Blackstone European Property Income Fund

Access Blackstone’s leading European real estate investment platform

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Shareholder Letter – Year-End 2021

NAV Per Share: €11.53 as of August 31, 2022

Blackstone European Property Income Fund (BEPIF)

BEPIF is a perpetual-life vehicle that provides income-focused individual investors access to institutional quality real estate. BEPIF’s investments span Blackstone’s high conviction themes across substantially stabilized, income-generating European real estate.

BEPIF Has Constructed a High-Quality Portfolio of Income-Generating Investments

Since October, BEPIF has invested or committed to invest directly into multiple logistics and high-quality office properties in Europe, a prime data center in London and BPP Europe, Blackstone’s European Core+ real estate fund for institutional investors.

We believe these investments position BEPIF well to meet its objective of delivering competitive returns with a meaningful income component.

Note: There can be no assurance that any Blackstone fund or investment will achieve its objectives or avoid substantial losses.

Why BEPIF?

BEPIF provides income-focused individual investors access to institutional quality European real estate.

Leading Real Estate Platform

Blackstone Real Estate has successfully navigated three decades of market cycles and disruptions in Europe.

<meta charset="utf-8">Income-Oriented

Targeting substantially stabilized European real estate which has historically delivered consistent current income.

Past performance is not necessarily indicative of future results. Distributions are not guaranteed and may be sourced from non-income items.

<meta charset="utf-8"><meta charset="utf-8">Inflation Hedge

Unlike traditional fixed income, income streams from real estate tend to rise over time, acting as an inflation hedge.

There can be no assurance that income from real estate will keep pace with inflation.

<meta charset="utf-8">Appreciation Potential

Proactive asset management with a robust team of European professionals seeking to generate capital appreciation for investors.

BEPIF is subject to the risk of capital loss. There is no guarantee that BEPIF will achieve its objectives or avoid substantial losses.

Diversified

Diversified strategy across property types and geographies in our highest conviction themes and markets.

There is no guarantee BEPIF will be diversified. Diversification does not ensure a profit or protect against capital loss.

<meta charset="utf-8">Alignment of Interests

Institutional fee structure aligns interests between Blackstone and investors.

While we believe the interests of Blackstone are aligned with shareholders, Blackstone does face certain conflicts of interests. Please note that an investment in BEPIF is not an investment in Blackstone Inc.

Why European Private Real Estate

European Private Real Estate can be an attractive asset class for investors.

Sponsored by Blackstone Real Estate

Blackstone is the largest owner of commercial real estate globally with $320B of investor capital under management.1


Summary of Key Risk Factors

We have classified this product as 3 out of 7, which is a medium-low risk class. This rates the potential losses from future performance at a medium-low level, and poor market conditions could impact our capacity to pay you. There is no specific recommended holding period for the product. The actual risk can vary significantly. You may not be able to sell your product easily or you may have to sell at a price that significantly impacts how much you get back. The summary risk indicator is a guide to the level of risk of this product compared to other products. It shows how likely it is that the product will lose money because of movements in the markets or because we are not able to pay you.

The attention of potential investors is drawn to the risks to which any investor is exposed by investing in the Fund. Potential investors should pay particular attention to the risks described in the dedicated section of the Prospectus and Key Information Document (KID). In making an investment decision, investors must rely on their own examination of BEPIF Feeder SICAV and the terms of the offering, including the merits and risks involved. Potential investors should not construe the contents of this Prospectus as legal, tax, investment or accounting advice.

The following is a summary description of the principal risks of investing in BEPIF. The order of the below risk factors does not indicate the significance of any particular risk factor. Complete information on the risks of investing in BEPIF is set out in the Prospectus.

Risk of Capital Loss and No Assurance of Investment Return. BEPIF offers no capital protection guarantee. This investment involves a significant risk of capital loss and should only be made if an investor can afford the loss of its entire investment. There are no guarantees or assurances regarding the achievement of investment objectives or performance. This product does not include any protection from future market performance so you could lose some or all of your investment. If we are not able to pay you what is owed, you could lose some or all of your investment. A fund’s performance may be volatile. An investment should only be considered by sophisticated investors who can afford to lose all or a substantial amount of their investment. A fund’s fees and expenses may offset or exceed its profits. In considering any investment performance information contained in the document and related materials (“the  Materials”), recipients should bear in mind that past performance is not necessarily indicative of future results.

Lack of Liquidity. There is no current public trading market for the shares, and Blackstone does not expect that such a market will ever develop. Therefore, redemption of shares by BEPIF will likely be the only way for you to dispose of your shares. BEPIF expects to redeem shares at a price equal to the applicable net asset value as of the redemption date and not based on the price at which you initially purchased your shares. Shares redeemed within one year of the date of issuance will be redeemed at 95% of the applicable net asset value as of the redemption date, unless such deduction is waived by the Fund in its discretion, including without limitation in case of redemptions resulting from death, qualifying disability or divorce. As a result, you may receive less than the price you paid for your shares when you sell them to BEPIF pursuant to BEPIF’s redemption program.

