The Blackstone Group Reports First Quarter 2011 Results

By PYMNTS | April 21, 2011

The Blackstone Group L.P. (NYSE: BX) today reported its first quarter

2011 results.

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Economic Net Income (“ENI”) was $568.1 million for the first quarter of

2011, an increase of $207.7 million compared to ENI for the first

quarter of 2010. The increase in ENI was driven principally by strong

investment performance across Blackstone’s investment segments, which

produced $726.9 million in Performance Fees and Investment Income, more

than twice the $343.0 million in the first quarter of 2010.

Blackstone’s Fee-Earning Assets Under Management and Total Assets Under

Management continued to demonstrate consistently strong growth, rising

to a record $124.0 billion and $150.0 billion, respectively, driven both

by net inflows and investment appreciation. Blackstone funds had

$31.8 billion of committed but uninvested capital, or “dry powder”, at

the end of the first quarter of 2011, a record level.

For the first quarter of 2011, Total Segment Revenues were $1.2 billion,

up 64% from the first quarter of 2010. The increase was driven by higher

Performance Fees across all the investment segments and an increase in

Total Management Fees to $425.7 million, up 17% from $362.6 million in

the prior year’s first quarter.

Total Segment Expenses were $509.9 million for the first quarter of

2011, an increase from $326.0 million for the first quarter of 2010,

driven largely by increased accruals for Performance Fee Compensation of

$177.1 million for the first quarter of 2011. Compensation, excluding

Performance Fee Compensation, was up 21% to $229.9 million. Blackstone’s

non-compensation expenses were up 41% from the first quarter of 2010

driven mostly by fund-raising and financing activities.

Net Fee Related Earnings from Operations were $93.2 million for the

first quarter of 2011, down slightly from $98.7 million for the first

quarter of 2010 reflecting increased fund-raising and financing expenses.

GAAP results for the first quarter of 2011 included Revenues of

$1.2 billion, compared to $701.2 million for the first quarter of 2010,

and Net Income Attributable to The Blackstone Group L.P. of

$42.7 million, compared to a net loss of $121.4 million for the first

quarter of 2010.

Stephen A. Schwarzman, Chairman and Chief Executive Officer, said,

“Blackstone reported our strongest quarterly earnings since becoming a

public company four years ago, as the values of all of our funds

continued to increase. In real estate, operating fundamentals continue

to improve and two of our global funds moved above their preferred

return hurdle and started accruing performance fees. Our unique mix of

businesses, each of which is a leader in its own right, gives us a

distinct competitive advantage in identifying opportunities for value

creation and attracting new capital. Every one of our investing

businesses grew sharply year over year, and Blackstone ended the first

quarter with record total assets under management of $150 billion, up

from $105 billion this time last year.”

The table below details Blackstone’s ENI, Net Fee Related Earnings from

Operations, Distributable Earnings and Fee-Earning Assets Under

Management as of, and for, the first quarters of 2011 and 2010. ENI,

Total Segments includes unrealized gains (losses) and the direct

compensation impact related to those gains (losses), but excludes IPO

and acquisition-related accounting charges.

			As of and for the Three
			Months Ended March 31,				Variance
			2011		2010		$		%
			(Dollars in Thousands, Except per Unit Amounts)
Economic Net Income, Total Segments			$	654,305	$	385,102	$	269,203	70%
Provision for Income Taxes (a)				86,206		24,709		61,497	N/M
Economic Net Income, After Taxes			$	568,099	$	360,393	$	207,706	58%

Economic Net Income, After Taxes per Adjusted Unit (b)			$	0.51	$	0.32	$	0.19	59%
Net Fee Related Earnings from Operations			$	93,180	$	98,745	$	(5,565)	-6%
Distributable Earnings			$	196,549	$	148,696	$	47,853	32%
Distributable Earnings per Common Unit (c)			$	0.18	$	0.14	$	0.04	29%

Fee-Earning Assets Under Management:
	Private Equity		$	35,892,804	$	25,173,936	$	10,718,868	43%
	Real Estate			26,454,012		23,820,697		2,633,315	11%
	Hedge Fund Solutions			35,847,002		28,902,220		6,944,782	24%
	Credit Businesses			25,838,878		20,173,319		5,665,559	28%
		Total Fee-Earning Assets Under Management	$	124,032,696	$	98,070,172	$	25,962,524	26%

_________________________________

(a)

Represents the implied provision for income taxes calculated using a

similar methodology applied in calculating the tax provision for The

Blackstone Group L.P.

(b)

Adjusted Units represents the weighted-average fully diluted unit

count for Economic Net Income purposes. A reconciliation of this

item to the comparable GAAP measure is presented in Exhibit 4 to

this release.

(c)

See Exhibit 4 for the calculation of Distributable Earnings Units

Outstanding.

SEGMENT REVIEW

Private Equity

Private Equity had revenues of $273.7 million for the first quarter of

2011 compared to $276.8 million in 2010. Increases in Performance Fees

and Management Fees of 25% and 10%, respectively, were offset by a

decline in Investment Income of $37.2 million.

Private Equity had Realized Performance Fees of $82.4 million resulting

from realizations in BCP IV and Realized Investment Income of

$17.9 million resulting from realizations in both its BCP IV and BCP V

funds.

The appreciation of the underlying assets for Blackstone’s contributed

Private Equity funds was 4.9% for the first quarter of 2011. BCP’s

privately held portfolio companies continued to perform well on a

revenue and EBITDA basis while its publicly held investments benefited

from an increase in public stock markets, as well as public offerings of

Nielsen and Bank United. As of March 31, 2011, the unrealized value and

cumulative realized proceeds, before carried interest, fees and

expenses, of Blackstone’s contributed Private Equity funds represented

1.5 times investors’ original investments.

Economic Net Income was $175.5 million for the first quarter of 2011,

down from $193.2 million for the first quarter of 2010, a result of

lower Investment Income and increased operating expenses.

BCP V closed its investment period on January 7, 2011, thereby

commencing the investment period for BCP VI, which is now included in

Fee-Earning Assets Under Management. Fee-Earning Assets Under Management

were $35.9 billion compared to $25.2 billion in the first quarter of

2010 principally due to the start of BCP VI’s investment period.

Dry powder for Private Equity, which is inclusive of amounts related to

BCP VI, was $16.9 billion as of March 31, 2011. Limited Partner Capital

Invested during the first quarter of 2011 totaled $652.9 million, an

increase from $387.9 million invested during the first quarter of 2010.

Blackstone’s Private Equity segment’s funds had $1.7 billion of Limited

Partner Capital committed to transactions which had not yet closed as of

March 31, 2011.

Real Estate

Real Estate had revenues of $555.6 million for the first quarter of

2011, compared with revenues of $152.2 million for the first quarter of

2010. Improved operating performance, primarily across the hospitality

and office segments, led to an increase in the real estate investments’

carrying values, which drove an increase in Performance Fees.

As of March 31, 2011, the unrealized value and cumulative realized

proceeds, before carried interest, fees and expenses, of the Real Estate

segment’s contributed carry funds represented 1.4 times investors’

original investment.

The appreciation of the underlying assets for Blackstone’s contributed

Real Estate carry funds was 8.7% for the first quarter of 2011, and for

the Real Estate debt hedge funds was 4.5% for the first quarter of 2011.

ENI for the Real Estate segment was $361.0 million for the first quarter

of 2011 compared to $89.3 million for the first quarter of 2010, driven

principally by the increase in Performance Fees noted above.

