UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
FOR THE QUARTERLY PERIOD ENDED SEPTEMBERJUNE 30, 20172018
OR
☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
FOR THE TRANSITION PERIOD FROM TO
Commission File Number: 333-213043000-55931
Blackstone Real Estate Income Trust, Inc.
(Exact name of Registrant as specified in its charter)
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Maryland | 81-0696966 |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
345 Park Avenue
New York, New York 10154
(Address of principal executive offices) (Zip Code)
(212) 583-5000
(Registrant’s telephone number, including area code)
Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site,Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒ No ☐
Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer | ☐ |
| Accelerated filer | ☐ |
Non-accelerated filer | ☒ | (Do not check if a smaller reporting company) | Smaller reporting company | ☐ |
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| Emerging growth company | ☒ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. Yes ☒ No ☐
Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act.Act). Yes ☐ No ☒
As of November 13, 2017, there were 117,771,673 outstandingAugust 14, 2018, the issuer had the following shares outstanding: 222,140,469 shares of Class S common stock, 27,873,679 outstanding17,344,262 shares of Class IT common stock, 2,981,473 outstanding22,061,631 shares of Class D common stock, and 4,315,936 outstanding78,941,312 shares of Class TI common stock.
PART I. | 1 | |
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ITEM 1. | 1 | |
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| Condensed Consolidated Financial Statements (Unaudited): |
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| Condensed Consolidated Balance Sheets as of | 1 |
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| 3 | |
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| 4 | |
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ITEM 2. | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
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ITEM 3. |
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ITEM 4. |
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PART II. |
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ITEM 1. |
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ITEM 1A. |
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ITEM 2. |
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ITEM 3. |
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ITEM 4. |
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ITEM 5. |
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ITEM 6. |
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Blackstone Real Estate Income Trust, Inc.
Condensed Consolidated Balance Sheets (Unaudited)
(in thousands, except share and per share data)
|
| September 30, |
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| December 31, |
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| 2017 |
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| 2016 |
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| June 30, 2018 |
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| December 31, 2017 |
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Assets |
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Investments in real estate, net |
| $ | 2,234,133 |
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| $ | — |
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| $ | 6,748,035 |
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| $ | 3,406,555 |
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Investments in real estate-related securities |
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| 644,371 |
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| — |
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| 1,650,393 |
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| 915,742 |
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Cash and cash equivalents |
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| 30,820 |
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| 200 |
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| 56,456 |
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| 31,166 |
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Restricted cash |
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| 105,881 |
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| — |
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| 179,588 |
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| 126,563 |
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Intangible assets, net |
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| 88,510 |
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| — |
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Other assets |
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| 23,754 |
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| — |
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| 299,508 |
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| 145,282 |
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Total assets |
| $ | 3,127,469 |
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| $ | 200 |
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| $ | 8,933,980 |
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| $ | 4,625,308 |
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Liabilities and Equity |
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Mortgage notes, term loan, and revolving credit facility, net |
| $ | 1,155,391 |
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| $ | — |
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Mortgage notes, term loans, and revolving credit facilities, net |
| $ | 4,493,579 |
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| $ | 2,111,291 |
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Repurchase agreements |
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| 478,455 |
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| — |
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| 1,102,240 |
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| 682,848 |
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Affiliate line of credit |
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| 122,676 |
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| — |
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| — |
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| 5,374 |
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Due to affiliates |
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| 101,983 |
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| 86 |
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| 199,016 |
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| 133,071 |
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Subscriptions received in advance |
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| 98,435 |
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| — |
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Accounts payable, accrued expenses, and other liabilities |
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| 58,103 |
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| 29 |
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| 508,871 |
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| 182,835 |
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Total liabilities |
| $ | 2,015,043 |
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| $ | 115 |
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| 6,303,706 |
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| 3,115,419 |
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Commitments and contingencies |
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| — |
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| — |
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| — |
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| — |
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Redeemable non-controlling interest |
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| 9,187 |
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| 250 |
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Equity |
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Preferred stock, $0.01 par value per share, 100,000,000 shares authorized; none issued and outstanding as of September 30, 2017 and December 31, 2016 |
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| — |
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| — |
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Common stock — Class S shares, $0.01 par value per share, 500,000,000 shares authorized; 98,779,308 and no shares issued and outstanding as of September 30, 2017 and December 31, 2016, respectively |
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| 988 |
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| — |
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Common stock — Class T shares, $0.01 par value per share, 500,000,000 shares authorized; 2,208,763 and no shares issued and outstanding as of September 30, 2017 and December 31, 2016, respectively |
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| 22 |
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| — |
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Common stock — Class D shares, $0.01 par value per share, 500,000,000 shares authorized; 1,225,700 and no shares issued and outstanding as of September 30, 2017 and December 31, 2016, respectively |
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| 12 |
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| — |
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Common stock — Class I shares, $0.01 par value per share, 500,000,000 shares authorized; 23,277,430 and 20,000 shares issued and outstanding as of September 30, 2017 and December 31, 2016, respectively |
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| 233 |
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| — |
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Preferred stock, $0.01 par value per share, 100,000,000 shares authorized; no shares issued and outstanding as of June 30, 2018 and December 31, 2017 |
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| — |
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| — |
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Common stock — Class S shares, $0.01 par value per share, 500,000,000 shares authorized; 198,618,151 and 130,085,145 shares issued and outstanding as of June 30, 2018 and December 31, 2017, respectively |
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| 1,986 |
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| 1,301 |
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Common stock — Class T shares, $0.01 par value per share, 500,000,000 shares authorized; 14,857,931 and 5,624,614 shares issued and outstanding as of June 30, 2018 and December 31, 2017, respectively |
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| 149 |
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| 56 |
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Common stock — Class D shares, $0.01 par value per share, 500,000,000 shares authorized; 16,827,076 and 3,955,114 shares issued and outstanding as of June 30, 2018 and December 31, 2017, respectively |
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| 168 |
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| 40 |
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Common stock — Class I shares, $0.01 par value per share, 500,000,000 shares authorized; 66,715,121 and 30,719,160 shares issued and outstanding as of June 30, 2018 and December 31, 2017, respectively |
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| 667 |
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| 307 |
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Additional paid-in capital |
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| 1,177,444 |
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| 200 |
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| 2,884,242 |
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| 1,616,720 |
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Accumulated deficit and cumulative distributions |
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| (75,129 | ) |
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| (115 | ) |
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| (297,090 | ) |
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| (132,633 | ) |
Total stockholders' equity |
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| 1,103,570 |
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| 85 |
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| 2,590,122 |
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| 1,485,791 |
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Non-controlling interests |
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| 8,856 |
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| — |
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| 30,965 |
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| 23,848 |
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Total equity |
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| 1,112,426 |
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| 85 |
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| 2,621,087 |
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| 1,509,639 |
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Total liabilities and equity |
| $ | 3,127,469 |
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| $ | 200 |
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| $ | 8,933,980 |
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| $ | 4,625,308 |
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See accompanying notes to condensed consolidated financial statements.
Blackstone Real Estate Income Trust, Inc.
Condensed Consolidated Statements of Operations (Unaudited)
(in thousands, except share and per share data)
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| Three Months Ended September 30, |
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| Nine Months Ended September 30, |
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| For the Period March 2, 2016 (date of initial capitalization) through September 30, |
| Three Months Ended June 30, |
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| Six Months Ended June 30, |
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| 2017 |
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| 2016 |
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| 2017 |
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| 2016 |
| 2018 |
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| 2017 |
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| 2018 |
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| 2017 |
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Revenues |
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Rental revenue | $ | 33,599 |
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| $ | — |
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| $ | 55,727 |
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| $ | — |
| $ | 110,254 |
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| $ | 21,230 |
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| $ | 188,767 |
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| $ | 22,128 |
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Tenant reimbursement income |
| 3,230 |
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| — |
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| 5,503 |
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| — |
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| 15,560 |
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| 2,206 |
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| 24,608 |
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| 2,273 |
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Hotel revenue |
| 9,874 |
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| — |
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| 15,048 |
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| — |
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| 21,196 |
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|
| 3,748 |
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| 39,017 |
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| 5,174 |
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Other revenue |
| 2,201 |
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|
| — |
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| 3,409 |
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| — |
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| 5,216 |
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| 1,155 |
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| 9,518 |
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| 1,208 |
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Total revenues |
| 48,904 |
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|
| — |
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| 79,687 |
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| — |
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| 152,226 |
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| 28,339 |
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| 261,910 |
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| 30,783 |
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Expenses |
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Rental property operating |
| 15,938 |
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| — |
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| 25,632 |
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| — |
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| 51,452 |
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| 9,389 |
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| 90,070 |
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| 9,694 |
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Hotel operating |
| 6,668 |
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|
| — |
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| 9,617 |
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| — |
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| 13,522 |
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| 2,109 |
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| 25,136 |
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| 2,949 |
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General and administrative |
| 1,716 |
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|
| — |
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| 5,969 |
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| — |
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| 2,901 |
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| 1,567 |
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| 4,946 |
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| 4,253 |
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Management fee |
| 3,712 |
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| — |
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| 3,712 |
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| — |
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| 9,281 |
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| — |
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| 16,250 |
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| — |
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Performance participation allocation |
| 5,711 |
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| — |
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| 10,952 |
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| — |
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| 9,476 |
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| 5,241 |
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| 17,349 |
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| 5,241 |
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Depreciation and amortization |
| 40,359 |
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|
| — |
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| 65,145 |
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| — |
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| 84,826 |
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| 23,696 |
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| 158,950 |
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| 24,786 |
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Total expenses |
| 74,104 |
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|
| — |
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|
| 121,027 |
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|
| — |
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| 171,458 |
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|
| 42,002 |
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| 312,701 |
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| 46,923 |
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Other income (expense) |
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Income from real estate-related securities |
| 4,026 |
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| — |
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| 7,435 |
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| — |
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| 17,397 |
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| 2,543 |
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| 30,632 |
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| 3,409 |
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Interest income |
| 36 |
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|
| — |
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|
| 418 |
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|
| — |
|
| 121 |
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|
| 117 |
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|
| 198 |
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|
| 382 |
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Interest expense |
| (10,866 | ) |
|
| — |
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|
| (16,413 | ) |
|
| — |
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| (49,841 | ) |
|
| (5,541 | ) |
|
| (81,232 | ) |
|
| (5,547 | ) |
Other expenses |
| (27 | ) |
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| (55 | ) |
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Total other (expense) income |
| (6,831 | ) |
|
| — |
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| (8,615 | ) |
|
| — |
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Net loss before income tax |
| (32,031 | ) |
|
| — |
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| (49,955 | ) |
|
| — |
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Income tax benefit |
| 184 |
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|
| — |
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|
| 140 |
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|
| — |
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Other income (expense) |
| (389 | ) |
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| (157 | ) |
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| (389 | ) |
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| (72 | ) | |||||||||||||||
Total other income (expense) |
| (32,712 | ) |
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| (3,038 | ) |
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| (50,791 | ) |
|
| (1,828 | ) | |||||||||||||||
Net loss | $ | (31,847 | ) |
| $ | — |
|
| $ | (49,815 | ) |
| $ | — |
| $ | (51,944 | ) |
| $ | (16,701 | ) |
| $ | (101,582 | ) |
| $ | (17,968 | ) |
Net loss attributable to non-controlling interests | $ | 122 |
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| $ | — |
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| $ | 122 |
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| $ | — |
| $ | 1,462 |
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| $ | — |
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| $ | 3,552 |
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| $ | — |
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Net loss attributable to BREIT stockholders | $ | (31,725 | ) |
| $ | — |
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| $ | (49,693 | ) |
| $ | — |
| $ | (50,482 | ) |
| $ | (16,701 | ) |
| $ | (98,030 | ) |
| $ | (17,968 | ) |
Net loss per share of common stock — basic and diluted | $ | (0.28 | ) |
| $ | — |
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| $ | (0.66 | ) |
| $ | — |
| $ | (0.19 | ) |
| $ | (0.22 | ) |
| $ | (0.41 | ) |
| $ | (0.31 | ) |
Weighted-average shares of common stock outstanding, basic and diluted |
| 112,585,463 |
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| 20,000 |
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| 75,771,929 |
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| 20,000 |
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| 272,727,892 |
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| 76,595,994 |
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| 239,600,008 |
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| 57,060,077 |
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Gross distributions declared per share of common stock | $ | 0.16 |
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| $ | 0.13 |
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| $ | 0.31 |
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| $ | 0.17 |
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See accompanying notes to condensed consolidated financial statements.
Blackstone Real Estate Income Trust, Inc.
Condensed Consolidated Statement of Changes in Equity (Unaudited)
(in thousands)
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| Par Value |
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| Accumulated |
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| Par Value |
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| Accumulated |
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| Common |
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| Common |
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| Common |
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| Common |
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| Additional |
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| Deficit and |
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| Total |
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| Common |
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| Common |
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| Common |
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| Common |
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| Additional |
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| Deficit and |
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| Total |
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| Non- |
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| Stock |
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| Stock |
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| Stock |
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| Stock |
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| Paid-in |
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| Cumulative |
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| Stockholders' |
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| Non-controlling |
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| Total |
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| Stock |
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| Stock |
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| Stock |
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| Stock |
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| Paid-in |
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| Cumulative |
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| Stockholders' |
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| controlling |
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| Total |
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| Class S |
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| Class T |
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| Class D |
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| Class I |
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| Capital |
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| Distributions |
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| Equity |
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| Interests |
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| Equity |
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| Class S |
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| Class T |
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| Class D |
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| Class I |
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| Capital |
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| Distributions |
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| Equity |
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| Interests |
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| Equity |
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Balance at December 31, 2016 |
| $ | — |
|
| $ | — |
|
| $ | — |
|
| $ | — |
|
| $ | 200 |
|
| $ | (115 | ) |
| $ | 85 |
|
| $ | — |
|
| $ | 85 |
|
| $ | — |
|
| $ | — |
|
| $ | — |
|
| $ | — |
|
| $ | 200 |
|
| $ | (115 | ) |
| $ | 85 |
|
| $ | — |
|
| $ | 85 |
|
Common stock issued |
|
| 711 |
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|
| — |
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|
| 2 |
|
|
| 172 |
|
|
| 893,765 |
|
|
| — |
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|
| 894,650 |
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|
| — |
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|
| 894,650 |
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Distribution reinvestment |
|
| 3 |
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|
| — |
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|
| — |
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|
| 1 |
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|
| 4,266 |
|
|
| — |
|
|
| 4,270 |
|
|
| — |
|
|
| 4,270 |
| ||||||||||||||||||||||||||||||||||||
Offering costs |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (70,369 | ) |
|
| — |
|
|
| (70,369 | ) |
|
| — |
|
|
| (70,369 | ) | ||||||||||||||||||||||||||||||||||||
Amortization of restricted stock grant |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 52 |
|
|
| — |
|
|
| 52 |
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|
| — |
|
|
| 52 |
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Net loss |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (17,968 | ) |
|
| (17,968 | ) |
|
| — |
|
|
| (17,968 | ) | ||||||||||||||||||||||||||||||||||||
Distributions declared on common stock |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (10,270 | ) |
|
| (10,270 | ) |
|
| — |
|
|
| (10,270 | ) | ||||||||||||||||||||||||||||||||||||
Balance at June 30, 2017 |
| $ | 714 |
|
| $ | — |
|
| $ | 2 |
|
| $ | 173 |
|
| $ | 827,914 |
|
| $ | (28,353 | ) |
| $ | 800,450 |
|
| $ | — |
|
| $ | 800,450 |
| ||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2017 |
| $ | 1,301 |
|
| $ | 56 |
|
| $ | 40 |
|
| $ | 307 |
|
| $ | 1,616,720 |
|
| $ | (132,633 | ) |
| $ | 1,485,791 |
|
| $ | 23,848 |
|
| $ | 1,509,639 |
| ||||||||||||||||||||||||||||||||||||
Common stock issued |
|
| 978 |
|
|
| 22 |
|
|
| 12 |
|
|
| 230 |
|
|
| 1,262,811 |
|
|
| — |
|
|
| 1,264,053 |
|
|
| — |
|
|
| 1,264,053 |
|
|
| 668 |
|
|
| 92 |
|
|
| 128 |
|
|
| 353 |
|
|
| 1,325,418 |
|
|
| — |
|
|
| 1,326,659 |
|
|
| — |
|
|
| 1,326,659 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||||||||||||||
Offering costs |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (98,938 | ) |
|
| — |
|
|
| (98,938 | ) |
|
| — |
|
|
| (98,938 | ) |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (83,852 | ) |
|
| — |
|
|
| (83,852 | ) |
|
| — |
|
|
| (83,852 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||||||||||||||
Distribution reinvestment |
|
| 10 |
|
|
| — |
|
|
| — |
|
|
| 3 |
|
|
| 13,481 |
|
|
| — |
|
|
| 13,494 |
|
|
| — |
|
|
| 13,494 |
|
|
| 25 |
|
|
| 1 |
|
|
| — |
|
|
| 9 |
|
|
| 38,466 |
|
|
| — |
|
|
| 38,501 |
|
|
| — |
|
|
| 38,501 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||||||||||||||
Common stock repurchased |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (187 | ) |
|
| — |
|
|
| (187 | ) |
|
| — |
|
|
| (187 | ) |
|
| (8 | ) |
|
| — |
|
|
| — |
|
|
| (2 | ) |
|
| (11,104 | ) |
|
| — |
|
|
| (11,114 | ) |
|
| — |
|
|
| (11,114 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||||||||||||||
Amortization of restricted stock grants |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 77 |
|
|
| — |
|
|
| 77 |
|
|
| — |
|
|
| 77 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 50 |
|
|
| — |
|
|
| 50 |
|
|
| — |
|
|
| 50 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||||||||||||||
Net loss |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (49,693 | ) |
|
| (49,693 | ) |
|
| (122 | ) |
|
| (49,815 | ) | ||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||||||||||||||
Net loss ($622 allocated to redeemable non-controlling interest) |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (98,030 | ) |
|
| (98,030 | ) |
|
| (2,930 | ) |
|
| (100,960 | ) | ||||||||||||||||||||||||||||||||||||
Distributions declared on common stock |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (25,321 | ) |
|
| (25,321 | ) |
|
| — |
|
|
| (25,321 | ) |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (66,427 | ) |
|
| (66,427 | ) |
|
| — |
|
|
| (66,427 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||||||||||||||
Contributions from non-controlling interests |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 8,978 |
|
|
| 8,978 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 11,274 |
|
|
| 11,274 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||||||||||||||
Balance at September 30, 2017 |
| $ | 988 |
|
| $ | 22 |
|
| $ | 12 |
|
| $ | 233 |
|
| $ | 1,177,444 |
|
| $ | (75,129 | ) |
| $ | 1,103,570 |
|
| $ | 8,856 |
|
| $ | 1,112,426 |
| ||||||||||||||||||||||||||||||||||||
Distributions to non-controlling interests |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (1,227 | ) |
|
| (1,227 | ) | ||||||||||||||||||||||||||||||||||||
Allocation to redeemable non-controlling interest |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (1,456 | ) |
|
| — |
|
|
| (1,456 | ) |
|
| — |
|
|
| (1,456 | ) | ||||||||||||||||||||||||||||||||||||
Balance at June 30, 2018 |
| $ | 1,986 |
|
| $ | 149 |
|
| $ | 168 |
|
| $ | 667 |
|
| $ | 2,884,242 |
|
| $ | (297,090 | ) |
| $ | 2,590,122 |
|
| $ | 30,965 |
|
| $ | 2,621,087 |
|
See accompanying notes to condensed consolidated financial statements.
Blackstone Real Estate Income Trust, Inc.
Condensed Consolidated Statements of Cash Flows (Unaudited)
(in thousands)
|
| Six Months Ended June 30, |
| |||||||||||||
|
| Nine Months Ended September 30, 2017 |
|
| For the Period March 2, 2016 (date of initial capitalization) through September 30, 2016 |
|
| 2018 |
|
| 2017 |
| ||||
Cash flows from operating activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
| $ | (49,815 | ) |
|
| — |
|
| $ | (101,582 | ) |
| $ | (17,968 | ) |
Adjustments to reconcile net loss to net cash provided by operating activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Management fee |
|
| 16,250 |
|
|
| — |
| ||||||||
Performance participation allocation |
|
| 17,349 |
|
|
| — |
| ||||||||
Depreciation and amortization |
|
| 65,145 |
|
|
| — |
|
|
| 158,950 |
|
|
| 24,786 |
|
Unrealized gain on changes in fair value of financial instruments |
|
| (993 | ) |
|
| — |
|
|
| (3,848 | ) |
|
| (1,635 | ) |
Realized loss on settlement of real estate-related securities |
|
| 177 |
|
|
| — |
| ||||||||
Straight-line rent adjustment |
|
| (1,118 | ) |
|
| — |
| ||||||||
Amortization of above- and below-market lease intangibles |
|
| (792 | ) |
|
| — |
| ||||||||
Amortization of below-market and prepaid ground lease intangibles |
|
| 156 |
|
|
| — |
| ||||||||
Amortization of deferred financing costs |
|
| 771 |
|
|
| — |
| ||||||||
Amortization of restricted stock grants |
|
| 77 |
|
|
| — |
| ||||||||
Bad debt expense |
|
| 709 |
|
|
| — |
| ||||||||
Other items |
|
| (519 | ) |
|
| (203 | ) | ||||||||
Change in assets and liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Increase) / decrease in other assets |
|
| (10,824 | ) |
|
| — |
|
|
| (24,186 | ) |
|
| (6,277 | ) |
Increase / (decrease) in due to affiliates |
|
| 18,523 |
|
|
| — |
|
|
| (257 | ) |
|
| 7,634 |
|
Increase / (decrease) in accounts payable, accrued expenses, and other liabilities |
|
| 22,244 |
|
|
| — |
|
|
| 42,168 |
|
|
| 13,147 |
|
Net cash provided by operating activities |
|
| 44,260 |
|
|
| — |
|
|
| 104,325 |
|
|
| 19,484 |
|
Cash flows from investing activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisitions of real estate |
|
| (2,245,885 | ) |
|
| — |
|
|
| (3,372,075 | ) |
|
| (1,509,640 | ) |
Capital improvements to real estate |
|
| (3,290 | ) |
|
| — |
|
|
| (28,843 | ) |
|
| (461 | ) |
Pre-acquisition costs |
|
| (9,201 | ) |
|
| — |
|
|
| (615 | ) |
|
| (1,123 | ) |
Purchase of real estate-related securities |
|
| (660,151 | ) |
|
| — |
|
|
| (676,394 | ) |
|
| (300,040 | ) |
Proceeds from settlement of real estate-related securities |
|
| 16,596 |
|
|
| — |
|
|
| 115,619 |
|
|
| 16,596 |
|
Net cash used in investing activities |
|
| (2,901,931 | ) |
|
| — |
|
|
| (3,962,308 | ) |
|
| (1,794,668 | ) |
Cash flows from financing activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from issuance of common stock |
|
| 1,264,053 |
|
|
| — |
|
|
| 1,204,297 |
|
|
| 894,650 |
|
Offering costs paid |
|
| (15,388 | ) |
|
| — |
|
|
| (19,208 | ) |
|
| (10,102 | ) |
Subscriptions received in advance |
|
| 98,435 |
|
|
| — |
|
|
| 137,896 |
|
|
| 88,657 |
|
Repurchase of common stock |
|
| (187 | ) |
|
| — |
|
|
| (6,881 | ) |
|
| — |
|
Borrowings from mortgage notes, term loan, and revolving credit facility |
|
| 1,055,913 |
|
|
| — |
| ||||||||
Redemption of redeemable non-controlling interest |
|
| (8,400 | ) |
|
| — |
| ||||||||
Borrowings from mortgage notes, term loans, and revolving credit facilities |
|
| 3,141,053 |
|
|
| 723,304 |
| ||||||||
Repayments from mortgage notes, term loans, and revolving credit facilities |
|
| (894,600 | ) |
|
| — |
| ||||||||
Borrowings under repurchase agreements |
|
| 491,026 |
|
|
| — |
|
|
| 508,949 |
|
|
| 182,154 |
|
Settlement of repurchase agreements |
|
| (12,571 | ) |
|
| — |
|
|
| (89,557 | ) |
|
| (12,571 | ) |
Borrowings from affiliate line of credit |
|
| 617,650 |
|
|
| — |
|
|
| 575,000 |
|
|
| 178,208 |
|
Repayments on affiliate line of credit |
|
| (495,150 | ) |
|
| — |
|
|
| (580,250 | ) |
|
| (134,500 | ) |
Payment of deferred financing costs |
|
| (12,384 | ) |
|
| — |
|
|
| (19,847 | ) |
|
| (8,742 | ) |
Contributions from non-controlling interests |
|
| 8,978 |
|
|
| — |
|
|
| 11,274 |
|
|
| — |
|
Distributions to non-controlling interests |
|
| (1,652 | ) |
|
| — |
| ||||||||
Distributions |
|
| (6,203 | ) |
|
| — |
|
|
| (21,776 | ) |
|
| (1,917 | ) |
Net cash provided by financing activities |
|
| 2,994,172 |
|
|
| — |
|
|
| 3,936,298 |
|
|
| 1,899,141 |
|
Net change in cash and cash equivalents and restricted cash |
|
| 136,501 |
|
|
| — |
|
|
| 78,315 |
|
|
| 123,957 |
|
|
|
|
|
|
|
|
|
| ||||||||
Cash and cash equivalents and restricted cash, beginning of period |
| $ | 200 |
|
| $ | 200 |
|
|
| 157,729 |
|
|
| 200 |
|
Cash and cash equivalents and restricted cash, end of period |
| $ | 136,701 |
|
| $ | 200 |
|
| $ | 236,044 |
|
| $ | 124,157 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of cash and cash equivalents and restricted cash to the consolidated balance sheets: |
|
|
|
|
|
|
|
| ||||||||
Reconciliation of cash and cash equivalents and restricted cash to the condensed consolidated balance sheets: |
|
|
|
|
|
|
|
| ||||||||
Cash and cash equivalents |
| $ | 30,820 |
|
| $ | 200 |
|
| $ | 56,456 |
|
| $ | 31,296 |
|
Restricted cash |
|
| 105,881 |
|
|
| — |
|
|
| 179,588 |
|
|
| 92,861 |
|
Total cash and cash equivalents and restricted cash |
| $ | 136,701 |
|
| $ | 200 |
|
| $ | 236,044 |
|
| $ | 124,157 |
|
|
|
|
|
|
|
|
|
| ||||||||
Non-cash investing and financing activities: |
|
|
|
|
|
|
|
| ||||||||
Assumption of mortgage notes in conjunction with acquisitions of real estate |
| $ | 151,220 |
|
| $ | — |
| ||||||||
Assumption of other liabilities in conjunction with acquisitions of real estate |
| $ | 36,625 |
|
| $ | 10,459 |
| ||||||||
Accrued capital expenditures and acquisition related costs |
| $ | 8,163 |
|
| $ | 1,003 |
| ||||||||
Accrued pre-acquisition costs |
| $ | 403 |
|
| $ | 585 |
| ||||||||
Accrued distributions |
| $ | 6,194 |
|
| $ | 4,083 |
| ||||||||
Accrued stockholder servicing fee due to affiliate |
| $ | 65,254 |
|
| $ | 53,385 |
| ||||||||
Accrued offering costs due to affiliate |
| $ | — |
|
| $ | 6,882 |
| ||||||||
Redeemable non-controlling interest issued as settlement of performance participation allocation |
| $ | 16,974 |
|
| $ | — |
| ||||||||
Allocation to redeemable non-controlling interest |
| $ | 1,456 |
|
| $ | — |
| ||||||||
Distribution reinvestment |
| $ | 38,503 |
|
| $ | 4,270 |
| ||||||||
Accrued common stock repurchases |
| $ | 4,233 |
|
| $ | — |
| ||||||||
Payable for real estate-related securities |
| $ | 170,028 |
|
| $ | 6,647 |
|
See accompanying notes to consolidated financial statements.
|
|
|
|
|
|
|
| |
Non-cash investing and financing activities: |
|
|
|
|
|
|
|
|
Assumption of mortgage notes in conjunction with acquisitions of real estate |
| $ | 107,369 |
|
|
| — |
|
Assumption of other liabilities in conjunction with acquisitions of real estate |
| $ | 17,093 |
|
|
| — |
|
Accrued capital expenditures and acquisition related costs |
| $ | 314 |
|
|
| — |
|
Accrued pre-acquisition costs |
| $ | 905 |
|
|
| — |
|
Accrued distributions |
| $ | 5,624 |
|
|
| — |
|
Accrued stockholder servicing fee due to affiliate |
| $ | 75,998 |
|
|
| — |
|
Accrued offering costs due to affiliate |
| $ | 7,552 |
|
|
| — |
|
Distribution reinvestment |
| $ | 13,494 |
|
|
| — |
|
Accrued deferred financing costs |
| $ | 307 |
|
|
| — |
|
See accompanying notes tocondensed consolidated financial statements.
