The Blackstone Group Reports First Quarter 2011 Results

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				2010				2010				2010					2011					$				%
Economic Net Income Recap, Total Segments
Revenues
	Management and Advisory Fees
		Base Management Fees					$	251,971			$	262,914			$	269,434			$	285,152				$	305,587				$	53,616			21	%
		Advisory Fees						76,568				134,099				84,541				130,932					70,252					(6,316	)		-8	%
		Transaction and Other Fees, Net *						35,260				20,617				22,948				58,923					58,363					23,103			66	%
		Management Fee Offsets **						(1,178	)			(179	)			(674	)			(282	)				(8,536	)				(7,358	)		N/M
			Total Management and Advisory Fees					362,621				417,451				376,249				474,725					425,666					63,045			17	%
	Performance Fees
		Realized						53,881				46,374				66,039				195,369					95,600					41,719			77	%
		Unrealized						132,333				(20,738	)			192,745				260,286					505,197					372,864			N/M
			Total Performance Fees					186,214				25,636				258,784				455,655					600,797					414,583			N/M
	Investment Income
		Realized						5,307				15,721				14,276				11,611					23,499					18,192			N/M
		Unrealized						151,521				87,186				128,247				134,680					102,577					(48,944	)		-32	%
			Total Investment Income					156,828				102,907				142,523				146,291					126,076					(30,752	)		-20	%
	Interest Income and Dividend Revenue							8,690				6,930				10,187				10,289					9,448					758			9	%
	Other							(3,250	)			(644	)			4,468				(1,192	)				2,259					5,509			N/M
				Total Revenues				711,103				552,280				792,211				1,085,768					1,164,246					453,143			64	%
Expenses
	Compensation and Benefits
		Compensation						190,637				220,662				210,582				237,233					229,898					39,261			21	%
		Performance Fee Compensation
			Realized					7,741				22,879				24,962				72,734					14,543					6,802			88	%
			Unrealized					54,600				(892	)			104,323				70,615					162,525					107,925			198	%
					Total Compensation and Benefits			252,978				242,649				339,867				380,582					406,966					153,988			61	%
	Other Operating Expenses							73,023				88,160				84,253				99,080					102,975					29,952			41	%
				Total Expenses				326,001				330,809				424,120				479,662					509,941					183,940			56	%
Total Economic Net Income							$	385,102			$	221,471			$	368,091			$	606,106				$	654,305				$	269,203			70	%
Total Net Fee Related Earnings from Operations							$	98,745			$	107,915			$	112,914			$	122,740				$	93,180				$	(5,565	)		-6	%
____________________
* Transaction and Other Fees, Net, are net of amounts, if any, shared with limited partners including, for Private Equity, broken deal expenses.
** Primarily placement fees.
continued...

THE BLACKSTONE GROUP L.P. Exhibit 2a. Economic Net Income and Net Fee Related Earnings from Operations - Continued (Dollars in Thousands)
							Three Months Ended
																													Mar 31, 2011 vs.
							Mar 31,				Jun 30,				Sep 30,				Dec 31,					Mar 31,					Mar 31, 2010
							2010				2010				2010				2010					2011					$				%
Private Equity
Revenues
	Management Fees
		Base Management Fees					$	65,432			$	66,795			$	66,077			$	65,003				$	79,935				$	14,503			22	%
		Transaction and Other Fees, Net *						31,972				16,367				13,348				10,556					35,342					3,370			11	%
		Management Fee Offsets **						?				?				(91	)			(97	)				(7,889	)				(7,889	)		N/M
			Total Management Fees					97,404				83,162				79,334				75,462					107,388					9,984			10	%
	Performance Fees
		Realized						46,175				1,106				44,814				64,774					82,389					36,214			78	%
		Unrealized						45,549				(24,020	)			45,499				84,466					32,537					(13,012	)		-29	%
			Total Performance Fees					91,724				(22,914	)			90,313				149,240					114,926					23,202			25	%
	Investment Income (Loss)																																N/M
		Realized						(495	)			3,141				9,940				2,746					17,907					18,402			N/M
		Unrealized						84,684				17,275				30,491				20,838					29,126					(55,558	)		-66	%
			Total Investment Income (Loss)					84,189				20,416				40,431				23,584					47,033					(37,156	)		-44	%
	Interest Income and Dividend Revenue							3,428				2,728				3,802				4,086					3,505					77			2	%
	Other							100				460				1,061				400					811					711			N/M
				Total Revenues				276,845				83,852				214,941				252,772					273,663					(3,182	)		-1	%
Expenses
	Compensation and Benefits
		Compensation						46,910				46,612				47,552				38,271					56,254					9,344			20	%
		Performance Fee Compensation
			Realized					6,005				128				10,783				15,711					7,718					1,713			29	%
			Unrealized					6,344				(10,296	)			18,306				6,966					5,464					(880	)		-14	%
					Total Compensation and Benefits			59,259				36,444				76,641				60,948					69,436					10,177			17	%
	Other Operating Expenses							24,431				28,677				26,359				30,122					28,713					4,282			18	%
				Total Expenses				83,690				65,121				103,000				91,070					98,149					14,459			17	%
Economic Net Income							$	193,155			$	18,731			$	111,941			$	161,702				$	175,514				$	(17,641	)		-9	%
Net Fee Related Earnings from Operations							$	28,712			$	11,464			$	17,465			$	7,355				$	23,803				$	(4,909	)		-17	%
____________________
* Transaction and Other Fees, Net, are net of amounts, if any, shared with limited partners including, for Private Equity, broken deal expenses.
** Primarily placement fees.
continued...

