BX 10-Q Quarter ended Sept. 30, 2017

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2017

OR

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM              TO

Commission File Number: 001-33551

The Blackstone Group L.P.

(Exact name of Registrant as specified in its charter)

Delaware		20-8875684
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

345 Park Avenue

New York, New York 10154

(Address of principal executive offices)(Zip Code)

(212) 583-5000

(Registrant’s telephone number, including area code)

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ☒    No  ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  ☒    No  ☐

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer  ☒		Accelerated filer  ☐
Non-accelerated filer  ☐		Smaller reporting company  ☐
(Do not check if a smaller reporting company)		Emerging growth company  ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ☐    No  ☒

The number of the Registrant’s voting common units representing limited partner interests outstanding as of November 1, 2017 was 630,715,641. The number of the Registrant’s non-voting common units representing limited partner interests outstanding as of November 1, 2017 was 20,891,886.

TABLE OF CONTENTS

				Page
PART I.		FINANCIAL INFORMATION
ITEM 1.		FINANCIAL STATEMENTS			5
		Unaudited Condensed Consolidated Financial Statements — September 30, 2017 and 2016:
		Condensed Consolidated Statements of Financial Condition as of September 30, 2017 and December  31, 2016			5
		Condensed Consolidated Statements of Operations for the Three and Nine Months Ended September  30, 2017 and 2016			7
		Condensed Consolidated Statements of Comprehensive Income for the Three and Nine Months Ended September 30, 2017 and 2016			8
		Condensed Consolidated Statements of Changes in Partners’ Capital for the Nine Months Ended September 30, 2017 and 2016			9
		Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September  30, 2017 and 2016			11
		Notes to Condensed Consolidated Financial Statements			13
ITEM 1A.		UNAUDITED SUPPLEMENTAL PRESENTATION OF STATEMENTS OF FINANCIAL CONDITION			60
ITEM 2.		MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS			62
ITEM 3.		QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK			132
ITEM 4.		CONTROLS AND PROCEDURES			136
PART II.		OTHER INFORMATION
ITEM 1.		LEGAL PROCEEDINGS			137
ITEM 1A.		RISK FACTORS			137
ITEM 2.		UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS			137
ITEM 3.		DEFAULTS UPON SENIOR SECURITIES			137
ITEM 4.		MINE SAFETY DISCLOSURES			138
ITEM 5.		OTHER INFORMATION			138
ITEM 6.		EXHIBITS			138
SIGNATURES					139

1

Forward-Looking Statements

This report may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 which reflect our current views with respect to, among other things, our operations and financial performance. You can identify these forward-looking statements by the use of words such as “outlook,” “indicator,” “believes,” “expects,” “potential,” “continues,” “may,” “will,” “should,” “seeks,” “approximately,” “predicts,” “intends,” “plans,” “estimates,” “anticipates” or the negative version of these words or other comparable words. Such forward-looking statements are subject to various risks and uncertainties. Accordingly, there are or will be important factors that could cause actual outcomes or results to differ materially from those indicated in these statements. We believe these factors include but are not limited to those described under the section entitled “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2016 and in this report, as such factors may be updated from time to time in our periodic filings with the United States Securities and Exchange Commission (“SEC”), which are accessible on the SEC’s website at www.sec.gov. These factors should not be construed as exhaustive and should be read in conjunction with the other cautionary statements that are included in this report and in our other periodic filings. The forward-looking statements speak only as of the date of this report, and we undertake no obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise.

Website and Social Media Disclosure

We use our website (www.blackstone.com), Facebook page (www.facebook.com/blackstone), Twitter (www.twitter.com/blackstone), LinkedIn (www.linkedin.com/company/the-blackstone-group), Instagram (www.instagram.com/blackstone), YouTube (www.youtube.com/user/blackstonegroup) and Medium (www.medium.com/@blackstonebx) accounts as channels of distribution of company information. The information we post through these channels may be deemed material. Accordingly, investors should monitor these channels, in addition to following our press releases, SEC filings and public conference calls and webcasts. In addition, you may automatically receive e-mail alerts and other information about Blackstone when you enroll your e-mail address by visiting the “Contact Us/Email Alerts” section of our website at http://ir.blackstone.com. The contents of our website, any alerts and social media channels are not, however, a part of this report.

