Blackstone (BX) 8-K Blackstone Reports First Quarter Results

Blackstone’s First Quarter 2014 Earnings

April 17, 2014

Exhibit 99.2

Blackstone

1

Blackstone’s First Quarter 2014 Highlights

(a)

See page 11, Total Assets Under Management, notes (b) and (c).

Blackstone’s Economic Net Income (“ENI”) was $814 million ($0.70/unit) for the quarter, up 30% from

last year, reflecting continued strong growth in Fee Revenues and Performance Fees.

•

ENI

was

$3.7

billion

($3.23/unit)

for

the

last

twelve

months,

up

73%

from

$2.1

billion

($1.88/unit)

in

the same period last year.

Distributable Earnings (“DE”) were $485 million for the quarter ($0.41/unit), up 24% from the same

period last year, driven by strong growth in Realized Performance Fees and Realized Investment Income.

GAAP

Net

Income

was

$266

million

for

the

quarter,

net

of

certain

non-cash

IPO

and

transaction

related

expenses and exclusive of net income attributable to non-controlling interests, primarily inside ownership.

Total Assets Under Management (“AUM”) reached $272 billion, up 25% year-over-year with double-digit

increases across all investing businesses, through strong inflows and consistent appreciation.

•

Gross inflows were $10.2 billion in the first quarter and $62.0 billion for the last twelve months.

•

Blackstone’s

funds

returned

$11.5

billion

(a)

of

capital

to

investors

during

the

first

quarter

and

$41.9

billion

(a)

over the last twelve months as the environment for realizing gains remained strong.

Increased investment activity led to $7.4 billion of capital invested and/or committed during the first

quarter, bringing the last twelve months to $21.6 billion.

Blackstone accelerated the release of its final annual K-1 tax forms which were made available to common

unitholders in late March.

Blackstone

2

Blackstone’s First Quarter 2014 Earnings

Note:

LTM

represents

the

last

twelve

months’

results

for

the

respective

periods

presented.

Throughout

this

presentation,

LTM

per

Unit

amounts

equal

the

sum

of

the

relevant

per

unit

amounts

for

the preceding four quarters.

(a)

ENI per Unit is based on the Weighted-Average ENI Adjusted Units. See page 30, Unit Rollforward.

(b)

DE per Common Unit equals DE Attributable to Common Unitholders divided by Total Common Units Outstanding. See page 30, Unit Rollforward.

% Change

% Change

(Dollars in Thousands, Except per Unit Data)

1Q'13

1Q'14

vs. 1Q'13

1Q'13 LTM

1Q'14 LTM

vs. 1Q'13 LTM

Fee Revenues

520,883

$       

613,338

$       

18%

2,202,737

$    

2,459,777

$    

12%

Performance Fees

603,999

779,014

29%

1,812,008

3,731,388

106%

Investment Income

134,771

116,467

(14)%

337,609

669,501

98%

Total Revenues

1,259,653

$   

1,508,819

$   

20%

4,352,354

$   

6,860,666

$   

58%

Total Expenses

621,316

683,573

10%

2,173,278

3,077,718

42%

Taxes

10,031

11,312

13%

46,688

83,445

79%

Economic Net Income (“ENI

”)

628,306

$       

813,934

$       

30%

2,132,388

$   

3,699,503

$   

73%

ENI per Unit

(a)

0.55

$             

0.70

$             

27%

1.88

$             

3.23

$             

72%

GAAP Net Income

167,635

$       

265,617

$       

58%

327,908

$       

1,269,184

$    

287%

Fee Related Earnings (“FRE”)

137,733

$       

174,829

$       

27%

691,118

$       

782,565

$       

13%

Distributable Earnings (“DE”)

390,912

$       

485,112

$       

24%

1,344,910

$   

1,956,899

$   

46%

DE per Common Unit

(b)

0.34

$             

0.41

$             

21%

1.12

$             

1.63

$             

46%

Total Assets Under Management

218,210,672

$

271,745,583

$

25%

218,210,672

$

271,745,583

$

25%

Fee-Earning Assets Under Management

170,949,347

$

203,599,604

$

19%

170,949,347

$

203,599,604

$

19%

Blackstone

3

Walkdown of Financial Metrics

(Dollars in Thousands, Except per Unit Data)

1Q'14

1Q'14 LTM

Results

Per Unit

(a)

Results

Per Unit

(a)

Base Management Fees

476,878

$         

1,808,938

$     

Advisory Fees

69,963

413,457

Transaction and Other Fees, Net

59,910

228,913

Management Fee Offsets

(16,644)

(79,202)

Interest Income and Other Revenue

31,041

77,636

Compensation

(306,545)

(1,155,208)

Other Operating Expenses

(139,774)

(511,969)

Fee Related Earnings

174,829

$         

0.15

$               

782,565

$         

0.69

$               

Net Realized Incentive Fees

30,202

289,401

Net Realized Carried Interest

184,225

666,249

Net Realized Investment Income

110,573

259,948

Taxes and Related Payables

(31,054)

(175,640)

Equity-Based Compensation

16,337

134,376

Distributable Earnings

485,112

$         

0.41

$               

1,956,899

$     

1.63

$               

Net Unrealized Incentive Fees

37,735

(33,819)

Net Unrealized Carried Interest

289,598

1,399,016

Net Unrealized Investment Income

(1,916)

419,588

Add Back: Related Payables

19,742

92,195

Less: Equity-Based Compensation

(16,337)

(134,376)

Economic Net Income

813,934

$         

0.70

$               

3,699,503

$     

3.23

$               

See

page 29,

Walkdown

of

Financial

Metrics

–

Calculation

of

Certain

Non-GAAP

Financial

Metric

Components

for

the calculation

of

the

amounts

presented

herein

that

are

not

the respective  captions

on

page

18,

Total

Segments.

(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

page30,

Unit

Rollforward).

Blackstone

4

Summary Walkdown of GAAP to Non-GAAP Financial Metrics

GAAP

Economic Income

“EI”

Fee Related Earnings

“FRE”

Distributable Earnings

“DE”

Income Before Provision for Taxes

+

IPO and Acquisition-Related Charges

–

Impact of Consolidated Funds

–

Net Performance Fees

–

Fund Investment Income

+

Net Realized Performance Fees

+

Realized Investment Income

–

Taxes and Related Payables

+   Equity-Based Compensation

=

Distributable Earnings

(Dollars in Millions)

See pages 27-28, Reconciliation of GAAP to Non-GAAP Measures for details.

1Q’14

1Q’14 LTM

$485

$1,957

$709

$3,379

=

Economic Income

$825

$3,783

=

Fee Related Earnings

$175

$783

Blackstone

5

Private Equity

27.0%

1Q’14

LTM

increase

in

fund

carrying

value

(a)

$120 million

1Q’14 Realized Performance Fees

(a)

Corporate Private Equity portfolio, Tactical Opportunities and Other Funds (including fee-paying co-investment funds). Excludes returns for Strategic Partners.

$820 million

1Q’14 Net Accrued Performance Fees

Total Revenues up 115% to $484 million for the quarter and Economic Income up 209% to $319 million.

•

Performance Fees up over 400% to $287 million from $56 million in the first quarter of 2013.

Carrying value of portfolio assets

(a)

appreciated 7.0% in the quarter and 27.0% for the last twelve months, driven by

private holdings in the healthcare and services sectors and public holdings.

BCP

V

appreciated

5.6%,

accruing

$49

million

of

Performance

Fees

during

the

quarter,

and

the

BCP

V

“main

fund”

further

reduced

its

gap

to

the

preferred

return

hurdle

by

43%

to

$916

million.

Robust realization activity, with $4.7 billion harvested during the quarter compared to $2.0 billion in the first

quarter of 2013, and $12.3 billion over the last twelve months up from $4.6 billion in the comparable period.

Sharp

increase

in

investment

activity

with

$3.1

billion

of

total

capital

invested

and/or

committed

for

the

quarter

and $6.2 billion during the last twelve months.

Additional closes in Tactical Opportunities of $510 million ($5.6 billion total) and latest Strategic Partners

secondary fund of funds of $854 million ($1.5 billion total).

% Change

% Change

(Dollars in Thousands)

1Q'13

1Q'14

vs. 1Q'13

1Q'13 LTM

1Q'14 LTM

vs. 1Q'13 LTM

Fee Revenues

113,627

$      

145,810

$       

28%

470,039

$      

511,495

$      

9%

Performance Fees

55,938

286,870

413%

276,132

959,157

247%

Investment Income

55,873

51,502

(8)%

136,653

245,404

80%

Total Revenues

225,438

484,182

115%

882,824

1,716,056

94%

Compensation

60,203

73,307

22%

230,365

249,224

8%

Performance Fee Compensation

32,865

58,623

78%

95,831

407,444

325%

Other Operating Expenses

29,168

33,006

13%

131,132

127,975

(2)%

Total Expenses

122,236

164,936

35%

457,328

784,643

72%

Economic Income

103,202

$      

319,246

$      

209%

425,496

$      

931,413

$      

119%

Total AUM

52,491,811

$ 

66,142,945

$ 

26%

52,491,811

$ 

66,142,945

$ 

26%

Fee-Earning AUM

36,785,770

$ 

41,150,728

$ 

12%

36,785,770

$ 

41,150,728

$ 

12%

Blackstone

6

Real Estate

27.8%

1Q’14

LTM

increase

in

fund

carrying

value

(a)

$195 million

1Q’14 Realized Performance Fees

(a)

Blackstone Real Estate Partners (“BREP”) portfolio (including fee-paying co-investment funds).

(b)

Includes April 7, 2014 equity issuance of $254.6 million net proceeds.

Fee Revenues rose 18% compared to the first quarter of 2013 reflecting Management Fees from latest European

fund and first Asian fund.