THE BLACKSTONE GROUP L.P. Exhibit 2a. Economic Net Income and Net Fee Related Earnings from Operations - Continued (Dollars in Thousands)
							Three Months Ended
																													Mar 31, 2011 vs.
							Mar 31,				Jun 30,				Sep 30,				Dec 31,					Mar 31,					Mar 31, 2010
							2010				2010				2010				2010					2011					$				%
Real Estate
Revenues
	Management Fees
		Base Management Fees					$	83,060			$	82,916			$	83,232			$	89,220				$	95,439				$	12,379			15%
		Transaction and Other Fees, Net *						1,942				2,979				8,538				46,455					21,543					19,601			N/M
		Management Fee Offsets **						(489	)			(110	)			(401	)			(71	)				(505	)				(16	)		-3%
			Total Management Fees					84,513				85,785				91,369				135,604					116,477					31,964			38%
	Performance Fees
		Realized						5,948				16,319				5,010				13,011					2,593					(3,355	)		-56%
		Unrealized						11,391				21,117				69,910				154,553					368,104					356,713			N/M
			Total Performance Fees					17,339				37,436				74,920				167,564					370,697					353,358			N/M
	Investment Income
		Realized						2,632				3,900				2,159				2,560					2,919					287			11%
		Unrealized						46,892				79,543				83,968				108,576					61,406					14,514			31%
			Total Investment Income					49,524				83,443				86,127				111,136					64,325					14,801			30%
	Interest Income and Dividend Revenue							2,718				2,178				3,026				3,251					3,288					570			21%
	Other							(1,876	)			(390	)			2,330				(400	)				860					2,736			N/M
				Total Revenues				152,218				208,452				257,772				417,155					555,647					403,429			N/M
Expenses
	Compensation and Benefits
		Compensation						40,150				44,528				43,219				55,280					58,501					18,351			46%
		Performance Fee Compensation
			Realized					1,524				8,895				1,806				3,619					1,230					(294	)		-19%
			Unrealized					6,937				15,999				46,182				53,746					106,501					99,564			N/M
					Total Compensation and Benefits			48,611				69,422				91,207				112,645					166,232					117,621			N/M
	Other Operating Expenses							14,290				17,647				18,584				23,668					28,366					14,076			99%
				Total Expenses				62,901				87,069				109,791				136,313					194,598					131,697			N/M
Economic Net Income							$	89,317			$	121,383			$	147,981			$	280,842				$	361,049				$	271,732			N/M
Net Fee Related Earnings from Operations							$	29,825			$	24,743			$	39,853			$	52,457				$	31,233				$	1,408			5%
____________________
* Transaction and Other Fees, Net, are net of amounts, if any, shared with limited partners.
** Primarily placement fees.
continued...

THE BLACKSTONE GROUP L.P. Exhibit 2a. Economic Net Income and Net Fee Related Earnings from Operations - Continued (Dollars in Thousands)
							Three Months Ended
																											Mar 31, 2011 vs.
							Mar 31,				Jun 30,				Sep 30,				Dec 31,				Mar 31,				Mar 31, 2010
							2010				2010				2010				2010				2011				$				%
Hedge Fund Solutions
Revenues
	Management Fees
		Base Management Fees					$	63,866			$	65,533			$	69,305			$	74,069			$	75,612			$	11,746			18%
		Transaction and Other Fees, Net *						809				870				846				1,047				727				(82	)		-10%
		Management Fee Offsets **						?				(72	)			(163	)			(95	)			(124	)			(124	)		N/M
			Total Management Fees					64,675				66,331				69,988				75,021				76,215				11,540			18%
	Performance Fees
		Realized						2,117				1,021				872				52,616				893				(1,224	)		-58%
		Unrealized						10,413				(2,596	)			14,137				(18,972	)			19,253				8,840			85%
			Total Performance Fees					12,530				(1,575	)			15,009				33,644				20,146				7,616			61%
	Investment Income (Loss)
		Realized						(250	)			5,438				1,050				3,580				1,341				1,591			N/M
		Unrealized						11,880				(6,749	)			7,831				6,399				7,120				(4,760	)		-40%
			Total Investment Income (Loss)					11,630				(1,311	)			8,881				9,979				8,461				(3,169	)		-27%
	Interest Income and Dividend Revenue							475				353				498				543				516				41			9%
	Other							(83	)			(40	)			270				(50	)			104				187			N/M
				Total Revenues				89,227				63,758				94,646				119,137				105,442				16,215			18%
Expenses
	Compensation and Benefits
		Compensation						20,742				26,388				24,506				23,750				28,657				7,915			38%
		Performance Fee Compensation
			Realized					771				356				3,313				16,193				300				(471	)		-61%
			Unrealized					3,783				(977	)			5,075				(6,814	)			5,358				1,575			42%
					Total Compensation and Benefits			25,296				25,767				32,894				33,129				34,315				9,019			36%
	Other Operating Expenses							11,285				12,353				12,388				15,334				13,008				1,723			15%
				Total Expenses				36,581				38,120				45,282				48,463				47,323				10,742			29%
Economic Net Income							$	52,646			$	25,638			$	49,364			$	70,674			$	58,119			$	5,473			10%
Net Fee Related Earnings from Operations							$	31,542			$	26,857			$	36,082			$	29,240			$	33,136			$	1,594			5%
____________________
* Transaction and Other Fees, Net, are net of amounts, if any, shared with limited partners.
** Primarily placement fees.
continued...

