Tax Advantages of BREIT

BREIT offers income-focused investors a compelling after-tax yield and strong, tax-advantaged distributions.1

Distributions are not guaranteed and may be funded from sources other than cash flow from operations, including borrowings, offering proceeds, the sale of our assets and repayments of our real estate debt investments. We have no limits on the amounts we may fund from such sources.

BREIT’s Distributions Highlights

  • Delivered strong, consistent income distributions each month.
  • 92% of income distributions treated as return of capital (“ROC”) and qualified for tax deferral, resulting in only 8 basis points (0.08%) of tax dilution.2,3,4
  • Continued to offer a meaningful after-tax yield advantage compared to taxable investment grade bonds.5,6

BREIT’s Distributions Highlights

  • Delivered strong, consistent income distributions each month.
  • 92% of income distributions treated as return of capital (“ROC”) and qualified for tax deferral, resulting in only 8 basis points (0.08%) of tax dilution.2,3,4
  • Continued to offer a meaningful after-tax yield advantage compared to taxable investment grade bonds.5,6

The Tax Treatment of REITs3

  • REIT distributions are taxed at different rates depending on whether they are characterized as ordinary income, capital gains or ROC.
  • A notable advantage of REITs is the ability to characterize a portion of distributions that would otherwise be treated as ordinary income as ROC due to real estate-related factors such as depreciation and amortization. ROC distributions are tax deferred until redemption, at which time they give rise to capital gain.
  • In addition, REIT investors benefit from a 20% rate reduction to individual tax rates on the ordinary income portion of distributions.7

The Tax Treatment of REITs3

  • REIT distributions are taxed at different rates depending on whether they are characterized as ordinary income, capital gains or ROC.
  • A notable advantage of REITs is the ability to characterize a portion of distributions that would otherwise be treated as ordinary income as ROC due to real estate-related factors such as depreciation and amortization. ROC distributions are tax deferred until redemption, at which time they give rise to capital gain.
  • In addition, REIT investors benefit from a 20% rate reduction to individual tax rates on the ordinary income portion of distributions. 7

Distributions are not guaranteed and may be funded from sources other than cash flow from operations, including borrowings, offering proceeds, the sale of our assets and repayments of our real estate debt investments. We have no limits on the amounts we may fund from such sources.

BREIT’s Return of Capital (ROC)3

BREIT is structured as a Real Estate Investment Trust (REIT) and is able to characterize a portion of its distributions as ROC rather than ordinary income. ROC distributions are generally tax deferred until redemption, at which time they give rise to capital gain.

Past performance does not guarantee future results. Financial information is approximate and as of October 31, 2022, unless otherwise noted. The words “we”, “us”, and “our” refer to BREIT, together with its consolidated subsidiaries, including BREIT Operating Partnership L.P. (the “Operating Partnership”), unless the context requires otherwise.

NAV Calculation and Reconciliation. This material contains references to our net asset value (“NAV”) and NAV-based calculations, which involve significant professional judgment. Our NAV is generally equal to the fair value of our assets less outstanding liabilities, calculated in accordance with our valuation guidelines. The calculated value of our assets and liabilities may differ from our actual realizable value or future value which would affect the NAV as well as any returns derived from that NAV, and ultimately the value of your investment. As return information is calculated based on NAV, return information presented will be impacted should the assumptions on which NAV was determined prove to be different. NAV is not a measure used under generally accepted accounting principles (“GAAP”) and will likely differ from the GAAP value of our equity reflected in our financial statements. As of September 30, 2022, our total equity under GAAP, excluding noncontrolling third-party JV interests, was $48.2 billion and our NAV was $70.4 billion. As of September 30, 2022, our NAV per share was $15.10, $14.88, $14.79 and $15.11 for Class S, Class T, Class D and Class I shares, respectively, and GAAP equity per share/unit was $10.32. GAAP equity accounts for net losses as calculated under GAAP, and we have incurred $371.6 million in net losses, excluding net losses attributable to non-controlling interests in third-party JV interests, for the nine months ended September 30, 2022. Our net losses as calculated under GAAP and a reconciliation of our GAAP equity, excluding non-controlling third-party JV interests, to our NAV are provided in our annual and interim financial statements. As of September 30, 2022, 100% of inception to date distributions were funded from cash flows from operations. For further information, please refer to “Net Asset Value Calculation and Valuation Guidelines” in BREIT’s prospectus, which describes our valuation process and the independent third parties who assist us.

