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.
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.
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)
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 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.
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)
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 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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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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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. For credit-focused investments that
are not publicly traded or whose market prices are not readily available, Blackstone may utilize other valuation techniques, including the discounted cash flow method or a market approach. The discounted cash flow method projects the expected cash
flows of the debt instrument based on contractual terms, and discounts such cash flows back to the valuation date using a market-based yield. The market-based yield is estimated using yields of publicly traded debt instruments issued by companies
operating in similar industries as the subject investment, with similar leverage statistics and time to maturity.
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)
The market approach is generally used to determine the enterprise value of the issuer of
a credit investment, and considers valuation multiples of comparable companies or transactions. The resulting enterprise value will dictate whether or not such credit investment has adequate enterprise value coverage. In cases of distressed credit
instruments, the market approach may be used to estimate a recovery value in the event of a restructuring.
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.
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)
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 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
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)
(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.
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
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)
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 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.
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)
Distributions
Distributions are reflected in the condensed consolidated financial statements when declared.
Recent Accounting Developments
In May 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 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.
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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)
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, and accounting for forfeitures (the amended guidance permits an entity
to make an accounting policy election either to estimate the number of forfeitures expected to occur or to account for forfeitures when they occur). The amendments require all excess tax benefits and deficiencies related to share-based payment
transactions to be recognized through the Provision for Taxes in the Condensed Consolidated Statement of Operations. The amendments also require excess tax benefits related to share-based payment transactions to be presented as operating activities
in the Condensed Consolidated Statement of Cash Flows with employee taxes paid presented as a financing activity. The guidance is effective for annual periods beginning after December 15, 2016 and interim periods within those annual periods.
Blackstone has elected to early adopt the guidance for the quarter ended June 30, 2016 and any adjustments have been reflected prospectively as of January 1, 2016.
Blackstone has made an accounting policy election to continue estimating forfeitures in determining the number of equity-based awards that are expected to vest. Amendments relating to the recognition of
excess tax benefits and deficiencies in the Condensed Consolidated Statement of Operations and Condensed Consolidated Statement of Cash Flows have been applied prospectively. As a result, prior period amounts have not been restated. Application of
the guidance did not have a material impact on Blackstones Condensed Consolidated Statement of Operations or Condensed Consolidated Statement of Cash Flows.
In October 2016, the FASB issued amended guidance on consolidation. The amendments do not change the characteristics of a primary beneficiary, however, in evaluating whether an entity has the obligation
to absorb losses or receive benefits from the VIE that could potentially be significant to the VIE, an entity is now required to evaluate all indirect interests, including those held by a party under common control, on a proportionate basis. The
guidance is effective for fiscal years beginning after December 15, 2016. The guidance is not expected to have a material impact on Blackstones financial statements.
Intangible Assets, Net consists of the following:
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September 30,
2016
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December 31,
2015
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Finite-Lived Intangible Assets/Contractual Rights
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$
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1,424,226
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$
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1,424,226
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Accumulated Amortization
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(1,146,007
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)
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(1,078,679
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)
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Intangible Assets, Net
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$
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278,219
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$
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345,547
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|
|
|
|
|
|
|
Amortization expense associated with Blackstones intangible assets was $21.7 million and
$67.3 million for the three and nine month periods ended September 30, 2016, respectively, and $29.5 million and $77.9 million for the three and nine month periods ended September 30, 2015, respectively.
Amortization of Intangible Assets held at September 30, 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 September 30, 2016 are expected to
amortize over a weighted-average period of 6.3 years.
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)
Investments
consist of the following:
|
|
|
|
|
|
|
|
|
|
|
September 30,
2016
|
|
|
December 31,
2015
|
|
Investments of Consolidated Blackstone Funds
|
|
$
|
5,436,085
|
|
|
$
|
4,613,944
|
|
Equity Method Investments
|
|
|
3,110,320
|
|
|
|
3,110,810
|
|
Blackstones Treasury Cash Management Strategies
|
|
|
2,065,798
|
|
|
|
1,682,259
|
|
Performance Fees
|
|
|
5,078,448
|
|
|
|
4,757,932
|
|
Other Investments
|
|
|
267,283
|
|
|
|
159,152
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
15,957,934
|
|
|
$
|
14,324,097
|
|
|
|
|
|
|
|
|
|
|
Blackstones share of Investments of Consolidated Blackstone Funds totaled $440.1 million and
$451.9 million at September 30, 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 (Loss) Net Gains (Losses) from Fund Investment Activities in the Condensed Consolidated Statements of Operations:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
September 30,
|
|
|
Nine Months Ended
September 30,
|
|
|
|
2016
|
|
|
2015
|
|
|
2016
|
|
|
2015
|
|
Realized Gains
|
|
$
|
52,046
|
|
|
$
|
51,150
|
|
|
$
|
62,993
|
|
|
$
|
178,662
|
|
Net Change in Unrealized Losses
|
|
|
(26,764
|
)
|
|
|
(102,340
|
)
|
|
|
(35,112
|
)
|
|
|
(100,597
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Realized and Net Change in Unrealized Gains (Losses) from Consolidated Blackstone Funds
|
|
|
25,282
|
|
|
|
(51,190
|
)
|
|
|
27,881
|
|
|
|
78,065
|
|
Interest and Dividend Revenue Attributable to Consolidated Blackstone Funds
|
|
|
36,113
|
|
|
|
34,323
|
|
|
|
83,359
|
|
|
|
80,638
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Income (Loss) Net Gains (Losses) from Fund Investment Activities
|
|
$
|
61,395
|
|
|
$
|
(16,867
|
)
|
|
$
|
111,240
|
|
|
$
|
158,703
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 nine months ended September 30, 2016 and 2015, no individual equity method investment held
by Blackstone met the significance criteria. As such, Blackstone is not required to present summarized statement of operations information for any of its equity method investments.
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)
The Partnership recognized net gains (losses) related to its equity method investments
of $50.6 million and $(89.7) million for the three months ended September 30, 2016 and 2015, respectively. The Partnership recognized net gains related to its equity method investments of $120.3 million and $91.9 million for
the nine months ended September 30, 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 advisors. 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 September 30,
|
|
|
Nine Months Ended September 30,
|
|
|
|
2016
|
|
|
2015
|
|
|
2016
|
|
|
2015
|
|
Realized Losses
|
|
$
|
(3,159
|
)
|
|
$
|
(3,003
|
)
|
|
$
|
(12,404
|
)
|
|
$
|
(6,606
|
)
|
Net Change in Unrealized Gains (Losses)
|
|
|
17,689
|
|
|
|
(8,984
|
)
|
|
|
32,384
|
|
|
|
(12,922
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
14,530
|
|
|
$
|
(11,987
|
)
|
|
$
|
19,980
|
|
|
$
|
(19,528
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
|
|
|
417,842
|
|
|
|
733,818
|
|
|
|
6,282
|
|
|
|
170,355
|
|
|
|
1,328,297
|
|
Foreign Exchange Gain
|
|
|
|
|
|
|
13,604
|
|
|
|
|
|
|
|
|
|
|
|
13,604
|
|
Fund Distributions
|
|
|
(113,806
|
)
|
|
|
(863,685
|
)
|
|
|
(6,448
|
)
|
|
|
(37,446
|
)
|
|
|
(1,021,385
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Performance Fees, September 30, 2016
|
|
$
|
1,783,479
|
|
|
$
|
2,985,425
|
|
|
$
|
9,581
|
|
|
$
|
299,963
|
|
|
$
|
5,078,448
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 September 30,
|
|
|
Nine Months Ended September 30,
|
|
|
|
2016
|
|
|
2015
|
|
|
2016
|
|
|
2015
|
|
Realized Gains
|
|
$
|
83
|
|
|
$
|
1,282
|
|
|
$
|
4,560
|
|
|
$
|
1,274
|
|
Net Change in Unrealized Gains (Losses)
|
|
|
10,039
|
|
|
|
(2,779
|
)
|
|
|
7,087
|
|
|
|
(3,233
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
10,122
|
|
|
$
|
(1,497
|
)
|
|
$
|
11,647
|
|
|
$
|
(1,959
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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)
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 September 30, 2016 is presented below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Strategy
|
|
Fair Value
|
|
|
Unfunded
Commitments
|
|
|
Redemption
Frequency
(if currently
eligible)
|
|
|
Redemption
Notice
Period
|
|
Diversified Instruments
|
|
$
|
160,822
|
|
|
$
|
129
|
|
|
|
(a
|
)
|
|
|
(a
|
)
|
Credit Driven
|
|
|
205,315
|
|
|
|
268
|
|
|
|
(b
|
)
|
|
|
(b
|
)
|
Equity
|
|
|
65,008
|
|
|
|
|
|
|
|
(c
|
)
|
|
|
(c
|
)
|
Commodities
|
|
|
2,015
|
|
|
|
|
|
|
|
(d
|
)
|
|
|
(d
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
433,160
|
|
|
$
|
397
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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 45% 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 55% of investments in this category are redeemable as of the reporting date.
|
(c)
|
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.
|
(d)
|
The Commodities category includes investments in commodities-focused funds that primarily invest in futures and physical-based commodity driven strategies. Investments
representing 100% of the fair value of the investments in this category may not be redeemed at, or within three months of, the reporting date.
|
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.
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)
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 September 30, 2016 the resulting loss was $0.5 million. For the nine months ended September 30, 2016 the
resulting loss was $1.3 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.