THE BLACKSTONE GROUP L.P. Exhibit 2a. Economic Net Income and Net Fee Related Earnings from Operations - Continued (Dollars in Thousands)
							Three Months Ended
																													Mar 31, 2011 vs.
							Mar 31,				Jun 30,				Sep 30,				Dec 31,					Mar 31,					Mar 31, 2010
							2010				2010				2010				2010					2011					$				%
Credit Businesses
Revenues
	Management Fees
		Base Management Fees					$	39,613			$	47,670			$	50,820			$	56,860				$	54,601				$	14,988			38%
		Transaction and Other Fees, Net *						536				299				216				606					745					209			39%
		Management Fee Offsets **						(689	)			3				(19	)			(19	)				(18	)				671			97%
			Total Management Fees					39,460				47,972				51,017				57,447					55,328					15,868			40%
	Performance Fees
		Realized						(359	)			27,928				15,343				64,968					9,725					10,084			N/M
		Unrealized						64,980				(15,239	)			63,199				40,239					85,303					20,323			31%
			Total Performance Fees					64,621				12,689				78,542				105,207					95,028					30,407			47%
	Investment Income (Loss)
		Realized						3,233				3,291				658				2,518					1,235					(1,998	)		-62%
		Unrealized						7,835				(3,444	)			5,350				(269	)				4,532					(3,303	)		-42%
			Total Investment Income (Loss)					11,068				(153	)			6,008				2,249					5,767					(5,301	)		-48%
	Interest Income and Dividend Revenue							673				403				1,252				710					453					(220	)		-33%
	Other							(459	)			(332	)			330				(27	)				98					557			N/M
				Total Revenues				115,363				60,579				137,149				165,586					156,674					41,311			36%
Expenses
	Compensation and Benefits
		Compensation						28,343				26,982				28,774				39,158					30,325					1,982			7%
		Performance Fee Compensation
			Realized					(559	)			13,500				9,060				37,211					5,295					5,854			N/M
			Unrealized					37,536				(5,618	)			34,760				16,717					45,202					7,666			20%
					Total Compensation and Benefits			65,320				34,864				72,594				93,086					80,822					15,502			24%
	Other Operating Expenses							8,290				12,167				9,669				8,980					15,357					7,067			85%
				Total Expenses				73,610				47,031				82,263				102,066					96,179					22,569			31%
Economic Net Income							$	41,753			$	13,548			$	54,886			$	63,520				$	60,495				$	18,742			45%
Net Fee Related Earnings from Operations							$	2,594			$	7,695			$	13,252			$	10,028				$	8,987				$	6,393			N/M
____________________
* Transaction and Other Fees, Net, are net of amounts, if any, shared with limited partners.
** Primarily placement fees.
continued...

THE BLACKSTONE GROUP L.P. Exhibit 2a. Economic Net Income and Net Fee Related Earnings from Operations - Continued (Dollars in Thousands)
							Three Months Ended
																												Mar 31, 2011 vs.
							Mar 31,				Jun 30,				Sep 30,			Dec 31,					Mar 31,					Mar 31, 2010
							2010				2010				2010			2010					2011					$				%
Financial Advisory
Revenues
	Advisory Fees						$	76,568			$	134,099			$	84,541		$	130,932				$	70,252				$	(6,316	)		-8%
	Transaction and Other Fees, Net							1				102				?			259					6					5			N/M
		Total Advisory and Transaction Fees						76,569				134,201				84,541			131,191					70,258					(6,311	)		-8%
	Investment Income (Loss)
		Realized						187				(49	)			469			207					97					(90	)		-48%
		Unrealized						230				561				607			(864	)				393					163			71%
			Total Investment Income (Loss)					417				512				1,076			(657	)				490					73			18%
	Interest Income and Dividend Revenue							1,396				1,268				1,609			1,699					1,686					290			21%
	Other							(932	)			(342	)			477			(1,115	)				386					1,318			N/M
				Total Revenues				77,450				135,639				87,703			131,118					72,820					(4,630	)		-6%
Expenses
	Compensation and Benefits
		Compensation						54,492				76,152				66,531			80,774					56,161					1,669			3%
				Total Compensation and Benefits				54,492				76,152				66,531			80,774					56,161					1,669			3%
	Other Operating Expenses							14,727				17,316				17,253			20,976					17,531					2,804			19%
				Total Expenses				69,219				93,468				83,784			101,750					73,692					4,473			6%
Economic Net Income (Loss)							$	8,231			$	42,171			$	3,919		$	29,368				$	(872	)			$	(9,103	)		N/M
Net Fee Related Earnings (Loss) from Operations							$	6,072			$	37,156			$	6,262		$	23,660				$	(3,979	)			$	(10,051	)		N/M

