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Blackstone Inc. (“Blackstone”) is filing this exhibit (the “Exhibit”) to update certain information in Part I. Item 1. Business and to reflect changes to the presentation of its financial information as set forth in its Annual Report on
Form 10-K
for the year ended December 31, 2023 (“Blackstone’s
10-K”),
as filed with the SEC on February 23, 2024. This Exhibit is being filed solely to retrospectively recast Blackstone’s historical segment reporting financial information to reflect changes effective the quarter ended June 30, 2024, as previously disclosed. This Exhibit speaks as of the original filing date of Blackstone’s
10-K,
does not reflect events that may have occurred subsequent to the original filing date and does not modify or update in any way the disclosures made other than as required to reflect the revised segment information and to identify the current names and compositions of Blackstone’s existing segments, businesses and platforms.
In this report, references to “Blackstone,” the “Company,” “we,” “us” or “our” refer to Blackstone Inc. and its consolidated subsidiaries.
“Series I Preferred Stockholder” refers to Blackstone Partners L.L.C., the holder of the sole outstanding share of our Series I preferred stock.
“Series II Preferred Stockholder” refers to Blackstone Group Management L.L.C., the holder of the sole outstanding share of our Series II preferred stock.
“Blackstone Funds,” “our funds” and “our investment funds” refer to the funds and other vehicles that are managed by Blackstone. “Our carry funds” refers to funds managed by Blackstone that have commitment-based multi-year drawdown structures that pay carry on the realization of an investment.
“Our hedge funds” refers to our funds of hedge funds, hedge funds, certain of our real estate debt investment funds and certain other credit-focused funds which are managed by Blackstone.
We refer to our separately managed accounts as “SMAs.”
“Total Assets Under Management” refers to the assets we manage. Our Total Assets Under Management equals the sum of:
| | (a) | the fair value of the investments held by our carry funds and our and co-investment entities managed by us plus the capital that we are entitled to call from investors in those funds and entities pursuant to the terms of their respective capital commitments, including capital commitments to funds that have yet to commence their investment periods, |
| | (b) | the net asset value of (1) our hedge funds, real estate debt carry funds, Blackstone Property Partners (“BPP”) funds, certain co-investments managed by us, certain credit-focused funds, and our Multi-Asset Investing drawdown funds (plus, in each case, the capital that we are entitled to call from investors in those funds, including commitments yet to commence their investment periods), and (2) our funds of hedge funds, our Multi-Asset Investing registered investment companies, Blackstone Real Estate Income Trust, Inc. (“BREIT”) and Blackstone European Property Income (“BEPIF”) funds, |
| | (c) | the invested capital, fair value or net asset value of assets we manage pursuant to separately managed accounts, |
| | (d) | the amount of debt and equity outstanding for our collateralized loan obligations (“CLO”) during the reinvestment period, |
| | (e) | the aggregate par amount of collateral assets, including principal cash, for our CLOs after the reinvestment period, |
| | (f) | the gross or net amount of assets (including leverage where applicable) for our credit-focused registered investment companies and business development companies (“BDCs”), |
| | (g) | the fair value of common stock, preferred stock, convertible debt, term loans or similar instruments issued by Blackstone mortgage Trust, Inc. (“BXMT”) and |
| | (h) | borrowings under and any amounts available to be borrowed under certain credit facilities of our funds. |
Our carry funds are commitment-based drawdown structured funds that do not permit investors to redeem their interests at their election. Our funds of hedge funds, hedge funds, funds structured like hedge funds and other open-ended funds in our Real Estate, Credit & Insurance and Multi-Asset Investing segments generally have structures that afford an investor the right to withdraw or redeem their interests on a periodic basis (for example, annually, quarterly or monthly), typically with 2 to 95 days’ notice, depending on the fund and the liquidity profile of the underlying assets. In our Perpetual Capital vehicles where redemption rights exist, Blackstone has the ability
to fulfill redemption requests only (a) in Blackstone’s or the vehicles’ board’s discretion, as applicable, or (b) to the extent there is sufficient new capital. Investment advisory agreements related to certain separately managed accounts in our Credit & Insurance and Multi-Asset Investing segments, excluding our separately managed accounts in our insurance platform, may generally be terminated by an investor on 30 to 90 days’ notice. Separately managed accounts in our insurance platform can generally only be terminated for long-term underperformance, cause and certain other limited circumstances, in each case subject to Blackstone’s right to cure.
“Fee-Earning
Assets Under Management” refers to the assets we manage on which we derive management fees and/or performance revenues. Our
Fee-Earning
Assets Under Management equals the sum of:
| | (a) | for our Private Equity segment funds, Real Estate segment carry funds including certain Blackstone Real Estate Debt Strategies (“BREDS”) funds, and certain Multi-Asset Investing funds, the amount of capital commitments, remaining invested capital, fair value, net asset value or par value of assets held, depending on the fee terms of the fund, |
| | (b) | for our credit-focused carry funds, the amount of remaining invested capital (which may include leverage) or net asset value, depending on the fee terms of the fund, |
| | (c) | the remaining invested capital or fair value of assets held in co-investment vehicles managed by us on which we receive fees, |
| | (d) | the net asset value of our funds of hedge funds, hedge funds, BPP, certain co-investments managed by us, certain registered investment companies, BREIT, BEPIF, and certain of our Multi-Asset Investing drawdown funds, |
| | (e) | the invested capital, fair value of assets or the net asset value we manage pursuant to separately managed accounts, |
| | (f) | the net proceeds received from equity offerings and accumulated distributable earnings of BXMT, subject to certain adjustments, |
| | (g) | the aggregate par amount of collateral assets, including principal cash, of our CLOs and |
| | (h) | the gross amount of assets (including leverage) or the net assets (plus leverage where applicable) for certain of our credit-focused registered investment companies and BDCs. |
Each of our segments may include certain
Fee-Earning
Assets Under Management on which we earn performance revenues but not management fees.
Our calculations of Total Assets Under Management and
Fee-Earning
Assets Under Management may differ from the calculations of other asset managers, and as a result this measure may not be comparable to similar measures presented by other asset managers. In addition, our calculation of Total Assets Under Management includes commitments to, and the fair value of, invested capital in our funds from Blackstone and our personnel, regardless of whether such commitments or invested capital are subject to fees. Our definitions of Total Assets Under Management and
Fee-Earning
Assets Under Management are not based on any definition of Total Assets Under Management and
Fee-Earning
Assets Under Management that is set forth in the agreements governing the investment funds that we manage.
For our carry funds, Total Assets Under Management includes the fair value of the investments held and uncalled capital commitments, whereas
Fee-Earning
Assets Under Management may include the total amount of capital commitments or the remaining amount of invested capital at cost, depending on whether the investment period has expired or as specified by the fee terms of the fund. As such, in certain carry funds
Fee-Earning
Assets Under Management may be greater than Total Assets Under Management when the aggregate fair value of the remaining investments is less than the cost of those investments.
“Perpetual Capital” refers to the component of assets under management with an indefinite term, that is not in liquidation, and for which there is no requirement to return capital to investors through redemption requests in the ordinary course of business, except where funded by new capital inflows. Perpetual Capital includes
co-investment
capital with an investor right to convert into Perpetual Capital.
This report does not constitute an offer of any Blackstone Fund.
Blackstone is the world’s largest alternative asset manager. We seek to deliver compelling returns for institutional and individual investors by strengthening the companies and assets in which we invest. Our more than $1.0 trillion in Total Assets Under Management as of December 31, 2023 include global investment strategies focused on real estate, private equity, infrastructure, life sciences, growth equity, credit, real assets, secondaries and hedge funds.
Our businesses use a solutions-oriented approach to drive better performance. We believe our scale, diversified business, long record of investment performance, rigorous investment process and strong client relationships position us to continue to perform well in a variety of market conditions, expand our assets under management, and innovate.
We invest across asset classes on behalf of our investors, including pension funds, insurance companies and individual investors. Our mission is to fulfill our fiduciary duty by creating long-term value for our investors. We aim to do this by strengthening the companies, real estate assets and other investments in our portfolio, equipping them to thrive in the global economy. To the extent our funds perform well, we can support a better retirement for tens of millions of pensioners, including teachers, nurses and firefighters.
As of December 31, 2023, we employed approximately 4,735 people, including our 239 senior managing directors, at our headquarters in New York and around the world. Our employees are integral to Blackstone’s culture of integrity, professionalism and excellence. We believe hiring, training and retaining talented individuals, coupled with our rigorous investment process, has supported our excellent investment record over many years. This record, in turn, has enabled us to innovate into new strategies, drive growth and better serve our investors.
Our four business segments are: (a) Real Estate, (b) Private Equity, (c) Credit & Insurance and (d) Multi-Asset Investing.
Information about our business segments should be read together with “Part II. Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.”
For more information concerning the revenues and fees we derive from our business segments, see “—Fee Structure/Incentive Arrangements.”
Our Real Estate business is a global leader in real estate investing, with $336.9 billion of Total Assets Under Management as of December 31, 2023. Our Real Estate segment operates as one globally integrated business with approximately 870 employees and has investments across the globe, including in the Americas, Europe and Asia. Our real estate investment teams seek to utilize our global expertise and presence to generate attractive risk-adjusted returns for our investors.
Our Blackstone Real Estate Partners (“BREP”) business is geographically diversified and targets a broad range of opportunistic real estate and real estate-related investments. The BREP platform includes global funds as well as funds focused specifically on Europe or Asia investments. BREP seeks to invest thematically in high-quality assets, focusing where we see outsized growth potential driven by global economic and demographic trends. BREP has made significant investments in logistics, rental housing, hospitality, office and retail properties around the world, as well as in a variety of real estate operating companies.
Our Core+ real estate strategy invests in substantially stabilized real estate globally primarily through perpetual capital vehicles. Our Core+ real estate strategy includes our (a) Blackstone Property Partners (“BPP”) funds, which is focused on high-quality assets in the Americas, Europe and Asia and (b) our
non-listed
REIT, Blackstone Real Estate Income Trust, Inc. (“BREIT”) and our Blackstone European Property Income (“BEPIF”) vehicles, which provide income-focused individual investors access to institutional quality real estate primarily in the Americas and Europe, respectively.
Our Blackstone Real Estate Debt Strategies (“BREDS”) platform primarily targets real estate-related debt investment opportunities. BREDS invests in both public and private markets, primarily in the U.S. and Europe. BREDS’ scale and investment mandates enable it to provide a variety of lending options for our borrowers and investment options for our investors, including commercial real estate and mezzanine loans, residential mortgage loan pools and liquid real estate-related debt securities. The BREDS platform includes high-yield real estate debt funds, liquid real estate debt funds and Blackstone Mortgage Trust, Inc. (“BXMT”), a NYSE-listed real estate investment trust (“REIT”).
Our Private Equity segment encompasses global businesses with a total of approximately 650 employees managing $314.4 billion of Total Assets Under Management as of December 31, 2023. Our Private Equity segment includes our Corporate Private Equity business, which consists of: (a) our global private equity funds, Blackstone Capital Partners (“BCP”), (b) our sector-focused funds, including our energy- and energy transition-focused funds, Blackstone Energy Transition Partners (“BETP”), (c) our Asia-focused private equity funds, Blackstone Capital Partners Asia and (d) our core private equity funds, Blackstone Core Equity Partners (“BCEP”). Our Private Equity segment also includes (a) our opportunistic investment platform that invests flexibly across asset classes, industries and geographies, Blackstone Tactical Opportunities (“Tactical Opportunities”), (b) our secondary funds business, Strategic Partners Fund Solutions (“Strategic Partners”), and our business that targets minority investments in the general partners of private equity and other private market alternative asset management firms (“GP Stakes”) as “Secondaries”, (c) our infrastructure-focused funds, Blackstone Infrastructure Partners (“BIP”), (d) our life sciences investment platform, Blackstone Life Sciences (“BXLS”), (e) our growth equity investment platform, Blackstone Growth (“BXG”), (f) our investment platform offering eligible individual investors access to Blackstone’s private equity capabilities, Blackstone Private Equity Strategies Fund (“BXPE”), (g) our multi-asset investment program for eligible
investors offering exposure to certain of Blackstone’s key illiquid investment strategies through a single commitment, Blackstone Total Alternatives Solution (“BTAS”) and (h) our capital markets services business, Blackstone Capital Markets (“BXCM”).
We are a global leader in private equity investing. Our Corporate Private Equity business pursues transactions across industries on a global basis. It strives to create value by investing in great businesses where our capital, strategic insight, global relationships and operational support can drive transformation. Corporate Private Equity’s investment strategies and core themes continually evolve in anticipation of, or in response to, changes in the global economy, local markets, regulation, capital flows and geopolitical trends. We seek to construct a differentiated portfolio of investments with a well-defined, post-acquisition value creation strategy. Similarly, we seek investments that can generate strong unlevered returns regardless of entry or exit cycle timing.
BCEP pursues control-oriented investments in high-quality companies with durable businesses and seeks to offer a lower level of risk and a longer hold period than traditional private equity.
Tactical Opportunities pursues a thematically driven, opportunistic investment strategy. Our flexible, global mandate enables us to find differentiated opportunities across asset classes, industries and geographies and invest behind them with the frequent use of structure to generate attractive risk-adjusted returns. Tactical Opportunities’ ability to dynamically shift focus to the most compelling opportunities in any market environment, combined with the business’ expertise in structuring complex transactions, enables Tactical Opportunities to invest in attractive market areas, often with securities that provide downside protection and maintain upside return.
Secondaries is comprised of our Strategic Partners and GP Stakes businesses. Strategic Partners is a total fund solutions provider. As a secondary investor, it acquires interests in high-quality private funds from original holders seeking liquidity. Strategic Partners focuses on a range of opportunities in underlying funds such as private equity, real estate, infrastructure, venture and growth capital, credit and other types of funds, as well as general
partner-led
transactions and primary investments and
co-investments
with financial sponsors. Strategic Partners also provides investment advisory services to separately managed account clients investing in primary and secondary investments in private funds and
co-investments.
Effective the quarter ended June 30, 2024, our GP Stakes business moved from our Multi-Asset Investment segment to our Private Equity segment. GP Stakes targets minority investments in the general partners of private equity and other private market alternative asset management firms globally, with a focus on delivering a combination of recurring annual cash flow yield and long-term capital appreciation.
BIP targets a diversified mix of core+, core and public-private partnership investments across all infrastructure sectors, including energy infrastructure, transportation, digital infrastructure and water and waste, with a primary focus in the U.S. BIP applies a disciplined, operationally intensive investment approach to investments, seeking to apply a long-term
strategy to large-scale infrastructure assets with a focus on delivering stable, long-term capital appreciation together with a predictable annual cash flow yield.
BXLS invests across the life cycle of companies and products within the life sciences sector. BXLS primarily focuses on investments in life sciences products in late-stage clinical development within the pharmaceutical, biotechnology and medical technology sectors.
BXG seeks to deliver attractive risk-adjusted returns by investing in dynamic, growth-stage businesses, with a focus on the consumer, consumer technology, enterprise solutions, financial services and healthcare sectors.
BXPE invests primarily in privately negotiated, equity-oriented investments, leveraging the talent and investment capabilities of Blackstone’s private equity platform to create an attractive portfolio of alternative investments diversified across geographies and sectors for eligible individual investors.
Our Credit & Insurance segment has approximately 625 employees and manages $312.7 billion of Total Assets Under Management as of December 31, 2023. Effective January 1, 2024, our corporate credit (formerly Blackstone Credit or BXC), asset based finance and insurance (“insurance platform” and formerly Blackstone Insurance Solutions or BIS) groups were integrated into a single new unit, Blackstone Credit & Insurance (“BXCI”). BXCI offers its clients and borrowers a comprehensive solution across corporate and asset based, as well as investment grade and
non-investment
grade, private credit. BXCI is one of the largest credit-oriented managers and CLO managers in the world. The investment portfolios of the funds BXCI’s credit platform manages or
sub-advises
consist primarily of loans and securities of
non-investment
and investment grade companies spread across the capital structure including senior debt, subordinated debt, preferred stock and common equity.
BXCI is organized into three overarching credit investing strategies: private corporate credit, liquid corporate credit and infrastructure and asset based credit. The private corporate credit strategies include mezzanine and direct lending funds, private placement strategies and stressed/distressed strategies. The direct lending funds include Blackstone Private Credit Fund (“BCRED”) and Blackstone Secured Lending Fund (“BXSL”), both of which are business development companies (“BDCs”). The liquid corporate credit strategies consist of CLOs, closed-ended funds, open-ended funds, systematic strategies and separately managed accounts. The infrastructure and asset based credit strategies include our energy strategies (including our sustainable resources platform) and asset based finance strategies focused on privately originated, income-oriented credit assets secured by physical or financial collateral.
Our insurance platform focuses on providing full investment management services for insurers’ general accounts, seeking to deliver customized and diversified portfolios that include allocations to Blackstone managed products and strategies across asset classes and Blackstone’s private credit origination capabilities. Through this platform, we provide our clients tailored portfolio construction and strategic asset allocation, seeking to generate risk-managed, capital-efficient returns, diversification and capital preservation that meets clients’ objectives. We also provide similar services to clients through separately managed accounts or by
sub-managing
assets for certain insurance-dedicated funds and special purpose vehicles. Through the insurance platform, we currently manage assets for clients that include Corebridge Financial Inc., Everlake Life Insurance Company, Fidelity & Guaranty Life Insurance Company and Resolution Life Group, among others.
Effective the quarter ended March 31, 2024, our Hedge Fund Solutions segment was renamed “Multi-Asset Investing.” Working with our clients for more than 30 years, our Multi-Asset Investing group is a leading manager of institutional funds with approximately 245 employees managing $76.2 billion of Total Assets Under Management as of December 31, 2023. Our Multi-Asset Investing segment seeks to grow investors’ assets through investment strategies designed to deliver, primarily through the public markets, compelling risk-adjusted returns. Blackstone Multi-Asset Investing (“BXMA”) is the world’s largest discretionary allocator to hedge funds, managing a broad range of commingled and customized fund solutions since its inception in 1990. BXMA is organized into two primary platforms: Absolute Return and Multi-Strategy. Absolute Return is designed to pursue consistent, efficient and diversifying returns across multiple market environments. Absolute Return manages a broad range of commingled and customized fund solutions, a seeding business and registered funds that provide alternative asset solutions through daily liquidity products. Multi-Strategy aims to generate strong risk-adjusted returns through opportunistic, asset-class agnostic investing, including structured risk transfer and equity capital markets strategies. Effective the quarter ended June 30, 2024, our platform managed by Harvest Fund Advisors LLC (“Harvest”) moved from our Credit & Insurance segment to our Multi-Asset Investing segment. Harvest primarily invests in publicly traded energy infrastructure, renewables and master limited partnerships holding midstream energy assets in North America.
Each of our business segments currently includes Perpetual Capital assets under management, which refers to assets under management with an indefinite term, that are not in liquidation and for which there is no requirement to return capital to investors through redemption requests in the ordinary course of business, except where funded by new capital inflows. In recent years, we have continued to meaningfully increase our assets under management in such vehicles. Perpetual Capital strategies represent a significant and growing portion of our overall business, and the management fees and performance revenues we receive. Among the strategies in each of our segments, Perpetual Capital strategies include, without limitation, (a) in our Real Estate segment, Core+ real estate (including BREIT and BEPIF) and BXMT, (b) in our Private Equity segment, BIP, GP Stakes and BXPE, and (c) in our Credit & Insurance segment, BXSL and BCRED. In addition, assets managed for certain of our insurance clients are Perpetual Capital assets under management.
Blackstone’s business historically focused on the provision of investment products, such as traditional drawdown funds, to institutional investors. In recent years, we have considerably expanded the number and type of investment products we offer through various distribution channels to certain
and mass affluent individual investors in the U.S. and other jurisdictions around the world. Our Private Wealth Solutions business is dedicated to building out our distribution capabilities in the private wealth channel to provide certain individual investors with access to Blackstone products across a broad array of alternative investment strategies. In recent years, capital from the private wealth channel has represented an increasing portion of our Total Assets Under Management, and we expect this trend to continue as we continue to undertake initiatives focused on this market segment.
Investment Process and Risk Management
We maintain a rigorous investment process across all of our investment vehicles. Each investment vehicle has investment policies and procedures that generally contain requirements, guidelines and limitations for investments, such as limitations relating to the amount that will be invested in any one investment and the types of assets, industries or geographic regions in which the vehicle will invest, as well as limitations required by law.
Our investment professionals are responsible for identifying, evaluating, underwriting, diligencing, negotiating, executing, managing and exiting investments. For those of our businesses with review committees and/or investment committees, such committees review and evaluate investment opportunities in a framework that includes a qualitative and quantitative assessment of the key risks of investments. In such businesses, investment professionals generally submit investment opportunities for review and approval by a review committee and/or investment committee, subject to delineated exceptions set forth in the funds’ investment committee charters or resolutions. Review and investment committees are generally comprised of senior leaders and other senior professionals of the applicable investment business, and in many cases, other senior leaders of Blackstone and its businesses. Considerations that review and investment committees take into account when evaluating an investment may include, without limitation and depending on the nature of the investing business and its strategy, the quality of the business or asset in which the fund proposes to invest, the quality of the management team, likely exit strategies and factors that could reduce the value of the business or asset at exit, the ability of the business in which the investment is made to service debt in a range of economic and interest rate environments, macroeconomic trends in the relevant geographic region or industry and the quality of the businesses’ operations. In addition, the majority of our businesses have ESG policies that address, among other things, the review of ESG risks in the respective business’s investment process. Existing investments are reviewed and monitored on a regular basis by investment and asset management professionals. In addition, our investment professionals, Portfolio Operations professionals work with our portfolio company senior executives to identify opportunities to drive operational efficiencies and growth.
In addition, before deciding to invest in an investment fund or an alternative asset manager, as applicable, our Multi-Asset Investing and Secondaries teams conduct diligence in a number of areas, which, depending on the nature of the investment, may include, among others, the fund’s/manager’s performance, investment terms, investment strategy and investment personnel, as well as its operations, processes, risk management and internal controls. With respect to liquid credit clients and other clients whose portfolios are actively traded in our Credit & Insurance segment, our industry-focused research analysts provide the review and/or investment committee with a formal and comprehensive review of new investment recommendations and portfolio managers and trading
professionals discuss, among other things, risks associated with overall portfolio composition. Our Credit & Insurance segment’s research team monitors the operating performance of underlying issuers, while portfolio managers, together with our traders, focus on optimizing asset composition to maximize value for our investors. This investment process is assisted by a variety of proprietary and
non-proprietary
research models and methods.
Structure and Operation of Our Investment Vehicles
Our asset management businesses include private investment funds, registered funds, BDCs, REITs, CLOs, SMAs and other vehicles focused on real estate, private equity, infrastructure, life sciences, growth equity, credit, real assets and secondary funds, all on a global basis. Many of our private investment funds and other vehicles are targeted at institutional investors. We also have several products, such as BREIT, BCRED and BXPE, among others, that are targeted at individual investors, including
investors (“Private Wealth Products”).
Our private investment funds are generally organized as limited partnerships with respect to U.S. domiciled vehicles and limited partnerships or other similar limited liability entities with respect to
non-U.S.
domiciled vehicles. These funds accept commitments and/or subscriptions for investment from institutional investors and/or
individuals. Our Private Wealth Products are organized using a variety of structures, including corporations, statutory trusts, limited partnerships or other vehicles, and accept subscriptions for investment from
individuals and/or other individual investors. Our private investment funds are generally either commitment-structured funds, where commitments are generally drawn down from investors on an
as-needed
basis to fund investments (or for other permitted purposes) over a specified term, or open-ended funds, where the investor’s capital may be fully funded on or shortly after the investor’s subscription date and cash proceeds resulting from the disposition of investments can be reinvested, subject to certain limitations and limited investor withdrawal rights. In most of our Private Wealth Products, the investor’s capital is fully funded on the subscription date. Our BXCI insurance platform is generally structured around separately managed accounts and our BXCI CLO vehicles are generally private companies with limited liability.
Our investment funds, separately managed accounts and other vehicles not domiciled in the European Economic Area (the “EEA”) are each generally advised by a Blackstone entity serving as investment adviser that is registered under the U.S. Investment Advisers Act of 1940, as amended (the “Advisers Act”). For our investment funds, separately managed accounts and other vehicles domiciled in the EEA, a Blackstone entity domiciled in the EEA generally serves as external alternative investment fund manager (“AIFM”), and the AIFM typically delegates its portfolio management function to a Blackstone-affiliated investment adviser registered under the Advisers Act. The Blackstone entity serving as investment adviser or AIFM, as applicable, typically carries out substantially all of the
operations of each investment vehicle pursuant to an investment advisory, investment management, AIFM or other similar agreement. Generally, the material terms of our investment advisory and AIFM agreements, as applicable, relate to the scope of services to be rendered by the investment adviser or the AIFM to the applicable vehicle, the calculation of management fees to be borne by investors in our investment vehicles, the calculation of and the manner and extent to which other fees received by the investment adviser or the AIFM, as applicable, from funds or fund portfolio companies serve to offset or reduce the management fees payable by investors in our investment vehicles and certain rights of termination with respect to our investment advisory and AIFM agreements.
Our private investment funds do not generally register as investment companies under the U.S. Investment Company Act of 1940, as amended (the “1940 Act”), in reliance on the statutory exemptions provided by Section 3(c)(7), Section 3(c)(5)(C) or Section 3(c)(1) thereof. Section 3(c)(7) of the 1940 Act exempts from its registration requirements investment vehicles privately placed in the United States whose securities are beneficially owned exclusively by persons who, at the time of acquisition of such securities, are “qualified purchasers” as defined under the 1940 Act. In addition, under current interpretations of the SEC, Section 3(c)(7) of
the 1940 Act exempts from registration any
non-U.S.
investment vehicle all of whose outstanding securities are beneficially owned either by
non-U.S.
residents or by U.S. residents that are qualified purchasers. Section 3(c)(5)(C) of the 1940 Act exempts from its registration requirements certain companies engaged primarily in investment in mortgages and other liens or investments in real estate. Section 3(c)(1) of the 1940 Act exempts from its registration requirements privately placed investment vehicles whose securities are beneficially owned by not more than 100 persons. Additionally, under current interpretations of the SEC, Section 3(c)(1) of the 1940 Act exempts from registration any
non-U.S.
investment vehicle not publicly offered in the U.S. all of whose outstanding securities are beneficially owned by not more than 100 U.S. residents. In addition, each of BXMT and BREIT conducts its operations in a manner that allows it to maintain its REIT qualification and avail itself of the statutory exemption provided by Section 3(c)(5)(C) of the 1940 Act and our U.S. BXPE vehicle relies on Section 3(c)(7) of the 1940 Act. Our Private Wealth Products include funds that are registered, or regulated as a BDC, under the 1940 Act. In addition, certain of our investment advisers or AIFMs advise or
sub-advise
funds domiciled in, and subject to registration and regulatory requirements of, the EEA.
In addition to having an investment adviser, each investment fund that is a limited partnership, or “partnership” fund, also has a general partner that, apart from partnership funds domiciled in the EEA, generally makes all operational and investment decisions, including the making, monitoring and disposing of investments. Investment vehicles in our Private Wealth Products typically have a board that includes independent directors. In the case of our separately managed accounts, the investor, rather than we, generally holds or has custody of the investments. The investors in our investment funds generally take no part in the conduct or control of the business of the investment funds, have no right or authority to act for or bind the investment funds and have no influence over the voting or disposition of the securities or other assets held by the investment funds. Third party investors in some of our partnership funds have the right to remove the general partner of the fund or to accelerate the termination of the fund without cause by a majority or supermajority vote. In addition, the governing agreements of many of our partnership funds provide that in the event certain “key persons” in our partnership funds do not meet specified time commitments with regard to managing the fund, then (a) investors in such funds have the right to vote to terminate the investment period by a specified percentage (including, in certain cases a simple majority) vote in accordance with specified procedures, or accelerate the withdrawal of their capital on an
basis, or (b) the fund’s investment period will automatically terminate and a specified percentage (including, in certain cases a simple majority) in accordance with specified procedures is required to restart it. In addition, the governing agreements of some of our partnership funds provide that investors have the right to terminate the investment period for any reason by a supermajority vote of the investors in such fund.
Fee Structure/Incentive Arrangements
The following is a general description of the management fees earned by Blackstone. Management fees are generally based on an annual rate but payable on a regular basis (typically monthly or quarterly). Management fees received are not subject to clawback.
| | • | | In our carry funds, the investment adviser or AIFM (depending on the domicile of the fund) receives a management fee based on a percentage of the fund’s capital commitments, invested capital and/or undeployed capital during the investment period and the fund’s invested capital, investment fair value or capital commitments after the investment period. Management fees are generally payable over either the term or life of the fund. Depending on the fee basis, negative performance of one or more investments in the fund may reduce the total management fee paid for the relevant period, but not the fee rate. |
| | • | | In our other fund structures, unless outlined differently below, the investment adviser or AIFM (depending on the domicile of the fund) receives a management fee based on a percentage of the fund’s |
| | net asset value over the term or life of the fund. These funds may permit investors to withdraw or redeem their interests periodically, in some cases following the expiration of a specified period of time when capital may not be withdrawn. Decreases in net asset value reduce the total management fee paid for the relevant period, but not the fee rate. |
| | • | | In our CLOs, the investment adviser typically receives a base management fee and a subordinated management fee, which are calculated as a percentage of the CLO’s assets. Although varying from deal to deal, a CLO will typically be wound down within eight to eleven years of being launched. The amount of fees will decrease as the CLO deleverages toward the end of its term. |
| | • | | In our separately managed accounts, the investment adviser generally receives a management fee based on a percentage of each account’s net asset value or invested capital. Such management fees are generally subject to contractual rights the investor has to terminate our management on generally as short as 30 days’ notice. |
| | • | | In our credit-focused registered investment companies and our BDCs, the investment adviser typically receives a management fee based on a percentage of net asset value or total managed assets. Such management fees are generally subject to contractual rights of the company’s board of directors to terminate our management of an account on as short as 30 days’ notice. |
| | • | | For BXMT, the investment adviser receives a management fee based on a percentage of BXMT’s net proceeds received from equity offerings and accumulated “distributable earnings” (which is generally equal to its net income, calculated under GAAP, excluding certain non-cash and other items), subject to certain adjustments. |
For additional information regarding the management fee rates we receive, see “Part II. Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations — Critical Accounting Policies — Revenue Recognition — Management and Advisory Fees, Net.”
Our incentive arrangements are composed of (a) contractual incentive fees received from certain investment vehicles upon achieving specified cumulative investment returns (“Incentive Fees”), and (b) a disproportionate allocation of the income generated by investment vehicles otherwise allocable to investors upon achieving certain investment returns (“Performance Allocations”, and, together with Incentive Fees, “Performance Revenues”).
In our carry funds, our Performance Revenues consist of the Performance Allocations to which the general partner or an affiliate thereof is entitled, commonly referred to as carried interest. Our ability to generate and realize carried interest is an important element of our business and has historically accounted for a very significant portion of our income.
Carried interest is typically structured as a net profits interest in the applicable fund. In the case of our carry funds, carried interest is generally calculated on a “realized gain” basis, and each general partner (or affiliate) is generally entitled to an allocation of up to 20% of the net realized income and gains (generally taking into account realized and unrealized or net unrealized losses) generated by such fund. Net realized income or loss is not generally netted between or among funds, and in some cases our carry funds provide for allocations to be made on current income distributions (subject to certain conditions).
For most carry funds, the carried interest is subject to a preferred limited partner return generally ranging from 5% to 8% per year, subject to a
catch-up
allocation to the general partner. Some of our carry funds do not provide for a preferred return, and generally the terms of our carry funds vary in certain respects across our business units and vintages. If, at the end of the life of a carry fund (or earlier with respect to certain of our carry
funds), as a result of diminished performance of later investments in a carry fund’s life, (a) the general partner receives in excess of the relevant carried interest percentage(s) applicable to the fund as applied to the fund’s cumulative net profits over the life of the fund, or (in certain cases) (b) the carry fund has not achieved investment returns that exceed the preferred return threshold (if applicable), then we will be obligated to repay an amount equal to the carried interest that was previously distributed to us that exceeds the amounts to which we were ultimately entitled, up to the amount of carried interest received on an
after-tax
basis. This is known as a “clawback” obligation and is an obligation of any person who received such carried interest, including us and other participants in our carried interest plans.
Although a portion of any dividends paid to our stockholder may include any carried interest received by us, we do not intend to seek fulfillment of any clawback obligation by seeking to have our stockholders return any portion of such dividends attributable to carried interest associated with any clawback obligation. To the extent we are required to fulfill a clawback obligation, however, we may determine to decrease the amount of our dividends to our stockholders. The clawback obligation operates with respect to a given carry fund’s own net investment performance only and carried interest of other funds is not netted for determining this contingent obligation. Moreover, although a clawback obligation is several, the governing agreements of most of our funds provide that to the extent another recipient of carried interest (such as a current or former employee) does not fund his or her respective share of the clawback obligation then due, then we and our employees who participate in such carried interest plans may have to fund additional amounts (generally an additional 50% to 70% beyond our
pro-rata
share of such obligation) although we retain the right to pursue any remedies that we have under such governing agreements against those carried interest recipients who fail to fund their obligations. We have recorded a contingent repayment obligation equal to the amount that would be due on December 31, 2023, if the various carry funds were liquidated at their current carrying value. For additional information concerning the clawback obligations we could face, see “—Item 1A. Risk Factors — Risks Related to Our Business — We may not have sufficient cash to pay back “clawback” obligations if and when they are triggered under the governing agreements with our investors.”
In our structures other than carry funds, our Performance Revenues generally consist of performance-based allocations of a vehicle’s net capital appreciation during a measurement period, typically a year, subject to the achievement of minimum return levels, high water marks, loss carry forwards and/or other hurdle provisions, in accordance with the respective terms set out in each vehicle’s governing agreements. Such allocations are typically realized at the end of the measurement period and, once realized, are typically not subject to clawback or reversal. In particular, our ability to generate and realize these amounts is an important element of our business. Such allocations in certain of our Perpetual Capital strategies contribute a significant and growing portion to our overall revenues.
The following is a general description of the Performance Revenues earned by Blackstone in structures other than carry funds:
| | • | | In our Multi-Asset Investing segment, the investment adviser of certain of our funds of hedge funds, hedge funds, separately managed accounts that invest in hedge funds and certain non-U.S. registered investment companies, is entitled to an incentive fee generally between 0% to 20%, as applicable, of the applicable investment vehicle’s net appreciation, subject to “high water mark” provisions and in some cases a preferred return. |
| | • | | The general partners or similar entities of each of our real estate and credit hedge fund structures receive incentive fees of generally up to 20% of the applicable fund’s net capital appreciation per annum. |
| | • | | The investment adviser of our BDCs receives (a) income incentive fees of 12.5% or 17.5%, as applicable, subject to, in certain cases, certain hurdles, catch-ups and caps, payable quarterly, and (b) capital gains incentive fees (net of realized and unrealized losses) of 12.5% or 17.5%, as applicable, payable annually. |
| | • | | The investment manager of BXMT receives an incentive fee generally equal to 20% of BXMT’s distributable earnings in excess of a 7% per annum return on stockholders’ equity (excluding stock appreciation or depreciation), provided that BXMT’s distributable earnings over the prior three years is greater than zero. |
| | • | | The general partner or special limited partner of each of BREIT, BEPIF and BXPE receives a performance participation allocation of 12.5% of total return, subject to a 5% hurdle amount with a catch-up and recouping any loss carry forward amounts, measured annually and payable quarterly. |
| | • | | The general partners of certain open-ended BPP and BIP funds are entitled to an incentive fee allocation generally between 7% and 12.5% of net profit, subject to a hurdle amount generally of between 5.5% and 7%, a loss recovery amount and a catch-up. Incentive allocations for these funds are generally realized every three years from when a limited partner makes its initial investment, or upon a limited partner’s redemption from the fund. |
Advisory and Transaction Fees
Some of our investment advisers or their affiliates receive customary fees (for example, acquisition, origination and other transaction fees) upon consummation of their funds’ transactions, and may from time to time receive advisory, monitoring and other fees in connection with their activities. For most of the funds where we receive such fees, we are required to reduce the management fees charged to the funds’ investors by 50% to 100% of such limited partner’s share of such fees.
