Professional Documents
Culture Documents
ForwardLookingStatementsandImportantDisclosures
ThispresentationmaycontainforwardlookingstatementswithinthemeaningofSection27AoftheSecuritiesAct of 1933 and Section 21E of the Securities Exchange Act of 1934 which reflect Blackstones current views with respectto,amongotherthings,Blackstonesoperationsandfinancialperformance.Youcanidentifytheseforward lookingstatementsbytheuseofwordssuchasoutlook, believes, expects, potential, continues, may, will, should, seeks, approximately, predicts, intends, plans, estimates, anticipates orthenegative version of these words or other comparable words. Such forwardlooking statements are subject to various risks anduncertainties.Accordingly,thereareorwillbeimportantfactorsthatcouldcauseactualoutcomesorresultsto differ materially from those indicated in these statements. Blackstone believes these factors include but are not limitedtothosedescribedunderthesectionentitledRiskFactors initsAnnualReportonForm10Kforthefiscal yearendedDecember31,2009,assuchfactorsmaybeupdatedfromtime to time in its periodic filings with the SEC, which are accessible on the SECs website at www.sec.gov. These factors should not be construed as exhaustive and should be read in conjunction with the other cautionary statements that are included in the SEC filings. Blackstone undertakes no obligation to publicly update or review any forwardlooking statement, whether as a resultofnewinformation,futuredevelopmentsorotherwise. ThispresentationincludesNonGAAPFinancialMeasures.Youshouldalsoreadtheappendixtothispresentation ReconciliationofNonGAAPFinancialMeasures. ThisreleaseisforinformationalpurposesonlyanddoesnotconstituteanofferofanyBlackstonefundoranofferto enter into any investment program with Blackstone. Such an offer may only be made by means of an offering memorandum, which would have a complete description of the relevant fund or program, including the risks applicablethereto.
Agenda Thursday,September23,2010
Time 8:00 8:05am 8:05 8:20am 8:20 9:00am 9:00 9:40am 9:40 10:25am 10:25 10:45am 10:45 11:25am 11:30 12:10pm 12:10 12:30pm 12:30 1:30pm 1:30 1:45pm 1:45 2:35pm 2:35 3:25pm 3:25 4:30pm 4:30 5:30pm Function IntroductionandOverviewofTheBlackstoneGroup
JoanSolotarSeniorManagingDirector,ExternalRelationsandStrategy, TheBlackstoneGroup
Location TrianonBallroom,3rdFloor TrianonBallroom,3rdFloor TrianonBallroom,3rdFloor TrianonBallroom,3rdFloor TrianonBallroom,3rdFloor PetitTrianon,3 Floor TrianonBallroom,3rdFloor TrianonBallroom,3rdFloor PetitTrianon,3rd Floor MercuryBallroom,3rdFloor PetitTrianon,3rd Floor TrianonBallroom,3rdFloor TrianonBallroom,3rdFloor TrianonBallroom,3 Floor PetitTrianon,3rd Floor
rd rd
WelcomeRemarks
StephenA.SchwarzmanChairman,CEO&CoFounder,TheBlackstoneGroup
FinancialOverview
LaurenceTosi(LT)ChiefFinancialOfficer,TheBlackstoneGroup
PortfolioOperationsGroup
JamesQuellaSeniorManagingDirector,TheBlackstoneGroup
PrivateEquity
GarrettMoranSeniorManagingDirector,TheBlackstoneGroup VikrantSawhneySeniorManagingDirector,TheBlackstoneGroup
BREAKCyberCaf BlackstoneAdvisoryPartners
JohnStudzinskiSeniorManagingDirector,TheBlackstoneGroup
Restructuring&ReorganizationAdvisory
TimothyColemanSeniorManagingDirector,TheBlackstoneGroup
BREAKCyberCaf GSOCreditPlatformWorkingLunch
BennettGoodmanSeniorManagingDirector,TheBlackstoneGroup&Founder, GSOCapitalPartners
BREAKCyberCaf RealEstate
JonathanGraySeniorManagingDirector,TheBlackstoneGroup
COCKTAILRECEPTION
TableofContents
ReconciliationofNonGAAPFinancialMeasures SpeakerBiographies
I.
OverviewoftheBlackstoneGroup
Private Equity
Real Estate
Financial Advisory
12 months
Robustbalancesheetwith$1.6billionofcashandliquidinvestments A ratingfromS&Pwithstableoutlook;A+ ratingfromFitchwithstableoutlook Deep,experiencedmanagementteam Presidesoverstrongriskmanagementprocessesandstrictcapitaldisciplineacrossallcycles Approximately66%ofequityisownedbypartnersandemployeescreatingacultureofownershipandlongterm
________________________________________________
accountability
II.
Financial Overview
AnUnparalleledRecordofConsistentGrowth
PrivateEquity
$25.2billionFeeEarningAUM
RealEstate
$23.8billionFeeEarningAUM
Credit&MarketableAlternatives
$52.4billionFeeEarningAUM
FinancialAdvisory
M&A,Restructuring& Reorganization,ParkHill PlacementAgent
AssetsUnderManagement(1)
($inbillions)
FeeEarningAUM
$120 $100 $80 $60 $40 $22 $20 $3 $0 $4 $8 $8 $12 $13 $14 $27 $32 $96
$117
$101
15YearCAGR CAMA 40%
$91
CAGR27%
$51
$83 $70
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 June 2010
________________________________________________
(1)
ChartreflectsTotalAUMforyears19952006,andFeeEarningAUMthereafter.
1
BlackstoneFinancials KeyRevenueDrivers
Privates (PE,RE,GSOMezz) MarketableAlternatives (FoHFs,BREDS,GSOHedge)
ManagementFees
FeeEarningAUM (Committed/InvestedCapital)
FeeEarningAUM (NAVincludingmarks)
Transaction&AdvisoryFees
Activitybased
Activitybased
PerformanceFees
CarriedInterest (20%ofPositiveReturns)(1)
IncentiveFees (%ofPositiveReturns)
PrincipalGainsonBX InvestmentsinFunds
________________________________________________
BXReturnsonits GPInvestments(2%3%)
BXReturnsonits GPInvestments(2%3%)
(1)
Assumespreferredreturnhurdleisachievedbythefund.
2
FeeRevenueStreams
($inmillions)
$1,800 $1,500 FeeRevenues $1,200 $900 $600 $300 $0 2007 ManagementFees 2008 AdvisoryFees 2009 Transaction&OtherFees 2010LTM FeeEarningAUM $804 $360 $1,042 $1,000 $1,024 $1,636 $472 $1,562 $123 $398 $1,518 $127 $391 $1,618 $166 $428
($inbillions)
$180 $150 $120 $90 $60 $30 $0 FeeEarningAUM
RealizedPerformanceRevenueStreams
($inmillions) ($inbillions)
$1,200 RealizedPerformanceFees $995 $900 $600 $322 $300 $0 $133 $23 2003 $24 2004 2005 2006 $55 $37 $916
$1,055
$83
$74
$169
2009
2010LTM
RealizedPerformanceFees
negativeRealizedPerformanceFeesoverthelifeofafund=RisklessUpside
Whilelumpy,PerformanceFeesaregeneratedwithconsistentreturnsovertime
BlackstoneFinancials 2010LTM($inmillions) KeyFinancialMetrics GAAP Income(Loss)BeforeProvisionforTaxes +IPOandAcquisitionRelatedCharges +AmortizationofIntangibles Income(Loss)ofNonControllingInterests EconomicNetIncome ENI =EconomicNetIncome NetPerformanceFeesandAllocations InvestmentIncome(Loss) TaxesPayable NetFeeRelatedEarnings NFRE =NetFeeRelatedEarnings +NetRealizedPerformanceFeesandAllocations +RealizedInvestmentIncome(Loss) DistributableEarnings DE =DistributableEarnings $609
5
$(1,657)
$1,251
$441
PrivateEquityProfile
FeeEarningAUMof$25.2billion Capitalissubjectto10yearlockup
FeeRevenues
FeeRevenues
($inmillions)
$500 $400 $300 $200 $100 $0
2007 2008 2009
($inbillions)
$50 $392 $125
$367 $97
FeeEarningAUM
ManagementFeespaidoncommittedcapital,
notcarryingvalue:
Insulatedfrommarketcyclicality TransactionFeescreateupside PerformanceFeesof20%paidonrealized gains $2.1billionsince2003;positivethrough
$255
$269
$271
$267
$10 $0
2010LTM
ManagementFees FeeEarningAUM
Transaction&OtherFees
RealizedPerformanceFees
($inmillions)
RealizedPerformanceFees $700 $600 $500 $400 $300 $200 $100 $0 $(100) $79 $(1) $602 $666 $574
($inbillions)
$50 $40 $30 FeeEarningAUM
downcycle
SubstantialDryPowder toinvest Financialprofilecreatescompetitiveadvantage
forpatientinvestmentandsuperiorreturns
RealizedNetIRRssinceinceptionof25%
2003 2004 2005 2006 2007 2008 2009 2010 LTM RealizedPerformanceFees FeeEarningAUM
6
RealEstateProfile
FeeEarningAUMof$23.8billion Capitalissubjectto10yearlockupforcarry FeeRevenues
($inmillions)
$600 $500 FeeRevenues $400 $300 $200 $100 $0 $233 $296 $338 $336 $40 $361 $33 $366 $33 $571
($inbillions)
$50 $40 $30 $20 $328 $333 $10 $0 FeeEarningAUM
funds
ManagementFeespaidoncommittedcapital,
notcarryingvalueforcarryfunds
PerformanceFeesof20%paidonrealized
2007
2008
2009
2010LTM
gains
SubstantialDryPowder toinvest RealizedNetIRRssinceinceptionof28%
ManagementFees FeeEarningAUM
Transaction&OtherFees
RealizedPerformanceFees
($inmillions)
RealizedPerformanceFees $400 $300 $200 $100 $0 $(100) $34 $67 $25 $(3) $209 $347 $327
($inbillions)
$40 $30 $20 $10 $14 $0 $(10) FeeEarningAUM
CreditandMarketableAlternativesProfile
FeeEarningAUMof$52.4billion Highlydiversifiedbystrategy,sectorandvintage Countercyclicalelementsdrivegrowth Flexiblestrategiestailoredtoclientand FeeRevenues
($inmillions)
$600 $500 FeeRevenues $400 $300 $200 $100 $0 2007 2008 2009 2010LTM $40 $20 $0 $327 $488 $394 $427 $80 $60 FeeEarningAUM
($inbillions)
$100
opportunity
Limitedpartnersarepredominatelyinstitutional Despiteindustryshakeoutandredemptions,
FeeRevenues
FeeEarningAUM
outperformrelevantbenchmarks
CAMAFeeEarningAUMMixasofJune30,2010
CreditHedge
RealizedPerformanceFees
($inmillions)
RealizedPerformanceFees $160 $120 $154
($inbillions)
$90 FeeEarningAUM
5%3%
GSO 45%
ClosedEnd MutualFunds(Asia)
$60 $80 $47 $40 $0 2003 2004 2005 2006 2007 2008 2009 2010 LTM
RealizedPerformanceFees FeeEarningAUM
52% 7%
$20
$24
CreditDrawdown
FinancialAdvisoryProfile
Purestrategicadvisorybusinesses BlackstoneRestructuringandReorganization Leadingrestructuringandreorganization FeeRevenues
($inmillions)
$411
$396
$434
revenueseveninadownmarket
ParkHillGroup Leadingprivateequityandrealestate
2008
2009
2010LTM
NetFeeRelatedEarnings
($inmillions)
fundraisingbusinessforthirdparties
Revenuesperpartnernearlydoublethatof
$95 $78
$91
independentpeers
Investedaggressivelyingrowthduringthe
down cycle
Businesseshavecountercyclicalelements
leadingtobalanced,stableprofitabilityand growth
________________________________________________
2008
2009
2010LTM
(1)
2007ProFormaincludesalladjustmentsrelatedtotheInitialPublicOfferingandReorganization,asifsuchtransactionhadbeencompletedinJanuary1,2007.
9
StrongBalanceSheet(1)
($inmillions)
A ratingfromS&Pwithstableoutlook;A+
June30,2010 TotalCashandLiquidInvestments
RatingfromFitchwithstableoutlook
$3.45billioninInvestments NorecoursetoBXbalancesheet Nodirectinvestments/proprietary
CashandCashEquivalents TreasuryCashManagementStrategies LiquidInvestments TotalCashandLiquidInvestments TotalDebt $507 813 274 $1,594
positions
Diversifiedbybusiness,fund,vintage,
$1,070millionRevolver LoansPayable 10YearNoteDue2019 BalanceSheetItemswithOffsettingAssets TotalDebt TotalPartners Capital CurrentMarketCapitalization(2)
________________________________________________ (1) Representsdeconsolidatedbalancesheetaspresentedinpublicfilings. (2) CurrentMarketCapitalizationcalculatedusingBXclosingpriceasofSeptember20,2010andBlackstonesEconomicNetIncome AdjustedUnitsasofJune30,2010.
10
sectorandregion
Added$400millionof10.5yearnotesat
5.875%;longtermcapitalforgrowth
OurMission:SustainableCompetitiveAdvantageDeliveringLongTermValue
BlackstonesPortfolioOperationsGroup workswithourinvestmentteamsandportfolio
companyseniormanagementtohelpacquiredbusinessesbecomemoreproductive, competitiveandefficient
Intheprocess,webuildstrongerenterprises,preserveandcreatejobs,andenableour
portfoliocompaniestoachievelastingvalueforbothourfundinvestorsandsuccessor owners
Geographies
NorthAmerica Europe Asia/Africa
Industries
39 9 14
Industrials& Energy Healthcare Tech,Media&Telecom Hospitality/Leisure BusinessServices FinancialServices Retail/Consumer
Size(1)
18 10
Approximately715,000total Over$110billiontotal
revenues
10 8 6 5 5
employees
EquityinvestedbyBlackstone
fundsof$24 billion
Totalcurrententerprisevalue
over$200billion
________________________________________________
(1)
IncludesBXownershippercentageofDTandHarrahs.Totalenterprisevaluerepresentsmarktomarketvalueasof6/30/10.
2
SourcesofSustainableCompetitiveAdvantage
FinancialStability
BusinessSystems/FinancialControls WorkingCapitalOptimization TaxOptimization
Strategy&PerformanceEnhancement
GlobalPeerReviewProcess 100dayPlanning LeadershipDevelopment ManagementAssessment TalentManagement
Productivity&Competitiveness
ProcessRedesign/Lean SupplyChain ProcurementProcessesandConsortiaBuying IT/Outsourcing HealthcareBenefits
CorporateGovernance
BoardCompositionandProcess
CorporateResponsibility
Ethics/FCPA SocialResponsibility EnvironmentalManagement
StructuralTransformation
TransformationalChange
RevenueOptimization
GotoMarket Redesign StrategicSalesandMarketing Pricing/SalesForceOptimization CrossSelling
GoodProgressin2009and2010 alongsidevaluedeliverywithintheportfoliocompanies
InvestinginGrowthandLeadershipbyhiringspecialistsin:
Growth Leadershipandmanagementdevelopment
Expandedfunctionalcapabilitieswithsenioroperatingadvisors
IT,Lean,SupplyChain SalesforceEffectiveness PricingandMarketing AdvertisingandBranding
Reviewedandreorganizedportfoliocompanyboards
Increaseduseofsenioradvisors/independentdirectors RebalancedBXprofessionals
Newquarterlyportfolioreviewprocess
Sectorfocusedpeerreviews Combininginvestmentandoperatingexecutives CEOledportfoliocompanydeepdives
SupportModelCombinesSectorandFunctionalExpertise PortfolioOperationsGrouphasgrowntoover60FTEsoverthepastsixyears
DealPartners Focusedon IndustrySectors Blackstone Portfolio Companies Business Services Consumer/ Retail Financial Institutions Hospitality/ Leisure Healthcare India Industrial/ Chemical/Energy Tech,Media, Telecom
________________________________________________
Global SectorTeams
Platforms
TBMConsulting E&YWorkingCapital
Optimization
E&Y/DeloitteTax
Optimization
(1)
NorthAmerica,Europe,Asia.
