10-Q 1 breit-10q_20190630.htm 10-Q breit-10q_20190630.htm

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 10-Q

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2019

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: 000-55931

 

 

Blackstone Real Estate Income Trust, Inc.

(Exact name of Registrant as specified in its charter)

 

 

 

 

Maryland

81-0696966

(State or other jurisdiction of

incorporation or organization)

345 Park Avenue

New York, NY

(Address of principal executive offices)

(I.R.S. Employer

Identification No.)

 

10154

(Zip Code)

Registrant’s telephone number, including area code: (212) 583-5000

 


Securities registered pursuant to Section 12(b) of the Act: None

Title of each class

 

Trading

Symbol(s)

 

Name of each exchange on which registered

 

 

 

 

 

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 every Interactive Data File required to be submitted 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 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

 

  

Smaller reporting company

 

 

 

 

 

 

 

 

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).    Yes      No  

As of August 14, 2019, the issuer had the following shares outstanding: 421,961,887 shares of Class S common stock, 35,233,903 shares of Class T common stock, 63,674,039 shares of Class D common stock, and 286,858,436 shares of Class I common stock.

 

 


TABLE OF CONTENTS

 

PART I.

FINANCIAL INFORMATION

1

 

 

 

ITEM 1.

FINANCIAL STATEMENTS

1

 

 

 

 

Condensed Consolidated Financial Statements (Unaudited):

 

 

 

 

 

Condensed Consolidated Balance Sheets as of June 30, 2019 and December 31, 2018

1

 

 

 

 

Condensed Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2019 and 2018

2

 

 

 

 

Condensed Consolidated Statements of Changes in Equity for the Three and Six Months Ended June 30, 2019 and 2018

3

 

 

 

 

Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2019 and 2018

5

 

 

 

 

Notes to Condensed Consolidated Financial Statements

7

 

 

 

ITEM 2.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

29

 

 

 

ITEM 3.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

50

 

 

 

ITEM 4.

CONTROLS AND PROCEDURES

50

 

 

 

PART II.

OTHER INFORMATION

51

 

 

 

ITEM 1.

LEGAL PROCEEDINGS

51

 

 

 

ITEM 1A.

RISK FACTORS

51

 

 

 

ITEM 2.

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

52

 

 

 

ITEM 3.

DEFAULTS UPON SENIOR SECURITIES

53

 

 

 

ITEM 4.

MINE SAFETY DISCLOSURES

53

 

 

 

ITEM 5.

OTHER INFORMATION

53

 

 

 

ITEM 6.

EXHIBITS

54

 

 

 

SIGNATURES

55

 

 

 


 

PART I. FINANCIAL INFORMATION

ITEM 1.

FINANCIAL STATEMENTS

Blackstone Real Estate Income Trust, Inc.

Condensed Consolidated Balance Sheets (Unaudited)

(in thousands, except share and per share data)

 

 

 

June 30, 2019

 

 

December 31, 2018

 

Assets

 

 

 

 

 

 

 

 

Investments in real estate, net

 

$

14,266,583

 

 

$

10,259,687

 

Investments in real estate-related securities and loans

 

 

3,460,922

 

 

 

2,259,913

 

Cash and cash equivalents

 

 

150,062

 

 

 

68,089

 

Restricted cash

 

 

477,768

 

 

 

238,524

 

Other assets

 

 

506,752

 

 

 

410,945

 

Total assets

 

$

18,862,087

 

 

$

13,237,158

 

 

 

 

 

 

 

 

 

 

Liabilities and Equity

 

 

 

 

 

 

 

 

Mortgage notes, term loans, and secured revolving credit facilities, net

 

$

8,379,181

 

 

$

6,833,269

 

Repurchase agreements

 

 

2,447,134

 

 

 

1,713,723

 

Unsecured revolving credit facilities

 

 

240,000

 

 

 

 

Due to affiliates

 

 

430,011

 

 

 

301,581

 

Accounts payable, accrued expenses, and other liabilities

 

 

979,203

 

 

 

464,398

 

Total liabilities

 

 

12,475,529

 

 

 

9,312,971

 

 

 

 

 

 

 

 

 

 

Commitments and contingencies

 

 

 

 

 

 

Redeemable non-controlling interest

 

 

10,183

 

 

 

9,233

 

 

 

 

 

 

 

 

 

 

Equity

 

 

 

 

 

 

 

 

Preferred stock, $0.01 par value per share, 100,000,000 shares authorized; no shares issued

   and outstanding as of June 30, 2019 and December 31, 2018

 

 

 

 

 

 

Common stock — Class S shares, $0.01 par value per share, 500,000,000 shares authorized;

   381,155,980 and 276,989,019 shares issued and outstanding as of June 30, 2019 and

   December 31, 2018, respectively

 

 

3,812

 

 

 

2,770

 

Common stock — Class T shares, $0.01 par value per share, 500,000,000 shares authorized;

   31,903,877 and 23,313,429 shares issued and outstanding as of June 30, 2019 and

   December 31, 2018, respectively

 

 

319

 

 

 

233

 

Common stock — Class D shares, $0.01 par value per share, 500,000,000 shares authorized;

   52,916,501 and 30,375,353 shares issued and outstanding as of June 30, 2019 and

   December 31, 2018, respectively

 

 

529

 

 

 

304

 

Common stock — Class I shares, $0.01 par value per share, 500,000,000 shares authorized;

   228,556,040 and 108,261,331 shares issued and outstanding as of June 30, 2019 and

   December 31, 2018, respectively

 

 

2,286

 

 

 

1,083

 

Additional paid-in capital

 

 

6,969,300

 

 

 

4,327,444

 

Accumulated deficit and cumulative distributions

 

 

(845,511

)

 

 

(587,548

)

Total stockholders' equity

 

 

6,130,735

 

 

 

3,744,286

 

    Non-controlling interests attributable to third party joint ventures

 

 

113,725

 

 

 

75,592

 

    Non-controlling interests attributable to BREIT OP unitholders

 

 

131,915

 

 

 

95,076

 

Total equity

 

 

6,376,375

 

 

 

3,914,954

 

Total liabilities and equity

 

$

18,862,087

 

 

$

13,237,158

 

 

See accompanying notes to condensed consolidated financial statements.

1


 

Blackstone Real Estate Income Trust, Inc.

Condensed Consolidated Statements of Operations (Unaudited)

(in thousands, except share and per share data)

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

 

2019

 

 

2018

 

 

2019

 

 

2018

 

Revenues

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Rental revenue

$

247,672

 

 

$

125,814

 

 

$

459,869

 

 

$

213,375

 

Hotel revenue

 

94,351

 

 

 

21,196

 

 

 

169,617

 

 

 

39,017

 

Other revenue

 

12,285

 

 

 

5,216

 

 

 

21,913

 

 

 

9,518

 

Total revenues

 

354,308

 

 

 

152,226

 

 

 

651,399

 

 

 

261,910

 

Expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Rental property operating

 

101,211

 

 

 

51,452

 

 

 

189,022

 

 

 

90,070

 

Hotel operating

 

63,197

 

 

 

13,522

 

 

 

114,517

 

 

 

25,136

 

General and administrative

 

4,878

 

 

 

2,901

 

 

 

8,059

 

 

 

4,946

 

Management fee

 

22,487

 

 

 

9,281

 

 

 

39,664

 

 

 

16,250

 

Performance participation allocation

 

29,898

 

 

 

9,476

 

 

 

50,061

 

 

 

17,349

 

Depreciation and amortization

 

161,854

 

 

 

84,826

 

 

 

301,333

 

 

 

158,950

 

Total expenses

 

383,525

 

 

 

171,458

 

 

 

702,656

 

 

 

312,701

 

Other income (expense)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income from real estate-related securities and loans

 

51,784

 

 

 

17,397

 

 

 

113,467

 

 

 

30,632

 

Gain on disposition of real estate

 

29,686

 

 

 

 

 

 

29,686

 

 

 

 

Interest income

 

303

 

 

 

121

 

 

 

497

 

 

 

198

 

Interest expense

 

(103,279

)

 

 

(49,841

)

 

 

(194,866

)

 

 

(81,232

)

Other income (expense)

 

(2,061

)

 

 

(389

)

 

 

(407

)

 

 

(389

)

Total other income (expense)

 

(23,567

)

 

 

(32,712

)

 

 

(51,623

)

 

 

(50,791

)

Net loss

$

(52,784

)

 

$

(51,944

)

 

$

(102,880

)

 

$

(101,582

)

Net loss attributable to non-controlling interests in third party joint ventures

$

970

 

 

$

1,217

 

 

$

3,006

 

 

$

2,930

 

Net loss attributable to non-controlling interests in BREIT OP

 

1,110

 

 

 

245

 

 

 

2,324

 

 

 

622

 

Net loss attributable to BREIT stockholders

$

(50,704

)

 

$

(50,482

)

 

$

(97,550

)

 

$

(98,030

)

Net loss per share of common stock — basic and diluted

$

(0.08

)

 

$

(0.19

)

 

$

(0.17

)

 

$

(0.41

)

Weighted-average shares of common stock outstanding, basic and diluted

 

631,744,799

 

 

 

272,727,892

 

 

 

560,647,423

 

 

 

239,600,008

 

 

See accompanying notes to condensed consolidated financial statements.

 

 

2


 

Blackstone Real Estate Income Trust, Inc.

Condensed Consolidated Statements of Changes in Equity (Unaudited)

(in thousands, except per share data)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-

 

 

Non-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

controlling

 

 

controlling

 

 

 

 

 

 

 

Par Value

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

Interests

 

 

Interests

 

 

 

 

 

 

 

Common

 

 

Common

 

 

Common

 

 

Common

 

 

Additional

 

 

Deficit and

 

 

Total

 

 

Attributable

 

 

Attributable

 

 

 

 

 

 

 

Stock

 

 

Stock

 

 

Stock

 

 

Stock

 

 

Paid-in

 

 

Cumulative

 

 

Stockholders'

 

 

to Third Party

 

 

to BREIT OP

 

 

Total

 

 

 

Class S

 

 

Class T

 

 

Class D

 

 

Class I

 

 

Capital

 

 

Distributions

 

 

Equity

 

 

Joint Ventures

 

 

Unitholders

 

 

Equity

 

Balance at December 31, 2018

 

$

2,770

 

 

$

233

 

 

$

304

 

 

$

1,083

 

 

$

4,327,444

 

 

$

(587,548

)

 

$

3,744,286

 

 

$

75,592

 

 

$

95,076

 

 

$

3,914,954

 

Common stock issued

 

 

414

 

 

 

38

 

 

 

75

 

 

 

245

 

 

 

843,347

 

 

 

 

 

 

844,119

 

 

 

 

 

 

 

 

 

844,119

 

Offering costs

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(50,847

)

 

 

 

 

 

(50,847

)

 

 

 

 

 

 

 

 

(50,847

)

Distribution reinvestment

 

 

24

 

 

 

2

 

 

 

2

 

 

 

11

 

 

 

41,995

 

 

 

 

 

 

42,034

 

 

 

 

 

 

 

 

 

42,034

 

Common stock repurchased

 

 

(18

)

 

 

(6

)

 

 

 

 

 

(18

)

 

 

(45,468

)

 

 

 

 

 

(45,510

)

 

 

 

 

 

 

 

 

(45,510

)

Amortization of compensation awards

 

 

 

 

 

 

 

 

 

 

 

1

 

 

 

99

 

 

 

 

 

 

100

 

 

 

 

 

 

500

 

 

 

600

 

Net loss ($277 allocated to redeemable non-controlling interest)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(46,846

)

 

 

(46,846

)

 

 

(2,036

)

 

 

(937

)

 

 

(49,819

)

Distributions declared on common stock ($0.1582 gross per share)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(69,542

)

 

 

(69,542

)

 

 

 

 

 

 

 

 

(69,542

)

Contributions from non-controlling interests

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

4,894

 

 

 

4,714

 

 

 

9,608

 

Distributions to non-controlling interests

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1,277

)

 

 

(1,536

)

 

 

(2,813

)

Allocation to redeemable non-controlling interest

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1,080

)

 

 

 

 

 

(1,080

)

 

 

 

 

 

 

 

 

(1,080

)

Balance at March 31, 2019

 

$

3,190

 

 

$

267

 

 

$

381

 

 

$

1,322

 

 

$

5,115,490

 

 

$

(703,936

)

 

$

4,416,714

 

 

$

77,173

 

 

$

97,817

 

 

$

4,591,704

 

Common stock issued

 

 

610

 

 

 

51

 

 

 

146

 

 

 

986

 

 

 

1,965,318

 

 

 

 

 

 

1,967,111

 

 

 

 

 

 

 

 

 

1,967,111

 

Offering costs

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(103,027

)

 

 

 

 

 

(103,027

)

 

 

 

 

 

 

 

 

(103,027

)

Distribution reinvestment

 

 

28

 

 

 

2

 

 

 

3

 

 

 

14

 

 

 

51,813

 

 

 

 

 

 

51,860

 

 

 

 

 

 

 

 

 

51,860

 

Common stock repurchased

 

 

(16

)

 

 

(1

)

 

 

(1

)

 

 

(37

)

 

 

(60,032

)

 

 

 

 

 

(60,087

)

 

 

 

 

 

(70

)

 

 

(60,157

)

Amortization of compensation awards

 

 

 

 

 

 

 

 

 

 

 

1

 

 

 

99

 

 

 

 

 

 

100

 

 

 

 

 

 

500

 

 

 

600

 

Net loss ($74 allocated to redeemable non-controlling interest)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(50,704

)

 

 

(50,704

)

 

 

(970

)

 

 

(1,036

)

 

 

(52,710

)

Distributions declared on common stock ($0.1588 gross per share)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(90,871

)

 

 

(90,871

)

 

 

 

 

 

 

 

 

(90,871

)

Contributions from non-controlling interests

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

41,049

 

 

 

36,749

 

 

 

77,798

 

Distributions to non-controlling interests

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(3,527

)

 

 

(2,045

)

 

 

(5,572

)

Allocation to redeemable non-controlling interest

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(361

)

 

 

 

 

 

(361

)

 

 

 

 

 

 

 

 

(361

)

Balance at June 30, 2019

 

$

3,812

 

 

$

319

 

 

$

529

 

 

$

2,286

 

 

$

6,969,300

 

 

$

(845,511

)

 

$

6,130,735

 

 

$

113,725

 

 

$

131,915

 

 

$

6,376,375

 

 

See accompanying notes to condensed consolidated financial statements.

 


3


 

Blackstone Real Estate Income Trust, Inc.

Condensed Consolidated Statements of Changes in Equity (Unaudited)

(in thousands, except per share data)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-

 

 

Non-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

controlling

 

 

controlling

 

 

 

 

 

 

 

Par Value

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

Interests

 

 

Interests

 

 

 

 

 

 

 

Common

 

 

Common

 

 

Common

 

 

Common

 

 

Additional

 

 

Deficit and

 

 

Total

 

 

Attributable

 

 

Attributable

 

 

 

 

 

 

 

Stock

 

 

Stock

 

 

Stock

 

 

Stock

 

 

Paid-in

 

 

Cumulative

 

 

Stockholders'

 

 

to Third Party

 

 

to BREIT OP

 

 

Total

 

 

 

Class S

 

 

Class T

 

 

Class D

 

 

Class I

 

 

Capital

 

 

Distributions

 

 

Equity

 

 

Joint Ventures

 

 

Unitholders

 

 

Equity

 

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

 

 

325

 

 

 

42

 

 

 

28

 

 

 

163

 

 

 

593,143

 

 

 

 

 

 

593,701

 

 

 

 

 

 

 

 

 

593,701

 

Offering costs

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(37,361

)

 

 

 

 

 

(37,361

)

 

 

 

 

 

 

 

 

(37,361

)

Distribution reinvestment

 

 

11

 

 

 

 

 

 

 

 

 

4

 

 

 

16,482

 

 

 

 

 

 

16,497

 

 

 

 

 

 

 

 

 

16,497

 

Common stock repurchased

 

 

(1

)

 

 

 

 

 

 

 

 

(1

)

 

 

(2,294

)

 

 

 

 

 

(2,296

)

 

 

 

 

 

 

 

 

(2,296

)

Amortization of restricted stock grant

 

 

 

 

 

 

 

 

 

 

 

 

 

 

25

 

 

 

 

 

 

25

 

 

 

 

 

 

 

 

 

25

 

Net loss ($347 allocated to redeemable non-controlling interest)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(47,548

)

 

 

(47,548

)

 

 

(1,716

)

 

 

 

 

 

(49,264

)

Distributions declared on common stock ($0.1552 gross per share)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(28,384

)

 

 

(28,384

)

 

 

 

 

 

 

 

 

(28,384

)

Contributions from non-controlling interests

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

6,940

 

 

 

 

 

 

6,940

 

Distributions to non-controlling interests

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(581

)

 

 

 

 

 

(581

)

Allocation to redeemable non-controlling interest

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(883

)

 

 

 

 

 

(883

)

 

 

 

 

 

 

 

 

(883

)

Balance at March 31, 2018

 

$

1,636

 

 

$

98

 

 

$

68

 

 

$

473

 

 

$

2,185,832

 

 

$

(208,565

)

 

$

1,979,542

 

 

$

28,491

 

 

$

 

 

$

2,008,033

 

Common stock issued

 

 

343

 

 

 

50

 

 

 

100

 

 

 

190

 

 

 

732,275

 

 

 

 

 

 

732,958

 

 

 

 

 

 

 

 

 

732,958

 

Offering costs

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(46,491

)

 

 

 

 

 

(46,491

)

 

 

 

 

 

 

 

 

(46,491

)

Distribution reinvestment

 

 

14

 

 

 

1

 

 

 

 

 

 

5

 

 

 

21,984

 

 

 

 

 

 

22,004

 

 

 

 

 

 

 

 

 

22,004

 

Common stock repurchased

 

 

(7

)

 

 

 

 

 

 

 

 

(1

)

 

 

(8,810

)

 

 

 

 

 

(8,818

)

 

 

 

 

 

 

 

 

(8,818

)

Amortization of restricted stock grant

 

 

 

 

 

 

 

 

 

 

 

 

 

 

25

 

 

 

 

 

 

25

 

 

 

 

 

 

 

 

 

25

 

Net loss ($275 allocated to redeemable non-controlling interest)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(50,482

)

 

 

(50,482

)

 

 

(1,214

)

 

 

 

 

 

(51,696

)

Distributions declared on common stock ($0.1566 gross per share)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(38,043

)

 

 

(38,043

)

 

 

 

 

 

 

 

 

(38,043

)

Contributions from non-controlling interests

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

4,334

 

 

 

 

 

 

4,334

 

Distributions to non-controlling interests

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(646

)

 

 

 

 

 

(646

)

Allocation to redeemable non-controlling interest

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(573

)

 

 

 

 

 

(573

)

 

 

 

 

 

 

 

 

(573

)

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.

 

 

 

4


 

Blackstone Real Estate Income Trust, Inc.

