Blackstone common stock.
2.    Summary of Significant Accounting Policies
Basis of Presentation
The accompanying unaudited condensed consolidated financial statements of Blackstone have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and the instructions to Form 10-Q. The condensed consolidated financial statements, including these notes, are unaudited and exclude some of the disclosures required in audited financial statements. Management believes it has made all necessary adjustments (consisting of only normal recurring items) so that the condensed consolidated financial statements are presented fairly and that estimates made in preparing its condensed consolidated financial statements are reasonable and prudent. The operating results presented for interim periods are not necessarily indicative of the results that may be expected for any other interim period or for the entire year. These condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements included in Blackstone’s Annual Report on Form 10-K for the year ended December 31, 2020 filed with the Securities and Exchange Commission.
The condensed consolidated financial statements include the accounts of Blackstone, its wholly owned or majority owned subsidiaries, the consolidated entities which are considered to be variable interest entities and for which Blackstone is considered the primary beneficiary, and certain partnerships or similar entities which are not considered variable interest entities but in which the general partner is determined to have control.
All intercompany balances and transactions have been eliminated in consolidation.
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Notes to Condensed Consolidated Financial Statements (Unaudited) - Continued
(All Dollars are in Thousands, Except Share and Per Share Data, Except Where Noted)
Restructurings within consolidated collateralized loan obligations (“CLOs”) are treated as investment purchases or sales, as applicable, in the Condensed Consolidated Statements of Cash Flows.
COVID-19
and Global Economic Market Conditions
The ongoing novel coronavirus
(“COVID-19”)
pandemic has caused disruption in the U.S. and global economies. More recently, broad-based economic recovery and activity in the U.S. have accelerated following meaningful progress on vaccine distribution, the easing of shutdowns and other restrictions and support from previously implemented fiscal and monetary stimulus. Nevertheless, both in the U.S. and abroad, there is continued uncertainty regarding the trajectory of a continuing recovery, particularly given the strength of the Delta variant. Accordingly, this recovery remains uneven with dispersion across sectors and regions. The estimates and assumptions underlying these consolidated financial statements are based on the information available as of June 30, 2021 for the current period and as of June 30, 2020 or December 31, 2020, as applicable. The estimates and assumptions include judgments about financial market and economic conditions which have changed, and may continue to change, over time.
Consolidation
Blackstone consolidates all entities that it controls through a majority voting interest or otherwise, including those Blackstone Funds in which the general partner has a controlling financial interest. Blackstone has a controlling financial interest in Blackstone Holdings because the limited partners do not have the right to dissolve the partnerships or have substantive kick-out rights or participating rights that would overcome the control held by Blackstone. Accordingly, Blackstone consolidates Blackstone Holdings and records non-controlling interests to reflect the economic interests of the limited partners of Blackstone Holdings.
In addition, Blackstone consolidates all variable interest entities (“VIE”) for which it is the primary beneficiary. An enterprise is determined to be the primary beneficiary if it holds a controlling financial interest. A controlling financial interest is defined as (a) the power to direct the activities of a VIE that most significantly impact the entity’s economic performance and (b) the obligation to absorb losses of the entity or the right to receive benefits from the entity that could potentially be significant to the VIE. The consolidation guidance requires an analysis to determine (a) whether an entity in which Blackstone holds a variable interest is a VIE and (b) whether Blackstone’s involvement, through holding interests directly or indirectly in the entity or contractually through other variable interests, would give it a controlling financial interest. Performance of that analysis requires the exercise of judgment.
Blackstone determines whether it is the primary beneficiary of a VIE at the time it becomes involved with a variable interest entity and continuously reconsiders that conclusion. In determining whether Blackstone is the primary beneficiary, Blackstone evaluates its control rights as well as economic interests in the entity held either directly or indirectly by Blackstone. The consolidation analysis can generally be performed qualitatively; however, if it is not readily apparent that Blackstone is not the primary beneficiary, a quantitative analysis may also be performed. Investments and redemptions (either by Blackstone, affiliates of Blackstone or third parties) or amendments to the governing documents of the respective Blackstone Funds could affect an entity’s status as a VIE or the determination of the primary beneficiary. At each reporting date, Blackstone assesses whether it is the primary beneficiary and will consolidate or deconsolidate accordingly.
Assets of consolidated VIEs that can only be used to settle obligations of the consolidated VIE and liabilities of a consolidated VIE for which creditors (or beneficial interest holders) do not have recourse to the general credit of Blackstone are presented in a separate section in the Condensed Consolidated Statements of Financial Condition.
Blackstone’s other disclosures regarding VIEs are discussed in Note 9. “Variable Interest Entities.”
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Notes to Condensed Consolidated Financial Statements (Unaudited) - Continued
(All Dollars are in Thousands, Except Share and Per Share Data, Except Where Noted)
Revenue Recognition
Revenues primarily consist of management and advisory fees, incentive fees, investment income, interest and dividend revenue and other.
Management and advisory fees and incentive fees are accounted for as contracts with customers. Under the guidance for contracts with customers, an entity is required to (a) identify the contract(s) with a customer, (b) identify the performance obligations in the contract, (c) determine the transaction price, (d) allocate the transaction price to the performance obligations in the contract, and (e) recognize revenue when (or as) the entity satisfies a performance obligation. In determining the transaction price, an entity may include variable consideration only to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized would not occur when the uncertainty associated with the variable consideration is resolved. See Note 18. “Segment Reporting” for a disaggregated presentation of revenues from contracts with customers.
Management and Advisory Fees, Net
 — Management and Advisory Fees, Net are comprised of management fees, including base management fees, transaction and other fees and advisory fees net of management fee reductions and offsets.
Blackstone earns base management fees from limited partners of funds in each of its managed funds, at a fixed percentage of assets under management, net asset value, total assets, committed capital or invested capital. These customer contracts require Blackstone to provide investment management services, which represents a performance obligation that Blackstone satisfies over time. Management fees are a form of variable consideration because the fees Blackstone is entitled to vary based on fluctuations in the basis for the management fee. The amount recorded as revenue is generally determined at the end of the period because these management fees are payable on a regular basis (typically quarterly) and are not subject to clawback once paid.
Transaction, advisory and other fees are principally fees charged to the limited partners of funds indirectly through the managed funds and portfolio companies. The investment advisory agreements generally require that the investment adviser reduce the amount of management fees payable by the limited partners to Blackstone (“management fee reductions”) by an amount equal to a portion of the transaction and other fees paid to Blackstone by the portfolio companies. The amount of the reduction varies by fund, the type of fee paid by the portfolio company and the previously incurred expenses of the fund. These fees and associated management fee reductions are a component of the transaction price for Blackstone’s performance obligation to provide investment management services to the limited partners of funds and are recognized as changes to the transaction price in the period in which they are charged and the services are performed.
Management fee offsets are reductions to management fees payable by the limited partners of the Blackstone Funds, which are based on the amount such limited partners reimburse the Blackstone Funds or Blackstone primarily for placement fees. Providing investment management services requires Blackstone to arrange for services on behalf of its customers. In those situations where Blackstone is acting as an agent on behalf of the limited partners of funds, it presents the cost of services as net against management fee revenue. In all other situations, Blackstone is primarily responsible for fulfilling the services and is therefore acting as a principal for those arrangements. As a result, the cost of those services is presented as Compensation or General, Administrative and Other expense, as appropriate, with any reimbursement from the limited partners of the funds recorded as Management and Advisory Fees, Net. In cases where the limited partners of the funds are determined to be the customer in an arrangement, placement fees may be capitalized as a cost to acquire a customer contract. Capitalized placement fees are amortized over the life of the customer contract, are recorded within Other Assets in the Condensed Consolidated Statements of Financial Condition and amortization is recorded within General, Administrative and Other within the Condensed Consolidated Statements of Operations.
Accrued but unpaid Management and Advisory Fees, net of management fee reductions and management fee offsets, as of the reporting date are included in Accounts Receivable or Due from Affiliates in the Condensed Consolidated Statements of Financial Condition.
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Notes to Condensed Consolidated Financial Statements (Unaudited) - Continued
(All Dollars are in Thousands, Except Share and Per Share Data, Except Where Noted)
Incentive Fees 
— Contractual fees earned based on the performance of Blackstone Funds (“Incentive Fees”) are a form of variable consideration in Blackstone’s contracts with customers to provide investment management services. Incentive Fees are earned based on fund performance during the period, subject to the achievement of minimum return levels, or high water marks, in accordance with the respective terms set out in each fund’s governing agreements. Incentive Fees will not be recognized as revenue until (a) it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur, or (b) the uncertainty associated with the variable consideration is subsequently resolved. Incentive Fees are typically recognized as revenue when realized at the end of the measurement period. Once realized, such fees are not subject to clawback or reversal. Accrued but unpaid Incentive Fees charged directly to investors in Blackstone Funds as of the reporting date are recorded within Due from Affiliates in the Condensed Consolidated Statements of Financial Condition.
Investment Income (Loss)
 — Investment Income (Loss) represents the unrealized and realized gains and losses on Blackstone’s Performance Allocations and Principal Investments.
In carry fund structures, Blackstone, through its subsidiaries, invests alongside its limited partners in a partnership and is entitled to its pro-rata share of the results of the fund (a “pro-rata allocation”). In addition to a pro-rata allocation, and assuming certain investment returns are achieved, Blackstone is entitled to a disproportionate allocation of the income otherwise allocable to the limited partners, commonly referred to as carried interest (“Performance Allocations”).
Performance Allocations are made to the general partner based on cumulative fund performance to date, subject to a preferred return to limited partners. At the end of each reporting period, Blackstone calculates the balance of accrued Performance Allocations (“Accrued Performance Allocations”) that would be due to Blackstone for each fund, pursuant to the fund agreements, as if the fair value of the underlying investments were realized as of such date, irrespective of whether such amounts have been realized. As the fair value of underlying investments varies between reporting periods, it is necessary to make adjustments to amounts recorded as Accrued Performance Allocations to reflect either (a) positive performance resulting in an increase in the Accrued Performance Allocation to the general partner or (b) negative performance that would cause the amount due to Blackstone to be less than the amount previously recognized as revenue, resulting in a negative adjustment to the Accrued Performance Allocation to the general partner. In each scenario, it is necessary to calculate the Accrued Performance Allocation on cumulative results compared to the Accrued Performance Allocation recorded to date and make the required positive or negative adjustments. Blackstone ceases to record negative Performance Allocations once previously Accrued Performance Allocations for such fund have been fully reversed. Blackstone is not obligated to pay guaranteed returns or hurdles, and therefore, cannot have negative Performance Allocations over the life of a fund. Accrued Performance Allocations as of the reporting date are reflected in Investments in the Condensed Consolidated Statements of Financial Condition.
Performance Allocations are realized when an underlying investment is profitably disposed of and the fund’s cumulative returns are in excess of the preferred return or, in limited instances, after certain thresholds for return of capital are met. Performance Allocations are subject to clawback to the extent that the Performance Allocation received to date exceeds the amount due to Blackstone based on cumulative results. As such, the accrual for potential repayment of previously received Performance Allocations, which is a component of Due to Affiliates, represents all amounts previously distributed to Blackstone Holdings and non-controlling interest holders that would need to be repaid to the Blackstone carry funds if the Blackstone carry funds were to be liquidated based on the current fair value of the underlying funds’ investments as of the reporting date. The actual clawback liability, however, generally does not become realized until the end of a fund’s life except for certain funds, including certain Blackstone real estate funds, multi-asset class investment funds and credit-focused funds, which may have an interim clawback liability.
Principal Investments include the unrealized and realized gains and losses on Blackstone’s principal investments, including its investments in Blackstone Funds that are not consolidated and receive pro-rata allocations, its equity method investments, and other principal investments. Income (Loss) on Principal
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Notes to Condensed Consolidated Financial Statements (Unaudited) - Continued
(All Dollars are in Thousands, Except Share and Per Share Data, Except Where Noted)
Investments is realized when Blackstone redeems all or a portion of its investment or when Blackstone receives cash income, such as dividends or distributions. Unrealized Income (Loss) on Principal Investments results from changes in the fair value of the underlying investment as well as the reversal of unrealized gain (loss) at the time an investment is realized.
Interest and Dividend Revenue 
— Interest and Dividend Revenue comprises primarily interest and dividend income earned on principal investments not accounted for under the equity method held by Blackstone.
Other Revenue
 — Other Revenue consists of miscellaneous income and foreign exchange gains and losses arising on transactions denominated in currencies other than U.S. dollars.
Fair Value of Financial Instruments
GAAP establishes a hierarchical disclosure framework which prioritizes and ranks the level of market price observability used in measuring financial instruments at fair value. Market price observability is affected by a number of factors, including the type of financial instrument, the characteristics specific to the financial instrument and the state of the marketplace, including the existence and transparency of transactions between market participants. Financial instruments with readily available quoted prices in active markets generally will have a higher degree of market price observability and a lesser degree of judgment used in measuring fair value.
Financial instruments measured and reported at fair value are classified and disclosed based on the observability of inputs used in the determination of fair values, as follows:
●
Level I – Quoted prices are available in active markets for identical financial instruments as of the reporting date. The types of financial instruments in Level I include listed equities, listed derivatives and mutual funds with quoted prices. Blackstone does not adjust the quoted price for these investments, even in situations where Blackstone holds a large position and a sale could reasonably impact the quoted price.
●
Level II – Pricing inputs are other than quoted prices in active markets, which are either directly or indirectly observable as of the reporting date, and fair value is determined through the use of models or other valuation methodologies. Financial instruments which are generally included in this category include corporate bonds and loans, including corporate bonds and loans held within CLO vehicles, government and agency securities, less liquid and restricted equity securities, and certain over-the-counter derivatives where the fair value is based on observable inputs. Senior and subordinated notes issued by CLO vehicles are classified within Level II of the fair value hierarchy comprise debt instruments, including certain corporate loans and bonds held by Blackstone’s consolidated CLO vehicles and debt securities sold, not yet purchased. Certain equity securities and derivative instruments valued using observable inputs are also classified as Level II.hierarchy.
The valuation techniques used to value financial instruments classified within Level II of the fair value hierarchy are as follows:
 
●
●
Debt Instruments and Equity Securities are valued on the basis of prices from an orderly transaction between market participants provided by reputable dealers or pricing services. In determining the value of a particular investment, pricing services may use certain information with respect to transactions in such investments, quotations from dealers, pricing matrices and market transactions in comparable investments and various relationships between investments. The valuation of certain equity securities is based on an observable price for an identical security adjusted for the effect of a restriction.
●
Freestanding Derivatives are valued using contractual cash flows and observable inputs comprising yield curves, foreign currency rates and credit spreads.
●
Senior and subordinate notes issued by CLO vehicles are classified based on the more observable fair value of CLO assets less (a) the fair value of any beneficial interests held by Blackstone, and (b) the carrying value of any beneficial interests that represent compensation for services.
Level III Valuation Techniques
In– Pricing inputs are unobservable for the absence of observable market prices, Blackstone values its investments using valuation methodologies applied on a consistent basis. For some investmentsfinancial instruments and includes situations where there is little, if any, market activity may exist; management’sfor the financial instrument. The inputs into the determination of fair value is then based on the best information availablerequire significant management judgment or estimation. Financial instruments that are included in the circumstances,this category generally include general and may incorporate management’s own assumptionslimited partnership interests in private equity and involves a significant degree of judgment, taking into consideration a combination of internal and external factors, including the appropriate risk adjustments for
non-performance
and liquidity risks. Investments for which market prices are not observable include private investments in the equity of operating companies, real estate properties,funds, credit-focused funds, distressed debt and non-investment grade residual interests in securitizations, certain funds of hedge fundscorporate bonds and credit-focused investments.
Real Estate Investments –
The fair values of real estate investments are determined by considering projected operating cash flows, sales of comparable assets, if any, and replacement costs, among other measures. The methods used to estimate the fair value of real estate investments include the discounted cash flow method and/or capitalization rates (“cap rates”) analysis. Valuations may be derived by reference to observable valuation measures for comparable companies or assets (for example, multiplying a key performance metric of the investee company or asset, such as EBITDA, by a relevant valuation multiple observed in the range of comparable companies or transactions), adjusted by management for differences between the investment and the referenced comparables, and in some instances by reference to option pricing models or other similar methods. Where a discounted cash flow method is used, a terminal value is derived by reference to an exit EBITDA multiple or capitalization rate. Additionally, where applicable, projected distributable cash flow-through debt maturity will be considered in support of the investment’s fair value.
Private Equity Investments –
The fair values of private equity investments are determined by reference to projected net earnings, earnings before interest, taxes, depreciation and amortization (“EBITDA”), the discounted cash flow method, public market or private transactions, valuations for comparable companies and other measures which, in many cases, are based on unaudited information at the time received. Valuations may be
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The Blackstone Group Inc.
Notes to Condensed Consolidated Financial Statements (Unaudited) - Continued
(All Dollars Are in Thousands, Except Share and Per Share Data, Except Where Noted)
derived by reference to observable valuation measures for comparable companies or transactions (for example, multiplying a key performance metric of the investee company, such as EBITDA, by a relevant valuation multiple observed in the range of comparable companies or transactions), adjusted by management for differences between the investment and the referenced comparables, and in some instances by reference to option pricing models or other similar methods. Where a discounted cash flow method is used, a terminal value is derived by reference to EBITDA or price/earnings exit multiples.
Credit-Focused Investments
– The fair values of credit-focused investments are generally determined on the basis of prices between market participants provided by reputable dealers or pricing services. For credit-focused investments that are not publicly traded or whose market prices are not readily available, Blackstone may utilize other valuation techniques, including the discounted cash flow method or a market approach. The discounted cash flow method projects the expected cash flows of the debt instrument based on contractual terms, and discounts such cash flows back to the valuation date using a market-based yield. The market-based yield is estimated using yields of publicly traded debt instruments issued by companies operating in similar industries as the subject investment, with similar leverage statistics and time to maturity.
The market approach is generally used to determine the enterprise value of the issuer of a credit investment, and considers valuation multiples of comparable companies or transactions. The resulting enterprise value will dictate whether or not such credit investment has adequate enterprise value coverage. In cases of distressed credit instruments, the market approach may be used to estimate a recovery value in the event of a restructuring.
Investments, at Fair Value
The Blackstone Funds are accounted for as investment companies under the American Institute of Certified Public Accountants Accounting and Auditing Guide,
Investment Companies
, and in accordance with the GAAP guidance on investment companies and reflect their investments, including majority
owned and controlled investments (the “Portfolio Companies”), at fair value. Such consolidated funds’ investments are reflected in Investments on the Condensed Consolidated Statements of Financial Condition at fair value, with unrealized gains and losses resulting from changes in fair value reflected as a component of Net Gains from Fund Investment Activities in the Condensed Consolidated Statements of Operations. Fair value is the amount that would be received to sell an asset or paid to transfer a liability, in an orderly transaction between market participants at the measurement date, at current market conditions (i.e., the exit price).
Blackstone’s principal investments are presented at fair value with unrealized appreciation or depreciation and realized gains and losses recognized in the Condensed Consolidated Statements of Operationsloans held within Investment Income (Loss).
For certain instruments, Blackstone has elected the fair value option. Such election is irrevocable and is applied on an investment by investment basis at initial recognition. Blackstone has applied the fair value option for certain loans and receivables, unfunded loan commitmentsCLO vehicles and certain investments in private debt securities that otherwise would not have been carried at fair value with gains and losses recorded in net income. The methodology for measuring the fair value of such investments is consistent with the methodology applied to private equity, real estate, credit-focused and funds of hedge funds investments. Changes in the fair value of such instruments are recognized in Investment Income (Loss) in the Condensed Consolidated Statements of Operations. Interest income on interest bearing loans and receivables and debt securities on which the fair value option has been elected is based on stated coupon rates adjusted for the accretion of purchase discounts and the amortization of purchase premiums. This interest income is recorded within Interest and Dividend Revenue.
Blackstone has elected the fair value option for the assets of consolidated CLO vehicles. As permitted under GAAP, Blackstone measures the liabilities of consolidated CLO vehicles as (a) the sum of the fair value of the consolidated CLO assets and the carrying value of any
non-financial
assets held temporarily, less (b) the sum of the fair value of any beneficial interests retained by Blackstone (other than those that represent compensation for services) and Blackstone’s carrying value of any beneficial interests that represent compensation for services. As a
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The Blackstone Group Inc.
Notes to Condensed Consolidated Financial Statements (Unaudited) - Continued
(All Dollars Are in Thousands, Except Share and Per Share Data, Except Where Noted)
result of this measurement alternative, there is no attribution of amounts to
Non-Controlling
Interests for consolidated CLO vehicles. Assets of the consolidated CLOs are presented within Investments within the Condensed Consolidated Statements of Financial Condition and Liabilities within Loans Payable for the amounts due to unaffiliated third parties and Due to Affiliates for the amounts held by
non-consolidated
affiliates. Changes in the fair value of consolidated CLO assets and liabilities and related interest, dividend and other income are presented within Net Gains from Fund Investment Activities. Expenses of consolidated CLO vehicles are presented in Fund Expenses.
Blackstone has elected the fair value option for certain proprietary investments that would otherwise have been accounted for using the equity method of accounting. The fair value of such investments is based on quoted prices in an active market or using the discounted cash flow method. Changes in fair value are recognized in Investment Income (Loss) in the Condensed Consolidated Statements of Operations.
Further disclosure on instruments for which the fair value option has been elected is presented in Note 7. “Fair Value Option”.
The investments of consolidated Blackstone Funds in funds of hedge funds (“Investee Funds”) are valued at net asset value (“NAV”) per share of the Investee Fund. In limited circumstances, Blackstone may determine, based on its own due diligence and investment procedures, that NAV per share does not represent fair value. In such circumstances, Blackstone will estimate the fair value in good faith and in a manner that it reasonably chooses, in accordance with the requirements of GAAP.
Certain investments of Blackstone and of the consolidated Blackstone funds of hedge funds and credit-focused funds measure their investments in underlying funds at fair value using NAV per share without adjustment. The terms of the investee’s investment generally provide for minimum holding periods or
lock-ups,
the institution of gates on redemptions or the suspension of redemptions or an ability to side-pocket investments, at the discretion of the investee’s fund manager, and as a result, investments may not be redeemable at, or within three months of, the reporting date. A side-pocket is used by hedge funds and funds of hedge funds to separate investments that may lack a readily ascertainable value, are illiquid or are subject to liquidity restriction. Redemptions are generally not permitted until the investments within a side-pocket are liquidated or it is deemed that the conditions existing at the time that required the investment to be included in the side-pocket no longer exist. As the timing of either of these events is uncertain, the timing at which Blackstone may redeem an investment held in a side-pocket cannot be estimated. Further disclosure on instruments for which fair value is measured using NAV per share is presented in Note 5. “Net Asset Value as Fair Value”.
Security and loan transactions are recorded on a trade date basis.
Equity Method Investments
Investments in which Blackstone is deemed to exert significant influence, but not control, are accounted for using the equity method of accounting except in casesover-the-counter derivatives where the fair value option has been elected. Blackstone has significant influence over all Blackstone Funds in which it invests but does not consolidate. Therefore, its investments in such Blackstone Funds, which include both a proportionate and disproportionate allocation of the profits and losses (as is the case with carry funds that include a Performance Allocation), are accounted for under the equity method. Under the equity method of accounting, Blackstone’s share of earnings (losses) from equity method investments is included in Investment Income (Loss) in the Condensed Consolidated Statements of Operations.based on unobservable inputs.
In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, the determination of which category within the fair value hierarchy is appropriate for any given financial instrument is based on the lowest level of input that is significant to the fair value measurement. Blackstone’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the financial instrument.
In cases where Blackstone’s equity method investments provide for a disproportionate allocation of the profits and losses (as is the case with carry funds that include a Performance Allocation), Blackstone’s share of earnings (losses) from equity method investments is determined using a balance sheet approach referred to as the hypothetical liquidation at book value (“HLBV”) method. Under the HLBV method, at the end of each reporting period, Blackstone calculates the Accrued Performance Allocations that would be due to Blackstone for each fund pursuant to the fund agreements as if the fair value of the underlying investments were realized as of such date,
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The Blackstone Group Inc.
Notes to Condensed Consolidated Financial Statements (Unaudited) - Continued
(All Dollars Are in Thousands, Except Share and Per Share Data, Except Where Noted)
irrespective of whether such amounts have been realized. As the fair value of underlying investments varies between reporting periods, it is necessary to make adjustments to amounts recorded as Accrued Performance Allocations to reflect either (a) positive performance resulting in an increase in the Accrued Performance Allocation to the general partner, or (b) negative performance that would cause the amount due to Blackstone to be less than the amount previously recognized as revenue, resulting in a negative adjustment to the Accrued Performance Allocation to the general partner. In each scenario, it is necessary to calculate the Accrued Performance Allocation on cumulative results compared to the Accrued Performance Allocation recorded to date and make the required positive or negative adjustments. Blackstone ceases to record negative Performance Allocations once previously Accrued Performance Allocations for such fund have been fully reversed. Blackstone is not obligated to pay guaranteed returns or hurdles, and therefore, cannot have negative Performance Allocations over the life of a fund. The carrying amounts of equity method investments are reflected in Investments in the Condensed Consolidated Statements of Financial Condition.
Results for Strategic Partners are reported on a three month lag from the fund financial statements, which generally report based on a three month lag from the underlying fund investments unless information is available on a more timely basis. Therefore, results presented herein do not include the impact of economic and market activity in the quarter in which such events occur. Economic and market activity for the periods presented is expected to affect reported results in upcoming periods.
Compensation and Benefits
Compensation
507,104458,4571,049,742935,000
Incentive Fee Compensation
14,4318,43227,75614,954
Performance Allocations Compensation
Realized
347,42338,569560,450110,992
Unrealized
1,150,219454,8132,200,188(942,565) 
Total Compensation and Benefits
 —2,019,177960,2713,838,136118,381
CompensationGeneral, Administrative and Other
 — Compensation consists of (a) salary and bonus, and benefits paid and payable to employees and senior managing directors and (b) equity-based compensation associated with the grants of equity-based awards to employees and senior managing directors. Compensation cost relating to the issuance of equity-based awards to senior managing directors and employees is measured at fair value at the grant date, and expensed over the vesting period on a straight-line basis, taking into consideration expected forfeitures, except in the case of (a) equity-based awards that do not require future service, which are expensed immediately, and (b) certain awards to recipients that meet criteria making them eligible for retirement (allowing such recipient to keep a percentage of those awards upon departure from Blackstone after becoming eligible for retirement), for which the expense for the portion of the award that would be retained in the event of retirement is either expensed immediately or amortized to the retirement date. Cash settled equity-based awards are classified as liabilities and are remeasured at the end of each reporting period.205,057169,051390,179326,617
Interest Expense
44,32239,27689,30580,920
Fund Expenses
3,7744,0836,1578,688
Total Expenses
2,272,3301,172,6814,323,777534,606
Other Income (Loss)
Compensation and BenefitsChange in Tax Receivable Agreement Liability
(392) 762,518(519) 
Net Gains (Losses) from Fund Investment Activities
127,116158,297247,469(169,077) 
 — Incentive Fee Compensation
 —
Incentive Fee Compensation consists of compensation paid based on Incentive Fees.
Total Other Income (Loss)
126,724158,373249,987(169,596) 
Income (Loss) Before Provision (Benefit) for Taxes
3,145,7481,501,7616,516,436(1,264,097) 
Compensation and Benefits
Provision (Benefit) for Taxes
288,250147,415287,803(11,288) 
 — Performance Allocations Compensation
 —
Performance Allocation Compensation consists of compensation paid based on Performance Allocations (which may be distributed in cash or
in-kind).
Such compensation expense is subject to both positive and negative adjustments. Unlike Performance Allocations, compensation expense is based on the performance of individual investments held by a fund rather than on a fund by fund basis. These amounts may also include allocations of investment income from Blackstone’s principal investments, to senior managing directors and employees participating in certain profit sharing initiatives.
Net Income (Loss)
2,857,4981,354,3466,228,633(1,252,809) 
Net Income (Loss) Attributable to Redeemable Non-Controlling
Interests in Consolidated Entities
637(3,426) 1,266(18,895) 
Non-Controlling
Interests in Consolidated Entities represent the component of Equity in consolidated Blackstone Funds held by third party investors and employees. The percentage interests held by third parties and employees are adjusted for general partner allocations and by subscriptions and redemptions in funds of hedge funds and certain credit-focused funds which occur during the reporting period. In addition, all
non-controlling
interests in consolidated Blackstone Funds are attributed a share of income (loss) arising from the respective funds and a share of other comprehensive income, if applicable.Net Income (Loss) is allocatedAttributable to
non-controlling
interests in consolidated entities based on the relative ownership interests of third party investors and employees after considering any contractual arrangements that govern the allocation of income (loss) such as fees allocable to The Blackstone Group Inc. 
2
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The Blackstone Group Inc.
Notes to Condensed Consolidated Financial Statements (Unaudited) - Continued
(All Dollars Are in Thousands, Except Share and Per Share Data, Except Where Noted)
Redeemable
Non-Controlling
Interests in Consolidated Entities
431,516294,378818,366(350,699) 
Non-controlling
interests relatedNet Income (Loss) Attributable to funds of hedge funds are subject to annual, semi-annual or quarterly redemption by investors in these funds following the expiration of a specified period of time, or may be withdrawn subject to a redemption fee during the period when capital may not be withdrawn. As limited partners in these types of funds have been granted redemption rights, amounts relating to third party interests in such consolidated funds are presented as Redeemable
Non-Controlling
Interests in Consolidated Entities within the Consolidated Statements of Financial Condition. When redeemable amounts become legally payable to investors, they are classified as a liability and included in Accounts Payable, Accrued Expenses and Other Liabilities in the Consolidated Statements of Financial Condition. For all consolidated funds in which redemption rights have not been granted,
non-controlling
interests are presented within Equity in the Consolidated Statements of Financial Condition as
Non-Controlling
Interests in Consolidated Entities.
Non-Controlling
Interests in Blackstone Holdings
1,116,193495,1282,351,977(384,989) 
Non-Controlling
Interests in Blackstone Holdings represent the component of Equity in the consolidated Blackstone Holdings Partnerships held by Blackstone personnel and others who are limited partners of the Blackstone Holdings Partnerships.
Certain costs and expenses are borne directly by the Holdings Partnerships. Income (Loss), excluding those costs directly borne by and attributable to the Holdings Partnerships, is attributable to
Non-Controlling
Interests in Blackstone Holdings. This residual attribution is based on the year to date average percentage of Blackstone Holdings Partnership Units and unvested participating Holdings Partnership Units held by Blackstone personnel and others who are limited partners of the Blackstone Holdings Partnerships. Unvested participating Holdings Partnership Units are excluded from the attribution in periods of loss as they are not contractually obligated to share in losses of the Holdings Partnerships.
Net Income (Loss) Per Share of Class A Common Stock
Basic Income (Loss) Per Share of Class A Common Stock is calculated by dividing Net Income (Loss) Attributable to The Blackstone Group Inc. by the weighted-average number of Class A common stock, unvested participating shares of Class A common stock outstanding for the period and vested deferred restricted shares of Class A common stock that have been earned for which issuance of the related shares of Class A common stock is deferred until future periods. Diluted
 $1,309,152 $568,266 $3,057,024 $(498,226) 
Net Income (Loss) Per Share of Class ACommon Stock
Basic
 $1.82 $0.81 $4.27 $(0.74) 
Diluted
 $1.82 $0.81 $4.27 $(0.74) 
Weighted-Average Shares of Common Stock reflectsOutstanding
Basic
721,141,954698,534,168715,121,029677,041,769
Diluted
      721,265,180      1,204,411,957      715,622,208      677,041,769
See notes to condensed consolidated financial statements.
8 
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The Blackstone Group Inc.
Condensed Consolidated Statements of Comprehensive Income (Unaudited)
(Dollars in Thousands)
                                                                                                             
   
Three Months Ended
 
Six Months Ended
   
June 30,
 
June 30,
   
2021
  
2020
 
2021
  
2020
Net Income (Loss)
   $2,857,498    $1,354,346   $6,228,633    $(1,252,809) 
Other Comprehensive Income (Loss), Currency Translation Adjustment
   2,124    8,316   10,055    (11,903) 
   
 
 
 
  
 
 
 
 
 
 
 
  
 
 
 
Comprehensive Income (Loss)
   2,859,622    1,362,662   6,238,688    (1,264,712) 
   
 
 
 
  
 
 
 
 
 
 
 
  
 
 
 
Less:
                   
Comprehensive Income (Loss) Attributable to Redeemable Non-Controlling Interests in Consolidated Entities
   637    (3,426)   1,266    (18,895) 
Comprehensive Income (Loss) Attributable to Non-Controlling Interests in Consolidated Entities
   431,516    294,378   818,366    (350,699) 
Comprehensive Income (Loss) Attributable to Non-Controlling Interests in Blackstone Holdings
   1,117,108    498,669   2,356,446    (388,629) 
   
 
 
 
  
 
 
 
 
 
 
 
  
 
 
 
Comprehensive Income (Loss) Attributable to Non-Controlling Interests
   1,549,261    789,621   3,176,078    (758,223) 
   
 
 
 
  
 
 
 
 
 
 
 
  
 
 
 
Comprehensive Income (Loss) Attributable to The Blackstone Group Inc.
   $      1,310,361    $      573,041   $      3,062,610    $      (506,489) 
   
 
 
 
  
 
 
 
 
 
 
 
  
 
 
 
See notes to condensed consolidated financial statements.
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Table of Contents
The Blackstone Group Inc.
Condensed Consolidated Statements of Changes in Equity (Unaudited)
(Dollars in Thousands, Except Share Data)
                                                                                                                                                       
  
Shares of

The Blackstone

Group Inc. (a)
 
The Blackstone Group Inc. (a)
        
          
Accumulated
         
Redeemable
          
Other
   
Non-
 
Non-
   
Non-
          
Compre-
   
Controlling
 
Controlling
   
Controlling
      
Additional
 
Retained
 
hensive
 
Total
 
Interests in
 
Interests in
   
Interests in
  
Common
 
Common
 
Paid-in-
 
Earnings
 
Income
 
Stockholders’
 
Consolidated
 
Blackstone
 
Total
 
Consolidated
  
Stock
 
Stock
 
Capital
 
(Deficit)
 
(Loss)
 
Equity
 
Entities
 
Holdings
 
Equity
 
Entities
Balance at March 31, 2021
  690,569,563  $7  $6,446,829  $1,408,768  $(11,454)  $7,844,150  $4,390,594  $4,524,898  $16,759,642  $65,546 
Net Income
  —   —   —   1,309,152   —   1,309,152   431,516   1,116,193   2,856,861   637 
Currency Translation Adjustment
  —   —   —   —   1,209   1,209   —   915   2,124   — 
Capital Contributions
  —   —   —   —   —   —   204,933   2,551   207,484   — 
Capital Distributions
  —   —   —   (584,126)   —   (584,126)   (166,518)   (441,687)   (1,192,331)   (615) 
Transfer of Non-Controlling Interests in Consolidated Entities
  —   —   —   —   —   —   (83)   —   (83)   — 
Deferred Tax Effects Resulting from Acquisition of Ownership Interests from Non-Controlling Interest Holders
  —   —   9,535   —   —   9,535   —   —   9,535   — 
Equity-Based Compensation
  —   —   77,083   —   —   77,083   —   55,046   132,129   — 
Net Delivery of Vested Blackstone Holdings Partnership Units and Shares of Common Stock
  273,659   —   (4,860)   —   —   (4,860)   —   —   (4,860)   — 
Repurchase of Shares of Common Stock and Blackstone Holdings Partnership Units
  (3,174,598)   —   (289,055)   —   —   (289,055)   —   —   (289,055)   — 
Change in The Blackstone Group Inc.’s Ownership Interest
  —   —   11,322   —   —   11,322   —   (11,322)   —   — 
Conversion of Blackstone Holdings Partnership Units to Shares of Common Stock
  3,424,839   —   31,746   —   —   31,746   —   (31,746)   —   — 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance at June 30, 2021
  691,093,463  $7  $6,282,600  $2,133,794  $(10,245)  $8,406,156  $4,860,442  $5,214,848  $18,481,446  $65,568 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(a)
During the impactperiod presented, Blackstone also had one share outstanding of all dilutive securities. Unvested participating shareseach of Class A commonSeries I and Series II preferred stock, are excluded from the computation in periodswith par value of loss as they are not contractually obligated to share in losses.each less than one cent.
continued...
See notes to condensed consolidated financial statements.
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Table of Contents
The Blackstone Group Inc.
Condensed Consolidated Statements of Changes in Equity (Unaudited)
(Dollars in Thousands, Except Share Data)
                                                                                                                                                       
  
Shares of

The Blackstone

Group Inc. (a)
 
The Blackstone Group Inc. (a)
        
          
Accumulated
         
Redeemable
          
Other
   
Non-
 
Non-
   
Non-
          
Compre-
   
Controlling
 
Controlling
   
Controlling
      
Additional
 
Retained
 
hensive
 
Total
 
Interests in
 
Interests in
   
Interests in
  
Common
 
Common
 
Paid-in-
 
Earnings
 
Income
 
Stockholders’
 
Consolidated
 
Blackstone
 
Total
 
Consolidated
  
Stock
 
Stock
 
Capital
 
(Deficit)
 
(Loss)
 
Equity
 
Entities
 
Holdings
 
Equity
 
Entities
Balance at March 31, 2020
  676,630,489  $7  $6,298,093  $(871,948)  $(41,533)  $5,384,619  $3,591,160  $2,530,263  $11,506,042  $72,066 
Net Income (Loss)
  —   —   —   568,266   —   568,266��  294,378   495,128   1,357,772   (3,426) 
Currency Translation Adjustment
  —   —   —   —   4,775   4,775   —   3,541   8,316   — 
Capital Contributions
  —   —   —   —   —   —   170,282   —   170,282   — 
Capital Distributions
  —   —   —   (270,613)   —   (270,613)   (155,525)   (203,354)   (629,492)   (76) 
Transfer of Non-Controlling Interests in Consolidated Entities
  —   —   —   —   —   —   134   —   134   — 
Deferred Tax Effects Resulting from Acquisition of Ownership Interests from Non-Controlling Interest Holders
  —   —   2,806   —   —   2,806   —   —   2,806   — 
Equity-Based Compensation
  —   —   73,455   —   —   73,455   —   55,442   128,897   — 
Net Delivery of Vested Blackstone Holdings Partnership Units and Shares of Common Stock
  56,662   —   (2,398)   —   —   (2,398)   —   —   (2,398)   — 
Repurchase of Shares of Common Stock and Blackstone Holdings Partnership Units
  (2,000,000)   —   (114,893)   —   —   (114,893)   —   —   (114,893)   — 
Change in The Blackstone Group Inc.’s Ownership Interest
  —   —   4,006   —   —   4,006   —   (4,006)   —   — 
Conversion of Blackstone Holdings Partnership Units to Shares of Common Stock
  2,187,432   —   10,971   —   —   10,971   —   (10,971)   —   — 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance at June 30, 2020
  676,874,583  $7  $6,272,040  $(574,295)  $(36,758)  $5,660,994  $3,900,429  $2,866,043  $12,427,466  $68,564 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(a)
During the period presented, Blackstone appliesalso had one share outstanding of each of Series I and Series II preferred stock, with par value of each less than one cent.
continued...
See notes to condensed consolidated financial statements.
11
Table of Contents
The Blackstone Group Inc.
Condensed Consolidated Statements of Changes in Equity (Unaudited)
(Dollars in Thousands, Except Share Data)
                                                                                                                                                       
  
Shares of

The Blackstone

Group Inc. (a)
 
The Blackstone Group Inc. (a)
        
          
Accumulated
         
Redeemable
          
Other
   
Non-
 
Non-
   
Non-
          
Compre-
   
Controlling
 
Controlling
   
Controlling
      
Additional
 
Retained
 
hensive
 
Total
 
Interests in
 
Interests in
   
Interests in
  
Common
 
Common
 
Paid-in-
 
Earnings
 
Income
 
Stockholders’
 
Consolidated
 
Blackstone
 
Total
 
Consolidated
  
Stock
 
Stock
 
Capital
 
(Deficit)
 
(Loss)
 
Equity
 
Entities
 
Holdings
 
Equity
 
Entities
Balance at December 31, 2020
  683,875,544  $7  $6,332,105  $335,762  $(15,831)  $6,652,043  $4,042,157  $3,831,148  $14,525,348  $65,161 
Net Income
  —   —   —   3,057,024   —   3,057,024   818,366   2,351,977   6,227,367   1,266 
Currency Translation Adjustment
  —   —   —   —   5,586   5,586   —   4,469   10,055   — 
Capital Contributions
  —   —   —   —   —   —   412,230   5,259   417,489   — 
Capital Distributions
  —   —   —   (1,258,992)   —   (1,258,992)   (408,718)   (1,024,657)   (2,692,367)   (859) 
Transfer of Non-Controlling Interests in Consolidated Entities
  —   —   —   —   —   —   (3,593)   —   (3,593)   — 
Deferred Tax Effects Resulting from Acquisition of Ownership Interests from Non-Controlling Interest Holders
  —   —   19,714   —   —   19,714   —   —   19,714   — 
Equity-Based Compensation
  —   —   168,606   —   —   168,606   —   120,941   289,547   — 
Net Delivery of Vested Blackstone Holdings Partnership Units and Shares of Common Stock
  1,986,972   —   (23,059)   —   —   (23,059)   —   —   (23,059)   — 
Repurchase of Shares of Common Stock and Blackstone Holdings Partnership Units
  (3,174,598)   —   (289,055)   —   —   (289,055)   —   —   (289,055)   — 
Change in The Blackstone Group Inc.’s Ownership Interest
  —   —   3,877   —   —   3,877   —   (3,877)   —   — 
Conversion of Blackstone Holdings Partnership Units to Shares of Common Stock
  8,405,545   —   70,412   —   —   70,412   —   (70,412)   —   — 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance at June 30, 2021
  691,093,463  $7  $6,282,600  $2,133,794  $(10,245)  $8,406,156  $4,860,442  $5,214,848  $18,481,446  $65,568 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(a)
During the treasuryperiod presented, Blackstone also had one share outstanding of each of Series I and Series II preferred stock, method to determinewith par value of each less than one cent.
continued...
See notes to condensed consolidated financial statements.
12
Table of Contents
The Blackstone Group Inc.
Condensed Consolidated Statements of Changes in Equity (Unaudited)
(Dollars in Thousands, Except Share Data)
                                                                                                                                                       
  
Shares of
The Blackstone

Group Inc. (a)
 
The Blackstone Group Inc. (a)
        
          
Accumulated
         
Redeemable
          
Other
   
Non-
 
Non-
   
Non-
          
Compre-
   
Controlling
 
Controlling
   
Controlling
      
Additional
 
Retained
 
hensive
 
Total
 
Interests in
 
Interests in
   
Interests in
  
Common
 
Common
 
Paid-in-
 
Earnings
 
Income
 
Stockholders’
 
Consolidated
 
Blackstone
 
Total
 
Consolidated
  
Stock
 
Stock
 
Capital
 
(Deficit)
 
(Loss)
 
Equity
 
Entities
 
Holdings
 
Equity
 
Entities
Balance at December 31, 2019
  671,157,692  $7  $6,428,647  $609,625  $(28,495)  $7,009,784  $4,186,069  $3,819,548  $15,015,401  $87,651 
Net Income (Loss)
  —   —   —   (498,226)   —   (498,226)   (350,699)   (384,989)   (1,233,914)   (18,895) 
Currency Translation Adjustment
  —   —   —   —   (8,263)   (8,263)   —   (3,640)   (11,903)   — 
Capital Contributions
  —   —   —   —   —   —   372,961   —   372,961   — 
Capital Distributions
  —   —   —   (685,694)   —   (685,694)   (305,797)   (569,055)   (1,560,546)   (192) 
Transfer of Non-Controlling Interests in Consolidated Entities
  —   —   —   —   —   —   (2,105)   —   (2,105)   — 
Deferred Tax Effects Resulting from Acquisition of Ownership Interests from Non-Controlling Interest Holders
  —   —   15,200   —   —   15,200   —   —   15,200   — 
Equity-Based Compensation
  —   —   124,279   —   —   124,279   —   94,100   218,379   — 
Net Delivery of Vested Blackstone Holdings Partnership Units and Shares of Common Stock
  1,740,156   —   (17,639)   —   —   (17,639)   —   (7)   (17,646)   — 
Repurchase of Shares of Common Stock and Blackstone Holdings Partnership Units
  (6,969,237)   —   (368,361)   —   —   (368,361)   —   —   (368,361)   — 
Change in The Blackstone Group Inc.’s Ownership Interest
  —   —   13,785   —   —   13,785   —   (13,785)   —   — 
Conversion of Blackstone Holdings Partnership Units to Shares of Common Stock
  10,945,972   —   76,129   —   —   76,129   —   (76,129)   —   — 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance at June 30, 2020
  676,874,583  $7  $6,272,040  $(574,295)  $(36,758)  $5,660,994  $3,900,429  $2,866,043  $12,427,466  $68,564 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(a)
During the dilutive weighted-average common unitsperiod presented, Blackstone also had one share outstanding of each of Series I and Series II preferred stock, with par value of each less than one cent.
See notes to condensed consolidated financial statements.
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The Blackstone Group Inc.
Condensed Consolidated Statements of Cash Flows (Unaudited)
(Dollars in Thousands)
                                                       
   
Six Months Ended June 30,
   
2021
 
2020
Operating Activities
         
Net Income (Loss)
   $6,228,633   $(1,252,809) 
Adjustments to Reconcile Net Income (Loss) to Net Cash Provided by Operating Activities
         
Blackstone Funds Related
         
Net Realized Gains on Investments
   (1,949,167)   (261,870) 
Changes in Unrealized (Gains) Losses on Investments
   (1,140,654)  744,335 
Non-Cash Performance Allocations
   (5,161,667)  2,385,158 
Non-Cash Performance Allocations and Incentive Fee Compensation
   2,780,561   (821,798) 
Equity-Based Compensation Expense
   305,422   238,721 
Amortization of Intangibles
   37,476   35,500 
Other Non-Cash Amounts Included in Net Income (Loss)
   (153,350)  (175,677) 
Cash Flows Due to Changes in Operating Assets and Liabilities
         
Accounts Receivable
   346,505   562,123 
Due from Affiliates
   109,163   203,698 
Other Assets
   (55,225)   (120,679) 
Accrued Compensation and Benefits
   (440,034)   (443,534) 
Securities Sold, Not Yet Purchased
   (14,925)   (26,840) 
Accounts Payable, Accrued Expenses and Other Liabilities
   13,373   (182,034) 
Repurchase Agreements
   (19,562)   (73,498) 
Due to Affiliates
   19,836   85,380 
Investments Purchased
   (2,718,024)  (3,786,662) 
Cash Proceeds from Sale of Investments
   5,007,907   4,381,268 
   
 
 
 
 
 
 
 
Net Cash Provided by Operating Activities
       3,196,268       1,490,782 
   
 
 
 
 
 
 
 
Investing Activities
         
Purchase of Furniture, Equipment and Leasehold Improvements
   (34,811)   (25,453) 
   
 
 
 
 
 
 
 
Net Cash Used in Investing Activities
   (34,811)   (25,453) 
   
 
 
 
 
 
 
 
Financing Activities
         
Distributions to Non-Controlling Interest Holders in Consolidated Entities
   (409,577)   (305,914) 
Contributions from Non-Controlling Interest Holders in Consolidated Entities
   407,738   355,599 
Payments Under Tax Receivable Agreement
   (51,366)   (73,881) 
Net Settlement of Vested Common Stock and Repurchase of Common Stock and Blackstone Holdings Partnership Units
   (312,114)   (386,007) 
continued...
See notes to condensed consolidated financial statements.
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The Blackstone Group Inc.
Condensed Consolidated Statements of Cash Flows (Unaudited)
(Dollars in Thousands)
                                                       
   
Six Months Ended June 30,
   
2021
 
2020
Financing Activities (Continued)
         
Repayment and Repurchase of Loans Payable
   $0   $(1,896) 
Dividends/Distributions to Shareholders and Unitholders
   (2,278,390)   (1,254,749) 
   
 
 
 
 
 
 
 
Net Cash Used in Financing Activities
   (2,643,709)   (1,666,848) 
   
 
 
 
 
 
 
 
Effect of Exchange Rate Changes on Cash and Cash Equivalents and Cash Held by Blackstone Funds and Other
   (5,084)   (2,419) 
   
 
 
 
 
 
 
 
Cash and Cash Equivalents and Cash Held by Blackstone Funds and Other
         
Net Increase (Decrease)
   512,664   (203,938) 
Beginning of Period
   2,064,456   2,523,651 
   
 
 
 
 
 
 
 
End of Period
   $    2,577,120   $    2,319,713 
   
 
 
 
 
 
 
 
   
Supplemental Disclosure of Cash Flows Information
         
Payments for Interest
   $102,524   $93,645 
   
 
 
 
 
 
 
 
Payments for Income Taxes
   $289,244   $42,330 
   
 
 
 
 
 
 
 
Supplemental Disclosure of Non-Cash Investing and Financing Activities
         
Non-Cash Contributions from Non-Controlling Interest Holders
   $6,076   $16,033 
   
 
 
 
 
 
 
 
Non-Cash Distributions to Non-Controlling Interest Holders
   $0   $(75) 
   
 
 
 
 
 
 
 
Transfer of Interests to Non-Controlling Interest Holders
   $(3,593)   $(2,105) 
   
 
 
 
 
 
 
 
Change in The Blackstone Group Inc.’s Ownership Interest
   $3,877   $13,785 
   
 
 
 
 
 
 
 
Net Settlement of Vested Common Stock
   $124,386   $71,978 
   
 
 
 
 
 
 
 
Conversion of Blackstone Holdings Units to Common Stock
   $70,412   $76,129 
   
 
 
 
 
 
 
 
Acquisition of Ownership Interests from Non-Controlling Interest Holders
         
Deferred Tax Asset
   $(167,433)  $(148,838) 
   
 
 
 
 
 
 
 
Due to Affiliates
   $147,719   $133,638 
   
 
 
 
 
 
 
 
Equity
   $19,714   $15,200 
   
 
 
 
 
 
 
 
The following table provides a reconciliation of Cash and Cash Equivalents and Cash Held by Blackstone Funds and Other reported within the Condensed Consolidated Statements of Financial Condition:
                                                       
   
June 30,
  
December 31,
   
2021
  
2020
Cash and Cash Equivalents
   $2,467,444    $1,999,484 
Cash Held by Blackstone Funds and Other
   109,676    64,972 
   
 
 
 
  
 
 
 
    $    2,577,120    $    2,064,456 
   
 
 
 
  
 
 
 
See notes to condensed consolidated financial statements.
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The Blackstone Group Inc.
Notes to Condensed Consolidated Financial Statements (Unaudited)
(All Dollars are in Thousands, Except Share and Per Share Data, Except Where Noted)
1.    Organization
The Blackstone Group Inc., together with its consolidated subsidiaries (“Blackstone” or the “Company”), is one of the world’s leading investment firms. Blackstone’s asset management business includes investment vehicles focused on real estate, private equity, public debt and equity, growth equity, opportunistic, non-investment grade credit, real assets and secondary funds, all on a global basis. “Blackstone Funds” refers to the funds and other vehicles that are managed by Blackstone. Blackstone’s business is organized into
4 segments: Real Estate, Private Equity, Hedge Fund Solutions and Credit & Insurance.
Effective August 6, 2021, The Blackstone Group Inc. changed its name to Blackstone Inc. Blackstone Inc. was initially formed as The Blackstone Group L.P., a Delaware limited partnership, on March 12, 2007. Prior to its conversion (effective July 1, 2019) to a Delaware corporation (the “Conversion”), Blackstone Inc. was managed and operated by Blackstone Group Management L.L.C., which is wholly owned by Blackstone’s senior managing directors and controlled by 
1of Blackstone’s founders, Stephen A. Schwarzman (the “Founder”). Effective February 26, 2021, the Certificate of Incorporation of Blackstone Inc. was amended and restated to rename Blackstone’s Class A Common stock as “common stock” and reclassify Blackstone’s Class B common stock and Class C common stock into a new Series I preferred stock and a new Series II preferred stock, respectively. All references to common stock, series I preferred stock and series II preferred stock prior to such date refer to Class A, Class B and Class C common stock, respectively. See Note 13. “Income Taxes” and Note 14. “Earnings Per Share and Stockholders’ Equity — Stockholders’ Equity.”
The activities of Blackstone are conducted through its holding partnerships: Blackstone Holdings I L.P., Blackstone Holdings AI L.P., Blackstone Holdings II L.P., Blackstone Holdings III L.P. and Blackstone Holdings IV L.P. (collectively, “Blackstone Holdings,” “Blackstone Holdings Partnerships” or the “Holding Partnerships”). Blackstone, through its wholly owned subsidiaries, is the sole general partner of each of the Holding Partnerships. Generally, holders of the limited partner interests in the Holding Partnerships may, four times each year, exchange their limited partnership interests (“Partnership Units”) for Blackstone common stock, on a one-to-one basis, exchanging one Partnership Unit from each of the Holding Partnerships for one share of Blackstone common stock.
2.    Summary of Significant Accounting Policies
Basis of Presentation
The accompanying unaudited condensed consolidated financial statements of Blackstone have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and the instructions to Form 10-Q. The condensed consolidated financial statements, including these notes, are unaudited and exclude some of the disclosures required in audited financial statements. Management believes it has made all necessary adjustments (consisting of only normal recurring items) so that the condensed consolidated financial statements are presented fairly and that estimates made in preparing its condensed consolidated financial statements are reasonable and prudent. The operating results presented for interim periods are not necessarily indicative of the results that may be expected for any other interim period or for the entire year. These condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements included in Blackstone’s Annual Report on Form 10-K for the year ended December 31, 2020 filed with the Securities and Exchange Commission.
The condensed consolidated financial statements include the accounts of Blackstone, its wholly owned or majority owned subsidiaries, the consolidated entities which are considered to be variable interest entities and for which Blackstone is considered the primary beneficiary, and certain partnerships or similar entities which are not considered variable interest entities but in which the general partner is determined to have control.
All intercompany balances and transactions have been eliminated in consolidation.
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The Blackstone Group Inc.
Notes to Condensed Consolidated Financial Statements (Unaudited) - Continued
(All Dollars are in Thousands, Except Share and Per Share Data, Except Where Noted)
Restructurings within consolidated collateralized loan obligations (“CLOs”) are treated as investment purchases or sales, as applicable, in the Condensed Consolidated Statements of Cash Flows.
COVID-19
and Global Economic Market Conditions
The ongoing novel coronavirus
(“COVID-19”)
pandemic has caused disruption in the U.S. and global economies. More recently, broad-based economic recovery and activity in the U.S. have accelerated following meaningful progress on vaccine distribution, the easing of shutdowns and other restrictions and support from previously implemented fiscal and monetary stimulus. Nevertheless, both in the U.S. and abroad, there is continued uncertainty regarding the trajectory of a continuing recovery, particularly given the strength of the Delta variant. Accordingly, this recovery remains uneven with dispersion across sectors and regions. The estimates and assumptions underlying these consolidated financial statements are based on the information available as of June 30, 2021 for the current period and as of June 30, 2020 or December 31, 2020, as applicable. The estimates and assumptions include judgments about financial market and economic conditions which have changed, and may continue to change, over time.
Consolidation
Blackstone consolidates all entities that it controls through a majority voting interest or otherwise, including those Blackstone Funds in which the general partner has a controlling financial interest. Blackstone has a controlling financial interest in Blackstone Holdings because the limited partners do not have the right to dissolve the partnerships or have substantive kick-out rights or participating rights that would overcome the control held by Blackstone. Accordingly, Blackstone consolidates Blackstone Holdings and records non-controlling interests to reflect the economic interests of the limited partners of Blackstone Holdings.
In addition, Blackstone consolidates all variable interest entities (“VIE”) for which it is the primary beneficiary. An enterprise is determined to be the primary beneficiary if it holds a controlling financial interest. A controlling financial interest is defined as (a) the power to direct the activities of a VIE that most significantly impact the entity’s economic performance and (b) the obligation to absorb losses of the entity or the right to receive benefits from the entity that could potentially be significant to the VIE. The consolidation guidance requires an analysis to determine (a) whether an entity in which Blackstone holds a variable interest is a VIE and (b) whether Blackstone’s involvement, through holding interests directly or indirectly in the entity or contractually through other variable interests, would give it a controlling financial interest. Performance of that analysis requires the exercise of judgment.
Blackstone determines whether it is the primary beneficiary of a VIE at the time it becomes involved with a variable interest entity and continuously reconsiders that conclusion. In determining whether Blackstone is the primary beneficiary, Blackstone evaluates its control rights as well as economic interests in the entity held either directly or indirectly by Blackstone. The consolidation analysis can generally be performed qualitatively; however, if it is not readily apparent that Blackstone is not the primary beneficiary, a quantitative analysis may also be performed. Investments and redemptions (either by Blackstone, affiliates of Blackstone or third parties) or amendments to the governing documents of the respective Blackstone Funds could affect an entity’s status as a VIE or the determination of the primary beneficiary. At each reporting date, Blackstone assesses whether it is the primary beneficiary and will consolidate or deconsolidate accordingly.
Assets of consolidated VIEs that can only be used to settle obligations of the consolidated VIE and liabilities of a consolidated VIE for which creditors (or beneficial interest holders) do not have recourse to the general credit of Blackstone are presented in a separate section in the Condensed Consolidated Statements of Financial Condition.
Blackstone’s other disclosures regarding VIEs are discussed in Note 9. “Variable Interest Entities.”
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The Blackstone Group Inc.
Notes to Condensed Consolidated Financial Statements (Unaudited) - Continued
(All Dollars are in Thousands, Except Share and Per Share Data, Except Where Noted)
Revenue Recognition
Revenues primarily consist of management and advisory fees, incentive fees, investment income, interest and dividend revenue and other.
Management and advisory fees and incentive fees are accounted for as contracts with customers. Under the guidance for contracts with customers, an entity is required to (a) identify the contract(s) with a customer, (b) identify the performance obligations in the contract, (c) determine the transaction price, (d) allocate the transaction price to the performance obligations in the contract, and (e) recognize revenue when (or as) the entity satisfies a performance obligation. In determining the transaction price, an entity may include variable consideration only to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized would not occur when the uncertainty associated with the variable consideration is resolved. See Note 18. “Segment Reporting” for a disaggregated presentation of revenues from contracts with customers.
Management and Advisory Fees, Net
 — Management and Advisory Fees, Net are comprised of management fees, including base management fees, transaction and other fees and advisory fees net of management fee reductions and offsets.
Blackstone earns base management fees from limited partners of funds in each of its managed funds, at a fixed percentage of assets under management, net asset value, total assets, committed capital or invested capital. These customer contracts require Blackstone to provide investment management services, which represents a performance obligation that Blackstone satisfies over time. Management fees are a form of variable consideration because the fees Blackstone is entitled to vary based on fluctuations in the basis for the management fee. The amount recorded as revenue is generally determined at the end of the period because these management fees are payable on a regular basis (typically quarterly) and are not subject to clawback once paid.
Transaction, advisory and other fees are principally fees charged to the limited partners of funds indirectly through the managed funds and portfolio companies. The investment advisory agreements generally require that the investment adviser reduce the amount of management fees payable by the limited partners to Blackstone (“management fee reductions”) by an amount equal to a portion of the transaction and other fees paid to Blackstone by the portfolio companies. The amount of the reduction varies by fund, the type of fee paid by the portfolio company and the previously incurred expenses of the fund. These fees and associated management fee reductions are a component of the transaction price for Blackstone’s performance obligation to provide investment management services to the limited partners of funds and are recognized as changes to the transaction price in the period in which they are charged and the services are performed.
Management fee offsets are reductions to management fees payable by the limited partners of the Blackstone Funds, which are based on the amount such limited partners reimburse the Blackstone Funds or Blackstone primarily for placement fees. Providing investment management services requires Blackstone to arrange for services on behalf of its customers. In those situations where Blackstone is acting as an agent on behalf of the limited partners of funds, it presents the cost of services as net against management fee revenue. In all other situations, Blackstone is primarily responsible for fulfilling the services and is therefore acting as a principal for those arrangements. As a result, the cost of those services is presented as Compensation or General, Administrative and Other expense, as appropriate, with any reimbursement from the limited partners of the funds recorded as Management and Advisory Fees, Net. In cases where the limited partners of the funds are determined to be the customer in an arrangement, placement fees may be capitalized as a cost to acquire a customer contract. Capitalized placement fees are amortized over the life of the customer contract, are recorded within Other Assets in the Condensed Consolidated Statements of Financial Condition and amortization is recorded within General, Administrative and Other within the Condensed Consolidated Statements of Operations.
Accrued but unpaid Management and Advisory Fees, net of management fee reductions and management fee offsets, as of the reporting date are included in Accounts Receivable or Due from Affiliates in the Condensed Consolidated Statements of Financial Condition.
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The Blackstone Group Inc.
Notes to Condensed Consolidated Financial Statements (Unaudited) - Continued
(All Dollars are in Thousands, Except Share and Per Share Data, Except Where Noted)
Incentive Fees 
— Contractual fees earned based on the performance of Blackstone Funds (“Incentive Fees”) are a form of variable consideration in Blackstone’s contracts with customers to provide investment management services. Incentive Fees are earned based on fund performance during the period, subject to the achievement of minimum return levels, or high water marks, in accordance with the respective terms set out in each fund’s governing agreements. Incentive Fees will not be recognized as revenue until (a) it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur, or (b) the uncertainty associated with the variable consideration is subsequently resolved. Incentive Fees are typically recognized as revenue when realized at the end of the measurement period. Once realized, such fees are not subject to clawback or reversal. Accrued but unpaid Incentive Fees charged directly to investors in Blackstone Funds as of the reporting date are recorded within Due from Affiliates in the Condensed Consolidated Statements of Financial Condition.
Investment Income (Loss)
 — Investment Income (Loss) represents the unrealized and realized gains and losses on Blackstone’s Performance Allocations and Principal Investments.
In carry fund structures, Blackstone, through its subsidiaries, invests alongside its limited partners in a partnership and is entitled to its pro-rata share of the results of the fund (a “pro-rata allocation”). In addition to a pro-rata allocation, and assuming certain investment returns are achieved, Blackstone is entitled to a disproportionate allocation of the income otherwise allocable to the limited partners, commonly referred to as carried interest (“Performance Allocations”).
Performance Allocations are made to the general partner based on cumulative fund performance to date, subject to a preferred return to limited partners. At the end of each reporting period, Blackstone calculates the balance of accrued Performance Allocations (“Accrued Performance Allocations”) that would be due to Blackstone for each fund, pursuant to the fund agreements, as if the fair value of the underlying investments were realized as of such date, irrespective of whether such amounts have been realized. As the fair value of underlying investments varies between reporting periods, it is necessary to make adjustments to amounts recorded as Accrued Performance Allocations to reflect either (a) positive performance resulting in an increase in the Accrued Performance Allocation to the general partner or (b) negative performance that would cause the amount due to Blackstone to be less than the amount previously recognized as revenue, resulting in a negative adjustment to the Accrued Performance Allocation to the general partner. In each scenario, it is necessary to calculate the Accrued Performance Allocation on cumulative results compared to the Accrued Performance Allocation recorded to date and make the required positive or negative adjustments. Blackstone ceases to record negative Performance Allocations once previously Accrued Performance Allocations for such fund have been fully reversed. Blackstone is not obligated to pay guaranteed returns or hurdles, and therefore, cannot have negative Performance Allocations over the life of a fund. Accrued Performance Allocations as of the reporting date are reflected in Investments in the Condensed Consolidated Statements of Financial Condition.
Performance Allocations are realized when an underlying investment is profitably disposed of and the fund’s cumulative returns are in excess of the preferred return or, in limited instances, after certain thresholds for return of capital are met. Performance Allocations are subject to clawback to the extent that the Performance Allocation received to date exceeds the amount due to Blackstone based on cumulative results. As such, the accrual for potential repayment of previously received Performance Allocations, which is a component of Due to Affiliates, represents all amounts previously distributed to Blackstone Holdings and non-controlling interest holders that would need to be repaid to the Blackstone carry funds if the Blackstone carry funds were to be liquidated based on the current fair value of the underlying funds’ investments as of the reporting date. The actual clawback liability, however, generally does not become realized until the end of a fund’s life except for certain funds, including certain Blackstone real estate funds, multi-asset class investment funds and credit-focused funds, which may have an interim clawback liability.
Principal Investments include the unrealized and realized gains and losses on Blackstone’s principal investments, including its investments in Blackstone Funds that are not consolidated and receive pro-rata allocations, its equity method investments, and other principal investments. Income (Loss) on Principal
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The Blackstone Group Inc.
Notes to Condensed Consolidated Financial Statements (Unaudited) - Continued
(All Dollars are in Thousands, Except Share and Per Share Data, Except Where Noted)
Investments is realized when Blackstone redeems all or a portion of its investment or when Blackstone receives cash income, such as dividends or distributions. Unrealized Income (Loss) on Principal Investments results from changes in the fair value of the underlying investment as well as the reversal of unrealized gain (loss) at the time an investment is realized.
Interest and Dividend Revenue 
— Interest and Dividend Revenue comprises primarily interest and dividend income earned on principal investments not accounted for under the equity method held by Blackstone.
Other Revenue
 — Other Revenue consists of miscellaneous income and foreign exchange gains and losses arising on transactions denominated in currencies other than U.S. dollars.
Fair Value of Financial Instruments
GAAP establishes a hierarchical disclosure framework which prioritizes and ranks the level of market price observability used in measuring financial instruments at fair value. Market price observability is affected by a number of factors, including the type of financial instrument, the characteristics specific to the financial instrument and the state of the marketplace, including the existence and transparency of transactions between market participants. Financial instruments with readily available quoted prices in active markets generally will have a higher degree of market price observability and a lesser degree of judgment used in measuring fair value.
Financial instruments measured and reported at fair value are classified and disclosed based on the observability of inputs used in the determination of fair values, as follows:
●
Level I – Quoted prices are available in active markets for certain equity-based compensation awards. Blackstone applies the
“if-converted”
method to the Blackstone Holdings Partnership Units to determine the dilutive impact, if any,identical financial instruments as of the exchange rightreporting date. The types of financial instruments in Level I include listed equities, listed derivatives and mutual funds with quoted prices. Blackstone does not adjust the quoted price for these investments, even in situations where Blackstone holds a large position and a sale could reasonably impact the quoted price.
●
Level II – Pricing inputs are other than quoted prices in active markets, which are either directly or indirectly observable as of the reporting date, and fair value is determined through the use of models or other valuation methodologies. Financial instruments which are generally included in the Blackstone Holdings Partnership Units.
Reverse Repurchasethis category include corporate bonds and Repurchase Agreements
Securities purchased under agreements to resell (“reverse repurchase agreements”)loans, including corporate bonds and securities sold under agreements to repurchase (“repurchase agreements”), comprised primarily of U.S. and
non-U.S.
loans held within CLO vehicles, government and agency securities, asset-backedless liquid and restricted equity securities, and corporate debt, represent collateralized financing transactions. Such transactionscertain over-the-counter derivatives where the fair value is based on observable inputs. Senior and subordinated notes issued by CLO vehicles are recorded inclassified within Level II of the Condensed Consolidated Statements of Financial Condition at their contractual amounts and include accrued interest. The carryingfair value of reverse repurchase and repurchase agreements approximates fair value.hierarchy.
●
2
5Level III – Pricing inputs are unobservable for the financial instruments and includes situations where there is little, if any, market activity for the financial instrument. The inputs into the determination of fair value require significant management judgment or estimation. Financial instruments that are included in this category generally include general and limited partnership interests in private equity and real estate funds, credit-focused funds, distressed debt and non-investment grade residual interests in securitizations, certain corporate bonds and loans held within CLO vehicles and certain over-the-counter derivatives where the fair value is based on unobservable inputs.
In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, the determination of which category within the fair value hierarchy is appropriate for any given financial instrument is based on the lowest level of input that is significant to the fair value measurement. Blackstone’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the financial instrument.
Level II Valuation Techniques
Financial instruments classified within Level II of the fair value hierarchy comprise debt instruments, including certain corporate loans and bonds held by Blackstone’s consolidated CLO vehicles and debt securities sold, not yet purchased. Certain equity securities and derivative instruments valued using observable inputs are also classified as Level II.
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Notes to Condensed Consolidated Financial Statements (Unaudited) - Continued
(All Dollars Are in Thousands, Except Share and Per Share Data, Except Where Noted)
Blackstone manages credit exposure arising from reverse repurchase agreements and repurchase agreements by, in appropriate circumstances, entering into master netting agreements and collateral arrangements with counterparties that provide Blackstone, in the event of a counterparty default, the right to liquidate collateral and the right to offset a counterparty’s rights and obligations.
Blackstone takes possession of securities purchased under reverse repurchase agreements and is permitted to repledge, deliver or otherwise use such securities. Blackstone also pledges its financial instruments to counterparties to collateralize repurchase agreements. Financial instruments pledged that can be repledged, delivered or otherwise used by the counterparty are recorded in Investments in the Condensed Consolidated Statements of Financial Condition. Additional disclosures relating to repurchase agreements are discussed in Note 10. “Repurchase Agreements”.
Blackstone does not offset assets and liabilities relating to reverse repurchase agreements and repurchase agreements in its Condensed Consolidated Statements of Financial Condition. Additional disclosures relating to offsetting are discussed in Note 11. “Offsetting of Assets and Liabilities”.
Securities Sold, Not Yet Purchased
Securities Sold, Not Yet Purchased consist of equity and debt securities that Blackstone has borrowed and sold. Blackstone is required to “cover” its short sale in the future by purchasing the security at prevailing market prices and delivering it to the counterparty from which it borrowed the security. Blackstone is exposed to loss in the event that the price at which a security may have to be purchased to cover a short sale exceeds the price at which the borrowed security was sold short.
Securities Sold, Not Yet Purchased are recorded at fair value in the Condensed Consolidated Statements of Financial Condition.
Notes to Condensed Consolidated Financial Statements (Unaudited) - Continued
(All Dollars are in Thousands, Except Share and Per Share Data, Except Where Noted)
The valuation techniques used to value financial instruments classified within Level II of the fair value hierarchy are as follows:
●
Debt Instruments and Equity Securities are valued on the basis of prices from an orderly transaction between market participants provided by reputable dealers or pricing services. In determining the value of a particular investment, pricing services may use certain information with respect to transactions in such investments, quotations from dealers, pricing matrices and market transactions in comparable investments and various relationships between investments. The valuation of certain equity securities is based on an observable price for an identical security adjusted for the effect of a restriction.
●
Freestanding Derivatives are valued using contractual cash flows and observable inputs comprising yield curves, foreign currency rates and credit spreads.
●
Senior and subordinate notes issued by CLO vehicles are classified based on the more observable fair value of CLO assets less (a) the fair value of any beneficial interests held by Blackstone, and (b) the carrying value of any beneficial interests that represent compensation for services.
Level III Valuation Techniques
In the absence of observable market prices, Blackstone values its investments using valuation methodologies applied on a consistent basis. For some investments little market activity may exist; management’s determination of fair value is then based on the best information available in the circumstances, and may incorporate management’s own assumptions and involves a significant degree of judgment, taking into consideration a combination of internal and external factors, including the appropriate risk adjustments for non-performance and liquidity risks. Investments for which market prices are not observable include private investments in the equity of operating companies, real estate properties, certain funds of hedge funds and credit-focused investments.
Real Estate Investments –
The fair values of real estate investments are determined by considering projected operating cash flows, sales of comparable assets, if any, and replacement costs, among other measures. The methods used to estimate the fair value of real estate investments include the discounted cash flow method and/or capitalization rates (“cap rates”) analysis. Valuations may be derived by reference to observable valuation measures for comparable companies or assets (for example, multiplying a key performance metric of the investee company or asset, such as EBITDA, by a relevant valuation multiple observed in the range of comparable companies or transactions), adjusted by management for differences between the investment and the referenced comparables, and in some instances by reference to option pricing models or other similar methods. Where a discounted cash flow method is used, a terminal value is derived by reference to an exit EBITDA multiple or capitalization rate. Additionally, where applicable, projected distributable cash flow-through debt maturity will be considered in support of the investment’s fair value.
Private Equity Investments –
The fair values of private equity investments are determined by reference to projected net earnings, earnings before interest, taxes, depreciation and amortization (“EBITDA”), the discounted cash flow method, public market or private transactions, valuations for comparable companies and other measures which, in many cases, are based on unaudited information at the time received. Valuations may be derived by reference to observable valuation measures for comparable companies or transactions (for example, multiplying a key performance metric of the investee company, such as EBITDA, by a relevant valuation multiple observed in the range of comparable companies or transactions), adjusted by management for differences between the investment and the referenced comparables, and in some instances by reference to option pricing models or other similar methods. Where a discounted cash flow method is used, a terminal value is derived by reference to EBITDA or price/earnings exit multiples.
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The Blackstone Group Inc.
Notes to Condensed Consolidated Financial Statements (Unaudited) - Continued
(All Dollars are in Thousands, Except Share and Per Share Data, Except Where Noted)
Credit-Focused Investments
– The fair values of credit-focused investments are generally determined on the basis of prices between market participants provided by reputable dealers or pricing services. For credit-focused investments that are not publicly traded or whose market prices are not readily available, Blackstone may utilize other valuation techniques, including the discounted cash flow method or a market approach. The discounted cash flow method projects the expected cash flows of the debt instrument based on contractual terms, and discounts such cash flows back to the valuation date using a market-based yield. The market-based yield is estimated using yields of publicly traded debt instruments issued by companies operating in similar industries as the subject investment, with similar leverage statistics and time to maturity.
The market approach is generally used to determine the enterprise value of the issuer of a credit investment, and considers valuation multiples of comparable companies or transactions. The resulting enterprise value will dictate whether or not such credit investment has adequate enterprise value coverage. In cases of distressed credit instruments, the market approach may be used to estimate a recovery value in the event of a restructuring.
Investments, at Fair Value
The Blackstone Funds are accounted for as investment companies under the American Institute of Certified Public Accountants Accounting and Auditing Guide,
Investment Companies
, and in accordance with the GAAP guidance on investment companies and reflect their investments, including majority owned and controlled investments (the “Portfolio Companies”), at fair value. Such consolidated funds’ investments are reflected in Investments on the Condensed Consolidated Statements of Financial Condition at fair value, with unrealized gains and losses resulting from changes in fair value reflected as a component of Net Gains from Fund Investment Activities in the Condensed Consolidated Statements of Operations. Fair value is the amount that would be received to sell an asset or paid to transfer a liability, in an orderly transaction between market participants at the measurement date, at current market conditions (i.e., the exit price).
Blackstone’s principal investments are presented at fair value with unrealized appreciation or depreciation and realized gains and losses recognized in the Condensed Consolidated Statements of Operations within Investment Income (Loss).
For certain instruments, Blackstone has elected the fair value option. Such election is irrevocable and is applied on an investment by investment basis at initial recognition. Blackstone has applied the fair value option for certain loans and receivables, unfunded loan commitments and certain investments in private debt securities that otherwise would not have been carried at fair value with gains and losses recorded in net income. The methodology for measuring the fair value of such investments is consistent with the methodology applied to private equity, real estate, credit-focused and funds of hedge funds investments. Changes in the fair value of such instruments are recognized in Investment Income (Loss) in the Condensed Consolidated Statements of Operations. Interest income on interest bearing loans and receivables and debt securities on which the fair value option has been elected is based on stated coupon rates adjusted for the accretion of purchase discounts and the amortization of purchase premiums. This interest income is recorded within Interest and Dividend Revenue.
Blackstone has elected the fair value option for the assets of consolidated CLO vehicles. As permitted under GAAP, Blackstone measures the liabilities of consolidated CLO vehicles as (a) the sum of the fair value of the consolidated CLO assets and the carrying value of any non-financial assets held temporarily, less (b) the sum of the fair value of any beneficial interests retained by Blackstone (other than those that represent compensation for services) and Blackstone’s carrying value of any beneficial interests that represent compensation for services. As a result of this measurement alternative, there is no attribution of amounts to Non-Controlling Interests for consolidated CLO vehicles. Assets of the consolidated CLOs are presented within Investments within the Condensed Consolidated Statements of Financial Condition and Liabilities within Loans Payable for the amounts due to unaffiliated third parties and Due to Affiliates for the amounts held by non-consolidated affiliates. Changes in the fair value of consolidated CLO assets and liabilities and related interest, dividend and other income are presented within Net Gains from Fund Investment Activities. Expenses of consolidated CLO vehicles are presented in Fund Expenses.
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(All Dollars are in Thousands, Except Share and Per Share Data, Except Where Noted)
Blackstone has elected the fair value option for certain proprietary investments that would otherwise have been accounted for using the equity method of accounting. The fair value of such investments is based on quoted prices in an active market or using the discounted cash flow method. Changes in fair value are recognized in Investment Income (Loss) in the Condensed Consolidated Statements of Operations.
Further disclosure on instruments for which the fair value option has been elected is presented in Note 7. “Fair Value Option.”
The investments of consolidated Blackstone Funds in funds of hedge funds (“Investee Funds”) are valued at net asset value (“NAV”) per share of the Investee Fund. In limited circumstances, Blackstone may determine, based on its own due diligence and investment procedures, that NAV per share does not represent fair value. In such circumstances, Blackstone will estimate the fair value in good faith and in a manner that it reasonably chooses, in accordance with the requirements of GAAP.
Certain investments of Blackstone and of the consolidated Blackstone funds of hedge funds and credit-focused funds measure their investments in underlying funds at fair value using NAV per share without adjustment. The terms of the investee’s investment generally provide for minimum holding periods or lock-ups, the institution of gates on redemptions or the suspension of redemptions or an ability to side-pocket investments, at the discretion of the investee’s fund manager, and as a result, investments may not be redeemable at, or within three months of, the reporting date. A side-pocket is used by hedge funds and funds of hedge funds to separate investments that may lack a readily ascertainable value, are illiquid or are subject to liquidity restriction. Redemptions are generally not permitted until the investments within a side-pocket are liquidated or it is deemed that the conditions existing at the time that required the investment to be included in the side-pocket no longer exist. As the timing of either of these events is uncertain, the timing at which Blackstone may redeem an investment held in a side-pocket cannot be estimated. Further disclosure on instruments for which fair value is measured using NAV per share is presented in Note 5. “Net Asset Value as Fair Value.”
Security and loan transactions are recorded on a trade date basis.
Equity Method Investments
Investments in which Blackstone is deemed to exert significant influence, but not control, are accounted for using the equity method of accounting except in cases where the fair value option has been elected. Blackstone has significant influence over all Blackstone Funds in which it invests but does not consolidate. Therefore, its investments in such Blackstone Funds, which include both a proportionate and disproportionate allocation of the profits and losses (as is the case with carry funds that include a Performance Allocation), are accounted for under the equity method. Under the equity method of accounting, Blackstone’s share of earnings (losses) from equity method investments is included in Investment Income (Loss) in the Condensed Consolidated Statements of Operations.
In cases where Blackstone’s equity method investments provide for a disproportionate allocation of the profits and losses (as is the case with carry funds that include a Performance Allocation), Blackstone’s share of earnings (losses) from equity method investments is determined using a balance sheet approach referred to as the hypothetical liquidation at book value (“HLBV”) method. Under the HLBV method, at the end of each reporting period, Blackstone calculates the Accrued Performance Allocations that would be due to Blackstone for each fund pursuant to the fund agreements as if the fair value of the underlying investments were realized as of such date, irrespective of whether such amounts have been realized. As the fair value of underlying investments varies between reporting periods, it is necessary to make adjustments to amounts recorded as Accrued Performance Allocations to reflect either (a) positive performance resulting in an increase in the Accrued Performance Allocation to the general partner, or (b) negative performance that would cause the amount due to Blackstone to
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(All Dollars are in Thousands, Except Share and Per Share Data, Except Where Noted)
be less than the amount previously recognized as revenue, resulting in a negative adjustment to the Accrued Performance Allocation to the general partner. In each scenario, it is necessary to calculate the Accrued Performance Allocation on cumulative results compared to the Accrued Performance Allocation recorded to date and make the required positive or negative adjustments. Blackstone ceases to record negative Performance Allocations once previously Accrued Performance Allocations for such fund have been fully reversed. Blackstone is not obligated to pay guaranteed returns or hurdles, and therefore, cannot have negative Performance Allocations over the life of a fund. The carrying amounts of equity method investments are reflected in Investments in the Condensed Consolidated Statements of Financial Condition.
Results for Strategic Partners are reported on a three month lag from the fund financial statements, which generally report based on a three month lag from the underlying fund investments unless information is available on a more timely basis. Therefore, results presented herein do not include the impact of economic and market activity in the quarter in which such events occur. Economic and market activity for the periods presented is expected to affect reported results in upcoming periods.
Compensation and Benefits
Compensation and Benefits 
—
Compensation
 — Compensation consists of (a) salary and bonus, and benefits paid and payable to employees and senior managing directors and (b) equity-based compensation associated with the grants of equity-based awards to employees and senior managing directors. Compensation cost relating to the issuance of equity-based awards to senior managing directors and employees is measured at fair value at the grant date, and expensed over the vesting period on a straight-line basis, taking into consideration expected forfeitures, except in the case of (a) equity-based awards that do not require future service, which are expensed immediately, and (b) certain awards to recipients that meet criteria making them eligible for retirement (allowing such recipient to keep a percentage of those awards upon departure from Blackstone after becoming eligible for retirement), for which the expense for the portion of the award that would be retained in the event of retirement is either expensed immediately or amortized to the retirement date. Cash settled equity-based awards are classified as liabilities and are remeasured at the end of each reporting period.
Compensation and Benefits — Incentive Fee Compensation —
Incentive Fee Compensation consists of compensation paid based on Incentive Fees.
Compensation and Benefits — Performance Allocations Compensation —
Performance Allocation Compensation consists of compensation paid based on Performance Allocations (which may be distributed in cash or in-kind). Such compensation expense is subject to both positive and negative adjustments. Unlike Performance Allocations, compensation expense is based on the performance of individual investments held by a fund rather than on a fund by fund basis. These amounts may also include allocations of investment income from Blackstone’s principal investments, to senior managing directors and employees participating in certain profit sharing initiatives.
Non-Controlling Interests in Consolidated Entities
Non-Controlling Interests in Consolidated Entities represent the component of Equity in consolidated Blackstone Funds held by third party investors and employees. The percentage interests held by third parties and employees is adjusted for general partner allocations and by subscriptions and redemptions in funds of hedge funds and certain credit-focused funds which occur during the reporting period. In addition, all non-controlling interests in consolidated Blackstone Funds are attributed a share of income (loss) arising from the respective funds and a share of other comprehensive income, if applicable. Income (Loss) is allocated to non-controlling interests in consolidated entities based on the relative ownership interests of third party investors and employees after considering any contractual arrangements that govern the allocation of income (loss) such as fees allocable to The Blackstone Group Inc.
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Notes to Condensed Consolidated Financial Statements (Unaudited) - Continued
(All Dollars are in Thousands, Except Share and Per Share Data, Except Where Noted)
Redeemable Non-Controlling Interests in Consolidated Entities
Non-controlling interests related to funds of hedge funds are subject to annual, semi-annual or quarterly redemption by investors in these funds following the expiration of a specified period of time, or may be withdrawn subject to a redemption fee during the period when capital may not be withdrawn. As limited partners in these types of funds have been granted redemption rights, amounts relating to third party interests in such consolidated funds are presented as Redeemable Non-Controlling Interests in Consolidated Entities within the Condensed Consolidated Statements of Financial Condition. When redeemable amounts become legally payable to investors, they are classified as a liability and included in Accounts Payable, Accrued Expenses and Other Liabilities in the Condensed Consolidated Statements of Financial Condition. For all consolidated funds in which redemption rights have not been granted, non-controlling interests are presented within Equity in the Condensed Consolidated Statements of Financial Condition as Non-Controlling Interests in Consolidated Entities.
Non-Controlling Interests in Blackstone Holdings
Non-Controlling Interests in Blackstone Holdings represent the component of Equity in the consolidated Blackstone Holdings Partnerships held by Blackstone personnel and others who are limited partners of the Blackstone Holdings Partnerships.
Certain costs and expenses are borne directly by the Holdings Partnerships. Income (Loss), excluding those costs directly borne by and attributable to the Holdings Partnerships, is attributable to Non-Controlling Interests in Blackstone Holdings. This residual attribution is based on the year to date average percentage of Blackstone Holdings Partnership Units and unvested participating Holdings Partnership Units held by Blackstone personnel and others who are limited partners of the Blackstone Holdings Partnerships. Unvested participating Holdings Partnership Units are excluded from the attribution in periods of loss as they are not contractually obligated to share in losses of the Holdings Partnerships.
Net Income (Loss) Per Share of Common Stock
Basic Income (Loss) Per Share of Common Stock is calculated by dividing Net Income (Loss) Attributable to The Blackstone Group Inc. by the weighted-average shares of common stock, unvested participating shares of common stock outstanding for the period and vested deferred restricted shares of common stock that have been earned for which issuance of the related shares of common stock is deferred until future periods. Diluted Income (Loss) Per Share of Common Stock reflects the impact of all dilutive securities. Unvested participating shares of common stock are excluded from the computation in periods of loss as they are not contractually obligated to share in losses.
Blackstone applies the treasury stock method to determine the dilutive weighted-average common shares outstanding for certain equity-based compensation awards. Blackstone applies the “if-converted” method to the Blackstone Holdings Partnership Units to determine the dilutive impact, if any, of the exchange right included in the Blackstone Holdings Partnership Units.
Reverse Repurchase and Repurchase Agreements
Securities purchased under agreements to resell (“reverse repurchase agreements”) and securities sold under agreements to repurchase (“repurchase agreements”), comprised primarily of U.S. and non-U.S. government and agency securities, asset-backed securities and corporate debt, represent collateralized financing transactions. Such transactions are recorded in the Condensed Consolidated Statements of Financial Condition at their contractual amounts and include accrued interest. The carrying value of reverse repurchase and repurchase agreements approximates fair value.
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(All Dollars are in Thousands, Except Share and Per Share Data, Except Where Noted)
Blackstone manages credit exposure arising from reverse repurchase agreements and repurchase agreements by, in appropriate circumstances, entering into master netting agreements and collateral arrangements with counterparties that provide Blackstone, in the event of a counterparty default, the right to liquidate collateral and the right to offset a counterparty’s rights and obligations.
Blackstone takes possession of securities purchased under reverse repurchase agreements and is permitted to repledge, deliver or otherwise use such securities. Blackstone also pledges its financial instruments to counterparties to collateralize repurchase agreements. Financial instruments pledged that can be repledged, delivered or otherwise used by the counterparty are recorded in Investments in the Condensed Consolidated Statements of Financial Condition. Additional disclosures relating to repurchase agreements are discussed in Note 10. “Repurchase Agreements.”
Blackstone does not offset assets and liabilities relating to reverse repurchase agreements and repurchase agreements in its Condensed Consolidated Statements of Financial Condition. Additional disclosures relating to offsetting are discussed in Note 11. “Offsetting of Assets and Liabilities.”
Securities Sold, Not Yet Purchased
Securities Sold, Not Yet Purchased consist of equity and debt securities that Blackstone has borrowed and sold. Blackstone is required to “cover” its short sale in the future by purchasing the security at prevailing market prices and delivering it to the counterparty from which it borrowed the security. Blackstone is exposed to loss in the event that the price at which a security may have to be purchased to cover a short sale exceeds the price at which the borrowed security was sold short.
Securities Sold, Not Yet Purchased are recorded at fair value in the Condensed Consolidated Statements of Financial Condition.
Derivative Instruments
Blackstone recognizes all derivatives as assets or liabilities on its Condensed Consolidated Statements of Financial Condition at fair value. On the date Blackstone enters into a derivative contract, it designates and documents each derivative contract as one of the following: (a) a hedge of a recognized asset or liability (“fair value hedge”), (b) a hedge of a forecasted transaction or of the variability of cash flows to be received or paid related to a recognized asset or liability (“cash flow hedge”), (c) a hedge of a net investment in a foreign operation, or (d) a derivative instrument not designated as a hedging instrument (“freestanding derivative”). Gains or losses on a derivative instrument that is designated as, and is effective as, an economic hedge of a net investment in a foreign operation are reported in the cumulative translation adjustment section of other comprehensive income to the extent it is effective as a hedge. The ineffective portion of a net investment hedge is recognized in current period earnings.
Blackstone formally documents at inception its hedge relationships, including identification of the hedging instruments and the hedged items, itsit
s
 risk management objectives, strategy for undertaking the hedge transaction and Blackstone’s evaluation of effectiveness of its hedged transaction. At least monthly, Blackstone also formally assesses whether the derivative it designated in each hedging relationship is expected to be, and has been, highly effective in offsetting changes in estimated fair values or cash flows of the hedged items using either the regression analysis or the dollar offset method. For net investment hedges, Blackstone uses a method based on changes in spot rates to measure effectiveness. If it is determined that a derivative is not highly effective at hedging the designated exposure, hedge accounting is discontinued. The fair values of hedging derivative instruments are reflected within Other Assets in the Condensed Consolidated Statements of Financial Condition.
For freestanding derivative contracts, Blackstone presents changes in fair value in current period earnings. Changes in the fair value of derivative instruments held by consolidated Blackstone Funds are reflected in Net Gains from Fund Investment Activities or, where derivative instruments are held by Blackstone, within Investment Income (Loss) in the Condensed Consolidated Statements of Operations. The fair value of freestanding derivative
assets of the consolidated Blackstone Funds are recorded within Investments, the
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(All Dollars Areare in Thousands, Except Share and Per Share Data, Except Where Noted)
 
