Blackstone (BX) 8-K Blackstone Reports Third Quarter 2012 Results

Blackstone’s Third Quarter 2012 Earnings

October 18, 2012

Exhibit 99.2

Blackstone

1

Blackstone’s Third Quarter 2012 Highlights

$622 million of Economic Net Income (“ENI”) was our third best quarter since going public.

$1.3 billion of year-to-date ENI, a record, up 24% from the same period last year.

GAAP net income was $129 million in the quarter net of non-cash IPO related expenses.

$540 million of Distributable Earnings, up 4% year-over-year.

Total AUM grew to a record $205 billion, up 30% year-over-year, on $38 billion of organic inflows.

Significant inflows into new funds and strategies continued in the third quarter:

•

Completed fundraising for our latest global real estate fund which hit its cap at $13.3 billion.

•

Our first dedicated energy fund completed fundraising with $2.4 billion of total commitments.

•

Hedge Fund Solutions had $1.7 billion of net inflows during the quarter.

•

Credit launched its third closed-end fund and priced two new CLOs raising nearly $2 billion.

•

$36 billion of committed undrawn capital (“dry powder”) at the end of the third quarter.

Announced agreement to acquire Capital Trust’s asset management platform ($2.4 billion of AUM).

Blackstone

2

Blackstone’s Third Quarter 2012 Earnings

Note: Prior period amounts on all pages have been adjusted to conform to the current period presentation and definitions.

(a)

Economic Net Income, a segment measure, has been redefined as Economic Income after current taxes (“Taxes”); it no longer deducts the implied provision for income taxes.

(b)

ENI per Unit is based on the Weighted-Average ENI Adjusted Units. 

(c)

DE per Common Unit equals Pre-Tax DE allocated to Common Unitholders less Other Payables to Common Unitholders divided by Total GAAP Common Units Outstanding.

% Change

% Change

(Dollars in Thousands, Except per Unit Data)

3Q'11

3Q'12

vs. 3Q'11

YTD'11

YTD'12

vs. YTD'11

Fee Revenues

451,082

$       

509,192

$       

13%

1,412,469

$   

1,539,862

$   

9%

Performance Fees

(457,279)

602,999

n/m

816,576

1,123,592

38%

Investment Income (Loss)

(134,106)

107,432

n/m

129,539

174,574

35%

Total Revenues

(140,303)

$     

1,219,623

$   

n/m

2,358,584

$   

2,838,028

$   

20%

Total Expenses

234,247

586,614

150%

1,256,385

1,483,034

18%

Taxes

5,449

11,257

107%

31,145

29,676

(5)%

Economic

Net

Income

(Loss)

("ENI")

(379,999)

$     

621,752

$       

n/m

1,071,054

$   

1,325,318

$   

24%

ENI per Unit

(b)

(0.34)

$           

0.55

$             

n/m

0.96

$             

1.18

$             

23%

GAAP Net Income (Loss)

(274,567)

$     

128,824

$       

n/m

(145,626)

$     

112,185

$       

n/m

Fee Related Earnings ("FRE")

112,932

$       

135,052

$       

20%

380,397

$       

427,709

$       

12%

Distributable Earnings ("DE")

125,745

$       

189,635

$       

51%

518,538

$       

540,160

$       

4%

DE per Common Unit

(c)

0.10

$             

0.15

$             

50%

0.44

$             

0.46

$             

5%

Total Assets Under Management

157,698,448

$

204,551,572

$

30%

157,698,448

$

204,551,572

$

30%

Fee-Earning Assets Under Management

132,934,377

$

168,630,082

$

27%

132,934,377

$

168,630,082

$

27%

(a)

Blackstone

3

Walkdown of Financial Metrics

3Q'12

YTD'12

(Dollars in Thousands, Except per Unit Data)

Results

Per Unit

(a)

Results

Per Unit

(a)

Base Management Fees

398,088

$      

1,174,938

$   

Transaction and Other Fees, Net

45,126

133,050

Advisory Fees

59,951

229,169

Management Fee Offsets

(8,454)

(29,477)

Interest Income and Other Revenue

27,358

53,261

Compensation

(259,561)

(783,217)

Other Operating Expenses

(127,456)

(350,015)

Fee Related Earnings

135,052

$      

0.12

$            

427,709

$      

0.38

$            

Net Realized Incentive Fees

7,163

14,307

Net Realized Carried Interest

61,742

115,394

Realized Investment Income

16,847

42,522

Taxes and Related Payables

(31,169)

(59,772)

Distributable Earnings

189,635

$      

0.15

$            

540,160

$      

0.46

$            

Net Unrealized Incentive Fees

59,895

107,759

Net Unrealized Carried Interest

274,602

536,330

Unrealized Investment Income

77,708

110,973

Add Back: Related Payables

19,912

30,096

Economic Net Income

621,752

$      

0.55

$            

1,325,318

$   

1.18

$            

See Appendix - Calculation of Certain Non-GAAP Financial Metric Components for the calculation of the amounts presented herein that are not the respective captions from the 

Total Segment information.

(a)

Fee Related Earnings per Unit is based on DE Units Outstanding; DE per Unit equals DE per Common Unit; and ENI per Unit is based on Weighted-Average ENI Adjusted Units (See

Appendix - Unit Rollforward).

Blackstone

4

Private Equity

Revenues were up substantially year-over-year driven by an increase in Performance Fees and Investment Income.

•

Overall carrying value of assets was up 7.1% for the quarter with appreciation across all contributed funds.

•

Improved market conditions drove the segment’s public holdings up 15.1% for the quarter, while private

holdings also increased 3.2%.

•

Significant Performance Fees were driven by BCP IV and our recent funds BCP VI and Blackstone Energy

Partners (“BEP”) which are also now both above their hurdle rates and generating performance fees.

Invested $1.4 billion of total capital with an additional $907 million committed but not yet invested during the

quarter, bringing year-to-date total capital invested and committed to $3.7 billion.

Returned

$285

million

of

capital

to

investors

during

the

quarter

at

an

average

4.5x

Multiple

of

Invested

Capital.

BEP, our first ever dedicated energy fund, completed its fundraising with total fund commitments of $2.4 billion.

Raised $1.4 billion for our new tactical opportunities fund and have commenced active marketing.

7.1%

3Q’12 Increase in Fund Carrying Value

$591 million

Net Accrued Performance Fees at 3Q’12

17%

Increase in Total AUM since 3Q’11

% Change

% Change

(Dollars in Thousands)

3Q'11

3Q'12

vs. 3Q'11

YTD'11

YTD'12

vs. YTD'11

Fee Revenues

104,003

$       

116,125

$       

12%

346,590

$       

323,864

$       

(7)%

Performance Fees

(287,980)

160,338

n/m

15,498

139,210

n/m

Investment Income (Loss)

(101,140)

50,456

n/m

25,861

46,304

79%

Total Revenues

(285,117)

326,919

n/m

387,949

509,378

31%

Compensation

52,388

62,424

19%

171,945

168,746

(2)%

Performance Fee Compensation

(47,398)

44,276

n/m

(4,858)

36,089

n/m

Other Operating Expenses

27,588

30,944

12%

86,425

90,346

5%

Total Expenses

32,578

137,644

n/m

253,512

295,181

16%

Economic Income (Loss)

(317,695)

$     

189,275

$       

n/m

134,437

$       

214,197

$       

59%

Total AUM

42,967,159

$ 

50,222,312

$ 

17%

42,967,159

$ 

50,222,312

$ 

17%

Fee-Earning AUM

37,006,024

$ 

38,505,497

$ 

4%

37,006,024

$ 

38,505,497

$ 

4%

Blackstone

5

Real Estate

Revenues for the quarter were up materially from last year driven by a significant increase in Performance Fees

reflecting the continued improvement of operating fundamentals across our office, retail and hotel portfolios.

•

Real Estate investments of $34.0 billion were up 4.9% for the quarter and 11.6% year-to-date.

•

Debt Strategies drawdown funds ($2.3 billion) were up 5.1% for the quarter and 11.6% year-to-date, while the

hedge funds ($800 million) were up 6.2% for the quarter and 14.6% year-to-date.

•

Significant performance fees generated by BREP V, VI, VII and EUR III (total $19 billion of invested equity).

Returned $659 million of cash to investors during the quarter bringing year-to-date to over $2 billion.

Invested $1.4 billion of total capital with an additional $1.8 billion committed but not yet deployed at the end of

the quarter, bringing year-to-date total capital deployed and committed to $6.3 billion.

Fundraising is complete for our most recent global real estate fund, BREP VII, with $2.2 billion in additional

commitments

in

the

third

quarter

bringing

total

fund

commitments

to

$13.3

billion.

Announced

the

agreement

to

acquire

the

asset

management

platform

of

Capital

Trust

($2.4

billion

of

AUM),

a

publicly traded real estate finance and investment management company.

4.9%

3Q’12

Increase

in

Fund

Carrying

Value

(a)

$1.2 billion

Net Accrued Performance Fees at 3Q’12

32%

Increase in Total AUM since 3Q’11

(a)

BREP portfolio (including fee-paying co-invest).