In this report, references to “Blackstone,” the “Partnership,” “we,” “us” or “our” refer to The Blackstone Group L.P. and its consolidated subsidiaries. Unless the context otherwise requires, references in this report to the ownership of Mr. Stephen A. Schwarzman, our founder, and other Blackstone personnel include the ownership of personal planning vehicles and family members of these individuals.

“Blackstone Funds,” “our funds” and “our investment funds” refer to the private equity funds, real estate funds, funds of hedge funds, credit-focused funds, collateralized loan obligation (“CLO”), real estate investment trusts and registered investment companies that are managed by Blackstone. “Our carry funds” refers to the private equity funds, real estate funds and certain of the hedge fund solutions and credit-focused funds (with multi-year drawdown, commitment-based structures that only pay carry on the realization of an investment) that are managed by Blackstone. We refer to our general corporate private equity funds as Blackstone Capital Partners (“BCP”) funds, our energy-focused private equity funds as Blackstone Energy Partners (“BEP”) funds, our core private equity fund as Blackstone Core Equity Partners (“BCEP”), our opportunistic investment platform that invests globally across asset classes, industries and geographies as Blackstone Tactical Opportunities (“Tactical Opportunities”), our secondary private equity fund of funds business as Strategic Partners Fund Solutions (“Strategic Partners”), a multi-asset investment program for eligible high net worth investors offering exposure to certain of our key illiquid investment strategies through a single commitment as Blackstone Total Alternatives Solution (“BTAS”) and our capital markets services business as Blackstone Capital Markets (“BXCM”). We refer to our real estate opportunistic funds as Blackstone Real Estate Partners (“BREP”) funds and our real estate debt investment funds as Blackstone Real Estate Debt Strategies (“BREDS”) funds. We refer to our core+ real estate funds, which target substantially stabilized assets in prime markets, as Blackstone Property Partners (“BPP”) funds. We refer to our real

2

estate investment trusts as “REITs”, to Blackstone Mortgage Trust, Inc., our NYSE-listed REIT, as “BXMT”, and to Blackstone Real Estate Income Trust, Inc., our non-exchange traded REIT, as “BREIT”. “Our hedge funds” refers to our funds of hedge funds, certain of our real estate debt investment funds, including a registered investment company, and certain other credit-focused funds which are managed by Blackstone.

“Assets Under Management” refers to the assets we manage. Our Assets Under Management equals the sum of:

(a)

the fair value of the investments held by our carry funds and our side-by-side and co-investment entities managed by us, plus the capital that we are entitled to call from investors in those funds and entities pursuant to the terms of their respective capital commitments, including capital commitments to funds that have yet to commence their investment periods, plus for certain credit-oriented funds the amounts available to be borrowed under asset based credit facilities,

(b)

the net asset value of (1) our hedge funds, real estate debt carry funds, open ended core+ real estate fund, certain co-investments managed by us, and our Hedge Fund Solutions carry and drawdown funds (plus, in each case, the capital that we are entitled to call from investors in those funds, including commitments yet to commence their investment periods), and (2) our funds of hedge funds, our Hedge Fund Solutions registered investment companies, and our non-exchange traded REIT,

(c)

the invested capital, fair value or net asset value of assets we manage pursuant to separately managed accounts,

(d)

the amount of debt and equity outstanding for our CLOs during the reinvestment period,

(e)

the aggregate par amount of collateral assets, including principal cash, for our CLOs after the reinvestment period,

(f)

the gross or net amount of assets (including leverage where applicable) for our credit-focused registered investment companies, and

(g)

the fair value of common stock, preferred stock, convertible debt, or similar instruments issued by BXMT.

Our carry funds are commitment-based drawdown structured funds that do not permit investors to redeem their interests at their election. Our funds of hedge funds, hedge funds, funds structured like hedge funds and other open ended funds in our Hedge Fund Solutions, Credit and Real Estate segments generally have structures that afford an investor the right to withdraw or redeem their interests on a periodic basis (for example, annually or quarterly), typically with 30 to 95 days’ notice, depending on the fund and the liquidity profile of the underlying assets. Investment advisory agreements related to certain separately managed accounts in our Hedge Fund Solutions and Credit segments may generally be terminated by an investor on 30 to 90 days’ notice.