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.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 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
|
|
$
|
53,402
|
|
|
$
|
62
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
53,627
|
|
|
$
|
319
|
|
|
$
|
138
|
|
|
$
|
1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Freestanding Derivatives
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Blackstone
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest Rate Contracts
|
|
|
1,823,069
|
|
|
|
1,185
|
|
|
|
465,455
|
|
|
|
4,816
|
|
|
|
1,681,533
|
|
|
|
2,212
|
|
|
|
1,054,465
|
|
|
|
4,288
|
|
Foreign Currency Contracts
|
|
|
665,112
|
|
|
|
3,348
|
|
|
|
201,135
|
|
|
|
1,161
|
|
|
|
158,684
|
|
|
|
2,088
|
|
|
|
271,891
|
|
|
|
2,042
|
|
Credit Default Swaps
|
|
|
|
|
|
|
|
|
|
|
7,274
|
|
|
|
634
|
|
|
|
|
|
|
|
|
|
|
|
19,250
|
|
|
|
2,411
|
|
Investments of Consolidated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Blackstone Funds
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign Currency Contracts
|
|
|
297,138
|
|
|
|
29,661
|
|
|
|
32,079
|
|
|
|
170
|
|
|
|
124,595
|
|
|
|
1,400
|
|
|
|
92,094
|
|
|
|
6,490
|
|
Credit Default Swaps
|
|
|
|
|
|
|
|
|
|
|
126,617
|
|
|
|
7,070
|
|
|
|
|
|
|
|
|
|
|
|
108,786
|
|
|
|
6,275
|
|
Other Assets of Consolidated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Blackstone Funds
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign Currency Contracts
|
|
|
10,479
|
|
|
|
1,670
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,795,798
|
|
|
|
35,864
|
|
|
|
832,560
|
|
|
|
13,851
|
|
|
|
1,964,812
|
|
|
|
5,700
|
|
|
|
1,546,486
|
|
|
|
21,506
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
2,849,200
|
|
|
$
|
35,926
|
|
|
$
|
832,560
|
|
|
$
|
13,851
|
|
|
$
|
2,018,439
|
|
|
$
|
6,019
|
|
|
$
|
1,546,624
|
|
|
$
|
21,507
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 table below summarizes the impact to the Condensed Consolidated Statements of
Operations from derivative financial instruments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
September 30,
|
|
|
Nine Months Ended
September 30,
|
|
|
|
2016
|
|
|
2015
|
|
|
2016
|
|
|
2015
|
|
Net Investment Hedges Foreign Currency Contracts
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hedge Ineffectiveness
|
|
$
|
|
|
|
$
|
|
|
|
$
|
(128
|
)
|
|
$
|
229
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Freestanding Derivatives
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Realized Gains (Losses)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest Rate Contracts
|
|
$
|
(3,493
|
)
|
|
$
|
(2,076
|
)
|
|
$
|
(10,305
|
)
|
|
$
|
(7,169
|
)
|
Foreign Currency Contracts
|
|
|
(4,704
|
)
|
|
|
53
|
|
|
|
(9,424
|
)
|
|
|
8,956
|
|
Credit Default Swaps
|
|
|
(241
|
)
|
|
|
646
|
|
|
|
(4,790
|
)
|
|
|
4,427
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
(8,438
|
)
|
|
$
|
(1,377
|
)
|
|
$
|
(24,519
|
)
|
|
$
|
6,214
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Freestanding Derivatives
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Change in Unrealized Gains (Losses)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest Rate Contracts
|
|
$
|
4,893
|
|
|
$
|
(7,282
|
)
|
|
$
|
(2,349
|
)
|
|
$
|
(3,321
|
)
|
Foreign Currency Contracts
|
|
|
13,801
|
|
|
|
1,796
|
|
|
|
37,992
|
|
|
|
(6,449
|
)
|
Credit Default Swaps
|
|
|
(719
|
)
|
|
|
(3,319
|
)
|
|
|
(4,201
|
)
|
|
|
(8,710
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
17,975
|
|
|
$
|
(8,805
|
)
|
|
$
|
31,442
|
|
|
$
|
(18,480
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of September 30, 2016 and December 31, 2015, the Partnership had not designated any
derivatives as cash flow hedges.
The
following table summarizes the financial instruments for which the fair value option has been elected:
|
|
|
|
|
|
|
|
|
|
|
September 30,
2016
|
|
|
December 31,
2015
|
|
Assets
|
|
|
|
|
|
|
|
|
Loans and Receivables
|
|
$
|
75,901
|
|
|
$
|
261,994
|
|
Equity and Preferred Securities
|
|
|
292,766
|
|
|
|
280,879
|
|
Debt Securities
|
|
|
13,841
|
|
|
|
15,176
|
|
Assets of Consolidated CLO Vehicles
|
|
|
|
|
|
|
|
|
Corporate Loans
|
|
|
3,857,058
|
|
|
|
3,087,563
|
|
Corporate Bonds
|
|
|
473,275
|
|
|
|
379,000
|
|
Other
|
|
|
24,627
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
4,737,468
|
|
|
$
|
4,024,612
|
|
|
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
|
Liabilities of Consolidated CLO Vehicles
|
|
|
|
|
|
|
|
|
Senior Secured Notes
|
|
$
|
4,263,747
|
|
|
$
|
3,225,064
|
|
Subordinated Notes
|
|
|
184,475
|
|
|
|
98,371
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
4,448,222
|
|
|
$
|
3,323,435
|
|
|
|
|
|
|
|
|
|
|
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 the Realized and Net Change in Unrealized Gains (Losses) on
financial instruments on which the fair value option was elected:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30,
|
|
|
|
2016
|
|
|
2015
|
|
|
|
Realized
Gains (Losses)
|
|
|
Net Change
in Unrealized
Gains (Losses)
|
|
|
Realized
Gains (Losses)
|
|
|
Net Change
in
Unrealized
Gains (Losses)
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans and Receivables
|
|
$
|
|
|
|
$
|
298
|
|
|
$
|
|
|
|
$
|
(1,235
|
)
|
Equity and Preferred Securities
|
|
|
27
|
|
|
|
10,200
|
|
|
|
(36
|
)
|
|
|
(3,749
|
)
|
Debt Securities
|
|
|
|
|
|
|
(281
|
)
|
|
|
|
|
|
|
(342
|
)
|
Assets of Consolidated CLO Vehicles
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate Loans
|
|
|
16,672
|
|
|
|
33,071
|
|
|
|
2,578
|
|
|
|
(38,888
|
)
|
Corporate Bonds
|
|
|
(662
|
)
|
|
|
7,491
|
|
|
|
(988
|
)
|
|
|
(4,578
|
)
|
Other
|
|
|
(2,643
|
)
|
|
|
|
|
|
|
1,003
|
|
|
|
(305
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
13,394
|
|
|
$
|
50,779
|
|
|
$
|
2,557
|
|
|
$
|
(49,097
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities of Consolidated CLO Vehicles
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Subordinated Notes
|
|
$
|
|
|
|
$
|
(56,690
|
)
|
|
$
|
|
|
|
$
|
34,235
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended September 30,
|
|
|
|
2016
|
|
|
2015
|
|
|
|
Realized
Gains (Losses)
|
|
|
Net Change
in Unrealized
Gains (Losses)
|
|
|
Realized
Gains (Losses)
|
|
|
Net Change
in Unrealized
Gains (Losses)
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans and Receivables
|
|
$
|
|
|
|
$
|
(2,395
|
)
|
|
$
|
|
|
|
$
|
(1,832
|
)
|
Equity and Preferred Securities
|
|
|
(266
|
)
|
|
|
11,624
|
|
|
|
(273
|
)
|
|
|
(11,240
|
)
|
Debt Securities
|
|
|
|
|
|
|
(1,335
|
)
|
|
|
|
|
|
|
(342
|
)
|
Assets of Consolidated CLO Vehicles
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate Loans
|
|
|
(12,288
|
)
|
|
|
70,592
|
|
|
|
(2,269
|
)
|
|
|
1,993
|
|
Corporate Bonds
|
|
|
(225
|
)
|
|
|
6,548
|
|
|
|
(867
|
)
|
|
|
(62
|
)
|
Other
|
|
|
(2,377
|
)
|
|
|
|
|
|
|
4,276
|
|
|
|
(3,636
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
(15,156
|
)
|
|
$
|
85,034
|
|
|
$
|
867
|
|
|
$
|
(15,119
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities of Consolidated CLO Vehicles
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Subordinated Notes
|
|
$
|
|
|
|
$
|
(58,558
|
)
|
|
$
|
|
|
|
$
|
23,997
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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)
The following table presents information for those financial instruments for which the
fair value option was elected:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2016
|
|
|
December 31, 2015
|
|
|
|
|
|
|
For Financial Assets
Past Due (a)
|
|
|
|
|
|
For Financial Assets
Past Due
(a)
|
|
|
|
Excess
(Deficiency)
of Fair Value
Over Principal
|
|
|
Fair
Value
|
|
|
Excess
of Fair
Value
Over Principal
|
|
|
(Deficiency)
of Fair Value
Over Principal
|
|
|
Fair
Value
|
|
|
(Deficiency)
of Fair Value
Over Principal
|
|
Loans and Receivables
|
|
$
|
(11,587
|
)
|
|
$
|
|
|
|
$
|
|
|
|
$
|
(8,845
|
)
|
|
$
|
|
|
|
$
|
|
|
Debt Securities
|
|
|
(1,761
|
)
|
|
|
|
|
|
|
|
|
|
|
(426
|
)
|
|
|
|
|
|
|
|
|
Assets of Consolidated CLO Vehicles
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate Loans
|
|
|
3,330
|
|
|
|
|
|
|
|
|
|
|
|
(77,900
|
)
|
|
|
1,088
|
|
|
|
(5,620
|
)
|
Corporate Bonds
|
|
|
(2,111
|
)
|
|
|
|
|
|
|
|
|
|
|
(6,046
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
(12,129
|
)
|
|
$
|
|
|
|
$
|
|
|
|
$
|
(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 September 30, 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.
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)
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:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2016
|
|
|
|
Level I
|
|
|
Level II
|
|
|
Level III
|
|
|
NAV
|
|
|
Total
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investments of Consolidated Blackstone Funds (a)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment Funds
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
157,430
|
|
|
$
|
157,430
|
|
Equity Securities
|
|
|
50,551
|
|
|
|
50,244
|
|
|
|
90,240
|
|
|
|
|
|
|
|
191,035
|
|
Partnership and LLC Interests
|
|
|
27,897
|
|
|
|
64,924
|
|
|
|
392,381
|
|
|
|
|
|
|
|
485,202
|
|
Debt Instruments
|
|
|
|
|
|
|
210,054
|
|
|
|
7,743
|
|
|
|
|
|
|
|
217,797
|
|
Assets of Consolidated CLO Vehicles
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate Loans
|
|
|
|
|
|
|
3,611,059
|
|
|
|
245,999
|
|
|
|
|
|
|
|
3,857,058
|
|
Corporate Bonds
|
|
|
|
|
|
|
473,275
|
|
|
|
|
|
|
|
|
|
|
|
473,275
|
|
Freestanding Derivatives Foreign Currency Contracts
|
|
|
|
|
|
|
29,661
|
|
|
|
|
|
|
|
|
|
|
|
29,661
|
|
Other
|
|
|
|
|
|
|
|
|
|
|
24,627
|
|
|
|
|
|
|
|
24,627
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Investments of Consolidated Blackstone Funds
|
|
|
78,448
|
|
|
|
4,439,217
|
|
|
|
760,990
|
|
|
|
157,430
|
|
|
|
5,436,085
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Blackstones Treasury Cash Management Strategies
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity Securities
|
|
|
149,040
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
149,040
|
|
Debt Instruments
|
|
|
|
|
|
|
1,621,709
|
|
|
|
38,200
|
|
|
|
53,766
|
|
|
|
1,713,675
|
|
Other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
203,083
|
|
|
|
203,083
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Blackstones Treasury Cash Management Strategies
|
|
|
149,040
|
|
|
|
1,621,709
|
|
|
|
38,200
|
|
|
|
256,849
|
|
|
|
2,065,798
|
|
Money Market Funds
|
|
|
393,897
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
393,897
|
|
Net Investment Hedges Foreign Currency Contracts
|
|
|
|
|
|
|
62
|
|
|
|
|
|
|
|
|
|
|
|
62
|
|
Freestanding Derivatives
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest Rate Contracts
|
|
|
737
|
|
|
|
448
|
|
|
|
|
|
|
|
|
|
|
|
1,185
|
|
Foreign Currency Contracts
|
|
|
|
|
|
|
3,348
|
|
|
|
|
|
|
|
|
|
|
|
3,348
|
|
Other Assets of Consolidated Blackstone Funds
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Freestanding Derivatives Foreign Currency Contracts
|
|
|
|
|
|
|
1,670
|
|
|
|
|
|
|
|
|
|
|
|
1,670
|
|
Loans and Receivables
|
|
|
|
|
|
|
|
|
|
|
75,901
|
|
|
|
|
|
|
|
75,901
|
|
Other Investments
|
|
|
143,877
|
|
|
|
|
|
|
|
104,525
|
|
|
|
18,881
|
|
|
|
267,283
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
765,999
|
|
|
$
|
6,066,454
|
|
|
$
|
979,616
|
|
|
$
|
433,160
|
|
|
$
|
8,245,229
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2016
|
|
|
|
Level I
|
|
|
Level II
|
|
|
Level III
|
|
|
Total
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities of Consolidated CLO Vehicles (a)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Senior Secured Notes (b)
|
|
$
|
|
|
|
$
|
4,263,747
|
|
|
$
|
|
|
|
$
|
4,263,747
|
|
Subordinated Notes (b)
|
|
|
|
|
|
|
184,475
|
|
|
|
|
|
|
|
184,475
|
|
Freestanding Derivatives Foreign Currency Contracts
|
|
|
|
|
|
|
170
|
|
|
|
|
|
|
|
170
|
|
Liabilities of Consolidated Blackstone Funds
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Freestanding Derivatives Credit Default Swaps
|
|
|
|
|
|
|
7,070
|
|
|
|
|
|
|
|
7,070
|
|
Freestanding Derivatives
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest Rate Contracts
|
|
|
862
|
|
|
|
3,954
|
|
|
|
|
|
|
|
4,816
|
|
Foreign Currency Contracts
|
|
|
|
|
|
|
1,161
|
|
|
|
|
|
|
|
1,161
|
|
Credit Default Swaps
|
|
|
|
|
|
|
634
|
|
|
|
|
|
|
|
634
|
|
Securities Sold, Not Yet Purchased
|
|
|
|
|
|
|
176,218
|
|
|
|
|
|
|
|
176,218
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
862
|
|
|
$
|
4,637,429
|
|
|
$
|
|
|
|
$
|
4,638,291
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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 September 30, 2016 and 2015, respectively:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
September 30,
|
|
|
Nine Months Ended
September 30,
|
|
|
|
2016
|
|
|
2015
|
|
|
2016
|
|
|
2015
|
|
Transfers from Level I into Level II (a)
|
|
$
|
|
|
|
$
|
287
|
|
|
$
|
2,114
|
|
|
$
|
287
|
|
Transfers from Level II into Level I (b)
|
|
$
|
|
|
|
$
|
26,534
|
|
|
$
|
28,346
|
|
|
$
|
32,312
|
|
(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.
