BREIT 2017 Annual Report

71 Aston Multifamily Portfolio On November 15, 2017, we acquired a fee simple interest in twelve multifamily properties totaling 3,301 units for $381.4 million (the “Aston Multifamily Portfolio”). The properties were acquired through a 90% joint venture with the seller. The Aston Multifamily Portfolio is located in four markets: Austin/San Antonio, Texas (49% of units), Dallas/Fort Worth, Texas (25% of units), Nashville, Tennessee (22% of units) and Louisville, Kentucky (4% of units). The Aston Multifamily Portfolio experienced strong performance in 2017 with 3.4% September year to date rent growth versus the national average of 2.2%. We believe the Aston Multifamily Portfolio markets benefit from attractive fundamentals. 2016 employment growth in the portfolio’s markets was 3.5% versus the national average of 1.7%. 2016 population growth in the portfolio’s markets was 2.1% versus the national average of 0.7%. Further, multifamily occupancy in the portfolio’s markets has been stable, averaging 94% over the last 21 years. The acquisition of the Aston Multifamily Portfolio was funded through a combination of cash on hand, which primarily consisted of proceeds from the Offering, draws on the Line of Credit and revolving industrial facility, and $266.4 million of property level loans. See “— Liquidity and Capital Resources” for further information regarding the Aston Multifamily Portfolio financing. Canyon Industrial Portfolio On March 9, 2018, we acquired a fee simple interest in a 22 million square foot industrial portfolio (the “Canyon Industrial Portfolio”) for approximately $1.8 billion, excluding closing costs. The Canyon Industrial Portfolio consists of 146 industrial properties primarily concentrated in Chicago (18% of November 2017 base rent), Dallas (12%), Baltimore/Washington, D.C. (12%), Los Angeles/Inland Empire (7%), South/Central Florida (7%), New Jersey (7%), and Denver (6%). We believe the Canyon Industrial Portfolio’s markets benefit from attractive fundamentals. Industrial vacancy across the Canyon Industrial Portfolio’s markets has continued to decline over the past seven years and was just 4.6% at the time of acquisition, while rents across the portfolio’s markets have increased 5.7% year-over-year. The continued market rent growth in the Canyon Industrial Portfolio’s markets resulted in rents on new leases exceeding rents on expiring leases by 9% in the portfolio during the third quarter of 2017. We believe the Canyon Industrial Portfolio will further benefit from these attractive fundamentals as the portfolio was only 90% leased at the time of acquisition versus average occupancy in the portfolio’s markets of 95%. The Canyon Industrial Portfolio is leased to 377 tenants including e-commerce and logistics companies such as Amazon, FedEx, and DHL as well as Coca-Cola, Fiat Chrysler, and the U.S. Government. As of November 30, 2017, the Canyon Industrial Portfolio had a 4-year weighted average lease life with no more than 16% of square footage expiring in a single year and no single tenant occupying 5% or more of the portfolio’s aggregate square footage. The properties in the Canyon Industrial Portfolio face competition from similarly situated properties in and around their respective submarkets. The acquisition of the Canyon Industrial Portfolio was funded through a combination of a $1.1 billion mortgage secured by the Canyon Industrial Portfolio, a $200.0 million mezzanine loan secured by equity interests in the Canyon Industrial Portfolio, and available cash. The mortgage has a term of 84 months and an interest rate of 4.10% per annum and the mezzanine loan has a term of 84 months and an interest rate of 5.85% per annum. Investments in Real Estate-Related Securities As of December 31, 2017, our real estate-related securities consisted of 37 investments in floating-rate commercial mortgage backed securities. The following table details our investments in CMBS as of December 31, 2017 ($ in thousands): Number of Positions (1) Credit Rating (2) Collateral Weighted Average Coupon (3) Weighted Average Maturity Date Face Amount Cost Basis Fair Value 15 BB Hospitality, Office, Residential, Retail L+3.21% 2/1/2033 $423,770 $423,658 $424,419 10 B Hospitality, Office, Residential L+4.05% 6/27/2034 284,371 284,127 285,037 9 BBB Office, Hospitality, Residential, Industrial, Retail L+2.28% 8/17/2032 194,013 193,838 194,549 3 Other Residential L+2.50% 9/15/2026 11,749 11,749 11,737 37 $913,903 $913,372 $915,742 (1) For details regarding affiliate relationships with respect to certain of our CMBS investments, see Note 5 to our consolidated financial statements. (2) BBB represents credit ratings of BBB+, BBB, and BBB-, BB represents credit ratings of BB+, BB, and BB-, and B represents credit ratings of B+, B, and B-. Other consists of investments that, as of December 31, 2017, were either not ratable or have not been submitted to ratings agencies. (3) The term “L” refers to the three-month U.S. dollar-denominated London Interbank Offer Rate (“LIBOR”).