Capital Invested In and Alongside Our Investment Funds
To further align our interests with those of investors in our investment funds, we have invested the firm’s capital and that of our personnel in the investment funds we sponsor and manage. Minimum general partner capital commitments to our investment funds are determined separately with respect to each of our investment funds and, generally, are less than 5% of the limited partner commitments of any particular fund. See “Part II. Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources” for more information regarding our minimum general partner capital commitments to our funds. We determine whether to make general partner capital commitments to our funds in excess of the minimum required commitments based on, among other things, our anticipated liquidity, working capital and other capital needs. In many cases, we require our senior managing directors and other professionals to fund a portion of the general partner capital commitments to our funds. In other cases, we may from time to time offer to our senior managing directors and employees a part of the funded or unfunded general partner commitments to our investment funds. Our general partner capital commitments are funded with cash and not with carried interest or deferral of management fees.
Investors in many of our funds also receive the opportunity to make additional
“co-investments”
with the investment funds. Our personnel, as well as Blackstone itself and certain Blackstone relationships, also have the opportunity to make investments, in or alongside our funds and other vehicles we manage, in some instances without being subject to management fees, carried interest or incentive fees. In certain cases, limited partner investors may pay additional management fees or carried interest in connection with such
co-investments.
The asset management industry is intensely competitive, and we expect it to remain so. We compete both globally and on a regional, industry and sector basis. We compete on the basis of a number of factors, including investment performance, transaction execution skills, access to capital, access to and retention of qualified personnel, reputation, range of products and services, innovation and price.
We face competition in the pursuit of institutional and individual investors for our investment funds. Although over time many institutional and individual investors have increased the amount of capital they commit to alternative investment funds, such increases may create increased competition with respect to fees charged by our funds. Certain institutional investors have demonstrated a preference to
in-source
their own investment professionals and to make direct investments in alternative assets without the assistance of private equity advisers like us. We compete for investments with such institutional investors and such institutional investors could cease to be our clients. With respect to the private wealth channel and insurance sector, the market for capital is highly competitive, requires significant investment and is highly regulated, which could create competitive challenges for us.
We also face competition in the pursuit of attractive investment opportunities for our funds. Depending on the investment, we face competition primarily from sponsors managing other funds, investment vehicles and other pools of capital, other financial institutions and institutional investors (including sovereign wealth and pension funds), corporate buyers and other parties. Several of these competitors have significant amounts of capital and many of them have investment objectives similar to ours, which may create additional competition for investment opportunities. Some of these competitors may also have a lower cost of capital and access to funding sources or other resources that are not available to us, which may create competitive disadvantages for us with respect to investment opportunities. In addition, some of these competitors may have higher risk tolerances, different risk assessments or lower return thresholds, which could allow them to consider a wider variety of investments and to bid more aggressively than us for investments. Corporate buyers may be able to achieve synergistic cost savings with regard to an investment or be perceived by sellers as otherwise being more desirable bidders, which may provide them with a competitive advantage in bidding for an investment.
In all of our businesses, competition is also intense for the attraction and retention of qualified employees. Our ability to continue to compete effectively in our businesses will depend upon our ability to attract new employees and retain and motivate our existing employees.
For additional information concerning the competitive risks that we face, see “—Item 1A. Risk Factors — Risks Related to Our Business — The asset management business is intensely competitive.”
Environmental, Social and Governance
Our investors have relied on our relentless commitment to excellence for nearly 40 years. Our ESG efforts are anchored in our goal of generating strong returns for investors to fulfil our fiduciary duty. Our integrated team includes dedicated coverage at the firm level and at individual business units. Senior management reports quarterly to our board of directors, which is responsible for reviewing our ESG strategy, including on the basis of periodic reports from management addressing relevant matters and practices.
Our strategy prioritizes (a) reinforcing strong governance, a foundation of resilient companies, (b) accelerating decarbonization by investing in the energy transition and driving value-accretive emissions reduction in our portfolio and (c) building workplaces by expanding talent pools. We have pursued attractive investments in
companies and assets that support the global energy transition. We are also focused on helping select portfolio companies capture cost savings through greenhouse gas emission reduction efforts as part of our Emissions Reduction Program. This program aims to reduce Scope 1 and Scope 2 carbon emissions by 15% on average across certain new investments where we control energy usage during the first three full calendar years of ownership. At a corporate level, we seek to advance corporate sustainability, energy efficiency and environmental performance at out global office locations.
At Blackstone, our people are our most valuable asset. We seek to attract, develop and retain outstanding talent across a wide spectrum of disciplines. We believe building inclusive workplaces positions us and our portfolio companies to access a broad pool of qualified talent, including from historically under-tapped talent pools, and foster inclusive cultures that generate lasting value for our investors. See “—Human Capital Management.”
Blackstone’s employees are integral to our culture of integrity, professionalism, excellence and cooperation. The intellectual capital collectively possessed by our employees is our most important asset. We hire qualified people, train them and encourage them to work together to provide their best thinking to the firm for the benefit of the investors in the funds we manage. As of December 31, 2023, we employed approximately 4,735 people. During 2023, our total number of employees increased by approximately 40.
Our board of directors plays an active role in overseeing our human capital management efforts. To that end, senior management reviews with our board of directors management succession planning and development and other key aspects of our talent management strategy.
We believe a workforce reflecting a breadth of backgrounds and experiences makes us better investors and a better firm. Our diversity, equity and inclusion strategy leverages a people-driven framework based on four key pillars: recruiting, talent development, community and inclusion and accountability. We believe that by focusing on each of these pillars and investing in our people and our culture, we will create an inclusive environment that helps expand our access to the best available talent and drives retention and advancement opportunities for our employees.
To that end, our employee affinity networks, which are open to all employees, serve as a platform for our professionals to expand cultural awareness and connect to other employees, including through speaker series, professional development panels and social events. We also seek to enable ourselves and our portfolio companies to access a broad pool of qualified talent, including through firm programs aimed at introducing talented undergraduate students to financial services and Blackstone and portfolio programs aimed at helping our portfolio companies access historically under-tapped talent pools.
Employee and Community Engagement
Blackstone is committed to ensuring our employees are engaged with their work and with their local communities. Blackstone regularly gathers feedback from our employees via internal and/or external surveys to assess employee engagement and satisfaction and develop targeted solutions. Blackstone also supports its employee affinity networks in their efforts to expand cultural awareness and connection across the firm.
In addition, the Blackstone Charitable Foundation (“BXCF”) was established in 2007 and is committed to supporting Blackstone’s goal of helping foster economic opportunity and career mobility for historically
underrepresented groups. This includes, among other initiatives, its signature Blackstone LaunchPad network, which seeks to close the opportunity gap by equipping college and university students with the entrepreneurial skills they need to build lasting careers, and BX Connects, a global program that provides Blackstone employees with the opportunity to support their local communities through volunteering and giving. BX Connects uses the firm’s scale, talent and resources to make grants, develop nonprofit partnerships and create employee engagement opportunities. Nearly 90% of our employees engaged globally with BXCF’s charitable initiatives in 2023.
Talent Acquisition, Development and Retention
We believe the talent of our employees, coupled with our rigorous investment process, has supported our excellent investment record over many years. We are therefore focused on hiring, training, motivating and retaining talented individuals. Across all our businesses, we face intense competition for qualified personnel.
We seek to attract and retain the brightest minds across a wide spectrum of disciplines and from varied backgrounds and experiences. We believe our reputation, talent development opportunities and compensation make us an attractive employer. We encourage independent thinking and reward initiative while providing training and development opportunities to help our employees grow professionally. In addition, our Respect at Work programs and trainings help maintain an inclusive work environment in which all individuals are treated with respect and dignity. Employee education and training are also critical to maintaining a culture of compliance.
Blackstone offers a wide range of learning and professional development opportunities, both formally and informally, to help employees advance their careers and maximize the value they can add to the global firm. Incoming analyst classes are provided with training that spans their first few years. In addition, our new hires are provided with training and other opportunities to help them thrive in our culture, including through our Culture Program and our Leadership Speaker Series. Blackstone employees are trained or enrolled in compliance training when they start at the firm, and we retrain employees globally at least once annually. Over the course of their careers at Blackstone, employees are offered learning opportunities in a number of areas including leadership and management development and communication skills, among others. We offer a global development curriculum on key capabilities required to succeed at Blackstone, and we partner with external organizations to deliver training programs for our employees. We consistently seek to create visibility and opportunities for talent to take on roles beyond their current positions, and for managers to connect regularly to discuss and match talent with critical roles. These efforts result in cross-pollination of talent that we believe engages our people and generates stronger outcomes for the firm.
As discussed below, we seek to retain and incentivize the performance of our employees through our compensation structure. We also enter into
non-competition
and
non-solicitation
agreements with certain employees. See “Part III. Item 11. Executive Compensation —
Non-Competition
and
Non-Solicitation
Agreements” for a description of the material terms of such agreements.
Compensation, Benefits and Wellness
Our compensation is designed to motivate and retain employees and align their interests with those of the investors in our funds. In particular, incentive compensation for our senior managing directors and employees involves a combination of annual cash bonus payments and performance interests or deferred equity awards, which we believe encourages them to focus on the performance of our investment funds and the overall performance of the firm. The proportion of compensation that is “at risk” generally increases as an employee’s level of responsibility rises. Employees at higher total compensation levels are generally targeted to receive a greater percentage of their total compensation payable in annual cash bonuses, participation in performance
interests and deferred equity awards and a lesser percentage in the form of base salary compared to employees at lower total compensation levels. To further align their interests with those of investors in our funds, we provide employees with the opportunity to make investments in or alongside certain of the funds and other vehicles we manage. We also provide our employees robust health and retirement offerings, as well as a variety of quality of life benefits, including
time-off
options and well-being and family planning resources.
We believe our current compensation and benefit allocations for senior professionals are best in class and are consistent with companies in the alternative asset management industry. Our senior management periodically reviews the effectiveness and competitiveness of our compensation program. Most of our current senior managing directors and other senior personnel have equity interests in our business that entitle such personnel to cash distributions. See “Part III. Item 11. Executive Compensation–Compensation Discussion and Analysis–Overview of Compensation Philosophy and Program” for more information on compensation of our senior managing directors and certain other employees.
We care greatly about the health, safety and wellbeing of our employees. Blackstone also offers comprehensive and competitive benefits to its full-time employees, including primary and secondary caregiver leave, adoption leave, phased back to work, fertility coverage, back up childcare and more. We continually evaluate and enhance our offerings to meet the needs of our employees. For example, we offer additional family planning benefits for U.S. employees such as enhancing infertility benefits to include cryopreservation and primary caregiver leave up to 21 weeks. We offer employee well-being programs, including an online therapy program and access to an education platform with coaching to support working parents and caretakers caring for children who have behavioral problems, autism or developmental disabilities. We also provide access to programs to further assist our employees in managing their lives outside of work, such as group legal services to help with estate planning and surrogacy agreements.
Data Privacy and Security
Blackstone is committed to data privacy. These topics are included in routine training received at least once annually by employees. Data privacy is typically addressed in the Global Head of Compliance’s annual update to our board of directors. Blackstone’s approach to data protection is set out in our Online Privacy Notice and its Investor Data Privacy Notice. Senior management oversees privacy, data protection and information risk management efforts, leading the privacy and data protection function, which conducts privacy impact assessments, implements
initiatives and reconciles global privacy programs with local privacy requirements. Our privacy function also supports the Data Protection Operating Committee, Blackstone’s global privacy compliance steering committee. Please see “—Part I, Item 1C. Cybersecurity” for a discussion of our cybersecurity risk management, strategy and governance.
Regulatory and Compliance Matters
Our businesses, as well as the financial services industry generally, are subject to extensive regulation in the United States and in many of the markets in which we operate.
Many of our businesses are subject to compliance with laws and regulations of U.S. federal and state governments,
non-U.S.
governments, their respective agencies and/or various self-regulatory organizations or exchanges. The SEC and various self-regulatory organizations, state securities regulators and international securities regulators have in recent years increased their regulatory activities, including regulation, examination and enforcement in respect of asset management firms, including Blackstone. Any failure to comply with these regulations could expose us to liability and/or damage our reputation. Our businesses have operated for many years within a legal framework that requires us to monitor and comply with a broad range of legal and regulatory
developments that affect our activities. However, additional legislation, changes in rules promulgated by financial regulatory authorities or self-regulatory organizations or changes in the interpretation or enforcement of existing laws and rules, either in the United States or abroad, may directly affect our mode of operation and profitability.
All of the investment advisers of our investment funds operating in the U.S. are registered as investment advisers with the SEC under the Advisers Act (other investment advisers may be registered in
non-U.S.
jurisdictions). Registered investment advisers are subject to the requirements and regulations of the Advisers Act. Such requirements relate to, among other things, fiduciary duties to advisory clients, maintaining an effective compliance program and code of ethics, investment advisory contracts, solicitation agreements, conflicts of interest, recordkeeping and reporting requirements, disclosure, advertising and custody requirements, political contributions, limitations on agency cross and principal transactions between an adviser and advisory clients, and general anti-fraud prohibitions. Certain investment advisers are also registered with international regulators in connection with their management of products that are locally distributed and/or regulated.
Blackstone Securities Partners L.P. (“BSP”), a subsidiary through which we conduct our capital markets business and certain of our fund marketing and distribution, is registered as a broker-dealer with the SEC and is subject to regulation and oversight by the SEC, is a member of the Financial Industry Regulatory Authority, or “FINRA,” and is registered as a broker-dealer in 50 states, the District of Columbia, the Commonwealth of Puerto Rico and the Virgin Islands. In addition, FINRA, a self-regulatory organization subject to oversight by the SEC, adopts and enforces rules governing the conduct, and examines the activities, of its member firms, including BSP. State securities regulators also have regulatory oversight authority over BSP.
Broker-dealers are subject to regulations that cover all aspects of the securities business, including, among others, the implementation of a supervisory control system over the securities business, advertising and sales practices, conduct of and compensation in connection with public securities offerings, maintenance of adequate net capital, record keeping and the conduct and qualifications of employees. In particular, as a registered broker-dealer and member of FINRA, BSP is subject to the SEC’s uniform net capital rule, Rule
15c3-1.
Rule
15c3-1
specifies the minimum level of net capital a broker-dealer must maintain and also requires that a significant part of a broker-dealer’s assets be kept in relatively liquid form. The SEC and various self-regulatory organizations impose rules that require notification when net capital of a broker-dealer falls below certain predefined criteria, limit the ratio of subordinated debt to equity in the capital structure of a broker-dealer and constrain the ability of a broker-dealer to expand its business under certain circumstances. Additionally, the SEC’s uniform net capital rule imposes certain requirements that may have the effect of prohibiting a broker-dealer from distributing or withdrawing capital and requiring prior notice to the SEC for certain withdrawals of capital.
In addition, certain of the
closed-end
and
open-end
investment companies we manage, advise or
sub-advise
are registered, or regulated as a BDC, under the 1940 Act. The 1940 Act and the rules thereunder govern, among other things, the relationship between us and such investment vehicles and limit such investment vehicles’ ability to enter into certain transactions with us or our affiliates, including other funds managed, advised or
sub-advised
by us.
Pursuant to the U.K. Financial Services and Markets Act 2000, or “FSMA,” certain of our subsidiaries are subject to regulations promulgated and administered by the Financial Conduct Authority (“FCA”). The FSMA and rules promulgated thereunder form the cornerstone of legislation which governs all aspects of our investment business in the United Kingdom, including sales, provision of investment advice, use and safekeeping of client funds and securities, regulatory capital, recordkeeping, approval standards for individuals, anti-money laundering, periodic reporting and settlement procedures. Blackstone Europe LLP (formerly known as Blackstone Group International Partners LLP) (“BELL”) acts as a
sub-advisor
to its Blackstone U.S. affiliates in relation to the investment and
re-investment
of Europe, Middle East and Africa (“EMEA”) based assets of Blackstone Funds,
arranging transactions to be entered into by or on behalf of Blackstone Funds, and providing certain related services. Until December 31, 2020, BGIP had a MiFID II (as defined herein) cross-border passport to provide investment services into the European Economic Area (“EEA”). As of January 1, 2021, as a result of the U.K.’s withdrawal from the European Union, BGIP no longer has a MiFID II passport. Consequently, BELL can only provide investment services in certain EEA jurisdictions where it has obtained a domestic license on a cross-border services basis (currently, Belgium, Denmark, Finland and Italy), or can operate pursuant to an exemption or relief (currently Ireland, Lichtenstein and Norway), although in certain cases with limitations. BELL’s principal place of business is in London, and it has a branch in Abu Dhabi Global Market.
Blackstone Ireland Limited (formerly known as Blackstone / GSO Debt Funds Management Europe Limited) (“BIL”) is authorized and regulated by the Central Bank of Ireland (“CBI”) as an Investment Firm under the (Irish) European Union (Markets in Financial Instruments) Regulations 2017, which largely implements MiFID II in Ireland. BIL’s principal activity is the provision of management and advisory services to certain CLO and
sub-advisory
services to certain affiliates. Blackstone Ireland Fund Management Limited (formerly known as Blackstone / GSO Debt Funds Management Europe II Limited) (“BIFM”) is authorized and regulated by the CBI as an Alternative Investment Fund Manager under the (Irish) European Union (Alternative Investment Fund Managers Regulations) 2013 (“AIFMRs”), which largely implements the EU Alternative Investment Fund Managers Directive (“AIFMD”) in Ireland. BIFM acts as AIFM and provides investment management functions including portfolio management, risk management, administration, marketing and related activities to its alternative investment funds in accordance with AIFMRs and the conditions imposed by the CBI as set out in the CBI’s alternative investment fund rulebook.
Blackstone Europe Fund Management S.à r.l. (“BEFM”) is an authorized Alternative Investment Fund Manager under the Luxembourg Law of 12 July 2013 on alternative investment fund managers (as amended, the “AIFM Law”), which largely implements AIFMD in Luxembourg. BEFM may also provide discretionary portfolio management services, investment advice and reception and transmission of orders in accordance with article 5(4) of the AIFM Law. BEFM provides investment management functions including portfolio management, risk management, administration, marketing and related activities to the assets of its alternative investment funds, in accordance with the AIFM Law and the regulatory provisions imposed by the
Commission de Surveillance du Secteur Financier
in Luxembourg. BEFM may also manage undertakings for collective investment in transferable securities (UCITS). As of January 1, 2021, BEFM promotes Blackstone products and services in European countries where BELL is not otherwise licensed to do so. BEFM has branches in Paris, Milan and Frankfurt which provide marketing services and where distribution and deal sourcing individuals are based.
Certain Blackstone operating entities are licensed and subject to regulation by financial regulatory authorities in Japan, Hong Kong, Australia and Singapore: The Blackstone Group Japan K.K., a financial instruments firm, is registered with Kanto Local Finance Bureau and regulated by the Japan Financial Services Agency; The Blackstone Group (HK) Limited is regulated by the Hong Kong Securities and Futures Commission; The Blackstone Group (Australia) Pty Limited and Blackstone Real Estate Australia Pty Limited each holds an Australian financial services license authorizing it to provide financial services in Australia and is regulated by the Australian Securities and Investments Commission; and Blackstone Singapore Pte. Ltd. is regulated by the Monetary Authority of Singapore.
Rigorous legal and compliance analysis of our businesses and investments is endemic to our culture and risk management. Our Chief Legal Officer and Global Head of Compliance, together with the Chief Compliance Officers of each of our businesses, supervise our compliance personnel, who are responsible for addressing the regulatory and compliance matters that affect our activities. We strive to maintain a culture of compliance through the use of policies and procedures including a code of ethics, electronic compliance systems, testing and monitoring, communication of compliance guidance and employee education and training. Our compliance policies and procedures address regulatory and compliance matters such as the handling of material
non-public
information, personal securities trading, marketing practices, gifts and entertainment, anti-money laundering, anti-bribery and sanctions, valuation of investments on a fund-specific basis, recordkeeping, potential conflicts of interest, the allocation of investment and
co-investment
opportunities, collection of fees and expense allocation.
Our compliance group also monitors the information barriers that we maintain between Blackstone’s businesses. We believe that our various businesses’ access to the intellectual knowledge and contacts and relationships that reside throughout our firm benefits all of our businesses. To maximize that access and related synergies without compromising compliance with our legal and contractual obligations, our compliance group oversees and monitors the communications between groups that are on the private side of our information barrier and groups that are on the public side, as well as between different public side groups. Our compliance group also monitors contractual obligations that may be impacted and potential conflicts that may arise in connection with these inter-group discussions.
In addition, disclosure controls and procedures and internal controls over financial reporting are documented, tested and assessed for design and operating effectiveness in accordance with the U.S. Sarbanes-Oxley Act of 2002. Internal Audit, which independently reports to the audit committee of our board of directors, operates with a global mandate and is responsible for the examination and evaluation of the adequacy and effectiveness of the organization’s governance and risk management processes and internal controls, as well as the quality of performance in carrying out assigned responsibilities to achieve the organization’s stated goals and objectives.
Our enterprise risk management framework is designed to manage
non-investment
risk areas across the firm, such as financial, human capital, legal, operational, regulatory, legislative, reputational and technology risks. Our enterprise risk committee assists Blackstone management to identify, assess, monitor and mitigate such key enterprise risks at the corporate, business unit and fund level. The enterprise risk committee is chaired by our Chief Financial Officer and is comprised of senior management across business units, corporate functions and regional locations. Senior management reports to the audit committee of the board of directors on the agenda of risk topics evaluated by the enterprise risk committee and provides periodic risk reports, a summary of its view on key risks to the firm and detailed assessments of selected risks, as applicable. Our firmwide valuation committee reviews the valuation process for investments held by us and our investment vehicles, including the application of appropriate valuation standards on a consistent basis. The firmwide valuation committee is chaired by our Chief Financial Officer and is comprised of senior heads of Blackstone’s businesses and representatives from legal and finance. The review committees and/or investment committees of our businesses review and evaluate investment opportunities in a framework that includes a qualitative and quantitative assessment of the key risks of investments. See “—Investment Process and Risk Management.”
There are a number of pending or recently enacted legislative and regulatory initiatives that could significantly affect our business. Please see “— Item 1A. Risk Factors — Risks Related to Our Business — Financial regulatory changes in the United States could adversely affect our business” and “— Complex regulatory regimes and potential regulatory changes in jurisdictions outside the United States could adversely affect our business.”
Available Information, Website and Social Media Disclosure
We file annual, quarterly and current reports and other information with the SEC. These filings are available to the public over the internet at the SEC’s website at www.sec.gov.
Our principal internet address is www.blackstone.com. We make available free of charge on or through www.blackstone.com our annual reports on
Form 10-K,
quarterly reports on
Form 10-Q,
current reports on
Form 8-K
and amendments to those reports, as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC.
In addition, use our website (www.blackstone.com), Facebook page (www.facebook.com/blackstone), X (Twitter) (www.x.com/blackstone), LinkedIn (www.linkedin.com/company/blackstonegroup), Instagram (www.instagram.com/blackstone), SoundCloud (www.soundcloud.com/blackstone-300250613), PodBean (www.blackstone.podbean.com), Spotify (https://spoti.fi/2LJ1tHG), YouTube (www.youtube.com/user/blackstonegroup) and Apple Podcast (https://apple.co/31Pe1Gg) accounts as channels of distribution of company information. The information we post through these channels may be deemed material. Accordingly, investors should monitor these channels, in addition to following our press releases, SEC filings and public conference calls and webcasts. In addition, you may automatically receive email alerts and other information about Blackstone when you enroll your email address by visiting the “Contact Us/Email Alerts” section of our website at http://ir.blackstone.com. The contents of our website, any alerts and social media channels are not, however, a part of this report.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis should be read in conjunction with Blackstone Inc.’s consolidated financial statements and the related notes included within this Annual Report on
Form 10-K.
Blackstone is the world’s largest alternative asset manager. Our business is organized into four segments: Real Estate, Private Equity, Credit & Insurance and Multi-Asset Investing. For more information about our business segments, see “Part I. Item 1. Business — Business Segments.”
We generate revenue primarily from fees earned pursuant to contractual arrangements with funds and investors, and capital markets services. We also invest in the funds we manage and we are entitled to a
pro-rata
share of the income of the fund (a
“pro-rata
allocation”). In addition to a
pro-rata
allocation, and assuming certain investment returns are achieved, we are entitled to a disproportionate allocation of the income otherwise allocable to the limited partners, commonly referred to as carried interest (“Performance Allocations”). In certain structures, we receive a contractual incentive fee from an investment fund based on achieving certain investment returns (an “Incentive Fee,” and together with Performance Allocations, “Performance Revenues”). The composition of our revenues will vary based on market conditions and the cyclicality of the different businesses in which we operate. Net investment gains and investment income generated by the Blackstone Funds are driven by the performance of the underlying investments as well as overall market conditions. Fair values are affected by changes in the fundamentals of our investments, the industries in which they operate, the overall economy and other market conditions.
Blackstone’s businesses are materially affected by conditions in the financial markets and economic conditions in the U.S., Europe, Asia and, to a lesser extent, elsewhere in the world.
2023 was a volatile year for global markets, driven by historic movements in U.S. Treasury bond yields, geopolitical instability, including in the Middle East and economic uncertainty. Major central banks globally continued monetary policy tightening in the context of historically elevated inflation. In the U.S., the Federal Reserve increased the federal funds target range four times over the course of 2023, which reached
5.25%-5.50%
in July — the highest level in 22 years. Accordingly, inflation in the U.S. decelerated throughout the year, with the U.S. consumer price index decreasing from 6.4% annual growth in January 2023 to 3.4% in December 2023, at which time the Federal Reserve signaled that a reduction in the federal funds target range could be appropriate in 2024. Similarly, in the Eurozone economy, the European Central bank raised its deposit facility rate by 200 basis points in 2023. Consequently, Eurozone inflation slowed from 8.6% annual growth in January 2023 to 2.9% at year end.
Nevertheless, the U.S. economy continued to show resiliency in 2023, underpinned by a strong labor market. The Bureau of Economic Analysis’ advance estimate of U.S. real GDP indicated growth of 2.5% year-over-year in 2023, up from 1.9% in 2022. The U.S. unemployment rate remained largely stable with
pre-pandemic
levels at 3.7% in both December 2023 and subsequent to year end in January 2024. U.S. retail sales increased 3.2% year-over-year in 2023, driven in part by higher prices. In manufacturing, however, the Institute for Supply Management Purchasing Managers’ Index decreased moderately to 47.4 in December 2023, compared to 48.4 in December 2022, signaling a continued contraction in the U.S. manufacturing sector. Growth in major economies outside of the U.S. was mixed in 2023. In Europe, Eurozone real GDP growth contracted to 0.1% year-over-year in the fourth quarter from 1.8% in the fourth quarter of 2022. In China, real GDP growth increased to 5.2% year over year in 2023, up from 3% in 2022, but below the yearly average of 6% over the last ten years.
In the fourth quarter of 2023, major equity markets rallied sharply on increasing expectations that the current cycle of monetary policy tightening was at or nearing its end. The S&P 500 rose 12% in the fourth quarter and increased 26% for the full year. Most sectors gained during the year, led by information technology, which rose 58%. Oil prices declined during the year, with the price of West Texas Intermediate crude oil down 11% in 2023 to $72 per barrel. The Henry Hub Natural Gas spot price decreased 44% in 2023 to $2.51. Capital markets activity declined, with global initial public offering volumes down 31% and global announced merger and acquisition volumes down 16% compared to 2022.
In credit markets, the S&P leveraged loan index increased 13% in 2023, while the Credit Suisse high yield bond index rose 14%. High yield spreads tightened 135 basis points in 2023, while issuance increased 64% year-over-year. Base rates were highly volatile during the year, with the
ten-year
Treasury yield increasing 114 basis points from the beginning of 2023 to an intraday high of 5.02% in October — representing a
16-year
high — but ended the year lower at 3.88%. Short-term rates, however, increased in 2023 with three-month SOFR up 74 basis points to 5.33% at year end.
Moderating inflation and economic resiliency in the U.S. have led to an increase in investor confidence in recent months. However, the potential for sustained high interest rates and decelerating economic growth may contribute to continued market volatility in the U.S. and globally.
On December 15, 2023, Blackstone entered into an amended and restated $4.325 billion revolving credit facility. The amendment and restatement, among other things, increased the amount of available borrowings and extended the maturity date to December 15, 2028.
For additional information see Note 13. “Borrowings” in the “Notes to Consolidated Financial Statements” in “—Item 8. Financial Statements and Supplementary Data.”
The simplified diagram below depicts our current organizational structure. The diagram does not depict all of our subsidiaries, including intermediate holding companies through which certain of the subsidiaries depicted are held.
Key Financial Measures and Indicators
We manage our business using certain financial measures and key operating metrics since we believe these metrics measure the productivity of our investment activities. We prepare our Consolidated Financial Statements in accordance with accounting principles generally accepted in the United States of America (“GAAP”). See “—Item 8. Financial Statements and Supplementary Data — Notes to Consolidated Financial Statements — Note 2. Summary of Significant Accounting Policies” and “—Critical Accounting Policies.” Our key
non-GAAP
financial measures and operating indicators and metrics are discussed below.
Distributable Earnings is derived from Blackstone’s segment reported results. Distributable Earnings is used to assess performance and amounts available for dividends to Blackstone stockholders, including Blackstone personnel and others who are limited partners of the Blackstone Holdings Partnerships. Distributable Earnings is the sum of Segment Distributable Earnings plus Net Interest and Dividend Income (Loss) less Taxes and Related Payables. Distributable Earnings excludes unrealized activity and is derived from and reconciled to, but not equivalent to, its most directly comparable GAAP measure of Income (Loss) Before Provision (Benefit) for Taxes. See
“—Non-GAAP
Financial Measures” for our reconciliation of Distributable Earnings.
Net Interest and Dividend Income (Loss) is presented on a segment basis and is equal to Interest and Dividend Revenue less Interest Expense, adjusted for the impact of consolidation of Blackstone Funds, and interest expense associated with the Tax Receivable Agreement.
Taxes and Related Payables represent the total GAAP tax provision adjusted to include only the current tax provision (benefit) calculated on Income (Loss) Before Provision (Benefit) for Taxes and including the Payable under the Tax Receivable Agreement. Further, the current tax provision utilized when calculating Taxes and Related Payables and Distributable Earnings reflects the benefit of deductions available to the company on certain expense items that are excluded from the underlying calculation of Segment Distributable Earnings and Total Segment Distributable Earnings, such as equity-based compensation charges and certain Transaction-Related and
Non-Recurring
Items where there is a current tax provision or benefit. The economic assumptions and methodologies that impact the implied income tax provision are the same as those methodologies and assumptions used in calculating the current income tax provision for Blackstone’s Consolidated Statements of Operations under GAAP, excluding the impact of divestitures and accrued tax contingencies and refunds which are reflected when paid or received. Management believes that including the amount payable under the Tax Receivable Agreement and utilizing the current income tax provision adjusted as described above when calculating Distributable Earnings is meaningful as it increases comparability between periods and more accurately reflects earnings that are available for distribution to stockholders.
Segment Distributable Earnings
Segment Distributable Earnings is Blackstone’s segment profitability measure used to make operating decisions and assess performance across Blackstone’s four segments. Blackstone believes it is useful to stockholders to review the measure that management uses in assessing segment performance. Segment Distributable Earnings represents the net realized earnings of Blackstone’s segments and is the sum of Fee Related Earnings and Net Realizations for each segment. Blackstone’s segments are presented on a basis that deconsolidates Blackstone Funds, eliminates
non-controlling
ownership interests in Blackstone’s consolidated operating partnerships, removes the amortization of intangible assets and removes Transaction-Related and
Non-Recurring
Items. Transaction-Related and
Non-Recurring
Items arise from corporate actions including acquisitions, divestitures, Blackstone’s initial public offering and
non-recurring
gains, losses, or other charges, if any. They consist primarily of equity-based compensation charges, gains and losses on contingent consideration arrangements, changes in the balance of the Tax Receivable Agreement resulting from a change in tax law or similar event, transaction costs, gains or losses associated with these corporate actions and
non-recurring
gains, losses or other charges that affect
comparability and are not reflective of Blackstone’s operational performance. Segment Distributable Earnings excludes unrealized activity and is derived from and reconciled to, but not equivalent to, its most directly comparable GAAP measure of Income (Loss) Before Provision (Benefit) for Taxes. See
“—Non-GAAP
Financial Measures” for our reconciliation of Segment Distributable Earnings.
Effective September 30, 2023, Blackstone redefined Segment Distributable Earnings to exclude the impact of
non-recurring
gains, losses or other charges that affect
comparability and are not reflective of Blackstone’s operational performance. Blackstone believes the exclusion of such amounts is useful to investors as it assists in the comparison of Blackstone’s operational performance across different periods. The updated definition had no impact to the current or any previously reported period.
Net Realizations is presented on a segment basis and is the sum of Realized Principal Investment Income and Realized Performance Revenues (which refers to Realized Performance Revenues excluding Fee Related Performance Revenues), less Realized Performance Compensation (which refers to Realized Performance Compensation excluding Fee Related Performance Compensation and Equity-Based Performance Compensation).
Realized Performance Compensation reflects an increase in the aggregate Realized Performance Compensation paid to certain of our professionals above the amounts allocable to them based upon the percentage participation in the relevant performance plans previously awarded to them. In the year ended December 31, 2023, Realized Performance Compensation was increased by an aggregate of $65.0 million and Fee Related Compensation was decreased by a corresponding amount. In the year ended December 31, 2022, Realized Performance Compensation was increased by an aggregate of $77.0 million and Fee Related Compensation decreased by a corresponding amount. These changes to Realized Performance Compensation and Fee Related Compensation reduced Net Realizations, increased Fee Related Earnings and had a neutral impact to Income Before Provision (Benefit) for Taxes and Distributable Earnings in the years ended December 31, 2023 and December 31, 2022.
All prior periods have been recast to reflect that GP Stakes is included in Blackstone’s Private Equity segment and Harvest is included in Blackstone’s Multi-Asset Investing segment. Prior to these updates, GP Stakes and Harvest were included in Blackstone’s Multi-Asset Investing and Credit & Insurance segments, respectively.
Fee Related Earnings is a performance measure used to assess Blackstone’s ability to generate profits from revenues that are measured and received on a recurring basis and not subject to future realization events. Blackstone believes Fee Related Earnings is useful to stockholders as it provides insight into the profitability of the portion of Blackstone’s business that is not dependent on realization activity. Fee Related Earnings equals management and advisory fees (net of management fee reductions and offsets) plus Fee Related Performance Revenues, less (a) Fee Related Compensation on a segment basis and (b) Other Operating Expenses. Fee Related Earnings is derived from and reconciled to, but not equivalent to, its most directly comparable GAAP measure of Income (Loss) Before Provision (Benefit) for Taxes. See
“—Non-GAAP
Financial Measures” for our reconciliation of Fee Related Earnings.
Fee Related Compensation is presented on a segment basis and refers to the compensation expense, excluding Equity-Based Compensation, directly related to (a) Management and Advisory Fees, Net and (b) Fee Related Performance Revenues, referred to as Fee Related Performance Compensation.
Fee Related Performance Revenues refers to the realized portion of Performance Revenues from Perpetual Capital that are (a) measured and received on a recurring basis and (b) not dependent on realization events from the underlying investments.
Other Operating Expenses is presented on a segment basis and is equal to General, Administrative and Other Expenses, adjusted to (a) remove the amortization of transaction-related intangibles, (b) remove certain expenses reimbursed by the Blackstone Funds which are netted against Management and Advisory Fees, Net in Blackstone’s segment presentation and (c) give effect to an administrative fee collected on a quarterly basis from certain holders of Blackstone Holdings Partnership Units. The administrative fee is accounted for as a capital contribution under GAAP, but is reflected as a reduction of Other Operating Expenses in Blackstone’s segment presentation.