|
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)
The following table summarizes the quantitative inputs and assumptions used for items
categorized in Level III of the fair value hierarchy as of September 30, 2016:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair Value
|
|
|
Valuation
Techniques
|
|
|
Unobservable
Inputs
|
|
|
Ranges
|
|
|
Weighted-
Average (a)
|
|
Financial Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investments of Consolidated Blackstone Funds
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity Securities
|
|
$
|
67,923
|
|
|
|
Discounted Cash Flows
|
|
|
|
Discount Rate
|
|
|
|
7.4% - 29.1%
|
|
|
|
12.6%
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue CAGR
|
|
|
|
0.0% - 20.6%
|
|
|
|
7.2%
|
|
|
|
|
|
|
|
|
|
|
|
|
Exit Multiple - EBITDA
|
|
|
|
4.0x - 19.0x
|
|
|
|
9.7x
|
|
|
|
|
|
|
|
|
|
|
|
|
Exit Multiple -P/E
|
|
|
|
10.5x - 17.0x
|
|
|
|
11.4x
|
|
|
|
|
|
|
|
|
|
|
|
|
Exit Capitalization Rate
|
|
|
|
5.3% - 11.4%
|
|
|
|
8.6%
|
|
|
|
|
13,330
|
|
|
|
Other
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
|
7,091
|
|
|
|
Transaction Price
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
|
1,879
|
|
|
|
Market Comparable Companies
|
|
|
|
Book Value Multiple
|
|
|
|
0.8x
|
|
|
|
N/A
|
|
|
|
|
17
|
|
|
|
Third Party Pricing
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
|
|
|
|
Partnership and LLC Interests
|
|
|
350,281
|
|
|
|
Discounted Cash Flows
|
|
|
|
Discount Rate
|
|
|
|
2.0% - 29.4%
|
|
|
|
9.8%
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue CAGR
|
|
|
|
-38.5% - 42.2%
|
|
|
|
7.0%
|
|
|
|
|
|
|
|
|
|
|
|
|
Exit Multiple - EBITDA
|
|
|
|
0.1x - 23.5x
|
|
|
|
9.0x
|
|
|
|
|
|
|
|
|
|
|
|
|
Exit Multiple - P/E
|
|
|
|
9.3x
|
|
|
|
N/A
|
|
|
|
|
|
|
|
|
|
|
|
|
Exit Capitalization Rate
|
|
|
|
3.0% - 10.7%
|
|
|
|
6.0%
|
|
|
|
|
18,160
|
|
|
|
Transaction Price
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
|
16,589
|
|
|
|
Third Party Pricing
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
|
7,351
|
|
|
|
Other
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
|
|
|
|
Debt Instruments
|
|
|
4,306
|
|
|
|
Third Party Pricing
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
|
3,437
|
|
|
|
Discounted Cash Flows
|
|
|
|
Discount Rate
|
|
|
|
8.3% - 77.9%
|
|
|
|
12.1%
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue CAGR
|
|
|
|
6.8%
|
|
|
|
N/A
|
|
|
|
|
|
|
|
|
|
|
|
|
Exit Multiple - EBITDA
|
|
|
|
12.0x
|
|
|
|
N/A
|
|
|
|
|
|
|
|
|
|
|
|
|
Exit Capitalization Rate
|
|
|
|
8.3%
|
|
|
|
N/A
|
|
Assets of Consolidated
CLO Vehicles
|
|
|
244,175
|
|
|
|
Third Party Pricing
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
|
24,627
|
|
|
|
Transaction Price
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
|
1,824
|
|
|
|
Market Comparable Companies
|
|
|
|
EBITDA Multiple
|
|
|
|
6.0x
|
|
|
|
N/A
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Investments of Consolidated Blackstone Funds
|
|
|
760,990
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
continued
33
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
|
|
$
|
9,239
|
|
|
|
Discounted Cash Flows
|
|
|
|
Default Rate
|
|
|
|
1.0% - 2.0%
|
|
|
|
1.9%
|
|
|
|
|
|
|
|
|
|
|
|
|
Recovery Rate
|
|
|
|
16.5% - 79.1%
|
|
|
|
67.4%
|
|
|
|
|
|
|
|
|
|
|
|
|
Recovery Lag
|
|
|
|
12 months
|
|
|
|
N/A
|
|
|
|
|
|
|
|
|
|
|
|
|
Pre-payment Rate
|
|
|
|
20.0%
|
|
|
|
N/A
|
|
|
|
|
|
|
|
|
|
|
|
|
Reinvestment Rate
|
|
|
|
LIBOR + 350 bps -
|
|
|
|
LIBOR + 390 bps
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIBOR + 400 bps
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Discount Rate
|
|
|
|
7.3% - 11.2%
|
|
|
|
8.4%
|
|
|
|
|
28,961
|
|
|
|
Third Party Pricing
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
|
|
|
|
Loans and Receivables
|
|
|
46,338
|
|
|
|
Discounted Cash Flows
|
|
|
|
Discount Rate
|
|
|
|
6.8% - 16.1%
|
|
|
|
10.0%
|
|
|
|
|
29,563
|
|
|
|
Third Party Pricing
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
|
|
|
|
Other Investments
|
|
|
83,971
|
|
|
|
Discounted Cash Flows
|
|
|
|
Discount Rate
|
|
|
|
1.3% - 15.8%
|
|
|
|
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
|
|
|
|
|
20,554
|
|
|
|
Transaction Price
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
979,616
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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)
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 Companies
|
|
|
EBITDA Multiple
|
|
|
6.5x - 8.0x
|
|
6.6x
|
|
|
|
|
|
|
|
|
|
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
|
|
|
|
|
|
|
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
|
|
|
|
|
|
|
|
|
|
|
|
continued
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)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair Value
|
|
|
Valuation
Techniques
|
|
Unobservable
Inputs
|
|
|
Ranges
|
|
Weighted-
Average (a)
|
|
|
|
|
|
|
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
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
N/A
|
|
Not applicable.
|
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 unadjusted prices between market participants provided by reputable dealers or pricing services.
|
Transaction Price
|
|
Includes recent acquisitions or transactions.
|
(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 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.
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)
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 September 30,
|
|
|
|
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
|
|
$
|
706,432
|
|
|
$
|
207,519
|
|
|
$
|
128,054
|
|
|
$
|
1,042,005
|
|
|
$
|
937,149
|
|
|
$
|
36,440
|
|
|
$
|
151,734
|
|
|
$
|
1,125,323
|
|
Transfer In to Level III (b)
|
|
|
50,836
|
|
|
|
|
|
|
|
5,188
|
|
|
|
56,024
|
|
|
|
43,920
|
|
|
|
|
|
|
|
5,194
|
|
|
|
49,114
|
|
Transfer Out of Level III (b)
|
|
|
(41,852
|
)
|
|
|
|
|
|
|
(5,917
|
)
|
|
|
(47,769
|
)
|
|
|
(143,531
|
)
|
|
|
|
|
|
|
(9,171
|
)
|
|
|
(152,702
|
)
|
Purchases
|
|
|
174,939
|
|
|
|
44,988
|
|
|
|
12,454
|
|
|
|
232,381
|
|
|
|
122,676
|
|
|
|
144,058
|
|
|
|
5,240
|
|
|
|
271,974
|
|
Sales
|
|
|
(151,701
|
)
|
|
|
(175,914
|
)
|
|
|
(284
|
)
|
|
|
(327,899
|
)
|
|
|
(139,229
|
)
|
|
|
|
|
|
|
(2,792
|
)
|
|
|
(142,021
|
)
|
Settlements
|
|
|
|
|
|
|
(2,983
|
)
|
|
|
(140
|
)
|
|
|
(3,123
|
)
|
|
|
|
|
|
|
(1,405
|
)
|
|
|
(140
|
)
|
|
|
(1,545
|
)
|
Changes in Gains (Losses) Included in Earnings and Other Comprehensive Income (Loss)
|
|
|
22,336
|
|
|
|
2,291
|
|
|
|
3,370
|
|
|
|
27,997
|
|
|
|
16,871
|
|
|
|
162
|
|
|
|
(1,768
|
)
|
|
|
15,265
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, End of Period
|
|
$
|
760,990
|
|
|
$
|
75,901
|
|
|
$
|
142,725
|
|
|
$
|
979,616
|
|
|
$
|
837,856
|
|
|
$
|
179,255
|
|
|
$
|
148,297
|
|
|
$
|
1,165,408
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Changes in Unrealized Gains (Losses) Included in Earnings Related to Investments Still Held at the Reporting Date
|
|
$
|
(16,130
|
)
|
|
$
|
2,292
|
|
|
$
|
2,627
|
|
|
$
|
(11,211
|
)
|
|
$
|
(41,807
|
)
|
|
$
|
162
|
|
|
$
|
(1,837
|
)
|
|
$
|
(43,482
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Level III Financial Assets at Fair Value
Nine Months Ended September 30,
|
|
|
|
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)
|
|
|
76,564
|
|
|
|
|
|
|
|
14,515
|
|
|
|
91,079
|
|
|
|
47,035
|
|
|
|
|
|
|
|
25,092
|
|
|
|
72,127
|
|
Transfer Out of Level III (b)
|
|
|
(80,550
|
)
|
|
|
|
|
|
|
(16,121
|
)
|
|
|
(96,671
|
)
|
|
|
(181,429
|
)
|
|
|
|
|
|
|
(56,336
|
)
|
|
|
(237,765
|
)
|
Purchases
|
|
|
266,229
|
|
|
|
348,645
|
|
|
|
19,427
|
|
|
|
634,301
|
|
|
|
304,012
|
|
|
|
150,244
|
|
|
|
38,579
|
|
|
|
492,835
|
|
Sales
|
|
|
(305,502
|
)
|
|
|
(531,165
|
)
|
|
|
(30,975
|
)
|
|
|
(867,642
|
)
|
|
|
(321,121
|
)
|
|
|
(9,535
|
)
|
|
|
(39,765
|
)
|
|
|
(370,421
|
)
|
Settlements
|
|
|
|
|
|
|
(8,157
|
)
|
|
|
(394
|
)
|
|
|
(8,551
|
)
|
|
|
|
|
|
|
(3,485
|
)
|
|
|
(358
|
)
|
|
|
(3,843
|
)
|
Changes in Gains (Losses) Included in Earnings and Other Comprehensive Income (Loss)
|
|
|
29,857
|
|
|
|
4,584
|
|
|
|
432
|
|
|
|
34,873
|
|
|
|
55,074
|
|
|
|
1,634
|
|
|
|
(8,300
|
)
|
|
|
48,408
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, End of Period
|
|
$
|
760,990
|
|
|
$
|
75,901
|
|
|
$
|
142,725
|
|
|
$
|
979,616
|
|
|
$
|
837,856
|
|
|
$
|
179,255
|
|
|
$
|
148,297
|
|
|
$
|
1,165,408
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Changes in Unrealized Gains (Losses) Included in Earnings Related to Investments Still Held at the Reporting Date
|
|
$
|
(32,299
|
)
|
|
$
|
4,626
|
|
|
$
|
2,581
|
|
|
$
|
(25,092
|
)
|
|
$
|
(25,614
|
)
|
|
$
|
1,505
|
|
|
$
|
(329
|
)
|
|
$
|
(24,438
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Level III Financial Liabilities at Fair Value
|
|
|
|
Three Months Ended September 30, 2015 (c)
|
|
|
Nine Months Ended September 30, 2015 (c)
|
|
|
|
Collateralized
Loan
Obligations
Senior
Notes
|
|
|
Collateralized
Loan
Obligations
Subordinated
Notes
|
|
|
Total
|
|
|
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 and nine months ended September 30, 2016. There were no changes in unrealized (gains) losses
included in earnings related to liabilities still held at either September 30, 2016 or September 30, 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.