THE BLACKSTONE GROUP L.P. Exhibit 2b. Reconciliation of Income (Loss) Before Provision (Benefit) for Taxes to Total Segments Economic Net Income, of Total Segments, Economic Net Income to Net Fee Related Earnings from Operations, of Net Fee Related Earnings from Operations to Distributable Earnings and of Earnings Before Interest, Taxes and Depreciation and Amortization from Net Fee Related Earnings from Operations to Net Fee Related Earnings from Operations (Dollars in Thousands)
The tables below reconcile Economic Net Income (Loss) to Net Fee Related Earnings from Operations.
		Three Months Ended
		March 31,				June 30,				September 30,				December 31,					March 31,
		2010				2010				2010				2010					2011
Private Equity
Economic Net Income		$	193,155			$	18,731			$	111,941			$	161,702				$	175,514
Performance Fees Adjustment (a)			(91,724	)			22,914				(90,313	)			(149,240	)				(114,926	)
Investment Income (Loss) Adjustment (b)			(84,189	)			(20,416	)			(40,431	)			(23,584	)				(47,033	)
Investment Income - Blackstone's Treasury Cash Management Strategies (c)			1,650				2,278				5,052				(3,358	)				275
Performance Fee Compensation and Benefits Adjustment (d)			12,349				(10,168	)			29,089				22,677					13,182
Taxes Payable (e)			(2,529	)			(1,875	)			2,127				(842	)				(3,209	)
Net Fee Related Earnings from Operations		$	28,712			$	11,464			$	17,465			$	7,355				$	23,803
Real Estate
Economic Net Income		$	89,317			$	121,383			$	147,981			$	280,842				$	361,049
Performance Fees Adjustment (a)			(17,339	)			(37,436	)			(74,920	)			(167,564	)				(370,697	)
Investment Income (Loss) Adjustment (b)			(49,524	)			(83,443	)			(86,127	)			(111,136	)				(64,325	)
Investment Income - Blackstone's Treasury Cash Management Strategies (c)			1,311				1,811				4,016				(2,669	)				257
Performance Fee Compensation and Benefits Adjustment (d)			8,461				24,894				47,988				57,365					107,731
Taxes Payable (e)			(2,401	)			(2,466	)			915				(4,381	)				(2,782	)
Net Fee Related Earnings from Operations		$	29,825			$	24,743			$	39,853			$	52,457				$	31,233

(a)		This adjustment removes from ENI the segment amount of Performance Fees.
(b)		This adjustment removes from ENI the segment amount of Investment Income (Loss).
(c)		This adjustment represents the realized and unrealized gain on Blackstone’s Treasury cash management strategies which are a component of Investment Income (Loss) but included in Net Fee Related Earnings.
(d)		This adjustment removes from expenses the compensation and benefit amounts related to Blackstone’s profit sharing plans related to Performance Fees.
(e)		Represents an implied payable for income taxes calculated using a similar methodology applied in calculating the current provision for The Blackstone Group L.P.
		continued...

THE BLACKSTONE GROUP L.P. Exhibit 2b. Reconciliation of Income (Loss) Before Provision (Benefit) for Taxes to Total Segments Economic Net Income, of Total Segments, Economic Net Income to Net Fee Related Earnings from Operations, of Net Fee Related Earnings from Operations to Distributable Earnings and of Earnings Before Interest, Taxes and Depreciation and Amortization from Net Fee Related Earnings from Operations to Net Fee Related Earnings from Operations - Continued (Dollars in Thousands)
		Three Months Ended
		March 31,				June 30,				September 30,				December 31,					March 31,
		2010				2010				2010				2010					2011
Hedge Fund Solutions
Economic Net Income		$	52,646			$	25,638			$	49,364			$	70,674				$	58,119
Performance Fees Adjustment (a)			(12,530	)			1,575				(15,009	)			(33,644	)				(20,146	)
Investment Income (Loss) Adjustment (b)			(11,630	)			1,311				(8,881	)			(9,979	)				(8,461	)
Investment Income - Blackstone's Treasury Cash Management Strategies (c)			215				292				647				(430	)				40
Performance Fee Compensation and Benefits Adjustment (d)			4,554				(621	)			8,388				9,379					5,658
Taxes Payable (e)			(1,713	)			(1,338	)			1,573				(6,760	)				(2,074	)
Net Fee Related Earnings from Operations		$	31,542			$	26,857			$	36,082			$	29,240				$	33,136
Credit Businesses
Economic Net Income		$	41,753			$	13,548			$	54,886			$	63,520				$	60,495
Performance Fees Adjustment (a)			(64,621	)			(12,689	)			(78,542	)			(105,207	)				(95,028	)
Investment Income (Loss) Adjustment (b)			(11,068	)			153				(6,008	)			(2,249	)				(5,767	)
Investment Income - Blackstone's Treasury Cash Management Strategies (c)			139				197				438				2,494					667
Performance Fee Compensation and Benefits Adjustment (d)			36,977				7,882				43,820				53,928					50,497
Taxes Payable (e)			(586	)			(1,396	)			(1,342	)			(2,458	)				(1,877	)
Net Fee Related Earnings from Operations		$	2,594			$	7,695			$	13,252			$	10,028				$	8,987