“Fee-Earning Assets Under Management” refers to the assets we manage on which we derive management and/or performance fees. Our Fee-Earning Assets Under Management equals the sum of:

(a)

for our Private Equity segment funds and Real Estate segment carry funds including certain real estate debt investment funds and certain of our Hedge Fund Solutions funds, the amount of capital commitments, remaining invested capital, fair value, net asset value or par value of assets held, depending on the fee terms of the fund,

(b)

for our credit-focused carry funds, the amount of remaining invested capital (which may include leverage) or net asset value, depending on the fee terms of the fund,

(c)

the remaining invested capital or fair value of assets held in co-investment vehicles managed by us on which we receive fees,

(d)

the net asset value of our funds of hedge funds, hedge funds, open ended core+ real estate fund, certain co-investments managed by us, certain registered investment companies, our non-exchange traded REIT, and certain of our Hedge Fund Solutions drawdown funds,

3

(e)

the invested capital, fair value of assets or the net asset value we manage pursuant to separately managed accounts,

(f)

the net proceeds received from equity offerings and accumulated core earnings of BXMT, subject to certain adjustments,

(g)

the aggregate par amount of collateral assets, including principal cash, of our CLOs, and

(h)

the gross amount of assets (including leverage) or the net assets (plus leverage where applicable) for certain of our credit-focused registered investment companies.

Each of our segments may include certain Fee-Earning Assets Under Management on which we earn performance fees but not management fees.

Our calculations of assets under management and fee-earning assets under management may differ from the calculations of other asset managers, and as a result this measure may not be comparable to similar measures presented by other asset managers. In addition, our calculation of assets under management includes commitments to, and the fair value of, invested capital in our funds from Blackstone and our personnel, regardless of whether such commitments or invested capital are subject to fees. Our definitions of assets under management or fee-earning assets under management are not based on any definition of assets under management or fee-earning assets under management that is set forth in the agreements governing the investment funds that we manage.

For our carry funds, total assets under management includes the fair value of the investments held, whereas fee-earning assets under management includes the amount of capital commitments, the remaining amount of invested capital at cost depending on whether the investment period has or has not expired or the fee terms of the fund. As such, fee-earning assets under management may be greater than total assets under management when the aggregate fair value of the remaining investments is less than the cost of those investments.

This report does not constitute an offer of any Blackstone Fund.

4

PART I. FINANCIAL INFORMATION

ITEM 1.

FINANCIAL STATEMENTS

THE BLACKSTONE GROUP L.P.

Condensed Consolidated Statements of Financial Condition (Unaudited)

(Dollars in Thousands, Except Unit Data)

		September 30, 2017				December 31, 2016
Assets
Cash and Cash Equivalents		$	1,315,687			$	1,837,253
Cash Held by Blackstone Funds and Other			1,665,730				1,005,161
Investments (including assets pledged of $105,607 and $119,139 at September 30, 2017 and December 31, 2016, respectively)			22,385,192				17,694,975
Accounts Receivable			906,315				772,695
Reverse Repurchase Agreements			—				118,495
Due from Affiliates			2,026,751				1,442,378
Intangible Assets, Net			229,713				262,604
Goodwill			1,718,519				1,718,519
Other Assets			253,173				264,788
Deferred Tax Assets			1,260,907				1,286,469
Total Assets		$	31,761,987			$	26,403,337
Liabilities and Partners’ Capital
Loans Payable		$	12,581,638			$	8,866,366
Due to Affiliates			1,319,679				1,321,772
Accrued Compensation and Benefits			2,823,773				2,327,762
Securities Sold, Not Yet Purchased			105,517				215,398
Repurchase Agreements			74,728				75,324
Accounts Payable, Accrued Expenses and Other Liabilities			1,395,030				1,081,782
Total Liabilities			18,300,365				13,888,404
Commitments and Contingencies
Redeemable Non-Controlling Interests in Consolidated Entities			201,377				185,390
Partners’ Capital
The Blackstone Group L.P. Partners’ Capital
Partners’ Capital (common units: 657,637,533 issued and outstanding as of September 30, 2017; 643,459,542 issued and outstanding as of December 31, 2016)			6,620,434				6,523,929
Accumulated Other Comprehensive Loss			(34,421	)			(62,887	)
Total The Blackstone Group L.P. Partners’ Capital			6,586,013				6,461,042
Non-Controlling Interests in Consolidated Entities			3,174,680				2,428,964
Non-Controlling Interests in Blackstone Holdings			3,499,552				3,439,537
Total Partners’ Capital			13,260,245				12,329,543
Total Liabilities and Partners’ Capital		$	31,761,987			$	26,403,337

continued

See notes to condensed consolidated financial statements.

