Blackstone Inc (BX) 2011 Q4 法說會逐字稿

Welcome to The Blackstone Group's fourth-quarter and year-end 2011 earnings conference call.

Our speakers today are Stephen A.

Schwartzman, Chairman, CEO, and Cofounder; Tony James, President and Chief Operating Officer; Laurence Tosi, Chief Financial Officer and Joan Solotar, Senior Managing Director, External Relations and Strategy.

And now, I'd like to turn the call over to Joan Solotar.

Please proceed.

Great.

Thank you.

Good morning, everybody, and welcome to Blackstone's fourth-quarter 2011 conference call.

I am here today with Steve Schwarzman, Chairman and CEO; Tony James, President and Chief Operating Officer; and Laurence Tosi, CFO.

So earlier this morning we issued a press release which, hopefully, you have had time to go through and it's available on our website if you have not.

We expect to file the 10-K Report at the end of the month.

So I would like to remind you that today's call may include forward-looking statements which are uncertain and out of the firm's control.

Actual results may differ materially.

For a discussion of some of the risks that could affect our results, please see the Risk Factors section of the 10-K.

We don't undertake any duty to update forward-looking statements and we will refer to non-GAAP measures on the call and reconciliations of those can be found in the press release.

The audiocast is copyrighted material of Blackstone and can't be duplicated, reproduced or rebroadcast without consent.

So, we reported economic net income or ENI of $0.40 per unit for the fourth quarter.

That is up sequentially from $0.31 in the third quarter and compares with 46% in the fourth quarter of 2010.

The sequential improvement reflected mostly a sharp increase in Performance Fees and Investment Income.

That was across all of our investing businesses as well as an increase in Management and Advisory Fees.

We reported ENI roughly flat at $1.25 per unit for the year and that compared with $1.28 in 2010.

Terms of distributable earnings for the fourth quarter, those were $0.16 per common unit and that brings the full year distributable earnings to $0.60 per common unit, which is basically flat with the prior year as well.

We will be paying $0.22 to common unit holders as it relates to the first quarter as a true up less the holdback and that brings the full year distribution to $0.52.

I just wanted to touch on one other item because I think there was a little bit of confusion in some of the research reports that came out and probably wasn't totally clear in our press release.

But when you look at the Hedge Fund Solutions unit, it includes the Asian Advisors business which we actually sold.

So it shows net inflows at $271.5 million but those are not BAAM net inflows.

Those were actually $1.2 billion.

Those do not include inflows as of January 1.

There were no redemptions as of January 1 so that is a really clean number, and there were some reports saying that BAAM showed some slowed growth.

But in the fourth quarter that actually was not the case.

So as always, if you have other questions, please feel free to reach out to me or to Weston Tucker after the call, and with that I will turn it over to Steve.

Good morning.

In the fourth quarter, global markets rebounded significantly from third-quarter levels, capping a volatile year that was dominated by geopolitical disruptions, tsunamis, and macroeconomic uncertainties.

The Global Index recovered 7% in the quarter, led by US and European markets although it finished down 8% for 2011.

In the US, as you know, the S&P 500 finished the year perfectly flat.

Investor sentiment that had been influenced for much of the second half of the year by the escalating European sovereign crisis responded favorably to improving economic data late in the year, including jobs and housing statistics, two of the country's most critical areas and also some improvement with liquidity in the ECB.

Although unemployment remains elevated, we exited 2011 with the lowest stated unemployment rate in three years although as you know it only counts people who are unemployed for six months and doesn't count them afterwards.

Moving into 2012, while market performance certainly has been encouraging, several key issues remain unresolved.

The current unemployment rate does not capture as I mentioned the number of people who have given up looking for work, are working part-time and, therefore, in reality the numbers are much higher.

The implementations of austerity around the globe continued deleveraging could significantly track economic growth, particularly in Europe.

And the political landscape in the US will likely be dominated by the upcoming elections with little headway expected in resolving the budget deficit problem.

But the avoidance of the US recession and the continued positive corporate earnings growth should drive the recovery slowly forward.

The need for a strong and diversified general partner to help navigate the perilous market backdrop we have seen to generate returns has never been so apparent.

Our limited partner investors, which includes the largest state and public pension funds, representing 23 million pensioners in the United States alone, which is about half of all pensioners, continues to affirm their confidence in us and rely on us to help them meet their obligations.

Our LPs recognize that each of our complementary businesses is a leader in its respective market and each continues to strengthen its competitive position and there is currently no firm with that kind of array like Blackstone.

We reported meaningful net inflows in every business and ended 2011 with record fee earning assets of $137 billion, up 25% year over year.

And that is in a world where markets were flat in the US and down significantly abroad.

We were up 25% in terms of assets.

If we include commitments which are not yet earning fees as well as the assets of Harbor Master which closed January 5 and our share of Patria where we own 40% of the company, Blackstone's pro forma fee earning AUM would be $160 billion.

Across the firm we invested or committed a near record $16 billion in 2011 as Tony mentioned on our earlier press call, on behalf of our investors from our various drawdown funds and we returned $9 billion.

We expect this to increase as markets improve, driving us closer to a more normalized level of earnings power.

With that I would like to turn to a discussion of our five businesses.

Private Equity, our diversified portfolio, is performing quite well in this turbulent environment.

Our companies are estimating 10% to 12% revenue growth for the full year, and 8% to 10% growth in EBITDA which is really pretty strong.

The carrying value of our contributed funds increased 3% in the fourth quarter despite a negative foreign-exchange impact.

The dollar gained against the euro and other major currencies.

Our portfolio was up 5% for the full year beating the Global Index by 13 percentage points.

Over the last 10 quarters, our portfolio has risen over 50%.

We invested $1.6 billion in the fourth quarter, including two previously announced transactions, [BOBOV], a leading healthcare information technology company and a significant minority investment in Leica Cameras, the premium high-end German camera, and [Sports Optics Manufacturer], terrific product you ought to try and buy some.

We are actually sold out.

They are tough to get.

In case of Leica, the Company sought an experienced partner with a global footprint to help accelerate its international expansion plans and strengthen operational capabilities, including increasing the size of their factories.

Leica was an opportunity available exclusively to Blackstone, as was the case with the majority of our investments in 2011.

For the full year we invested or committed $4.8 billion in Private Equity and 80% of our new investments were proprietary transactions.

Other recent investment activities focused on energy, platform buildups and certain non-cyclicals.

