Blackstone Inc. (BX) FY 2022 MD&A

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis should be read in conjunction with Blackstone Inc.’s consolidated financial statements and the related notes included within this Annual Report on Form 10-K.

This section of this Form 10-K generally discusses 2022 and 2021 items and year to year comparisons between 2022 and 2021. For the discussion of 2021 compared to 2020 see “Part II. Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” of Blackstone’s Annual Report on Form 10-K for the year ended December 31, 2021, which specific discussion is incorporated herein by reference.

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In this report, references to “Blackstone,” the “Company,” “we,” “us” or “our” refer to Blackstone Inc. and its consolidated subsidiaries.

Our Business

Blackstone is one of the world’s leading investment firms. Our business is organized into four segments: Real Estate, Private Equity, Credit & Insurance and Hedge Fund Solutions. For more information about our business segments, see “Part I. Item 1. Business — Business Segments.”

We generate revenue from fees earned pursuant to contractual arrangements with funds, fund investors and fund portfolio companies (including management, transaction and monitoring fees), and from capital markets services. We also invest in the vehicles we manage and we are entitled to a pro-rata share of the results of the vehicle (a “pro-rata allocation”). In addition to a pro-rata allocation, and assuming certain investment returns are achieved, we are entitled to a disproportionate allocation of the income otherwise allocable to the investors (“Performance Allocations”). In carry funds, such allocations are commonly referred to as carried interest. In certain structures, we receive a contractual incentive fee from an investment vehicle in the event that specified cumulative investment returns are achieved (an “Incentive Fee,” and together with Performance Allocations, “Performance Revenues”). The composition of our revenues will vary based on market conditions and the cyclicality of the different businesses in which we operate. Net investment gains and investment income generated by the Blackstone Funds are driven by value created by our operating and strategic initiatives as well as overall market conditions. Fair values are affected by changes in the fundamentals of our portfolio company and other investments, the industries in which they operate, the overall economy and other market conditions.

Business Environment

Blackstone’s businesses are materially affected by conditions in the financial markets and economic conditions in the U.S., Europe, Asia and, to a lesser extent, elsewhere in the world.

In 2022, the market environment was one of the most challenging since the global financial crisis as central banks around the world pursued monetary policy tightening amid high, persistent inflation. In the U.S., annual inflation reached 9.1% in June 2022 but subsequently declined to 6.5% in December 2022. In Eurozone economies, inflation reached 10.6% in October 2022 before decreasing to 9.2% in December 2022. The U.S. Federal Reserve raised the federal funds target range seven times over the course of 2022, beginning the year at 0.0%-0.25% and reaching 4.25%-4.50% in December. In February 2023, the Federal Reserve further raised the federal funds target range to 4.50%-4.75% and reiterated its anticipation that ongoing increases would be appropriate in order to return to the U.S. Federal Reserve’s long term inflation target of 2%. Economists expect inflation to continue moderating from 2022 highs, but remain above the U.S. Federal Reserve’s long run target of 2% for a period of time.

Despite monetary policy tightening, economic growth, employment rates and consumer health indicators have demonstrated resilience. The Bureau of Economic Analysis’ advance estimate of U.S. real GDP growth indicated growth of 2.1% in 2022, down from 5.9% in 2021. The U.S. unemployment rate remained at the pre-pandemic level of 3.5% in December 2022, down from 3.9% in December 2021, indicating a robust labor market. Retail sales increased 9.2% year-over-year in 2022, driven in part by higher prices. In manufacturing, however, the Institute for Supply Management Purchasing Managers’ Index decreased to 48.4 in December 2022, down from 58.8 in December 2021, signaling a contraction in the U.S. manufacturing sector for the first time since May 2020. While the U.S. economy demonstrated relative strength, other major economies experienced less robust fundamentals. In China, there was 0% economic growth in the fourth quarter of 2022 and 3% for the year – the second lowest level since 1976. Most economists believe an economic recession in 2023 is highly probable in the U.K., but somewhat less probable in the Eurozone.

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The S&P 500 declined 18% in 2022 with most sectors down for the year. The telecom sector experienced the largest decline, down 40%, while energy was the best performing sector, up 65%. The price of West Texas Intermediate crude oil increased 7% in 2022 to $80 per barrel, and remained at approximately that same level in February 2023. The Henry Hub Natural Gas spot price increased 20% to $4.48 during the year, but has subsequently fallen to $2.57 as of February 14, 2023.