% Change

% Change

(Dollars in Thousands)

3Q'11

3Q'12

vs. 3Q'11

YTD'11

YTD'12

vs. YTD'11

Fee Revenues

118,401

$        

150,084

$        

27%

388,540

$        

455,812

$        

17%

Performance Fees

(114,868)

270,569

n/m

706,119

672,888

(5)%

Investment Income (Loss)

(18,747)

44,000

n/m

94,304

101,735

8%

Total Revenues

(15,214)

464,653

n/m

1,188,963

1,230,435

3%

Compensation

54,986

71,456

30%

183,264

216,921

18%

Performance Fee Compensation

(28,259)

73,208

n/m

179,875

173,650

(3)%

Other Operating Expenses

23,495

31,284

33%

74,832

86,768

16%

Total Expenses

50,222

175,948

250%

437,971

477,339

9%

Economic Income (Loss)

(65,436)

$        

288,705

$        

n/m

750,992

$        

753,096

$        

0%

Total AUM

40,709,500

$  

53,546,023

$  

32%

40,709,500

$  

53,546,023

$  

32%

Fee-Earning AUM

29,981,920

$  

40,609,286

$  

35%

29,981,920

$  

40,609,286

$  

35%

Blackstone

6

Hedge Fund Solutions

Revenues more than doubled from the year ago quarter driven by 17% Fee-Earning AUM growth and fund

performance.

Composite returns

(a)

were up 3.3% net for the quarter and up 6.2% net year-to-date.

•

As

of

quarter-end,

$18.5

billion

or

77%

of

Incentive

Fee-Earning

AUM

was

estimated

above

their

respective

High Water Mark and/or Hurdle, up from $9 billion or 41% last quarter.

Fee-Earning AUM grew 9% during the quarter and 17% over the last twelve months, driven by strong net inflows

primarily in customized and commingled investment products and market appreciation.

•

Fee-Earning net inflows were $1.7 billion for the quarter and $3.2 billion year-to-date.

•

October

1

st

subscriptions

of

$478

million

are

not

included

in

the

quarter-end

Fee-Earning

AUM.

$24 billion

3Q’12

Incentive

Fee-Earning

AUM

(b)

(a)

Represents the BAAM Composite which is the asset-weighted performance of BAAM’s investments net of all fees, excluding BAAM's long-only platforms, seed

funds and advisory relationships.

(b)

Represents currently invested incentive fee eligible AUM above or below High Water Mark or Relevant Benchmark. Totals may not add due to rounding.

Above

HWM /

Hurdle

0-5% Below

> 5% Below

$1.6B / 7%

$3.9B / 16%

$18.5B / 77%

% Change

% Change

(Dollars in Thousands)

3Q'11

3Q'12

vs. 3Q'11

YTD'11

YTD'12

vs. YTD'11

Fee Revenues

80,355

$         

87,811

$         

9%

237,579

$      

254,138

$      

7%

Performance Fees

(14,097)

39,272

n/m

10,157

55,951

n/m

Investment Income (Loss)

(9,011)

5,836

n/m

(559)

12,003

n/m

Total Revenues

57,247

132,919

132%

247,177

322,092

30%

Compensation

30,667

28,826

(6)%

90,434

91,618

1%

Performance Fee Compensation

(4,957)

9,124

n/m

3,909

14,631

274%

Other Operating Expenses

14,421

12,878

(11)%

43,504

41,318

(5)%

Total Expenses

40,131

50,828

27%

137,847

147,567

7%

Economic Income

17,116

$         

82,091

$         

n/m

109,330

$      

174,525

$      

60%

Total AUM

40,373,092

$ 

46,218,618

$ 

14%

40,373,092

$ 

46,218,618

$ 

14%

Fee-Earning AUM

37,231,013

$ 

43,601,541

$ 

17%

37,231,013

$ 

43,601,541

$ 

17%

Blackstone

7

Credit

Revenues

for the quarter were

up

reflecting

a

significant

increase

in

Performance

Fees.

Total

AUM

grew

8%

during

the

quarter

and

62%

from

the

prior

year

to

a

record

$55

billion

driven

by

new

product

launches, strong net inflows, market appreciation and the Harbourmaster acquisition in the first quarter.

Fund returns remained strong across the platform despite volatile markets:

•

Hedge Funds

(a)

were up 6.1% net for the quarter and up 9.2% net year-to-date.

•

Mezzanine Funds

(a)

were up 7.7% net for the quarter and up 17.7% net year-to-date.

•

Rescue Lending Funds

(a)

were up 4.6% net for the quarter and up 12.4% net year-to-date.

Invested $722

million of capital in our credit-oriented drawdown funds during the quarter, bringing year-to-date

total capital invested to $2.5 billion.

During

the

quarter,

Credit

launched

its

third

closed-end

fund

raising

$835

million

of

AUM

and

priced

two

new

CLOs

totaling

over

$1

billion

of

AUM;

net

inflows

over

the

last

twelve

months

were

$19

billion.

$55 billion

3Q’12 Total AUM

Customized

Credit Strategies

(d)

Rescue

Lending

Mezzanine

Funds

Hedge Fund

Strategies

CLOs

$8.5

$3.8

$5.0

$12.0

$25.4

Totals may not add due to rounding.

(a)

Represents weighted average returns for the onshore and offshore funds (if applicable) for the respective flagship funds.

(b)

3Q’12 includes $20 million of non-recurring business development expenses related to fundraising.

(c)

2Q’12 and 3Q’12 include AUM from the January 5, 2012 acquisition of Harbourmaster.

(d)

Includes business development companies (“BDCs”), closed-end funds, commingled funds and separately managed accounts.

% Change

% Change

(Dollars in Thousands)

3Q'11

3Q'12

vs. 3Q'11

YTD'11

YTD'12

vs. YTD'11

Fee Revenues

60,736

$         

94,169

$         

55%

175,634

$      

272,223

$      

55%

Performance Fees

(40,334)

132,820

n/m

84,802

255,543

201%

Investment Income (Loss)

(4,993)

5,961

n/m

9,447

12,337

31%

Total Revenues

15,409

232,950

n/m

269,883

540,103

100%

Compensation

40,533

50,236

24%

103,153

130,224

26%

Performance Fee Compensation

(20,278)

72,989

n/m

43,058

125,432

191%

11,210

33,527

199%

36,793

66,372

80%

Total Expenses

31,465

156,752

n/m

183,004

322,028

76%

Economic Income (Loss)

(16,056)

$       

76,198

$         

n/m

86,879

$         

218,075

$      

151%

Total

AUM

(c)

33,648,697

$ 

54,564,619

$ 

62%

33,648,697

$ 

54,564,619

$ 

62%

28,715,420

$ 

45,913,758

$ 

60%

28,715,420

$ 

45,913,758

$ 

60%

Fee-Earning

AUM

(c)

Other

Operating

Expenses

(b)

Blackstone

8

Financial Advisory

Revenues

were

down

29%

from

the

same

quarter

last

year

primarily

from

delays

in

deal

closings,

particularly

in

our strategic advisory business.  Despite the slow quarter, activity levels remained largely in line with last year.

Restructuring maintained its #1 ranking for worldwide completed restructurings in the Thomson Reuters league

tables for the first nine months of 2012; the pipeline remains steady across a broad set of mandates with revenue

up year-to-date.

Blackstone

Advisory

Partners’

2012

backlog

is

healthy

against

a

difficult

backdrop

of

M&A

as

deal

activity

remained in line with 2011 levels with several high profile mandates being recently announced.

Park Hill’s pipeline remains solid as challenging fundraising market conditions are driving demand for placement

services; revenues were down slightly year-over-year reflecting timing more than recurring activity levels.

% Change

% Change

(Dollars in Thousands)

3Q'11

3Q'12

vs. 3Q'11

YTD'11

YTD'12

vs. YTD'11

Fee Revenues

87,587

$          

61,003

$          

(30)%

264,126

$       

233,825

$       

(11)%

Investment Income (Loss)

(215)

1,179

n/m

486

2,195

n/m

Total Revenues

87,372

62,182

(29)%

264,612

236,020

(11)%

Compensation

59,633

46,619

(22)%

186,335

175,708

(6)%

Other Operating Expenses

20,218

18,823

(7)%

57,716

65,211

13%

Total Expenses

79,851

65,442

(18)%

244,051

240,919

(1)%

Economic Income (Loss)

7,521

$            

(3,260)

$          

n/m

20,561

$          

(4,899)

$          

n/m

Blackstone

9

Assets Under Management

Fee-Earning

AUM

grew

to

a

record

$169

billion,

up

27%

in

the

last

twelve

months,

as

$43

billion

of

gross

inflows

more than offset $11

billion of capital returned to investors during the same period.

•

Including

commitments,

not

yet

earning

fees,

Blackstone’s

Fee-Earning

AUM

would

have

been

$179

billion,

up

34% year-over-year.

Total

AUM

increased

30%

in

the

last

twelve

months

to

a

record

$205

billion,

up

8%

from

last

quarter

driven

by

strong organic net inflows and market appreciation across all asset management segments.

Fee-Earning AUM by Segment

(Dollars in Billions)

$132.9

$157.6

$168.6

Total AUM by Segment

(Dollars in Billions)

$157.7

$190.3

$204.6

Credit

Hedge Fund

Solutions

Real

Estate

Private

Equity

Credit

Hedge Fund

Solutions

Real

Estate

Private

Equity

Totals may not add due to rounding.

$37.0

$37.2

$38.5

$30.0

$38.5

$40.6

$37.2

$40.2

$43.6

$28.7

$41.8

$45.9

3Q'11

2Q'12

3Q'12

$43.0

$46.6

$50.2

$40.7

$50.2

$53.5

$40.4

$42.9

$46.2

$33.6

$50.5

$54.6

3Q'11

2Q'12

3Q'12

Blackstone

10

3Q’12 Available Capital Summary

$36 billion Dry Powder

(a)

Credit

Hedge Fund

Solutions

Private

Equity

Real

Estate

Currently Earning

Performance Fees

Invested/Committed Not Yet

Earning Performance Fees

To

Be

Invested

(c)

$10 billion Not Yet Earning

Base Management Fees

(b)

$127 billion Performance

Fee Eligible AUM

Substantial levels of committed undrawn capital (“dry powder”) with $36 billion at the end of the third quarter.