Real Estate Funds’

carrying value

(a)

appreciated 3.8% for the quarter and 27.8% for the last twelve months, driven

by valuation increases from private investments in the office and industrial sectors and certain public holdings.

Realized Performance Fees totaled $195 million in the first quarter of 2014 compared with $72 million a year ago.

•

Significant proceeds of $1.3 billion from partial realizations in the global office portfolio including Broadgate

Estate, Equity Office Properties, CarrAmerica and Trizec.

Raised $2.2 billion of capital during the quarter, including $1.3 billion from the final closing of the latest European

fund ($6.9 billion total), $245 million in the Asian fund ($3.5 billion total) and $563 million in debt strategies.

BXMT, the commercial mortgage REIT, completed two successful common equity issuances to fund continued

strong

origination

activity,

bringing

it

to

$1.4

billion

of

current

market

capitalization

(b)

.

Invested $1.7 billion with an additional $1.9 billion committed at quarter end, bringing the total capital invested

plus committed to $12.7 billion for the last twelve months.

$2.4 billion

1Q’14 Net Accrued Performance Fees

% Change

% Change

(Dollars in Thousands)

1Q'13

1Q'14

vs. 1Q'13

1Q'13 LTM

1Q'14 LTM

vs. 1Q'13 LTM

Fee Revenues

144,365

$     

170,103

$     

18%

612,671

$     

672,721

$     

10%

Performance Fees

354,341

337,606

(5)%

990,726

2,138,847

116%

Investment Income

69,837

36,736

(47)%

172,290

369,459

114%

Total Revenues

568,543

544,445

(4)%

1,775,687

3,181,027

79%

Compensation

69,459

80,233

16%

271,692

304,996

12%

Performance Fee Compensation

117,678

110,184

(6)%

295,933

717,043

142%

Other Operating Expenses

28,462

33,107

16%

123,252

121,036

(2)%

Total Expenses

215,599

223,524

4%

690,877

1,143,075

65%

Economic Income

352,944

$     

320,921

$     

(9)%

1,084,810

$  

2,037,952

$  

88%

Total AUM

59,475,215

$

81,333,562

$

37%

59,475,215

$

81,333,562

$

37%

Fee-Earning AUM

42,140,507

$

53,490,834

$

27%

42,140,507

$

53,490,834

$

27%

Blackstone

7

Hedge Fund Solutions

Total Revenues of $194 million for the quarter, up 16% year-over-year driven by an increase in

Fee-Earning AUM, up 22% over the same period last year.

BAAM’s

Principal

Solutions

Composite

(a)

was

up

gross

1.8%

for

the

quarter

and

9.8%

for

the

last

twelve

months.

Fee-Earning AUM grew by $10.0 billion, or 22% year-over-year to $55.6 billion; April 1 subscriptions of

$795

million are not included in Fee-Earning AUM.

•

BAAM

held

an

additional

closing

for

its

first

permanent

capital

vehicle

acquiring

general

partner

interests

in

hedge

funds

bringing

total

commitments

to

$1.4

billion.

•

69% of Fee-Earning AUM is currently invested in specialized, customized or individual investor solutions.

$27.0 billion of Incentive Fee-Earning AUM, or 92% of the eligible total, were above the high water mark and/or

hurdle,

which

was

up

14%

from

$23.6

billion

a

year

ago.

Dry powder of $2.2 billion, up 82% from the first quarter of last year, primarily driven by the launch of the general

partner interests vehicle.

9.8%

1Q’14

LTM

Composite

Return

(a)

$29.3 billion

Incentive Fee Eligible AUM at 1Q’14

$1.6 billion

1Q’14 Fee-Earning Net Inflows

% Change

% Change

(Dollars in Thousands)

1Q'13

1Q'14

vs. 1Q'13

1Q'13 LTM

1Q'14 LTM

vs. 1Q'13 LTM

Fee Revenues

93,772

$         

114,805

$      

22%

362,874

$      

435,883

$      

20%

Performance Fees

69,210

57,930

(16)%

135,200

204,173

51%

Investment Income

4,765

21,251

346%

11,678

34,793

198%

Total Revenues

167,747

193,986

16%

509,752

674,849

32%

Compensation

33,868

40,571

20%

125,366

143,173

14%

Performance Fee Compensation

24,858

20,032

(19)%

40,583

63,823

57%

Other Operating Expenses

15,159

19,480

29%

59,034

71,287

21%

Total Expenses

73,885

80,083

8%

224,983

278,283

24%

Economic Income

93,862

$         

113,903

$      

21%

284,769

$      

396,566

$      

39%

Total AUM

48,187,865

$ 

58,262,659

$ 

21%

48,187,865

$ 

58,262,659

$ 

21%

Fee-Earning AUM

45,585,454

$ 

55,571,357

$ 

22%

45,585,454

$ 

55,571,357

$ 

22%

BAAM’s Principal Solutions Composite does not include BAAM’s long-only equity, long-biased commodities, seed, strategic opportunities (external investments) and advisory

platforms. On a net of fees basis, the BAAM Principal Solutions Composite was up 1.6% for the quarter and 8.6% for the last twelve months. 

(a)

Blackstone

8

Credit

$66 billion

1Q’14 Total AUM

Investment Performance

(a)

Gross Returns

CLOs

Customized Credit

Strategies

(b)

Mezzanine

Funds

Rescue

Lending

Funds

Hedge Fund

Strategies

Fee Revenues up 10% to $110 million in the quarter, driven by a 15%

increase in Fee-Earning AUM.

Total AUM grew 14% year-over-year to $66.0 billion due to robust net

inflows and strong appreciation, which more than offset realizations and

outflows of $13.5 billion over the last twelve months.

GSO further advanced its European platform with the launches of a

European CLO and a new global credit fund, raising over $1 billion of Total

AUM during the quarter.

Invested $587 million of total capital with an additional $308 million

committed but not yet invested during the quarter, bringing total capital

invested and committed to $2.2 billion for the last twelve months.

% Change

% Change

(Dollars in Thousands)

1Q'13

1Q'14

vs. 1Q'13

1Q'13 LTM

1Q'14 LTM

vs. 1Q'13 LTM

Fee Revenues

100,541

$      

110,268

$      

10%

402,145

$      

414,815

$      

3%

Performance Fees

124,510

96,608

(22)%

409,950

429,211

5%

Investment Income

4,421

6,150

39%

14,907

19,778

33%

Total Revenues

229,472

213,026

(7)%

827,002

863,804

4%

Compensation

45,521

50,752

11%

190,455

191,745

1%

Performance Fee Compensation

64,494

48,415

(25)%

211,582

222,231

5%

Other Operating Expenses

20,962

32,839

57%

88,354

108,817

23%

Total Expenses

130,977

132,006

1%

490,391

522,793

7%

Economic Income

98,495

$         

81,020

$         

(18)%

336,611

$      

341,011

$      

1%

Total AUM

58,055,781

$ 

66,006,417

$ 

14%

58,055,781

$ 

66,006,417

$ 

14%

Fee-Earning AUM

46,437,616

$ 

53,386,685

$ 

15%

46,437,616

$ 

53,386,685

$ 

15%

1Q'14

1Q'14 LTM

Hedge Fund

   Strategies

3.9%

21.7%

Mezzanine

   Funds

4.3%

19.3%

Rescue

   Lending Funds

5.3%

30.6%

$7.8

$8.8

$7.6

$21.6

$20.3

Totals may not add due to rounding.

(b)

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

(a)

Represents weighted-average performance of the assets of the respective flagship funds within each strategy. Hedge Fund Strategies net returns were 2.9% for 1Q’14 and

16.3% for 1Q’14 LTM, Mezzanine Funds net returns were 3.2% for 1Q’14 and 12.5% for 1Q’14 LTM and Rescue Lending Funds net returns were 3.9% for 1Q’14 and 23.5% for 1Q’14 LTM.

Blackstone

9

Financial Advisory

Total Revenues up 7% in the quarter, due primarily to greater deal activity in Blackstone Advisory Partners.

Blackstone

Advisory

Partners’

revenue

more

than

doubled

compared

to

the

first

quarter

of

2013

as

several

large

deals closed during the first quarter of 2014, including Advanced Auto Parts and WMI Holdings.

Blackstone Capital Markets had a good start to the year, reflecting increased participation in debt transactions.

Restructuring revenue decreased in the quarter compared to the prior year quarter due to fewer deal closings,

although the pipeline remains steady across a diverse group of industries.

Park

Hill’s

revenue

declined

due

to

fewer

fund

closings;

however,

the

pipeline

remains

strong

and

a

meaningful

backlog

of

assignments

exists

at

the

close

of

the

quarter.

% Change

% Change

(Dollars in Thousands)

1Q'13

1Q'14

vs. 1Q'13

1Q'13 LTM

1Q'14 LTM

vs. 1Q'13 LTM

Fee Revenues

68,578

$         

72,352

$         

6%

355,008

$      

424,863

$      

20%

Investment Income (Loss)

(125)

828

n/m

2,081

67

(97)%

Total Revenues

68,453

73,180

7%

357,089

424,930

19%

Compensation

57,926

61,682

6%

225,103

266,070

18%

Other Operating Expenses

20,693

21,342

3%

84,596

82,854

(2)%

Total Expenses

78,619

83,024

6%

309,699

348,924

13%

Economic Income (Loss)

(10,166)

$       

(9,844)

$         

3%

47,390

$         

76,006

$         

60%

Blackstone

10

Fee-Earning Assets Under Management

Private

Equity

Real

Estate

Hedge

Fund

Solutions

Credit

1Q’14 Fee-Earning AUM Rollforward

(Dollars in Millions)

LTM Fee-Earning AUM Rollforward

(Dollars in Millions)

Fee-Earning AUM by Segment

(Dollars in Billions)

$170.9

$203.6

Private Equity

Real Estate

Hedge Fund

Solutions

Credit

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 other 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.

