Blackstone REIT Plans to Raise Another $10 Billion in NTR Offering
June 12, 2018 | James Sprow | Blue Vault
In a registration statement filed with the SEC on Tuesday, Blackstone Real Estate Income Trust made known its intentions to raise up to an additional $10 billion in equity for its nontraded REIT program that broke escrow on January 1, 2017 and has already raised over $3.00 billion, including over $1.13 billion since January 1, 2018, according to Blue Vault’s monthly NTR sales reports. In the first five months of 2018, the REIT has raised about 66% of all equity raised in the nontraded REIT sector by 24 effective offerings. In May, Blackstone REIT raised an estimated $256.5 million, including DRIP proceeds, for a market share in the NTR sector of 65%. By contrast, the next five nontraded REITs in total sales in May combined had raised 22% of the sector’s equity.
According to the S-11 registration for the latest offering, Blackstone REIT plans to raise up to $8.0 billion through the issuance of Class T, Class C, Class D and Class I common stock. In addition, the REIT registered to issue up to $2.0 billion through its Distribution Reinvestment Program (“DRIP”). The prices for each share class to the public, including upfront selling commissions for Class T, S and D shares, would be: Class T $10.9060; Class S $11.0884; Class D $10.7517 and Class I $10.6985. The prices per share for each class of shares is based upon the June 1 offering price which is equal to such class’s NAV as of April 30, 2018. Shares of each class will be issued on a monthly basis at a price per share generally equal to the prior month’s NAV per share for each class, plus applicable upfront selling commissions and dealer manager fees.
Upfront selling commissions will be up to 3.0% for Class T shares, with a dealer manager fee of 0.5%. For Class S shares, the upfront selling commission will be up to 3.5% with no dealer manager fees. For Class D shares, the upfront selling commission is up to 1.5% of the transaction price. There will also be a stockholder servicing fee of 0.65% per annum and a dealer stockholder servicing fee of 0.20% per annum of the aggregate NAV for Class T shares, a stockholder servicing fee of 0.85% per annum for Class S shares, and a stockholder servicing fee of 0.25% per annum for Class D shares, payable monthly. Class I shares will not have stockholder servicing fees.
The REIT pays the Adviser a management fee equal to 1.25% of NAV per annum payable monthly. In addition, the Special Limited Partner holds a performance participation interest in the Operating Partnership that entitles it to receive an allocation from the REIT’s Operating Partnership equal to 12.5% of the total return, subject to a 5% hurdle rate and a “High Water Mark”, with a “Catch-Up” (each term is defined in the prospectus). This allocation is made annually and accrues monthly. In Q1 2018, the REIT reported a “Performance participation allocation” of $7.873 million, representing 33% of the funds from operations attributable to BREIT stockholders for the quarter. Total distributions, including DRIP, were 91% of Adjusted Funds from Operations attributable to BREIT stockholders in Q1 2018, and 108% of Funds from Operations. Stockholders reinvested over $16.9 million of total distributions of $25.6 million in Q1 2018.
According to Blue Vault’s Q1 2018 NTR Industry Review, Blackstone REIT’s distributions were (net of fees) at rates of 5.66%, 5.85%, 5.00% and 5.09% annualized for Class D, I, S and T shares, respectively.
As of March 31, 2018, Blackstone REIT owned 272 properties and 51 CMBS. Based upon fair values, the portfolio was 47% residential, 46% industrial, 5% hotels and 2% retail. The real estate portfolio consisted of 17,171 multifamily units, 32.8 million square feet of industrial, 1,356 hotel rooms and 403,000 square feet of retail.
Class T and Class S shares are available through brokerage and transaction-based accounts. Class D shares are generally available for purchase only (1) through fee-based programs, also known as wrap accounts, that provide access to Class D shares, (2) through participating broker-dealers that have alternative fee arrangements with their clients to provide access to Class D shares, (3) through transaction/brokerage platforms at participating broker-dealers, (4) through certain registered investment advisers, (5) through bank trust departments or any other organization or person authorized to act in a fiduciary capacity for its clients or customers or (6) other categories of investors that are named in an amendment or supplement to the prospectus. Class I shares are generally available for purchase in the offering only (1) through fee-based programs, also known as wrap accounts, that provide access to Class I shares, (2) by endowments, foundations, pension funds and other institutional investors, (3) through participating broker-dealers that have alternative fee arrangements with their clients to provide access to Class I shares, (4) through certain registered investment advisers, (5) by executive officers and directors and their immediate family members, as well as officers and employees of the Adviser, Blackstone or other affiliates and their immediate family members, and joint venture partners, consultants and other service providers or (6) other categories of investors that are named in an amendment or supplement to the prospectus.
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