Adjusted Earnings Before Interest, Taxes and Depreciation and Amortization
Adjusted Earnings Before Interest, Taxes and Depreciation and Amortization (“Adjusted EBITDA”), is a supplemental measure used to assess performance derived from Blackstone’s segment results and may be used to assess its ability to service its borrowings. Adjusted EBITDA represents Distributable Earnings plus the addition of (a) Interest Expense on a segment basis, (b) Taxes and Related Payables and (c) Depreciation and Amortization. Adjusted EBITDA is derived from and reconciled to, but not equivalent to, its most directly comparable GAAP measure of Income (Loss) Before Provision (Benefit) for Taxes. See
“—Non-GAAP
Financial Measures” for our reconciliation of Adjusted EBITDA.
Net Accrued Performance Revenues
Net Accrued Performance Revenues is a
non-GAAP
financial measure Blackstone believes is useful to stockholders as an indicator of potential future realized performance revenues based on the current investment portfolio of the funds and vehicles we manage. Net Accrued Performance Revenues represents the accrued performance revenues receivable by Blackstone, net of the related accrued performance compensation payable by Blackstone, excluding performance revenues that have been realized but not yet distributed as of the reporting date and clawback amounts, if any. Net Accrued Performance Revenues is derived from and reconciled to, but not equivalent to, its most directly comparable GAAP measure of Investments. See
“—Non-GAAP
Financial Measures” for our reconciliation of Net Accrued Performance Revenues and Note 2 “Summary of Significant Accounting Policies — Equity Method Investments” in the “Notes to Consolidated Financial Statements” in “—Item 8. Financial Statements and Supplementary Data” for additional information on the calculation of Investments — Accrued Performance Allocations.
The alternative asset management business is primarily based on managing third party capital and does not require substantial capital investment to support rapid growth. Since our inception, we have developed and used various key operating metrics to assess and monitor the operating performance of our various alternative asset management businesses in order to monitor the effectiveness of our value creating strategies.
Total and
Fee-Earning
Assets Under Management
Total Assets Under Management refers to the assets we manage. We believe this measure is useful to stockholders as it represents the total capital for which we provide investment management services. Our Total Assets Under Management equals the sum of:
| | (a) | the fair value of the investments held by our carry funds and our and co-investment entities managed by us plus the capital that we are entitled to call from investors in those funds and entities pursuant to the terms of their respective capital commitments, including capital commitments to funds that have yet to commence their investment periods, |
| | (b) | the net asset value of (1) our hedge funds, real estate debt carry funds, BPP, certain co-investments managed by us, certain credit-focused funds and our Multi-Asset Investing drawdown funds (plus, in each case, the capital that we are entitled to call from investors in those funds, including commitments yet to commence their investment periods) and (2) our funds of hedge funds, our Multi-Asset Investing registered investment companies, BREIT and BEPIF, |
| | (c) | the invested capital, fair value or net asset value of assets we manage pursuant to separately managed accounts, |
| | (d) | the amount of debt and equity outstanding for our CLOs during the reinvestment period, |
| | (e) | the aggregate par amount of collateral assets, including principal cash, for our CLOs after the reinvestment period, |
| | (f) | the gross or net amount of assets (including leverage where applicable) for our credit-focused registered investment companies and BDCs, |
| | (g) | the fair value of common stock, preferred stock, convertible debt, term loans or similar instruments issued by BXMT and |
| | (h) | borrowings under and any amounts available to be borrowed under certain credit facilities of our funds. |
Our carry funds are commitment-based drawdown structured funds that do not permit investors to redeem their interests at their election. Our funds of hedge funds, hedge funds, funds structured like hedge funds and
other open-ended funds in our Real Estate, Credit & Insurance and Multi-Asset Investing segments generally have structures that afford an investor the right to withdraw or redeem their interests on a periodic basis (for example, annually, quarterly or monthly), typically with 2 to 95 days’ notice, depending on the fund and the liquidity profile of the underlying assets. In our Perpetual Capital vehicles where redemption rights exist, Blackstone has the ability to fulfill redemption requests only (a) in Blackstone’s or the vehicles’ board’s discretion, as applicable, or (b) to the extent there is sufficient new capital. Investment advisory agreements related to certain separately managed accounts in our Credit & Insurance and Multi-Asset Investing segments, excluding our separately managed accounts in our insurance platform, may generally be terminated by an investor on 30 to 90 days’ notice. Separately managed accounts in our insurance platform can generally only be terminated for long-term underperformance, cause and certain other limited circumstances, in each case subject to Blackstone’s right to cure.
Fee-Earning
Assets Under Management refers to the assets we manage on which we derive management fees and/or performance revenues. We believe this measure is useful to stockholders as it provides insight into the capital base upon which we can earn management fees and/or performance revenues. Our
Fee-Earning
Assets Under Management equals the sum of:
| | (a) | for our Private Equity segment funds, Real Estate segment carry funds including certain BREDS funds and certain Multi-Asset Investing funds, the amount of capital commitments, remaining invested capital, fair value, net asset value or par value of assets held, depending on the fee terms of the fund, |
| | (b) | for our credit-focused carry funds, the amount of remaining invested capital (which may include leverage) or net asset value, depending on the fee terms of the fund, |
| | (c) | the remaining invested capital or fair value of assets held in co-investment vehicles managed by us on which we receive fees, |
| | (d) | the net asset value of our funds of hedge funds, hedge funds, BPP, certain co-investments managed by us, certain registered investment companies, BREIT, BEPIF and certain of our Multi-Asset Investing drawdown funds, |
| | (e) | the invested capital, fair value of assets or the net asset value we manage pursuant to separately managed accounts, |
| | (f) | the net proceeds received from equity offerings and accumulated distributable earnings of BXMT, subject to certain adjustments, |
| | (g) | the aggregate par amount of collateral assets, including principal cash, of our CLOs and |
| | (h) | the gross amount of assets (including leverage) or the net assets (plus leverage where applicable) for certain of our credit-focused registered investment companies and BDCs. |
Each of our segments may include certain
Fee-Earning
Assets Under Management on which we earn performance revenues but not management fees.
Our calculations of Total Assets Under Management and
Fee-Earning
Assets Under Management may differ from the calculations of other asset managers, and as a result this measure may not be comparable to similar measures presented by other asset managers. In addition, our calculation of Total Assets Under Management includes commitments to, and the fair value of, invested capital in our funds from Blackstone and our personnel, regardless of whether such commitments or invested capital are subject to fees. Our definitions of Total Assets Under Management and
Fee-Earning
Assets Under Management are not based on any definition of Total Assets Under Management and
Fee-Earning
Assets Under Management that is set forth in the agreements governing the investment funds that we manage.
For our carry funds, Total Assets Under Management includes the fair value of the investments held and uncalled capital commitments, whereas
Fee-Earning
Assets Under Management may include the total amount of
capital commitments or the remaining amount of invested capital at cost depending on whether the investment period has expired or as specified by the fee terms of the fund. As such, in certain carry funds
Fee-Earning
Assets Under Management may be greater than Total Assets Under Management when the aggregate fair value of the remaining investments is less than the cost of those investments.
Perpetual Capital refers to the component of assets under management with an indefinite term, that is not in liquidation, and for which there is no requirement to return capital to investors through redemption requests in the ordinary course of business, except where funded by new capital inflows. Perpetual Capital includes
co-investment
capital with an investor right to convert into Perpetual Capital. We believe this measure is useful to stockholders as it represents capital we manage that has a longer duration and the ability to generate recurring revenues in a different manner than traditional fund structures.
Dry Powder represents the amount of capital available for investment or reinvestment, including general partner and employee capital, and is an indicator of the capital we have available for future investments. We believe this measure is useful to stockholders as it provides insight into the extent to which capital is available for Blackstone to deploy capital into investment opportunities as they arise.
Invested Performance Eligible Assets Under Management
Invested Performance Eligible Assets Under Management represents invested capital at fair value, including capital closed for funds whose investment period has not yet commenced, on which performance revenues could be earned if certain hurdles are met. We believe Invested Performance Eligible Assets Under Management is useful to stockholders as it provides insight into the capital deployed that has the potential to generate performance revenues.
On October 8, 2021, the OECD and Group of 20 (“G20”) announced the OECD/G20 Inclusive Framework on Base Erosion and Profit Shifting (“Framework”), which agreed to a
two-pillar
solution to address tax challenges arising from digitalization of the economy. On December 20, 2021, the OECD released Pillar Two Model Rules, which contemplate a global 15% minimum tax rate. The OECD continues to release additional guidance, including administrative guidance on interpretation and application of Pillar Two, and many countries are passing legislation to comply with Pillar Two. The Framework calls for law enactment by OECD and G20 members to take effect in 2024 and 2025. The changes contemplated by Pillar Two, when enacted by various countries in which we do business, may increase our taxes in such countries. Based on available guidance, currently we do not believe the impact of Pillar Two to our business would be material. For further discussion of potential consequences of changes in tax regulations, please see “—Item 1A. Risk Factors — Risks Related to our Business — Changes in U.S. and foreign taxation of businesses and other tax laws, regulations or treaties or an adverse interpretation of these items by tax authorities could adversely affect us, including by adversely impacting our effective tax rate and tax liability.”
Consolidated Results of Operations
Following is a discussion of our consolidated results of operations. For a more detailed discussion of the factors that affected the results of our four business segments (which are presented on a basis that deconsolidates the investment funds, eliminates
non-controlling
ownership interests in Blackstone’s consolidated operating partnerships and removes the amortization of intangibles assets and Transaction-Related and
Non-Recurring
Items) in these periods, see “—Segment Analysis” below.
The following table sets forth information regarding our consolidated results of operations and certain key operating metrics for the years ended December 31, 2023, 2022 and 2021:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | |
| | | | |
| | | | | | | | | | | | | | | |
| | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Management and Advisory Fees, Net | | $ | 6,671,260 | | | $ | 6,303,315 | | | $ | 5,170,707 | | | $ | 367,945 | | | | 6% | | | $ | 1,132,608 | | | | 22% | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | 695,171 | | | | 525,127 | | | | 253,991 | | | | 170,044 | | | | 32% | | | | 271,136 | | | | 107% | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | 2,223,841 | | | | 5,381,640 | | | | 5,653,452 | | | | (3,157,799 | ) | | | -59% | | | | (271,812 | ) | | | -5% | |
| | | (1,691,668 | ) | | | (3,435,056 | ) | | | 8,675,246 | | | | 1,743,388 | | | | -51% | | | | (12,110,302 | ) | | | n/m | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | 303,823 | | | | 850,327 | | | | 1,003,822 | | | | (546,504 | ) | | | -64% | | | | (153,495 | ) | | | -15% | |
| | | (603,154 | ) | | | (1,563,849 | ) | | | 1,456,201 | | | | 960,695 | | | | -61% | | | | (3,020,050 | ) | | | n/m | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | 232,842 | | | | 1,233,062 | | | | 16,788,721 | | | | (1,000,220 | ) | | | -81% | | | | (15,555,659 | ) | | | -93% | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Interest and Dividend Revenue | | | 516,497 | | | | 271,612 | | | | 160,643 | | | | 244,885 | | | | 90% | | | | 110,969 | | | | 69% | |
| | | (92,929 | ) | | | 184,557 | | | | 203,086 | | | | (277,486 | ) | | | n/m | | | | (18,529 | ) | | | -9% | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | 8,022,841 | | | | 8,517,673 | | | | 22,577,148 | | | | (494,832 | ) | | | -6% | | | | (14,059,475 | ) | | | -62% | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Compensation and Benefits | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | 2,785,447 | | | | 2,569,780 | | | | 2,161,973 | | | | 215,667 | | | | 8% | | | | 407,807 | | | | 19% | |
Incentive Fee Compensation | | | 281,067 | | | | 207,998 | | | | 98,112 | | | | 73,069 | | | | 35% | | | | 109,886 | | | | 112% | |
Performance Allocations Compensation | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | 900,859 | | | | 2,225,264 | | | | 2,311,993 | | | | (1,324,405 | ) | | | -60% | | | | (86,729 | ) | | | -4% | |
| | | (654,403 | ) | | | (1,470,588 | ) | | | 3,778,048 | | | | 816,185 | | | | -56% | | | | (5,248,636 | ) | | | n/m | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total Compensation and Benefits | | | 3,312,970 | | | | 3,532,454 | | | | 8,350,126 | | | | (219,484 | ) | | | -6% | | | | (4,817,672 | ) | | | -58% | |
General, Administrative and Other | | | 1,117,305 | | | | 1,092,671 | | | | 917,847 | | | | 24,634 | | | | 2% | | | | 174,824 | | | | 19% | |
| | | 431,868 | | | | 317,225 | | | | 198,268 | | | | 114,643 | | | | 36% | | | | 118,957 | | | | 60% | |
| | | 118,987 | | | | 30,675 | | | | 10,376 | | | | 88,312 | | | | 288% | | | | 20,299 | | | | 196% | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | 4,981,130 | | | | 4,973,025 | | | | 9,476,617 | | | | 8,105 | | | | — | | | | (4,503,592 | ) | | | -48% | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Change in Tax Receivable Agreement Liability | | | (27,196 | ) | | | 22,283 | | | | (2,759 | ) | | | (49,479 | ) | | | n/m | | | | 25,042 | | | | n/m | |
Net Gains (Losses) from Fund Investment Activities | | | (56,801 | ) | | | (105,142 | ) | | | 461,624 | | | | 48,341 | | | | -46% | | | | (566,766 | ) | | | n/m | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total Other Income (Loss) | | | (83,997 | ) | | | (82,859 | ) | | | 458,865 | | | | (1,138 | ) | | | 1% | | | | (541,724 | ) | | | n/m | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Income Before Provision for Taxes | | | 2,957,714 | | | | 3,461,789 | | | | 13,559,396 | | | | (504,075 | ) | | | -15% | | | | (10,097,607 | ) | | | -74% | |
| | | 513,461 | | | | 472,880 | | | | 1,184,401 | | | | 40,581 | | | | 9% | | | | (711,521 | ) | | | -60% | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | 2,444,253 | | | | 2,988,909 | | | | 12,374,995 | | | | (544,656 | ) | | | -18% | | | | (9,386,086 | ) | | | -76% | |
Net Income (Loss) Attributable to Redeemable Non-Controlling Interests in Consolidated Entities | | | (245,518 | ) | | | (142,890 | ) | | | 5,740 | | | | (102,628 | ) | | | 72% | | | | (148,630 | ) | | | n/m | |
Net Income Attributable to Non-Controlling Interests in Consolidated Entities | | | 224,155 | | | | 107,766 | | | | 1,625,306 | | | | 116,389 | | | | 108% | | | | (1,517,540 | ) | | | -93% | |
Net Income Attributable to Non-Controlling Interests in Blackstone Holdings | | | 1,074,736 | | | | 1,276,402 | | | | 4,886,552 | | | | (201,666 | ) | | | -16% | | | | (3,610,150 | ) | | | -74% | |
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Net Income Attributable to Blackstone Inc. | | $ | 1,390,880 | | | $ | 1,747,631 | | | $ | 5,857,397 | | | $ | (356,751 | ) | | | -20% | | | $ | (4,109,766 | ) | | | -70% | |
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Year Ended December 31, 2023 Compared to Year Ended December 31, 2022
Revenues were $8.0 billion for the year ended December 31, 2023, a decrease of $494.8 million, compared to $8.5 billion for the year ended December 31, 2022. The decrease in Revenues was primarily attributable to a decrease of $1.0 billion in Investment Income, which was composed of a decrease of $3.7 billion in Realized Investment Income and an increase of $2.7 billion in Unrealized Investment Income, partially offset by an increase of $367.9 million in Management and Advisory Fees, Net.
The $3.7 billion decrease in Realized Investment Income was primarily attributable to lower realized gains in our Real Estate segment.
The $2.7 billion increase in Unrealized Investment Income was primarily attributable to lower net unrealized depreciation of investments in the year ended December 31, 2023 compared to the year ended December 31, 2022. Principal drivers were:
| | • | | An increase of $1.8 billion in our Private Equity segment, primarily attributable to net unrealized appreciation of investments in Corporate Private Equity in the year ended December 31, 2023 compared to net unrealized depreciation of investments in the year ended December 31, 2022. The carrying value of Corporate Private Equity increased 12.1% in the year ended December 31, 2023 compared to a decrease of 0.6% in the year ended December 31, 2022. |
| | • | | An increase of $1.1 billion in our Credit & Insurance segment, primarily attributable to lower net unrealized depreciation of investments in our insurance platform in the year ended December 31, 2023 compared to the year ended December 31, 2022. |
| | • | | A decrease of $524.1 million in our Real Estate segment, primarily attributable to lower appreciation in BREP and Core+ real estate in the year ended December 31, 2023 compared to the year ended December 31, 2022 and an unrealized loss on the liability related to the strategic ventures with UC Investments (defined herein). The carrying values of BREP and Core+ real estate decreased 6.3% and 4.3%, respectively, in the year ended December 31, 2023 compared to an increase of 7.1% and 10.3%, respectively, in the year ended December 31, 2022. |
The $367.9 million increase in Management and Advisory Fees, Net was primarily due to increases in our Real Estate and Credit & Insurance segments of $220.3 million and $123.7 million, respectively. The increase in our Real Estate segment was primarily due to
Fee-Earning
Assets Under Management growth in BREP. The increase in our Credit & Insurance segment was primarily due to inflows from
Fee-Earning
Assets Under Management in direct lending.
Expenses were $5.0 billion for the year ended December 31, 2023, an increase of $8.1 million, compared to the year ended December 31, 2022. The increase was primarily attributable to increases of $114.6 million in Interest Expense and $88.3 million in Fund Expenses, partially offset by a decrease of $219.5 million in Total Compensation and Benefits, which is primarily composed of a decrease of $508.2 million in Performance Allocations Compensation and an increase of $215.7 million in Compensation. The increase in Interest Expense was primarily due to an increase in borrowings. The increase in Fund Expenses was primarily due to an increase in interest expense in a consolidated private equity fund. The decrease in Performance Allocations Compensation was primarily due to the decrease in Investment Income, on which a portion of compensation is based. The increase in Compensation was primarily due to the increase in Management and Advisory Fees, Net, on which a portion of compensation is based.
Other Income (Loss) was $(84.0) million for the year ended December 31, 2023, a decrease of $1.1 million, compared to $(82.9) million for the year ended December 31, 2022. The decrease in Other Income (Loss) was due to a decrease of $49.5 million in Change in Tax Receivable Agreement Liability, partially offset by an increase of $48.3 million in Net Gains (Losses) from Fund Investment Activities.
Changes to the Tax Receivable Agreement Liability are driven by the required remeasurement of the liability as a result of changes in expected future tax rates.
The increase in Net Gains (Losses) from Fund Investment Activities was principally driven by increases of $203.7 million and $121.7 million in our Private Equity and Multi-Asset Investing segments, respectively, partially offset by a decrease of $300.2 million in our Real Estate segment. The increases in our Private Equity and Multi-Asset Investing segments were primarily due to unrealized appreciation of investments in our consolidated Private Equity and Multi-Asset Investing funds. The decrease in our Real Estate segment was primarily due to realized losses and unrealized depreciation of investments in our consolidated funds.
Provision (Benefit) for Taxes
Blackstone’s Provision for Taxes for the year ended December 31, 2023 was $513.5 million, an increase of $40.6 million, compared to $472.9 million for the year ended December 31, 2022. This resulted in an effective tax rate of 17.4% and 13.7% based on our Income Before Provision for Taxes of $3.0 billion and $3.5 billion for the years ended December 31, 2023 and 2022, respectively.
The increase in Blackstone’s effective tax rate for the year ended December 31, 2023, compared to the year ended December 31, 2022, resulted primarily from an
adjustment recorded in December 31, 2022 to revise the book investment basis used to calculate deferred tax assets and the deferred tax provision.
Blackstone had a corporate alternative minimum tax (“CAMT”) liability for the year ended December 31, 2023 as calculated pursuant to the Inflation Reduction Act. Blackstone will continue to assess the overall impact to its Provision for Income Tax upon the issuance of applicable additional guidance by the U.S. Treasury Department related to interpretations of CAMT. For the year ended December 31, 2023 there is no meaningful CAMT impact reflected in the Provision for Income Taxes given current year tax payments made under CAMT are permitted to be carried forward and used as credits in future years resulting in a deferred tax benefit.
On December 27, 2023, New York State finalized regulations with respect to various areas of its tax reform. The impact of the legislation has been considered and incorporated in the computation of the tax provision for the year ended December 31, 2023.
Additional information regarding our income taxes can be found in “— Item 8. Financial Statements and Supplementary Data — Notes to Consolidated Financial Statements — Note 15. Income Taxes” of this filing.
Year Ended December 31, 2022 Compared to Year Ended December 31, 2021
Revenues were $8.5 billion for the year ended December 31, 2022, a decrease of $14.1 billion, or 62%, compared to $22.6 billion for the year ended December 31, 2021. The decrease in Revenues was primarily attributable to a decrease of $15.6 billion in Investment Income (Loss), which is composed of decreases of $15.1 billion in Unrealized Investment Income (Loss) and $425.3 million in Realized Investment Income (Loss).
The $15.1 billion decrease in Unrealized Investment Income (Loss) was primarily attributable to net unrealized depreciation of investments in the year ended December 31, 2022 compared to net unrealized appreciation of investment holdings in the year ended December 31, 2021 in the segments. Principal drivers of the decrease were:
| | • | | A decrease of $6.7 billion in our Real Estate segment, primarily attributable to lower net unrealized appreciation of investments in BREP and Core+ during the year ended December 31, 2022 compared to the year ended December 31, 2021. BREP and Core+ carrying value increased 7.1% and 10.3%, respectively, in the year ended December 31, 2022 compared to increases of 43.8% and 25.0%, respectively, in the year ended December 31, 2021. |
| | • | | A decrease of $5.9 billion in our Private Equity segment, primarily attributable to net unrealized depreciation of investments in corporate private equity and lower net unrealized appreciation in Strategic Partners in the year ended December 31, 2022 compared to net unrealized appreciation of investments in the year ended December 31, 2021. Corporate private equity and Strategic Partners carrying value decreased 0.6% and increased 8.5%, respectively, in the year ended December 31, 2022 compared to increases of 42.2% and 61.2%, respectively, in the year ended December 31, 2021. |
| | • | | A decrease of $1.3 billion in our Credit & Insurance segment, primarily attributable to an unrealized loss on the ownership of Corebridge common stock based on the publicly traded price as of December 31, 2022. |
The $425.3 million decrease in Realized Investment Income (Loss) was primarily attributable to lower realized gains in our Private Equity segment, offset by higher realized gains in our Real Estate segment.
The $1.1 billion increase in Management and Advisory Fees, Net was primarily due to increases in our Real Estate and Credit & Insurance segments of $570.8 million and $456.2 million, respectively. The increase in our Real Estate segment was primarily due to
Fee-Earning
Assets Under Management growth in Core+ real estate. The increase in our Credit & Insurance segment was primarily due to an increase in inflows in BCRED.
Expenses were $5.0 billion for the year ended December 31, 2022, a decrease of $4.5 billion, compared to $9.5 billion for the year ended December 31, 2021. The decrease was primarily attributable to a decrease of $4.8 billion in Total Compensation and Benefits, composed of a decrease of $5.3 billion in Performance Allocations Compensation and an increase of $407.8 million in Compensation. The decrease in Performance Allocations Compensation was primarily due to the decrease in Investment Income (Loss) — Performance Allocations, on which a portion of Performance Allocations Compensation is based.
Other Income (Loss) was $(82.9) million for the year ended December 31, 2022, a decrease of $541.7 million, compared to $458.9 million for the year ended December 31, 2021. The decrease in Other Income (Loss) was due to a decrease of $566.8 million in Net Gains (Losses) from Fund Investment Activities, partially offset by an increase of $25.0 million in Change in Tax Receivable Agreement Liability.
The decrease in Net Gains (Losses) from Fund Investment Activities was principally driven by decreases of $265.4 million, $159.8 million and $111.2 million in our Private Equity, Real Estate and Multi-Asset Investing segments, respectively. The decrease in our Private Equity segment was primarily due to unrealized depreciation and lower realized gains of investments in our consolidated Private Equity funds. The decreases in our Real Estate and Multi-Asset Investing segments were primarily due to unrealized depreciation of investments in our consolidated Real Estate and Multi-Asset Investing funds.
The increase in Change in Tax Receivable Agreement Liability was primarily attributable to a change in our state tax apportionment.
Provision (Benefit) for Taxes
Blackstone’s Provision for Taxes for the year ended December 31, 2022 was $472.9 million, a decrease of $711.5 million, compared to $1.2 billion for the year ended December 31, 2021. This resulted in an effective tax rate of 13.7% and 8.7% based on our Income Before Provision for Taxes of $3.5 billion and $13.6 billion for the years ended December 31, 2022 and 2021, respectively.
The increase in Blackstone’s effective tax rate for the year ended December 31, 2022, compared to the year ended December 31, 2021, resulted primarily from recent increases in Blackstone’s state tax provisions for the jurisdictions in which it operates and larger benefits recorded in December 31, 2021 for valuation allowance releases.
During the year ended December 31, 2022, Blackstone recorded an
adjustment to revise the book investment basis used to calculate deferred tax assets and the deferred tax provision. The cumulative impact of the correction related to prior years resulted in a decrease in the Provision for Taxes and a corresponding increase to Deferred Tax Assets for the year ended December 31, 2022.
Additional information regarding our income taxes can be found in “— Item 8. Financial Statements and Supplementary Data — Notes to Consolidated Financial Statements — Note 15. Income Taxes” of this filing.
Non-Controlling
Interests in Consolidated Entities
The Net Income Attributable to Redeemable
Non-Controlling
Interests in Consolidated Entities and Net Income Attributable to
Non-Controlling
Interests in Consolidated Entities is attributable to the consolidated Blackstone Funds. The amounts of these items vary directly with the performance of the consolidated Blackstone Funds and largely eliminate the amount of Other Income (Loss) — Net Gains (Losses) from Fund Investment Activities from the Net Income (Loss) Attributable to Blackstone Inc.
Net Income Attributable to
Non-Controlling
Interests in Blackstone Holdings is derived from the Income Before Provision (Benefit) for Taxes at the Blackstone Holdings level, excluding the Net Gains (Losses) from Fund Investment Activities and the percentage allocation of the income between Blackstone personnel and others who are limited partners of Blackstone Holdings and Blackstone after considering any contractual arrangements that govern the allocation of income such as fees allocable to Blackstone.
For the years ended December 31, 2023, 2022 and 2021, the Net Income Before Taxes allocated to Blackstone personnel and others who are limited partners of Blackstone Holdings was 39.2%, 39.7% and 41.3%, respectively. The decreases of 0.5% and 1.6% were primarily due to the conversion of Blackstone Holdings Partnership Units to shares of common stock and the vesting of shares of common stock.
The Other Income (Loss) — Change in Tax Receivable Agreement Liability was entirely allocated to Blackstone Inc.
Total and
Fee-Earning
Assets Under Management
The following graphs and tables summarize the
Fee-Earning
Assets Under Management by Segment and Total Assets Under Management by Segment, followed by a rollforward of activity for the years ended December 31, 2023, 2022 and 2021. For a description of how Assets Under Management and
Fee-Earning
Assets Under Management are determined, please see “—Key Financial Measures and Indicators — Operating Metrics — Total and
Fee-Earning
Assets Under Management.”
| Note: | Totals may not add due to rounding. |
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Fee-Earning Assets Under Management | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Balance, Beginning of Period | | $ | 281,967,153 | | | $ | 175,990,967 | | | $ | 192,535,693 | | | $ | 67,893,075 | | | $ | 718,386,888 | | | $ | 221,476,699 | | | $ | 166,331,770 | | | $ | 191,174,657 | | | $ | 70,985,932 | | | $ | 649,969,058 | |
| | | 60,404,380 | | | | 8,501,835 | | | | 42,750,955 | | | | 7,694,930 | | | | 119,352,100 | | | | 98,569,361 | | | | 20,577,513 | | | | 42,659,407 | | | | 10,463,507 | | | | 172,269,788 | |
| | | (18,176,929 | ) | | | (737,831 | ) | | | (12,485,948 | ) | | | (10,461,779 | ) | | | (41,862,487 | ) | | | (20,168,572 | ) | | | (4,311,749 | ) | | | (19,184,148 | ) | | | (14,428,904 | ) | | | (58,093,373 | ) |
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| | | 42,227,451 | | | | 7,764,004 | | | | 30,265,007 | | | | (2,766,849 | ) | | | 77,489,613 | | | | 78,400,789 | | | | 16,265,764 | | | | 23,475,259 | | | | (3,965,397 | ) | | | 114,176,415 | |
| | | (20,266,342 | ) | | | (9,767,895 | ) | | | (13,242,327 | ) | | | (2,324,408 | ) | | | (45,600,972 | ) | | | (22,661,825 | ) | | | (9,704,296 | ) | | | (8,466,629 | ) | | | (1,573,442 | ) | | | (42,406,192 | ) |
| | | (5,038,787 | ) | | | 3,010,189 | | | | 8,630,563 | | | | 5,730,408 | | | | 12,332,373 | | | | 4,751,490 | | | | 3,097,729 | | | | (13,647,594 | ) | | | 2,445,982 | | | | (3,352,393 | ) |
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Balance, End of Period (e) | | $ | 298,889,475 | | | $ | 176,997,265 | | | $ | 218,188,936 | | | $ | 68,532,226 | | | $ | 762,607,902 | | | $ | 281,967,153 | | | $ | 175,990,967 | | | $ | 192,535,693 | | | $ | 67,893,075 | | | $ | 718,386,888 | |
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| | $ | 16,922,322 | | | $ | 1,006,298 | | | $ | 25,653,243 | | | $ | 639,151 | | | $ | 44,221,014 | | | $ | 60,490,454 | | | $ | 9,659,197 | | | $ | 1,361,036 | | | $ | (3,092,857 | ) | | $ | 68,417,830 | |
| | | 6 | % | | | 1 | % | | | 13 | % | | | 1 | % | | | 6 | % | | | 27 | % | | | 6 | % | | | 1 | % | | | -4 | % | | | 11 | % |
Annualized Base Management Fee Rate (f) | | | 0.97 | % | | | 1.09 | % | | | 0.64 | % | | | 0.69 | % | | | 0.88 | % | | | 0.97 | % | | | 1.09 | % | | | 0.62 | % | | | 0.74 | % | | | 0.88 | % |
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Fee-Earning Assets Under Management | | | | | | | | | | | | | | | | | | | | |
Balance, Beginning of Period | | $ | 149,121,461 | | | $ | 136,605,920 | | | $ | 110,881,406 | | | $ | 72,824,327 | | | $ | 469,433,114 | |
| | | 73,051,751 | | | | 39,150,440 | | | | 102,760,775 | | | | 9,583,988 | | | | 224,546,954 | |
| | | (3,092,934 | ) | | | (3,693,890 | ) | | | (10,222,949 | ) | | | (16,429,121 | ) | | | (33,438,894 | ) |
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| | | 69,958,817 | | | | 35,456,550 | | | | 92,537,826 | | | | (6,845,133 | ) | | | 191,108,060 | |
| | | (14,210,387 | ) | | | (13,689,977 | ) | | | (12,595,052 | ) | | | (1,247,243 | ) | | | (41,742,659 | ) |
| | | 16,606,808 | | | | 7,959,277 | | | | 350,477 | | | | 6,253,981 | | | | 31,170,543 | |
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Balance, End of Period (e) | | $ | 221,476,699 | | | $ | 166,331,770 | | | $ | 191,174,657 | | | $ | 70,985,932 | | | $ | 649,969,058 | |
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| | $ | 72,355,238 | | | $ | 29,725,850 | | | $ | 80,293,251 | | | $ | (1,838,395 | ) | | $ | 180,535,944 | |
| | | 49 | % | | | 22 | % | | | 72 | % | | | -3 | % | | | 38 | % |
Annualized Base Management Fee Rate (f) | | | 1.09 | % | | | 1.12 | % | | | 0.54 | % | | | 0.78 | % | | | 0.92 | % |
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Total Assets Under Management | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Balance, Beginning of Period | | $ | 326,146,904 | | | $ | 299,850,659 | | | $ | 273,746,559 | | | $ | 74,928,955 | | | $ | 974,673,077 | | | $ | 279,474,105 | | | $ | 272,810,231 | | | $ | 251,150,891 | | | $ | 77,466,493 | | | $ | 880,901,720 | |
| | | 53,922,506 | | | | 23,986,567 | | | | 62,132,619 | | | | 8,476,721 | | | | 148,518,413 | | | | 90,199,877 | | | | 52,712,942 | | | | 71,695,591 | | | | 11,431,029 | | | | 226,039,439 | |
| | | (15,642,086 | ) | | | (3,085,261 | ) | | | (16,132,113 | ) | | | (10,858,518 | ) | | | (45,717,978 | ) | | | (13,577,103 | ) | | | (3,989,727 | ) | | | (19,535,887 | ) | | | (14,958,862 | ) | | | (52,061,579 | ) |
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| | | 38,280,420 | | | | 20,901,306 | | | | 46,000,506 | | | | (2,381,797 | ) | | | 102,800,435 | | | | 76,622,774 | | | | 48,723,215 | | | | 52,159,704 | | | | (3,527,833 | ) | | | 173,977,860 | |
| | | (18,744,078 | ) | | | (24,426,644 | ) | | | (20,080,725 | ) | | | (2,439,392 | ) | | | (65,690,839 | ) | | | (37,061,836 | ) | | | (24,926,992 | ) | | | (18,132,037 | ) | | | (1,646,775 | ) | | | (81,767,640 | ) |
| | | (8,743,150 | ) | | | 18,066,076 | | | | 13,007,697 | | | | 6,079,151 | | | | 28,409,774 | | | | 7,111,861 | | | | 3,244,205 | | | | (11,431,999 | ) | | | 2,637,070 | | | | 1,561,137 | |
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Balance, End of Period (e) | | $ | 336,940,096 | | | $ | 314,391,397 | | | $ | 312,674,037 | | | $ | 76,186,917 | | | $ | 1,040,192,447 | | | $ | 326,146,904 | | | $ | 299,850,659 | | | $ | 273,746,559 | | | $ | 74,928,955 | | | $ | 974,673,077 | |
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| | $ | 10,793,192 | | | $ | 14,540,738 | | | $ | 38,927,478 | | | $ | 1,257,962 | | | $ | 65,519,370 | | | $ | 46,672,799 | | | $ | 27,040,428 | | | $ | 22,595,668 | | | $ | (2,537,538 | ) | | $ | 93,771,357 | |
| | | 3 | % | | | 5 | % | | | 14 | % | | | 2 | % | | | 7 | % | | | 17 | % | | | 10 | % | | | 9 | % | | | -3 | % | | | 11 | % |
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Total Assets Under Management | | | | | | | | | | | | | | | | | | | | |
Balance, Beginning of Period | | $ | 187,191,247 | | | $ | 205,510,244 | | | $ | 147,977,704 | | | $ | 77,877,733 | | | $ | 618,556,928 | |
| | | 75,257,777 | | | | 55,633,265 | | | | 128,833,582 | | | | 10,747,030 | | | | 270,471,654 | |
| | | (5,145,881 | ) | | | (2,969,032 | ) | | | (11,543,244 | ) | | | (16,431,571 | ) | | | (36,089,728 | ) |
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| | | 70,111,896 | | | | 52,664,233 | | | | 117,290,338 | | | | (5,684,541 | ) | | | 234,381,926 | |
| | | (19,490,016 | ) | | | (37,169,693 | ) | | | (19,229,656 | ) | | | (1,320,138 | ) | | | (77,209,503 | ) |
| | | 41,660,978 | | | | 51,805,447 | | | | 5,112,505 | | | | 6,593,439 | | | | 105,172,369 | |
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Balance, End of Period (e) | | $ | 279,474,105 | | | $ | 272,810,231 | | | $ | 251,150,891 | | | $ | 77,466,493 | | | $ | 880,901,720 | |
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| | $ | 92,282,858 | | | $ | 67,299,987 | | | $ | 103,173,187 | | | $ | (411,240 | ) | | $ | 262,344,792 | |
| | | 49 | % | | | 33 | % | | | 70 | % | | | -1 | % | | | 42 | % |
| (a) | Inflows include contributions, capital raised, other increases in available capital (recallable capital and increased commitments), purchases, inter-segment allocations and acquisitions. |
| (b) | Outflows represent redemptions, client withdrawals and decreases in available capital (expired capital, expense drawdowns and decreased commitments). |
| (c) | Realizations represent realization proceeds from the disposition or other monetization of assets, current income or capital returned to investors from CLOs. |
| (d) | Market activity includes realized and unrealized gains (losses) on portfolio investments and the impact of foreign exchange rate fluctuations. |
| (e) | Total and Fee-Earning Assets Under Management are reported in the segment where the assets are managed. |
| (f) | Annualized Base Management Fee Rate represents annualized year to date Base Management Fee divided by the average of the beginning of year and each quarter end’s Fee-Earning Assets Under Management in the reporting period. |
| (g) | For the year ended December 31, 2023, the impact to Fee-Earning Assets Under Management from foreign exchange rate fluctuations was $1.6 billion, $110.2 million, $1.0 billion, $223.5 million, and $3.0 billion for the Real Estate, Private Equity, Credit & Insurance, Multi-Asset Investing and Total segments, respectively. For the year ended December 31, 2022, the impact to Fee-Earning Assets Under Management from foreign exchange rate fluctuations was $(3.5) billion, $(148.4) million, $(1.7) billion, $(548.2) million and $(5.9) billion for the Real Estate, Private Equity, Credit & Insurance, Multi-Asset Investing and Total segments, respectively. For the year ended December 31, 2021, such impact was $(2.1) billion, $(1.1) billion and $(3.2) billion for the Real Estate, Credit & Insurance and Total segments, respectively. |
| (h) | For the year ended December 31, 2023, the impact to Total Assets Under Management from foreign exchange rate fluctuations was $2.2 billion, $1.1 billion, $1.1 billion, $232.1 million, and $4.6 billion for the Real Estate, Private Equity, Credit & Insurance, Multi-Asset Investing and Total segments, respectively. For the year ended December 31, 2022, the impact to Total Assets Under Management from foreign exchange rate fluctuations was $(6.6) billion, $(1.5) billion, $(2.1) billion, $(546.5) million and $(10.8) billion for the Real Estate, Private Equity, Credit & Insurance, Multi-Asset Investing and Total segments, respectively. For the year ended December 31, 2021, such impact was $(3.2) billion, $(1.2) billion, $(1.2) billion and $(5.6) billion for the Real Estate, Private Equity, Credit & Insurance and Total segments, respectively. |
Fee-Earning
Assets Under Management
Fee-Earning
Assets Under Management were $762.6 billion at December 31, 2023, an increase of $44.2 billion compared to $718.4 billion at December 31, 2022. The net increase was due to:
| | • | | In our Real Estate segment, an increase of $16.9 billion from $282.0 billion at December 31, 2022 to $298.9 billion at December 31, 2023. The net increase was due to inflows of $60.4 billion, offset by realizations of $20.3 billion, outflows of $18.2 billion and market depreciation of $5.0 billion. |
| | o | Inflows were driven by $33.0 billion from BREDS, $15.8 billion from BREIT and $9.1 billion from BREP and co-investment. BREDS inflows primarily related to $17.3 billion from a fee-paying joint venture with the Federal Deposit Insurance Corporation to acquire the Signature Bank commercial senior mortgage loan portfolio (the “Signature transaction”) and $12.5 billion from allocations of insurance capital. BREIT inflows included $4.5 billion from the Regents of the University of California (“UC Investments”) in the first quarter of 2023. BREP and co-investment inflows were primarily driven by the commencement of the investment period for the seventh European opportunistic fund. |
| | o | Realizations were driven by $9.9 billion from BREIT, $4.8 billion from BREDS, $3.5 billion from BREP and co-investment and $2.0 billion from BPP and co-investment. |
| | o | Outflows were driven by $13.3 billion from BREIT, reflecting repurchases, and $3.6 billion from BREP and co-investment, due to remaining uninvested reserves at the end of BREP Europe VI’s investment period. |
| | o | Market depreciation was driven by depreciation of $5.0 billion primarily from BPP and co-investment (which reflected $1.1 billion of foreign exchange appreciation). |
Fee-Earning
Assets Under Management inflows and outflows in BREP exceeds the Total Assets Under Management inflows and outflows due to the commencement of the investment period for the seventh European opportunistic fund and the termination of the investment period for BREP Europe VI in September 2023.
