Blackstone (BX) 8-K Blackstone Reports Full Year and Fourth Quarter Results

Blackstone’s Full Year and Fourth Quarter

2014 Earnings

January 29, 2015

Exhibit 99.2

Blackstone’s Full Year and Fourth Quarter 2014 Highlights

Blackstone reported record full year earnings, assets, and distributions in 2014.

Economic

Net

Income

(“ENI”)

was

$4.3

billion

($3.76/unit)

for

the

year,

up

24%

from

last

year,

as

Blackstone’s

funds

appreciated

$24.5

billion,

outperforming

the

relevant

market

indices

by

a

wide

margin.

Distributable

Earnings

(“DE”)

continued

to

accelerate

to

a

record

$3.1

billion

($2.51/unit),

up

64%

year-over-year on $44.6 billion of realizations from IPOs, secondary sales, and distributions for 2014.

Fund activity generated $2.7 billion of Realized Performance Fees during the year, up 91% from

$1.4

billion in the prior year.

GAAP Net Income was $1.6 billion for the year, net of certain non-cash IPO and transaction related expenses

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

Total AUM was a record $290 billion, up 9% year-over-year, despite returning $56.8 billion of capital to

investors during the year.

Capital raised totaled $19.1 billion for the fourth quarter and $56.9 billion for the year.

Increased

investment

activity

led

to

$8.1

billion

of

capital

invested

during

the

fourth

quarter

of

2014,

bringing

the

full

year

total

to

$26.4

billion,

up

73%.

Of the $26.4 billion, 47% was deployed outside of North America and 48% was deployed in products

launched since the IPO, reflecting the firm’s unique geographic and product diversification.

Blackstone declared a fourth quarter distribution of $0.78 per common unit payable on

February

17,

2015,

bringing

the

full

year

distribution

to

$2.12

per

common

unit,

up

58%

from

last

year.

Blackstone

1

Blackstone’s Full Year and Fourth Quarter 2014 Earnings

(a)

4Q’13 includes the impact of the Hilton IPO.

Blackstone

2

% Change

% Change

(Dollars in Thousands, Except per Unit Data)

4Q'13

4Q'14

vs. 4Q'13

FY'13

FY'14

vs. FY'13

Fee Revenues

648,246

$       

715,851

$       

10%

2,367,322

$    

2,673,789

$    

13%

Performance Fees

1,688,219

1,323,338

(22)%

3,556,373

4,391,877

23%

Investment Income

(a)

356,743

98,424

(72)%

687,805

471,628

(31)%

Total Revenues

2,693,208

$   

2,137,613

$   

(21)%

6,611,500

$   

7,537,294

$   

14%

Total Expenses

1,109,921

607,231

(45)%

3,015,461

2,992,796

(1)%

Taxes

41,189

83,649

103%

82,164

199,512

143%

Economic

Net

Income

(“ENI”)

1,542,098

$   

1,446,733

$   

(6)%

3,513,875

$   

4,344,986

$   

24%

ENI per Unit

1.35

$             

1.25

$             

(7)%

3.07

$             

3.76

$             

22%

GAAP Net Income

621,255

$       

551,451

$       

(11)%

1,171,202

$    

1,584,589

$    

35%

Fee

Related

Earnings

(“FRE”)

260,706

$       

374,210

$       

44%

745,469

$       

967,438

$       

30%

Distributable

Earnings

(“DE”)

820,629

$       

1,129,780

$   

38%

1,862,699

$   

3,057,833

$   

64%

DE per Common Unit

0.68

$             

0.92

$             

35%

1.56

$             

2.51

$             

61%

Total Assets Under Management

265,757,630

290,381,069

9%

265,757,630

290,381,069

9%

Fee-Earning Assets Under Management

197,981,739

216,691,799

9%

197,981,739

216,691,799

9%

Blackstone

3

44%

CAGR

Sustained Outperformance and Strong Forward Indicators

Total Revenues and Economic Income

(Dollars in Billions)

Distributable Earnings

(Dollars in Billions)

Performance Fee Receivable

(Dollars in Billions)

16%

CAGR

60%

Margin

90%

CAGR

Net Realization Activity

Fee Related Earnings

Total Revenues

Economic Income

$1.9

$1.1

$0.8

$0.8

$0.5

Totals may not add due to rounding. CAGR = Compound Annual Growth Rate.

$3.1

$0.7

$1.6

$1.6

$2.0

$3.6

$4.5

$1.8

$3.1

$3.3

$4.1

$6.6

$7.5

2009

2010

2011

2012

2013

2014

$0.5

$0.5

$0.5

$0.7

$0.7

$1.0

$0.3

$0.2

$0.4

$1.1

$2.1

2009

2010

2011

2012

2013

2014

Net Realized Performance Fees

(Dollars in Billions)

$0.1

$0.2

$0.1

$0.4

$1.0

$1.8

2009

2010

2011

2012

2013

2014

2009

2010

2011

2012

2013

2014

$0.4

$0.7

$1.5

$2.2

$3.4

$4.6

Walkdown of Financial Metrics

(Dollars in Thousands, Except per Unit Data)

4Q'14

FY'14

Results

Per Unit

Results

Per Unit

Base Management Fees

508,588

$         

1,987,529

$     

Advisory Fees

151,837

420,845

Transaction and Other Fees, Net

46,446

246,437

Management Fee Offsets

(27,146)

(86,771)

Interest Income and Other Revenue

31,467

106,691

Compensation

(199,525)

(1,153,511)

Other Operating Expenses

(137,457)

(553,782)

Fee Related Earnings

374,210

$         

0.33

$               

967,438

$         

0.85

$               

Net Realized Incentive Fees

82,851

151,646

Net Realized Carried Interest

616,621

1,634,953

Net Realized Investment Income

153,862

536,358

Taxes and Related Payables

(108,456)

(280,788)

Equity-Based Compensation

10,692

48,226

Distributable Earnings

1,129,780

$     

0.92

$               

3,057,833

$     

2.51

$               

Net Unrealized Incentive Fees

(82,439)

(10,149)

Net Unrealized Carried Interest

436,056

1,329,924

Net Unrealized Investment Loss

(50,779)

(65,672)

Add Back: Related Payables

24,807

81,276

Less: Equity-Based Compensation

(10,692)

(48,226)

Economic Net Income

1,446,733

$     

1.25

$               

4,344,986

$     

3.76

$               

See page 31, Walkdown of Financial Metrics – Calculation of Certain Non-GAAP Financial Metric Components for the calculation of the amounts presented herein that are not the respective

captions on page 20, Total Segments. 4Q’14 Fee Related Earnings per Unit is based on 1,148,024,427 DE Units Outstanding; DE per Unit is based on 611,480,457 Total Common Units

Outstanding; and ENI per Unit is based on 1,159,309,726 and 1,155,729,493 Weighted-Average ENI Adjusted Units for 4Q’14 and FY’14, respectively (see page 32, Unit Rollforward).

Blackstone

4

Blackstone

5

Private Equity

21.6%

FY’14 increase in fund carrying value

$1.1 billion

increase in 2014 Economic Income

$1.7 billion

Net Accrued Performance Fees

Record Total Revenues and Economic Income of $2.7 billion and $1.8 billion for the year, respectively.

% Change

% Change

(Dollars in Thousands)

4Q'13

4Q'14

vs. 4Q'13

FY'13

FY'14

vs. FY'13

Fee Revenues

123,044

$       

123,384

$       

0%

479,312

$      

559,889

$      

17%

Performance Fees

486,641

754,388

55%

728,225

1,977,230

172%

Investment Income

116,112

27,162

(77)%

249,775

178,805

(28)%

Total Revenues

725,797

904,934

25%

1,457,312

2,715,924

86%

Compensation

56,370

51,095

(9)%

236,120

276,447

17%

Performance Fee Compensation

276,207

114,924

(58)%

381,686

476,839

25%

Other Operating Expenses

32,767

36,590

12%

124,137

142,898

15%

Total Expenses

365,344

202,609

(45)%

741,943

896,184

21%

Economic Income

360,453

$      

702,325

$      

95%

715,369

$      

1,819,740

$   

154%

Total AUM

65,675,031

$ 

73,073,252

$ 

11%

65,675,031

$ 

73,073,252

$ 

11%

Fee-Earning AUM

42,600,515

$ 

43,890,167

$ 

3%

42,600,515

$ 

43,890,167

$ 

3%

(a)

4Q’14 and FY’14 Total Capital Invested: Corporate Private Equity $1.1 billion and $6.4 billion, tactical opportunities funds $1.2 billion and $2.6 billion, Strategic Partners $1.3 billion and 

$2.1 billion, respectively.

Raised $6.0 billion of new capital during the quarter: second energy fund, tactical opportunities and the new high net worth

focused total alternative solutions fund.

Appreciation of 4.2% during the quarter and 21.6% during the year on strong operating performance in BCP V (up

27.2%) and continued positive performance of BCP VI (up 21.9%).

BCP V generated $834 million of Performance Fees during the quarter and $1.6 billion for the year.

Realization activity remained strong with $4.2 billion during the quarter and $15.4 billion during the year driven by public

and strategic exits in the corporate private equity funds.

Fourth

quarter

realizations

included

the

sale

of

United

Biscuits

and

the

secondary

sales

of

Pinnacle,

Hilton, Merlin,

Nielsen and Kosmos. 41%, or $14.1 billion, of the Corporate Private Equity portfolio is publicly traded.

Investment

activity

remained

robust,

with

$3.6

billion

total

capital

invested

during

the

quarter

and

$11.2

billion during the

year, up 170% and 280%, respectively

(a)

.

At quarter end, an additional $2.9 billion of capital was committed not yet deployed.

Commenced fundraising for seventh global private equity fund.

Total Private Equity net returns inception-to-date were 16% as of year end.

