Blackstone 8K The Blackstone Group Reports Third Quarter 2010 Results | BX 28 Oct 10

Exhibit 99.1

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The Blackstone Group Reports Third Quarter 2010 Results

Economic Net Income increased to $339 million for the third quarter of 2010, up 23% from $275 million for the third quarter of 2009.

Net Fee Related Earnings increased to $113 million for the third quarter of 2010, up 19% from $95 million for the third quarter of 2009.

Distributable Earnings increased to $166 million for the third quarter of 2010, up 67% from $100 million in the third quarter of 2009.

GAAP Results Attributable to The Blackstone Group L.P. improved in the third quarter of 2010 with a net loss of $44 million, compared to a net loss of $176 million in the third quarter of 2009, in each case including net IPO and acquisition-related charges.

Fee-Earning Assets Under Management totaled $104.3 billion at September 30, 2010, up 8% from $96.3 billion at September 30, 2009.

Blackstone purchased a 40% equity interest in Pátria, one of Latin America’s leading alternative asset managers, on October 1, 2010.

Blackstone declares a quarterly distribution of $0.10 per common unit.

New York, October 28, 2010: The Blackstone Group L.P. (NYSE: BX) today reported its third quarter 2010 results.

Economic Net Income was $339.3 million for the third quarter of 2010, an increase of $63.9 million from $275.3 million, or 23%, for the third quarter of 2009. Economic Net Income was $904.9 million for the nine months ended September 30, 2010, an increase of $531.2 million compared to Economic Net Income for the nine months ended September 30, 2009 of $373.8 million. The increase in Economic Net Income was principally driven by increased Performance Fees and Allocations and Investment Income.

For the third quarter of 2010, Total Segment Revenues were $792.2 million, up significantly from $603.8 million for the third quarter of 2009. The improvement was driven by greater Investment Income derived from an increase in the carrying value of the underlying portfolio investments in the Private Equity and Real Estate segments, and by increases in Performance Fees and Allocations in the Real Estate and Credit and Marketable Alternatives segments. These increases were partially offset by decreased fees earned in the Financial Advisory segment.

Total Segment Expenses were $424.1 million for the third quarter of 2010, an increase from $325.4 million for the third quarter of 2009. The increase in Compensation and Benefits to $339.9 million for the third quarter of 2010 was primarily driven by an increase in Performance Fee Related Compensation and an increase in Base Compensation, which includes all compensation for all partners and employees excluding only compensation from performance fees. Other Operating Expenses increased to $84.3 million.

The Blackstone Group® L.P.

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New York, NY 10154

212 583-5000

Net Fee Related Earnings from Operations were $112.9 million for the third quarter of 2010, up from $94.9 million for the third quarter of 2009. Net Fee Related Earnings from Operations were $319.6 million for the nine months ended September 30, 2010, up from $271.2 million for the nine months ended September 30, 2009. Net Fee Related Earnings from Operations increased principally as a result of increased Management and Advisory Fees and investment income from Blackstone’s Treasury cash management strategies, partially offset by an increase in Base Compensation.

GAAP results for the third quarter of 2010 included Revenues of $784.0 million, compared to $597.0 million for the third quarter of 2009, and Net Loss Attributable to The Blackstone Group L.P. of $44.4 million, compared to a net loss of $176.2 million for the third quarter of 2009.

On October 1, 2010, Blackstone purchased a 40% equity interest in Pátria, one of Latin America’s leading alternative asset managers and advisory firms. Pátria has $3.2 billion in total assets under management across private equity, real estate, infrastructure and hedge funds. Pátria is a fast growing market leader with an excellent investment track record, and will continue to be managed by its current partners. As part of the transaction, Blackstone and Pátria have agreed to cooperate in building their businesses in Brazil and throughout the region. Blackstone believes this will allow both firms to offer a broader array of investments to their limited partners and help drive superior fund returns over the long-term.

Global equity markets moved sharply higher in the third quarter of 2010, while credit markets also rose and high yield spreads moderately tightened. Investors reacted positively to sustained above-average corporate earnings growth and the expectation of continued economic recovery. Economic data remained mixed, however, and most indicators pointed to a slowing in the recovery of the U.S. economy, including both output and employment rates. In real estate, the fundamentals generally continued to improve in the third quarter. In office, occupancy trends and leasing activity continued to improve modestly in most markets, and new supply remained at historically low levels. In hospitality, industry Revenue Per Available Room, or RevPAR, grew 8.4% in the third quarter of 2010, and has experienced positive growth since March 2010.

Stephen A. Schwarzman, Chairman and Chief Executive Officer, said, “While global economic and market environments remain fragile, we saw continued marked improvement in the carrying values of our investment funds during the third quarter. Our ability to leverage the knowledge we have housed across our businesses helped us create value through operational programs at the companies we own on behalf of our investors and identify exciting new opportunities. As of quarter end, we have grown total assets under management to $119 billion, which speaks to the hard work and performance of our team.”

The table below details Blackstone’s Economic Net Income, Net Fee Related Earnings from Operations, Distributable Earnings and Fee-Earning Assets Under Management as of, and for the three and nine months ended September 30, 2010 and 2009. Economic Net Income, Total Segments includes unrealized gains (losses) and the direct compensation impact related to those gains/losses, but excludes IPO and acquisition-related charges.


	As of and for the Three Months Ended September 30,				Variance						Nine Months Ended September 30,					Variance
	2010		2009		$			%			2010		2009			$		%
	(Dollars in Thousands, Except per Unit Amounts)
Economic Net Income, Total Segments	$	368,091	$	278,357	$	89,734			32	%	$	974,664	$	357,918		$	616,746		172	%
Provision (Benefit) for Income Taxes (a)		28,812		3,009		25,803			N/M			69,752		(15,836	)		85,588		N/M

Economic Net Income, After Taxes	$	339,279	$	275,348	$	63,931			23	%	$	904,912	$	373,754		$	531,158		142	%

Economic Net Income, After Taxes per Adjusted Unit (b)	$	0.30	$	0.25	$	0.05			22	%	$	0.80	$	0.33		$	0.47		141	%

Net Fee Related Earnings from Operations	$	112,914	$	94,939	$	17,975			19	%	$	319,574	$	271,247		$	48,327		18	%

Distributable Earnings	$	166,316	$	99,502	$	66,814			67	%	$	462,587	$	266,138		$	196,449		74	%

Distributable Earnings per Adjusted Unit (c)	$	0.15	$	0.09	$	0.06			67	%	$	0.42	$	0.24		$	0.18		75	%

Fee-Earning Assets Under Management:
Private Equity	$	24,311,443	$	25,184,161	$	(872,718	)		-3	%
Real Estate		24,345,161		23,692,257		652,904			3	%
Credit and Marketable Alternatives		55,636,578		47,448,212		8,188,366			17	%

Total Fee-Earning Assets Under Management	$	104,293,182	$	96,324,630	$	7,968,552			8	%

(a)	Represents the implied provision (benefit) for income taxes calculated using a similar methodology applied in calculating the tax provision for The Blackstone Group L.P.

(b)

Adjusted Units represents the weighted-average fully diluted unit count for Economic Net Income purposes using the if-converted method. A reconciliation of this item to the comparable GAAP measure is presented in Exhibit 4 to this release.

(c)	Adjusted Units represents the unit count for Distributable Earnings purposes. A reconciliation of this item to the comparable GAAP measure is presented in Exhibit 4 to this release.

SEGMENT REVIEW

Private Equity

Private Equity had revenues of $214.9 million for the third quarter of 2010, compared with revenues of $226.9 million for the third quarter of 2009. The change from 2009 was driven principally by a decrease in Performance Fees and Allocations, which are determined on a fund by fund basis, to $90.3 million compared to $110.9 million for the three months ended September 30, 2009. Private Equity had nine-month revenues of $575.6 million, compared with revenues of $493.6 million in the same period of 2009. The overall performance of our private equity funds was driven by appreciation of our privately held investments and increases in share prices of our publicly held portfolio investments.