____________________
(a)		This adjustment removes from ENI the segment amount of Performance Fees.
(b)		This adjustment removes from ENI the segment amount of Investment Income (Loss).
(c)		This adjustment represents the realized and unrealized gain on Blackstone’s Treasury cash management strategies which are a component of Investment Income (Loss) but included in Net Fee Related Earnings.
(d)		This adjustment removes from expenses the compensation and benefit amounts related to Blackstone’s profit sharing plans related to Performance Fees.
(e)		Represents an implied payable for income taxes calculated using a similar methodology applied in calculating the current provision for The Blackstone Group L.P.
		continued...

THE BLACKSTONE GROUP L.P. Exhibit 2b. Reconciliation of Income (Loss) Before Provision (Benefit) for Taxes to Total Segments Economic Net Income, of Total Segments, Economic Net Income to Net Fee Related Earnings from Operations, of Net Fee Related Earnings from Operations to Distributable Earnings and of Earnings Before Interest, Taxes and Depreciation and Amortization from Net Fee Related Earnings from Operations to Net Fee Related Earnings from Operations - Continued (Dollars in Thousands)
		Three Months Ended
		March 31,				June 30,				September 30,				December 31,					March 31,
		2010				2010				2010				2010					2011
Financial Advisory
Economic Net Income (Loss)		$	8,231			$	42,171			$	3,919			$	29,368				$	(872	)
Investment Income (Loss) Adjustment (a)			(417	)			(512	)			(1,076	)			657					(490	)
Investment Income - Blackstone's Treasury Cash Management Strategies (b)			350				484				1,073				(713	)				63
Taxes Payable (c)			(2,092	)			(4,987	)			2,346				(5,652	)				(2,680	)
Net Fee Related Earnings (Loss) from Operations		$	6,072			$	37,156			$	6,262			$	23,660				$	(3,979	)

____________________
(a)		This adjustment removes from ENI the segment amount of Investment Income (Loss).
(b)		This adjustment represents the realized and unrealized gain on Blackstone’s Treasury cash management strategies which are a component of Investment Income (Loss) but included in Net Fee Related Earnings.
(c)		Represents an implied payable for income taxes calculated using a similar methodology applied in calculating the current provision for The Blackstone Group L.P.
		continued...

THE BLACKSTONE GROUP L.P. Exhibit 2b. Reconciliation of Income (Loss) Before Provision (Benefit) for Taxes to Total Segments Economic Net Income, of Total Segments, Economic Net Income to Net Fee Related Earnings from Operations, of Net Fee Related Earnings from Operations to Distributable Earnings and of Earnings Before Interest, Taxes and Depreciation and Amortization from Net Fee Related Earnings from Operations to Net Fee Related Earnings from Operations - Continued (Dollars in Thousands)
			Three Months Ended
			March 31,				June 30,				September 30,				December 31,					March 31,
			2010				2010				2010				2010					2011
Income (Loss) Before Provision (Benefit) for Taxes			$	(227,671	)		$	(636,928	)		$	143,302			$	198,643				$	117,214
	IPO and Acquisition-Related Charges (a)			726,722				749,930				438,568				453,975					421,861
	Amortization of Intangibles (b)			39,512				40,822				40,872				44,172					44,174
	(Income) Loss Associated with Non-Controlling Interests in (Income) Loss of Consolidated Entities (c)			(153,461	)			67,647				(254,651	)			(90,684	)				71,056
Total Segments
Total Segments, Economic Net Income				385,102				221,471				368,091				606,106					654,305
	Performance Fees Adjustment (d)			(186,214	)			(25,636	)			(258,784	)			(455,655	)				(600,797	)
	Investment Income (Loss) Adjustment (e)			(156,828	)			(102,907	)			(142,523	)			(146,291	)				(126,076	)
	Investment Income - Blackstone's Treasury Cash Management Strategies (f)			3,665				5,062				11,226				(4,676	)				1,302
	Performance Fee Compensation and Benefits Adjustment (g)			62,341				21,987				129,285				143,349					177,068
	Taxes Payable (h)			(9,321	)			(12,062	)			5,619				(20,093	)				(12,622	)
Net Fee Related Earnings from Operations				98,745				107,915				112,914				122,740					93,180
	Realized Performance Fees (i)			46,140				23,495				41,077				122,635					81,057
	Realized Investment Income (Loss) (j)			5,307				15,721				14,276				11,611					23,499
	Adjustment Related to Realized Investment Income - Blackstone's Treasury Cash Management Strategies (k)			(1,264	)			512				(4,874	)			(2,156	)				(1,010	)
	Other Payables Including Payable Under Tax Receivable Agreement			(232	)			(68	)			2,923				(15,633	)				(177	)
Distributable Earnings			$	148,696			$	147,575			$	166,316			$	239,197				$	196,549
Earnings Before Interest, Taxes and Depreciation and Amortization from Net Fee Related Earnings from Operations (l)			$	120,805			$	132,866			$	124,195			$	163,600				$	126,666

