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UNITED STATES

SECURITIES AND EXCHANGE COMMISSIONWASHINGTON, D.C. 20549

FORM 10-K(Mark One)☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE FISCAL YEAR ENDED DECEMBER 31, 2017OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF1934 FOR THE TRANSITION PERIOD FROM TO

Commission File Number: 001-33551

The Blackstone Group L.P.(Exact name of Registrant as specified in its charter)

Delaware 20-8875684(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)

345 Park AvenueNew York, New York 10154

(Address of principal executive offices)(Zip Code)(212) 583-5000

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class Name of each exchange on which registeredCommonunitsrepresentinglimitedpartnerinterests NewYorkStockExchange

SecuritiesregisteredpursuanttoSection12(g)oftheAct:None

IndicatebycheckmarkiftheRegistrantisawell-knownseasonedissuer,asdefinedinRule405oftheSecuritiesAct.

Yes

☒

No

☐

IndicatebycheckmarkiftheRegistrantisnotrequiredtofilereportspursuanttoSection13orSection15(d)oftheAct.

Yes

☐

No

☒

IndicatebycheckmarkwhethertheRegistrant(1)hasfiledallreportsrequiredtobefiledbySection13or15(d)oftheSecuritiesExchangeActof1934duringthepreceding12months(orforsuchshorterperiodthattheRegistrantwasrequiredtofilesuchreports),and(2)hasbeensubjecttosuchfilingrequirementsforthepast90days.

Yes

☒

No

☐

IndicatebycheckmarkwhethertheregistranthassubmittedelectronicallyandpostedonitscorporateWebsite,ifany,everyInteractiveDataFilerequiredtobesubmittedandpostedpursuanttoRule405ofRegulationS-T(§232.405ofthischapter)duringthepreceding12months(orforsuchshorterperiodthattheregistrantwasrequiredtosubmitandpostsuchfiles).

Yes

☒

No

☐

IndicatebycheckmarkifdisclosureofdelinquentfilerspursuanttoItem405ofRegulationS-K(§229.405ofthischapter)isnotcontainedhereinandwillnotbecontained,tothebestoftheRegistrant’sknowledge,indefinitiveproxyorinformationstatementsincorporatedbyreferenceinPartIIIofthisForm10-KoranyamendmenttothisForm10-K.

☐

IndicatebycheckmarkwhethertheRegistrantisalargeacceleratedfiler,anacceleratedfiler,anon-acceleratedfiler,smallerreportingcompany,oranemerginggrowthcompany.Seethedefinitionsof“largeacceleratedfiler,”“acceleratedfiler,”“smallerreportingcompany,”and“emerginggrowthcompany”inRule12b-2oftheExchangeAct.

Largeacceleratedfiler

☒

Acceleratedfiler

☐Non-acceleratedfiler

☐

Smallerreportingcompany

☐(donotcheckifasmallerreportingcompany)

Emerginggrowthcompany

☐

Ifanemerginggrowthcompany,indicatebycheckmarkiftheregistranthaselectednottousetheextendedtransitionperiodforcomplyingwithanyneworrevisedfinancialaccountingstandardsprovidedpursuanttoSection13(a)oftheExchangeAct.

☐

IndicatebycheckmarkwhethertheRegistrantisashellcompany(asdefinedinRule12b-2oftheAct).

Yes

☐

No

☒

TheaggregatemarketvalueofthecommonunitsoftheRegistrantheldbynon-affiliatesasofJune30,2017wasapproximately$21.4billion,whichincludesnon-votingcommonunitswithavalueofapproximately$1.1billion.

ThenumberoftheRegistrant’svotingcommonunitsrepresentinglimitedpartnerinterestsoutstandingasofFebruary22,2018was659,087,647.

DOCUMENTSINCORPORATEDBYREFERENCENone

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Page

PART I.

ITEM1.

BUSINESS

5

ITEM1A.

RISKFACTORS

20

ITEM1B.

UNRESOLVEDSTAFFCOMMENTS

73

ITEM2.

PROPERTIES

73

ITEM3.

LEGALPROCEEDINGS

73

ITEM4.

MINESAFETYDISCLOSURES

73

PART II.

ITEM5.

MARKETFORREGISTRANT’SCOMMONEQUITY,RELATEDSTOCKHOLDERMATTERSANDISSUERPURCHASESOFEQUITYSECURITIES

74

ITEM6.

SELECTEDFINANCIALDATA

77

ITEM7.

MANAGEMENT’SDISCUSSIONANDANALYSISOFFINANCIALCONDITIONANDRESULTSOFOPERATIONS

79

ITEM7A.

QUANTITATIVEANDQUALITATIVEDISCLOSURESABOUTMARKETRISK

148

ITEM8.

FINANCIALSTATEMENTSANDSUPPLEMENTARYDATA

152

ITEM8A.

UNAUDITEDSUPPLEMENTALPRESENTATIONOFSTATEMENTSOFFINANCIALCONDITION

225

ITEM9.

CHANGESINANDDISAGREEMENTSWITHACCOUNTANTSONACCOUNTINGANDFINANCIALDISCLOSURE

227

ITEM9A.

CONTROLSANDPROCEDURES

227

ITEM9B.

OTHERINFORMATION

228

PART III.

ITEM10.

DIRECTORS,EXECUTIVEOFFICERSANDCORPORATEGOVERNANCE

229

ITEM11.

EXECUTIVECOMPENSATION

236

ITEM12.

SECURITYOWNERSHIPOFCERTAINBENEFICIALOWNERSANDMANAGEMENTANDRELATEDSTOCKHOLDERMATTERS

257

ITEM13.

CERTAINRELATIONSHIPSANDRELATEDTRANSACTIONS,ANDDIRECTORINDEPENDENCE

260

ITEM14.

PRINCIPALACCOUNTINGFEESANDSERVICES

269

PART IV.

ITEM15.

EXHIBITS,FINANCIALSTATEMENTSCHEDULES

270

ITEM16.

FORM10-KSUMMARY

281

SIGNATURES

282

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Forward-Looking Statements

Thisreportmaycontainforward-lookingstatementswithinthemeaningofSection27AoftheSecuritiesActof1933andSection21EoftheSecuritiesExchangeActof1934whichreflectourcurrentviewswithrespectto,amongotherthings,ouroperationsandfinancialperformance.Youcanidentifytheseforward-lookingstatementsbytheuseofwordssuchas“outlook,”“indicator,”“believes,”“expects,”“potential,”“continues,”“may,”“will,”“should,”“seeks,”“approximately,”“predicts,”“intends,”“plans,”“estimates,”“anticipates”orthenegativeversionofthesewordsorothercomparablewords.Suchforward-lookingstatementsaresubjecttovariousrisksanduncertainties.Accordingly,thereareorwillbeimportantfactorsthatcouldcauseactualoutcomesorresultstodiffermateriallyfromthoseindicatedinthesestatements.Webelievethesefactorsincludebutarenotlimitedtothosedescribedunderthesectionentitled“RiskFactors”inthisreport,assuchfactorsmaybeupdatedfromtimetotimeinourperiodicfilingswiththeUnitedStatesSecuritiesandExchangeCommission(“SEC”),whichareaccessibleontheSEC’swebsiteatwww.sec.gov.Thesefactorsshouldnotbeconstruedasexhaustiveandshouldbereadinconjunctionwiththeothercautionarystatementsthatareincludedinthisreportandinourotherperiodicfilings.Theforward-lookingstatementsspeakonlyasofthedateofthisreport,andweundertakenoobligationtopubliclyupdateorreviewanyforward-lookingstatement,whetherasaresultofnewinformation,futuredevelopmentsorotherwise.

Website and Social Media Disclosure

Weuseourwebsite(www.blackstone.com),Facebookpage(www.facebook.com/blackstone),Twitter(www.twitter.com/blackstone),LinkedIn(www.linkedin.com/company/blackstonegroup),Instagram(www.instagram.com/blackstone),SoundCloud(https://soundcloud.com/blackstone-300250613)andYouTube(www.youtube.com/user/blackstonegroup)accountsaschannelsofdistributionofcompanyinformation.Theinformationwepostthroughthesechannelsmaybedeemedmaterial.Accordingly,investorsshouldmonitorthesechannels,inadditiontofollowingourpressreleases,SECfilingsandpublicconferencecallsandwebcasts.Inaddition,youmayautomaticallyreceivee-mailalertsandotherinformationaboutBlackstonewhenyouenrollyoure-mailaddressbyvisitingthe“ContactUs/EmailAlerts”sectionofourwebsiteathttp://ir.blackstone.com.Thecontentsofourwebsite,anyalertsandsocialmediachannelsarenot,however,apartofthisreport.

Inthisreport,referencesto“Blackstone,”the“Partnership,”“we,”“us”or“our”refertoTheBlackstoneGroupL.P.anditsconsolidatedsubsidiaries.Unlessthecontextotherwiserequires,referencesinthisreporttotheownershipofMr.StephenA.Schwarzman,ourfounder,andotherBlackstonepersonnelincludetheownershipofpersonalplanningvehiclesandfamilymembersoftheseindividuals.

“BlackstoneFunds,”“ourfunds”and“ourinvestmentfunds”refertotheprivateequityfunds,realestatefunds,fundsofhedgefunds,credit-focusedfunds,collateralizedloanobligation(“CLO”),realestateinvestmenttrustsandregisteredinvestmentcompaniesthataremanagedbyBlackstone.“Ourcarryfunds”referstotheprivateequityfunds,realestatefundsandcertainofthehedgefundsolutionsandcredit-focusedfunds(withmulti-yeardrawdown,commitment-basedstructuresthatonlypaycarryontherealizationofaninvestment)thataremanagedbyBlackstone.WerefertoourgeneralcorporateprivateequityfundsasBlackstoneCapitalPartners(“BCP”)funds,ourenergy-focusedprivateequityfundsasBlackstoneEnergyPartners(“BEP”)funds,ourcoreprivateequityfundasBlackstoneCoreEquityPartners(“BCEP”),ouropportunisticinvestmentplatformthatinvestsgloballyacrossassetclasses,industriesandgeographiesasBlackstoneTacticalOpportunities(“TacticalOpportunities”),oursecondaryprivateequityfundoffundsbusinessasStrategicPartnersFundSolutions(“StrategicPartners”),ourmulti-assetinvestmentprogramforeligiblehighnetworthinvestorsofferingexposuretocertainofourkeyilliquidinvestmentstrategiesthroughasinglecommitmentasBlackstoneTotalAlternativesSolution(“BTAS”)andourcapitalmarketsservicesbusinessasBlackstoneCapitalMarkets(“BXCM”).WerefertoourrealestateopportunisticfundsasBlackstoneRealEstatePartners(“BREP”)fundsandourrealestatedebtinvestmentfundsasBlackstoneRealEstateDebtStrategies(“BREDS”)funds.Werefertoourcore+realestatefunds,whichtargetsubstantiallystabilizedassetsinprimemarkets,asBlackstonePropertyPartners(“BPP”)funds.Werefertoourreal

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estateinvestmenttrustsas“REITs,”toBlackstoneMortgageTrust,Inc.,ourNYSE-listedREIT,as“BXMT,”andtoBlackstoneRealEstateIncomeTrust,Inc.,ournon-exchangetradedREIT,as“BREIT.”“Ourhedgefunds”referstoourfundsofhedgefunds,certainofourrealestatedebtinvestmentfunds,includingaregisteredinvestmentcompany,andcertainothercredit-focusedfundswhicharemanagedbyBlackstone.“BIS”referstoBlackstoneInsuranceSolutions,ourbusinessthatdevelops,distributesandmanagestailoredsolutionsforinsurancecompaniesworldwide.

“AssetsUnderManagement”referstotheassetswemanage.OurAssetsUnderManagementequalsthesumof:

(a) thefairvalueoftheinvestmentsheldbyourcarryfundsandourside-by-sideandco-investmententitiesmanagedbyus,plus(1)thecapitalthatweareentitledtocallfrominvestorsinthosefundsandentitiespursuanttothetermsoftheirrespectivecapitalcommitments,includingcapitalcommitmentstofundsthathaveyettocommencetheirinvestmentperiods,or(2)forcertaincredit-orientedfundstheamountsavailabletobeborrowedunderassetbasedcreditfacilities,

(b) thenetassetvalueof(1)ourhedgefunds,realestatedebtcarryfunds,openendedcore+realestatefund,certainco-investmentsmanagedbyus,andourHedgeFundSolutionscarryanddrawdownfunds(plus,ineachcase,thecapitalthatweareentitledtocallfrominvestorsinthosefunds,includingcommitmentsyettocommencetheirinvestmentperiods),and(2)ourfundsofhedgefunds,ourHedgeFundSolutionsregisteredinvestmentcompanies,andournon-exchangetradedREIT,

(c) theinvestedcapital,fairvalueornetassetvalueofassetswemanagepursuanttoseparatelymanagedaccounts,

(d) theamountofdebtandequityoutstandingforourCLOsduringthereinvestmentperiod,

(e) theaggregateparamountofcollateralassets,includingprincipalcash,forourCLOsafterthereinvestmentperiod,

(f) thegrossornetamountofassets(includingleveragewhereapplicable)forourcredit-focusedregisteredinvestmentcompanies,and

(g) thefairvalueofcommonstock,preferredstock,convertibledebt,orsimilarinstrumentsissuedbyBXMT.