5
WorkingCollaborativelywithManagement,DealTeamsandCoSponsors
OurPortfolioWide,Transformational,andFunctionalInitiativeshavegeneratedorareontracktogenerateover$4billionof
annualizedgrossEBITDAimpact
$4billion=$36billionofTEV,or~20%oftotalPrivateEquity portfolioTEVat9xportfoliomultiple
PortfolioWideInitiatives
GroupPurchasingincludingCore
TransformationalInitiatives
Largescale,companywide
FunctionalInitiatives
Morefocusedprogramsaimedat
programsaimedatdriving significantvalue
Managementupgrades Integratedcorporateprograms:
Corporatewiderestructuring Growthinitiatives;pricingand salesproductivity Leanprocessredesign Plantconsolidationand lowcostsourcing Supplychain,procurement,and distributionoptimization ITandoperationsrestructuring andcosourcing
increasescashflowandimproves assetutilization
Over150TouchPointsacrossthePortfolioCompanies
Integrated Group Equity Performance IT& Sales& Working NumberofTouches Purchasing Healthcare &BOD Lean Outsourcing Marketing Capital+Tax Europe
SelectPortfolioCos. AllcargoGlobalLogistics AlliantHoldings AlliedBarton ApriaHealthcareGroup Biomet BlueStar CatalentPharmaceuticals CenterParcs Cineworld DJO 36 28 20 10 15 8 12 23
India
15
China
2
Travelport
savingsin2009
Newtarget$350+millionannualizedsavingsin2010 Over~$1.4billionofannualspendmanagedthroughtheprogram 80% 85%ofportfoliocompaniesparticipateglobally 35+categoriesavailabletoday Globalcapabilityforover10categories Nocosttoparticipateinvirtuallyallcategories
Behavioral Health/EAP
D A T A
Centersof Excellence
Vendors Line
24HourNurse
P R E D I C T I O N
PersonalHealth Advocate
Pharmacy
Maternity
CareAlerts
EquityHealthcare FirstYearResults:2009
AggregateEHtrendis6.4%vs.U.S.corporateaverage~10.6%(1) 2009estimatednetsavingsof$35millionfor25portfoliocompanies $19millionmedicalclaimsavingsduetobetterqualityanddecisionmaking $16millionadministration(ASO)feesavings Aggressivesavingstargetof$100+million Continuedinvestmentinincentivesandplandesign Newmembershipgrowth
________________________________________________
(1) SegalTrendSurvey.
11
CrossSellingOpportunityandProgram(B2B) CrosssellingB2Bprogramcontinuestogrowrapidly,withmaterialrevenueandEBITDAimpact
FulltimeresourceinPortfolioOperationsGrouptocoordinatecrosssellingprograms(B2BandB2C)
SpecificProduct/ServiceOpportunitiesExamples:
Intelenet businessprocessoutsourcing Orbitz,HiltonHotels,LaQuinta travel Allcargo logistics TMobileWireless telecom SunGard businessservices RGIS inventorymanagement PerformanceFoodGroup fooddistribution
services
AlliantInsurance insurance,employee
benefitsconsulting
AlliedBarton securityservicesand
employeescreening
RepublicServices wastemanagement
intohotels,themeparks
Merlin,MichaelsStores,Universal,Tragus,
12
CrossSellingPlatform BlackstoneB2CMarketplace
ExclusiveBlackstone
platform
Objectiveistopromote
Blackstoneportfolio companies
31U.S.basedportfolio
ExclusiveBlackstoneOffers toemployees
Includesmanynon
Blackstonemerchants
LaunchedinMay
13
CxOOnlineNetworkforPortfolioSeniorExecutives(CEO,CFO,CPO,CHRO,CMO,CIO)
WelcometoTheBlackstoneGroupCEONetwork
WelcometotheCEONetwork!OursitepromotesrelationshipbuildingamongtheCEOsofourPortfolio Companies,suchasyourself.Youwillfindthelatestpersonalandcontactinformationformembersaswell asopportunitiestointeractwiththemthroughsurveysanddiscussionboards. TobegintheprocessyouwillneedtoregisterbyclickingontheNewMemberRegistration linkbelow.If youhavealreadyregisteredwithus,pleaseloginbyenteringyourEmailaddressandPasswordandthen clickingontheLogin buttonbelow. Wehopeyouenjoyyourexperienceandencourageyourfeedbackas wecontinuetoupdatethesiteto meetyourneeds.
CEONetwork
14
inenvironmentalstewardship
Threeprimaryareasoffocus: Blackstoneenergyconsumptionandenvironmentalimpact Portfolioenergyconsumptionandenvironmentalimpact(bothPEandRE) Environmentalriskassessmentinallinvestmentprocesses Targetingmeaningfulenergyandcarbonreductionsoverthenextfiveyears Toptierofcompaniesglobally Sharingexpertiseacrossportfolio FullcompliancewithCRCmandateacrossEuropeanportfolio Broadcommunicationprogrambeinglaunchedthisquarter Documentingenvironmentalandcostbenefitsforthefirmandportfolio
15
OurMission:SustainableCompetitiveAdvantageDeliveringLongTermValue
BlackstonesPortfolioOperationsGroup workswithourinvestmentteamsandportfolio
companyseniormanagementtohelpacquiredbusinessesbecomemoreproductive, competitiveandefficient
Intheprocess,webuildstrongerenterprises,preserveandcreatejobs,andenableour
portfoliocompaniestoachievelastingvalueforbothourfundinvestorsandsuccessor owners
16
BlackstoneCapitalPartnersOverview(1)
GlobalLeaderin PrivateEquity
Invested$33billionofequitycapitalin142transactionssinceDecember1988
Investment Strategy
Transformationalvalueaddedoperationscapability MidMarket/GrowthEquityFocus
Alignmentof Interests
$2.3billiontotalinvested/committedcapitalbyBlackstoneanditsprofessionals 7%oftotalcapitalinvested
DeepInvestment Team
________________________________________________
28SeniorManagingDirectors
Note: Pastperformanceisnotnecessarilyindicativeoffutureresults.BCPVhasinvested$17.4billionasofJune30,2010witharealized/unrealizedvalueof$17.2billion,generatingagrossIRRof0.5%, andanetIRRof2%.TherecanbenoassurancethatanyBCPfundwillachieveits objectivesoravoidsubstantiallosses. (1) InformationisasofJune2010unlessotherwisestated.Includes BlackstoneCommunicationsPartners,asectorspecificfund. (2) S&P500AnnualReturnhasbeencalculatedastheinternalrateofreturnofthetotalcontributionsanddistributions(including fees,drawdownofexpenses,returnofcapitalandrecoupedlosses),and thecorrespondingannualrateofreturnoftheS&P500Indexfromeachcontribution/distributiondatetothequarterendforallinvestments.ForBCPIandBCPII,theS&Preturnhasbeencalculated fromthemostmaterialinvestmenttranchedatetothefinalexit dateforeachinvestment.S&P500AnnualRateofReturnisprovidedsolelyasanindicationofreturnsthatcouldbeearnedby investorsbymakingsimilarinvestmentsintheS&P500Index.BlackstonesfundsdifferfromtheS&P500Indexinthat,amongotherfactors,Blackstonesfundsareactivelymanagedentitiesthatbear feesanduseleverage. 1
RestructuringAdvisory
Restructuringsinvolving over$925billionof totalliabilities
CorporateAdvisory
Over$450billionof transactions
RealEstate
$24billionAUM
Credit/GSO
$29billionAUM
FundofHedgeFunds
$29billionAUM
________________________________________________
Note:DataasofJune30,2010.
2
24%ingrowth
equity
24%inlarge
transactions
16%inminority
anddistressed investments
36%insmall and
mediumsizeddeals
Small andMedium SizedBuyouts 36%
________________________________________________
(1)
Basedoninvested/committedcapitalfrom2000throughSeptember17,2010.Percentagesmaychangeovertime.
3
GlobalReach,SingleFund,OneHighStandard
Europe 5SMDs 16Professionals 5LocalCountryRepresentatives
Sweden
London
Paris
Switzerland Madrid
Chicago
Boston
LosAngeles
AffiliatedOffice Advisors
Houston
Atlanta
ReviewCommittee Gatesdealsand
Workshop Detaileddrill
100DayPlanReview Reviewsresults,
priceandtactics
RankedhighestamongChiefInvestmentOfficersforinvestmentprocessandriskmanagement(1)
________________________________________________
(1)
CitigroupInvestmentResearch:ChiefInvestmentOfficerSurvey,September25,2007(toourknowledge,themostrecentsurveyofitskind).
4
____________________________________________
Pastperformanceisnotnecessarilyindicativeoffutureresults.InherentinaninvestmentinanyBCP/BCOMfundissignificantriskandvolatility,andtherecanbenoassurancethatanyBCP/ BCOMfundwillachieveitsobjectivesoravoidsubstantiallosses. BasedoneachclosedBCP/BCOMfundsnetIRRasofJune30,2010comparedtoThomsonReuters dataasofMarch31,2010,themostcurrentdataavailable.AsBCPVisstillinvesting,itisnot consideredaclosedfundandisexcludedfromthisanalysis.AsBCOMisasectorspecificcommunicationsfund,BCOMs netIRRwascomparedtotheThomsonReuters TelecomFundsIndexrather thantheBuyout/MezzanineFundsIndexusedtocomparetheBCPfunds. IncludesinvestmentsmadebyBlackstonesSidebySideinvestmententities;excludesLPCoinvestments. S&P500AnnualReturnhasbeencalculatedastheinternalrateofreturnofthetotalcontributionsanddistributions(including fees,drawdownofexpenses,returnofcapitalandrecoupedlosses), andthecorrespondingannualrateofreturnoftheS&P500Index fromeachcontribution/distributiondatetothequarterendforallinvestments.ForBCPIandBCPII,theS&Preturnhasbeen calculatedfromthemostmaterialinvestmenttranchedatetothe finalexitdateforeachinvestment.S&P500AnnualRateofReturnisprovidedsolelyasanindicationofreturnsthatcouldbe earnedbyinvestorsbymakingsimilarinvestmentsintheS&P500 Index.BlackstonesfundsdifferfromtheS&P500Indexinthat,amongotherfactors,Blackstonesfundsareactivelymanaged entitiesthatbearfeesanduseleverage. 5
15.8%
11Deals
Ish Spirit
SunGard
Travelport
BlueStar WeatherChannel
$2,000$5,000
ExtendedStay
22Deals
CTIHoldings UniversalOrlando
SeaWorld
<$2,000
61Deals
2000
________________________________________________
2001
2003
2005
2006
2008
2010
2011
Note:OnlyTEV>$2,000labeled.ExcludesBankUnited,whichdoesnothaveaTEVcomparabletoothertransactions.
7
AdvantagesofScale
Brandnamematters Dedicated50+personPortfolioOperationsGroupfocusedoncreatingvalue Highproportionofexclusivedeals Preferredaccesstodebtfinancingincapitalconstrainedmarkets Processadvantagesfromsellingagents,includinglastlooks Broadnetworkofrelationshipstofinddeals Corporatepartnerships Globalperspective evenondomesticcompanies Deepfinancialandoperatingdomainexpertiseineachmajorsector Strategicalliances China,Korea,Brazil
BlackstonesApproachtotheCreditMarkets
Maintainabroadrangeofactiveandcollaborativerelationships
Proactive
withinvestmentbanks,commercialbanks,hedgefundsand mutualfunds
Opportunistic
Continuallystayaheadof,andtakeadvantageof,new
technology (e.g.,amend/extend)
Customized
Tailorthecapitalstructureofeachinvestmenttosuitthat
particularinvestmentthesis
ManagethedebtobligationsoftheBCPportfoliocompanieson
anintegratedbasis,leveragebestpracticesandrelationships acrosstheportfolioandthefirm(e.g.,GSO,BAAM)
$3billionofequityvaluecreated
10
BuiltinFinancialFlexibility
StrongLiquidityandCovenantPosition
Almost2/3ofBCPVscapitalisinvestedincompanieswithnomaintenancecovenants Comfortablecovenantcushionsforcompanieswithcovenants Lessthan3%ofBCPVportfoliocompanydebtmaturesbefore2013;65%matures2015andbeyond
BCPVDebtMaturities(1) 50%
%ofTotalBCPVDebt
46.7%
40%
33.2%
30%
21.0%
20% 10% 0%
0.2% 1.0%0.9% 3.1% 0.2% 3.1%
16.4%
15.8% 10.7%
1.6%
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018+
BCPVDebtMaturitiesasofDecember2008
________________________________________________
BCPVDebtMaturitiesasofSeptember2010
CreditMarketsOutlookforBCPVI AstheBCPVIinvestmentperiodbegins,weexpecttobeataveryfavorablepointinthecreditcycle
Favorableenvironmentforsaleofnoninvestmentgradedebttoinstitutionalinvestors
Bankinginstitutionshavehealed
BCPhasmorearrowsinthequiver thanbeforethecrisis:
12
BCPVOutlook
WeexpectBCPVtogeneratea2xMOIC(1)
AveragerevenueandEBITDAgrowthratesof5.1%and8.3%,respectively Averagemarginimprovementof80bps
Solidbalancesheetswithcomfortablecovenantandmaturityprofiles
91%ofBCPVcapitalinvested/committed
Expecttocloseinvestmentperiodinthenextfewmonths
________________________________________________
Opportunity
Postrecessionvintageshavehistoricallyprovided
prospects
Anabundanceofprivateequityinthe
thehighestreturns
BCPhassignificantdrypowderandaglobal
marketmakesontherundealsvery difficult
Debtmarketshavereboundedand
opportunityset
Focusonexclusiveopportunitiesdrivenby
industry/regionaldepth
RecentInvestments SummitMaterials Aggregatesbuildup PBFRefining depressedrefiningopportunities SeaWorld furtheringourthemeparkfranchise Dili modernizingdistributioninChina
14
BestPrivateEquityInvestmentsOriginateat theBottomoftheCycle
PrivateEquityIndustryReturnsbyVintagevs.U.S.GDPGrowth
35% 30% MeanNetIRRbyVintage 25% 20% 15% 10% 5% 0% 5% 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2% 2006 2008 2010 19% 15% 11% 9% 6% 15% 11% 7% 7% 1% 15%15% 16% 23% 21%
?
31% 29% 27% 26% 22%
5%
YoYU.S.GDPGrowth
1% 0% 1% NA NA NA 2% 3%
TopofCycle
BottomofCycle
U.S.GDPGrowth
________________________________________________
Source:GlobalInsight;CambridgeAssociatesLLC;U.S.privateequityPooledMeanNetIRRtolimitedpartnersbyvintageyearasofMarch31,2010.Vintageyear fundsformedsince2006aretooyoungtohaveproducedmeaningfulreturns.GDPprojectionsaspertheInternationalMonetaryFund,2009.