The net return for Blackstone’s contributed Private Equity funds was 5.1% in the third quarter of 2010 versus 3.9% in the third quarter of 2009 and 2.5% in the second quarter of 2010. At September 30, 2010, the unrealized value and cumulative realized proceeds, before carried interest, fees and expenses, of Blackstone’s contributed Private Equity funds represented 1.4 times investors’ original investments. Excluding funds which are still in their Investment Period, the value was 2.2 times investors’ original investments.

Net Fee Related Earnings from Operations were $17.5 million for the third quarter of 2010, down from $21.2 million for the third quarter of 2009, reflecting increased Base Compensation, interest expense and marketing expenses related to Blackstone’s sixth private equity fund which is expected to begin over the next few months. Economic Net Income was $111.9 million for the third quarter of 2010, down from $135.7 million for the third quarter of 2009, a result of lower Performance Fees and Allocations.

Compensation and Benefits expense increased to $76.6 million from $69.9 million for the third quarter of 2009. The change from 2009 was primarily due to an increase in Base Compensation. Other Operating Expenses of $26.4 million were up from $21.3 million for the third quarter of 2009, principally due to an increase in interest expense, professional fees and business development expenses.

Fee-Earning Assets Under Management were down slightly to $24.3 billion compared with the third quarter of 2009.

Limited Partner Capital Invested during the third quarter of 2010 totaled $678.9 million, an increase from $109.1 million invested during the third quarter of 2009. Blackstone had $1.6 billion of Limited Partner Capital committed to deals made by the segment’s Private Equity funds that had not yet closed as of September 30, 2010.

Real Estate

Real Estate had revenues of $257.8 million for the third quarter of 2010, compared with revenues of $100.2 million for the third quarter of 2009. Real Estate had nine-month revenues of $618.4 million, compared with negative revenues of $131.3 million in the same period of 2009. The change from 2009 was primarily due to an improvement in Performance Fees and Allocations and Investment Income (Loss), driven by improved operating performance, projected cash flows and exit multiples across the Real Estate segment’s investments.

The net return for Blackstone’s Real Estate carry funds was 16.9% for the third quarter of 2010 compared to a negative 2.0% in the third quarter of 2009, while the net returns for the Real Estate debt hedge funds was 3.3% for the third quarter of 2010 compared to 7.8% in the third quarter of 2009.

Net Fee Related Earnings from Operations were $39.9 million in the third quarter of 2010, up from $33.4 million for the third quarter of 2009. Economic Net Income was $148.0 million for the third quarter of 2010 compared to $44.2 million for the third quarter of 2009, driven by the increases in Performance Fees and Allocations and Investment Income (Loss).

Compensation and Benefits were $91.2 million compared to $42.5 million for the third quarter of 2009. The change from 2009 was primarily due to an increase in Performance Fee Related Compensation driven by an increase in Performance Fees and Allocations revenue. Other Operating Expenses of $18.6 million were up from $13.4 million for the third quarter of 2009, principally due to an increase in interest expense and professional fees.

Fee-Earning Assets Under Management were $24.3 billion compared with $23.7 billion for the third quarter of 2009, reflecting the continued fund-raising of Blackstone’s Real Estate debt platform and additional limited partner co-investment capital.

Limited Partner Capital Invested during the third quarter of 2010 was $689.0 million, up from $35.0 million during the third quarter of 2009. Blackstone’s Real Estate segment’s funds had committed $1.6 billion of Limited Partner Capital to new transactions which have not yet closed as of September 30, 2010.

Credit and Marketable Alternatives (CAMA)

CAMA had revenues of $231.8 million, compared with $179.4 million for the third quarter of 2009. The increase from 2009 was due primarily to improved Performance Fees and Allocations. CAMA had nine-month revenues of $560.7 million compared with revenues of $419.0 million in the same period of 2009.

The net core funds composite returns for Blackstone’s funds of hedge funds was 3.2% for the third quarter of 2010 compared to 5.5% for the third quarter of 2009. Base Management Fees increased $14.7 million from the third quarter of 2009 as a result of positive net inflows and performance in the funds of hedge funds business and the April 1, 2010 acquisition of $3.5 billion in collateralized debt obligations and collateralized loan obligations (“CLO”) vehicles.

Net Fee Related Earnings from Operations were $49.3 million for the third quarter of 2010, an increase of $25.3 million from $24.0 million for the third quarter of 2009, reflecting increased Management Fees, which were driven by continued strong inflows and fund returns across the segment. Economic Net Income was $104.3 million for the third quarter of 2010 compared to $81.5 million for the third quarter of 2009.

Compensation and Benefits were $105.5 million, up from $79.8 million for the third quarter of 2009. The increase from the third quarter of 2009 was principally driven by an increase in Performance Fee Related Compensation. Other Operating Expenses of $22.1 million were up from $18.1 million for the third quarter of 2009, reflecting an increase in professional fees and technology costs primarily in the credit platform businesses related to the launching of new products.

Fee-Earning Assets Under Management grew 17% for the third quarter of 2010 to $55.6 billion from $47.4 billion for the third quarter of 2009. The increase from 2009 was principally due to net inflows and market appreciation in the funds of hedge funds and the April 1, 2010 acquisition of $3.5 billion in collateralized debt obligations and CLO vehicles.

Limited Partner Capital Invested in certain carry credit-oriented funds during the third quarter of 2010 totaled $692.3 million, representing 11.6% of total commitments in these funds, up from $87.3 million for the third quarter of 2009.

Financial Advisory

Revenues were $87.7 million for the third quarter of 2010, down from $97.3 million for the third quarter of 2009. The decrease in segment revenue was primarily driven by a decrease in fees from the financial and strategic advisory business, which had several significant transactions which closed in the third quarter of 2009, and a decrease in retainer fees from the restructuring and reorganization business. These decreases were partially offset by a sharp increase in fees in the fund placement business. Revenues were $300.8 million for the nine months ended September 30, 2010, an increase from $271.9 million in the same period of 2009. The increase in segment revenues was primarily driven by an increase of $66.3 million in fees earned by Blackstone’s fund placement business, partially offset by decreases from Blackstone’s financial and strategic advisory and restructuring and reorganization businesses.

The fund placement business has seen an increase in fees to more normalized levels as the economic conditions which had negatively impacted institutional allocations to alternative investment funds abated. The pipeline for the restructuring and reorganization business remains solid across a diverse group of industries and geographies. The pipeline for the financial and strategic advisory business continues to be strong and includes a significant international component.

Net Fee Related Earnings from Operations were $6.3 million for the third quarter of 2010, a decrease from $16.4 million for the third quarter of 2009. The primary catalyst for the decrease from 2009 was a decrease in fees generated by the financial and strategic advisory business, which had several large mandates which closed during the third quarter of 2009, and a decrease in retainer fees from the restructuring and reorganization business. Economic Net Income was $3.9 million for the third quarter of 2010 compared to $17.0 million for the third quarter of 2009.

Compensation and Benefits were $66.5 million, up from $57.7 million for the third quarter of 2009. The increase from the third quarter of 2009 was principally driven by an increase in Base Compensation. Other Operating Expenses of $17.3 million were down from $22.7 million for the third quarter of 2009 principally due to a reduction in bad debt expenses.

CAPITAL AND LIQUIDITY

For Economic Net Income purposes, the weighted-average fully diluted adjusted unit count for the three and nine month periods ended September 30, 2010 was 1,121.3 million units and 1,124.3 million units, respectively. The weighted-average fully diluted adjusted unit count for the three and nine months periods ended September 30, 2009 was 1,119.8 million units and 1,125.2 million units, respectively.

The total number of units used in calculating cash distributions and Distributable Earnings per Adjusted Unit was 1,097.7 million units for the nine month period ended September 30, 2010 and 1,092.0 million units for the nine month period ended September 30, 2009.

On September 15, 2010, Blackstone issued $400 million of 5.875% notes due in 2021. Standard & Poor’s and Fitch reiterated Blackstone’s ratings of A and A+, respectively, with a stable outlook after the new issuance.