$10 billion of Total AUM was not yet earning base management fees at the end of the quarter due largely to fund

structures where fees are triggered by the investment of capital.

$127 billion of Performance Fee Eligible AUM, including $66 billion currently earning Performance Fees.

Credit

Hedge Fund

Solutions

Real

Estate

Private

Equity

$16.4

$12.9

$1.3

$5.0

$2.6

$1.8

$1.2

$4.7

$66.2

$27.0

$33.8

(a)

Represents illiquid drawdown funds only; excludes marketable vehicles; includes both Fee-Earning (third party) capital and GP/employee commitments which do not earn fees.  Amounts reduced by

outstanding commitments to invest, but for which capital has not been called.

(b)

Represents (i) committed uninvested capital of our Private Equity and Real Estate drawdown funds with closed investment periods, and (ii) committed uninvested capital for our Real Estate debt strategies

drawdown funds, our Credit Mezzanine and Rescue Lending funds and our Hedge Fund Solutions Strategic Alliance Fund.

(c)

Represents performance fee eligible Dry Powder.

Blackstone

11

Distribution Calculation

Earned $0.15 of Distributable Earnings per common unit during the third quarter, bringing year-to-date

Distributable Earnings to $0.46 per common unit.

Declared a quarterly distribution of $0.10 per common unit to record holders as of November 15, 2012; payable

on November 30, 2012.

Blackstone currently pays $0.10 per unit for the first three quarters of the year and any excess net of retained

capital for the fourth quarter.

% Change

% Change

(Dollars in Thousands, Except per Unit Data)

3Q'11

3Q'12

vs. 3Q'11

YTD'11

YTD'12

vs. YTD'11

Distributable Earnings ("DE")

125,745

$   

189,635

$   

51%

518,538

$   

540,160

$   

4%

Add: Other Payables Attributable to Common Unitholders

10,581

20,012

89%

24,295

30,396

25%

Pre-Tax DE

(a)

136,326

209,647

54%

542,833

570,556

5%

% to Common Unitholders

44%

48%

8%

43%

47%

9%

Pre-Tax DE Attributable to Common Unitholders

60,318

100,396

66%

235,060

269,153

15%

Less: Other Payables Attributable to Common Unitholders

(10,581)

(20,012)

(89)%

(24,295)

(30,396)

(25)%

DE Attributable to Common Unitholders

49,737

80,384

62%

210,765

238,757

13%

DE Per Common Unit

(b)

0.10

$        

0.15

$        

50%

0.44

$        

0.46

$        

5%

Less: Retained Capital per Unit

(c)

(0.02)

$       

(0.03)

$       

(50)%

(0.06)

$       

(0.08)

$       

(33)%

Net Cash Available for Distribution Per Common Unit

(b)

0.08

$        

0.12

$        

50%

0.38

$        

0.38

$        

-

Actual Distribution per Common Unit

0.10

$        

0.10

$        

-

0.30

$        

0.30

$        

-

(a)

Pre-Tax DE represents Distributable Earnings before the deduction for Payable under the Tax Receivable Agreement and tax expense (benefit) of wholly-owned subsidiaries.

(b)

Per Unit calculations are based Total Common Units Outstanding (see Appendix – Unit Rollforward); actual distributions are paid to applicable unitholders as of the record date.

(c)

Retained capital is withheld pro-rata from common and Blackstone Partnership unitholders. Common unitholders’ share was $15.3 million for 3Q’12 and $41.7 million year-to-date.

Blackstone

12

Balance Sheet Highlights

(a)

At

September

30,

2012,

Blackstone

had

$2.3

billion

in

total

cash

and

liquid

investments.

In total, Blackstone had $6.4 billion or $5.66 per unit in cash and investments at quarter end.

In August, Blackstone issued senior notes of $400 million (4.75%) due 2023 and $250 million (6.25%) due 2042.

There are currently no borrowings outstanding against the $1.1 billion revolving credit facility.

(a)

Preliminary, excludes the consolidated Blackstone funds.  Totals

may not add due to rounding.

(b)

Primarily Blackstone investments in Hedge Fund Solutions and non-drawdown Credit.

(c)

Illiquids include Blackstone investments in all drawdown funds in Private Equity, Real Estate and Credit.

(d)

Senior notes of $600 million issued August 2009 maturing on August 15, 2019 (6.625% coupon), $400 million issued September 2010 maturing on March 15, 2021 (5.875% coupon), $400 million issued August 2012 maturing on March 15, 2023

(4.750% coupon) and $250 million issued August 2012 maturing on August 15, 2042 (6.250% coupon), net of $15 million held by Blackstone.

(Dollars in Millions)

3Q’12

Cash and Cash Equivalents

$

834

Treasury Cash Management Strategies

1,274

Liquid

Investments

(b)

143

Illiquid

Investments

(c)

2,053

Net Performance Fees

2,049

Total Net Value

$

6,353

Outstanding Bonds (at par)

(d)

$

1,635

A/A+

rated by S&P / Fitch

$1.1 billion

undrawn credit revolver

$2.3 billion

total cash and liquid investments

$5.66

Cash and Investments per Unit

$6.4 billion

Total Net Value

Net Performance

Fees

Treasury Cash

and Liquids

Private Equity

Real Estate

Other

$1.83

Illiquids

$1.83

$0.19

$0.87

$0.77

$2.01

Blackstone

13

GAAP Statement of Operations

% Change

% Change

(Dollars in Thousands, Except per Unit Data) (Unaudited)

3Q'11

3Q'12

vs. 3Q'11

YTD'11

YTD'12

vs. YTD'11

Revenues

Management and Advisory Fees, Net

425,193

$        

469,109

$        

10%

1,335,971

$     

1,428,833

$     

7%

Performance Fees

Realized Carried Interest

(9,633)

83,765

n/m

126,520

153,254

21%

Realized Incentive Fees

16,238

11,588

(29)%

38,051

28,497

(25)%

Unrealized Carried Interest

(382,949)

403,465

n/m

660,356

786,551

19%

Unrealized Incentive Fees

(79,953)

104,312

n/m

(369)

155,011

n/m

Total Performance Fees

(456,297)

603,130

n/m

824,558

1,123,313

36%

Investment Income (Loss)

Realized

45,596

18,559

(59)%

77,682

40,652

(48)%

Unrealized

(145,990)

119,599

n/m

70,116

181,906

159%

Total Investment Income (Loss)

(100,394)

138,158

n/m

147,798

222,558

51%

Interest and Dividend Revenue

9,085

10,278

13%

27,423

27,181

(1)%

Other

(1,666)

2,415

n/m

1,721

443

(74)%

Total Revenues

(124,079)

1,223,090

n/m

2,337,471

2,802,328

20%

Expenses

Compensation and Benefits

Compensation

494,478

503,295

2%

1,853,393

1,531,917

(17)%

Performance Fee Compensation

Realized Carried Interest

(1,836)

22,023

n/m

30,409

37,860

25%

Realized Incentive Fees

12,378

4,457

(64)%

22,388

14,284

(36)%

Unrealized Carried Interest

(74,123)

128,863

n/m

175,546

250,221

43%

Unrealized Incentive Fees

(37,312)

44,254

n/m

(6,358)

47,437

n/m

Total Compensation and Benefits

393,585

702,892

79%

2,075,378

1,881,719

(9)%

General, Administrative and Other

124,929

139,172

11%

380,433

417,675

10%

Interest Expense

13,785

19,074

38%

41,773

47,365

13%

Fund Expenses

8,635

(9,747)

n/m

19,045

28,243

48%

Total Expenses

540,934

851,391

57%

2,516,629

2,375,002

(6)%

Other Income (Loss)

Net Gains (Losses) from Fund Investment Activities

(329,399)

(135,960)

59%

(449,244)

400,412

n/m

Income (Loss) Before Provision (Benefit) for Taxes

(994,412)

$       

235,739

$        

n/m

(628,402)

$       

827,738

$        

n/m

Provision (Benefit) for Taxes

(7,637)

39,237

n/m

95,412

119,327

25%

Net Income (Loss)

(986,775)

$       

196,502

$        

n/m

(723,814)

$       

708,411

$        

n/m

Net Income (Loss) Attributable to Redeemable Non-Controlling Interests in Consolidated Entities

(47,922)

41,854

n/m

(24,980)

78,447

n/m

Net Income (Loss) Attributable to Non-Controlling Interests in Consolidated Entities

(262,207)

(157,607)

40%

(448,753)

279,970

n/m

Net Income (Loss) Attributable to Non-Controlling Interests in Blackstone Holdings

(402,079)

183,431

n/m

(104,455)

237,809

n/m

Net Income (Loss) Attributable to The Blackstone Group L.P.

(274,567)

$       

128,824

$        

n/m

(145,626)

$       

112,185

$        

n/m

Net Income (Loss) per Common Unit, Basic and Diluted

(0.56)

$             

0.24

$               

n/m

(0.31)

$             

0.21

$               

n/m

Appendix

Blackstone

15

Total Segments

(a)

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

(b)

Primarily placement fees.