The vast majority of BEPIF’s assets are expected to consist of real estate properties and other investments that cannot generally be readily liquidated without impacting BEPIF’s ability to realize full value upon their disposition. Therefore, BEPIF may not always have a sufficient amount of cash to immediately satisfy redemption requests. As a result, your ability to have your shares redeemed by BEPIF may be limited and at times you may not be able to liquidate your investment.

Concentration. BEPIF’s investment strategy is substantially concentrated in the real estate sector and its performance will therefore be closely tied to the performance of this sector which has historically experienced substantial price volatility. The Fund’s concentration in the real estate sector may present more risks than if it were broadly diversified over numerous industries and sectors of the economy.

Conflicts of Interest. There may be occasions when the fund manager and its affiliates will encounter potential conflicts of interest in connection with the Fund’s activities including, without limitation, the allocation of investment opportunities, relationships with Blackstone’s and its affiliates’ investment banking and advisory clients, and the diverse interests of the Fund’s investors.

Epidemics / Pandemics. 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 will continue to have a negative impact on the economy and business activity globally (including in the countries in which the Fund invests), and thereby is expected to adversely affect the performance of the Fund’s investments.

Exchange Currency Risk. The Fund is denominated in Euro (EUR). Shareholders holding shares with a functional currency other than Euro acknowledge that they are exposed to fluctuations of the Euro foreign exchange rate and/or hedging costs, which may lead to variations on the amount to be distributed. This risk is not considered in the indicator shown above. Fund charges will be incurred in multiple currencies, meaning that payments may increase or decrease as a result of currency exchange fluctuations.

Highly Competitive Market for Investment Opportunities. The activity of identifying, completing and realizing attractive investments is highly competitive, and involves a high degree of uncertainty. There can be no assurance that the Fund will be able to locate, consummate and exit investments that satisfy its objectives or realize upon their values or that the Fund will be able to fully invest its committed capital. There is no guarantee that investment opportunities will be allocated to the Fund and/or that the activities of Blackstone’s other funds will not adversely affect the interests of the Fund.

Real Estate Investments. The Fund’s investments do and will consist primarily of real estate investments and real estate-related investments. All real estate investments are subject to some degree of risk. For example, real estate investments are relatively illiquid and, therefore, will tend to limit Blackstone’s ability to vary the Fund’s portfolio promptly in response to changes in economic or other conditions. No assurances can be given that the fair market value of any real estate investments held by the Fund will not decrease in the future or that the Fund will recognize full value for any investment that the Fund is required to sell for liquidity reasons. Deterioration of real estate fundamentals generally may negatively impact the performance of the Fund. In addition, the Fund may be subject to more specific risks relating to inter alia the residential, commercial or the industrial real estate sectors.

Reliance on Key Management Personnel. The success of the Fund will depend, in large part, upon the skill and expertise of certain Blackstone professionals. In the event of the death, disability or departure of any key Blackstone professionals, the business and the performance of the Fund may be therefore adversely affected. Some Blackstone professionals may have other responsibilities, including senior management responsibilities, throughout Blackstone and, therefore, conflicts are expected to arise in the allocation of such personnel’s time (including as a result of such personnel deriving financial benefit from these other activities, including fees and performance-based compensation).

Russian Invasion of Ukraine. On February 24, 2022, Russian troops began a full-scale invasion of Ukraine and, as of the date of this document, 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 BEPIF invests), and therefore could adversely affect the performance of BEPIF’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 BEPIF and the performance of its investments and operations, and the ability of BEPIF 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.

Sustainability Risks. The Fund may be exposed to an environmental, social or governance event or condition that, if it occurs, could have a material adverse effect, actual or potential, on the value of the investments made by the Fund. Sustainability risks are assessed into investment decisions relating to the Fund.

Target Allocations. There can be no assurance that the Fund will achieve its objectives or avoid substantial losses. Allocation strategies and targets depend on a variety of factors, including prevailing market conditions and investment availability. There is no guarantee that such strategies and targets will be achieved and any particular investment may not meet the target criteria.

Use of Leverage. The Fund may borrow money. If returns on such investment exceed the costs of borrowing, investor returns will be enhanced. However, if returns do not exceed the costs of borrowing, Fund performance will be depressed. This includes the potential for the Fund to suffer greater losses than it otherwise would have. The effect of leverage is that any losses will be magnified. The use of leverage also exposes the Fund to the risk of an increase in interest rates.

Opinions expressed reflect Blackstone’s view of the current market environment as of the date appearing in these materials only.

  1. Largest owner based on estimated market value per Real Capital Analytics and excludes governmental entities and religious organizations, as of March 31, 2022. “Investor capital” includes co-investments and Blackstone’s GP and side-by-side commitments, as applicable.