15
FundraisingandNewInitiatives
BCPVI
Estimatedfundsizeof$500million Expectfinalclosein1Q2011
RMBFund Chinagrowthstrategies
Estimatedfundsizeof5billionRMB(approximately$740million) Firstcloseexpectedin4Q2010
16
FundraisingandNewInitiatives(Contd)
Infrastructure ValueorientedandvalueaddedInfrastructureinvesting,currentlyfocusedon
17
V.
A.
BAP Overview
BlackstoneAdvisoryPartners
Advisoronover$450billionoftransactionssince1985
Aleadingglobalindependenttrustedadvisorypracticewithlimitedconflictsofinterestandahigh
levelofseniorattentiontoclients
Adviseonandexecutecomplextransactions:
BroadExpertise
InternationalhubsinNewYork,London,HongKong,andPariswithassignmentsthroughouttheU.S.,
Europe,andAsia
FinancialInstitutions,EnergyandNaturalResources,Chemicals, Technology&Communications,
Media,Consumer,RealEstate,Industrials,andMinerals&Mining
20SeniorManagingDirectorswithanaverageofover20yearsof industryexpertise 138professionalsglobally
Independence
DepthofExpertise;SeniorLevelAttention
Intellectual Capital
SeniorManagingDirectorswithaveragetenureof20yearsinInvestmentBanking,nearlyallofwhomhaveled
Innovation
Extensiveexperienceadvisingadiversesetofclients,includingpublicandprivatecompanies,boards,and
InvestorFocus
Distinctiveabilitytobringanownersmindsettobearonadvisoryengagements;extensiveexperienceworking
withtheFirmsportfoliocompanies GlobalPresenceandAbilitytoCapitalizeonOtherBlackstoneBusinesses
International Network
NetworkofinternationalofficesandinternationaladvisoryboardallowBlackstonetoofferglobalcrossborder
AdvisoryProductCategories IntellectualCapitalatWork
M&AandCorporateAdvisory
SectorExpertise Generaladviceandexecutionofacquisitions,mergers,jointventures,minority investments,assetswaps,divestitures,leveragedbuyouts,specialcommittees andtakeoverdefenses Abilitytoadviseonlargecap(>$10billion),midcapandsmallcap(<$500 million)transactions
IPOandCapitalMarketsAdvisory
Board/ManagementAdvice Adviceonsharerepurchases,dividendpolicyandcostofcapital Independentviewsondebtandequitycapitalraising Privatecapitalplacementservices Coordinationofselectionofunderwriters/lendersandnegotiationof terms SectorExpertise Ownermindsetinhelpingclientsdevelopstrategiesforraisingcapitalor monetizingpositions
StructuredProducts
Wedevelopanddelivercustomizedsolutionstomeetourclients complexfinancial andstrategicobjectives.Typicalengagementsinclude
RestructuringandReorganizationAdvice
BroadRelationships Strongrelationshipswithissuers,lenders,distresseddebtinvestors,legal advisorsandothers StrategicandFinancialAcumen Expertiseincorporatefinanceandbusinessstrategy,helpingbothcompanies andcreditorsdevelopstrategicbusinessplans,financialforecastsand restructuringalternatives IndepthKnowledgeofRestructuringProcess ComprehensiveunderstandingofU.S./Europeanrestructuringprocessand provenabilitytomanageittomaximizevalue
BlackstoneAdvisory:RepresentativeLargeCapTransactions BlackstoneAdvisoryPartnershasadvisedonnumeroushighprofiletransactionsglobally
$180Billion SoleGlobal Coordinator
Advisorto on
andAdvisorto onthecombinationofits globalpowerbusiness with
93Billionand N/A
Advisorto onitsmergerwith
$46Billion
Advisorto
$23Billion
AdvisortotheBoard ofDirectorsof
$20Billion
Advisorto
10Billion
Advisorto
$18Billion
Advisorto
onitsproposed mergerwith
onitsstrategic investmentin
onitssaleto
onthejoint acquisitionof
$17Billion
Advisorto
6.6Billion(1)
Soleadvisorto
$8.3Billion
Advisorto
$8.0Billion
Advisoronthesale of to
$7.6Billion
Advisorto
$3.7Billion
Advisorto
$3.3Billion
Advisorto
________________________________________________
(1)
RepresentstotalcapitalcommitmentfromCDB.
6
B.
BAP Highlights
$2,000 ($inbillions) 12,714 12,767 10,079 8,923 8,771 9,893 10,041 12,350 13,220 $1,500 11,363 9,181 4,532 2007 2008 2009 6,502 $1,000 $500 $0 YTD6/09 YTD6/10
NumberofDeals
Avg.Deal Size(1) ($M) $307 $226 $181 $137 $157 $209 $274
U.S.EnterpriseValue/LTMEBITDAMultiples(2)
15x 12x 9x 6x 3x 0x
________________________________________________
9.1x
8.1x
7.1x
8.0x
8.2x
9.5x
11.0x
11.1x
11.8x
10.4x 8.0x
9.4x
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
LTD6/10
20101HM&AActivitybyTargetIndustry
Media HighTechnology 6% RealEstate 7% 5% 20% Energy& Power
Healthcare 8%
49.1% Americas
Industrials
10% Consumer&Retail
15% Financials
TotalVolume:$1,065billion
________________________________________________
Source:ThomsonReutersfor1H2010.
9
ThegrouphasexpandedthenumberofinternationalclientsthroughexpansioninEuropeandAsia
DespitethedownturnintheM&Amarket,BAPhascontinuedtogrowbothitsrevenuebaseandpersonnel,morethandoublingin
sizesince2007whilemaintainingstrongprofitability
Added19newSMDsandMDstothefirminthepasttwoyears
PersonnelGrowth
160 120 80 40 0 2006 51
(TotalProfessionalHeadcount)
PersonnelGrowth
(SMDsandMDs) 50
121 95 138 40 30 20 10 0 2008 2009 Aug10 17 2006 21 27 36
42
69
2007
2007
2008
2009
Aug10
10
2010
Industries
Mergers&Acquisitions
Products
NewYork Atlanta
NewYork Atlanta
Geographies
buildoutofAsiaoffices
BolsteredcapabilitiesinFIG,Chemicals,andMedia Maintainedstrongrevenue/SMDrelativetocompetitors 2010achievementsincluded: Top10rankinginM&Aleaguetablesin1Q Strongpipelineofover100projects Diversetransactionbaseacrossindustriesandgeographies ExpandedEuropeanandAsianbusiness Approximately50%ofdealshaveaninternationalcomponent
12
LTMBAPRevenuebyIndustry
Media Energy&Power 5% 18% 18% 14% Industrials 23% Financials
HighTechnology RealEstate,1%
Americas
2009RevenueperSMD(1)
($inmillions)
$8.0 $6.0 $4.0 $2.0 $0.0 BAP
________________________________________________
2009RevenueperProfessional(1)
($inmillions)
$2.0
$7.8 $5.9
CompAverage
BAP
CompAverage
(1)
Source:200910KsforEvercore,GreenhillandLazardsadvisorybusinesses.
13
Openingofcreditmarketshasencouragedstrategicsandfinancialstopursuenewdeals EmergingmarketM&Aisincreasing;Blackstonesinternationalpresenceandstrongbrandallowittobenefit
ContinuedturmoilanduncertaintyatlargerfirmsprovidesbusinessandhiringopportunitiesforBAP
BoutiqueM&Amarketsharehasincreasedoverthepastdecade Majordealmakersatlargebankshavebeenmovingtosmalleradvisoryfirmsatrecordlevels
2011areasoffocusinclude:
Globalizingmajorindustryverticals,includingFIG,ConsumerProducts
14
A.
GlobalReach
NewYorkteamcomprisedof46professionals includes6SMDs,7MDsand4VPs Londonteamcomprisedof4professionals includes1SMDand3MDs,whoreportthroughBAP SMDsandMDscollectivelyhaveover130yearsofexperienceatBlackstoneandover215yearsinrestructuring
WideRangeofAdvisoryServicesandClients
TypeofService
Adviseonincourtreorganizations Adviseonoutofcourtrecapitalizations Adviseonexchangeoffers Raisedebtandequitycapital Adviseondistressedmergersandacquisitions Adviseonretireehealthcareissues Provideexpertwitnesstestimony
Company
X X X X X X X
Creditor
X X X X X
2
16
1998
MichaelGenereux
2003
FlipHuffard
18
1995
NickLeone
20
1995
SteveZelin
22
1998
BlackstoneRestructuringRecognition Blackstonesrestructuringadvisoryeffortshavereceivedsubstantialpraiseoverrecentyears
ThomsonsInternationalFinancingReview
AwardedRestructuringDealoftheYear in2009fortheFordMotor
&ServicesDealoftheYear in2010fortherestructuringofFordMotor Company AwardedTurnaroundoftheYear ($1+billion)in2010fortheSemGroup Corporationreorganization AwardedCorporateTurnaroundDealoftheYear ($500+million)in2010 fortherestructuringofMerisantCompany AwardedBeverage,Food&ServiceDealoftheYear in2009forthe reorganizationofMrs.FieldsCompanies TurnaroundManagementAssociation
AwardedMegaCompanyTurnaroundoftheYear in2007forthe
WinnDixieStoresreorganization
4
RestructuringandReorganizationGroupRole Weprovideclientsawiderangeofadvisoryservicesincluding,butnotlimitedto,thefollowing:
Adviseonoutofcourtrecapitalizationsandincourtreorganizations Developstrategicbusinessplans,financialforecastsandliquidityforecasts Analyzecomplexlegalandcapitalstructures Performcomplexvaluationassignments Negotiateconsensualsolutionsincomplexandoftencontentiousdistressedsituations Adviseonexchangeoffers Adviseoncapitalmarketstransactions,includingraisingallformsofcapital Debtorinpossessionfinancing Securedfinancing Secondlien Othersubordinateddebtandequity Adviseonmergers,acquisitionsanddivestituresofassetsoroperations Divestbusinessesorotherassetsincourtandoutofcourt Adviseonmergersandothercombinations Advisebuyersofdistressedcompaniesanddistressedassets Adviseonpensionandretireehealthcareissues Provideexpertwitnesstestimony
5
Automotive
ConsumerProducts
Infrastructure
RealEstate/ Casinos
Energy
Leisure/ Entertainment
Steel
FinancialServices
Manufacturing/ BasicIndustry
Transportation
Media/ Communications
B.
Newinitialjoblessclaimsshotupto500,000inmidAugust,defyingexpectations,andwhilecurrentlydecreasing,stillremain above450,000(1)
Creditmarketsreboundedinthesecondhalfof2009andhavecontinuedatanacceleratedpacein2010(3)
WeekofAugust9,2010:Recordhighyieldweeklyvolumeof$22.1billion March2010:Recordhighyieldmonthlyvolumeof$40.5billion April2010:Secondhighesthighyieldmonthlyvolumeof$34.2billion 1Q2010:Recordquarterlyhighyieldvolumeof$76.8billion 2009:Recordyearlyhighyieldvolumeof$180.7billion
LTMhighyielddefaultratepeakedin2009
2009defaultrateof10.2%(4) JPMorganforecastsa2010defaultrateof2%(3)
________________________________________________
U.S.Economy TheU.S.economyisstilltryingtorecover
RealGDPGrowth(1)
6% 4% 2% 0% (2%) (4%) Jan08 Jul08 Jan09 Jul09 Jan10 Aug10
UnemploymentRateandNewJoblessClaims(2)
(Claimsinthousands)
11% 10% 9% 8% 7% 6% 5% 4% Jan08
JoblessClaims
UnemploymentRate
Jul08
Jan09
Jul09
Jan10
(Thousands) 1,200
1,000 800 600 400 Jan08
MonthlyHousingStarts
CaseShillerHousingPriceIndex(3)
190 175 160 145 130
Jul08
Jan09
Jul09
Jan10
Aug10
Jan08
Jul08
Jan09
Jul09
Jan10
Aug10
________________________________________________
NewIssueVolume HighYield(3)
($inbillions)
$80 77 61 57 55 52 60 $60 $40 39 44
$100
118
81
84
78
31
67
47
55
44
43
22
$50
$20
31
36
17
26
12
16
16
11
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 2009 2010
7 1
13
2009
2010
(3Qasof 8/20/10)
________________________________________________
49
50
11
HighYieldIssuanceUsedtoRefinance 2010isonpacetohaveoneofthehighestpercentagesofhighyieldrefinancingvolumein15years
80% 70% 60% 50% 40% 30% 20% 10% 0% 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
13.5% 16.0% 32.9% 33.9% 26.3% 16.9% 17.5% 9.0% 33.8% 72.2% 71.7% 72.0% 70.5%
59.9% 54.4%
8.1%
2008
2009
2010
(Asof 9/01/10)
________________________________________________
Source:JPMorganDefaultMonitorasof9/01/2010.
12
2011
2012
HighYieldBonds
InstitutionalLoans
ChangeinMaturitySinceEndof2008
($inbillions)
$120 $80 $40 $0 ($40) ($80) 2010 2011 2012 2013 HighYieldBonds
________________________________________________
141 81 17 (25) (13) (38) (21) (28) (49) (16) (36) (52) (13) (42) (25) (70) (83) 2014 2015 Overall 2016 2017 30 13 43 40 41 71 12 83
141
2018orLater
InstitutionalLoans
Source:JPMorganCreditStrategyWeeklyUpdateasof6/18/10.
13
23.8%
20162018 $3bnandGreater
Source:JPMorganCreditStrategyWeeklyUpdateasof4/9/10.
14
through refinancing
Whilethehighyieldmarketappearstobeamajorcontributortotherecovering capitalmarketsand
thereductioninnewrestructuringassignments,itismostlikelysettingthestageforthenext restructuringcycle
Whilematuritiesareimportant,ahighpercentageofdefaultsoccurbecauseofcovenantbreaches
andcashflowshortages
15
Year 2002 2003 2004 2005 2006 2007 2008 2009 2010(3)
________________________________________________
LeveragedLoans(1) Amount %ofTotal (B/CCCrated) Issuance $47.7 34.3% 37.7 22.7% 61.2 23.1% 90.3 30.6% 126.7 26.4% 165.9 31.0% 74.1 47.2% 44.2 58.9% 68.6 38.7%
HighYield(2) Amount %ofTotal (B/CCCrated) Issuance $2.3 3.4% 15.3 10.1% 32.6 20.6% 18.5 17.4% 31.1 20.9% 53.6 36.3% 13.7 26.0% 19.4 10.7% 26.1 14.9%
Increaseddefaultratestypicallyfollow
CCCandWorse
peaksinhighyielddebtissuanceby approximatelythreetofiveyears
Historically,48%ofCCC/Crateddebt
defaultswithinfiveyearsof issuance
BB
CCC/C
Source:S&PDefault,Transition,andRecovery:2009AnnualGlobalCorporateDefaultStudyandRatingTransitions(3/27/10).Percentofissueswhichsubsequently defaultedinthestatedyearfollowingissuance.
17
InterestRates Alowinterestrateenvironmenthasenabledcompaniestomaintainhighleverage
8%
6%
4%
2%
7/17/2005
10/28/2006
2/9/2008
5/22/2009
9/3/2010
U.S.Treasury10Year
Source:CapitalIQ.