Volatility increased materially as the CBOE Volatility Index rose 26% in 2022. Capital markets and transaction activity declined materially, with U.S. initial public offering volumes down 93% and U.S. announced merger and acquisition deal volumes down 43% compared to 2021.

The ten-year Treasury yield increased by 273 basis points to a fourteen-year high of 4.24% in October 2022 and ended the year lower at 3.87%. Since year end, the rate has risen slightly to 3.92% as of February 22, 2023. Meanwhile, short term rates remain on an upward trajectory as three-month LIBOR increased by 4.56% to 4.82% during 2022 and has since increased to 4.93% as of February 22, 2023.

In credit markets, the S&P leveraged loan index decreased by 0.6% and the Credit Suisse high yield bond index declined by 11% in 2022. High yield spreads widened by 144 basis points in 2022, while issuance decreased 77%.

While showing some recent signs of moderating in the U.S., inflation remains meaningfully elevated. In response, the Federal Reserve has indicated that it anticipates further interest rate increases will be appropriate in order to achieve inflation at the rate of two percent over the longer term. The economic consensus predicts multiple additional moderate interest rate increases in the remainder of 2023, with some economists predicting a first reduction by the end of 2023. The possibility of a period of economic slowdown or recession has contributed, and in the near term may continue to contribute, to market volatility.

Notable Transactions

On January 10, 2022, Blackstone issued $500 million aggregate principal amount of 2.550% senior notes due March 30, 2032 and $1 billion aggregate principal amount of 3.200% senior notes due January 30, 2052.

On June 1, 2022, Blackstone issued
€
500 million aggregate principal amount of 3.500% senior notes due June 1, 2034.

On June 3, 2022, Blackstone entered into an amended and restated $4.135 billion revolving credit facility. The amendment and restatement to the credit facility, among other things, increased the amount of available borrowings and extended the maturity date from November 24, 2025 to June 3, 2027.

On November 3, 2022, Blackstone issued $600 million aggregate principal amount of 5.900% senior notes due November 3, 2027 and a $900 million aggregate principal amount of 6.200% senior notes due April 22, 2033.

For additional information see Note 13. “Borrowings” in the “Notes to Consolidated Financial Statements” in “— Item 8. Financial Statements and Supplementary Data.”

Organizational Structure

Effective February 26, 2021, Blackstone effectuated changes to rename its Class A common stock as “common stock,” and to reclassify its Class B and Class C common stock into a new “Series I preferred stock” and “Series II preferred stock,” respectively. Each new stock has the same rights and powers of its predecessor. For additional information, see Note 1. “Organization” and Note 16. “Earnings Per Share and Stockholders’ Equity — Stockholders’ Equity” in the “Notes to Consolidated Financial Statements” in “— Item 8. Financial Statements and Supplementary Data” of this filing.

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Effective August 6, 2021, The Blackstone Group Inc. changed its name to Blackstone Inc. For additional information, see Note 1. “Organization” in the “Notes to Consolidated Financial Statements” in “— Item 8. Financial Statements and Supplementary Data.”

The simplified diagram below depicts our current organizational structure. The diagram does not depict all of our subsidiaries, including intermediate holding companies through which certain of the subsidiaries depicted are held.

Key Financial Measures and Indicators

We manage our business using certain financial measures and key operating metrics since we believe these metrics measure the productivity of our investment activities. We prepare our Consolidated Financial Statements in accordance with accounting principles generally accepted in the United States of America (“GAAP”). See “— Item 8. Financial Statements and Supplementary Data — Notes to Consolidated Financial Statements — Note 2. Summary of Significant Accounting Policies” and “— Critical Accounting Policies.” Our key non-GAAP financial measures and operating indicators and metrics are discussed below.

Distributable Earnings

Distributable Earnings is derived from Blackstone’s segment reported results. Distributable Earnings is used to assess performance and amounts available for dividends to Blackstone stockholders, including Blackstone personnel and others who are limited partners of the Blackstone Holdings Partnerships. Distributable Earnings is the sum of Segment Distributable Earnings plus Net Interest and Dividend Income (Loss) less Taxes and Related Payables. Distributable Earnings excludes unrealized activity and is derived from and reconciled to, but not equivalent to, its most directly comparable GAAP measure of Income (Loss) Before Provision (Benefit) for Taxes. See “— Non-GAAP Financial Measures” for our reconciliation of Distributable Earnings.

