The Blackstone Group Reports Third Quarter 2010 Results

NEW YORK--The Blackstone Group L.P. today reported its third quarter 2010 results.

Economic Net Income was $339.3 million for the third quarter of 2010, an increase of $63.9 million from $275.3 million, or 23%, for the third quarter of 2009. Economic Net Income was $904.9 million for the nine months ended September 30, 2010, an increase of $531.2 million compared to Economic Net Income for the nine months ended September 30, 2009 of $373.8 million. The increase in Economic Net Income was principally driven by increased Performance Fees and Allocations and Investment Income.

For the third quarter of 2010, Total Segment Revenues were $792.2 million, up significantly from $603.8 million for the third quarter of 2009. The improvement was driven by greater Investment Income derived from an increase in the carrying value of the underlying portfolio investments in the Private Equity and Real Estate segments, and by increases in Performance Fees and Allocations in the Real Estate and Credit and Marketable Alternatives segments. These increases were partially offset by decreased fees earned in the Financial Advisory segment.

Total Segment Expenses were $424.1 million for the third quarter of 2010, an increase from $325.4 million for the third quarter of 2009. The increase in Compensation and Benefits to $339.9 million for the third quarter of 2010 was primarily driven by an increase in Performance Fee Related Compensation and an increase in Base Compensation, which includes all compensation for all partners and employees excluding only compensation from performance fees. Other Operating Expenses increased to $84.3 million.

Net Fee Related Earnings from Operations were $112.9 million for the third quarter of 2010, up from $94.9 million for the third quarter of 2009. Net Fee Related Earnings from Operations were $319.6 million for the nine months ended September 30, 2010, up from $271.2 million for the nine months ended September 30, 2009. Net Fee Related Earnings from Operations increased principally as a result of increased Management and Advisory Fees and investment income from Blackstone’s Treasury cash management strategies, partially offset by an increase in Base Compensation.

GAAP results for the third quarter of 2010 included Revenues of $784.0 million, compared to $597.0 million for the third quarter of 2009, and Net Loss Attributable to The Blackstone Group L.P. of $44.4 million, compared to a net loss of $176.2 million for the third quarter of 2009.

On October 1, 2010, Blackstone purchased a 40% equity interest in Pátria, one of Latin America’s leading alternative asset managers and advisory firms. Pátria has $3.2 billion in total assets under management across private equity, real estate, infrastructure and hedge funds. Pátria is a fast growing market leader with an excellent investment track record, and will continue to be managed by its current partners. As part of the transaction, Blackstone and Pátria have agreed to cooperate in building their businesses in Brazil and throughout the region. Blackstone believes this will allow both firms to offer a broader array of investments to their limited partners and help drive superior fund returns over the long-term.

Global equity markets moved sharply higher in the third quarter of 2010, while credit markets also rose and high yield spreads moderately tightened. Investors reacted positively to sustained above-average corporate earnings growth and the expectation of continued economic recovery. Economic data remained mixed, however, and most indicators pointed to a slowing in the recovery of the U.S. economy, including both output and employment rates. In real estate, the fundamentals generally continued to improve in the third quarter. In office, occupancy trends and leasing activity continued to improve modestly in most markets, and new supply remained at historically low levels. In hospitality, industry Revenue Per Available Room, or RevPAR, grew 8.4% in the third quarter of 2010, and has experienced positive growth since March 2010.

Stephen A. Schwarzman, Chairman and Chief Executive Officer, said, “While global economic and market environments remain fragile, we saw continued marked improvement in the carrying values of our investment funds during the third quarter. Our ability to leverage the knowledge we have housed across our businesses helped us create value through operational programs at the companies we own on behalf of our investors and identify exciting new opportunities. As of quarter end, we have grown total assets under management to $119 billion, which speaks to the hard work and performance of our team.�??

The table below details Blackstone’s Economic Net Income, Net Fee Related Earnings from Operations, Distributable Earnings and Fee-Earning Assets Under Management as of, and for the three and nine months ended September 30, 2010 and 2009. Economic Net Income, Total Segments includes unrealized gains (losses) and the direct compensation impact related to those gains/losses, but excludes IPO and acquisition-related charges.

	Â	As of and for the Three Months Ended September 30,							Â	Variance					Â	Nine Months Ended September 30,							Â	Variance
		2010			Â	2009				$			Â	%		2010			Â	2009				$			Â	%
																												Â
		(Dollars in Thousands, Except per Unit Amounts)
Economic Net Income, Total Segments		$	368,091	Â		$	278,357	Â		$	89,734			32%		$	974,664	Â		$	357,918			$	616,746	Â		172%
Provision (Benefit) for Income Taxes (a)		Â	28,812	Â		Â	3,009	Â		Â	25,803	Â		N/M		Â	69,752	Â		Â	(15,836	)		Â	85,588	Â		N/M
Economic Net Income, After Taxes		$	339,279	Â		$	275,348	Â		$	63,931	Â		23%		$	904,912	Â		$	373,754	Â		$	531,158	Â		142%
																												Â
Economic Net Income, After Taxes per Adjusted Unit (b)		$	0.30	Â		$	0.25	Â		$	0.05	Â		22%		$	0.80	Â		$	0.33	Â		$	0.47	Â		141%
Net Fee Related Earnings from Operations		$	112,914	Â		$	94,939	Â		$	17,975	Â		19%		$	319,574	Â		$	271,247	Â		$	48,327	Â		18%
Distributable Earnings		$	166,316	Â		$	99,502	Â		$	66,814	Â		67%		$	462,587	Â		$	266,138	Â		$	196,449	Â		74%
Distributable Earnings per Adjusted Unit (c)		$	0.15	Â		$	0.09	Â		$	0.06	Â		67%		$	0.42	Â		$	0.24	Â		$	0.18	Â		75%
																												Â
Fee-Earning Assets Under Management:
Private Equity		$	24,311,443			$	25,184,161			$	(872,718	)		-3%
Real Estate			24,345,161				23,692,257				652,904			3%
Credit and Marketable Alternatives		Â	55,636,578	Â		Â	47,448,212	Â		Â	8,188,366	Â		17%
Total Fee-Earning Assets Under Management		$	104,293,182	Â		$	96,324,630	Â		$	7,968,552	Â		8%

_________________________________
(a)	Represents the implied provision (benefit) 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 using the if-converted method. A reconciliation of this item to the comparable GAAP measure is presented in Exhibit 4 to this release.
(c)	Adjusted Units represents the unit count for Distributable Earnings purposes. A reconciliation of this item to the comparable GAAP measure is presented in Exhibit 4 to this release.
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SEGMENT REVIEW

Private Equity

Private Equity had revenues of $214.9 million for the third quarter of 2010, compared with revenues of $226.9 million for the third quarter of 2009. The change from 2009 was driven principally by a decrease in Performance Fees and Allocations, which are determined on a fund by fund basis, to $90.3 million compared to $110.9 million for the three months ended September 30, 2009. Private Equity had nine-month revenues of $575.6 million, compared with revenues of $493.6 million in the same period of 2009. The overall performance of our private equity funds was driven by appreciation of our privately held investments and increases in share prices of our publicly held portfolio investments.

The net return for Blackstone’s contributed Private Equity funds was 5.1% in the third quarter of 2010 versus 3.9% in the third quarter of 2009 and 2.5% in the second quarter of 2010. At September 30, 2010, the unrealized value and cumulative realized proceeds, before carried interest, fees and expenses, of Blackstone’s contributed Private Equity funds represented 1.4 times investors’ original investments. Excluding funds which are still in their Investment Period, the value was 2.2 times investors’ original investments.

Net Fee Related Earnings from Operations were $17.5 million for the third quarter of 2010, down from $21.2 million for the third quarter of 2009, reflecting increased Base Compensation, interest expense and marketing expenses related to Blackstone’s sixth private equity fund which is expected to begin over the next few months. Economic Net Income was $111.9 million for the third quarter of 2010, down from $135.7 million for the third quarter of 2009, a result of lower Performance Fees and Allocations.