18
HighYieldDebtIssuanceandDefaultCycles
PeakIssuance,LowDefault LowIssuance,PeakDefault
$250
12%
$200 HighYieldIssuance(billions)
10%
2%
$0 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
(1)
0%
HighYieldIssuance
DefaultRate
________________________________________________
Observations
Highyieldnewissuevolumeincreasedsignificantlyin4Q2009andhascontinuedtoberobust Overthepastfewmonths,manylargecompanieswereabletoaccessthehighyielddebtmarket
inordertoextendtheirdebtmaturities
Smallercompanies,however,didnothavesimilaraccesstorefinancingsources Lowinterestrateshavehelpedcompaniesremainhighlylevered Theeconomyhascertainstructuralproblemsthatarelikelytopersistandpotentiallycreate
problemsforcompaniesexpectingeconomicmomentumtopickupmaterially
Highunemployment LacklusterGDPgrowthandretailsalesasconsumersdeleverage
20
C.
Conclusions
Conclusions Whatdoesthismeanforthecurrentrestructuringcycle?
Thedichotomybetweenaweakeconomyandrobustcapitalmarketscouldleadtoafewdifferent
possiblescenarios:
Thecurrentcyclecouldbeonatemporaryhiatusandcouldcontinueforquiteawhile
cyclewillbeginanewinapproximately3to5years(typicalpatternafterpeakhighyieldissuance) Lowinterestratesmayonlydelayinevitableliquidityissuesfacingstrugglingindustries
Thecurrentrestructuringcyclecouldbeoverandthenextcycle couldbeginashistoricalpatterns
22
FordMotorCompany
CompanyOverview WorkPlan
CompanyhassignificantinternationaloperationsthroughoutEurope, Asia,andSouthAmerica
BackgroundIssues
FordretainedBlackstoneinJanuary2009toadviseonvarious deleveragingtransactions Duringtheensuingmonths,Blackstone: AssistedFordonstructuringtwotenderoffersanda3(a)9exchange designedtoreduceunsecuredindebtednessandalleviatenearterm securedmaturities AnalyzedCreditAgreementandIndenturesanddeterminedlegal meansofexecutingtransactionsusingFMCCcash Builtcomprehensiverecapitalizationandfinancialmodelstoanalyze theimpactofthetransactionsonFordscapitalstructure,liquidity, creditprofileandequityvalue Assistedcompanyinevaluatingalternativestoequitizeclaimsunder VoluntaryEmployeeBeneficiaryAssociation Assistedthecompanyindevelopingandpresentingitsdebt restructuringplantotheUAW,governmentandkeystakeholders Assistedthecompanyindevelopingacomprehensive communicationsandpublicrelationsstrategies AssistedcompanyinexecutingtransactionsservingasRestructuring CoAdvisor,StructuringAgentandGlobalLeadDealerManagerfor theUnsecuredtenderofferandAuctionAgentfortheTermLoanB DutchAuction
FinalOutcome
OnApril3,2009,thecompanysuccessfullytenderedfor$2.2billionof SecuredTermLoanand$3.4billionofUnsecuredBondsand successfullyexchangedcashandstockfor$4.3billionofUnsecured ConvertibleNotes Asaresultofthiscomplexsetoftransactions,Fordreduceditstotal indebtednessby$9.9billionandeliminated$556millionofannual interestexpensewith$2.4billionofcashand468millionsharesof Ford stock Thecompanyremainstheonlydomesticautomakertoavoidaccepting governmentloansandhasbeenpraisedbytheWhiteHouseaswell as membersoftheHouseandSenateforexecutinganextremely successfulbalancesheetandoperationalrestructuringwithoutany governmentassistance
24
XeroxCorporation
CompanyOverview WorkPlan
BlackstoneadvisedonanoverallrestructuringofXeroxscapitalstructure. Thefinancingworkincluded: Extensiveduediligence,includingmeetingswithoperationaland finance groupsinEurope,SouthAmerica,andNorthAmerica Creationofdetailedfinancialforecastwithflexibilitytoanalyze: Impactsofvariousoperatingassumptionsandcashsourcesanduses bygeography Effectsofvariousfinancingandrestructuringproposals,including transitiontothirdpartycustomerfinancing IdentifiedadditionalfinancingtofundliquiditycrisisasXeroxundertook majorassetsalesandshutdownnegativecashflowoperations Developmentofvariousrestructuringalternativesincludinganalysisof legalandcorporatestructure Assistedinthenegotiationandstructuringofcapitalmarkettransactions consistentwithlegalandcorporatestructure
Xeroxisaleaderintheglobaldocumentmarket.Thecompanydevelops,
manufactures,markets,servicesandfinancesarangeofdocument equipment,software,solutionsandservices
Xeroxoperatesinover130countriesworldwide,anddistributesits
productsintheWesternHemispherethroughdivisions,whollyowned subsidiariesandthirdpartydistributors
BackgroundIssues
Xeroxfacedvariousissuesbeginninginmid1999including:
FinalOutcome
InJuly2002,Blackstonenegotiatedanew$4.2billioncreditagreement
satisfactorytoXeroxandcreditors,avoidingbankruptcy
InMay2000,Xeroxscreditratingwasdowngradedandsubsequentlylost
InFebruary2003,Blackstoneassistedinthenegotiationandexecution
of$3.6billionofnewfinancing,whichrefinancedtheoutstanding amountsunderthecreditagreement:
restructuringandfinancingplan
Securedcreditfacilityandseniornotes Mandatoryconvertiblepreferredstockandnewcommonstock
In2009,BlackstonesAdvisoryGroupadvisedXeroxonits$8.3billion
acquisitionofAffiliatedComputerServices
25
GSOCapitalPartnersOverview
$28.6billion(1) intotalAUM
GlobalLeaderinCredit
Exclusivelyfocusedintheleveragedfinancemarketplace Diversifiedmixofinvestmentstrategies
Strongperformanceacrossstrategies
OutstandingTrackRecord
WorldClassOrganization
havebuilttheleadingleveragedfinancefranchiseonWallStreet
Strongbrandrecognitiononglobalbasis Over160professionalsworldwide
Strongfundraisingmomentumacrossstrategies
StrongBusinessMomentumand HugeMarketOpportunity
OurInstitutionalLimitedPartnerbaseisastrategicasset Investorsareactivelyseekingcreditorientedstrategiesmanagedbya
marketleaderintodaysenvironment
________________________________________________
(1)
ExcludesAUMrelatedtotheBlackstoneDistressedDebtHedgeFund,whichBlackstonebeganliquidatingin2008.
1
GSOCapitalPartners
AUM$28.6billion(1)
PrivateMarketStrategies
Capital Opportunities / Blackstone Mezzanine
(MezzanineFunds)
PublicMarketStrategies
CustomizedCredit Strategies
(CLOs/Permanent CapitalVehicles/ SeparateAccounts)
CapitalSolutions
(RescueLendingFund)
SpecialSituations Fund
(CreditHedgeFund)
$2.8billion
________________________________________________
$3.3billion
$3.1billion(1)
$19.4billion
(1)
ExcludesAUMrelatedtotheBlackstoneDistressedDebtHedgeFund,whichBlackstonebeganliquidatingin2008.
2
StrategicObjectives
Maintainourinvestmentexcellence Continueourstrongperformanceacrossfunds Createroadmapto$40billionAUMenterprise Aspirationalgoal,withacquisitions,couldgetto$50billion Developaretailbrand inthecreditspace BreakoutpotentialinnewPermanentCapitalVehiclesandourexistingproducts TransformourCLObusinessintoalongonlyplatform Industryleadingtrackrecord Diversearrayofnewproductstobelaunched Achievethefollowing: 30%GSONetFeeMargin $300millionofPreTax,EconomicNetIncome
GSOs CompetitiveAdvantage
Betteraccesstoinformationanddealflow BetterAccesstoInformationandDealFlow HighPriorityClienttoWallStreet HighpriorityclienttoWallStreet
Scale Scale
Creditandduediligenceskills Deepindustry/sectorknowledge
UnparalleledExpertise
investmentprocess
Trackrecordofgeneratingsuperiorriskadjustedreturnsthrough
TrackRecord
disciplinedcreditselection,structuringandriskmanagement
Achievedourreturnswithsignificantlylessvolatilitythanour benchmarks
SharpeRatioSinceInception(1)(3)
0.45
30%
31.7% 0.36
0.41
25% 0.32 23.6% 20% 21.3% 0.27 0.24 15% 16.8% 0.18
10% 0.09 5% 0.07 0.00 GSOSpecial TremontEvent HFRIFund CreditComposite SituationsFund DrivenDistressed Weighted Index LP Index CompositeIndex GSOSpecial TremontEvent HFRIFund CreditComposite SituationsFund DrivenDistressed Weighted Index LP Index CompositeIndex
0%
GSOhasoutperformedourCreditCompositeIndexby 1,500bpssinceinception
________________________________________________
...withsuperiorriskadjustedreturns
Note: Pleaserefertothefootnotesonpage14.
5
5.7% 1.6%
0%
(5%) (9.8%) (10%) (14.1%) (15%) GSOCapital OpportunitiesFundI CreditSuisse HighYieldIndex CreditSuisse LeveragedLoanIndex S&P500Index CreditSuisse LeveragedEquityIndex
________________________________________________
Note: Pleaserefertothedisclosuresonpage14.
6
PortfolioPerformance(asof6/30/10)
FundInception: FundSize: NumberofInvestments: CapitalDeployed: Realized/UnrealizedValue: 9/30/09 $3.25billion 7 $589.6million $695.7million $300million
Backlog
Twoinvestmentspendingforapproximately
Broadsetofopportunitieswearecurrently
pursuingintheU.S.andEurope
Prospectiveinvestmentsareinavarietyof
industries(i.e.,Leisure,Manufacturing,Energy andHomebuilding)
Generally,investmenttargetsare:(1)Middle
MultipleofInvestedCapital:
1.2x
Marketcompanies;and(2)goodbusinesses facingliquidity/refinancingissues
________________________________________________
AverageAnnualDefaultRate
4.0% 3.0% 3.55%
AverageRecoveryRate
72% 68% 64% 60% 56% GSO/Blackstone
________________________________________________
AverageAnnualPrincipalLossRate
1.5%
69.55%
Source:Standard&PoorsLCD. Note:Pleaserefertothedisclosuresonpage14.
8
GSOAUMGrowthSinceInception(1)
($inbillions)
$30 $25 $20 $15 $10 $5 $0 $9.4 $8.7 $5.8 $1.4 $2.2 2005 $1.6 $3.4 2006 $13.7 $13.7 $19.7 $24.1 $21.9
$28.6
$3.3 $1.9 $4.1 2007 $3.4 $3.2 2008 $3.2 $1.1 $3.1 2009 $2.8 $3.1 2Q'10
MultiStrategyHedgeFundAssets MezzanineFunds
________________________________________________
PrivateDistressedFunds CustomizedCreditStrategies
(1)
ExcludesAUMrelatedtotheBlackstoneDistressedDebtHedgeFund,whichBlackstonebeganliquidatingin2008.
9
EvolutionoftheGSOFranchise
ComparisonofSelectedBusinessMetrics
#offundproducts #ofSMAs #ofCLOs #offundLPs$25million Top10LPsasa%oftotalAUM %ofcapitallockedup Assetsundermanagement($inbillions) Productsoffered 2005(1) 2 1 10 19 42% 41% $3.6 HedgeFunds,CLOs,SMAs 2010(Estimated) 12 7 25 100 18% 90%+ $28.6(2) HedgeFunds,CLOs, SMAs,MezzFunds, DistressedRescueFunds, BDCs,ClosedEndFunds, CoMingledLoanFunds
________________________________________________
(1) (2)
2005datareflectsonlythosebusinesseswhichweremanagedbyGSOatthetime,andisnotproformafortheBlackstoneTransaction. ExcludesAUMrelatedtotheBlackstoneDistressedDebtHedgeFund,whichBlackstonebeganliquidatingin2008.
10
Account
StatePension(A) StatePension(B) FinancialInstitution(A) InsuranceCompany(A) FundofFunds(A) StatePension(C) FundofFunds(B) SovereignWealth(A) Foundation(A) SovereignWealth(B) FinancialInstitution(B) Foundation(B) FamilyOffice(A) InsuranceCompany(B) FamilyOffice(B) FundofFunds(C) Endowment(A) FamilyOffice(C)
Hedge Fund
102 211 23 144 151 40
Mezzanine Fund
Liquidity Fund
250 62 100
Capital Solutions
100
Customized CreditStrategies
Total
702 550 473 383 369 350 236 225 190 190 182 169 138 116 99 89 88 85
200
52 75 50 16 25
225 33 15 75 65 5 75
250
144 63 66 69 77 23 50 10 30 20 35 75
75
12
10
11
cashbalances
Committedcapitalremainsscarce Marketvolatilitylikelytopersist
ofhigheryieldinginvestmentswithstrong currentincome
GSOs privatemarketstrategiesof
providingdebtcapitaltocompanies commandssignificantpremium
Long/Short,EventDrivencredit
strategieshelpmitigatevolatilityand drivevaluecreation
12
LookingForward
Highlyscalablebusinessmodel Topquartiletrackrecord Greatbrand Teamorientedculture Firstclassoperatingplatform BlueChiplistofLPs Weveearnedverygoodstandingwithadiversearrayofinstitutions ExcellentgrowthprospectswithinternationalLPs Industryconsolidationwillleadtopotentialopportunities GSOisaveryattractivepartner JunkCredit isemergingasastandaloneassetclass FixedIncomedepartmentsbeginningtomakespecificallocations Retailinvestorshaveinsatiableappetiteforyield BreakoutopportunityforGSO Inflectionpointofourgrowthcurve OurstrategicplancallsforsubstantialAUMgrowthandexpansionofourprofitabilityoverthe
next2 years
13
PerformanceReviewFootnotesandDisclosures
PerformanceReview:HedgeFund (1) NetperformancefromJanuary2006(firstfullyearoftheFund)throughJune2010. (2) The volatility of the indices reflected above and elsewhere in this report may be materially different from the performance of the Fund. In addition, these indices employ different investment guidelinesandcriteriathantheFund;asaresult,theholdings intheFundmaydiffersignificantlyfromthesecuritiesthatcomprisetheindices.Theperformanceoftheseindiceshasnotnecessarily beenselectedtorepresentanappropriatebenchmarktocomparetotheperformanceoftheFund,butratherisdisclosedtoallowforcomparisonoftheFundsperformancetothatofwellknown, relevantindices.Asummaryoftheinvestmentguidelinesfortheseindicesisavailableuponrequest. CreditCompositeIndexreflectstheaverageportfolioconstructionsinceinceptionwhichconsistsofthefollowingmixofindices:60%CSLeveragedLoanIndex,25%CSHighYieldIndexand15% CS LeveragedEquityIndexwhichwebelieveisgenerallyconsistentwiththemixoftheSpecialSituationsFund.