Ourcarryfundsarecommitment-baseddrawdownstructuredfundsthatdonotpermitinvestorstoredeemtheirinterestsattheirelection.Ourfundsofhedgefunds,hedgefunds,fundsstructuredlikehedgefundsandotheropenendedfundsinourHedgeFundSolutions,CreditandRealEstatesegmentsgenerallyhavestructuresthataffordaninvestortherighttowithdraworredeemtheirinterestsonaperiodicbasis(forexample,annuallyorquarterly),typicallywith30to95days’notice,dependingonthefundandtheliquidityprofileoftheunderlyingassets.InvestmentadvisoryagreementsrelatedtocertainseparatelymanagedaccountsinourHedgeFundSolutionsandCreditsegments,excludingourBISseparatelymanagedaccounts,maygenerallybeterminatedbyaninvestoron30to90days’notice.

“Fee-EarningAssetsUnderManagement”referstotheassetswemanageonwhichwederivemanagementand/orperformancefees.OurFee-EarningAssetsUnderManagementequalsthesumof:

(a) forourPrivateEquitysegmentfundsandRealEstatesegmentcarryfundsincludingcertainrealestatedebtinvestmentfundsandcertainofour

HedgeFundSolutionsfunds,theamountofcapitalcommitments,remaininginvestedcapital,fairvalue,netassetvalueorparvalueofassetsheld,dependingonthefeetermsofthefund,

(b) forourcredit-focusedcarryfunds,theamountofremaininginvestedcapital(whichmayincludeleverage)ornetassetvalue,dependingonthe

feetermsofthefund,

(c) theremaininginvestedcapitalorfairvalueofassetsheldinco-investmentvehiclesmanagedbyusonwhichwereceivefees,

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(d) thenetassetvalueofourfundsofhedgefunds,hedgefunds,openendedcore+realestatefund,certainco-investmentsmanagedbyus,certain

registeredinvestmentcompanies,ournon-exchangetradedREIT,andcertainofourHedgeFundSolutionsdrawdownfunds,

(e) theinvestedcapital,fairvalueofassetsorthenetassetvaluewemanagepursuanttoseparatelymanagedaccounts,

(f) thenetproceedsreceivedfromequityofferingsandaccumulatedcoreearningsofBXMT,subjecttocertainadjustments,

(g) theaggregateparamountofcollateralassets,includingprincipalcash,ofourCLOs,and

(h) thegrossamountofassets(includingleverage)orthenetassets(plusleveragewhereapplicable)forcertainofourcredit-focusedregistered

investmentcompanies.

EachofoursegmentsmayincludecertainFee-EarningAssetsUnderManagementonwhichweearnperformancefeesbutnotmanagementfees.

Ourcalculationsofassetsundermanagementandfee-earningassetsundermanagementmaydifferfromthecalculationsofotherassetmanagers,andasaresultthismeasuremaynotbecomparabletosimilarmeasurespresentedbyotherassetmanagers.Inaddition,ourcalculationofassetsundermanagementincludescommitmentsto,andthefairvalueof,investedcapitalinourfundsfromBlackstoneandourpersonnel,regardlessofwhethersuchcommitmentsorinvestedcapitalaresubjecttofees.Ourdefinitionsofassetsundermanagementorfee-earningassetsundermanagementarenotbasedonanydefinitionofassetsundermanagementorfee-earningassetsundermanagementthatissetforthintheagreementsgoverningtheinvestmentfundsthatwemanage.

Forourcarryfunds,totalassetsundermanagementincludesthefairvalueoftheinvestmentsheld,whereasfee-earningassetsundermanagementincludestheamountofcapitalcommitments,theremainingamountofinvestedcapitalatcostdependingonwhethertheinvestmentperiodhasorhasnotexpiredorthefeetermsofthefund.Assuch,fee-earningassetsundermanagementmaybegreaterthantotalassetsundermanagementwhentheaggregatefairvalueoftheremaininginvestmentsislessthanthecostofthoseinvestments.

ThisreportdoesnotconstituteanofferofanyBlackstoneFund.

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PART I.

ITEM 1. BUSINESS

Overview

Blackstoneisaleadingglobalalternativeassetmanager,withTotalAssetsUnderManagementof$434.1billionasofDecember31,2017.Asstewardsofpublicfunds,welooktodriveoutstandingresultsforourinvestorsandclientsbydeployingcapitalandideastohelpbusinessessucceedandgrow.Ouralternativeassetmanagementbusinessesincludeinvestmentvehiclesfocusedonprivateequity,realestate,hedgefundsolutions,non-investmentgradecredit,secondaryprivateequityfundsoffundsandmulti-assetclassstrategies.Wealsoprovidecapitalmarketsservices.

AllofBlackstone’sbusinessesuseasolutionsorientedapproachtodrivebetterperformance.Webelieveourscaled,diversifiedbusinesses,coupledwithourlongtrackrecordofinvestmentperformance,proveninvestmentapproachandstrongclientrelationships,positionustocontinuetoperformwellinavarietyofmarketconditions,expandourassetsundermanagementandaddcomplementarybusinesses.

Twoofourprimarylimitedpartnerconstituenciesarepublicandcorporatepensionfunds.Asaresult,totheextentourfundsperformwell,itsupportsabetterretirementformillionsofpensioners.

Inaddition,becauseweareaglobalfirmwithafootprintonnearlyeverycontinent,ourinvestmentscanmakeadifferencearoundtheworld.Wearecommittedtomakingourfamilyofcompaniesstrongerinwaysthatcanhavepositiveimpactsonlocaleconomies.

AsofDecember31,2017,wehad136seniormanagingdirectorsandapproximately2,225otheremployeesatourheadquartersinNewYorkandaroundtheworld.Webelievehiring,trainingandretainingtalentedindividualscoupledwithourrigorousinvestmentprocesshassupportedourexcellentinvestmentrecordovermanyyears.Thisrecordinturnhasallowedustosuccessfullyandrepeatedlyraiseadditionalassetsfromanincreasinglywidevarietyofsophisticatedinvestors.

2017 Highlights

Record Realization Activity and Cash Distributions to Shareholders

• Totalrealizationsreached$55.2billionin2017,arecordforthefirm,withstrongactivityacrossbusinesssegments.Realizationsincludedthe

saleofLogicor,Blackstone’sEuropeanwarehousebusiness,thelargestprivatesaleinthefirm’shistory.

• Blackstonedistributed$3.3billionincashdistributionstoshareholderswithrespectto2017,ourhighestaggregatelevelinhistory.

Record Assets Under Management

• EachofourinvestingbusinessessawpositivegrowthinbothTotalAssetsUnderManagementandFee-EarningAssetsUnderManagementin

2017,despiterecordlevelsofrealizations,givencontinuedstrongfundraising.Fee-EarningAssetsUnderManagementrose21%in2017to$335.3billionandTotalAssetsUnderManagementrose18%to$434.1billion.

• Capitalinflowsacrossourbusinessesreached$108.0billionfor2017,ourbestyearonrecord.Ourlimitedpartnerscontinuetoentrustuswith

largescalecapitalfornewinitiatives.

• BAAMachieved$12.1billionincapitalinflows,itsbestyearonrecord.

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• InourCreditsegmentwelaunchedBlackstoneInsuranceSolutionswith$22billionofAssetsUnderManagement,andclosedontheacquisition

ofHarvest,contributingnearly$11billiontoTotalAssetsUnderManagement.Inaddition,weraised$25.3billionadditionalcapitalacrosslong-onlycreditandperforminganddistressedstrategies.

• OurfifthEurope-focusedrealestatefundobtained€7.8billionofcapitalcommitments,makingitthelargesteverdedicatedEuropeanReal

Estatefund;andoursecondAsiaopportunisticrealestatefundraisednearly$6billion,andisexpectedtosoonhitits$7billionhardcap.

• PrivateEquityraised$1.6billionforitsfirstAsia-focusedprivateequityfund,andTacticalOpportunitieshadcapitalinflowsof$5.9billionin

2017,itssecondbestyearonrecord.

Ongoing Platform Expansion Through New Product Strategies and Channels

• 61%ofourTotalAssetsUnderManagementisfrombusinessesthatdidnotexistatthefirmatthetimeofourinitialpublicoffering(“IPO”).

• OneourlargestnewinitiativesisBlackstoneInsuranceSolutions(“BIS”),whichweestablishedtodevelop,distributeandmanagetailored

solutionsforinsurancecompaniesworldwide.BISincludesourpartnershipwithFidelity&GuarantyLife,whichenteredintoaninvestmentmanagementagreementwithuswithrespectto$22.4billioninAssetsUnderManagement.

• Anothernewinitiative,ourdedicatedinfrastructurefund,willinvestininfrastructureprojectsprincipallyintheUnitedStatesandreceivedin

2017ananchorcommitmentfromasovereigninvestor.

• Ourcore+realestatebusiness,launchedfouryearsago,hasreached$27.0billioninAssetsUnderManagement,includinganewEuropean

vehicleaswellasavehicletomanageLogicoronalong-termbasis.

• Wecontinuedtodiversifyoursourcesofcapitalbyofferingourinstitutionalqualityinvestmentsolutionstoretailinvestors,includingtheprivatewealth/highnetworth,familyoffice,independentbrokerdealerandotherretail-orientedchannels.We’vealsolaunchedseveraldedicatedproductsforthesechannelsoverthepastseveralyears,includingBAAM’sindividualinvestorsolutionsplatform,whichnowmanagesmorethan$8billionandBREIT,ournon-exchangetradedREIT,whichmanagednearly$2billionattheendof2017.Intotal,Blackstoneraised$12billionfromretailinvestorsin2017.

Industry-Leading Credit Rating and Strong Balance Sheet

• Strongbalancesheetwithnonetdebt,$5.1billionintotalcash,cashequivalentsandcorporatetreasuryinvestments,anda$1.5billionundrawn

revolver.

• S&PandFitchhavebothaffirmedBlackstone’sA+/A+creditratings,makingBlackstonethehighestratedalternativeassetmanagerandone

ofthehighestratedglobalfinancialservicesfirms.

• Successfullyexecutedbondissuancesinhighlyoversubscribedofferingsof$300millionof3.150%notesdue2027and$300millionof

4.000%notesdue2047,whichwaspricedatrecordlowcreditspreadstothebenchmarkU.S.Treasuryratesrelativetoourpreviousissuances(0.98%and1.38%forthe10-yearnotesand30-yearnotes,respectively),andrepurchasedthebalanceofour6.625%notesdue2019.

• Theweighted-averagematurityofouroutstandingnotesasofDecember31,2017was14.9years.

Positively Impacting Communities

• TheBlackstoneCharitableFoundationcontinueditsworkwithlocalpartnersintargetedregionstocreateorgrownon-profitprogramsthatsupportnetworksandresourcesforentrepreneurs.InJune2017,workingwiththecityofChicagoandWorldBusinessChicago,itlaunchedtheBlackstoneChallenge,athree-yearpilotprogramfocusedoninclusiveentrepreneurshipthatwillawardupto$3.4millioningrantstocreateacohortofinnovativeorganizationsthateffectivelyrecruitandsupportdiverseentrepreneursandscale

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start-upsintheChicagoarea.InOctober2017,itpartneredwithTechstars,oneoftheworld’slargestacceleratornetworks,tohoststudententrepreneursfromacrossitsBlackstoneLaunchPadnetworkof20universitiesfortwodaysofmentoring,networking,andexclusivecontent.TheFoundationawarded$30,000inprizestothetopstudententrepreneurs.

• TheBlackstoneCharitableFoundationcontinuedBlackstoneConnects,thefirm’svolunteerandcommunityserviceprogram,whichdeliversa

varietyofopportunitiesforemployeestoengagewithandgivebacktotheircommunities.In2017,70%ofouremployeesgloballyvolunteered.

• InMay2017,Blackstoneannouncedithadreacheditsgoalofhiring50,000veterans,caregiversandspousesacrossitsportfolioofcompaniesafullyearaheadoftheoriginalfive-yeartarget.Blackstonedoubleddownwithanewgoalof50,000additionalveteranshiresinthenextfiveyears.ThefirmcontinuestohostannualVeteransHiringSummitsdesignedtohelphiringexecutiveswithincorporationssharebestpracticesonattractingandrecruitingveteransandtoassistrepresentativesfromtheU.S.militaryandgovernmentastheyworkincoordinationwithBlackstoneportfoliocompanies.