Fee-Earning
Assets Under Management inflows are reported when a fund’s investment period commences, whereas Total Assets Under Management inflows are reported at each fund closing.
Fee-Earning
Assets Under Management outflows include the change in fee base within BREP Europe VI from committed capital to invested capital.
Fee-Earning
Assets Under Management inflows in BREDS exceeds the Total Assets Under Management inflows due to the impact of the Signature transaction.
Fee-Earning
Assets Under Management inflows include the gross outstanding principal balance of the investments in the Signature transaction, whereas Total Assets Under Management inflows include each joint venture partner’s ownership interest at fair value.
| | • | | In our Private Equity segment, an increase of $1.0 billion from $176.0 billion at December 31, 2022 to $177.0 billion at December 31, 2023. The net increase was due to inflows of $8.5 billion and market appreciation of $3.0 billion, offset by realizations of $9.8 billion and outflows of $737.8 million. |
| | o | Inflows were driven by $3.6 billion from BIP, $2.6 billion from Tactical Opportunities and $2.1 billion from Secondaries. |
| | o | Market appreciation was driven by appreciation of $2.5 billion from BIP (which reflected $111.1 million of foreign exchange appreciation). |
| | o | Realizations were driven by $3.6 billion from Corporate Private Equity, $3.0 billion from Secondaries and $2.0 billion from Tactical Opportunities. |
| | o | Outflows were driven by $441.5 million from BTAS and $259.0 million from Tactical Opportunities. |
| | • | | In our Credit & Insurance segment, an increase of $25.7 billion from $192.5 billion at December 31, 2022 to $218.2 billion at December 31, 2023. The net increase was due to inflows of $42.8 billion and market appreciation of $8.6 billion, offset by realizations of $13.2 billion and outflows of $12.5 billion. |
| | o | Inflows were driven by $15.1 billion from liquid corporate credit, $15.1 billion from direct lending and $8.3 billion from infrastructure and asset based credit strategies. |
| | o | Market appreciation was driven by appreciation of $4.6 billion from liquid corporate credit (which reflected $814.2 million of foreign exchange appreciation) and $4.2 billion from direct lending (which reflected $227.7 million of foreign exchange appreciation). |
| | o | Realizations were driven by $5.3 billion from direct lending, $3.4 billion from liquid corporate credit and $1.9 billion from mezzanine funds. |
| | o | Outflows were driven by $7.0 billion from liquid corporate credit and $4.2 billion from direct lending. |
| | • | | In our Multi-Asset Investing segment, an increase of $639.2 million from $67.9 billion at December 31, 2022 to $68.5 billion at December 31, 2023. The net increase was due to inflows of $7.7 billion and market appreciation of $5.7 billion, offset by outflows of $10.5 billion and realizations of $2.3 billion. |
| | o | Inflows were driven by $5.2 billion from Absolute Return, $2.2 billion from Multi-Strategy and $298.6 million from Harvest. |
| | o | Market appreciation was driven by appreciation of $4.0 billion from Absolute Return (which reflected $199.0 million of foreign exchange appreciation), $980.8 million from Harvest and $729.1 million from Multi-Strategy (which reflected $24.4 million of foreign exchange appreciation). |
| | o | Outflows were driven by $8.8 billion from Absolute Return, $1.0 billion from Harvest and $612.9 million from Multi-Strategy. |
| | o | Realizations were driven by $1.2 billion from Multi-Strategy and $949.1 million from Absolute Return. |
Fee-Earning
Assets Under Management were $718.4 billion at December 31, 2022, an increase of $68.4 billion compared to $650.0 billion at December 31, 2021. The net increase was due to:
| | • | | In our Real Estate segment, an increase of $60.5 billion from $221.5 billion at December 31, 2021 to $282.0 billion at December 31, 2022. The net increase was due to inflows of $98.6 billion and market appreciation of $4.8 billion, offset by realizations of $22.7 billion and outflows of $20.2 billion. |
| | o | Inflows were driven by $38.7 billion from BREP and co-investment, primarily due to the commencement of the BREP X and BREP Asia III investment periods, $27.7 billion from BREIT, $17.8 billion from BREDS, primarily due to allocations of insurance capital and BREDS IV and $13.3 billion from BPP and co-investment. |
| | o | Market appreciation was driven by appreciation of $9.6 billion from Core+ real estate (which reflected $2.8 billion of foreign exchange depreciation), partially offset by investment depreciation of $4.8 billion from BREDS insurance vehicles and foreign exchange depreciation of $639.2 million from BREP and co-investment. |
| | o | Realizations were driven by $7.7 billion from BREIT, $7.4 billion from BREDS, $3.9 billion from BREP and co-investment and $3.6 billion from BPP and co-investment. |
| | o | Outflows were driven by $10.6 billion from BREIT repurchases, $7.1 billion from BREP and co-investment from uninvested reserves at the end of BREP IX’s and BREP Asia II’s investment periods and $2.1 billion from BPP and co-investment. |
| | • | | In our Private Equity segment, an increase of $9.7 billion from $166.3 billion at December 31, 2021 to $176.0 billion at December 31, 2022. The net increase was due to inflows of $20.6 billion and market appreciation of $3.1 billion, offset by realizations of $9.7 billion and outflows of $4.3 billion. |
| | o | Inflows were driven by $9.2 billion from Secondaries, $6.0 billion from BIP, $2.9 billion from Tactical Opportunities and $1.5 billion from Corporate Private Equity. |
| | o | Market appreciation was driven by $2.9 billion from BIP. |
| | o | Realizations were driven by $4.0 billion from Secondaries, $2.6 billion from Tactical Opportunities and $2.3 billion from Corporate Private Equity. |
| | o | Outflows were driven by $2.3 billion in BIP resulting from the change in the calculation of management fees to exclude unfunded commitments, $831.1 million from Secondaries, $469.3 million in Tactical Opportunities, $381.4 million in BTAS and $369.8 million from Corporate Private Equity. |
| | • | | In our Credit & Insurance segment, an increase of $1.4 billion from $191.2 billion at December 31, 2021 to $192.5 billion at December 31, 2022. The net increase was due to inflows of $42.7 billion, offset by outflows of $19.2 billion, market depreciation of $13.6 billion and realizations of $8.5 billion. |
| | o | Inflows were driven by $19.4 billion from direct lending, $11.4 billion from liquid corporate credit and $8.8 billion from infrastructure and asset based credit strategies. |
| | o | Outflows were driven by $11.7 billion from liquid corporate credit, $3.5 billion from direct lending and $3.0 billion from our insurance platform. |
| | o | Market depreciation was driven by depreciation of $9.4 billion from liquid corporate credit and $4.2 billion from infrastructure and asset based credit strategies, which included $1.7 billion of foreign exchange depreciation across the segment. |
| | o | Realizations were driven by $3.1 billion from direct lending and $2.8 billion from liquid corporate credit. |
| | • | | In our Multi-Asset Investing segment, a decrease of $3.1 billion from $71.0 billion at December 31, 2021 to $67.9 billion at December 31, 2022. The net decrease was due to outflows of $14.4 billion and realizations of $1.6 billion, offset by inflows of $10.5 billion and market appreciation of $2.4 billion. |
| | o | Outflows were driven by $10.4 billion from Absolute Return, $3.2 billion from Harvest and $800.0 million from Multi-Strategy. |
| | o | Realizations were driven by $709.6 million from Absolute Return and $685.8 million from Multi-Strategy. |
| | o | Inflows were driven by $9.4 billion from Absolute Return and $654.6 million from Multi-Strategy. |
| | o | Market appreciation was driven by $1.9 billion from Harvest and $638.3 million from Absolute Return, partially offset by market depreciation of $56.8 million from Multi-Strategy. |
Total Assets Under Management
Total Assets Under Management were $1,040.2 billion at December 31, 2023, an increase of $65.5 billion compared to $974.7 billion at December 31, 2022. The net increase was due to:
| | • | | In our Real Estate segment, an increase of $10.8 billion from $326.1 billion at December 31, 2022 to $336.9 billion at December 31, 2023. The net increase was due to inflows of $53.9 billion, offset by realizations of $18.7 billion, outflows of $15.6 billion and market depreciation of $8.7 billion. |
| | o | Inflows were driven by $28.3 billion from BREDS, $15.8 billion from BREIT and $8.5 billion from BREP and co-investment. BREDS inflows were primarily related to $10.5 billion from the Signature transaction and $13.1 billion from allocations of insurance capital. BREIT inflows included $4.5 billion from UC Investments. BREP and co-investment inflows were driven by fundraising for the seventh European opportunistic fund and BREP X. |
| | o | Realizations were driven by $9.9 billion from BREIT, $3.4 billion from BREDS, $3.3 billion from BREP and co-investment and $2.0 billion from BPP and co-investment. |
| | o | Outflows were driven by $13.3 billion from BREIT, reflecting repurchases. |
| | o | Market depreciation was driven by depreciation of $5.3 billion from BPP and co-investment (which reflected $1.2 billion of foreign exchange appreciation) and depreciation of $3.8 billion from BREP and co-investment (which reflected $759.0 million of foreign exchange appreciation), partially offset by appreciation of $983.5 million from BREDS (which reflected $66.1 million of foreign exchange appreciation). |
| | • | | In our Private Equity segment, an increase of $14.5 billion from $299.9 billion at December 31, 2022 to $314.4 billion at December 31, 2023. The net increase was due to inflows of $24.0 billion and market appreciation of $18.1 billion, offset by realizations of $24.4 billion and outflows of $3.1 billion. |
| | o | Inflows were driven by $9.2 billion from Corporate Private Equity, $6.0 billion from Secondaries, $3.8 billion from Tactical Opportunities and $3.4 billion from BIP. |
| | o | Market appreciation was driven by appreciation of $10.6 billion from Corporate Private Equity (which reflected $750.2 million of foreign exchange appreciation) and $3.2 billion from BIP (which reflected $116.1 million of foreign exchange appreciation). |
| | o | Realizations were driven by $12.4 billion from Corporate Private Equity and $6.5 billion from Secondaries. |
| | o | Outflows were driven by $1.7 billion from Secondaries, $558.8 million from Corporate Private Equity and $417.1 million from Tactical Opportunities. |
| | • | | In our Credit & Insurance segment, an increase of $38.9 billion from $273.7 billion at December 31, 2022 to $312.7 billion at December 31, 2023. The net increase was due to inflows of $62.1 billion and market appreciation of $13.0 billion, offset by realizations of $20.1 billion and outflows of $16.1 billion. |
| | o | Inflows were driven by $24.6 billion from direct lending, $15.2 billion from liquid corporate credit, $12.2 billion from infrastructure and asset based credit strategies and $9.6 billion from our insurance platform. |
| | o | Market appreciation was driven by appreciation of $5.5 billion from direct lending (which reflected $228.4 million of foreign exchange appreciation) and $4.8 billion from liquid corporate credit (which reflected $829.2 million of foreign exchange appreciation). |
| | o | Realizations were driven by $8.7 billion from direct lending, $3.4 billion from mezzanine funds and $3.4 billion from liquid corporate credit. |
| | o | Outflows were driven by $7.8 billion from liquid corporate credit and $5.5 billion from direct lending. |
| | • | | In our Multi-Asset Investing segment, an increase of $1.3 billion from $74.9 billion at December 31, 2022 to $76.2 billion at December 31, 2023. The net increase was due to inflows of $8.5 billion and market appreciation of $6.1 billion, offset by outflows of $10.9 billion and realizations of $2.4 billion. |
| | o | Inflows were driven by $5.7 billion from Absolute Return, $2.4 billion from Multi-Strategy and $365.5 million from Harvest. |
| | o | Market appreciation was driven by appreciation of $4.3 billion from Absolute Return (which reflected $207.5 million of foreign exchange appreciation), $1.1 billion from Harvest and $719.5 million from Multi-Strategy (which reflected $24.6 million of foreign exchange appreciation). |
| | o | Outflows were driven by $9.0 billion from Absolute Return, $1.1 billion from Harvest and $735.2 million from Multi-Strategy. |
| | o | Realizations were driven by $1.2 billion from Multi-Strategy, $985.1 million from Absolute Return and $287.8 million from Harvest. |
Total Assets Under Management inflows in Corporate Private Equity exceed the
Fee-Earning
Assets Under Management inflows primarily due to the closings of BCP IX and BETP IV and capital raised in
co-investments
in the year ended December 31, 2023.
Fee-Earning
Assets Under Management inflows are reported when a fund’s investment period commences or
fee-earning
co-investment
capital is raised, whereas Total Assets Under Management activity is reported at each fund closing or when
co-investment
capital is raised.
Total Assets Under Management realizations in our BREP and
co-investment
funds and our Private Equity segment generally represents the total proceeds and typically exceeds the
Fee-Earning
Assets Under Management realizations.
Fee-Earning
Assets Under Management generally represents only the invested capital.
Fee-Earning
Assets Under Management in Corporate Private Equity is reported based on committed or remaining invested capital, whereas Total Assets Under Management is reported based on fair value and remaining available capital. Total Assets Under Management market activity therefore exceeds
Fee-Earning
Assets Under Management market activity.
Total Assets Under Management inflows in our Credit & Insurance segment direct lending funds exceed the
Fee-Earning
Assets Under Management inflows because Total Assets Under Management inflows are reported at their gross value while, for certain funds,
Fee-Earning
Assets Under Management are reported as net assets, which is the basis on which fees are charged.
Total Assets Under Management were $974.7 billion at December 31, 2022, an increase of $93.8 billion compared to $880.9 billion at December 31, 2021. The net increase was due to:
| | • | | In our Real Estate segment, an increase of $46.7 billion from $279.5 billion at December 31, 2021 to $326.1 billion at December 31, 2022. The net increase was due to inflows of $90.2 billion and market appreciation of $7.1 billion, offset by realizations of $37.1 billion and outflows of $13.6 billion. |
| | o | Inflows were driven by $34.0 billion from BREP, primarily from BREP X and BREP Asia III, $27.7 billion from BREIT, $14.5 billion from BREDS, primarily due to allocations of insurance capital and BREDS V, and $12.9 billion from BPP and co-investment. |
| | o | Market appreciation was driven by $9.7 billion from Core+ real estate and $3.5 billion from BREP and co-investment, partially offset by a decrease of $4.8 billion in BREDS insurance vehicles, all of which included $6.6 billion of foreign exchange depreciation across the segment. |
| | o | Realizations were driven by $22.3 billion from BREP and co-investment, $7.7 billion from BREIT, $3.7 billion from BPP and co-investment and $3.3 billion from BREDS. |
| | o | Outflows were driven by $10.6 billion from BREIT and $2.1 billion from BPP and co-investment. |
| | • | | In our Private Equity segment, an increase of $27.0 billion from $272.8 billion at December 31, 2021 to $299.9 billion at December 31, 2022. The net increase was due to inflows of $52.7 billion and market appreciation of $3.2 billion, offset by realizations of $24.9 billion and outflows of $4.0 billion. |
| | o | Inflows were driven by $19.7 billion from Corporate Private Equity, $14.2 billion from Secondaries, $9.7 billion from BIP, $4.2 billion from Tactical Opportunities and $3.9 billion from BXG. |
| | o | Market appreciation was driven by $3.4 billion from BIP and $2.8 billion from Secondaries, partially offset by depreciation of $2.2 billion from Corporate Private Equity. |
| | o | Realizations were driven by $10.5 billion from Corporate Private Equity, $8.1 billion from Secondaries and $5.1 billion from Tactical Opportunities. |
| | o | Outflows were driven by $1.6 billion from Secondaries, $838.6 million from Tactical Opportunities and $796.0 million from Corporate Private Equity. |
| | • | | In our Credit & Insurance segment, an increase of $22.6 billion from $251.2 billion at December 31, 2021 to $273.7 billion at December 31, 2022. The net increase was due to inflows of $71.7 billion, offset by outflows of $19.5 billion, realizations of $18.1 billion and market depreciation of $11.4 billion. |
| | o | Inflows were driven by $43.7 billion from direct lending, $12.9 billion from liquid corporate credit and $12.8 billion from infrastructure and asset based credit strategies. |
| | o | Outflows were driven by $12.1 billion from liquid corporate credit, $3.8 billion from direct lending and $3.0 billion from our insurance platform. |
| | o | Realizations were driven by $10.5 billion from direct lending and $2.8 billion from liquid corporate credit. |
| | o | Market depreciation was driven by depreciation of $9.6 billion from liquid corporate credit and $3.5 billion from infrastructure and asset based credit strategies, which included $2.1 billion of foreign exchange depreciation across the segment. |
| | • | | In our Multi-Asset Investing segment, a decrease of $2.5 billion from $77.5 billion at December 31, 2021 to $74.9 billion at December 31, 2022. The net decrease was due to outflows of $15.0 billion and realizations of $1.6 billion, offset by inflows of $11.4 billion and market appreciation of $2.6 billion. |
| | o | Outflows were driven by $10.5 billion for Absolute Return, $3.5 billion from Harvest and $999.4 million from Multi-Strategy. |
| | o | Realizations were driven by $733.4 million for Absolute Return and $692.7 million from Multi-Strategy. |
| | o | Inflows were driven by $10.6 billion from Absolute Return, $481.8 million from Multi-Strategy and $342.9 million from Harvest. |
| | o | Market appreciation was driven by $2.0 billion from Harvest and $790.8 million from Absolute Return, partially offset by market depreciation of $180.6 million from Multi-Strategy. |
The following presents our Dry Powder as of December 31 of each year:
| Note: | Totals may not add due to rounding. |
| (a) | Represents illiquid drawdown funds, a component of Perpetual Capital and fee-paying co-investments; includes fee-paying third party capital as well as general partner and employee capital that does not earn fees. Amounts are reduced by outstanding capital commitments, for which capital has not yet been invested. |
Net Accrued Performance Revenues
The following table presents the Accrued Performance Revenues, net of performance compensation, of the Blackstone Funds as of December 31, 2023 and 2022. Net Accrued Performance Revenues presented do not include clawback amounts, if any, which are disclosed in Note 19. “Commitments and Contingencies — Contingencies — Contingent Obligations (Clawback)” in the “Notes to Consolidated Financial Statements” in “—Item 8. Financial Statements and Supplementary Data” of this filing. See
“— Non-GAAP
Financial Measures” for our reconciliation of Net Accrued Performance Revenues.
| | | | | | | | |
| | | | |
| | | | | | | |
| | | | | | | |
| | | | |
| | | | | | | | |
| | $ | 2 | | | $ | 6 | |
| | | 4 | | | | 4 | |
| | | 1 | | | | 21 | |
| | | — | | | | 115 | |
| | | 572 | | | | 749 | |
| | | 744 | | | | 1,011 | |
| | | 5 | | | | 48 | |
| | | — | | | | 44 | |
| | | 104 | | | | 49 | |
| | | 92 | | | | 108 | |
| | | — | | | | 119 | |
| | | 129 | | | | 633 | |
| | | 32 | | | | 11 | |
| | | 2 | | | | 25 | |
| | | | | | | | |
| | | 1,687 | | | | 2,944 | |
| | | | | | | | |
| | | | | | | | |
| | | — | | | | 6 | |
| | | 17 | | | | 20 | |
| | | 340 | | | | 459 | |
| | | 839 | | | | 870 | |
| | | 366 | | | | 256 | |
| | | 149 | | | | 144 | |
| | | 32 | | | | — | |
| | | 25 | | | | 37 | |
| | | 78 | | | | 27 | |
| | | 203 | | | | 136 | |
| | | 234 | | | | 205 | |
| | | 229 | | | | 234 | |
| | | 731 | | | | 773 | |
| | | 333 | | | | 193 | |
| | | 82 | | | | 25 | |
| | | 185 | | | | 186 | |
| | | | | | | | |
| | | 3,844 | | | | 3,571 | |
| | | | | | | | |
| | | 286 | | | | 312 | |
| | | | | | | | |
| | | 17 | | | | 9 | |
| | | | | | | | |
Total Blackstone Net Accrued Performance Revenues | | $ | 5,835 | | | $ | 6,835 | |
| | | | | | | | |
| Note: | Totals may not add due to rounding. |
| (a) | Real Estate and Private Equity include co-investments, as applicable |
For the year ended December 31, 2023, Net Accrued Performance Revenues receivable decreased due to net realized distributions of $1.8 billion, partially offset by Net Performance Revenues of $765.7 million. For the year ended December 31, 2022, Net Accrued Performance Revenues receivable decreased due to net realized distributions of $3.5 billion, partially offset by net performance revenues of $1.6 billion.
Invested Performance Eligible Assets Under Management
The following presents our Invested Performance Eligible Assets Under Management as of December 31 of each year:
| Note: | Totals may not add due to rounding. |
The following presents our Perpetual Capital Total Assets Under Management as of December 31 of each year:
| Note: | Totals may not add due to rounding. |
| (a) | Our Multi-Asset Investing segment had no Perpetual Capital Assets Under Management as of December 31 for the years ended 2021, 2022 and 2023, respectively. |
Perpetual Capital Total Assets Under Management were $396.3 billion as of December 31, 2023, an increase of $25.2 billion, compared to $371.1 billion as of December 31, 2022. Perpetual Capital Total Assets Under Management in our Credit & Insurance and Private Equity segments increased $22.2 billion and $6.0 billion, respectively. Principal drivers of these increases were:
| | • | | In our Credit & Insurance segment, growth in insurance capital and BCRED resulted in increases of $14.8 billion and $5.9 billion, respectively. |
| | • | | In our Private Equity segment, growth in BIP resulted in an increase of $5.6 billion. |
Perpetual Capital Total Assets Under Management were $371.1 billion as of December 31, 2022, an increase of $57.8 billion, or 18%, compared to $313.4 billion as of December 31, 2021. Perpetual Capital Total Assets Under Management in our Real Estate, Credit & Insurance and Private Equity segments increased $32.1 billion, $13.9 billion and $11.7 billion, respectively. Principal drivers of these increases were:
| | • | | In our Real Estate segment, net Total Assets Under Management growth in BREIT, BPP and insurance capital managed in the Real Estate segment resulted in increases of $14.4 billion, $12.2 billion and $5.6 billion, respectively. |
| | • | | In our Credit & Insurance segment, net Total Assets Under Management growth in direct lending resulted in an increase of $23.7 billion, partially offset by a decrease of $9.6 billion in insurance capital, which includes $5.6 billion of allocations to other segments. |
| | • | | In our Private Equity segment, net Total Assets Under Management growth in BIP resulted in an increase of $12.1 billion. |
Fund returns information for our significant funds is included throughout this discussion and analysis to facilitate an understanding of our results of operations for the periods presented. The fund returns information reflected in this discussion and analysis is not indicative of the financial performance of Blackstone and is also not necessarily indicative of the future performance of any particular fund. An investment in Blackstone is not an investment in any of our funds. There can be no assurance that any of our funds or our other existing and future funds will achieve similar returns.