As of September 30, 2010, Blackstone had $1.0 billion in cash, $927.7 million invested in Blackstone’s Treasury cash management strategies, $283.1 million invested in liquid Blackstone funds and $1.4 billion invested in illiquid Blackstone funds. Long-term debt totaled just under $1.0 billion in borrowings from the 2010 and 2009 bond issuances. Blackstone has no borrowings outstanding against its $1.07 billion revolving credit facility.

DISTRIBUTION

The Blackstone Group L.P. has declared a quarterly distribution of $0.10 per common unit to record holders of common units at the close of business on November 15, 2010. This distribution will be paid on November 30, 2010.

For distributions related to fiscal 2010 and thereafter, Blackstone’s current intention is to distribute to its common unitholders substantially all of The Blackstone Group L.P.’s net after-tax share of its annual Distributable Earnings in excess of amounts determined by its general partner to be necessary or appropriate to provide for the conduct of its business, to make appropriate investments in its business and funds, to comply with applicable law, any of its debt instruments or other agreements, or to provide for future distributions to its unitholders for any ensuing quarter. Because Blackstone will not know what its Distributable Earnings will be for any fiscal year until the end of such year, Blackstone expects that its first three quarterly distributions in respect of any given year will be based on its anticipated annualized Net Fee Related Earnings. As such, the distributions for the first three quarters may be smaller than the final quarterly distribution in respect of such year. In the fourth quarter Blackstone will distribute the remaining Distributable Earnings for the year, which is expected to also include realized Performance Fees and Allocations net of related compensation and realized net investment income.

In most years the aggregate amounts of Blackstone’s distributions to unitholders will not equal its Distributable Earnings for that year. Distributable Earnings will only be a starting point for the determination of the amount to be distributed to unitholders because as noted above, in determining the amount to be distributed Blackstone will subtract from Distributable Earnings any amounts determined by its general partner to be necessary or appropriate to provide for the conduct of its business, to make appropriate investments in its business and funds, to comply with applicable law, any of its debt instruments or other agreements, or to provide for future distributions to its unitholders for any ensuing quarter.

All of the foregoing is subject to the qualification that the declaration and payment of any distributions are at the sole discretion of Blackstone’s general partner and the general partner may change its distribution policy at any time.

Because the wholly-owned subsidiaries of The Blackstone Group L.P. must pay taxes and make payments under the tax receivable agreements described in Blackstone’s Annual Report on Form 10-K, the amounts ultimately distributed by The Blackstone Group L.P. to its common unitholders in respect of fiscal 2010 and subsequent years are expected to be different, on a per unit basis, than the amounts distributed by the Blackstone Holdings partnerships to the Blackstone personnel and others who are limited partners of the Blackstone Holdings partnerships in respect of their Blackstone Holdings partnership units.

# # #

Blackstone will host a conference call on October 28, 2010 at 11:00 a.m. ET to discuss third quarter 2010 results. The conference call can be accessed by dialing (877) 391-6737 (U.S. domestic) or +1 (617) 597-9373 (international) pass code 12859509. Additionally, the conference call will be broadcast live over the internet and can be accessed by all interested parties through the Investor Relations section of The Blackstone Group’s website http://ir.blackstone.com. For those unable to listen to the live broadcast, a replay will be available on Blackstone’s website or by dialing (888) 286-8010 (U.S. domestic) or +1 (617) 801-6888 (international) conference ID number 12859509, beginning approximately two hours after the event.

Investor Relations Contacts:

Joan Solotar

The Blackstone Group

Tel: +1 (212) 583-5068

solotar@blackstone.com

Weston Tucker

The Blackstone Group

Tel: +1 (212) 583-5231

tucker@blackstone.com

Media Relations Contact:

Peter Rose

The Blackstone Group

Tel: +1 (212) 583-5871

rose@blackstone.com

About The Blackstone Group

Blackstone is one of the world’s leading investment and advisory firms. We seek to create positive economic impact and long-term value for our investors, the companies we invest in, the companies we advise and the broader global economy. We do this through the commitment of our extraordinary people and flexible capital. Our alternative asset management businesses include the management of private equity funds, real estate funds, funds of hedge funds, credit-oriented funds and closed-end mutual funds. The Blackstone Group also provides various financial advisory services, including financial and strategic advisory, restructuring and reorganization advisory and fund placement services. Further information is available at www.blackstone.com.

Forward-Looking Statements

This release may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 which reflect Blackstone’s current views with respect to, among other things, Blackstone’s operations and financial performance. You can identify these forward-looking statements by the use of words such as “outlook,” “believes,” “expects,” “potential,” “continues,” “may,” “will,” “should,” “seeks,” “approximately,” “predicts,” “intends,” “plans,” “estimates,” “anticipates” or the negative version of these words or other comparable words. Such forward-looking statements are subject to various risks and uncertainties. Accordingly, there are or will be important factors that could cause actual outcomes or results to differ materially from those indicated in these statements. Blackstone believes these factors include but are not limited to those described under the section entitled “Risk Factors” in its Annual Report on Form 10-K for the fiscal year ended December 31, 2009, as such factors may be updated from time to time in its periodic filings with the 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 release and in the prospectus. Blackstone undertakes no obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise.

This release does not constitute an offer of any Blackstone Fund.

THE BLACKSTONE GROUP L.P.

Exhibit 1a. Consolidated Statements of Operations

(Dollars in Thousands, Except Per Unit Data)


	Three Months Ended September 30,
	2010			2009
Revenues
Management and Advisory Fees	$	362,521		$	367,605

Performance Fees and Allocations
Realized		66,142			(3,452	)
Unrealized		199,824			157,465

Total Performance Fees and Allocations		265,966			154,013

Investment Income
Realized		13,542			6,279
Unrealized		127,428			58,530

Total Investment Income (a)		140,970			64,809

Interest and Dividend Revenue		10,075			6,703
Other		4,468			3,893

Total Revenues		784,000			597,023

Expenses
Compensation and Benefits
Base Compensation		664,004			923,272
Performance Fee Related
Realized		24,962			(712	)
Unrealized		104,324			58,068

Total Compensation and Benefits (b)		793,290			980,628
General, Administrative and Other (c)		114,291			110,641
Interest Expense (d)		11,766			5,258
Fund Expenses		6,422			1,267

Total Expenses		925,769			1,097,794

Other Income
Net Gains from Fund Investment Activities		285,071			73,812

Income (Loss) Before Provision (Benefit) for Taxes (e)		143,302			(426,959	)
Provision (Benefit) for Taxes		(4,225	)		52,551

Net Income (Loss)		147,527			(479,510	)
Net Income Attributable to Redeemable Non-Controlling Interests in Consolidated Entities		23,623			50,281
Net Income Attributable to Non-Controlling Interests in Consolidated Entities		242,723			3,622
Net Income (Loss) Attributable to Non-Controlling Interests in Blackstone Holdings		(74,461	)		(357,230	)

Net Income (Loss) Attributable to The Blackstone Group L.P. (f)	$	(44,358	)	$	(176,183	)

Net Loss per Common Unit, Basic and Diluted
Common Units	$	(0.12	)

Common Units Entitled to Priority Distributions				$	(0.61	)

Common Units Not Entitled to Priority Distributions				$	(0.91	)

Net IPO and acquisition-related charges included above were:
(a) Investment Income (Loss)	$	17,237		$	11,935
(b) Total Compensation and Benefits	$	793,290		$	980,628
Less: Compensation and Benefits - IPO and acquisition-related	$	453,422		$	730,726

Compensation - non-IPO and acquisition-related (*)	$	339,868		$	249,902

(c) General, Administrative and Other	$	41,736		$	902
(d) Interest Expense	$	1,519		$	39,527
(e) Total IPO and acquisition-related charges	$	479,440		$	759,220
(f) Total IPO and acquisition-related charges attributable to The Blackstone Group L.P., net of tax	$	161,663		$	201,141

(*)	Principally comprised of base pay, bonus, net carried interest allocations, benefits and non-IPO and acquisition-related equity-based compensation.

THE BLACKSTONE GROUP L.P.

