Welcome to the Blackstone Second Quarter 2015 Investor Call. And now I would like to hand the call over to Joan Solotar, Senior Managing Director, External Relations and Strategy. Please proceed.

Great, thank you Jasmine. Good morning, everybody. Welcome to Blackstone’s second quarter 2015 conference call. Today, we are joined by Steve Schwarzman, Chairman and CEO who is joining us from overseas; Tony James, President and Chief Operating Officer; Laurence Tosi, CFO; and Weston Tucker, Head of IR. So, earlier this morning we issued our press release and slide presentation illustrating the results and that’s all available on the website and we will be filing our 10-Q in a few weeks. So, I would like to remind you that the call may include forward-looking statements, which are by their nature uncertain and outside of the firm’s control and may differ from actual results materially. We don’t undertake any duty to update any forward-looking statements and for a discussion of some of the risk factors that could affect the firm’s results, please see the Risk Factors section of our 10-K. We will refer to non-GAAP measures on the call and for reconciliations of those, please refer to the press release. So, I would also like to remind you that nothing on the call constitutes an offer to sell or a solicitation of an offer to purchase any interest in any Blackstone funds and the audiocast is copyrighted and may not be duplicated, reproduced or rebroadcast without consent. So, very quick recap of the results, we reported ENI of $0.43 for the second quarter, that’s in line with consensus. I know one of the – well, Reuters have reported it incorrectly earlier, but have since corrected that, that’s down from last year due to lower appreciation in the private equity and real estate funds, particularly the publics, which were down in line with markets. The performance was actually still quite good overall across all of the businesses. Distributable earnings were up quite a bit, 35% to $1 billion for the quarter or $0.88 per common unit. We will be paying a distribution of $0.74 to holders of record as of July 27, which brings us to $2.85 paid out over the last 12 months. And just based on where the stock is today that equates to a compelling yield of 7% on the current price, which is one of the highest of any large companies anywhere in the world. And with that, I will turn the call over to Steve.

Thanks, Joan and thanks to all of you for joining our call. In the first half of 2015, Blackstone sustained strong momentum across all of our businesses: private equity, real estate, hedge fund solutions and credit continue to distinguish us in the world of money management. We remain the only manager with leadership positions and strong investment performance in every one of the alternative classes and our limited partner investors recognize that and are rewarding us with more and more of their capital as a result. This is why Blackstone took in $94 billion of new capital in the last 12 months despite capping, which means limiting the size of all of our major funds. In other words, the demand for our products significantly exceeded the money that we could accept. And in that sense, we could have raised much more than $94 billion. This $94 billion is a record for Blackstone or any other alternative asset manager and is actually more than the combined fundraising of the other public alternative managers for any year in history. Our fundraising success is unprecedented for our industry and has propelled Blackstone to a record $333 billion in AUM, up 19% year-over-year. So, what’s driving this success and our sustained growth over many, many years? Blackstone is very different from a typical asset manager. We have been able to continually outperform and deliver outperformance for our LPs versus the relevant indices since the firm’s inception three decades ago. When our investors give us a $1, we have generated $2 to $2.50 on average in our private equity and real estate funds across markets and economic cycles for 30 years. This is not a one-time event. In the second quarter, if you invested in the public stocks of basically any developed market in the world other than Japan, you would have had either achieved flat performance or lost money. Blackstone, however, despite the headwinds in the public markets, continued to deliver superior returns for our investors. In private equity, we outperformed the S&P by 370 basis points in the quarter, and in real estate, we beat the REIT Index by 1,250 basis points. Our credit and hedge fund solutions business meaningfully outperformed benchmarks as well as which Tony mentioned with our mezzanine fund being up, I guess, somewhere around 24%, which I think is what Tony said. And when you have performance like that in flat markets, you will have loyal investors and you will have more money from them. This is because when we invest with a specific view of operating and improving assets in our portfolio, growing their cash flows and creating real and lasting value. A great example of this was the IndCor warehouse company we sold last quarter. We painstakingly built this platform through 18 different transactions over four years, in many cases buying assets from distressed sellers and we consolidated them and created an irreplaceable company upscale. Now, we are doing something similar in European logistics with our company, Logicor. In private equity, we built up Marlin from the small London Dungeon attraction. So, I think we have paid about $85 million for, to become the second largest theme park company in the world behind only Disney, before exiting the investment earlier this year. And in the case of Central Park’s investment in the UK, we leveraged the combined expertise of both at our private equity and real estate groups to maximize the value of the property in operations. And just last month, we announced its sale from more than a triple our original invested price. What we do at Blackstone can’t be replicated by investors in the public markets and very few can do it anywhere or at our scale. Meanwhile, the public market backdrop as everybody knows, has been volatile and challenged lately, largely driven by the drawn-out situation in Greece, as well as the sharp decline of the stock markets in China. In the case of Greeks, we seemed to have a temporary solution now which is calm markets. China’s issues may have longer lasting implications, particularly in commodities and related areas. Despite public market headwinds, our portfolio of companies, as Tony mentioned overall, are really in terrific shape. In private equity, trends remain healthy with portfolio company revenue and EBITDA up 5% and 12% respectively over a year ago. In other words, that’s a 12% increase in earnings. This compares to most estimates to S&P companies showing flat to down earnings. So, the outperformance of the companies we own is really substantial. In real estate, our office trends in the U.S. and UK are rising in the double-digit percentages. While hotel RevPAR growth is healthy despite lodging stocks being down between 3% and 7% for the quarter. We have also seen 15 consecutive quarters of base rent increase in our grocery anchored retail portfolio and surprisingly, probably to most of you, Chinese shopping malls are reporting double-digit percentage same-store sales growth. Trends in our portfolio of companies compare favorably to the U.S. economy, which continues to grow somewhere in the 2% rate. There has been much focus recently on the Fed potentially increasing interest rates, which still hasn’t occurred despite most predictions to the contrary. I think this could happen within the – in the next 6 months, which Janet Yellen seems to be indicating in a well telegraphed and controlled way. In a rising rate environment, I expect our portfolio, including real estate and credit to continue to perform well, which it has historically in that type of environment and that’s because rising rates have usually come – accompanied by better economic activity, which is obviously beneficial to the portfolio. And I personally think that any rate increase would be very, very gradual. As public markets move up and down, you should expect our public holdings, of course to move up and down as well. That’s the reality of our business and part of our financial results in the short-term. Fortunately, the capital in our fund is largely locked in with approximately 70% of our AUM not subject to any redemption risk. In these businesses, we are not for sellers and can wait until the time is right to exit our positions, while at the same time continue to compound value for our limited partners and ultimately for our shareholders. A volatile market drop – backdrop could also lead us to deploy greater capital to take advantage of dislocation whenever this occurs. So ironically, our ENI could be temporarily going down at a time of great opportunities were setting up future gains. Blackstone has by far the industry’s largest pool of dry powder at $82 billion and a fully integrated network built around the world, positioning us very well to take advantage of any market dislocation. Each of our businesses has continued, as Tony mentioned to expand its platform. And by the nature of our size and diversity, we are investing more today than we were 5 years ago. In real estate, in addition to the global fund, we have dedicated opportunistic pools in Europe and Asia, the real estate debt area and now our core plus business. In private equity, we have our global fund and our energy fund and we have ramped up the size of our Tactical Opportunities business and have added our secondaries business. In credit, we have rescue lending, mezzanine, a dedicated energy fund, a dedicated Europe fund, CLOs, the hedge fund platform and so on. So Blackstone is not limited to just being in a few big funds, we find unique opportunities and we grow those businesses to where they are at scale. Because of our global footprint, we are able to identify risk reward around the world and move our scale capital quickly and decisively. And our size and brand give us a significant competitive advantage to win deals that are in many cases be the exclusive partners as we were in the GE deal announced in April, which was the largest real estate purchase before the financial crisis. Despite more difficult investing environments in both private equity and credit, we have still been able to deploy significant capital. We have invested $5 billion for example in the second quarter bringing us to $26 billion invested over the last 12 months. The dominant thing – themes include distressed real estate in Europe, European credit, energy and opportunities created by the pullback of financial institutions globally, including mortgage lending and tactical opportunities, special situations deal flow. On average, over the past 3 years we have invested or committed more than $20 billion per year from our drawdown funds alone, which is far greater than our investment pace prior to the crisis. Although our capital deployed in a given year maybe up or down depending on markets, we are functioning now with a completely different scale of operations than we were even 5 years ago and we are continuing to create fantastic performance despite that. Our greater investment pace today is planting the seeds for future gains and distributions that I believe will be of a significantly larger order of magnitude than what we are harvesting even today, which is quite strong. As we have expanded and further globalized our businesses, we kept the strong focus on keeping our internal culture intact and ensuring Blackstone quality across regions and products. We never franchised out decision-making and we retain one single global Investment Committee for each of our business lines. Our investors have confidence that when we invest anywhere in the world, we are doing it with the same process driven analytical rigor that has defined us in our performance for the past 30 years. I expect it will continue to define us for the next 30 years as well. And that’s why Blackstone remains one of the fastest growing, most profitable asset managers in the world. And, in fact, there are not many other companies of our scale in any industry that have grown at our rate on a sustained basis. And unlike most other leading companies, we pay out the majority of our earnings on a current basis. And in fact, a lot more than the majority, equating to one of the highest dividend yields of any major company in the world at 7%, as Joan highlighted. I believe these factors make Blackstone’s stock a very compelling value for investors and I am confident that over time, the public markets will come to the same conclusion, driving a premium valuation for Blackstone. In the meantime, Blackstone will continue to operate as we always have, focused on generating exceptional long-term performance for our investors with very low risk of loss of capital. With that, I would like to thank everyone for joining the call. And I am going to turn it over to our CFO, Laurence Tosi.