Business Segments

Ourfourbusinesssegmentsare:(a)PrivateEquity,(b)RealEstate,(c)HedgeFundSolutionsand(d)Credit.

Informationaboutourbusinesssegmentsshouldbereadtogetherwith“PartII.Item7.Management’sDiscussionandAnalysisofFinancialConditionandResultsofOperations”andthehistoricalfinancialstatementsandrelatednotesincludedelsewhereinthisForm10-K.

Private Equity

OurPrivateEquitysegment,establishedin1987,isaglobalbusinesswithapproximately275employeesmanaging$105.6billionofTotalAssetsUnderManagementasofDecember31,2017.Weareaworldleaderinprivateequityinvesting,havingmanagedsevengeneralprivateequityfunds,threesector-focusedfundsandonegeography-focusedfundsinceweestablishedthebusiness.Wearefocusedonidentifying,managingandcreatinglastingvalueforourinvestors.OurPrivateEquitysegmentincludesourcorporateprivateequitybusiness,whichconsistsofourflagshipprivateequityfunds(BlackstoneCapitalPartners(“BCP”)funds),oursector-focusedfunds,includingourenergy-focusedfunds(BlackstoneEnergyPartners(“BEP”)funds)andournewAsia-focusedfund.Inaddition,ourPrivateEquitysegmentincludesourcoreprivateequityfund,whichtargetscontrol-orientedinvestmentsinhigh-qualitycompanieswithdurablebusinessesandseekstoofferalowerlevelofriskandalongerholdperiodthantraditionalprivateequity,ouropportunisticinvestmentplatformthatinvestsgloballyacrossassetclasses,industriesandgeographies,BlackstoneTacticalOpportunities(“TacticalOpportunities”),oursecondaryprivateequityfundoffundsbusiness,StrategicPartnersFundSolutions(“StrategicPartners”),amulti-assetinvestmentprogramforeligiblehighnetworthinvestorsofferingexposuretocertainofBlackstone’skeyilliquidinvestmentstrategiesthroughasinglecommitment,BlackstoneTotalAlternativesSolutions(“BTAS”)andourcapitalmarketsservicesbusiness,BlackstoneCapitalMarkets(“BXCM”).

Ourcorporateprivateequitybusinesspursuestransactionsthroughouttheworldacrossavarietyoftransactiontypes,includinglargebuyouts,mid-capbuyouts,buyandbuildplatforms(whichinvolvemultipleacquisitionsbehindasinglemanagementteamandplatform)andgrowthequity/developmentprojects(whichinvolvesignificantminorityinvestmentsinoperatingcompaniesandgreenfielddevelopmentprojectsinenergyandpower).Ourprivateequitybusiness’sinvestmentstrategiesandcorethemescontinuallyevolve,inanticipationof,orinresponseto,changesintheglobaleconomy,localmarkets,regulation,capitalflowsandgeopoliticaltrends.Weseektoconstructadifferentiatedportfolioofinvestmentswithawell-defined,interventionist,post-acquisitionvaluecreationstrategy.Similarly,weseekinvestmentsthatcangeneratestrongunleveredreturnsregardlessofentryorexitcycletiming.Finally,whenwecanidentifysectorsorgeographiesinwhichthedemandforcapitalgreatlyexceedsthereadilyavailablesupply,ourprivateequitybusinessseekstomakeinvestmentsatornearbookvaluewhereitcancreategoodwillorfranchisevaluethroughpost-acquisitionactions.

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TacticalOpportunitiesisouropportunisticinvestmentplatform.TheTacticalOpportunitiesmandateinvestsgloballyacrossassetclasses,industriesandgeographies,seekingtoidentifyandexecuteonattractive,differentiatedinvestmentopportunities.Aspartofthestrategy,theteamleveragestheintellectualcapitalacrossBlackstone’svariousbusinesseswhilecontinuouslyoptimizingitsapproachinthefaceofever-changingmarketconditions.TacticalOpportunities’flexiblemandateenablesabroadrangeofinvestmentstructures,includingprivateandpublicsecuritiesandinstruments,wheretheunderlyingexposuremaybetoequityordebt,andtheconstructionofadiversifiedportfolioofinvestments.

StrategicPartners,oursecondaryprivateequityfundoffundsbusinesswasestablishedin2000andacquiredbyBlackstonein2013.StrategicPartnersseekscapitalappreciationthroughthepurchaseofsecondaryinterestsinmature,high-qualityprivateequityfundsfrominvestorsseekingliquidity.StrategicPartnersisfocusedoninvestinginarangeofopportunities,leveragingitsproprietarydatabasetoexecutetransactionsrangingfromsinglefundintereststocomplex,structuredportfoliosolutions,inanefficientandtimelymanner.

FormoreinformationconcerningtherevenuesandfeeswederivefromourPrivateEquitysegment,see“—IncentiveArrangements/FeeStructure”inthisItem1.

Real Estate

OurRealEstategroupwasfoundedin1991andisoneofthelargestrealestateinvestmentmanagersintheworld,with$115.3billionofTotalAssetsUnderManagementasofDecember31,2017.Weoperateasonegloballyintegratedbusinesswith320employeesandinvestmentsinNorthAmerica,Europe,AsiaandLatinAmerica.OurRealEstateinvestmentteamseekstoestablishadifferentiatedviewandcapitalizesonourscaleandproprietaryinformationadvantagestoinvestwithconvictionandgenerateattractiverisk-adjustedreturnsforourinvestorsoverthelongterm.

OurBlackstoneRealEstatePartners(“BREP”)fundsaregeographicallydiversifiedandtargetabroadrangeof“opportunistic”realestateandrealestaterelatedinvestments.TheBREPfundsincludeglobalfundsaswellasfundsfocusedspecificallyonEuropeorAsiainvestments.Weseektoacquirehighquality,well-locatedyetundermanagedassetsatanattractivebasis,addressanypropertyorbusinessissuesthroughactiveassetmanagementandselltheassetsonceourbusinessplanisaccomplished.BREPhasmadesignificantinvestmentsinhotels,officebuildings,shoppingcenters,residentialandindustrialassets,aswellasavarietyofrealestateoperatingcompanies.

WelaunchedBlackstoneRealEstateDebtStrategies(“BREDS”),ourrealestatedebtplatform,in2008.OurBREDSvehiclestargetdebtinvestmentopportunitiescollateralizedbycommercialrealestate.BREDSinvestsinbothpublicandprivatemarkets,primarilyintheU.S.andEurope.BREDS’scaleandinvestmentmandatesenableittoprovideavarietyoflendingoptionsforourborrowersandinvestmentoptionsforourinvestors,includingmezzanineloans,seniorloansandliquidsecurities.TheBREDSplatformincludesanumberofhighyieldandhighgraderealestatedebtfunds,liquidrealestatedebtfundsandBlackstoneMortgageTrust,Inc.(“BXMT”),aNYSE-listedREIT.

Welaunchedourcore+realestatebusiness,BlackstonePropertyPartners(“BPP”),in2013andhaveassembledaglobalportfolioofhighqualitycore+investmentsacrosstheU.S.,EuropeandAsia.Wemanageseveralcore+realestatefunds,whichtargetsubstantiallystabilizedassetsinprimemarketswithafocusonoffice,multifamily,industrialandretailassets.Thefundsgeneratereturnsthroughbothcurrentincomeandvalueappreciationoverthelongterm.

WelaunchedBlackstoneRealEstateIncomeTrust(“BREIT”),anon-exchangetradedREIT,in2017.BREITisfocusedoninvestingprimarilyinstabilizedincome-orientedcommercialrealestateintheUnitedStates.

FormoreinformationconcerningtherevenuesandfeeswederivefromourRealEstatesegment,see“—IncentiveArrangements/FeeStructure”inthisItem1.

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Hedge Fund Solutions

OurHedgeFundSolutionsgroupiscomprisedprimarilyofBlackstoneAlternativeAssetManagement(“BAAM”).BAAMistheworld’slargestdiscretionaryallocatortohedgefunds,managingabroadrangeofcommingledandcustomizedhedgefundoffundsolutionssinceitsinceptionin1990.TheHedgeFundSolutionsegmentalsoincludesinvestmentplatformsthatseednewhedgefundbusinesses,purchaseminorityownershipinterestsinmoreestablishedhedgefunds,investinspecialsituationsopportunities,createalternativesolutionsinregulatedstructuresandtradedirectly.Workingwithourclientsoverthepast20plusyears,ourHedgeFundSolutionsgrouphasdevelopedintoaleadingmanagerofinstitutionalfundswithapproximately155employeesmanaging$75.1billionofTotalAssetsUnderManagementasofDecember31,2017.HedgeFundSolutions’overallinvestmentphilosophyistoprotectandgrowinvestors’assetsthroughbothcommingledandcustom-tailoredinvestmentstrategiesdesignedtodelivercompellingrisk-adjustedreturnsandmitigaterisk.Diversification,riskmanagement,duediligenceandafocusondownsideprotectionarekeytenetsofourapproach.FormoreinformationconcerningtherevenuesandfeeswederivefromourHedgeFundSolutionssegment,see“—IncentiveArrangements/FeeStructure”inthisItem1.

Credit

Ourcreditbusiness,with$138.1billionofTotalAssetsUnderManagementasofDecember31,2017andapproximately205employees,consistsprincipallyofGSOCapitalPartnersLP(“GSO”).GSO,whichwasfoundedin2005andsubsequentlyacquiredbyBlackstonein2008,isoneofthelargestleveragedfinance-focusedalternativeassetmanagersintheworldandisthelargestmanagerofCLOsglobally.Theinvestmentportfoliosofthefundswemanageorsub-advisepredominantlyconsistofloansandsecuritiesofnon-investmentgradecompaniesspreadacrossthecapitalstructureincludingseniordebt,subordinateddebt,preferredstockandcommonequity.

TheGSObusinessisorganizedintothreeoverarchingstrategies:performingcredit,distressedandlongonly.Ourperformingcreditstrategiesincludemezzaninelendingfunds,middlemarketdirectlendingfunds(whichwouldincludethebusinessdevelopmentcompanies(“BDCs”)sub-advisorybusiness),andotherperformingcreditstrategyfunds.Ourdistressedstrategiesincludecreditalphastrategies,stressed/distressedfundsandenergystrategies.GSO’slongonlystrategiesconsistofCLOs,closedendfunds,commingledfundsandseparatelymanagedaccounts.

Inaddition,ourcreditbusinessincludesourpubliclytradedmasterlimitedpartnership(“MLP”)andinvestmentplatform,whicharemanagedbyHarvestFundAdvisorsLLC(“Harvest”).Harvest,whichwasfoundedin2005andsubsequentlyacquiredbyBlackstonein2017,primarilyinvestscapitalraisedfrominstitutionalinvestorsinseparatelymanagedaccountsandpooledvehicles,investinginpubliclytradedMLPsholdingprimarilymidstreamenergyassetsintheU.S.

Ourcreditbusinessalsoincludesourinsurer-focusedplatform,BIS.BISpartnerswithinsurerstodelivercustomizableanddiversifiedportfoliosofBlackstoneproductsacrossassetclasses,aswellastheoptionforfullmanagementofinsurancecompanies’investmentportfolios.

Financial and Other Information by Segment

FinancialandotherinformationbysegmentfortheyearsendedDecember31,2017,2016and2015issetforthinNote21.“SegmentReporting”inthe“NotestoConsolidatedFinancialStatements”in“PartII.Item8.FinancialStatementsandSupplementaryData”ofthisfiling.

Pátria Investments

OnOctober1,2010,wepurchaseda40%equityinterestinPátriaInvestmentsLimitedandPátriaInvestimentosLtda.(collectively,“Pátria”).PátriaisaleadingalternativeassetmanagerinLatinAmericathatwasfoundedin1988.AsofDecember31,2017,Pátria’salternativeassetmanagementbusinesseshad$9.9billioninassetsundermanagement,includingthemanagementofprivateequityfunds($4.9billion),infrastructurefunds

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($3.6billion),realestatefunds($1.2billion)andnewinitiatives($184.7million).Pátriahasapproximately250employeesandisledbyagroupofthreemanagingpartners.OurinvestmentinPátriaisaminority,non-controllinginvestment,whichwerecordusingtheequitymethodofaccounting.WehaverepresentativesonPátria’sboardofdirectorsinproportiontoourownership,butwedonotcontroltheday-to-daymanagementofthefirmortheinvestmentdecisionsoftheirfunds,allofwhichcontinuestoresidewiththelocalBrazilianpartners.