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Net Interest and Dividend Income (Loss) is presented on a segment basis and is equal to Interest and Dividend Revenue less Interest Expense, adjusted for the impact of consolidation of Blackstone Funds, and interest expense associated with the Tax Receivable Agreement.

Taxes and Related Payables represent the total GAAP tax provision adjusted to include only the current tax provision (benefit) calculated on Income (Loss) Before Provision (Benefit) for Taxes and including the Payable under the Tax Receivable Agreement. Further, the current tax provision utilized when calculating Taxes and Related Payables and Distributable Earnings reflects the benefit of deductions available to the company on certain expense items that are excluded from the underlying calculation of Segment Distributable Earnings and Total Segment Distributable Earnings, such as equity-based compensation charges and certain Transaction-Related Charges where there is a current tax provision or benefit. The economic assumptions and methodologies that impact the implied income tax provision are the same as those methodologies and assumptions used in calculating the current income tax provision for Blackstone’s Consolidated Statements of Operations under GAAP, excluding the impact of divestitures and accrued tax contingencies and refunds which are reflected when paid or received. Management believes that including the amount payable under the Tax Receivable Agreement and utilizing the current income tax provision adjusted as described above when calculating Distributable Earnings is meaningful as it increases comparability between periods and more accurately reflects earnings that are available for distribution to stockholders.

Segment Distributable Earnings

Segment Distributable Earnings is Blackstone’s segment profitability measure used to make operating decisions and assess performance across Blackstone’s four segments. Blackstone believes it is useful to stockholders to review the measure that management uses in assessing segment performance. Segment Distributable Earnings represents the net realized earnings of Blackstone’s segments and is the sum of Fee Related Earnings and Net Realizations for each segment. Blackstone’s segments are presented on a basis that deconsolidates Blackstone Funds, eliminates non-controlling ownership interests in Blackstone’s consolidated operating partnerships, removes the amortization of intangible assets and removes Transaction-Related Charges. Transaction-Related Charges arise from corporate actions including acquisitions, divestitures and Blackstone’s initial public offering. They consist primarily of equity-based compensation charges, gains and losses on contingent consideration arrangements, changes in the balance of the Tax Receivable Agreement resulting from a change in tax law or similar event, transaction costs and any gains or losses associated with these corporate actions. Segment Distributable Earnings excludes unrealized activity and is derived from and reconciled to, but not equivalent to, its most directly comparable GAAP measure of Income (Loss) Before Provision (Benefit) for Taxes. See “— Non-GAAP Financial Measures” for our reconciliation of Segment Distributable Earnings.

Net Realizations is presented on a segment basis and is the sum of Realized Principal Investment Income and Realized Performance Revenues (which refers to Realized Performance Revenues excluding Fee Related Performance Revenues), less Realized Performance Compensation (which refers to Realized Performance Compensation excluding Fee Related Performance Compensation and Equity-Based Performance Compensation).

Realized Performance Compensation reflects an increase in the aggregate Realized Performance Compensation paid to certain of our professionals above the amounts allocable to them based upon the percentage participation in the relevant performance plans previously awarded to them as a result of a compensation program that commenced during the three months ended June 30, 2021. For the full year 2022, Fee Related Compensation was decreased by the total amount of additional Performance Compensation awarded for the year. During the year ended December 31, 2022, Realized Performance Compensation was increased by an aggregate of $77.0 million and Fee Related Compensation was decreased by a corresponding amount. In the year ended December 31, 2021, Realized Performance Compensation was increased by an aggregate of $19.7 million and Fee Related Compensation was decreased by a corresponding amount. These changes to Realized Performance Compensation and Fee Related Compensation reduced Net Realizations, increased Fee Related

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Earnings and had a neutral impact to Income Before Provision (Benefit) for Taxes and Distributable Earnings in the years ended December 31, 2022 and December 31, 2021.