Blackstone

6

Real Estate

20.9%

FY’14 increase in fund carrying value

$1.5 billion

FY’14 Realized Performance Fees

$2.6 billion

Net Accrued Performance Fees

Total Revenues and Economic Income of $3.0 billion and $1.9 billion for the year, respectively, reflecting strong

operating fundamentals and demand across the global real estate portfolio.

Record realizations of $19.9 billion for the year resulted in Realized Performance Fees nearly tripling to

$1.5

billion.

24%,

or

$15.2

billion,

of

the

opportunistic

Real

Estate

portfolio

is

publicly

traded.

•

$5.8

billion

of

realizations

were

under

contract

at

year

end

or

have

closed

since

year

end.

Investment

activity

continued

at

a

record

pace

with

$3.6

billion

of

total

capital

invested

in

the

quarter

and

$11.5

billion invested in 2014.

•

At quarter end, an additional $2.5 billion of capital was committed not yet deployed.

•

62% of capital deployed in 2014 was invested outside of North America, highlighting the platform’s ability to

opportunistically deploy capital in scale across geographies.

Raised

$9.7

billion

of

new

capital

during

the

year:

fourth

European

fund,

Asia

fund,

debt

strategies,

and

Core+.

BXMT, the commercial mortgage REIT, increased its quarterly dividend to $0.52 per share (7.1% annualized

yield), and concluded 2014 with a market capitalization of $1.7 billion, up from $800 million a year ago.

% Change

% Change

(Dollars in Thousands)

4Q'13

4Q'14

vs. 4Q'13

FY'13

FY'14

vs. FY'13

Fee Revenues

187,081

$      

184,619

$      

(1)%

646,983

$      

718,729

$      

11%

Performance Fees

958,463

603,109

(37)%

2,155,582

2,017,786

(6)%

Investment Income

224,926

77,537

(66)%

402,560

250,165

(38)%

Total Revenues

1,370,470

865,265

(37)%

3,205,125

2,986,680

(7)%

Compensation

75,625

69,916

(8)%

294,222

326,317

11%

Performance Fee Compensation

333,047

177,691

(47)%

724,537

633,399

(13)%

Other Operating Expenses

29,698

40,296

36%

116,391

146,083

26%

Total Expenses

438,370

287,903

(34)%

1,135,150

1,105,799

(3)%

Economic Income

932,100

$      

577,362

$      

(38)%

2,069,975

$   

1,880,881

$   

(9)%

Total AUM

79,410,788

$ 

80,863,187

$ 

2%

79,410,788

$ 

80,863,187

$ 

2%

Fee-Earning AUM

50,792,803

$ 

52,563,068

$ 

3%

50,792,803

$ 

52,563,068

$ 

3%

•

Opportunistic

Real

Estate

funds’

carrying

value

appreciated

6.6%

for

the

quarter

and

20.9%

for

the

year.

•

Inception-to-date net returns were 17% as of year end.

Blackstone

7

Hedge Fund Solutions

7.0%

FY’14 Gross Composite Return

$34.7 billion

Incentive Fee Eligible AUM at FY’14

$12.0 billion

FY’14 Fee-Earning Gross Inflows

Total Revenues and Economic Income of $658 million and $398 million for the year, respectively, driven by a

16%

increase in Fee-Earning AUM from sustained growth in organic net inflows.

Despite more difficult markets globally, the composite gross return was up 0.7% for the quarter and 7.0% for the

year which generated $141 million of Realized Performance Fees.

Fee-Earning gross inflows of $1.9 billion during the quarter and $12.0 billion for the year, driven by significant

investments in customized and commingled strategies.

•

Following

record

second

quarter

and

third

quarter

gross

inflows,

BAAM

continued

to

raise

assets

across

all

business lines during the quarter driven by significant investments in customized and commingled strategies

and individual investor solutions.

•

January 1 subscriptions of $622 million are not yet included in Fee-Earning AUM.

Total AUM for BAAM’s  registered product platform reached $3.2 billion during the year.

The BAAM Principal Solutions (“BPS”) Composite does not include BAAM’s individual investor solutions (i.e., liquid alternatives), long-only equity, long-biased commodities, ventures 

(i.e., seeding and minority interests) and strategic opportunities (i.e., co-investments) platforms except where a BPS fund invests directly into those platforms.  BAAM’s advisory platforms and

liquidating funds are also excluded. On a net of fees basis, the BPS Composite was up 0.5% for the quarter and 5.9% for the full year.

% Change

% Change

(Dollars in Thousands)

4Q'13

4Q'14

vs. 4Q'13

FY'13

FY'14

vs. FY'13

Fee Revenues

114,389

$     

128,950

$     

13%

414,850

$     

491,505

$     

18%

Performance Fees

76,881

11,035

(86)%

215,453

139,650

(35)%

Investment Income

6,087

455

(93)%

18,307

26,682

46%

Total Revenues

197,357

140,440

(29)%

648,610

657,837

1%

Compensation

28,147

5,806

(79)%

136,470

131,658

(4)%

Performance Fee Compensation

18,878

(3,114)

n/m

68,649

42,178

(39)%

Other Operating Expenses

15,697

21,068

34%

66,966

86,129

29%

Total Expenses

62,722

23,760

(62)%

272,085

259,965

(4)%

Economic Income

134,635

$     

116,680

$     

(13)%

376,525

$     

397,872

$     

6%

Total AUM

55,657,463

$

63,585,670

$

14%

55,657,463

$

63,585,670

$

14%

Fee-Earning AUM

52,865,837

$

61,417,558

$

16%

52,865,837

$

61,417,558

$

16%

Blackstone

8

Credit

$72.9 billion

4Q’14 Total AUM

Investment Performance

Gross Returns

CLOs

Customized Credit

Strategies

Mezzanine

Funds

Rescue

Lending

Funds

Hedge Fund

Strategies

Fee

Revenues up 16% year-over-year, reflecting strong Fee-Earning AUM

growth however Performance Fees were 44% lower due to challenging market

conditions largely in the fourth quarter.

Certain credit-focused fund performance was impacted by weaker market

conditions for lower rated credits in the fourth quarter.

Launched nine CLOs totaling $5.6 billion in Fee-Earning AUM during the year,

including three during the fourth quarter which totaled $1.7 billion.

Raised capital for a new energy fund, additional credit alpha funds and a

European senior debt fund during the quarter, totaling $2.0 billion.

Realized

proceeds

in

drawdown

funds

of

$349

million

in

the

fourth

quarter

and

$3.1

billion

during

the

year

while

achieving

record

total

AUM

of

$72.9

billion.

Fee-Earning AUM up 14% year-over-year to $58.8 billion due to robust net

inflows throughout the year.

% Change

% Change

(Dollars in Thousands)

4Q'13

4Q'14

vs. 4Q'13

FY'13

FY'14

vs. FY'13

Fee Revenues

80,873

$         

123,735

$      

53%

405,088

$      

470,928

$      

16%

Performance Fees

166,234

(45,194)

n/m

457,113

257,211

(44)%

Investment Income (Loss)

8,892

(6,417)

n/m

18,049

14,409

(20)%

Total Revenues

255,999

72,124

(72)%

880,250

742,548

(16)%

Compensation

31,802

31,261

(2)%

186,514

188,200

1%

Performance Fee Compensation

89,930

(19,252)

n/m

238,310

133,087

(44)%

Other Operating Expenses

29,566

14,666

(50)%

96,940

90,524

(7)%

Total Expenses

151,298

26,675

(82)%

521,764

411,811

(21)%

Economic Income

104,701

$      

45,449

$         

(57)%

358,486

$      

330,737

$      

(8)%

Total AUM

65,014,348

$ 

72,858,960

$ 

12%

65,014,348

$ 

72,858,960

$ 

12%

Fee-Earning AUM

51,722,584

$ 

58,821,006

$ 

14%

51,722,584

$ 

58,821,006

$ 

14%

4Q'14

FY'14

Mezzanine

   Funds

(0.3)%

25.4%

Rescue

   Lending Funds

(4.5)%

15.4%

Hedge Fund

   Strategies

(4.1)%

0.2%

$8.5

$8.3

$10.8

$25.8

$19.4

Investment Performance represents weighted-average performance of the assets of the respective flagship funds within each strategy as of December 31, 2014. Hedge Fund Strategies net 

returns were (4.1)% for 4Q’14 and (1.5)% for FY’14, Mezzanine Funds net returns were (0.7)% for 4Q’14 and 19.0% for FY’14 and Rescue Lending Funds net returns were (3.9)% for 4Q’14 

and 11.9% for FY’14. Customized Credit Strategies includes business development companies (“BDCs”), closed-end funds, commingled funds, the exchange traded fund and separately 

managed accounts.

Blackstone

9

Financial Advisory

Total Revenues reached a record $434 million during the year, primarily from increased activity in Blackstone

Advisory Partners. 

Blackstone Advisory Partners Fee Revenues increased year-over-year by almost 40% due to improving global

mergers

and

acquisitions

activity

as

well

as

a

greater

number

of

closed

transactions.

While Restructuring Fee Revenues decreased 20% compared to the prior year due to the timing of a number of

deal closings, 2014 was one of the group’s best years in its history.

Park Hill’s placement business revenue was a record and up slightly year-over-year led by a significant increase in

secondary advisory activity, which was partially offset by a decline in real estate revenue.

Blackstone

Capital

Markets

had

another

positive

year

as

it

acted

as

an

underwriter

or

arranger

on

over

25

deals,

including the IPOs for Catalent, La Quinta and Vivint Solar, as well as the debt financings for Gates, Ipreo,

and Cheniere.