Thank you, Steve. As Steve pointed out, all of our global investment businesses grew double digits over the last year, amassing a staggering $140 billion of incremental asset base expansion from $94 billion of gross inflows and $20 billion of value created through positive funds performance. That one year growth is 40% greater than the entire size of Blackstone at the time we went public. In total, Blackstone’s businesses grew AUM at a combined rate of 19%, with each business growing at a multiple of the industry average. That growth comes from generating new ideas, new strategies and continuing to outperform broader market appreciation. This quarter, the contribution of each business shifted, demonstrating Blackstone’s unique balance. GSO and BAAM had the strongest economic income growth year-over-year. Private equity had the highest total distributable earnings. And real estate had the highest fee revenues. Each business is a market leader, performing well and contributed materially to our results. Total firm ENI is flat year-to-date at $2.1 billion or $1.80 per unit at a margin of greater than 50%. A few points to highlight about ENI and earnings momentum, sustainability, performance fee revenue momentum continue to rise to a record $2.2 billion year-to-date. We have now added $4.5 billion of gross performance fees in the last 12 months, which is more than our record level of realizations and managed to grow the accrued performance fee balance year-over-year. Earnings power, Blackstone’s growth reflects our increasing asset base paying performance fees, which grew 13% year-over-year to a record $158 billion, effectively lowering the level of appreciation needed for earnings growth. Compounding effect, the compounding effect of performance fees paid on asset appreciation is a key earnings driver and why cumulative results continue to show strong earnings momentum. Total management fees are down slightly year-to-date and in the quarter as new assets raised are not yet earning fees and lower levels of transaction and advisory fees impacted results. There was also a reduction in management fees, coupled with an increase operating expenses related to one time items consisting of fund raising fees and legal reserves. From white however, based management fees are up 4% for the quarter and we expect we will return to double-digit growth levels as more of the $57 billion of committed capital we raised begins paying fees. Distributable earnings continued to accelerate in the quarter, continuing a trend we have seen over the last few years. Distributable earnings are up 35% in the quarter and 83% year-to-date on a 45% surge in realized performance fees. Over the last year, we have returned $46 billion of capital related to realizations, representing $20 billion of gains. We have now realized over 70% of performance fees we have accrued as of the end of the second quarter 2014. That realization rate has accelerated from an average of 45% in the prior years to the current level of 70%. And our pipeline for exits remain strong as more than 60% of the $4.5 billion in performance fees we have accrued relate to assets that are either public or are liquidating. Additionally, more than half of the current $4.5 billion net receivable is related to pre-crisis deals and 90% of those are public or in liquidation. Blackstone’s deliberate strategic design, which we painstakingly assembled over many years, better positions us today to absorb and materially outperform in periods of market volatility, dislocations and a shifting global opportunity set. Our outperformance comes from the fact that our core fund strategies for finding opportunities and creating value do not depend on public markets. The value created in private equity and real estate comes primarily from operating earnings growth demonstrated this quarter and over the last year by double-digit fundamental growth as Steve pointed out compared to a backdrop of flat global growth. In credit, our expertise relies on analyzing borrowers, structuring collateral and pricing credit risk. In hedge funds, the returns come from our expertise and scale in picking managers, innovating new products and ideas and making active allocations across asset classes. All of these strategies and skills are at their core sustainable competitive advantages that are not temporary, cyclical or market-dependent. Think about it this way. Blackstone has now generated $5 billion of performance fees from investments we made before the financial crisis in 2006 and ‘07. The only way to achieve that is by leveraging our unique operating platform to find opportunities and create value through active management and patient capital structures. The Blackstone platform delivers outperformance even in periods of high asset prices as we have seen over the last few years, where investments aged more than 1 year are averaging gross IRRs in private equity of 27%, real estate of 31% and credit of 28% as Steve pointed out. Our culture learned from our pre-crisis experiences and we adapted by building up firm capabilities to manage these markets. Strong performance drives growth and sustained performance drives franchise value and investor loyalty. Investors have validated Blackstone’s distinctive patient investing in operating model by committing record levels of capital to our funds, a record of $31 billion of commitments in the quarter, $61 billion year-to-date and $94 billion over the last year. It’s of note that our investor base has drawn strong and growing interest from new, global and fast growing pools of capital. In fact, 14% of our capital over the last year came from sovereign wealth funds, 13% from retail investors. Both capital pools were not meaningful contributors just a few years ago. In fact, almost 50% of the capital from our most recent funds comes from outside North America, up from just 15% a few years ago. The loyalty to outperformance runs so deep that BCP 7 and BREP 8, our global flagship funds, raised $32 billion so far this year with demand far exceeding their caps. Moreover, as investors concentrate their capital with the best managers, Blackstone certainly benefits from that powerful consolidation with 81 investors in our recent flagship funds making commitments of over $100 million. As of today, we have record levels of capital to deploy, $82 billion, to take advantage of opportunities in the marketplace. Is that too much capital or will we compromise to put money to work? Absolutely not. Of the $82 billion, half was raised in the last two years. So, the timeframe for committing capital is long and we are patient by nature. We have also built a unique platform to put that capital to work. We have $15 billion committed and deployed year-to-date with approximately 15% of that outside of North America. That puts us on pace to meet or exceed $20 billion of invested capital in 2015 providing further earnings growth in future years from the value created with that capital. It is not just our differentiated platform, leading return profile or ability to access new pools of capital to drive our results, it is a new, more diverse and capable Blackstone. In private equity and real estate, $28 billion or 15% of our total assets in those segments are public. The rest are subject to long-term private values or in funds that are less susceptible to public equity market swings such as stock ops, secondaries, multi-strat, real estate debt, real estate core. All of those are new businesses, which now amount to $40 billion in assets, up from 0 just a few years ago. Our credit and hedge fund platforms are scale drivers of our financial results. Those businesses are now $150 billion of AUM or 40% – 45% of the firm, up from $39 billion in 2007. Those two businesses have generated over $1.4 billion in revenues over the last 12 months marking a significant part of the firm’s performance. And in terms of diversity, their performance is driven by very different dynamics than our other businesses. In credit, we earned management and performance fees largely on collateralized assets paying current yield. In hedge funds, the strategies are either designed to have a third of the volatility to S&P, be market neutral, long/short, or relate to asset growth of alternative managers, all of which is a step removed from public markets. I always find it curious when people describe our value Blackstone on some of the parts largely because what makes Blackstone distinct is that the whole is far greater than the parts. All you have to look at is the unprecedented speed and scale with which our newest initiatives have grown as extensions of that whole: Tac Ops, which is two years old, now is $11 billion; core real estate, 18 months old, have $7 billion; strategic partners, purchased two years ago, has nearly tripled to $13 billion; and new energy funds, created over the last three years, are reaching $20 billion between private equity and the BDC and GSO funds. Retail distribution is ahead of our record year last year and has reached nearly $1 billion a month in flows, up from nothing just a few years ago. These initiatives are still on their infancy and they are addressing the deepest markets Blackstone has ever accessed. They are nimble extensions of core competencies, gaining scale fast and will materially contribute to the firm’s growth for years to come. Lastly, when you think about forward earnings, consider the vintage and scale of assets that are in the ground as the primary driver of those earnings. As of today, we have $220 billion of invested capital more than a year old and are earning close to $3.50 per unit in both the ENI and distributable earnings. That performance does not account for the $26 billion we have invested over the last 12 months or the $82 billion in dry powder we have recently raised. With the explosive growth of the last 12 months and continuing momentum in our fundraising, we will soon have over $330 billion of money at work creating earnings, which will drive significant value for unitholders to a new level reflective of that 50% increase in assets at work. While we do not and should not try to predict the timing of those earnings, our long history indicates based on prior performance, it is not if Blackstone will generate returns and reach higher levels of earnings, but simply a matter of when. With that, we would be happy to take your questions.

