10-KPeriod: FY2008

Blackstone Inc. Annual Report, Year Ended Dec 31, 2008

Filed March 2, 2009For Securities:BX

Summary

In its 2008 annual report, Blackstone Inc. (BX) reported a challenging year marked by significant market downturns impacting its investment performance. Despite a substantial decrease in total revenues to a net loss of $1.16 billion, the company maintained a strong position in its core businesses, including Corporate Private Equity, Real Estate, and Marketable Alternative Asset Management. The report highlights the firm's substantial assets under management (AUM) of $94.56 billion as of December 31, 2008, underscoring its scale despite market headwinds. The acquisition of GSO Capital Partners LP in March 2008 was a key strategic move, bolstering Blackstone's credit investment platform. Management acknowledged the adverse impact of the global economic downturn on its portfolio companies and fund valuations, leading to negative performance fees and allocations. The company also detailed its capital resources and liquidity, noting its $1 billion revolving credit facility and significant cash balances, while managing its commitments and potential clawback obligations. Looking ahead, Blackstone emphasized its diversified business model, long-term investment approach, and commitment to value creation, positioning itself to navigate the challenging economic environment and capitalize on future opportunities.

Financial Highlights

18 data points
Beta

Revenue

-$349.36M

Net Income

-$5.59B

1601.3% Net Margin

Cash & Equivalents

$503.74M

Free Cash Flow

$1.84B

Financial Statements
Beta
Revenue-$349.36M
Operating Expenses$4.39B
Interest Expense$23.01M
Net Income-$5.59B

Key Highlights

  • 1Blackstone reported a challenging 2008 with a net loss of $1.16 billion, primarily due to market downturns affecting investment valuations and performance fees.
  • 2Assets Under Management (AUM) stood at $94.56 billion as of December 31, 2008, demonstrating the firm's significant scale.
  • 3The acquisition of GSO Capital Partners LP in March 2008 was a strategic move to enhance its credit investment platform.
  • 4Performance Fees and Allocations turned negative at $(1.25) billion for 2008, a significant decline from $1.13 billion in 2007, reflecting the market's impact on portfolio values.
  • 5Management and Advisory Fees saw a modest decrease of 6% to $1.48 billion, with higher base management fees offset by lower transaction fees.
  • 6The company maintained a strong liquidity position with $503.7 million in cash and cash equivalents, alongside a $1 billion revolving credit facility.
  • 7Blackstone's business segments (Corporate Private Equity, Real Estate, Marketable Alternative Asset Management, and Financial Advisory) demonstrated resilience, though impacted by broader economic conditions.

Frequently Asked Questions

Blackstone experienced a challenging financial year in 2008, reporting a net loss of $1.16 billion. This was primarily driven by the severe global economic downturn, which negatively impacted the valuations of its investment portfolios, leading to a significant decrease in Performance Fees and Allocations and a negative Investment Income figure.

The difficult market conditions in 2008 led to a decrease in total Assets Under Management (AUM) to $94.56 billion, down from $102.43 billion in 2007, primarily due to market depreciation. Revenues also declined, with a substantial negative impact on Performance Fees and Allocations, although Management and Advisory Fees saw a more moderate decrease due to increased base management fees offsetting lower transaction fees.

A major strategic initiative was the acquisition of GSO Capital Partners LP in March 2008. This acquisition significantly strengthened Blackstone's credit investment platform, which was seen as particularly well-positioned to grow in the prevailing economic environment. The company also continued to expand its operations in Asia and invest in its operations management group.

Blackstone maintained a solid liquidity position at the end of 2008, with $503.7 million in cash and cash equivalents and no significant debt beyond its cash balances. The company had access to a $1 billion revolving credit facility. Blackstone's capital needs are primarily met through cash flow from operations, accumulated earnings, and investments in its own liquid funds, supplemented by its credit facility. The firm also managed its capital commitments to its funds and was mindful of potential clawback obligations.