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Blackstone’s Non-Traded REIT Declared Effective by SEC

Blackstone Real Estate Income Trust, a non-traded REIT sponsored by private equity giant The Blackstone Group (NYSE: BX), has been declared effective by the U.S. Securities and Exchange Commission and is now marketing its shares.

Blackstone’s entry into the non-traded space comes at a time when the industry is facing significant headwinds due to the implosion of Nicholas Schorsch’s ARC empire and significant regulatory changes. As a result, the industry is raising a fraction of the retail equity of recent years, and is projected to raise in the neighborhood of just $5 billion to $6 billion this year – roughly a quarter of the equity raised by the industry just two years ago. Many see the introduction of a major institutional player like Blackstone as a positive harbinger for the future of the industry as the ARC scandals fade from memory and the market adjusts to the new realities of FINRA’s 15-02 and the Department of Labor’s fiduciary standard.

As previously reported by The DI Wire, the Blackstone Real Estate Income Trust primary offering includes $4 billion in class T, class S, class D, and class I common shares, priced between $10.00-$10.35 per share, and $1 billion in shares allocated for the REIT’s distribution reinvestment plan.

Class T shares have a 3 percent selling commission and a 0.5 percent dealer manager fee. The shares also include an advisor stockholder servicing fee of 0.65 percent per year and a dealer stockholder servicing fee of 0.20 percent per year of the total net asset value.

Class S shares include a 3.5 percent selling commission and no dealer manager fee. The shares include a stockholder servicing fee equal to 0.85 percent per year of the total net asset value. Class T and class S shares are available to purchase through brokerage and transaction-based accounts.

Class D shares have no selling commission or dealer manager fees, but include a stockholder servicing fee equal to 0.25 percent per year of the total NAV. These shares are available for purchase 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.

Class I shares have no selling commissions, dealer manager fees, or stockholder servicing fees. The shares are available for purchase by endowments, foundations, pension funds and other institutional investors, as well by REIT executives, directors, and their immediate family members.

The stockholder servicing fees run approximately seven years for class T and class S shares, and 35 years for class D shares.

The REIT will invest in stabilized income-oriented commercial real estate in the United States. A special limited partner wholly owned by Blackstone will receive 12.5 percent fee of the REIT’s total return, after a 5 percent hurdle is met.

Blackstone, which currently manages various private investment funds and a publicly-traded REIT, has $356 billion in assets under management.

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