[Operator Instructions] And our first question comes from the line of Michael Cyprys with Morgan Stanley. Please proceed.

Hey, good morning. Thanks for taking the question. Just on the management fees, is there any color that you could share just in terms of the mechanics of the flagship management funds turning on and the implications for fee-related earnings? I think you mentioned about $57 billion or so of committed capital that’s not yet earning fees, just what’s the timeframe for that coming online? And it looked like there was a disconnect in the quarter with management fees possibly stepping down on some of the predecessor funds, but with no benefit from fees coming on to the new fund. Did I get that right?

The second part, no, so there is not an impact on the step down yet, because it doesn’t impact in real estate. But let me just go through the two major funds that you see. In BREP 8, we expect to begin earning management fees later this quarter, and the first full quarter of those management fees will be in the fourth quarter this year. And for BCP 7, that will begin sometime next year, first or second quarter, depending on the investment fees. With respect to Tac Ops and the other fundraising, those will begin hitting in the next quarter. So, you are right, there will be an increase and that’s why I mentioned we’ll be back to double-digit related base management fee growth shortly as those new funds come online.

Got it. Okay, great. Thanks. And then just as a follow-up if I could just turn to the geographic split, you have certainly grown the platform substantially over the past couple of years with large amount coming from – or increasing amounts coming from non-U.S. clients and I appreciate some of the disclosures you guys have showing the capital invested by region. But just curious, how much of your revenue and your client base today would you say breaks down by geographic region? How has that evolved over the past couple of years and how do you see that mix evolving say over the next three years?

So, I would – I describe it this way, which I do a little bit in my speech is that the more recent funds are closer to 50-50 North American and outside North America and that’s from a level, we were 80% to 85% North America just in the last generation of funds. So that clearly is a shift. And those pools of capital outside the U.S. are growing quite strongly. We are also seeing balance on the high net worth side. It started off primarily in North America. Now, we are starting to see some really nice growth internationally. With respect to our revenues and businesses, they are all global funds, so it depends on where you put the capital to work. The blended average of capital to work today is still about 70% in North America versus 30% outside, but that’s shifting. As you can see, we have now for the last 18 months been pretty close to 50-50 North America versus international investments.

And even international investors, for the most part give us dollars, give us investment in dollars. So we get revenues in dollars from international investors, if you will.

Got it. Okay. So about 70% of invested capital base is in North America with 30% outside?

Right.

Okay, great. Thanks.

And our next question comes from the line of Luke Montgomery with Bernstein Research, please proceed.

Thanks. Good morning. In credit you have been saying a lot of the capital deployment has been Europe, maybe you could just update on what you are seeing there and how we should think about the strategy in terms of origination versus buying assets. And more specifically are you considering opportunities in Greece with the possible privatization of assets there and what’s your appetite for buying non-performing assets from so-called bad banks like real estate from the Irish bad bank NAMA?