Note: All information is as of December 2021. This tax information is provided for informational purposes only, is subject to material change, and should not be relied upon as a guarantee or prediction of tax effects. This material also does not constitute tax advice to, and should not be relied upon by, potential investors, who should consult their own tax advisors regarding the matters discussed herein and the tax consequences of an investment. A return of capital in this context is intended to mean a current income distribution which is not a taxable dividend (as defined in IRC Section 316) and which reduces or exceeds the adjusted basis of the shareholder’s stock (i.e., a Section 301(c) (2) or Section 302(c)(3) distribution). No inference should be made about the source of the current income distribution (including the taxable and non-taxable components).

  1. Distributions are not guaranteed and may be funded from sources other than cash flow from operations, including borrowings, offering proceeds, the sale of our assets and repayments of our real estate debt investments. We have no limits on the amounts we may fund from such sources.
  2. As of October 31, 2022. Performance varies by share class. Annualized distribution rates (pre-tax yields) for all class shares are as follows: Class S: 3.6%; Class T: 3.6% and Class D: 4.3%; Class I: 4.4%. Reflects the current month’s distribution annualized and divided by the prior month’s net asset value, which is inclusive of all fees and expenses. There is no assurance we will pay distributions in any particular amount, if at all. Any distributions we make will be at the discretion of our board of directors. As of September 30, 2022, 100% of inception to date distributions were funded from cash flows from operations.
  3. Return of Capital distributions reduce the stockholder’s tax basis in the year the dividend is received, and generally defer taxes on that portion until the stockholder’s stock is sold via redemption. Upon redemption, the investor may be subject to higher capital gains taxes as a result of a lower cost basis due to the return of capital distributions. Certain non-cash deductions, such as depreciation and amortization, lower the taxable income for REIT distributions. Assuming BREIT’s 2021 ROC of 92%. BREIT’s ROC in 2017, 2018, 2019 and 2020 was 66%, 97%, 90% and 100%, respectively.
  4. Investors should be aware that a REIT’s ROC percentage may vary significantly in a given year and, as a result, the impact of the tax law and any related advantages may vary significantly from year to year. The hypothetical example is intended to show the likely effects of existing tax laws and is for information purposes only. There can be no assurance that the actual results will be similar to the example set forth herein or that BREIT will be able to effectively implement its investment strategy, achieve its investment objectives, be profitable or avoid losses. While we currently believe that the estimations and assumptions referenced herein are reasonable under the circumstances, there is no guarantee that the conditions upon which such assumptions are based will materialize or are otherwise applicable. This example does not constitute a forecast, and all assumptions herein are subject to uncertainties, changes and other risks, any of which may cause the relevant actual, financial and other results to be materially different from the results expressed or implied by the information presented herein. No assurance, representation or warranty is made by any person that any of the estimations herein will be achieved, and no recipient of this example should rely on such estimations. The illustrative example does not include state taxes. Investors could be subject to state income tax in their state of residence which would lower the after-tax yield received by the investor.
  5. As of September 30, 2022. The after-tax yield of a 3.8% yielding Taxable U.S. Investment Grade Bond was 2.4%. Taxable U.S. Investment Grade Bonds are represented by the Bloomberg U.S. Aggregate Bond Index, a broad-based benchmark that measures the investment grade, U.S. dollar-denominated, fixed-rate taxable bond market and excludes tax- exempt investment grade bonds. The Bloomberg U.S. Aggregate Bond Index is not subject to fees or expenses and is meant to illustrate general market performance. It is not possible to invest in the Bloomberg U.S. Aggregate Bond Index itself. We believe that the Bloomberg U.S. Aggregate Bond Index is an appropriate and accepted index for the purpose of evaluating the yields of investment grade, U.S. taxable bonds, which generally are bonds issued by companies with a high credit quality rating and rated Baa/BBB or higher by rating agencies. An investment grade rating typically indicates that there is a relatively low risk of default on such bonds. An investment in BREIT has material differences from an investment in investment grade bonds, including, among other things, those related to costs and expenses, liquidity, volatility, risk profile and tax treatment. Unlike BREIT shareholders, holders of bonds do not hold an ownership interest in the issuer. Investment grade bonds are typically