Investment Process and Risk Management

Wemaintainarigorousinvestmentprocessacrossallofourfunds,accountsandotherinvestmentvehicles.Eachfund,accountorothervehiclehasinvestmentpoliciesandproceduresthatgenerallycontainrequirementsandlimitationsforinvestments,suchaslimitationsrelatingtotheamountthatwillbeinvestedinanyoneinvestmentandthetypesofindustriesorgeographicregionsinwhichthefund,accountorothervehiclewillinvest,aswellaslimitationsrequiredbylaw.Ourbusiness’investmentcommitteesreviewandevaluateinvestmentopportunitiesinaframeworkthatincludesaqualitativeandquantitativeassessmentofthekeyrisksofeachinvestment.

Private Equity Funds

OurPrivateEquityinvestmentprofessionalsareresponsibleforselecting,evaluating,structuring,diligencing,negotiating,executing,managingandexitinginvestments,aswellaspursuingoperationalimprovementsandvaluecreation.Afteraninitialselection,evaluationanddiligenceprocess,therelevantteamofinvestmentprofessionals(i.e.,thedealteam)submitsaproposedtransactionforreviewbythereviewcommitteeofourprivateequityfunds.ReviewcommitteemeetingsareledbyanexecutivecommitteeofseveralseniormanagingdirectorsofourPrivateEquitysegment.Followingassimilationofthereviewcommittee’sinputanditsdecisiontoproceed,theproposedinvestmentisvettedbytheinvestmentcommittee.TheinvestmentcommitteeofourprivateequityfundsiscomposedofseniorleadersofthefirmandselectedseniormanagingdirectorsofourPrivateEquitysegment,includingindividualsbasedonthelocationandsectoroftheproposedtransaction.Theinvestmentcommitteeisresponsibleforapprovingallinvestmentdecisionsmadeonbehalfofourprivateequityfunds.Considerationsthattheinvestmentcommitteetakesintoaccountwhenevaluatinganinvestmentincludethequalityofabusinessinwhichthefundproposestoinvestandthequalityofthemanagementteamofsuchbusiness,expectedleveredandunleveredreturnsoftheinvestmentinavarietyofinvestmentscenarios,theabilityofthecompanyinwhichtheinvestmentismadetoservicedebtinarangeofeconomicandinterestrateenvironments,environmental,socialandgovernance,orESG,issuesandmacroeconomictrendsintherelevantgeographicregion.

Theinvestmentprofessionalsofourprivateequityfundsareresponsibleformonitoringaninvestmentonceitismadeandformakingrecommendationswithrespecttoexitinganinvestment.Inadditiontomembersofadealteamandourportfoliooperationsgroup,whichisresponsibleforassistinginenhancingportfoliocompanies’operationsandvalue,allprofessionalsinourprivateequitybusinessmeetseveraltimeseachyeartoreviewtheperformanceofthefunds’portfoliocompanies.

OurTacticalOpportunitiesbusinesshasasubstantiallysimilarprocesstothePrivateEquityprocessdescribedabove,withtheexceptionofthecompositionofthereviewandinvestmentcommittee.TheTacticalOpportunitiesreviewcommitteeiscomprisedofseniormanagingdirectorsoftheTacticalOpportunitiesbusinessandaseniormanagingdirectorofourPrivateEquitybusiness,andtheinvestmentcommitteeiscomprisedofMr.Schwarzmanandseniorleadersofthefirmandkeyleadersofeachbusinessunit.

OurStrategicPartnersbusinessfocusesonacquiringsecondaryinterestsinprivateequityfunds.Afterrigorous,highlyanalyticalinvestmentduediligence,theStrategicPartnersinvestmentprofessionalspresentaproposedtransactiontothegroup’sinvestmentcommittee.TheStrategicPartnersinvestmentcommitteeiscomprisedofseniormembersofourStrategicPartnersbusiness.Theinvestmentcommitteemeetstoreview,anddecidewhethertoapproveordeny,transactions.TheinvestmentprofessionalsontheStrategicPartnersteamareresponsibleformonitoringeachinvestmentonceitismade.Inadditiontomembersoftheinvestmentteam,andgiventhelarge

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numberofunderlyinginvestments,theStrategicPartnersFinanceteamwillalsotrackinvestmentvaluationspursuanttothegroup’svaluationpoliciesandprocedures.

Real Estate Funds

OurRealEstateinvestmentprofessionalsareresponsibleforselecting,evaluating,structuring,diligencing,negotiating,executing,managing,monitoringandexitinginvestments,aswellaspursuingoperationalimprovementsandvaluecreation.Ourrealestateoperationhasoneglobalinvestmentcommitteeprocesstoconsiderandapproveallinvestments,similartothatdescribedunder“—PrivateEquityFunds.”Theinvestmentprocessbeginswithateamofinvestmentprofessionals(i.e.,dealteam)submittingaproposedtransactionforreviewbytheapplicablecommittee.Therelevantcommitteescrutinizespotentialtransactions,providesguidanceandinstructionstothedealteamand,ifapplicable,approvestheinvestment.Considerationsthatthecommitteestakeintoaccountwhenevaluatinganinvestmentincludecurrentandanticipatedmarketfundamentals(including,forexample,supplyanddemandfundamentals)andmacroeconomictrendsintherelevantgeographicregion,thequalityoftheassetinwhichthefundorvehicleproposestoinvest,theappropriatenessofexistingorplannedleveragelevelsofthebusinessorassetandourabilitytosuccessfullyimplementoperationalplansandimprovementsandexittheinvestmentatanexpectedrateofreturn.Dealteammembersandourassetmanagementgroupareresponsibleformonitoringandenhancinginvestments’operationsandvalue.

Hedge Fund Solutions

Beforedecidingtoinvestinanewhedgefundorwithanewhedgefundmanager,ourHedgeFundSolutionsteamconductsextensiveduediligence,includinganon-site“frontoffice”reviewofthefund’s/manager’sperformance,investmentterms,investmentstrategyandinvestmentpersonnel,a“backoffice”reviewofthefund’s/manager’soperations,processes,riskmanagementandinternalcontrols,industryreferencechecksandalegalreviewoftheinvestmentstructuresandlegaldocuments.Onceinitialduediligenceproceduresarecompletedandtheinvestmentandotherprofessionalsaresatisfiedwiththeresultsofthereview,theteamwillpresentthepotentialinvestmenttotherelevantHedgeFundSolutionsinvestmentcommittee.Theinvestmentcommitteesarecomprisedofrelevantseniormanagingdirectorsandseniorinvestmentpersonnel.Existinginvestmentsarereviewedandmonitoredonaregularbasis.

Credit

Eachofourcredit-focusedfundshasaninvestmentcommitteesimilartothatdescribedunder“—PrivateEquityFunds.”Theinvestmentcommitteesforthecredit-focusedfundsincludesseniormembersoftherespectiveinvestmentteamsassociatedwitheachcredit-focusedfund.Theinvestmentcommitteesreviewpotentialtransactions,provideinputregardingthescopeofduediligenceandapproverecommendedinvestmentsanddispositions,subjecttodelineatedexceptionssetforthinthefunds’investmentcharters.

Theinvestmentdecisionsforthecustomizedcreditlongonlyclientsandotherclientswhoseportfoliosareactivelytradedaremadebyseparateinvestmentcommittees,eachofwhichiscomposedofcertainofthegroup’srespectiveseniormanagingdirectors,managingdirectorsandotherinvestmentprofessionals.Withlimitedexceptionswheretheportfoliomanagerswishtocapitalizeontimesensitivemarketopportunities,theinvestmentcommitteeapprovesallassetsthatareheldbytheapplicableclient.Theinvestmentteamisstaffedbyprofessionalswithinresearch,portfoliomanagement,tradingandcapitalformationtoensureactivemanagementoftheportfolios.Industry-focusedresearchanalystsprovidethecommitteewithaformalandcomprehensivereviewofanynewinvestmentrecommendation,whileourportfoliomanagersandtradingprofessionalsprovideopinionsonothertechnicalaspectsoftherecommendationaswellastherisksassociatedwiththeoverallportfoliocomposition.Investmentsaresubjecttopredeterminedperiodicreviewstoassesstheircontinuedfitwithinthefunds.Ourresearchteammonitorstheoperatingperformanceoftheunderlyingissuers,whileportfoliomanagers,inconcertwithourtraders,focusonoptimizingassetcompositiontomaximizevalueforourinvestors.

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Structure and Operation of Our Investment Vehicles

OurprivateinvestmentfundsaregenerallyorganizedaslimitedpartnershipswithrespecttoU.S.domiciledvehiclesandlimitedliability(andothersimilar)companieswithrespecttonon-U.S.domiciledvehicles.Inthecaseofourseparatelymanagedaccounts,theinvestor,ratherthanus,generallycontrolstheinvestmentvehiclethatholdsorhascustodyoftheinvestmentsweadvisethevehicletomake.Weconductthesponsorshipandmanagementofourcarryfundsandothersimilarvehiclesprimarilythroughapartnershipstructureinwhichlimitedpartnershipsorganizedbyusacceptcommitmentsand/orfundsforinvestmentfrominstitutionalinvestorsand,toamorelimitedextent,highnetworthindividuals.Suchcommitmentsaregenerallydrawndownfrominvestorsonanas-neededbasistofundinvestmentsoveraspecifiedterm.Withtheexceptionofcertaincore+realestateandrealestatedebtfunds,ourprivateequityandprivaterealestatefundsarecommitmentstructuredfunds.Forcertaincore+realestateandrealestatedebtfunds,alloraportionofthecommittedcapitalisfundedonorpromptlyaftertheinvestor’ssubscriptiondateandcashproceedsresultingfromthedispositionofinvestmentscanbereusedindefinitelyforfurtherinvestment,subjecttocertaininvestorwithdrawalrights.OurRealEstatebusinessalsoincludesBXMT,BREIT,andaregisteredopen-endedinvestmentcompanycomplex,eachofwhichisexternallymanagedoradvisedbyBlackstone-ownedentities.Ourcredit-focusedfundsaregenerallycommitmentstructuredfundsoropen-endedwheretheinvestor’scapitalisfullyfundedintothefunduponorsoonafterthesubscriptionforinterestsinthefund.Tencredit-focusedvehiclesthatwemanageorsub-adviseinwholeorinpartareregisteredinvestmentcompanies(includingBDCs).TheCLOvehicleswemanagearestructuredinvestmentvehiclesthataregenerallyprivatecompanieswithlimitedliability.Mostofourfundsofhedgefundsaswellasourhedgefundsarestructuredasfundswheretheinvestor’scapitalisfullyfundedintothefunduponthesubscriptionforinterestsinthefund.

Ourinvestmentfunds,separatelymanagedaccountsandothervehiclesaregenerallyadvisedbyaBlackstoneentityservingasinvestmentadviserthatisregisteredundertheU.S.InvestmentAdvisersActof1940,or“AdvisersAct.”Substantiallyalloftheday-to-dayoperationsofeachinvestmentvehiclearetypicallycarriedoutbytheBlackstoneentityservingasinvestmentadviserpursuanttoaninvestmentadvisory(orsimilar)agreement.Generally,thematerialtermsofourinvestmentadvisoryagreementsrelatetothescopeofservicestoberenderedbytheinvestmentadvisertotheapplicablevehicle,thecalculationofmanagementfeestobebornebyinvestorsinourinvestmentvehicles,thecalculationofandthemannerandextenttowhichotherfeesreceivedbytheinvestmentadviserfromfundsorfundportfoliocompaniesservetooffsetorreducethemanagementfeespayablebyinvestorsinourinvestmentvehiclesandcertainrightsofterminationwithrespecttoourinvestmentadvisoryagreements.Withtheexceptionoftheregisteredfundsdescribedbelow,theinvestmentvehiclesthemselvesdonotgenerallyregisterasinvestmentcompaniesundertheU.S.InvestmentCompanyActof1940,or“1940Act,”inrelianceonthestatutoryexemptionsprovidedbySection3(c)(7)orSection7(d)thereofor,typicallyinthecaseofvehiclesformedpriorto1997,Section3(c)(1)thereof.Section3(c)(7)ofthe1940ActexemptsfromitsregistrationrequirementsinvestmentvehiclesprivatelyplacedintheUnitedStateswhosesecuritiesareownedexclusivelybypersonswho,atthetimeofacquisitionofsuchsecurities,are“qualifiedpurchasers”asdefinedunderthe1940Act.Section3(c)(1)ofthe1940Actexemptsfromitsregistrationrequirementsprivatelyplacedinvestmentvehicleswhosesecuritiesarebeneficiallyownedbynotmorethan100persons.Inaddition,undercurrentinterpretationsoftheSEC,Section7(d)ofthe1940Actexemptsfromregistrationanynon-U.S.investmentvehicleallofwhoseoutstandingsecuritiesarebeneficiallyownedeitherbynon-U.S.residentsorbyU.S.residentsthatarequalifiedpurchasers.BXMTisexternallymanagedbyaBlackstone-ownedentitypursuanttoamanagementagreement,conductsitsoperationsinamannerthatallowsittomaintainitsREITqualificationandalsoavailitselfofthestatutoryexemptionprovidedbySection3(c)(5)(C)ofthe1940Actforcompaniesengagedprimarilyininvestmentinmortgagesandotherliensorinvestmentsinrealestate.Ournon-exchangetradedREITisexternallyadvisedbyaBlackstone-ownedentitypursuanttoanadvisoryagreement,conductsitsoperationsinamannerthatallowsittomaintainitsREITqualificationandalsoavailsitselfofthestatutoryexemptionprovidedbySection3(c)(5)(C)ofthe1940Act.