Fee-Earning Assets Under Management were $26.5 billion compared to

$23.8 billion for the first quarter of 2010. Fee-Earning Assets Under

Management increased principally due to the commencement of Blackstone’s

management of the Merrill Lynch Asia assets which added $2.1 billion in

Fee-Earning Assets Under Management in the fourth quarter of 2010.

Dry powder for Real Estate was $8.6 billion as of March 31, 2011.

Limited Partner Capital Invested during the first quarter of 2011 was

$654.4 million, up from $424.9 million during the first quarter of 2010.

Blackstone’s Real Estate segment’s funds had $2.4 billion of Limited

Partner Capital committed to transactions which had not yet closed as of

March 31, 2011. This active investment pace has resulted in the

segment’s BREP VI fund reaching approximately 82% invested or committed

capital as of the end of the first quarter of 2011. Accordingly,

Blackstone has commenced fund-raising for its next major real estate

fund.

Hedge Fund Solutions

Hedge Fund Solutions had revenues of $105.4 million for the first

quarter of 2011, compared with revenues of $89.2 million for the first

quarter of 2010. The increase from the first quarter of 2010 was

principally due to an increase in Total Management Fees of 18% to

$76.2 million for the first quarter of 2011.

The appreciation of the underlying assets for Blackstone’s Hedge Fund

Solutions’ funds was 2% for the first quarter of 2011.

ENI for the Hedge Funds Solutions segment was up 10% to $58.1 million

for the first quarter of 2011 compared to $52.6 million for the first

quarter of 2010 as higher Fee-Earning Assets Under Management drove

increases in Management and Performance Fees.

Fee-Earning Assets Under Management for the segment grew 24% to

$35.8 billion from $28.9 billion at the end of the first quarter of

2010. The increase from the prior year period was principally due to net

inflows and market appreciation across the segment. Net inflows for

Blackstone’s Hedge Fund Solutions business came primarily from its

commingled and customized investment products, hedge fund manager

seeding platform and long only solutions business.

As of March 31, 2011, 74% of the Fee-Earnings Assets Under Management in

Blackstone’s Hedge Fund Solutions products which were eligible to earn

performance fees were above their respective high water marks.

Credit Businesses

Credit Businesses had revenues of $156.7 million for the first quarter

of 2011, compared with revenues of $115.4 million for the first quarter

of 2010. The increase from the first quarter of 2010 was due to an

increase in Performance Fees of 47% to $95.0 million for the first

quarter of 2011, resulting from strong fund performance across the

segment, and an increase in Total Management Fees of 40% to

$55.3 million.

The appreciation of the underlying assets for Blackstone’s

credit-oriented business was 8.1% for the flagship hedge funds, 9.0% for

the mezzanine funds and 9.4% for the rescue lending funds for the first

quarter of 2011.

ENI for the Credit Businesses segment was up 45% to $60.5 million for

the first quarter of 2011 compared to $41.8 million for the first

quarter of 2010 as higher Fee-Earning Assets Under Management and

favorable market conditions drove increases in Management and

Performance Fees.

Fee-Earning Assets Under Management for the segment increased 28% to

$25.8 billion from $20.2 billion for the first quarter of 2010. The long

only platform had particularly strong year over year growth in

Fee-Earning Assets Under Management, increasing to $19.3 billion, up

$5.1 billion, or 36%, from the first quarter of last year as the segment

continued to launch new products and strategies. Additionally,

Blackstone announced the acquisition of Allied Irish Banks’ CLO

platform, which will add $2.1 billion of Fee-Earning Assets Under

Management when that acquisition closes sometime in the second quarter.

As of March 31, 2011, 99% of the Fee-Earning Assets Under Management in

Blackstone’s credit-oriented hedge funds which were eligible to earn

performance fees were above their respective high water marks compared

to 88% as of March 31, 2010.

Dry powder of drawdown funds for the Credit Businesses segment was

$4.1 billion as of March 31, 2011.

Financial Advisory

Revenues were $72.8 million for the first quarter of 2011, a modest

decrease from $77.5 million for the first quarter of 2010. The decrease

in segment revenues was primarily driven by decreases in Blackstone

Advisory Partners’ business as several transactions closed in late 2010

instead of 2011 and a decrease in the restructuring and reorganization

business largely due to the improving economy as well as the continued

strength of the credit markets. These decreases were largely offset by

an increase in fees earned by Blackstone’s fund placement business as

the institutional fund-raising environment improved compared to the

first quarter of 2010.

ENI was a loss of $0.9 million for the first quarter of 2011 compared to

income of $8.2 million for the first quarter of 2010.

CAPITAL AND LIQUIDITY

As of March 31, 2011, Blackstone had $455.8 million in cash,

$976.1 million invested in Blackstone’s Treasury cash management

strategies, $254.0 million invested in liquid Blackstone funds and

$1.7 billion invested in illiquid Blackstone funds. Long-term debt

totaled $1.0 billion in borrowings from the 2010 and 2009 bond

issuances. Blackstone has no borrowings outstanding against its

$1 billion revolving credit facility. On April 8, 2011, Blackstone and

its lenders amended the revolving credit facility to extend its maturity

from March 23, 2013 to April 8, 2016.

DISTRIBUTION

The Blackstone Group L.P. has declared a quarterly distribution of

$0.10 per common unit to record holders of common units at the close of

business on May 16, 2011. This distribution will be paid on May 31, 2011.

Blackstone’s general partner maintains the right to determine the amount

to be distributed from The Blackstone Group L.P.’s net after-tax share

of its annual Distributable Earnings. Distributable Earnings will only

be a starting point for the determination of the amount to be

distributed to unitholders because in determining the amount to be

distributed Blackstone will subtract from Distributable Earnings any

amounts determined by its general partner to be necessary or appropriate

to provide for the conduct of its business, to make appropriate

investments in its business and funds, to comply with applicable law,

any of its debt instruments or other agreements, or to provide for

future distributions to its unitholders for any ensuing quarter. The

aggregate amounts of Blackstone’s distributions to unitholders will

typically be less than its Distributable Earnings for that year.

Although for calendar 2010 Blackstone distributed substantially all of

its net after-tax annual Distributable Earnings. Blackstone’s current

intention is now to distribute to its common unitholders substantially

all of The Blackstone Group L.P.’s net after-tax share of annual

Distributable Earnings less the amount of its realized investment gains.

This determination was made based on the continued pace of organic and

inorganic growth and the potential for further strategic initiatives and

the retained amount will be used for those purposes. The retained cash

will be deducted from the fourth quarter distribution which is made in

the first quarter of the ensuing calendar year. Distributions for the

first three quarters will remain unchanged at $0.10 per unit. All

distributions are subject to Blackstone’s discretion to retain

additional amounts from the amount of annual Distribituable Earnings to

be distributed as described above.

Because Blackstone will not know what its Distributable Earnings will be

for any fiscal year until the end of such year, Blackstone expects that

its first three quarterly distributions in respect of any given year

will be based on its anticipated annualized Net Fee Related Earnings. As

such, the distributions for the first three quarters are expected to be

smaller than the final quarterly distribution in respect of such year.

For the fourth quarter of 2011 Blackstone expects to pay the remaining

amount of the year’s Distributable Earnings less realized investment

gains.

All of the foregoing is subject to the qualification that the

declaration and payment of any distributions are at the sole discretion

of Blackstone’s general partner and the general partner may change its

distribution policy at any time.

