FAIR VALUE MEASUREMENTS OF FINANCIAL INSTRUMENTS (Tables)

6 Months Ended

Jun. 30, 2013

Financial Assets and Liabilities at Fair Value

The following tables summarize the valuation of the Partnership’s financial assets and liabilities by the fair value hierarchy:

	June 30, 2013
	Level I		Level II		Level III		Total
Assets
Investments of Consolidated Blackstone Funds (a)
Investment Funds	$	—	$	—	$	974,599	$	974,599
Equity Securities		59,432		63,314		217,646		340,392
Partnership and LLC Interests		—		8,547		628,255		636,802
Debt Instruments		—		1,102,396		25,817		1,128,213
Assets of Consolidated CLO Vehicles
Corporate Loans		—		8,258,099		1,024,173		9,282,272
Corporate Bonds		—		146,472		2,609		149,081
Freestanding Derivatives—Foreign Currency Contracts		—		43,523		—		43,523
Freestanding Derivatives—Interest Rate Contracts		—		4,010		—		4,010
Other		—		964		17,220		18,184
Total Investments of Consolidated Blackstone Funds		59,432		9,627,325		2,890,319		12,577,076
Blackstone’s Treasury Cash Management Strategies		415,584		631,783		31,804		1,079,171
Money Market Funds		178,931		—		—		178,931
Freestanding Derivatives
Interest Rate Contracts		3,444		44,220		—		47,664
Foreign Currency Contracts		—		3,059		—		3,059
Loans and Receivables		—		—		107,731		107,731
Other Investments		62,197		7,081		16,110		85,388
	$	719,588	$	10,313,468	$	3,045,964	$	14,079,020
Liabilities
Liabilities of Consolidated CLO Vehicles (a)
Senior Secured Notes	$	—	$	—	$	9,189,948	$	9,189,948
Subordinated Notes		—		—		618,682		618,682
Freestanding Derivatives—Foreign Currency Contracts		—		9,353		—		9,353
Freestanding Derivatives—Interest Rate Contracts		—		—		—		—
Freestanding Derivatives
Interest Rate Contracts		1,289		2,071		—		3,360
Foreign Currency Contracts		—		3,162		—		3,162
Credit Default Swaps		—		1,879		—		1,879
Securities Sold, Not Yet Purchased		—		77,553		—		77,553
	$	1,289	$	94,018	$	9,808,630	$	9,903,937

	December 31, 2012
	Level I		Level II		Level III		Total
Assets
Investments of Consolidated Blackstone Funds (a)
Investment Funds	$	—	$	1,799	$	890,465	$	892,264
Equity Securities		95,898		28,654		217,060		341,612
Partnership and LLC Interests		212		12,375		581,151		593,738
Debt Instruments		—		903,123		17,724		920,847
Assets of Consolidated CLO Vehicles
Corporate Loans		—		9,775,070		1,278,443		11,053,513
Corporate Bonds		—		146,625		15,831		162,456
Freestanding Derivatives—Foreign Currency Contracts		—		37,898		—		37,898
Freestanding Derivatives—Interest Rate Contracts		—		6,132		—		6,132
Other		—		1,260		17,025		18,285
Total Investments of Consolidated Blackstone Funds		96,110		10,912,936		3,017,699		14,026,745
Blackstone’s Treasury Cash Management Strategies		672,766		737,708		1,206		1,411,680
Money Market Funds		129,549		—		—		129,549
Freestanding Derivatives
Interest Rate Contracts		486		54,784		—		55,270
Foreign Currency Contracts		—		74		—		74
Loans and Receivables		—		—		30,663		30,663
Other Investments		12,443		6,783		26,898		46,124
	$	911,354	$	11,712,285	$	3,076,466	$	15,700,105
Liabilities
Liabilities of Consolidated CLO Vehicles (a)
Senior Secured Notes	$	—	$	—	$	10,695,136	$	10,695,136
Subordinated Notes		—		—		846,471		846,471
Freestanding Derivatives—Foreign Currency Contracts		—		17,101		—		17,101
Freestanding Derivatives—Interest Rate Contracts		—		772		—		772
Freestanding Derivatives
Interest Rate Contracts		277		3,839		—		4,116
Foreign Currency Contracts		—		81		—		81
Securities Sold, Not Yet Purchased		—		226,425		—		226,425
	$	277	$	248,218	$	11,541,607	$	11,790,102