Insomecases,oneormoreofourinvestmentadvisers,includingwithinGSO,BAAMandBREDSadvisers,advisesorsub-advisesfundsregisteredunderthe1940Act.Inadditiontohavinganinvestmentadviser,eachinvestmentfundthatisalimitedpartnership,or“partnership”fund,alsohasageneralpartnerthatgenerallymakesalloperationalandinvestmentdecisions,includingthemaking,monitoringanddisposingofinvestments.The

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limitedpartnersofthepartnershipfundstakenopartintheconductorcontrolofthebusinessoftheinvestmentfunds,havenorightorauthoritytoactfororbindtheinvestmentfundsandhavenoinfluenceoverthevotingordispositionofthesecuritiesorotherassetsheldbytheinvestmentfunds.Withtheexceptionofcertainofourfundsofhedgefunds,hedgefunds,certaincredit-focusedandrealestatedebtfunds,andotherfundsorseparatelymanagedaccountsforthebenefitofoneormorespecifiedinvestors,thirdpartyinvestorsinourfundshavetherighttoremovethegeneralpartnerofthefundortoacceleratetheterminationoftheinvestmentfundwithoutcausebyasimplemajorityvote.Inaddition,thegoverningagreementsofourinvestmentfundsprovidethatintheeventcertain“keypersons”inourinvestmentfundsdonotmeetspecifiedtimecommitmentswithregardtomanagingthefund,theninvestorsincertainfundshavetherighttovotetoterminatetheinvestmentperiodbyaspecifiedpercentage(including,incertaincasesasimplemajority)voteinaccordancewithspecifiedprocedures,acceleratethewithdrawaloftheircapitalonaninvestor-by-investorbasis,orthefund’sinvestmentperiodwillautomaticallyterminateandthevoteofaspecifiedpercentage(including,incertaincasesasimplemajority)inaccordancewithspecifiedproceduresisrequiredtorestartit.Inaddition,thegoverningagreementsofsomeofourinvestmentfundsprovidethatinvestorshavetherighttoterminate,foranyreason,theinvestmentperiodbyavoteof75%oftheinvestorsinsuchfund.

Incentive Arrangements / Fee Structure

Management Fees

ThefollowingdescribesthemanagementfeesreceivedbytheBlackstoneinvestmentadvisers.

• Theinvestmentadviserofeachofourcarryfundsgenerallyreceivesanannualmanagementfeebaseduponapercentageofthefund’scapitalcommitments,investedcapitaland/orundeployedcapitalduringtheinvestmentperiodandthefund’sinvestedcapitalorinvestmentfairvalueaftertheinvestmentperiod,exceptthattheinvestmentadviserstocertainofourcredit-focusedcarry/incentivefunds,core+realestatefundsandourcoreprivateequityfundreceiveanannualmanagementfeethatisbaseduponapercentageofinvestedcapitalornetassetvaluethroughoutthetermofthefund.Thesemanagementfeesarepayableonaregularbasis(typicallyquarterly)inthecontractuallyprescribedamountsoverthelifeofthefund.Dependingonthebaseuponwhichmanagementfeesarecalculated,negativeperformanceofoneormoreinvestmentsinthefundmayreducethetotalmanagementfeepaid,butnotthefeerate.

• Theinvestmentadviserofeachofourfundsthatarestructuredlikehedgefunds,orofourfundsofhedgefunds,registeredmutualfundsandseparatelymanagedaccountsthatinvestinhedgefunds,generallyreceivesanannualmanagementfeethatisbaseduponapercentageofthefund’soraccount’snetassetvalue.Thesemanagementfeesarealsopayableonaregularbasis(typicallyquarterly).Thesefundsgenerallyprovideinvestorsliquiditythroughannual,semi-annualorquarterlywithdrawalorredemptionrights,insomecasesfollowingtheexpirationofaspecifiedperiodoftimewhencapitalmaynotbewithdrawn.Dailyredemptionrightsaregenerallyprovidedinthecaseofregisteredmutualfunds.Theamountofmanagementfeestowhichtheinvestmentadviserisentitledwithrespecttheretowillproportionatelyincreaseasthenetassetvalueofeachinvestor’scapitalaccountgrowsandwillproportionatelydecreaseasthenetassetvalueofeachinvestor’scapitalaccountdecreases.

• TheinvestmentadviserofeachofourCLOstypicallyreceivesannualmanagementfeesbaseduponapercentageofeachfund’sassets,subjecttocertainperformancemeasuresrelatedtotheunderlyingassetsthevehicleowns,andadditionalmanagementfeeswhichareincentive-based(thatis,subjecttomeetingcertainreturncriteria).Thesemanagementfeesarealsopayableonaregularbasis(typicallyquarterly).ThetermofeachCLOvariesfromdealtodealandmaybesubjecttoearlyredemptionorextension;typically,however,aCLOwillbewounddownwithineighttoelevenyearsofbeinglaunched.Whilethemanagementfeestendtorangefromapproximately0.40%to0.65%perannumofeachfund’saggregateparamountofcollateralassets,includingprincipalcash,forthetermofthedeal,thequantumoffeeswilldecreaseasthefunddeleveragestowardtheendofitsterm.

• Theinvestmentadviserofourseparatelymanagedaccountsgenerallyreceivesannualmanagementfeestypicallybaseduponapercentageof

eachaccount’snetassetvalueorinvestedcapital.Themanagement

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feeswereceivefromourseparatelymanagedaccountsaregenerallypaidonaregularbasis(typicallyquarterly)andifbasedonnetassetvaluemayproportionatelyincreaseordecreasebasedonthenetassetvalueoftheseparatelymanagedaccount.Themanagementfeeswearepaidformanagingaseparatelymanagedaccountwillgenerallybesubjecttocontractualrightstheinvestorhastoterminateourmanagementofanaccountonasshortas30days’priornotice.

• Theinvestmentadviserofeachofourcredit-focusedregisteredandnon-registeredinvestmentcompaniestypicallyreceivesannualmanagementfeesbaseduponapercentageofeachcompany’snetassetvalueortotalmanagedassets.Themanagementfeeswereceivefromtheregisteredinvestmentcompanieswemanagearegenerallypaidonaregularbasis(typicallyquarterly)andproportionatelyincreaseordecreasebasedonthenetassetvalueorgrossassetsoftheinvestmentcompany.Themanagementfeeswearepaidformanagingtheinvestmentcompanywillgenerallybesubjecttocontractualrightsthecompany’sboardofdirectors(or,inthecaseoftheBDCswesub-advise,theinvestmentadviser)hastoterminateourmanagementofanaccountonasshortas30days’priornotice.

• TheinvestmentadviserofBXMTreceivesannualmanagementfeesbaseduponapercentageofBXMT’snetproceedsreceivedfromequityofferingsandaccumulated“coreearnings”(whichisgenerallyequaltoitsnetincome,calculatedunderaccountingprinciplesgenerallyacceptedintheUnitedStatesofAmerica(“GAAP”),excludingcertainnon-cashandotheritems),subjecttocertainadjustments.ThemanagementfeeswereceivefrommanagingBXMTarepaidquarterlyandincreaseordecreasebasedon,amongotherthings,BXMT’snetproceedsreceivedfromequityofferingsandaccumulatedcoreearnings(subjecttocertainadjustments).

• Theinvestmentadviserofournon-exchangetradedREITreceivesamanagementfeebasedonapercentageoftheREIT’snetassetvalue,

payablemonthly.

Foradditionalinformationregardingthemanagementfeerateswereceive,see“Item7.Management’sDiscussionandAnalysisofFinancialConditionandResultsofOperations—CriticalAccountingPolicies—RevenueRecognition—ManagementandAdvisoryFees,Net.”

Incentive Fees

Incentivefeesgenerallyareperformancebasedallocationsofafund’snetcapitalappreciationduringaperiod,typicallyannually,subjecttotheachievementofminimumreturnlevels,highwatermarks,and/orotherhurdleprovisions,inaccordancewiththerespectivetermssetoutineachfund’sgoverningagreements.Incentivefeesaretypicallyrealizedattheendofthemeasurementperiod.Oncerealized,suchfeesaretypicallynotsubjecttoclawbackorreversal.ThefollowingdescribestheincentivefeesearnedgenerallybyBlackstone.

• InourHedgeFundSolutionssegment,theinvestmentadviserofeachofourfundsofhedgefunds,hedgefunds,separatelymanagedaccounts

thatinvestinhedgefundsandcertainnon-U.S.registeredinvestmentcompanies,isentitledtoanincentivefeeofgenerallyupto25%oftheapplicableinvestmentvehicle’snetappreciation,subjecttohighwatermarkhurdleprovisionsandinsomecasesapreferredreturn.

• Thegeneralpartnersorsimilarentitiesofeachofourrealestateandcredithedgefundstructuresreceiveincentivefeesofgenerallyupto20%

oftheapplicablefund’snetcapitalappreciationperannum.

• FortheBDCswesub-advise,wereceiveincentivefeesof10%ofthevehicle’snetappreciationperannum(incertaincasespaidquarterly),

subjecttoapreferredreturn.

• TheexternalmanagerofBXMTisentitledtoanincentivefee,payablequarterly,inanamount,notlessthanzero,equaltotheproductof(a)20%and(b)theexcessof(i)BXMT’scoreearningsfortheprevious12-monthperiodover(ii)anamountequalto7%perannummultipliedbyBXMT’saverageoutstandingequity(asdefinedinthemanagementagreement),providedthatBXMT’scoreearningsoverthepriorthree-yearperiodaregreaterthanzero.

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• Thespeciallimitedpartner,anaffiliateofournon-exchangetradedREIT,isentitledtoaperformanceparticipationinterest,whichispaid

annuallyandaccruesmonthly,inanamountequalto12.5%ofitstotalreturn,subjecttoa5%hurdleamountandahighwatermarkwithacatch-up.

• Thegeneralpartnerofcertainopenendedcore+realestatefundsisentitledtoanincentivefeeallocationofgenerally10%ofnetcapital

appreciation,subjecttoahurdleamountgenerallyof6%to7%,alossrecoveryamountandacatch-up.IncentiveFeesforthesefundsaregenerallyrealizedeverythreeyearsfromwhenalimitedpartnermakesitsinitialinvestment.

Carried Interest

Thegeneralpartneroranaffiliateofeachofourcarryfundsalsoreceivescarriedinterestfromtheinvestmentfund.Carriedinterestentitlesthegeneralpartner(oranaffiliate)toanallocationofincomeandgainsfromafund.Ourabilitytogeneratecarriedinterestisanimportantelementofourbusinessandcarriedinteresthashistoricallyaccountedforaverysignificantportionofourincome.

Thecarriedinterestistypicallystructuredasanetprofitsinterestintheapplicablefund.Inthecaseofourcarryfunds,carriedinterestiscalculatedona“realizedgain”basis,andeachgeneralpartnerisgenerallyentitledtoacarriedinterestequalto20%ofthenetrealizedincomeandgains(generallytakingintoaccountrealizedandunrealizedlosses)generatedbysuchfund,exceptthatthegeneralpartners(oraffiliates)ofcertainofourcredit-focusedfunds,realestatedebtfunds,core+realestatefunds,TacticalOpportunitiesfunds,multi-assetclassinvestmentfundsandsecondaryfundsoffunds,andourcoreprivateequityfund,aregenerallyentitledtoacarriedinterestthatrangesbetween10%and20%,dependingonthespecificfund(subjecttovariationacrossourbusinessunitsandfunds).Netrealizedincomeorlossisnotnettedbetweenoramongfunds,andinsomecasesourcarryfundsprovideforcarriedinterestoncurrentincomedistributions(subjecttocertainconditions).

