Notes to Condensed Consolidated Financial Statements
(All Dollars Are in Thousands, Except Unit and Per Unit Data, Except Where Noted)
The Blackstone Group L.P., together with its subsidiaries (Blackstone or the Partnership), is a
leading global manager of private capital. The alternative asset management business includes the management of private equity funds, real estate funds, real estate investment trusts (REITs), funds of hedge funds, hedge funds,
credit-focused funds, collateralized loan obligation (CLO) vehicles, collateralized debt obligation (CDO) vehicles, separately managed accounts and registered investment companies (collectively referred to as the
Blackstone Funds). Blackstones business is organized into four segments: private equity, real estate, hedge fund solutions and credit.
On October 1, 2015, Blackstone completed the spin-off of the operations that historically constituted Blackstones Financial Advisory segment, other than Blackstones capital markets
services business. Blackstones capital markets services business was retained and was not part of the spin-off. These historical operations included various financial advisory services, including financial and strategic advisory, restructuring
and reorganization advisory and fund placement services. As of October 1, 2015, Blackstone no longer reported a Financial Advisory segment.
The Partnership was formed as a Delaware limited partnership on March 12, 2007. The Partnership is managed and operated by its general partner, Blackstone Group Management L.L.C., which is in turn
wholly owned and controlled by one of Blackstones founders, Stephen A. Schwarzman (the Founder), and Blackstones other senior managing directors. The activities of the Partnership are conducted through its holding
partnerships: Blackstone Holdings I L.P., Blackstone Holdings AI L.P., Blackstone Holdings II L.P., Blackstone Holdings III L.P. and Blackstone Holdings IV L.P. (collectively, Blackstone Holdings, Blackstone Holdings
Partnerships or the Holding Partnerships). The Partnership, through its wholly owned subsidiaries, is the sole general partner in each of these Holding Partnerships.
Generally, holders of the limited partner interests in the Holding Partnerships may, four times each year, exchange their limited
partnership interests (Partnership Units) for Blackstone common units, on a one-to-one basis, exchanging one Partnership Unit from each of the Holding Partnerships for one Blackstone common unit.
2.
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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
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Basis of Presentation
The accompanying unaudited condensed consolidated financial statements of the Partnership have been prepared in accordance with accounting principles generally accepted in the United States of America
(GAAP) for interim financial information and the instructions to Form 10-Q. The condensed consolidated financial statements, including these notes, are unaudited and exclude some of the disclosures required in audited financial
statements. Management believes it has made all necessary adjustments (consisting of only normal recurring items) so that the condensed consolidated financial statements are presented fairly and that estimates made in preparing its condensed
consolidated financial statements are reasonable and prudent. The operating results presented for interim periods are not necessarily indicative of the results that may be expected for any other interim period or for the entire year. These condensed
consolidated financial statements should be read in conjunction with the audited consolidated financial statements included in the Partnerships Annual Report on Form 10-K for the year ended December 31, 2015 filed with the Securities and
Exchange Commission. As disclosed in the audited consolidated financial statements, the Partnership adopted certain accounting guidance for the quarter ended June 30, 2015 and applied a modified retrospective approach as of January 1,
2015. As such, the condensed consolidated financial statements for the three months ended March 31, 2015 were recast from the amounts originally reported in the Partnerships Quarterly Report on Form 10-Q for the quarter ended
March 31, 2015.
13
THE BLACKSTONE GROUP L.P.
Notes to Condensed Consolidated Financial StatementsContinued
(All Dollars Are in Thousands, Except Unit and Per Unit Data, Except Where Noted)
The condensed consolidated financial statements include the accounts of the Partnership,
its wholly owned or majority-owned subsidiaries, the consolidated entities which are considered to be variable interest entities and for which the Partnership is considered the primary beneficiary, and certain partnerships or similar entities which
are not considered variable interest entities but in which the general partner has a controlling financial interest.
All
intercompany balances and transactions have been eliminated in consolidation.
Restructurings within consolidated CLOs are
treated as investment purchases or sales, as applicable, in the Condensed Consolidated Statements of Cash Flows.
Consolidation
The Partnership consolidates all entities that it controls through a majority voting interest or otherwise, including
those Blackstone Funds in which the general partner has a controlling financial interest. The Partnership has a controlling interest in Blackstone Holdings because the limited partners do not have the right to dissolve the partnerships or have
substantive kick out rights or participating rights that would overcome the presumption of control by the Partnership. Accordingly, the Partnership consolidates Blackstone Holdings and records non-controlling interests to reflect the economic
interests of the limited partners of Blackstone Holdings.
In addition, the Partnership consolidates all variable interest
entities (VIE) in which it is the primary beneficiary. An enterprise is determined to be the primary beneficiary if it holds a controlling financial interest. A controlling financial interest is defined as (a) the power to direct
the activities of a VIE that most significantly impact the entitys economic performance and (b) the obligation to absorb losses of the entity or the right to receive benefits from the entity that could potentially be significant to the
VIE. The consolidation guidance requires an analysis to determine (a) whether an entity in which the Partnership holds a variable interest is a VIE and (b) whether the Partnerships involvement, through holding interests directly or
indirectly in the entity or contractually through other variable interests (for example, management and performance related fees), would give it a controlling financial interest. Performance of that analysis requires the exercise of judgment.
The Partnership determines whether it is the primary beneficiary of a VIE at the time it becomes involved with a variable
interest entity and reconsiders that conclusion continually. In evaluating whether the Partnership is the primary beneficiary, Blackstone evaluates its economic interests in the entity held either directly or indirectly by the Partnership. The
consolidation analysis can generally be performed qualitatively; however, if it is not readily apparent that the Partnership is not the primary beneficiary, a quantitative analysis may also be performed. Investments and redemptions (either by the
Partnership, affiliates of the Partnership or third parties) or amendments to the governing documents of the respective Blackstone Funds could affect an entitys status as a VIE or the determination of the primary beneficiary. At each reporting
date, the Partnership assesses whether it is the primary beneficiary and will consolidate or deconsolidate accordingly.
Assets of consolidated VIEs that can only be used to settle obligations of the consolidated VIE and liabilities of a consolidated VIE for
which creditors (or beneficial interest holders) do not have recourse to the general credit of Blackstone are presented in a separate section in the Condensed Consolidated Statements of Financial Condition.
Blackstones other disclosures regarding VIEs are discussed in Note 9. Variable Interest Entities.
Fair Value of Financial Instruments
GAAP establishes a hierarchical disclosure framework which prioritizes and ranks the level of market price observability used in measuring financial instruments at fair value. Market price observability
is affected by a
14
THE BLACKSTONE GROUP L.P.
Notes to Condensed Consolidated Financial StatementsContinued
(All Dollars Are in Thousands, Except Unit and Per Unit Data, Except Where Noted)
number of factors, including the type of financial instrument, the characteristics specific to the financial instrument and the state of the marketplace, including the existence and transparency
of transactions between market participants. Financial instruments with readily available quoted prices in active markets generally will have a higher degree of market price observability and a lesser degree of judgment used in measuring fair value.
Financial instruments measured and reported at fair value are classified and disclosed based on the observability of inputs used in the
determination of fair values, as follows:
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Level I Quoted prices are available in active markets for identical financial instruments as of the reporting date. The types of financial
instruments in Level I include listed equities, listed derivatives and mutual funds with quoted prices. The Partnership does not adjust the quoted price for these investments, even in situations where Blackstone holds a large position and a sale
could reasonably impact the quoted price.
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Level II Pricing inputs are other than quoted prices in active markets, which are either directly or indirectly observable as of the reporting
date, and fair value is determined through the use of models or other valuation methodologies. Financial instruments which are generally included in this category include corporate bonds and loans, including corporate bonds and loans held within CLO
vehicles, government and agency securities, less liquid and restricted equity securities, and certain over-the-counter derivatives where the fair value is based on observable inputs. Senior and subordinated notes issued by CLO vehicles are
classified within Level II of the fair value hierarchy.
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Level III Pricing inputs are unobservable for the financial instruments and includes situations where there is little, if any, market activity
for the financial instrument. The inputs into the determination of fair value require significant management judgment or estimation. Financial instruments that are included in this category generally include general and limited partnership interests
in private equity and real estate funds, credit-focused funds, distressed debt and non-investment grade residual interests in securitizations, certain corporate bonds and loans held within CLO vehicles, and certain over-the-counter derivatives where
the fair value is based on unobservable inputs.
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In certain cases, the inputs used to measure fair value may
fall into different levels of the fair value hierarchy. In such cases, the determination of which category within the fair value hierarchy is appropriate for any given financial instrument is based on the lowest level of input that is significant to
the fair value measurement. The Partnerships assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the financial instrument.
Transfers between levels of the fair value hierarchy are recognized at the beginning of the reporting period.
Level II Valuation Techniques
Financial instruments classified within Level II of the fair value hierarchy comprise debt instruments, including certain corporate loans and bonds held by Blackstones consolidated CLO vehicles,
those held within Blackstones Treasury Cash Management Strategies and debt securities sold, not yet purchased and interests in investment funds. Certain equity securities and derivative instruments valued using observable inputs are also
classified as Level II.
The valuation techniques used to value financial instruments classified within Level II of the fair
value hierarchy are as follows:
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Debt Instruments and Equity Securities are valued on the basis of prices from an orderly transaction between market participants provided by reputable
dealers or pricing services. In determining the value of a particular investment, pricing services may use certain information with respect to transactions in such
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15
THE BLACKSTONE GROUP L.P.
Notes to Condensed Consolidated Financial StatementsContinued
(All Dollars Are in Thousands, Except Unit and Per Unit Data, Except Where Noted)
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investments, quotations from dealers, pricing matrices and market transactions in comparable investments and various relationships between investments. The valuation of certain equity securities
is based on an observable price for an identical security adjusted for the effect of a restriction.
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Freestanding Derivatives are valued using contractual cash flows and observable inputs comprising yield curves, foreign currency rates and credit
spreads.
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Senior and subordinate notes issued by CLO vehicles are classified based on the more observable fair value of CLO assets less (a) the fair value
of any beneficial interests held by Blackstone, and (b) the carrying value of any beneficial interests that represent compensation for services.
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Level III Valuation Techniques
In the absence of observable market prices,
Blackstone values its investments using valuation methodologies applied on a consistent basis. For some investments little market activity may exist; managements determination of fair value is then based on the best information available in
the circumstances, and may incorporate managements own assumptions and involves a significant degree of judgment, taking into consideration a combination of internal and external factors, including the appropriate risk adjustments for
non-performance and liquidity risks. Investments for which market prices are not observable include private investments in the equity of operating companies, real estate properties, certain funds of hedge funds and credit-focused investments.
Private Equity Investments
The fair values of private equity investments are determined by reference to
projected net earnings, earnings before interest, taxes, depreciation and amortization (EBITDA), the discounted cash flow method, public market or private transactions, valuations for comparable companies and other measures which, in
many cases, are based on unaudited information at the time received. Valuations may be derived by reference to observable valuation measures for comparable companies or transactions (for example, multiplying a key performance metric of the investee
company, such as EBITDA, by a relevant valuation multiple observed in the range of comparable companies or transactions), adjusted by management for differences between the investment and the referenced comparables, and in some instances by
reference to option pricing models or other similar methods. Where a discounted cash flow method is used, a terminal value is derived by reference to EBITDA or price/earnings exit multiples.
Real Estate Investments
The fair values of real estate investments are determined by considering projected operating cash
flows, sales of comparable assets, if any, and replacement costs, among other measures. The methods used to estimate the fair value of real estate investments include the discounted cash flow method and/or capitalization rates (cap
rates) analysis. Valuations may be derived by reference to observable valuation measures for comparable companies or assets (for example, multiplying a key performance metric of the investee company or asset, such as EBITDA, by a relevant
valuation multiple observed in the range of comparable companies or transactions), adjusted by management for differences between the investment and the referenced comparables, and in some instances by reference to option pricing models or other
similar methods. Where a discounted cash flow method is used, a terminal value is derived by reference to an exit EBITDA multiple or capitalization rate. Additionally, where applicable, projected distributable cash flow through debt maturity will be
considered in support of the investments fair value.
Credit-Focused Investments
The fair values of
credit-focused investments are generally determined on the basis of prices between market participants provided by reputable dealers or pricing services. In some instances, Blackstone may utilize other valuation techniques, including the discounted
cash flow method or a market approach.
16
THE BLACKSTONE GROUP L.P.
Notes to Condensed Consolidated Financial StatementsContinued
(All Dollars Are in Thousands, Except Unit and Per Unit Data, Except Where Noted)
Level III Valuation Process
Investments classified within Level III of the fair value hierarchy are valued on a quarterly basis, taking into consideration factors
including any changes in Blackstones weighted-average cost of capital assumptions, discounted cash flow projections and exit multiple assumptions, as well as any changes in economic and other relevant conditions, and valuation models are
updated accordingly. The valuation process also includes a review by an independent valuation party, at least annually for all investments, and quarterly for certain investments, to corroborate the values determined by management. The valuations of
Blackstones investments are reviewed quarterly by a valuation committee chaired by Blackstones Vice Chairman and includes senior heads of each of Blackstones businesses, as well as representatives of legal and finance. Each
quarter, the valuations of Blackstones investments are also reviewed by the Audit Committee in a meeting attended by the chairman of the valuation committee. The valuations are further tested by comparison to actual sales prices obtained on
disposition of the investments.
Investments, at Fair Value
The Blackstone Funds are accounted for as investment companies under the American Institute of Certified Public Accountants Accounting and Auditing Guide,
Investment Companies
, and reflect their
investments, including majority-owned and controlled investments (the Portfolio Companies), at fair value. Such consolidated funds investments are reflected in Investments on the Condensed Consolidated Statements of Financial
Condition at fair value, with unrealized gains and losses resulting from changes in fair value reflected as a component of Net Gains (Losses) from Fund Investment Activities in the Condensed Consolidated Statements of Operations. Fair value is the
amount that would be received to sell an asset or paid to transfer a liability, in an orderly transaction between market participants at the measurement date, at current market conditions (i.e., the exit price).
Blackstones principal investments are presented at fair value with unrealized appreciation or depreciation and realized gains and
losses recognized in the Condensed Consolidated Statements of Operations within Investment Income (Loss).
For certain
instruments, the Partnership has elected the fair value option. Such election is irrevocable and is applied on an investment by investment basis at initial recognition. The Partnership has applied the fair value option for certain loans and
receivables and certain investments in private debt securities that otherwise would not have been carried at fair value with gains and losses recorded in net income. Accounting for these financial instruments at fair value is consistent with how the
Partnership accounts for its other principal investments. Loans extended to third parties are recorded within Accounts Receivable within the Condensed Consolidated Statements of Financial Condition. Debt securities for which the fair value option
has been elected are recorded within Investments. The methodology for measuring the fair value of such investments is consistent with the methodology applied to private equity, real estate, credit-focused and funds of hedge funds investments.
Changes in the fair value of such instruments are recognized in Investment Income (Loss) in the Condensed Consolidated Statements of Operations. Interest income on interest bearing loans and receivables and debt securities on which the fair value
option has been elected is based on stated coupon rates adjusted for the accretion of purchase discounts and the amortization of purchase premiums. This interest income is recorded within Interest and Dividend Revenue.
In addition, the Partnership has elected the fair value option for the assets and liabilities of CLO vehicles that are consolidated as of
January 1, 2010, as a result of the initial adoption of variable interest entity consolidation guidance. The Partnership has also elected the fair value option for CLO vehicles consolidated as a result of the acquisitions of CLO management
contracts or the acquisition of the share capital of CLO managers. Historically, the adjustment resulting from the difference between the fair value of assets and liabilities for each of these events was presented as a transition and acquisition
adjustment to Appropriated Partners Capital. Assets of the consolidated
17
THE BLACKSTONE GROUP L.P.
Notes to Condensed Consolidated Financial StatementsContinued
(All Dollars Are in Thousands, Except Unit and Per Unit Data, Except Where Noted)
CLOs are presented within Investments within the Condensed Consolidated Statements of Financial Condition and Liabilities within Loans Payable for the amounts due to unaffiliated third parties
and Due to Affiliates for the amounts held by non-consolidated affiliates. Changes in the fair value of consolidated CLO assets and liabilities and related interest, dividend and other income subsequent to adoption and acquisition are presented
within Net Gains (Losses) from Fund Investment Activities. Expenses of consolidated CLO vehicles are presented in Fund Expenses. Historically, amounts attributable to Non-Controlling Interests in Consolidated Entities had a corresponding adjustment
to Appropriated Partners Capital. On the adoption of the new CLO measurement guidance, there is no attribution of amounts to Non-Controlling Interests and no corresponding adjustments to Appropriated Partners Capital.
The Partnership has elected the fair value option for certain proprietary investments that would otherwise have been accounted for using
the equity method of accounting. The fair value of such investments is based on quoted prices in an active market or using the discounted cash flow method. Changes in fair value are recognized in Investment Income (Loss) in the Condensed
Consolidated Statements of Operations.
Further disclosure on instruments for which the fair value option has been elected is
presented in Note 7. Fair Value Option to the Condensed Consolidated Financial Statements.
The investments of
consolidated Blackstone Funds in funds of hedge funds (Investee Funds) are valued at net asset value (NAV) per share of the Investee Fund. In limited circumstances, the Partnership may determine, based on its own due
diligence and investment procedures, that NAV per share does not represent fair value. In such circumstances, the Partnership will estimate the fair value in good faith and in a manner that it reasonably chooses, in accordance with the requirements
of GAAP.
Certain investments of Blackstone and of the consolidated Blackstone funds of hedge funds and credit-focused funds
measure their investments in underlying funds at fair value using NAV per share without adjustment. The terms of the investees investment generally provide for minimum holding periods or lock-ups, the institution of gates on redemptions or the
suspension of redemptions or an ability to side pocket investments, at the discretion of the investees fund manager, and as a result, investments may not be redeemable at, or within three months of, the reporting date. A side pocket is used by
hedge funds and funds of hedge funds to separate investments that may lack a readily ascertainable value, are illiquid or are subject to liquidity restriction. Redemptions are generally not permitted until the investments within a side pocket are
liquidated or it is deemed that the conditions existing at the time that required the investment to be included in the side pocket no longer exist. As the timing of either of these events is uncertain, the timing at which the Partnership may redeem
an investment held in a side pocket cannot be estimated. Further disclosure on instruments for which fair value is measured using NAV per share is presented in Note 5. Net Asset Value as Fair Value.