Okay. So most of our investing in Europe are new loans, in other words, as opposed to buying assets in the secondary market. However, we set up some joint ventures with some of the European banks to do some things around non-performing loans. We had definitely have an appetite for that regardless that sellers, it is kind of the question of the underlying asset quality although our real estate debt and our corporate debt are done by different groups. So – but we have, as you know, collectively we have bought non-performing loans substantially in Spain, in Italy, in Ireland and in other places. We do not – we have not bought anything in Greece, to your specific question. And without a presence on the ground in Greece, I don’t think that’s ever going to be a big part of our mix. And it’s also hard to predict what’s going to happen because it’s such a political, social process, not really an economic and business process. And in our kind of assets, it’s one thing for people to speculate on what’s going to happen with Greece and public markets if your RE can sell out. Once we buy an asset, we own it for a long, long time. So you got to have – you got to be able to develop conviction around what’s really going to happen and that’s hard right now.

Okay, thank you.

And our next question comes from the line of Michael Carrier with Bank of America. Please proceed.

Thanks guys. LT, just I had a few questions on the FRE both in current quarter and then probably more importantly, the outlook. So I guess just on the current quarter, if you – can you just give us a little bit of color, I know you said on the transaction fees in PE, there were some items. I mean and then also in the non-comp expenses, I am assuming there might have been some fund raising costs in there. But just those two line items, kind of unusual, so what’s maybe more of a normal run rate. And then if you look at the management fees, in the real estate business it looks like your fee AUM went up, but your management fees didn’t go in tandem. And I don’t know if in the past quarters there has been some catch-up fees that you have been getting as the fundraising has been going on, but I just wanted a little color on that. And then finally, just in terms of the outlook, given how broad the business is now, just trying to understand, as the fees start to kick in, on BREP 8 and BCP 7 what we should be thinking about in terms of the operating leverage or the scale for the margins, because when we look back and compare the business in prior cycles, it’s just – it’s vastly different. I just want to get a sense of how much upside we can see on the margin across the cycle?

Okay. A lot in that, let me take each piece. Let me start with management fees in real estate, you didn’t have the impact of BREP 8 in the second quarter. And so I think that’s what you are seeing playing through there, so you don’t see the uptick. You did have asset sales which of course would have the opposite effect of bringing management fees down. With respect to one-time items in the quarter, there are really two drivers. And I will speak about it across the business is that you do have fundraising expenses that impacts. For example, BCP 7, you have fundraising expenses now, but you don’t really have the management fees to offset that yet. So it’s a timing difference that we have seen in the past and you did have some legal reserves that we took inside of the private equity piece. But I would say, Mike if you look back at the first quarter, that’s closer to the run rate we would expect. Ex interest and fund raising expenses, our non-compensation expenses are largely 1% or 2% growth year-over-year, so we are keeping a tight reign on that. If you ask about the outlook going forward, certainly having – we had almost $56 billion of committed capital that’s not paying fees. That will come on line. I gave you some time line on that in my last answer and that will certainly have an uptick in our fees going forward. Let’s talk a little bit about margin. Margin hovers in and around for few related earnings, in and around somewhere between 29% and 31%, 32% to 33% at the height. And it will fluctuate within that, but it won’t – you won’t see a lot of earnings leverage other than a couple hundred basis points as those funds come back on. And that’s just by the way that we design the firm, we reinvest in the firm in the way we do compensation ratios.

Okay, thanks. And then just on the – I think last quarter, you gave like the percent of catch-up related to BCP 5, I don’t know if you had an update, but obviously the outlook is pretty good for the distributable earnings, but I just wanted to get a sense on how far along we are in the catch-up phase?

Sure, so there is really two phases of catch-up. There is how it hits unrealized fees and then realized fees. The way that you might interpret that is what hits ENI and what hits DE. On an ENI basis, we are 85% of the way through the catch-up. And on a DE basis, we are 70% through the catch-up, so that’s how we model it.

Okay. Thanks a lot.

And our next question comes from the line of Glenn Schorr with Evercore ISI. Please proceed.

Hi, this is Kaimon Chung for Glenn Schorr. Just trying to isolate further the ENI drivers this quarter, I mean there were big differences between first quarter and second quarter, publics versus privates, America versus India. And most of that took place in late June and concerns of like recent China and higher rates. Has any of those trends reversed lately and more importantly has anything changed to your overall outlook? Thanks.

Well, Glenn, first a couple of things. I think it’s always hard to take – when you look at our business, it’s really hard to take one quarter in isolation. Actually, if you look at the year-to-date numbers on appreciation for private equity and real estate, real estate is at 9%, private equity is at 9.5%. You just had a particularly strong first quarter. By the way, you also had a really strong second quarter of last year where we saw near-record levels of realizations. So I would look – always take a longer term and look at the run rate of the appreciation if that actually more fairly reflects the underlying operating fundamentals, which Steve pointed out, are really good in real estate and are really good in private equity. With respect...

Just on that Kaimon, I kind of look at LTM and they are in real estate just – so private is 16.5%, real estate at 20%. Just checking a lot at those kind of levels where they have been for the last several years.

And so following on that, we have seen a comeback in the – the primary driver of the publics was the – was in real estate in the second quarter where you had real estate publics were down in line with the REIT Index about 10%. About 35% of that’s come back. The disconnect, which is good for investing, bad for mark to market, is that the operating fundamentals of our public real estate holdings are far better than the REIT Index, which is flat. So over time, that disconnect will play out both in the values of the companies that we hold, but also does create some new investing opportunities that we like.

Cool, thank you. And then just one more, what portion of the GE deal is in the numbers and what is not?

Actually, very little of it is in the deal. There is – it’s a complicated transaction across several funds and the closings will take place over time. There has been a couple of small closings, but the bulk of it has not closed yet, Glenn. So it will take over the next quarter, maybe quarter plus. It might take more than just the third quarter.

Thank you.

For example, you closed in BXMT, which is the first most liquid assets, but you haven’t closed the other assets, it will take some time. Remember, there is loans, real assets mixed in the business.

And there is people to move. It’s an organization – in some there are organizational aspects of this as well that take some time to sort out with GE.

And our next question comes from the line of Craig Siegenthaler with Credit Suisse. Please proceed.

Thanks. Good morning everyone. So I just have two questions here on real estate. First, is it reasonable to expect an increase in capital raising from core plus just given the distribution resources allocated to BREP 8 over the last nine months. And also, could you provide a little more color on the $4 billion of – un-investor reserves at the close of BREP 7? Thank you.

Okay. Let me talk about core plus. Yes, it’s reasonable to assume that, that business will continue to raise substantial capital. And that’s been ramping up very nicely. I think they raised several billion dollars just in the last quarter and the beauty of that business is it’s a business where we can scale the money that puts to work. It’s really to match what’s raised and we get that money in the ground very quickly. And so we are doing some interesting things there, which will expand the target audience for that product as well. So, I think that will scale nicely on. In terms of the breakdown of the dry powder….