(Dollars in Thousands)

3Q'11

4Q'11

1Q'12

2Q'12

3Q'12

YTD'11

YTD'12

Revenues

Management and Advisory Fees, Net

Base Management Fees

322,371

$        

336,753

$        

395,506

$        

381,344

$        

398,088

$        

944,432

$        

1,174,938

$     

Advisory Fees

86,178

123,567

75,846

93,372

59,951

258,673

229,169

Transaction and Other Fees, Net

(a)

41,793

43,796

38,471

49,453

45,126

203,717

133,050

Management Fee Offsets

(b)

(7,703)

(8,479)

(13,050)

(7,973)

(8,454)

(24,914)

(29,477)

Total Management and Advisory Fees, Net

442,639

495,637

496,773

516,196

494,711

1,381,908

1,507,680

Performance Fees

Realized Carried Interest

(9,633)

12,387

13,560

55,929

83,765

126,520

153,254

Realized Incentive Fees

17,530

51,837

5,279

11,692

11,620

37,192

28,591

Unrealized Carried Interest

(382,949)

311,162

298,796

84,290

403,465

660,356

786,551

Unrealized Incentive Fees

(82,227)

(17,436)

68,121

(17,074)

104,149

(7,492)

155,196

Total Performance Fees

(457,279)

357,950

385,756

134,837

602,999

816,576

1,123,592

Investment Income (Loss)

Realized

31,647

16,697

23,492

9,360

25,098

85,878

57,950

Unrealized

(165,753)

39,028

59,914

(25,624)

82,334

43,661

116,624

Total Investment Income (Loss)

(134,106)

55,725

83,406

(16,264)

107,432

129,539

174,574

Interest Income and Dividend Revenue

10,110

10,003

9,345

10,391

12,004

28,841

31,740

Other

(1,667)

5,695

(1,207)

(828)

2,477

1,720

442

Total Revenues

(140,303)

925,010

974,073

644,332

1,219,623

2,358,584

2,838,028

Expenses

Compensation

238,207

225,438

254,772

268,884

259,561

735,131

783,217

Performance Fee Compensation

Realized Carried Interest

(1,835)

13,206

7,938

7,899

22,023

30,409

37,860

Realized Incentive Fees

12,378

33,524

4,252

5,575

4,457

22,388

14,284

Unrealized Carried Interest

(74,123)

62,399

84,543

36,815

128,863

175,545

250,221

Unrealized Incentive Fees

(37,312)

(14,401)

12,779

(9,596)

44,254

(6,358)

47,437

Total Compensation and Benefits

137,315

320,166

364,284

309,577

459,158

957,115

1,133,019

Other Operating Expenses

96,932

122,072

109,521

113,038

127,456

299,270

350,015

Total Expenses

234,247

442,238

473,805

422,615

586,614

1,256,385

1,483,034

Economic Income (Loss)

(374,550)

$       

482,772

$        

500,268

$        

221,717

$        

633,009

$        

1,102,199

$     

1,354,994

$     

Economic Net Income (Loss)

(379,999)

$       

468,154

$        

491,217

$        

212,349

$        

621,752

$        

1,071,054

$     

1,325,318

$     

Fee Related Earnings

112,932

$        

166,096

$        

146,928

$        

145,729

$        

135,052

$        

380,397

$        

427,709

$        

Distributable Earnings

125,745

$        

178,186

$        

162,121

$        

188,404

$        

189,635

$        

518,538

$        

540,160

$        

Total Assets Under Management

157,698,448

$

166,228,504

$

190,074,167

$

190,267,831

$

204,551,572

$

157,698,448

$

204,551,572

$

Fee-Earning Assets Under Management

132,934,377

$

136,756,753

$

156,261,446

$

157,646,521

$

168,630,082

$

132,934,377

$

168,630,082

$

Weighted Average Fee-Earning AUM

131,458,996

$

136,876,758

$

154,354,070

$

156,426,744

$

162,377,631

$

126,903,959

$

157,608,079

$

LP Capital Invested

4,753,161

$     

3,406,264

$     

2,719,433

$     

2,403,623

$     

3,085,441

$     

10,066,631

$   

8,208,497

$     

Total Capital Invested

5,012,167

$     

3,992,488

$     

3,134,385

$     

2,525,648

$     

3,754,061

$     

10,611,146

$   

9,414,094

$     

Blackstone

16

Private Equity

(a)

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

(b)

Primarily placement fees.

(Dollars in Thousands)

3Q'11

4Q'11

1Q'12

2Q'12

3Q'12

YTD'11

YTD'12

Revenues

Management Fees, Net

Base Management Fees

85,534

$        

84,231

$        

85,789

$        

87,475

$        

86,136

$        

247,766

$      

259,400

$      

Transaction

and

Other

Fees,

Net

(a)

21,430

23,879

18,097

14,951

25,693

109,125

58,741

Management

Fee

Offsets

(b)

(6,498)

(5,057)

(3,782)

(672)

(767)

(22,016)

(5,221)

Total Management Fees, Net

100,466

103,053

100,104

101,754

111,062

334,875

312,920

Performance Fees

Realized Carried Interest

(17,966)

(28,392)

3,933

28,781

31,592

65,785

64,306

Unrealized Carried Interest

(270,014)

83,777

34,051

(87,893)

128,746

(50,287)

74,904

Total Performance Fees

(287,980)

55,385

37,984

(59,112)

160,338

15,498

139,210

Investment Income (Loss)

Realized

20,548

3,512

13,911

(6,195)

7,189

41,476

14,905

Unrealized

(121,688)

25,091

16,469

(28,337)

43,267

(15,615)

31,399

Total Investment Income (Loss)

(101,140)

28,603

30,380

(34,532)

50,456

25,861

46,304

Interest Income and Dividend Revenue

3,396

3,651

2,420

3,114

3,413

10,098

8,947

Other

141

193

(215)

562

1,650

1,617

1,997

Total Revenues

(285,117)

190,885

170,673

11,786

326,919

387,949

509,378

Expenses

Compensation

52,388

45,611

52,547

53,775

62,424

171,945

168,746

Performance Fee Compensation

Realized Carried Interest

(2,443)

(3,859)

320

804

1,048

5,324

2,172

Unrealized Carried Interest

(44,955)

7,953

(1,052)

(8,259)

43,228

(10,182)

33,917

Total Compensation and Benefits

4,990

49,705

51,815

46,320

106,700

167,087

204,835

Other Operating Expenses

27,588

34,493

28,881

30,521

30,944

86,425

90,346

Total Expenses

32,578

84,198

80,696

76,841

137,644

253,512

295,181

Economic Income (Loss)

(317,695)

$    

106,687

$      

89,977

$        

(65,055)

$       

189,275

$      

134,437

$      

214,197

$      

Total Assets Under Management

42,967,159

$

45,863,673

$

47,624,013

$

46,633,552

$

50,222,312

$

42,967,159

$

50,222,312

$

Fee-Earning Assets Under Management

37,006,024

$

37,237,791

$

37,323,635

$

37,159,452

$

38,505,497

$

37,006,024

$

38,505,497

$

Weighted Average Fee-Earning AUM

36,670,087

$

37,147,118

$

37,491,735

$

37,434,520

$

38,096,139

$

35,731,733

$

37,745,618

$

LP Capital Invested

1,377,715

$   

1,093,745

$   

643,044

$      

102,899

$      

1,015,605

$   

2,698,338

$   

1,761,548

$   

Total Capital Invested

1,458,008

$   

1,563,912

$   

680,035

$      

108,977

$      

1,427,871

$   

2,840,345

$   

2,216,883

$   

Blackstone

17

4,341,474

(Dollars in Thousands)

3Q'11

4Q'11

1Q'12

2Q'12

3Q'12

YTD'11

YTD'12

Revenues

Management Fees, Net

Base Management Fees

97,925

$        

103,947

$      

147,802

$      

127,817

$      

135,659

$      

290,831

$      

411,278

$      

Transaction and Other Fees, Net

(a)

19,551

19,128

14,412

25,151

14,937

90,382

54,500

Management Fee Offsets

(b)

(880)

(2,820)

(8,627)

(5,357)

(6,034)

(2,130)

(20,018)

Total Management Fees, Net

116,596

120,255

153,587

147,611

144,562

379,083

445,760

Performance Fees

Realized Carried Interest

5,137

3,538

8,617

13,539

51,845

19,306

74,001

Realized Incentive Fees

171

202

(1)

7,766

4,879

9,427

12,644

Unrealized Carried Interest

(119,192)

237,884

221,500

144,510

207,695

675,534

573,705

Unrealized Incentive Fees

(984)

1,806

7,914

(1,526)

6,150

1,852

12,538

Total Performance Fees

(114,868)

243,430

238,030

164,289

270,569

706,119

672,888

Investment Income (Loss)

Realized

7,313

6,346

7,812

9,067

10,324

21,626

27,203

Unrealized

(26,060)

19,970

25,912

14,944

33,676

72,678

74,532

Total Investment Income (Loss)

(18,747)

26,316

33,724

24,011

44,000

94,304

101,735

Interest Income and Dividend Revenue

3,195

3,430

2,552

3,277

3,581

9,472

9,410

Other

(1,390)

(1,046)

(709)

(590)

1,941

(15)

642

Total Revenues

(15,214)

392,385

427,184

338,598

464,653

1,188,963

1,230,435

Expenses

Compensation

54,986

53,507

68,889

76,576

71,456

183,264

216,921

Performance Fee Compensation

Realized Carried Interest

2,169

1,713

4,077

3,401

19,822

8,390

27,300

Realized Incentive Fees

82

91

2

3,871

2,570

4,473

6,443

Unrealized Carried Interest

(30,076)

57,866

54,275

31,677

47,940

163,274

133,892

Unrealized Incentive Fees

(434)

(632)

3,768

(629)

2,876

3,738

6,015

Total Compensation and Benefits

26,727

112,545

131,011

114,896

144,664

363,139

390,571

Other Operating Expenses

23,495

29,027

28,924

26,560

31,284

74,832

86,768

Total Expenses

50,222

141,572

159,935

141,456

175,948

437,971

477,339

Economic Income (Loss)

(65,436)

$       

250,813

$      

267,249

$      

197,142

$      

288,705

$      

750,992

$      

753,096

$      

Total Assets Under Management

40,709,500

$

42,852,669

$

48,322,760

$

50,225,950

$

53,546,023

$

40,709,500

$

53,546,023

$

Fee-Earning Assets Under Management

29,981,920

$

31,236,540

$

36,647,462

$

38,476,123

$

40,609,286

$

29,981,920

$

40,609,286

$

Weighted Average Fee-Earning AUM

28,701,420

$

31,474,333

$

35,983,336

$

36,882,087

$

38,947,049

$

27,425,607

$

37,078,418

$

LP Capital Invested

1,706,157

$   

995,643

$      

1,143,555

$   

1,855,108

$   

1,342,811

$   

5,145,773

$   

$   

Total Capital Invested

1,805,654

$   

1,064,690

$   

1,172,883

$   

1,954,731

$   

1,397,249

$   

5,435,774

$   

4,524,863

$   

Real Estate

(a)

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

(b)

Primarily placement fees.