 
assets of the consolidated Blackstone Funds are recorded within Investments, the fair value of freestanding derivative assets that are not part of the consolidated Blackstone Funds are recorded within Other Assets and the fair value of freestanding derivative liabilities are recorded within Accounts Payable, Accrued Expenses and Other Liabilities in the Condensed Consolidated Statements of Financial Condition.
Blackstone has elected to not offset derivative assets and liabilities or financial assets in its Condensed Consolidated Statements of Financial Condition, including cash, that may be received or paid as part of collateral arrangements, even when an enforceable master netting agreement is in place that provides Blackstone, in the event of counterparty default, the right to liquidate collateral and the right to offset a counterparty’s rights and obligations.
Blackstone’s other disclosures regarding derivative financial instruments are discussed in Note 6. “Derivative Financial Instruments”.Instruments.”
Blackstone’s disclosures regarding offsetting are discussed in Note 11. “Offsetting of Assets and Liabilities”. Liabilities.”
Affiliates
Blackstone considers its Founder, senior managing directors, employees, the Blackstone Funds and the Portfolio Companies to be affiliates.
Dividends
Dividends are reflected in the condensed consolidated financial statements when declared.
Recent Accounting Developments
In June 2016, the FASB issued amended guidance on how to measure credit losses for most financial assets. The guidance was effective for Blackstone on January 1, 2020 and was adopted on a modified retrospective basis. The guidance requires entities to recognize their estimate of lifetime expected credit losses based on reasonable and supportable forecasts, current conditions, and historical experience. Adoption did not have a material impact on Blackstone’s condensed consolidated financial statements.
3.    Intangible Assets
Intangible Assets, Net consists of the following:
 
                                                       
   
June 30,
  
December 31,
   
2020
  
2019
Finite-Lived Intangible Assets/Contractual Rights  $1,712,576    $1,712,576  
Accumulated Amortization        (1,350,568)         (1,315,068) 
           
Intangible Assets, Net  $362,008    $397,508  
           
                                                
   
June 30,
  
December 31,
   
2021
  
2020
                                                       
Finite-Lived Intangible Assets/Contractual Rights
  $1,745,376  $1,734,076 
Accumulated Amortization
        (1,423,596)  
 
 
 
 
 
(1,386,121
)
 
   
 
 
 
 
 
 
 
Intangible Assets, Net
  $321,780  $     347,955 
   
 
 
 
 
 
 
 
Amortization expense associated with Blackstone’s intangible assets was $17.7$18.7 million and $35.5$37.5 million for the three and six month periods ended June 30, 2020,2021, respectively, and $17.7 million and $35.5 million for the three and six month periods ended June 30, 2019,2020, respectively.
Amortization of Intangible Assets held at June 30, 20202021 is expected to be $71.0$74.9 million, $71.0$67.1 million, $63.3$38.1 million, $34.3$30.5 million, and $26.9$30.5 million for each of the years ending December 31, 2020, 2021, 2022, 2023, 2024 and 2024,2025, respectively. Blackstone’s intangible assetsIntangible Assets as of June 30, 20202021 are expected to amortize over a weighted-average period of 7.67.3 years.
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(All Dollars Areare in Thousands, Except Share and Per Share Data, Except Where Noted)
 
 
4.    Investments
Investments consist of the following:
 
   
                        
   
                        
 
 
  
June 30,
  
December 31,
 
  
2020
  
2019
Investments of Consolidated Blackstone Funds  $7,943,531  $8,380,698 
Equity Method Investments         
Partnership Investments   3,873,346    4,035,675  
Accrued Performance Allocations   4,715,510   7,180,449 
Corporate Treasury Investments   2,205,843   2,419,587 
Other Investments   235,143   265,273 
          
   $    18,973,373  $    22,281,682 
          
                                                       
   
June 30,
  
December 31,
   
2021
  
2020
Investments of Consolidated Blackstone Funds
  $1,871,269   $1,455,008 
Equity Method Investments
          
Partnership Investments
   4,916,674    
4,353,234
 
Accrued Performance Allocations
   12,101,142    6,891,262 
Corporate Treasury Investments
   2,440,325    2,579,716 
Other Investments
   833,912    337,922 
   
 
 
 
  
 
 
 
   $    22,163,322   $    15,617,142 
   
 
 
 
  
 
 
 
Blackstone’s share of Investments of Consolidated Blackstone Funds totaled $245.1$417.9 million and $347.4$198.3 million at June 30, 20202021 and December 31, 2019,2020, respectively.
Where appropriate, the accounting for Blackstone’s investments incorporates the changes in fair value of those investments as determined under GAAP. The decrease in Partnership Investments and Accrued Performance Allocations for the period ended June 30, 2020 was primarily from the unrealized depreciation in the fair value of underlying fund investments driven by the impact of
COVID-19.
The significant inputs and assumptions required to determine the change in fair value of the investments of Consolidated Blackstone Funds, Corporate Treasury Investments and Other Investments are discussed in more detail in Note 8. “Fair Value Measurements of Financial Instruments”.Instruments.”
See Note 2. “Summary of Significant Accounting Policies —
COVID-19
and Global Economic and Market Conditions”.
Investments of Consolidated Blackstone Funds
The following table presents the Realized and Net Change in Unrealized Gains (Losses) on investments held by the consolidated Blackstone Funds and a reconciliation to Other Income (Loss) – Net Gains (Losses) from Fund Investment Activities in the Condensed Consolidated Statements of Operations:
 
   
                        
   
                        
   
                        
   
                        
 
 
  
Three Months Ended
  
Six Months Ended
 
  
June 30,
  
June 30,
 
  
2020
 
2019
  
2020
 
2019
Realized Gains (Losses)  $(61,698)  $5,198   $(134,972)  $2,286 
Net Change in Unrealized Gains (Losses)   216,552   6,257    (116,790)   112,260 
                   
Realized and Net Change in Unrealized Gains (Losses) from Consolidated Blackstone Funds   154,854   11,455    (251,762)   114,546 
Interest and Dividend Revenue Attributable to Consolidated Blackstone Funds              3,443   49,676               82,685   76,910 
                   
Other Income (Loss) – Net Gains (Losses) from Fund Investment Activities  $158,297  $         61,131   $(169,077)  $         191,456 
                   
                                                                                                             
   
Three Months Ended

June 30,
 
Six Months Ended

June 30,
   
2021
  
2020
 
2021
  
2020
Realized Gains (Losses)
  $33,001   $(61,698)  $61,995   $(134,972) 
Net Change in Unrealized Gains (Losses)
   88,489    216,552   172,956    (116,790) 
   
 
 
 
  
 
 
 
 
 
 
 
  
 
 
 
Realized and Net Change in Unrealized Gains (Losses) from Consolidated Blackstone Funds
   121,490    154,854   234,951    (251,762) 
Interest and Dividend Revenue Attributable to Consolidated Blackstone Funds
   5,626    3,443   12,518    82,685 
   
 
 
 
  
 
 
 
 
 
 
 
  
 
 
 
Other Income (Loss) – Net Gains (Losses) from Fund Investment Activities
  $    127,116   $    158,297  $    247,469   $(169,077) 
   
 
 
 
  
 
 
 
 
 
 
 
  
 
 
 
Equity Method Investments
Blackstone’s equity method investments include Partnership Investments, which represent the
pro-rata
investments, and any associated Accrued Performance Allocations in private equity funds, real estate funds, funds of hedge funds and credit-focused funds. Prior to January 26, 2021, Partnership Investments also includesincluded the 40%
non-controlling
interest in Pátria Investments Limited and Pátria Investimentos Ltda. (collectively, “Pátria”).
 
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(All Dollars Areare in Thousands, Except Share and Per Share Data, Except Where Noted)
 
On January 26, 2021, Pátria completed its initial public offering (“IPO”), pursuant to which Blackstone sold a portion of its interests and no longer has representatives or the right to designate representatives on Pátria’s board of directors. As a result of Pátria’s pre-IPO reorganization transactions (which included Blackstone’s sale of 10% of Pátria’s pre-IPO shares to Pátria’s controlling shareholder) and the consummation of the IPO, Blackstone is deemed to no longer have significant influence over Pátria due to Blackstone’s decreased ownership and lack of board representation. Following the IPO, Blackstone will account for its retained interest in Pátria at fair value in accordance with the GAAP guidance for investments in equity securities with a readily determinable fair value.
Blackstone evaluates each of its equity method investments, excluding Accrued Performance Allocations, to determine if any were significant as defined by guidance from the United States Securities and Exchange Commission. As of and for the six months ended June 30, 20202021 and 2019,2020, no individual equity method investment held by Blackstone met the significance criteria. As such, Blackstone is not required to present separate financial statements for any of its equity method investments.
Partnership Investments
Blackstone recognized net gains related to its Partnership Investments accounted for under the equity method of $247.8$423.3 million and $72.3$247.8 million for the three months ended June 30, 20202021 and 2019,2020, respectively. Blackstone recognized net gains (losses) related to its equity method investments of $(318.7) million$1.1 billion and $227.7$(318.7) million for the six months ended June 30, 20202021 and 2019,2020, respectively.
Accrued Performance Allocations
Accrued Performance Allocations to Blackstone were as follows:
 
                                                                                                                                        
   
Real
 
Private
 
Hedge Fund
 
Credit &
  
   
Estate
 
Equity
 
Solutions
 
Insurance
 
Total
Accrued Performance Allocations, December 31, 2019  $3,639,855  $3,063,149  $23,951  $  453,494  $7,180,449 
Performance Allocations as a Result
of Changes in Fund Fair Values		   (1,004,794)   (710,814)   22,928   (348,197)   (2,040,877) 
Foreign Exchange Loss   (6,476)   —   —   —   (6,476) 
Fund Distributions   (233,683)   (157,281)   (7,782)   (18,840)   (417,586) 
                      
Accrued Performance Allocations,
June 30, 2020		  $  2,394,902  $  2,195,054  $  39,097  $  86,457  $  4,715,510 
                      
                                                                                                                                        
   
Real
 
Private
 
Hedge Fund
 
Credit &
  
   
Estate
 
Equity
 
Solutions
 
Insurance
 
Total
Accrued Performance Allocations, December 31, 2020
  $3,033,462  $3,487,206  $42,293  $328,301  $6,891,262 
Performance Allocations as a Result of Changes in Fund Fair Values
   2,210,007   3,717,840   405,611   176,351   6,509,809 
Foreign Exchange Loss
   (17,258)   —   —   —   (17,258) 
Fund Distributions
   (703,349)   (488,879)   (14,243)   (76,200)   (1,282,671) 
   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Accrued Performance Allocations, June 30, 2021
  $    4,522,862  $    6,716,167  $    433,661  $    428,452  $    12,101,142 
   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Corporate Treasury Investments
The portion of corporate treasury investments included in Investments represents Blackstone’s investments into primarily fixed income securities, mutual fund interests, and other fund interests. These strategies are managed by a combination of Blackstone personnel and third party advisors.
The following table presents the Realized and Net Change in Unrealized Gains (Losses) on these investments:
 
                                                                                                             
   
Three Months Ended
June 30,
  
Six Months Ended
June 30,
   
2020
 
2019
  
2020
 
2019
Realized Gains (Losses)  $        (4,273)  $22,983   $        (1,756)  $23,300 
Net Change in Unrealized Gains (Losses)   114,990   558    (143,397)   49,217 
                   
   $110,717  $        23,541   $(145,153)  $        72,517 
                   
                                                                                                             
   
Three Months Ended
 
Six Months Ended
   
June 30,
 
June 30,
   
2021
 
2020
 
2021
  
2020
Realized Gains (Losses)
  $(1,049)  $(4,273)  $5,885   $(1,756) 
Net Change in Unrealized Gains (Losses)
   29,523   114,990   39,452    (143,397) 
   
 
 
 
 
 
 
 
 
 
 
 
  
 
 
 
   $    28,474  $    110,717  $    45,337   $(145,153) 
   
 
 
 
 
 
 
 
 
 
 
 
  
 
 
 
2
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Notes to Condensed Consolidated Financial Statements (Unaudited) - Continued
(All Dollars Areare in Thousands, Except Share and Per Share Data, Except Where Noted)
 
Other Investments
Other Investments consist primarily of proprietary investment securities held by Blackstone.Blackstone, including subordinated notes in non-consolidated CLO vehicles and the retained interest in Pátria following Pátria’s IPO. Other Investments include equity investments without readily determinable fair values which have a carrying value of $69.5$113.1 million as of June 30, 2020.2021. The following table presents Blackstone’s Realized and Net Change in Unrealized Gains (Losses) in Other Investments:
 
                                                                                                             
   
Three Months Ended
June 30,
  
Six Months Ended
June 30,
   
2020
  
2019
  
2020
  
2019
Realized Gains  $        6,348   $        21,491   $        13,333   $45,727 
Net Change in Unrealized Gains (Losses)   26,573    (3,933)    (73,364)    6,789 
                     
   $32,921   $17,558   $(60,031)   $        52,516 
                     
   
Three Months Ended
June 30,
   
Six Months Ended
June 30,
 
   
2021
   
2020
   
2021
   
2020
 
Realized Gains
  $        29,309   $        6,348   $        29,422   $13,333 
Net Change in Unrealized Gains (Losses)
   1,065    26,573    285,567    (73,364) 
   
 
 
   
 
 
   
 
 
   
 
 
 
   $30,374   $32,921   $314,989   $        (60,031) 
   
 
 
   
 
 
   
 
 
   
 
 
 
5.    Net Asset Value as Fair Value
A summary of fair value by strategy type alongside the remaining unfunded commitments and ability to redeem such investments as of June 30, 20202021 is presented below:
 
   
                        
   
                        
  
                        
 
                        
 
  
 
  
 
  
Redemption
 
 
 
  
 
  
Unfunded
  
Frequency
 
Redemption
Strategy
  
Fair Value
      
Commitments
      
    (if currently eligible)    
     
  Notice Period  
Diversified Instruments  $218,522   $—   (a) (a)
Credit Driven   64,518    —   (b) (b)
Equity   1,051    —   (c) (c)
Commodities   1,007    —   (d) (d)
                
   $285,098   $—      
                
                                                                        
      
Redemption
  
      
Frequency
 
Redemption
Strategy (a)
  
Fair Value
  
    (if currently eligible)    
 
Notice Period
Diversified Instruments
  $994    (b)   (b) 
Credit Driven
   299,130    (c)   (c) 
Equity
   50,440    (d)   (d) 
Commodities
   990    (e)   (e) 
   
 
 
 
         
   $            351,554          
   
 
 
 
         
 
(a)
As of June 30, 2021, Blackstone had no unfunded commitments.
(b)
Diversified Instruments include investments in funds that invest across multiple strategies. Investments representing 1%100% of the fair value of the investments in this category may not be redeemed at, or within three months of, the reporting date. The remaining 99% of investments in this category are redeemable as of the reporting date.
(b)(c)
The Credit Driven category includes investments in hedge funds that invest primarily in domestic and international bonds. Investments representing 19%5% of the fair value of the investments in this category are in liquidation. The remaining 81%95% of investments in this category are redeemable asmay not be redeemed at, or within three months of, the reporting date.
(c)(d)
The Equity category includes investments in hedge funds that invest primarily in domestic and international equity securities. Investments representing 100% 1%
of the fair value of the investments in this category are in liquidation. The remaining 99% of investments in this category are redeemable as of the reporting date. As of the reporting date, the investee fund manager had elected to side-pocket 74%
1% of Blackstone’s investments in the category.
(d)(e)
The Commodities category includes investments in commodities-focused funds that primarily invest in futures and physical-based commodity driven strategies. Investments representing 100% of the fair value of the investments in this category may not be redeemed at, or within three months of, the reporting date.
6.    Derivative Financial Instruments
Blackstone and the consolidated Blackstone Funds enter into derivative contracts in the normal course of business to achieve certain risk management objectives and for general investment purposes. Blackstone may enter into derivative contracts in order to hedge its interest rate risk exposure against the effects of interest rate changes. Additionally, Blackstone may also enter into derivative contracts in order to hedge its foreign currency risk exposure against the effects of a portion of its
non-U.S.
dollar denominated currency net investments. As a result of the use of derivative contracts, Blackstone and the consolidated Blackstone Funds are exposed to the risk
 
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The Blackstone Group Inc.
Notes to Condensed Consolidated Financial Statements (Unaudited) - Continued
(All Dollars Areare in Thousands, Except Share and Per Share Data, Except Where Noted)
 
 
changes. Additionally, Blackstone may also enter into derivative contracts in order to hedge its foreign currency risk exposure against the effects of a portion of its non-U.S. dollar denominated currency net investments. As a result of the use of derivative contracts, Blackstone and the consolidated Blackstone Funds are exposed to the risk that counterparties will fail to fulfill their contractual obligations. To mitigate such counterparty risk, Blackstone and the consolidated Blackstone Funds enter into contracts with certain major financial institutions, all of which have investment grade ratings. Counterparty credit risk is evaluated in determining the fair value of derivative instruments.
Freestanding Derivatives
Freestanding derivatives are instruments that Blackstone and certain of the consolidated Blackstone Funds have entered into as part of their overall risk management and investment strategies. These derivative contracts are not designated as hedging instruments for accounting purposes. Such contracts may include interest rate swaps, foreign exchange contracts, equity swaps, options, futures and other derivative contracts.
The table below summarizes the aggregate notional amount and fair value of the derivative financial instruments. The notional amount represents the absolute value amount of all outstanding derivative contracts.
 
   
                  
   
                  
   
                  
   
                  
   
                  
   
                  
   
                  
   
                  
 
 
  
June 30, 2020
  
December 31, 2019
 
  
Assets
  
Liabilities
  
Assets
  
Liabilities
 
  
 
  
Fair
  
 
  
Fair
  
 
  
Fair
  
 
  
Fair
 
  
Notional
  
Value
  
Notional
  
Value
  
Notional
  
Value
  
Notional
  
Value
Freestanding Derivatives
                                        
Blackstone                                        
Interest Rate Contracts   $989,013    $168,122    $496,200    $43,216    $1,256,287    $53,129    $165,852    $4,895 
Foreign Currency Contracts   387,286    5,755    51,647    577    344,422    1,231    97,626    802 
Credit Default Swaps   2,706    535    9,158    2,009    7,617    36    16,697    197 
Investments of Consolidated Blackstone Funds                                        
Foreign Currency Contracts   25,643    173    68,313    2,243    106,906    307    40,110    1,167 
Interest Rate Contracts   —    —    19,000    2,052    —    —    33,000    1,728 
Credit Default Swaps   13,722    1,889    35,850    2,098    5,108    58    47,405    960 
Total Return Swaps   —    —    23,207    4,543    4,558    21    27,334    464 
Other   —    —    —    —    1    4    1    2 
                                         
    $    1,418,370    $    176,474    $    703,375    $    56,738    $    1,724,899    $    54,786    $    428,025    $    10,215 
                                         
                                                                                                                                                                         
   
June 30, 2021
  
December 31, 2020
   
Assets
  
Liabilities
  
Assets
  
Liabilities
      
Fair
     
Fair
     
Fair
     
Fair
   
Notional
  
Value
  
Notional
  
Value
  
Notional
  
Value
  
Notional
  
Value
Freestanding Derivatives
                                        
Blackstone
                                        
Interest Rate Contracts
   $882,179    $103,813    $916,011    $139,841    $684,320    $113,072    $862,887    $190,342 
Foreign Currency Contracts
   104,040    1,536    362,161    6,143    316,787    7,392    334,015    3,941 
Credit Default Swaps
   2,007    161    10,183    1,050    2,706    331    9,158    1,350 
Other
   —    —    —    —    5,000    5,227    —    — 
   
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
    988,226    105,510    1,288,355    147,034    1,008,813    126,022    1,206,060    195,633 
   
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
Investments of Consolidated Blackstone Funds
                                        
Foreign Currency Contracts
   76,410    2,066    5,299    35    —    —    66,431    2,651 
Interest Rate Contracts
   —    —    14,000    1,094    —    —    14,000    1,485 
Credit Default Swaps
   3,507    291    23,484    1,130    8,282    542    41,290    1,558 
Total Return Swaps
   —    —    —    —    —    —    19,275    2,125 
   
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
    79,917    2,357    42,783    2,259    8,282    542    140,996    7,819 
   
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
    $    1,068,143    $    107,867    $    1,331,138    $    149,293    $    1,017,095    $    126,564    $    1,347,056    $    203,452 
   
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
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Notes to Condensed Consolidated Financial Statements (Unaudited) - Continued
(All Dollars Areare in Thousands, Except Share and Per Share Data, Except Where Noted)
 
 
The table below summarizes the impact to the Condensed Consolidated Statements of Operations from derivative financial instruments:
 
                                                                                                             
   
Three Months Ended
June 30,
 
Six Months Ended
June 30,
   
2020
 
2019
 
2020
 
2019
Freestanding Derivatives
                 
Realized Gains (Losses)                 
Interest Rate Contracts  $(2,613)  $(416)  $(7,914)  $(2,664) 
Foreign Currency Contracts   8,567   (1,526)   (5,140)   146 
Credit Default Swaps   (13)   881   (112)   1,991 
Total Return Swaps   (782)   (275)   (1,531)   (395) 
Other   —   (124)   (38)   (132) 
                  
   $5,159  $    (1,460)  $    (14,735)  $    (1,054) 
                  
     
Net Change in Unrealized Gains (Losses)                 
Interest Rate Contracts  $(27,963)  $(2,892)  $80,335  $(11,155) 
Foreign Currency Contracts   (8,258)   1,773   3,587   209 
Credit Default Swaps   18   (294)   (1,371)   3,647 
Total Return Swaps   877   393   (4,099)   1,371 
Other   —   115   36   65 
                  
   $    (35,326)  $(905)  $78,488  $(5,863) 
                  
                                                                                                
   
Three Months Ended
 
Six Months Ended
   
June 30,
 
June 30,
   
2021
 
2020
 
2021
 
2020
Freestanding Derivatives
     
Realized Gains (Losses)
     
                                                                                                             
Interest Rate Contracts
  $(348)  $(2,613)  $1,298  $(7,914) 
Foreign Currency Contracts
           2,887         8,567   4,423   (5,140) 
Credit Default Swaps
   (8)   (13)   (990)   (112) 
Total Return Swaps
   (65)   (782)   (1,415)   (1,531) 
Other
   0   0   (40)   (38) 
   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
    2,466   5,159   3,276   (14,735) 
   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
     
Net Change in Unrealized Gains (Losses)
                 
Interest Rate Contracts
   39,484   (27,963)   45,185   80,335 
Foreign Currency Contracts
   (3,249)   (8,258)   (3,376)   3,587 
Credit Default Swaps
   0   18   842   (1,371) 
Total Return Swaps
   0   877   2,130   (4,099) 
Other
   0   0   (20)   36 
   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
    36,235   (35,326)       44,761         78,488 
   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
   $        38,701  $(30,167)  $48,037  $63,753 
   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
As of June 30, 20202021 and December 31, 2019, 2020,
Blackstone
had
not
designated
any
derivatives
as
cash
flow hedges. 
hedges
.
7.    Fair Value Option
The following table summarizes the financial instruments for which the fair value option has been elected:
 
                                                       
   
June 30,
  
December 31,
   
2020
  
2019
Assets
          
Loans and Receivables  $162,368   $500,751 
Equity and Preferred Securities   480,199    432,472 
Debt Securities   471,158    506,924 
Assets of Consolidated CLO Vehicles          
Corporate Loans
  
 
6,518,669
 
  
 
6,801,691
 
Other
  
 
313
 
  
 
770
 
           
   
$
7,632,707
 
  
$
8,242,608
 
           
   
Liabilities
          
Liabilities of Consolidated CLO Vehicles          
Senior Secured Notes          
Loans Payable  $6,232,695   $6,455,016 
Due to Affiliates   78,719    57,717 
Subordinated Notes          
Loans Payable   —    24,738 
Due to Affiliates   15,226    20,535 
Corporate Treasury Commitments   2,030    — 
           
   $        6,328,670   $        6,558,006 
           
                                                       
   
June 30,
  
December 31,
   
2021
  
2020
Assets
          
Loans and Receivables
  $223,796   $581,079 
Equity and Preferred Securities
   695,434    532,790 
Debt Securities
   329,555    448,352 
   
 
 
 
  
 
 
 
   $        1,248,785   $        1,562,221 
   
 
 
 
  
 
 
 
   
Liabilities
          
Corporate Treasury Commitments
  $447   $244 
   
 
 
 
  
 
 
 
 
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The Blackstone Group Inc.
Notes to Condensed Consolidated Financial Statements (Unaudited) - Continued
(All Dollars Areare in Thousands, Except Share and Per Share Data, Except Where Noted)
 
 
The following tables present the Realized and Net Change in Unrealized Gains (Losses) on financial instruments on which the fair value option was elected:
                                                                                                             
   
Three Months Ended June 30,
   
2021
  
2020
     
Net Change
    
Net Change
   
Realized
 
in Unrealized
  
Realized
 
in Unrealized
   
Gains (Losses)
 
Gains
  
Gains (Losses)
 
Gains (Losses)
Assets
                  
Loans and Receivables
  $(3,065)  $7,012   $(2,249)  $13,101 
Equity and Preferred Securities
   18,444   9,530                      —   59,612 
Debt Securities
   1,303   1,923    (9,487)   60,988 
Assets of Consolidated CLO Vehicles (a)
                  
Corporate Loans
   —   —    (52,293)   538,367 
   
 
 
 
 
 
 
 
  
 
 
 
 
 
 
 
   $        16,682  $        18,465   $(64,029) $        672,068 
   
 
 
 
 
 
 
 
  
 
 
 
 
 
 
 
Liabilities
                  
Liabilities of Consolidated CLO Vehicles (a)
                  
Senior Secured Notes
  $—  $—   $—  $(495,059) 
Subordinated Notes
   —   —    —   73,504 
Corporate Treasury Commitments
   —   7    —   (2,030) 
   
 
 
 
 
 
 
 
  
 
 
 
 
 
 
 
   $—  $7   $—  $(423,585) 
   
 
 
 
 
 
 
 
  
 
 
 
 
 
 
 
 
                                                                                                                                                                                                                        
  
Three Months Ended June 30,
  
Six Months Ended June 30,
  
2020
 
2019
  
2021
 
2020
    
Net Change
   
Net Change
    
Net Change
   
Net Change
  
Realized
 
in Unrealized
 
Realized
 
in Unrealized
  
Realized
 
in Unrealized
 
Realized
 
in Unrealized
  
Gains (Losses)
 
Gains (Losses)
 
Gains (Losses)
 
Gains (Losses)
  
Gains (Losses)
 
Gains (Losses)
 
Gains (Losses)
 
Gains (Losses)
Assets
                  
Loans and Receivables  $(2,249)  $13,101  $(747)  $(1,897)   $(7,896)  $5,083  $(5,770)  $(268) 
Equity and Preferred Securities   —   59,612   9,907   (67)    18,444   40,401   (342)   (103,747) 
Debt Securities   (9,487)   60,988   (3,325)   1,817    9,970   (4,235)   (21,103)   (9,129) 
Assets of Consolidated CLO Vehicles(a)                  
Corporate Loans   (52,293)   538,367   (10,549)   (18,025)    —   —   (96,194)   (226,542) 
Other   —   —   —   350    —   —   —   (325) 
           
 
 
 
 
 
 
 
  $        (64,029)
 
 $        672,068  $        (4,714)  $        (17,822)   $     20,518  $    41,249  $(123,409)  $(340,011) 
           
 
 
 
 
 
 
 
Liabilities
                  
Liabilities of Consolidated CLO Vehicles(a)                  
Senior Secured Notes  $—  $(495,059)  $—  $6,667   $—  $—  $—  $199,445 
Subordinated Notes   —   73,504   —   15,163    —   —   —   30,046 
Corporate Treasury Commitments   —   (2,030)   —   —    —   (193)   —   (2,030) 
           
 
 
 
 
 
 
 
  $—  $(423,585)  $—  $21,830   $—  $(193)  $—  $227,461 
           
 
 
 
 
 
 
 
(a)
During the year ended December 31, 2020, Blackstone deconsolidated nine CLO vehicles. See Note 9. “Variable Interest Entities” for additional details.
                                                                                                             
   
Six Months Ended June 30,
   
2020
 
2019
     
Net Change
   
Net Change
   
Realized
 
in Unrealized
 
Realized
 
in Unrealized
   
Gains (Losses)
 
Gains (Losses)
 
Gains (Losses)
 
Gains (Losses)
Assets
                 
Loans and Receivables  $(5,770)  $(268)  $(1,831)  $(2,657) 
Equity and Preferred Securities   (342)   (103,747)   9,908   22,298 
Debt Securities   (21,103)   (9,129)   (3,360)   16,749 
Assets of Consolidated CLO Vehicles                 
Corporate Loans   (96,194)   (226,542)   (14,400)   161,777 
Other   —   (325)   —   350 
                  
   $        (123,409)  $        (340,011)  $        (9,683)  $        198,517 
                  
Liabilities
                 
Liabilities of Consolidated CLO Vehicles                 
Senior Secured Notes  $—  $199,445  $—  $(44,893) 
Subordinated Notes   —   30,046   —   (50,981) 
Corporate Treasury Commitments   —   (2,030)   —   — 
                  
   $—  $227,461  $—  $(95,874) 
                  
3
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Table of Contents
The Blackstone Group Inc.
Notes to Condensed Consolidated Financial Statements (Unaudited) - Continued
(All Dollars Areare in Thousands, Except Share and Per Share Data, Except Where Noted)
 
 
The following table presents information for those financial instruments for which the fair value option was elected:
                                                                                                                                                                   
   
June 30, 2020
 
December 31, 2019
     
For Financial Assets
   
For Financial Assets
     
Past Due (a)
   
Past Due (a)
   
(Deficiency)
    
(Deficiency)
 
Excess
(Deficiency)
    
Excess
   
of Fair Value
 
Fair
  
of Fair Value
 
of Fair Value
 
Fair
  
of Fair Value
   
Over Principal
 
     
 
 Value        
  
Over Principal
 
Over Principal
 
      Value      
  
Over Principal
Loans and Receivables  $(5,616)  $—   $—  $(3,875)  $—   $            — 
Debt Securities   (24,588)   —    —   (14,667)   —    — 
Assets of Consolidated CLO Vehicles
                           
Corporate Loans   (496,820)   21,604��   (11,431)   (234,430)   —    — 
Other   (325)   —    —   133   —    — 
                            
   $        (527,349)  $        21,604   $(11,431)  $        (252,839)  $            —   $— 
                            
 
(a)
                                                                                                                                                                   
   
June 30, 2021
  
December 31, 2020
     
For Financial Assets
    
For Financial Assets
     
Past Due
    
Past Due
   
(Deficiency)
    
Excess
  
(Deficiency)
    
Excess
   
of Fair Value
 
Fair
  
of Fair Value
  
of Fair Value
 
Fair
  
of Fair Value
   
Over Principal
 
        Value        
  
Over Principal
  
Over Principal
 
        Value        
  
Over Principal
Loans and Receivables
  $(2,569)  $—   $—   $(7,807)  $—   $— 
Debt Securities
   (26,978)   —    —    (29,359)   —    — 
   
 
 
 
 
 
 
 
  
 
 
 
  
 
 
 
 
 
 
 
  
 
 
 
   $    (29,547)  $            —   $            —   $    (37,166)  $            —   $            — 
   
 
 
 
 
 
 
 
  
 
 
 
  
 
 
 
 
 
 
 
  
 
 
 
Corporate Loans within CLO assets are classified as past due if contractual payments are more than one day past due.
As of June 30, 20202021 and December 31, 2019, 0 Loans2020, 0Loans and Receivables for which the fair value option was elected were past due or in
non-accrual status.
status. As of June 30, 2020 and December 31, 2019, 0 Corporate Bonds included within the Assets of Consolidated CLO Vehicles for which the fair value option was elected were past due or in
non-accrual
status.
 
3
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The Blackstone Group Inc.
Notes to Condensed Consolidated Financial Statements (Unaudited) - Continued
(All Dollars Areare in Thousands, Except Share and Per Share Data, Except Where Noted)
 
 
8.   Fair Value Measurements of Financial Instruments
The following tables summarize the valuation of Blackstone’s financial assets and liabilities by the fair value hierarchy:
 
                                                                                                                                        
   
June 30, 2020
   
Level I
  
Level II
  
Level III
  
NAV
  
Total
Assets
                         
Cash and Cash Equivalents   $349,197    $—    $—    $—    $349,197 
                          
Investments                         
Investments of Consolidated Blackstone Funds (a)
                         
Investment Funds
   —    —    —    13,149    13,149 
Equity Securities, Partnerships and LLC Interests
   38,917    55,704    677,772    —    772,393 
Debt Instruments
   —    570,935    66,010    —    636,945 
Freestanding Derivatives
   —    2,062    —    —    2,062 
Assets of Consolidated CLO Vehicles
   —    6,047,390    471,592    —    6,518,982 
                          
Total Investments of Consolidated Blackstone Funds
   38,917    6,676,091    1,215,374    13,149    7,943,531 
Corporate Treasury Investments
   572,312    1,335,989    29,768    267,774    2,205,843 
Other Investments
   157,552    —    3,929    4,175    165,656 
                          
Total Investments   768,781    8,012,080    1,249,071    285,098    10,315,030 
                          
Accounts Receivable - Loans and Receivables   —    —    162,368    —    162,368 
                          
Other Assets - Freestanding Derivatives   47    174,365    —    —    174,412 
                          
   $1,118,025   $8,186,445   $1,411,439   $285,098   $11,001,007 
                          
Liabilities
                         
Loans Payable - Liabilities of Consolidated CLO Vehicles (a)(b)  $—   $6,232,695   $—   $—   $6,232,695 
                          
Due to Affiliates - Liabilities of Consolidated CLO Vehicles (a)(b)   —    93,945    —    —    93,945 
                          
Securities Sold, Not Yet Purchased   9,395    42,000    —    —    51,395 
                          
Accounts Payable, Accrued Expenses and Other Liabilities                         
Consolidated Blackstone Funds - Freestanding Derivatives (a)
   —    10,936    —    —    10,936 
Freestanding Derivatives
   518    45,284    —    —    45,802 
Corporate Treasury Commitments (c)
   —    —    2,030    —    2,030 
                          
Total Accounts Payable, Accrued Expenses and Other Liabilities   518    56,220    2,030    —    58,768 
                          
    $9,913    $6,424,860    $2,030    $—    $6,436,803 
                          
                                                                                                                                        
   
June 30, 2021
   
Level I
  
Level II
  
Level III
  
NAV
  
Total
Assets
 
                         
Cash and Cash Equivalents
   $398,672    $—    $—    $—    $398,672 
   
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
Investments
                         
Investments of Consolidated Blackstone Funds
                         
Investment Funds
   —    —    —    299,596    299,596 
Equity Securities, Partnerships and LLC Interests
   35,247    163,841    923,618    —    1,122,706 
Debt Instruments
   670    386,574    59,366    —    446,610 
Freestanding Derivatives
   —    2,357    —    —    2,357 
   
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
Total Investments of Consolidated Blackstone Funds
   35,917    552,772    982,984    299,596    1,871,269 
Corporate Treasury Investments
   510,186    1,894,540    35,396    203    2,440,325 
Other Investments
   503,932    116,250    48,862    51,755    720,799 
   
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
Total Investments
   1,050,035    2,563,562    1,067,242    351,554    5,032,393 
   
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
Accounts Receivable - Loans and Receivables
   —    —    223,796    —    223,796 
   
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
Other Assets - Freestanding Derivatives
   505    105,005    —    —    105,510 
   
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
    $1,449,212    $2,668,567    $1,291,038    $351,554    $5,760,371 
   
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
Liabilities
                         
Securities Sold, Not Yet Purchased
   $11,953    $23,830    $—    $—    $35,783 
   
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
Accounts Payable, Accrued Expenses and Other Liabilities
                         
Consolidated Blackstone Funds - Freestanding Derivatives
   —    2,259    —    —    2,259 
Freestanding Derivatives
   1,086    145,948    —    —    147,034 
Corporate Treasury Commitments (a)
   —    —    447    —    447 
   
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
Total Accounts Payable, Accrued Expenses and Other Liabilities
   1,086    148,207    447    —    149,740 
   
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
    $13,039    $172,037    $447    $—    $185,523 
   
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
 
3
5
Table of Contents
The Blackstone Group Inc.
Notes to Condensed Consolidated Financial Statements (Unaudited) - Continued
(All Dollars Areare in Thousands, Except Share and Per Share Data, Except Where Noted)
 
                                                                                                                                        
   
December 31, 2019
   
Level I
  
Level II
  
Level III
  
NAV
  
Total
Assets
                         
Cash and Cash Equivalents   $456,784    $—    $—    $—    $456,784 
                          
Investments
                         
Investments of Consolidated Blackstone Funds (a)
                         
Investment Funds
   —    —    —    23,647    23,647 
Equity Securities, Partnerships and LLC Interests
   31,812    53,611    674,150    —    759,573 
Debt Instruments
   —    715,246    79,381    —    794,627 
Freestanding Derivatives
   —    390    —    —    390 
Assets of Consolidated CLO Vehicles
   —    6,505,720    296,741    —    6,802,461 
                          
Total Investments of Consolidated Blackstone Funds
   31,812    7,274,967    1,050,272    23,647    8,380,698 
Corporate Treasury Investments
   726,638    1,385,582    29,289    278,078    2,419,587 
Other Investments
   200,478    —    —    7,126    207,604 
                          
Total Investments   958,928    8,660,549    1,079,561    308,851    11,007,889 
                          
Accounts Receivable - Loans and Receivables
   —    —    500,751    —    500,751 
                          
Other Assets - Freestanding Derivatives
   502    53,894    —    —    54,396 
                          
    $1,416,214    $8,714,443    $1,580,312    $308,851    $12,019,820 
                          
Liabilities
                         
Loans Payable - Liabilities of Consolidated CLO Vehicles (a)(b)
   $—    $6,479,754    $—    $—    $6,479,754 
                          
Due to Affiliates - Liabilities of Consolidated CLO Vehicles (a)(b)
   —    78,252    —    —    78,252 
                          
Securities Sold, Not Yet Purchased   19,977    55,569    —    —    75,546 
                          
Accounts Payable, Accrued Expenses and Other Liabilities                         
Consolidated Blackstone Funds - Freestanding Derivatives (a)
   —    4,321    —    —    4,321 
Freestanding Derivatives
   150    5,744    —    —    5,894 
                          
Total Accounts Payable, Accrued Expenses and Other Liabilities   150    10,065    —    —    10,215 
                          
    $20,127    $6,623,640    $—    $—    $6,643,767 
                          
                                                                                                                                        
   
December 31, 2020
   
Level I
  
Level II
  
Level III
  
NAV
  
Total
Assets
                         
Cash and Cash Equivalents
   $597,130    $15,606    $—    $—    $612,736 
   
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
Investments
                         
Investments of Consolidated Blackstone Funds
                         
Investment Funds
   —    —    —    15,711    15,711 
Equity Securities, Partnerships and LLC Interests
   39,694    48,471    792,958    —    881,123 
Debt Instruments
   —    492,280    65,352    —    557,632 
Freestanding Derivatives
   —    542    —    —    542 
   
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
Total Investments of Consolidated Blackstone Funds
   39,694    541,293    858,310    15,711    1,455,008 
Corporate Treasury Investments
   996,516    1,517,809    7,899    57,492    2,579,716 
Other Investments
   187,089    —    61,053    4,762    252,904 
   
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
Total Investments
   1,223,299    2,059,102    927,262    77,965    4,287,628 
   
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
Accounts Receivable - Loans and Receivables
   —    —    581,079    —    581,079 
   
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
Other Assets - Freestanding Derivatives
   162    125,860    —    —    126,022 
   
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
    $1,820,591    $2,200,568    $1,508,341    $77,965    $5,607,465 
   
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
Liabilities
                         
Securities Sold, Not Yet Purchased
   $9,324    $41,709    $—    $—    $51,033 
   
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
Accounts Payable, Accrued Expenses and Other Liabilities
                         
Consolidated Blackstone Funds - Freestanding Derivatives
   —    7,819    —    —    7,819 
Freestanding Derivatives
   373    195,260    —    —    195,633 
Corporate Treasury Commitments (a)
   —    —    244    —    244 
   
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
Total Accounts Payable, Accrued Expenses and Other Liabilities
   373    203,079    244    —    203,696 
   
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
    $9,697    $244,788    $244    $—    $254,729 
   
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
 
LLC Limited Liability Company.
(a)
Pursuant to GAAP consolidation guidance, Blackstone is required to consolidate all VIEs in which it has been identified as the primary beneficiary, including certain CLO vehicles and other funds in which a consolidated entity of Blackstone, such as the general partner of the fund, has a controlling financial interest. While Blackstone is required to consolidate certain funds, including CLO vehicles, for GAAP purposes, Blackstone has no ability to utilize the assets of these funds and there is no recourse to Blackstone for their liabilities since these are client assets and liabilities.
(b)
Senior and subordinated notes issued by CLO vehicles are classified based on the more observable fair value of CLO assets less (1) the fair value of any beneficial interests held by Blackstone, and (2) the carrying value of any beneficial interests that represent compensation for services.
(c)
Corporate Treasury Commitments are measured using
third party pricing
.pricing.
 
3
6
Table of Contents
The Blackstone Group Inc.
Notes to Condensed Consolidated Financial Statements (Unaudited) - Continued
(All Dollars Areare in Thousands, Except Share and Per Share Data, Except Where Noted)
 
 
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, 2020:2021:
 
  
                        
   
                        
   
                        
   
                        
   
                        
   
                        
                                                                                                                                                                   
    
Fair Value
      
Valuation
Techniques
      
Unobservable
Inputs
     
Ranges
     
Weighted-
Average (a)
 
    
Impact to
Valuation
from an
Increase
in Input
 
Fair Value
 
Valuation
Techniques
  
Unobservable
Inputs
 
Ranges
 
Weighted-
Average (a)
 
Impact to
Valuation

from an

Increase

in Input
Financial Assets
                                     
Investments of Consolidated Blackstone Funds
                                     
Equity Securities, Partnership and LLC Interests
  
$
677,772
 
   
Discounted Cash Flows
   
 
Discount Rate
 
   
0.8
%
 -
42.1
%
   
 
11.0
%
 
 
 
Lower
 
 
$
923,618
 
 
 
Discounted Cash Flows
 
  
 
Discount Rate
 
 
 
2.8%
 -
 
43.8
%
 
 
 
10.4
%
 
 
 
Lower
 
          
 
Exit Multiple - EBITDA
 
   
3.5
x -
18.6
x
   
 
12.0
x
 
 
 
Higher
 
      
 
Exit Multiple - EBITDA
 
 
 
3.7x
 - 27.0x
 
 
 
12.8
x
 
 
 
Higher
 
          
 
Exit Capitalization Rate
 
   
2.0
%
 -
15.5
%
   
 
5.5
%
 
 
 
Lower
 
      
 
Exit Capitalization Rate
 
 
 
1.7
% - 14.9
%
 
 
 
5.2
%
 
 
 
Lower
 
      
Third Party Pricing
   
 
N/A
 
       
 
     
 
Transaction Price
 
  
 
n/a
 
       
      
Transaction Price
   
 
N/A
 
       
 
  
      
Other
   
 
N/A
 
       
 
  
Debt Instruments
  
 
66,010
 
   
Discounted Cash Flows
   
 
Discount Rate
 
   
6.8
%
 -
19.3
%
   
 
10.0
%
 
 
 
Lower
 
 
 
59,366
 
 
 
Discounted Cash Flows
 
  
 
Discount Rate
 
 
 
6.6
% -19.3
%
 
 
 
9.7
%
 
 
 
Lower
 
      
Third Party Pricing
   
 
N/A
 
       
 
  
      
Transaction Price
   
 
N/A
 
       
 
  
      
Other
   
 
N/A
 
       
 
  
Assets of Consolidated CLO Vehicles
  
 
471,592
 
   
Third Party Pricing
   
 
N/A
 
       
 
  
                          
 
Third Party Pricing
 
  
 
n/a
 
       
Total Investments of Consolidated Blackstone Funds
  
 
1,215,374
 
                     
 
982,984
 
            
Corporate Treasury Investments
  
 
29,768
 
   
Discounted Cash Flows
   
 
Discount Rate
 
   
4.0
%
 -
11.7
%
   
 
7.7
%
 
 
 
Lower
 
 
 
35,396
 
 
 
Discounted Cash Flows
 
  
 
Discount Rate
 
 
 
5.6
% - 8.1
%
 
 
 
6.5
%
 
 
 
Lower
 
      
Third Party Pricing
   
 
N/A
 
       
 
 
 
  
 
 
 
 
Third Party Pricing
 
 
 
 
n/a
 
 
 
 
 
 
 
 
 
 
 
 
Transaction Price
 
 
 
 
n/a
 
 
 
 
 
 
 
 
Loans and Receivables
  
 
162,368
 
   
Discounted Cash Flows
   
 
Discount Rate
 
   
7.2
%
 -
9.4
%
   
 
8.1
%
 
 
 
Lower
 
 
 
223,796
 
 
 
Discounted Cash Flows
 
  
 
Discount Rate
 
 
 
6.6
% - 8.3
%
 
 
 
7.4
%
 
 
 
Lower
 
      
Third Party Pricing
   
 
N/A
 
       
 
 
 
  
Other Investments
  
 
3,929
 
   
Transaction Price
   
 
N/A
 
       
 
 
 
   
 
48,862
 
 
 
Third Party Pricing
 
  
 
n/a
 
       
                          
 
Transaction Price
 
  
 
n/a
 
       
  
$
1,411,439
 
                     
$
1,291,038
 
            
                       
 
3
737
Table of Contents
The Blackstone Group Inc.
Notes to Condensed Consolidated Financial Statements (Unaudited) - Continued
(All Dollars Areare in Thousands, Except Share and Per Share Data, Except Where Noted)
 
 
The following table summarizes the quantitative inputs and assumptions used for items categorized in Level III of the fair value hierarchy as of December 31, 2019: 
2020:
 
  
                        
   
                        
   
                        
   
                        
   
                        
   
                        
                                                                                                                                                                   
 
Fair Value
 
Valuation
Techniques
 
Unobservable
Inputs
 
Ranges
 
Weighted-
Average (a)
 
Impact to
Valuation
from an
Increase
in Input
 
Fair Value
 
Valuation
Techniques
 
Unobservable
Inputs
 
Ranges
 
Weighted-
Average (a)
 
Impact to
Valuation
from an
Increase
in Input
Financial Assets
   
 
                                    
 
Investments of Consolidated Blackstone Funds
   
 
                                    
 
Equity Securities, Partnership and LLC Interests
  
 $
674,150
 
   
Discounted Cash Flows
    
Discount Rate
    
0.9
% - 40.2
%
   
10.6
%
   
Lower
  
$
792,958
 
 
 
Discounted Cash Flows
 
 
 
Discount Rate
 
 
 
3.8
% - 42.1
%
 
 
 
10.8
%
 
 
 
Lower
 
   
 
         
Exit Multiple - EBITDA
    
0.1
x - 17.0
x
   
9.7
x
   
Higher
      
 
Exit Multiple - EBITDA
 
 
 
1.7
x - 24.0
x
 
 
 
13.2
x
 
 
 
Higher
 
   
 
         
Exit Capitalization Rate
    
2.0
% - 27.0
%
   
5.9
%
   
Lower
      
 
Exit Capitalization Rate
 
 
 
2.7
% - 14.9
%
 
 
 
5.4
%
 
 
 
Lower
 
   
 
    
Third Party Pricing
    
N/A
                 
 
Transaction Price
 
 
 
n/a
 
      
 
   
 
    
Transaction Price
    
N/A
                 
 
Other
 
 
 
n/a
 
      
 
   
 
    
Other
    
N/A
              
Debt Instruments
  
 
79,381
 
   
Discounted Cash Flows
    
Discount Rate
    
7.1
% - 58.2
%
   
12.1
%
   
Lower
  
 
65,352
 
 
 
Discounted Cash Flows
 
 
 
Discount Rate
 
 
 
6.3
% - 19.3
%
 
 
 
8.6
%
 
 
 
Lower
 
   
 
    
Third Party Pricing
    
N/A
              
   
 
    
Transaction Price
    
N/A
              
   
 
    
Other
    
N/A
              
Assets of Consolidated CLO Vehicles
  
 
296,741
 
   
Third Party Pricing
    
N/A
              
                             
 
Third Party Pricing
 
 
 
n/a
 
      
 
Total Investments of Consolidated Blackstone Funds
  
 
1,050,272
 
                        
 
858,310
 
          
 
Corporate Treasury Investments
  
 
29,289
 
   
Discounted Cash Flows
    
Discount Rate
    
3.2
% - 7.1
%
   
5.7
%
   
Lower
  
 
7,899
 
 
 
Discounted Cash Flows
 
 
 
Discount Rate
 
 
 
3.3
% - 7.4
%
 
 
 
6.4
%
 
 
 
Lower
 
   
 
    
Market Comparable Companies
    
EBITDA Multiple
    
6.2
x - 8.8
x
   
8.1
x
   
Higher
    
 
Third Party Pricing
 
 
 
n/a
 
      
 
   
 
    
Third Party Pricing
    
N/A
              
Loans and Receivables
  
 
500,751
 
   
Discounted Cash Flows
    
Discount Rate
    
5.2
% - 9.8
%
   
7.7
%
   
Lower
  
 
581,079
 
 
 
Discounted Cash Flows
 
 
 
Discount Rate
 
 
 
6.7
% - 10.3
%
 
 
 
7.8
%
 
 
 
Lower
 
Other Investments
 
 
61,053
 
 
 
Third Party Pricing
 
 
 
n/a
 
      
 
   
 
    
Transaction Price
    
N/A
                 
 
Transaction Price
 
 
 
n/a
 
      
 
 
 
        
 
Other
 
 
 
n/a
 
      
 
  
 $
1,580,312
 
                        
 
          
                           
$
1,508,341
 
          
 
 
          
 
N/A
n/a
Not applicable.
EBITDA
Earnings before interest, taxes, depreciation and amortization.
Exit Multiple
Ranges include the last twelve months EBITDA and forward EBITDA multiples.
Third Party Pricing
Third Party Pricing is generally determined on the basis of unadjusted prices between market participants provided by reputable dealers or pricing services.
Transaction Price
Includes recent acquisitions or transactions.
(a)
Unobservable inputs were weighted based on the fair value of the investments included in the range.
Since December 31, 2019,2020, there have been no changes in valuation techniques within Level II and Level III that have had a material impact on the valuation of financial instruments.
The following tables summarize the changes in financial assets and liabilities measured at fair value for which Blackstone has used Level III inputs to determine fair value and does not include gains or losses that were reported in Level III in prior years or for instruments that were transferred out of Level III prior to the end of the respective reporting period. These tables also exclude financial assets and liabilities measured at fair value on a non-recurring basis. Total realizedr
e
alized and unrealized gains and losses recorded for Level III investments are reported in either Investment Income (Loss) or Net Gains from Fund Investment Activities in the Condensed Consolidated Statements of Operations.
 
3
8
Table of Contents
The Blackstone Group Inc.
Notes to Condensed Consolidated Financial Statements (Unaudited) - Continued
(All Dollars Areare in Thousands, Except Share and Per Share Data, Except Where Noted)
 
                                                                                                                                                
   
Level III Financial Assets at Fair Value
   
Three Months Ended June 30,
   
2020
 
2019
   
Investments
       
Investments
      
   
of
 
Loans
 
Other
   
of
 
Loans
 
Other
  
   
Consolidated
 
and
 
Investments
   
Consolidated
 
and
 
Investments
  
   
Funds
 
Receivables
 
(a)
 
Total
 
Funds
 
Receivables
 
(a)
 
Total
Balance, Beginning of Period   $1,014,098   $218,115   $47,909   $1,280,122   $1,243,800   $208,226   $59,133   $1,511,159 
Transfer Into Level III (b)
   316,551   —   8,402   324,953   149,275   —   3,986   153,261 
Transfer Out of Level III (b)   (200,964)   —   (16,850)   (217,814)   (294,612)   —   (14,557)   (309,169) 
Purchases   125,218   7,160   4,559   136,937   112,757   198,482   5,251   316,490 
Sales   (51,971)   (75,689)   (7,626)   (135,286)   (84,525)   (218,148)   (5,270)   (307,943) 
Settlements   —   (1,637)   —   (1,637)   —   (3,038)   —   (3,038) 
Changes in Gains Included in Earnings   12,442   14,419   (2,697)   24,164   13,401   2,309   509   16,219 
                                  
Balance, End of Period   $1,215,374   $162,368   $33,697   $1,411,439   $1,140,096   $187,831   $49,052   $1,376,979 
                                  
         
Changes in Unrealized Gains (Losses) Included in Earnings Related to Financial Assets Still Held at the Reporting Date   $(27,616)   $9,521   $(7,782)   $(25,877)   $(2,162)   $(1,898)   $135   $(3,925) 
                                  
                                                                                                                                                                         
  
 
  
Level III Financial Assets at Fair Value
  
Three Months Ended June 30,
  
2021
 
2020
  
Investments
       
Investments
      
  
of
 
Loans
 
Other
   
of
 
Loans
 
Other
  
  
Consolidated
 
and
 
Investments
   
Consolidated
 
and
 
Investments
  
  
Funds
 
Receivables
 
(a)
 
Total
 
Funds
 
Receivables
 
(a)
 
Total
Balance, Beginning of Period
  $885,228   $604,611   $41,160   $1,530,999   $1,014,098   $218,115   $47,909   $1,280,122 
Transfer Into Level III (b)
  1,266   —   —   1,266   316,551   —   8,402   324,953 
Transfer Out of Level III (b)
  (12,187)   —   —   (12,187)   (200,964)   —   (16,850)   (217,814) 
Purchases
  99,223   33,434   33,458   166,115   125,218   7,160   4,559   136,937 
Sales
  (79,993)   (408,488)   (1,014)   (489,495)   (51,971)   (75,689)   (7,626)   (135,286) 
Issuances
  —   12,594   —   12,594   —   —   —   — 
Settlements
  —   (28,155)   —   (28,155)   —   (1,637)   —   (1,637) 
Changes in Gains (Losses) Included in Earnings
  89,447   9,800   (129)   99,118   12,442   14,419   (2,697)   24,164 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance, End of Period
  $982,984   $223,796   $73,475   $1,280,255   $1,215,374   $162,368   $33,697   $1,411,439 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
         
Changes in Unrealized Gains (Losses) Included in Earnings Related to Financial Assets Still Held at the Reporting Date
  $68,862   $746   $(128)   $69,480   $(27,616)   $9,521   $(7,782)   $(25,877) 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                                                                                                                
   
Level III Financial Assets at Fair Value
   
Six Months Ended June 30,
   
2020
 
2019
   
Investments
       
Investments
      
   
of
 
Loans
 
Other
   
of
 
Loans
 
Other
  
   
Consolidated
 
and
 
Investments
   
Consolidated
 
and
 
Investments
  
   
Funds
 
Receivables
 
(a)
 
Total
 
Funds
 
Receivables
 
(a)
 
Total
Balance, Beginning of Period   $1,050,272   $500,751   $29,289   $1,580,312   $1,364,016   $304,173   $56,185   $1,724,374 
Transfer Into Level III (b)
   282,400   —   25,001   307,401   106,644   —   12,935   119,579 
Transfer Out of Level III (b)   (147,510)   —   (18,875)   (166,385)   (400,402)   —   (27,170)   (427,572) 
Purchases   226,824   170,899   5,771   403,494   179,305   270,772   12,820   462,897 
Sales   (111,580)   (506,881)   (12,665)   (631,126)   (145,097)   (383,816)   (6,141)   (535,054) 
Settlements   —   (3,650)   —   (3,650)   —   (10,189)   —   (10,189) 
Changes in Gains Included in Earnings   (85,032)   1,249   5,176   (78,607)   35,630   6,891   423   42,944 
                                  
Balance, End of Period   $1,215,374   $162,368   $33,697   $1,411,439   $1,140,096   $187,831   $49,052   $1,376,979 
                                  
         
Changes in Unrealized Gains (Losses) Included in Earnings Related to Financial Assets Still Held at the Reporting Date   $(97,403)   $4,940   $(123)   $(92,586)   $25,821   $(2,657)   $315   $23,479 
                                  
                                                                                                                                                                         
  
Level III Financial Assets at Fair Value
  
Six Months Ended June 30,
  
2021
 
2020
  
Investments
       
Investments
      
  
of
 
Loans
 
Other
   
of
 
Loans
 
Other
  
  
Consolidated
 
and
 
Investments
   
Consolidated
 
and
 
Investments
  
  
Funds
 
Receivables
 
(a)
 
Total
 
Funds
 
Receivables
 
(a)
 
Total
Balance, Beginning of Period
  $858,310   $581,079   $46,158   $1,485,547   $1,050,272   $500,751   $29,289   $1,580,312 
Transfer Into Level III (b)
  1,804   —   —   1,804   282,400   —   25,001   307,401 
Transfer Out of Level III (b)
  (88,841)   —   —   (88,841)   (147,510)   —   (18,875)   (166,385) 
Purchases
  186,080   356,763   33,459   576,302   226,824   170,899   5,771   403,494 
Sales
  (127,985)   (701,212)   (6,163)   (835,360)   (111,580)   (506,881)   (12,665)   (631,126) 
Issuances
  —   19,340   —   19,340   —   —   —   — 
Settlements
  —   (45,555)   —   (45,555)   —   (3,650)   —   (3,650) 
Changes in Gains (Losses) Included in Earnings
  153,616   13,381   21   167,018   (85,032)   1,249   5,176   (78,607) 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance, End of Period
  $982,984   $223,796   $73,475   $1,280,255   $1,215,374   $162,368   $33,697   $1,411,439 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
          
Changes in Unrealized Gains (Losses) Included in Earnings Related to Financial Assets Still Held at the Reporting Date
  $125,918   $(3,110)   $(71)   $122,737   $(97,403)   $4,940   $(123)   $(92,586) 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(a)
Represents corporate treasury investments and Other Investments.
(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.
9.    Variable Interest Entities
Pursuant to GAAP consolidation guidance, Blackstone consolidates certain VIEs infor which it is determined that Blackstone is the primary
t
he pr
i
mary beneficiary either directly or indirectly, through a consolidated entity or affiliate. VIEs include certain private equity, real estate, credit-focused or funds of hedge funds entities and CLO vehicles. The purpose of such VIEs is to provide strategy specific investment opportunities for investors in exchange for management and performance-based fees. The investment strategies of the Blackstone Funds differ by
b
y product; however, the fundamental risks of the Blackstone Funds haveare similar, characteristics, including loss of invested capital and loss of management fees and performance-basedperformance-
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Notes to Condensed Consolidated Financial Statements (Unaudited) - Continued
(All Dollars are in Thousands, Except Share and Per Share Data, Except Where Noted)
based fees. In Blackstone’s role as general partner, collateral manager or investment adviser, it generally considers itself the sponsor of the applicable Blackstone Fund. Blackstone does not provide performance guarantees and has no other financial obligation to provide funding to consolidated VIEs other than its own capital commitments.
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Notes to Condensed Consolidated Financial Statements (Unaudited) - Continued
(All Dollars Are in Thousands, Except Share and Per Share Data, Except Where Noted)
The assets of consolidated variable interest entities may only be used to settle obligations of these entities. In addition, there is no recourse to Blackstone for the consolidated VIEs’ liabilities includingliabilities.
During the liabilitiesyear ended December 31, 2020, Blackstone determined that it was no longer the pr
i
mary beneficiary and deconsolidated nine CLO vehicles as a result of an ownership reorganization and the ongoing decline in Blackstone’s economic exposure to these vehicles. Following the ownership reorganization, there are no remaining consolidated CLO vehicles. As of the consolidated CLO vehicles.date of deconsolidation, Blackstone’s Total Assets, Total Liabilities and Non-Controlling Interests in Consolidated Entities were reduced by $6.8 billion, $6.6 billion and $216.3 million, respectively. Blackstone will continue to receive management fees and Performance Allocations from these vehicles following the dilution of its ownership interests.
Blackstone holds variable interests in certain VIEs which are not consolidated as it is determined that Blackstone is not the primary beneficiary. Blackstone’s involvement with such entities is in the form of direct and indirect equity interests and fee arrangements. The maximum exposure to loss represents the loss of assets recognized by Blackstone relating to
non-consolidated
VIEs and any clawback obligation relating to previously distributed Performance Allocations. Blackstone’s maximum exposure to loss relating to
non-consolidated
VIEs were as follows:
         
   
June 30,
   
December 31,
 
   
2020
   
2019
 
Investments   $868,579    $1,216,932 
Due from Affiliates   197,570    143,949 
Potential Clawback Obligation   39,271    109,240 
           
Maximum Exposure to Loss   $    1,105,420    $    1,470,121 
           
   
Amounts Due to
Non-Consolidated
VIEs
   $313    $231 
           
 
   
June 30,
   
December 31,
 
   
2021
   
2020
 
Investments
   $1,988,177    $1,307,292 
Due from Affiliates
   416,699    262,815 
Potential Clawback Obligation
   43,529    38,679 
   
 
 
   
 
 
 
Maximum Exposure to Loss
   $    2,448,405    $    1,608,786 
   
 
 
   
 
 
 
   
Amounts Due to Non-Consolidated VIEs
   $209    $241 
   
 
 
   
 
 
 
10.
Repurchase Agreements
At June 30, 20202021 and December 31, 2019,2020, Blackstone pledged securities with a carrying value of $123.0$80.0 million and $196.1$110.8 million, respectively, and cash to collateralize its repurchase agreements. Such securities can be repledged, delivered or otherwise used by the counterparty.
The following tables provide information regarding Blackstone’s Repurchase Agreements obligation by type of collateral pledged:
 
                     
  
June 30, 2020
  
Remaining Contractual Maturity of the
Agreements
  
Overnight
     
Greater
  
  
and
 
Up to
 
30 - 90
 
than
  
  
Continuous
 
30 Days
 
Days
 
90 days
 
Total
Repurchase Agreements
                    
Asset-Backed Securities  $—   $10,634   $40,780   $29,206   $80,620 
                     
  
Gross Amount of Recognized Liabilities for Repurchase Agreements in Note 11. “Offsetting of Assets and Liabilities”   $80,620 
              
  
Amounts Related to Agreements Not Included in Offsetting Disclosure in Note 11. “Offsetting of Assets and Liabilities”   $—   
                     
  
June 30, 2021
  
Remaining Contractual Maturity of the Agreements
  
Overnight
     
Greater
  
  
and
 
Up to
 
30 - 90
 
than
  
  
Continuous
 
30 Days
 
Days
 
90 days
 
Total
Repurchase Agreements
                    
Asset-Backed Securities
  $0   $0   $25,121   $32,126   $57,247 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
Gross Amount of Recognized Liabilities for Repurchase Agreements in Note 11. “Offsetting of Assets and Liabilities”
 
  $57,247 
           
 
 
 
  
Amounts Related to Agreements Not Included in Offsetting Disclosure in Note 11. “Offsetting of Assets and Liabilities”
 
  $0 
                  
 
 
 
 
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The Blackstone Group Inc.
Notes to Condensed Consolidated Financial Statements (Unaudited) - Continued
(All Dollars Areare in Thousands, Except Share and Per Share Data, Except Where Noted)
   
December 31, 2020
 
   
Remaining Contractual Maturity of the Agreements
 
   
Overnight
           
Greater
     
   
and
   
Up to
   
30 - 90
   
than
     
   
Continuous
   
30 Days
   
Days
   
90 days
   
Total
 
Repurchase Agreements
                         
Asset-Backed Securities
   $0    $15,345    $32,759   $28,704    $76,808 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
 
  
Gross Amount of Recognized Liabilities for Repurchase Agreements in Note 11. “Offsetting of Assets and Liabilities”
 
   $76,808 
                       
 
 
 
  
Amounts Related to Agreements Not Included in Offsetting Disclosure in Note 11. “Offsetting of Assets and Liabilities”
 
   $0 
                       
 
 
 
11. Offsetting of Assets and Liabilities
The following tables present the offsetting of assets and liabilities as of June 30, 2021 and December 31, 2020:
                                                                                                             
   
June 30, 2021
   
Gross and Net
         
   
Amounts of
  
Gross Amounts Not Offset
   
   
Assets Presented
  
in the Statement of
   
   
in the Statement
  
Financial Condition
   
   
of Financial
  
Financial
  
Cash Collateral
   
   
Condition
  
Instruments (a)
  
Received
  
Net Amount
Assets
                    
Freestanding Derivatives
   $106,296    $104,616    $46    $1,634 
   
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
                                                                                                             
   
June 30, 2021
   
Gross and Net
         
   
Amounts of
         
   
Liabilities
  
Gross Amounts Not Offset
   
   
Presented in the
  
in the Statement of
   
   
Statement of
  
Financial Condition
   
   
Financial
  
Financial
  
Cash Collateral
   
   
Condition
  
Instruments (a)
  
Pledged
  
Net Amount
Liabilities
                    
Freestanding Derivatives
   $149,293    $129,569    $13,857    $5,867 
Repurchase Agreements
   57,247    57,247    0    0 
   
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
    $206,540    $186,816    $13,857    $5,867 
   
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
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The Blackstone Group Inc.
Notes to Condensed Consolidated Financial Statements (Unaudited) - Continued
(All Dollars are in Thousands, Except Share and Per Share Data, Except Where Noted)
 
 
                     
  
December 31, 2019
  
Remaining Contractual Maturity of the Agreements
  
Overnight
     
Greater
  
  
and
 
Up to
 
30 - 90
 
than
  
  
Continuous
 
30 Days
 
Days
 
90 days
 
Total
Repurchase Agreements
                    
Asset-Backed Securities  $—   $42,459   $88,868   $22,791   $154,118 
                     
  
Gross Amount of Recognized Liabilities for Repurchase Agreements in Note 11. “Offsetting of Assets and Liabilities”   $154,118 
              
  
Amounts Related to Agreements Not Included in Offsetting Disclosure in Note 11. “Offsetting of Assets and Liabilities”   $— 
                     
                                                                                                             
   
December 31, 2020
   
Gross and Net
         
   
Amounts of
  
Gross Amounts Not Offset
   
   
Assets Presented
  
in the Statement of
   
   
in the Statement
  
Financial Condition
   
   
of Financial
  
Financial
  
Cash Collateral
   
   
Condition
  
Instruments (a)
  
Received
  
Net Amount
Assets
                    
Freestanding Derivatives
   $126,564    $114,673    $53    $11,838 
   
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
                                                                                                             
   
December 31, 2020
   
Gross and Net
         
   
Amounts of
         
   
Liabilities
  
Gross Amounts Not Offset
   
   
Presented in the
  
in the Statement of
   
   
Statement of
  
Financial Condition
   
   
Financial
  
Financial
  
Cash Collateral
   
   
Condition
  
Instruments (a)
  
Pledged
  
Net Amount
Liabilities
                    
Freestanding Derivatives
   $202,188    $174,623    $19,194    $8,371 
Repurchase Agreements
   76,808    76,808    0    0 
   
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
    $278,996    $251,431    $19,194    $8,371 
   
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
11.    Offsetting of Assets and Liabilities
The following tables present the offsetting of assets and liabilities as of June 30, 2020 and December 31, 2019:
                                                                                                             
   
June 30, 2020
   
Gross and Net
         
   
Amounts of
  
Gross Amounts Not Offset
   
   
Assets Presented
  
in the Statement of
   
   
in the Statement
  
Financial Condition
   
   
of Financial
  
Financial
  
Cash Collateral
   
   
Condition
  
Instruments (a)
  
Received
  
Net Amount
Assets
                    
Freestanding Derivatives   $176,474    $36,148    $72,895    $67,431 
                     
                                                                                                             
   
June 30, 2020
   
Gross and Net
         
   
Amounts of
         
   
Liabilities
  
Gross Amounts Not Offset
   
   
Presented in the  
  
in the Statement of
   
   
Statement of
  
Financial Condition
   
   
Financial
  
Financial
  
Cash Collateral
   
   
Condition
  
Instruments (a)
  
Pledged
  
Net Amount
Liabilities
                    
Freestanding Derivatives   $55,001    $36,148    $18,123    $730 
Repurchase Agreements   80,620    80,620    —    — 
                     
    $135,621    $116,768    $18,123    $730 
                     
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The Blackstone Group Inc.
Notes to Condensed Consolidated Financial Statements (Unaudited) - Continued
(All Dollars Are in Thousands, Except Share and Per Share Data, Except Where Noted)
   
                        
   
                        
   
                        
   
                        
 
 
  
December 31, 2019
 
  
Gross and Net
  
 
  
 
  
 
 
  
Amounts of
  
Gross Amounts Not Offset
  
 
 
  
Assets Presented
  
in the Statement of
  
 
 
  
in the Statement
  
Financial Condition
  
 
 
  
of Financial
  
Financial
  
Cash Collateral
  
 
 
  
Condition
     
Instruments (a)
     
Received
    
Net Amount
Assets
                    
Freestanding Derivatives   $54,479    $380    $—    $54,099 
                     
                                                                                                             
   
December 31, 2019
   
Gross and Net
         
   
Amounts of
         
   
Liabilities
  
Gross Amounts Not Offset
   
   
Presented in the
  
in the Statement of
   
   
Statement of
  
Financial Condition
   
   
Financial
  
Financial
  
Cash Collateral
   
   
Condition
  
Instruments (a)
  
Pledged
  
Net Amount
Liabilities
                    
Freestanding Derivatives   $10,215    $380    $9,198    $637 
Repurchase Agreements   154,118    154,118    —    — 
                     
    $164,333    $154,498    $9,198    $637 
                     
(a)
Amounts presented are inclusive of both legally enforceable master netting agreements, and financial instruments received or pledged as collateral. Financial instruments received or pledged as collateral offset derivative counterparty risk exposure, but do not reduce net balance sheet exposure.
Repurchase Agreements are presented separately on the Condensed Consolidated Statements of Financial Condition. Freestanding Derivative assets are included in Other Assets in the Condensed Consolidated Statements of Financial Condition. The following table presents the components of Other Assets:
 
   
June 30,
   
December 31,
 
   
2020
   
2019
 
Furniture, Equipment and Leasehold Improvements, Net
   $164,516    $154,482 
Prepaid Expenses
   144,823    159,333 
Freestanding Derivatives
   174,412    54,396 
Other
   17,600    14,282 
  
 
 
   
 
 
 
   $        501,351    $        382,493 
  
 
 
   
 
 
 
   
June 30,
   
December 31,
 
   
2021
   
2020
 
Furniture, Equipment and Leasehold Improvements, Net
   $242,072    $231,807 
Prepaid Expenses
   193,899    105,248 
Freestanding Derivatives
   105,510    126,022 
Other
   15,233    17,945 
   
 
 
   
 
 
 
    $        556,714    $        481,022 
   
 
 
   
 
 
 
Freestanding Derivative liabilities are included in Accounts Payable, Accrued Expenses and Other Liabilities in the Condensed Consolidated Statements of Financial Condition and are not a significant component thereof.
Notional Pooling Arrangement
Blackstone has a notional cash pooling arrangement with a financial institution for cash management purposes. This arrangement allows for cash withdrawals based upon aggregate cash balances on deposit at the same financial institution. Cash withdrawals cannot exceed aggregate cash balances on deposit. The net balance of cash on deposit and overdrafts is used as a basis for calculating net interest expense or income. As of June 30, 2020, the aggregate cash balance on deposit relating to the cash pooling arrangement was $1.0 billion, which was offset with an accompanying overdraft of $1.0 billion.
 