% Change

% Change

(Dollars in Thousands)

4Q'13

4Q'14

vs. 4Q'13

FY'13

FY'14

vs. FY'13

Fee Revenues

142,859

$      

155,163

$      

9%

421,089

$      

432,738

$      

3%

Investment Income (Loss)

726

(313)

n/m

(886)

1,567

n/m

Total Revenues

143,585

154,850

8%

420,203

434,305

3%

Compensation

70,744

41,447

(41)%

262,314

230,889

(12)%

Other Operating Expenses

21,443

24,837

16%

82,205

88,148

7%

Total Expenses

92,187

66,284

(28)%

344,519

319,037

(7)%

Economic Income

51,398

$         

88,566

$         

72%

75,684

$         

115,268

$      

52%

On October 10, 2014, Blackstone announced the tax-free spin-off of its financial advisory business (excluding

capital markets) to Blackstone unitholders. The business will combine with PJT Partners to create an independent,

world-class, publicly traded advisory firm.

Blackstone

10

Assets Under Management

Total AUM by Segment

(Dollars in Billions)

$265.8

$290.4

$210.2

Fee-Earning AUM by Segment

(Dollars in Billions)

$198.0

$216.7

$167.9

Private Equity

Real Estate

Hedge Fund Solutions

Credit

Record

Fee-Earning

AUM

of

$216.7

billion

was

up

9%

over

the

last

year

as

$49.9

billion

of

gross

inflows

outpaced

$31.5 billion of realizations and outflows.

•

Fee-Earning AUM drove Base Management Fees up 14% to $2.0 billion in 2014.

Total AUM increased 9% year-over-year to $290.4 billion driven by $56.9 billion from gross inflows and

$24.5

billion from consistently strong market appreciation.

$37.1

$42.6

$43.9

$41.9

$50.8

$52.6

$43.5

$52.9

$61.4

$45.4

$51.7

$58.8

4Q'12

4Q'13

4Q'14

$51.0

$65.7

$73.1

$56.7

$79.4

$80.9

$46.1

$55.7

$63.6

$56.4

$65.0

$72.9

4Q'12

4Q'13

4Q'14

Fee-Earning Assets Under Management

4Q’14 Fee-Earning AUM Rollforward

(Dollars in Millions)

FY’14 Fee-Earning AUM Rollforward

(Dollars in Millions)

Inflows:

Customized solutions ($876 million); commingled products ($290 million); specialized solutions ($228 million); individual

investor solutions ($514 million).

Private

Equity

Real

Estate

Hedge

Fund

Solutions

Credit

Inflows include contributions, capital raised, other increases in available capital, purchases and acquisitions. Outflows represent redemptions, client withdrawals and other decreases 

in available capital. Realizations represent realizations from the disposition of assets. Market Activity represents gains (losses) on portfolio investments and impact of foreign 

exchange rate fluctuations.

Blackstone

11

Inflows:

secondary infrastructure fund capital raised ($100 million).

Realizations:

Hilton, Merlin, Nielsen and Kosmos.

BCP V and BCP IV strategic and public dispositions including sale of United Biscuits and secondary sales of Pinnacle,

Inflows:

Fourth

European

fund

($1.7

billion);

Asia

fund

($0.4

billion);

Core+

($0.3

billion);

BREDS

capital

raised

and/or

invested

($0.6 billion).

Realizations:

BREP

V

($0.2

billion);

BREP

VI

($0.9

billion);

BREP

Europe

III

($0.3

billion);

BREP

Co-Investment

($0.5

billion);

BREDS

($1.1 billion).

Outflows:

Redemptions reflect seasonally higher activity in commingled and

customized products due to investors’

liquidity needs

Inflows:

CLOs ($564 million U.S., $1.1 billion European); BDCs ($1.7 billion); Hedge Fund Strategies ($999 million); Carry Funds

($832

million).

Outflows:

BDCs ($269

million); BTS ($434 million); hedge fund strategies ($358 million).

and certain strategic shifts in their programs.

Tactical opportunities investment vehicles ($723 million); total alternative solutions fund capital raised ($441 million);

Private

Real

Hedge Fund

Equity

Estate

Solutions

3Q'14

43,818

$    

52,308

$    

62,037

$    

56,657

$    

214,820

$  

Inflows

1,175

3,461

1,908

5,586

12,130

Outflows

(3)

(69)

(2,147)

(1,306)

(3,525)

Realizations

(1,225)

(2,737)

(11)

(922)

(4,895)

Net Inflows (Outflows)

(53)

655

(250)

3,358

3,710

Market Activity

125

(400)

(369)

(1,194)

(1,838)

4Q'14

43,890

$    

52,563

$    

61,418

$    

58,821

$    

216,692

$  

QoQ Increase (Decrease)

0%

0%

(1)%

4%

1%

Credit

Total

Private

Real

Hedge Fund

Equity

Estate

Solutions

4Q'13

42,601

$    

50,793

$    

52,866

$    

51,723

$    

197,982

$  

Inflows

6,757

11,536

12,021

19,536

49,850

Outflows

(1,124)

(295)

(5,363)

(3,915)

(10,697)

Realizations

(4,734)

(8,720)

(312)

(7,029)

(20,795)

Net Inflows

899

2,521

6,346

8,592

18,358

Market Activity

390

(750)

2,206

(1,494)

352

4Q'14

43,890

$    

52,563

$    

61,418

$    

58,821

$    

216,692

$  

YoY Increase

3%

3%

16%

14%

9%

Credit

Total

Blackstone

12

Total Assets Under Management

Private

Equity

Real

Estate

Hedge

Fund

Solutions

Credit

Inflows include contributions, capital raised, other increases in available capital, purchases and acquisitions. Outflows represent redemptions, client withdrawals and other

decreases in available capital. Realizations represent realizations from the disposition of assets. Market Activity represents gains (losses) on portfolio investments and

impact of foreign exchange rate fluctuations.

Market Activity:

(up 6.8% or $2.6 billion) and public portfolio appreciation (up 6.0% or $1.1 billion).

Record realization activity of $6.8 billion in the quarter and $20.4 billion for the year.

Market Activity:

Composite gross return was up 0.7% for the quarter and 7.0% for the year.

Realizations:

Inflows:

Realizations:

($359 million), and Tactical Opportunities ($344 million).

Realizations:

fund ($446 million).

4Q’14 Total AUM Rollforward

(Dollars in Millions)

FY’14 Total AUM Rollforward

(Dollars in Millions)

Fundraising for second energy fund ($4.5 billion), tactical opportunities fund ($1.0 billion) and total alternative solutions

6.6% appreciation, driven by sustained strong operating fundamentals in the BREP private portfolio

Returns to CLO investors ($146 million U.S., $510 million European); carry funds ($349 million).

Disposition activity across the segment including BCP V ($2.9 billion), Strategic Partners ($401 million), BCP IV

Private

Real

Hedge Fund

Equity

Estate

Solutions

4Q'13

65,675

$    

79,411

$    

55,657

$    

65,014

$    

265,758

$  

Inflows

13,677

11,080

11,429

20,764

56,950

Outflows

(1,624)

(896)

(5,430)

(4,221)

(12,171)

Realizations

(15,379)

(20,390)

(417)

(8,433)

(44,619)

Net Inflows (Outflows)

(3,326)

(10,206)

5,582

8,110

160

Market Activity

10,724

11,658

2,347

(266)

24,463

4Q'14

73,073

$    

80,863

$    

63,586

$    

72,859

$    

290,381

$  

YoY Increase

11%

2%

14%

12%

9%

Credit

Total

Private

Real

Hedge Fund

Equity

Estate

Solutions

3Q'14

69,890

$    

80,189

$    

64,184

$    

70,152

$    

284,415

$  

Inflows

6,166

4,477

1,957

6,520

19,120

Outflows

(865)

(186)

(2,181)

(1,472)

(4,704)

Realizations

(4,165)

(6,799)

(15)

(1,006)

(11,985)

Net Inflows (Outflows)

1,136

(2,508)

(239)

4,042

2,431

Market Activity

2,047

3,182

(359)

(1,335)

3,535

4Q'14

73,073

$    

80,863

$    

63,586

$    

72,859

$    

290,381

$  

QoQ Increase (Decrease)

5%

1%

(1)%

4%

2%

Credit

Total

Additional Capital Detail

Undrawn capital (“Total Dry Powder”) of $46.1 billion remains stable, despite $30.6 billion of total capital

invested and/or committed over the last year.

Performance Fee Eligible AUM reached $205.1 billion at the end of the quarter, up 13% year-over-year.

Net inflows and strong investment performance drove a 34% year-over-year increase in assets currently earning

Performance Fees to $149.6

billion.

$46.1 billion 4Q’14 Total Dry Powder

$205 billion Performance Fee Eligible AUM

Uninvested

Not Earning

Fees

Currently

Earning Fees

Credit

Hedge

Fund

Solutions

Private

Equity

Real

Estate

$73.8

$112.1

$149.6

$26.7

$25.8

$12.9

$33.7

$43.1

$42.5

$134.2

$181.0

$205.1

4Q'12

4Q'13

4Q'14

$19.6

$14.1

$2.4

$10.0

Blackstone

13

Capital Invested

Blackstone continues to raise and deploy capital at an offsetting pace, keeping dry powder amounts steady and

maintaining Blackstone’s ability to make opportunistic investments.

Invested $26.4 billion of capital in 2014, up 73% from $15.3 billion in 2013.

•

47% of capital invested in 2014 was deployed outside of North America, up 3% from 44% in 2013.

•

48%

of capital invested in 2014 was invested by products that did not exist at the time of the IPO.

Capital Invested by Segment

(Dollars in Billions)

2014 Capital Invested by Region

Global and

Other

Asia

North

America

Europe

Blackstone

14

$3.0

$11.2

$10.2

$11.5

$1.6

$2.8

$15.3

$26.4

2013

2014

Private Equity

Real Estate

Hedge Fund Solutions

Credit

$14.0

$7.7

$2.4

$2.3

(Dollars in Billions)

Blackstone

15

At

December

31,

2014,

Blackstone

had

$3.4

billion

in

total

cash,

corporate

treasury

and

liquid

investments

and

$10.4

billion of total net value, or $9.05 per DE unit, up 24% from $7.29 a year ago.

