Blackstone Real Estate Income Trust, a publicly registered non-traded REIT sponsored by private equity giant The Blackstone Group (NYSE: BX), has declared lower monthly net asset values for its Class S, Class I, Class D and Class T shares of common stock, as of March 31, 2020.
In a filing with the Securities and Exchange Commission, Blackstone REIT explained that the global outbreak of COVID-19 has adversely impacted global commercial activity and contributed to significant volatility in financial markets.
Class S shares, which are purchased through brokerage and transaction-based accounts, have a net asset value per share of approximately $10.46. Last month, Class S shares had a monthly net asset value of approximately $11.44 each.
Class I shares, which have a net asset value per share of approximately $10.44, are sold to endowments, foundations, pension funds and other institutional investors, as well to REIT executives, directors, and their immediate family members. Last month, Class I shares had a net asset value per share of nearly $11.42.
Class D shares have a net asset value per share of approximately $10.31 each and are sold through fee-based programs known as wrap accounts, and through participating broker-dealers, certain registered investment advisers, and through bank trust departments or other organizations. Last month, Class D shares had a NAV per share of approximately $11.27.
Class T shares have a per share NAV of approximately $10.27 and are available through brokerage and transaction-based accounts. Last month, Class T shares had a per share NAV of $11.23.
Blackstone REIT said that the price movement was driven by unrealized mark-to-market declines across its real estate debt portfolio, as well as reduced valuations of its real estate properties as determined through its monthly valuation process.
The company noted that reduced property values were generally attributable to “anticipated slower rental growth and rent relief requests, which have been modest to date, as well as anticipated reductions in projected lease-up of vacant space.” The company also pointed to decreased cash flow in its hospitality assets due to closures of two full-service hotels and reduced occupancy at its select-service properties.
Regarding its real estate debt portfolio, the REIT indicated that the pandemic caused significant market pricing and liquidity dislocation in March, causing a broad-based market decline across securities including commercial mortgage-backed securities. “This had a significant impact on Blackstone REIT’s real estate debt investments, which consist mostly of single asset, single borrower CMBS with high-quality assets and borrowers.”
“Despite these mark-to-market declines, none of which are realized, we remain optimistic in the strength of these investments on a hold-to-maturity basis,” Blackstone REIT added.
Blackstone Real Estate Income Trust originally registered $5 billion in shares and accepted gross offering proceeds of $4.9 billion from January 1, 2017 to January 1, 2019. The company later registered a $12 billion follow-on offering, and as of March 20, 2020, had received $7.1 billion in investor proceeds.
As of March 31, 2020, the REIT owned a property portfolio valued at $31.4 billion and had positions in real estate-related securities and loans totaling $4.3 billion. The company currently invests in multifamily, industrial, hotel, and retail properties, and real estate-related securities and loans.