Exhibit 1b. Consolidated Statements of Operations

(Dollars in Thousands, Except Per Unit Data)


	Nine Months Ended September 30,
	2010			2009
Revenues
Management and Advisory Fees	$	1,123,403		$	1,049,606

Performance Fees and Allocations
Realized		171,941			2,004
Unrealized		312,304			8,932

Total Performance Fees and Allocations		484,245			10,936

Investment Income (Loss)
Realized		29,493			7,556
Unrealized		371,691			(36,149	)

Total Investment Income (Loss) (a)		401,184			(28,593	)

Interest and Dividend Revenue		25,922			11,124
Other		573			5,280

Total Revenues		2,035,327			1,048,353

Expenses
Compensation and Benefits
Base Compensation		2,556,665			2,805,567
Performance Fee Related
Realized		55,582			1,014
Unrealized		158,032			(75,855	)

Total Compensation and Benefits (b)		2,770,279			2,730,726
General, Administrative and Other (c)		341,853			328,517
Interest Expense (d)		26,633			6,744
Fund Expenses		15,484			5,871

Total Expenses		3,154,249			3,071,858

Other Income
Net Gains from Fund Investment Activities		397,625			97,353

Income (Loss) Before Provision (Benefit) for Taxes (e)		(721,297	)		(1,926,152	)
Provision (Benefit) for Taxes		24,802			81,167

Net Income (Loss)		(746,099	)		(2,007,319	)
Net Income Attributable to Redeemable Non-Controlling Interests in Consolidated Entities		47,171			90,515
Net Income (Loss) Attributable to Non-Controlling Interests in Consolidated Entities		320,816			(33,450	)
Net Income (Loss) Attributable to Non-Controlling Interests in Blackstone Holdings		(755,031	)		(1,492,343	)

Net Income (Loss) Attributable to The Blackstone Group L.P. (f)	$	(359,055	)	$	(572,041	)

Net Loss per Common Unit, Basic and Diluted
Common Units	$	(1.02	)

Common Units Entitled to Priority Distributions				$	(2.05	)

Common Units Not Entitled to Priority Distributions				$	(2.95	)

Net IPO and acquisition-related charges included above were:
(a) Investment Income (Loss)	$	24,784		$	32,729
(b) Total Compensation and Benefits	$	2,770,279		$	2,730,726
Less: Compensation and Benefits - IPO and acquisition-related	$	1,934,785		$	2,252,096

Compensation - non-IPO and acquisition-related (*)	$	835,494		$	478,630

(c) General, Administrative and Other	$	123,066		$	2,638
(d) Interest Expense	$	3,359		$	119,130
(e) Total IPO and acquisition-related charges	$	2,036,426		$	2,341,135
(f) Total IPO and acquisition-related charges attributable to The Blackstone Group L.P., net of tax	$	633,095		$	589,852

(*)	Principally comprised of base pay, bonus, net carried interest allocations, benefits and non-IPO and acquisition-related equity-based compensation.

THE BLACKSTONE GROUP L.P.

Exhibit 2a. Economic Net Income and Net Fee Related Earnings from Operations

(Dollars in Thousands)

The tables below detail Blackstone’s Economic Net Income and Net Fee Related Earnings from Operations. Net Fee Related Earnings from Operations is a supplemental measure of after tax performance used to highlight earnings from operations excluding the income from and related profit sharing expenses of Blackstone’s performance fees and allocations and investment income, except for interest income. The reconciliation of Economic Net Income to Net Fee Related Earnings from Operations is presented in Exhibit 2b to this release.


	Three Months Ended																			Nine Months Ended
	March 31, 2009			June 30, 2009			September 30, 2009		December 31, 2009		March 31, 2010			June 30, 2010			September 30, 2010			September 30, 2009			September 30, 2010
Private Equity
Revenues
Management Fees
Base Management Fees	$	68,431		$	67,740		$	67,009	$	67,329	$	65,432		$	66,795		$	66,077		$	203,180		$	198,304
Transaction and Other Fees, Net *		10,328			15,145			18,368		42,495		31,972			16,367			13,348			43,841			61,687
Management Fee Offsets **		—			—			—		—		—			—			(91	)		—			(91	)

Total Management Fees		78,759			82,885			85,377		109,824		97,404			83,162			79,334			247,021			259,900

Performance Fees and Allocations
Realized		—			—			—		34,021		46,175			1,106			44,814			—			92,095
Unrealized		4,818			97,185			110,867		90,621		45,549			(24,020	)		45,499			212,870			67,028

Total Performance Fees and Allocations		4,818			97,185			110,867		124,642		91,724			(22,914	)		90,313			212,870			159,123

Investment Income (Loss)
Realized		(344	)		102			8,794		28,416		(495	)		3,141			9,940			8,552			12,586
Unrealized		(15,165	)		17,118			18,640		12,676		84,684			17,275			30,491			20,593			132,450

Total Investment Income (Loss)		(15,509	)		17,220			27,434		41,092		84,189			20,416			40,431			29,145			145,036
Interest Income and Dividend Revenue		(152	)		824			2,553		4,531		3,428			2,728			3,802			3,225			9,958
Other		180			472			677		1,516		100			460			1,061			1,329			1,621

Total Revenues		68,096			198,586			226,908		281,605		276,845			83,852			214,941			493,590			575,638

Expenses
Compensation and Benefits
Base Compensation		36,848			40,667			42,011		61,740		46,910			46,612			47,552			119,526			141,074
Performance Fee Related
Realized		(6	)		(3	)		135		615		6,005			128			10,783			126			16,916
Unrealized		(41,966	)		13,599			27,755		20,919		6,344			(10,296	)		18,306			(612	)		14,354

Total Compensation and Benefits		(5,124	)		54,263			69,901		83,274		59,259			36,444			76,641			119,040			172,344
Other Operating Expenses		20,108			20,553			21,318		20,492		24,431			28,677			26,359			61,979			79,467

Total Expenses		14,984			74,816			91,219		103,766		83,690			65,121			103,000			181,019			251,811

Economic Net Income	$	53,112		$	123,770		$	135,689	$	177,839	$	193,155		$	18,731		$	111,941		$	312,571		$	323,827

Net Fee Related Earnings from Operations	$	19,883		$	23,885		$	21,153	$	32,905	$	28,712		$	11,464		$	17,465		$	64,921		$	57,641

*	Transaction and Other Fees, Net, are net of amounts, if any, shared with limited partners including, for Private Equity, broken deal expenses.

**	Primarily placement fees.

continued...

THE BLACKSTONE GROUP L.P.

Exhibit 2a. Economic Net Income and Net Fee Related Earnings from Operations - Continued

(Dollars in Thousands)


	Three Months Ended																					Nine Months Ended
	March 31, 2009			June 30, 2009			September 30, 2009			December 31, 2009			March 31, 2010			June 30, 2010			September 30, 2010			September 30, 2009			September 30, 2010
Real Estate
Revenues
Management Fees
Base Management Fees	$	80,198		$	81,517		$	83,409		$	83,323		$	83,060		$	82,916		$	83,232		$	245,124		$	249,208
Transaction and Other Fees, Net *		3,140			2,879			3,347			16,472			1,942			2,979			8,538			9,366			13,459
Management Fee Offsets **		(1,193	)		(486	)		(415	)		(373	)		(489	)		(110	)		(401	)		(2,094	)		(1,000	)

Total Management Fees		82,145			83,910			86,341			99,422			84,513			85,785			91,369			252,396			261,667

Performance Fees and Allocations
Realized		646			4,590			(11,441	)		3,166			5,948			16,319			5,010			(6,205	)		27,277
Unrealized		(229,219	)		(51,960	)		23,608			5,391			11,391			21,117			69,910			(257,571	)		102,418

Total Performance Fees and Allocations		(228,573	)		(47,370	)		12,167			8,557			17,339			37,436			74,920			(263,776	)		129,695

Investment Income (Loss)
Realized		1,397			1,345			(3,078	)		6,500			2,632			3,900			2,159			(336	)		8,691
Unrealized		(67,239	)		(59,408	)		1,242			(219	)		46,892			79,543			83,968			(125,405	)		210,403

