BLACKSTONE REAL ESTATE ADVISORS EUROPE L.P.



Overview of the Firm

The Adviser, directly or indirectly through its subsidiaries, provides investment advisory services to its Clients, and Affiliates of the Adviser generally serve as General Partner of each Client. The Adviser’s Clients primarily make control-oriented “opportunistic” Investments in real estate and real estate related assets and companies. The Adviser also serves as an investment sub-advisor to certain Investment Vehicles, pursuant to sub-advisory agreements with the applicable Investment Vehicle’s investment adviser.

The ultimate parent of the Adviser is The Blackstone Group Inc., a publicly held corporation listed on the New York Stock Exchange that trades under the ticker symbol “BX”. Please see the structure chart below. Blackstone is a leading global alternative investment manager with Investment Vehicles focused on real estate, private equity, hedge fund solutions, credit, infrastructure, secondary funds of funds and multi-asset class strategies. Effective as of July 1, 2019, The Blackstone Group Inc. converted from a Delaware limited partnership named The Blackstone Group L.P. to a Delaware corporation. Please see Item 10 – Other Financial Industry Activities and Affiliations for more information. As of December 31, 2018, the Adviser had regulatory assets under management of approximately $8.6 billion on a discretionary basis. Please note that this figure is an unaudited estimate.

Description of Advisory Services
The Adviser serves as investment adviser to its Clients pursuant to the Advisory Agreements. The Adviser performs the following services, among others, for its Clients:

1. Identifies and analyzes investment opportunities; 2. Makes investment recommendations to the General Partner of each Client, as applicable; 3. Participates in the monitoring and evaluation of investments; and 4. Provides other related services in connection with the implementation of the investment program of each Client. The Adviser tailors its advisory services to the particular needs of each Client. However, the specific needs of the individual Investors in a Client (i.e., limited partner investors) are not the basis for recommendations by the Adviser. Investment advice is provided directly to the Client, not individually to the respective Investors in the Client.
Management Fees and Performance Fees

The Adviser charges each Client a Management Fee quarterly that is payable in arrears at a rate of up to 1.50% per annum (which varies by Client) pursuant to the terms of the applicable Advisory Agreement. During a Client’s investment period, Management Fees are charged based on capital commitments, and thereafter based on invested capital.

The Management Fee is prorated for any partial periods. In certain cases, the portion of the Management Fee allocable to an Investor in a Client is offset by specified additional fees received by the Adviser (as more fully described below) or will be waived or reduced for a certain period for certain Investors (including but not limited to Investors participating in early closings or Blackstone Employee Investors).

As set forth in Item 6 below, each of the General Partners receives performance-based compensation in respect of realized appreciation, subject to certain conditions, and, in addition, certain Clients distribute current income from Investments.

Management Fees and performance-based compensation are either called from Investors or withheld from distributions to Investors, as applicable.

Management Fees and/or performance-based compensation will not be paid by Blackstone Employee Investors in connection with their investments. Notwithstanding the foregoing, such Investors will either directly pay for their pro rata share of the other expenses incurred by the applicable Client (as described below), or the pro rata share of such expenses will be allocated to the General Partner or its Affiliates. For more information on the allocation of Client expenses, please see “Expenses” in Item 5 below.
Other Fees Payable to the Adviser and its Affiliates
The Adviser and its Affiliates also will from time to time receive (i) Acquisition Fees; (ii) fees relating to Investments for any management, construction, leasing, development and other property management services, as well as services related to mortgage servicing, group purchasing, healthcare, consulting/brokerage, capital markets (including with respect to syndications or placements of debt and/or equity securities or instruments issued by Portfolio Entities formed to invest therein), credit origination, loan servicing, property, title and/or other types of insurance, management consulting and other similar operational matters performed by the Adviser or its Affiliates on arm’s-length terms and at competitive market rates; (iii) fees for advisory services (including investment banking services) provided to entities (or with respect to assets) in which the Clients, directly or indirectly, have an interest, on arm’s length terms and at competitive market rates; and (iv) fees associated with capital invested by co-investors relating to Investments in which the Clients participate or otherwise, in connection with a JV Arrangements in which the Clients participate or otherwise with respect to assets or other interests retained by a seller or other commercial counterparty with respect to which the Adviser or its Affiliates performs services. Such fees will not result in an offset to the Management Fee, except as set forth in the Organizational Documents of the Clients. Furthermore, the Adviser and its Affiliates will, in certain circumstances, receive Additional Fees, which do offset the Management Fee.