|
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)
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.
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:
|
|
|
|
|
|
|
|
|
|
|
September 30,
|
|
|
December 31,
|
|
|
|
2016
|
|
|
2015
|
|
Investments
|
|
$
|
657,065
|
|
|
$
|
466,651
|
|
Accounts Receivable
|
|
|
12,549
|
|
|
|
11,726
|
|
Due from Affiliates
|
|
|
35,535
|
|
|
|
51,029
|
|
|
|
|
|
|
|
|
|
|
Total VIE Assets
|
|
|
705,149
|
|
|
|
529,406
|
|
Due to Affiliates
|
|
|
791
|
|
|
|
586
|
|
Accounts Payable, Accrued Expenses and Other Liabilities
|
|
|
183
|
|
|
|
88
|
|
Potential Clawback Obligation
|
|
|
86,675
|
|
|
|
73,450
|
|
|
|
|
|
|
|
|
|
|
Maximum Exposure to Loss
|
|
$
|
792,798
|
|
|
$
|
603,530
|
|
|
|
|
|
|
|
|
|
|
10.
|
REVERSE REPURCHASE AND REPURCHASE AGREEMENTS
|
At September 30, 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
$88.6 million as collateral for reverse repurchase agreements that could be repledged, delivered or otherwise used. Securities with a fair value of $50.6 million and cash were used to cover Securities Sold, Not Yet Purchased. The
Partnership also pledged securities with a carrying value of $96.1 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.
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)
The following table provides information regarding the Partnerships Repurchase
Agreements obligation by type of collateral pledged as of September 30, 2016:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2016
|
|
|
|
Remaining Contractual Maturity of the Agreements
|
|
|
|
Overnight and
Continuous
|
|
|
Up to
30 Days
|
|
|
30 - 90
Days
|
|
|
Greater than
90 days
|
|
|
Total
|
|
Repurchase Agreements
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Treasury and Agency Securities
|
|
$
|
3,261
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
3,261
|
|
Asset-Backed Securities
|
|
|
|
|
|
|
8,617
|
|
|
|
46,101
|
|
|
|
4,116
|
|
|
|
58,834
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
3,261
|
|
|
$
|
8,617
|
|
|
$
|
46,101
|
|
|
$
|
4,116
|
|
|
$
|
62,095
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross Amount of Recognized Liabilities for Repurchase Agreements in Note 11. Offsetting of Assets and
Liabilities
|
|
|
$
|
62,095
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amounts Related to Agreements Not Included in Offsetting Disclosure in Note 11. Offsetting of Assets and
Liabilities
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11.
|
OFFSETTING OF ASSETS AND LIABILITIES
|
The following tables present the offsetting of assets and liabilities as of September 30, 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
|
|
$
|
62
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
62
|
|
Freestanding Derivatives
|
|
|
6,203
|
|
|
|
1,090
|
|
|
|
5,004
|
|
|
|
109
|
|
Reverse Repurchase Agreements
|
|
|
89,326
|
|
|
|
88,644
|
|
|
|
|
|
|
|
682
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
95,591
|
|
|
$
|
89,734
|
|
|
$
|
5,004
|
|
|
$
|
853
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Freestanding Derivatives
|
|
$
|
13,681
|
|
|
$
|
1,090
|
|
|
$
|
11,581
|
|
|
$
|
1,010
|
|
Repurchase Agreements
|
|
|
62,095
|
|
|
|
58,947
|
|
|
|
3,149
|
|
|
|
(1
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
75,776
|
|
|
$
|
60,037
|
|
|
$
|
14,730
|
|
|
$
|
1,009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 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
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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:
|
|
|
|
|
|
|
|
|
|
|
September 30, 2016
|
|
|
December 31, 2015
|
|
Furniture, Equipment and Leasehold Improvements, Net
|
|
$
|
135,260
|
|
|
$
|
135,543
|
|
Prepaid Expenses
|
|
|
154,732
|
|
|
|
190,241
|
|
Other Assets
|
|
|
77,222
|
|
|
|
46,786
|
|
Freestanding Derivatives
|
|
|
6,203
|
|
|
|
4,300
|
|
Net Investment Hedges
|
|
|
62
|
|
|
|
319
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
373,479
|
|
|
$
|
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.
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)
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 September 30, 2016, the aggregate cash balance on deposit relating to the cash pooling arrangement was $1.2 billion, which was fully offset with an accompanying overdraft.
On
August 31, 2016, Blackstone Holdings Finance Co. L.L.C. (the Issuer), an indirect subsidiary of the Partnership, entered into an amendment to the Issuers revolving credit facility (the Credit Facility) with
Citibank, N.A., as Administrative Agent. The amendment, among other things, increased the amount of the Credit Facility from $1.1 billion to $1.5 billion and extended the maturity date of the Credit Facility from May 29, 2019 to
August 31, 2021.
On October 5, 2016, the Issuer issued 600 million aggregate principal amount of senior notes
maturing October 5, 2026 (the 2026 Notes). The 2026 Notes have an interest rate of 1.000% per annum, accruing from October 5, 2016. Interest is payable annually in arrears on October 5 of each year, commencing on
October 5, 2017. The 2026 Notes are unsecured and unsubordinated obligations of the Issuer. The 2026 Notes are fully and unconditionally guaranteed, jointly and severally, by the Partnership and its indirect subsidiaries, 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. (the Guarantors). The guarantees are unsecured and unsubordinated obligations of the Guarantors. Transaction
costs related to the issuance of the 2026 Notes have been capitalized and are being amortized over the life of the 2026 Notes. The 2026 Notes are not included in the September 30, 2016 Condensed Consolidated Statement of Financial Condition.
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.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2016
|
|
|
December 31, 2015
|
|
Senior Notes
|
|
Carrying
Value
|
|
|
Fair
Value (a)
|
|
|
Carrying
Value
|
|
|
Fair
Value (a)
|
|
6.625%, Due 8/15/2019 (b)
|
|
$
|
609,129
|
|
|
$
|
662,220
|
|
|
$
|
614,996
|
|
|
$
|
665,438
|
|
5.875%, Due 3/15/2021
|
|
|
398,007
|
|
|
|
462,080
|
|
|
|
397,720
|
|
|
|
458,680
|
|
4.750%, Due 2/15/2023
|
|
|
392,921
|
|
|
|
444,520
|
|
|
|
392,224
|
|
|
|
430,560
|
|
6.250%, Due 8/15/2042
|
|
|
237,784
|
|
|
|
312,600
|
|
|
|
237,648
|
|
|
|
297,575
|
|
5.000%, Due 6/15/2044
|
|
|
488,288
|
|
|
|
548,050
|
|
|
|
488,119
|
|
|
|
515,050
|
|
4.450%, Due 7/15/2045
|
|
|
343,789
|
|
|
|
355,320
|
|
|
|
343,689
|
|
|
|
332,640
|
|
2.000%, Due 5/19/2025
|
|
|
331,535
|
|
|
|
365,444
|
|
|
|
322,664
|
|
|
|
327,465
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
2,801,453
|
|
|
$
|
3,150,234
|
|
|
$
|
2,797,060
|
|
|
$
|
3,027,408
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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.
|
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)
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:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 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
|
|
$
|
4,648,050
|
|
|
|
1.93
|
%
|
|
|
4.9
|
|
|
$
|
3,687,976
|
|
|
|
1.93
|
%
|
|
|
5.4
|
|
Subordinated Notes
|
|
|
221,865
|
|
|
|
(a
|
)
|
|
|
N/A
|
|
|
|
226,350
|
|
|
|
(a
|
)
|
|
|
N/A
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
4,869,915
|
|
|
|
|
|
|
|
|
|
|
$
|
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:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 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
|
|
$
|
4,263,747
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
3,225,064
|
|
|
$
|
|
|
|
$
|
|
|
Subordinated Notes
|
|
|
184,475
|
|
|
|
10,000
|
|
|
|
7,978
|
|
|
|
98,371
|
|
|
|
10,000
|
|
|
|
8,231
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
4,448,222
|
|
|
$
|
10,000
|
|
|
$
|
7,978
|
|
|
$
|
3,323,435
|
|
|
$
|
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 September 30, 2016 and December 31, 2015, the fair value of the consolidated CLO assets was $5.3 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 September 30, 2016 were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
Borrowings
|
|
|
Blackstone Fund
Facilities/CLO
Vehicles
|
|
|
Total
Borrowings
|
|
2016
|
|
$
|
|
|
|
$
|
2,937
|
|
|
$
|
2,937
|
|
2017
|
|
|
|
|
|
|
533,045
|
|
|
|
533,045
|
|
2018
|
|
|
|
|
|
|
|
|
|
|
|
|
2019
|
|
|
585,000
|
|
|
|
|
|
|
|
585,000
|
|
2020
|
|
|
|
|
|
|
|
|
|
|
|
|
Thereafter
|
|
|
2,236,660
|
|
|
|
4,336,870
|
|
|
|
6,573,530
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
2,821,660
|
|
|
$
|
4,872,852
|
|
|
$
|
7,694,512
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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)
Blackstones effective tax rate was 3.9% and -0.3% for the three months ended September 30, 2016 and 2015, respectively, and
5.4% and 10.5% for the nine months ended September 30, 2016 and 2015, respectively. Blackstones income tax provision was $27.7 million and $1.6 million for the three months ended September 30, 2016 and 2015, respectively,
and $84.3 million and $144.2 million for the nine months ended September 30, 2016 and 2015, respectively.