Total Investment Income (Loss)		(65,842	)		(58,063	)		(1,836	)		6,281			49,524			83,443			86,127			(125,741	)		219,094
Interest Income and Dividend Revenue		384			197			2,035			3,414			2,718			2,178			3,026			2,616			7,922
Other		(669	)		2,405			1,450			75			(1,876	)		(390	)		2,330			3,186			64

Total Revenues		(212,555	)		(18,921	)		100,157			117,749			152,218			208,452			257,772			(131,319	)		618,442

Expenses
Compensation and Benefits
Base Compensation		36,002			39,207			38,484			44,422			40,150			44,528			43,219			113,693			127,897
Performance Fee Related
Realized		2,138			(542	)		(1,690	)		3,600			1,524			8,895			1,806			(94	)		12,225
Unrealized		(75,459	)		(45,489	)		5,721			1,246			6,937			15,999			46,182			(115,227	)		69,118

Total Compensation and Benefits		(37,319	)		(6,824	)		42,515			49,268			48,611			69,422			91,207			(1,628	)		209,240
Other Operating Expenses		12,615			12,978			13,437			17,295			14,290			17,647			18,584			39,030			50,521

Total Expenses		(24,704	)		6,154			55,952			66,563			62,901			87,069			109,791			37,402			259,761

Economic Net Income	$	(187,851	)	$	(25,075	)	$	44,205		$	51,186		$	89,317		$	121,383		$	147,981		$	(168,721	)	$	358,681

Net Fee Related Earnings from Operations	$	30,513		$	32,867		$	33,376		$	38,431		$	29,825		$	24,743		$	39,853		$	96,756		$	94,421

*	Transaction and Other Fees, Net, are net of amounts, if any, shared with limited partners.

**	Primarily placement fees.

continued...

THE BLACKSTONE GROUP L.P.

Exhibit 2a. Economic Net Income and Net Fee Related Earnings from Operations - Continued

(Dollars in Thousands)


		Three Months Ended																					Nine Months Ended
		March 31, 2009			June 30, 2009			September 30, 2009			December 31, 2009			March 31, 2010			June 30, 2010			September 30, 2010			September 30, 2009			September 30, 2010
Credit and Marketable Alternatives
Revenues
Management Fees
Base Management Fees		$	96,503		$	96,293		$	105,430		$	102,647		$	103,479		$	113,203		$	120,125		$	298,226		$	336,807
Transaction and Other Fees, Net *			443			687			778			958			1,345			1,169			1,062			1,908			3,576
Management Fee Offsets **			(4,213	)		(4,365	)		(4,121	)		(1,995	)		(689	)		(69	)		(182	)		(12,699	)		(940	)

Total Management Fees			92,733			92,615			102,087			101,610			104,135			114,303			121,005			287,435			339,443

Performance Fees and Allocations
Realized			—			587			7,622			35,073			1,758			28,949			16,215			8,209			46,922
Unrealized	��		9,922			21,832			36,114			46,688			75,393			(17,835	)		77,336			67,868			134,894

Total Performance Fees and Allocations			9,922			22,419			43,736			81,761			77,151			11,114			93,551			76,077			181,816

Investment Income (Loss)
Realized			(11,998	)		(4,268	)		1,953			(718	)		2,983			8,729			1,708			(14,313	)		13,420
Unrealized			8,090			29,049			29,976			28,901			19,715			(10,193	)		13,181			67,115			22,703

Total Investment Income (Loss)			(3,908	)		24,781			31,929			28,183			22,698			(1,464	)		14,889			52,802			36,123
Interest Income and Dividend Revenue			709			279			929			1,535			1,148			756			1,750			1,917			3,654
Other			(253	)		315			715			248			(542	)		(372	)		600			777			(314	)

Total Revenues			99,203			140,409			179,396			213,337			204,590			124,337			231,795			419,008			560,722

Expenses
Compensation and Benefits
Base Compensation			53,707			49,304			54,365			40,741			49,085			53,370			53,280			157,376			155,735
Performance Fee Related
Realized			57			82			842			19,873			212			13,856			12,373			981			26,441
Unrealized			7,370			8,020			24,594			27,509			41,319			(6,595	)		39,835			39,984			74,559

Total Compensation and Benefits			61,134			57,406			79,801			88,123			90,616			60,631			105,488			198,341			256,735
Other Operating Expenses			23,645			16,461			18,123			22,432			19,575			24,520			22,057			58,229			66,152

Total Expenses			84,779			73,867			97,924			110,555			110,191			85,151			127,545			256,570			322,887

Economic Net Income		$	14,424		$	66,542		$	81,472		$	102,782		$	94,399		$	39,186		$	104,250		$	162,438		$	237,835

Net Fee Related Earnings from Operations		$	14,428		$	25,164		$	24,005		$	36,049		$	34,136		$	34,552		$	49,334		$	63,597		$	118,022

*	Transaction and Other Fees, Net, are net of amounts, if any, shared with limited partners.

**	Primarily placement fees.

continued…

THE BLACKSTONE GROUP L.P.

Exhibit 2a. Economic Net Income and Net Fee Related Earnings from Operations - Continued

(Dollars in Thousands)


	Three Months Ended																			Nine Months Ended
	March 31, 2009			June 30, 2009			September 30, 2009		December 31, 2009			March 31, 2010			June 30, 2010			September 30, 2010		September 30, 2009			September 30, 2010
Financial Advisory
Revenues
Advisory Fees	$	90,940		$	82,503		$	94,566	$	122,709		$	76,568		$	134,099		$	84,541	$	268,009		$	295,208
Transaction and Other Fees, Net		—			—			—		—			1			102			—		—			103

Total Management Fees		90,940			82,503			94,566		122,709			76,569			134,201			84,541		268,009			295,311

Investment Income (Loss)
Realized		—			—			—		1,443			187			(49	)		469		—			607
Unrealized		—			—			476		(257	)		230			561			607		476			1,398

Total Investment Income (Loss)		—			—			476		1,186			417			512			1,076		476			2,005
Interest Income and Dividend Revenue		1,044			1,118			1,250		1,842			1,396			1,268			1,609		3,412			4,273
Other		(943	)		(122	)		1,051		(21	)		(932	)		(342	)		477		(14	)		(797	)

Total Revenues		91,041			83,499			97,343		125,716			77,450			135,639			87,703		271,883			300,792

Expenses
Compensation and Benefits
Base Compensation		50,952			54,239			57,686		69,482			54,492			76,152			66,531		162,877			197,175

Total Compensation and Benefits		50,952			54,239			57,686		69,482			54,492			76,152			66,531		162,877			197,175
Other Operating Expenses		12,976			21,734			22,666		22,196			14,727			17,316			17,253		57,376			49,296

Total Expenses		63,928			75,973			80,352		91,678			69,219			93,468			83,784		220,253			246,471

Economic Net Income	$	27,113		$	7,526		$	16,991	$	34,038		$	8,231		$	42,171		$	3,919	$	51,630		$	54,321


Net Fee Related Earnings from Operations	$	24,694		$	4,874		$	16,405	$	31,778		$	6,072		$	37,156		$	6,262	$	45,973		$	49,490

continued...

THE BLACKSTONE GROUP L.P.