In addition, Portfolio Entities and Blackstone-affiliated service providers will receive fees in respect of services provided to Clients, Other Blackstone Vehicles and Portfolio Entities of the foregoing. As a result, while Blackstone believes that any such Portfolio Entities or Blackstone- affiliated service providers, when engaged, provide (or Blackstone believes they will provide) services on a cost reimbursement basis at or below market rates or otherwise at rates that Blackstone believes are reasonable, there is an inherent conflict of interest that incentivizes Blackstone to engage its Portfolio Entities and Blackstone-affiliated service providers over third parties. Please see Item 10 – Other Financial Industry Activities and Affiliations below and, in particular, “Portfolio Entity Service Providers and Vendors”, “Third Party Service Providers, Vendors and Other Counterparties Generally” and “Blackstone Affiliate Service Providers” therein respectively for further information about such Portfolio Entities and Blackstone-affiliated service providers.

The Management Fee paid to the Adviser, pursuant to the Organizational Documents of Clients, with respect to Investors in the Clients is generally offset by some or all of such Investor’s share of the placement fees paid by such Investor, Additional Fees and Acquisition Fees that varies among the Clients. Such fees will be allocated between the relevant Client and any other Investment Vehicles sponsored by the Adviser and its Affiliates having an interest in such fees on a pro rata basis. The amount of such fees which are allocable to Other Blackstone Vehicles or accounts and co- investment vehicles generally do not offset the Management Fee allocable to Investors in the Clients, even if such Other Blackstone Vehicles or accounts and co-investment vehicles provide for lower or no management fees for the Investors or participants therein (such as the vehicles established in connection with Blackstone’s side-by-side co-investment rights, which generally do not provide for a management fee or performance-based compensation payable by participants therein), subject to certain limitations.

The Adviser or its Affiliates, from time to time, will also receive topping, break-up or other similar fees in connection with any unconsummated or terminated transaction as noted above. To the extent the Adviser or its Affiliates receive such fees, they are treated like Additional Fees. In the event break-up or topping fees are paid to the Adviser and its Affiliates in connection with a transaction that is not ultimately consummated, co-investment vehicles that invest alongside the Clients will generally not be allocated any share of such break-up or topping fees; similarly, such co-investment vehicles generally do not bear their share of broken deal expenses for unconsummated transactions and such costs and expenses will generally be borne by the Clients. In the event break-up fees, topping fees, or similar expenses are payable by a co-investment vehicle, the Clients will, in certain circumstances, advance such fees and expenses on behalf of the co-investment vehicle without charging interest until paid by the co-investment vehicle and the General Partners may, in their discretion, request contribution from such co-investment vehicle in an amount equal to the advance. Such other fees may give rise to conflicts of interest in connection with a Client’s Investment activities.

In addition, the Adviser and its Affiliates will, in certain circumstances, receive a fee from the Clients in respect of the provision of Administrative Services as well as the payment or reimbursement of any expenses, charges or related costs incurred by such Clients, the Adviser or its Affiliates in connection with such provision of Administrative Services to such Clients (or specifically allocated thereto); provided, however, that any such expenses, fees, charges or related costs in connection with such provision of Administrative Services will not be greater than what would be paid to an unaffiliated third party for substantially similar services. Such allocations require judgments as to methodology that Blackstone will make in good faith. Such methodologies can include (i) requiring personnel to periodically record or allocate their historical time spent with respect to the Clients or Blackstone approximating the proportion of certain personnel’s time spent with respect to the Clients, and in each case allocating their compensation and allocable overhead based on time spent, or charging their time spent at market rates, (ii) the assessment of an overall dollar amount (based on a fixed fee or percentage of assets under management) that Blackstone believes represents a fair recoupment of expenses and a market rate for such services or (iii) any other similar methodology determined by Blackstone to be appropriate under the circumstances. Any methodology (including the choice thereof) involves inherent conflicts and may result in incurrence of greater expenses by the Clients and their Portfolio Entities than would be the case if such services were provided by third parties. These expenses will be borne by the Clients and will not result in any offset to the Management Fee.

