_____________________________ Blackstone 345 Park Avenue New York NY 10154 T 212 583 5000 www.blackstone.com Blackstone Reports Second Quarter 2020 Results New York, July 23, 2020: Blackstone (NYSE:BX) today reported its second quarter 2020 results. Stephen A. Schwarzman, Chairman and Chief Executive Officer, said, “It was a strong quarter for our firm despite the continued market volatility. Investment performance rebounded sharply, we continued to deploy capital in high conviction sectors and our limited partners entrusted us with another $20 billion of inflows across our expanding platform. We are very well positioned to navigate the road ahead with our long-term committed capital model and an industry-record $156 billion of dry powder.” Blackstone issued a full detailed presentation of its second quarter 2020 results, which can be viewed at www.blackstone.com. Dividend Blackstone has declared a quarterly dividend of $0.37 per share to record holders of Class A common stock at the close of business on August 3, 2020. This dividend will be paid on August 10, 2020. Quarterly Investor Call Details Blackstone will host its second quarter 2020 investor conference via public webcast on July 23, 2020 at 9:00 a.m. ET. To register, please use the following link: https://event.webcasts.com/starthere.jsp?ei=1339494&tp_key=55ac978e77. For those unable to listen to the live
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_____________________________ Blackstone 345 Park Avenue New York NY 10154 T 212 583 5000 www.blackstone.com
Blackstone Reports Second Quarter 2020 Results New York, July 23, 2020: Blackstone (NYSE:BX) today reported its second quarter 2020 results. Stephen A. Schwarzman, Chairman and Chief Executive Officer, said, “It was a strong quarter for our firm despite the continued market volatility. Investment performance rebounded sharply, we continued to deploy capital in high conviction sectors and our limited partners entrusted us with another $20 billion of inflows across our expanding platform. We are very well positioned to navigate the road ahead with our long-term committed capital model and an industry-record $156 billion of dry powder.” Blackstone issued a full detailed presentation of its second quarter 2020 results, which can be viewed at www.blackstone.com. Dividend Blackstone has declared a quarterly dividend of $0.37 per share to record holders of Class A common stock at the close of business on August 3, 2020. This dividend will be paid on August 10, 2020. Quarterly Investor Call Details Blackstone will host its second quarter 2020 investor conference via public webcast on July 23, 2020 at 9:00 a.m. ET. To register, please use the following link: https://event.webcasts.com/starthere.jsp?ei=1339494&tp_key=55ac978e77. For those unable to listen to the live
broadcast, there will be a webcast replay on the Shareholders section of Blackstone’s website at https://ir.blackstone.com/. About Blackstone Blackstone is one of the world’s leading investment firms. We seek to create positive economic impact and long-term value for our investors, the companies we invest in, and the communities in which we work. We do this by using extraordinary people and flexible capital to help companies solve problems. Our asset management businesses, with $564 billion in assets under management, include investment vehicles focused on private equity, real estate, public debt and equity, growth equity, opportunistic, non-investment grade credit, real assets and secondary funds, all on a global basis. Further information is available at www.blackstone.com. Follow Blackstone on Twitter @Blackstone. Forward-Looking Statements This presentation 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 our current views with respect to, among other things, our operations, taxes, earnings and financial performance, share repurchases and dividends. You can identify these forward-looking statements by the use of words such as “outlook,” “indicator,” “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. We believe these factors include but are not limited to the impact of the novel coronavirus (“COVID-19”) and energy market dislocation, as well as those described under the section entitled “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2019 and in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2020, as such factors may be updated from time to time in our periodic filings with the United States Securities and Exchange Commission (“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 report and in our other periodic filings. The forward-looking statements speak only as of the date of this report, and we undertake no obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise.
This presentation does not constitute an offer of any Blackstone Fund. Investor and Media Relations Contacts Weston Tucker Blackstone Tel: +1 (212) 583-5231 [email protected]
Christine Anderson Blackstone Tel: +1 (212) 583-5182 [email protected]
Blackstone’s Second Quarter 2020 Earnings
JULY 23, 2020
Blackstone | 1
BLACKSTONE’S SECOND QUARTER 2020 GAAP RESULTS
▪ GAAP Net Income (Loss) was $1.4 billion for the quarter and $(1.3) billion year-to-date (“YTD”). GAAP Net Income
(Loss) Attributable to The Blackstone Group Inc. was $568 million for the quarter and $(498) million year-to-date.