Fee Related Earnings

Fee Related Earnings is a performance measure used to assess Blackstone’s ability to generate profits from revenues that are measured and received on a recurring basis and not subject to future realization events. Blackstone believes Fee Related Earnings is useful to stockholders as it provides insight into the profitability of the portion of Blackstone’s business that is not dependent on realization activity. Fee Related Earnings equals management and advisory fees (net of management fee reductions and offsets) plus Fee Related Performance Revenues, less (a) Fee Related Compensation on a segment basis, and (b) Other Operating Expenses. Fee Related Earnings is derived from and reconciled to, but not equivalent to, its most directly comparable GAAP measure of Income (Loss) Before Provision (Benefit) for Taxes. See “— Non-GAAP Financial Measures” for our reconciliation of Fee Related Earnings.

Fee Related Compensation is presented on a segment basis and refers to the compensation expense, excluding Equity-Based Compensation, directly related to (a) Management and Advisory Fees, Net and (b) Fee Related Performance Revenues, referred to as Fee Related Performance Compensation.

Fee Related Performance Revenues refers to the realized portion of Performance Revenues from Perpetual Capital that are (a) measured and received on a recurring basis, and (b) not dependent on realization events from the underlying investments.

Other Operating Expenses is presented on a segment basis and is equal to General, Administrative and Other Expenses, adjusted to (a) remove the amortization of transaction-related intangibles, (b) remove certain expenses reimbursed by the Blackstone Funds which are netted against Management and Advisory Fees, Net in Blackstone’s segment presentation, and (c) give effect to an administrative fee collected on a quarterly basis from certain holders of Blackstone Holdings Partnership Units. The administrative fee is accounted for as a capital contribution under GAAP, but is reflected as a reduction of Other Operating Expenses in Blackstone’s segment presentation.

Adjusted Earnings Before Interest, Taxes and Depreciation and Amortization

Adjusted Earnings Before Interest, Taxes and Depreciation and Amortization (“Adjusted EBITDA”), is a supplemental measure used to assess performance derived from Blackstone’s segment results and may be used to assess its ability to service its borrowings. Adjusted EBITDA represents Distributable Earnings plus the addition of (a) Interest Expense on a segment basis, (b) Taxes and Related Payables, and (c) Depreciation and Amortization. Adjusted EBITDA is derived from and reconciled to, but not equivalent to, its most directly comparable GAAP measure of Income (Loss) Before Provision (Benefit) for Taxes. See “— Non-GAAP Financial Measures” for our reconciliation of Adjusted EBITDA.

Net Accrued Performance Revenues

Net Accrued Performance Revenues is a non-GAAP financial measure Blackstone believes is useful to stockholders as an indicator of potential future realized performance revenues based on the current investment portfolio of the funds and vehicles we manage. Net Accrued Performance Revenues represents the accrued performance revenues receivable by Blackstone, net of the related accrued performance compensation payable by Blackstone, excluding performance revenues that have been realized but not yet distributed as of the reporting date and clawback amounts, if any. Net Accrued Performance Revenues is derived from and reconciled to, but not equivalent to, its most directly comparable GAAP measure of Investments. See “— Non-GAAP Financial Measures” for our reconciliation of Net Accrued Performance Revenues and Note 2 “Summary of Significant Accounting Policies — Equity Method Investments” in the “Notes to Consolidated Financial Statements” in “— Item 8.

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Financial Statements and Supplementary Data.” for additional information on the calculation of Investments — Accrued Performance Allocations.

Operating Metrics

The alternative asset management business is primarily based on managing third party capital and does not require substantial capital investment to support rapid growth. Since our inception, we have developed and used various key operating metrics to assess and monitor the operating performance of our various alternative asset management businesses in order to monitor the effectiveness of our value creating strategies.

Total and Fee-Earning Assets Under Management

Total Assets Under Management refers to the assets we manage. We believe this measure is useful to stockholders as it represents the total capital for which we provide investment management services. Our Total Assets Under Management equals the sum of:

Our carry funds are commitment-based drawdown structured funds that do not permit investors to redeem their interests at their election. Our funds of hedge funds, hedge funds, funds structured like hedge funds and other open-ended funds in our Real Estate, Credit & Insurance and Hedge Fund Solutions segments generally have structures that afford an investor the right to withdraw or redeem their interests on a periodic basis (for example, annually, quarterly or monthly), typically with 2 to 95 days’ notice, depending on the fund and the liquidity profile of the underlying assets. In our Perpetual Capital vehicles where redemption rights exist, Blackstone has the ability to fulfill redemption requests only (a) in Blackstone’s or the vehicles’ board’s discretion, as applicable, or (b) to the extent there is sufficient new capital. Investment advisory agreements related to certain separately managed accounts in our Credit & Insurance and Hedge Fund Solutions segments, excluding our BIS separately managed accounts, may generally be terminated by an investor on 30 to 90 days’ notice. Our BIS separately managed accounts can generally only be terminated for long-term underperformance, cause and certain other limited circumstances, in each case subject to Blackstone's right to cure.