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The Blackstone Group Inc.
Notes to Condensed Consolidated Financial Statements (Unaudited) - Continued
(All Dollars Areare in Thousands, Except Share and Per Share Data, Except Where Noted)
 
 
interest expense or income. As of June 30, 2021, the aggregate cash balance on deposit relating to the cash pooling arrangement was $724.3 million, which was offset with an accompanying overdraft of $724.3 million.
12. Borrowings
On August 5, 2021, Blackstone, through its indirect subsidiary Blackstone Holdings Finance Co. L.L.C. (the “Issuer”), issued $650 million aggregate principal amount of senior notes due August 5, 2028 (the “2028 Notes”), $800 million aggregate principal amount of senior notes due January 30, 2032 (the “2032 Notes”) and $550 million aggregate principal amount of senior notes due August 5, 2051 (the “2051 Notes”). The 2028 Notes have an interest rate of 1.625% per annum, the 2032 Notes have an interest rate of 2.000% per annum and the 2051 Notes have an interest rate of 2.850% per annum, in each case accruing from August 5, 2021. Interest on the 2028 Notes and the 2051 Notes is payable semi-annually in arrears on February 5 and August 5 of each year commencing on February 5, 2022. Interest on the 2032 Notes is payable semi-annually in arrears on January 30 and July 30 of each year commencing on January 30, 2022.
All of Blackstone’s outstanding senior notes, including the 2028 Notes, 2032 Notes and 2051 Notes are unsecured and unsubordinated obligations of the Issuer that are fully and unconditionally guaranteed by The Blackstone Group Inc. and its indirect subsidiaries, Blackstone Holdings I L.P., Blackstone Holdings AI L.P., Blackstone Holdings II L.P., Blackstone Holdings III L.P. and Blackstone Holdings IV L.P. (the “Guarantors”). The guarantees are unsecured and unsubordinated obligations of the Guarantors. Transaction costs related to the issuance of the 2028 Notes, 2032 Notes and 2051 Notes have been capitalized and will be amortized over the life of the 2028 Notes, 2032 Notes and 2051 Notes.
The following table presents the general characteristics of each of ourBlackstone’s outstanding notes as of June 30, 2021 and December 31, 2020, as well as their carrying value and fair value. The notes are included in Loans Payable within the Condensed Consolidated Statements of Financial Condition. All of the notes were issued at a discount. All of the notes accrue interest from the issue date thereof and all pay interest in arrears on a semi-annual basis or annual basis.
 
  
June 30, 2020
   
December 31, 2019
   
June 30, 2021
   
December 31, 2020
 
  
Carrying
   
Fair
   
Carrying
   
Fair
   
Carrying
   
Fair
   
Carrying
   
Fair
 
Senior Notes
  
Value
   
Value (a)
   
Value
   
Value (a)
   
Value
   
Value (a)
   
Value
   
Value (a)
 
4.750%, Due 2/15/2023
   $396,809    $438,960    $396,247    $429,280    $397,975    $426,880    $397,385    $434,400 
2.000%, Due 5/19/2025
   333,264    357,140    332,393    365,521    384,722    383,630    362,947    398,620 
1.000%, Due 10/5/2026
   666,153    684,959    664,229    691,012    712,608    738,872    724,646    770,707 
3.150%, Due 10/2/2027
   297,215    320,250    297,046    309,540    297,561    324,720    297,387    332,370 
1.500%, Due 4/10/2029
   668,937    718,392    667,425    708,841    666,320    763,418    728,054    805,744 
2.500%, Due 1/10/2030
   490,268    520,850    489,841    493,500    491,201    517,500    490,745    538,200 
1.600%, Due 3/30/2031
   495,319    474,750    495,100    497,950 
6.250%, Due 8/15/2042
   238,551    352,375    238,437    338,200    238,789    364,025    238,668    372,250 
5.000%, Due 6/15/2044
   489,083    620,150    488,968    606,700    489,322    665,200    489,201    684,800 
4.450%, Due 7/15/2045
   344,219    411,110    344,157    396,235    344,346    432,495    344,282    449,645 
4.000%, Due 10/2/2047
   290,437    336,690    290,344    321,780    290,630    353,070    290,533    364,590 
3.500%, Due 9/10/2049
   391,845    421,840    391,769    399,961    392,007    440,760    391,925    460,120 
2.800%, Due 9/30/2050
   393,749    395,400    393,681    406,280 
  
 
   
 
   
 
   
 
   
 
   
 
   
 
   
 
 
  $  4,606,781   $  5,182,716   $  4,600,856   $  5,060,570    $5,594,549    $6,280,720    $5,644,554    $6,515,676 
  
 
   
 
   
 
   
 
   
 
   
 
   
 
   
 
 
 
(a)
Fair value is determined by broker quote and these notes would be classified as Level II within the fair value hierarchy.
Included within Loans Payable and Due to Affiliates within the Condensed Consolidated Statements of Financial Condition are amounts due to holders of debt securities issued by Blackstone’s consolidated CLO vehicles. Borrowings through the consolidated CLO vehicles consisted of the following:
   
June 30, 2020
  
December 31, 2019
 
         
Weighted-
         
Weighted-
 
         
Average
         
Average
 
       
Effective
 
Remaining
      
Effective
  
Remaining
 
   
Borrowing
   
Interest
 
  Maturity in  
  
Borrowing
   
Interest
  
  Maturity in  
 
   
Outstanding
   
Rate
 
Years (a)
  
Outstanding
   
Rate
  
Years (a)
 
Senior Secured Notes
  $6,525,925   2.74% 6.1  $6,527,800    3.55%   3.5 
Subordinated Notes
   325,735   (b)N/A   331,735    (b)  N/A 
  
 
 
      
 
 
    
  $6,851,660      $6,859,535    
  
 
 
      
 
 
    
(a)
Weighted-Average Remaining Maturity in Years for Senior Secured Notes includes consideration of pre-payment options.
(b)
The Subordinated Notes do not have contractual interest rates but instead receive distributions from the excess cash flows of the CLO vehicles.
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The Blackstone Group Inc.
Notes to Condensed Consolidated Financial Statements (Unaudited) - Continued
(All Dollars Areare in Thousands, Except Share and Per Share Data, Except Where Noted)
 
 
Senior Secured Notes and Subordinated Notes comprise the following amounts:
                        
                        
                        
                        
                        
                        
  
June 30, 2020
 
December 31, 2019
    
Amounts Due to Non-
   
Amounts Due to Non-
    
Consolidated Affiliates
   
Consolidated Affiliates
    
Borrowing
     
Borrowing
  
  
Fair Value
 
Outstanding
 
Fair Value
 
Fair Value
 
Outstanding
 
Fair Value
Senior Secured Notes
 $6,311,414  $78,800  $78,719  $6,512,733  $57,750  $57,717 
Subordinated Notes
  15,226   44,734   15,226   45,273   44,734   20,535 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 $6,326,640  $123,534  $93,945  $6,558,006  $102,484  $78,252 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
The Loans Payable of the consolidated CLO vehicles are collateralized by assets held by each respective CLO vehicle and assets of one vehicle may not be used to satisfy the liabilities of another. This collateral consisted of Cash, Corporate Loans, Corporate Bonds and other securities. As of June 30, 2020 and December 31, 2019, the fair value of the consolidated CLO assets was $6.8 billion and $7.2 billion, respectively.
Scheduled principal payments for borrowings as of June 30, 20202021 were as follows:
      
  Blackstone Fund  
   
   
Operating
  
Facilities/CLO
  
Total
   
    Borrowings    
  
Vehicles
  
    Borrowings    
2020
    $—     $92     $92 
2021
   —    —    — 
2022
   —    —    — 
2023
   400,000    —    400,000 
2024
   —    —    — 
Thereafter
   4,285,100    6,851,660    11,136,760 
  
 
 
 
  
 
 
 
  
 
 
 
    $        4,685,100     $  6,851,752     $        11,536,852 
  
 
 
 
  
 
 
 
  
 
 
 
 
13.  
Income Taxes
   
Operating
  
    Blackstone Fund    
  
Total
   
    Borrowings    
  
Facilities
  
    Borrowings    
2021
   $—    $99    $99 
2022
   —    —    — 
2023
   400,000    —    400,000 
2024
   —    —    — 
2025
   355,740    —    355,740 
Thereafter
   4,922,960    —    4,922,960 
   
 
 
 
  
 
 
 
  
 
 
 
    $5,678,700    $99    $5,678,799 
   
 
 
 
  
 
 
 
  
 
 
 
13. Income Taxes
Prior to the Conversion, Blackstone and certain of its subsidiaries operated in the U.S. as partnerships for income tax purposes (partnerships generally are not subject to federal income taxes) and generally as corporate entities in
non-U.S.
jurisdictions. Subsequent to the Conversion, all income attributable to Blackstone is subject to U.S. corporate income taxes.
The Conversion resulted in a
step-up
in the tax basis of certain assets that will be recovered as those assets are sold or the basis is amortized. The basis information currently available represents an estimate of
Blackstone was a cash 
taxpayer for the basis in Blackstone’s subsidiaries at July 1, 2019. The final amount of the
step-up
in tax basis may differ as the basis information becomes availablethree and is finalized.
six months ended June 30, 2021. Blackstone’s effective tax rate was 9.8%
9.2
% and 5.6%
9.8
% for the three months ended June 30, 20202021 and 2019,2020, respectively, and 0.9%
4.4
% and 4.4%
0.9
% for the six months ended June 30, 20202021 and 2019,2020, respectively. Blackstone’s income tax provision (benefit) was $147.4$
288.3
 million and $38.7$
147.4
 million for the three months ended June 30, 20202021 and 2019,2020, respectively, and $(11.3)$
287.8
 million and $79.9$
(11.3
) million for the six months ended June 30, 2021 and 2020, respectively. For the three and 2019, respectively.six months ended June 30, 2021, the effective tax rate differs from the statutory rate primarily because: (a) a portion of the reported net income (loss) before taxes is attributable to non-controlling interest holders and (b) of the net change to the valuation allowance related to the step-up in the tax basis of investment tax assets
.
 For the three and six months ended June 30, 2020, the effective tax rate differs from the statutory rate primarily because: (a) a portion of the reported net income (loss) before taxes is attributable to non-controlling interest holders and (b) of the net change to the valuation allowance related to the
step-up
in the tax basis of investment assets. For the three and six months ended June 30, 2019, the effective tax rate differs from the statutory rate primarily because a portion of the reported net income (loss) before taxes is passed through to common shareholders and
non-controlling
interest holders.
assets.
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The Blackstone Group Inc.
Notes to Condensed Consolidated Financial Statements (Unaudited) - Continued
(All Dollars Areare in Thousands, Except Share and Per Share Data, Except Where Noted)
 
 
14.  
Earnings Per Share and Stockholder’s
14. Earnings Per Share and Stockholders’ Equity
Earnings Per Share
Basic and diluted net income per share of Class A common stock for the three and six months ended June 30, 20202021 and 20192020 was calculated as follows:
 
                                                                                                             
   
Three Months Ended
  
Six Months Ended
   
June 30,
  
June 30,
   
2020
  
2019
  
2020
 
2019
Net Income (Loss) for Per Share of Class A Common Stock Calculations
                   
Net Income (Loss) Attributable to The Blackstone Group Inc., Basic   $568,266   $305,792    $(498,226)   $787,096 
Incremental Net Income from Assumed Exchange of Blackstone Holdings Partnership Units   405,459    —    —   610,101 
                    
Net Income (Loss) Attributable to The Blackstone Group Inc., Diluted   $973,725   $305,792    $(498,226)   $1,397,197 
                    
     
Shares/Units Outstanding
                   
Weighted-Average Shares of Class A Common Stock Outstanding, Basic   698,534,168    673,655,305    677,041,769   674,079,074 
Weighted-Average Shares of Unvested Deferred Restricted Class A Common Stock   123,340    330,639    —   269,196 
Weighted-Average Blackstone Holdings Partnership Units   505,754,449    —    —   526,244,006 
                    
Weighted-Average Shares of Class A Common Stock Outstanding, Diluted   1,204,411,957    673,985,944    677,041,769   1,200,592,276 
                    
     
Net Income (Loss) Per Share of Class A Common Stock
                   
Basic   $0.81    $0.45    $(0.74)   $1.17 
                    
Diluted   $0.81    $0.45    $(0.74)   $1.16 
                    
Dividends Declared Per Share of Class A Common Stock (a)
   $0.39    $0.37    $1.00   $0.95 
                    
                                                                                                             
   
Three Months Ended
  
Six Months Ended
   
June 30,
  
June 30,
   
2021
  
2020
  
2021
  
2020
Net Income (Loss) for Per Share of Common Stock Calculations
                    
Net Income (Loss) Attributable to The Blackstone Group Inc., Basic
   $1,309,152    $568,266    $3,057,024    $(498,226) 
Incremental Net Income from Assumed Exchange of Blackstone Holdings Partnership Units
   —    405,459    —    — 
   
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
Net Income (Loss) Attributable to The Blackstone Group Inc., Diluted
   $1,309,152    $973,725    $3,057,024    $(498,226) 
   
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
     
Shares/Units Outstanding
                    
Weighted-Average Shares of Common Stock Outstanding, Basic
   721,141,954    698,534,168    715,121,029    677,041,769 
Weighted-Average Shares of Unvested Deferred Restricted Common Stock
   123,226    123,340    501,179    — 
Weighted-Average Blackstone Holdings Partnership Units
   —    505,754,449    —    — 
   
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
Weighted-Average Shares of Common Stock Outstanding, Diluted
   721,265,180    1,204,411,957    715,622,208    677,041,769 
   
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
     
Net Income (Loss) Per Share of Common Stock
                    
Basic
   $1.82    $0.81    $4.27    $(0.74) 
   
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
Diluted
   $1.82    $0.81    $4.27    $(0.74) 
   
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
Dividends Declared Per Share of Common Stock (a)
   $0.82
 
   $0.39
 
   $1.78
 
   $1.00
 
   
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
 
(a)
Dividends declared reflects the calendar date of the declaration for each dividend.
In computing the dilutive effect that the exchange of Blackstone Holdings Partnership Units would have on Net Income Per Share of Class A Common Stock, Blackstone considered that net income available to holders of shares of Class A common stock would increase due to the elimination of
non-controlling
interests in Blackstone Holdings, inclusive of any tax impact. The hypothetical conversion may be dilutive to the extent there is activity at The Blackstone Group Inc. level that has not previously been attributed to the
non-controlling
interests or if there is a change in tax rate as a result of a hypothetical conversion.
Unvested participating Blackstone Holdings Partnership Units and unvested participating shares of Class A common stock are excluded from basic and diluted net loss per share of Class A common stock for the six months ended June 30, 2020 as those unvested participating units and shares are not contractually obligated to share in losses.
 
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The Blackstone Group Inc.
Notes to Condensed Consolidated Financial Statements (Unaudited) - Continued
(All Dollars Areare in Thousands, Except Share and Per Share Data, Except Where Noted)
 
The following table summarizes the anti-dilutive securities for the three and six months ended June 30, 20202021 and 2019:2020:
 
  
Three Months Ended
June 30,
 
  
Six Months Ended
June 30,
 
  
Three Months Ended

June 30,
   
Six Months Ended

June 30,
 
  
2020
 
  
2019
 
  
2020
 
  
2019
 
  
2021
   
2020
   
2021
   
2020
 
Weighted-Average Shares of Unvested Deferred Restricted Class A Common Stock
   —    —    15,672,449    — 
Weighted-Average Shares of Unvested Deferred Restricted Common Stock
   —    0    0    15,672,449 
Weighted-Average Blackstone Holdings Partnership Units
   —    526,721,409    508,487,300    —    488,569,471    0    490,857,143    508,487,300 
Stockholders’ Equity
Stockholder’s Equity
In connection with the Conversion, effective July 1, 2019, each common unit of the Partnership outstanding immediately prior to the Conversion converted into one issued and outstanding, fully paid and nonassessable share of Class A common stock, $0.00001 par value per share, of the Company. The special voting unit of the Partnership outstanding immediately prior to the Conversion converted into one issued and outstanding, fully paid and nonassessable share of Class B common stock, $0.00001 par value per share, of the Company. The general partner units of the Partnership outstanding immediately prior to the Conversion converted into one issued and outstanding, fully paid and nonassessable share of Class C common stock, $0.00001 par value per share, of the Company.
In connection with the share reclassification, effective February 26, 2021, the Certificate of Incorporation of The Class ABlackstone Group Inc. was amended and Class B common stock generally are
non-voting.
The Class B common stock generally will vote together withrestated to: (a) rename the Class A common stock as “common stock,” which has the same rights and powers (including, without limitation, with respect to voting) that Blackstone’s Class A common stock formerly had, (b) reclassify the “Class B common stock” into a new “Series I preferred stock,” which has the same rights and powers that the Class B common stock formerly had, and (c) reclassify the Class C common stock into a new “Series II preferred stock,” which has the same rights and powers that the Class C common stock formerly had. In connection with such share reclassification, the Company authorized 10 billion shares of preferred stock with a par value of $0.00001, of which (a) 999,999,000 shares are designated as Series I preferred stock and (b) 1,000 shares are designated as Series II preferred stock. The remaining 9 billion shares may be designated from time to time in accordance with Blackstone’s certificate of incorporation. There was 1 share of Series I preferred stock and 1 share of Series II preferred stock issued and outstanding as of June 30, 2021.
Under Blackstone’s certificate of incorporation and Delaware law, holders of Blackstone’s common stock are entitled to vote, together with holders of Blackstone’s Series I preferred stock, voting as a single class, on those fewa number of significant matters, that may be submitted forincluding certain sales, exchanges or other dispositions of all or substantially all of Blackstone’s assets, a votemerger, consolidation or other business combination, the removal of the Class A common stock.Series II Preferred Stockholder and forced transfer by the Series II Preferred Stockholder of its shares of Series II preferred stock and the designation of a successor Series II Preferred Stockholder. The Class C common stock is the only class ofSeries II Preferred Stockholder elects the Company’s commondirectors. Holders of Blackstone’s Series I preferred stock entitled to vote at a meeting of shareholders (or take similar action by written consent) in the election of directors and generally with respect to all other matters submitted to a vote of shareholders. Shareholders of Class B and Class C commonSeries II preferred stock are not entitled to dividends from the Company, or receipt of any of the Company’s assets in the event of any dissolution, liquidation or winding up. Blackstone Partners L.L.C. is the sole holder of the Class B commonSeries I preferred stock and Blackstone Group Management L.L.C. is the sole holder of the Class C common
Series II preferred stock.
In connection with the Conversion on July 1, 2019, the Company authorized 9 billion shares of preferred stock with a par value of $0.00001. There were 0 shares of preferred stock issued and outstanding as of June 30, 2020.
Share Repurchase Program
On July 16, 2019,May 6, 2021, Blackstone’s board of directors authorized the repurchase of up to $1.0 billion of Class A common stock and Blackstone Holdings Partnership Units. Under the repurchase program, repurchases may be made from time to time in open market transactions, in privately negotiated transactions or otherwise. The timing and the actual numbers repurchased will depend on a variety of factors, including legal requirements, price and economic and market conditions. The repurchase program may be changed, suspended or discontinued at any time and does not have a specified expiration date.
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The Blackstone Group Inc.
Notes to Condensed Consolidated Financial Statements (Unaudited) - Continued
(All Dollars are in Thousands, Except Share and Per Share Data, Except Where Noted)
During the three and six months
 ended June 30, 2021, Blackstone repurchased 3.2 million shares of common stock at a total cost of $289.1 million. During the three and six months ended June 30, 2020, Blackstone repurchased 2.0 million and 7.0 million shares,
, respectiv
ely,
respectively, of Blackstone Class A common stock
at a total cost of $114.9 million and $368.4 million, respectively. During the three and six months ended June 30, 2019, Blackstone repurchased 7.0 million and 8.5 million shares
, respectively,
of Blackstone Class A common stock
at a total cost of $290.9 million and $343.1 million, respectively. As of June 30, 2020,2021, the amount remaining available for repurchases under the
repurchase
program was $412.8$758.4 million. Class A common stock repurchased in the
three months
ended June 30, 2019 includes shares for which trades were executed during the three months ended June 30, 201
9
 and settlement occurred in July 2019.
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The Blackstone Group Inc.
Notes to Condensed Consolidated Financial Statements (Unaudited) - Continued
(All Dollars Are in Thousands, Except Share and Per Share Data, Except Where Noted)
Shares Eligible for Dividends and Distributions
As of June 30, 2020,2021, the total shares of Class A common stock and Blackstone Holdings Partnership Units entitled to participate in dividends and distributions were as follows:
 
   
Shares/Units
Class A Common Stock Outstanding
   676,874,583691,093,463 
Unvested Participating Common Stock
   20,722,45329,381,076 
  
 
 
Total Participating Common Stock
   697,597,036720,474,539 
Participating Blackstone Holdings Partnership Units
   504,912,855487,276,882 
  
 
 
   1,202,509,891    1,207,751,421 
  
 
 
 
15.
Equity-Based Compensation
Blackstone has granted equity-based compensation awards to Blackstone’s senior managing directors,
non-partner
professionals,
non-professionals
and selected external advisers under Blackstone’s Amended and Restated 2007 Equity Incentive Plan (the “Equity Plan”). The Equity Plan allows for the granting of options, share appreciation rights or other share-based awards (shares, restricted shares, restricted shares of Class A common stock, deferred restricted shares of Class A common stock, phantom restricted shares of Class A common stock or other share-based awards based in whole or in part on the fair market value of shares of Blackstone Class A common stock or Blackstone Holdings Partnership Units) which may contain certain service or performance requirements. As of January 1, 2020,2021, Blackstone had the ability to grant 171,085,619171,130,080 shares under the Equity Plan.
For the three and six months ended June 30, 2021, Blackstone recorded compensation expense of $141.6 million and $305.4 million, respectively, in relation to its equity-based awards with corresponding tax benefits of $18.8 million and $40.7 million, respectively. For the three and six months ended June 30, 2020, Blackstone recorded compensation expense of $119.9 million and $238.7 million, respectively, in relation to its equity-based awards with corresponding tax benefits of $14.7 million and $28.4 million, respectively. For the three and six months ended June 30, 2019, Blackstone recorded compensation expense of $102.8 million and $224.0 million, respectively, in relation to its equity-based awards with corresponding tax benefits of $15.9 million and $34.5 million, respectively.
As of June 30, 2020,2021, there was $1.1$1.4 billion of estimated unrecognized compensation expense related to unvested awards. This cost is expected to be recognized over a weighted-average period of 3.5 years.
Total vested and unvested outstanding shares, including Blackstone Class A common stock, Blackstone Holdings Partnership Units and deferred restricted shares of Class A common stock, were 1,202,744,3871,207,856,387 as of June 30, 2020.2021. Total outstanding unvested phantom shares were 75,93492,051 as of June 30, 2020.2021.
A summary of the status of Blackstone’s unvested equity-based awards as of June 30, 2020 and of changes during the period January 1, 2020 through June 30, 2020 is presented below:
                                                                                                                                                                   
   
Blackstone Holdings
  
The Blackstone Group Inc.
        
Equity Settled Awards
  
Cash Settled Awards
     
Weighted-
  
Deferred
 
Weighted-
    
Weighted-
     
Average
  
Restricted Shares
 
Average
    
Average
   
Partnership
 
Grant Date
  
of Class A
 
Grant Date
  
Phantom
 
Grant Date
Unvested Shares/Units
  
Units
 
Fair Value
  
Common Stock
 
Fair Value
  
Shares
 
Fair Value
Balance, December 31, 2019   32,159,218  $36.25    8,969,736  $35.26    51,341  $52.85 
Granted   —   —    13,764,902   44.89    21,189   56.95 
Vested   (4,020,702)   40.22    (2,096,231)   34.34    (485)   56.03 
Forfeited   (97,316)   35.65    (450,917)   38.07    —   — 
                            
Balance, June 30, 2020   28,041,200  $36.54    20,187,490  $41.54    72,045  $57.17 
                            
 
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Table of Contents
The Blackstone Group Inc.
Notes to Condensed Consolidated Financial Statements (Unaudited) - Continued
(All Dollars Areare in Thousands, Except Share and Per Share Data, Except Where Noted)
 
A summary of the status of Blackstone’s unvested equity-based awards as of June 30, 2021 and of changes during the period January 1, 2021 through June 30, 2021 is presented below:
 
                                                                                                                                                                   
   
Blackstone Holdings
  
The Blackstone Group Inc.
        
Equity Settled Awards
  
Cash Settled Awards
     
Weighted-
    
Weighted-
    
Weighted-
     
Average
  
Deferred
 
Average
    
Average
   
Partnership
 
Grant Date
  
Restricted Shares
 
Grant Date
  
Phantom
 
Grant Date
Unvested Shares/Units
  
Units
 
Fair Value
  
of Common Stock
 
Fair Value
  
Shares
 
Fair Value
Balance, December 31, 2020
   23,771,136  $36.33    19,512,034  $42.60    65,284  $60.42 
Granted
   —   —    11,844,962   72.88    22,000   89.68 
Vested
   (1,590,073)   36.19    (2,611,721)   47.63    (1,211)   69.96 
Forfeited
   (535,650)   41.28    (390,170)   46.08    —   — 
   
 
 
 
      
 
 
 
      
 
 
 
    
Balance, June 30, 2021
   21,645,413  $36.50    28,355,105  $54.75    86,073  $92.42 
   
 
 
 
      
 
 
 
      
 
 
 
    
Shares/Units Expected to Vest
The following unvested shares and units, after expected forfeitures, as of June 30, 2020,2021, are expected to vest:
 
   
Weighted-
      
Weighted-
   
Average
      
Average
   
Service Period
      
Service Period
 
Shares/Units
 
in Years
  
Shares/Units
   
in Years
Blackstone Holdings Partnership Units
 24,690,441  2.8   19,772,774   2.3
Deferred Restricted Shares of Class A Common Stock
 16,833,076  3.5
Deferred Restricted Shares of Common Stock
   24,434,747   3.5
 
 
  
 
  
 
   
 
Total Equity-Based Awards
         41,523,517  3.1           44,207,521   3.0
 
 
  
 
  
 
   
 
Phantom Shares
 57,559  3.0   70,356   2.9
 
 
  
 
  
 
   
 
 
16.
Related Party Transactions
AffiliateA
ffiliate Receivables and Payables
Due from Affiliates and Due to Affiliates consisted of the following:
 
                                                       
   
June 30,
 
December 31,
   
2020
 
2019
Due from Affiliates
         
Management Fees, Performance Revenues, Reimbursable Expenses and Other Receivables from
Non-Consolidated
Entities and Portfolio Companies
   $1,933,376   $1,999,568 
Due from Certain
Non-Controlling
Interest Holders and Blackstone Employees
   460,552   573,679 
Accrual for Potential Clawback of Previously Distributed Performance Allocations   37,584   21,626 
          
    $2,431,512   $2,594,873 
          
                                                       
   
June 30,
  
December 31,
   
2021
  
2020
Due from Affiliates
          
Management Fees, Performance Revenues, Reimbursable Expenses and Other Receivables from Non-Consolidated Entities and Portfolio Companies
   $2,462,256    $2,637,055 
Due from Certain Non-Controlling Interest Holders and Blackstone Employees
   661,193    548,897 
Accrual for Potential Clawback of Previously Distributed Performance Allocations
   36,380    35,563 
   
 
 
 
  
 
 
 
    $3,159,829    $3,221,515 
   
 
 
 
  
 
 
 
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The Blackstone Group Inc.
                                                       
   
June 30,
 
December 31,
   
2020
 
2019
Due to Affiliates
         
Due to Certain
Non-Controlling
Interest Holders in Connection with the Tax Receivable Agreements
   $736,656   $672,981 
Due to
Non-Consolidated
Entities
   162,880   100,286 
Due to Note-Holders of Consolidated CLO Vehicles   93,945   78,252 
Due to Certain
Non-Controlling
Interest Holders and Blackstone Employees
   80,421   48,433 
Accrual for Potential Repayment of Previously Received Performance Allocations   194,669   126,919 
          
    $1,268,571   $1,026,871 
          
Notes to Condensed Consolidated Financial Statements (Unaudited) - Continued
(All Dollars are in Thousands, Except Share and Per Share Data, Except Where Noted)
                                                       
   
June 30,
  
December 31,
   
2021
  
2020
Due to Affiliates
          
Due to Certain Non-Controlling Interest Holders in Connection with the Tax Receivable Agreements
   $951,574    $857,523 
Due to Non-Consolidated Entities
   149,924    107,410 
Due to Certain Non-Controlling Interest Holders and Blackstone Employees
   38,562    61,539 
Accrual for Potential Repayment of Previously Received Performance Allocations
   86,444    108,569 
   
 
 
 
  
 
 
 
    $1,226,504    $1,135,041 
   
 
 
 
  
 
 
 
Interests of the Founder, Senior Managing Directors, Employees and Other Related Parties
The Founder, senior managing directors, employees and certain other related parties invest on a discretionary basis in the consolidated Blackstone Funds both directly and through consolidated entities. These investments generally are subject to preferential management fee and performance allocation or incentive fee arrangements. As of June 30, 20202021 and December 31, 2019,2020, such investments aggregated $915.8 million$1.4 billion and $969.3 million,$1.1 billion, respectively. Their share of the Net Income
 (
L
oss)
Attributable to Redeemable
Non-Controlling
and
Non-Controlling
Interests in Consolidated Entities aggregated $64.1
to
$116.2 million and $17.5$64.1 million for the three months ended June 30, 20202021 and 2019,2020, respectively, and $(114.3)$233.6 million and $48.5$(114.3) million for the six months ended June 30, 2021 and 2020, and 2019, respectively.
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Loans to Affiliates
Loans to affiliates consist of interest bearing advances to certain Blackstone individuals to finance their investments in certain Blackstone Funds. These loans earn interest at Blackstone’s cost of borrowing and such interest totaled $1.1$1.0 million and $1.8$1.1 million for the three months ended June 30, 20202021 and 2019,2020, respectively, and $4.1$3.3 million and $4.2$4.1 million for the six months ended June 30, 20202021 and 2019,2020, respectively.
Contingent Repayment Guarantee
Blackstone and its personnel who have received Performance Allocation distributions have guaranteed payment on a several basis (subject to a cap) to the carry funds of any clawback obligation with respect to the excess Performance Allocation allocated to the general partners of such funds and indirectly received thereby to the extent that either Blackstone or its personnel fails to fulfill its clawback obligation, if any. The Accrual for Potential Repayment of Previously Received Performance Allocations represents amounts previously paid to Blackstone Holdings and
non-controlling
interest holders that would need to be repaid to the Blackstone Funds if the carry funds were to be liquidated based on the fair value of their underlying investments as of June 30, 2020.2021. See Note 17. “Commitments and Contingencies — Contingencies — Contingent Obligations (Clawback).”.
Aircraft and Other Services
In the normal course of business, Blackstone makes use of aircraft owned by Stephen A. Schwarzman; aircraft owned by Jonathan D. Gray; and aircraft owned jointly by Joseph P. Baratta and two other individuals (each such aircraft, “Personal Aircraft”). Each of Messrs. Schwarzman, Gray and Baratta paid for his respective ownership interest in his Personal Aircraft himself and bears his respective share of all operating, personnel and maintenance costs associated with the operation of such Personal Aircraft. The payments Blackstone makes for the use of the Personal Aircraft
are
based on current market rates.
In addition, on occasion, certain of Blackstone’s executive officers and employee directors and their families may make personal use of aircraft in which Blackstone owns a fractional interest, as well as other assets of Blackstone. Any such personal use of
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Blackstone assets is charged to the executive officer or employee director based on market rates and usage. Personal use of Blackstone resources is also reimbursed to Blackstone based on market rates.
The transactions described herein are not material to the Condensed Consolidated Financial Statements.
Tax Receivable Agreements
Blackstone used a portion of the proceeds from the IPO and other sale
s
sales of shares to purchase interests in the predecessor businesses from the predecessor owners. In addition, holders of Blackstone Holdings Partnership Units may exchange their Blackstone Holdings Partnership Units for shares of Blackstone Class A common stock on a
one-for-one
basis. The purchase and subsequent exchanges are expected to result in increases in the tax basis of the tangible and intangible assets of Blackstone Holdings and therefore reduce the amount of tax that Blackstone would otherwise be required to pay in the future.
Blackstone has entered into tax receivable agreements with each of the predecessor owners and additional tax receivable agreements have been executed, and will continue to be executed, with newly-admitted senior managing directors and others who acquire Blackstone Holdings Partnership Units. The agreements provide for the payment by the corporate taxpayer to such owners of 85% of the amount of cash savings, if any, in U.S. federal, state and local income tax that the corporate taxpayers actually realize as a result of the aforementioned increases in tax basis and of certain other tax benefits related to entering into these tax receivable agreements. For purposes
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of the tax receivable agreements, cash savings in income tax will be computed by comparing the actual income tax liability of the corporate taxpayers to the amount of such taxes that the corporate taxpayers would have been required to pay had there been no increase to the tax basis of the tangible and intangible assets of Blackstone Holdings as a result of the exchanges and had the corporate taxpayers not entered into the tax receivable agreements.
Assuming no future material changes in the relevant tax law and that the corporate taxpayers earn sufficient taxable income to realize the full tax benefit of the increased amortization of the assets, the expected future payments under the tax receivable agreements (which are taxable to the recipients) will aggregate $736.6$951.6 million over the next 15 years. The
after-tax
net present value of these estimated payments totals $201.6$261.5 million assuming a 15% discount rate and using Blackstone’s most recent projections relating to the estimated timing of the benefit to be received. Future payments under the tax receivable agreements in respect of subsequent exchanges would be in addition to these amounts. The payments under the tax receivable agreements are not conditioned upon continued ownership of Blackstone equity interests by the
pre-IPO
owners and the others mentioned above.
Amounts related to the deferred tax asset resulting from the increase in tax basis from the exchange of Blackstone Holdings Partnership Units to shares of Blackstone Class A common stock, the resulting remeasurement of net deferred tax assets at the Blackstone ownership percentage at the balance sheet date, the due to affiliates for the future payments resulting from the tax receivable agreements and resulting adjustment to partners’ capital are included as Acquisition of Ownership Interests from
Non-Controlling
Interest Holders in the Supplemental Disclosure of
Non-Cash
Investing and Financing Activities in the Condensed Consolidated Statements of Cash Flows.
Other
Blackstone does business with and on behalf of some of its Portfolio Companies; all such arrangements are on a negotiated basis.
Additionally, please see Note 17. “Commitments and Contingencies — Contingencies — Guarantees” for information regarding guarantees provided to a lending institution for certain loans held by employees.
 
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17.    Commitments and Contingencies
Commitments
Investment Commitments
Blackstone had $3.7 billion of investment commitments as of June 30, 20202021 representing general partner capital funding commitments to the Blackstone Funds, limited partner capital funding to other funds and Blackstone principal investment commitments, including loan commitments. The consolidated Blackstone Funds had signed investment commitments of $51.8$293.0 million as of June 30, 2020
,
2021, which includes $28.6$216.3 million of signed investment commitments for portfolio company acquisitions in the process of closing.
Contingencies
Guarantees
Certain of Blackstone’s consolidated real estate funds guarantee payments to third parties in connection with the
ongoing
business activities and/or acquisitions of their Portfolio Companies. There is no direct recourse to Blackstone to fulfill such obligations. To the extent that underlying funds are required to fulfill guarantee obligations, Blackstone’s invested capital in such funds is at risk. Total investments at risk in respect of guarantees extended by consolidated real estate funds was $19.1$16.7 million as of June 30, 2020.
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2021.
The Blackstone Holdings Partnerships provided guarantees to a lending institution for certain loans held by employees either for investment in Blackstone Funds or for members’ capital contributions to The Blackstone Group International Partners LLP. The amount guaranteed as of June 30, 20202021 was $233.5$216.3 million.
Litigation 
Blackstone may from time to time be involved in litigation and claims incidental to the conduct of its business. Blackstone’s businesses are also subject to extensive regulation, which may result in regulatory proceedings against Blackstone.
Blackstone accrues a liability for legal proceedings only when those matters present loss contingencies that are both probable and reasonably estimable. In such cases, there may be an exposure to loss in excess of any amounts accrued. Although there can be no assurance of the outcome of such legal actions, based on information known by management, Blackstone does not have a potential liability related to any current legal proceeding or claim that would individually or in the aggregate materially affect its results of operations, financial position or cash flows.
In December 2017, a purported derivative suit (Mayberry v. KKR & Co., L.P., et al.) was filed in the Commonwealth of Kentucky Franklin County Circuit Court on behalf of the Kentucky Retirement System (“KRS”) by eight of its members and beneficiaries (the “Mayberry Plaintiffs”) alleging various breaches of fiduciary duty and other violations of Kentucky state law in connection with KRS’s investment in three hedge funds of funds, including a fund managed by Blackstone Alternative Asset Management L.P. (“BAAM L.P.”). The suit namesnamed more than 30 defendants, including The Blackstone Group L.P.; BAAM L.P.; Stephen A. Schwarzman, as Chairman and CEO of Blackstone; and J. Tomilson Hill, as then-President and CEO of the Hedge Fund Solutions Group, Vicethen-Vice Chairman of Blackstone and CEO of BAAM L.P. (collectively, the “Blackstone Defendants”). Aside from the Blackstone Defendants, the action also namesnamed current and former KRS trustees and former KRS officers and various other service providers to KRS and their related persons.
The plaintiffsMayberry Plaintiffs filed an amended complaint in January 2018. In November 2018, the Circuit Court granted one defendant’s motion to dismiss and denied all other defendants’ motions to dismiss, including those of the Blackstone Defendants. In January 2019, certain of the KRS trustee and officer defendants noticed appeals from the denial of the motions to dismiss to the Kentucky Court of Appeals, and also filed a motion to stay the Mayberry proceedings in Circuit Court pending the outcome of those appeals. In addition, several defendants, including the Blackstone and BAAM L.P.,Defendants, filed petitions in the Kentucky Court of Appeals for a writ of prohibition against the ongoing Mayberry proceedings on the ground that the plaintiffsMayberry Plaintiffs lack standing. In April 2019, theCertain KRS trustee
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and officer defendants’defendants also noticed appeals from the Circuit Court’s denial of the motions to dismiss, which were transferred to the Kentucky Supreme Court.
On April 23, 2019, the Kentucky Court of Appeals granted the Blackstone Defendants’ petition for a writ of prohibition and vacated the Circuit Court’s November 30, 2018 Opinion and Order denying the motion to dismiss for lack of standing. On April 24, 2019, the Mayberry Plaintiffs filed a notice of appeal of that order to the Kentucky Supreme Court. The Kentucky Supreme Court heard oral argument on the appeal on October 24, 2019.
On July 9, 2020, the Kentucky Supreme Court unanimously held that the plaintiffsMayberry Plaintiffs lack constitutional standing to bring their claims and remanded the case to the Circuit Court with direction to dismiss the complaint. On July 20, 2020, the Kentucky Attorney General filed a motion to intervene and a proposed intervening complaint in the Mayberry action on behalf of the Commonwealth of Kentucky. The Blackstone Defendants filed theiran objection to that motion on July 30, 2020 and a hearing has been scheduled for August 17, 2020. On July 21, 2020, the Kentucky Attorney General also filed a separate action in Franklin County Circuit Court that is nearly identical to its proposed intervening complaint; that action was consolidated with the Mayberry action on August 5, 2020. complaint.
In addition, on July 29, 2020, counsel for certain of the Mayberry Plaintiffs filed a motion for leave to amend their complaint. On December 28, 2020, the Circuit Court dismissed the Mayberry Plaintiffs’ complaint purportingfor lack of standing, denied the Mayberry Plaintiffs’ motion for leave to remedy the standing defects identified byamend, and granted the Kentucky Supreme Court. TheAttorney General’s motion to intervene. On May 24, 2021, the Attorney General filed its first amended complaint, which generally asserts the same allegations and claims as the Attorney General’s proposed intervening complaint and the Mayberry Plaintiffs’ original complaint. On July 30, 2021, the Blackstone Defendants intendfiled a motion to oppose thatdismiss the first amended complaint.
On December 31, 2020, three potentially new derivative plaintiffs brought a motion in the Circuit Court for leave to file a third amended complaint. The new derivative plaintiffs alleged they had standing and sought to press the Mayberry Plaintiffs’ case. The Circuit Court ordered the three potentially new derivative plaintiffs to file a motion to intervene, which has also been noticed for hearingthey filed on August 17, 2020.
February 1, 2021. On March 2, 2021, the Blackstone Defendants, certain other defendants, the Kentucky Attorney General, and KRS filed responses opposing the motion to intervene. On June 14, 2021, the Circuit Court denied the motion to intervene.
On January 6, 2021, the same three potentially new derivative plaintiffs also filed a separate derivative action that is substantially the same as the amended complaint they had sought to file in the original derivative action. On July 9, 2021, these same plaintiffs filed their first amended complaint. The first amended complaint is not styled as a derivative complaint, but rather as a purported “class” complaint brought on behalf of all KRS beneficiaries in KRS’s “Tier 3” pension plan. Defendants’ deadline to respond to the first amended complaint is September 20, 2021. On July 19, 2021, the Blackstone Defendants and other defendants removed this purported class action to federal court in the United States District Court for the Eastern District of Kentucky. On August 3, 2021, the plaintiffs moved to remand the lawsuit back to state court. Defendants’ opposition to the motion to remand is due August 23, 2021.
On April 28, 2021, the Kentucky Attorney General filed a declaratory judgment action in Franklin County Circuit Court on behalf of the Commonwealth of Kentucky. The Attorney General’s complaint alleges that certain provisions in the subscription agreements between KRS and the managers of the three funds at issue in the Mayberry action violate the Kentucky Constitution. The Attorney General’s suit names as defendants BAAM L.P., Blackstone, and five other defendants also named in the Mayberry action. On July 12, 2021, BAAM L.P. and Blackstone filed their answer to the complaint. On July 28, 2021, BAAM L.P. filed a motion for judgment on the pleadings, or in the alternative, for summary judgment seeking dismissal of the action and arguing the relevant contractual provisions are enforceable under the Kentucky Constitution. Also on July 28, 2021, Blackstone filed a motion for judgment on the pleadings seeking dismissal on the basis that Blackstone was not a party to the relevant agreements and is not subject to jurisdiction in Kentucky for this action.
Blackstone continues to believe that this suit isthese suits are totally without merit and intends to defend itthem vigorously.
Finally, on July 30, 2021, BAAM L.P. filed a complaint in the Franklin Circuit Court in Kentucky asserting claims for breach of contract against Kentucky Public Pensions Authority (the administrative board overseeing KRS pension systems following a restructuring on April 1, 2021), Board of Trustees of KRS, Board of Trustees of the County Employees Retirement System, KRS Insurance Fund, and KRS Pension Fund, based on KRS’s breach of its representations in its subscription agreements with BAAM L.P.
 
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The complaint alleges that KRS’s support and prosecution of the Mayberry action and the Kentucky Attorney General’s declaratory judgment action breaches the parties’ subscription agreements governing KRS’s investment with BAAM L.P and seeks damages flowing from that breach, including legal fees and expenses incurred in defending against the Mayberry and declaratory judgment actions. The KRS defendants’ response to the complaint is currently due September 8, 2021.
Contingent Obligations (Clawback)
Performance Allocations are subject to clawback to the extent that the Performance Allocations received to date with respect to a fund exceeds the amount due to Blackstone based on cumulative results of that fund. The actual clawback liability, however, generally does not become realized until the end of a fund’s life except for certain Blackstone real estate funds, multi-asset class investment funds and credit-focused funds, which may have an interim clawback liability. The lives of the carry funds, including available contemplated extensions, for which a liability for potential clawback obligations has been recorded for financial reporting purposes, are currently anticipated to expire at various points through 2029.2028. Further extensions of such terms may be implemented under given circumstances.
For financial reporting purposes, when applicable, the general partners record a liability for potential clawback obligations to the limited partners of some of the carry funds due to changes in the unrealized value of a fund’s remaining investments and where the fund’s general partner has previously received Performance Allocation distributions with respect to such fund’s realized investments.
The following table presents the clawback obligations by segment:
 
                                                                                                                                                                   
   
June 30, 2020
  
December 31, 2019
      
Current and
        
Current and
   
   
Blackstone
  
Former
     
Blackstone
  
Former
   
Segment
  
Holdings
  
Personnel (a)
  
Total
  
Holdings
  
Personnel (a)
  
Total
Real Estate   $21,042    $11,850    $32,892    $16,151    $10,597    $26,748 
Private Equity   120,993    8,744    129,737    82,276    2,860    85,136 
Credit & Insurance   15,050    16,990    32,040    6,866    8,169    15,035 
                               
    $157,085    $37,584    $194,669    $105,293    $21,626    $126,919 
                               
                                                                                                                                                                   
   
June 30, 2021
  
December 31, 2020
      
Current and
        
Current and
  
   
Blackstone
  
Former
     
Blackstone
  
Former
  
Segment
  
Holdings
  
Personnel (a)
  
Total (b)
  
Holdings
  
Personnel (a)
 
Total (b)
Real Estate
   $30,689    $18,596    $49,285    $28,283    $17,102   $45,385 
Private Equity
   5,544    2,006    7,550    41,722    (8,623)   33,099 
Credit & Insurance
   13,831    15,778    29,609    13,935    16,150   30,085 
   
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
 
 
 
 
    $50,064    $36,380    $86,444    $83,940    $24,629   $108,569 
   
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
 
 
 
 
 
(a)
The split of clawback between Blackstone Holdings and Current and Former Personnel is based on the performance of individual investments held by a fund rather than on a fund by fund basis.
The increase in contingent obligations related to clawback for the period ended June 30, 2020 was driven by unrealized depreciation in the fair value of certain underlying fund investments driven by the impact of
COVID-19.
See Note 2. “Summary of Significant Accounting Policies —
COVID-19
and Global Economic and Market Conditions”. 
(b)
Total is a component of Due to Affiliates. See Note 16. “Related Party Transactions — Affiliate Receivables and Payables — Due to Affiliates.”
For Private Equity, Real Estate, and certain Credit & Insurance Funds, a portion of the Performance Allocations paid to current and former Blackstone personnel is held in segregated accounts in the event of a cash clawback obligation. These segregated accounts are not included in the Condensed Consolidated Financial Statements of Blackstone, except to the extent a portion of the assets held in the segregated accounts may be allocated to a consolidated Blackstone fund of hedge funds. At June 30, 2020, $750.72021, $856.4 million was held in segregated accounts for the purpose of meeting any clawback obligations of current and former personnel if such payments are required.
In the Credit & Insurance segment, payment of Performance Allocations to Blackstone by the majority of the stressed/distressed, mezzanine and credit alpha strategies funds are substantially deferred under the terms of the partnership agreements. This deferral mitigates the need to hold funds in segregated accounts in the event of a cash clawback obligation.
If, at June 30, 2020,2021, all of the investments held by ourBlackstone’s carry funds were deemed worthless, a possibility that management views as remote, the amount of Performance Allocations subject to potential clawback would be $3.6 billion, on an
after-tax
basis where applicable, of which Blackstone Holdings is potentially liable for $3.2$3.4 billion if current and former Blackstone personnel default on their share of the liability, a possibility that management also views as remote.
 
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18.    Segment Reporting
Blackstone transacts its primary business in the United States and substantially all of its revenues are generated domestically.
Blackstone conducts its alternative asset management businesses through 4 segments:
 
•
Real Estate – Blackstone’s Real Estate segment primarily comprises its management of global, Europe and Asia-focused opportunistic real estate funds, high-yield and high-grade real estate debt funds, liquid real estate debt funds, core+ real estate funds which also include a
non-exchange
traded REIT and a NYSE-listed REIT.
Real Estate – Blackstone’s Real Estate segment primarily comprises its management of global, Europe and Asia-focused opportunistic real estate funds, high-yield and high-grade real estate debt funds, liquid real estate debt funds, North America, Europe, Asia and life science-focused Core+ real estate funds, which also include a non-listed REIT, and a NYSE-listed REIT.

Private Equity – Blackstone’s Private Equity segment includes its management of flagship corporate private equity funds, sector and geographically-focused corporate private equity funds, including energy and Asia-focused funds, core private equity funds, an opportunistic investment platform, a secondary fund of funds business, infrastructure-focused funds, a life sciences private investment platform, a growth equity investment platform, a multi-asset investment program for eligible high net worth investors and a capital markets services business.
 
Hedge Fund Solutions – The largest component of Blackstone’s Hedge Fund Solutions segment is Blackstone Alternative Asset Management, which manages a broad range of commingled and customized hedge fund of fund solutions. The segment also includes investment platforms that seed new hedge fund businesses, purchase minority interests in more established general partners and management companies of funds, invest in special situation opportunities, create alternative solutions in the form ofthrough daily liquidity products and invest directly.
 
Credit & Insurance – Blackstone’s Credit & Insurance segment consists principally of GSO Capital Partners LP,Blackstone Credit, which is organized into threetwo overarching strategies: performingprivate credit strategies (which includeincludes mezzanine lending funds, middle market direct lending funds, including ourBlackstone’s business development company, ourcompanies, structured products group, and other performing credit strategy funds), stressed/distressed strategies (which include credit alpha strategies, stressed/distressed funds and energy strategies) and long only strategiesliquid credit (which consistconsists of CLOs, closed-ended funds, open-ended funds and separately managed accounts). In addition, the segment includes a publicly traded master limited partnership investment platform, Harvest, and ourBlackstone’s insurer-focused platform, Blackstone Insurance Solutions.
These business segments are differentiated by their various investment strategies. The Real Estate, Private Equity, Hedge Fund Solutions and Credit & Insurance segments primarily earn their income from management fees and investment returns on assets under management.
Segment Distributable Earnings is Blackstone’s segment profitability measure used to make operating decisions and assess performance across Blackstone’s four segments. Segment Distributable Earnings represents the net realized earnings of Blackstone’s segments and is the sum of Fee Related Earnings and Net Realizations for each segment. Blackstone’s segments are presented on a basis that deconsolidates Blackstone Funds, eliminates
non-controlling
ownership interests in Blackstone’s consolidated operating partnerships, removes the amortization of intangible assets and 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.
For segment reporting purposes, Segment Distributable Earnings is presented along with its major components, Fee Related Earnings and Net Realizations. Fee Related Earnings is used to assess Blackstone’s ability to generate profits from revenues that are measured and received on a recurring basis and not subject to future realization events. Net Realizations is the sum of Realized Principal Investment Income and Realized Performance Revenues less Realized Performance Compensation. Performance Allocations and Incentive Fees are presented together and referred to collectively as Performance Revenues or Performance Compensation.
 
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Segment Presentation
The following tables present the financial data for Blackstone’s four segments for the three months ended June 30, 20202021 and 2019:2020:
 
                                                                                                                                        
   
Three Months Ended June 30, 2020
   
Real
 
Private
 
Hedge Fund
 
Credit &
 
Total
   
Estate
 
Equity
 
Solutions
 
Insurance
 
Segments
Management and Advisory Fees, Net                     
Base Management Fees    $382,704    $268,070    $145,455    $145,565    $941,794 
Transaction, Advisory and Other Fees, Net   32,039   9,521   859   5,873   48,292 
Management Fee Offsets   (2,436)   (8,031)   4   (2,890)   (13,353) 
                      
Total Management and Advisory Fees, Net   412,307   269,560   146,318   148,548   976,733 
Fee Related Performance Revenues   6,505   —   —   8,528   15,033 
Fee Related Compensation   (116,640)   (92,825)   (40,353)   (57,086)   (306,904) 
Other Operating Expenses   (44,525)   (44,827)   (17,807)   (36,424)   (143,583) 
                      
Fee Related Earnings
   257,647   131,908   88,158   63,566   541,279 
                      
Realized Performance Revenues   34,209   64,513   1,482   1,973   102,177 
Realized Performance Compensation   (12,547)   (25,016)   —   (224)   (37,787) 
Realized Principal Investment Income (Loss)   1,573   17,416   (331)   280   18,938 
                      
Total Net Realizations
   23,235   56,913   1,151   2,029   83,328 
                      
Total Segment Distributable Earnings
    $280,882    $188,821    $  89,309    $65,595    $624,607 
                      
                                                                                          
   
Three Months Ended June 30, 2021
   
Real
 
Private
 
Hedge Fund
 
Credit &
 
Total
   
Estate
 
Equity
 
Solutions
 
Insurance
 
Segments
Management and Advisory Fees, Net
      
Base Management Fees
    $453,664    $364,606    $155,244    $166,537    $1,140,051 
Transaction, Advisory and Other Fees, Net
   38,080   32,272   1,558   6,215   78,125 
Management Fee Offsets
   (493)   (3,601)   (203)   (1,137)   (5,434) 
   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Management and Advisory Fees, Net
   491,251   393,277   156,599   171,615   1,212,742 
Fee Related Performance Revenues
   33,776   —   —   15,113   48,889 
Fee Related Compensation
   (121,957)   (136,767)   (38,638)   (78,023)   (375,385) 
Other Operating Expenses
   (54,760)   (61,041)   (21,873)   (44,504)   (182,178) 
   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fee Related Earnings
   348,310   195,469   96,088   64,201   704,068 
   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Realized Performance Revenues
   351,053   383,010   17,056   41,819   792,938 
Realized Performance Compensation
   (154,928)   (159,375)   (5,626)   (18,342)   (338,271) 
Realized Principal Investment Income
   28,129   27,796   2,125   5,082   63,132 
   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Net Realizations
   224,254   251,431   13,555   28,559   517,799 
   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Segment Distributable Earnings
    $572,564    $446,900    $109,643    $92,760    $1,221,867 
   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                                                                                                        
   
Three Months Ended June 30, 2019
   
Real
 
Private
 
Hedge Fund
 
Credit &
 
Total
   
Estate
 
Equity
 
Solutions
 
Insurance
 
Segments
Management and Advisory Fees, Net                     
Base Management Fees    $255,636    $265,139    $136,990    $147,550    $805,315 
Transaction, Advisory and Other Fees, Net   23,990   31,526   723   5,256   61,495 
Management Fee Offsets   (1,686)   (17,689)   —   (3,279)   (22,654) 
                      
Total Management and Advisory Fees, Net   277,940   278,976   137,713   149,527   844,156 
Fee Related Performance Revenues   11,072   —   —   2,552   13,624 
Fee Related Compensation   (97,795)   (105,107)   (36,622)   (54,310)   (293,834) 
Other Operating Expenses   (40,114)   (40,429)   (21,112)   (40,466)   (142,121) 
                      
Fee Related Earnings
   151,103   133,440   79,979   57,303   421,825 
                      
Realized Performance Revenues   198,573   122,907   11,960   7,946   341,386 
Realized Performance Compensation   (67,742)   (52,081)   (2,175)   (3,468)   (125,466) 
Realized Principal Investment Income   47,420   42,906   12,306   20,925   123,557 
                      
Total Net Realizations
   178,251   113,732   22,091   25,403   339,477 
                      
Total Segment Distributable Earnings
    $329,354    $247,172    $102,070    $82,706    $761,302 
                      
                                                                                          
   
Three Months Ended June 30, 2020
   
Real
 
Private
 
Hedge Fund
 
Credit &
 
Total
   
Estate
 
Equity
 
Solutions
 
Insurance
 
Segments
Management and Advisory Fees, Net
      
Base Management Fees
    $  382,704    $  268,070    $    145,455    $  145,565    $  941,794 
Transaction, Advisory and Other Fees, Net
   32,039   9,521   859   5,873   48,292 
Management Fee Offsets
   (2,436)   (8,031)   4   (2,890)   (13,353) 
   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Management and Advisory Fees, Net
   412,307   269,560   146,318   148,548   976,733 
Fee Related Performance Revenues
   6,505   —   —   8,528   15,033 
Fee Related Compensation
   (116,640)   (92,825)   (40,353)   (57,086)   (306,904) 
Other Operating Expenses
   (44,525)   (44,827)   (17,807)   (36,424)   (143,583) 
   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fee Related Earnings
   257,647   131,908   88,158   63,566   541,279 
   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Realized Performance Revenues
   34,209   64,513   1,482   1,973   102,177 
Realized Performance Compensation
   (12,547)   (25,016)   —   (224)   (37,787) 
Realized Principal Investment Income (Loss)
   1,573   17,416   (331)   280   18,938 
   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Net Realizations
   23,235   56,913   1,151   2,029   83,328 
   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Segment Distributable Earnings
    $280,882    $188,821    $89,309    $65,595    $624,607 
   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
5
45
Table of Contents
The Blackstone Group Inc.
Notes to Condensed Consolidated Financial Statements (Unaudited) - Continued
(All Dollars Areare in Thousands, Except Share and Per Share Data, Except Where Noted)
 
 
The following tables present the financial data for Blackstone’s four segments as of June 30, 20202021 and for the six months ended June 30, 20202021 and 2019:2020:
 
                                                                                                                                        
   
June 30, 2020 and the Six Months Then Ended
   
Real
 
Private
 
Hedge Fund
 
Credit &
 
Total
   
Estate
 
Equity
 
Solutions
 
Insurance
 
Segments
Management and Advisory Fees, Net                     
Base Management Fees    $754,142    $522,044    $285,111    $290,893    $1,852,190 
Transaction, Advisory and Other Fees, Net   55,063   30,934   1,617   11,343   98,957 
Management Fee Offsets   (10,777)   (17,246)   (38)   (5,786)   (33,847) 
                      
Total Management and Advisory Fees, Net   798,428   535,732   286,690   296,450   1,917,300 
Fee Related Performance Revenues   11,056   —   —   16,443   27,499 
Fee Related Compensation   (236,936)   (203,193)   (86,544)   (126,495)   (653,168) 
Other Operating Expenses   (85,001)   (85,828)   (36,474)   (75,165)   (282,468) 
                      
Fee Related Earnings
   487,547   246,711   163,672   111,233   1,009,163 
                      
Realized Performance Revenues   77,929   176,589   3,249   11,643   269,410 
Realized Performance Compensation   (25,939)   (79,659)   (945)   (2,546)   (109,089) 
Realized Principal Investment Income (Loss)   8,873   27,763   (940)   3,532   39,228 
                      
Total Net Realizations
   60,863   124,693   1,364   12,629   199,549 
                      
Total Segment Distributable Earnings
    $548,410    $371,404    $165,036    $123,862    $1,208,712 
                      
Segment Assets
    $7,460,667    $7,924,981    $2,238,985    $3,278,666    $20,903,299 
                      
                                                                                                                                        
   
Six Months Ended June 30, 2019
   
Real
 
Private
 
Hedge Fund
 
Credit &
 
Total
   
Estate
 
Equity
 
Solutions
 
Insurance
 
Segments
Management and Advisory Fees, Net                     
Base Management Fees    $515,881    $484,556    $274,318    $288,078    $1,562,833 
Transaction, Advisory and Other Fees, Net   47,901   68,817   1,041   8,886   126,645 
Management Fee Offsets   (1,966)   (22,674)   —   (6,620)   (31,260) 
                      
Total Management and Advisory Fees, Net   561,816   530,699   275,359   290,344   1,658,218 
Fee Related Performance Revenues   17,748   —   —   3,655   21,403 
Fee Related Compensation   (212,611)   (212,694)   (79,576)   (112,984)   (617,865) 
Other Operating Expenses   (79,100)   (74,630)   (38,997)   (72,705)   (265,432) 
                      
Fee Related Earnings
   287,853   243,375   156,786   108,310   796,324 
                      
Realized Performance Revenues   275,755   279,506   16,051   16,843   588,155 
Realized Performance Compensation   (97,642)   (102,637)   (3,588)   (6,839)   (210,706) 
Realized Principal Investment Income   45,289   68,045   12,023   24,108   149,465 
                      
Total Net Realizations
   223,402   244,914   24,486   34,112   526,914 
                      
Total Segment Distributable Earnings
    $   511,255    $   488,289    $   181,272    $   142,422    $  1,323,238 
                      
                                                                                                                                        
   
June 30, 2021 and the Six Months Then Ended
   
Real
 
Private
 
Hedge Fund
 
Credit &
 
Total
   
Estate
 
Equity
 
Solutions
 
Insurance
 
Segments
Management and Advisory Fees, Net
                     
Base Management Fees
    $  880,850    $  742,266    $  305,777    $  328,448    $2,257,341 
Transaction, Advisory and Other Fees, Net
   64,099   74,979   5,904   11,783   156,765 
Management Fee Offsets
   (2,116)   (17,520)   (261)   (3,262)   (23,159) 
   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Management and Advisory Fees, Net
   942,833   799,725   311,420   336,969   2,390,947 
Fee Related Performance Revenues
   189,168   —   —   28,889   218,057 
Fee Related Compensation
   (310,449)   (277,364)   (77,488)   (155,194)   (820,495) 
Other Operating Expenses
   (99,122)   (112,096)   (41,045)   (91,339)   (343,602) 
   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fee Related Earnings
   722,430   410,265   192,887   119,325   1,444,907 
   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Realized Performance Revenues
   439,691   638,855   48,629   67,086   1,194,261 
Realized Performance Compensation
   (177,690)   (270,584)   (12,534)   (28,387)   (489,195) 
Realized Principal Investment Income
   128,949   143,199   37,675   51,465   361,288 
   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Net Realizations
   390,950   511,470   73,770   90,164   1,066,354 
   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Segment Distributable Earnings
    $1,113,380    $921,735    $266,657    $209,489    $2,511,261 
   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Segment Assets
    $11,049,049    $14,178,326    $2,803,086    $3,754,874    $31,785,335 
   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
5
56
Table of Contents
The Blackstone Group Inc.
Notes to Condensed Consolidated Financial Statements (Unaudited) - Continued
(All Dollars Areare in Thousands, Except Share and Per Share Data, Except Where Noted)
 
 
                                                                                                                                        
   
Six Months Ended June 30, 2020
   
Real
 
Private
 
Hedge Fund
 
Credit &
 
Total
   
Estate
 
Equity
 
Solutions
 
Insurance
 
Segments
Management and Advisory Fees, Net
                     
Base Management Fees
    $  754,142    $  522,044    $  285,111    $  290,893    $  1,852,190 
Transaction, Advisory and Other Fees, Net
   55,063   30,934   1,617   11,343   98,957 
Management Fee Offsets
   (10,777)   (17,246)   (38)   (5,786)   (33,847) 
   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Management and Advisory Fees, Net
   798,428   535,732   286,690   296,450   1,917,300 
Fee Related Performance Revenues
   11,056   —   —   16,443   27,499 
Fee Related Compensation
   (236,936)   (203,193)   (86,544)   (126,495)   (653,168) 
Other Operating Expenses
   (85,001)   (85,828)   (36,474)   (75,165)   (282,468) 
   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fee Related Earnings
   487,547   246,711   163,672   111,233   1,009,163 
   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Realized Performance Revenues
   77,929   176,589   3,249   11,643   269,410 
Realized Performance Compensation
   (25,939)   (79,659)   (945)   (2,546)   (109,089) 
Realized Principal Investment Income Income (Loss)
   8,873   27,763   (940)   3,532   39,228 
   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Net Realizations
   60,863   124,693   1,364   12,629   199,549 
   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Segment Distributable Earnings
    $548,410    $371,404    $165,036    $123,862    $1,208,712 
   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Reconciliations of Total Segment Amounts
The following tables reconcile the Total Segment Revenues, Expenses and Distributable Earnings to their equivalent GAAP measure for
f
or the three and six months ended June 30, 20202021 and 20192020 along with Total Assets as of June 30, 2020:2021:
 
                                                                                                             
   
Three Months Ended
 
Six Months Ended
   
June 30,
 
June 30,
   
2020
 
2019
 
2020
 
2019
Revenues
                 
Total GAAP Revenues
    $2,516,069    $1,486,806    $(559,895)    $3,511,677 
Less: Unrealized Performance Revenues (a)   (1,067,923)   (157,398)   2,385,523   (821,731) 
Less: Unrealized Principal Investment (Income)
Loss (b)		   (223,316)   56,353   393,294   (83,572) 
Less: Interest and Dividend Revenue (c)   (26,290)   (45,991)   (63,889)   (92,690) 
Less: Other Revenue (d)   55,606   20,150   (82,545)   6,961 
Impact of Consolidation (e)   (141,599)   (35,119)   179,519   (104,968) 
Amortization of Intangibles (f)   387   387   774   774 
Transaction-Related Charges (g)   (1,310)   (4,174)   (2,140)   (2,706) 
Intersegment Eliminations   1,257   1,709   2,796   3,496 
                  
Total Segment Revenue (h)
    $1,112,881    $1,322,723    $2,253,437    $2,417,241 
                  
                                                                                                             
   
Three Months Ended
 
Six Months Ended
   
June 30,
 
June 30,
   
2020
 
2019
 
2020
 
2019
Expenses
                 
Total GAAP Expenses
    $1,172,681    $   862,240    $   534,606    $1,903,404 
Less: Unrealized Performance Allocations Compensation (i)   (454,813)   (64,518)   942,565   (351,533) 
Less: Equity-Based Compensation (j)   (89,341)   (53,105)   (176,813)   (119,881) 
Less: Interest Expense (k)   (38,924)   (43,230)   (80,464)   (84,868) 
Impact of Consolidation (e)   (9,020)   (14,411)   (20,479)   (25,272) 
Amortization of Intangibles (f)   (16,096)   (16,096)   (32,192)   (32,192) 
Transaction-Related Charges (g)   (77,470)   (111,168)   (125,294)   (199,151) 
Intersegment Eliminations   1,257   1,709   2,796   3,496 
                  
Total Segment Expenses (l)
  $   488,274  $561,421  $1,044,725  $1,094,003 
                  
                                                                                                             
   
Three Months Ended
 
Six Months Ended
   
June 30,
 
June 30,
   
2021
 
2020
 
2021
 
2020
Revenues
                 
Total GAAP Revenues
    $5,291,354    $2,516,069  $10,590,226    $(559,895) 
Less: Unrealized Performance Revenues (a)
   (2,697,170)   (1,067,923)   (5,161,667)   2,385,523 
Less: Unrealized Principal Investment Income (b)
   (104,658)   (223,316)   (528,592)   393,294 
Less: Interest and Dividend Revenue (c)
   (32,931)   (26,290)   (64,343)   (63,889) 
Less: Other Revenue (d)
   (27,870)   55,606   (88,143)   (82,545) 
Impact of Consolidation (e)
   (312,076)   (141,599)   (581,392)   179,519 
Amortization of Intangibles (f)
   —   387   —   774 
Transaction-Related Charges (g)
   12   (1,310)   (3,611)   (2,140) 
Intersegment Eliminations
   1,040   1,257   2,075   2,796 
   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Segment Revenue (h)
    $2,117,701    $1,112,881  
 
$
4,164,553    $2,253,437 
   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
5
67
Table of Contents
The Blackstone Group Inc.
Notes to Condensed Consolidated Financial Statements (Unaudited) - Continued
(All Dollars Areare in Thousands, Except Share and Per Share Data, Except Where Noted)
 
 
                                                                                                             
   
Three Months Ended
 
Six Months Ended
   
June 30,
 
June 30,
   
2020
 
2019
 
2020
 
2019
Other Income
                 
Total GAAP Other Income
    $    158,373    $     61,131    $(169,596)    $   191,456 
Impact of Consolidation (e)   (158,373)   (61,131)       169,596   (191,456) 
                  
Total Segment Other Income
    $—    $—    $—    $— 
                  
                                                                                                             
   
Three Months Ended
 
Six Months Ended
   
June 30,
 
June 30,
   
2021
 
2020
 
2021
 
2020
Expenses
                 
Total GAAP Expenses
    $  2,272,330    $    1,172,681    $  4,323,777    $   534,606 
Less: Unrealized Performance
 Allocations Compensation (i)
   (1,150,219)   (454,813)   (2,200,188)   942,565 
Less: Equity-Based Compensation (j)
   (121,422)   (89,341)   (265,694)   (176,813) 
Less: Interest Expense (k)
   (44,132)   (38,924)   (88,472)   (80,464) 
Impact of Consolidation (e)
   (6,647)   (9,020)   (11,747)   (20,479) 
Amortization of Intangibles (f)
   (17,044)   (16,096)   (34,168)   (32,192) 
Transaction-Related Charges (g)
   (35,521)   (77,470)   (67,032)   (125,294) 
Administrative Fee Adjustment (l)
   (2,551)   —   (5,259)   — 
Intersegment Eliminations
   1,040   1,257   2,075   2,796 
   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Segment Expenses (m)
    $895,834    $488,274      $1,653,292    $1,044,725 
   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                                                                             
   
Three Months Ended
 
Six Months Ended
   
June 30,
 
June 30,
   
2020
 
2019
 
2020
 
2019
Income (Loss) Before Provision (Benefit) for Taxes
                 
Total GAAP Income (Loss) Before Provision (Benefit) for Taxes
    $1,501,761    $685,697    $(1,264,097)    $1,799,729 
Less: Unrealized Performance Revenues (a)   (1,067,923)   (157,398)   2,385,523   (821,731) 
Less: Unrealized Principal Investment (Income)
Loss (b)		   (223,316)   56,353   393,294   (83,572) 
Less: Interest and Dividend Revenue (c)   (26,290)   (45,991)   (63,889)   (92,690) 
Less: Other Revenue (d)   55,606   20,150   (82,545)   6,961 
Plus: Unrealized Performance Allocations Compensation (i)   454,813   64,518   (942,565)   351,533 
Plus: Equity-Based Compensation (j)   89,341   53,105   176,813   119,881 
Plus: Interest Expense (k)   38,924   43,230   80,464   84,868 
Impact of Consolidation (e)   (290,952)   (81,839)   369,594   (271,152) 
Amortization of Intangibles (f)   16,483   16,483   32,966   32,966 
Transaction-Related Charges (g)   76,160   106,994   123,154   196,445 
                  
Total Segment Distributable Earnings
    $624,607    $761,302    $1,208,712    $1,323,238 
                  
                                                                                                             
   
Three Months Ended
 
Six Months Ended
   
June 30,
 
June 30,
   
2021
 
2020
 
2021
 
2020
Other Income
                 
Total GAAP Other Income
    $     126,724     $     158,373    $     249,987    $(169,596) 
Impact of Consolidation (e)
   (126,724)   (158,373)   (249,987)   169,596 
   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Segment Other Income
    $—    $—    $—    $— 
   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                                                                             
   
Three Months Ended
 
Six Months Ended
   
June 30,
 
June 30,
   
2021
 
2020
 
2021
 
2020
Income (Loss) Before Provision (Benefit) for Taxes
                 
Total GAAP Income (Loss) Before Provision (Benefit) for Taxes
    $3,145,748    $1,501,761    $6,516,436    $(1,264,097) 
Less: Unrealized Performance Revenues (a)
   (2,697,170)   (1,067,923)   (5,161,667)   2,385,523 
Less: Unrealized Principal Investment Income (b)
   (104,658)   (223,316)   (528,592)   393,294 
Less: Interest and Dividend Revenue (c)
   (32,931)   (26,290)   (64,343)   (63,889) 
Less: Other Revenue (d)
   (27,870)   55,606   (88,143)   (82,545) 
Plus: Unrealized Performance
 Allocations Compensation (i)
   1,150,219   454,813   2,200,188   (942,565) 
Plus: Equity-Based Compensation (j)
   121,422   89,341   265,694   176,813 
Plus: Interest Expense (k)
   44,132   38,924   88,472   80,464 
Impact of Consolidation (e)
   (432,153)   (290,952)   (819,632)   369,594 
Amortization of Intangibles (f)
   17,044   16,483   34,168   32,966 
Transaction-Related Charges (g)
   35,533   76,160   63,421   123,154 
Administrative Fee Adjustment (l)
   2,551   —   5,259   — 
   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Segment Distributable Earnings
    $1,221,867    $624,607    $2,511,261    $1,208,712 
   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
5
8
Table of Contents
The Blackstone Group Inc.
Notes to Condensed Consolidated Financial Statements (Unaudited) - Continued
(All Dollars are in Thousands, Except Share and Per Share Data, Except Where Noted)
 