(3)
PerformanceReview:MezzanineFund CreditSuisseHighYieldIndexisanunmanagedmarketvalueweightedindexdesignedtomirrortheinvestableuniverseofthe U.S.dollardenominatedhighyielddebtmarket.Newissuesareaddedtothe indexuponissuanceiftheyqualifyaccordingtothefollowingcriteria:issuesmustbepubliclyregisteredintheUnitedStatesorissuedunderRule144Awithregistrationrights;issuesmustberatedB or lower; the minimum amount outstanding is $75 million; and issues must be U.S. dollardenominated straight corporate debt, including cashpay, zerocoupon, steppedrate and payinkind (PIK) bonds. Floatingrateandconvertiblebondsandpreferredstockarenotincluded; ifanissuerhasmorethantwoissuesoutstanding,onlythetwo mostliquidissuesareincludedintheindex. CreditSuisseLeveragedLoanIndexisanunmanagedmarketvalueweightedindexdesignedtomirrortheinvestableuniverseofthe U.S.dollardenominatedleveragedloanmarket.Newissuesareaddedto theindexontheireffectivedateiftheyqualifyaccordingtothefollowingcriteria:loanfacilitiesmustberatedB orlower;onlyfullyfundedtermloanfacilitiesareincluded;andissuersmustbedomiciledin developedcountries. Standard&Poors500Index(theS&P500)setsforththeperformanceofawellknownbroadbasedstockmarketindexassumingreinvestmentofdividends.TheS&P500containsonlypubliclytraded, seasonedequitysecurities. CreditSuisseLeveragedEquityIndexisanunmanagedmarketweightedindexdesignedtomirrortheinvestableuniverseofthe publicequityofissuersinthehighyielddebtmarket.Theindexincludesthe commonstockofeveryissuerintheCreditSuisseHighYieldIndexwhichhaspublicequity. TherearesignificantdifferencesbetweentheGSOCapitalOpportunitiesFundIs investmentsandtheindices.Forinstance,GSOCapitalOpportunitiesFundImayuseleverageandinvestininvestments thathaveagreaterdegreeofriskandvolatility,aswellaslessliquidity,thanthoseinvestmentscontainedintheindices.Moreover,theindicesdonotreflectthereinvestmentofincomeordividendsand theindicesarenotsubjecttoanymanagementfees,performancecompensationorexpenses.ItshouldnotbeassumedthatGSOCapitalOpportunitiesFundIwillinvestinanyspecificinvestments that comprisetheindices,norshoulditbeunderstoodtomeanthatthereisacorrelationbetweenGSOCapitalOpportunitiesFundIs returnsandtheperformanceoftheindices.Thestatisticaldataregarding theseindiceshasbeenobtainedfromsourcesbelievedtobereliable.Itisnotpossibletoinvestintheseindices.TheseindicesarebeingpresentedforcomparisonpurposesonlytoshowhowGSOCapital OpportunitiesFundIs performancecomparestothebroadglobalmarkets. PerformanceReview:CLOBusiness Past performance is not necessarily indicative of future results, and there can be no assurance that the Fund will achieve a comparable composition or that the Fund will be able to implement its investmentstrategyorachieveitsinvestmentobjectives. Unlessotherwiseindicated,allyieldsandratesofreturnarepresentedonagross basisanddonotreflectthemanagementfees,fundexpenses, organizationalexpenses,performancecompensation,taxesandotherrelatedexpensesthatarebornebyinvestorsintheportfoliosdescribedhereinwhich,intheaggregate,areexpectedtobesubstantial and may result in net returns being materially lower than those presented herein. Investors are encouraged to contact GSO representatives to discuss any questions they may have concerning the performanceinformationcontainedherein.Furtherinformationmaybemadeavailabletosuchinvestorsuponrequest.
14
VIII.
Real Estate
A.
BlackstoneRealEstateOverview
GlobalLeaderinRealEstate PrivateEquity
$22billioninAUMfromOpportunisticfunds $2billioninAUMfromRealEstateDebtfunds GrossIRRof37.5%(28.3%net)onrealized/partiallyrealizedinvestments(1)
OutstandingTrackRecord
MultipleonInvestedCapital(MOIC)of2.2xonrealized/partiallyrealized
investments
Weprojectall20042007vintagefundswillbeprofitable
SignificantDryPowder
$11.2billionintotalavailablecapital($1.4billioninpendingtransactions) U.S.officeportfolioconcentratedinBoston,WestLosAngeles,Northern
California,andNewYork CurrentHoldings
Globalhotelowner/operator Europeanleisureparcs,hotels,studenthousing,andhealthcare ExistingPortfolio:76%NorthAmerica,16%Europe,and8%other
WorldClassOrganization
________________________________________________
Over120RealEstateprofessionalsacrosstheU.S.,Europe,andAsia PartnerswithanaveragetenureatBlackstoneof12years
($inbillions)
BREPVI BREPV
Projected Performance
________________________________________________
(1)
(2)
WhileBlackstonecurrentlybelievesthattheassumptionsonwhichtheseprojections arebasedarereasonableundercurrentcircumstances,thereisno guaranteethattheconditionsonwhichsuchassumptionsarebasedwillmaterializeorotherwisebeapplicabletothesefunds. Therecanbenoassurancethat anyfundmanagedbyBlackstonewillbeprofitableoravoidsubstantiallosses. Aboveprojectionsdonotincludeanyassumptionsregardinginvestmenttime horizon ortherateofreturnonfundsmanagedbyBlackstone.Ultimatereturnstoinvestorswillbereducedbymanagementfees,fundexpensesandcarried interest. BREDSincludesseveraldebtfundsandinvestmentvehiclesthathavesimilarinvestmentobjectives.
3
BREPStrategyHistorically Primaryreasonsforexpectedoutperformance
Sold$60billionofassets20052007
Focusedontopqualityassets
Avoideddebtcrosscollateralization/Fundlevelrecourse
Virtuallynocommercialdevelopment
Deployedlimitedcapital2H071H09
Purchasedorextended$24+billioninportfoliocompanydebt
Nomaterialrealizedlossestodate
BREPVIandBREPEuropeIIICommittedCapitalbyQuarter(1)
($inmillions)
$1,500 $1,000 $500 $86 $0 1Q2008 2Q2008 3Q3008 4Q2008 1Q2009 2Q2009 $179 3Q2009 $435 4Q2009 $409 1Q2010 2Q2010 $1,219
________________________________________________
RealEstateAssetsUnderManagement RealEstateAUMhasincreasedalmost30%overthepastyear
BlackstoneRealEstateTotalAUM
($inmillions)
$26,222 $20,195
$22,004
________________________________________________
InvestmentActivity BlackstoneRealEstatehasinvestedorcommittedtoinvestover$4billionoverthepastyear(1)
BroadgateEstate PremierLondonofficecomplex BuschEntertainmentCorporation SeaWorld/BuschGardensthemeparks GlimcherJV Twolargeregionalmalls Portfolioofindustrialassets Pending GeneralGrowthProperties Leadingregionalmallowner/operator Pending
LeveragedPublic Companies
Bankruptcy Situations
U.S. Pending
HighlandHospitality Seniormezzanineloanonaportfolioof29hotels Montgomery/Washington NoteonSanFranciscoofficebuilding
DistressedDebt
JapaneseDistressedLoans Nonperformingrealestateloanportfolio VariousNotes Notesatsignificantdiscountstofacevalue
BREDS hasinvestedapproximately$1.0billioninpublicandprivatedebtmarkets
________________________________________________
(1) Includesapproximately$500millionintransactionspostJune30,2010.
7
AvailableCapital $11.2billionindrypowderinafavorableinvestmentenvironment
($inmillions)
BREPVI
BREPEuropeIII
Reserves
BREDS
BREPIntlI
BREPIntlII
BREPV
$5,718
$3,920
$1,135
$435
________________________________________________
AllfiguresareasofJune30,2010.
8
B.
RealEstateDemand Employment,thekeydriverofrealestatedemand,hasturnedmodestlypositive
MonthlyChangeinU.S.Payrolls(1)
(inthousands)
300
100
(100)
(300)
(500)
(700)
(900) Feb07 May07 Aug07 Nov07 Feb08 May08 Aug08 Nov08 Feb09 May09 Aug09 Nov09 Feb10 May10 Aug10
________________________________________________
(1) BureauofLaborStatistics:September2010TotalPrivateNonFarmPayrolls(SeasonallyAdjusted).
10
RealEstateSupply Newsupplyofcommercialrealestateisatrecordlowlevels
U.S.AggregateConstructionStarts(1)
(Annualized)
4.5% 4.0% 3.5% 3.0% 2.5% 2.0% 1.5% 1.0% 0.5% 0.0% Mar84 Mar86 Mar88 Mar90 Mar92 Mar94 Mar96 Mar98 Mar00 Mar02 Mar04 Mar06 Mar08 Mar10
11
LongtermAverage=1.9%
________________________________________________
(1) Source:Citi,September10,2010.
RealEstateOccupancy Givensupply/demandfundamentals,occupancyinU.S.realestateisbeginningtoimprove
U.S.REITOccupancy(1)
94.5%
94.0%
93.5%
93.0%
92.5%
92.0%
91.5%
91.0%
90.5%
90.0% 1Q01 2Q01 3Q01 4Q01 1Q02 2Q02 3Q02 4Q02 1Q03 2Q03 3Q03 4Q03 1Q04 2Q04 3Q04 4Q04 1Q05 2Q05 3Q05 4Q05 1Q06 2Q06 3Q06 4Q06 1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10
12
________________________________________________
(1) Source:Citi,September10,2010.
RealEstateCashFlows Improvingoccupancyandbottomingrentstranslateintostabilizingrealestatecashflows
U.S.REITChangeinSameStoreNOI(1)
7% 6% 5% 4% 3% 2% 1% 0% 1% 2% 3% 2Q99 2Q00 2Q01 2Q02 2Q03 2Q04 2Q05 2Q06 2Q07 2Q08 2Q09 2Q10
________________________________________________
(1) ISIGroup:September2010.
13
HotelMarketOverview Thehotelsectorhasbeguntoseeasharpuptickinrevenuewithnewsupplyatalltimelows
U.SHotelYoY%ChangeinOccupancy,ADR&RevPAR(1)
10% 0% 10% 20% 30% 6/06 11/06 4/07 9/07 2/08 Occupancy 7/08 ADR 12/08 RevPAR 5/09 10/09 3/10 8/10
U.S.HotelRoomsUnderConstruction(2)
(inthousands)
11/06
4/07
9/07
2/08
7/08
12/08
5/09
10/09
3/10
8/10
________________________________________________
STRResearch:September4,2010. STRResearch:August31,2010.
14
NewU.SOfficeSquareFootageUnderConstruction(2) (SFunderConstructioninthousands)
180,000 160,000 140,000 120,000 100,000 80,000 60,000 40,000 20,000 0 2Q1997 2Q1998 2Q1999 2Q2000 2Q2001
LongtermAverage=3.1% 0.7%
2Q2002
2Q2003
2Q2004
2Q2005
2Q2006
2Q2007
2Q2008
2Q2009
2Q2010
________________________________________________
(1) (2)
JonesLangLaSalle:June30,2010. ISIGroup:June30,2010.
15
REITUnsecuredDebtSpreadstoUnderlyingTreasuries(2)
(Spreadinbps)
1,400 1,200 1,000 800 600 400 200 0 Aug07 Aug08 Aug09 Aug10 Apr07 Dec07 Apr08 Dec08 Apr09 Dec09 Apr10
1,800 1,600 1,400 1,200 1,000 800 600 400 200 0 Apr07 Aug07 Dec07 Apr08 Aug08 Dec08 Apr09 Aug09 Dec09 Apr10 Aug10
16
10yearCMBS
________________________________________________
(1) (2)
BankofAmericaMerrillLynchGlobalResearch:August20,2010. Source:Citi,September10,2010.
PublicRealEstateValues Publicrealestateequitymarketshaverecoveredsharplyfromtheir2009troughs
Publicofficecompaniesintopmarketscurrentlytradebelowa6%caprate:
Leadingpublichotelcompaniescurrentlytradeataweightedaverageof17.0xmultiple:
________________________________________________
(1)
GreenStreetAdvisors:August2010UnleveragedCommercialPropertyPriceIndex.
18
U.S.CMBSIssuance(2) ($inbillions)
$250 $200 $150 $100 $50 $0 2002 2003 2004 2005 2006 2007 2008 2009 2010YTD $52 $78 $93 $12 $2 $3 $202 $230
$169
________________________________________________
250
200
Over2.5x
150
100
50
________________________________________________
Source:TheUKCommercialPropertyLendingMarket,DeMonfort University.
20
C.
Strategy Overview
BREDSInvestmentTarget
$100 $90 $80 $70 $60 $50 $40 $30 $20 $10 $0
$100OriginalValue $25OriginalEquity
34.2%
$75OriginalDebt
22.3%
Peak
________________________________________________
Current
Gross
Net
InceptiontoDate(Cumulative)
(1) Thischartrepresentsthepreliminaryunauditedcumulativeinternalrateofreturn(IRR)ofBlackstoneRealEstateSpecialSituationsFundIIL.P.andBlackstone RealEstateSpecialSituationsEuropeFundLtd.(together,BSSFII).BSSFIs inceptiontodategrossreturnis40.3%(net30.7%).Pastperformanceisnot necessarilyindicativeoffutureresults.
22
seasonedinvestmentprofessionalsfromNewYork,London,andthe region
Deployedlimitedcapitalbeforemarketdecline
Investedapproximately$500millionintheregionpostSeptember2008
Blackstonehasenteredintoanagreementtomanageapproximately $2billioninrealestateassets
fromBankofAmerica/MerrillLynchAsia Why:
Growsonthegroundpresence Expandslocalrelationships Providesbettermarketknowledge Widenslendercontacts IncreasesLimitedPartnerbase
23
BlackstoneRealEstateSummary Ourbusinessisextremelywellpositioned
WeexpecttooutperformcompetitorsandproducesolidreturnsforourLimitedPartners
CompetitivelandscapehasbeenalteredwithfewerGeneralPartnerscompetingfornew
investmentsandfundraisingdollarsbecauseoflegacyand/orparentcompanyissues
Thecurrentinvestmentenvironmentishighlyattractivewith$11+billionindrypowder;wehave
uniquepositionforlarge,complexrealestateinvestments
OpportunitytosubstantiallyincreaseBREDSplatformandAsianinvestmentbusiness
Stablelongtermmanagementfeebase
Significantcarriedinterestpotentialfromexistingfunds
24
WhereareHedgeFundsToday?
