BREIT 2017 Annual Report

66 ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion should be read in conjunction with the consolidated financial statements and notes thereto appearing elsewhere in this Annual Report on Form 10-K. In addition to historical data, this discussion contains forward-looking statements about our business, operations and financial performance based on current expectations that involve risks, uncertainties and assumptions. Our actual results may differ materially from those in this discussion as a result of various factors, including but not limited to those discussed in Part, I. Item 1A — “ Risk Factors” in this Annual Report on Form 10-K. Overview BREIT is a non-exchange traded, perpetual life real estate investment trust ("REIT") that acquires primarily stabilized income-oriented commercial real estate in the United States and to a lesser extent real estate-related securities. We are externally managed by BX REIT Advisors L.L.C., a subsidiary of Blackstone. We are the sole general partner of BREIT OP, a Delaware limited partnership, and we own all or substantially all of our assets through BREIT OP. We operate our business in five reportable segments: Multifamily, Industrial, Hotel, and Retail Properties, and Real Estate-Related Securities. We intend to qualify as a REIT under the Code for U.S. federal income tax purposes beginning with the taxable year ended December 31, 2017. We generally will not be subject to U.S. federal income taxes on our taxable income to the extent we annually distribute all of our net taxable income to stockholders and maintain our qualification as a REIT. We have registered with the SEC an offering of up to $5.0 billion in shares of common stock (in any combination of purchases of Class S, Class T, Class D and Class I shares of our common stock), consisting of up to $4.0 billion in shares in our primary offering and up to $1.0 billion in shares pursuant to its distribution reinvestment plan (the “Offering”). The share classes have different upfront selling commissions and ongoing stockholder servicing fees. As of January 1, 2017, we satisfied the minimum offering requirement and our board of directors authorized the release of proceeds from escrow. We intend to continue selling shares in the Offering on a monthly basis. As of March 19, 2018, we had received net proceeds of $2.3 billion from selling an aggregate of 226,804,071 shares of our common stock (consisting of 163,218,275 Class S shares, 9,741,552 Class T shares, 6,823,284 Class D shares, and 47,020,960 Class I shares). We have contributed the net proceeds from the Offering to BREIT OP in exchange for a corresponding number of Class S, Class T, Class D, and Class I units. BREIT OP has primarily used the net proceeds to make investments in real estate and real estate-related securities as further described below under “— Portfolio”. 2017 Highlights Operating results: • Satisfied the minimum offering requirements and broke escrow on January 1, 2017 with $279.0 million of net proceeds. • Raised $1.7 billion of net proceeds in the Offering from approximately 13,000 investors during the year ended December 31, 2017. • Declared monthly distributions, beginning March 31, 2017, totaling $46.3 million for the year ended December 31, 2017. • Total return without upfront selling commissions of 9.9% for Class S, 6.8% for Class T, 8.4% for Class D, and 10.7% for Class I shares. Total return with upfront selling commissions of 6.2% for Class S and 3.2% for Class T shares. Investments: • Closed 27 transactions with a total purchase price of $3.6 billion, inclusive of closing costs resulting in a diversified portfolio of stabilized (92% portfolio occupancy, excluding our hotel investments) income-producing commercial real estate assets concentrated in high growth markets across the U.S. • Our 115 properties as of December 31, 2017 consisted of Multifamily (71% based on fair value), Industrial (18%), Hotel (8%), and Retail (3%) and our portfolio of real estate was concentrated in the following regions: South (53%), West (33%), East (8%), and Midwest (6%).