Formostcarryfunds,thecarriedinterestissubjecttoanannualpreferredlimitedpartnerreturnrangingfrom5%to8%,subjecttoacatch-upallocationtothegeneralpartner.Someofourcarryfunds(e.g.,ourTacticalOpportunitiesfundsgenerally)donotprovideforapreferredreturn,andgenerallythetermsofourcarryfundsvaryincertainrespectsacrossourbusinessunitsandvintages.If,attheendofthelifeofacarryfund(orearlierwithrespecttocertainofourrealestate,realestatedebt,core+realestateandmulti-assetclassand/oropportunisticinvestmentfunds),asaresultofdiminishedperformanceoflaterinvestmentsinacarryfund’slife,(a)thegeneralpartnerreceivesinexcessoftherelevantcarriedinterestpercentage(s)applicabletothefundasappliedtothefund’scumulativenetprofitsoverthelifeofthefund,or(incertaincases)(b)thecarryfundhasnotachievedinvestmentreturnsthatexceedthepreferredreturnthreshold(ifapplicable),thenwewillbeobligatedtorepayanamountequaltothecarriedinterestthatwaspreviouslydistributedtousthatexceedstheamountstowhichtherelevantgeneralpartnerwasultimatelyentitledonanaftertaxbasis.Thisobligationisknownasa“clawback”obligationandisanobligationofanypersonwhodirectlyreceivedsuchcarriedinterest,includingusandouremployeeswhoparticipateinourcarriedinterestplans.

Althoughaportionofanydistributionsbyustoourunitholdersmayincludeanycarriedinterestreceivedbyus,wedonotintendtoseekfulfillmentofanyclawbackobligationbyseekingtohaveourunitholdersreturnanyportionofsuchdistributionsattributabletocarriedinterestassociatedwithanyclawbackobligation.Totheextentwearerequiredtofulfillaclawbackobligation,however,ourgeneralpartnermaydeterminetodecreasetheamountofourdistributionstocommonunitholders.Theclawbackobligationoperateswithrespecttoagivencarryfund’sownnetinvestmentperformanceonlyandcarriedinterestofotherfundsisnotnettedfordeterminingthiscontingentobligation.Moreover,althoughaclawbackobligationisseveral,thegoverningagreementsofmostofourfundsprovidethattotheextentanotherrecipientofcarriedinterest(suchasacurrentorformeremployee)doesnotfundhisorherrespectiveshareoftheclawbackobligationthendue,thenweandouremployeeswhoparticipateinsuchcarriedinterestplansmayhavetofundadditionalamounts(generallyanadditional50%to70%)althoughweretaintherighttopursueanyremediesthatwehaveundersuchgoverningagreementsagainstthosecarriedinterestrecipientswhofailtofundtheirobligations.Wehaverecordedacontingentrepaymentobligationequalto

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theamountthatwouldbedueonDecember31,2017,ifthevariouscarryfundswereliquidatedattheircurrentcarryingvalue.

Foradditionalinformationconcerningtheclawbackobligationswecouldface,see“Item1A.RiskFactors—Wemaynothavesufficientcashtopayback‘clawback’obligationsifandwhentheyaretriggeredunderthegoverningagreementswithourinvestors.”

Advisory and Transaction Fees

Someofourinvestmentadvisersoroneoftheiraffiliates,particularlyprivateequity,realestateandcreditadvisers,receivecustomaryfees(forexample,acquisition,originationandothertransactionfees)uponconsummationoftheirfunds’transactions,andmayfromtimetotimereceiveadvisory,monitoringandotherfeesinconnectionwiththeiractivities.Formostofthefundswherewereceivesuchfees,wearerequiredtoreducethemanagementfeeschargedtothefunds’limitedpartnersby50%to100%ofsuchlimitedpartner’sshareofsuchfees.

Capital Invested In and Alongside Our Investment Funds

Tofurtheralignourinterestswiththoseofinvestorsinourinvestmentfunds,wehaveinvestedthefirm’scapitalandthatofourpersonnelintheinvestmentfundswesponsorandmanage.Minimumgeneralpartnercapitalcommitmentstoourinvestmentfundsaredeterminedseparatelywithrespecttoourinvestmentfundsand,generally,arelessthan5%ofthelimitedpartnercommitmentsofanyparticularfund.See“PartII.Item7.Management’sDiscussionandAnalysisofFinancialConditionandResultsofOperations—LiquidityandCapitalResources”formoreinformationregardingourminimumgeneralpartnercapitalcommitmentstoourfunds.Wedeterminewhethertomakegeneralpartnercapitalcommitmentstoourfundsinexcessoftheminimumrequiredcommitmentsbasedon,amongotherthings,ouranticipatedliquidity,workingcapitalandothercapitalneeds.Inmanycases,werequireourseniormanagingdirectorsandotherprofessionalstofundaportionofthegeneralpartnercapitalcommitmentstoourfunds.Inothercases,wemayfromtimetotimeoffertoourseniormanagingdirectorsandemployeesapartofthefundedorunfundedgeneralpartnercommitmentstoourinvestmentfunds.Ourgeneralpartnercapitalcommitmentsarefundedwithcashandnotwithcarriedinterestordeferralofmanagementfees.

Investorsinmanyofourfundsalsoreceivetheopportunitytomakeadditional“co-investments”withtheinvestmentfunds.Ourpersonnel,aswellasBlackstoneitself,alsohavetheopportunitytomakeco-investments,whichwerefertoas“side-by-sideinvestments,”withmanyofourcarryfunds.Co-investmentsandside-by-sideinvestmentsareinvestmentsinportfoliocompaniesorotherassetsonthesametermsandconditionsasthoseacquiredbytheapplicablefund.Co-investmentsrefertoinvestmentsarrangedbyusthataremadebyourlimitedpartnerinvestors(andotherinvestorsinsomeinstances)inaportfoliocompanyorotherassetsalongsideaninvestmentfund.Incertaincases,limitedpartnerinvestorsmaypayadditionalmanagementfeesorcarriedinterestinconnectionwithsuchco-investments.Side-by-sideinvestmentsaresimilartoco-investmentsbutaremadebydirectors,officers,seniormanagingdirectors,employeesandcertainaffiliatesofBlackstone.Theseinvestmentsaregenerallymadepursuanttoabindingelection,subjecttocertainlimitations,madeonceayearfortheestimatedactivityduringtheensuing12monthsunderwhichthosepersonsarepermittedtomakeinvestmentsalongsideaparticularcarryfundinalltransactionsofthatfundforthatyear.Side-by-sideinvestmentsarefundedincashandarenotgenerallysubjecttomanagementfeesorcarriedinterest.

Competition

Theassetmanagementindustryisintenselycompetitive,andweexpectittoremainso.Wecompetebothgloballyandonaregional,industryandsectorbasis.Wecompeteonthebasisofanumberoffactors,includinginvestmentperformance,transactionexecutionskills,accesstocapital,accesstoandretentionofqualifiedpersonnel,reputation,rangeofproductsandservices,innovationandprice.

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Wefacecompetitionbothinthepursuitofoutsideinvestorsforourinvestmentfundsandinacquiringinvestmentsinattractiveportfoliocompaniesandmakingotherinvestments.Althoughmanyinstitutionalandindividualinvestorshaveincreasedtheamountofcapitaltheycommittoalternativeinvestmentfunds,suchincreasesmaycreateincreasedcompetitionwithrespecttofeeschargedbyourfunds.Certaininstitutionalinvestorsaredemonstratingapreferencetoin-sourcetheirowninvestmentprofessionalsandtomakedirectinvestmentsinalternativeassetswithouttheassistanceofprivateequityadviserslikeus.Suchinstitutionalinvestorsmaybecomeourcompetitorsandcouldceasetobeourclients.

Dependingontheinvestment,wefacecompetitionprimarilyfromsponsorsmanagingotherprivateequityfunds,specializedinvestmentfunds,hedgefundsandotherpoolsofcapital,otherfinancialinstitutionsincludingsovereignwealthfunds,corporatebuyersandotherparties.Severalofthesecompetitorshavesignificantamountsofcapitalandmanyofthemhaveinvestmentobjectivessimilartoours,whichmaycreateadditionalcompetitionforinvestmentopportunities.Someofthesecompetitorsmayalsohavealowercostofcapitalandaccesstofundingsourcesorotherresourcesthatarenotavailabletous,whichmaycreatecompetitivedisadvantagesforuswithrespecttoinvestmentopportunities.Inaddition,someofthesecompetitorsmayhavehigherrisktolerances,differentriskassessmentsorlowerreturnthresholds,whichcouldallowthemtoconsiderawidervarietyofinvestmentsandtobidmoreaggressivelythanusforinvestmentsthatwewanttomake.Corporatebuyersmaybeabletoachievesynergisticcostsavingswithregardtoaninvestmentorbeperceivedbysellersasotherwisebeingmoredesirablebidders,whichmayprovidethemwithacompetitiveadvantageinbiddingforaninvestment.

Inallofourbusinesses,competitionisalsointensefortheattractionandretentionofqualifiedemployees.Ourabilitytocontinuetocompeteeffectivelyinourbusinesseswilldependuponourabilitytoattractnewemployeesandretainandmotivateourexistingemployees.

Foradditionalinformationconcerningthecompetitiverisksthatweface,see“Item1A.RiskFactors—RisksRelatedtoOurBusiness—Theassetmanagementbusinessisintenselycompetitive.”

Employees

AsofDecember31,2017,weemployedapproximately2,360people,includingour136seniormanagingdirectors.Westrivetomaintainaworkenvironmentthatfostersprofessionalism,excellence,integrityandcooperationamongouremployees.

Regulatory and Compliance Matters

Ourbusinesses,aswellasthefinancialservicesindustrygenerally,aresubjecttoextensiveregulationintheUnitedStatesandelsewhere.

AlloftheinvestmentadvisersofourinvestmentfundsoperatingintheU.S.areregisteredasinvestmentadviserswiththeSEC(otherinvestmentadvisersareregisteredinnon-U.S.jurisdictions).RegisteredinvestmentadvisersaresubjecttotherequirementsandregulationsoftheAdvisersAct.Suchrequirementsrelateto,amongotherthings,fiduciarydutiestoclients,maintaininganeffectivecomplianceprogram,solicitationagreements,conflictsofinterest,recordkeepingandreportingrequirements,disclosure,advertisingandcustodyrequirements,limitationsonagencycrossandprincipaltransactionsbetweenanadviserandadvisoryclients,andgeneralanti-fraudprohibitions.

BlackstoneAdvisoryPartnersL.P.,asubsidiaryofoursthroughwhichweconductourcapitalmarketsbusinessandcertainofourfundmarketinganddistribution,isregisteredasabroker-dealerwiththeSECandissubjecttoregulationandoversightbytheSEC,isamemberoftheFinancialIndustryRegulatoryAuthority,or“FINRA,”andisregisteredasabroker-dealerin50states,theDistrictofColumbia,theCommonwealthofPuertoRicoandtheVirginIslands.Inaddition,FINRA,aself-regulatoryorganizationsubjecttooversightbytheSEC,adoptsandenforcesrulesgoverningtheconduct,andexaminestheactivities,ofitsmemberfirms,includingourbroker-dealerentity.Statesecuritiesregulatorsalsohaveregulatoryoversightauthorityoverourbroker-dealerentity.

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Broker-dealersaresubjecttoregulationsthatcoverallaspectsofthesecuritiesbusiness,including,amongothers,theimplementationofasupervisorycontrolsystemoverthesecuritiesbusiness,advertisingandsalespractices,conductofandcompensationinconnectionwithpublicsecuritiesofferings,maintenanceofadequatenetcapital,recordkeepingandtheconductandqualificationsofemployees.Inparticular,asaregisteredbroker-dealerandmemberofFINRA,BlackstoneAdvisoryPartnersL.P.issubjecttotheSEC’suniformnetcapitalrule,Rule15c3-1.Rule15c3-1specifiestheminimumlevelofnetcapitalabroker-dealermustmaintainandalsorequiresthatasignificantpartofabroker-dealer’sassetsbekeptinrelativelyliquidform.TheSECandvariousself-regulatoryorganizationsimposerulesthatrequirenotificationwhennetcapitalfallsbelowcertainpredefinedcriteria,limittheratioofsubordinateddebttoequityinthecapitalstructureofabroker-dealerandconstraintheabilityofabroker-dealertoexpanditsbusinessundercertaincircumstances.Additionally,theSEC’suniformnetcapitalruleimposescertainrequirementsthatmayhavetheeffectofprohibitingabroker-dealerfromdistributingorwithdrawingcapitalandrequiringpriornoticetotheSECforcertainwithdrawalsofcapital.

Inaddition,certainoftheclosed-endandopen-endmutualfundsandinvestmentmanagementcompanieswemanage,adviseorsub-adviseareregisteredunderthe1940Act.The1940Actandtherulesthereundergovern,amongotherthings,therelationshipbetweenusandsuchinvestmentvehiclesandlimitsuchinvestmentvehicles’abilitytoenterintocertaintransactionswithusorouraffiliates,includingotherfundsmanaged,advisedorsub-advisedbyus.