issued in $1,000 or $5,000 denominations and when purchased as a new issue, are not subject to fees or expenses. The purchase price of BREIT shares is generally the prior month’s NAV per share for the applicable class, plus upfront selling commissions and dealer manager fees for Class S, T and D shares. Such shares classes are also subject to stockholder servicing fees. While the liquidity of an investment grade bond depends on its credit rating and market conditions, there exists a secondary market for such bonds. There is no public trading market for shares of BREIT and an investor’s ability to dispose of shares will likely be limited to repurchase by us, subject to the limitations described in BREIT’s prospectus. The volatility and risk profile of investment grade bonds is also likely to be materially different from that of BREIT because, among other things, BREIT’s shares are not fixed-rate debt instruments and such bonds represent debt issued by corporations across a variety of issuers with varying pricing, terms and conditions. BREIT’s share price may be subject to less volatility because its per share NAV is based on the value of real estate assets it owns and is not subject to market pricing forces in the same way as are the prices of investment grade bonds, but is not immune to fluctuations. The bonds in the Bloomberg U.S. Aggregate Bond Index bear a contractual interest rate for periods of over one year and are rated investment grade, whereas BREIT’s yield is generated primarily by rental income, including leases that are short-term, and these rental obligations are not rated. Furthermore, issuers of investment grade bonds are contractually obligated to pay periodic interest and repay a fixed principal amount at maturity, whereas we cannot guarantee that we will make any distributions and investing in BREIT involves a high degree of risk, as described in BREIT’s prospectus. In addition, the Bloomberg U.S. Aggregate Bond Index employs different investment guidelines and criteria than BREIT; as a result, the holdings in BREIT may differ significantly from the holdings of the securities that comprise the Bloomberg U.S. Aggregate Bond Index. Such bonds generally provide investors with current income, and BREIT’s primary objective is to provide current income with some appreciation. While BREIT invests primarily in stabilized income-generating commercial real estate investments across asset classes in the U.S. and, to a lesser extent, real estate debt investments, an investment in BREIT is not a direct investment in real estate.
  6. After-tax yield is reflective of the current tax year which does not take into account other taxes that may be owed on an investment in a REIT when the investor redeems his or her shares. Upon redemption, the investor may be subject to higher capital gains taxes as a result of a lower cost basis due to the return of capital distributions. After-tax yield for all share classes: Class S: 3.5%; Class T: 3.6%; Class D: 4.2%; Class I: 4.4%. Tax-equivalent yield reflects the pre-tax yield an investor in a theoretical taxable investment (with income assumed to be taxed at the ordinary rate of 37%) would need to receive to match the after-tax yield of BREIT’s applicable class share in the current tax year and assumes that 92% of BREIT’s distributions is treated as Return of Capital (“ROC”), which is equal to the percentage of BREIT distributions classified as ROC for 2021, and qualified for tax deferral without taking into account taxes that would be payable upon redemption. The ordinary income tax rate could change in the future. Tax-equivalent yield for all share classes: Class S: 5.6%; Class T: 5.7%; Class D: 6.7%; Class I: 6.9%. The tax-equivalent yield would be reduced by 1.1%, 1.1%, 1.3% and 1.3% for Class S, T, D and I shares, respectively, taking into account deferred capital gains tax that would be payable upon redemption. This assumes a one-year holding period and includes the impact of deferred capital gains tax incurred in connection with a redemption of BREIT shares. Upon redemption, an investor is assumed to be subject to tax on all prior return of capital distributions at the current maximum capital gains rate of 20%. The capital gains rate could change in the future. Other fixed income products with different characteristics may also provide tax advantages, such as government bonds. Investors should consult their own tax advisors. See “Important Disclosure Information–Tax Information”.
  7. At this time, the 20% rate deduction to individual tax rates on the ordinary income portion of distributions is set to expire on December 31, 2025. The tax benefits are not applicable to capital gain dividends or certain qualified dividend income and are only available for qualified REITs. If BREIT did not qualify as a REIT, the tax benefit would be unavailable. BREIT’s board also has the authority to revoke its REIT election. There may be adverse legislative or regulatory tax changes and other investments may offer tax advantages without the set expiration. An accelerated depreciation schedule does not guarantee a profitable return on investment and return of capital reduces the basis of the investment.