Security and loan transactions are recorded on a trade date basis.
Equity Method Investments
Investments in which the Partnership is deemed
to exert significant influence, but not control, are accounted for using the equity method of accounting. Under the equity method of accounting, the Partnerships share of earnings (losses) from equity method investments is included in
Investment Income (Loss) in the Condensed Consolidated Statements of Operations. The carrying amounts of equity method investments are reflected in Investments in the Condensed Consolidated Statements of Financial Condition. As the underlying
investments of the Partnerships equity method investments in Blackstone Funds are reported at fair value, the carrying value of the Partnerships equity method investments approximates fair value.
18
THE BLACKSTONE GROUP L.P.
Notes to Condensed Consolidated Financial StatementsContinued
(All Dollars Are in Thousands, Except Unit and Per Unit Data, Except Where Noted)
Repurchase and Reverse Repurchase Agreements
Securities purchased under agreements to resell (reverse repurchase agreements) and securities sold under agreements to
repurchase (repurchase agreements), comprised primarily of U.S. and non-U.S. government and agency securities, asset-backed securities and corporate debt, represent collateralized financing transactions. Such transactions are recorded in
the Condensed Consolidated Statements of Financial Condition at their contractual amounts and include accrued interest. The carrying value of repurchase and reverse repurchase agreements approximates fair value.
The Partnership manages credit exposure arising from reverse repurchase agreements and repurchase agreements by, in appropriate
circumstances, entering into master netting agreements and collateral arrangements with counterparties that provide the Partnership, in the event of a counterparty default, the right to liquidate collateral and the right to offset a
counterpartys rights and obligations.
The Partnership takes possession of securities purchased under reverse repurchase
agreements and is permitted to repledge, deliver or otherwise use such securities. The Partnership also pledges its financial instruments to counterparties to collateralize repurchase agreements. Financial instruments pledged that can be repledged,
delivered or otherwise used by the counterparty are recorded in Investments in the Condensed Consolidated Statements of Financial Condition. Additional disclosures relating to reverse repurchase and repurchase agreements are discussed in Note 10.
Reverse Repurchase and Repurchase Agreements.
Blackstone does not offset assets and liabilities relating to
reverse repurchase agreements and repurchase agreements in its Condensed Consolidated Statements of Financial Condition. Additional disclosures relating to offsetting are discussed in Note 11. Offsetting of Assets and Liabilities.
Securities Sold, Not Yet Purchased
Securities Sold, Not Yet Purchased consist of equity and debt securities that the Partnership has borrowed and sold. The Partnership is required to cover its short sale in the future by
purchasing the security at prevailing market prices and delivering it to the counterparty from which it borrowed the security. The Partnership is exposed to loss in the event that the price at which a security may have to be purchased to cover a
short sale exceeds the price at which the borrowed security was sold short.
Securities Sold, Not Yet Purchased are recorded
at fair value in the Condensed Consolidated Statements of Financial Condition.
Derivative Instruments
The Partnership recognizes all derivatives as assets or liabilities on its Condensed Consolidated Statements of Financial Condition at
fair value. On the date the Partnership enters into a derivative contract, it designates and documents each derivative contract as one of the following: (a) a hedge of a recognized asset or liability (fair value hedge), (b) a
hedge of a forecasted transaction or of the variability of cash flows to be received or paid related to a recognized asset or liability (cash flow hedge), (c) a hedge of a net investment in a foreign operation, or (d) a
derivative instrument not designated as a hedging instrument (freestanding derivative). For a fair value hedge, Blackstone records changes in the fair value of the derivative and, to the extent that it is highly effective, changes in the
fair value of the hedged asset or liability attributable to the hedged risk, in current period earnings in General, Administrative and Other in the Condensed Consolidated Statements of Operations. Changes in the fair value of derivatives designated
as hedging instruments caused by factors other than changes in the risk being hedged, which
19
THE BLACKSTONE GROUP L.P.
Notes to Condensed Consolidated Financial StatementsContinued
(All Dollars Are in Thousands, Except Unit and Per Unit Data, Except Where Noted)
are excluded from the assessment of hedge effectiveness, are recognized in current period earnings. Gains or losses on a derivative instrument that is designated as, and is effective as, an
economic hedge of a net investment in a foreign operation are reported in the cumulative translation adjustment section of other comprehensive income to the extent it is effective as a hedge. The ineffective portion of a net investment hedge is
recognized in current period earnings.
The Partnership formally documents at inception its hedge relationships, including
identification of the hedging instruments and the hedged items, its risk management objectives, strategy for undertaking the hedge transaction and the Partnerships evaluation of effectiveness of its hedged transaction. At least monthly, the
Partnership also formally assesses whether the derivative it designated in each hedging relationship is expected to be, and has been, highly effective in offsetting changes in estimated fair values or cash flows of the hedged items using either the
regression analysis or the dollar offset method. For net investment hedges, the Partnership uses a method based on changes in spot rates to measure effectiveness. If it is determined that a derivative is not highly effective at hedging the
designated exposure, hedge accounting is discontinued. The Partnership may also at any time remove a designation of a fair value hedge. The fair values of hedging derivative instruments are reflected within Other Assets in the Condensed Consolidated
Statements of Financial Condition.
For freestanding derivative contracts, the Partnership presents changes in fair value in
current period earnings. Changes in the fair value of derivative instruments held by consolidated Blackstone Funds are reflected in Net Gains (Losses) from Fund Investment Activities or, where derivative instruments are held by the Partnership,
within Investment Income (Loss) in the Condensed Consolidated Statements of Operations. The fair value of freestanding derivative assets are recorded within Investments and freestanding derivative liabilities are recorded within Accounts Payable,
Accrued Expenses and Other Liabilities in the Condensed Consolidated Statements of Financial Condition.
The Partnership has
elected to not offset derivative assets and liabilities or financial assets in its Condensed Consolidated Statements of Financial Condition, including cash, that may be received or paid as part of collateral arrangements, even when an enforceable
master netting agreement is in place that provides the Partnership, in the event of counterparty default, the right to liquidate collateral and the right to offset a counterpartys rights and obligations.
Blackstones other disclosures regarding derivative financial instruments are discussed in Note 6. Derivative Financial
Instruments.
Blackstones disclosures regarding offsetting are discussed in Note 11. Offsetting of Assets
and Liabilities.
Affiliates
Blackstone considers its Founder, senior managing directors, employees, the Blackstone Funds and the Portfolio Companies to be affiliates.
Distributions
Distributions are reflected in the condensed consolidated
financial statements when declared.
Recent Accounting Developments
In June 2014, the Financial Accounting Standards Board (FASB) issued amended guidance on revenue from contracts with
customers. The guidance requires that an entity should recognize revenue to depict the transfer of
20
THE BLACKSTONE GROUP L.P.
Notes to Condensed Consolidated Financial StatementsContinued
(All Dollars Are in Thousands, Except Unit and Per Unit Data, Except Where Noted)
promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. An entity is required to
(a) identify the contract(s) with a customer, (b) identify the performance obligations in the contract, (c) determine the transaction price, (d) allocate the transaction price to the performance obligations in the contract, and
(e) recognize revenue when (or as) the entity satisfies a performance obligation. In determining the transaction price, an entity may include variable consideration only to the extent that it is probable that a significant reversal in the
amount of cumulative revenue recognized would not occur when the uncertainty associated with the variable consideration is resolved.
The guidance introduces new qualitative and quantitative disclosure requirements about contracts with customers including revenue and impairments recognized, disaggregation of revenue and information
about contract balances and performance obligations. Information is required about significant judgments and changes in judgments in determining the timing of satisfaction of performance obligations and determining the transaction price and amounts
allocated to performance obligations. Additional disclosures are required about assets recognized from the costs to obtain or fulfill a contract.
In August 2015, the FASB issued new guidance deferring the effective date of the new revenue recognition standard by one year. The new guidance should be applied for annual reporting periods beginning
after December 15, 2017, including interim periods within that reporting period.
The new revenue guidance may have a
material impact on Blackstones consolidated financial statements if it is determined that both performance fees and carried interest are forms of variable consideration that may not be included in the transaction price. This may significantly
delay the recognition of carried interest income and performance fees.
In February 2016, the FASB issued amended guidance on
the accounting for leases. The guidance requires the recognition of lease assets and lease liabilities for those leases classified as operating leases under previous GAAP. The guidance retains a distinction between finance leases and operating
leases. The classification criteria for distinguishing between finance leases and operating leases are substantially similar to the classification criteria for distinguishing between capital leases and operating leases under previous GAAP. The
recognition, measurement and presentation of expenses and cash flows arising from a lease by a lessee have not changed significantly from previous GAAP.
For operating leases, a lessee is required to do the following: (a) recognize a right-of-use asset and a lease liability, initially measured at the present value of the lease payments, in the
Statement of Financial Condition, (b) recognize a single lease cost, calculated so that the cost of the lease is allocated over the lease term on a generally straight-line basis, and (c) classify all cash payments within operating
activities in the statement of cash flows.
The guidance is effective for fiscal periods beginning after December 15,
2018. Early application is permitted. Blackstone is evaluating the impact of the amended guidance on the Consolidated Statement of Financial Condition. It is not expected to have a material impact on the Consolidated Statements of Operations or the
Consolidated Statements of Cash Flows.
In March 2016, the FASB issued amended guidance on stock compensation. The amendments
simplify several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, accounting for forfeitures, and classification of excess tax benefits
and employee taxes paid on the statement of cash flows. The guidance is effective for annual periods beginning after December 15, 2016 and interim periods within those annual periods. Early adoption is permitted. The guidance is not expected to
have a material impact on Blackstones financial statements.
21
THE BLACKSTONE GROUP L.P.
Notes to Condensed Consolidated Financial StatementsContinued
(All Dollars Are in Thousands, Except Unit and Per Unit Data, Except Where Noted)
Intangible Assets, Net consists of the following:
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March 31,
2016
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December 31,
2015
|
|
Finite-Lived Intangible Assets/Contractual Rights
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|
$
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1,424,226
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$
|
1,424,226
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Accumulated Amortization
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(1,101,507
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)
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(1,078,679
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)
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|
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Intangible Assets, Net
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|
$
|
322,719
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|
|
$
|
345,547
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Amortization expense associated with Blackstones intangible assets was $22.8 million for the three
months ended March 31, 2016 and $24.8 million for the three months ended March 31, 2015.
Amortization of Intangible
Assets held at March 31, 2016 is expected to be $82.9 million, $43.9 million, $43.8 million, $43.8 million, and $43.8 million for each of the years ending December 31, 2016, 2017, 2018, 2019, and 2020, respectively. Blackstones
intangible assets as of March 31, 2016 are expected to amortize over a weighted-average period of 6.3 years.
Investments consist of the following:
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March 31,
2016
|
|
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December 31,
2015
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|
Investments of Consolidated Blackstone Funds
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|
$
|
4,885,584
|
|
|
$
|
4,613,944
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Equity Method Investments
|
|
|
3,116,125
|
|
|
|
3,110,810
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|
Blackstones Treasury Cash Management Strategies
|
|
|
1,588,194
|
|
|
|
1,682,259
|
|
Performance Fees
|
|
|
4,782,046
|
|
|
|
4,757,932
|
|
Other Investments
|
|
|
253,083
|
|
|
|
159,152
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
14,625,032
|
|
|
$
|
14,324,097
|
|
|
|
|
|
|
|
|
|
|
Blackstones share of Investments of Consolidated Blackstone Funds totaled $405.9 million and $451.9
million at March 31, 2016 and December 31, 2015, respectively.
Investments of Consolidated Blackstone Funds
The following table presents the Realized and Net Change in Unrealized Gains (Losses) on investments held by the consolidated Blackstone
Funds and a reconciliation to Other Income Net Gains from Fund Investment Activities in the Condensed Consolidated Statements of Operations:
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
|
|
2016
|
|
|
2015
|
|
Realized Gains
|
|
$
|
13,382
|
|
|
$
|
67,039
|
|
Net Change in Unrealized Gains (Losses)
|
|
|
(25,241
|
)
|
|
|
3,933
|
|
|
|
|
|
|
|
|
|
|
Realized and Net Change in Unrealized Gains (Losses) from Consolidated Blackstone Funds
|
|
|
(11,859
|
)
|
|
|
70,972
|
|
Interest and Dividend Revenue Attributable to Consolidated Blackstone Funds
|
|
|
31,001
|
|
|
|
22,583
|
|
|
|
|
|
|
|
|
|
|
Other Income Net Gains from Fund Investment Activities
|
|
$
|
19,142
|
|
|
$
|
93,555
|
|
|
|
|
|
|
|
|
|
|
22
THE BLACKSTONE GROUP L.P.
Notes to Condensed Consolidated Financial StatementsContinued
(All Dollars Are in Thousands, Except Unit and Per Unit Data, Except Where Noted)
Equity Method Investments
Blackstones equity method investments include its investments in private equity funds, real estate funds, funds of hedge funds and
credit-focused funds and other proprietary investments, which are not consolidated but in which the Partnership exerts significant influence.
Blackstone evaluates each of its equity method investments to determine if any were significant as defined by guidance from the United States Securities and Exchange Commission. As of and for the three
months ended March 31, 2016 and 2015, no individual equity method investment held by Blackstone met the significance criteria. As such, Blackstone is not required to present separate financial statements for any of its equity method
investments.
The Partnership recognized net gains related to its equity method investments of $17.6 million and
$162.1 million for the three months ended March 31, 2016 and 2015, respectively.
Blackstones Treasury Cash Management
Strategies
The portion of Blackstones Treasury Cash Management Strategies included in Investments represents the
Partnerships liquid investments into primarily fixed income securities, mutual fund interests, and other fund interests. These strategies are managed by a combination of Blackstone personnel and third party advisers. The following table
presents the Realized and Net Change in Unrealized Gains (Losses) on investments held by Blackstones Treasury Cash Management Strategies:
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
|
|
2016
|
|
|
2015
|
|
Realized Losses
|
|
$
|
(18,609
|
)
|
|
$
|
(161
|
)
|
Net Change in Unrealized Gains
|
|
|
1,783
|
|
|
|
11,111
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
(16,826
|
)
|
|
$
|
10,950
|
|
|
|
|
|
|
|
|
|
|
Performance Fees
Performance Fees allocated to the general partner in respect of performance of certain Carry Funds, funds of hedge funds and credit-focused funds were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Private
Equity
|
|
|
Real
Estate
|
|
|
Hedge Fund
Solutions
|
|
|
Credit
|
|
|
Total
|
|
Performance Fees, December 31, 2015
|
|
$
|
1,479,443
|
|
|
$
|
3,101,688
|
|
|
$
|
9,747
|
|
|
$
|
167,054
|
|
|
$
|
4,757,932
|
|
Performance Fees Allocated as a Result of Changes in Fund Fair Values
|
|
|
104,602
|
|
|
|
179,842
|
|
|
|
(891
|
)
|
|
|
(4
|
)
|
|
|
283,549
|
|
Foreign Exchange Gain
|
|
|
|
|
|
|
18,631
|
|
|
|
|
|
|
|
|
|
|
|
18,631
|
|
Fund Distributions
|
|
|
(29,345
|
)
|
|
|
(222,978
|
)
|
|
|
(6,363
|
)
|
|
|
(19,380
|
)
|
|
|
(278,066
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Performance Fees, March 31, 2016
|
|
$
|
1,554,700
|
|
|
$
|
3,077,183
|
|
|
$
|
2,493
|
|
|
$
|
147,670
|
|
|
$
|
4,782,046
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
23
THE BLACKSTONE GROUP L.P.
Notes to Condensed Consolidated Financial StatementsContinued
(All Dollars Are in Thousands, Except Unit and Per Unit Data, Except Where Noted)
Other Investments
Other Investments consist primarily of proprietary investment securities held by Blackstone. The following table presents Blackstones Realized and Net Change in Unrealized Gains (Losses) in other
investments:
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
|
|
2016
|
|
|
2015
|
|
Realized Gains
|
|
$
|
4,733
|
|
|
$
|
22
|
|
Net Change in Unrealized Gains (Losses)
|
|
|
(6,235
|
)
|
|
|
371
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
(1,502
|
)
|
|
$
|
393
|
|
|
|
|
|
|
|
|
|
|
5.
|
NET ASSET VALUE AS FAIR VALUE
|
A summary of fair value by strategy type alongside the remaining unfunded commitments and ability to redeem such
investments as of March 31, 2016 is presented below:
|
|
|
|
|
|
|
|
|
|
|
|
|
Strategy
|
|
Fair Value
|
|
|
Unfunded
Commitments
|
|
|
Redemption
Frequency
(if currently
eligible)
|
|
Redemption
Notice
Period
|
Diversified Instruments
|
|
$
|
153,867
|
|
|
$
|
142
|
|
|
(a)
|
|
(a)
|
Credit Driven
|
|
|
257,775
|
|
|
|
268
|
|
|
(b)
|
|
(b)
|
Event Driven
|
|
|
64,773
|
|
|
|
|
|
|
(c)
|
|
(c)
|
Equity
|
|
|
227
|
|
|
|
|
|
|
(d)
|
|
(d)
|
Commodities
|
|
|
1,977
|
|
|
|
|
|
|
(e)
|
|
(e)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
478,619
|
|
|
$
|
410
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
Diversified Instruments include investments in funds that invest across multiple strategies. Investments representing 4% of the fair value of the investments in this
category may not be redeemed at, or within three months of, the reporting date. The remaining 96% of investments in this category are redeemable as of the reporting date.
|
(b)
|
The Credit Driven category includes investments in hedge funds that invest primarily in domestic and international bonds. Investments representing 32% of the fair value
of the investments in this category may not be redeemed at, or within three months of, the reporting date. Investments representing 64% of the fair value of the investments in this category are redeemable as of the reporting date. Investments
representing 4% of the total fair value in the credit driven category are subject to redemption restrictions such as the investee fund managers ability to limit the amount of redemptions.
|
(c)
|
The Event Driven category includes investments in hedge funds whose primary investing strategy is to identify certain event-driven investments. Withdrawals are
generally not permitted for the investments in this category. Distributions will be received as the underlying investments are liquidated.
|
(d)
|
The Equity category includes investments in hedge funds that invest primarily in domestic and international equity securities. Withdrawals are generally not permitted
for the investments in this category. Distributions will be received as the underlying investments are liquidated.
|
(e)
|
The Commodities category includes investments in commodities-focused funds that primarily invest in futures and physical-based commodity driven strategies. Withdrawals
are generally not permitted for the investments in this category. Distributions will be received as the underlying investments are liquidated.
|
24
THE BLACKSTONE GROUP L.P.