($ in thousands, except per share data. unaudited) 2Q'19 2Q'20 2Q'19 YTD 2Q'20 YTD 2Q'19 LTM 2Q'20 LTM
Revenues
Management and Advisory Fees, Net 840,378$ 969,728$ 1,650,104$ 1,904,560$ 3,227,667$ 3,726,611$
Net Income (Loss) Attributable to Non-Controlling Interests in Consolidated Entities 80,744 294,378 267,577 (350,699) 341,878 (141,497)
Net Income (Loss) Attributable to Non-Controlling Interests in Blackstone Holdings 259,330 495,128 661,590 (384,989) 1,027,419 293,048
Net Income (Loss) Attributable to The Blackstone Group Inc. (“BX”) 305,792$ 568,266$ 787,096$ (498,226)$ 1,218,970$ 764,360$
Net Income (Loss) Per Share of Class A Common Stock, Basic 0.45$ 0.81$ 1.17$ (0.74)$ 1.80$ 1.12$
Net Income (Loss) Per Share of Class A Common Stock, Diluted 0.45$ 0.81$ 1.16$ (0.74)$ 1.79$ 1.12$
Income (Loss) Before Provision (Benefit) for Taxes Margin 46.1% 59.7% 51.2% 225.8% 45.9% 23.1%
Throughout this presentation, all current period amounts are preliminary. Totals may not add due to rounding. See pages 34-35, Definitions and Dividend Policy,
for definitions of terms used throughout this presentation. See additional notes on page 32.
Blackstone | 2
BLACKSTONE’S SECOND QUARTER 2020 HIGHLIGHTS
Financial Measures
▪ Fee Related Earnings (“FRE”) of $541 million ($0.45/share) in the quarter, up 28% year-
over-year
– FRE was $2.0 billion for the last twelve months (“LTM”) ($1.67/share), up 27% year-
over-year
▪ Distributable Earnings (“DE”) of $548 million ($0.43/share) in the quarter
– DE was $2.7 billion for the LTM ($2.19/share)
▪ Net Accrued Performance Revenues of $2.7 billion ($2.25/share)
Capital Metrics
▪ Total Assets Under Management (“AUM”) of $564.3 billion, up 3% year-over-year
– Fee-Earning AUM of $435.8 billion, up 12% year-over-year
▪ Inflows of $20.3 billion in the quarter and $93.9 billion for the LTM
▪ Realizations of $7.4 billion in the quarter and $35.1 billion for the LTM
▪ Deployment of $12.8 billion in the quarter and $61.1 billion for the LTM
Capital Returned
to Shareholders
▪ Dividend of $0.37 per common share payable on August 10, 2020
– Dividends of $1.86 per common share for the LTM
▪ Repurchased 2.0 million common shares in the quarter and 11.2 million common shares
for the LTM
▪ $590 million to be distributed to shareholders with respect to the second quarter
through dividends and share repurchases, and $2.9 billion for the LTM
Notes on page 32.
Blackstone | 3
BLACKSTONE’S SECOND QUARTER 2020 SEGMENT EARNINGS
Fee Related Earnings per Share is based on end of period DE Shares Outstanding (see page 23, Share Summary). DE per Common Share is based on DE Attributable
to Common Shareholders (see page 22, Shareholder Dividends) and end of period Participating Common Shares outstanding. YTD per Share amounts represent the
sum of the last two quarters. See pages 30-31 for the Reconciliation of GAAP to Total Segment Measures.
% Change % Change
($ in thousands, except per share data) 2Q'19 2Q'20 vs. 2Q'19 2Q'19 YTD 2Q'20 YTD vs. 2Q'19 YTD
Management and Advisory Fees, Net 844,156$ 976,733$ 16% 1,658,218$ 1,917,300$ 16%
Fee Related Performance Revenues 13,624 15,033 10% 21,403 27,499 28%
Fee Related Compensation (293,834) (306,904) 4% (617,865) (653,168) 6%
Other Operating Expenses (142,121) (143,583) 1% (265,432) (282,468) 6%
Fee Related Earnings 421,825$ 541,279$ 28% 796,324$ 1,009,163$ 27%
DE per Common Share 0.57$ 0.43$ (25)% 1.01$ 0.89$ (12)%
Total Segment Revenues 1,322,723$ 1,112,881$ (16)% 2,417,241$ 2,253,437$ (7)%
Total Assets Under Management 545,482,337$ 564,330,088$ 3% 545,482,337$ 564,330,088$ 3%
Fee-Earning Assets Under Management 387,864,642$ 435,825,935$ 12% 387,864,642$ 435,825,935$ 12%
Blackstone | 4
SUMMARY OF FINANCIALS
▪ LTM Fee Related Earnings of $1.67 per share, an increase of 27% year-over-year.
