UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
(Mark One)
FOR THE QUARTERLY PERIOD ENDED
OR
For the Transition period from to .
Commission file number
(Exact name of Registrant as specified in Governing Instruments)
(State or other jurisdiction of incorporation or organization) |
(Address of principal executive offices) (Zip Code) |
(I.R.S. Employer Identification No.) |
Registrant’s telephone number, including area code: (
Securities registered pursuant to Section 12(b) of the Act: None
Title of each class |
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Trading Symbol(s) |
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Name of each exchange on which registered |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer |
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Accelerated filer |
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Smaller reporting company |
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Emerging growth company |
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No
As of August 11, 2023, the registrant had the following shares outstanding:
TABLE OF CONTENTS
PART I. |
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ITEM 1. |
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Condensed Consolidated Financial Statements (Unaudited): |
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Condensed Consolidated Balance Sheets as of June 30, 2023 and December 31, 2022 |
1 |
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2 |
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3 |
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Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2023 and 2022 |
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6 |
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ITEM 2. |
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
30 |
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ITEM 3. |
48 |
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ITEM 4. |
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PART II. |
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ITEM 1. |
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ITEM 1A. |
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ITEM 2. |
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ITEM 3. |
52 |
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ITEM 4. |
52 |
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ITEM 5. |
52 |
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ITEM 6. |
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PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Starwood Real Estate Income Trust, Inc.
Condensed Consolidated Balance Sheets (Unaudited)
(in thousands, except share and per share data)
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June 30, 2023 |
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December 31, 2022 |
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Assets |
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Investments in real estate, net |
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$ |
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$ |
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Investments in real estate debt |
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Investments in unconsolidated real estate ventures |
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Cash and cash equivalents |
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Restricted cash |
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Other assets |
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Total assets |
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$ |
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$ |
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Liabilities and Equity |
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Mortgage notes and revolving credit facility, net |
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$ |
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$ |
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Secured financings on investments in real estate debt |
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Unsecured line of credit |
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— |
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Other liabilities |
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Subscriptions received in advance |
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Due to affiliates |
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Total liabilities |
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Commitments and contingencies |
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Redeemable non-controlling interests |
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Equity |
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Preferred stock, $ |
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Common stock — Class T shares, $ |
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Common stock — Class S shares, $ |
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Common stock — Class D shares, $ |
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Common stock — Class I shares, $ |
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Additional paid-in capital |
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Accumulated other comprehensive loss |
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( |
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Accumulated deficit and cumulative distributions |
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( |
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Total stockholders’ equity |
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Non-controlling interests in consolidated joint ventures |
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Total equity |
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Total liabilities and equity |
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$ |
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$ |
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See accompanying notes to condensed consolidated financial statements.
1
Starwood Real Estate Income Trust, Inc.
Condensed Consolidated Statements of Operations and Comprehensive Loss (Unaudited)
(in thousands, except share and per share data)
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For the Three Months Ended June 30, |
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For the Six Months Ended June 30, |
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2023 |
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2022 |
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2023 |
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2022 |
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Revenues |
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Rental revenue |
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$ |
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$ |
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$ |
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$ |
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Other revenue |
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Total revenues |
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Expenses |
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Property operating |
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General and administrative |
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Management fees |
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Performance participation allocation |
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— |
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— |
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Impairment of investments in real estate |
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— |
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— |
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Depreciation and amortization |
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Total expenses |
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Other income (expense) |
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Income (loss) from unconsolidated real estate ventures |
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Income from investments in real estate debt |
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Net gain on dispositions of real estate |
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— |
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— |
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Interest expense |
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( |
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( |
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( |
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Other income (expense), net |
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Total other income (expense) |
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Net loss |
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$ |
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$ |
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$ |
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( |
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$ |
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Net income attributable to non-controlling interests in |
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$ |
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$ |
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$ |
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$ |
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Net loss attributable to non-controlling interests in |
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Net loss attributable to stockholders |
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$ |
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( |
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$ |
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( |
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$ |
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$ |
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Net loss per share of common stock, basic and diluted |
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$ |
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( |
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$ |
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( |
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$ |
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( |
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$ |
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Weighted-average shares of common stock |
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Comprehensive loss: |
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Net loss |
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$ |
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( |
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$ |
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( |
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$ |
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( |
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$ |
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( |
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Other comprehensive income (loss) item: |
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Foreign currency translation adjustments |
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( |
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( |
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Other comprehensive income (loss) |
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$ |
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$ |
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( |
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$ |
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$ |
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( |
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Comprehensive loss |
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$ |
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( |
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$ |
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( |
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$ |
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( |
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$ |
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( |
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See accompanying notes to condensed consolidated financial statements.
2
Starwood Real Estate Income Trust, Inc.
Condensed Consolidated Statements of Changes in Equity (Unaudited)
(in thousands)
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Par Value |
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Common |
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Common |
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Common |
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Common |
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Additional |
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Accumulated |
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Accumulated |
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Total |
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Non- |
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Total |
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Balance at March 31, 2023 |
$ |
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$ |
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$ |
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$ |
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$ |
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$ |
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( |
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$ |
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( |
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$ |
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$ |
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$ |
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Common stock issued |
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— |
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— |
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— |
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— |
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Offering costs, net |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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Distribution reinvestments |
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— |
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— |
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— |
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— |
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Amortization of restricted stock grants |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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Common stock repurchased |
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( |
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( |
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( |
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( |
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( |
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— |
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— |
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( |
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— |
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( |
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Net loss ($ |
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— |
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— |
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— |
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— |
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— |
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— |
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( |
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( |
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( |
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Distributions to non-controlling interests |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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( |
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Distributions declared on common stock |
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— |
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— |
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— |
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— |
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( |
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( |
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— |
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( |
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Other comprehensive income, net |
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— |
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— |
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— |
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— |
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Allocation to redeemable non-controlling |
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— |
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— |
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— |
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— |
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— |
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Balance at June 30, 2023 |
$ |
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$ |
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$ |
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$ |
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$ |
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$ |
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( |
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$ |
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$ |
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$ |
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$ |
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Par Value |
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Common |
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Common |
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Common |
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Common |
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Additional |
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Accumulated |
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Accumulated |
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Total |
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Non- |
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Total |
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Balance at March 31, 2022 |
$ |
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$ |
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$ |
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$ |
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$ |
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$ |
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( |
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$ |
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( |
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$ |
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$ |
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$ |
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Common stock issued |
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— |
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— |
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— |
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Offering costs, net |
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— |
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— |
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— |
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— |
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( |
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— |
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— |
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( |
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— |
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( |
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Distribution reinvestments |
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— |
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— |
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— |
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Amortization of restricted stock grants |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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Common stock repurchased |
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— |
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( |
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— |
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( |
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( |
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— |
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— |
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( |
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— |
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( |
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Net loss ($ |
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— |
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— |
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— |
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— |
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— |
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— |
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( |
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( |
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( |
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Contributions from non-controlling |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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Distributions to non-controlling interests |
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— |
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— |
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— |
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— |
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— |
|
|
|
|
— |
|
|
|
|
— |
|
|
|
|
— |
|
|
|
|
( |
) |
|
|
|
( |
) |
Distributions declared on common stock |
|
|
— |
|
|
|
|
— |
|
|
|
|
— |
|
|
|
|
— |
|
|
|
|
— |
|
|
|
|
— |
|
|
|
|
( |
) |
|
|
|
( |
) |
|
|
|
— |
|
|
|
|
( |
) |
Other comprehensive loss, net |
|
|
— |
|
|
|
|
— |
|
|
|
|
— |
|
|
|
|
— |
|
|
|
|
— |
|
|
|
|
( |
) |
|
|
|
— |
|
|
|
|
( |
) |
|
|
|
— |
|
|
|
|
( |
) |
Allocation to redeemable non-controlling |
|
|
— |
|
|
|
|
— |
|
|
|
|
— |
|
|
|
|
— |
|
|
|
|
( |
) |
|
|
|
— |
|
|
|
|
— |
|
|
|
|
( |
) |
|
|
|
— |
|
|
|
|
( |
) |
Balance at June 30, 2022 |
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
( |
) |
|
$ |
|
( |
) |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
||||||||
See accompanying notes to condensed consolidated financial statements.
3
Starwood Real Estate Income Trust, Inc.
Condensed Consolidated Statements of Changes in Equity (Unaudited)
(in thousands)
|
Par Value |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||
|
Common |
|
|
Common |
|
|
Common |
|
|
Common |
|
|
Additional |
|
|
Accumulated |
|
|
Accumulated |
|
|
Total |
|
|
Non- |
|
|
Total |
|
||||||||||||||||||||
Balance at December 31, 2022 |
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
( |
) |
|
$ |
|
( |
) |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
||||||||
Common stock issued |
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
|
— |
|
|
|
|
|
|
|
|
— |
|
|
|
|
|
||||||
Offering costs, net |
|
|
— |
|
|
|
|
— |
|
|
|
|
— |
|
|
|
|
— |
|
|
|
|
|
|
|
|
— |
|
|
|
|
— |
|
|
|
|
|
|
|
|
— |
|
|
|
|
|
|||
Distribution reinvestments |
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
|
— |
|
|
|
|
|
|
|
|
— |
|
|
|
|
|
||||||
Amortization of restricted stock grants |
|
|
— |
|
|
|
|
— |
|
|
|
|
— |
|
|
|
|
— |
|
|
|
|
|
|
|
|
— |
|
|
|
|
— |
|
|
|
|
|
|
|
|
— |
|
|
|
|
|
|||
Common stock repurchased |
|
|
( |
) |
|
|
|
( |
) |
|
|
|
( |
) |
|
|
|
( |
) |
|
|
|
( |
) |
|
|
|
— |
|
|
|
|
— |
|
|
|
|
( |
) |
|
|
|
— |
|
|
|
|
( |
) |
Net loss ($ |
|
|
— |
|
|
|
|
— |
|
|
|
|
— |
|
|
|
|
— |
|
|
|
|
— |
|
|
|
|
— |
|
|
|
|
( |
) |
|
|
|
( |
) |
|
|
|
|
|
|
|
( |
) |
|
Distributions to non-controlling interests |
|
|
— |
|
|
|
|
— |
|
|
|
|
— |
|
|
|
|
— |
|
|
|
|
— |
|
|
|
|
— |
|
|
|
|
— |
|
|
|
|
— |
|
|
|
|
( |
) |
|
|
|
( |
) |
Distributions declared on common stock |
|
|
— |
|
|
|
|
— |
|
|
|
|
— |
|
|
|
|
— |
|
|
|
|
— |
|
|
|
|
— |
|
|
|
|
( |
) |
|
|
|
( |
) |
|
|
|
— |
|
|
|
|
( |
) |
Other comprehensive income, net |
|
|
— |
|
|
|
|
— |
|
|
|
|
— |
|
|
|
|
— |
|
|
|
|
— |
|
|
|
|
|
|
|
|
— |
|
|
|
|
|
|
|
|
— |
|
|
|
|
|
|||
Allocation to redeemable non-controlling |
|
|
— |
|
|
|
|
— |
|
|
|
|
— |
|
|
|
|
— |
|
|
|
|
|
|
|
|
— |
|
|
|
|
— |
|
|
|
|
|
|
|
|
— |
|
|
|
|
|
|||
Balance at June 30, 2023 |
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
( |
) |
|
$ |
|
( |
) |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
||||||||
|
Par Value |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||
|
Common |
|
|
Common |
|
|
Common |
|
|
Common |
|
|
Additional |
|
|
Accumulated |
|
|
Accumulated |
|
|
Total |
|
|
Non- |
|
|
Total |
|
||||||||||||||||||||
Balance at December 31, 2021 |
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
( |
) |
|
$ |
|
( |
) |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
||||||||
Common stock issued |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
|
— |
|
|
|
|
|
|
|
|
— |
|
|
|
|
|
|||||||
Offering costs, net |
|
|
— |
|
|
|
|
— |
|
|
|
|
— |
|
|
|
|
— |
|
|
|
|
( |
) |
|
|
|
— |
|
|
|
|
— |
|
|
|
|
( |
) |
|
|
|
— |
|
|
|
|
( |
) |
Distribution reinvestments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
|
— |
|
|
|
|
|
|
|
|
— |
|
|
|
|
|
|||||||
Amortization of restricted stock grants |
|
|
— |
|
|
|
|
— |
|
|
|
|
— |
|
|
|
|
— |
|
|
|
|
|
|
|
|
— |
|
|
|
|
— |
|
|
|
|
|
|
|
|
— |
|
|
|
|
|
|||
Common stock repurchased |
|
|
— |
|
|
|
|
( |
) |
|
|
|
( |
) |
|
|
|
( |
) |
|
|
|
( |
) |
|
|
|
— |
|
|
|
|
— |
|
|
|
|
( |
) |
|
|
|
— |
|
|
|
|
( |
) |
Net loss ($ |
|
|
— |
|
|
|
|
— |
|
|
|
|
— |
|
|
|
|
— |
|
|
|
|
— |
|
|
|
|
— |
|
|
|
|
( |
) |
|
|
|
( |
) |
|
|
|
|
|
|
|
( |
) |
|
Contributions from non-controlling |
|
|
— |
|
|
|
|
— |
|
|
|
|
— |
|
|
|
|
— |
|
|
|
|
— |
|
|
|
|
— |
|
|
|
|
— |
|
|
|
|
— |
|
|
|
|
|
|
|
|
|
||
Distributions to non-controlling interests |
|
|
— |
|
|
|
|
— |
|
|
|
|
— |
|
|
|
|
— |
|
|
|
|
— |
|
|
|
|
— |
|
|
|
|
— |
|
|
|
|
— |
|
|
|
|
( |
) |
|
|
|
( |
) |
Distributions declared on common stock |
|
|
— |
|
|
|
|
— |
|
|
|
|
— |
|
|
|
|
— |
|
|
|
|
— |
|
|
|
|
— |
|
|
|
|
( |
) |
|
|
|
( |
) |
|
|
|
— |
|
|
|
|
( |
) |
Other comprehensive loss, net |
|
|
— |
|
|
|
|
— |
|
|
|
|
— |
|
|
|
|
— |
|
|
|
|
— |
|
|
|
|
( |
) |
|
|
|
— |
|
|
|
|
( |
) |
|
|
|
— |
|
|
|
|
( |
) |
Allocation to redeemable non-controlling |
|
|
— |
|
|
|
|
— |
|
|
|
|
— |
|
|
|
|
— |
|
|
|
|
( |
) |
|
|
|
— |
|
|
|
|
— |
|
|
|
|
( |
) |
|
|
|
— |
|
|
|
|
( |
) |
Balance at June 30, 2022 |
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
( |
) |
|
$ |
|
( |
) |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
||||||||
See accompanying notes to condensed consolidated financial statements.
4
Starwood Real Estate Income Trust, Inc.
Condensed Consolidated Statements of Cash Flows (Unaudited)
(in thousands)
|
|
For the Six Months Ended June 30, |
|
|||||
|
|
2023 |
|
|
2022 |
|
||
Cash flows from operating activities |
|
|
|
|
|
|
||
Net loss |
|
$ |
( |
) |
|
$ |
( |
) |
Adjustments to reconcile net loss to net cash provided by operating |
|
|
|
|
|
|
||
Management fees |
|
|
|
|
|
|
||
Performance participation allocation |
|
|
— |
|
|
|
|
|
Impairment of investments in real estate |
|
|
|
|
|
— |
|
|
Depreciation and amortization |
|
|
|
|
|
|
||
Amortization of deferred financing costs |
|
|
|
|
|
|
||
Straight-line rent amortization |
|
|
( |
) |
|
|
( |
) |
Deferred income amortization |
|
|
( |
) |
|
|
( |
) |
Unrealized loss (gain) on changes in fair value of financial |
|
|
|
|
|
( |
) |
|
Foreign currency (gain) loss |
|
|
( |
) |
|
|
|
|
Amortization of restricted stock grants |
|
|
|
|
|
|
||
Net gain on disposition of investments in real estate |
|
|
( |
) |
|
|
— |
|
Realized loss on sale of investments in real estate debt |
|
|
|
|
|
— |
|
|
Loss (income) from unconsolidated real estate ventures |
|
|
|
|
|
( |
) |
|
Distributions of earnings from unconsolidated real estate ventures |
|
|
|
|
|
— |
|
|
Other items |
|
|
( |
) |
|
|
|
|
Change in assets and liabilities |
|
|
|
|
|
|
||
(Increase) decrease in other assets |
|
|
( |
) |
|
|
|
|
Decrease in due to affiliates |
|
|
( |
) |
|
|
( |
) |
Increase (decrease) in other liabilities |
|
|
|
|
|
( |
) |
|
Net cash provided by operating activities |
|
|
|
|
|
|
||
Cash flows from investing activities |
|
|
|
|
|
|
||
Acquisitions of real estate |
|
|
— |
|
|
|
( |
) |
Proceeds from dispositions of real estate |
|
|
|
|
|
— |
|
|
Capital improvements to real estate |
|
|
( |
) |
|
|
( |
) |
Distributions from unconsolidated real estate ventures |
|
|
— |
|
|
|
|
|
Origination and purchase of investments in real estate debt |
|
|
— |
|
|
|
( |
) |
Purchase of real estate-related debt and equity securities |
|
|
— |
|
|
|
( |
) |
Proceeds from paydown of principal and settlement of investments in real estate debt |
|
|
|
|
|
|
||
Purchase of derivative instruments |
|
|
( |
) |
|
|
— |
|
Proceeds from settlement of derivative contracts |
|
|
|
|
|
— |
|
|
Net cash provided by (used in) investing activities |
|
|
|
|
|
( |
) |
|
Cash flows from financing activities |
|
|
|
|
|
|
||
Proceeds from issuance of common stock, net |
|
|
|
|
|
|
||
Offering costs paid |
|
|
( |
) |
|
|
( |
) |
Subscriptions received in advance |
|
|
|
|
|
|
||
Repurchase of common stock |
|
|
( |
) |
|
|
( |
) |
Borrowings from mortgage notes, revolving credit facility, and unsecured line of credit |
|
|
|
|
|
|
||
Repayments of mortgage notes, revolving credit facility, and unsecured line of credit |
|
|
( |
) |
|
|
( |
) |
Borrowings under secured financings on investments in real estate debt |
|
|
— |
|
|
|
|
|
Repayments under secured financings on investments in real estate debt |
|
|
— |
|
|
|
( |
) |
Payment of deferred financing costs |
|
|
( |
) |
|
|
( |
) |
Contributions from non-controlling interests |
|
|
— |
|
|
|
|
|
Distributions to non-controlling interests |
|
|
( |
) |
|
|
( |
) |
Distributions |
|
|
( |
) |
|
|
( |
) |
Net cash (used in) provided by financing activities |
|
|
( |
) |
|
|
|
|
Effect of exchange rate changes |
|
|
( |
) |
|
|
( |
) |
Net change in cash and cash equivalents and restricted cash |
|
|
( |
) |
|
|
|
|
Cash and cash equivalents and restricted cash, beginning of year |
|
|
|
|
|
|
||
Cash and cash equivalents and restricted cash, end of year |
|
$ |
|
|
$ |
|
||
Reconciliation of cash and cash equivalents and restricted cash to the |
|
|
|
|
|
|
||
Cash and cash equivalents |
|
$ |
|
|
$ |
|
||
Restricted cash |
|
|
|
|
|
|
||
Total cash and cash equivalents and restricted cash |
|
$ |
|
|
$ |
|
||
Supplemental disclosure of cash flow information: |
|
|
|
|
|
|
||
Cash paid for interest |
|
$ |
|
|
$ |
|
||
Non-cash investing and financing activities: |
|
|
|
|
|
|
||
Accrued stockholder servicing fee due to affiliate |
|
$ |
( |
) |
|
$ |
|
|
Assumption of mortgage notes in conjunction with acquisitions of real |
|
$ |
— |
|
|
$ |
|
|
Issuance of Operating Partnership units as consideration for acquisitions of real estate |
|
$ |
— |
|
|
$ |
|
|
Issuance of Class I shares for payment of management fee |
|
$ |
|
|
$ |
|
||
Redeemable non-controlling interest issued as settlement for performance |
|
$ |
|
|
$ |
|
||
Accrued distributions |
|
$ |
|
|
$ |
|
||
Distribution reinvestment |
|
$ |
|
|
$ |
|
||
Allocation to redeemable non-controlling interests |
|
$ |
( |
) |
|
$ |
|
|
Accrued capital expenditures |
|
$ |
|
|
$ |
|
||
See accompanying notes to condensed consolidated financial statements.