                            
   
As of
   
    June 30,    
   
20202021
Total Assets
     
Total GAAP Assets
    $28,844,38133,297,192 
Impact of Consolidation (e)
   (7,941,0821,511,857) 
   
Total Segment Assets
    $20,903,29931,785,335 
   
 
Segment basis presents revenues and expenses on a basis that deconsolidates the investment funds Blackstone manages and excludes the amortization of intangibles and Transaction-Related Charges.
(a)
This adjustment removes Unrealized Performance Revenues on a segment basis.
(b)
This adjustment removes Unrealized Principal Investment Income (Loss) on a segment basis.
(c)
This adjustment removes Interest and Dividend Revenue on a segment basis.
5
7
Table of Contents
The Blackstone Group Inc.
Notes to Condensed Consolidated Financial Statements (Unaudited) - Continued
(All Dollars Are in Thousands, Except Share and Per Share Data, Except Where Noted)
(d)
This adjustment removes Other Revenue on a segment basis. For the three months ended June 30, 20202021 and 2019,2020, Other Revenue on a GAAP basis was $27.9 million and $(55.6) million, and $(17.1)included $27.3 million and included $56.7 million and $20.8$(56.7) million of foreign exchange losses,gains (losses), respectively. For the six months ended June 30, 20202021 and 2019,2020, Other Revenue on a GAAP basis was $88.2 million and $82.6 million, and $(6.8)included $86.9 million and included $80.3 million and $(8.3) million of foreign exchange gains (losses), respectively.
(e)
This adjustment reverses the effect of consolidating Blackstone Funds, which are excluded from Blackstone’s segment presentation. This adjustment includes the elimination of Blackstone’s interest in these funds, the removal of revenue from the reimbursement of certain expenses by the Blackstone Funds, which are presented gross under GAAP but netted against Management and Advisory Fees, Net in the Total Segment measures, and the removal of amounts associated with the ownership of Blackstone consolidated operating partnerships held by
non-controlling interests. 
interests.
(f)
This adjustment removes the amortization of transaction-related intangibles, which are excluded from Blackstone’s segment presentation. This amount includes amortization of intangibles associated with Blackstone’s investment in Pátria, which iswas historically accounted for under the equity method. As a result of Pátria’s IPO in January 2021, equity method has been discontinued and there will no longer be amortization of intangibles associated with the investment.
(g)
This adjustment removes Transaction-Related Charges, which are excluded from Blackstone’s segment presentation. 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.
(h)
Total Segment Revenues is comprised of the following:
                                                                                                             
   
Three Months Ended
  
Six Months Ended
   
June 30,
  
June 30,
   
2021
  
2020
  
2021
  
2020
Total Segment Management and Advisory Fees, Net
   $1,212,742    $976,733    $2,390,947    $1,917,300 
Total Segment Fee Related Performance Revenues
   48,889    15,033    218,057    27,499 
Total Segment Realized Performance Revenues
   792,938    102,177    1,194,261    269,410 
Total Segment Realized Principal Investment Income
   63,132    18,938    361,288    39,228 
   
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
Total Segment Revenues
   $  2,117,701   
 
$
  1,112,881    $  4,164,553    $  2,253,437 
   
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
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The Blackstone Group Inc.
Notes to Condensed Consolidated Financial Statements (Unaudited) - Continued
(All Dollars are in Thousands, Except Share and Per Share Data, Except Where Noted)
 
                                                                                                             
   
Three Months Ended
  
Six Months Ended
   
June 30,
  
June 30,
   
2020
  
2019
  
2020
  
2019
Total Segment Management and Advisory Fees, Net   $976,733    $844,156    $1,917,300    $1,658,218 
Total Segment Fee Related Performance Revenues   15,033    13,624    27,499    21,403 
Total Segment Realized Performance Revenues   102,177    341,386    269,410    588,155 
Total Segment Realized Principal Investment Income   18,938    123,557    39,228    149,465 
                     
Total Segment Revenues
   $  1,112,881    $  1,322,723    $  2,253,437    $  2,417,241 
                     
 
(i)
This adjustment removes Unrealized Performance Allocations Compensation.
(j)
This adjustment removes Equity-Based Compensation on a segment basis.
(k)
This adjustment removesadds back Interest Expense on a segment basis, excluding interest expense related to the Tax Receivable Agreement.
(l)
This adjustment adds an amount equal to an administrative fee collected on a quarterly basis from certain holders of Blackstone Holdings Partnership Units. The administrative fee is accounted for as a capital contribution under GAAP, but is reflected as a reduction of Other Operating Expenses in Blackstone’s segment presentation.
5
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The Blackstone Group Inc.
Notes to Condensed Consolidated Financial Statements (Unaudited) - Continued
(All Dollars Are in Thousands, Except Share and Per Share Data, Except Where Noted)
(l)(m)
Total Segment Expenses is comprised of the following:

                                                                                                             
   
Three Months Ended
  
Six Months Ended
   
June 30,
  
June 30,
   
2020
  
2019
  
2020
  
2019
Total Segment Fee Related Compensation   $306,904    $293,834    $653,168    $617,865 
Total Segment Realized Performance Compensation   37,787    125,466    109,089    210,706 
Total Segment Other Operating Expenses   143,583    142,121    282,468    265,432 
                     
Total Segment Expenses
   $     488,274    $     561,421    $     1,044,725    $     1,094,003 
                     
   
Three Months Ended
   
Six Months Ended
 
   
June 30,
   
June 30,
 
   
2021
   
2020
   
2021
   
2020
 
  
 
 
   
 
 
   
 
 
   
 
 
��
Total Segment Fee Related Compensation
  $375,385    $306,904    $820,495    $653,168 
Total Segment Realized Performance Compensation
   338,271    37,787    489,195    109,089 
Total Segment Other Operating Expenses
   182,178    143,583    343,602    282,468 
  
 
 
   
 
 
   
 
   
 
 
 
Total Segment Expenses
     $895,834    $  488,274    $  1,653,292    $  1,044,725 
Reconciliations of Total Segment Components
The following tables reconcile the components of Total Segments to their equivalent GAAP measures, reported on the Condensed Consolidated Statement of Operations for the three and six months ended June 30, 20202021 and 2019:2020:
 
  
                        
   
                        
   
                        
   
                        
                                                                                                             
  
Three Months Ended
  
Six Months Ended
  
Three Months Ended
  
Six Months Ended
  
June 30,
  
June 30,
  
June 30,
  
June 30,
  
2020
  
2019
  
2020
  
2019
  
2021
  
2020
  
2021
  
2020
Management and Advisory Fees, Net
                        
GAAP
   $969,728    $840,378    $1,904,560    $1,650,104    $1,212,549    $969,728    $2,390,364    $1,904,560 
Segment Adjustment (a)   7,005    3,778    12,740    8,114    193    7,005    583    12,740 
              
 
  
 
  
 
  
 
Total Segment
   $  976,733    $  844,156    $  1,917,300    $  1,658,218    $  1,212,742    $  976,733    $  2,390,947    $  1,917,300 
              
 
  
 
  
 
  
 
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The Blackstone Group Inc.
                                                                                                             
   
Three Months Ended
 
Six Months Ended
   
June 30,
 
June 30,
   
2020
 
2019
 
2020
 
2019
GAAP Realized Performance Revenues to Total Segment Fee Related Performance Revenues
                 
GAAP                 
Incentive Fees   $15,300   $21,915   $27,461   $34,047 
Investment Income - Realized Performance Allocations   101,910   332,520   269,440   574,895 
                  
GAAP
   117,210   354,435   296,901   608,942 
Total Segment                 
Less: Realized Performance Revenues   (102,177)   (341,386)   (269,410)   (588,155) 
Segment Adjustment (b)   —   575   8   616 
                  
Total Segment
   $15,033   $13,624   $27,499   $21,403 
                  
Notes to Condensed Consolidated Financial Statements (Unaudited) - Continued
(All Dollars are in Thousands, Except Share and Per Share Data, Except Where Noted)
 
5
                                                                                                             
   
Three Months Ended
June 30,
 
Six Months Ended

June 30,
   
2021
 
2020
 
2021
 
2020
GAAP Realized Performance Revenues to Total Segment Fee Related Performance Revenues
                 
GAAP
                 
Incentive Fees
   $33,207   $15,300   $69,331   $27,461 
Investment Income - Realized Performance Allocations
   808,620   101,910   1,342,987   269,440 
   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
GAAP
   841,827   117,210   1,412,318   296,901 
Total Segment
                 
Less: Realized Performance Revenues
   (792,938)   (102,177)   (1,194,261)   (269,410) 
Segment Adjustment (b)
   —   0   —   8 
   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Segment
   $  48,889   $  15,033   $  218,057   $  27,499 
   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
9
                                                                                                             
   
Three Months Ended
 
Six Months Ended
  
 
J
une 30
,
 
J
une 30
,
 
   
2021
 
2020
 
2021
 
2020
GAAP Compensation to Total Segment Fee Related Compensation
                 
GAAP
                 
Compensation
   $507,104   $458,457   $1,049,742   $935,000 
Incentive Fee Compensation
   14,431   8,432   27,756   14,954 
Realized Performance Allocations Compensation
   347,423   38,569   560,450   110,992 
   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
GAAP
   868,958   505,458   1,637,948   1,060,946 
Total Segment
                 
Less: Realized Performance Compensation
   (338,271)   (37,787)   (489,195)   (109,089) 
Less: Equity-Based Compensation - Operating Compensation
   (119,491)   (87,205)   (261,165)   (172,539) 
Less: Equity-Based Compensation - Performance Compensation
   (1,931)   (2,136)   (4,529)   (4,274) 
Segment Adjustment (c)
   (33,880)   (71,426)   (62,564)   (121,876) 
   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Segment
   $  375,385   $  306,904   $  820,495   $  653,168 
   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                                                                             
   
Three Months Ended
 
Six Months Ended
  
J
une 30
,
 
 
J
une
 
30,
 
   
2021
 
2020
 
2021
 
2020
GAAP General, Administrative and Other to Total Segment Other Operating Expenses
                 
GAAP
   $205,057   $169,051   $390,179   $326,617 
Segment Adjustment (d)
   (22,879)   (25,468)   (46,577)   (44,149) 
   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Segment
   $  182,178   $  143,583   $  343,602   $  282,468 
   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
6
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The Blackstone Group Inc.
Notes to Condensed Consolidated Financial Statements (Unaudited) - Continued
(All Dollars Areare in Thousands, Except Share and Per Share Data, Except Where Noted)
 
 
                                                                                                             
   
Three Months Ended
 
Six Months Ended
   
June 30,
 
June 30,
   
2020
 
2019
 
2020
 
2019
GAAP Compensation to Total Segment Fee Related Compensation
                 
GAAP                 
Compensation   $458,457   $438,521   $935,000   $909,918 
Incentive Fee Compensation   8,432   8,886   14,954   14,292 
Realized Performance Allocations Compensation   38,569   125,825   110,992   212,220 
                  
GAAP
   505,458   573,232   1,060,946   1,136,430 
Total Segment                 
Less: Realized Performance Compensation   (37,787)   (125,466)   (109,089)   (210,706) 
Less: Equity-Based Compensation - Operating Compensation   (87,205)   (50,225)   (172,539)   (113,933) 
Less: Equity-Based Compensation - Performance Compensation   (2,136)   (2,880)   (4,274)   (5,948) 
Segment Adjustment (c)   (71,426)   (100,827)   (121,876)   (187,978) 
                  
Total Segment
   $ 306,904   $293,834   $653,168   $617,865 
                  
                                                                                                             
   
Three Months Ended
 
Six Months Ended
  
J
une
 
30,
 
J
une
 
30,
 
   
2021
 
2020
 
2021
 
2020
Realized Performance Revenues
                 
GAAP
                 
Incentive Fees
   $33,207   $15,300   $69,331   $27,461 
Investment Income - Realized Performance Allocations
   808,620   101,910   1,342,987   269,440 
   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
GAAP
   841,827   117,210   1,412,318   296,901 
Total Segment
                 
Less: Fee Related Performance Revenues
   (48,889)   (15,033)   (218,057)   (27,499) 
Segment Adjustment (b)
   —   0   —   8 
   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Segment
   $792,938   $102,177   $1,194,261   $269,410 
   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                                                                             
   
Three Months Ended
 
Six Months Ended
   
June 30,
 
June 30,
   
2020
 
2019
 
2020
 
2019
GAAP General, Administrative and Other to Total Segment Other Operating Expenses
                 
GAAP
   $169,051   $175,308   $326,617   $321,370 
Segment Adjustment (d)   (25,468)   (33,187)   (44,149)   (55,938) 
                  
Total Segment
   $ 143,583   $ 142,121   $ 282,468   $ 265,432 
                  
                                                                                                             
   
Three Months Ended
June 30,
 
Six Months Ended

June 30,
   
2021
 
2020
 
2021
 
2020
Realized Performance Compensation
                 
GAAP
                 
Incentive Fee Compensation
   $14,431   $8,432   $27,756   $14,954 
Realized Performance Allocation Compensation
   347,423   38,569   560,450   110,992 
   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
GAAP
   361,854   47,001   588,206   125,946 
Total Segment
                 
Less: Fee Related Performance Compensation
   (21,652)   (7,078)   (94,482)   (12,583) 
Less: Equity-Based Compensation - Performance Compensation
   (1,931)   (2,136)   (4,529)   (4,274) 
   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Segment
   $338,271   $37,787   $489,195   $109,089 
   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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The Blackstone Group Inc.
Notes to Condensed Consolidated Financial Statements (Unaudited) - Continued
(All Dollars Are in Thousands, Except Share and Per Share Data, Except Where Noted)
                                                                                                             
   
Three Months Ended
 
Six Months Ended
   
June 30,
 
June 30,
   
2020
 
2019
 
2020
 
2019
Realized Performance Revenues
                 
GAAP                 
Incentive Fees   $15,300   $21,915   $27,461   $34,047 
Investment Income - Realized Performance Allocations   101,910   332,520   269,440   574,895 
                  
GAAP
   117,210   354,435   296,901   608,942 
Total Segment                 
Less: Fee Related Performance Revenues   (15,033)   (13,624)   (27,499)   (21,403) 
Segment Adjustment (b)   —   575   8   616 
                  
Total Segment
   $ 102,177   $ 341,386   $ 269,410   $ 588,155 
                  
                                                                                                             
   
Three Months Ended
 
Six Months Ended
   
June 30,
 
June 30,
   
2020
 
2019
 
2020
 
2019
Realized Performance Compensation
                 
GAAP                 
Incentive Fee Compensation   $8,432   $8,886   $14,954   $14,292 
Realized Performance Allocation Compensation   38,569   125,825   110,992   212,220 
                  
GAAP
   47,001   134,711   125,946   226,512 
Total Segment                 
Less: Fee Related Performance Compensation   (7,078)   (6,365)   (12,583)   (9,858) 
Less: Equity-Based Compensation - Performance Compensation   (2,136)   (2,880)   (4,274)   (5,948) 
                  
Total Segment
   $ 37,787   $ 125,466   $ 109,089   $ 210,706 
                  
                                                                                                             
   
Three Months Ended
 
Six Months Ended
   
June 30,
 
June 30,
   
2020
 
2019
 
2020
 
2019
Realized Principal Investment Income
                 
GAAP
   $61,102   $145,040   $109,797   $218,301 
Segment Adjustment (e)   (42,164)   (21,483)   (70,569)   (68,836) 
                  
Total Segment
   $18,938   $123,557   $39,228   $149,465 
                  
                                                                                                             
   
Three Months Ended
June 30,
 
Six Months Ended

June 30,
   
2021
 
2020
 
2021
 
2020
Realized Principal Investment Income
                 
GAAP
   $152,060   $61,102   $507,098   $109,797 
Segment Adjustment (e)
   (88,928)   (42,164)   (145,810)   (70,569) 
   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Segment
   $63,132   $18,938   $361,288   $39,228 
   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Segment basis presents revenues and expenses on a basis that deconsolidates the investment funds Blackstone manages and excludes the amortization of intangibles, the expense of equity-based awards and Transaction-Related Charges.
(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 Management and Advisory Fees, Net in the Total Segment measures.
(b)
Represents the add back of Performance Revenues earned from consolidated Blackstone Funds which have been eliminated in consolidation.
 
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The Blackstone Group Inc.
Notes to Condensed Consolidated Financial Statements (Unaudited) - Continued
(All Dollars Areare in Thousands, Except Share and Per Share Data, Except Where Noted)
 
 
(b)
Represents the add back of Performance Revenues earned from consolidated Blackstone Funds which have been eliminated in consolidation.
(c)
Represents the removal of Transaction-Related Charges that are not recorded in the Total Segment measures.
(d)
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 Management and Advisory Fees, Net in the Total Segment measures. The three and six months ended June 30, 2021 includes a reduction equal to an administrative fee collected on a quarterly basis from certain holders of Blackstone Holdings Partnership Units which is accounted for as a capital contribution under GAAP, but is reflected as a reduction of Other Operating Expenses in Blackstone’s segment presentation.
(e)
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 removal of amounts associated with the ownership of Blackstone consolidated operating partnerships held by
non-controlling interests.
interests.
19.     Subsequent Events
There have been no events since June 30, 2020 that require recognition or disclosure in the Condensed Consolidated Financial Statements.
On July 14, 2021, Blackstone announced that it entered into a stock purchase agreement with American International Group, Inc. (“AIG”) to acquire a 9.9% equity stake in SAFG Retirement Services, Inc. (“SAFG”) for an aggregate cash purchase price of $2.2 billion, subject to purchase price adjustments. SAFG is expected to be the parent company of AIG’s Life and Retirement (“AIG L&R”) business at the time of the anticipated initial public offering of AIG L&R, which AIG previously announced it is pursuing. In connection with the closing of the transaction, Blackstone will enter into a long-term strategic asset management partnership to serve as the exclusive investment manager of AIG L&R with respect to certain asset classes.
On August 5, 2021, Blackstone issued $650 million aggregate principal amount of 1.625% senior notes due August 5, 2028, $800 million aggregate principal amount of 2.000% senior notes due January 30, 2032 and $550 million aggregate principal amount of 2.850% senior notes due August 5, 2051. For additional information see Note 12. “Borrowings.”
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Item 1A. Unaudited Supplemental Presentation of Statements of Financial Condition
The Blackstone Group Inc.
Unaudited Consolidating Statements of Financial Condition
(Dollars in Thousands)
 
 
                                                                                                
   
June 30, 2020
   
Consolidated
 
Consolidated
  
   
Operating
 
Blackstone
 
Reclasses and
  
   
Partnerships
 
Funds (a)
 
Eliminations
 
Consolidated
Assets
     
Cash and Cash Equivalents
  
 $
  
 
 
1,976,512  
 $
  
 
 
—  
 $
 
 
  
—  
 $
 
 
 
1,976,512 
Cash Held by Blackstone Funds and Other
   —   343,201   —   343,201 
Investments
   11,538,592   7,943,531   (508,750)   18,973,373 
Accounts Receivable
   323,046   175,554   —   498,600 
Due from Affiliates
   2,445,274   7,413   (21,175)   2,431,512 
Intangible Assets, Net
   362,008   —   —   362,008 
Goodwill
   1,869,860   —   —   1,869,860 
Other Assets
   500,043   1,308   —   501,351 
Right-of-Use
Assets
   568,663   —   —   568,663 
Deferred Tax Assets
   1,319,301   —   —   1,319,301 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Assets
   $20,903,299   $8,471,007   $(529,925)   $28,844,381 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Liabilities and Equity
     
Loans Payable
   $4,606,781   $6,232,787   $—   $10,839,568 
Due to Affiliates
   1,082,973   462,752   (277,154)   1,268,571 
Accrued Compensation and Benefits
   2,551,056   —   —   2,551,056 
Securities Sold, Not Yet Purchased
   9,395   42,000   —   51,395 
Repurchase Agreements
   —   80,620   —   80,620 
Operating Lease Liabilities
   637,946   —   —   637,946 
Accounts Payable, Accrued Expenses and Other Liabilities
   617,925   301,270   —   919,195 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Liabilities
   9,506,076   7,119,429   (277,154)   16,348,351 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Redeemable
Non-Controlling
Interests in Consolidated Entities
   22,000   46,564   —   68,564 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Equity
     
Class A Common Stock
   7   —   —   7 
Class B Common Stock
   —   —   —   — 
Class C Common Stock
   —   —   —   — 
Additional
Paid-in-Capital
   6,272,040   287,838   (287,838)   6,272,040 
Retained Earnings (Deficit)
   (574,295)   (35,067)   35,067   (574,295) 
Accumulated Other Comprehensive Loss
   (36,758)   —   —   (36,758) 
Non-Controlling
Interests in Consolidated Entities
   2,848,186   1,052,243   —   3,900,429 
Non-Controlling
Interests in Blackstone Holdings
   2,866,043   —   —   2,866,043 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Equity
   11,375,223   1,305,014   (252,771)   12,427,466 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Liabilities and Equity
   $20,903,299   $8,471,007   $(529,925)   $28,844,381 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                                                                             
   
June 30, 2021
   
Consolidated
 
Consolidated
   
   
Operating
 
Blackstone
  
Reclasses and
  
   
Partnerships
 
Funds (a)
  
Eliminations
 
Consolidated
Assets
                  
Cash and Cash Equivalents
  
 $
2,467,444
 
 
 $
—
 
  
 $
—
 
 
 $
2,467,444
 
Cash Held by Blackstone Funds and Other
  
 
—
 
 
 
109,676
 
  
 
—
 
 
 
109,676
 
Investments
  
 
20,700,820
 
 
 
1,871,269
 
  
 
(408,767
) 
 
 
22,163,322
 
Accounts Receivable
  
 
502,168
 
 
 
80,374
 
  
 
—
 
 
 
582,542
 
Due from Affiliates
  
 
3,301,073
 
 
 
12,475
 
  
 
(153,719
) 
 
 
3,159,829
 
Intangible Assets, Net
  
 
321,780
 
 
 
—
 
  
 
—
 
 
 
321,780
 
Goodwill
  
 
1,890,202
 
 
 
—
 
  
 
—
 
 
 
1,890,202
 
Other Assets
  
 
556,165
 
 
 
549
 
  
 
—
 
 
 
556,714
 
Right-of-Use Assets
  
 
723,539
 
 
 
—
 
  
 
—
 
 
 
723,539
 
Deferred Tax Assets
  
 
1,322,144
 
 
 
—
 
  
 
—
 
 
 
1,322,144
 
   
 
 
 
 
 
 
 
  
 
 
 
 
 
 
 
Total Assets
  
 $
31,785,335
 
 
 $
2,074,343
 
  
 $
(562,486
) 
 
 $
33,297,192
 
   
 
 
 
 
 
 
 
  
 
 
 
 
 
 
 
     
Liabilities and Equity
                  
Loans Payable
  
 $
5,594,549
 
 
 $
99
 
  
 $
—
 
 
 $
5,594,648
 
Due to Affiliates
  
 
1,125,981
 
 
 
254,241
 
  
 
(153,718
) 
 
 
1,226,504
 
Accrued Compensation and Benefits
  
 
5,789,662
 
 
 
—
 
  
 
—
 
 
 
5,789,662
 
Securities Sold, Not Yet Purchased
  
 
11,953
 
 
 
23,830
 
  
 
—
 
 
 
35,783
 
Repurchase Agreements
  
 
—
 
 
 
57,247
 
  
 
—
 
 
 
57,247
 
Operating Lease Liabilities
  
 
841,152
 
 
 
—
 
  
 
—
 
 
 
841,152
 
Accounts Payable, Accrued Expenses and Other Liabilities
  
 
1,171,568
 
 
 
33,614
 
  
 
—
 
 
 
1,205,182
 
   
 
 
 
 
 
 
 
  
 
 
 
 
 
 
 
Total Liabilities
  
 
14,534,865
 
 
 
369,031
 
  
 
(153,718
) 
 
 
14,750,178
 
   
 
 
 
 
 
 
 
  
 
 
 
 
 
 
 
     
Redeemable Non-Controlling Interests in Consolidated Entities
  
 
22,000
 
 
 
43,568
 
  
 
—
 
 
 
65,568
 
   
 
 
 
 
 
 
 
  
 
 
 
 
 
 
 
     
Equity
                  
Common Stock
  
 
7
 
 
 
—
 
  
 
—
 
 
 
7
 
Series I Preferred Stock
  
 
—
 
 
 
—
 
  
 
—
 
 
 
—
 
Series II Preferred Stock
  
 
—
 
 
 
—
 
  
 
—
 
 
 
—
 
Additional Paid-in-Capital
  
 
6,282,600
 
 
 
383,095
 
  
 
(383,095
) 
 
 
6,282,600
 
Retained Earnings
  
 
2,133,794
 
 
 
25,673
 
  
 
(25,673
) 
 
 
2,133,794
 
Accumulated Other Comprehensive Loss
  
 
(10,245
) 
 
 
—
 
  
 
—
 
 
 
(10,245
) 
Non-Controlling Interests in Consolidated Entities
  
 
3,607,466
 
 
 
1,252,976
 
  
 
—
 
 
 
4,860,442
 
Non-Controlling Interests in Blackstone Holdings
  
 
5,214,848
 
 
 
—
 
  
 
—
 
 
 
5,214,848
 
   
 
 
 
 
 
 
 
  
 
 
 
 
 
 
 
Total Equity
  
 
17,228,470
 
 
 
1,661,744
 
  
 
(408,768
) 
 
 
18,481,446
 
   
 
 
 
 
 
 
 
  
 
 
 
 
 
 
 
Total Liabilities and Equity
  
 $
31,785,335
 
 
 $
2,074,343
 
  
 $
(562,486
) 
 
 $
33,297,192
 
   
 
 
 
 
 
 
 
  
 
 
 
 
 
 
 
 
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The Blackstone Group Inc.
Unaudited Consolidating Statements of Financial Condition - Continued
(Dollars in Thousands)
 
 
                                                                                                
   
December 31, 2019
   
Consolidated
 
Consolidated
   
   
Operating
 
Blackstone
  
Reclasses and
  
   
Partnerships
 
Funds (a)
  
Eliminations
 
Consolidated
Assets
      
Cash and Cash Equivalents
  
 $ 
 
 
2,172,441  
 $
  
 
—   
 $ 
 
 
—  
 $ 
 
 
2,172,441 
Cash Held by Blackstone Funds and Other
   —   351,210    —   351,210 
Investments
   14,535,685   8,380,698    (634,701)   22,281,682 
Accounts Receivable
   754,703   220,372    —   975,075 
Due from Affiliates
   2,606,563   8,818    (20,508)   2,594,873 
Intangible Assets, Net
   397,508   —    —   397,508 
Goodwill
   1,869,860   —    —   1,869,860 
Other Assets
   381,289   1,204    —   382,493 
Right-of-Use
Assets
   471,059   —    —   471,059 
Deferred Tax Assets
   1,089,305   —    —   1,089,305 
  
 
 
 
 
 
 
 
  
 
 
 
 
 
 
 
Total Assets
   $24,278,413   $8,962,302    $(655,209)   $32,585,506 
  
 
 
 
 
 
 
 
  
 
 
 
 
 
 
 
Liabilities and Equity
      
Loans Payable
   $4,600,856   $6,479,867    $—   $11,080,723 
Due to Affiliates
   885,655   509,681    (368,465)   1,026,871 
Accrued Compensation and Benefits
   3,796,044   —    —   3,796,044 
Securities Sold, Not Yet Purchased
   20,256   55,289    —   75,545 
Repurchase Agreements
   —   154,118    —   154,118 
Operating Lease Liabilities
   542,994   —    —   542,994 
Accounts Payable, Accrued Expenses and Other Liabilities
   504,804   301,355    —   806,159 
  
 
 
 
 
 
 
 
  
 
 
 
 
 
 
 
Total Liabilities
   10,350,609   7,500,310    (368,465)   17,482,454 
  
 
 
 
 
 
 
 
  
 
 
 
 
 
 
 
Redeemable
Non-Controlling
Interests in Consolidated Entities
   22,002   65,649    —   87,651 
  
 
 
 
 
 
 
 
  
 
 
 
 
 
 
 
Equity
      
Class A Common Stock
   7   —    —   7 
Class B Common Stock
   —   —    —   — 
Class C Common Stock
   —   —    —   — 
Additional
Paid-in-Capital
   6,428,647   283,339    (283,339)   6,428,647 
Retained Earnings
   609,625   3,405    (3,405)   609,625 
Accumulated Other Comprehensive Loss
   (28,495)   —    —   (28,495) 
Non-Controlling
Interests in Consolidated Entities
   3,076,470   1,109,599    —   4,186,069 
Non-Controlling
Interests in Blackstone Holdings
   3,819,548   —    —   3,819,548 
  
 
 
 
 
 
 
 
  
 
 
 
 
 
 
 
Total Equity
   13,905,802   1,396,343    (286,744)   15,015,401 
  
 
 
 
 
 
 
 
  
 
 
 
 
 
 
 
Total Liabilities and Equity
   $24,278,413   $8,962,302    $(655,209)   $32,585,506 
  
 
 
 
 
 
 
 
  
 
 
 
 
 
 
 
                                                                                                
   
December 31, 2020
   
Consolidated
 
Consolidated
  
   
Operating
 
Blackstone
 
Reclasses and
  
   
Partnerships
 
Funds (a)
 
Eliminations
 
Consolidated
Assets
     
Cash and Cash Equivalents
   $1,999,484   $—   $—   $1,999,484 
Cash Held by Blackstone Funds and Other
   —   64,972   —   64,972 
Investments
   14,425,035   1,455,008   (262,901)   15,617,142 
Accounts Receivable
   746,059   120,099   —   866,158 
Due from Affiliates
   3,224,522   10,001   (13,008)   3,221,515 
Intangible Assets, Net
   347,955   —   —   347,955 
Goodwill
   1,901,485   —   —   1,901,485 
Other Assets
   480,760   262   —   481,022 
Right-of-Use Assets
   526,943   —   —   526,943 
Deferred Tax Assets
   1,242,576   —   —   1,242,576 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Assets
   $24,894,819   $1,650,342   $(275,909)   $26,269,252 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Liabilities and Equity
     
Loans Payable
   $5,644,554   $99   $—   $5,644,653 
Due to Affiliates
   1,070,955   77,095   (13,009)   1,135,041 
Accrued Compensation and Benefits
   3,433,260   —   —   3,433,260 
Securities Sold, Not Yet Purchased
   9,324   41,709   —   51,033 
Repurchase Agreements
   —   76,808   —   76,808 
Operating Lease Liabilities
   620,844   —   —   620,844 
Accounts Payable, Accrued Expenses and Other Liabilities
   679,883   37,221   —   717,104 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Liabilities
   11,458,820   232,932   (13,009)   11,678,743 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Redeemable Non-Controlling Interests in Consolidated Entities
   21,999   43,162   —   65,161 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Equity
     
Common Stock
   7   —   —   7 
Series I Preferred Stock
   —   —   —   — 
Series II Preferred Stock
   —   —   —   — 
Additional Paid-in-Capital
   6,332,105   269,235   (269,235)   6,332,105 
Retained Earnings
   335,762   (6,335)   6,335   335,762 
Accumulated Other Comprehensive Loss
   (15,831)   —   —   (15,831) 
Non-Controlling Interests in Consolidated Entities
   2,930,809   1,111,348   —   4,042,157 
Non-Controlling Interests in Blackstone Holdings
   3,831,148   —   —   3,831,148 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Equity
   13,414,000   1,374,248   (262,900)   14,525,348 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Liabilities and Equity
   $24,894,819   $1,650,342   $(275,909)   $26,269,252 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(a)
The Consolidated Blackstone Funds consisted of the following:
Blackstone / GSO Global Dynamic Credit Feeder Fund (Cayman) LP
Blackstone / GSO Global Dynamic Credit Funding Designated Activity Company
Blackstone / GSO Global Dynamic Credit Master Fund
 
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Blackstone / GSO Global Dynamic Credit USD Feeder Fund (Ireland)
Blackstone Annex Onshore Fund L.P.*
Blackstone Horizon Fund L.P.*
Blackstone Real Estate Special Situations Holdings L.P.
Blackstone Strategic Alliance Fund L.P.
BTD CP Holdings LP
Collateralized loan obligationMezzanine side-by-side investment vehicles
Mezzanine
Private equity side-by-side
investment vehicles
Private equity
Real estate side-by-side
investment vehicles
Real estate
side-by-side
investment vehicles
Hedge Fund Solutions
side-by-side
investment vehicles.
*Consolidated as of June 30, 2021 only.
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis should be read in conjunction with The Blackstone Group Inc.’s condensed consolidated financial statements and the related notes included withinin this Quarterly Report on
Form 10-Q.
Effective July 1, 2019, The Blackstone Group L.P. (the “Partnership”) converted from a Delaware limited partnership to a Delaware corporation,August 6, 2021, The Blackstone Group Inc. (the “Conversion”). This report includes the results for the Partnership priorchanged its name to the Conversion and The Blackstone Group Inc. following the Conversion. In this report, references to “Blackstone,” the “Company,” “we,” “us” or “our” refer to (a) The Blackstone Group Inc. and its consolidated subsidiaries followingsubsidiaries.
Effective February 26, 2021, Blackstone effectuated changes to rename its Class A common stock as “common stock,” and to reclassify its Class B and Class C common stock into a new “Series I preferred stock” and “Series II preferred stock,” respectively (the “share reclassification”). Each new stock has the Conversionsame rights and (b) the Partnershippowers of its predecessor. All references to common stock, Series I preferred stock and its consolidated subsidiariesSeries II preferred stock prior to the Conversion. All references to shares or per share amounts prior to the Conversionreclassification refer to units or per unit amounts. Unless otherwise noted, all references to shares or per share amounts following the Conversion refer to shares or per share amounts of Class A, Class B and Class C common stock. All references to dividends prior to the Conversion refer to distributions.stock, respectively. See “–“— Organizational Structure.”
Effective January 1, 2020, the Credit segment was renamed Credit & Insurance. There was no change to the composition of the segment or historical results.
Our Business
Blackstone is one of the world’s leading investment firms. Our business is organized into four segments:
 
Real Estate.
Our real estate business is a global leader in real estate investing. Our Real Estate segment operates as one globally integrated business, with investments in North America,the Americas, Europe Asia and Latin America.Asia. Our real estate investment teams seek to utilize our global expertise and presence to generate attractive risk-adjusted returns for our investors and to make a positive impact on the communities in which we invest. Blackstone Real Estate seeks to invest thematically in high-quality assets, focusing where we see outsized growth potential driven by global economic and demographic trends. Blackstone Real Estate has made significant investments in logistics, office, rental housing, hospitality and retail properties around the world, as well as a variety of real estate operating companies.
Our Blackstone Real Estate Partners (“BREP”) funds are geographically diversified and target a broad range of “opportunistic” real estate and real estate-related investments. The BREP funds include global funds as well as funds focused specifically on Europe or Asia investments. BREP seeks to invest thematically in high quality assets, focusing where we see outsized growth potential driven by global economic and demographic trends. BREP has made significant investments in logistics, office, rental housing, hospitality and retail properties around the world, as well as a variety of real estate operating companies.
Our Blackstone Real Estate Debt Strategies (“BREDS”) vehicles primarily target real estate-related debt investment opportunities. BREDS’ scale and investment mandates enable it to provide a variety of lending and investment options including commercial real estate and mezzanine loans, senior loansresidential mortgage loan pools and liquid real estate-related debt securities. The BREDS platform includes a number of high-yield real estate debt funds, liquid real estate debt funds and BXMT, a NYSE-listed real estate investment trust (“REIT”).
Blackstone Real Estate’s Core+ strategy invests in substantially stabilized real estate globally through regional open-ended funds focused on high-quality assets, the Blackstone Property Partners funds (“BPP”), and Blackstone Real Estate Income Trust, Inc.
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Our core+ real estate business includes Blackstone Property Partners
(“BPP”BREIT”) and, a
non-exchange
traded non-listed REIT (“BREIT”). BPP has assembled a global portfolio of high quality investments acrossthat invests in income-generating assets in North America, Europe and Asia, which target substantially stabilized assets in prime markets withBlackstone BioMed Life Science Real Estate L.P. (“BPP Life Sciences”), a focuslong-term, perpetual capital, core+ return fund that owns BioMed Realty and is focused on industrial, multifamily,life science office and retail assets. BREIT investsinvestments primarily in stabilized income-oriented commercial real estate inacross the U.S. and to a lesser extent in real estate-related securities.
 
Private Equity.
Our Private Equity segment includes our corporate private equity business, which consists of (a) our flagship private equity funds (Blackstone Capital Partners (“BCP”) funds), which includes global funds as well as funds focused specifically on Asia investments, (b) our sector-focused private equity funds, including our energy-focused funds (Blackstone Energy Partners (“BEP”) funds), and (c) our Asia-focused fund (Blackstone Capital Partners Asia (“BCP Asia”) fund) and (d) our core private equity funds, Blackstone Core Equity Partners (“BCEP”). In addition, our Private Equity segment includes (a) our opportunistic investment platform that invests globally across asset classes, industries and geographies, Blackstone Tactical Opportunities (“Tactical Opportunities”), (b) our secondary fund of funds business, Strategic Partners Fund Solutions (“Strategic Partners”), (c) our infrastructure-focused funds, Blackstone Infrastructure Partners (“BIP”), (d) our life sciences private investment platform, Blackstone Life Sciences (“BXLS”), (e) our growth equity investment platform, Blackstone Growth (“BXG”), (f) a multi-asset investment program for eligible high net worth investors offering exposure to certain of Blackstone’s key illiquid investment strategies through a single commitment, Blackstone Total Alternatives Solution (“BTAS”) and (f)(g) our capital markets services business, Blackstone Capital Markets (“BXCM”).
We are a worldglobal leader in private equity investing. Our corporate private equity business, established in 1987, pursues transactions across industries in both established and growth-oriented businesses across the globe. It strives to create value by investing in great businesses where our capital, strategic insight, global relationships and operational support can drive transformation. Our core private equity funds target control-oriented investments in high qualityhigh-quality companies with durable businesses and seek to offer a lower level of risk and a longer hold period than traditional private equity.
Tactical Opportunities invests globally across asset classes, industries and geographies, seeking to identify and execute on attractive, differentiated investment opportunities, leveraging the intellectual capital across our various businesses while continuously optimizing its approach in the face of ever-changing market conditions. Strategic Partners is a total fund solutions provider that acquires interests in high qualityhigh-quality private funds from original holders seeking liquidity, makes primary investments and
co-investments
with financial sponsors and provides investment advisory services to clients investing in primary and secondary investments in private funds and
co-investments.
BIP focuses on investmentinvestments across all infrastructure sectors, including energy infrastructure, transportation, digital infrastructure, and water and waste and communications.with a primary focus in the U.S. BXLS is our private investment platform with capabilities to invest across the life cycle of companies and products within the life sciences sector. BXG seeks to deliver attractive risk-adjusted returns by investing in dynamic, growth-stage businesses, with a focus on the consumer, enterprise solutions, financial services and healthcare sectors.
 
Hedge Fund Solutions.
The principal component of our Hedge Fund Solutions segment is Blackstone Alternative Asset Management (“BAAM”). BAAM is the world’s largest discretionary allocator to hedge funds, managing a broad range of commingled and customized fund solutions since its inception in 1990. The Hedge Fund Solutions segment also includes investment platforms that seed new hedge fund businesses, purchase minority interests in more established general partners and management companies of funds, invest in special situation opportunities, create alternative solutions in the form ofthrough daily liquidity products and invest directly.
 
Credit
 & Insurance.
The principal component of our Credit & Insurance segment is GSO Capital Partners LPBlackstone Credit (“GSO”BXC”). GSOBXC is one of the largest credit-oriented managers in the world and is the largest manager of collateralized loan obligations (“CLOs”) globally. The investment portfolios of the funds GSOBXC manages or
sub-advises
predominantly consist of loans and securities of
non-investment
grade companies spread across the capital structure including senior debt, subordinated debt, preferred stock and common equity.
GSOBXC is organized into threetwo overarching strategies: performingprivate credit distressed and long only. Performingliquid credit. Private credit strategies include mezzanine lending funds, middle market direct lending funds including our(including Blackstone Secured Lending Fund (“BXSL”) and Blackstone Private Credit Fund (“BCRED”), both of which are business
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development companycompanies (“BDC”BDCs”)), our structured products group, and other performing credit strategy funds. Distressedstressed/distressed strategies include credit alpha strategies,(including stressed/distressed funds and credit alpha strategies) and energy strategies. Long onlyLiquid credit strategies consist of CLOs, closed-ended funds, open-ended funds and separately managed accounts.
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In addition, ourOur Credit & Insurance segment includes our insurer-focused platform, Blackstone Insurance Solutions (“BIS”). BIS focuses on providing full investment management services for insurers’ general accounts, delivering customized and diversified portfolios that include allocations to Blackstone managed products and strategies across asset classes and Blackstone’s private credit origination capabilities. BIS provides its clients tailored portfolio construction and strategic asset allocation, seeking to generate risk-managed, capital-efficient returns, diversification and capital preservation that meets clients’ objectives. BIS also provides similar services to clients through separately managed accounts or by sub-managing assets for certain insurance-dedicated funds and special purpose vehicles.
Our Credit & Insurance segment also includes our publicly traded midstream energy infrastructure and master limited partnership (“MLP”) investment platform, which is managed by Harvest.Harvest Fund Advisors LLC (“Harvest”). Harvest primarily invests capital raised from institutional investors in separately managed accounts and pooled vehicles, investing in publicly traded energy infrastructure and MLPs holding primarily midstream energy assets in the U.S.North America.
Our insurer-focused platform, BIS, also a part of our Credit & Insurance segment, partners with insurers to deliver customized and diversified portfolios of Blackstone products across asset classes, including the option for full management of insurance companies’ investment portfolios.
We generate revenue from fees earned pursuant to contractual arrangements with funds, fund investors and fund portfolio companies (including management, transaction and monitoring fees), and from capital markets services. We also invest in the funds we manage and we are entitled to a
pro-rata
share of the results of the fund
(a (a “pro-rata
allocation”). In addition to a
pro-rata
allocation, and assuming certain investment returns are achieved, we are entitled to a disproportionate allocation of the income otherwise allocable to the limited partners, commonly referred to as carried interest (“Performance Allocations”). In certain structures, we receive a contractual incentive fee from an investment fund in the event that specified cumulative investment returns are achieved (an “Incentive Fee”,Fee,” and together with Performance Allocations, “Performance Revenues”). The composition of our revenues will vary based on market conditions and the cyclicality of the different businesses in which we operate. Net investment gains and investment income generated by the Blackstone Funds are driven by value created by our operating and strategic initiatives as well as overall market conditions. Fair values are affected by changes in the fundamentals of our portfolio company and other investments, the industries in which they operate, the overall economy and other market conditions.
Our Response to
COVID-19
As the global response to
COVID-19
continuesnovel coronavirus (“COVID-19”) pandemic has continued to evolve, our primary focus has been the safety and wellbeing of our employees and their families, as well as the seamless functioning of the firm in serving our limited partner investors who have entrusted us with their capital, and our shareholders. In accordance withWhere remote work has been appropriate or recommended under local government guidance and social distancing recommendations, the vast majority ofguidelines, our employees globally have been working remotely since
mid-March
2020. Our technology infrastructure has proven to be robust and capable of supporting thisa remote work model. We have implemented rigorous protocols for remote work across the firm, including increased cadence of group calls and updates, and frequent communication across leadership and working levels. We are leveraging technology to ensure our teams stay connected and productive, and that our culture remains strong even in these unusual circumstances. WhileTo the extent we are generally not meeting with our clients in person, we continue to actively communicate with our clients through videoconference, teleconference and email. Investment committees continue to convene as needed, and the firm continues to operate across investment, asset management and corporate support functions.
In
mid-July,
July 2020, employees in our U.S. and European offices began a phased reopeningreturning to the office on a voluntary basis, and in June 2021, the majority of our U.S. employees began returning to the office on a regular basis, in each case consistent with local government guidelines, with testing, contact-tracing and social distancing and other safety protocols in place. WeIn implementing our return to office plans, we continue to closely monitor applicable public health and government guidance.guidance, the proliferation of variants and progress on vaccine production and distribution.
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Business Environment
Blackstone’s businesses are materially affected by conditions in the financial markets and economic conditions in the U.S., Europe, Asia and, to a lesser extent, elsewhere in the world.
The second quarter of 20202021 was characterized by strong recoveriescontinued strength in global equity and credit markets, as governments around the world implementedeconomic recovery advanced in major markets due to progress on
COVID-19
vaccine distribution, coupled with continued fiscal and monetary stimulus to counterstimulus. In the economic impactsU.S., 70% of the
COVID-19
pandemic. Although the global economy has begun to reopen, economic recoveryadults had received at least one vaccine dose and over half were fully vaccinated as of August 2, 2021. Continued progress on vaccine distribution is likely to be gradualsupport economic activity and uneven,further recovery, albeit with divergent trendsdispersion across regions and sectors, and the ultimate length of the recovery is uncertain.sectors.
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All major U.S. equity market sectors posted positive returns in the second quarter.The S&P 500 technology stocks outperformed the overall market, ending the quarter up 30%, while the S&P 500 ended the quarter up 20%. S&P 500 energy stocks also experienced a strong reboundTotal Return Index rose 8.5% in the second quarter finishing up 29% forof 2021, with almost every S&P 500 sector posting positive returns, led by Real Estate, Technology and Energy. The Bloomberg Commodity Index rose 13% in the second quarter but still down 37% year to date. Theand the price of West Texas Intermediate crude oil rose 92%increased 24% in the second quarter to $39$73 per barrel, but was still down significantlyrepresenting an 87% increase since the second quarter of 2020. At the same time, the annual U.S. inflation rate increased to 5.4% in June 2021, up from $61 at the end2.6% in March, and its highest level since July of 2019. The Henry Hub Natural Gas spot price remained flat2008.
Volatility continued to decline in the second quarter at $1.71, but was also stillof 2021, with the CBOE Volatility Index ending the quarter down from $2.09 at18% to 15.8, marking a 48% decline over the end of 2019. Spot prices for other commodities also experienced recoveries and the Bloomberg Commodity Index increased 5% in the second quarter.last twelve months.
In the credit markets, U.S. leveraged loans and high yield bonds also experienced sharp recoveries, increasing 8%increased 1.5% and 9%2.5%, respectively, forin the second quarter.quarter of 2021. High yield spreads compressed 32740 basis points in the second quarter, while year to date issuance increased 45% year over year. 48% year-over-year. Equity capital markets activity also accelerated in the second quarter on a year-over-year basis, with U.S. equity issuance increasing 140%. Compared to the first quarter of 2021, however, U.S. equity issuance decreased 54%. Merger and acquisition activity also continued to improve, with global announced volumes up 225% year-over-year and 10% compared to the first quarter of 2021.
The Federal Reserve maintained the federal funds target range at 0.0%-0.25% due, the range set in March 2020 in response to the effectsinitial onset of the coronavirus weighing on economic activity in the near term. In addition, the Federal Reserve has increased its balance sheet since mid-March 2020 by $3 trillion to support new credit and liquidity facilities, with potentially trillions more at their discretion if necessary. Three month LIBOR declined meaningfully in the second quarter, down 1.15% compared to the end of the first quarter, to 0.30%.
COVID-19
Volatilitypandemic. The U.S. Treasury yield curve decreased in the second quarter, with the CBOE Volatility Indexten-year yields declining 43%27 basis points to 30.4. Global equity issuance increased 140%1.47%, and continued to decline to 1.16% subsequent to quarter-end. Three month LIBOR declined 5 basis points in the second quarter of 2020 compared to the first quarter, and increased 75% relative to the second quarter of 2019. Merger and acquisition (“M&A”) activity declined meaningfully in the second quarter, down 32% compared to the first quarter and down 59% compared to the prior year period.
The industrial sector showed mixed signals, as industrial production declined 10.8% in the second quarter from the year ago period. However, the Institute for Supply Management Purchasing Managers’ Index increased from last quarter, rising above 50 for the first time since February 2020, signaling an expansion in the U.S. manufacturing sector.
0.15%.
The U.S. unemployment rate increased inas of June 2021 remained relatively flat at 5.9%, well below the second quarter, reaching an all time highApril 2020 peak of 14.7% at the end of April. The jobless rate has improved since then,14.8%, but still finished the second quarter at 11.1% which was up sharply from 4.4% at the end of the first quarter.historically elevated levels. Wages grew, with average hourly earnings increasing 5.0% year over year3.6% year-over-year based on the three month average for production and nonsupervisory employees. U.S. retail sales fell 2% in June compared to March 2021 on a seasonally adjusted basis, but increased 16% since June 2020. The Institute for Supply Management Purchasing Managers’ Index decreased in the second quarter, falling slightly to 60.6 from 64.7 in the first quarter, but is still at elevated levels, signaling expansion in the U.S. manufacturing sector.
The worldwide outbreakAlthough many countries around the world are on a path of recovery and
COVID-19
has disrupted global travel and supply chains, and has adversely impacted commercial activity in many industries,vaccination rates continue to rise, new coronavirus variants, including travel, hospitality and entertainment. It has also significantly negatively impacted global growth. While certain geographies are experiencing declining infection levels and are reopening businesses, others are seeing persistent or accelerating levels. The continued rapid development of this situation andthe increasingly prevalent Delta variant, create uncertainty regarding potential economic recovery precludes any prediction aswith respect to the ultimate adverse impacttrajectory of
COVID-19
on the economic recovery, which may remain uneven across the globe.
Notable Transactions
On July 14, 2021, Blackstone announced that it entered into a stock purchase agreement with American International Group, Inc. (“AIG”) to acquire a 9.9% equity stake in SAFG Retirement Services, Inc. (“SAFG”) for an aggregate cash purchase price of $2.2 billion, subject to purchase price adjustments. SAFG is expected to be the parent company of AIG’s Life and market conditions.Retirement (“AIG L&R”) business at the time of the anticipated initial public offering of AIG L&R, which AIG previously announced it is pursuing. In connection with the closing of the transaction, Blackstone will enter into a long-term strategic asset management partnership to serve as the exclusive investment manager of AIG L&R with respect to certain asset classes.
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On August 5, 2021, Blackstone issued $650 million aggregate principal amount of 1.625% senior notes due August 5, 2028 (the “2028 Notes”), $800 million aggregate principal amount of 2.000% senior notes due January 30, 2032 (the “2032 Notes”) and $550 million aggregate principal amount of 2.850% senior notes due August 5, 2051 (the “2051 Notes”). Blackstone intends to use the net proceeds from the sale of the 2028 Notes, 2032 Notes and 2051 Notes for general corporate purposes, which may include funding a portion of the purchase price for the acquisition of a 9.9% equity stake in AIG’s L&R business. For additional information see Note 12. “Borrowings” in the “Notes to Condensed Consolidated Financial Statements” in “Part I. Item 1. Financial Statements.”
Effective August 6, 2021, The Blackstone Group Inc. changed its name to Blackstone Inc.
Organizational Structure
Effective July 1, 2019, The Blackstone Group L.P. converted from a Delaware limited partnership to a Delaware corporation, The Blackstone Group Inc. (the “Conversion”).
Effective February 26, 2021, Blackstone effectuated changes to rename its Class A common stock as “common stock,” and to reclassify its Class B and Class C common stock into a new “Series I preferred stock” and “Series II preferred stock,” respectively. Each new stock has the same rights and powers of its predecessor. For additional information, see Note 1. “Organization” and Note 14. “Earnings Per Share and Stockholders’ Equity — Stockholders’ Equity” in the “Notes to Condensed Consolidated Financial Statements” in “— Item 1. Financial Statements” of this filing.
68Effective August 6, 2021, The Blackstone Group Inc. changed its name to Blackstone Inc. For additional information, see Note 1. “Organization” in the “Notes to Condensed Consolidated Financial Statements” in “— Item 1. Financial Statements” and “Part II. Item 5. Other Information — Name Change.”
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The simplified diagram below depicts our current organizational structure. The diagram does not depict all of our subsidiaries, including intermediate holding companies through which certain of the subsidiaries depicted are held.
 

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Key Financial Measures and Indicators
We manage our business using certain financial measures and key operating metrics since we believe these metrics measure the productivity of our investment activities. We prepare our Condensed Consolidated Financial Statements in accordance with GAAP.accounting principles generally accepted in the United States of America (“GAAP”). See Note 2. “Summary of Significant Accounting Policies” in the “Notes to Condensed Consolidated Financial Statements” in “Part I. Item 1. Financial Statements” and “— Critical Accounting Policies.” Our key
non-GAAP
financial measures and operating indicators and metrics are discussed below.
Distributable Earnings
Distributable Earnings is derived from Blackstone’s segment reported results. Distributable Earnings is used to assess performance and amounts available for dividends to Blackstone shareholders, including Blackstone personnel and others who are limited partners of the Blackstone Holdings Partnerships. Distributable Earnings is the sum of Segment Distributable Earnings plus Net Interest Income (Loss) less Taxes and Related Payables. Distributable Earnings excludes unrealized activity and is derived from and reconciled to, but not equivalent to, its most directly comparable GAAP measure of Income (Loss) Before Provision (Benefit) for Taxes. See “—
Non-GAAP
Financial Measures” for our reconciliation of Distributable Earnings.
Net Interest Income (Loss) is presented on a segment basis and is equal to Interest and Dividend Revenue less Interest Expense, adjusted for the impact of consolidation of Blackstone Funds, and interest expense associated with the Tax Receivable Agreement.
Taxes and Related Payables represent the total GAAP tax provision adjusted to include only the current tax provision (benefit) calculated on Income (Loss) Before Provision (Benefit) for Taxes excluding the tax impact of any divestitures and including the Payable under the Tax Receivable Agreement.
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Table Further, the current tax provision utilized when calculating Taxes and Related Payables and Distributable Earnings reflects the benefit of Contentsdeductions available to the company on certain expense items that are excluded from the underlying calculation of Segment Distributable Earnings and Total Segment Distributable Earnings, such as equity-based compensation charges and certain Transaction-Related Charges where there is a current tax provision or benefit. The economic assumptions and methodologies that impact the implied income tax provision are the same as those methodologies and assumptions used in calculating the current income tax provision for Blackstone’s Condensed Consolidated Statements of Operations under GAAP, excluding the impact of divestitures and accrued tax contingencies and refunds which are reflected when paid or received. Management believes that including the amount payable under the tax receivable agreement and utilizing the current income tax provision adjusted as described above when calculating Distributable Earnings is meaningful as it increases comparability between periods and more accurately reflects earnings that are available for distribution to shareholders.
Segment Distributable Earnings
Segment Distributable Earnings is Blackstone’s segment profitability measure used to make operating decisions and assess performance across Blackstone’s four segments. Segment Distributable Earnings represents the net realized earnings of Blackstone’s segments and is the sum of Fee Related Earnings and Net Realizations for each segment. Blackstone’s segments are presented on a basis that deconsolidates Blackstone Funds, eliminates
non-controlling
ownership interests in Blackstone’s consolidated operating partnerships, removes the amortization of intangible assets and 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. Segment Distributable Earnings excludes unrealized activity and is derived from and reconciled to, but not equivalent to, its most directly comparable GAAP measure of Income (Loss) Before Provision (Benefit) for Taxes. See “—
Non-GAAP
Financial Measures” for our reconciliation of Segment Distributable Earnings.
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Net Realizations is presented on a segment basis and is the sum of Realized Principal Investment Income and Realized Performance Revenues (which refers to Realized Performance Revenues excluding Fee Related Performance Revenues), less Realized Performance Compensation (which refers to Realized Performance Compensation excluding Fee Related Performance Compensation and Equity-Based Performance Compensation).
Realized Performance Compensation reflects an increase in the aggregate Realized Performance Compensation paid to certain of our professionals above the amounts allocable to them based upon the percentage participation in the relevant performance plans previously awarded to them as a result of a new compensation program that commenced during the three months ended June 30, 2021. As a result, in the three months ended June 30, 2021, Realized Performance Compensation paid to our professionals was increased by an aggregate of $15.0 million and Fee Related Compensation was decreased by a corresponding amount. These changes to Realized Performance Compensation and Fee Related Compensation reduced Net Realizations, increased Fee Related Earnings, and were neutral to Income (Loss) Before Provision (Benefit) for Taxes and had no impact to Distributable Earnings in the three months ended June 30, 2021.
Fee Related Earnings
Fee Related Earnings is a performance measure used to assess Blackstone’s ability to generate profits from revenues that are measured and received on a recurring basis and not subject to future realization events. Fee Related Earnings equals management and advisory fees (net of management fee reductions and offsets) plus Fee Related Performance Revenues, less (a) Fee Related Compensation on a segment basis, and (b) Other Operating Expenses. Fee Related Earnings is derived from and reconciled to, but not equivalent to, its most directly comparable GAAP measure of Income (Loss) Before Provision (Benefit) for Taxes. See “—
Non-GAAP
Financial Measures” for our reconciliation of Fee Related Earnings.
Fee Related Compensation is presented on a segment basis and refers to the compensation expense, excluding Equity-Based Compensation, directly related to (a) Management and Advisory Fees, Net and (b) Fee Related Performance Revenues, referred to as Fee Related Performance Compensation.
Fee Related Performance Revenues refers to the realized portion of Performance Revenues from Perpetual Capital that are (a) measured and received on a recurring basis, and (b) not dependent on realization events from the underlying investments.
Other Operating Expenses is presented on a segment basis and is equal to General, Administrative and Other Expenses, adjusted to (a) remove the amortization of transaction-related intangibles, (b) remove certain expenses reimbursed by the Blackstone Funds which are netted against Management and Advisory Fees, Net in Blackstone’s segment presentation, and (c) give effect to an administrative fee collected on a quarterly basis from certain holders of Blackstone Holdings Partnership Units. The administrative fee is accounted for as a capital contribution under GAAP, but is reflected as a reduction of Other Operating Expenses in Blackstone’s segment presentation.
Adjusted Earnings Before Interest, Taxes and Depreciation and Amortization
Adjusted Earnings Before Interest, Taxes and Depreciation and Amortization (“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. Adjusted EBITDA represents Distributable Earnings plus the addition of (a) Interest Expense on a segment basis, (b) Taxes and Related Payables, and (c) Depreciation and Amortization. Adjusted EBITDA is derived from and reconciled to, but not equivalent to, its most directly comparable GAAP measure of Income (Loss) Before Provision (Benefit) for Taxes. See “—
Non-GAAP
Financial Measures” for our reconciliation of Adjusted EBITDA.
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Operating Metrics
The alternative asset management business is primarily based on managing third party capital and does not require substantial capital investment to support rapid growth. Since our inception, we have developed and used various key operating metrics to assess and monitor the operating performance of our various alternative asset management businesses in order to monitor the effectiveness of our value creating strategies.
Total and Fee-Earning Assets Under Management
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Assets Under Management.
Total Assets Under Management refers to the assets we manage. Our Total Assets Under Management equals the sum of:
 
 (a)
the fair value of the investments held by our carry funds and our
side-by-side
and
co-investment
entities managed by us plus (1) the capital that we are entitled to call from investors in those funds and entities pursuant to the terms of their respective capital commitments, including capital commitments to funds that have yet to commence their investment periods, or (2) for certain credit-focused funds the amounts available to be borrowed under asset based credit facilities,
 
 (b)
the net asset value of (1) our hedge funds, and real estate debt carry funds, BPP, certain
co-investments
managed by us, certain credit-focused funds, and our Hedge Fund Solutions drawdown funds (plus, in each case, the capital that we are entitled to call from investors in those funds, including commitments yet to commence their investment periods), and (2) our funds of hedge funds, our Hedge Fund Solutions registered investment companies, and BREIT,
 
 (c)
the invested capital, fair value or net asset value of assets we manage pursuant to separately managed accounts,
 
 (d)
the amount of debt and equity outstanding for our CLOs during the reinvestment period,
 
 (e)
the aggregate par amount of collateral assets, including principal cash, for our CLOs after the reinvestment period,
 
 (f)
the gross or net amount of assets (including leverage where applicable) for our credit-focused registered investment companies, and
 
 (g)
the fair value of common stock, preferred stock, convertible debt, term loans or similar instruments issued by BXMT.BXMT, and
(h)
borrowings under and any amounts available to be borrowed under certain credit facilities of our funds.
Our carry funds are commitment-based drawdown structured funds that do not permit investors to redeem their interests at their election. Our funds of hedge funds, hedge funds, funds structured like hedge funds and other open-ended funds in our Real Estate, Hedge Fund Solutions and Credit & Insurance segments generally have structures that afford an investor the right to withdraw or redeem their interests on a periodic basis (for example, annually or quarterly), typically with 30 to 95 days’ notice, depending on the fund and the liquidity profile of the underlying assets. Investment advisory agreements related to certain separately managed accounts in our Hedge Fund Solutions and Credit & Insurance segments, excluding our BIS separately managed accounts, may generally be terminated by an investor on 30 to 90 days’ notice.
Fee-Earning
Assets Under Management
.
Fee-Earning
Assets Under Management refers to the assets we manage on which we derive management fees and/or performance revenues. Our
Fee-Earning
Assets Under Management equals the sum of:
 
 (a)
for our Private Equity segment funds and Real Estate segment carry funds, including certain BREDS and Hedge Fund Solutions funds, the amount of capital commitments, remaining invested capital, fair value, net asset value or par value of assets held, depending on the fee terms of the fund,
 
 (b)
for our credit-focused carry funds, the amount of remaining invested capital (which may include leverage) or net asset value, depending on the fee terms of the fund,
 
 (c)
the remaining invested capital or fair value of assets held in
co-investment
vehicles managed by us on which we receive fees,
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 (d)
the net asset value of our funds of hedge funds, hedge funds, BPP, certain
co-investments
managed by us, certain registered investment companies, BREIT, and certain of our Hedge Fund Solutions drawdown funds,
 
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 (e)
the invested capital, fair value of assets or the net asset value we manage pursuant to separately managed accounts,
 
 (f)
the net proceeds received from equity offerings and accumulated coredistributable earnings of BXMT, subject to certain adjustments,
 
 (g)
the aggregate par amount of collateral assets, including principal cash, of our CLOs, and
 
 (h)
the gross amount of assets (including leverage) or the net assets (plus leverage where applicable) for certain of our credit-focused registered investment companies.
Each of our segments may include certain
Fee-Earning
Assets Under Management on which we earn performance revenues but not management fees.
Our calculations of assets under managementTotal Assets Under Management and
fee-earning
assets under management Fee-Earning Assets Under Management may differ from the calculations of other asset managers, and as a result this measure may not be comparable to similar measures presented by other asset managers. In addition, our calculation of assets under managementTotal Assets Under Management includes commitments to, and the fair value of, invested capital in our funds from Blackstone and our personnel, regardless of whether such commitments or invested capital are subject to fees. Our definitions of assets under managementTotal Assets Under Management and
fee-earning
assets under management Fee-Earning Assets Under Management are not based on any definition of total assets under management and
fee-earning
assets under management that is set forth in the agreements governing the investment funds that we manage.
For our carry funds, total assets under managementTotal Assets Under Management includes the fair value of the investments held and uncalled capital commitments, whereas
fee-earning
assets under management includes Fee-Earning Assets Under Management may include the total amount of capital commitments or the remaining amount of invested capital at cost, depending on whether the investment period has expired or as specified by the fee terms of the fund. As such,
fee-earning
assets under management in certain carry funds Fee-Earning Assets Under Management may be greater than total assets under managementTotal Assets Under Management when the aggregate fair value of the remaining investments is less than the cost of those investments.
Perpetual Capital
.
Perpetual Capital refers to the component of assets under management with an indefinite term, that is not in liquidation, and for which there is no requirement to return capital to investors through redemption requests in the ordinary course of business, except where funded by new capital inflows. Perpetual Capital includes
co-investment
capital with an investor right to convert into Perpetual Capital.
Dry Powder
.
Dry Powder represents the amount of capital available for investment or reinvestment, including general partner and employee capital, and is an indicator of the capital we have available for future investments.
Performance Eligible Assets Under Management
.
Performance Eligible Assets Under Management represents invested and to be invested capital at fair value, including capital closed for funds whose investment period has not yet commenced, on which performance revenues could be earned if certain hurdles are met.
Income Tax Current Developments
Prior to the Conversion, certain of our share of investment income and carried interest was not subject to U.S. corporate income taxes. Subsequent to the Conversion, all income earned by us is subject to U.S. corporate income taxes, which we believe will result in an overall higher income tax expense (or benefit) over time when compared to periods prior to the Conversion.
Consolidated Results of Operations
Following is a discussion of our consolidated results of operations for the three and six months ended June 30, 20202021 and 2019.2020. For a more detailed discussion of the factors that affected the results of our four business segments (which are presented on a basis that deconsolidates the investment funds we manage) in these periods, see “— Segment Analysis” below.
 
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The following table sets forth information regarding our consolidated results of operations and certain key operating metrics for the three and six months ended June 30, 20202021 and 2019:2020:
 
   
Three Months Ended
     
Six Months Ended
    
   
June 30,
 
2020 vs. 2019
 
June 30,
 
2020 vs. 2019
   
2020
 
2019
 
$
 
%
 
2020
 
2019
 
$
 
%
   
(Dollars in Thousands)
Revenues
         
Management and Advisory Fees, Net
   $969,728   $840,378   $129,350   15%   $1,904,560   $1,650,104   $254,456   15% 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Incentive Fees
   15,300   21,915   (6,615)   -30%   27,461   34,047   (6,586)   -19% 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Investment Income (Loss)
         
Performance Allocations
         
Realized
   101,910   332,520   (230,610)   -69%   269,440   574,895   (305,455)   -53% 
Unrealized
   1,067,923   157,732   910,191   577%   (2,385,158)   821,731   (3,206,889)   N/M 
Principal Investments
         
Realized
   61,102   145,040   (83,938)   -58%   109,797   218,301   (108,504)   -50% 
Unrealized
   331,762   (37,345)   369,107   N/M   (627,603)   131,699   (759,302)   N/M 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Investment Income (Loss)
   1,562,697   597,947   964,750   161%   (2,633,524)   1,746,626   (4,380,150)   N/M 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest and Dividend Revenue
   23,924   43,686   (19,762)   -45%   59,008   87,770   (28,762)   -33% 
Other
   (55,580)   (17,120)   (38,460)   225%   82,600   (6,870)   89,470   N/M 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Revenues
   2,516,069   1,486,806   1,029,263   69%   (559,895)   3,511,677   (4,071,572)   N/M 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Expenses
         
Compensation and Benefits
         
Compensation
   458,457   438,521   19,936   5%   935,000   909,918   25,082   3% 
Incentive Fee Compensation
   8,432   8,886   (454)   -5%   14,954   14,292   662   5% 
Performance Allocations Compensation
         
Realized
   38,569   125,825   (87,256)   -69%   110,992   212,220   (101,228)   -48% 
Unrealized
   454,813   64,518   390,295   605%   (942,565)   351,533   (1,294,098)   N/M 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Compensation and Benefits
   960,271   637,750   322,521   51%   118,381   1,487,963   (1,369,582)   -92% 
General, Administrative and Other
   169,051   175,308   (6,257)   -4%   326,617   321,370   5,247   2% 
Interest Expense
   39,276   43,596   (4,320)   -10%   80,920   85,598   (4,678)   -5% 
Fund Expenses
   4,083   5,586   (1,503)   -27%   8,688   8,473   215   3% 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Expenses
   1,172,681   862,240   310,441   36%   534,606   1,903,404   (1,368,798)   -72% 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Other Income (Loss)
         
Change in Tax Receivable Agreement Liability
   76   —   76   N/M   (519)   —   (519)   N/M 
Net Gains (Losses) from Fund Investment Activities
   158,297   61,131   97,166   159%   (169,077)   191,456   (360,533)   N/M 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Other Income (Loss)
   158,373   61,131   97,242   159%   (169,596)   191,456   (361,052)   N/M 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Income (Loss) Before Provision (Benefit) for Taxes
   1,501,761   685,697   816,064   119%   (1,264,097)   1,799,729   (3,063,826)   N/M 
Provision (Benefit) for Taxes
   147,415   38,736   108,679   281%   (11,288)   79,891   (91,179)   N/M 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net Income (Loss)
   1,354,346   646,961   707,385   109%   (1,252,809)   1,719,838   (2,972,647)   N/M 
Net Income (Loss) Attributable to Redeemable
Non-Controlling
Interests in Consolidated Entities
   (3,426)   1,095   (4,521)   N/M   (18,895)   3,575   (22,470)   N/M 
Net Income (Loss) Attributable to
Non-Controlling
Interests in Consolidated Entities
   294,378   80,744   213,634   265%   (350,699)   267,577   (618,276)   N/M 
Net Income (Loss) Attributable to
Non-Controlling
Interests in Blackstone Holdings
   495,128   259,330   235,798   91%   (384,989)   661,590   (1,046,579)   N/M 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net Income (Loss) Attributable to The Blackstone Group Inc.
   $568,266   $305,792   $262,474   86%  $(498,226)   $787,096   $(1,285,322)   N/M 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                                                                
  
Three Months Ended
     
Six Months Ended
    
  
June 30,
 
2021 vs. 2020
 
June 30,
 
2021 vs. 2020
  
2021
 
2020
 
$
 
%
 
2021
 
2020
 
$
 
%
  
(Dollars in Thousands)
Revenues
        
Management and Advisory Fees, Net
  $1,212,549   $969,728   $242,821   25%   $2,390,364   $1,904,560   $485,804   26% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Incentive Fees
  33,207   15,300   17,907   117%   69,331   27,461   41,870   152% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Investment Income (Loss)
        
Performance Allocations
        
Realized
  808,620   101,910   706,710   693%   1,342,987   269,440   1,073,547   398% 
Unrealized
  2,697,170   1,067,923   1,629,247   153%   5,161,667   (2,385,158)   7,546,825   n/m 
Principal Investments
        
Realized
  152,060   61,102   90,958   149%   507,098   109,797   397,301   362% 
Unrealized
  328,835   331,762   (2,927)   -1%   968,150   (627,603)   1,595,753   n/m 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Investment Income (Loss)
  3,986,685   1,562,697   2,423,988   155%   7,979,902   (2,633,524)   10,613,426   n/m 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest and Dividend Revenue
  31,017   23,924   7,093   30%   62,429   59,008   3,421   6% 
Other
  27,896   (55,580)   83,476   n/m   88,200   82,600   5,600   7% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Revenues
  5,291,354   2,516,069   2,775,285   110%   10,590,226   (559,895)   11,150,121   n/m 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Expenses
        
Compensation and Benefits
        
Compensation
  507,104   458,457   48,647   11%   1,049,742   935,000   114,742   12% 
Incentive Fee Compensation
  14,431   8,432   5,999   71%   27,756   14,954   12,802   86% 
Performance Allocations Compensation
        
Realized
  347,423   38,569   308,854   801%   560,450   110,992   449,458   405% 
Unrealized
  1,150,219   454,813   695,406   153%   2,200,188   (942,565)   3,142,753   n/m 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Compensation and Benefits
  2,019,177   960,271   1,058,906   110%   3,838,136   118,381   3,719,755   n/m 
General, Administrative and Other
  205,057   169,051   36,006   21%   390,179   326,617   63,562   19% 
Interest Expense
  44,322   39,276   5,046   13%   89,305   80,920   8,385   10% 
Fund Expenses
  3,774   4,083   (309)   -8%   6,157   8,688   (2,531)   -29% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Expenses
  2,272,330   1,172,681   1,099,649   94%   4,323,777   534,606   3,789,171   709% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Other Income (Loss)
        
Change in Tax Receivable Agreement Liability
  (392)   76   (468)   n/m   2,518   (519)   3,037   n/m 
Net Gains (Losses) from Fund Investment Activities
  127,116   158,297   (31,181)   -20%   247,469   (169,077)   416,546   n/m 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Other Income (Loss)
  126,724   158,373   (31,649)   -20%   249,987   (169,596)   419,583   n/m 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Income (Loss) Before Provision (Benefit) for Taxes
  3,145,748   1,501,761   1,643,987   109%   6,516,436   (1,264,097)   7,780,533   n/m 
Provision (Benefit) for Taxes
  288,250   147,415   140,835   96%   287,803   (11,288)   299,091   n/m 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net Income (Loss)
  2,857,498   1,354,346   1,503,152   111%   6,228,633   (1,252,809)   7,481,442   n/m 
Net Income (Loss) Attributable to Redeemable Non-Controlling Interests in Consolidated Entities
  637   (3,426)   4,063   n/m   1,266   (18,895)   20,161   n/m 
Net Income (Loss) Attributable to Non-Controlling Interests in Consolidated Entities
  431,516   294,378   137,138   47%   818,366   (350,699)   1,169,065   n/m 
Net Income (Loss) Attributable to Non-Controlling Interests in Blackstone Holdings
  1,116,193   495,128   621,065   125%   2,351,977   (384,989)   2,736,966   n/m 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net Income (Loss) Attributable to The Blackstone Group Inc.
  $1,309,152   $568,266   $740,886   130%   $3,057,024   $(498,226)   $3,555,250   n/m 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
N/Mn/m     Not meaningful.
 