(a) Pursuant to GAAP consolidation guidance, the Partnership is required to consolidate all VIEs in which it has been identified as the primary beneficiary, including certain CLO vehicles, and other funds in which a consolidated entity of the Partnership, as the general partner of the fund, is presumed to have control. While the Partnership is required to consolidate certain funds, including CLO vehicles, for GAAP purposes, the Partnership has no ability to utilize the assets of these funds and there is no recourse to the Partnership for their liabilities since these are client assets and liabilities.

Summary of Fair Value Transfers Between Level I and Level II

The following table summarizes the fair value transfers between Level I and Level II for positions that existed as of June 30, 2013 and 2012, respectively:

	Three Months Ended June  30,				Six Months Ended June  30,
	2013		2012		2013		2012
Transfers from Level I into Level II (a)	$	31	$	15,924	$	28,670	$	45,440
Transfers from Level II into Level I (b)	$	46,495	$	529	$	—	$	801

(a) Transfers out of Level I represent those financial instruments for which restrictions exist and adjustments were made to an otherwise observable price to reflect fair value at the reporting date.

(b) Transfers into Level I represent those financial instruments for which an unadjusted quoted price in an active market became available for the identical asset.

Summary of Quantitative Inputs and Assumptions for Items Categorized in Level III of Fair Value Hierarchy

The following table summarizes the quantitative inputs and assumptions used for items categorized in Level III of the fair value hierarchy as of June 30, 2013:

	Fair Value		Valuation Techniques	Unobservable Inputs	Ranges	Weighted Average (a)
Financial Assets
Investments of Consolidated Blackstone Funds
Investment Funds	$	974,599	NAV as Fair Value	N/A	N/A	N/A
Equity Securities		156,394	Discounted Cash Flows	Discount Rate Revenue CAGR Exit Multiple - EBITDA Exit Multiple - P/E	8.2% - 25.0% 0.9% - 43.4% 5.0x - 11.5x 8.5x - 17.0x	11.3% 5.4% 9.5x 10.0x
		58,753	Transaction Price	N/A	N/A	N/A
		279	Market Comparable Companies	EBITDA Multiple	7.2x - 7.8x	7.4x
		85	Third Party Pricing	N/A	N/A	N/A
		2,135	Other	N/A	N/A	N/A
Partnership and LLC Interests		608,846	Discounted Cash Flows	Discount Rate Revenue CAGR Exit Multiple - EBITDA Exit Capitalization Rate	5.1% - 26.3% -4.6% - 33.9% 3.0x - 20.0x 5.0% - 10.5%	9.0% 5.9% 9.8x 7.0%
		12,107	Transaction Price	N/A	N/A	N/A
		7,302	Third Party Pricing	N/A	N/A	N/A
Debt Instruments		13,708	Discounted Cash Flows	Discount Rate Revenue CAGR Exit Multiple - EBITDA Exit Capitalization Rate Default Rate Recovery Rate Recovery Lag Pre-payment Rate Reinvestment Rate	8.4% - 27.0% 1.6% - 3.4% 5.8x - 11.5x 6.1% - 10.0% 2.0% - 3.0% 70.0% 12 months 20.0% LIBOR + 375 bps	15.7% 2.1% 10.5x 7.4% 2.6% N/A N/A N/A N/A
		11,690	Third Party Pricing	N/A	N/A	N/A
		121	Transaction Price	N/A	N/A	N/A
		298	Market Comparable Companies	EBITDA Multiple	6.3x - 7.6x	6.3x
Assets of Consolidated CLO Vehicles		562,383	Third Party Pricing	N/A	N/A	N/A
		426,496	Market Comparable Companies	EBITDA Multiple	2.0x - 11.4x	8.0x
		55,114	Discounted Cash Flows	Discount Rate	6.9% - 12.9%	7.6%
		9	Transaction Price	N/A	N/A	N/A
Total Investments of Consolidated Blackstone Funds		2,890,319
						continued...
Blackstone’s Treasury Cash Management Strategies	$	4,351	Transaction Price	N/A	N/A	N/A
		17,822	Third Party Pricing	N/A	N/A	N/A
		9,631	Discounted Cash Flows	Default Rate Recovery Rate Recovery Lag Pre-payment Rate Reinvestment Rate Discount Rate	2.0% 30.0% - 70.0% 12 months 10.0% - 20.0% LIBOR + 375 bps 6.3% - 10.3%	N/A 66.0% N/A 19.0% N/A 8.0%
Loans and Receivables		107,731	Discounted Cash Flows	Discount Rate	8.5% - 30.1%	11.5%
Other Investments		3,983	NAV as Fair Value	N/A	N/A	N/A
		4,249	Discounted Cash Flows	Discount Rate	12.5%	N/A
		7,878	Transaction Price	N/A	N/A	N/A
Total	$	3,045,964
Financial Liabilities
Liabilities of Consolidated CLO Vehicles	$	9,808,630	Discounted Cash Flows	Default Rate	2.0% - 3.0%	2.1%
				Recovery Rate	30.0% - 70.0%	66.0%
				Recovery Lag	12 months	N/A
				Pre-payment Rate	5.0% - 40.0%	18.0%
				Discount Rate	0.7% - 47.0%	3.2%
				Reinvestment Rate	LIBOR + 375 bps	N/A