Because the wholly-owned subsidiaries of The Blackstone Group L.P. must

pay taxes and make payments under the tax receivable agreements

described in Blackstone’s Annual Report on Form 10-K, the amounts

ultimately distributed by The Blackstone Group L.P. to its common

unitholders in respect of fiscal 2011 and subsequent years are expected

to be different, on a per unit basis, than the amounts distributed by

the Blackstone Holdings partnerships to the Blackstone personnel and

others who are limited partners of the Blackstone Holdings partnerships

in respect of their Blackstone Holdings partnership units.

###

Blackstone will host a conference call on April 21, 2011 at

11:00 a.m. ET to discuss first quarter 2011 results. The conference call

can be accessed by dialing (877) 391-6747 (U.S. domestic) or

+1 (617) 597-9291 (international) pass code 14994355. Additionally, the

conference call will be broadcast live over the internet and can be

accessed by all interested parties through the Investor Relations

section of The Blackstone Group’s website http://ir.blackstone.com.

For those unable to listen to the live broadcast, a replay will be

available on Blackstone’s website or by dialing (888) 286-8010 (U.S.

domestic) or +1 (617) 801-6888 (international) conference ID number

77830492, beginning approximately two hours after the event.

Blackstone expects to host conference calls to report its 2011 results

as follows: second quarter results, July 21, 2011; third quarter

results, October 20, 2011 and fourth quarter and full year results,

February 2, 2012.

About The Blackstone Group

Blackstone is one of the world’s leading investment and advisory firms.

We seek to create positive economic impact and long-term value for our

investors, the companies we invest in, the companies we advise and the

broader global economy. We do this through the commitment of our

extraordinary people and flexible capital. Our alternative asset

management businesses include the management of private equity funds,

real estate funds, hedge fund solutions, credit-oriented funds and

closed-end mutual funds. The Blackstone Group also provides various

financial advisory services, including financial and strategic advisory,

restructuring and reorganization advisory and fund placement services.

Further information is available at www.blackstone.com.

Forward-Looking Statements

This release may contain forward-looking statements within the meaning

of Section 27A of the Securities Act of 1933 and Section 21E of the

Securities Exchange Act of 1934 which reflect Blackstone’s current views

with respect to, among other things, Blackstone’s operations and

financial performance. You can identify these forward-looking statements

by the use of words such as “outlook,” “believes,” “expects,”

“potential,” “continues,” “may,” “will,” “should,” “seeks,”

“approximately,” “predicts,” “intends,” “plans,” “estimates,”

“anticipates” or the negative version of these words or other comparable

words. Such forward-looking statements are subject to various risks and

uncertainties. Accordingly, there are or will be important factors that

could cause actual outcomes or results to differ materially from those

indicated in these statements. Blackstone believes these factors include

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

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

December 31, 2010, as such factors may be updated from time to time in

its periodic filings with the SEC, which are accessible on the SEC’s

website at www.sec.gov.

These factors should not be construed as exhaustive and should be read

in conjunction with the other cautionary statements that are included in

this release and in the filings. Blackstone undertakes no obligation to

publicly update or review any forward-looking statement, whether as a

result of new information, future developments or otherwise.

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

THE BLACKSTONE GROUP L.P. Exhibit 1. Consolidated Statements of Operations (Dollars in Thousands, Except Per Unit Data)

					Quarter Ended March 31,
					2011			2010
Revenues
	Management and Advisory Fees				$	412,738		$	354,820
	Performance Fees
		Realized				96,203			54,049
		Unrealized				512,401			131,779
			Total Performance Fees			608,604			185,828
	Investment Income
		Realized				12,783			5,726
		Unrealized				107,395			149,220
			Total Investment Income			120,178			154,946
	Interest and Dividend Revenue					9,490			8,895
	Other					2,259			(3,250	)
		Total Revenues				1,153,269			701,239
Expenses
	Compensation and Benefits
		Compensation				659,483			924,950
		Performance Fee Compensation
			Realized			14,543			7,741
			Unrealized			162,525			54,600
				Total Compensation and Benefits		836,551			987,291
	General, Administrative and Other					129,386			106,379
	Interest Expense					13,803			7,185
	Fund Expenses					11,124			(141	)
		Total Expenses				990,864			1,100,714
Other Income
	Net Gains (Losses) from Fund Investment Activities					(45,191	)		171,804
Income (Loss) Before Provision (Benefit) for Taxes						117,214			(227,671	)
Provision for Taxes						38,850			9,635
Net Income (Loss)						78,364			(237,306	)
Net Income Attributable to Redeemable Non-Controlling Interests in Consolidated Entities						22,025			23,969
Net Income (Loss) Attributable to Non-Controlling Interests in Consolidated Entities						(93,081	)		135,966
Net Income (Loss) Attributable to Non-Controlling Interests in Blackstone Holdings						106,716			(275,864	)
Net Income (Loss) Attributable to The Blackstone Group L.P.					$	42,704		$	(121,377	)
Net Loss per Common Unit, Basic and Diluted								$	(0.36	)
Net Income per Common Unit, Basic					$	0.10
Net Income per Common Unit, Diluted					$	0.09

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

						Three Months Ended
																					Mar 31, 2011 vs.
						Mar 31,			Jun 30,			Sep 30,			Dec 31,			Mar 31,			Mar 31, 2010
						2010			2010			2010			2010			2011			$			%
Economic Net Income Recap, Total Segments
Revenues
	Management and Advisory Fees
		Base Management Fees				$	251,971		$	262,914		$	269,434		$	285,152		$	305,587		$	53,616		21	%
		Advisory Fees					76,568			134,099			84,541			130,932			70,252			(6,316	)	-8	%
		Transaction and Other Fees, Net *					35,260			20,617			22,948			58,923			58,363			23,103		66	%
		Management Fee Offsets **					(1,178	)		(179	)		(674	)		(282	)		(8,536	)		(7,358	)	N/M
			Total Management and Advisory Fees				362,621			417,451			376,249			474,725			425,666			63,045		17	%
	Performance Fees
		Realized					53,881			46,374			66,039			195,369			95,600			41,719		77	%
		Unrealized					132,333			(20,738	)		192,745			260,286			505,197			372,864		N/M
			Total Performance Fees				186,214			25,636			258,784			455,655			600,797			414,583		N/M
	Investment Income
		Realized					5,307			15,721			14,276			11,611			23,499			18,192		N/M
		Unrealized					151,521			87,186			128,247			134,680			102,577			(48,944	)	-32	%
			Total Investment Income				156,828			102,907			142,523			146,291			126,076			(30,752	)	-20	%
	Interest Income and Dividend Revenue						8,690			6,930			10,187			10,289			9,448			758		9	%
	Other						(3,250	)		(644	)		4,468			(1,192	)		2,259			5,509		N/M
				Total Revenues			711,103			552,280			792,211			1,085,768			1,164,246			453,143		64	%
Expenses
	Compensation and Benefits
		Compensation					190,637			220,662			210,582			237,233			229,898			39,261		21	%
		Performance Fee Compensation
			Realized				7,741			22,879			24,962			72,734			14,543			6,802		88	%
			Unrealized				54,600			(892	)		104,323			70,615			162,525			107,925		198	%
					Total Compensation and Benefits		252,978			242,649			339,867			380,582			406,966			153,988		61	%
	Other Operating Expenses						73,023			88,160			84,253			99,080			102,975			29,952		41	%
				Total Expenses			326,001			330,809			424,120			479,662			509,941			183,940		56	%
Total Economic Net Income						$	385,102		$	221,471		$	368,091		$	606,106		$	654,305		$	269,203		70	%