Yes, I will do that. It does look a little unusual, Craig, because normally, you see us take reserves of around 10% or so and then you will see that when we spend a fund, you will see that then that capital be retired. In this case, we had so much recall capital in BREP 7 because there were a lot of deals that we have actually exited quickly. I mean, the fund returns have been excellent in that fund, that the number looks bigger at $4 billion, so the size of the reserve is larger than you typically see because of that recall capital.

But of that also a $1 billion has been committed. It’s just not invested yet.

So putting the line up with $3 billion leftover on top of that, which again will be larger than you would normally have.

Got it. Thank you.

And our next question comes from the line of Patrick Davitt with Autonomous. Please proceed.

Hi, good morning. Thanks for taking my questions. There is an article this week about LPs and sovereigns increasingly setting up their own in-house management capabilities. I read like it’s still in the very early stages, particularly in your world and alternative, but to what extent are you seeing that and how does it affect the conversations you are having with them as you fundraise? And I guess if this really is a trend in the long run, do you think you can coexist peacefully if that’s where it’s going?

Yes, okay. This has been a trend for a long time actually and certain investors are far down the road than others. To do that well and to do it in scale takes a big company. So, only our biggest LPs are set up to do that. Of the biggest LPs, most of the public funds in the U.S., which is the core of our business for the most part, do not have the mandate to do that, do not have the staff to do that, do not have the budget to hire the staff to do that and will not do that. So where we are seeing the large LPs effectively doing direct investing is really the international. It’s been led by the Canadian pension funds, but there are certain other international institutions that will do that as well. But again there, many of those international institutions, particularly when we are talking about Asia and Middle East, they want to base their operations in their home country. They want to staff it with local nationals. And it’s very hard for them to be effective on a global basis. So, bottom line is we don’t worry about this as a trend, first. Secondly, to the extent they want to do direct investing, for the most part, the more enlightened ones, Canadians are a bit of the exception. What they want to do is they want to use that direct investing to look at co-invest with trusted sponsors. So, what do they do is they give capital to funds, most particularly, our funds. And then in return, they expect us to offer them some co-investment opportunities, where their deal team will jump on and look at it. And that’s been a very symbiotic relationship, frankly. And in fact, their goal for more direct investing has really encouraged them to concentrate more resources with the biggest players like us. And so I think we are actually net benefiting from that. However, there is definitely more capital in the market looking to be invested in deals than just the committed capital to funds and that of course just has an effect on the overall supply and demand of capital. But generally speaking, it’s been a trend, but not one that’s going to threaten our core business.

Okay, great. It makes sense. And then just quickly, we have seen a few of the announced strategic deals, but could you update us on kind of the filed and maybe even close to filing IPO pipeline? Maybe just some numbers there, how that’s tracking?

Well, we have four or five things – they are not all IPOs necessarily, most of them are secondaries frankly, but we have four or five things in the pipeline, I would say, in private equity and probably three or four in real estate, all of which are possibles depending on price and market appetite and one thing, another. The real estate sales in light of the soft core for real estate related equities. That’s probably a little cooler in the last 90 days, especially because those companies continue to have great EBITDA growth. So, we are really paid the way and we are accruing more value by holding it now. And so that means bigger future gains. So, we are very patient about that, but we keep chipping away at it.

Okay, thank you.

And our next question comes from the line of Bill Katz with Citigroup. Please proceed.

Okay, thanks very much. I got cut off before this was answered and I apologize in advance. You mentioned very strong year-on-year growth in the unrealized receivable. Sequentially though, it looks like it’s down about 9%. Just given the very strong pace of distribution, how do you think that, that receivable plays out over the next couple of quarters? Are we at a peak or do you think that, that could actually start to reverse and climb again against given the pace of distributions, what’s going on right now?

Okay. Well, first of all, I didn’t say very strong. I said it was up year-over-year, which I think is remarkable given the amount of realizations that we have had and it’s almost, I guess, about $4.8 billion of total let’s call it incremental realizations. I mean, remember, 70% of the receivable as of the close of the second quarter of last year has now been realized. And so that realization rate has picked up. It was 45% realization rate over the last couple of years. Now, it’s picked up to 70%. I think the comparability sequentially is difficult, because in the first quarter, you always have the incentive fees related to annual hedge fund high watermarks that hit in. So, it’s not surprising to us even with lower level of appreciation that the receivable didn’t go up this quarter, because we do have that comparability issue. But I think we feel like what’s in the ground now, by way of example, the investments we have done over the last couple of years are only about 15% of the receivable. So, there is a long way to go with a lot of capital. That’s about – by the way, that’s $40 billion of capital we have in the ground. That’s only 14% of the receivables. So, as those businesses click on, we think there will be forward momentum in growth and receivable. I would also point out that the growth isn’t uniform when we typically do a real estate or private equity deal. You have relatively low level of value in the first year, because you are basically holding it largely at cost. What you see is an acceleration over time. And then of course, we are still exiting assets at a 20% to 25% premium to our prior quarter mark. So, that will kick in as well. So, we actually feel good about the forward outlook and that’s why I gave you some of those stats in and around the growth of the underlying portfolio and the fact that even with these realization rates, we are still adding to the receivables. So, we most certainly do not see it as a peak.

Okay, that’s helpful. And then you have been very successful in gathering assets into retail business, can you talk a little bit about maybe geographically where you are seeing that growth U.S. versus non-U.S. and which products and the underlying demand you see going ahead?

Yes, okay. So, it’s – the vast bulk of that is in the U.S. and in fact we have built an international organization, but we are really just coming through the first year of that. About $1 billion was of the various amounts that we have raised. Retail is international and the rest – year-to-date, the rest has been in domestic. And so, we have got a lot of potential, untapped potential, still in the international markets, but we got – but we are starting to get that and we have got the people on the ground, the organization on the ground to do it.

And just one last one, obviously just tremendous success in both the private equity and real estate respectively. You mentioned you had more demand at the end of the day. What drove you to cap it where it is right now given that you are deploying at a pretty high cliff? Is there any sort of supply demand concept you are thinking through in your minds?

Which fund, Bill?

Well, both the private equity and real estate, where I think you said you always subscribe in both I believe, if I recollect, maybe growing there.

Yes.

But why cap – I mean obviously you have very impressive numbers. So, I am not trying to quibble, but just conceptually trying to understand why not go for $20 billion? What in your minds, what was the holdback?