Compensation and Benefits expense increased to $76.6 million from $69.9 million for the third quarter of 2009. The change from 2009 was primarily due to an increase in Base Compensation. Other Operating Expenses of $26.4 million were up from $21.3 million for the third quarter of 2009, principally due to an increase in interest expense, professional fees and business development expenses.

Fee-Earning Assets Under Management were down slightly to $24.3 billion compared with the third quarter of 2009.

Limited Partner Capital Invested during the third quarter of 2010 totaled $678.9 million, an increase from $109.1 million invested during the third quarter of 2009. Blackstone had $1.6 billion of Limited Partner Capital committed to deals made by the segment’s Private Equity funds that had not yet closed as of September 30, 2010.

Real Estate

Real Estate had revenues of $257.8 million for the third quarter of 2010, compared with revenues of $100.2 million for the third quarter of 2009. Real Estate had nine-month revenues of $618.4 million, compared with negative revenues of $131.3 million in the same period of 2009. The change from 2009 was primarily due to an improvement in Performance Fees and Allocations and Investment Income (Loss), driven by improved operating performance, projected cash flows and exit multiples across the Real Estate segment’s investments.

The net return for Blackstone’s Real Estate carry funds was 16.9% for the third quarter of 2010 compared to a negative 2.0% in the third quarter of 2009, while the net returns for the Real Estate debt hedge funds was 3.3% for the third quarter of 2010 compared to 7.8% in the third quarter of 2009.

Net Fee Related Earnings from Operations were $39.9 million in the third quarter of 2010, up from $33.4 million for the third quarter of 2009. Economic Net Income was $148.0 million for the third quarter of 2010 compared to $44.2 million for the third quarter of 2009, driven by the increases in Performance Fees and Allocations and Investment Income (Loss).

Compensation and Benefits were $91.2 million compared to $42.5 million for the third quarter of 2009. The change from 2009 was primarily due to an increase in Performance Fee Related Compensation driven by an increase in Performance Fees and Allocations revenue. Other Operating Expenses of $18.6 million were up from $13.4 million for the third quarter of 2009, principally due to an increase in interest expense and professional fees.

Fee-Earning Assets Under Management were $24.3 billion compared with $23.7 billion for the third quarter of 2009, reflecting the continued fund-raising of Blackstone’s Real Estate debt platform and additional limited partner co-investment capital.

Limited Partner Capital Invested during the third quarter of 2010 was $689.0 million, up from $35.0 million during the third quarter of 2009. Blackstone’s Real Estate segment’s funds had committed $1.6 billion of Limited Partner Capital to new transactions which have not yet closed as of September 30, 2010.

Credit and Marketable Alternatives (CAMA)

CAMA had revenues of $231.8 million, compared with $179.4 million for the third quarter of 2009. The increase from 2009 was due primarily to improved Performance Fees and Allocations. CAMA had nine-month revenues of $560.7 million compared with revenues of $419.0 million in the same period of 2009.

The net core funds composite returns for Blackstone’s funds of hedge funds was 3.2% for the third quarter of 2010 compared to 5.5% for the third quarter of 2009. Base Management Fees increased $14.7 million from the third quarter of 2009 as a result of positive net inflows and performance in the funds of hedge funds business and the April 1, 2010 acquisition of $3.5 billion in collateralized debt obligations and collateralized loan obligations (“CLO�??) vehicles.

Net Fee Related Earnings from Operations were $49.3 million for the third quarter of 2010, an increase of $25.3 million from $24.0 million for the third quarter of 2009, reflecting increased Management Fees, which were driven by continued strong inflows and fund returns across the segment. Economic Net Income was $104.3 million for the third quarter of 2010 compared to $81.5 million for the third quarter of 2009.

Compensation and Benefits were $105.5 million, up from $79.8 million for the third quarter of 2009. The increase from the third quarter of 2009 was principally driven by an increase in Performance Fee Related Compensation. Other Operating Expenses of $22.1 million were up from $18.1 million for the third quarter of 2009, reflecting an increase in professional fees and technology costs primarily in the credit platform businesses related to the launching of new products.

Fee-Earning Assets Under Management grew 17% for the third quarter of 2010 to $55.6 billion from $47.4 billion for the third quarter of 2009. The increase from 2009 was principally due to net inflows and market appreciation in the funds of hedge funds and the April 1, 2010 acquisition of $3.5 billion in collateralized debt obligations and CLO vehicles.

Limited Partner Capital Invested in certain carry credit-oriented funds during the third quarter of 2010 totaled $692.3 million, representing 11.6% of total commitments in these funds, up from $87.3 million for the third quarter of 2009.

Financial Advisory

Revenues were $87.7 million for the third quarter of 2010, down from $97.3 million for the third quarter of 2009. The decrease in segment revenue was primarily driven by a decrease in fees from the financial and strategic advisory business, which had several significant transactions which closed in the third quarter of 2009, and a decrease in retainer fees from the restructuring and reorganization business. These decreases were partially offset by a sharp increase in fees in the fund placement business. Revenues were $300.8 million for the nine months ended September 30, 2010, an increase from $271.9 million in the same period of 2009. The increase in segment revenues was primarily driven by an increase of $66.3 million in fees earned by Blackstone’s fund placement business, partially offset by decreases from Blackstone’s financial and strategic advisory and restructuring and reorganization businesses.

The fund placement business has seen an increase in fees to more normalized levels as the economic conditions which had negatively impacted institutional allocations to alternative investment funds abated. The pipeline for the restructuring and reorganization business remains solid across a diverse group of industries and geographies. The pipeline for the financial and strategic advisory business continues to be strong and includes a significant international component.

Net Fee Related Earnings from Operations were $6.3 million for the third quarter of 2010, a decrease from $16.4 million for the third quarter of 2009. The primary catalyst for the decrease from 2009 was a decrease in fees generated by the financial and strategic advisory business, which had several large mandates which closed during the third quarter of 2009, and a decrease in retainer fees from the restructuring and reorganization business. Economic Net Income was $3.9 million for the third quarter of 2010 compared to $17.0 million for the third quarter of 2009.

Compensation and Benefits were $66.5 million, up from $57.7 million for the third quarter of 2009. The increase from the third quarter of 2009 was principally driven by an increase in Base Compensation. Other Operating Expenses of $17.3 million were down from $22.7 million for the third quarter of 2009 principally due to a reduction in bad debt expenses.

CAPITAL AND LIQUIDITY

For Economic Net Income purposes, the weighted-average fully diluted adjusted unit count for the three and nine month periods ended September 30, 2010 was 1,121.3 million units and 1,124.3 million units, respectively. The weighted-average fully diluted adjusted unit count for the three and nine months periods ended September 30, 2009 was 1,119.8 million units and 1,125.2 million units, respectively.

The total number of units used in calculating cash distributions and Distributable Earnings per Adjusted Unit was 1,097.7 million units for the nine month period ended September 30, 2010 and 1,092.0 million units for the nine month period ended September 30, 2009.

On September 15, 2010, Blackstone issued $400 million of 5.875% notes due in 2021. Standard & Poor’s and Fitch reiterated Blackstone’s ratings of A and A+, respectively, with a stable outlook after the new issuance.

As of September 30, 2010, Blackstone had $1.0 billion in cash, $927.7 million invested in Blackstone’s Treasury cash management strategies, $283.1 million invested in liquid Blackstone funds and $1.4 billion invested in illiquid Blackstone funds. Long-term debt totaled just under $1.0 billion in borrowings from the 2010 and 2009 bond issuances. Blackstone has no borrowings outstanding against its $1.07 billion revolving credit facility.

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 November 15, 2010. This distribution will be paid on November 30, 2010.

For distributions related to fiscal 2010 and thereafter, Blackstone’s current intention is to distribute to its common unitholders substantially all of The Blackstone Group L.P.’s net after-tax share of its annual Distributable Earnings 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. 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 may be smaller than the final quarterly distribution in respect of such year. In the fourth quarter Blackstone will distribute the remaining Distributable Earnings for the year, which is expected to also include realized Performance Fees and Allocations net of related compensation and realized net investment income.