Important Disclosure Information

Alternative investments often are speculative, typically have higher fees than traditional investments, often include a high degree of risk and are appropriate only for eligible, long-term investors who are willing to forgo liquidity and put capital at risk for an indefinite period of time. They may be highly illiquid and can engage in leverage and other speculative practices that may increase volatility and risk of loss.

Alternative investments involve complex tax structures, tax inefficient investing, and delays in distributing important tax information. Individual funds have specific risks related to their investment programs that will vary from fund to fund. Investors should consult their own tax and legal advisors as Dealers generally do not provide tax or legal advice. REITs are generally not taxed at the corporate level to the extent they distribute all of their taxable income in the form of dividends. Ordinary income dividends are taxed at individual tax rates and distributions may be subject to state tax. Each investor’s tax considerations are different and consulting a tax advisor is recommended. Any of the data provided herein should not be construed as investment, tax, accounting or legal advice.

Interests in alternative investment products are distributed by the applicable Dealer and (1) are not FDIC-insured, (2) are not deposits or other obligations of such Dealer or any of its affiliates, and (3) are not guaranteed by such Dealer and its affiliates. Each Dealer is a registered broker-dealer, not a bank.

Tax Information. The tax information herein is provided for informational purposes only, is subject to material change, and should not be relied upon as a guarantee or prediction of tax effects. This material also does not constitute tax advice to, and should not be relied upon by, potential investors, who should consult their own tax advisors regarding the matters discussed herein and the tax consequences of an investment. A portion of REIT ordinary income distributions may be tax deferred given the ability to characterize ordinary income as Return of Capital (“ROC”). ROC distributions reduce the stockholder’s tax basis in the year the distribution is received, and generally defer taxes on that portion until the stockholder’s stock is sold via redemption. Upon redemption, the investor may be subject to higher capital gains taxes as a result of a lower cost basis due to the return of capital distributions. Certain non-cash deductions, such as depreciation and amortization, lower the taxable income for REIT distributions. Investors should be aware that a REIT’s Return of Capital (ROC) percentage may vary significantly in a given year and, as a result, the impact of the tax law and any related advantages may vary significantly from year to year. While we currently believe that the estimations and assumptions referenced herein are reasonable under the circumstances, there is no guarantee that the conditions upon which such assumptions are based will materialize or are otherwise applicable. This information does not constitute a forecast, and all assumptions herein are subject to uncertainties, changes and other risks, any of which may cause the relevant actual, financial and other results to be materially different from the results expressed or implied by the information presented herein. No assurance, representation or warranty is made by any person that any of the estimations herein will be achieved, and no recipient of this example should rely on such estimations. Investors may also be subject to net investment income taxes of 3.8% and/or state income tax in their state of residence which would lower the after-tax yield received by the investor.