Yes, sure. Well, part of that is the dialogue with your LPs. So, you try to find that matching amount that they are comfortable with and the end that you can deliver on and balance that with demand. The investment pace has been strong, but particularly, in real estate, it’s been strong. Private equity, it’s a little more challenging to put out capital at record investment levels. In real estate, an awful lot of the money has been put out in America in the last few years and that’s markets becoming tighter. And so – and it’s the biggest market. So we are just trying to be smart about not so much what we are investing today, but what’s the right level through the cycle. We have got 4 years or 5 years. We actually have 6 years to invest these funds, but we try to target to invest them in 4 years and 5 years much quicker than what we have got in order to deliver on our LPs –for our LPs, keep that J curve down. And so we thought these were reasonable levels. They are the two biggest funds in the world and they are tight. So it’s however hardly like – being unduly conservative, I don’t think.

I see. Alright. Thanks for taking my questions.

And our next question comes from the line of Robert Lee from KBW. Please proceed.

Great. Thank you. And thanks for taking my questions. Maybe the first one, just kind of a little bit of a modeling question, but I noticed that in the calculation of DE, I mean year-over-year, the other payables is down 85%. And I know typically, I think the second half of the year tends to also be a little bit higher. So – and it was zero this quarter. So should we be expecting that that’s going to ramp back up to kind of what I will call more normal levels in the second half of the year?

Yes. You should, it has to do with how we calculate on the different assets that go through and it relates to the tax receivable agreement. So yes Rob, you should look at it on a more normalized basis.

Okay, great. And then a question on financial advisory, I know in the presentation you talked about that being on track for the second half, but just kind of curious, the spin of the advisory business, when do you think we may be able to expect kind of more details on it, so that we can kind of start thinking about value for BX shareholders that will be unlocked by that spin and putting some value on it?

Okay. So Rob we filed a Form 10, which you can go through and it’ll show what the – basically the carved out financials for PJTR, so that gives you the detail. I think right now we are expecting that the spin will happen some time this fall, which we are expecting to do. With respect to the earnings to-date and this is in the press release, but let me reemphasize this that business will from time to time be lumpy with respect to its returns. And we think by the end of the third quarter, it will be up year-over-year. So there is a bit of a comparability issue. In fact, if I just took the results through today as we sit here, the 16 of July, they are actually up year-over-year. So they have some scale deals closed just after the end of the quarter. With respect to the distribution itself and valuation, I think there is already some reports out there on valuation, I am not going to speculate on that piece. The impact on Blackstone is it’s about 3% on ENI and about 5% on DE, both of which are numbers that we frankly would grow through in 6 months to 9 months with respect to the regular activities in Blackstone. So it would be a good one-time distribution to the shareholders because as I said we expect to happen this fall. And we think with respect impact on Blackstone, it will not be material over time. And the timing, to be a little bit more specific about timing, somewhere near the end of the third quarter or beginning of the fourth, right in there.

Great, I appreciate that. And then my last question is and I am sure is probably one you guys have heard in the past, but just going back to the balance sheet and capital. I mean you have done a great job expanding the business and it doesn’t actually feel like you had to commit a lot more capital to newer strategies or at least been able to maintain a very steady – you have raised a lot of cash with very cheap debt and I think you make a pretty compelling case about the stock being cheap and undervalued. So just still kind of wondering what the reticence is about thinking – putting share repurchase in the mix given liquidity, given you haven’t really used a lot of that, you haven’t needed to use a lot of it, it’s a kind of expand the franchise and you do make a pretty good case about – I think on the value?

Yes. Well, we love the value, but we also think we have a huge number of growth opportunities, frankly. And you are right, we have met – we have done a pretty good job managing down some of the percentage capital commitments in our core funds. If you look at what we did a few years ago on BCP 5 and BREP 5, I guess 4, I can’t remember. They were big, bigger – much bigger percentages of the capital than they are today. Having said that, some of these new vehicles we are doing have huge potential scale, just core plus real estate, that got the $50 billion, which is I think certainly within the realm of possibility. It could take a lot of capital. And some of the things our businesses are doing could really scale. The other thing is the acquisitions we have done, all of them have been very, very accretive. We have been disciplined about it. But I think if you add up the number, it’s more than people perceive. It’s probably six, seven acquisitions.

We have done eight acquisitions since 2000 – since the IPO, eight acquisitions. And so the capital put to work was about $1.5 billion.

And those are very lumpy. It’s little hard to predict those. And the other thing is we don’t generate positive cash really because we pay it out to our LPs. So we do need to be careful about our balance sheet to be able to fund the growth and have available capital for the opportunistic things like acquisitions. And then we are just very conservative financial managers, which is we think that our LPs, when they give us money for 10 years or 12 years, they should know they are giving it to the Rock of Gibraltar in terms of its solidity. And so that’s kind of our view and that’s been our driving view about the balance sheet is not to lever up. Two things, so the acquisitions have turned out really well. I mean they are better than 30% IRR on the deals that we have done and that reflects the fact that there is so much synergy when we find the right teams and the right things. The other thing I would say is that what’s unusual is we don’t have the same dilution you see in a lot of financial services companies or asset managers who are giving out a lot of stock every year because the characteristics of performance fees has a certain vesting period with it. So if you look at over the last 8 years, we have averaged just over 150 basis points of dilution from stock given out over time. So we are not creating that type of headwind. And of course we have done good things with the capital. We have earned our ways through it.

Great. I appreciate the color. Thank you so much.

And our next question comes from the line of Michael Kim with Sandler O’Neill. Please proceed.

Yes. Good morning, just first wanted to come at the outlook for realizations maybe a bit differently. I know there is a lot of moving parts and it’s difficult to make generalizations across the different businesses. But just curious to maybe getting your thoughts or perspective on sort of the potential trajectory for realized performance fees just at a high level, it seems like there is a bit of a push-pull in terms of more seasoned portfolios on the one hand versus maybe a bit more of a volatile market backdrop going forward. So just curious to get your thoughts on how that might play out as it relates to exit activity?

Okay. Well, I think if the market conditions of today are reasonably stable, you will continue to see a high level of realizations. Obviously, if the markets fall out of bed, they will go down. And if the market gets hotter, it will probably accelerate. But in today’s markets, which the S&P is at about 16 PE, they feel not undervalued, but not peaky either in these equity markets. You will see a high level – you will continue to see strong realizations. Having said that – and so our realization activity will be – there is some variation in that, but it’s not near as big as I think what mostly what the market expects. So I look at the kind of level, maybe we are slightly above normal this year. I think last year was about a normal level and an average year going forward that we could expect to distribute. And they will be some years, we are a little below. But this isn’t – we are not like it’s some kind of a huge peak way above normal now. So if you look at what we did last year and then you think, okay a little higher in certain strong market years, a little lower on weak market years, you wouldn’t be too far off, in my opinion.

Got it. That’s helpful. And then just maybe a follow-up on the fundraising side, obviously, a lot of demand from LPs and it does seem like GP rationalization is starting to pick up. So just wondering if maybe that the balance of power, if you will has shifted a bit back in favor of the GPs in terms of fees and/or structures to the point where maybe you are hearing less noise from LPs as it relates to the terms?