▪ LTM Total Segment Distributable Earnings were $3.0 billion, an increase of 3% year-over-year.
FRE Margin is calculated by dividing Fee Related Earnings by Fee Related Revenues (defined as the sum of Total Segment Management and Advisory Fees, Net and
Fee Related Performance Revenues).
$1.31
$1.67
47.3%
50.5%
2Q'19 LTM 2Q'20 LTM
Fee Related Earnings per Share Segment Distributable Earnings
($ in millions)
FRE/Share FRE Margin
$1,539
$730
$434
$252
Private
Equity
Real
Estate
Hedge Fund
Solutions
Credit &
Insurance
2Q’20 LTM total: $2,955
Blackstone | 5
INVESTMENT PERFORMANCE AND NET ACCRUED PERFORMANCE REVENUES
▪ Unrealized appreciation across strategies led to a 24% increase in Net Accrued Performance Revenues to $2.7 billion
Investment Performance represents fund appreciation for Real Estate and Private Equity and gross returns for Hedge Fund Solutions and Credit & Insurance. BPS
Composite net returns were 5.8% and (1.4)% for 2Q’20 and 2Q’20 LTM, respectively. Credit Composite net returns were 9.6% and (2.3)% for 2Q’20 and 2Q’20 LTM,
respectively. See notes on pages 32-33 for additional details on investment performance.
$2,187
$2,708 $595
$74
1Q'20 NetPerformance
Revenues
NetRealized
Distributions
2Q'20
2Q'20 2Q'20 LTM
Real Estate
Opportunistic 1.6% 0.6%
Core+ 3.0% 4.7%
Private Equity
Corporate Private Equity 12.8% (7.7)%
Tactical Opportunities 10.8% 1.9%
Secondaries 3.8% 20.8%
Hedge Fund Solutions
BPS Composite 6.0% (0.6)%
Credit & Insurance
Credit Composite 10.1% (2.1)%
Blackstone | 6
CAPITAL METRICS – ADDITIONAL DETAIL
Corporate Private Equity also includes Core Private Equity, Life Sciences, and BTAS.
Inflows include contributions, capital raised, other increases in available capital, purchases, inter-segment allocations and acquisitions. Outflows represent
redemptions, client withdrawals and other decreases in available capital. Realizations represent realizations from the disposition of assets. Market Activity
represents gains (losses) on portfolio investments and the impact of foreign exchange rate fluctuations. AUM is reported in the segment where the assets are
managed.
Three Months Ended June 30, 2020 Twelve Months Ended June 30, 2020
Real Private Hedge Fund Credit & Real Private Hedge Fund Credit &
▪ At June 30, 2020, Blackstone had $4.5 billion in total cash, cash equivalents, and corporate treasury investments
and $9.0 billion of cash and net investments, or $7.51 per share.
▪ Blackstone has a $1.6 billion undrawn credit revolver and maintains A+/A+ ratings.
Balance Sheet Highlights exclude the consolidated Blackstone Funds. GP/Fund Investments include Blackstone investments in Real Estate, Private Equity, Hedge
Fund Solutions, and Credit & Insurance, which were $768 million, $676 million, $107 million, and $241 million, respectively, as of June 30, 2020. Cash and Net
Investments per share amounts are calculated using period end DE Shares Outstanding (see page 23, Share Summary).