Our dedicated Energy Fund is now $1.3 billion in size and we have invested jointly across both our BCP VI and Energy Fund and by transactions for approximately $1 billion in total equity.

We have also recently invested $150 million to repurchase portfolio company debt.

Fully realized debt purchases within BCP V have generated realized gross IRR of 205% over the past two years.

So this has been a very attractive use of capital for our fund investors.

With regard to the environment for new financings, investor caution increased sharply in the third quarter of last year.

But this has abated quite a bit in the US due to strong fund inflows and recent encouraging signs in the economy and markets.

While it continues to be challenging to raise more than $4 billion to $5 billion of debt to finance an LBO in the United States, we currently have a functioning credit market here with deals getting priced reasonably.

The faults and base rates remain at historic lows although spreads continue to be above mid-cycle norms.

On balance, though, this creates a relatively attractive cost of financing for institutional money.

The European credit outlook on the other hand is much more bearish, due to limited capital availability, banking system concerns and the weaker economic outlook.

The environment for realizations is up and down.

We have had $160 million of realizations in the fourth quarter, primarily in BCP V which is not yet earning carry.

For the full year, however, we had $4.5 billion in realizations in Private Equity across both contributed and noncontributed funds at an average of 2.4 times our invested capital.

Just to repeat that comment, that is 2.4 times our investment -- invested capital in a world where basically stocks have been flat for 10 years.

This was primarily the result of strategic sales, although we did successfully execute five IPOs and one follow-on equity offering in 2011 before turbulent market conditions in the second half of the year caused us to pull back.

Depending on conditions in 2012, we are planning to bring several more companies to market this year.

Moving onto Real Estate where we are the global leader in opportunistic investing, now with $43 billion total assets under management including our opportunistic funds as well as our debt strategy business.

Despite the volatility in the global economy and public markets, operating fundamentals remained healthy across all of our property types.

Our key office markets are benefiting from historically low new supply.

Some cases, in many markets, virtually none.

Combined with slow but steady growth in GDP and employment which has resulted in increasing occupancy in rents, we are seeing similar trends of positive absorption and declining vacancy in our industrial, retail, and senior living assets.

And hospitality trends remain positive with US industry RevPar up 8% for both the fourth quarter and the full year.

We feel very good about the condition of our portfolio and its carrying value rose 3% in the fourth quarter and 17% for the full year.

Improving operating fundamentals drove an increase in the carrying value of every segment of our portfolio.

We have been very successful in our fundraising this year and to date we have closed on over $6 billion for our most recent global Real Estate fund, we are up [7], which we believe is quite an accomplishment given the ongoing market turbulence.

More importantly the fundraising should be completed this year and we remain highly confident that it will exceed the size of our last $10 billion fund.

Our investment pace has been very robust and we have deployed $1.5 billion from the new fund in the past five months.

For the full year, 2011 we invested or committed a total of $8 billion of equity.

Our primary focus remains bankruptcies, overleveraged or distressed situations and non-core asset sales.

Notable recent transactions include diversified portfolio of global assets from a US bank and a set of high-quality suburban office properties.

A second portfolio of grocery-anchored shopping centers and a portfolio of distressed loans on trophy real estate assets in the US purchased from a European bank.

All are being purchased at a significant discount to replacement cost.

While European banks have been slower than expected to sell assets at market clearing prices, the need for meaningful deleveraging is clear.

They are becoming more open and willing to transact.

This, along with the volume of troubled commercial real estate loans already in the system or coming due in the next few years, should drive a very active pipeline of attractive opportunities for us for the foreseeable future.

We expect an opportunity set many times the size of the market's current supply of opportunistic capital.

Competition on the largest sized transactions, we like to focus, remains limited.

Given the radically altered competitive environment, we will have the largest pool of discretionary capital for opportunistic real estate in the world.

Moving on to BAAM, our customized solutions in the Hedge Fund area, last year was a challenging year, as you know, for hedge funds.

Given market volatility and correlations for example, the [Heffrey] fund to funds composite in particular had net outflows of $7.9 billion and a negative return of 6%.

Our business on the other hand thrived as our institutional clients continue to view us as a critical partner helping them protect and grow their capital, particularly in this turbulent and uncertain market environment.

Since the inception of our business over 20 years ago, we have continually delivered liquidity, low volatility and attractive risk-adjusted returns.

And our client-centric problem-solving approach has supported a unique and deep cultured innovation and partnership allowing us to tailor specific customized strategies and risk return profiles rather than just marketing off the shelf products.

Despite the fact that the fourth quarter is a primary redemption quarter for BAAM and almost all hedge fund investors, we had net inflows of $1.2 billion for the quarter.

This brings us to $7.5 billion in net inflows for the full year, which is our second best year ever.

This consisted of record gross inflows of $9.7 billion.

That is almost $10 billion of inflows in BAAM -- partly offset by $2.2 billion in redemptions -- and all of these numbers exclude additional inflows January 1 of roughly $250 million.

In terms of returns our composite gross return was 2% in the fourth quarter.

For the full year we had a slight negative return of 1%, outperforming benchmarks with substantially less volatility as we were able to preserve investor capital through our broad strategy of diversification and manager selection.

Our solid performance and significant inflows resulted in record total assets under management as of January 1 of $40.8 billion, up 20% year over year.

And I remember when we asked [Tom Hill] to take over this business I guess it was somewhere around the year 2000, and we had less than $1 billion of assets at that time.

So it's growth of about 40 times in 12 years.

Moving on to our credit platform GSO, which continued its impressive record of growth and execution in the fourth quarter.

On January 5 as I mentioned we closed the landmark acquisition of Harbor Master, adding $10 billion to our AUM.

We believe this acquisition makes us the largest global senior loan manager as well as the largest non-bank lender to non-investment-grade corporate borrowers in Europe.

Given the deficiency of capital that is likely to persist in Europe for the next several years, we are exceptionally well-positioned to provide critical funding and solutions to capitalize on the inevitable bank deleveraging.

We anticipate launching several new funds and strategies in the region from this foundation.

Our mezzanine and rescue lending drawdown funds have been very active against a backdrop of market dislocation and heightened caution by traditional lenders, providing much-needed capital in the capital constrained world.

We deployed nearly half of our rescue lending capital since the S&P downgrade of the US credit rating which is pretty amazing and shows how vulnerable markets are and how -- with the current levels of volatility, and we are now over 70% invested or committed in this fund.

While there are recycling provisions that will extend capital availability, we have started the marketing process for our second rescue lending fund.