Summary of Risk Factors

BREIT is a non-listed REIT that invests primarily in stabilized income-generating commercial real estate investments across asset classes in the United States and, to a lesser extent, real estate debt investments, with a focus on current income. We invest to a lesser extent in countries outside of the U.S. This investment involves a high degree of risk. You should purchase these securities only if you can afford the complete loss of your investment. You should read the prospectus carefully for a description of the risks associated with an investment in BREIT. These risks include, but are not limited to, the following:

  • There is no public trading market for our common stock and repurchase of shares by us will likely be the only way to dispose of your shares. We are not obligated to repurchase any shares under our share repurchase plan and may choose to repurchase only some, or even none, of the shares that have been requested to be repurchased. In addition, repurchases will be subject to available liquidity and other significant restrictions. Further, our board of directors may make exceptions to, modify or suspend our share repurchase plan. As a result, our shares should be considered as having only limited liquidity and at times may be illiquid.
  • Distributions are not guaranteed and may be funded from sources other than cash flow from operations, including borrowings, offering proceeds, the sale of our assets and repayments of our real estate debt investments. We have no limits on the amounts we may fund from such sources.
  • The purchase and repurchase price for shares of our common stock are generally based on our prior month’s net asset value (“NAV”) and are not based on any public trading market. While there will be independent annual appraisals of our properties, the appraisal of properties is inherently subjective, and our NAV may not accurately reflect the actual price at which our properties could be liquidated on any given day. The NAV per share, if calculated as of the date on which you make your subscription request or repurchase request, may be significantly different than the transaction price you pay or the repurchase price you receive. Certain of our investments or liabilities are subject to high levels of volatility from time to time and could change in value significantly between the end of the prior month as of which our NAV is determined and the date that you acquire or repurchase our shares, however the prior month’s NAV per share will generally continue to be used as the offering price per share and repurchase price per share.
  • We are dependent on BX REIT Advisors L.L.C. (the “Adviser”) to conduct our operations. The Adviser will face conflicts of interest as a result of, among other things, the allocation of investment opportunities among us and Other Blackstone Accounts (as defined in BREIT’s prospectus), the allocation of time of its investment professionals and the substantial fees that we will pay to the Adviser.
  • On acquiring shares, you will experience immediate dilution in the net tangible book value of your investment.
  • There are limits on the ownership and transferability of our shares.
  • If we fail to qualify as a REIT and no relief provisions apply, our NAV and cash available for distribution to our stockholders could materially decrease.
  • We do not own the Blackstone name, but we are permitted to use it as part of our corporate name pursuant to a trademark license agreement with an affiliate of Blackstone Inc. (together with its affiliates, “Blackstone”). Use of the name by other parties or the termination of our trademark license agreement may harm our business.

Certain countries have been susceptible to epidemics which may be designated as pandemics by world health authorities, most recently COVID-19. The outbreak of such epidemics, together with any resulting restrictions on travel or quarantines imposed, has had and may in the future have a negative impact on the economy and business activity globally (including in the countries in which BREIT invests), and thereby may adversely affect the performance of BREIT’s investments. Furthermore, the rapid development of epidemics could preclude prediction as to their ultimate adverse impact on economic and market conditions, and, as a result, presents material uncertainty and risk with respect to BREIT and the performance of its investments. For further information on the impact of COVID-19 on BREIT, please refer to “Risk Factors—The current outbreak of the novel coronavirus, or COVID-19, has caused severe disruptions in the U.S. and global economy and has had an adverse impact on our performance and results of operations” in BREIT’s prospectus.