In most years the aggregate amounts of Blackstone’s distributions to unitholders will not equal its Distributable Earnings for that year. Distributable Earnings will only be a starting point for the determination of the amount to be distributed to unitholders because as noted above, 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.

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 2010 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 October 28, 2010 at 11:00 a.m. ET to discuss third quarter 2010 results. The conference call can be accessed by dialing (877) 391-6737 (U.S. domestic) or +1 (617) 597-9373 (international) pass code 12859509. 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 12859509, beginning approximately two hours after the event.

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, funds of hedge funds, 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, 2009, 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 prospectus. 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.

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THE BLACKSTONE GROUP L.P. Exhibit 1a. Consolidated Statements of Operations (Dollars in Thousands, Except Per Unit Data)
Â		Â	Three Months Ended September 30,
			2010			Â	2009
Revenues
Management and Advisory Fees			$	362,521	Â		$	367,605	Â
Performance Fees and Allocations
Realized				66,142				(3,452	)
Unrealized			Â	199,824	Â		Â	157,465	Â
Total Performance Fees and Allocations			Â	265,966	Â		Â	154,013	Â
Investment Income
Realized				13,542				6,279
Unrealized			Â	127,428	Â		Â	58,530	Â
Total Investment Income (a)			Â	140,970	Â		Â	64,809	Â
Interest and Dividend Revenue				10,075				6,703
Other			Â	4,468	Â		Â	3,893	Â
Total Revenues			Â	784,000	Â		Â	597,023	Â
Expenses
Compensation and Benefits
Base Compensation				664,004				923,272
Performance Fee Related
Realized				24,962				(712	)
Unrealized			Â	104,324	Â		Â	58,068	Â
Total Compensation and Benefits (b)				793,290				980,628
General, Administrative and Other (c)				114,291				110,641
Interest Expense (d)				11,766				5,258
Fund Expenses			Â	6,422	Â		Â	1,267	Â
Total Expenses			Â	925,769	Â		Â	1,097,794	Â
Other Income
Net Gains from Fund Investment Activities			Â	285,071	Â		Â	73,812	Â
Income (Loss) Before Provision (Benefit) for Taxes (e)				143,302				(426,959	)
Provision (Benefit) for Taxes			Â	(4,225	)		Â	52,551	Â
Net Income (Loss)				147,527				(479,510	)
Net Income Attributable to Redeemable Non-Controlling Interests in Consolidated Entities				23,623				50,281
Net Income Attributable to Non-Controlling Interests in Consolidated Entities				242,723				3,622
Net Income (Loss) Attributable to Non-Controlling Interests in Blackstone Holdings			Â	(74,461	)		Â	(357,230	)
Net Income (Loss) Attributable to The Blackstone Group L.P. (f)			$	(44,358	)		$	(176,183	)
Net Loss per Common Unit, Basic and Diluted
Common Units			$	(0.12	)
Common Units Entitled to Priority Distributions							$	(0.61	)
Common Units Not Entitled to Priority Distributions							$	(0.91	)
Net IPO and acquisition-related charges included above were:
(a) Investment Income (Loss)			$	17,237			$	11,935
(b) Total Compensation and Benefits			$	793,290			$	980,628
Less: Compensation and Benefits - IPO and acquisition-related			$	453,422	Â		$	730,726	Â
Compensation - non-IPO and acquisition-related (*)			$	339,868	Â		$	249,902	Â
(c) General, Administrative and Other			$	41,736			$	902
(d) Interest Expense			$	1,519			$	39,527
(e) Total IPO and acquisition-related charges			$	479,440			$	759,220
(f) Total IPO and acquisition-related charges attributable to The Blackstone Group L.P., net of tax			$	161,663			$	201,141

(*)	Principally comprised of base pay, bonus, net carried interest allocations, benefits and non-IPO and acquisition-related equity-based compensation.
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THE BLACKSTONE GROUP L.P. Exhibit 1b. Consolidated Statements of Operations (Dollars in Thousands, Except Per Unit Data)
			Nine Months Ended September 30,
			2010			Â	2009
Revenues
Management and Advisory Fees			$	1,123,403	Â		$	1,049,606	Â
Performance Fees and Allocations
Realized				171,941				2,004
Unrealized			Â	312,304	Â		Â	8,932	Â
Total Performance Fees and Allocations			Â	484,245	Â		Â	10,936	Â
Investment Income (Loss)
Realized				29,493				7,556
Unrealized			Â	371,691	Â		Â	(36,149	)
Total Investment Income (Loss) (a)			Â	401,184	Â		Â	(28,593	)
Interest and Dividend Revenue				25,922				11,124
Other			Â	573	Â		Â	5,280	Â
Total Revenues			Â	2,035,327	Â		Â	1,048,353	Â
Expenses
Compensation and Benefits
Base Compensation				2,556,665				2,805,567
Performance Fee Related
Realized				55,582				1,014
Unrealized			Â	158,032	Â		Â	(75,855	)
Total Compensation and Benefits (b)				2,770,279				2,730,726
General, Administrative and Other (c)				341,853				328,517
Interest Expense (d)				26,633				6,744
Fund Expenses			Â	15,484	Â		Â	5,871	Â
Total Expenses			Â	3,154,249	Â		Â	3,071,858	Â
Other Income
Net Gains from Fund Investment Activities			Â	397,625	Â		Â	97,353	Â
Income (Loss) Before Provision (Benefit) for Taxes (e)				(721,297	)			(1,926,152	)
Provision (Benefit) for Taxes			Â	24,802	Â		Â	81,167	Â
Net Income (Loss)				(746,099	)			(2,007,319	)
Net Income Attributable to Redeemable Non-Controlling Interests in Consolidated Entities				47,171				90,515
Net Income (Loss) Attributable to Non-Controlling Interests in Consolidated Entities				320,816				(33,450	)
Net Income (Loss) Attributable to Non-Controlling Interests in Blackstone Holdings			Â	(755,031	)		Â	(1,492,343	)
Net Income (Loss) Attributable to The Blackstone Group L.P. (f)			$	(359,055	)		$	(572,041	)
Net Loss per Common Unit, Basic and Diluted
Common Units			$	(1.02	)
Common Units Entitled to Priority Distributions							$	(2.05	)
Common Units Not Entitled to Priority Distributions							$	(2.95	)
Net IPO and acquisition-related charges included above were:
(a) Investment Income (Loss)			$	24,784			$	32,729
(b) Total Compensation and Benefits			$	2,770,279			$	2,730,726
Less: Compensation and Benefits - IPO and acquisition-related			$	1,934,785	Â		$	2,252,096	Â
Compensation - non-IPO and acquisition-related (*)			$	835,494	Â		$	478,630	Â
(c) General, Administrative and Other			$	123,066			$	2,638
(d) Interest Expense			$	3,359			$	119,130
(e) Total IPO and acquisition-related charges			$	2,036,426			$	2,341,135
(f) Total IPO and acquisition-related charges attributable to The Blackstone Group L.P., net of tax			$	633,095			$	589,852

(*)	Principally comprised of base pay, bonus, net carried interest allocations, benefits and non-IPO and acquisition-related equity-based compensation.
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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 allocations 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.