5
Starwood Real Estate Income Trust, Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Starwood Real Estate Income Trust, Inc. (the “Company”) was formed on June 22, 2017 as a Maryland corporation and has elected to be taxed as a real estate investment trust (“REIT”) for U.S. federal income tax purposes. The Company was organized to invest primarily in stabilized, income-oriented commercial real estate and debt secured by commercial real estate. The Company’s portfolio is principally comprised of properties located in the United States. The Company has diversified its portfolio on a global basis through the acquisition of properties outside of the United States, with a focus on Europe. To a lesser extent, the Company invests in debt secured by commercial real estate and real estate-related securities. The Company is the sole general partner of Starwood REIT Operating Partnership, L.P., a Delaware limited partnership (the “Operating Partnership”). Starwood REIT Special Limited Partner, L.L.C. (the “Special Limited Partner”), a wholly owned subsidiary of Starwood Capital Group Holdings, L.P. (the “Sponsor” and together with any entity that is controlled by, controls or is under common control with the Sponsor, and any of their respective predecessor entities, “Starwood Capital”), owns a special limited partner interest in the Operating Partnership. Substantially all of the Company’s business is conducted through the Operating Partnership. The Company and the Operating Partnership are externally managed by Starwood REIT Advisors, L.L.C. (the “Advisor”), an affiliate of the Sponsor.
As of June 30, 2023, the Company owned
On December 27, 2017, the Company commenced its initial public offering of up to $
Principles of Consolidation and Basis of Presentation
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. All significant intercompany balances and transactions have been eliminated in consolidation. Management believes it has made all necessary adjustments, consisting of only normal recurring items, so that the condensed consolidated financial statements are presented fairly and that estimates made in preparing its condensed consolidated financial statements are reasonable and prudent. The accompanying unaudited condensed consolidated interim financial statements should be read in conjunction with the audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022 filed with the U.S. Securities and Exchange Commission (the “SEC”).
The accompanying unaudited condensed consolidated financial statements include the accounts of the Company, the Company’s subsidiaries and joint ventures in which the Company has a controlling interest. For consolidated joint ventures, the non-controlling partner’s share of the assets, liabilities and operations of the joint ventures is included in non-controlling interests as equity of the Company. The non-controlling partner’s interest is generally computed as the joint venture partner’s ownership percentage. Certain of the joint ventures formed by the Company provide the other partner a profits interest based on certain return hurdles being achieved. Any profits interest due to the other partner is reported within non-controlling interests.
In determining whether the Company has a controlling financial interest in a partially owned entity and the requirement to consolidate the accounts of that entity, the Company considers whether the entity is a variable interest entity (“VIE”) and whether it is the primary beneficiary. The Company is the primary beneficiary of a VIE when it has (i) the power to direct the most significant activities impacting the economic performance of the VIE and (ii) the obligation to absorb losses or receive benefits significant to the VIE. The Operating Partnership is considered to be a VIE. The Company consolidates the Operating Partnership because it has the ability to direct the most significant activities of the entity such as purchases, dispositions, financings, budgets, and overall operating plans. Where the Company does not have the power to direct the activities of the VIE that most significantly impact its economic performance, the Company’s interest for those partially owned entities are accounted for using the equity method of accounting. The
6
Company meets the VIE disclosure exemption criteria, as the Company’s interest in the Operating Partnership is considered a majority voting interest.
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the balance sheet. Actual results could differ from those estimates.
Investments in Real Estate
Refer to Note 2 — “Summary of Significant Accounting Policies” to the Company’s consolidated financial statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022, for further details of the GAAP treatment regarding the Company’s investments in real estate.
Impairment of Investments in Real Estate
The Company’s management reviews its real estate properties for impairment each quarter or when there is an event or change in circumstances that indicates an impaired value. If the carrying amount of the real estate investment is no longer recoverable and exceeds the fair value of such investment, an impairment loss is recognized. The impairment loss is recognized based on the excess of the carrying amount of the asset over its fair value. The evaluation of anticipated future cash flows is highly subjective and is based in part on assumptions regarding future occupancy, rental rates and capital requirements that could differ materially from actual results. Since cash flows on real estate properties considered to be “long-lived assets to be held and used” are considered on an undiscounted basis to determine whether an asset has been impaired, the Company’s strategy of holding properties over the long term decreases the likelihood of recording an impairment loss. If the Company’s strategy changes or market conditions otherwise dictate an earlier sale date, an additional impairment loss may be recognized and such loss could be material to the Company’s results. If the Company determines that an impairment has occurred, the affected assets must be reduced to their fair value. Impairment charges are recorded in the Condensed Consolidated Statements of Operations and Comprehensive Loss.
During the three and six months ended June 30, 2023, the Company recognized an aggregate of $
Properties Held-for-Sale
The Company classifies the assets and liabilities related to its investments in real estate as held-for-sale when a sale is probable to occur within one year. The Company considers a sale to be probable when a binding contract has been executed, the buyer has posted a non-refundable deposit, and there are limited contingencies to closing. The Company records held-for-sale investments in real estate at the lower of depreciated cost or fair value, less estimated closing costs. Held-for-sale assets and liabilities are presented within Other assets and Other liabilities on the Company’s Condensed Consolidated Balance Sheets.
Fair Value Measurements
Under normal market conditions, the fair value of an investment is the amount that would be received to sell an asset or transfer a liability in an orderly transaction between market participants at the measurement date (i.e., the exit price). Additionally, there is a hierarchal framework that prioritizes and ranks the level of market price observability used in measuring investments at fair value. Market price observability is impacted by a number of factors, including the type of investment and the characteristics specific to the investment and the state of the market place, including the existence and transparency of transactions between market participants. Investments with readily available active quoted prices or for which fair value can be measured from actively quoted prices generally will have a higher degree of market price observability and a lesser degree of judgment used in measuring fair value.
Investments measured and reported at fair value are classified and disclosed in one of the following levels within the fair value hierarchy:
Level 1 — quoted prices are available in active markets for identical investments as of the measurement date. The Company does not adjust the quoted price for these investments.
Level 2 — quoted prices are available in markets that are not active or model inputs are based on inputs that are either directly or indirectly observable as of the measurement date.
Level 3 — pricing inputs are unobservable and include instances where there is minimal, if any, market activity for the investment. These inputs require significant judgment or estimation by management or third parties when determining fair value and generally
7
represent anything that does not meet the criteria of Levels 1 and 2. Due to the inherent uncertainty of these estimates, these values may differ materially from the values that would have been used had a ready market for these investments existed.
Valuation of assets and liabilities measured at fair value
The Company’s investments in real estate debt are reported at fair value. The Company’s investments in real estate debt include commercial mortgage-backed securities (“CMBS”). The Company generally determines the fair value of its investments by utilizing third-party pricing service providers. In determining the value of a particular investment, the pricing service providers may use broker-dealer quotations, reported trades or valuation estimates from their internal pricing models to determine the reported price. The pricing service providers’ internal models for real estate-related securities usually consider the attributes applicable to a particular class of security (e.g., credit rating or seniority), current market data, and estimated cash flows for each class and incorporate deal collateral performance such as prepayment speeds and default rates, as available.
Certain of the Company’s investments in real estate debt include loans secured by real estate, such as its term loans, which may not have readily available market quotations. In such cases, the Company will generally determine the initial value based on the origination amount or acquisition price of such investment if acquired by the Company or the par value of such investment if originated by the Company. Following the initial measurement, the Company will determine fair value by utilizing or reviewing certain of the following inputs (i) market yield data, (ii) discounted cash flow modeling, (iii) collateral asset performance, (iv) local or macro real estate performance, (v) capital market conditions, (vi) debt yield or loan-to-value ratios and (vii) borrower financial condition and performance.
During the three months ended June 30, 2023 and 2022, the Company recorded net unrealized gains (losses) on its investments in real estate debt securities of $
The Company’s investments in equity securities of public real estate-related companies are reported at fair value and were recorded as a component of Other assets on the Company’s Condensed Consolidated Balance Sheets. As such, the resulting unrealized gains and losses are recorded as a component of Other income (expense), net in the Company’s Condensed Consolidated Statements of Operations and Comprehensive Loss. During the three months ended June 30, 2023 and 2022, the Company recognized $
The Company’s derivative financial instruments are reported at fair value. The Company’s interest rate swap agreements are valued using a discounted cash flow analysis based on the terms of the contract and the forward interest rate curve adjusted for the Company’s non-performance risk. The Company’s interest rate cap positions are valued using models developed by the respective counterparty as well as third party pricing service providers that use as their basis readily observable market parameters (such as forward yield curves and credit default swap data).
The fair values of the Company’s foreign currency forward contracts are determined by comparing the contracted forward exchange rate to the current market exchange rate. The current market exchange rates are determined by using market spot rates, forward rates and interest rate curves for the underlying instruments.
The fair values of the Company’s financial instruments (other than investments in real estate debt, mortgage notes, revolving credit facility, unsecured line of credit and derivative instruments), including cash and cash equivalents, restricted cash and other financial instruments, approximate their carrying or contract value. The Company utilizes a discounted cash flow model to value its loans secured by real estate (considering loan features, credit quality of the loans and includes a review of market yield data, collateral asset performance, local and macro real estate performance, capital market conditions, debt yield, loan-to-value ratios, borrower financial condition and performance, among other factors). The Company continuously monitors and assesses the credit quality of individual loans including the review of delinquency and loan-to-value ratios on our loans secured by real estate. Such loans have floating interest rates with market terms and there are no underlying credit quality issues as of June 30, 2023.
8
The following table details the Company’s assets and liabilities measured at fair value on a recurring basis ($ in thousands):
|
|
June 30, 2023 |
|
|
December 31, 2022 |
|
||||||||||||||||||||||||||
|
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
|
Total |
|
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
|
Total |
|
||||||||
Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Investments in real estate debt |
|
$ |
— |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
— |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||
Equity securities |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||||
Derivatives(1) |
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
||||
Total |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Derivatives |
|
$ |
— |
|
|
$ |
|
|
$ |
— |
|
|
$ |
|
|
$ |
— |
|
|
$ |
|
|
$ |
— |
|
|
$ |
|
||||
Total |
|
$ |
— |
|
|
$ |
|
|
$ |
— |
|
|
$ |
|
|
$ |
— |
|
|
$ |
|
|
$ |
— |
|
|
$ |
|
||||
__________
The following table details the Company’s assets measured at fair value on a recurring basis using Level 3 inputs ($ in thousands):
|
|
Investments in Real Estate Debt |
|
|
Balance as of December 31, 2022 |
|
$ |
|
|
Purchases |
|
|
— |
|
Included in net loss |
|
|
|
|
Unrealized loss |
|
|
( |
) |
Foreign currency exchange |
|
|
|
|
Balance as of June 30, 2023 |
|
$ |
|
|
The following table contains the quantitative inputs and assumptions used for items categorized in Level 3 of the fair value hierarchy ($ in thousands):
|
|
June 30, 2023 |
||||||||||
|
|
Fair Value |
|
|
Valuation Technique |
|
Unobservable Inputs |
|
Weighted Average |
|
Impact to Valuation from an Increase in Input |
|
Investments in real estate debt |
|
$ |
|
|
Discounted Cash Flow |
|
Discount Rate |
|
|
Decrease |
||
|
|
December 31, 2022 |
||||||||||
|
|
Fair Value |
|
|
Valuation Technique |
|
Unobservable Inputs |
|
Weighted Average |
|
Impact to Valuation from an Increase in Input |
|
Investments in real estate debt |
|
$ |
|
|
Cost |
|
Par |
|
N/A |
|
N/A |
|
Valuation of assets measured at fair value on a nonrecurring basis
Certain of the Company’s assets are not measured at fair value on an ongoing basis but are subject to fair value adjustments, such as when there is evidence of impairment, and therefore measured at fair value on a nonrecurring basis. The Company reviews its real estate properties for impairment each quarter or when there is an event or change in circumstances that indicates an impaired value.
During the three and six months ended June 30, 2023, the Company recognized an aggregate $
9
Level 2 input. There are inherent uncertainties in making these estimates such as current and future macroeconomic conditions. During the three and six months ended June 30, 2022, the Company did
Valuation of liabilities not measured at fair value
Fair value of the Company’s indebtedness is estimated by modeling the cash flows required by the Company’s debt agreements and discounting them back to the present value using an appropriate discount rate. Additionally, the Company considers current market rates and conditions by evaluating similar borrowing agreements with comparable loan-to-value ratios and credit profiles. The inputs used in determining the fair value of the Company’s indebtedness are considered Level 3. As of June 30, 2023, the fair value of the Company’s mortgage notes, revolving credit facility and secured financings on investments in real estate debt was approximately $
Income Taxes
The Company elected to be taxed as a REIT under the Internal Revenue Code (the “Code”), for federal income tax purposes, beginning with its taxable year ended December 31, 2019. As long as the Company qualifies for taxation as a REIT, it generally will not be subject to U.S. federal corporate income tax on its net taxable income that is currently distributed to its stockholders. A REIT is subject to a number of organizational and operational requirements, including a requirement that it currently distributes at least
The Company has formed wholly owned subsidiaries to function as TRSs and filed TRS elections, together with such subsidiaries, with the Internal Revenue Service. In general, a TRS may perform additional services for the Company’s tenants and generally may engage in any real estate or non-real estate-related business other than management or operation of a lodging facility or a health care facility. The TRSs are subject to taxation at the federal, state and local levels, as applicable, at the regular corporate tax rates. The Company accounts for applicable income taxes by utilizing the asset and liability method. As such, the Company records deferred tax assets and liabilities for the future tax consequences resulting from the difference between the carrying value of existing assets and liabilities and their respective tax basis. A valuation allowance for deferred tax assets is provided if the Company believes all or some portion of the deferred tax asset may not be realized.
For the three and six months ended June 30, 2023, the Company recognized an income tax expense of $
Recent Accounting Pronouncements
In March 2020, the Financial Accounting Standards Board (the “FASB”) issued ASU 2020-04, Reference Rate Reform (Topic 848), as amended by ASU 2021-01 in January 2021 and ASU 2022-06 in December 2022, directly addressing the effects of reference rate reform on financial reporting as a result of the cessation of the publication of certain London Interbank Offered Rate (“LIBOR”) rates beginning December 31, 2021, with complete elimination of the publication of the LIBOR rates by June 30, 2023. The guidance provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships and other transactions affected by reference rate reform by virtue of referencing LIBOR or another reference rate expected to be discontinued. This guidance became effective on March 12, 2020 and can be adopted no later than December 31, 2024, with early adoption permitted. The Company is currently evaluating the impact, but does not expect that the adoption of ASU 2020-04, as amended by ASU 2021-01 and ASU 2022-06, will have a material impact on the Company’s condensed consolidated financial statements.
10
Investments in Real Estate
Investments in real estate, net consisted of the following ($ in thousands):
|
|
June 30, 2023 |
|
|
December 31, 2022 |
|
||
Building and building improvements |
|
$ |
|
|
$ |
|
||
Land and land improvements |
|
|
|
|
|
|
||
Furniture, fixtures and equipment |
|
|
|
|
|
|
||
) |
|
|
|
|
|
|
||
Total |
|
|
|
|
|
|
||
Accumulated depreciation and amortization |
|
|
( |
) |
|
|
( |
) |
Investments in real estate, net |
|
$ |
|
|
$ |
|
||
Asset Dispositions
During the three months ended June 30, 2023, the Company recorded $
During the three months ended June 30, 2023, the Company sold an aggregate of $
For the three and six months ended June 30, 2022, there were
Investments in Real Estate - Held-for-Sale
As of June 30, 2023,
The following table details the assets and liabilities of the Company’s investments in real estate classified as held-for-sale ($ in thousands):
|
|
June 30, 2023 |
|
|
December 31, 2022 |
|
||
Assets: |
|
|
|
|
|
|
||
Investments in real estate, net |
|
$ |
|
|
$ |
— |
|
|
Other assets |
|
|
|
|
|
— |
|
|
Total assets |
|
$ |
|
|
$ |
— |
|
|
|
|
|
|
|
|
|
||
Liabilities: |
|
|
|
|
|
|
||
Mortgage notes, net |
|
$ |
|
|
$ |
— |
|
|
Other liabilities |
|
|
|
|
|
— |
|
|
Total liabilities |
|
$ |
|
|
$ |
— |
|
|
11
Investments in Unconsolidated Real Estate Ventures
The following table details the Company’s equity investments in unconsolidated entities ($ in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
||
Investments in Unconsolidated Real Estate Ventures (Segment) |
|
Date Acquired |
|
Number of Properties |
|
Ownership Interest |
|
June 30, 2023 |
|
|
December 31, 2022 |
|
||
Extended Stay Portfolio (Other properties) |
|
July 2022 |
|
|
|
$ |
|
|
$ |
|
||||
Fort Lauderdale Hotel (Other properties) |
|
March 2019 |
|
|
|
|
|
|
|
|
||||
Total investments in unconsolidated real estate ventures |
|
|
|
|
|
$ |
|
|
$ |
|
||||
The following table details the Company’s income (loss) from equity investments in unconsolidated entities ($ in thousands):
|
|
Three Months Ended |
|
|
Six Months Ended |
|
||||||||||
Investments in Unconsolidated Real Estate Ventures (Segment) |
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
||||
Extended Stay Portfolio (Other properties) |
|
$ |
|
|
$ |
— |
|
|
$ |
( |
) |
|
$ |
— |
|
|
Fort Lauderdale Hotel (Other properties) |
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|||
Total income (loss) from unconsolidated real estate ventures |
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
|||
The gross carrying amount and accumulated amortization of the Company’s intangible assets and liabilities consisted of the following ($ in thousands):
|
June 30, 2023 |
|
|
December 31, 2022 |
|
||||
Intangible assets: (1) |
|
|
|
|
|
|
|
||
In-place lease intangibles |
$ |
|
|
|
$ |
|
|
||
Above-market lease intangibles |
|
|
|
|
|
|
|
||
Other |
|
|
|
|
|
|
|
||
Total intangible assets |
|
|
|
|
|
|
|
||
Accumulated amortization: |
|
|
|
|
|
|
|
||
In-place lease amortization |
|
|
( |
) |
|
|
|
( |
) |
Above-market lease amortization |
|
|
( |
) |
|
|
|
( |
) |
Other |
|
|
( |
) |
|
|
|
( |
) |
Total accumulated amortization |
|
|
( |
) |
|
|
|
( |
) |
Intangible assets, net |
$ |
|
|
|
$ |
|
|
||
Intangible liabilities: (2) |
|
|
|
|
|
|
|
||
Below-market lease intangibles |
$ |
|
|
|
$ |
|
|
||
Total intangible liabilities |
|
|
|
|
|
|
|
||
Accumulated amortization: |
|
|
|
|
|
|
|
||
Below-market lease amortization |
|
|
( |
) |
|
|
|
( |
) |
Total accumulated amortization |
|
|
( |
) |
|
|
|
( |
) |
Intangible liabilities, net |
$ |
|
|
|
$ |
|
|
||
The estimated future amortization on the Company’s intangibles for each of the next five years and thereafter as of June 30, 2023 is as follows ($ in thousands):
|
|
In-place |
|
|
Above-market |
|
|
Other |
|
|
Below-market |
|
||||
2023 (remaining) |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|||
2024 |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|||
2025 |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|||
2026 |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|||
2027 |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|||
Thereafter |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|||
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|||
12
The following tables detail the Company’s investments in real estate debt as of June 30, 2023 and December 31, 2022 ($ in thousands):
|
|
|
|
June 30, 2023 |
|
|||||||||
Type of Security/Loan |
|
Number of Positions |
|
Weighted |
|
Weighted Average |
|
Cost Basis |
|
|
Fair Value |
|
||
CMBS - floating |
|
|
|
|
$ |
|
|
$ |
|
|||||
Term loans |
|
|
|
|
|
|
|
|
|
|||||
Total investments in real estate debt |
|
|
|
|
$ |
|
|
$ |
|
|||||
|
|
|
|
December 31, 2022 |
|
|||||||||
Type of Security/Loan |
|
Number of |
|
Weighted |
|
Weighted Average |
|
Cost Basis |
|
|
Fair Value |
|
||
CMBS - floating |
|
|
|
|
$ |
|
|
$ |
|
|||||
Term loans |
|
|
|
|
|
|
|
|
|
|||||
Total investments in real estate debt |
|
|
|
|
$ |
|
|
$ |
|
|||||
During June 2022, the Company provided financing in the form of a term loan to an unaffiliated entity in connection with its acquisition of Australia’s largest hotel and casino company. The loan is in the amount of AUD
During February 2021, the Company provided financing in the form of a term loan to an unaffiliated entity in connection with its acquisition of a premier United Kingdom holiday company. The loan is in the amount of £
The Company’s investments in real estate debt include CMBS collateralized by properties owned by Starwood Capital investment vehicles. The following table details the Company’s affiliate investments in real estate debt ($ in thousands):
|
|
Fair Value |
|
|||||
|
|
June 30, 2023 |
|
|
December 31, 2022 |
|
||
CMBS |
|
$ |
|
|
$ |
|
||
Total |
|
$ |
|
|
$ |
|
||
Such CMBS were purchased in fully or over-subscribed offerings. Each investment in such CMBS by the Company represented a minority participation in any individual tranche. The Company acquired its minority participation interest from third-party investment banks on market terms negotiated by the majority third-party investors.