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Three Months Ended June 30, 20202021 Compared to Three Months Ended June 30, 20192020
Revenues
Revenues were $5.3 billion for the three months ended June 30, 2021, an increase of $2.8 billion, or 110%, compared to $2.5 billion for the three months ended June 30, 2020, an increase of $1.0 billion, compared to $1.5 billion for the three months ended June 30, 2019.2020. The increase in Revenues was primarily attributable to an increase of $2.4 billion in Investment Income (Loss), which is composed of increases of $964.8$1.6 billion and $797.7 million in Unrealized and Realized Investment Income (Loss) and $129.4 million in Management and Advisory Fees, Net, partially offset by decreases of $38.5 million in Other Revenue and $19.8 million in Interest and Dividend Revenue., respectively.
The $1.6 billion increase in Unrealized Investment Income (Loss) was primarily attributable to an increasenet unrealized appreciation of investment holdings in the three months ended June 30, 2021 compared to net unrealized depreciation of investment holdings in the three months ended June 30, 2020. Unrealized Investment Income (Loss) in our Real Estate and Private Equity segmentsegments increased $1.0 billion and $507.8 million, respectively. Principal drivers of $1.1 billion, partially offset by a decreasethese increases were:
The increase in our Real Estate segment was primarily attributable to higher net unrealized appreciation of $306.5 million. investment holdings in our BREP opportunistic funds in the three months ended June 30, 2021 compared to the three months ended June 30, 2020. The carrying value of investments for our BREP opportunistic funds increased 9.4% in the three months ended June 30, 2021 compared to 1.6% in the three months ended June 30, 2020.
The increase in our Private Equity segment was primarily attributable to higher net unrealized appreciation of investment holdings in corporate private equity and Tactical OpportunitiesStrategic Partners in the current quarter relativethree months ended June 30, 2021 compared to the prior quarter.three months ended June 30, 2020. Corporate private equity carrying value increased 13.8% in the three months ended June 30, 2021 compared to 12.8% in the three months ended June 30, 2020 compared to 1.3%2020. Strategic Partners carrying value increased 17.7% in the three months ended June 30, 2019. Tactical Opportunities carrying value increased 10.8%2021 compared to 3.8% in the three months ended June 30, 2020 compared to 1.3%2020.
The $797.7 million increase in the three months ended June 30, 2019. The decrease in our Real Estate segmentRealized Investment Income (Loss) was primarily attributable to lower unrealized appreciation of investment holdings in BREP opportunistic funds in the current quarter relative to the prior quarter. BREP opportunistic funds’ carrying value increased 1.6% in the three months ended June 30, 2020 compared to 4.4% in the three months ended June 30, 2019.
The increase in Management and Advisory Fees, Net was primarily due to increaseshigher realized gains in our Real Estate and Hedge Fund Solutions segments of $134.4 million and $8.6 million, respectively, partially offset by a decrease of $9.4 million in our Private Equity segment. The increase in our Real Estate segment was primarily due to the launch of the investment periods of BREP IX and BREP Europe VI and
Fee-Earning
Assets Under Management growth in our core+ real estate funds. The increase in our Hedge Fund Solutions segment was primarily due to
Fee-Earning
Assets Under Management growth in individual investor and specialized solutions. The decrease in our Private Equity segment was primarily due to a decrease of Transaction, Advisory and Other Fees, Net in BXCM.
The decrease in Other Revenue was primarily due to foreign exchange losses on our euro denominated bonds and cross-currency swaps.
The decrease in Interest and Dividend Revenue was primarily due to lower interest rates in our separately managed, notional pooling and deposit accounts.segments.
Expenses
Expenses were $2.3 billion for the three months ended June 30, 2021, an increase of $1.1 billion, compared to $1.2 billion for the three months ended June 30, 2020, an increase of $310.4 million, compared to $862.2 million for the three months ended June 30, 2019.2020. The increase was primarily attributable to an increase of $322.5 million in Total Compensation and Benefits. The increase$1.1 billion in Total Compensation and Benefits, was primarily due to an increase of $303.0 million inwhich $1.0 billion was Performance Allocations Compensation. The increase of $303.0 million in Performance Allocations Compensation was primarily due to the increase in Investment Income (Loss) – Performance Allocations, on which thea portion of this compensation is based.
Other Income (Loss)
Other Income (Loss) was $126.7 million for the three months ended June 30, 2021, a decrease of $31.6 million, compared to $158.4 million for the three months ended June 30, 2020. The decrease in Other Income (Loss) was due to a decrease of $31.2 million in Net Gains (Losses) from Fund Investment Activities.
The decrease in Other Income (Loss) — Net Gains (Losses) from Fund Investment Activities was principally driven by a decrease of $105.8 million in our Credit & Insurance segment, partially offset by increases of $35.8 million in our Private Equity segment and $34.3 million in our Real Estate segment. The decrease in our Credit & Insurance segment was primarily driven by the deconsolidation of nine CLO vehicles during the year ended December 31, 2020, as well as lower unrealized appreciation of investments in our consolidated credit funds. See Note 9. “Variable Interest Entities” in the “Notes to Condensed Consolidated Financial Statements” in “Part I. Item 1. Financial Statements” for additional information on the deconsolidated CLO vehicles. The increase in our Private Equity segment was primarily due to higher unrealized appreciation and realized net gains of investments in our consolidated private equity funds. The increase in our Real Estate segment was primarily due to higher unrealized appreciation and realized net gains of investments in our consolidated real estate funds.
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Six Months Ended June 30, 20202021 Compared to Six Months Ended June 30, 20192020
Revenues
Revenues were $10.6 billion for the six months ended June 30, 2021, an increase of $11.2 billion, compared to $(559.9) million for the six months ended June 30, 2020, a decrease of $4.1 billion, compared to $3.5 billion for the six months ended June 30, 2019.2020. The decreaseincrease in Revenues was primarily attributable to a decreasean increase of $4.4$10.6 billion in Investment Income (Loss), which is composed of increases of $9.1 billion and $1.5 billion in Unrealized and Realized Investment Income (Loss), partially offset by increases of $254.5 million in Management and Advisory Fees, Net and $89.5 million in Other Revenue.respectively.
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The decrease$9.1 billion increase in Unrealized Investment Income (Loss) was primarily attributable to net unrealized appreciation of investment holdings in the six months ended June 30, 2021 compared to net unrealized depreciation of investment holdings driven byin the impacts of
COVID-19.
six months ended June 30, 2020. Unrealized Investment Income (Loss) in our Private Equity, Real Estate, Private Equity, Credit & Insurance and Hedge Fund Solutions segments decreased $2.1increased $4.4 billion, $1.3$3.0 billion, $563.1$605.9 million and $122.9$483.7 million, respectively. Principal drivers of these increases were:
The increase in our Private Equity segment was primarily attributable to higher net unrealized appreciation of investment holdings in corporate private equity, Tactical Opportunities and Strategic Partners in the six months ended June 30, 2021 compared to the six months ended June 30, 2020. Corporate private equity carrying value increased 29.0% in the six months ended June 30, 2021 compared to a decrease of 12.4% in the six months ended June 30, 2020. Tactical Opportunities carrying value increased 22.1% in the six months ended June 30, 2021 compared to a decrease of 6.1% in the six months ended June 30, 2020. Strategic Partners carrying value increased 28.7% in the six months ended June 30, 2021 compared to 5.6% in the six months ended June 30, 2020.
The increase in our Real Estate segment was primarily attributable to higher net unrealized depreciationappreciation of investment holdings in our BREP opportunistic funds.funds in the six months ended June 30, 2021 compared to the six months ended June 30, 2020. The carrying value of investments for our BREP opportunistic funds’ carrying value decreasedfunds increased 14.9% in the six months ended June 30, 2021 compared to a decrease of 7.6% in the six months ended June 30, 2020 compared to an2020.
The increase of 9.1% in the six months ended June 30, 2019. The decrease in our Private Equity segment was primarily attributable to net unrealized depreciation of investment holdings in corporate private equity and Tactical Opportunities. Corporate private equity carrying value decreased 12.4% in the six months ended June 30, 2020 compared to an increase of 10.6% in the six months ended June 30, 2019. Tactical Opportunities carrying value decreased 6.1% in the six months ended June 30, 2020 compared to an increase of 4.0% in the six months ended June 30, 2019. The decrease in our Credit & Insurance segment was primary attributable to net unrealized depreciationappreciation of investments in our performingprivate credit and distressed strategies in the six months ended June 30, 20202021 compared to net unrealized depreciation in the six months ended June 30, 2019. 2020.
The decreaseincrease in our Hedge Fund Solutions segment was primarily due to the net unrealized depreciationappreciation of investments of which Blackstone owns a share in the six months ended June 30, 20202021 compared to net unrealized depreciation in the six months ended June 30, 2019.2020.
The $1.5 billion increase in Management and Advisory Fees, NetRealized Investment Income (Loss) was primarily dueattributable to increaseshigher realized gains in our Real Estate and Hedge Fund SolutionsPrivate Equity segments of $236.6 million and $11.3 million, respectively. The increasethe gain recognized in our Real Estate segment was primarily duethe Pátria sale transactions. For additional information, see Note 4. “Investments — Equity Method Investments” in the “Notes to the launch of the investment periods of BREP IX and BREP Europe VI and
Fee-Earning
Assets Under Management growthCondensed Consolidated Financial Statements” in our core+ real estate funds. The increase in our Hedge Fund Solutions segment was primarily due to
Fee-Earning
Assets Under Management growth in our individual investor and specialized solutions.
The increase in Other Revenue was primarily due to foreign exchange gains on our euro denominated bonds and cross-currency swaps.“Part I. Item 1. Financial Statements.”
Expenses
Expenses were $4.3 billion for the six months ended June 30, 2021, an increase of $3.8 billion, compared to $534.6 million for the six months ended June 30, 2020, a decrease of $1.4 billion, compared to $1.9 billion for the six months ended June 30, 2019.2020. The decreaseincrease was primarily attributable to a decreasean increase of $1.4$3.7 billion in Total Compensation and Benefits. The decrease in Total Compensation and Benefits, was primarily due to a decrease of $1.4which $3.6 billion inwas Performance Allocations Compensation. The decrease of $1.4 billionincrease in Performance Allocations Compensation was primarily due to the decreaseincrease in Investment Income (Loss) – Performance Allocations, on which thea portion of this compensation is based.
Other Income (Loss)
Three Months Ended June 30, 2020 Compared to Three Months Ended June 30, 2019
Other Income (Loss) was $158.4$250.0 million for the threesix months ended June 30, 2020,2021, an increase of $97.2$419.6 million, compared to $61.1$(169.6) million for the threesix months ended June 30, 2019.2020. The increase in Other Income (Loss) was due to an increase of $97.2 million in Net Gains (Losses) from Fund Investment Activities.
The increase in Other Income (Loss) – Net Gain (Losses) from Fund Investment Activities was primarily due to increases of $78.3 million in our Credit & Insurance segment and $36.1 million in our Private Equity segment, partially offset by a decrease of $13.5 million in our Real Estate segment. The increase in our Credit & Insurance segment was primarily driven by appreciation of consolidated CLOs and other vehicles during the three months ended June 30, 2020. The increase in our Private Equity segment was primarily due to appreciation of investments in our consolidated Private Equity segment funds. The decrease in our Real Estate segment was primarily driven by depreciation of investments in our consolidated Real Estate segment funds.
Six Months Ended June 30, 2020 Compared to Six Months Ended June 30, 2019
Other Income (Loss) was $(169.6) million for the six months ended June 30, 2020, a decrease of $361.1 million, compared to $191.5 million for the six months ended June 30, 2019. The decrease in Other Income (Loss) was due to a decrease of $360.5$416.5 million in Net Gains (Losses) from Fund Investment Activities.
 
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The decreaseincrease in Other Income (Loss) –— Net GainGains (Losses) from Fund Investment Activities was primarily due to decreasesprincipally driven by increases of $178.0$203.3 million in our Credit & InsurancePrivate Equity segment, $113.5$138.1 million in our Real Estate segment and $63.2$67.5 million in our Credit & Insurance segment. The increase in our Private Equity segment.segment was primarily due to unrealized appreciation of investments in our consolidated private equity funds. The decreaseincrease in our Real Estate segment was primarily due to unrealized appreciation of investments in our consolidated real estate funds. The increase in our Credit & Insurance segment was primarily driven by depreciationthe deconsolidation of consolidated CLOs and othernine CLO vehicles during the six monthsyear ended June 30, 2020. The decrease in our Real Estate segment was primarily driven by depreciationDecember 31, 2020, as well as realized net gains of investments in our consolidated Real Estate segmentcredit funds. The decreaseSee Note 9. “Variable Interest Entities” in our Private Equity segment was primarily duethe “Notes to depreciation of investmentsCondensed Consolidated Financial Statements” in our consolidated Private Equity segment funds.“Part I. Item 1. Financial Statements” for additional information on the deconsolidated CLO vehicles.
Provision (Benefit) for Taxes
The following table summarizes Blackstone’s tax position:
 
   
Three Months Ended
  
Six Months Ended
 
   
June 30,
  
June 30,
 
   
2020
  
2019
  
2020
  
2019
 
   
(Dollars in Thousands)
 
Income (Loss) Before Provision (Benefit) for Taxes
   $1,501,761   $685,697   $(1,264,097)   $1,799,729 
Provision (Benefit) for Taxes
   $147,415   $38,736   $(11,288)   $79,891 
Effective Income Tax Rate
   9.8%   5.6%   0.9%   4.4% 
   
Three Months Ended
  
Six Months Ended
 
   
June 30,
  
June 30,
 
   
2021
  
2020
  
2021
  
2020
 
   
(Dollars in Thousands)
 
Income (Loss) Before Provision (Benefit) for Taxes
   $3,145,748   $1,501,761   $6,516,436   $(1,264,097) 
Provision (Benefit) for Taxes
   $288,250   $147,415   $287,803   $(11,288) 
Effective Income Tax Rate
   9.2%   9.8%   4.4%   0.9% 
The following table reconciles the effective income tax rate to the U.S. federal statutory tax rate:
 
   
Three Months Ended
 
2020
 
Six Months Ended
 
2020
   
June 30,
 
vs.
 
June 30,
 
vs.
   
2020
 
2019
 
2019
 
2020
 
2019
 
2019
Statutory U.S. Federal Income Tax Rate
   21.0%   21.0%   —   21.0%   21.0%   — 
Income Passed Through to Common Unitholders and
Non-Controlling
Interest Holders (a)
   -10.0%   -15.7%   5.7%   -16.7%   -16.8%   0.1% 
State and Local Income Taxes
   2.2%   1.3%   0.9%   0.3%   1.1%   -0.8% 
Change in Valuation Allowance
   -3.8%   —   -3.8%   -5.0%   —   -5.0% 
Other
   0.4%   -1.0%   1.4%   1.3%   -0.9%   2.2% 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Effective Income Tax Rate
   9.8%   5.6%   4.2%   0.9%   4.4%   -3.5% 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                                        
   
Three Months Ended
  
2021
  
Six Months Ended
  
2021
   
June 30,
  
vs.
  
June 30,
  
vs.
   
2021
  
2020
  
2020
  
2021
  
2020
  
2020
Statutory U.S. Federal Income Tax Rate
   21.0%    21.0%    —    21.0%    21.0%    — 
Income Passed Through to Non-Controlling Interest Holders (a)(b)
   -10.4%    -10.6%    0.2%    -10.3%    -12.9%    2.6% 
State and Local Income Taxes
   2.2%    2.2%    —    2.2%    0.3%    1.9% 
Change in Valuation Allowance
   -4.0%    -3.8%    -0.2%    -8.6%    -5.0%    -3.6% 
Other (a)
   0.4%    1.0%    -0.6%    0.1%    -2.5%    2.6% 
  
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
Effective Income Tax Rate
   9.2%    9.8%    -0.6%    4.4%    0.9%    3.5% 
  
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
 
(a)
During the three months ended June 30, 2021, Blackstone recategorized certain components of its effective income tax reconciliation. Accordingly, certain components related to income attributable to non-controlling interest holders were recategorized from Income Passed Through to Non-Controlling Interest Holders to Other. Prior periods have been recast accordingly. The recategorization had no effect on Blackstone’s Provision (Benefit) for Taxes.
(b)
Includes income that was not taxable to Blackstone and its subsidiaries. Such income was directly taxable to shareholders of Blackstone’s Class A common stock for the period prior to the Conversion and remains taxable to Blackstone’s
non-controlling
interest holders.
Three Months Ended June 30, 20202021 Compared to Three Months Ended June 30, 20192020
Blackstone’s Provision (Benefit) for Taxes for the three months ended June 30, 2021 and 2020 and 2019 was $147.4$288.3 million and $38.7$147.4 million, respectively. This resulted in an effective tax rate of 9.8%9.2% and 5.6%9.8%, respectively, based on our Income Before Provision (Benefit) for Taxes of $3.1 billion and $1.5 billion, and $685.7 million.respectively.
The increasedecrease in Blackstone’s effective tax rate for the three months ended June 30, 20202021 compared to the three months ended June 30, 2019, resulted primarily from the Conversion. For the three months ended June 30, 2020, The Blackstone Group Inc. was a corporation subjectdue to federal and state corporate income taxes while for the three months ended June 30, 2019 The Blackstone Group L.P. was a publicly traded partnership with income directly taxable to common unitholders.various items, none of which were significant.
 
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Although Blackstone was a cash taxpayer for the three and six months ended June 30, 2021, unrealized gains on Investments resulted in the reduction of a previously recorded valuation allowance against Blackstone’s deferred tax asset. The reduction in the valuation allowance is recorded as an income tax benefit on the Condensed Consolidated Statement of Operations and thereby reduces the effective tax rate in the current period.
Six Months Ended June 30, 20202021 Compared to Six Months Ended June 30, 20192020
Blackstone’s Provision (Benefit) for Taxes for the six months ended June 30, 2021 and 2020 and 2019 was $(11.3)$287.8 million and $79.9$(11.3) million, respectively. This resulted in an effective tax rate of 0.9%4.4% and 4.4%0.9%, respectively, based on our Income (Loss) Before Provision (Benefit) for Taxes of $6.5 billion and $(1.3) billion, and $1.8 billion.respectively.
The decreaseincrease in Blackstone’s effective tax rate for the six months ended June 30, 2020,2021, compared to the six months ended June 30, 2019,2020, resulted primarily from the change inattribution of a portion of reported net income (loss) before taxes to non-controlling interest holders, and state taxes. This increase was partially offset by additional valuation allowance releases related to the step upstep-up in the tax basis of investment assets due toassets.
Although Blackstone was a cash taxpayer for the netthree and six months ended June 30, 2021, unrealized depreciationgains on Investments resulted in our investment holdings driven by the impactsreduction of COVID-19.a previously recorded valuation allowance against Blackstone’s deferred tax asset. The reduction in the valuation allowance is recorded as an income tax benefit on the Condensed Consolidated Statement of Operations and thereby reduces the effective tax rate in the current period.
Additional information regarding our income taxes can be found in Note 13. “Income Taxes” in the “Notes to Condensed Consolidated Financial Statements” in “Part I. Item 1. Financial Statements” of this filing.
Non-Controlling
Interests in Consolidated Entities
The Net Income Attributable to Redeemable
Non-Controlling
Interests in Consolidated Entities and Net Income Attributable to
Non-Controlling
Interests in Consolidated Entities is attributable to the consolidated Blackstone Funds. The amounts of these items vary directly with the performance of the consolidated Blackstone Funds and largely eliminate the amount of Other Income (Loss) – Net Gains (Losses) from Fund Investment Activities from the Net Income (Loss) Attributable to The Blackstone Group Inc.
Net Income Attributable to
Non-Controlling
Interests in Blackstone Holdings is derived from the Income Before Provision (Benefit) for Taxes at the Blackstone Holdings level, excluding the Net Gains (Losses) from Fund Investment Activities and the percentage allocation of the income between Blackstone personnel and others who are limited partners of Blackstone Holdings and Blackstone after considering any contractual arrangements that govern the allocation of income such as fees allocable to Blackstone.
For the three months ended June 30, 20202021 and 2019,2020, the Net Income Before Taxes allocated to Blackstone personnel and others who are limited partners of Blackstone Holdings was 41.2%41.4% and 44.0%41.2%, respectively. For the six months ended June 30, 20202021 and 2019,2020, the Net Income Before Taxes allocated to Blackstone personnel and others who are limited partners of Blackstone Holdings was 41.4%41.6% and 44.0%41.4%, respectively. The decreaserespective increases of 2.8% was0.2% were primarily due to conversions of Blackstone Holdings Partnership Units to shares of Class A common stock, the vesting of shares of Class A common stock and the exclusion of unvested participating Blackstone Holdings Partnership Units, which are not contractually obligated to share in losses. The decrease of 2.6% was primarily due to conversions of Blackstone Holdings Partnership Units to shares of Class A common stock, the vesting of shares of Class A common stocklosses, during the three and the exclusion of unvested participating Blackstone Holdings Partnership Units which are not contractually obligated to share in losses.six months ended June 30, 2020.
The Other Income (Loss) — Reduction ofChange in Tax Receivable Agreement Liability was entirely allocated to The Blackstone Group Inc.
 
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Operating Metrics
Total and Fee-Earning Assets Under Management
The following graphs and tables summarize the
Fee-Earning
Assets Under Management by Segment and Total Assets Under Management by Segment, followed by a rollforward of activity for the three and six months ended June 30, 20202021 and 2019.2020. For a description of how Assets Under Management and
Fee-Earning
Assets Under Management are determined, please see “— Key Financial Measures and Indicators — Operating Metrics — Assets Under ManagementTotal and
Fee-Earning
Assets Under Management”:
 

 
Note: Totals may not add due to rounding.
 
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Three Months Ended
   
June 30, 2020
 
June 30, 2019
     
Private
 
Hedge Fund
 
Credit &
     
Private
 
Hedge Fund
 
Credit &
  
   
Real Estate
 
Equity
 
Solutions
 
Insurance
 
Total
 
Real Estate
 
Equity
 
Solutions
 
Insurance
 
Total
   
(Dollars in Thousands)
Fee-Earning
Assets Under Management
           
Balance, Beginning of Period
  $130,424,462  $128,300,802  $68,214,435  $96,115,338  $423,055,037  $94,223,034  $85,446,868  $73,647,014  $99,676,478  $352,993,394 
Inflows, including Commitments (a)
   3,572,729   3,980,763   3,480,682   4,552,263   15,586,437   25,130,260   13,723,729   3,578,265   7,548,513   49,980,767 
Outflows, including Distributions (b)
   (730,177)   (1,945,670)   (4,548,271)   (2,080,773)   (9,304,891)   (5,571,573)   (444,360)   (3,943,643)   (2,231,944)   (12,191,520) 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net Inflows (Outflows)
   2,842,552   2,035,093   (1,067,589)   2,471,490   6,281,546   19,558,687   13,279,369   (365,378)   5,316,569   37,789,247 
Realizations (c)
   (998,351)   (1,118,162)   (512,215)   (1,078,291)   (3,707,019)   (2,375,372)   (2,103,962)   (276,016)   (1,201,419)   (5,956,769) 
Market Activity (d)(g)
   1,991,685   66,379   3,565,510   4,572,797   10,196,371   880,745   (155,003)   1,647,800   665,228   3,038,770 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance, End of Period (e)
  $134,260,348  $129,284,112  $70,200,141  $102,081,334  $435,825,935  $112,287,094  $96,467,272  $74,653,420  $104,456,856  $387,864,642 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Increase
  $3,835,886  $983,310  $1,985,706  $5,965,996  $12,770,898  $18,064,060  $11,020,404  $1,006,406  $4,780,378  $34,871,248 
Increase
   3%   1%   3%   6%   3%   19%   13%   1%   5%   10% 
   
Three Months Ended
   
June 30, 2021
 
June 30, 2020
     
Private
 
Hedge Fund
 
Credit &
     
Private
 
Hedge Fund
 
Credit &
  
   
Real Estate
 
Equity
 
Solutions
 
Insurance
 
Total
 
Real Estate
 
Equity
 
Solutions
 
Insurance
 
Total
   
(Dollars in Thousands)
Fee-Earning Assets Under Management
           
Balance, Beginning of Period
  $155,851,794  $131,903,347  $76,614,206  $116,856,060  $481,225,407  $130,424,462  $128,300,802  $68,214,435  $96,115,338  $423,055,037 
Inflows (a)
   9,834,475   2,320,367   1,794,869   14,734,257   28,683,968   3,572,729   3,980,763   3,480,682   4,552,263   15,586,437 
Outflows (b)
   (581,677)   (457,610)   (8,277,079)   (2,502,137)   (11,818,503)   (730,177)   (1,945,670)   (4,548,271)   (2,080,773)   (9,304,891) 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net Inflows (Outflows)
   9,252,798   1,862,757   (6,482,210)   12,232,120   16,865,465   2,842,552   2,035,093   (1,067,589)   2,471,490   6,281,546 
Realizations (c)
   (3,069,895)   (3,304,081)   (294,858)   (4,029,664)   (10,698,498)   (998,351)   (1,118,162)   (512,215)   (1,078,291)   (3,707,019) 
Market Activity (d)(g)
   4,228,796   2,013,463   2,403,014   2,894,879   11,540,152   1,991,685   66,379   3,565,510   4,572,797   10,196,371 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance, End of Period (e)
  $166,263,493  $132,475,486  $72,240,152  $127,953,395  $498,932,526  $134,260,348  $129,284,112  $70,200,141  $102,081,334  $435,825,935 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Increase (Decrease)
  $10,411,699  $572,139  $(4,374,054)  $11,097,335  $17,707,119  $3,835,886  $983,310  $1,985,706  $5,965,996  $12,770,898 
Increase (Decrease)
   7%   —   -6%   9%   4%   3%   1%   3%   6%   3% 
 
   
Six Months Ended
   
June 30, 2020
 
June 30, 2019
     
Private
 
Hedge Fund
 
Credit &
     
Private
 
Hedge Fund
 
Credit &
  
   
Real Estate
 
Equity
 
Solutions
 
Insurance
 
Total
 
Real Estate
 
Equity
 
Solutions
 
Insurance
 
Total
   
(Dollars in Thousands)
Fee-Earning
Assets Under Management
           
Balance, Beginning of Period
  $128,214,137  $97,773,964  $75,636,004  $106,450,747  $408,074,852  $93,252,724  $80,008,166  $72,280,606  $96,986,011  $342,527,507 
Inflows, including Commitments (a)
   13,001,518   39,306,793   5,847,645   8,188,108   66,344,064   27,864,125   22,386,445   5,212,771   11,414,091   66,877,432 
Outflows, including Distributions (b)
   (1,741,073)   (5,558,119)   (7,200,263)   (4,821,457)   (19,320,912)   (5,836,255)   (1,172,943)   (6,011,376)   (5,474,048)   (18,494,622) 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net Inflows (Outflows)
   11,260,445   33,748,674   (1,352,618)   3,366,651   47,023,152   22,027,870   21,213,502   (798,605)   5,940,043   48,382,810 
Realizations (c)
   (3,696,112)   (2,043,516)   (646,945)   (2,508,418)   (8,894,991)   (4,589,190)   (4,664,973)   (440,452)   (2,168,269)   (11,862,884) 
Market Activity (d)(h)
   (1,518,122)   (195,010)   (3,436,300)   (5,227,646)   (10,377,078)   1,595,690   (89,423)   3,611,871   3,699,071   8,817,209 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance, End of Period (e)
  $134,260,348  $129,284,112  $70,200,141  $102,081,334  $435,825,935  $112,287,094  $96,467,272  $74,653,420  $104,456,856  $387,864,642 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Increase (Decrease)
  $6,046,211  $31,510,148  $(5,435,863)  $(4,369,413)  $27,751,083  $19,034,370  $16,459,106  $2,372,814  $7,470,845  $45,337,135 
Increase (Decrease)
   5%   32%   -7%   -4%   7%   20%   21%   3%   8%   13% 
Annualized Base Management Fee Rate (f)
   1.15%   0.88%   0.80%   0.57%   0.88%   1.03%   1.11%   0.75%   0.57%   0.87% 
   
Six Months Ended
   
June 30, 2021
 
June 30, 2020
     
Private
 
Hedge Fund
 
Credit &
     
Private
 
Hedge Fund
 
Credit &
  
   
Real Estate
 
Equity
 
Solutions
 
Insurance
 
Total
 
Real Estate
 
Equity
 
Solutions
 
Insurance
 
Total
   
(Dollars in Thousands)
Fee-Earning Assets Under Management
           
Balance, Beginning of Period
  $149,121,461  $129,539,630  $74,126,610  $116,645,413  $469,433,114  $128,214,137  $97,773,964  $75,636,004  $106,450,747  $408,074,852 
Inflows (a)
   18,395,652   6,788,988   3,800,855   22,920,908   51,906,403   13,001,518   39,306,793   5,847,645   8,188,108   66,344,064 
Outflows (b)
   (1,425,237)   (1,065,631)   (9,623,330)   (7,618,014)   (19,732,212)   (1,741,073)   (5,558,119)   (7,200,263)   (4,821,457)   (19,320,912) 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net Inflows (Outflows)
   16,970,415   5,723,357   (5,822,475)   15,302,894   32,174,191   11,260,445   33,748,674   (1,352,618)   3,366,651   47,023,152 
Realizations (c)
   (4,925,197)   (6,375,260)   (483,294)   (7,276,868)   (19,060,619)   (3,696,112)   (2,043,516)   (646,945)   (2,508,418)   (8,894,991) 
Market Activity (d)(h)
   5,096,814   3,587,759   4,419,311   3,281,956   16,385,840   (1,518,122)   (195,010)   (3,436,300)   (5,227,646)   (10,377,078) 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance, End of Period (e)
  $166,263,493  $132,475,486  $72,240,152  $127,953,395  $498,932,526  $134,260,348  $129,284,112  $70,200,141  $102,081,334  $435,825,935 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Increase (Decrease)
  $17,142,032  $2,935,856  $(1,886,458)  $11,307,982  $29,499,412  $6,046,211  $31,510,148  $(5,435,863)  $(4,369,413)  $27,751,083 
Increase (Decrease)
   11%   2%   -3%   10%   6%   5%   32%   -7%   -4%   7% 
Annualized Base Management Fee Rate (f)
   1.12%   1.13%   0.82%   0.55%   0.93%   1.15%   0.88%   0.80%   0.57%   0.88% 
 
7981
Table of Contents
   
Three Months Ended
   
June 30, 2020
 
June 30, 2019
     
Private
 
Hedge Fund
 
Credit &
     
Private
 
Hedge Fund
 
Credit &
  
   
Real Estate
 
Equity
 
Solutions
 
Insurance
 
Total
 
Real Estate
 
Equity
 
Solutions
 
Insurance
 
Total
   
(Dollars in Thousands)
Total Assets Under Management
           
Balance, Beginning of Period
  $160,934,849  $174,695,883  $73,720,792  $128,655,761  $538,007,285  $140,334,043  $158,988,748  $80,182,772  $132,272,199  $511,777,762 
Inflows, including Commitments (a)
   4,884,629   5,202,708   3,323,861   6,857,865   20,269,063   14,364,834   16,806,806   3,812,651   10,126,818   45,111,109 
Outflows, including Distributions (b)
   (713,861)   (668,799)   (4,618,615)   (2,346,962)   (8,348,237)   (599,928)   (178,901)   (4,114,571)   (2,341,479)   (7,234,879) 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net Inflows (Outflows)
   4,170,768   4,533,909   (1,294,754)   4,510,903   11,920,826   13,764,906   16,627,905   (301,920)   7,785,339   37,876,230 
Realizations (c)
   (2,264,204)   (2,990,225)   (516,843)   (1,579,530)   (7,350,802)   (3,989,755)   (4,678,685)   (296,126)   (1,629,825)   (10,594,391) 
Market Activity (d)(i)
   3,882,431   7,878,568   3,758,944   6,232,836   21,752,779   3,495,626   233,719   1,850,954   842,437   6,422,736 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance, End of Period (e)
  $166,723,844  $184,118,135  $75,668,139  $137,819,970  $564,330,088  $153,604,820  $171,171,687  $81,435,680  $139,270,150  $545,482,337 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Increase
  $5,788,995  $9,422,252  $1,947,347  $9,164,209  $26,322,803  $13,270,777  $12,182,939  $1,252,908  $6,997,951  $33,704,575 
Increase
   4%   5%   3%   7%   5%   9%   8%   2%   5%   7% 
   
Three Months Ended
   
June 30, 2021
 
June 30, 2020
     
Private
 
Hedge Fund
 
Credit &
     
Private
 
Hedge Fund
 
Credit &
  
   
Real Estate
 
Equity
 
Solutions
 
Insurance
 
Total
 
Real Estate
 
Equity
 
Solutions
 
Insurance
 
Total
   
(Dollars in Thousands)
Total Assets Under Management
           
Balance, Beginning of Period
  $196,277,032  $211,801,085  $81,819,220  $158,905,670  $648,803,007  $160,934,849  $174,695,883  $73,720,792  $128,655,761  $538,007,285 
Inflows (a)
   8,879,659   7,335,028   2,197,161   18,869,609   37,281,457   4,884,629   5,202,708   3,323,861   6,857,865   20,269,063 
Outflows (b)
   (579,152)   (1,077,784)   (7,299,018)   (2,716,532)   (11,672,486)   (713,861)   (668,799)   (4,618,615)   (2,346,962)   (8,348,237) 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net Inflows (Outflows)
   8,300,507   6,257,244   (5,101,857)   16,153,077   25,608,971   4,170,768   4,533,909   (1,294,754)   4,510,903   11,920,826 
Realizations (c)
   (5,306,047)   (8,633,166)   (303,557)   (5,390,278)   (19,633,048)   (2,264,204)   (2,990,225)   (516,843)   (1,579,530)   (7,350,802) 
Market Activity (d)(i)(k)
   8,276,744   14,196,196   2,731,457   4,045,385   29,249,782   3,882,431   7,878,568   3,758,944   6,232,836   21,752,779 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance, End of Period (e)
  $207,548,236  $223,621,359  $79,145,263  $173,713,854  $684,028,712  $166,723,844  $184,118,135  $75,668,139  $137,819,970  $564,330,088 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Increase (Decrease)
  $11,271,204  $11,820,274  $(2,673,957)  $14,808,184  $35,225,705  $5,788,995  $9,422,252  $1,947,347  $9,164,209  $26,322,803 
Increase (Decrease)
   6%   6%   -3%   9%   5%   4%   5%   3%   7%   5% 
 
   
Six Months Ended
   
June 30, 2020
 
June 30, 2019
     
Private
 
Hedge Fund
 
Credit &
     
Private
 
Hedge Fund
 
Credit &
  
   
Real Estate
 
Equity
 
Solutions
 
Insurance
 
Total
 
Real Estate
 
Equity
 
Solutions
 
Insurance
 
Total
   
(Dollars in Thousands)
Total Assets Under Management
           
Balance, Beginning of Period
  $163,156,064  $182,886,109  $80,738,112  $144,342,178  $571,122,463  $136,247,229  $130,665,286  $77,814,516  $127,515,286  $472,242,317 
Inflows, including Commitments (a)
   17,537,804   14,071,559   6,570,522   9,401,686   47,581,571   19,398,685   45,278,266   6,381,594   16,959,688   88,018,233 
Outflows, including Distributions (b)
   (1,507,549)   (1,067,275)   (7,499,898)   (5,188,261)   (15,262,983)   (1,750,109)   (421,901)   (6,222,189)   (6,896,662)   (15,290,861) 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net Inflows (Outflows)
   16,030,255   13,004,284   (929,376)   4,213,425   32,318,588   17,648,576   44,856,365   159,405   10,063,026   72,727,372 
Realizations (c)
   (4,783,000)   (5,021,331)   (655,830)   (3,279,335)   (13,739,496)   (7,047,896)   (8,421,343)   (482,684)   (2,902,661)   (18,854,584) 
Market Activity (d)(j)
   (7,679,475)   (6,750,927)   (3,484,767)   (7,456,298)   (25,371,467)   6,756,911   4,071,379   3,944,443   4,594,499   19,367,232 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance, End of Period (e)
  $166,723,844  $184,118,135  $75,668,139  $137,819,970  $564,330,088  $153,604,820  $171,171,687  $81,435,680  $139,270,150  $545,482,337 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Increase (Decrease)
  $3,567,780  $1,232,026  $(5,069,973)  $(6,522,208)  $(6,792,375)  $17,357,591  $40,506,401  $3,621,164  $11,754,864  $73,240,020 
Increase (Decrease)
   2%   1%   -6%   -5%   -1%   13%   31%   5%   9%   16% 
   
Six Months Ended
   
June 30, 2021
 
June 30, 2020
     
Private
 
Hedge Fund
 
Credit &
     
Private
 
Hedge Fund
 
Credit &
  
   
Real Estate
 
Equity
 
Solutions
 
Insurance
 
Total
 
Real Estate
 
Equity
 
Solutions
 
Insurance
 
Total
   
(Dollars in Thousands)
Total Assets Under Management
           
Balance, Beginning of Period
  $187,191,247  $197,549,222  $79,422,869  $154,393,590  $618,556,928  $163,156,064  $182,886,109  $80,738,112  $144,342,178  $571,122,463 
Inflows (a)
   17,461,122   15,166,670   4,264,119   31,993,631   68,885,542   17,537,804   14,071,559   6,570,522   9,401,686   47,581,571 
Outflows (b)
   (2,388,253)   (1,828,756)   (8,922,346)   (8,508,421)   (21,647,776)   (1,507,549)   (1,067,275)   (7,499,898)   (5,188,261)   (15,262,983) 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net Inflows (Outflows)
   15,072,869   13,337,914   (4,658,227)   23,485,210   47,237,766   16,030,255   13,004,284   (929,376)   4,213,425   32,318,588 
Realizations (c)
   (7,259,579)   (16,726,541)   (497,904)   (10,017,051)   (34,501,075)   (4,783,000)   (5,021,331)   (655,830)   (3,279,335)   (13,739,496) 
Market Activity (d)(j)(k)
   12,543,699   29,460,764   4,878,525   5,852,105   52,735,093   (7,679,475)   (6,750,927)   (3,484,767)   (7,456,298)   (25,371,467) 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance, End of Period (e)
  $207,548,236  $223,621,359  $79,145,263  $173,713,854  $684,028,712  $166,723,844  $184,118,135  $75,668,139  $137,819,970  $564,330,088 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Increase (Decrease)
  $20,356,989  $26,072,137  $(277,606)  $19,320,264  $65,471,784  $3,567,780  $1,232,026  $(5,069,973)  $(6,522,208)  $(6,792,375) 
Increase (Decrease)
   11%   13%   —   13%   11%   2%   1%   -6%   -5%   -1% 
 
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(a)
Inflows represent contributions, capital raised, other increases in available capital (recallable capital and increased
side-by-side
commitments), purchases, inter-segment allocations and acquisitions.
(b)
Outflows represent redemptions, client withdrawals and decreases in available capital (expired capital, expense drawdowns and decreased
side-by-side
commitments).
(c)
Realizations represent realizationsrealization proceeds from the disposition or other monetization of assets, current income or capital returned to investors from CLOs.
(d)
Market activity includes realized and unrealized gains (losses) on portfolio investments and the impact of foreign exchange rate fluctuations.
(e)
Total and Fee-Earning Assets Under Management are reported in the segment where the assets are managed.
(f)
Effective January 1, 2020, Blackstone updated its calculation methodology as follows:
Annualized Base Management Fee Rate represents annualized year to date Base Management Fee divided by the average of the beginning of year and each quarter end’s
Fee-Earning
Assets Under Management in the reporting period. Prior periods have been recast for this update.
(g)
For the three months ended June 30, 2020,2021, the impact to
Fee-Earning
Assets Under Management due to foreign exchange rate fluctuations was $546.9$332.1 million, $2.1$262.1 million and $599.8 million for the Real Estate, Credit & Insurance and Total segments, respectively. For the three months ended June 30, 2020, such impact was $546.9 million, $260.7 million and $809.6 million for the Real Estate, Credit & Insurance and Total segments, respectively.
(h)
For the six months ended June 30, 2021, the impact to Fee-Earning Assets Under Management due to foreign exchange rate fluctuations was $(777.3) million, $130.7 million and $(659.6) million for the Real Estate, Credit & Insurance and Total segments, respectively. For the six months ended June 30, 2020, such impact was $(211.6) million, $(14.4) million and $(223.9) million for the Real Estate, Credit & Insurance and Total segments, respectively.
(i)
For the three months ended June 30, 2021, the impact to Total Assets Under Management due to foreign exchange rate fluctuations was $452.1 million, $68.4 million, $361.8 million and $882.3 million for the Real Estate, Private Equity, Credit & Insurance and Total segments, respectively. For the three months ended June 30, 2019,2020, such impact was $150.3 million, $(161.6) million and $(11.3) million for the Real Estate, Credit & Insurance and Total segments, respectively.
(h)
For the six months ended June 30, 2020, the impact to
Fee-Earning
Assets Under Management due to foreign exchange rate fluctuations was $(211.6) million, $2.1 million, $(14.4) million and $(223.9) million for the Real Estate, Private Equity, Credit & Insurance and Total segments, respectively. For the six months ended June 30, 2019, such impact was $(82.1) million, $(272.0) million and $(354.1) million for the Real Estate, Credit & Insurance and Total segments, respectively.
(i)
For the three months ended June 30, 2020, the impact to Total Assets Under Management due to foreign exchange rate fluctuations was $1.0 billion, $37.0 million, $336.4 million and $1.4 billion for the Real Estate, Private Equity, Credit & Insurance and Total segments, respectively.
(j)
For the threesix months ended June 30, 2019, such2021, the impact to Total Assets Under Management due to foreign exchange rate fluctuations was $156.5$(1.2) billion, $(262.2) million, $(64.3) million, $(189.4)$115.5 million and $(97.1) million$(1.3) billion for the Real Estate, Private Equity, Credit & Insurance and Total segments, respectively.
(j)
For the six months ended June 30, 2020, thesuch impact to Total Assets Under Management due to foreign exchange rate fluctuations was $(471.6) million, $(564.6) million, $(65.6) million and $(1.1) billion for the Real Estate, Private Equity, Credit & Insurance and Total segments, respectively. For
(k)
Effective in the sixthree months ended June 30, 2019, such impact2021, the methodology for Total Assets Under Management was $(271.8) million, $107.4 million, $(296.9) million and $(461.4) millionupdated to exclude permanent fund leverage where the intended use is not for investing purposes. Funds without an adjustment were either already applying the Real Estate, Private Equity, Credit & Insurance andmethodology in reporting Total segments, respectively.Assets Under Management or the update was not applicable. Additional detail on these adjustments is included below:
                                                                                                                        
   
Three Months Ended June 30, 2021
     
Private
  
Hedge Fund
  
Credit &
   
   
Real Estate
 
Equity
  
Solutions
  
Insurance
  
Total
   
(Dollars in Thousands)
Market Activity
    $10,103,225    $14,196,196     $2,731,457     $4,045,385     $31,076,263 
One-Time Methodology Adjustment
   (1,826,481)   —    —    —    (1,826,481) 
  
 
 
 
 
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
Reported Market Activity
    $  8,276,744    $14,196,196     $2,731,457     $4,045,385     $29,249,782 
  
 
 
 
 
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
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Six Months Ended June 30, 2021
     
Private
  
Hedge Fund
  
Credit &
   
   
Real Estate
 
Equity
  
Solutions
  
Insurance
  
Total
   
(Dollars in Thousands)
Market Activity
    $14,370,180    $29,460,764     $4,878,525     $5,852,105     $54,561,574 
One-Time Methodology Adjustment
   (1,826,481)   —    —    —    (1,826,481) 
  
 
 
 
 
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
Reported Market Activity
    $12,543,699    $29,460,764     $4,878,525     $5,852,105     $52,735,093 
  
 
 
 
 
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
Fee-Earning
Assets Under Management
Fee-Earning
Assets Under Management were $435.8$498.9 billion at June 30, 2020,2021, an increase of $12.8$17.7 billion, compared to $423.1$481.2 billion at March 31, 2020.2021. The net increase was due to:
 
Inflows of $15.6$28.7 billion primarily attributablerelated to:
 
 o
$4.614.7 billion in our Credit & Insurance segment driven by $1.7$5.5 billion from direct lending, $4.1 billion from certain liquid credit and MLP strategies, $3.6 billion from CLOs, $2.0 billion from BIS, $1.2 billion from our structured products group, $435.3 million from mezzanine funds, $245.3 million from stressed/distressed strategies and $189.5 million from energy strategies, all partially offset by $2.5 billion of allocations to various strategies and other segments,
o
$9.8 billion in our Real Estate segment driven by $5.8 billion from BREIT, $3.0 billion from BREDS due to capital raisedbeing deployed (this amount was previously reflected in Inflows for Total Assets Under Management at each capital closing of the fund), $453.3 million from BPP Europe and co-investment and $437.0 million from BPP U.S. and co-investment,
o
$2.3 billion in our Private Equity segment driven by $958.8 million from Strategic Partners, $922.6 million from corporate private equity and $527.3 million from Tactical Opportunities, and
o
$1.8 billion in our Hedge Fund Solutions segment driven by $1.2 billion from individual investor and specialized solutions, $333.9 million from commingled products and $310.1 million from customized solutions.
Market activity of $11.5 billion primarily attributable to:
o
$4.2 billion of market appreciation in our Real Estate segment driven by appreciation of $3.9 billion from Core+ real estate, $199.6 million from BREDS and $128.8 million from BREP opportunistic and co-investment, all of which included $332.1 million of foreign exchange appreciation across the segment,
o
$2.9 billion of market appreciation in our Credit & Insurance segment driven by appreciation of $2.3 billion from certain liquid credit and MLP strategies, $341.3 million from CLOs and $274.5 million from direct lending, partially offset by $116.4 million of market depreciation from energy strategies, all of which included $262.1 million of foreign exchange appreciation across the segment,
o
$2.4 billion of market appreciation in our Hedge Fund Solutions segment driven by returns from BAAM’s Principal Solutions Composite of 3.5% gross (3.2% net), and
o
$2.0 billion of market appreciation in our Private Equity segment driven by $1.3 billion from Strategic Partners and $724.0 million from BIP.
Offsetting these increases were:
Outflows of $11.8 billion primarily attributable to:
o
$8.3 billion in our Hedge Fund Solutions segment driven by $6.4 billion from customized solutions, $1.3 billion from commingled products and $584.1 million from individual investor and specialized solutions, and
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o
$2.5 billion in our Credit & Insurance segment driven by $1.4 billion from certain long onlyliquid credit and MLP strategies, $322.2$331.1 million from BIS $321.8and $107.9 million from direct lending, $290.7 million from our structured product group, $205.2 million from stressed/distressed strategies and $191.3 million from mezzanine funds,strategies.
Realizations of $10.7 billion driven by:
 
 o
$4.0 billion in our Private EquityCredit & Insurance segment driven by $3.6$2.2 billion from Strategic Partners, $570.3CLOs, $635.0 million from BXLS and $171.9direct lending, $624.3 million from Tactical Opportunities,stressed/distressed strategies, $225.2 million from mezzanine funds, $196.6 million from energy strategies and $159.1 million from certain liquid credit and MLP strategies,
 
 o
$3.63.3 billion in our Private Equity segment driven by $1.3 billion from Strategic Partners, $1.1 billion from corporate private equity and $878.5 million from Tactical Opportunities, and
o
$3.1 billion in our Real Estate segment driven by $1.1$1.2 billion from BREIT, $912.8 million from BPP Asia and
co-investment,
$703.2 million from BREP opportunistic funds and
co-investment,
$624.5 $969.5 million from BREDS and $222.5$857.7 million from BPP U.S. and
co-investment,Core+ real estate.
and
Fee-Earning Assets Under Management were $498.9 billion at June 30, 2021, an increase of $29.5 billion, compared to $469.4 billion at December 31, 2020. The net increase was due to:
Inflows of $51.9 billion related to:
 
 o
$3.522.9 billion in our Credit & Insurance segment driven by $8.8 billion from direct lending, $5.4 billion from certain liquid credit and MLP strategies, $3.6 billion from CLOs, $2.3 billion from BIS, $1.3 billion from our structured products group, $869.5 million from mezzanine funds, $349.1 million from stressed/distressed strategies and $304.9 million from energy strategies,
o
$18.4 billion in our Real Estate segment driven by $8.9 billion from BREIT, $5.9 billion from BREDS due to capital being deployed (this amount was previously reflected in Inflows for Total Assets Under Management at each capital closing of the fund), $2.0 billion from BPP Life Sciences, $638.4 million from BPP U.S. and co-investment, $463.3 million from BPP Europe and co-investment, $326.8 million from BREP opportunistic funds and co-investment and $198.3 million from BPP Asia,
o
$6.8 billion in our Private Equity segment driven by $2.5 billion from corporate private equity, $1.4 billion from BXG, $1.2 billion from Tactical Opportunities, $1.0 billion from Strategic Partners and $659.1 million from multi-asset products, and
o
$3.8 billion in our Hedge Fund Solutions segment driven by $2.0$2.5 billion from individual investor and specialized solutions, $1.1 billion$727.8 million from customized solutions and $449.8$547.0 million from commingled products.
 
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Market activity of $10.2$16.4 billion primarily attributable to:
 
 o
$4.65.1 billion of market appreciation in our Credit & InsuranceReal Estate segment driven by $3.8appreciation of $5.7 billion from certain long onlyCore+ real estate and MLP strategies, $375.8$200.6 million from direct lending, $162.1BREDS, partially offset by foreign exchange depreciation of $396.4 million from BISCore+ real estate and $140.5$381.3 million from distressed strategies, which included $260.7 million of foreign exchange appreciation across the segment,BREP opportunistic and co-investment,
 
 o
$3.64.4 billion of market appreciation in our Hedge Fund Solutions segment driven by returns from BAAM’s Principal Solutions Composite of 6.0% gross and 5.8% net, and(5.5% net),
 
 o
$2.03.6 billion of market appreciation in our Real EstatePrivate Equity segment driven by $2.1 billion from Strategic Partners and $1.5 billion from core+ real estate (including $331.9BIP, and
o
$3.3 billion of market appreciation in our Credit & Insurance segment driven by appreciation of $2.6 billion from certain liquid credit and MLP strategies, $332.9 million from foreign exchange appreciation), $294.3CLOs and $319.9 million from BREDS and $214.9direct lending, partially offset by $116.4 million of market depreciation from energy strategies, all of which included $130.7 million of foreign exchange appreciation from BREP opportunistic funds and
co-investment.across the segment.
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Offsetting these increases were:
 
Outflows of $9.3$19.7 billion primarily attributable to:
 
 o
$4.59.6 billion in our Hedge Fund Solutions segment driven by $2.2$6.7 billion from customized solutions, $1.5 billion from individual investor and specialized solutions $1.5and $1.4 billion from customized solutions and $889.0 million from commingled products,
 
 o
$2.17.6 billion in our Credit & Insurance segment driven by $1.7$3.8 billion from certain long onlyliquid credit and MLP strategies, and $172.7$2.7 billion from BIS, $469.3 million from CLOs and $307.4 million from stressed/distressed strategies,
 
 o
$1.91.4 billion in our Private Equity segment driven by $1.3 billion from corporate private equity and $636.2 million from Strategic Partners, and
o
$730.2 million in our Real Estate segment driven by $477.5$876.0 million from core+ real estate and $252.7BREIT, $370.1 million from BREDS.BPP U.S. and co-investment and $141.0 million from BREDS, and
Realizations of $3.7 billion primarily attributable to:
 
 o
$1.1 billion in our Private Equity segment driven by $610.4$418.1 million from Tactical Opportunities, $282.6$386.0 million from corporate private equitymulti-asset products and $213.8$245.5 million from Strategic Partners,Partners.
Realizations of $19.1 billion primarily driven by:
 
 o
$1.17.3 billion in our Credit & Insurance segment driven by $384.2$2.9 billion from CLOs, $1.8 billion from direct lending, $996.4 million from stressed/distressed strategies, $258.9 million from CLOs, $174.9$866.6 million from mezzanine funds, $131.7$355.0 million from direct lendingenergy strategies and $128.5$319.1 million from certain long onlyliquid credit and MLP strategies,
 
 o
$998.4 million6.4 billion in our Real EstatePrivate Equity segment driven by $688.2 million$2.4 billion from core+ real estatecorporate private equity, $2.2 billion from Strategic Partners and $211.7 million$1.6 billion from BREDS,Tactical Opportunities, and
 
 o
$512.2 million in our Hedge Fund Solutions segment driven by $508.7 million from individual investor and specialized solutions.
Fee-Earning
Assets Under Management were $435.8 billion at June 30, 2020, an increase of $27.8 billion, compared to $408.1 billion at December 31, 2019. The net increase was due to:
Inflows of $66.3 billion primarily attributable to:
o
$39.3 billion in our Private Equity segment driven by $28.9 billion from corporate private equity, primarily related to the commencement of BCP VIII and BEP III’s investment periods, $4.5 billion from BXLS, related to the commencement of BXLS V’s investment period, $4.0 billion from Strategic Partners, $1.2 billion from Tactical Opportunities and $767.4 million from multi-asset products,
o
$13.04.9 billion in our Real Estate segment driven by $6.3 billion from BREIT, $2.9 billion from BREDS, $1.8 billion from BREP opportunistic funds and
co-investment,
$1.1 billion from BPP Asia and
co-investment,
$651.2 million from BPP U.S. and
co-investment
and $203.6 million from BPP Europe,
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o
$8.2 billion in our Credit & Insurance segment driven by $2.3 billion from certain long only and MLP strategies, $2.2 billion of capital raised from CLOs, $2.0 billion from direct lending, $890.4 million from BIS, $744.5 million from distressed strategies, $737.1 million from mezzanine funds and $409.0 million from our structured products group, all partially offset by $1.2 billion of allocations to various strategies in other segments, and
o
$5.8 billion in our Hedge Fund Solutions segment driven by $3.6 billion from individual investor and specialized solutions, $1.6 billion from customized solutions and $639.7 million from commingled products.
Offsetting these increases were:
Outflows of $19.3 billion primarily attributable to:
o
$7.2 billion in our Hedge Fund Solutions segment driven by $3.7 billion from individual investor and specialized solutions, $2.6 billion from customized solutions and $908.0 million from commingled products,
o
$5.6 billion in our Private Equity segment driven by $4.3 billion from corporate private equity primarily due to the end of BCP VII and BEP II’s investment periods, $705.2 million from Strategic Partners and $497.5 million from BXLS due to the end of Clarus IV’s investment period,
o
$4.8 billion in our Credit & Insurance segment driven by $4.2 billion from certain long only and MLP strategies and $257.8 million from distressed strategies, and
o
$1.7 billion in our Real Estate segment driven by $899.0 million from BREIT, $611.7 million from BREDS and $176.0 million from BPP U.S. and
co-investment.
Market activity of $(10.4) billion driven in large part by the market impacts of
COVID-19
on the fair value components of
Fee-Earning
Assets Under Management unless otherwise stated:
o
$5.2 billion of market depreciation in our Credit & Insurance segment driven by $4.0 billion from certain long only and MLP strategies, $612.3 million from distressed strategies and $198.1 million from direct lending, which included $14.4 million of foreign exchange depreciation across the segment,
o
$3.4 billion of market depreciation in our Hedge Fund Solutions segment driven by returns from BAAM’s Principal Solutions Composite of
-3.1%
gross
(-3.5%
net), and
o
$1.5 billion of market depreciation in our Real Estate segment driven by $887.5 million from core+ real estate (including $248.9 million from foreign exchange depreciation) and $653.2 million from BREDS.
Realizations of $8.9 billion primarily attributable to:
o
$3.7 billion in our Real Estate segment driven by $1.7 billion from core+ real estate, $1.5 billion from BREDS and $530.8 million$1.5 billion from BREP opportunistic funds and
co-investment,Core+ real estate.
o
$2.5 billion in our Credit & Insurance segment driven by $726.8 million from distressed strategies, $570.7 million from mezzanine funds, $494.5 million from CLOs, $416.3 million from direct lending and $300.1 million from certain long only and MLP strategies, and
o
$2.0 billion in our Private Equity segment driven by $898.3 million from Tactical Opportunities, $610.6 million from corporate private equity and $523.2 million from Strategic Partners.
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Total Assets Under Management
Total Assets Under Management were $564.3$684.0 billion at June 30, 2020,2021, an increase of $26.3$35.2 billion, compared to $538.0$648.8 billion at March 31, 2020.2021. The net increase was due to:
 
Market activityInflows of $21.8$37.3 billion primarily attributablerelated to:
 
 o
$7.918.9 billion in our Credit & Insurance segment driven by $9.5 billion from direct lending (which exceeds Fee-Earning Assets Under Management inflows principally due to certain funds charging fees on net assets versus gross assets), $4.3 billion from certain liquid credit and MLP strategies, $3.6 billion from CLOs, $2.0 billion from BIS, $981.3 million from mezzanine funds and $868.6 million from our structured products group, all partially offset by $2.4 billion of allocations to various strategies and other segments,
o
$8.9 billion in our Real Estate segment driven by $5.8 billion from BREIT, $1.2 billion from BREDS, $911.0 million from BPP Europe and co-investment, $437.2 million from BPP U.S. and co-investment, $243.8 million from BPP Life Sciences, $175.6 million from BREP opportunistic funds and $125.4 million from BPP Asia,
o
$7.3 billion in our Private Equity segment driven by $3.6 billion from Strategic Partners, $2.5 billion from corporate private equity and $1.1 billion from Tactical Opportunities, and
o
$2.2 billion in our Hedge Fund Solutions segment driven by $1.4 billion from individual investor and specialized solutions, $429.3 million from commingled products and $356.8 million from customized solutions.
Market activity of $29.2 billion primarily driven by:
o
$14.2 billion of market appreciation in our Private Equity segment driven by carrying value increases in corporate private equity, Tactical Opportunities and Strategic Partners of 12.8%13.8%, 10.8%7.2% and 3.8%17.7%, during the quarter, respectively, which included $37.0includes $68.4 million of foreign exchange appreciation across the segment,
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 o
$6.2 billion of market appreciation in our Credit & Insurance segment driven by $3.9 billion from certain long only and MLP strategies, $842.2 million from distressed strategies, $739.2 million from direct lending and $469.0 million from mezzanine funds, which included $336.4 million of foreign exchange appreciation across the segment,
o
$3.98.3 billion of market appreciation in our Real Estate segment driven by carrying value increases in opportunistic and core+Core+ real estate of 1.6%9.4% and 3.0%5.7%, during the quarter, respectively, which includes $1.0$452.1 million of foreign exchange appreciation across the segment,
o
$4.0 billion of market appreciation in our Credit & Insurance segment driven by appreciation of $2.5 billion from certain liquid credit and MLP strategies, $520.2 million from direct lending, $290.9 million from mezzanine funds, $262.2 million from CLOs, $213.9 million from stressed/distressed strategies and $180.0 million from energy strategies, all of which included $361.8 million of foreign exchange appreciation across the segment, and
 
 o
$3.82.7 billion of market appreciation in our Hedge Fund Solutions segment driven by reasons noted above in
Fee-Earning
Assets Under Management.
Total Assets Under Management market activity in our Real Estate and Private Equity segments generally represents the change in fair value of the investments held and typically exceeds the
Fee-Earning
Assets Under Management market activity.
Offsetting these increases were:
 
InflowsRealizations of $20.3$19.6 billion primarily attributable to:driven by:
 
 o
$6.98.6 billion in our Private Equity segment driven by $4.0 billion from corporate private equity, $2.6 billion from Strategic Partners and $1.8 billion from Tactical Opportunities,
o
$5.4 billion in our Credit & Insurance segment driven by $1.7$2.1 billion of capital raised from CLOs, $1.6$1.1 billion from direct lending, $1.6$1.1 billion from certain long only and MLPstressed/distressed strategies, $894.4$508.1 million from mezzanine funds, $322.2$355.6 million from BISenergy strategies and $306.0$173.1 million from our structured products group,certain liquid credit and MLP strategies, and
 
 o
$5.2 billion in our Private Equity segment driven by $3.2 billion from Strategic Partners, $888.0 million from BIP, $470.2 million from corporate private equity, $367.3 million from Tactical Opportunities and $294.5 million from BXLS,
o
$4.95.3 billion in our Real Estate segment driven by $2.9 billion from BREDS, $1.1 billion from BREIT, $515.8 million from BREP opportunistic funds and
co-investment,
$190.3 million from BPP U.S. and
co-investment
and $111.4 million from BPP Asia and co-investment, and
o
$3.3 billion in our Hedge Fund Solutions segment driven by $1.9 billion from individual investor and specialized solutions, $785.5 million from customized solutions and $604.9 million from commingled products.
Offsetting these increases were:
Outflows of $8.3 billion primarily attributable to:
o
$4.6 billion in our Hedge Fund Solutions segment driven by $2.2 billion from individual investor and specialized solutions, $1.5 billion from customized solutions and $955.9 million from commingled products,
o
$2.3 billion in our Credit & Insurance segment driven by $2.0 billion from certain long only and MLP strategies and $290.7 million from CLOs,
o
$713.9 million in our Real Estate segment driven by redemptions from BREIT, BREDS liquid funds and BPP U.S., and
o
$668.8 million in our Private Equity segment driven by $499.0 million from multi-asset products.
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Realizations of $7.4 billion primarily attributable to:
o
$3.0 billion in our Private Equity segment driven by $1.3 billion from corporate private equity, $875.6 million from Tactical Opportunities, $453.7 million from Strategic Partners and $399.3 million from BXLS,
o
$2.3 billion in our Real Estate segment driven by $1.2$4.0 billion from BREP opportunistic and
co-investment,
$698.2 $877.7 million from core+Core+ real estate and $350.8$461.4 million from BREDS,
o
$1.6 billion in our Credit & Insurance segment driven by $418.3 million from mezzanine funds, $282.4 million from direct lending, $258.9 million from CLOs and $145.5 million from certain long only and MLP strategies, andBREDS.
o
$516.8 million in our Hedge Fund Solutions segment driven by $513.3 million from individual investor and specialized solutions.
Total Assets Under Management realizations in our Real Estate and Private Equity segments generally represents the total proceeds and typically exceeds the
Fee-Earning
Assets Under Management realizations which generally represents only the invested capital.
Total Assets Under Management were $564.3 billion at June 30, 2020, a decrease of $6.8 billion, compared to $571.1 billion at December 31, 2019. The net decrease was due to:
 
Market activity
Outflows of $(25.4)$11.7 billion driven in large part by the market impacts of
COVID-19
on the fair value components of Total Assets Under Management unless otherwise noted:primarily attributable to:
 
 o
$7.77.3 billion of market depreciationin our Hedge Fund Solutions segment driven by $5.3 billion from customized solutions, $1.4 billion from commingled products and $587.9 million from individual investor and specialized solutions,
o
$2.7 billion in our Credit & Insurance segment driven by $1.5 billion from certain liquid credit and MLP strategies, $534.4 million from CLOs and $347.2 million from BIS, and
o
$1.1 billion on our Private Equity segment driven by $600.3 million from Tactical Opportunities and $183.2 million from multi-asset products.
Total Assets Under Management were $684.0 billion at June 30, 2021, an increase of $65.5 billion, or 11%, compared to $618.6 billion at December 31, 2020. The net increase was due to:
Inflows of $68.9 billion primarily related to:
o
$32.0 billion in our Credit & Insurance segment driven by $16.6 billion from direct lending (which exceeds Fee-Earning Assets Under Management inflows principally due to certain funds charging fees on net assets versus gross assets), $5.2 billion from certain liquid credit and MLP strategies, $3.7 billion from CLOs, $2.7 billion from our structured products group, $2.0 billion from BIS and $1.5 billion from mezzanine funds,
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o
$17.5 billion in our Real Estate segment driven by $9.3 billion from BREIT, $4.1 billion from BPP Life Sciences, $1.6 billion from BREDS, $1.0 billion from BPP Europe and co-investment, $639.3 million from BPP U.S. and co-investment, $533.1 million from BREP opportunistic funds and $286.4 million from BPP Asia,
o
$15.2 billion in our Private Equity segment driven by $6.2 billion from corporate private equity, $4.2 billion from Strategic Partners, $2.3 billion from Tactical Opportunities, $1.9 billion from BXG and $481.3 million from multi-asset products, and
o
$4.3 billion in our Hedge Fund Solutions segment driven by $3.0 billion from individual investor and specialized solutions, $654.9 million from customized solutions and $621.3 million from commingled products.
Market activity of $52.7 billion primarily driven by:
o
$29.5 billion of market appreciation in our Private Equity segment driven by carrying value decreasesincreases in opportunisticcorporate private equity, Tactical Opportunities and core+ real estateStrategic Partners of 7.6%29.0%, 22.1% and 1.1%28.7%, during the year, respectively, which includes $471.6$262.2 million of foreign exchange depreciation across the segment,
 
 o
$7.512.5 billion of market depreciationappreciation in our Credit & InsuranceReal Estate segment driven by $4.4carrying value increases in opportunistic and Core+ real estate of 14.9% and 9.0%, during the year, respectively, which includes $1.2 billion from certain long only and MLP strategies, $1.8 billion from distressed strategies, $554.1 million from mezzanine funds, $396.2 million from direct lending and $135.3 million from our structured products group, which included $65.6 million of foreign exchange depreciation across the segment,
o
$5.9 billion of market appreciation in our Credit & Insurance segment driven by appreciation of $3.1 billion from certain liquid credit and MLP strategies, $715.7 million from mezzanine funds, $908.8 million from direct lending, $596.1 million from stressed/distressed strategies and $534.5 million from energy strategies, all of which included $115.5 million of foreign exchange appreciation across the segment, and
 
 o
$6.84.9 billion of market depreciation in our Private Equity segment driven by carrying value decreases in corporate private equity and Tactical Opportunities of 12.4% and 6.1%, respectively, partially offset by a carrying value increase in Strategic Partners of 5.6%, which included $564.6 million of foreign exchange depreciation across the segment, and
o
$3.5 billion of market depreciationappreciation in our Hedge Fund Solutions segment driven by reasons noted above in
Fee-Earning
Assets Under Management.
Total Assets Under Management market activity in our Real Estate and Private Equity segments generally represents the change in fair value of the investments held and typically exceeds the Fee-Earning Assets Under Management market activity.
Offsetting these increases were:
 
OutflowsRealizations of $15.3$34.5 billion primarily attributable to:driven by:
 
 o
$7.516.7 billion in our Hedge Fund SolutionsPrivate Equity segment driven by $3.7$7.8 billion from individual investor and specialized solutions, $2.7corporate private equity, $4.2 billion from customized solutions and $1.1Strategic Partners, $4.1 billion from commingled products,Tactical Opportunities, $278.6 million from BXG, $162.3 million from BIP and $151.2 million from BXLS,
o
$10.0 billion in our Credit & Insurance segment driven by $2.9 billion from CLOs, $2.7 billion from direct lending, $1.9 billion from mezzanine funds, $1.6 billion from stressed/distressed strategies, $573.1 million from energy strategies and $347.5 million from certain liquid credit and MLP strategies, and
o
$7.3 billion in our Real Estate segment driven by $4.9 billion from BREP opportunistic and co-investment, $1.5 billion from Core+ real estate and $845.3 million from BREDS.
Total Assets Under Management realizations in our Real Estate and Private Equity segments generally represents the total proceeds and typically exceeds the Fee-Earning Assets Under Management realizations which generally represents only the invested capital.
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Outflows of $21.6 billion primarily attributable to:
 
 o
$5.28.9 billion in our Hedge Fund Solutions segment driven by $5.6 billion from customized solutions, $1.8 billion from individual investor and specialized solutions and $1.5 billion from commingled products,
o
$8.5 billion in our Credit & Insurance segment driven by $4.6$4.0 billion from certain long onlyliquid credit and MLP strategies, $339.8$2.6 billion from BIS, $588.7 million from direct lending, $587.0 million from CLOs, and $126.6$213.9 million from direct lending,stressed/distressed strategies, $141.4 million from our structured products group and $106.3 million from energy strategies,
 
 o
$1.52.4 billion in our Real Estate segment driven by redemptions$1.3 billion from BREIT,Core+ real estate, $738.8 million from BREDS liquidand $365.0 million from BREP opportunistic funds and BPP U.S.,co-investment, and
 
 o
$1.11.8 billion in our Private Equity segment driven by $537.1$845.1 million from Tactical Opportunities, $390.1 million from Strategic Partners, $281.5 million from multi-asset products $223.3and $160.0 million from corporate private equity and $202.0 million from Tactical Opportunities.equity.
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Realizations of $13.7 billion primarily attributable to:
o
$5.0 billion in our Private Equity segment driven by $2.0 billion from corporate private equity, $1.5 billion from Tactical Opportunities and $1.1 billion from Strategic Partners,
o
$4.8 billion in our Real Estate segment driven by $2.3 billion from BREP opportunistic and
co-investment,
$1.7 billion from core+ real estate and $835.0 million from BREDS, and
o
$3.3 billion in our Credit & Insurance segment driven by $979.0 million from mezzanine funds, $741.1 million from direct lending, $730.4 million from distressed strategies, $494.5 million from CLOs and $334.4 million from certain long only and MLP strategies.
Offsetting these decreases were:
Inflows of $47.6 billion primarily attributable to:
o
$17.5 billion in our Real Estate segment driven by $7.2 billion from BREDS, $6.3 billion from BREIT, $1.8 billion from BREP opportunistic funds and
co-investment,
$1.1 billion from BPP Asia and
co-investment,
$655.1 million from BPP U.S. and
co-investment
and $413.2 million from BPP Europe,
o
$14.1 billion in our Private Equity segment driven by $6.8 billion from corporate private equity, $3.8 billion from Strategic Partners, $1.4 billion from BXLS, $1.3 billion from Tactical Opportunities and $888.0 million from BIP,
o
$9.4 billion in our Credit & Insurance segment driven by $2.8 billion from certain long only and MLP strategies, $2.8 billion from direct lending, $2.2 billion of capital raised from CLOs, $1.1 billion from mezzanine funds, $890.4 million from BIS, $306.0 million from our structured products group and $196.9 million from distressed strategies, all partially offset by $1.0 billion of allocations to various strategies in other segments, and
o
$6.6 billion in our Hedge Fund Solutions segment driven by $4.0 billion from individual investor and specialized solutions, $1.8 billion from customized solutions and $844.3 million from commingled products.
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Dry Powder
The following presents our Dry Powder as of quarter end of each period:
 
 
 
Note:
Totals may not add due to rounding.
(a)
Represents illiquid drawdown funds, a component of Perpetual Capital and
fee-paying
co-investments;
includes
fee-paying
third party capital as well as general partner and employee capital that does not earn fees. Amounts are reduced by outstanding capital commitments, for which capital has not yet been invested.
Net Accrued Performance Revenues
Effective January 1, 2020, Net Accrued Performance Revenues has been redefined to exclude Performance Revenues realized but not yet distributed as of the reporting date. This update aligns the presentation of Distributable Earnings and Net Accrued Performance Revenues. Prior periods have been recast to reflect this definition.
The following table presents the Accrued Performance Revenues, net of performance compensation, of the Blackstone Funds as of June 30, 20202021 and 2019.2020. Net Accrued Performance Revenues presented doexcludes Performance Revenues realized but not includeyet distributed as of the respective quarter end and clawback amounts, if any, which are disclosed in Note 17. “Commitments and Contingencies — Contingencies — Contingent Obligations (Clawback)” in the “Notes to Condensed Consolidated Financial Statements” in “Part I. Item 1. Financial Statements” of this filing. The Net Accrued Performance Revenues as of each reporting date were principally unrealized; if realized, such amount would be a component of Distributable Earnings. See “—
Non-GAAP
Financial Measures” for our reconciliation of Net Accrued Performance Revenues.
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June 30,
 
   
2020
   
2019
 
   
      (Dollars in Millions)      
 
Real Estate
    
BREP IV
   $7    $11 
BREP V
   1    54 
BREP VI
   45    88 
BREP VII
   238    536 
BREP VIII
   604    517 
BREP IX
   6    — 
BREP International II
   —    25 
BREP Europe IV
   105    209 
BREP Europe V
   99    161 
BREP Asia I
   85    154 
BPP
   225    240 
BREIT
   —    36 
BREDS
   3    20 
BTAS
   22    41 
  
 
 
   
 
 
 
Total Real Estate (a)
   1,441    2,093 
  
 
 
   
 
 
 
Private Equity
    
BCP IV
   19    24 
BCP VI
   521    755 
BCP VII
   307    293 
BCP Asia
   18    6 
BEP I
   63    134 
BEP II
   —    54 
BEP III
   3    — 
BCEP
   43    30 
Tactical Opportunities
   55    128 
Strategic Partners
   155    98 
BXLS
   8    — 
BTAS/Other
   7    52 
  
 
 
   
 
 
 
Total Private Equity (a)
   1,199    1,573 
  
 
 
   
 
 
 
Hedge Fund Solutions
   26    64 
  
 
 
   
 
 
 
Credit & Insurance
   42    242 
  
 
 
   
 
 
 
Total Blackstone Net Accrued Performance Revenues
   $2,708    $3,973 
  
 
 
   
 
 
 
Note:
Totals may not add due to rounding.
(a)
Real Estate and Private Equity include
Co-Investments,
as applicable.
For the twelve months ended June 30, 2020, Net Accrued Performance Revenues receivable declined due to Net Accrued Performance Revenues of $(264.2) million and net realized distributions of $1.0 billion.
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Performance Eligible Assets Under Management
The following presents our Invested Performance Eligible Assets Under Management as of quarter end for each period:
Note:
Totals may not add due to rounding.
 