Blackstone Real Estate Income Trust, Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
1. Organization and Business Purpose
Blackstone Real Estate Income Trust, Inc. (“BREIT” or the “Company”) was formed on November 16, 2015 as a Maryland corporation and intends to qualifyqualifies as a real estate investment trust (“REIT”) for U.S. federal income tax purposes commencing with the taxable year endingended December 31, 2017. The Company was organized to investinvests primarily in stabilized income-oriented commercial real estate in the United States and, to a lesser extent, invest in real estate-related securities. The Company is the sole general partner of BREIT Operating Partnership, L.P., a Delaware limited partnership (“BREIT OP”). BREIT Special Limited Partner L.L.C.L.P. (the “Special Limited Partner”), a wholly-owned subsidiary of The Blackstone Group L.P. (together with its affiliates, “Blackstone”), owns a special limited partner interest in BREIT OP. Substantially all of the Company’s business is conducted through BREIT OP. The Company and BREIT OP are externally managed by BX REIT Advisors L.L.C. (the “Adviser”), an affiliate of Blackstone.
The Company has registered with the Securities and Exchange Commission (the “SEC”) an offering of up to $5.0 billion in shares of common stock, consisting of up to $4.0 billion in shares in its primary offering and up to $1.0 billion in shares pursuant to its distribution reinvestment plan (the “Offering”). The Company intends to sell any combination of four classes of shares of its common stock, with a dollar value up to the maximum aggregate amount of the Offering. The share classes have different upfront selling commissions, dealer manager fees and ongoing stockholder servicing fees. As of January 1, 2017,June 30, 2018, the Company had satisfied the minimum offering requirement and the Company’s boardreceived net proceeds of directors authorized the release$3.1 billion from selling an aggregate of proceeds from escrow. As of September 30, 2017, the Company issued and sold 125,491,201296,037,091 shares of the Company’s common stock (consisting of 98,779,308199,474,239 Class S shares, 23,277,43014,860,908 Class IT shares, 1,225,70016,828,257 Class D shares, and 2,208,76364,873,687 Class TI shares). The Company intends to continue selling shares on a monthly basis.
As of SeptemberJune 30, 2017,2018, the Company owned 1842 investments in real estate and had 2474 positions in commercial mortgage-backed securities (“CMBS”).real estate-related debt securities. The Company currently operates in five reportable segments: Multifamily, Industrial, Hotel, and Retail Properties, and Real Estate-Related Securities. Multifamily includes various forms of rental housing including apartments and manufactured housing. Financial results by segment are reported in Note 1413 — Segment Reporting.
2. Summary of Significant Accounting Policies
Basis of Presentation
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. All intercompany transactions have been eliminated in consolidation. The condensed consolidated financial statements, including the condensed notes thereto, are unaudited and exclude some of the disclosures required in audited financial statements. Management believes it has made all necessary adjustments, consisting of only normal recurring items, so that the condensed consolidated financial statements are presented fairly and that estimates made in preparing its condensed consolidated financial statements are reasonable and prudent. The accompanying unaudited condensed consolidated interim financial statements should be read in conjunction with the audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 20162017 filed with the SEC.
Certain amounts in the Company’s prior period consolidated financial statements have been reclassified to conform to the current period presentation. The Company has chosen to aggregate certain financial statement line items in the Company’s consolidated statements of operations and consolidated statements of cash flows. Such reclassifications had no effect on net loss or previously reported totals or subtotals in the consolidated statements of cash flows.
The accompanying condensed consolidated financial statements include the accounts of the Company, ourthe Company’s subsidiaries and joint ventures in which we havethe Company has a controlling interest. For consolidated joint ventures, the non-controlling partner’s share of the assets, liabilities and operations of the joint ventures is included in non-controlling interests as equity of the Company. The non-controlling partner’s interest is generally computed as the joint venture partner’s ownership percentage. All intercompany balances and transactions have been eliminated in consolidation.
The Company consolidates partially owned entities, in which it has a controlling financial interest. In determining whether the Company has a controlling financial interest in a partially owned entity and the requirement to consolidate the accounts of that entity, the Company considers whether the entity is a variable interest entity (“VIE”) and whether it is the primary beneficiary. The Company is the primary beneficiary of a VIE when it has (i) the power to direct the most significant activities impacting the economic performance of the VIE and (ii) the obligation to absorb losses or receive benefits significant to the VIE. BREIT OP and each of the Company’s joint ventures are considered to be a VIE. The Company consolidates these entities because it has the ability to direct the most significant activities of the entities such as purchases, dispositions, financings, budgets, and overall operating plans.
As of June 30, 2018, the total assets and liabilities of the Company’s consolidated VIEs, excluding BREIT OP, were $1.4 billion and $960.8 million, respectively, compared to $947.9 million and $645.5 million as of December 31, 2017. Such amounts are included on the Company’s Condensed Consolidated Balance Sheets.
The preparation of the financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the balance sheet. Actual results could differ from those estimates.
Cash and Cash Equivalents
Cash and cash equivalents represent cash held in banks, cash on hand, and liquid investments with original maturities of three months or less. The Company may have bank balances in excess of federally insured amounts; however, the Company deposits its cash and cash equivalents with high credit-quality institutions to minimize credit risk.
As of SeptemberJune 30, 2018 and December 31, 2017, restricted cash primarily consists of $98.4$137.9 million and $107.6 million, respectively, of cash received for subscriptions prior to the date in which the subscriptions are effective. The Company’s restricted casheffective, which is held primarily in a bank account controlled by the Company’s transfer agent but in the name of the Company.
Investments Other restricted cash consists of amounts in Real Estate
In accordance with the guidance for business combinations, the Company determines whether the acquisition of a property qualifies as a business combination, which requires that the assets acquired and liabilities assumed constitute a business. If the property acquired is not a business, the Company accounts for the transaction as an asset acquisition. The Company has early adopted Accounting Standards Update 2017-01 — Clarifying the Definition of a Business (“ASU 2017-01”). ASU 2017-01 states that when substantially all of the fair value of the gross assetsescrow related to be acquired is concentrated in a single identifiable asset or group of similar identifiable assets, the asset or set of assets is not a business. All property acquisitions to date have been accounted for as asset acquisitions.
Whether the acquisition of a property acquired is considered a business combination or asset acquisition, the Company recognizes the identifiable assets acquired, the liabilities assumed, and any non-controlling interest in the acquired entity. In addition, for transactions that are business combinations, the Company evaluates the existence of goodwill or a gain from a bargain purchase. The Company expenses acquisition-related costs associated with business combinations as they are incurred. The Company capitalizes acquisition-related costs associated with asset acquisitions.
Upon acquisition of a property, the Company assesses the fair value of acquired tangible and intangible assets (including land, buildings, tenant improvements, “above-market” and “below-market” leases, acquired in-place leases, other identified intangible assets and assumed liabilities) and allocates the purchase price to the acquired assets and assumed liabilities. The Company assesses and considers fair value based on estimated cash flow projections that utilize discount and/or capitalization rates that it deems appropriate, as well as other available market information. Estimates of future cash flows are based on a number of factors including the historical operating results, known and anticipated trends, and market and economic conditions.
The fair value of the tangible assets of an acquired property considers the value of the property as if it were vacant. The Company also considers an allocation of purchase price of other acquired intangibles, including acquired in-place leases that may have a customer relationship intangible value, including (but not limited to) the nature and extent of the existing relationship with the tenants, the tenants’ credit quality and expectations of lease renewals. Based on its acquisitions to date, the Company’s allocation to customer relationship intangible assets has not been material.
The Company records acquired above-market and below-market leases at their fair values (using a discount rate which reflects the risks associated with the leases acquired) equal to the difference between (1) the contractual amounts to be paid pursuant to each in-place lease and (2) management’s estimate of fair market lease rates for each corresponding in-place lease, measured over a period equal to the remaining term of the lease for above-market leases and the initial term plus the term of any below-market fixed rate renewal options for below-market leases. Other intangible assets acquired include amounts for in-place lease values that are based on the Company’s evaluation of the specific characteristics of each tenant’s lease. Factors to be considered include estimates of carrying costs during hypothetical expected lease-up periods considering current market conditions, and costs to execute similar leases. In estimating carrying costs, the Company includes real estate taxes insurance and other operating expenses and estimates of lost rentals at market rates during the expected lease-up periods, depending on local market conditions. In estimating costs to execute similar leases, the Company considers leasing commissions, legal and other related expenses.
The amortization of acquired above-market and below-market leases is recorded as an adjustment to Rental Revenue on the Company’s Consolidated Statements of Operations. The amortization of in-place leases is recorded as an adjustment to Depreciation and Amortization Expense on the Company’s Consolidated Statements of Operations. The amortization of below-market and pre-paid ground leases are recorded as an adjustment to Rental Property Operating or Hotel Operating Expenses, as applicable, on the Company’s Consolidated Statements of Operations.
The cost of buildings and improvements includes the purchase price of the Company’s properties and any acquisition-related costs, along with any subsequent improvements to such properties. The Company’s investments in real estate are stated at cost and are generally depreciated on a straight-line basis over the estimated useful lives of the assets as follows:
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Significant improvements to properties are capitalized. When assets are sold or retired, their costs and related accumulated depreciation are removed from the accounts with the resulting gains or losses reflected in net income or loss for the period.
Repairs and maintenance are expensed to operations as incurred and are included in Rental Property Operating and Hotel Operating Expenses on the Company’s Consolidated Statements of Operations.
The Company’s management reviews its real estate properties for impairment each quarter or when there is an event or change in circumstances that indicates an impaired value. If the carrying amount of the real estate investment is no longer recoverable and exceeds the fair value such investment, an impairment loss is recognized. The impairment loss is recognized based on the excess of the carrying amount of the asset over its fair value. The evaluation of anticipated future cash flows is highly subjective and is based in part on assumptions regarding future occupancy, rental rates and capital requirements that could differ materially from actual results. Since cash flows on real estate properties considered to be “long-lived assets to be held and used” are considered on an undiscounted basis to determine whether an asset has been impaired, the Company’s strategy of holding properties over the long term directly decreases the likelihood of recording an impairment loss. If the Company’s strategy changes or market conditions otherwise dictate an earlier sale date, an impairment loss may be recognized and such loss could be material to the Company’s results. If the Company determines that an impairment has occurred, the affected assets must be reduced to their fair value, less cost to sell. During the periods presented, no such impairment occurred.
Deferred Charges
The Company’s deferred charges include financing and leasing costs. Deferred financing costs include legal, structuring, and other loan costs incurred by the Company for its financing agreements. Deferred financing costs related to the Company’s mortgage notes and term loan are recorded as an offset to the related liability and amortized over the term of the applicable financing instruments. Deferred financing costs related to the Company’s revolving credit facility and affiliate line of credit are recorded as a component of Other Assets on the Company’s Consolidated Balance Sheets and amortized over the term of the applicable financing agreements. Deferred leasing costs incurredinsurance in connection with new leases, which consist primarilymortgages at certain of brokerage and legal fees, are recorded as a component of Other Assets on the Company’s Consolidated Balance Sheets and amortized over the life of the related lease.our properties.
Investments in Real Estate-Related Securities
The Company has elected to classify its investment in real estate-related securities as trading securities and carry such investments at estimated fair value. As such, the resulting gains and losses are recorded as a component of Income from Real Estate-Related Securities on the Company’s Consolidated Statements of Operations.
Fair Value Measurement
Under normal market conditions, the fair value of an investment is the amount that would be received to sell an asset or transfer a liability in an orderly transaction between market participants at the measurement date (i.e., the exit price). Additionally, there is a hierarchal framework that prioritizes and ranks the level of market price observability used in measuring investments at fair value. Market price observability is impacted by a number of factors, including the type of investment and the characteristics specific to the investment and the state of the marketplace, including the existence and transparency of transactions between market participants. Investments with readily available active quoted prices or for which fair value can be measured from actively quoted prices generally will have a higher degree of market price observability and a lesser degree of judgment used in measuring fair value.
Investments measured and reported at fair value are classified and disclosed in one of the following levels within the fair value hierarchy:
Level 1 — quoted prices are available in active markets for identical investments as of the measurement date. The Company does not adjust the quoted price for these investments.
Level 2 — quoted prices are available in markets that are not active or model inputs are based on inputs that are either directly or indirectly observable as of the measurement date.
Level 3 — pricing inputs are unobservable and include instances where there is minimal, if any, market activity for the investment. These inputs require significant judgment or estimation by management or third parties when determining fair value and generally represent anything that does not meet the criteria of Levels 1 and 2. Due to the inherent uncertainty of these estimates, these values may differ materially from the values that would have been used had a ready market for these investments existed.
As of SeptemberJune 30, 2018 and December 31, 2017, the Company’s $644.4$1.7 billion and $915.7 million, respectively, of investments in real estate-related securities were classified as Level 2.
Valuation
The Company’s investments in real estate-related securities are reported at fair value. As of SeptemberJune 30, 2017,2018, the Company’s investments in real estate-related securities consisted of CMBS,commercial mortgage-backed securities (“CMBS”), which are mortgage-related fixed income securities. Mortgage-related securities are usually issued as separate tranches, or classes, of securities within each deal. The Company generally determines the fair value of its CMBS by utilizing third-party pricing service providers and broker-dealer quotations on the basis of last available bid price.
In determining the fair value of a particular investment, pricing service providers may use broker-dealer quotations, reported trades or valuation estimates from their internal pricing models to determine the reported price. The pricing service providers’ internal models for mortgage-related securities such as CMBS usually consider the attributes applicable to a particular class of the security (e.g., credit rating, seniority), current market data, and estimated cash flows for each class and incorporate deal collateral performance such as prepayment speeds and default rates, as available.
TheAs of June 30, 2018, the fair value of the Company’s mortgage notes, term loan,loans, and revolving credit facility,facilities, repurchase agreements, and affiliate line of credit all approximate theirwas approximately $18.5 million below carrying value.
Revenue Recognition
The Company’s sources of revenue and the related revenue recognition policies are as follows:
Rental revenue — primarily consists of base rent arising from tenant leases at the Company’s industrial, multifamily, and retail properties. Rental revenue is recognized on a straight-line basis over the life of the lease, including any rent steps or abatement provisions. The Company begins to recognize revenue upon the acquisition of the related property or when a tenant takes possession of the leased space.
Tenant reimbursement income — consists primarily of amounts due from tenants for costs related to common area maintenance, real estate taxes, and other recoverable costs included in lease agreements. The Company recognizes the reimbursement of such costs incurred as tenant reimbursement income.
Hotel revenue — consists of income from the Company’s hotel properties. Hotel revenue consists primarily of room revenue and food and beverage revenue. Room revenue is recognized when the related room is occupied and other hotel revenue is recognized when the service is rendered.
Income Taxes
The Company intends to make an election to be taxed as a REIT under Sections 856 through 860 of the Internal Revenue Code of 1986, as amended, or the Internal Revenue Code, commencing with its taxable year ending December 31, 2017. If the Company qualifies for taxation as a REIT, the Company generally will not be subject to federal corporate income tax to the extent it distributes 90% of its taxable income to its stockholders. REITs are subject to a number of other organization and operational requirements. Even if the Company qualifies for taxation as a REIT, it may be subject to certain state and local taxes on its income and property, and federal income and excise taxes on its undistributed income.
The Company leases its hotel investments to wholly-owned taxable REIT subsidiaries (“TRSs”). The TRSs are subject to taxation at the federal, state and local levels, as applicable. Revenues related to the hotels’ operations such as room revenue, food and beverage revenue and other revenue are recorded in the TRS along with corresponding expenses. The Company accounts for applicable income taxes by utilizing the asset and liability method. As such, the Company records deferred tax assets and liabilities for the future tax consequences resulting from the difference between the carrying Fair value of existing assets and liabilities and their respective tax basis. A valuation allowance for deferred tax assets is provided if the Company believes all or some portion of the deferred tax asset may not be realized. As of September 30, 2017, the Company recorded a deferred tax asset of $246 thousand due to its hotel investments and recorded such amount as a tax benefit within Income Tax Benefit on the Company’s Consolidated Statements of Operations.
Organization and Offering Costs
Organization costs are expensed as incurred and recorded as a component of General and Administrative Expense on the Company’s Consolidated Statements of Operations and offering costs are charged to equity as such amounts are incurred.
The Adviser has agreed to advance certain organization and offering costs on behalf of the Company interest free (including legal, accounting, and other expenses attributable to the Company’s organization, but excluding upfront selling commissions, dealer manager fees and stockholder servicing fees) through December 31, 2017, the day before the first anniversary of the date as of which escrow for the Offering was released. The Company will reimburse the Adviser for all such advanced expenses ratably over a 60 month period following December 31, 2017.
As of September 30, 2017, the Adviser and its affiliates had incurred organization and offering costs on the Company’s behalf of $9.4 million, consisting of offering costs of $7.6 million and organization costs of $1.8 million. Such costs became the Company’s liability on January 1, 2017, the date as of which the proceeds from the Offering were released from escrow. These organization and offering costs were recorded as a component of Due to Affiliates on the Company’s Consolidated Balance Sheet as of September 30, 2017.
Blackstone Advisory Partners L.P. (the “Dealer Manager”), a registered broker-dealer affiliated with the Adviser, serves as the dealer manager for the Offering. The Dealer Manager is entitled to receive selling commissions and dealer manager fees based on the transaction price of each applicable class of shares sold in the Offering. The Dealer Manager is also entitled to receive a stockholder servicing fee of 0.85%, 0.85% and 0.25% per annum of the aggregate net asset value (“NAV”) of the Company’s outstanding Class S shares, Class T shares,indebtedness is estimated by modeling the cash flows required by the Company’s debt agreements and Class D shares, respectively.
The following table detailsdiscounting them back to the selling commissions, dealer manager fees,present value using the appropriate discount rate. Additionally, the Company considers current market rates and stockholder servicing fees for each applicable share class:
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| Class S |
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| Class T |
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| Class D |
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| Class I | |||
Selling commissions and dealer manager fees (% of transaction price) |
| up to 3.5% |
|
| up to 3.5% |
|
| — |
|
| — | |||
Stockholder servicing fee (% of NAV) |
|
| 0.85% |
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| 0.85% |
|
|
| 0.25% |
|
| — |
There is no stockholder servicing fee with respect to Class I shares. The Dealer Manager has entered intoconditions by evaluating similar borrowing agreements with comparable loan-to-value ratios and credit profiles. The inputs used in determining the selected dealers distributingfair value of the Company’s shares in the Offering, which provide, among other things, for the re-allowance of the full amount of the selling commissions and dealer manager fees and all or a portion of the stockholder servicing fees received by the Dealer Manager to such selected dealers. The Company will cease paying the stockholder servicing fee with respect to any Class S share, Class T share or Class D share held in a stockholder’s account at the end of the month in which the total selling commissions, dealer manager fees and stockholder servicing fees paid with respect to the shares held by such stockholder within such account would exceed, in the aggregate, 8.75% (or, in the case of Class T shares sold through certain participating broker-dealers, a lower limit as set forth in any applicable agreement between the Dealer Manager and a participating broker-dealer) of the gross proceeds from the sale of such shares (including the gross proceeds of any shares issued under the Company’s distribution reinvestment plan with respect thereto). The Company will accrue the full cost of the stockholder servicing fee as an offering cost at the time each Class S, Class T, and Class D share is sold during the Offering. As of September 30, 2017, the Company had accrued $76.0 million of stockholder servicing fees related to Class S shares, Class D shares and Class T shares sold and recorded such amount as a component of Due to Affiliates on the Company’s Consolidated Balance Sheets.
Earnings Per Share
Basic net loss per share of common stock is determined by dividing net loss attributable to common stockholders by the weighted average number of common shares outstanding during the period. All classes of common stock are allocated net income/(loss) at the same rate per share and receive the same gross distribution per share.
The restricted stock grants of Class I shares held by our directorsindebtedness are considered to be participating securities because they contain non-forfeitable rights to distributions. The impact of these restricted stock grants on basic and diluted earnings per common share (“EPS”) has been calculated using the two-class method whereby earnings are allocated to the restricted stock grants based on dividends declared and the restricted stocks’ participation rights in undistributed earnings. As of September 30, 2017, the effects of the two-class method on basic and diluted EPS were not material to the Company’s consolidated financial statements.Level 3.
Recent Accounting Pronouncements
In May 2014, the Financial Accounting Standards Board (“FASB”)FASB issued ASU 2014-09, “Revenue from Contracts with Customers (Topic 606).” Beginning January 1, 2018, companies will be required to recognizeASU 2014-09 broadly amends the accounting guidance for revenue to depictrecognition. ASU 2014-09 is effective for the transfer of promised goodsfirst interim or services to customers in an amount that reflects the consideration to which the entity expectsannual period beginning after December 15, 2017, and is to be entitled in exchange for those goods or services and also includes additional disclosure requirements. The new standard can be adopted either retrospectively to prior reporting periods presented or as a cumulative effect adjustment as of the date of adoption.applied retrospectively. The Company is taking inventoryadopted ASU 2014-09 in the first quarter of its revenue streams2018 and performingthe pronouncement did not have a detailed review of the related contracts to determine thematerial impact of this standard on the Company’s consolidated financial statements. The majority of the Company’s revenue is derived from tenant leases at multifamily, industrial and
retail properties. As such the adoption of ASU 2014-09 will not have an impact on both the Rental Revenue and Tenant Reimbursement Income revenue streams. However, upon adoption of the new leasing standard, ASU 2014-09 may impact the presentation of certain lease and non-lease components of revenue. See below for a further description of the expected impact the new leasing standard may have on the Company. The Company is finalizing its assessment of the expected impact ASU 2014-09 will have on its performance obligations related to the revenue components at the Company’s hotel properties. Due to the fact that the Company’s hotel properties are select service hotels whereby the customer is generally allowed to cancel their reservation within a certain period of time, the Company does not expect the adoption of ASU 2014-09 to have a material impact on the revenue recognition policy for the Company’s hotel properties.
In February 2016, the FASB issued ASU 2016-02, “Leases,” which will require organizations that lease assets to recognize the assets and liabilities for the rights and obligations created by those leases on their balance sheet. Additional disclosure regarding a company’s leasing activities will also be expanded under the new guidance. In March 2018, the FASB approved an amendment to the new Leases standard that allows a practical expedient for lessors from separating lease and non-lease components. For public entities, ASU 2016-02 is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years, and requires a modified retrospective transition. The Company is currently evaluating the potential impact of this pronouncement on the Company’s consolidated financial statements from both a lessor and lessee standpoint. Under the new leasing standard, lessor accounting remains substantially the same as current GAAP. However, the classification of certain lease and non-lease components, such as tenant reimbursement income for real estate taxes and insurance, may change but will not impact total revenue. The new lease standard will have a significant impact on lessee accounting. As such, the Company will be required to recognize a right of use asset on the Company’s consolidated balance sheet along with a lease liability equal to the present value of the remaining minimum lease payments for the Company’s ground leases. As of June 30, 2018, the undiscounted future minimum lease payments due under the Company’s long-term ground leases total $14.1 million.
3. Investments in Real Estate
Investments in real estate, net consisted of the following ($ in thousands):
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| September 30, 2017 |
| |
Building and building improvements |
| $ | 1,850,698 |
|
Land and land improvements |
|
| 367,012 |
|
Furniture, fixtures and equipment |
|
| 40,364 |
|
Total |
|
| 2,258,074 |
|
Accumulated depreciation |
|
| (23,941 | ) |
Investments in real estate, net |
| $ | 2,234,133 |
|
|
| June 30, 2018 |
|
| December 31, 2017 |
| ||
Building and building improvements |
| $ | 5,383,773 |
|
| $ | 2,815,348 |
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Land and land improvements |
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| 1,396,214 |
|
|
| 574,253 |
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Furniture, fixtures and equipment |
|
| 97,343 |
|
|
| 64,080 |
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Total |
|
| 6,877,330 |
|
|
| 3,453,681 |
|
Accumulated depreciation |
|
| (129,295 | ) |
|
| (47,126 | ) |
Investments in real estate, net |
| $ | 6,748,035 |
|
| $ | 3,406,555 |
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During the ninesix months ended SeptemberJune 30, 2017,2018, the Company acquired interests in 1815 real estate investments, which were comprised of 50155 industrial, 2740 multifamily 7and four hotel and 1 retail property. As of December 31, 2016, the Company had not commenced its principal operations and had not acquired any real estate investment properties.
