Blackstone Real Estate Income Trust Inc.

04/18/2024 | Press release | Distributed by Public on 04/18/2024 04:03

Results of Operations and Financial Condition - Form 8-K

Item 2.02 Results of Operations and Financial Condition

Certain Preliminary Estimated Unaudited Financial Results for the Three Months ended March 31, 2024

On April 17, 2024, Blackstone Real Estate Income Trust, Inc., a Maryland corporation ("BREIT" or the "Company"), announced preliminary estimated unaudited same property net operating income ("NOI") for the three months ended March 31, 2024. Based upon preliminary estimated financial results, the Company expects same property NOI for the three months ended March 31, 2024 to have increased approximately 4% from the same period in the prior year (based on the midpoint of the preliminary estimated range of same property NOI). This data is not a comprehensive statement of the Company's financial results for the three months ended March 31, 2024, and the Company's actual results may differ materially from this preliminary estimated data.

NOI is a supplemental non-Generally Accepted Accounting Principles ("GAAP") measure of the Company's property operating results that the Company believes is meaningful because it enables management to evaluate the impact of occupancy, rents, leasing activity, and other controllable property operating results at the Company's real estate. The Company defines NOI as operating revenues less operating expenses, which exclude (i) impairment of investments in real estate, (ii) depreciation and amortization, (iii) straight-line rental income and expense, (iv) amortization of above- and below-market lease intangibles, (v) amortization of accumulated unrealized gains on derivatives previously recognized in other comprehensive income, (vi) lease termination fees, (vii) property expenses not core to the operations of such properties, and (viii) other non-property related revenue and expense items such as (a) general and administrative expenses, (b) management fee, (c) performance participation allocation, (d) incentive compensation awards, (e) income (loss) from investments in real estate debt, (f) change in net assets of consolidated securitization vehicles, (g) income (loss) from interest rate derivatives, (h) net gain (loss) on dispositions of real estate, (i) interest expense, (j) gain (loss) on extinguishment of debt, (k) other income (expense), and (l) similar adjustments for NOI attributable to non-controlling interests and unconsolidated entities.

The Company evaluates its consolidated results of operations on a same property basis, which allows the Company to analyze its property operating results excluding acquisitions and dispositions during the periods under comparison. Properties in the Company's portfolio are considered same property if they were owned for the full periods presented, otherwise they are considered non-same property. Recently developed properties are not included in same property results until the properties have achieved stabilization for both full periods presented. We define stabilization for the property as the earlier of (i) achieving 90% occupancy, (ii) 12 months after receiving a certificate of occupancy, or (iii) for Data Centers 12 months after receiving a certificate of occupancy and greater than 50% of its critical IT capacity has been built. Certain assets are excluded from same property results and are considered non-same property, including (i) properties held-for-sale, (ii) properties that are being re-developed, (iii) properties identified for future sale, and (iv) interests in unconsolidated entities under contract for sale with hard deposit or other factors ensuring the buyer's performance. The Company does not consider its investments in the real estate debt segment or equity securities to be same property.

As such, same property NOI assists in eliminating disparities in net income due to the acquisition, disposition, development, or redevelopment of properties during the periods presented, and therefore the Company believes it provides a more consistent performance measure for the comparison of the operating performance of the Company's properties, which it believes is useful to investors. The Company's same property NOI may not be comparable to that of other REITs and should not be considered to be more relevant or accurate in evaluating the Company's operating performance than the current GAAP methodology used to calculate the Company's net income (loss).

While the Company currently expects its results for the three months ended March 31, 2024 to be within the ranges set forth below, the review of the Company's financial statements for the three months ended March 31, 2024 has not been completed. During the course of the Company's preparation of its financial statements and related notes and the completion of the review for the three months ended March 31, 2024, additional adjustments to the preliminary estimated financial information presented below may be identified. Any such adjustments may be material. The Company's independent registered public accounting firm, Deloitte & Touche LLP, has not audited, reviewed, compiled or performed any procedures with respect to this preliminary financial data, and, accordingly, Deloitte & Touche LLP does not express an opinion or any other form of assurance with respect thereto.





The following table reconciles preliminary estimated GAAP net loss to preliminary estimated same property NOI for the three months ended March 31, 2024 and 2023 (Unaudited, $ in thousands):
Three Months Ended March 31,
2024 2023
Estimated Actual
Low High
Net loss $ (161,566) $ (178,573) $ (692,461)
Adjustments to reconcile to same property NOI
Management fee 187,121 187,121 221,138
Depreciation and amortization 913,208 913,208 999,385
Loss (income) from unconsolidated entities 23,140 25,576 (444,658)
Income from investments in real estate debt (254,783) (281,603) (163,965)
Change in net assets of consolidated securitization vehicles (71,642) (79,184) (29,254)
(Income) loss from interest rate derivatives (299,439) (330,959) 642,160
Net gain on dispositions of real estate (101,226) (111,882) (121,003)
Interest expense 790,129 873,301 788,593
Other 251,585 321,560 167,581
NOI from unconsolidated entities 184,280 203,678 193,891
NOI attributable to non-controlling interests in third party joint ventures and BREIT OP unit holders (120,861) (133,583) (86,325)
NOI attributable to BREIT stockholders 1,339,946 1,408,660 1,475,082
Less: Non-same property NOI attributable to BREIT stockholders 62,632 65,844 215,096
Same property NOI attributable to BREIT stockholders $ 1,277,314 $ 1,342,816 $ 1,259,986

CAUTIONARY LANGUAGE CONCERNING FORWARD-LOOKING STATEMENTS

Certain information contained in this Current Report on Form 8-K constitutes "forward-looking statements" within the meaning of the federal securities laws and the Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by the use of forward-looking terminology such as "outlook," "indicator," "believes," "expects," "potential," "continues," "identified," "may," "will," "should," "seeks," "approximately," "predicts," "intends," "plans," "estimates," "anticipates", "confident," "conviction" or other similar words or the negatives thereof. These may include financial estimates and their underlying assumptions, statements about plans, objectives, intentions, and expectations with respect to positioning, including the impact of macroeconomic trends and market forces, future operations, repurchases, acquisitions, future performance and statements regarding identified but not yet closed acquisitions. Such forward-looking statements are inherently uncertain and there are or may be important factors that could cause actual outcomes or results to differ materially from those indicated in such statements. We believe these factors include but are not limited to those described under the section entitled "Risk Factors" in BREIT's prospectus and annual report for the most recent fiscal year, and any such updated factors included in BREIT's periodic filings with the SEC, which are accessible on the SEC's website at www.sec.gov. These factors should not be construed as exhaustive and should be read in conjunction with the other cautionary statements that are included in this website (or BREIT's public filings). Except as otherwise required by federal securities laws, we undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future developments or otherwise.