	Â	Three Months Ended																									Â	Nine Months Ended
		March 31, 2009			Â	June 30, 2009			Â	September 30, 2009		Â	December 31, 2009		Â	March 31, 2010			Â	June 30, 2010			Â	September 30, 2010				September 30, 2009			Â	September 30, 2010
Private Equity
Revenues
Management Fees
Base Management Fees		$	68,431			$	67,740			$	67,009		$	67,329		$	65,432			$	66,795			$	66,077			$	203,180			$	198,304
Transaction and Other Fees, Net *			10,328				15,145				18,368			42,495			31,972				16,367				13,348				43,841				61,687
Management Fee Offsets **		Â	-	Â		Â	-	Â		Â	-		Â	-		Â	-	Â		Â	-	Â		Â	(91	)		Â	-	Â		Â	(91	)
Total Management Fees		Â	78,759	Â		Â	82,885	Â		Â	85,377		Â	109,824		Â	97,404	Â		Â	83,162	Â		Â	79,334	Â		Â	247,021	Â		Â	259,900	Â
Performance Fees and Allocations
Realized			-				-				-			34,021			46,175				1,106				44,814				-				92,095
Unrealized		Â	4,818	Â		Â	97,185	Â		Â	110,867		Â	90,621		Â	45,549	Â		Â	(24,020	)		Â	45,499	Â		Â	212,870	Â		Â	67,028	Â
Total Performance Fees and Allocations		Â	4,818	Â		Â	97,185	Â		Â	110,867		Â	124,642		Â	91,724	Â		Â	(22,914	)		Â	90,313	Â		Â	212,870	Â		Â	159,123	Â
Investment Income (Loss)
Realized			(344	)			102				8,794			28,416			(495	)			3,141				9,940				8,552				12,586
Unrealized		Â	(15,165	)		Â	17,118	Â		Â	18,640		Â	12,676		Â	84,684	Â		Â	17,275	Â		Â	30,491	Â		Â	20,593	Â		Â	132,450	Â
Total Investment Income (Loss)			(15,509	)			17,220				27,434			41,092			84,189				20,416				40,431				29,145				145,036
Interest Income and Dividend Revenue			(152	)			824				2,553			4,531			3,428				2,728				3,802				3,225				9,958
Other		Â	180	Â		Â	472	Â		Â	677		Â	1,516		Â	100	Â		Â	460	Â		Â	1,061	Â		Â	1,329	Â		Â	1,621	Â
Total Revenues		Â	68,096	Â		Â	198,586	Â		Â	226,908		Â	281,605		Â	276,845	Â		Â	83,852	Â		Â	214,941	Â		Â	493,590	Â		Â	575,638	Â
Expenses
Compensation and Benefits
Base Compensation			36,848				40,667				42,011			61,740			46,910				46,612				47,552				119,526				141,074
Performance Fee Related
Realized			(6	)			(3	)			135			615			6,005				128				10,783				126				16,916
Unrealized		Â	(41,966	)		Â	13,599	Â		Â	27,755		Â	20,919		Â	6,344	Â		Â	(10,296	)		Â	18,306	Â		Â	(612	)		Â	14,354	Â
Total Compensation and Benefits			(5,124	)			54,263				69,901			83,274			59,259				36,444				76,641				119,040				172,344
Other Operating Expenses		Â	20,108	Â		Â	20,553	Â		Â	21,318		Â	20,492		Â	24,431	Â		Â	28,677	Â		Â	26,359	Â		Â	61,979	Â		Â	79,467	Â
Total Expenses		Â	14,984	Â		Â	74,816	Â		Â	91,219		Â	103,766		Â	83,690	Â		Â	65,121	Â		Â	103,000	Â		Â	181,019	Â		Â	251,811	Â
Economic Net Income		$	53,112	Â		$	123,770	Â		$	135,689		$	177,839		$	193,155	Â		$	18,731	Â		$	111,941	Â		$	312,571	Â		$	323,827	Â
																																	Â
Net Fee Related Earnings from Operations		$	19,883	Â		$	23,885	Â		$	21,153		$	32,905		$	28,712	Â		$	11,464	Â		$	17,465	Â		$	64,921	Â		$	57,641	Â
Â
* 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...
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	Â																												Â
THE BLACKSTONE GROUP L.P. Exhibit 2a. Economic Net Income and Net Fee Related Earnings from Operations - Continued (Dollars in Thousands)
		Three Months Ended																												Nine Months Ended
		March 31, 2009			Â	June 30, 2009			Â	September 30, 2009			Â	December 31, 2009			Â	March 31, 2010			Â	June 30, 2010			Â	September 30, 2010				September 30, 2009			Â	September 30, 2010
Real Estate
Revenues
Management Fees
Base Management Fees		$	80,198			$	81,517			$	83,409			$	83,323			$	83,060			$	82,916			$	83,232			$	245,124			$	249,208
Transaction and Other Fees, Net *			3,140				2,879				3,347				16,472				1,942				2,979				8,538				9,366				13,459
Management Fee Offsets **		Â	(1,193	)		Â	(486	)		Â	(415	)		Â	(373	)		Â	(489	)		Â	(110	)		Â	(401	)		Â	(2,094	)		Â	(1,000	)
Total Management Fees		Â	82,145	Â		Â	83,910	Â		Â	86,341	Â		Â	99,422	Â		Â	84,513	Â		Â	85,785	Â		Â	91,369	Â		Â	252,396	Â		Â	261,667	Â
Performance Fees and Allocations
Realized			646				4,590				(11,441	)			3,166				5,948				16,319				5,010				(6,205	)			27,277
Unrealized		Â	(229,219	)		Â	(51,960	)		Â	23,608	Â		Â	5,391	Â		Â	11,391	Â		Â	21,117	Â		Â	69,910	Â		Â	(257,571	)		Â	102,418	Â
Total Performance Fees and Allocations		Â	(228,573	)		Â	(47,370	)		Â	12,167	Â		Â	8,557	Â		Â	17,339	Â		Â	37,436	Â		Â	74,920	Â		Â	(263,776	)		Â	129,695	Â
Investment Income (Loss)
Realized			1,397				1,345				(3,078	)			6,500				2,632				3,900				2,159				(336	)			8,691
Unrealized		Â	(67,239	)		Â	(59,408	)		Â	1,242	Â		Â	(219	)		Â	46,892	Â		Â	79,543	Â		Â	83,968	Â		Â	(125,405	)		Â	210,403	Â
Total Investment Income (Loss)			(65,842	)			(58,063	)			(1,836	)			6,281				49,524				83,443				86,127				(125,741	)			219,094
Interest Income and Dividend Revenue			384				197				2,035				3,414				2,718				2,178				3,026				2,616				7,922
Other		Â	(669	)		Â	2,405	Â		Â	1,450	Â		Â	75	Â		Â	(1,876	)		Â	(390	)		Â	2,330	Â		Â	3,186	Â		Â	64	Â
Total Revenues		Â	(212,555	)		Â	(18,921	)		Â	100,157	Â		Â	117,749	Â		Â	152,218	Â		Â	208,452	Â		Â	257,772	Â		Â	(131,319	)		Â	618,442	Â
Expenses
Compensation and Benefits
Base Compensation			36,002				39,207				38,484				44,422				40,150				44,528				43,219				113,693				127,897
Performance Fee Related
Realized			2,138				(542	)			(1,690	)			3,600				1,524				8,895				1,806				(94	)			12,225
Unrealized		Â	(75,459	)		Â	(45,489	)		Â	5,721	Â		Â	1,246	Â		Â	6,937	Â		Â	15,999	Â		Â	46,182	Â		Â	(115,227	)		Â	69,118	Â
Total Compensation and Benefits			(37,319	)			(6,824	)			42,515				49,268				48,611				69,422				91,207				(1,628	)			209,240
Other Operating Expenses		Â	12,615	Â		Â	12,978	Â		Â	13,437	Â		Â	17,295	Â		Â	14,290	Â		Â	17,647	Â		Â	18,584	Â		Â	39,030	Â		Â	50,521	Â
Total Expenses		Â	(24,704	)		Â	6,154	Â		Â	55,952	Â		Â	66,563	Â		Â	62,901	Â		Â	87,069	Â		Â	109,791	Â		Â	37,402	Â		Â	259,761	Â
Economic Net Income		$	(187,851	)		$	(25,075	)		$	44,205	Â		$	51,186	Â		$	89,317	Â		$	121,383	Â		$	147,981	Â		$	(168,721	)		$	358,681	Â
																																			Â
Net Fee Related Earnings from Operations		$	30,513	Â		$	32,867	Â		$	33,376	Â		$	38,431	Â		$	29,825	Â		$	24,743	Â		$	39,853	Â		$	96,756	Â		$	94,421	Â
Â
* Transaction and Other Fees, Net, are net of amounts, if any, shared with limited partners.
** Primarily placement fees.
continued...
Â