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Fee-Earning Assets Under Management refers to the assets we manage on which we derive management fees and/or performance revenues. We believe this measure is useful to stockholders as it provides insight into the capital base upon which we can earn management fees and/or performance revenues. Our Fee-Earning Assets Under Management equals the sum of:

Each of our segments may include certain Fee-Earning Assets Under Management on which we earn performance revenues but not management fees.

Our calculations of Total Assets Under Management and Fee-Earning Assets Under Management may differ from the calculations of other asset managers, and as a result this measure may not be comparable to similar measures presented by other asset managers. In addition, our calculation of Total Assets Under Management includes commitments to, and the fair value of, invested capital in our funds from Blackstone and our personnel, regardless of whether such commitments or invested capital are subject to fees. Our definitions of Total Assets Under Management and Fee-Earning Assets Under Management are not based on any definition of Total Assets Under Management and Fee-Earning Assets Under Management that is set forth in the agreements governing the investment funds that we manage.

For our carry funds, Total Assets Under Management includes the fair value of the investments held and uncalled capital commitments, whereas Fee-Earning Assets Under Management may include the total amount of capital commitments or the remaining amount of invested capital at cost depending on whether the investment period has expired or as specified by the fee terms of the fund. As such, in certain carry funds Fee-Earning Assets Under Management may be greater than Total Assets Under Management when the aggregate fair value of the remaining investments is less than the cost of those investments.

Perpetual Capital

Perpetual Capital refers to the component of assets under management with an indefinite term, that is not in liquidation, and for which there is no requirement to return capital to investors through redemption requests in the ordinary course of business, except where funded by new capital inflows. Perpetual Capital includes co-investment capital with an investor right to convert into Perpetual Capital. We believe this measure is useful to

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stockholders as it represents capital we manage that has a longer duration and the ability to generate recurring revenues in a different manner than traditional fund structures.

Dry Powder

Dry Powder represents the amount of capital available for investment or reinvestment, including general partner and employee capital, and is an indicator of the capital we have available for future investments. We believe this measure is useful to stockholders as it provides insight into the extent to which capital is available for Blackstone to deploy capital into investment opportunities as they arise.

Invested Performance Eligible Assets Under Management

Invested Performance Eligible Assets Under Management represents invested capital at fair value, including capital closed for funds whose investment period has not yet commenced, on which performance revenues could be earned if certain hurdles are met. We believe Invested Performance Eligible Assets Under Management is useful to stockholders as it provides insight into the capital deployed that has the potential to generate performance revenues.

Recent Tax Developments

Recent and future changes to tax laws and regulations may create uncertainty for our business and investment strategies and could have an adverse impact on us. For example, the recently enacted Inflation Reduction Act imposes, among other things, a minimum “book” tax on certain large corporations and creates a new excise tax on net stock repurchases made by certain publicly traded corporations after December 31, 2022. While the application of this new law is uncertain and we continue to evaluate its potential impact, these changes could materially change the amount and/or timing of tax Blackstone Inc. may be required to pay. For further discussion of potential consequences of changes in tax regulations, please see “— Item 1A. Risk Factors – Risks Related to Our Business – Changes in U.S. and foreign taxation of businesses and other tax laws, regulations or treaties or an adverse interpretation of these items by tax authorities could adversely affect us, including by adversely impacting our effective tax rate and tax liability.”

Consolidated Results of Operations

Following is a discussion of our consolidated results of operations. For a more detailed discussion of the factors that affected the results of our four business segments (which are presented on a basis that deconsolidates the investment funds, eliminates non-controlling ownership interests in Blackstone’s consolidated operating partnerships and removes the amortization of intangibles assets and Transaction-Related Charges) in these periods, see “—Segment Analysis” below.

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The following table sets forth information regarding our consolidated results of operations and certain key operating metrics for the years ended December 31, 2022, 2021 and 2020:

n/m Not meaningful.