Condensed Consolidated Statements of Cash Flows (Unaudited)

(in thousands)

 

 

 

Six Months Ended June 30,

 

 

 

2019

 

 

2018

 

Cash flows from operating activities:

 

 

 

 

 

 

 

 

Net loss

 

$

(102,880

)

 

$

(101,582

)

Adjustments to reconcile net loss to net cash provided by operating activities:

 

 

 

 

 

 

 

 

Management fee

 

 

39,664

 

 

 

16,250

 

Performance participation allocation

 

 

50,061

 

 

 

17,349

 

Depreciation and amortization

 

 

301,333

 

 

 

158,950

 

Gain on disposition of real estate

 

 

(29,686

)

 

 

 

Unrealized gain on changes in fair value of financial instruments

 

 

(45,492

)

 

 

(3,848

)

Other items

 

 

3,677

 

 

 

(519

)

Change in assets and liabilities:

 

 

 

 

 

 

 

 

(Increase) / decrease in other assets

 

 

(37,401

)

 

 

(24,186

)

Increase / (decrease) in due to affiliates

 

 

(709

)

 

 

(257

)

Increase / (decrease) in accounts payable, accrued expenses, and other liabilities

 

 

14,902

 

 

 

42,168

 

Net cash provided by operating activities

 

 

193,469

 

 

 

104,325

 

Cash flows from investing activities:

 

 

 

 

 

 

 

 

Acquisitions of real estate

 

 

(3,763,487

)

 

 

(3,372,075

)

Capital improvements to real estate

 

 

(67,091

)

 

 

(28,843

)

Proceeds from disposition of real estate

 

 

44,293

 

 

 

 

Pre-acquisition costs

 

 

(3,407

)

 

 

(615

)

Purchase of real estate-related securities and loans

 

 

(1,296,050

)

 

 

(676,394

)

Proceeds from settlement of real estate-related securities and loans

 

 

276,205

 

 

 

115,619

 

Net cash used in investing activities

 

 

(4,809,537

)

 

 

(3,962,308

)

Cash flows from financing activities:

 

 

 

 

 

 

 

 

Proceeds from issuance of common stock

 

 

2,596,552

 

 

 

1,204,297

 

Offering costs paid

 

 

(33,045

)

 

 

(19,208

)

Subscriptions received in advance

 

 

402,493

 

 

 

137,896

 

Repurchase of common stock

 

 

(53,638

)

 

 

(6,881

)

Repurchase of management fee shares

 

 

(49,871

)

 

 

 

Redemption of redeemable non-controlling interest

 

 

(25,407

)

 

 

(8,400

)

Redemption of affiliate service provider incentive compensation awards

 

 

(70

)

 

 

 

Borrowings from mortgage notes, term loans, and secured revolving credit facilities

 

 

4,111,058

 

 

 

3,141,053

 

Repayments from mortgage notes, term loans, and secured revolving credit facilities

 

 

(2,942,083

)

 

 

(894,600

)

Borrowings under repurchase agreements

 

 

927,475

 

 

 

508,949

 

Settlement of repurchase agreements

 

 

(194,064

)

 

 

(89,557

)

Borrowings from affiliate line of credit

 

 

1,466,000

 

 

 

575,000

 

Repayments on affiliate line of credit

 

 

(1,466,000

)

 

 

(580,250

)

Borrowings from unsecured credit facilities

 

 

240,000

 

 

 

 

Payment of deferred financing costs

 

 

(22,839

)

 

 

(19,847

)

Contributions from non-controlling interests

 

 

43,443

 

 

 

11,274

 

Distributions to non-controlling interests

 

 

(8,778

)

 

 

(1,652

)

Distributions

 

 

(53,941

)

 

 

(21,776

)

Net cash provided by financing activities

 

 

4,937,285

 

 

 

3,936,298

 

Net change in cash and cash equivalents and restricted cash

 

 

321,217

 

 

 

78,315

 

Cash and cash equivalents and restricted cash, beginning of period

 

 

306,613

 

 

 

157,729

 

Cash and cash equivalents and restricted cash, end of period

 

$

627,830

 

 

$

236,044

 

Reconciliation of cash and cash equivalents and restricted cash to the condensed consolidated balance sheets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

150,062

 

 

$

56,456

 

Restricted cash

 

 

477,768

 

 

 

179,588

 

Total cash and cash equivalents and restricted cash

 

$

627,830

 

 

$

236,044

 


5


 

Non-cash investing and financing activities:

 

 

 

 

 

 

 

 

Assumption of mortgage notes in conjunction with acquisitions of real estate

 

$

385,450

 

 

$

151,220

 

Assumption of other liabilities in conjunction with acquisitions of real estate

 

$

25,847

 

 

$

36,625

 

Issuance of BREIT OP units as consideration for acquisitions of real estate

 

$

36,749

 

 

$

 

Recognition of financing lease liability

 

$

56,008

 

 

$

 

Accrued pre-acquisition costs

 

$

1,217

 

 

$

403

 

Contributions from non-controlling interests

 

$

2,520

 

 

$

 

Accrued capital expenditures and acquisition related costs

 

$

3,406

 

 

$

8,163

 

Accrued distributions

 

$

12,783

 

 

$

6,194

 

Accrued stockholder servicing fee due to affiliate

 

$

121,421

 

 

$

65,254

 

Redeemable non-controlling interest issued as settlement of performance participation allocation

 

$

37,484

 

 

$

16,974

 

Exchange of redeemable non-controlling interest for Class I shares

 

$

11,620

 

 

$

 

Allocation to redeemable non-controlling interest

 

$

1,441

 

 

$

1,456

 

Distribution reinvestment

 

$

93,894

 

 

$

38,503

 

Accrued common stock repurchases

 

$

2,088

 

 

$

4,233

 

Issuance of BREIT OP units as settlement of affiliate incentive compensation awards

 

$

4,714

 

 

$

 

Payable for real estate-related securities

 

$

129,317

 

 

$

170,028

 

 

See accompanying notes to condensed consolidated financial statements.

6


 

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”) invests primarily in stabilized income-oriented commercial real estate in the United States and, to a lesser extent, in real estate-related securities and loans. The Company is the sole general partner of BREIT Operating Partnership, L.P., a Delaware limited partnership (“BREIT OP”). BREIT Special Limited Partner L.P. (the “Special Limited Partner”), a wholly-owned subsidiary of The Blackstone Group Inc. (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”). The Adviser is part of the real estate group of Blackstone, a leading global investment manager, which serves as our sponsor. The Company was formed on November 16, 2015 as a Maryland corporation and qualifies as a real estate investment trust (“REIT”) for U.S. federal income tax purposes.  

The Company had registered with the Securities and Exchange Commission (the “SEC”) an offering of up to $5.0 billion in shares of common stock (the “Initial Offering”) and accepted gross offering proceeds of $4.9 billion during the period January 1, 2017 to January 1, 2019. The Company subsequently registered with the SEC a follow-on offering of up to $12.0 billion in shares of common stock, consisting of up to $10.0 billion in shares in its primary offering and up to $2.0 billion in shares pursuant to its distribution reinvestment plan (the “Current Offering” and with the Initial Offering, 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 Current Offering. The share classes have different upfront selling commissions, dealer manager fees and ongoing stockholder servicing fees. As of June 30, 2019, the Company had received net proceeds of $6.8 billion from selling shares in the Offering. The Company intends to continue selling shares on a monthly basis.

As of June 30, 2019, the Company owned 652 properties and had 163 positions in real estate-related securities and loans. The Company currently operates in five reportable segments: Multifamily, Industrial, Hotel, and Retail Properties, and Real Estate-Related Securities and Loans. Multifamily includes various forms of rental housing including apartments, student housing and manufactured housing. Financial results by segment are reported in Note 13 — 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. 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, 2018 filed with the SEC.

Certain amounts in the Company’s prior period condensed 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 condensed consolidated statements of operations and condensed consolidated statements of cash flows. Such reclassifications had no effect on total revenues or net loss on the condensed consolidated statements of operations or previously reported totals or subtotals in the Condensed Consolidated Statements of Cash Flows.

The accompanying condensed consolidated financial statements include the accounts of the Company, the Company’s subsidiaries and joint ventures in which the 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.

7


 

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, 2019, the total assets and liabilities of the Company’s consolidated VIEs, excluding BREIT OP, were $4.4 billion and $2.8 billion, respectively, compared to $2.8 billion and $1.9 billion as of December 31, 2018. 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.

Fair Value Option

The Company elected the fair value option (“FVO”) for its investments in term loans. Unrealized gains and losses on the value of financial instruments for which the FVO has been elected are recorded as a component of net income or loss. The Company records any unrealized gains or losses on its investments in term loans as a component of Income from Real Estate-Related Securities and Loans on the Condensed Consolidated Statements of Operations.

Fair Value Measurements

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 June 30, 2019 and December 31, 2018, the Company’s $3.5 billion and $2.3 billion, respectively, of investments in real estate-related securities and loans were classified as Level 2.

Valuation

The Company’s investments in real estate-related securities and loans are reported at fair value. As of June 30, 2019, the Company’s investments in real estate-related securities and loans consisted of commercial mortgage-backed securities (“CMBS”), which are mortgage-related fixed income securities, corporate bonds, and term loans of real estate-related companies. The Company generally determines the fair value of its real estate-related securities and loans by utilizing third-party pricing service providers and broker-dealer quotations on the basis of last available bid price. 

8


 

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 securities such as real estate-related securities and loans generally 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.

As of June 30, 2019, the fair value of the Company’s mortgage notes, term loans, secured  and unsecured revolving credit facilities, repurchase agreements, and affiliate line of credit was approximately $51.1 million above carrying value. Fair value of the Company’s indebtedness is estimated by modeling the cash flows required by the Company’s debt agreements and discounting them back to the present value using the appropriate discount rate. Additionally, the Company considers current market rates and conditions by evaluating similar borrowing agreements with comparable loan-to-value ratios and credit profiles. The inputs used in determining the fair value of the Company’s indebtedness are considered Level 3.

 

Stock-Based Compensation

 

The Company’s stock-based compensation consists of incentive compensation awards issued to certain employees of affiliate portfolio company service providers. Such awards vest over the life of the awards and stock-based compensation expense is recognized for these awards in net income on a straight-line basis over the applicable vesting period of the award, based on the value of the awards at grant. Refer to Note 11 for additional information.

Recent Accounting Pronouncements

On January 1, 2019, the Company adopted Accounting Standards Update 2016-02 (“ASU 2016-02”), “Leases,” and all related amendments (codified in Accounting Standards Codification Topic 842 (“Topic 842”)). Certain of the Company’s investments in real estate are subject to ground leases, for which lease liabilities and corresponding right-of-use (“ROU”) assets were recognized as a result of adoption. The Company calculated the amount of the lease liabilities and ROU assets by taking the present value of the remaining lease payments, and adjusted the ROU assets for any existing straight-line ground rent liabilities and acquired ground lease intangibles. The Company’s estimated incremental borrowing rate of a loan with a similar term as the corresponding ground leases was used as the discount rate, which was determined to be approximately 7.0%. Considerable judgment and assumptions were required to estimate the Company’s incremental borrowing rate which was determined by considering the Company’s credit quality, ground lease duration, and debt yields observed in the market.

Three of the Company’s existing ground leases were classified as operating leases, and upon adoption the Company recognized operating lease liabilities and corresponding ROU assets of $31.3 million. The Company’s existing below-market ground lease intangible asset of $4.5 million, above-market ground lease intangible liability of $4.6 million, and straight-line ground rent liability of $1.2 million were reclassified as of January 1, 2019 to be presented net of the operating ROU assets. In addition, the Company’s existing prepaid ground lease intangible asset of $15.7 million was reclassified as of January 1, 2019 to be presented along with the operating ROU assets.

On March 29, 2019, the Company made an acquisition which was subject to ground leases. The present value of the future lease payments under such leases exceeded the fair value of the underlying asset, as such, the Company recorded financing lease liabilities and corresponding ROU assets of $56.0 million.

The lease liabilities are included as a component of Accounts Payable, Accrued Expenses, and Other Liabilities and the related ROU assets are recorded as a component of Investments in Real Estate, Net on the Company’s Condensed Consolidated Balance Sheet. Refer to Note 3, Note 9 and Note 12 for additional information.

In transition, the Company elected the package of practical expedients to not reassess (i) whether existing arrangements are or contain a lease, (ii) the classification of an operating or financing lease in a period prior to adoption, and (iii) any initial direct costs for existing leases. Additionally, the Company elected to not use hindsight and carried forward its lease term assumptions when adopting Topic 842 and did not recognize lease liabilities and lease assets for leases with a term of 12 months or less. The Company applied ASU 2016-02 as of the effective date of January 1, 2019, and there was no impact to retained earnings as a result of the Company’s adoption.

9


 

The adoption of ASU 2016-02 for leases in which the Company is lessor did not have a material impact on the Company’s condensed consolidated financial statements. The Company elected to not separate non-lease components from lease components and presented lease related revenues as a single line item, net of bad debt expense on the Company’s Condensed Consolidated Statement of Operations. Prior to the adoption of ASU 2016-02, the Company separated lease related revenue between “rental revenue” and “tenant reimbursement income” and bad debt expense as a component of “rental property operating” expense. As a result of adoption, the Company reclassified the prior period balances of “tenant reimbursement income” to “rental revenue” to conform to the current period presentation. The Company did not reclassify the prior period balance of bad debt expense on its condensed consolidated statement of operations. The operating lease income presented in “rental revenue” for the three and six months ended June 30, 2018 includes $15.6 million and $24.6 million, respectively, previously classified as “tenant reimbursement income,” which was determined under the standard in effect prior to the Company’s adoption of ASU 2016-02. Refer to Note 12 for additional information.

3. Investments in Real Estate

Investments in real estate, net consisted of the following ($ in thousands):

 

 

 

June 30, 2019

 

 

December 31, 2018

 

Building and building improvements

 

$

11,711,288

 

 

$

8,389,864

 

Land and land improvements

 

 

2,680,720

 

 

 

1,961,977

 

Furniture, fixtures and equipment

 

 

248,560

 

 

 

182,418

 

Right of use asset - operating leases(1)

 

 

47,386

 

 

 

 

Right of use asset - financing leases(1)

 

 

56,008

 

 

 

 

Total

 

 

14,743,962

 

 

 

10,534,259

 

Accumulated depreciation and amortization

 

 

(477,379

)

 

 

(274,572

)

Investments in real estate, net

 

$

14,266,583

 

 

$

10,259,687

 

 

(1)

Refer to Note 12 for additional details on the Company’s leases.

 

During the six months ended June 30, 2019, the Company acquired interests in 27 real estate investments, which were comprised of 104 industrial, 51 multifamily, 22 hotel and one retail property.

10


 

The following table provides further details of the properties acquired during the six months ended June 30, 2019 ($ in thousands):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Investment

 

Ownership

Interest(1)

 

 

Number of

Properties

 

 

Location

 

Segment

 

Acquisition

Date

 

Purchase

Price(2)

 

4500 Westport Drive

 

100%

 

 

 

1

 

 

Harrisburg, PA

 

Industrial

 

Jan. 2019

 

$

11,975

 

Roman Multifamily Portfolio

 

100%

 

 

 

14

 

 

Various(3)

 

Multifamily

 

Feb. 2019

 

 

857,540

 

Gilbert Heritage Apartments

 

90%

 

 

 

1

 

 

Phoenix, AZ

 

Multifamily

 

Feb. 2019

 

 

60,984

 

Courtyard Kona

 

100%

 

 

 

1

 

 

Kailua-Kona, HI

 

Hotel

 

March 2019

 

 

105,587

 

Elevation Plaza Del Rio

 

90%

 

 

 

1

 

 

Phoenix, AZ

 

Multifamily

 

April 2019

 

 

70,550

 

Raider Mulifamily Portfolio

 

100%

 

 

 

3

 

 

Las Vegas, NV

 

Multifamily

 

April & June 2019

 

 

259,371

 

Courtney at Universal Multifamily

 

100%

 

 

 

1

 

 

Orlando, FL

 

Multifamily

 

April 2019

 

 

77,952

 

Citymark Multifamily 2-Pack

 

95%

 

 

 

2

 

 

Various(4)

 

Multifamily

 

April 2019

 

 

97,922

 

Tri-Cities Multifamily 2-Pack

 

95%

 

 

 

2

 

 

Richland & Kennewick, WA

 

Multifamily

 

April 2019

 

 

61,616

 

Angler MH Portfolio

 

99%

 

 

 

5

 

 

Phoenix, AZ

 

Multifamily

 

April 2019

 

 

61,975

 

Florida MH 4-Pack

 

99%

 

 

 

1

 

 

Tarpon Springs, FL

 

Multifamily

 

April 2019

 

 

10,053

 

Bridge II Multifamily Portfolio

 

100%

 

 

 

5

 

 

Various(5)

 

Multifamily

 

April & June 2019

 

 

350,923

 

Morgan Savannah

 

100%

 

 

 

1

 

 

Savannah, GA

 

Industrial

 

April 2019

 

 

26,254

 

Minneapolis Industrial Portfolio

 

100%

 

 

 

34

 

 

Minneapolis, MN

 

Industrial

 

April 2019

 

 

250,678

 

Miami Doral 2-Pack

 

100%

 

 

 

2

 

 

Miami, FL

 

Multifamily

 

May 2019

 

 

209,404

 

Davis Multifamily 2-Pack

 

100%

 

 

 

2

 

 

Various(6)

 

Multifamily

 

May 2019

 

 

89,687

 

Slate Savannah

 

90%

 

 

 

1

 

 

Savannah, GA

 

Multifamily

 

May 2019

 

 

44,267

 

Amara at MetroWest

 

95%

 

 

 

1

 

 

Orlando, FL

 

Multifamily

 

May 2019

 

 

73,933

 

Colorado 3-Pack

 

100%

 

 

 

3

 

 

Denver & Fort Collins, CO

 

Multifamily

 

May 2019

 

 

207,137

 

Atlanta Industrial Portfolio

 

100%

 

 

 

61

 

 

Atlanta, GA

 

Industrial

 

May 2019

 

 

203,745

 

Edge Las Vegas

 

95%

 

 

 

1

 

 

Las Vegas, NV

 

Multifamily

 

June 2019

 

 

61,337

 

ACG IV Multifamily

 

95%

 

 

 

2

 

 

Various(7)

 

Multifamily

 

June 2019

 

 

124,971

 

Perimeter Multifamily 3-Pack

 

100%

 

 

 

3

 

 

Atlanta, GA

 

Multifamily

 

June 2019

 

 

160,941

 

Anson at the Lakes

 

100%

 

 

 

1

 

 

Charlotte, NC

 

Multifamily

 

June 2019

 

 

107,287

 

D.C. Powered Shell Warehouse Portfolio

 

90%

 

 

 

7

 

 

Ashburn & Manassas, VA

 

Industrial

 

June 2019

 

 

266,322

 

El Paseo Simi Valley

 

100%

 

 

 

1

 

 

Simi Valley, CA

 

Retail

 

June 2019

 

 

39,115

 

Raven Select Service Portfolio

 

100%

 

 

 

21

 

 

Various(8)

 

Hotel

 

June 2019

 

 

305,470

 

 

 

 

 

 

 

 

178

 

 

 

 

 

 

 

 

$

4,196,996

 

 

(1)

Certain of the investments made by the Company 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.

(3)

The Roman Multifamily Portfolio is primarily concentrated in Riverside, CA (18% of units), Denver, CO (13%), Tampa, FL (10%), Orlando, FL (9%), Charlotte, NC (9%), Portland, OR (8%), and Dallas, TX (8%).

(4)

The Citymark Multifamily 2-Pack is located in Las Vegas, NV (61% of units) and Lithia Springs, GA (39%).

(5)

The Bridge II Multifamily Portfolio is located in Phoenix, AZ (25% of units), Lakeland, FL (23%), Charlotte, NC (18%), Corona Hills, CA (17%), and Moreno Valley, CA (17%).

(6)

The Davis Multifamily 2-Pack is located in Jacksonville, FL (56% of units) and Raleigh, NC (44%).

(7)

ACG IV Multifamily is located in Puyallup, WA (74% of units) and Woodland, CA (26%).

(8)

The Raven Select Service Portfolio is primarily concentrated in Fort Lauderdale/West Palm, FL (24% of keys), Austin/San Antonio, TX (14%), Salt Lake City, UT (10%), Boulder, CO (10%), Durham, NC (7%), Minneapolis, MN (7%), and Chicago, IL (6%).

 

11


 

The following table summarizes the purchase price allocation for the properties acquired during the six months ended June 30, 2019 ($ in thousands):

 

 

 

Roman Multifamily Portfolio

 

 

All Other

 

 

Total

 

Building and building improvements

 

$

714,941

 

 

$

2,551,444

 

 

$

3,266,385

 

Land and land improvements

 

 

110,206

 

 

 

607,259

 

 

 

717,465

 

Furniture, fixtures and equipment

 

 

8,538

 

 

 

46,530

 

 

 

55,068

 

In-place lease intangibles

 

 

23,855

 

 

 

140,942

 

 

 

164,797

 

Above-market lease intangibles

 

 

 

 

 

3,596

 

 

 

3,596

 

Below-market lease intangibles

 

 

 

 

 

(15,657

)

 

 

(15,657

)

Other

 

 

 

 

 

5,342

 

 

 

5,342

 

Total purchase price

 

 

857,540

 

 

 

3,339,456

 

 

 

4,196,996

 

Assumed mortgage notes(1)

 

 

237,981

 

 

 

147,469

 

 

 

385,450

 

Net purchase price

 

$

619,559

 

 

$

3,191,987

 

 

$

3,811,546

 

 

(1)

Refer to Note 6 for additional details on the Company’s mortgage notes.

The weighted-average amortization periods for the acquired in-place lease intangibles, above-market lease intangibles, and below-market lease intangibles of the properties acquired during the six months ended June 30, 2019 were three, six, and six years, respectively.

Dispositions

On June 6, 2019, the Company sold the parking garage attached to the Hyatt Place San Jose Downtown property to a third party. The sale included a four story, 261 space, parking structure and land parcel. The sale did not include the attached Hyatt Place San Jose Downtown hotel or the additional land parcels under the hotel. Net proceeds from the sale were $44.3 million, which resulted in a realized gain of $29.7 million recorded as Gain on Disposition of Real Estate on the Company’s Condensed Consolidated Statements of Operations.