($ in millions) 2Q'20
Cash and Cash Equivalents 1,977$
Corporate Treasury
Investments2,550
GP/Fund Investments 1,792
Net Accrued Performance
Revenues2,708
Cash and Net Investments 9,026$
Outstanding Bonds (at par) 4,685
A+ / A+rated by S&P and Fitch
$1.6Bundrawn credit revolver
with September 2023 maturity
$4.5Btotal cash
and corporate treasury
Cash and Net Investments(per share)
Blackstone | 18
($ in millions, except per share data) 2Q'19 1Q'20 2Q'202Q'20
Per Share
Real Estate
BREP IV 11$ 8$ 7$ 0.01$
BREP V 54 - 1 0.00
BREP VI 88 51 45 0.04
BREP VII 536 309 238 0.20
BREP VIII 517 517 604 0.50
BREP IX - - 6 0.00
BREP International II 25 - - -
BREP Europe IV 209 123 105 0.09
BREP Europe V 161 110 99 0.08
BREP Asia I 154 85 85 0.07
BPP 240 196 225 0.19
BREIT 36 - - -
BREDS 20 2 3 0.00
BTAS 41 45 22 0.02
Real Estate 2,093$ 1,446$ 1,441$ 1.20$
Private Equity
BCP IV 24 23 19 0.02
BCP VI 755 283 521 0.43
BCP VII 293 115 307 0.26
BCP Asia 6 14 18 0.02
BEP I 134 - 63 0.05
BEP II 54 - - -
BEP III - - 3 0.00
BCEP 30 33 43 0.04
Tactical Opportunities 128 36 55 0.05
Secondaries 98 136 155 0.13
Life Sciences - 7 8 0.01
BTAS/Other 52 73 7 0.01
Private Equity 1,573$ 720$ 1,199$ 1.00$
Hedge Fund Solutions 64$ 15$ 26$ 0.02$
Credit & Insurance 242$ 6$ 42$ 0.03$
Net Accrued Performance Revenues 3,973$ 2,187$ 2,708$ 2.25$
2Q’20 QoQ Rollforward
($ in millions)
1Q'20
Net
Performance
Revenues
Net
Realized
Distributions 2Q'20
Real Estate 1,446$ 21$ (25)$ 1,441$
Private Equity 720 520 (42) 1,199
HFS 15 12 (1) 26
Credit &
Insurance6 42 (6) 42
Total 2,187$ 595$ (74)$ 2,708$
QoQ Change 24%
2Q’20 LTM Rollforward
($ in millions)
2Q'19
Net
Performance
Revenues
Net
Realized
Distributions 2Q'20
Real Estate 2,093$ 3$ (655)$ 1,441$
Private Equity 1,573 (169) (205) 1,199
HFS 64 53 (92) 26
Credit &
Insurance242 (151) (49) 42
Total 3,973$ (264)$ (1,001)$ 2,708$
YoY Change (32)%
NET ACCRUED PERFORMANCE REVENUES – ADDITIONAL DETAIL
Net Accrued Performance Revenues (“NAPR”) are presented net of performance compensation and do not include clawback amounts, if any, which are disclosed
in the 10-K/Q. See additional notes on page 33.
Blackstone | 19
INVESTMENT RECORDS AS OF JUNE 30, 2020 (a)
Notes on page 21. BREP – Blackstone Real Estate Partners, BREIT – Blackstone Real Estate Income Trust, BPP – Blackstone Property Partners, BREDS – Blackstone
Real Estate Debt Strategies, BCP – Blackstone Capital Partners, BCOM – Blackstone Communications.
* Represents funds that are currently in their investment period and open ended funds.
($ in thousands, except where noted) Committed Available Unrealized Investments Realized Investments Total Investments Net IRRs (d)
Fund (Investment Period Beginning Date / Ending Date) Capital Capital (b) Value MOIC (c) Value MOIC (c) Value MOIC (c) Realized Total
DE Attributable to Common Shareholders 379,829 389,322 492,337 316,790 298,717 (21)% 676,063 615,507 (9)%
DE per Common Share 0.57$ 0.58$ 0.72$ 0.46$ 0.43$ (25)% $1.01 $0.89 (12)%
Less: Retained Capital per Common Share (0.09)$ (0.09)$ (0.11)$ (0.07)$ (0.06)$ (33)% (0.16)$ (0.13)$ (19)%
Actual Dividend per Common Share 0.48$ 0.49$ 0.61$ 0.39$ 0.37$ (23)% 0.85$ 0.76$ (11)%
Record Date Aug 3, 2020
Payable Date Aug 10, 2020
SHAREHOLDER DIVIDENDS
▪ Generated $0.43 of Distributable Earnings per common share during the quarter, bringing the year-to-date amount
to $0.89 per common share.