The following table summarizes the quantitative inputs and assumptions used for items categorized in Level III of the fair value hierarchy as of December 31, 2012:

	Fair Value		Valuation Techniques	Unobservable Inputs	Ranges	Weighted Average (a)
Financial Assets
Investments of Consolidated Blackstone Funds
Investment Funds	$	890,465	NAV as Fair Value	N/A	N/A	N/A
Equity Securities		151,899	Discounted Cash Flows	Discount Rate Revenue CAGR Exit Multiple - EBITDA Exit Multiple - P/E	8.4% - 25.1% 0.7% - 83.4% 5.8x - 11.5x 8.5x - 17.0x	11.2% 5.6% 9.2x 10.1x
		61,479	Transaction Price	N/A	N/A	N/A
		1,602	Market Comparable Companies	Book Value Multiple EBITDA Multiple	0.9x 5.0x - 8.7x	N/A 7.8x
		200	Third Party Pricing	N/A	N/A	N/A
		1,880	Other	N/A	N/A	N/A
Partnership and LLC Interests		562,678	Discounted Cash Flows	Discount Rate Revenue CAGR Exit Multiple - EBITDA Exit Capitalization Rate	5.3% - 22.6% -8.2% - 62.0% 4.5x - 15.4x 1.0% - 10.5%	8.9% 5.3% 10.0x 7.0%
		13,316	Transaction Price	N/A	N/A	N/A
		5,157	Third Party Pricing	N/A	N/A	N/A
Debt Instruments		13,056	Discounted Cash Flows	Discount Rate Revenue CAGR Exit Multiple - EBITDA Exit Capitalization Rate Default Rate Recovery Rate Recovery Lag Pre-payment Rate Reinvestment Rate	7.8% - 42.0% 2.9% - 5.1% 9.5x 7.0% - 7.5% 2.0% 70.0% 12 months 20.0% LIBOR + 400 bps	15.6% 3.8% N/A 7.1% N/A N/A N/A N/A N/A
		4,004	Third Party Pricing	N/A	N/A	N/A
		664	Market Comparable Companies	EBITDA Multiple	6.5x - 7.5x	6.7x
Assets of Consolidated CLO Vehicles		900,146	Third Party Pricing	N/A	N/A	N/A
		278,972	Market Comparable Companies	EBITDA Multiple Liquidity Discount	2.0x - 13.0x 1.0% - 25.0%	6.5x 8.4%
		132,171	Discounted Cash Flows	Discount Rate	7.0% - 15.7%	9.3%
		10	Transaction Price	N/A	N/A	N/A
Total Investments of Consolidated Blackstone Funds		3,017,699
						continued...
Blackstone’s Treasury Cash Management Strategies	$	1,006	Discounted Cash Flows	Default Rate Recovery Rate Recovery Lag Pre-payment Rate Discount Rate Reinvestment Rate	2.0% 70.0% 12 months 20.0% 12.0% LIBOR + 400 bps	N/A N/A N/A N/A N/A N/A
		200	Transaction Price	N/A	N/A	N/A
Loans and Receivables		30,620	Discounted Cash Flows	Discount Rate	11.8% - 25.9%	13.7%
		43	Market Comparable Companies	EBITDA Multiple	8.7x	N/A
Other Investments		17,901	NAV as Fair Value	N/A	N/A	N/A
		5,647	Discounted Cash Flows	Discount Rate	12.5%	N/A
		3,350	Transaction Price	N/A	N/A	N/A
Total	$	3,076,466
Financial Liabilities
Liabilities of Consolidated CLO Vehicles	$	11,541,607	Discounted Cash Flows	Default Rate	2.0% - 5.0%	2.1%
				Recovery Rate	30.0% - 70.0%	66.0%
				Recovery Lag	12 months	N/A
				Pre-payment Rate	5.0% - 20.0%	18.0%
				Discount Rate	1.1% - 50.0%	3.9%
				Reinvestment Rate	LIBOR + 400 bps	N/A