Jupiter12 Industrial Portfolio

On June 2, 2019, the Company entered into an agreement to acquire a 64 million square foot income-oriented, high-quality, 95% leased industrial portfolio (the “Jupiter Portfolio”) in well-located, in-fill locations for $5.3 billion, excluding closing costs. The Jupiter Portfolio consists of 316 industrial properties with 51% of aggregate square footage located in Dallas/Fort Worth, Chicago, Central Pennsylvania, Atlanta and Central Florida. The Jupiter Portfolio is leased to 745 tenants including e-commerce and logistics companies such as Amazon, FedEx and DHL, as well as Starbucks, Wayfair and Whirlpool. The Company expects the closing of the acquisition to occur in October 2019.

 

12


 

4. Intangibles

The gross carrying amount and accumulated amortization of the Company’s intangible assets and liabilities consisted of the following ($ in thousands):

 

 

 

June 30, 2019

 

 

December 31, 2018

 

Intangible assets:

 

 

 

 

 

 

 

 

In-place lease intangibles

 

$

505,668

 

 

$

354,261

 

Above-market lease intangibles

 

 

25,202

 

 

 

21,626

 

Prepaid ground lease intangibles

 

 

 

 

 

16,114

 

Below-market ground lease intangibles

 

 

 

 

 

5,415

 

Other

 

 

6,719

 

 

 

5,676

 

Total intangible assets

 

 

537,589

 

 

 

403,092

 

Accumulated amortization:

 

 

 

 

 

 

 

 

In-place lease amortization

 

 

(189,995

)

 

 

(104,745

)

Above-market lease amortization

 

 

(7,409

)

 

 

(4,903

)

Prepaid ground lease amortization

 

 

 

 

 

(378

)

Below-market ground lease amortization

 

 

 

 

 

(162

)

Other

 

 

(348

)

 

 

(246

)

Total accumulated amortization

 

 

(197,752

)

 

 

(110,434

)

Intangible assets, net

 

$

339,837

 

 

$

292,658

 

Intangible liabilities:

 

 

 

 

 

 

 

 

Below-market lease intangibles

 

$

77,224

 

 

$

62,199

 

Above-market ground lease intangibles

 

 

 

 

 

4,657

 

Total intangible liabilities

 

 

77,224

 

 

 

66,856

 

Accumulated amortization:

 

 

 

 

 

 

 

 

Below-market lease amortization

 

 

(17,110

)

 

 

(11,132

)

Above-market ground lease amortization

 

 

 

 

 

(15

)

Total accumulated amortization

 

 

(17,110

)

 

 

(11,147

)

Intangible liabilities, net

 

$

60,114

 

 

$

55,709

 

 

The estimated future amortization on the Company’s intangibles for each of the next five years and thereafter as of June 30, 2019 is as follows ($ in thousands)

 

 

 

In-place Lease

Intangibles

 

 

Above-market

Lease Intangibles

 

 

Below-market

Lease Intangibles

 

2019 (remaining)

 

$

107,624

 

 

$

2,732

 

 

$

(7,560

)

2020

 

 

62,850

 

 

 

4,711

 

 

 

(12,712

)

2021

 

 

47,215

 

 

 

4,015

 

 

 

(10,032

)

2022

 

 

32,999

 

 

 

2,786

 

 

 

(7,993

)

2023

 

 

21,478

 

 

 

1,459

 

 

 

(6,349

)

2024

 

 

13,698

 

 

 

871

 

 

 

(4,462

)

Thereafter

 

 

29,809

 

 

 

1,219

 

 

 

(11,006

)

 

 

$

315,673

 

 

$

17,793

 

 

$

(60,114

)

 

 


13


 

5. Investments in Real Estate-Related Securities and Loans

The following tables detail the Company’s investments in real estate-related securities and loans ($ in thousands):

 

 

 

 

 

 

 

 

 

June 30, 2019

 

Number of Positions

 

 

Credit

Rating(1)

 

Collateral(2)

 

Weighted

Average

Coupon(3)

 

Weighted

Average

Maturity Date(4)

Face

Amount/

Notional(5)

 

Cost

Basis

 

Fair

Value

 

CMBS - Floating:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

42

 

 

BB

 

Hospitality, Industrial, Multifamily, Office, Retail, Diversified

 

L+2.79%

 

10/29/2024

$

1,131,473

 

$

1,132,757

 

$

1,136,303

 

 

33

 

 

BBB

 

Hospitality, Multifamily, Office, Retail, Diversified

 

L+2.30%

 

10/20/2024

 

816,234

 

 

817,997

 

 

819,883

 

 

21

 

 

B

 

Hospitality, Multifamily, Office

 

L+3.45%

 

10/27/2024

 

461,587

 

 

460,488

 

 

462,143

 

 

5

 

 

A

 

Hospitality, Industrial, Retail, Diversified

 

L+2.01%

 

1/25/2025

 

200,293

 

 

200,643

 

 

201,479

 

 

13

 

 

Other

 

Multifamily

 

L+2.48%

 

6/27/2026

 

112,045

 

 

112,586

 

 

112,698

 

 

114

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2,724,471

 

 

2,732,506

 

CMBS - Fixed:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

8

 

 

BBB

 

Multifamily, Diversified

 

4.3%

 

4/30/2028

 

67,662

 

 

64,999

 

 

68,560

 

 

6

 

 

BB

 

Hospitality, Multifamily, Office, Diversified

 

4.0%

 

1/17/2026

 

75,850

 

 

73,048

 

 

75,458

 

 

4

 

 

B

 

Hospitality, Multifamily, Diversified

 

4.3%

 

4/4/2026

 

82,493

 

 

81,534

 

 

81,402

 

 

6

 

 

Other

 

Multifamily, Diversified

 

4.5%

 

10/7/2026

 

56,298

 

 

54,008

 

 

55,476

 

 

24

 

 

 

 

 

 

 

 

 

 

 

 

 

 

273,589

 

 

280,896

 

CMBS - Zero Coupon:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1

 

 

BB

 

Multifamily

 

N/A

 

4/21/2025

 

27,273

 

 

19,964

 

 

20,368

 

 

3

 

 

Other

 

Multifamily

 

N/A

 

4/11/2027

 

208,817

 

 

102,232

 

 

110,684

 

 

4

 

 

 

 

 

 

 

 

 

 

 

 

 

 

122,196

 

 

131,052

 

CMBS - Interest Only:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2

 

 

AAA

 

Multifamily

 

0.1%

 

5/21/2026

 

1,800,924

 

 

10,367

 

 

10,367

 

 

1

 

 

BBB

 

Multifamily

 

0.1%

 

1/5/2028

 

225,803

 

 

1,534

 

 

1,534

 

 

1

 

 

A

 

Multifamily

 

0.1%

 

5/2/2025

 

194,399

 

 

978

 

 

978

 

 

1

 

 

Other

 

Multifamily

 

4.5%

 

1/7/2029

 

42,024

 

 

12,340

 

 

12,340

 

 

5

 

 

 

 

 

 

 

 

 

 

 

 

 

 

25,219

 

 

25,219

 

Corporate Bonds:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

7

 

 

BB

 

Hospitality, Multifamily, Diversified

 

5.9%

 

6/30/2026

 

146,586

 

 

145,860

 

 

152,028

 

 

2

 

 

B

 

Hospitality, Multifamily

 

5.9%

 

10/9/2025

 

15,609

 

 

15,585

 

 

15,931

 

 

9

 

 

 

 

 

 

 

 

 

 

 

 

 

 

161,445

 

 

167,959

 

Term Loans:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

4

 

 

B

 

Hospitality, Diversified

 

L+3.79%

 

1/11/2025

 

43,810

 

 

43,418

 

 

43,226

 

 

2

 

 

BB

 

Hospitality, Diversified

 

L+2.74%

 

5/2/2026

 

55,471

 

 

55,211

 

 

55,096

 

 

1

 

 

Other

 

Diversified

 

L+1.70%

 

2/6/2022

 

25,608

 

 

25,000

 

 

24,968

 

 

7

 

 

 

 

 

 

 

 

 

 

 

 

 

 

123,629

 

 

123,290

 

 

163

 

 

 

 

 

 

 

 

 

 

 

 

 

$

3,430,549

 

$

3,460,922

 

 

 

14


 

 

 

 

 

 

 

 

 

 

December 31, 2018

 

Number of Positions

 

 

Credit

Rating(1)

 

Collateral(2)

 

Weighted

Average

Coupon(3)

 

 

Weighted

Average

Maturity Date(4)

 

Face

Amount/

Notional(5)

 

 

Cost

Basis

 

 

Fair

Value

 

CMBS:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

38

 

 

BB

Hospitality, Industrial, Multifamily, Office, Retail

L+2.83%

 

 

9/4/2024

 

$

941,240

 

 

$

939,742

 

 

$

930,411

 

 

26

 

 

BBB

 

Hospitality, Industrial, Multifamily, Office

 

L+2.15%

 

 

11/18/2024

 

 

578,771

 

 

 

576,601

 

 

 

571,171

 

 

21

 

 

B

 

Hospitality, Multifamily, Office

 

L+3.56%

 

 

9/19/2024

 

 

496,383

 

 

 

495,095

 

 

 

490,019

 

 

3

 

 

A

 

Hospitality, Industrial, Retail

 

L+1.81%

 

 

3/10/2023

 

 

89,165

 

 

 

89,184

 

 

 

88,358

 

 

7

 

 

Other

 

Multifamily

 

L+1.99%

 

 

6/13/2026

 

 

35,442

 

 

 

34,876

 

 

 

34,951

 

 

95

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2,135,498

 

 

 

2,114,910

 

CMBS - Interest Only:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2

 

 

AAA

 

Multifamily

 

0.1%

 

 

3/12/2027

 

 

1,802,581

 

 

 

9,959

 

 

 

9,957

 

 

1

 

 

BBB

 

Multifamily

 

0.1%

 

 

5/25/2028

 

 

225,802

 

 

 

1,414

 

 

 

1,415

 

 

1

 

 

A

 

Multifamily

 

0.1%

 

 

7/25/2025

 

 

194,399

 

 

 

1,001

 

 

 

1,001

 

 

4

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

12,374

 

 

 

12,373

 

CMBS - Zero Coupon:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2

 

 

Other

 

Multifamily

 

N/A

 

 

3/2/2027

 

 

166,793

 

 

 

80,892

 

 

 

81,875

 

Corporate Bond:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1

 

 

BB

 

Hospitality

 

6.5%

 

 

9/15/2026

 

 

52,652

 

 

 

52,652

 

 

 

50,755

 

 

102

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

2,281,416

 

 

$

2,259,913

 

 

 

(1)

AAA represents credit ratings of AAA and AAA-, A represents credit ratings of A+, A, and A-, 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, 2019 and December 31, 2018, were either not ratable or have not been submitted to rating agencies.

(2)

Multifamily real estate-related securities and loans 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, 2019 and December 31, 2018, one-month LIBOR was equal to 2.4% and 2.5%, respectively.

(4)

Weighted average maturity date is based on the fully extended maturity date of the instrument or, in the case of CMBS, the underlying collateral.

(5)

Represents notional amount for interest only positions.

The Company’s investments in real estate-related securities and loans included CMBS collateralized by properties owned by Blackstone-advised investment vehicles and CMBS collateralized by loans originated or acquired by Blackstone-advised investment vehicles. The following table details the Company’s affiliate CMBS positions ($ in thousands):

 

 

 

Fair Value

 

Interest Income

 

 

 

June 30,

 

December 31,

 

Three Months Ended June 30,

 

Six Months Ended June 30,

 

 

 

2019

 

2018

 

2019

 

 

2018

 

2019

 

2018

 

CMBS collateralized by properties

 

$

1,057,625

 

$

919,392

 

$

12,290

 

 

$

8,771

 

$

24,370

 

$

15,795

 

CMBS collateralized by a loan

 

 

164,770

 

 

163,404

 

 

2,090

 

 

 

762

 

 

4,187

 

 

1,448

 

Total

 

$

1,222,395

 

$

1,082,796

 

$

14,380

 

 

$

9,533

 

$

28,557

 

$

17,243

 

 

For additional information regarding the Company’s investments in affiliated CMBS, see Note 5 to the consolidated financial statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018. The terms and conditions of such affiliated CMBS held as of June 30, 2019 are consistent with the terms described in such Note.

The Company’s investments in real estate-related securities and loans also included $98.5 million of CMBS collateralized by pools of commercial real estate debt, all or a portion of which included certain of the Company’s mortgage notes. The Company recognized $1.7 million and $3.3 million of interest income related to such CMBS during the three and six months ended June 30, 2019, respectively. No such investments were owned during the six months ended June 30, 2018.

During the three and six months ended June 30, 2019, the Company recorded a net unrealized gain of $20.8 million and $51.8 million, respectively. During the three and six months ended June 30, 2018, the Company recorded a net unrealized gain of $2.1 million and $3.8 million, respectively. Such unrealized gains were recorded as a component of Income from Real Estate-Related Securities and Loans on the Company’s Condensed Consolidated Statements of Operations.

During the three and six months ended June 30, 2019, the Company sold two CMBS positions for approximately its cost basis. The Company did not sell any positions during the corresponding periods of the prior year.

15


 

6. Mortgage Notes, Term Loans, and Secured Revolving Credit Facilities

The following table is a summary of the Company’s mortgage notes, term loans, and secured revolving credit facilities ($ in thousands):

 

 

 

 

 

 

 

 

 

 

 

 

 

Principal Balance Outstanding(3)

 

Indebtedness

 

Weighted

Average

Interest Rate(1)

 

 

Weighted

Average

Maturity Date(2)(3)

 

Maximum

Facility Size

 

 

June 30, 2019

 

 

December 31, 2018

 

Fixed rate

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fixed rate mortgages

 

4.00%

 

 

12/6/2025

 

N/A

 

 

$

6,176,501

 

 

$

4,782,326

 

Mezzanine loan

 

5.85%

 

 

4/5/2025

 

N/A

 

 

 

200,000

 

 

 

200,000

 

Total fixed rate loans

 

4.06%

 

 

11/28/2025

 

 

 

 

 

 

6,376,501

 

 

 

4,982,326

 

Variable rate

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Floating rate mortgages

 

L+1.71%

 

 

5/9/2026

 

N/A

 

 

 

667,916

 

 

 

675,116

 

Variable rate term loans

 

L+1.66%

 

 

3/19/2023

 

N/A

 

 

 

732,325

 

 

 

603,500

 

Variable rate secured revolving credit facilities

 

L+1.65%

 

 

4/19/2023

 

$

1,032,325

 

 

 

662,825

 

 

 

624,200

 

Total variable rate loans

 

L+1.67%

 

 

4/3/2024

 

 

 

 

 

 

2,063,066

 

 

 

1,902,816

 

Total loans secured by the Company's properties

 

4.06%

 

 

7/3/2025

 

 

 

 

 

 

8,439,567

 

 

 

6,885,142

 

Deferred financing costs, net

 

 

 

 

 

 

 

 

 

 

 

 

(61,922

)

 

 

(53,546

)

Premium on assumed debt, net

 

 

 

 

 

 

 

 

 

 

 

 

1,536

 

 

 

1,673

 

Mortgage notes, term loans, and secured revolving credit facilities, net

 

 

 

 

 

 

 

 

$

8,379,181

 

 

$

6,833,269

 

 

(1)

The term “L” refers to the one-month LIBOR. As of June 30, 2019, one-month LIBOR was equal to 2.4%.

(2)

For loans where the Company, at its sole discretion, has extension options, the maximum maturity date has been assumed.

(3)

The majority of the Company’s mortgages contain yield or spread maintenance provisions.

The following table presents the future principal payments due under the Company’s mortgage notes, term loans, and secured revolving credit facilities as of June 30, 2019 ($ in thousands):

Year

 

Amount

 

2019 (remaining)

 

$

16,751

 

2020

 

 

98,938

 

2021

 

 

48,458

 

2022

 

 

881,656

 

2023

 

 

610,819

 

2024

 

 

1,594,210

 

Thereafter

 

 

5,188,735

 

Total

 

$

8,439,567

 

 

 

7. Repurchase Agreements

The Company has entered into master repurchase agreements with Citigroup Global Markets Inc. (the “Citi MRA”), Royal Bank of Canada (the “RBC MRA”), Bank of America Merrill Lynch (the “BAML MRA”), Morgan Stanley Bank, N.A. (the “MS MRA”), MUFG Securities EMEA PLC (the “MUFG MRA”), HSBC Bank USA, National Association (the “HSBC MRA”), and Barclays Bank PLC (the “Barclays MRA”) to provide the Company with additional financing capacity secured by certain of the Company’s investments in real estate-related securities. The terms of the Citi MRA, RBC MRA, BAML MRA, MS MRA, MUFG MRA, and HSBC 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. The Barclays MRA has a maximum facility size of $750.0 million and repurchase agreements under the Barclays MRA have longer dated maturity compared to the Company’s other master repurchase agreements. Additionally, the Barclays MRA contains specific spread and advance rate provisions based on the rating of the underlying CMBS. The Company is in compliance with all financial covenants of the Barclays MRA.


16


 

The following tables are a summary of the Company’s repurchase agreements ($ in thousands):

 

 

 

June 30, 2019

Facility

 

Weighted Average

Maturity Date(1)

 

Security

Interests

 

Collateral

Assets(2)

 

 

Outstanding

Balance

 

 

Prepayment

Provisions

RBC MRA

 

10/3/2019

 

CMBS

 

$

1,241,029

 

 

$

984,284

 

 

None

Barclays MRA

 

9/29/2021

 

   CMBS(3)

 

 

987,429

 

 

 

750,000

 

 

None

MS MRA

 

7/15/2019

 

CMBS

 

 

482,566

 

 

 

404,834

 

 

None

Citi MRA

 

7/21/2019

 

CMBS

 

 

296,331

 

 

 

244,180

 

 

None

MUFG MRA

 

4/30/2020

 

CMBS

 

 

84,447

 

 

 

63,836

 

 

None

 

 

 

 

 

 

$

3,091,802

 

 

$

2,447,134

 

 

 

 

 

 

December 31, 2018

Facility

 

Weighted Average

Maturity Date(1)

 

Security

Interests

 

Collateral

Assets(2)

 

 

Outstanding

Balance

 

 

Prepayment

Provisions

Barclays MRA

 

9/29/2021

 

   CMBS(3)

 

$

989,059

 

 

$

750,000

 

 

None

RBC MRA

 

6/18/2019

 

CMBS

 

 

794,917

 

 

 

650,018

 

 

None

Citi MRA

 

1/13/2019

 

CMBS

 

 

193,372

 

 

 

154,736

 

 

None

MS MRA

 

1/15/2019

 

CMBS

 

 

173,050

 

 

 

146,569

 

 

None

MUFG MRA

 

4/30/2020

 

CMBS

 

 

15,266

 

 

 

12,400

 

 

None

 

 

 

 

 

 

$

2,165,664

 

 

$

1,713,723

 

 

 

 

(1)

Subsequent to quarter end, the Company rolled its repurchase agreement contracts expiring in July 2019 into new contracts.

(2)

Represents the fair value of the Company’s investments in real estate-related securities that serve as collateral.

(3)

As of June 30, 2019 and December 31, 2018, the security interests pledged under the Barclays MRA include one corporate bond.

The weighted average interest rate of the Company’s repurchase agreements was 3.61% (L+1.22%) as of June 30, 2019. The term “L” refers to the one-month, three-month or 12-month U.S. dollar-denominated LIBOR.

8. Unsecured Revolving Credit Facilities

On February 21, 2019, the Company entered into a $350.0 million unsecured line of credit with a third party. The line of credit expires on February 22, 2022 and may be extended for up to one year. Interest under the line of credit is determined based on one-month U.S. dollar-denominated LIBOR plus 2.50%. During the second quarter of 2019, the Company increased the capacity of the unsecured line of credit to $685.0 million. As of June 30, 2019, there was $240.0 million outstanding on such line.

The Company also maintains a $250 million unsecured line of credit with an affiliate of Blackstone of which there was no outstanding balance as of June 30, 2019. For additional information regarding the affiliate line of credit, see Note 8 to the consolidated financial statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018.  