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Perpetual Capital
The following presents our Perpetual Capital as of quarter end for each period:
Note:
Totals may not add due to rounding.
Investment Record
Fund returns information for our significant funds is included throughout this discussion and analysis to facilitate an understanding of our results of operations for the periods presented. The fund returns information reflected in this discussion and analysis is not indicative of the financial performance of Blackstone and is also not necessarily indicative of the future performance of any particular fund. An investment in Blackstone is not an investment in any of our funds. There can be no assurance that any of our funds or our other existing and future funds will achieve similar returns.
The following table presents the investment record of our significant drawdown funds from inception through June 30, 2020:
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Unrealized Investments
 
Realized Investments
 
Total Investments
  
Fund (Investment Period
 
Committed
 
Available
     
%
         
Net IRRs (d)
Beginning Date / Ending Date) (a)
 
Capital
 
Capital (b)
 
Value
 
MOIC (c)
 
Public
 
Value
 
MOIC (c)
 
Value
 
MOIC (c)
 
Realized
 
Total
  
(Dollars in Thousands, Except Where Noted)
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   —   28,986    —     49%  4,544,926    2.2x  4,573,912    1.7x   28%   12% 
BREP V (Dec 2005 / Feb 2007)
 5,539,418   —   161,954    0.6x   36%  13,047,811    2.4x  13,209,765    2.3x   12%   11% 
BREP VI (Feb 2007 / Aug 2011)
 11,060,444   —   559,459    2.2x   71%  27,131,368    2.5x  27,690,827    2.5x   13%   13% 
BREP VII (Aug 2011 / Apr 2015)
 13,496,823   1,693,447   5,596,958    1.2x   6%  22,816,881    2.1x  28,413,839    1.9x   22%   15% 
BREP VIII (Apr 2015 / Jun 2019)
 16,567,310   2,644,464   17,563,805    1.4x   —  7,132,698    1.7x  24,696,503    1.5x   26%   12% 
*BREP IX (Jun 2019 / Dec 2024)
 20,891,658   14,814,901   6,240,053    1.0x   8%  983,331    1.4x  7,223,384    1.1x   N/M   8% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Global BREP
  $  72,996,816   $  19,152,812   $  30,151,215    1.2x   4%   $  83,191,933    2.2x   $113,343,148    1.8x   18%   15% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
BREP Int’l (Jan 2001 / Sep 2005)
  
€
        824,172  		 
€
                  —  		 
€
                  —  		  N/A   —  
€
      1,373,170  		  2.1x  
€
      1,373,170  		  2.1x   23%   23% 
BREP Int’l II (Sep 2005 / Jun 2008) (e)
 1,629,748   —   —    N/A   —  2,576,670    1.8x  2,576,670    1.8x   8%   8% 
BREP Europe III (Jun 2008 / Sep 2013)
 3,205,167   467,119   410,184    0.6x   —  5,737,320    2.5x  6,147,504    2.1x   20%   14% 
BREP Europe IV (Sep 2013 / Dec 2016)
 6,709,145   1,337,987   2,594,032    1.4x   —  8,988,619    2.0x  11,582,651    1.8x   23%   15% 
BREP Europe V (Dec 2016 / Oct 2019)
 7,949,959   1,595,473   7,454,498    1.2x   —  721,076    2.7x  8,175,574    1.3x   53%   8% 
*BREP Europe VI (Oct 2019 / Apr 2025)
 9,794,768   7,638,299   2,121,888    1.0x   10%  —    N/A  2,121,888    1.0x   N/M   N/M 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total BREP Europe
  
€
  30,112,959  		 
€
  11,038,878  		 
€
  12,580,602  		  1.2x   2%   
€
  19,396,855  		  2.1x   
€
  31,977,457  		  1.6x   16%   12% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
continued...
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Unrealized Investments
 
Realized Investments
 
Total Investments
  
Fund (Investment Period
 
Committed
 
Available
     
%
         
Net IRRs (d)
Beginning Date / Ending Date) (a)
 
Capital
 
Capital (b)
 
Value
 
MOIC (c)
 
Public
 
Value
 
MOIC (c)
 
Value
 
MOIC (c)
 
Realized
 
Total
  
(Dollars in Thousands, Except Where Noted)
Real Estate (continued)
 
BREP Asia I (Jun 2013 / Dec 2017)
 $      5,096,753 $    1,728,257 $    3,139,012  1.3x   11%  $      4,129,266  1.9x  $      7,268,278  1.6x   21%   11% 
*BREP Asia II (Dec 2017 / Jun 2023)
 7,302,307 4,416,827 3,054,983  1.1x   12%  207,162  1.5x  3,262,145  1.1x   36%   — 
BREP
Co-Investment
(f)
 7,055,974 154,594 1,787,693  2.4x   —  13,289,404  2.1x  15,077,097  2.1x   15%   16% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total BREP
 $  126,131,248 $  37,853,566 $  52,536,503  1.2x   4%  $  125,287,061  2.2x  $  177,823,564  1.8x   17%   15% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
*Core+ BPP (Various) (g)
 N/A N/A $  33,191,570  N/A   —  $       7,089,382  N/A  $    40,280,952  N/A   N/M   8% 
*Core+ BREIT (Various) (h)
 N/A N/A 17,384,357  N/A   —  465,068  N/A  17,849,425  N/A   N/A   7% 
*BREDS High-Yield (Various) (i)
 18,600,464 8,894,151 3,013,387  1.0x   —  12,492,057  1.3x  15,505,444  1.2x   11%   10% 
Private Equity
 
Corporate 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 11,891  N/A   —  2,953,649  1.4x  2,965,540  1.4x   6%   6% 
BCP IV (Nov 2002 / Dec 2005)
 6,773,182 195,824 161,183  2.2x   —  21,417,821  2.9x  21,579,004  2.9x   36%   36% 
BCP V (Dec 2005 / Jan 2011)
 21,013,658 1,039,805 627,552  0.7x   45%  37,166,512  1.9x  37,794,064  1.9x   9%   8% 
BCP VI (Jan 2011 / May 2016)
 15,202,400 1,239,853 9,921,527  1.4x   43%  16,493,176  2.1x  26,414,703  1.8x   18%   11% 
BCP VII (May 2016 / Feb 2020)
 18,865,679 3,397,863 18,925,185  1.3x   1%  1,685,595  1.8x  20,610,780  1.3x   47%   10% 
*BCP VIII (Feb 2020 / Feb 2026)
 24,985,447 24,985,447 —  N/A   —  —  N/A  —  N/A   N/A  N/A 
Energy I (Aug 2011 / Feb 2015)
 2,441,558 157,049 1,211,172  1.2x   61%  2,744,604  1.9x  3,955,776  1.6x   17%   10% 
Energy II (Feb 2015 / Feb 2020)
 4,914,044 263,873 3,447,078  0.8x   9%  332,436  2.0x  3,779,514  0.8x   58%   -15% 
*Energy III (Feb 2020 / Feb 2026)
 4,227,166 4,087,226 127,103  1.8x   45%  —  N/A  127,103  1.8x   N/A   N/M 
*BCP Asia (Dec 2017 / Dec 2023)
 2,394,966 1,393,730 1,241,822  1.3x   15%  54,308  1.7x  1,296,130  1.3x   92%   14% 
*Core Private Equity (Jan 2017 / Jan 2021) (j)
 4,756,707 1,381,730 4,260,653  1.2x   —  418,053  1.6x  4,678,706  1.3x   36%   10% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Corporate Private Equity
 $  113,899,740 $  38,166,975 $  39,935,166  1.2x   16%  $    97,449,399  2.1x  $  137,384,565  1.7x   16%   14% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
continued...
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Unrealized Investments
 
Realized Investments
 
Total Investments
  
Fund (Investment Period
 
Committed
 
Available
     
%
         
Net IRRs (d)
Beginning Date / Ending Date) (a)
 
Capital
 
Capital (b)
 
Value
 
MOIC (c)
 
Public
 
Value
 
MOIC (c)
 
Value
 
MOIC (c)
 
Realized
 
Total
  
(Dollars in Thousands, Except Where Noted)
Private Equity (continued)
 
Tactical Opportunities
 
*Tactical Opportunities (Various)
  $ 22,555,525  $  8,618,210  $  9,886,307  1.0x   8%   $  10,267,342  1.7x   $20,153,649  1.3x   18%   7% 
*Tactical Opportunities
Co-Investment
and Other (Various)
 8,515,156 2,201,908 5,435,077  1.3x   4%  2,075,769  1.5x  7,510,846  1.4x   22%   14% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Tactical Opportunities
  $ 31,070,681  $10,820,118  $15,321,384  1.1x   7%   $  12,343,111  1.7x   $27,664,495  1.3x   19%   9% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Strategic Partners (Secondaries)
 
Strategic Partners
I-V
(Various) (k)
 $ 11,865,053  $  1,696,017  $      933,357  N/M   —   $  16,866,422  N/M  $17,799,779  1.5x   N/A   13% 
Strategic Partners VI (Apr 2014 / Apr 2016) (k)
 4,362,750 1,201,160 1,423,216  N/M   —  3,244,976  N/M  4,668,192  1.5x   N/A   15% 
Strategic Partners VII (May 2016 / Mar 2019) (k)
 7,489,970 2,511,941 5,499,667  N/M   —  1,812,567  N/M  7,312,234  1.5x   N/A   20% 
Strategic Partners Real Assets II (May 2017 / Jun 2020) (k)
 1,749,807 264,740 1,161,342  N/M   —  394,475  N/M  1,555,817  1.2x   N/A   16% 
*Strategic Partners VIII (Mar 2019 / Jul 2023) (k)
 10,763,600 5,469,228 3,418,251  N/M   —  188,363  N/M  3,606,614  1.4x   N/A   58% 
*Strategic Partners Real Estate, SMA and Other (Various) (k)
 7,678,402 2,963,642 2,742,203  N/M   —  1,354,601  N/M  4,096,804  1.3x   N/A   17% 
*Strategic Partners Infra III (Jun 2020 / Jul 2024) (k)
 3,240,000 2,941,474 —  N/A   —  —  N/A  —  N/A   N/A   N/A 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Strategic Partners (Secondaries)
  $ 47,149,582  $17,048,202  $15,178,036  N/M   —   $ 23,861,404  N/M   $39,039,440  1.5x   N/A   14% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
*Infrastructure (Various)
  $ 13,658,063  $11,307,674  $  2,201,896  0.9x   1%   $                 —  N/A   $  2,201,896  0.9x   N/A   -11% 
Life Sciences
 
Clarus IV (Jan 2018 / Jan 2020)
 910,000 440,014 570,869  1.4x   2%  20,207  1.3x  591,076  1.4x   6%   18% 
*BXLS V (Jan 2020 / Jan 2025)
 4,385,171 4,182,973 240,675  1.2x   8%  —  N/A  240,675  1.2x   N/A   N/M 
continued...
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Unrealized Investments
 
Realized Investments
 
Total Investments
  
Fund (Investment Period
 
Committed
 
Available
     
%
         
Net IRRs (d)
Beginning Date / Ending Date) (a)
 
Capital
 
Capital (b)
 
Value
 
 MOIC (c) 
 
     Public     
 
Value
 
MOIC (c)
 
Value
 
 MOIC (c) 
    
 Realized 
      
    Total    
  
(Dollars in Thousands, Except Where Noted)
Credit (l)
 
Mezzanine / Opportunistic I (Jul 2007 / Oct 2011)
  $  2,000,000    $       97,114    $         15,554    0.8x   —    $   4,774,329    1.6x    $   4,789,883    1.6x   N/A          17% 
Mezzanine / Opportunistic II (Nov 2011 / Nov 2016)
 4,120,000   1,033,255   884,201    0.6x   —  5,492,318    1.6x  6,376,519    1.3x   N/A   9% 
*Mezzanine / Opportunistic III (Sep 2016 / Sep 2021)
 6,639,133   2,497,919   4,260,490    1.0x   —  2,202,749    1.6x  6,463,239    1.2x   N/A   8% 
Stressed / Distressed I (Sep 2009 / May 2013)
 3,253,143   76,000   10,770    —     —  5,772,930    1.6x  5,783,700    1.3x   N/A   9% 
Stressed / Distressed II (Jun 2013 / Jun 2018)
 5,125,000   555,590   903,246    0.6x   1%  4,376,500    1.2x  5,279,746    1.0x   N/A   -3% 
*Stressed / Distressed III (Dec 2017 / Dec 2022)
 7,356,380   4,167,110   1,720,727    0.8x   —  1,217,223    1.4x  2,937,950    1.0x   N/A   -9% 
Energy I (Nov 2015 / Nov 2018)
 2,856,867   1,072,376   1,409,774    0.9x   —  1,046,757    1.7x  2,456,531    1.1x   N/A   2% 
*Energy II (Feb 2019 / Feb 2024)
 3,616,081   3,017,574   621,160    1.0x   —  176,873    1.4x  798,033    1.1x   N/A   12% 
Euro
 
European Senior Debt I (Feb 2015 / Feb 2019)
 
 
€
  1,964,689  
 
 
€
     305,089  
 
 
€
   
  
1,661,274  
  1.0x   2%  
 
€
 
  
 1,376,818  
  1.5x  
 
€
 
  
 3,038,092  
  1.1x   N/A   4% 
*European Senior Debt II (Jun 2019 / Jun 2024)
 
 
€
  4,088,344  
 
 
€
  3,672,670  
 
 
€
        413,190  
  1.0x   —  
 
€
       101,399  
  1.5x  
 
€
       514,589  
  1.1x   N/A   N/M 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Credit
  $41,872,262    $16,984,573    $  12,155,856            0.8x              —   $ 26,728,090            1.5x   $ 38,883,946            1.2x       N/A   8% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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The returns presented herein represent those of the applicable Blackstone Funds and not those of Blackstone.
N/M
Not meaningful generally due to the limited time since initial investment.
N/A
Not applicable.
*  
Represents funds that are currently in their investment period and open-ended funds.
(a)
Excludes investment vehicles where Blackstone does not earn fees.
(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 Performance Revenues, divided by invested capital.
(d)
Net Internal Rate of Return (“IRR”) represents the annualized inception to June 30, 2020 IRR on total invested capital based on realized proceeds and unrealized value, as applicable, after management fees, expenses and Performance Revenues. IRRs are calculated using actual timing of limited partner cash flows. Initial inception date cash flow may differ from the Investment Period Beginning Date.
(e)
The 8% 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 7% Realized Net IRR and a 7% Total Net IRR.
(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 Performance Revenues.
(g)
BPP represents the core+ real estate funds which invest with a more modest risk profile and lower leverage. Committed Capital and Available Capital are not regularly reported to investors in our core+ strategy and are not applicable in the context of these funds.
(h)
Unrealized Investment Value reflects BREIT’s net asset value as of June 30, 2020. Realized Investment Value represents BREIT’s cash distributions, net of servicing fees. BREIT net return reflects a per share blended return, assuming BREIT had a single share class, reinvestment of all dividends received during the period, and no upfront selling commission, net of all fees and expenses incurred by BREIT. These returns are not representative of the returns experienced by any particular investor or share class. Inception to date net returns are presented on an annualized basis and are from January 1, 2017. Committed Capital and Available Capital are not regularly reported to investors in our core+ strategy and are not applicable in the context of this vehicle.
(i)
BREDS High-Yield represents the flagship real estate debt drawdown funds only and excludes BREDS High-Grade.
(j)
Blackstone Core Equity Partners is a core private equity fund which invests with a more modest risk profile and longer hold period than traditional private equity.
(k)
Realizations are treated as return of capital until fully recovered and therefore unrealized and realized MOICs are not meaningful. If information is not available on a timely basis, returns are calculated from results that are reported on a three month lag and therefore do not include the impact of economic and market activities in the quarter in which such events occur.
(l)
Funds presented represent the flagship credit drawdown funds only. The Total Credit Net IRR is the combined IRR of the credit drawdown funds presented.
Segment Analysis
Discussed below is our Segment Distributable Earnings for each of our segments. This information is reflected in the manner utilized by our senior management to make operating decisions, assess performance and allocate resources. References to “our” sectors or investments may also refer to portfolio companies and investments of the underlying funds that we manage.
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Real Estate
The following table presents the results of operations for our Real Estate segment:
                                                                                                                        
  
Three Months Ended
     
Six Months Ended
    
  
June 30,
 
2020 vs. 2019
 
June 30,
 
2020 vs. 2019
  
2020
 
2019
 
$
 
%
 
2020
 
2019
 
$
 
%
  
(Dollars in Thousands)
Management Fees, Net        
Base Management Fees $382,704  $255,636  $127,068   50%  $754,142  $515,881  $238,261   46% 
Transaction and Other Fees, Net  32,039   23,990   8,049   34%   55,063   47,901   7,162   15% 
Management Fee Offsets  (2,436)   (1,686)   (750)   44%   (10,777)   (1,966)   (8,811)   448% 
                                
Total Management Fees, Net  412,307   277,940   134,367   48%   798,428   561,816   236,612   42% 
Fee Related Performance Revenues  6,505   11,072   (4,567)   -41%   11,056   17,748   (6,692)   -38% 
Fee Related Compensation  (116,640)   (97,795)   (18,845)   19%   (236,936)   (212,611)   (24,325)   11% 
Other Operating Expenses  (44,525)   (40,114)   (4,411)   11%   (85,001)   (79,100)   (5,901)   7% 
                                
Fee Related Earnings  257,647   151,103   106,544   71%   487,547   287,853   199,694   69% 
                                
Realized Performance Revenues  34,209   198,573   (164,364)   -83%   77,929   275,755   (197,826)   -72% 
Realized Performance Compensation  (12,547)   (67,742)   55,195   -81%   (25,939)   (97,642)   71,703   -73% 
Realized Principal Investment Income  1,573   47,420   (45,847)   -97%   8,873   45,289   (36,416)   -80% 
                                
Net Realizations  23,235   178,251   (155,016)   -87%   60,863   223,402   (162,539)   
      -73
% 
                                
Segment Distributable Earnings $      280,882  $      329,354  $      (48,472)   
        -15
%  $      548,410  $      511,255  $      37,155   7% 
                                
N/M    Not meaningful.
Three Months Ended June 30, 2020 Compared to Three Months Ended June 30, 2019
Segment Distributable Earnings were $280.9 million for the three months ended June 30, 2020, a decrease of $48.5 million, compared to $329.4 million for the three months ended June 30, 2019. The decrease in Segment Distributable Earnings was primarily attributable to a decrease of $155.0 million in Net Realizations, partially offset by an increase of $106.5 million in Fee Related Earnings.
Segment Distributable Earnings in our Real Estate segment in the second quarter of 2020 were lower compared to the second quarter of 2019. This was primarily driven by decreased Net Realizations, partially offset by increased Fee Related Earnings due to the launch of the BREP IX and BREP Europe VI investment periods and growth in
Fee-Earning
Assets Under Management in our core+ real estate funds. Despite significant market rebounds across many asset classes in the second quarter of 2020, the ongoing
COVID-19
pandemic and related shutdowns of
non-essential
businesses, including as a result of persistent or accelerating infection levels in some regions, have caused severe disruption in the U.S. and global economies. This has adversely impacted, and will likely continue to adversely impact, the performance of our Real Estate segment, particularly as a result of declines in the unrealized valuations of certain investments in sectors that are materially challenged as a result of
COVID-19.
Although approximately 80% of our aggregate global real estate portfolio in BREP and core+ real estate businesses is in sectors that we believe are more resilient to the impact of
COVID-19,
certain of our investments, such as those in the hospitality and retail sectors and certain geographies in the office and residential sectors, have been materially challenged and could continue to be adversely impacted. Furthermore, global growth will be significantly negatively impacted by the
COVID-19
pandemic. Although economic recovery is partially underway, it is likely to be gradual, uneven, and characterized by meaningful dispersion across sectors and regions, and the ultimate length of the recovery is uncertain. This uncertainty poses further material risk to the Real Estate segment, including by potentially creating additional pressure on certain of our portfolio companies’ and investments’ liquidity needs and their ability to meet financial obligations, and by making the prediction of the extent to which rent collection and operational performance will be impacted over the longer term difficult. The
COVID-19
pandemic and such other conditions have limited and are expected to continue to limit realization
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opportunities for our Real Estate segment at least in the near term, which would adversely impact Realized Performance Revenues in future periods. Nevertheless, a continuing market recovery like that experienced in the second quarter of 2020 should be positive for realizations over time. The
COVID-19
pandemic has also caused significant dislocation and, at times, limited the liquidity of certain assets traded in the credit markets. A sustained period of such dislocation would, like it did in the first quarter of 2020, impact the value of certain assets held by our funds, such funds’ ability to sell assets at attractive prices or in a timely manner in order to avoid losses and the likelihood of margin calls from credit providers. In addition, given recent market turbulence and continuing uncertainty, we expect fundraising in our Real Estate segment to continue, but now at a slower pace, which may result in a delay in management fees.
Overall, although operating trends in the majority of our Real Estate portfolio have remained resilient and
supply-demand
fundamentals have remained positive in most markets to date, the ultimate impact of the
COVID-19
pandemic and decelerating growth in certain sectors, including retail and hospitality, is highly uncertain. To the extent that growth further decelerates, this would contribute to a more challenging operating environment. We have also seen an increasing focus in certain markets in the U.S. and Europe toward rent regulation as a means to address residential affordability caused by undersupply of housing. Such conditions (which may be across industries, sectors or geographies) may contribute to adverse operating performance, including by moderating rent growth in certain markets in our residential portfolio. See “Part II. Item 1A. Risk Factors — The global outbreak of the novel coronavirus, or
COVID-19,
has caused severe disruptions in the U.S. and global economies and is adversely impacting, and may continue to adversely impact, our performance and results of operations.” in our Quarterly Report on Form
10-Q
for the quarter ended March 31, 2020 and the market and economic conditions risk factors in our Annual Report on Form
10-K
for the year ended December 31, 2019.
Fee Related Earnings
Fee Related Earnings were $257.6 million for the three months ended June 30, 2020, an increase of $106.5 million, or 71%, compared to $151.1 million for the three months ended June 30, 2019. The increase in Fee Related Earnings was primarily attributable to an increase of $134.4 million in Management Fees, Net, partially offset by an increase of $18.8 million in Fee Related Compensation.
Management Fees, Net were $412.3 million for the three months ended June 30, 2020, an increase of $134.4 million, compared to $277.9 million for the three months ended June 30, 2019, primarily driven by an increase in Base Management Fees. Base Management Fees increased $127.1 million primarily due to the launch of the investment periods of BREP IX and BREP Europe VI, which commenced in the second and fourth quarters of 2019, respectively, and
Fee-Earning
Assets Under Management growth in our core+ real estate funds.
Fee Related Compensation was $116.6 million for the three months ended June 30, 2020, an increase of $18.8 million, compared to $97.8 million for the three months ended June 30, 2019. The increase was primarily due to an increase in Management Fees, Net on which a portion of Fee Related Compensation is based.
Net Realizations
Net Realizations were $23.2 million for the three months ended June 30, 2020, a decrease of $155.0 million, compared to $178.3 million for the three months ended June 30, 2019. The decrease in Net Realizations was primarily attributable to decreases of $164.4 million in Realized Performance Revenues and $45.8 million in Realized Principal Investment Income, partially offset by a decrease of $55.2 million in Realized Performance Compensation.
Realized Performance Revenues were $34.2 million for the three months ended June 30, 2020, a decrease of $164.4 million, compared to $198.6 million for the three months ended June 30, 2019. The decrease was due to lower realized gains in the three months ended June 30, 2020 compared to the three months ended June 30, 2019.
Realized Principal Investment Income was $1.6 million for the three months ended June 30, 2020, a decrease of $45.8 million, compared to $47.4 million for the three months ended June 30, 2019. The decrease was due to lower Realized Principal Investment Income in BREDS and BREP.
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Realized Performance Compensation was $12.5 million for the three months ended June 30, 2020, a decrease of $55.2 million, compared to $67.7 million for the three months ended June 30, 2019. The decrease was due to the decrease in Realized Performance Revenues.
Six Months Ended June 30, 2020 Compared to Six Months Ended June 30, 2019
Segment Distributable Earnings were $548.4 million for the six months ended June 30, 2020, an increase of $37.2 million, compared to $511.3 million for the six months ended June 30, 2019. The increase in Segment Distributable Earnings was primarily attributable to an increase of $199.7 million in Fee Related Earnings, partially offset by a decrease of $162.5 million in Net Realizations.
Fee Related Earnings
Fee Related Earnings were $487.5 million for the six months ended June 30, 2020, an increase of $199.7 million, or 69%, compared to $287.9 million for the six months ended June 30, 2019. The increase in Fee Related Earnings was primarily attributable to an increase of $236.6 million in Management Fees, Net, partially offset by an increase of $24.3 million in Fee Related Compensation.
Management Fees, Net were $798.4 million for the six months ended June 30, 2020, an increase of $236.6 million, compared to $561.8 million for the six months ended June 30, 2019, primarily driven by an increase in Base Management Fees. Base Management Fees increased $238.3 million primarily due to the launch of the investment periods of BREP IX and BREP Europe VI, which commenced in the second and fourth quarters of 2019, respectively, and
Fee-Earning
Assets Under Management growth in core+ real estate.
The annualized Base Management Fee Rate increased from 1.03% at June 30, 2019 to 1.15% at June 30, 2020. The increase was principally due to a full quarter of Base Management Fees in BREP IX, the majority of which were under a Base Management Fee holiday in the second quarter of 2019, and a full quarter of Base Management Fees for BREP Europe VI, which commenced its investment period in the fourth quarter of 2019.
Fee Related Compensation was $236.9 million for the six months ended June 30, 2020, an increase of $24.3 million, compared to $212.6 million for the six months ended June 30, 2019. The increase was primarily due to an increase in Management Fees, Net on which a portion of Fee Related Compensation is based.
Net Realizations
Net Realizations were $60.9 million for the six months ended June 30, 2020, a decrease of $162.5 million, compared to $223.4 million for the six months ended June 30, 2019. The decrease in Net Realizations was primarily attributable to decreases of $197.8 million in Realized Performance Revenues and $36.4 million in Realized Principal Investment Income, partially offset by a decrease of $71.7 million in Realized Performance Compensation.
Realized Performance Revenues were $77.9 million for the six months ended June 30, 2020, a decrease of $197.8 million, compared to $275.8 million for the six months ended June 30, 2019. The decrease was due to lower realized gains in the six months ended June 30, 2020 compared to the six months ended June 30, 2019.
Realized Principal Investment Income was $8.9 million for the six months ended June 30, 2020, a decrease of $36.4 million, compared to $45.3 million for the six months ended June 30, 2019. The decrease was primarily due to lower Realized Principal Investment Income in BREDS.
Realized Performance Compensation was $25.9 million for the six months ended June 30, 2020, a decrease of $71.7 million, compared to $97.6 million for the six months ended June 30, 2019. The decrease was due to the decrease in Realized Performance Revenues.
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Fund Returns
Fund return information for our significant funds is included throughout this discussion and analysis to facilitate an understanding of our results of operations for the periods presented. The fund returns information reflected in this discussion and analysis is not indicative of the financial performance of Blackstone and is also not necessarily indicative of the future performance of any particular fund. An investment in Blackstone is not an investment in any of our funds. There can be no assurance that any of our funds or our other existing and future funds will achieve similar returns.
The following table presents the internal rates of return, except where noted, of our significant real estate funds:
   
Three Months Ended
  
Six Months Ended
  
June 30, 2020
   
June 30,
  
June 30,
  
Inception to Date
   
2020
  
2019
  
2020
  
2019
  
Realized
  
Total
Fund (a)
  
Gross
  
Net
  
Gross
  
Net
  
Gross
  
Net
  
Gross
  
Net
  
Gross
  
Net
  
Gross
  
Net
BREP IV
   5%    5%    49%    30%    -30%    -29%    40%    27%    48%    28%    22%    12% 
BREP V
   14%    13%    9%    8%    -35%    -31%    16%    13%    15%    12%    14%    11% 
BREP VI
   -    -    14%    13%    -20%    -18%    15%    13%    18%    13%    17%    13% 
BREP VII
   -9%    -8%    4%    3%    -22%    -20%    10%    8%    30%    22%    21%    15% 
BREP VIII
   4%    3%    4%    3%    -4%    -3%    7%    5%    36%    26%    19%    12% 
BREP IX
   10%    9%    N/M    N/M    8%    3%    N/M    N/M    N/M    N/M    20%    8% 
BREP International II (b)(c)
   N/M    N/M    8%    -6%    N/M    N/M    140%    66%    10%    8%    10%    8% 
BREP Europe III (b)
   -7%    -6%    1%    1%    -3%    -3%    1%    -    30%    20%    23%    14% 
BREP Europe IV (b)
   -5%    -5%    -    -    -13%    -12%    5%    4%    31%    23%    21%    15% 
BREP Europe V (b)
   1%    1%    5%    3%    -7%    -6%    10%    7%    69%    53%    14%    8% 
BREP Asia I
   -    -    5%    4%    -15%    -13%    10%    8%    29%    21%    18%    11% 
BREP Asia II
   3%    2%    7%    5%    -6%    -7%    14%    8%    58%    36%    9%    - 
BREP
Co-Investment
(d)
   16%    15%    9%    9%    13%    13%    25%    23%    17%    15%    18%    16% 
BPP (e)
   2%    2%    1%    1%    -    -    4%    3%    N/M    N/M    10%    8% 
BREDS High-Yield (f)
   5%    4%    3%    3%    -7%    -7%    8%    6%    15%    11%    14%    10% 
BREDS High-Grade (f)
   -    -    2%    2%    -2%    -3%    4%    3%    8%    7%    4%    3% 
BREDS Liquid (g)
   3%    3%    2%    2%    -19%    -19%    8%    7%    N/A    N/A    9%    6% 
BXMT (h)
   N/A    33%    N/A    5%    N/A    -32%    N/A    16%    N/A    N/A    N/A    7% 
BREIT (i)
   N/A    4%    N/A    3%    N/A    -4%    N/A    5%    N/A    N/A    N/A    7% 
The returns presented herein represent those of the applicable Blackstone Funds and not those of Blackstone.
N/M
Not meaningful generally due to the limited time since initial investment.
N/A
Not applicable.
(a)
Net returns are based on the change in carrying value (realized and unrealized) after management fees, expenses and Performance Revenues.
(b)
Euro-based internal rates of return.
(c)
The 8% Realized Net IRR and 8% Total Net IRR Inception to Date exclude investors that opted out of the Hilton investment opportunity. Overall BREP International II Performance reflects a 7% Realized Net IRR and a 7% Total Net IRR.
(d)
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 Performance Revenues.
(e)
BPP represents the core+ real estate funds which invest with a more modest risk profile and lower leverage.
(f)
BREDS High-Yield represents the flagship real estate debt drawdown funds and excludes the BREDS High-Grade drawdown fund, which has a different risk-return profile. Inception to date returns are from July 1, 2009 and July 1, 2017 for BREDS High-Yield and BREDS High-Grade, respectively.
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(g)
BREDS Liquid represents BREDS funds that invest in liquid real estate debt securities, except funds in liquidation and insurance mandates with specific investment objectives. The returns presented represent summarized asset-weighted gross and net rates of return from August 1, 2008. Inception to Date returns are presented on an annualized basis.
(h)
Reflects annualized return of a shareholder invested in BXMT as of the beginning of each period presented, assuming reinvestment of all dividends received during the period, and net of all fees and expenses incurred by BXMT. Return incorporates the closing NYSE stock price as of each period end. Inception to date returns are from May 22, 2013.
(i)
Effective September 30, 2019, the BREIT return reflects a per share blended return for each respective period, assuming BREIT had a single share class, reinvestment of all dividends received during the period, and no upfront selling commission, net of all fees and expenses incurred by BREIT. These returns are not representative of the returns experienced by any particular investor or share class. Inception to date returns are presented on an annualized basis and are from January 1, 2017. Prior periods have been updated to reflect BREIT’s per share blended return. The BREIT returns presented in filings prior to September 30, 2019 were for BREIT’s Class S investors.
Real Estate segment has eleven funds with closed investment periods as of June 30, 2020: BREP VIII, BREP VII, BREP VI, BREP V, BREP IV, BREP Europe V, BREP Europe IV, BREP Europe III, BREP Asia, BREDS III and BREDS II. As of June 30, 2020, BREP VII, BREP VI, BREP V, BREP IV, BREP Europe IV, BREP Europe III and BREDS II were above their carried interest thresholds and would still be above their carried interest thresholds even if all remaining investments were valued at zero. BREP VIII, BREP Europe V and BREP Asia are currently above their carried interest thresholds. BREDS III is currently not above its carried interest threshold.
Private Equity
The following table presents the results of operations for our Private Equity segment:
                                                                                                                                                 
  
Three Months Ended
     
Six Months Ended
    
  
June 30,
 
2020 vs. 2019
 
June 30,
 
2020 vs. 2019
  
2020
 
2019
 
$
 
%
 
2020
 
2019
 
$
 
%
  
(Dollars in Thousands)
Management and Advisory Fees, Net                                
Base Management Fees $268,070  $265,139  $2,931   1%  $522,044  $484,556  $37,488   8% 
Transaction, Advisory and Other Fees, Net  9,521   31,526   (22,005)   -70%   30,934   68,817   (37,883)   -55% 
Management Fee Offsets  (8,031)   (17,689)   9,658   -55%   (17,246)   (22,674)   5,428   -24% 
                                 
Total Management and Advisory Fees, Net  269,560   278,976   (9,416)   -3%   535,732   530,699   5,033   1% 
Fee Related Compensation  (92,825)   (105,107)   12,282   -12%   (203,193)   (212,694)   9,501   -4% 
Other Operating Expenses  (44,827)   (40,429)   (4,398)   11%   (85,828)   (74,630)   (11,198)   15% 
                                 
Fee Related Earnings
  131,908   133,440   (1,532)   -1%   246,711   243,375   3,336   1% 
                                 
Realized Performance Revenues  64,513   122,907   (58,394)   -48%   176,589   279,506   (102,917)   -37% 
Realized Performance Compensation  (25,016)   (52,081)   27,065   -52%   (79,659)   (102,637)   22,978   -22% 
Realized Principal Investment Income  17,416   42,906   (25,490)   -59%   27,763   68,045   (40,282)   -59% 
                                 
Net Realizations
  56,913   113,732   (56,819)   -50%   124,693   244,914   (120,221)   -49% 
                                 
Segment Distributable Earnings
 $      188,821  $      247,172  $      (58,351)   
      -24
%  $      371,404  $      488,289  $      (116,885)   
      -24
% 
                                 
N/M
Not meaningful.
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Three Months Ended June 30, 2020 Compared to Three Months Ended June 30, 2019
Segment Distributable Earnings were $188.8 million for the three months ended June 30, 2020, a decrease of $58.4 million, compared to $247.2 million for the three months ended June 30, 2019. The decrease in Segment Distributable Earnings was primarily attributable to decreases of $1.5 million in Fee Related Earnings and $56.8 million in Net Realizations.
Segment Distributable Earnings in our Private Equity segment in the second quarter of 2020 were lower compared to the second quarter of 2019. This was primarily driven by a decrease in Net Realizations due to lower Realized Performance Revenue and Realized Principal Investment Income. Despite significant market rebounds across many asset classes in the second quarter of 2020, the ongoing
COVID-19
pandemic and related shutdowns of
non-essential
businesses, including as a result of persistent or accelerating infection levels in some regions, have caused severe disruption in the U.S. and global economies. This has adversely impacted and will likely continue to adversely impact the performance of our Private Equity segment, particularly as a result of declines in the unrealized valuations of investments in industries impacted by the
COVID-19
pandemic. Although approximately 70% of our aggregate
non-energy
portfolio in our corporate private funds is in sectors that we believe are more resilient to the impact of
COVID-19,
certain of our investments, such as those in the travel, leisure and events sectors, have experienced material reductions in value and could continue to be adversely impacted. Furthermore, global growth will be significantly negatively impacted by the
COVID-19
pandemic. Although economic recovery is partially underway, it is likely to be gradual, uneven, and characterized by meaningful dispersion across sectors and regions, and the ultimate length of the recovery is uncertain. This uncertainty poses further material risk to the Private Equity segment, including by potentially creating additional pressure on certain of our portfolio companies’ liquidity needs and their ability to meet financial obligations. The
COVID-19
pandemic and such other conditions (which may be across industries, sectors or geographies) may contribute to adverse operating performance at our portfolio companies, and have limited and are expected to continue to limit realization opportunities for our Private Equity segment at least in the near term, which would adversely impact Realized Performance Revenues in future periods. Nevertheless, a continuing market recovery like that experienced in the second quarter of 2020 should be positive for realizations over time. In addition, given recent market turbulence and continuing uncertainty, we expect fundraising in our Private Equity segment to continue, but now at a slower pace, which may result in a delay in new management fees.
In energy, equity and credit markets rebounded significantly in the second quarter of 2020, but weakened market fundamentals continue to pose challenges, particularly in upstream energy. Upstream energy represents 3% of the Private Equity segment’s investment portfolio and less than 2% of Blackstone’s aggregate investment portfolio. An increased focus on energy sustainability, including potential alternatives to fossil fuels, has also exacerbated the impact of such weakened market fundamentals. The persistence of these weakened market fundamentals would further negatively impact the performance of certain investments in our energy and corporate private equity funds. In addition, factors such as the imposition of tariffs and overall uncertainty regarding trade policy, create challenges to increasing or maintaining profit margins for U.S. companies, particularly in the industrials and retail sectors. In that connection, adverse trade developments put pressure on our ability to increase profit margins at our U.S. portfolio companies through operational initiatives. See “Part II. Item 1A. Risk Factors — The global outbreak of the novel coronavirus, or
COVID-19,
has caused severe disruptions in the U.S. and global economies and is adversely impacting, and may continue to adversely impact, our performance and results of operations.” in our Quarterly Report on Form
10-Q
for the quarter ended March 31, 2020 and the market and economic conditions risk factors in our Annual Report on Form
10-K
for the year ended December 31, 2019.
Fee Related Earnings
Fee Related Earnings were $131.9 million for the three months ended June 30, 2020, a decrease of $1.5 million, compared to $133.4 million for the three months ended June 30, 2019. The decrease in Fee Related Earnings was primarily attributable to a decrease of $9.4 million in Management and Advisory Fees, Net and an increase of $4.4 million in Other Operating Expenses, partially offset by a decrease of $12.3 million in Fee Related Performance Compensation.
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Management and Advisory Fees, Net were $269.6 million for the three months ended June 30, 2020, a decrease of $9.4 million, compared to $279.0 million for the three months ended June 30, 2019, primarily driven by a decrease in Transaction, Advisory and Other Fees, Net. Transaction, Advisory and Other Fees decreased $22.0 million primarily due to a decrease in BXCM.
Other Operating Expenses were $44.8 million for the three months ended June 30, 2020, an increase of $4.4 million, compared to $40.4 million for the three months ended June 30, 2019. The increase was primarily due to growth in our BIP, Tactical Opportunities and BXLS businesses, partially offset by less travel and entertainment expenses in the three months ended June 30, 2020 due to COVID-19.
Fee Related Compensation was $92.8 million for the three months ended June 30, 2020, a decrease of $12.3 million, compared to $105.1 million for the three months ended June 30, 2019. The decrease was primarily due to a decrease in Management and Advisory Fees, Net on which a portion of Fee Related Compensation is based.
Net Realizations
Net Realizations were $56.9 million for the three months ended June 30, 2020, a decrease of $56.8 million, compared to $113.7 million for the three months ended June 30, 2019. The decrease in Net Realizations was primarily attributable to decreases of $58.4 million in Realized Performance Revenues and $25.5 million in Realized Principal Investment Income, partially offset by a decrease of $27.1 million in Realized Performance Compensation.
Realized Performance Revenues were $64.5 million for the three months ended June 30, 2020, a decrease of $58.4 million, compared to $122.9 million for the three months ended June 30, 2019. The decrease was primarily due to lower Realized Performance Revenues in Tactical Opportunities and corporate private equity.
Realized Principal Investment Income was $17.4 million for the three months ended June 30, 2020, a decrease of $25.5 million, compared to $42.9 million for the three months ended June 30, 2019. The decrease was primarily due to a decrease in Realized Principal Investment Income in corporate private equity.
Realized Performance Compensation was $25.0 million for the three months ended June 30, 2020, a decrease of $27.1 million, compared to $52.1 million for the three months ended June 30, 2019. The decrease was due to the decrease in Realized Performance Revenues.
Six Months Ended June 30, 2020 Compared to Six Months Ended June 30, 2019
Segment Distributable Earnings were $371.4 million for the six months ended June 30, 2020, a decrease of $116.9 million, compared to $488.3 million for the six months ended June 30, 2019. The decrease in Segment Distributable Earnings was primarily attributable to a decrease of $120.2 million in Net Realizations, partially offset by an increase of $3.3 million in Fee Related Earnings.
Fee Related Earnings
Fee Related Earnings were $246.7 million for the six months ended June 30, 2020, an increase of $3.3 million, compared to $243.4 million for the six months ended June 30, 2019. The increase in Fee Related Earnings was primarily attributable to a decrease of $9.5 million in Fee Related Compensation and an increase of $5.0 million in Management and Advisory Fees, Net, partially offset by an increase of $11.2 million in Other Operating Expenses.
Fee Related Compensation was $203.2 million for the six months ended June 30, 2020, a decrease of $9.5 million, compared to $212.7 million for the six months ended June 30, 2019. The decrease was primarily due to a decrease of Revenues in corporate private equity.
Management and Advisory Fees, Net were $535.7 million for the six months ended June 30, 2020, an increase of $5.0 million, compared to $530.7 million for the six months ended June 30, 2019, primarily driven by an increase in Base Management Fees, offset by a decrease in Transaction, Advisory and Other Fees, Net. Base Management Fees increased $37.5 million primarily due to an increase in
Fee-Earning
Assets Under Management in Strategic Partners as a result of the launch of the investment period of Strategic Partners VIII. Transaction, Advisory and Other Fees, Net decreased $37.9 million primarily due to decreases in BIP and BXCM.
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The annualized Base Management Fee Rate decreased from 1.11% at June 30, 2019 to 0.88% at June 30, 2020. The decrease was principally due to fee holidays in BCP VIII, BEP III and BXLS V, each of which commenced its investment period in the first quarter of 2020.
Other Operating Expenses were $85.8 million for the six months ended June 30, 2020, an increase of $11.2 million, compared to $74.6 million for the six months ended June 30, 2019. The increase was primarily due to growth in our BIP, Tactical Opportunities and BXLS businesses, partially offset by less travel and entertainment expenses in the three months ended June 30, 2020 due to
COVID-19.
Net Realizations
Net Realizations were $124.7 million for the six months ended June 30, 2020, a decrease of $120.2 million, compared to $244.9 million for the six months ended June 30, 2019. The decrease in Net Realizations was primarily attributable to decreases of $102.9 million in Realized Performance Revenues and $40.3 million in Realized Principal Investment Income, partially offset by a decrease of $23.0 million in Realized Performance Compensation.
Realized Performance Revenues were $176.6 million for the six months ended June 30, 2020, a decrease of $102.9 million, compared to $279.5 million for the six months ended June 30, 2019. The decrease was primarily due to lower Realized Performance Revenues in corporate private equity and Tactical Opportunities.
Realized Principal Investment Income was $27.8 million for the six months ended June 30, 2020, a decrease of $40.3 million, compared to $68.0 million for the six months ended June 30, 2019. The decrease was primarily due to a decrease of Realized Principal Investment Income in corporate private equity.
Realized Performance Compensation was $79.7 million for the six months ended June 30, 2020, a decrease of $23.0 million, compared to $102.6 million for the six months ended June 30, 2019. The decrease was due to the decrease in Realized Performance Revenues.
Fund Returns
Fund returns information for our significant funds is included throughout this discussion and analysis to facilitate an understanding of our results of operations for the periods presented. The fund returns information reflected in this discussion and analysis is not indicative of the financial performance of Blackstone and is also not necessarily indicative of the future performance of any particular fund. An investment in Blackstone is not an investment in any of our funds. There can be no assurance that any of our funds or our other existing and future funds will achieve similar returns.
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The following table presents the internal rates of return of our significant private equity funds:
   
Three Months Ended
  
Six Months Ended
  
June 30, 2020
   
June 30,
  
June 30,
  
Inception to Date
   
2020
  
2019
  
2020
  
2019
  
Realized
  
Total
Fund (a)
  
Gross
  
Net
  
Gross
  
Net
  
Gross
  
Net
  
Gross
  
Net
  
Gross
  
Net
  
Gross
  
Net
BCP IV
   -10%    -10%    -3%    -2%    -11%    -10%    41%    33%    50%    36%    50%    36% 
BCP V
   15%    3%    -6%    -3%    -15%    -7%    -4%    -1%    11%    9%    10%    8% 
BCP VI
   27%    22%    -2%    -2%    -10%    -9%    4%    3%    24%    18%    15%    11% 
BCP VII
   6%    4%    6%    4%    -7%    -7%    10%    7%    66%    47%    18%    10% 
BCP Asia
   4%    3%    N/M    N/M    3%    1%    N/M    N/M    190%    92%    32%    14% 
BEP I
   47%    34%    1%    1%    -22%    -20%    12%    11%    22%    17%    13%    10% 
BEP II
   13%    13%    -2%    -2%    -38%    -38%    -2%    -3%    79%    58%    -10%    -15% 
BCOM
   4%    4%    -12%    -12%    -12%    -12%    -20%    -20%    13%    6%    13%    6% 
BCEP (b)
   4%    4%    8%    7%    -2%    -2%    13%    11%    41%    36%    13%    10% 
BIP
   3%    3%    N/M    N/M    -9%    -10%    N/M    N/M    N/A    N/A    -6%    -11% 
Clarus IV
   -    -    N/M    N/M    2%    1%    N/M    N/M    23%    6%    36%    18% 
Tactical Opportunities
   12%    9%    1%    -    -9%    -5%    5%    3%    22%    18%    11%    7% 
Tactical Opportunities
Co-Investment
and Other
   9%    9%    1%    -    -    -    4%    1%    26%    22%    16%    14% 
Strategic Partners
I-V
(c)
   1%    1%    -7%    -7%    3%    3%    -6%    -6%    N/A    N/A    16%    13% 
Strategic Partners VI (c)
   -    -    -6%    -6%    -1%    -2%    -4%    -4%    N/A    N/A    20%    15% 
Strategic Partners VII (c)
   3%    3%    -4%    -4%    3%    2%    2%    2%    N/A    N/A    25%    20% 
Strategic Partners RA II (c)
   4%    4%    6%    4%    8%    7%    11%    8%    N/A    N/A    22%    16% 
Strategic Partners VIII (c)
   8%    5%    N/M    N/M    12%    9%    N/M    N/M    N/A    N/A    81%    58% 
Strategic Partners RE, SMA and Other (c)
   5%    5%    3%    3%    7%    7%    6%    6%    N/A    N/A    20%    17% 
The returns presented herein represent those of the applicable Blackstone Funds and not those of Blackstone.
N/M
Not meaningful generally due to the limited time since initial investment.
N/A
Not applicable.
(a)
Net returns are based on the change in carrying value (realized and unrealized) after management fees, expenses and Performance Revenues.
(b)
BCEP is a core private equity fund which invests with a more modest risk profile and longer hold period than traditional private equity.
(c)
Realizations are treated as return of capital until fully recovered and therefore inception to date realized returns are not applicable. If information is not available on a timely basis, returns are calculated from results that are reported on a three month lag and therefore do not include the impact of economic and market activities in the quarter in which such events occur.
The corporate private equity funds within the Private Equity segment have seven funds with closed investment periods: BCP IV, BCP V, BCP VI, BCP VII, BCOM, BEP I and BEP II. As of June 30, 2020, BCP IV was above its carried interest threshold (i.e., the preferred return payable to its limited partners before the general partner is eligible to receive carried interest) and would still be above its carried interest threshold even if all remaining investments were valued at zero. BCP V is comprised of two fund classes based on the timings of fund closings, the BCP V “main fund” and
BCP V-AC
fund. Within these fund classes, the general partner is subject to equalization such that (a) the general partner accrues carried interest when the respective carried interest for either fund class is positive and (b) the general partner realizes carried interest so long as clawback obligations, if any, for either of
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the respective fund classes are fully satisfied. During the quarter, BCP V is currently below its carried interest threshold, while
BCP V-AC
is above its carried interest threshold. BCP VI, BCP VII and BEP I are currently above their respective carried interest thresholds. BCOM is currently above its carried interest threshold. We are entitled to retain previously realized carried interest up to 20% of BCOM’s net gains. As a result, Performance Revenues are recognized from BCOM on current period gains and losses. BEP II is currently below its respective carried interest threshold.
   
June 30,
 
   
2021
   
2020
 
   
      (Dollars in Millions)      
 
Real Estate
          
BREP IV
  $19   $7 
BREP V
   26    1 
BREP VI
   42    45 
BREP VII
   300    238 
BREP VIII
   626    604 
BREP IX
   359    6 
BREP Europe IV
   89    105 
BREP Europe V
   312    99 
BREP Europe VI
   60    — 
BREP Asia I
   107    85 
BREP Asia II
   98    — 
BPP
   265    225 
BREIT
   247    — 
BREDS
   32    3 
BTAS
   6    22 
   
 
 
   
 
 
 
Total Real Estate (a)
   2,591    1,441 
   
 
 
   
 
 
 
Private Equity
          
BCP IV
   9    19 
BCP V
   39    — 
BCP VI
   740    521 
BCP VII
   1,351    307 
BCP VIII
   89    — 
BCP Asia I
   213    18 
BEP I
   28    63 
BEP III
   47    3 
BCEP I
   170    43 
Tactical Opportunities (b)
   432    55 
Strategic Partners
   262    155 
BIP
   81    — 
BXLS
   23    8 
BTAS/Other
   151    7 
   
 
 
   
 
 
 
Total Private Equity (a)
   3,637    1,199 
   
 
 
   
 
 
 
Hedge Fund Solutions
30026
The following table presents the results of operations for our Hedge Fund Solutions segment:
Credit & Insurance
23342
Total Blackstone Net Accrued Performance Revenues
$6,761$2,708
Note:
Totals may not add due to rounding.
(a)
Real Estate and Private Equity include co-investments, as applicable.
(b)
Tactical Opportunities includes Blackstone Growth.
For the twelve months ended June 30, 2021, Net Accrued Performance Revenues receivable increased due to Net Performance Revenues of $6.1 billion offset by net realized distributions of $2.0 billion.
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Invested Performance Eligible Assets Under Management
The following presents our Invested Performance Eligible Assets Under Management as of quarter end for each period:

Note:
Totals may not add due to rounding.
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Perpetual Capital
The following presents our Perpetual Capital Total Assets Under Management as of quarter end for each period:

Note:
Totals may not add due to rounding.
Investment Records
Fund returns information for our significant funds is included throughout this discussion and analysis to facilitate an understanding of our results of operations for the periods presented. The fund returns information reflected in this discussion and analysis is not indicative of the financial performance of Blackstone and is also not necessarily indicative of the future performance of any particular fund. An investment in Blackstone is not an investment in any of our funds. There can be no assurance that any of our funds or our other existing and future funds will achieve similar returns.
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The following table presents the investment record of our significant drawdown funds from inception through June 30, 2021:
             
             
      
Unrealized Investments
 
Realized Investments
 
Total Investments
  
Fund (Investment Period
 
Committed
 
Available
     
%
         
Net IRRs (d)
Beginning Date / Ending Date) (a)
 
Capital
 
Capital (b)
 
Value
 
MOIC (c)
 
Public
 
Value
 
MOIC (c)
 
Value
 
MOIC (c)
 
Realized
 
Total
  
(Dollars/Euros in Thousands, Except Where Noted)
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   — 67,097    1.3x   56%  4,579,740    1.7x  4,646,837    1.7x   13%   12% 
BREP V (Dec 2005 / Feb 2007)
 5,539,418   231,857 255,300    1.1x   58%  13,090,349    2.4x  13,345,649    2.3x   12%   11% 
BREP VI (Feb 2007 / Aug 2011)
 11,060,444   550,596 493,096    2.3x   77%  27,272,291    2.5x  27,765,387    2.5x   13%   13% 
BREP VII (Aug 2011 / Apr 2015)
 13,496,823   1,525,932 5,918,553    1.3x   6%  23,280,621    2.1x  29,199,174    1.9x   22%   14% 
BREP VIII (Apr 2015 / Jun 2019)
 16,576,617   2,571,042 14,572,997    1.3x   —  14,848,690    2.4x  29,421,687    1.7x   29%   15% 
*BREP IX (Jun 2019 / Dec 2024)
 21,007,890   11,839,168 12,675,878    1.4x   7%  1,585,131    1.7x  14,261,009    1.4x   n/m   29% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Global BREP
  $   73,122,355    $  16,718,595  $  33,982,921    1.4x   6%   $  92,191,740    2.3x   $  126,174,661    1.9x   18%   16% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
BREP Int’l (Jan 2001 / Sep 2005)
  
€
        824,172  		  
€
                  —		  
€
                  —  		  n/a   —   
€
    1,373,170  		  2.1x   
€
      1,373,170  		  2.1x   23%   23% 
BREP Int’l II (Sep 2005 / Jun 2008) (e)
 1,629,748   — —    n/a   —  2,576,670    1.8x  2,576,670    1.8x   8%   8% 
BREP Europe III (Jun 2008 / Sep 2013)
 3,205,167   460,260 339,108    0.5x   —  5,738,120    2.5x  6,077,228    2.1x   20%   14% 
BREP Europe IV (Sep 2013 / Dec 2016)
 6,675,950   1,328,875 2,226,614    1.4x   —  9,238,374    1.9x  11,464,988    1.8x   20%   14% 
BREP Europe V (Dec 2016 / Oct 2019)
 7,937,730   1,579,708 8,147,321    1.4x   —  1,530,272    2.5x  9,677,593    1.5x   41%   11% 
*BREP Europe VI (Oct 2019 / Apr 2025)
 9,835,049   6,410,782 3,935,114    1.2x   2%  9,200    n/a  3,944,314    1.2x   n/m   13% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total BREP Europe
  
€
  30,107,816  		  
€
    9,779,625		  
€
  14,648,157  		  1.3x   1%   
€
  20,465,806  		  2.1x   
€
    35,113,963  		  1.7x   16%   12% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
continued...
93
Table of Contents
             
             
      
Unrealized Investments
 
Realized Investments
 
Total Investments
  
Fund (Investment Period
 
Committed
 
Available
     
%
         
Net IRRs (d)
Beginning Date / Ending Date) (a)
 
Capital
 
Capital (b)
 
Value
 
MOIC (c)
 
Public
 
Value
 
MOIC (c)
 
Value
 
MOIC (c)
 
Realized
 
Total
  
(Dollars/Euros in Thousands, Except Where Noted)
Real Estate (continued)
 
BREP Asia I (Jun 2013 / Dec 2017)
 $      4,261,983 $       916,901 $    2,505,476  1.4x   17%  $      5,788,923  2.1x  $       8,294,399  1.8x   21%   13% 
*BREP Asia II (Dec 2017 / Jun 2023)
 7,349,172 3,091,837 5,381,616  1.3x   5%  491,184  1.7x  5,872,800  1.3x   55%   11% 
BREP Co-Investment (f)
 7,055,974 32,158 670,425  1.6x   1%  14,812,488  2.2x  15,482,913  2.2x   16%   16% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total BREP
  $  127,579,181  $  32,356,170  $  59,378,266  1.3x   5%   $  138,957,222  2.2x   $  198,335,488  1.9x   17%   15% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
*Core+ BPP (Various) (g)
 $                  n/a $                n/a  $  48,143,297  n/a   —   $      8,480,471  n/a   $    56,623,768  n/a   n/a   9% 
*Core+ BREIT (Various) (h)
 n/a n/a 31,518,967  n/a   —  1,008,038  n/a  32,527,005  n/a   n/a   11% 
*BREDS High-Yield (Various) (i)
 19,991,125 7,767,589 5,179,211  1.1x   —  13,732,462  1.3x  18,911,673  1.2x   11%   10% 
Private Equity
 
Corporate 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 16,589  n/a   —  2,953,649  1.4x  2,970,238  1.4x   6%   6% 
BCP IV (Nov 2002 / Dec 2005)
 6,773,182 179,524 118,662  1.3x   —  21,478,010  2.9x  21,596,672  2.8x   36%   36% 
BCP V (Dec 2005 / Jan 2011)
 21,009,112 1,035,259 553,720  37.5x   98%  37,876,327  1.9x  38,430,047  1.9x   8%   8% 
BCP VI (Jan 2011 / May 2016)
 15,202,246 1,164,816 11,003,889  2.0x   52%  20,142,109  2.1x  31,145,998  2.1x   17%   13% 
BCP VII (May 2016 / Feb 2020)
 18,846,349 1,622,124 27,335,958  1.8x   34%  5,130,267  1.9x  32,466,225  1.8x   29%   21% 
*BCP VIII (Feb 2020 / Feb 2026)
 24,884,732 21,948,631 4,226,476  1.5x   6%  —  n/a  4,226,476  1.5x   n/a   n/m 
Energy I (Aug 2011 / Feb 2015)
 2,441,558 142,138 728,983  1.4x   64%  3,618,876  1.9x  4,347,859  1.8x   14%   11% 
Energy II (Feb 2015 / Feb 2020)
 4,914,647 833,132 4,214,573  1.3x   20%  1,197,747  0.9x  5,412,320  1.2x   -8%   2% 
*Energy III (Feb 2020 / Feb 2026)
 4,257,011 3,679,798 1,091,715  2.1x   75%  238,516  2.0x  1,330,231  2.0x   94%   95% 
*BCP Asia I (Dec 2017 / Dec 2023)
 2,414,503 1,370,026 3,079,369  3.1x   58%  603,472  4.8x  3,682,841  3.3x   97%   65% 
BCP Asia II (TBD)
 5,243,475 5,243,475 —  n/a   —  —  n/a  —  n/a   n/a   n/a 
Core Private Equity I (Jan 2017 / Mar 2021) (j)
 4,756,020 1,076,792 7,024,913  1.8x   —  1,284,639  2.3x  8,309,552  1.9x   31%   25% 
*Core Private Equity II (Mar 2021 / Mar 2026) (j)
 8,165,403 8,156,099 (4,266)  n/a   —  —  n/a  (4,266)  n/a   n/a   n/a 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Corporate Private Equity
  $  127,233,171  $  46,476,389  $  59,390,581  1.8x   33%   $  108,706,857  2.1x   $  168,097,438  2.0x   16%   15% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
continued...
94
Table of Contents
             
             
      
Unrealized Investments
 
Realized Investments
 
Total Investments
  
Fund (Investment Period
 
Committed
 
Available
     
%
         
Net IRRs (d)
Beginning Date / Ending Date) (a)
 
Capital
 
Capital (b)
 
Value
 
MOIC (c)
 
Public
 
Value
 
MOIC (c)
 
Value
 
MOIC (c)
 
Realized
 
Total
  
(Dollars/Euros in Thousands, Except Where Noted)
Private Equity (continued)
 
Tactical Opportunities
 
*Tactical Opportunities (Various)
  $   22,862,522 $    7,088,393  $  14,979,562  1.5x   20%   $ 14,307,619  1.8x   $ 29,287,181  1.6x   17%   13% 
*Tactical Opportunities Co-Investment and Other (Various)
 9,238,885 1,445,766 4,253,052  1.4x   6%  6,072,437  1.6x  10,325,489  1.5x   20%   16% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Tactical Opportunities
  $   32,101,407 $    8,534,159  $  19,232,614  1.5x   17%   $  20,380,056  1.7x   $ 39,612,670  1.6x   18%   14% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
*Blackstone Growth (Jul 2020 / Jul 2025)
 $     4,761,851 $    3,500,609  $    2,101,698  1.6x   46%  $       220,087  3.8x  $   2,321,785  1.7x   n/m   n/m 
Strategic Partners (Secondaries)
 
Strategic Partners I-V (Various) (k)
 11,863,351 1,047,300 722,607  n/m   —  17,234,545  n/m  17,957,152  1.6x   n/a   13% 
Strategic Partners VI (Apr 2014 / Apr 2016) (k)
 4,362,750 1,316,363 1,278,661  n/m   —  3,596,948  n/m  4,875,609  1.5x   n/a   15% 
Strategic Partners VII (May 2016 / Mar 2019) (k)
 7,489,970 2,049,841 5,268,290  n/m   —  3,509,459  n/m  8,777,749  1.6x   n/a   20% 
Strategic Partners Real Assets II (May 2017 / Jun 2020) (k)
 1,749,807 379,942 1,047,927  n/m   —  535,504  n/m  1,583,431  1.2x   n/a   12% 
*Strategic Partners VIII (Mar 2019 / Jul 2023) (k)
 10,763,600 5,454,255 5,691,944  n/m   —  1,991,266  n/m  7,683,210  1.5x   n/a   44% 
*Strategic Partners Real Estate, SMA and Other (Various) (k)
 7,878,498 2,537,778 2,999,839  n/m   —  2,015,737  n/m  5,015,576  1.3x   n/a   15% 
*Strategic Partners Infra III (Jun 2020 / Jul 2024) (k)
 3,250,100 2,627,042 101,030  n/m   —  14,819  n/a  115,849  1.7x   n/a   n/m 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Strategic Partners (Secondaries)
  $  47,358,076  $ 15,412,521  $  17,110,298  n/m   —   $ 28,898,278  n/m   $ 46,008,576  1.5x   n/a   15% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
*Infrastructure (Various)
 $  13,658,063 $   9,103,132  $    6,168,496  1.4x   49%  $                 —  n/a  $   6,168,496  1.4x   n/a   20% 
Life Sciences
 
Clarus IV (Jan 2018 / Jan 2020)
 910,000 275,501 821,098  1.5x   5%  34,970  0.8x  856,068  1.5x   -27%   16% 
*BXLS V (Jan 2020 / Jan 2025)
 4,772,543 4,124,567 822,115  1.4x   15%  —  n/a  822,115  1.4x   n/a   n/m 
continued...
95
Table of Contents
             
             
      
Unrealized Investments
 
Realized Investments
 
Total Investments
  
Fund (Investment Period
 
Committed
 
Available
     
%
         
Net IRRs (d)
Beginning Date / Ending Date) (a)
 
Capital
 
Capital (b)
 
Value
 
MOIC (c)
 
Public
 
Value
 
MOIC (c)
 
Value
 
MOIC (c)
 
Realized
 
Total
  
(Dollars/Euros in Thousands, Except Where Noted)
Credit
 
Mezzanine / Opportunistic I (Jul 2007 / Oct 2011)
  $       2,000,000   $         97,114   $         20,784    1.1x   —     $    4,775,786    1.6x   $     4,796,570    1.6x   n/a   17% 
Mezzanine / Opportunistic II (Nov 2011 / Nov 2016)
 4,120,000   1,013,932   876,247    0.6x   —    5,787,118    1.6x  6,663,365    1.3x   n/a   10% 
Mezzanine / Opportunistic III (Sep 2016 / Jan 2021)
 6,639,133   1,073,044   5,120,278    1.1x   —    3,756,163    1.7x  8,876,441    1.3x   n/a   11% 
*Mezzanine / Opportunistic IV (Jan 2021 / Jan 2026)
 3,738,771   3,304,044   444,960    1.0x   —    5,321    n/a  450,281    1.0x   n/a   n/a 
Stressed / Distressed I (Sep 2009 / May 2013)
 3,253,143   76,000   —    n/a   —    5,776,922    1.3x  5,776,922    1.3x   n/a   9% 
Stressed / Distressed II (Jun 2013 / Jun 2018)
 5,125,000   547,430   642,546    0.7x   —    4,956,906    1.2x  5,599,452    1.1x   n/a   1% 
*Stressed / Distressed III (Dec 2017 / Dec 2022)
 7,356,380   3,665,909   2,142,557    1.0x   —    2,002,481    1.4x  4,145,038    1.1x   n/a   8% 
Energy I (Nov 2015 / Nov 2018)
 2,856,867   1,003,583   1,437,797    1.0x   —    1,523,775    1.6x  2,961,572    1.3x   n/a   8% 
*Energy II (Feb 2019 / Feb 2024)
 3,616,081   2,639,556   1,109,599    1.1x   —    338,649    1.7x  1,448,248    1.2x   n/a   27% 
European Senior Debt I (Feb 2015 / Feb 2019)
  
€
    1,964,689  		 
€
       262,076  		 
€
    1,403,591  		  1.0x   —     
€
    1,824,750  		  1.4x   
€
    3,228,341  		  1.2x   n/a   6% 
*European Senior Debt II (Jun 2019 / Jun 2024)
  
€
    4,088,344  		 
€
    3,344,258  		 
€
    1,777,997  		  1.0x   —     
€
       581,142  		  1.2x   
€
    2,359,139  		  1.1x   n/a   19% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Credit Drawdown Funds (l)
  $  45,611,033   $  17,697,364   $  15,567,813    1.0x   —     $  31,707,914    1.4x   $  47,275,727    1.3x   n/a   10% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
*Direct Lending BDC (Various) (m)
  $    3,926,295   $       356,250   $    3,741,102    n/a   —     $       379,307    n/a   $    4,120,409    n/a   n/a   10% 
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Table of Contents
The returns presented herein represent those of the applicable Blackstone Funds and not those of Blackstone.
 
                                                                                                                        
   
Three Months Ended
      
Six Months Ended
    
   
June 30,
 
2020 vs. 2019
  
June 30,
 
2020 vs. 2019
   
2020
 
2019
 
$
 
%
  
2020
 
2019
 
$
 
%
   
(Dollars in Thousands)
Management Fees, Net          
Base Management Fees  $145,455  $136,990  $8,465   6%   $285,111  $274,318  $10,793   4% 
Transaction and Other Fees, Net   859   723   136   19%    1,617   1,041   576   55% 
Management Fee Offsets   4   —   4   N/M    (38)   —   (38)   N/M 
                                  
Total Management Fees, Net   146,318   137,713   8,605   6%    286,690   275,359   11,331   4% 
Fee Related Compensation   (40,353)   (36,622)   (3,731)   10%    (86,544)   (79,576)   (6,968)   9% 
Other Operating Expenses   (17,807)   (21,112)   3,305   -16%    (36,474)   (38,997)   2,523   -6% 
                                  
Fee Related Earnings   88,158   79,979   8,179   10%    163,672   156,786   6,886   4% 
                                  
Realized Performance Revenues   1,482   11,960   (10,478)   -88%    3,249   16,051   (12,802)   -80% 
Realized Performance Compensation   —   (2,175)   2,175   -100%    (945)   (3,588)   2,643   -74% 
Realized Principal Investment Income (Loss)   (331)   12,306   (12,637)   N/M    (940)   12,023   (12,963)   N/M 
                                  
Net Realizations   1,151   22,091   (20,940)   -95%    1,364   24,486   (23,122)   -94% 
                                  
Segment Distributable Earnings  $      89,309  $      102,070  $      (12,761)   
      -13%
   $      165,036  $      181,272  $      (16,236)   
      -9%
 
                                  
n/m
Not meaningful generally due to the limited time since initial investment.
n/a
Not applicable.
SMA
Separately managed account.
*
Represents funds that are currently in their investment period and open-ended funds.
(a)
Excludes investment vehicles where Blackstone does not earn fees.
(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 Performance Revenues, divided by invested capital.
(d)
Unless otherwise indicated, Net Internal Rate of Return (“IRR”) represents the annualized inception to June 30, 2021 IRR on total invested capital based on realized proceeds and unrealized value, as applicable, after management fees, expenses and Performance Revenues. IRRs are calculated using actual timing of limited partner cash flows. Initial inception date of cash flows may differ from the Investment Period Beginning Date.
(e)
The 8% 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 7% Realized Net IRR and a 7% Total Net IRR.
(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 Performance Revenues.
(g)
BPP represents the Core+ real estate funds which invest with a more modest risk profile and lower leverage. Committed Capital and Available Capital are not regularly reported to investors in our Core+ strategy and are not applicable in the context of these funds.
(h)
Unrealized Investment Value reflects BREIT’s net asset value as of June 30, 2021. Realized Investment Value represents BREIT’s cash distributions, net of servicing fees. The BREIT net return reflects a per share blended return, assuming BREIT had a single share class, reinvestment of all dividends received during the period, and no upfront selling commission, net of all fees and expenses incurred by BREIT. These returns are not representative of the returns experienced by any particular investor or share class. Inception to date net returns are presented on an annualized basis and are from January 1, 2017. Committed Capital and Available Capital are not regularly reported to investors in our Core+ strategy and are not applicable in the context of this vehicle.
(i)
BREDS High-Yield represents the flagship real estate debt drawdown funds only and excludes BREDS High-Grade.
(j)
Blackstone Core Equity Partners is a core private equity strategy which invests with a more modest risk profile and longer hold period than traditional private equity.
(k)
Realizations are treated as return of capital until fully recovered and therefore unrealized and realized MOICs are not meaningful. If information is not available on a timely basis, returns are calculated from results that are reported on a three month lag and therefore do not include the impact of economic and market activities in the quarter in which such events occur.
(l)
Funds presented represent the flagship credit drawdown funds only. The Total Credit Net IRR is the combined IRR of the credit drawdown funds presented.
(m)
Unrealized Investment Value reflects BXSL’s net asset value as of June 30, 2021. Realized Investment Value represents BXSL’s cash distributions. BXSL’s net return is annualized and calculated since inception starting on November 20, 2018, as the change in net asset value (“NAV”) per share during the period, plus distributions per share (assuming dividends and distributions are reinvested in accordance with the Company’s dividend reinvestment plan) divided by the beginning NAV per share.
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Table of Contents
Segment Analysis
Discussed below is our Segment Distributable Earnings for each of our segments. This information is reflected in the manner utilized by our senior management to make operating decisions, assess performance and allocate resources. References to “our” sectors or investments may also refer to portfolio companies and investments of the underlying funds that we manage.
Real Estate
The following table presents the results of operations for our Real Estate segment:
                                                                                                                                                 
  
Three Months Ended
     
Six Months Ended
    
  
June 30,
 
2021 vs. 2020
 
June 30,
 
2021 vs. 2020
  
2021
 
2020
 
$
 
%
 
2021
 
2020
 
$
 
%
  
(Dollars in Thousands)
Management Fees, Net
                                
Base Management Fees
 $453,664  $382,704  $70,960   19%  $880,850  $754,142  $126,708   17% 
Transaction and Other Fees, Net
  38,080   32,039   6,041   19%   64,099   55,063   9,036   16% 
Management Fee Offsets
  (493)   (2,436)   1,943   -80%   (2,116)   (10,777)   8,661   -80% 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Management Fees, Net
  491,251   412,307   78,944   19%   942,833   798,428   144,405   18% 
Fee Related Performance Revenues
  33,776   6,505   27,271   419%   189,168   11,056   178,112   n/m 
Fee Related Compensation
  (121,957)   (116,640)   (5,317)   5%   (310,449)   (236,936)   (73,513)   31% 
Other Operating Expenses
  (54,760)   (44,525)   (10,235)   23%   (99,122)   (85,001)   (14,121)   17% 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fee Related Earnings
  348,310   257,647   90,663   35%   722,430   487,547   234,883   48% 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Realized Performance Revenues
  351,053   34,209   316,844   926%   439,691   77,929   361,762   464% 
Realized Performance Compensation
  (154,928)   (12,547)   (142,381)   n/m   (177,690)   (25,939)   (151,751)   585% 
Realized Principal Investment Income
  28,129   1,573   26,556   n/m   128,949   8,873   120,076   n/m 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net Realizations
  224,254   23,235   201,019   865%   390,950   60,863   330,087         542% 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Segment Distributable Earnings
 $      572,564  $      280,882  $      291,682         104%  $      1,113,380  $      548,410  $      564,970   103% 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
n/m    Not meaningful.
Three Months Ended June 30, 2021 Compared to Three Months Ended June 30, 2020
Segment Distributable Earnings were $572.6 million for the three months ended June 30, 2021, an increase of $291.7 million, or 104%, compared to $280.9 million for the three months ended June 30, 2020. The increase in Segment Distributable Earnings was attributable to increases of $90.7 million in Fee Related Earnings and $201.0 million in Net Realizations.
Segment Distributable Earnings in our Real Estate segment in the second quarter of 2021 were higher compared to the second quarter of 2020. This was primarily driven by increased Net Realizations, as well as an increase in Fee Related Earnings due to growth in Fee-Earning Assets Under Management and the crystallization of performance revenues for certain vehicles, partially offset by an increase in Other Operating Expenses. Continued favorable market conditions have contributed to significant realization and capital deployment opportunities. We have also benefited from fundraising momentum in our perpetual capital strategies, which represent an increasing percentage of our Total Assets Under Management. Broad-based economic recovery and activity in the U.S. have continued to accelerate following meaningful progress on
COVID-19
vaccine distribution, the easing of shutdowns and other restrictions and support from previously implemented fiscal and monetary stimulus. We are also seeing early signs of recovery in certain investments in our real estate portfolio, such as those in hospitality and leisure, that have been materially impacted by the
COVID-19
pandemic. Nevertheless, both in the U.S. and abroad, there is continued uncertainty regarding the trajectory of a continuing recovery, particularly given the potential for an increase in
COVID-19
infection levels globally as a result of new variants. The global economic recovery could
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remain uneven with dispersion across sectors and regions. Inflation in the U.S. is showing signs of acceleration, although this rise may be a temporary result from lingering
COVID-19-related
supply chain issues. Higher inflation would potentially negatively impact certain real estate assets, such as those with long-term leases that do not provide for short-term rent increases. Our real estate strategies have, however, oriented their portfolios toward investments in markets where we see opportunities for stronger relative growth, with better insulation from inflation pressure. If increasing wages and other inputs increasingly pressure profit margins, the valuations of certain investments in our Real Estate segment would potentially be negatively impacted.
In addition, the Presidential administration and the U.S. Congress may introduce new or enforce existing policies and regulations that may create uncertainty for our business and investment strategies and could have an adverse impact on us and our portfolio companies. Such conditions (which may be across industries, sectors or geographies) may contribute to adverse operating performance, including moderated rent growth in certain markets in our residential portfolio. See “Part I. Item 1A. Risk Factors — Risks Related to Our Business — The global outbreak of the novel coronavirus, or
COVID-19,
has caused severe disruptions in the U.S. and global economies and has adversely impacted, and may continue to adversely impact, our performance and results of operations,” “— Difficult market and geopolitical conditions can adversely affect our business in many ways, each of which could materially reduce our revenue, earnings and cash flow and adversely affect our financial prospects and condition” and “— A period of economic slowdown, which may be across one or more industries, sectors or geographies, has contributed and could in the future contribute to adverse operating performance for certain of our funds’ investments, which would adversely affect our operating results and cash flows” in our Annual Report on Form 10-K for the year ended December 31, 2020.
Fee Related Earnings
Fee Related Earnings were $348.3 million for the three months ended June 30, 2021, an increase of $90.7 million, or 35%, compared to $257.6 million for the three months ended June 30, 2020. The increase in Fee Related Earnings was primarily attributable to increases of $78.9 million in Management Fees, Net and $27.3 million in Fee Related Performance Revenues, partially offset by an increase of $10.2 million in Other Operating Expenses.
Management Fees, Net were $491.3 million for the three months ended June 30, 2021, an increase of $78.9 million, compared to $412.3 million for the three months ended June 30, 2020, primarily driven by an increase in Base Management Fees. Base Management Fees increased $71.0 million primarily due to Fee-Earning Assets Under Management growth in Core+ real estate.
Fee Related Performance Revenues were $33.8 million for the three months ended June 30, 2021, an increase of $27.3 million, compared to $6.5 million for the three months ended June 30, 2020. The increase was primarily due to crystallization events in BPP Europe.
Other Operating Expenses were $54.8 million for the three months ended June 30, 2021, an increase of $10.2 million, compared to $44.5 million for the three months ended June 30, 2020. The increase was primarily due to occupancy and technology related expenses to support business growth.
Net Realizations
Net Realizations were $224.3 million for the three months ended June 30, 2021, an increase of $201.0 million, or 865%, compared to $23.2 million for the three months ended June 30, 2020. The increase in Net Realizations was attributable to increases of $316.8 million in Realized Performance Revenues and $26.6 million in Realized Principal Investment Income, partially offset by an increase of $142.4 million in Realized Performance Compensation.
Realized Performance Revenues were $351.1 million for the three months ended June 30, 2021, an increase of $316.8 million, compared to $34.2 million for the three months ended June 30, 2020. The increase was primarily due to higher realized gains in the three months ended June 30, 2021 compared to the three months ended June 30, 2020.
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Realized Principal Investment Income was $28.1 million for the three months ended June 30, 2021, an increase of $26.6 million, compared to $1.6 million for the three months ended June 30, 2020. The increase was primarily due to higher realized gains in the three months ended June 30, 2021 compared to the three months ended June 30, 2020.
Realized Performance Compensation was $154.9 million for the three months ended June 30, 2021, an increase of $142.4 million, compared to $12.5 million for the three months ended June 30, 2020. The increase was primarily due to the increase in Realized Performance Revenues.
Six Months Ended June 30, 2021 Compared to Six Months Ended June 30, 2020
Segment Distributable Earnings were $1.1 billion for the six months ended June 30, 2021, an increase of $565.0 million, or 103%, compared to $548.4 million for the six months ended June 30, 2020. The increase in Segment Distributable Earnings was attributable to increases of $234.9 million in Fee Related Earnings and $330.1 million in Net Realizations.
Fee Related Earnings
Fee Related Earnings were $722.4 million for the six months ended June 30, 2021, an increase of $234.9 million, or 48%, compared to $487.5 million for the six months ended June 30, 2020. The increase in Fee Related Earnings was primarily attributable to increases of $178.1 million in Fee Related Performance Revenues and $144.4 million in Management Fees, Net, partially offset by an increase of $73.5 million in Fee Related Compensation.
Fee Related Performance Revenues were $189.2 million for the six months ended June 30, 2021, an increase of $178.1 million, compared to $11.1 million for the six months ended June 30, 2020. The increase was primarily due to crystallization events in the Logicor separately managed account and BPP Europe.
Management Fees, Net were $942.8 million for the six months ended June 30, 2021, an increase of $144.4 million, compared to $798.4 million for the six months ended June 30, 2020, primarily driven by an increase in Base Management Fees. Base Management Fees increased $126.7 million primarily due to Fee-Earning Assets Under Management growth in Core+ real estate and the end of BREP Europe VI’s fee holiday in the first quarter of 2020.
Fee Related Compensation was $310.4 million for the six months ended June 30, 2021, an increase of $73.5 million, compared to $236.9 million for the six months ended June 30, 2020. The increase was primarily due to increases in Fee Related Performance Revenues and Management Fees, Net, on which a portion of Fee Related Compensation is based.
Net Realizations
Net Realizations were $391.0 million for the six months ended June 30, 2021, an increase of $330.1 million, or 542%, compared to $60.9 million for the six months ended June 30, 2020. The increase in Net Realizations was attributable to increases of $361.8 million in Realized Performance Revenues and $120.1 million in Realized Principal Investment Income, partially offset by an increase of $151.8 million in Realized Performance Compensation.
Realized Performance Revenues were $439.7 million for the six months ended June 30, 2021, an increase of $361.8 million, compared to $77.9 million for the six months ended June 30, 2020. The increase was primarily due to the higher realized gains in the six months ended June 30, 2021 compared to the six months ended June 30, 2020.
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Realized Principal Investment Income was $128.9 million for the six months ended June 30, 2021, an increase of $120.1 million, compared to $8.9 million for the six months ended June 30, 2020. The increase was primarily due to the segment’s allocation of the gain recognized in the first quarter of 2021 in connection with the Pátria sale transactions. For additional information, see Note 4. “Investments — Equity Method Investments” in the “Notes to Condensed Consolidated Financial Statements” in “Part I. Item 1. Financial Statements.”
Realized Performance Compensation was $177.7 million for the six months ended June 30, 2021, an increase of $151.8 million, compared to $25.9 million for the six months ended June 30, 2020. The increase was primarily due to the increase in Realized Performance Revenues.
Fund Returns
Fund return information for our significant funds is included throughout this discussion and analysis to facilitate an understanding of our results of operations for the periods presented. The fund returns information reflected in this discussion and analysis is not indicative of the financial performance of Blackstone and is also not necessarily indicative of the future performance of any particular fund. An investment in Blackstone is not an investment in any of our funds. There can be no assurance that any of our funds or our other existing and future funds will achieve similar returns.
The following table presents the internal rates of return, except where noted, of our significant real estate funds:
   
Three Months Ended
  
Six Months Ended
  
June 30, 2021
   
June 30,
  
June 30,
  
Inception to Date
   
2021
  
2020
  
2021
  
2020
  
Realized
  
Total
Fund (a)
  
Gross
  
Net
  
Gross
  
Net
  
Gross
  
Net
  
Gross
  
Net
  
Gross
  
Net
  
Gross
  
Net
BREP VII
   7%    6%    -9%    -8%    11%    9%    -22%    -20%    30%    22%    21%    14% 
BREP VIII
   12%    10%    4%    3%    17%    13%    -4%    -3%    36%    29%    21%    15% 
BREP IX
   17%    13%    10%    9%    27%    20%    8%    3%    n/m    n/m    44%    29% 
BREP Europe IV (b)
   -1%    -1%    -5%    -5%    -1%    -1%    -13%    -12%    29%    20%    20%    14% 
BREP Europe V (b)
   6%    5%    1%    1%    10%    8%    -7%    -6%    52%    41%    16%    11% 
BREP Europe VI (b)
   11%    8%    n/m    n/m    19%    13%    n/m    n/m    n/m    n/m    25%    13% 
BREP Asia I
   5%    4%    -    -    20%    16%    -15%    -13%    29%    21%    19%    13% 
BREP Asia II
   4%    3%    3%    2%    16%    10%    -6%    -7%    81%    55%    20%    11% 
BREP Co-Investment (c)
   17%    17%    16%    15%    24%    22%    13%    13%    18%    16%    18%    16% 
BPP (d)
   4%    4%    2%    2%    6%    5%    -    -    n/a    n/a    11%    9% 
BREIT (e)
   n/a    7%    n/a    4%    n/a    12%    n/a    -4%    n/a    n/a    n/a    11% 
BREDS High-Yield (f)
   4%    3%    5%    4%    9%    7%    -7%    -7%    15%    11%    15%    10% 
BREDS Liquid (g)
   3%    2%    3%    3%    9%    8%    -19%    -19%    n/a    n/a    9%    7% 
BXMT (h)
   n/a    5%    n/a    33%    n/a    20%    n/a    -32%    n/a    n/a    n/a    11% 
The returns presented herein represent those of the applicable Blackstone Funds and not those of Blackstone.
 
n/m
N/M    Not meaningful.
Three Months Ended June 30, 2020 Compared to Three Months Ended June 30, 2019
Segment Distributable Earnings were $89.3 million for the three months ended June 30, 2020, a decrease of $12.8 million, compared to $102.1 million for the three months ended June 30, 2019. The decrease in Segment Distributable Earnings was primarily attributable to a decrease of $20.9 million in Net Realizations, partially offset by an increase of $8.2 million in Fee Related Earnings.
Segment Distributable Earnings in our Hedge Fund Solutions segment in the second quarter of 2020 were lower comparedmeaningful generally due to the second quarterlimited time since initial investment.
n/a
Not applicable.
(a)
Net returns are based on the change in carrying value (realized and unrealized) after management fees, expenses and Performance Revenues.
(b)
Euro-based internal rates of 2019. This decrease was primarily drivenreturn.
(c)
BREP Co-Investment represents co-investment capital raised for various BREP investments. The Net IRR reflected is calculated by decreased Net Realizations due to decreases in Principal Investment Income (Loss)aggregating each co-investment’s realized proceeds and Realizedunrealized value, as applicable, after management fees, expenses and Performance Revenues, partially offset by increased Fee Related Earnings. Despite significant market rebounds across many asset classes inRevenues.
(d)
BPP represents the second quarter of 2020, the ongoing
COVID-19
pandemicCore+ real estate funds which invest with a more modest risk profile and related shutdowns of
non-essential
businesses, including as a result of persistent or accelerating infection levels in some regions, have caused severe disruption in the U.S. and global economies. This has adversely impacted and will likely continue to adversely impact the performance of our Hedge Fund Solutions segment, including as a result of distress in the structured credit and mortgage markets. Furthermore, global growth will be significantly negatively impacted by the
COVID-19
pandemic. Although economic recovery is partially underway, it is likely to be gradual, uneven, and characterized by meaningful dispersion across sectors and regions, and the ultimate length of the recovery is uncertain. This uncertainty poses further material risk to the Hedge Fund Solutions segment, including by causing investors to seek liquidity in the form of redemptions from our funds and adversely impacting Incentive Fees. Segment Distributable Earnings in the Hedge Fund Solutions segment would likely be further negatively impacted if the significant decline in global,
lower leverage.
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(e)
regional
Reflects a per share blended return for each respective period, assuming BREIT had a single share class, reinvestment of all dividends received during the period, and no upfront selling commission, net of all fees and expenses incurred by BREIT. These returns are not representative of the returns experienced by any particular investor or sector asset prices experiencedshare class. Inception to date returns are presented on an annualized basis and are from January 1, 2017.
(f)
BREDS High-Yield represents the flagship real estate debt drawdown funds and excludes the BREDS High-Grade drawdown fund, which has a different risk-return profile. Inception to date returns are from July 1, 2009.
(g)
BREDS Liquid represents BREDS funds that invest in the first halfliquid real estate debt securities, except funds in liquidation and insurance mandates with specific investment objectives. The returns presented represent summarized asset-weighted gross and net rates of 2020 as a result of thereturn from August 1, 2008. Inception to Date returns are presented on an annualized basis.
(h)
COVID-19
pandemic is sustained, or in the event
Reflects annualized return of a returning prolonged weak equity market environment. The
COVID-19
pandemic has also caused significant dislocation and, at times, limited the liquidity of certain assets tradedshareholder invested in the credit markets. A sustained period of such dislocation would, like it did in the first quarter of 2020, likely impact the value of certain assets held by our funds, such funds’ ability to sell such assets at attractive prices or in a timely manner in order to avoid losses and the likelihood of margin calls from credit providers. In addition, given recent market turbulence and continuing uncertainty, we expect fundraising in our Hedge Fund Solutions segment to continue, but now at a slower pace, which may result in a delay in management fees.
In an equity market environment that generally has been characterized by relatively low volatility, investors may choose to reallocate capital away from traditional hedge fund strategies. Our Hedge Fund Solutions segment operates multiple business lines, manages strategies that are both long and short asset classes and generates a majority of its revenue through management fees. In that regard, the segment’s revenues will depend in part on our ability to successfully grow such existing diverse business lines and strategies, and identify new ones to meet evolving investor appetites. Over time we anticipate an increasing change in the mix of our product offerings to products whose performance based fees represent a more significant proportionBXMT as of the beginning of each period presented, assuming reinvestment of all dividends received during the period, and net of all fees than has historically beenand expenses incurred by BXMT. Return incorporates the case for such products. See “Part II. Item 1A. Risk Factors — The global outbreakclosing NYSE stock price as of the novel coronavirus, or
COVID-19,
has caused severe disruptions in the U.S. and global economies and is adversely impacting, and may continueeach period end. Inception to adversely impact, our performance and results of operations.” in our Quarterly Report on Form
10-Q
for the quarter ended March 31, 2020 and “Part I. Item 1A. Risk Factors — Risks Related to Our Business — Hedge fund investmentsdate returns are subject to numerous additional risks.” and the market and economic conditions risk factors in our Annual Report on Form
10-Kfrom May 22, 2013.
for the year ended December 31, 2019.
Funds With Closed Investment Periods
The Real Estate segment has ten funds with closed investment periods as of June 30, 2021: BREP VIII, BREP VII, BREP VI, BREP V, BREP IV, BREP Europe V, BREP Europe IV, BREP Europe lll, BREP Asia I and BREDS lll. As of June 30, 2021, BREP VII, BREP VI, BREP V, BREP IV, BREP Europe IV and BREP Europe lll were above their carried interest thresholds and would have been above their carried interest thresholds even if all remaining investments were valued at zero. BREP VIII, BREP Europe V, BREP Asia I and BREDS III were above their carried interest thresholds.
Private Equity
The following table presents the results of operations for our Private Equity segment:
                                                                                                                        
