Economic Net Income was $173 million for the second quarter of 2009, compared to a loss of $(93) million for the first quarter of 2009 and Economic Net Income of $100million for the second quarter of 2008.

Net Fee Related Earnings from Operations were $87million for the second quarter of 2009, down slightly from $90 million for both the first quarter of 2009 and the second quarter of 2008.

Adjusted Cash Flows From Operations were $102 million during the second quarter of 2009, up from $75 million for the first quarter of 2009 and down from $162 million for the second quarter of 2008.

Blackstone declares a quarterly priority distribution of $0.30 per common unit.

GAAP Net Loss Attributable to The Blackstone Group L.P. was $(164) million for the second quarter of 2009, including net IPO and acquisition-related charges of $196 million, compared to a GAAP Net Loss of $(232) million for the first quarter of 2009, including net IPO and acquisition-related charges of $190million, and $(157)million for the second quarter of 2008, which included net IPO and acquisition-related charges of $204million.

Second Quarter 2009 Highlights

Management and Advisory Fees declined modestly by 1% to $341.9million from both the first quarter of 2009 and the second quarter of 2008.

Fee-Earning Assets Under Management totaled $93.5 billion, up from $92.2 billion at March 31, 2009 and down from $99.7 billion at June 30, 2008. Fee-Earning Assets Under Management were higher in Real Estate and Corporate Private Equity year-over-year and lower in Credit and Marketable Alternatives, mostly as a result of a reduction in the fair value of the underlying portfolio investments, as well as Blackstone's liquidation of its proprietary single manager hedge funds. Both Blackstone's credit-oriented and funds of hedge funds businesses experienced positive performance in the second quarter of 2009.

Performance Fees and Allocations of $72.2million were up from negative $(213.8)million for the first quarter of 2009 and $(10.1)million for the second quarter of 2008. Performance Fees and Allocations were positive for Corporate Private Equity and Credit and Marketable Alternatives, but negative in Real Estate.

Blackstone strengthened its capital and liquidity position from the first quarter of 2009, with $784.6million in available cash, $432.6million invested in liquid Blackstone Funds with only $78.0million in outstanding asset-backed borrowings as of June 30, 2009.

The Blackstone Group L.P. (NYSE: BX) today reported its second quarter 2009 results.

For the second quarter of 2009, Total Segment Revenues were $403.6million, up 781% from $45.8million for the first quarter of 2009 and up 7% from $376.5million for the second quarter of 2008. The year-over-year change was driven by net appreciation of the underlying portfolio investments in the Corporate Private Equity and Credit and Marketable Alternatives segments and increased Management and Advisory Fees in the Corporate Private Equity, Real Estate and Financial Advisory segments. These increases were partially offset by increased unrealized net depreciation of the underlying portfolio investments in the Real Estate segment. For the six months ended June 30, 2009, Total Segment Revenues were $449.4million compared to $408.3million for the same period in 2008, an increase of10%.

GAAP results for the second quarter of 2009 included Revenues of $406.4million, up from $44.9 million for the first quarter of 2009 and $353.9million for the second quarter of 2008, and Net Loss Attributable to The Blackstone Group L.P. of $(164.3)million, compared to $(231.6) million for the first quarter of 2009 and $(156.5) million for the second quarter of 2008. On a GAAP basis, Net Cash Flows Provided by Operating Activities were $136.7million for the second quarter of 2009, down from $555.9 million for the first quarter of 2009 and $155.8million for the second quarter of 2008. GAAP results for the six months ended June 30, 2009 included Revenues of $451.3million, compared to $422.0million for the six months ended June30, 2008, and Net Loss Attributable to The Blackstone Group L.P. of $(395.9)million, compared to $(407.5)million for the six months ended June 30, 2008. On a GAAP basis, Net Cash Flows Provided by Operating Activities were $692.6million for the six months ended June 30, 2009 more than double the $271.0million for the six months ended June 30, 2008.