9. Other Assets and Other Liabilities

The following table summarizes the components of other assets ($ in thousands):

 

 

 

June 30, 2019

 

 

December 31, 2018

 

Real estate intangibles, net

 

$

339,837

 

 

$

292,658

 

Receivables

 

 

60,470

 

 

 

45,799

 

Prepaid expenses

 

 

20,024

 

 

 

10,746

 

Pre-acquisition costs

 

 

17,552

 

 

 

15,361

 

Straight-line rent receivable

 

 

16,395

 

 

 

10,337

 

Deferred financing costs, net

 

 

13,112

 

 

 

5,822

 

Deferred leasing costs, net

 

 

12,050

 

 

 

7,621

 

Other

 

 

27,312

 

 

 

22,601

 

Total

 

$

506,752

 

 

$

410,945

 

 

17


 

The following table summarizes the components of accounts payable, accrued expenses, and other liabilities ($ in thousands):

 

 

 

June 30, 2019

 

 

December 31, 2018

 

Subscriptions received in advance

 

$

402,493

 

 

$

166,542

 

Payable for real estate-related securities and loans

 

 

129,317

 

 

 

 

Accounts payable and accrued expenses

 

 

80,304

 

 

 

53,247

 

Real estate taxes payable

 

 

64,299

 

 

 

56,555

 

Intangible liabilities, net

 

 

60,114

 

 

 

55,709

 

Right of use lease liability - financing leases

 

 

56,270

 

 

 

4,300

 

Distribution payable

 

 

34,143

 

 

 

21,360

 

Right of use lease liability - operating leases

 

 

31,714

 

 

 

 

Tenant security deposits

 

 

31,120

 

 

 

23,493

 

Accrued interest expense

 

 

28,852

 

 

 

24,432

 

Prepaid rental income

 

 

23,396

 

 

 

29,112

 

Other

 

 

37,181

 

 

 

29,648

 

Total

 

$

979,203

 

 

$

464,398

 

 

10. Equity and Redeemable Non-controlling Interest

Common Stock

The following table details the movement in the Company’s outstanding shares of common stock (in thousands):

 

 

 

Six Months Ended June 30, 2019

 

 

 

Class S

 

 

Class T

 

 

Class D

 

 

Class I

 

 

Total

 

December 31, 2018

 

 

276,989

 

 

 

23,313

 

 

 

30,375

 

 

 

108,261

 

 

 

438,938

 

Common stock issued

 

 

102,407

 

 

 

8,864

 

 

 

22,112

 

 

 

123,319

 

 

 

256,702

 

Distribution reinvestment

 

 

5,157

 

 

 

388

 

 

 

574

 

 

 

2,484

 

 

 

8,603

 

Common stock repurchased

 

 

(3,397

)

 

 

(661

)

 

 

(144

)

 

 

(5,508

)

 

 

(9,710

)

June 30, 2019

 

 

381,156

 

 

 

31,904

 

 

 

52,917

 

 

 

228,556

 

 

 

694,533

 

 

 

Share Repurchase Plan

For the six months ended June 30, 2019, the Company repurchased 9,710,021 shares of common stock and 6,454 BREIT OP units representing a total of $105.7 million. The Company had no unfulfilled repurchase requests during the six months ended June 30, 2019.

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.

Each class of common stock receives the same gross distribution per share. 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 following table details the aggregate distributions declared for each applicable class of common stock for the six months ended June 30, 2019:

 

 

 

Class S

 

 

Class T

 

 

Class D

 

 

Class I

 

Aggregate gross distributions declared per share of common stock

 

$

0.3170

 

 

$

0.3170

 

 

$

0.3170

 

 

$

0.3170

 

Stockholder servicing fee per share of common stock

 

 

(0.0464

)

 

 

(0.0455

)

 

 

(0.0135

)

 

 

 

Net distributions declared per share of common stock

 

$

0.2706

 

 

$

0.2715

 

 

$

0.3035

 

 

$

0.3170

 

 

18


 

Redeemable Non-controlling Interest

In connection with its performance participation interest, the Special Limited Partner holds Class I units in BREIT OP. See Note 11 for further details of the Special Limited Partner’s performance participation interest. 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, 2019, the Company recorded an allocation adjustment of $1.4 million between Additional Paid-in Capital and Redeemable Non-controlling Interest.

The following table summarizes the redeemable non-controlling interest activity for the six months ended June 30, 2019 ($ in thousands):

 

December 31, 2018

 

$

9,233

 

Settlement of 2018 performance participation allocation

 

 

37,484

 

Conversion to Class I shares

 

 

(11,620

)

Repurchases

 

 

(25,407

)

GAAP income allocation

 

 

(351

)

Distributions

 

 

(597

)

Fair value allocation

 

 

1,441

 

June 30, 2019

 

$

10,183

 

 

11. Related Party Transactions

Management Fee

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 has elected to receive the management fee in shares of the Company’s common stock to date. During the three and six months ended June 30, 2019, the Company incurred management fees of $22.5 million and $39.7 million, respectively.  During the three and six months ended June 30, 2018, the Company incurred management fees of $9.3 million and $16.3 million, respectively.

During the six months ended June 30, 2019 and 2018, the Company issued 2,870,390 and 1,206,253, respectively, unregistered Class I shares to the Adviser as payment for management fees. The Company also had a payable of $8.3 million and $5.1 million related to the management fees as of June 30, 2019 and December 31, 2018, respectively, which is included in Due to Affiliates on the Company’s Condensed Consolidated Balance Sheets. During July 2019, the Adviser was issued 746,844 unregistered Class I shares as payment for the $8.3 million management fees accrued as of June 30, 2019. 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. During the six months ended June 30, 2019, the Adviser submitted 4,574,431 Class I shares for repurchase resulting in a total repurchase of $49.9 million. The Adviser did not submit any shares for repurchase during the six months ended June 30, 2018.

Performance Participation Allocation

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. During the three and six months ended June 30, 2019, the Company recognized $29.9 million and $50.1 million, respectively, of Performance Participation Allocation expense in the Company’s Condensed Consolidated Statements of Operations as the performance hurdle was achieved as of June 30, 2019. During the three and six months ended June 30, 2018, the Company recognized $9.5 million and $17.3 million, respectively, of Performance Participation Allocation expense as the performance hurdle was achieved as of June 30, 2018.

19


 

In January 2019, the Company issued approximately 3.5 million Class I units in BREIT OP to the Special Limited Partner as payment for the 2018 performance participation allocation. Such Class I units were issued at the NAV per unit as of December 31, 2018.  Subsequent to the Class I units being issued, 0.4 million of such units were redeemed for $4.3 million and 1.1 million of such units were exchanged for unregistered Class I shares in the Company. Additionally, during the three months ended June 30, 2019, the Special Limited Partner redeemed approximately 1.9 million Class I units in BREIT OP for $21.1 million. The remaining Class I units held by the Special Limited Partner are included in Redeemable Non-Controlling Interest on the Company’s Condensed Consolidated Balance Sheets.

Due to Affiliates

The following table details the components of due to affiliates ($ in thousands):

 

 

 

June 30, 2019

 

December 31, 2018

 

Accrued stockholder servicing fee(1)

 

$

359,917

 

$

238,496

 

Performance participation allocation

 

 

50,061

 

 

37,484

 

Accrued management fee

 

 

8,272

 

 

5,124

 

Advanced organization and offering costs

 

 

7,159

 

 

8,181

 

Accrued affiliate service provider expenses

 

 

3,214

 

 

3,115

 

Accrued affiliate incentive compensation awards

 

 

 

 

4,714

 

Other

 

 

1,388

 

 

4,467

 

Total

 

$

430,011

 

$

301,581

 

 

(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. 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 affiliate service provider expenses and incentive compensation awards

 

In March 2019, the Company engaged Link Industrial Properties LLC (“Link”), a portfolio company owned by a Blackstone-advised fund, to provide operational services (including property management, leasing, and construction management), corporate support services (including accounting, legal, and tax), and transaction support services for the Company’s industrial assets. Prior to such time, Gateway Industrial Properties L.L.C. serviced the Company’s industrial assets. For further detail on other affiliate relationships, see Note 11 to the consolidated financial statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018.

 

The following tables detail the amounts incurred for affiliate service providers during the three and six months ended June 30, 2019 and 2018 ($ in thousands).

 

 

 

Affiliate Service

 

 

Affiliate Service Provider

 

 

Capitalized Transaction

 

 

 

Provider Expenses

 

 

Incentive Compensation Awards

 

 

Support Services

 

 

 

Three Months Ended June 30,

 

 

Three Months Ended June 30,

 

 

Three Months Ended June 30,

 

 

 

2019

 

 

2018

 

 

2019

 

 

2018

 

 

2019

 

 

2018

 

LivCor, L.L.C.

 

$

4,398

 

 

$

2,048

 

 

$

13

 

 

$

 

 

$

563

 

 

$

101

 

Gateway Industrial Properties L.L.C.

 

 

429

 

 

 

673

 

 

 

 

 

 

 

 

 

 

 

 

17

 

Link Industrial Properties LLC

 

 

3,112

 

 

 

 

 

 

285

 

 

 

 

 

 

1,000

 

 

 

 

ShopCore Properties TRS Management LLC

 

 

299

 

 

 

258

 

 

 

8

 

 

 

 

 

 

 

 

 

 

BRE Hotels and Resorts LLC

 

 

1,087

 

 

 

171

 

 

 

194

 

 

 

 

 

 

 

 

 

 

Revantage Corporate Services, L.L.C.

 

 

274

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

8

 

Total

 

$

9,599

 

 

$

3,150

 

 

$

500

 

 

$

 

 

$

1,563

 

 

$

126

 

 

20


 

 

 

Affiliate Service

 

 

Affiliate Service Provider

 

 

Capitalized Transaction

 

 

Provider Expenses

 

 

Incentive Compensation Awards

 

 

Support Services

 

 

Six Months Ended June 30,

 

 

Six Months Ended June 30,

 

 

Six Months Ended June 30,

 

 

2019

 

 

2018

 

 

2019

 

 

2018

 

 

2019

 

 

2018

 

LivCor, L.L.C.

 

$

8,426

 

 

$

3,191

 

 

$

154

 

 

$

 

 

$

921

 

 

$

101

 

Gateway Industrial Properties LLC

 

 

2,524

 

 

 

1,078

 

 

 

236

 

 

 

 

 

 

27

 

 

 

196

 

Link Industrial Properties LLC

 

 

3,112

 

 

 

 

 

 

285

 

 

 

 

 

 

1,000

 

 

 

 

ShopCore Properties TRS Management LLC

 

 

701

 

 

 

498

 

 

 

13

 

 

 

 

 

 

15

 

 

 

 

BRE Hotels and Resorts LLC

 

 

1,741

 

 

 

318

 

 

 

312

 

 

 

 

 

 

 

 

 

 

Revantage Corporate Services, LLC

 

 

533

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

8

 

Total

 

$

17,037

 

 

$

5,085

 

 

$

1,000

 

 

$

 

 

$

1,963

 

 

$

305

 

 

Affiliate service provider expenses and portfolio company incentive compensation awards are included as a component of Rental Property Operating and Hotel Operating expense, as applicable, in the Company’s Condensed Consolidated Statements of Operations. Transaction support fees were capitalized to Investments in Real Estate on the Company’s Condensed Consolidated Balance Sheets.

The Company issued incentive compensation awards to certain employees of affiliate portfolio company service providers on January 1, 2019 that entitles them to receive an allocation of total return over a certain hurdle amount, as determined by the Company. The value of the award at January 1, 2019 was $8.0 million and will be amortized over the four year service period. As of June 30, 2019, the total unrecognized compensation cost relating to the portfolio company incentive compensation awards was $7.0 million and is expected to be recognized over a period of 3.5 years from June 30, 2019. Neither Blackstone nor the Adviser receives any fees or incentive payments from agreements between the Company and such portfolio companies or their management teams.

The 2018 portfolio company incentive compensation awards of $4.7 million became payable on December 31, 2018 and, in January 2019, the Company issued approximately 0.4 million of fully vested Class I units in BREIT OP to certain employees of such companies.

Affiliate Title Service Provider

During the three and six months ended June 30, 2019, the Company paid Lexington National Land Services $2.7 million and $2.8 million, respectively, for title services related to 17 investments and such costs were capitalized to Investments in Real Estate or recorded as deferred financing costs which is a reduction to Mortgage Notes, Term Loans, and Secured Revolving Credit Facilities on the Company’s Condensed Consolidated Balance Sheet. For additional information regarding this affiliate relationship, see Note 11 to the consolidated financial statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018.

Other

As of June 30, 2019 and December 31, 2018, the Adviser had advanced $1.4 million and $1.1 million, respectively, of expenses on the Company’s behalf for general corporate expenses provided by unaffiliated third parties.

21


 

12. Leases

 

Lessee

Certain of the Company’s investments in real estate are subject to ground leases. The Company’s ground leases are classified as either operating leases or financing leases based on the characteristics of each lease. As of June 30, 2019, the Company had five ground leases classified as operating and two ground leases classified as financing. Each of the Company’s ground leases were acquired as part of the acquisition of real estate and no incremental costs were incurred for such ground leases. The Company’s ground leases are non-cancelable, and one of the Company’s operating leases contains a renewal option for an additional 99 year term. The following table presents the future lease payments due under the Company’s ground leases ($ in thousands):

 

 

 

Operating

Leases

 

 

Financing

Leases

 

2019 (remaining)

 

$

742

 

 

$

1,474

 

2020

 

 

1,445

 

 

 

2,991

 

2021

 

 

1,481

 

 

 

3,081

 

2022

 

 

1,518

 

 

 

3,174

 

2023

 

 

1,556

 

 

 

3,269

 

2024

 

 

1,596

 

 

 

3,367

 

Thereafter

 

 

457,749

 

 

 

330,546

 

Total undiscounted future lease payments

 

 

466,087

 

 

 

347,902

 

Difference between undiscounted cash flows and discounted cash flows

 

 

434,373

 

 

 

291,632

 

Total lease liability

 

$

31,714

 

 

$

56,270

 

 

The Company utilized its incremental borrowing rate of approximately 7% to determine its lease liabilities. As of June 30, 2019, the weighted average remaining lease term of the Company’s operating leases and financing leases was 74 years and 77 years, respectively.

The following table presents the future lease payments due under the Company’s ground leases as of December 31, 2018, prior to the adoption of ASU 2016-02 ($ in thousands):

Year

 

Future

Commitments

 

2019

 

$

1,470

 

2020

 

 

1,508

 

2021

 

 

1,547

 

2022

 

 

1,586

 

2023

 

 

1,622

 

Thereafter

 

 

460,055

 

Total

 

$

467,788

 

22


 

Payments under the Company’s ground leases primarily contain fixed payment components that may include periodic increases fixed to an index or periodic fixed percentage escalations. One of the Company’s ground leases contains a variable component based on a percentage of revenue. The following table summarizes the fixed and variable components of the Company’s operating leases ($ in thousands):

 

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

 

 

2019

 

 

2018

 

 

2019

 

 

2018

 

Fixed ground rent expense

 

$

359

 

 

$

68

 

 

$

718

 

 

$

136

 

Variable ground rent expense

 

 

3

 

 

 

24

 

 

 

21

 

 

 

30

 

Total cash portion of ground rent expense

 

 

362

 

 

 

92

 

 

 

739

 

 

 

166

 

Non-cash ground rent expense

 

 

1,092

 

 

 

107

 

 

 

2,184

 

 

 

158

 

Total operating lease costs

 

$

1,454

 

 

$

199

 

 

$

2,923

 

 

$

324

 

 

The following table summarizes the fixed and variable components of the Company’s financing leases ($ in thousands).

 

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

 

 

2019

 

 

2018

 

 

2019

 

 

2018

 

Interest on lease liabilities

 

$

739

 

 

$

 

 

$

754

 

 

$

 

Amortization of right-of-use assets

 

 

261

 

 

 

 

 

 

261

 

 

 

 

Total financing lease costs

 

$

1,000

 

 

$

 

 

$

1,015

 

 

$

 

 

Lease costs recognized during the prior periods are presented under the standard in effect prior to the Company’s adoption of ASU 2016-02.

Lessor

The Company’s rental revenue primarily consists of rent earned from operating leases at the Company’s multifamily, industrial, and retail properties. Leases at the Company’s industrial and retail properties generally include a fixed base rent and certain leases also contain a variable component. The variable component of the Company’s operating leases at its industrial and retail properties primarily consist of the reimbursement of operating expenses such as real estate taxes, insurance, and common area maintenance costs. Leases at the Company’s industrial and retail properties are generally longer term and may contain extension and termination options at the lessee’s election. Rental revenue earned from leases at the Company’s multifamily properties primarily consist of a fixed base rent and certain leases contain a variable component that allows for the pass-through of certain operating expenses such as utilities. Leases at the Company’s multifamily properties are short term in nature, generally not greater than 12 months in length.

 

The following table details the components of operating lease income from leases in which the Company is the lessor ($ in thousands):

 

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

 

 

2019

 

 

2018

 

 

2019

 

 

2018

 

Fixed lease payments

 

$

223,882

 

 

$

110,254

 

 

$

412,737

 

 

$

188,767

 

Variable lease payments

 

 

23,790

 

 

 

15,560

 

 

 

47,132

 

 

 

24,608

 

Rental revenue

 

$

247,672

 

 

$

125,814

 

 

$

459,869

 

 

$

213,375

 

 

The following table presents the undiscounted future minimum rents the Company expects to receive for its industrial and retail properties ($ in thousands). Leases at the Company’s multifamily properties are short term, generally 12 months or less, and are therefore not included.

 

Year

 

Future Minimum Rents

 

2019 (remaining)

 

$

146,705

 

2020

 

 

278,991

 

2021

 

 

246,743

 

2022

 

 

200,453

 

2023

 

 

154,817

 

2024

 

 

110,253

 

Thereafter

 

 

311,494

 

Total

 

$

1,449,456

 

23


 

 

 

The following table presents the future minimum rents the Company expects to receive for its industrial and retail properties as of December 31, 2018, prior to the adoption of ASU 2016-02 ($ in thousands):

 

Year

 

Future Minimum Rents

 

2019

 

$

238,043

 

2020

 

 

215,327

 

2021

 

 

185,419

 

2022

 

 

144,186

 

2023

 

 

102,609

 

Thereafter

 

 

285,981

 

Total

 

$

1,171,565

 

 

13. Segment Reporting

The Company operates in five reportable segments: Multifamily properties, Industrial properties, Hotel properties, Retail properties, and real estate-related securities and loans. The Company allocates resources and evaluates results based on the performance of each segment individually. The Company believes that segment net operating income is a key performance metric that captures the operating performance of each segment.