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Year Ended December 31, 2022 Compared to Year Ended December 31, 2021

Revenues

Revenues were $8.5 billion for the year ended December 31, 2022, a decrease of $14.1 billion, or 62%, compared to $22.6 billion for the year ended December 31, 2021. The decrease in Revenues was primarily attributable to a decrease of $15.6 billion in Investment Income (Loss), which is composed of decreases of $15.1 billion in Unrealized Investment Income (Loss) and $425.3 million in Realized Investment Income (Loss).

The $15.1 billion decrease in Unrealized Investment Income (Loss) was primarily attributable to net unrealized depreciation of investments in the year ended December 31, 2022 compared to net unrealized appreciation of investment holdings in the year ended December 31, 2021 in the segments. Principal drivers of the decrease were:

The $425.3 million decrease in Realized Investment Income (Loss) was primarily attributable to lower realized gains in our Private Equity segment, offset by higher realized gains in our Real Estate segment.

The $1.1 billion increase in Management and Advisory Fees, Net was primarily due to increases in our Real Estate and Credit & Insurance segments of $570.8 million and $455.8 million, respectively. The increase in our Real Estate segment was primarily due to Fee-Earning Assets Under Management growth in Core+ real estate. The increase in our Credit & Insurance segment was primarily due to an increase in inflows in BCRED.

Expenses

Expenses were $5.0 billion for the year ended December 31, 2022, a decrease of $4.5 billion, compared to $9.5 billion for the year ended December 31, 2021. The decrease was primarily attributable to a decrease of $4.8 billion in Total Compensation and Benefits, composed of a decrease of $5.3 billion in Performance Allocations Compensation and an increase of $407.8 million in Compensation. The decrease in Performance Allocations Compensation was primarily due to the decrease in Investment Income (Loss) – Performance Allocations, on which a portion of Performance Allocations Compensation is based.

Other Income (Loss)

Other Income (Loss) was $(82.9) million for the year ended December 31, 2022, a decrease of $541.7 million, compared to $458.9 million for the year ended December 31, 2021. The decrease in Other Income (Loss) was due to a decrease of $566.8 million in Net Gains (Losses) from Fund Investment Activities, partially offset by an increase of $25.0 million in Change in Tax Receivable Agreement Liability.

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The decrease in Net Gains (Losses) from Fund Investment Activities was principally driven by decreases of $265.4 million, $159.8 million and $111.2 million in our Private Equity, Real Estate and Hedge Fund Solutions segments, respectively. The decrease in our Private Equity segment was primarily due to unrealized depreciation and lower realized gains of investments in our consolidated private equity funds. The decreases in our Real Estate and Hedge Fund Solutions segments were primarily due to unrealized depreciation of investments in our consolidated real estate and hedge fund solutions funds.

The increase in Change in Tax Receivable Agreement Liability was primarily attributable to a change in our state tax apportionment.

Provision (Benefit) for Taxes

Blackstone’s Provision for Taxes for the year ended December 31, 2022 was $472.9 million, a decrease of $711.5 million, compared to $1.2 billion for the year ended December 31, 2021. This resulted in an effective tax rate of 13.7% and 8.7% based on our Income Before Provision for Taxes of $3.5 billion and $13.6 billion for the years ended December 31, 2022 and 2021, respectively.

The increase in Blackstone’s effective tax rate for the year ended December 31, 2022, compared to the year ended December 31, 2021, resulted primarily from recent increases in Blackstone’s state tax provisions for the jurisdictions in which it operates and larger benefits recorded in December 31, 2021 for valuation allowance releases.

During the year ended December 31, 2022, Blackstone recorded an out-of-period adjustment to revise the book investment basis used to calculate deferred tax assets and the deferred tax provision. The cumulative impact of the correction related to prior years resulted in a decrease in the Provision for Taxes and a corresponding increase to Deferred Tax Assets for the year ended December 31, 2022.

Additional information regarding our income taxes can be found in “— Item 8. Financial Statements and Supplementary Data — Notes to Consolidated Financial Statements — Note 15. Income Taxes” of this filing.