PursuanttotheU.K.FinancialServicesandMarketsAct2000,or“FSMA,”certainofoursubsidiariesaresubjecttoregulationspromulgatedandadministeredbytheFinancialConductAuthority(“FCA”).TheBlackstoneGroupInternationalPartnersLLP(“BGIP”)actsasasub-advisortoitsBlackstoneU.S.affiliatesinrelationtotheinvestmentandre-investmentofEurope,MiddleEastandAfrica(“EMEA”)-basedassetsofBlackstonefundsaswellasarrangingtransactionstobeenteredintobyoronbehalfofBlackstonefunds.BGIPalsoactsasadistributorofBlackstonefundsinEMEA.BGIPhasaMarketsinFinancialInstrumentsDirective(2007)(“MiFID”)cross-borderpassporttoprovideinvestmentadvisoryserviceswithintheEuropeanEconomicArea(“EEA”).BGIP’sprincipalplaceofbusinessisinLondonandithasRepresentativeOfficesintheDubaiInternationalFinancialCentre(“DIFC”),MilanandParis.GSOCapitalPartnersInternationalPartnersLLP(“GSOU.K.”)isalsoauthorizedandregulatedbytheFCAintheUnitedKingdom.GSOU.K.actsasasub-advisorandsub-investmentmanagertoitsGSOU.S.affiliatesinrelationtotheinvestmentandre-investmentofEMEA-basedassetsofGSOfundsaswellasarrangingtransactionstobeenteredintobyoronbehalfofGSOfunds.GSOU.K.alsoactsasadiscretionaryinvestmentmanagerforseparatelymanagedaccountsaswellasadistributorofGSOfundsinEMEA.GSOU.K.hasaMiFIDcross-borderpassporttoprovideinvestmentadvisoryservicesandinvestmentmanagementwithintheEEA.GSOU.K.’sprincipalplaceofbusinessisinLondon.TheFSMAandrulespromulgatedthereunderformthecornerstoneoflegislationwhichgovernsallaspectsofourinvestmentbusinessintheUnitedKingdom,includingsales,researchandtradingpractices,provisionofinvestmentadvice,useandsafekeepingofclientfundsandsecurities,regulatorycapital,recordkeeping,approvalstandardsforindividuals,anti-moneylaundering,periodicreportingandsettlementprocedures.BlackstonePropertyManagementLimitedisauthorizedandregulatedbytheFCAintheUnitedKingdomasapropertymanagementandadvisorycompanywiththeabilitytoadministercontractsofinsurance.

Blackstone/GSODebtFundsManagementEuropeLimited(“DFME”)isauthorizedandregulatedbytheCentralBankofIreland(“CBI”)asanInvestmentFirmundertheEuropeanCommunities(MarketsinFinancialInstruments)Regulations2007.DFME’sprincipalactivityistheprovisionofmanagementandadvisoryservicestocertaincollateralizedloanobligationsandsub-advisoryservicestocertainaffiliates.Blackstone/GSODebtFundsManagementEuropeIILimited(“DFMEII”)isauthorizedandregulatedbytheCBIasanAlternativeInvestmentFundManagerundertheEuropeanUnionAlternativeInvestmentFundManagersRegulations2013(“AIFMD”).DFMEIIprovidesinvestmentmanagementfunctionsincludingportfoliomanagement,riskmanagement,administration,marketingandrelatedactivitiestoitsalternativeinvestmentfundsinaccordancewithAIFMDandtheconditionsimposedbytheCBIassetoutintheCBI’salternativeinvestmentfundrulebook.

BlackstoneEuropeFundManagementS.àr.l.(“BEFM”)isanapprovedAlternativeInvestmentFundManagerunderAIFMD.BEFMprovidesinvestmentmanagementfunctionsincludingportfoliomanagement,risk

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management,administration,marketingandrelatedactivitiestoitsalternativeinvestmentfundsinaccordancewithAIFMDandtheconditionsimposedbytheCommissiondeSurveillanceduSecteurFinancier(“CSSF”)inLuxembourg.BEFMhasabranchentityestablishedinDenmark.

CertainBlackstoneoperatingentitiesarelicensedandsubjecttoregulationbyfinancialregulatoryauthoritiesinJapan,HongKong,AustraliaandSingapore:TheBlackstoneGroupJapanK.K.,afinancialinstrumentsfirm,isregisteredwithKantoLocalFinanceBureau(Kin-shoNo.1785)andregulatedbytheJapanFinancialServicesAgency;TheBlackstoneGroup(HK)LimitedisregulatedbytheHongKongSecuritiesandFuturesCommission;TheBlackstoneGroup(Australia)PtyLimitedACN149142058andBlackstoneRealEstateAustraliaPtyLimitedACN604167651eachholdsanAustralianfinancialserviceslicenseauthorizingittoprovidefinancialservicesinAustralia(AFSL408376andAFSL485716,respectively)andisregulatedbytheAustralianSecuritiesandInvestmentsCommission;andBlackstoneSingaporePte.Ltd.isregulatedbytheMonetaryAuthorityofSingapore(CompanyRegistrationNumber:201020503E).

TheSECandvariousself-regulatoryorganizationsandstatesecuritiesregulatorshaveinrecentyearsincreasedtheirregulatoryactivities,includingregulation,examinationandenforcementinrespectofassetmanagementfirms.

Asdescribedabove,certainofourbusinessesaresubjecttocompliancewithlawsandregulationsofU.S.federalandstategovernments,non-U.S.governments,theirrespectiveagenciesand/orvariousself-regulatoryorganizationsorexchangesrelatingto,amongotherthings,marketingofinvestmentproducts,disclosureandtheprivacyofclientinformation,andanyfailuretocomplywiththeseregulationscouldexposeustoliabilityand/ordamageourreputation.Ourbusinesseshaveoperatedformanyyearswithinalegalframeworkthatrequiresustomonitorandcomplywithabroadrangeoflegalandregulatorydevelopmentsthataffectouractivities.However,additionallegislation,changesinrulespromulgatedbyself-regulatoryorganizationsorchangesintheinterpretationorenforcementofexistinglawsandrules,eitherintheUnitedStatesorelsewhere,maydirectlyaffectourmodeofoperationandprofitability.

Rigorouslegalandcomplianceanalysisofourbusinessesandinvestmentsisendemictoourcultureandriskmanagement.OurChiefLegalOfficerandGlobalHeadofCompliance,togetherwiththeChiefComplianceOfficersofeachofourbusinesses,superviseourcompliancepersonnel,whoareresponsibleforaddressingallregulatoryandcompliancemattersthataffectouractivities.Westrivetomaintainacultureofcompliancethroughtheuseofpoliciesandproceduresincludingacodeofethics,electroniccompliancesystems,testingandmonitoring,communicationofcomplianceguidanceandemployeeeducationandtraining.Ourcompliancepoliciesandproceduresaddressavarietyofregulatoryandcompliancematterssuchasthehandlingofmaterialnon-publicinformation,personalsecuritiestrading,marketingpractices,giftsandentertainment,valuationofinvestmentsonafund-specificbasis,recordkeeping,potentialconflictsofinterest,theallocationofinvestmentopportunities,collectionoffeesandexpenseallocation.

OurcompliancegroupalsomonitorstheinformationbarriersthatwemaintainbetweenthepublicandprivatesidesofBlackstone’sbusinesses.Webelievethatourvariousbusinesses’accesstotheintellectualknowledgeandcontactsandrelationshipsthatresidethroughoutourfirmbenefitsallofourbusinesses.Tomaximizethataccesswithoutcompromisingcompliancewithourlegalandcontractualobligations,ourcompliancegroupoverseesandmonitorsthecommunicationsbetweengroupsthatareontheprivatesideofourinformationbarrierandgroupsthatareonthepublicside,aswellasbetweendifferentpublicsidegroups.Ourcompliancegroupalsomonitorscontractualobligationsthatmaybeimpactedandpotentialconflictsthatmayariseinconnectionwiththeseinter-groupdiscussions.

Inaddition,disclosurecontrolsandproceduresandinternalcontrolsoverfinancialreportingaredocumented,testedandassessedfordesignandoperatingeffectivenessincompliancewiththeU.S.Sarbanes-OxleyActof2002(“Sarbanes-Oxley”).WehaveanInternalAuditdepartmentwithaglobalmandateanddedicatedresourcesthatproviderisk-basedaudits,Sarbanes-Oxleycomplianceandadvisorypractices.InternalAudit,whichreportsdirectlytotheauditcommitteeoftheboardofdirectorsofourgeneralpartner,aimstoprovidereasonable,independent,and

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objectiveassurancetoourmanagementandtheboardofdirectorsofourgeneralpartnerthatrisksarewellmanagedandthatcontrolsareappropriateandeffective.

Ourenterpriseriskmanagementpracticesincludereviewandmonitoringofourbusiness,investmentandotherkeyrisksatvariouslevels,includingatthefund,businessunitandcorporatelevel.Committeescomprisedofmembersofmanagementandrepresentativesofvariousbusinessunitsandcorporatefunctionsconsiderandevaluatelegal,reputational,operational,controlandotherrisksattendanttoourbusiness.Inaddition,seniormanagementregularlyreportstotheauditcommitteeoftheboardofdirectorsofourgeneralpartneronriskmatters,includingbyprovidingperiodicriskreports,anoverviewofmanagement’sviewofkeyriskstothefirmanddetailedassessmentsofselectedrisks.

ThereareanumberofpendingorrecentlyenactedlegislativeandregulatoryinitiativesintheUnitedStatesandinEuropethatcouldsignificantlyaffectourbusiness.Pleasesee“Item1A.RiskFactors—RisksRelatedtoOurBusiness—FinancialregulatorychangesintheUnitedStatescouldadverselyaffectourbusiness”and“Item1A.RiskFactors—RisksRelatedtoOurBusiness—RecentregulatorychangesinjurisdictionsoutsidetheUnitedStatescouldadverselyaffectourbusiness.”

Available Information

TheBlackstoneGroupL.P.isaDelawarelimitedpartnershipthatwasformedonMarch12,2007.

Wefileannual,quarterlyandcurrentreportsandotherinformationwiththeSEC.ThesefilingsareavailabletothepublicovertheinternetattheSEC’swebsiteatwww.sec.gov.YoumayalsoreadandcopyanydocumentwefileattheSEC’spublicreferenceroomlocatedat100FStreet,N.E.,Washington,D.C.20549.PleasecalltheSECat1-800-SEC-0330forfurtherinformationonthepublicreferenceroom.

Ourprincipalinternetaddressiswww.blackstone.com.Wemakeavailablefreeofchargeonorthroughwww.blackstone.comourannualreportsonForm10-K,quarterlyreportsonForm10-Q,currentreportsonForm8-K,andamendmentstothosereports,assoonasreasonablypracticableafterweelectronicallyfilesuchmaterialwith,orfurnishitto,theSEC.Thecontentsofourwebsitearenot,however,apartofthisreport.

ITEM 1A. RISK FACTORS

Risks Related to Our Business

Difficult market conditions can adversely affect our business in many ways, including by reducing the value or performance of the investments made byour investment funds and reducing the ability of our investment funds to raise or deploy capital, each of which could materially reduce our revenue,earnings and cash flow and adversely affect our financial prospects and condition.

Ourbusinessismateriallyaffectedbyconditionsintheglobalfinancialmarketsandeconomicconditionsoreventsthroughouttheworldthatareoutsideourcontrol,includingbutnotlimitedtochangesininterestrates,availabilityofcredit,inflationrates,economicuncertainty,changesinlaws(includinglawsrelatingtotaxation),tradebarriers,commodityprices,currencyexchangeratesandcontrolsandnationalandinternationalpoliticalcircumstances(includingwars,terroristactsorsecurityoperations).Thesefactorsmayaffectthelevelandvolatilityofsecuritiespricesandtheliquidityandthevalueofinvestments,andwemaynotbeabletoormaychoosenottomanageourexposuretothesemarketconditionsand/orotherevents.Intheeventofamarketdownturneachofourbusinessescouldbeaffectedindifferentways.