The following table sets forth the total assets by segment ($ in thousands):

 

 

 

June 30, 2019

 

 

December 31, 2018

 

Multifamily

 

$

8,299,626

 

 

$

5,396,457

 

Industrial

 

 

4,686,239

 

 

 

3,966,796

 

Hotel

 

 

1,745,454

 

 

 

1,268,992

 

Retail

 

 

175,281

 

 

 

136,273

 

Real estate-related securities and loans

 

 

3,479,085

 

 

 

2,281,033

 

Other (Corporate)

 

 

476,402

 

 

 

187,607

 

Total assets

 

$

18,862,087

 

 

$

13,237,158

 

 

24


 

The following table sets forth the financial results by segment for the three months ended June 30, 2019 ($ in thousands):  

 

 

 

Multifamily

 

Industrial

 

Hotel

 

Retail

 

Real Estate-

Related

Securities and Loans

 

Total

 

Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Rental revenue

 

$

159,243

 

$

85,368

 

$

 

$

3,061

 

$

 

$

247,672

 

Hotel revenue

 

 

 

 

 

 

94,351

 

 

 

 

 

 

94,351

 

Other revenue

 

 

9,038

 

 

95

 

 

3,075

 

 

77

 

 

 

 

12,285

 

Total revenues

 

 

168,281

 

 

85,463

 

 

97,426

 

 

3,138

 

 

 

 

354,308

 

Expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Rental property operating

 

 

73,772

 

 

26,196

 

 

 

 

1,243

 

 

 

 

101,211

 

Hotel operating

 

 

 

 

 

 

63,197

 

 

 

 

 

 

63,197

 

Total expenses

 

 

73,772

 

 

26,196

 

 

63,197

 

 

1,243

 

 

 

 

164,408

 

Income from real estate-related securities and loans

 

 

 

 

 

 

 

 

 

51,784

 

 

51,784

 

Segment net operating income

 

$

94,509

 

$

59,267

 

$

34,229

 

$

1,895

 

$

51,784

 

$

241,684

 

Depreciation and amortization

 

$

96,631

 

$

47,403

 

$

16,257

 

$

1,563

 

$

 

$

161,854

 

General and administrative

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(4,878

)

Management fee

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(22,487

)

Performance participation allocation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(29,898

)

Gain on disposition of real estate

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

29,686

 

Interest income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

303

 

Interest expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(103,279

)

Other income (expense)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(2,061

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

(52,784

)

Net loss attributable to non-controlling interests in third party joint ventures

 

 

 

 

 

 

 

$

970

 

Net loss attributable to non-controlling interests in BREIT OP

 

 

 

 

 

 

 

 

1,110

 

Net loss attributable to BREIT stockholders

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

(50,704

)

 

25


 

The following table sets forth the financial results by segment for the three months ended June 30, 2018 ($ in thousands):  

 

 

 

Multifamily

 

Industrial

 

Hotel

 

Retail

 

Real Estate-

Related

Securities

and Loans

 

Total

 

Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Rental revenue

 

$

70,384

 

$

53,235

 

$

 

$

2,195

 

$

 

$

125,814

 

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 and loans

 

 

 

 

 

 

 

 

 

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

 

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 in third party joint ventures

 

 

 

 

 

 

 

$

1,217

 

Net loss attributable to non-controlling interests in BREIT OP

 

 

 

 

 

 

 

 

 

 

 

245

 

Net loss attributable to BREIT stockholders

 

 

 

 

 

 

 

 

 

 

$

(50,482

)

 

26


 

The following table sets forth the financial results by segment for the six months ended June 30, 2019 ($ in thousands):  

 

 

 

Multifamily

 

Industrial

 

Hotel

 

Retail

 

Real Estate-

Related

Securities and Loans

 

Total

 

Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Rental revenue

 

$

287,141

 

$

166,669

 

$

 

$

6,059

 

$

 

$

459,869

 

Hotel revenue

 

 

 

 

 

 

169,617

 

 

 

 

 

 

169,617

 

Other revenue

 

 

16,649

 

 

312

 

 

4,802

 

 

150

 

 

 

 

21,913

 

Total revenues

 

 

303,790

 

 

166,981

 

 

174,419

 

 

6,209

 

 

 

 

651,399

 

Expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Rental property operating

 

 

135,596

 

 

51,057

 

 

 

 

2,369

 

 

 

 

189,022

 

Hotel operating

 

 

 

 

 

 

114,517

 

 

 

 

 

 

114,517

 

Total expenses

 

 

135,596

 

 

51,057

 

 

114,517

 

 

2,369

 

 

 

 

303,539

 

Income from real estate-related securities and loans

 

 

 

 

 

 

 

 

 

113,467

 

 

113,467

 

Segment net operating income

 

$

168,194

 

$

115,924

 

$

59,902

 

$

3,840

 

$

113,467

 

$

461,327

 

Depreciation and amortization

 

$

175,165

 

$

92,425

 

$

30,683

 

$

3,060

 

$

 

$

301,333

 

General and administrative

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(8,059

)

Management fee

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(39,664

)

Performance participation allocation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(50,061

)

Gain on disposition of real estate

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

29,686

 

Interest income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

497

 

Interest expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(194,866

)

Other income (expense)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(407

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

(102,880

)

Net loss attributable to non-controlling interests in third party joint ventures

 

 

 

 

 

 

 

$

3,006

 

Net loss attributable to non-controlling interests in BREIT OP

 

 

 

 

 

 

 

 

 

 

 

2,324

 

Net loss attributable to BREIT stockholders

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

(97,550

)

 

27


 

The following table sets forth the financial results by segment for the six months ended June 30, 2018 ($ in thousands):  

 

 

 

Multifamily

 

Industrial

 

Hotel

 

Retail

 

Real Estate-

Related

Securities and Loans

 

Total

 

Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Rental revenue

 

$

131,127

 

$

77,836

 

$

 

$

4,412

 

$

 

$

213,375

 

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 and loans

 

 

 

 

 

 

 

 

 

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

 

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 in third party joint ventures

 

 

 

 

 

 

 

$

2,930

 

Net loss attributable to non-controlling interests in BREIT OP

 

 

 

 

 

 

 

 

 

 

 

622

 

Net loss attributable to BREIT stockholders

 

 

 

 

 

 

 

 

 

 

$

(98,030

)

 

 

14. Commitments and Contingencies

From time to time, the Company may be involved in various claims and legal actions arising in the ordinary course of business. As of June 30, 2019 and December 31, 2018, the Company was not involved in any material legal proceedings.

 

15. Subsequent Events

Acquisitions

Subsequent to June 30, 2019, the Company acquired an aggregate of $520.7 million of real estate, exclusive of closing costs, across 6 separate transactions.

Subsequent to June 30, 2019, the Company acquired an aggregate of $62.0 million of real estate-related securities and loans.

Proceeds from the Issuance of Common Stock

Subsequent to June 30, 2019, the Company had received net proceeds of $1.3 billion from the issuance of its common stock.

28


 

ITEM 2.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

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 under Item 1A. Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2018 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

BREIT invests primarily in stabilized income-oriented commercial real estate in the United States and, to a lesser extent, real estate-related securities and loans. We are the sole general partner of BREIT Operating Partnership L.P. (“BREIT OP”), a Delaware limited partnership, and we own all or substantially all of our assets through BREIT OP. We are externally managed by BX REIT Advisors L.L.C. (the “Adviser”). The Adviser is part of the real estate group of The Blackstone Group Inc. (“Blackstone”), a leading investment manager, which serves as our sponsor. As of June 30, 2019, we operated our business in five reportable segments: Multifamily, Industrial, Hotel, and Retail Properties, and real estate-related securities and loans. Multifamily includes various forms of rental housing including apartments, student housing and manufactured housing.

BREIT is a non-exchange traded, perpetual life real estate investment trust (“REIT”) that qualifies as a REIT under the Internal Revenue Code for U.S. federal income tax purposes. We will generally not be subject to U.S. federal income taxes on our taxable income to the extent we annually distribute all of our net taxable income to stockholders and maintain our qualification as a REIT.

We had registered with the SEC an offering of up to $5.0 billion in shares of common stock (the “Initial Offering”) and accepted aggregate gross offering proceeds of $4.9 billion during the period January 1, 2017 to January 1, 2019. We subsequently registered with the SEC a follow-on offering of up to $12.0 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 $10.0 billion in shares in our primary offering and up to $2.0 billion in shares pursuant to our distribution reinvestment plan, which we began using to offer shares of our common stock in January 2019 (the “Current Offering” and with the Initial Offering, the “Offering”). The share classes have different upfront selling commissions and ongoing stockholder servicing fees.

As of August 14, 2019, we had received net proceeds of $8.7 billion from the Offering and the sale of unregistered shares of our common stock. We have contributed the net proceeds to BREIT OP in exchange for a corresponding number of Class S, Class T, Class D, and Class I units. BREIT OP has primarily used the net proceeds to make investments in real estate and real estate-related securities and loans as further described below under “— Portfolio”. We intend to continue selling shares on 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 and loans, other than those disclosed in Item 1A. Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2018, our prospectus dated January 4, 2019 and filed with the SEC, as supplemented, and elsewhere in this quarterly report on Form 10-Q.

29


 

Q2 2019 Highlights

Operating Results:

 

Raised $2.0 billion of net proceeds during the three months ended June 30, 2019 and a total $2.8 billion of net proceeds during the six months ended June 30, 2019.

 

Subsequent to June 30, 2019, we raised $1.3 billion of net proceeds from the issuance of our common stock.

 

Declared monthly net distributions totaling $90.9 million and $160.4 million for the three and six months ended June 30, 2019, respectively.

 

Year-to-date total return through June 30, 2019, without upfront selling commissions, was 5.1% for Class S, 5.1% for Class T, 5.4% for Class D, and 5.6% for Class I shares. Year to date total return assuming full upfront selling commissions was 1.6% for Class S, 1.6% for Class T, and 3.8% for Class D shares.

Investments:

 

Acquired 103 industrial, 36 multifamily, 21 hotel, and one retail property across 23 transactions with a total purchase price of $3.2 billion, inclusive of closing costs, during the three months ended June 30, 2019.  The acquisitions are consistent with our strategy of acquiring diversified, income producing, commercial real estate assets concentrated in high growth markets across the U.S.

 

Entered into an agreement to acquire a 64 million square foot income-oriented, high-quality, 95% leased industrial portfolio in well-located, in-fill locations for $5.3 billion, excluding closing costs. The transaction is expected to close in October 2019.

 

Sold the parking garage attached to the Hyatt Place San Jose Downtown property to a third party. Net proceeds from the sale were $44.3 million which resulted in a realized gain of $29.7 million.

 

Our 652 properties as of June 30, 2019 consisted of Multifamily (56% based on fair value), Industrial (33%), Hotel (10%), and Retail (1%) and our portfolio of real estate was concentrated in the following regions: South (39%), West (38%), East (15%), and Midwest (8%).

 

Made 55 investments in real estate-related securities and loans with a total cost basis of $1.2 billion consisting of commercial mortgage-backed securities (“CMBS”), corporate bonds and term loans of real estate-related companies and we held 163 positions as of June 30, 2019.

 

Investments in real estate-related securities and loans as of June 30, 2019 were diversified by credit rating — BB (41% based on fair value), BBB (26%), B (17%), Other (9%), A (6%), and AAA (1%) and collateral backing — Hospitality (53%), Office (17%), Multifamily (13%), Diversified (8%), Retail (7%), and Industrial (2%).

Financings:

 

Increased the capacity of the unsecured line of credit with a third party by $335.0 million to $685.0 million. The line of credit expires on February 22, 2022 and may be extended for up to one year. Interest under the line of credit is determined based on one-month U.S. dollar-denominated LIBOR plus 2.50%.

 

Continued our strategy of obtaining secured revolving credit capacity by adding an additional $128.8 million of revolving credit capacity.

 

Closed or assumed an aggregate $1.2 billion in property-level financing and obtained an additional $0.7 billion of financings secured by our investments in real estate-related securities and loans during the three months ended June 30, 2019.


30


 

Portfolio

Summary of Portfolio

 

The following chart outlines the percentage of our investments in real properties and investments in real estate-related securities and loans based on fair value as of June 30, 2019:

 

The following charts further describe our portfolio composition in real properties based on fair value as of June 30, 2019:

 

 


31


 

The following map identifies the top 10 markets of our portfolio composition in real properties based on fair value as of June 30, 2019:

 

Investments in Real Estate

As of June 30, 2019, we had acquired 652 properties with a total purchase price of $15.1 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, 2019:

 

Segment

 

Number of

Properties

 

 

Sq. Feet (in

thousands)/

Units/Keys(1)

 

Occupancy

Rate(2)

 

 

Average Effective

Annual Base Rent

Per Leased Square

Foot/Units/Keys(3)

 

 

Gross Asset

Value(4)

($ in thousands)

 

 

Segment

Revenue

 

 

Percentage of

Segment

Revenue

 

Multifamily

 

 

172

 

 

54,033 units

 

93%

 

 

$

13,330

 

 

$

8,904,021

 

 

$

303,790

 

 

47%

 

Industrial

 

 

429

 

 

58,593 sq. ft.

 

95%

 

 

$

5.10

 

 

 

5,063,441

 

 

 

166,981

 

 

25%

 

Hotel

 

 

47

 

 

7,142 keys

 

82%

 

 

$152.90/$125.06

 

 

 

1,648,807

 

 

 

174,419

 

 

27%

 

Retail

 

 

4

 

 

600 sq. ft.

 

98%

 

 

$

19.60

 

 

 

179,321

 

 

 

6,209

 

 

1%

 

Total

 

 

652

 

 

 

 

 

 

 

 

 

 

 

 

$

15,795,590

 

 

$

651,399

 

 

100%

 

 

(1)

Multifamily includes other types of rental housing such as manufactured and student housing. Multifamily units include manufactured housing sites and student housing beds.

(2)

The occupancy rate is as of June 30, 2019 for non-hotels. The occupancy rate for our hotel investments is the average occupancy rate for the twelve months ended June 30, 2019. Hotels owned less than twelve months are excluded from the average occupancy rate calculation.

(3)

For multifamily properties, industrial properties, and retail properties, represents the annualized June 30, 2019 base rent per leased square foot or unit and excludes tenant recoveries, straight-line rent and above-market and below-market lease amortization. For hotel properties, represents Average Daily Rate (“ADR”) and Revenue Per Available Room (“RevPAR”), respectively, for the twelve months ended June 30, 2019. Hotels owned less than twelve months are excluded from the ADR and RevPAR calculations.  

(4)

Based on fair value as of June 30, 2019.

32


 

Real Estate

The following table provides information regarding our portfolio of real properties as of June 30, 2019:

 

Segment and Investment

 

Number of

Properties

 

 

Location

 

Acquisition Date

 

Ownership

Interest(1)

 

 

Sq. Feet (in

thousands)/

Units/Keys(2)

 

Occupancy

Rate(3)

 

Multifamily:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sonora Canyon Apartments

 

 

1

 

 

Mesa, AZ

 

Feb. 2017

 

100%

 

 

388 units

 

92%

 

TA Multifamily Portfolio

 

 

6

 

 

Various(4)

 

April 2017

 

100%

 

 

2,514 units

 

93%

 

Emory Point

 

 

1

 

 

Atlanta, GA

 

May 2017

 

100%

 

 

750 units

 

89%

 

Nevada West Multifamily

 

 

3

 

 

Las Vegas, NV

 

May 2017

 

100%

 

 

972 units

 

95%

 

Mountain Gate & Trails Multifamily

 

 

2

 

 

Las Vegas, NV

 

June 2017

 

100%

 

 

539 units

 

95%

 

Elysian West Multifamily

 

 

1

 

 

Las Vegas, NV

 

July 2017

 

100%

 

 

466 units

 

92%

 

Harbor 5 Multifamily

 

 

5

 

 

Dallas, TX

 

Aug. 2017

 

100%

 

 

1,192 units

 

94%

 

Gilbert Multifamily

 

 

2

 

 

Gilbert, AZ

 

Sept. 2017

 

90%

 

 

748 units

 

95%

 

Domain & GreenVue Multifamily

 

 

2

 

 

Dallas, TX

 

Sept. 2017

 

100%

 

 

803 units

 

96%

 

ACG II Multifamily

 

 

4

 

 

Various(5)

 

Sept. 2017

 

94%

 

 

932 units

 

90%

 

Olympus Multifamily

 

 

3

 

 

Jacksonville, FL

 

Nov. 2017

 

95%

 

 

1,032 units

 

95%

 

Amberglen West Multifamily

 

 

1

 

 

Hillsboro, OR

 

Nov. 2017

 

100%

 

 

396 units

 

94%

 

Aston Multifamily Portfolio

 

 

20

 

 

Various(6)

 

Nov. 2017 & Jan. 2018

 

90%

 

 

4,584 units

 

95%

 

Talavera and Flamingo Multifamily

 

 

2

 

 

Las Vegas, NV

 

Dec. 2017

 

100%

 

 

674 units

 

95%

 

Walden Pond & Montair Multifamily Portfolio

 

 

2

 

 

Everett, WA & Thornton, CO

 

Dec. 2017

 

95%

 

 

635 units

 

93%

 

Signature at Kendall Multifamily

 

 

1

 

 

Miami, FL

 

Dec. 2017

 

100%

 

 

546 units

 

96%

 

The Boulevard

 

 

1

 

 

Phoenix, AZ

 

April 2018

 

100%

 

 

294 units

 

94%

 

Blue Hills Multifamily

 

 

1

 

 

Boston, MA

 

May 2018

 

100%

 

 

472 units

 

95%

 

Wave Multifamily Portfolio

 

 

6

 

 

Various(7)

 

May 2018

 

100%

 

 

2,199 units

 

94%

 

ACG III Multifamily

 

 

2

 

 

Gresham, OR & Turlock, CA

 

May 2018

 

95%

 

 

475 units

 

93%

 

Carroll Florida Multifamily

 

 

2

 

 

Jacksonville & Orlando, FL

 

May 2018

 

100%

 

 

716 units

 

95%

 

Solis at Flamingo

 

 

1

 

 

Las Vegas, NV

 

June 2018

 

95%

 

 

524 units

 

95%

 

Velaire at Aspera

 

 

1

 

 

Phoenix, AZ

 

July 2018

 

100%

 

 

286 units

 

92%

 

Coyote Multifamily Portfolio

 

 

6

 

 

Phoenix, AZ

 

Aug. 2018

 

100%

 

 

1,752 units

 

93%

 

Avanti Apartments

 

 

1

 

 

Las Vegas, NV

 

Dec. 2018

 

100%

 

 

414 units

 

94%

 

Gilbert Heritage Apartments

 

 

1

 

 

Phoenix, AZ

 

Feb. 2019

 

90%

 

 

256 units

 

95%

 

Roman Multifamily Portfolio

 

 

14

 

 

Various(8)

 

Feb. 2019

 

100%

 

 

3,743 units

 

95%

 

Elevation Plaza Del Rio

 

 

1

 

 

Phoenix, AZ

 

April 2019

 

90%

 

 

333 units

 

62%

 

Courtney at Universal Multifamily

 

 

1

 

 

Orlando, FL

 

April 2019

 

100%

 

 

355 units

 

91%

 

Citymark Multifamily 2-Pack

 

 

2

 

 

Various(9)

 

April 2019

 

95%

 

 

608 units

 

99%

 

Tri-Cities Multifamily 2-Pack

 

 

2

 

 

Richland & Kennewick, WA

 

April 2019

 

95%

 

 

428 units

 

96%

 

Raider Multifamily Portfolio

 

 

3

 

 

Las Vegas, NV

 

April & June 2019

 

100%

 

 

1,110 units

 

93%

 

Bridge II Multifamily Portfolio

 

 

5

 

 

Various(10)

 

April & June 2019

 

100%

 

 

1,911 units

 

92%

 

Miami Doral 2-Pack

 

 

2

 

 

Miami, FL

 

May 2019

 

100%

 

 

720 units

 

94%

 

Davis Multifamily 2-Pack

 

 

2

 

 

Various(11)

 

May 2019

 

100%

 

 

454 units

 

83%

 

Slate Savannah

 

 

1

 

 

Savannah, GA

 

May 2019

 

90%

 

 

272 units

 

90%

 

Amara at MetroWest

 

 

1

 

 

Orlando, FL

 

May 2019

 

95%

 

 

411 units

 

97%

 

Colorado 3-Pack

 

 

3

 

 

Denver & Fort Collins, CO

 

May 2019

 

100%

 

 

855 units

 

95%

 

Edge Las Vegas

 

 

1

 

 

Las Vegas, NV

 

June 2019

 

95%

 

 

296 units

 

94%

 

ACG IV Multifamily

 

 

2

 

 

Various(12)

 

June 2019

 

95%

 

 

606 units

 

94%

 

Perimeter Multifamily 3-Pack

 

 

3

 

 

Atlanta, GA

 

June 2019

 

100%

 

 

691 units

 

92%

 

Anson at the Lakes

 

 

1

 

 

Charlotte, NC

 

June 2019

 

100%

 

 

694 units

 

95%

 

Highroads MH

 

 

3

 

 

Phoenix, AZ

 

April 2018

 

99%

 

 

265 units

 

92%

 

Evergreen Minari MH

 

 

2

 

 

Phoenix, AZ

 

June 2018

 

99%

 

 

115 units

 

96%

 

Southwest MH

 

 

14

 

 

Various(13)

 

June 2018

 

99%

 

 

3,065 units

 

79%

 

Hidden Springs MH

 

 

1

 

 

Desert Hot Springs, CA

 

July 2018

 

99%

 

 

317 units

 

85%

 

SVPAC MH

 

 

2

 

 

Phoenix, AZ

 

July 2018

 

99%

 

 

233 units

 

91%

 

Royal Vegas MH

 

 

1

 

 

Las Vegas, NV

 

Oct. 2018

 

99%

 

 

176 units

 

73%

 

Riverest MH

 

 

1

 

 

Tavares, FL

 

Dec. 2018

 

99%

 

 

130 units

 

93%

 

Angler MH Portfolio

 

 

5

 

 

Phoenix, AZ

 

April 2019

 

99%

 

 

939 units

 

80%

 

Florida MH 4-Pack

 

 

1

 

 

Tarpon Springs, FL

 

April 2019

 

99%

 

 

137 units

 

93%

 

EdR Student Housing Portfolio

 

 

20

 

 

Various(14)

 

Sept. 2018

 

95%

 

 

10,610 units

 

92%

 

Total Multifamily

 

 

172

 

 

 

 

 

 

 

 

 

 

54,033 units

 

 

 

 

 

33


 

 

Segment and Investment

 

Number of

Properties

 

 

Location

 

Acquisition Date

 

Ownership

Interest(1)

 

 

Sq. Feet (in

thousands)/

Units/Keys(2)

 

Occupancy

Rate(3)

 

Industrial:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stockton Industrial Park

 

 

1

 

 

Stockton, CA

 

Feb. 2017

 

100%

 

 

878 sq. ft.

 

86%

 

HS Industrial Portfolio

 

 

38

 

 

Various(15)

 

April 2017

 

100%

 

 

5,968 sq. ft.

 

92%

 

Fairfield Industrial Portfolio

 

 

11

 

 

Fairfield, NJ

 

Sept. 2017

 

100%

 

 

578 sq. ft.

 

100%

 

Southeast Industrial Portfolio

 

 

5

 

 

Various(16)

 

Nov. 2017

 

100%

 

 

1,927 sq. ft.

 

97%

 

Kraft Chicago Industrial Portfolio

 

 

3

 

 

Aurora, IL

 

Jan. 2018

 

100%

 

 

1,693 sq. ft.