The following table provides further details of the properties acquired during the ninesix months ended SeptemberJune 30, 20172018 ($ in thousands):
Property Name |
| Ownership Interest |
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| Number of Properties |
| Location |
| Sector |
| Acquisition Date |
| Purchase Price(1) |
| ||
Hyatt Place UC Davis(2) |
|
| 100% |
|
| 1 |
| Davis, CA |
| Hotel |
| Jan. 2017 |
| $ | 32,687 |
|
Sonora Canyon |
|
| 100% |
|
| 1 |
| Mesa, AZ |
| Multifamily |
| Feb. 2017 |
|
| 40,983 |
|
Stockton |
|
| 100% |
|
| 1 |
| Stockton, CA |
| Industrial |
| Feb. 2017 |
|
| 32,751 |
|
Bakers Centre |
|
| 100% |
|
| 1 |
| Philadelphia, PA |
| Retail |
| Mar. 2017 |
|
| 54,223 |
|
TA Multifamily Portfolio |
|
| 100% |
|
| 6 |
| Various(3) |
| Multifamily |
| Apr. 2017 |
|
| 432,593 |
|
HS Industrial Portfolio |
|
| 100% |
|
| 38 |
| Various(4) |
| Industrial |
| Apr. 2017 |
|
| 405,930 |
|
Emory Point(2) |
|
| 100% |
|
| 1 |
| Atlanta, GA |
| Multifamily(5) |
| May 2017 |
|
| 201,578 |
|
Nevada West |
|
| 100% |
|
| 3 |
| Las Vegas, NV |
| Multifamily |
| May 2017 |
|
| 170,965 |
|
Hyatt Place San Jose Downtown |
|
| 100% |
|
| 1 |
| San Jose, CA |
| Hotel |
| June 2017 |
|
| 65,321 |
|
Mountain Gate & Trails |
|
| 100% |
|
| 2 |
| Las Vegas, NV |
| Multifamily |
| June 2017 |
|
| 83,572 |
|
Elysian West |
|
| 100% |
|
| 1 |
| Las Vegas, NV |
| Multifamily |
| July 2017 |
|
| 107,027 |
|
Florida Select-Service 4-Pack |
|
| 100% |
|
| 4 |
| Tampa & Orlando, FL |
| Hotel |
| July 2017 |
|
| 58,973 |
|
Hyatt House Downtown Atlanta |
|
| 100% |
|
| 1 |
| Atlanta, GA |
| Hotel |
| Aug. 2017 |
|
| 35,332 |
|
Harbor 5 |
|
| 100% |
|
| 5 |
| Dallas, TX |
| Multifamily |
| Aug. 2017 |
|
| 146,161 |
|
Gilbert Multifamily |
|
| 90% |
|
| 2 |
| Gilbert, AZ |
| Multifamily |
| Sept. 2017 |
|
| 147,039 |
|
Domain & GreenVue Multifamily |
|
| 100% |
|
| 2 |
| Dallas, TX |
| Multifamily |
| Sept. 2017 |
|
| 134,452 |
|
Fairfield Industrial |
|
| 100% |
|
| 11 |
| Fairfield, NJ |
| Industrial |
| Sept. 2017 |
|
| 74,283 |
|
ACG II Multifamily Portfolio |
|
| 94% |
|
| 4 |
| Various (6) |
| Multifamily |
| Sept. 2017 |
|
| 148,038 |
|
|
|
|
|
|
| 85 |
|
|
|
|
|
|
| $ | 2,371,908 |
|
Investment |
| Ownership Interest(1) |
|
| Number of Properties |
|
| Location |
| Segment |
| Acquisition Date |
| Purchase Price(2) |
| |||
Aston Multifamily Portfolio(3) |
| 90% |
|
|
| 8 |
|
| Various(4) |
| Multifamily |
| Jan. 2018 |
| $ | 141,743 |
| |
Kraft Chicago Industrial Portfolio |
| 100% |
|
|
| 3 |
|
| Aurora, IL |
| Industrial |
| Jan. 2018 |
|
| 151,365 |
| |
Canyon Industrial Portfolio(5) |
| 100% |
|
|
| 146 |
|
| Various(5) |
| Industrial |
| Mar. 2018 |
|
| 1,837,213 |
| |
The Boulevard |
| 100% |
|
|
| 1 |
|
| Phoenix, AZ |
| Multifamily |
| April 2018 |
|
| 48,392 |
| |
Highroads MH |
| 99% |
|
|
| 3 |
|
| Phoenix, AZ |
| Multifamily |
| April 2018 |
|
| 18,637 |
| |
Blue Hills Multifamily |
| 100% |
|
|
| 1 |
|
| Boston, MA |
| Multifamily |
| May 2018 |
|
| 131,747 |
| |
Wave Multifamily Portfolio |
| 100% |
|
|
| 6 |
|
| Various(6) |
| Multifamily |
| May 2018 |
|
| 423,135 |
| |
ACG III Multifamily |
| 95% |
|
|
| 2 |
|
| Gresham, OR & Turlock, CA |
| Multifamily |
| May 2018 |
|
| 96,182 |
| |
Carroll Florida Multifamily |
| 100% |
|
|
| 2 |
|
| Jacksonville & Orlando, FL |
| Multifamily |
| May 2018 |
|
| 116,832 |
| |
HP Cold Storage Industrial Portfolio |
| 100% |
|
|
| 6 |
|
| Various(7) |
| Industrial |
| May 2018 |
|
| 253,082 |
| |
Henderson Select-Service 2-Pack |
| 100% |
|
|
| 2 |
|
| Henderson, NV |
| Hotel |
| May 2018 |
|
| 36,260 |
| |
Orlando Select-Service 2-Pack |
| 100% |
|
|
| 2 |
|
| Orlando, FL |
| Hotel |
| May 2018 |
|
| 48,862 |
| |
Solis at Flamingo |
| 95% |
|
|
| 1 |
|
| Las Vegas, NV |
| Multifamily |
| June 2018 |
|
| 72,560 |
| |
Evergreen Minari MH |
| 99% |
|
|
| 2 |
|
| Phoenix, AZ |
| Multifamily |
| June 2018 |
|
| 8,614 |
| |
Southwest MH |
| 99% |
|
|
| 14 |
|
| Various(8) |
| Multifamily |
| June 2018 |
|
| 176,194 |
| |
|
|
|
|
|
|
| 199 |
|
|
|
|
|
|
|
| $ | 3,560,818 |
|
(1) | Certain of the investments made by BREIT provide the seller or the other partner a profits interest based on certain internal rate of return hurdles being achieved. Such investments are consolidated by the Company and any profits interest due to the other partner is reported within non-controlling interests. |
(2) | Purchase price is inclusive of acquisition related costs. |
| The |
| The |
|
|
(5) |
|
(6) | The |
(7) | The HP Cold Storage Industrial Portfolio is located in four |
(8) | Southwest MH is located in |
The following table summarizes the purchase price allocation for the properties acquired during the ninesix months ended SeptemberJune 30, 20172018 ($ in thousands):
| TA Multifamily Portfolio |
|
| HS Industrial Portfolio |
|
| Emory Point |
|
| Nevada West |
|
| All Other |
|
| Total |
| ||||||
Building and building improvements | $ | 337,889 |
|
| $ | 345,391 |
|
| $ | 171,709 |
|
| $ | 145,305 |
|
| $ | 847,905 |
|
| $ | 1,848,199 |
|
Land and land improvements |
| 68,456 |
|
|
| 45,081 |
|
|
| — |
|
|
| 17,409 |
|
|
| 235,876 |
|
|
| 366,822 |
|
Furniture, fixtures and equipment |
| 4,651 |
|
|
| — |
|
|
| 3,040 |
|
|
| 2,833 |
|
|
| 28,892 |
|
|
| 39,416 |
|
In-place lease intangibles |
| 21,880 |
|
|
| 20,793 |
|
|
| 11,207 |
|
|
| 5,418 |
|
|
| 46,094 |
|
|
| 105,392 |
|
Below-market ground lease intangibles |
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 4,683 |
|
|
| 4,683 |
|
Above-market lease intangibles |
| 24 |
|
|
| 2,726 |
|
|
| 84 |
|
|
| — |
|
|
| 465 |
|
|
| 3,299 |
|
Below-market lease intangibles |
| (307 | ) |
|
| (8,061 | ) |
|
| (576 | ) |
|
| — |
|
|
| (3,749 | ) |
|
| (12,693 | ) |
Prepaid ground lease rent |
| — |
|
|
| — |
|
|
| 16,114 |
|
|
| — |
|
|
| — |
|
|
| 16,114 |
|
Other intangibles |
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 676 |
|
|
| 676 |
|
Total purchase price | $ | 432,593 |
|
| $ | 405,930 |
|
| $ | 201,578 |
|
| $ | 170,965 |
|
| $ | 1,160,842 |
|
| $ | 2,371,908 |
|
Assumed mortgage notes(1) |
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 108,971 |
|
|
| 108,971 |
|
Net purchase price | $ | 432,593 |
|
| $ | 405,930 |
|
| $ | 201,578 |
|
| $ | 170,965 |
|
| $ | 1,051,871 |
|
| $ | 2,262,937 |
|
|
| Canyon Industrial Portfolio |
|
| Wave Multifamily Portfolio |
|
| All Other |
|
| Total |
| ||||
Building and building improvements |
| $ | 1,362,916 |
|
| $ | 323,954 |
|
| $ | 857,661 |
|
| $ | 2,544,531 |
|
Land and land improvements |
|
| 376,762 |
|
|
| 82,686 |
|
|
| 360,498 |
|
|
| 819,946 |
|
Furniture, fixtures and equipment |
|
| — |
|
|
| 5,252 |
|
|
| 18,336 |
|
|
| 23,588 |
|
In-place lease intangibles |
|
| 109,031 |
|
|
| 11,243 |
|
|
| 71,857 |
|
|
| 192,131 |
|
Above-market lease intangibles |
|
| 8,459 |
|
|
| — |
|
|
| 3,122 |
|
|
| 11,581 |
|
Below-market lease intangibles |
|
| (19,955 | ) |
|
| — |
|
|
| (11,404 | ) |
|
| (31,359 | ) |
Other |
|
| — |
|
|
| — |
|
|
| 400 |
|
|
| 400 |
|
Total purchase price |
|
| 1,837,213 |
|
|
| 423,135 |
|
|
| 1,300,470 |
|
|
| 3,560,818 |
|
Assumed mortgage notes(1) |
|
| — |
|
|
| — |
|
|
| 151,220 |
|
|
| 151,220 |
|
Net purchase price |
| $ | 1,837,213 |
|
| $ | 423,135 |
|
| $ | 1,149,250 |
|
| $ | 3,409,598 |
|
(1) |
|
|
The weighted-average amortization periods for the acquired in-place lease intangibles, below-market ground lease intangibles, above-market lease intangibles, and below-market lease intangibles, prepaid ground lease rent and other intangibles of the properties acquired during the ninesix months ended SeptemberJune 30, 20172018 were 3, 52, 6, 6, 71five, five and 4seven years, respectively.
The gross carrying amount and accumulated amortization of the Company’s intangible assets and liabilities consisted of the following ($ in thousands):
|
| September 30, 2017 |
|
| June 30, 2018 |
|
| December 31, 2017 |
| |||
Intangible assets: |
|
|
|
|
|
|
|
|
|
|
|
|
In-place lease intangibles |
| $ | 104,735 |
|
| $ | 252,130 |
|
| $ | 131,833 |
|
Below-market ground lease intangibles |
|
| 4,683 |
|
|
| 4,623 |
|
|
| 4,623 |
|
Above-market lease intangibles |
|
| 3,299 |
|
|
| 18,251 |
|
|
| 6,670 |
|
Prepaid ground lease rent |
|
| 16,114 |
|
|
| 16,114 |
|
|
| 16,114 |
|
Other |
|
| 676 |
|
|
| 676 |
|
|
| 676 |
|
Total intangible assets |
|
| 129,507 |
|
|
| 291,794 |
|
|
| 159,916 |
|
Accumulated amortization: |
|
|
|
|
|
|
|
|
|
|
|
|
In-place lease amortization |
|
| (40,496 | ) |
|
| (49,923 | ) |
|
| (45,160 | ) |
Below-market ground lease amortization |
|
| (62 | ) |
|
| (122 | ) |
|
| (85 | ) |
Above-market lease amortization |
|
| (314 | ) |
|
| (2,467 | ) |
|
| (600 | ) |
Prepaid ground lease rent amortization |
|
| (94 | ) |
|
| (265 | ) |
|
| (151 | ) |
Other |
|
| (31 | ) |
|
| (160 | ) |
|
| (76 | ) |
Total accumulated amortization |
|
| (40,997 | ) |
|
| (52,937 | ) |
|
| (46,072 | ) |
Intangible assets, net |
| $ | 88,510 |
|
| $ | 238,857 |
|
| $ | 113,844 |
|
Intangible liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
Below-market lease intangibles |
| $ | 12,693 |
|
| $ | 46,279 |
|
| $ | 14,920 |
|
Accumulated amortization |
|
| (1,106 | ) |
|
| (5,719 | ) |
|
| (1,764 | ) |
Intangible liabilities, net |
| $ | 11,587 |
|
| $ | 40,560 |
|
| $ | 13,156 |
|
The estimated future amortization on the Company’s intangibles for each of the next five years and thereafter as of SeptemberJune 30, 20172018 is as follows ($ in thousands):
|
| In-place Lease Intangibles |
|
| Below-market Ground Lease Intangibles |
|
| Above-market Lease Intangibles |
|
| Pre-paid Ground Lease Intangibles |
|
| Below-market Lease Intangibles |
|
| In-place Lease Intangibles |
|
| Below-market Ground Lease Intangibles |
|
| Above-market Lease Intangibles |
|
| Pre-paid Ground Lease Intangibles |
|
| Below-market Lease Intangibles |
| ||||||||||
2017 (remaining) |
| $ | 23,448 |
|
| $ | 22 |
|
| $ | 194 |
|
| $ | 57 |
|
| $ | (743 | ) | ||||||||||||||||||||
2018 |
|
| 20,145 |
|
|
| 89 |
|
|
| 722 |
|
|
| 227 |
|
|
| (2,745 | ) | ||||||||||||||||||||
2018 (remaining) |
| $ | 57,300 |
|
| $ | 40 |
|
| $ | 2,275 |
|
| $ | 114 |
|
| $ | (5,029 | ) | ||||||||||||||||||||
2019 |
|
| 6,370 |
|
|
| 89 |
|
|
| 496 |
|
|
| 227 |
|
|
| (2,060 | ) |
|
| 42,579 |
|
|
| 79 |
|
|
| 4,085 |
|
|
| 227 |
|
|
| (8,894 | ) |
2020 |
|
| 5,264 |
|
|
| 89 |
|
|
| 473 |
|
|
| 227 |
|
|
| (1,866 | ) |
|
| 32,136 |
|
|
| 79 |
|
|
| 3,155 |
|
|
| 227 |
|
|
| (7,015 | ) |
2021 |
|
| 4,101 |
|
|
| 89 |
|
|
| 442 |
|
|
| 227 |
|
|
| (1,617 | ) |
|
| 24,646 |
|
|
| 79 |
|
|
| 2,563 |
|
|
| 227 |
|
|
| (5,278 | ) |
2022 |
|
| 18,082 |
|
|
| 79 |
|
|
| 1,991 |
|
|
| 227 |
|
|
| (4,072 | ) | ||||||||||||||||||||
Thereafter |
|
| 4,911 |
|
|
| 4,243 |
|
|
| 658 |
|
|
| 15,055 |
|
|
| (2,556 | ) |
|
| 27,464 |
|
|
| 4,145 |
|
|
| 1,715 |
|
|
| 14,827 |
|
|
| (10,272 | ) |
|
| $ | 64,239 |
|
| $ | 4,621 |
|
| $ | 2,985 |
|
| $ | 16,020 |
|
| $ | (11,587 | ) |
| $ | 202,207 |
|
| $ | 4,501 |
|
| $ | 15,784 |
|
| $ | 15,849 |
|
| $ | (40,560 | ) |
5. Investments in Real Estate-Related Securities
The following table detailstables detail the Company’s investments in real estate-related securities, which are exclusively CMBS as of September 30, 2017 ($ in thousands):
| Number of Investments |
|
| Credit Rating(1) |
| Collateral |
| Weighted Average Coupon(2) |
| Weighted Average Maturity Date |
| Face Amount |
|
| Cost Basis |
|
| Fair Value |
| ||||
|
| 5 |
|
| BBB |
| Office, Hospitality, Industrial, Retail |
| L+2.16% |
| 4/28/2030 |
| $ | 132,034 |
|
| $ | 132,034 |
|
| $ | 132,363 |
|
|
| 11 |
|
| BB |
| Hospitality, Office, Retail, Multifamily |
| L+3.22% |
| 4/5/2034 |
|
| 333,578 |
|
|
| 333,466 |
|
|
| 333,777 |
|
|
| 8 |
|
| B |
| Hospitality, Office, Multifamily |
| L+4.12% |
| 11/30/2032 |
|
| 177,950 |
|
|
| 177,878 |
|
|
| 178,231 |
|
|
| 24 |
|
|
|
|
|
|
|
|
|
| $ | 643,562 |
|
| $ | 643,378 |
|
| $ | 644,371 |
|
|
|
|
|
|
|
|
| June 30, 2018 |
| |||||||||||||
Number of Positions |
|
| Credit Rating(1) |
| Collateral(2) |
| Weighted Average Coupon(3) |
| Weighted Average Maturity Date(4) |
| Face Amount |
|
| Cost Basis |
|
| Fair Value |
| ||||
| 32 |
|
| BB |
| Multifamily, Hospitality, Office, Retail |
| L+2.89% |
| 5/31/2024 |
| $ | 808,624 |
|
| $ | 807,386 |
|
| $ | 809,985 |
|
| 16 |
|
| B |
| Hospitality, Office, Multifamily, Retail |
| L+3.63% |
| 8/21/2024 |
|
| 463,231 |
|
|
| 462,275 |
|
|
| 464,638 |
|
| 16 |
|
| BBB |
| Hospitality, Office, Multifamily, Industrial, Retail |
| L+2.18% |
| 7/6/2024 |
|
| 295,646 |
|
|
| 295,256 |
|
|
| 296,063 |
|
8(5) |
|
| Other |
| Multifamily, Hospitality |
| L+1.14% |
| 2/18/2027 |
|
| 126,670 |
|
|
| 71,639 |
|
|
| 72,058 |
| |
2(6) |
|
| Other |
| Multifamily |
| N/A |
| 5/25/2028 |
| N/A |
|
|
| 7,623 |
|
|
| 7,649 |
| ||
| 74 |
|
|
|
|
|
|
|
|
|
| $ | 1,694,171 |
|
| $ | 1,644,179 |
|
| $ | 1,650,393 |
|
|
|
|
|
|
|
|
| December 31, 2017 |
| |||||||||||||
Number of Positions |
|
| Credit Rating(1) |
| Collateral(2) |
| Weighted Average Coupon(3) |
| Weighted Average Maturity Date(4) |
| Face Amount |
|
| Cost Basis |
|
| Fair Value |
| ||||
| 15 |
|
| BB |
| Hospitality, Office, Multifamily, Retail |
| L+3.21% |
| 12/18/2022 |
| $ | 423,770 |
|
| $ | 423,658 |
|
| $ | 424,419 |
|
| 10 |
|
| B |
| Hospitality, Office, Multifamily |
| L+4.05% |
| 1/27/2024 |
|
| 284,371 |
|
|
| 284,127 |
|
|
| 285,037 |
|
| 9 |
|
| BBB |
| Office, Hospitality, Multifamily, Industrial, Retail |
| L+2.28% |
| 5/11/2022 |
|
| 194,013 |
|
|
| 193,838 |
|
|
| 194,549 |
|
| 3 |
|
| Other |
| Multifamily |
| L+2.50% |
| 9/15/2026 |
|
| 11,749 |
|
|
| 11,749 |
|
|
| 11,737 |
|
| 37 |
|
|
|
|
|
|
|
|
|
| $ | 913,903 |
|
| $ | 913,372 |
|
| $ | 915,742 |
|
| (1) | BBB represents credit ratings of BBB+, BBB, and BBB-, BB represents credit ratings of BB+, BB, and BB-, and B represents credit ratings of B+, B, and B-.Other consists of investments that, as of June 30, 2018 and December 31, 2017, were either not ratable or have not been submitted to rating agencies. |
| (2) | Multifamily real estate-related securities are collateralized by various forms of rental housing including single-family homes and apartments. |
(3) | The term “L” refers to the |
(4) | Weighted average maturity date is based on the fully extended maturity date of the underlying collateral. |
(5) | Includes one zero coupon position. Excluding the zero coupon position, the weighted average coupon was L+2.33%. |
(6) | Includes two interest-only positions with a total notional amount of $1.2 billion. |
As of September 30, 2017, theThe Company’s investments in real estate-related securities included 11 CMBS with a total cost basis of $369.3 million collateralized by properties owned by Blackstone-advised investment vehicles and CMBS collateralized by loans originated or acquired by a Blackstone-advised investment vehicle. The following table details the Company’s affiliate CMBS positions ($ in thousands):
|
| Cost Basis |
|
| Interest Income |
| ||||||||||||||||||
|
| June 30, |
|
| December 31, |
|
| Three Months Ended June 30, |
|
| Six Months Ended June 30, |
| ||||||||||||
|
| 2018 |
|
| 2017 |
|
| 2018 |
|
| 2017 |
|
| 2018 |
|
| 2017 |
| ||||||
CMBS collateralized by properties |
| $ | 780,631 |
|
| $ | 559,616 |
|
| $ | 8,771 |
|
| $ | 1,163 |
|
| $ | 15,795 |
|
| $ | 1,188 |
|
CMBS collateralized by a loan |
|
| 166,108 |
|
|
| 63,533 |
|
|
| 762 |
|
|
| 2 |
|
|
| 1,448 |
|
|
| 2 |
|
Total |
| $ | 946,739 |
|
| $ | 623,149 |
|
| $ | 9,533 |
|
| $ | 1,165 |
|
| $ | 17,243 |
|
| $ | 1,190 |
|
For additional information regarding the Company’s investments in affiliated CMBS, see Note 5 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2017. The terms and conditions of such affiliated CMBS held as of June 30, 2018 are consistent with the terms described in such Note.
During the six months ended June 30, 2018, the borrower paid off three of the Company’s CMBS with a total cost basis of $63.5$115.6 million collateralized by a loan originatedproperty owned by a Blackstone-advised investment vehicle. Such CMBS were purchased in fully or over-subscribed offerings. Each investment in such CMBS by Blackstone and its affiliates (including the Company) represented no more than a 49% participation in any individual tranche. The Company acquired its minority participation interests from third-party investment banks on market terms negotiated by the majority third-party investors. Blackstone and its affiliates (including the Company) will forgo all non-economic rights (including voting rights) in such CMBS as long as the Blackstone-advised investment vehicles either own the properties collateralizing, or have an interestvehicle, which did not result in a different part of the capital structure related to such CMBS. For the three and nine months ended September 30, 2017, the Company recorded interest income of $3.1 million and $4.3 million, respectively, related to its investments in such CMBS. Such amounts were reported as a component of Income From Real Estate-Related Securitiesgain or loss on the Company’s Condensed Consolidated StatementsStatement of Operations.
As described in Note 2, the Company classifies its investments in real estate-related securities as trading and records these investments at fair value in Real Estate-Related Securities on the Company’s Consolidated Balance Sheets. During the three and ninesix months ended SeptemberJune 30, 2018 and 2017, the Company recorded an unrealized lossgain of $0.6$2.1 million and an unrealized gain of $1.0$3.8 million and $0.9 million and $1.6 million, respectively, as a component of Income Fromfrom Real Estate-Related Securities on the Company’s Consolidated Statements of Operations. During the nine months ended September 30, 2017, one of the Company’s CMBS investments was repaid and the Company recorded a realized loss of $0.2 million as a component of Income From Real Estate-Related Securities on the Company’sCondensed Consolidated Statements of Operations. The Company did not sell any real estate-related debt securities during the three and ninesix months ended SeptemberJune 30, 2018 and 2017.
6. Mortgage Notes, Term Loan,Loans, and Revolving Credit FacilityFacilities
The following table is a summary of the mortgage notes, term loan,loans, and revolving credit facilityfacilities secured by the Company’s properties as of September 30, 2017 ($ in thousands):
Property |
| Interest Rate(1) |
|
| Maturity Dates |
| Principal Balance |
|
| Amortization Period |
| Prepayment Provisions(2) | ||
TA Multifamily (excluding 55 West) |
|
| 3.76% |
|
| 6/1/2024 |
| $ | 211,249 |
|
| Interest Only |
| Yield Maintenance |
Industrial Properties - Term Loan |
| L+2.10% |
|
| 6/1/2022 |
|
| 146,000 |
|
| Interest Only |
| Spread Maintenance | |
Industrial Properties - Revolving Credit Facility |
| L+2.10% |
|
| 6/1/2022 |
|
| 146,000 |
|
| Interest Only |
| None | |
Emory Point |
|
| 3.66% |
|
| 5/5/2024 |
|
| 130,000 |
|
| Interest Only(4) |
| Yield Maintenance |
Nevada West |
|
| 3.75% |
|
| 9/1/2024 |
|
| 121,380 |
|
| Interest Only |
| Yield Maintenance |
Elysian West |
|
| 3.77% |
|
| 9/1/2024 |
|
| 75,400 |
|
| Interest Only |
| Yield Maintenance |
55 West (part of TA Multifamily Portfolio) |
| L+2.18% |
|
| 5/9/2022(3) |
|
| 63,600 |
|
| Interest Only |
| Spread Maintenance | |
Mountain Gate & Trails |
|
| 3.75% |
|
| 9/1/2024 |
|
| 59,985 |
|
| Interest Only |
| Yield Maintenance |
Gilbert Vistara |
|
| 4.09% |
|
| 10/1/2028 |
|
| 48,129 |
|
| Interest Only |
| Yield Maintenance |
Gilbert Redstone |
|
| 4.92% |
|
| 4/10/2029 |
|
| 40,484 |
|
| Interest Only(5) |
| Yield Maintenance |
ACG II - Highlands |
|
| 3.62% |
|
| 10/1/2024 |
|
| 27,715 |
|
| Interest Only |
| Yield Maintenance |
Sonora Canyon |
|
| 3.76% |
|
| 6/1/2024 |
|
| 26,455 |
|
| Interest Only |
| Yield Maintenance |
ACG II - Brooks Landing |
|
| 4.60% |
|
| 10/6/2025 |
|
| 24,500 |
|
| Interest Only |
| Yield Maintenance |
ACG II - Woodlands |
|
| 4.83% |
|
| 3/6/2024 |
|
| 23,485 |
|
| Interest Only(5) |
| Yield Maintenance |
ACG II - Sterling Pointe |
|
| 5.36% |
|
| 1/6/2024 |
|
| 18,900 |
|
| Interest Only(5) |
| Yield Maintenance |
Total principal balance |
|
|
|
|
|
|
|
| 1,163,282 |
|
|
|
|
|
Deferred financing costs, net |
|
|
|
|
|
|
|
| (9,493 | ) |
|
|
|
|
Premium on assumed debt, net |
|
|
|
|
|
|
|
| 1,602 |
|
|
|
|
|
Mortgage notes, term loan, and revolving credit facility, net |
|
|
|
|
|
|
| $ | 1,155,391 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Principal Balance Outstanding(3) |
| |||||
Indebtedness |
| Weighted Average Interest Rate(1) |
|
| Weighted Average Maturity Date(2) |
| Maximum Facility Size |
|
| June 30, 2018 |
|
| December 31, 2017 |
| ||||
Fixed rate loans |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fixed rate mortgages |
| 3.98% |
|
| 5/6/2025 |
| N/A |
|
| $ | 3,426,067 |
|
| $ | 1,468,294 |
| ||
Canyon Industrial Portfolio Mezzanine Loan |
| 5.85% |
|
| 4/5/2025 |
| N/A |
|
|
| 200,000 |
|
|
| — |
| ||
Total fixed rate loans |
| 4.08% |
|
| 5/4/2025 |
|
|
|
|
|
| 3,626,067 |
|
|
| 1,468,294 |
| |
Variable rate loans |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BAML Industrial Term Loan(4) |
| L+2.00% |
|
| 6/1/2022 |
| N/A |
|
|
| 236,000 |
|
|
| 186,000 |
| ||
BAML Revolving Credit Facility(4) |
| L+2.00% |
|
| 6/1/2022 |
| $ | 236,000 |
|
|
| 217,000 |
|
|
| 186,000 |
| |
Citi Revolving Credit Facility(5) |
| L+2.25% |
|
| 10/26/2020 |
|
| 300,000 |
|
|
| 178,831 |
|
|
| 178,831 |
| |
Floating rate mortgage |
| L+2.18% |
|
| 5/9/2022 |
| N/A |
|
|
| 63,600 |
|
|
| 63,600 |
| ||
Capital One Term Loan(6) |
| L+1.60% |
|
| 12/12/2022 |
| N/A |
|
|
| 101,000 |
|
|
| 22,500 |
| ||
Capital One Revolving Credit Facility(6) |
| L+1.60% |
|
| 12/12/2022 |
|
| 101,000 |
|
|
| 101,000 |
|
|
| 20,600 |
| |
Total variable rate loans |
| 4.06% |
|
| 3/18/2022 |
|
|
|
|
|
| 897,431 |
|
|
| 657,531 |
| |
Total loans secured by the Company's properties |
| 4.08% |
|
| 9/19/2024 |
|
|
|
|
|
| 4,523,498 |
|
|
| 2,125,825 |
| |
Deferred financing costs, net |
|
|
|
|
|
|
|
|
|
|
|
| (31,854 | ) |
|
| (16,075 | ) |
Premium on assumed debt, net |
|
|
|
|
|
|
|
|
|
|
|
| 1,935 |
|
|
| 1,541 |
|
Mortgage notes, term loans, and revolving credit facilities, net |
|
|
|
|
| $ | 4,493,579 |
|
| $ | 2,111,291 |
|
| (1) | The term “L” refers to the one-month LIBOR. As of |
| (2) |
|
| (3) | The |
| (4) |
|
| (5) |
|
(6) | The Capital One Term Loan and |
The following table presents the future principal payments due under the Company’s mortgage notes, term loan,loans, and revolving credit facilityfacilities as of SeptemberJune 30, 20172018 ($ in thousands):
|
|
|
|
|
Year |
| Amount |
| |
2017 (remaining) |
| $ | — |
|
2018 |
|
| 227 |
|
2019 |
|
| 510 |
|
2020 |
|
| 622 |
|
2021 |
|
| 834 |
|
Thereafter |
|
| 1,161,089 |
|
Total |
| $ | 1,163,282 |
|
Year |
| Amount |
| |
2018 (remaining) |
| $ | 1,510 |
|
2019 |
|
| 17,994 |
|
2020 |
|
| 212,541 |
|
2021 |
|
| 5,959 |
|
2022 |
|
| 729,042 |
|
Thereafter |
|
| 3,556,452 |
|
Total |
| $ | 4,523,498 |
|
7. Repurchase Agreements
TheOn June 29, 2018, the Company entered into a master repurchase agreement with Barclays Bank PLC (the “Barclays MRA”) providing the Company with financing secured by the Company’s investments in real estate-related securities. Repurchase agreements under the Barclays MRA will have an initial maturity date of September 29, 2021. Additionally, the Company has previously entered into master repurchase agreements with Citigroup Global Markets Inc. (the “Citi MRA”), Royal Bank of Canada (the “RBC MRA”), and Bank of America Merrill Lynch (the “BAML MRA”) to provide the Company with additional financing capacity secured by the Company’s $644.4 million$1.7 billion of investments in real estate-related securities. The terms of the Citi MRA, RBC MRA, and BAML MRA
provide the lenders the ability to determine the size and terms of the financing provided based upon the particular collateral pledged by the Company from time-to-time. As of September 30, 2017, theThe Company did not have any outstanding borrowings underbalance on the BAML MRA.Barclays MRA as of June 30, 2018.