Turmoilintheglobalfinancialmarkets,suchasoccurredin2008-2009,canprovokesignificantvolatilityofequityanddebtsecuritiesprices.Thiscanhaveamaterialandrapidimpactonourmark-to-marketvaluations,particularlywithrespecttoourpublicholdingsandcreditinvestments.Aspubliclytradedequitysecuritieshaveinrecentyearsrepresentedasignificantproportionoftheassetsofmanyofourcarryfunds,stockmarketvolatility

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mayhaveagreaterimpactonourreportedresultsthaninthepastanddeclinesinthestockmarketmayadverselyaffectourresults,includingourrevenuesandnetincome.Alackofcreditresultingfromturmoilintheglobalfinancialmarketsinthefuturemaymateriallyhindertheinitiationofnew,large-sizedtransactionsforourprivateequityandrealestatesegmentsandadverselyimpactouroperatingresults.Althoughoverallfinancingcostsstillremainlowonahistoricalbasis,thereissomeconcernthatthemonetarypolicyofcentralbanks,includingoftheU.S.FederalReserve,strongeconomicgrowth,andinflationaryandothermarketfactorsmayleadtorisinginterestratesandadverselyimpactthecostandavailabilityofcredit,aswellasthevalueofourinvestments.Inaddition,acceleratingeconomicgrowthinmanyinternationaleconomiesmayinthefuturecontributetotightercreditconditions,adecreasedavailabilityofforeigncapitalandrisinginterestrates.AstrongU.S.dollar,whichcouldbeassociatedwithrisinginterestrates,couldhurtU.S.exportsandgrowthandhaveanadverseimpactoneconomicgrowthininternationaleconomies.Inaddition,2017wasayearofsignificantgeopoliticalconcerns,including,amongotherthings,increasedtensionswithNorthKoreaoveritsballisticmissiletestingandnuclearprogram,uncertaintyregardingU.S.recertificationoftheIrannuclearframeworkandtheU.K.’sinitiationinMarch2017ofthetwo-yearnegotiationperiodprecedingitswithdrawalfromtheEuropeanUnion(“Brexit”).Althoughthelong-termimpactoneconomicconditionsisuncertain,BrexitmayhaveanadverseeffectontherateofeconomicgrowthintheU.K.andEurope,whichmaynegativelyimpactrealestateandotherassetvaluesinthoseregions.

Althoughinterestrateshavebeenathistoricallylowlevels,theU.S.FederalReserveraisedratesinlate2016andthroughout2017andhasindicatedanintentiontocontinueraisingratesin2018.Aperiodofsharplyrisinginterestratescouldcreatedownwardpressureonthepriceofrealestateandincreasethecostofdebtfinancingforthetransactionswepursue,eachofwhichmayhaveanadverseimpactonourbusiness.

Manyinvestmentsmadebyourfundsarehighlyilliquid,andwemaynotbeabletorealizeinvestmentsinatimelymanner.Duringearly2016,forexample,volatileequityandcreditmarketsresultedinreducedopportunitiesforourfundstoexitandrealizevaluefromtheirexistinginvestments.Althoughstrongequitycapitalmarketsandgenerallylowvolatilitythroughout2017providedopportunitiesforexitthroughtheequitymarkets,recentvolatilityandrisinginterestratesmayimpactthesemarketconditions.Uncertaintysurroundingpotentialchangestogovernmentalpolicymayalsohavesomeimpactonourexitopportunitiesthroughtheprivatemarkets.Forexample,recentlyintroducedbipartisanlegislationwoulddramaticallyincreasethenumberoftransactionsthataresubjecttothejurisdictionoftheCommitteeonForeignInvestmentintheUnitedStates(“CFIUS”).Iftheproposalbecomeslaw,CFIUSwillhavetheauthoritytoreviewandpotentiallyblockcertainnon-controllinginvestmentsincriticalinfrastructureandtechnologycompaniesandothertransactions,whichmayreducethenumberofpotentialbuyersandlimittheabilityofourfundstorealizevaluefromcertainexistingandfutureinvestments.Althoughtheequitymarketsarenottheonlymeansbywhichweexitinvestments,shouldweexperienceanotherperiodofchallengingequitymarkets,ourfundsmayexperienceincreaseddifficultyinrealizingvaluefrominvestments.Weareunabletopredictwhetherandtowhatextentuncertaintysurroundingeconomicandmarketconditionswillbereduced,andevenintheabsenceofuncertainty,adverseconditionsand/orothereventsinparticularsectorsmaycauseourperformancetosufferfurther.

Buoyantmarketsandpositiveeconomicconditionshavealsomadeitandmayinthefuturemakeitmoredifficultandcompetitivetofindsuitableinvestmentsforthefundstoeffectivelydeploycapital.Thiscouldadverselyaffectourperformanceandabilitytoraisenewfunds.Duringperiodsofdifficultmarketconditionsorslowdowns(whichmaybeacrossoneormoreindustries,sectorsorgeographies),ourfunds’portfoliocompaniesmayexperienceadverseoperatingperformance,decreasedrevenues,creditratingdowngrades,financiallosses,difficultyinobtainingaccesstofinancingandincreasedfundingcosts.Negativefinancialresultsinourinvestmentfunds’portfoliocompaniesmayresultinlowerinvestmentreturnsforourinvestmentfunds,whichcouldmateriallyandadverselyaffectourabilitytoraisenewfundsaswellasouroperatingresultsandcashflow.Totheextenttheoperatingperformanceofthoseportfoliocompanies(aswellasvaluationmultiples)donotimproveorotherportfoliocompaniesexperienceadverseoperatingperformance,ourinvestmentfundsmaysellthoseassetsatvaluesthatarelessthanweprojectedorevenaloss,therebysignificantlyaffectingthoseinvestmentfunds’performanceandconsequentlyouroperatingresultsandcashflow.Duringsuchperiodsofweakness,ourinvestmentfunds’portfoliocompaniesmayalsohavedifficultyexpandingtheirbusinessesandoperationsormeetingtheirdebt

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serviceobligationsorotherexpensesastheybecomedue,includingexpensespayabletous.Furthermore,suchnegativemarketconditionscouldpotentiallyresultinaportfoliocompanyenteringbankruptcyproceedings,therebypotentiallyresultinginacompletelossofthefund’sinvestmentinsuchportfoliocompanyandasignificantnegativeimpacttotheinvestmentfund’sperformanceandconsequentlytoouroperatingresultsandcashflow,aswellastoourreputation.Inaddition,negativemarketconditionswouldalsoincreasetheriskofdefaultwithrespecttoinvestmentsheldbyourinvestmentfundsthathavesignificantdebtinvestments,suchasourcredit-focusedfunds.Estimatesorprojectionsofmarketconditions,commoditypricesandsupplyanddemanddynamicsarekeyfactorsinevaluatingpotentialinvestmentopportunitiesandvaluingtheinvestmentsmadebyourfunds.Theseestimatesaresubjecttowidevariancesbasedonchangesinmarketconditions,underlyingassumptions,commoditypricesandtechnicalorinvestment-relatedassumptions.

Inaddition,theperformanceoftheinvestmentsmadebyourcreditandprivateequityfundsintheenergyandnaturalresourcesmarketsarealsosubjecttoahighdegreeofmarketriskgiven,amongothermatters,thevolatilityofcommodityprices.See“—Investmentsbyourfundsinthepowerandenergyindustriesinvolvevariousoperational,construction,regulatoryandmarketrisksthatmayexposeustoincreasedrisksandliabilitiesandcouldadverselyaffectourresultsofoperations,liquidityandfinancialcondition.”

Ouroperatingperformancemayalsobeadverselyaffectedbyourfixedcostsandotherexpensesandthepossibilitythatwewouldbeunabletoscalebackothercostswithinatimeframesufficienttomatchanydecreasesinrevenuerelatingtochangesinmarketandeconomicconditions.Inordertoreduceexpensesinthefaceofadifficulteconomicenvironment,wemayneedtocutbackoreliminatetheuseofcertainservicesorserviceproviders,orterminatetheemploymentofasignificantnumberofourpersonnelthat,ineachcase,couldbeimportanttoourbusinessandwithoutwhichouroperatingresultscouldbeadverselyaffected.

Changes in the debt financing markets could negatively impact the ability of our funds and their portfolio companies to obtain attractive financing orrefinancing for their investments and could increase the cost of such financing if it is obtained, which could lead to lower-yielding investments andpotentially decrease our net income.

Asignificantcontractioninthemarketfordebtfinancing,suchasthecontractionthatoccurredin2008and2009orotheradversechangerelatingtothetermsofdebtfinancing(suchas,forexample,higherrates,higherequityrequirements,and/ormorerestrictivecovenants),particularlyintheareaofacquisitionfinancingsforprivateequityandrealestatetransactions,couldhaveamaterialadverseimpactonourbusiness.Inaddition,thefinancingofacquisitionsortheoperationsofourfunds’portfoliocompanieswithdebtmaybecomelessattractiveduetolimitationsonthedeductibilityofcorporateinterestexpense.See“—ComprehensiveU.S.federalincometaxreformbecameeffectivein2018,whichcouldadverselyaffectus.”Ifourfundsareunabletoobtaincommitteddebtfinancingforpotentialacquisitions,canonlyobtaindebtfinancingatanincreasedinterestrateoronunfavorabletermsortheabilitytodeductcorporateinterestexpenseissubstantiallylimited,ourfundsmayhavedifficultycompletingotherwiseprofitableacquisitionsormaygenerateprofitsthatarelowerthanwouldotherwisebethecase,eitherofwhichcouldleadtoadecreaseinourrevenues.Similarly,ourfunds’portfoliocompaniesregularlyutilizethecorporatedebtmarketsinordertoobtainfinancingfortheiroperations.Totheextentthatthecreditmarketsand/orregulatoryortaxchangesrendersuchfinancingdifficulttoobtain,moreexpensiveorotherwiselessattractive,thismayalsonegativelyimpactthefinancialresultsofthoseportfoliocompaniesand,therefore,theinvestmentreturnsonourfunds.Inaddition,totheextentthatmarketconditionsand/orregulatorychangesmakeitdifficultorimpossibletorefinancedebtthatismaturinginthenear-term,someofourfunds’portfoliocompaniesmaybeunabletorepaysuchdebtatmaturityandmaybeforcedtosellassets,undergoarecapitalizationorseekbankruptcyprotection.

A decline in the pace or size of investment made by our funds may adversely affect our revenues.

Therevenuesthatweearnaredriveninpartbythepaceatwhichourfundsmakeinvestmentsandthesizeofthoseinvestments,andadeclineinthepaceorthesizeofsuchinvestmentsmayreduceourrevenues.Manyfactors

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couldcausesuchadeclineinthepaceofinvestment,includinghighprices,theinabilityofourinvestmentprofessionalstoidentifyattractiveinvestmentopportunities,competitionforsuchopportunitiesamongotherpotentialacquirers,decreasedavailabilityofcapitalonattractivetermsandourfailuretoconsummateidentifiedinvestmentopportunitiesbecauseofbusiness,regulatoryorlegalcomplexitiesoruncertaintyandadversedevelopmentsintheU.S.orglobaleconomyorfinancialmarkets.Inaddition,anincreaseinthepaceatwhichourfundsexitinvestmentscouldreducethefeerevenueweearnifsuchexitsarenotoffsetbynewcommitmentsandinvestments.

Our revenue, earnings, net income and cash flow are all highly variable, which may make it difficult for us to achieve steady earnings growth on aquarterly basis and may cause the price of our common units to decline.

Ourrevenue,netincomeandcashflowareallhighlyvariable.Forexample,ourcashflowmayfluctuatesignificantlyduetothefactthatwereceivecarriedinterestfromourcarryfundsonlywheninvestmentsarerealizedandachieveacertainpreferredreturn.Inaddition,transactionfeesreceivedbyourcarryfundscanvarysignificantlyfromquartertoquarter.Wemayalsoexperiencefluctuationsinourresults,includingourrevenueandnetincome,fromquartertoquarterduetoanumberofotherfactors,includingchangesinthevaluationsofourfunds’investments,changesintheamountofdistributions,dividendsorinterestpaidinrespectofinvestments,changesinouroperatingexpenses,thedegreetowhichweencountercompetitionandgeneraleconomicandmarketconditions.Inparticular,economicandmarketconditionsmayleadtovolatilityinthemark-to-marketvaluationsofinvestmentsmadebyourfunds,particularlyinrespectofourpublicinvestments.Thevaluationsofinvestmentsmadebyourfundscouldalsobesubjecttohighvolatilityasaresultofuncertaintyregardinggovernmentalpolicywithrespectto,amongotherthings,tax,financialservicesregulation,internationaltrade,immigration,healthcare,labor,infrastructureandenergy.Achievingsteadygrowthinnetincomeandcashflowonaquarterlybasismaybedifficult,whichcouldinturnleadtolargeadversemovementsorgeneralincreasedvolatilityinthepriceofourcommonunits.

Thetimingandreceiptofcarriedinterestgeneratedbyourcarryfundsisuncertainandwillcontributetothevolatilityofourresults.Carriedinterestdependsonourcarryfunds’performanceandopportunitiesforrealizinggains,whichmaybelimited.Ittakesasubstantialperiodoftimetoidentifyattractiveinvestmen