The Adviser and its personnel and related parties will receive intangible and other benefits, discounts and perquisites arising or resulting from their activities on behalf of the Clients, which will not offset or reduce Management Fees or otherwise be shared with the Clients or their Investors or Portfolio Entities. For example, airline travel or hotel stays will result in “miles” or “points” or credit in loyalty or status programs, and such benefits will, whether or not de minimis or difficult to value, inure exclusively to the benefit of the Adviser, its Affiliates or their personnel or related parties receiving it, even though the cost of the underlying service is borne by the Client or by its Portfolio Entities. Similarly, the Adviser, its Affiliates and their personnel and related parties, and third parties designated by the foregoing, also receive discounts on products and services provided by Portfolio Entities or customers or suppliers of such Portfolio Entities.

CoreTrust is an independent group purchasing organization used by large corporations and private equity firms to obtain volume discounts on products and services. In consideration of Blackstone’s work in facilitating Portfolio Entities’ participation in CoreTrust and in enhancing CoreTrust’s program, Blackstone receives a portion of the administrative fee CoreTrust collects from vendors as well as an annual consulting fee from CoreTrust. These fees do not offset Management Fees payable by investors.

In addition, the Adviser engages and retains on behalf of the Clients or their Portfolio Entities, Consultants who will, from time to time, receive payments from, or performance-based compensation, retainers and expense reimbursements with respect to, Portfolio Entities (as well as from Blackstone or the Clients), and such amounts will not offset the Management Fees payable by the Investors. Such payments, performance-based compensation, retainers and expense reimbursements, as applicable, will be paid at rates determined by Blackstone, the Adviser or the General Partner, in its sole discretion. The Clients will generally bear the costs and expenses related to the organization or maintenance of any entity used to directly or indirectly acquire, hold or dispose of any Investment or otherwise facilitate such Clients’ Investment activities (including, without limitation, travel, accommodation and related expenses related to such entity, and the salary and benefits of any personnel (including of the Adviser or its Affiliates) reasonably necessary or advisable for the maintenance and operation of such entity), expenses of liquidating Clients, capital raising and Investor related services and other similar costs and expenses of administering side letters entered into with Investors (including the process of distributing and implementing applicable elections pursuant to any “most-favored nation” clauses in side letters) and to the extent not reimbursed by a third-party, all third-party expenses incurred in connection with a proposed Investment that is not ultimately made or a proposed disposition that is not actually consummated (including legal, tax, accounting, travel and other expenses related to underwriting and pursuing an Investment, advisory and consulting fees and expenses, travel, accommodation and related expenses and printing expenses, and any liquidated damages, reverse termination fees or similar payments). Service providers (including Affiliates of the Adviser) will be retained for such purposes in accordance with the terms described in Item 10 – “Portfolio Entity Service Providers and Vendors” and “Third Party Service Providers, Vendors and Other Counterparties Generally.”

The Clients will, in certain circumstances, be required to make contingent funding commitments or guarantees to their Portfolio Entities or other vehicles or entities in or alongside which the Clients invest and to provide other credit support arrangements in connection therewith. Such credit support may take the form of a guarantee, a letter of credit or other forms of promise to provide funding. Such credit support will, in certain circumstances, result in fees, expenses and interest costs to the Clients, subject to certain limitations set forth in the organizational documents of the applicable Clients.