The following table istables are a summary of ourthe Company’s repurchase agreements as of September 30, 2017 ($ in thousands):
|
| June 30, 2018 | ||||||||||||||||||||||||||||||
Facility |
| Interest Rate(1) |
| Maturity Dates(2) |
| Security Interests |
| Collateral Assets(3) |
|
| Outstanding Balance |
|
| Prepayment Provisions |
| Weighted Average Interest Rate(1) |
| Weighted Average Maturity Date(2) |
| Security Interests |
| Collateral Assets(3) |
|
| Outstanding Balance |
|
| Prepayment Provisions | ||||
RBC MRA |
| L+1.34% |
| 11/25/2018 |
| CMBS |
| $ | 758,891 |
|
| $ | 605,585 |
|
| None | ||||||||||||||||
Citi MRA |
| L+1.25% - L+1.70% |
| 10/16/2017 - 12/28/2017 |
| CMBS |
| $ | 580,899 |
|
| $ | 429,294 |
|
| None |
| L+1.56% |
| 9/7/2018 |
| CMBS |
|
| 628,491 |
|
|
| 458,896 |
|
| None |
RBC MRA |
| L+1.25% - L+1.45% |
| 10/20/2017 |
| CMBS |
|
| 63,472 |
|
|
| 49,161 |
|
| None | ||||||||||||||||
BAML MRA |
| L+1.06% |
| 7/10/2018 |
| CMBS |
|
| 48,477 |
|
|
| 37,759 |
|
| None | ||||||||||||||||
|
|
|
|
|
|
|
| $ | 644,371 |
|
| $ | 478,455 |
|
|
|
|
|
|
|
|
|
| $ | 1,435,859 |
|
| $ | 1,102,240 |
|
|
|
|
| December 31, 2017 | ||||||||||||||
Facility |
| Weighted Average Interest Rate(1) |
| Weighted Average Maturity Date(2) |
| Security Interests |
| Collateral Assets(3) |
|
| Outstanding Balance |
|
| Prepayment Provisions | ||
Citi MRA |
| L+1.57% |
| 8/23/2018 |
| CMBS |
| $ | 694,808 |
|
| $ | 512,975 |
|
| None |
RBC MRA |
| L+1.54% |
| 11/24/2018 |
| CMBS |
|
| 194,918 |
|
|
| 150,238 |
|
| None |
BAML MRA |
| L+1.16% |
| 2/9/2018 |
| CMBS |
|
| 26,016 |
|
|
| 19,635 |
|
| None |
|
|
|
|
|
|
|
| $ | 915,742 |
|
| $ | 682,848 |
|
|
|
| (1) | The term “L” refers to the one-month or three-month LIBOR. As of |
| (2) | Subsequent to quarter end, the Company rolled its repurchase agreement contracts expiring in |
| (3) | Represents the fair value of the Company’s investments in real estate-related |
8. Affiliate Line of Credit
On January 23, 2017, the Company entered into an unsecured, uncommitted line of credit (the “Line of Credit”) up to a maximum amount of $250 million with Blackstone Holdings Finance Co. L.L.C. (“Lender”), an affiliate of Blackstone. The Line of Credit expires on January 23, 2018, and may be extended for up to 12 months, subject to Lender approval. The interest rate is the then-current rate offered by a third-party lender, or, if no such rate is available, LIBOR plus 2.25%. Interest under the Line of Credit is determined based on a one-month U.S. dollar-denominated LIBOR, which was 1.2% as of September 30, 2017. Each advance under the Line of Credit is repayable on the earliest of (i) the expiration of the Line of Credit, (ii) Lender’s demand and (iii) the date on which the Adviser no longer acts as the Company’s investment adviser, provided that the Company will have 180 days to make such repayment in the cases of clauses (i) and (ii) and 45 days to make such repayment in the case of clause (iii). To the extent the Company has not repaid all loans and other obligations under the Line of Credit when repayment is required, the Company is obligated to apply the net cash proceeds from the Offering and any sale or other disposition of assets to the repayment of such loans and other obligations; provided that the Company will be permitted to (x) make payments to fulfill any repurchase requests pursuant to the Company’s share repurchase plan, (y) use funds to close any acquisition of property that the Company committed to prior to receiving a demand notice and (z) make quarterly distributions to the Company’s stockholders at per share levels consistent with the immediately preceding fiscal quarter and as otherwise required for the Company to maintain its REIT status. As of September 30, 2017, the Company had $122.7 million in borrowings outstanding under the Line of Credit.
9. Other Assets and Other Liabilities
The following table summarizes the components of other assets ($ in thousands):
|
| |||||||
|
|
|
| |||||
|
|
| ||||||
|
|
| ||||||
|
|
| ||||||
|
|
| ||||||
|
|
| ||||||
|
|
|
|
|
|
| June 30, 2018 |
|
| December 31, 2017 |
| ||
Real estate intangibles, net |
| $ | 238,857 |
|
| $ | 113,844 |
|
Receivables |
|
| 20,869 |
|
|
| 7,386 |
|
Prepaid expenses |
|
| 9,709 |
|
|
| 3,267 |
|
Pre-acquisition costs |
|
| 7,606 |
|
|
| 6,588 |
|
Deferred financing costs, net |
|
| 6,088 |
|
|
| 5,248 |
|
Straight-line rent receivable |
|
| 5,799 |
|
|
| 2,045 |
|
Deferred leasing commissions, net |
|
| 3,946 |
|
|
| 1,193 |
|
Other |
|
| 6,634 |
|
|
| 5,711 |
|
Total |
| $ | 299,508 |
|
| $ | 145,282 |
|
The following table summarizes the components of accounts payable, accrued expenses, and other liabilities ($ in thousands):
|
| September 30, 2017 |
|
| December 31, 2016 |
|
| June 30, 2018 |
|
| December 31, 2017 |
| ||||
Payable for real estate-related securities |
| $ | 170,028 |
|
| $ | — |
| ||||||||
Subscriptions received in advance |
|
| 137,896 |
|
|
| 107,576 |
| ||||||||
Intangible liabilities, net |
|
| 40,560 |
|
|
| 13,156 |
| ||||||||
Real estate taxes payable |
| $ | 15,867 |
|
| $ | — |
|
|
| 37,319 |
|
|
| 13,202 |
|
Intangible liabilities, net |
|
| 11,587 |
|
|
| — |
| ||||||||
Accounts payable and accrued expenses |
|
| 9,501 |
|
|
| — |
|
|
| 33,989 |
|
|
| 13,169 |
|
Tenant security deposits |
|
| 5,685 |
|
|
| — |
|
|
| 17,170 |
|
|
| 8,107 |
|
Distribution payable |
|
| 5,624 |
|
|
| — |
| ||||||||
Accrued interest expense |
|
| 4,397 |
|
|
| — |
|
|
| 16,161 |
|
|
| 8,072 |
|
Prepaid rental income |
|
| 4,098 |
|
|
| — |
|
|
| 14,729 |
|
|
| 5,381 |
|
Distribution payable |
|
| 13,868 |
|
|
| 7,716 |
| ||||||||
Other |
|
| 1,344 |
|
|
| 29 |
|
|
| 27,151 |
|
|
| 6,456 |
|
Total |
| $ | 58,103 |
|
| $ | 29 |
|
| $ | 508,871 |
|
| $ | 182,835 |
|
Authorized Capital
The Company is authorized to issue preferred stock and four classes of common stock consisting of Class S shares, Class T shares, Class D shares, and Class I shares. The Company’s board of directors has the ability to establish the preferences and rights of each class or series of preferred stock, without stockholder approval, and as such, it may afford the holders of any series or class of preferred stock preferences, powers and rights senior to the rights of holders of common stock. The differences among the common share classes relate to upfront selling commissions, dealer manager fees and ongoing stockholder servicing fees. See Note 2 for a further description of such items. Other than the differences in upfront selling commissions, dealer manager fees and ongoing stockholder servicing fees, each class of common stock is subject to the same economic and voting rights.
As of September 30, 2017, the Company had authority to issue 2,100,000,000 shares, consisting of the following:
Classification |
| Number of Shares (in thousands) |
|
| Par Value |
| ||
Preferred Stock |
|
| 100,000 |
|
| $ | 0.01 |
|
Class S Shares |
|
| 500,000 |
|
| $ | 0.01 |
|
Class T Shares |
|
| 500,000 |
|
| $ | 0.01 |
|
Class D Shares |
|
| 500,000 |
|
| $ | 0.01 |
|
Class I Shares |
|
| 500,000 |
|
| $ | 0.01 |
|
Total |
|
| 2,100,000 |
|
|
|
|
|
Redeemable Non-controlling Interest
Common Stock
As of SeptemberJune 30, 2017,2018, the Company had sold 125.5issued 297.0 million shares of its common stock in the Offering for aggregate net proceeds of $1.3$3.1 billion. The following table details the movement in the Company’s outstanding shares of common stock (in thousands):
|
| Nine Months Ended September 30, 2017 |
| |||||||||||||||||
|
| Class S |
|
| Class T |
|
| Class D |
|
| Class I |
|
| Total |
| |||||
Beginning balance |
|
| — |
|
|
| — |
|
|
| — |
|
|
| 20 |
|
|
| 20 |
|
Common stock issued |
|
| 97,801 |
|
|
| 2,206 |
|
|
| 1,221 |
|
|
| 22,932 |
|
|
| 124,160 |
|
Distribution reinvestment |
|
| 993 |
|
|
| 3 |
|
|
| 5 |
|
|
| 313 |
|
|
| 1,314 |
|
Common stock repurchased |
|
| (15 | ) |
|
| — |
|
|
| — |
|
|
| (4 | ) |
|
| (19 | ) |
Directors’ restricted stock grant(1) |
|
| — |
|
|
| — |
|
|
| — |
|
|
| 16 |
|
|
| 16 |
|
Ending balance |
|
| 98,779 |
|
|
| 2,209 |
|
|
| 1,226 |
|
|
| 23,277 |
|
|
| 125,491 |
|
|
|
|
| For the Six Months Ended June 30, 2018 |
| |||||||||||||||||
|
| Class S |
|
| Class T |
|
| Class D |
|
| Class I |
|
| Total |
| |||||
December 31, 2017 |
|
| 130,085 |
|
|
| 5,625 |
|
|
| 3,955 |
|
|
| 30,719 |
|
|
| 170,384 |
|
Common stock issued |
|
| 66,853 |
|
|
| 9,111 |
|
|
| 12,762 |
|
|
| 35,336 |
|
|
| 124,062 |
|
Distribution reinvestment |
|
| 2,511 |
|
|
| 125 |
|
|
| 111 |
|
|
| 864 |
|
|
| 3,611 |
|
Common stock repurchased |
|
| (831 | ) |
|
| (3 | ) |
|
| (1 | ) |
|
| (204 | ) |
|
| (1,039 | ) |
June 30, 2018 |
|
| 198,618 |
|
|
| 14,858 |
|
|
| 16,827 |
|
|
| 66,715 |
|
|
| 297,018 |
|
Share Repurchase Plan
We haveThe Company has adopted a share repurchase plan whereby, subject to certain limitations, stockholders may request on a monthly basis that we repurchasethe Company repurchases all or any portion of their shares. For the ninesix months ended SeptemberJune 30, 2017, we2018, the Company repurchased 18,9211,039,003 shares of common stock. Westock representing a total of $11.1 million. The Company had no unfulfilled repurchase requests during the ninesix months ended SeptemberJune 30, 2017.2018.
Distributions
The Company generally intends to distribute substantially all of its taxable income, which does not necessarily equal net income as calculated in accordance with GAAP, to its stockholders each year to comply with the REIT provisions of the Internal Revenue Code. Beginning March 2017, the Company declared a monthly distribution to stockholders of record as of the last day of each applicable month.
The following table details the aggregate distributions declared for each applicable class of common stock for the ninesix months ended SeptemberJune 30, 20172018 ($ in thousands, except share and per share data):
|
| Class S |
|
| Class I |
|
| Class D |
|
| Class T |
|
| Class S |
|
| Class T |
|
| Class D |
|
| Class I |
| ||||||||
Aggregate distributions declared per share of common stock |
| $ | 0.3245 |
|
| $ | 0.3245 |
|
| $ | 0.2471 |
|
| $ | 0.2030 |
| ||||||||||||||||
Aggregate gross distributions declared per share of common stock |
| $ | 0.3118 |
|
| $ | 0.3118 |
|
| $ | 0.3118 |
|
| $ | 0.3118 |
| ||||||||||||||||
Stockholder servicing fee per share of common stock |
|
| (0.0598 | ) |
|
| — |
|
|
| (0.0108 | ) |
|
| (0.0289 | ) |
|
| (0.0451 | ) |
|
| (0.0444 | ) |
|
| (0.0132 | ) |
|
| — |
|
Net distributions declared per share of common stock |
| $ | 0.2647 |
|
| $ | 0.3245 |
|
| $ | 0.2363 |
|
| $ | 0.1741 |
|
| $ | 0.2667 |
|
| $ | 0.2674 |
|
| $ | 0.2986 |
|
| $ | 0.3118 |
|
Redeemable Non-controlling Interest
11.During 2017, the Special Limited Partner earned a performance participation allocation in the amount of $17.0 million. On January 1, 2018, the Company issued 1.6 million Class I units in BREIT OP to the Special Limited Partner as payment for the 2017 performance participation allocation based on the Company’s Net Asset Value (“NAV”) at December 31, 2017. In June 2018, the Special Limited Partner redeemed 0.8 million Class I units in BREIT OP for $8.4 million based on the NAV of the Class I units at May 31, 2018. As of June 30, 2018, Blackstone and its employees, including the Company’s executive officers, continue to own an aggregate of $54.0 million worth of shares of the Company and Class I units of BREIT OP.
Because the Special Limited Partner has the ability to redeem its Class I units for Class I shares in the Company or cash, at the election of the Special Limited Partner, the Company has classified these Class I units as Redeemable Non-controlling Interest in mezzanine equity on the Company’s Condensed Consolidated Balance Sheets. The Redeemable Non-controlling Interest is recorded at the greater of the carrying amount, adjusted for their share of the allocation of income or loss and dividends, or the redemption value, which is equivalent to fair value, of such units at the end of each measurement period. As the redemption value was greater than the adjusted carrying value at June 30, 2018, the Company recorded an allocation adjustment of $1.5 million between Additional Paid-in Capital and Redeemable Non-controlling Interest.
10. Related Party Transactions
Management Fee and Performance Participation Allocation
On August 7, 2017, the Company renewed the advisory agreement between the Company, BREIT OP and the Adviser for an additional one-year period ending August 31, 2018. The Adviser is entitled to an annual management fee equal to 1.25% of the Company’s NAV, payable monthly, as compensation for the services it provides to the Company. The management fee can be paid, at the Adviser’s election, in cash, shares of common stock, or BREIT OP units. The Adviser’s management fee waiver period expired on June 30, 2017. During the three months ended September 30, 2017, the Company accrued $3.7 million of management fees, which is included in Due to Affiliates on the Company’s Consolidated Balance Sheets. The Adviser has currently elected to receive the management fee in shares of the Company’s common stock to date. During
the three and during October 2017six months ended June 30, 2018, the Company incurred management fees of $9.3 million and $16.3 million, respectively. The Company issued 1,206,253 unregistered Class I shares to the Adviser as payment for such management fee and also had a payable of $3.4 million related to management fees as of June 30, 2018, which is included in Due to Affiliates on the Company’s Condensed Consolidated Balance Sheets. During July 2018, the Adviser was issued 355 thousand313,712 unregistered Class I shares as payment for the $3.7$3.4 million management fee accrued as of SeptemberJune 30, 2018. The shares issued to the Adviser for payment of the management fee were issued at the applicable NAV per share at the end of each month for which the fee was earned. In accordance with the advisory agreement between the Company, BREIT OP and the Adviser, the Adviser waived management fees for the period January 1, 2017 to June 30, 2017, as such no management fee was incurred during the six months ended June 30, 2017.
Additionally, the Special Limited Partner holds a performance participation interest in BREIT OP that entitles it to receive an allocation of BREIT OP’s total return to its capital account. Total return is defined as distributions paid or accrued plus the change in NAV. Under the BREIT OP agreement, the annual total return will be allocated solely to the Special Limited Partner after the other unit holders have received a total return of 5% (after recouping any loss carryforward amount) and such allocation will continue until the allocation between the Special Limited Partner and all other unit holders is equal to 12.5% and 87.5%, respectively. Thereafter, the Special Limited Partner will receive an allocation of 12.5% of the annual total return. The allocation of the performance participation interest is ultimately determined at the end of each calendar year and will be paid in cash or Class I units of BREIT OP, at the election of the Special Limited Partner. During the ninethree and six months ended SeptemberJune 30, 2017,2018, the Company had recognized $11.0$9.5 million and $17.3 million, respectively, of Performance Participation Allocation Expense in the Company’s Condensed Consolidated StatementStatements of Operations.Operations as the participation hurdle was achieved as of June 30, 2018. During both the three and six months ended June 30, 2017, the Company recognized $5.2 million of Performance Participation Allocation Expense as the participation hurdle was achieved as of June 30, 2017.
Due to Affiliates
The following table details the components of due to affiliates ($ in thousands):
|
| September 30, 2017 |
|
| December 31, 2016 |
|
| June 30, 2018 |
|
| December 31, 2017 |
| |||||||
Accrued stockholder servicing fee |
| $ | 75,998 |
|
| $ | — |
|
| $ | 167,329 |
|
| $ | 102,076 |
| |||
Performance participation allocation |
|
| 10,952 |
|
|
| — |
|
|
| 17,349 |
|
|
| 16,974 |
| |||
Advanced organization and offering costs |
|
| 9,389 |
|
|
| — |
|
|
| 9,144 |
|
|
| 10,160 |
| |||
Accrued management fee |
|
| 3,712 |
|
|
| — |
|
|
| 3,371 |
|
|
| 1,904 |
| |||
Accrued affiliate service provider expenses |
|
| 1,797 |
|
|
| — |
|
|
| 1,310 |
|
|
| 1,485 |
| |||
Advanced expenses |
|
| 135 |
|
|
| 86 |
|
|
| 513 |
|
|
| 472 |
| |||
Total |
| $ | 101,983 |
|
| $ | 86 |
|
| $ | 199,016 |
|
| $ | 133,071 |
|
(1) | The Company accrues the full amount of the future stockholder servicing fees payable to the Dealer Manager for Class S, Class T, and Class D shares up to the 8.75% of gross proceeds limit at the time such shares are sold. As of June 30, 2018, the Company accrued $167.3 million of stockholder servicing fees payable to the Dealer Manager related to the Class S, Class T, and Class D shares sold. The Dealer Manager has entered into agreements with the selected dealers distributing the Company’s shares in the Offering, which provide, among other things, for the re-allowance of the full amount of the selling commissions and dealer manager fee and all or a portion of the stockholder servicing fees received by the Dealer Manager to such selected dealers. |
Accrued stockholder servicing fee
As described in Note 2, the Company accrues the full amount of the future stockholder servicing fees payable to the Dealer Manager for Class S, Class T, and Class D shares up to the 8.75% of gross proceeds limit at the time such shares are sold. As of September 30, 2017, the Company accrued $76.0 million of stockholder servicing fees payable to the Dealer Manager related to the Class S, Class T, and Class D shares sold. The Dealer Manager has entered into agreements with the selected dealers distributing the Company’s shares in the Offering, which provide, among other things, for the re-allowance of the full amount of the selling commissions and dealer manager fee and all or a portion of the stockholder servicing fees received by the Dealer Manager to such selected dealers.
Advanced organization and offering costs
The Adviser advanced $9.4 million of organization and offering costs (excluding upfront selling commissions, dealer manager fees and stockholder servicing fees) on behalf of the Company through September 30, 2017. Such amounts will be reimbursed to the Adviser on a pro-rata basis over 60 months beginning January 1, 2018.
Accrued affiliate service provider expenses
The Company has engaged and expects to continue to engage BRE Hotels and Resorts, a portfolio company controlled (but not owned) by a Blackstone-advised fund, to provide day-to-day operational and management services (including revenue management, accounting, legal and contract management, expense management, and capital expenditure projects and transaction support services) for the Company’s hotel properties. The Company currently estimates the cost for such services to be approximately $200 per key per
annum (which will be reviewed periodically and adjusted if appropriate), plus actual costs allocated for transaction support services. During the three and nine months ended September 30, 2017,Beginning January 1, 2018, the Company incurred $38 thousand and $53 thousand, respectively, of expenses due to BRE Hotels and Resorts for services incurred in connection with its investments and such amount is included in Hotel Operating expenses on the Company’s Consolidated Statements of Operations.
The Company has engaged and expects to continue to engage LivCor, LLC (“LivCor”)Gateway Industrial Properties L.L.C., a portfolio company owned by a Blackstone-advised fund, to provide day-to-day operational and managementthe services (including leasing, construction management, revenue management, accounting, legal and contract management, expense management, and capital expenditure projects and transaction support services) for the Company’s multifamily properties. The Company currently estimates the cost for such services to be approximately $300 per unit per annum (which will be reviewed periodically and adjusted if appropriate), plus actual costs allocated for transaction support services. During the three and nine months ended September 30, 2017, the Company incurred $394 thousand and $464 thousand, respectively, of expenses due to LivCor for services incurred in connection with its investments and such amount is included in Rental Property Operating expenses on the Company’s Consolidated Statements of Operations. Additionally, as of September 30, 2017, the Company capitalized $600 thousand to Investments in Real Estate on the Company’s Consolidated Balance Sheets for transaction support services provided by LivCor.
The Company has engaged and expects to continue to engagethat Equity Office Management, L.L.C. (“EOM”), a portfolio company owned by Blackstone-advised funds,had previously provided to provide day-to-day operational and management services (including property management services, leasing, construction management, accounting, legal and contract management, expense management, and capital expenditure projects and transaction support services) for the Company’s office and industrial properties. The Company currently estimates the cost for such services to be approximately 3% of gross revenue for property management services, 1% of gross rents from new and renewal leases for leasing services and 4% of total project costs for construction management services, plus a per square foot amount for corporate services and actual costs allocated for transaction support services. During the three and nine months ended September 30, 2017,Additionally, beginning April 1, 2018, the Company incurred $286 thousand and $757 thousand, respectively, of expenses due to EOM for services incurred in connection with its investments, and such amount is included in Rental Property Operating expenses in the Company’s Consolidated Statements of Operations. Additionally, as of September 30, 2017, the Company capitalized $20 thousand to Investments in Real Estate on the Company’s Consolidated Balance Sheets for transaction support services provided by EOM.
The Company has engaged and expects to continue to engage ShopCore Properties TRS ManagementRevantage Corporate Services, LLC, (“ShopCore”), a portfolio company owned by a Blackstone-advised fund, to provide day-to-day operational and managementcorporate support services (including, property management services, leasing, construction management, revenue management,without limitation, accounting, legal, and contract management, expense management, and capital expenditure projectstax, treasury, as applicable), and transaction support services)services to certain of the Company’s investments directly.
For further details on the Company’s relationships with its affiliated service providers, see Note 11 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2017. The following table details the amounts incurred for such providers during the three and six months ended June 30, 2018 and 2017 ($ in thousands). Such amounts are included in the Company’s retail properties. The Company currently estimates the costCondensed Consolidated Statements of such services to be approximately 3% of gross revenue for property management services, 1% of gross rents from newOperations and renewal leases for leasing services and 4% of total project costs for construction management services, plus a per square foot amount for corporate services and actual costs allocated for transaction support services. Condensed Consolidated Balance Sheets, respectively.
|
| Affiliate Service Provider Expenses |
|
| Affiliate Service Provider Expenses |
|
| Capitalized Transaction Support Fees(1) |
| |||||||||||||||
|
| For the Three Months Ended June 30, |
|
| For the Six Months Ended June 30, |
|
| For the Six Months Ended June 30, |
| |||||||||||||||
|
| 2018 |
|
| 2017 |
|
| 2018 |
|
| 2017 |
|
| 2018 |
|
| 2017 |
| ||||||
LivCor, L.L.C. |
| $ | 2,048 |
|
| $ | 70 |
|
| $ | 3,191 |
|
| $ | 70 |
|
| $ | 101 |
|
| $ | 485 |
|
Gateway Industrial Properties L.L.C. |
|
| 673 |
|
|
| — |
|
|
| 1,078 |
|
|
| — |
|
|
| 196 |
|
|
| — |
|
ShopCore Properties TRS Management LLC |
|
| 258 |
|
|
| 70 |
|
|
| 498 |
|
|
| 70 |
|
|
| — |
|
|
| — |
|
BRE Hotels and Resorts LLC |
|
| 171 |
|
|
| 10 |
|
|
| 318 |
|
|
| 15 |
|
|
| — |
|
|
| — |
|
Equity Office Management, L.L.C. |
|
| — |
|
|
| 461 |
|
|
| — |
|
|
| 471 |
|
|
| — |
|
|
| 20 |
|
Revantage Corporate Services, L.L.C. |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 8 |
|
|
| — |
|
Total |
| $ | 3,150 |
|
| $ | 611 |
|
| $ | 5,085 |
|
| $ | 626 |
|
| $ | 305 |
|
| $ | 505 |
|
(1) | Transaction support fees were capitalized to Investments in Real Estate on the Company’s Condensed Consolidated Balance Sheets. |
During the three and ninesix months ended SeptemberJune 30, 2017, the Company incurred $72 thousand and $142 thousand, respectively, of expenses due to ShopCore for services incurred in connection with its investments and such amount is included in Rental Property Operating expenses on the Company’s Consolidated Statements of Operations.
The Company expects to set up a management incentive plan for each transaction for which the Company engages BRE Hotels and Resorts, LivCor, EOM, or ShopCore for certain senior executives of the applicable portfolio company. Neither Blackstone nor the Adviser receives any fees or incentive payments from agreements between the Company and such portfolio companies or their management teams. During the nine months ended September 30, 2017,2018, the Company has not paid or accrued any incentive fees to its affiliated service providers under such agreements.
Advanced expenses
The Adviser had advanced $135 thousand and $86 thousand of expenses on the Company’s behalf for general corporate services provided by unaffiliated third parties as of September 30, 2017 and December 31, 2016, respectively.providers.
Other
Blackstone partnered with a leading national title agency to createDuring the three and six months ended June 30, 2018, the Company paid Lexington National Land Services (“LNLS”), a title agent company. LNLS acts as an agent for one or more underwriters in issuing title policies in connection with investments by the Company, Blackstone,$0.4 million and third parties. LNLS will not perform services in non-regulated states for the Company, unless in the context of a portfolio transaction that includes properties in rate-regulated states, as part of a syndicate of title insurance companies where the rate is negotiated by other insurers or their agents, when a third party is paying all or a material portion of the premium or in other scenarios where LNLS is not negotiating the premium. LNLS earns fees, which would have otherwise been paid to third parties, by providing title agency services and facilitating placement of title insurance with underwriters. Blackstone receives distributions from LNLS in connection with investments by the Company based on its equity interest in LNLS. During the nine months ended
September 30, 2017, the Company paid LNLS $160 thousand$0.6 million, respectively, for title services related to twofive investments and such costs were capitalized to Investments in Real Estate on the Company’s Condensed Consolidated Balance Sheet. For additional information regarding this affiliate relationship, see Note 11 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2017.
12.11. Commitments and Contingencies
As of SeptemberJune 30, 20172018 and December 31, 2016,2017, the Company was not subject to any material litigation nor is the Company aware of any material litigation threatened against it.
The Hyatt Place UC Davis is subject to a ground lease that expires in 2070. Pursuant to the ground lease, the Company will pay the landlord annual rent equal to the greater of (a) minimum base rent of $130 thousand (subject to certain periodic adjustments) or (b) 5% of room revenue reduced by a utility rebate equal to actual utility charges paid, capped at 2% of room revenue.
The 55 West parking garage is subject to a ground lease that expires in 2085. Pursuant to the ground lease, the Company will pay the landlord annual rent equal to a fixed payment of $50 thousand and a variable payment which is the product of the prior year variable rate adjusted by the Consumer Price Index during the previous year. At the time the Company acquired the ground lease, the variable rent payment component was equal to $59 thousand.
The following table details the Company’s contractual obligations and commitments with payments due subsequent to September 30, 2017 ($ in thousands):
Year |
| Future Commitments |
| |
2017 (remaining) |
| $ | 60 |
|
2018 |
|
| 239 |
|
2019 |
|
| 239 |
|
2020 |
|
| 239 |
|
2021 |
|
| 239 |
|
Thereafter |
|
| 13,233 |
|
Total |
| $ | 14,249 |
|
13.12. Five Year Minimum Rental Payments
The following table presents the future minimum rents the Company expects to receive for its industrial and retail properties ($ in thousands). Leases at the Company’s multifamily investments are short term, generally 12 months or less, and are therefore not included.