Blackstone

18

Hedge Fund Solutions

(a)

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

(b)

Primarily placement fees.

(Dollars in Thousands)

3Q'11

4Q'11

1Q'12

2Q'12

3Q'12

YTD'11

YTD'12

Revenues

Management Fees, Net

Base Management Fees

79,355

$        

81,606

$        

81,821

$        

84,278

$        

87,334

$        

234,257

$      

253,433

$      

Transaction and Other Fees, Net

(a)

740

470

92

65

4

2,328

161

Management Fee Offsets

(b)

(258)

(402)

(335)

(375)

(382)

(578)

(1,092)

Total Management Fees, Net

79,837

81,674

81,578

83,968

86,956

236,007

252,502

Performance Fees

Realized Incentive Fees

5,764

4,148

3,298

1,175

2,637

7,324

7,110

Unrealized Incentive Fees

(19,861)

(2,059)

23,187

(10,981)

36,635

2,833

48,841

Total Performance Fees

(14,097)

2,089

26,485

(9,806)

39,272

10,157

55,951

Investment Income (Loss)

Realized

1,023

2,503

503

929

637

15,219

2,069

Unrealized

(10,034)

(3,253)

8,371

(3,636)

5,199

(15,778)

9,934

Total Investment Income (Loss)

(9,011)

(750)

8,874

(2,707)

5,836

(559)

12,003

Interest Income and Dividend Revenue

500

537

386

495

540

1,488

1,421

Other

18

7,818

(127)

27

315

84

215

Total Revenues

57,247

91,368

117,196

71,977

132,919

247,177

322,092

Expenses

Compensation

30,667

38,525

28,233

34,559

28,826

90,434

91,618

Performance Fee Compensation

Realized Incentive Fees

2,257

688

1,378

(345)

1,062

2,810

2,095

Unrealized Incentive Fees

(7,214)

(865)

7,294

(2,820)

8,062

1,099

12,536

Total Compensation and Benefits

25,710

38,348

36,905

31,394

37,950

94,343

106,249

Other Operating Expenses

14,421

21,568

13,934

14,506

12,878

43,504

41,318

Total Expenses

40,131

59,916

50,839

45,900

50,828

137,847

147,567

Economic Income

17,116

$        

31,452

$        

66,357

$        

26,077

$        

82,091

$        

109,330

$      

174,525

$      

Total Assets Under Management

40,373,092

$

40,534,768

$

43,351,275

$

42,888,946

$

46,218,618

$

40,373,092

$

46,218,618

$

Fee-Earning Assets Under Management

37,231,013

$

37,819,636

$

40,543,772

$

40,161,179

$

43,601,541

$

37,231,013

$

43,601,541

$

Weighted Average Fee-Earning AUM

37,658,240

$

38,452,740

$

39,904,474

$

40,528,701

$

42,005,752

$

36,857,511

$

41,016,254

$

LP Capital Invested

354,971

$      

288,237

$      

4,661

$          

-

$               

196,180

$      

601,022

200,841

$      

Total Capital Invested

375,000

$      

304,500

$      

5,502

$          

-

$               

207,250

$      

638,827

212,752

$      

$

$

Blackstone

19

Credit

(a)

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

(b)

Primarily placement fees.

(Dollars in Thousands)

3Q'11

4Q'11

1Q'12

2Q'12

3Q'12

YTD'11

YTD'12

Revenues

Management Fees, Net

Base Management Fees

59,557

$        

66,969

$        

80,094

$        

81,774

$        

88,959

$        

171,578

$      

250,827

$      

(26)

312

5,725

9,184

4,486

1,568

19,395

Management Fee Offsets

(b)

(67)

(200)

(306)

(1,569)

(1,271)

(190)

(3,146)

Total Management Fees, Net

59,464

67,081

85,513

89,389

92,174

172,956

267,076

Performance Fees

Realized Carried Interest

3,196

37,241

1,010

13,609

328

41,429

14,947

Realized Incentive Fees

11,595

47,487

1,982

2,751

4,104

20,441

8,837

Unrealized Carried Interest

6,257

(10,499)

43,245

27,673

67,024

35,109

137,942

Unrealized Incentive Fees

(61,382)

(17,183)

37,020

(4,567)

61,364

(12,177)

93,817

Total Performance Fees

(40,334)

57,046

83,257

39,466

132,820

84,802

255,543

Investment Income (Loss)

Realized

2,807

4,021

683

5,638

6,697

7,278

13,018

Unrealized

(7,800)

(2,877)

9,211

(9,156)

(736)

2,169

(681)

Total Investment Income (Loss)

(4,993)

1,144

9,894

(3,518)

5,961

9,447

12,337

Interest Income and Dividend Revenue

1,404

610

2,425

1,752

2,673

2,759

6,850

Other

(132)

(772)

(238)

(787)

(678)

(81)

(1,703)

Total Revenues

15,409

125,109

180,851

126,302

232,950

269,883

540,103

Expenses

Compensation

40,533

25,435

37,143

42,845

50,236

103,153

130,224

Performance Fee Compensation

Realized Carried Interest

(1,561)

15,352

3,541

3,694

1,153

16,695

8,388

Realized Incentive Fees

10,039

32,745

2,872

2,049

825

15,105

5,746

Unrealized Carried Interest

908

(3,420)

31,320

13,397

37,695

22,453

82,412

Unrealized Incentive Fees

(29,664)

(12,904)

1,717

(6,147)

33,316

(11,195)

28,886

Total Compensation and Benefits

20,255

57,208

76,593

55,838

123,225

146,211

255,656

Other Operating Expenses

11,210

13,162

17,096

15,749

33,527

36,793

66,372

Total Expenses

31,465

70,370

93,689

71,587

156,752

183,004

322,028

Economic Income (Loss)

(16,056)

$       

54,739

$        

87,162

$        

54,715

$        

76,198

$        

86,879

$        

218,075

$      

Total Assets Under Management

33,648,697

$

36,977,394

$

50,776,119

$

50,519,383

$

54,564,619

$

33,648,697

54,564,619

$

Fee-Earning Assets Under Management

28,715,420

$

30,462,786

$

41,746,577

$

41,849,767

$

45,913,758

$

28,715,420

45,913,758

$

Weighted Average Fee-Earning AUM

28,429,249

$

29,802,567

$

40,974,525

$

41,581,436

$

43,328,691

$

26,889,108

41,767,789

$

LP Capital Invested

1,314,318

$   

1,028,639

$   

928,173

$      

445,616

$      

530,845

$      

1,621,498

1,904,634

$   

Total Capital Invested

1,373,505

$   

1,059,386

$   

1,275,965

$   

461,940

$      

721,691

$      

1,696,200

2,459,596

$   

$

$

$

$   

$   

Transaction and Other Fees, Net

(a)

Blackstone

20

Financial Advisory

(Dollars in Thousands)

3Q'11

4Q'11

1Q'12

2Q'12

3Q'12

YTD'11

YTD'12

Revenues

Advisory Fees

86,178

$         

123,567

$       

75,846

$         

93,372

$         

59,951

$         

258,673

$       

229,169

$       

Transaction and Other Fees, Net

98

7

145

102

6

314

253

Total Advisory and Transaction Fees

86,276

123,574

75,991

93,474

59,957

258,987

229,422

Investment Income (Loss)

Realized

(44)

315

583

(79)

251

279

755

Unrealized

(171)

97

(49)

561

928

207

1,440

Total Investment Income (Loss)

(215)

412

534

482

1,179

486

2,195

Interest Income and Dividend Revenue

1,615

1,775

1,562

1,753

1,797

5,024

5,112

Other

(304)

(498)

82

(40)

(751)

115

(709)

Total Revenues

87,372

125,263

78,169

95,669

62,182

264,612

236,020

Expenses

Compensation

59,633

62,360

67,960

61,129

46,619

186,335

175,708

Total Compensation and Benefits

59,633

62,360

67,960

61,129

46,619

186,335

175,708

Other Operating Expenses

20,218

23,822

20,686

25,702

18,823

57,716

65,211

Total Expenses

79,851

86,182

88,646

86,831

65,442

244,051

240,919

Economic Income (Loss)

7,521

$           

39,081

$         

(10,477)

$        

8,838

$           

(3,260)

$          

20,561

$         

(4,899)

$          

Blackstone

21

Fee-Earning AUM Net Flows

Fee-Earning AUM was up $11 billion or 7% from last quarter and up $35.7 billion or 27% from a year ago driven

mainly

by

net

inflows

across

the

segments

and

to

a

lesser

extent

market

appreciation.

Private Equity includes our new tactical opportunities fund as well as our energy fund.

Real Estate grew 35% during the last twelve months driven by capital committed to our latest global buyout fund.