The precise amount of, and the manner and calculation of, the fees and compensation described above, including the Management Fee and performance-based compensation, are established by the Adviser through negotiations with Investors in each Client, and the Offering Materials, the Organizational Documents and the Advisory Agreement of each Client include further details on such fees, compensation and related matters.
Expenses
The following is a list of expenses that are typically borne by the Clients (and indirectly by the Investors in the Clients). This list is not intended to be exhaustive; prospective and existing Investors in the Clients are advised to review the applicable Client’s Offering Materials and Organizational Documents for a more extensive description of the expenses associated with an investment in such Client.  Legal fees (including costs for in-house legal advice and/or services charged or attributed or allocated by the Adviser and its Affiliates to the Clients or their Portfolio Entities on matters related to potential or actual Investments or transactions of the Clients and their Portfolio Entities, as applicable; provided, that any such expenses, fees, charges or related costs shall not be greater than what would be paid to an unaffiliated third party for substantially similar services)  Placement fees and due diligence of placement agents (See Item 14 below)  Regulatory filing fees of the Clients, including but not limited to compliance with AIFMD (including any costs associated with the AIFMD marketing passport), U.S. federal and state securities laws and other international laws  Expenses related to the Adviser’s compliance matters and reporting obligations to the extent they relate to the Clients’ activities (e.g., Form PF, CFTC filings, AIFMD)  Risk management  Data aggregation  Administrative fees (including in-house administration/accounting costs), expenses and charges, including overhead related thereto  Administrator fees and due diligence of such administrator or other service provider  Organizational expenses  Operating expenses  Consultant, operating partner and senior advisor expenses (See “Advisors, Consultants and Partners” in Item 10 below) and the expenses of investment bankers (See “Other Blackstone Business Activities” and “Multiple Blackstone Business Lines” in Item 10 below)  Technology expenses (including third-party as well as internally allocated charges)  Certain hardware expenses and software fees  Property, loan administration and servicing and other asset management fees  Audit and accounting fees  Fees and expenses associated with brokerage services (including prime broker account charge, brokerage commissions and distribution fees)  Fees and expenses associated with borrowing, guarantees and other financing, including interest charges  Fee and other expenses incurred in connection with derivative transactions  Expenses associated with the development, negotiation, acquisition, settling, holding, monitoring and disposition of Investments and transaction fees  Costs and expenses associated with vehicles through which the Clients or their Investors directly or indirectly participate in Investments  Fees, costs and expenses related to the organization or maintenance of any intermediate entity  Taxes, fees or governmental charges imposed on the Investment Vehicles and expenses related to the preparation and delivery of any entity-level taxes  Custodial, depositary, representative and paying agent and other third-party professional fees  Bank and bank wire fees  Fees and expenses related to hedging and currency conversion  Travel and other expenses in connection with the Clients’ organization, fundraising and Investment activities (including first class and/or business class airfare (and/or private charter, where appropriate), first class lodging, ground transportation, travel and premium meals (including, as applicable, closing dinners and mementos, cars and meals (outside normal business hours) and social and entertainment events with Portfolio Entity employees, customers, clients, investors, borrowers, brokers and service providers) and related costs and expenses incidental thereto)). Most staff out-of-pocket travel expenses in connection with the Clients’ transactions are treated as expenses of the Clients, subject to the terms of the Offering Materials, Organizational Documents and the Advisory Agreements.  Fees, costs and expenses related to the organization or maintenance of any intermediate entity used to acquire, hold or dispose of any one or more Investment(s) or otherwise facilitating a Client’s Investment activities, including without limitation any travel and accommodation expenses related to such entity and the salary and benefits of any personnel (including personnel of the Adviser or its Affiliates and Luxembourg entities formed in connection with the Clients’ activities)) reasonably necessary and/or advisable for the maintenance and operation of such entity, costs associated with the leasing of office space (including in Luxembourg), or other overhead expenses in connection therewith.  Fees, costs and expenses of feeder vehicles to the extent not paid by such vehicle or its partners, as applicable  Expenses related to the preparation and delivery of internal control reports  Marketing, advertising, printing, wholesaling and other capital raising expenses associated with Investor admission/subscription and Investor-related services and other similar costs  Research-related expenses, including news and quotation equipment and services  Expenses associated with market data and research (including fees for internal and/or third- party research-related services)  Expenses of Blackstone-internal and third-party printing and publishing (including time spent performing such printing and publishing services)  Preparing, printing and delivering all reports, documents and filings related to the Clients and their Investments  Expenses associated with the preparation of the Clients’ periodic reports (and related financial and other statements) and Investor notices and communications  Expenses of Investor meetings  Broken-deal expenses  Insurance expenses  Extraordinary expenses, including expenses of litigation or settlement involving the Clients or Portfolio Entities in which the Clients have Investments and the amount of any judgments or settlements paid in connection therewith  Expenses incurred in connection with complying with provisions in Investor side letter agreements related to the Clients, including “Most-Favored Nations” provisions  Valuation costs (including costs related to a third-party valuation advisor and/or third-party appraiser)  Expenses of the L.P. Advisory Committee or board of directors, including director fees, as applicable  Expenses of third-party advisory committees of the Clients as well as of other goods and services provided by third parties  Expenses incurred in connection with organizing and/or attending Investment-related conferences  Dissolution and liquidation expenses  Arbitration expenses  Expenses of loan servicers and other service providers  Expenses associated with redemptions and admissions/subscriptions Investors in a Client are typically allocated (or otherwise bear) their pro rata share of such fees and expenses, which will, in certain circumstances, be calculated based on capital commitments, invested capital, available capital, or other metrics as determined by the General Partner in its sole discretion. From time to time, the General Partner will be required to decide whether costs and expenses are to be borne by a Client, on the one hand, or the General Partner and the Adviser, on the other, and/or whether certain costs and expenses should be allocated between or among the Clients, on the one hand, and the Other Blackstone Vehicles on the other. Certain expenses may be suitable for only a particular Client, its parallel fund or participating Other Blackstone Vehicles and borne only by such Client, or, as is more often the case, expenses may be allocated pro rata among the Client, all of its parallel funds and participating Other Blackstone Vehicles, even if the expenses relate only to particular vehicle(s) and/or Investor(s) therein, and such allocation can be expected to be calculated based on capital commitments, invested capital, available capital, or other metrics as determined by the General Partner in its sole discretion. The General Partner will make such judgments on a fair and reasonable basis, and in its sole discretion, notwithstanding its interest in the outcome, and may make corrective allocations should it determine that such corrections are necessary or advisable. There can be no assurance that a different manner of allocation would not result in a Client bearing less (or more) expenses.