 

100%

 

Canyon Industrial Portfolio

 

 

146

 

 

Various(17)

 

March 2018

 

100%

 

 

21,719 sq. ft.

 

97%

 

HP Cold Storage Industrial Portfolio

 

 

6

 

 

Various(18)

 

May 2018

 

100%

 

 

2,252 sq. ft.

 

100%

 

Meridian Industrial Portfolio

 

 

106

 

 

Various(19)

 

Nov. 2018

 

     99%(19)

 

 

14,011 sq. ft.

 

93%

 

Stockton Distribution Center

 

 

1

 

 

Stockton, CA

 

Dec. 2018

 

100%

 

 

987 sq. ft.

 

100%

 

Summit Industrial Portfolio

 

 

8

 

 

Atlanta, GA

 

Dec. 2018

 

100%

 

 

631 sq. ft.

 

98%

 

4500 Westport Drive

 

 

1

 

 

Harrisburg, PA

 

Jan. 2019

 

100%

 

 

179 sq. ft.

 

100%

 

Morgan Savannah

 

 

1

 

 

Savannah, GA

 

April 2019

 

100%

 

 

357 sq. ft.

 

100%

 

Minneapolis Industrial Portfolio

 

 

34

 

 

Minneapolis, MN

 

April 2019

 

100%

 

 

2,460 sq. ft.

 

96%

 

Atlanta Industrial Portfolio

 

 

61

 

 

Atlanta, GA

 

May 2019

 

100%

 

 

3,779 sq. ft.

 

95%

 

D.C. Powered Shell Warehouse Portfolio

 

 

7

 

 

Ashburn & Manassas, VA

 

June 2019

 

90%

 

 

1,174 sq. ft.

 

100%

 

Total Industrial

 

 

429

 

 

 

 

 

 

 

 

 

 

58,593 sq. ft.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Hotel:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Hyatt Place UC Davis

 

 

1

 

 

Davis, CA

 

Jan. 2017

 

100%

 

 

127 keys

 

85%

 

Hyatt Place San Jose Downtown

 

 

1

 

 

San Jose, CA

 

June 2017

 

100%

 

 

240 keys

 

79%

 

Florida Select-Service 4-Pack

 

 

4

 

 

Tampa & Orlando, FL

 

July 2017

 

100%

 

 

469 keys

 

78%

 

Hyatt House Downtown Atlanta

 

 

1

 

 

Atlanta, GA

 

Aug. 2017

 

100%

 

 

150 keys

 

78%

 

Boston/Worcester Select-Service 3-Pack

 

 

3

 

 

Boston & Worcester, MA

 

Oct. 2017

 

100%

 

 

374 keys

 

81%

 

Henderson Select-Service 2-Pack

 

 

2

 

 

Henderson, NV

 

May 2018

 

100%

 

 

228 keys

 

83%

 

Orlando Select-Service 2-Pack

 

 

2

 

 

Orlando, FL

 

May 2018

 

100%

 

 

254 keys

 

93%

 

Corporex Select Service Portfolio

 

 

5

 

 

Various(20)

 

Aug. 2018

 

100%

 

 

601 keys

 

N/A

 

JW Marriott San Antonio Hill Country Resort

 

 

1

 

 

San Antonio, TX

 

Aug. 2018

 

100%

 

 

1,002 keys

 

N/A

 

Hampton Inn & Suites Federal Way

 

 

1

 

 

Seattle, WA

 

Oct. 2018

 

100%

 

 

142 keys

 

N/A

 

Staybridge Suites Reno

 

 

1

 

 

Reno, NV

 

Nov. 2018

 

100%

 

 

94 keys

 

N/A

 

Salt Lake City Select Service 3 Pack

 

 

3

 

 

Salt Lake City, UT

 

Nov. 2018

 

60%

 

 

454 keys

 

N/A

 

Courtyard Kona

 

 

1

 

 

Kailua-Kona, HI

 

March 2019

 

100%

 

 

452 keys

 

N/A

 

Raven Select Service Portfolio

 

 

21

 

 

Various(21)

 

June 2019

 

100%

 

 

2,555 keys

 

N/A

 

Total Hotel

 

 

47

 

 

 

 

 

 

 

 

 

 

7,142 keys

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Retail:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Bakers Centre

 

 

1

 

 

Philadelphia, PA

 

March 2017

 

100%

 

 

236 sq. ft.

 

99%

 

Plaza Del Sol Retail

 

 

1

 

 

Burbank, CA

 

Oct. 2017

 

100%

 

 

166 sq. ft.

 

100%

 

Vista Center

 

 

1

 

 

Miami, FL

 

Aug. 2018

 

100%

 

 

89 sq. ft.

 

90%

 

El Paseo Simi Valley

 

 

1

 

 

Simi Valley, CA

 

June 2019

 

100%

 

 

109 sq. ft.

 

97%

 

Total Retail

 

 

4

 

 

 

 

 

 

 

 

 

 

600 sq. ft.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Investments in Real Estate

 

 

652

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1)

Certain of the joint venture agreements entered into by the Company 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)

Multifamily includes other types of rental housing such as manufactured housing and student housing. Multifamily units include manufactured housing sites and student housing beds.

(3)

The occupancy rate is as of June 30, 2019 for non-hotels. The occupancy rate for our hotel investments is the average occupancy rate for the twelve months ended June 30, 2019. The occupancy rate is excluded for hotels owned less than twelve months.

(4)

The TA Multifamily Portfolio consists of a 32-floor property in downtown Orlando, FL (19% of units) and five garden style properties located in the suburbs of Palm Beach Gardens, FL (19%), Chicago, IL (19%), Orlando, FL (17%), Dallas, TX (14%), and Kansas City, KS (12%).

(5)

The ACG II Multifamily Portfolio consists of four garden style properties in Gilbert, AZ (30% of units), Modesto, CA (25%), Olympia, WA (24%), and Flagstaff, AZ (21%).

(6)

The Aston Multifamily Portfolio is located in four markets: Austin/San Antonio, TX (47% of units), Dallas/Fort Worth, TX (21%), Nashville, TN (18%), and Louisville, KY (14%).

(7)

The Wave Multifamily Portfolio is located in five markets: Greater Seattle, WA (29% of units), Sacramento, CA (28%), Las Vegas, NV (22%), Spokane, WA (14%), and Portland, OR (7%).

(8)

The Roman Multifamily Portfolio is primarily concentrated in Riverside, CA (18% of units), Denver, CO (13%), Tampa, FL (10%), Orlando, FL (9%), Charlotte, NC (9%), Portland, OR (8%), and Dallas, TX (8%).

34


 

(9)

The Citymark Multifamily 2-Pack is located in Las Vegas, NV (61% of units) and Lithia Springs, GA (39%).

(10)

The Bridge II Multifamily Portfolio is located in Phoenix, AZ (25% of units), Lakeland, FL (23%), Charlotte, NC (18%), Corona Hills, CA (17%), and Moreno Valley, CA (17%).

(11)

The Davis Multifamily 2-Pack is located in Jacksonville, FL (56% of units) and Raleigh, NC (44%).

(12)

ACG IV Multifamily is located in Puyallup, WA (74% of units) and Woodland, CA (26%).

(13)

Southwest MH is located in three markets: Phoenix, AZ (86% of sites), San Diego, CA (11%), and Palm Desert, CA (3%).

(14)

The EdR Student Housing Portfolio consists of 10,610 beds primarily concentrated at Penn State University (15% of beds), University of Arizona (10%), University of Virginia (8%), Arizona State University (8%) and Virginia Tech (8%).

(15)

The HS Industrial Portfolio is located in six submarkets: Atlanta, GA (38% of sq. ft.), Chicago, IL (23%), Houston, TX (17%), Harrisburg, PA (10%), Dallas, TX (10%) and Orlando, FL (2%).

(16)

The Southeast Industrial Portfolio is located in Jacksonville, FL (53% of sq. ft.), Atlanta, GA (26%), and Nashville, TN (21%).

(17)

The Canyon Industrial Portfolio is primarily concentrated in Chicago, IL (19% of sq. ft.), Dallas, TX (15%), Indianapolis, IN (11%), Baltimore/Washington, D.C. (9%), and Columbus, OH (7%).

(18)

The HP Cold Storage Industrial Portfolio is located in four markets: Stockton, CA (52% of sq. ft.), Atlanta, GA (24%), Baltimore, MD (18%), and Austin, TX (6%).

(19)

The Meridian Industrial Portfolio consists of 106 industrial properties primarily concentrated in Memphis, TN (23% of sq. ft.), Orlando, FL (19%), Jacksonville, FL (10%), Atlanta, GA (9%), Richmond, VA (7%), and Winston-Salem, NC (7%). We own a 99% joint venture interest in 74 of the properties and wholly own the other 32 properties.

(20)

The Corporex Select Service Portfolio is located in five markets: Phoenix, AZ (24% of keys), Reno, NV (23%), Salt Lake City, UT (20%), Sonoma, CA (17%), and Tampa, FL (16%).

(21)

The Raven Select Service Portfolio is primarily concentrated in Fort Lauderdale/West Palm, FL (24% of keys), Austin/San Antonio, TX (14%), Salt Lake City, UT (10%), Boulder, CO (10%), Durham, NC (7%), Minneapolis, MN (7%), and Chicago, IL (6%).

On June 2, 2019, we entered into an agreement to acquire a 64 million square foot income-oriented, high-quality, 95% leased industrial portfolio (the “Jupiter Portfolio”) in well-located, in-fill locations for $5.3 billion, excluding closing costs. The Jupiter Portfolio consists of 316 industrial properties with 51% of aggregate square footage located in Dallas/Fort Worth, Chicago, Central Pennsylvania, Atlanta and Central Florida. The Jupiter Portfolio is leased to 745 tenants including e-commerce and logistics companies such as Amazon, FedEx and DHL, as well as Starbucks, Wayfair and Whirlpool. We expect the closing of the acquisition to occur in October 2019.

Subsequent to June 30, 2019, we acquired an aggregate of $520.7 million of real estate, exclusive of closing costs, across 6 separate transactions.


35


 

Investments in Real Estate-Related Securities and Loans

During the six months ended June 30, 2019, we invested $1.2 billion in real estate-related securities and loans. The following table details our investments in real estate-related securities and loans as of June 30, 2019 ($ in thousands):

 

 

 

 

 

 

 

 

 

June 30, 2019

 

Number of Positions

 

 

Credit

Rating(1)

 

Collateral(2)

 

Weighted

Average

Coupon(3)

 

Weighted

Average

Maturity Date(4)

Face

Amount/

Notional(5)

 

Cost

Basis

 

Fair

Value

 

CMBS - Floating:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

42

 

 

BB

 

Hospitality, Industrial, Multifamily, Office, Retail, Diversified

 

L+2.79%

 

10/29/2024

$

1,131,473

 

$

1,132,757

 

$

1,136,303

 

 

33

 

 

BBB

 

Hospitality, Multifamily, Office, Retail, Diversified

 

L+2.30%

 

10/20/2024

 

816,234

 

 

817,997

 

 

819,883

 

 

21

 

 

B

 

Hospitality, Multifamily, Office

 

L+3.45%

 

10/27/2024

 

461,587

 

 

460,488

 

 

462,143

 

 

5

 

 

A

 

Hospitality, Industrial, Retail, Diversified

 

L+2.01%

 

1/25/2025

 

200,293

 

 

200,643

 

 

201,479

 

 

13

 

 

Other

 

Multifamily

 

L+2.48%

 

6/27/2026

 

112,045

 

 

112,586

 

 

112,698

 

 

114

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2,724,471

 

 

2,732,506

 

CMBS - Fixed:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

8

 

 

BBB

 

Multifamily, Diversified

 

4.3%

 

4/30/2028

 

67,662

 

 

64,999

 

 

68,560

 

 

6

 

 

BB

 

Hospitality, Multifamily, Office, Diversified

 

4.0%

 

1/17/2026

 

75,850

 

 

73,048

 

 

75,458

 

 

4

 

 

B

 

Hospitality, Multifamily, Diversified

 

4.3%

 

4/4/2026

 

82,493

 

 

81,534

 

 

81,402

 

 

6

 

 

Other

 

Multifamily, Diversified

 

4.5%

 

10/7/2026

 

56,298

 

 

54,008

 

 

55,476

 

 

24

 

 

 

 

 

 

 

 

 

 

 

 

 

 

273,589

 

 

280,896

 

CMBS - Zero Coupon:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1

 

 

BB

 

Multifamily

 

N/A

 

4/21/2025

 

27,273

 

 

19,964

 

 

20,368

 

 

3

 

 

Other

 

Multifamily

 

N/A

 

4/11/2027

 

208,817

 

 

102,232

 

 

110,684

 

 

4

 

 

 

 

 

 

 

 

 

 

 

 

 

 

122,196

 

 

131,052

 

CMBS - Interest Only:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2

 

 

AAA

 

Multifamily

 

0.1%

 

5/21/2026

 

1,800,924

 

 

10,367

 

 

10,367

 

 

1

 

 

BBB

 

Multifamily

 

0.1%

 

1/5/2028

 

225,803

 

 

1,534

 

 

1,534

 

 

1

 

 

A

 

Multifamily

 

0.1%

 

5/2/2025

 

194,399

 

 

978

 

 

978

 

 

1

 

 

Other

 

Multifamily

 

4.5%

 

1/7/2029

 

42,024

 

 

12,340

 

 

12,340

 

 

5

 

 

 

 

 

 

 

 

 

 

 

 

 

 

25,219

 

 

25,219

 

Corporate Bonds:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

7

 

 

BB

 

Hospitality, Multifamily, Diversified

 

5.9%

 

6/30/2026

 

146,586

 

 

145,860

 

 

152,028

 

 

2

 

 

B

 

Hospitality, Multifamily

 

5.9%

 

10/9/2025

 

15,609

 

 

15,585

 

 

15,931

 

 

9

 

 

 

 

 

 

 

 

 

 

 

 

 

 

161,445

 

 

167,959

 

Term Loans:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

4

 

 

B

 

Hospitality, Diversified

 

L+3.79%

 

1/11/2025

 

43,810

 

 

43,418

 

 

43,226

 

 

2

 

 

BB

 

Hospitality, Diversified

 

L+2.74%

 

5/2/2026

 

55,471

 

 

55,211

 

 

55,096

 

 

1

 

 

Other

 

Diversified

 

L+1.70%

 

2/6/2022

 

25,608

 

 

25,000

 

 

24,968

 

 

7

 

 

 

 

 

 

 

 

 

 

 

 

 

 

123,629

 

 

123,290

 

 

163

 

 

 

 

 

 

 

 

 

 

 

 

 

$

3,430,549

 

$

3,460,922

 

 

(1)

AAA represents credit ratings of AAA and AAA-, A represents credit ratings of A+, A, and A-, 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, 2019, were either not ratable or have not been submitted to ratings agencies.

(2)

Multifamily real estate-related securities and loans 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, 2019, one-month LIBOR was 2.4%.

(4)

Weighted average maturity date is based on the fully extended maturity date of the instrument or, in the case of CMBS, the underlying collateral.

(5)

Represents notional amount for CMBS interest only positions.

36


 

The following charts further describe the diversification of our real estate-related securities and loans by credit rating and collateral type based on fair value as of June 30, 2019:

 

Credit Rating(1)

Collateral Type

 

 

Credit Rating(1)

 

 

 

(1)

AAA represents credit ratings of AAA and AAA-, A represents credit ratings of A+, A, and A-, 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, 2019, were either not ratable or have not been submitted to ratings agencies.

Subsequent to June 30, 2019, we purchased an aggregate of $62.0 million of real estate-related securities and loans.

Lease Expirations

The following schedule details the expiring leases at our industrial and retail properties by annualized base rent and square footage as of June 30, 2019 ($ and square feet data in thousands). The table below excludes our multifamily properties as substantially all leases at such properties expire within 12 months:

 

Year

 

Number of

Expiring Leases

 

Annualized

Base Rent(1)

 

% of Total

Annualized Base

Rent Expiring

 

Square

Feet

 

% of Total Square

Feet Expiring

 

2019 (remaining)

 

 

85

 

$

8,560

 

3%

 

 

1,853

 

3%

 

2020

 

 

190

 

 

34,504

 

12%

 

 

6,885

 

12%

 

2021

 

 

235

 

 

46,390

 

16%

 

 

9,814

 

18%

 

2022

 

 

215

 

 

44,830

 

15%

 

 

8,058

 

14%

 

2023

 

 

169

 

 

47,986

 

17%

 

 

9,430

 

17%

 

2024

 

 

142

 

 

29,777

 

10%

 

 

6,390

 

12%

 

2025

 

 

53

 

 

18,099

 

6%

 

 

3,452

 

6%

 

2026

 

 

31

 

 

17,530

 

6%

 

 

2,730

 

5%

 

2027

 

 

24

 

 

16,907

 

6%

 

 

2,861

 

5%

 

2028

 

 

25

 

 

7,988

 

3%

 

 

929

 

2%

 

Thereafter

 

 

32

 

 

16,373

 

6%

 

 

3,430

 

6%

 

Total

 

 

1,201

 

$

288,944

 

100%

 

 

55,832

 

100%

 

 

(1)

Annualized base rent is determined from the annualized base rent per leased square foot of the applicable year and excludes tenant recoveries, straight-line rent and above-market and below-market lease amortization.

 

37


 

Affiliate Service Providers

For details regarding our affiliate service providers, see Note 11 to our condensed consolidated financial statements included herein and Note 11 to the consolidated finance statements included in our Annual Report on form 10-K for the year ended December 31, 2018.

Results of Operations

Due to the significant amount of acquisitions of real estate and real estate-related securities and loans we have made since we commenced principal operations in January 2017, our results of operations for the three and six months ended June 30, 2019 and 2018 are not comparable. However, certain properties in our portfolio were owned for both the full three and six months ended June 30, 2019 and 2018 and are discussed further below.  

Same Property Results of Operations

We evaluate our consolidated results of operations on a same property basis, which allows us to analyze our property operating results excluding acquisitions during the periods under comparison. Properties in our portfolio are considered same property if they were owned for the full periods presented, otherwise they are considered non-same property. Recently developed properties that have not achieved stabilized occupancy (defined as 90% or greater) are excluded from same property results and are considered non-same property. We do not consider our real estate-related securities and loans segment to be same property.

For the three months ended June 30, 2019 and 2018, our same property portfolio consisted of 52 multifamily, 204 industrial, 10 hotel, and two retail properties. For the six months ended June 30, 2019 and 2018, our same property portfolio consisted of 44 multifamily, 55 industrial, 10 hotel, and two retail properties.

Same property operating results are measured by calculating same property net operating income (“NOI”). Same property NOI is a supplemental non-GAAP disclosure of our operating results that we believe is meaningful as it enables management to evaluate the impact of occupancy, rents, leasing activity, and other controllable property operating results at our real estate properties. We define same property NOI as operating revenues less operating expenses, which exclude (i) depreciation and amortization, (ii) interest expense and other non-property related revenue and expense items such as (a) general and administrative expenses, (b) management fee, (c) performance participation allocation, (d) affiliate incentive compensation awards, (e) interest income, and (f) income from real estate-related securities and loans.

Our same property NOI may not be comparable to that of other REITs and should not be considered to be more relevant or accurate in evaluating our operating performance than the current GAAP methodology used in calculating net income (loss).

The following table reconciles GAAP net loss attributable to BREIT stockholders to same property NOI for the three and six months ended June 30, 2019 and 2018 ($ in thousands):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended June 30,

 

2019 vs.

2018

 

Six Months Ended June 30,

 

2019 vs.