THE BLACKSTONE GROUP L.P. Exhibit 2a. Economic Net Income and Net Fee Related Earnings from Operations - Continued (Dollars in Thousands)
	Â	Three Months Ended																											Â	Nine Months Ended
		March 31, 2009			Â	June 30, 2009			Â	September 30, 2009			Â	December 31, 2009			Â	March 31, 2010			Â	June 30, 2010			Â	September 30, 2010				September 30, 2009			Â	September 30, 2010
Credit and Marketable Alternatives
Revenues
Management Fees
Base Management Fees		$	96,503			$	96,293			$	105,430			$	102,647			$	103,479			$	113,203			$	120,125			$	298,226			$	336,807
Transaction and Other Fees, Net *			443				687				778				958				1,345				1,169				1,062				1,908				3,576
Management Fee Offsets **		Â	(4,213	)		Â	(4,365	)		Â	(4,121	)		Â	(1,995	)		Â	(689	)		Â	(69	)		Â	(182	)		Â	(12,699	)		Â	(940	)
Total Management Fees		Â	92,733	Â		Â	92,615	Â		Â	102,087	Â		Â	101,610	Â		Â	104,135	Â		Â	114,303	Â		Â	121,005	Â		Â	287,435	Â		Â	339,443	Â
Performance Fees and Allocations
Realized			-				587				7,622				35,073				1,758				28,949				16,215				8,209				46,922
Unrealized		Â	9,922	Â		Â	21,832	Â		Â	36,114	Â		Â	46,688	Â		Â	75,393	Â		Â	(17,835	)		Â	77,336	Â		Â	67,868	Â		Â	134,894	Â
Total Performance Fees and Allocations		Â	9,922	Â		Â	22,419	Â		Â	43,736	Â		Â	81,761	Â		Â	77,151	Â		Â	11,114	Â		Â	93,551	Â		Â	76,077	Â		Â	181,816	Â
Investment Income (Loss)
Realized			(11,998	)			(4,268	)			1,953				(718	)			2,983				8,729				1,708				(14,313	)			13,420
Unrealized		Â	8,090	Â		Â	29,049	Â		Â	29,976	Â		Â	28,901	Â		Â	19,715	Â		Â	(10,193	)		Â	13,181	Â		Â	67,115	Â		Â	22,703	Â
Total Investment Income (Loss)			(3,908	)			24,781				31,929				28,183				22,698				(1,464	)			14,889				52,802				36,123
Interest Income and Dividend Revenue			709				279				929				1,535				1,148				756				1,750				1,917				3,654
Other		Â	(253	)		Â	315	Â		Â	715	Â		Â	248	Â		Â	(542	)		Â	(372	)		Â	600	Â		Â	777	Â		Â	(314	)
Total Revenues		Â	99,203	Â		Â	140,409	Â		Â	179,396	Â		Â	213,337	Â		Â	204,590	Â		Â	124,337	Â		Â	231,795	Â		Â	419,008	Â		Â	560,722	Â
Expenses
Compensation and Benefits
Base Compensation			53,707				49,304				54,365				40,741				49,085				53,370				53,280				157,376				155,735
Performance Fee Related
Realized			57				82				842				19,873				212				13,856				12,373				981				26,441
Unrealized		Â	7,370	Â		Â	8,020	Â		Â	24,594	Â		Â	27,509	Â		Â	41,319	Â		Â	(6,595	)		Â	39,835	Â		Â	39,984	Â		Â	74,559	Â
Total Compensation and Benefits			61,134				57,406				79,801				88,123				90,616				60,631				105,488				198,341				256,735
Other Operating Expenses		Â	23,645	Â		Â	16,461	Â		Â	18,123	Â		Â	22,432	Â		Â	19,575	Â		Â	24,520	Â		Â	22,057	Â		Â	58,229	Â		Â	66,152	Â
Total Expenses		Â	84,779	Â		Â	73,867	Â		Â	97,924	Â		Â	110,555	Â		Â	110,191	Â		Â	85,151	Â		Â	127,545	Â		Â	256,570	Â		Â	322,887	Â
Economic Net Income		$	14,424	Â		$	66,542	Â		$	81,472	Â		$	102,782	Â		$	94,399	Â		$	39,186	Â		$	104,250	Â		$	162,438	Â		$	237,835	Â
																																			Â
Net Fee Related Earnings from Operations		$	14,428	Â		$	25,164	Â		$	24,005	Â		$	36,049	Â		$	34,136	Â		$	34,552	Â		$	49,334	Â		$	63,597	Â		$	118,022	Â
Â
* Transaction and Other Fees, Net, are net of amounts, if any, shared with limited partners.
** Primarily placement fees.
continued...

Â
THE BLACKSTONE GROUP L.P. Exhibit 2a. Economic Net Income and Net Fee Related Earnings from Operations - Continued (Dollars in Thousands)
	Â	Three Months Ended																									Â	Nine Months Ended
		March 31, 2009			Â	June 30, 2009			Â	September 30, 2009		Â	December 31, 2009			Â	March 31, 2010			Â	June 30, 2010			Â	September 30, 2010			September 30, 2009			Â	September 30, 2010
Financial Advisory
Revenues
Advisory Fees		$	90,940			$	82,503			$	94,566		$	122,709			$	76,568			$	134,099			$	84,541		$	268,009			$	295,208
Transaction and Other Fees, Net		Â	-	Â		Â	-	Â		Â	-		Â	-	Â		Â	1	Â		Â	102	Â		Â	-		Â	-	Â		Â	103	Â
Total Management Fees		Â	90,940	Â		Â	82,503	Â		Â	94,566		Â	122,709	Â		Â	76,569	Â		Â	134,201	Â		Â	84,541		Â	268,009	Â		Â	295,311	Â
Investment Income (Loss)
Realized			-				-				-			1,443				187				(49	)			469			-				607
Unrealized		Â	-	Â		Â	-	Â		Â	476		Â	(257	)		Â	230	Â		Â	561	Â		Â	607		Â	476	Â		Â	1,398	Â
Total Investment Income (Loss)			-				-				476			1,186				417				512				1,076			476				2,005
Interest Income and Dividend Revenue			1,044				1,118				1,250			1,842				1,396				1,268				1,609			3,412				4,273
Other		Â	(943	)		Â	(122	)		Â	1,051		Â	(21	)		Â	(932	)		Â	(342	)		Â	477		Â	(14	)		Â	(797	)
Total Revenues		Â	91,041	Â		Â	83,499	Â		Â	97,343		Â	125,716	Â		Â	77,450	Â		Â	135,639	Â		Â	87,703		Â	271,883	Â		Â	300,792	Â
Expenses
Compensation and Benefits
Base Compensation		Â	50,952	Â		Â	54,239	Â		Â	57,686		Â	69,482	Â		Â	54,492	Â		Â	76,152	Â		Â	66,531		Â	162,877	Â		Â	197,175	Â
Total Compensation and Benefits			50,952				54,239				57,686			69,482				54,492				76,152				66,531			162,877				197,175
Other Operating Expenses		Â	12,976	Â		Â	21,734	Â		Â	22,666		Â	22,196	Â		Â	14,727	Â		Â	17,316	Â		Â	17,253		Â	57,376	Â		Â	49,296	Â
Total Expenses		Â	63,928	Â		Â	75,973	Â		Â	80,352		Â	91,678	Â		Â	69,219	Â		Â	93,468	Â		Â	83,784		Â	220,253	Â		Â	246,471	Â
Economic Net Income		$	27,113	Â		$	7,526	Â		$	16,991		$	34,038	Â		$	8,231	Â		$	42,171	Â		$	3,919		$	51,630	Â		$	54,321	Â
																																	Â
Net Fee Related Earnings from Operations		$	24,694	Â		$	4,874	Â		$	16,405		$	31,778	Â		$	6,072	Â		$	37,156	Â		$	6,262		$	45,973	Â		$	49,490	Â
Â
continued...