Exhibit 2a. Economic Net Income and Net Fee Related Earnings from Operations - Continued

(Dollars in Thousands)


	Three Months Ended																					Nine Months Ended
	March 31, 2009			June 30, 2009			September 30, 2009			December 31, 2009			March 31, 2010			June 30, 2010			September 30, 2010			September 30, 2009			September 30, 2010
Economic Net Income Recap, Total Segments
Revenues
Management and Advisory Fees
Base Management Fees	$	245,132		$	245,550		$	255,848		$	253,299		$	251,971		$	262,914		$	269,434		$	746,530		$	784,319
Advisory Fees		90,940			82,503			94,566			122,709			76,568			134,099			84,541			268,009			295,208
Transaction and Other Fees, Net *		13,911			18,711			22,493			59,925			35,260			20,617			22,948			55,115			78,825
Management Fee Offsets **		(5,406	)		(4,851	)		(4,536	)		(2,368	)		(1,178	)		(179	)		(674	)		(14,793	)		(2,031	)

Total Management and Advisory Fees		344,577			341,913			368,371			433,565			362,621			417,451			376,249			1,054,861			1,156,321

Performance Fees and Allocations
Realized		646			5,177			(3,819	)		72,260			53,881			46,374			66,039			2,004			166,294
Unrealized		(214,479	)		67,057			170,589			142,700			132,333			(20,738	)		192,745			23,167			304,340

Total Performance Fees and Allocations		(213,833	)		72,234			166,770			214,960			186,214			25,636			258,784			25,171			470,634

Investment Income (Loss)
Realized		(10,945	)		(2,821	)		7,669			35,641			5,307			15,721			14,276			(6,097	)		35,304
Unrealized		(74,314	)		(13,241	)		50,334			41,101			151,521			87,186			128,247			(37,221	)		366,954

Total Investment Income (Loss)		(85,259	)		(16,062	)		58,003			76,742			156,828			102,907			142,523			(43,318	)		402,258
Interest Income and Dividend Revenue		1,985			2,418			6,767			11,322			8,690			6,930			10,187			11,170			25,807
Other		(1,685	)		3,070			3,893			1,818			(3,250	)		(644	)		4,468			5,278			574

Total Revenues		45,785			403,573			603,804			738,407			711,103			552,280			792,211			1,053,162			2,055,594

Expenses
Compensation and Benefits
Base Compensation		177,509			183,417			192,546			216,385			190,637			220,662			210,582			553,472			621,881
Performance Fee Related
Realized		2,189			(463	)		(713	)		24,088			7,741			22,879			24,962			1,013			55,582
Unrealized		(110,055	)		(23,870	)		58,070			49,674			54,600			(892	)		104,323			(75,855	)		158,031

Total Compensation and Benefits		69,643			159,084			249,903			290,147			252,978			242,649			339,867			478,630			835,494
Other Operating Expenses		69,344			71,726			75,544			82,415			73,023			88,160			84,253			216,614			245,436

Total Expenses		138,987			230,810			325,447			372,562			326,001			330,809			424,120			695,244			1,080,930

Total Economic Net Income (Loss)	$	(93,202	)	$	172,763		$	278,357		$	365,845		$	385,102		$	221,471		$	368,091		$	357,918		$	974,664

Total Net Fee Related Earnings from Operations	$	89,518		$	86,790		$	94,939		$	139,163		$	98,745		$	107,915		$	112,914		$	271,247		$	319,574

*	Transaction and Other Fees, Net, are net of amounts, if any, shared with limited partners including, for Private Equity, broken deal expenses.

**	Primarily placement fees.

THE BLACKSTONE GROUP L.P.

Exhibit 2b. Reconciliation of Income (Loss) Before Provision (Benefit) for Taxes to Total Segments Economic Net Income, of Total Segments, Economic Net Income to Net Fee Related Earnings from Operations, of Net Fee Related Earnings from Operations to Distributable Earnings and of Earnings Before Interest, Taxes and Depreciation and Amortization from Net Fee Related Earnings from Operations to Net Fee Related Earnings from Operations

(Dollars in Thousands)

The tables below reconcile Economic Net Income (Loss) to Net Fee Related Earnings from Operations.


	Three Months Ended																					Nine Months Ended
	March 31, 2009			June 30, 2009			September 30, 2009			December 31, 2009			March 31, 2010			June 30, 2010			September 30, 2010			September 30, 2009			September 30, 2010
Private Equity
Economic Net Income	$	53,112		$	123,770		$	135,689		$	177,839		$	193,155		$	18,731		$	111,941		$	312,571		$	323,827
Performance Fees and Allocations Adjustment (a)		(4,818	)		(97,185	)		(110,867	)		(124,642	)		(91,724	)		22,914			(90,313	)		(212,870	)		(159,123	)
Investment Income (Loss) Adjustment (b)		15,509			(17,220	)		(27,434	)		(41,092	)		(84,189	)		(20,416	)		(40,431	)		(29,145	)		(145,036	)
Investment Income - Blackstone’s Treasury Cash Management Strategies (c)		—			—			—			5,510			1,650			2,278			5,052			—			8,980
Performance Fee Related Compensation and Benefits Adjustment (d)		(41,972	)		13,596			27,890			21,534			12,349			(10,168	)		29,089			(486	)		31,270
Taxes Payable (e)		(1,948	)		924			(4,125	)		(6,244	)		(2,529	)		(1,875	)		2,127			(5,149	)		(2,277	)

Net Fee Related Earnings from Operations	$	19,883		$	23,885		$	21,153		$	32,905		$	28,712		$	11,464		$	17,465		$	64,921		$	57,641


Real Estate
Economic Net Income (Loss)	$	(187,851	)	$	(25,075	)	$	44,205		$	51,186		$	89,317		$	121,383		$	147,981		$	(168,721	)	$	358,681
Performance Fees and Allocations Adjustment (a)		228,573			47,370			(12,167	)		(8,557	)		(17,339	)		(37,436	)		(74,920	)		263,776			(129,695	)
Investment Income (Loss) Adjustment (b)		65,842			58,063			1,836			(6,281	)		(49,524	)		(83,443	)		(86,127	)		125,741			(219,094	)
Investment Income - Blackstone’s Treasury Cash Management Strategies (c)		—			—			—			4,312			1,311			1,811			4,016			—			7,138
Performance Fee Related Compensation and Benefits Adjustment (d)		(73,321	)		(46,031	)		4,031			4,846			8,461			24,894			47,988			(115,321	)		81,343
Taxes Payable (e)		(2,730	)		(1,460	)		(4,529	)		(7,075	)		(2,401	)		(2,466	)		915			(8,719	)		(3,952	)

Net Fee Related Earnings from Operations	$	30,513		$	32,867		$	33,376		$	38,431		$	29,825		$	24,743		$	39,853		$	96,756		$	94,421

(a)	This adjustment removes from ENI the segment amount of Performance Fees and Allocations.

(b)	This adjustment removes from ENI the segment amount of Investment Income (Loss).

(c)	This adjustment represents the realized and unrealized gain on Blackstone’s Treasury cash management strategies which are a component of Investment Income (Loss) but included in Net Fee Related Earnings.

(d)	This adjustment removes from expenses the compensation and benefit amounts related to Blackstone’s profit sharing plans related to Performance Fees and Allocations.

(e)	Represents an implied payable for income taxes calculated using a similar methodology applied in calculating the current provision for The Blackstone Group L.P.

continued...

THE BLACKSTONE GROUP L.P.

(Dollars in Thousands)


	Three Months Ended																					Nine Months Ended
	March 31, 2009			June 30, 2009			September 30, 2009			December 31, 2009			March 31, 2010			June 30, 2010			September 30, 2010			September 30, 2009			September 30, 2010
Credit and Marketable Alternatives
Economic Net Income	$	14,424		$	66,542		$	81,472		$	102,782		$	94,399		$	39,186		$	104,250		$	162,438		$	237,835
Performance Fees and Allocations Adjustment (a)		(9,922	)		(22,419	)		(43,736	)		(81,761	)		(77,151	)		(11,114	)		(93,551	)		(76,077	)		(181,816	)
Investment Income (Loss) Adjustment (b)		3,908			(24,781	)		(31,929	)		(28,183	)		(22,698	)		1,464			(14,889	)		(52,802	)		(36,123	)
Investment Income - Blackstone’s Treasury Cash Management Strategies (c)		—			—			—			1,326			354			489			1,085			—			1,928
Performance Fee Related Compensation and Benefits Adjustment (d)		7,427			8,102			25,436			47,382			41,531			7,261			52,208			40,965			101,000
Taxes Payable (e)		(1,409	)		(2,280	)		(7,238	)		(5,497	)		(2,299	)		(2,734	)		231			(10,927	)		(4,802	)

Net Fee Related Earnings from Operations	$	14,428		$	25,164		$	24,005		$	36,049		$	34,136		$	34,552		$	49,334		$	63,597		$	118,022


Financial Advisory
Economic Net Income	$	27,113		$	7,526		$	16,991		$	34,038		$	8,231		$	42,171		$	3,919		$	51,630		$	54,321
Investment Income (Loss) Adjustment (b)		—			—			(476	)		(1,186	)		(417	)		(512	)		(1,076	)		(476	)		(2,005	)
Investment Income - Blackstone’s Treasury Cash Management Strategies (c)		—			—			—			1,220			350			484			1,073			—			1,907
Taxes Payable (e)		(2,419	)		(2,652	)		(110	)		(2,294	)		(2,092	)		(4,987	)		2,346			(5,181	)		(4,733	)

Net Fee Related Earnings from Operations	$	24,694		$	4,874		$	16,405		$	31,778		$	6,072		$	37,156		$	6,262		$	45,973		$	49,490

(a)	This adjustment removes from ENI the segment amount of Performance Fees and Allocations.