N/A                    Not applicable.

CAGR                Compound annual growth rate.

EBITDA            Earnings before interest, taxes, depreciation and amortization.

Exit Multiple     Ranges include the last twelve months EBITDA, forward EBITDA and price/earnings exit multiples.

(a)                    Unobservable inputs were weighted based on the fair value of the investments included in the range.

Summary of Changes in Financial Assets Measured at Fair Value for Which Level III Inputs Were Used

	Level III Financial Assets at Fair Value Three Months Ended June 30,
	2013											2012
	Investments  of Consolidated Funds			Loans and Receivables		Other Investments  (c)			Total			Investments  of Consolidated Funds			Loans and Receivables			Other Investments  (c)			Total
Balance, Beginning of Period	$	2,937,297		$	3,867	$	63,049		$	3,004,213		$	2,390,276		$	105,004		$	21,791		$	2,517,071
Transfer Out Due to Deconsolidation		(50,181	)		—		—			(50,181	)		(1,599	)		—			—			(1,599	)
Transfer In to Level III (b)		177,145			—		—			177,145			171,916			—			—			171,916
Transfer Out of Level III (b)		(259,570	)		—		(1,713	)		(261,283	)		(59,315	)		—			—			(59,315	)
Purchases		308,817			103,653		28,260			440,730			232,684			39,657			100			272,441
Sales		(302,010	)		—		(41,074	)		(343,084	)		(173,516	)		(41,872	)		(541	)		(215,929	)
Settlements		—			—		—			—			—			(186	)		—			(186	)
Realized Gains (Losses), Net		29,476			—		13,587			43,063			(12,264	)		—			541			(11,723	)
Changes in Unrealized Gains (Losses) Included in Earnings Related to Investments Still Held at the Reporting Date		49,345			211		(14,195	)		35,361			(8,026	)		1,604			(529	)		(6,951	)
Balance, End of Period	$	2,890,319		$	107,731	$	47,914		$	3,045,964		$	2,540,156		$	104,207		$	21,362		$	2,665,725