Illiquid investments of $2.4 billion, down 11% from last year.

Long-term debt of $2.1 billion at quarter end contributed to a Debt to Adjusted EBITDA ratio of 0.61x FY’14.

There are currently no borrowings outstanding against the $1.1 billion revolving credit facility expiring in 2019.

Balance Sheet Highlights

4Q’14

$

1,412

1,804

176

2,445

4,552

$

10,389

Outstanding Bonds (at par)

$

2,135

A+/A+

rated by S&P and Fitch

$1.1

billion

undrawn credit revolver with

May 2019 maturity

$3.4 billion

total cash, corporate treasury

and liquid investments

Cash and Investments

Net

Performance

Fees

Total Cash

and Liquids

Illiquids

$9.05

$7.29

$5.95

$1.99

$3.00

$3.97

$1.95

$2.41

$2.13

$2.01

$1.88

$2.95

4Q'12

4Q'13

4Q'14

(Dollars in Millions)

Cash and Cash Equivalents

Treasury Cash

Management Strategies

Liquid Investments

Illiquid Investments

Total Net Value

Net Accrued Performance

Fees

Balance Sheet Highlights are preliminary, and exclude the consolidated Blackstone funds. Liquid Investments are primarily Blackstone investments in Hedge Fund Solutions and

non-drawdown Credit. Illiquid Investments include Blackstone investments in Private Equity, Real Estate and Other, which were $935 million, $1.2 billion, and $288 million, respectively, as of

December 31, 2014, $963 million, $1.5 billion and $291 million, respectively, as of December 31, 2013 and $942 million, $1.0 billion and $210 million, respectively, as of December 31,

2012. Cash and Investments are calculated using 1,148,024,427 DE Units Outstanding.

Despite Net Realized Performance Fees of $1.8 billion, asset appreciation across all investing businesses drove

Net Accrued Performance Fees to a record $4.6 billion ($3.97/unit), up $1.2 billion from the prior year.

Net

Accrued

Performance

Fees

grew

at

a

43%

CAGR

since

the

fourth

quarter

of

2012,

primarily

driven

by

continued appreciation in Real Estate and Private Equity.

Performance Fees

Net Realized Performance Fees

(Dollars in Millions)

$960

$1,787

$392

Net Accrued Performance Fees

(Dollars in Millions)

$3,400

$4,552

$2,238

Private Equity

Real Estate

Credit

Hedge Fund Solutions

$4.6 billion

Record Net Accrued

Performance Fees

61%

Net Accrued

Performance Fees

Related to Publics/Pending Exits

$1.8 billion

Record FY Net Realized

Performance Fees

$291

$488

$360

$1,060

$167

FY'12

FY'13

FY'14

$644

$632

$1,657

$1,265

$2,347

$2,612

$262

$277

$207

4Q'12

4Q'13

4Q'14

Blackstone

16

Blackstone

17

Unitholder Distribution

A

detailed

description

of

Blackstone’s

distribution

policy

and

the

definition

of

Distributable

Earnings

can

be

found

on

page

33,

Definitions

and

Distribution

Policy.

DE

before

Certain

Payables

represents

Distributable

Earnings before the deduction for the Payable Under Tax Receivable Agreement and tax expense (benefit) of wholly owned subsidiaries. Per Unit calculations are based on Total Common Units Outstanding

(page

32,

Unit

Rollforward);

actual

distributions

are

paid

to

applicable

unitholders

as

of

the

record

date.

For

the

periods

presented,

Net

Cash

Available

for

Distribution

per

Common

Unit

equals

the

Actual

Distribution

per

Common

Unit.

Retained

capital

is

withheld

pro-rata

from

common

and

Blackstone

Holdings

Partnership

unitholders.

Common

unitholders’

share

was

$85.6

million

for

4Q’14.

Generated

$0.92

of

Distributable

Earnings

per

common

unit

during

the

quarter,

up

35%

year-over-year.

•

Record full year Distributable Earnings per common unit of $2.51, up 61% from the last year.

Declared a quarterly distribution of $0.78 per common unit to record holders as of February 9, 2015; payable on

February

17, 2015.

•

Full year distribution of $2.12, up 58% from the prior year period.

% Change

(Dollars in Thousands, Except per Unit Data)

1Q'14

2Q'14

3Q'14

4Q'14

FY'13

FY'14

vs. FY'13

Distributable Earnings (“DE”)

485,112

$        

770,797

$        

672,144

$        

1,129,780

$     

1,862,699

$       

3,057,833

$     

64%

Add: Other Payables Attributable to

   Common Unitholders

19,856

29,884

69,707

87,977

106,499

207,424

95%

DE before Certain Payables

504,968

800,681

741,851

1,217,757

1,969,198

3,265,257

66%

Percent to Common Unitholders

53%

53%

53%

53%

51%

53%

DE before Certain Payables Attributable to

   Common Unitholders

265,378

423,209

393,197

648,623

1,012,971

1,730,407

71%

Less: Other Payables Attributable to

   Common Unitholders

(19,856)

(29,884)

(69,707)

(87,977)

(106,499)

(207,424)

(95)%

DE Attributable to Common Unitholders

245,522

393,325

323,490

560,646

906,472

1,522,983

68%

DE per Common Unit

0.41

$              

0.65

$              

0.53

$              

0.92

$              

1.56

$                 

2.51

$              

61%

Less: Retained Capital per Common Unit

(0.06)

$             

(0.10)

$             

(0.09)

$             

(0.14)

$             

(0.22)

$              

(0.39)

$             

(77)%

Actual Distribution per Common Unit

0.35

$              

0.55

$              

0.44

$              

0.78

$              

1.34

$                 

2.12

$              

58%

Record Date

Feb 9, 2015

Payable Date

Feb 17, 2015

Blackstone

18

GAAP Statement of Operations

% Change

% Change

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

4Q'13

4Q'14

vs. 4Q'13

FY'13

FY'14

vs. FY'13

Revenues

Management and Advisory Fees, Net

602,034

$        

663,620

$        

10%

2,193,985

$     

2,497,252

$     

14%

Performance Fees

Realized Carried Interest

283,846

836,124

195%

943,958

2,450,082

160%

Realized Incentive Fees

334,109

130,262

(61)%

464,838

249,005

(46)%

Unrealized Carried Interest

1,233,905

491,743

(60)%

2,158,010

1,704,924

(21)%

Unrealized Incentive Fees

(167,198)

(142,458)

15%

(22,749)

(29,749)

(31)%

Total Performance Fees

1,684,662

1,315,671

(22)%

3,544,057

4,374,262

23%

Investment Income

Realized

51,294

63,857

24%

188,644

523,735

178%

Unrealized

348,523

(52,489)

n/m

611,664

10,265

(98)%

Total Investment Income

399,817

11,368

(97)%

800,308

534,000

(33)%

Interest and Dividend Revenue

18,248

22,293

22%

64,511

69,809

8%

Other

4,619

7,822

69%

10,307

9,405

(9)%

Total Revenues

2,709,380

2,020,774

(25)%

6,613,168

7,484,728

13%

Expenses

Compensation and Benefits

Compensation

448,443

357,783

(20)%

1,844,485

1,868,868

1%

Performance Fee Compensation

Realized Carried Interest

31,485

219,941

599%

257,201

815,643

217%

Realized Incentive Fees

140,794

48,926

(65)%

200,915

110,099

(45)%

Unrealized Carried Interest

616,080

59,879

(90)%

966,717

379,037

(61)%

Unrealized Incentive Fees

(70,297)

(58,497)

17%

(11,651)

(19,276)

(65)%

Total Compensation and Benefits

1,166,505

628,032

(46)%

3,257,667

3,154,371

(3)%

General, Administrative and Other

128,336

149,402

16%

474,442

549,463

16%

Interest Expense

27,687

35,395

28%

107,973

121,524

13%

Fund Expenses

7,944

10,257

29%

26,658

30,498

14%

Total Expenses

1,330,472

823,086

(38)%

3,866,740

3,855,856

(0)%

Other Income

Reversal of Tax Receivable Agreement Liability

20,469

-

(100)%

20,469

-

(100)%

Net Gains from Fund Investment Activities

185,536

140,432

(24)%

381,664

357,854

(6)%

Income Before Provision for Taxes

1,584,913

$     

1,338,120

$     

(16)%

3,148,561

$     

3,986,726

$     

27%

Provision for Taxes

91,090

74,686

(18)%

255,642

291,173

14%

Net Income

1,493,823

$     

1,263,434

$     

(15)%

2,892,919

$     

3,695,553

$     

28%

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

47,445

29,844

(37)%

183,315

74,794

(59)%

Net Income Attributable to Non-Controlling Interests in Consolidated Entities

149,834

95,557

(36)%

198,557

335,070

69%

Net Income Attributable to Non-Controlling Interests in Blackstone Holdings

675,289

586,582

(13)%

1,339,845

1,701,100

27%

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

621,255

$        

551,451

$        

(11)%

1,171,202

$     

1,584,589

$     

35%

Net Income per Common Unit, Basic

1.05

$               

0.90

$               

(14)%

2.00

$               

2.60

$               

30%

Net Income per Common Unit, Diluted

1.04

$               

0.89

$               

(14)%

1.98

$               

2.58

$               

30%

Appendix

Blackstone

Total Segments

(Dollars in Thousands)

4Q'13

1Q'14

2Q'14

3Q'14

4Q'14

FY'13

FY'14

Revenues

Management and Advisory Fees, Net

Base Management Fees

469,092

$          

476,878

$          

496,570

$          

505,493

$          

508,588

$          

1,740,807

$       

1,987,529

$       

Advisory Fees

139,158

69,963

114,914

84,131

151,837

410,514

420,845

Transaction and Other Fees, Net

59,733

59,910

49,196

90,885

46,446

206,977

246,437

Management Fee Offsets

(43,752)