In early November, we completed the investment period for our first flagship mezzanine fund and we launched our second mezzanine fund.

We expect this second fund, which is twice the size of our first, to hit its $4 billion cap with its final month -- final close this month.

Our mezzanine and rescue lending funds have both performed quite well generating gross annualized return of 23% and 21% respectively since inception.

For those of you who know about mezzanine, mezzanine returns virtually never get into the 20s.

Most people expect them to be mid- to lower teens.

So there is enormous outperformance there.

Finally, our credit-oriented hedge funds outperformed benchmarks, up 4% gross in the fourth quarter and 9% for the full year.

That is again compared to a flat stock market so 9% is looking pretty good and we have experienced net inflows of nearly $500 million in the fourth quarter.

Nearly all of our fee earning assets are above high water marks and will earn performance fees with positive results.

In our Advisory segment, revenues declined modestly in the fourth quarter from record performance last year.

However, revenues were up 43% from the third quarter.

In our M&A business despite slowing industry volumes the second half of last year, the fourth quarter was our second best quarter in history, beaten only by the fourth quarter of 2010.

The 2012 outlook is very strong with great diversity in industry and geography, a result of the investments we have made in the business over the past few years.

In restructuring, despite its slow 2011 for most industry participants, we remained very busy and fourth-quarter revenues increased over last year.

And finally at Park Hill, our placement agent business, revenues rose over last year as our clients increasingly look for an experienced partner to ensure effective fundraising in a difficult fundraising environment.

In summary, current investing conditions remain challenged by an uncertain macroeconomic, political, and regulatory environment.

Institutional investors are increasingly looking for stable long-term partners to generate higher returns and protect against the volatility and slow growth we are seeing across much of the world.

As the only manager that has delivered industry-leading performance across the diverse set of businesses we operate in -- which is credit, hedge funds, real estate, and private equity, I believe we are in an exceptional position to continue to grow and outperform, driving strong returns over the long term for our public market investors.

With that I would like to turn the call over to Laurence Tosi, LT.

That's an appropriate name given that the Giants are going to the Super Bowl.

Thank you, Steve.

Although I am a Patriots fan.

I appreciate the thought.

Good morning, everyone, and thank you for joining the call.

In 2011 Blackstone extended our unbroken streak of AUM growth every year since inception with an average growth rate of 27% over the past 15 years.

Besides consistency, Blackstone's growth is also notable for its diversity and scale.

In 2011, we had $29 billion of net inflows as every one of our investment businesses grew in the double digits.

Equally significant are the positive dynamics driving that growth.

Today we are benefiting from institutional investors consolidating their alternative managers in order to maintain best in class returns.

In fact, 73% of our fund investors invest in more than one Blackstone business.

A second positive trend is the increasing amount of capital coming from global sources.

For example almost 50% of the capital commitments to BCP VI originated outside North America, up from just 21% in BCP IV.

Other Blackstone businesses have seen similar trends.

Blackstone's asset growth and performance are and will be the key drivers behind our financial performance.

Fee revenues rose 15% year-over-year and performance fees rose 27% to $1.2 billion, resulting in record total revenues of $3.3 billion.

While our performance fee revenues reflect strong momentum, they are still lower than precrisis peaks when the firm had less than half the level of assets we do today.

Economic net income of $1.4 billion was basically flat for the full year as we held expense and compensation ratios in line and generated solid 48% pretax margins.

We again achieved almost $700 million in distributable earnings despite a more muted environment for realizations in the second half of 2011.

Net fee related earnings were up 14% for the year despite sharply higher marketing and business development expenses, our continued aggressive international portfolio operation expansion, and increased funding costs.

Exiting 2011 we remained busy with our key growth initiatives.

In our fourth-quarter results, you will see increased contributions from GSO as we acquired the remaining 15% profits [interstake] of the GSO partners, a full year earlier than we originally expected.

The decision reflects our confidence in the GSO team and the strategic positioning of being a provider of financing solutions and credit management in a postcrisis world where the traditional sources of capital remain greatly diminished.

For 2011, it is also notable that GSO distributable earnings grew close to 50% and contributed nearly 20% of Blackstone's distributable earnings for the year.

Importantly, GSO contributed more than 60% of the firm's realized performance fees, demonstrating its lack of correlation to equity markets and it is indicative of a more balanced and diverse Blackstone.

As Steve mentioned, we closed the acquisition of Harbor Master and its $10 billion of AUM in the first week of January.

And as such, the full year results of Harbor Master will materially impact GSO earnings for 2012.

Additionally, in the fourth quarter as Joan mentioned we completed the divestiture of our non-core long only Asia Advisors business to Aberdeen which reduced our Hedge Fund Solutions segment fee-earning assets and net inflows by $1 billion, but with minimal impact to our financial performance.

On a go forward basis, our Hedge Fund Solutions segment will solely reflect the performance of BAAM.

BAAM's net inflows in the fourth quarter were over $1.2 billion, bringing the full year total to $7.5 billion.

We ended the quarter with cash and liquid investments of $1.6 billion, illiquid investments of $2.1 billion and net accrued performance fees of $1.5 billion which equates collectively to $4.72 per unit in combined value.

S&P and Fitch recently affirmed our A, A+ ratings -- the highest in the industry.

Looking forward to 2012, there are a number of key forward indicators of financial performance for Blackstone for you to think about.

The consistent high growth of our management fee paying assets to record levels will generate a steady stream of predictable cash earnings, which exceeded $500 million in 2011.

In addition, our accrued net performance fees of $1.5 billion should convert to cash earnings as improving markets create more opportunities for both value creation and realizations.

At the end of the year, Blackstone had $34 billion of assets earning performance fees and $78 billion more of committed assets eligible for performance fees, which positions us well as we work to convert unrealized value into realized cash gains for our fund investors and unitholders.

Everyone at Blackstone is excited about 2012.

We see compelling investment opportunities across our businesses and around the world.

We have record levels of dry powder to invest and we will continue to leverage the investments we have made in our platform to originate opportunities, create sustainable value, and drive returns for our investors.

On behalf of everyone at Blackstone, we thank you for your time in joining the call and will take any questions that you have.

(Operator Instructions).

Bill Katz with Citigroup.

Good morning, everybody.

Just going back to the discussion around the consolidation with the GPs and the LPs, just maybe two questions.

One is, are you still seeing or sensing allocations going up to the alternative group in general or is there a denominator effect here, just given the market dynamics, that could slow the amount of money coming in?