The
Blackstone Group L.P. and certain of its subsidiaries operate in the U.S. as partnerships for income tax purposes (partnerships generally are not subject to federal income taxes) and generally as corporate entities in non-U.S. jurisdictions.
Blackstones effective tax rate for the three and nine months ended September 30, 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 (LOSS) PER COMMON UNIT
|
Basic and diluted net income (loss) per common unit for the three and nine months ended September 30, 2016 and September 30, 2015 was calculated as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
September 30,
|
|
|
Nine Months Ended
September 30,
|
|
|
|
2016
|
|
|
2015
|
|
|
2016
|
|
|
2015
|
|
Net Income (Loss) for Per Common Unit Calculation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income (Loss) Attributable to The Blackstone Group L.P., Basic
|
|
$
|
312,905
|
|
|
$
|
(254,697
|
)
|
|
$
|
671,284
|
|
|
$
|
508,919
|
|
Incremental Net Income from Assumed Exchange of Blackstone Holdings Partnership Units
|
|
|
246,086
|
|
|
|
|
|
|
|
532,116
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income (Loss) Attributable to The Blackstone Group L.P., Diluted
|
|
$
|
558,991
|
|
|
$
|
(254,697
|
)
|
|
$
|
1,203,400
|
|
|
$
|
508,919
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Units Outstanding
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-Average Common Units Outstanding, Basic
|
|
|
650,917,510
|
|
|
|
638,832,799
|
|
|
|
647,595,189
|
|
|
|
632,046,646
|
|
Weighted-Average Unvested Deferred Restricted Common Units
|
|
|
1,495,331
|
|
|
|
|
|
|
|
1,379,168
|
|
|
|
3,393,182
|
|
Weighted-Average Blackstone Holdings Partnership Units
|
|
|
543,392,474
|
|
|
|
|
|
|
|
545,887,895
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-Average Common Units Outstanding, Diluted
|
|
|
1,195,805,315
|
|
|
|
638,832,799
|
|
|
|
1,194,862,252
|
|
|
|
635,439,828
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income (Loss) Per Common Unit, Basic
|
|
$
|
0.48
|
|
|
$
|
(0.40
|
)
|
|
$
|
1.04
|
|
|
$
|
0.81
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income (Loss) Per Common Unit, Diluted
|
|
$
|
0.47
|
|
|
$
|
(0.40
|
)
|
|
$
|
1.01
|
|
|
$
|
0.80
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Distributions Declared Per Common Unit (a)
|
|
$
|
0.36
|
|
|
$
|
0.74
|
|
|
$
|
1.25
|
|
|
$
|
2.41
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
Distributions declared reflects the calendar date of the declaration for each distribution.
|
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)
The following table summarizes the anti-dilutive securities for the three and nine
months ended September 30, 2016 and 2015:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
September 30,
|
|
|
Nine Months Ended
September 30,
|
|
|
|
2016
|
|
|
2015
|
|
|
2016
|
|
|
2015
|
|
Weighted-Average Unvested Deferred Restricted Common Units
|
|
|
|
|
|
|
1,913,028
|
|
|
|
|
|
|
|
|
|
Weighted-Average Blackstone Holdings Partnership Units
|
|
|
|
|
|
|
550,983,910
|
|
|
|
|
|
|
|
551,860,289
|
|
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.
During the nine months ended September 30,
2016 and 2015, no units were repurchased. As of September 30, 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 and nine months ended September 30, 2016,
the Partnership recorded compensation expense of $78.1 million and $242.2 million, respectively, in relation to its equity-based awards with corresponding tax benefits of $8.2 million and $24.8 million, respectively. For the
three and nine months ended September 30, 2015, the Partnership recorded compensation expense of $78.8 million and $561.5 million, respectively, in relation to its equity-based awards with corresponding tax benefits of
$9.0 million and $36.0 million, respectively. As of September 30, 2016, there was $892.0 million of estimated unrecognized compensation expense related to unvested awards. This cost is expected to be recognized over a
weighted-average period of 4.7 years.
Total vested and unvested outstanding units, including Blackstone common units,
Blackstone Holdings Partnership Units and deferred restricted common units, were 1,196,341,765 as of September 30, 2016. Total outstanding unvested phantom units were 46,246 as of September 30, 2016.
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)
A summary of the status of the Partnerships unvested equity-based awards as of
September 30, 2016 and of changes during the period January 1, 2016 through September 30, 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
|
|
|
3,495,525
|
|
|
|
25.03
|
|
|
|
3,402,926
|
|
|
|
26.96
|
|
|
|
14,248
|
|
|
|
27.07
|
|
Vested
|
|
|
(7,044,239
|
)
|
|
|
22.08
|
|
|
|
(5,114,780
|
)
|
|
|
19.61
|
|
|
|
(1,248
|
)
|
|
|
16.48
|
|
Forfeited
|
|
|
(217,007
|
)
|
|
|
36.26
|
|
|
|
(449,317
|
)
|
|
|
20.85
|
|
|
|
(482
|
)
|
|
|
28.62
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, September 30, 2016
|
|
|
37,136,034
|
|
|
$
|
34.31
|
|
|
|
12,180,958
|
|
|
$
|
24.93
|
|
|
|
40,460
|
|
|
$
|
26.83
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Units Expected to Vest
The following unvested units, after expected forfeitures, as of September 30, 2016, are expected to vest:
|
|
|
|
|
|
|
|
|
|
|
Units
|
|
|
Weighted-Average
Service Period
in
Years
|
|
Blackstone Holdings Partnership Units
|
|
|
29,298,229
|
|
|
|
4.3
|
|
Deferred Restricted Blackstone Common Units
|
|
|
10,429,836
|
|
|
|
1.9
|
|
|
|
|
|
|
|
|
|
|
Total Equity-Based Awards
|
|
|
39,728,065
|
|
|
|
3.7
|
|
|
|
|
|
|
|
|
|
|
Phantom Units
|
|
|
33,836
|
|
|
|
3.7
|
|
|
|
|
|
|
|
|
|
|
16.
|
RELATED PARTY TRANSACTIONS
|
Affiliate
Receivables and Payables
Due from Affiliates and Due to Affiliates consisted of the following:
|
|
|
|
|
|
|
|
|
|
|
September 30,
2016
|
|
|
December 31,
2015
|
|
Due from Affiliates
|
|
|
|
|
|
|
|
|
Accrual for Potential Clawback of Previously Distributed Carried Interest
|
|
$
|
1,571
|
|
|
$
|
1,686
|
|
Advances Made on Behalf of Certain Non-Controlling Interest Holders and Blackstone Employees Principally for Investments in
Blackstone Funds
|
|
|
347,713
|
|
|
|
331,558
|
|
Amounts Due from Portfolio Companies and Funds
|
|
|
326,827
|
|
|
|
319,758
|
|
Investments Redeemed in Non-Consolidated Funds of Hedge Funds
|
|
|
8,156
|
|
|
|
5,931
|
|
Management and Performance Fees Due from Non-Consolidated Funds
|
|
|
425,400
|
|
|
|
403,538
|
|
Payments Made on Behalf of Non-Consolidated Entities
|
|
|
200,745
|
|
|
|
178,326
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
1,310,412
|
|
|
$
|
1,240,797
|
|
|
|
|
|
|
|
|
|
|
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)
|
|
|
|
|
|
|
|
|
|
|
September 30,
2016
|
|
|
December 31,
2015
|
|
Due to Affiliates
|
|
|
|
|
|
|
|
|
Due to Certain Non-Controlling Interest Holders in Connection with the Tax Receivable Agreements
|
|
$
|
1,169,136
|
|
|
$
|
1,201,543
|
|
Accrual for Potential Repayment of Previously Received Performance Fees
|
|
|
3,355
|
|
|
|
3,356
|
|
Due to Note Holders of Consolidated CLO Vehicles
|
|
|
7,978
|
|
|
|
8,231
|
|
Distributions Received on Behalf of Certain Non-Controlling Interest Holders and Blackstone Employees
|
|
|
30,541
|
|
|
|
26,593
|
|
Distributions Received on Behalf of Blackstone Entities
|
|
|
83,241
|
|
|
|
33,160
|
|
Payments Made by Non-Consolidated Entities
|
|
|
15,650
|
|
|
|
9,817
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
1,309,901
|
|
|
$
|
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 September 30, 2016 and December 31, 2015, such investments
aggregated $749.0 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 $24.5 million and
$(20.0) million for the three months ended September 30, 2016 and 2015, respectively, and $53.0 million and $61.1 million for the nine months ended September 30, 2016 and 2015, respectively.
Revenues Earned from Affiliates
Management and Advisory Fees, Net earned from affiliates totaled $39.1 million and $48.2 million for the three months ended September 30, 2016 and 2015, respectively. Management and
Advisory Fees, Net earned from affiliates totaled $139.9 million and $125.1 million for the nine months ended September 30, 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 $0.6 million and $0.8 million for the three months ended September 30, 2016 and 2015, respectively, and $0.9 million and
$4.0 million for the nine months ended September 30, 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 September 30, 2016. See Note 17. Commitments and Contingencies Contingencies Contingent
Obligations (Clawback).
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)
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 a Director of Blackstone, 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 $1.2 billion over the next 15 years. The after-tax net
present value of these estimated payments totals $389.7 million assuming a 15% discount rate and using Blackstones most recent projections relating to the estimated timing of the benefit to be
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)
received. Future payments under the tax receivable agreements in respect of subsequent exchanges would be in 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 $2.4 billion of investment commitments as of September 30, 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 $73.1 million as of
September 30, 2016 which includes $47.6 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 $5.3 million as of September 30, 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 Group International Partners LLP. The amount guaranteed as of September 30, 2016 was $147.4 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.
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)
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:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2016
|
|
|
December 31, 2015
|
|
Segment
|
|
Blackstone
Holdings
|
|
|
Current and
Former Personnel
|
|
|
Total
|
|
|
Blackstone
Holdings
|
|
|
Current and
Former Personnel
|
|
|
Total
|
|
Credit
|
|
$
|
1,784
|
|
|
$
|
1,571
|
|
|
$
|
3,355
|
|
|
$
|
1,670
|
|
|
$
|
1,686
|
|
|
$
|
3,356
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For Private Equity, Real Estate, and certain Credit Funds, 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 September 30, 2016, $611.6 million was held in segregated accounts for the purpose of meeting any clawback
obligations of current and former personnel if such payments are required.