Inflows:

Tactical Opportunities additional fee generating assets.

Realizations:

primarily BCP V,  including three public market

dispositions and three strategic sales.

Inflows:

BREP Europe IV $1.3 billion; first Asian fund $245 million;

BREDS capital raised and/or invested $916 million.

Realizations:

primarily sales of office assets in BREP.

Net Inflows:

$1.6 billion in net inflows of which 53% was from

specialized, customized or individual investor solutions.

Inflows:

launch of new European CLO $812 million; capital raised for

BDCs $860 million and Hedge Fund Strategies $1.1 billion.

Realizations / Outflows:

$1.1 billion returned to CLO investors;

$559 million returned across Mezzanine and Rescue Lending funds.

Private

Real

Hedge Fund

Equity

Estate

Solutions

4Q'13

42,601

$    

50,793

$    

52,866

$    

51,723

$    

197,982

$  

Inflows

(a)

383

3,307

2,368

3,830

9,887

Outflows

(b)

(342)

(91)

(608)

(871)

(1,912)

Realizations

(c)

(1,579)

(573)

(188)

(1,648)

(3,988)

Net

Inflows

(Outflows)

(1,539)

2,643

1,572

1,311

3,987

Market Activity

(d)

89

55

1,133

353

1,630

1Q'14

41,151

$    

53,491

$    

55,571

$    

53,387

$    

203,600

$  

QoQ Increase (Decrease)

(3)%

5%

5%

3%

3%

Credit

Total

Private

Real

Hedge Fund

Equity

Estate

Solutions

1Q'13

36,786

$    

42,141

$    

45,585

$    

46,438

$    

170,949

$  

Inflows

(a)

9,797

16,390

10,257

15,310

51,753

Outflows

(b)

(735)

(1,413)

(3,958)

(2,470)

(8,576)

Realizations

(c)

(4,884)

(3,814)

(488)

(8,004)

(17,190)

Net Inflows

4,177

11,163

5,811

4,836

25,987

Market Activity

(d)

188

187

4,175

2,113

6,663

1Q'14

41,151

$    

53,491

$    

55,571

$    

53,387

$    

203,600

$  

YoY Increase

12%

27%

22%

15%

19%

Credit

Total

Blackstone

11

Real

Estate

Hedge

Fund

Solutions

Credit

Total Assets Under Management

1Q’14 Total AUM Rollforward

(Dollars in Millions)

LTM Total AUM Rollforward

(Dollars in Millions)

$218.2

$271.7

Private Equity

Real Estate

Hedge Fund

Solutions

Credit

Total AUM by Segment

(Dollars in Billions)

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 other decreases in available capital.

(c)

Realizations: represent realizations from the disposition of assets and the effect of changes in the definition of Total Assets Under Management.

(d)

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

Private

Equity

Inflows:

Strategic Partners capital raised $854 million; Tactical

Opportunities capital raised $510 million.

Market Activity:

strong fund performance, with 7.0% overall increase in

carrying value, including 12.5% in BCP VI and 5.6% in BCP V.

Market Activity:

carrying value increase of 3.8% driven by

improving fundamentals in the private portfolio (4.4%, $1.5 billion)

and public portfolio appreciation (2.9%, $580 million).

Inflows:

second close of general partner interests vehicle

($1.4 billion in total commitments).

Market Activity:

BAAM’s Principal Solutions Composite up 1.8%

gross.

Market Activity:

$433 million appreciation in Hedge Fund

Strategies and BDCs; $333 million appreciation in carry funds.

Private

Real

Hedge Fund

Equity

Estate

Solutions

4Q'13

65,675

$    

79,411

$    

55,657

$    

65,014

$    

265,758

$  

Inflows

(a)

2,106

2,407

2,287

3,396

10,195

Outflows

(b)

(168)

(580)

(612)

(902)

(2,262)

Realizations

(c)

(4,682)

(2,046)

(276)

(2,272)

(9,276)

Net

Inflows

(Outflows)

(2,744)

(219)

1,399

222

(1,342)

Market Activity

(d)

3,212

2,142

1,206

770

7,330

1Q'14

66,143

$    

81,334

$    

58,263

$    

66,006

$    

271,746

$  

QoQ Increase

1%

2%

5%

2%

2%

Credit

Total

Private

Real

Hedge Fund

Equity

Estate

Solutions

1Q'13

52,492

$    

59,475

$    

48,188

$    

58,056

$    

218,211

$  

Inflows

(a)

15,543

18,576

10,409

17,473

62,002

Outflows

(b)

(436)

(1,574)

(4,108)

(3,102)

(9,219)

Realizations

(c)

(12,305)

(9,322)

(661)

(10,419)

(32,708)

Net Inflows

2,802

7,680

5,640

3,953

20,076

Market Activity

(d)

10,849

14,178

4,435

3,998

33,459

1Q'14

66,143

$    

81,334

$    

58,263

$    

66,006

$    

271,746

$  

YoY Increase

26%

37%

21%

14%

25%

Credit

Total

Blackstone

12

1Q’14 Available Capital Summary

Committed undrawn capital (“Total Dry Powder”) reached a record $48.0 billion, up 34% from $35.8 billion a

year ago, despite record levels of investment activity.

Performance

Fee

Eligible

AUM

(a)

was

$185.8

billion

at

the

end

of

the

quarter,

including

$116.0

billion

currently

earning Performance Fees, up substantially from the prior year period.

$48 billion Total Dry Powder

(b)

$21 billion Not Currently

Earning  Management Fees

(c)

$186 billion Performance

Fee Eligible AUM

(a)

Uninvested

Not Earning

Fees

Currently

Earning Fees

Credit

Hedge

Fund

Solutions

Private

Equity

Real

Estate

Credit

Hedge Fund

Solutions

Real

Estate

Private

Equity

Totals may not add due to rounding.

$18.6

$17.7

$2.2

$9.5

$6.5

$4.0

$0.9

$9.1

$88.5

$116.0

$24.6

$25.3

$34.3

$44.5

$147.5

$185.8

1Q'13

1Q'14

(a)

Represents invested and to be invested capital at fair value, including closed commitments for funds whose investment period has not yet commenced, on which performance fees could be earned if certain hurdles are met.

(b)

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

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

(c)

Represents the committed uninvested capital portion of Total AUM not currently earning Base Management Fees of the Private Equity, Real Estate and Real Estate debt strategies drawdown funds, and the Credit Mezzanine and Rescue Lending

funds, the Hedge Fund Solutions’ Strategic Alliance Fund and other separately managed accounts. The amount depends on the specific terms of each fund.

Total AUM not currently earning Management Fees of $20.5 billion at quarter end, due largely to fund structures

where the payment of Management Fees is triggered by investment of capital rather than commitment.

Blackstone

13

At March 31, 2014, Blackstone had $1.9 billion in total cash, corporate treasury and liquid investments and

$8.2

billion of total net value, or $7.20 per DE unit, up 21% from $5.93 a year ago.

Net Performance Fees were $3.5 billion at the end of the first quarter, up 57% from the same period last year,

reflecting the consistent high returns on a diverse set of funds.

Long-term

debt

of

$1.6

billion

at

the

end

of

the

first

quarter

from

the

2009,

2010

and

2012

bond

issuances,

resulting in a Debt to Adjusted EBITDA ratio of 0.72x for the last twelve months.

•

On

April

7,

2014,

Blackstone

issued

senior

notes

of

$500

million

(5.00%)

maturing

on

June

15,

2044.

There

are

currently

no

borrowings

outstanding

against

the

$1.1

billion

revolving

credit

facility

expiring

in

2017.

Balance Sheet Highlights

(a)

(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

Private

Equity,

Real

Estate

and

Other,

which

were

$966

million, $1.4 billion and $389 million, respectively, as of March 31, 2014 and $907 million,

$1.1 billion and $201 million, respectively, as of March 31, 2013.

(Dollars in Millions)

1Q’13

1Q’14

Cash and Cash Equivalents

$

815

$

788

Treasury Cash Management

Strategies

1,255

965

Liquid Investments

(b)

142

147

Illiquid Investments

(c)

2,220

2,761

Net Performance Fees

2,261

3,546

Total Net Value

$

6,693

$

8,207

Outstanding Bonds

(at par)

(d)

$

1,635

$

1,635

A+/A+

rated by S&P and Fitch

$1.1 billion

undrawn credit revolver with

July 2017 maturity

$1.9 billion

total cash, corporate treasury

and liquid investments

Cash and Investments

(e)

Net

Performance

Fees

Total Cash

and Liquids

Illiquids

$5.93

$7.20

(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 February 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.

(e)

Cash and Investments per DE unit.

Blackstone

14

Unitholder

Distribution

(a)

A detailed description of Blackstone’s distribution policy and the definition of Distributable Earnings can be found on page 31, Definitions and Distribution Policy.

(b)

DE

before

Certain

Payables

represents

Distributable

Earnings

before

the

deduction

for

the

Payable

Under

Tax

Receivable

Agreement

and

tax

expense

(benefit)

of

wholly-owned

subsidiaries.

(c)

Per Unit calculations are based on Total Common Units Outstanding (page 30, Unit Rollforward); actual distributions are paid to applicable unitholders as of the record date.

(d)

Retained

capital

is

withheld

pro-rata

from

common

and

Blackstone

Holdings

Partnership

unitholders.

Common

unitholders’

share

was

$38.3

million

for

1Q’14.

Generated

$0.41

of

Distributable

Earnings

per

common

unit

during

the

first

quarter,

up

21%

year-over-year.

Declared

a

quarterly

distribution

of

$0.35

per

common

unit

to

record

holders

as

of

April

28,

2014;

payable

on

May

5, 2014.