During the three and six months ended June 30, 2023, the Company recorded net realized losses on sales of its investments in real estate debt securities of $
13
6. Mortgage Notes and Revolving Credit Facility
The following table is a summary of the mortgage notes and revolving credit facility secured by the Company’s properties as of June 30, 2023 and December 31, 2022 ($ in thousands):
|
|
|
|
|
|
|
|
Principal Balance Outstanding(3)(4) |
|
|||||
Indebtedness |
|
Weighted |
|
Weighted |
|
Maximum |
|
June 30, 2023 |
|
|
December 31, 2022 |
|
||
Fixed rate loans |
|
|
|
|
|
|
|
|
|
|
|
|
||
Fixed rate mortgages |
|
|
|
N/A |
|
$ |
|
|
$ |
|
||||
Total fixed rate loans |
|
|
|
|
|
|
|
|
|
|
|
|
||
Variable rate loans |
|
|
|
|
|
|
|
|
|
|
|
|
||
Floating rate mortgages |
|
|
|
N/A |
|
|
|
|
|
|
||||
Variable rate revolving credit facility(5) |
|
|
|
$ |
|
|
|
|
|
|
||||
Total variable rate loans |
|
|
|
|
|
|
|
|
|
|
|
|
||
Total loans secured by the Company’s |
|
|
|
|
|
|
|
|
|
|
|
|
||
Deferred financing costs, net |
|
|
|
|
|
|
|
|
( |
) |
|
|
( |
) |
Discount on assumed debt, net |
|
|
|
|
|
|
|
|
( |
) |
|
|
( |
) |
Mortgage notes and revolving credit facility, net |
|
|
|
$ |
|
|
$ |
|
||||||
The following table presents the future principal payments under the Company’s mortgage notes and revolving credit facility as of June 30, 2023 ($ in thousands):
Year |
|
Amount |
|
||
2023 (remaining) |
|
$ |
|
|
|
2024 |
|
|
|
|
|
2025 |
|
|
|
|
|
2026 |
|
|
|
|
|
2027 |
|
|
|
|
|
Thereafter |
|
|
|
|
|
Total |
|
$ |
|
|
|
Pursuant to lender agreements for certain of the Company’s mortgages, the Company has the ability to draw $
The Company’s mortgage notes and revolving credit facility may contain customary events of default and covenants, including limitations on liens and indebtedness and maintenance of certain financial ratios. The Company is not aware of any instance of material noncompliance with financial covenants as of June 30, 2023.
14
Secured financings on investments in real estate debt are treated as collateralized financing transactions and are carried at their contractual amounts, including accrued interest, as specified in the respective agreements. Although structured as a sale and repurchase obligation, a secured financing on investments in real estate debt operates as a financing under which securities are pledged as collateral to secure a short-term loan equal in value to a specified percentage of the market value of the pledged collateral. While used as collateral, the Company retains beneficial ownership of the pledged collateral, including the right to distributions. At the maturity of a secured financing on investments in real estate debt, the Company is required to repay the loan and concurrently receive the pledged collateral from the lender or, with the consent of the lender, renew such agreement at the then-prevailing financing rate.
Interest rates on these borrowings are determined based on prevailing rates corresponding to the terms of the borrowings, and interest is paid at the termination of the borrowing at which time the Company may enter into a new borrowing arrangement at prevailing market rates with the same counterparty or repay that counterparty and negotiate financing with a different counterparty.
The fair value of financial instruments pledged as collateral on the Company’s secured financings on investments in real estate debt disclosed in the tables below represents the Company’s fair value of such instruments, which may differ from the fair value assigned to the collateral by its counterparties.
During June 2022, the Company entered into a repurchase agreement with Morgan Stanley Bank, N.A. (“Morgan Stanley”), Guardians of New Zealand Superannuation as manager and administrator of the New Zealand Superannuation Fund (“NZ Super”), and BAWAG P.S.K. Bank für Arbeit und Wirtschaft und Osterreichische Postsparkasse Aktiengesellschaft (“BAWAG”) in order to finance its term loan investment (the “Syndicated RA”) to an unaffiliated entity in connection with its acquisition of three Australian hospitality and leisure resorts.
During February 2021, the Company entered into a repurchase agreement with Barclays Bank PLC in order to finance its term loan investment (the “Barclays RA”) to an unaffiliated entity in connection with its acquisition of a premier United Kingdom holiday company. Effective February 15, 2022, the reference rate for the calculation of interest transitioned from the three-month U.S. dollar-denominated LIBOR to SONIA. The Barclays RA interest rate is now equal to the SONIA daily non-cumulative EFR rate plus a spread.
For financial statement purposes, the Company does not offset its secured financings on investments in real estate debt and securities lending transactions because the conditions for netting as specified by GAAP are not met. Although not offset on the Company’s Condensed Consolidated Balance Sheets, these transactions are summarized in the following tables ($ in thousands):
|
|
|
|
|
|
June 30, 2023 |
|
|||||
Indebtedness |
|
Maturity Date |
|
Coupon |
|
Collateral |
|
|
Outstanding |
|
||
Barclays RA |
|
|
|
$ |
|
|
$ |
|
||||
Syndicated RA |
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
$ |
|
|
$ |
|
||
|
|
|
|
|
|
December 31, 2022 |
|
|||||
Indebtedness |
|
Maturity Date |
|
Coupon |
|
Collateral |
|
|
Outstanding |
|
||
Barclays RA |
|
|
|
$ |
|
|
$ |
|
||||
Syndicated RA |
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
$ |
|
|
$ |
|
||
(1)
During July 2021, the Company increased its unsecured line of credit (the “Line of Credit”) by $
15
The following table summarizes the components of Other assets ($ in thousands):
|
|
June 30, 2023 |
|
|
December 31, 2022 |
|
||
Held-for-sale assets |
|
$ |
|
|
$ |
— |
|
|
Derivative instruments |
|
|
|
|
|
|
||
Intangible assets, net |
|
|
|
|
|
|
||
Receivables |
|
|
|
|
|
|
||
Equity securities |
|
|
|
|
|
|
||
Prepaid expenses |
|
|
|
|
|
|
||
Deferred financing costs, net |
|
|
|
|
|
|
||
Interest receivable |
|
|
|
|
|
|
||
Other |
|
|
|
|
|
|
||
Total other assets |
|
$ |
|
|
$ |
|
||
The following table summarizes the components of Other liabilities ($ in thousands):
|
|
June 30, 2023 |
|
|
December 31, 2022 |
|
||
Held-for-sale liabilities |
|
$ |
|
|
$ |
— |
|
|
Accounts payable and accrued expenses |
|
|
|
|
|
|
||
Real estate taxes payable |
|
|
|
|
|
|
||
Intangible liabilities, net |
|
|
|
|
|
|
||
Accrued interest expense |
|
|
|
|
|
|
||
Distributions payable |
|
|
|
|
|
|
||
Tenant security deposits |
|
|
|
|
|
|
||
Deferred tax liability |
|
|
|
|
|
|
||
Deposits received on pending sales |
|
|
|
|
|
— |
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|||
Deferred income |
|
|
|
|
|
|
||
Other taxes payable |
|
|
|
|
|
|
||
Other |
|
|
|
|
|
|
||
Total other liabilities |
|
$ |
|
|
$ |
|
||
The Company uses derivative financial instruments to minimize the risks and/or costs associated with the Company’s investments and financing transactions. The Company has not designated any of its derivative financial instruments as hedges as defined under GAAP. Although not designated as hedging instruments under GAAP, the Company’s derivatives are not speculative and are used to manage the Company’s exposure to interest rate movements, fluctuations in foreign exchange rates, and other identified risks.
The use of derivative financial instruments involves certain risks, including the risk that the counterparties to these contractual arrangements do not perform as agreed. To mitigate this risk, the Company enters into derivative financial instruments with counterparties it believes to have appropriate credit ratings and that are major financial institutions with which the Company and its affiliates may also have other financial relationships.
Interest Rate Contracts
Certain of the Company’s transactions expose the Company to interest rate risks, which include exposure to variable interest rates on certain loans secured by the Company’s real estate in addition to its secured financings of investments in real estate debt. The Company uses derivative financial instruments, which includes interest rate caps and swaps, and may also include options, floors, and other interest rate derivative contracts, to limit the Company’s exposure to the future variability of interest rates.
16
The following tables detail the Company’s outstanding interest rate derivatives that were non-designated hedges of interest rate risk (notional amounts in thousands):
|
|
June 30, 2023 |
|||||||||||
Interest Rate Derivatives |
|
Number of Instruments |
|
Notional Amount |
|
|
Weighted Average Strike Rate |
|
Index |
|
Weighted Average Maturity (Years) |
||
Interest Rate Caps - Property debt |
|
|
$ |
|
|
|
|
LIBOR, SOFR |
|
||||
Interest Rate Caps - Property debt |
|
|
€ |
|
|
|
|
EURIBOR |
|
||||
Interest Rate Caps - Property debt |
|
|
DKK |
|
|
|
|
CIBOR |
|
||||
Interest Rate Swaps - Property debt |
|
|
$ |
|
|
|
|
LIBOR |
|
||||
Interest Rate Swaps - Property debt |
|
|
€ |
|
|
|
|
EURIBOR |
|
||||
Interest Rate Swaps - Property debt |
|
|
NOK |
|
|
|
|
NIBOR |
|
||||
Total interest rate derivatives |
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2022 |
|||||||||||
Interest Rate Derivatives |
|
Number of Instruments |
|
Notional Amount |
|
|
Weighted Average Strike Rate |
|
Index |
|
Weighted Average Maturity (Years) |
||
Interest Rate Caps - Property debt |
|
|
$ |
|
|
|
|
LIBOR, SOFR |
|
||||
Interest Rate Caps - Property debt |
|
|
€ |
|
|
|
|
EURIBOR |
|
||||
Interest Rate Caps - Property debt |
|
|
DKK |
|
|
|
|
CIBOR |
|
||||
Interest Rate Swaps - Property debt |
|
|
$ |
|
|
|
|
LIBOR |
|
||||
Interest Rate Swaps - Property debt |
|
|
€ |
|
|
|
|
EURIBOR |
|
||||
Interest Rate Swaps - Property debt |
|
|
NOK |
|
|
|
|
NIBOR |
|
||||
Total interest rate derivatives |
|
|
|
|
|
|
|
|
|
||||
Foreign Currency Forward Contracts
Certain of the Company’s international investments expose it to fluctuations in foreign currency exchange rates and interest rates. These fluctuations may impact the value of the Company’s cash receipts and payments in terms of its functional currency, the U.S. dollar. The Company uses foreign currency forward contracts to protect the value or fix the amount of certain investments or cash flows in terms of the U.S. dollar.
The following table details the Company’s outstanding foreign currency forward contracts that were non-designated hedges of foreign currency risk (notional amounts in thousands):
|
|
June 30, 2023 |
|
|
December 31, 2022 |
|
||||||||
Foreign Currency Forward Contracts |
|
Number of Instruments |
|
Notional Amount |
|
|
Number of Instruments |
|
Notional Amount |
|
||||
Buy USD/Sell EUR Forward |
|
|
€ |
|
|
|
|
€ |
|
|
||||
Buy USD/Sell DKK Forward |
|
|
DKK |
|
|
|
|
DKK |
|
|
||||
Buy USD/Sell AUD Forward |
|
|
AUD |
|
|
|
|
AUD |
|
|
||||
Buy USD/Sell NOK Forward |
|
|
NOK |
|
|
|
|
NOK |
|
|
||||
Buy USD/Sell GBP Forward |
|
|
£ |
|
|
|
|
£ |
|
|
||||
17
Valuation and Financial Statement Impact
The following table details the fair value of the Company’s derivative financial instruments ($ in thousands):
|
|
Fair Value of Derivatives in an Asset (1) Position |
|
|
Fair Value of Derivatives in a Liability (2) Position |
|
||||||||||
|
|
June 30, 2023 |
|
|
December 31, 2022 |
|
|
June 30, 2023 |
|
|
December 31, 2022 |
|
||||
Interest rate derivatives(3) |
|
$ |
|
|
$ |
|
|
$ |
— |
|
|
$ |
— |
|
||
Foreign currency forward contracts |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total Derivatives |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
The following table details the effect of the Company’s derivative financial instruments on the Condensed Consolidated Statements of Operations and Comprehensive Loss ($ in thousands):
|
|
|
|
For the Three Months Ended June 30, |
|
|||||
Type of Derivative |
|
Net Realized/Unrealized Gain (Loss) |
|
2023 |
|
|
2022 |
|
||
Interest Rate Caps - Property debt |
|
Unrealized gain(1) |
|
$ |
|
|
$ |
|
||
Interest Rate Swaps - Property debt |
|
Unrealized gain(1) |
|
|
|
|
|
|
||
Foreign Currency Forward Contracts |
|
Unrealized (loss) gain(2) |
|
|
( |
) |
|
|
|
|
Foreign Currency Forward Contracts |
|
Realized gain(1) |
|
|
|
|
|
|
||
Interest Rate Caps - Property debt |
|
Realized gain(1) |
|
|
|
|
|
— |
|
|
Interest Rate Swaps - Property debt |
|
Realized gain(1) |
|
|
— |
|
|
|
— |
|
Total |
|
|
|
$ |
|
|
$ |
|
||
|
|
|
|
For the Six Months Ended June 30, |
|
|||||
Type of Derivative |
|
Net Realized/Unrealized Gain (Loss) |
|
2023 |
|
|
2022 |
|
||
Interest Rate Caps - Property debt |
|
Unrealized (loss) gain(1) |
|
$ |
( |
) |
|
$ |
|
|
Interest Rate Swaps - Property debt |
|
Unrealized (loss) gain(1) |
|
|
( |
) |
|
|
|
|
Foreign Currency Forward Contracts |
|
Unrealized (loss) gain(2) |
|
|
( |
) |
|
|
|
|
Foreign Currency Forward Contracts |
|
Realized gain(1) |
|
|
|
|
|
|
||
Interest Rate Caps - Property debt |
|
Realized gain(1) |
|
|
|
|
|
— |
|
|
Interest Rate Swaps - Property debt |
|
Realized gain(1) |
|
|
|
|
|
— |
|
|
Total |
|
|
|
$ |
( |
) |
|
$ |
|
|
(1) Included in Other income (expense), net in the Company’s Condensed Consolidated Statements of Operations and Comprehensive Loss.
(2) A portion of this amount is included in Income from investments in real estate debt and the remaining amount is included Other income (expense), net in the Company’s Condensed Consolidated Statements of Operations and Comprehensive Loss.
18
Authorized Capital
The Company is authorized to issue preferred stock and
As of June 30, 2023, the Company had the authority to issue
Classification |
|
Number of |
|
|
Par Value |
|
|||
Preferred Stock |
|
|
|
|
$ |
|
|
||
Class T Shares |
|
|
|
|
$ |
|
|
||
Class S Shares |
|
|
|
|
$ |
|
|
||
Class D Shares |
|
|
|
|
$ |
|
|
||
Class I Shares |
|
|
|
|
$ |
|
|
||
Total |
|
|
|
|
|
|
|
||
Common Stock
The following table details the movement in the Company’s outstanding shares of common stock:
|
|
Three Months Ended June 30, 2023 |
|
|||||||||||||||||
|
|
Class T |
|
|
Class S |
|
|
Class D |
|
|
Class I |
|
|
Total |
|
|||||
March 31, 2023 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Common stock shares issued (1) |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
||||
Distribution reinvestment plan shares issued |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Common stock shares repurchased |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
June 30, 2023 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
|
Six Months Ended June 30, 2023 |
|
|||||||||||||||||
|
|
Class T |
|
|
Class S |
|
|
Class D |
|
|
Class I |
|
|
Total |
|
|||||
December 31, 2022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Common stock shares issued (1) |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
||||
Distribution reinvestment plan shares issued |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Common stock shares repurchased |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
June 30, 2023 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
__________
Share Repurchases
The Company has adopted a share repurchase plan whereby, subject to certain limitations, stockholders may request on a monthly basis that the Company repurchases all or any portion of their shares. Should repurchase requests, in the Company’s judgment, place an undue burden on its liquidity, adversely affect its operations or risk having an adverse impact on the Company as a whole, or should the Company otherwise determine that investing its liquid assets in real properties or other illiquid investments rather than repurchasing its shares is in the best interests of the Company as a whole, then the Company may choose to repurchase fewer shares than have been requested to be repurchased, or none at all. Further, the Company’s board of directors may modify or suspend the Company’s share repurchase plan if it deems such action to be in the Company’s best interest and in the best interest of its stockholders. In addition, the total amount of shares that the Company will repurchase is limited, in any calendar month, to shares whose aggregate value (based on the repurchase price per share on the date of the repurchase) is no more than
19
not all of the shares submitted for repurchase during any month, shares repurchased at the end of the month will be repurchased on a pro rata basis.