The following tables present the investment record of our significant carry/drawdown funds and selected perpetual capital strategies from inception through December 31, 2023:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
Beginning Date / Ending Date) (a) | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
| | | (Dollars/Euros in Thousands, Except Where Noted) |
| |
| | $ 140,714 | | $ — | | $ — | | | n/a | | | | — | | | $ 345,190 | | | 2.5x | | | $ 345,190 | | | 2.5x | | | | 33% | | | | 33% | |
BREP I (Sep 1994 / Oct 1996) | | 380,708 | | — | | — | | | n/a | | | | — | | | 1,327,708 | | | 2.8x | | | 1,327,708 | | | 2.8x | | | | 40% | | | | 40% | |
BREP II (Oct 1996 / Mar 1999) | | 1,198,339 | | — | | — | | | n/a | | | | — | | | 2,531,614 | | | 2.1x | | | 2,531,614 | | | 2.1x | | | | 19% | | | | 19% | |
BREP III (Apr 1999 / Apr 2003) | | 1,522,708 | | — | | — | | | n/a | | | | — | | | 3,330,406 | | | 2.4x | | | 3,330,406 | | | 2.4x | | | | 21% | | | | 21% | |
BREP IV (Apr 2003 / Dec 2005) | | 2,198,694 | | — | | 1,983 | | | n/a | | | | — | | | 4,666,129 | | | 1.7x | | | 4,668,112 | | | 1.7x | | | | 12% | | | | 12% | |
BREP V (Dec 2005 / Feb 2007) | | 5,539,418 | | — | | 6,226 | | | n/a | | | | — | | | 13,463,448 | | | 2.3x | | | 13,469,674 | | | 2.3x | | | | 11% | | | | 11% | |
BREP VI (Feb 2007 / Aug 2011) | | 11,060,122 | | — | | 5,797 | | | n/a | | | | — | | | 27,758,980 | | | 2.5x | | | 27,764,777 | | | 2.5x | | | | 13% | | | | 13% | |
BREP VII (Aug 2011 / Apr 2015) | | 13,502,690 | | 1,284,421 | | 2,000,250 | | | 0.6x | | | | — | | | 28,399,471 | | | 2.3x | | | 30,399,721 | | | 1.9x | | | | 20% | | | | 14% | |
BREP VIII (Apr 2015 / Jun 2019) | | 16,601,896 | | 2,126,652 | | 12,577,721 | | | 1.5x | | | | 1% | | | 21,833,202 | | | 2.4x | | | 34,410,923 | | | 1.9x | | | | 25% | | | | 14% | |
BREP IX (Jun 2019 / Aug 2022) | | 21,346,598 | | 3,379,621 | | 24,992,884 | | | 1.4x | | | | 1% | | | 8,549,345 | | | 2.2x | | | 33,542,229 | | | 1.5x | | | | 59% | | | | 17% | |
*BREP X (Aug 2022 / Feb 2028) | | 30,498,731 | | 28,234,499 | | 2,477,931 | | | 1.1x | | | | 32% | | | — | | | n/a | | | 2,477,931 | | | 1.1x | | | | n/m | | | | n/m | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | $ 103,990,618 | | $ 35,025,193 | | $ 42,062,792 | | | 1.3x | | | | 3% | | | $ 112,205,493 | | | 2.3x | | | $ 154,268,285 | | | 1.9x | | | | 17% | | | | 15% | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
BREP Int’l (Jan 2001 / Sep 2005) | | | | | | | | | n/a | | | | — | | | | | | 2.1x | | | | | | 2.1x | | | | 23% | | | | 23% | |
BREP Int’l II (Sep 2005 / Jun 2008) (e) | | 1,629,748 | | — | | — | | | n/a | | | | — | | | 2,583,032 | | | 1.8x | | | 2,583,032 | | | 1.8x | | | | 8% | | | | 8% | |
BREP Europe III (Jun 2008 / Sep 2013) | | 3,205,420 | | 393,185 | | 159,016 | | | 0.3x | | | | — | | | 5,856,192 | | | 2.4x | | | 6,015,208 | | | 2.0x | | | | 18% | | | | 13% | |
BREP Europe IV (Sep 2013 / Dec 2016) | | 6,674,949 | | 1,280,424 | | 1,084,235 | | | 0.8x | | | | — | | | 9,982,474 | | | 1.9x | | | 11,066,709 | | | 1.7x | | | | 19% | | | | 12% | |
BREP Europe V (Dec 2016 / Oct 2019) | | 7,979,853 | | 1,121,512 | | 4,589,558 | | | 0.9x | | | | — | | | 6,696,771 | | | 3.9x | | | 11,286,329 | | | 1.6x | | | | 41% | | | | 9% | |
BREP Europe VI (Oct 2019 / Sep 2023) | | 10,033,576 | | 3,387,193 | | 7,974,065 | | | 1.2x | | | | — | | | 3,427,886 | | | 2.6x | | | 11,401,951 | | | 1.4x | | | | 72% | | | | 16% | |
*BREP Europe VII (Sep 2023 / Mar 2029) | | 5,097,875 | | 4,730,274 | | 367,601 | | | 1.0x | | | | — | | | — | | | n/a | | | 367,601 | | | 1.0x | | | | n/a | | | | n/a | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | 1.0x | | | | — | | | | | | 2.3x | | | | | | 1.6x | | | | 17% | | | | 11% | |
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Beginning Date / Ending Date) (a) | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
| | | (Dollars/Euros in Thousands, Except Where Noted) |
| |
BREP Asia I (Jun 2013 / Dec 2017) | | $ | 4,262,075 | | | $ | 898,228 | | | $ | 1,640,959 | | | | 1.6x | | | | 24 | % | | $ | 7,018,318 | | | | 1.9x | | | $ | 8,659,277 | | | | 1.9x | | | | 16% | | | | 12% | |
BREP Asia II (Dec 2017 / Mar 2022) | | | 7,354,782 | | | | 1,310,674 | | | | 6,783,639 | | | | 1.2x | | | | 4 | % | | | 1,670,209 | | | | 1.9x | | | | 8,453,848 | | | | 1.3x | | | | 32% | | | | 6% | |
*BREP Asia III (Mar 2022 / Sep 2027) | | | 8,225,044 | | | | 6,877,915 | | | | 1,241,164 | | | | 1.0x | | | | — | | | | — | | | | n/a | | | | 1,241,164 | | | | 1.0x | | | | n/a | | | | -21% | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | 19,841,901 | | | | 9,086,817 | | | | 9,665,762 | | | | 1.2x | | | | 7 | % | | | 8,688,527 | | | | 1.9x | | | | 18,354,289 | | | | 1.5x | | | | 17% | | | | 9% | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | 7,308,836 | | | | 40,457 | | | | 918,951 | | | | 2.0x | | | | — | | | | 15,219,149 | | | | 2.2x | | | | 16,138,100 | | | | 2.2x | | | | 16% | | | | 16% | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | $ | 172,853,680 | | | $ | 56,150,637 | | | $ | 68,646,642 | | | | 1.2x | | | | 3 | % | | $ | 172,689,772 | | | | 2.3x | | | $ | 241,336,414 | | | | 1.8x | | | | 17% | | | | 14% | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
*BREDS High-Yield (Various) (g) | | $ | 24,060,116 | | | $ | 8,065,536 | | | $ | 5,916,743 | | | | 1.0x | | | | — | | | $ | 18,862,743 | | | | 1.4x | | | $ | 24,779,486 | | | | 1.2x | | | | 10% | | | | 9% | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
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 | | | | — | | | | 3,268,627 | | | | 2.5x | | | | 3,268,627 | | | | 2.5x | | | | 32% | | | | 32% | |
BCP III (Aug 1997 / Nov 2002) | | | 3,967,422 | | | | — | | | | — | | | | n/a | | | | — | | | | 9,228,707 | | | | 2.3x | | | | 9,228,707 | | | | 2.3x | | | | 14% | | | | 14% | |
BCOM (Jun 2000 / Jun 2006) | | | 2,137,330 | | | | 24,575 | | | | 113 | | | | n/a | | | | — | | | | 2,995,106 | | | | 1.4x | | | | 2,995,219 | | | | 1.4x | | | | 6% | | | | 6% | |
BCP IV (Nov 2002 / Dec 2005) | | | 6,773,182 | | | | 195,824 | | | | 231 | | | | n/a | | | | — | | | | 21,720,334 | | | | 2.9x | | | | 21,720,565 | | | | 2.9x | | | | 36% | | | | 36% | |
BCP V (Dec 2005 / Jan 2011) | | | 21,009,112 | | | | 1,035,259 | | | | 69,929 | | | | n/a | | | | 100 | % | | | 38,790,444 | | | | 1.9x | | | | 38,860,373 | | | | 1.9x | | | | 8% | | | | 8% | |
BCP VI (Jan 2011 / May 2016) | | | 15,195,265 | | | | 1,341,048 | | | | 4,731,061 | | | | 2.1x | | | | 21 | % | | | 28,090,440 | | | | 2.2x | | | | 32,821,501 | | | | 2.2x | | | | 14% | | | | 12% | |
BCP VII (May 2016 / Feb 2020) | | | 18,857,164 | | | | 1,693,962 | | | | 18,921,082 | | | | 1.6x | | | | 21 | % | | | 15,928,343 | | | | 2.5x | | | | 34,849,425 | | | | 1.9x | | | | 29% | | | | 13% | |
*BCP VIII (Feb 2020 / Feb 2026) | | | 25,658,729 | | | | 11,117,449 | | | | 19,868,056 | | | | 1.4x | | | | 7 | % | | | 1,506,944 | | | | 2.5x | | | | 21,375,000 | | | | 1.4x | | | | n/m | | | | 11% | |
| | | 17,852,339 | | | | 17,852,339 | | | | — | | | | n/a | | | | — | | | | — | | | | n/a | | | | — | | | | n/a | | | | n/a | | | | n/a | |
Energy I (Aug 2011 / Feb 2015) | | | 2,441,558 | | | | 174,492 | | | | 479,698 | | | | 1.5x | | | | 55 | % | | | 4,174,235 | | | | 2.0x | | | | 4,653,933 | | | | 1.9x | | | | 14% | | | | 11% | |
Energy II (Feb 2015 / Feb 2020) | | | 4,917,864 | | | | 864,501 | | | | 3,829,333 | | | | 1.7x | | | | 62 | % | | | 3,937,288 | | | | 1.7x | | | | 7,766,621 | | | | 1.7x | | | | 11% | | | | 8% | |
*Energy III (Feb 2020 / Feb 2026) | | | 4,371,917 | | | | 1,579,382 | | | | 4,867,811 | | | | 1.8x | | | | 16 | % | | | 1,307,128 | | | | 2.4x | | | | 6,174,939 | | | | 1.9x | | | | 55% | | | | 34% | |
Energy Transition IV (TBD) | | | 2,642,347 | | | | 2,642,347 | | | | — | | | | n/a | | | | — | | | | — | | | | n/a | | | | — | | | | n/a | | | | n/a | | | | n/a | |
BCP Asia I (Dec 2017 / Sep 2021) | | | 2,438,028 | | | | 418,459 | | | | 3,317,476 | | | | 1.8x | | | | 31 | % | | | 1,787,587 | | | | 4.9x | | | | 5,105,063 | | | | 2.3x | | | | 96% | | | | 28% | |
*BCP Asia II (Sep 2021 / Sep 2027) | | | 6,656,718 | | | | 4,910,184 | | | | 2,208,855 | | | | 1.5x | | | | 10 | % | | | 25 | | | | n/a | | | | 2,208,880 | | | | 1.5x | | | | n/a | | | | 22% | |
Core Private Equity I (Jan 2017 / Mar 2021) (h) | | | 4,761,597 | | | | 1,167,697 | | | | 7,426,538 | | | | 2.0x | | | | — | | | | 2,482,074 | | | | 4.5x | | | | 9,908,612 | | | | 2.3x | | | | 57% | | | | 18% | |
*Core Private Equity II (Mar 2021 / Mar 2026) (h) | | | 8,205,237 | | | | 5,690,657 | | | | 3,469,156 | | | | 1.4x | | | | — | | | | 68,770 | | | | n/a | | | | 3,537,926 | | | | 1.5x | | | | n/a | | | | 16% | |
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Total Corporate Private Equity | | $ | 150,105,990 | | | $ | 50,708,175 | | | $ | 69,189,339 | | | | 1.6x | | | | 16 | % | | $ | 137,027,790 | | | | 2.2x | | | $ | 206,217,129 | | | | 2.0x | | | | 16% | | | | 15% | |
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Beginning Date / Ending Date) (a) | | | | | | | | | | | | | | | | | | | | | | |
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| | | (Dollars/Euros in Thousands, Except Where Noted) |
Private Equity (continued) | |
| |
*Tactical Opportunities (Various) | | $ | 30,971,115 | | | $ | 15,765,172 | | | $ | 12,385,194 | | | | 1.2x | | | | 9 | % | | $ | 23,023,393 | | | | 1.8x | | | $ | 35,408,587 | | | | 1.6x | | | | 15% | | | | 11% | |
*Tactical Opportunities Co-Investment and Other (Various) | | | 10,043,477 | | | | 1,427,711 | | | | 4,690,499 | | | | 1.6x | | | | 7 | % | | | 9,205,600 | | | | 1.6x | | | | 13,896,099 | | | | 1.6x | | | | 19% | | | | 16% | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total Tactical Opportunities | | $ | 41,014,592 | | | $ | 17,192,883 | | | $ | 17,075,693 | | | | 1.3x | | | | 8 | % | | $ | 32,228,993 | | | | 1.8x | | | $ | 49,304,686 | | | | 1.6x | | | | 16% | | | | 12% | |
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| |
*BXG I (Jul 2020 / Jul 2025) | | $ | 5,056,267 | | | $ | 1,222,437 | | | $ | 3,503,415 | | | | 1.0x | | | | 2 | % | | $ | 497,131 | | | | 2.7x | | | $ | 4,000,546 | | | | 1.0x | | | | n/m | | | | -2% | |
| | | 4,093,732 | | | | 4,093,732 | | | | — | | | | n/a | | | | — | | | | — | | | | n/a | | | | — | | | | n/a | | | | n/a | | | | n/a | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | $ | 9,149,999 | | | $ | 5,316,169 | | | $ | 3,503,415 | | | | 1.0x | | | | 2 | % | | $ | 497,131 | | | | 2.7x | | | $ | 4,000,546 | | | | 1.0x | | | | n/m | | | | -2% | |
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Strategic Partners (Secondaries) | |
Strategic Partners I-V (Various) (i) | | $ | 11,035,527 | | | $ | 139,647 | | | $ | 15,736 | | | | n/a | | | | — | | | $ | 16,776,139 | | | | n/a | | | $ | 16,791,875 | | | | 1.7x | | | | n/a | | | | 13% | |
Strategic Partners VI (Apr 2014 / Apr 2016) (i) | | | 4,362,772 | | | | 611,267 | | | | 816,248 | | | | n/a | | | | — | | | | 4,237,948 | | | | n/a | | | | 5,054,196 | | | | 1.7x | | | | n/a | | | | 14% | |
Strategic Partners VII (May 2016 / Mar 2019) (i) | | | 7,489,970 | | | | 1,570,496 | | | | 4,164,820 | | | | n/a | | | | — | | | | 6,551,800 | | | | n/a | | | | 10,716,620 | | | | 1.9x | | | | n/a | | | | 17% | |
Strategic Partners Real Assets II (May 2017 / Jun 2020) (i) | | | 1,749,807 | | | | 471,876 | | | | 1,204,611 | | | | n/a | | | | — | | | | 1,113,866 | | | | n/a | | | | 2,318,477 | | | | 1.7x | | | | n/a | | | | 16% | |
Strategic Partners VIII (Mar 2019 / Oct 2021) (i) | | | 10,763,600 | | | | 4,348,349 | | | | 8,023,258 | | | | n/a | | | | — | | | | 6,060,532 | | | | n/a | | | | 14,083,790 | | | | 1.8x | | | | n/a | | | | 29% | |
*Strategic Partners Real Estate, SMA and Other (Various) (i) | | | 7,055,590 | | | | 2,436,365 | | | | 1,994,397 | | | | n/a | | | | — | | | | 2,001,796 | | | | n/a | | | | 3,996,193 | | | | 1.6x | | | | n/a | | | | 14% | |
*Strategic Partners Infrastructure III (Jun 2020 / Jul 2024) (i) | | | 3,250,100 | | | | 870,479 | | | | 1,961,697 | | | | n/a | | | | — | | | | 249,542 | | | | n/a | | | | 2,211,239 | | | | 1.4x | | | | n/a | | | | 32% | |
*Strategic Partners IX (Oct 2021 / Jan 2027) (i) | | | 19,492,126 | | | | 11,482,287 | | | | 5,386,344 | | | | n/a | | | | — | | | | 662,344 | | | | n/a | | | | 6,048,688 | | | | 1.3x | | | | n/a | | | | 18% | |
*Strategic Partners GP Solutions (Jun 2021 / Dec 2026) (i) | | | 2,045,211 | | | | 850,868 | | | | 714,059 | | | | n/a | | | | — | | | | — | | | | n/a | | | | 714,059 | | | | 1.0x | | | | n/a | | | | -3% | |
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Total Strategic Partners (Secondaries) | | $ | 67,244,703 | | | $ | 22,781,634 | | | $ | 24,281,170 | | | | n/a | | | | — | | | $ | 37,653,967 | | | | n/a | | | $ | 61,935,137 | | | | 1.7x | | | | n/a | | | | 15% | |
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Clarus IV (Jan 2018 / Jan 2020) | | $ | 910,000 | | | $ | 81,728 | | | $ | 773,667 | | | | 1.9x | | | | — | | | $ | 369,363 | | | | 1.1x | | | $ | 1,143,030 | | | | 1.5x | | | | -4% | | | | 9% | |
*BXLS V (Jan 2020 / Jan 2025) | | | 4,948,559 | | | | 2,989,827 | | | | 2,654,776 | | | | 1.6x | | | | 5 | % | | | 361,841 | | | | 1.1x | | | | 3,016,617 | | | | 1.5x | | | | n/m | | | | 13% | |
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Beginning Date / Ending Date) (a) | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
| | | (Dollars/Euros in Thousands, Except Where Noted) |
| |
Mezzanine / Opportunistic I (Jul 2007 / Oct 2011) | | $ | 2,000,000 | | | $ | 97,114 | | | $ | — | | | | n/a | | | | — | | | $ | 4,809,113 | | | | 1.6x | | | $ | 4,809,113 | | | | 1.6x | | | | n/a | | | | 17% | |
Mezzanine / Opportunistic II (Nov 2011 / Nov 2016) | | | 4,120,000 | | | | 993,179 | | | | 179,941 | | | | 0.2x | | | | — | | | | 6,591,362 | | | | 1.6x | | | | 6,771,303 | | | | 1.4x | | | | n/a | | | | 10% | |
Mezzanine / Opportunistic III (Sep 2016 / Jan 2021) | | | 6,639,133 | | | | 1,106,840 | | | | 2,309,594 | | | | 1.0x | | | | — | | | | 7,572,576 | | | | 1.6x | | | | 9,882,170 | | | | 1.4x | | | | n/a | | | | 10% | |
*Mezzanine / Opportunistic IV (Jan 2021 / Jan 2026) | | | 5,016,771 | | | | 2,381,115 | | | | 3,613,613 | | | | 1.1x | | | | — | | | | 792,732 | | | | 1.8x | | | | 4,406,345 | | | | 1.2x | | | | n/a | | | | 13% | |
Stressed / Distressed I (Sep 2009 / May 2013) | | | 3,253,143 | | | | — | | | | — | | | | n/a | | | | — | | | | 5,777,098 | | | | 1.3x | | | | 5,777,098 | | | | 1.3x | | | | n/a | | | | 9% | |
Stressed / Distressed II (Jun 2013 / Jun 2018) | | | 5,125,000 | | | | 547,430 | | | | 196,970 | | | | 0.3x | | | | — | | | | 5,387,034 | | | | 1.2x | | | | 5,584,004 | | | | 1.1x | | | | n/a | | | | 1% | |
Stressed / Distressed III (Dec 2017 / Dec 2022) | | | 7,356,380 | | | | 1,279,457 | | | | 3,052,396 | | | | 1.2x | | | | — | | | | 3,243,803 | | | | 1.2x | | | | 6,296,199 | | | | 1.2x | | | | n/a | | | | 9% | |
Energy I (Nov 2015 / Nov 2018) | | | 2,856,867 | | | | 1,154,846 | | | | 331,416 | | | | 0.8x | | | | — | | | | 3,206,611 | | | | 1.6x | | | | 3,538,027 | | | | 1.5x | | | | n/a | | | | 10% | |
Energy II (Feb 2019 / Jun 2023) | | | 3,616,081 | | | | 1,547,033 | | | | 1,815,358 | | | | 1.1x | | | | — | | | | 1,792,881 | | | | 1.6x | | | | 3,608,239 | | | | 1.3x | | | | n/a | | | | 17% | |
*Green Energy III (May 2023 / May 2028) | | | 6,477,000 | | | | 5,813,477 | | | | 670,209 | | | | 1.0x | | | | — | | | | 14,159 | | | | n/a | | | | 684,368 | | | | 1.0x | | | | n/a | | | | n/m | |
European Senior Debt I (Feb 2015 / Feb 2019) | | | 1,964,689 | | | | 140,688 | | | | 511,139 | | | | 0.7x | | | | — | | | | 2,673,875 | | | | 1.3x | | | | 3,185,014 | | | | 1.2x | | | | n/a | | | | 2% | |
European Senior Debt II (Jun 2019 / Jun 2023) (j) | | | 4,088,344 | | | | 969,353 | | | | 4,391,907 | | | | 1.0x | | | | — | | | | 1,992,593 | | | | 2.2x | | | | 6,384,500 | | | | 1.2x | | | | n/a | | | | 10% | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total Credit Drawdown Funds (k) | | $ | 53,366,033 | | | $ | 16,146,706 | | | $ | 17,573,818 | | | | 1.0x | | | | — | | | $ | 44,574,003 | | | | 1.5x | | | $ | 62,147,821 | | | | 1.3x | | | | n/a | | | | 10% | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Selected Perpetual Capital Strategies (l)
| | | | | | | | | | | | |
Strategy (Inception Year) (a) | |
| | | Total Assets
Under
Management | | | | |
| | | | | | | | | | |
| | | (Dollars in Thousands, Except Where Noted) | |
| | | | | | | | | | | | |
BPP—Blackstone Property Partners Platform (2013) (n) | | | Core+ Real Estate | | | $ | 65,917,602 | | | | 7% | |
BREIT—Blackstone Real Estate Income Trust (2017) (o) | | | Core+ Real Estate | | | | 60,728,619 | | | | 10% | |
| | | | | | | | | | | 11% | |
BXMT—Blackstone Mortgage Trust (2013) (q) | | | Real Estate Debt | | | | 6,385,586 | | | | 7% | |
| | | | | | | | | | | | |
BSCH—Blackstone Strategic Capital Holdings (2014) (r) | | | Secondaries—GP Stakes | | | | 9,396,234 | | | | 11% | |
BIP—Blackstone Infrastructure Partners (2019) (s) | | | Infrastructure | | | | 31,835,343 | | | | 15% | |
| | | | | | | | | | | | |
BXSL—Blackstone Secured Lending Fund (2018) (t) | | | U.S. Direct Lending | | | | 11,250,141 | | | | 11% | |
BCRED—Blackstone Private Credit Fund (2021) (u) | | | U.S. Direct Lending | | | | 64,469,210 | | | | 10% | |
| | | | | | | | | | | 10% | |
The returns presented herein represent those of the applicable Blackstone Funds and not those of Blackstone.
| n/m | Not meaningful generally due to the limited time since initial investment. |
| SMA | Separately managed account. |
| * | Represents funds that are currently in their investment period. |
| (a) | Excludes investment vehicles where Blackstone does not earn fees. |
| (b) | Available Capital represents total investable capital commitments, including adjusted for certain expenses and expired or recallable capital and may include leverage, less invested capital. This amount is not reduced by outstanding commitments to investments. |
| (c) | Multiple of Invested Capital (“MOIC”) represents carrying value, before management fees, expenses and Performance Revenues, divided by invested capital. |
| (d) | Unless otherwise indicated, Net Internal Rate of Return (“IRR”) represents the annualized inception to December 31, 2023 IRR on total invested capital based on realized proceeds and unrealized value, as applicable, after management fees, expenses and Performance Revenues. IRRs are calculated using actual timing of limited partner cash flows. Initial inception date of cash flows may differ from the Investment Period Beginning Date. |
| (e) | The 8% Realized Net IRR and 8% Total Net IRR exclude investors that opted out of the Hilton investment opportunity. Overall BREP International II performance reflects a 7% Realized Net IRR and a 7% Total Net IRR. |
| (f) | BREP Co-Investment represents co-investment capital raised for various BREP investments. The Net IRR reflected is calculated by aggregating each co-investment’s realized proceeds and unrealized value, as applicable, after management fees, expenses and Performance Revenues. |
| (g) | BREDS High-Yield represents the flagship real estate debt drawdown funds only. |
| (h) | Blackstone Core Equity Partners is a core private equity strategy which invests with a more modest risk profile and longer hold period than traditional private equity. |
| (i) | Strategic Partners’ Unrealized Investment Value, Realized Investment Value, Total Investment Value, Total MOIC and Total Net IRRs are reported on a three-month lag and therefore do not include the impact of economic and market activities in the current quarter. Prior to June 30, 2023, the calculation of such metrics also incorporated investor cash flow information from the current quarter to the extent available. Effective June 30, 2023, such current quarter cash flow information is no longer incorporated. Committed |
| | Capital and Available Capital continue to be presented as of the current quarter. We believe the updated presentation is more reflective of the Strategic Partners’ investor experience. Realizations are treated as returns of capital until fully recovered and therefore Unrealized and Realized MOICs and Realized Net IRRs are not applicable. Effective June 30, 2023, Strategic Partners I-V and Strategic Partners Real Estate, SMA and Other excluded investment vehicles where Blackstone does not earn fees, which were previously included. |
| (j) | European Senior Debt II Levered has a net return of 16%, European Senior Debt II Unlevered has a net return of 8%. |
| (k) | Funds presented represent the flagship credit drawdown funds only. The Total Credit Net IRR is the combined IRR of the credit drawdown funds presented. |
| (l) | Represents the performance for select Perpetual Capital Strategies; strategies excluded consist primarily of (1) investment strategies that have been investing for less than one year, (2) perpetual capital assets managed for certain insurance clients, and (3) investment vehicles where Blackstone does not earn fees. |
| (m) | Unless otherwise indicated, Total Net Return represents the annualized inception to December 31, 2023 IRR on total invested capital based on realized proceeds and unrealized value, as applicable, after management fees, expenses and Performance Revenues. IRRs are calculated using actual timing of investor cash flows. Initial inception date of cash flows occurred during the Inception Year. |
| (n) | BPP represents the aggregate Total Assets Under Management and Total Net Return of the BPP Platform, which comprises over 30 funds, co-investment and separately managed account vehicles. It includes certain vehicles managed as part of the BPP Platform but not classified as Perpetual Capital. As of December 31, 2023, these vehicles represented $2.7 billion of Total Assets Under Management. |
| (o) | The BREIT Total Net Return reflects a per share blended return, assuming BREIT had a single share class, reinvestment of all dividends received during the period, and no upfront selling commission, net of all fees and expenses incurred by BREIT. This return is not representative of the return experienced by any particular investor or share class. Total Net Return is presented on an annualized basis and is from January 1, 2017. |
| (p) | Represents the Total Net Return for BREIT’s Class I shares, its largest share class. Performance varies by share class. Class I Total Net Return assumes reinvestment of all dividends received during the period, and no upfront selling commission, net of all fees and expenses incurred by BREIT, Class I Total Net Return is presented on an annualized basis and is from January 1, 2017. |
| (q) | The BXMT Total Net Return reflects annualized market return of a shareholder invested in BXMT since inception, May 22, 2013, assuming reinvestment of all dividends received during the period. |
| (r) | BSCH represents the aggregate Total Assets Under Management and Total Net Return of BSCH I and BSCH II funds that invest as part of the GP Stakes strategy, which targets minority investments in the general partners of private equity and other private-market alternative asset management firms globally. Including co-investment vehicles that do not pay fees, BSCH Total Assets Under Management is $10.4 billion. |
| (s) | Including co-investment vehicles, BIP Total Assets Under Management is $40.8 billion. |
| (t) | The BXSL Total Assets Under Management and Total Net Return are presented as of September 30, 2023. Refer to BXSL public filings for current quarter results. BXSL Total Net Return reflects the change in Net Asset Value (“NAV”) per share, plus distributions per share (assuming dividends and distributions are reinvested in accordance with BXSL’s dividend reinvestment plan) divided by the beginning NAV per share. Total Net Returns are presented on an annualized basis and are from November 20, 2018. |
| (u) | The BCRED Total Net Return reflects a per share blended return, assuming BCRED had a single share class, reinvestment of all dividends received during the period, and no upfront selling commission, net of all fees and expenses incurred by BCRED. This return is not representative of the return experienced by any particular investor or share class. Total Net Return is presented on an annualized basis and is from January 7, 2021. Total Assets Under Management reflects gross asset value plus amounts borrowed or available to be borrowed under certain credit facilities. BCRED net asset value as of December 31, 2023 was $28.5 billion. |
| (v) | Represents the Total Net Return for BCRED’s Class I shares, its largest share class. Performance varies by share class. Class I Total Net Return assumes reinvestment of all dividends received during the period, and no upfront selling commission, net of all fees and expenses incurred by BCRED. Class I Total Net Return is presented on an annualized basis and is from January 7, 2021. |
Discussed below is our Segment Distributable Earnings for each of our segments. This information is reflected in the manner utilized by our senior management to make operating decisions, assess performance and allocate resources. References to “our” sectors or investments may also refer to portfolio companies and investments of the underlying funds that we manage.
The following table presents the results of operations for our Real Estate segment:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | |
| | | | | | | | | | | | | | | |
| | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | $ | 2,794,232 | | | $ | 2,462,179 | | | $ | 1,895,412 | | | $ | 332,053 | | | | 13% | | | $ | 566,767 | | | | 30 | % |
Transaction and Other Fees, Net | | | 78,483 | | | | 171,424 | | | | 160,395 | | | | (92,941 | ) | | | -54% | | | | 11,029 | | | | 7 | % |
| | | (29,357 | ) | | | (10,538 | ) | | | (3,499 | ) | | | (18,819 | ) | | | 179% | | | | (7,039 | ) | | | 201 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total Management Fees, Net | | | 2,843,358 | | | | 2,623,065 | | | | 2,052,308 | | | | 220,293 | | | | 8% | | | | 570,757 | | | | 28 | % |
Fee Related Performance Revenues | | | 294,240 | | | | 1,075,424 | | | | 1,695,019 | | | | (781,184 | ) | | | -73% | | | | (619,595 | ) | | | -37 | % |
| | | (675,880 | ) | | | (1,039,125 | ) | | | (1,161,349 | ) | | | 363,245 | | | | -35% | | | | 122,224 | | | | -11 | % |
| | | (325,050 | ) | | | (315,331 | ) | | | (234,505 | ) | | | (9,719 | ) | | | 3% | | | | (80,826 | ) | | | 34 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | 2,136,668 | | | | 2,344,033 | | | | 2,351,473 | | | | (207,365 | ) | | | -9% | | | | (7,440 | ) | | | — | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Realized Performance Revenues | | | 244,358 | | | | 2,985,713 | | | | 1,119,612 | | | | (2,741,355 | ) | | | -92% | | | | 1,866,101 | | | | 167 | % |
Realized Performance Compensation | | | (123,299 | ) | | | (1,168,045 | ) | | | (443,220 | ) | | | 1,044,746 | | | | -89% | | | | (724,825 | ) | | | 164 | % |
Realized Principal Investment Income | | | 7,628 | | | | 150,790 | | | | 196,869 | | | | (143,162 | ) | | | -95% | | | | (46,079 | ) | | | -23 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | 128,687 | | | | 1,968,458 | | | | 873,261 | | | | (1,839,771 | ) | | | -93% | | | | 1,095,197 | | | | 125 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Segment Distributable Earnings | | $ | 2,265,355 | | | $ | 4,312,491 | | | $ | 3,224,734 | | | $ | (2,047,136 | ) | | | -47% | | | $ | 1,087,757 | | | | 34 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Year Ended December 31, 2023 Compared to Year Ended December 31, 2022
Segment Distributable Earnings were $2.3 billion for the year ended December 31, 2023, a decrease of $2.0 billion, compared to $4.3 billion for the year ended December 31, 2022. The decrease in Segment Distributable Earnings was attributable to decreases of $207.4 million in Fee Related Earnings and $1.8 billion in Net Realizations.
Our global opportunistic and Core+ real estate portfolios’ concentration in high-conviction sectors where we see favorable long-term fundamentals helped support performance in a challenging market environment in 2023. Notably, strong demand drove operating performance in key sectors, including digital infrastructure, logistics and student housing. Notwithstanding this strength, the real estate market has been characterized by divergent performance across sectors. Growth has slowed and may moderate further in certain sectors with elevated near-term supply, including U.S. multifamily and life sciences office, which has negatively impacted valuations of such assets. Weak fundamentals persisted in the U.S. office market, where traditional office buildings remained particularly challenged. Traditional U.S. office, however, represents less than 2% of the aggregate net asset value
of our global opportunistic and Core+ real estate portfolios. Additionally, in 2023, higher interest rates negatively impacted real estate valuations, which would continue to be challenged if interest rates remain at high levels for an extended period. Coupled with a more constrained financing market, the high interest rate environment has also contributed to lower realizations, which are likely to remain muted until market conditions improve. The steep decline in future new supply in certain sectors and the anticipated moderation of cost of capital in 2024, however, should be positive for real estate valuations over time. We also believe we are entering a supportive environment for deployment activity and that our real estate segment funds are well positioned to capitalize on opportunities that arise.
Fundraising in our real estate segment in 2023 remained positive overall despite a challenging market backdrop. In our perpetual capital strategies, BREIT repurchase requests were elevated, but decreased over the course of 2023, down 76% in January 2024 from their peak in January 2023. While a worsening of the current environment could adversely affect net inflows in perpetual capital strategies, we believe the long-term growth trajectory remains positive and that strong investment performance and investor under-allocation to such strategies should drive flows over the long-term.
Fee Related Earnings were $2.1 billion for the year ended December 31, 2023, a decrease of $207.4 million, compared to $2.3 billion for the year ended December 31, 2022. The decrease in Fee Related Earnings was primarily attributable to a decrease of $781.2 million in Fee Related Performance Revenues, partially offset by a decrease of $363.2 million in Fee Related Compensation and an increase of $220.3 million in Management Fees, Net.
Fee Related Performance Revenues were $294.2 million for the year ended December 31, 2023, a decrease of $781.2 million, compared to $1.1 billion for the year ended December 31, 2022. The decrease was primarily due to lower Fee Related Performance Revenues in BREIT.
Fee Related Compensation was $675.9 million for the year ended December 31, 2023, a decrease of $363.2 million, compared to $1.0 billion for the year ended December 31, 2022. The decrease was primarily due to a decrease in Fee Related Performance Revenues, partially offset by an increase in Management Fees, Net, both of which impact Fee Related Compensation.
Management Fees, Net were $2.8 billion for the year ended December 31, 2023, an increase of $220.3 million, compared to $2.6 billion for the year ended December 31, 2022, primarily driven by an increase in Base Management Fees, partially offset by a decrease in Transaction and Other Fees, Net. Base Management Fees increased $332.1 million primarily due to
Fee-Earning
Assets Under Management growth in in BREP. Transaction and Other Fees, Net decreased $92.9 million primarily due to a decrease in acquisition fees paid to the advisor of certain funds.
Net Realizations were $128.7 million for the year ended December 31, 2023, a decrease of $1.8 billion, compared to $2.0 billion for the year ended December 31, 2022. The decrease in Net Realizations was primarily attributable to a decrease of $2.7 billion in Realized Performance Revenues, partially offset by a decrease of $1.0 billion in Realized Performance Compensation.
Realized Performance Revenues were $244.4 million for the year ended December 31, 2023, a decrease of $2.7 billion, compared to $3.0 billion for the year ended December 31, 2022. The decrease was primarily due to lower Realized Performance Revenues in BREP.
Realized Performance Compensation was $123.3 million for the year ended December 31, 2023, a decrease of $1.0 billion, compared to $1.2 billion for the year ended December 31, 2022. The decrease was primarily due to the decrease in Realized Performance Revenues.
Year Ended December 31, 2022 Compared to Year Ended December 31, 2021
Segment Distributable Earnings were $4.3 billion for the year ended December 31, 2022, an increase of $1.1 billion, or 34%, compared to $3.2 billion for the year ended December 31, 2021. The increase in Segment Distributable Earnings was primarily attributable to an increase of $1.1 billion in Net Realizations.
Fee Related Earnings were $2.3 billion for the year ended December 31, 2022, a decrease of $7.4 million, compared to $2.4 billion for the year ended December 31, 2021. The decrease in Fee Related Earnings was attributable to a decrease of $619.6 million in Fee Related Performance Revenues and an increase of $80.8 million in Other Operating Expenses, partially offset by an increase of $570.8 million in Management Fees, Net and a decrease of $122.2 million in Fee Related Compensation.
Fee Related Performance Revenues were $1.1 billion for the year ended December 31, 2022, a decrease of $619.6 million, compared to $1.7 billion for the year ended December 31, 2021. The decrease was primarily due to the crystallization of BREIT performance revenues.
Other Operating Expenses were $315.3 million for the year ended December 31, 2022, an increase of $80.8 million, compared to $234.5 million for the year ended December 31, 2021. The increase was primarily due to travel, entertainment, occupancy, technology-related expenses and professional fees.
Management Fees, Net were $2.6 billion for the year ended December 31, 2022, an increase of $570.8 million, compared to $2.1 billion for the year ended December 31, 2021, primarily driven by an increase in Base Management Fees. Base Management Fees increased $566.8 million primarily due to
Fee-Earning
Assets Under Management growth in Core+ real estate.
The annualized Base Management Fee Rate decreased from 1.09% at December 31, 2021 to 0.97% at December 31, 2022. The decrease was primarily due to the commencement of BREP X, for which a significant portion of management fees are on a fee holiday through December 31, 2022, and growth in BREDS insurance vehicles, which have a lower management fee rate.
Fee Related Compensation was $1.0 billion for the year ended December 31, 2022, a decrease of $122.2 million, compared to $1.2 billion for the year ended December 31, 2021. The decrease was primarily due to a decrease in Fee Related Performance Revenues, partially offset by an increase in Management Fees, Net, both of which impact Fee Related Compensation.
Net Realizations were $2.0 billion for the year ended December 31, 2022, an increase of $1.1 billion, or 125%, compared to $873.3 million for the year ended December 31, 2021. The increase in Net Realizations was attributable to an increase of $1.9 billion in Realized Performance Revenues, partially offset by an increase of $724.8 million in Realized Performance Compensation and a decrease of $46.1 million in Realized Principal Investment Income.
Realized Performance Revenues were $3.0 billion for the year ended December 31, 2022, an increase of $1.9 billion, compared to $1.1 billion for the year ended December 31, 2021. The increase was primarily due to higher Realized Performance Revenues in BREP.
Realized Performance Compensation was $1.2 billion for the year ended December 31, 2022, an increase of $724.8 million, compared to $443.2 million for the year ended December 31, 2021. The increase was primarily due to the increase in Realized Performance Revenues.
Realized Principal Investment Income was $150.8 million for the year ended December 31, 2022, a decrease of $46.1 million, compared to $196.9 million for the year ended December 31, 2021. The decrease was primarily due to the segment’s allocation of the gain recognized in connection with the Pátria Investments Limited and Pátria Investimentos Ltda. (collectively, “Pátria”) sale transactions during the first and third quarters of 2021.
Fund return information for our significant funds is included throughout this discussion and analysis to facilitate an understanding of our results of operations for the periods presented. The fund returns information reflected in this discussion and analysis is not indicative of the financial performance of Blackstone and is also not necessarily indicative of the future performance of any particular fund. An investment in Blackstone is not an investment in any of our funds. There can be no assurance that any of our funds or our other existing and future funds will achieve similar returns.
The following table presents the internal rates of return, except where noted, of our significant real estate funds:
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| | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
| | | -32% | | | | -27% | | | | 4% | | | | 2% | | | | 44% | | | | 36% | | | | 27% | | | | 20% | | | | 21% | | | | 14% | |
| | | -10% | | | | -9% | | | | 8% | | | | 6% | | | | 57% | | | | 46% | | | | 32% | | | | 25% | | | | 20% | | | | 14% | |
| | | -6% | | | | -6% | | | | 18% | | | | 13% | | | | 84% | | | | 63% | | | | 87% | | | | 59% | | | | 24% | | | | 17% | |
| | | -22% | | | | -20% | | | | -14% | | | | -13% | | | | 2% | | | | — | | | | 26% | | | | 19% | | | | 18% | | | | 12% | |
| | | -14% | | | | -13% | | | | -1% | | | | -2% | | | | 37% | | | | 29% | | | | 51% | | | | 41% | | | | 14% | | | | 9% | |
| | | 10% | | | | 6% | | | | 10% | | | | 6% | | | | 71% | | | | 51% | | | | 97% | | | | 72% | | | | 26% | | | | 16% | |
| | | 5% | | | | 3% | | | | -1% | | | | -2% | | | | 37% | | | | 29% | | | | 23% | | | | 16% | | | | 18% | | | | 12% | |
| | | -2% | | | | -1% | | | | 2% | | | | 1% | | | | 31% | | | | 21% | | | | 47% | | | | 32% | | | | 10% | | | | 6% | |
| | | -4% | | | | -19% | | | | n/m | | | | n/m | | | | n/a | | | | n/a | | | | n/a | | | | n/a | | | | -5% | | | | -21% | |
| | | 1% | | | | 1% | | | | 26% | | | | 25% | | | | 77% | | | | 70% | | | | 18% | | | | 16% | | | | 18% | | | | 16% | |
| | | -8% | | | | -8% | | | | 11% | | | | 9% | | | | 20% | | | | 17% | | | | n/a | | | | n/a | | | | 8% | | | | 7% | |
| | | n/a | | | | -1% | | | | n/a | | | | 8% | | | | n/a | | | | 30% | | | | n/a | | | | n/a | | | | n/a | | | | 10% | |
| | | n/a | | | | -1% | | | | n/a | | | | 8% | | | | n/a | | | | 30% | | | | n/a | | | | n/a | | | | n/a | | | | 11% | |
| | | 12% | | | | 8% | | | | 3% | | | | — | | | | 18% | | | | 13% | | | | 14% | | | | 10% | | | | 13% | | | | 9% | |
| | | n/a | | | | 13% | | | | n/a | | | | -24% | | | | n/a | | | | 20% | | | | n/a | | | | n/a | | | | n/a | | | | 7% | |
The returns presented herein represent those of the applicable Blackstone Funds and not those of Blackstone.
| n/m | Not meaningful generally due to the limited time since initial investment. |
| (a) | Net returns are based on the change in carrying value (realized and unrealized) after management fees, expenses and Performance Revenues. Excludes investment vehicles where Blackstone does not earn fees. |
| (b) | Euro-based internal rates of return. |
| (c) | BREP Co-Investment represents co-investment capital raised for various BREP investments. The Net IRR reflected is calculated by aggregating each co-investment’s realized proceeds and unrealized value, as applicable, after management fees, expenses and Performance Revenues. |
| (d) | The BPP platform, which comprises over 30 funds, co-investment and separately managed account vehicles, represents the Core+ real estate funds which invest with a more modest risk profile and lower leverage. |
| (e) | Reflects a per share blended return for each respective period, assuming BREIT had a single share class, reinvestment of all dividends received during the period, and no upfront selling commission, net of all fees and expenses incurred by BREIT. These returns are not representative of the returns experienced by any particular investor or share class. Inception to date returns are presented on an annualized basis and are from January 1, 2017. |
| (f) | Represents the Total Net Return for BREIT’s Class I shares, its largest share class. Performance varies by share class. Class I Total Net Return assumes reinvestment of all dividends received during the period, and no upfront selling commission, net of all fees and expenses incurred by BREIT. Inception to date return is from January 1, 2017. |
| (g) | BREDS High-Yield represents the flagship real estate debt drawdown funds only. Inception to date returns are from July 1, 2009. |
| (h) | Reflects annualized return of a shareholder invested in BXMT as of the beginning of each period presented, assuming reinvestment of all dividends received during the period, and net of all fees and expenses incurred by BXMT. Return incorporates the closing NYSE stock price as of each period end. Inception to date returns are from May 22, 2013. |
Funds With Closed Investment Periods
The Real Estate segment has fourteen funds with closed investment periods as of December 31, 2023: BREP IX, BREP VIII, BREP VII, BREP VI, BREP V, BREP IV, BREP Europe VI, BREP Europe V, BREP Europe IV, BREP Europe III, BREP Asia II, BREP Asia I, BREDS IV and BREDS III. As of December 31, 2023, BREP VII, BREP VI, BREP V, BREP IV, BREP Europe IV, BREP Europe III and BREP Asia I were above their carried interest thresholds (i.e., the preferred return payable to its limited partners before the general partner is eligible to receive carried interest) and would have been above their carried interest thresholds even if all remaining investments were valued at zero. BREP IX, BREP VIII, BREP Europe VI, BREP Europe V, BREDS IV and BREDS III were above their carried interest thresholds as of December 31, 2023, and BREP Asia II was below its carried interest threshold. Funds are considered above their carried interest thresholds based on the aggregate fund position, although individual limited partners may be below their respective carried interest thresholds in certain funds.