In the Credit segment, payment of Carried Interest
to the Partnership by the majority of the rescue lending, mezzanine and hedge fund strategies funds is substantially deferred under the terms of the partnership agreements. This deferral mitigates the need to hold funds in segregated accounts in the
event of a cash clawback obligation.
If, at September 30, 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 $5.0 billion, on an after tax basis where applicable, of which $4.6 billion related to Blackstone
Holdings and $382.3 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,
|
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 segment has debt investment funds, 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, and a non-listed REIT formed to invest primarily in stabilized income-oriented commercial real estate in the United States.
|
|
|
|
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
total GAAP tax provision adjusted to include only 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.
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.
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)
The following table presents the financial data for Blackstones four segments for
the three months ended September 30, 2016 and 2015:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30, 2016
|
|
|
|
Private
Equity
|
|
|
Real Estate
|
|
|
Hedge Fund
Solutions
|
|
|
Credit
|
|
|
Total
Segments
|
|
Segment Revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Management and Advisory Fees, Net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Base Management Fees
|
|
$
|
131,708
|
|
|
$
|
197,629
|
|
|
$
|
130,305
|
|
|
$
|
133,867
|
|
|
$
|
593,509
|
|
Advisory Fees
|
|
|
1,106
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,106
|
|
Transaction and Other Fees, Net
|
|
|
11,786
|
|
|
|
14,190
|
|
|
|
116
|
|
|
|
1,823
|
|
|
|
27,915
|
|
Management Fee Offsets
|
|
|
(12,917
|
)
|
|
|
(842
|
)
|
|
|
|
|
|
|
(7,091
|
)
|
|
|
(20,850
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Management and Advisory Fees, Net
|
|
|
131,683
|
|
|
|
210,977
|
|
|
|
130,421
|
|
|
|
128,599
|
|
|
|
601,680
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Performance Fees
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Realized
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Carried Interest
|
|
|
26,398
|
|
|
|
461,980
|
|
|
|
|
|
|
|
15,644
|
|
|
|
504,022
|
|
Incentive Fees
|
|
|
|
|
|
|
3,857
|
|
|
|
4,572
|
|
|
|
21,866
|
|
|
|
30,295
|
|
Unrealized
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Carried Interest
|
|
|
144,597
|
|
|
|
(113,449
|
)
|
|
|
(84
|
)
|
|
|
75,093
|
|
|
|
106,157
|
|
Incentive Fees
|
|
|
|
|
|
|
14,445
|
|
|
|
12,038
|
|
|
|
5,689
|
|
|
|
32,172
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Performance Fees
|
|
|
170,995
|
|
|
|
366,833
|
|
|
|
16,526
|
|
|
|
118,292
|
|
|
|
672,646
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment Income (Loss)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Realized
|
|
|
15,469
|
|
|
|
46,704
|
|
|
|
(1,211
|
)
|
|
|
(328
|
)
|
|
|
60,634
|
|
Unrealized
|
|
|
8,884
|
|
|
|
(6,725
|
)
|
|
|
12,219
|
|
|
|
12,875
|
|
|
|
27,253
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Investment Income
|
|
|
24,353
|
|
|
|
39,979
|
|
|
|
11,008
|
|
|
|
12,547
|
|
|
|
87,887
|
|
Interest and Dividend Revenue
|
|
|
9,160
|
|
|
|
12,460
|
|
|
|
4,692
|
|
|
|
6,769
|
|
|
|
33,081
|
|
Other
|
|
|
411
|
|
|
|
(548
|
)
|
|
|
(260
|
)
|
|
|
(28
|
)
|
|
|
(425
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Revenues
|
|
|
336,602
|
|
|
|
629,701
|
|
|
|
162,387
|
|
|
|
266,179
|
|
|
|
1,394,869
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Compensation and Benefits Compensation
|
|
|
73,889
|
|
|
|
99,886
|
|
|
|
47,206
|
|
|
|
47,614
|
|
|
|
268,595
|
|
Performance Fee Compensation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Realized
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Carried Interest
|
|
|
13,741
|
|
|
|
147,419
|
|
|
|
|
|
|
|
7,267
|
|
|
|
168,427
|
|
Incentive Fees
|
|
|
|
|
|
|
1,764
|
|
|
|
2,902
|
|
|
|
10,770
|
|
|
|
15,436
|
|
Unrealized
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Carried Interest
|
|
|
69,300
|
|
|
|
(38,972
|
)
|
|
|
35
|
|
|
|
39,681
|
|
|
|
70,044
|
|
Incentive Fees
|
|
|
|
|
|
|
6,229
|
|
|
|
4,557
|
|
|
|
2,722
|
|
|
|
13,508
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Compensation and Benefits
|
|
|
156,930
|
|
|
|
216,326
|
|
|
|
54,700
|
|
|
|
108,054
|
|
|
|
536,010
|
|
Other Operating Expenses
|
|
|
47,534
|
|
|
|
47,908
|
|
|
|
27,432
|
|
|
|
28,016
|
|
|
|
150,890
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Expenses
|
|
|
204,464
|
|
|
|
264,234
|
|
|
|
82,132
|
|
|
|
136,070
|
|
|
|
686,900
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Economic Income
|
|
$
|
132,138
|
|
|
$
|
365,467
|
|
|
$
|
80,255
|
|
|
$
|
130,109
|
|
|
$
|
707,969
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
52
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 September 30, 2015
|
|
|
|
Private
Equity
|
|
|
Real Estate
|
|
|
Hedge Fund
Solutions
|
|
|
Credit
|
|
|
Financial
Advisory
|
|
|
Total
Segments
|
|
Segment Revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Management and Advisory Fees, Net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Base Management Fees
|
|
$
|
128,452
|
|
|
$
|
175,710
|
|
|
$
|
133,592
|
|
|
$
|
126,533
|
|
|
$
|
|
|
|
$
|
564,287
|
|
Advisory Fees
|
|
|
2,547
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
143,606
|
|
|
|
146,153
|
|
Transaction and Other Fees, Net
|
|
|
9,359
|
|
|
|
21,390
|
|
|
|
219
|
|
|
|
1,289
|
|
|
|
146
|
|
|
|
32,403
|
|
Management Fee Offsets
|
|
|
(12,262
|
)
|
|
|
(10,147
|
)
|
|
|
(507
|
)
|
|
|
(11,260
|
)
|
|
|
|
|
|
|
(34,176
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Management and Advisory Fees, Net
|
|
|
128,096
|
|
|
|
186,953
|
|
|
|
133,304
|
|
|
|
116,562
|
|
|
|
143,752
|
|
|
|
708,667
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Performance Fees
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Realized
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Carried Interest
|
|
|
214,532
|
|
|
|
169,051
|
|
|
|
|
|
|
|
51,606
|
|
|
|
|
|
|
|
435,189
|
|
Incentive Fees
|
|
|
|
|
|
|
3,879
|
|
|
|
2,783
|
|
|
|
28,123
|
|
|
|
|
|
|
|
34,785
|
|
Unrealized
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Carried Interest
|
|
|
(809,363
|
)
|
|
|
(128,854
|
)
|
|
|
(5,394
|
)
|
|
|
(112,366
|
)
|
|
|
|
|
|
|
(1,055,977
|
)
|
Incentive Fees
|
|
|
|
|
|
|
2,784
|
|
|
|
(29,711
|
)
|
|
|
(26,419
|
)
|
|
|
|
|
|
|
(53,346
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Performance Fees
|
|
|
(594,831
|
)
|
|
|
46,860
|
|
|
|
(32,322
|
)
|
|
|
(59,056
|
)
|
|
|
|
|
|
|
(639,349
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment Income (Loss)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Realized
|
|
|
46,917
|
|
|
|
39,821
|
|
|
|
(468
|
)
|
|
|
1,735
|
|
|
|
(479
|
)
|
|
|
87,526
|
|
Unrealized
|
|
|
(110,689
|
)
|
|
|
(95,382
|
)
|
|
|
(6,411
|
)
|
|
|
(10,177
|
)
|
|
|
(998
|
)
|
|
|
(223,657
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Investment Loss
|
|
|
(63,772
|
)
|
|
|
(55,561
|
)
|
|
|
(6,879
|
)
|
|
|
(8,442
|
)
|
|
|
(1,477
|
)
|
|
|
(136,131
|
)
|
Interest and Dividend Revenue
|
|
|
8,119
|
|
|
|
11,057
|
|
|
|
4,136
|
|
|
|
6,053
|
|
|
|
6,094
|
|
|
|
35,459
|
|
Other
|
|
|
471
|
|
|
|
(938
|
)
|
|
|
(66
|
)
|
|
|
(73
|
)
|
|
|
(235
|
)
|
|
|
(841
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Revenues
|
|
|
(521,917
|
)
|
|
|
188,371
|
|
|
|
98,173
|
|
|
|
55,044
|
|
|
|
148,134
|
|
|
|
(32,195
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Compensation and Benefits Compensation
|
|
|
70,419
|
|
|
|
99,255
|
|
|
|
44,408
|
|
|
|
51,324
|
|
|
|
64,169
|
|
|
|
329,575
|
|
Performance Fee Compensation Realized
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Carried Interest
|
|
|
16,303
|
|
|
|
52,546
|
|
|
|
|
|
|
|
28,950
|
|
|
|
|
|
|
|
97,799
|
|
Incentive Fees
|
|
|
|
|
|
|
1,838
|
|
|
|
(436
|
)
|
|
|
13,659
|
|
|
|
|
|
|
|
15,061
|
|
Unrealized
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Carried Interest
|
|
|
(141,448
|
)
|
|
|
(23,018
|
)
|
|
|
(3,041
|
)
|
|
|
(61,190
|
)
|
|
|
|
|
|
|
(228,697
|
)
|
Incentive Fees
|
|
|
|
|
|
|
5,215
|
|
|
|
(7,011
|
)
|
|
|
(12,846
|
)
|
|
|
|
|
|
|
(14,642
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Compensation and Benefits
|
|
|
(54,726
|
)
|
|
|
135,836
|
|
|
|
33,920
|
|
|
|
19,897
|
|
|
|
64,169
|
|
|
|
199,096
|
|
Other Operating Expenses
|
|
|
43,812
|
|
|
|
42,050
|
|
|
|
24,147
|
|
|
|
24,898
|
|
|
|
22,658
|
|
|
|
157,565
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Expenses
|
|
|
(10,914
|
)
|
|
|
177,886
|
|
|
|
58,067
|
|
|
|
44,795
|
|
|
|
86,827
|
|
|
|
356,661
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Economic Income (Loss)
|
|
$
|
(511,003
|
)
|
|
$
|
10,485
|
|
|
$
|
40,106
|
|
|
$
|
10,249
|
|
|
$
|
61,307
|
|
|
$
|
(388,856
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
53
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 (Loss)
Before Provision for Taxes for the three months ended September 30, 2016 and 2015:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30, 2016
|
|
|
Three Months Ended September 30, 2015
|
|
|
|
Total
Segments
|
|
|
Consolidation
Adjustments
and Reconciling
Items
|
|
|
Blackstone
Consolidated
|
|
|
Total
Segments
|
|
|
Consolidation
Adjustments
and Reconciling
Items
|
|
|
Blackstone
Consolidated
|
|
Revenues
|
|
$
|
1,394,869
|
|
|
$
|
36,816(a)
|
|
|
$
|
1,431,685
|
|
|
$
|
(32,195
|
)
|
|
$
|
43,768(a)
|
|
|
$
|
11,573
|
|
Expenses
|
|
$
|
686,900
|
|
|
$
|
86,877(b)
|
|
|
$
|
773,777
|
|
|
$
|
356,661
|
|
|
$
|
120,336(b)
|
|
|
$
|
476,997
|
|
Other Income (Loss)
|
|
$
|
|
|
|
$
|
61,395(c)
|
|
|
$
|
61,395
|
|
|
$
|
|
|
|
$
|
(16,867)(c)
|
|
|
$
|
(16,867
|
)
|
Economic Income (Loss)
|
|
$
|
707,969
|
|
|
$
|
11,334(d)
|
|
|
$
|
719,303
|
|
|
$
|
(388,856
|
)
|
|
$
|
(93,435)(d)
|
|
|
$
|
(482,291
|
)
|
(a)
|
The Revenues adjustment represents management and performance fees earned from Blackstone Funds which were eliminated in consolidation to arrive at Blackstone
consolidated revenues, non-segment related Investment Income (Loss), which is included in Blackstone consolidated revenues and the elimination of inter-segment interest income.