For the three months ended June 30, 2023, the Company repurchased
Distributions
The Company generally intends to distribute substantially all of its taxable income, which does not necessarily equal net income as calculated in accordance with GAAP, to its stockholders each year to comply with the REIT provisions of the Code.
Each class of common stock receives the same gross distribution per share. The net distribution varies for each class based on the applicable stockholder servicing fee, which is deducted from the monthly distribution per share and is paid directly to the applicable distributor.
The following table details the aggregate distributions declared for each applicable class of common stock:
|
|
Three Months Ended June 30, 2023 |
|
|||||||||||||||||
|
|
Class T |
|
|
Class S |
|
|
Class D |
|
|
Class I |
|
||||||||
Aggregate gross distributions declared per share of common stock |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
||||
Stockholder servicing fee per share of common stock |
|
|
|
( |
) |
|
|
|
( |
) |
|
|
|
( |
) |
|
|
|
— |
|
Net distributions declared per share of common stock |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
Six Months Ended June 30, 2023 |
|
|||||||||||||||||
|
|
Class T |
|
|
Class S |
|
|
Class D |
|
|
Class I |
|
||||||||
Aggregate gross distributions declared per share of common stock |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
||||
Stockholder servicing fee per share of common stock |
|
|
|
( |
) |
|
|
|
( |
) |
|
|
|
( |
) |
|
|
|
— |
|
Net distributions declared per share of common stock |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Redeemable Non-controlling Interests
In connection with its performance participation interest, the Special Limited Partner holds Class I units in the Operating Partnership. See Note 12 for further details of the Special Limited Partner’s performance participation interest. Because the Special Limited Partner has the ability to redeem its Class I units for cash, at its election, the Company has classified these Class I units as Redeemable non-controlling interest in mezzanine equity on the Company’s Condensed Consolidated Balance Sheets. The redeemable non-controlling interest is recorded at the greater of the carrying amount, adjusted for its share of the allocation of income or loss and distributions, or the redemption value, which is equivalent to fair value, of such units at the end of each measurement period. In addition to the Special Limited Partner’s interest noted above, certain third parties also have a redeemable non-controlling interest.
The following tables detail the redeemable non-controlling interests activity related to the Special Limited Partner and third-party Operating Partnership unitholders for the six months ended June 30, 2023 and 2022 ($ in thousands):
|
|
Special Limited Partner |
|
|
Third-party Operating Partnership unitholders |
|
|
Total |
|
|||
Balance at December 31, 2022 |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Settlement of performance participation allocation |
|
|
|
|
|
— |
|
|
|
|
||
GAAP loss allocation |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Distributions |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Fair value allocation |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Balance at June 30, 2023 |
|
$ |
|
|
$ |
|
|
$ |
|
|||
20
|
|
Special Limited Partner |
|
|
Third-party Operating Partnership unitholders |
|
|
Total |
|
|||
Balance at December 31, 2021 |
|
$ |
|
|
$ |
— |
|
|
$ |
|
||
Settlement of performance participation allocation |
|
|
|
|
|
— |
|
|
|
|
||
Issuance of Operating Partnership units as consideration for |
|
|
— |
|
|
|
|
|
|
|
||
GAAP loss allocation |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Distributions |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Fair value allocation |
|
|
|
|
|
|
|
|
|
|||
Balance at June 30, 2022 |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Acquisition of Investments
On March 11, 2022, the Company acquired floating rate CMBS bonds related to Starwood Capital and a third party for $
Management Fee and Performance Participation Allocation
The Advisor is entitled to an annual management fee equal to
To date, the Advisor has elected to receive the management fee in shares of the Company’s common stock. During January 2023, the Company issued
Additionally, the Special Limited Partner, an affiliate of the Advisor, holds a performance participation interest in the Operating Partnership that entitles it to receive an allocation of the Operating Partnership’s total return to its capital account. Total return is defined as distributions paid or accrued plus the change in NAV. Under the Operating Partnership’s limited partnership agreement, the annual total return will be allocated solely to the Special Limited Partner after the other unit holders have received a total return of
As of June 30, 2023, the Advisor, its employees, and its affiliates, including the Company’s executive officers, hold an aggregate of $
21
Repurchase of Advisor and Certain Director Shares
During the three and six months ended June 30, 2023, the Company repurchased
Due to Affiliates
The following table details the components of Due to affiliates ($ in thousands):
|
|
June 30, 2023 |
|
|
December 31, 2022 |
|
||
Accrued stockholder servicing fee |
|
$ |
|
|
$ |
|
||
Performance participation allocation |
|
|
— |
|
|
|
|
|
Accrued management fee |
|
|
|
|
|
|
||
Advanced organization and offering costs |
|
|
|
|
|
|
||
Accrued affiliate service provider expenses |
|
|
|
|
|
|
||
Advanced operating expenses |
|
|
|
|
|
|
||
Total |
|
$ |
|
|
$ |
|
||
Accrued stockholder servicing fee
The Company accrues the full amount of the future stockholder servicing fees payable to Starwood Capital, L.L.C. (the “Dealer Manager”) for Class T shares, Class S shares, and Class D shares up to the
Advanced organization and offering costs
The Advisor and its affiliates incurred $
Accrued affiliate service provider expenses
The Company has engaged and expects to continue to engage Highmark Residential (formerly Milestone Management), a portfolio company owned by an affiliate of the Sponsor, to provide day-to-day operational and management services (including leasing, construction management, revenue management, accounting, legal and contract management, expense management, and capital expenditure projects and transaction support services) for a portion of the Company’s multifamily properties. The cost for such services is a percentage of the gross receipts and project costs respectively (which will be reviewed periodically and adjusted if appropriate), plus actual costs allocated for transaction support services. During the three months ended June 30, 2023 and 2022, the Company has incurred approximately $
The Company has engaged Rinaldi, Finkelstein & Franklin L.L.C. (“RFF”), a law firm owned and controlled by Ellis F. Rinaldi, Co-General Counsel and Senior Managing Director of the Sponsor and certain of its affiliates, to provide corporate legal support services to the Company. During the three months ended June 30, 2023 and 2022, the amounts incurred for services provided by RFF were $
The Company has engaged Essex Title, LLC (“Essex”), a title agent company majority owned by Starwood Capital. Essex acts as an agent for one or more underwriters in issuing title policies and/or providing support services in connection with investments by the Company, Starwood Capital and its affiliates and third parties. Essex focuses on transactions in rate-regulated states where the cost of title insurance is non-negotiable. Essex will not perform services in non-regulated states for the Company, unless (i) in the context of a portfolio transaction that includes properties in rate-regulated states, (ii) as part of a syndicate of title insurance companies where the rate is negotiated by other insurers or their agents, (iii) when a third party is paying all or a material portion of the premium or (iv) when providing only support services to the underwriter. Essex earns fees, which would have otherwise been paid to third parties, by
22
providing title agency services and facilitating placement of title insurance with underwriters. Starwood Capital receives distributions from Essex in connection with investments by the Company based on its equity interest in Essex. In each case, there will be no related offset to the Company. During the three and six months ended June 30, 2023, the Company incurred $
The Company has engaged Starwood Retail Partners to provide leasing and legal services for any retail properties the Company acquires. During the three and six months ended June 30, 2023 and 2022, the Company incurred an insignificant amount, respectively.
The Company has engaged Starwood Capital’s affiliated Luxembourg office for accounting and administrative matters relating to certain European investments. During the three and six months ended June 30, 2023, the amounts incurred for services provided were $
The Company has incurred legal expenses from third party law firms whose lawyers have been seconded to affiliates of Starwood Capital for the purpose of providing legal services in Europe to investment vehicles sponsored by Starwood Capital. During the three and six months ended June 30, 2023, the amounts incurred for services provided were an insignificant amount. During the three and six months ended June 30, 2022, the amounts incurred for services provided were $
The Company has engaged STR Management Co, LLC, an affiliate of the Advisor, to provide property management services to certain of the Company’s residential units that function as short term rental assets. The costs for such services is a percentage of gross revenue produced by the short-term rentals on a monthly basis. During the three and six months ended June 30, 2023, the Company has incurred approximately $
The Company has entered into an agreement with an affiliate of Starwood Global Opportunity Fund XI to assist with property management of the Company’s assets in Spain and Italy. The Starwood Capital Group (“SCG”) Southern Europe Team charges market fees for such property management services. During the three and six months ended June 30, 2023, the amount incurred for services provided by the SCG Southern Europe Team was $
Advanced operating expenses
As of June 30, 2023 and 2022, the Advisor had advanced approximately $
For the three months ended June 30, 2023 and 2022, the Advisor had incurred approximately $
As of June 30, 2023 and December 31, 2022, the Company is not subject to any material litigation nor is the Company aware of any material litigation threatened against it.
Lessee
Certain of the Company’s investments in real estate are subject to a ground lease. The Company’s ground leases are classified as right-of-use liability – operating leases based on the characteristics of the respective lease. The ground leases were acquired as part of the acquisition of real estate and
23
The following table presents the future lease payments due under the Company’s ground leases as of June 30, 2023 ($ in thousands):
Year |
|
Operating |
|
||
2023 (remaining) |
|
$ |
|
|
|
2024 |
|
|
|
|
|
2025 |
|
|
|
|
|
2026 |
|
|
|
|
|
2027 |
|
|
|
|
|
Thereafter |
|
|
|
|
|
Total undiscounted future lease payments |
|
|
|
|
|
Difference between undiscounted cash flows and discounted cash flows |
|
|
|
( |
) |
Total lease liability |
|
$ |
|
|
|
The Company utilized its incremental borrowing rate, which was between
Payments under the Company’s ground leases contain fixed payment components. The Company’s ground leases contained escalations prior to the Company’s hold period.
Lessor
The Company’s rental revenue primarily consists of rent earned from operating leases at the Company’s multifamily, single-family rental, industrial, office, self-storage and other properties. Leases at the Company’s industrial, office and other properties generally include a fixed base rent and certain leases also contain a variable component. The variable component of the Company’s operating leases at its industrial, office and other properties primarily consist of the reimbursement of operating expenses such as real estate taxes, insurance, and common area maintenance costs.
Leases at the Company’s industrial, office and other properties are generally longer term and may contain extension and termination options at the lessee’s election. The Company’s rental revenue earned from leases at the Company’s multifamily, single-family rental and self-storage properties primarily consists of a fixed base rent and certain leases contain a variable component that allows for the pass-through of certain operating expenses such as utilities. Leases at the Company’s multifamily, single-family rental and self-storage properties are short term in nature, generally not greater than 12 months in length.
The following table summarizes the fixed and variable components of the Company’s operating leases ($ in thousands):
|
|
For the Three Months Ended June 30, |
|
|
For the Six Months Ended June 30, |
|
||||||||||||||
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
||||||||
Fixed lease payments |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
||||
Variable lease payments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Rental revenue |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
||||
The following table presents the undiscounted future minimum rents the Company expects to receive for its industrial, office and other properties ($ in thousands) as of June 30, 2023. Leases at the Company’s multifamily, single-family rental and self-storage properties are short term, generally 12 months or less, and are therefore not included.
Year |
|
Future Minimum Rents |
|
||
2023 (remaining) |
|
$ |
|
|
|
2024 |
|
|
|
|
|
2025 |
|
|
|
|
|
2026 |
|
|
|
|
|
2027 |
|
|
|
|
|
Thereafter |
|
|
|
|
|
Total |
|
$ |
|
|
|
24
The Company operates in
The following table sets forth the total assets by segment ($ in thousands):
|
June 30, 2023 |
|
|
December 31, 2022 |
|
||||
Multifamily |
$ |
|
|
|
$ |
|
|
||
Single-family rental |
|
|
|
|
|
|
|
||
Industrial |
|
|
|
|
|
|
|
||
Office |
|
|
|
|
|
|
|
||
Self-storage |
|
|
|
|
|
|
|
||
Investments in real estate debt |
|
|
|
|
|
|
|
||
Other properties(1) |
|
|
|
|
|
|
|
||
Other (Corporate) |
|
|
|
|
|
|
|
||
Total assets |
$ |
|
|
|
$ |
|
|
||
25
The following table sets forth the financial results by segment for the three months ended June 30, 2023 ($ in thousands):
|
Multifamily |
|
|
Single- |
|
|
Industrial |
|
|
Office |
|
|
Self- |
|
|
Other |
|
|
Investments |
|
|
Total |
|
||||||||||||||||
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Rental revenue |
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
— |
|
|
$ |
|
|
|||||||
Other revenue |
|
|
|
|
|
|
— |
|
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
|
|
|||||
Total revenues |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
|
|
|||||||
Expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Property operating |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
|
|
|||||||
Total segment expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
|
|
|||||||
Income from unconsolidated |
|
|
— |
|
|
|
|
— |
|
|
|
|
— |
|
|
|
|
— |
|
|
|
|
— |
|
|
|
|
|
|
|
|
— |
|
|
|
|
|
||
Income from investments in |
|
|
— |
|
|
|
|
— |
|
|
|
|
— |
|
|
|
|
— |
|
|
|
|
— |
|
|
|
|
— |
|
|
|
|
|
|
|
|
|
||
Segment net operating income |
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
General and administrative |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|||||||||||||
Management fees |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|||||||||||||
Impairment of investments in real estate |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|||||||||||||||||||||||
Depreciation and amortization |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|||||||||||||
Net gain on dispositions of real estate |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||
Interest expense |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|||||||||||||
Other income, net |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Net loss |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
|
( |
) |
|||||||||||||
Net income attributable to non-controlling interests in consolidated joint ventures |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|||||||||||||||||||||||
Net loss attributable to non-controlling interests in Operating Partnership |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||
Net loss attributable to stockholders |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
|
( |
) |
|||||||||||||||||||||
26
The following table sets forth the financial results by segment for the three months ended June 30, 2022 ($ in thousands):
|
Multifamily |
|
|
Single- |
|
|
Industrial |
|
|
Office |
|
|
Self-Storage |
|
|
Other |
|
|
Investments |
|
|
Total |
|
||||||||||||||||
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Rental revenue |
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
— |
|
|
$ |
|
|
|||||||
Other revenue |
|
|
|
|
|
|
— |
|
|
|
|
— |
|
|
|
|
|
|
|
|
— |
|
|
|
|
|
|
|
|
— |
|
|
|
|
|
||||
Total revenues |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
|
|
|||||||
Expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Property operating |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
|
|
|||||||
Total segment expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
|
|
|||||||
Loss from unconsolidated |
|
|
— |
|
|
|
|
— |
|
|
|
|
— |
|
|
|
|
— |
|
|
|
|
— |
|
|
|
|
( |
) |
|
|
|
— |
|
|
|
|
( |
) |
Income from investments in real |
|
|
— |
|
|
|
|
— |
|
|
|
|
— |
|
|
|
|
— |
|
|
|
|
— |
|
|
|
|
— |
|
|
|
|
|
|
|
|
|
||
Segment net operating income |
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
General and administrative |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|||||||||||||
Management fees |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|||||||||||||
Performance participation allocation |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|||||||||||||
Depreciation and amortization |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|||||||||||||
Interest expense |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|||||||||||||
Other income, net |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Net loss |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
|
( |
) |
|||||||||||||
Net income attributable to non-controlling interests in consolidated joint ventures |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|||||||||||||||||||||
Net loss attributable to non-controlling interests in Operating Partnership |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||
Net loss attributable to stockholders |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
|
( |
) |
|||||||||||||||||
27
The following table sets forth the financial results by segment for the six months ended June 30, 2023 ($ in thousands):
|
Multifamily |
|
|
Single- |
|
|
Industrial |
|
|
Office |
|
|
Self- |
|
|
Other |
|
|
Investments |
|
|
Total |
|
||||||||||||||||
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Rental revenue |
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
— |
|
|
$ |
|
|
|||||||
Other revenue |
|
|
|
|
|
|
— |
|
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
|
|
|||||
Total revenues |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
|
|
|||||||
Expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Property operating |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
|
|
|||||||
Total segment expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
|
|
|||||||
Loss from unconsolidated |
|
|
— |
|
|
|
|
— |
|
|
|
|
— |
|
|
|
|
— |
|
|
|
|
— |
|
|
|
|
( |
) |
|
|
|
— |
|
|
|
|
( |
) |
Income from investments in |
|
|
— |
|
|
|
|
— |
|
|
|
|
— |
|
|
|
|
— |
|
|
|
|
— |
|
|
|
|
— |
|
|
|
|
|
|
|
|
|
||
Segment net operating income |
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
General and administrative |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|||||||||||||
Management fees |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|||||||||||||
Impairment of investments in real estate |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|||||||||||||||||||||||
Depreciation and amortization |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|||||||||||||
Net gain on dispositions of real estate |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||
Interest expense |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|||||||||||||
Other expense, net |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|||||||||||||
Net loss |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
|
( |
) |
|||||||||||||
Net income attributable to non-controlling interests in consolidated joint ventures |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|||||||||||||||||||||||
Net loss attributable to non-controlling interests in Operating Partnership |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||
Net loss attributable to stockholders |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
|
( |
) |
|||||||||||||||||||||
28
The following table sets forth the financial results by segment for the six months ended June 30, 2022 ($ in thousands):
|
Multifamily |
|
|
Single- |
|
|
Industrial |
|
|
Office |
|
|
Self-Storage |
|
|
Other |
|
|
Investments |
|
|
Total |
|
||||||||||||||||
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Rental revenue |
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
— |
|
|
$ |
|
|
|||||||
Other revenue |
|
|
|
|
|
|
— |
|
|
|
|
— |
|
|
|
|
|
|
|
|
— |
|
|
|
|
|
|
|
|
— |
|
|
|
|
|
||||
Total revenues |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
|
|
|||||||
Expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Property operating |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
|
|
|||||||
Total segment expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
|
|
|||||||
Income from unconsolidated |
|
|
— |
|
|
|
|
— |
|
|
|
|
— |
|
|
|
|
— |
|
|
|
|
— |
|
|
|
|
|
|
|
|
— |
|
|
|
|
|
||
Income from investments in real |
|
|
— |
|
|
|
|
— |
|
|
|
|
— |
|
|
|
|
— |
|
|
|
|
— |
|
|
|
|
— |
|
|
|
|
|
|
|
|
|
||
Segment net operating income |
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
General and administrative |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|||||||||||||
Management fees |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|||||||||||||
Performance participation allocation |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|||||||||||||
Depreciation and amortization |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|||||||||||||
Interest expense |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|||||||||||||
Other income, net |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Net loss |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
|
( |
) |
|||||||||||||
Net income attributable to non-controlling interests in consolidated joint ventures |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|||||||||||||||||||||
Net loss attributable to non-controlling interests in Operating Partnership |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||
Net loss attributable to stockholders |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
|
( |
) |
|||||||||||||||||
Financing and Capital Activity
During the period from July 1, 2023 through August 14, 2023, the Company raised an aggregate of $
During the period from July 1, 2023 through August 14, 2023, the Company received $
Asset Dispositions
During the period from July 1, 2023 through August 14, 2023, the Company sold an aggregate of approximately $
29
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
References herein to “Starwood Real Estate Income Trust, Inc.,” “Company,” “we,” “us,” or “our” refer to Starwood Real Estate Income Trust, Inc. and its subsidiaries unless the context specifically requires otherwise.