Non-Controlling Interests in Consolidated Entities

The Net Income Attributable to Redeemable Non-Controlling Interests in Consolidated Entities and Net Income Attributable to Non-Controlling Interests in Consolidated Entities is attributable to the consolidated Blackstone Funds. The amounts of these items vary directly with the performance of the consolidated Blackstone Funds and largely eliminate the amount of Other Income (Loss) — Net Gains (Losses) from Fund Investment Activities from the Net Income (Loss) Attributable to Blackstone Inc.

Net Income Attributable to Non-Controlling Interests in Blackstone Holdings is derived from the Income Before Provision (Benefit) for Taxes at the Blackstone Holdings level, excluding the Net Gains (Losses) from Fund Investment Activities and the percentage allocation of the income between Blackstone personnel and others who are limited partners of Blackstone Holdings and Blackstone after considering any contractual arrangements that govern the allocation of income such as fees allocable to Blackstone.

For the years ended December 31, 2022 and 2021, the Net Income Before Taxes allocated to Blackstone personnel and others who are limited partners of Blackstone Holdings was 39.7% and 41.3%, respectively. The decrease of 1.6% was primarily due to the conversion of Blackstone Holdings Partnership Units to shares of common stock and the vesting of shares of common stock.

The Other Income (Loss) — Change in Tax Receivable Agreement Liability was entirely allocated to Blackstone Inc.

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Operating Metrics

Total and Fee-Earning Assets Under Management

The following graphs and tables summarize the Fee-Earning Assets Under Management by Segment and Total Assets Under Management by Segment, followed by a rollforward of activity for the years ended December 31, 2022, 2021 and 2020. For a description of how Assets Under Management and Fee-Earning Assets Under Management are determined, please see “—Key Financial Measures and Indicators — Operating Metrics — Total and Fee-Earning Assets Under Management.”

Note: Totals may not add due to rounding.

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Fee-Earning Assets Under Management

Fee-Earning Assets Under Management were $718.4 billion at December 31, 2022, an increase of $68.4 billion, or 11%, compared to $650.0 billion at December 31, 2021. The net increase was due to:

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Total Assets Under Management

Total Assets Under Management were $974.7 billion at December 31, 2022, an increase of $93.8 billion, or 11%, compared to $880.9 billion at December 31, 2021. The net increase was due to:

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Dry Powder

The following presents our Dry Powder as of December 31 of each year:

Note:     Totals may not add due to rounding.

Net Accrued Performance Revenues

The following table presents the Accrued Performance Revenues, net of performance compensation, of the Blackstone Funds as of December 31, 2022 and 2021. Net Accrued Performance Revenues presented do not include clawback amounts, if any, which are disclosed in Note 19. “Commitments and Contingencies — Contingencies — Contingent Obligations (Clawback)” in the “Notes to Consolidated Financial Statements” in “—Item 8. Financial Statements and Supplementary Data” of this filing. See “— Non-GAAP Financial Measures” for our reconciliation of Net Accrued Performance Revenues.

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Note:     Totals may not add due to rounding.

For the year ended December 31, 2022, Net Accrued Performance Revenues receivable decreased due to net realized distributions of $3.5 billion, partially offset by net performance revenues of $1.6 billion.

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Invested Performance Eligible Assets Under Management

The following presents our Invested Performance Eligible Assets Under Management as of December 31 of each year:

Note:     Totals may not add due to rounding.

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Perpetual Capital

The following presents our Perpetual Capital Total Assets Under Management as of December 31 of each year:

Note:     Totals may not add due to rounding.

Perpetual Capital Total Assets Under Management were $371.1 billion as of December 31, 2022, an increase of $57.8 billion, or 18%, compared to $313.4 billion as of December 31, 2021. Perpetual Capital Total Assets Under Management in our Real Estate, Credit & Insurance and Private Equity segments increased $32.1 billion, $13.9 billion and $12.1 billion, respectively. Principal drivers of these increases were:

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Investment Records

Fund returns information for our significant funds is included throughout this discussion and analysis to facilitate an understanding of our results of operations for the periods presented. The fund returns information reflected in this discussion and analysis is not indicative of the financial performance of Blackstone and is also not necessarily indicative of the future performance of any particular fund. An investment in Blackstone is not an investment in any of our funds. There can be no assurance that any of our funds or our other existing and future funds will achieve similar returns.

The following tables present the investment record of our significant carry/drawdown funds and select perpetual capital strategies from inception through December 31, 2022:

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Carry/Drawdown Funds

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