Year |
| Future Minimum Rents |
|
| Future Minimum Rents |
| ||
2017 (remaining) |
| $ | 9,562 |
| ||||
2018 |
|
| 37,139 |
| ||||
2018 (remaining) |
| $ | 86,638 |
| ||||
2019 |
|
| 31,378 |
|
|
| 168,483 |
|
2020 |
|
| 28,275 |
|
|
| 149,607 |
|
2021 |
|
| 24,021 |
|
|
| 128,830 |
|
2022 |
|
| 103,644 |
| ||||
Thereafter |
|
| 59,734 |
|
|
| 226,602 |
|
Total |
| $ | 190,109 |
|
| $ | 863,804 |
|
The Company operates in five reportable segments: Multifamily properties, Industrial properties, Hotel properties, Retail properties, and Real Estate-Related Securities. The Company allocates resources and evaluates results based on the performance of each segment individually. The Company believes that Segment Net Operating Income is the key performance metric that captures the unique operating characteristics of each segment.
The following table sets forth the total assets by segment as of September 30, 2017 ($ in thousands):
|
| September 30, 2017 |
|
| June 30, 2018 |
|
| December 31, 2017 |
| |||
Multifamily |
| $ | 1,588,958 |
|
| $ | 3,757,245 |
|
| $ | 2,567,735 |
|
Industrial |
|
| 524,988 |
|
|
| 2,899,583 |
|
|
| 636,900 |
|
Hotel |
|
| 200,301 |
|
|
| 366,351 |
|
|
| 281,242 |
|
Retail |
|
| 55,644 |
|
|
| 100,860 |
|
|
| 103,138 |
|
Real Estate-Related Securities |
|
| 646,373 |
|
|
| 1,658,178 |
|
|
| 918,975 |
|
Other (Corporate) |
|
| 111,205 |
|
|
| 151,763 |
|
|
| 117,318 |
|
Total assets |
| $ | 3,127,469 |
|
| $ | 8,933,980 |
|
| $ | 4,625,308 |
|
The following table sets forth the financial results by segment for the three months ended SeptemberJune 30, 2018 ($ in thousands):
|
| Multifamily |
|
| Industrial |
|
| Hotel |
|
| Retail |
|
| Real Estate- Related Securities |
|
| Total |
| ||||||
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rental revenue |
| $ | 66,930 |
|
| $ | 41,542 |
|
| $ | — |
|
| $ | 1,782 |
|
| $ | — |
|
| $ | 110,254 |
|
Tenant reimbursement income |
|
| 3,454 |
|
|
| 11,693 |
|
|
| — |
|
|
| 413 |
|
|
| — |
|
|
| 15,560 |
|
Hotel revenue |
|
| — |
|
|
| — |
|
|
| 21,196 |
|
|
| — |
|
|
| — |
|
|
| 21,196 |
|
Other revenue |
|
| 5,047 |
|
|
| 140 |
|
|
| 8 |
|
|
| 21 |
|
|
| — |
|
|
| 5,216 |
|
Total revenues |
|
| 75,431 |
|
|
| 53,375 |
|
|
| 21,204 |
|
|
| 2,216 |
|
|
| — |
|
|
| 152,226 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rental property operating |
|
| 35,959 |
|
|
| 14,678 |
|
|
| — |
|
|
| 815 |
|
|
| — |
|
|
| 51,452 |
|
Hotel operating |
|
| — |
|
|
| — |
|
|
| 13,522 |
|
|
| — |
|
|
| — |
|
|
| 13,522 |
|
Total expenses |
|
| 35,959 |
|
|
| 14,678 |
|
|
| 13,522 |
|
|
| 815 |
|
|
| — |
|
|
| 64,974 |
|
Income from real estate-related securities |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 17,397 |
|
|
| 17,397 |
|
Segment net operating income |
| $ | 39,472 |
|
| $ | 38,697 |
|
| $ | 7,682 |
|
| $ | 1,401 |
|
| $ | 17,397 |
|
| $ | 104,649 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization |
| $ | 48,181 |
|
| $ | 31,822 |
|
| $ | 3,800 |
|
| $ | 1,023 |
|
| $ | — |
|
| $ | 84,826 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income (expense): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General and administrative |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (2,901 | ) |
Management fee |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (9,281 | ) |
Performance participation allocation |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (9,476 | ) |
Interest income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 121 |
|
Interest expense |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (49,841 | ) |
Other income (expense) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (389 | ) |
Net loss |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| $ | (51,944 | ) |
Net loss attributable to non-controlling interests |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 1,462 |
|
Net loss attributable to BREIT stockholders |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| $ | (50,482 | ) |
The following table sets forth the financial results by segment for the three months ended June 30, 2017 ($ in thousands):
|
| Multifamily |
|
| Industrial |
|
| Hotel |
|
| Retail |
|
| Real Estate- Related Securities |
|
| Total |
|
| Multifamily |
|
| Industrial |
|
| Hotel |
|
| Retail |
|
| Real Estate- Related Securities |
|
| Total |
| ||||||||||||
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rental revenue |
| $ | 24,911 |
|
| $ | 7,737 |
|
| $ | — |
|
| $ | 951 |
|
| $ | — |
|
| $ | 33,599 |
|
| $ | 14,036 |
|
| $ | 6,260 |
|
| $ | — |
|
| $ | 934 |
|
| $ | — |
|
| $ | 21,230 |
|
Tenant reimbursement income |
|
| 964 |
|
|
| 2,036 |
|
|
| — |
|
|
| 230 |
|
|
| — |
|
|
| 3,230 |
|
|
| 482 |
|
|
| 1,626 |
|
|
| — |
|
|
| 98 |
|
|
| — |
|
|
| 2,206 |
|
Hotel revenue |
|
| — |
|
|
| — |
|
|
| 9,874 |
|
|
| — |
|
|
| — |
|
|
| 9,874 |
|
|
| — |
|
|
| — |
|
|
| 3,748 |
|
|
| — |
|
|
| — |
|
|
| 3,748 |
|
Other revenue |
|
| 2,182 |
|
|
| 7 |
|
|
| — |
|
|
| 12 |
|
|
| — |
|
|
| 2,201 |
|
|
| 1,149 |
|
|
| — |
|
|
| — |
|
|
| 6 |
|
|
| — |
|
|
| 1,155 |
|
Total revenues |
|
| 28,057 |
|
|
| 9,780 |
|
|
| 9,874 |
|
|
| 1,193 |
|
|
| — |
|
|
| 48,904 |
|
|
| 15,667 |
|
|
| 7,886 |
|
|
| 3,748 |
|
|
| 1,038 |
|
|
| — |
|
|
| 28,339 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rental property operating |
|
| 12,588 |
|
|
| 3,029 |
|
|
| — |
|
|
| 321 |
|
|
| — |
|
|
| 15,938 |
|
|
| 6,667 |
|
|
| 2,549 |
|
|
| — |
|
|
| 173 |
|
|
| — |
|
|
| 9,389 |
|
Hotel operating |
|
| — |
|
|
| — |
|
|
| 6,668 |
|
|
| — |
|
|
| — |
|
|
| 6,668 |
|
|
| — |
|
|
| — |
|
|
| 2,109 |
|
|
| — |
|
|
| — |
|
|
| 2,109 |
|
Total expenses |
|
| 12,588 |
|
|
| 3,029 |
|
|
| 6,668 |
|
|
| 321 |
|
|
| — |
|
|
| 22,606 |
|
|
| 6,667 |
|
|
| 2,549 |
|
|
| 2,109 |
|
|
| 173 |
|
|
| — |
|
|
| 11,498 |
|
Income from real estate-related securities |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 4,026 |
|
|
| 4,026 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 2,543 |
|
|
| 2,543 |
|
Segment net operating income |
| $ | 15,469 |
|
| $ | 6,751 |
|
| $ | 3,206 |
|
| $ | 872 |
|
| $ | 4,026 |
|
| $ | 30,324 |
|
| $ | 9,000 |
|
| $ | 5,337 |
|
| $ | 1,639 |
|
| $ | 865 |
|
| $ | 2,543 |
|
| $ | 19,384 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization |
| $ | 32,606 |
|
| $ | 5,408 |
|
| $ | 1,862 |
|
| $ | 483 |
|
| $ | — |
|
| $ | 40,359 |
|
| $ | 18,240 |
|
| $ | 4,217 |
|
| $ | 763 |
|
| $ | 476 |
|
| $ | — |
|
| $ | 23,696 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income (expense): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General and administrative |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (1,716 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (1,567 | ) |
Management fee |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (3,712 | ) | ||||||||||||||||||||||||
Performance participation allocation |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (5,711 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (5,241 | ) |
Interest income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 36 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 117 |
|
Interest expense |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (10,866 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (5,541 | ) |
Other expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (27 | ) | ||||||||||||||||||||||||
Income tax benefit |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 184 |
| ||||||||||||||||||||||||
Other income (expense) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (157 | ) | ||||||||||||||||||||||||
Net loss |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| $ | (31,847 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| $ | (16,701 | ) |
Net loss attributable to non-controlling interests |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 122 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| — |
|
Net loss attributable to BREIT stockholders |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| $ | (31,725 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| $ | (16,701 | ) |
The following table sets forth the financial results by segment for the ninesix months ended SeptemberJune 30, 2018 ($ in thousands):
|
| Multifamily |
|
| Industrial |
|
| Hotel |
|
| Retail |
|
| Real Estate- Related Securities |
|
| Total |
| ||||||
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rental revenue |
| $ | 124,713 |
|
| $ | 60,487 |
|
| $ | — |
|
| $ | 3,567 |
|
| $ | — |
|
| $ | 188,767 |
|
Tenant reimbursement income |
|
| 6,414 |
|
|
| 17,349 |
|
|
| — |
|
|
| 845 |
|
|
| — |
|
|
| 24,608 |
|
Hotel revenue |
|
| — |
|
|
| — |
|
|
| 39,017 |
|
|
| — |
|
|
| — |
|
|
| 39,017 |
|
Other revenue |
|
| 9,284 |
|
|
| 178 |
|
|
| 16 |
|
|
| 40 |
|
|
| — |
|
|
| 9,518 |
|
Total revenues |
|
| 140,411 |
|
|
| 78,014 |
|
|
| 39,033 |
|
|
| 4,452 |
|
|
| — |
|
|
| 261,910 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rental property operating |
|
| 66,579 |
|
|
| 21,863 |
|
|
| — |
|
|
| 1,628 |
|
|
| — |
|
|
| 90,070 |
|
Hotel operating |
|
| — |
|
|
| — |
|
|
| 25,136 |
|
|
| — |
|
|
| — |
|
|
| 25,136 |
|
Total expenses |
|
| 66,579 |
|
|
| 21,863 |
|
|
| 25,136 |
|
|
| 1,628 |
|
|
| — |
|
|
| 115,206 |
|
Income from real estate-related securities |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 30,632 |
|
|
| 30,632 |
|
Segment net operating income |
| $ | 73,832 |
|
| $ | 56,151 |
|
| $ | 13,897 |
|
| $ | 2,824 |
|
| $ | 30,632 |
|
| $ | 177,336 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization |
| $ | 104,054 |
|
| $ | 45,820 |
|
| $ | 7,010 |
|
| $ | 2,066 |
|
| $ | — |
|
| $ | 158,950 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income (expense): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General and administrative |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (4,946 | ) |
Management fee |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (16,250 | ) |
Performance participation allocation |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (17,349 | ) |
Interest income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 198 |
|
Interest expense |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (81,232 | ) |
Other income (expense) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (389 | ) |
Net loss |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| $ | (101,582 | ) |
Net loss attributable to non-controlling interests |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 3,552 |
|
Net loss attributable to BREIT stockholders |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| $ | (98,030 | ) |
The following table sets forth the financial results by segment for the six months ended June 30, 2017 ($ in thousands):
|
| Multifamily |
|
| Industrial |
|
| Hotel |
|
| Retail |
|
| Real Estate- Related Securities |
|
| Total |
|
| Multifamily |
|
| Industrial |
|
| Hotel |
|
| Retail |
|
| Real Estate- Related Securities |
|
| Total |
| ||||||||||||
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rental revenue |
| $ | 39,466 |
|
| $ | 14,357 |
|
| $ | — |
|
| $ | 1,904 |
|
| $ | — |
|
| $ | 55,727 |
|
| $ | 14,556 |
|
| $ | 6,619 |
|
| $ | — |
|
| $ | 953 |
|
| $ | — |
|
| $ | 22,128 |
|
Tenant reimbursement income |
|
| 1,472 |
|
|
| 3,703 |
|
|
| — |
|
|
| 328 |
|
|
| — |
|
|
| 5,503 |
|
|
| 508 |
|
|
| 1,667 |
|
|
| — |
|
|
| 98 |
|
|
| — |
|
|
| 2,273 |
|
Hotel revenue |
|
| — |
|
|
| — |
|
|
| 15,048 |
|
|
| — |
|
|
| — |
|
|
| 15,048 |
|
|
| — |
|
|
| — |
|
|
| 5,174 |
|
|
| — |
|
|
| — |
|
|
| 5,174 |
|
Other revenue |
|
| 3,385 |
|
|
| 6 |
|
|
| — |
|
|
| 18 |
|
|
| — |
|
|
| 3,409 |
|
|
| 1,202 |
|
|
| — |
|
|
| — |
|
|
| 6 |
|
|
| — |
|
|
| 1,208 |
|
Total revenues |
|
| 44,323 |
|
|
| 18,066 |
|
|
| 15,048 |
|
|
| 2,250 |
|
|
| — |
|
|
| 79,687 |
|
|
| 16,266 |
|
|
| 8,286 |
|
|
| 5,174 |
|
|
| 1,057 |
|
|
| — |
|
|
| 30,783 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rental property operating |
|
| 19,473 |
|
|
| 5,664 |
|
|
| — |
|
|
| 495 |
|
|
| — |
|
|
| 25,632 |
|
|
| 6,885 |
|
|
| 2,635 |
|
|
| — |
|
|
| 174 |
|
|
| — |
|
|
| 9,694 |
|
Hotel operating |
|
| — |
|
|
| — |
|
|
| 9,617 |
|
|
| — |
|
|
| — |
|
|
| 9,617 |
|
|
| — |
|
|
| — |
|
|
| 2,949 |
|
|
| — |
|
|
| — |
|
|
| 2,949 |
|
Total expenses |
|
| 19,473 |
|
|
| 5,664 |
|
|
| 9,617 |
|
|
| 495 |
|
|
| — |
|
|
| 35,249 |
|
|
| 6,885 |
|
|
| 2,635 |
|
|
| 2,949 |
|
|
| 174 |
|
|
| — |
|
|
| 12,643 |
|
Income from real estate-related securities |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 7,435 |
|
|
| 7,435 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 3,409 |
|
|
| 3,409 |
|
Segment net operating income |
| $ | 24,850 |
|
| $ | 12,402 |
|
| $ | 5,431 |
|
| $ | 1,755 |
|
| $ | 7,435 |
|
| $ | 51,873 |
|
| $ | 9,381 |
|
| $ | 5,651 |
|
| $ | 2,225 |
|
| $ | 883 |
|
| $ | 3,409 |
|
| $ | 21,549 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization |
| $ | 51,205 |
|
| $ | 9,852 |
|
| $ | 3,119 |
|
| $ | 969 |
|
| $ | — |
|
| $ | 65,145 |
|
| $ | 18,599 |
|
| $ | 4,444 |
|
| $ | 1,257 |
|
| $ | 486 |
|
| $ | — |
|
| $ | 24,786 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income (expense): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General and administrative |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (5,969 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (4,253 | ) |
Management fee |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (3,712 | ) | ||||||||||||||||||||||||
Performance participation allocation |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (10,952 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (5,241 | ) |
Interest income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 418 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 382 |
|
Interest expense |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (16,413 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (5,547 | ) |
Other expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (55 | ) | ||||||||||||||||||||||||
Income tax benefit |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 140 |
| ||||||||||||||||||||||||
Other income (expense) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (72 | ) | ||||||||||||||||||||||||
Net loss |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| $ | (49,815 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| $ | (17,968 | ) |
Net loss attributable to non-controlling interests |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 122 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| — |
|
Net loss attributable to BREIT stockholders |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| $ | (49,693 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| $ | (17,968 | ) |
15.
Acquisitions
Subsequent to SeptemberJune 30, 2017,2018, the Company acquired an aggregate of $383.8$522.3 million of real estate, across four separate transactions, exclusive of closing costs. The acquisitions were related to multifamily, industrial, hotel, and retail properties. costs, across five separate transactions.
Subsequent to SeptemberJune 30, 2017,2018, the Company purchased an aggregate of $150.8$358.4 million of floating-rate CMBS.real estate-related securities.
Financing
On October 27, 2017, the Company entered into a $300.0 million revolving credit facility with Citi Bank, N.A. (the “Citi Line of Credit”). The Citi Line of Credit is currently secured by certain of the Company’s hotel investments. Borrowings under the Citi Line of Credit will accrue interest at a rate of LIBOR plus 2.25%. The initial maturity date of the Citi Line of Credit is October 26, 2018, and the Company has two one year extension options. As of November 13, 2017, the Company has not drawn any funds under the Citi Line of Credit.
Status of the Offering
As of November 13, 2017,August 14, 2018, the Company had sold an aggregate of 152,942,761339,573,665 shares of its common stock (consisting of 117,771,673223,147,685 Class S shares, 4,315,93617,347,509 Class T shares, 2,981,47322,066,207 Class D shares, and 27,873,67977,012,264 Class I shares) in the Offering resulting in net proceeds of $1.5$3.5 billion to the Company as payment for such shares.
Class B Units
On July 27, 2018, the Company entered into an Amended and Restated Limited Partnership Agreement (the “A&R OP Agreement”) for BREIT OP. The A&R OP Agreement amends and restates the limited partnership agreement governing BREIT OP to provide for a new class of units (“Class B Units”) of BREIT OP, among other changes. Class B Units are available to certain suitable investors in private placements generally utilizing a “draw-down” structure. Class B Units will be sold at their NAV per unit, which will equal the NAV per Class I unit of BREIT OP and will generally correspond to the NAV per share of the Company’s Class I shares.
Class B Units are subject to the same fees and expenses of Class I Units and will not have any preferential rights relative to the Company’s interest in BREIT OP, nor will they be exchangeable for any shares of the Company’s common stock. Holders of the Class B Units will have a right to redeem their units for cash in a manner similar to the ability of the Company’s stockholders to have their shares repurchased under the Company’s share repurchase plan. Class B Unit redemptions will be subject to similar limitations as share repurchases under the Company’s share repurchase plan, namely the early repurchase deduction and caps on monthly and quarterly repurchases (calculated on an aggregate basis with shares of the Company’s common stock submitted for repurchase for the applicable period). The redemption rights of the Class B Unitholders will not affect the terms of the Company’s share repurchase plan. Class B Units will have the same limited voting rights as the other BREIT OP units and such rights do not affect the Company’s exclusive power, as general partner of BREIT OP, to manage and conduct the business of BREIT OP.
On July 27, 2018, BREIT OP received a $100.0 million commitment to purchase Class B Units from a Blackstone-advised entity, $25.0 million of which was funded on August 1, 2018.
References herein to “Blackstone Real Estate Income Trust,” “BREIT,” the “Company,” “we,” “us,” or “our” refer to Blackstone Real Estate Income Trust, Inc. and its subsidiaries unless the context specifically requires otherwise.
The following discussion should be read in conjunction with the unaudited condensed consolidated financial statements and notes thereto appearing elsewhere in this quarterly report on Form 10-Q.
Forward-Looking Statements
This Form 10-Q contains forward-looking statements about our business, operations and financial performance, including, in particular, statements about our plans, strategies and objectives. You can generally identify forward-looking statements by our use of forward-looking terminology such as “may,” “will,” “expect,” “intend,” “anticipate,” “estimate,” “believe,” “continue” or other similar words. These statements include our plans and objectives for future operations, including plans and objectives relating to future growth and availability of funds, and are based on current expectations that involve numerous risks, uncertainties and assumptions. Assumptions relating to these statements involve judgments with respect to, among other things, future economic, competitive and market conditions and future business decisions, all of which are difficult or impossible to accurately predict and many of which are beyond our control. Although we believe the assumptions underlying the forward-looking statements, and the forward-looking statements themselves, are reasonable, any of the assumptions could be inaccurate and, therefore, there can be no assurance that these forward-looking statements will prove to be accurate and our actual results, performance and achievements may be materially different from that expressed or implied by these forward-looking statements as a result of various factors, including but not limited to those discussed in the Company’s Registration Statement on Form S-11 (File No. 333-213043), as amended, under Item 1A. Risk Factors in our annual reportAnnual Report on Form 10-K for the year ended December 31, 2016,2017, and elsewhere in this quarterly report on Form 10-Q. In light of the significant uncertainties inherent in these forward looking statements, the inclusion of this information should not be regarded as a representation by us or any other person that our objectives and plans, which we consider to be reasonable, will be achieved.
Overview
Blackstone Real Estate Income Trust, Inc. was formed on November 16, 2015 asBREIT is a Maryland corporation. We are an externally advised, perpetual-life entity that intends to qualify as anon-exchange traded, perpetual life real estate investment trust (“REIT”) for U.S. federal income tax purposes commencing with the taxable year ending December 31, 2017. We were formed to investthat acquires primarily in stabilized income-oriented commercial real estate in the United States and, to a lesser extent, invest in real estate-related securities. We are externally managed by BX REIT Advisors L.L.C. (the “Adviser”), a subsidiary of The Blackstone Group L.P. (“Blackstone”). We are the sole general partner of BREIT Operating Partnership L.P. (“BREIT OP”), a Delaware limited partnership, (“BREIT OP”). BREIT Special Limited Partner L.L.C. (the “Special Limited Partner”), a wholly owned subsidiary of The Blackstone Group L.P. (together with its affiliates, “Blackstone”), owns a special limited partner interest in BREIT OP. Weand we own all or substantially all of our assets through BREIT OP. The CompanyAs of June 30, 2018, we operated our business in five reportable segments: Multifamily, Industrial, Hotel, and BREIT OP are externally managed by BXRetail Properties, and Real Estate-Related Securities. Multifamily includes various forms of rental housing including apartments and manufactured housing.
We qualified as a REIT Advisors L.L.C. (the “Adviser”), an affiliate of Blackstone.
Our board of directorsunder the Code for U.S. federal income tax purposes beginning with the taxable year ended December 31, 2017. We generally will at all times have oversight and policy-making authority over us, including responsibility for governance, financial controls, compliance and disclosure. However, pursuantnot be subject to U.S. federal income taxes on our taxable income to the Advisory Agreement,extent we have delegated to the Adviser the authority to source, evaluate and monitor our investment opportunities and to make decisions related to the acquisition, management, financing and dispositionannually distribute all of our assets, in accordance withnet taxable income to stockholders and maintain our investment objectives, guidelines, policies and limitations, subject to oversight by our board of directors.qualification as a REIT.
We have registered with the Securities and Exchange Commission (the “SEC”) an offering of up to $5.0 billion in shares of common stock (in any combination of purchases of Class S, Class T, Class D and Class I shares of our common stock), consisting of up to $4.0 billion in shares in our primary offering and up to $1.0 billion in shares pursuant to its distribution reinvestment plan (the “Offering”). The share classes have different upfront selling commissions and ongoing stockholder servicing fees.
As of January 1, 2017, we satisfied the minimum offering requirement and our board of directors authorized the release of proceeds from escrow. We intend to continue selling shares in the Offering on a monthly basis. As of November 13, 2017,August 14, 2018, we had received net proceeds of $1.5$3.5 billion from selling an aggregate of 152,942,761339,573,665 shares of our common stock (consisting of 117,771,673223,147,685 Class S shares, 4,315,93617,347,509 Class T shares, 2,981,47322,066,207 Class D shares, and 27,873,67977,012,264 Class I shares). We have contributed the net proceeds from the Offering to BREIT OP in exchange for a corresponding number of Class S, Class I,T, Class D, and Class TI units. BREIT OP has primarily used the net proceeds to make investments in real estate and real estate-related securities as further described below under “— Portfolio”.
We own one property in Houston, nine properties in Florida, and one property in Atlanta. Our assets remain operational with no material damage from the hurricanes that hit the U.S. at the end of August andintend to continue selling shares in the beginning of September 2017. We expect to incur some non-budgeted expenses related to minor repairs and cleanup. We expect these costs to have an immaterial impactOffering on our NAV and results from operations.a monthly basis.
We are not aware of any material trends or uncertainties, favorable or unfavorable, other than national economic conditions affecting real estate generally, that may be reasonably anticipated to have a material impact on either capital resources or the revenues or income to be derived from acquiring properties or real estate-related securities, other than those disclosed in Item 1A. Risk Factors in our annual reportAnnual Report on Form 10-K for the year ended December 31, 2016,2017, our prospectus dated April 17, 2017May 1, 2018 and filed with the SEC, as supplemented, and elsewhere in this quarterly report on Form 10-Q.
Investment Objectives
Our investment objectives are to invest in assets that will enable us to:Operating Results:
provide currentRaised $741.2 million of net proceeds in the Offering during the three months ended June 30, 2018 and a total $1.3 billion of net proceeds in the Offering during the six months ended June 30, 2018.
Declared monthly net distributions totaling $38.0 million for the three months ended June 30, 2018 and $66.4 million in distributions during the six months ended June 30, 2018.
Inception through June 30, 2018 annualized total return without upfront selling commissions of 9.7% for Class S, 10.4% for Class T, 11.4% for Class D, and 10.6% for Class I shares. Inception to date annualized total return assuming full upfront selling commissions of 7.2% for Class S, 6.9% for Class T, and 9.9% for Class D shares.
Investments:
Our 314 properties as of June 30, 2018 consisted of Multifamily (53% based on fair value), Industrial (40%), Hotel (5%), and Retail (2%) and our portfolio of real estate was concentrated in the following regions: South (40%), West (35%), East (13%), and Midwest (12%).
Commercial mortgage backed securities (“CMBS”) investments as of June 30, 2018 were diversified by credit rating — BB (49% based on fair value), B (28%), BBB (18%), and Other (5%) and collateral backing — Hospitality (59%), Office (26%), Multifamily (8%), Retail (6%), and Industrial (1%).
During the three months ended June 30, 2018, acquired 32 multifamily, six industrial, and four hotel properties across 12 transactions with a total purchase price of $1.4 billion, inclusive of closing costs, consistent with our strategy of acquiring diversified, income producing, commercial real estate assets concentrated in high growth markets across the U.S.
Made investments in real estate-related securities in the form of regular, stable cash distributions to achieveCMBS positions with a total cost basis of $586.9 million during the three months ended June 30, 2018.
Financings:
Increased the Capital One Term Loan and Capital One Revolving Credit facility by $158.9 million in conjunction with the closing of the HP Cold Storage Portfolio and closed or assumed an attractive distribution yield;additional $705.8 million of property level financings.
preserve and protect invested capital;Obtained $292.0 of financings secured by the CMBS positions acquired during the three months ended June 30, 2018.
realize appreciationEntered into a new master repurchase agreement with Barclays Bank PLC (the “Barclays MRA”), providing an additional source of financing secured by our CMBS portfolio. Repurchase agreements under the Barclays MRA will have an initial maturity date of September 29, 2021.