  
Three Months Ended
     
Six Months Ended
    
  
June 30,
 
2021 vs. 2020
 
June 30,
 
2021 vs. 2020
  
2021
 
2020
 
$
 
%
 
2021
 
2020
 
$
 
%
  
(Dollars in Thousands)
Management and Advisory Fees, Net
 
Base Management Fees
 $364,606  $268,070  $96,536   36%  $742,266  $522,044  $220,222   42% 
Transaction, Advisory and Other Fees, Net
  32,272   9,521   22,751   239%   74,979   30,934   44,045   142% 
Management Fee Offsets
  (3,601)   (8,031)   4,430   -55%   (17,520)   (17,246)   (274)   2% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Management and Advisory Fees, Net
  393,277   269,560   123,717   46%   799,725   535,732   263,993   49% 
Fee Related Compensation
  (136,767)   (92,825)   (43,942)   47%   (277,364)   (203,193)   (74,171)   37% 
Other Operating Expenses
  (61,041)   (44,827)   (16,214)   36%   (112,096)   (85,828)   (26,268)   31% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fee Related Earnings
  195,469   131,908   63,561   48%   410,265   246,711   163,554   66% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Realized Performance Revenues
  383,010   64,513   318,497   494%   638,855   176,589   462,266   262% 
Realized Performance Compensation
  (159,375)   (25,016)   (134,359)   537%   (270,584)   (79,659)   (190,925)   240% 
Realized Principal Investment Income
  27,796   17,416   10,380   60%   143,199   27,763   115,436   416% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net Realizations
  251,431   56,913   194,518   342%   511,470   124,693   386,777   310% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Segment Distributable Earnings
 $    446,900  $    188,821  $    258,079   137%  $    921,735  $    371,404  $    550,331   148% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
n/m
Fee Related EarningsNot meaningful.
Fee Related Earnings were $88.2 million for the three months ended June 30, 2020, an increase of $8.2 million, or 10%, compared to $80.0 million for the three months ended June 30, 2019. The decrease in Fee Related Earnings was primarily attributable to an increase of $8.6 million in Management Fees, Net and a decrease of $3.3 million in Other Operating Expenses, partially offset by an increase of $3.7 million in Fee Related Compensation.
Management Fees, Net were $146.3 million for the three months ended June 30, 2020, an increase of $8.6 million, compared to $137.7 million for the three months ended June 30, 2019, primarily driven by an increase in Base Management Fees. Base Management Fees increased $8.5 million primarily driven by
Fee-Earning
Assets Under Management growth in our individual investor and specialized solutions platform.
Other Operating Expenses were $17.8 million for the three months ended June 30, 2020, a decrease of $3.3 million, compared to $21.1 million for the three months ended June 30, 2019. The decrease was primarily due to less travel and entertainment expenses in the three months ended June 30, 2020 due to
COVID-19.
Fee Related Compensation was $40.4 million for the three months ended June 30, 2020, an increase of $3.7 million, compared to $36.6 million for the three months ended June 30, 2019. The increase was primarily due to an increase in Management Fees, Net, on which a portion of Fee Related Compensation is based.
Net Realizations
Net Realizations were $1.2 million for the three months ended June 30, 2020, a decrease of $20.9 million, compared to $22.1 million for the three months ended June 30, 2019. The decrease in Net Realizations was primarily attributable to decreases of $12.6 million in Realized Principal Investment Income (Loss) and $10.5 million in Realized Performance Revenues, partially offset by a decrease of $2.2 million in Realized Performance Compensation.
Realized Principal Investment Income (Loss) was $(0.3) million for the three months ended June 30, 2020, a decrease of $12.6 million, compared to $12.3 million for the three months ended June 30, 2019. The decrease
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Three Months Ended June 30, 2021 Compared to Three Months Ended June 30, 2020
Segment Distributable Earnings were $446.9 million for the three months ended June 30, 2021, an increase of $258.1 million, or 137%, compared to $188.8 million for the three months ended June 30, 2020. The increase in Segment Distributable Earnings was attributable to increases of $63.6 million in Fee Related Earnings and $194.5 million in Net Realizations.
Segment Distributable Earnings in our Private Equity segment in the second quarter of 2021 were higher compared to the second quarter of 2020. This was primarily driven by an increase in Net Realizations, as well as an increase in Fee Related Earnings. Continued favorable market conditions have contributed to significant realizations, particularly through the public markets. Broad-based economic recovery and activity in the U.S. have continued to accelerate following meaningful progress on
COVID-19
vaccine distribution, the easing of shutdowns and other restrictions and support from previously implemented fiscal and monetary stimulus. We are also seeing early signs of recovery in certain investments in our corporate private equity portfolio, such as in location-based businesses, that have been materially impacted by the
COVID-19
pandemic. Nevertheless, both in the U.S. and abroad, there is continued uncertainty regarding the trajectory of a continuing recovery, particularly given the potential for an increase in
COVID-19
infection levels globally as a result of new variants. The global economic recovery could remain uneven with dispersion across sectors and regions. Inflation in the U.S. is showing signs of acceleration, although this rise may be a temporary result of lingering
COVID-19-related
supply chain issues. Higher inflation would potentially negatively impact Segment Distributable Earnings in our Private Equity segment, particularly if occurring against a backdrop of slow economic growth. If increasing wages and other inputs increasingly pressure profit margins, the valuations of certain investments in the Private Equity segment would potentially be negatively impacted.
In energy, the macroeconomic backdrop has continued to meaningfully improve, but weakened long-term market fundamentals nonetheless continue to pose challenges, particularly in upstream energy. An increased focus on energy sustainability due to concerns about climate change and the impact of carbon emissions, including potential alternatives to fossil fuels, has also exacerbated the impact of such weakened market fundamentals. The persistence of these weakened market fundamentals would further negatively impact the performance of certain investments in our energy and corporate private equity funds.
In addition, the Presidential administration and the U.S. Congress may introduce new or enforce existing policies and regulations that may create uncertainty for our business and investment strategies and could have an adverse impact on us and our portfolio companies. See “Part I. Item 1A. Risk Factors — Risks Related to Our Business — The global outbreak of the novel coronavirus, or
COVID-19,
has caused severe disruptions in the U.S. and global economies and has adversely impacted, and may continue to adversely impact, our performance and results of operations,” “— Difficult market and geopolitical conditions can adversely affect our business in many ways, each of which could materially reduce our revenue, earnings and cash flow and adversely affect our financial prospects and condition” and “— A period of economic slowdown, which may be across one or more industries, sectors or geographies, has contributed and could in the future contribute to adverse operating performance for certain of our funds’ investments, which would adversely affect our operating results and cash flows” in our Annual Report on Form 10-K for the year ended December 31, 2020.
Fee Related Earnings
Fee Related Earnings were $195.5 million for the three months ended June 30, 2021, an increase of $63.6 million, or 48%, compared to $131.9 million for the three months ended June 30, 2020. The increase in Fee Related Earnings was attributable to an increase of $123.7 million in Management and Advisory Fees, Net, partially offset by increases of $43.9 million in Fee Related Compensation and $16.2 million in Other Operating Expenses.
Management and Advisory Fees, Net were $393.3 million for the three months ended June 30, 2021, an increase of $123.7 million, compared to $269.6 million for the three months ended June 30, 2020, primarily driven by an increase in Base Management Fees. Base Management Fees increased $96.5 million primarily due to BCP VIII, BEP III, BXLS V and BXG. BCP VIII commenced its investment period in the first quarter of 2020 and ended its fee holiday in the second quarter of 2020. BEP III and BXLS V commenced their investment period in the first quarter of 2020 and ended their fee holidays in the third quarter of 2020. BXG commenced its investment period in the third quarter of 2020 and ended its fee holiday in the first quarter of 2021.
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Fee Related Compensation was $136.8 million for the three months ended June 30, 2021, an increase of $43.9 million, compared to $92.8 million for the three months ended June 30, 2020. The increase was primarily due to an increase in Management and Advisory Fees, Net on which a portion of Fee Related Compensation is based.
Other Operating Expenses were $61.0 million for the three months ended June 30, 2021, an increase of $16.2 million, compared to $44.8 million for the three months ended June 30, 2020. The increase was primarily due to occupancy, technology and other expenses to support business growth.
Net Realizations
Net Realizations were $251.4 million for the three months ended June 30, 2021, an increase of $194.5 million, or 342%, compared to $56.9 million for the three months ended June 30, 2020. The increase in Net Realizations was attributable to increases of $318.5 million in Realized Performance Revenues and $10.4 million in Realized Principal Investment Income, partially offset by an increase of $134.4 million in Realized Performance Compensation.
Realized Performance Revenues were $383.0 million for the three months ended June 30, 2021, an increase of $318.5 million, compared to $64.5 million for the three months ended June 30, 2020. The increase was primarily due to higher Realized Performance Revenues in Tactical Opportunities, corporate private equity and BXG.
Realized Principal Investment Income was $27.8 million for the three months ended June 30, 2021, an increase of $10.4 million, compared to $17.4 million for the three months ended June 30, 2020. The increase was primarily due to higher realized performance revenues in Tactical Opportunities, corporate private equity and BXG.
Realized Performance Compensation was $159.4 million for the three months ended June 30, 2021, an increase of $134.4 million, compared to $25.0 million for the three months ended June 30, 2020. The increase was primarily due to the increase in Realized Performance Revenues.
Six Months Ended June 30, 2021 Compared to Six Months Ended June 30, 2020
Segment Distributable Earnings were $921.7 million for the six months ended June 30, 2021, an increase of $550.3 million, or 148%, compared to $371.4 million for the six months ended June 30, 2020. The increase in Segment Distributable Earnings was attributable to increases of $163.6 million in Fee Related Earnings and $386.8 million in Net Realizations.
Fee Related Earnings
Fee Related Earnings were $410.3 million for the six months ended June 30, 2021, an increase of $163.6 million, or 66%, compared to $246.7 million for the six months ended June 30, 2020. The increase in Fee Related Earnings was attributable to an increase of $264.0 million in Management and Advisory Fees, Net, partially offset by increases of $74.2 million in Fee Related Compensation and $26.3 million in Other Operating Expenses.
Management and Advisory Fees, Net were $799.7 million for the six months ended June 30, 2021, an increase of $264.0 million, compared to $535.7 million for the six months ended June 30, 2020, primarily driven by an increase in Base Management Fees. Base Management Fees increased $220.2 million primarily due to BCP VIII, BEP III, BXLS V and BXG. BCP VIII commenced its investment period in the first quarter of 2020 and ended its fee holiday in the second quarter of 2020. BEP III and BXLS V commenced their investment period in the first quarter of 2020 and ended their fee holidays in the third quarter of 2020. BXG commenced its investment period in the third quarter of 2020 and ended its fee holiday in the first quarter of 2021.
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The annualized Base Management Fee Rate increased from 0.88% at June 30, 2020 to 1.13% at June 30, 2021. The increase was primarily due to the investment period commencement and subsequent fee holiday expirations of BCP VIII, BEP III, BXLS V and BXG as described in the paragraph above.
Fee Related Compensation was $277.4 million for the six months ended June 30, 2021, an increase of $74.2 million, compared to $203.2 million for the six months ended June 30, 2020. The increase was primarily due to an increase in Management and Advisory Fees, Net on which a portion of Fee Related Compensation is based.
Other Operating Expenses were $112.1 million for the six months ended June 30, 2021, an increase of $26.3 million, compared to $85.8 million for the six months ended June 30, 2020. The increase was primarily due to occupancy and technology related expenses to support business growth.
Net Realizations
Net Realizations were $511.5 million for the six months ended June 30, 2021, an increase of $386.8 million, or 310%, compared to $124.7 million for the six months ended June 30, 2020. The increase in Net Realizations was attributable to increases of $462.3 million in Realized Performance Revenues and $115.4 million in Realized Principal Investment Income, partially offset by an increase of $190.9 million in Realized Performance Compensation.
Realized Performance Revenues were $638.9 million for the six months ended June 30, 2021, an increase of $462.3 million, compared to $176.6 million for the six months ended June 30, 2020. The increase was primarily due to higher Realized Performance Revenues in Tactical Opportunities, corporate private equity and BXG.
Realized Principal Investment Income was $143.2 million for the six months ended June 30, 2021, an increase of $115.4 million, compared to $27.8 million for the six months ended June 30, 2020. The increase was primarily due to the segment’s allocation of the gain recognized in the first quarter of 2021 in connection with the Pátria sale transactions. For additional information, see Note 4. “Investments — Equity Method Investments” in the “Notes to Condensed Consolidated Financial Statements” in “Part I. Item 1. Financial Statements.”
Realized Performance Compensation was $270.6 million for the six months ended June 30, 2021, an increase of $190.9 million, compared to $79.7 million for the six months ended June 30, 2020. The increase was primarily due to the increase in Realized Performance Revenues.
Fund Returns
Fund returns information for our significant funds is included throughout this discussion and analysis to facilitate an understanding of our results of operations for the periods presented. The fund returns information reflected in this discussion and analysis is not indicative of the financial performance of Blackstone and is also not necessarily indicative of the future performance of any particular fund. An investment in Blackstone is not an investment in any of our funds. There can be no assurance that any of our funds or our other existing and future funds will achieve similar returns.
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The following table presents the internal rates of return of our significant private equity funds:
   
Three Months Ended
  
Six Months Ended
  
June 30, 2021
   
June 30,
  
June 30,
  
Inception to Date
   
2021
  
2020
  
2021
  
2020
  
Realized
  
Total
Fund (a)
  
Gross
  
Net
  
Gross
  
Net
  
Gross
  
Net
  
Gross
  
Net
  
Gross
  
Net
  
Gross
  
Net
BCP V
   3%    1%    15%    3%    148%    69%    -15%    -7%    10%    8%    10%    8% 
BCP VI
   4%    4%    27%    22%    15%    13%    -10%    -9%    22%    17%    17%    13% 
BCP VII
   14%    12%    6%    4%    29%    23%    -7%    -7%    41%    29%    29%    21% 
BEP I
   13%    10%    47%    34%    53%    42%    -22%    -20%    18%    14%    14%    11% 
BEP II
   15%    14%    13%    13%    40%    38%    -38%    -38%    -3%    -8%    6%    2% 
BEP III
   24%    14%    n/m    n/m    59%    40%    n/m    n/m    138%    94%    173%    95% 
BCP Asia I
   60%    52%    4%    3%    88%    75%    3%    1%    209%    97%    90%    65% 
BCEP I (b)
   11%    10%    4%    4%    29%    27%    -2%    -2%    42%    31%    28%    25% 
Tactical Opportunities
   8%    6%    12%    9%    27%    21%    -9%    -5%    21%    17%    18%    13% 
Tactical Opportunities
Co-Investment
and Other
   7%    6%    9%    9%    21%    18%    -    -    20%    20%    19%    16% 
Strategic Partners I-V (c)
   11%    10%    1%    1%    18%    15%    3%    3%    n/a    n/a    16%    13% 
Strategic Partners VI (c)
   16%    15%    -    -    27%    24%    -1%    -2%    n/a    n/a    19%    15% 
Strategic Partners VII (c)
   20%    19%    3%    3%    34%    31%    3%    2%    n/a    n/a    24%    20% 
Strategic Partners Real Assets II (c)
   5%    4%    4%    4%    7%    6%    8%    7%    n/a    n/a    16%    12% 
Strategic Partners VIII (c)
   24%    22%    8%    5%    49%    41%    12%    9%    n/a    n/a    58%    44% 
Strategic Partners RE, SMA and Other (c)
   7%    7%    5%    5%    14%    14%    7%    7%    n/a    n/a    17%    15% 
BIP
   13%    12%    3%    3%    39%    32%    -9%    -10%    n/a    n/a    28%    20% 
Clarus IV
   5%    4%    -    -    18%    14%    2%    1%    -19%    -27%    28%    16% 
The returns presented herein represent those of the applicable Blackstone Funds and not those of Blackstone.
n/m
Not meaningful generally due to the limited time since initial investment.
n/a
Not applicable.
SMA
Separately managed account.
(a)
Net returns are based on the change in carrying value (realized and unrealized) after management fees, expenses and Performance Revenues.
(b)
BCEP is a core private equity strategy which invests with a more modest risk profile and longer hold period than traditional private equity.
(c)
Realizations are treated as return of capital until fully recovered and therefore inception to date realized lossesreturns are not applicable. If information is not available on our corporate treasury investments allocated toa timely basis, returns are calculated from results that are reported on a three month lag and therefore do not include the segment.impact of economic and market activities in the quarter in which such events occur.
Funds With Closed Investment Periods
The corporate private equity funds within the Private Equity segment have eight funds with closed investment periods: BCP IV, BCP V, BCP VI, BCP VII, BCOM, BEP I, BEP II and BCEP I. As of June 30, 2021, BCP IV was above its carried interest threshold (i.e., the preferred return payable to its limited partners before the general partner is eligible to receive carried interest) and would still be above its carried interest threshold even if all remaining investments were valued at zero. BCP V is comprised of two fund classes based on the timings of fund closings, the BCP V “main fund” and BCP V-AC fund. Within these fund classes, the general partner is subject to equalization such that (a) the general partner accrues carried interest when the respective carried interest for either fund class
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is positive and (b) the general partner realizes carried interest so long as clawback obligations, if any, for either of the respective fund classes are fully satisfied. BCP V, BCP VI, BCP VII, BCOM, BEP I and BCEP I were above their respective carried interest thresholds. We are entitled to retain previously realized carried interest up to 20% of BCOM’s net gains. As a result, Performance Revenues are recognized from BCOM on current period gains and losses. BEP II was below its carried interest threshold.
Hedge Fund Solutions
The following table presents the results of operations for our Hedge Fund Solutions segment:
                                                                                                                        
   
Three Months Ended
      
Six Months Ended
    
   
June 30,
 
2021 vs. 2020
  
June 30,
 
2021 vs. 2020
   
2021
 
2020
 
$
 
%
  
2021
 
2020
 
$
 
%
   
(Dollars in Thousands)
Management Fees, Net
          
Base Management Fees
  $155,244  $    145,455  $9,789   7%   $305,777  $285,111  $20,666   7% 
Transaction and Other Fees, Net
   1,558   859   699   81%    5,904   1,617   4,287   265% 
Management Fee Offsets
   (203)   4   (207)   n/m    (261)   (38)   (223)   587% 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Management Fees, Net
   156,599   146,318   10,281   7%    311,420   286,690   24,730   9% 
Fee Related Compensation
   (38,638)   (40,353)   1,715   -4%    (77,488)   (86,544)   9,056   -10% 
Other Operating Expenses
   (21,873)   (17,807)   (4,066)   23%    (41,045)   (36,474)   (4,571)   13% 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fee Related Earnings
   96,088   88,158   7,930   9%    192,887   163,672   29,215   18% 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Realized Performance Revenues
   17,056   1,482   15,574   n/m    48,629   3,249   45,380   n/m 
Realized Performance Compensation
   (5,626)   —   (5,626)   n/m    (12,534)   (945)   (11,589)   n/m 
Realized Principal Investment Income (Loss)
   2,125   (331)   2,456   n/m    37,675   (940)   38,615   n/m 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net Realizations
   13,555   1,151   12,404   n/m    73,770   1,364   72,406   n/m 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Segment Distributable Earnings
  $    109,643  $89,309  $    20,334       23%   $    266,657  $    165,036  $    101,621       62% 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
n/m    Not meaningful.
Three Months Ended June 30, 2021 Compared to Three Months Ended June 30, 2020
Segment Distributable Earnings were $109.6 million for the three months ended June 30, 2021, an increase of $20.3 million, or 23%, compared to $89.3 million for the three months ended June 30, 2020. The increase in Segment Distributable Earnings was attributable to increases of $7.9 million in Fee Related Earnings and $12.4 million in Net Realizations.
Segment Distributable Earnings in our Hedge Fund Solutions segment in the second quarter of 2021 were higher compared to the second quarter of 2020. This increase was primarily driven by an increase in Net Realizations, as well as an increase in Fee Related Earnings. Continued market rebounds across many asset classes have contributed to recovery from the losses in composite returns experienced in the first half of 2020. Broad-based economic recovery and activity have continued to accelerate following meaningful progress on
COVID-19
vaccine distribution, the easing of shutdowns and other restrictions and support from previously implemented fiscal and monetary stimulus. The segment has also benefited from favorable liquidity conditions in recent quarters. Nevertheless, both in the U.S. and abroad, there is continued uncertainty regarding the trajectory of a continuing recovery, particularly given the potential for an increase in
COVID-19
infection levels globally as a result of new variants. The global economic recovery could remain uneven with meaningful dispersion across sectors and regions. Another significant market downturn could pose material risks to our Hedge Fund Solutions segment, including by potentially causing investors to seek liquidity in the form of redemptions from our funds and adversely impacting management fees.
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In an equity market environment that generally has been characterized by relatively low volatility, investors may choose to reallocate capital away from traditional hedge fund strategies. Our Hedge Fund Solutions segment operates multiple business lines, manages strategies that are both long and short asset classes and generates a majority of its revenue through management fees. In that regard, the segment’s revenues depend in part on our ability to successfully grow such existing diverse business lines and strategies, and identify and scale new ones to meet evolving investor appetites. Over time we expect an increasing change in the mix of our product offerings to products whose performance-based fees represent a more significant proportion of the fees than has historically been the case for such products.
In addition, the Presidential administration and the U.S. Congress may introduce new or enforce existing policies and regulations that may create uncertainty for our business and investment strategies and may adversely affect the profitability of certain of our investments. See “Part I. Item 1A. Risk Factors — Risks Related to Our Business — The global outbreak of the novel coronavirus, or
COVID-19,
has caused severe disruptions in the U.S. and global economies and has adversely impacted, and may continue to adversely impact, our performance and results of operations,” “— Difficult market and geopolitical conditions can adversely affect our business in many ways, each of which could materially reduce our revenue, earnings and cash flow and adversely affect our financial prospects and condition” and “— A period of economic slowdown, which may be across one or more industries, sectors or geographies, has contributed and could in the future contribute to adverse operating performance for certain of our funds’ investments, which would adversely affect our operating results and cash flows” in our Annual Report on Form 10-K for the year ended December 31, 2020.
Fee Related Earnings
Fee Related Earnings were $96.1 million for the three months ended June 30, 2021, an increase of $7.9 million, compared to $88.2 million for the three months ended June 30, 2020. The increase in Fee Related Earnings was primarily attributable to an increase of $10.3 million in Management Fees, Net, partially offset by an increase of $4.1 million in Other Operating Expenses.
Management Fees, Net were $156.6 million for the three months ended June 30, 2021, an increase of $10.3 million, compared to $146.3 million for the three months ended June 30, 2020, primarily due to an increase in Base Management Fees. Base Management Fees increased $9.8 million primarily driven by Fee-Earning Assets Under Management growth in our individual investor and specialized solutions platform.
Other Operating Expenses were $21.9 million for the three months ended June 30, 2021, an increase of $4.1 million, compared to $17.8 million for the three months ended June 30, 2020. The increase was primarily due to professional fees as well as technology related expenses to support business growth.
Net Realizations
Net Realizations were $13.6 million for the three months ended June 30, 2021, an increase of $12.4 million, compared to $1.2 million for the three months ended June 30, 2020. The increase in Net Realizations was primarily attributable to an increase of $15.6 million in Realized Performance Revenues, partially offset by an increase of $5.6 million in Realized Performance Compensation.
Realized Performance Revenues were $17.1 million for the three months ended June 30, 2021, an increase of $15.6 million, compared to $1.5 million for the three months ended June 30, 2020. The increase was primarily driven by our customized solutions products having a lower loss carryforward balance entering the three months ended June 30, 2021 compared to the three months ended June 30, 2020 and realizations in commingled products.
Realized Performance Compensation increased $5.6 million from zero for the three months ended June 30, 2021 compared to the three months ended June 30, 2020. The increase was primarily due to the increase in Realized Performance Revenues.
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Six Months Ended June 30, 2021 Compared to Six Months Ended June 30, 2020
Segment Distributable Earnings were $266.7 million for the six months ended June 30, 2021, an increase of $101.6 million, or 62%, compared to $165.0 million for the six months ended June 30, 2020. The increase in Segment Distributable Earnings was attributable to increases of $29.2 million in Fee Related Earnings and $72.4 million in Net Realizations.
Fee Related Earnings
Fee Related Earnings were $192.9 million for the six months ended June 30, 2021, an increase of $29.2 million, compared to $163.7 million for the six months ended June 30, 2020. The increase in Fee Related Earnings was primarily attributable to an increase of $24.7 million in Management Fees, Net and a decrease of $9.1 million in Fee Related Compensation.
Management Fees, Net were $311.4 million for the six months ended June 30, 2021, an increase of $24.7 million, compared to $286.7 million for the six months ended June 30, 2020, primarily due to an increase in Base Management Fees. Base Management Fees increased $20.7 million primarily driven by Fee-Earning Assets Under Management growth in our individual investor and specialized solutions platform.
Fee Related Compensation was $77.5 million for the six months ended June 30, 2021, a decrease of $9.1 million, compared to $86.5 million for the six months ended June 30, 2020. The decrease was primarily due to changes in compensation accruals.
Net Realizations
Net Realizations were $73.8 million for the six months ended June 30, 2021, an increase of $72.4 million, compared to $1.4 million for the six months ended June 30, 2020. The increase in Net Realizations was attributable to increases of $45.4 million in Realized Performance Revenues and $38.6 million in Realized Principal Investment Income (Loss), partially offset by an increase of $11.6 million in Realized Performance Compensation.
Realized Performance Revenues were $48.6 million for the six months ended June 30, 2021, an increase of $45.4 million, compared to $3.2 million for the six months ended June 30, 2020. The increase was primarily driven by realizations and higher returns for the six months ended June 30, 2020, principally within customized solutions and commingled products.
Realized Principal Investment Income (Loss) was $37.7 million for the six months ended June 30, 2021, an increase of $38.6 million, compared to $(0.9) million for the six months ended June 30, 2020. The increase was primarily due to the segment’s allocation of the gain recognized in the first quarter of 2021 in connection with the Pátria sale transactions. For additional information, see Note 4. “Investments — Equity Method Investments” in the “Notes to Condensed Consolidated Financial Statements” in “Part I. Item 1. Financial Statements.”
Realized Performance Compensation was $12.5 million for the six months ended June 30, 2021, an increase of $11.6 million, compared to $0.9 million for the six months ended June 30, 2020. The increase was primarily due to the increase in Realized Performance Revenues.
Composite Returns
Composite returns information is included throughout this discussion and analysis to facilitate an understanding of our results of operations for the periods presented. The composite returns information reflected in this discussion and analysis is not indicative of the financial performance of Blackstone and is also not necessarily indicative of the future results of any particular fund or composite. An investment in Blackstone is not an investment in any of our funds or composites. There can be no assurance that any of our funds or composites or our other existing and future funds or composites will achieve similar returns.
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The following table presents the return information of the BAAM Principal Solutions Composite:
  
Three
 
Six
 
Average Annual Returns (a)
  
Months Ended
 
Months Ended
 
Periods Ended
  
June 30,
 
June 30,
 
June 30, 2021
  
2021
 
2020
 
2021
 
2020
 
One Year
 
Three Year
 
Five Year
 
Historical
Composite
 
Gross
 
Net
 
Gross
 
Net
 
Gross
 
Net
 
Gross
 
Net
 
Gross
 
Net
 
Gross
 
Net
 
Gross
 
Net
 
Gross
 
Net
BAAM Principal Solutions Composite (b)
  3%   3%   6%   6%   6%   5%   -3%   -3%   15%   14%   6%   5%   7%   6%   7%   6% 
The returns presented herein represent those of the applicable Blackstone Funds and not those of Blackstone.
 
(a)
106Composite returns present a summarized asset-weighted return measure to evaluate the overall performance of the applicable class of Blackstone Funds.
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(b)
Realized Performance Revenues were $1.5 million forBAAM’s Principal Solutions (“BPS”) Composite covers the three months ended June 30, 2020, a decrease of $10.5 million, comparedperiod from January 2000 to $12.0 million for the three months ended June 30, 2019.present, although BAAM’s inception date is September 1990. The decrease was primarily driven by ourBPS Composite includes only BAAM-managed commingled and customized solutions products entering the three months ended June 30, 2020 with larger loss carryforward balances.
Realized Performance Compensation decreased $2.2 million to zero for the three months ended June 30, 2020. The decrease was primarily due to the decrease in Realized Performance Revenues.
Six Months Ended June 30, 2020 Compared to Six Months Ended June 30, 2019
Segment Distributable Earnings were $165.0 million for the six months ended June 30, 2020, a decrease of $16.2 million, compared to $181.3 million for the six months ended June 30, 2019. The decrease in Segment Distributable Earnings was primarily attributable to a decrease of $23.1 million in Net Realizations, partially offset by an increase of $6.9 million in Fee Related Earnings.
Fee Related Earnings
Fee Related Earnings were $163.7 million for the six months ended June 30, 2020, an increase of $6.9 million, compared to $156.8 million for the six months ended June 30, 2019. The increase in Fee Related Earnings was primarily attributable to an increase of $11.3 million in Management Fees, Net, partially offset by an increase of $7.0 million in Fee Related Compensation.
Management Fees, Net were $286.7 million for the six months ended June 30, 2020, an increase of $11.3 million, compared to $275.4 million for the six months ended June 30, 2019, primarily driven by an increase in Base Management Fees. Base Management Fees increased $10.8 million primarily driven by
Fee-Earning
Assets Under Management growth in ourmulti-manager funds and accounts and does not include BAAM’s individual investor solutions (liquid alternatives), strategic capital (seeding and specialized solutions platform.
Fee Related Compensation was $86.5 millionGP minority stakes), 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, in the six months ended June 30, 2020,case of net returns, non-fee-paying assets 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 increaseinvestible product and, as such, the performance of $7.0 million, compared to $79.6 million for the six months ended June 30, 2019.BPS Composite does not represent the performance of an actual fund or account. The increase was primarily due to an increase in Management Fees, Net, on which a portion of Fee Related Compensationhistorical return is based.from January 1, 2000.
Net Realizations
Net Realizations were $1.4 million for the six months ended June 30, 2020, a decrease of $23.1 million, compared to $24.5 million for the six months ended June 30, 2019. The decrease in Net Realizations was primarily attributable to decreases of $13.0 million in Realized Principal Investment Income (Loss) and $12.8 million in Realized Performance Revenues, partially offset by a decrease of $2.6 million in Realized Performance Compensation.
Realized Principal Investment Income (Loss) was $(0.9) million for the six months ended June 30, 2020, a decrease of $13.0 million, compared to $12.0 million for the six months ended June 30, 2019. The decrease was primarily due to the realized losses on our corporate treasury investments allocated to the segment.
Realized Performance Revenues were $3.2 million for the six months ended June 30, 2020, a decrease of $12.8 million, compared to $16.1 million for the six months ended June 30, 2019. The decrease was primarily driven by lower returns in customized solutions compared to the six months ended June 30, 2019.
Realized Performance Compensation was $0.9 million for the six months ended June 30, 2020, a decrease of $2.6 million, compared to $3.6 million for the six months ended June 30, 2019. The decrease was due to a decrease in Realized Performance Revenues.
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Operating Metrics
The following table presents information regarding our Invested Performance Eligible Assets Under Management:
                                                                                                
   
Invested Performance
  
Estimated % Above
   
Eligible Assets Under
  
High Water Mark/
   
Management
  
Benchmark (a)
   
As of June 30,
  
As of June 30,
   
2020
  
2019
  
2020
 
2019
   
(Dollars in Thousands)
     
Hedge Fund Solutions Managed Funds (b)  $     43,933,866   $     44,988,825    21%   87% 
Operating Metrics
The following table presents information regarding our Invested Performance Eligible Assets Under Management:
                                                
   
Invested Performance
  
Estimated % Above
   
Eligible Assets Under
  
High Water Mark/
   
Management
  
Benchmark (a)
   
As of June 30,
  
As of June 30,
   
2021
  
2020
  
2021
 
2020
   
(Dollars in Thousands)
     
Hedge Fund Solutions Managed Funds (b)
  $     44,660,713   $     43,933,866    93%   21% 
 
(a)
Estimated % Above High Water Mark/Benchmark represents the percentage of Invested Performance Eligible Assets Under Management that as of the dates presented would earn performance fees when the applicable Hedge Fund Solutions managed fund has positive investment performance relative to a benchmark, where applicable. Incremental positive performance in the applicable Blackstone Funds may cause additional assets to reach their respective High Water Mark or clear a benchmark return, thereby resulting in an increase in Estimated % Above High Water Mark/Benchmark.
(b)
(b)
For the Hedge Fund Solutions managed funds, at June 30, 2020,For the Hedge Fund Solutions managed funds, at June 30, 2021, the incremental appreciation needed for the 79% of Invested Performance Eligible Assets Under Management below their respective High Water Marks/Benchmarks to reach their respective High Water Marks/Benchmarks was $2.5 billion, an increase of $2.1 billion, compared to $410.0 million at June 30, 2019. Of the Invested Performance Eligible Assets Under Management below their respective High Water Marks/Benchmarks as of June 30, 2020, 40% were within 5% of reaching their respective High Water Mark.
Composite Returns
Composite returns information is included throughout this discussion and analysis to facilitate an understanding of our results of operations for the periods presented. The composite returns information reflected in this discussion and analysis is not indicative7% of Invested Performance Eligible Assets Under Management below their respective High Water Marks/Benchmarks to reach their respective High Water Marks/Benchmarks was $261.5 million, a decrease of $(2.2) billion, compared to $2.5 billion at June 30, 2020. Of the financial performanceInvested Performance Eligible Assets Under Management below their respective High Water Marks/Benchmarks as of Blackstone and is also not necessarily indicativeJune 30, 2021, 55% were within 5% of the future results of any particular fund. An investment in Blackstone is not an investment in any of our funds or composites. There can be no assurance that any of our funds or composites or our other existing and future funds or composites will achieve similar returns.reaching their respective High Water Mark.
The following table presents the return information of the BAAM Principal Solutions Composite:
  
Three
 
Six
 
Average Annual Returns (a)
  
Months Ended
 
Months Ended
 
Periods Ended
  
June 30,
 
June 30,
 
June 30, 2020
  
2020
 
2019
 
2020
 
2019
 
One Year
 
Three Year
 
Five Year
 
Historical
Composite
 
Gross
 
Net
 
Gross
 
Net
 
Gross
 
Net
 
Gross
 
Net
 
Gross
 
Net
 
Gross
 
Net
 
Gross
 
Net
 
Gross
 
Net
BAAM Principal Solutions Composite (b)
  6%   6%   2%   2%   -3%   -3%   5%   5%   -1%   -1%   4%   3%   4%   3%   7%   6% 
The returns presented herein represent those of the applicable Blackstone Funds and not those of Blackstone.
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Credit & Insurance
The following table presents the results of operations for our Credit & Insurance segment:
 
(a)
Composite returns present a summarized asset-weighted return measure to evaluate the overall performance of the applicable class of Blackstone Funds.
                                                                                                                        
  
Three Months Ended
     
Six Months Ended
    
  
June 30,
 
2021 vs. 2020
 
June 30,
 
2021 vs. 2020
  
2021
 
2020
 
$
 
%
 
2021
 
2020
 
$
 
%
  
(Dollars in Thousands)
Management Fees, Net
        
Base Management Fees
 $      166,537  $      145,565  $      20,972   14%  $        328,448  $        290,893  $        37,555   13% 
Transaction and Other Fees, Net
  6,215   5,873   342   6%   11,783   11,343   440   4% 
Management Fee Offsets
  (1,137)   (2,890)   1,753           -61%   (3,262)   (5,786)   2,524           -44% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Management Fees, Net
  171,615   148,548   23,067   16%   336,969   296,450   40,519   14% 
Fee Related Performance Revenues
  15,113   8,528   6,585   77%   28,889   16,443   12,446   76% 
Fee Related Compensation
  (78,023)   (57,086)   (20,937)   37%   (155,194)   (126,495)   (28,699)   23% 
Other Operating Expenses
  (44,504)   (36,424)   (8,080)   22%   (91,339)   (75,165)   (16,174)   22% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fee Related Earnings
  64,201   63,566   635   1%   119,325   111,233   8,092   7% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Realized Performance Revenues
  41,819   1,973   39,846   n/m   67,086   11,643   55,443   476% 
Realized Performance Compensation
  (18,342)   (224)   (18,118)   n/m   (28,387)   (2,546)   (25,841)   n/m 
Realized Principal Investment Income
  5,082   280   4,802   n/m   51,465   3,532   47,933   n/m 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net Realizations
  28,559   2,029   26,530   n/m   90,164   12,629   77,535   614% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Segment Distributable Earnings
 $92,760  $65,595  $27,165   41%  $209,489  $123,862  $85,627   69% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
n/m    Not meaningful.
Three Months Ended June 30, 2021 Compared to Three Months Ended June 30, 2020
Segment Distributable Earnings were $92.8 million for the three months ended June 30, 2021, an increase of $27.2 million, or 41%, compared to $65.6 million for the three months ended June 30, 2020. The increase in Segment Distributable Earnings was attributable to increases of $0.6 million in Fee Related Earnings and $26.5 million in Net Realizations.
Segment Distributable Earnings in our Credit & Insurance segment in the second quarter of 2021 were higher compared to the second quarter of 2020, driven by an increase in Net Realizations, as well as an increase in Fee Related Earnings. Favorable market conditions, including continued market rebounds across many asset classes and tightening spreads, as well as solid underlying company performance, have positively impacted returns in our Credit segment. We have also experienced strong fundraising momentum in our perpetual capital strategies, which represent an increasing percentage of our Total Assets Under Management. Broad-based economic recovery and activity in the U.S. have accelerated following meaningful progress on
COVID-19
vaccine distribution, the easing of shutdowns and other restrictions and support from previously implemented fiscal and monetary stimulus. The segment has also benefited from favorable liquidity conditions in recent quarters. Nevertheless, both in the U.S. and abroad, there is continued uncertainty regarding the trajectory of a continuing recovery, particularly given the potential for an increase in
COVID-19
infection levels globally as a result of new variants. The economic recovery could remain uneven with meaningful dispersion across sectors and regions. Another significant market downturn could create additional pressure for borrowers with respect to their ability to meet their debt payment obligations or increase their focus on deleveraging. Our Credit & Insurance funds have, however, continued to actively manage their portfolios in order to limit downside and protect capital.
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(b)
BAAM’s Principal Solutions (“BPS”) Composite covers the period from January 2000 to present, although BAAM’s inception date is September 1990. The BPS Composite includes only BAAM-managed commingled and customized multi-manager funds and accounts. None of the other platforms/strategies managed through the Blackstone Hedge Fund Solutions Group are included in the composite (except for investments by BPS funds/accounts directly into those platforms/strategies). BAAM-managed funds in liquidation and
non-fee-paying
assets (in the case of net returns) are excluded from the composite. The historical return is from January 1, 2000.
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Credit & Insurance
The following table presents the results of operations for our Credit & Insurance segment:
                                                                                                                        
  
Three Months Ended
     
Six Months Ended
    
  
June 30,
 
2020 vs. 2019
 
June 30,
 
2020 vs. 2019
  
2020
 
2019
 
$
 
%
 
2020
 
2019
 
$
 
%
  
(Dollars in Thousands)
Management Fees, Net        
Base Management Fees $      145,565  $      147,550  $(1,985)   -1%  $290,893  $288,078  $2,815   1% 
Transaction and Other Fees, Net  5,873   5,256   617   12%   11,343   8,886   2,457   28% 
Management Fee Offsets  (2,890)   (3,279)   389   -12%   (5,786)   (6,620)   834   -13% 
                                
Total Management Fees, Net  148,548   149,527   (979)   -1%   296,450   290,344   6,106   2% 
Fee Related Performance Revenues  8,528   2,552   5,976   234%   16,443   3,655         12,788   350% 
Fee Related Compensation  (57,086)   (54,310)   (2,776)   5%   (126,495)   (112,984)   (13,511)   12% 
Other Operating Expenses  (36,424)   (40,466)           4,042   -10%   (75,165)   (72,705)   (2,460)   3% 
                                
Fee Related Earnings  63,566   57,303   6,263   11%   111,233   108,310   2,923   3% 
                                
Realized Performance Revenues  1,973   7,946   (5,973)   -75%   11,643   16,843   (5,200)   -31% 
Realized Performance Compensation  (224)   (3,468)   3,244   -94%   (2,546)   (6,839)   4,293   -63% 
Realized Principal Investment Income  280   20,925   (20,645)   -99%   3,532   24,108   (20,576)   -85% 
                                
Net Realizations  2,029   25,403   (23,374)   -92%   12,629   34,112   (21,483)   -63% 
                                
Segment Distributable Earnings $65,595  $82,706  $(17,111)   
      -21
%  $      123,862  $      142,422  $(18,560)   
      -13
% 
                                
N/M    Not meaningful.
Three Months Ended June 30, 2020 Compared to Three Months Ended June 30, 2019
Segment Distributable Earnings were $65.6 million for the three months ended June 30, 2020, a decrease of $17.1 million, compared to $82.7 million for the three months ended June 30, 2019. The decrease in Segment Distributable Earnings was primarily attributable to a decrease of $23.4 million in Net Realizations, partially offset by an increase of $6.3 million in Fee Related Earnings.
Segment Distributable Earnings in our Credit & Insurance segment in the second quarter of 2020 were lower compared to the second quarter of 2019, driven by lower Net Realizations due to lower Realized Principal Investment Income and Realized Performance Revenues, partially offset by higher Fee Related Earnings. Despite significant market rebounds across many asset classes in the second quarter of 2020, the ongoing
COVID-19
pandemic and related shutdowns of
non-essential
businesses, including as a result of persistent or accelerating infection levels in some regions have caused severe disruption in the U.S. and global economies. Although approximately 75% of our aggregate Credit & Insurance segment portfolio is in sectors that we believe are more resilient to the impact of
COVID-19,
the
COVID-19
pandemic has adversely impacted and will likely continue to adversely impact the performance of our Credit & Insurance segment. Furthermore, global growth will be significantly negatively impacted by the
COVID-19
pandemic. Although economic recovery is partially underway, it is likely to be gradual, uneven, and characterized by meaningful dispersion across sectors and regions, and the ultimate length of the recovery is uncertain. This uncertainty poses further material risk to the Credit & Insurance segment, including by potentially putting additional pressure on the ability of borrowers to meet their debt payment obligations or increased focus of companies on deleveraging. Our Credit & Insurance funds have, however, continued to actively manage their portfolios in order to limit downside and protect capital and have used the market disruption as an opportunity to deploy capital into investments that are higher in the capital structure and with counterparties that we believe to be of high quality. The
COVID-19
pandemic has also caused
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significant dislocation and, at times, limited the liquidity of certain assets traded in the credit markets. A sustained period of such dislocation would, like it did in the first quarter of 2020, likely impact the value of certain assets held by our funds and such funds’ ability to sell such assets at attractive prices or in a timely manner, each of which would adversely impact performance revenues in our Credit & Insurance segment. The
COVID-19
pandemic and such other conditions have limited and are expected to continue to limit realization opportunities for the Credit & Insurance segment at least in the near term, which is a factor that may contribute to an adverse impact on Realized Performance Revenues in future periods. Nevertheless, a continuing market recovery like that experienced in the second quarter of 2020 should be positive for realizations over time. The
COVID-19
pandemic and such other conditions may also create a more challenging capital deployment environment for our Credit & Insurance segment. In addition, given recent market turbulence and continuing uncertainty, we expect fundraising in our Credit & Insurance segment to continue, but now at a slower pace, which may result in a delay in management fees.
In energy, equity and credit markets rebounded significantly in the second quarter of 2020, but weakened market fundamentals continue to pose challenges, particularly in upstream energy. Upstream energy represents 3% of the Credit & Insurance segment’s investment portfolio and less than 2% of Blackstone’s aggregate investment portfolio. An increased focus on energy sustainability, including potential alternatives to fossil fuels, has also exacerbated the impact of such weakened market fundamentals. The persistence of these weakened market fundamentals in the energy sector or in the credit markets more broadly would further negatively impact the performance of certain investments in our credit funds. See “Part II. Item 1A. Risk Factors — The global outbreak of the novel coronavirus, or
COVID-19,
has caused severe disruptions in the U.S. and global economies and is adversely impacting, and may continue to adversely impact, our performance and results of operations.” in our Quarterly Report on Form
10-Q
for the quarter ended March 31, 2020 and the market and economic conditions risk factors in our Annual Report on Form
10-K
for the year ended December 31, 2019.
Fee Related Earnings
Fee Related Earnings were $63.6 million for the three months ended June 30, 2020, an increase of $6.3 million, or 11%, compared to $57.3 million for the three months ended June 30, 2019. The increase in Fee Related Earnings was primarily attributable to an increase of $6.0 million in Fee Related Performance Revenues and a decrease of $4.0 million in Other Operating Expenses, partially offset by an increase of $2.8 million in Fee Related Compensation.
Fee Related Performance Revenues were $8.5 million for the three months ended June 30, 2020, an increase of $6.0 million, compared to $2.6 million for the three months ended June 30, 2019. The increase was primarily due to performance and growth in assets in our BDC.
Other Operating Expenses were $36.4 million for the three months ended June 30, 2020, a decrease of $4.0 million, compared to $40.5 million for the three months ended June 30, 2019. The decrease was primarily due to less travel and entertainment expenses in the three months ended June 30, 2020 due to
COVID-19.
Fee Related Compensation was $57.1 million for the three months ended June 30, 2020, an increase of $2.8 million, compared to $54.3 million for the three months ended June 30, 2019. The increase was primarily due to an increase in Fee Related Performance Revenues, on which a portion of Fee Related Compensation is based.
Net Realizations
Net Realizations were $2.0 million for the three months ended June 30, 2020, a decrease of $23.4 million, compared to $25.4 million for the three months ended June 30, 2019. The decrease in Net Realizations was primarily attributable to decreases of $20.6 million in Realized Principal Investment Income and $6.0 million in Realized Performance Revenues, partially offset by a decrease of $3.2 million in Realized Performance Compensation.
Realized Principal Investment Income was $0.3 million for the three months ended June 30, 2020, a decrease of $20.6 million, compared to $20.9 million for the three months ended June 30, 2019. The decrease was primarily due to realized gains in our corporate treasury investments in the three months ended June 30, 2019 compared to realized losses in the three months ended June 30, 2020.
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Realized Performance Revenues were $2.0 million for the three months ended June 30, 2020, a decrease of $6.0 million, compared to $7.9 million for the three months ended June 30, 2019. The decrease was primarily attributable to a decrease in realized carry compared to the three months ended June 30, 2019.
Realized Performance Compensation was $0.2 million for the three months ended June 30, 2020, a decrease of $3.2 million, compared to $3.5 million for the three months ended June 30, 2019. The decrease was due to the decrease in Realized Performance Revenues.
Six Months Ended June 30, 2020 Compared to Six Months Ended June 30, 2019
Segment Distributable Earnings were $123.9 million for the six months ended June 30, 2020, a decrease of $18.6 million, compared to $142.4 million for the six months ended June 30, 2019. The decrease in Segment Distributable Earnings was primarily attributable to a decrease of $21.5 million in Net Realizations, partially offset by an increase of $2.9 million in Fee Related Earnings.
Fee Related Earnings
Fee Related Earnings were $111.2 million for the six months ended June 30, 2020, an increase of $2.9 million, compared to $108.3 million for the six months ended June 30, 2019. The increase in Fee Related Earnings was primarily attributable to increases of $12.8 million in Fee Related Performance Revenues and $6.1 million in Management Fees, Net, partially offset by increases of $13.5 million in Fee Related Compensation and $2.5 million in Other Operating Expenses.
Fee Related Performance Revenues were $16.4 million for the six months ended June 30, 2020, an increase of $12.8 million, compared to $3.7 million for the six months ended June 30, 2019. The increase was primarily due to performance and growth in assets in our BDC.
Management Fees, Net were $296.5 million for the six months ended June 30, 2020, an increase of $6.1 million, compared to $290.3 million for the six months ended June 30, 2019, primarily driven by an increase in Base Management Fees and Transaction and Other Fees, Net. Base Management Fees increased $2.8 million primarily due to increased capital deployed in our most recently launched credit funds and vehicles, including our BDC, and inflows in our long only business, partially offset by a decrease in Harvest. Transaction and Other Fees, Net increased $2.5 million primarily due to origination fees in our structured products group.
Fee Related Compensation was $126.5 million for the six months ended June 30, 2020, an increase of $13.5 million, compared to $113.0 million for the six months ended June 30, 2019. The increase was primarily due to increases in Management Fees, Net and Fee Related Performance Revenues, on which a portion of Fee Related Compensation is based.
Other Operating Expenses were $75.2 million for the six months ended June 30, 2020, an increase of $2.5 million, compared to $72.7 million for the six months ended June 30, 2019. The increase was primarily due to placement fees for new business initiatives, including our BDC, as well as the launch of middle office platforms for BIS, partially offset by a decrease in travel and entertainment expenses in the three months ended June 30, 2020 due to
COVID-19.
Net Realizations
Net Realizations were $12.6 million for the six months ended June 30, 2020, a decrease of $21.5 million, compared to $34.1 million for the six months ended June 30, 2019. The decrease in Net Realizations was primarily attributable to decreases of $20.6 million in Realized Principal Investment Income and $5.2 million in Realized Performance Revenues, partially offset by a decrease of $4.3 million in Realized Performance Compensation.
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Realized Principal Investment Income was $3.5 million for the six months ended June 30, 2020, a decrease of $20.6 million, compared to $24.1 million for the six months ended June 30, 2019. The decrease was primarily due to higher realized gains in our corporate treasury investments in the six months ended June 30, 2019 compared to the six months ended June 30, 2020.
Realized Performance Revenues were $11.6 million for the six months ended June 30, 2020, a decrease of $5.2 million, compared to $16.8 million for the six months ended June 30, 2019. The decrease was primarily attributable to a decrease in realized carry compared to the six months ended June 30, 2019.
Realized Performance Compensation was $2.5 million for the six months ended June 30, 2020, a decrease of $4.3 million, compared to $6.8 million for the six months ended June 30, 2019. The decrease was due to the decrease in Realized Performance Revenues.
Fund Returns
Fund return information for our significant businesses is included throughout this discussion and analysis to facilitate an understanding of our results of operations for the periods presented. The fund returns information reflected in this discussion and analysis is not indicative of the financial performance of Blackstone and is also not necessarily indicative of the future results of any particular fund. An investment in Blackstone is not an investment in any of our funds. There can be no assurance that any of our funds or our other existing and future funds will achieve similar returns.
The following table presents the return information for the Credit Composite:
  
Three Months Ended
June 30,
 
Six Months Ended
June 30,
 
June 30, 2020
  
2020
 
2019
 
2020
 
2019
 
Inception to Date
Composite (a)
 
Gross
 
Net
 
Gross
 
Net
 
Gross
 
Net
 
Gross
 
Net
 
Gross
 
Net
Credit Composite (b)
  10%   10%   2%   2%   -5%   -5%   6%   6%   8%   6% 
In energy, the macroeconomic backdrop has continued to meaningfully improve, but weakened long-term market fundamentals continue to pose challenges, particularly in upstream energy. An increased focus on energy sustainability due to concerns about climate change and the impact of carbon emissions, including potential alternatives to fossil fuels, has also exacerbated the impact of such weakened market fundamentals. The persistence of these weakened market fundamentals in the energy sector or in the credit markets more broadly would further negatively impact the performance of certain investments in our credit funds.
In addition, the Presidential administration and the U.S. Congress may introduce new or enforce existing policies and regulations that may create uncertainty for our business and investment strategies and may adversely affect the profitability of certain of our investments. See “Part I. Item 1A. Risk Factors — Risks Related to Our Business — The global outbreak of the novel coronavirus, or
COVID-19,
has caused severe disruptions in the U.S. and global economies and has adversely impacted, and may continue to adversely impact, our performance and results of operations,” “— Difficult market and geopolitical conditions can adversely affect our business in many ways, each of which could materially reduce our revenue, earnings and cash flow and adversely affect our financial prospects and condition” and “— A period of economic slowdown, which may be across one or more industries, sectors or geographies, has contributed and could in the future contribute to adverse operating performance for certain of our funds’ investments, which would adversely affect our operating results and cash flows” in our Annual Report on Form 10-K for the year ended December 31, 2020.
Fee Related Earnings
Fee Related Earnings were $64.2 million for the three months ended June 30, 2021, an increase of $0.6 million, compared to $63.6 million for the three months ended June 30, 2020. The increase in Fee Related Earnings was attributable to increases of $23.1 million in Management Fees, Net and $6.6 million in Fee Related Performance Revenues, partially offset by increases of $20.9 million in Fee Related Compensation and $8.1 million in Other Operating Expenses.
Management Fees, Net were $171.6 million for the three months ended June 30, 2021, an increase of $23.1 million, compared to $148.5 million for the three months ended June 30, 2020, primarily driven by an increase in Base Management Fees. Base Management Fees increased $21.0 million primarily due to increased capital deployed in our most recently launched credit funds and vehicles, including BXSL, and inflows in our liquid credit business.
Fee Related Performance Revenues were $15.1 million for the three months ended June 30, 2021, an increase of $6.6 million, compared to $8.5 million for the three months ended June 30, 2020. The increase was primarily due to performance and growth in assets in BXSL.
Fee Related Compensation was $78.0 million for the three months ended June 30, 2021, an increase of $20.9 million, compared to $57.1 million for the three months ended June 30, 2020. The increase was primarily due to increases in Management Fees, Net and Fee Related Performance Revenues, on which a portion of Fee Related Compensation is based.
Other Operating Expenses were $44.5 million for the three months ended June 30, 2021, an increase of $8.1 million, compared to $36.4 million for the three months ended June 30, 2020. The increase was primarily due to occupancy and technology related expenses to support business growth.
Net Realizations
Net Realizations were $28.6 million for the three months ended June 30, 2021, an increase of $26.5 million, compared to $2.0 million for the three months ended June 30, 2020. The increase in Net Realizations was primarily attributable to an increase of $39.8 million in Realized Performance Revenues, partially offset by an increase of $18.1 million in Realized Performance Compensation.
Realized Performance Revenues were $41.8 million for the three months ended June 30, 2021, an increase of $39.8 million, compared to $2.0 million for the three months ended June 30, 2020. The increase was primarily attributable to realized performance fees generated by our mezzanine opportunistic funds.
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Realized Performance Compensation was $18.3 million for the three months ended June 30, 2021, an increase of $18.1 million, compared to $0.2 million for the three months ended June 30, 2020. The increase was primarily due to the increase in Realized Performance Revenues.
Six Months Ended June 30, 2021 Compared to Six Months Ended June 30, 2020
Segment Distributable Earnings were $209.5 million for the six months ended June 30, 2021, an increase of $85.6 million, or 69%, compared to $123.9 million for the six months ended June 30, 2020. The increase in Segment Distributable Earnings was attributable to increases of $8.1 million in Fee Related Earnings and $77.5 million in Net Realizations.
Fee Related Earnings
Fee Related Earnings were $119.3 million for the six months ended June 30, 2021, an increase of $8.1 million, compared to $111.2 million for the six months ended June 30, 2020. The increase in Fee Related Earnings was attributable to increases of $40.5 million in Management Fees, Net and $12.4 million in Fee Related Performance Revenues, partially offset by increases of $28.7 million in Fee Related Compensation and $16.2 million in Other Operating Expenses.
Management Fees, Net were $337.0 million for the six months ended June 30, 2021, an increase of $40.5 million, compared to $296.5 million for the six months ended June 30, 2020, primarily driven by an increase in Base Management Fees. Base Management Fees increased $37.6 million primarily due to increased capital deployed in our most recently launched credit funds and vehicles, including BXSL, and inflows in our liquid credit business.
Fee Related Performance Revenues were $28.9 million for the six months ended June 30, 2021, an increase of $12.4 million, compared to $16.4 million for the six months ended June 30, 2020. The increase was primarily due to performance and growth in assets in BXSL.
Fee Related Compensation was $155.2 million for the six months ended June 30, 2021, an increase of $28.7 million, compared to $126.5 million for the six months ended June 30, 2020. The increase was primarily due to increases in Management Fees, Net and Fee Related Performance Revenues, on which a portion of Fee Related Compensation is based.
Other Operating Expenses were $91.3 million for the six months ended June 30, 2021, an increase of $16.2 million, compared to $75.2 million for the three months ended June 30, 2020. The increase was primarily due occupancy and technology related expenses to support business growth.
Net Realizations
Net Realizations were $90.2 million for the six months ended June 30, 2021, an increase of $77.5 million, compared to $12.6 million for the six months ended June 30, 2020. The increase in Net Realizations was attributable to increases of $55.4 million in Realized Performance Revenues and $47.9 million in Realized Principal Investment Income, partially offset by an increase of $25.8 million in Realized Performance Compensation.
Realized Performance Revenues were $67.1 million for the six months ended June 30, 2021, an increase of $55.4 million, compared to $11.6 million for the six months ended June 30, 2020. The increase was primarily attributable to realized performance fees generated by our mezzanine opportunistic funds.
Realized Principal Investment Income was $51.5 million for the six months ended June 30, 2021, an increase of $47.9 million, compared to $3.5 million for the six months ended June 30, 2020. The increase was primarily due to the segment’s allocation of the gain recognized in the first quarter of 2021 in connection with the Pátria sale transactions. For additional information, see Note 4. “Investments — Equity Method Investments” in the “Notes to Condensed Consolidated Financial Statements” in “Part I. Item 1. Financial Statements.”
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Realized Performance Compensation was $28.4 million for the six months ended June 30, 2021, an increase of $25.8 million, compared to $2.5 million for the six months ended June 30, 2020. The increase was primarily due to the increase in Realized Performance Revenues.
Composite Returns
Composite returns information is included throughout this discussion and analysis to facilitate an understanding of our results of operations for the periods presented. The composite returns information reflected in this discussion and analysis is not indicative of the financial performance of Blackstone and is also not necessarily indicative of the future results of any particular fund or composite. An investment in Blackstone is not an investment in any of our funds or composites. There can be no assurance that any of our funds or composites or our other existing and future funds or composites will achieve similar returns.
The following table presents the return information for the Private Credit and Liquid Credit composites:
  
Three Months Ended
June 30,
 
Six Months Ended
June 30,
 
June 30, 2021
  
2021
 
2020
 
2021
 
2020
 
Inception to Date
Composite (a)
 
Gross
 
Net
 
Gross
 
Net
 
Gross
 
Net
 
Gross
 
Net
 
Gross
 
Net
Private Credit (b)
  5%   4%   11%   9%   12%   10%   -14%   -12%   11%   7% 
Liquid Credit (b)
  2%   2%   10%   10%   3%   3%   -3%   -3%   5%   5% 
The returns presented herein represent those of the applicable Blackstone Funds and not those of Blackstone.
 
(a)
Net returns are based on the change in carrying value (realized and unrealized) after management fees, expenses and Performance Allocations, net of tax advances.
(b)
Effective January 1, 2021, Credit returns are presented as separate returns for Private Credit and Liquid Credit instead of as a Credit Composite. Private Credit returns include mezzanine lending funds and middle market direct lending funds (including BXSL), stressed/distressed strategies (including stressed/distressed funds and credit alpha strategies) and energy strategies. Liquid Credit returns include CLOs, closed-ended funds, open-ended funds and separately managed accounts. Only fee-earning funds exceeding $100 million of fair value at the beginning of each respective quarter-end are included. Funds in liquidation, funds investing primarily in investment grade corporate credit and our structured products group are excluded. Blackstone Funds that were contributed to BXC as part of Blackstone’s acquisition of BXC in March 2008 and the pre-acquisition date performance for funds and vehicles acquired by BXC subsequent to March 2008, are also excluded. Private Credit and Liquid Credit’s inception to date returns are from December 31, 2005. Prior periods have been updated to reflect this presentation.
(b)
Operating Metrics
The following table presents information regarding our Invested Performance Eligible Assets Under Management:
                                                                                                
   
Invested Performance

Eligible Assets Under

Management
  
Estimated % Above

High Water Mark/

Hurdle (a)
   
As of June 30,
  
As of June 30,
   
2021
  
2020
  
2021
 
2020
   
(Dollars in Thousands)
     
Credit & Insurance (b)
  $     42,210,582   $    24,731,100    76%   41% 
(a)
Effective January 1, 2020, Credit returns have been redefined to present a composite return instead of separate returns for performing credit strategies and distressed strategies. The Credit Composite now also includes the long only strategy. The Credit Composite return is a weighted-average of (a) the return based on the combined quarterly cash flows of performing credit and distressed
fee-earning
funds and (b) the weighted-average quarterly return of all long only strategy
fee-earning
funds. Only
fee-earning
funds exceeding $100 million of fair value at the beginning of each respective quarter end are included and funds in liquidation are excluded. Credit returns exclude Blackstone Funds that were contributed to GSO as part of Blackstone’s acquisition of GSO in March 2008 and the
pre-acquisition
date performance for funds and vehicles acquired by GSO subsequent to March 2008. The inception to date returns are from December 31, 2005. Prior periods have been updated to reflect this presentation.
AsEstimated % Above High Water Mark/Hurdle represents the percentage of June 30, 2020, there was $10.2 billion ofInvested Performance Eligible Assets Under Management invested inthat as of the dates presented would earn performance fees when the applicable Credit & Insurance strategies that were abovemanaged fund has positive investment performance relative to a hurdle, where applicable. Incremental positive performance in the hurdle necessary to generate Incentive Fees or Performance Allocations. This represented 21% of the total Performance Eligible Assets Under Management across all Credit & Insurance strategies.
Non-GAAP
Financial Measures
These
non-GAAP
financial measures are presented without the consolidation of anyapplicable Blackstone Funds that are consolidated into the Condensed Consolidated Financial Statements. Consequently, all
non-GAAP
financial measures exclude themay cause additional assets liabilities and operating results related to the Blackstone Funds. See “— Key Financial Measures and Indicators” for our definitions of Distributable Earnings, Segment Distributable Earnings, Fee Related Earnings and Adjusted EBITDA.
reach their respective High Water Mark or clear a hurdle return, thereby resulting in an increase in Estimated % Above High Water Mark/Hurdle.
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(b)
The following table isFor the Credit & Insurance managed funds, at June 30, 2021, the incremental appreciation needed for the 24% of Invested Performance Eligible Assets Under Management below their respective High Water Marks/Hurdles to reach their respective High Water Marks/Hurdles was $2.4 billion, a reconciliationdecrease of Net Income Attributable$(2.1) billion, compared to The Blackstone Group Inc. to Distributable Earnings, Total Segment Distributable Earnings, Fee Related Earnings and Adjusted EBITDA:$4.5 billion at June 30, 2020. Of the Invested Performance Eligible Assets Under Management below their respective High Water Marks/Hurdles as of June 30, 2021, 58% were within 5% of reaching their respective High Water Mark.
Non-GAAP Financial Measures
These non-GAAP financial measures are presented without the consolidation of any Blackstone Funds that are consolidated into the Condensed Consolidated Financial Statements. Consequently, all non-GAAP financial measures exclude the assets, liabilities and operating results related to the Blackstone Funds. See “— Key Financial Measures and Indicators” for our definitions of Distributable Earnings, Segment Distributable Earnings, Fee Related Earnings and Adjusted EBITDA.
 
(a)
This adjustment removes Transaction-Related Charges, which are excluded from Blackstone’s segment presentation. 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.
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(b)
This adjustment removes the amortization of transaction-related intangibles, which are excluded from Blackstone’s segment presentation. This amount includes amortization of intangibles associated with Blackstone’s investment in Pátria, which
The following table is a reconciliation of Net Income Attributable to The Blackstone Group Inc. to Distributable Earnings, Total Segment Distributable Earnings, Fee Related Earnings and Adjusted EBITDA:
                                                                                                
   
Three Months Ended
June 30,
 
Six Months Ended

June 30,
   
2021
 
2020
 
2021
 
2020
   
(Dollars in Thousands)
Net Income (Loss) Attributable to The Blackstone Group Inc.
   $1,309,152   $568,266   $3,057,024   $(498,226) 
Net Income (Loss) Attributable to Non-Controlling Interests in Blackstone Holdings
   1,116,193   495,128   2,351,977   (384,989) 
Net Income (Loss) Attributable to Non-Controlling Interests in Consolidated Entities
   431,516   294,378   818,366   (350,699) 
Net Income (Loss) Attributable to Redeemable Non-Controlling Interests in Consolidated Entities
   637   (3,426)   1,266   (18,895) 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net Income (Loss)
   2,857,498   1,354,346   6,228,633   (1,252,809) 
Provision (Benefit) for Taxes
   288,250   147,415   287,803   (11,288) 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net Income (Loss) Before Provision (Benefit) for Taxes
   3,145,748   1,501,761   6,516,436   (1,264,097) 
Transaction-Related Charges (a)
   35,533   76,160   63,421   123,154 
Amortization of Intangibles (b)
   17,044   16,483   34,168   32,966 
Impact of Consolidation (c)
   (432,153)   (290,952)   (819,632)   369,594 
Unrealized Performance Revenues (d)
   (2,697,170)   (1,067,923)   (5,161,667)   2,385,523 
Unrealized Performance Allocations Compensation (e)
   1,150,219   454,813   2,200,188   (942,565) 
Unrealized Principal Investment (Income) Loss (f)
   (104,658)   (223,316)   (528,592)   393,294 
Other Revenues (g)
   (27,870)   55,606   (88,143)   (82,545) 
Equity-Based Compensation (h)
   121,422   89,341   265,694   176,813 
Administrative Fee Adjustment (i)
   2,551   —   5,259   — 
Taxes and Related Payables (j)
   (140,673)   (63,990)   (224,895)   (87,043) 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Distributable Earnings
   1,069,993   547,983   2,262,237   1,105,094 
Taxes and Related Payables (j)
   140,673   63,990   224,895   87,043 
Net Interest Loss (k)
   11,201   12,634   24,129   16,575 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Segment Distributable Earnings
   1,221,867   624,607   2,511,261   1,208,712 
Realized Performance Revenues (l)
   (792,938)   (102,177)   (1,194,261)   (269,410) 
Realized Performance Compensation (m)
   338,271   37,787   489,195   109,089 
Realized Principal Investment Income (n)
   (63,132)   (18,938)   (361,288)   (39,228) 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fee Related Earnings
   $704,068   $541,279   $1,444,907   $1,009,163 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Adjusted EBITDA Reconciliation
     
Distributable Earnings
   $1,069,993   $547,983   $2,262,237   $1,105,094 
Interest Expense (o)
   44,132   38,924   88,472   80,464 
Taxes and Related Payables (j)
   140,673   63,990   224,895   87,043 
Depreciation and Amortization (p)
   12,581   8,110   24,874   15,622 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Adjusted EBITDA
   $1,267,379   $659,007   $2,600,478   $1,288,223 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(a)
This adjustment removes Transaction-Related Charges, which are excluded from Blackstone’s segment presentation. 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.
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(b)
This adjustment removes the amortization of transaction-related intangibles, which are excluded from Blackstone’s segment presentation. This amount includes amortization of intangibles associated with Blackstone’s investment in Pátria, which was historically accounted for under the equity method. As a result of Pátria’s IPO in January 2021, equity method has been discontinued and there will no longer be amortization of intangibles associated with the investment.
(c)
(c)
This adjustment reverses the effect of consolidating Blackstone Funds, which are excluded from Blackstone’s segment presentation. This adjustment includes the elimination of Blackstone’s interest in these funds and the removal of amounts associated with the ownership of Blackstone consolidated operating partnerships held by
non-controlling
This adjustment reverses the effect of consolidating Blackstone Funds, which are excluded from Blackstone’s segment presentation. This adjustment includes the elimination of Blackstone’s interest in these funds and the removal of amounts associated with the ownership of Blackstone consolidated operating partnerships held by non-controlling interests.
(d)
This adjustment removes Unrealized Performance Revenues on a segment basis. The Segment Adjustment represents the add back of performance revenues earned from consolidated Blackstone Funds which have been eliminated in consolidation.
(d)
This adjustment removes Unrealized Performance Revenues on a segment basis. The Segment Adjustment represents the add back of performance revenues earned from consolidated Blackstone Funds which have been eliminated in consolidation.
                                                                                                             
   
Three Months Ended
June 30,
 
Six Months Ended
June 30,
   
2020
  
2019
 
2020
 
2019
   
(Dollars in Thousands)
GAAP Unrealized Performance Allocations
  $1,067,923   $157,732  $(2,385,158)  $821,731 
Segment Adjustment   —    (334)   (365)   — 
                   
Unrealized Performance Revenues  $1,067,923   $157,398  $(2,385,523)  $821,731 
                   
                                                                                                
   
Three Months Ended
June 30,
  
Six Months Ended
June 30,
   
2021
  
2020
  
2021
  
2020
   
(Dollars in Thousands)
GAAP Unrealized Performance Allocations
  $2,697,170   $1,067,923   $5,161,667   $(2,385,158) 
Segment Adjustment
   —    —    —    (365) 
  
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
Unrealized Performance Revenues
  $2,697,170   $1,067,923   $5,161,667   $(2,385,523) 
  
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
 
(e)
This adjustment removes Unrealized Performance Allocations Compensation.
(f)
This adjustment removes Unrealized Principal Investment Income (Loss) on a segment basis. The Segment Adjustment 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 removal of amounts associated with the ownership of Blackstone consolidated operating partnerships held by non-controlling interests.
(f)
This adjustment removes Unrealized Principal Investment Income (Loss) on a segment basis. The Segment Adjustment 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 removal of amounts associated with the ownership of Blackstone consolidated operating partnerships held by
non-controlling
interests.
                                                                                                
   
Three Months Ended
June 30,
 
Six Months Ended
June 30,
   
2021
 
2020
 
2021
 
2020
   
(Dollars in Thousands)
GAAP Unrealized Principal Investment Income (Loss)
  $328,835  $331,762  $968,150  $(627,603) 
Segment Adjustment
   (224,177)   (108,446)   (439,558)   234,309 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Unrealized Principal Investment Income (Loss)
  $104,658  $223,316  $528,592  $(393,294) 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                                                                             
   
Three Months Ended
June 30,
 
Six Months Ended
June 30,
   
2020
 
2019
 
2020
 
2019
   
(Dollars in Thousands)
GAAP Unrealized Principal Investment Income (Loss)
  $331,762  $(37,345)  $(627,603)  $131,699 
Segment Adjustment   (108,446)   (19,008)   234,309   (48,127) 
                  
Unrealized Principal Investment Income (Loss)  $223,316  $(56,353)  $(393,294)  $83,572 
                  
(g)
This adjustment removes Other Revenues on a segment basis. The Segment Adjustment 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.
 