The following table presents the results of operations for our Private Equity segment:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | |
| | | | | | | | | | | | | | | |
| | | |
Management and Advisory Fees, Net | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | $ | 1,903,972 | | | $ | 1,882,197 | | | $ | 1,638,300 | | | $ | 21,775 | | | | 1% | | | $ | 243,897 | | | | 15% | |
Transaction, Advisory and Other Fees, Net | | | 108,848 | | | | 97,972 | | | | 179,204 | | | | 10,876 | | | | 11% | | | | (81,232 | ) | | | -45% | |
| | | (5,228 | ) | | | (56,078 | ) | | | (33,588 | ) | | | 50,850 | | | | -91% | | | | (22,490 | ) | | | 67% | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total Management and Advisory Fees, Net | | | 2,007,592 | | | | 1,924,091 | | | | 1,783,916 | | | | 83,501 | | | | 4% | | | | 140,175 | | | | 8% | |
Fee Related Performance Revenues | | | — | | | | (648 | ) | | | 212,128 | | | | 648 | | | | -100% | | | | (212,776 | ) | | | n/m | |
| | | (619,678 | ) | | | (599,758 | ) | | | (687,408 | ) | | | (19,920 | ) | | | 3% | | | | 87,650 | | | | -13% | |
| | | (329,221 | ) | | | (314,967 | ) | | | (274,360 | ) | | | (14,254 | ) | | | 5% | | | | (40,607 | ) | | | 15% | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | 1,058,693 | | | | 1,008,718 | | | | 1,034,276 | | | | 49,975 | | | | 5% | | | | (25,558 | ) | | | -2% | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Realized Performance Revenues | | | 1,343,865 | | | | 1,206,594 | | | | 2,296,036 | | | | 137,271 | | | | 11% | | | | (1,089,442 | ) | | | -47% | |
Realized Performance Compensation | | | (584,154 | ) | | | (550,306 | ) | | | (952,913 | ) | | | (33,848 | ) | | | 6% | | | | 402,607 | | | | -42% | |
Realized Principal Investment Income | | | 76,220 | | | | 144,585 | | | | 269,679 | | | | (68,365 | ) | | | -47% | | | | (125,094 | ) | | | -46% | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | 835,931 | | | | 800,873 | | | | 1,612,802 | | | | 35,058 | | | | 4% | | | | (811,929 | ) | | | -50% | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Segment Distributable Earnings | | $ | 1,894,624 | | | $ | 1,809,591 | | | $ | 2,647,078 | | | $ | 85,033 | | | | 5% | | | $ | (837,487 | ) | | | -32% | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Year Ended December 31, 2023 Compared to Year Ended December 31, 2022
Segment Distributable Earnings were $1.9 billion for the year ended December 31, 2023, an increase of $85.0 million, compared to $1.8 billion for the year ended December 31, 2022. The increase in Segment Distributable Earnings was attributable to increases of $50.0 million in Fee Related Earnings and $35.1 million in Net Realizations.
Despite a challenging market environment, our Private Equity segment demonstrated resilient performance across nearly all of its strategies in 2023. Our thematic investments, including those in digital infrastructure, life sciences, and energy transition, were substantial drivers of appreciation in the segment in 2023. In Corporate Private Equity, our operating companies saw resilient revenue growth overall in 2023, along with margin strength in the overall portfolio as input and wage costs continued to abate. Nonetheless, economic uncertainty, negative market sentiment and a volatile backdrop for asset values throughout a significant portion of 2023 contributed to muted realizations, which are likely to remain muted until market conditions improve. Investors’ ability to allocate to private equity strategies amidst difficult market conditions and lower realizations have contributed to an already demanding fundraising environment, and these near-term headwinds have made fundraising for our flagship corporate private equity fund more difficult. Nevertheless, we believe that the long-term fundraising trajectory in our Private Equity segment remains positive.
Fee Related Earnings were $1.1 billion for the year ended December 31, 2023, an increase of $50.0 million, compared to $1.0 billion for the year ended December 31, 2022. The increase in Fee Related Earnings was primarily attributable to an increase of $83.5 million in Management and Advisory Fees, Net, partially offset by an increase of $19.9 million in Fee Related Compensation.
Management and Advisory Fees, Net were $2.0 billion for the year ended December 31, 2023, an increase of $83.5 million, compared to $1.9 billion for the year ended December 31, 2022, primarily driven by a decrease in Management Fee Offsets and an increase in Base Management Fees. Management Fee Offsets decreased $50.9 million primarily due to a reduction in Management Fee Offsets in Strategic Partners IX. Base Management Fees increased $21.8 million primarily due to
Fee-Earning
Assets Under Management Growth in BIP.
Fee Related Compensation was $619.7 million for the year ended December 31, 2023, an increase of $19.9 million, compared to $599.8 million for the year ended December 31, 2022. The increase was primarily due to an increase in Management Fees, Net, on which a portion of Fee Related Compensation is based.
Net Realizations were $835.9 million for the year ended December 31, 2023, an increase of $35.1 million, compared to $800.9 million for the year ended December 31, 2022. The increase in Net Realizations was attributable to an increase of $137.3 million in Realized Performance Revenues, partially offset by a decrease of $68.4 million in Realized Principal Investment Income and an increase of $33.8 million in Realized Performance Compensation.
Realized Performance Revenues were $1.3 billion for the year ended December 31, 2023, an increase of $137.3 million, compared to $1.2 billion for the year ended December 31, 2022. The increase was primarily due to higher Realized Performance Revenues in Corporate Private Equity, partially offset by lower Realized Performance Revenues in Tactical Opportunities and Secondaries.
Realized Principal Investment Income was $76.2 million for the year ended December 31, 2023, a decrease of $68.4 million, compared to $144.6 million for the year ended December 31, 2022. The decrease was primarily due to the segment’s allocation of the gain recognized in connection with sales of interests in Pátria Investments Limited and Pátria Investimentos Ltda. (collectively, “Pátria”) in the third quarter of 2022, partially offset by higher Realized Principal Investment Income in Corporate Private Equity.
Realized Performance Compensation was $584.2 million for the year ended December 31, 2023, an increase of $33.8 million, compared to $550.3 million for the year ended December 31, 2022. The increase was primarily due to higher Realized Performance Revenues in Corporate Private Equity, partially offset by lower Realized Performance Revenues in Tactical Opportunities and Secondaries.
Year Ended December 31, 2022 Compared to Year Ended December 31, 2021
Segment Distributable Earnings were $1.8 billion for the year ended December 31, 2022, a decrease of $837.5 million, compared to $2.6 billion for the year ended December 31, 2021. The decrease in Segment Distributable Earnings was attributable to decreases of $811.9 million in Net Realizations and $25.6 million in Fee Related Earnings.
Fee Related Earnings were $1.0 billion for the year ended December 31, 2022, a decrease of $25.6 million, compared to $1.0 billion for the year ended December 31, 2021. The decrease in Fee Related Earnings was attributable a decrease of $212.8 million in Fee Related Performance Revenues and an increase of $40.6 million in Other Operating Expenses, partially offset by an increase of $140.2 million in Management and Advisory Fees, Net and a decrease of $87.7 million in Fee Related Compensation.
Fee Related Performance Revenues were $(0.6) million for the year ended December 31, 2022, a decrease of $212.8 million, compared to $212.1 million for the year ended December 31, 2021. The decrease was primarily due to BIP performance revenues crystallizing at December 31, 2021, with the amount for the year ended December 31, 2022 representing a true up to the prior year Fee Related Performance Revenue.
Other Operating Expenses were $315.0 million for the year ended December 31, 2022, an increase of $40.6 million, compared to $274.4 million for the year ended December 31, 2021. The increase was primarily due to travel and entertainment, occupancy and technology related expenses, and professional fees.
Management and Advisory Fees, Net were $1.9 billion for the year ended December 31, 2022, an increase of $140.2 million, compared to $1.8 billion for the year ended December 31, 2021, primarily driven by an increase in Base Management Fees, partially offset by a decrease in Transaction and Advisory Fees, Net and Management Fee Offsets. Base Management Fees increased $243.9 million primarily due to (a) the commencement of Strategic Partners GP Solutions and Strategic Partners IX’s investment periods during the three months ended June 30, 2021 and the three months ended December 31, 2021, respectively, and
(b) Fee-Earning
Assets Under Management Growth in BIP. Transaction, Advisory and Other Fees, Net decreased $81.2 million primarily due to deal activity in BXCM. Management Fee Offsets increased $22.5 million primarily due to the launch of Strategic Partners IX during the three months ended December 31, 2021.
Fee Related Compensation was $599.8 million for the year ended December 31, 2022, a decrease of $87.7 million, compared to $687.4 million for the year ended December 31, 2021. The decrease was primarily due to a decrease in Fee Related Performance Revenues, partially offset by an increase in Management and Advisory Fees, Net, both of which impact Fee Related Compensation.
Net Realizations were $800.9 million for the year ended December 31, 2022, a decrease of $811.9 million, compared to $1.6 billion for the year ended December 31, 2021. The decrease in Net Realizations was attributable to decreases of $1.1 billion in Realized Performance Revenues and $125.1 million in Realized Principal Investment Income, partially offset by a decrease of $402.6 million in Realized Performance Compensation.
Realized Performance Revenues were $1.2 billion for the year ended December 31, 2022, a decrease of $1.1 billion, compared to $2.3 billion for the year ended December 31, 2021. The decrease was primarily due to lower Realized Performance Revenues in corporate private equity and Tactical Opportunities, partially offset by higher Realized Performance Revenues in Secondaries.
Realized Principal Investment Income was $144.6 million for the year ended December 31, 2022, a decrease of $125.1 million, compared to $269.7 million for the year ended December 31, 2021. The decrease was primarily due to the segment’s allocation of the gain recognized in connection with the Pátria sale transactions during the first and third quarters of 2021.
Realized Performance Compensation was $550.3 million for the year ended December 31, 2022, a decrease of $402.6 million, compared to $952.9 million for the year ended December 31, 2021. The decrease was primarily due to the decrease in Realized Performance Revenues.
Fund returns information for our significant funds is included throughout this discussion and analysis to facilitate an understanding of our results of operations for the periods presented. The fund returns information reflected in this discussion and analysis is not indicative of the financial performance of Blackstone and is also not necessarily indicative of the future performance of any particular fund. An investment in Blackstone is not an investment in any of our funds. There can be no assurance that any of our funds or our other existing and future funds will achieve similar returns.
The following table presents the internal rates of return of our significant private equity funds:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | December 31, 2023
Inception to Date |
| | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
| | | | 7% | | | | | 6% | | | | | 12% | | | | | 11% | | | | | 19% | | | | | 16% | | | | | 19% | | | | | 14% | | | | | 17% | | | | | 12% | |
| | | | 13% | | | | | 10% | | | | | -12% | | | | | -11% | | | | | 44% | | | | | 36% | | | | | 38% | | | | | 29% | | | | | 19% | | | | | 13% | |
| | | | 12% | | | | | 6% | | | | | 4% | | | | | — | | | | | n/a | | | | | n/a | | | | | n/m | | | | | n/m | | | | | 21% | | | | | 11% | |
| | | | -15% | | | | | -13% | | | | | 57% | | | | | 46% | | | | | 78% | | | | | 59% | | | | | 18% | | | | | 14% | | | | | 15% | | | | | 11% | |
| | | | 12% | | | | | 8% | | | | | 36% | | | | | 33% | | | | | 56% | | | | | 53% | | | | | 14% | | | | | 11% | | | | | 12% | | | | | 8% | |
| | | | 28% | | | | | 20% | | | | | 42% | | | | | 31% | | | | | 86% | | | | | 56% | | | | | 77% | | | | | 55% | | | | | 52% | | | | | 34% | |
| | | | 16% | | | | | 13% | | | | | -38% | | | | | -35% | | | | | 193% | | | | | 158% | | | | | 128% | | | | | 96% | | | | | 40% | | | | | 28% | |
| | | | 62% | | | | | 23% | | | | | n/m | | | | | n/m | | | | | n/a | | | | | n/a | | | | | n/a | | | | | n/a | | | | | 67% | | | | | 22% | |
| | | | 2% | | | | | 2% | | | | | — | | | | | — | | | | | 55% | | | | | 50% | | | | | 62% | | | | | 57% | | | | | 21% | | | | | 18% | |
| | | | 31% | | | | | 24% | | | | | 14% | | | | | 9% | | | | | n/a | | | | | n/a | | | | | n/a | | | | | n/a | | | | | 22% | | | | | 16% | |
| | | | 9% | | | | | 5% | | | | | -2% | | | | | -4% | | | | | 37% | | | | | 28% | | | | | 19% | | | | | 15% | | | | | 15% | | | | | 11% | |
Tactical Opportunities Co-Investment and Other | | | | 7% | | | | | 7% | | | | | — | | | | | 4% | | | | | 67% | | | | | 57% | | | | | 20% | | | | | 19% | | | | | 19% | | | | | 16% | |
| | | | -2% | | | | | -5% | | | | | -13% | | | | | -13% | | | | | 50% | | | | | 29% | | | | | n/m | | | | | n/m | | | | | 2% | | | | | -2% | |
Strategic Partners VI (c) | | | | -2% | | | | | -3% | | | | | -10% | | | | | -11% | | | | | 53% | | | | | 49% | | | | | n/a | | | | | n/a | | | | | 18% | | | | | 14% | |
Strategic Partners VII (c) | | | | 1% | | | | | — | | | | | -4% | | | | | -5% | | | | | 68% | | | | | 61% | | | | | n/a | | | | | n/a | | | | | 22% | | | | | 17% | |
Strategic Partners Real Assets II (c) | | | | 19% | | | | | 16% | | | | | 13% | | | | | 12% | | | | | 26% | | | | | 22% | | | | | n/a | | | | | n/a | | | | | 20% | | | | | 16% | |
Strategic Partners VIII (c) | | | | -1% | | | | | -3% | | | | | 3% | | | | | 2% | | | | | 144% | | | | | 128% | | | | | n/a | | | | | n/a | | | | | 37% | | | | | 29% | |
Strategic Partners Real Estate, SMA and Other (c) | | | | -6% | | | | | -7% | | | | | 35% | | | | | 32% | | | | | 30% | | | | | 20% | | | | | n/a | | | | | n/a | | | | | 15% | | | | | 14% | |
Strategic Partners Infrastructure III (c) | | | | 15% | | | | | 11% | | | | | 58% | | | | | 45% | | | | | 134% | | | | | 85% | | | | | n/a | | | | | n/a | | | | | 48% | | | | | 32% | |
Strategic Partners IX (c) | | | | 15% | | | | | 7% | | | | | n/m | | | | | n/m | | | | | n/a | | | | | n/a | | | | | n/a | | | | | n/a | | | | | 32% | | | | | 18% | |
Strategic Partners GP Solutions (c) | | | | -16% | | | | | -11% | | | | | 39% | | | | | 29% | | | | | n/m | | | | | n/m | | | | | n/a | | | | | n/a | | | | | 2% | | | | | -3% | |
| | | | 13% | | | | | 10% | | | | | 26% | | | | | 20% | | | | | 41% | | | | | 33% | | | | | n/a | | | | | n/a | | | | | 20% | | | | | 15% | |
| | | | -3% | | | | | -4% | | | | | 4% | | | | | 2% | | | | | 34% | | | | | 26% | | | | | 6% | | | | | -4% | | | | | 15% | | | | | 9% | |
| | | | 43% | | | | | 27% | | | | | 10% | | | | | 2% | | | | | 13% | | | | | -4% | | | | | n/m | | | | | n/m | | | | | 26% | | | | | 13% | |
The returns presented herein represent those of the applicable Blackstone Funds and not those of Blackstone.
| n/m | Not meaningful generally due to the limited time since initial investment. |
| SMA | Separately managed account. |
| (a) | Net returns are based on the change in carrying value (realized and unrealized) after management fees, expenses and Performance Revenues. Excludes investment vehicles where Blackstone does not earn fees. |
| (b) | BCEP is a core private equity strategy which invests with a more modest risk profile and longer hold period than traditional private equity. |
| (c) | Gross and net returns are reported on a three-month lag and therefore do not include the impact of economic and market activities in the current quarter. Prior to June 30, 2023, the calculation of such metrics also incorporated investor cash flow information from the current quarter to the extent available. Effective June 30, 2023, such current quarter cash flow information is no longer incorporated. We believe the updated presentation is more reflective of the Strategic Partners’ investor experience. Prior periods have been recast. Realizations are treated as returns of capital until fully recovered and therefore Realized IRRs are not applicable. Effective June 30, 2023, Strategic Partners Real Estate, SMA and Other exclude investment vehicles where Blackstone does not earn fees, which were previously included. |
Funds With Closed Investment Periods
The Corporate Private Equity funds within the Private Equity segment have nine funds with closed investment periods: BCP IV, BCP V, BCP VI, BCP VII, BCOM, BEP I, BEP II, BCEP I and BCP Asia I. As of December 31, 2023, BCP IV was above its carried interest threshold (i.e., the preferred return payable to its limited partners before the general partner is eligible to receive carried interest) and would still be above its carried interest threshold even if all remaining investments were valued at zero. BCP V is comprised of two fund classes, the BCP V “main fund” and
BCP V-AC
fund. Within these fund classes, the general partner is subject to equalization such that (a) the general partner accrues carried interest when the respective carried interest for either fund class is positive and (b) the general partner realizes carried interest so long as clawback obligations, if any, for either of the respective fund classes are fully satisfied. BCP V, BCP VI, BCP VII, BCOM, BEP I, BEP II, BCEP I and BCP Asia I were above their respective carried interest thresholds. Funds are considered above their carried interest thresholds based on the aggregate fund position, although individual limited partners may be below their respective carried interest thresholds in certain funds.
The Tactical Opportunities funds within the Private Equity segment have various funds with closed investment periods, including but not limited to:
BTOF-POOL,
BTOF-POOL
II, and
BTOF-POOL
III, which are each above their carried interest thresholds based on aggregate fund position. Strategic Partners funds within the Private Equity segment have various funds with closed investment periods, including but not limited to: Strategic Partners Real Assets II, Strategic Partners VIII, Strategic Partners Real Estate VII and BSCH I, which are above their respective carried interest thresholds based on aggregate fund position. Certain Strategic Partners funds with closed investment periods do not generate carried interest for Blackstone as agreed to at the time the Strategic Partners business was acquired. The Blackstone Life Sciences funds within the Private Equity segment has one fund with a closed investment period: Clarus IV, which was above its carried interest threshold.
The following table presents the results of operations for our Credit & Insurance segment:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | |
| | | | | | | | | | | | | | | |
| | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | $ | 1,297,406 | | | $ | 1,185,289 | | | $ | 720,131 | | | $ | 112,117 | | | | 9% | | | $ | 465,158 | | | | 65% | |
Transaction and Other Fees, Net | | | 44,542 | | | | 34,481 | | | | 44,676 | | | | 10,061 | | | | 29% | | | | (10,195 | ) | | | -23% | |
| | | (3,907 | ) | | | (5,432 | ) | | | (6,653 | ) | | | 1,525 | | | | -28% | | | | 1,221 | | | | -18% | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total Management Fees, Net | | | 1,338,041 | | | | 1,214,338 | | | | 758,154 | | | | 123,703 | | | | 10% | | | | 456,184 | | | | 60% | |
Fee Related Performance Revenues | | | 564,287 | | | | 374,721 | | | | 118,097 | | | | 189,566 | | | | 51% | | | | 256,624 | | | | 217% | |
| | | (628,064 | ) | | | (512,727 | ) | | | (348,826 | ) | | | (115,337 | ) | | | 22% | | | | (163,901 | ) | | | 47% | |
| | | (323,773 | ) | | | (260,028 | ) | | | (196,457 | ) | | | (63,745 | ) | | | 25% | | | | (63,571 | ) | | | 32% | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | 950,491 | | | | 816,304 | | | | 330,968 | | | | 134,187 | | | | 16% | | | | 485,336 | | | | 147% | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Realized Performance Revenues | | | 317,620 | | | | 147,285 | | | | 209,126 | | | | 170,335 | | | | 116% | | | | (61,841 | ) | | | -30% | |
Realized Performance Compensation | | | (140,210 | ) | | | (63,845 | ) | | | (94,443 | ) | | | (76,365 | ) | | | 120% | | | | 30,598 | | | | -32% | |
Realized Principal Investment Income | | | 21,752 | | | | 79,763 | | | | 67,994 | | | | (58,011 | ) | | | -73% | | | | 11,769 | | | | 17% | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | 199,162 | | | | 163,203 | | | | 182,677 | | | | 35,959 | | | | 22% | | | | (19,474 | ) | | | -11% | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Segment Distributable Earnings | | $ | 1,149,653 | | | $ | 979,507 | | | $ | 513,645 | | | $ | 170,146 | | | | 17% | | | $ | 465,862 | | | | 91% | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Year Ended December 31, 2023 Compared to Year Ended December 31, 2022
Segment Distributable Earnings were $1.1 billion for the year ended December 31, 2023, an increase of $170.1 million, compared to $979.5 million for the year ended December 31, 2022. The increase in Segment Distributable Earnings was attributable to increases of $134.2 million in Fee Related Earnings and $36.0 million in Net Realizations.
Our credit funds demonstrated strong performance in 2023, driven by a higher interest rate environment and the concentration of our portfolios in floating rate debt. Longer-term structural shifts in the lending market, combined with a more constrained financing market, have contributed and are likely to continue to contribute to attractive and sizeable deployment opportunities for our credit funds as banks and other originators seek to preserve liquidity and meet capital requirements and borrowers seek alternative financing sources. Additionally, we continue to see opportunities for growth in our insurance and energy transition strategies. In the broader market, a higher cost of capital as a result of historically high interest rates has negatively impacted the free cash flow and credit quality of certain borrowers. Nevertheless, default rates across corporate issuers in our credit funds’ portfolios remained low in 2023 relative to our historical levels. A sustained period of high interest rates, however, increases the potential for defaults. Conversely, a material decline in interest rates and/or widening of credit spreads would make it more difficult for our credit funds to replicate their 2023 performance. In addition, a period of significant market dislocation could limit the liquidity of certain assets traded in the credit markets. This would impact our funds’ ability to sell such assets at attractive prices or in a timely manner.
Fundraising in our Credit & Insurance segment, including in our perpetual capital strategies, has been positively impacted by the long-term structural shifts in the lending market and a more constraining financing market. In our perpetual capital strategies, compelling private credit fundamentals contributed to a significant increase in BCRED inflows in 2023. We believe the long-term growth trajectory remains positive and that strong investment performance and investor under-allocation to such private wealth strategies should continue to drive flows over the long-term.
Fee Related Earnings were $950.5 million for the year ended December 31, 2023, an increase of $134.2 million, compared to $816.3 million for the year ended December 31, 2022. The increase in Fee Related Earnings was attributable to increases of $189.6 million in Fee Related Performance Revenues and $123.7 million in Management Fees, Net, partially offset by increases of $115.3 million in Fee Related Compensation and $63.7 million in Other Operating Expenses.
Fee Related Performance Revenues were $564.3 million for the year ended December 31, 2023, an increase of $189.6 million, compared to $374.7 million for the year ended December 31, 2022. The increase was primarily due to performance and higher
Fee-Earning
Assets Under Management in BCRED.
Management Fees, Net were $1.3 billion for the year ended December 31, 2023, an increase of $123.7 million, compared to $1.2 billion for the year ended December 31, 2022, primarily driven by an increase in Base Management Fees. Base Management Fees increased $112.1 million primarily due to inflows from
Fee-Earning
Assets Under Management in direct lending.
Fee Related Compensation was $628.1 million for the year ended December 31, 2023, an increase of $115.3 million, compared to $512.7 million for the year ended December 31, 2022. The increase was primarily due to increases in Fee Related Performance Revenues and Management Fees, Net, both of which impact Fee Related Compensation.
Other Operating Expenses were $323.8 million for the year ended December 31, 2023, an increase of $63.7 million, compared to $260.0 million for the year ended December 31, 2022. The increase was primarily due to occupancy costs, market data and technology-related expenses and professional fees.
Net Realizations were $199.2 million for the year ended December 31, 2023, an increase of $36.0 million, compared to $163.2 million for the year ended December 31, 2022. The increase in Net Realizations was attributable to increases of $170.3 million in Realized Performance Revenues, partially offset by an increase of $76.4 million in Realized Performance Compensation and a decrease of $58.0 million in Realized Principal Investment Income.
Realized Performance Revenues were $317.6 million for the year ended December 31, 2023, an increase of $170.3 million, compared to $147.3 million for the year ended December 31, 2022. The increase was primarily due to higher Realized Performance Revenues in our direct lending and mezzanine funds.
Realized Performance Compensation was $140.2 million for the year ended December 31, 2023, an increase of $76.4 million, compared to $63.8 million for the year ended December 31, 2022. The increase was primarily due to the increase in Realized Performance Revenues.
Realized Principal Investment Income was $21.8 million for the year ended December 31, 2023, a decrease of $58.0 million, compared to $79.8 million for the year ended December 31, 2022. The decrease was primarily due to the segment’s allocation of the gain recognized in connection with sales of interests in Pátria in the first and third quarters of 2022 and a realized loss related to insurance platform investments during the year ended December 31, 2023.
Year Ended December 31, 2022 Compared to Year Ended December 31, 2021
Segment Distributable Earnings were $979.5 million for the year ended December 31, 2022, an increase of $465.9 million, compared to $513.6 million for the year ended December 31, 2021. The increase in Segment Distributable Earnings was attributable to an increase of $485.3 million in Fee Related Earnings, partially offset by a decrease of $19.5 million in Net Realizations.
Fee Related Earnings were $816.3 million for the year ended December 31, 2022, an increase of $485.3 million, compared to $331.0 million for the year ended December 31, 2021. The increase in Fee Related Earnings was attributable to increases of $456.2 million in Management Fees, Net and $256.6 million in Fee Related Performance Revenues, partially offset by increases of $163.9 million in Fee Related Compensation and $63.6 million in Other Operating Expenses.
Management Fees, Net were $1.2 billion for the year ended December 31, 2022, an increase of $456.2 million, compared to $758.2 million for the year ended December 31, 2021, primarily driven by an increase in Base Management Fees. Base Management Fees increased $465.2 million primarily due to inflows in BCRED and the insurance platform.
Fee Related Performance Revenues were $374.7 million for the year ended December 31, 2022, an increase of $256.6 million, compared to $118.1 million for the year ended December 31, 2021. The increase was primarily due to performance and an increase in subscriptions in BCRED.
Fee Related Compensation was $512.7 million for the year ended December 31, 2022, an increase of $163.9 million, compared to $348.8 million for the year ended December 31, 2021. The increase was primarily due to increases in Management Fees, Net and Fee Related Performance Revenues, both of which impact Fee Related Compensation.
Other Operating Expenses were $260.0 million for the year ended December 31, 2022, an increase of $63.6 million, compared to $196.5 million for the year ended December 31, 2021. The increase was primarily due to travel, entertainment, occupancy and technology-related expenses and professional fees.
Net Realizations were $163.2 million for the year ended December 31, 2022, a decrease of $19.5 million, compared to $182.7 million for the year ended December 31, 2021. The decrease in Net Realizations was attributable to a decrease of $61.8 million in Realized Performance Revenues, partially offset by a decrease of $30.6 million in Realized Performance Compensation.
Realized Performance Revenues were $147.3 million for the year ended December 31, 2022, a decrease of $61.8 million, compared to $209.1 million for the year ended December 31, 2021. The decrease was primarily attributable to lower realized performance revenues in our mezzanine funds.
Realized Performance Compensation was $63.8 million for the year ended December 31, 2022, a decrease of $30.6 million, compared to $94.4 million for the year ended December 31, 2021. The decrease was primarily due to the decrease in Realized Performance Revenues.
Composite returns information is included throughout this discussion and analysis to facilitate an understanding of our results of operations for the periods presented. The composite returns information reflected in this discussion and analysis is not indicative of the financial performance of Blackstone and is also not
necessarily indicative of the future results of any particular fund or composite. An investment in Blackstone is not an investment in any of our funds or composites. There can be no assurance that any of our funds or composites or our other existing and future funds or composites will achieve similar returns.
The following table presents the return information for the Private Credit and Liquid Credit composites:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | |
| | | | | |
| | | | | | | | | |
| | | | | | | | | | | | | | | | |
| | | | 16% | | | | | 12% | | | | | 7% | | | | | 4% | | | | | 22% | | | | | 16% | | | | | 12% | | | | | 8% | |
| | | | 13% | | | | | 12% | | | | | -3% | | | | | -3% | | | | | 5% | | | | | 5% | | | | | 5% | | | | | 5% | |
The returns presented herein represent those of the applicable Blackstone Funds and not those of Blackstone.
| (a) | Net returns are based on the change in carrying value (realized and unrealized) after management fees, expenses and Performance Allocations, net of tax advances. |
| (b) | Private Credit returns include mezzanine lending funds and middle market direct lending funds (including BXSL and BCRED), stressed/distressed strategies (including stressed/distressed funds and credit alpha strategies) and energy strategies. Liquid Credit returns include CLOs, closed-ended funds, open-ended funds and separately managed accounts. Only fee-earning funds exceeding $100 million of fair value at the beginning of each respective quarter-end are included. Funds in liquidation, funds investing primarily in investment grade corporate credit and asset based finance funds are excluded. Blackstone Funds that were contributed to BXC as part of Blackstone’s acquisition of BXC in March 2008 and the pre-acquisition date performance for funds and vehicles acquired by BXC subsequent to March 2008, are also excluded. Private Credit and Liquid Credit’s inception to date returns are from December 31, 2005. |
The following table presents information regarding our Invested Performance Eligible Assets Under Management:
| | | | | | | | | | | | | | | | | | |
| | | Invested Performance Eligible
Assets Under Management | | Estimated % Above
High Water Mark/
Hurdle (a) |
| | | | | |
| | | | | | | | | | | | | |
| | | | | | | | | |
| | $ | 89,500,575 | | | $ | 87,166,271 | | | $ | 66,339,581 | | | 97% | | 93% | | 94% |
| (a) | Estimated % Above High Water Mark/Hurdle represents the percentage of Invested Performance Eligible Assets Under Management that as of the dates presented would earn performance fees when the applicable Credit & Insurance managed fund has positive investment performance relative to a hurdle, where applicable. Incremental positive performance in the applicable Blackstone Funds may cause additional assets to reach their respective High Water Mark or clear a hurdle return, thereby resulting in an increase in Estimated % Above High Water Mark/Hurdle. |
| (b) | For the Credit & Insurance managed funds, at December 31, 2023, the incremental appreciation needed for the 3% of Invested Performance Eligible Assets Under Management below their respective High Water Marks/Hurdles to reach their respective High Water Marks/Hurdles was $2.1 billion, an increase of $122.9 million, compared to $2.0 billion at December 31, 2022. Of the Invested Performance Eligible Assets Under Management below their respective High Water Marks/Hurdles as of December 31, 2023, 10% were within 5% of reaching their respective High Water Mark. |
The following table presents the results of operations for our Multi-Asset Investing segment:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | |
| | | | | | | | | | | | | | | |
| | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | $ | 470,237 | | | $ | 515,373 | | | $ | 565,432 | | | $ | (45,136 | ) | | | -9% | | | $ | (50,059 | ) | | | -9% | |
Transaction and Other Fees, Net | | | 4,019 | | | | 6,240 | | | | 7,663 | | | | (2,221 | ) | | | -36% | | | | (1,423 | ) | | | -19% | |
| | | (3 | ) | | | (161 | ) | | | (231 | ) | | | 158 | | | | -98% | | | | 70 | | | | -30% | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total Management Fees, Net | | | 474,253 | | | | 521,452 | | | | 572,864 | | | | (47,199 | ) | | | -9% | | | | (51,412 | ) | | | -9% | |
| | | (164,488 | ) | | | (179,165 | ) | | | (150,427 | ) | | | 14,677 | | | | -8% | | | | (28,738 | ) | | | 19% | |
| | | (106,289 | ) | | | (98,697 | ) | | | (88,355 | ) | | | (7,592 | ) | | | 8% | | | | (10,342 | ) | | | 12% | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | 203,476 | | | | 243,590 | | | | 334,082 | | | | (40,114 | ) | | | -16% | | | | (90,492 | ) | | | -27% | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Realized Performance Revenues | | | 155,259 | | | | 121,746 | | | | 258,338 | | | | 33,513 | | | | 28% | | | | (136,592 | ) | | | -53% | |
Realized Performance Compensation | | | (48,354 | ) | | | (31,901 | ) | | | (66,994 | ) | | | (16,453 | ) | | | 52% | | | | 35,093 | | | | -52% | |
Realized Principal Investment Income | | | 5,332 | | | | 21,118 | | | | 53,224 | | | | (15,786 | ) | | | -75% | | | | (32,106 | ) | | | -60% | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | 112,237 | | | | 110,963 | | | | 244,568 | | | | 1,274 | | | | 1% | | | | (133,605 | ) | | | -55% | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Segment Distributable Earnings | | $ | 315,713 | | | $ | 354,553 | | | $ | 578,650 | | | $ | (38,840 | ) | | | -11% | | | $ | (224,097 | ) | | | -39% | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Year Ended December 31, 2023 Compared to Year Ended December 31, 2022
Segment Distributable Earnings were $315.7 million for the year ended December 31, 2023, a decrease of $38.8 million, compared to $354.6 million for the year ended December 31, 2022. The decrease in Segment Distributable Earnings was attributable to a decrease of $40.1 million in Fee Related Earnings, partially offset by and increase of $1.3 million in Net Realizations.
Strategies across our Multi-Asset Investing segment produced resilient performance in a year of market volatility. The majority of such strategies exhibited positive performance in 2023, with significantly less volatility than the broader markets. Segment Distributable Earnings in the Multi-Asset Investing segment would likely be negatively impacted, however, by a significant or sustained weak market environment or decline in asset prices, including as a result of concerns over macroeconomic factors. In addition, while certain of our strategies are designed to benefit from a high interest rate environment, a period of sustained high interest rates combined with weak equity markets would make it difficult for funds in certain of our strategies to exceed interest rate-based performance hurdles to which such funds are subject. This would negatively impact our Segment Distributable Earnings. In addition, if interest rates remain at sustained high levels for an extended period, certain investors may seek to reallocate capital away from traditional hedge fund strategies in favor of fixed income investments. Conversely, outperformance by our Multi-Asset Investing strategies in a weak market environment has in some cases resulted in such strategies representing an increasing portion of the value of certain investors’ portfolios, which may limit such investors’ ability to allocate additional capital to certain funds in the segment, or result in such investors seeking to withdraw capital from such funds. The segment operates multiple business lines, manages strategies that are both long and short asset classes and generates a majority of its revenue through management fees. In that regard, the segment’s revenues depend in part on our ability to successfully grow such existing, diverse business lines and strategies and to identify and scale new ones to meet evolving investor
appetites. In recent years, however, we have shifted the mix of our product offerings to include more products whose performance-based fees represent a more significant proportion of the fees earned from such products than has historically been the case.
Fee Related Earnings were $203.5 million for the year ended December 31, 2023, a decrease of $40.1 million, compared to $243.6 million for the year ended December 31, 2022. The decrease in Fee Related Earnings was primarily attributable to a decrease of $47.2 million in Management Fees, Net, partially offset by a decrease of $14.7 million in Fee Related Compensation.
Management Fees, Net were $474.3 million for the year ended December 31, 2023, a decrease of $47.2 million, compared to $521.5 million for the year ended December 31, 2022, primarily driven by a decrease in Base Management Fees. Base Management Fees decreased $45.1 million primarily due to lower
Fee-Earning
Assets Under Management throughout the year ended December 31, 2023, in Absolute Return, Multi-Strategy and Harvest.