Global equity and debt markets recovered much of their previous losses in the second quarter of 2009, while the macro-economic backdrop remained challenged. In the United States and Europe, equities markets rose for the first time since the second quarter of 2007, after U.S. markets reached a 12-year low and European markets reached a 6-year low in March2009. Emerging markets across Asia and Latin America rose even more quickly and ended the quarter 35-75% higher than year-end 2008 levels. High yield credit spreads tightened sharply to 978 basis points over Treasury securities at the end of June 2009, compared with credit spreads of 1,700 basis points over Treasury securities at year-end 2008. Despite this dramatic tightening, spreads remain well above historic averages and credit trends continue to be weak across both consumer and commercial asset classes.

Notwithstanding the significant rally in debt, bank lenders have not increased their appetite to make long-term capital commitments. New leveraged transaction levels remain low given the overall global economic weakness and lack of financing availability, even though new issuance in the high yield market increased in the second quarter of 2009 amidst tightening spreads.

Commercial real estate trends in the U.S. and Europe worsened in the second quarter of 2009, with lower occupancy and pricing trends. Global hospitality trends also declined, including revenue per available room ("RevPAR"), an important hospitality industry metric. Commodities prices continued their upward climb. Crude oil ended the second quarter of 2009 at $70 per barrel, 41% higher than at the end of March 2009 and 57% higher than at year-end 2008. The dollar generally weakened against most currencies in the quarter, reversing the gains from the first quarter of 2009. In the second quarter of 2009, the dollar declined approximately 6% against the Euro, 13% against the Pound Sterling and 3% against the Japanese Yen.

Stephen A. Schwarzman, Chairman and Chief Executive Officer, said, "Blackstone remains focused on creating lasting value for our investors and our clients. In the current environment, this means investing prudently in the areas where we see the greatest long-term value and remaining cautious in areas where we expect further value declines. We currently have the largest amount of available capital in our history across our investment platforms and we expect our investors will benefit greatly as we deploy that capital over the next several years."

The table below details Blackstone's Economic Net Income, Net Fee Related Earnings from Operations, Adjusted Cash Flows from Operations and Fee-Earning Assets Under Management as of and for the three and six months ended June 30, 2009 and 2008. Economic Net Income, Total Segments includes unrealized gains (losses) and the direct compensation impact related to those gains/losses but excludes IPO and acquisition-related charges.

                                                                                                                                                                                                                                           Three Months Ended June 30,           Variance                    Six Months Ended June 30,       Variance                                                                       2009               2008               $                  %        2009            2008            $              %                                                               (Dollars in Thousands, Except per Unit Amounts)                                                                          Economic Net Income, Total Segments                     $  172,763         $  99,925          $  72,838          73   %   $  79,561       $  6,358        $  73,203      -       Benefit for Income Taxes (a)                               (8,073      )      (65,717     )      57,644          88   %      (18,845  )      (92,771  )      73,926      80  %   Economic Net Income After Taxes                         $  180,836         $  165,642         $  15,194          9    %   $  98,406       $  99,129       $  (723    )   -1  %                                                                                                                                                                                    Economic Net Income After Taxes per Adjusted Unit (b)   $  0.16            $  0.15            $  0.01            10   %   $  0.09         $  0.09         $  (0.00   )   -1  %   Net Fee Related Earnings from Operations                $  86,790          $  90,443          $  (3,653      )   -4   %   $  176,308      $  158,004      $  18,304      12  %   Adjusted Cash Flows from Operations                     $  102,296         $  161,525         $  (59,229     )   -37  %   $  177,080      $  157,123      $  19,957      13  %                                                                                                                                                                                                                                                                                                                                                                     Fee-Earning Assets Under Management:                                                                                                                                             Corporate Private Equity                                $  25,244,050      $  25,229,438      $  14,612          0    %                                                          Real Estate                                                23,525,181         21,084,770         2,440,411       12   %                                                          Credit and Marketable Alternatives (c)                     44,736,171         53,414,459         (8,678,288  )   -16  %                                                          Total Fee-Earning Assets Under Management               $  93,505,402      $  99,728,667      $  (6,223,265  )   -6   %                                                           -------------------------------------------------------------------------------  