And then, the second question is as these LPs are consolidating, is there any material give up in the net economics of these mandates?

I'll handle that pretty quickly.

In terms of allocations going up, the answer is yes.

The problem that the LPs have is really hitting their actuarial assumptions and you can't do that as much as they would have liked to in equities and even most of the debt products are below -- and significantly below -- their actuarial assumptions of roughly 8%.

The alternatives are almost the only class of investments that will get you there.

And consequently, increasing commitments to alternatives is happening pretty widely as an occasional exception of someone who is way ahead of where they should be, but it's very much across the board.

LPs are consolidating relationships for a lot of reasons.

One is performance.

As people fall down in performance, they are being eliminated.

The LPs are also looking to get some economies of scale as they are looking to even lower some of their own costs internally.

There is a little bit of fee compression that goes on as part of that, but with some of the best-known managers in the world getting larger and larger allocations from these institutional investors, it is a good arrangement for everyone.

Thank you.

And then just two quick follow-ups to LT perhaps.

I noticed the other expenses jumped pretty markedly sequentially.

I am sort of curious is that related maybe to the acceleration of the buyback -- the residual in the [shift of GSO] and then could you frame out the accretion you anticipate from Harbor Master, [all else being equal]?

Let me take the first one.

Your judgment of other expenses.

The reason why the other expenses was up was really because this was a very busy year really for business development and so if you back that out, our growth in core expenses is equal to the net fee related earnings for us there was about 15%.

So that answers that question.

And it is not impacted by the change in GSO.

The change in GSO is really we were accounting for their profit interests take as compensation expense.

So what you'll see there is a drop in their compensation expense ratio.

So it didn't affect earnings, it didn't affect other expenses, it just affected the compensation ratio.

With respect to Harbor Master, we disclosed the amount of the transaction which was about $153 million US.

We do think it will be accretive in 2012 across the various measures particularly the net fee-related earnings because it is a CLO business so it is a fee heavy business.

Okay.

Thanks for taking all my questions.

Matt Kelley with Morgan Stanley.

Good morning.

I was just hoping you could give us a little bit more color about the European deleveraging opportunity.

If you could just in your mind how you could benefit, which types of funds you expect to raise and how big and when this could actually come through the bottom line?

It's Tony and I will take that one, I guess.

I think we are set up with $33 billion in dry powder to take advantage of the opportunities right now without having to raise more funds.

As we put that to work, obviously that picture will change, but we have got plenty of money in real estate for Europe and we have got plenty of money in -- we have got a brand-new mezzanine fund at $4 billion we just closed.

We are in the market with Capital Solutions, our rescue financing fund now.

That's financing --.

And we expect to have a very significant funds raised there any way.

And then of course we just started a brand-new private equity fund with $16 billion.

So I think we are extremely well poised to take advantage of Europe without having to fundraise which is good, because I think we are going to have a bit of a golden moment here to be dealing with the deleveraging pressures of Europe.

And, frankly, the economy, we think, is going to be slow there.

So it is a good time to jump in.

And if we had to fundraise that takes a year or two.

I think there is a reasonable chance people that are fundraising around the opportunity will miss the opportunity.

So when that -- when the added -- so I don't know.

I can't really, Matt, I can't really answer your question when the added fund raising will flow through the P&L because I think the first thing we have got to do is put the money to work that we have.

Just one note on that.

In credit, in mezzanine and in the rest of financing funds, we don't get any management fees.

It is not even in our fee earning yet until that money is invested.

So, even though that money is raised, as you said investing in Europe or elsewhere, it will start to flow into both our fee earning AUM and into our management fees.

Great.

Thank you.

One follow-up for me on real estate specifically.

Just trying to get a sense for how broad you see the opportunity set now both US and outside the US, if we could potentially see you raise subsequent funds after the current one that you are raising faster than we have in the past?

Well, obviously, if -- last year we invested $7.5 billion in real estate or thereabouts.

At that pace we will be back very soon.

Frankly I don't think we can raise money as fast as -- fast enough to sustain that pace.

We are now in the market with a real estate fund, we have announced that we have closed on just over $6 billion of that.

Our last real estate fund was $10 billion.

We are optimistic that we can exceed that.

But bear in mind, that is the largest real estate in the fund in the world by a lot.

So I don't know how much more we could scale that size at this moment.

But we are still fundraising for that fund.

So it will be a little while before we fully finish that fundraising, fully invest it, and then get back in the market for a global fund.

We do have the opportunity I believe to fundraise around more specific regional funds, maybe Asia or maybe Europe.

And we have -- we are now investing our essentially our third European fund for all intents and purposes, and we have about -- I think we have got about half of that fund still left.

Someone correct me if I am wrong, on my team here.

About $4 billion.

Okay.

So it will so as Europe plays out we will invest that fund and then hopefully we will be back.

But again that is not right around the corner.

Michael Kim with Sandler O'Neill.

Good afternoon.

First, as you think about fund-raising more broadly, how do you think about maybe finding the right balance between staying focused on bigger global funds that offer you flexibility on the investment side, but maybe a bit more vintage risk, if you will, versus smaller more specialized funds that can maybe provide a bit more consistency in terms of fundraising?

Well, we don't think about our business the way you just laid it out.

We introduce new funds or new products when we think we can really generate special kinds of returns for people with low risk.

And we go wherever that takes us rather than having a philosophy on just large or focused and, ultimately, we are measured by the people who give us money by how well we do and we always aspire to be at the very top of performance.

So for example, we are in the process of raising, I guess you would call it a small or specialized fund in real estate.

And we think the returns in that are really good because we have the opportunity to invest globally in that as opposed to just upstream or downstream.

We have an extremely broad mandate for that.

It is investing side-by-side with our BCP VI.

On the other hand, we just finished raising a very large mezzanine fund.

I guess it is like the second biggest in the world now, and we don't view that as sort of a big global thing versus A specialized because the kinds of investments we can do out of that or that we did out of the last one were the best returns in the world.

For mezzanine it's sort of find its own way as long as we get that kind of global deal fund to flow, and we are doing that in the rescue fund.

So I think, and I'm not trying to avoid your question, I'm just saying that we look at where the best returns can be, the best opportunity, the best structure, and that is how we raise money in the markets receive it that well, that approach which is one reason why we have raised so much money.

Not because we choose to raise it, we are responding to opportunities and convince LPs that indeed those opportunities are compelling.

The other thing I like to add is there are some advantages to a global fund because you can move that capital around instantly, fluidly to wherever the opportunities are in the world by region or by sector or by type of investment.