____________________
(a)		This adjustment adds back to Income (Loss) Before Provision for Taxes amounts for Transaction-Related Charges which include principally equity-based compensation charges associated with Blackstone’s initial public offering and other corporate actions.
(b)		This adjustment adds back to Income (Loss) Before Provision for Taxes amounts for the Amortization of Intangibles which are associated with Blackstone’s initial public offering and other corporate actions.
(c)		This adjustment adds back to Income (Loss) Before Provision for Taxes the amount of (Income) Loss Associated with Non-Controlling Interests in (Income) Loss of Consolidated Entities and includes the amount of Management Fee Revenues associated with Consolidated CLO Entities.
(d)		This adjustment removes from ENI the total segment amount of Performance Fees.
(e)		This adjustment removes from ENI the total segment amount of Investment Income (Loss).
(f)		This adjustment represents the realized and unrealized gain on Blackstone’s Treasury cash management strategies which are a component of Investment Income (Loss) but included in Net Fee Related Earnings.
(g)		This adjustment removes from expenses the compensation and benefit amounts related to Blackstone’s profit sharing plans related to Performance Fees.
(h)		Represents an implied payable for income taxes calculated using a similar methodology applied in calculating the current provision for The Blackstone Group L.P.
(i)		Represents the adjustment for realized Performance Fees net of corresponding actual amounts due under Blackstone’s profit sharing plans related thereto.
(j)		Represents the adjustment for Blackstone’s Investment Income (Loss) - Realized.
(k)		Represents the elimination of Realized Investment Income attributable to Blackstone’s Treasury cash management strategies which is a component of both Net Fee Related Earnings from Operations and Realized Investment Income (Loss).
(l)		Earnings Before Interest, Taxes and Depreciation and Amortization from Net Fee Related Earnings from Operations represents Net Fee Related Earnings from Operations adding back the implied cash taxes payable component from the Distributable Earnings reconciliation presented above, which is included in (i), and segment interest and depreciation and amortization. The cash taxes payable component of (i) was $9.3 million, $12.1 million, $(5.6) million, $20.1 million and $12.6 million for the three months ended March 31, 2010, June 30, 2010, September 30, 2010, December 31, 2010, and March 31, 2011, respectively. Interest was $6.3 million, $6.8 million, $10.3 million, $13.2 million and $12.7 million for the three months ended March 31, 2010, June 30, 2010, September 30, 2010, December 31, 2010, and March 31, 2011, respectively. Depreciation and amortization was $6.4 million, $6.1 million, $6.6 million, $7.6 million and $8.2 million for the three months ended March 31, 2010, June 30, 2010, September 30, 2010, December 31, 2010, and March 31, 2011, respectively.

THE BLACKSTONE GROUP L.P. Exhibit 3.  Distributable Earnings (Dollars in Thousands)
The following table calculates Blackstone’s Distributable Earnings. Distributable Earnings is a supplemental measure of performance to assess amounts available for distributions to Blackstone unitholders, including Blackstone personnel.
					Three Months Ended
					March 31,
					2011				2010
Fee Related Earnings
	Revenues
		Total Management and Advisory Fees (a)			$	425,666			$	362,621
		Interest and Dividend Revenue (a)				9,448				8,690
		Other (a)				2,259				(3,250	)
		Investment Income - Blackstone's Treasury Cash Management Strategies (b)				1,302				3,665
			Total Revenues			438,675				371,726
	Expenses
		Compensation and Benefits - Compensation (a)				229,898				190,637
		Other Operating Expenses (a)				102,975				73,023
		Cash Taxes (c)				12,622				9,321
			Total Expenses			345,495				272,981
Net Fee Related Earnings from Operations						93,180				98,745
Performance Fees, Net of Related Compensation
	Performance Fees - Realized (a)					95,600				53,881
	Compensation and Benefits - Performance Fee Compensation - Realized (a)					(14,543	)			(7,741	)
		Total Performance Fees, Net of Related Compensation				81,057				46,140
Investment Income and Other
	Investment Income - Realized (a)					23,499				5,307
	Adjustment Related to Realized Investment Income - Blackstone's Treasury Cash Management Strategies (d)					(1,010	)			(1,264	)
	Other Payables Including Payable Under Tax Receivable Agreement					(177	)			(232	)
		Total Investment Income and Other				22,312				3,811
Distributable Earnings					$	196,549			$	148,696

_________________________
(a)		Represents the total segment amounts of the respective captions.
(b)		Represents the inclusion of Investment Income from Blackstone’s Treasury cash management strategies.
(c)		Represents the provisions for and/or adjustments to income taxes that were calculated using a similar methodology applied in calculating the current provision for The Blackstone Group L.P.
(d)		Represents the elimination of Realized Investment Income attributable to Blackstone’s Treasury cash management strategies which is a component of Net Fee Related Earnings from Operations.