Notes to Condensed Consolidated Financial StatementsContinued
(All Dollars Are in Thousands, Except Unit and Per Unit Data, Except Where Noted)
6.
|
DERIVATIVE FINANCIAL INSTRUMENTS
|
Blackstone and the consolidated Blackstone Funds enter into derivative contracts in the normal course of business to
achieve certain risk management objectives and for general investment purposes. Blackstone may enter into derivative contracts in order to hedge its interest rate risk exposure against the effects of interest rate changes. Additionally, Blackstone
may also enter into derivative contracts in order to hedge its foreign currency risk exposure against the effects of a portion of its non-U.S. dollar denominated currency net investments. As a result of the use of derivative contracts, Blackstone
and the consolidated Blackstone Funds are exposed to the risk that counterparties will fail to fulfill their contractual obligations. To mitigate such counterparty risk, Blackstone and the consolidated Blackstone Funds enter into contracts with
certain major financial institutions, all of which have investment grade ratings. Counterparty credit risk is evaluated in determining the fair value of derivative instruments.
Net Investment Hedges
To manage the potential exposure from adverse
changes in currency exchange rates arising from Blackstones net investment in foreign operations, during December 2014, Blackstone entered into several foreign currency forward contracts to hedge a portion of the net investment in
Blackstones non-U.S. dollar denominated foreign operations.
Blackstone uses foreign currency forward contracts to hedge
portions of Blackstones net investments in foreign operations. The gains and losses due to change in fair value attributable to changes in spot exchange rates on foreign currency derivatives designated as net investment hedges were recognized
in Other Comprehensive Income (Loss), Net of Tax Currency Translation Adjustment. For the three months ended March 31, 2016 the resulting loss was $2.1 million.
Freestanding Derivatives
Freestanding derivatives are instruments that
Blackstone and certain of the consolidated Blackstone Funds have entered into as part of their overall risk management and investment strategies. These derivative contracts are not designated as hedging instruments for accounting purposes. Such
contracts may include interest rate swaps, foreign exchange contracts, equity swaps, options, futures and other derivative contracts.
In June 2012, Blackstone removed the fair value hedge designation of its interest rate swaps that were previously used to hedge a portion of the interest rate risk on the Partnerships fixed rate
borrowings. Changes in the fair value of the interest rate swaps subsequent to the date of de-designation are reflected within Freestanding Derivatives within Interest Rate Contracts in the table below.
25
THE BLACKSTONE GROUP L.P.
Notes to Condensed Consolidated Financial StatementsContinued
(All Dollars Are in Thousands, Except Unit and Per Unit Data, Except Where Noted)
The table below summarizes the aggregate notional amount and fair value of the
derivative financial instruments. The notional amount represents the absolute value amount of all outstanding derivative contracts.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2016
|
|
|
December 31, 2015
|
|
|
|
Assets
|
|
|
Liabilities
|
|
|
Assets
|
|
|
Liabilities
|
|
|
|
Notional
|
|
|
Fair
Value
|
|
|
Notional
|
|
|
Fair
Value
|
|
|
Notional
|
|
|
Fair
Value
|
|
|
Notional
|
|
|
Fair
Value
|
|
Net Investment Hedges
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign Currency Contracts
|
|
$
|
6,087
|
|
|
$
|
9
|
|
|
$
|
53,191
|
|
|
$
|
1,677
|
|
|
$
|
53,627
|
|
|
$
|
319
|
|
|
$
|
138
|
|
|
$
|
1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Freestanding Derivatives
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Blackstone
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest Rate Contracts
|
|
|
603,327
|
|
|
|
900
|
|
|
|
724,087
|
|
|
|
5,765
|
|
|
|
1,681,533
|
|
|
|
2,212
|
|
|
|
1,054,465
|
|
|
|
4,288
|
|
Foreign Currency Contracts
|
|
|
163,031
|
|
|
|
2,902
|
|
|
|
127,891
|
|
|
|
1,063
|
|
|
|
158,684
|
|
|
|
2,088
|
|
|
|
271,891
|
|
|
|
2,042
|
|
Credit Default Swaps
|
|
|
2,275
|
|
|
|
12
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
19,250
|
|
|
|
2,411
|
|
Investments of Consolidated Blackstone Funds
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign Currency Contracts
|
|
|
197,087
|
|
|
|
11,562
|
|
|
|
26,253
|
|
|
|
2,846
|
|
|
|
124,595
|
|
|
|
1,400
|
|
|
|
92,094
|
|
|
|
6,490
|
|
Credit Default Swaps
|
|
|
|
|
|
|
|
|
|
|
122,682
|
|
|
|
7,647
|
|
|
|
|
|
|
|
|
|
|
|
108,786
|
|
|
|
6,275
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
965,720
|
|
|
|
15,376
|
|
|
|
1,000,913
|
|
|
|
17,321
|
|
|
|
1,964,812
|
|
|
|
5,700
|
|
|
|
1,546,486
|
|
|
|
21,506
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
971,807
|
|
|
$
|
15,385
|
|
|
$
|
1,054,104
|
|
|
$
|
18,998
|
|
|
$
|
2,018,439
|
|
|
$
|
6,019
|
|
|
$
|
1,546,624
|
|
|
$
|
21,507
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The table below summarizes the impact to the Condensed Consolidated Statements of Operations from
derivative financial instruments:
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
|
|
2016
|
|
|
2015
|
|
Net Investment Hedges Foreign Currency Contracts
|
|
|
|
|
|
|
|
|
Hedge Ineffectiveness
|
|
$
|
129
|
|
|
$
|
240
|
|
|
|
|
|
|
|
|
|
|
Freestanding Derivatives
|
|
|
|
|
|
|
|
|
Realized Gains (Losses)
|
|
|
|
|
|
|
|
|
Interest Rate Contracts
|
|
$
|
(7,358
|
)
|
|
$
|
(3,735
|
)
|
Foreign Currency Contracts
|
|
|
(4,310
|
)
|
|
|
12,064
|
|
Credit Default Swaps
|
|
|
(3,811
|
)
|
|
|
1,826
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
(15,479
|
)
|
|
$
|
10,155
|
|
|
|
|
|
|
|
|
|
|
Freestanding Derivatives
|
|
|
|
|
|
|
|
|
Net Change in Unrealized Gains (Losses)
|
|
|
|
|
|
|
|
|
Interest Rate Contracts
|
|
$
|
(2,666
|
)
|
|
$
|
(746
|
)
|
Foreign Currency Contracts
|
|
|
15,322
|
|
|
|
(11,024
|
)
|
Credit Default Swaps
|
|
|
(4,276
|
)
|
|
|
(2,922
|
)
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
8,380
|
|
|
$
|
(14,692
|
)
|
|
|
|
|
|
|
|
|
|
As of March 31, 2016 and December 31, 2015, the Partnership had not designated any derivatives
as cash flow hedges.
26
THE BLACKSTONE GROUP L.P.
Notes to Condensed Consolidated Financial StatementsContinued
(All Dollars Are in Thousands, Except Unit and Per Unit Data, Except Where Noted)
The following table summarizes the financial instruments for which the fair value option has been elected:
|
|
|
|
|
|
|
|
|
|
|
March 31,
2016
|
|
|
December 31,
2015
|
|
Assets
|
|
|
|
|
|
|
|
|
Loans and Receivables
|
|
$
|
287,858
|
|
|
$
|
261,994
|
|
Equity and Preferred Securities
|
|
|
280,028
|
|
|
|
280,879
|
|
Debt Securities
|
|
|
14,487
|
|
|
|
15,176
|
|
Assets of Consolidated CLO Vehicles
|
|
|
|
|
|
|
|
|
Corporate Loans
|
|
|
3,363,794
|
|
|
|
3,087,563
|
|
Corporate Bonds
|
|
|
412,073
|
|
|
|
379,000
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
4,358,240
|
|
|
$
|
4,024,612
|
|
|
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
|
Liabilities of Consolidated CLO Vehicles
|
|
|
|
|
|
|
|
|
Senior Secured Notes
|
|
$
|
3,467,956
|
|
|
$
|
3,225,064
|
|
Subordinated Notes
|
|
|
86,063
|
|
|
|
98,371
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
3,554,019
|
|
|
$
|
3,323,435
|
|
|
|
|
|
|
|
|
|
|
The following table presents the Realized and Net Change in Unrealized Gains (Losses) on financial
instruments on which the fair value option was elected:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
|
|
2016
|
|
|
2015
|
|
|
|
Realized
Gains (Losses)
|
|
|
Net Change
in
Unrealized
Gains (Losses)
|
|
|
Realized
Gains (Losses)
|
|
|
Net Change
in
Unrealized
Gains (Losses)
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans and Receivables
|
|
$
|
|
|
|
$
|
(3,778
|
)
|
|
$
|
|
|
|
$
|
(1,875
|
)
|
Equity and Preferred Securities
|
|
|
3
|
|
|
|
(3,832
|
)
|
|
|
(185
|
)
|
|
|
(2,828
|
)
|
Debt Securities
|
|
|
|
|
|
|
(689
|
)
|
|
|
|
|
|
|
|
|
Assets of Consolidated CLO Vehicles
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate Loans
|
|
|
(13,707
|
)
|
|
|
957
|
|
|
|
(7,208
|
)
|
|
|
22,557
|
|
Corporate Bonds
|
|
|
190
|
|
|
|
271
|
|
|
|
30
|
|
|
|
1,135
|
|
Other
|
|
|
178
|
|
|
|
|
|
|
|
1,955
|
|
|
|
(2,491
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
(13,336
|
)
|
|
$
|
(7,071
|
)
|
|
$
|
(5,408
|
)
|
|
$
|
16,498
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities of Consolidated CLO Vehicles
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Senior Secured Notes
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
(3,794
|
)
|
Subordinated Notes
|
|
|
|
|
|
|
12,413
|
|
|
|
|
|
|
|
754
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
|
|
|
$
|
12,413
|
|
|
$
|
|
|
|
$
|
(3,040
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
27
THE BLACKSTONE GROUP L.P.
Notes to Condensed Consolidated Financial StatementsContinued
(All Dollars Are in Thousands, Except Unit and Per Unit Data, Except Where Noted)
The following table presents information for those financial instruments for which the
fair value option was elected:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2016
|
|
|
December 31, 2015
|
|
|
|
|
|
|
For Financial Assets
Past Due (a)
|
|
|
|
|
|
For Financial Assets Past
Due (a)
|
|
|
|
(Deficiency)
of Fair Value
Over Principal
|
|
|
Fair
Value
|
|
|
(Deficiency)
of Fair Value
Over Principal
|
|
|
(Deficiency)
of Fair Value
Over Principal
|
|
|
Fair
Value
|
|
|
(Deficiency)
of Fair Value
Over Principal
|
|
Loans and Receivables
|
|
$
|
(13,806
|
)
|
|
$
|
|
|
|
$
|
|
|
|
$
|
(8,845
|
)
|
|
$
|
|
|
|
$
|
|
|
Debt Securities
|
|
|
(1,115
|
)
|
|
|
|
|
|
|
|
|
|
|
(426
|
)
|
|
|
|
|
|
|
|
|
Assets of Consolidated CLO Vehicles
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate Loans
|
|
|
(71,562
|
)
|
|
|
|
|
|
|
(1,784
|
)
|
|
|
(77,900
|
)
|
|
|
1,088
|
|
|
|
(5,620
|
)
|
Corporate Bonds
|
|
|
(6,588
|
)
|
|
|
|
|
|
|
|
|
|
|
(6,046
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
(93,071
|
)
|
|
$
|
|
|
|
$
|
(1,784
|
)
|
|
$
|
(93,217
|
)
|
|
$
|
1,088
|
|
|
$
|
(5,620
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
Corporate Loans and Corporate Bonds within CLO assets are classified as past due if contractual payments are more than one day past due.
|
As of December 31, 2015, no Loans and Receivables for which the fair value option was elected were past due or in non-accrual
status. As of March 31, 2016 and December 31, 2015, no Corporate Bonds included within the Assets of Consolidated CLO Vehicles for which the fair value option was elected were past due or in non-accrual status.
28
THE BLACKSTONE GROUP L.P.
Notes to Condensed Consolidated Financial StatementsContinued
(All Dollars Are in Thousands, Except Unit and Per Unit Data, Except Where Noted)
8.
|
FAIR VALUE MEASUREMENTS OF FINANCIAL INSTRUMENTS
|
The following tables summarize the valuation of the Partnerships financial assets and liabilities by the fair
value hierarchy:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2016
|
|
|
|
Level I
|
|
|
Level II
|
|
|
Level III
|
|
|
NAV
|
|
|
Total
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investments of Consolidated Blackstone Funds (a)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment Funds
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
149,071
|
|
|
$
|
149,071
|
|
Equity Securities
|
|
|
71,851
|
|
|
|
53,317
|
|
|
|
82,724
|
|
|
|
|
|
|
|
207,892
|
|
Partnership and LLC Interests
|
|
|
32,642
|
|
|
|
75,005
|
|
|
|
445,697
|
|
|
|
|
|
|
|
553,344
|
|
Debt Instruments
|
|
|
|
|
|
|
168,597
|
|
|
|
19,251
|
|
|
|
|
|
|
|
187,848
|
|
Assets of Consolidated CLO Vehicles
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate Loans
|
|
|
|
|
|
|
3,174,768
|
|
|
|
189,026
|
|
|
|
|
|
|
|
3,363,794
|
|
Corporate Bonds
|
|
|
|
|
|
|
412,073
|
|
|
|
|
|
|
|
|
|
|
|
412,073
|
|
Freestanding Derivatives Foreign
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Currency Contracts
|
|
|
|
|
|
|
11,562
|
|
|
|
|
|
|
|
|
|
|
|
11,562
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Investments of Consolidated Blackstone Funds
|
|
|
104,493
|
|
|
|
3,895,322
|
|
|
|
736,698
|
|
|
|
149,071
|
|
|
|
4,885,584
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Blackstones Treasury Cash Management Strategies
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity Securities
|
|
|
143,882
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
143,882
|
|
Debt Instruments
|
|
|
|
|
|
|
1,101,627
|
|
|
|
30,855
|
|
|
|
116,544
|
|
|
|
1,249,026
|
|
Other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
195,286
|
|
|
|
195,286
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Blackstones Treasury Cash
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Management Strategies
|
|
|
143,882
|
|
|
|
1,101,627
|
|
|
|
30,855
|
|
|
|
311,830
|
|
|
|
1,588,194
|
|
Money Market Funds
|
|
|
170,680
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
170,680
|
|
Net Investment Hedges Foreign Currency Contracts
|
|
|
|
|
|
|
9
|
|
|
|
|
|
|
|
|
|
|
|
9
|
|
Freestanding Derivatives
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest Rate Contracts
|
|
|
452
|
|
|
|
448
|
|
|
|
|
|
|
|
|
|
|
|
900
|
|
Foreign Currency Contracts
|
|
|
|
|
|
|
2,902
|
|
|
|
|
|
|
|
|
|
|
|
2,902
|
|
Credit Default Swaps
|
|
|
|
|
|
|
12
|
|
|
|
|
|
|
|
|
|
|
|
12
|
|
Loans and Receivables
|
|
|
|
|
|
|
|
|
|
|
287,858
|
|
|
|
|
|
|
|
287,858
|
|
Other Investments
|
|
|
135,956
|
|
|
|
|
|
|
|
99,409
|
|
|
|
17,718
|
|
|
|
253,083
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
555,463
|
|
|
$
|
5,000,320
|
|
|
$
|
1,154,820
|
|
|
$
|
478,619
|
|
|
$
|
7,189,222
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2016
|
|
|
|
Level I
|
|
|
Level II
|
|
|
Level III
|
|
|
Total
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities of Consolidated CLO Vehicles (a)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Senior Secured Notes (b)
|
|
$
|
|
|
|
$
|
3,467,956
|
|
|
$
|
|
|
|
$
|
3,467,956
|
|
Subordinated Notes (b)
|
|
|
|
|
|
|
86,063
|
|
|
|
|
|
|
|
86,063
|
|
Freestanding Derivatives Foreign Currency Contracts
|
|
|
|
|
|
|
2,846
|
|
|
|
|
|
|
|
2,846
|
|
Freestanding Derivatives Credit Default Swaps
|
|
|
|
|
|
|
7,647
|
|
|
|
|
|
|
|
7,647
|
|
Net Investment Hedges Foreign Currency Contracts
|
|
|
|
|
|
|
1,677
|
|
|
|
|
|
|
|
1,677
|
|
Freestanding Derivatives
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest Rate Contracts
|
|
|
1,899
|
|
|
|
3,866
|
|
|
|
|
|
|
|
5,765
|
|
Foreign Currency Contracts
|
|
|
|
|
|
|
1,063
|
|
|
|
|
|
|
|
1,063
|
|
Securities Sold, Not Yet Purchased
|
|
|
|
|
|
|
105,857
|
|
|
|
|
|
|
|
105,857
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
1,899
|
|
|
$
|
3,676,975
|
|
|
$
|
|
|
|
$
|
3,678,874
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
29
THE BLACKSTONE GROUP L.P.