Portfolio
Summary of Portfolio
The following charts further describe our portfolio composition in real properties based on fair value as of June 30, 2018:
The following chart outlines the net assetpercentage of our investments in real properties and investments in real estate-related securities based on fair value (“NAV”) from proactive investment and asset management; and
provide an investment alternative for stockholders seeking to allocate a portionas of their long-term investment portfolios to commercial real estate with lower volatility than public real estate companies.June 30, 2018:
PortfolioInvestments in Real Estate
As of June 30, 2018, we had acquired 314 properties with a total purchase price of $7.2 billion, inclusive of closing costs. Our diversified portfolio of income producing assets primarily consists of Multifamily and Industrial properties, and to a lesser extent Hotel and Retail properties, located in growth markets across the U.S. The following table provides a summary of our portfolio as of June 30, 2018:
Segment |
| Number of Properties |
|
| Sq. Feet (in thousands)/ Number of Units/Sites/Keys |
| Occupancy Rate(1) |
| Average Effective Annual Base Rent Per Leased Square Foot or Unit(2) |
|
| Gross Asset Value(3) ($ in thousands) |
|
| Segment Revenue(4) |
|
| Percentage of Total Rental and Hotel Revenue |
| |||||
Multifamily |
|
| 88 |
|
| 25,295 units/sites |
| 91% |
| $14,477 |
|
| $ | 3,940,924 |
|
| $ | 140,411 |
|
| 53% |
| ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Industrial |
|
| 210 |
|
| 35,019 sq. ft. |
| 95% |
| $ | 4.92 |
|
|
| 3,025,796 |
|
|
| 78,014 |
|
| 30% |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hotel |
|
| 14 |
|
| 1,828 keys |
| 83% |
| $157.33/$129.62 |
|
|
| 306,988 |
|
|
| 39,033 |
|
| 15% |
| ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retail |
|
| 2 |
|
| 403 sq. ft. |
| 97% |
| $ | 16.25 |
|
|
| 100,736 |
|
|
| 4,452 |
|
| 2% |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
| 314 |
|
|
|
|
|
|
|
|
|
| $ | 7,374,444 |
|
| $ | 261,910 |
|
| 100% |
|
(1) | The occupancy rate is as of June 30, 2018 for non-hotels. The occupancy rate for our hotel investments is the average occupancy rate for the six months ended June 30, 2018. |
(2) | For Hotel properties, represents Average Daily Rate and Revenue Per Available Room, respectively, for the six months ended June 30, 2018 or for properties acquired during the six months ended June 30, 2018, the date of acquisition through June 30, 2018. |
(3) | Based on fair value as of June 30, 2018. |
(4) | Total represents Rental and Hotel Revenue for the six months ended June 30, 2018. |
During the ninesix months ended SeptemberJune 30, 2017,2018, we invested $2.4$3.6 billion in real estate investments consisting of 79169 wholly-owned properties and 630 properties through two joint ventures. The following table provides information regarding our portfoliofurther details of realthe properties as of Septemberacquired during the six months ended June 30, 2017:2018:
Sector and Property/Portfolio Name |
| Number of Properties |
|
| Location |
| Acquisition Date |
| Ownership Interest(1) |
|
| Acquisition Price (in thousands)(2) |
|
| Sq. Feet (in thousands)/ Number of Rooms/Units |
| Occupancy Rate(3) |
| ||||
Multifamily: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TA Multifamily Portfolio |
|
| 6 |
|
| Various(4) |
| Apr. 2017 |
|
| 100% |
|
| $ | 432,593 |
|
| 2,514 units |
|
| 94% |
|
Emory Point |
|
| 1 |
|
| Atlanta, GA |
| May 2017 |
|
| 100% |
|
|
| 201,578 |
|
| 750 units |
|
| 100% |
|
Nevada West Multifamily |
|
| 3 |
|
| Las Vegas, NV |
| May 2017 |
|
| 100% |
|
|
| 170,965 |
|
| 972 units |
|
| 92% |
|
Gilbert Multifamily |
|
| 2 |
|
| Gilbert, AZ |
| Sept. 2017 |
|
| 90% |
|
|
| 147,039 |
|
| 748 units |
|
| 93% |
|
ACG II Multifamily |
|
| 4 |
|
| Various(5) |
| Sept. 2017 |
|
| 94% |
|
|
| 148,038 |
|
| 932 units |
|
| 98% |
|
Harbor 5 |
|
| 5 |
|
| Dallas, TX |
| Aug. 2017 |
|
| 100% |
|
|
| 146,161 |
|
| 1,192 units |
|
| 94% |
|
Domain & GreenVue Multifamily |
|
| 2 |
|
| Dallas, TX |
| Sept. 2017 |
|
| 100% |
|
|
| 134,452 |
|
| 803 units |
|
| 84% |
|
Elysian West |
|
| 1 |
|
| Las Vegas, NV |
| July 2017 |
|
| 100% |
|
|
| 107,027 |
|
| 466 units |
|
| 91% |
|
Mountain Gate & Trails |
|
| 2 |
|
| Las Vegas, NV |
| June 2017 |
|
| 100% |
|
|
| 83,572 |
|
| 539 units |
|
| 96% |
|
Sonora Canyon |
|
| 1 |
|
| Mesa, AZ |
| Feb. 2017 |
|
| 100% |
|
|
| 40,983 |
|
| 388 units |
|
| 93% |
|
Total Multifamily |
|
| 27 |
|
|
|
|
|
|
|
|
|
|
| 1,612,408 |
|
| 9,304 units |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Industrial: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
HS Industrial Portfolio |
|
| 38 |
|
| Various(4) |
| Apr. 2017 |
|
| 100% |
|
|
| 405,930 |
|
| 5,972 sq. ft. |
|
| 96% |
|
Fairfield Industrial |
|
| 11 |
|
| Fairfield, NJ |
| Sept. 2017 |
|
| 100% |
|
|
| 74,283 |
|
| 578 sq. ft. |
|
| 100% |
|
Stockton |
|
| 1 |
|
| Stockton, CA |
| Feb. 2017 |
|
| 100% |
|
|
| 32,751 |
|
| 878 sq. ft. |
|
| 87% |
|
Total Industrial |
|
| 50 |
|
|
|
|
|
|
|
|
|
|
| 512,964 |
|
| 7,428 sq. ft. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hotel: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hyatt Place San Jose Downtown |
|
| 1 |
|
| San Jose, CA |
| June 2017 |
|
| 100% |
|
|
| 65,321 |
|
| 236 rooms |
|
| 83% |
|
Florida Select-Service 4-Pack |
|
| 4 |
|
| Tampa & Orlando, FL |
| July 2017 |
|
| 100% |
|
|
| 58,973 |
|
| 469 rooms |
|
| 71% |
|
Hyatt House Downtown Atlanta |
|
| 1 |
|
| Atlanta, GA |
| Aug. 2017 |
|
| 100% |
|
|
| 35,332 |
|
| 150 rooms |
|
| 78% |
|
Hyatt Place UC Davis |
|
| 1 |
|
| Davis, CA |
| Jan. 2017 |
|
| 100% |
|
|
| 32,687 |
|
| 127 rooms |
|
| 87% |
|
Total Hotel |
|
| 7 |
|
|
|
|
|
|
|
|
|
|
| 192,313 |
|
| 982 rooms |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retail: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bakers Centre |
|
| 1 |
|
| Philadelphia, PA |
| Mar. 2017 |
|
| 100% |
|
|
| 54,223 |
|
| 237 sq. ft. |
|
| 95% |
|
Total Retail |
|
| 1 |
|
|
|
|
|
|
|
|
|
|
| 54,223 |
|
| 237 sq. ft. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Investments in Real Estate |
|
| 85 |
|
|
|
|
|
|
|
|
|
| $ | 2,371,908 |
|
|
|
|
|
|
|
Segment and Investment |
| Number of Properties |
|
| Location |
| Acquisition Date |
| Ownership Interest(1) |
|
| Purchase Price (in thousands)(2) |
|
| Sq. Feet (in thousands)/ Units/Sites/Keys |
| Occupancy Rate(3) |
| ||||
Multifamily: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Aston Multifamily Portfolio (second closing) |
|
| 8 |
|
| Various(4) |
| Jan. 2018 |
| 90% |
|
| $ | 141,743 |
|
| 1,283 units |
| 95% |
| ||
The Boulevard |
|
| 1 |
|
| Phoenix, AZ |
| April 2018 |
| 100% |
|
|
| 48,392 |
|
| 294 units |
| 98% |
| ||
Highroads MH |
|
| 3 |
|
| Phoenix, AZ |
| April 2018 |
| 99% |
|
|
| 18,637 |
|
| 265 sites |
| 93% |
| ||
Blue Hills Multifamily |
|
| 1 |
|
| Boston, MA |
| May 2018 |
| 100% |
|
|
| 131,747 |
|
| 472 units |
| 90% |
| ||
Wave Multifamily Portfolio |
|
| 6 |
|
| Various(5) |
| May 2018 |
| 100% |
|
|
| 423,135 |
|
| 2,199 units |
| 95% |
| ||
ACG III Multifamily |
|
| 2 |
|
| Gresham, OR & Turlock, CA |
| May 2018 |
| 95% |
|
|
| 96,182 |
|
| 475 units |
| 93% |
| ||
Carroll Florida Multifamily |
|
| 2 |
|
| Jacksonville & Orlando, FL |
| May 2018 |
| 100% |
|
|
| 116,832 |
|
| 716 units |
| 93% |
| ||
Solis at Flamingo |
|
| 1 |
|
| Las Vegas, NV |
| June 2018 |
| 95% |
|
|
| 72,560 |
|
| 524 units |
| 96% |
| ||
Evergreen Minari MH |
|
| 2 |
|
| Phoenix, AZ |
| June 2018 |
| 99% |
|
|
| 8,614 |
|
| 114 sites |
| 100% |
| ||
Southwest MH |
|
| 14 |
|
| Various(6) |
| June 2018 |
| 99% |
|
|
| 176,194 |
|
| 3,065 sites |
| 100% |
| ||
Total Multifamily |
|
| 40 |
|
|
|
|
|
|
|
|
|
|
| 1,234,036 |
|
| 9,407 units/sites |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Industrial: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Kraft Chicago Industrial Portfolio |
|
| 3 |
|
| Aurora, IL |
| Jan. 2018 |
| 100% |
|
|
| 151,365 |
|
| 1,693 sq. ft. |
| 100% |
| ||
Canyon Industrial Portfolio |
|
| 146 |
|
| Various(7) |
| Mar. 2018 |
| 100% |
|
|
| 1,837,213 |
|
| 21,719 sq. ft. |
| 90% |
| ||
HP Cold Storage Industrial Portfolio |
|
| 6 |
|
| Various(8) |
| May 2018 |
| 100% |
|
|
| 253,082 |
|
| 2,252 sq. ft. |
| 100% |
| ||
Total Industrial |
|
| 155 |
|
|
|
|
|
|
|
|
|
|
| 2,241,660 |
|
| 25,664 sq. ft. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hotel: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Henderson Select-Service 2-Pack |
|
| 2 |
|
| Henderson, NV |
| May 2018 |
| 100% |
|
|
| 36,260 |
|
| 228 keys |
| 85% |
| ||
Orlando Select-Service 2-Pack |
|
| 2 |
|
| Orlando, FL |
| May 2018 |
| 100% |
|
|
| 48,862 |
|
| 254 keys |
| 84% |
| ||
Total Hotel |
|
| 4 |
|
|
|
|
|
|
|
|
|
|
| 85,122 |
|
| 482 keys |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Investments in Real Estate |
|
| 199 |
|
|
|
|
|
|
|
|
|
| $ | 3,560,818 |
|
|
|
|
|
|
|
(1) | Certain of the joint venture agreements entered into by BREIT provide the seller or the other partner a profits interest based on certain internal rate of return hurdles being achieved. Such investments are consolidated by us and any profits interest due to the other partner is reported within non-controlling interests. |
(2) | Purchase price is inclusive of acquisition-related costs. |
(3) | The occupancy rate is as of |
(4) |
|
(5) | The |
(6) | Southwest MH is located in three markets: Phoenix, AZ (86% of sites), San Diego, CA (11%), and Palm Desert, CA (3%). |
(7) | The Canyon Industrial Portfolio consists of 146 industrial properties primarily concentrated in Chicago, IL (19% of sq. ft.), Dallas, TX (15%), Indianapolis, IN (11%), Baltimore/Washington, D.C. (9%), and Columbus, OH (7%). |
(8) | The HP Cold Storage Industrial Portfolio is located in four |
Subsequent to SeptemberJune 30, 2017,2018, the Company acquired an aggregate of $383.8$522.3 million of real estate, across four separate transactions, exclusive of closing costs. The acquisitions were related to multifamily, industrial, hotel, and retail properties.
The following provides descriptions of select properties in our portfolio:
TA Multifamily Portfolio
On April 13, 2017, we acquired fee simple interests in six high quality multifamily properties totaling 2,514 units (the “TA Multifamily Portfolio”). The portfolio was acquired from an affiliate of TA Realty, a third party, for $432.6 million. The TA Multifamily Portfolio consists of a 32-floor high quality property in downtown Orlando andcosts, across five garden style properties located in the suburbs of Palm Beach Gardens, Orlando, Chicago, Dallas and Kansas City.
The acquisition of the TA Multifamily Portfolio was funded with cash on hand, which primarily consisted of proceeds from the Offering, and a $95.0 million draw on the Line of Credit. See “— Liquidity and Capital Resources” for further information regarding the Line of Credit.
HS Industrial Portfolio
On April 18, 2017, we acquired a fee simple interest in the HS Industrial Portfolio (the “HS Industrial Portfolio”), a six million square foot collection of predominantly infill industrial assets. The portfolio was acquired from an affiliate of High Street Realty Company (“Seller”), a third party, for $405.9 million. The HS Industrial Portfolio consists of 38 industrial properties located in six submarkets, with the following concentration based on square footage: Atlanta (38%), Chicago (23%), Houston (17%), Harrisburg (10%), Dallas (10%) and Orlando (2%).
The acquisition of the HS Industrial Portfolio was funded through a combination of cash on hand, which primarily consisted of proceeds from the Offering, a $5.0 million draw on the Line of Credit, and a $292.0 million loan. See “— Liquidity and Capital Resources” for further information regarding the HS Industrial Portfolio financing.
Emory Point
On May 2, 2017, we acquired a leasehold interest in Emory Point, a Class A+ multifamily property totaling 750 units and 124,000 square feet of walkable retail space in Atlanta, Georgia (“Emory Point”). The property was acquired from a third party for $201.6 million. Emory Point was recently constructed in 2015 and is located adjacent to Emory University and across the street from the Center for Disease Control and Prevention’s headquarters. The property’s immediate submarket has no new multifamily supply and the property is the only new multifamily project delivered in the property’s immediate submarket since 2010.
The acquisition of Emory Point was funded through a combination of cash on hand, which primarily consisted of proceeds from the Offering and a $130.0 million loan. See “— Liquidity and Capital Resources” for further information regarding the Emory Point financing.
Nevada West
On May 19, 2017, we acquired a fee simple interest in three newly constructed Class A multifamily properties totaling 972 units located in Las Vegas, Nevada (“Nevada West”). The properties were acquired from a third party for $171.0 million. Nevada West is highly amenitized with large units and rents 10% - 15% below comparable properties. We believe the Las Vegas residential market also benefits from attractive fundamentals with new housing supply 65% below the long term average while annual unemployment growth has averaged 3.7% since 2012 compared to 1.8% nationally.
The acquisition of Nevada West was funded through cash on hand, which primarily consisted of proceeds from the Offering.
The following charts further describe the diversification of our investments in real properties based on fair value as of September 30, 2017:
The following chart outlines the allocation of our investments in real properties and real estate-related securities based on fair value as of September 30, 2017:
separate transactions.
Investments in Real Estate-Related Securities
During the ninesix months ended SeptemberJune 30, 2017,2018, we made 24 investmentsinvested $730.8 million in commercial mortgage backed securities (“CMBS”).CMBS. The following table details our investments in CMBS as of SeptemberJune 30, 20172018 ($ in thousands):
| Number of Investments |
|
| Credit Rating(1) |
| Collateral |
| Weighted Average Coupon(2) |
| Weighted Average Maturity Date |
| Face Amount |
|
| Cost Basis |
|
| Fair Value |
| ||||
|
| 5 |
|
| BBB |
| Office, Hospitality, Industrial, Retail |
| L+2.16% |
| 4/28/2030 |
| $ | 132,034 |
|
| $ | 132,034 |
|
| $ | 132,363 |
|
|
| 11 |
|
| BB |
| Hospitality, Office, Retail, Multifamily |
| L+3.22% |
| 4/5/2034 |
|
| 333,578 |
|
|
| 333,466 |
|
|
| 333,777 |
|
|
| 8 |
|
| B |
| Hospitality, Office, Multifamily |
| L+4.12% |
| 11/30/2032 |
|
| 177,950 |
|
|
| 177,878 |
|
|
| 178,231 |
|
|
| 24 |
|
|
|
|
|
|
|
|
|
| $ | 643,562 |
|
| $ | 643,378 |
|
| $ | 644,371 |
|
|
|
|
|
|
|
|
| June 30, 2018 |
| |||||||||||||
Number of Positions |
|
| Credit Rating(1) |
| Collateral(2) |
| Weighted Average Coupon(3) |
| Weighted Average Maturity Date(4) |
| Face Amount |
|
| Cost Basis |
|
| Fair Value |
| ||||
| 32 |
|
| BB |
| Multifamily, Hospitality, Office, Retail |
| L+2.89% |
| 5/31/2024 |
| $ | 808,624 |
|
| $ | 807,386 |
|
| $ | 809,985 |
|
| 16 |
|
| B |
| Hospitality, Office, Multifamily, Retail |
| L+3.63% |
| 8/21/2024 |
|
| 463,231 |
|
|
| 462,275 |
|
|
| 464,638 |
|
| 16 |
|
| BBB |
| Hospitality, Office, Multifamily, Industrial, Retail |
| L+2.18% |
| 7/6/2024 |
|
| 295,646 |
|
|
| 295,256 |
|
|
| 296,063 |
|
8(5) |
|
| Other |
| Multifamily, Hospitality |
| L+1.14% |
| 2/18/2027 |
|
| 126,670 |
|
|
| 71,639 |
|
|
| 72,058 |
| |
2(6) |
|
| Other |
| Multifamily |
| N/A |
| 5/25/2028 |
| N/A |
|
|
| 7,623 |
|
|
| 7,649 |
| ||
| 74 |
|
|
|
|
|
|
|
|
|
| $ | 1,694,171 |
|
| $ | 1,644,179 |
|
| $ | 1,650,393 |
|
| (1) | BBB represents credit ratings of BBB+, BBB, and BBB-, BB represents credit ratings of BB+, BB, and BB-, and B represents credit ratings of B+, B, and B-. Other consists of investments that, as of June 30, 2018, were either not ratable or have not been submitted to ratings agencies. |
(2) | Multifamily real estate-related securities are collateralized by various forms of rental housing including single-family homes and apartments. |
(3) | The term “L” refers to the one-month U.S. dollar-denominated London Interbank Offer Rate (“LIBOR”). As of June 30, 2018, one-month LIBOR was 2.1%. |
(4) | Weighted average maturity date is based on the fully extended maturity date of the underlying collateral. |
(5) | Includes one zero coupon position. Excluding the zero coupon position, the weighted average coupon was L+2.33%. |
(6) | Includes two interest-only positions with a total notional amount of $1.2 billion. |
The following charts further describe the diversification of our CMBS investments by credit rating and collateral type based on fair value as of June 30, 2018:
Credit Rating(1) | Collateral Type |
(1) | BBB represents credit ratings of BBB+, BBB, and BBB-, BB represents credit ratings of BB+, BB, and BB-, and B represents credit ratings of B+, B, and B-. |
|
|
|
|
The following charts further describe the diversification of our CMBS investments by credit rating and collateral type based on fair value as of September 30, 2017:
|
|
|
|
Subsequent to SeptemberJune 30, 2017,2018, we purchased an aggregate of $150.8$358.4 million of floating-rate CMBS.
Rental and Hotel Revenue
The following table details our rental revenue and hotel revenue by segment ($ in thousands):
|
| Three Months Ended |
|
| Nine Months Ended |
| ||
|
| September 30, 2017 |
|
| September 30, 2017 |
| ||
Rental revenue |
|
|
|
|
|
|
|
|
Multifamily |
| $ | 24,911 |
|
| $ | 39,466 |
|
Industrial |
|
| 7,737 |
|
|
| 14,357 |
|
Retail |
|
| 951 |
|
|
| 1,904 |
|
Total rental revenue |
|
| 33,599 |
|
|
| 55,727 |
|
Hotel revenue |
|
| 9,874 |
|
|
| 15,048 |
|
Total rental and hotel revenue |
| $ | 43,473 |
|
| $ | 70,775 |
|
real estate-related debt securities.
Lease Expirations
The following schedule details the expiring leases at our industrial and retail properties by annualized base rent and square footage as of SeptemberJune 30, 20172018 ($ and square feet data in thousands). The table below excludes our multifamily properties as substantially all leases at such properties expire within twelve12 months.
Year |
| Number of Expiring Leases |
|
| Annualized Base Rent(1) |
|
| % of Total Annualized Base Rent Expiring |
|
| Square Feet |
|
| % of Total Square Feet Expiring |
|
| Number of Expiring Leases |
|
| Annualized Base Rent(1) |
|
| % of Total Annualized Base Rent Expiring |
|
| Square Feet |
|
| % of Total Square Feet Expiring |
| ||||||||
2017 (remainder) |
|
| 1 |
|
| $ | 418 |
|
|
| 1% |
|
|
| 131 |
|
|
| 2% |
| ||||||||||||||||||
2018 |
|
| 24 |
|
|
| 6,906 |
|
|
| 16% |
|
|
| 1,129 |
|
|
| 15% |
| ||||||||||||||||||
2018 (remaining) |
|
| 43 |
|
| $ | 6,916 |
|
| 3% |
|
|
| 985 |
|
| 3% |
| ||||||||||||||||||||
2019 |
|
| 19 |
|
|
| 5,575 |
|
|
| 13% |
|
|
| 982 |
|
|
| 13% |
|
|
| 85 |
|
|
| 22,887 |
|
| 11% |
|
|
| 3,652 |
|
| 10% |
|
2020 |
|
| 16 |
|
|
| 3,960 |
|
|
| 9% |
|
|
| 641 |
|
|
| 9% |
|
|
| 89 |
|
|
| 29,218 |
|
| 14% |
|
|
| 4,739 |
|
| 13% |
|
2021 |
|
| 21 |
|
|
| 8,082 |
|
|
| 18% |
|
|
| 1,465 |
|
|
| 20% |
|
|
| 85 |
|
|
| 33,750 |
|
| 16% |
|
|
| 5,206 |
|
| 15% |
|
2022 |
|
| 16 |
|
|
| 5,781 |
|
|
| 13% |
|
|
| 907 |
|
|
| 12% |
|
|
| 66 |
|
|
| 26,247 |
|
| 13% |
|
|
| 3,990 |
|
| 11% |
|
2023 |
|
| 19 |
|
|
| 6,341 |
|
|
| 14% |
|
|
| 1,099 |
|
|
| 15% |
|
|
| 75 |
|
|
| 40,769 |
|
| 20% |
|
|
| 7,616 |
|
| 22% |
|
2024 |
|
| 9 |
|
|
| 1,579 |
|
|
| 4% |
|
|
| 190 |
|
|
| 3% |
|
|
| 23 |
|
|
| 8,189 |
|
| 4% |
|
|
| 1,090 |
|
| 3% |
|
2025 |
|
| 8 |
|
|
| 2,937 |
|
|
| 7% |
|
|
| 484 |
|
|
| 7% |
|
|
| 25 |
|
|
| 14,222 |
|
| 7% |
|
|
| 2,000 |
|
| 6% |
|
2026 |
|
| 4 |
|
|
| 571 |
|
|
| 1% |
|
|
| 73 |
|
|
| 1% |
|
|
| 12 |
|
|
| 7,548 |
|
| 4% |
|
|
| 1,510 |
|
| 4% |
|
2027 |
|
| 11 |
|
|
| 7,774 |
|
| 4% |
|
|
| 1,193 |
|
| 3% |
| ||||||||||||||||||||
Thereafter |
|
| 4 |
|
|
| 1,720 |
|
|
| 4% |
|
|
| 189 |
|
|
| 3% |
|
|
| 17 |
|
|
| 10,648 |
|
| 4% |
|
|
| 3,471 |
|
| 10% |
|
Total |
|
| 141 |
|
| $ | 43,870 |
|
|
| 100% |
|
|
| 7,290 |
|
|
| 100% |
|
|
| 531 |
|
| $ | 208,168 |
|
| 100% |
|
|
| 35,452 |
|
| 100% |
|
(1) | Annualized base rent is determined from the annualized |
Hotel Metrics
The following table details the average daily rate and the revenue per available room (“RevPAR”) for our hotel properties for the period of ownership during the three and nine months ended September 30, 2017:
|
| Three Months Ended September 30, 2017 |
|
| Nine Months Ended September 30, 2017 |
| ||||||||||
Property |
| Average Daily Rate |
|
| RevPAR |
|
| Average Daily Rate |
|
| RevPAR |
| ||||
Hyatt Place UC Davis |
| $ | 160 |
|
| $ | 143 |
|
| $ | 165 |
|
| $ | 144 |
|
Hyatt Place San Jose Downtown |
| $ | 197 |
|
| $ | 163 |
|
| $ | 213 |
|
| $ | 177 |
|
Florida Select-Service 4-Pack |
| $ | 107 |
|
| $ | 76 |
|
| $ | 108 |
|
| $ | 76 |
|
Hyatt House Downtown Atlanta |
| $ | 175 |
|
| $ | 136 |
|
| $ | 175 |
|
| $ | 136 |
|
Affiliate Service Providers
For details regarding our affiliate service providers, see Note 1110 to our condensed consolidated financial statements.statements and our Annual Report on form 10-K for the year ended December 31, 2017.
Due to the significant amount of acquisitions of real estate and real estate-related securities we have made since we commenced principal operations in January 2017, our results of operations for the three and six months ended June 30, 2018 and 2017 are not comparable. Four out of the 314 properties in our portfolio were owned for both the full three months ended June 30, 2018 and 2017 and as such, same store comparisons are not meaningful.
The following table sets forth information regarding our consolidated results of operations ($ in thousands):
|
| For the Three Months Ended June 30, |
|
| 2018 vs. 2017 |
|
| For the Six Months Ended June 30, |
|
| 2018 vs. 2017 |
| ||||||||||||||||||||
|
| Three Months Ended September 30, 2017 |
|
| Nine Months Ended September 30, 2017 |
|
| 2018 |
|
| 2017 |
|
| $ |
|
| 2018 |
|
| 2017 |
|
| $ |
| ||||||||
Revenues |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rental revenue |
| $ | 33,599 |
|
| $ | 55,727 |
|
| $ | 110,254 |
|
| $ | 21,230 |
|
| $ | 89,024 |
|
| $ | 188,767 |
|
| $ | 22,128 |
|
| $ | 166,639 |
|
Tenant reimbursement income |
|
| 3,230 |
|
|
| 5,503 |
|
|
| 15,560 |
|
|
| 2,206 |
|
|
| 13,354 |
|
|
| 24,608 |
|
|
| 2,273 |
|
|
| 22,335 |
|
Hotel revenue |
|
| 9,874 |
|
|
| 15,048 |
|
|
| 21,196 |
|
|
| 3,748 |
|
|
| 17,448 |
|
|
| 39,017 |
|
|
| 5,174 |
|
|
| 33,843 |
|
Other revenue |
|
| 2,201 |
|
|
| 3,409 |
|
|
| 5,216 |
|
|
| 1,155 |
|
|
| 4,061 |
|
|
| 9,518 |
|
|
| 1,208 |
|
|
| 8,310 |
|
Total revenues |
|
| 48,904 |
|
|
| 79,687 |
|
|
| 152,226 |
|
|
| 28,339 |
|
|
| 123,887 |
|
|
| 261,910 |
|
|
| 30,783 |
|
|
| 231,127 |
|
Expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rental property operating |
|
| 15,938 |
|
|
| 25,632 |
|
|
| 51,452 |
|
|
| 9,389 |
|
|
| 42,063 |
|
|
| 90,070 |
|
|
| 9,694 |
|
|
| 80,376 |
|
Hotel operating |
|
| 6,668 |
|
|
| 9,617 |
|
|
| 13,522 |
|
|
| 2,109 |
|
|
| 11,413 |
|
|
| 25,136 |
|
|
| 2,949 |
|
|
| 22,187 |
|
General and administrative |
|
| 1,716 |
|
|
| 5,969 |
|
|
| 2,901 |
|
|
| 1,567 |
|
|
| 1,334 |
|
|
| 4,946 |
|
|
| 4,253 |
|
|
| 693 |
|
Management fee |
|
| 3,712 |
|
|
| 3,712 |
|
|
| 9,281 |
|
|
| — |
|
|
| 9,281 |
|
|
| 16,250 |
|
|
| — |
|
|
| 16,250 |
|
Performance participation allocation |
|
| 5,711 |
|
|
| 10,952 |
|
|
| 9,476 |
|
|
| 5,241 |
|
|
| 4,235 |
|
|
| 17,349 |
|
|
| 5,241 |
|
|
| 12,108 |
|
Depreciation and amortization |
|
| 40,359 |
|
|
| 65,145 |
|
|
| 84,826 |
|
|
| 23,696 |
|
|
| 61,130 |
|
|
| 158,950 |
|
|
| 24,786 |
|
|
| 134,164 |
|
Total expenses |
|
| 74,104 |
|
|
| 121,027 |
|
|
| 171,458 |
|
|
| 42,002 |
|
|
| 129,456 |
|
|
| 312,701 |
|
|
| 46,923 |
|
|
| 265,778 |
|
Other income (expense) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from real estate-related securities |
|
| 4,026 |
|
|
| 7,435 |
|
|
| 17,397 |
|
|
| 2,543 |
|
|
| 14,854 |
|
|
| 30,632 |
|
|
| 3,409 |
|
|
| 27,223 |
|
Interest income |
|
| 36 |
|
|
| 418 |
|
|
| 121 |
|
|
| 117 |
|
|
| 4 |
|
|
| 198 |
|
|
| 382 |
|
|
| (184 | ) |
Interest expense |
|
| (10,866 | ) |
|
| (16,413 | ) |
|
| (49,841 | ) |
|
| (5,541 | ) |
|
| (44,300 | ) |
|
| (81,232 | ) |
|
| (5,547 | ) |
|
| (75,685 | ) |
Other expense |
|
| (27 | ) |
|
| (55 | ) | ||||||||||||||||||||||||
Total other (expense) income |
|
| (6,831 | ) |
|
| (8,615 | ) | ||||||||||||||||||||||||
Income before income tax |
|
| (32,031 | ) |
|
| (49,955 | ) | ||||||||||||||||||||||||
Income tax benefit |
|
| 184 |
|
|
| 140 |
| ||||||||||||||||||||||||
Other income |
|
| (389 | ) |
|
| (157 | ) |
|
| (232 | ) |
|
| (389 | ) |
|
| (72 | ) |
|
| (317 | ) | ||||||||
Total other income (expense) |
|
| (32,712 | ) |
|
| (3,038 | ) |
|
| (29,674 | ) |
|
| (50,791 | ) |
|
| (1,828 | ) |
|
| (48,963 | ) | ||||||||
Net loss |
|
| (31,847 | ) |
|
| (49,815 | ) |
|
| (51,944 | ) |
|
| (16,701 | ) |
|
| (35,243 | ) |
|
| (101,582 | ) |
|
| (17,968 | ) |
|
| (83,614 | ) |
Net loss attributable to non-controlling interests |
|
| 122 |
|
|
| 122 |
|
|
| 1,462 |
|
|
| — |
|
|
| 1,462 |
|
|
| 3,552 |
|
|
| — |
|
|
| 3,552 |
|
Net loss attributable to BREIT stockholders |
| $ | (31,725 | ) |
| $ | (49,693 | ) |
| $ | (50,482 | ) |
| $ | (16,701 | ) |
| $ | (33,781 | ) |
| $ | (98,030 | ) |
| $ | (17,968 | ) |
| $ | (80,062 | ) |
From March 2, 2016 (date of our initial capitalization) through September 30, 2016, we had not commenced our principal operationsRevenues, Rental Property Operating and were focused on our formationHotel Operating Expenses, Depreciation and the registration of the Offering. The registration statement for the Offering was declared effective by the SEC on August 31, 2016. We commenced selling shares in October 2016 and broke escrow on January 1, 2017. As such, comparative results have not been presented.