(g)
This adjustment removes Other Revenues on a segment basis. The Segment Adjustment 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.
                                                                                                             
   
Three Months Ended
June 30,
 
Six Months Ended
June 30,
   
2020
 
2019
 
2020
 
2019
   
(Dollars in Thousands)
GAAP Other Revenue  $(55,580)  $(17,120)  $82,600  $(6,870) 
Segment Adjustment   (26)   (3,030)   (55)   (91) 
                  
Other Revenues  $(55,606)  $(20,150)  $82,545  $(6,961) 
                  
                                                                                                
   
Three Months Ended
June 30,
 
Six Months Ended
June 30,
   
2021
 
2020
 
2021
 
2020
   
(Dollars in Thousands)
GAAP Other Revenue
  $27,896  $(55,580)  $88,200  $82,600 
Segment Adjustment
   (26)   (26)   (57)   (55) 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Other Revenues
  $27,870  $(55,606)  $88,143  $82,545 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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Table of Contents
(h)
This adjustment removes Equity-Based Compensation on a segment basis.
(i)
This adjustment adds an amount equal to an administrative fee collected on a quarterly basis from certain holders of Blackstone Holdings Partnership Units. The administrative fee is accounted for as a capital contribution under GAAP, but is reflected as a reduction of Other Operating Expenses in Blackstone’s segment presentation.
(j)
Taxes represent the total GAAP tax provision adjusted to include only the current tax provision (benefit) calculated on Income (Loss) Before Provision (Benefit) for Taxes and adjusted to exclude the tax impact of any divestitures. Related Payables represent tax-related payables including the amount payable under the Tax Receivable Agreement. See “— Key Financial Measures and Indicators — Distributable Earnings” for the full definition of Taxes and Related Payables.
                                                                                                
   
Three Months Ended
June 30,
    
Six Months Ended
June 30,
   
2021
  
2020
    
2021
    
2020
   
(Dollars in Thousands)
Taxes
  $127,809   $48,462     $197,418     $64,736 
Related Payables
   12,864    15,528      27,477      22,307 
  
 
 
 
  
 
 
 
    
 
 
 
    
 
 
 
Taxes and Related Payables
  $140,673   $63,990     $224,895     $87,043 
  
 
 
 
  
 
 
 
    
 
 
 
    
 
 
 
 
(k)
114This adjustment removes Interest and Dividend Revenue less Interest Expense on a segment basis. The Segment Adjustment represents (1) the add back of Interest and Dividend Revenue earned from consolidated Blackstone Funds which have been eliminated in consolidation, and (2) the removal of interest expense associated with the Tax Receivable Agreement.
Table of Contents
(i)
Taxes represent the total GAAP tax provision adjusted to include only the current tax provision (benefit) calculated on Income (Loss) Before Provision (Benefit) for Taxes and adjusted to exclude the tax impact of any divestitures. Related Payables represent
tax-related
payables including the amount payable under the Tax Receivable Agreement.
                                                                                                
   
Three Months Ended
June 30,
 
Six Months Ended
June 30,
   
2021
 
2020
 
2021
 
2020
   
(Dollars in Thousands)
GAAP Interest and Dividend Revenue
  $31,017  $23,924  $62,429  $59,008 
Segment Adjustment
   1,914   2,366   1,914   4,881 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest and Dividend Revenue
   32,931   26,290   64,343   63,889 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
GAAP Interest Expense
   44,322   39,276   89,305   80,920 
Segment Adjustment
   (190)   (352)   (833)   (456) 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest Expense
   44,132   38,924   88,472   80,464 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net Interest Loss
  $(11,201)  $(12,634)  $(24,129)  $(16,575) 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                                                                             
   
Three Months Ended
June 30,
  
Six Months Ended
June 30,
   
2020
  
2019
  
2020
  
2019
   
(Dollars in Thousands)
Taxes  $48,462   $34,209   $64,736   $49,553 
Related Payables   15,528    20,992    22,307    34,687 
                     
Taxes and Related Payables  $63,990   $55,201   $87,043   $84,240 
                     
(l)
(j)
This adjustment removes Interest and Dividend Revenue less Interest Expense on a segment basis. The Segment Adjustment represents (1) the add back of Other Revenues earned from consolidated Blackstone Funds which have been eliminated in consolidation, and (2) the removal of interest expense associated with the Tax Receivable Agreement.
                                                                                                             
   
Three Months Ended
June 30,
 
Six Months Ended
June 30,
   
2020
 
2019
 
2020
 
2019
   
(Dollars in Thousands)
GAAP Interest and Dividend Revenue  $23,924  $43,686  $59,008  $87,770 
Segment Adjustment   2,366   2,305   4,881   4,920 
                  
Interest and Dividend Revenue   26,290   45,991   63,889   92,690 
                  
GAAP Interest Expense   39,276   43,596   80,920   85,598 
Segment Adjustment   (352)   (366)   (456)   (730) 
                  
Interest Expense   38,924   43,230   80,464   84,868 
                  
Net Interest Income (Loss)  $(12,634)  $2,761  $(16,575)  $7,822 
                  
(k)
This adjustment removes the total segment amountsThis adjustment removes the total segment amount of Realized Performance Revenues.
(m)
(l)
This adjustment removes the total segment amountsThis adjustment removes the total segment amount of Realized Performance Compensation.
(m)
(n)
This adjustment removes the total segment amount of Realized Principal Investment Income.
(o)
(n)
This adjustment adds back Interest Expense on a segment basis.This adjustment adds back Interest Expense on a segment basis, excluding interest expense related to the Tax Receivable Agreement.
(p)
This adjustment adds back Depreciation and Amortization on a segment basis.
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The following tables are a reconciliation of Total GAAP Investments to Net Accrued Performance Revenues. Total GAAP Investments and Net Accrued Performance Revenues consist of the following:
                                                       
   
June 30,
   
2020
 
2019
   
(Dollars in Thousands)
Investments of Consolidated Blackstone Funds  $7,943,531  $8,633,794 
Equity Method Investments         
Partnership Investments   3,873,346   3,802,565 
Accrued Performance Allocations   4,715,510   6,743,542 
Corporate Treasury Investments   2,205,843   2,797,908 
Other Investments   235,143   264,231 
          
Total GAAP Investments  $18,973,373  $22,242,040 
          
   
Accrued Performance Allocations - GAAP  $4,715,510  $6,743,542 
Impact of Consolidation (a)   19   607 
Due from Affiliates - GAAP (b)   20,642   25,022 
Less: Net Realized Performance Revenues (c)   (38,592)   (71,352) 
Less: Accrued Performance Compensation - GAAP (d)   (1,989,219)   (2,724,998) 
          
Net Accrued Performance Revenues  $2,708,360  $3,972,821 
          
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The following tables are a reconciliation of Total GAAP Investments to Net Accrued Performance Revenues. Total GAAP Investments and Net Accrued Performance Revenues consist of the following:
                                                
   
June 30,
   
2021
 
2020
   
(Dollars in Thousands)
Investments of Consolidated Blackstone Funds
  $1,871,269  $7,943,531 
Equity Method Investments
   
Partnership Investments
   4,916,674   3,873,346 
Accrued Performance Allocations
   12,101,142   4,715,510 
Corporate Treasury Investments
   2,440,325   2,205,843 
Other Investments
   833,912   235,143 
  
 
 
 
 
 
 
 
Total GAAP Investments
  $22,163,322  $18,973,373 
  
 
 
 
 
 
 
 
Accrued Performance Allocations - GAAP
  $12,101,142  $4,715,510 
Impact of Consolidation (a)
   1   19 
Due from Affiliates - GAAP (b)
   59,304   20,642 
Less: Net Realized Performance Revenues (c)
   (261,760)   (38,592) 
Less: Accrued Performance Compensation - GAAP (d)
   (5,137,933)   (1,989,219) 
  
 
 
 
 
 
 
 
Net Accrued Performance Revenues
  $6,760,754  $2,708,360 
  
 
 
 
 
 
 
 
 
(a)
This adjustment adds back investments in consolidated Blackstone Funds which have been eliminated in consolidation.
(b)
Represents GAAP accrued performance revenue recorded within Due from Affiliates.
(c)
Represents Performance Revenues realized but not yet distributed as of the reporting date and are included in Distributable Earnings in the period they are realized.
(d)
Represents GAAP accrued performance compensation associated with Accrued Performance Allocations and is recorded within Accrued Compensation and Benefits and Due to Affiliates.
Liquidity and Capital Resources
General
Blackstone’s business model derives revenue primarily from third party assets under management. Blackstone is not a capital or balance sheet intensive business and targets operating expense levels such that total management and advisory fees exceed total operating expenses each period. As a result, we require limited capital resources to support the working capital or operating needs of our businesses. We draw primarily on the long-term committed capital of our limited partner investors to fund the investment requirements of the Blackstone Funds and use our own realizations and cash flows to invest in growth initiatives, make commitments to our own funds, where our minimum general partner commitments are generally less than 5% of the limited partner commitments of a fund, and pay dividends to shareholders.
Fluctuations in our statement of financial condition result primarily from activities of the Blackstone Funds that are consolidated as well as business transactions, such as the issuance of senior notes described below. The majority economic ownership interests of the Blackstone Funds are reflected as Redeemable
Non-Controlling
Interests in Consolidated Entities and
Non-Controlling
Interests in Consolidated Entities in the Condensed Consolidated Financial Statements. The consolidation of these Blackstone Funds has no net effect on Blackstone’s Net Income or Partners’ Capital. Additionally, fluctuations in our statement of financial condition also include appreciation or depreciation in Blackstone investments in the Blackstone Funds, additional investments and redemptions of such interests in the Blackstone Funds and the collection of receivables related to management and advisory fees.
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Total assets were $28.8 billion as of June 30, 2020, a decrease of $3.7 billion, from December 31, 2019. The decrease in total assets was principally due to a decrease of $3.4 billion in total assets attributable to the consolidated operating partnerships. The decrease in total assets attributable to the consolidated operating partnerships was primarily due to a decrease of $3.0 billion in Investments. The decrease in Investments was primarily due to depreciation in the value of Blackstone’s interests in its real estate and private equity investments as a result of declines in the unrealized valuations of investments in industries impacted by
COVID-19.
The other net variances of the assets attributable to the consolidated operating partnerships were relatively unchanged.
Total liabilities were $16.3 billion as of June 30, 2020, a decrease of $1.1 billion, from December 31, 2019. The decrease in total liabilities was principally due to decreases of $844.5 million in total liabilities attributable to the consolidated operating partnerships and $380.9 million in total liabilities attributable to consolidated Blackstone funds. The decrease in total liabilities attributable to the consolidated operating partnerships was primarily due to a decrease of $1.2 billion in Accrued Compensation and Benefits. The decrease in Accrued Compensation and Benefits was dueand Due to a decrease in performance compensation. The decrease in total liabilities attributable to consolidated Blackstone funds was primarily due to a decrease of $247.1 million in Loans Payable. The decrease in Loans Payable was due to depreciation in the value of Blackstone’s CLOs. The depreciation was due to the market and economic impacts of
COVID-19.Affiliates.
The other net variances of the liabilities attributable to the consolidated operating partnerships were relatively unchanged.
We have multiple sources of liquidity to meet our capital needs as described in “— Sources and Uses of Liquidity”.
Liquidity and Capital Resources
General
Blackstone’s business model derives revenue primarily from third party assets under management. Blackstone is not a capital or balance sheet intensive business and targets operating expense levels such that total management and advisory fees exceed total operating expenses each period. As a result, we require limited capital resources to support the working capital or operating needs of our businesses. We draw primarily on the long-term committed capital of our limited partner investors to fund the investment requirements of the Blackstone Funds and use our own realizations and cash flows to invest in growth initiatives, make commitments to our own funds, where our minimum general partner commitments are generally less than 5% of the limited partner commitments of a fund, and pay dividends to shareholders.
Fluctuations in our statement of financial condition result primarily from activities of the Blackstone Funds that are consolidated as well as business transactions, such as the issuance of senior notes described below. The majority economic ownership interests of the Blackstone Funds are reflected as Redeemable Non-Controlling Interests in Consolidated Entities and Non-Controlling Interests in Consolidated Entities in the Condensed Consolidated Financial Statements. The consolidation of these Blackstone Funds has no net effect on Blackstone’s Net Income or Partners’ Capital. Additionally, fluctuations in our statement of financial condition also include appreciation or depreciation in Blackstone investments in the Blackstone Funds, additional investments and redemptions of such interests in the Blackstone Funds and the collection of receivables related to management and advisory fees.
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Total Assets were $33.3 billion as of June 30, 2021, an increase of $7.0 billion, or 27%, from December 31, 2020. The increase in Total Assets was principally due to an increase of $6.9 billion in total assets attributable to consolidated operating partnerships. The increase in total assets attributable to consolidated operating partnerships was primarily due to an increase of $6.3 billion in Investments. The increase in Investments was primarily due to appreciation in the value of Blackstone’s interests in its private equity and real estate investments. The other net variances of the assets attributable to the consolidated operating partnerships were relatively unchanged.
Total Liabilities were $14.8 billion as of June 30, 2021, an increase of $3.1 billion, or 26%, from December 31, 2020. The increase in Total Liabilities was principally due to an increase of $3.1 billion in total liabilities attributable to consolidated operating partnerships. The increase in total liabilities attributable to the consolidated operating partnerships was primarily due to an increase of $2.4 billion in Accrued Compensation and Benefits. The increase in Accrued Compensation and Benefits was primarily due to an increase in performance compensation. The other net variances of the liabilities attributable to the consolidated operating partnerships were relatively unchanged.
We have multiple sources of liquidity to meet our capital needs as described in “— Sources and Uses of Liquidity.” While our liquidity has not been materially impacted by the
COVID-19
pandemic to date, we continue to closely monitor developments in the impact of the
COVID-19
pandemic and actively evaluate our sources and uses of liquidity in light of such developments.
Sources and Uses of Liquidity
We have multiple sources of liquidity to meet our capital needs, including annual cash flows, accumulated earnings in our businesses, the proceeds from our issuances of senior notes, liquid investments we hold on our balance sheet and access to our $1.6$2.25 billion committed revolving credit facility. As of June 30, 2020,2021, Blackstone had $2.0$2.5 billion in cashCash and cash equivalentsCash Equivalents and $2.2$2.4 billion invested in corporate treasury investments,Corporate Treasury Investments, against $4.7$5.7 billion in borrowings from our bond issuances, and no borrowings outstanding under our revolving credit facility.
On August 5, 2021, Blackstone issued $650 million aggregate principal amount of 1.625% senior notes due August 5, 2028, $800 million aggregate principal amount of 2.000% senior notes due January 30, 2032 and $550 million aggregate principal amount of 2.850% senior notes due August 5, 2051. Blackstone intends to use the net proceeds from the sale of the 2028 Notes, 2032 Notes and 2051 Notes for general corporate purposes, which may include funding a portion of the purchase price for the acquisition of a 9.9% equity stake in AIG’s L&R business. For additional information see Note 12. “Borrowings” in the “Notes to Condensed Consolidated Financial Statements” in “Part I. Item 1. Financial Statements” of this filing and “— Notable Transactions.”
In addition to the cash we received from our notes offerings and availability under our revolving credit facility, we expect to receive (a) cash generated from operating activities, (b) Performance Allocations and Incentive Fee realizations, and (c) realizations on the fund investments that we make. The amounts received from these three sources in particular may vary substantially from year to year and quarter to quarter depending on the frequency and size of realization events or net returns experienced by our investment funds. Our available capital could be adversely affected if there are prolonged periods of few substantial realizations from our investment funds accompanied by substantial capital calls for new investments from those investment funds. Therefore, Blackstone’s commitments to our funds are taken into consideration when managing our overall liquidity and cash position.
We expect that our primary liquidity needs will be cash to (a) provide capital to facilitate the growth of our existing businesses which principally includes funding our general partner and
co-investment
commitments to our funds, (b) provide capital to facilitate our expansion into new businesses, (c) pay operating expenses, including cash compensation to our employees and other obligations as they arise, (d) fund modest capital expenditures, (e) repay borrowings and related interest costs, (f) pay income taxes, (g) repurchase shares of our common stock and Blackstone Holdings Partnership Units pursuant to our repurchase program, and (h) pay dividends to our shareholders and distributions to the holders of Blackstone Holdings Partnership Units.
 
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Our own capital commitments to our funds, the funds we invest in and our investment strategies as of June 30, 20202021 consisted of the following:
 
                                                                                                             
         
Senior Managing Directors
   
Blackstone and
  
and Certain Other
   
General Partner
  
Professionals (a)
   
Original
  
Remaining
  
Original
  
Remaining
Fund
  
Commitment
  
Commitment
  
Commitment
  
Commitment
   
(Dollars in Thousands)
Real Estate
                    
BREP VII  $300,000   $37,347   $100,000   $12,449 
BREP VIII   300,000    49,595    100,000    16,532 
BREP IX   300,000    214,622    100,000    71,541 
BREP Europe III   100,000    13,231    35,000    4,410 
BREP Europe IV   130,000    23,540    43,333    7,847 
BREP Europe V   150,000    31,537    43,333    9,111 
BREP Europe VI   130,000    102,002    43,333    34,001 
BREP Asia I   50,000    14,806    16,667    4,935 
BREP Asia II   70,707    43,133    23,569    14,378 
BREDS II   50,000    6,227    16,667    2,076 
BREDS III   50,000    18,304    16,667    6,101 
BREDS IV   50,000    50,000    —    — 
BPP   74,918    5,108    —    — 
Other (b)   21,195    14,130    —    — 
                     
Total Real Estate   1,776,820    623,582    538,569    183,381 
                     
Private Equity
                    
BCP V   629,356    30,642    —    — 
BCP VI   719,718    82,834    250,000    28,773 
BCP VII   500,000    90,572    225,000    40,757 
BCP VIII   500,000    500,000    225,000    225,000 
BEP I   50,000    4,728    —    — 
BEP II   80,000    4,922    26,667    1,641 
BEP III   80,000    77,555    26,667    25,852 
BCEP   120,000    35,179    18,992    5,514 
BCEP II   109,980    109,980    22,436    22,436 
BCP Asia   40,000    23,466    13,333    7,822 
Tactical Opportunities   404,717    183,451    134,906    61,150 
Strategic Partners   770,642    486,953    118,907    73,413 
BIP   168,632    133,464    —    — 
BXLS   110,000    92,234    26,667    25,430 
Other (b)   274,735    34,285    —    — 
                     
Total Private Equity   4,557,780    1,890,265    1,088,575    517,788 
                     
                                                                                                
         
Senior Managing Directors
   
Blackstone and
  
and Certain Other
   
General Partner
  
Professionals (a)
   
Original
  
Remaining
  
Original
  
Remaining
Fund
  
Commitment
  
Commitment
  
Commitment
  
Commitment
   
(Dollars in Thousands)
Real Estate
        
BREP V
  $52,545   $2,185   $—   $— 
BREP VI
   750,000    36,809    150,000    12,270 
BREP VII
   300,000    33,652    100,000    11,217 
BREP VIII
   300,000    48,178    100,000    16,059 
BREP IX
   300,000    170,534    100,000    56,845 
BREP Europe III
   100,000    13,231    35,000    4,410 
BREP Europe IV
   130,000    24,074    43,333    8,025 
BREP Europe V
   150,000    32,040    43,333    9,256 
BREP Europe VI
   130,000    87,059    43,333    29,020 
BREP Asia I
   50,000    10,141    16,667    3,380 
BREP Asia II
   70,707    30,014    23,569    10,005 
BREDS II
   50,000    6,227    16,667    2,076 
BREDS III
   50,000    17,659    16,667    5,886 
BREDS IV
   50,000    33,366    —    — 
BPP
   176,306    30,315    —    — 
Other (b)
   25,599    11,557    —    — 
  
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
Total Real Estate
   2,685,157    587,041    688,569    168,449 
  
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
continued
continued...
 
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Senior Managing Directors
   
Blackstone and
  
and Certain Other
   
General Partner
  
Professionals (a)
   
Original
  
Remaining
  
Original
  
Remaining
Fund
  
Commitment
  
Commitment
  
Commitment
  
Commitment
   
(Dollars in Thousands)
Hedge Fund Solutions
                    
Strategic Alliance I  $50,000   $2,033   $—   $— 
Strategic Alliance II   50,000    1,482    —    — 
Strategic Alliance III   22,000    6,514    —    — 
Strategic Holdings I   154,610    67,180    —    — 
Strategic Holdings II   50,000    47,500    —    — 
Other (b)   11,373    8,218    —    — 
                     
Total Hedge Fund Solutions   337,983    132,927    —    — 
                     
Credit & Insurance
                    
Mezzanine / Opportunistic II   120,000    30,218    110,101    27,726 
Mezzanine / Opportunistic III   130,783    64,691    30,555    15,114 
Mezzanine / Opportunistic IV   100,000    100,000    33,333    33,333 
European Senior Debt I   63,000    16,547    56,955    14,959 
European Senior Debt II   92,711    83,101    24,113    21,614 
Stressed / Distressed I   50,000    4,869    27,666    2,694 
Stressed / Distressed II   125,000    51,695    121,050    50,061 
Stressed / Distressed III   151,000    115,238    31,805    24,273 
Energy I   80,000    38,026    75,555    35,913 
Energy II   150,000    139,880    25,423    23,708 
Credit Alpha Fund   52,102    7,465    50,624    7,254 
Credit Alpha Fund II   25,500    13,138    6,034    3,109 
Blackstone / GSO Secured Lending   74,500    26,770    —    — 
Other (b)   167,917    44,882    22,021    4,159 
                     
Total Credit & Insurance   1,382,513    736,520    615,235    263,917 
                     
Other
                    
Treasury (c)   370,132    347,161    —    — 
                     
   $8,425,228   $3,730,455   $2,242,379   $965,086 
                     
                                                                                                
         
Senior Managing Directors
   
Blackstone and
  
and Certain Other
   
General Partner
  
Professionals (a)
   
Original
  
Remaining
  
Original
  
Remaining
Fund
  
Commitment
  
Commitment
  
Commitment
  
Commitment
   
(Dollars in Thousands)
Private Equity
        
BCP V
  $629,356   $30,642   $—   $— 
BCP VI
   719,718    82,838    250,000    28,774 
BCP VII
   500,000    43,119    225,000    19,404 
BCP VIII
   500,000    443,434    225,000    199,545 
BEP I
   50,000    4,728    —    — 
BEP II
   80,000    14,477    26,667    4,826 
BEP III
   80,000    69,421    26,667    23,140 
BCEP I
   120,000    27,062    18,992    4,283 
BCEP II
   160,000    160,000    32,640    32,640 
BCP Asia I
   40,000    22,860    13,333    7,620 
BCP Asia II
   100,000    100,000    33,333    33,333 
Tactical Opportunities
   420,577    164,315    140,192    54,772 
Strategic Partners
   777,368    453,280    120,214    69,072 
BIP
   168,632    91,577    —    — 
BXLS
   110,000    81,310    26,667    23,427 
BXG
   80,500    60,227    26,667    19,942 
Other (b)
   278,669    31,787    —    — 
  
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
Total Private Equity
   4,814,820    1,881,077    1,165,372    520,778 
  
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
Hedge Fund Solutions
        
Strategic Alliance I
   50,000    2,033    —    — 
Strategic Alliance II
   50,000    1,482    —    — 
Strategic Alliance III
   22,000    2,031    —    — 
Strategic Alliance IV
   15,000    15,000    —    — 
Strategic Holdings I
   154,610    53,330    —    — 
Strategic Holdings II
   50,000    40,157    —    — 
Horizon
   100,000    13,225    —    — 
Other (b)
   18,879    10,095    —    — 
  
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
Total Hedge Fund Solutions
   460,489    137,353    —    — 
  
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
continued...
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Senior Managing Directors
   
Blackstone and
  
and Certain Other
   
General Partner
  
Professionals (a)
   
Original
  
Remaining
  
Original
  
Remaining
Fund
  
Commitment
  
Commitment
  
Commitment
  
Commitment
   
(Dollars in Thousands)
Credit & Insurance
        
Mezzanine / Opportunistic II
  $120,000   $29,458   $110,101   $27,028 
Mezzanine / Opportunistic III
   130,783    40,960    31,072    9,731 
Mezzanine / Opportunistic IV
   122,000    111,853    33,383    30,607 
European Senior Debt I
   63,000    16,521    56,882    14,917 
European Senior Debt II
   93,110    64,462    24,284    16,774 
Stressed / Distressed I
   50,000    4,869    27,666    2,694 
Stressed / Distressed II
   125,000    51,695    119,878    49,576 
Stressed / Distressed III
   151,000    113,042    31,989    23,948 
Energy I
   80,000    37,630    75,566    35,544 
Energy II
   150,000    129,739    25,565    22,112 
Credit Alpha Fund
   52,102    19,752    50,675    19,211 
Credit Alpha Fund II
   25,500    11,336    6,130    2,725 
Other (b)
   147,368    51,248    20,612    4,073 
  
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
Total Credit & Insurance
   1,309,863    682,565    613,803    258,940 
  
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
Other
        
Treasury (c)
   680,638    372,637    —    — 
  
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
  $9,950,967   $3,660,673   $2,467,744   $948,167 
  
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
 
(a)
For some of the general partner commitments shown in the table above, we require our senior managing directors and certain other professionals to fund a portion of the commitment even though the ultimate obligation to fund the aggregate commitment is ours pursuant to the governing agreements of the respective funds. The amounts of the aggregate applicable general partner original and remaining commitment are shown in the table above. In addition, certain senior managing directors and other professionals may be required to fund a de minimis amount of the commitment in certain carry funds. We expect our commitments to be drawn down over time and to be funded by available cash and cash generated from operations and realizations. Taking into account prevailing market conditions and both the liquidity and cash or liquid investment balances, we believe that the sources of liquidity described above will be more than sufficient to fund our working capital requirements.
(b)
Represents capital commitments to a number of other funds in each respective segment.
(c)
Represents loan origination commitments, revolver commitments and capital market commitments.
 
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As of June 30, 2020,2021, Blackstone Holdings Finance Co. L.L.C. (the “Issuer”), an indirect subsidiary of Blackstone, had issued and outstanding the following senior notes (collectively the “Notes”):
 
                        
   
Aggregate
   
Principal
   
Amount
   
(Dollars/Euros
Senior Notes (a)
  
in Thousands)
4.750%, Due 2/15/2023
  $400,000   
2.000%, Due 5/19/2025
  
€
300,000   
1.000%, Due 10/5/2026
  
€
600,000   
3.150%, Due 10/2/2027
  $300,000   
1.500%, Due 4/10/2029
  
€
600,000   
2.500%, Due 1/10/2030
  $500,000   
1.600%, Due 3/30/2031
$500,000  
6.250%, Due 8/15/2042
  $250,000   
5.000%, Due 6/15/2044
  $500,000   
4.450%, Due 7/15/2045
  $350,000   
4.000%, Due 10/2/2047
  $300,000   
3.500%, Due 9/10/2049
  $400,000   
2.800%, Due 9/30/2050
$400,000  
  
 
 
 
  $4,685,1005,678,700   
  
 
 
 
 
(a)
The Notes are unsecured and unsubordinated obligations of the Issuer and are fully and unconditionally guaranteed, jointly and severally, by The Blackstone Group Inc. and each of the Blackstone Holdings Partnerships. The Notes contain customary covenants and financial restrictions that, among other things, limit the Issuer and the guarantors’ ability, subject to certain exceptions, to incur indebtedness secured by liens on voting stock or profit participating equity interests of their subsidiaries or merge, consolidate or sell, transfer or lease assets. The Notes also contain customary events of default. All or a portion of the Notes may be redeemed at our option, in whole or in part, at any time and from time to time, prior to their stated maturity, at the make-whole redemption price set forth in the Notes. If a change of control repurchase event occurs, the Notes are subject to repurchase at the repurchase price as set forth in the Notes.
Blackstone, through its indirect subsidiary Blackstone Holdings Finance Co. L.L.C., has a $1.6$2.25 billion unsecured revolving credit facility (the “Credit Facility”) with Citibank, N.A., as administrative agent with a maturity date of September 21, 2023.November 24, 2025. Borrowings may also be made in U.K. sterling, euros, Swiss francs, Japanese yen or Canadian dollars, in each case subject to certain
sub-limits.
The Credit Facility contains customary representations, covenants and events of default. Financial covenants consist of a maximum net leverage ratio and a requirement to keep a minimum amount of
fee-earning
assets under management, each tested quarterly.
Share Repurchase Program
On July 16, 2019, ourMay 6, 2021, Blackstone’s board of directors authorized the repurchase of up to $1.0 billion of Class A common stock and Blackstone Holdings Partnership Units. Under the repurchase program, repurchases may be made from time to time in open market transactions, in privately negotiated transactions or otherwise. The timing and the actual number repurchased will depend on a variety of factors, including legal requirements, price and economic and market conditions. The repurchase program may be changed, suspended or discontinued at any time and does not have a specified expiration date.
During the three and six months ended June 30, 2020, we2021, Blackstone repurchased 2.0 million and 7.03.2 million shares respectively, of Blackstone Class A common stock as part of the repurchase program at a total cost of $114.9 million and $368.4 million, respectively.$289.1 million. As of June 30, 2020,2021, the amount remaining available for repurchases under the repurchase program was $412.8$758.4 million.
 
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Dividends
Our intention is to pay to holders of Class A common stock a quarterly dividend representing approximately 85% of The Blackstone Group Inc.’s share of Distributable Earnings, subject to adjustment by amounts determined by our board of directors to be necessary or appropriate to provide for the conduct of our business, to make appropriate investments in our business and funds, to comply with applicable law, any of our debt instruments or other agreements, or to provide for future cash requirements such as
tax-related
payments, clawback obligations and dividends to shareholders for any ensuing quarter. The dividend amount could also be adjusted upward in any one quarter.
For Blackstone’s definition of Distributable Earnings, see “— Key Financial Measures and Indicators”.Indicators.”
All of the foregoing is subject to the qualification that the declaration and payment of any dividends are at the sole discretion of our board of directors and our board of directors may change our dividend policy at any time, including, without limitation, to reduce such quarterly dividends or even to eliminate such dividends entirely.
Because the publicly traded entity and/or its wholly owned subsidiaries must pay taxes and make payments under the tax receivable agreements, the amounts ultimately paid as dividends by The Blackstone Group Inc. to common shareholders in respect of each fiscal year are generally expected to be less, on a per share or per unit basis, than the amounts distributed by the Blackstone Holdings Partnerships to the Blackstone personnel and others who are limited partners of the Blackstone Holdings Partnerships in respect of their Blackstone Holdings Partnership Units. Following the Conversion, we expect to pay more corporate income taxes than we would have as a limited partnership, which will increase this difference inbetween the dividend and/or distribution amounts on a per share ordividend and per unit basis.distribution amounts.
Dividends are treated as qualified dividends to the extent of Blackstone’s current and accumulated earnings and profits, with any excess dividends treated as a return of capital to the extent of the shareholder’s basis.
The following graph shows fiscal quarterly and annual per common shareholder dividends for 20192021 and 2020. Dividends are declared and paid in the quarter subsequent to the quarter in which they are earned.
 

 
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With respect to the second quarter of fiscal year 2020,2021, we paid to shareholders of our Class A common stock a dividend of $0.37$0.70 per share, aggregating to $0.76$1.52 per share of Class A common stock in respect of the six months ended June 30, 2020.2021. With respect to fiscal year 2019,2020, we paid shareholders of our Class A common stock aggregate dividends of $1.95$2.26 per share.
Leverage
We may under certain circumstances use leverage opportunistically and over time to create the most efficient capital structure for Blackstone and our shareholders. In addition to the borrowings from our note issuances and our revolving credit facility, we may use reverse repurchase agreements, repurchase agreements and securities sold, not yet purchased. All of these positions are held in a separately managed portfolio. Reverse repurchase agreements are entered into primarily to take advantage of opportunistic yields otherwise absent in the overnight markets and also to use the collateral received to cover securities sold, not yet purchased. Repurchase agreements are entered into primarily to opportunistically yield higher spreads on purchased securities. The balances held in these financial instruments fluctuate based on Blackstone’s liquidity needs, market conditions and investment risk profiles.
Generally the funds in our Private Equity segment, our opportunistic real estate funds, funds of hedge funds and certain credit-focused funds have not utilized substantial leverage at the fund level other than for (a) short-term borrowings between the date of an investment and the receipt of capital from the investing fund’s investors, and (b) long-term borrowings for certain investments in aggregate amounts which are generally 1% to 30% of the capital commitments of the respective fund. Our carry funds make direct or indirect investments in companies that utilize leverage in their capital structure. The degree of leverage employed varies among portfolio companies.
Certain of our Real Estate debt hedge funds, Hedge Fund Solutions funds and
credit-focused
funds use leverage in order to obtain additional market exposure, enhance returns on invested capital and/or to bridge short-term cash needs. The forms of leverage primarily employed by these funds include purchasing securities on margin, utilizing collateralized financing and using derivative instruments.
The following table presents information regarding these financial instruments in our Condensed Consolidated Statements of Financial Condition:
 
                                                
      
Securities
   
Repurchase
  
Sold, Not Yet
   
Agreements
  
Purchased
   
(Dollars in Millions)
Balance, June 30, 2020  $80.6   $51.4 
Balance, December 31, 2019  $154.1   $75.5 
Six Months Ended June 30, 2020    
Average Daily Balance  $110.9   $61.1 
Maximum Daily Balance  $152.8   $75.7 
                                                
      
Securities
   
Repurchase
  
Sold, Not Yet
   
Agreements
  
Purchased
   
(Dollars in Millions)
Balance, June 30, 2021
  $57.2   $35.8 
Balance, December 31, 2020
  $76.8   $51.0 
Six Months Ended June 30, 2021
    
Average Daily Balance
  $61.0   $42.3 
Maximum Daily Balance
  $75.5   $51.0 
 
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Contractual Obligations, Commitments and Contingencies
The following table sets forth information relating to our contractual obligations as of June 30, 20202021 on a consolidated basis and on a basis deconsolidating the Blackstone Funds:
 
                                                                                                                        
   
July 1, 2020 to
        
Contractual Obligations  
December 31, 2020
 
2021-2022
 
2023-2024
 
Thereafter
 
Total
   
(Dollars in Thousands)
Operating Lease Obligations (a)   $32,643   $194,348   $186,854   $275,213   $689,058 
Purchase Obligations   28,972   49,769   6,266   —   85,007 
Blackstone Issued Notes and Revolving Credit Facility (b)   —   —   400,000   4,285,100   4,685,100 
Interest on Blackstone Issued Notes and Revolving Credit Facility (c)   68,315   293,483   264,983   1,889,699   2,516,480 
Blackstone Funds and CLO Vehicles Debt Obligations Payable (d)   92   —   —   6,851,660   6,851,752 
Interest on Blackstone Funds and CLO Vehicles Debt Obligations Payable (e)   89,256   357,022   357,022   953,276   1,756,576 
Blackstone Funds Capital Commitments to Investee Funds (f)   51,819   —   —   —   51,819 
Due to Certain
Non-Controlling
Interest Holders in Connection with Tax Receivable Agreements (g)
   —   91,628   78,256   574,737   744,621 
Unrecognized Tax Benefits, Including Interest and Penalties (h)   —   952   —   —   952 
Blackstone Operating Entities Capital Commitments to Blackstone Funds and Other (i)   3,730,455   —   —   —   3,730,455 
                     
Consolidated Contractual Obligations   4,001,552   987,202   1,293,381   14,829,685   21,111,820 
Blackstone Funds and CLO Vehicles Debt Obligations Payable (d)   (92)   —   —   (6,851,660)   (6,851,752) 
Interest on Blackstone Funds and CLO Vehicles Debt Obligations Payable (e)   (89,256)   (357,022)   (357,022)   (953,276)   (1,756,576) 
Blackstone Funds Capital Commitments to Investee Funds (f)   (51,819)   —   —   —   (51,819) 
                     
Blackstone Operating Entities Contractual Obligations   $3,860,385   $630,180   $936,359   $7,024,749   $12,451,673 
                     
                                                                                                                        
   
July 1, 2021 to
           
Contractual Obligations
  
December 31, 2021
 
2022-2023
  
2024-2025
  
Thereafter
  
Total
   
(Dollars in Thousands)
Operating Lease Obligations (a)
   $59,483   $246,399    $209,251    $293,223    $808,356 
Purchase Obligations
   46,080   55,482    7,106    —    108,668 
Blackstone Issued Notes and Revolving Credit Facility (b)
   —   400,000    355,740    4,922,960    5,678,700 
Interest on Blackstone Issued Notes and Revolving Credit Facility (c)
   78,290   325,004    296,504    2,088,579    2,788,377 
Blackstone Funds Debt Obligations Payable
   99   —    —    —    99 
Blackstone Funds Capital Commitments to Investee Funds (d)
   292,970   —    —    —    292,970 
Due to Certain Non-Controlling Interest Holders in Connection with Tax Receivable Agreements (e)
   —   107,144    105,779    738,566    951,489 
Unrecognized Tax Benefits, Including Interest and Penalties (f)
   1,098   —    —    —    1,098 
Blackstone Operating Entities Capital Commitments to Blackstone Funds and Other (g)
   3,660,673   —    —    —    3,660,673 
  
 
 
 
 
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
Consolidated Contractual Obligations
   4,138,693   1,134,029    974,380    8,043,328    14,290,430 
Blackstone Funds Debt Obligations Payable
   (99)   —    —    —    (99) 
Blackstone Funds Capital Commitments to Investee Funds (d)
   (292,970)   —    —    —    (292,970) 
  
 
 
 
 
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
Blackstone Operating Entities Contractual Obligations
  $3,845,624  $1,134,029   $974,380   $8,043,328   $13,997,361 
  
 
 
 
 
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
 
(a)
We lease our primary office space and certain office equipment under agreements that expire through 2030.2031. Occupancy lease agreements, in addition to contractual rent payments, generally include additional payments for certain costs incurred by the landlord, such as building expenses, and utilities. To the extent these are fixed or determinable they are included in the table above. The table above includes operating leases that are recognized as Operating Lease Liabilities, short-term leases that are not recorded as Operating Lease Liabilities and leases that have been signed but not yet commenced which are not recorded as Operating Lease Liabilities. The amounts in this table are presented net of contractual sublease commitments.
(b)
Represents the principal amount due on the senior notes we issued. As of June 30, 2020,2021, we had no outstanding borrowings under our revolver.
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(c)
Represents interest to be paid over the maturity of our senior notes and borrowings under our revolving credit facility which has been calculated assuming no
pre-payments
are made and debt is held until its final maturity date. These amounts exclude commitment fees for unutilized borrowings under our revolver.
(d)
These obligations are those of the Blackstone Funds including the consolidated CLO vehicles.
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(e)
Represents interest to be paid over the maturity of the related consolidated Blackstone Funds’ and CLO vehicles’ debt obligations which has been calculated assuming no
pre-payments
will be made and debt will be held until its final maturity date. The future interest payments are calculated using variable rates in effect as of June 30, 2020, at spreads to market rates pursuant to the financing agreements, and range from 1.6% to 7.6%. The majority of the borrowings are due on demand and for purposes of this schedule are assumed to mature within one year. Interest on the majority of these borrowings rolls over into the principal balance at each reset date.
(f)(d)
These obligations represent commitments of the consolidated Blackstone Funds to make capital contributions to investee funds and portfolio companies. These amounts are generally due on demand and are therefore presented in the less than one year category.
(g)(e)
Represents obligations by Blackstone’s corporate subsidiary to make payments under the Tax Receivable Agreements to certain
non-controlling
interest holders for the tax savings realized from the taxable purchases of their interests in connection with the reorganization at the time of Blackstone’s IPO in 2007 and subsequent purchases. The obligation represents the amount of the payments currently expected to be made, which are dependent on the tax savings actually realized as determined annually without discounting for the timing of the payments. As required by GAAP, the amount of the obligation included in the Condensed Consolidated Financial Statements and shown in Note 16. “Related Party Transactions” (see “Part I. Item 11. Financial Statements”) differs to reflect the net present value of the payments due to certain
non-controlling
interest holders.
(h)(f)
The total represents gross unrecognized tax benefits of $0.5 million and interest and penalties of $0.5$0.6 million. In addition, Blackstone is not able to make a reasonably reliable estimate of the timing of payments in individual years in connection with gross unrecognized benefits of $28.5$36.9 million and interest of $2.5 million;$3.9 million, therefore, such amounts are not included in the above contractual obligations table.
(i)(g)
These obligations represent commitments by us to provide general partner capital funding to the Blackstone Funds, limited partner capital funding to other funds and Blackstone principal investment commitments. These amounts are generally due on demand and are therefore presented in the less than one year category; however, a substantial amount of the capital commitments are expected to be called over the next three years. We expect to continue to make these general partner capital commitments as we raise additional amounts for our investment funds over time.
Guarantees
Blackstone and certain of its consolidated funds provide financial guarantees. The amounts and nature of these guarantees are described in Note 17. “Commitments and Contingencies – Contingencies –Contingencies— Contingencies— Guarantees” in the “Notes to Condensed Consolidated Financial Statements” in “Part I. Item 1. Financial Statements” of this filing.
Indemnifications
In many of its service contracts, Blackstone agrees to indemnify the third party service provider under certain circumstances. The terms of the indemnities vary from contract to contract and the amount of indemnification liability, if any, cannot be determined and has not been included in the table above or recorded in our Condensed Consolidated Financial Statements as of June 30, 2020.2021.
Clawback Obligations
Performance Allocations are subject to clawback to the extent that the Performance Allocations received to date with respect to a fund exceeds the amount due to Blackstone based on cumulative results of that fund. The actual clawback liability, however, generally does not become realized until the endnature and amounts of a fund’s life except for certain Blackstone real estate funds, multi-asset class investment funds and credit-focused funds, which may have an interim clawback liability. The lives of the carry funds, including available contemplated extensions, for which a liability for potentialBlackstone’s clawback obligations has been recorded for financial reporting purposes, are currently anticipated to expire at various points through 2029. Further extensions of such terms may be implemented under given circumstances.
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For financial reporting purposes, when applicable, the general partners record a liability for potential clawback obligations to the limited partners of some of the carry funds due to changesdescribed in the unrealized value of a fund’s remaining investments and where the fund’s general partner has previously received Performance Allocation distributions with respect to such fund’s realized investments.
As of June 30, 2020, the total clawback obligations were $194.7 million, of which $157.1 million was related to Blackstone Holdings and $37.6 million was related to current and former Blackstone personnel. The split of clawback between Blackstone Holdings and current and former personnel is based on the performance of individual investments held by a fund rather than on a fund by fund basis. The increase in contingent obligations related to clawback for the period ended June 30, 2020 was driven by unrealized depreciation in the fair value of certain underlying fund investments driven by the impact of
COVID-19.
If, at June 30, 2020, all of the investments held by our carry funds were deemed worthless, a possibility that management views as remote, the amount of Performance Allocations subject to potential clawback would be $3.6 billion, on an
after-tax
basis where applicable, of which Blackstone Holdings is potentially liable for $3.2 billion if current and former Blackstone personnel default on their share of the liability, a possibility that management also views as remote. See Note 16. “Related Party Transactions” and Note 17. “Commitments and Contingencies”Contingencies— Contingencies — Contingent Obligations (Clawback)” in the “Notes to Condensed Consolidated Financial Statements” in “Part I. Item 1.I. Financial Statements” of this filing.
Critical Accounting Policies
We prepare our Condensed Consolidated Financial Statements in accordance with GAAP. In applying many of these accounting principles, we need to make assumptions, estimates and/or judgments that affect the reported amounts of assets, liabilities, revenues and expenses in our Condensed Consolidated Financial Statements. We base our estimates and judgments on historical experience and other assumptions that we believe are reasonable under the circumstances. These assumptions, estimates and/or judgments, however, are often subjective. Actual results may be affected negatively based on changing circumstances. If actual amounts are ultimately different from our estimates, the revisions are included in our results of operations for the period in which the actual amounts become known. We believe the following critical accounting policies could potentially produce materially different results if we were to change underlying assumptions, estimates and/or judgments. For a description of our accounting policies, see Note 2. “Summary of Significant Accounting Policies” in the “Notes to Condensed Consolidated Financial Statements” in “Part I. Item 1. Financial Statements” of this filing.
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Principles of Consolidation
For a description of our accounting policy on consolidation, see Note 2. “Summary of Significant Accounting Policies — Consolidation” and Note 9. “Variable Interest Entities” in the “Notes to Condensed Consolidated Financial Statements” in “Part I. Item 1. Financial Statements” of this filing for detailed information on Blackstone’s involvement with VIEs. The following discussion is intended to provide supplemental information about how the application of consolidation principles impact our financial results, and management’s process for implementing those principles including areas of significant judgment.
The determination that Blackstone holds a controlling financial interest in a Blackstone Fund or investment vehicle significantly changes the presentation of our Condensed Consolidated Financial Statements.condensed consolidated financial statements. In our Condensed Consolidated Statements of Financial Position included in this filing, we present 100% of the assets and liabilities of consolidated VIEs along with a
non-controlling
interest which represents the portion of the consolidated vehicle’s interests held by third parties. However, assets of our consolidated VIEs can only be used to settle obligations of the consolidated VIE and are not available for general use by Blackstone. Further, the liabilities of our consolidated VIEs do not have recourse to the general credit of Blackstone. In the Condensed Consolidated Statements of Operations, we eliminate any management fees, Incentive Fees, or Performance Allocations
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received or accrued from consolidated VIEs as they are considered intercompany transactions. We recognize 100% of the consolidated VIE’s investment income (loss) and allocate the portion of that income (loss) attributable to third party ownership to
non-controlling
interests in arriving at Net Income Attributable to The Blackstone Group Inc.
The assessment of whether we consolidate a Blackstone Fund or investment vehicle we manage requires the application of significant judgment. These judgments are applied both at the time we become involved with the VIE and on an ongoing basis and include, but are not limited to:
 
Determining whether our management fees, Incentive Fees or Performance Allocations represent variable interests – We make judgments as to whether the fees we earn are commensurate with the level of effort required for those fees and at market rates. In making this judgment, we consider, among other things, the extent of third party investment in the entity and the terms of any other interests we hold in the VIE.
 
Determining whether
kick-out
rights are substantive – We make judgments as to whether the third party investors in a partnership entity have the ability to remove the general partner, the investment manager or its equivalent, or to dissolve (liquidate) the partnership entity, through a simple majority vote. This includes an evaluation of whether barriers to exercise these rights exist.
 
Concluding whether Blackstone has an obligation to absorb losses or the right to receive benefits that could potentially be significant to the VIE – As there is no explicit threshold in GAAP to define “potentially significant,” management must apply judgment and evaluate both quantitative and qualitative factors to conclude whether this threshold is met.
Revenue Recognition
For a description of our accounting policy on revenue recognition, see Note 2. “Summary of Significant Accounting Policies — Revenue Recognition” in the “Notes to Condensed Consolidated Financial Statements” in “Part I. Item 1. Financial Statements”.Statements.” For an additional description of the nature of our revenue arrangements, including how management fees, Incentive Fees, and Performance Allocations are generated, please refer to “Part I. Item 1. Business — Fee Structure/Incentive Arrangements” in our Annual Report on
Form 10-K
for the year ended December 31, 2019.2020. The following discussion is intended to provide supplemental information about how the application of revenue recognition principles impact our financial results, and management’s process for implementing those principles including areas of significant judgment.
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Management and Advisory Fees, Net
— Blackstone earns base management fees from the investors in its managed funds and investment vehicles, at a fixed percentage of a calculation base, which is typically assets under management, net asset value, total assets, committed capital or invested capital. The range of management fee rates and the calculation base from which they are earned, generally, are as follows:
On private equity, real estate, and certain of our hedge fund solutions and credit-focused funds:
 
0.25% to 1.75% of committed capital or invested capital during the investment period,
 
0.25% to 1.50% of invested capital, committed capital or investment fair value subsequent to the investment period for private equity and real estate funds, and
 
0.75%1.00% to 1.50% of invested capital or net asset value subsequent to the investment period for certain of our hedge fund solutions and
credit-focused
funds.
On real estate, credit and
MLP-focused
funds structured like hedge funds:
 
0.24% to 1.50% of net asset value.
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On credit and
MLP-focused
separately managed accounts:
 
0.24%0.20% to 1.50% of net asset value or total assets.
On real estate separately managed accounts:
 
0.65% to 2.00% of invested capital, net operating income or net asset value.
On funds of hedge funds, certain hedge funds and separately managed accounts invested in hedge funds:
 
0.25% to 1.50% of net asset value.
On CLO vehicles:
 
0.40% to 0.65%0.50% of the aggregate par amount of collateral assets, including principal cash.
On credit-focused registered and
non-registered
investment companies:
 
0.35%0.25% to 1.50%1.25% of total assets or net asset value.
The investment adviser of BXMT receives annual management fees based on 1.50% of BXMT’s net proceeds received from equity offerings and accumulated “core“distributable earnings” (which is generally equal to its GAAP net income excluding certain
non-cash
and other items), subject to certain adjustments. The investment adviser of BREIT receives a management fee of 1.25% per annum of net asset value, payable monthly.
Management fee calculations based on committed capital or invested capital are mechanical in nature and therefore do not require the use of significant estimates or judgments. Management fee calculations based on net asset value, total assets, or investment fair value depend on the fair value of the underlying investments within the funds. Estimates and assumptions are made when determining the fair value of the underlying investments within the funds and could vary depending on the valuation methodology that is used as well as economic conditions. See “— Fair Value” below for further discussion of the judgment required for determining the fair value of the underlying investments.
Investment Income (Loss)
— Performance Allocations are made to the general partner based on cumulative fund performance to date, subject to a preferred return to limited partners. Blackstone has concluded that investments made alongside its limited partners
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in a partnership which entitle Blackstone to a Performance Allocation represent equity method investments that are not in the scope of the GAAP guidance on accounting for revenues from contracts with customers. Blackstone accounts for these arrangements under the equity method of accounting. Under the equity method, Blackstone’s share of earnings (losses) from equity method investments is determined using a balance sheet approach referred to as the hypothetical liquidation at book value (“HLBV”) method. Under the HLBV method, at the end of each reporting period Blackstone calculates the accrued Performance Allocations that would be due to Blackstone for each fund pursuant to the fund agreements as if the fair value of the underlying investments were realized as of such date, irrespective of whether such amounts have been realized. Performance Allocations are subject to clawback to the extent that the Performance Allocation received to date exceeds the amount due to Blackstone based on cumulative results.
The change in the fair value of the investments held by certain Blackstone Funds is a significant input into the accrued Performance Allocation calculation and accrual for potential repayment of previously received Performance Allocations. Estimates and assumptions are made when determining the fair value of the underlying investments within the funds. See “— Fair Value” below for further discussion related to significant estimates and assumptions used for determining fair value of the underlying investments.
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Fair Value
Blackstone uses fair value throughout the reporting process. For a description of our accounting policies related to valuation, see Note 2. “Summary of Significant Accounting Policies —
COVID-19
and Global Economic Conditions”,Market Conditions,” “Summary of Significant Accounting Policies — Fair Value of Financial Instruments” and “Summary of Significant Accounting Policies — Investments, at Fair Value” in the “Notes to Condensed Consolidated Financial Statements” in “Part I. Item 1. Financial Statements” of this filing. The following discussion is intended to provide supplemental information about how the application of fair value principles impact our financial results, and management’s process for implementing those principles including areas of significant judgment.
The fair value of the investments held by Blackstone Funds is the primary input to the calculation of certain of our management fees, Incentive Fees, Performance Allocations and the related Compensation we recognize. The Blackstone Funds are accounted for as investment companies under the American Institute of Certified Public Accountants Accounting and Auditing Guide,
Investment Companies
, and in accordance with the GAAP guidance on investment companies and reflect their investments, including majority owned and controlled investments (the “Portfolio Companies”), at fair value. In the absence of observable market prices, we utilize valuation methodologies applied on a consistent basis and assumptions that we believe market participants would use to determine the fair value of the investments. For investments where little market activity exists management’s determination of fair value is based on the best information available in the circumstances, which may incorporate management’s own assumptions and involves a significant degree of judgment, and the consideration of a combination of internal and external factors, including the appropriate risk adjustments for
non-performance
and liquidity risks.
Blackstone has also elected the fair value option for certain instruments it owns directly, including loans and receivables and investments in private debt securities, the assets of consolidated CLO vehicles and other proprietary investments. Blackstone is required to measure certain financial instruments at fair value, including debt instruments, equity securities and freestanding derivatives.
Fair Value of Investments or Instruments that are Publicly Traded
Securities that are publicly traded and for which a quoted market exists will be valued at the closing price of such securities in the principal market in which the security trades, or in the absence of a principal market, in the most advantageous market on the valuation date. When a quoted price in an active market exists, no block discounts or control premiums are permitted regardless of the size of the public security held. In some cases, securities will include legal and contractual restrictions limiting their purchase and sale for a period of time, such as may be required under SEC Rule 144 or by underwriters in certain transactions.144. A discount to publicly traded price may be appropriate in those cases; the amount of the discount, if taken, shall be determined based on the time period that must pass before the restricted security becomes unrestricted or otherwise available for sale.
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Fair Value of Investments or Instruments that are not Publicly Traded
Investments for which market prices are not observable include private investments in the equity or debt of operating companies or real estate properties. Our primary methodology for determining the fair values of such investments is generally the income approach which provides an indication of fair value based on the present value of cash flows that a business, security, or property is expected to generate in the future. The most widely used methodology under the income approach is the discounted cash flow method which includes significant assumptions about the underlying investment’s projected net earnings or cash flows, discount rate, capitalization rate and exit multiple. Our secondary methodology, generally used to corroborate the results of the income approach, is typically the market approach. The most widely used methodology under the market approach relies upon valuations for comparable public companies, transactions, or assets, and includes making judgments about which companies, transactions, or assets are comparable. Depending on the facts and circumstances associated with the investment, different primary and secondary methodologies may be used including option value, contingent claims or scenario analysis, yield analysis, projected cash flow through maturity or expiration, probability weighted methods or recent round of financing.
In certain cases debt and equity securities are valued on the basis of prices from an orderly transaction between market participants provided by reputable dealers or pricing services. In determining the value of a particular investment, pricing services may use certain information with respect to transactions in such investments, quotations from dealers, pricing matrices and market transactions in comparable investments and various relationships between investments.
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Management Process on Fair Value
Due to the importance of fair value throughout the condensed consolidated financial statements and the significant judgment required to be applied in arriving at those fair values, we have developed a process around valuation that incorporates several levels of approval and review from both internal and external sources. Investments held by Blackstone Fund investmentsFunds and investment vehicles are valued on at least a quarterly basis by our internal valuation or asset management teams, which are independent from our investment teams.
For investments valued utilizing the income method, and where Blackstone has information rights, we generally have a direct line of communication with each of the Portfolio Company finance teams and collect financial data used to support projections used in a discounted cash flow analysis. The respective businesses’business unit’s valuation team then analyzes the data received and updates the valuation models reflecting any changes in the underlying cash flow projections, weighted-average cost of capital, exit multiple, and any other valuation input relevant economic conditions.
The results of all valuations of investments held by Blackstone Fund and investment vehicles are reviewed and approved by the relevant business unit’s valuation
sub-committee,
which is comprised of key personnel from the business unit, typically the chief investment officer, chief operating officer, chief financial officer, chief compliance officer (or their respective equivalents where applicable) and other senior managing directors in the business. To further corroborate our results, weeach business unit also generally obtainobtains either a positive assurance opinion or a range of value byfrom an independent valuation party, at least annually for allinternally prepared valuations for investments that have been held by Blackstone Funds and investment vehicles for greater than a year and quarterly for certain investments. Our firmwide valuation committee, chaired by our Chief Financial Officer and comprised of senior headsmembers of our businesses and representatives from corporate functions, including legal and finance, reviews the valuation process for investments held by us and our investment vehicles, including the application of appropriate valuation standards on a consistent basis. Each quarter, the valuations of the investment portfolios of Blackstone Funds are presented tovaluation process is also reviewed by the audit committee of our board of directors, which is comprised of
non-employee our employee directors.
directors.
The global outbreak of
COVID-19
required management to make significant judgments about the ultimate adverse impact of
COVID-19
on financial markets and economic conditions, which is uncertain and may change over time. These judgments and estimates were incorporated into the valuation process outlined herein. Management’s policies were unchanged and certain critical processes were executed in a remote working environment.
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Income Tax
For a description of our accounting policy on taxes and additional information on taxes see Note 2. “Summary of Significant Accounting Policies” in “Part II. Item 8. Financial Statements and Supplementary Data” in our Annual Report on Form
10-K
for the year ended December 31, 2019.2020. For additional information on taxes see Note 13. “Income Taxes” in the “Notes to Consolidated Financial Statements” in “— Item 8. Financial Statements and Supplementary Data” of this filing and Note 15. “Income Taxes” in “Part II. Item 8. Financial Statements and Supplementary Data” in our Annual Report on Form
10-K
for the year ended December 31, 2019.2020.
Our provision for income taxes is composed of current and deferred taxes. Current income taxes approximate taxes to be paid or refunded for the current period. Deferred income taxes reflect the net tax effects of temporary differences between the financial reporting and tax bases of assets and liabilities and are measured using the applicable enacted tax rates and laws that will be in effect when such differences are expected to reverse. During the year ended December 31, 2019, theThe Conversion resulted in a
step-up
in the tax basis of certain assets that will be recovered as those assets are sold or the basis is amortized. The final amount of the
step-up
in tax basis may differ as the basis information becomes available and is finalized.
Additionally, significant judgment is required in estimating the provision for (benefit from) income taxes, current and deferred tax balances (including valuation allowance), accrued interest or penalties and uncertain tax positions. In evaluating these judgments, we consider, among other items, projections of taxable income (including the character of such income), beginning with historic results and incorporating assumptions of the amount of future pretax operating income. These assumptions about future taxable income require significant judgment and are consistent with the plans and estimates that Blackstone uses to manage its business. A portion of the deferred tax assets are not considered to be more likely than not to be realized due to the character of income necessary for recovery. For that portion of the deferred tax assets, a valuation allowance has been recorded.
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Revisions in estimates and/or actual costs of a tax assessment may ultimately be materially different from the recorded accruals and unrecognized tax benefits, if any.
Off-Balance
Sheet Arrangements
In the normal course of business, we engage in
off-balance
sheet arrangements, including transactions in derivatives, guarantees, commitments, indemnifications and potential contingent repayment obligations. We do not have any
off-balance
sheet arrangements that would require us to fund losses or guarantee target returns to investors in our funds.
Further disclosure on our
off-balance
sheet arrangements is presented in the “Notes to Condensed Consolidated Financial Statements” in “Part I. Item 1. Financial Statements” of this filing as follows:
 
Note 9. “Variable Interest Entities”,Entities,” and
 
Note 17. “Commitments and Contingencies — Commitments — Investment Commitments” and “— Contingencies — Guarantees”.Guarantees.”
Recent Accounting Developments
Information regarding recent accounting developments and their impact on Blackstone can be found in Note 2. “Summary of Significant Accounting Policies” in the “Notes to Condensed Consolidated Financial Statements” in “Part I. Item 1. Financial Statements” of this filing.
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Interbank Offered Rates Transition
Certain jurisdictions are currently reforming or phasing out their Interbank Offered Rates (“IBORs”), including, without limitation,benchmark interest rates, most notably the London Interbank Offered Rates Euro Interbank Offered Rate, Tokyo Interbank Offered Rate, Hong Kong Interbank Offered Rate and Singapore Interbank Offered Rate.(“LIBOR”) across multiple currencies. The timing of the anticipated reforms or phase-outs vary by jurisdiction, with most of the reforms or phase-outs currently scheduled to take effect atby the end of calendar year 2021.2021 and certain U.S. dollar LIBOR tenors persisting through June 2023. Blackstone is evaluating the operational impact of such changes on existing transactions and contractual arrangements and managing transition efforts. See “Part I. Item 1A. Risk Factors — Risks Related to Our Business — Interest rates on our and our portfolio companies’ outstanding financial instruments might be subject to change based on regulatory developments, which could adversely affect our revenue, expenses and the value of those financial instruments.” in our Annual Report on Form
10-K
for the year ended December 31, 2019.2020.
Item 3.  Quantitative and Qualitative Disclosures About Market Risk
Our predominant exposure to market risk is related to our role as general partner or investment adviser to the Blackstone Funds and the sensitivities to movements in the fair value of their investments, including the effect on management fees, performance revenues and investment income.
Effect on Fund Management Fees
Our management fees are based on (a) third parties’ capital commitments to a Blackstone Fund, (b) third parties’ capital invested in a Blackstone Fund or (c) the net asset value, or NAV, of a Blackstone Fund, as described There were no material changes in our Condensed Consolidated Financial Statements. Management fees will only be directly affected by short-term changes in market conditions to the extent they are based on NAV or represent permanent impairments of value. These management fees will be increased (or reduced) in direct proportion to the effect of changes in the fair value of our investments in the related funds. The proportion of our management fees that are based on NAV is dependent on the number and types of Blackstone Funds in existence and the current stage of each fund’s life cycle. For the six months ended June 30, 2020 and June 30, 2019, the percentages of our fund management fees based on the NAV of the applicable funds or separately managed accounts, were as follows:
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Six Months Ended
June 30,
   
2020
 
2019
Fund Management Fees Based on the NAV of the Applicable Funds or Separately Managed Accounts   34%     40%   
Market Risk
The Blackstone Funds hold investments which are reported at fair value. Based on the fair valuerisks as of June 30, 2020 and June 30, 2019, we estimate that a 10% decline in fair value of the investments would result in the following declines in Management Fees, Performance Revenues, Net of Related Compensation Expense and Investment Income:
                                                                                                                                                                   
   
June 30,
   
2020
  
2019
      
Performance
        
Performance
   
      
Revenues,
        
Revenues,
   
      
Net of Related
        
Net of Related
   
   
Management
  
Compensation
  
Investment
  
Management
  
Compensation
  
Investment
   
Fees (a)
  
Expense (b)
  
Income (b)
  
Fees (a)
  
Expense (b)
  
Income (b)
   
(Dollars in Thousands)
10% Decline in Fair Value of the Investments  $169,543   $1,336,620   $163,015   $142,689   $1,552,228   $181,076 
(a)
Represents the annualized effect of the 10% decline.
(b)
Represents the reporting date effect of the 10% decline.
Total Assets Under Management, excluding undrawn capital commitments and the amount of capital raised for our CLOs, by segment, and the percentage amount classified2021 as Level III investments as defined within the fair value standards of GAAP, are as follows:
                                                
   
June 30, 2020
   
Total Assets Under Management,
Excluding Undrawn Capital
Commitments and the Amount of
Capital Raised for CLOs
  
Percentage Amount
    Classified as Level III    
Investments
   
(Dollars in Thousands)
   
Real Estate
  $118,791,519               87%
Private Equity
  $88,517,036               67%
Hedge Fund Solutions
  $72,524,790               11%
Credit & Insurance
  $71,741,038               30%
The fair value of our investments and securities can vary significantly based on a number of factors that take into consideration the diversity of the Blackstone Funds’ investment portfolio and on a number of factors and inputs such as similar transactions, financial metrics, and industry comparatives, among others. See “Part I. Item 1A. Risk Factors” incompared to December 31, 2020. For additional information, refer to our Annual Report on
Form 10-K
for the year ended December 31, 2019. Also see “Part I. Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations — Critical Accounting Policies — Fair Value”. We believe these fair value amounts should be utilized with caution as our intent and strategy is to hold investments and securities until prevailing market conditions are beneficial for investment sales.2020.
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Investors in our carry funds (and certain other of our funds) make capital commitments to those funds that we are entitled to call from those investors at any time during prescribed periods. We depend on investors fulfilling their commitments when we call capital from them in order for those funds to consummate investments and otherwise pay their related obligations when due, including management fees. We have not had investors fail to honor capital calls to any meaningful extent and any investor that did not fund a capital call would be subject to having a significant amount of its existing investment forfeited in that fund; however, if investors were to fail to satisfy a significant amount of capital calls for any particular fund or funds, those funds could be materially and adversely affected.
Exchange Rate Risk
The Blackstone Funds hold investments that are denominated in
non-U.S.
dollar currencies that may be affected by movements in the rate of exchange between the U.S. dollar and
non-U.S.
dollar currencies. Additionally, a portion of our management fees are denominated in
non-U.S.
dollar currencies. We estimate that as of June 30, 2020 and June 30, 2019, a 10% decline in the rate of exchange of all foreign currencies against the U.S. dollar would result in the following declines in Management Fees, Performance Revenues, Net of Related Compensation Expense and Investment Income:
                                                                                                                                                
   
June 30,
   
2020
  
2019
      
Performance
        
Performance
   
      
Revenues,
        
Revenues,
   
      
Net of Related
        
Net of Related
   
   
Management
  
Compensation
  
Investment
  
Management
  
Compensation
  
Investment
   
Fees (a)
  
Expense (b)
  
Income (b)
  
Fees (a)
  
Expense (b)
  
Income (b)
   
(Dollars in Thousands)
10% Decline in the Rate of Exchange of All Foreign Currencies Against the U.S. Dollar  $31,918   $465,967   $45,466   $19,640   $411,596   $34,545 
(a)
Represents the annualized effect of the 10% decline.
(b)
Represents the reporting date effect of the 10% decline.
Interest Rate Risk
Blackstone may have debt obligations payable that accrue interest at variable rates. Interest rate changes may therefore affect the amount of our interest payments, future earnings and cash flows. Based on our debt obligations payable as of June 30, 2020 and June 30, 2019, we estimate that interest expense relating to variable rates would increase on an annual basis, in the event interest rates were to increase by one percentage point, as follows:
                                                
   
June 30,
   
2020
  
2019
   
        (Dollars in Thousands)        
Annualized Increase in Interest Expense Due to a One Percentage Point Increase in Interest Rates (a)  $—     $—   
(a) As of June 30, 2020 and 2019, Blackstone had no such debt obligations payable outstanding.
Blackstone has a diversified portfolio of liquid assets to meet the liquidity needs of various businesses. This portfolio includes cash, open-ended money market mutual funds, open-ended bond mutual funds, marketable investment securities, freestanding derivative contracts, repurchase and reverse repurchase agreements and other investments. If interest rates were to increase by one percentage point, we estimate that our annualized investment income would decrease, offset by an estimated increase in interest income on an annual basis from interest on floating rate assets, as follows:
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June 30,
   
2020
  
2019
   
Annualized
Decrease in
Investment
Income
 
Annualized
Increase in
Interest Income

from Floating
Rate Assets
  
Annualized
Decrease in
Investment
Income
 
Annualized
Increase in
Interest Income
from Floating
Rate Assets
   
(Dollars in Thousands)
One Percentage Point Increase in Interest Rates  $13,603 (a)  $20,139   $6,295 (a)  $28,423 
(a)
As of June 30, 2020 and 2019, this represents 0.5% and 0.2% of our portfolio of liquid assets, respectively.
Blackstone has U.S. dollar and
non-U.S.
dollar based interest rate derivatives whose future cash flows and present value may be affected by movement in their respective underlying yield curves. We estimate that as of June 30, 2020 and June 30, 2019, a one percentage point increase parallel shift in global yield curves would result in the following impact on Other Revenue:
                                                       
   
June 30,
   
        2020        
  
        2019        
   
(Dollars in Thousands)
Annualized Increase in Other Revenue Due to a One Percentage Point Increase in Interest Rates  $3,063   $17,749 
Credit Risk
Certain Blackstone Funds and the Investee Funds are subject to certain inherent risks through their investments.
Our portfolio of liquid assets contains certain credit risks including, but not limited to, exposure to uninsured deposits with financial institutions, unsecured corporate bonds and mortgage-backed securities. These exposures are actively monitored on a continuous basis and positions are reallocated based on changes in risk profile, market or economic conditions.
We estimate that our annualized investment income would decrease, if credit spreads were to increase by one percentage point, as follows:
                                                       
   
June 30,
   
        2020        
  
        2019        
   
(Dollars in Thousands)
Decrease in Annualized Investment Income Due to a One Percentage Point Increase in Credit Spreads (a)  $63,473   $77,008 
(a)
As of June 30, 2020 and 2019, this represents 2.2% and 2.3% of our portfolio of liquid assets, respectively.
Certain of our entities hold derivative instruments that contain an element of risk in the event that the counterparties may be unable to meet the terms of such agreements. We minimize our risk exposure by limiting the counterparties with which we enter into contracts to banks and investment banks that meet established credit and capital guidelines. We do not expect any counterparty to default on its obligations and therefore do not expect to incur any loss due to counterparty default.
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Item 4.  Controls and Procedures
We maintain “disclosure controls and procedures,” as such term is defined in
Rules 13a-15(e)
and
15d-15(e)
under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), that are designed to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. In designing disclosure controls and procedures, our management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible disclosure controls and procedures. The design of any disclosure controls and procedures also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired objectives.
Our management, including our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures pursuant to
Rule 13a-15
under the Exchange Act as of the end of the period covered by this report. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of the period covered by this report, our disclosure controls and procedures (as defined in
Rule 13a-15(e)
under the Exchange Act) are effective at the reasonable assurance level to accomplish their objectives of ensuring that information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.
No change in our internal control over financial reporting (as such term is defined in
Rules 13a-15(f)
and
15d-15(f)
under the Exchange Act) occurred during our most recent quarter, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
Part II.    Other Information
Item 1.  Legal Proceedings
We may from time to time be involved in litigation and claims incidental to the conduct of our business. Our businesses are also subject to extensive regulation, which may result in regulatory proceedings against us. See “Part I. Item 1A. Risk Factors” in our Annual Report on
Form 10-K
for the year ended December 31, 2019.2020. We are not currently subject to any pending legal (including judicial, regulatory, administrative or arbitration) proceedings
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that we expect to have a material impact on our consolidated financial statements. However, given the inherent unpredictability of these types of proceedings and the potentially large and/or indeterminate amounts that could be sought, an adverse outcome in certain matters could have a material effect on Blackstone’s financial results in any particular period.
In December 2017, a purported derivative suit (
Mayberry v. KKR
 & Co., L.P., et al.
) was filed in the Commonwealth of Kentucky Franklin County Circuit Court on behalf of the Kentucky Retirement System (“KRS”) by eight of its members See “Part I. Item 1. Financial Statements — Notes to Condensed Consolidated Financial Statements — Note 17. Commitments and beneficiaries alleging various breaches of fiduciary duty and other violations of Kentucky state law in connection with KRS’s investment in three hedge funds of funds, including a fund managed by Blackstone Alternative Asset Management L.P. (“BAAM L.P.Contingencies — Contingencies — Litigation.”). The suit names more than 30 defendants, including The Blackstone Group L.P.; BAAM L.P.; Stephen A. Schwarzman, as Chairman and CEO of Blackstone; and J. Tomilson Hill, as then-President and CEO of the Hedge Fund Solutions Group, Vice Chairman of Blackstone and CEO of BAAM L.P. (collectively, the “Blackstone Defendants”). Aside from the Blackstone Defendants, the action also names current and former KRS trustees and former KRS officers and various other service providers to KRS and their related persons.
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The plaintiffs filed an amended complaint in January 2018. In November 2018, the Circuit Court granted one defendant’s motion to dismiss and denied all other defendants’ motions to dismiss, including those of the Blackstone Defendants. In January 2019, certain of the KRS trustee and officer defendants noticed appeals from the denial of the motions to dismiss to the Kentucky Court of Appeals, and also filed a motion to stay the Mayberry proceedings in Circuit Court pending the outcome of those appeals. In addition, several defendants, including Blackstone and BAAM L.P., filed petitions in the Kentucky Court of Appeals for a writ of prohibition against the ongoing Mayberry proceedings on the ground that the plaintiffs lack standing. In April 2019, the KRS trustee and officer defendants’ appeals were transferred to the Kentucky Supreme Court.
On April 23, 2019, the Kentucky Court of Appeals granted the Blackstone Defendants’ petition for a writ of prohibition and vacated the Circuit Court’s November 30, 2018 Opinion and Order denying the motion to dismiss for lack of standing. On April 24, 2019, the Mayberry Plaintiffs filed a notice of appeal of that order to the Kentucky Supreme Court. The Kentucky Supreme Court heard oral argument on the appeal on October 24, 2019.
On July 9, 2020, the Kentucky Supreme Court unanimously held that the plaintiffs lack constitutional standing to bring their claims and remanded the case to the Circuit Court with direction to dismiss the complaint. On July 20, 2020, the Kentucky Attorney General filed a motion to intervene and a proposed intervening complaint in the Mayberry action on behalf of the Commonwealth of Kentucky. The Blackstone Defendants filed their objection to that motion on July 30, 2020 and a hearing has been scheduled for August 17, 2020. On July 21, 2020, the Kentucky Attorney General also filed a separate action in Franklin County Circuit Court that is nearly identical to its proposed intervening complaint; that action was consolidated with the Mayberry action on August 5, 2020. In addition, on July 29, 2020, counsel for certain of the Mayberry Plaintiffs filed a motion for leave to amend their complaint, purporting to remedy the standing defects identified by the Kentucky Supreme Court. The Blackstone Defendants intend to oppose that motion, which has also been noticed for hearing on August 17, 2020.
Blackstone continues to believe that this suit is totally without merit and intends to defend it vigorously.
Item 1A. Risk Factors
For a discussion of our potential risks and uncertainties, see the information under the heading “Risk Factors” in our Annual Report on
Form 10-K
for the year ended December 31, 2019, our Quarterly Report on
Form 10-Q
for the quarter ended March 31, 2020 and in our subsequently filed periodic reports as such factors may be updated from time to time, all of which are accessible on the Securities and Exchange Commission’s website at www.sec.gov.
See “Part I. Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations — Business Environment” in this report for a discussion of the conditions in the financial markets and economic conditions affecting our businesses. This discussion updates, and should be read together with, the risk factorfactors entitled “Difficult market conditions can adversely affect our business in many ways, including by reducing the value or performance of the investments made by our investment funds and reducing the ability of our investment funds to raise or deploy capital, each of which could materially reduce our revenue, earnings and cash flow and adversely affect our financial prospects and condition.” in our Annual Report on
Form 10-K
for the year ended December 31, 2019 and “The global outbreak of the novel coronavirus, or
COVID-19,
has caused severe disruptions in the U.S. and global economies and ishas adversely impacting,impacted, and may continue to adversely impact, our performance and results of operations.”operations” and “Difficult market and geopolitical conditions can adversely affect our business in many ways, each of which could materially reduce our revenue, earnings and cash flow and adversely affect our financial prospects and condition” in our QuarterlyAnnual Report on Form
10-Q
 10-K for the quarteryear ended MarchDecember 31, 2020.
The risks described in our Annual Report on
Form 10-K
in our Quarterly Report on Form
10-Q
for the quarter ended March 31, 2020 and in our subsequently filed periodic reports are not the only risks facing us. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and/or operating results.
Item 2.    Unregistered Sales of Equity Securities and Use of Proceeds
The following table sets forth information regarding repurchases of shares of our Class A common stock during the quarter ended June 30, 2020:2021:
 
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Period
  
    Total Number    
of Shares
Purchased
  
Average
    Price Paid    

per Share
  
    Total Number of Shares    
Purchased as Part of
Publicly Announced

Plans or Programs (a)
  
  Approximate Dollar  
Value of Shares that
May Yet Be Purchased
Under the Program
(Dollars in Thousands) (a)
Apr. 1 - Apr. 30, 2020   —   $—    —   $527,714 
May 1 - May 31, 2020   —   $—    —   $527,714 
Jun. 1 - Jun. 30, 2020   2,000,000   $57.45    2,000,000   $412,819 
                     
    2,000,000         2,000,000      
                     
                                                                                                
Period
  
Total Number
of Shares
Purchased
  
Average
Price Paid
per Share
  
Total Number of Shares
Purchased as Part of
Publicly Announced
Plans or Programs (a)
  
Approximate Dollar
Value of Shares that
May Yet Be Purchased
Under the Program
(Dollars in Thousands) (a)
Apr. 1 - Apr. 30, 2021
   267,855   $88.93    267,855   $283,355 
May 1 - May 31, 2021
   1,785,711   $89.11    1,785,711   $864,543 
Jun. 1 - Jun. 30, 2021
   1,121,032   $94.65    1,121,032   $758,433 
  
 
 
 
    
 
 
 
  
   3,174,598      3,174,598   
  
 
 
 
    
 
 
 
  
 
(a)
On July 16, 2019, ourMay 6, 2021, Blackstone’s board of directors authorized the repurchase of up to $1.0 billion of Class A common stock and Blackstone Holdings Partnership Units. Under the repurchase program, repurchases may be made from time to time in open market transactions, in privately negotiated transactions or otherwise. The timing and the actual numbers repurchased will depend on a variety of factors, including legal requirements, price and economic and market conditions. The repurchase program may be changed, suspended or discontinued at any time and does not have a specified expiration date. See “Part I. Item 1. Financial Statements – Notes to Condensed Consolidated Financial Statements – Note 14. Earnings Per Share and Stockholder’s Equity”Stockholders’ Equity — Share Repurchase Program” and “Part I. Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations – Liquidity and Capital Resources – Sources and Uses of Liquidity”Share Repurchase Program” for further information regarding this repurchase program.
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As permitted by our policies and procedures governing transactions in our securities by our directors, executive officers and other employees, from time to time some of these persons may establish plans or arrangements complying with
Rule 10b5-1
under the Exchange Act, and similar plans and arrangements relating to our Class A common stock and Blackstone Holdings Partnership Units.
Item 3.    Defaults Upon Senior Securities
Not applicable.
Item 4.    Mine Safety Disclosures
Not applicable.
Item 5.    Other Information
Name Change
Effective August 6, 2021, the Certificate of Incorporation and Bylaws of The Blackstone Group Inc. were amended and restated to change, and reflect the change of, the name of the corporation to Blackstone Inc.
The full text of the Amended and Restated Certificate of Incorporation and Amended and Restated Bylaws are filed as Exhibits 3.1 and 3.2, respectively, to this Quarterly Report on Form 10-Q and are incorporated herein by reference. The holder of our Series II preferred stock consented to the Amended and Restated Certificate of Incorporation and Amended and Restated Bylaws on July 20, 2021.
Election of Directors
On August 5, 2020,4, 2021, Blackstone Group Management L.L.C., by a written consent as the sole holder of our Class C commonSeries II preferred stock, elected Stephen A. Schwarzman, Jonathan D. Gray, Hamilton E. James, Jonathan D. Gray,Joseph P. Baratta, William G. Parrett, Kelly A. Ayotte, Joseph P. Baratta, James W. Breyer, Reginald J. Brown, Sir John Antony Hood, Rochelle B. Lazarus, Jay O. Light, The Right Honorable Brian Mulroney and Ruth Porat as directors of The Blackstone Group Inc. Each director was serving as a director of The Blackstone Group Inc. at the time of election.
Annual Meeting of Stockholders
We will hold our 20202021 annual meeting of stockholders (the “Annual Meeting”) at 9:00 a.m., Eastern Time, on September 17, 2020.21, 2021. The Annual Meeting will be held in a virtual meeting format only. Stockholders of record at the close of business on August 17, 202020, 2021 (the “Record Date”) can attend the meeting at https://event.webcasts.com/starthere.jsp?ei=13512411475044&tp_key=590ee8ab45.ef9a4e903d. In order to access the Annual Meeting, please be prepared to confirm your ownership of Class A common stock as of the Record Date. Please note that there will not be any matter for stockholders to vote on at the Annual Meeting, and, as such, no action is expected to be taken at the Annual Meeting. Please note that we are not planning on providing any update on our business during the Annual Meeting.
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Item 6.    Exhibits
 
Exhibit
Number
  
Exhibit Description
3.1*Amended and Restated Certificate of Incorporation of Blackstone Inc.
3.2*Amended and Restated Bylaws of Blackstone Inc.
4.1Seventeenth Supplemental Indenture dated as of August 5, 2021 among Blackstone Holdings Finance Co. L.L.C., The Blackstone Group Inc., Blackstone Holdings I L.P., Blackstone Holdings AI L.P., Blackstone Holdings II L.P., Blackstone Holdings III L.P., Blackstone Holdings IV L.P. and The Bank of New York Mellon, as trustee (incorporated herein by reference to Exhibit 4.2 to the Registrant’s Current Report on Form 8-K filed with the SEC on August 5, 2021).
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4.2Form of 1.625% Senior Note due 2028 (included in Exhibit 4.1 hereto).
4.3Eighteenth Supplemental Indenture dated as of August 5, 2021 among Blackstone Holdings Finance Co. L.L.C., The Blackstone Group Inc., Blackstone Holdings I L.P., Blackstone Holdings AI L.P., Blackstone Holdings II L.P., Blackstone Holdings III L.P., Blackstone Holdings IV L.P. and The Bank of New York Mellon, as trustee (incorporated herein by reference to Exhibit 4.4 to the Registrant’s Current Report on Form 8-K filed with the SEC on August 5, 2021).
4.4Form of 2.000% Senior Note due 2032 (included in Exhibit 4.3 hereto).
4.5Nineteenth Supplemental Indenture dated as of August 5, 2021 among Blackstone Holdings Finance Co. L.L.C., The Blackstone Group Inc., Blackstone Holdings I L.P., Blackstone Holdings AI L.P., Blackstone Holdings II L.P., Blackstone Holdings III L.P., Blackstone Holdings IV L.P. and The Bank of New York Mellon, as trustee (incorporated herein by reference to Exhibit 4.6 to the Registrant’s Current Report on Form 8-K filed with the SEC on August 5, 2021).
4.6Form of 2.850% Senior Note due 2051 (included in Exhibit 4.5 hereto).
31.1*  Certification of the Chief Executive Officer pursuant to Rule 13a-14(a).
31.2*  Certification of the Chief Financial Officer pursuant to Rule 13a-14(a).
32.1*  Certification of the Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith).
32.2*  Certification of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith).
101.INS*  Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH*  Inline XBRL Taxonomy Extension Schema Document.
101.CAL*  Inline XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF*  Inline XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB*  Inline XBRL Taxonomy Extension Label Linkbase Document.
101.PRE*  Inline XBRL Taxonomy Extension Presentation Linkbase Document.
104.  Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).
 
*
Filed herewith.
The agreements and other documents filed as exhibits to this report are not intended to provide factual information or other disclosure other than with respect to the terms of the agreements or other documents themselves, and you should not rely on them for that purpose. In particular, any representations and warranties made by us in these agreements or other documents were made solely within the specific context of the relevant agreement or document and may not describe the actual state of affairs as of the date they were made or at any other time.
 
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Table of Contents
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
Date: August 7, 20206, 2021
 
The Blackstone Group Inc.
/s/ Michael S. Chae
Name: Michael S. Chae
Title: Chief Financial Officer
 (Principal Financial Officer and
 Authorized Signatory)
 
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