Notes to Condensed Consolidated Financial StatementsContinued
(All Dollars Are in Thousands, Except Unit and Per Unit Data, Except Where Noted)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2015
|
|
|
|
Level I
|
|
|
Level II
|
|
|
Level III
|
|
|
NAV
|
|
|
Total
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investments of Consolidated Blackstone Funds (a)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment Funds
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
155,512
|
|
|
$
|
155,512
|
|
Equity Securities
|
|
|
82,734
|
|
|
|
53,250
|
|
|
|
80,849
|
|
|
|
|
|
|
|
216,833
|
|
Partnership and LLC Interests
|
|
|
|
|
|
|
101,399
|
|
|
|
472,391
|
|
|
|
|
|
|
|
573,790
|
|
Debt Instruments
|
|
|
|
|
|
|
179,465
|
|
|
|
20,381
|
|
|
|
|
|
|
|
199,846
|
|
Assets of Consolidated CLO Vehicles
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate Loans
|
|
|
|
|
|
|
2,886,792
|
|
|
|
200,771
|
|
|
|
|
|
|
|
3,087,563
|
|
Corporate Bonds
|
|
|
|
|
|
|
379,000
|
|
|
|
|
|
|
|
|
|
|
|
379,000
|
|
Freestanding Derivatives Foreign Currency Contracts
|
|
|
|
|
|
|
1,400
|
|
|
|
|
|
|
|
|
|
|
|
1,400
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Investments of Consolidated Blackstone Funds
|
|
|
82,734
|
|
|
|
3,601,306
|
|
|
|
774,392
|
|
|
|
155,512
|
|
|
|
4,613,944
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Blackstones Treasury Cash Management Strategies
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity Securities
|
|
|
240,464
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
240,464
|
|
Debt Instruments
|
|
|
|
|
|
|
1,069,915
|
|
|
|
54,657
|
|
|
|
115,657
|
|
|
|
1,240,229
|
|
Other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
201,566
|
|
|
|
201,566
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Blackstones Treasury Cash Management Strategies
|
|
|
240,464
|
|
|
|
1,069,915
|
|
|
|
54,657
|
|
|
|
317,223
|
|
|
|
1,682,259
|
|
Money Market Funds
|
|
|
460,233
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
460,233
|
|
Net Investment Hedges Foreign Currency Contracts
|
|
|
|
|
|
|
319
|
|
|
|
|
|
|
|
|
|
|
|
319
|
|
Freestanding Derivatives
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest Rate Contracts
|
|
|
1,806
|
|
|
|
406
|
|
|
|
|
|
|
|
|
|
|
|
2,212
|
|
Foreign Currency Contracts
|
|
|
|
|
|
|
2,088
|
|
|
|
|
|
|
|
|
|
|
|
2,088
|
|
Loans and Receivables
|
|
|
|
|
|
|
|
|
|
|
261,994
|
|
|
|
|
|
|
|
261,994
|
|
Other Investments
|
|
|
40,261
|
|
|
|
|
|
|
|
101,184
|
|
|
|
17,707
|
|
|
|
159,152
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
825,498
|
|
|
$
|
4,674,034
|
|
|
$
|
1,192,227
|
|
|
$
|
490,442
|
|
|
$
|
7,182,201
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2015
|
|
|
|
Level I
|
|
|
Level II
|
|
|
Level III
|
|
|
Total
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities of Consolidated CLO Vehicles (a)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Senior Secured Notes (b)
|
|
$
|
|
|
|
$
|
3,225,064
|
|
|
$
|
|
|
|
$
|
3,225,064
|
|
Subordinated Notes (b)
|
|
|
|
|
|
|
98,371
|
|
|
|
|
|
|
|
98,371
|
|
Freestanding Derivatives Foreign Currency Contracts
|
|
|
|
|
|
|
6,490
|
|
|
|
|
|
|
|
6,490
|
|
Freestanding Derivatives Credit Default Swaps
|
|
|
|
|
|
|
6,275
|
|
|
|
|
|
|
|
6,275
|
|
Net Investment Hedges Foreign Currency Contracts
|
|
|
|
|
|
|
1
|
|
|
|
|
|
|
|
1
|
|
Freestanding Derivatives
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest Rate Contracts
|
|
|
835
|
|
|
|
3,453
|
|
|
|
|
|
|
|
4,288
|
|
Foreign Currency Contracts
|
|
|
|
|
|
|
2,042
|
|
|
|
|
|
|
|
2,042
|
|
Credit Default Swaps
|
|
|
|
|
|
|
2,411
|
|
|
|
|
|
|
|
2,411
|
|
Securities Sold, Not Yet Purchased
|
|
|
|
|
|
|
176,667
|
|
|
|
|
|
|
|
176,667
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
835
|
|
|
$
|
3,520,774
|
|
|
$
|
|
|
|
$
|
3,521,609
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
30
THE BLACKSTONE GROUP L.P.
Notes to Condensed Consolidated Financial StatementsContinued
(All Dollars Are in Thousands, Except Unit and Per Unit Data, Except Where Noted)
(a)
|
Pursuant to GAAP consolidation guidance, the Partnership is required to consolidate all VIEs in which it has been identified as the primary beneficiary, including
certain CLO vehicles, and other funds in which a consolidated entity of the Partnership, as the general partner of the fund, has a controlling financial interest. While the Partnership is required to consolidate certain funds, including CLO
vehicles, for GAAP purposes, the Partnership has no ability to utilize the assets of these funds and there is no recourse to the Partnership for their liabilities since these are client assets and liabilities.
|
(b)
|
Senior and subordinate notes issued by CLO vehicles are classified based on the more observable fair value of CLO assets less (a) the fair value of any beneficial
interests held by Blackstone, and (b) the carrying value of any beneficial interests that represent compensation for services.
|
The following table summarizes the fair value transfers between Level I and Level II for positions that existed as of March 31, 2016 and 2015, respectively:
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
March 31,
|
|
|
|
2016
|
|
|
2015
|
|
Transfers from Level I into Level II (a)
|
|
$
|
2,114
|
|
|
$
|
|
|
Transfers from Level II into Level I (b)
|
|
$
|
28,346
|
|
|
$
|
5,688
|
|
(a)
|
Transfers out of Level I represent those financial instruments for which restrictions exist and adjustments were made to an otherwise observable price to reflect fair
value at the reporting date.
|
(b)
|
Transfers into Level I represent those financial instruments for which an unadjusted quoted price in an active market became available for the identical asset.
|
31
THE BLACKSTONE GROUP L.P.
Notes to Condensed Consolidated Financial StatementsContinued
(All Dollars Are in Thousands, Except Unit and Per Unit Data, Except Where Noted)
The following table summarizes the quantitative inputs and assumptions used for items
categorized in Level III of the fair value hierarchy as of March 31, 2016:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair
Value
|
|
|
Valuation
Techniques
|
|
Unobservable
Inputs
|
|
Ranges
|
|
Weighted-
Average (a)
|
Financial Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
Investments of Consolidated Blackstone Funds
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity Securities
|
|
$
|
69,289
|
|
|
Discounted Cash Flows
|
|
Discount Rate
|
|
7.4% - 25.0%
|
|
13.1%
|
|
|
|
|
|
|
|
|
Revenue CAGR
|
|
-1.5% - 20.2%
|
|
8.1%
|
|
|
|
|
|
|
|
|
Exit Multiple - EBITDA
|
|
4.0x - 18.2x
|
|
9.6x
|
|
|
|
|
|
|
|
|
Exit Multiple - P/E
|
|
10.5x - 17.0x
|
|
11.3x
|
|
|
|
|
|
|
|
|
Exit Capitalization Rate
|
|
5.5% - 11.4%
|
|
8.9%
|
|
|
|
5,878
|
|
|
Other
|
|
N/A
|
|
N/A
|
|
N/A
|
|
|
|
5,869
|
|
|
Transaction Price
|
|
N/A
|
|
N/A
|
|
N/A
|
|
|
|
1,661
|
|
|
Market Comparable Companies
|
|
EBITDA Multiple
|
|
6.1x
|
|
N/A
|
|
|
|
|
|
|
|
|
Book Value Multiple
|
|
0.9x
|
|
N/A
|
|
|
|
27
|
|
|
Third Party Pricing
|
|
N/A
|
|
N/A
|
|
N/A
|
|
|
|
|
|
|
Partnership and LLC Interests
|
|
|
413,719
|
|
|
Discounted Cash Flows
|
|
Discount Rate
|
|
2.1% - 29.2%
|
|
9.5%
|
|
|
|
|
|
|
|
|
Revenue CAGR
|
|
-13.8% - 67.1%
|
|
8.4%
|
|
|
|
|
|
|
|
|
Exit Multiple - EBITDA
|
|
0.1x - 23.5x
|
|
10.3x
|
|
|
|
|
|
|
|
|
Exit Multiple - P/E
|
|
9.3x
|
|
N/A
|
|
|
|
|
|
|
|
|
Exit Capitalization Rate
|
|
3.0% - 12.1%
|
|
6.4%
|
|
|
|
14,342
|
|
|
Third Party Pricing
|
|
N/A
|
|
N/A
|
|
N/A
|
|
|
|
9,671
|
|
|
Transaction Price
|
|
N/A
|
|
N/A
|
|
N/A
|
|
|
|
7,965
|
|
|
Other
|
|
N/A
|
|
N/A
|
|
N/A
|
|
|
|
|
|
|
Debt Instruments
|
|
|
14,794
|
|
|
Third Party Pricing
|
|
N/A
|
|
N/A
|
|
N/A
|
|
|
|
4,071
|
|
|
Discounted Cash Flows
|
|
Discount Rate
|
|
8.3% - 52.7%
|
|
14.4%
|
|
|
|
|
|
|
|
|
Revenue CAGR
|
|
6.8%
|
|
N/A
|
|
|
|
|
|
|
|
|
Exit Multiple - EBITDA
|
|
12.0x
|
|
N/A
|
|
|
|
|
|
|
|
|
Exit Capitalization Rate
|
|
1.0% - 8.3%
|
|
5.3%
|
|
|
|
386
|
|
|
Transaction Pricing
|
|
N/A
|
|
N/A
|
|
N/A
|
|
|
|
|
|
|
Assets of Consolidated CLO Vehicles
|
|
|
172,442
|
|
|
Third Party Pricing
|
|
N/A
|
|
N/A
|
|
N/A
|
|
|
|
16,584
|
|
|
Market Comparable Companies
|
|
EBITDA Multiple
|
|
4.0x - 15.0x
|
|
7.2x
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Investments of Consolidated Blackstone Funds
|
|
|
736,698
|
|
|
|
|
|
continued
...
32
THE BLACKSTONE GROUP L.P.
Notes to Condensed Consolidated Financial StatementsContinued
(All Dollars Are in Thousands, Except Unit and Per Unit Data, Except Where Noted)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair Value
|
|
|
Valuation
Techniques
|
|
Unobservable
Inputs
|
|
Ranges
|
|
Weighted-
Average (a)
|
Blackstones Treasury Cash Management Strategies
|
|
$
|
15,663
|
|
|
Discounted Cash Flows
|
|
Default Rate
|
|
1.0% - 2.0%
|
|
1.9%
|
|
|
|
|
|
|
|
|
Recovery Rate
|
|
30.0% - 70.0%
|
|
69.4%
|
|
|
|
|
|
|
|
|
Recovery Lag
|
|
12 Months
|
|
N/A
|
|
|
|
|
|
|
|
|
Pre-payment Rate
|
|
20.0%
|
|
N/A
|
|
|
|
|
|
|
|
|
Reinvestment Rate
|
|
LIBOR + 350 bps
|
|
LIBOR + 394 bps
|
|
|
|
|
|
|
|
|
|
|
LIBOR + 400 bps
|
|
|
|
|
|
|
|
|
|
|
Discount Rate
|
|
8.4% - 13.5%
|
|
9.5%
|
|
|
|
15,192
|
|
|
Third Party Pricing
|
|
N/A
|
|
N/A
|
|
N/A
|
|
|
|
|
|
|
Loans and Receivables
|
|
|
222,726
|
|
|
Discounted Cash Flows
|
|
Discount Rate
|
|
6.8% - 24.8%
|
|
12.2%
|
|
|
|
47,514
|
|
|
Transaction Price
|
|
N/A
|
|
N/A
|
|
N/A
|
|
|
|
17,618
|
|
|
Third Party Pricing
|
|
N/A
|
|
N/A
|
|
N/A
|
|
|
|
|
|
|
Other Investments
|
|
|
83,210
|
|
|
Discounted Cash Flows
|
|
Discount Rate
|
|
1.7% - 19.7%
|
|
3.9%
|
|
|
|
|
|
|
|
|
Default Rate
|
|
2.0%
|
|
N/A
|
|
|
|
|
|
|
|
|
Recovery Rate
|
|
70.0%
|
|
N/A
|
|
|
|
|
|
|
|
|
Recovery Lag
|
|
12 Months
|
|
N/A
|
|
|
|
|
|
|
|
|
Pre-payment Rate
|
|
20.0%
|
|
N/A
|
|
|
|
|
|
|
|
|
Reinvestment Rate
|
|
LIBOR + 400 bps
|
|
N/A
|
|
|
|
16,199
|
|
|
Transaction Price
|
|
N/A
|
|
N/A
|
|
N/A
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
1,154,820
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The following table summarizes the quantitative inputs and assumptions used for items categorized in
Level III of the fair value hierarchy as of December 31, 2015:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair Value
|
|
|
Valuation
Techniques
|
|
Unobservable
Inputs
|
|
Ranges
|
|
Weighted
Average (a)
|
Financial Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
Investments of Consolidated Blackstone Funds
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity Securities
|
|
$
|
66,962
|
|
|
Discounted Cash Flows
|
|
Discount Rate
|
|
7.8% - 25.0%
|
|
13.6%
|
|
|
|
|
|
|
|
|
Revenue CAGR
|
|
-5.0% - 61.5%
|
|
10.2%
|
|
|
|
|
|
|
|
|
Exit Multiple - EBITDA
|
|
5.0x - 18.2x
|
|
9.6x
|
|
|
|
|
|
|
|
|
Exit Multiple - P/E
|
|
10.5x - 17.0x
|
|
11.2x
|
|
|
|
|
|
|
|
|
Exit Capitalization Rate
|
|
5.5% - 11.4%
|
|
9%
|
|
|
|
5,426
|
|
|
Other
|
|
N/A
|
|
N/A
|
|
N/A
|
|
|
|
6,722
|
|
|
Transaction Price
|
|
N/A
|
|
N/A
|
|
N/A
|
|
|
|
1,710
|
|
|
Market Comparable
|
|
EBITDA Multiple
|
|
6.5x - 8.0x
|
|
6.6x
|
|
|
|
|
|
|
Companies
|
|
Book Value Multiple
|
|
0.9x
|
|
N/A
|
|
|
|
29
|
|
|
Third Party Pricing
|
|
N/A
|
|
N/A
|
|
N/A
|
|
|
|
|
|
|
Partnership and LLC Interests
|
|
|
423,588
|
|
|
Discounted Cash Flows
|
|
Discount Rate
|
|
2.1% - 25.8%
|
|
9.3%
|
|
|
|
|
|
|
|
|
Revenue CAGR
|
|
-24.1% - 31.8%
|
|
8.6%
|
|
|
|
|
|
|
|
|
Exit Multiple - EBITDA
|
|
0.1x - 23.8x
|
|
9.8x
|
|
|
|
|
|
|
|
|
Exit Multiple - P/E
|
|
9.3x
|
|
N/A
|
|
|
|
|
|
|
|
|
Exit Capitalization Rate
|
|
2.7% - 12.1%
|
|
6.3%
|
|
|
|
30,437
|
|
|
Transaction Price
|
|
N/A
|
|
N/A
|
|
N/A
|
|
|
|
16,963
|
|
|
Third Party Pricing
|
|
N/A
|
|
N/A
|
|
N/A
|
|
|
|
1,403
|
|
|
Other
|
|
N/A
|
|
N/A
|
|
N/A
|
33
continued ...
THE BLACKSTONE GROUP L.P.
Notes to Condensed Consolidated Financial StatementsContinued
(All Dollars Are in Thousands, Except Unit and Per Unit Data, Except Where Noted)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair Value
|
|
|
Valuation
Techniques
|
|
Unobservable
Inputs
|
|
Ranges
|
|
Weighted
Average (a)
|
Debt Instruments
|
|
$
|
16,217
|
|
|
Third Party Pricing
|
|
N/A
|
|
N/A
|
|
N/A
|
|
|
|
4,086
|
|
|
Discounted Cash Flows
|
|
Discount Rate
|
|
6.5% - 52.7%
|
|
14.1%
|
|
|
|
|
|
|
|
|
Revenue CAGR
|
|
16.8%
|
|
N/A
|
|
|
|
|
|
|
|
|
Exit Multiple -
EBITDA
|
|
12.0x
|
|
N/A
|
|
|
|
|
|
|
|
|
Exit
Capitalization
Rate
|
|
1.0% - 8.3%
|
|
5.8%
|
|
|
|
78
|
|
|
Transaction Price
|
|
N/A
|
|
N/A
|
|
N/A
|
|
|
|
|
|
|
Assets of Consolidated CLO Vehicles
|
|
|
180,988
|
|
|
Third Party Pricing
|
|
N/A
|
|
N/A
|
|
N/A
|
|
|
|
19,783
|
|
|
Market Comparable
Companies
|
|
EBITDA Multiple
|
|
4.5x - 7.0x
|
|
6.5x
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Investments of Consolidated Blackstone Funds
|
|
|
774,392
|
|
|
|
|
|
|
|
|
|
Blackstones Treasury Cash Management Strategies
|
|
|
32,004
|
|
|
Discounted Cash Flows
|
|
Default Rate
|
|
1.0% - 2.0%
|
|
1.9%
|
|
|
|
|
|
|
|
|
Recovery Rate
|
|
30.0% - 70.0%
|
|
67.0%
|
|
|
|
|
|
|
|
|
Recovery Lag
|
|
12 months
|
|
N/A
|
|
|
|
|
|
|
|
|
Pre-payment Rate
|
|
20.0%
|
|
N/A
|
|
|
|
|
|
|
|
|
Reinvestment Rate
|
|
LIBOR + 400 bps
|
|
N/A
|
|
|
|
|
|
|
|
|
Discount Rate
|
|
5.8% - 14.0%
|
|
8.6%
|
|
|
|
22,653
|
|
|
Third Party Pricing
|
|
N/A
|
|
N/A
|
|
N/A
|
|
|
|
|
|
|
Loans and Receivables
|
|
|
241,897
|
|
|
Discounted Cash Flows
|
|
Discount Rate
|
|
6.7% - 20.6%
|
|
11.0%
|
|
|
|
20,097
|
|
|
Third Party Pricing
|
|
N/A
|
|
N/A
|
|
N/A
|
|
|
|
|
|
|
Other Investments
|
|
|
81,984
|
|
|
Discounted Cash Flows
|
|
Discount Rate
|
|
1.4% - 12.5%
|
|
3.3%
|
|
|
|
|
|
|
|
|
Default Rate
|
|
2.0%
|
|
N/A
|
|
|
|
|
|
|
|
|
Recovery Rate
|
|
70.0%
|
|
N/A
|
|
|
|
|
|
|
|
|
Recovery Lag
|
|
12 months
|
|
N/A
|
|
|
|
|
|
|
|
|
Pre-payment Rate
|
|
20.0%
|
|
N/A
|
|
|
|
|
|
|
|
|
Reinvestment Rate
|
|
LIBOR + 400 bps
|
|
N/A
|
|
|
|
19,200
|
|
|
Transaction Price
|
|
N/A
|
|
N/A
|
|
N/A
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
1,192,227
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CAGR
|
Compound annual growth rate.
|
EBITDA
|
Earnings before interest, taxes, depreciation and amortization.
|
Exit Multiple
|
Ranges include the last twelve months EBITDA, forward EBITDA and price/earnings exit multiples.
|
Third Party Pricing
|
Third Party Pricing is generally determined on the basis of prices between market participants provided by reputable dealers or pricing services.
|
(a)
|
Unobservable inputs were weighted based on the fair value of the investments included in the range.
|
The significant unobservable inputs used in the fair value measurement of the Blackstones Treasury Cash Management Strategies, debt
instruments and other investments are discount rates, default rates, recovery rates, recovery lag, pre-payment rates and reinvestment rates. Increases (decreases) in any of the discount rates, default rates, recovery lag and pre-payment rates in
isolation would result in a lower (higher) fair value measurement. Increases (decreases) in any of the recovery rates and reinvestment rates in isolation would result in a higher (lower) fair value measurement. Generally, a change in the assumption
used for default rates may be accompanied by a
34
THE BLACKSTONE GROUP L.P.