And one of the reasons we have never had a losing fund, one of the reasons that we have always had top quartile returns is the ability to react to what the world gives us and not have a bunch of capital trapped into little vehicles where you have to push it into hostile markets.

That's helpful.

And then it seems like the real estate business is making a pretty sizable bet here on US retail.

And so just given the synergy across the franchise in terms of investment themes that you have talked about before, are you looking at ways to maybe leverage this across the franchise so maybe as it relates to potential activity on the private equity side?

Not really, frankly.

I think real estate is less playing a theme of retail than playing the theme of good properties, distressed owners and when even a good property is owned by an owner that is having financial difficulty, that owner no longer maintains the property appropriately, very often, no longer can sign new leases because he doesn't have the capital required for tenant improvements and frankly no longer can attract tenants for a very long term because most tenants don't want to lock into a lease decades long and not know whether someone is going to be taking care of their building.

So a lot of times when you get troubled owners of which there are massive amounts of CMBS that are coming due that are not going to be able to be rolled over, you also have properties underperform.

So we could buy good properties.

We could fix them up by putting new capital into them and putting them in strong ownership hands and we really know how to run these properties very well.

We lease them up and then we have the opportunity to -- and by the way, we are seeing very good results in leasing because even though the economy is not terribly strong, there's just no new supply out there.

And as an economy we destroy through obsolescence and one thing or another more than we are building today.

So we have got a shrinking base of commercial real estate across all the asset classes.

We have got growing population and even though slow an improving economy, and that is doing good things for the need for real estate.

So we fix them up, we lease them and then we have got what is actually quite a favorable market to sell them into because with treasury rates so low and base rates so low, cap rates are low.

So even though the spreads are above normal because investors are still risk-averse, the actual absolute cap rate on selling a fully mature leased up building are very -- makes for some very attractive markets to sell into.

So by being able to bridge from the distressed to the healthy and take advantage of the historically wide spread between those markets we can create a lot of value.

But the other way we can take advantage of that from a firm wide platform is we can see what's happening with consumer purchases across that.

And to the extent they are stronger that leads us to other places.

We can see that when the occupancy rates of all of these centers, just for example, start getting much higher the big one we bought, Briggsmore, is sort of down 5% from where it used to be, for example.

As that starts filling up you realize that we are going to have to start going into a construction cycle again.

We are not there.

But we will be able to watch this sort of like life in slow motion as these places show up.

And then, for example, that could lead us in Private Equity to start buying more things that would benefit from a construction cycle which hasn't started yet but we would have advanced warning signs.

And those types of linkages intellectually, analytically enable us to figure out where to move rather than just sort of consulting economists if you will.

They are wrong at least half the time.

Okay.

And then just one real quick one for LT.

Just coming back to comp.

I know you talked about the step down at GSO, but any color in terms of the pickup in the Hedge Fund Solutions business?

Was that a function of the -- maybe the disposition of the Asian business and then it also looks like you restated some of the numbers going back a few quarters.

Can you just shed some light on that as well?

Sure.

What typically happens and there are a couple of dynamics, let me just specifically talk about them.

There are a couple of dynamics in play.

One of the things that BAAM has been focused on is diversifying their platform.

In order to diversify their platform, that means there's more products that they have.

So they typically will have a rise in expense ahead of deployment of the capital that they are raising.

So that is relatively typical.

The second piece with respect to that is today about 60% of the assets they have are in customized solution type wrappers.

That is up from 40% just a few years ago.

And so that takes a little bit more investment in the platform.

The good news is that they have also had those very, very strong net inflows.

So that will play out over time.

So I would look at it as a one-time spike.

It's not impacted by the Asia Advisors piece.

And as far as the slight differences over time, that is just related to reclassification of how we dealt with certain long-term incentive award shares.

Howard Chen with Credit Suisse.

Good morning, everyone.

This is Adam on for Howard.

Thanks for taking my questions.

Steve, in the past you've noted your constructive outlook for credit.

The Harbor Master acquisition clearly dovetails with that and appreciate your comments on how it expands the footprint in Europe.

As you look forward are there any pockets of the credit space where you think you are still underpenetrated and what segments of credit do you see offering the best opportunities for growth?

I would say in terms of credit, we are probably underpenetrated loan only jump on management and we really haven't expanded in that area as much as we can and leveraged loan area I think we are probably the largest non-bank in the world in that area.

And in mezzanine, we push that.

I think we also have a lot of expansion potential in Asia.

We really are not present there for a variety of reasons.

There's only so much you can do.

Some of their credit laws or laws enforcing creditors' rights aren't as developed as they are in some other places but there are a lot of people who have made good money there.

So there are a lot of other places geographically where we can take our product, particularly if we can raise money in local currency so that those local currency investors are used to those laws in those countries in terms of how to be investing.

So there's a long runway to go.

We also haven't really raised money in Europe for a number of our products in euros that that may be a little challenging in today's world where people are pretty frozen in Europe about committing to almost anything.

But that market will probably normalize over time assuming that the euro is maintained which, as of today, feels better because a variety of factors including Draghi's approach to running the ECB.

So I think a long way more to go in GSO.

The other thing, Adam, I would add is you know we are spending some, I would say we've had a very good success with commercial credit on the commercial real estate side and there's some interesting growth opportunities there.

We have got a new team in Europe in the last year and I think we will be expanding that business.

We are underweighted there.

And we are even starting to take a hard look at residential credit, residential mortgage credit and how we might play that.

And of course that is just gargantuan in size and, of course, very distressed and politically sensitive.

But there could be some interesting opportunities there that we are just beginning to think about.

Great.

Thank you for all of the color.

And one follow-up.

As we have listened to some of the other brokerage and asset management firms through earnings season, we have heard a generally healthier tone to the capital markets from them and appreciate your comments on what the financing environment is like currently.

As you guys sit in the investment community, would you say that you share that view and as you look forward to 2012, how are you thinking about this affecting your opportunities for deployment?

Well, the financing markets -- the debt financing markets in the US are reasonably healthy.

In Europe, they are pretty much shut down.

So it's quite -- there is a real dichotomy between those two markets.

The economies, the European economy feels like it is going into a recession to us.

The US economy feels like it is growing more strongly than it has in the past.

So that makes us think that that could be and -- we are sort of trying to be contrarian and that makes us think there could be some interesting opportunities in Europe.