Total RevenuesAmortization
During the three and ninesix months ended SeptemberJune 30, 2018, revenues, rental property operating and hotel operating expenses, and depreciation and amortization increased significantly compared to the corresponding period in 2017. The increase is driven by the growth in our portfolio, which increased from 55 properties as of June 30, 2017 total revenues were $48.9 million and $79.7 million, respectively, driven primarily by rental income and hotel revenue from our 18 investments in real property.
Rental Property and Hotel Operating Expenses
During the three and nine months ended Septemberto 314 properties as of June 30, 2017, Rental Property and Hotel Operating Expenses were $22.6 million and $35.2 million, respectively, driven primarily by our 18 investments in real property.2018.
General and Administrative Expenses
During the three and ninesix months ended SeptemberJune 30, 2017, General2018, general and Administrative Expenses were $1.7administrative expenses increased $1.3 million and $6.0$0.7 million, respectively, and consistedcompared to the corresponding periods in 2017, primarily of legal fees, accounting fees, transfer agent fees, other professional services fees, anddue to miscellaneous corporate level expenses related to unconsummated acquisitions we are no longer pursuing. Additionally, during the nine months ended September 30, 2017, we incurredincreased size of our portfolio. The increase was partially offset by $1.8 million of organization costs incurred in conjunction with our formation. Such costs included legal fees, accounting fees, and transfer agent fees, among other costs. We doduring the six months ended June 30, 2017, which we did not expect to incur such costs in the future as our formation is complete and we have commenced principal operations.same period of 2018.
The Adviser’s management fee waiver expired onDuring the three and six months ended June 30, 2017, and during the third quarter we began accruing2018, the management fee onincreased by $9.3 million and $16.3 million, respectively, compared to the corresponding periods in 2017. The Adviser waived management fees for the first six months of 2017, and as such, we did not incur a monthly basis based on our NAV. During bothmanagement fee during the three and ninesix months ended SeptemberJune 30, 2017, the management fee was $3.7 million.2017.
Performance Participation Allocation
During the three and ninesix months ended SeptemberJune 30, 2017,2018, the unrealized performance participation allocation accrued was $5.7accrual increased $4.2 million and $11.0$12.1 million, respectively, as acompared to the corresponding periods in 2017. Each increase was the result of the increased Net Asset Value (“NAV”) of BREIT and a higher total return being greater than the 5% hurdle amount.corresponding period in 2017. Such amount was allocated to the Special Limited Partner.
Depreciation and Amortization
During the three and nine months ended September 30, 2017, depreciation and amortization expenses were $40.4 million and $65.1 million, respectively, driven by depreciation and amortization on our investments in real property.
Income from Real Estate-Related Securities
During the three and ninesix months ended SeptemberJune 30, 2017,2018, income from real estate-related securities was $4.0increased $14.9 million and $7.4$27.2 million, respectively, which consistedcompared to the corresponding periods in 2017. Each increase was primarily due to the growth of the interest income and mark-to-market gains, partially offset by a realized loss on our portfolio of investments in real estate-related securities.
Interest Income
During the three and nine months ended Septembersecurities which increased from 12 positions as of June 30, 2017 interest income was $36 thousand and $0.4 million, respectively, which consistedto 74 positions as of the interest earned on the cash deposited in a money market account.June 30, 2018.
Interest Expense
During the three and ninesix months ended SeptemberJune 30, 2017,2018, interest expense was $10.9increased $44.3 million and $16.4$75.7 million, respectively, which consistedcompared to the corresponding periods in 2017. Each increase was primarily due to the growth in our portfolio of real estate and real estate-related securities and the interest expense incurred on our mortgage notes, term loan, revolving credit facility, Linerelated indebtedness of Credit and borrowings under our repurchase agreements.
Income Tax Benefit
During the three and nine months ended September 30, 2017, the income tax benefit of $0.2 million and $0.1 million, respectively, related to our hotel taxable REIT subsidiaries.such investments.
Funds from Operations and Adjusted Funds from Operations
We believe funds from operations (“FFO”) is a meaningful supplemental non-GAAP operating metric. Our consolidated financial statements are presented under historical cost accounting which, among other things, requires depreciation of real estate investments to be calculated on a straight-line basis. As a result, our operating results imply that the value of our real estate investments will decrease evenly over a set time period. However, we believe that the value of real estate investments will fluctuate over time based on market conditions and as such, depreciation under historical cost accounting may be less informative. FFO is a standard REIT industry metric defined by the National Associational of Real Estate Investment Trusts (“NAREIT”).
FFO, as defined by NAREIT and presented below, is calculated as net income or loss (computed in accordance with GAAP)accounting principles generally accepted in the United States (“GAAP”)), excluding gains or losses from sales of depreciable real property and impairment write-downs on depreciable real property, plus real estate-related depreciation and amortization, and similar adjustments for unconsolidated joint ventures.
The following table presents a reconciliation of FFO to net loss ($ in thousands):
|
| For the Three Months Ended June 30, |
|
| For the Six Months Ended June 30, |
| ||||||||||||||||||
|
| Three Months Ended September 30, 2017 |
|
| Nine Months Ended September 30, 2017 |
|
| 2018 |
|
| 2017 |
|
| 2018 |
|
| 2017 |
| ||||||
Net loss attributable to BREIT stockholders |
| $ | (31,725 | ) |
| $ | (49,693 | ) |
| $ | (50,482 | ) |
| $ | (16,701 | ) |
| $ | (98,030 | ) |
| $ | (17,968 | ) |
Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Real estate depreciation and amortization |
|
| 40,359 |
|
|
| 65,145 |
|
|
| 84,826 |
|
|
| 23,696 |
|
|
| 158,950 |
|
|
| 24,786 |
|
Amount attributable to non-controlling interests for above adjustment |
|
| (169 | ) |
|
| (169 | ) |
|
| (2,266 | ) |
|
| — |
|
|
| (5,162 | ) |
|
| — |
|
Funds from Operations attributable to BREIT stockholders |
| $ | 8,465 |
|
| $ | 15,283 |
|
| $ | 32,078 |
|
| $ | 6,995 |
|
| $ | 55,758 |
|
| $ | 6,818 |
|
We also believe that adjusted FFO (“AFFO”) is a meaningful supplemental non-GAAP disclosure of our operating results. AFFO further adjusts FFO in order for our operating results to reflect the specific characteristics of our business by adjusting for items we believe are not related to our core operations. Our adjustments to FFO to arrive at AFFO include straight-line rental income, amortization of above- and below-market lease intangibles, amortization of mortgage premium/discount, organization costs, unrealized gains or losses from changes in the fair value of financial instruments, amortization of stock awards, and performance participation allocation not paid in cash. AFFO is not defined by NAREIT and our calculation of AFFO may not be comparable to disclosures made by other REITs.
The following table presents a reconciliation of FFO to AFFO ($ in thousands):
|
| For the Three Months Ended June 30, |
|
| For the Six Months Ended June 30, |
| ||||||||||||||||||
|
| Three Months Ended September 30, 2017 |
|
| Nine Months Ended September 30, 2017 |
|
| 2018 |
|
| 2017 |
|
| 2018 |
|
| 2017 |
| ||||||
Funds from Operations attributable to BREIT stockholders |
| $ | 8,465 |
|
| $ | 15,283 |
|
| $ | 32,078 |
|
| $ | 6,995 |
|
| $ | 55,758 |
|
| $ | 6,818 |
|
Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Straight-line rental income |
|
| (551 | ) |
|
| (1,118 | ) |
|
| (2,671 | ) |
|
| (549 | ) |
|
| (3,760 | ) |
|
| (567 | ) |
Amortization of above- and below-market lease intangibles |
|
| (427 | ) |
|
| (792 | ) |
|
| (1,352 | ) |
|
| (277 | ) |
|
| (1,857 | ) |
|
| (288 | ) |
Amortization of below-market and prepaid ground lease intangible |
|
| 79 |
|
|
| 156 |
| ||||||||||||||||
Amortization of mortgage premium |
|
| (55 | ) |
|
| — |
|
|
| (101 | ) |
|
| — |
| ||||||||
Organization costs |
|
| — |
|
|
| 1,838 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 1,838 |
|
Unrealized gains (losses) from changes in the fair value of real estate-related securities |
|
| 641 |
|
|
| (966 | ) | ||||||||||||||||
Unrealized (gains) losses from changes in the fair value of real estate-related securities |
|
| (2,059 | ) |
|
| (882 | ) |
|
| (3,848 | ) |
|
| (1,607 | ) | ||||||||
Amortization of restricted stock awards |
|
| 25 |
|
|
| 77 |
|
|
| 25 |
|
|
| 29 |
|
|
| 50 |
|
|
| 52 |
|
Performance participation allocation |
|
| 5,711 |
|
|
| 10,952 |
|
|
| 9,476 |
|
|
| 5,241 |
|
|
| 17,349 |
|
|
| 5,241 |
|
Amount attributable to non-controlling interests for above adjustments |
|
| (14 | ) |
|
| — |
|
|
| (47 | ) |
|
| — |
| ||||||||
Adjusted Funds from Operations attributable to BREIT stockholders |
| $ | 13,943 |
|
| $ | 25,430 |
|
| $ | 35,428 |
|
| $ | 10,557 |
|
| $ | 63,544 |
|
| $ | 11,487 |
|
FFO and AFFO should not be considered to be more relevant or accurate than the current GAAP methodology in calculating net income (loss) or in evaluating our operating performance. In addition, FFO and AFFO should not be considered as alternatives to net income (loss) as indications of our performance or as alternatives to cash flows from operating activities as indications of our liquidity, but rather should be reviewed in conjunction with these and other GAAP measurements. Further, FFO and AFFO are not intended to be used as liquidity measures indicative of cash flow available to fund our cash needs, including our ability to make distributions to our stockholders.
Net Asset Value
The purchase price per share for each class of our common stock will generally equal our prior month’s NAV per share, as determined monthly, plus applicable selling commissions and dealer manager fees. Our NAV for each class of shares is based on the net asset values of our investments (including real estate-related securities), the addition of any other assets (such as cash on hand) and the deduction of any liabilities, including the allocation/accrual of any performance participation, and any stockholder servicing fees applicable to such class of shares.
The following table provides a breakdown of the major components of our NAV ($ and shares in thousands, except per share data):
Components of NAV |
| September 30, 2017 |
|
| June 30, 2018 |
| ||
Investments in real property |
| $ | 2,437,266 |
| ||||
Investments in real properties |
| $ | 7,374,445 |
| ||||
Investments in real estate-related securities |
|
| 644,371 |
|
|
| 1,650,393 |
|
Cash and cash equivalents |
|
| 30,820 |
|
|
| 56,456 |
|
Restricted cash |
|
| 105,881 |
|
|
| 179,588 |
|
Other assets |
|
| 22,553 |
|
|
| 48,422 |
|
Debt obligations |
|
| (1,756,385 | ) |
|
| (5,577,412 | ) |
Subscriptions received in advance |
|
| (98,435 | ) |
|
| (137,896 | ) |
Other liabilities |
|
| (48,836 | ) |
|
| (331,507 | ) |
Accrued performance participation allocation |
|
| (10,952 | ) |
|
| (17,349 | ) |
Management fee payable |
|
| (3,712 | ) |
|
| (3,371 | ) |
Accrued stockholder servicing fees(1) |
|
| (744 | ) |
|
| (1,648 | ) |
Non-controlling interests in joint venture |
|
| (9,025 | ) | ||||
Non-controlling interests in joint ventures |
|
| (49,664 | ) | ||||
Net Asset Value |
| $ | 1,312,802 |
|
| $ | 3,190,457 |
|
Number of outstanding shares |
|
| 125,491 |
|
|
| 297,018 |
|
(1) | Stockholder servicing fees only apply to Class S, Class T, and Class D shares. See Reconciliation of Stockholders’ Equity to NAV below for an explanation of the difference between the |
The following table provides a breakdown of our total NAV and NAV per share by share class as of June 30, 2018 ($ and shares in thousands, except per share data):
NAV Per Share |
| Class S Shares |
|
| Class I Shares |
|
| Class D Shares |
|
| Class T Shares |
|
| Total |
|
| Class S Shares |
|
| Class T Shares |
|
| Class D Shares |
|
| Class I Shares |
|
| Total |
| ||||||||||
Monthly NAV |
| $ | 1,033,848 |
|
| $ | 243,433 |
|
| $ | 12,718 |
|
| $ | 22,803 |
|
| $ | 1,312,802 |
|
| $ | 2,137,531 |
|
| $ | 157,200 |
|
| $ | 178,897 |
|
| $ | 716,829 |
|
| $ | 3,190,457 |
|
Number of outstanding shares |
|
| 98,779 |
|
|
| 23,277 |
|
|
| 1,226 |
|
|
| 2,209 |
|
|
| 125,491 |
|
|
| 198,618 |
|
|
| 14,858 |
|
|
| 16,827 |
|
|
| 66,715 |
|
|
| 297,018 |
|
NAV Per Share |
| $ | 10.4662 |
|
| $ | 10.4579 |
|
| $ | 10.3763 |
|
| $ | 10.3239 |
|
|
|
|
| ||||||||||||||||||||
NAV Per Share as of June 30, 2018 |
| $ | 10.7620 |
|
| $ | 10.5802 |
|
| $ | 10.6315 |
|
| $ | 10.7446 |
|
|
|
|
|
Set forth below are the weighted averages of the key assumptions in the discounted cash flow methodology used in the SeptemberJune 30, 20172018 valuations, based on property types. Once we own more than one retail property, we will include the key assumptions for this property type.
Property Type |
| Discount Rate |
|
| Exit Capitalization Rate |
|
| Discount Rate |
|
| Exit Capitalization Rate |
| ||
Multifamily |
|
| 7.8% |
|
|
| 5.7% |
|
| 7.8% |
|
| 5.6% |
|
Industrial |
|
| 7.1% |
|
|
| 6.7% |
|
| 7.3% |
|
| 6.2% |
|
Hospitality |
|
| 9.8% |
|
|
| 9.5% |
| ||||||
Hotel |
| 9.7% |
|
| 9.5% |
| ||||||||
Retail |
| 7.7% |
|
| 6.4% |
|
These assumptions are determined by the Adviser and reviewed by our independent valuation advisor. A change in these assumptions would impact the calculation of the value of our property investments. For example, assuming all other factors remain unchanged, the changes listed below would result in the following effects on our investment values:
Input |
| Hypothetical Change |
| Multifamily Investment Values |
| Industrial Investment Values |
| Hospitality Investment Values |
| Hypothetical Change |
| Multifamily Investment Values |
|
| Industrial Investment Values |
|
| Hotel Investment Values |
|
| Retail Investment Values |
|
|
|
|
|
|
|
|
|
| ||||||||||||||
Discount Rate |
| 0.25% decrease |
| +1.9% |
| +1.5% |
| +0.9% |
| 0.25% decrease |
| +1.9% |
|
| +1.6% |
|
| +0.9% |
|
| +1.8% |
|
(weighted average) |
| 0.25% increase |
| (1.9%) |
| (1.5%) |
| (0.9%) |
| 0.25% increase |
| (1.8%) |
|
| (1.3%) |
|
| (0.8%) |
|
| (1.8%) |
|
|
|
|
|
|
|
|
|
| ||||||||||||||
Exit Capitalization Rate |
| 0.25% decrease |
| +2.8% |
| +2.4% |
| +1.9% |
| 0.25% decrease |
| +2.9% |
|
| +2.7% |
|
| +1.9% |
|
| +2.4% |
|
(weighted average) |
| 0.25% increase |
| (2.7%) |
| (2.2%) |
| (1.8%) |
| 0.25% increase |
| (2.7%) |
|
| (2.4%) |
|
| (1.8%) |
|
| (2.2%) |
|
The following table reconciles stockholders’ equity per our condensed consolidated balance sheet to our NAV ($ in thousands):
Reconciliation of Stockholders’ Equity to NAV |
| September 30, 2017 |
|
| June 30, 2018 |
| ||
Stockholders’ equity under U.S. GAAP |
| $ | 1,103,570 |
|
| $ | 2,590,122 |
|
Adjustments: |
|
|
|
|
|
|
|
|
Accrued stockholder servicing fee |
|
| 75,254 |
|
|
| 165,681 |
|
Organization and offering costs |
|
| 9,389 |
|
|
| 9,144 |
|
Unrealized real estate appreciation |
|
| 60,080 |
|
|
| 153,644 |
|
Accumulated depreciation and amortization |
|
| 64,509 |
|
|
| 271,866 |
|
NAV |
| $ | 1,312,802 |
|
| $ | 3,190,457 |
|
The following details the adjustments to reconcile GAAP stockholders’ equity to our NAV:
| - | Accrued stockholder servicing fee represents the accrual for the full cost of the stockholder servicing fee for Class S, Class |
| - | The Adviser |
market value of our investments in real estate or our Debt are not included in our GAAP results. For purposes of determining our NAV, our investments in real estate and our Debt are recorded at fair value. |
Distributions
Beginning March 31, 2017, we declared monthly distributions for each class of our common stock which are generally paid 20 days after month-end. Each class of our common stock receives the same gross distribution per share, which was $0.3118 per share for the six months ended June 30, 2018. The net distribution varies for each class based on the applicable stockholder servicing fee, which is deducted from the monthly distribution per share and paid directly to the applicable distributor. The table below details the net distribution for each of our share classes for the six months ended June 30, 2018.
|
| Class S Shares |
|
| Class T Shares |
|
| Class D Shares |
|
| Class I Shares |
| ||||
January 31, 2018 |
| $ | 0.0441 |
|
| $ | 0.0442 |
|
| $ | 0.0495 |
|
| $ | 0.0517 |
|
February 28, 2018 |
|
| 0.0443 |
|
|
| 0.0444 |
|
|
| 0.0492 |
|
|
| 0.0513 |
|
March 31, 2018 |
|
| 0.0445 |
|
|
| 0.0446 |
|
|
| 0.0500 |
|
|
| 0.0522 |
|
April 30, 2018 |
|
| 0.0445 |
|
|
| 0.0446 |
|
|
| 0.0498 |
|
|
| 0.0520 |
|
May 31, 2018 |
|
| 0.0446 |
|
|
| 0.0448 |
|
|
| 0.0501 |
|
|
| 0.0524 |
|
June 30, 2018 |
|
| 0.0447 |
|
|
| 0.0448 |
|
|
| 0.0500 |
|
|
| 0.0522 |
|
Total |
| $ | 0.2667 |
|
| $ | 0.2674 |
|
| $ | 0.2986 |
|
| $ | 0.3118 |
|
The following table summarizestables summarize our distributions declared during the three and ninesix months ended SeptemberJune 30, 2018 and 2017 ($ in thousands). From March 2, 2016 (date of our initial capitalization) through September 30, 2016, we had not commenced our principal operations and as such, no distributions were made during this period.
|
| Three Months Ended September 30, 2017 |
|
| Nine Months Ended September 30, 2017 |
|
| Three months ended June 30, 2018 |
|
| Three months ended June 30, 2017 |
| ||||||||||||||||||||
|
| Amount |
|
| Percentage |
|
| Amount |
|
| Percentage |
|
| Amount |
|
| Percentage |
|
| Amount |
|
| Percentage |
| ||||||||
Distributions |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Paid in cash |
| $ | 5,033 |
|
|
| 33 | % |
| $ | 8,221 |
|
|
| 32 | % | ||||||||||||||||
Payable in cash |
| $ | 13,928 |
|
|
| 37 | % |
| $ | 2,801 |
|
|
| 31 | % | ||||||||||||||||
Reinvested in shares |
|
| 10,018 |
|
|
| 67 | % |
|
| 17,100 |
|
|
| 68 | % |
|
| 24,115 |
|
|
| 63 | % |
|
| 6,150 |
|
|
| 69 | % |
Total distributions |
| $ | 15,051 |
|
|
| 100 | % |
| $ | 25,321 |
|
|
| 100 | % |
| $ | 38,043 |
|
|
| 100 | % |
| $ | 8,951 |
|
|
| 100 | % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||
Sources of Distributions |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from operating activities |
| $ | 15,051 |
|
|
| 100 | % |
| $ | 25,321 |
|
|
| 100 | % |
| $ | 38,043 |
|
|
| 100 | % |
| $ | 8,951 |
|
|
| 100 | % |
Offering proceeds |
|
| — |
|
|
| — | % |
|
| — |
|
|
| — | % |
|
| — |
|
|
| — | % |
|
| — |
|
|
| — | % |
Total sources of distributions |
| $ | 15,051 |
|
|
| 100 | % |
| $ | 25,321 |
|
|
| 100 | % |
| $ | 38,043 |
|
|
| 100 | % |
| $ | 8,951 |
|
|
| 100 | % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from operating activities |
| $ | 24,776 |
|
|
|
|
|
| $ | 44,260 |
|
|
|
|
|
| $ | 62,835 |
|
|
|
|
|
| $ | 17,911 |
|
|
|
|
|
Funds from Operations |
| $ | 8,465 |
|
|
|
|
|
| $ | 15,283 |
|
|
|
|
|
| $ | 32,078 |
|
|
|
|
|
| $ | 6,995 |
|
|
|
|
|
|
| Six Months Ended June 30, 2018 |
|
| Six Months Ended June 30, 2017 |
| ||||||||||
|
| Amount |
|
| Percentage |
|
| Amount |
|
| Percentage |
| ||||
Distributions |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Payable in cash |
| $ | 24,076 |
|
|
| 36 | % |
| $ | 3,188 |
|
|
| 31 | % |
Reinvested in shares |
|
| 42,351 |
|
|
| 64 | % |
|
| 7,082 |
|
|
| 69 | % |
Total distributions |
| $ | 66,427 |
|
|
| 100 | % |
| $ | 10,270 |
|
|
| 100 | % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sources of Distributions |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from operating activities |
| $ | 66,427 |
|
|
| 100 | % |
| $ | 10,270 |
|
|
| 100 | % |
Offering proceeds |
|
| — |
|
|
| — | % |
|
| — |
|
|
| — | % |
Total sources of distributions |
| $ | 66,427 |
|
|
| 100 | % |
| $ | 10,270 |
|
|
| 100 | % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from operating activities |
| $ | 104,325 |
|
|
|
|
|
| $ | 19,484 |
|
|
|
|
|
Funds from Operations |
| $ | 55,758 |
|
|
|
|
|
| $ | 6,818 |
|
|
|
|
|
Liquidity and Capital Resources
Our primary needs for liquidity and capital resources are to fund our investments, to make distributions to our stockholders, to repurchase shares of our common stock pursuant to our share repurchase plan, to pay our organization and offering costs (including reimbursement of organization and offering costs advanced by the Adviser), operating expenses, and capital expenditures and to pay debt service on anyour outstanding indebtedness we may incur. To date, the Adviser has advanced our organization and offering costs, but beginning January 1, 2018 we will be required to reimburse the Adviser for such advanced amounts ratably over a 60 month period.
indebtedness. We anticipate our operating expenses will include, among other things, the management fee we will pay to the Adviser (to the extent the Adviser elects to receive the management fee in cash or requests that we repurchase shares previously issued to the Adviser for payment of the management fee), the performance participation allocation that BREIT OP will paypays to the Special Limited Partner (to the extent the Special Limited Partner elects to receive the performance participation allocation in cash or requests that we repurchase shares previously issued to the Special Limited Partner for payment of the performance participation allocation), general corporate expenses, and fees and expenses related to managing our properties and other investments. We do not have any office or personnel expenses as we do not have any employees.
Our cash needs for acquisitions and other investments will be funded primarily from the sale of shares of our common stock and through the assumption or incurrence of debt. Through June 30, 2018, our distributions have been funded entirely from cash flows from operations.
As of June 30, 2018, our indebtedness included loans secured by our properties, master repurchase agreements with Citigroup Global Markets Inc. (the “Citi MRA”), Royal Bank of Canada (the “RBC MRA”), and Bank of America Merrill Lynch (the “BAML MRA”) secured by our investments in real estate-related securities, and an unsecured line of credit.
