Blackstone Real Estate Income Trust, Inc. files 10-Q

Blackstone Real Estate Income Trust, Inc. filed 10-Q with SEC. Read ‘s full filing at 000156459019019456.

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.

(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%).

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%).

The Company utilized its incremental borrowing rate of approximately 7% to determine its lease liabilities. As of March 31, 2019, the weighted average remaining lease term of the Company’s operating leases and financing leases was 78 years and 77 years, respectively.

(3) The term ‘L’ refers to the one-month U.S. dollar-denominated London Interbank Offer Rate (‘LIBOR’). As of March 31, 2019 and December 31, 2018, one-month LIBOR was equal to 2.5%.

The term ‘L’ refers to the one-month U.S. dollar-denominated London Interbank Offer Rate (‘LIBOR’). As of March 31, 2019 and December 31, 2018, one-month LIBOR was equal to 2.5%.

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%. The maximum facility size has been included in the variable rate revolving credit facilities in the table below. There was no outstanding balance on the line of credit as of March 31, 2019.

(1) The term ‘L’ refers to the one-month LIBOR. As of March 31, 2019, one-month LIBOR was equal to 2.5%.

The term ‘L’ refers to the one-month LIBOR. As of March 31, 2019, one-month LIBOR was equal to 2.5%.

The weighted average interest rate of the Company’s repurchase agreements was 3.85% (L+1.35%) as of March 31, 2019. The term ‘L’ refers to the one-month, three-month or 12-month U.S. dollar-denominated London Interbank Offer Rate (‘LIBOR’).

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 months ended March 31, 2019 and 2018, the Company incurred management fees of $17.2 million and $7.0 million, respectively.

(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.

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.

• Inception through March 31, 2019 annualized total return, without upfront selling commissions, was 9.3% for Class S, 9.5% for Class T, 10.5% for Class D, and 10.2% for Class I shares. Inception to date annualized total return assuming full upfront selling commissions of 7.5% for Class S, 7.3% for Class T, and 9.5% for Class D shares.

Inception through March 31, 2019 annualized total return, without upfront selling commissions, was 9.3% for Class S, 9.5% for Class T, 10.5% for Class D, and 10.2% for Class I shares. Inception to date annualized total return assuming full upfront selling commissions of 7.5% for Class S, 7.3% for Class T, and 9.5% for Class D shares.

• Our 491 properties as of March 31, 2019 consisted of Multifamily (54% based on fair value), Industrial (34%), Hotel (11%), and Retail (1%) and our portfolio of real estate was concentrated in the following regions: South (40%), West (37%), East (15%), and Midwest (8%).

Our 491 properties as of March 31, 2019 consisted of Multifamily (54% based on fair value), Industrial (34%), Hotel (11%), and Retail (1%) and our portfolio of real estate was concentrated in the following regions: South (40%), West (37%), East (15%), and Midwest (8%).

• Investments in real estate-related securities and loans as of March 31, 2019 were diversified by credit rating – BB (45% based on fair value), BBB (24%), B (21%), Other (6%), A (3%), and AAA (1%) and collateral backing – Hospitality (58%), Office (27%), Multifamily (10%), Industrial (4%), and Retail (1%).

Investments in real estate-related securities and loans as of March 31, 2019 were diversified by credit rating – BB (45% based on fair value), BBB (24%), B (21%), Other (6%), A (3%), and AAA (1%) and collateral backing – Hospitality (58%), Office (27%), Multifamily (10%), Industrial (4%), and Retail (1%).

• Closed 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%.

Closed 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%.