THE BLACKSTONE GROUP L.P. Exhibit 4. Reconciliation of Total GAAP Weighted-Average Common Units Outstanding—Basic and Diluted to Weighted-Average Economic Net Income Adjusted Units—Basic and Diluted and of Total GAAP Common Units Outstanding—Basic and Diluted to Economic Net Income Adjusted Units—Basic and Diluted and of Total GAAP Common Units Outstanding to Distributable Earnings Units Outstanding
The following table provides a reconciliation of Blackstone’s Total GAAP Weighted-Average Common Units Outstanding—Basic and Diluted to Weighted-Average Economic Net Income Adjusted Units—Basic and Diluted.
			Three Months Ended
			March 31,
			2011		2010
Total GAAP Weighted-Average Common Units Outstanding - Basic			447,742,389		333,433,864
Adjustments:
Weighted-Average Unvested Deferred Restricted Common Units			9,910,527		?
Total GAAP Weighted-Average Common Units Outstanding - Diluted			457,652,916		333,433,864
Adjustments:
Weighted-Average Blackstone Holdings Partnership Units			658,290,684		764,866,007
Weighted-Average Unvested Deferred Restricted Common Units			?		28,626,333
Weighted-Average Economic Net Income Adjusted Units - Diluted			1,115,943,600		1,126,926,204
The following table provides a reconciliation of Blackstone’s Total GAAP Common Units Outstanding—Basic and Diluted to Economic Net Income Adjusted Units—Basic and Diluted.
			March 31,
			2011		2010
Total GAAP Common Units Outstanding - Basic			464,502,284		347,181,400
Adjustments:
Blackstone Holdings Partnership Units			639,228,191		751,496,468
Unvested Deferred Restricted Common Units			24,297,037		27,815,594
Economic Net Income Adjusted Units - Basic			1,128,027,512		1,126,493,462
			March 31,
			2011		2010
Total GAAP Common Units Outstanding - Diluted			474,412,811		347,181,400
Adjustments:
Blackstone Holdings Partnership Units			639,228,191		751,496,468
Unvested Deferred Restricted Common Units			?		27,815,594
Economic Net Income Adjusted Units - Diluted			1,113,641,002		1,126,493,462
The following table provides a reconciliation of Blackstone’s Total GAAP Common Units Outstanding to Distributable Earnings Units Outstanding.
			March 31,
			2011		2010
Total GAAP Common Units Outstanding (a)			464,502,284		347,181,400
Adjustments:
Blackstone Holdings Partnership Units			639,228,191		751,496,468
Distributable Earnings Units Outstanding			1,103,730,475		1,098,677,868

______________________
(a)		Common unit holders receive tax benefits from deductions taken by Blackstone’s corporate tax paying subsidiaries and bear responsibility for the deduction from Distributable Earnings of the Payable Under the Tax Receivable Agreement and certain other tax-related payables.

THE BLACKSTONE GROUP L.P. Exhibit 5. Assets Under Management (Dollars in Thousands)
					As of and for the Periods Ended
					March 31,
					2011			2010
	Total Assets Under Management
		(End of Period)
			Private Equity		$	43,955,392		$	28,022,326
			Real Estate			34,990,590			21,880,655
			Hedge Fund Solutions			39,542,086			30,322,510
			Credit Businesses			31,475,397			24,290,357
					$	149,963,465		$	104,515,848
	Fee-Earning Assets Under Management
		(End of Period)
			Private Equity		$	35,892,804		$	25,173,936
			Real Estate			26,454,012			23,820,697
			Hedge Fund Solutions			35,847,002			28,902,220
			Credit Businesses			25,838,878			20,173,319
					$	124,032,696		$	98,070,172
	Weighted-Average Fee-Earning
		Assets Under Management
		(For the Three Months Ended)
			Private Equity		$	35,775,826		$	25,010,887
			Real Estate			26,454,180			23,719,287
			Hedge Fund Solutions			35,320,896			28,506,845
			Credit Businesses			25,482,707			20,259,313
					$	123,033,609		$	97,496,332