Fee Related Compensation was $164.5 million for the year ended December 31, 2023, a decrease of $14.7 million, compared to $179.2 million for the year ended December 31, 2022. The decrease was primarily due to a decrease in Management Fees, Net, on which a portion of Fee Related Compensation is based.
Net Realizations were $112.2 million for the year ended December 31, 2023, an increase of $1.3 million, compared to $111.0 million for the year ended December 31, 2022. The increase in Net Realizations was primarily attributable to an increase of $33.5 million in Realized Performance Revenues, partially offset by an increase of $16.5 million in Realized Performance Compensation.
Realized Performance Revenues were $155.3 million for the year ended December 31, 2023, an increase of $33.5 million, compared to $121.7 million for the year ended December 31, 2022. The increase was primarily due to increased Realized Performance Revenues in Multi-Strategy, offset by a decrease in Absolute Return.
Realized Performance Compensation was $48.4 million for the year ended December 31, 2023, an increase of $16.5 million, compared to $31.9 million for the year ended December 31, 2022. The increase was primarily due to the increase in Realized Performance Revenues.
Year Ended December 31, 2022 Compared to Year Ended December 31, 2021
Segment Distributable Earnings were $354.6 million for the year ended December 31, 2022, a decrease of $224.1 million, compared to $578.7 million for the year ended December 31, 2021. The decrease in Segment Distributable Earnings was attributable to decreases of $90.5 million in Fee Related Earnings and $133.6 million in Net Realizations.
Fee Related Earnings were $243.6 million for the year ended December 31, 2022, a decrease of $90.5 million, compared to $334.1 million for the year ended December 31, 2021. The decrease in Fee Related Earnings was primarily attributable to a decrease of $51.4 million in Management Fees, Net and increases of $28.7 million in Fee Related Compensation and $10.3 million in Other Operating Expenses.
Management Fees, Net were $521.5 million for the year ended December 31, 2022, a decrease of $51.4 million, compared to $572.9 million for the year ended December 31, 2021, primarily driven by a decrease in Base Management Fees. Base Management Fees decreased $50.1 million primarily due to lower
Fee-Earning
Assets Under Management in Absolute Return throughout the year ended December 31, 2022.
Fee Related Compensation was $179.2 million for the year ended December 31, 2022, an increase of $28.7 million, compared to $150.4 million for the year ended December 31, 2021. The increase was primarily due to compensation accruals, hiring and corporate allocations.
Other Operating Expenses were $98.7 million for the year ended December 31, 2022, an increase of $10.3 million, compared to $88.4 million for the year ended December 31, 2021. The increase was primarily due to travel and entertainment, and occupancy related expenses.
Net Realizations were $111.0 million for the year ended December 31, 2022, a decrease of $133.6 million, compared to $244.6 million for the year ended December 31, 2021. The decrease in Net Realizations was primarily attributable to decreases of $136.6 million in Realized Performance Revenues and $32.1 million in Realized Principal Investment Income, partially offset by a decrease of $35.1 million in Realized Performance Compensation.
Realized Performance Revenues were $121.7 million for the year ended December 31, 2022, a decrease of $136.6 million, compared to $258.3 million for the year ended December 31, 2021. The decrease was primarily driven by reduced Realized Performance Revenues in Multi-Strategy and Absolute Return.
Realized Principal Investment Income was $21.1 million for the year ended December 31, 2022, a decrease of $32.1 million, compared to $53.2 million for the year ended December 31, 2021. The decrease was primarily due to the segment’s allocation of the gain recognized in the Pátria sale transaction in the first and third quarters of 2021.
Realized Performance Compensation was $31.9 million for the year ended December 31, 2022, a decrease of $35.1 million, compared to $67.0 million for the year ended December 31, 2021. The decrease was primarily due to the decrease in Realized Performance Revenues.
Composite returns information is included throughout this discussion and analysis to facilitate an understanding of our results of operations for the periods presented. The composite returns information reflected in this discussion and analysis is not indicative of the financial performance of Blackstone and is also not necessarily indicative of the future results of any particular fund or composite. An investment in Blackstone is not an investment in any of our funds or composites. There can be no assurance that any of our funds or composites or our other existing and future funds or composites will achieve similar returns.
The following table presents the return information of the Absolute Return Composite:
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| | | Average Annual Returns (a) |
| | | |
| | | |
| | | | | | | | | |
| | | | | | | | | | | | | | | | |
Absolute Return Composite (b) | | | 8 | % | | | 7 | % | | | 7 | % | | | 6 | % | | | 7 | % | | | 6 | % | | | 7 | % | | | 6 | % |
The returns presented herein represent those of the applicable Blackstone Funds and not those of Blackstone.
| (a) | Composite returns present a summarized asset-weighted return measure to evaluate the overall performance of the applicable class of Blackstone Funds. |
| (b) | Effective the first quarter of 2024, Blackstone Alternative Asset Management Principal Solutions (“BPS”) Composite was renamed to “Absolute Return Composite.” Absolute Return Composite covers the period from January 2000 to present, although BXMA’s inception date is September 1990. The Absolute Return Composite includes only BXMA-managed commingled and customized multi-manager funds and accounts and does not include BXMA’s liquid solutions, seeding, Multi-Strategy, Harvest and advisory (non-discretionary) platforms, except for investments by Absolute Return funds directly into those platforms. BXMA-managed funds in liquidation and, in the case of net returns, assets are also excluded. The funds/accounts that comprise the Absolute Return Composite are not managed within a single fund or account and are managed with different mandates. There is no guarantee that BXMA would have made the same mix of investments in a stand-alone fund/account. The Absolute Return Composite is not an investible product and, as such, the performance of the Absolute Return Composite does not represent the performance of an actual fund or account. The historical return is from January 1, 2000. |
The following table presents information regarding our Invested Performance Eligible Assets Under Management:
| | | | | | | | | | | | | | | | | | |
| | | Invested Performance Eligible
Assets Under Management | | Estimated % Above
High Water Mark/
Benchmark (a) |
| | | | | |
| | | | | | | | | | | | | |
| | | | | | | | | |
Multi-Asset Investing Managed Funds (b) | | $ | 45,631,127 | | | $ | 43,052,178 | | | $ | 39,958,125 | | | 95% | | 82% | | 89% |
| (a) | Estimated % Above High Water Mark/Benchmark represents the percentage of Invested Performance Eligible Assets Under Management that as of the dates presented would earn performance fees when the applicable Multi-Asset Investing managed fund has positive investment performance relative to a benchmark, where applicable. Incremental positive performance in the applicable Blackstone Funds may cause additional assets to reach their respective High Water Mark or clear a benchmark return, thereby resulting in an increase in Estimated % Above High Water Mark/Benchmark. |
| (b) | For the Multi-Asset Investing managed funds, at December 31, 2023, the incremental appreciation needed for the 5% of Invested Performance Eligible Assets Under Management below their respective High Water Marks/Benchmarks to reach their respective High Water Marks/Benchmarks was $578.3 million, a decrease of $(179.3) million, compared to $757.7 million at December 31, 2022. Of the Invested Performance Eligible Assets Under Management below their respective High Water Marks/ Benchmarks as of December 31, 2023, 9% were within 5% of reaching their respective High Water Mark. |
Non-GAAP
Financial Measures
These
non-GAAP
financial measures are presented without the consolidation of any Blackstone Funds that are consolidated into the Consolidated Financial Statements. Consequently, all
non-GAAP
financial measures exclude the assets, liabilities and operating results related to the Blackstone Funds. See “—Key Financial Measures and Indicators” for our definitions of Distributable Earnings, Segment Distributable Earnings, Fee Related Earnings and Adjusted EBITDA.
The following table is a reconciliation of Net Income Attributable to Blackstone Inc. to Distributable Earnings, Total Segment Distributable Earnings, Fee Related Earnings and Adjusted EBITDA:
| | | | | | | | | | | | |
| | | |
| | | |
| | | | | | | |
| | | |
Net Income Attributable to Blackstone Inc. | | $ | 1,390,880 | | | $ | 1,747,631 | | | $ | 5,857,397 | |
Net Income Attributable to Non-Controlling Interests in Blackstone Holdings | | | 1,074,736 | | | | 1,276,402 | | | | 4,886,552 | |
Net Income Attributable to Non-Controlling Interests in Consolidated Entities | | | 224,155 | | | | 107,766 | | | | 1,625,306 | |
Net Income (Loss) Attributable to Redeemable Non-Controlling Interests in Consolidated Entities | | | (245,518 | ) | | | (142,890 | ) | | | 5,740 | |
| | | | | | | | | | | | |
| | | 2,444,253 | | | | 2,988,909 | | | | 12,374,995 | |
| | | 513,461 | | | | 472,880 | | | | 1,184,401 | |
| | | | | | | | | | | | |
Net Income Before Provision for Taxes | | | 2,957,714 | | | | 3,461,789 | | | | 13,559,396 | |
Transaction-Related and Non-Recurring Items (a) | | | 25,981 | | | | 57,133 | | | | 144,038 | |
Amortization of Intangibles (b) | | | 33,457 | | | | 60,481 | | | | 68,256 | |
Impact of Consolidation (c) | | | 21,363 | | | | 35,124 | | | | (1,631,046 | ) |
Unrealized Performance Revenues (d) | | | 1,691,788 | | | | 3,436,978 | | | | (8,675,246 | ) |
Unrealized Performance Allocations Compensation (e) | | | (654,403 | ) | | | (1,470,588 | ) | | | 3,778,048 | |
Unrealized Principal Investment (Income) Loss (f) | | | 593,301 | | | | 1,235,529 | | | | (679,767 | ) |
| | | 93,083 | | | | (183,754 | ) | | | (202,885 | ) |
Equity-Based Compensation (h) | | | 959,474 | | | | 782,090 | | | | 559,537 | |
Administrative Fee Adjustment (i) | | | 9,707 | | | | 9,866 | | | | 10,188 | |
Taxes and Related Payables (j) | | | (670,510 | ) | | | (791,868 | ) | | | (759,682 | ) |
| | | | | | | | | | | | |
| | | 5,060,955 | | | | 6,632,780 | | | | 6,170,837 | |
Taxes and Related Payables (j) | | | 670,510 | | | | 791,868 | | | | 759,682 | |
Net Interest and Dividend (Income) Loss (k) | | | (106,120 | ) | | | 31,494 | | | | 33,588 | |
| | | | | | | | | | | | |
Total Segment Distributable Earnings | | | 5,625,345 | | | | 7,456,142 | | | | 6,964,107 | |
Realized Performance Revenues (l) | | | (2,061,102 | ) | | | (4,461,338 | ) | | | (3,883,112 | ) |
Realized Performance Compensation (m) | | | 896,017 | | | | 1,814,097 | | | | 1,557,570 | |
Realized Principal Investment Income (n) | | | (110,932 | ) | | | (396,256 | ) | | | (587,766 | ) |
| | | | | | | | | | | | |
| | $ | 4,349,328 | | | $ | 4,412,645 | | | $ | 4,050,799 | |
| | | | | | | | | | | | |
Adjusted EBITDA Reconciliation | | | | | | | | | | | | |
| | $ | 5,060,955 | | | $ | 6,632,780 | | | $ | 6,170,837 | |
| | | 429,521 | | | | 316,569 | | | | 196,632 | |
Taxes and Related Payables (j) | | | 670,510 | | | | 791,868 | | | | 759,682 | |
Depreciation and Amortization (p) | | | 94,124 | | | | 69,219 | | | | 52,187 | |
| | | | | | | | | | | | |
| | $ | 6,255,110 | | | $ | 7,810,436 | | | $ | 7,179,338 | |
| | | | | | | | | | | | |
| (a) | This adjustment removes Transaction-Related and Non-Recurring Items, which are excluded from Blackstone’s segment presentation. Transaction-Related and Non-Recurring Items arise from corporate actions including acquisitions, divestitures, Blackstone’s initial public offering and non-recurring gains, losses, or other charges, if any. They consist primarily of equity-based compensation charges, gains and losses on contingent consideration arrangements, changes in the balance of the Tax Receivable Agreement resulting from a change in tax law or similar event, transaction costs, gains or losses associated with these corporate actions and non-recurring gains, losses or other charges that affect comparability and are not reflective of Blackstone’s operational performance. |
| (b) | This adjustment removes the amortization of transaction-related intangibles, which are excluded from Blackstone’s segment presentation. |
| (c) | This adjustment reverses the effect of consolidating Blackstone Funds, which are excluded from Blackstone’s segment presentation. This adjustment includes the elimination of Blackstone’s interest in these funds and the removal of amounts associated with the ownership of Blackstone consolidated operating partnerships held by non-controlling interests. |
| (d) | This adjustment removes Unrealized Performance Revenues on a segment basis. The Segment Adjustment represents the add back of performance revenues earned from consolidated Blackstone Funds which have been eliminated in consolidation. |
| | | | | | | | | | | | |
| | |
|
| | | | | | | |
| | | |
GAAP Unrealized Performance Allocations | | $ | (1,691,668 | ) | | $ | (3,435,056 | ) | | $ | 8,675,246 | |
| | | (120 | ) | | | (1,922 | ) | | | - | |
| | | | | | | | | | | | |
Unrealized Performance Revenues | | $ | (1,691,788 | ) | | $ | (3,436,978 | ) | | $ | 8,675,246 | |
| | | | | | | | | | | | |
| (e) | This adjustment removes Unrealized Performance Allocations Compensation. |
| (f) | This adjustment removes Unrealized Principal Investment Income on a segment basis. The Segment Adjustment represents (1) the add back of Principal Investment Income, including general partner income, earned from consolidated Blackstone Funds which have been eliminated in consolidation, and (2) the removal of amounts associated with the ownership of Blackstone consolidated operating partnerships held by non-controlling interests. |
| | | | | | | | | | | | |
| | |
|
| | | | | | | |
| | | |
GAAP Unrealized Principal Investment Income (Loss) | | $ | (603,154 | ) | | $ | (1,563,849 | ) | | $ | 1,456,201 | |
| | | 9,853 | | | | 328,320 | | | | (776,434 | ) |
| | | | | | | | | | | | |
Unrealized Principal Investment Income (Loss) | | $ | (593,301 | ) | | $ | (1,235,529 | ) | | $ | 679,767 | |
| | | | | | | | | | | | |
| (g) | This adjustment removes Other Revenues on a segment basis. The Segment Adjustment represents (1) the add back of Other Revenues earned from consolidated Blackstone Funds which have been eliminated in consolidation, and (2) the removal of certain Transaction-Related and Non-Recurring Items. |
| | | | | | | | | | | | |
| | |
|
| | | | | | | |
| | | |
| | $ | (92,929 | ) | | $ | 184,557 | | | $ | 203,086 | |
| | | (154 | ) | | | (803 | ) | | | (201 | ) |
| | | | | | | | | | | | |
| | $ | (93,083 | ) | | $ | 183,754 | | | $ | 202,885 | |
| | | | | | | | | | | | |
| (h) | This adjustment removes Equity-Based Compensation on a segment basis. |
| (i) | This adjustment adds an amount equal to an administrative fee collected on a quarterly basis from certain holders of Blackstone Holdings Partnership Units. The administrative fee is accounted for as a capital contribution under GAAP, but is reflected as a reduction of Other Operating Expenses in Blackstone’s segment presentation. |
| (j) | Taxes represent the total GAAP tax provision adjusted to include only the current tax provision (benefit) calculated on Income (Loss) Before Provision (Benefit) for Taxes and adjusted to exclude the tax impact of any divestitures. Related Payables represent tax-related payables including the amount payable under the Tax Receivable Agreement. See “—Key Financial Measures and Indicators — Distributable Earnings” for the full definition of Taxes and Related Payables. |
| | | | | | | | | | | | |
| | |
|
| | | | | | | |
| | | |
| | $ | 580,925 | | | $ | 693,443 | | | $ | 703,075 | |
| | | 89,585 | | | | 98,425 | | | | 56,607 | |
| | | | | | | | | | | | |
Taxes and Related Payables | | $ | 670,510 | | | $ | 791,868 | | | $ | 759,682 | |
| | | | | | | | | | | | |
| (k) | This adjustment removes Interest and Dividend Revenue less Interest Expense on a segment basis. The Segment Adjustment represents (1) the add back of Interest and Dividend Revenue earned from consolidated Blackstone Funds which have been eliminated in consolidation, and (2) the removal of interest expense associated with the Tax Receivable Agreement. |
| | | | | | | | | | | | |
| | | |
| | | |
| | | | | | | |
| | | |
GAAP Interest and Dividend Revenue | | $ | 516,497 | | | $ | 271,612 | | | $ | 160,643 | |
| | | 19,144 | | | | 13,463 | | | | 2,401 | |
| | | | | | | | | | | | |
Interest and Dividend Revenue | | | 535,641 | | | | 285,075 | | | | 163,044 | |
| | | | | | | | | | | | |
| | | 431,868 | | | | 317,225 | | | | 198,268 | |
| | | (2,347 | ) | | | (656 | ) | | | (1,636 | ) |
| | | | | | | | | | | | |
| | | 429,521 | | | | 316,569 | | | | 196,632 | |
| | | | | | | | | | | | |
Net Interest and Dividend Income (Loss) | | $ | 106,120 | | | $ | (31,494 | ) | | $ | (33,588 | ) |
| | | | | | | | | | | | |
| (l) | This adjustment removes the total segment amount of Realized Performance Revenues. |
| (m) | This adjustment removes the total segment amount of Realized Performance Compensation. |
| (n) | This adjustment removes the total segment amount of Realized Principal Investment Income. |
| (o) | This adjustment adds back Interest Expense on a segment basis, excluding interest expense related to the Tax Receivable Agreement. |
| (p) | This adjustment adds back Depreciation and Amortization on a segment basis. |
The following tables are a reconciliation of Total GAAP Investments to Net Accrued Performance Revenues. Total GAAP Investments and Net Accrued Performance Revenues consist of the following:
| | | | | | | | |
| | | |
| | | | | |
| | | |
Investments of Consolidated Blackstone Funds | | $ | 4,319,483 | | | $ | 5,136,966 | |
Equity Method Investments | | | | | | | | |
| | | 5,924,275 | | | | 5,530,419 | |
Accrued Performance Allocations | | | 10,775,355 | | | | 12,360,684 | |
Corporate Treasury Investments | | | 803,870 | | | | 1,053,540 | |
| | | 4,323,639 | | | | 3,471,642 | |
| | | | | | | | |
| | $ | 26,146,622 | | | $ | 27,553,251 | |
| | | | | | | | |
Accrued Performance Allocations - GAAP | | $ | 10,775,355 | | | $ | 12,360,684 | |
Due from Affiliates - GAAP (a) | | | 313,838 | | | | 269,987 | |
Less: Net Realized Performance Revenues (b) | | | (552,249 | ) | | | (282,730 | ) |
Less: Accrued Performance Compensation - GAAP (c) | | | (4,702,363 | ) | | | (5,512,796 | ) |
| | | | | | | | |
Net Accrued Performance Revenues | | $ | 5,834,581 | | | $ | 6,835,145 | |
| | | | | | | | |
| (a) | Represents GAAP accrued performance revenue recorded within Due from Affiliates. |
| (b) | Represents Performance Revenues realized but not yet distributed as of the reporting date and are included in Distributable Earnings in the period they are realized. |
| (c) | Represents GAAP accrued performance compensation associated with Accrued Performance Allocations and is recorded within Accrued Compensation and Benefits and Due to Affiliates. |
Liquidity and Capital Resources
Blackstone’s business model derives revenue primarily from third party Assets Under Management. Blackstone is not a capital or balance sheet intensive business and targets operating expense levels such that total management and advisory fees exceed total operating expenses each period. As a result, we require limited capital resources to support the working capital or operating needs of our businesses. We draw primarily on the long-term committed or invested capital of investors in our investment vehicles to fund the investment requirements of the Blackstone Funds and use our own realizations and cash flows to invest in growth initiatives, make commitments to our own funds, where our minimum general partner commitments are generally less than 5% of the limited partner commitments of a fund, and pay dividends to stockholders and distributions to holders of Holdings Units.
Fluctuations in our statement of financial condition result primarily from activities of the Blackstone Funds that are consolidated as well as business transactions, such as the issuance of senior notes. The majority economic ownership interests of such consolidated Blackstone Funds are reflected as Redeemable
Non-Controlling
Interests in Consolidated Entities, and
Non-Controlling
Interests in Consolidated Entities in the Consolidated Financial Statements. The consolidation of these Blackstone Funds has no net effect on Blackstone’s Net Income or Equity. Additionally, fluctuations in our statement of financial condition also include appreciation or depreciation in Blackstone investments in the
non-consolidated
Blackstone Funds, additional investments and redemptions of such interests in the
non-consolidated
Blackstone Funds and the collection of receivables related to management and advisory fees.
Total Assets were $40.3 billion as of December 31, 2023, a decrease of $2.2 billion from December 31, 2022. The decrease in Total Assets was principally due to a decrease of $1.5 billion in total assets attributable to consolidated operating partnerships. The decrease in total assets attributable to consolidated operating partnerships was primarily due to decreases of $1.3 billion in Cash and Cash Equivalents and $641.4 million in Investments, partially offset by an increase of $312.3 million in Due from Affiliates. The decrease in Cash and Cash Equivalents was primarily due to ongoing operating activities, including the payoff at maturity of Blackstone’s 4.750% senior note due February 15, 2023. The decrease in Investments was primarily due to unrealized depreciation across our Real Estate segment and net sales of investments within Corporate Treasury Investments, partially offset by unrealized appreciation in our Private Equity segment. The increase in Due from Affiliates was primarily due to an increase in management fees, performance revenues and reimbursable expenses due from
non-consolidated
Blackstone Funds.
Total Liabilities were $22.2 billion as of December 31, 2023, a decrease of $630.8 million, from December 31, 2022. The decrease in Total Liabilities was principally due to decreases of $305.5 million and $274.8 million in total liabilities attributable to consolidated Blackstone Funds and total liabilities attributable to consolidated operating partnerships, respectively. The decrease in total liabilities attributable to consolidated Blackstone Funds was primarily due to a decrease of $762.9 million in Loans Payable, partially offset by an increase of $365.3 million in Accounts Payable, Accrued Expenses and Other Liabilities. The decrease in Loans Payable was primarily due to the deconsolidation of one fund, including its borrowings, during the year ended December 31, 2023, partially offset by the consolidation of three CLOs during the year ended December 31, 2023. The increase in Accounts Payable, Accrued Expenses and Other Liabilities was primarily due to the consolidation of two CLOs, including their unsettled trade liabilities during the year ended December 31, 2023. The decrease in total liabilities attributable to consolidated operating partnerships was primarily due to a decrease of $854.0 million in Accrued Compensation and Benefits, partially offset by an increase of $660.1 million in Accounts Payable, Accrued Expenses and Other Liabilities. The decrease in Accrued Compensation and Benefits was primarily due to a decrease in performance compensation. The increase in Accounts Payable, Accrued Expenses and Other Liabilities was primarily due to an increase in derivative liabilities.
Sources and Uses of Liquidity
We have multiple sources of liquidity to meet our capital needs, including annual cash flows, accumulated earnings in our businesses, the proceeds from our issuances of senior notes, liquid investments we hold on our balance sheet and access to our committed revolving credit facility. On December 15, 2023, Blackstone amended and restated its revolving credit facility to, among other things, increase available borrowings from $4.135 billion to $4.325 billion and to extend the maturity date from June 3, 2027 to December 15, 2028. As of December 31, 2023, Blackstone had $3.0 billion in Cash and Cash Equivalents, $803.9 million invested in Corporate Treasury Investments and $4.3 billion in Other Investments (which included $4.0 billion of liquid investments), against $10.7 billion in borrowings from our bond issuances, and no borrowings outstanding under our revolving credit facility.
In addition to the cash we receive from our notes offerings and availability under our revolving credit facility, we expect to receive (a) cash generated from operating activities, (b) Performance Revenue realizations, and (c) realizations on the fund investments that we make. The amounts received from these three sources in particular may vary substantially from year to year and quarter to quarter depending on the frequency and size of realization events or net returns experienced by our investment funds. Our available capital could be adversely affected if there are prolonged periods of few substantial realizations from our investment funds accompanied by substantial capital calls for new investments from those investment funds. Therefore, Blackstone’s commitments to our funds are taken into consideration when managing our overall liquidity and cash position.
We expect that our primary liquidity needs will be cash to (a) provide capital to facilitate the growth of our existing businesses, which principally includes funding our general partner and
co-investment
commitments to our
funds, (b) provide capital for business expansion, (c) pay operating expenses, including cash compensation to our employees, and other obligations as they arise, (d) fund modest capital expenditures, (e) repay borrowings and related interest costs, (f) pay income taxes, (g) repurchase shares of our common stock and Blackstone Holdings Partnership Units pursuant to our repurchase program and (h) pay dividends to our stockholders and distributions to the holders of Blackstone Holdings Partnership Units. For a tabular presentation of Blackstone’s contractual obligations and the expected timing of such see “— Contractual Obligations.”
Our own capital commitments to our funds, the funds we invest in and our investment strategies as of December 31, 2023 consisted of the following:
| | | | | | | | | | | | | | | | |
| | | | | | | Senior Managing Directors |
| | | | | |
| | | | | |
| | | | | | | | | |
| | | | | | | | |
| | | |
| | | | | | | | | | | | | | | | |
| | $ | 300,000 | | | $ | 28,469 | | | $ | 100,000 | | | $ | 9,490 | |
| | | 300,000 | | | | 39,823 | | | | 100,000 | | | | 13,274 | |
| | | 300,000 | | | | 47,296 | | | | 100,000 | | | | 15,765 | |
| | | 300,000 | | | | 279,054 | | | | 100,000 | | | | 93,018 | |
| | | 100,000 | | | | 11,257 | | | | 35,000 | | | | 3,752 | |
| | | 130,000 | | | | 22,477 | | | | 43,333 | | | | 7,492 | |
| | | 150,000 | | | | 22,292 | | | | 43,333 | | | | 6,440 | |
| | | 130,000 | | | | 44,690 | | | | 43,333 | | | | 14,897 | |
| | | 130,000 | | | | 109,910 | | | | 43,333 | | | | 36,637 | |
| | | 50,392 | | | | 10,342 | | | | 16,797 | | | | 3,447 | |
| | | 70,707 | | | | 12,877 | | | | 23,569 | | | | 4,292 | |
| | | 81,078 | | | | 66,892 | | | | 27,026 | | | | 22,297 | |
| | | 50,000 | | | | 13,499 | | | | 16,667 | | | | 4,500 | |
| | | 50,000 | | | | 15,919 | | | | 49,113 | | | | 15,636 | |
| | | 50,000 | | | | 50,000 | | | | 48,070 | | | | 48,070 | |
| | | 312,773 | | | | 28,682 | | | | — | | | | — | |
| | | 30,636 | | | | 9,767 | | | | — | | | | — | |
| | | | | | | | | | | | | | | | |
| | | 2,535,586 | | | | 813,246 | | | | 789,574 | | | | 299,007 | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| | | | | | | Senior Managing Directors |
| | | | | |
| | | | | |
| | | | | | | | | |
| | | | | | | | |
| | | |
| | | | | | | | | | | | | | | | |
| | $ | 629,356 | | | $ | 30,642 | | | $ | — | | | $ | — | |
| | | 719,718 | | | | 81,400 | | | | 250,000 | | | | 28,275 | |
| | | 500,000 | | | | 36,635 | | | | 225,000 | | | | 16,486 | |
| | | 500,000 | | | | 211,102 | | | | 225,000 | | | | 94,996 | |
| | | 500,000 | | | | 500,000 | | | | 225,000 | | | | 225,000 | |
| | | 50,000 | | | | 4,728 | | | | — | | | | — | |
| | | 80,000 | | | | 12,018 | | | | 26,667 | | | | 4,006 | |
| | | 80,000 | | | | 27,907 | | | | 26,667 | | | | 9,302 | |
| | | 52,847 | | | | 52,847 | | | | 17,616 | | | | 17,616 | |
| | | 117,747 | | | | 27,016 | | | | 18,992 | | | | 4,358 | |
| | | 160,000 | | | | 112,965 | | | | 32,640 | | | | 23,045 | |
| | | 40,000 | | | | 5,869 | | | | 13,333 | | | | 1,956 | |
| | | 100,000 | | | | 74,993 | | | | 33,333 | | | | 24,998 | |
| | | 491,315 | | | | 228,369 | | | | 163,772 | | | | 76,123 | |
| | | 1,471,799 | | | | 771,868 | | | | 1,181,976 | | | | 683,061 | |
| | | 338,785 | | | | 70,891 | | | | — | | | | — | |
| | | 142,057 | | | | 85,065 | | | | 37,353 | | | | 26,477 | |
| | | 162,381 | | | | 106,641 | | | | 53,959 | | | | 35,536 | |
| | | 290,209 | | | | 39,547 | | | | — | | | | — | |
| | | | | | | | | | | | | | | | |
| | | 6,426,214 | | | | 2,480,503 | | | | 2,531,308 | | | | 1,271,235 | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
Mezzanine / Opportunistic II | | | 120,000 | | | | 29,182 | | | | 110,101 | | | | 26,774 | |
Mezzanine / Opportunistic III | | | 130,783 | | | | 38,258 | | | | 96,614 | | | | 28,262 | |
Mezzanine / Opportunistic IV | | | 122,000 | | | | 67,933 | | | | 115,602 | | | | 64,370 | |
| | | 63,000 | | | | 5,084 | | | | 56,882 | | | | 4,590 | |
| | | 92,661 | | | | 34,805 | | | | 89,599 | | | | 33,679 | |
| | | 21,838 | | | | 21,834 | | | | 7,279 | | | | 7,278 | |
| | | 125,000 | | | | 51,612 | | | | 119,878 | | | | 49,497 | |
Stressed / Distressed III | | | 151,000 | | | | 93,835 | | | | 146,682 | | | | 91,152 | |
| | | 80,000 | | | | 36,785 | | | | 75,445 | | | | 34,691 | |
| | | 150,000 | | | | 104,262 | | | | 148,577 | | | | 103,273 | |
| | | 127,000 | | | | 123,190 | | | | 117,935 | | | | 114,397 | |
| | | 52,102 | | | | 19,752 | | | | 50,670 | | | | 19,209 | |
| | | 25,500 | | | | 12,550 | | | | 24,385 | | | | 12,001 | |
| | | 178,823 | | | | 82,366 | | | | 47,229 | | | | 12,810 | |
| | | | | | | | | | | | | | | | |
| | | 1,439,707 | | | | 721,448 | | | | 1,206,878 | | | | 601,983 | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| | | | | | | Senior Managing Directors |
| | | | | |
| | | | | |
| | | | | | | | | |
| | | | | | | | |
| | | |
| | | | | | | | | | | | | | | | |
| | $ | 50,000 | | | $ | 1,482 | | | $ | — | | | $ | — | |
| | | 22,000 | | | | 17,283 | | | | — | | | | — | |
| | | 15,000 | | | | 13,548 | | | | — | | | | — | |
| | | 100,000 | | | | 27,765 | | | | — | | | | — | |
| | | 20,000 | | | | 12,274 | | | | — | | | | — | |
| | | 6,454 | | | | 2,194 | | | | — | | | | — | |
Total Multi-Asset Investing | | | 213,454 | | | | 74,546 | | | | — | | | | — | |
| | | | | | | | | | | | | | | | |
| | | 1,110,932 | | | | 874,955 | | | | — | | | | — | |
| | | | | | | | | | | | | | | | |
| | $ | 11,725,893 | | | $ | 4,964,698 | | | $ | 4,527,760 | | | $ | 2,172,225 | |
| | | | | | | | | | | | | | | | |
| (a) | We expect our commitments to be drawn down over time and to be funded by available cash and cash generated from operations and realizations. Taking into account prevailing market conditions and both the liquidity and cash or liquid investment balances, we believe that the sources of liquidity described above will be more than sufficient to fund our working capital requirements. Additionally, for some of the general partner commitments shown in the table above, we require our senior managing directors and certain other professionals to fund a portion of the commitment even though the ultimate obligation to fund the aggregate commitment is ours pursuant to the governing agreements of the respective funds. The amounts of the aggregate applicable general partner original and remaining commitment are shown in the table above. |
| (b) | Includes the full portion of our commitments (i) required to be funded by senior managing directors and certain other professionals and (ii) that are elected by such individuals to be funded for the life of a fund, where such fund permits such election. Excludes amounts that are elected by such individuals to be funded on an annual basis and certain de minimis commitments funded by such individuals in certain carry funds. |
| (c) | Represents capital commitments to a number of other funds in each respective segment. |
| (d) | Represents loan origination commitments, revolver commitments and capital market commitments. |
For a tabular presentation of the timing of Blackstone’s remaining capital commitments to our funds, the funds we invest in and our investment strategies see “— Contractual Obligations”.
As of December 31, 2023, Blackstone Holdings Finance Co. L.L.C. (the “Issuer”), an indirect subsidiary of Blackstone, had issued and outstanding the following senior notes (collectively the “Notes”):
| | | | |
| | | | |
| | | | |
| | | | |
| | | | |
| | | |
| | | 300,000 | |
| | | 600,000 | |
| | $ | 300,000 | |
| | $ | 600,000 | |
| | $ | 650,000 | |
| | | 600,000 | |
| | $ | 500,000 | |
| | $ | 500,000 | |
| | $ | 800,000 | |
| | $ | 500,000 | |
| | $ | 900,000 | |
| | | 500,000 | |
| | $ | 250,000 | |
| | $ | 500,000 | |
| | $ | 350,000 | |
| | $ | 300,000 | |
| | $ | 400,000 | |
| | $ | 400,000 | |
| | $ | 550,000 | |
| | $ | 1,000,000 | |
| | | | |
| | $ | 10,707,800 | |
| | | | |
| (a) | The Notes are unsecured and unsubordinated obligations of the Issuer and are fully and unconditionally guaranteed, jointly and severally, by Blackstone Inc. and each of the Blackstone Holdings Partnerships. The Notes contain customary covenants and financial restrictions that, among other things, limit the Issuer and the guarantors’ ability, subject to certain exceptions, to incur indebtedness secured by liens on voting stock or profit participating equity interests of their subsidiaries or merge, consolidate or sell, transfer or lease assets. The Notes also contain customary events of default. All or a portion of the Notes may be redeemed at our option, in whole or in part, at any time and from time to time, prior to their stated maturity, at the make-whole redemption price set forth in the Notes. If a change of control repurchase event occurs, the Notes are subject to repurchase at the repurchase price as set forth in the Notes. |
Blackstone, through the Issuer, has a $4.325 billion unsecured revolving credit facility (the “Credit Facility”) with Citibank, N.A., as administrative agent with a maturity date of December 15, 2028. Borrowings may also be made in U.K. sterling, euros, Swiss francs, Japanese yen or Canadian dollars, in each case subject to certain
sub-limits.
The Credit Facility contains customary representations, covenants and events of default. Financial covenants consist of a maximum net leverage ratio and a requirement to keep a minimum amount of
fee-earning
assets under management, each tested quarterly.
For a tabular presentation of the payment timing of principal and interest due on Blackstone’s issued notes and the Credit Facility see “—Contractual Obligations”.