% Change

(Dollars in Thousands, Except per Unit Data)

1Q'13

2Q'13

3Q'13

4Q'13

1Q'14

vs. 1Q'13

Distributable Earnings (“DE”)

390,912

$     

338,485

$     

312,673

$     

820,629

$     

485,112

$     

24%

Add: Other Payables Attributable to

Common Unitholders

2,204

28,498

17,694

58,103

19,856

801%

DE before Certain Payables

(b)

393,116

366,983

330,367

878,732

504,968

28%

Percent to Common Unitholders

51%

51%

52%

52%

53%

DE before Certain Payables Attributable to

Common Unitholders

199,812

187,652

170,216

455,291

265,378

33%

Less: Other Payables Attributable to

Common Unitholders

(2,204)

(28,498)

(17,694)

(58,103)

(19,856)

(801)%

DE Attributable to Common Unitholders

197,608

159,154

152,522

397,188

245,522

24%

DE per Common Unit

(c)

0.34

$           

0.28

$           

0.26

$           

0.68

$           

0.41

$           

21%

Less: Retained Capital per Unit

(d)

(0.04)

$          

(0.05)

$          

(0.03)

$          

(0.10)

$          

(0.06)

$          

(50)%

Net Cash Available for Distribution per

Common Unit

(c)

0.30

$           

0.23

$           

0.23

$           

0.58

$           

0.35

$           

17%

Actual Distribution per Common Unit

(c)

0.30

$           

0.23

$           

0.23

$           

0.58

$           

0.35

$           

17%

Record Date

Apr 28, 2014

Payable Date

May 5, 2014

(a)

Blackstone

15

GAAP Statement of Operations

% Change

% Change

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

1Q'13

1Q'14

vs. 1Q'13

1Q'13 LTM

1Q'14 LTM

vs. 1Q'13 LTM

Revenues

Management and Advisory Fees, Net

482,133

$        

573,160

$        

19%

2,041,150

$     

2,285,012

$     

12%

Performance Fees

Realized Carried Interest

294,170

333,623

13%

608,032

983,411

62%

Realized Incentive Fees

23,741

43,794

84%

320,263

484,891

51%

Unrealized Carried Interest

177,347

330,394

86%

872,741

2,311,057

165%

Unrealized Incentive Fees

105,798

64,233

(39)%

8,302

(64,314)

n/m

Total Performance Fees

601,056

772,044

28%

1,809,338

3,715,045

105%

Investment Income

Realized

42,353

153,026

261%

119,981

299,317

149%

Unrealized

106,230

13,500

(87)%

289,635

518,934

79%

Total Investment Income

148,583

166,526

12%

409,616

818,251

100%

Interest and Dividend Revenue

12,557

14,069

12%

45,275

66,023

46%

Other

2,144

869

(59)%

8,499

9,032

6%

Total Revenues

1,246,473

1,526,668

22%

4,313,878

6,893,363

60%

Expenses

Compensation and Benefits

Compensation

451,430

485,351

8%

2,047,873

1,878,406

(8)%

Performance Fee Compensation

Realized Carried Interest

89,437

149,398

67%

177,932

317,162

78%

Realized Incentive Fees

10,508

23,635

125%

146,298

214,042

46%

Unrealized Carried Interest

95,472

40,730

(57)%

332,528

911,975

174%

Unrealized Incentive Fees

44,478

23,531

(47)%

(12,829)

(32,598)

(154)%

Total Compensation and Benefits

691,325

722,645

5%

2,691,802

3,288,987

22%

General, Administrative and Other

109,306

135,554

24%

515,278

500,690

(3)%

Interest Expense

27,062

24,667

(9)%

85,414

105,578

24%

Fund Expenses

7,408

4,985

(33)%

19,495

24,235

24%

Total Expenses

835,101

887,851

6%

3,311,989

3,919,490

18%

Other Income

Reversal of Tax Receivable Agreement Liability

-

-

n/m

-

20,469

n/m

Net Gains from Fund Investment Activities

67,210

70,155

4%

35,213

384,609

992%

Income Before Provision for Taxes

478,582

$        

708,972

$        

48%

1,037,102

$     

3,378,951

$     

226%

Provision for Taxes

50,993

54,097

6%

197,263

258,746

31%

Net Income

427,589

$        

654,875

$        

53%

839,839

$        

3,120,205

$     

272%

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

62,316

45,792

(27)%

111,655

166,791

49%

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

(9,452)

43,961

n/m

(107,136)

251,970

n/m

Net Income Attributable to Non-Controlling Interests in Blackstone Holdings

207,090

299,505

45%

507,412

1,432,260

182%

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

167,635

$        

265,617

$        

58%

327,908

$        

1,269,184

$     

287%

Net Income per Common Unit, Basic and Diluted

0.29

$               

0.44

$               

52%

n/a

n/a

n/a

Blackstone

16

Additional Disclosures

How did BCP V impact earnings in the first quarter?

•

BCP

V

in

total

(“main

fund”

and

BCP

V-AC)

appreciated

5.6%

during

the

quarter

and

accrued

$49

million

of

Performance Fees.

•

Currently,

the

BCP

V

“main

fund”

needs

a

3%

increase

in

Total

Enterprise

Value

(“TEV”),

or

$916

million,

to

begin the “catch-up”

phase of the 80%/20% accrual of carry. 

•

BCP V-AC remains above hurdle and continues to accrue Performance Fees.

Were there significant events that impacted Fee Revenues during the first quarter?

•

Pursuant to its limited partnership agreement, on February 9, 2014, BREP V’s partnership term expired and is

no longer earning Base Management Fees.

•

BREP V has $3.4 billion of Fee-Earning AUM and the expiration of its term resulted in an $8 million decline in

Base Management Fees from the prior quarter.

Were there any one-time Operating Expenses in the first quarter? 

•

During the quarter, the Credit segment recorded a non-recurring Placement Fee expense of $11 million.

Excluding the impact of this one-time expense, Total Segment Operating Expenses are up 13% year-over-year.

Since

BREP

V

is

eligible

for

Performance

Fees,

it

is

included

in

Fee-Earning

AUM.

Currently,

BREP

V

has

$623

million

of

net

accrued

Performance

Fees

and

a

1.9x

MOIC/10%

Net

IRR.

Appendix

Blackstone

18

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)

1Q'13

2Q'13

3Q'13

4Q'13

1Q'14

1Q'13 LTM

1Q'14 LTM

Revenues

Management and Advisory Fees, Net

Base Management Fees

408,747

$         

425,674

$          

437,294

$          

469,092

$          

476,878

$          

1,604,644

$     

1,808,938

$     

Advisory Fees

67,020

120,734

83,602

139,158

69,963

348,591

413,457

Transaction and Other Fees, Net

(a)

37,974

66,464

42,806

59,733

59,910

226,622

228,913

Management Fee Offsets

(b)

(9,662)

(10,535)

(8,271)

(43,752)

(16,644)

(37,565)

(79,202)

Total Management and Advisory Fees, Net

504,079

602,337

555,431

624,231

590,107

2,142,292

2,372,106

Performance Fees

Realized Carried Interest

294,170

183,288

182,654

283,846

333,623

608,032

983,411

Realized Incentive Fees

24,727

74,867

31,238

343,501

53,837

320,912

503,443

Unrealized Carried Interest

177,347

456,706

290,052

1,233,905

330,288

872,741

2,310,951

Unrealized Incentive Fees

107,755

4,358

40,992

(173,033)

61,266

10,323

(66,417)

Total Performance Fees

603,999

719,219

544,936

1,688,219

779,014

1,812,008

3,731,388

Investment Income

Realized

38,110

54,586

11,492

66,283

111,917

110,016

244,278

Unrealized

96,661

42,533

87,680

290,460

4,550

227,593

425,223

Total Investment Income

134,771

97,119

99,172

356,743

116,467

337,609

669,501

Interest Income and Dividend Revenue

14,661

15,342

21,539

19,394

22,362

51,946

78,637

Other

2,143

(1,164)

4,708

4,621

869

8,499

9,034

Total Revenues

1,259,653

1,432,853

1,225,786

2,693,208

1,508,819

4,352,354

6,860,666

Expenses

Compensation

266,977

306,477

279,498

262,688

306,545

1,042,981

1,155,208

Performance Fee Compensation

Realized Carried Interest

89,437

75,910

60,369

31,485

149,398

177,932

317,162

Realized Incentive Fees

10,508

35,014

14,599

140,794

23,635

146,298

214,042

Unrealized Carried Interest

95,472

172,824

82,341

616,080

40,690

332,528

911,935

Unrealized Incentive Fees

44,478

3,084

11,084

(70,297)

23,531

(12,829)

(32,598)

Total Compensation and Benefits

506,872

593,309

447,891

980,750

543,799

1,686,910

2,565,749

Other Operating Expenses

114,444

120,152

122,872

129,171

139,774

486,368

511,969

Total Expenses

621,316

713,461

570,763

1,109,921

683,573

2,173,278

3,077,718

Economic Income

638,337

$         

719,392

$          

655,023

$          

1,583,287

$       

825,246

$          

2,179,076

$     

3,782,948

$     

Economic Net Income

628,306

$         

703,240

$          

640,231

$          

1,542,098

$       

813,934

$          

2,132,388

$     

3,699,503

$     

Fee Related Earnings

137,733

$         

168,434

$          

178,596

$          

260,706

$          

174,829

$          

691,118

$         

782,565

$         

Distributable Earnings

390,912

$         

338,485

$          

312,673

$          

820,629

$          

485,112

$          

1,344,910

$     

1,956,899

$     

Total Assets Under Management

218,210,672

$ 

229,571,741

$   

248,064,888

$   

265,757,630

$   

271,745,583

$   

218,210,672

$ 

271,745,583

$ 

Fee-Earning Assets Under Management

170,949,347

$ 

176,338,947

$   

188,649,817

$   

197,981,739

$   

203,599,604

$   

170,949,347

$ 

203,599,604

$ 

Weighted Average Fee-Earning AUM

169,551,186

$ 

173,706,678

$   

185,628,676

$   

196,309,547

$   

200,246,002

$   

164,747,339

$ 

188,952,701

$ 

LP Capital Invested

1,784,463

$     

3,634,404

$       

3,378,067

$       

5,382,770

$       

4,468,527

$       

12,964,001

$   

16,863,768

$   

Total Capital Invested

1,840,474

$     

3,757,591

$       

3,536,365

$       

6,115,856

$       

4,807,663

$       

14,320,938

$   

18,217,475

$   

Blackstone

19

Private Equity

(a)

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

(b)

Primarily placement fees.