(16,644)

(20,218)

(22,763)

(27,146)

(72,220)

(86,771)

Total Management and Advisory Fees, Net

624,231

590,107

640,462

657,746

679,725

2,286,078

2,568,040

Performance Fees

Realized Carried Interest

283,846

333,623

641,659

638,752

836,562

943,958

2,450,596

Realized Incentive Fees

343,501

53,837

39,291

36,840

131,777

474,333

261,745

Unrealized Carried Interest

1,233,905

330,288

660,712

222,026

495,935

2,158,010

1,708,961

Unrealized Incentive Fees

(173,033)

61,266

56,776

(6,531)

(140,936)

(19,928)

(29,425)

Total Performance Fees

1,688,219

779,014

1,398,438

891,087

1,323,338

3,556,373

4,391,877

Investment Income (Loss)

Realized

66,283

111,917

202,199

75,832

153,477

170,471

543,425

Unrealized

290,460

4,550

(26,228)

4,934

(55,053)

517,334

(71,797)

Total Investment Income

356,743

116,467

175,971

80,766

98,424

687,805

471,628

Interest Income and Dividend Revenue

19,394

22,362

22,094

23,585

28,303

70,936

96,344

Other

4,621

869

(6)

719

7,823

10,308

9,405

Total Revenues

2,693,208

1,508,819

2,236,959

1,653,903

2,137,613

6,611,500

7,537,294

Expenses

Compensation

262,688

306,545

323,015

324,426

199,525

1,115,640

1,153,511

Performance Fee Compensation

Realized Carried Interest

31,485

149,398

260,301

186,003

219,941

257,201

815,643

Realized Incentive Fees

140,794

23,635

18,509

19,029

48,926

200,915

110,099

Unrealized Carried Interest

616,080

40,690

114,336

164,132

59,879

966,717

379,037

Unrealized Incentive Fees

(70,297)

23,531

24,692

(9,002)

(58,497)

(11,651)

(19,276)

Total Compensation and Benefits

980,750

543,799

740,853

684,588

469,774

2,528,822

2,439,014

Other Operating Expenses

129,171

139,774

145,111

131,440

137,457

486,639

553,782

Total Expenses

1,109,921

683,573

885,964

816,028

607,231

3,015,461

2,992,796

Economic Income

1,583,287

$       

825,246

$          

1,350,995

$       

837,875

$          

1,530,382

$       

3,596,039

$       

4,544,498

$       

Economic Net Income

1,542,098

$       

813,934

$          

1,325,963

$       

758,356

$          

1,446,733

$       

3,513,875

$       

4,344,986

$       

Fee Related Earnings

260,706

$          

174,829

$          

201,108

$          

217,291

$          

374,210

$          

745,469

$          

967,438

$          

Distributable Earnings

820,629

$          

485,112

$          

770,797

$          

672,144

$          

1,129,780

$       

1,862,699

$       

3,057,833

$       

Total Assets Under Management

265,757,630

$   

271,745,583

$   

278,917,713

$   

284,414,936

$   

290,381,069

$   

265,757,630

$   

290,381,069

$   

Fee-Earning Assets Under Management

197,981,739

$   

203,599,604

$   

209,913,760

$   

214,819,600

$   

216,691,799

$   

197,981,739

$   

216,691,799

$   

Weighted Average Fee-Earning AUM

196,309,547

$   

200,246,002

$   

209,251,436

$   

213,525,423

$   

215,196,253

$   

186,133,604

$   

212,324,209

$   

LP Capital Invested

5,382,770

$       

4,468,527

$       

5,426,511

$       

6,664,365

$       

7,810,098

$       

14,179,704

$     

24,369,501

$     

Total Capital Invested

6,115,856

$       

4,807,663

$       

5,858,210

$       

7,619,737

$       

8,090,350

$       

15,250,286

$     

26,375,960

$     

20

Blackstone

Private Equity

(Dollars in Thousands)

4Q'13

1Q'14

2Q'14

3Q'14

4Q'14

FY'13

FY'14

Revenues

Management Fees, Net

Base Management Fees

99,998

$         

98,584

$         

103,204

$       

108,236

$       

105,817

$       

368,146

$       

415,841

$       

Transaction and Other Fees, Net

18,135

42,847

27,616

48,996

15,183

96,988

134,642

Management Fee Offsets

(1,173)

(1,713)

(4,246)

(5,837)

(7,350)

(5,683)

(19,146)

Total Management Fees, Net

116,960

139,718

126,574

151,395

113,650

459,451

531,337

Performance Fees

Realized Carried Interest

101,081

119,805

212,394

124,913

297,290

329,993

754,402

Unrealized Carried Interest

385,560

167,065

502,210

96,455

457,098

398,232

1,222,828

Total Performance Fees

486,641

286,870

714,604

221,368

754,388

728,225

1,977,230

Investment Income (Loss)

Realized

30,783

60,535

74,812

20,421

46,951

88,026

202,719

Unrealized

85,329

(9,033)

17,662

(12,754)

(19,789)

161,749

(23,914)

Total Investment Income

116,112

51,502

92,474

7,667

27,162

249,775

178,805

Interest Income and Dividend Revenue

4,136

5,228

4,666

5,346

6,743

15,602

21,983

Other

1,948

864

564

2,150

2,991

4,259

6,569

Total Revenues

725,797

484,182

938,882

387,926

904,934

1,457,312

2,715,924

Expenses

Compensation

56,370

73,307

73,038

79,007

51,095

236,120

276,447

Performance Fee Compensation

Realized Carried Interest

2,006

85,771

112,720

30,944

36,958

38,953

266,393

Unrealized Carried Interest

274,201

(27,148)

66,194

93,434

77,966

342,733

210,446

Total Compensation and Benefits

332,577

131,930

251,952

203,385

166,019

617,806

753,286

Other Operating Expenses

32,767

33,006

39,193

34,109

36,590

124,137

142,898

Total Expenses

365,344

164,936

291,145

237,494

202,609

741,943

896,184

Economic Income

360,453

$       

319,246

$       

647,737

$       

150,432

$       

702,325

$       

715,369

$       

1,819,740

$   

Total Assets Under Management

65,675,031

$ 

66,142,945

$ 

68,294,162

$ 

69,890,367

$ 

73,073,252

$ 

65,675,031

$ 

73,073,252

$ 

Fee-Earning Assets Under Management

42,600,515

$ 

41,150,728

$ 

42,888,756

$ 

43,817,741

$ 

43,890,167

$ 

42,600,515

$ 

43,890,167

$ 

Weighted Average Fee-Earning AUM

43,290,792

$ 

41,815,672

$ 

43,702,379

$ 

43,838,483

$ 

42,899,791

$ 

43,977,145

$ 

44,178,572

$ 

LP Capital Invested

1,017,985

$    

2,029,019

$    

1,857,330

$    

2,277,861

$    

3,459,063

$    

2,568,582

$    

9,623,273

$    

Total Capital Invested

1,330,606

$    

2,271,273

$    

2,159,178

$    

3,172,660

$    

3,593,887

$    

2,950,129

$    

11,196,998

$ 

21

Blackstone

Real Estate

(Dollars in Thousands)

4Q'13

1Q'14

2Q'14

3Q'14

4Q'14

FY'13

FY'14

Revenues

Management Fees, Net

Base Management Fees

153,115

$       

159,336

$       

157,869

$       

155,089

$       

156,208

$       

565,182

$       

628,502

$       

Transaction and Other Fees, Net

32,317

13,564

13,514

38,312

26,220

79,675

91,610

Management Fee Offsets

(6,838)

(9,224)

(7,702)

(8,977)

(8,540)

(22,821)

(34,443)

Total Management Fees, Net

178,594

163,676

163,681

184,424

173,888

622,036

685,669

Performance Fees

Realized Carried Interest

180,641

194,658

417,826

349,237

526,041

486,773

1,487,762

Realized Incentive Fees

7,931

(26)

6,070

1,159

4,296

45,862

11,499

Unrealized Carried Interest

771,246

140,237

119,461

187,175

77,173

1,651,700

524,046

Unrealized Incentive Fees

(1,355)

2,737

(3,483)

(374)

(4,401)

(28,753)

(5,521)

Total Performance Fees

958,463

337,606

539,874

537,197

603,109

2,155,582

2,017,786

Investment Income (Loss)

Realized

23,320

31,357

122,664

49,173

105,901

52,359

309,095

Unrealized

201,606

5,379

(50,437)

14,492

(28,364)

350,201

(58,930)

Total Investment Income

224,926

36,736

72,227

63,665

77,537

402,560

250,165

Interest Income and Dividend Revenue

6,809

6,110

8,009

7,135

8,943

21,563

30,197

Other

1,678

317

(218)

976

1,788

3,384

2,863

Total Revenues

1,370,470

544,445

783,573

793,397

865,265

3,205,125

2,986,680

Expenses

Compensation

75,625

80,233

85,582

90,586

69,916

294,222

326,317

Performance Fee Compensation

Realized Carried Interest

29,027

51,833

143,442

64,187

173,534

148,837

432,996

Realized Incentive Fees

4,502

(16)

3,081

592

2,323

23,878

5,980

Unrealized Carried Interest

299,853

56,985

27,339

108,789

4,061

566,837

197,174

Unrealized Incentive Fees

(335)

1,382

(1,783)

(123)

(2,227)

(15,015)

(2,751)

