The Blackstone Group’s economic net income was USD339.3m for the third quarter of 2010, an increase of USD63.9m from USD275.3m, or 23 per cent, for the third quarter of 2009.
Economic net income was USD904.9m for the nine months ended 30 September 2010, an increase of USD531.2m compared to economic net income for the nine months ended 30 September 2009 of USD373.8m.
The increase was principally driven by increased performance fees and allocations and investment income.
For the third quarter of 2010, total segment revenues were USD792.2m, up significantly from USD603.8m for the third quarter of 2009. The improvement was driven by greater investment income derived from an increase in the carrying value of the underlying portfolio investments in the private equity and real estate segments, and by increases in performance fees and allocations in the real estate and credit and marketable alternatives segments. These increases were partially offset by decreased fees earned in the financial advisory segment.
Total segment expenses were USD424.1m for the third quarter of 2010, an increase from USD325.4m for the third quarter of 2009. The increase in compensation and benefits to USD339.9m for the third quarter of 2010 was primarily driven by an increase in performance fee related compensation and an increase in base compensation, which includes all compensation for all partners and employees excluding only compensation from performance fees. Other operating expenses increased to USD84.3m.
Net fee related earnings from operations were USD112.9m for the third quarter of 2010, up from USD94.9m for the third quarter of 2009. Net fee related earnings from operations were USD319.6m for the nine months ended 30 September 2010, up from USD271.2m for the nine months ended 30 September 2009. Net fee related earnings from operations increased principally as a result of increased management and advisory fees and investment income from Blackstone’s treasury cash management strategies, partially offset by an increase in base compensation.
GAAP results for the third quarter of 2010 included revenues of USD784.0m, compared to USD597.0m for the third quarter of 2009, and net loss attributable to The Blackstone Group of USD44.4m, compared to a net loss of USD176.2m for the third quarter of 2009.
On 1 October 2010, Blackstone purchased a 40 per cent equity interest in Pátria, a Latin American alternative asset managers and advisory firm. As part of the transaction, Blackstone and Pátria have agreed to cooperate in building their businesses in Brazil and throughout the region.
Stephen A. Schwarzman, chairman and chief executive officer, says: “While global economic and market environments remain fragile, we saw continued marked improvement in the carrying values of our investment funds during the third quarter. Our ability to leverage the knowledge we have housed across our businesses helped us create value through operational programs at the companies we own on behalf of our investors and identify exciting new opportunities. As of quarter end, we have grown total assets under management to USD119bn, which speaks to the hard work and performance of our team.”