Total Net Fee Related Earnings from Operations						$	98,745		$	107,915		$	112,914		$	122,740		$	93,180		$	(5,565	)	-6	%
____________________
* Transaction and Other Fees, Net, are net of amounts, if any, shared with limited partners including, for Private Equity, broken deal expenses.
** Primarily placement fees.
continued…

THE BLACKSTONE GROUP L.P. Exhibit 2a. Economic Net Income and Net Fee Related Earnings from Operations – Continued (Dollars in Thousands)

						Three Months Ended
																					Mar 31, 2011 vs.
						Mar 31,			Jun 30,			Sep 30,			Dec 31,			Mar 31,			Mar 31, 2010
						2010			2010			2010			2010			2011			$			%
Private Equity
Revenues
	Management Fees
		Base Management Fees				$	65,432		$	66,795		$	66,077		$	65,003		$	79,935		$	14,503		22	%
		Transaction and Other Fees, Net *					31,972			16,367			13,348			10,556			35,342			3,370		11	%
		Management Fee Offsets **					“•			“•			(91	)		(97	)		(7,889	)		(7,889	)	N/M
			Total Management Fees				97,404			83,162			79,334			75,462			107,388			9,984		10	%
	Performance Fees
		Realized					46,175			1,106			44,814			64,774			82,389			36,214		78	%
		Unrealized					45,549			(24,020	)		45,499			84,466			32,537			(13,012	)	-29	%
			Total Performance Fees				91,724			(22,914	)		90,313			149,240			114,926			23,202		25	%
	Investment Income (Loss)																							N/M
		Realized					(495	)		3,141			9,940			2,746			17,907			18,402		N/M
		Unrealized					84,684			17,275			30,491			20,838			29,126			(55,558	)	-66	%
			Total Investment Income (Loss)				84,189			20,416			40,431			23,584			47,033			(37,156	)	-44	%
	Interest Income and Dividend Revenue						3,428			2,728			3,802			4,086			3,505			77		2	%
	Other						100			460			1,061			400			811			711		N/M
				Total Revenues			276,845			83,852			214,941			252,772			273,663			(3,182	)	-1	%
Expenses
	Compensation and Benefits
		Compensation					46,910			46,612			47,552			38,271			56,254			9,344		20	%
		Performance Fee Compensation
			Realized				6,005			128			10,783			15,711			7,718			1,713		29	%
			Unrealized				6,344			(10,296	)		18,306			6,966			5,464			(880	)	-14	%
					Total Compensation and Benefits		59,259			36,444			76,641			60,948			69,436			10,177		17	%
	Other Operating Expenses						24,431			28,677			26,359			30,122			28,713			4,282		18	%
				Total Expenses			83,690			65,121			103,000			91,070			98,149			14,459		17	%
Economic Net Income						$	193,155		$	18,731		$	111,941		$	161,702		$	175,514		$	(17,641	)	-9	%

Net Fee Related Earnings from Operations						$	28,712		$	11,464		$	17,465		$	7,355		$	23,803		$	(4,909	)	-17	%
____________________
* Transaction and Other Fees, Net, are net of amounts, if any, shared with limited partners including, for Private Equity, broken deal expenses.
** Primarily placement fees.
continued…

THE BLACKSTONE GROUP L.P. Exhibit 2a. Economic Net Income and Net Fee Related Earnings from Operations – Continued (Dollars in Thousands)

						Three Months Ended
																					Mar 31, 2011 vs.
						Mar 31,			Jun 30,			Sep 30,			Dec 31,			Mar 31,			Mar 31, 2010
						2010			2010			2010			2010			2011			$			%
Real Estate
Revenues
	Management Fees
		Base Management Fees				$	83,060		$	82,916		$	83,232		$	89,220		$	95,439		$	12,379		15%
		Transaction and Other Fees, Net *					1,942			2,979			8,538			46,455			21,543			19,601		N/M
		Management Fee Offsets **					(489	)		(110	)		(401	)		(71	)		(505	)		(16	)	-3%
			Total Management Fees				84,513			85,785			91,369			135,604			116,477			31,964		38%
	Performance Fees
		Realized					5,948			16,319			5,010			13,011			2,593			(3,355	)	-56%
		Unrealized					11,391			21,117			69,910			154,553			368,104			356,713		N/M
			Total Performance Fees				17,339			37,436			74,920			167,564			370,697			353,358		N/M
	Investment Income
		Realized					2,632			3,900			2,159			2,560			2,919			287		11%
		Unrealized					46,892			79,543			83,968			108,576			61,406			14,514		31%
			Total Investment Income				49,524			83,443			86,127			111,136			64,325			14,801		30%
	Interest Income and Dividend Revenue						2,718			2,178			3,026			3,251			3,288			570		21%
	Other						(1,876	)		(390	)		2,330			(400	)		860			2,736		N/M
				Total Revenues			152,218			208,452			257,772			417,155			555,647			403,429		N/M
Expenses
	Compensation and Benefits
		Compensation					40,150			44,528			43,219			55,280			58,501			18,351		46%
		Performance Fee Compensation
			Realized				1,524			8,895			1,806			3,619			1,230			(294	)	-19%
			Unrealized				6,937			15,999			46,182			53,746			106,501			99,564		N/M
					Total Compensation and Benefits		48,611			69,422			91,207			112,645			166,232			117,621		N/M
	Other Operating Expenses						14,290			17,647			18,584			23,668			28,366			14,076		99%
				Total Expenses			62,901			87,069			109,791			136,313			194,598			131,697		N/M
Economic Net Income						$	89,317		$	121,383		$	147,981		$	280,842		$	361,049		$	271,732		N/M

Net Fee Related Earnings from Operations						$	29,825		$	24,743		$	39,853		$	52,457		$	31,233		$	1,408		5%
____________________
* Transaction and Other Fees, Net, are net of amounts, if any, shared with limited partners.
** Primarily placement fees.
continued…

THE BLACKSTONE GROUP L.P. Exhibit 2a. Economic Net Income and Net Fee Related Earnings from Operations – Continued (Dollars in Thousands)

						Three Months Ended
																					Mar 31, 2011 vs.
						Mar 31,			Jun 30,			Sep 30,			Dec 31,			Mar 31,			Mar 31, 2010
						2010			2010			2010			2010			2011			$			%
Hedge Fund Solutions
Revenues
	Management Fees
		Base Management Fees				$	63,866		$	65,533		$	69,305		$	74,069		$	75,612		$	11,746		18%
		Transaction and Other Fees, Net *					809			870			846			1,047			727			(82	)	-10%
		Management Fee Offsets **					“•			(72	)		(163	)		(95	)		(124	)		(124	)	N/M
			Total Management Fees				64,675			66,331			69,988			75,021			76,215			11,540		18%
	Performance Fees
		Realized					2,117			1,021			872			52,616			893			(1,224	)	-58%
		Unrealized					10,413			(2,596	)		14,137			(18,972	)		19,253			8,840		85%
			Total Performance Fees				12,530			(1,575	)		15,009			33,644			20,146			7,616		61%
	Investment Income (Loss)
		Realized					(250	)		5,438			1,050			3,580			1,341			1,591		N/M
		Unrealized					11,880			(6,749	)		7,831			6,399			7,120			(4,760	)	-40%
			Total Investment Income (Loss)				11,630			(1,311	)		8,881			9,979			8,461			(3,169	)	-27%
	Interest Income and Dividend Revenue						475			353			498			543			516			41		9%
	Other						(83	)		(40	)		270			(50	)		104			187		N/M
				Total Revenues			89,227			63,758			94,646			119,137			105,442			16,215		18%
Expenses
	Compensation and Benefits
		Compensation					20,742			26,388			24,506			23,750			28,657			7,915		38%
		Performance Fee Compensation
			Realized				771			356			3,313			16,193			300			(471	)	-61%
			Unrealized				3,783			(977	)		5,075			(6,814	)		5,358			1,575		42%
					Total Compensation and Benefits		25,296			25,767			32,894			33,129			34,315			9,019		36%
	Other Operating Expenses						11,285			12,353			12,388			15,334			13,008			1,723		15%
				Total Expenses			36,581			38,120			45,282			48,463			47,323			10,742		29%
Economic Net Income						$	52,646		$	25,638		$	49,364		$	70,674		$	58,119		$	5,473		10%