▪ Blackstone declared a quarterly dividend of $0.37 per common share to record holders as of August 3, 2020; payable
on August 10, 2020.
A detailed description of Blackstone’s dividend policy and the definition of Distributable Earnings can be found on pages 34-35, Definitions and Dividend Policy.
See additional notes on page 33.
Blackstone | 23
2Q'19 3Q'19 4Q'19 1Q'20 2Q'20
Participating Common Shares 669,561,793 675,640,119 680,457,424 687,869,905 697,597,036
Participating Partnership Units 525,165,724 523,338,040 515,973,657 507,101,000 504,912,855
RECONCILIATION OF GAAP TO NON-GAAP MEASURES – NOTES
Note: See pages 34-35, Definitions and Dividend Policy.
(a) This adjustment removes Transaction-Related Charges, which are excluded from Blackstone’s segment presentation. Transaction-Related Charges arise
from corporate actions including acquisitions, divestitures, and Blackstone’s initial public offering. They consist primarily of equity-based compensation
charges, gains and losses on contingent consideration arrangements, changes in the balance of the Tax Receivable Agreement resulting from a change in
tax law or similar event, transaction costs and any gains or losses associated with these corporate actions.
(b) This adjustment removes the amortization of transaction-related intangibles, which are excluded from Blackstone’s segment presentation. This amount
includes amortization of intangibles associated with Blackstone’s investment in Pátria, which is accounted for under the equity method.
(c) This adjustment reverses the effect of consolidating Blackstone Funds, which are excluded from Blackstone’s segment presentation. This adjustment
includes the elimination of Blackstone’s interest in these funds and the removal of amounts associated with the ownership of Blackstone consolidated
operating partnerships held by non-controlling interests.
(d) This adjustment removes Unrealized Performance Revenues on a segment basis. The Segment Adjustment represents the add back of performance
revenues earned from consolidated Blackstone Funds which have been eliminated in consolidation.
(h) This adjustment removes Equity-Based Compensation on a segment basis.
Blackstone | 27
RECONCILIATION OF GAAP TO NON-GAAP MEASURES – NOTES
(i) Taxes represent the total GAAP tax provision adjusted to include only the current tax provision (benefit) calculated on Income (Loss) Before Provision
(Benefit) for Taxes and adjusted to exclude the tax impact of any divestitures. Related Payables represent tax-related payables including the amount
payable under the Tax Receivable Agreement.
(j) This adjustment removes Interest and Dividend Revenue less Interest Expense on a segment basis. The Segment Adjustment represents (1) the add back of
Other Revenues earned from consolidated Blackstone Funds which have been eliminated in consolidation, and (2) the removal of interest expense
associated with the Tax Receivable Agreement.
(k) This adjustment removes the total segment amounts of Realized Performance Revenues.
(l) This adjustment removes the total segment amounts of Realized Performance Compensation.
(m) This adjustment removes the total segment amount of Realized Principal Investment Income.
(n) This adjustment adds back Interest Expense on a segment basis.
(a) This adjustment adds back investments in consolidated Blackstone Funds which have been eliminated in consolidation.
(b) Represents GAAP accrued performance revenue recorded within Due from Affiliates.
(c) Represents Performance Revenues realized but not yet distributed as of the reporting date and are included in Distributable Earnings in the period they are realized.
(d) Represents GAAP accrued performance compensation associated with Accrued Performance Allocations and is recorded within Accrued Compensation and Benefits
and Due to Affiliates.
(e) This adjustment adds other assets related to Treasury Operations that are recorded within Accounts Receivable, reverse repurchase agreements and Due from
Affiliates.
(f) This adjustment adds other liabilities related to Treasury Operations that are recorded within Accounts Payable, Accrued Expenses and Other Liabilities, Repurchase
Agreements and securities sold short, not yet purchased.
(g) This adjustment removes amounts associated with the ownership of Blackstone consolidated operating partnerships held by non-controlling interests and adds back
investments in consolidated Blackstone Funds which have been eliminated in consolidation.
(h) This adjustment removes amounts related to consolidated Blackstone Funds.
