Blackstone REIT Buys First Property
Blackstone Real Estate Income Trust Inc., a non-traded REIT sponsored by private equity giant The Blackstone Group (NYSE: BX), purchased its first property, the Hyatt Place UC Davis. The property was purchased from an affiliate of Westbrook Partners for approximately $32.2 million, according to a filing with the Securities and Exchange Commission.
Hyatt Place UC Davis is the only hotel on the University of California, Davis campus. Built in 2010 and expanded in 2014, the 127-room hotel is within walking distance of downtown Davis and is within close proximity to the Sacramento airport. The hotel has an average daily rate of $158 and an average occupancy of 83 percent.
The underlying land is owned by the Regents of The University of California, the governing board of the University of California system. The ground lease expires in 2070 and includes a moratorium on further hotel development on the UC Davis core campus through 2040. Blackstone REIT will lease the land for either $130,000, or 5 percent of room revenue, whichever is higher. In 2015, the rent paid under the ground lease was $145,099.
The day-to-day operational and management services will be provided by WHM LLC, a hotel operating platform controlled, but not owned, by a Blackstone-advised fund.
The acquisition of the UC Davis Hotel was funded with proceeds from the company’s public offering.
In other Blackstone REIT news, the company entered into an unsecured, uncommitted line of credit of up to $250 million with Blackstone Holdings Finance, an affiliate of Blackstone. The credit line expires on January 23, 2018 and has an interest rate of the then-current rate offered by a third-party lender, or LIBOR plus 2.25 percent.
Blackstone Real Estate Income Trust launched its $4 billion offering in September 2016 and broke escrow earlier this month after raising approximately $279 million in investor equity. The REIT plans to invest in stabilized income-oriented commercial real estate in the United States.
Blackstone Real Estate Income Trust is headquartered in New York City and is externally managed by BX REIT Advisors., a subsidiary of Blackstone. Blackstone, which currently manages various private investment funds and a publicly-traded REIT, has more than $360 billion in assets under management.