Hedge Fund Solutions continued its solid growth with $1.7 billion of net inflows during the quarter and $3.5 billion

over the last twelve months, net of $1.1 billion of outflows in 2011 from the exit of our Asian mutual fund business.

Credit continued its strong growth, up 60% from the same period last year driven by almost $21 billion of gross

inflows, more than half organic growth and the remainder from the Harbourmaster acquisition.

3Q’12 Fee-Earning AUM Rollforward

(Dollars in Millions)

LTM Fee-Earning AUM Rollforward

(Dollars in Millions)

Totals may not add due to rounding.

(a)

Inflows: include contributions, capital raised, other increases in available capital, purchases and acquisitions.

(b)

Outflows: represent redemptions, client withdrawals and decreases in available capital.

(c)

Realizations: represent realizations from the disposition of

assets.

(d)

Market Activity: gains (losses) on portfolio investments and

impact of foreign exchange rate fluctuations.

Private

Real

Hedge Fund

Private

Real

Hedge Fund

Equity

Estate

Solutions

Credit

Total

Equity

Estate

Solutions

Credit

Total

2Q'12

37,159

$      

38,476

$      

40,161

$      

41,850

$      

157,647

$    

3Q'11

37,006

$      

29,982

$      

37,231

$      

28,715

$      

132,934

$    

Inflows

(a)

1,397

2,395

1,929

4,372

10,093

Inflows

(a)

2,755

12,603

6,830

20,935

43,123

Outflows

(b)

-

(47)

(221)

(375)

(643)

Outflows

(b)

(303)

(203)

(3,312)

(1,211)

(5,029)

Realizations

(c)

(62)

(380)

-

(718)

(1,160)

Realizations

(c)

(971)

(1,643)

-

(3,388)

(6,002)

Net Inflows

1,335

1,968

1,708

3,280

8,291

Net Inflows

1,480

10,757

3,518

16,336

32,092

Market Activity

(d)

11

165

1,732

784

2,692

Market Activity

(d)

19

(130)

2,852

862

3,604

3Q'12

38,505

$      

40,609

$      

43,602

$      

45,914

$      

168,630

$    

3Q'12

38,505

$      

40,609

$      

43,602

$      

45,914

$      

168,630

$    

QoQ Increase

4%

6%

9%

10%

7%

YoY Increase

4%

35%

17%

60%

27%

Blackstone

22

Total AUM Net Flows

Total AUM was up $14.3 billion or 8% from last quarter and up $46.9 billion or 30% from a year ago driven by

strong net inflows and market appreciation across the segments.

Private Equity market appreciation was $3.2 billion over the last year, driven mainly by positive performance of

our public portfolio.

Real Estate market appreciation was $4.8 billion over the last year as fundamentals continue to improve.

Hedge Fund Solutions market appreciation was $3.0 billion over the last year driven by solid returns.

Credit grew AUM 62% over the last twelve months through both organic and inorganic net inflows.

3Q’12 Total AUM Rollforward

(Dollars in Millions)

LTM Total AUM Rollforward

(Dollars in Millions)

Totals may not add due to rounding.

(a)

Inflows: include contributions, capital raised, other increases in available capital, purchases and acquisitions.

(b)

Outflows: represent redemptions, client withdrawals and decreases in available capital.

(c)

Realizations: represent realizations from the disposition of assets.

(d)

Market Activity: gains (losses) on portfolio investments and impact of foreign exchange rate fluctuations.

Private

Real

Hedge Fund

Private

Real

Hedge Fund

Equity

Estate

Solutions

Credit

Total

Equity

Estate

Solutions

Credit

Total

2Q'12

46,634

$      

50,226

$      

42,889

$      

50,519

$      

190,268

$    

3Q'11

42,967

$      

40,710

$      

40,373

$      

33,649

$      

157,698

$    

Inflows

(a)

1,654

2,313

1,767

4,103

9,837

Inflows

(a)

5,795

10,805

6,415

24,908

47,922

Outflows

(b)

(42)

(137)

(243)

(388)

(810)

Outflows

(b)

(46)

(331)

(3,552)

(1,859)

(5,788)

Realizations

(c)

(286)

(676)

-

(810)

(1,773)

Realizations

(c)

(1,663)

(2,439)

-

(3,869)

(7,971)

Net Inflows

1,325

1,500

1,524

2,904

7,254

Net Inflows

4,086

8,035

2,863

19,180

34,163

Market

Activity

(d)

2,263

1,820

1,805

1,141

7,029

Market

Activity

(d)

3,169

4,802

2,983

1,736

12,690

3Q'12

50,222

$      

53,546

$      

46,219

$      

54,565

$      

204,552

$    

3Q'12

50,222

$      

53,546

$      

46,219

$      

54,565

$      

204,552

$    

QoQ Increase

8%

7%

8%

8%

8%

YoY Increase

17%

32%

14%

62%

30%

Blackstone

23

Net

Accrued

Performance

Fees

and

Carried

Interest

Status

(a)

Blackstone had $2 billion of accrued performance fees, net of compensation, as of the end of the third quarter.

BCP V and BREP Int’l II were below their respective carried interest thresholds as of quarter-end.

Carried Interest Status (excl. SBS)

(d)

Net Accrued Performance Fees

(b)

Remaining Capital

Gain to Cross Carry Threshold

(Dollars in Millions, Except per Unit Data)

2Q'12

3Q'12

Per Unit

(c)

Change vs. 2Q'12

(Dollars In Millions)

@ FMV

@ Cost

Amount

% Change in TEV

Private Equity

Private Equity

BCP IV Carried Interest

532

$               

551

$               

0.49

$              

19

$                         

BCP V

17,765

17,189

6,412

13%

BCP VI Carried Interest

-

8

0.01

8

BEP Carried Interest

-

30

0.03

30

Real Estate

Tactical Opportunities Carried Interest

1

2

0.00

1

BREP Int'l II

1,352

1,602

1,242

22%

Total Private Equity

533

591

0.53

58

Real Estate

BREP V Carried Interest

377

434

0.39

57

BREP VI Carried Interest

530

590

0.53

60

BREP VII Carried Interest

22

44

0.04

22

BREP Int'l I Carried Interest

7

3

0.00

(4)

BREP Europe III Carried Interest

53

66

0.06

13

BREDS Carried Interest

15

19

0.02

4

BREDS Incentive Fees

4

5

0.00

1

Asia Platform Incentive Fees

27

28

0.02

1

Total Real Estate

1,035

1,189

1.06

154

Hedge Fund Solutions

Incentive Fees

12

42

0.04

30

Total Hedge Fund Solutions

12

42

0.04

30

Credit

Carried Interest

106

142

0.13

36

Incentive Fees

70

85

0.08

15

Total Credit

176

227

0.20

51

Total Blackstone

Carried Interest

1,643

1,889

1.68

246

Incentive Fees

113

160

0.14

47

Performance Fees

1,756

$            

2,049

$            

1.83

$              

293

$                       

(a)

Preliminary. Totals may not add due to rounding.

(b)

Net Accrued Performance Fees are presented net of compensation and do not include clawback amounts, if any, which are disclosed in the 10-K/Q.

(c)

Per Unit calculations are based on quarter-end Distributable Earnings Units Outstanding (see Appendix – Unit Rollforward).

(d)

Represents the required increase in equity at the fund level (excluding side-by-side investments) for funds with expired investment periods which are currently not generating performance fees. 

Blackstone

24

Investment

Records

as

of

September

30,

2012

(a)

Notes on next page.

Committed

Available

Unrealized Investments

Realized Investments

Total Investments

Net IRRs

(d)

(Dollars in Thousands, Except Where Noted)

Capital

Capital

(b)

Value

MOIC

(c)

% Public

Value

MOIC

(c)

Value

MOIC

(c)

Realized

Total

Private Equity

BCP I (Oct 1987 / Oct 1993)

859,081

$      

-

$               

-

$               

n/a

-

1,741,738

$   

2.6x

1,741,738

$   

2.6x

19%

19%

BCP II (Oct 1993 / Aug 1997)

1,361,100

-

-

n/a

-

3,256,351

2.5x

3,256,351

2.5x

32%

32%

BCP III (Aug 1997 / Nov 2002)

3,973,378

167,776

22,507

0.6x

100%

9,160,904

2.3x

9,183,411

2.3x

14%

14%

BCOM (Jun 2000 / Jun 2006)

2,137,330

202,433

439,754

0.6x

52%

2,418,537

1.8x

2,858,291

1.3x

18%

6%

BCP IV (Nov 2002 / Dec 2005)

6,773,138

266,490

5,216,902

1.8x

60%

14,496,044

3.2x

19,712,946

2.6x

59%

37%

BCP V (Dec 2005 / Jan 2011)

21,592,318

1,990,259

18,437,391

1.0x

17%

3,502,372

1.7x

21,939,763

1.1x

31%

1%

BCP VI (Jan 2011 / Jan 2016)

15,220,118

12,843,121

2,817,359

1.2x

28%

3,330

1.5x

2,820,689

1.2x

n/m

8%

BEP (Aug 2011 / Aug 2017)

2,415,509

1,929,546

765,116

1.6x

43%

-

n/a

765,116

1.6x

n/a

101%

Total Core Private Equity

54,331,972

$

17,399,625

$

27,699,029

$

1.1x

28%

34,579,276

$

2.5x

62,278,305

$

1.6x

23%

14%

Tactical Opportunities

1,374,734

1,204,273

189,843

1.1x

-

8,948

1.7x

198,791

1.1x

n/m

n/m

Other Funds

397,493

262,946

65,161

0.9x

-

-

n/a

65,161

0.9x

n/a

(18)%

Total Private Equity

56,104,199

$

18,866,844

$

27,954,033

$

1.1x

28%

34,588,224

$

2.5x

62,542,257

$

1.6x

23%

14%

Real Estate

Dollar

Pre-BREP

140,714

$      

-

$               

-

$               

n/a

-

345,190

$      

2.5x

345,190

$      

2.5x

33%

33%

BREP I (Sep 1994 / Oct 1996)