The following table is a summary of our indebtedness as of September 30, 2017 ($ in thousands):
Indebtedness |
| Interest Rate(1) |
|
| Maturity Dates(2)(3) |
|
| Maximum Facility Size |
| Principal Balance |
|
| |||
Loans secured by our properties: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TA Multifamily (excluding 55 West) |
| 3.76% |
|
| 6/1/2024 |
|
| N/A |
| $ | 211,249 |
|
| ||
Industrial Properties - Term Loan |
| L+2.10% |
|
| 6/1/2022 |
|
| N/A |
|
| 146,000 |
|
| ||
Industrial Properties - Revolving Credit Facility |
| L+2.10% |
|
| 6/1/2022 |
|
| 146,000 |
|
| 146,000 |
|
| ||
Emory Point |
| 3.66% |
|
| 5/5/2024 |
|
| N/A |
|
| 130,000 |
|
| ||
Nevada West |
| 3.75% |
|
| 9/1/2024 |
|
| N/A |
|
| 121,380 |
|
| ||
Elysian West |
| 3.77% |
|
| 9/1/2024 |
|
| N/A |
|
| 75,400 |
|
| ||
55 West (part of TA Multifamily Portfolio) |
| L+2.18% |
|
| 5/9/2022(2) |
|
| N/A |
|
| 63,600 |
|
| ||
Mountain Gate & Trails |
| 3.75% |
|
| 9/1/2024 |
|
| N/A |
|
| 59,985 |
|
| ||
Gilbert Vistara |
| 4.09% |
|
| 10/1/2028 |
|
| N/A |
|
| 48,129 |
|
| ||
Gilbert Redstone |
| 4.92% |
|
| 4/10/2029 |
|
| N/A |
|
| 40,484 |
|
| ||
ACG II - Highlands |
| 3.62% |
|
| 10/1/2024 |
|
| N/A |
|
| 27,715 |
|
| ||
Sonora Canyon |
| 3.76% |
|
| 6/1/2024 |
|
| N/A |
|
| 26,455 |
|
| ||
ACG II - Brooks Landing |
| 4.60% |
|
| 10/6/2025 |
|
| N/A |
|
| 24,500 |
|
| ||
ACG II - Woodlands |
| 4.83% |
|
| 3/6/2024 |
|
| N/A |
|
| 23,485 |
|
| ||
ACG II - Sterling Pointe |
| 5.36% |
|
| 1/6/2024 |
|
| N/A |
|
| 18,900 |
|
| ||
Total loans secured by our properties |
|
|
|
|
|
|
|
|
|
|
|
| 1,163,282 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Repurchase agreement borrowings: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Citi MRA |
| L+1.25% - L+1.70% |
|
| 10/16/2017 - 12/28/2017 |
|
| N/A |
|
| 429,294 |
|
| ||
RBC MRA |
| L+1.25% - L+1.45% |
|
| 10/20/2017 |
|
| N/A |
|
| 49,161 |
|
| ||
BAML MRA |
|
| — |
|
|
| — |
|
| N/A |
|
| — |
|
|
Total repurchase agreement borrowings |
|
|
|
|
|
|
|
|
|
|
|
| 478,455 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Line of Credit |
| L+2.25% |
|
| 1/23/2018 |
|
| 250,000 |
|
| 122,676 |
|
| ||
Citi Line of Credit(4) |
| L+2.25% |
|
|
| 10/26/2018 |
|
| 300,000 |
|
| — |
|
| |
Total indebtedness |
|
|
|
|
|
|
|
|
|
|
| $ | 1,764,413 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Principal Balance as Of |
| |||||
Indebtedness |
| Weighted Average Interest Rate(1) |
|
| Weighted Average Maturity Date(2)(3) |
| Maximum Facility Size |
|
| June 30, 2018 |
|
| December 31, 2017 |
| ||||
Fixed rate loans |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fixed rate mortgages |
| 3.98% |
|
| 5/6/2025 |
| N/A |
|
| $ | 3,426,067 |
|
| $ | 1,468,294 |
| ||
Canyon Industrial Portfolio Mezzanine Loan |
| 5.85% |
|
| 4/5/2025 |
| N/A |
|
|
| 200,000 |
|
|
| — |
| ||
Total fixed rate loans |
| 4.08% |
|
| 5/4/2025 |
|
|
|
|
|
| 3,626,067 |
|
|
| 1,468,294 |
| |
Variable rate loans |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BAML Industrial Term Loan(4) |
| L+2.00% |
|
| 6/1/2022 |
| N/A |
|
|
| 236,000 |
|
|
| 186,000 |
| ||
BAML Revolving Credit Facility(4) |
| L+2.00% |
|
| 6/1/2022 |
| $ | 236,000 |
|
|
| 217,000 |
|
|
| 186,000 |
| |
Citi Revolving Credit Facility(5) |
| L+2.25% |
|
| 10/26/2020 |
|
| 300,000 |
|
|
| 178,831 |
|
|
| 178,831 |
| |
Floating rate mortgage |
| L+2.18% |
|
| 5/9/2022 |
| N/A |
|
|
| 63,600 |
|
|
| 63,600 |
| ||
Capital One Term Loan(6) |
| L+1.80% |
|
| 12/12/2022 |
| N/A |
|
|
| 101,000 |
|
|
| 22,500 |
| ||
Capital One Revolving Credit Facility(6) |
| L+1.80% |
|
| 12/12/2022 |
|
| 20,600 |
|
|
| 101,000 |
|
|
| 20,600 |
| |
Total variable rate loans |
| 4.06% |
|
| 3/18/2022 |
|
|
|
|
|
| 897,431 |
|
|
| 657,531 |
| |
Total loans secured by the Company's properties |
| 4.08% |
|
| 9/19/2024 |
|
|
|
|
|
| 4,523,498 |
|
|
| 2,125,825 |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Repurchase agreement borrowings secured by our real estate-related securities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RBC MRA |
| L+1.34% |
|
| 11/25/2018 |
| N/A |
|
|
| 605,585 |
|
|
| 150,238 |
| ||
Citi MRA |
| L+1.56% |
|
| 9/7/2018 |
| N/A |
|
|
| 458,896 |
|
|
| 512,975 |
| ||
BAML MRA |
| L+1.06% |
|
| 7/10/2018 |
| N/A |
|
|
| 37,759 |
|
|
| 19,635 |
| ||
Total repurchase agreement borrowings secured by our real estate-related securities |
|
|
|
|
|
|
|
|
| 1,102,240 |
|
|
| 682,848 |
| |||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unsecured loan: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Affiliate line of credit |
| L+2.25% |
|
| 1/23/2019 |
| 250,000 |
|
|
| — |
|
|
| 5,374 |
| ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total indebtedness |
|
|
|
|
|
|
|
|
|
|
| $ | 5,625,738 |
|
| $ | 2,814,047 |
|
| (1) | The term “L” refers to (i) the one-month LIBOR with respect to the Line of Credit, Revolving Credit |
| (2) |
|
| (3) | Subsequent to quarter end, we rolled our repurchase agreement contracts expiring in |
| (4) |
|
(5) | The Citi Revolving Credit Facility is secured by certain of our hotel investments. |
(6) | The Capital One Term Loan and Capital One Revolving Credit Facility are secured by certain of our industrial assets. |
On June 27, 2018, we entered into an Amended and Restated Limited Partnership Agreement (the “A&R OP Agreement”) for BREIT OP. The A&R OP Agreement amends and restates the limited partnership agreement governing BREIT OP to provide for a new class of units (“Class B Units”) of the BREIT OP, among other changes. Class B Units are available to certain suitable investors in private placements generally utilizing a “draw-down” structure. Class B Units will be sold at their NAV per unit, which will equal the NAV per Class I unit of BREIT OP and will generally correspond to the NAV per share of our Class I shares.
Class B Units are subject to the same fees and expenses of Class I Units and will not have any preferential rights relative to the Company’s interest in BREIT OP, nor will they be exchangeable for any shares of the Company’s common stock. Holders of the Class B Units will have a right to redeem their units for cash in a manner similar to the ability of the Company’s stockholders to have their shares repurchased under the Company’s share repurchase plan. Class B Unit redemptions will be subject to the same limitations as share repurchases under the Company’s share repurchase plan, namely the early repurchase deduction and caps on monthly and quarterly repurchases (calculated on an aggregate basis with shares of the Company’s common stock submitted for repurchase for the applicable period). The redemption rights of the Class B Unitholders will not affect the terms of the Company’s share repurchase plan. Class B Units will have the same limited voting rights as the other BREIT OP units and such rights do not affect the Company’s exclusive power, as general partner of BREIT OP, to manage and conduct the business of BREIT OP.
On July 27, 2018, BREIT OP received a $100.0 million commitment to purchase Class B Units from a Blackstone-advised entity, $25.0 million of which was funded on August 1, 2018.
Other potential future sources of capital include secured or unsecured financings from banks or other lenders and proceeds from the sale of assets. If necessary, we may use financings or other sources of capital in the event of unforeseen significant capital expenditures. We have not yet identified any sources for these types of financings.
As of November 13, 2017,August 14, 2018, we had received net proceeds of $1.5$3.5 billion from selling an aggregate of 152,942,761339,573,665 shares of our common stock (consisting of 117,771,673223,147,685 Class S shares, 4,315,93617,347,509 Class T shares, 2,981,47322,066,207 Class D shares, and 27,873,67977,012,264 Class I shares). The Company intends to continue selling shares in the Offering on a monthly basis.
The following table provides a breakdown of the net change in our cash and cash equivalents and restricted cash ($ in thousands):
|
| Nine Months Ended September 30, 2017 |
|
| Six Months Ended June 30, 2018 |
|
| Six Months Ended June 30, 2017 |
| |||
Cash flows provided by operating activities |
| $ | 44,260 |
|
| $ | 104,325 |
|
| $ | 19,484 |
|
Cash flows used in investing activities |
|
| (2,901,931 | ) |
|
| (3,962,308 | ) |
|
| (1,794,668 | ) |
Cash flows provided by financing activities |
|
| 2,994,172 |
|
|
| 3,936,298 |
|
|
| 1,899,141 |
|
Net increase in cash and cash equivalents and restricted cash |
| $ | 136,501 |
|
| $ | 78,315 |
|
| $ | 123,957 |
|
Cash flows provided by operating activities were $44.3increased $84.8 million during the ninesix months ended SeptemberJune 30, 2018 compared to the corresponding period in the 2017 primarily as a result ofdue to increased cash flows from the operations of the investments in our propertiesreal estate and interest income on our investments in real estate-related securities.
Cash flows used in investing activities were $2.9increased $2.2 billion during the ninesix months ended SeptemberJune 30, 2018 compared to the corresponding period in 2017 driven primarily by our acquisitionsdue to an increase of $1.9 billion in the acquisition of real estate investments of $2.3and $0.3 billion and purchase of real estate-related securities of $660.2 million.securities.
Cash flows provided by financing activities were $3.0increased $2.0 billion during the ninesix months ended SeptemberJune 30, 2018 compared to the corresponding period in 2017 primarily due to the $1.3a net increase of $1.7 billion in borrowings and an increase of net$0.3 billion in proceeds we received from the issuance of our common stock and $1.7 billion of net borrowings under our mortgage notes, term loan, affiliate line of credit, and repurchase agreements.stock.
From March 2, 2016 (date of our initial capitalization) through September 30, 2016, we had not commenced our principal operations and as such, comparative results have not been analyzed.
Critical Accounting Policies
The preparation of the financial statements in accordance with accounting principles generally accepted in the United States (“GAAP”) involveGAAP involves significant judgments and assumptions and requirerequires estimates about matters that are inherently uncertain. These judgments will affect our reported amounts of assets and liabilities and our disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of revenue and expenses during the reporting periods. With different estimates or assumptions, materially different amounts could be reported in our condensed consolidated financial statements. We consider our accounting policies over investments in real estate and lease intangibles, investments in real estate-related securities, and revenue recognition to be our critical accounting policies. See Note 2 to our consolidated financial statementsAnnual Report on Form 10-K for the year ended December 31, 2017 for further descriptions of such accounting policies.
Recent Accounting Pronouncements
See Note 2 — “Summary of Significant Accounting Policies” to our condensed consolidated financial statements in this quarterly report on Form 10-Q for a discussion concerning recent accounting pronouncements.
Off-Balance Sheet Arrangements
We currently have no off-balance sheet arrangements that are reasonably likely to have a material current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.
The following table aggregates our contractual obligations and commitments with payments due subsequent to SeptemberJune 30, 20172018 ($ in thousands).
Obligations |
| Total |
|
| Less than 1 year |
|
| 1-3 years |
|
| 3-5 years |
|
| More than 5 years |
|
| Total |
|
| Less than 1 year |
|
| 1-3 years |
|
| 3-5 years |
|
| More than 5 years |
| ||||||||||
Indebtedness (1) |
| $ | 6,812,283 |
|
| $ | 1,304,565 |
|
| $ | 599,327 |
|
| $ | 1,139,212 |
|
| $ | 3,769,179 |
| ||||||||||||||||||||
Ground leases |
|
| 14,149 |
|
|
| 240 |
|
|
| 480 |
|
|
| 480 |
|
|
| 12,949 |
| ||||||||||||||||||||
Organizational and offering costs |
| $ | 9,389 |
|
| $ | 1,408 |
|
| $ | 3,756 |
|
| $ | 3,756 |
|
| $ | 469 |
|
|
| 9,144 |
|
|
| 2,032 |
|
|
| 4,064 |
|
|
| 3,048 |
|
|
| — |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||
Ground leases |
|
| 14,249 |
|
|
| 239 |
|
|
| 478 |
|
|
| 478 |
|
|
| 13,054 |
| ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||
Indebtedness (1) |
|
| 1,947,404 |
|
|
| 524,129 |
|
|
| 89,108 |
|
|
| 381,789 |
|
|
| 952,378 |
| ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||
Other |
|
| 18,627 |
|
|
| 2,398 |
|
|
| 6,871 |
|
|
| 7,092 |
|
|
| 2,266 |
| ||||||||||||||||||||
Total |
| $ | 1,971,042 |
|
| $ | 525,776 |
|
| $ | 93,342 |
|
| $ | 386,023 |
|
| $ | 965,901 |
|
| $ | 6,854,203 |
|
| $ | 1,309,235 |
|
| $ | 610,742 |
|
| $ | 1,149,832 |
|
| $ | 3,784,394 |
|
| (1) | The allocation of our indebtedness includes both principal and interest payments based on the current maturity date and interest rates in effect at |
Indebtedness
We are exposed to interest rate risk with respect to our variable-rate indebtedness, whereas an increase in interest rates would directly result in higher interest expense costs. We seek to manage our exposure to interest rate risk by utilizing a mix of fixed and floating rate financings with staggered maturities and through interest rate protection agreements to fix or cap a portion of our variable rate debt. As of SeptemberJune 30, 2017,2018, the outstanding principal balance of our variable rate indebtedness was $956.6 million$2.0 billion and consisted of mortgage notes, a term loan, aloans, revolving credit facility, an affiliate line of credit,facilities, and repurchase agreements.
OurCertain of our mortgage loans, term loan,loans, and revolving credit facility, and affiliate line of creditfacilities are variable rate and indexed to one-month U.S. Dollar denominated LIBOR. For the three and ninesix months ended SeptemberJune 30, 2017,2018, a 10% increase in one-month U.S. Dollar denominated LIBOR would have resulted in increased interest expense of $819 thousand$0.3 million and $1.3$0.5 million, respectively.
Our repurchase agreements are variable rate and indexed to one-month or three-month U.S. Dollar denominated LIBOR. For the three and ninesix months ended SeptemberJune 30, 2017,2018, a 10% increase in the one-month or three-month U.S. Dollar denominated LIBOR rate would have resulted in increased interest expense of $217 thousand$0.3 million and $293 thousand,$0.6 million, respectively.
We may seek to limit the impact of rising interest rates on earnings and cash flows through the use of fixed rate financings or the use of derivative financial instruments to hedge exposures to changes in interest rates on loans secured by our assets.
Investments in real estate-related securities
As of SeptemberJune 30, 2017, our2018, we held $1.7 billion of investments in real estate-related debt securities, consisted of $644.4 million ofwhich were exclusively CMBS. Our CMBS investments are floating-rate and indexed to one-month U.S. denominated LIBOR and as such, exposed to interest rate risk. Our net income will increase or decrease depending on interest rate movements. While we cannot predict factors which may or may not affect interest rates, duringfor the three and ninesix months ended SeptemberJune 30, 2017,2018, a 10% increase or decrease in the one-month U.S. denominated LIBOR rate would have resulted in an increase or decrease to income from real estate-related securities of $467 thousand$0.7 million and $663 thousand,$1.5 million, respectively.
We may also be exposed to market risk with respect to our investments in real-estate relatedreal estate-related debt securities due to changes in the fair value of our investments. We seek to manage our exposure to market risk with respect to our investments in real estate-related debt securities by making investments in securities backed by different types of collateral and varying credit ratings. The fair value of our investments may fluctuate, thus the amount we will realize upon any sale of our investments in CMBSreal estate-related debt securities is unknown. As of SeptemberJune 30, 2017,2018, the fair value at which we may sell our investments in real estate-related debt securities is not known, but a 10% change in the fair value of our investments in real estate-related debt securities may result in an unrealized gain or loss of $64.4$165.0 million.
Evaluation of Disclosure Controls and Procedures
An evaluation of the effectiveness of the design and operation of our “disclosure controls and procedures” (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), as of the end of the period covered by this quarterly report on Form 10-Q was made under the supervision and with the participation of our management, including our Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”). Based upon this evaluation, our CEO and CFO have concluded that as of the end of the period covered by this report our disclosure controls and procedures (a) arewere effective to ensure that information required to be disclosed by us in reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified by SEC rules and forms and (b) include,included, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in reports filed or submitted under the Exchange Act is accumulated and communicated to our management, including our CEO and CFO, as appropriate to allow timely decisions regarding required disclosure.
Changes in Internal Controls over Financial Reporting
There have been no changes in our “internal control over financial reporting” (as defined in Rule 13a-15(f) of the Exchange Act) that occurred during the period covered by this quarterly report on Form 10-Q that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
From time to time, we may be involved in various claims and legal actions arising in the ordinary course of business. As of SeptemberJune 30, 2017,2018, we were not involved in any material legal proceedings.
There have been no material changes to the risk factors previously disclosed under Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2016.2017.
Unregistered Sales of Equity Securities
DuringExcept as described below, during the three and six months ended SeptemberJune 30, 2017,2018, we did not sell or issue any equity securities that were not registered under the Securities Act. As described in Note 1110 to our condensed consolidated financial statements, the Adviser is entitled to an annual management fee payable monthly in cash, shares of common stock, or BREIT OP Units, in each case at the Adviser's election. For the three month periodsix months ended SeptemberJune 30, 2017,2018, the Adviser elected to receive its management fee in Class I Shares. During October 2017, the Companyshares and we issued 355 thousand1,206,253 unregistered Class I Sharesshares to the Adviser in satisfaction of the management fee for January through May 2018. Additionally, we issued 313,712 unregistered Class I shares to the Adviser in July 2018 in satisfaction of the June 2018 management fee.
The Special Limited Partner is also entitled to an annual performance participation allocation. As further described in our Annual Report on Form 10-K for the fiscal year ended December 31, 2017, the 2017 performance participation allocation became payable on December 31, 2017 and in January 2018, the Company issued approximately 1.6 million Class I units in BREIT OP to the Special Limited Partner as payment for the 2017 performance participation allocation. Each Class I unit is exchangeable into one Class I share. Each issuance to the Adviser and the Special Limited Partner was made pursuant to Section 4(a)(2) of the Securities Act.
Use of Offering Proceeds
On August 31, 2016, ourthe Registration Statement on Form S-11 (File No. 333-213043) coveringfor the Offering of up to $5.0 billion in shares of common stock (in any combination of purchases of Class S, Class T, Class D and Class I shares of our common stock), consisting of up to $4.0 billion in shares in our primary offering and up to $1.0 billion in shares pursuant to our distribution reinvestment plan, was declared effective under the Securities Act. Amendment No. 58 to our Registration Statement was declared effective under the Securities Act on August 17, 2017. The initial offering price of each class of our common stock was $10.00 per share, plus applicable selling commissions and dealer manager fees.May 1, 2018. The offering price for each class of our common stock is determined monthly and is made available on our website and in prospectus supplement filings.
As of SeptemberJune 30, 2017,2018, we received net proceeds of $3.1 billion from the Offering. The following istable summarizes certain information about the Offering and use of proceeds therefrom ($ in thousands)thousands except for share data):
|
| Class S Shares |
|
| Class I Shares |
|
| Class D Shares |
|
| Class T Shares |
|
| Total |
| |||||
Offering proceeds: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares sold |
|
| 98,779,308 |
|
|
| 23,241,230 |
|
|
| 1,225,700 |
|
|
| 2,208,763 |
|
|
| 125,455,001 |
|
Gross offering proceeds |
| $ | 997,265 |
|
| $ | 231,177 |
|
| $ | 12,454 |
|
| $ | 23,157 |
|
| $ | 1,264,053 |
|
Selling commissions and dealer manager fees |
|
| (11,431 | ) |
|
| — |
|
|
| — |
|
|
| (659 | ) |
|
| (12,090 | ) |
Accrued stockholder servicing fees |
|
| (4,008 | ) |
|
| — |
|
|
| (6 | ) |
|
| (28 | ) |
|
| (4,042 | ) |
Other offering costs |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
Net offering proceeds |
| $ | 981,826 |
|
| $ | 231,177 |
|
| $ | 12,448 |
|
| $ | 22,470 |
|
| $ | 1,247,921 |
|
Use of offering proceeds: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchase of real estate |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (2,245,885 | ) |
Capital improvements to real estate |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (3,290 | ) |
Pre-acquisition costs |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (9,201 | ) |
Purchase of real estate-related securities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (660,151 | ) |
Proceeds from settlement of real estate-related securities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 16,596 |
|
Repurchase of common stock |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (187 | ) |
Borrowings from mortgage notes, term loan, and revolving credit facility |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 1,055,913 |
|
Borrowings under repurchase agreements |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 491,026 |
|
Settlement of repurchase agreements |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (12,571 | ) |
Borrowings from Line of Credit |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 617,650 |
|
Repayments on Line of Credit |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (495,150 | ) |
Payment of deferred financing costs |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (12,384 | ) |
Contributions from non-controlling interests |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 8,978 |
|
Distributions to stockholders |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (6,203 | ) |
Working capital |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 37,758 |
|
Cash and cash equivalents |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| $ | 30,820 |
|
|
| Class S Shares |
|
| Class T Shares |
|
| Class D Shares |
|
| Class I Shares |
|
| Total |
| |||||
Offering proceeds: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares sold |
|
| 199,474,239 |
|
|
| 14,860,908 |
|
|
| 16,828,257 |
|
|
| 64,873,687 |
|
|
| 296,037,091 |
|
Gross offering proceeds |
| $ | 2,083,343 |
|
| $ | 158,912 |
|
| $ | 176,761 |
|
| $ | 676,033 |
|
| $ | 3,095,049 |
|
Selling commissions and dealer manager fees |
|
| (21,869 | ) |
|
| (4,419 | ) |
|
| — |
|
|
| — |
|
|
| (26,288 | ) |
Accrued stockholder servicing fees |
|
| (14,409 | ) |
|
| (610 | ) |
|
| (134 | ) |
|
| — |
|
|
| (15,153 | ) |
Net offering proceeds |
| $ | 2,047,065 |
|
| $ | 153,883 |
|
| $ | 176,627 |
|
| $ | 676,033 |
|
| $ | 3,053,608 |
|
We primarily used the net proceeds from the Offering toward the acquisition of $7.2 billion of real estate and $1.7 billion of real estate-related securities. In addition to the net proceeds from the Offering, we financed our acquisitions with $4.5 billion of financing secured by our investments in real estate, $1.1 billion of repurchase agreements, and borrowings on the line of credit from Blackstone Holdings Finance Co. L.L.C., an affiliate of Blackstone. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources” for additional details on our borrowings.
Under our share repurchase plan, to the extent we choose to repurchase shares in any particular month, we will only repurchase shares as of the opening of the last calendar day of that month (each such date, a “Repurchase Date”). Repurchases will be made at the transaction price in effect on the Repurchase Date (which will generally be equal to our prior month’s NAV per share), except that shares that have not been outstanding for at least one year will be repurchased at 95% of the transaction price (an “Early Repurchase Deduction”) subject to certain limited exceptions. Settlements of share repurchases will be made within three business days of the Repurchase Date. The Early Repurchase Deduction will not apply to shares acquired through our distribution reinvestment plan.
The total amount of aggregate repurchases of Class S, Class T, Class D and Class I shares is limited to no more than 2% of our aggregate NAV per month and no more than 5% of our aggregate NAV per calendar quarter.
Should repurchase requests, in our judgment, place an undue burden on our liquidity, adversely affect our operations or risk having an adverse impact on the company as a whole, or should we otherwise determine that investing our liquid assets in real properties or other illiquid investments rather than repurchasing our shares is in the best interests of the Company as a whole, then we may choose to repurchase fewer shares than have been requested to be repurchased, or none at all. Further, our board of directors may modify,
suspend or terminate our share repurchase plan if it deems such action to be in our best interest and the best interest of our stockholders. In the event that we determine to repurchase some but not all of the shares submitted for repurchase during any month, shares repurchased at the end of the month will be repurchased on a pro rata basis.
If the transaction price for the applicable month is not made available by the tenth business day prior to the last business day of the month (or is changed after such date), then no repurchase requests will be accepted for such month and stockholders who wish to have their shares repurchased the following month must resubmit their repurchase requests.
During the threesix months ended SeptemberJune 30, 2017,2018, we repurchased shares of our common stock in the following amounts, which represented all of the share repurchase requests received for the same period.
Period |
| Total Number of Shares Redeemed or Repurchased |
|
| Average Price Paid per Share |
|
| Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs |
|
| Maximum Number of Shares that May Yet Be Purchased Pursuant to the Program | |||
July 1 – July 31, 2017 |
|
| — |
|
| $ | — |
|
|
| — |
|
| (1) |
August 1 - August 31, 2017 |
|
| 3,594 |
|
|
| 9.80 |
|
|
| 3,594 |
|
| (1) |
September 1 - September 30, 2017 |
|
| 15,327 |
|
|
| 9.90 |
|
|
| 15,327 |
|
| (1) |
Total |
|
| 18,921 |
|
| $ | 9.85 |
|
|
| 18,921 |
|
| (1) |
Period |
| Total Number of Shares Repurchased |
|
| Repurchases as a Percentage of Shares Outstanding |
|
| Average Price Paid per Share |
|
| Total Number of Shares Repurchased as Part of Publicly Announced Plans or Programs |
|
| Maximum Number of Shares Pending Repurchase Pursuant to Publicly Announced Plans or Programs(1) |
| |||||
January 1 - January 31, 2018 |
|
| 29,942 |
|
|
| 0.02 | % |
| $ | 10.57 |
|
|
| 29,942 |
|
|
| — |
|
February 1 - February 28, 2018 |
|
| 88,765 |
|
|
| 0.04 | % |
|
| 10.63 |
|
|
| 88,765 |
|
|
| — |
|
March 1 - March 31, 2018 |
|
| 97,380 |
|
|
| 0.04 | % |
|
| 10.64 |
|
|
| 97,380 |
|
|
| — |
|
April 1 - April 30, 3018 |
|
| 164,420 |
|
|
| 0.07 | % |
|
| 10.57 |
|
|
| 164,420 |
|
|
| — |
|
May 1 - May 31, 2018 |
|
| 282,194 |
|
|
| 0.10 | % |
|
| 10.64 |
|
|
| 282,194 |
|
|
| — |
|
June 1 - June 30, 2018 |
|
| 376,302 |
|
|
| 0.13 | % |
|
| 10.72 |
|
|
| 376,302 |
|
|
| — |
|
Total |
|
| 1,039,003 |
|
| N/M |
|
| $ | 10.65 |
|
|
| 1,039,003 |
|
|
| — |
|
| (1) | Repurchases are limited under the share repurchase plan as described above. Under the share repurchase plan, we would have been able to repurchase up to an aggregate of |
In June 2018, the Special Limited Partner redeemed 0.8 million Class I units in BREIT OP for $8.4 million based on the net asset value of the Class I units at May 31, 2018. The Special Limited Partner continues to hold 0.9 million Class I units in BREIT OP. The redemption of Class I units are not considered part of our share repurchase plan as described above.
None.
Not applicable.
Not applicable.
| ||
|
| |
|
| |
10.1 | ||
10.2 |
| |
31.1 |
| |
|
|
|
31.2 |
| |
|
|
|
32.1 + |
| |
|
|
|
32.2 + |
| |
|
|
|
101.INS |
| XBRL Instance Document |
|
|
|
101.SCH |
| XBRL Taxonomy Extension Schema Document |
|
|
|
101.SCH |
| XBRL Taxonomy Extension Calculation Linkbase Document |
|
|
|
101.LAB |
| XBRL Taxonomy Extension Label Linkbase Document |
|
|
|
101.PRE |
| XBRL Taxonomy Extension Presentation Linkbase Document |
|
|
|
101.DEF |
| XBRL Taxonomy Extension Definition Linkbase Document |
+ | This exhibit shall not be deemed “filed” for purposes of Section 18 of the |
The agreements and other documents filed as exhibits to this report are not intended to provide factual information or other disclosure other than with respect to the terms of the agreements or other documents themselves, and you should not rely on them for that purpose. In particular, any representations and warranties made by us in these agreements or other documents were made solely within the specific context of the relevant agreement or document and may not describe the actual state of affairs as of the date they were made or at any other time.
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
|
| BLACKSTONE REAL ESTATE INCOME TRUST, INC. |
|
|
|
|
| /s/ Frank Cohen |
Date |
| Frank Cohen |
|
| Chief Executive Officer |
|
| (Principal Executive Officer) |
|
|
|
|
| /s/ Paul D. Quinlan |
Date |
| Paul D. Quinlan |
|
| Chief Financial Officer and Treasurer |
|
| (Principal Financial Officer and |
|
| Principal Accounting Officer) |
4341