(Dollars in Thousands)

1Q'13

2Q'13

3Q'13

4Q'13

1Q'14

1Q'13 LTM

1Q'14 LTM

Revenues

Management Fees, Net

Base Management Fees

86,246

$        

86,621

$        

95,281

$        

99,998

$        

98,584

$        

349,051

$        

380,484

$        

Transaction and Other Fees, Net

(a)

24,453

38,348

16,052

18,135

42,847

106,436

115,382

Management Fee Offsets

(b)

(480)

(1,950)

(2,080)

(1,173)

(1,713)

(2,624)

(6,916)

Total Management Fees, Net

110,219

123,019

109,253

116,960

139,718

452,863

488,950

Performance Fees

Realized Carried Interest

139,892

3,899

85,121

101,081

119,805

245,756

309,906

Unrealized Carried Interest

(83,954)

182,926

(86,300)

385,560

167,065

30,376

649,251

Total Performance Fees

55,938

186,825

(1,179)

486,641

286,870

276,132

959,157

Investment Income (Loss)

Realized

24,162

21,586

11,495

30,783

60,535

36,074

124,399

Unrealized

31,711

21,088

23,621

85,329

(9,033)

100,579

121,005

Total Investment Income

55,873

42,674

35,116

116,112

51,502

136,653

245,404

Interest Income and Dividend Revenue

2,984

3,251

5,231

4,136

5,228

14,120

17,846

Other

424

366

1,521

1,948

864

3,056

4,699

Total Revenues

225,438

356,135

149,942

725,797

484,182

882,824

1,716,056

Expenses

Compensation

60,203

63,747

55,800

56,370

73,307

230,365

249,224

Performance Fee Compensation

Realized Carried Interest

16,246

877

19,824

2,006

85,771

19,605

108,478

Unrealized Carried Interest

16,619

88,111

(36,198)

274,201

(27,148)

76,226

298,966

Total Compensation and Benefits

93,068

152,735

39,426

332,577

131,930

326,196

656,668

Other Operating Expenses

29,168

32,178

30,024

32,767

33,006

131,132

127,975

Total Expenses

122,236

184,913

69,450

365,344

164,936

457,328

784,643

Economic Income

103,202

$      

171,222

$      

80,492

$        

360,453

$      

319,246

$      

425,496

$        

931,413

$        

Total Assets Under Management

52,491,811

$

53,287,294

$

62,619,813

$

65,675,031

$

66,142,945

$

52,491,811

$  

66,142,945

$  

Fee-Earning Assets Under Management

36,785,770

$

36,635,224

$

43,645,106

$

42,600,515

$

41,150,728

$

36,785,770

$  

41,150,728

$  

Weighted Average Fee-Earning AUM

36,907,936

$

36,675,636

$

43,886,763

$

43,290,792

$

41,815,672

$

38,028,891

$  

44,164,744

$  

LP Capital Invested

276,987

$      

749,290

$      

524,320

$      

1,017,985

$   

2,029,019

$   

2,857,478

$     

4,320,614

$     

Total Capital Invested

291,011

$      

780,339

$      

548,173

$      

1,330,606

$   

2,271,273

$   

3,688,597

$     

4,930,391

$     

Blackstone

20

Real Estate

(a)

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

(b)

Primarily placement fees.

(Dollars in Thousands)

1Q'13

2Q'13

3Q'13

4Q'13

1Q'14

1Q'13 LTM

1Q'14 LTM

Revenues

Management Fees, Net

Base Management Fees

138,346

$      

137,000

$      

136,721

$      

153,115

$      

159,336

$      

541,866

$      

586,172

$      

Transaction and Other Fees, Net

(a)

9,140

19,013

19,205

32,317

13,564

80,409

84,099

Management Fee Offsets

(b)

(7,286)

(6,312)

(2,385)

(6,838)

(9,224)

(27,268)

(24,759)

Total Management Fees, Net

140,200

149,701

153,541

178,594

163,676

595,007

645,512

Performance Fees

Realized Carried Interest

68,773

143,481

93,878

180,641

194,658

225,270

612,658

Realized Incentive Fees

3,092

31,102

3,737

7,931

(26)

28,749

42,744

Unrealized Carried Interest

280,076

259,972

340,406

771,246

140,237

742,340

1,511,861

Unrealized Incentive Fees

2,400

(32,279)

2,481

(1,355)

2,737

(5,633)

(28,416)

Total Performance Fees

354,341

402,276

440,502

958,463

337,606

990,726

2,138,847

Investment Income

Realized

9,534

18,577

928

23,320

31,357

47,024

74,182

Unrealized

60,303

30,636

57,656

201,606

5,379

125,266

295,277

Total Investment Income

69,837

49,213

58,584

224,926

36,736

172,290

369,459

Interest Income and Dividend Revenue

4,298

4,396

6,060

6,809

6,110

16,194

23,375

Other

(133)

(274)

2,113

1,678

317

1,470

3,834

Total Revenues

568,543

605,312

660,800

1,370,470

544,445

1,775,687

3,181,027

Expenses

Compensation

69,459

73,792

75,346

75,625

80,233

271,692

304,996

Performance Fee Compensation

Realized Carried Interest

25,863

55,005

38,942

29,027

51,833

84,204

174,807

Realized Incentive Fees

1,724

15,733

1,919

4,502

(16)

14,782

22,138

Unrealized Carried Interest

89,057

78,604

99,323

299,853

56,985

200,264

534,765

Unrealized Incentive Fees

1,034

(16,329)

615

(335)

1,382

(3,317)

(14,667)

Total Compensation and Benefits

187,137

206,805

216,145

408,672

190,417

567,625

1,022,039

Other Operating Expenses

28,462

27,617

30,614

29,698

33,107

123,252

121,036

Total Expenses

215,599

234,422

246,759

438,370

223,524

690,877

1,143,075

Economic Income

352,944

$      

370,890

$      

414,041

$      

932,100

$      

320,921

$      

1,084,810

$  

2,037,952

$  

Total Assets Under Management

59,475,215

$

63,919,906

$

68,964,455

$

79,410,788

$

81,333,562

$

59,475,215

$

81,333,562

$

Fee-Earning Assets Under Management

42,140,507

$

43,635,493

$

44,715,985

$

50,792,803

$

53,490,834

$

42,140,507

$

53,490,834

$

Weighted Average Fee-Earning AUM

41,682,661

$

42,523,604

$

44,163,396

$

50,568,609

$

50,954,956

$

39,878,906

$

45,064,145

$

LP Capital Invested

1,175,775

$   

2,213,668

$   

2,365,224

$   

3,986,610

$   

1,692,232

$   

8,250,395

$   

10,257,734

$

Total Capital Invested

1,202,736

$   

2,274,853

$   

2,438,725

$   

4,333,419

$   

1,746,460

$   

8,545,336

$   

10,793,457

$

Blackstone

21

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)

1Q'13

2Q'13

3Q'13

4Q'13

1Q'14

1Q'13 LTM

1Q'14 LTM

Revenues

Management Fees, Net

Base Management Fees

92,791

$        

100,113

$      

103,392

$      

113,025

$      

113,384

$      

357,180

$      

429,914

$      

Transaction and Other Fees, Net

(a)

4

61

295

263

93

100

712

Management Fee Offsets

(b)

(324)

(714)

(1,200)

(1,149)

(1,455)

(1,403)

(4,518)

Total Management Fees, Net

92,471

99,460

102,487

112,139

112,022

355,877

426,108

Performance Fees

Realized Incentive Fees

13,709

13,845

5,320

174,861

39,845

93,844

233,871

Unrealized Incentive Fees

55,501

20,989

29,208

(97,980)

18,085

41,356

(29,698)

Total Performance Fees

69,210

34,834

34,528

76,881

57,930

135,200

204,173

Investment Income (Loss)

Realized

852

13,668

(598)

13,691

16,820

7,619

43,581

Unrealized

3,913

(12,054)

6,439

(7,604)

4,431

4,059

(8,788)

Total Investment Income

4,765

1,614

5,841

6,087

21,251

11,678

34,793

Interest Income and Dividend Revenue

1,216

1,878

2,523

1,988

2,661

2,969

9,050

Other

85

(254)

595

262

122

4,028

725

Total Revenues

167,747

137,532

145,974

197,357

193,986

509,752

674,849

Expenses

Compensation

33,868

36,844

37,611

28,147

40,571

125,366

143,173

Performance Fee Compensation

Realized Incentive Fees

5,022

5,116

1,954

53,701

13,271

26,724

74,042

Unrealized Incentive Fees

19,836

7,666

10,177

(34,823)

6,761

13,859

(10,219)

Total Compensation and Benefits

58,726

49,626

49,742

47,025

60,603

165,949

206,996

Other Operating Expenses

15,159

16,535

19,575

15,697

19,480

59,034

71,287

Total Expenses

73,885

66,161

69,317

62,722

80,083

224,983

278,283

Economic Income

93,862

$        

71,371

$        

76,657

$        

134,635

$      

113,903

$      

284,769

$      

396,566

$      

Total Assets Under Management

48,187,865

$

50,128,028

$

53,162,174

$

55,657,463

$

58,262,659

$

48,187,865

$

58,262,659

$

Fee-Earning Assets Under Management

45,585,454

$

47,572,465

$

50,829,734

$

52,865,837

$

55,571,357

$

45,585,454

$

55,571,357

$

Weighted Average Fee-Earning AUM

44,999,899

$

46,783,727

$

48,933,335

$

51,794,518

$

54,715,882

$

42,972,258

$

50,438,845

$

LP Capital Invested

55,849

$        

118,323

$      

248,422

$      

8,681

$          

167,170

$      

252,029

$      

542,596

$      

Total Capital Invested

59,000

$        

125,000

$      

262,309

$      

8,681

$          

202,674

$      

266,250

$      

598,664

$      

Blackstone

22

Credit

(a)

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

(b)

Primarily placement fees.