Total Compensation and Benefits

408,672

190,417

257,661

264,031

247,607

1,018,759

959,716

Other Operating Expenses

29,698

33,107

36,542

36,138

40,296

116,391

146,083

Total Expenses

438,370

223,524

294,203

300,169

287,903

1,135,150

1,105,799

Economic Income

932,100

$       

320,921

$       

489,370

$       

493,228

$       

577,362

$       

2,069,975

$   

1,880,881

$   

Total Assets Under Management

79,410,788

$ 

81,333,562

$ 

80,410,988

$ 

80,188,858

$ 

80,863,187

$ 

79,410,788

$ 

80,863,187

$ 

Fee-Earning Assets Under Management

50,792,803

$ 

53,490,834

$ 

52,823,975

$ 

52,308,175

$ 

52,563,068

$ 

50,792,803

$ 

52,563,068

$ 

Weighted Average Fee-Earning AUM

50,568,609

$ 

50,954,956

$ 

53,233,974

$ 

52,764,267

$ 

52,236,610

$ 

45,326,937

$ 

53,589,873

$ 

LP Capital Invested

3,986,610

$    

1,692,232

$    

3,017,193

$    

3,046,867

$    

3,478,850

$    

9,741,277

$    

11,235,142

$ 

Total Capital Invested

4,333,419

$    

1,746,460

$    

3,128,232

$    

3,071,425

$    

3,584,035

$    

10,249,733

$ 

11,530,152

$ 

22

Blackstone

Hedge Fund Solutions

(Dollars in Thousands)

4Q'13

1Q'14

2Q'14

3Q'14

4Q'14

FY'13

FY'14

Revenues

Management Fees, Net

Base Management Fees

113,025

$      

113,384

$      

123,008

$      

121,484

$      

125,105

$      

409,321

$      

482,981

$      

Transaction and Other Fees, Net

263

93

126

161

189

623

569

Management Fee Offsets

(1,149)

(1,455)

(1,531)

(1,099)

(929)

(3,387)

(5,014)

Total Management Fees, Net

112,139

112,022

121,603

120,546

124,365

406,557

478,536

Performance Fees

Realized Incentive Fees

174,861

39,845

7,973

6,683

86,028

207,735

140,529

Unrealized Incentive Fees

(97,980)

18,085

30,556

25,473

(74,993)

7,718

(879)

Total Performance Fees

76,881

57,930

38,529

32,156

11,035

215,453

139,650

Investment Income (Loss)

Realized

13,691

16,820

2,394

2,693

(357)

27,613

21,550

Unrealized

(7,604)

4,431

1,057

(1,168)

812

(9,306)

5,132

Total Investment Income

6,087

21,251

3,451

1,525

455

18,307

26,682

Interest Income and Dividend Revenue

1,988

2,661

2,340

2,724

3,389

7,605

11,114

Other

262

122

(203)

740

1,196

688

1,855

Total Revenues

197,357

193,986

165,720

157,691

140,440

648,610

657,837

Expenses

Compensation

28,147

40,571

43,341

41,940

5,806

136,470

131,658

Performance Fee Compensation

Realized Incentive Fees

53,701

13,271

2,918

2,312

23,950

65,793

42,451

Unrealized Incentive Fees

(34,823)

6,761

11,252

8,778

(27,064)

2,856

(273)

Total Compensation and Benefits

47,025

60,603

57,511

53,030

2,692

205,119

173,836

Other Operating Expenses

15,697

19,480

25,101

20,480

21,068

66,966

86,129

Total Expenses

62,722

80,083

82,612

73,510

23,760

272,085

259,965

Economic Income

134,635

$      

113,903

$      

83,108

$        

84,181

$        

116,680

$      

376,525

$      

397,872

$      

Total Assets Under Management

55,657,463

$

58,262,659

$

60,672,759

$

64,183,863

$

63,585,670

$

55,657,463

$

63,585,670

$

Fee-Earning Assets Under Management

52,865,837

$

55,571,357

$

58,084,020

$

62,037,082

$

61,417,558

$

52,865,837

$

61,417,558

$

Weighted Average Fee-Earning AUM

51,794,518

$

54,715,882

$

56,793,206

$

60,009,283

$

61,730,313

$

48,431,911

$

58,548,866

$

LP Capital Invested

8,681

$          

167,170

$      

188,236

$      

473,233

$      

25,489

$        

431,275

$      

854,128

$      

Total Capital Invested

8,681

$          

202,674

$      

196,348

$      

487,398

$      

12,137

$        

454,990

$      

898,557

$      

23

Blackstone

Credit

(Dollars in Thousands)

4Q'13

1Q'14

2Q'14

3Q'14

4Q'14

FY'13

FY'14

Revenues

Management Fees, Net

Base Management Fees

102,954

$      

105,574

$      

112,489

$      

120,684

$      

121,458

$      

398,158

$      

460,205

$      

Transaction and Other Fees, Net

8,152

3,344

7,064

3,025

4,728

28,586

18,161

Management Fee Offsets

(34,592)

(4,252)

(6,739)

(6,850)

(10,327)

(40,329)

(28,168)

Total Management Fees, Net

76,514

104,666

112,814

116,859

115,859

386,415

450,198

Performance Fees

Realized Carried Interest

2,124

19,160

11,439

164,602

13,231

127,192

208,432

Realized Incentive Fees

160,709

14,018

25,248

28,998

41,453

220,736

109,717

Unrealized Carried Interest

77,099

22,986

39,041

(61,604)

(38,336)

108,078

(37,913)

Unrealized Incentive Fees

(73,698)

40,444

29,703

(31,630)

(61,542)

1,107

(23,025)

Total Performance Fees

166,234

96,608

105,431

100,366

(45,194)

457,113

257,211

Investment Income (Loss)

Realized

(627)

3,071

2,223

3,040

1,020

4,098

9,354

Unrealized

9,519

3,079

4,521

4,892

(7,437)

13,951

5,055

Total Investment Income (Loss)

8,892

6,150

6,744

7,932

(6,417)

18,049

14,409

Interest Income and Dividend Revenue

4,240

5,861

4,892

5,968

6,319

18,146

23,040

Other

119

(259)

11

(3,619)

1,557

527

(2,310)

Total Revenues

255,999

213,026

229,892

227,506

72,124

880,250

742,548

Expenses

Compensation

31,802

50,752

51,310

54,877

31,261

186,514

188,200

Performance Fee Compensation

Realized Carried Interest

452

11,794

4,139

90,872

9,449

69,411

116,254

Realized Incentive Fees

82,591

10,380

12,510

16,125

22,653

111,244

61,668

Unrealized Carried Interest

42,026

10,853

20,803

(38,091)

(22,148)

57,147

(28,583)

Unrealized Incentive Fees

(35,139)

15,388

15,223

(17,657)

(29,206)

508

(16,252)

Total Compensation and Benefits

121,732

99,167

103,985

106,126

12,009

424,824

321,287

Other Operating Expenses

29,566

32,839

22,159

20,860

14,666

96,940

90,524

Total Expenses

151,298

132,006

126,144

126,986

26,675

521,764

411,811

Economic Income

104,701

$      

81,020

$        

103,748

$      

100,520

$      

45,449

$        

358,486

$      

330,737

$      

Total Assets Under Management

65,014,348

$

66,006,417

$

69,539,804

$

70,151,848

$

72,858,960

$

65,014,348

$

72,858,960

$

Fee-Earning Assets Under Management

51,722,584

$

53,386,685

$

56,117,009

$

56,656,602

$

58,821,006

$

51,722,584

$

58,821,006

$

Weighted Average Fee-Earning AUM

50,655,628

$

52,759,492

$

55,521,877

$

56,913,390

$

58,329,539

$

48,397,611

$

56,006,898

$

LP Capital Invested

369,494

$      

580,106

$      

363,752

$      

866,404

$      

846,696

$      

1,438,570

$   

2,656,958

$   

Total Capital Invested

443,150

$      

587,256

$      

374,452

$      

888,254

$      

900,291

$      

1,595,434

$   

2,750,253

$   

24

Blackstone

Financial Advisory

(Dollars in Thousands)

4Q'13

1Q'14

2Q'14

3Q'14

4Q'14

FY'13

FY'14

Revenues

Advisory Fees

139,158

$       

69,963

$         

114,914

$       

84,131

$         

151,837

$       

410,514

$       

420,845

$       

Transaction and Other Fees, Net

866

62

876

391

126

1,105

1,455

Total Advisory and Transaction Fees

140,024

70,025

115,790

84,522

151,963

411,619

422,300

Investment Income (Loss)

Realized

(884)

134

106

505

(38)

(1,625)

707

Unrealized

1,610

694

969

(528)

(275)

739

860

Total Investment Income (Loss)

726

828

1,075

(23)

(313)

(886)

1,567

Interest Income and Dividend Revenue

2,221

2,502

2,187

2,412

2,909

8,020

10,010

Other

614

(175)

(160)

472

291

1,450

428

Total Revenues

143,585

73,180

118,892

87,383

154,850

420,203

434,305

Expenses

Compensation

70,744

61,682

69,744

58,016

41,447

262,314

230,889

Total Compensation and Benefits

70,744

61,682

69,744

58,016

41,447

262,314

230,889

Other Operating Expenses

21,443

21,342

22,116

19,853

24,837

82,205

88,148

Total Expenses

92,187

83,024

91,860

77,869

66,284

344,519

319,037

Economic Income (Loss)

51,398

$         

(9,844)

$          

27,032

$         

9,514

$           

88,566

$         

75,684

$         

115,268

$       

25

Blackstone

Net Accrued Performance Fees

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

included

in

DE.

When

these

fees

are

received,

the

receivable

is

reduced

without

further

impacting

DE.

Per

Unit

calculations

are

based

on

1,148,024,427

DE

Units

Outstanding

(see

page

32,

Unit

Rollforward).

Blackstone had $4.6 billion of accrued performance fees, net of performance fee compensation and distributed

Realized Performance Fees, at the end of the year.

$4.6 billion

Net Accrued Performance Fees at 4Q’14

$3.97 per unit

Net Accrued Performance Fees at 4Q’14

34% increase

in Net Accrued Performance Fees since 4Q’13

Change vs.