HedgeFundsintheCurrentMarketLandscape
Volatilityanduncertainty Long/shortinvestmentmandatestypicallybetterequippedtohandlemarketuncertaintythanlongonly Talentmigration Economicsandregulatorychangescontinuetoattracttoptalent totheindustry Institutionalacceptance Institutionsincreasinglyimplementinghedgefundsacrosstheinvestmentportfolio Growthpotential Hedgefundsstillmanageonlyasmallfractionofinvestableassets
ThePotentialforAttractiveRiskadjustedPerformanceHasLedto GrowthinHedgeFundAssetsOverTime
($inbillions)
$2,000 $1,600 $1,200 $1,105 $800 $400 $39 $0 1990 $186 1995 2000 2005 2007 2008 2009 June30, 2010 $491 $1,868 $1,600 $1,407 $1,648
________________________________________________
BAAMAUMandAssetFlowSummary
BAAM:SolidRelativePerformance,StrongClientFocus,ProperFundManagement
Positivenetinflows Netinflowsin2008,2009,1H2010 aperiodofsignificantoutflowsforfundofhedgefunds(1) Strongpipeline Visibilityintoadiversifiedrangeofattractiveprospectopportunitiesin20112012 Differentiatedbusinessmodel Assetretentionandgrowththroughcustomization,innovation,advice Diverseproductportfolio Broadarrayofoptionsforcrosssellingtoexistinginvestorsandattractingnewinvestors
AUM
($inmillions)
NetAssetFlow
($inmillions)
$30,000 $27,000 $24,000 $21,000 $18,000 $15,000 $12,000 $9,000 $6,000 $3,000 $0
KeyPoints:
Strongtrackrecordofattractiveriskadjusted
$10,000 $9,000 $8,000 $7,000 $6,000 $5,000 $4,000 $3,000 $2,000 $1,000 $0
2000
2001
2002
2003
2004 BAAMAUM
2005
2006
2007
2008
2009
2010
(1)
BAAMNetInflows
________________________________________________
BAAMPerformanceSummary
BAAMsInvestmentProcessHasProducedStrongRiskAdjustedReturns(1)
Portfolioconstruction Historicallyhasproducedstrongriskadjustedreturnsandcapitalpreservation Differentiatedexposure Abilitytomanufacture tailoredcapacityandexploitmarketopportunities Managerpartnerships Abilitytoleveragescaleandexpertisetonegotiatebenefitsforclients Expertise Wellresourced,experiencedteamsourcingnewideasandmonitoringinvestments
January2000 July2010
AnnualizedNetReturn 8% 6% 4% 2% 0% 2% 0%
________________________________________________
BAAMComposite
BarclaysAggBond HFRIFOFComposite
4%
8%
12%
16%
20%
24%
28%
AnnualizedStandardDeviation
(1) BAAMCompositecoverstheperiodfromJanuary2000toJuly2010. BAAMs inceptiondateisSeptember1990(furtherhistoricalperformanceisavailableuponrequest).Pastperformanceisnot indicativeoffutureresultsandthereisnoassurancethatanyBAAMfundwillachieveitsobjectivesoravoidsignificantlosses.TheBAAMCompositeistheassetweightedperformanceofBAAMs investmentsnetofallfees(bothBAAMandunderlyingmanager).TheCompositedoesnotincludeBAAM's commoditiesplatform,seedfunds,andadvisoryrelationships(detailsoftheperformanceof allBAAMfundsareavailableuponrequest).Thevolatilityoftheindexespresentedmaybemateriallydifferentfromthatofthe performanceofanyparticularBAAMfundincludedintheComposite.In addition,theseindexesemploydifferentinvestmentguidelinesandcriteriathantheBAAMfunds;asaresult,theholdingsintheBAAMfundsmaydiffersignificantlyfromthesecuritiesthatcomprise theindexes.TheperformanceoftheseindexeshasnotbeenselectedtorepresentanappropriatebenchmarktocomparetotheperformanceoftheBAAMComposite,butratherisdisclosedtoallowfor comparisonoftheCompositetothatofwellknownandwidelyrecognizedindexes.Asummaryoftheinvestment guidelinesfortheseindexesisavailableuponrequest.Inthecaseofequityindices, performanceoftheindicesreflectsthereinvestmentofdividends.
InvestorAppetiteforHedgeFundExposure:DemandTodayvs.DemandintheFuture
BAAMHasMultipleOpportunitiestoIncreaseGeographicMarketPenetration
Institutionalfocus Industrygrowthdrivenbyinstitutionsseekingattractiveriskadjustedreturnsanddownsideprotection Growingdemandintraditionalmarkets U.S.andEuropeanpublicandcorporatepensions Significantpotentialinunderpenetratedmarkets MiddleEast,Japan,Australia,andCanada Sizeableuntappedopportunities LatinAmerica,China,andnonJapanAsia
BAAMsInvestorBaseIsIncreasinglyGlobalinNature
100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 35.2% 0.1% 1.7% 2006 AllOthers 3.8% 3.7% 4.6% 2007 Japan 10.1% 4.9% 3.8% 2008 MiddleEast 30.4% 26.9% 25.0% 23.7% 63.0% 57.4% 54.3% 50.6% 51.9%
OpportunitiesExisttoIncreaseMarket PenetrationandEnterNewGeographies
NorthAmerica
TraditionalFocus
DevelopingMarketOpportunity
________________________________________________
(1) Dataisestimatedandunauditedandexcludesinternalcapital.AsofJuly2010.
4
ProductInnovation:KeyDifferentiatoroftheBAAMModel
BAAMReverseEngineers NewSolutionstoClientProblems
BAAMengagesclientstoidentifykeyissuesininstitutionalportfoliomanagement BAAMhasatrackrecordofsuccessfullyaddressingclientconcerns(1): Longbiasedcommoditiesstrategy launchedMay2007;over$1billioninAUM(2) Hedgefundseedingplatform firstfundlaunchedin2007;over$1billioninAUMandcommitments(2) Longonlyequityreplacement strategies increasinginterestinhedgedexposure,alphageneration Customizedmandates abilitytoaccommodatespecificriskandreturntargets Solutionsresearch ongoingacrossemergingmarketsandlongonly substituteproductopportunities BAAMhasdevelopedanarrayofservicesforstrategicpartners,including: Advisoryservices AccesstoBAAMresearchandproprietarytechnologyplatform Proactiveknowledgetransferandtraining Transitioningandrebuildingtroubledclienthedgefundportfolios BAAMisathoughtful,valueaddedpartner Insightintokeyregulatorydevelopmentsandindustryresponses Perspectivesonapproachestotopdownassetallocationandotherkeyclientinvestmentprocesses Thoughtsregardingpotentialtacticalallocationsandmarketopportunities
________________________________________________
ProductInnovation:ImplicationsforBAAMsBusiness
ProductInnovation:KeytoDevelopingStrategic Relationships
37customizedclientvehicles nearly50%ofBAAM
AUMComposition(August2010)(1)
externalAUM(1)
Targetingspecificclientportfolioobjectives Customizedaccountshaveincreasedasaproportion
Commingled Assets 51% 49% Customized Vehicles
ofBAAMAUMinrecentyears
InnovationHasHelpedBAAMAvoidFeeCompression
BAAMhasavoidedsignificantfeecompression,
BAAMsFees(2)
120% 100% TotalFee 80% 60% 40% 20% 0% YE2006
(normalizedto2006level)
despitereportedtrendsamongcompetitors
Managementfeeshavelargelyheldstablesince
2006(2)
Incentivefees(2) significantamountofassets
alreadyaboveorapproachingtheirhighwatermark
YE2007
YE2008
YE2009 IncentiveFee
June30,2010
ManagementFee
________________________________________________
GlobalFootprint
BAAMofficesinNewYork,London,andHongKong(investmentprofessionalsineachlocation) Increasinglyglobalinstitutionalinvestorbase
FocusonLiquidity
Properasset/liabilitymanagementacrossfundsandstrategies Providedliquiditytoinvestorswhenneeded
LeveragingtheBlackstoneLibrary(2)
AccesstoBlackstoneexpertsforindustryandmarketinsights AccesstoBlackstonesextensivenetworkofindustrycontacts
AlignmentofInterestandaCultureofRiskManagementandCompliance
Significantfirmandemployeecapitalinvestedalongsideclients Significantresourcesdedicatedtoreducingtheriskofinvestinginfundsthatdestroyclientcapitaland/orgeneratenegative
headlines
________________________________________________
ProductOfferingsthatTargetDifferentPoolsofInvestorCapital
Broadcommingledproductofferingsandcustomizedexposuresbasedonclientdemand Specializedfundsthatattractadifferentiatedinvestorbase
ProductInnovation
Abilitytocreatetailoredportfoliosandfundstructurestomeetclientneedsorcapitalizeonmarketdislocations PartnershipswithunderlyingmanagerswhereBAAMcanaccessandstructurecustomizedexposureforclients
EmphasisonTechnologyandTransparency
SignificantinvestmentinPortfolioManagement,RiskManagement, andDueDiligencetechnologytools Managerrelationshipsandmarketreputationthatfacilitatetransparencyneeds
StrategicClientRelationships
BAAMisatrustedadvisortomanyoftheworldsleadinginstitutionalinvestors AstrategicrelationshipwithBAAMcanencompassafullscopeof servicesbeyondaportfoliomandate
A.
ReconciliationofGAAPIncome(Loss)BeforeTaxestoENItoNFRE toDEandNFREtoEBITDANFRE
($inthousands)
Revenues Expenses OtherIncome(Loss) Income(Loss)BeforeProvisionforTaxes EconomicNetIncomeAdjustments IPOandAcquisitionRelatedCharges AmortizationofIntangibles Income(Loss)AssociatedwithNonControllingInterestsin Income(Loss)ofConsolidatedEntities ManagementFeeRevenuesAssociatedwithConsolidatedCLOEntities EconomicNetIncome,BeforeTaxes NFREAdjustments PerformanceFeesandAllocationsAdjustment InvestmentIncome(Loss)Adjustment InvestmentIncome(Loss)CashManagementStrategies PerformanceFeeRelatedCompensationandBenefitsAdjustment TaxesPayable NetFeeRelatedEarnings DistributableEarningsAdjustments RealizedPerformanceFeesandAllocations RealizedInvestmentIncome(Loss) AdjustmentRelatedtoInvestmentIncomeCashManagementStrategies OtherPayablesIncludingPayableunderTaxReceivableAgreement DistributableEarnings NFREtoEBITDANFREReconciliation NetFeeRelatedEarnings TaxesPayable Interest,Depreciation&Amortization EarningsBeforeInterest,TaxesandDepreciationandAmortizationfromNFRE
________________________________________________
ThreeMonthsEnded Dec31,2009 Mar31,2010 June30,2010 $725,346 $701,239 $550,088 1,170,001 1,100,714 1,127,766 79,341 171,804 (59,250) ($365,314) ($227,671) ($636,928) 726,722 39,512 749,930 40,822
LTM(1) Ended June30,2010 $2,573,696 4,496,275 265,707 ($1,656,872) 2,947,711 159,358 (215,249) 15,827 $1,250,775 (593,580) (394,480) 21,095 215,447 (58,495) $440,762 114,702 64,338 (10,894) (300) $608,608 $440,762 58,495 47,589 $546,846
(53,905) (59,703) (159,935) 58,294 6,474 9,353 $278,357 $365,845 $385,102 $221,471 (166,770) (58,003) 57,357 (16,002) $94,939 (3,105) 7,669 $99,503 (214,960) (76,742) 12,368 73,762 (21,110) $139,163 48,172 35,641 (10,142) $212,834 (186,214) (156,828) 3,665 62,341 (9,321) $98,745 46,140 5,307 (1,264) (232) $148,696 $98,745 9,321 12,739 $120,805 (25,636) (102,907) 5,062 21,987 (12,062) $107,915 23,495 15,721 512 (68) $147,575 $107,915 12,062 12,889 $132,866
(1)
LastTwelveMonths.
1
FeeRevenuesandTransaction&OtherFees,AsDisclosedinPresentation
Dec31,2007 FeeRevenues BaseManagementFees AdvisoryFees TransactionandOtherFees,Net ManagementFeeOffsets InterestIncomeandDividendRevenue Other FeeRevenues Transaction&OtherFees TransactionandOtherFees,Net ManagementFeeOffsets InterestIncomeandDividendRevenue Other Transaction&OtherFees $804,252 360,284 478,810 (22,484) 14,686 528 $1,636,076 $478,810 (22,484) 14,686 528 $471,540 TwelveMonthsEnded Dec31,2008 Dec31,2009 $1,041,718 397,519 96,358 (16,437) 29,014 13,595 $1,561,767 $96,358 (16,437) 29,014 13,595 $122,530 $999,829 390,718 115,040 (17,161) 22,492 7,096 $1,518,014 $115,040 (17,161) 22,492 7,096 $127,467 Sep30,2009 $255,848 94,566 22,493 (4,536) 6,767 3,893 $379,031 $22,493 (4,536) 6,767 3,893 $28,617 ThreeMonthsEnded Dec31,2009 Mar31,2010 $253,299 122,709 59,925 (2,368) 11,322 1,818 $446,705 $59,925 (2,368) 11,322 1,818 $70,697 $251,971 76,568 35,260 (1,178) 8,690 (3,250) $368,061 $35,260 (1,178) 8,690 (3,250) $39,522 June30,2010 $262,914 134,099 20,617 (179) 6,930 (644) $423,737 $20,617 (179) 6,930 (644) $26,724 LTMEnded June30,2010 $1,024,032 427,942 138,295 (8,261) 33,709 1,817 $1,617,534 $138,295 (8,261) 33,709 1,817 $165,560
ENIRevenuesPrivateEquity,AsReported
Dec31,2007 ManagementandAdvisoryFees BaseManagementFees TransactionandOtherFees,Net ManagementFeeOffsets TotalManagement&AdvisoryFees PerformanceFees&Allocations Realized Unrealized TotalPerformanceFees&Allocations InvestmentIncome(Loss) Realized Unrealized TotalInvestmentIncome(Loss) InterestIncomeandDividendRevenue Other TotalRevenues $254,843 123,770 (10,734) $367,879 574,274 (194,357) $379,917 131,498 (16,166) $115,332 1,731 470 $865,329 TwelveMonthsEnded Dec31,2008 Dec31,2009 $268,961 51,796 (4,862) $315,895 (749) (429,736) ($430,485) 13,687 (196,200) ($182,513) 6,459 4,474 ($286,170) $270,509 86,336 $356,845 34,021 303,491 $337,512 36,968 33,269 $70,237 7,756 2,845 $775,195 Sep30,2009 $67,009 18,368 $85,377 110,867 $110,867 8,794 18,640 $27,434 2,553 677 $226,908 ThreeMonthsEnded Dec31,2009 Mar31,2010 $67,329 42,495 $109,824 34,021 90,621 $124,642 28,416 12,676 $41,092 4,531 1,516 $281,605 $65,432 31,972 $97,404 46,175 45,549 $91,724 (495) 84,684 $84,189 3,428 100 $276,845 June30,2010 $66,795 16,367 $83,162 1,106 (24,020) ($22,914) 3,141 17,275 $20,416 2,728 460 $83,852 LTMEnded June30,2010 $266,565 109,202 $375,767 81,302 223,017 $304,319 39,856 133,275 $173,131 13,240 2,753 $869,210
FeeRevenuesandTransaction&OtherFees,AsDisclosedinPresentation