	Level III Financial Assets at Fair Value Six Months Ended June 30,
	2013												2012
	Investments  of Consolidated Funds			Loans and Receivables			Other Investments  (c)			Total			Investments  of Consolidated Funds			Loans and Receivables			Other Investments  (c)			Total
Balance, Beginning of Period	$	3,017,699		$	30,663		$	28,104		$	3,076,466		$	2,103,769		$	8,555		$	20,164		$	2,132,488
Transfer In Due to Consolidation and Acquisition (a)		—			—			11,960			11,960			122,565			—			—			122,565
Transfer Out Due to Deconsolidation		(152,727	)		—			—			(152,727	)		(1,599	)		—			—			(1,599	)
Transfer In to Level III (b)		224,363			—			—			224,363			253,608			—			—			253,608
Transfer Out of Level III (b)		(372,438	)		—			(1,713	)		(374,151	)		(103,280	)		—			—			(103,280	)
Purchases		436,850			106,526			91,034			634,410			320,312			142,908			100			463,320
Sales		(430,563	)		(29,462	)		(80,536	)		(540,561	)		(229,623	)		(49,251	)		(541	)		(279,415	)
Settlements		—			(332	)		(1,559	)		(1,891	)		—			(46	)		—			(46	)
Realized Gains (Losses), Net		1,959			43			14,436			16,438			(9,093	)		—			639			(8,454	)
Changes in Unrealized Gains (Losses) Included in Earnings Related to Investments Still Held at the Reporting Date		165,176			293			(13,812	)		151,657			83,497			2,041			1,000			86,538
Balance, End of Period	$	2,890,319		$	107,731		$	47,914		$	3,045,964		$	2,540,156		$	104,207		$	21,362		$	2,665,725

Summary of Changes in Financial Liabilities Measured at Fair Value for Which Level III Inputs Were Used

	Level III Financial Liabilities at Fair Value Three Months Ended June 30,
	2013									2012
	Collateralized Loan Obligations Senior Notes			Collateralized Loan Obligations Subordinated Notes			Total			Collateralized Loan Obligations Senior Notes			Collateralized Loan Obligations Subordinated Notes			Total
Balance, Beginning of Period	$	9,634,747		$	720,552		$	10,355,299		$	10,984,018		$	857,772		$	11,841,790
Transfer Out Due to Deconsolidation		(343,392	)		(67,629	)		(411,021	)		—			—			—
Issuances		—			—			—			227			—			227
Settlements		(299,993	)		(4	)		(299,997	)		(140,736	)		(238	)		(140,974	)
Realized (Gains) Losses, Net		—			—			—			(1	)		—			(1	)
Changes in Unrealized (Gains) Losses Included in Earnings Related to Liabilities Still Held at the Reporting Date		198,586			(34,237	)		164,349			(309,255	)		(155,886	)		(465,141	)
Balance, End of Period	$	9,189,948		$	618,682		$	9,808,630		$	10,534,253		$	701,648		$	11,235,901

	Level III Financial Liabilities at Fair Value Six Months Ended June 30,
	2013									2012
	Collateralized Loan Obligations Senior Notes			Collateralized Loan Obligations Subordinated Notes			Total			Collateralized Loan Obligations Senior Notes			Collateralized Loan Obligations Subordinated Notes			Total
Balance, Beginning of Period	$	10,695,136		$	846,471		$	11,541,607		$	7,449,766		$	630,236		$	8,080,002
Transfer In Due to Consolidation and Acquisition (a)		—			—			—			3,419,084			149,225			3,568,309
Transfer Out Due to Deconsolidation		(1,100,842	)		(150,925	)		(1,251,767	)		—			—			—
Issuances		1,054			775			1,829			4,620			838			5,458
Settlements		(704,377	)		(346	)		(704,723	)		(272,609	)		(2,984	)		(275,593	)
Realized (Gains) Losses, Net		—			—			—			43			—			43
Changes in Unrealized (Gains) Losses Included in Earnings Related to Liabilities Still Held at the Reporting Date		298,977			(77,293	)		221,684			(66,651	)		(75,667	)		(142,318	)
Balance, End of Period	$	9,189,948		$	618,682		$	9,808,630		$	10,534,253		$	701,648		$	11,235,901

(a) Represents the transfer into Level III of financial assets and liabilities held by CLO vehicles as a result of the acquisition of management contracts and the Harbourmaster acquisition.

(b) Transfers in and out of Level III financial assets and liabilities were due to changes in the observability of inputs used in the valuation of such assets and liabilities.

(c) Represents Blackstone’s Treasury Cash Management Strategies and Other Investments.