BREIT 2017 Annual Report

63 The following table presents a reconciliation of FFO to AFFO ($ in thousands): For the Year Ended December 31, 2017 Funds from Operations attributable to BREIT stockholders $ 33,831 Adjustments: Straight-line rental income (2,063) Amortization of above- and below-market lease intangibles (910) Organization costs 1,838 Unrealized gains (losses) from changes in the fair value of real estate-related securities (2,343) Amortization of restricted stock awards 102 Performance participation allocation 16,974 Adjusted Funds from Operations attributable to BREIT stockholders $ 47,429 FFO and AFFO should not be considered to be more relevant or accurate than the current GAAP methodology in calculating net income (loss) or in evaluating our operating performance. In addition, FFO and AFFO should not be considered as alternatives to net income (loss) as indications of our performance or as alternatives to cash flows from operating activities as indications of our liquidity, but rather should be reviewed in conjunction with these and other GAAP measurements. Further, FFO and AFFO are not intended to be used as liquidity measures indicative of cash flow available to fund our cash needs, including our ability to make distributions to our stockholders. Unregistered Sales of Equity Securities During the year ended December 31, 2017, we did not sell any equity securities that were not registered under the Securities Act. As described in Note 11 to our consolidated financial statements, the Adviser is entitled to an annual management fee payable monthly in cash, shares of common stock, or BREIT OP Units, in each case at the Adviser's election. For the year ended December 31, 2017, the Adviser elected to receive its management fee in Class I shares and we issued 664,411 unregistered Class I shares to the Adviser in satisfaction of the management fee through November 2017. Additionally, we issued 180,215 unregistered Class I shares to the Adviser in January 2018 in satisfaction of the December 2017 management fee. The Special Limited Partner is also entitled to an annual performance participation allocation. As further described in Note 11 to our consolidated financial statements, the performance participation allocation became payable on December 31, 2017 and in January 2018, the Company issued approximately 1.6 million Class I units in BREIT OP to the Special Limited Partner as payment for the 2017 performance participation allocation. Each Class I unit is exchangeable into one Class I share. Each issuance to the Adviser and the Special Limited Partner was made pursuant to Section 4(a)(2) of the Securities Act. Use of Offering Proceeds On August 31, 2016, the Registration Statement on Form S-11 (File No. 333-213043) for the Offering was declared effective under the Securities Act. Amendment No. 5 to our Registration Statement was declared effective under the Securities Act on August 17, 2017. The initial offering price of each class of our common stock was $10.00 per share, plus applicable selling commissions and dealer manager fees. The offering price for each class of our common stock is determined monthly and is made available on our website and in prospectus supplement filings. During the year ended December 31, 2017, we received net proceeds of $1.7 billion from the Offering. The following table summarizes certain information about the Offering proceeds therefrom ($ in thousands except for share data): Class S Shares Class T Shares Class D Shares Class I Shares Total Offering proceeds: Shares sold 130,110,731 5,624,614 3,955,114 30,059,850 169,750,309 Gross offering proceeds $ 1,338,560 $ 59,486 $ 40,849 $ 305,624 $ 1,744,519 Selling commissions and dealer manager fees (14,801) (1,689) — — (16,490) Accrued stockholder servicing fees (6,700) (128) (25) — (6,853) Net offering proceeds $ 1,317,059 $ 57,669 $ 40,824 $ 305,624 $ 1,721,176