If you are judicious and if you are buying companies that are not economically sensitive and it makes us think maybe in the US, get some of them focused more on companies that will participate in the growth as it develops.

Patrick Davitt with Bank of America Merrill Lynch.

Good morning.

Steve mentioned the kind of revenue and EBITDA growth expectations for the portfolio companies.

Could you walk us through what is driving their expectation of negative operating leverage?

You mean the fact the revenue is up a bit more than EBITDA?

Yes.

Well, it is kind of the reverse of what has been happening.

When the economy came down they massively cut costs frankly to deal with what was a very scary environment.

At this point, we have encouraged our companies to start investing for growth.

And there is a lag effect there.

They start spending more on new business initiatives, capital expenditures, R&D, advertising, almost all of that is front ended as expenses and we hope over time it will have good long-term effects on the growth rates.

Okay.

That's helpful.

And the GSO buyout is there any concern that any of the key men are going to check out any time soon or what really drove that decision?

Actually, it was quite the opposite.

I think that we felt good about where they were.

We have had virtually zero turnover in GSO.

We felt it was a good time really for two ways.

I think that the partners in GSO -- as part of the deal by the way, we lengthened the amount of retention over time, and it is payable over several years.

So we actually strengthened the retention but we never really thought there was much risk of departure.

And also much of the consideration is being recycled back in their funds because the GSO people believe in their funds and believe this is a good time to be there.

So it worked both ways.

Yes (multiple speakers) and let me just add to that.

There is no group in our firm looking at the future with more excitement and optimism than GSO.

Just the economics of their business, first of all, just being a provider of high-margin credit in this world is a fantastic place to be.

Secondly, the way they raise money and then actually don't actually get fees and whatnot on it until it is invested, the dynamics of that business are very well poised to have a quite a surge in profitability over the next few years.

And their looking of that is of course is suspecting some of that to get into the bonus pool and of course our job is to make sure it's (technical difficulties) as possible to (technical difficulties).

But one thing that is fun and Tony is completely on point with this.

On Monday this week, GSO moved from where they had been a few blocks down on Park Avenue into our headquarters building at 345 Park.

And I have never seen so many excited people and I don't think they were aware they were down in some kind of deep hole or something on -- I forget what floor it was down there, 16 surrounded by giant office buildings and here they are up on 31 where because of the adjoining buildings, they are up above most of it.

And it is sort of brilliant sunlight and new offices and excited people and everybody at the firm is really happy that we have now got all of our New York people in one building.

And the kind of concerns that you evidenced in the question, it is really just the opposite when you've got visibility on what is going on here.

And I think in the past, you have talked about the real estate portfolio being particularly primed for some cash realization.

Do you still feel that way?

And is that a more immediate opportunity or next two years?

Could you kind of frame that for us?

I'd say we have a very, very large portfolio there and it is a funny thing.

You can almost harvest the real estate portfolio at any time you choose.

It is really a matter of choice and how much growth we are going to get out of the US economy for how long because we are on leverage.

It is an issue of absolute dollars, and if we're facing a more expanded cycle then it is sort of like, why would you sell today if you can hold on and make more money tomorrow?

And we are in the business of buying low and selling higher.

Nobody ever picks the top tick on an entire portfolio particularly the scale of ours, but we are seeing the trends improve.

And what happens in real estate, as you get up close to high occupancy, whether it is a building or in an asset class like industrial, what happens is the rents geometrically pop.

And that usually happens in office somewhere around 7% or something like that of a building.

You get a market tighter than that and rents spike.

When those rents spike the people who buy those properties will pay you much, much more than your current cash flow is, justifying because they can price those rents in the future when your stuff rolls off and that one asset will earn a hugely higher amount of money.

And so what we try and do is for the most part try and time that exit to get closer in that kind of ideal zone.

And we're not there yet for some of it.

Some properties we have had for a while.

They have done quite well when we would exit those.

But when we exit the real estate, my expectation is that we will really crush it and we will really do extremely well.

And that is assuming that the economy continues on and construction remains almost nonexistent except for the apartment sector where we are not huge participants.

Daniel Fannon with Jefferies.

Good afternoon.

I guess building upon that and thinking about the realization opportunity you mentioned on the PE side potentially a good backdrop for 2012 if markets hold up and, obviously, it is very difficult to predict.

But any way to size what you guys think in your portfolio is ripe or potentially ready to go in terms of coming, exiting at this point?

I hate to get into that, because if it's IPO we have got SEC restrictions and some other things.

So I can say this.

We have got a couple -- we have got several ideas that we are in the process of moving forward on.

Different stages.

Some are quite early.

We still haven't even chosen underwriters yet for some of them.

But we're -- there's several that are in the pipeline.

I think there's probably -- you are probably going to see more activity on notwithstanding what Steve was saying on the real estate side than on the private equity side this year though.

Okay.

And then I guess with the financing markets better here in the US certainly than in Europe, I mean, is it is the competitive framework for finding attractive opportunities in the US has that picked up?

Or is it still -- I know you guys do a lot of proprietary sourcing but just trying to get a sense of the competitive aspect out there right now.

One thing I would say with that is that the M&A cycle as you know from reporting or reading the reports on the investment banks you can see that M&A volumes really plunged; and in terms of new setups for private equity, we have done a pretty unusual job sourcing things, a lot of energy where people need to add to what they're doing or starting new businesses whether it is in the [shell] business or building electric plants in India, but the kind of regular way M&A-driven private equity type opportunities have been relatively small just because M&A volumes are down.

M&A volumes are almost always down when you are at the bottom and coming up from a recessionary period.

Because sellers basically don't want to sell when equity has not been worth much, and they think they can get more value for the company in the future.

So it takes a little while for an economy to recover where buyers and sellers can match up in a comfortable way, and we are getting closer to that.

But remember what it was like last August.

That wasn't that long ago with the debt talks, Europe in shambles, US downgraded, markets collapsing.

Who the heck would sell a business in the middle of that?

And people who sell businesses don't make changes in the way they think as a result of a two-month rally, which isn't like a heroic rally in any case in the capital markets.

It takes a while and we also have the uncertainty of the political environment which has been basically getting in the way of an enormous amount of normal functioning in the economy.

And as those issues get resolved one way or another and expansion continues, you'll see more volume coming in a more traditional fashion in the private equity area.

Thank you.

Chris Kotowski with Oppenheimer.

Couple of questions related to the real estate.

First of all, at the end of the third quarter, you said you had $10.1 billion of dry powder in real estate.