The following discussion should be read in conjunction with the unaudited condensed consolidated financial statements and notes thereto appearing elsewhere in this Quarterly Report on Form 10-Q. In addition to historical data, this discussion contains forward-looking statements about our business, operations and financial performance based on current expectations that involve risks, uncertainties and assumptions. Our actual results may differ materially from those in this discussion as a result of various factors, including but not limited to those discussed under Item 1A. Risk Factors in our Annual Report on Form 10-K filed with the SEC on March 17, 2023 and elsewhere in this Quarterly Report on Form 10-Q. We do not undertake to revise or update any forward-looking statements.
Forward-Looking Statements
This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Exchange Act of 1934, as amended (the “Exchange Act”). Forward-looking statements include statements about our business, including, in particular, statements about our plans, strategies and objectives. Forward-looking statements can generally be identified by our use of forward-looking terminology such as “may,” “will,” “expect,” “intend,” “anticipate,” “estimate,” “believe,” “continue” or other similar words. These statements include our plans and objectives for future operations, including plans and objectives relating to future growth and availability of funds for repurchases, and are based on current expectations that involve numerous risks and uncertainties. Assumptions relating to these statements involve judgments with respect to, among other things, future economic, competitive and market conditions and future business decisions, all of which are difficult or impossible to accurately predict and many of which are beyond our control.
Although we believe the assumptions underlying the forward-looking statements, and the forward-looking statements themselves, are reasonable, any of the assumptions could be inaccurate and, therefore, there can be no assurance that these forward-looking statements will prove to be accurate and our actual results, performance and achievements may be materially different from that expressed or implied by these forward-looking statements. In light of the significant uncertainties inherent in these forward looking statements, the inclusion of this information should not be regarded as a representation by us or any other person that our objectives and plans, which we consider to be reasonable, will be achieved.
You should carefully review Item 1A. Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2022, and elsewhere in this Quarterly Report on Form 10-Q for a discussion of the risks and uncertainties that we believe are material to our business, operating results, prospects and financial condition. Except as otherwise required by federal securities laws, we do not undertake to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
Overview
We were formed on June 22, 2017 as a Maryland corporation to invest primarily in stabilized, income-oriented commercial real estate and debt secured by commercial real estate. Our portfolio is principally comprised of properties located in the United States and is diversified on a global basis through investments in properties outside of the United States, with a focus on Europe. To a lesser extent, we invest in real estate debt, including loans secured by real estate and real estate-related securities. We are an externally advised, perpetual-life REIT. We own all or substantially all of our assets through the Operating Partnership, of which we are the sole general partner. We and the Operating Partnership are externally managed by the Advisor.
Our board of directors has at all times oversight and policy-making authority over us, including responsibility for governance, financial controls, compliance and disclosure. Pursuant to an advisory agreement among the Advisor, the Operating Partnership and us (the “Advisory Agreement”), we have delegated to the Advisor the authority to source, evaluate and monitor our investment opportunities and make decisions related to the acquisition, management, financing and disposition of our assets, in accordance with our investment objectives, guidelines, policies and limitations, subject to oversight by our board of directors.
We have elected to be taxed as a REIT under the Code for U.S. federal income tax purposes, commencing with our taxable year ended December 31, 2019. We generally will not be subject to U.S. federal income taxes on our taxable income to the extent we annually distribute all of our net taxable income (determined without regard to our net capital gain and dividends-paid deduction) to stockholders and maintain our qualification as a REIT.
30
On December 27, 2017, we commenced our initial public offering of up to $5.0 billion in shares of our common stock. On June 2, 2021, our initial public offering terminated and we commenced our follow-on public offering of up to $10.0 billion in shares of common stock.
On August 10, 2022, the follow-on public offering terminated and we commenced our third public offering of up to $18.0 billion in shares of common stock, consisting of up to $16.0 billion in shares in our primary offering and up to $2.0 billion in shares pursuant to our distribution reinvestment plan. We intend to continue selling shares in our third public offering on a monthly basis.
As of August 14, 2023, we had received net proceeds of $13.6 billion from the sale of our common stock through our public offerings. We have contributed the net proceeds from our public offerings to the Operating Partnership in exchange for a corresponding number of Class T, Class S, Class D and Class I units. The Operating Partnership has primarily used the net proceeds to make investments in real estate and real estate debt as further described below under “Portfolio”.
Investment Objectives
Our investment objectives are to invest in assets that will enable us to:
We cannot assure you that we will achieve our investment objectives. See Item 1A. Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2022 for additional details.
Recent Developments
Business Outlook
In constructing our portfolio, we anticipated a rising interest rate environment after ten years of low interest rates and, therefore, we invested defensively with an emphasis on stable income to ensure predictable monthly distributions of cash flow. We invested in asset classes that we believe provide a good balance between inflation protection with blended rent growth, while also being defensively structured to perform well through this period and over the long-term.
Our portfolio remains approximately 82% allocated to rental residential and industrial, which represent two of the strongest performing asset classes in the current environment. Including floating rate loans, self-storage, extended-stay hotels (which perform like rental residential), hospitality, and net lease, our portfolio is 93% allocated to sectors that are performing well in the current environment. We also have limited exposure to office and retail properties, which are asset classes that have underperformed in the current environment.
Through the first half of 2023, our rental residential portfolio continues to maintain approximately 95% occupancy and we have experienced rent growth across market rate multifamily and single-family rental above 5% over expiring leases. Our affordable housing assets, which represent approximately one-quarter of our rental housing portfolio, recently experienced allowable rent increases of 8.3%.
Over the first half of 2023, as our industrial leases have expired, rent increases have averaged 49% above expiring leases. Our industrial portfolio continues to maintain 98% occupancy. Our investments in floating rate real estate term loans represent approximately 5% of our portfolio and are currently yielding 12% as a result of significant increases in benchmark interest rates.
In addition, our debt structuring to protect against rising interest rates has created value and enabled steady monthly distributions of cash flows. At present, 99% of our debt is effectively fixed at approximately 3.5% and has more than five years of duration remaining. In addition, assuming all available extension options, we have minimal debt maturities over the next three years with 1% maturing in 2023, 1% maturing in 2024, and 9% maturing in 2025. We believe this will help us navigate through the current higher yield environment.
Our business and operating results are affected by the financial markets and economic conditions in the United States and throughout the world. Economic uncertainty remains high associated with supply chain and labor shortage concerns, rising financing costs,
31
inflationary concerns, actual or perceived instability in the U.S. banking system, market volatility and other geopolitical risks arising from the ongoing Russia-Ukraine conflict and additional COVID-19 variants. The uncertainty of the economy as it is recovering from these concerns could further destabilize the financial markets and geographies in which we operate.
Please refer to Item 1A. Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2022, and elsewhere in this Quarterly Report on Form 10-Q for additional disclosure relating to material trends or uncertainties that may impact our business.
Q2 2023 Highlights
Operating Results:
|
Class T |
Class S |
Class D |
Class I |
|
Shares |
Shares |
Shares |
Shares |
Average Annualized Distribution Rate |
4.0% |
4.0% |
4.7% |
4.9% |
Year-to-Date Total Return, without upfront selling commissions and dealer manager fees |
(3.6%) |
(3.6%) |
(3.3%) |
(3.2%) |
Year-to-Date Total Return, assuming full upfront selling commissions and dealer manager fees |
(6.8%) |
(6.9%) |
(4.8%) |
N/A |
Inception-to-Date Total Return, without upfront selling commissions and dealer manager fees |
9.8% |
9.7% |
10.0% |
10.5% |
Inception-to-Date Total Return, assuming full upfront selling commissions and dealer manager fees |
8.9% |
8.9% |
9.6% |
N/A |
Investments:
Financing Activity:
Portfolio
Summary of Portfolio
The following chart outlines the percentage of our assets across investments in real estate, investments in real estate securities and investments in real estate loans based on fair value as of June 30, 2023:
32
The following charts further describe the composition of our investments in real estate and investment in real estate loans based on fair value as of June 30, 2023:
|
|
Investments in Real Estate
The following table provides a summary of our portfolio as of June 30, 2023 ($ in thousands):
Segment |
|
Number of |
|
Sq. Feet |
|
Occupancy |
|
Gross Asset Value (2) |
|
|
Segment |
|
|
Percentage of |
||
Multifamily |
|
288 |
|
68,304 units |
|
95% |
|
$ |
16,756,800 |
|
|
$ |
622,181 |
|
|
69% |
Single-family rental |
|
N/A (3) |
|
2,942 units |
|
91% |
|
|
1,013,280 |
|
|
|
40,951 |
|
|
5% |
Industrial |
|
163 |
|
23.56 sq. ft. |
|
98% |
|
|
3,483,470 |
|
|
|
102,017 |
|
|
11% |
Office |
|
20 |
|
3.90 sq. ft. |
|
92% |
|
|
1,686,120 |
|
|
|
75,149 |
|
|
8% |
Self-storage |
|
26 |
|
1.90 sq. ft. |
|
86% |
|
|
394,200 |
|
|
|
13,652 |
|
|
2% |
Other (4) |
|
14 |
|
N/A (5) |
|
N/A |
|
|
745,898 |
|
|
|
44,138 |
|
|
5% |
Total |
|
511 |
|
|
|
|
|
$ |
24,079,768 |
|
|
$ |
898,088 |
|
|
100% |
33
The following table provides information regarding our portfolio of real estate properties as of June 30, 2023:
Segment and Investment |
|
Number of |
|
Location |
|
Acquisition |
|
Ownership |
|
Sq. Feet |
|
|
Occupancy(2) |
|
Multifamily: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Florida Multifamily Portfolio |
|
4 |
|
Jacksonville/Naples, FL |
|
January 2019 |
|
100% |
|
|
1,150 |
|
|
99% |
Phoenix Property |
|
1 |
|
Mesa, AZ |
|
January 2019 |
|
100% |
|
|
256 |
|
|
96% |
Concord Park Apartments |
|
1 |
|
Fort Meade, MD |
|
July 2019 |
|
100% |
|
|
335 |
|
|
94% |
Columbus Multifamily |
|
4 |
|
Columbus, OH |
|
September/October 2019 |
|
96% |
|
|
1,012 |
|
|
95% |
Cascades Apartments |
|
1 |
|
Charlotte, NC |
|
October 2019 |
|
100% |
|
|
570 |
|
|
96% |
Thornton Apartments |
|
1 |
|
Alexandria, VA |
|
October 2019 |
|
100% |
|
|
439 |
|
|
97% |
Exchange on Erwin |
|
1 |
|
Durham, NC |
|
November 2019 |
|
100% |
|
|
265 |
|
|
77% |
Avida Apartments |
|
1 |
|
Salt Lake City, UT |
|
December 2019 |
|
100% |
|
|
400 |
|
|
93% |
Southeast Affordable Housing Portfolio |
|
22 |
|
Various |
|
Various 2020 |
|
100% |
|
|
4,384 |
|
|
97% |
The Baxter Decatur |
|
1 |
|
Atlanta, GA |
|
August 2020 |
|
100% |
|
|
290 |
|
|
95% |
Florida Affordable Housing Portfolio II |
|
4 |
|
Jacksonville, FL |
|
October 2020 |
|
100% |
|
|
958 |
|
|
95% |
Mid-Atlantic Affordable Housing Portfolio |
|
28 |
|
Various |
|
October 2020 |
|
100% |
|
|
3,660 |
|
|
96% |
Kalina Way |
|
1 |
|
Salt Lake City, UT |
|
December 2020 |
|
100% |
|
|
264 |
|
|
94% |
Southeast Affordable Housing Portfolio II |
|
9 |
|
DC, FL, GA, MD, SC, VA |
|
May 2021 |
|
100% |
|
|
1,642 |
|
|
97% |
Azalea Multifamily Portfolio |
|
17 |
|
TX, FL, NC, MD, TN, GA |
|
June/July 2021 |
|
100% |
|
|
5,620 |
|
|
96% |
Keystone Castle Hills |
|
1 |
|
Dallas, TX |
|
July 2021 |
|
100% |
|
|
690 |
|
|
95% |
Greater Boston Affordable Portfolio |
|
5 |
|
Boston, MA |
|
August/September 2021 |
|
98% |
|
|
842 |
|
|
97% |
Columbus Preferred Portfolio |
|
2 |
|
Columbus, OH |
|
September 2021 |
|
96% |
|
|
400 |
|
|
92% |
The Palmer Dadeland |
|
1 |
|
Dadeland, FL |
|
September 2021 |
|
100% |
|
|
844 |
|
|
93% |
Seven Springs Apartments |
|
1 |
|
Burlington, MA |
|
September 2021 |
|
100% |
|
|
331 |
|
|
98% |
Maison’s Landing |
|
1 |
|
Taylorsville, UT |
|
September 2021 |
|
100% |
|
|
492 |
|
|
95% |
Sawyer Flats |
|
1 |
|
Gaithersburg, MD |
|
October 2021 |
|
100% |
|
|
648 |
|
|
96% |
Raleigh Multifamily Portfolio |
|
6 |
|
Raleigh, NC |
|
November 2021 |
|
95% |
|
|
2,291 |
|
|
93% |
SEG Multifamily Portfolio |
|
62 |
|
Various |
|
November 2021 |
|
100% |
|
|
15,460 |
|
|
94% |
South Florida Multifamily Portfolio |
|
3 |
|
Various |
|
November 2021 |
|
95% |
|
|
1,150 |
|
|
92% |
Florida Affordable Housing Portfolio III |
|
16 |
|
Various |
|
November 2021 |
|
100% |
|
|
2,660 |
|
|
96% |
Central Park Portfolio |
|
9 |
|
Denver, CO |
|
December 2021 |
|
100% |
|
|
1,445 |
|
|
93% |
National Affordable Housing Portfolio |
|
17 |
|
Various |
|
December 2021 |
|
100% |
|
|
3,264 |
|
|
96% |
Phoenix Affordable Housing Portfolio |
|
7 |
|
Phoenix, AZ |
|
April/May 2022 |
|
100% |
|
|
1,462 |
|
|
96% |
Mid-Atlantic Affordable Housing Portfolio II |
|
8 |
|
DC, GA |
|
April 2022 |
|
100% |
|
|
1,449 |
|
|
96% |
Texas and North Carolina Multifamily Portfolio |
|
5 |
|
TX, NC |
|
April/June 2022 |
|
95% |
|
|
1,601 |
|
|
93% |
Summit Multifamily Portfolio |
|
34 |
|
Various |
|
May/June 2022 |
|
100% |
|
|
8,812 |
|
|
96% |
Florida Affordable Housing Portfolio IV |
|
9 |
|
Various, FL |
|
June/July 2022 |
|
100% |
|
|
2,054 |
|
|
98% |
Blue Multifamily Portfolio |
|
4 |
|
Various |
|
August 2022 |
|
100% |
|
|
1,164 |
|
|
95% |
Total Multifamily |
|
288 |
|
|
|
|
|
|
|
|
68,304 |
|
|
|
Single-Family Rental: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Single-Family Rental Joint Venture |
|
N/A (3) |
|
Various |
|
Various |
|
95% |
|
|
913 |
|
|
93% |
Sun Belt Single-Family Rental Portfolio |
|
N/A (4) |
|
Various |
|
December 2021 |
|
100% |
|
|
2,029 |
|
|
90% |
Total Single-Family Rental |
|
N/A (3)(4) |
|
|
|
|
|
|
|
|
2,942 |
|
|
|
Industrial: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Midwest Industrial Portfolio |
|
32 |
|
IL, IN, OH, WI |
|
November 2019 |
|
95% |
|
|
3.95 |
|
|
96% |
Airport Logistics Park |
|
6 |
|
Nashville, TN |
|
September 2020 |
|
100% |
|
|
0.40 |
|
|
100% |
Marshfield Industrial Portfolio |
|
4 |
|
Baltimore, MD |
|
October 2020 |
|
100% |
|
|
1.33 |
|
|
100% |
Denver/Boulder Industrial Portfolio |
|
16 |
|
Denver, CO |
|
April 2021 |
|
100% |
|
|
1.68 |
|
|
100% |
Independence Industrial Portfolio |
|
6 |
|
Houston, TX |
|
April 2021 |
|
100% |
|
|
2.33 |
|
|
100% |
Reno Logistics Portfolio |
|
19 |
|
Reno, NV |
|
May 2021 |
|
100% |
|
|
3.14 |
|
|
93% |
Northern Italy Industrial Portfolio |
|
4 |
|
Northern Italy |
|
August 2021 |
|
100% |
|
|
0.75 |
|
|
100% |
Southwest Light Industrial Portfolio |
|
15 |
|
AZ, NV |
|
September 2021 |
|
100% |
|
|
2.48 |
|
|
100% |
Norway Logistics Portfolio |
|
2 |
|
Oslo, Norway |
|
February 2022 |
|
100% |
|
|
0.37 |
|
|
100% |
American Industrial Center |
|
25 |
|
Orlando, FL |
|
April 2022 |
|
100% |
|
|
0.82 |
|
|
97% |
Middlebrook Crossroads |
|
18 |
|
Bridgewater, NJ |
|
May 2022 |
|
95% |
|
|
0.58 |
|
|
99% |
Verona Oppeano |
|
5 |
|
Verona, Italy |
|
June 2022 |
|
100% |
|
|
2.64 |
|
|
100% |
Denmark Logistics Portfolio |
|
10 |
|
Eastern Denmark |
|
June 2022 |
|
100% |
|
|
1.97 |
|
|
100% |
Belgioioso Logistics |
|
1 |
|
Greater Milan, Italy |
|
August 2022 |
|
100% |
|
|
1.12 |
|
|
100% |
Total Industrial |
|
163 |
|
|
|
|
|
|
|
|
23.56 |
|
|
|
Office: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Florida Office Portfolio |
|
11 |
|
Jacksonville, FL |
|
May 2019 |
|
97% |
|
|
1.27 |
|
|
77% |
Columbus Office Portfolio |
|
1 |
|
Columbus, OH |
|
October 2019 |
|
96% |
|
|
0.32 |
|
|
100% |
Nashville Office |
|
1 |
|
Nashville, TN |
|
February 2020 |
|
100% |
|
|
0.36 |
|
|
100% |
60 State Street |
|
1 |
|
Boston, MA |
|
March 2020 |
|
100% |
|
|
0.91 |
|
|
97% |
Stonebridge |
|
3 |
|
Atlanta, GA |
|
February 2021 |
|
100% |
|
|
0.46 |
|
|
98% |
M Campus |
|
2 |
|
Paris, France |
|
December 2021 |
|
100% |
|
|
0.24 |
|
|
100% |
Barcelona Mediacomplex |
|
1 |
|
Barcelona, Spain |
|
June 2022 |
|
100% |
|
|
0.34 |
|
|
100% |
Total Office |
|
20 |
|
|
|
|
|
|
|
|
3.90 |
|
|
|
Self-storage: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Morningstar Self-Storage Joint Venture |
|
26 |
|
Various |
|
December 2021/March 2022 |
|
95% |
|
|
1.90 |
|
|
86% |
Total Self-storage |
|
26 |
|
|
|
|
|
|
|
|
1.90 |
|
|
|
34
Segment and Investment |
|
Number of |
|
Location |
|
Acquisition |
|
Ownership |
|
Sq. Feet |
|
|
Occupancy(2) |
|
Other: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Select Service Portfolio |
|
8 |
|
FL, CO, TN, OH, AR |
|
January 2019 |
|
100% |
|
|
1,057 |
|
|
84% |
Fort Lauderdale Hotel (6) |
|
1 |
|
Fort Lauderdale, FL |
|
March 2019 |
|
43% |
|
|
236 |
|
|
65% |
Exchange on Erwin - Commercial |
|
2 |
|
Durham, NC |
|
November 2019 |
|
100% |
|
|
0.10 |
|
|
100% |
Barlow |
|
1 |
|
Chevy Chase, MD |
|
March 2020 |
|
100% |
|
|
0.29 |
|
|
84% |
Comfort Hotel Vesterbro |
|
1 |
|
Copenhagen, Denmark |
|
September 2021 |
|
100% |
|
|
0.14 |
|
|
100% |
Iberostar Las Dalias |
|
1 |
|
Tenerife, Spain |
|
December 2021 |
|
100% |
|
|
0.31 |
|
|
100% |
Marketplace at the Outlets |
|
1 |
|
West Palm Beach, FL |
|
December 2021 |
|
100% |
|
|
0.30 |
|
|
100% |
Extended Stay Portfolio (6) |
|
196 |
|
Various |
|
July 2022 |
|
45% |
|
|
24,935 |
|
|
84% |
Total Other |
|
211 |
|
|
|
|
|
|
|
N/A (5) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Investment Properties |
|
708 |
|
|
|
|
|
|
|
|
|
|
|
|
Impairment of Investments in Real Estate
Management reviews its real estate properties for impairment each quarter or when there is an event or change in circumstances that indicates an impaired value. If the carrying amount of the real estate investment is no longer recoverable and exceeds the fair value of such investment, an impairment loss is recognized. The impairment loss is recognized based on the excess of the carrying amount of the asset over its fair value. The evaluation of anticipated future cash flows is highly subjective and is based in part on assumptions regarding future occupancy, rental rates and capital requirements that could differ materially from actual results. Since cash flows on real estate properties are considered on an undiscounted basis to determine whether an asset has been impaired, our strategy of holding properties over the long term directly decreases the likelihood of recording an impairment loss. If our strategy changes or market conditions otherwise dictate an earlier sale date, an additional impairment loss may be recognized, and such loss could be material to our results. If we determine that an impairment has occurred, the affected assets must be reduced to their fair value.