(b)	This adjustment removes from ENI the segment amount of Investment Income (Loss).

(c)	This adjustment represents the realized and unrealized gain on Blackstone’s Treasury cash management strategies which are a component of Investment Income (Loss) but included in Net Fee Related Earnings.

(d)	This adjustment removes from expenses the compensation and benefit amounts related to Blackstone’s profit sharing plans related to Performance Fees and Allocations.

(e)	Represents an implied payable for income taxes calculated using a similar methodology applied in calculating the current provision for The Blackstone Group L.P.

continued...

THE BLACKSTONE GROUP L.P.

(Dollars in Thousands)


	Three Months Ended																					Nine Months Ended
	March 31, 2009			June 30, 2009			September 30, 2009			December 31, 2009			March 31, 2010			June 30, 2010			September 30, 2010			September 30, 2009			September 30, 2010
Income (Loss) Before Provision (Benefit) for Taxes	$	(912,207	)	$	(586,986	)	$	(426,959	)	$	(365,314	)	$	(227,671	)	$	(636,928	)	$	143,302		$	(1,926,152	)	$	(721,297	)
IPO and Acquisition-Related Charges (a)		741,057			761,834			719,708			751,351			726,722			749,930			438,568			2,222,599			1,915,220
Amortization of Intangibles (b)		39,513			39,511			39,513			39,511			39,512			40,822			40,872			118,537			121,206
(Income) Loss Associated with Non-Controlling Interests in (Income) Loss of Consolidated Entities (c)		38,435			(41,596	)		(53,905	)		(59,703	)		(159,935	)		58,294			(266,346	)		(57,066	)		(367,987	)
Management Fee Revenues Associated with Consolidated CLO Entities (d)		—			—			—			—			6,474			9,353			11,695			—			27,522

Total Segments
Total Segments, Economic Net Income (Loss)		(93,202	)		172,763			278,357			365,845			385,102			221,471			368,091			357,918			974,664
Performance Fees and Allocations Adjustment (e)		213,833			(72,234	)		(166,770	)		(214,960	)		(186,214	)		(25,636	)		(258,784	)		(25,171	)		(470,634	)
Investment Income (Loss) Adjustment (f)		85,259			16,062			(58,003	)		(76,742	)		(156,828	)		(102,907	)		(142,523	)		43,318			(402,258	)
Investment Income - Blackstone’s Treasury Cash Management Strategies (g)		—			—			—			12,368			3,665			5,062			11,226			—			19,953
Performance Fee Related Compensation and Benefits Adjustment (h)		(107,866	)		(24,333	)		57,357			73,762			62,341			21,987			129,285			(74,842	)		213,613
Taxes Payable (i)		(8,506	)		(5,468	)		(16,002	)		(21,110	)		(9,321	)		(12,062	)		5,619			(29,976	)		(15,764	)

Net Fee Related Earnings from Operations		89,518			86,790			94,939			139,163			98,745			107,915			112,914			271,247			319,574
Realized Performance Fees and Allocations (j)		(1,543	)		5,637			(3,106	)		48,172			46,140			23,495			41,077			988			110,712
Realized Investment Income (Loss) (k)		(10,945	)		(2,821	)		7,669			35,641			5,307			15,721			14,276			(6,097	)		35,304
Adjustment Related to Realized Investment Income - Blackstone’s Treasury Cash Management Strategies (l)		—			—			—			(10,142	)		(1,264	)		512			(4,874	)		—			(5,626	)
Other Payables Including Payable Under Tax Receivable Agreement		—			—			—			—			(232	)		(68	)		2,923			—			2,623

Distributable Earnings	$	77,030		$	89,606		$	99,502		$	212,834		$	148,696		$	147,575		$	166,316		$	266,138		$	462,587

Earnings Before Interest, Taxes andDepreciation and Amortization from Net Fee Related Earnings from Operations (m)	$	104,846		$	97,463		$	121,259		$	171,916		$	120,805		$	132,866		$	124,195		$	323,568		$	377,866

(a)	This adjustment adds back to Income (Loss) Before Provision for Taxes amounts for Transaction-Related Charges which include principally equity-based compensation charges associated with Blackstone’s initial public offering and other corporate actions.

(b)	This adjustment adds back to Income (Loss) Before Provision for Taxes amounts for the Amortization of Intangibles which are associated with Blackstone’s initial public offering and other corporate actions.

(c)	This adjustment adds back to Income (Loss) Before Provision for Taxes the amount of (Income) Loss Associated with Non-Controlling Interests in (Income) Loss of Consolidated Entities.

continued...

THE BLACKSTONE GROUP L.P.

Exhibit 2b. Reconciliation of Income (Loss) Before Provision (Benefit) for Taxes to Total Segments Economic Net Income, of
Total Segments, Economic Net Income to Net Fee Related Earnings from Operations, of Net Fee Related Earnings from
Operations to Distributable Earnings and of Earnings Before Interest, Taxes and Depreciation and Amortization from Net
Fee Related Earnings from Operations to Net Fee Related Earnings from Operations - Continued

(Dollars in Thousands)

(d)	This adjustment adds back to Income (Loss) Before Provision for Taxes the amount of Management Fee Revenues associated with Consolidated CLO Entities.

(e)	This adjustment removes from ENI the total segment amount of Performance Fees and Allocations.

(f)	This adjustment removes from ENI the total segment amount of Investment Income (Loss).

(g)	This adjustment represents the realized and unrealized gain on Blackstone’s Treasury cash management strategies which are a component of Investment Income (Loss) but included in Net Fee Related Earnings.

(h)	This adjustment removes from expenses the compensation and benefit amounts related to Blackstone’s profit sharing plans related to Performance Fees and Allocations.

(i)	Represents an implied payable for income taxes calculated using a similar methodology applied in calculating the current provision for The Blackstone Group L.P.

(j)	Represents the adjustment for realized Performance Fees and Allocations net of corresponding actual amounts due under Blackstone’s profit sharing plans related thereto.

(k)	Represents the adjustment for Blackstone’s Investment Income (Loss) - Realized.

(l)	Represents the elimination of Realized Investment Income attributable to Blackstone’s Treasury cash management strategies which is a component of both Net Fee Related Earnings from Operations and Realized Investment Income (Loss).

(m)

Earnings Before Interest, Taxes and Depreciation and Amortization from Net Fee Related Earnings from Operations represents Net Fee Related Earnings from Operations adding back the implied cash taxes payable component from the Distributable Earnings reconciliation presented above, which is included in (i), and segment interest and depreciation and amortization. The cash taxes payable component of (i) was $8.5 million, $5.5 million, $16.0 million, $21.1 million, $9.3 million, $12.1 million and $(5.6) million for the three months ended March 31, 2009, June 30, 2009, September 30, 2009, December 31, 2009, March 31, 2010, June 30, 2010 and September 30, 2010, respectively. The cash taxes payable component of (i) was $15.8 million and $30.0 million for the nine months ended September 30, 2010 and 2009, respectively. Interest was $0.8 million, $(0.8) million, $4.4 million, $5.8 million, $6.3 million, $6.8 million and $10.3 million for the three months ended March 31, 2009, June 30, 2009, September 30, 2009, December 31, 2009, March 31, 2010, June 30, 2010 and September 30, 2010, respectively. Interest was $23.5 million and $4.4 million for the nine months ended September 30, 2010 and 2009, respectively. Depreciation and amortization was $6.0 million, $6.0 million, $5.9 million, $5.8 million, $6.4 million, $6.1 million and $6.6 million for the three months ended March 31, 2009, June 30, 2009, September 30, 2009, December 31, 2009, March 31, 2010, June 30, 2010 and September 30, 2010, respectively. Depreciation and amortization was $19.0 million and $17.9 million for the nine months ended September 30, 2010 and 2009, respectively.