5

THE BLACKSTONE GROUP L.P.

Condensed Consolidated Statements of Financial Condition (Unaudited)

(Dollars in Thousands)

The following presents the portion of the consolidated balances presented above, after intercompany eliminations, attributable to consolidated Blackstone Funds which are variable interest entities. The following assets may only be used to settle obligations of these consolidated Blackstone Funds and these liabilities are only the obligations of these consolidated Blackstone Funds and they do not have recourse to the general credit of Blackstone.

		September 30, 2017				December 31, 2016
Assets
Cash Held by Blackstone Funds and Other		$	1,475,964			$	740,760
Investments			10,261,638				6,459,355
Accounts Receivable			362,707				355,364
Due from Affiliates			27,709				21,300
Other Assets			4,048				2,602
Total Assets		$	12,132,066			$	7,579,381
Liabilities
Loans Payable		$	9,070,061			$	5,466,444
Due to Affiliates			75,696				72,609
Securities Sold, Not Yet Purchased			75,589				81,309
Repurchase Agreements			74,728				66,221
Accounts Payable, Accrued Expenses and Other Liabilities			959,576				545,481
Total Liabilities		$	10,255,650			$	6,232,064

See notes to condensed consolidated financial statements.

6

THE BLACKSTONE GROUP L.P.

Condensed Consolidated Statements of Operations (Unaudited)

(Dollars in Thousands, Except Unit and Per Unit Data)

		Three Months Ended September 30,								Nine Months Ended September 30,
		2017				2016				2017				2016
Revenues
Management and Advisory Fees, Net		$	680,641			$	596,154			$	2,009,369			$	1,812,883
Performance Fees
Realized
Carried Interest			369,309				503,990				2,082,725				1,058,633
Incentive Fees			101,186				30,295				189,151				88,155
Unrealized
Carried Interest			432,590				106,202				343,104				242,080
Incentive Fees			(9,241	)			30,545				98,403				45,900
Total Performance Fees			893,844				671,032				2,713,383				1,434,768
Investment Income
Realized			74,805				119,351				451,207				172,387
Unrealized			96,085				23,752				63,172				67,347
Total Investment Income			170,890				143,103				514,379				239,734
Interest and Dividend Revenue			36,974				21,819				99,172				67,180
Other			(35,572	)			(423	)			(99,448	)			1,900
Total Revenues			1,746,777				1,431,685				5,236,855				3,556,465
Expenses
Compensation and Benefits
Compensation			359,209				329,634				1,078,001				1,031,061
Performance Fee Compensation
Realized
Carried Interest			134,014				168,427				695,494				314,511
Incentive Fees			46,823				15,436				91,056				44,810
Unrealized
Carried Interest			187,158				70,044				257,271				175,247
Incentive Fees			(7,094	)			13,508				36,645				19,645
Total Compensation and Benefits			720,110				597,049				2,158,467				1,585,274
General, Administrative and Other			115,755				124,322				337,080				378,355
Interest Expense			41,545				37,278				122,880				111,512
Fund Expenses			26,350				15,128				100,095				28,949
Total Expenses			903,760				773,777				2,718,522				2,104,090
Other Income
Net Gains from Fund Investment Activities			63,448				61,395				239,634				111,240
Income Before Provision for Taxes			906,465				719,303				2,757,967				1,563,615
Provision for Taxes			59,512				27,714				146,557				84,275
Net Income			846,953				691,589				2,611,410				1,479,340
Net Income Attributable to Redeemable
Non-Controlling Interests in Consolidated Entities			3,215				10,764				6,206				2,314
Net Income Attributable to Non-Controlling
Interests in Consolidated Entities			113,446				82,653				365,075				187,468
Net Income Attributable to Non-Controlling
Interests in Blackstone Holdings			345,650				285,267				1,050,887				618,274
Net Income Attributable to The Blackstone Group L.P.		$	384,642			$	312,905			$	1,189,242			$	671,284
Net Income Per Common Unit
Common Units, Basic		$	0.58			$	0.48			$	1.79			$	1.04
Common Units, Diluted		$	0.56			$	0.47			$	1.76			$	1.01
Weighted-Average Common Units Outstanding
Common Units, Basic			667,384,727				650,917,510				664,331,632				647,595,189
Common Units, Diluted			1,200,502,292				1,195,805,315				1,200,092,676				1,194,862,252
Distributions Declared Per Common Unit		$	0.54			$	0.36			$	1.88			$	1.25
Revenues Earned from Affiliates
Management and Advisory Fees, Net		$	35,928			$	39,073			$	100,376			$	139,896