This quarter, you invested $1 billion and you ended up with $10 billion.

So I assume that means you got an additional $1 billion of commitments roughly for BREP VII?

Yes, that is about right.

Okay and then how does that $10 billion of dry powder relate to this 7 -- or you said BREP VII was up to [6].

The remaining 4, would that be primarily in -- yes, where is that?

It is in a couple of different funds.

It is in -- and some of it as Tony mentioned before -- we still have about EUR2.5 billion in our last European fund and that is the majority of it.

Okay.

So it is not that you keep follow-on investment funds, so it is mainly in the European fund.

Okay.

Yes.

That's correct.

And then how does this flow into AUM?

It seems like unlike in private equity this only flows into a -- fee paying AUM when it is deployed?

No.

So in real estate it is as committed.

The one place it is as deployed is in our real estate debt strategies business.

Let me just qualify it slightly.

It is as committed when a fund is in its investment period.

Before a fund is in an investment period it doesn't show up.

So but the BREP fund that we are raising is in its investment period as we are raising it.

So it becomes -- it was in there as committed.

So at the end of the year you had about $5 billion of that, of the new fund that was in fee paying AUM?

Yes.

But I had mentioned this last quarter.

From in terms of when we started collecting those fees it wasn't until the first quarter of this year on the real estate fund.

So even though the year end number showed it in the AUM there were no fee -- management fees accrued for that first quarter.

That is going to start in -- excuse me, for the fourth quarter.

That will start in the first quarter.

Okay.

I guess what I am wondering about is why wasn't -- why isn't there -- isn't there at some point a step function increase as that whole fund comes in?

Not in real estate.

Not in real estate.

So and you keep this fund open for the -- you said through the end of 2012?

You'll be having additional closings or --?

That's right.

There will be additional closings in 2012 for the latest real estate fund.

That is right.

Okay and so if, in this quarter, we effectively raised another billion then, sort of in the first-quarter numbers one should theoretically see $1 billion step-up from that?

No.

No.

So what I was saying is, in the AUM number that is true, but in terms of fees, the fees didn't kick in until the first quarter so the entire amount raised will start earning fees in the first quarter.

It is a bigger jump than the AUM number will show.

That is because you do get that big step up.

Because we started (multiple speakers) investment periods.

So, then, you should see that in the first quarter?

Correct.

It is when you see -- start the investment period on BREP or BREP VII or BCP VI, that is when you get that big step function.

And as you keep raising money, that step goes higher.

You go up another step because that money wasn't there previously and it is.

In our GSO drawdown funds, for example, the credit world treats these type of funds differently from an LP point of view and those funds only generate their management fee when they are invested.

So there's no giant step up.

It is really a slow leakage into income as that fund makes its investments.

Yes, if I -- we are all smiling at each other because we pretty much butchered this answer.

But let me see if I can (laughter) in a typical real estate and private equity fund when the investment period begins, you begin recognizing the fees on the amount that has been raised.

And that was the case of BCP VI in the first quarter of 2011.

The recent BREP fund is a little bit different than we have had in the past because while we have raised $6.1 billion to date as Joan pointed out because of the way that was structured there was effectively a fee holiday during for the capital that was raised in 2011.

So for the $5 billion that appears in our fee-earning assets for that fund at the end of the year, those fees will begin paying for the first time in the first quarter, and there will be a catch-up.

So you surmised correctly, that there will be a step up so to speak and that is somewhat unusual for the way we have done funds in the past.

It really relates to the fact that it was a very robust investment environment and we wanted to get capital in quickly and we did some deals earlier than we normally would.

So just one note though.

When a new fund starts coming and what's typically happening is you are selling investments out of an old fund and so you lose the management fees on an investment that is sold, obviously.

So it is never -- it is not as big a step up as you might expect.

Okay and then going back to the realization side.

I mean would one expect most of the realizations would be out of BREP IV and that V and VI still need more time to mature or occupy and get the occupancy up and all that?

Not necessarily because it is more asset-dependent than it is the particular fund that they are in.

All right.

That's it for me, thank you.

Roger Freeman with Barclays Capital.

Good morning.

Just in the -- with respect to your portfolio comments, I guess particularly in the US, going back to one of your earlier questions, if you are positioning to try to grow through investment and a low topline growth environment, I think, Tony, you mentioned earlier on the New York call that from a CapEx perspective companies generally have a fair amount of excess capacities, and maybe there is not as much opportunity there.

I guess I am wondering are bolt-on acquisitions within existing portfolio companies something more of a focus this year?

Well, they are a focus this year, but they have been a focus for the past few years too.

I mean, one of the main ways that we like to invest money is industry consolidations where you start with a platform company and a world class management team.

It is frankly too good quote a management team for somebody that size.

Certainly too deep.

And then add bolt-ons and try to create value that way as a synergistic buyer.

And that continues to be a main focus of ours.

Okay, great.

And then on the opportunities in Europe from the bank deleveraging and the investment you are doing around that.

Is the amount of supply coming out and likely to continue coming out, is that depressing prices further?

In other words should we expect the returns on those investments maybe to be somewhat delayed because there may be more of sort of a ramp down or before (technical difficulties).

I don't know, Roger, actually.

I read the banks are going to sell $3 trillion of assets in Europe.

If that is the case in a recently short of period of time, yes, I mean it is a tidal wave.

We haven't seen anything like that major flow yet.

We are seeing European banks from all countries selling, starting to sell assets lately but it is hard -- but the floodgates aren't open yet.

So what I -- what might happen here is with the ECB putting last time $0.5 trillion maybe this time as much as $1 trillion of liquidity into the banks you might well see some of these European banks -- because they are getting a lot of very low cost funding from the ECB -- sit on the assets that are occurring higher and continue to earn their way out of some of their capital problems and that could stretch it out a lot longer or -- the asset sales.

So if that is the case, then, no.

I don't think you would see a depressant in the returns you can be earned by buying them.

We have a -- I think the returns have held up pretty well on the stuff we have seen so far.

The stuff we bought into a lot of the stuff we bought the -- it's interesting, they are European sellers but they are often US assets.

So we are not seeing the pressure in the US because it is such a broad type of market.

And we are buying it in effect at US clearing prices, and that additional supply from Europe doesn't really make a difference.

And we have and I have been personally involved in experiences where the head of a European financial institution will say, look, I would love to sell you this thing.

We have made an offer for it but I just can't take a deeper write-off.

I just can't do it because I have got my regulatory capital requirements and I am carrying it higher, and you may be the real market but I can't survive if I dump all of this stuff out at that price.