During the three and six months ended June 30, 2023, we recognized an aggregate of $105.3 million and $185.1 million of impairment charges, respectively, on single-family rental properties. The estimated fair values of the impaired properties were primarily based on binding, executed sales contracts. During the three and six months ended June 30, 2022, the Company did not recognize any impairments on investments in real estate.
35
Investments in Real Estate Debt
The following table details our investments in real estate debt as of June 30, 2023 ($ in thousands):
|
|
|
|
June 30, 2023 |
|
|||||||||
Type of Security/Loan |
|
Number of Positions |
|
Weighted |
|
Weighted Average |
|
Cost Basis |
|
|
Fair Value |
|
||
CMBS - floating |
|
6 |
|
L + 4.50% |
|
February 2037 |
|
$ |
257,441 |
|
|
$ |
247,428 |
|
Term loans |
|
2 |
|
L + 4.96% |
|
January 2027 |
|
|
1,461,417 |
|
|
|
1,374,010 |
|
Total investments in real estate debt |
|
8 |
|
L + 4.89% |
|
July 2028 |
|
$ |
1,718,858 |
|
|
$ |
1,621,438 |
|
During June 2022, we provided financing in the form of a term loan to an unaffiliated entity in connection with its acquisition of Australia’s largest hotel and casino company. The loan is in the amount of AUD 1,377 million and has an initial term of five years, with a two-year extension option. The loan is pre-payable at the option of the borrower at any time.
During February 2021, we provided financing in the form of a term loan to an unaffiliated entity in connection with its acquisition of a premier United Kingdom holiday company. The loan is in the amount of £360 million and has an initial term of five years, with a two-year extension option. The loan is pre-payable at the option of the borrower at any time.
The following chart describes the diversification of our investments in real estate debt by type based on fair value as of June 30, 2023:
36
Lease Expirations
The following table details the expiring leases at our industrial, office and other properties by annualized base rent as of June 30, 2023 ($ in thousands). The table below excludes our multifamily, single-family rental and self-storage properties as substantially all leases at such properties expire within 12 months:
|
|
Industrial |
|
Office |
|
Other |
|
Total |
||||||||||||||||||||||||
Year |
|
Annualized |
|
|
% of Total |
|
Annualized |
|
|
% of Total |
|
Annualized |
|
|
% of Total |
|
Annualized |
|
|
% of Total |
||||||||||||
2023 (remaining) |
|
$ |
|
9,570 |
|
|
|
3% |
|
$ |
|
1,542 |
|
|
|
0% |
|
$ |
|
1,190 |
|
|
|
0% |
|
$ |
|
12,302 |
|
|
|
3% |
2024 |
|
|
|
24,160 |
|
|
|
7% |
|
|
|
5,553 |
|
|
|
2% |
|
|
|
2,999 |
|
|
|
1% |
|
|
|
32,712 |
|
|
|
10% |
2025 |
|
|
|
24,605 |
|
|
|
7% |
|
|
|
7,844 |
|
|
|
2% |
|
|
|
2,651 |
|
|
|
1% |
|
|
|
35,100 |
|
|
|
10% |
2026 |
|
|
|
23,229 |
|
|
|
7% |
|
|
|
14,772 |
|
|
|
4% |
|
|
|
3,139 |
|
|
|
1% |
|
|
|
41,140 |
|
|
|
12% |
2027 |
|
|
|
26,907 |
|
|
|
8% |
|
|
|
13,383 |
|
|
|
4% |
|
|
|
3,049 |
|
|
|
1% |
|
|
|
43,339 |
|
|
|
13% |
2028 |
|
|
|
13,122 |
|
|
|
4% |
|
|
|
12,202 |
|
|
|
4% |
|
|
|
9,985 |
|
|
|
3% |
|
|
|
35,309 |
|
|
|
11% |
2029 |
|
|
|
5,928 |
|
|
|
2% |
|
|
|
5,353 |
|
|
|
2% |
|
|
|
1,695 |
|
|
|
1% |
|
|
|
12,976 |
|
|
|
5% |
2030 |
|
|
|
11,715 |
|
|
|
3% |
|
|
|
17,468 |
|
|
|
5% |
|
|
|
2,308 |
|
|
|
1% |
|
|
|
31,491 |
|
|
|
9% |
2031 |
|
|
|
4,830 |
|
|
|
1% |
|
|
|
21,877 |
|
|
|
6% |
|
|
|
1,771 |
|
|
|
1% |
|
|
|
28,478 |
|
|
|
8% |
2032 |
|
|
|
3,393 |
|
|
|
1% |
|
|
|
7,272 |
|
|
|
2% |
|
|
|
909 |
|
|
|
0% |
|
|
|
11,574 |
|
|
|
3% |
Thereafter |
|
|
|
10,778 |
|
|
|
3% |
|
|
|
34,094 |
|
|
|
10% |
|
|
|
9,023 |
|
|
|
3% |
|
|
|
53,895 |
|
|
|
16% |
Total |
|
$ |
|
158,237 |
|
|
|
46% |
|
$ |
|
141,360 |
|
|
|
41% |
|
$ |
|
38,719 |
|
|
|
13% |
|
$ |
|
338,316 |
|
|
|
100% |
37
Results of Operations
The following table sets forth information regarding our consolidated results of operations ($ in thousands):
|
|
For the Three Months Ended June 30, |
|
|
2023 vs. 2022 |
|
|||||||||
|
|
2023 |
|
|
2022 |
|
|
$ |
|
||||||
Revenues |
|
|
|
|
|
|
|
|
|
|
|
|
|||
Rental revenue |
|
$ |
|
436,272 |
|
|
$ |
|
362,735 |
|
|
$ |
|
73,537 |
|
Other revenue |
|
|
|
15,372 |
|
|
|
|
16,473 |
|
|
|
|
(1,101 |
) |
Total revenues |
|
|
|
451,644 |
|
|
|
|
379,208 |
|
|
|
|
72,436 |
|
Expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|||
Property operating |
|
|
|
192,621 |
|
|
|
|
152,420 |
|
|
|
|
40,201 |
|
General and administrative |
|
|
|
11,867 |
|
|
|
|
13,008 |
|
|
|
|
(1,141 |
) |
Management fees |
|
|
|
39,442 |
|
|
|
|
42,229 |
|
|
|
|
(2,787 |
) |
Performance participation allocation |
|
|
|
— |
|
|
|
|
52,344 |
|
|
|
|
(52,344 |
) |
Impairment of investments in real estate |
|
|
|
105,291 |
|
|
|
|
— |
|
|
|
|
105,291 |
|
Depreciation and amortization |
|
|
|
208,929 |
|
|
|
|
205,583 |
|
|
|
|
3,346 |
|
Total expenses |
|
|
|
558,150 |
|
|
|
|
465,584 |
|
|
|
|
92,566 |
|
Other income (expense) |
|
|
|
|
|
|
|
|
|
|
|
|
|||
Income (loss) from unconsolidated real estate ventures |
|
|
|
2,544 |
|
|
|
|
(209 |
) |
|
|
|
2,753 |
|
Income from investments in real estate debt |
|
|
|
41,682 |
|
|
|
|
33,523 |
|
|
|
|
8,159 |
|
Net gain on dispositions of real estate |
|
|
|
121,681 |
|
|
|
|
— |
|
|
|
|
121,681 |
|
Interest expense |
|
|
|
(155,335 |
) |
|
|
|
(108,253 |
) |
|
|
|
(47,082 |
) |
Other income, net |
|
|
|
63,683 |
|
|
|
|
56,956 |
|
|
|
|
6,727 |
|
Total other income (expense) |
|
|
|
74,255 |
|
|
|
|
(17,983 |
) |
|
|
|
92,238 |
|
Net loss |
|
|
|
(32,251 |
) |
|
|
|
(104,359 |
) |
|
|
|
72,108 |
|
Net income attributable to non-controlling interests in |
|
|
|
(1,572 |
) |
|
|
|
(432 |
) |
|
|
|
(1,140 |
) |
Net loss attributable to non-controlling interests in |
|
|
|
1,664 |
|
|
|
|
3,428 |
|
|
|
|
(1,764 |
) |
Net loss attributable to stockholders |
|
$ |
|
(32,159 |
) |
|
$ |
|
(101,363 |
) |
|
$ |
|
69,204 |
|
Revenues
Rental revenue primarily consists of base rent arising from tenant leases at our multifamily, single-family rental, industrial, office, self-storage and other properties. Rental revenue is recognized on a straight-line basis over the life of the lease, including any rent steps or abatement provisions. During the three months ended June 30, 2023 and 2022, rental revenue was $436.3 million and $362.7 million, respectively. The increase in rental revenue was driven by the overall growth in our portfolio as well as an increase in average rental rates for multifamily and industrial assets for the three months ended June 30, 2023 compared to the three months ended June 30, 2022.
Other revenue primarily consists of revenue generated by our hospitality properties. Hospitality revenue consists primarily of room revenue. During the three months ended June 30, 2023 and 2022, other revenue was $15.4 million and $16.5 million, respectively, resulting in a year over year decrease of $1.1 million.
Expenses
Property operating expenses consist of the costs of ownership and operation of our real estate investments. Examples of property operating expenses include real estate taxes, insurance, utilities and repair and maintenance expenses. Property operating expenses also include general and administrative expenses unrelated to the operations of the properties. During the three months ended June 30, 2023 and 2022, property operating expenses were $192.6 million and $152.4 million, respectively. The increase was driven by the growth in our real estate portfolio.
General and administrative expenses are corporate-level expenses that relate mainly to our compliance and administration costs and consist primarily of legal fees, accounting fees, transfer agent fees and other professional fees. During the three months ended June 30, 2023, general and administrative expenses decreased $1.1 million compared to the three months ended June 30, 2022 and was primarily driven by a reduction in transaction activity.
Management fees are earned by our Advisor for providing services pursuant to the Advisory Agreement. During the three months ended June 30, 2023 and 2022, management fees were $39.4 million and $42.2 million, respectively. The decrease was primarily due to the reduction in our NAV, which decreased by $1.6 billion from June 30, 2022 to June 30, 2023.
38
Performance participation allocation relates to allocations from the Operating Partnership to the Special Limited Partner based on the total return of the Operating Partnership. Total return is defined as distributions paid or accrued plus the change in NAV. The performance participation allocation is measured annually and any amount earned by the Special Limited Partner becomes payable as of December 31 of the applicable year. During the three months ended June 30, 2023, there was no performance participation allocation as certain thresholds were not achieved. During the three months ended June 30, 2022, the performance participation allocation was $52.3 million.
During the three months ended June 30, 2023, the Company recognized an aggregate $105.3 million of impairment charges on single-family rental properties in the Condensed Consolidated Statements of Operations and Comprehensive Loss. The estimated fair values of the impaired properties were primarily based on binding, executed sales contracts. During the three months ended June 30, 2022, the Company did not recognize any impairments on investments in real estate.
Depreciation and amortization expenses are impacted by the values assigned to buildings, personal property and in-place lease assets as part of the initial purchase price allocation. During the three months ended June 30, 2023 and 2022, depreciation and amortization expenses were $208.9 million and $205.6 million, respectively. The increase was driven by growth in our portfolio, which increased from 509 consolidated properties as of June 30, 2022 to 511 consolidated real estate properties as of June 30, 2023.
Other Income (Expense)
During the three months ended June 30, 2023 and 2022, income from investments in real estate debt was $41.7 million and $33.5 million, respectively, which consisted of interest income, realized losses, and unrealized gains resulting from changes in the fair value of our real estate debt investments and related hedges. The increase was primarily driven by an increase in floating rate benchmark rates resulting in additional interest income on our term loans.
During the three months ended June 30, 2023, we recorded $121.7 million of net aggregate gains from the disposition of six multifamily properties, one industrial property, and 268 single-family rental units. During the three months ended June 30, 2022, we did not dispose of any of our investments in real estate.
During the three months ended June 30, 2023 and 2022, interest expense was $155.3 million and $108.3 million, respectively, which primarily consisted of interest expense incurred on our mortgage notes, revolving credit facility, unsecured revolving credit facility and borrowings under our secured financings on investments in real estate debt. The increase was primarily due to the growth in our portfolio of real estate and investments in real estate debt and the related indebtedness on such investments, an increase in borrowings on our unsecured line of credit, as well as an increase in floating rate benchmark rates resulting in additional interest expense on our borrowings.
During the three months ended June 30, 2023 and 2022, other income (expense), net was $63.7 million and $57.0 million, respectively. These results were primarily driven by unrealized losses of $29.6 million recognized on our investments in equity securities during the three months ended June 30, 2022, compared to unrealized gains of $4.0 million recognized during the three months ended June 30, 2023. These results were offset by a reduction in unrealized gains relating to the changes in the fair value of our interest rate caps and swaps of $7.6 million driven by unrealized gains of $70.2 million during the three months ended June 30, 2023 compared to unrealized gains of $77.8 million during the three months ended June 30, 2022. The interest rate caps and swaps are used primarily to limit our interest rate payments on certain of our variable rate borrowings. These results were also offset by a $12.1 million reduction in other income due to changes in unrealized and realized gains and losses on FX related activity year over year.
39
|
|
For the Six Months Ended June 30, |
|
|
2023 vs. 2022 |
|
|||||||||
|
|
2023 |
|
|
2022 |
|
|
$ |
|
||||||
Revenues |
|
|
|
|
|
|
|
|
|
|
|
|
|||
Rental revenue |
|
$ |
|
867,272 |
|
|
$ |
|
680,105 |
|
|
$ |
|
187,167 |
|
Other revenue |
|
|
|
30,816 |
|
|
|
|
29,748 |
|
|
|
|
1,068 |
|
Total revenues |
|
|
|
898,088 |
|
|
|
|
709,853 |
|
|
|
|
188,235 |
|
Expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|||
Property operating |
|
|
|
382,272 |
|
|
|
|
285,418 |
|
|
|
|
96,854 |
|
General and administrative |
|
|
|
22,436 |
|
|
|
|
21,425 |
|
|
|
|
1,011 |
|
Management fees |
|
|
|
81,623 |
|
|
|
|
76,384 |
|
|
|
|
5,239 |
|
Performance participation allocation |
|
|
|
— |
|
|
|
|
139,470 |
|
|
|
|
(139,470 |
) |
Impairment of investments in real estate |
|
|
|
185,137 |
|
|
|
|
— |
|
|
|
|
185,137 |
|
Depreciation and amortization |
|
|
|
409,363 |
|
|
|
|
430,342 |
|
|
|
|
(20,979 |
) |
Total expenses |
|
|
|
1,080,831 |
|
|
|
|
953,039 |
|
|
|
|
127,792 |
|
Other (expense) income |
|
|
|
|
|
|
|
|
|
|
|
|
|||
(Loss) income from unconsolidated real estate ventures |
|
|
|
(545 |
) |
|
|
|
720 |
|
|
|
|
(1,265 |
) |
Income from investments in real estate debt |
|
|
|
73,523 |
|
|
|
|
36,344 |
|
|
|
|
37,179 |
|
Net gain on dispositions of real estate |
|
|
|
121,258 |
|
|
|
|
— |
|
|
|
|
121,258 |
|
Interest expense |
|
|
|
(292,625 |
) |
|
|
|
(186,122 |
) |
|
|
|
(106,503 |
) |
Other (expense) income, net |
|
|
|
(76,351 |
) |
|
|
|
314,250 |
|
|
|
|
(390,601 |
) |
Total other (expense) income |
|
|
|
(174,740 |
) |
|
|
|
165,192 |
|
|
|
|
(339,932 |
) |
Net loss |
|
|
|
(357,483 |
) |
|
|
|
(77,994 |
) |
|
|
|
(279,489 |
) |
Net income attributable to non-controlling interests in |
|
|
|
(80 |
) |
|
|
|
(1,355 |
) |
|
|
|
1,275 |
|
Net loss attributable to non-controlling interests in |
|
|
|
14,767 |
|
|
|
|
2,846 |
|
|
|
|
11,921 |
|
Net loss attributable to stockholders |
|
$ |
|
(342,796 |
) |
|
$ |
|
(76,503 |
) |
|
$ |
|
(266,293 |
) |
Revenues
Rental revenue primarily consists of base rent arising from tenant leases at our multifamily, single-family rental, industrial, office, self-storage and other properties. Rental revenue is recognized on a straight-line basis over the life of the lease, including any rent steps or abatement provisions. During the six months ended June 30, 2023 and 2022, rental revenue was $867.3 million and $680.1 million, respectively. The increase in rental revenue was driven by the overall growth in our portfolio as well as an increase in average rental rates for multifamily and industrial assets for the six months ended June 30, 2023 compared to the six months ended June 30, 2022.
