Blackstone’s Non-Traded REIT Raising and Spending a Ton of Equity
Blackstone Real Estate Income Trust, Inc., a non-traded REIT sponsored by private equity giant The Blackstone Group (NYSE: BX), purchased the TA Multifamily Portfolio and the HS Industrial Portfolio for a combined $832 million, according to a filing with the Securities and Exchange Commission.
Blackstone REIT, which was declared effective by the SEC at the end of August 2016, is the new dominant player in the non-traded REIT space, with a staggering equity raise of approximately $650 million, as of April 1st.
The TA Multifamily Portfolio is comprised of six multifamily properties totaling 2,514 units purchased from an affiliate of TA Realty for approximately $430 million, excluding closing costs.
The properties include a 32-floor property in downtown Orlando with approximately 70,000 square feet of retail space on the ground floor, a 244-space parking garage, and a leasehold interest in an adjacent 868-space parking garage. The other properties include five multifamily communities built between 2000 and 2013 in the suburbs of Palm Beach Gardens, Orlando, Chicago, Dallas and Kansas City.
The acquisition of the TA Multifamily Portfolio was funded with cash on hand and a $95 million draw on the company’s existing line of credit with an affiliate of The Blackstone Group L.P.
Blackstone Real Estate Income Trust said that it believes the portfolio’s markets benefit from attractive fundamentals, and that employment and population growth in the portfolio’s markets in 2016 were each more than double the national average. The company also noted that multifamily occupancy in those markets has been stable, remaining above 92 percent over the last 21 years.
In addition, the company purchased the HS Industrial Portfolio, a 6 million-square-foot collection of predominantly infill industrial assets, from an affiliate of High Street Realty Company for approximately $402 million, excluding closing costs.
The HS Industrial Portfolio is 97 percent leased to more than 90 tenants and consists of 38 industrial properties located in the submarkets of Atlanta, Chicago, Houston, Harrisburg, Dallas, and Orlando. Blackstone noted that over the last two years, market rents have increased by 5 percent annually while vacancy has declined by approximately 100 basis points to 5.2 percent.
The company also said that infill industrial supply in these markets is expected to be constrained at 0.6 percent of stock throughout 2017 given limited land availability near the population centers. The positive fundamentals have resulted in weighted average releasing spreads of 12 percent over the last two years. “Releasing spreads” is a measurement of the change in rent per square foot between new and expiring leases at a property.
The acquisition of the HS Industrial Portfolio was funded through a combination of cash on hand, a $5 million draw on the line of credit, and a $292 million loan to one of the company’s subsidiaries from various lenders.
In other Blackstone REIT news, last month the company added two properties and $116 million in commercial mortgage-backed securities to its portfolio, as reported by The DI Wire. The company purchased its first property in January 2017 for $32.2 million.
Blackstone Real Estate Income Trust is a $4 billion offering that plans to invest in stabilized income-oriented commercial real estate in the United States. The company is headquartered in New York City and externally managed by BX REIT Advisors., a subsidiary of Blackstone. Blackstone currently manages various private investment funds and one publicly-traded REIT.