Net Fee Related Earnings from Operations						$	31,542		$	26,857		$	36,082		$	29,240		$	33,136		$	1,594		5%
____________________
* Transaction and Other Fees, Net, are net of amounts, if any, shared with limited partners.
** Primarily placement fees.
continued…

THE BLACKSTONE GROUP L.P. Exhibit 2a. Economic Net Income and Net Fee Related Earnings from Operations – Continued (Dollars in Thousands)

						Three Months Ended
																					Mar 31, 2011 vs.
						Mar 31,			Jun 30,			Sep 30,			Dec 31,			Mar 31,			Mar 31, 2010
						2010			2010			2010			2010			2011			$			%
Credit Businesses
Revenues
	Management Fees
		Base Management Fees				$	39,613		$	47,670		$	50,820		$	56,860		$	54,601		$	14,988		38%
		Transaction and Other Fees, Net *					536			299			216			606			745			209		39%
		Management Fee Offsets **					(689	)		3			(19	)		(19	)		(18	)		671		97%
			Total Management Fees				39,460			47,972			51,017			57,447			55,328			15,868		40%
	Performance Fees
		Realized					(359	)		27,928			15,343			64,968			9,725			10,084		N/M
		Unrealized					64,980			(15,239	)		63,199			40,239			85,303			20,323		31%
			Total Performance Fees				64,621			12,689			78,542			105,207			95,028			30,407		47%
	Investment Income (Loss)
		Realized					3,233			3,291			658			2,518			1,235			(1,998	)	-62%
		Unrealized					7,835			(3,444	)		5,350			(269	)		4,532			(3,303	)	-42%
			Total Investment Income (Loss)				11,068			(153	)		6,008			2,249			5,767			(5,301	)	-48%
	Interest Income and Dividend Revenue						673			403			1,252			710			453			(220	)	-33%
	Other						(459	)		(332	)		330			(27	)		98			557		N/M
				Total Revenues			115,363			60,579			137,149			165,586			156,674			41,311		36%
Expenses
	Compensation and Benefits
		Compensation					28,343			26,982			28,774			39,158			30,325			1,982		7%
		Performance Fee Compensation
			Realized				(559	)		13,500			9,060			37,211			5,295			5,854		N/M
			Unrealized				37,536			(5,618	)		34,760			16,717			45,202			7,666		20%
					Total Compensation and Benefits		65,320			34,864			72,594			93,086			80,822			15,502		24%
	Other Operating Expenses						8,290			12,167			9,669			8,980			15,357			7,067		85%
				Total Expenses			73,610			47,031			82,263			102,066			96,179			22,569		31%
Economic Net Income						$	41,753		$	13,548		$	54,886		$	63,520		$	60,495		$	18,742		45%

Net Fee Related Earnings from Operations						$	2,594		$	7,695		$	13,252		$	10,028		$	8,987		$	6,393		N/M
____________________
* Transaction and Other Fees, Net, are net of amounts, if any, shared with limited partners.
** Primarily placement fees.
continued…

THE BLACKSTONE GROUP L.P. Exhibit 2a. Economic Net Income and Net Fee Related Earnings from Operations – Continued (Dollars in Thousands)

					Three Months Ended

																			Mar 31, 2011 vs.
					Mar 31,			Jun 30,			Sep 30,		Dec 31,			Mar 31,			Mar 31, 2010
					2010			2010			2010		2010			2011			$			%
Financial Advisory
Revenues
	Advisory Fees				$	76,568		$	134,099		$	84,541	$	130,932		$	70,252		$	(6,316	)	-8%
	Transaction and Other Fees, Net					1			102			“•		259			6			5		N/M
		Total Advisory and Transaction Fees				76,569			134,201			84,541		131,191			70,258			(6,311	)	-8%
	Investment Income (Loss)
		Realized				187			(49	)		469		207			97			(90	)	-48%
		Unrealized				230			561			607		(864	)		393			163		71%
			Total Investment Income (Loss)			417			512			1,076		(657	)		490			73		18%
	Interest Income and Dividend Revenue					1,396			1,268			1,609		1,699			1,686			290		21%
	Other					(932	)		(342	)		477		(1,115	)		386			1,318		N/M
				Total Revenues		77,450			135,639			87,703		131,118			72,820			(4,630	)	-6%
Expenses
	Compensation and Benefits
		Compensation				54,492			76,152			66,531		80,774			56,161			1,669		3%
				Total Compensation and Benefits		54,492			76,152			66,531		80,774			56,161			1,669		3%
	Other Operating Expenses					14,727			17,316			17,253		20,976			17,531			2,804		19%
				Total Expenses		69,219			93,468			83,784		101,750			73,692			4,473		6%
Economic Net Income (Loss)					$	8,231		$	42,171		$	3,919	$	29,368		$	(872	)	$	(9,103	)	N/M

Net Fee Related Earnings (Loss) from Operations					$	6,072		$	37,156		$	6,262	$	23,660		$	(3,979	)	$	(10,051	)	N/M

THE BLACKSTONE GROUP L.P. Exhibit 2b. Reconciliation of Income (Loss) Before Provision (Benefit) for Taxes to Total Segments Economic Net Income, of Total Segments, Economic Net Income to Net Fee Related Earnings from Operations, of Net Fee Related Earnings from Operations to Distributable Earnings and of Earnings Before Interest, Taxes and Depreciation and Amortization from Net Fee Related Earnings from Operations to Net Fee Related Earnings from Operations (Dollars in Thousands)

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

	Three Months Ended

	March 31,			June 30,			September 30,			December 31,			March 31,
	2010			2010			2010			2010			2011
Private Equity
Economic Net Income	$	193,155		$	18,731		$	111,941		$	161,702		$	175,514
Performance Fees Adjustment (a)		(91,724	)		22,914			(90,313	)		(149,240	)		(114,926	)
Investment Income (Loss) Adjustment (b)		(84,189	)		(20,416	)		(40,431	)		(23,584	)		(47,033	)
Investment Income – Blackstone’s Treasury Cash Management Strategies (c)		1,650			2,278			5,052			(3,358	)		275
Performance Fee Compensation and Benefits Adjustment (d)		12,349			(10,168	)		29,089			22,677			13,182
Taxes Payable (e)		(2,529	)		(1,875	)		2,127			(842	)		(3,209	)
Net Fee Related Earnings from Operations	$	28,712		$	11,464		$	17,465		$	7,355		$	23,803

Real Estate
Economic Net Income	$	89,317		$	121,383		$	147,981		$	280,842		$	361,049
Performance Fees Adjustment (a)		(17,339	)		(37,436	)		(74,920	)		(167,564	)		(370,697	)
Investment Income (Loss) Adjustment (b)		(49,524	)		(83,443	)		(86,127	)		(111,136	)		(64,325	)
Investment Income – Blackstone’s Treasury Cash Management Strategies (c)		1,311			1,811			4,016			(2,669	)		257
Performance Fee Compensation and Benefits Adjustment (d)		8,461			24,894			47,988			57,365			107,731
Taxes Payable (e)		(2,401	)		(2,466	)		915			(4,381	)		(2,782	)
Net Fee Related Earnings from Operations	$	29,825		$	24,743		$	39,853		$	52,457		$	31,233

(a)

This adjustment removes from ENI the segment amount of Performance

Fees.