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 95% TA Multifamily Portfolio 6 Various(4) Apr. 2017 100% 2,514 units 94% Emory Point 1 Atlanta, GA May 2017 100% 750 units 97% Nevada West Multifamily 3 Las Vegas, NV May 2017 100% 972 units 96% Mountain Gate & Trails Multifamily 2 Las Vegas, NV June 2017 100% 539 units 96% Elysian West Multifamily 1 Las Vegas, NV July 2017 100% 466 units 93% 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 94% ACG II Multifamily 4 Various(5) Sept. 2017 94% 932 units 93% Olympus Multifamily 3 Jacksonville, FL Nov. 2017 95% 1,032 units 93% Amberglen West Multifamily 1 Hillsboro, OR Nov. 2017 100% 396 units 95% Aston Multifamily Portfolio 20 Various(6) Nov. 2017 & Jan. 2018 90% 4,584 units 94% Talavera and Flamingo Multifamily 2 Las Vegas, NV Dec. 2017 100% 674 units 94% 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 93% The Boulevard 1 Phoenix, AZ April 2018 100% 294 units 94% Blue Hills Multifamily 1 Boston, MA May 2018 100% 472 units 92% Wave Multifamily Portfolio 6 Various(7) May 2018 100% 2,199 units 92% 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 94% Solis at Flamingo 1 Las Vegas, NV June 2018 95% 524 units 93% Velaire at Aspera 1 Phoenix, AZ July 2018 100% 286 units 91% Coyote Multifamily Portfolio 6 Phoenix, AZ Aug. 2018 100% 1,751 units 95% Avanti Apartments 1 Las Vegas, NV Dec. 2018 100% 414 units 95% Gilbert Heritage Apartments 1 Phoenix, AZ Feb. 2019 90% 256 units 95% Roman Multifamily Portfolio 14 Various(8) Feb. 2019 100% 3,743 units 94% Highroads MH 3 Phoenix, AZ April 2018 99% 265 units 94% Evergreen Minari MH 2 Phoenix, AZ June 2018 99% 114 units 96% Southwest MH 14 Various(9) June 2018 99% 3,065 units 90% Hidden Springs MH 1 Desert Hot Springs, CA July 2018 99% 317 units 87% SVPAC MH 2 Phoenix, AZ July 2018 99% 233 units 96% Royal Vegas MH 1 Las Vegas, NV Oct. 2018 99% 176 units 73% Riverest MH 1 Tavares, FL Dec. 2018 99% 130 units 93% EdR Student Housing Portfolio 20 Various(10) Sept. 2018 95% 10,610 units 97% Total Multifamily 136 43,211 units Industrial: Stockton Industrial Park 1 Stockton, CA Feb. 2017 100% 878 sq. ft. 100% HS Industrial Portfolio 38 Various(11) Apr. 2017 100% 5,972 sq. ft. 96% Fairfield Industrial Portfolio 11 Fairfield, NJ Sept. 2017 100% 578 sq. ft. 100% Southeast Industrial Portfolio 5 Various(12) Nov. 2017 100% 1,927 sq. ft. 100% Kraft Chicago Industrial Portfolio 3 Aurora, IL Jan. 2018 100% 1,693 sq. ft. 100% Canyon Industrial Portfolio 146 Various(13) Mar. 2018 100% 21,719 sq. ft. 96% HP Cold Storage Industrial Portfolio 6 Various(14) May 2018 100% 2,252 sq. ft. 94% Meridian Industrial Portfolio 106 Various(15) Nov. 2018 99%(15) 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% Total Industrial 326 50,827 sq. ft.

(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%).

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%).

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%).

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%).

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%).

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%).

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

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

(10) 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%).

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%).

(11) 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%).

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%).

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

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

(13) 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%).

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%).

(14) 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%).

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%).

(15) 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.

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.

(16) 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%).

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%).

(3) The term ‘L’ refers to the one-month U.S. dollar-denominated London Interbank Offer Rate (‘LIBOR’). As of March 31, 2019, one-month LIBOR was 2.5%.

The term ‘L’ refers to the one-month U.S. dollar-denominated London Interbank Offer Rate (‘LIBOR’). As of March 31, 2019, one-month LIBOR was 2.5%.

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.

Same property hotel revenue increased $1.0 million for the three months ended March 31, 2019, compared to the corresponding period in 2018 primarily due to an increase of $0.6 million at our hotel property located in downtown Atlanta, Georgia. The Hyatt House Downtown Atlanta experienced increased occupancy, ADR, and RevPAR during the three months ended March 31, 2019 as a result of increased demand 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 $161 to $172 while occupancy decreased 1% and with RevPAR increasing from $131 to $138 during the three months ended March 31, 2019 compared to the corresponding period in 2018.

Same property rental property operating expenses increased $1.2 million during the three months ended March 31, 2019, compared to the corresponding period in 2018. The increase in rental property operating expenses for the three months ended March 31, 2019 was primarily a result of an increase in general operating expenses related to the increase in occupancy at our multifamily (1%), industrial (2%), and retail (2%) properties.

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%. The maximum facility size has been included in the variable rate revolving credit facilities in the table below. There was no outstanding balance on the line of credit as of March 31, 2019.

Certain of our mortgage notes, term loans, revolving credit facilities and repurchase agreements are variable rate and indexed to one-month, three-month, or 12-month U.S. Dollar denominated LIBOR. For the three months ended March 31, 2019, a 10% increase in one-month, three-month, or 12-month U.S. Dollar denominated LIBOR would have resulted in increased interest expense of $1.9 million.

As of March 31, 2019, we held $2.4 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 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 months ended March 31, 2019, a 10% increase or decrease in the one-month U.S. denominated LIBOR rate would have resulted in an increase or decrease to income from real estate-related securities and loans of $1.4 million.

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 March 31, 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 $238.6 million.

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.

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