Notes to Condensed Consolidated Financial StatementsContinued
(All Dollars Are in Thousands, Except Unit and Per Unit Data, Except Where Noted)
directionally similar change in the assumption used for recovery lag and a directionally opposite change in the assumption used for recovery rates and pre-payment rates.
The significant unobservable inputs used in the fair value measurement of equity securities, partnership and LLC interests, debt
instruments, assets of consolidated CLO vehicles and loans and receivables are discount rates, exit capitalization rates, exit multiples, EBITDA multiples and revenue compound annual growth rates. Increases (decreases) in any of discount rates and
exit capitalization rates in isolation can result in a lower (higher) fair value measurement. Increases (decreases) in any of exit multiples and revenue compound annual growth rates in isolation can result in a higher (lower) fair value measurement.
Since December 31, 2015, there have been no changes in valuation techniques within Level II and Level III that have had
a material impact on the valuation of financial instruments.
The following tables summarize the changes in financial assets
and liabilities measured at fair value for which the Partnership has used Level III inputs to determine fair value and does not include gains or losses that were reported in Level III in prior years or for instruments that were transferred out of
Level III prior to the end of the respective reporting period. Total realized and unrealized gains and losses recorded for Level III investments are reported in Investment Income (Loss) and Net Gains (Losses) from Fund Investment Activities in the
Condensed Consolidated Statements of Operations.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Level III Financial Assets at Fair Value
Three Months Ended March 31,
|
|
|
|
2016
|
|
|
2015
|
|
|
|
Investments
of
Consolidated
Funds
|
|
|
Loans
and
Receivables
|
|
|
Other
Investments (a)
|
|
|
Total
|
|
|
Investments
of
Consolidated
Funds
|
|
|
Loans
and
Receivables
|
|
|
Other
Investments (a)
|
|
|
Total
|
|
Balance, Beginning of Period
|
|
$
|
774,392
|
|
|
$
|
261,994
|
|
|
$
|
155,841
|
|
|
$
|
1,192,227
|
|
|
$
|
2,394,823
|
|
|
$
|
40,397
|
|
|
$
|
189,385
|
|
|
$
|
2,624,605
|
|
Transfer Out Due to Deconsolidation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1,460,538
|
)
|
|
|
|
|
|
|
|
|
|
|
(1,460,538
|
)
|
Transfer In to Level III (b)
|
|
|
54,626
|
|
|
|
|
|
|
|
290
|
|
|
|
54,916
|
|
|
|
9,314
|
|
|
|
|
|
|
|
17,125
|
|
|
|
26,439
|
|
Transfer Out of Level III (b)
|
|
|
(61,879
|
)
|
|
|
|
|
|
|
(4,005
|
)
|
|
|
(65,884
|
)
|
|
|
(12,353
|
)
|
|
|
|
|
|
|
(22,684
|
)
|
|
|
(35,037
|
)
|
Purchases
|
|
|
63,932
|
|
|
|
298,381
|
|
|
|
|
|
|
|
362,313
|
|
|
|
83,503
|
|
|
|
6,186
|
|
|
|
24,933
|
|
|
|
114,622
|
|
Sales
|
|
|
(92,578
|
)
|
|
|
(267,556
|
)
|
|
|
(20,007
|
)
|
|
|
(380,141
|
)
|
|
|
(92,074
|
)
|
|
|
(4,071
|
)
|
|
|
(35,153
|
)
|
|
|
(131,298
|
)
|
Settlements
|
|
|
|
|
|
|
(4,294
|
)
|
|
|
(140
|
)
|
|
|
(4,434
|
)
|
|
|
|
|
|
|
(1,144
|
)
|
|
|
(103
|
)
|
|
|
(1,247
|
)
|
Changes in Gains (Losses) Included in Earnings and Other Comprehensive Income (Loss)
|
|
|
(1,795
|
)
|
|
|
(667
|
)
|
|
|
(1,715
|
)
|
|
|
(4,177
|
)
|
|
|
(2,227
|
)
|
|
|
(677
|
)
|
|
|
(9,705
|
)
|
|
|
(12,609
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, End of Period
|
|
$
|
736,698
|
|
|
$
|
287,858
|
|
|
$
|
130,264
|
|
|
$
|
1,154,820
|
|
|
$
|
920,448
|
|
|
$
|
40,691
|
|
|
$
|
163,798
|
|
|
$
|
1,124,937
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Changes in Unrealized Gains (Losses) Included in Earnings Related to Investments Still Held at the Reporting Date
|
|
$
|
(18,484
|
)
|
|
$
|
(667
|
)
|
|
$
|
(1,300
|
)
|
|
$
|
(20,451
|
)
|
|
$
|
6,352
|
|
|
$
|
(806
|
)
|
|
$
|
1,348
|
|
|
$
|
6,894
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
35
THE BLACKSTONE GROUP L.P.
Notes to Condensed Consolidated Financial StatementsContinued
(All Dollars Are in Thousands, Except Unit and Per Unit Data, Except Where Noted)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Level III Financial Liabilities at Fair Value
Three Months Ended March 31, 2015
(c)
|
|
|
|
Collateralized
Loan
Obligations
Senior
Notes
|
|
|
Collateralized
Loan
Obligations
Subordinated
Notes
|
|
|
Total
|
|
Balance, Beginning of Period
|
|
$
|
6,448,352
|
|
|
$
|
348,752
|
|
|
$
|
6,797,104
|
|
Transfer Out Due to Deconsolidation
|
|
|
(4,168,405
|
)
|
|
|
(261,934
|
)
|
|
|
(4,430,339
|
)
|
Transfer Out Due to Amended CLO Guidance (d)
|
|
|
(2,279,947
|
)
|
|
|
(86,818
|
)
|
|
|
(2,366,765
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, End of Period
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
Represents Blackstones Treasury Cash Management Strategies and Other Investments.
|
(b)
|
Transfers in and out of Level III financial assets and liabilities were due to changes in the observability of inputs used in the valuation of such assets and
liabilities.
|
(c)
|
There were no Level III financial liabilities as of and for the three months ended March 31, 2016. There were no changes in unrealized (gains) losses included in
earnings related to liabilities still held at either March 31, 2016 or March 31, 2015.
|
(d)
|
Transfers out due to amended CLO measurement guidance represents the transfer out of Level III for liabilities of consolidated CLO vehicles for which fair value is
based on the more observable fair value of CLO assets. Such liabilities are classified as Level II within the fair value hierarchy.
|
9.
|
VARIABLE INTEREST ENTITIES
|
Pursuant to GAAP consolidation guidance, the Partnership consolidates certain VIEs in which it is determined that the
Partnership is the primary beneficiary either directly or indirectly, through a consolidated entity or affiliate. VIEs include certain private equity, real estate, credit-focused or funds of hedge funds entities and CLO vehicles. The purpose of such
VIEs is to provide strategy specific investment opportunities for investors in exchange for management and performance based fees. The investment strategies of the Blackstone Funds differ by product; however, the fundamental risks of the Blackstone
Funds have similar characteristics, including loss of invested capital and loss of management fees and performance based fees. In Blackstones role as general partner, collateral manager or investment adviser, it generally considers itself the
sponsor of the applicable Blackstone Fund. The Partnership does not provide performance guarantees and has no other financial obligation to provide funding to consolidated VIEs other than its own capital commitments.
The assets of consolidated variable interest entities may only be used to settle obligations of these consolidated Blackstone Funds. In
addition, there is no recourse to the Partnership for the consolidated VIEs liabilities including the liabilities of the consolidated CLO vehicles.
36
THE BLACKSTONE GROUP L.P.
Notes to Condensed Consolidated Financial StatementsContinued
(All Dollars Are in Thousands, Except Unit and Per Unit Data, Except Where Noted)
The Partnership holds variable interests in certain VIEs which are not consolidated as
it is determined that the Partnership is not the primary beneficiary. The Partnerships involvement with such entities is in the form of direct equity interests and fee arrangements. The maximum exposure to loss represents the loss of assets
recognized by Blackstone relating to non-consolidated entities, any amounts due to non-consolidated entities and any clawback obligation relating to previously distributed Carried Interest. The assets and liabilities recognized in the
Partnerships Condensed Consolidated Statements of Financial Condition related to the Partnerships interest in these non-consolidated VIEs and the Partnerships maximum exposure to loss relating to non-consolidated VIEs were as
follows:
|
|
|
|
|
|
|
|
|
|
|
March 31,
2016
|
|
|
December 31,
2015
|
|
Investments
|
|
$
|
517,284
|
|
|
$
|
466,651
|
|
Accounts Receivable
|
|
|
14,593
|
|
|
|
11,726
|
|
Due from Affiliates
|
|
|
45,314
|
|
|
|
51,029
|
|
|
|
|
|
|
|
|
|
|
Total VIE Assets
|
|
|
577,191
|
|
|
|
529,406
|
|
Due to Affiliates
|
|
|
652
|
|
|
|
586
|
|
Accounts Payable, Accrued Expenses and Other Liabilities
|
|
|
122
|
|
|
|
88
|
|
Potential Clawback Obligation
|
|
|
74,676
|
|
|
|
73,450
|
|
|
|
|
|
|
|
|
|
|
Maximum Exposure to Loss
|
|
$
|
652,641
|
|
|
$
|
603,530
|
|
|
|
|
|
|
|
|
|
|
10.
|
REVERSE REPURCHASE AND REPURCHASE AGREEMENTS
|
At March 31, 2016, the Partnership received securities, primarily U.S. and non-U.S. government and agency
securities, asset-backed securities and corporate debt, with a fair value of $45.2 million as collateral for reverse repurchase agreements that could be repledged, delivered or otherwise used. Securities with a fair value of $32.1 million and
cash were used to cover Securities Sold, Not Yet Purchased. The Partnership also pledged securities with a carrying value of $75.7 million and cash to collateralize its repurchase agreements. Such securities can be repledged, delivered or otherwise
used by the counterparty.
At December 31, 2015, the Partnership pledged securities with a carrying value of $64.5
million and cash to collateralize its repurchase agreements. Such securities can be repledged, delivered or otherwise used by the counterparty.
The following table provides information regarding the Partnerships Repurchase Agreements obligation by type of collateral pledged as of March 31, 2016:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2016
|
|
|
|
Remaining Contractual Maturity of the Agreements
|
|
|
|
Overnight and
Continuous
|
|
|
Up to
30 Days
|
|
|
30 - 90
Days
|
|
|
Greater
than
90 days
|
|
|
Total
|
|
Repurchase Agreements
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Asset-Backed Securities
|
|
$
|
|
|
|
$
|
5,148
|
|
|
$
|
40,260
|
|
|
$
|
4,132
|
|
|
$
|
49,540
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross Amount of Recognized Liabilities for Repurchase Agreements in Note 11. Offsetting of Assets and
Liabilities
|
|
|
$
|
49,540
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amounts Related to Agreements Not Included in Offsetting Disclosure in Note 11. Offsetting of Assets and
Liabilities
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
37
THE BLACKSTONE GROUP L.P.
Notes to Condensed Consolidated Financial StatementsContinued
(All Dollars Are in Thousands, Except Unit and Per Unit Data, Except Where Noted)
11.
|
OFFSETTING OF ASSETS AND LIABILITIES
|
The following tables present the offsetting of assets and liabilities as of March 31, 2016:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross and Net
Amounts of Assets
Presented in the
Statement
of
Financial
Condition
|
|
|
Gross Amounts Not Offset in
the Statement of Financial
Condition
|
|
|
|
|
|
|
Financial
Instruments
|
|
|
Cash Collateral
Received
|
|
|
Net Amount
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Investment Hedges
|
|
$
|
9
|
|
|
$
|
9
|
|
|
$
|
|
|
|
$
|
|
|
Freestanding Derivatives
|
|
|
3,814
|
|
|
|
1,215
|
|
|
|
1,174
|
|
|
|
1,425
|
|
Reverse Repurchase Agreements
|
|
|
45,301
|
|
|
|
45,151
|
|
|
|
|
|
|
|
150
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
49,124
|
|
|
$
|
46,375
|
|
|
$
|
1,174
|
|
|
$
|
1,575
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross and Net
Amounts of Liabilities
Presented in the
Statement
of
Financial
Condition
|
|
|
Gross Amounts Not Offset in
the Statement of Financial
Condition
|
|
|
|
|
|
|
Financial
Instruments
|
|
|
Cash Collateral
Pledged
|
|
|
Net Amount
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Investment Hedges
|
|
$
|
1,677
|
|
|
$
|
9
|
|
|
$
|
|
|
|
$
|
1,668
|
|
Freestanding Derivatives
|
|
|
14,475
|
|
|
|
1,215
|
|
|
|
12,909
|
|
|
|
351
|
|
Repurchase Agreements
|
|
|
49,540
|
|
|
|
46,573
|
|
|
|
2,967
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
65,692
|
|
|
$
|
47,797
|
|
|
$
|
15,876
|
|
|
$
|
2,019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The following tables present the offsetting of assets and liabilities as of December 31, 2015:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross and Net
Amounts of Assets
Presented in the
Statement
of
Financial
Condition
|
|
|
Gross Amounts Not Offset in
the Statement of Financial
Condition
|
|
|
|
|
|
|
Financial
Instruments
|
|
|
Cash Collateral
Received
|
|
|
Net Amount
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Investment Hedges
|
|
$
|
319
|
|
|
$
|
1
|
|
|
$
|
|
|
|
$
|
318
|
|
Freestanding Derivatives
|
|
|
4,300
|
|
|
|
2,149
|
|
|
|
1,310
|
|
|
|
841
|
|
Reverse Repurchase Agreements
|
|
|
204,893
|
|
|
|
203,938
|
|
|
|
|
|
|
|
955
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
209,512
|
|
|
$
|
206,088
|
|
|
$
|
1,310
|
|
|
$
|
2,114
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross and Net
Amounts of Liabilities
Presented in the
Statement
of
Financial
Condition
|
|
|
Gross Amounts Not Offset in
the Statement of Financial
Condition
|
|
|
|
|
|
|
Financial
Instruments
|
|
|
Cash Collateral
Pledged
|
|
|
Net
Amount
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Investment Hedges
|
|
$
|
1
|
|
|
$
|
1
|
|
|
$
|
|
|
|
$
|
|
|
Freestanding Derivatives
|
|
|
15,016
|
|
|
|
2,149
|
|
|
|
12,076
|
|
|
|
791
|
|
Repurchase Agreements
|
|
|
40,929
|
|
|
|
40,259
|
|
|
|
670
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
55,946
|
|
|
$
|
42,409
|
|
|
$
|
12,746
|
|
|
$
|
791
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
38
THE BLACKSTONE GROUP L.P.
Notes to Condensed Consolidated Financial StatementsContinued
(All Dollars Are in Thousands, Except Unit and Per Unit Data, Except Where Noted)
Reverse Repurchase Agreements and Repurchase Agreements are presented separately on the
Condensed Consolidated Statements of Financial Condition. Freestanding Derivative assets are included in Other Assets in the Condensed Consolidated Statements of Financial Condition. The following table presents the components of Other Assets:
|
|
|
|
|
|
|
|
|
|
|
March 31, 2016
|
|
|
December 31, 2015
|
|
Furniture, Equipment and Leasehold Improvements, Net
|
|
$
|
139,318
|
|
|
$
|
135,543
|
|
Prepaid Expenses
|
|
|
144,887
|
|
|
|
190,241
|
|
Other Assets
|
|
|
28,168
|
|
|
|
46,786
|
|
Freestanding Derivatives
|
|
|
3,814
|
|
|
|
4,300
|
|
Net Investment Hedges
|
|
|
9
|
|
|
|
319
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
316,196
|
|
|
$
|
377,189
|
|
|
|
|
|
|
|
|
|
|
Freestanding Derivative liabilities are included in Accounts Payable, Accrued Expenses and Other
Liabilities in the Condensed Consolidated Statements of Financial Condition and are not a significant component thereof.
Notional Pooling
Arrangement
Blackstone has a notional cash pooling arrangement with a financial institution for cash management purposes.
This arrangement allows for cash withdrawals based upon aggregate cash balances on deposit at the same financial institution. Cash withdrawals cannot exceed aggregate cash balances on deposit. The net balance of cash on deposit and overdrafts is
used as a basis for calculating net interest expense or income. As of March 31, 2016, the aggregate cash balance on deposit relating to the cash pooling arrangement was $952.1 million, which was fully offset with an accompanying overdraft.