Well, we are hearing less noise, but we have also improved the terms for LPs. So if you look at our private equity fund, for example, you look at fee slips, it’s gone from 50-50, i.e., we got 50% of each fee and they did just 65-35 to 80-20 and our most recent private equity funds are essentially 100% of the fees go to LPs. So – and there has never been any particular pressure on carry in the core funds. So, I think at this point, that’s stable partly because, sure the market environment, maybe the balance of powers to the GPs that have good records. But as much as anything, the LPs have got maybe some progress. On some of the newer funds that we started, like Tac Ops and some things like that, you will see there rising fees and carry as we have established those track records. And so there should be some good news for that with certain of our products.

But overall base fees for the core products really haven’t changed. They didn’t go down from prior years where they were.

Got it, okay.

Really, if I could flush that out, actually we increased basically slightly on private equity as we shifted from deal fee splits into base fees. So, generally speaking, it’s a very stable picture.

Got it. Okay, thanks for taking my questions.

And our next question comes from the line of Brian Bedell from Deutsche Bank. Please proceed.

Hi, good afternoon. Thanks for taking my questions. Just quickly on the outlook on energy, maybe Tony if you – or LT, if you want to describe how you thought energy impacted the portfolio performance probably across the franchise, I guess mostly in private equity in the credit segments this quarter. And then the deployment outlook near-term, I know longer term, it’s a good backdrop, but if you can comment on what you are thinking over the next say few quarters for the deployment outlook in those segments in energy areas?

Okay. Energy prices, maybe LT has a more specific answer, but in general, energy prices have dampened the returns in both private equity and credit. And by energy prices, I really mean oil and gas prices, which is what I assume you mean, but – and those are fully reflected in our returns and so however, we don’t have that much exposure really to oil and gas. A lot of our energy portfolio is in power generation, renewable power and things so on and so forth. And most of our companies are in very solid shape. So, we haven’t been hit near as hard as most of the other bigger energy investors. We actually – actually for the most part, our guys are very nimble. They got into gas early. They got out of gas at the right time. They got into oil. They got out of oil for the most part before the oil prices went down. So, our portfolio is very robust and they still are reporting good positive returns, not withstanding what’s happened in energy prices quarter by quarter. We are very happy with that overall. But if oil and gas prices – oil was up at $100, we would have higher marks I am sure and play that through, but I am sure we would. In terms of the deployment outlook, it’s picking up and I think it will be very strong, a high percentage of the likely closings in our private – in our announcements, new commitments in our private equity portfolio are energy-related. And on the credit side, too, with the new fund and some big new deals they have got handshakes on, that’s about to pick up as well.

Okay, great. That’s helpful. And then maybe just a broader picture on the fundraising environment, obviously, it’s been so incredibly strong, dry powder around the $82 billion from $64 billion last quarter. I think you deployed about $26 billion in 2014 and I believe $10 billion so far in the first half this year. If we think about going into the second half, just for you to frame the sort of conundrum of the heavy demand, oversubscribed demand, for the products and the ability to find new places to deploy that, does that make you want to slow down the fundraising pace even aside from the two big flagship funds?

Well, remember, the fundraising for the kind of funds we do is episodic in that sense of we go raise – we have $16.7 billion closing, our fundraisings for BCP 7. All we can – since there is a hard cap of $17.5 billion, all we can have left on that in the next few years is $800 million. So – and similarly, with BREP 8 closed, it’s going to be a while before we do another big BREP 8. So the fundraise was so – we have been through a phase now where big flagship funds have been very successful fundraisers. And year-to-date, both BREP 8 and BCP 7 had closings and Tac Ops is in the market. And so those are major bites, which will kind of be behind us. Now, there is a lot of other products and new products and other things, which are coming up. And I am not – it’s not going to fall out of bed, but it’s not something you decide, oh, well, let’s raise a little more this quarter, less next quarter, because we are kind of – we do it fund-by-fund and those are episodic. But the investment pace I think is very sustainable of where it is now. The returns have been great. We don’t feel we are having to compromise at all to get high returns. And I don’t see any reason why we can’t run it at sort of $20 billion investment pace for a while. Some markets are cooling a little bit, but we are still finding things to do. Other markets are heating up. So – and then as I say, some of the new products are – there is really big scale. So, I think we are in a pretty balanced area here.

But I think you also have to look at where your fundraising is as Tony said. So, in areas like real estate credit after GE deal, they used up a lot of capital, European real estate, etcetera. So, it’s really based on the piece of investing rather than when we want to take in money.

Great. And I think you quoted a number for the Core+ fundraised in the quarter and I missed that. What was that number?

Yes. So total, in Core+ is about $7 billion.

$7 billion totally. Okay, great. Thanks so much for taking my questions.

And our next question comes from the line of Devin Ryan with JMP Securities. Please proceed.

Hey, thanks. Good afternoon. I appreciate the view the credit and real estate will do well when rates move higher. Just given the expectation that rates could move over the next six months and looking, I guess, maybe within private equity, specifically I know that you guys underwrite every deal, but the buyer is going to have more expensive financing. I think that’s probably been a conservative assumption in recent years, but with the view on potential rates moving, does that change the premium relative to the existing market you guys have kind of benefited from recently? And then I guess also do you see any shifts in competition from higher rates that could impact your ability to sell products or buy assets?

Okay. Not sure I completely understand all the questions, but let me just certainly enter around a little bit. As you say, when we go into a deal, we assume that the buyer is going to be buying from us five years from now in a normal credit market, whatever we think that may be. That in today’s – by comparison to today’s world, that will be lower debt-to-EBITDA multiples than is available today at higher rates. Could we be wrong on that? Yes. And – but I don’t think that – and if we are wrong, I think it’s more apt to be better credit markets, but we are already assuming rates rise in that. And – but a lot of our investments are not just public to private LBOs, where you put the max amount of debt on it. Many times, frankly, we are not taking all the debt available, because we want more conserved capital structures and the guiding principle in our investing in private equity is not levered returns, it’s un-levered returns. So, we have to be able to drive un-levered returns, zero, not a dollar of leverage on a portfolio company investment to higher rates than investors can earn in the S&P for us to want to do the deal. And so then – so, if we are doing that, we become much less sensitive in our investing to amounts of leverage. Also, to the extent we do a lot of things built on developing or building new assets, whether they be energy or infrastructure or things like that, things in emerging markets. Again, we are not – those returns are driven not so much by the amount of leverage available. The other big themes in private equity that we do are consolidations where we back a great management team to buy a company in an industry where we think we can roll up a lot of the other players at very, very attractive multiples of post-synergy EBITDA. And the return is not at all driven by the amount of leverage. The return on those deals is driven by our ability to continue to effectuate acquisitions and get the operating synergies. And then the other kind of business that we have moved to actually, because we felt like the most overpriced assets in this market are slow-growing, cash-flowing assets almost like bonds. So, bonds are the most overpriced financial assets, but slow-growing, mature companies with lots of cash flow are the values, where leverage has pushed up the values the most. So – and we are most vulnerable if rates come up. So, we have moved away from those kinds of assets in our acquisition activity. And if you look at, in addition to the energy, in addition to the consolidation plays, the other thing you will see us is doing growth investing actually where you always had a high percentage of low capital structure for those investments in equity. So, if you are paying 12 times EBITDA for a company and you had 5 times debt, the fact that you can get 5.5 now doesn’t affect your price very much and you are still getting a high-quality company with real organic growth. So, again, I think that the value and returns in those companies will be contingent to us continuing to get the growth and continuing to have a franchise, not on credit markets. So, I feel very good about the fact that we are not promising our investment strategy on these credit markets and we are not even really in some ways even taking the advantage very much of them.