(b)

This adjustment removes from ENI the segment amount of Investment

Income (Loss).

(c)

This adjustment represents the realized and unrealized gain on

Blackstone’s Treasury cash management strategies which are a

component of Investment Income (Loss) but included in Net Fee

Related Earnings.

(d)

This adjustment removes from expenses the compensation and benefit

amounts related to Blackstone’s profit sharing plans related to

Performance Fees.

(e)

Represents an implied payable for income taxes calculated using a

similar methodology applied in calculating the current provision for

The Blackstone Group L.P.

continued…

THE BLACKSTONE GROUP L.P. Exhibit 2b. Reconciliation of Income (Loss) Before Provision (Benefit) for Taxes to Total Segments Economic Net Income, of Total Segments, Economic Net Income to Net Fee Related Earnings from Operations, of Net Fee Related Earnings from Operations to Distributable Earnings and of Earnings Before Interest, Taxes and Depreciation and Amortization from Net Fee Related Earnings from Operations to Net Fee Related Earnings from Operations – Continued (Dollars in Thousands)

	Three Months Ended
	March 31,			June 30,			September 30,			December 31,			March 31,
	2010			2010			2010			2010			2011
Hedge Fund Solutions
Economic Net Income	$	52,646		$	25,638		$	49,364		$	70,674		$	58,119
Performance Fees Adjustment (a)		(12,530	)		1,575			(15,009	)		(33,644	)		(20,146	)
Investment Income (Loss) Adjustment (b)		(11,630	)		1,311			(8,881	)		(9,979	)		(8,461	)
Investment Income – Blackstone’s Treasury Cash Management Strategies (c)		215			292			647			(430	)		40
Performance Fee Compensation and Benefits Adjustment (d)		4,554			(621	)		8,388			9,379			5,658
Taxes Payable (e)		(1,713	)		(1,338	)		1,573			(6,760	)		(2,074	)
Net Fee Related Earnings from Operations	$	31,542		$	26,857		$	36,082		$	29,240		$	33,136

Credit Businesses
Economic Net Income	$	41,753		$	13,548		$	54,886		$	63,520		$	60,495
Performance Fees Adjustment (a)		(64,621	)		(12,689	)		(78,542	)		(105,207	)		(95,028	)
Investment Income (Loss) Adjustment (b)		(11,068	)		153			(6,008	)		(2,249	)		(5,767	)
Investment Income – Blackstone’s Treasury Cash Management Strategies (c)		139			197			438			2,494			667
Performance Fee Compensation and Benefits Adjustment (d)		36,977			7,882			43,820			53,928			50,497
Taxes Payable (e)		(586	)		(1,396	)		(1,342	)		(2,458	)		(1,877	)
Net Fee Related Earnings from Operations	$	2,594		$	7,695		$	13,252		$	10,028		$	8,987

____________________

(a)

This adjustment removes from ENI the segment amount of Performance

Fees.

(b)

This adjustment removes from ENI the segment amount of Investment

Income (Loss).

(c)

This adjustment represents the realized and unrealized gain on

Blackstone’s Treasury cash management strategies which are a

component of Investment Income (Loss) but included in Net Fee

Related Earnings.

(d)

This adjustment removes from expenses the compensation and benefit

amounts related to Blackstone’s profit sharing plans related to

Performance Fees.

(e)

Represents an implied payable for income taxes calculated using a

similar methodology applied in calculating the current provision for

The Blackstone Group L.P.

continued…

THE BLACKSTONE GROUP L.P. Exhibit 2b. Reconciliation of Income (Loss) Before Provision (Benefit) for Taxes to Total Segments Economic Net Income, of Total Segments, Economic Net Income to Net Fee Related Earnings from Operations, of Net Fee Related Earnings from Operations to Distributable Earnings and of Earnings Before Interest, Taxes and Depreciation and Amortization from Net Fee Related Earnings from Operations to Net Fee Related Earnings from Operations – Continued (Dollars in Thousands)

	Three Months Ended
	March 31,			June 30,			September 30,			December 31,			March 31,
	2010			2010			2010			2010			2011
Financial Advisory
Economic Net Income (Loss)	$	8,231		$	42,171		$	3,919		$	29,368		$	(872	)
Investment Income (Loss) Adjustment (a)		(417	)		(512	)		(1,076	)		657			(490	)
Investment Income – Blackstone’s Treasury Cash Management Strategies (b)		350			484			1,073			(713	)		63
Taxes Payable (c)		(2,092	)		(4,987	)		2,346			(5,652	)		(2,680	)
Net Fee Related Earnings (Loss) from Operations	$	6,072		$	37,156		$	6,262		$	23,660		$	(3,979	)

____________________

(a)

This adjustment removes from ENI the segment amount of Investment

Income (Loss).

(b)

This adjustment represents the realized and unrealized gain on

Blackstone’s Treasury cash management strategies which are a

component of Investment Income (Loss) but included in Net Fee

Related Earnings.

(c)

Represents an implied payable for income taxes calculated using a

similar methodology applied in calculating the current provision for

The Blackstone Group L.P.

continued…

THE BLACKSTONE GROUP L.P. Exhibit 2b. Reconciliation of Income (Loss) Before Provision (Benefit) for Taxes to Total Segments Economic Net Income, of Total Segments, Economic Net Income to Net Fee Related Earnings from Operations, of Net Fee Related Earnings from Operations to Distributable Earnings and of Earnings Before Interest, Taxes and Depreciation and Amortization from Net Fee Related Earnings from Operations to Net Fee Related Earnings from Operations – Continued (Dollars in Thousands)

		Three Months Ended
		March 31,			June 30,			September 30,			December 31,			March 31,
		2010			2010			2010			2010			2011
Income (Loss) Before Provision (Benefit) for Taxes		$	(227,671	)	$	(636,928	)	$	143,302		$	198,643		$	117,214
	IPO and Acquisition-Related Charges (a)		726,722			749,930			438,568			453,975			421,861
	Amortization of Intangibles (b)		39,512			40,822			40,872			44,172			44,174
	(Income) Loss Associated with Non-Controlling Interests in (Income) Loss of Consolidated Entities (c)		(153,461	)		67,647			(254,651	)		(90,684	)		71,056
Total Segments
Total Segments, Economic Net Income			385,102			221,471			368,091			606,106			654,305
	Performance Fees Adjustment (d)		(186,214	)		(25,636	)		(258,784	)		(455,655	)		(600,797	)
	Investment Income (Loss) Adjustment (e)		(156,828	)		(102,907	)		(142,523	)		(146,291	)		(126,076	)
	Investment Income – Blackstone’s Treasury Cash Management Strategies (f)		3,665			5,062			11,226			(4,676	)		1,302
	Performance Fee Compensation and Benefits Adjustment (g)		62,341			21,987			129,285			143,349			177,068
	Taxes Payable (h)		(9,321	)		(12,062	)		5,619			(20,093	)		(12,622	)
Net Fee Related Earnings from Operations			98,745			107,915			112,914			122,740			93,180
	Realized Performance Fees (i)		46,140			23,495			41,077			122,635			81,057
	Realized Investment Income (Loss) (j)		5,307			15,721			14,276			11,611			23,499
	Adjustment Related to Realized Investment Income – Blackstone’s Treasury Cash Management Strategies (k)		(1,264	)		512			(4,874	)		(2,156	)		(1,010	)
	Other Payables Including Payable Under Tax Receivable Agreement		(232	)		(68	)		2,923			(15,633	)		(177	)
Distributable Earnings		$	148,696		$	147,575		$	166,316		$	239,197		$	196,549