Â
THE BLACKSTONE GROUP L.P. Exhibit 2a. Economic Net Income and Net Fee Related Earnings from Operations - Continued (Dollars in Thousands)
	Â	Three Months Ended																											Â	Nine Months Ended
		March 31, 2009			Â	June 30, 2009			Â	September 30, 2009			Â	December 31, 2009			Â	March 31, 2010			Â	June 30, 2010			Â	September 30, 2010				September 30, 2009			Â	September 30, 2010
Economic Net Income Recap, Total Segments
Revenues
Management and Advisory Fees
Base Management Fees		$	245,132			$	245,550			$	255,848			$	253,299			$	251,971			$	262,914			$	269,434			$	746,530			$	784,319
Advisory Fees			90,940				82,503				94,566				122,709				76,568				134,099				84,541				268,009				295,208
Transaction and Other Fees, Net *			13,911				18,711				22,493				59,925				35,260				20,617				22,948				55,115				78,825
Management Fee Offsets **		Â	(5,406	)		Â	(4,851	)		Â	(4,536	)		Â	(2,368	)		Â	(1,178	)		Â	(179	)		Â	(674	)		Â	(14,793	)		Â	(2,031	)
Total Management and Advisory Fees		Â	344,577	Â		Â	341,913	Â		Â	368,371	Â		Â	433,565	Â		Â	362,621	Â		Â	417,451	Â		Â	376,249	Â		Â	1,054,861	Â		Â	1,156,321	Â
Performance Fees and Allocations
Realized			646				5,177				(3,819	)			72,260				53,881				46,374				66,039				2,004				166,294
Unrealized		Â	(214,479	)		Â	67,057	Â		Â	170,589	Â		Â	142,700	Â		Â	132,333	Â		Â	(20,738	)		Â	192,745	Â		Â	23,167	Â		Â	304,340	Â
Total Performance Fees and Allocations		Â	(213,833	)		Â	72,234	Â		Â	166,770	Â		Â	214,960	Â		Â	186,214	Â		Â	25,636	Â		Â	258,784	Â		Â	25,171	Â		Â	470,634	Â
Investment Income (Loss)
Realized			(10,945	)			(2,821	)			7,669				35,641				5,307				15,721				14,276				(6,097	)			35,304
Unrealized		Â	(74,314	)		Â	(13,241	)		Â	50,334	Â		Â	41,101	Â		Â	151,521	Â		Â	87,186	Â		Â	128,247	Â		Â	(37,221	)		Â	366,954	Â
Total Investment Income (Loss)			(85,259	)			(16,062	)			58,003				76,742				156,828				102,907				142,523				(43,318	)			402,258
Interest Income and Dividend Revenue			1,985				2,418				6,767				11,322				8,690				6,930				10,187				11,170				25,807
Other		Â	(1,685	)		Â	3,070	Â		Â	3,893	Â		Â	1,818	Â		Â	(3,250	)		Â	(644	)		Â	4,468	Â		Â	5,278	Â		Â	574	Â
Total Revenues		Â	45,785	Â		Â	403,573	Â		Â	603,804	Â		Â	738,407	Â		Â	711,103	Â		Â	552,280	Â		Â	792,211	Â		Â	1,053,162	Â		Â	2,055,594	Â
Expenses
Compensation and Benefits
Base Compensation			177,509				183,417				192,546				216,385				190,637				220,662				210,582				553,472				621,881
Performance Fee Related
Realized			2,189				(463	)			(713	)			24,088				7,741				22,879				24,962				1,013				55,582
Unrealized		Â	(110,055	)		Â	(23,870	)		Â	58,070	Â		Â	49,674	Â		Â	54,600	Â		Â	(892	)		Â	104,323	Â		Â	(75,855	)		Â	158,031	Â
Total Compensation and Benefits			69,643				159,084				249,903				290,147				252,978				242,649				339,867				478,630				835,494
Other Operating Expenses		Â	69,344	Â		Â	71,726	Â		Â	75,544	Â		Â	82,415	Â		Â	73,023	Â		Â	88,160	Â		Â	84,253	Â		Â	216,614	Â		Â	245,436	Â
Total Expenses		Â	138,987	Â		Â	230,810	Â		Â	325,447	Â		Â	372,562	Â		Â	326,001	Â		Â	330,809	Â		Â	424,120	Â		Â	695,244	Â		Â	1,080,930	Â
Total Economic Net Income (Loss)		$	(93,202	)		$	172,763	Â		$	278,357	Â		$	365,845	Â		$	385,102	Â		$	221,471	Â		$	368,091	Â		$	357,918	Â		$	974,664	Â
																																			Â
Total Net Fee Related Earnings from Operations		$	89,518	Â		$	86,790	Â		$	94,939	Â		$	139,163	Â		$	98,745	Â		$	107,915	Â		$	112,914	Â		$	271,247	Â		$	319,574	Â
Â
* 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.
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	Â																												Â
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.
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		Three Months Ended																												Nine Months Ended
		March 31, 2009			Â	June 30, 2009			Â	September 30, 2009			Â	December 31, 2009			Â	March 31, 2010			Â	June 30, 2010			Â	September 30, 2010				September 30, 2009			Â	September 30, 2010
Private Equity
Economic Net Income		$	53,112			$	123,770			$	135,689			$	177,839			$	193,155			$	18,731			$	111,941			$	312,571			$	323,827
Performance Fees and Allocations Adjustment (a)			(4,818	)			(97,185	)			(110,867	)			(124,642	)			(91,724	)			22,914				(90,313	)			(212,870	)			(159,123	)
Investment Income (Loss) Adjustment (b)			15,509				(17,220	)			(27,434	)			(41,092	)			(84,189	)			(20,416	)			(40,431	)			(29,145	)			(145,036	)
Investment Income - Blackstone's Treasury Cash Management Strategies (c)			-				-				-				5,510				1,650				2,278				5,052				-				8,980
Performance Fee Related Compensation and Benefits Adjustment (d)			(41,972	)			13,596				27,890				21,534				12,349				(10,168	)			29,089				(486	)			31,270
Taxes Payable (e)		Â	(1,948	)		Â	924	Â		Â	(4,125	)		Â	(6,244	)		Â	(2,529	)		Â	(1,875	)		Â	2,127	Â		Â	(5,149	)		Â	(2,277	)
Net Fee Related Earnings from Operations		$	19,883	Â		$	23,885	Â		$	21,153	Â		$	32,905	Â		$	28,712	Â		$	11,464	Â		$	17,465	Â		$	64,921	Â		$	57,641	Â
																																			Â
Real Estate
Economic Net Income (Loss)		$	(187,851	)		$	(25,075	)		$	44,205			$	51,186			$	89,317			$	121,383			$	147,981			$	(168,721	)		$	358,681
Performance Fees and Allocations Adjustment (a)			228,573				47,370				(12,167	)			(8,557	)			(17,339	)			(37,436	)			(74,920	)			263,776				(129,695	)
Investment Income (Loss) Adjustment (b)			65,842				58,063				1,836				(6,281	)			(49,524	)			(83,443	)			(86,127	)			125,741				(219,094	)
Investment Income - Blackstone's Treasury Cash Management Strategies (c)			-				-				-				4,312				1,311				1,811				4,016				-				7,138
Performance Fee Related Compensation and Benefits Adjustment (d)			(73,321	)			(46,031	)			4,031				4,846				8,461				24,894				47,988				(115,321	)			81,343
Taxes Payable (e)		Â	(2,730	)		Â	(1,460	)		Â	(4,529	)		Â	(7,075	)		Â	(2,401	)		Â	(2,466	)		Â	915	Â		Â	(8,719	)		Â	(3,952	)
Net Fee Related Earnings from Operations		$	30,513	Â		$	32,867	Â		$	33,376	Â		$	38,431	Â		$	29,825	Â		$	24,743	Â		$	39,853	Â		$	96,756	Â		$	94,421	Â

____________________
(a)	This adjustment removes from ENI the segment amount of Performance Fees and Allocations.
(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 and Allocations.
(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.
	Â
	continued...
	Â