The following table presents the general characteristics of each of our Notes, as well as their carrying value and fair
value. The Notes are included in Loans Payable within the Condensed Consolidated Statements of Financial Condition. All of the Notes were issued at a discount. All of the Notes accrue interest from the Issue Date and all pay interest in arrears on a
semi-annual basis or annual basis.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2016
|
|
|
December 31, 2015
|
|
Senior Notes
|
|
Carrying
Value
|
|
|
Fair Value (a)
|
|
|
Carrying
Value
|
|
|
Fair Value (a)
|
|
6.625%, Due 8/15/2019 (b)
|
|
$
|
613,047
|
|
|
$
|
667,485
|
|
|
$
|
614,996
|
|
|
$
|
665,438
|
|
5.875%, Due 3/15/2021
|
|
$
|
397,814
|
|
|
$
|
459,880
|
|
|
$
|
397,720
|
|
|
$
|
458,680
|
|
4.750%, Due 2/15/2023
|
|
$
|
392,452
|
|
|
$
|
436,560
|
|
|
$
|
392,224
|
|
|
$
|
430,560
|
|
6.250%, Due 8/15/2042
|
|
$
|
237,692
|
|
|
$
|
297,200
|
|
|
$
|
237,648
|
|
|
$
|
297,575
|
|
5.000%, Due 6/15/2044
|
|
$
|
488,204
|
|
|
$
|
510,750
|
|
|
$
|
488,119
|
|
|
$
|
515,050
|
|
4.450%, Due 7/15/2045
|
|
$
|
343,737
|
|
|
$
|
330,365
|
|
|
$
|
343,689
|
|
|
$
|
332,640
|
|
2.000%, Due 5/19/2025
|
|
$
|
334,697
|
|
|
$
|
351,977
|
|
|
$
|
322,664
|
|
|
$
|
327,465
|
|
(a)
|
Fair value is determined by broker quote and these notes would be classified as Level II within the fair value hierarchy.
|
(b)
|
The carrying and fair values are determined using the original $600 million par amount less $15 million attributable to these notes which were acquired but not retired
by Blackstone during 2012.
|
39
THE BLACKSTONE GROUP L.P.
Notes to Condensed Consolidated Financial StatementsContinued
(All Dollars Are in Thousands, Except Unit and Per Unit Data, Except Where Noted)
Included within Loans Payable and Due to Affiliates within the Condensed Consolidated
Statements of Financial Condition are amounts due to holders of debt securities issued by Blackstones consolidated CLO vehicles. Borrowings through the consolidated CLO vehicles consisted of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2016
|
|
|
December 31, 2015
|
|
|
|
Borrowing
Outstanding
|
|
|
Weighted-
Average
Interest
Rate
|
|
|
Weighted-
Average
Remaining
Maturity
in Years
|
|
|
Borrowing
Outstanding
|
|
|
Weighted-
Average
Interest
Rate
|
|
|
Weighted-
Average
Remaining
Maturity
in Years
|
|
Senior Secured Notes
|
|
$
|
3,786,464
|
|
|
|
1.94
|
%
|
|
|
5.5
|
|
|
$
|
3,687,976
|
|
|
|
1.93
|
%
|
|
|
5.4
|
|
Subordinated Notes
|
|
|
234,071
|
|
|
|
(a
|
)
|
|
|
N/A
|
|
|
|
226,350
|
|
|
|
(a
|
)
|
|
|
N/A
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
4,020,535
|
|
|
|
|
|
|
|
|
|
|
$
|
3,914,326
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
The Subordinated Notes do not have contractual interest rates but instead receive distributions from the excess cash flows of the CLO vehicles.
|
Senior Secured Notes and Subordinated Notes comprise the following amounts:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2016
|
|
|
December 31, 2015
|
|
|
|
|
|
|
Amounts Due to Non-
Consolidated Affiliates
|
|
|
|
|
|
Amounts Due to Non-
Consolidated Affiliates
|
|
|
|
Fair Value
|
|
|
Borrowing
Outstanding
|
|
|
Fair Value
|
|
|
Fair Value
|
|
|
Borrowing
Outstanding
|
|
|
Fair Value
|
|
Senior Secured Notes
|
|
$
|
3,467,956
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
3,225,064
|
|
|
$
|
|
|
|
$
|
|
|
Subordinated Notes
|
|
$
|
86,063
|
|
|
$
|
10,000
|
|
|
$
|
8,164
|
|
|
$
|
98,371
|
|
|
$
|
10,000
|
|
|
$
|
8,231
|
|
The Loans Payable of the consolidated CLO vehicles are collateralized by assets held by each respective
CLO vehicle and assets of one vehicle may not be used to satisfy the liabilities of another. As of March 31, 2016 and December 31, 2015, the fair value of the consolidated CLO assets was $4.1 billion and $3.9 billion, respectively. This
collateral consisted of Cash, Corporate Loans, Corporate Bonds, other securities and receivables.
Scheduled principal
payments for borrowings as of March 31, 2016 were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
Borrowings
|
|
|
Blackstone Fund
Facilities/CLO
Vehicles
|
|
|
Total
Borrowings
|
|
2016
|
|
$
|
|
|
|
$
|
4,253
|
|
|
$
|
4,253
|
|
2017
|
|
|
|
|
|
|
538,555
|
|
|
|
538,555
|
|
2018
|
|
|
|
|
|
|
|
|
|
|
|
|
2019
|
|
|
585,000
|
|
|
|
|
|
|
|
585,000
|
|
2020
|
|
|
|
|
|
|
|
|
|
|
|
|
Thereafter
|
|
|
2,240,140
|
|
|
|
3,481,980
|
|
|
|
5,722,120
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
2,825,140
|
|
|
$
|
4,024,788
|
|
|
$
|
6,849,928
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Blackstones effective tax rate was 5.7% and 6.8% for the three months ended March 31, 2016 and 2015,
respectively. Blackstones income tax provision was $18.9 million and $99.3 million for the three months ended March 31, 2016 and 2015, respectively.
40
THE BLACKSTONE GROUP L.P.
Notes to Condensed Consolidated Financial StatementsContinued
(All Dollars Are in Thousands, Except Unit and Per Unit Data, Except Where Noted)
The Blackstone Group L.P. and certain of its subsidiaries operate in the U.S. as
partnerships for U.S. federal income tax purposes and generally as corporate entities in non-U.S. jurisdictions. Blackstones effective tax rate for the three months ended March 31, 2016 and 2015 was substantially due to the fact that
certain corporate subsidiaries are subject to federal, state, local and foreign income taxes (as applicable) and other subsidiaries are subject to New York City unincorporated business taxes.
14.
|
NET INCOME PER COMMON UNIT
|
Basic and diluted net income per common unit for the three months ended March 31, 2016 and March 31, 2015 was
calculated as follows:
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
|
|
2016
|
|
|
2015
|
|
Net Income for Per Common Unit Calculation
|
|
|
|
|
|
|
|
|
Net Income Attributable to The Blackstone Group L.P., Basic
|
|
$
|
150,033
|
|
|
$
|
629,448
|
|
Incremental Net Income from Assumed Exchange of Blackstone Holdings Partnership Units
|
|
|
119,594
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income Attributable to The Blackstone Group L.P., Diluted
|
|
$
|
269,627
|
|
|
$
|
629,448
|
|
|
|
|
|
|
|
|
|
|
Units Outstanding
|
|
|
|
|
|
|
|
|
Weighted-Average Common Units Outstanding, Basic
|
|
|
644,897,849
|
|
|
|
625,276,969
|
|
Weighted-Average Unvested Deferred Restricted Common Units
|
|
|
1,629,702
|
|
|
|
5,955,072
|
|
Weighted-Average Blackstone Holdings Partnership Units
|
|
|
548,042,780
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-Average Common Units Outstanding, Diluted
|
|
|
1,194,570,331
|
|
|
|
631,232,041
|
|
|
|
|
|
|
|
|
|
|
Net Income Per Common Unit, Basic
|
|
$
|
0.23
|
|
|
$
|
1.01
|
|
|
|
|
|
|
|
|
|
|
Net Income Per Common Unit, Diluted
|
|
$
|
0.23
|
|
|
$
|
1.00
|
|
|
|
|
|
|
|
|
|
|
Distributions Declared Per Common Unit (a)
|
|
$
|
0.61
|
|
|
$
|
0.78
|
|
|
|
|
|
|
|
|
|
|
(a)
|
Distributions declared reflects the calendar date of the declaration for each distribution.
|
The following table summarizes the anti-dilutive securities for the three months ended March 31, 2016 and 2015:
|
|
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
|
2016
|
|
|
2015
|
Weighted-Average Blackstone Holdings Partnership Units
|
|
|
|
|
|
548,837,150
|
Unit Repurchase Program
In January 2008, Blackstone announced that the Board of Directors of its general partner, Blackstone Group Management L.L.C., had authorized the repurchase by Blackstone of up to $500 million of
Blackstone common units and Blackstone Holdings Partnership Units. Under this unit repurchase program, units may be repurchased from time to time in open market transactions, in privately negotiated transactions or otherwise. The timing and the
actual number of Blackstone common units and Blackstone Holdings Partnership Units repurchased will depend on a variety of factors, including legal requirements, price and economic and market conditions. This unit repurchase program may be suspended
or discontinued at any time and does not have a specified expiration date.
41
THE BLACKSTONE GROUP L.P.
Notes to Condensed Consolidated Financial StatementsContinued
(All Dollars Are in Thousands, Except Unit and Per Unit Data, Except Where Noted)
During the three month periods ended March 31, 2016 and 2015, no units were
repurchased. As of March 31, 2016, the amount remaining available for repurchases under this program was $335.8 million.
15.
|
EQUITY-BASED COMPENSATION
|
The Partnership has granted equity-based compensation awards to Blackstones senior managing directors,
non-partner professionals, non-professionals and selected external advisers under the Partnerships 2007 Equity Incentive Plan (the Equity Plan), the majority of which to date were granted in connection with Blackstones
initial public offering (IPO). The Equity Plan allows for the granting of options, unit appreciation rights or other unit-based awards (units, restricted units, restricted common units, deferred restricted common units, phantom
restricted common units or other unit-based awards based in whole or in part on the fair value of the Blackstone common units or Blackstone Holdings Partnership Units) which may contain certain service or performance requirements. As of
January 1, 2016, the Partnership had the ability to grant 168,600,140 units under the Equity Plan.
For the three months
ended March 31, 2016 and March 31, 2015, the Partnership recorded compensation expense of $79.8 million and $272.3 million, respectively, in relation to its equity-based awards with corresponding tax benefits of $8.3 million and $23.6
million, respectively.
As of March 31, 2016, there was $1.0 billion of estimated unrecognized compensation expense
related to unvested awards. This cost is expected to be recognized over a weighted-average period of 4.9 years.
Total vested
and unvested outstanding units, including Blackstone common units, Blackstone Holdings Partnership Units and deferred restricted common units, were 1,192,401,538 as of March 31, 2016. Total outstanding unvested phantom units were 35,844 as of
March 31, 2016.
A summary of the status of the Partnerships unvested equity-based awards as of March 31, 2016
and of changes during the period January 1, 2016 through March 31, 2016 is presented below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Blackstone Holdings
|
|
|
The Blackstone Group L.P.
|
|
|
|
|
|
|
|
|
|
Equity Settled Awards
|
|
|
Cash Settled Awards
|
|
Unvested Units
|
|
Partnership
Units
|
|
|
Weighted-
Average
Grant
Date Fair
Value
|
|
|
Deferred
Restricted
Common
Units and
Options
|
|
|
Weighted-
Average
Grant
Date Fair
Value
|
|
|
Phantom
Units
|
|
|
Weighted-
Average
Grant
Date Fair
Value
|
|
Balance, December 31, 2015
|
|
|
40,901,755
|
|
|
$
|
32.98
|
|
|
|
14,342,129
|
|
|
$
|
22.38
|
|
|
|
27,942
|
|
|
$
|
28.79
|
|
Granted
|
|
|
363,239
|
|
|
|
28.57
|
|
|
|
1,893,628
|
|
|
|
28.77
|
|
|
|
2,465
|
|
|
|
29.24
|
|
Vested
|
|
|
(4,089,498
|
)
|
|
|
22.46
|
|
|
|
(2,600,563
|
)
|
|
|
22.92
|
|
|
|
(529
|
)
|
|
|
28.14
|
|
Forfeited
|
|
|
(164,898
|
)
|
|
|
39.21
|
|
|
|
(271,587
|
)
|
|
|
20.04
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, March 31, 2016
|
|
|
37,010,598
|
|
|
$
|
34.07
|
|
|
|
13,363,607
|
|
|
$
|
23.23
|
|
|
|
29,878
|
|
|
$
|
28.84
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
42
THE BLACKSTONE GROUP L.P.
Notes to Condensed Consolidated Financial StatementsContinued
(All Dollars Are in Thousands, Except Unit and Per Unit Data, Except Where Noted)
Units Expected to Vest
The following unvested units, after expected forfeitures, as of March 31, 2016, are expected to vest:
|
|
|
|
|
|
|
|
|
|
|
Units
|
|
|
Weighted-Average
Service Period in
Years
|
|
Blackstone Holdings Partnership Units
|
|
|
29,122,600
|
|
|
|
4.4
|
|
Deferred Restricted Blackstone Common Units
|
|
|
11,561,529
|
|
|
|
2.0
|
|
|
|
|
|
|
|
|
|
|
Total Equity-Based Awards
|
|
|
40,684,129
|
|
|
|
3.7
|
|
|
|
|
|
|
|
|
|
|
Phantom Units
|
|
|
22,284
|
|
|
|
3.5
|
|
|
|
|
|
|
|
|
|
|
Equity-Based Awards with Performance Conditions
The Partnership has also granted certain equity-based awards with performance requirements. These awards are based on the performance of
certain businesses over a four year period beginning August 2013, relative to a predetermined threshold. Blackstone has determined that it is probable that the relevant performance thresholds will be exceeded in future periods and, therefore, has
recorded compensation expense since the beginning of the performance period of $4.2 million.
16.
|
RELATED PARTY TRANSACTIONS
|
Affiliate Receivables and Payables
Due from Affiliates and Due to Affiliates consisted of the following:
|
|
|
|
|
|
|
|
|
|
|
March 31,
2016
|
|
|
December 31,
2015
|
|
Due from Affiliates
|
|
|
|
|
|
|
|
|
Accrual for Potential Clawback of Previously Distributed Carried Interest
|
|
$
|
2,659
|
|
|
$
|
1,686
|
|
Advances Made on Behalf of Certain Non-Controlling Interest Holders and Blackstone Employees Principally for Investments in
Blackstone Funds
|
|
|
293,701
|
|
|
|
331,558
|
|
Amounts Due from Portfolio Companies and Funds
|
|
|
295,718
|
|
|
|
319,758
|
|
Investments Redeemed in Non-Consolidated Funds of Hedge Funds
|
|
|
6,760
|
|
|
|
5,931
|
|
Management and Performance Fees Due from Non-Consolidated Funds
|
|
|
371,260
|
|
|
|
403,538
|
|
Payments Made on Behalf of Non-Consolidated Entities
|
|
|
169,428
|
|
|
|
178,326
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
1,139,526
|
|
|
$
|
1,240,797
|
|
|
|
|
|
|
|
|
|
|
43
THE BLACKSTONE GROUP L.P.
Notes to Condensed Consolidated Financial StatementsContinued
(All Dollars Are in Thousands, Except Unit and Per Unit Data, Except Where Noted)
|
|
|
|
|
|
|
|
|
|
|
March 31,
2016
|
|
|
December 31,
2015
|
|
Due to Affiliates
|
|
|
|
|
|
|
|
|
Due to Certain Non-Controlling Interest Holders in Connection with the Tax Receivable Agreements
|
|
$
|
1,145,207
|
|
|
$
|
1,201,543
|
|
Accrual for Potential Repayment of Previously Received Performance Fees
|
|
|
6,308
|
|
|
|
3,356
|
|
Due to Note Holders of Consolidated CLO Vehicles
|
|
|
8,164
|
|
|
|
8,231
|
|
Distributions Received on Behalf of Certain Non-Controlling Interest Holders and Blackstone Employees
|
|
|
17,262
|
|
|
|
26,593
|
|
Distributions Received on Behalf of Blackstone Entities
|
|
|
36,504
|
|
|
|
33,160
|
|
Payments Made by Non-Consolidated Entities
|
|
|
5,739
|
|
|
|
9,817
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
1,219,184
|
|
|
$
|
1,282,700
|
|
|
|
|
|
|
|
|
|
|
Interests of the Founder, Senior Managing Directors, Employees and Other Related Parties
The Founder, senior managing directors, employees and certain other related parties invest on a discretionary basis in the consolidated
Blackstone Funds both directly and through consolidated entities. These investments generally are subject to preferential management fee and performance fee arrangements. As of March 31, 2016 and December 31, 2015, such investments
aggregated $732.1 million and $746.3 million, respectively. Their share of the Net Income (Loss) Attributable to Redeemable Non-Controlling and Non-Controlling Interests in Consolidated Entities aggregated $3.0 million and $49.5 million for the
three months ended March 31, 2016 and 2015, respectively.
Revenues Earned from Affiliates
Management and Advisory Fees, Net earned from affiliates totaled $56.7 million and $48.1 million for the three months ended March 31,
2016 and 2015, respectively. Fees relate primarily to transaction and monitoring fees which are negotiated in the ordinary course of fundraising and investment activities.
Loans to Affiliates
Loans to affiliates consist of interest bearing
advances to certain Blackstone individuals to finance their investments in certain Blackstone Funds. These loans earn interest at Blackstones cost of borrowing and such interest totaled $0.2 million and $2.0 million for the three months ended
March 31, 2016 and 2015, respectively.
Contingent Repayment Guarantee
Blackstone and its personnel who have received Carried Interest distributions have guaranteed payment on a several basis (subject to a
cap) to the Carry Funds of any clawback obligation with respect to the excess Carried Interest allocated to the general partners of such funds and indirectly received thereby to the extent that either Blackstone or its personnel fails to fulfill its
clawback obligation, if any. The Accrual for Potential Repayment of Previously Received Performance Fees represents amounts previously paid to Blackstone Holdings and non-controlling interest holders that would need to be repaid to the Blackstone
Funds if the Carry Funds were to be liquidated based on the fair value of their underlying investments as of March 31, 2016. See Note 17. Commitments and Contingencies Contingencies Contingent Obligations (Clawback).