THE BLACKSTONE GROUP L.P. Exhibit 6. Limited Partner Capital Invested Metrics (Dollars in Thousands)
						As of and for the Periods
						Ended March 31,
						2011			2010
	Limited Partner Capital Invested
		(For the Three Months Ended)
			Private Equity			$	652,947		$	387,904
			Real Estate (a)				654,428			424,868
			Credit Businesses				154,298			157,052
						$	1,461,673		$	969,824
	Fund Level Unrealized Value (b)
		(End of Period)
			Private Equity
				Cost		$	20,262,265		$	19,695,417
				Unrealized Value		$	22,646,168		$	19,695,029
			Real Estate (a)
				Cost		$	16,637,075		$	12,478,211
				Unrealized Value		$	20,805,296		$	8,355,147
			Credit Businesses
				Cost		$	3,668,448		$	3,088,626
				Unrealized Value		$	4,418,781		$	3,424,993

_________________________
(a)		Limited Partner Capital Invested and Fund Level Unrealized Value for the Real Estate segment represents activity related to funds raised by Blackstone.
(b)		Cost and unrealized value represent the limited partners’ share, including co-investments arranged by Blackstone, of those fund level investments on which carried interest can be earned, before carried interest allocations to Blackstone, when a fund achieves cumulative investment returns in excess of a specified rate.

THE BLACKSTONE GROUP L.P.

Exhibit 7. Definitions of Non-GAAP Financial Information

Blackstone discloses the following financial measures that are calculated and presented on the basis of methodologies other than in accordance with generally accepted accounting principles in the United States of America ("non-GAAP”) in the attached press release:

• Blackstone uses Economic Net Income, or "ENI”, as a key measure of value creation and as a benchmark of its performance. ENI represents segment net income excluding the impact of income taxes and initial public offering ("IPO”) and acquisition-related items, including charges associated with equity-based compensation, the amortization of intangibles and corporate actions including acquisitions. For segment reporting purposes, revenues and expenses are presented on a basis that deconsolidates the investment funds we manage.
  
  Total Segment ENI equals the aggregate of ENI for all segments. ENI is used by management primarily in making resource deployment and compensation decisions across Blackstone’s five segments.

• Economic Net Income After Taxes represents ENI adjusted to reflect the implied provision (benefit) for income taxes calculated using a similar methodology as applied in calculating the tax provision (benefit) for The Blackstone Group L.P. but consistent with the ENI concepts as noted above.
• Blackstone uses Net Fee Related Earnings from Operations as a key measure to highlight earnings from operations excluding: (a) the income related to performance fees and related carry plan costs, (b) income earned from Blackstone’s investments in the Blackstone Funds, and (c) realized and unrealized gains (losses) from other investments except for such gains (losses) from Blackstone’s Treasury cash management strategies. Management uses Net Fee Related Earnings from Operations as a measure to assess whether recurring revenue from our businesses is sufficient to adequately cover all of our operating expenses and generate profits. Net Fee Related Earnings from Operations equals contractual fee revenues, investment income from Blackstone’s Treasury cash management strategies and interest income, less (a) compensation expenses (which includes amortization of non-IPO and non-acquisition-related equity-based awards, but excludes amortization of IPO and acquisition-related equity-based awards, carried interest and incentive fee compensation), (b) other operating expenses, and (c) cash taxes due on earnings from operations as calculated using a similar methodology as applied in calculating the current tax provision (benefit) for The Blackstone Group L.P.
• Blackstone uses Earnings Before Interest, Taxes and Depreciation and Amortization from Net Fee Related Earnings from Operations ("EBITDA-NFRE”) as a measure of segment performance and an indicator of our ability to cover our recurring operating expenses. EBITDA-NFRE equals Net Fee Related Earnings from Operations before segment interest expense, segment depreciation and amortization and the cash taxes included in Net Fee Related Earnings from Operations.
• Distributable Earnings, which is derived from our segment reported results, is a supplemental measure to assess performance and amounts available for distributions to Blackstone unitholders, including Blackstone personnel and others who are limited partners of the Blackstone Holdings partnerships. Distributable Earnings is intended to show the amount of net realized earnings without the effects of the consolidation of the Blackstone Funds.
  
  Distributable Earnings, which is a component of Economic Net Income, is the sum across all segments of: (a) Total Management and Advisory Fees, (b) Interest and Dividend Revenue, (c) Other Revenue, (d) Realized Performance Fees, and (e) Realized Investment Income (Loss); less (a) Compensation, (b) Realized Performance Fee Compensation, (c) Other Operating Expenses, and (d) Cash Taxes and Payables Under the Tax Receivable Agreement. Distributable Earnings is reconciled to Blackstone’s Consolidated Statement of Operations. It is Blackstone’s current intention that on an annual basis it will distribute to unitholders all of its Distributable Earnings, less realized investment gains, in excess of amounts determined by its general partner to be necessary or appropriate to provide for the conduct of its business, to make appropriate investments in its business and funds, to comply with applicable law, any of its debt instruments or other agreements, or to provide for future distributions to its unitholders for any ensuing quarter.

Reconciliations of these non-GAAP financial measures to the most directly comparable financial measures calculated and presented in accordance with GAAP are included within this press release. These non-GAAP financial measures should be considered in addition to and not as a substitute for, or superior to, financial measures presented in accordance with GAAP.