2018

 

 

 

2019

 

2018

 

$

 

2019

 

2018

 

$

 

Net loss attributable to BREIT stockholders

 

$

(50,704

)

$

(50,482

)

$

(222

)

$

(97,550

)

$

(98,030

)

$

480

 

Adjustments to reconcile to same property NOI

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

General and administrative

 

 

4,878

 

 

2,901

 

 

1,977

 

 

8,059

 

 

4,946

 

 

3,113

 

Management fee

 

 

22,487

 

 

9,281

 

 

13,206

 

 

39,664

 

 

16,250

 

 

23,414

 

Performance participation allocation

 

 

29,898

 

 

9,476

 

 

20,422

 

 

50,061

 

 

17,349

 

 

32,712

 

Affiliate incentive compensation awards

 

 

500

 

 

 

 

500

 

 

1,000

 

 

 

 

1,000

 

Depreciation and amortization

 

 

161,854

 

 

84,826

 

 

77,028

 

 

301,333

 

 

158,950

 

 

142,383

 

Income from real estate-related securities and loans

 

 

(51,784

)

 

(17,397

)

 

(34,387

)

 

(113,467

)

 

(30,632

)

 

(82,835

)

Gain on disposition of real estate

 

 

(29,686

)

 

 

 

(29,686

)

 

(29,686

)

 

 

 

(29,686

)

Interest income

 

 

(303

)

 

(121

)

 

(182

)

 

(497

)

 

(198

)

 

(299

)

Interest expense

 

 

103,279

 

 

49,841

 

 

53,438

 

 

194,866

 

 

81,232

 

 

113,634

 

Other income (expense)

 

 

2,061

 

 

389

 

 

1,672

 

 

407

 

 

389

 

 

18

 

Net loss attributable to non-controlling interests in third party joint ventures

 

(970

)

 

(1,217

)

 

247

 

 

(3,006

)

 

(2,930

)

 

(76

)

Net loss attributable to non-controlling interests in BREIT OP

 

 

(1,110

)

 

(245

)

 

(865

)

 

(2,324

)

 

(622

)

 

(1,702

)

NOI

 

 

190,400

 

 

87,252

 

 

103,148

 

 

348,860

 

 

146,704

 

 

202,156

 

Non-same property NOI

 

 

111,650

 

 

8,899

 

 

102,751

 

 

247,664

 

 

48,989

 

 

198,675

 

Same property NOI

 

$

78,750

 

$

78,353

 

$

397

 

$

101,196

 

$

97,715

 

$

3,481

 

38


 

The following table details the components of same property NOI for the three months ended June 30, 2019 and 2018 ($ in thousands):

 

 

 

Three Months Ended June 30,

 

 

2019 vs. 2018

 

 

 

2019

 

 

2018

 

 

$

 

 

%

 

Same property NOI

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Rental revenue

 

$

111,213

 

 

$

109,278

 

 

$

1,935

 

 

2%

 

Hotel revenue

 

 

18,536

 

 

 

18,503

 

 

 

33

 

 

0%

 

Other revenue

 

 

3,695

 

 

 

4,523

 

 

 

(828

)

 

(18%)

 

Total revenues

 

 

133,444

 

 

 

132,304

 

 

 

1,140

 

 

1%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Rental property operating

 

 

42,697

 

 

 

41,843

 

 

 

854

 

 

2%

 

Hotel operating

 

 

11,997

 

 

 

12,108

 

 

 

(111

)

 

(1%)

 

Total expenses

 

 

54,694

 

 

 

53,951

 

 

 

743

 

 

1%

 

Same property NOI

 

$

78,750

 

 

$

78,353

 

 

$

397

 

 

1%

 

Same Property – Rental Revenue

Same property rental revenue increased $1.9 million for the three months ended June 30, 2019 compared to the corresponding period in 2018. The increase was due to a $2.6 million increase in base rental revenue partially offset by a $0.3 million decrease in tenant reimbursement income. Additionally, as a result of the adoption of ASU 2016-02, $0.4 million of bad debt expense was recorded as a component of same property rental revenue for the three months ended June 30, 2019. For the three months ended June 30, 2018, bad debt expense was recorded as a component of rental property operating expenses. For further detail on the adoption of ASU 2016-02 see Note 2 to the condensed consolidated financial statements.  

The following table details the changes in base rental revenue period over period ($ in thousands):

 

 

 

 

 

 

 

 

 

2019 vs. 2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Change in Average

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Effective Annual

 

 

 

Three Months Ended June 30,

 

Change in Base

 

Change in

 

Base Rent Per Leased

 

 

 

2019

 

2018

 

Rental Revenue

 

Occupancy Rate

 

Square Foot/Unit(1)

 

Multifamily

 

$

55,356

 

$

53,776

 

$

1,580

 

0%

 

+3%

 

Industrial

 

 

40,176

 

 

39,149

 

 

1,027

 

+1%

 

+3%

 

Retail

 

 

1,805

 

 

1,782

 

 

23

 

+1%

 

+1%

 

Total base rental revenue

 

$

97,337

 

$

94,707

 

$

2,630

 

 

 

 

 

 

 

 

(1)

The annualized base rent per leased square foot or unit for the three months ended June 30, 2019 includes straight-line rent and above-market and below-market lease amortization.

Same Property – Hotel Revenue

Same property hotel revenue increased $33 thousand for the three months ended June 30, 2019 compared to the corresponding period in 2018. ADR for the hotels in our same property portfolio increased from $165 to $170 while occupancy decreased 2% and RevPAR increased from $138 to $139 during the three months ended June 30, 2019 compared to the corresponding period in 2018.

Same Property –Other Revenue

Same property other revenue decreased $0.8 million for the three months ended June 30, 2019 compared to the corresponding period in 2018. The decrease in other revenue for the three months ended June 30, 2019 was primarily a result of lower non-recurring lease related fees such as late fees and termination fees at our multifamily properties.

Same Property – Rental Property Operating Expenses

Same property rental property operating expenses increased $0.9 million during the three months ended June 30, 2019, compared to the corresponding period in 2018. The increase in rental property operating expenses was primarily the result of a $1.5 million increase in real estate taxes, insurance and repair and maintenance expenses at our multifamily and industrial properties. The increase was partially offset by the presentation of bad debt expense as a component of rental revenue for the three months ended June 30,

39


 

2019 as a result of the adoption of ASU 2016-02. During the three months ended June 30, 2018, $0.6 million of bad debt expense was recorded as a component of rental property operating expense.

Same Property – Hotel Operating Expenses

Same property hotel operating expenses decreased $0.1 million during the three months ended June 30, 2019, compared to the corresponding period in 2018. The decrease in hotel operating expenses was primarily the result of decreased expenses related to hurricane damage incurred in 2018 at certain of our hotels in Tampa and Orlando, Florida partially offset by an increase in payroll costs at certain hotels within our portfolio.

The following table details the components of same property NOI for the six months ended June 30, 2019 and 2018 ($ in thousands):

 

 

 

Six Months Ended June 30,

 

 

2019 vs. 2018

 

 

 

2019

 

 

2018

 

 

$

 

 

%

 

Same property NOI

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Rental revenue

 

$

140,710

 

 

$

137,600

 

 

$

3,110

 

 

2%

 

Hotel revenue

 

 

37,041

 

 

 

36,081

 

 

 

960

 

 

3%

 

Other revenue

 

 

7,077

 

 

 

7,774

 

 

 

(697

)

 

(9%)

 

Total revenues

 

 

184,828

 

 

 

181,455

 

 

 

3,373

 

 

2%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Rental property operating

 

 

59,428

 

 

 

60,029

 

 

 

(601

)

 

(1%)

 

Hotel operating

 

 

24,204

 

 

 

23,711

 

 

 

493

 

 

2%

 

Total expenses

 

 

83,632

 

 

 

83,740

 

 

 

(108

)

 

0%

 

Same property NOI

 

$

101,196

 

 

$

97,715

 

 

$

3,481

 

 

4%

 

Same Property – Rental Revenue

Same property rental revenue increased $3.1 million for the six months ended June 30, 2019 compared to the corresponding period in 2018. The increase was primarily due to an increase of $3.9 million in base rental revenue and a $0.2 million increase in tenant reimbursement revenue. Additionally, as a result of the adoption of ASU 2016-02, $1.0 million of bad debt expense was recorded as a component of same property rental revenue for the six months ended June 30, 2019.  For the six months ended June 30, 2018, bad debt expense was recorded as a component of rental property operating expenses. For further detail on the adoption of ASU 2016-02, see Note 2 to the condensed consolidated financial statements.

The following table details the changes in base rental revenue period over period ($ in thousands):

 

 

 

 

 

 

 

 

 

2019 vs. 2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Change in Average

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Effective Annual

 

 

 

Six Months Ended June 30,

 

Change in Base

 

Change in

 

Base Rent Per Leased

 

 

 

2019

 

2018

 

Rental Revenue

 

Occupancy Rate

 

Square Foot/Unit(1)

 

Multifamily

 

$

103,364

 

$

99,809

 

$

3,555

 

+1%

 

+2%

 

Industrial

 

 

21,197

 

 

20,926

 

 

271

 

0%

 

+2%

 

Retail

 

 

3,609

 

 

3,567

 

 

42

 

+1%

 

0%

 

Total base rental revenue

 

$

128,170

 

$

124,302

 

$

3,868

 

 

 

 

 

 

 

 

(1)

The annualized base rent per leased square foot or unit for the six months ended June 30, 2019 includes straight-line rent and above-market and below-market lease amortization.

Same Property – Hotel Revenue

Same property hotel revenue increased $1.0 million for the six months ended June 30, 2019, compared to the corresponding period in 2018 primarily due to an increase of $0.7 million at our hotel property located in downtown Atlanta, Georgia. The Hyatt House Downtown Atlanta experienced increased occupancy, ADR, and RevPAR during the first quarter of 2019 as a result of increased demand primarily associated with the Super Bowl. The remaining increase in hotel revenue was due to an increase in ADR and RevPAR across the remaining hotel properties in our portfolio. ADR for the hotels increased from $163 to $172 while occupancy decreased 1% and RevPAR increased from $134 to $138 during the six months ended June 30, 2019 compared to the corresponding period in 2018.

40


 

Same Property –Other Revenue

Same property other revenue decreased $0.7 million for the six months ended June 30, 2019 compared to the corresponding period in 2018. The decrease in other revenue for the six months ended June 30, 2019 was primarily a result of lower non-recurring lease related fees, such as late fees and termination fees at our multifamily properties.

Same Property – Rental Property Operating Expenses

Same property rental property operating expenses decreased $0.6 million during the six months ended June 30, 2019, compared to the corresponding period in 2018. The decrease in rental property operating expenses was the result of the presentation of bad debt expense as a component of rental revenue for the six months ended June 30, 2019 as a result of the adoption of ASU 2016-02. During the six months ended June 30, 2018, $1.5 million of bad debt expense was recorded as a component of rental property operating expense. The change in presentation of bad debt expense was partially offset by an increase in real estate taxes and insurance expenses at our multifamily properties.

Same Property – Hotel Operating Expenses

Same property hotel operating expenses increased $0.5 million during the six months ended June 30, 2019, compared to the corresponding period in 2018. The increase in hotel operating expenses for the six months ended June 30, 2019 was primarily a result of an increase in payroll costs at certain hotels within our portfolio, along with an increase in general operating expenses across the portfolio associated with the overall increase in revenues.

Other Operating Income and Expense Items

General and Administrative Expenses

During the three and six months ended June 30, 2019, general and administrative expenses increased $2.0 million and $3.1 million, respectively, compared to the corresponding periods in 2018, primarily due to various corporate level expenses that are related to the increased size of our portfolio.

Management Fee

During the three and six months ended June 30, 2019, the management fee increased by $13.2 million and $23.4 million, respectively, compared to the corresponding periods in 2018. The increase was due to the growth in our net asset value (“NAV”).

Performance Participation Allocation

During the three and six months ended June 30, 2019, the unrealized performance participation allocation accrual increased $20.4 million and $32.7 million, respectively, compared to the corresponding periods in 2018. The increase was the result of our increased NAV and a higher total return than the corresponding period in 2018. Such amount was allocated to the Special Limited Partner.

Depreciation and amortization

Depreciation and amortization increased significantly compared to the corresponding periods in 2018. The increase was driven by the growth in our portfolio, which increased from 314 properties as of June 30, 2018 to 652 properties as of June 30, 2019.

Income from Real Estate-Related Securities and Loans

During the three and six months ended June 30, 2019, income from real estate-related securities and loans increased $34.4 million and $82.8 million, respectively, compared to the corresponding periods in 2018. The increase was primarily due to the growth of our portfolio of investments in real estate-related securities and loans which increased from 74 positions as of June 30, 2018 to 163 positions as of June 30, 2019.

Gain from sale on disposition of real estate

During the three and six months ended June 30, 2019, we recorded $29.7 million of a gain from the disposition of real estate related to the sale of the parking garage attached to the Hyatt Place San Jose Downtown property. We did not sell any real estate in the corresponding periods in 2018.

41


 

Interest Expense

During the three and six months ended June 30, 2019, interest expense increased $53.4 million and $113.6 million, respectively, compared to the corresponding periods in 2018. The increase was primarily due to the growth in our portfolio of real estate and real estate-related securities and loans and the related indebtedness of such investments.

Non-same Property NOI

Due to our substantial fundraising and continued deployment of the net proceeds raised into new property acquisitions, non-same property NOI is not comparable period over period. We expect the non-same property NOI variance period over period to continue as we raise more proceeds from selling shares of our common stock and invest in additional new property acquisitions.

Funds from Operations, Adjusted Funds from Operations and Funds Available for Distribution

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 accounting principles generally accepted in the United States of America (“GAAP”)), excluding (i) gains or losses from sales of depreciable real property, (ii) impairment write-downs on depreciable real property, plus (iii) real estate-related depreciation and amortization, and (iv) similar adjustments for non-controlling interests.

We also believe that adjusted FFO (“AFFO”) is a meaningful non-GAAP supplemental 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 removing the impact of (i) straight-line rental income and expense, (ii) amortization of above- and below-market lease intangibles, (iii) amortization of mortgage premium/discount, (iv) unrealized (gains) losses from changes in the fair value of real estate-related securities and loans, (v) amortization of restricted stock awards, (vi) non-cash performance participation allocation or other non-cash incentive compensation even if repurchased by us, (vii) gain or loss on involuntary conversion, and (viii) similar adjustments for non-controlling interests.

We also believe funds available for distribution (“FAD”) is an additional meaningful non-GAAP supplemental disclosure that provides useful information for considering our operating results and certain other items relative to the amount of our distributions by removing the impact of certain non-cash items on our distributions. FAD is calculated as AFFO excluding (i) realized gains (losses) on real estate-related securities and loans and (ii) management fee paid in shares or BREIT OP units even if repurchased by us, and including deductions for (iii) recurring tenant improvements, leasing commissions, and other capital projects, (iv) stockholder servicing fees paid during the period, and (v) similar adjustments for non-controlling interests. FAD is not indicative of cash available to fund our cash needs and does not represent cash flows from operating activities in accordance with GAAP, as it excludes adjustments for working capital items and actual cash receipts from interest income recognized on real estate-related securities and loans. Cash flows from operating activities in accordance with GAAP would generally be adjusted for such items.  Furthermore, FAD is adjusted for stockholder servicing fees and recurring tenant improvements, leasing commissions, and other capital expenditures, which are not considered when determining cash flows from operating activities in accordance with GAAP.

42


 

The following table presents a reconciliation of FFO, AFFO and FAD to net loss attributable to BREIT stockholders ($ in thousands):

 

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

 

 

2019

 

 

2018

 

 

2019

 

 

2018

 

Net loss attributable to BREIT stockholders

 

$

(50,704

)

 

$

(50,482

)

 

$

(97,550

)

 

$

(98,030

)

Adjustments to arrive at FFO:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Real estate depreciation and amortization

 

 

161,854

 

 

 

84,826

 

 

 

301,333

 

 

 

158,950

 

Gain on disposition of real estate

 

 

(29,686

)

 

 

 

 

 

(29,686

)

 

 

 

Amount attributable to non-controlling interests for above adjustments

 

 

(5,431

)

 

 

(2,266

)

 

 

(12,629

)

 

 

(5,162

)

FFO attributable to BREIT stockholders

 

 

76,033

 

 

 

32,078

 

 

 

161,468

 

 

 

55,758

 

Adjustments to arrive at AFFO:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Straight-line rental income and expense

 

 

(1,537

)

 

 

(2,671

)

 

 

(3,728

)

 

 

(3,760

)

Amortization of above- and below-market lease intangibles

 

 

(2,007

)

 

 

(1,352

)

 

 

(3,722

)

 

 

(1,857

)

Amortization of mortgage premium/discount

 

 

15

 

 

 

(55

)

 

 

(3

)

 

 

(101

)

Unrealized (gains) losses from changes in the fair value of real estate-related securities and loans

 

(15,489

)

 

 

(2,059

)

 

 

(45,492

)

 

 

(3,848

)

Amortization of restricted stock awards

 

 

100

 

 

 

25

 

 

 

200

 

 

 

50

 

Non-cash performance participation allocation

 

 

29,898

 

 

 

9,476

 

 

 

50,061

 

 

 

17,349

 

Non-cash incentive compensation awards to affiliated service providers

 

 

500

 

 

 

 

 

 

1,000

 

 

 

 

Gain on involuntary conversion

 

 

(75

)

 

 

 

 

 

(1,389

)

 

 

 

Amount attributable to non-controlling interests for above adjustments

 

 

(265

)

 

 

(14

)

 

 

84

 

 

 

(47

)

AFFO attributable to BREIT stockholders

 

 

87,173

 

 

 

35,428

 

 

 

158,479

 

 

 

63,544

 

Adjustments to arrive at FAD:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Realized (gains) losses on real estate-related securities and loans

 

 

40

 

 

 

 

 

 

25

 

 

 

 

Management fee paid in shares

 

 

22,487

 

 

 

9,281

 

 

 

39,664

 

 

 

16,250

 

Recurring tenant improvements, leasing commissions and other capital expenditures (1)

 

 

(11,587

)

 

 

(3,149

)

 

 

(20,835

)

 

 

(5,854

)

Stockholder servicing fees

 

 

(9,449

)

 

 

(4,681

)

 

 

(17,207

)

 

 

(8,308

)

Amount attributable to non-controlling interests for above adjustments

 

 

(226

)

 

 

(33

)

 

 

(437

)

 

 

(67

)

FAD attributable to BREIT stockholders

 

$

88,438

 

 

$

36,846

 

 

$

159,689

 

 

$

65,565

 

 

(1)

Recurring tenant improvements and leasing commissions are related to second-generation leases and other capital expenditures required to maintain our investments. Second generation leases are for space that had previously been leased. Other capital expenditures exclude underwritten capital projects in conjunction with acquisitions and projects that we believe will enhance the value of our investments.

FFO, AFFO, and FAD should not be considered to be more relevant or accurate than the GAAP methodology in calculating net income (loss) or in evaluating our operating performance. In addition, FFO, AFFO, and FAD 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, AFFO, and FAD 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.


43


 

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 and loans), 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/units in thousands):

 

Components of NAV

 

June 30, 2019

 

Investments in real properties

 

$

15,795,590

 

Investments in real estate-related securities and loans

 

 

3,460,922

 

Cash and cash equivalents

 

 

150,062

 

Restricted cash

 

 

477,768

 

Other assets

 

 

130,269

 

Mortgage notes, term loans, and revolving credit facilities, net

 

 

(8,670,299

)

Repurchase agreements

 

 

(2,447,134

)

Subscriptions received in advance

 

 

(402,493

)

Other liabilities

 

 

(435,172

)

Accrued performance participation allocation

 

 

(50,061

)

Management fee payable

 

 

(8,272

)

Accrued stockholder servicing fees(1)

 

 

(3,334

)

Non-controlling interests in joint ventures

 

 

(152,855

)

Net Asset Value

 

$

7,844,991

 

Number of outstanding shares/units

 

 

708,513

 

 

(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 $3.3 million accrued for purposes of our NAV and the $335.9 million accrued under U.S. GAAP.

 

The following table provides a breakdown of our total NAV and NAV per share by share class as of June 30, 2019 ($ and shares in thousands, except per share data):

 

NAV Per Share

 

Class S

Shares

 

 

Class T

Shares

 

 

Class D

Shares

 

 

Class I

Shares

 

 

Third-party

Operating

Partnership

Units (1)

 

 

Total

 

Monthly NAV

 

$

4,231,680

 

 

$

347,774

 

 

$

579,335

 

 

$

2,531,369

 

 

$

154,833

 

 

$

7,844,991

 

Number of outstanding shares/units

 

 

381,156

 

 

 

31,904

 

 

 

52,917

 

 

 

228,556

 

 

 

13,980

 

 

 

708,513

 

NAV Per Share/Unit as of June 30, 2019

 

$

11.1022

 

 

$

10.9007

 

 

$

10.9481

 

 

$

11.0755

 

 

$

11.0755

 

 

 

 

 

 

(1)

Includes the partnership interests of BREIT OP held by the Special Limited Partner, Class B unitholders, and other BREIT OP interests held by parties other than the Company.

Set forth below are the weighted averages of the key assumptions in the discounted cash flow methodology used in the June 30, 2019 valuations, based on property types.