Dec31,2007 FeeRevenues BaseManagementFees TransactionandOtherFees,Net ManagementFeeOffsets InterestIncomeandDividendRevenue Other FeeRevenues Transaction&OtherFees TransactionandOtherFees,Net ManagementFeeOffsets InterestIncomeandDividendRevenue Other Transaction&OtherFees $254,843 123,770 (10,734) 1,731 470 $370,080 $123,770 (10,734) 1,731 470 $115,237 TwelveMonthsEnded Dec31,2008 Dec31,2009 $268,961 51,796 (4,862) 6,459 4,474 $326,828 $51,796 (4,862) 6,459 4,474 $57,867 $270,509 86,336 7,756 2,845 $367,446 $86,336 7,756 2,845 $96,937 Sep30,2009 $67,009 18,368 2,553 677 $88,607 $18,368 2,553 677 $21,598 ThreeMonthsEnded Dec31,2009 Mar31,2010 $67,329 42,495 4,531 1,516 $115,871 $42,495 4,531 1,516 $48,542 $65,432 31,972 3,428 100 $100,932 $31,972 3,428 100 $35,500 June30,2010 $66,795 16,367 2,728 460 $86,350 $16,367 2,728 460 $19,555 LTMEnded June30,2010 $266,565 109,202 13,240 2,753 $391,760 $109,202 13,240 2,753 $125,195
ENIRevenuesRealEstate,AsReported
Dec31,2007 ManagementandAdvisoryFees BaseManagementFees TransactionandOtherFees,Net ManagementFeeOffsets TotalManagement&AdvisoryFees PerformanceFees&Allocations Realized Unrealized TotalPerformanceFees&Allocations InvestmentIncome(Loss) Realized Unrealized TotalInvestmentIncome(Loss) InterestIncomeandDividendRevenue Other TotalRevenues $233,072 348,410 (11,717) $569,765 326,514 297,437 $623,951 68,996 65,472 $134,468 1,321 38 $1,329,543 TwelveMonthsEnded Dec31,2008 Dec31,2009 $295,921 36,046 (4,969) $326,998 24,681 (843,704) ($819,023) 3,778 (238,650) ($234,872) 5,880 3,008 ($718,009) $328,447 25,838 (2,467) $351,818 (3,039) (252,180) ($255,219) 6,164 (125,624) ($119,460) 6,030 3,261 ($13,570) Sep30,2009 $83,409 3,347 (415) $86,341 (11,441) 23,608 $12,167 (3,078) 1,242 ($1,836) 2,035 1,450 $100,157 ThreeMonthsEnded Dec31,2009 Mar31,2010 $83,323 16,472 (373) $99,422 3,166 5,391 $8,557 6,500 (219) $6,281 3,414 75 $117,749 $83,060 1,942 (489) $84,513 5,948 11,391 $17,339 2,632 46,892 $49,524 2,718 (1,876) $152,218 June30,2010 $82,916 2,979 (110) $85,785 16,319 21,117 $37,436 3,900 79,543 $83,443 2,178 (390) $208,452 LTMEnded June30,2010 $332,708 24,740 (1,387) $356,061 13,992 61,507 $75,499 9,954 127,458 $137,412 10,345 (741) $578,576
FeeRevenuesandTransaction&OtherFees,AsDisclosedinPresentation
Dec31,2007 FeeRevenues BaseManagementFees TransactionandOtherFees,Net ManagementFeeOffsets InterestIncomeandDividendRevenue Other FeeRevenues Transaction&OtherFees TransactionandOtherFees,Net ManagementFeeOffsets InterestIncomeandDividendRevenue Other Transaction&OtherFees $233,072 348,410 (11,717) 1,321 38 $571,124 $348,410 (11,717) 1,321 38 $338,052 TwelveMonthsEnded Dec31,2008 Dec31,2009 $295,921 36,046 (4,969) 5,880 3,008 $335,886 $36,046 (4,969) 5,880 3,008 $39,965 $328,447 25,838 (2,467) 6,030 3,261 $361,109 $25,838 (2,467) 6,030 3,261 $32,662 Sep30,2009 $83,409 3,347 (415) 2,035 1,450 $89,826 $3,347 (415) 2,035 1,450 $6,417 ThreeMonthsEnded Dec31,2009 Mar31,2010 $83,323 16,472 (373) 3,414 75 $102,911 $16,472 (373) 3,414 75 $19,588 $83,060 1,942 (489) 2,718 (1,876) $85,355 $1,942 (489) 2,718 (1,876) $2,295 June30,2010 $82,916 2,979 (110) 2,178 (390) $87,573 $2,979 (110) 2,178 (390) $4,657 LTMEnded June30,2010 $332,708 24,740 (1,387) 10,345 (741) $365,665 $24,740 (1,387) 10,345 (741) $32,957
4
ENIRevenuesCreditandMarketableAlternatives,AsReported
TwelveMonthsEnded Dec31,2007 Dec31,2008 Dec31,2009 ManagementandAdvisoryFees BaseManagementFees TransactionandOtherFees,Net ManagementFeeOffsets TotalManagement&AdvisoryFees PerformanceFees&Allocations Realized Unrealized TotalPerformanceFees&Allocations InvestmentIncome(Loss) Realized Unrealized TotalInvestmentIncome(Loss) InterestIncomeandDividendRevenue Other TotalRevenues $316,337 6,630 (33) $322,934 154,028 2,952 $156,980 62,363 81,439 $143,802 4,249 31 $627,996 $476,836 8,516 (6,606) $478,746 $400,873 2,866 (14,694) $389,045 Sep30,2009 $105,430 778 (4,121) $102,087 ThreeMonthsEnded Dec31,2009 Mar31,2010 June30,2010 $102,647 958 (1,995) $101,610 $103,479 1,345 (689) $104,135 1,758 75,393 $77,151 2,983 19,715 $22,698 1,148 (542) $204,590 $113,203 1,169 (69) $114,303 28,949 (17,835) $11,114 8,729 (10,193) ($1,464) 756 (372) $124,337 LTMEnded June30,2010 $424,759 4,250 (6,874) $422,135 73,402 140,360 $213,762 12,947 68,399 $81,346 4,368 49 $721,660
15,081 43,282 (12,822) 114,556 $2,259 $157,838 (82,142) (257,084) ($339,226) 8,527 1,214 $151,520 (15,031) 96,016 $80,985 3,452 1,025 $632,345
7,622 35,073 36,114 46,688 $43,736 $81,761 1,953 29,976 $31,929 929 715 $179,396 (718) 28,901 $28,183 1,535 248 $213,337
FeeRevenues,AsDisclosedinPresentation
TwelveMonthsEnded Dec31,2007 Dec31,2008 Dec31,2009 FeeRevenues BaseManagementFees TransactionandOtherFees,Net ManagementFeeOffsets InterestIncomeandDividendRevenue Other FeeRevenues $316,337 6,630 (33) 4,249 31 $327,214 $476,836 8,516 (6,606) 8,527 1,214 $488,487 $400,873 2,866 (14,694) 3,452 1,025 $393,522 Sep30,2009 $105,430 778 (4,121) 929 715 $103,731 ThreeMonthsEnded Dec31,2009 Mar31,2010 June30,2010 $102,647 958 (1,995) 1,535 248 $103,393 $103,479 1,345 (689) 1,148 (542) $104,741 $113,203 1,169 (69) 756 (372) $114,687 LTMEnded June30,2010 $424,759 4,250 (6,874) 4,368 49 $426,552
$132,633 234,755 232,359 39,037 67,277 79,572 $171,670 $302,032 $311,931 $195,988 $108,534 $85,668
57,686 69,482 54,492 76,152 22,666 22,196 14,727 17,316 $80,352 $91,678 $69,219 $93,468 $16,991 $34,038 $8,231 $42,171
FeeRevenuesandNetFeeRelatedEarnings,AsDisclosedinPresentation
Dec31,2007 FeeRevenues AdvisoryFees TransactionandOtherFees,Net InterestIncomeandDividendRevenue Other FeeRevenues ENItoNFREReconciliation EconomicNetIncome ProFormaCompensationAdjustment(1) ProFormaInterestExpense(2) InvestmentIncome(Loss)Adjustment InvestmentIncome(Loss)Blackstone's TreasuryCashManagementStrategies TaxesPayable NetFeeRelatedEarnings(3) $360,284 7,385 (11) $367,658 $195,988 (57,530) 1,122 (68,140) $71,440 TwelveMonthsEnded Dec31,2008 $397,519 8,148 4,899 $410,566 $108,534 (13,356) $95,178 Dec31,2009 $390,718 5,254 (35) $395,937 $85,668 (1,662) 1,220 (7,475) $77,751 Sep30,2009 $94,566 1,250 1,051 $96,867 $16,991 (476) (110) $16,405 ThreeMonthsEnded Dec31,2009 Mar31,2010 $122,709 1,842 (21) $124,530 $34,038 (1,186) 1,220 (2,294) $31,778 $76,568 1 1,396 (932) $77,033 $8,231 (417) 350 (2,092) $6,072 June30,2010 $134,099 102 1,268 (342) $135,127 $42,171 (512) 484 (4,987) $37,156 LTMEnded June30,2010 $427,942 103 5,756 (244) $433,557 $101,431 (2,591) 2,054 (9,483) $91,411
________________________________________________
B.
SpeakerBiographies
PresenterBiographies
StephenA.Schwarzman isChairman,CEOandCoFounderofBlackstoneandtheChairmanoftheboardofdirectors ofitsgeneralpartner, BlackstoneGroupManagementL.L.C.Hehasbeeninvolvedinallphasesofthefirmsdevelopmentsinceitsfoundingin1985. Mr.SchwarzmanbeganhiscareeratLehmanBrothers,wherehewas electedManagingDirectorin1978attheageof31.Hewasengaged principallyinthefirmsmergersandacquisitionsbusinessfrom1977to1984,andservedasChairmanofthefirmsMergers&Acquisitions Committeein1983and1984. Mr.SchwarzmanisamemberofTheCouncilonForeignRelationsandTheBusinessCouncil.HeisontheboardofTheNewYorkPublicLibrary, andTheAsiaSociety.HeservesonTheJPMorganChaseNational AdvisoryBoard,TheNewYorkCityPartnershipBoardofDirectorsandThe AdvisoryBoardoftheSchoolofEconomicsandManagement,Tsinghua University,Beijing.Mr.SchwarzmanisaTrusteeofTheFrickCollection inNewYorkCityandChairmanEmeritusoftheBoardofTheJohnF.KennedyCenterforthePerformingArts.HealsowasawardedtheLgion dhonneur byPresidentJacquesChirac. Mr.SchwarzmanholdsaBAfromYaleUniversityandanMBAfromHarvardBusinessSchool.HehasservedasanadjunctprofessorattheYale SchoolofManagementandontheHarvardBusinessSchoolBoardof DeansAdvisors. Hamilton(Tony)E.James isPresident,ChiefOperatingOfficerofBlackstone,andamemberoftheboardofdirectorsofourgeneralpartner, BlackstoneGroupManagementL.L.C.HeisalsoamemberofBlackstonesManagementandExecutiveCommitteesandsitsoneachofthe firmsinvestmentcommittees. PriortojoiningBlackstoneMr.JameswasChairmanofGlobalInvestmentBankingandPrivateEquityatCreditSuisseFirstBoston anda memberoftheExecutiveBoard.PriortotheacquisitionofDonaldson,Lufkin&JenrettebyCreditSuisseFirstBostonin2000,Mr.Jameswas theChairmanofDLJs BankingGroup,responsibleforallthefirmsinvestmentbankingandmerchantbankingactivities.Mr.James joinedDLJ in1975asanInvestmentBankingassociate.HebecameheadofDLJs globalM&Agroupin1982,foundedDLJMerchantBanking,Inc.in 1985, andwasnamedChairmanoftheBankingGroupin1995.HeisaDirectorofCostcoWholesaleCorporationandSwiftRiverInvestments,Inc., andhasservedonanumberofothercorporateBoards. Mr.JamesisViceChairmanofTheKennedyCenterCorporateFundBoard,TrusteeandmemberofTheExecutiveCommitteeofTheSecond StageTheatre,TrusteeofTheMetropolitanMuseumofArt,ViceChairmanofTroutUnlimiteds ColdwaterConservationFund,Trusteeof WoodsHoleOceanographic,TrusteeofWildlifeConservationSociety,AdvisoryBoardmemberofTheMontanaLandReliance,andChairman EmeritusoftheBoardofTrusteesofAmericanBalletTheatre.HeisalsoaformermemberofthePresidentsExportCouncil Subcommittee onTechnology&Competitiveness. Mr.Jamesgraduatedmagnacumlaude withaBAfromHarvardCollegein1973andwasaJohnHarvardScholar.HeearnedanMBAwithhigh distinctionfromtheHarvardBusinessSchoolandgraduatedasaBakerScholarin1975.
PresenterBiographies
TimothyColeman isaSeniorManagingDirectorandHeadoftheRestructuring&ReorganizationGroup.Mr.Colemanalsoservesasamember ofBlackstonesExecutiveCommittee. SincejoiningBlackstonein1992,Mr.Colemanhasworkedonavarietyofrestructuringandreorganizationassignmentsforcompanies,creditor groups,specialcommitteesofcorporateboards,corporateparentsoftroubledcompaniesandacquirersofdistressedassets.Mr. Colemans mostnotableassignmentsincludeAdelphia,AT&T(intherestructuringsofAT&TCanada,Alestra,AT&TBroadbandandExcite@Home),Bear StearnsAssetManagement,Bidermann IndustriesUSA,Inc.,Cable&WirelessHoldings,CamelotMusic, Inc.,CellNet DataSystemsInc.,Credit BasedAssetServicingandSecuritizationLLC(CBASS),Criimi Mae,DeltaAirLines,EdisonBrothersStores,Inc.,Ermis MaritimeShipping, FinancialGuarantyInsuranceCompany(FGIC),FLAGTelecom,GenevaSteelCompany,GuangdongEnterprises,HarnischfegerIndustries, HarrahsJazzCompany,JPSTextileGroup,Inc.,KollRealEstate,MirantCorp.,MoltenMetalTechnology,Inc.,RCN,R.H.Macy&Co., StratosphereCorporation,Supercanal Holding,S.A.,Vencor,Inc.,WilliamsCommunications,XeroxCorporationandXLCapital. TheInternationalFinancingReviewrecognizedMr.ColemanseffortsintherestructuringofCBASSbynamingthetransactionthe RestructuringoftheYearin2008. BeforejoiningBlackstone,Mr.ColemanwasaVicePresidentatCitibankN.A.fortwelveyears,wherehedividedhistimebetween corporate restructuring,realestaterestructuring,andloansyndications. Mr.ColemanisafrequentguestlectureratColumbiaUniversityandNewYorkUniversity.HeisamemberoftheinMotion BoardofDirectors andtheBoardofLeadersoftheMarshallSchoolofBusinessattheUniversityofSouthernCalifornia. Mr.ColemanreceivedaBAfromtheUniversityofCaliforniaatSantaBarbaraandanMBAfromtheUniversityofSouthernCalifornia. BennettJ.Goodman,SeniorManagingDirectorofTheBlackstoneGroupandaMemberoftheBlackstoneGroupExecutiveCommittee,isa FounderofGSOCapitalPartners. BeforecofoundingGSOCapitalPartnersin2005,Mr.GoodmanwasChairman, FounderandManagingPartneroftheAlternativeCapital DivisionofCreditSuisseFirstBoston.Hewasresponsibleforoverseeing$33billionofassetsundermanagement,includinginvestment partnershipsforprivateequityinvestments,mezzaninesecurities,realestateinvestmentsandseveralcreditorientedinvestmentstrategies. Mr.GoodmanwasamemberoftheExecutiveBoardandtheManagementCouncilofCSFB.Additionally,Mr.GoodmanservedastheChairman oftheCorporateBank,overseeingCSFBs $35billionofglobalcorporatelendingactivities. Mr.GoodmanjoinedCSFBin2000whenitacquiredDonaldson,Lufkin&Jenrette(DLJ)wherehewasGlobalHeadofLeveragedFinance.Mr. GoodmanjoinedDLJin1988asthefounderoftheHighYieldCapitalMarketsGroup.In1993,DLJbecamethe#1globalissuerofhighyield bondsandMr.Goodmansteamretainedthatcovetedmarketpositionforthenext11consecutiveyears.PriortojoiningDLJ,Mr.Goodman workedinthehighyieldbusinessatDrexelBurnhamLambertfrom 1984to1988. Mr.GoodmangraduatedfromLafayetteCollegeandtheHarvardBusinessSchool.HeisontheBoardofDirectorsoftheFilmSocietyofLincoln Center,theCancerResearchInstituteandtheAmericanJewishCommittee(WestchesterChapter).HealsoservesontheDeansCouncilofMt. SinaiSchoolofMedicineandtheinvestmentcommitteeoftheLafayetteCollegeendowment.Mr.Goodmanreceivedthe2004Lifetime AchievementAwardfromEuromoney Magazineforhiscareerachievementsintheglobalcapitalmarkets.