Earnings Before Interest, Taxes and Depreciation and Amortization from Net Fee Related Earnings from Operations (l)		$	120,805		$	132,866		$	124,195		$	163,600		$	126,666

____________________

(a)

This adjustment adds back to Income (Loss) Before Provision for

Taxes amounts for Transaction-Related Charges which include

principally equity-based compensation charges associated with

Blackstone’s initial public offering and other corporate actions.

(b)

This adjustment adds back to Income (Loss) Before Provision for

Taxes amounts for the Amortization of Intangibles which are

associated with Blackstone’s initial public offering and other

corporate actions.

(c)

This adjustment adds back to Income (Loss) Before Provision for

Taxes the amount of (Income) Loss Associated with Non-Controlling

Interests in (Income) Loss of Consolidated Entities and includes the

amount of Management Fee Revenues associated with Consolidated CLO

Entities.

(d)

This adjustment removes from ENI the total segment amount of

Performance Fees.

(e)

This adjustment removes from ENI the total segment amount of

Investment Income (Loss).

(f)

This adjustment represents the realized and unrealized gain on

Blackstone’s Treasury cash management strategies which are a

component of Investment Income (Loss) but included in Net Fee

Related Earnings.

(g)

This adjustment removes from expenses the compensation and benefit

amounts related to Blackstone’s profit sharing plans related to

Performance Fees.

(h)

Represents an implied payable for income taxes calculated using a

similar methodology applied in calculating the current provision for

The Blackstone Group L.P.

(i)

Represents the adjustment for realized Performance Fees net of

corresponding actual amounts due under Blackstone’s profit sharing

plans related thereto.

(j)

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

– Realized.

(k)

Represents the elimination of Realized Investment Income

attributable to Blackstone’s Treasury cash management strategies

which is a component of both Net Fee Related Earnings from

Operations and Realized Investment Income (Loss).

(l)

Earnings Before Interest, Taxes and Depreciation and Amortization

from Net Fee Related Earnings from Operations represents Net Fee

Related Earnings from Operations adding back the implied cash

taxes payable component from the Distributable Earnings

reconciliation presented above, which is included in (i), and

segment interest and depreciation and amortization. The cash taxes

payable component of (i) was $9.3 million, $12.1 million, $(5.6)

million, $20.1 million and $12.6 million for the three months

ended March 31, 2010, June 30, 2010, September 30, 2010, December

31, 2010, and March 31, 2011, respectively. Interest was $6.3

million, $6.8 million, $10.3 million, $13.2 million and $12.7

million for the three months ended March 31, 2010, June 30, 2010,

September 30, 2010, December 31, 2010, and March 31, 2011,

respectively. Depreciation and amortization was $6.4 million, $6.1

million, $6.6 million, $7.6 million and $8.2 million for the three

months ended March 31, 2010, June 30, 2010, September 30, 2010,

December 31, 2010, and March 31, 2011, respectively.

THE BLACKSTONE GROUP L.P.

Exhibit 3. Distributable Earnings

(Dollars in Thousands)

The following table calculates Blackstone’s Distributable

Earnings. Distributable Earnings is a supplemental measure of

performance to assess amounts available for distributions to

Blackstone unitholders, including Blackstone personnel.

Three Months Ended

March 31,

2011

2010

Fee Related Earnings

Revenues

Total Management and Advisory Fees (a)

425,666

362,621

Interest and Dividend Revenue (a)

9,448

8,690

Other (a)

2,259

(3,250

)

Investment Income – Blackstone’s Treasury Cash Management Strategies

(b)

1,302

3,665

Total Revenues

438,675

371,726

Expenses

Compensation and Benefits – Compensation (a)

229,898

190,637

Other Operating Expenses (a)

102,975

73,023

Cash Taxes (c)

12,622

9,321

Total Expenses

345,495

272,981

Net Fee Related Earnings from Operations

93,180

98,745

Performance Fees, Net of Related Compensation

Performance Fees – Realized (a)

95,600

53,881

Compensation and Benefits – Performance Fee Compensation – Realized

(a)

(14,543

)

(7,741

)

Total Performance Fees, Net of Related Compensation

81,057

46,140

Investment Income and Other

Investment Income – Realized (a)

23,499

5,307

Adjustment Related to Realized Investment Income –

Blackstone’s Treasury Cash Management Strategies (d)

(1,010

)

(1,264

)

Other Payables Including Payable Under Tax Receivable Agreement

(177

)

(232

)

Total Investment Income and Other

22,312

3,811

Distributable Earnings

196,549

148,696

_________________________

(a)

Represents the total segment amounts of the respective captions.

(b)

Represents the inclusion of Investment Income from Blackstone’s

Treasury cash management strategies.

(c)

Represents the provisions for and/or adjustments to income taxes

that were calculated using a similar methodology applied in

calculating the current provision for The Blackstone Group L.P.

(d)

Represents the elimination of Realized Investment Income

attributable to Blackstone’s Treasury cash management strategies

which is a component of Net Fee Related Earnings from Operations.

THE BLACKSTONE GROUP L.P. Exhibit 4. Reconciliation of Total GAAP Weighted-Average Common Units Outstanding””Basic and Diluted to Weighted-Average Economic Net Income Adjusted Units””Basic and Diluted and of Total GAAP Common Units Outstanding””Basic and Diluted to Economic Net Income Adjusted Units””Basic and Diluted and of Total GAAP Common Units Outstanding to Distributable Earnings Units Outstanding

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

	Three Months Ended
	March 31,
	2011	2010
Total GAAP Weighted-Average Common Units Outstanding – Basic	447,742,389	333,433,864
Adjustments:
Weighted-Average Unvested Deferred Restricted Common Units	9,910,527	“•
Total GAAP Weighted-Average Common Units Outstanding – Diluted	457,652,916	333,433,864
Adjustments:
Weighted-Average Blackstone Holdings Partnership Units	658,290,684	764,866,007
Weighted-Average Unvested Deferred Restricted Common Units	“•	28,626,333
Weighted-Average Economic Net Income Adjusted Units – Diluted	1,115,943,600	1,126,926,204


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

	March 31,
	2011	2010
Total GAAP Common Units Outstanding – Basic	464,502,284	347,181,400
Adjustments:
Blackstone Holdings Partnership Units	639,228,191	751,496,468
Unvested Deferred Restricted Common Units	24,297,037	27,815,594
Economic Net Income Adjusted Units – Basic	1,128,027,512	1,126,493,462

	March 31,
	2011	2010
Total GAAP Common Units Outstanding – Diluted	474,412,811	347,181,400
Adjustments:
Blackstone Holdings Partnership Units	639,228,191	751,496,468
Unvested Deferred Restricted Common Units	“•	27,815,594
Economic Net Income Adjusted Units – Diluted	1,113,641,002	1,126,493,462


The following table provides a reconciliation of Blackstone’s Total GAAP Common Units Outstanding to Distributable Earnings Units Outstanding.