  (a)   Represents the implied benefit for income taxes calculated using the same methodology applied in calculating the tax provision for The Blackstone Group L.P.                                                                                                                      (b)   Adjusted Units represents the weighted-average fully diluted unit count for Economic Net Income purposes. A reconciliation of this item to the equivalent GAAP measure is presented in Exhibit 5 to this release.                                                                 (c)   The variance of $8.7 billion is partially attributed to a $3.6 billion decrease in Fee-Earning Assets Under Management related to Blackstone's decision to restructure its Credit and Marketable Alternatives segment and liquidate its single manager proprietary hedge funds.    -------------------------------------------------------------------------------  

SEGMENT REVIEW

Corporate Private Equity

Corporate Private Equity had revenues of $198.6million for the second quarter of 2009, compared with revenues of $68.1million for the first quarter of 2009 and $92.4million for the second quarter of 2008. The increase from 2008 was driven by stabilization in the total fair value of the segment's underlying portfolio investments.

Net Fee Related Earnings from Operations were $23.9 million for the second quarter of 2009, up from $19.9million for the first quarter of 2009 and $15.9million for the second quarter of 2008. The increase from 2008 reflects decreased Management Fee Offsets, partially offset by an increase in Compensation and Benefits. Economic Net Income was $123.8million for the second quarter of 2009, up from $53.1million for the first quarter of 2009 and $31.3million for the second quarter of 2008.

Compensation and Benefits expense increased to $54.3million from negative $(5.1)million for the first quarter of 2009 and $40.3million for the second quarter of 2008. The first quarter of 2009 included a $40.7million reversal of prior period carried interest allocations to certain personnel, resulting from the net depreciation in fair value of certain portfolio investments. The increase from 2008 was due to an increase in personnel compensation tied to Net Fee Related Earnings from Operations for the segment. Other Operating Expenses of $20.6million remained consistent with both the first quarter of 2009 and second quarter of 2008.

Fee-Earning Assets Under Management were relatively flat at $25.2billion, compared with $25.5billion for the first quarter of 2009 and $25.2billion for the second quarter of 2008.

Limited Partner Capital Deployed totaled $338.3million for the second quarter of 2009, an increase from $196.1million for the first quarter of 2009 and a decrease from $775.9million deployed for the second quarter of 2008.

Corporate Private Equity had six-month revenues of $266.7million, compared with negative revenues of $(24.4)million in the same period of 2008. The principal driver of the year-over-year change was due to an increase in performance fees and investment income driven by positive investment returns from one of Blackstone's corporate private equity investment funds and modest appreciation in the fair value of the portfolio investments in the investment funds.

Real Estate

Real Estate had revenues of negative $(18.9)million for the second quarter of 2009, compared with revenues of negative $(212.6)million for the first quarter of 2009 and $(13.5)million for the second quarter of 2008.

Net Fee Related Earnings from Operations were $32.9million in the second quarter of 2009, up from $30.5million for the first quarter of 2009 and $22.8million for the second quarter of 2008. The principal driver of the change from 2008 was an increase in Base Management Fees. Economic Net Income was negative $(25.1)million for the second quarter of 2009, an improvement from negative $(187.9)million for the first quarter of 2009 and $(59.1)million for the second quarter of 2008.

Compensation and Benefits were negative $(6.8)million, reflecting the reversal of prior period carried interest allocations to certain personnel. This compared to $(37.3)million for the first quarter of 2009 and $32.1million for the second quarter of 2008. Other Operating Expenses were $13.0million, in line with both the first quarter of 2009 and the second quarter of 2008.

Fee-Earning Assets Under Management increased $657.2million from the first quarter of 2009 and $2.4billion from the second quarter of 2008 to $23.5billion.

Limited Partner Capital Deployed totaled $252.7million for the second quarter of 2009, an increase from $215.1million and $209.8million deployed during the first quarter of 2009 and second quarter of 2008, respectively.

Real Estate had negative six-month revenues of $(231.5)million, compared with positive revenues of $34.0million for the six months ended June 30, 2008. The principal driver of the year-over-year decline was net depreciation in the fair value of the portfolio investments in the real estate investment funds. The net depreciation in fair value is reflected in decreased Performance Fees and Allocations and Investment Income (Loss) and Other.