This analysis reconciles the components of Total Segment Distributable Earnings (page 3) to their equivalent GAAP measures, reported on the Consolidated
Statement of Operations (page 1). Segment basis presents revenues and expenses on a basis that deconsolidates the investment funds Blackstone manages and
excludes the amortization of intangibles, the expense of equity-based awards and Transaction-Related Charges.
(a) Represents (1) the add back of net management fees earned from consolidated Blackstone Funds which have been eliminated in consolidation, and
(2) the removal of revenue from the reimbursement of certain expenses by the Blackstone Funds, which are presented gross under GAAP but netted
against Management and Advisory Fees, Net in the Total Segment measures.
(b) Represents the add back of Performance Revenues earned from consolidated Blackstone Funds which have been eliminated in consolidation.
(c) Represents the removal of Transaction-Related Charges that are not recorded in the Total Segment measures.
(d) Represents the removal of (1) the amortization of transaction-related intangibles, and (2) certain expenses reimbursed by the Blackstone Funds,
which are presented gross under GAAP but netted against Management and Advisory Fees, Net in the Total Segment measures.
(e) Represents (1) the add back of Principal Investment Income, including general partner income, earned from consolidated Blackstone Funds which have
been eliminated in consolidation, and (2) the removal of amounts associated with the ownership of Blackstone consolidated operating partnerships
held by non-controlling interests.
(f) Represents (1) the add back of Other Revenues earned from consolidated Blackstone Funds which have been eliminated in consolidation, and (2) the
removal of interest expense associated with the Tax Receivable Agreement.
Blackstone | 32
NOTES
Notes to page 1 - Blackstone’s Second Quarter 2020 GAAP Results
▪ Effective July 1, 2019, The Blackstone Group L.P. converted from a Delaware limited partnership to a Delaware corporation, The Blackstone
Group Inc. (the “Conversion”). This presentation includes results for The Blackstone Group L.P. prior to the Conversion. As of any time prior to
the Conversion, references to “Blackstone,” “the Company,” “our” and similar terms mean The Blackstone Group L.P. and its consolidated
subsidiaries and, as of any time after the Conversion, The Blackstone Group Inc. and its consolidated subsidiaries.
▪ All references to shares or per share amounts prior to the Conversion refer to units or per unit amounts. Unless otherwise noted, references to
“common stock” and “common shares” refer to Class A common stock.
▪ Income (Loss) Before Provision (Benefit) for Taxes Margin is calculated by dividing Income (Loss) Before Provision (Benefit) for Taxes by Total
Revenues.
Notes to page 2 - Blackstone’s Second Quarter 2020 Highlights
▪ The changes in carrying value, fund returns and composite returns presented throughout this presentation represent those of the applicable
Blackstone Funds and not those of Blackstone.
▪ See Notes to page 18 regarding Net Accrued Performance Revenue redefinition.
Notes to page 5 - Investment Performance and Net Accrued Performance Revenues
▪ Effective 1Q’20, the Credit segment was renamed Credit & Insurance; however, there was no change to the composition of the segment or
historical results.
▪ Effective 1Q’20, Core+ appreciation was updated to include BREIT and represents a weighted average of BREIT’s per share appreciation and BPP
appreciation for the period. The returns are weighted based on the average of BREIT’s monthly net asset values and the average of BPP’s
quarterly adjusted beginning period market values for the period. This presentation provides a more holistic view of Core+ by including BREIT
performance.
▪ Effective 1Q’20, Corporate Private Equity appreciation was updated to include Core Private Equity appreciation. This presentation provides a
more holistic view of Corporate Private Equity by including Core Private Equity performance.
▪ Results for the Secondaries business (also referred to as Strategic Partners) are reported on a three month lag from the Secondaries’ fund
financial statements, which generally report based on a three month lag from the underlying fund investments unless information is available on
a more timely basis. As a result, the appreciation presented herein does not include the impact of economic and market activity in the current
quarter. Current market activity is expected to affect reported results in upcoming quarters.
▪ The BPS Composite gross and net returns are based on the BAAM Principal Solutions (“BPS”) Composite, which does not include BAAM’s individual
investor solutions (liquid alternatives), strategic capital (seeding and minority interests), strategic opportunities (co-invests), and advisory (non-
discretionary) platforms, except for investments by BPS funds directly into those platforms. BAAM-managed funds in liquidation and non fee-
paying assets (net returns only) are also excluded. The funds/accounts that comprise the BPS Composite are not managed within a single fund or
account and are managed with different mandates. There is no guarantee that BAAM would have made the same mix of investments in a stand-
alone fund/account. The BPS Composite is not an investible product and, as such, the performance of the BPS Composite does not represent the
performance of an actual fund or account.