 

Property Type

 

Discount Rate

 

 

Exit Capitalization Rate

 

Multifamily

 

7.8%

 

 

5.5%

 

Industrial

 

7.3%

 

 

6.2%

 

Hotel

 

9.7%

 

 

9.3%

 

Retail

 

7.7%

 

 

6.7%

 

44


 

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

 

 

Hotel

Investment

Values

 

 

Retail

Investment

Values

 

Discount Rate

 

0.25% decrease

 

+1.9%

 

 

+1.9%

 

 

+1.0%

 

 

+1.8%

 

(weighted average)

 

0.25% increase

 

(1.8%)

 

 

(1.9%)

 

 

(1.0%)

 

 

(1.8%)

 

Exit Capitalization Rate

 

0.25% decrease

 

+3.0%

 

 

+2.7%

 

 

+2.0%

 

 

+2.3%

 

(weighted average)

 

0.25% increase

 

(2.7%)

 

 

(2.5%)

 

 

(1.9%)

 

 

(2.1%)

 

 

The following table reconciles stockholders’ equity per our condensed consolidated balance sheet to our NAV ($ in thousands):

 

Reconciliation of Stockholders’ Equity to NAV

June 30, 2019

 

Stockholders’ equity under U.S. GAAP

$

6,130,735

 

Non-controlling interests attributable to Class B units

 

131,915

 

Redeemable non-controlling interest

 

10,183

 

Total partners' capital of BREIT OP

 

6,272,833

 

Adjustments:

 

 

 

Accrued stockholder servicing fee

 

356,583

 

Organization and offering costs

 

7,159

 

Accrued affiliate incentive compensation awards

 

(5,145

)

Unrealized real estate appreciation

 

408,728

 

Accumulated depreciation and amortization

 

804,833

 

NAV

$

7,844,991

 

 

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 T, and Class D shares. Under GAAP, we accrued the full cost of the stockholder servicing fee payable over the life of each share (assuming such share remains outstanding the length of time required to pay the maximum stockholder servicing fee) as an offering cost at the time we sold the Class S, Class T, and Class D shares. Refer to Note 2 to the consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, 2018 for further details of the GAAP treatment regarding the stockholder servicing fee. For purposes of NAV we recognize the stockholder servicing fee as a reduction of NAV on a monthly basis when such fee is paid.

 

-

The Adviser agreed to advance certain organization and offering costs on our behalf through December 31, 2017. Such costs are being reimbursed to the Adviser pro-rata basis over 60 months beginning January 1, 2018. Under GAAP, organization costs are expensed as incurred and offering costs are charged to equity as such amounts are incurred. For NAV, such costs will be recognized as a reduction to NAV as they are reimbursed ratably over 60 months.

 

-

Under GAAP, the affiliate incentive compensation awards are valued as of grant date and compensation expense is recognized over the service period on a straight-line basis with an offset to equity resulting in no impact to Stockholders’ Equity. For purposes of NAV, we value the awards based on the performance of the applicable period and deduct such value from NAV.

 

-

Our investments in real estate are presented under historical cost in our GAAP consolidated financial statements. Additionally, our mortgage notes, term loans, secured and unsecured revolving credit facilities, and repurchase agreements (“Debt”) are presented at their carrying value in our consolidated GAAP financial statements. As such, any increases or decreases in the fair 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.

 

-

In addition, we depreciate our investments in real estate and amortize certain other assets and liabilities in accordance with GAAP. Such depreciation and amortization is not recorded for purposes of determining our NAV. 


45


 

Distributions

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 received the same gross distribution per share, which was $0.3170 per share for the six months ended June 30, 2019. 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, 2019:  

 

 

 

Class S

Shares

 

 

Class T

Shares

 

 

Class D

Shares

 

 

Class I

Shares

 

January 31, 2019

 

$

0.0451

 

 

$

0.0452

 

 

$

0.0507

 

 

$

0.0530

 

February 28, 2019

 

 

0.0451

 

 

 

0.0452

 

 

 

0.0501

 

 

 

0.0522

 

March 31, 2019

 

 

0.0451

 

 

 

0.0452

 

 

 

0.0507

 

 

 

0.0530

 

April 30, 2019

 

 

0.0451

 

 

 

0.0453

 

 

 

0.0506

 

 

 

0.0528

 

May 31, 2019

 

 

0.0451

 

 

 

0.0453

 

 

 

0.0508

 

 

 

0.0531

 

June 30, 2019

 

 

0.0451

 

 

 

0.0453

 

 

 

0.0506

 

 

 

0.0529

 

Total

 

$

0.2706

 

 

$

0.2715

 

 

$

0.3035

 

 

$

0.3170

 

 

The following tables summarize our distributions declared during the three and six months ended June 30, 2019 and 2018 ($ in thousands):

 

 

 

Three Months Ended June 30, 2019

 

 

Three Months Ended June 30, 2018

 

 

 

Amount

 

 

Percentage

 

 

Amount

 

 

Percentage

 

Distributions

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Payable in cash

 

$

33,812

 

 

 

37

%

 

$

13,928

 

 

 

37

%

Reinvested in shares

 

 

57,059

 

 

 

63

%

 

 

24,115

 

 

 

63

%

Total distributions

 

$

90,871

 

 

 

100

%

 

$

38,043

 

 

 

100

%

Sources of Distributions

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash flows from operating activities

 

$

90,871

 

 

 

100

%

 

$

38,043

 

 

 

100

%

Offering proceeds

 

 

 

 

 

%

 

 

 

 

 

%

Total sources of distributions

 

$

90,871

 

 

 

100

%

 

$

38,043

 

 

 

100

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash flows from operating activities

 

$

120,433

 

 

 

 

 

 

$

62,835

 

 

 

 

 

Funds from Operations

 

$

76,033

 

 

 

 

 

 

$

32,078

 

 

 

 

 

Adjusted Funds from Operations

 

$

87,173

 

 

 

 

 

 

$

35,428

 

 

 

 

 

Funds Available for Distribution

 

$

88,438

 

 

 

 

 

 

$

36,846

 

 

 

 

 

 

 

 

 

Six Months Ended June 30, 2019

 

 

Six Months Ended June 30, 2018

 

 

 

Amount

 

 

Percentage

 

 

Amount

 

 

Percentage

 

Distributions

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Payable in cash

 

$

58,780

 

 

 

37

%

 

$

24,076

 

 

 

36

%

Reinvested in shares

 

 

101,633

 

 

 

63

%

 

 

42,351

 

 

 

64

%

Total distributions

 

$

160,413

 

 

 

100

%

 

$

66,427

 

 

 

100

%

Sources of Distributions

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash flows from operating activities

 

$

160,413

 

 

 

100

%

 

$

66,427

 

 

 

100

%

Offering proceeds

 

 

 

 

 

%

 

 

 

 

 

%

Total sources of distributions

 

$

160,413

 

 

 

100

%

 

$

66,427

 

 

 

100

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash flows from operating activities

 

$

193,469

 

 

 

 

 

 

$

104,325

 

 

 

 

 

Funds from Operations

 

$

161,468

 

 

 

 

 

 

$

55,758

 

 

 

 

 

Adjusted Funds from Operations

 

$

158,479

 

 

 

 

 

 

$

63,544

 

 

 

 

 

Funds Available for Distribution

 

$

159,689

 

 

 

 

 

 

$

65,565

 

 

 

 

 

 


46


 

Liquidity and Capital Resources

Our primary needs for liquidity and capital resources are to fund our investments, make distributions to our stockholders, repurchase shares of our common stock pursuant to our share repurchase plan, repurchasing shares or redeeming BREIT OP units from the Adviser or the Special Limited Partner, pay our organization and offering costs (including reimbursement of organization and offering costs advanced by the Adviser), operating expenses, capital expenditures and to pay debt service on our outstanding indebtedness. Our operating expenses include, among other things, the management fee we pay to the Adviser (to the extent the Adviser elects to receive the management fee in cash), the performance participation allocation that BREIT OP pays to the Special Limited Partner (to the extent the Special Limited Partner elects to receive the performance participation in cash), 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, 2019, our distributions have been funded entirely from cash flows from operations.

As of June 30, 2019, our indebtedness included loans secured by our properties, master repurchase agreements with Barclays Bank PLC (the “Barclays MRA”), Royal Bank of Canada (the “RBC MRA”), Citigroup Global Markets Inc. (the “Citi MRA”), Bank of America Merrill Lynch (the “BAML MRA”), Morgan Stanley Bank, N.A. (the “MS MRA”), MUFG Securities EMEA PLC (the “MUFG MRA”), and HSBC Bank USA, National Association (the “HSBC MRA”) secured by our investments in real estate-related securities.

On February 21, 2019, the Company entered into a $350.0 million unsecured line of credit with a third party. The line of credit expires on February 22, 2022 and may be extended for up to one year. Interest under the line of credit is determined based on a one-month U.S. dollar-denominated LIBOR plus 2.50%. During the second quarter of 2019, the Company increased the capacity of the unsecured line of credit to $685.0 million.

The following table is a summary of our indebtedness ($ in thousands):

 

 

 

 

 

 

 

 

 

 

 

 

 

Principal Balance as Of

 

Indebtedness

 

Weighted

Average

Interest Rate(1)

 

 

Weighted

Average

Maturity Date(2)(3)

 

Maximum

Facility

Size

 

 

June 30,

2019

 

 

December 31, 2018

 

Fixed rate loans:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fixed rate mortgages

 

4.00%

 

 

12/6/2025

 

N/A

 

 

$

6,176,501

 

 

$

4,782,326

 

Mezzanine loan

 

5.85%

 

 

4/5/2025

 

N/A

 

 

 

200,000

 

 

 

200,000

 

Total fixed rate loans

 

4.06%

 

 

11/28/2025

 

 

 

 

 

 

6,376,501

 

 

 

4,982,326

 

Variable rate loans:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Floating rate mortgages

 

L+1.71%

 

 

5/9/2026

 

N/A

 

 

 

667,916

 

 

 

675,116

 

Variable rate term loans

 

L+1.66%

 

 

3/19/2023

 

N/A

 

 

 

732,325

 

 

 

603,500

 

Variable rate secured revolving credit facilities

 

L+1.65%

 

 

4/19/2023

 

$

1,032,325

 

 

 

662,825

 

 

 

624,200

 

Total variable rate loans

 

L+1.67%

 

 

4/3/2024

 

 

 

 

 

 

2,063,066

 

 

 

1,902,816

 

Total loans secured by our properties

 

4.06%

 

 

7/3/2025

 

 

 

 

 

 

8,439,567

 

 

 

6,885,142

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Repurchase agreement borrowings secured by our real estate-related securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Barclays MRA

 

 

 

 

 

9/29/2021

 

 

750,000

 

 

 

750,000

 

 

 

750,000

 

Other MRAs(4)

 

 

 

 

 

9/11/2019

 

N/A

 

 

 

1,697,134

 

 

 

963,723

 

Total repurchase agreement borrowings secured by our real estate-related securities(5)

3.61%

 

 

 

 

 

 

 

 

 

2,447,134

 

 

 

1,713,723

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unsecured loans:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unsecured variable rate revolving credit facility

 

L+2.50%

 

 

2/22/2022

 

 

685,000

 

 

 

240,000

 

 

 

 

Affiliate line of credit

 

L+2.50%

 

 

1/23/2020

 

 

250,000

 

 

 

 

 

 

 

Total unsecured loans

 

 

 

 

 

 

 

 

935,000

 

 

 

240,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total indebtedness

 

 

 

 

 

 

 

 

 

 

 

$

11,126,701

 

 

$

8,598,865

 

 

(1)

The term “L” refers to (i) the one-month LIBOR with respect to loans secured by our properties and unsecured loans, and (ii) the one-month, three-month and twelve-month LIBOR with respect to the repurchase agreement borrowings.

(2)

For loans where we, at our sole discretion, have extension options, the maximum maturity date has been assumed.

(3)

Subsequent to quarter end, we rolled our repurchase agreement contracts expiring in July 2019 into new contracts.

(4)

Includes RBC MRA, Citi MRA, BAML MRA, MS MRA, MUFG MRA, and HSBC MRA.

(5)

Weighted average interest rate based on L+1.22%.

47


 

As of August 14, 2019, we had received net proceeds of $2.8 billion from selling an aggregate of 253,668,818 shares of our common stock in the Current Offering (consisting of 136,206,264 Class S shares, 11,545,459 Class T shares, 31,193,190 Class D shares, and 74,723,905 Class I shares).

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.

Cash Flows

The following table provides a breakdown of the net change in our cash and cash equivalents and restricted cash ($ in thousands):

 

 

 

Six Months Ended June 30,

 

 

 

2019

 

 

2018

 

Cash flows provided by operating activities

 

$

193,469

 

 

$

104,325

 

Cash flows used in investing activities

 

 

(4,809,537

)

 

 

(3,962,308

)

Cash flows provided by financing activities

 

 

4,937,285

 

 

 

3,936,298

 

Net increase in cash and cash equivalents and restricted cash

 

$

321,217

 

 

$

78,315

 

 

Cash flows provided by operating activities increased $89.1 million during the six months ended June 30, 2019 compared to the corresponding period in the 2018 due to increased cash flows from the operations of the investments in real estate and income on our investments in real estate-related securities and loans.

Cash flows used in investing activities increased $0.8 billion during the six months ended June 30, 2019 compared to the corresponding period in 2018 primarily due to an increase of $0.4 billion in the acquisition of real estate investments and an increase in the acquisition of real estate-related securities and loans of $0.6 billion. Such increases were offset by $0.3 billion in proceeds from the disposition of real estate and settlement of real-estate related securities and loans.  

Cash flows provided by financing activities increased $1.0 billion during the six months ended June 30, 2019 compared to the corresponding period in 2018 primarily due to a net increase of $1.3 billion from the issuance of our common stock and an increase of $0.3 billion in subscriptions received in advance, partially offset by a net decrease in borrowings of $0.5 billion.

Critical Accounting Policies

The preparation of the financial statements in accordance with GAAP involves significant judgments and assumptions and requires 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 loans, and revenue recognition to be our critical accounting policies. See Note 2 to the consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, 2018 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.


48


 

Contractual Obligations

 

The following table aggregates our contractual obligations and commitments with payments due subsequent to June 30, 2019 ($ in thousands).

 

Obligations

 

Total

 

 

Less than

1 year

 

 

1-3 years

 

 

3-5 years

 

 

More than

5 years

 

Indebtedness (1)

 

$

13,261,373

 

 

 

2,152,158

 

 

 

2,301,959

 

 

 

2,387,163

 

 

 

6,420,093

 

Ground leases

 

 

813,989

 

 

 

4,374

 

 

 

9,124

 

 

 

9,651

 

 

 

790,840

 

Organizational and offering costs

 

 

7,159

 

 

 

2,045

 

 

 

4,091

 

 

 

1,023

 

 

 

 

Other

 

 

16,231

 

 

 

3,082

 

 

 

7,618

 

 

 

4,769

 

 

 

762

 

Total

 

$

14,098,752

 

 

$

2,161,659

 

 

$

2,322,792

 

 

$

2,402,606

 

 

$

7,211,695

 

 

(1)

The allocation of our indebtedness includes both principal and interest payments based on the current maturity date and interest rates in effect at June 30, 2019.

49


 

ITEM 3.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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 June 30, 2019, the outstanding principal balance of our variable rate indebtedness was $4.8 billion and consisted of mortgage notes, term loans, secured and unsecured revolving credit facilities, and repurchase agreements.        

Certain of our mortgage notes, term loans, secured and unsecured revolving credit facilities and repurchase agreements are variable rate and indexed to one-month or 12-month U.S. Dollar denominated LIBOR. For the three and six months ended June 30, 2019, a 10% increase in one-month or 12-month U.S. Dollar denominated LIBOR would have resulted in increased interest expense of $2.6 million and $4.7 million, respectively.

Investments in real estate-related securities and loans

As of June 30, 2019, we held $3.5 billion of real estate-related securities and loans. Our investments in real estate-related securities and loans are primarily floating-rate and indexed to one-month or three-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, for the three and six months ended June 30, 2019, a 10% increase or decrease in the one-month or three-month U.S. denominated LIBOR rate would have resulted in an increase or decrease to income from real estate-related securities and loans of $1.4 million and $2.5 million, respectively.

We may also be exposed to market risk with respect to our investments in real estate-related securities and loans 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 securities and loans by making investments in securities and loans 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 real estate-related securities and loans is unknown. As of June 30, 2019, the fair value at which we may sell our investments in real estate-related securities and loans is not known, but a 10% change in the fair value of our investments in real estate-related securities and loans may result in a change in the carrying value of our real estate-related securities and loans of $346.1 million.

ITEM 4.

CONTROLS AND PROCEDURES

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) were 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) 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.

50


 

PART II. OTHER INFORMATION

ITEM 1.

LEGAL PROCEEDINGS

From time to time, we may be involved in various claims and legal actions arising in the ordinary course of business. As of June 30, 2019, we were not involved in any material legal proceedings.

ITEM  1A.

RISK FACTORS

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, 2018.

 

51


 

ITEM  2.

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Unregistered Sales of Equity Securities

During the three months ended June 30, 2019, we sold equity securities that were not registered under the Securities Act as described below. As described in Note 11 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 months ended June 30, 2019, the Adviser elected to receive its management fee in Class I shares and we issued 1,292,952 unregistered Class I shares to the Adviser in satisfaction of the management fee for April and May 2019. Additionally, we issued 746,844 unregistered Class I shares to the Adviser in July 2019 in satisfaction of the June 2019 management fee.

We have also sold Class I shares at the same transaction price as for Class I shares registered under the Current Offering to a non-U.S. feeder vehicle primarily created to hold Class I shares that offers interests in itself to non-U.S. persons. The offer and sale of Class I shares to the feeder vehicle is claimed to be exempt from the registration provisions of the Securities Act, by virtue of Section 4(a)(2) and Regulation S thereunder. During the three months ended June 30, 2019, we sold 63,560,547 unregistered Class I shares to such vehicle. We intend to use the net proceeds from such sales for the purposes set forth in the prospectus for our current offering and in a manner within the investment guidelines approved by our board of directors, who serve as fiduciaries to our stockholders.

Share Repurchases 

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, Class I shares, and Class B Units 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 three months ended June 30, 2019, we repurchased shares of our common stock in the following amounts, which represented all of the share repurchase requests received for the same period.

Month of:

 

Total Number

of Shares

Repurchased(1)

 

 

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(2)

 

April 2019

 

 

3,355,938

 

 

 

0.59

%

 

 

10.90

 

 

 

3,355,938

 

 

 

 

May 2019

 

 

1,330,994

 

 

 

0.21

%

 

 

10.91

 

 

 

1,330,994

 

 

 

 

June 2019

 

 

818,131

 

 

 

0.12

%

 

 

10.99

 

 

 

818,131

 

 

 

 

Total

 

 

5,505,063

 

 

N/M

 

 

$

10.93

 

 

 

5,505,063

 

 

 

 

 

(1)

Includes 3,149,004 Class I shares previously issued to the Adviser as payment for the management fee. The shares were repurchased at the then current transaction price resulting in a total repurchase of $34.4 million. As of June 30, 2019, the Adviser owned 1.3 million of our Class I common shares.

52


 

(2)

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 $281.7 million of Class S, Class T, Class D, Class I shares, and Class B Units based on our March 31, 2019 NAV in the second quarter of 2019 (if such repurchase requests were made). Pursuant to the share repurchase plan, this amount resets at the beginning of each quarter.

 

The Special Limited Partner continues to hold 919,385 Class I units in BREIT OP. The redemption of Class I units are not considered part of our share repurchase plan as described above.

 

ITEM 3.

DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4.

MINE SAFETY DISCLOSURES

Not applicable.

ITEM  5.

OTHER INFORMATION

Not applicable.

 


53


 

ITEM 6.

EXHIBITS

 

 

 

  10.1*

 

Transaction Agreement, dated as of June 2, 2019, by and among the Sellers named therein, the Acquired Companies named therein, the Seller Representative named therein, BRE Jupiter LLC, GLP US Management Holdings LLC and the Merger Subs named therein

  10.2*

 

Memorandum of Designation and Understanding, dated as of June 2, 2019, by and among BRE Jupiter LLC, Blackstone Real Estate Partners VIII L.P., Blackstone Real Estate Partners IX L.P. and Blackstone Real Estate Income Trust, Inc.

  31.1

 

Certification of Chief Executive Officer, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

 

 

 

  31.2

 

Certification of Chief Financial Officer, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

 

 

 

  32.1 +

 

Certification of Chief Executive Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

 

 

 

  32.2 +

 

Certification of Chief Financial Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

 

 

 

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

 

*

Filed herewith.

+

This exhibit shall not be deemed “filed” for purposes of Section 18 of the Exchange Act or otherwise subject to the liability of that Section. Such exhibit shall not be deemed incorporated into any filing under the Securities Act or the Exchange Act.

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.

54


 

SIGNATURES

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.

 

 

 

August 14, 2019

 

/s/ Frank Cohen

Date

 

Frank Cohen

 

 

Chief Executive Officer

 

 

(Principal Executive Officer)

 

 

 

August 14, 2019

 

/s/ Paul D. Quinlan

Date

 

Paul D. Quinlan

 

 

Chief Financial Officer and Treasurer

 

 

(Principal Financial Officer)

 

 

 

August 14, 2019

 

/s/ Paul Kolodziej

Date

 

Paul Kolodziej

 

 

Chief Accounting Officer

 

 

(Principal Accounting Officer)

 

 

55