And from a financial system perspective you actually don't want that institution destroying their equity capital for the privilege of shrinking.

And recently, I am sure you saw it, I guess it was week before last right around [Davos] that Mrs.

Merkel and Sarkozy asked the Basel committee to change the applicability of Basel 3 standards to the French and German banks.

That is -- for straightforward talk, that really just has to do with if we comply, you are going to make such a mess in our countries with the deleveraging and the capital and the rest of it, we won't be able to extend credit.

We can't run our countries right, our ability to grow our country is -- you know, we are going to be going down.

That is going to destabilize the financial system all the more.

It is something I have been saying for two years.

They have now just caught up with the reality of this and the ECB -- excuse me, the Basel committee will probably back off from some of that just to protect the European financial system which has been pushed to the point of severe distress and lack of confidence in terms of being able to raise liabilities.

And what that should mean is that, yes, they will sell but I think Tony's thesis on this is correct.

It will provide sales over a longer perspective of time for people like us which is probably a good thing because we can pace our capital raising to what is going on in the market.

If you have a huge flood it almost overwhelms everyone in that there basically aren't enough buyers.

The US banks, which are looking for earning assets, big US banks for the most part are in excellent shape and they are looking for assets and that is why when we have made, for example, in real estate bids for some of these asset pools where we have been successful we will team up with a US bank to buy the senior pieces that are quite secure and will take the stuff more on the bottom of the capital structure where you can say in a simplistic way there's more risk.

We don't see that more risk or else we wouldn't be doing it.

But where the return is much greater and you have to do something to that property and if you don't do something successfully it is not so good for you.

If you do you can make many, many more times than the banks would make just buying the senior debt.

But there is a good appetite for that senior debt, and we are a partner of choice for the US banking system on those type of major deals.

All right.

That's helpful.

It just seems like something has to give because there is a June 30 deadline to get to a tier 1 ratio of 9%; other assets have to start coming out quicker or deadlines have to get pushed back or calculations are redone.

Okay.

And then on the IPO pipeline I appreciate you don't want to -- you can't get into the specifics.

But maybe in terms of maybe total investment capital or carrying value of capital that might -- you are considering for IPO this year, could you maybe talk about it in those terms [on that]?

Honestly, Roger, one thing I have learned the hard way with my own portfolio is I am terrible at predicting the stock market and that it is going to be totally driven by that.

Okay.

Understood.

I might have missed this earlier but realizations in private equity were negative in the fourth quarter.

Was that just one transaction or --?

It actually is a timing issue.

So if you look at if you look at the full year numbers that is the right realization number but there were some -- we made an adjustment relative to some realized performance fees in the third quarter that we probably realized early.

So we were just reversing that out to full year numbers reflective of the full-year results.

Right.

Great.

Thanks a lot.

Marc Irizarry with Goldman Sachs.

I am going to try this one again a different way.

Steve, this -- this past year you put out I think $16 billion of capital and pulled $9 billion out of the ground.

When you think about 2012, if you have to sort of give your prognostication as to what those numbers look like a year from now, do you think this is just going to be a bigger year for investing versus harvesting activity?

Tony was asked that question on the earlier press call and I think he said it was really tough to predict that, which it is.

And he gave an estimate which, I think, was like a guess at the table of some number.

He used 8 to 10.

I don't know really.

That is one of the adventures of being part of a firm like this.

We are in the job of opportunistically taking advantage of large things.

Last year in real estate, for example, was sort of unprecedented in large part because we caught this major deal from Australia which needed about $6 billion or something like that of equity, where we offloaded a bunch because it was too big for the -- not if it is $6 billion of equity.

It was a $9 billion deal with $3 billion of equity that -- I don't know if we are going to catch one that size again.

If I had to guess I would probably say the real estate commitments would be down a bit from last year.

Probably more deals, lower aggregate size would be my guess although it's no more than a guess and private equity is tough to tell.

It will depend on the M&A cycle.

But in general though I think we will -- we are in the part of a cycle the economy is not great and markets are great really.

Where I think -- and we have got a lot of new funds and dry capitals we have discussed where you could expect that we would be putting more money out that will be harvesting.

We also have some new products which we are pretty interested and excited about which I am not going to talk about on this call, but when you get a new product or a new fund area of course it is all outflow and you don't harvest any of those investments for a while.

So I think as Steve said it is really are to predict and we are not you know we are not just not able to do that for you guys as much as we would like to but I think generally we are still sort of net investment mode.

Also I would like to say, Marc, to thank you for you for that hosting us at the Goldman conference.

It is always fun to come down there and you ask good questions and it works out really well.

You have a very good audience there.

And so I personally enjoy that.

I'm sure the same can be said of all the analysts and all of the firms that have been on the call today however.

They don't have conferences.

Thanks for coming downtown.

Just one quick follow-up on fees.

If you look at some of the new funds that you've launched you mentioned the fee holiday on BREP 7.

Any other changes to fees to terms on the new funds?

Nothing significant.

And they're really it wasn't really so much -- I mean, again, this whole BREP thing is a bit complicated.

But the first closers got a bit of an incentive for a short period of time.

So it really wasn't a fund wide holiday and actually in some ways the terms of when management fees accrue are actually more favorable because new money that comes in now actually goes all the way back to the inception date.

So I don't -- you shouldn't think of that as an adjustment down in fees.

You should think of that as just sort of a structural quirk.

So there will be about a $25 million catch-up in the first quarter related to that fund.

Based on what we know now.

Based on what we know today.

(multiple speakers) helpful when we know how much assets we will have.

Yes, roughly.

And then just quickly one for you, LT.

Maybe will see this in the Q or in the K but where are we in the PE fund catch-up?

You know so if we look at the funds that maybe aren't in cash, cash carry mode if you will, where are we in that catch-up?

How far away are we from getting to cash carry mode?

It's flat quarter over quarter.

So it is still a 12% change in total enterprise value it would take to get the carry and BCP V and the BREP funds, BREP V and VI are almost 100% of the way through their catch-up.

95% of the way through.

That's helpful.

And you will see that in the K.

Great.

Thanks.

Ladies and gentlemen, that is all the time that we have for questions today.

I will now turn the call over to Joan Solotar for closing remarks.

Great.

Thanks, everyone, for your attention and look forward to catching up after the call.

Have a good day.

Thank you for joining today's conference.

That concludes the presentation.

You may now disconnect.

Have a great day.