|
(b)
|
The Expenses adjustment represents the addition of expenses of the consolidated Blackstone Funds to the Blackstone unconsolidated expenses, amortization of intangibles,
expenses related to transaction-related equity-based compensation and the elimination of inter-segment interest expense to arrive at Blackstone consolidated expenses.
|
(c)
|
The Other Income adjustment results from the following:
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30,
|
|
|
|
2016
|
|
|
2015
|
|
Fund Management Fees and Performance Fees Eliminated in Consolidation and Transactional Investment Loss
|
|
$
|
(37,835
|
)
|
|
$
|
(45,027
|
)
|
Fund Expenses Added in Consolidation
|
|
|
5,141
|
|
|
|
10,175
|
|
Income Associated with Non-Controlling Interests of Consolidated Entities
|
|
|
93,417
|
|
|
|
18,151
|
|
Transaction-Related Other Income (Loss)
|
|
|
672
|
|
|
|
(166
|
)
|
|
|
|
|
|
|
|
|
|
Total Consolidation Adjustments and Reconciling Items
|
|
$
|
61,395
|
|
|
$
|
(16,867
|
)
|
|
|
|
|
|
|
|
|
|
(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 September 30,
|
|
|
|
2016
|
|
|
2015
|
|
Economic Income (Loss)
|
|
$
|
707,969
|
|
|
$
|
(388,856
|
)
|
|
|
|
|
|
|
|
|
|
Adjustments
|
|
|
|
|
|
|
|
|
Amortization of Intangibles
|
|
|
(22,054
|
)
|
|
|
(30,624
|
)
|
Transaction-Related Charges
|
|
|
(60,029
|
)
|
|
|
(80,962
|
)
|
Income Associated with Non-Controlling Interests of Consolidated Entities
|
|
|
93,417
|
|
|
|
18,151
|
|
|
|
|
|
|
|
|
|
|
Total Consolidation Adjustments and Reconciling Items
|
|
|
11,334
|
|
|
|
(93,435
|
)
|
|
|
|
|
|
|
|
|
|
Income (Loss) Before Provision (Benefit) for Taxes
|
|
$
|
719,303
|
|
|
$
|
(482,291
|
)
|
|
|
|
|
|
|
|
|
|
54
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 nine months ended September 30, 2016 and 2015:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2016 and the Nine Months Then Ended
|
|
|
|
Private
Equity
|
|
|
Real Estate
|
|
|
Hedge Fund
Solutions
|
|
|
Credit
|
|
|
Total
Segments
|
|
Segment Revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Management and Advisory Fees, Net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Base Management Fees
|
|
$
|
393,833
|
|
|
$
|
598,540
|
|
|
$
|
390,586
|
|
|
$
|
391,249
|
|
|
$
|
1,774,208
|
|
Advisory Fees
|
|
|
2,864
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,864
|
|
Transaction and Other Fees, Net
|
|
|
30,037
|
|
|
|
71,096
|
|
|
|
654
|
|
|
|
4,589
|
|
|
|
106,376
|
|
Management Fee Offsets
|
|
|
(23,960
|
)
|
|
|
(5,656
|
)
|
|
|
|
|
|
|
(26,731
|
)
|
|
|
(56,347
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Management and Advisory Fees, Net
|
|
|
402,774
|
|
|
|
663,980
|
|
|
|
391,240
|
|
|
|
369,107
|
|
|
|
1,827,101
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Performance Fees
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Realized
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Carried Interest
|
|
|
113,736
|
|
|
|
928,989
|
|
|
|
|
|
|
|
15,940
|
|
|
|
1,058,665
|
|
Incentive Fees
|
|
|
|
|
|
|
14,025
|
|
|
|
7,005
|
|
|
|
67,078
|
|
|
|
88,108
|
|
Unrealized
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Carried Interest
|
|
|
303,519
|
|
|
|
(209,846
|
)
|
|
|
749
|
|
|
|
147,609
|
|
|
|
242,031
|
|
Incentive Fees
|
|
|
|
|
|
|
30,152
|
|
|
|
10,139
|
|
|
|
6,988
|
|
|
|
47,279
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Performance Fees
|
|
|
417,255
|
|
|
|
763,320
|
|
|
|
17,893
|
|
|
|
237,615
|
|
|
|
1,436,083
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment Income (Loss)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Realized
|
|
|
23,038
|
|
|
|
79,608
|
|
|
|
(6,471
|
)
|
|
|
8,028
|
|
|
|
104,203
|
|
Unrealized
|
|
|
21,558
|
|
|
|
(17,764
|
)
|
|
|
9,285
|
|
|
|
3,726
|
|
|
|
16,805
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Investment Income
|
|
|
44,596
|
|
|
|
61,844
|
|
|
|
2,814
|
|
|
|
11,754
|
|
|
|
121,008
|
|
Interest and Dividend Revenue
|
|
|
28,525
|
|
|
|
38,732
|
|
|
|
15,193
|
|
|
|
20,945
|
|
|
|
103,395
|
|
Other
|
|
|
2,219
|
|
|
|
(226
|
)
|
|
|
(523
|
)
|
|
|
403
|
|
|
|
1,873
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Revenues
|
|
|
895,369
|
|
|
|
1,527,650
|
|
|
|
426,617
|
|
|
|
639,824
|
|
|
|
3,489,460
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Compensation and Benefits Compensation
|
|
|
237,303
|
|
|
|
303,352
|
|
|
|
145,811
|
|
|
|
155,687
|
|
|
|
842,153
|
|
Performance Fee Compensation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Realized
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Carried Interest
|
|
|
60,114
|
|
|
|
246,936
|
|
|
|
|
|
|
|
7,461
|
|
|
|
314,511
|
|
Incentive Fees
|
|
|
|
|
|
|
7,197
|
|
|
|
6,090
|
|
|
|
31,523
|
|
|
|
44,810
|
|
Unrealized
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Carried Interest
|
|
|
98,046
|
|
|
|
2,988
|
|
|
|
273
|
|
|
|
73,940
|
|
|
|
175,247
|
|
Incentive Fees
|
|
|
|
|
|
|
12,929
|
|
|
|
3,842
|
|
|
|
2,874
|
|
|
|
19,645
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Compensation and Benefits
|
|
|
395,463
|
|
|
|
573,402
|
|
|
|
156,016
|
|
|
|
271,485
|
|
|
|
1,396,366
|
|
Other Operating Expenses
|
|
|
143,968
|
|
|
|
148,206
|
|
|
|
80,796
|
|
|
|
83,700
|
|
|
|
456,670
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Expenses
|
|
|
539,431
|
|
|
|
721,608
|
|
|
|
236,812
|
|
|
|
355,185
|
|
|
|
1,853,036
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Economic Income
|
|
$
|
355,938
|
|
|
$
|
806,042
|
|
|
$
|
189,805
|
|
|
$
|
284,639
|
|
|
$
|
1,636,424
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment Assets as of September 30, 2016
|
|
$
|
6,287,058
|
|
|
$
|
7,421,606
|
|
|
$
|
1,888,118
|
|
|
$
|
2,723,402
|
|
|
$
|
18,320,184
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
55
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)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended September 30, 2015
|
|
|
|
Private
Equity
|
|
|
Real Estate
|
|
|
Hedge Fund
Solutions
|
|
|
Credit
|
|
|
Financial
Advisory
|
|
|
Total
Segments
|
|
Segment Revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Management and Advisory Fees, Net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Base Management Fees
|
|
$
|
358,753
|
|
|
$
|
468,801
|
|
|
$
|
394,445
|
|
|
$
|
375,177
|
|
|
$
|
|
|
|
$
|
1,597,176
|
|
Advisory Fees
|
|
|
9,819
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
297,570
|
|
|
|
307,389
|
|
Transaction and Other Fees, Net
|
|
|
17,876
|
|
|
|
58,116
|
|
|
|
244
|
|
|
|
4,806
|
|
|
|
162
|
|
|
|
81,204
|
|
Management Fee Offsets
|
|
|
(26,239
|
)
|
|
|
(20,441
|
)
|
|
|
(1,395
|
)
|
|
|
(22,480
|
)
|
|
|
|
|
|
|
(70,555
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Management and Advisory Fees, Net
|
|
|
360,209
|
|
|
|
506,476
|
|
|
|
393,294
|
|
|
|
357,503
|
|
|
|
297,732
|
|
|
|
1,915,214
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Performance Fees
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Realized
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Carried Interest
|
|
|
1,144,085
|
|
|
|
1,344,283
|
|
|
|
|
|
|
|
91,898
|
|
|
|
|
|
|
|
2,580,266
|
|
Incentive Fees
|
|
|
|
|
|
|
5,822
|
|
|
|
30,214
|
|
|
|
76,238
|
|
|
|
|
|
|
|
112,274
|
|
Unrealized
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Carried Interest
|
|
|
(548,114
|
)
|
|
|
(498,481
|
)
|
|
|
2,620
|
|
|
|
(80,099
|
)
|
|
|
|
|
|
|
(1,124,074
|
)
|
Incentive Fees
|
|
|
|
|
|
|
12,788
|
|
|
|
33,571
|
|
|
|
(10,774
|
)
|
|
|
|
|
|
|
35,585
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Performance Fees
|
|
|
595,971
|
|
|
|
864,412
|
|
|
|
66,405
|
|
|
|
77,263
|
|
|
|
|
|
|
|
1,604,051
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment Income (Loss)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Realized
|
|
|
141,991
|
|
|
|
196,597
|
|
|
|
(12,600
|
)
|
|
|
6,695
|
|
|
|
(868
|
)
|
|
|
331,815
|
|
Unrealized
|
|
|
(101,503
|
)
|
|
|
(165,563
|
)
|
|
|
104
|
|
|
|
(530
|
)
|
|
|
(39
|
)
|
|
|
(267,531
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Investment Income (Loss)
|
|
|
40,488
|
|
|
|
31,034
|
|
|
|
(12,496
|
)
|
|
|
6,165
|
|
|
|
(907
|
)
|
|
|
64,284
|
|
Interest and Dividend Revenue
|
|
|
23,406
|
|
|
|
31,313
|
|
|
|
12,055
|
|
|
|
17,642
|
|
|
|
12,520
|
|
|
|
96,936
|
|
Other
|
|
|
1,161
|
|
|
|
(3,838
|
)
|
|
|
(1,214
|
)
|
|
|
3,454
|
|
|
|
(1,303
|
)
|
|
|
(1,740
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Revenues
|
|
|
1,021,235
|
|
|
|
1,429,397
|
|
|
|
458,044
|
|
|
|
462,027
|
|
|
|
308,042
|
|
|
|