Blackstone | 33
NOTES – (CONT’D)
Notes to page 5 - Investment Performance and Net Accrued Performance Revenues (Cont’d)
▪ Effective 1Q’20, Credit returns are presented as a composite return instead of separate returns for performing credit and distressed. The Credit
Composite now also includes the long only strategy. The Credit Composite return is a weighted average of (a) the return based on the combined
quarterly cash flows of performing credit and distressed fee-earning funds and (b) the weighted average quarterly return of all long only strategy
fee-earning funds. Only fee-earning funds exceeding $100 million of fair value at the beginning of each respective quarter-end are included and
funds in liquidation are excluded. Credit returns exclude Blackstone Funds that were contributed to GSO as part of Blackstone’s acquisition of
GSO in March 2008.
Notes to page 18 – Net Accrued Performance Revenues – Additional Detail
▪ Effective 1Q’20, NAPR has been redefined to exclude Performance Revenues realized but not yet distributed as of the reporting date. This
update aligns the presentation of DE and NAPR. All prior periods have been recast to reflect this definition.
▪ Per Share calculations are based on end of period DE Shares Outstanding (see page 23, Share Summary).
Notes to page 22 – Shareholder Dividends
▪ DE before Certain Payables represents Distributable Earnings before the deduction for the Payable Under Tax Receivable Agreement and tax
expense (benefit) of wholly owned subsidiaries.
▪ Per Share calculations are based on end of period Participating Common Shares (page 23, Share Summary); actual dividends are paid to
shareholders as of the applicable record date.
▪ Retained capital is withheld pro rata from common and Blackstone Holdings Partnership unitholders. Common shareholders’ share was
$42 million for 2Q’20 and $90 million for 2Q’20 YTD.
▪ Common Shareholders 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 Tax Receivable Agreement and certain other tax-related payables.
Notes to page 23 – Share Summary
▪ Participating Common Shares and Participating Partnership Units include both issued and outstanding shares and unvested shares that participate
in dividends.
Blackstone | 34
DEFINITIONS AND DIVIDEND POLICY
Blackstone discloses the following operating metrics and 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 this presentation:
▪ Segment Distributable Earnings, or “Segment DE”, is Blackstone’s segment profitability measure used to make operating decisions and assess
performance across Blackstone’s four segments. Segment DE represents the net realized earnings of Blackstone’s segments and is the sum of Fee
Related Earnings and Net Realizations for each segment. Blackstone’s segments are presented on a basis that deconsolidates Blackstone Funds,
eliminates non-controlling ownership interests in Blackstone’s consolidated Operating Partnerships, removes the amortization of intangible assets
and removes Transaction-Related Charges. Segment DE excludes unrealized activity and is derived from and reconciled to, but not equivalent to,
its most directly comparable GAAP measure of Income (Loss) Before Provision (Benefit) for Taxes.
– Net Realizations is presented on a segment basis and is the sum of Realized Principal Investment Income and Realized Performance
Revenues (which refers to Realized Performance Revenues excluding Fee Related Performance Revenues), less Realized Performance
Compensation (which refers to Realized Performance Compensation excluding Fee Related Performance Compensation and Equity-Based
Performance Compensation).
– Total Segment Revenues and Segment Revenues represent Net Management and Advisory Fees, Fee Related Performance Revenues,
Realized Performance Revenues and Realized Principal Investment Income.
▪ Distributable Earnings, or “DE”, is derived from Blackstone’s segment reported results. DE is used to assess performance and amounts available
for dividends to Blackstone shareholders, including Blackstone personnel and others who are limited partners of the Blackstone Holdings
Partnerships. DE is the sum of Segment DE plus Net Interest Income (Loss) less Taxes and Related Payables. DE excludes unrealized activity and is
derived from and reconciled to, but not equivalent to, its most directly comparable GAAP measure of Income (Loss) Before Provision (Benefit) for
Taxes.
– Net Interest Income (Loss) is presented on a segment basis and is equal to Interest and Dividend Revenue less Interest Expense, adjusted for
the impact of consolidation of Blackstone Funds, and interest expense associated with the Tax Receivable Agreement.