See notes to condensed consolidated financial statements.

7

THE BLACKSTONE GROUP L.P.

Condensed Consolidated Statements of Comprehensive Income (Unaudited)

(Dollars in Thousands)

		Three Months Ended September 30,								Nine Months Ended September 30,
		2017				2016				2017				2016
Net Income		$	846,953			$	691,589			$	2,611,410			$	1,479,340
Other Comprehensive Income, Net of Tax — Currency Translation Adjustment			26,761				1,138				73,354				12,982
Comprehensive Income			873,714				692,727				2,684,764				1,492,322
Less:
Comprehensive Income Attributable to Redeemable Non-Controlling Interests in Consolidated Entities			3,215				10,764				6,206				2,314
Comprehensive Income Attributable to Non-Controlling Interests in Consolidated Entities			127,149				85,375				409,963				195,401
Comprehensive Income Attributable to Non-Controlling Interests in Blackstone Holdings			345,650				285,267				1,050,887				618,274
Comprehensive Income Attributable to The Blackstone Group L.P.		$	397,700			$	311,321			$	1,217,708			$	676,333

See notes to condensed consolidated financial statements.

8

THE BLACKSTONE GROUP L.P.

Condensed Consolidated Statements of Changes in Partners’ Capital (Unaudited)

(Dollars in Thousands, Except Unit Data)

						The Blackstone Group L.P.
		Common Units				Partners’ Capital				Accumulated Other Compre- hensive Income (Loss)				Total				Non- Controlling Interests in Consolidated Entities				Non- Controlling Interests in Blackstone Holdings				Total Partners’ Capital				Redeemable Non- Controlling Interests in Consolidated Entities
Balance at December 31, 2016			643,459,542			$	6,523,929			$	(62,887	)		$	6,461,042			$	2,428,964			$	3,439,537			$	12,329,543			$	185,390
Net Income			—				1,189,242				—				1,189,242				365,075				1,050,887				2,605,204				6,206
Currency Translation Adjustment			—				—				28,466				28,466				44,888				—				73,354				—
Consolidation of a Fund Entity			—				—				—				—				387,006				—				387,006				—
Capital Contributions			—				—				—				—				507,001				—				507,001				30,294
Capital Distributions			—				(1,241,717	)			—				(1,241,717	)			(552,440	)			(1,068,553	)			(2,862,710	)			(20,513	)
Transfer of Non-Controlling Interests in Consolidated Entities			—				—				—				—				(5,814	)			—				(5,814	)			—
Deferred Tax Effects Resulting from Acquisition of Ownership Interests from Non-Controlling Interest Holders			—				7,992				—				7,992				—				—				7,992				—
Equity-Based Compensation			—				135,292				—				135,292				—				112,109				247,401				—
Net Delivery of Vested Blackstone Holdings Partnership Units and Blackstone Common Units			6,985,219				(27,027	)			—				(27,027	)			—				(1,705	)			(28,732	)			—
Change in The Blackstone Group L.P.’s Ownership Interest			—				(14,850	)			—				(14,850	)			—				14,850				—				—
Conversion of Blackstone Holdings Partnership Units to Blackstone Common Units			7,192,772				47,573				—				47,573				—				(47,573	)			—				—
Balance at September 30, 2017			657,637,533			$	6,620,434			$	(34,421	)		$	6,586,013			$	3,174,680			$	3,499,552			$	13,260,245			$	201,377

continued

See notes to condensed consolidated financial statements.

9

THE BLACKSTONE GROUP L.P.