Certain personnel of Blackstone and its Affiliates, including Consultants (as defined herein), will, in certain circumstances, be seconded to one or more Portfolio Entities, vendors, service providers and vendors or Investors of the Clients and Other Blackstone Vehicles to provide services, including the sourcing of Investments for the Clients or other parties. The salaries, benefits, overhead and other similar expenses for such personnel during the secondment could be borne by Blackstone and its Affiliates or the organization for which the personnel are working or both. In addition, personnel of Portfolio Entities, vendors, service providers (including law firms and accounting firms) and Investors of the Clients and Other Blackstone Vehicles will, in certain circumstances, be seconded, or serve internships at, Blackstone and Portfolio Entities of the Clients. (See “Secondment and Internships” in Item 10 below) While often the Clients, Other Blackstone Vehicles and their Portfolio Entities are the beneficiaries of these types of arrangements, Blackstone is from time to time a beneficiary of these arrangements as well, including in circumstances where the vendor or service provider also provides services to the Clients in the ordinary course. From time to time, the Portfolio Entity and/or the Client may bear the entire cost of such secondments or internships although Blackstone can be expected to in part benefit from them. Blackstone or the Portfolio Entity may or may not pay salary or cover expenses associated with such secondees and interns, and if a Portfolio Entity pays the cost it will be borne directly or indirectly by the Client. The Management Fee will not be offset or reduced as a result of these secondments or internships or any fees, expense reimbursements or other costs related thereto. The personnel described above can be expected to provide services in respect of multiple matters, including in respect of matters related to Blackstone, its Affiliates and related parties, and any costs of such personnel may be allocated accordingly. please register to get more info

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