THE BLACKSTONE GROUP L.P.

Exhibit 3. Distributable Earnings

(Dollars in Thousands)

The following table calculates Blackstone’s Distributable Earnings. Distributable Earnings is a supplemental measure of performance to assess amounts available for distributions to Blackstone unitholders, including Blackstone personnel.


	Three Months Ended September 30,						Nine Months Ended September 30,
	2010			2009			2010			2009
Fee Related Earnings
Revenues
Total Management and Advisory Fees (a)	$	376,249		$	368,371		$	1,156,321		$	1,054,861
Interest and Dividend Revenue (a)		10,187			6,767			25,807			11,170
Other (a)		4,468			3,893			574			5,278
Investment Income - Blackstone’s Treasury Cash Management Strategies (b)		11,226			—			19,953			—

Total Revenues		402,130			379,031			1,202,655			1,071,309

Expenses
Compensation and Benefits - Base Compensation (a)		210,582			192,546			621,881			553,472
Other Operating Expenses (a)		84,253			75,544			245,436			216,614
Cash Taxes (c)		(5,619	)		16,002			15,764			29,976

Total Expenses		289,216			284,092			883,081			800,062

Net Fee Related Earnings from Operations		112,914			94,939			319,574			271,247

Performance Fees and Allocations, Net of Related Compensation
Performance Fees and Allocations - Realized (a)		66,039			(3,819	)		166,294			2,004
Compensation and Benefits - Performance Fee Related - Realized (a)		(24,962	)		713			(55,582	)		(1,016	)

Total Performance Fees and Allocations, Net of Related Compensation		41,077			(3,106	)		110,712			988

Investment Income and Other
Investment Income (Loss) - Realized (a)		14,276			7,669			35,304			(6,097	)
Adjustment Related to Realized Investment Income - Blackstone’s Treasury Cash Management Strategies (d)		(4,874	)		—			(5,626	)		—
Other Payables Including Payable Under Tax Receivable Agreement		2,923			—			2,623			—

Total Investment Income and Other		12,325			7,669			32,301			(6,097	)

Distributable Earnings	$	166,316		$	99,502		$	462,587		$	266,138

(a)	Represents the total segment amounts of the respective captions.

(b)	Represents the inclusion of Investment Income from Blackstone’s Treasury cash management strategies.

(c)	Represents the provisions for and/or adjustments to income taxes that were calculated using a similar methodology applied in calculating the current provision for The Blackstone Group L.P.

(d)	Represents the elimination of Realized Investment Income attributable to Blackstone’s Treasury cash management strategies which is a component of Net Fee Related Earnings from Operations.

THE BLACKSTONE GROUP L.P.

Exhibit 4. Reconciliation of Total GAAP Weighted-Average Common Units Outstanding—Basic and Diluted to Weighted-Average Economic Net Income Adjusted Units—Basic and Diluted and of Total GAAP Common Units Outstanding—Basic and Diluted to Economic Net Income Adjusted Units—Basic and Diluted and of Total GAAP Common Units Outstanding—Basic and Diluted to Distributable Earnings Adjusted Units—Basic and Diluted

The following table provides a reconciliation of Blackstone’s Total GAAP Weighted-Average Common Units Outstanding—Basic and Diluted to Weighted-Average Economic Net Income Adjusted Units—Basic and Diluted.


	Three Months Ended September 30,				Nine Months Ended September 30,
	2010		2009		2010		2009
Total GAAP Weighted-Average Common Units Outstanding - Basic and Diluted		370,101,582		291,554,570		352,794,385		280,856,860
Adjustments:
Weighted-Average Blackstone Holdings Partnership Units		727,528,593		808,479,683		745,006,116		820,944,937
Weighted-Average Unvested Deferred Restricted Common Units		23,636,653		19,750,299		26,542,362		23,353,728

Weighted-Average Economic Net Income Adjusted Units - Basic and Diluted		1,121,266,828		1,119,784,552		1,124,342,863		1,125,155,525

The following table provides a reconciliation of Blackstone’s Total GAAP Common Units Outstanding—Basic and Diluted to Economic Net Income Adjusted Units—Basic and Diluted as of September 30, 2010.


	September 30, 2010
Total GAAP Common Units Outstanding - Basic and Diluted		374,003,111
Adjustments:
Blackstone Holdings Partnership Units		723,662,686
Unvested Deferred Restricted Common Units		23,479,140

Economic Net Income Adjusted Units - Basic and Diluted		1,121,144,937

The following table provides a reconciliation of Blackstone’s Total GAAP Common Units Outstanding—Basic and Diluted to Distributable Earnings Adjusted Units—Basic and Diluted.


	September 30,
	2010		2009
Total GAAP Common Units Outstanding - Basic and Diluted		374,003,111		303,658,355
Adjustments:
Blackstone Holdings Partnership Units		723,662,686		788,342,719

Distributable Earnings Adjusted Units - Basic and Diluted		1,097,665,797		1,092,001,074

THE BLACKSTONE GROUP L.P.

Exhibit 5. Assets Under Management

(Dollars in Thousands)


	As of and for the Periods Ended September 30,
	2010		2009
Total Assets Under Management (End of Period)
Private Equity	$	29,202,952	$	24,308,879
Real Estate		27,129,825		20,434,831
CAMA		62,782,469		52,810,672

	$	119,115,246	$	97,554,382


Fee-Earning Assets Under Management (End of Period)
Private Equity	$	24,311,443	$	25,184,161
Real Estate		24,345,161		23,692,257
CAMA		55,636,578		47,448,212

	$	104,293,182	$	96,324,630


Weighted-Average Fee-Earning Assets Under Management (For the Three Months Ended)
Private Equity	$	24,610,920	$	25,240,130
Real Estate		24,016,964		23,815,694
CAMA		54,095,555		45,739,248

	$	102,723,439	$	94,795,072


Weighted-Average Fee-Earning Assets Under Management (Year to Date Period Ended)
Private Equity	$	25,028,962	$	25,298,679
Real Estate		23,826,723		23,292,141
CAMA		51,931,728		44,892,195

	$	100,787,413	$	93,483,015

THE BLACKSTONE GROUP L.P.

Exhibit 6. Limited Partner Capital Invested Metrics

(Dollars in Thousands)


	As of and for the Periods Ended September 30,
	2010		2009
Limited Partner Capital Invested (For the Three Months Ended)
Private Equity	$	678,882	$	109,082
Real Estate		688,951		34,993
CAMA (a)		692,275		87,346

	$	2,060,108	$	231,421


Limited Partner Capital Invested (Year to Date Period Ended)
Private Equity	$	1,536,594	$	643,491
Real Estate		1,757,636		502,803
CAMA (a)		1,113,419		407,805

	$	4,407,649	$	1,554,099


Fund Level Unrealized Value (b) (End of Period)
Private Equity
Cost	$	20,582,631	$	19,157,223

Unrealized Value	$	21,924,759	$	15,771,763

Real Estate
Cost	$	13,754,522	$	11,802,676

Unrealized Value	$	13,360,662	$	6,635,416

CAMA
Cost	$	3,465,813	$	3,001,616

Unrealized Value	$	3,905,776	$	2,789,529

(a)	Limited Partner Capital Invested and Fund Level Unrealized Value for the CAMA segment represent activity in Blackstone’s mezzanine and credit liquidity funds.

(b)

Cost and unrealized value represent the limited partners’ share, including co-investments arranged by Blackstone, of those fund level investments on which carried interest can be earned, before carried interest allocations to Blackstone, when a fund achieves cumulative investment returns in excess of a specified rate.

Blackstone (BX) 8-KThe Blackstone Group Reports Third Quarter 2010 Results