– Taxes and Related Payables represent the total GAAP tax provision adjusted to include only the current tax provision (benefit) calculated on
Income (Loss) Before Provision (Benefit) for Taxes excluding the tax impact of any divestitures and including the Payable under the Tax
Receivable Agreement.
▪ Fee Related Earnings, or “FRE”, is a performance measure used to assess Blackstone’s ability to generate profits from revenues that are
measured and received on a recurring basis and not subject to future realization events. FRE equals management and advisory fees (net of
management fee reductions and offsets) plus Fee Related Performance Revenues, less (a) Fee Related Compensation on a segment basis, and
(b) Other Operating Expenses. FRE is derived from and reconciled to, but not equivalent to, its most directly comparable GAAP measure of
Income (Loss) Before Provision (Benefit) for Taxes.
– Fee Related Compensation is presented on a segment basis and refers to the compensation expense, excluding Equity-Based Compensation,
directly related to (a) Management and Advisory Fees, Net and (b) Fee Related Performance Revenues, referred to as Fee Related
Performance Compensation.
– Fee Related Performance Revenues refers to the realized portion of Performance Revenues from Perpetual Capital that are (a) measured
and received on a recurring basis, and (b) not dependent on realization events from the underlying investments.
Blackstone | 35
DEFINITIONS AND DIVIDEND POLICY – (CONT’D)
– Perpetual Capital refers to the component of assets under management with an indefinite term, that is not in liquidation, and for which
there is no requirement to return capital to investors through redemption requests in the ordinary course of business, except where funded
by new capital inflows. Includes co-investment capital with an investor right to convert into Perpetual Capital.
▪ Adjusted Earnings Before Interest, Taxes and Depreciation and Amortization, or “Adjusted EBITDA”, is a supplemental measure used to
assess performance derived from Blackstone’s segment results and may be used to assess its ability to service its borrowings. Adjusted EBITDA
represents Distributable Earnings plus the addition of (a) Interest Expense on a segment basis, (b) Taxes and Related Payables, and
(c) Depreciation and Amortization. Adjusted EBITDA is derived from and reconciled to, but not equivalent to, its most directly comparable GAAP
measure of Income (Loss) Before Provision (Benefit) for Taxes.
▪ Performance Revenues collectively refers to: (a) Incentive Fees, and (b) Performance Allocations.
▪ Performance Compensation collectively refers to: (a) Incentive Fee Compensation, and (b) Performance Allocations Compensation.
▪ Transaction-Related Charges arise from corporate actions including acquisitions, divestitures, and Blackstone’s initial public offering. They
consist primarily of equity-based compensation charges, gains and losses on contingent consideration arrangements, changes in the balance of
the Tax Receivable Agreement resulting from a change in tax law or similar event, transaction costs and any gains or losses associated with these
corporate actions.
Dividend Policy. Blackstone’s intention is to pay to holders of Class A common stock a quarterly dividend representing approximately 85% of The
Blackstone Group Inc.’s share of Distributable Earnings, subject to adjustment by amounts determined by Blackstone’s board of directors 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 cash requirements such as tax-related payments, clawback
obligations and dividends to shareholders for any ensuing quarter. The dividend amount could also be adjusted upward in any one quarter. All of the
foregoing is subject to the qualification that the declaration and payment of any dividends are at the sole discretion of Blackstone’s board of
directors and our board of directors may change our dividend policy at any time, including, without limitation, to eliminate such dividends entirely.
Blackstone | 36
FORWARD-LOOKING STATEMENTS
This presentation 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 our current views with respect to, among other things, our operations, taxes, earnings and financial
performance, share repurchases and dividends. You can identify these forward-looking statements by the use of words such as “outlook,”
“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. We believe these factors include but are not limited to the impact of COVID-19 and energy market dislocation, as well
as those described under the section entitled “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2019 and in our
Quarterly Report on Form 10-Q for the quarter ended March 31, 2020, as such factors may be updated from time to time in our periodic filings with
the United States Securities and Exchange Commission (“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 report and in our other
periodic filings. The forward-looking statements speak only as of the date of this report, and we undertake no obligation to publicly update or review
any forward-looking statement, whether as a result of new information, future developments or otherwise.
This presentation does not constitute an offer of any Blackstone Fund.