(Dollars in Thousands)

1Q'13

2Q'13

3Q'13

4Q'13

1Q'14

1Q'13 LTM

1Q'14 LTM

Revenues

Management Fees, Net

Base Management Fees

91,364

$        

101,940

$      

101,900

$      

102,954

$      

105,574

$      

356,547

$      

412,368

$      

Transaction and Other Fees, Net

(a)

4,374

9,002

7,058

8,152

3,344

39,524

27,556

Management Fee Offsets

(b)

(1,572)

(1,559)

(2,606)

(34,592)

(4,252)

(6,270)

(43,009)

Total Management Fees, Net

94,166

109,383

106,352

76,514

104,666

389,801

396,915

Performance Fees

Realized Carried Interest

85,505

35,908

3,655

2,124

19,160

137,006

60,847

Realized Incentive Fees

7,926

29,920

22,181

160,709

14,018

198,319

226,828

Unrealized Carried Interest

(18,775)

13,808

35,946

77,099

22,986

100,025

149,839

Unrealized Incentive Fees

49,854

15,648

9,303

(73,698)

40,444

(25,400)

(8,303)

Total Performance Fees

124,510

95,284

71,085

166,234

96,608

409,950

429,211

Investment Income (Loss)

Realized

3,328

901

496

(627)

3,071

18,256

3,841

Unrealized

1,093

4,381

(1,042)

9,519

3,079

(3,349)

15,937

Total Investment Income (Loss)

4,421

5,282

(546)

8,892

6,150

14,907

19,778

Interest Income and Dividend Revenue

4,547

4,071

5,288

4,240

5,861

11,452

19,460

Other

1,828

(1,063)

(357)

119

(259)

892

(1,560)

Total Revenues

229,472

212,957

181,822

255,999

213,026

827,002

863,804

Expenses

Compensation

45,521

55,941

53,250

31,802

50,752

190,455

191,745

Performance Fee Compensation

Realized Carried Interest

47,328

20,028

1,603

452

11,794

74,123

33,877

Realized Incentive Fees

3,762

14,165

10,726

82,591

10,380

104,792

117,862

Unrealized Carried Interest

(10,204)

6,109

19,216

42,026

10,853

56,038

78,204

Unrealized Incentive Fees

23,608

11,747

292

(35,139)

15,388

(23,371)

(7,712)

Total Compensation and Benefits

110,015

107,990

85,087

121,732

99,167

402,037

413,976

Other Operating Expenses

20,962

22,961

23,451

29,566

32,839

88,354

108,817

Total Expenses

130,977

130,951

108,538

151,298

132,006

490,391

522,793

Economic Income

98,495

$        

82,006

$        

73,284

$        

104,701

$      

81,020

$        

336,611

$      

341,011

$      

Total Assets Under Management

58,055,781

$

62,236,513

$

63,318,446

$

65,014,348

$

66,006,417

$

58,055,781

$

66,006,417

$

Fee-Earning Assets Under Management

46,437,616

$

48,495,765

$

49,458,992

$

51,722,584

$

53,386,685

$

46,437,616

$

53,386,685

$

Weighted Average Fee-Earning AUM

45,960,690

$

47,723,711

$

48,645,182

$

50,655,628

$

52,759,492

$

43,867,284

$

49,284,967

$

LP Capital Invested

275,852

$      

553,123

$      

240,101

$      

369,494

$      

580,106

$      

1,604,099

$   

1,742,824

$   

Total Capital Invested

287,727

$      

577,399

$      

287,158

$      

443,150

$      

587,256

$      

1,820,755

$   

1,894,963

$   

Blackstone

23

Financial Advisory

(Dollars in Thousands)

1Q'13

2Q'13

3Q'13

4Q'13

1Q'14

1Q'13 LTM

1Q'14 LTM

Revenues

Advisory Fees

67,020

$      

120,734

$      

83,602

$        

139,158

$      

69,963

$        

348,591

$    

413,457

$    

Transaction and Other Fees, Net

3

40

196

866

62

153

1,164

Total Advisory and Transaction Fees

67,023

120,774

83,798

140,024

70,025

348,744

414,621

Investment Income (Loss)

Realized

234

(146)

(829)

(884)

134

1,043

(1,725)

Unrealized

(359)

(1,518)

1,006

1,610

694

1,038

1,792

Total Investment Income (Loss)

(125)

(1,664)

177

726

828

2,081

67

Interest Income and Dividend Revenue

1,616

1,746

2,437

2,221

2,502

7,211

8,906

Other

(61)

61

836

614

(175)

(947)

1,336

Total Revenues

68,453

120,917

87,248

143,585

73,180

357,089

424,930

Expenses

Compensation

57,926

76,153

57,491

70,744

61,682

225,103

266,070

Total Compensation and Benefits

57,926

76,153

57,491

70,744

61,682

225,103

266,070

Other Operating Expenses

20,693

20,861

19,208

21,443

21,342

84,596

82,854

Total Expenses

78,619

97,014

76,699

92,187

83,024

309,699

348,924

Economic Income (Loss)

(10,166)

$     

23,903

$        

10,549

$        

51,398

$        

(9,844)

$         

47,390

$      

76,006

$      

Blackstone

24

Net

Accrued

Performance

Fees

and

Carried

Interest

Status

(a)

(a)

Preliminary. Totals may not add due to rounding. TEV = Total Enterprise Value.

(b)

Net

Accrued

Performance

Fees

are

presented

net

of

performance

fee

compensation

and

do

not

include

clawback

amounts,

if

any,

which

are

disclosed

in

the

10-K/Q.

Net

Realized

Performance

Fees

are

included

in

Distributable

Earnings.

When

these

fees

are

received,

the

receivable

is

reduced

without

further

impacting

Distributable

Earnings.

(c)

Per Unit calculations are based on quarter end Distributable Earnings Units Outstanding (see page 30, Unit Rollforward).

(d)

Represents the required increase in equity at the fund level (excluding side-by-side investments) for funds with expired investment periods that

are currently not generating performance fees.

Blackstone had $3.5 billion of accrued performance fees, net of performance fee compensation and distributed

Realized Performance Fees, at the end of the first quarter.

$3.5 billion

Net Accrued Performance Fees at 1Q’14

$3.11 per unit

(c)

Net Accrued Performance Fees at 1Q’14

57% increase

in Net Accrued Performance Fees since 1Q’13

Carried Interest Status (excl. SBS)

(d)

Net Accrued Performance Fees

(b)

Remaining Capital

Gain to Cross (Amount Above) Carry Threshold

Change vs.

Fair

% Change in

% Change in

(Dollars in Millions, Except per Unit Data)

4Q'13

1Q'14

Per Unit

(c)

4Q'13

(Dollars / Euros In Millions)

Value

Cost

Amount

TEV

Equity Value

Private Equity

Private Equity

BCP IV Carried Interest

424

$               

437

$               

0.38

$              

13

$                  

BCP V

16,620

$         

11,336

$         

916

$              

3%

6%

BCP V Carried Interest

26

141

0.12

115

BCP V-AC

1,869

1,103

(441)

(12)%

(24)%

BCP VI Carried Interest

108

173

0.15

65

BEP Carried Interest

65

58

0.05

(7)

Real Estate

Tactical Opportunities Carried Interest

8

10

0.01

2

BREP Int'l II

1,360

€

1,111

€

893

€

21%

66%

SP V Carried Interest

1

1

0.00

-

Total Private Equity

632

820

0.72

188

Real Estate

BREP IV Carried Interest

-

2

0.00

2

BREP V Carried Interest

603

623

0.55

20

BREP VI Carried Interest

1,264

1,284

1.13

20

BREP VII Carried Interest

293

358

0.31

65

BREP Int'l I Carried Interest

2

2

0.00

-

BREP Europe III Carried Interest

155

117

0.10

(38)

BREP Europe IV Carried Interest

-

3

0.00

3

BREP Asia Carried Interest

4

8

0.01

4

BREDS Carried Interest

12

15

0.01

3

BREDS Incentive Fees

4

3

0.00

(1)

Asia Platform Incentive Fees

10

9

0.01

(1)

Total Real Estate

2,347

2,424

2.13

77

Hedge Fund Solutions

Incentive Fees

144

56

0.05

(88)

Total Hedge Fund Solutions

144

56

0.05

(88)

Credit

Carried Interest

173

185

0.16

12

Incentive Fees

104

61

0.05

(43)

Total Credit

277

246

0.22

(31)

Total Blackstone

Carried Interest

3,138

3,417

3.00

279

Incentive Fees

262

129

0.11

(133)

Net Accrued Performance Fees

3,400

$            

3,546

$            

3.11

$              

146

$               

Memo: Net Realized Performance Fees

261

$              

94

$                 

0.08

$             

(167)