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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)
	Â	Â	Three Months Ended																											Â	Nine Months Ended
			March 31, 2009			Â	June 30, 2009			Â	September 30, 2009			Â	December 31, 2009			Â	March 31, 2010			Â	June 30, 2010			Â	September 30, 2010				September 30, 2009			Â	September 30, 2010
Credit and Marketable Alternatives
Economic Net Income			$	14,424			$	66,542			$	81,472			$	102,782			$	94,399			$	39,186			$	104,250			$	162,438			$	237,835
Performance Fees and Allocations Adjustment (a)				(9,922	)			(22,419	)			(43,736	)			(81,761	)			(77,151	)			(11,114	)			(93,551	)			(76,077	)			(181,816	)
Investment Income (Loss) Adjustment (b)				3,908				(24,781	)			(31,929	)			(28,183	)			(22,698	)			1,464				(14,889	)			(52,802	)			(36,123	)
Investment Income - Blackstone's Treasury Cash Management Strategies (c)				-				-				-				1,326				354				489				1,085				-				1,928
Performance Fee Related Compensation and Benefits Adjustment (d)				7,427				8,102				25,436				47,382				41,531				7,261				52,208				40,965				101,000
Taxes Payable (e)			Â	(1,409	)		Â	(2,280	)		Â	(7,238	)		Â	(5,497	)		Â	(2,299	)		Â	(2,734	)		Â	231	Â		Â	(10,927	)		Â	(4,802	)
Net Fee Related Earnings from Operations			$	14,428	Â		$	25,164	Â		$	24,005	Â		$	36,049	Â		$	34,136	Â		$	34,552	Â		$	49,334	Â		$	63,597	Â		$	118,022	Â
																																				Â
Financial Advisory
Economic Net Income			$	27,113			$	7,526			$	16,991			$	34,038			$	8,231			$	42,171			$	3,919			$	51,630			$	54,321
Investment Income (Loss) Adjustment (b)				-				-				(476	)			(1,186	)			(417	)			(512	)			(1,076	)			(476	)			(2,005	)
Investment Income - Blackstone's Treasury Cash Management Strategies (c)				-				-				-				1,220				350				484				1,073				-				1,907
Taxes Payable (e)			Â	(2,419	)		Â	(2,652	)		Â	(110	)		Â	(2,294	)		Â	(2,092	)		Â	(4,987	)		Â	2,346	Â		Â	(5,181	)		Â	(4,733	)
Net Fee Related Earnings from Operations			$	24,694	Â		$	4,874	Â		$	16,405	Â		$	31,778	Â		$	6,072	Â		$	37,156	Â		$	6,262	Â		$	45,973	Â		$	49,490	Â

____________________
(a)	This adjustment removes from ENI the segment amount of Performance Fees and Allocations.
(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 and Allocations.
(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...
	Â

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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)
	Â	Three Months Ended																											Â	Nine Months Ended
		March 31, 2009			Â	June 30, 2009			Â	September 30, 2009			Â	December 31, 2009			Â	March 31, 2010			Â	June 30, 2010			Â	September 30, 2010				September 30, 2009			Â	September 30, 2010
Income (Loss) Before Provision (Benefit) for Taxes		$	(912,207	)		$	(586,986	)		$	(426,959	)		$	(365,314	)		$	(227,671	)		$	(636,928	)		$	143,302			$	(1,926,152	)		$	(721,297	)
IPO and Acquisition-Related Charges (a)			741,057				761,834				719,708				751,351				726,722				749,930				438,568				2,222,599				1,915,220
Amortization of Intangibles (b)			39,513				39,511				39,513				39,511				39,512				40,822				40,872				118,537				121,206
(Income) Loss Associated with Non-Controlling Interests in (Income) Loss of Consolidated Entities (c)			38,435				(41,596	)			(53,905	)			(59,703	)			(159,935	)			58,294				(266,346	)			(57,066	)			(367,987	)
Management Fee Revenues Associated with Consolidated CLO Entities (d)		Â	-	Â		Â	-	Â		Â	-	Â		Â	-	Â		Â	6,474	Â		Â	9,353	Â		Â	11,695	Â		Â	-	Â		Â	27,522	Â
Total Segments
Total Segments, Economic Net Income (Loss)			(93,202	)			172,763				278,357				365,845				385,102				221,471				368,091				357,918				974,664
Performance Fees and Allocations Adjustment (e)			213,833				(72,234	)			(166,770	)			(214,960	)			(186,214	)			(25,636	)			(258,784	)			(25,171	)			(470,634	)
Investment Income (Loss) Adjustment (f)			85,259				16,062				(58,003	)			(76,742	)			(156,828	)			(102,907	)			(142,523	)			43,318				(402,258	)
Investment Income - Blackstone's Treasury Cash Management Strategies (g)			-				-				-				12,368				3,665				5,062				11,226				-				19,953
Performance Fee Related Compensation and Benefits Adjustment (h)			(107,866	)			(24,333	)			57,357				73,762				62,341				21,987				129,285				(74,842	)			213,613
Taxes Payable (i)		Â	(8,506	)		Â	(5,468	)		Â	(16,002	)		Â	(21,110	)		Â	(9,321	)		Â	(12,062	)		Â	5,619	Â		Â	(29,976	)		Â	(15,764	)
Net Fee Related Earnings from Operations			89,518				86,790				94,939				139,163				98,745				107,915				112,914				271,247				319,574
Realized Performance Fees and Allocations (j)			(1,543	)			5,637				(3,106	)			48,172				46,140				23,495				41,077				988				110,712
Realized Investment Income (Loss) (k)			(10,945	)			(2,821	)			7,669				35,641				5,307				15,721				14,276				(6,097	)			35,304
Adjustment Related to Realized Investment Income - Blackstone's Treasury Cash Management Strategies (l)			-				-				-				(10,142	)			(1,264	)			512				(4,874	)			-				(5,626	)
Other Payables Including Payable Under Tax Receivable Agreement		Â	-	Â		Â	-	Â		Â	-	Â		Â	-	Â		Â	(232	)		Â	(68	)		Â	2,923	Â		Â	-	Â		Â	2,623	Â
Distributable Earnings		$	77,030	Â		$	89,606	Â		$	99,502	Â		$	212,834	Â		$	148,696	Â		$	147,575	Â		$	166,316	Â		$	266,138	Â		$	462,587	Â
																																			Â
Earnings Before Interest, Taxes and Depreciation and Amortization from Net Fee Related Earnings from Operations (m)		$	104,846	Â		$	97,463	Â		$	121,259	Â		$	171,916	Â		$	120,805	Â		$	132,866	Â		$	124,195	Â		$	323,568	Â		$	377,866	Â

____________________
(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.
(d)	This adjustment adds back to Income (Loss) Before Provision for Taxes the amount of Management Fee Revenues associated with Consolidated CLO Entities.
(e)	This adjustment removes from ENI the total segment amount of Performance Fees and Allocations.
(f)	This adjustment removes from ENI the total segment amount of Investment Income (Loss).
(g)	This adjustment represents the realized and unrealized gain on Blackstone’s Treasury cash management strategies which are a component of Investment Income (Loss) but included in Net Fee Related Earnings.
(h)	This adjustment removes from expenses the compensation and benefit amounts related to Blackstone’s profit sharing plans related to Performance Fees and Allocations.
(i)	Represents an implied payable for income taxes calculated using a similar methodology applied in calculating the current provision for The Blackstone Group L.P.
(j)	Represents the adjustment for realized Performance Fees and Allocations net of corresponding actual amounts due under Blackstone’s profit sharing plans related thereto.
(k)	Represents the adjustment for Blackstone’s Investment Income (Loss) - Realized.
(l)	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).
(m)	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 $8.5 million, $5.5 million, $16.0 million, $21.1 million, $9.3 million, $12.1 million and $(5.6) million for the three months ended March 31, 2009, June 30, 2009, September 30, 2009, December 31, 2009, March 31, 2010, June 30, 2010 and September 30, 2010, respectively. The cash taxes payable component of (i) was $15.8 million and $30.0 million for the nine months ended September 30, 2010 and 2009, respectively. Interest was $0.8 million, $(0.8) million, $4.4 million, $5.8 million, $6.3 million, $6.8 million and $10.3 million for the three months ended March 31, 2009, June 30, 2009, September 30, 2009, December 31, 2009, March 31, 2010, June 30, 2010 and September 30, 2010, respectively. Interest was $23.5 million and $4.4 million for the nine months ended September 30, 2010 and 2009, respectively. Depreciation and amortization was $6.0 million, $6.0 million, $5.9 million, $5.8 million, $6.4 million, $6.1 million and $6.6 million for the three months ended March 31, 2009, June 30, 2009, September 30, 2009, December 31, 2009, March 31, 2010, June 30, 2010 and September 30, 2010, respectively. Depreciation and amortization was $19.0 million and $17.9 million for the nine months ended September 30, 2010 and 2009, respectively.