Condensed Consolidated Statements of Changes in Partners’ Capital (Unaudited)

(Dollars in Thousands, Except Unit Data)

						The Blackstone Group L.P.
		Common Units				Partners’ Capital				Accumulated Other Compre- hensive Income (Loss)				Total				Non- Controlling Interests in Consolidated Entities				Non- Controlling Interests in Blackstone Holdings				Total Partners’ Capital				Redeemable Non- Controlling Interests in Consolidated Entities
Balance at December 31, 2015			624,450,162			$	6,322,307			$	(52,519	)		$	6,269,788			$	2,408,701			$	3,368,509			$	12,046,998			$	183,459
Net Income			—				671,284				—				671,284				187,468				618,274				1,477,026				2,314
Currency Translation Adjustment			—				—				5,049				5,049				7,933				—				12,982				—
Capital Contributions			—				—				—				—				242,773				—				242,773				15,000
Capital Distributions			—				(801,952	)			—				(801,952	)			(319,242	)			(707,129	)			(1,828,323	)			(6,623	)
Transfer of Non-Controlling Interests in Consolidated Entities			—				—				—				—				(7,915	)			—				(7,915	)			—
Deferred Tax Effects Resulting from Acquisition of Ownership Interests from Non-Controlling Interest Holders			—				2,250				—				2,250				—				—				2,250				—
Equity-Based Compensation			—				123,300				—				123,300				—				117,256				240,556				—
Net Delivery of Vested Blackstone Holdings Partnership Units and Blackstone Common Units			6,131,764				(26,426	)			—				(26,426	)			—				(36	)			(26,462	)			—
Change in The Blackstone Group L.P.’s Ownership Interest			—				7,929				—				7,929				—				(7,929	)			—				—
Conversion of Blackstone Holdings Partnership Units to Blackstone Common Units			7,669,834				46,100				—				46,100				—				(46,100	)			—				—
Balance at September 30, 2016			638,251,760			$	6,344,792			$	(47,470	)		$	6,297,322			$	2,519,718			$	3,342,845			$	12,159,885			$	194,150

See notes to condensed consolidated financial statements.

10

THE BLACKSTONE GROUP L.P.

Condensed Consolidated Statements of Cash Flows (Unaudited)

(Dollars in Thousands)

		Nine Months Ended September 30,
		2017				2016
Operating Activities
Net Income		$	2,611,410			$	1,479,340
Adjustments to Reconcile Net Income to Net Cash Provided by (Used in) Operating Activities
Blackstone Funds Related
Net Realized Gains on Investments			(2,833,208	)			(1,368,591	)
Change in Unrealized Gains on Investments			(71,122	)			(153,931	)
Non-Cash Performance Fees			(441,507	)			(166,283	)
Non-Cash Performance Fee Compensation			1,080,466				554,213
Equity-Based Compensation Expense			262,773				242,204
Amortization of Intangibles			32,891				67,328
Other Non-Cash Amounts Included in Net Income			209,605				53,920
Cash Flows Due to Changes in Operating Assets and Liabilities
Cash Held by Blackstone Funds and Other			(558,646	)			(509,486	)
Cash Relinquished in Deconsolidation and Liquidation of Fund Entity			(33,566	)			—
Accounts Receivable			141,312				145,131
Reverse Repurchase Agreements			118,495				115,567
Due from Affiliates			(386,037	)			21,484
Other Assets			237				(15,957	)
Accrued Compensation and Benefits			(594,610	)			(285,953	)
Securities Sold, Not Yet Purchased			(112,921	)			(7,253	)
Accounts Payable, Accrued Expenses and Other Liabilities			(735,929	)			(189,234	)
Repurchase Agreements			(597	)			21,153
Due to Affiliates			(15,433	)			22,324
Investments Purchased			(12,853,487	)			(4,511,740	)
Cash Proceeds from Sale of Investments			12,375,565				5,148,058
Net Cash Provided by (Used in) Operating Activities			(1,804,309	)			662,294
Investing Activities
Purchase of Furniture, Equipment and Leasehold Improvements			(20,405	)			(18,458	)
Changes in Restricted Cash			11,442				5,843
Net Cash Used in Investing Activities			(8,963	)			(12,615	)

continued

See notes to condensed consolidated financial statements.

11