Got it. Thanks. That answers my question. I appreciate it.

The final question is coming from the line of Eric Berg with RBC. Please proceed.

Thanks. Just a couple of questions. First, I would have thought that given the underlying – given the strength of the fundamentals of your underlying investments, your portfolio of company’s EBITDA and other measures of fundamentals create and given to the strength of the stock markets, especially outside the United States in the first quarter of this year, I would have thought that your year-to-date economic net income would have been up, but it too was kind of flat. What is – what’s your interpretation of that? Why would that happen given the factors that I mentioned?

Yes, okay. So – I mean, let me take a whack at that and then maybe everyone will jump in if they want. But first of all, our economic net income this quarter versus the same quarter last year is not so much a function of what’s happening now. Yes, we are accruing values. We are accruing good values. That’s why we gave you the returns on these funds, which your – private equity, 16.5%, real estate, 20% over last year. Those are great returns. But if we compare ourselves to a quarter last year when the markets boomed, you might have had even bigger markets. And so it’s a mistake to think about – you are kind of conflating a little bit absolute return and relative return for a given quarter, first of all. Secondly, remember too that while the European market – foreign market has been strong, the dollar has been strong too. So, currencies have – currencies are a factor here, because we translate back into dollars. And then we have different fund dynamics where some funds are in catch up and other funds aren’t, come from and go in and out of catch up and that affects the amount of the gain, which shifts – and then some funds have different comp ratios than others. And so depending on where the gains are it affects how much flows to ENI in a different quarter.

Okay. So, my second question is sort of and I will wrap up on – may I ask the second question real quick, do you have time to fit me in?

Sure, go ahead, Eric.

Thanks very much. It’s a broader, non-numerical question. It’s more on the – on sort of the business plan at Blackstone. One of the things that occurred to me, I am deeply involved with following the retirement savings business and given your success as both agents and principles, let’s talk about as agents for others, given the fact that you have been – that you have so far outperformed the stock markets and credit market indices and given this retirement crisis that we continue to have in this country, can we be found to sort of – obviously, you are contributing to the solution by working for your pension fund clients, but what about defining contribution, 401(k) and related areas? I would – let’s get the management’s view on how – either in coming – in the next year or in coming years your investment success and prowess could be put to work in helping solve ordinary people’s income needs in retirement or is that not realistic?

Well, first of all, let me say that you are my new favorite person and we are going to get you on the road, have you spend some time in Washington and everywhere else in the world. We completely agree. Let’s just start with that and frankly have been spending some considerable time on this. I have the view that the hidden crisis in America that no one is talking about is what’s going to happen with all of these 20, 30, 40-year-olds who no longer have corporate pension funds of defined benefit, so they have got 401(k)s and they are making little contributions in there, which is earning very, very little. When they retire at 65 and they don’t have enough to live on and it’s an entire generation, maybe two generations of people, we are going to go, oh my God, what happened? And if they can’t invest money at higher returns than 4% to 5%, which is all the public markets are going to give you, we are going to be in trouble as a country. So, I think that Blackstone has an obligation to save the country by delivering superior returns consistently with reduced, I would say reduced, lower risk in public markets to retail investors. Now, there is a lot of institutional barriers to do that, but retail investors need these products just as value – or worse than institutional product, because they have few – less options today. And the reason that institutions have moved over the years from 5% of their assets into alternatives to the average pension being 20 and the average endowment being over 50, the more sophisticated the institutional investor, the higher the percentage of the assets they have in alternatives is because that’s the only way they have been able to go far and will be able to get returns. But there are lot of institutional barriers for retail investors, not starting with Department of Labor and a lot of other things which just now prohibit it, because they require daily liquidity, daily mark-to-market. Some of our products don’t let them do that, sells to that. We are creating products that can accommodate that, but it’s a small subset of what we do and a lot of the returns we make come from the fact that we can free ourselves from the tyranny of daily liquidity and take advantage of these substantially enhanced returns that come when you can do that without taking more risk. So, as a society, we will need to work on this. And I promise you, eventually people will recognize this has to happen and we are there to serve when it does.

Okay. We will talk to you more about it. Yes, I would say – this is Steve, that Tony has given a terrific answer on it. This is basically a political issue and it’s a misunderstanding of risk and somebody thinks that they are protecting the public from firms and asset classes like – that we are in, where we have been doing this for 30 years and have averaged about double the stock market. And some of our asset classes have lost virtually nothing. And so any rationale look at this situation would come to the kind of conclusion that was implicit in your question and explicit in Tony’s answer. And this should really happen, but there are certain political beliefs that just don’t want to encounter reality. They have the theory that things actually are different than they are. And so as we go through political cycles, there maybe changes in this but there is an economic reality that the performance is there and people need this stuff. They need the returns. They have solved that problem institutionally. When we started in the business, alternatives were somewhere around 2% of institutional portfolios. They are now somewhere around 17% to 20%. Some institutions are at 40% and the publics at 2%. And they are being held back unfairly and in terms of their own retirement and well-being. And I am optimistic that this will ultimately be addressed and it would be a terrific legacy, frankly, for an administration to do something like that for people. Because if you don’t have a good retirement at – given the age people live to now, I mean that could be 30% of your life and people need to be supported. So, you hit a hot button with us whether you can tell by Tony’s answer or my answer. And if we can unlock that, the scale of the firm, we get to really remarkable thing. I mean, there are people who have $4 trillion plus managing public money with returns that are a fraction of ours. Well, we can’t deploy that much money in our current mode, but just think about that. I mean, there is huge opportunity for us at some point in the cycle.

Well, again, good luck to you on getting that done. Thank you.

Thanks, Eric. Thanks, everybody. If you have a follow-up, please feel free to give us a ring.

Ladies and gentlemen that concludes today’s conference. Thank you for your participation. You may now disconnect. So, you all have a great day.