380,708

-

-

n/a

-

1,327,708

2.8x

1,327,708

2.8x

40%

40%

BREP II (Oct 1996 / Mar 1999)

1,198,339

-

-

n/a

-

2,524,866

2.1x

2,524,866

2.1x

19%

19%

BREP III (Apr 1999 / Apr 2003)

1,522,708

-

2,161

0.1x

-

3,323,362

2.4x

3,325,523

2.3x

22%

21%

BREP IV (Apr 2003 / Dec 2005)

2,198,694

-

1,335,973

0.9x

5%

2,862,147

2.4x

4,198,120

1.5x

80%

14%

BREP V (Dec 2005 / Feb 2007)

5,538,579

243,769

7,216,141

1.6x

-

2,085,100

1.7x

9,301,241

1.6x

81%

9%

BREP VI (Feb 2007 / Aug 2011)

11,055,826

863,921

14,696,610

1.5x

6%

1,237,507

1.9x

15,934,117

1.5x

31%

9%

BREP VII (Aug 2011 / Feb 2017)

13,300,149

10,452,873

3,499,225

1.2x

-

135,831

1.2x

3,635,056

1.2x

75%

33%

Total Global Real Estate Funds

35,335,717

$

11,560,563

$

26,750,110

$

1.4x

3%

13,841,711

$

2.2x

40,591,821

$

1.6x

28%

16%

Euro

BREP Int'l (Jan 2001 / Sep 2005)

824,172

€

-

€

100,438

€

1.1x

-

1,230,290

€

2.2x

1,330,728

€

2.0x

26%

23%

BREP Int'l II (Sep 2005 / Jun 2008)

1,627,954

81,441

1,131,982

0.9x

-

177,238

1.5x

1,309,220

1.0x

14%

(3)%

BREP Europe III (Jun 2008 / Dec 2013)

3,196,712

1,793,012

2,064,912

1.4x

-

15,712

2.8x

2,080,624

1.4x

49%

20%

Total Euro Funds

5,648,838

€

1,874,453

€

3,297,332

€

1.2x

-

1,423,240

€

2.1x

4,720,572

€

1.4x

25%

8%

Total Real Estate

45,403,329

$

14,006,034

$

34,996,439

$

1.4x

3%

16,028,251

$

2.1x

51,024,690

$

1.5x

27%

14%

Debt Strategies Drawdown

2,822,818

$   

738,815

$      

2,406,779

$   

1.2x

-

897,237

$      

1.3x

3,304,016

$   

1.2x

17%

14%

Credit

Mezzanine

6,120,000

$   

3,025,830

$   

4,256,967

$   

1.3x

-

1,435,871

$   

1.6x

5,692,838

$   

1.4x

n/a

18%

Rescue Lending

3,253,143

930,246

2,877,253

1.2x

-

1,084,354

1.1x

3,961,607

1.2x

n/a

14%

Total Credit

9,373,143

$   

3,956,076

$   

7,134,220

$   

1.3x

-

2,520,225

$   

1.4x

9,654,445

$   

1.3x

-

-

BREP Co-Investment

(e)

3,936,619

1.5x

1%

437,583

1.4x

4,374,202

1.5x

10%

11%

2,944,738

-

Blackstone

25

Investment

Records

as

of

September

30,

2012

–

Notes

The returns presented herein represent those of the applicable Blackstone Funds and not those of The Blackstone Group L.P.

n/m

Not meaningful.

n/a

Not applicable.

(a)

Preliminary.

(b)

Available Capital represents total investable capital commitments, including side-by-side, adjusted for certain expenses and

expired or recallable capital, less invested capital.  This amount is not reduced by outstanding commitments to investments. 

Additionally, the Real Estate segment has $1.2 billion of Available Capital that has been reserved for add-on investments in

funds that are fully invested.

(c)

Multiple of Invested Capital (“MOIC”) represents carrying value, before management fees, expenses and Carried Interest,

divided by invested capital.

(d)

Net Internal Rate of Return (“IRR”) represents the annualized inception to September 30, 2012 IRR on total invested capital

based on realized proceeds and unrealized value, as applicable, after management fees, expenses and Carried Interest.

(e)

BREP Co-Investment represents co-investment capital raised for various BREP investments.  The Net IRR reflected is calculated

by aggregating each co-investment’s realized proceeds and unrealized value, as applicable, after management fees, expenses

and Carried Interest.

Blackstone

26

Reconciliation of GAAP to Non-GAAP Measures

Notes on next page.

(Dollars in Thousands)

3Q'11

4Q'11

1Q'12

2Q'12

3Q'12

YTD'11

YTD'12

Net Income (Loss) Attributable to The Blackstone Group L.P.

(274,567)

$ 

(22,677)

$   

58,325

$     

(74,964)

$   

128,824

$  

(145,626)

$ 

112,185

$  

Net Income (Loss) Attributable to Non-Controlling Interests in Blackstone Holdings

(402,079)

21,221

107,405

(53,027)

183,431

(104,455)

237,809

Net Income (Loss) Attributable to Non-Controlling Interests in Consolidated Entities

(262,207)

456,706

197,643

239,934

(157,607)

(448,753)

279,970

Net Income (Loss) Attributable to Redeemable Non-Controlling

Interests in Consolidated Entities

(47,922)

111

54,259

(17,666)

41,854

(24,980)

78,447

Net Income (Loss)

(986,775)

$ 

455,361

$  

417,632

$  

94,277

$     

196,502

$  

(723,814)

$ 

708,411

$  

Provision (Benefit) for Taxes

(7,637)

250,299

38,753

41,337

39,237

95,412

119,327

Income (Loss) Before Provision (Benefit) for Taxes

(994,412)

$ 

705,660

$  

456,385

$  

135,614

$  

235,739

$  

(628,402)

$ 

827,738

$  

IPO and Acquisition-Related Charges

(a)

264,068

147,808

244,897

268,936

248,179

1,122,124

762,012

Amortization of Intangibles

(b)

45,665

86,121

50,888

39,435

33,338

134,744

123,661

Income (Loss) Associated with Non-Controlling Interests in (Income) Loss of

Consolidated Entities

(c)

310,129

(456,817)

(251,902)

(222,268)

115,753

473,733

(358,417)

Economic Income (Loss)

(374,550)

$ 

482,772

$  

500,268

$  

221,717

$  

633,009

$  

1,102,199

$

1,354,994

$

Taxes

(d)

(5,449)

(14,618)

(9,051)

(9,368)

(11,257)

(31,145)

(29,676)

Economic Net Income (Loss)

(379,999)

$ 

468,154

$  

491,217

$  

212,349

$  

621,752

$  

1,071,054

$

1,325,318

$

Taxes

(d)

5,449

14,618

9,051

9,368

11,257

31,145

29,676

Performance Fee Adjustment

(e)

457,279

(357,950)

(385,756)

(134,837)

(602,999)

(816,576)

(1,123,592)

Investment Income (Loss) Adjustment

(f)

134,106

(55,725)

(83,406)

16,264

(107,432)

(129,539)

(174,574)

(g)

(3,011)

2,271

6,310

1,892

12,877

2,329

21,079

Performance Fee Compensation and Benefits Adjustment

(h)

(100,892)

94,728

109,512

40,693

199,597

221,984

349,802

Fee Related Earnings

112,932

$  

166,096

$  

146,928

$  

145,729

$  

135,052

$  

380,397

$  

427,709

$  

Realized Performance Fees

(i)

(2,646)

17,494

6,649

54,147

68,905

110,915

129,701

Realized Investment Income

(j)

31,647

16,697

23,492

9,360

25,098

85,878

57,950

Adjustment Related to Realized Investment Income -

Blackstone's Treasury Cash Management Strategies

(k)

(309)

(2,395)

(5,897)

(1,280)

(8,251)

(3,662)

(15,428)

Taxes and Related Payables Including Payable Under Tax Receivable Agreement

(l)

(15,879)

(19,706)

(9,051)

(19,552)

(31,169)

(54,990)

(59,772)

Distributable Earnings

125,745

$  

178,186

$  

162,121

$  

188,404

$  

189,635

$  

518,538

$  

540,160

$  

Interest

12,577

14,843

13,554

12,850

18,163

38,358

44,567

Taxes and Related Payables Including Payable Under Tax Receivable Agreement

(l)

15,879

19,706

9,051

19,552

31,169

54,990

59,772

Depreciation and Amortization

8,325

8,451

10,268

10,391

8,895

24,313

29,554

Adjusted EBITDA

162,526

$  

221,186

$  

194,994

$  

231,197

$  

247,862

$  

636,199

$  

674,053

$  

Investment Income (Loss)

-

Blackstone's Treasury Cash Management Strategies

Blackstone

27

Reconciliation

of

GAAP

to

Non-GAAP

Measures

–

Notes

Note:

Prior period amounts have been adjusted to conform to the current period presentation and definitions.  See also Appendix -

Definitions.

(a)

This adjustment adds back to Income (Loss) Before Provision (Benefit) for Taxes amounts for Transaction-Related Charges which

include principally equity-based compensation charges associated with Blackstone’s initial public offering and long-term retention

programs outside of annual deferred compensation and other corporate actions.