The following table sets forth information relating to our contractual obligations as of December 31, 2023 on a consolidated basis and on a basis deconsolidating the Blackstone Funds:
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | |
| | | |
Operating Lease Obligations (a) | | $ | 161,106 | | | $ | 339,275 | | | $ | 327,978 | | | $ | 577,044 | | | $ | 1,405,403 | |
| | | 128,176 | | | | 130,592 | | | | 33,120 | | | | 1,890 | | | | 293,778 | |
Blackstone Operating Borrowings (b) | | | 17 | | | | 1,007,780 | | | | 1,575,662 | | | | 8,164,290 | | | | 10,747,749 | |
Interest on Blackstone Operating Borrowings (c) | | | 348,391 | | | | 689,955 | | | | 623,548 | | | | 3,268,270 | | | | 4,930,164 | |
Borrowings of Consolidated Blackstone Funds | | | — | | | | — | | | | — | | | | 858,133 | | | | 858,133 | |
Interest on Borrowings of Consolidated Blackstone Funds | | | — | | | | 101,005 | | | | 101,005 | | | | 97,819 | | | | 299,829 | |
Blackstone Funds Capital Commitments to Investee Funds (d) | | | 364,357 | | | | — | | | | — | | | | — | | | | 364,357 | |
Due to Certain Non-Controlling Interest Holders in Connection with Tax Receivable Agreements (e) | | | 87,508 | | | | 191,701 | | | | 233,349 | | | | 1,169,085 | | | | 1,681,643 | |
Unrecognized Tax Benefits, Including Interest and Penalties (f) | | | — | | | | — | | | | — | | | | — | | | | — | |
Blackstone Operating Entities Capital Commitments to Blackstone Funds and Other (g) | | | 4,964,698 | | | | — | | | | — | | | | — | | | | 4,964,698 | |
| | | | | | | | | | | | | | | | | | | | |
Consolidated Contractual Obligations | | | 6,054,253 | | | | 2,460,308 | | | | 2,894,662 | | | | 14,136,531 | | | | 25,545,754 | |
Borrowings of Consolidated Blackstone Funds | | | — | | | | — | | | | — | | | | (858,133 | ) | | | (858,133 | ) |
Interest on Borrowings of Consolidated Blackstone Funds | | | — | | | | (101,005 | ) | | | (101,005 | ) | | | (97,819 | ) | | | (299,829 | ) |
Blackstone Funds Capital Commitments to Investee Funds (d) | | | (364,357 | ) | | | — | | | | — | | | | — | | | | (364,357 | ) |
| | | | | | | | | | | | | | | | | | | | |
Blackstone Operating Entities Contractual Obligations | | $ | 5,689,896 | | | $ | 2,359,303 | | | $ | 2,793,657 | | | $ | 13,180,579 | | | $ | 24,023,435 | |
| | | | | | | | | | | | | | | | | | | | |
| (a) | We lease our primary office space and certain office equipment under agreements that expire through 2043. Occupancy lease agreements, in addition to contractual rent payments, generally include additional payments for certain costs incurred by the landlord, such as building expenses and utilities. To the extent these are fixed or determinable they are included in the table above. The table above includes operating leases that are recognized as Operating Lease Liabilities, short-term leases that are not recorded as Operating Lease Liabilities and leases that have been signed but not yet commenced which are not recorded as Operating Lease Liabilities. The amounts in this table are presented net of contractual sublease commitments. |
| (b) | Represents the principal amounts due on our senior notes and secured borrowings. For our senior notes, we assume no pre-payments and the borrowings are held until their final maturity. For our secured borrowings we project prepayments based on the performance of the underlying assets and principal may be paid down in full prior to their stated maturity. As of December 31, 2023, we had no borrowings outstanding under our revolver. |
| (c) | Represents interest to be paid over the maturity of our senior notes and secured borrowings. For our senior notes, we assume no pre-payments and the borrowings are held until their final maturity. For our secured borrowings, we project pre-payments based on the performance of the underlying assets with interest payments based on the estimated principal outstanding, inclusive of projected pre-payments. These amounts include commitment fees for unutilized borrowings under our revolver. |
| (d) | These obligations represent commitments of the consolidated Blackstone Funds to make capital contributions to investee funds and portfolio companies. These amounts are generally due on demand and are therefore presented in the less than one year category. |
| (e) | Represents obligations by Blackstone’s corporate subsidiary to make payments under the Tax Receivable Agreements to certain non-controlling interest holders for the tax savings realized from the taxable purchases of their interests in connection with the reorganization at the time of Blackstone’s IPO in 2007 and subsequent purchases. The obligation represents the amount of the payments currently expected to be made, which are dependent on the tax savings actually realized as determined annually without discounting for the timing of the payments. As required by GAAP, the amount of the obligation included in the Consolidated Financial Statements and shown in Note 18. “Related Party Transactions” (see “—Item 8. Financial Statements and Supplementary Data”) differs to reflect the net present value of the payments due to certain non-controlling interest holders. |
| (f) | Blackstone is not able to make a reasonably reliable estimate of the timing of payments in individual years in connection with gross unrecognized benefits of $210.8 million and interest of $60.8 million as of December 31, 2023; therefore, such amounts are not included in the above contractual obligations table. |
| (g) | These obligations represent commitments by us to provide general partner capital funding to the Blackstone Funds, limited partner capital funding to other funds and Blackstone principal investment commitments. These amounts are generally due on demand and are therefore presented in the less than one year category; however, a substantial amount of the capital commitments are expected to be called over the next three years. We expect to continue to make these general partner capital commitments as we raise additional amounts for our investment funds over time. |
Blackstone and certain of its consolidated funds provide financial guarantees. The amounts and nature of these guarantees are described in Note 19. “Commitments and Contingencies — Contingencies — Guarantees” in the “Notes to Consolidated Financial Statements” in “—Item 8. Financial Statements and Supplementary Data” of this filing.
In many of its service contracts, Blackstone agrees to indemnify the third party service provider under certain circumstances. The terms of the indemnities vary from contract to contract and the amount of indemnification liability, if any, cannot be determined and has not been included in the above contractual obligations table or recorded in our Consolidated Financial Statements as of December 31, 2023.
Performance Allocations are subject to clawback to the extent that the Performance Allocations received to date with respect to a fund exceed the amount due to Blackstone based on cumulative results of that fund. The amounts and nature of Blackstone’s clawback obligations are described in Note 19. “Commitments and Contingencies — Contingencies — Contingent Obligations (Clawback)” in the “Notes to Consolidated Financial Statements” in “—Item 8. Financial Statements and Supplementary Data” of this filing.
On December 7, 2021, Blackstone’s board of directors authorized the repurchase of up to $2.0 billion of common stock and Blackstone Holdings Partnership Units. Under the repurchase program, repurchases may be made from time to time in open market transactions, in privately negotiated transactions or otherwise. The timing and the actual number repurchased will depend on a variety of factors, including legal requirements, price and economic and market conditions. The repurchase program may be changed, suspended or discontinued at any time and does not have a specified expiration date.
During the year ended December 31, 2023, Blackstone repurchased 3.7 million shares of common stock at a total cost of $351.3 million. As of December 31, 2023, the amount remaining available for repurchases under the program was $756.8 million.
Our intention is to pay to holders of common stock a quarterly dividend representing approximately 85% of Blackstone Inc.’s share of Distributable Earnings, subject to adjustment by amounts determined by our board of directors to be necessary or appropriate to provide for the conduct of our business, to make appropriate investments in our business and funds, to comply with applicable law, any of our debt instruments or other agreements, or to provide for future cash requirements such as
tax-related
payments, clawback obligations and dividends to stockholders for any ensuing quarter. The dividend amount could also be adjusted upward in any one quarter.
For Blackstone’s definition of Distributable Earnings, see “—Key Financial Measures and Indicators.”
All of the foregoing is subject to the qualification that the declaration and payment of any dividends are at the sole discretion of our board of directors, and our board of directors may change our dividend policy at any time, including, without limitation, to reduce such quarterly dividends or even to eliminate such dividends entirely.
Because the publicly traded entity and/or its wholly owned subsidiaries must pay taxes and make payments under the tax receivable agreements, the amounts ultimately paid as dividends by Blackstone to common stockholders in respect of each fiscal year are generally expected to be less, on a per share or per unit basis, than the amounts distributed by the Blackstone Holdings Partnerships to the Blackstone personnel and others who are limited partners of the Blackstone Holdings Partnerships in respect of their Blackstone Holdings Partnership Units. Following Blackstone’s conversion from a limited partnership to a corporation, we expect to pay more corporate income taxes than we would have as a limited partnership, which will increase this difference between the per share dividend and per unit distribution amounts.
Dividends are treated as qualified dividends to the extent of Blackstone’s current and accumulated earnings and profits, with any excess dividends treated as a return of capital to the extent of the stockholder’s basis.
The following graph shows fiscal quarterly and annual per common stockholder dividends for 2023, 2022 and 2021. Dividends are declared and paid in the quarter subsequent to the quarter in which they are earned.
With respect to fiscal year 2023, we paid to stockholders of our common stock a dividend of $0.82, $0.79, $0.80 and $0.94 per share in respect of the first, second, third and fourth quarters, respectively, aggregating to $3.35 per share of common stock. With respect to fiscal years 2022 and 2021, we paid stockholders of our common stock aggregate dividends of $4.40 per share and $4.06 per share, respectively.
We may under certain circumstances use leverage opportunistically and over time to create the most efficient capital structure for Blackstone and our stockholders. In addition to the borrowings from our notes issuances and our revolving credit facility, we may use reverse repurchase agreements, repurchase agreements and securities sold, not yet purchased. Reverse repurchase agreements are entered into primarily to take advantage of opportunistic yields otherwise absent in the overnight markets and also to use the collateral received to cover securities sold, not yet purchased. Repurchase agreements are entered into primarily to opportunistically yield higher spreads on purchased securities. The balances held in these financial instruments fluctuate based on Blackstone’s liquidity needs, market conditions and investment risk profiles.
The following table presents information regarding these financial instruments which are included in Accounts Payable, Accrued Expenses and Other Liabilities in our Consolidated Statements of Financial Condition:
| | | | | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | |
Balance, December 31, 2023 | | $ | — | | | $ | 3.9 | |
Balance, December 31, 2022 | | $ | 89.9 | | | $ | 3.8 | |
Year Ended December 31, 2023 | | | | | | | | |
| | $ | 24.7 | | | $ | 3.8 | |
| | $ | 90.1 | | | $ | 4.0 | |
Critical Accounting Policies
We prepare our Consolidated Financial Statements in accordance with GAAP. In applying many of these accounting principles, we need to make assumptions, estimates and/or judgments that affect the reported amounts of assets, liabilities, revenues and expenses in our Consolidated Financial Statements. We base our estimates and judgments on historical experience and other assumptions that we believe are reasonable under the circumstances. These assumptions, estimates and/or judgments, however, are often subjective. Actual results may be affected negatively based on changing circumstances. If actual amounts are ultimately different from our estimates, the revisions are included in our results of operations for the period in which the actual amounts become known. We believe the following critical accounting policies could potentially produce materially different results if we were to change underlying assumptions, estimates and/or judgments. For a description of our accounting policies, see Note 2. “Summary of Significant Accounting Policies” in the “Notes to Consolidated Financial Statements” in “—Item 8. Financial Statements and Supplementary Data” of this filing.
Principles of Consolidation
For a description of our accounting policy on consolidation, see Note 2. “Summary of Significant Accounting Policies — Consolidation” and Note 9. “Variable Interest Entities” in the “Notes to Consolidated Financial Statements” in “—Item 8. Financial Statements and Supplementary Data” for detailed information on Blackstone’s involvement with VIEs. The following discussion is intended to provide supplemental information about how the application of consolidation principles impact our financial results, and management’s process for implementing those principles including areas of significant judgment.
The determination that Blackstone holds a controlling financial interest in a Blackstone Fund or investment vehicle significantly changes the presentation of our consolidated financial statements. In our Consolidated Statements of Financial Position included in this filing, we present 100% of the assets and liabilities of consolidated VIEs along with a
non-controlling
interest which represents the portion of the consolidated vehicle’s interests held by third parties. However, assets of our consolidated VIEs can only be used to settle obligations of the consolidated VIE and are not available for general use by Blackstone. Further, the liabilities of our consolidated VIEs do not have recourse to the general credit of Blackstone. In the Consolidated Statements of Operations, we eliminate any management fees, Incentive Fees, or Performance Allocations received or accrued from consolidated VIEs as they are considered intercompany transactions. We recognize 100% of the consolidated VIE’s investment income (loss) and allocate the portion of that income (loss) attributable to third party ownership to
non-controlling
interests in arriving at Net Income Attributable to Blackstone Inc.
The assessment of whether we consolidate a Blackstone Fund or investment vehicle we manage requires the application of significant judgment. These judgments are applied both at the time we become involved with the VIE and on an ongoing basis and include, but are not limited to:
| | • | | Determining whether our management fees, Incentive Fees or Performance Allocations represent variable interests – We make judgments as to whether the fees we earn are commensurate with the level of effort required for those fees and at market rates. In making this judgment, we consider, among other things, the extent of third party investment in the entity and the terms of any other interests we hold in the VIE. |
| | • | | Determining whether kick-out rights are substantive – We make judgments as to whether the third party investors in a partnership entity have the ability to remove the general partner, the investment manager or its equivalent, or to dissolve (liquidate) the partnership entity, through a simple majority vote. This includes an evaluation of whether barriers to exercise these rights exist. |
| | • | | Concluding whether Blackstone has an obligation to absorb losses or the right to receive benefits that could potentially be significant to the VIE – As there is no explicit threshold in GAAP to define “potentially significant,” management must apply judgment and evaluate both quantitative and qualitative factors to conclude whether this threshold is met. |
For a description of our accounting policy on revenue recognition, see Note 2. “Summary of Significant Accounting Policies — Revenue Recognition” in the “Notes to Consolidated Financial Statements” in “—Item 8. Financial Statements and Supplementary Data.” For an additional description of the nature of our revenue arrangements, including how management fees, Incentive Fees, and Performance Allocations are generated, please refer to “Part I. Item 1. Business — Fee Structure/Incentive Arrangements.” The following discussion is intended to provide supplemental information about how the application of revenue recognition principles impact our financial results, and management’s process for implementing those principles including areas of significant judgment.
Management and Advisory Fees, Net
— Blackstone earns base management fees from its customers at a fixed percentage of a calculation base which is typically assets under management, net asset value, gross asset value, total assets, committed capital or invested capital. The range of management fee rates and the calculation base from which they are earned, generally, are as follows:
On private equity, real estate, and certain of our multi-asset investing and credit-focused funds:
| | • | | 0.25% to 1.75% of committed capital or invested capital during the investment period, |
| | • | | 0.25% to 1.50% of invested capital, committed capital or investment fair value subsequent to the investment period for private equity and real estate funds, and |
| | • | | 1.00% to 1.50% of invested capital or net asset value subsequent to the investment period for certain of our multi-asset investing and credit-focused funds. |
On real estate and credit-focused funds structured like hedge funds:
| | • | | 0.50% to 1.00% of net asset value. |
On credit separately managed accounts:
| | • | | 0.20% to 1.35% of net asset value or total assets. |
On real estate separately managed accounts:
| | • | | 0.35% to 2.00% of invested capital, net operating income or net asset value. |
On insurance separately managed accounts and investment vehicles:
| | • | | 0.25% to 1.00% of net asset value. |
On funds of hedge funds, certain hedge funds and separately managed accounts invested in hedge funds:
| | • | | 0.20% to 1.50% of net asset value. |
| | • | | 0.20% to 0.50% of the aggregate par amount of collateral assets, including principal cash. |
On credit-focused registered and
non-registered
investment companies:
| | • | | 0.25% to 1.25% of total assets or net asset value. |
The investment adviser of BXMT receives annual management fees based on 1.50% of BXMT’s net proceeds received from equity offerings and accumulated “distributable earnings” (which is generally equal to its GAAP net income excluding certain
non-cash
and other items), subject to certain adjustments. The investment advisers of BREIT and BEPIF receive a management fee of 1.25% per annum of net asset value, payable monthly.
Management fee calculations based on committed capital or invested capital are mechanical in nature and therefore do not require the use of significant estimates or judgments. Management fee calculations based on net asset value, total assets, or investment fair value depend on the fair value of the underlying investments within the funds. Estimates and assumptions are made when determining the fair value of the underlying investments within the funds and could vary depending on the valuation methodology that is used as well as economic conditions. See “—Fair Value” below for further discussion of the judgment required for determining the fair value of the underlying investments.
— Performance Allocations are made to the general partner based on cumulative fund performance to date, subject to a preferred return to limited partners. Blackstone has concluded that investments made alongside its limited partners in a partnership which entitle Blackstone to a Performance Allocation represent equity method investments that are not in the scope of the GAAP guidance on accounting for revenues from contracts with customers. Blackstone accounts for these arrangements under the equity method of accounting. Under the equity method, Blackstone’s share of earnings (losses) from equity method investments is determined using a balance sheet approach referred to as the hypothetical liquidation at book value (“HLBV”) method. Under the HLBV method, at the end of each reporting period Blackstone calculates the accrued Performance Allocations that would be due to Blackstone for each fund pursuant to the fund agreements as if the fair value of the underlying investments were realized as of such date, irrespective of whether such amounts have been realized. Performance Allocations are subject to clawback to the extent that the Performance Allocation received to date exceeds the amount due to Blackstone based on cumulative results.
The change in the fair value of the investments held by certain Blackstone Funds is a significant input into the accrued Performance Allocation calculation and accrual for potential repayment of previously received Performance Allocations. Estimates and assumptions are made when determining the fair value of the underlying investments within the funds. See “—Fair Value” below for further discussion related to significant estimates and assumptions used for determining fair value of the underlying investments.
Blackstone uses fair value throughout the reporting process. For a description of our accounting policies related to valuation, see Note 2. “Summary of Significant Accounting Policies — Fair Value of Financial Instruments” and “Summary of Significant Accounting Policies — Investments at Fair Value” in the “Notes to Consolidated
Financial Statements” in “—Item 8. Financial Statements and Supplementary Data” of this filing. The following discussion is intended to provide supplemental information about how the application of fair value principles impact our financial results, and management’s process for implementing those principles including areas of significant judgment.
The fair value of the investments held by Blackstone Funds is the primary input to the calculation of certain of our management fees, Incentive Fees, Performance Allocations and the related Compensation we recognize. Generally, Blackstone Funds are accounted for as investment companies under the American Institute of Certified Public Accountants Audit and Accounting Guide,
, and in accordance with the GAAP guidance on investment companies and reflect their investments, including majority-owned and controlled investments (the “Portfolio Companies”), at fair value. In the absence of observable market prices, we utilize valuation methodologies applied on a consistent basis and assumptions that we believe market participants would use to determine the fair value of the investments. For investments where little market activity exists management’s determination of fair value is based on the best information available in the circumstances, which may incorporate management’s own assumptions and involves a significant degree of judgment, and the consideration of a combination of internal and external factors, including the appropriate risk adjustments for
non-performance
and liquidity risks.
Blackstone has also elected the fair value option for certain instruments it owns directly, including loans and receivables, investments in private debt securities and other proprietary investments. Blackstone is required to measure certain financial instruments at fair value, including debt instruments, equity securities and freestanding derivatives.
Fair Value of Investments or Instruments that are Publicly Traded
Securities that are publicly traded and for which a quoted market exists will be valued at the closing price of such securities in the principal market in which the security trades, or in the absence of a principal market, in the most advantageous market on the valuation date. When a quoted price in an active market exists, no block discounts or control premiums are permitted regardless of the size of the public security held. In some cases, securities will include legal and contractual restrictions limiting their purchase and sale for a period of time. A discount to publicly traded price may be appropriate in instances where a legal restriction is a characteristic of the security, such as may be required under SEC Rule 144. The amount of the discount, if taken, shall be determined based on the time period that must pass before the restricted security becomes unrestricted or otherwise available for sale.
Fair Value of Investments or Instruments that are not Publicly Traded
Investments for which market prices are not observable include private investments in the equity or debt of operating companies or real estate properties. Our primary methodology for determining the fair values of such investments is generally the income approach which provides an indication of fair value based on the present value of cash flows that a business, security, or property is expected to generate in the future. The most widely used methodology under the income approach is the discounted cash flow method which includes significant assumptions about the underlying investment’s projected net earnings or cash flows, discount rate, capitalization rate and exit multiple. Our secondary methodology, generally used to corroborate the results of the income approach, is typically the market approach. The most widely used methodology under the market approach relies upon valuations for comparable public companies, transactions, or assets, and includes making judgments about which companies, transactions, or assets are comparable. Depending on the facts and circumstances associated with the investment, different primary and secondary methodologies may be used including option value, contingent claims or scenario analysis, yield analysis, projected cash flow through maturity or expiration, discount to sale, probability weighted methods or recent round of financing.
In certain cases debt and equity securities are valued on the basis of prices from an orderly transaction between market participants provided by reputable dealers or pricing services. In determining the value of a particular investment, pricing services may use certain information with respect to transactions in such investments, quotations from dealers, pricing matrices and market transactions in comparable investments and various relationships between investments.
Management Process on Fair Value
Due to the importance of fair value throughout the consolidated financial statements and the significant judgment required to be applied in arriving at those fair values, we have developed a process around valuation that incorporates several levels of approval and review from both internal and external sources. Investments held by Blackstone Funds and investment vehicles are valued on at least a quarterly basis by our internal valuation or asset management teams, which are independent from our investment teams. For investments held by vehicles managed by more than one business unit, Blackstone has developed a process designed to facilitate coordination and alignment, as appropriate, of the fair value of
in-scope
investments across business units.
For investments valued utilizing the income method and where Blackstone has information rights, we generally have a direct line of communication with each of the Portfolio Companies’ and underlying assets’ finance teams and collect financial data used to support projections used in a discounted cash flow analysis. The valuation team then analyzes the data received and updates the valuation models reflecting any changes in the underlying cash flow projections, weighted-average cost of capital, exit multiple or capitalization rate, and any other valuation input relevant to economic conditions.
The results of all valuations of investments held by Blackstone Funds and investment vehicles are reviewed by the relevant business unit’s valuation
sub-committee,
which is comprised of key personnel from the business unit, typically the chief investment officer, chief operating officer, chief financial officer, chief compliance officer (or their respective equivalents where applicable) and other senior managing directors in the business. To further corroborate results, each business unit also generally obtains either a positive assurance opinion or a range of value from an independent valuation party, at least annually for internally prepared valuations for investments that have been held by Blackstone Funds and investment vehicles for greater than a year and quarterly for certain investments. Our firmwide valuation committee, chaired by our Chief Financial Officer and comprised of senior members of our businesses and representatives from corporate functions, including legal and finance, reviews the valuation process for investments held by us and our investment vehicles, including the application of appropriate valuation standards on a consistent basis. Each quarter, the valuation process is also reviewed by the audit committee of our board of directors, which is comprised of our
non-employee
directors.
For a description of our accounting policy on taxes and additional information on taxes see Note 2. “Summary of Significant Accounting Policies” and Note 15. “Income Taxes,” in the “Notes to Consolidated Financial Statements” in “—Item 8. Financial Statements and Supplementary Data” of this filing.
Our provision for income taxes is composed of current and deferred taxes. Current income taxes approximate taxes to be paid or refunded for the current period. Deferred income taxes reflect the net tax effects of temporary differences between the financial reporting and tax bases of assets and liabilities and are measured using the applicable enacted tax rates and laws that will be in effect when such differences are expected to reverse.
Additionally, significant judgment is required in estimating the provision for (benefit from) income taxes, current and deferred tax balances (including valuation allowance), accrued interest or penalties and uncertain tax positions. In evaluating these judgments, we consider, among other items, projections of taxable income (including the character of such income), beginning with historic results and incorporating assumptions of the amount of future pretax operating income. These assumptions about future taxable income require significant judgment and
are consistent with the plans and estimates that Blackstone uses to manage its business. To the extent any portion of the deferred tax assets are not considered to be more likely than not to be realized, a valuation allowance is recorded.
Revisions in estimates and/or actual costs of a tax assessment may ultimately be materially different from the recorded accruals and unrecognized tax benefits, if any.
Recent Accounting Developments
Information regarding recent accounting developments and their impact on Blackstone, if any, can be found in Note 2. “Summary of Significant Accounting Policies” in the “Notes to Consolidated Financial Statements” in “—Item 8. Financial Statements and Supplementary Data” of this filing.
Interbank Offered Rates Transition
Certain jurisdictions are currently reforming or phasing out their benchmark interest rates, most notably LIBOR across multiple currencies. Most such reforms and phase outs, including all tenors of U.S. dollar LIBOR, became effective on or prior to June 30, 2023, though some rates may persist on a synthetic basis through September 2024. Blackstone has taken steps to prepare for and mitigate the impact of changing base rates and continues to manage transition efforts and evaluate the impact of prospective changes on existing transactions and contractual arrangements. See “Part I. Item 1A. Risk Factors — Risks Related to Our Business — Interest rates on our and our funds’ portfolio companies’ outstanding financial instruments have been and might in the future be subject to change based on regulatory developments, which could adversely affect our investment returns and our and our portfolio companies’ borrowing costs.”
Item 8. Financial Statements and Supplementary Data
Index to Consolidated Financial Statements
| | | | |
| | | 95 | |
| |
| | | 98 | |
| |
| | | 100 | |
| |
| | | 101 | |
| |
| | | 102 | |
| |
| | | 105 | |
| |
| | | 107 | |
Report of Independent Registered Public Accounting Firm
To the Stockholders and the Board of Directors of Blackstone Inc.:
Opinions on the Financial Statements and Internal Control over Financial Reporting
We have audited the accompanying consolidated statements of financial condition of Blackstone Inc. and subsidiaries (“Blackstone”) as of December 31, 2023 and 2022, the related consolidated statements of operations, comprehensive income, changes in equity, and cash flows for each of the three years in the period ended December 31, 2023, and the related notes (collectively referred to as the “financial statements”). We also have audited Blackstone’s internal control over financial reporting as of December 31, 2023, based on criteria established in
Internal Control — Integrated Framework (2013)
issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Blackstone as of December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2023, in conformity with accounting principles generally accepted in the United States of America. Also, in our opinion, Blackstone maintained, in all material respects, effective internal control over financial reporting as of December 31, 2023, based on criteria established in
Internal Control — Integrated Framework (2013)
issued by COSO.
Blackstone’s management is responsible for these financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in management’s report on internal control over financial reporting (not presented herein). Our responsibility is to express an opinion on these financial statements and an opinion on Blackstone’s internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to Blackstone in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.
Our audits of the financial statements included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures to respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in
accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (a) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company, (b) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company, and (c) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (a) relates to accounts or disclosures that are material to the financial statements and (b) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Fair Value of Certain Underlying Investments to determine Performance Allocations and Accrued Performance Allocations — Refer to Notes 2 and 4 to the financial statements
Critical Audit Matter Description
Blackstone, as a general partner, is entitled to an allocation of income from certain carry fund and open-ended structures (“Blackstone Funds”) assuming certain investment returns are achieved, referred to as “Performance Allocations”. Performance Allocations in carry fund structures are made based on cumulative fund performance to date, subject to a preferred return to limited partners. Performance Allocations in open-ended structures are based on fund or vehicle performance over a period of time, subject to a high water mark and preferred return to limited partners or investors. The change in the fair value of the underlying investments held by the Blackstone Funds is the significant input into this calculation.
As the fair value of underlying investments varies between reporting periods, adjustments are made to amounts recorded as Accrued Performance Allocations to reflect either (a) positive performance resulting in an increase in the Accrued Performance Allocation or (b) negative performance that would cause the amount due to the general partner to be less than the amount previously recognized as revenue, resulting in a negative adjustment to the Accrued Performance Allocation to the general partner.
We considered the valuation of certain investments without readily determinable fair values used in the calculation of Performance Allocations and Accrued Performance Allocations as a critical audit matter because of the valuation techniques, assumptions, market impacts and the degree of subjectivity of certain unobservable inputs used in the valuation. Auditing the fair value of these investments required a high degree of auditor judgment and increased effort, including the involvement of our internal fair value specialists as needed, who possess significant fair value methodology and modeling expertise.
How the Critical Audit Matter Was Addressed in the Audit
Our audit procedures related to testing the fair values of certain investments without readily determinable fair values included the following, among others:
| | | | We assessed the design and tested the operating effectiveness of controls, including those related to management’s review of the techniques and assumptions used in the determination of fair value. |
| | | | We evaluate the appropriateness of management’s assumptions through independent analysis and comparison to external sources. |
| | | | We utilized more experienced audit team members and, as needed, our internal fair value specialists, to assist in the evaluation of management’s valuation methodologies and assumptions (or “inputs”). |
| | | | We altered the nature, timing and extent of our procedures to focus our test on evaluating relevant inputs that required a higher degree of management judgment (e.g., cash flow projections, guideline public companies, certain components of the discount rates, yields, capitalization rates and exit multiples used in the calculation of the terminal value). Our procedures included testing the underlying source information of the assumptions, as well as developing a range of independent estimates and comparing those to the inputs used by management. |
| | | | We evaluated management’s valuation methodologies and modeling techniques for consistency with the expected methodologies of market participants in developing an estimate of fair value. |
| | | | We evaluated the impact of current market events and conditions, as well as relevant comparable transactions, on the valuation techniques and assumptions used by management (e.g., industry, sector and geographic location performance, cash flow projections, other market fundamentals, and interest rates). |
| | | | When applicable, we inspected industry reports to evaluate the consistency of current valuations with expected industry performance and inclusion of significant economic or industry events. |
| | | | We evaluated management’s ability to accurately estimate fair value by comparing previous estimates of fair value to investment transactions with third parties. |
/s/ DELOITTE & TOUCHE LLP
February 23, 2024 except for Notes 1, 3, 4, and 20 to the financial statements as it relates to the recast of historical
segment
reporting financial information, as to which the date is November 22, 2024
We have served as Blackstone’s auditor since 2006.
Consolidated Statements of Financial Condition
(Dollars in Thousands, Except Share Data)
| | | | | | | | |
| | | | | |
| | | | | |
| | | | | | | | |
Cash and Cash Equivalents | | $ | 2,955,866 | | | $ | 4,252,003 | |
Cash Held by Blackstone Funds and Other | | | 316,197 | | | | 241,712 | |
| | | 26,146,622 | | | | 27,553,251 | |
| | | 193,365 | | | | 462,904 | |
| | | 4,466,521 | | | | 4,146,707 | |
| | | 201,208 | | | | 217,287 | |
| | | 1,890,202 | | | | 1,890,202 | |
| | | 944,848 | | | | 800,458 | |
| | | 841,307 | | | | 896,981 | |
| | | 2,331,394 | | | | 2,062,722 | |
| | | | | | | | |
| | $ | 40,287,530 | | | $ | 42,524,227 | |
| | | | | | | | |
| | |
| | | | | | | | |
| | $ | 11,304,059 | | | $ | 12,349,584 | |
| | | 2,393,410 | | | | 2,118,481 | |
Accrued Compensation and Benefits | | | 5,247,766 | | | | 6,101,801 | |
Operating Lease Liabilities | | | 989,823 | | | | 1,021,454 | |
Accounts Payable, Accrued Expenses and Other Liabilities | | | 2,277,258 | | | | 1,251,840 | |
| | | | | | | | |
| | | 22,212,316 | | | | 22,843,160 | |
| | | | | | | | |
| | |
Commitments and Contingencies | | | | | | | | |
| | |
Redeemable Non-Controlling Interests in Consolidated Entities | | | 1,179,073 | | | | 1,715,006 | |
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| | |
| | | | | | | | |
Stockholders’ Equity of Blackstone Inc. | | | | | | | | |
Common Stock, $0.00001 par value, 90 billion shares authorized, (719,358,114 shares issued and outstanding as of December 31, 2023; 710,276,923 shares issued and outstanding as of December 31, 2022) | | | 7 | | | | 7 | |
Series I Preferred Stock, $0.00001 par value, 999,999,000 shares authorized, (1 share issued and outstanding as of December 31, 2023 and December 31, 2022) | | | — | | | | — | |
Series II Preferred Stock, $0.00001 par value, 1,000 shares authorized, (1 share issued and outstanding as of December 31, 2023 and December 31, 2022) | | | — | | | | — | |
| | | 6,175,190 | | | | 5,935,273 | |
| | | 660,734 | | | | 1,748,106 | |
Accumulated Other Comprehensive Loss | | | (19,133 | ) | | | (27,475 | ) |
| | | | | | | | |
Total Stockholders’ Equity of Blackstone Inc. | | | 6,816,798 | | | | 7,655,911 | |
Non-Controlling Interests in Consolidated Entities | | | 5,177,255 | | | | 5,056,480 | |
Non-Controlling Interests in Blackstone Holdings | | | 4,902,088 | | | | 5,253,670 | |
| | | | | | | | |
| | | 16,896,141 | | | | 17,966,061 | |
| | | | | | | | |
Total Liabilities and Equity | | $ | 40,287,530 | | | $ | 42,524,227 | |
| | | | | | | | |
See notes to consolidated financial statements.
Consolidated Statements of Financial Condition
The following presents the asset and liability portion of the consolidated balances presented in the Consolidated Statements of Financial Condition attributable to consolidated Blackstone Funds which are variable interest entities. The following assets may only be used to settle obligations of these consolidated Blackstone Funds and these liabilities are only the obligations of these consolidated Blackstone Funds and they do not have recourse to the general credit of Blackstone.
| | | | | | | | |
| | | | | |
| | | | | |
| | | | | | | | |
Cash Held by Blackstone Funds and Other | | $ | 316,197 | | | $ | 241,712 | |
| | | 4,319,483 | | | | 5,136,542 | |
| | | 6,995 | | | | 55,223 | |
| | | 12,762 | | | | 7,152 | |
| | | 770 | | | | 2,159 | |
| | | | | | | | |
| | $ | 4,656,207 | | | $ | 5,442,788 | |
| | | | | | | | |
| | |
| | | | | | | | |
| | $ | 687,122 | | | $ | 1,450,000 | |
| | | 123,909 | | | | 82,345 | |
Accounts Payable, Accrued Expenses and Other Liabilities | | | 391,172 | | | | 25,858 | |
| | | | | | | | |
| | $ | 1,202,203 | | | $ | 1,558,203 | |
| | | | | | | | |
See notes to consolidated financial statements.
Consolidated Statements of Operations
(Dollars in Thousands, Except Share and Per Share Data)
| | | | | | | | | | | | |
| | | |
| | | | | | | |
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Management and Advisory Fees, Net | | $ | 6,671,260 | | | $ | 6,303,315 | | | $ | 5,170,707 | |
| | | | | | | | | | | | |
| | | 695,171 | | | | 525,127 | | | | 253,991 | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | 2,223,841 | | | | 5,381,640 | | | | 5,653,452 | |
| | | (1,691,668 | ) | | | (3,435,056 | ) | | | 8,675,246 | |
| | | | | | | | | | | | |
| | | 303,823 | | | | 850,327 | | | | 1,003,822 | |
| | | (603,154 | ) | | | (1,563,849 | ) | | | 1,456,201 | |
| | | | | | | | | | | | |
| | | 232,842 | | | | 1,233,062 | | | | 16,788,721 | |
| | | | | | | | | | | | |
Interest and Dividend Revenue | | | 516,497 | | | | 271,612 | | | | 160,643 | |
| | | (92,929 | ) | | | 184,557 | | | | 203,086 | |
| | | | | | | | | | | | |
| | | 8,022,841 | | | | 8,517,673 | | | | 22,577,148 | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
Compensation and Benefits | | | | | | | | | | | | |
| | | 2,785,447 | | | | 2,569,780 | | | | 2,161,973 | |
Incentive Fee Compensation | | | 281,067 | | | | 207,998 | | | | 98,112 | |
Performance Allocations Compensation | | | | | | | | | | | | |
| | | 900,859 | | | | 2,225,264 | | | | 2,311,993 | |
| | | (654,403 | ) | | | (1,470,588 | ) | | | 3,778,048 | |
| | | | | | | | | | | | |
Total Compensation and Benefits | | | 3,312,970 | | | | 3,532,454 | | | | 8,350,126 | |
General, Administrative and Other | | | 1,117,305 | | | | 1,092,671 | | | | 917,847 | |
| | | 431,868 | | | | 317,225 | | | | 198,268 | |
| | | 118,987 | | | | 30,675 | | | | 10,376 | |
| | | | | | | | | | | | |
| | | 4,981,130 | | | | 4,973,025 | | | | 9,476,617 | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
Change in Tax Receivable Agreement Liability | | | (27,196 | ) | | | 22,283 | | | | (2,759 | ) |
Net Gains (Losses) from Fund Investment Activities | | | (56,801 | ) | | | (105,142 | ) | | | 461,624 | |
| | | | | | | | | | | | |
Total Other Income (Loss) | | | (83,997 | ) | | | (82,859 | ) | | | 458,865 | |
| | | | | | | | | | | | |
Income Before Provision for Taxes | | | 2,957,714 | | | | 3,461,789 | | | | 13,559,396 | |
| | | 513,461 | | | | 472,880 | | | | 1,184,401 | |
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