PresenterBiographies
JonathanD.Gray isSeniorManagingDirectorandCoHeadofRealEstate.HeisalsoamemberofBlackstonesManagementandExecutive Committees. SincejoiningBlackstonein1992,Mr.Grayhasledtheprivatizationofelevenpublicrealestatecompaniesvaluedatmorethan$100billion includingExtendedStayAmerica,CarrAmerica,EquityOfficePropertiesandHiltonHotels.Mr.GraypreviouslyworkedintheAdvisoryGroup andthePrivateEquityGroupatBlackstone. Mr.GrayreceivedaBSinEconomicsfromtheWhartonSchool,aswellasaBAinEnglishfromtheCollegeofArtsandSciencesof theUniversity ofPennsylvania,wherehegraduatedmagnacumlaude andwaselectedtoPhiBetaKappa.Hecurrentlyservesasaboardmemberofthe PensionRealEstateAssociation,NAREIT,HarlemVillageAcademiesandTrinitySchool. J.Tomilson Hill isPresidentandChiefExecutiveOfficeroftheFundsofHedgeFundsgroup,aViceChairmanofBlackstoneandamemberofthe boardofdirectorsofourgeneralpartner,BlackstoneGroupManagementL.L.C. Mr.HillpreviouslyservedasCoHeadoftheCorporateandMergersandAcquisitionsAdvisorygroupbeforeassuminghisroleintheFundsof HedgeFundsgroup.Inhiscurrentcapacity,Mr.Hillisresponsibleforoverseeingthedaytodayactivitiesofthegroup,includinginvestment management,clientrelationships,marketing,operationsandadministration.HealsoservesasamemberofBlackstonesManagementand ExecutiveCommittees. BeforejoiningBlackstonein1993,Mr.HillbeganhiscareeratFirstBoston,laterbecomingoneoftheCoFoundersofitsMergers&Acquisitions Department.AfterrunningtheMergers&AcquisitionsDepartmentatSmithBarney,hejoinedLehmanBrothersasapartnerin1982, servingas CoHeadandsubsequentlyHeadofInvestmentBanking.Later,heservedasCoChiefExecutiveOfficerofLehmanBrothersandCoPresident andCoCOOofShearsonLehmanBrothersHoldingInc. Mr.HillisagraduateofHarvardCollegeandtheHarvardBusinessSchool.HeisamemberoftheCouncilonForeignRelationswherehechairs theInvestmentCommitteeandservesontheCouncilsBoardofDirectors,andisamemberoftheBoardofDirectorsofLincolnCenterTheater, whereheservesasPresident.Mr.HillservesasChairmanoftheBoardofTrusteesoftheSmithsoniansHirshhorn MuseumandSculpture Garden.HeisamemberoftheAdvisoryBoardofChristiesandamemberoftheBoardofDirectorsofOpenPeak Inc.
PresenterBiographies
GarrettM.Moran isaSeniorManagingDirectorandChiefOperatingOfficerofthePrivateEquityGroup.HeisamemberofBlackstones ExecutiveCommittee,aswellasallinvestmentcommitteesforthePrivateEquityGroup. PriortojoiningBlackstonein2005,Mr.MoranwasaSeniorPrincipalandthePresidentofMMCCapital.BeforejoiningMMCCapitalin2002, Mr.MoranhadalongcareeratDonaldson,Lufkin&Jenrette.His lastpositiontherewasViceChairmanandcoheadoftheBankingGroup.He joinedDLJin1982asaninvestmentbankingassociateandsubsequentlyheadedthefirmsHighYieldBondDepartmentandservedasChief OperatingOfficerofDLJSTaxableFixedIncomeDivision.HewasViceChairmanandcoheadoftheBankingGroupofDLJatthetimeofthe firmsacquisitionbyCreditSuisseFirstBostonCorporation.Followingthatacquisition,Mr.MoranservedCSFBascoheadoftheinvestment bankingintegrationeffortandsubsequentlywastheheadofCSFBs PrivateEquityDivision. Mr.MoranisaboardmemberofthePosseFoundation,formerChairmanoftheBoardofTrusteesoftheBrunswickSchoolandformer Vice ChairmanoftheboardofMiddleburyCollege.HereceivedaBAfromMiddleburyCollegeandanMBAfromtheWhartonSchoolofthe UniversityofPennsylvania. JamesA.Quella isaSeniorManagingDirectorandSeniorOperatingPartnerinthePrivateEquityGroup. Mr.QuellaisresponsibleformonitoringthestrategyandoperationalperformanceofBlackstoneportfoliocompaniesandprovidingdirect assistanceintheoversightoflargeinvestments.HeisalsoamemberofthefirmsPrivateEquityInvestmentCommittee. PriortojoiningBlackstonein2004,Mr.QuellawasaManagingDirectorandSeniorOperatingPartnerwithDLJMerchantBankingPartners CSFBPrivateEquity.Priortothat,Mr.QuellaworkedatMercerManagementConsultingandStrategicPlanningAssociates,itspredecessorfirm, whereheservedasaseniorconsultanttoCEOsandseniormanagementteams,andwasCoViceChairmanwithsharedresponsibilityfor overallmanagementofthefirm. Mr.QuellareceivedaBAinInternationalStudiesfromtheUniversityofChicago/UniversityofWisconsinMadisonandanMBAwithdeans honorsfromtheUniversityofChicago.HeisalsothecoauthorofProfitPatterns:30WaystoAnticipateandProfitfrom theStrategicForces ReshapingYourBusiness.Mr.Quellahasbeenamemberofvarious PrivateEquitycompanyboardsandcurrentlyservesasaDirectorof Catalent,Freescale Semiconductor,GrahamPackaging,MichaelsStores,Inc.,andVanguardHealthSystems. VikrantSawhney isaSeniorManagingDirectorinthePrivateEquityGroupandisbasedinNewYork.Mr.Sawhney leadsthePrivateEquity GroupscapitalmarketsactivitiesandalsoworkscloselywithGSO,Advisory&RestructuringGroupandvariousotherpartsofthefirm on creditrelatedmatters. BeforejoiningBlackstonein2007,Mr.Sawhney workedasaManagingDirectorintheFinancialSponsorsGroupatDeutscheBank,wherehe wasresponsibleformanagingthefirmsrelationshipswithBlackstoneandseveralotherlargeprivateequityfirms.PriortojoiningDeutsche Bank,Mr.Sawhney wasanAssociateatthelawfirmofSimpsonThacher &Bartlett. Mr.Sawhney receivedaBA,magnacumlaude,fromDartmouthCollege,wherehewaselectedtoPhiBetaKappa.HealsoreceivedaJ.D.,cum laude,fromHarvardLawSchool.
PresenterBiographies
JohnStudzinski CBE isaSeniorManagingDirectorandglobalheadofBlackstoneAdvisoryPartnersLP.Mr.Studzinski isbasedinbothNew YorkandLondon. Mr.Studzinskis primaryroleistooverseeBlackstonesglobaladvisorybusiness.HeisamemberofthefirmsExecutiveCommittee. BeforejoiningBlackstonein2006,Mr.Studzinski wasamemberoftheGroupManagementBoardandcoheadofinvestmentbankingatHSBC basedinLondonfrom2003to2006.PriortothathewasatMorganStanleyfrom1980to2003,whereheservedasheadoftheEuropean InvestmentBankingDivisionandDeputyChairmanofMorganStanleyInternational. HisrecenttransactionexperienceincludesadvisingtheBoardof AIGonitsglobalrestructuring,theMinistersoftheGovernmentofthe Ukraine,theBoardofReutersonthemergerwithThomson,ChinaDevelopmentBankonitsinvestmentinBarclaysPLC,theBoardof Northern Rockonitsrestructuring,theBoardofSuezontheproposedmergerwithGaz deFrance,theBoardofUnileverontheDualHeadStructure,the BATseniormanagementoncertainmaterialstrategicoptionsandtheBoardofPetrochina onapossibleacquisitionofUnocal. Mr.Studzinski graduatedfromBowdoinCollegein1978withadoubleBADegreemagnacumlaude inBiology&Sociology.Hereceivedan MBAfromtheUniversityofChicagoin1980inFinanceandMarketing.HeisViceChairandDirectorofHumanRightsWatchwhereheserves ontheExecutiveCommitteeaswellasChairmanoftheInvestment Committee.HealsoservesasaTrusteeofBowdoinCollege,the Tate Foundation,ThePassageDayCentrefortheHomelessandTheRoyalParksFoundation.HeisamemberoftheCouncilofTheRoyalCollegeof ArtandisChairoftheEmmausRevivesLivescampaign.Inmid2007,Mr.Studzinski steppeddownasatrusteeoftheTateandbecame ChairmanofBenjaminFranklinHouse.In2001,heestablishedtheGenesisFoundationwhichsupportsandnurturesemergingcomposers, directors,writersandactorsintosustainedcareersinthearts. Mr.Studzinski wasmadeaKnightoftheOrderofSt.Gregoryforhishumanitarianworkforthehomeless.HewasalsomadeaKnight CommanderofSaintSylvester.HereceivedthePrinceofWalesAmbassadorsAwardinrecognitionofhiscontributiontothehomeless.He receivedtheBeaconPrizein2004forservicestophilanthropyandinOctober2007wasvotedBankeroftheYearbytheVarietyClubUK.In 2008,hewasnamedintheQueensNewYearHonours ListasaCommanderoftheBritishEmpire(CBE)forhisservicestotheArtsandto Charity. LaurenceTosi,aSeniorManagingDirector,isthefirmsChiefFinancialOfficer.HealsoservesonthefirmsExecutiveCommittee. BeforejoiningBlackstonein2008,LaurenceTosiwastheChiefOperatingOfficerfortheGlobalMarketsandInvestmentBankingGroupof MerrillLynch&Co.Priortothat,hewasSeniorVicePresident andFinanceDirectorresponsibleforMerrillLynchsglobalfinanceorganization, includingworldwideaccounting,regulatoryreporting,budgetingandcorporatedevelopment. LaurenceTosireceivedaBA,aJDandanMBAfromGeorgetownUniversity.
PresenterBiographies
JoanSolotar isaSeniorManagingDirectorintheExternalRelationsandStrategyGroupofTheBlackstoneGroupandamemberofthefirms ExecutiveCommittee.Ms.Solotarhasmanagementresponsibilityforshareholderrelationsandpublicaffairsandalsoguidesthefirmon analyzingstrategicdevelopmentopportunities. BeforejoiningBlackstonein2007,Ms.SolotarwaswithBancofAmericaSecuritieswhereshewasaManagingDirectorandHeadof Equity Research.ShestartedhercareerinequityresearchatTheFirst BostonCorporationandpriortojoiningBankofAmericawaspartofthe financialservicesteamatDonaldson,Lufkin&JenretteandlaterwithCSFBasaManagingDirector.Ms.Solotarwasrankedeachyearfrom 1995to2002intheBrokersandAssetManagementcategoryonthe InstitutionalInvestorAllAmericaResearchTeam,andconsistentlyranked highlyintheGreenwichSurveyofportfoliomanagers.ShealsoservedasChairpersonoftheResearchCommitteefortheSecuritiesIndustry Association. Ms.SolotarreceivedaBSinManagementInformationSystemsattheStateUniversityofNewYorkatAlbanyandanMBAinFinanceatNYU. SheiscurrentlyontheBoardofDirectorsoftheEastHarlemTutorialProgram. WestonTucker isaVicePresidentintheExternalRelationsandStrategyGroup. SincejoiningBlackstone,Mr.TuckerhasbeeninvolvedinBlackstonesdealingswiththeinvestmentcommunity. BeforejoiningBlackstonein2007,Mr.TuckerworkedasanassociateinJPMorgansequityresearchdepartment,coveringtelecomandcable. HebeganhiscareeratAT&T,whereheworkedinavarietyoffinancerolesincludinginvestorrelationsandcommunications,aswellas corporatedevelopment. Mr.Tuckergraduatedsummacumlaude withaBSinBusinessAdministration(Finance)fromOhioStateUniversity.
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Notes
Offices
New York 345 Park Avenue New York, NY 10154 Phone: +1 212 583 5000 (TBG) Fax: +1 212 583 5749 (TBG) Phone: +1 212 583 5799 (Park Hill) Fax: +1 212 583 5639 (Park Hill) New York GSO 280 Park Avenue 11th Floor New York, NY 10017 Phone: +1 212 503 2100 Fax: +1 212 503 6930 Atlanta 4401 Northside Parkway 3rd Floor, Suite 375 Atlanta, GA 30327 Phone: +1 404 460 2321 Fax: +1 404 460 2337 Boston Exchange Place 53 State Street Boston, MA 02109 Phone: +1 617 646 2900 (BAP) Fax: +1 617 646 2905 (BAP) Phone: +1 866 800 8933 (Asia Adv.) Phone: +1 617 598 2000 (Asia Adv.) (outside North America) Chicago 200 West Madison Street Suite 3800 Chicago, IL 60606 Phone: +1 312 705 3070 Fax: +1 312 705 3079 Dallas 3949 Maple Avenue Suite 400 Dallas, TX 75219 Phone: +1 214 661 8390 Fax: +1 214 661 8395 Houston GSO 11 Greenway Plaza 30th Floor, Suite 3050 Houston, TX 77046 Phone: +1 713 358 1400 Fax: +1 713 358 1401 Los Angeles 1299 Ocean Avenue Suite 320 Santa Monica, CA 90401 Phone: +1 310 310 6949 Fax: +1 310 310 6998 Menlo Park 2494 Sand Hill Road Suite 200 Menlo Park, CA 94025 Phone: +1 650 798 3800 Fax: +1 650 798 3801 San Francisco 101 California Street Suite 2880 San Francisco, CA 94111 Phone: +1 415 276 5900 Fax: +1 415 276 5919 London 40 Berkeley Square London, W1J 5AL United Kingdom Phone: +44 (0) 20 7451 4000 Fax: +44 (0) 20 7451 4001 Fax: +44 (0) 20 7451 4091 (Park Hill) London GSO 13 Hanover Square 5th Floor London W1S 1HN United Kingdom Phone: +44 (0) 20 7758 9000 Fax: +44 (0) 20 7758 9098 / 9099 Paris 3 Rue Paul Cezanne 4th Floor 75008 Paris France Phone: +33 (0) 1 56 69 16 30 Fax: +33 (0) 1 56 69 16 31 Mumbai Express Towers, 5th Floor Nariman Point Mumbai 400 021 India Phone: +91 (0) 22 6752 8520 (BFSIP) Fax: +91 (0) 22 6752 8530 (BFSIP) Phone: +91 (0) 22 6752 8500 (BAIP) Fax: +91 (0) 22 6752 8531 (BAIP) Hong Kong Two International Finance Centre 9th Floor, Suite 901 8 Finance Street Central, Hong Kong Phone: +852 3656 8600 Fax: +852 3656 8601 Tokyo 11F AIG Building 1-1-3 Marunouchi, Chiyoda-ku Tokyo, 100-0005 Japan Phone: +81 (03) 4577 8400 Fax: +81 (03) 4577 8401 Beijing Winland International Finance Center Unit F817-18 No. 7, Finance Street Xicheng District, Beijing China 100140 Phone: +86 10 6649 7300 Fax: +86 10 6649 7301 (Pvt Equity) Fax: +86 10 6649 7310 (Corp. Advisory) Sydney Angel Place Suite 2802 123 Pitt Street Sydney, NSW 2000 Australia Phone: +61 2 8016 7200 Fax: +61 2 8016 7201 Shanghai Unit 1101, DBS Bank Tower No. 1318 Lujjazui Ring Road, Pudong Shanghai 200120, PRC Phone: +86 21 6169 8188 Fax: +86 21 6169 8189