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Understanding Blackstone’s Total Expenses

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Significant rise

The Blackstone Group (BX) incurred total expenses of $2.7 billion in the first nine months of 2017, compared to $2.1 billion in the same period of 2016.

The difference mainly implies a rise in the fund’s expenses contributed to by its credit division. This rise has mainly been the result of new collateralized loan obligations (or CLOs).

Blackstone incurred compensation expenses of $1.07 billion in the first three quarters of 2017, compared to $1.03 billion in the same period of 2016.

Blackstone’s interest expenses rose 10% in the first nine months of 2017, compared to the same period in 2016.

On a trailing-12-month basis, while Blackstone posted a return on assets (or ROA) of 12.0%, peers (XLF) Greenhill & Co. (GHL), Brookfield Asset Management (BAM), and CBRE Group (CBG) posted ROAs of 5.5%, 1.5%, and 7.1%, respectively.

Performance fee compensation

Blackstone’s performance fee compensation rose $526.3 million on a YoY (year-over-year) basis in the first three quarters of 2017, implying a rise in performance fee revenues related to its private equity, real estate, and hedge fund solution divisions.

Blackstone saw net gains related to its fund investment activities of $239.6 million in the first nine months of 2017, compared to $111.2 million in the first nine months of 2016, mainly reflecting positive momentum in the real estate, credit, and private equity divisions. This momentum was seen in the credit division due to new CLOs.

Blackstone incurred general, administrative, and other expenses of $337 million in the first nine months of 2017, compared to $378.3 million in the same period of 2016.

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