Positioned for Inflation
BEPIF’s Positioning in an Inflationary Environment
We believe Blackstone’s early call of persistent inflation enabled BEPIF to outperform in the current environment.
Concentrated in sectors and markets with inflation linkage or regular rent reviews, and strong embedded cash flow growth potential
Portfolio Rents Linked to Inflation or With Regular Rent Reviews5
Embedded Rent Growth Potential6
Logistics Annual Rent Growth in Our Markets7
Fixed-Rate or Hedged Liabilities8
Leases in which Operating Costs are Largely Borne by Tenants9
BEPIF focuses on cash flow growth in Europe’s faster growing sectors and markets
BEPIF’s exposure to logistics, Blackstone Real Estate’s highest conviction theme, is powering the portfolio’s cash flow growth, significantly outpacing inflation
LOGISTICS MARKET RENT GROWTH
Logistics Market Rent Growth vs. Inflation10
Year-over-Year Growth Comparison
Market Rents Above In-Place Rents12
BEPIF offers strong growth potential
We believe BEPIF is positioned for continued cash flow growth even if market rent growth moderates, driven by market rents above in-place rents in selective markets with strong fundamentals
EMBEDDED RENT GROWTH POTENTIAL12
There can be no assurance that the Fund will achieve its objectives or avoid substantial losses. There can be no assurance of growth or that income from real estate will keep pace with inflation.
Spotting Trends Early: Blackstone’s Inflation Call
We believe successful investing requires identifying trends early and adapting quickly to deliver positive returns. Jon Gray, Blackstone’s President and COO, discusses how we anticipated and positioned our portfolio for a persistent, pervasive inflationary environment.
Blackstone proprietary data as of February 28, 2023, unless otherwise indicated. The figures herein include preliminary, unaudited results, which are subject to further review and adjustment. When used on this website and unless otherwise specified or unless the context otherwise requires, references to the “Fund” should be read as references to Blackstone European Property Income Fund SICAV (“BEPIF”), Blackstone European Property Income Fund (Master) FCP and their parallel entities. Capitalized terms used but not defined will have the meanings set forth in the confidential prospectus prepared for BEPIF (the “Prospectus”). An investment in BEPIF involves subscribing to shares of a collective investment and not of a given underlying asset. The inception date for Class I-A, Class I-D, Class A-A and Class A-D shares is October 1, 2021. Please refer to the Prospectus for further information.
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 website and/or the 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 this website and the documents linked to it (“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 available 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 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 the relevant sections of this website only.
- The annualized Total Net Return of BEPIF since its inception, where “Total Net Return” represents aggregated distributions plus change in NAV of BEPIF over a Reference Period, net of all applicable fees and expenses. The “Reference Period” is the year ending December 31, subject to pro-rating for partial years.
- The Dividend Yield represents dividends distributed over average NAV over the last twelve months. Calculation is consistent with NCREIF/INREV/ANREV’s “Distribution-Dividend Yield” definition. Dividends are incorporated into the Total Net Return of the applicable share class. Accumulation Sub-Class Shares will, in lieu of receiving cash distributions, have any such amounts reflected in their respective NAV per share.
- Represents the value of the Fund’s assets, minus the Fund’s liabilities as well as expenses attributable to certain share classes, such as servicing fees, determined in accordance with the valuation methods summarized in the Prospectus, divided by the number of shares outstanding.
- Sector breakdown by GAV at Fund share including underlying investments within Blackstone’s open-ended European Core+ fund for institutional investors, excluding debt investments.
- Represents direct real estate investments and Blackstone’s open-ended European Core+ fund for institutional investors, as of December 31, 2022.
- Blackstone proprietary data. Represents the estimated embedded rent growth potential between the Fund’s in-place portfolio rents and achievable market rents for direct real estate investments. Direct real estate investments are subject to periodic rent reviews over time. The embedded rent growth potential is calculated by dividing the prevailing portfolio market rents by the existing in-place rents. Any expectations that in-place rents have the potential to increase are based on certain assumptions that may change and do not constitute forecasts. Such growth potential is hypothetical, provided for informational purposes only, and does not represent the actual or estimated future performance of BEPIF.
- Represents 1-year growth rate from Q3 2021 to Q3 2022. CBRE. YoY market rent growth is based on country-level prime rent weighted by rentable value (as calculated by CBRE) and weighted by logistics exposure in Blackstone’s open-ended European Core+ funds (based on sqm owned).
- Fixed-rate financing includes debt that has been swapped from floating to fixed-rate(inclusive of forward-starting swaps), interest rate caps and matched debt.
- Proportion based on total rent on double and triple net leases vs. total rent for direct real estate investments, excluding Blackstone’s open-ended European Core+ fund for institutional investors, as of December 31, 2022.
- As of September 30, 2022. Inflation represented by the 1-year growth rate of the consumer price index (CPI) from Q3 2021 to Q3 2022 in the U.K. and Eurozone. European Central Bank, for Eurozone Harmonized Index of Consumer Prices (HICP); Bank of England, for U.K. CPI. CPI weighting based on U.K . / Eurozone logistics exposure in Blackstone’s open-ended European Core+ funds (based on sqm owned). Logistics market rent growth represented by the 1-year growth rate from Q3 2021 to Q3 2022. CBRE. YoY market rent growth is based on country level prime rent weighted by rentable value (as calculated by CBRE) and weighted by logistics exposure in Blackstone’s open-ended European Core+ funds (based on sqm owned).