Blackstone Group’s economic net income (ENI) was a loss of USD341.9 million for the third quarter of 2011, a decrease of USD681.2 million compared to ENI for the third quarter of 2010.
The decrease in ENI compared to the third quarter of 2010 was principally due to market-driven declines in the carrying value of assets as of 30 September , 2011 across Blackstone’s investment segments, partially offset by an increase of USD66.4 million, or 18%, in Management and Advisory Fees to USD442.6 million for the third quarter of 2011. However, since 30 September, 2011, US and European markets have rebounded. ENI was USD929.4 million for the nine months ended 30 September, 2011, an increase of USD24.5 million compared to ENI for the nine months ended 30 September, 2010 of USD904.9 million, primarily attributable to increases in Performance Fees net of applicable compensation and Total Management and Advisory Fees.
Driven both by net inflows and investment appreciation during the last year, Blackstone’s managed assets demonstrated consistently strong growth with Fee-Earning Assets Under Management rising to a record USD132.9 billion and Total Assets Under Management rising to USD157.7 billion at September 30, 2011. The Blackstone funds had USD33.4 billion of committed but uninvested capital, or “dry powder”, at the end of the third quarter of 2011, a record level.
For the third quarter of 2011, Total Segment Revenues were USD140.3 million, down from USD792.2 million in the third quarter of 2010, due to lower Performance Fees in the Private Equity, Real Estate and Credit Businesses segments and lower Investment Income. Total Management Fees increased to USD442.6 million, up 18% from USD376.2 million in the prior year’s third quarter, principally from the increase in Fee-Earning Assets Under Management.
Total Segment Expenses were USD239.9 million for the third quarter of 2011, a decrease from USD424.1 million for the third quarter of 2010, primarily due to the reversal of accruals for Performance Fee Compensation of USD230.2 million to USD(100.9) million for the third quarter of 2011. Compensation, excluding Performance Fee Compensation, was up 16% to USD243.8 million principally as a result of increased personnel. Blackstone’s non-compensation expenses were up 15% from the third quarter of 2010 driven mostly by financing activities and occupancy costs related to continuing global expansion.
GAAP results for the third quarter of 2011 included Revenues of USD(124.1) million, compared to USD784.0 million for the third quarter of 2010, and Net Loss Attributable to The Blackstone Group L.P. of USD274.6 million, compared to a net loss of USD44.4 million for the third quarter of 2010.
Stephen A Schwarzman (pictured), Chairman and Chief Executive Officer, says, “The third quarter presented extremely challenging market conditions, dominated by risk aversion and volatility. While our earnings were not immune to the sharp downward trajectory of global markets, our limited partner investors affirmed their confidence in our world-leading businesses and increased their share of funds with us. We reported net inflows in all of our businesses and grew fee-earning assets under management to a firm record USD133 billion, up nearly 30% year over year. During the quarter we capitalised on the significant dislocation in the market and invested USD4.8 billion in total capital, our highest level of investment activity since 2007, sowing the seeds for strong future returns.”