3,678,745
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Compensation and Benefits Compensation
|
|
|
209,597
|
|
|
|
263,573
|
|
|
|
146,353
|
|
|
|
148,325
|
|
|
|
180,917
|
|
|
|
948,765
|
|
Performance Fee Compensation Realized
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Carried Interest
|
|
|
162,287
|
|
|
|
415,210
|
|
|
|
|
|
|
|
50,582
|
|
|
|
|
|
|
|
628,079
|
|
Incentive Fees
|
|
|
|
|
|
|
2,865
|
|
|
|
11,745
|
|
|
|
34,515
|
|
|
|
|
|
|
|
49,125
|
|
Unrealized
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Carried Interest
|
|
|
11,098
|
|
|
|
(171,661
|
)
|
|
|
1,036
|
|
|
|
(45,349
|
)
|
|
|
|
|
|
|
(204,876
|
)
|
Incentive Fees
|
|
|
|
|
|
|
8,020
|
|
|
|
12,404
|
|
|
|
(3,974
|
)
|
|
|
|
|
|
|
16,450
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Compensation and Benefits
|
|
|
382,982
|
|
|
|
518,007
|
|
|
|
171,538
|
|
|
|
184,099
|
|
|
|
180,917
|
|
|
|
1,437,543
|
|
Other Operating Expenses
|
|
|
145,258
|
|
|
|
125,539
|
|
|
|
65,852
|
|
|
|
70,273
|
|
|
|
62,326
|
|
|
|
469,248
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Expenses
|
|
|
528,240
|
|
|
|
643,546
|
|
|
|
237,390
|
|
|
|
254,372
|
|
|
|
243,243
|
|
|
|
1,906,791
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Economic Income
|
|
$
|
492,995
|
|
|
$
|
785,851
|
|
|
$
|
220,654
|
|
|
$
|
207,655
|
|
|
$
|
64,799
|
|
|
$
|
1,771,954
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
56
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 (Loss)
Before Provision for Taxes and Total Assets as of and for the nine months ended September 30, 2016 and 2015:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2016
and the
Nine Months Then Ended
|
|
|
Nine Months Ended September 30, 2015
|
|
|
|
Total
Segments
|
|
|
Consolidation
Adjustments
and Reconciling
Items
|
|
|
Blackstone
Consolidated
|
|
|
Total
Segments
|
|
|
Consolidation
Adjustments
and Reconciling
Items
|
|
|
Blackstone
Consolidated
|
|
Revenues
|
|
$
|
3,489,460
|
|
|
$
|
67,005(a)
|
|
|
$
|
3,556,465
|
|
|
$
|
3,678,745
|
|
|
$
|
70,388(a)
|
|
|
$
|
3,749,133
|
|
Expenses
|
|
$
|
1,853,036
|
|
|
$
|
251,054(b)
|
|
|
$
|
2,104,090
|
|
|
$
|
1,906,791
|
|
|
$
|
627,206(b)
|
|
|
$
|
2,533,997
|
|
Other Income
|
|
$
|
|
|
|
$
|
111,240(c)
|
|
|
$
|
111,240
|
|
|
$
|
|
|
|
$
|
158,703(c)
|
|
|
$
|
158,703
|
|
Economic Income
|
|
$
|
1,636,424
|
|
|
$
|
(72,809)(d)
|
|
|
$
|
1,563,615
|
|
|
$
|
1,771,954
|
|
|
$
|
(398,115)(d)
|
|
|
$
|
1,373,839
|
|
Total Assets
|
|
$
|
18,320,184
|
|
|
$
|
6,093,336(e)
|
|
|
$
|
24,413,520
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
The Revenues adjustment represents management and performance fees earned from Blackstone Funds that were eliminated in consolidation to arrive at Blackstone
consolidated revenues, non-segment related Investment Income (Loss), which is included in Blackstone consolidated revenues and the elimination of inter-segment interest income.
|
(b)
|
The Expenses adjustment represents the addition of expenses of the consolidated Blackstone Funds to the Blackstone unconsolidated expenses, amortization of intangibles,
expenses related to transaction-related equity-based compensation and the elimination of inter-segment interest expense to arrive at Blackstone consolidated expenses.
|
(c)
|
The Other Income adjustment results from the following:
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended September 30,
|
|
|
|
2016
|
|
|
2015
|
|
Fund Management Fees and Performance Fees Eliminated in Consolidation and Transactional Investment Loss
|
|
$
|
(68,308
|
)
|
|
$
|
(80,519
|
)
|
Fund Expenses Added in Consolidation
|
|
|
(4,016
|
)
|
|
|
53,218
|
|
Income Associated with Non-Controlling Interests of Consolidated Entities
|
|
|
189,782
|
|
|
|
187,970
|
|
Transaction-Related Other Loss
|
|
|
(6,218
|
)
|
|
|
(1,966
|
)
|
|
|
|
|
|
|
|
|
|
Total Consolidation Adjustments and Reconciling Items
|
|
$
|
111,240
|
|
|
$
|
158,703
|
|
|
|
|
|
|
|
|
|
|
(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:
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended September 30,
|
|
|
|
2016
|
|
|
2015
|
|
Economic Income
|
|
$
|
1,636,424
|
|
|
$
|
1,771,954
|
|
|
|
|
|
|
|
|
|
|
Adjustments
|
|
|
|
|
|
|
|
|
Amortization of Intangibles
|
|
|
(68,470
|
)
|
|
|
(81,243
|
)
|
Transaction-Related Charges
|
|
|
(194,121
|
)
|
|
|
(504,842
|
)
|
Income Associated with Non-Controlling Interests of Consolidated Entities
|
|
|
189,782
|
|
|
|
187,970
|
|
|
|
|
|
|
|
|
|
|
Total Consolidation Adjustments and Reconciling Items
|
|
|
(72,809
|
)
|
|
|
(398,115
|
)
|
|
|
|
|
|
|
|
|
|
Income Before Provision for Taxes
|
|
$
|
1,563,615
|
|
|
$
|
1,373,839
|
|
|
|
|
|
|
|
|
|
|
(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.
|
57
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)
On
October 5, 2016, Blackstone Holdings Finance Co. L.L.C. issued 600 million in aggregate principal amount of 1.000% Senior Notes which will mature on October 5, 2026. See Note 12. Borrowings for additional information.
58
ITEM 1A.
|
UNAUDITED SUPPLEMENTAL PRESENTATION OF STATEMENTS OF FINANCIAL CONDITION
|
THE BLACKSTONE GROUP L.P.
Unaudited Consolidating Statements of
Financial Condition
(Dollars in Thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2016
|
|
|
|
Consolidated
Operating
Partnerships
|
|
|
Consolidated
Blackstone
Funds (a)
|
|
|
Reclasses and
Eliminations
|
|
|
Consolidated
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and Cash Equivalents
|
|
$
|
1,781,882
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
1,781,882
|
|
Cash Held by Blackstone Funds and Other
|
|
|
218,160
|
|
|
|
890,807
|
|
|
|
|
|
|
|
1,108,967
|
|
Investments
|
|
|
10,946,535
|
|
|
|
5,420,744
|
|
|
|
(409,345
|
)
|
|
|
15,957,934
|
|
Accounts Receivable
|
|
|
338,202
|
|
|
|
168,690
|
|
|
|
|
|
|
|
506,892
|
|
Reverse Repurchase Agreements
|
|
|
89,326
|
|
|
|
|
|
|
|
|
|
|
|
89,326
|
|
Due from Affiliates
|
|
|
1,302,223
|
|
|
|
28,289
|
|
|
|
(20,100
|
)
|
|
|
1,310,412
|
|
Intangible Assets, Net
|
|
|
278,219
|
|
|
|
|
|
|
|
|
|
|
|
278,219
|
|
Goodwill
|
|
|
1,718,519
|
|
|
|
|
|
|
|
|
|
|
|
1,718,519
|
|
Other Assets
|
|
|
359,228
|
|
|
|
14,251
|
|
|
|
|
|
|
|
373,479
|
|
Deferred Tax Assets
|
|
|
1,287,890
|
|
|
|
|
|
|
|
|
|
|
|
1,287,890
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Assets
|
|
$
|
18,320,184
|
|
|
$
|
6,522,781
|
|
|
$
|
(429,445
|
)
|
|
$
|
24,413,520
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and Partners Capital
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans Payable
|
|
$
|
2,801,453
|
|
|
$
|
4,443,181
|
|
|
$
|
|
|
|
$
|
7,244,634
|
|
Due to Affiliates
|
|
|
1,212,895
|
|
|
|
117,106
|
|
|
|
(20,100
|
)
|
|
|
1,309,901
|
|
Accrued Compensation and Benefits
|
|
|
2,292,718
|
|
|
|
|
|
|
|
|
|
|
|
2,292,718
|
|
Securities Sold, Not Yet Purchased
|
|
|
103,015
|
|
|
|
73,203
|
|
|
|
|
|
|
|
176,218
|
|
Repurchase Agreements
|
|
|
3,261
|
|
|
|
58,834
|
|
|
|
|
|
|
|
62,095
|
|
Accounts Payable, Accrued Expenses and Other Liabilities
|
|
|
558,641
|
|
|
|
415,278
|
|
|
|
|
|
|
|
973,919
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Liabilities
|
|
|
6,971,983
|
|
|
|
5,107,602
|
|
|
|
(20,100
|
)
|
|
|
12,059,485
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Redeemable Non-Controlling Interests in
Consolidated Entities
|
|
|
|
|
|
|
194,150
|
|
|
|
|
|
|
|
194,150
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Partners Capital
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Partners Capital
|
|
|
6,345,484
|
|
|
|
409,503
|
|
|
|
(410,195
|
)
|
|
|
6,344,792
|
|
Accumulated Other Comprehensive Income (Loss)
|
|
|
(48,320
|
)
|
|
|
|
|
|
|
850
|
|
|
|
(47,470
|
)
|
Non-Controlling Interests in Consolidated Entities
|
|
|
1,708,192
|
|
|
|
811,526
|
|
|
|
|
|
|
|
2,519,718
|
|
Non-Controlling Interests in Blackstone Holdings
|
|
|
3,342,845
|
|
|
|
|
|
|
|
|
|
|
|
3,342,845
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Partners Capital
|
|
|
11,348,201
|
|
|
|
1,221,029
|
|
|
|
(409,345
|
)
|
|
|
12,159,885
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Liabilities and Partners Capital
|
|
$
|
18,320,184
|
|
|
$
|
6,522,781
|
|
|
$
|
(429,445
|
)
|
|
$
|
24,413,520
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
continued
59
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
60
Private equity side-by-side investment vehicles
Real estate side-by-side investment vehicles
Mezzanine side-by-side investment vehicles
Collateralized loan obligation
vehicles