	March 31,
	2011	2010
Total GAAP Common Units Outstanding (a)	464,502,284	347,181,400
Adjustments:
Blackstone Holdings Partnership Units	639,228,191	751,496,468
Distributable Earnings Units Outstanding	1,103,730,475	1,098,677,868

______________________

(a)

Common unit holders receive tax benefits from deductions taken by

Blackstone’s corporate tax paying subsidiaries and bear

responsibility for the deduction from Distributable Earnings of the

Payable Under the Tax Receivable Agreement and certain other

tax-related payables.

THE BLACKSTONE GROUP L.P. Exhibit 5. Assets Under Management (Dollars in Thousands)

				As of and for the Periods Ended
				March 31,
				2011		2010
	Total Assets Under Management
		(End of Period)
			Private Equity	$	43,955,392	$	28,022,326
			Real Estate		34,990,590		21,880,655
			Hedge Fund Solutions		39,542,086		30,322,510
			Credit Businesses		31,475,397		24,290,357
				$	149,963,465	$	104,515,848
	Fee-Earning Assets Under Management
		(End of Period)
			Private Equity	$	35,892,804	$	25,173,936
			Real Estate		26,454,012		23,820,697
			Hedge Fund Solutions		35,847,002		28,902,220
			Credit Businesses		25,838,878		20,173,319
				$	124,032,696	$	98,070,172
	Weighted-Average Fee-Earning
		Assets Under Management
		(For the Three Months Ended)
			Private Equity	$	35,775,826	$	25,010,887
			Real Estate		26,454,180		23,719,287
			Hedge Fund Solutions		35,320,896		28,506,845
			Credit Businesses		25,482,707		20,259,313
				$	123,033,609	$	97,496,332

THE BLACKSTONE GROUP L.P. Exhibit 6. Limited Partner Capital Invested Metrics (Dollars in Thousands)

					As of and for the Periods
					Ended March 31,
					2011		2010
	Limited Partner Capital Invested
		(For the Three Months Ended)
			Private Equity		$	652,947	$	387,904
			Real Estate (a)			654,428		424,868
			Credit Businesses			154,298		157,052
					$	1,461,673	$	969,824

	Fund Level Unrealized Value (b)
		(End of Period)
			Private Equity
				Cost	$	20,262,265	$	19,695,417
				Unrealized Value	$	22,646,168	$	19,695,029
			Real Estate (a)
				Cost	$	16,637,075	$	12,478,211
				Unrealized Value	$	20,805,296	$	8,355,147
			Credit Businesses
				Cost	$	3,668,448	$	3,088,626
				Unrealized Value	$	4,418,781	$	3,424,993

_________________________

(a)

Limited Partner Capital Invested and Fund Level Unrealized Value for

the Real Estate segment represents activity related to funds raised

by Blackstone.

(b)

Cost and unrealized value represent the limited partners’ share,

including co-investments arranged by Blackstone, of those fund level

investments on which carried interest can be earned, before carried

interest allocations to Blackstone, when a fund achieves cumulative

investment returns in excess of a specified rate.

THE BLACKSTONE GROUP L.P.

Exhibit 7. Definitions of Non-GAAP Financial Information

Blackstone discloses the following financial measures that are

calculated and presented on the basis of methodologies other than

in accordance with generally accepted accounting principles in the

United States of America (“non-GAAP”) in the attached press

release:

Blackstone uses Economic Net Income, or “ENI”, as a key measure of

value creation and as a benchmark of its performance. ENI represents

segment net income excluding the impact of income taxes and initial

public offering (“IPO”) and acquisition-related items, including

charges associated with equity-based compensation, the amortization of

intangibles and corporate actions including acquisitions. For segment

reporting purposes, revenues and expenses are presented on a basis

that deconsolidates the investment funds we manage.

Total

Segment ENI equals the aggregate of ENI for all segments. ENI is used

by management primarily in making resource deployment and compensation

decisions across Blackstone’s five segments.

Economic Net Income After Taxes represents ENI adjusted to reflect the

implied provision (benefit) for income taxes calculated using a

similar methodology as applied in calculating the tax provision

(benefit) for The Blackstone Group L.P. but consistent with the ENI

concepts as noted above.
Blackstone uses Net Fee Related Earnings from Operations as a key

measure to highlight earnings from operations excluding: (a) the

income related to performance fees and related carry plan costs, (b)

income earned from Blackstone’s investments in the Blackstone Funds,

and (c) realized and unrealized gains (losses) from other investments

except for such gains (losses) from Blackstone’s Treasury cash

management strategies. Management uses Net Fee Related Earnings from

Operations as a measure to assess whether recurring revenue from our

businesses is sufficient to adequately cover all of our operating

expenses and generate profits. Net Fee Related Earnings from

Operations equals contractual fee revenues, investment income from

Blackstone’s Treasury cash management strategies and interest income,

less (a) compensation expenses (which includes amortization of non-IPO

and non-acquisition-related equity-based awards, but excludes

amortization of IPO and acquisition-related equity-based awards,

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

expenses, and (c) cash taxes due on earnings from operations as

calculated using a similar methodology as applied in calculating the

current tax provision (benefit) for The Blackstone Group L.P.
Blackstone uses Earnings Before Interest, Taxes and Depreciation and

Amortization from Net Fee Related Earnings from Operations

(“EBITDA-NFRE”) as a measure of segment performance and an indicator

of our ability to cover our recurring operating expenses. EBITDA-NFRE

equals Net Fee Related Earnings from Operations before segment

interest expense, segment depreciation and amortization and the cash

taxes included in Net Fee Related Earnings from Operations.
Distributable Earnings, which is derived from our segment reported

results, is a supplemental measure to assess performance and amounts

available for distributions to Blackstone unitholders, including

Blackstone personnel and others who are limited partners of the

Blackstone Holdings partnerships. Distributable Earnings is intended

to show the amount of net realized earnings without the effects of the

consolidation of the Blackstone Funds.

Distributable

Earnings, which is a component of Economic Net Income, is the sum

across all segments of: (a) Total Management and Advisory Fees,

(b) Interest and Dividend Revenue, (c) Other Revenue, (d) Realized

Performance Fees, and (e) Realized Investment Income (Loss); less

(a) Compensation, (b) Realized Performance Fee Compensation, (c) Other

Operating Expenses, and (d) Cash Taxes and Payables Under the Tax

Receivable Agreement. Distributable Earnings is reconciled to

Blackstone’s Consolidated Statement of Operations. It is Blackstone’s

current intention that on an annual basis it will distribute to

unitholders all of its Distributable Earnings, less realized

investment gains, in excess of amounts determined by its general

partner to be necessary or appropriate to provide for the conduct of

its business, to make appropriate investments in its business and

funds, to comply with applicable law, any of its debt instruments or

other agreements, or to provide for future distributions to its

unitholders for any ensuing quarter.

Reconciliations of these non-GAAP financial measures to the most

directly comparable financial measures calculated and presented in

accordance with GAAP are included within this press release. These

non-GAAP financial measures should be considered in addition to and not

as a substitute for, or superior to, financial measures presented in

accordance with GAAP.

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