(Dollars in Millions, Except per Unit Data)

3Q'14

4Q'14

Per Unit

3Q'14

Private Equity

BCP IV Carried Interest

343

$                       

282

$                       

0.25

$                      

(61)

$                        

BCP V Carried Interest

572

1,050

0.91

478

BCP VI Carried Interest

265

233

0.20

(32)

BEP Carried Interest

79

63

0.05

(16)

Tactical Opportunities Carried Interest

32

24

0.02

(8)

SP V Carried Interest

2

4

0.00

2

Korea Carried Interest

1

1

0.00

-

Total Private Equity

1,294

1,657

1.44

363

Real Estate

BREP IV Carried Interest

4

18

0.02

14

BREP V Carried Interest

679

602

0.52

(77)

BREP VI Carried Interest

1,244

1,113

0.97

(131)

BREP VII Carried Interest

545

605

0.53

60

BREP Europe III Carried Interest

187

183

0.16

(4)

BREP Europe IV Carried Interest

25

37

0.03

12

BREP Asia Carried Interest

12

17

0.01

5

Core+ Carried Interest

8

14

0.01

6

BREDS Carried Interest

16

14

0.01

(2)

BREDS Incentive Fees

2

2

0.00

-

Asia Platform Incentive Fees

8

7

0.01

(1)

Total Real Estate

2,730

2,612

2.28

(118)

Hedge Fund Solutions

Incentive Fees

70

76

0.07

6

Total Hedge Fund Solutions

70

76

0.07

6

Credit

Carried Interest

186

175

0.15

(11)

Incentive Fees

54

32

0.03

(22)

Total Credit

240

207

0.18

(33)

Total Blackstone

Carried Interest

4,200

4,435

3.86

235

Incentive Fees

134

117

0.10

(17)

Net Accrued Performance Fees

4,334

$                   

4,552

$                   

3.97

$                      

218

$                       

Memo: Net Realized Performance Fees

241

$                      

106

$                      

0.09

$                     

(135)

$                     

Net Accrued Performance Fees

26

Blackstone

Investment Records as of December 31, 2014

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 (June 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

225,775

3,167,450

1.7x

51%

18,005,120

3.2x

21,172,570

2.8x

45%

36%

BCP V (Dec 2005 / Jan 2011)

21,032,374

1,267,725

18,119,940

1.7x

55%

17,472,685

1.8x

35,592,625

1.8x

11%

8%

BCP VI (Jan 2011 / Jan 2017)

15,178,376

6,553,978

10,597,000

1.3x

17%

1,473,840

1.8x

12,070,840

1.4x

48%

15%

BEP (Aug 2011 / Aug 2017)

2,426,176

732,659

2,329,663

1.4x

30%

533,002

2.0x

2,862,665

1.5x

55%

34%

BEP II (TBD)

4,500,000

4,500,000

-

n/a

-

-

n/a

-

n/a

n/a

n/a

Total Corporate Private Equity

58,234,997

$  

13,479,435

$  

34,461,158

$   

1.5x

41%

54,286,932

$   

2.2x

88,748,090

$   

1.9x

22%

16%

Tactical Opportunities

6,554,659

3,270,974

3,761,107

1.1x

3%

676,885

1.4x

4,437,992

1.1x

30%

15%

Strategic Partners

16,593,144

5,096,371

6,319,537

1.8x

11,504,389

1.4x

17,823,926

1.5x

n/a

15%

Other Funds and Co-Invest

1,787,472

447,796

832,486

0.8x

49%

84,054

1.8x

916,540

0.9x

n/a

n/a

Total Private Equity

83,170,272

$  

22,294,576

$  

45,374,288

$   

1.5x

32%

66,552,260

$   

2.0x

111,926,548

$

1.8x

20%

16%

Real Estate

Dollar

Pre-BREP

140,714

$        

-

$                 

-

$                  

n/a

n/a

345,190

$        

2.5x

345,190

$        

2.5x

33%

33%

BREP I (Sep 1994 / Oct 1996)

380,708

-

-

n/a

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

n/a

2,531,612

2.1x

2,531,612

2.1x

19%

19%

BREP III (Apr 1999 / Apr 2003)

1,522,708

-

-

n/a

n/a

3,328,504

2.4x

3,328,504

2.4x

21%

21%

BREP IV (Apr 2003 / Dec 2005)

2,198,694

-

1,313,362

1.0x

24%

3,322,039

2.3x

4,635,401

1.7x

57%

14%

BREP V (Dec 2005 / Feb 2007)

5,539,418

-

6,220,311

2.1x

16%

5,879,814

2.1x

12,100,125

2.1x

16%

11%

BREP VI (Feb 2007 / Aug 2011)

11,059,495

586,397

15,444,660

2.3x

48%

10,016,132

2.3x

25,460,792

2.3x

16%

14%

BREP VII (Aug 2011 / Feb 2017)

13,467,015

3,224,238

17,079,584

1.6x

2%

2,324,240

1.6x

19,403,824

1.6x

36%

27%

Total Global Real Estate Funds

35,507,091

$  

3,810,635

$    

40,057,917

$   

1.8x

23%

29,075,239

$   

2.2x

69,133,156

$   

2.0x

24%

18%

Euro

BREP Int'l (Jan 2001 / Sep 2005)

824,172

€

-

€

125,722

€

1.5x

92%

1,250,606

€

2.2x

1,376,328

€

2.1x

25%

23%

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

1,629,748

52,437

1,466,176

1.3x

36%

567,022

1.8x

2,033,198

1.5x

12%

4%

BREP Europe III (Jun 2008 / Dec 2013)

3,204,714

511,596

4,037,370

1.7x

7%

1,136,487

2.4x

5,173,857

1.8x

32%

20%

BREP Europe IV (Sep 2013 / Mar 2019)

6,504,848

4,321,605

2,852,176

1.1x

-

247,017

1.3x

3,099,193

1.2x

40%

19%

Total Euro Real Estate Funds

12,163,482

€

4,885,638

€

8,481,444

€

1.4x

11%

3,201,132

€

2.1x

11,682,576

€

1.5x

23%

13%

BREP Co-Investment (f)

5,546,294

$     

-

$                 

8,138,959

$     

1.9x

61%

3,125,556

$     

2.3x

11,264,515

$   

2.0x

14%

17%

BREP Asia (Jun 2013 / Dec 2017)

5,072,903

3,334,671

2,042,699

1.1x

-

4,400

1.0x

2,047,099

1.1x

n/a

14%

Total Real Estate

61,994,079

$  

13,055,951

$  

61,533,703

$   

1.7x

24%

36,462,326

$   

2.2x

97,996,029

$   

1.9x

23%

17%

Core+

3,477,888

$     

1,585,560

$     

2,227,949

$     

1.2x

-

-

$                  

n/a

2,227,949

$     

1.2x

n/a

n/a

BREDS (g)

6,745,544

$     

1,668,642

$     

2,854,216

$     

1.2x

-

3,664,923

$     

1.3x

6,519,139

$     

1.3x

14%

12%

Credit (h)

Mezzanine I (Jul 2007 / Jul 2012)

2,000,000

$     

139,685

$        

820,393

$        

1.7x

-

3,999,452

$     

1.6x

4,819,845

$     

1.6x

n/a

18%

Mezzanine II (Nov 2011 / Nov 2016)

4,120,000

2,304,528

2,368,630

1.2x

-

1,216,870

1.5x

3,585,500

1.3x

n/a

24%

Rescue Lending I (Sep 2009 / May 2013)

3,253,143

493,489

2,667,696

1.5x

-

3,165,504

1.4x

5,833,200

1.4x

n/a

15%

Rescue Lending II (Jun 2013 / Jun 2018)

5,125,000

3,827,459

1,616,850

1.2x

-

3,795

1.0x

1,620,645

1.2x

n/a

n/m

Total Credit

14,498,143

$  

6,765,161

$    

7,473,569

$     

1.3x

-

8,385,621

$     

1.5x

15,859,190

$   

1.4x

n/a

27

Blackstone

Investment

Records

as

of

December

31,

2014

–

Notes

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

n/m

Not meaningful.

n/a

Not applicable.

(a)

Preliminary.

(b)

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

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

(c)

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

divided by invested capital.

(d)

Net Internal Rate of Return (“IRR”) represents the annualized inception to December 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 limited transaction activity.

(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 1.4x, respectively. Funds presented represent the flagship

credit drawdown funds only.

28

Blackstone

Reconciliation of GAAP to Non-GAAP Measures

Notes on next page.

(Dollars in Thousands)

4Q'13

1Q'14

2Q'14

3Q'14

4Q'14

FY'13

FY'14

Net Income Attributable to The Blackstone Group L.P.