44
THE BLACKSTONE GROUP L.P.
Notes to Condensed Consolidated Financial StatementsContinued
(All Dollars Are in Thousands, Except Unit and Per Unit Data, Except Where Noted)
Aircraft and Other Services
In the normal course of business, Blackstone personnel make use of aircraft owned as personal assets by Stephen A. Schwarzman; an aircraft
owned jointly as a personal asset by Hamilton E. James, Blackstones President and Chief Operating Officer, and Jonathan D. Gray, Blackstones Global Head of Real Estate and a Director of Blackstone; and an aircraft owned jointly as a
personal asset by Bennett J. Goodman, Co-Founder of GSO Capital and a Director of Blackstone, and another senior managing director (each such aircraft, Personal Aircraft). Mr. Schwarzman paid for his purchases of his Personal
Aircraft himself. Each of Mr. James and Mr. Gray paid for his respective interest in their jointly owned Personal Aircraft. Mr. Goodman paid for his interest in his jointly owned Personal Aircraft. Mr. Schwarzman, Mr. James,
Mr. Gray and Mr. Goodman respectively bear operating, personnel and maintenance costs associated with the operation of such Personal Aircraft. Payment by Blackstone for the use of the Personal Aircraft by Blackstone employees is made based
on market rates.
In addition, on occasion, certain of Blackstones executive officers and employee directors and their
families may make use of aircraft owned by Blackstone or in which Blackstone owns a fractional interest, as well as other assets of Blackstone. Any such personal use of Blackstone assets is charged to the executive officer or employee director based
on market rates and usage. Personal use of Blackstone resources is also reimbursed to Blackstone based on market rates.
The
transactions described herein are not material to the Condensed Consolidated Financial Statements.
Tax Receivable Agreements
Blackstone used a portion of the proceeds from the IPO and the sale of non-voting common units to Beijing Wonderful
Investments to purchase interests in the predecessor businesses from the predecessor owners. In addition, holders of Blackstone Holdings Partnership Units may exchange their Blackstone Holdings Partnership Units for Blackstone common units on a
one-for-one basis. The purchase and subsequent exchanges are expected to result in increases in the tax basis of the tangible and intangible assets of Blackstone Holdings and therefore reduce the amount of tax that Blackstones wholly owned
subsidiaries would otherwise be required to pay in the future.
One of the subsidiaries of the Partnership which is a
corporate taxpayer has entered into tax receivable agreements with each of the predecessor owners and additional tax receivable agreements have been executed, and will continue to be executed, with newly-admitted senior managing directors and others
who acquire Blackstone Holdings Partnership Units. The agreements provide for the payment by the corporate taxpayer to such owners of 85% of the amount of cash savings, if any, in U.S. federal, state and local income tax that the corporate taxpayers
actually realize as a result of the aforementioned increases in tax basis and of certain other tax benefits related to entering into these tax receivable agreements. For purposes of the tax receivable agreements, cash savings in income tax will be
computed by comparing the actual income tax liability of the corporate taxpayers to the amount of such taxes that the corporate taxpayers would have been required to pay had there been no increase to the tax basis of the tangible and intangible
assets of Blackstone Holdings as a result of the exchanges and had the corporate taxpayers not entered into the tax receivable agreements.
Assuming no future material changes in the relevant tax law and that the corporate taxpayers earn sufficient taxable income to realize the full tax benefit of the increased amortization of the assets, the
expected future payments under the tax receivable agreements (which are taxable to the recipients) will aggregate $1.1 billion over the next 15 years. The after-tax net present value of these estimated payments totals $360.8 million assuming a 15%
discount rate and using Blackstones most recent projections relating to the estimated timing of the benefit to be received. Future payments under the tax receivable agreements in respect of subsequent exchanges would be in
45
THE BLACKSTONE GROUP L.P.
Notes to Condensed Consolidated Financial StatementsContinued
(All Dollars Are in Thousands, Except Unit and Per Unit Data, Except Where Noted)
addition to these amounts. The payments under the tax receivable agreements are not conditioned upon continued ownership of Blackstone equity interests by the pre-IPO owners and the others
mentioned above.
Amounts related to the deferred tax asset resulting from the increase in tax basis from the exchange of
Blackstone Holdings Partnership Units to Blackstone common units, the resulting remeasurement of net deferred tax assets at the Blackstone ownership percentage at the balance sheet date, the due to affiliates for the future payments resulting from
the tax receivable agreements and resulting adjustment to partners capital are included as Acquisition of Ownership Interests from Non-Controlling Interest Holders in the Supplemental Disclosure of Non-Cash Investing and Financing Activities
in the Condensed Consolidated Statements of Cash Flows.
Other
Blackstone does business with and on behalf of some of its Portfolio Companies; all such arrangements are on a negotiated basis.
Additionally, please see Note 17. Commitments and Contingencies Contingencies Guarantees for information regarding guarantees provided to a lending institution for certain loans
held by employees.
17.
|
COMMITMENTS AND CONTINGENCIES
|
Commitments
Investment Commitments
Blackstone had $2.2 billion of investment commitments as of March 31, 2016 representing general partner capital funding commitments
to the Blackstone Funds, limited partner capital funding to other funds and Blackstone principal investment commitments. The consolidated Blackstone Funds had signed investment commitments of $22.9 million as of March 31, 2016 which includes
$10.6 million of signed investment commitments for portfolio company acquisitions in the process of closing.
Contingencies
Guarantees
Certain of
Blackstones consolidated real estate funds guarantee payments to third parties in connection with the on-going business activities and/or acquisitions of their Portfolio Companies. There is no direct recourse to the Partnership to fulfill such
obligations. To the extent that underlying funds are required to fulfill guarantee obligations, the Partnerships invested capital in such funds is at risk. Total investments at risk in respect of guarantees extended by consolidated real estate
funds was $6.3 million as of March 31, 2016.
The Blackstone Holdings Partnerships provided guarantees to a lending
institution for certain loans held by employees either for investment in Blackstone Funds or for members capital contributions to Blackstone International Partners LLP. The amount guaranteed as of March 31, 2016 was $136.4 million.
Litigation
From time to time, Blackstone is named as a defendant in legal actions relating to transactions conducted in the ordinary course of
business. Although there can be no assurance of the outcome of such legal actions, in the opinion of management, Blackstone does not have a potential liability related to any current legal proceeding or claim that would individually or in the
aggregate materially affect its results of operations, financial position or cash flows.
46
THE BLACKSTONE GROUP L.P.
Notes to Condensed Consolidated Financial StatementsContinued
(All Dollars Are in Thousands, Except Unit and Per Unit Data, Except Where Noted)
Contingent Obligations (Clawback)
Carried Interest is subject to clawback to the extent that the Carried Interest received to date with respect to a fund exceeds the amount
due to Blackstone based on cumulative results of that fund. The actual clawback liability, however, generally does not become realized until the end of a funds life except for certain Blackstone real estate funds, multi-asset class investment
funds and credit-focused funds, which may have an interim clawback liability. The lives of the carry funds, including available contemplated extensions, for which a liability for potential clawback obligations has been recorded for financial
reporting purposes, are currently anticipated to expire at various points through 2028. Further extensions of such terms may be implemented under given circumstances.
For financial reporting purposes, the general partners have recorded a liability for potential clawback obligations to the limited partners of some of the carry funds due to changes in the unrealized
value of a funds remaining investments and where the funds general partner has previously received Carried Interest distributions with respect to such funds realized investments.
The following table presents the clawback obligations by segment:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2016
|
|
|
December 31, 2015
|
|
Segment
|
|
Blackstone
Holdings
|
|
|
Current and
Former Personnel
|
|
|
Total
|
|
|
Blackstone
Holdings
|
|
|
Current and
Former Personnel
|
|
|
Total
|
|
Credit
|
|
$
|
3,649
|
|
|
$
|
2,659
|
|
|
$
|
6,308
|
|
|
$
|
1,670
|
|
|
$
|
1,686
|
|
|
$
|
3,356
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
A portion of the Carried Interest paid to current and former Blackstone personnel is held in segregated
accounts in the event of a cash clawback obligation. These segregated accounts are not included in the Condensed Consolidated Financial Statements of the Partnership, except to the extent a portion of the assets held in the segregated accounts may
be allocated to a consolidated Blackstone fund of hedge funds. At March 31, 2016, $576.8 million was held in segregated accounts for the purpose of meeting any clawback obligations of current and former personnel if such payments are
required.
If, at March 31, 2016, all of the investments held by the carry funds were deemed worthless, a possibility
that management views as remote, the amount of Carried Interest subject to potential clawback would be $4.6 billion, on an after tax basis where applicable, of which $4.2 billion related to Blackstone Holdings and $432.0 million related to current
and former Blackstone personnel.
Blackstone transacts its primary business in the United States and substantially all of its revenues are generated
domestically.
Blackstone conducts its alternative asset management businesses through four segments:
|
|
|
Private Equity Blackstones Private Equity segment comprises its management of private equity funds, certain opportunistic investment
funds, a core private equity fund and secondary private funds of funds.
|
|
|
|
Real Estate Blackstones Real Estate segment primarily comprises its management of global, European focused and Asian focused opportunistic
real estate funds as well as core+ real estate funds. In addition, the segment has debt investment funds and a publicly traded REIT targeting non-controlling real estate debt-related investment opportunities in the public and private markets,
primarily in the United States and Europe.
|
47
THE BLACKSTONE GROUP L.P.
Notes to Condensed Consolidated Financial StatementsContinued
(All Dollars Are in Thousands, Except Unit and Per Unit Data, Except Where Noted)
|
|
|
Hedge Fund Solutions Blackstones Hedge Fund Solutions segment is comprised principally of Blackstone Alternative Asset Management
(BAAM), which manages a broad range of commingled and customized hedge fund of fund solutions. The Hedge Fund Solutions business also includes investment platforms that seed new hedge fund talent, purchase ownership interests in more
established hedge funds, invest in special situation opportunities, create alternative solutions in regulated structures and trade long and short public equities.
|
|
|
|
Credit Blackstones Credit segment, which consists principally of GSO Capital Partners LP (GSO), manages credit-focused
products within private and public debt market strategies. GSOs products include senior credit-focused funds, mezzanine funds, distressed debt funds, general credit-focused funds, registered investment companies, separately managed accounts
and CLO vehicles.
|
These business segments are differentiated by their various sources of income. The
Private Equity, Real Estate, Hedge Fund Solutions and Credit segments primarily earn their income from management fees and investment returns on assets under management.
Blackstone uses Economic Income (EI) as a key measure of value creation, a benchmark of its performance and in making resource deployment and compensation decisions across its four segments.
EI represents segment net income before taxes excluding transaction-related charges. Transaction-related charges arise from Blackstones IPO and long-term retention programs outside of annual deferred compensation and other corporate actions,
including acquisitions. Transaction-related charges include equity-based compensation charges, the amortization of intangible assets and contingent consideration associated with acquisitions. EI presents revenues and expenses on a basis that
deconsolidates the investment funds Blackstone manages. Economic Net Income (ENI) represents EI adjusted to include current period taxes. Taxes represent the current tax provision (benefit) calculated on Income (Loss) Before Provision
for Taxes.
Senior management makes operating decisions and assesses the performance of each of Blackstones business
segments based on financial and operating metrics and data that is presented without the consolidation of any of the Blackstone Funds that are consolidated into the Condensed Consolidated Financial Statements. Consequently, all segment data excludes
the assets, liabilities and operating results related to the Blackstone Funds.
48
THE BLACKSTONE GROUP L.P.
Notes to Condensed Consolidated Financial StatementsContinued
(All Dollars Are in Thousands, Except Unit and Per Unit Data, Except Where Noted)
The following table presents the financial data for Blackstones four segments as
of and for the three months ended March 31, 2016 and 2015. On October 1, 2015, Blackstone completed the spin-off of the operations that historically constituted Blackstones Financial Advisory segment, other than Blackstones
capital markets services business. Blackstones capital markets services business was retained and was not part of the spin-off. These historical operations included various financial advisory services, including financial and strategic
advisory, restructuring and reorganization advisory and fund placement services. As of October 1, 2015, Blackstone no longer reported a Financial Advisory segment. Results of the historical Financial Advisory segment are included herein for
comparative purposes only. The results of Blackstones capital markets services business were reclassified from the Financial Advisory segment to the Private Equity segment. All prior periods have been recast to reflect this reclassification.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2016 and the Three Months Then Ended
|
|
|
|
Private
Equity
|
|
|
Real
Estate
|
|
|
Hedge Fund
Solutions
|
|
|
Credit
|
|
|
Total
Segments
|
|
Segment Revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Management and Advisory Fees, Net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Base Management Fees
|
|
$
|
130,648
|
|
|
$
|
199,907
|
|
|
$
|
130,158
|
|
|
$
|
125,990
|
|
|
$
|
586,703
|
|
Advisory Fees
|
|
|
481
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
481
|
|
Transaction and Other Fees, Net
|
|
|
8,439
|
|
|
|
35,794
|
|
|
|
543
|
|
|
|
1,342
|
|
|
|
46,118
|
|
Management Fee Offsets
|
|
|
(6,848
|
)
|
|
|
(3,595
|
)
|
|
|
|
|
|
|
(9,658
|
)
|
|
|
(20,101
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Management and Advisory Fees, Net
|
|
|
132,720
|
|
|
|
232,106
|
|
|
|
130,701
|
|
|
|
117,674
|
|
|
|
613,201
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Performance Fees
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Realized
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Carried Interest
|
|
|
30,282
|
|
|
|
200,627
|
|
|
|
|
|
|
|
|
|
|
|
230,909
|
|
Incentive Fees
|
|
|
|
|
|
|
4,069
|
|
|
|
2,684
|
|
|
|
21,697
|
|
|
|
28,450
|
|
Unrealized
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Carried Interest
|
|
|
73,875
|
|
|
|
(11,522
|
)
|
|
|
32
|
|
|
|
(14,779
|
)
|
|
|
47,606
|
|
Incentive Fees
|
|
|
|
|
|
|
9,765
|
|
|
|
(2,935
|
)
|
|
|
270
|
|
|
|
7,100
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Performance Fees
|
|
|
104,157
|
|
|
|
202,939
|
|
|
|
(219
|
)
|
|
|
7,188
|
|
|
|
314,065
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment Income (Loss)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Realized
|
|
|
(15,357
|
)
|
|
|
12,975
|
|
|
|
(4,745
|
)
|
|
|
(2,974
|
)
|
|
|
(10,101
|
)
|
Unrealized
|
|
|
15,440
|
|
|
|
(2,137
|
)
|
|
|
(12,291
|
)
|
|
|
(17,561
|
)
|
|
|
(16,549
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Investment Income (Loss)
|
|
|
83
|
|
|
|
10,838
|
|
|
|
(17,036
|
)
|
|
|
(20,535
|
)
|
|
|
(26,650
|
)
|
Interest and Dividend Revenue
|
|
|
9,849
|
|
|
|
13,188
|
|
|
|
5,296
|
|
|
|
6,748
|
|
|
|
35,081
|
|
Other
|
|
|
(1,587
|
)
|
|
|
(1,909
|
)
|
|
|
(1,388
|
)
|
|
|
(1,364
|
)
|
|
|
(6,248
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Revenues
|
|
|
245,222
|
|
|
|
457,162
|
|
|
|
117,354
|
|
|
|
109,711
|
|
|
|
929,449
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Compensation and Benefits Compensation
|
|
|
80,274
|
|
|
|
100,578
|
|
|
|
54,169
|
|
|
|
52,382
|
|
|
|
287,403
|
|
Performance Fee Compensation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Realized
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Carried Interest
|
|
|
15,427
|
|
|
|
43,076
|
|
|
|
|
|
|
|
|
|
|
|
58,503
|
|
Incentive Fees
|
|
|
|
|
|
|
2,133
|
|
|
|
1,863
|
|
|
|
10,127
|
|
|
|
14,123
|
|
Unrealized
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Carried Interest
|
|
|
9,296
|
|
|
|
27,703
|
|
|
|
|
|
|
|
(6,998
|
)
|
|
|
30,001
|
|
Incentive Fees
|
|
|
|
|
|
|
4,158
|
|
|
|
(1,195
|
)
|
|
|
485
|
|
|
|
3,448
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Compensation and Benefits
|
|
|
104,997
|
|
|
|
177,648
|
|
|
|
54,837
|
|
|
|
55,996
|
|
|
|
393,478
|
|
Other Operating Expenses
|
|
|
48,063
|
|
|
|
48,097
|
|
|
|
26,146
|
|
|
|
26,220
|
|
|
|
148,526
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Expenses
|
|
|
153,060
|
|
|
|
225,745
|
|
|
|
80,983
|
|
|
|
82,216
|
|
|
|
542,004
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Economic Income
|
|
$
|
92,162
|
|
|
$
|
231,417
|
|
|
$
|
36,371
|
|
|
$
|
27,495
|
|
|
$
|
387,445
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment Assets
|
|
$
|
5,390,618
|
|
|
$
|
7,320,885
|
|
|
$
|
1,762,700
|
|
|
$
|
2,650,331
|
|
|
$
|
17,124,534
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
49
THE BLACKSTONE GROUP L.P.