Other revenue primarily consists of revenue generated by our hospitality properties. Hospitality revenue consists primarily of room revenue. During the six months ended June 30, 2023 and 2022, other revenue was $30.8 million and $29.7 million, respectively. The increase in the other revenue was driven primarily by an increase in occupancy within our hospitality properties.
Expenses
Property operating expenses consist of the costs of ownership and operation of our real estate investments. Examples of property operating expenses include real estate taxes, insurance, utilities and repair and maintenance expenses. Property operating expenses also include general and administrative expenses unrelated to the operations of the properties. During the six months ended June 30, 2023 and 2022, property operating expenses were $382.3 million and $285.4 million, respectively. The increase was driven by the growth in our real estate portfolio.
General and administrative expenses are corporate-level expenses that relate mainly to our compliance and administration costs and consist primarily of legal fees, accounting fees, transfer agent fees and other professional fees. During the six months ended June 30, 2023, general and administrative expenses increased $1.0 million compared to the six months ended June 30, 2022 and was driven by the overall growth of our business.
Management fees are earned by our Advisor for providing services pursuant to the Advisory Agreement. During the six months ended June 30, 2023 and 2022, management fees were $81.6 million and $76.4 million, respectively. The increase was primarily due to the increase in our average NAV for the six months ended June 30, 2023 compared to the six months ended June 30, 2022.
Performance participation allocation relates to allocations from the Operating Partnership to the Special Limited Partner based on the total return of the Operating Partnership. Total return is defined as distributions paid or accrued plus the change in NAV. The performance participation allocation is measured annually and any amount earned by the Special Limited Partner becomes payable as
40
of December 31 of the applicable year. During the six months ended June 30, 2023, there was no performance participation allocation as certain thresholds were not achieved. During the six months ended June 30, 2022, the performance participation allocation was $139.5 million.
During the six months ended June 30, 2023, the Company recognized an aggregate $185.1 million of impairment charges on single-family rental properties in the Condensed Consolidated Statements of Operations and Comprehensive Loss. The estimated fair values of the impaired properties were primarily based on binding, executed sales contracts. During the six months ended June 30, 2022, the Company did not recognize any impairments on investments in real estate.
Depreciation and amortization expenses are impacted by the values assigned to buildings, personal property and in-place lease assets as part of the initial purchase price allocation. During the six months ended June 30, 2023 and 2022, depreciation and amortization expenses were $409.4 million and $430.3 million, respectively. The decrease was driven by a reduction in amortization of in-place lease intangible assets during the six months ended June 30, 2023 compared to the six months ended June 30, 2022.
Other (Expense) Income, net
During the six months ended June 30, 2023 and 2022, income from investments in real estate debt was $73.5 million and $36.3 million, respectively, which consisted of interest income, realized losses, and unrealized gains resulting from changes in the fair value of our real estate debt investments and related hedges. The increase was primarily driven by an increase in floating rate benchmark rates resulting in additional interest income on our term loans.
During the six months ended June 30, 2023, we recorded $121.3 million of net aggregate gains from the disposition of six multifamily properties, one industrial property, and 268 single-family rental units. During the six months ended June 30, 2022, we did not dispose of any of our investments in real estate.
During the six months ended June 30, 2023 and 2022, interest expense was $292.6 million and $186.1 million, respectively, which primarily consisted of interest expense incurred on our mortgage notes, revolving credit facility, unsecured revolving credit facility and borrowings under our secured financings on investments in real estate debt. The increase was primarily due to the growth in our portfolio of real estate and investments in real estate debt and the related indebtedness on such investments, an increase in borrowings on our unsecured line of credit, as well as an increase in floating rate benchmark rates resulting in additional interest expense on our borrowings.
During the six months ended June 30, 2023 and 2022, other (expense) income, net was ($76.4) million and $314.3 million, respectively. These results were primarily driven by unrealized losses of $75.8 million during the six months ended June 30, 2023, compared to unrealized gains of $348.2 million during the six months ended June 30, 2022, relating to the change in the fair value of our interest rate caps and interest rate swaps. The interest rate caps and swaps are used primarily to limit our interest rate payments on certain of our variable rate borrowings. These results were also driven by unrealized losses of $42.3 million recognized on our investments in equity securities during the six months ended June 30, 2022, compared to unrealized gains of $3.1 million recognized during the six months ended June 30, 2023.
Funds from Operations and Adjusted Funds from Operations
We believe funds from operations (“FFO”) is a meaningful supplemental non-GAAP operating metric. Our consolidated financial statements are presented under historical cost accounting which, among other things, requires depreciation of real estate investments to be calculated on a straight-line basis. As a result, our operating results imply that the value of our real estate investments will decrease evenly over a set time period. However, we believe that the value of real estate investments will change over time based on market conditions and as such, depreciation under historical cost accounting may be less informative. FFO is a standard REIT industry metric defined by the National Association of Real Estate Investment Trusts (“NAREIT”).
FFO, as defined by NAREIT and presented below, is calculated as net income or loss (computed in accordance with GAAP), excluding (i) gains or losses from sales of depreciable real property, (ii) impairment write-downs on depreciable real property, (iii) plus real estate-related depreciation and amortization, (iv) net gains or losses from sales of real estate, and (v) similar adjustments for unconsolidated joint ventures.
We also believe that adjusted FFO (“AFFO”) is a meaningful supplemental non-GAAP disclosure of our operating results. AFFO further adjusts FFO in order for our operating results to reflect the specific characteristics of our business by adjusting for items we believe are not related to our core operations. Our adjustments to FFO to arrive at AFFO include removing the impact of (i) straight-line rental income and expense, (ii) deferred income amortization, (iii) amortization of above- and below-market lease intangibles, (iv)
41
amortization of mortgage premium /discount, (v) unrealized gains or losses from changes in the fair value of real estate debt and other financial instruments, (vi) gains and losses resulting from foreign currency translations, (vii) amortization of restricted stock awards, (viii) non-cash performance participation allocation, even if repurchased by us, (ix) amortization of deferred financing costs, and (x) similar adjustments for unconsolidated joint ventures. AFFO is not defined by NAREIT and our calculation of AFFO may not be comparable to disclosures made by other REITs.
The following table presents a reconciliation of FFO and AFFO to GAAP net loss attributable to stockholders ($ in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
For the Three Months Ended June 30, |
|
|
|
For the Six Months Ended June 30, |
|
||||||||||
|
|
2023 |
|
|
2022 |
|
|
|
2023 |
|
|
2022 |
|
||||
Net loss attributable to stockholders |
|
$ |
(32,159 |
) |
|
$ |
(101,363 |
) |
|
|
$ |
(342,796 |
) |
|
$ |
(76,503 |
) |
Adjustments to arrive at FFO: |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Real estate depreciation and amortization |
|
|
208,929 |
|
|
|
205,583 |
|
|
|
|
409,363 |
|
|
|
430,342 |
|
Impairment of investments in real estate |
|
|
105,291 |
|
|
|
— |
|
|
|
|
185,137 |
|
|
|
— |
|
Investment in unconsolidated real estate ventures – depreciation and amortization |
|
|
13,248 |
|
|
|
200 |
|
|
|
|
26,143 |
|
|
|
400 |
|
Net gain on dispositions of real estate |
|
|
(121,681 |
) |
|
|
— |
|
|
|
|
(121,258 |
) |
|
|
— |
|
Amount attributable to non-controlling interests |
|
|
(1,223 |
) |
|
|
(1,134 |
) |
|
|
|
(2,461 |
) |
|
|
(2,631 |
) |
FFO attributable to stockholders |
|
|
172,405 |
|
|
|
103,286 |
|
|
|
|
154,128 |
|
|
|
351,608 |
|
Adjustments to arrive at AFFO: |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Straight-line rental income and expense |
|
|
(3,522 |
) |
|
|
(3,005 |
) |
|
|
|
(7,134 |
) |
|
|
(6,621 |
) |
Deferred income amortization |
|
|
(3,768 |
) |
|
|
(2,242 |
) |
|
|
|
(6,660 |
) |
|
|
(4,601 |
) |
Amortization of above- and below-market lease |
|
|
(879 |
) |
|
|
(973 |
) |
|
|
|
(1,918 |
) |
|
|
(1,437 |
) |
Unrealized (gains) losses from changes in the fair |
|
|
(73,148 |
) |
|
|
(96,619 |
) |
|
|
|
77,272 |
|
|
|
(343,136 |
) |
Foreign currency loss (gain) |
|
|
(7,229 |
) |
|
|
32,469 |
|
|
|
|
(6,923 |
) |
|
|
38,925 |
|
Non-cash performance participation allocation |
|
|
— |
|
|
|
52,344 |
|
|
|
|
— |
|
|
|
139,470 |
|
Amortization of deferred financing costs |
|
|
8,184 |
|
|
|
8,597 |
|
|
|
|
15,307 |
|
|
|
17,354 |
|
Amortization of restricted stock awards |
|
|
210 |
|
|
|
207 |
|
|
|
|
420 |
|
|
|
413 |
|
Amount attributable to non-controlling interests |
|
|
646 |
|
|
|
445 |
|
|
|
|
(421 |
) |
|
|
2,237 |
|
AFFO attributable to stockholders |
|
$ |
92,899 |
|
|
$ |
94,509 |
|
|
|
$ |
224,071 |
|
|
$ |
194,212 |
|
FFO and AFFO should not be considered to be more relevant or accurate than the GAAP methodology in calculating net income (loss) or in evaluating our operating performance. In addition, FFO and AFFO should not be considered as alternatives to net income (loss) as indications of our performance or as alternatives to cash flows from operating activities as indications of our liquidity, but rather should be reviewed in conjunction with these and other GAAP measurements. Further, FFO and AFFO are not intended to be used as liquidity measures indicative of cash flow available to fund our cash needs, including our ability to make distributions to our stockholders.
Net Asset Value
Our board of directors, including a majority of our independent directors, has adopted valuation guidelines that contain a comprehensive set of methodologies to be used by the Advisor, our independent valuation advisor and third-party appraisal firms in connection with estimating the values of our assets and liabilities for purposes of our NAV calculation. The calculation of our NAV is intended to be a calculation of the fair value of our assets less our outstanding liabilities and likely differs from the book value of our equity reflected in our financial statements. The purchase and repurchase price per share for each class of our common stock is the then-current transaction price, which generally equals our prior month’s NAV per share, as determined monthly, plus, for purchases only, applicable selling commissions and dealer manager fees.
For more information on our NAV calculation and valuation guidelines, please refer to “Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities” in our Annual Report on Form 10-K for the year ended December 31, 2022. Please also refer to “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2022, as supplemented, for additional disclosure relating to material trends or uncertainties that may impact our NAV and our business.
42
The following table provides a breakdown of the major components of our NAV as of June 30, 2023 ($ and shares/units in thousands):
Components of NAV |
|
June 30, 2023 |
|
|
Investments in real estate |
|
$ |
24,588,678 |
|
Investments in real estate debt |
|
|
1,621,714 |
|
Cash and cash equivalents |
|
|
336,776 |
|
Restricted cash |
|
|
298,186 |
|
Other assets |
|
|
1,071,891 |
|
Debt obligations |
|
|
(13,862,046 |
) |
Secured financings on investments in real estate debt |
|
|
(755,857 |
) |
Subscriptions received in advance |
|
|
(16,338 |
) |
Other liabilities |
|
|
(974,144 |
) |
Performance participation accrual |
|
|
— |
|
Management fee payable |
|
|
(12,777 |
) |
Accrued stockholder servicing fees(1) |
|
|
(4,035 |
) |
Non-controlling interests in consolidated joint ventures |
|
|
(89,326 |
) |
Net asset value |
|
$ |
12,202,722 |
|
Number of outstanding shares/units |
|
|
489,290 |
|
The following table provides a breakdown of our total NAV and NAV per share by share class as of June 30, 2023 ($ and shares/units in thousands, except per share/unit data):
NAV Per Share |
|
Class S |
|
|
Class T |
|
|
Class D |
|
|
Class I |
|
|
Third-party |
|
|
Total |
|
||||||
Net asset value |
|
$ |
5,318,409 |
|
|
$ |
141,362 |
|
|
$ |
721,216 |
|
|
$ |
5,521,758 |
|
|
$ |
499,977 |
|
|
$ |
12,202,722 |
|
Number of outstanding shares/units |
|
|
212,245 |
|
|
|
5,640 |
|
|
|
29,291 |
|
|
|
222,012 |
|
|
|
20,102 |
|
|
|
489,290 |
|
NAV Per Share/Unit as of June 30, 2023 |
|
$ |
25.06 |
|
|
$ |
25.06 |
|
|
$ |
24.62 |
|
|
$ |
24.87 |
|
|
$ |
24.87 |
|
|
|
|
|
Set forth below are the weighted averages of the key assumptions in the discounted cash flow methodology used in the June 30, 2023 valuations, based on property types. Once we own more than one self-storage and one extended stay investment, we will include the key assumptions for the property types.
Property Type |
|
Discount Rate |
|
Exit Capitalization |
Multifamily |
|
6.5% |
|
5.2% |
Single-Family Rental |
|
6.7% |
|
5.5% |
Industrial |
|
6.6% |
|
5.4% |
Office |
|
7.5% |
|
6.3% |
Other |
|
8.3% |
|
6.8% |
For quarter-end months, these assumptions are determined by the independent valuation advisor or third-party appraisers. In addition, the independent valuation advisor reviews the assumptions included in the third-party appraisals. The Advisor reviews the assumptions from each of the appraisals regardless of who performs the work. A change in these assumptions would impact the calculation of the
43
value of our property investments. For example, assuming all other factors remain unchanged, the changes listed below would result in the following effects on our investment values:
Input |
|
Hypothetical |
|
Multifamily |
|
Single-Family |
|
Industrial |
|
Office |
|
Other |
Discount Rate |
|
0.25% decrease |
|
+2.0% |
|
+2.0% |
|
+2.0% |
|
+1.9% |
|
+1.8% |
(weighted average) |
|
0.25% increase |
|
(1.9)% |
|
(1.8)% |
|
(1.9)% |
|
(1.9)% |
|
(1.8)% |
Exit Capitalization Rate |
|
0.25% decrease |
|
+3.1% |
|
+3.0% |
|
+3.1% |
|
+2.6% |
|
+2.2% |
(weighted average) |
|
0.25% increase |
|
(2.9)% |
|
(2.6)% |
|
(2.9)% |
|
(2.5)% |
|
(2.1)% |
The following table reconciles stockholders’ equity from our Condensed Consolidated Balance Sheet to our NAV ($ in thousands):
Reconciliation of Stockholders’ Equity to NAV |
|
June 30, 2023 |
|
||
Stockholders’ equity under GAAP |
|
$ |
|
8,559,772 |
|
Redeemable non-controlling interests |
|
|
|
499,977 |
|
Total partners’ capital of Operating Partnership |
|
|
|
9,059,749 |
|
Adjustments: |
|
|
|
|
|
Accrued stockholder servicing fee |
|
|
|
358,135 |
|
Advanced organization and offering costs and Advanced operating |
|
|
|
2,228 |
|
Unrealized net real estate and real estate debt appreciation |
|
|
|
947,139 |
|
Accumulated depreciation and amortization |
|
|
|
1,835,471 |
|
NAV |
|
$ |
|
12,202,722 |
|
The following details the adjustments to reconcile stockholders’ equity to our NAV:
44
Distributions
Since February 2019, we have declared monthly distributions for each class of our common stock, which are generally paid three days after month-end. Each class of our common stock received the same gross distribution per share, which was an aggregate of $0.6210 per share for the six months ended June 30, 2023. The net distribution varies for each class based on the applicable stockholder servicing fee, which is deducted from the gross distribution per share and paid to the Dealer Manager. The table below details the net distribution for each of our share classes for the six months ended June 30, 2023:
|
|
Class T |
|
|
Class S |
|
|
Class D |
|
|
Class I |
|
||||
|
|
Shares |
|
|
Shares |
|
|
Shares |
|
|
Shares |
|
||||
January 31, 2023 |
|
$ |
0.0844 |
|
|
$ |
0.0844 |
|
|
$ |
0.0980 |
|
|
$ |
0.1035 |
|
February 28, 2023 |
|
|
0.0864 |
|
|
|
0.0864 |
|
|
|
0.0986 |
|
|
|
0.1035 |
|
March 31, 2023 |
|
|
0.0845 |
|
|
|
0.0845 |
|
|
|
0.0980 |
|
|
|
0.1035 |
|
April 30, 2023 |
|
|
0.0855 |
|
|
|
0.0855 |
|
|
|
0.0983 |
|
|
|
0.1035 |
|
May 31, 2023 |
|
|
0.0851 |
|
|
|
0.0851 |
|
|
|
0.0982 |
|
|
|
0.1035 |
|
June 30, 2023 |
|
|
0.0857 |
|
|
|
0.0857 |
|
|
|
0.0983 |
|
|
|
0.1035 |
|
Total |
|
$ |
0.5116 |
|
|
$ |
0.5116 |
|
|
$ |
0.5894 |
|
|
$ |
0.6210 |
|
The following table summarizes our distributions declared during the six months ended June 30, 2023 and 2022 ($ in thousands):
|
For the Six Months Ended |
|
|
For the Six Months Ended |
|
|
|||||||||||
|
Amount |
|
|
% |
|
|
Amount |
|
|
% |
|
|
|||||
Distributions |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Payable in cash |
|
$ |
190,934 |
|
|
|
66 |
|
% |
$ |
156,362 |
|
|
|
62 |
|
% |
Reinvested in shares |
|
|
98,514 |
|
|
|
34 |
|
% |
|
96,539 |
|
|
|
38 |
|
% |
Total distributions |
|
$ |
289,448 |
|
|
|
100 |
|
% |
$ |
252,901 |
|
|
|
100 |
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Sources of Distributions |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Cash flows from operating activities(1) |
|
$ |
289,448 |
|
|
|
100 |
|
% |
$ |
252,901 |
|
|
|
100 |
|
% |
Offering proceeds |
|
|
— |
|
|
|
— |
|
% |
|
— |
|
|
|
— |
|
% |
Total sources of distributions |
|
$ |
289,448 |
|
|
|
100 |
|
% |
$ |
252,901 |
|
|
|
100 |
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Cash flows from operating activities |
|
$ |
260,958 |
|
|
|
|
|
$ |
264,181 |
|
|
|
|
|
||
Funds from operations |
|
$ |
154,128 |
|
|
|
|
|
$ |
351,608 |
|
|
|
|
|
||
Liquidity and Capital Resources
We believe we are well positioned from a liquidity perspective with approximately $1.7 billion of liquidity as of June 30, 2023, comprised of $1.1 billion of an undrawn unsecured Line of Credit, $0.3 billion of cash on hand, and approximately $0.3 billion in investments in real estate-related debt securities and real estate-related equity securities that could be liquidated to satisfy any potential liquidity requirements.
Our primary needs for liquidity and capital resources are to fund our investments, to make distributions to our stockholders, to repurchase shares of our common stock pursuant to our share repurchase plan, to pay our offering and operating expenses and capital expenditures and to pay debt service on the outstanding indebtedness we incur. Our operating expenses include, among other things, fees and expenses related to managing our properties and other investments, the management fee we pay to the Advisor (to the extent the Advisor elects to receive the management fee in cash), the performance participation allocation that the Operating Partnership will pay to the Special Limited Partner (to the extent that the Special Limited Partner elects to receive the performance participation allocation in cash) and general corporate expenses.