Credit and Marketable Alternatives (CAMA)

The Credit and Marketable Alternatives ("CAMA") segment, previously known as Marketable Alternative Asset Management, has been renamed to better reflect the product mix of this segment. This does not reflect a change to the underlying businesses or how they are reflected in reporting results of operations. CAMA had revenues of $140.4million, compared with $99.2million for the first quarter of 2009 and $225.1million for the second quarter of 2008. CAMA had positive performance fees and investment income of $47.8million for the second quarter of 2009 compared with $6.5million for the first quarter of 2009 and $94.8million for the second quarter of 2008. The change in revenues from 2008 was driven primarily by a decrease in management fees, performance fees and investment income due to the liquidation in the first quarter of 2009 of Blackstone's proprietary single manager hedge funds. Additionally, a reduction in Blackstone's total capital invested in its funds of hedge funds compared to the second quarter of 2008 contributed to the decrease.

Net Fee Related Earnings from Operations were $25.2million for the second quarter of 2009, an increase from $14.4million for the first quarter of 2009 and a decrease from $40.5million for the second quarter of 2008. The main driver of the decline from 2008 was a decrease in Base Management Fees, partially offset by a reduction in Compensation and Benefits and Other Operating Expenses. Economic Net Income was $66.5million for the second quarter of 2009 compared to $14.4million for the first quarter of 2009 and $115.9million for the second quarter of 2008.

Compensation and Benefits were $57.4 million, down from $61.1million in the first quarter of 2009 and $84.2million in the second quarter of 2008. The decrease from the second quarter of 2008 was principally driven by Blackstone's liquidation of its proprietary single manager hedge funds.

Fee-Earning Assets Under Management in the second quarter of 2009 totaled $44.7billion compared with $43.9billion for the first quarter of 2009 and $53.4billion for the second quarter of 2008. The decrease from 2008 was due to net depreciation in the fair value of investments, redemptions and the liquidation of Blackstone's proprietary single manager hedge funds.

Limited Partner Capital Deployed in certain carry credit-oriented funds totaled $112.1million for the second quarter of 2009, down from $208.4million for the first quarter of 2009 and $808.9million for the second quarter of 2008. The decrease was related to a reduction in investment activity in certain of Blackstone's credit-oriented funds due to lower investment activity levels.

CAMA had revenues of $239.6million for the six months ended June 30, 2009 compared with revenues of $255.1million for the same period of 2008. The decrease was primarily driven by a decrease in base management fees which reflected a decrease in Fee-Earning Assets Under Management.

Financial Advisory

Revenues were $83.5 million for the second quarter 2009, an increase of $11.0 million, or 15%, compared to $72.5 million for the second quarter of 2008. The change was driven by an increase of $21.3 million in fees generated by the restructuring and reorganization advisory services business as continued credit market turmoil and low levels of available liquidity led to increased bankruptcies, debt defaults and debt restructurings. Additionally, fees earned by the corporate and mergers and acquisitions advisory services business increased $13.0 million as clients increasingly looked to Blackstone for independent advice in complicated transactions. These increases were partially offset by a decrease of $22.9 million in fees generated by the fund placement business as efforts to raise capital continued to prove challenging in the current economic environment.

Net Fee Related Earnings from Operations were $4.9million for the second quarter of 2009, a decrease from $24.7million for the first quarter of 2009 and $11.3million for the second quarter of 2008. The primary catalyst for the decrease from 2008 was higher operating expenses, due to an increase in reserves against receivables and compensation expense in the corporate and mergers and acquisitions advisory services and restructuring and reorganization advisory services business. A portion of compensation is directly related to the profitability of each of the services businesses. Economic Net Income was $7.5million for the second quarter of 2009 compared to $27.1million for the first quarter of 2009 and $11.8million for the second quarter of 2008.

Compensation and Benefits were $54.2million, up from $51.0million for the first quarter of 2009 and $48.6million for the second quarter of 2008.

Revenues were $174.5million for the six months ended June 30, 2009, an increase of 22% compared to $143.6million in the same period of 2008.