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.

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

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

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

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

Performance Fees

Realized

53,881

46,374

66,039

195,369

95,600

41,719

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

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

Expenses

Compensation and Benefits

Compensation

190,637

220,662

210,582

237,233

229,898

39,261

Performance Fee

Compensation

Realized

7,741

22,879

24,962

72,734

14,543

6,802

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

Other Operating Expenses

73,023

88,160

84,253

99,080

102,975

29,952

Total Expenses

326,001

330,809

424,120

479,662

509,941

183,940

Total Economic Net Income

385,102

221,471

368,091

606,106

654,305

269,203

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

2011

Private Equity

Revenues

Management Fees

Base Management Fees

65,432

66,795

66,077

65,003

79,935

14,503

Transaction and Other Fees,

Net *

31,972

16,367

13,348

10,556

35,342

3,370

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

Performance Fees

Realized

46,175

1,106

44,814

64,774

82,389

36,214

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

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

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

Performance Fee

Compensation

Realized

6,005

128

10,783

15,711

7,718

1,713

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

Other Operating Expenses

24,431

28,677

26,359

30,122

28,713

4,282

Total Expenses

83,690

65,121

103,000

91,070

98,149

14,459

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

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

____________________

* 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

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

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

____________________

* 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

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

)

(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

)

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

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

2011

Financial Advisory

Revenues

Advisory Fees

76,568

134,099

84,541

130,932

70,252

(6,316

)

-8%

Transaction and Other Fees, Net

102

“•

259

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

(90

)

-48%

Unrealized

230

561

607

(864

)

393

163

71%

Total Investment Income (Loss)

417

512

1,076

(657

)

490

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

Total Compensation

and Benefits

54,492

76,152

66,531

80,774

56,161

1,669

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

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

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

Operations – Continued

(Dollars in Thousands)

Three Months Ended

March 31,

June 30,

September 30,

December 31,

March 31,

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

)

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

Operations – Continued

(Dollars in Thousands)

Three Months Ended

March 31,

June 30,

September 30,

December 31,

March 31,

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

)

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

Operations – Continued

(Dollars in Thousands)

Three Months Ended

March 31,

June 30,

September 30,

December 31,

March 31,

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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