Notes to Condensed Consolidated Financial StatementsContinued
(All Dollars Are in Thousands, Except Unit and Per Unit Data, Except Where Noted)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31, 2015
|
|
|
|
Private
Equity
|
|
|
Real Estate
|
|
|
Hedge Fund
Solutions
|
|
|
Credit
|
|
|
Financial
Advisory
|
|
|
Total
Segments
|
|
Segment Revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Management and Advisory Fees, Net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Base Management Fees
|
|
$
|
108,383
|
|
|
$
|
152,348
|
|
|
$
|
130,637
|
|
|
$
|
125,029
|
|
|
$
|
|
|
|
$
|
516,397
|
|
Advisory Fees
|
|
|
2,429
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
81,809
|
|
|
|
84,238
|
|
Transaction and Other Fees, Net
|
|
|
20,359
|
|
|
|
15,216
|
|
|
|
25
|
|
|
|
1,457
|
|
|
|
16
|
|
|
|
37,073
|
|
Management Fee Offsets
|
|
|
(4,949
|
)
|
|
|
(4,866
|
)
|
|
|
(280
|
)
|
|
|
(7,850
|
)
|
|
|
|
|
|
|
(17,945
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Management and Advisory Fees, Net
|
|
|
126,222
|
|
|
|
162,698
|
|
|
|
130,382
|
|
|
|
118,636
|
|
|
|
81,825
|
|
|
|
619,763
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Performance Fees
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Realized
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Carried Interest
|
|
|
382,978
|
|
|
|
811,249
|
|
|
|
|
|
|
|
13,367
|
|
|
|
|
|
|
|
1,207,594
|
|
Incentive Fees
|
|
|
|
|
|
|
723
|
|
|
|
10,516
|
|
|
|
18,431
|
|
|
|
|
|
|
|
29,670
|
|
Unrealized
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Carried Interest
|
|
|
566,822
|
|
|
|
(181,019
|
)
|
|
|
|
|
|
|
(11,951
|
)
|
|
|
|
|
|
|
373,852
|
|
Incentive Fees
|
|
|
|
|
|
|
6,069
|
|
|
|
47,427
|
|
|
|
9,124
|
|
|
|
|
|
|
|
62,620
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Performance Fees
|
|
|
949,800
|
|
|
|
637,022
|
|
|
|
57,943
|
|
|
|
28,971
|
|
|
|
|
|
|
|
1,673,736
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment Income (Loss)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Realized
|
|
|
44,816
|
|
|
|
71,344
|
|
|
|
(10,375
|
)
|
|
|
2,237
|
|
|
|
(230
|
)
|
|
|
107,792
|
|
Unrealized
|
|
|
31,487
|
|
|
|
37,510
|
|
|
|
4,483
|
|
|
|
6,887
|
|
|
|
1,482
|
|
|
|
81,849
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Investment Income (Loss)
|
|
|
76,303
|
|
|
|
108,854
|
|
|
|
(5,892
|
)
|
|
|
9,124
|
|
|
|
1,252
|
|
|
|
189,641
|
|
Interest and Dividend Revenue
|
|
|
7,618
|
|
|
|
9,997
|
|
|
|
3,949
|
|
|
|
5,651
|
|
|
|
3,236
|
|
|
|
30,451
|
|
Other
|
|
|
(1,825
|
)
|
|
|
(3,977
|
)
|
|
|
(1,607
|
)
|
|
|
3,493
|
|
|
|
(956
|
)
|
|
|
(4,872
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Revenues
|
|
|
1,158,118
|
|
|
|
914,594
|
|
|
|
184,775
|
|
|
|
165,875
|
|
|
|
85,357
|
|
|
|
2,508,719
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Compensation and Benefits Compensation
|
|
|
71,072
|
|
|
|
84,834
|
|
|
|
56,104
|
|
|
|
49,877
|
|
|
|
67,951
|
|
|
|
329,838
|
|
Performance Fee Compensation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Realized
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Carried Interest
|
|
|
39,482
|
|
|
|
246,496
|
|
|
|
|
|
|
|
6,270
|
|
|
|
|
|
|
|
292,248
|
|
Incentive Fees
|
|
|
|
|
|
|
356
|
|
|
|
3,470
|
|
|
|
8,401
|
|
|
|
|
|
|
|
12,227
|
|
Unrealized
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Carried Interest
|
|
|
178,120
|
|
|
|
(98,084
|
)
|
|
|
|
|
|
|
(5,656
|
)
|
|
|
|
|
|
|
74,380
|
|
Incentive Fees
|
|
|
|
|
|
|
2,575
|
|
|
|
15,651
|
|
|
|
6,735
|
|
|
|
|
|
|
|
24,961
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Compensation and Benefits
|
|
|
288,674
|
|
|
|
236,177
|
|
|
|
75,225
|
|
|
|
65,627
|
|
|
|
67,951
|
|
|
|
733,654
|
|
Other Operating Expenses
|
|
|
38,875
|
|
|
|
40,143
|
|
|
|
21,206
|
|
|
|
21,836
|
|
|
|
21,222
|
|
|
|
143,282
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Expenses
|
|
|
327,549
|
|
|
|
276,320
|
|
|
|
96,431
|
|
|
|
87,463
|
|
|
|
89,173
|
|
|
|
876,936
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Economic Income (Loss)
|
|
$
|
830,569
|
|
|
$
|
638,274
|
|
|
$
|
88,344
|
|
|
$
|
78,412
|
|
|
$
|
(3,816
|
)
|
|
$
|
1,631,783
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
50
THE BLACKSTONE GROUP L.P.
Notes to Condensed Consolidated Financial StatementsContinued
(All Dollars Are in Thousands, Except Unit and Per Unit Data, Except Where Noted)
The following table reconciles the Total Segments to Blackstones Income Before
Provision for Taxes and Total Assets as of and for the three months ended March 31, 2016 and 2015:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31, 2016
|
|
|
Three Months Ended March 31, 2015
|
|
|
|
Total
Segments
|
|
|
Consolidation
Adjustments
and Reconciling
Items
|
|
|
Blackstone
Consolidated
|
|
|
Total
Segments
|
|
|
Consolidation
Adjustments
and Reconciling
Items
|
|
|
Blackstone
Consolidated
|
|
Revenues
|
|
$
|
929,449
|
|
|
$
|
2,905
|
(a)
|
|
$
|
932,354
|
|
|
$
|
2,508,719
|
|
|
$
|
3,639
|
(a)
|
|
$
|
2,512,358
|
|
Expenses
|
|
$
|
542,004
|
|
|
$
|
75,706
|
(b)
|
|
$
|
617,710
|
|
|
$
|
876,936
|
|
|
$
|
265,632
|
(b)
|
|
$
|
1,142,568
|
|
Other Income
|
|
$
|
|
|
|
$
|
19,142
|
(c)
|
|
$
|
19,142
|
|
|
$
|
|
|
|
$
|
93,555
|
(c)
|
|
$
|
93,555
|
|
Economic Income
|
|
$
|
387,445
|
|
|
$
|
(53,659)
|
(d)
|
|
$
|
333,786
|
|
|
$
|
1,631,783
|
|
|
$
|
(168,438)
|
(d)
|
|
$
|
1,463,345
|
|
Total Assets
|
|
$
|
17,124,534
|
|
|
$
|
4,926,370
|
(e)
|
|
$
|
22,050,904
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
The Revenues adjustment represents management and performance fees earned from Blackstone Funds which were eliminated in consolidation to arrive at Blackstone
consolidated revenues and non-segment related Investment Income (Loss), which is included in Blackstone consolidated revenues.
|
(b)
|
The Expenses adjustment represents the addition of expenses of the consolidated Blackstone Funds to the Blackstone unconsolidated expenses, amortization of intangibles
and expenses related to transaction-related equity-based compensation to arrive at Blackstone consolidated expenses.
|
(c)
|
The Other Income adjustment results from the following:
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
|
|
2016
|
|
|
2015
|
|
Fund Management Fees and Performance Fees Eliminated in Consolidation and Transactional Investment Loss
|
|
$
|
(2,757
|
)
|
|
$
|
(3,711
|
)
|
Fund Expenses Added in Consolidation
|
|
|
(5,847
|
)
|
|
|
9,367
|
|
Non-Controlling Interests in Income of Consolidated Entities
|
|
|
33,685
|
|
|
|
89,323
|
|
Transaction-Related Other Loss
|
|
|
(5,939
|
)
|
|
|
(1,424
|
)
|
|
|
|
|
|
|
|
|
|
Total Consolidation Adjustments and Reconciling Items
|
|
$
|
19,142
|
|
|
$
|
93,555
|
|
|
|
|
|
|
|
|
|
|
(d)
|
The reconciliation of Economic Income to Income Before Provision for Taxes as reported in the Condensed Consolidated Statements of Operations consists of the following:
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
|
|
2016
|
|
|
2015
|
|
Economic Income
|
|
$
|
387,445
|
|
|
$
|
1,631,783
|
|
|
|
|
|
|
|
|
|
|
Adjustments
|
|
|
|
|
|
|
|
|
Amortization of Intangibles
|
|
|
(23,208
|
)
|
|
|
(25,899
|
)
|
IPO and Acquisition-Related Charges
|
|
|
(64,136
|
)
|
|
|
(231,862
|
)
|
Non-Controlling Interests in Income of Consolidated Entities
|
|
|
33,685
|
|
|
|
89,323
|
|
|
|
|
|
|
|
|
|
|
Total Consolidation Adjustments and Reconciling Items
|
|
|
(53,659
|
)
|
|
|
(168,438
|
)
|
|
|
|
|
|
|
|
|
|
Income Before Provision for Taxes
|
|
$
|
333,786
|
|
|
$
|
1,463,345
|
|
|
|
|
|
|
|
|
|
|
51
THE BLACKSTONE GROUP L.P.
Notes to Condensed Consolidated Financial StatementsContinued
(All Dollars Are in Thousands, Except Unit and Per Unit Data, Except Where Noted)
(e)
|
The Total Assets adjustment represents the addition of assets of the consolidated Blackstone Funds to the Blackstone unconsolidated assets to arrive at Blackstone
consolidated assets.
|
There have been no events since March 31, 2016 that require recognition or disclosure in the Condensed
Consolidated Financial Statements.
52
ITEM 1A.
|
UNAUDITED SUPPLEMENTAL PRESENTATION OF STATEMENTS OF FINANCIAL CONDITION
|
THE BLACKSTONE GROUP L.P.
Unaudited Consolidating Statements of
Financial Condition
(Dollars in Thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2016
|
|
|
|
Consolidated
Operating
Partnerships
|
|
|
Consolidated
Blackstone
Funds (a)
|
|
|
Reclasses
and
Eliminations
|
|
|
Consolidated
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and Cash Equivalents
|
|
$
|
1,372,552
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
1,372,552
|
|
Cash Held by Blackstone Funds and Other
|
|
|
239,340
|
|
|
|
309,251
|
|
|
|
|
|
|
|
548,591
|
|
Investments
|
|
|
10,185,613
|
|
|
|
4,871,032
|
|
|
|
(431,613
|
)
|
|
|
14,625,032
|
|
Accounts Receivable
|
|
|
500,641
|
|
|
|
160,212
|
|
|
|
|
|
|
|
660,853
|
|
Reverse Repurchase Agreements
|
|
|
45,301
|
|
|
|
|
|
|
|
|
|
|
|
45,301
|
|
Due from Affiliates
|
|
|
1,124,769
|
|
|
|
25,679
|
|
|
|
(10,922
|
)
|
|
|
1,139,526
|
|
Intangible Assets, Net
|
|
|
322,719
|
|
|
|
|
|
|
|
|
|
|
|
322,719
|
|
Goodwill
|
|
|
1,718,519
|
|
|
|
|
|
|
|
|
|
|
|
1,718,519
|
|
Other Assets
|
|
|
313,465
|
|
|
|
2,731
|
|
|
|
|
|
|
|
316,196
|
|
Deferred Tax Assets
|
|
|
1,301,615
|
|
|
|
|
|
|
|
|
|
|
|
1,301,615
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Assets
|
|
$
|
17,124,534
|
|
|
$
|
5,368,905
|
|
|
$
|
(442,535
|
)
|
|
$
|
22,050,904
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and Partners Capital
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans Payable
|
|
$
|
2,807,643
|
|
|
$
|
3,550,139
|
|
|
$
|
|
|
|
$
|
6,357,782
|
|
Due to Affiliates
|
|
|
1,179,633
|
|
|
|
53,361
|
|
|
|
(13,810
|
)
|
|
|
1,219,184
|
|
Accrued Compensation and Benefits
|
|
|
1,846,041
|
|
|
|
18
|
|
|
|
|
|
|
|
1,846,059
|
|
Securities Sold, Not Yet Purchased
|
|
|
32,641
|
|
|
|
73,216
|
|
|
|
|
|
|
|
105,857
|
|
Repurchase Agreements
|
|
|
|
|
|
|
49,540
|
|
|
|
|
|
|
|
49,540
|
|
Accounts Payable, Accrued Expenses and Other Liabilities
|
|
|
392,176
|
|
|
|
169,226
|
|
|
|
|
|
|
|
561,402
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Liabilities
|
|
|
6,258,134
|
|
|
|
3,895,500
|
|
|
|
(13,810
|
)
|
|
|
10,139,824
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Redeemable Non-Controlling Interests in Consolidated Entities
|
|
|
|
|
|
|
177,054
|
|
|
|
|
|
|
|
177,054
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Partners Capital
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Partners Capital
|
|
|
6,136,557
|
|
|
|
428,967
|
|
|
|
(429,049
|
)
|
|
|
6,136,475
|
|
Accumulated Other Comprehensive Income (Loss)
|
|
|
(46,388
|
)
|
|
|
|
|
|
|
324
|
|
|
|
(46,064
|
)
|
Non-Controlling Interests in Consolidated Entities
|
|
|
1,612,974
|
|
|
|
867,384
|
|
|
|
|
|
|
|
2,480,358
|
|
Non-Controlling Interests in Blackstone Holdings
|
|
|
3,163,257
|
|
|
|
|
|
|
|
|
|
|
|
3,163,257
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Partners Capital
|
|
|
10,866,400
|
|
|
|
1,296,351
|
|
|
|
(428,725
|
)
|
|
|
11,734,026
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Liabilities and Partners Capital
|
|
$
|
17,124,534
|
|
|
$
|
5,368,905
|
|
|
$
|
(442,535
|
)
|
|
$
|
22,050,904
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
53
THE BLACKSTONE GROUP L.P.
Unaudited Consolidating Statements of Financial Condition
(Dollars in Thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2015
|
|
|
|
Consolidated
Operating
Partnerships
|
|
|
Consolidated
Blackstone
Funds (a)
|
|
|
Reclasses
and
Eliminations
|
|
|
Consolidated
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and Cash Equivalents
|
|
$
|
1,837,324
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
1,837,324
|
|
Cash Held by Blackstone Funds and Other
|
|
|
148,660
|
|
|
|
438,472
|
|
|
|
|
|
|
|
587,132
|
|
Investments
|
|
|
10,186,419
|
|
|
|
4,591,465
|
|
|
|
(453,787
|
)
|
|
|
14,324,097
|
|
Accounts Receivable
|
|
|
461,610
|
|
|
|
151,543
|
|
|
|
|
|
|
|
613,153
|
|
Reverse Repurchase Agreements
|
|
|
204,893
|
|
|
|
|
|
|
|
|
|
|
|
204,893
|
|
Due from Affiliates
|
|
|
1,224,692
|
|
|
|
25,722
|
|
|
|
(9,617
|
)
|
|
|
1,240,797
|
|
Intangible Assets, Net
|
|
|
345,547
|
|
|
|
|
|
|
|
|
|
|
|
345,547
|
|
Goodwill
|
|
|
1,718,519
|
|
|
|
|
|
|
|
|
|
|
|
1,718,519
|
|
Other Assets
|
|
|
374,270
|
|
|
|
2,919
|
|
|
|
|
|
|
|
377,189
|
|
Deferred Tax Assets
|
|
|
1,277,429
|
|
|
|
|
|
|
|
|
|
|
|
1,277,429
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Assets
|
|
$
|
17,779,363
|
|
|
$
|
5,210,121
|
|
|
$
|
(463,404
|
)
|
|
$
|
22,526,080
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and Partners Capital
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans Payable
|
|
$
|
2,797,060
|
|
|
$
|
3,319,687
|
|
|
$
|
|
|
|
$
|
6,116,747
|
|
Due to Affiliates
|
|
|
1,244,748
|
|
|
|
50,892
|
|
|
|
(12,940
|
)
|
|
|
1,282,700
|
|
Accrued Compensation and Benefits
|
|
|
2,029,900
|
|
|
|
18
|
|
|
|
|
|
|
|
2,029,918
|
|
Securities Sold, Not Yet Purchased
|
|
|
99,392
|
|
|
|
77,275
|
|
|
|
|
|
|
|
176,667
|
|
Repurchase Agreements
|
|
|
970
|
|
|
|
39,959
|
|
|
|
|
|
|
|
40,929
|
|
Accounts Payable, Accrued Expenses and Other Liabilities
|
|
|
422,905
|
|
|
|
225,757
|
|
|
|
|
|
|
|
648,662
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Liabilities
|
|
|
6,594,975
|
|
|
|
3,713,588
|
|
|
|
(12,940
|
)
|
|
|
10,295,623
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Redeemable Non-Controlling Interests in Consolidated Entities
|
|
|
|
|
|
|
183,459
|
|
|
|
|
|
|
|
183,459
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Partners Capital
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Partners Capital
|
|
|
6,323,025
|
|
|
|
450,417
|
|
|
|
(451,135
|
)
|
|
|
6,322,307
|
|
Accumulated Other Comprehensive Income (Loss)
|
|
|
(53,190
|
)
|
|
|
|
|
|
|
671
|
|
|
|
(52,519
|
)
|
Non-Controlling Interests in Consolidated Entities
|
|
|
1,546,044
|
|
|
|
862,657
|
|
|
|
|
|
|
|
2,408,701
|
|
Non-Controlling Interests in Blackstone Holdings
|
|
|
3,368,509
|
|
|
|
|
|
|
|
|
|
|
|
3,368,509
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Partners Capital
|
|
|
11,184,388
|
|
|
|
1,313,074
|
|
|
|
(450,464
|
)
|
|
|
12,046,998
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Liabilities and Partners Capital
|
|
$
|
17,779,363
|
|
|
$
|
5,210,121
|
|
|
$
|
(463,404
|
)
|
|
$
|
22,526,080
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
The Consolidated Blackstone Funds consisted of the following:
|
Blackstone Real Estate Partners VI.C ESH L.P.
Blackstone Real Estate
Special Situations Fund L.P.
Blackstone Real Estate Special Situations Offshore Fund Ltd.
Blackstone Strategic Alliance Fund L.P.
Blackstone/GSO Loan Financing Limited
BSSF I AIV L.P.
BTD CP Holdings, LP
GSO Legacy Associates II LLC
GSO Legacy Associates LLC
Private equity side-by-side investment vehicles
Real estate side-by-side investment vehicles
Mezzanine side-by-side investment
vehicles
Collateralized loan obligation vehicles
54