621,255

$    

265,617

$    

517,016

$    

250,505

$    

551,451

$    

1,171,202

$

1,584,589

$

Net Income Attributable to Non-Controlling Interests in Blackstone Holdings

675,289

299,505

543,819

271,194

586,582

1,339,845

1,701,100

Net Income Attributable to Non-Controlling Interests in Consolidated Entities

149,834

43,961

140,061

55,491

95,557

198,557

335,070

Net Income (Loss) Attributable to Redeemable Non-Controlling

Interests in Consolidated Entities

47,445

45,792

22,486

(23,328)

29,844

183,315

74,794

Net Income

1,493,823

$

654,875

$    

1,223,382

$

553,862

$    

1,263,434

$

2,892,919

$

3,695,553

$

Provision for Taxes

91,090

54,097

83,282

79,108

74,686

255,642

291,173

Income Before Provision for Taxes

1,584,913

$

708,972

$    

1,306,664

$

632,970

$    

1,338,120

$

3,148,561

$

3,986,726

$

166,514

177,024

178,568

209,240

291,550

722,707

856,382

29,139

29,003

28,310

27,828

26,113

106,643

111,254

(197,279)

(89,753)

(162,547)

(32,163)

(125,401)

(381,872)

(409,864)

Economic Income

1,583,287

$

825,246

$    

1,350,995

$

837,875

$    

1,530,382

$

3,596,039

$

4,544,498

$

Taxes

(d)

(41,189)

(11,312)

(25,032)

(79,519)

(83,649)

(82,164)

(199,512)

Economic Net Income

1,542,098

$

813,934

$    

1,325,963

$

758,356

$    

1,446,733

$

3,513,875

$

4,344,986

$

Taxes

(d)

41,189

11,312

25,032

79,519

83,649

82,164

199,512

(1,688,219)

(779,014)

(1,398,438)

(891,087)

(1,323,338)

(3,556,373)

(4,391,877)

(356,743)

(116,467)

(175,971)

(80,766)

(98,424)

(687,805)

(471,628)

4,319

7,810

6,684

(8,893)

(4,659)

(19,574)

942

718,062

237,254

417,838

360,162

270,249

1,413,182

1,285,503

Fee Related Earnings

260,706

$    

174,829

$    

201,108

$    

217,291

$    

374,210

$    

745,469

$    

967,438

$    

455,068

214,427

402,140

470,560

699,472

960,175

1,786,599

66,283

111,917

202,199

75,832

153,477

170,471

543,425

Adjustment Related to Realized Investment (Income) Loss -

8,873

(1,344)

(1,059)

(5,049)

385

13,194

(7,067)

(68,610)

(31,054)

(44,841)

(96,437)

(108,456)

(156,734)

(280,788)

98,309

16,337

11,250

9,947

10,692

130,124

48,226

Distributable Earnings

820,629

$��   

485,112

$    

770,797

$    

672,144

$    

1,129,780

$

1,862,699

$

3,057,833

$

Interest Expense

26,607

30,398

34,082

34,221

34,154

103,904

132,855

68,610

31,054

44,841

96,437

108,456

156,734

280,788

Depreciation and Amortization

8,726

10,373

7,170

7,557

7,200

35,441

32,300

Adjusted EBITDA

924,572

$    

556,937

$    

856,890

$    

810,359

$    

1,279,590

$

2,158,778

$

3,503,776

$

IPO and Acquisition-Related Charges

(a)

Amortization of Intangibles

(b)

(Income) Associated with Non-Controlling Interests of Consolidated Entities

(c)

Performance Fee Adjustment

(e)

Investment (Income) Adjustment

(f)

Investment

Income

(Loss)

-

Blackstone's

Treasury

Cash

Management

Strategies

(g)

Performance Fee Compensation and Benefits Adjustment

(h)

Realized Performance Fees

(i)

Realized Investment Income

(j)

Blackstone's Treasury Cash Management Strategies

(k)

Taxes and Related Payables Including Payable Under Tax Receivable Agreement

(l)

Equity-Based Compensation

(m)

Taxes and Related Payables Including Payable Under Tax Receivable Agreement

(l)

29

Reconciliation

of

GAAP

to

Non-GAAP

Measures

–

Notes

Note:

See page 33, Definitions and Distribution Policy.

(a)

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

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

programs outside of annual deferred compensation and other corporate actions.

(b)

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

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

(c)

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

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

CLO Entities.

(d)

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

(e)

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

(f)

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

(g)

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

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

(h)

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

to Performance Fees.

(i)

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

sharing plans related thereto.

(j)

Represents

the

adjustment

for

Blackstone’s

Investment

Income

(Loss)

-

Realized.

(k)

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

Strategies which is a component of both Fee Related Earnings and

Realized Investment Income (Loss).

(l)

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

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

and the Payable Under Tax Receivable Agreement.

(m)

Represents equity-based award expense included in EI.

Blackstone

30

Blackstone

Walkdown

of

Financial

Metrics

–

Calculation

of

Certain

Non-GAAP

Financial

Metric

Components

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

(a)

See pages 29-30, Reconciliation of GAAP to Non-GAAP Measures for this adjustment.

(b)

Represents equity-based award expense included in Economic Income.

(c)

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

(Dollars in Thousands)

4Q'14

FY'14

Interest Income and Dividend Revenue

28,303

$       

96,344

$       

Other Revenue

7,823

9,405

(4,659)

942

Interest Income and Other Revenue

31,467

$       

106,691

$    

Realized Incentive Fees

131,777

261,745

Less: Realized Incentive Fee Compensation

(48,926)

(110,099)

Net Realized Incentive Fees

82,851

$       

151,646

$    

Realized Carried Interest

836,562

2,450,596

Less: Realized Carried Interest Compensation

(219,941)

(815,643)

Net Realized Carried Interest

616,621

$    

1,634,953

$ 

Realized Investment Income

153,477

543,425

Adjustment

Related

to

Realized

Investment

(Income)

Loss -

Blackstone's

Treasury

Cash

Management

Strategies

(a)

385

(7,067)

Net Realized Investment Income

153,862

$    

536,358

$    

Equity-Based Compensation

(b)

10,692

$       

48,226

$       

Taxes

and

Related

Payables

(a)

(108,456)

$   

(280,788)

$   

Unrealized Incentive Fees

(140,936)

(29,425)

Less: Unrealized Incentive Fee Compensation

58,497

19,276

Net Unrealized Incentive Fees

(82,439)

$     

(10,149)

$     

Unrealized Carried Interest

495,935

1,708,961

Less: Unrealized Carried Interest Compensation

(59,879)

(379,037)

Net Unrealized Carried Interest

436,056

$    

1,329,924

$ 

Unrealized Investment Income (Loss)

(55,053)

(71,797)

Less:

Investment

Income

(Loss)

-

Blackstone's

Treasury

Cash

Management

Strategies

(a)

4,659

(942)

Less:

Adjustment

Related

to

Realized

Investment

(Income)

Loss -

Blackstone's

Treasury

Cash

Management

Strategies

(a)

(385)

7,067

Net Unrealized Investment Income (Loss)

(50,779)

$     

(65,672)

$     

Related Payables

(c)

24,807

$       

81,276

$       

Investment

Income

(Loss)

-

Blackstone's

Treasury

Cash

Management

Strategies

(a)

31

Blackstone

Unit Rollforward

4Q'13

1Q'14

2Q'14

3Q'14

4Q'14

FY'13

FY'14

Total GAAP Weighted-Average Common Units Outstanding - Basic

592,129,570

601,527,299

606,690,740

611,684,213

615,492,620

587,018,828

608,803,111

Adjustments:

Weighted-Average Unvested Deferred Restricted Common Units

4,536,624

4,141,865

3,207,089

3,294,657

6,843,140

3,527,812

4,373,294

Total GAAP Weighted-Average Common Units Outstanding - Diluted

596,666,194

605,669,164

609,897,829

614,978,870

622,335,760

590,546,640

613,176,405

Adjustments:

Weighted-Average Blackstone Holdings Partnership Units

549,773,866

549,327,240

544,158,132

539,856,777

536,973,966

553,579,525

542,553,088

Weighted-Average Economic Net Income Adjusted Units

1,146,440,060

1,154,996,404

1,154,055,961

1,154,835,646

1,159,309,726

1,144,126,165

1,155,729,493

Economic Net Income Adjusted Units, End of Period

1,150,867,868

1,154,889,678

1,154,840,023

1,155,075,985

1,159,954,181

1,150,867,868

1,159,954,181

Total Common Units Outstanding

588,165,949

599,372,943

603,270,771

607,590,602

611,480,457

588,165,949

611,480,457

Adjustments:

Blackstone Holdings Partnership Units

547,021,277

541,129,472

538,074,958

538,760,225

536,543,970

547,021,277

536,543,970

Distributable Earnings Units Outstanding

1,135,187,226

1,140,502,415

1,141,345,729

1,146,350,827

1,148,024,427

1,135,187,226

1,148,024,427

Common Unitholders receive tax benefits from deductions taken by Blackstone’s corporate tax paying subsidiaries and bear responsibility for the deduction from Distributable Earnings of

the Payable Under Tax Receivable Agreement and certain other tax-related payables. Distributable Earnings Units Outstanding excludes units which are not entitled to distributions.

32

Blackstone

Definitions and Distribution Policy

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

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

•

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

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

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

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

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

•

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

Income (Loss) Before Provision for Taxes.

•

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

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

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

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

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

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

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

•

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

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

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

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

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

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

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

•

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

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

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

Distribution Policy. Blackstone’s intention is to distribute quarterly approximately 85% of The Blackstone Group L.P.’s share of Distributable Earnings, subject to

adjustment by amounts determined by Blackstone’s general partner to be necessary or appropriate to provide for the conduct of its business, to make

appropriate investments in its business and funds, to comply with applicable law, any of its debt instruments or other agreements, or to provide for future cash

requirements such as tax-related payments, clawback obligations and distributions to unitholders for any ensuing quarter. The amount to be distributed could

also be adjusted upward in any one quarter. 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 eliminate such distributions entirely.

33

Blackstone

Forward-Looking Statements

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

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

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

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

“outlook,”

“indicator,”

“believes,”

“expects,”

“potential,”

“continues,”

“may,”

“will,”

“should,”

“seeks,”

“approximately,”

“predicts,”

“intends,”

“plans,”

“estimates,”

“anticipates”

or the negative version of these words or other comparable words. Such forward-

looking statements are subject to various risks and uncertainties. Accordingly, there are or will be important factors that could cause

actual outcomes or results to differ materially from those indicated in these statements. Blackstone believes these factors include but

are not limited to those described under the section entitled “Risk Factors”

in its Annual Report on Form 10-K for the fiscal year

ended December 31, 2013, as such factors may be updated from time to time in its periodic filings with the Securities and Exchange

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

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

Blackstone undertakes no obligation to publicly update or review

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

information, future developments or otherwise.

This presentation does not constitute an offer of any Blackstone

Fund.

34