(b)

This adjustment adds back to Income (Loss) Before Provision (Benefit) for Taxes amounts for the Amortization of Intangibles which

are associated with Blackstone’s initial public offering and other corporate actions.

(c)

This adjustment adds back to Income (Loss) Before Provision (Benefit) for Taxes the amount of (Income) Loss Associated with Non-

Controlling Interests in (Income) Loss of Consolidated Entities and includes the amount of Management Fee Revenues associated

with Consolidated CLO Entities.

(d)

Taxes represent the current tax provision (benefit) calculated on Income (Loss) Before Provision for Taxes.

(e)

This adjustment removes from EI the total segment amount of Performance Fees.

(f)

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

(g)

This adjustment represents the realized and unrealized gain on Blackstone’s Treasury cash management strategies which are a

component of Investment Income (Loss) but included in Fee Related Earnings.

(h)

This adjustment removes from expenses the compensation and benefit amounts related to Blackstone’s profit sharing plans related

to Performance Fees.

(i)

Represents the adjustment for realized Performance Fees net of corresponding actual amounts due under Blackstone’s profit

sharing plans related thereto.

(j)

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

Realized.

(k)

Represents the elimination of Realized Investment Income attributable to Blackstone’s Treasury cash management strategies which

is a component of both Fee Related Earnings from Operations and Realized Investment Income (Loss).

(l)

Taxes and Related Payables Including Payable Under Tax Receivable Agreement represent the current tax provision (benefit)

calculated on Income (Loss) Before Provision for Taxes and the payable under the Tax Receivable Agreement.

Blackstone

28

Calculation of Certain Non-GAAP Financial Metric Components

(Dollars in Thousands)

3Q'12

YTD'12

Interest Income and Dividend Revenue

12,004

$       

31,740

$       

Other Revenue

2,477

442

Investment

Income

-

Blackstone's

Treasury

Cash

Management

Strategies

(a)

12,877

21,079

Interest Income and Other Revenue

27,358

$       

53,261

$       

Realized Incentive Fees

11,620

28,591

Less: Realized Incentive Fee Compensation

(4,457)

(14,284)

Net Realized Incentive Fees

7,163

$         

14,307

$       

Realized Carried Interest

83,765

153,254

Less: Realized Carried Interest Compensation

(22,023)

(37,860)

Net Realized Carried Interest

61,742

$       

115,394

$    

Realized Investment Income

25,098

57,950

Adjustment

Related

to

Realized

Investment

Income

-

Blackstone's

Treasury

Cash

Management

Strategies

(a)

(8,251)

(15,428)

Realized Investment Income

16,847

$       

42,522

$       

Unrealized Incentive Fees

104,149

155,196

Less: Unrealized Incentive Fee Compensation

(44,254)

(47,437)

Net Unrealized Incentive Fees

59,895

$       

107,759

$    

Unrealized Carried Interest

403,465

786,551

Less: Unrealized Carried Interest Compensation

(128,863)

(250,221)

Net Unrealized Carried Interest

274,602

$    

536,330

$    

Unrealized Investment Income

82,334

116,624

Less:

Investment

Income

-

Blackstone's

Treasury

Cash

Management

Strategies

(a)

(12,877)

(21,079)

Less:

Adjustment

Related

to

Realized

Investment

Income

-

Blackstone's

Treasury

Cash

Management

Strategies

(a)

8,251

15,428

Unrealized Investment Income

77,708

$       

110,973

$    

Related Payables

(b)

19,912

$       

30,096

$       

(a)

(b)

See Appendix - Reconciliation of GAAP to Non-GAAP Measures for this adjustment.

Represents tax related payables including the payable under the tax receivable agreement.

Unless otherwise noted, all amounts are the respective captions from the Total Segment information.

Blackstone

29

Unit Rollforward

(a)

Common Unitholders receive Tax Benefits from deductions taken by Blackstone’s corporate tax paying subsidiaries and bear responsibility for the deduction from 

Distributable Earnings of the Payable under the Tax Receivable Agreement and certain other tax-related payables.

(b)

Excludes units which are not entitled to distributions.

3Q'11

4Q'11

1Q'12

2Q'12

3Q'12

YTD'11

YTD'12

Total

GAAP

Weighted-Average

Common

Units

Outstanding

-

Basic

487,189,657

490,511,637

506,985,529

528,778,977

544,716,399

470,551,727

526,892,258

Adjustments:

Weighted-Average Unvested Deferred Restricted Common Units

-

-

10,404,029

-

2,207,204

-

5,810,614

Total

GAAP

Weighted-Average

Common

Units

Outstanding

-

Diluted

487,189,657

490,511,637

517,389,558

528,778,977

546,923,603

470,551,727

532,702,872

Adjustments:

Weighted-Average Blackstone Holdings Partnership Units

616,168,175

613,105,891

602,817,069

591,155,160

586,762,611

633,174,021

593,555,609

Weighted-Average Unvested Deferred Restricted Common Units

7,243,768

12,469,282

-

4,820,609

-

8,169,431

-

Weighted-Average Economic Net Income Adjusted Units

1,110,601,600

1,116,086,810

1,120,206,627

1,124,754,746

1,133,686,214

1,111,895,179

1,126,258,481

Economic Net Income Adjusted Units, End of Period

1,110,027,706

1,108,034,890

1,119,829,138

1,122,067,386

1,133,637,141

1,110,027,706

Total Common Units Outstanding

(a)

488,178,170

495,599,976

510,868,415

525,464,110

537,299,585

488,178,170

537,299,585

Adjustments:

Blackstone Holdings Partnership Units

615,164,340

608,718,156

597,566,417

585,315,742

584,690,200

615,164,340

584,690,200

Distributable Earnings Units Outstanding

(b)

1,103,342,510

1,104,318,132

1,108,434,832

1,110,779,852

1,121,989,785

1,103,342,510

1,121,989,785

1,133,637,141

Blackstone

30

Definitions

Blackstone discloses the following financial measures that are calculated and presented on the basis of methodologies other than in accordance with

generally accepted accounting principles in the United States of America (“non-GAAP”) in this presentation:

•

Blackstone uses Economic Income, or “EI”, as a key measure of value creation, a benchmark of its performance and in making resource deployment

and compensation decisions across its five segments.  EI represents segment net income before taxes excluding transaction-related charges. 

Transaction-related charges arise from Blackstone’s initial public offering (“IPO”) and long-term retention programs outside of annual deferred

compensation and other corporate actions, including acquisitions.  Transaction-related charges include equity-based compensation charges, the

amortization of intangible assets and contingent consideration associated with acquisitions.  EI presents revenues and expenses on a basis that

deconsolidates the investment funds Blackstone manages.

•

Economic Net Income, or “ENI”, represents EI adjusted to include current period taxes.  Taxes represent the current tax provision (benefit) calculated

on Income (Loss) Before Provision for Taxes.

•

Blackstone uses Fee Related Earnings, or “FRE”, as a key measure to highlight earnings from operations excluding:  (a) the income related to

performance fees and related carry plan costs, (b) income earned from Blackstone’s investments in the Blackstone Funds, and (c) realized and

unrealized gains (losses) from other investments except for such gains (losses) from Blackstone’s Treasury cash management strategies.  Blackstone

uses FRE as a measure to assess whether recurring revenue from its businesses is sufficient to adequately cover all of its operating expenses and

generate profits.  FRE equals contractual fee revenues, investment income from Blackstone’s Treasury cash management strategies and interest

income, less (a) compensation expenses (which includes amortization of non-IPO and non-acquisition-related equity-based awards, but excludes

amortization of IPO and acquisition-related equity-based awards, carried interest and incentive fee compensation), and (b) other operating expenses.

•

Distributable Earnings, or “DE”, which is derived from Blackstone’s segment reported results, is a supplemental measure to assess performance and

amounts available for distributions to Blackstone unitholders, including Blackstone personnel and others who are limited partners of the Blackstone

Holdings partnerships.  DE is intended to show the amount of net realized earnings without the effects of the consolidation of the Blackstone Funds.

DE, which is a component of ENI, is the sum across all segments of:  (a) Total Management and Advisory Fees, (b) Interest and Dividend Revenue, (c)

Other Revenue, (d) Realized Performance Fees, and (e) Realized Investment Income (Loss); less (a) Compensation, (b) Realized Performance Fee

Compensation, (c) Other Operating Expenses, and (d) Taxes and Related Payables Including the Payable Under the Tax Receivable Agreement.  DE is

reconciled to Blackstone’s Consolidated Statement of Operations.  It is Blackstone’s current intention that on an annual basis it will distribute to

unitholders all of its DE, less realized investment gains and returns of capital from investments and acquisitions, 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.

•

Blackstone uses Adjusted Earnings Before Interest, Taxes and Depreciation and Amortization, or “Adjusted EBITDA”, as a measure of segment

performance and an indicator of its ability to cover recurring operating expenses.  Adjusted EBITDA equals DE before segment interest expense,

segment depreciation and amortization, and the taxes and related payables including the payable under the tax receivable agreement.

Blackstone

31

Forward-Looking Statements

This presentation may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and

Section 21E of the Securities Exchange Act of 1934 which reflect

Blackstone’s current views with respect to, among other things,

Blackstone’s operations and financial performance. You can identify these forward-looking statements by the use of words such as

“outlook,”

“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, 2011, as such factors may be updated from time to time in its periodic filings with the Securities and Exchange

Commission, which are accessible on the SEC’s website at www.sec.gov. These factors should not be construed as exhaustive and

should be read in conjunction with the other cautionary statements that are included in this presentation and in the filings.

Blackstone undertakes no obligation to publicly update or review

any forward-looking statement, whether as a result of new

information, future developments or otherwise.

This presentation does not constitute an offer of any Blackstone

Fund.