Blackstone Inc. Quarterly Report for Q3 Ended Sep 30, 2009

Summary

Blackstone Inc. (BX) reported its third-quarter and nine-month results ending September 30, 2009. The company experienced a notable shift in performance, moving from significant losses in the prior year's comparable periods to a reduction in net loss attributable to The Blackstone Group L.P. For the three months ended September 30, 2009, the net loss attributable to common unitholders was $176.2 million, an improvement from $340.3 million in the same period of 2008. This improvement was driven by a substantial increase in performance fees and allocations, largely due to positive fund performance, and a significant increase in investment income, contrasting with substantial investment losses in the previous year. Despite these improvements, total revenues declined year-over-year due to lower management and advisory fees, reflecting a challenging economic environment impacting fee-earning assets under management. The company's financial position showed total assets of $8.73 billion at September 30, 2009, down from $9.26 billion at December 31, 2008. Liabilities also decreased to $2.85 billion from $3.37 billion. Blackstone successfully managed its liquidity, issuing $600 million in senior notes and maintaining access to its revolving credit facility, with no outstanding borrowings. The company continues to actively manage its capital structure and has approximately $339.5 million remaining under its unit repurchase program. While revenue generation remains sensitive to market conditions, the reported results indicate a positive operational trend with reduced losses and improved performance fee generation.

Key Highlights

• 1Blackstone reported a reduced net loss attributable to The Blackstone Group L.P. of $176.2 million for Q3 2009, compared to a loss of $340.3 million in Q3 2008.
• 2Performance Fees and Allocations significantly increased to $154.0 million in Q3 2009 from $(416.1) million in Q3 2008, indicating a recovery in fund performance.
• 3Investment Income (Loss) improved to $64.8 million in Q3 2009 from $(199.5) million in Q3 2008, driven by improved returns and elimination of prior year hedge fund losses.
• 4Total Revenues decreased by 18% year-over-year for the third quarter, primarily due to lower management and advisory fees.
• 5Assets Under Management decreased to $97.6 billion at September 30, 2009, from $116.3 billion at September 30, 2008, reflecting market depreciation and fund liquidations.
• 6The company issued $600 million in senior notes and had $486.5 million in cash and $1 billion in high-grade liquid debt strategies at quarter-end, with $673.4 million in outstanding borrowings.
• 7Fee-Earning Assets Under Management decreased slightly to $96.3 billion from $99.7 billion, impacted by market conditions and fund spin-offs.

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