$             

Blackstone

25

Investment

Records

as

of

March

31,

2014

(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

-

3,256,819

2.5x

3,256,819

2.5x

32%

32%

BCP III (Aug 1997 / Nov 2002)

3,967,422

-

-

n/a

-

9,184,688

2.3x

9,184,688

2.3x

14%

14%

BCOM (Jun 2000 / Jun 2006)

2,137,330

199,298

247,105

1.2x

-

2,619,040

1.4x

2,866,145

1.3x

7%

6%

BCP IV (Nov 2002 / Dec 2005)

6,773,138

230,235

4,223,212

2.1x

66%

17,166,888

3.1x

21,390,100

2.8x

46%

37%

BCP V (Dec 2005 / Jan 2011)

21,030,451

1,717,290

20,040,553

1.6x

48%

10,836,203

1.5x

30,876,756

1.5x

8%

7%

BCP VI (Jan 2011 / Jan 2017)

15,181,593

9,462,410

6,976,180

1.4x

19%

1,003,118

1.6x

7,979,298

1.4x

24%

17%

BEP (Aug 2011 / Aug 2017)

2,438,077

1,342,695

1,469,729

1.7x

39%

631,832

1.5x

2,101,561

1.6x

46%

49%

Total Corporate Private Equity

53,748,192

$     

12,951,928

$     

32,956,779

$  

1.6x

44%

46,440,326

$

2.1x

79,397,105

$

1.9x

20%

16%

Tactical Opportunities

5,415,867

3,852,911

1,740,034

1.1x

7%

155,722

1.0x

1,895,756

1.1x

12%

13%

Strategic Partners

13,933,728

4,106,594

6,138,402

1.7x

n/a

10,029,354

1.3x

16,167,756

1.5x

n/a

14%

Other Funds and Co-Invest (e)

1,201,226

37,082

651,966

0.8x

60%

20,890

1.0x

672,856

0.8x

n/m

n/m

Total Private Equity

74,299,013

$     

20,948,515

$     

41,487,181

$  

1.5x

42%

56,646,292

$

1.9x

98,133,473

$

1.7x

20%

15%

Real Estate

Dollar

Pre-BREP

140,714

$           

-

$                    

-

$                 

n/a

-

345,190

$      

2.5x

345,190

$      

2.5x

33%

33%

BREP I (Sep 1994 / Oct 1996)

380,708

-

-

n/a

-

1,327,708

2.8x

1,327,708

2.8x

40%

40%

BREP II (Oct 1996 / Mar 1999)

1,198,339

-

-

n/a

-

2,531,613

2.1x

2,531,613

2.1x

19%

19%

BREP III (Apr 1999 / Apr 2003)

1,522,708

-

2,161

0.1x

-

3,325,133

2.4x

3,327,294

2.4x

22%

21%

BREP IV (Apr 2003 / Dec 2005)

2,198,694

-

1,445,458

1.0x

-

3,092,653

2.4x

4,538,111

1.7x

66%

14%

BREP V (Dec 2005 / Feb 2007)

5,538,579

-

7,002,575

1.8x

-

3,928,514

2.0x

10,931,089

1.9x

25%

10%

BREP VI (Feb 2007 / Aug 2011)

11,057,280

656,849

18,762,958

2.1x

62%

3,859,420

2.1x

22,622,378

2.1x

24%

13%

BREP VII (Aug 2011 / Feb 2017)

13,432,352

5,263,381

11,822,984

1.4x

4%

1,682,063

1.6x

13,505,047

1.4x

39%

28%

Total Global Real Estate Funds

35,469,374

$     

5,920,230

$       

39,036,136

$  

1.7x

31%

20,092,294

$

2.2x

59,128,430

$

1.9x

27%

17%

Euro

BREP Int'l (Jan 2001 / Sep 2005)

824,172

€

-

€

120,660

€

1.5x

-

1,238,480

€

2.2x

1,359,140

€

2.1x

25%

23%

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

1,627,954

80,124

1,503,865

1.3x

45%

203,180

1.2x

1,707,045

1.2x

3%

2%

BREP Europe III (Jun 2008 / Dec 2013)

3,203,890

622,720

3,350,843

1.4x

13%

898,961

2.4x

4,249,804

1.5x

33%

17%

BREP Europe IV (Sep 2013 / Mar 2019)

5,124,904

4,453,354

776,510

1.1x

-

26,640

1.1x

803,150

1.1x

47%

14%

Total Euro Real Estate Funds

10,780,920

€

5,156,198

€

5,751,878

€

1.3x

19%

2,367,261

€

2.1x

8,119,139

€

1.5x

25%

11%

BREP Co-Investment (f)

5,160,385

$       

-

$                    

8,794,315

$    

1.9x

81%

711,502

$      

1.5x

9,505,817

$   

1.8x

13%

17%

BREP Asia (Jun 2013 / Dec 2017)

3,493,216

2,919,108

732,390

1.2x

-

4,400

1.0x

736,790

1.2x

n/a

31%

Total Real Estate

58,198,272

$     

15,944,065

$     

56,264,684

$  

1.7x

37%

23,915,191

$

2.1x

80,179,875

$

1.8x

26%

16%

Core Plus

1,194,180

$       

233,500

$           

960,680

$       

n/a

-

-

$               

n/a

960,680

$      

n/a

n/a

n/a

BREDS (g)

6,477,635

$       

2,677,962

$       

3,085,249

$    

n/a

-

2,575,404

$   

n/a

5,660,653

$   

n/a

15%

12%

Credit (h)

Mezzanine I

2,000,000

$       

139,685

$           

1,341,214

$    

1.5x

-

3,397,867

$   

1.6x

4,739,081

$   

1.6x

n/a

18%

Mezzanine II

4,120,000

2,893,249

1,557,619

1.3x

-

823,420

1.4x

2,381,039

1.3x

n/a

24%

Rescue Lending I

3,253,143

474,384

3,540,076

1.5x

-

2,250,056

1.4x

5,790,132

1.4x

n/a

17%

Rescue Lending II

5,125,000

4,341,551

831,740

1.1x

-

3,795

1.0x

835,535

1.1x

n/a

n/m

Total Credit

14,498,143

$     

7,848,869

$       

7,270,649

$    

1.4x

-

6,475,138

$   

1.5x

13,745,787

$

1.4x

Blackstone

26

Investment

Records

as

of

March

31,

2014

–

Notes

n/m

Not meaningful. 

n/a

Not applicable.

(a)

Preliminary.

(b)

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

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

(c)

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

divided by invested capital.

(d)

Net Internal Rate of Return (“IRR”) represents the annualized inception to March 31, 2014 IRR on total invested capital based

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

BREP Europe IV, BREP Asia and BREDS II are calculated from commencement of their respective investment periods which,

being less than one year, are not annualized.

(e)

Returns for Other Funds and Co-Invest are not meaningful as these funds have no or little realizations.

(f)

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

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

and Carried Interest.

(g)

Excludes Capital Trust drawdown funds.

(h)

The Total Investments MOIC for Mezzanine I, Mezzanine II, Rescue Lending I and Rescue Lending II Funds, excluding recycled

capital during the investment period, was 2.0x, 1.7x, 1.6x and 1.1x, respectively. Funds presented represent the flagship credit

drawdown funds only.

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

Blackstone

27

Reconciliation of GAAP to Non-GAAP Measures

Notes on next page.

(Dollars in Thousands)

Net Income Attributable to The Blackstone Group L.P.

Net Income Attributable to Non-Controlling Interests in Blackstone Holdings

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

Net Income Attributable to Redeemable Non-Controlling

Interests in Consolidated Entities

Net Income

Provision for Taxes

Income Before Provision for Taxes

IPO

and

Acquisition-Related

Charges

(a)

Amortization

of

Intangibles

(b)

(Income)

Associated

with

Non-Controlling

Interests

of

Economic Income

Taxes

(d)

Economic Net Income

Taxes

(d)

Performance

Fee

Adjustment

(e)

Investment

(Income)

Adjustment

(f)

Performance

Fee

Compensation

and

Benefits

Adjustment

(h)

Fee Related Earnings

Realized

Performance

Fees

(i)

Realized

Investment

Income

(j)

Adjustment

Related

to

Realized

Investment

(Income)

Loss -

Blackstone's

Treasury

Cash

Management

Strategies

(k)

Taxes

and

Related

Payables

Including

Payable

Under

Tax

Receivable

Agreement

(l)

Equity-Based

Compensation

(m)

Distributable Earnings

Interest Expense

Taxes

and

Related

Payables

Including

Payable

Under

Tax

Receivable

Agreement

(l)

Depreciation and Amortization

Adjusted EBITDA

Consolidated

Entities

(c)

Investment

Income

(Loss)

-

Blackstone’s

Treasury

Cash

Management

Strategies

(g)

1Q'13

2Q'13

3Q'13

4Q'13

1Q'14

1Q'13 LTM

1Q'14 LTM

167,635

$    

211,148

$    

171,164

$    

621,255

$    

265,617

$    

327,908

$    

1,269,184

$

207,090

249,134

208,332

675,289

299,505

507,412

1,432,260

(9,452)

27,944

30,231

149,834

43,961

(107,136)

251,970

62,316

22,366

51,188

47,445

45,792

111,655

166,791

427,589

$    

510,592

$    

460,915

$    

1,493,823

$

654,875

$    

839,839

$    

3,120,205

$

50,993

56,082

57,477

91,090

54,097

197,263

258,746

478,582

$    

566,674

$    

518,392

$    

1,584,913

$

708,972

$    

1,037,102

$

3,378,951

$

186,962

178,706

190,525

166,514

177,024

1,021,576

712,769

25,657

24,322

27,525

29,139

29,003

124,917

109,989

(52,864)

(50,310)