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THE BLACKSTONE GROUP L.P. Exhibit 3. Distributable Earnings (Dollars in Thousands)
Â
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.
Â
	Â	Three Months Ended September 30,							Â	Nine Months Ended September 30,
		2010			Â	2009				2010			Â	2009
Fee Related Earnings
Revenues
Total Management and Advisory Fees (a)		$	376,249			$	368,371			$	1,156,321			$	1,054,861
Interest and Dividend Revenue (a)			10,187				6,767				25,807				11,170
Other (a)			4,468				3,893				574				5,278
Investment Income - Blackstone's Treasury Cash  Management Strategies (b)		Â	11,226	Â		Â	-	Â		Â	19,953	Â		Â	-	Â
Total Revenues		Â	402,130	Â		Â	379,031	Â		Â	1,202,655	Â		Â	1,071,309	Â
Expenses
Compensation and Benefits - Base Compensation (a)			210,582				192,546				621,881				553,472
Other Operating Expenses (a)			84,253				75,544				245,436				216,614
Cash Taxes (c)		Â	(5,619	)		Â	16,002	Â		Â	15,764	Â		Â	29,976	Â
Total Expenses		Â	289,216	Â		Â	284,092	Â		Â	883,081	Â		Â	800,062	Â
Net Fee Related Earnings from Operations		Â	112,914	Â		Â	94,939	Â		Â	319,574	Â		Â	271,247	Â
Performance Fees and Allocations,  Net of  Related Compensation
Performance Fees and Allocations - Realized (a)			66,039				(3,819	)			166,294				2,004
Compensation and Benefits - Performance Fee  Related - Realized (a)		Â	(24,962	)			713	Â		Â	(55,582	)		Â	(1,016	)
Total Performance Fees and Allocations,  Net of Related Compensation		Â	41,077	Â			(3,106	)		Â	110,712	Â		Â	988	Â
Investment Income and Other
Investment Income (Loss) - Realized (a)			14,276				7,669				35,304				(6,097	)
Adjustment Related to Realized Investment Income -  Blackstone's Treasury Cash Management Strategies (d)			(4,874	)			-				(5,626	)			-
Other Payables Including Payable Under Tax  Receivable Agreement		Â	2,923	Â		Â	-	Â		Â	2,623	Â		Â	-	Â
Total Investment Income and Other		Â	12,325	Â		Â	7,669	Â		Â	32,301	Â		Â	(6,097	)
Distributable Earnings		$	166,316	Â		$	99,502	Â		$	462,587	Â		$	266,138	Â

_________________________
(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.
	Â

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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—Basic and Diluted to Distributable Earnings Adjusted Units—Basic and Diluted
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.
	Â		Â		Â		Â
		Three Months Ended September 30,				Nine Months Ended September 30,
		2010		2009		2010		2009
Total GAAP Weighted-Average Common Units Outstanding -   Basic and Diluted		370,101,582		291,554,570		352,794,385		280,856,860
Adjustments:
Weighted-Average Blackstone Holdings Partnership Units		727,528,593		808,479,683		745,006,116		820,944,937
Weighted-Average Unvested Deferred Restricted Common   Units		23,636,653		19,750,299		26,542,362		23,353,728
Weighted-Average Economic Net Income Adjusted Units -   Basic and Diluted		1,121,266,828		1,119,784,552		1,124,342,863		1,125,155,525

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 as of September 30, 2010.

	Â	Â	Â	September 30,
				2010
Total GAAP Common Units Outstanding - Basic and Diluted				374,003,111
Adjustments:
Blackstone Holdings Partnership Units				723,662,686
Unvested Deferred Restricted Common Units				23,479,140
Economic Net Income Adjusted Units - Basic and Diluted				1,121,144,937

The following table provides a reconciliation of Blackstone’s Total GAAP Common Units Outstanding—Basic and Diluted to Distributable Earnings Adjusted Units—Basic and Diluted.

	Â	Â	Â	Â	September 30,
					2010	Â	2009
Total GAAP Common Units Outstanding - Basic and Diluted					374,003,111		303,658,355
Adjustments:
Blackstone Holdings Partnership Units					723,662,686		788,342,719
Distributable Earnings Adjusted Units - Basic and Diluted					1,097,665,797		1,092,001,074
							Â

	Â
THE BLACKSTONE GROUP L.P. Exhibit 5. Assets Under Management (Dollars in Thousands)
		As of and for the Periods Ended September 30,
		2010			Â	2009
Total Assets Under Management
(End of Period)
Private Equity		$	29,202,952	Â		$	24,308,879	Â
Real Estate			27,129,825				20,434,831
CAMA		Â	62,782,469	Â		Â	52,810,672	Â
		$	119,115,246	Â		$	97,554,382	Â
Fee-Earning Assets Under Management
(End of Period)
Private Equity		$	24,311,443			$	25,184,161
Real Estate			24,345,161				23,692,257
CAMA		Â	55,636,578	Â		Â	47,448,212	Â
		$	104,293,182	Â		$	96,324,630	Â
Weighted-Average Fee-Earning
Assets Under Management
(For the Three Months Ended)
Private Equity		$	24,610,920			$	25,240,130
Real Estate			24,016,964				23,815,694
CAMA		Â	54,095,555	Â		Â	45,739,248	Â
		$	102,723,439	Â		$	94,795,072	Â
Weighted-Average Fee-Earning
Assets Under Management
(Year to Date Period Ended)
Private Equity		$	25,028,962			$	25,298,679
Real Estate			23,826,723				23,292,141
CAMA		Â	51,931,728	Â		Â	44,892,195	Â
		$	100,787,413	Â		$	93,483,015	Â
								Â

	Â
THE BLACKSTONE GROUP L.P. Exhibit 6. Limited Partner Capital Invested Metrics (Dollars in Thousands)
		As of and for the Periods Ended September 30,
		2010			Â	2009
Limited Partner Capital Invested
(For the Three Months Ended)
Private Equity		$	678,882	Â		$	109,082	Â
Real Estate			688,951				34,993
CAMA (a)		Â	692,275	Â		Â	87,346	Â
		$	2,060,108	Â		$	231,421	Â
Limited Partner Capital Invested
(Year to Date Period Ended)
Private Equity		$	1,536,594			$	643,491
Real Estate			1,757,636				502,803
CAMA (a)		Â	1,113,419	Â		Â	407,805	Â
		$	4,407,649	Â		$	1,554,099	Â
Fund Level Unrealized Value (b)
(End of Period)
Private Equity
Cost		$	20,582,631	Â		$	19,157,223	Â
Unrealized Value		$	21,924,759	Â		$	15,771,763	Â
Real Estate
Cost		$	13,754,522	Â		$	11,802,676	Â
Unrealized Value		$	13,360,662	Â		$	6,635,416	Â
CAMA
Cost		$	3,465,813	Â		$	3,001,616	Â
Unrealized Value		$	3,905,776	Â		$	2,789,529	Â

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(a)	Limited Partner Capital Invested and Fund Level Unrealized Value for the CAMA segment represent activity in Blackstone’s mezzanine and credit liquidity funds.
(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.