Our cash needs for acquisitions and other investments will be funded primarily from the sale of shares of our common stock and through the assumption or incurrence of debt. For the three and six months ended June 30, 2023, we raised $0.1 billion and $0.3 billion of gross proceeds in our public offering, respectively. In addition, for the three and six months ended June 30, 2023, we have repurchased $0.7 billion and $1.4 billion in shares of our common stock under our share repurchase plan.
Other potential future sources of capital include secured or unsecured financings from banks or other lenders and proceeds from the sale of assets and investments in real estate-related debt securities and real estate-related equity securities. If necessary, we may use
45
financings or other sources of capital in the event of unforeseen significant capital expenditures. From inception through June 30, 2023, our distributions have been entirely funded from cash flow from operating activities.
The following table is a summary of our indebtedness as of June 30, 2023 and December 31, 2022 ($ in thousands):
|
|
|
|
|
|
|
|
|
Principal Balance Outstanding(3)(4) |
|
||||||
Indebtedness |
|
Weighted |
|
Weighted |
|
Maximum |
|
|
June 30, |
|
|
December 31, |
|
|||
Fixed rate loans |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Fixed rate mortgages |
|
3.13% |
|
January 2031 |
|
N/A |
|
|
$ |
3,210,624 |
|
|
$ |
3,843,346 |
|
|
Total fixed rate loans |
|
|
|
|
|
|
|
|
|
3,210,624 |
|
|
|
3,843,346 |
|
|
Variable rate loans |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Floating rate mortgages |
|
L + 1.81% |
|
June 2027 |
|
N/A |
|
|
|
9,957,925 |
|
|
|
10,445,553 |
|
|
Variable rate revolving credit facility(5) |
|
L + 1.85% |
|
December 2023 |
|
$800,000 |
|
|
|
175,000 |
|
|
|
175,000 |
|
|
Total variable rate loans |
|
|
|
|
|
|
|
|
|
10,132,925 |
|
|
|
10,620,553 |
|
|
Total loans secured by the Company’s |
|
|
|
|
|
|
|
|
|
13,343,549 |
|
|
|
14,463,899 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Secured financings on investments in real estate debt |
|
L + 2.82% |
|
March 2027 |
|
$ |
755,857 |
|
|
|
755,857 |
|
|
|
751,771 |
|
Unsecured Line of Credit(6) |
|
L + 2.50% |
|
May 2024 |
|
$ |
1,550,000 |
|
|
|
492,000 |
|
|
|
— |
|
Total Indebtedness |
|
|
|
|
|
|
|
|
$ |
14,591,406 |
|
|
$ |
15,215,670 |
|
|
During the period from July 1, 2023 through August 14, 2023, we raised an aggregate of $0.1 billion in our third public offering and repurchased $0.4 billion of common stock under our share repurchase plan. In July 2023, we received repurchase requests equal to 3.6% of our aggregate monthly NAV and honored all repurchase requests for July 2023 on a pro-rata basis up to the 2% monthly limitation. As such, 55.3% of each stockholder’s share repurchase requests were satisfied in July 2023.
During the period from July 1, 2023 through August 14, 2023, we received $123.0 million of net borrowings on our line of credit.
During the period from July 1, 2023 through August 14, 2023, we sold an aggregate of $721.6 billion of investments in real estate, generating total net cash proceeds, net of mortgage repayments, of approximately $164.7 million.
Cash Flows
The following table provides a breakdown of the net change in our cash and cash equivalents and restricted cash ($ in thousands)]:
|
For the Six Months Ended |
|
|||||||
|
June 30, 2023 |
|
|
June 30, 2022 |
|
||||
Cash flows provided by operating activities |
$ |
|
260,958 |
|
|
$ |
|
264,181 |
|
Cash flows provided by (used in) investing activities |
|
|
622,827 |
|
|
|
|
(5,643,405 |
) |
Cash flows (used in) provided by financing activities |
|
|
(1,199,080 |
) |
|
|
|
5,508,555 |
|
Effect of exchange rate changes |
|
|
(6,352 |
) |
|
|
|
(7,296 |
) |
Net change in cash and cash equivalents and restricted cash |
$ |
|
(321,647 |
) |
|
$ |
|
122,035 |
|
46
Cash flows provided by operating activities decreased by approximately $3.2 million during the six months ended June 30, 2023 compared to the six months ended June 30, 2022. This decrease is primarily attributable to an increase in net interest expense during the period, offset by an increase in property operating income.
Cash flows from investing activities increased by approximately $6.3 billion during the six months ended June 30, 2023 compared to the six months ended June 30, 2022. The increase was primarily due to a decrease of $4.5 billion in acquisitions of real estate, a decrease of $1.1 billion related to investments in real estate debt securities, and an increase of $661.5 million in proceeds from dispositions of real estate investments.
Cash flows from financing activities decreased by approximately $6.7 billion during the six months ended June 30, 2023 compared to the six months ended June 30, 2022. The decrease was primarily due to a $3.1 billion decrease in net proceeds from the issuance of our common stock, a $1.2 billion increase in repurchases of common stock, a decrease of $2.1 billion of net debt borrowings, and a $0.3 billion decrease in subscriptions received in advance.
Critical Accounting Policies
The preparation of the financial statements in accordance with GAAP involves significant judgments and assumptions and requires estimates about matters that are inherently uncertain. These judgments will affect our reported amounts of assets and liabilities and our disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of revenue and expenses during the reporting periods. With different estimates or assumptions, materially different amounts could be reported in our financial statements. We consider our accounting policies over investments in real estate and lease intangibles, investments in real estate debt, and revenue recognition to be our critical accounting policies. Refer to Note 2 — “Summary of Significant Accounting Policies” to our condensed consolidated financial statements in this Quarterly Report on Form 10-Q for further descriptions of such accounting policies.
Recent Accounting Pronouncements
See Note 2 — “Summary of Significant Accounting Policies” to our condensed consolidated financial statements in this Quarterly Report on Form 10-Q for a discussion concerning recent accounting pronouncements.
Off-Balance Sheet Arrangements
We have no existing off-balance sheet arrangements.
47
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Capital Market Risk
We are exposed to risks related to the equity capital markets and our related ability to raise capital through the issuance of our common stock. We are also exposed to risks related to the debt capital markets, and our related ability to finance our business through borrowings under mortgages, repurchase obligations or other debt instruments. As a REIT, we are required to distribute a significant portion of our taxable income annually, which constrains our ability to accumulate operating cash flow and therefore requires us to utilize debt or equity capital to finance our business.
The combination of supply chain and labor shortage concerns, rising financing costs, rising inflationary concerns, market volatility, capital market conditions, including economic impacts resulting from actual or perceived instability in the U.S. banking system, rising oil prices and other geopolitical risks arising from the ongoing Russia-Ukraine conflict and additional COVID-19 variants, have resulted in extreme volatility in a variety of global markets, including the real estate related debt markets. Recent bank failures and consolidations have contributed to volatility in global markets and resulted in diminished liquidity and credit availability in the market broadly. We have received and may in the future receive margin calls from our lenders as a result of the decline in the market value of assets pledged by us to our lenders under our secured financings on investments in real estate debt, and if we fail to resolve such margin calls when due by payment of cash or delivery of additional collateral, the lenders may exercise remedies including taking ownership of the assets securing the applicable obligations.
Interest Rate Risk
We are exposed to interest rate risk with respect to our variable-rate mortgage indebtedness, variable-rate revolving credit facility, secured financings on investments in real estate debt and our unsecured line of credit, where an increase in interest rates would directly result in higher interest expense costs. We seek to manage our exposure to interest rate risk by utilizing a mix of fixed and floating rate financings with staggered maturities and through interest rate protection agreements to fix or cap a portion of our variable rate debt. As of June 30, 2023, the outstanding principal balance of our variable rate indebtedness was $11.4 billion.
Certain of our mortgage loans and secured financings on investments in real estate debt are variable rate and are indexed to the one-month U.S. dollar denominated LIBOR or other benchmark rates. We have executed interest rate caps and swaps with an aggregate notional amount of $10.9 billion as of June 30, 2023 to hedge the risk of increasing interest rates. For the three and six months ended June 30, 2023, a 10 basis point increase in the one-month U.S. dollar denominated LIBOR or other benchmark rates would have resulted in an increase in interest expense of $0.3 million and $0.4 million, net of the impact of our interest rate caps and swaps.
Foreign Currency Risk
We intend to hedge our currency exposures in a prudent manner to the extent it is cost effective to do so. However, our currency hedging strategies may not eliminate all of our currency risk due to, among other things, uncertainties in the timing and/or amount of payments received on the related investments, and/or unequal, inaccurate, or unavailable hedges to perfectly offset changes in future exchange rates. Additionally, we may be required under certain circumstances to collateralize our currency hedges for the benefit of the hedge counterparty, which could adversely affect our liquidity.
Consistent with our strategy of hedging foreign currency exposure on certain investments, we typically enter into a series of foreign currency forward contracts to fix the U.S. dollar amount of foreign currency denominated cash flows (interest income, rental income, principal payments and net sales proceeds after the repayment of debt) we expect to receive from our foreign currency denominated investments.
Investments in Real Estate Debt
As of June 30, 2023, we held $1.6 billion of investments in real estate debt. Certain of our investments in real estate debt are floating rate and indexed to various benchmark rates and as such, are exposed to interest rate risk. Our net income will increase or decrease depending on interest rate movements. While we cannot predict factors that may or may not affect interest rates, for the three and six months ended June 30, 2023, a 10 basis point increase or decrease in the various benchmark rates would have resulted in an increase or decrease to income from investments in real estate debt of $0.4 million and $0.8 million, respectively.
We may also be exposed to market risk with respect to our investments in real estate debt due to changes in the fair value of our investments. We seek to manage our exposure to market risk with respect to our investments in real estate debt by making investments in securities backed by different types of collateral and varying credit ratings. The fair value of our investments may fluctuate, thus the amount we will realize upon any sale of our investments is unknown. As of June 30, 2023, the fair value at which we may sell our investments in real estate debt is not known, but a 10% change in the fair value of our investments in real estate debt may result in an unrealized gain or loss of $162.2 million.
48
LIBOR Transition Risk
In July 2017, the United Kingdom’s Financial Conduct Authority (the “FCA”) (the authority that regulates LIBOR) announced it intends to stop compelling banks to submit rates for the calculation of LIBOR after 2021. The FCA subsequently announced on March 5, 2021 that the publication of LIBOR will cease for the one-week and two-month USD LIBOR settings immediately after December 31, 2021, and the remaining USD LIBOR settings immediately after June 30, 2023. On April 3, 2023, the FCA announced that it will compel the ICE Benchmark Administration to publish an unrepresentative synthetic USD LIBOR through September 30, 2024 for use in legacy contracts. There is currently no certainty regarding the future utilization of LIBOR or of any particular replacement rate (although the U.S. Federal Reserve, in conjunction with the Alternative Reference Rates Committee, has formally recommended SOFR as its preferred alternative rate for LIBOR). As indicated in the “Interest Rate Risk” section above, a substantial portion of our loans, investment securities, borrowings and interest rate derivatives are indexed to LIBOR or similar reference rates. Market participants anticipate that financial instruments tied to LIBOR will require transition to an alternative reference rate if LIBOR is no longer available. Our LIBOR-based loan agreements and borrowing arrangements generally specify alternative reference rates such as the prime rate and federal funds rate, respectively. The potential effect of the discontinuation of LIBOR on our interest income and expense cannot yet be determined and any changes to benchmark interest rates could increase our financing costs and/or result in mismatches between the interest rates of our investments and the corresponding financings. Our foreign denominated loan agreements and borrowing arrangements generally specify the SONIA or BBSY instead of U.S. dollar denominated LIBOR.
As of June 30, 2023, daily compounded SONIA or the BBSY is utilized as the floating benchmark rate on our secured financings on investments in real estate debt, while SOFR is utilized as the floating benchmark rate on a majority of our floating rate mortgage notes, our revolving credit facility, and our unsecured line of credit.
At this time, it is not possible to predict how markets will respond to SOFR, BBSY, SONIA, or other alternative reference rates as the transition away from USD LIBOR proceeds. The resulting changes to benchmark interest rates could increase our financing costs and/or result in mismatches between the interest rates of our investments and the corresponding financings.
49
ITEM 4. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
An evaluation of the effectiveness of the design and operation of our “disclosure controls and procedures” (as defined in Rule 13a-15(e) under the Exchange Act), as of the end of the period covered by this Quarterly Report on Form 10-Q was made under the supervision and with the participation of our management, including our Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”). Based upon this evaluation, our CEO and CFO have concluded that our disclosure controls and procedures (a) are effective to ensure that information required to be disclosed by us in reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified by the SEC rules and forms and (b) include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in reports filed or submitted under the Exchange Act is accumulated and communicated to our management, including our CEO and CFO, as appropriate to allow timely decisions regarding required disclosure.
Changes in Internal Controls over Financial Reporting
There have been no changes in our “internal control over financial reporting” (as defined in Rule 13a-15(f) of the Exchange Act) that occurred during the period covered by this Quarterly Report on Form 10-Q that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
50
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
From time to time, we may be involved in various claims and legal actions arising in the ordinary course of business. As of June 30, 2023, we were not involved in any material legal proceedings.
ITEM 1A. RISK FACTORS
Except as disclosed in Part II. Item 1A. Risk Factors in our Quarterly Report on Form 10-Q for the quarter ended June 30, 2023 and except as set forth below, there have been no material changes to the risk factors previously disclosed under Item 1A. of our Annual Report on Form 10-K for the year ended December 31, 2022.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
Unregistered Sales of Equity Securities
Except as described below, during the three and six months ended June 30, 2023, we did not sell any equity securities that were not registered under the Securities Act. As described in Note 12 – “Related Party Transactions” to our condensed consolidated financial statements in this Quarterly Report on Form 10-Q, the Advisor is entitled to a management fee payable monthly in cash, shares of common stock, or units of the Operating Partnership, in each case at the Advisor’s election. For the three months ended June 30, 2023, the Advisor elected to receive its management fees in Class I shares and we issued an aggregate of 1,052,942 unregistered Class I shares to the Advisor in satisfaction of the management fee for April 2023 and May 2023. Additionally, we issued 513,733 unregistered Class I shares to the Advisor in July 2023 in satisfaction of the June 2023 management fee. The shares were issued at the applicable NAV per share at the end of each month for which the fee was earned. Each issuance to the Advisor was made pursuant to Section 4(a)(2) of the Securities Act.
Share Repurchase Plan
We have adopted a share repurchase plan, whereby on a monthly basis, stockholders may request that we repurchase all or any portion of their shares. We may choose to repurchase all, some or none of the shares that have been requested to be repurchased at the end of any particular month, in our discretion, subject to any limitations in the share repurchase plan.
The total amount of aggregate repurchases of Class T, Class S, Class D, and Class I shares (excluding any early repurchase deduction) is limited to 2% of the aggregate NAV per month (measured using the aggregate NAV as of the end of the immediately preceding month) and 5% of the aggregate NAV per calendar quarter (measured using the aggregate NAV as of the end of the immediately preceding quarter).
Shares are repurchased at a price equal to the transaction price on the applicable repurchase date, subject to any early repurchase deduction. Shares that have not been outstanding for at least one year are repurchased at 95% of the transaction price. Due to the illiquid nature of investments in real estate, we may not have sufficient liquid resources to fund repurchase requests and may elect not to repurchase some or all of the shares submitted for repurchase in a given period. Further, we may make exceptions to, modify or suspend the share repurchase plan. Our board of directors may also determine to terminate our share repurchase plan if required by applicable law or in connection with a transaction in which our stockholders receive liquidity for their shares of our common stock, such as a sale or merger of our company or listing of our shares on a national securities exchange.
If the transaction price for the applicable month is not made available by the tenth business day prior to the last business day of the month (or is changed after such date), then no repurchase requests will be accepted for such month and stockholders who wish to have their shares repurchased the following month must resubmit their repurchase requests.
51
During the three months ended June 30, 2023, we repurchased shares of our common stock in the following amounts:
|
|
|
|
|
|
|
|
Total Number of |
|
|
Maximum Number of |
|
||||
|
|
|
|
|
|
|
|
Shares Repurchased |
|
|
Shares Pending |
|
||||
|
|
Total Number |
|
|
Average |
|
|
as Part of Publicly |
|
|
Repurchases Pursuant to |
|
||||
|
|
of Shares |
|
|
Price Paid |
|
|
Announced Plans |
|
|
Publicly Announced |
|
||||
Month of: |
|
Repurchased (1) |
|
|
per Share |
|
|
or Programs |
|
|
Plans or Programs (2) |
|
||||
April 2023(2) |
|
|
6,006,244 |
|
|
$ |
26.14 |
|
|
|
6,006,244 |
|
|
|
— |
|
May 2023(2) |
|
|
10,995,282 |
|
|
|
25.58 |
|
|
|
10,995,282 |
|
|
|
— |
|
June 2023(2) |
|
|
10,108,772 |
|
|
|
25.38 |
|
|
|
10,108,772 |
|
|
|
— |
|
Total |
|
|
27,110,298 |
|
|
$ |
25.63 |
|
|
|
27,110,298 |
|
|
|
— |
|
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
ITEM 5. OTHER INFORMATION
None.
52
ITEM 6. EXHIBITS
Exhibit Number |
|
Description |
|
|
|
3.1 |
|
|
|
|
|
3.2 |
|
|
|
|
|
3.3 |
|
|
|
|
|
3.4 |
|
|
|
|
|
10.1 |
|
Independent Director Compensation Policy (filed as Exhibit 10.11 to the Company’s Annual Report on Form 10-K filed on March 17, 2023 and incorporated herein by reference) |
|
|
|
31.1* |
|
Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
|
|
|
31.2* |
|
Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
|
|
|
32.1** |
|
|
|
|
|
32.2** |
|
|
|
|
|
101 |
|
The following information from the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2023, formatted in iXBRL (inline eXtensible Business Reporting Language): (i) Condensed Consolidated Balance Sheets; (ii) Condensed Consolidated Statements of Operations and Comprehensive Loss (iii) Condensed Consolidated Statements of Changes in Equity; and (iv) Condensed Consolidated Statements of Cash Flows |
|
|
|
104 |
|
Cover Page Interactive Data File (embedded within the Inline XBRL document) |
* Filed herewith
** Furnished herewith
The agreements and other documents filed as exhibits to this report are not intended to provide factual information or other disclosure other than with respect to the terms of the agreements or other documents themselves, and you should not rely on them for that purpose. In particular, any representations and warranties made by us in these agreements or other documents were made solely within the specific context of the relevant agreement or document and may not describe the actual state of affairs as of the date they were made or at any other time.
53
SIGNATURES
Pursuant to the requirements of Section 13 or Section 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
STARWOOD REAL ESTATE INCOME TRUST, INC.
August 14, 2023 |
|
/s/ Sean Harris |
Date |
|
Sean Harris |
|
|
Chief Executive Officer and President (Principal Executive Officer) |
|
|
|
August 14, 2023 |
|
/s/ Chris Lowthert |
Date |
|
Chris Lowthert |
|
|
Chief Financial Officer and Treasurer (Principal Financial Officer and Principal Accounting Officer) |
54