(81,419)

(197,279)

(89,753)

(4,519)

(418,761)

638,337

$    

719,392

$    

655,023

$    

1,583,287

$

825,246

$    

2,179,076

$

3,782,948

$

(10,031)

(16,152)

(14,792)

(41,189)

(11,312)

(46,688)

(83,445)

628,306

$    

703,240

$    

640,231

$    

1,542,098

$

813,934

$    

2,132,388

$

3,699,503

$

10,031

16,152

14,792

41,189

11,312

46,688

83,445

(603,999)

(719,219)

(544,936)

(1,688,219)

(779,014)

(1,812,008)

(3,731,388)

(134,771)

(97,119)

(99,172)

(356,743)

(116,467)

(337,609)

(669,501)

(1,729)

(21,452)

(712)

4,319

7,810

17,730

(10,035)

239,895

286,832

168,393

718,062

237,254

643,929

1,410,541

137,733

$    

168,434

$    

178,596

$    

260,706

$    

174,829

$    

691,118

$    

782,565

$    

218,952

147,231

138,924

455,068

214,427

604,714

955,650

38,110

54,586

11,492

66,283

111,917

110,016

244,278

(3,820)

1,469

6,672

8,873

(1,344)

(19,795)

15,670

(12,148)

(44,220)

(31,756)

(68,610)

(31,054)

(135,422)

(175,640)

12,085

10,985

8,745

98,309

16,337

94,279

134,376

390,912

$    

338,485

$    

312,673

$    

820,629

$    

485,112

$    

1,344,910

$

1,956,899

$

26,069

25,960

25,268

26,607

30,398

81,667

108,233

12,148

44,220

31,756

68,610

31,054

135,422

175,640

8,643

9,116

8,956

8,726

10,373

40,610

37,171

437,772

$    

417,781

$    

378,653

$    

924,572

$    

556,937

$    

1,602,609

$

2,277,943

$

Blackstone

28

Reconciliation

of

GAAP

to

Non-GAAP

Measures

–

Notes

Note:

See page 31, Definitions and Distribution Policy.

(a)

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

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

programs outside of annual deferred compensation and other corporate actions.

(b)

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

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

(c)

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

Controlling Interests of Consolidated Entities and includes the amount of Management Fee Revenues associated with Consolidated

CLO Entities.

(d)

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

(e)

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

(f)

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

(g)

This adjustment represents the realized and unrealized gain on Blackstone’s Treasury Cash Management Strategies which are a

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

(h)

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

to Performance Fees.

(i)

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

sharing plans related thereto.

(j)

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

Realized.

(k)

Represents the elimination of Realized Investment Income (Loss) attributable to Blackstone’s Treasury Cash Management

Strategies which is a component of both Fee Related Earnings and

Realized Investment Income (Loss).

(l)

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

calculated on Income (Loss) Before Provision (Benefit) for Taxes

and the Payable Under Tax Receivable Agreement.

(m)

Represents equity-based award expense included in EI.

Blackstone

29

Walkdown

of

Financial

Metrics

–

Calculation

of

Certain

Non-GAAP

Financial

Metric

Components

(Dollars in Thousands)

1Q'14

1Q'14 LTM

Interest Income and Dividend Revenue

22,362

$       

78,637

$       

Other Revenue

869

9,034

7,810

(10,035)

Interest Income and Other Revenue

31,041

$       

77,636

$       

Realized Incentive Fees

53,837

503,443

Less: Realized Incentive Fee Compensation

(23,635)

(214,042)

Net Realized Incentive Fees

30,202

$       

289,401

$    

Realized Carried Interest

333,623

983,411

Less: Realized Carried Interest Compensation

(149,398)

(317,162)

Net Realized Carried Interest

184,225

$    

666,249

$    

Realized Investment Income

111,917

244,278

(1,344)

15,670

Net Realized Investment Income

110,573

$    

259,948

$    

16,337

$       

134,376

$    

(31,054)

$     

(175,640)

$   

Unrealized Incentive Fees

61,266

(66,417)

Less: Unrealized Incentive Fee Compensation

(23,531)

32,598

Net Unrealized Incentive Fees

37,735

$       

(33,819)

$     

Unrealized Carried Interest

330,288

2,310,951

Less: Unrealized Carried Interest Compensation

(40,690)

(911,935)

Net Unrealized Carried Interest

289,598

$    

1,399,016

$ 

Unrealized Investment Income

4,550

425,223

(7,810)

10,035

1,344

(15,670)

Net Unrealized Investment Income

(1,916)

$        

419,588

$    

Related Payables

(c)

19,742

$       

92,195

$       

Investment

Income

(Loss)

-

Blackstone's

Treasury

Cash

Management

Strategies

(a)

Adjustment

Related

to

Realized

Investment

Income

(Loss)

-

Blackstone's

Treasury

Cash

Management

Strategies

(a)

Less:

Investment

Income

(Loss)

-

Blackstone's

Treasury

Cash

Management

Strategies

(a)

Less:

Adjustment

Related

to

Realized

Investment

Income

(Loss)

-

Blackstone's

Treasury

Cash

Management

Strategies

(a)

Equity-Based Compensation

(b)

Taxes and Related Payable

(a)

(a)

See pages 27-28, Reconciliation of GAAP to Non-GAAP Measures for this adjustment.

(b)

Represents equity-based award expense included in Economic Income.

(c)

Represents tax-related payables including the Payable Under Tax Receivable Agreement, which is a component of Taxes and Related Payables.

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

Blackstone

30

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 Tax Receivable Agreement and certain other tax-related payables.

(b)

Excludes units which are not entitled to distributions.

1Q'13

2Q'13

3Q'13

4Q'13

1Q'14

Total

GAAP

Weighted-Average

Common

Units

Outstanding

-

Basic

582,322,183

583,843,094

589,643,844

592,129,570

601,527,299

Adjustments:

Weighted-Average Unvested Deferred Restricted Common Units

3,377,716

2,919,959

3,276,951

4,536,624

4,141,865

Total

GAAP

Weighted-Average

Common

Units

Outstanding

-

Diluted

585,699,899

586,763,053

592,920,795

596,666,194

605,669,164

Adjustments:

Weighted-Average Blackstone Holdings Partnership Units

557,463,170

555,224,714

551,916,623

549,773,866

549,327,240

Weighted-Average Economic Net Income Adjusted Units

1,143,163,069

1,141,987,767

1,144,837,418

1,146,440,060

1,154,996,404

Economic Net Income Adjusted Units, End of Period

1,143,893,134

1,142,576,555

1,145,675,305

1,150,867,868

1,154,889,678

Total Common Units Outstanding

(a)

573,275,746

576,466,264

584,860,157

588,165,949

599,372,943

Adjustments:

Blackstone Holdings Partnership Units

554,603,708

550,902,208

550,274,903

547,021,277

541,129,472

Distributable Earnings Units Outstanding

(b)

1,127,879,454

1,127,368,472

1,135,135,060

1,135,187,226

1,140,502,415

Blackstone

31

Definitions and Distribution Policy

•

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

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

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

actions, including acquisitions. Transaction-related charges include equity-based compensation charges, the amortization of intangible assets and contingent

consideration associated with acquisitions. EI presents revenues and expenses on a basis that deconsolidates the investment funds Blackstone manages.

•

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

Income (Loss) Before Provision for Taxes.

•

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

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

other investments except for such gains (losses) from Blackstone’s Treasury cash management strategies. Blackstone uses FRE as a measure to assess whether

recurring revenue from its businesses is sufficient to adequately cover all of its operating expenses and generate profits. FRE equals contractual fee revenues,

investment income from Blackstone’s Treasury cash management strategies and interest income, less (a) compensation expenses (which includes

amortization of non-IPO and non-acquisition-related equity-based awards, but excludes amortization of IPO and acquisition-related equity-based awards,

carried interest and incentive fee compensation), and (b) other operating expenses.

•

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

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

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

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

Realized Performance Fees, and (e) Realized Investment Income (Loss); less (a) Compensation, excluding the expense of equity-based awards, (b) Realized

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

DE is reconciled to Blackstone’s Consolidated Statement of Operations.

•

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

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

amortization, and the taxes and related payables including the Payable Under Tax Receivable Agreement.

•

Net Cash Available for Distribution to Common Unitholders is The Blackstone Group L.P.’s share of Distributable Earnings, less realized investment gains and

returns of capital from investments and acquisitions, in excess of amounts determined by Blackstone’s general partner to be necessary or appropriate to

provide for the conduct of its business, to make appropriate investments in its business and funds, to comply with applicable law, any of its debt instruments

or other agreements, or to provide for future cash requirements such as tax-related payments, clawback obligations and distributions to unitholders for any

ensuing quarter.

Distribution Policy. Blackstone’s intention is to distribute to common unitholders each quarter substantially all of its Net Cash Available for Distribution to

Common Unitholders, subject to a minimum base quarterly distribution of $0.12 per unit. In circumstances in which the Net Cash Available for Distribution to

Common Unitholders for a quarter falls short of the amount necessary to support such per unit distribution, Blackstone intends to correspondingly reduce

subsequent quarterly distributions below the amounts supported by the Net Cash Available for Distribution to Common Unitholders by the amount of the

shortfall, but not below $0.12 per unit. All of the foregoing is subject to the qualification that the declaration and payment of any distributions are at the sole

discretion of Blackstone’s general partner and may change at any time, including, without limitation, to reduce the quarterly distribution payable to common

unitholders to less than $0.12 per unit or even to eliminate such distributions entirely.

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

32

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, 2013, as such factors may be updated from time to time in its periodic filings with the Securities and Exchange

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

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

Blackstone undertakes no obligation to publicly update or review

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

information, future developments or otherwise.

This presentation does not constitute an offer of any Blackstone

Fund.