On February 24, 2022, Russian troops began a full-scale invasion of Ukraine and, as of the date of this material, the countries remain in active armed conflict. Around the same time, the United States, the United Kingdom, the European Union, and several other nations announced a broad array of new or expanded sanctions, export controls, and other measures against Russia, Russia-backed separatist regions in Ukraine, and certain banks, companies, government officials, and other individuals in Russia and Belarus. The ongoing conflict and the rapidly evolving measures in response could be expected to have a negative impact on the economy and business activity globally (including in the countries in which BREIT invests), and therefore could adversely affect the performance of BREIT’s investments. The severity and duration of the conflict and its impact on global economic and market conditions are impossible to predict, and as a result, could present material uncertainty and risk with respect to BREIT and the performance of its investments and operations, and the ability of BREIT to achieve its investment objectives. Similar risks will exist to the extent that any investments, service providers, vendors or certain other parties have material operations or assets in Russia, Ukraine, Belarus, or the immediate surrounding areas.

Certain information contained in this material has been obtained from sources outside Blackstone, which in certain cases has not been updated through the date hereof. While such information is believed to be reliable for purposes used herein, no representations are made as to the accuracy or completeness thereof and none of Blackstone, its funds, nor any of their affiliates takes any responsibility for, and has not independently verified, any such information. This information involves a number of assumptions and limitations, and you are cautioned not to give undue weight to these estimates.

Opinions expressed reflect the current opinions of BREIT as of the date appearing in the materials only and are based on BREIT’s opinions of the current market environment, which is subject to change. Stockholders, financial professionals and prospective investors should not rely solely upon the information presented when making an investment decision and should review the most recent prospectus, as supplemented, available at www.breit.com. Certain information contained in the materials discusses general market activity, industry or sector trends, or other broad-based economic, market or political conditions and should not be construed as research or investment advice.

All rights to the trademarks and/or logos presented herein belong to their respective owners and Blackstone’s use hereof does not imply an affiliation with, or endorsement by, the owners of these logos.

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Forward-Looking Statements

Certain information contained in this communication 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 the negative versions of these words or other comparable words thereof. These may include financial estimates and their underlying assumptions, statements about plans, objectives and expectations with respect to future operations, statements with respect to acquisitions, statements regarding 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. BREIT believes 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 its periodic filings with the Securities and Exchange Commission (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 document (or BREIT’s prospectus and other filings). Except as otherwise required by federal securities laws, BREIT undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future developments or otherwise.

Blackstone Securities Partners L.P. (“BSP”) is a broker-dealer whose purpose is to distribute Blackstone managed or affiliated products. BSP provides services to its Blackstone affiliates, not to investors in its funds, strategies or other products. BSP does not make any recommendation regarding, and will not monitor, any investment. As such, when BSP presents an investment strategy or product to an investor, BSP does not collect the information necessary to determine—and BSP does not engage in a determination regarding—whether an investment in the strategy or product is in the best interests of, or is suitable for, the investor. You should exercise your own judgment and/or consult with a professional advisor to determine whether it is advisable for you to invest in any Blackstone strategy or product. Please note that BSP may not provide the kinds of financial services that you might expect from another financial intermediary, such as overseeing any brokerage or similar account. For financial advice relating to an investment in any Blackstone strategy or product, contact your own professional advisor.

This website must be read in conjunction with BREIT’s prospectus in order to fully understand all the implications and risks of an investment in BREIT. Please refer to the prospectus for more information regarding state suitability standards and consult a financial professional for share class availability and appropriateness.

THIS IS NEITHER AN OFFER TO SELL NOR A SOLICITATION OF AN OFFER TO BUY THE SECURITIES DESCRIBED IN THE PROSPECTUS FOR THE OFFERING, AS AMENDED AND SUPPLEMENTED (THE “PROSPECTUS”). THE OFFERING IS MADE ONLY BY THE PROSPECTUS AND THIS MATERIAL MUST BE PRECEDED OR ACCOMPANIED BY THE PROSPECTUS. NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY OTHER STATE SECURITIES REGULATOR HAS APPROVED OR DISAPPROVED OF THE SECURITIES OR DETERMINED IF THE PROSPECTUS IS TRUTHFUL OR COMPLETE. IN ADDITION, THE ATTORNEY GENERAL OF THE STATE OF NEW YORK HAS NOT PASSED ON OR ENDORSED THE MERITS OF THE OFFERING. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.