Correspondence 0001193125-25-075315 from Blackstone Private Real Estate Credit & Income Fund (CIK 0002049733)
Blackstone Private Real Estate Credit & Income Fund (CIK 0002049733)
Date: April 8, 2025 · CIK: 0002049733 · Accession: 0001193125-25-075315
AI Filing Summary & Sentiment
File numbers found in text: 000-56726
Letter
Via EDGAR Securities and Exchange Commission Division of Investment Management Washington, D.C. 20549 Re: Blackstone Private Real Estate Credit and Income Fund Registration Statement on Form 10 File No. 000-56726
Dear Ms. Rowland:
On behalf of Blackstone Private Real Estate Credit and Income Fund (formerly, Blackstone Private Real Estate Credit Fund, the “Fund”), we hereby file this letter with the Securities and Exchange Commission (the “Commission”) in response to comments received from the staff of the Division of Investment Management (the “Staff”) of the Commission received by the undersigned via email on March 17, 2025 (the “Comment Letter”) with respect to the above-referenced registration statement on Form 10 (the “Registration Statement”).
We are providing the following responses to the Comment Letter. For convenience of reference, the Staff’s comments have been reproduced herein. Unless otherwise defined below, capitalized terms shall have the meanings given to them in the Registration Statement. The responses and information described below are based upon information provided to us by the Fund. The Fund will file a pre-effective amendment to the Registration Statement reflecting the changes described herein at a later date.
General Comments
1. The Registration Statement states that the Fund intends to file an election to be regulated as a BDC under the Investment Company Act of 1940 (the “Investment Company Act”) as soon as reasonably practical following its filing of this Form 10. In correspondence, please advise as to when the Fund expects to file such election.
Response: The Fund expects to file an election to be regulated as a BDC under the Investment Company Act prior to commencing investment activities.
Securities and Exchange Commission
April 8, 2025
2. Please advise in correspondence if the Fund or Advisor expects to submit or rely upon any exemptive applications or no-action relief requests in connection with the Registration Statement or operations of the Fund, other than the Order, and application for a new co-investment exemptive order which would supersede the Order if granted, as described in the Registration Statement.
Response: The Fund hereby confirms that it does not currently expect to submit or rely on any exemptive applications or no-action relief requests in connection with the Registration Statement or operations of the Fund other than the existing Order and, if granted, the aforementioned new co-investment exemptive order.
3. Please confirm that the Fund does not intend to issue debt securities or preferred stock within a year from the effective date of the Registration Statement. If the Fund plans to issue preferred shares within a year from the effectiveness of the Registration Statement, please include additional disclosure of risks to holders of Common Shares in the event of a preferred shares offering.
Response: The Fund may issue debt or preferred stock within one year from the effective date of the Registration Statement. Accordingly, the Fund has added the following disclosure:
If we issue preferred shares or convertible debt securities, the NAV of our common shares may become more volatile.
We cannot assure you that the issuance of preferred shares or convertible debt securities, if any, would result in a higher yield or return to the holders of our common shares. The issuance of preferred shares or convertible debt securities would likely cause the NAV of our common shares to become more volatile. If the dividend rate on the preferred shares, or the interest rate on the convertible debt securities, were to approach the net rate of return on our investment portfolio, the benefit of such leverage to the holders of our common shares would be reduced. If the dividend rate on the preferred shares, or the interest rate on the convertible debt securities, were to exceed the net rate of return on our portfolio, the use of leverage would result in a lower rate of return to the holders of common shares than if we had not issued the preferred shares or convertible debt securities. Any decline in the NAV of our investment would be borne entirely by the holders of our common shares. Therefore, if the market value of our portfolio were to decline, the leverage would result in a greater decrease in NAV to the holders of our common shares than if we were not leveraged through the issuance of preferred shares or debt securities.
There is also a risk that, in the event of a sharp decline in the value of our net assets, we would be in danger of failing to maintain required asset coverage ratios, which may be required by the preferred shares or convertible debt, or our current investment income might not be sufficient to meet the dividend requirements on the preferred shares or the
Securities and Exchange Commission
April 8, 2025
interest payments on the debt securities. In order to counteract such an event, we might need to liquidate investments in order to fund the redemption of some or all of the preferred shares or convertible debt securities. In addition, we would pay (and the holders of our common shares would bear) all costs and expenses relating to the issuance and ongoing maintenance of the preferred shares, debt securities, convertible debt, or any combination of these securities. Holders of preferred shares or convertible debt securities may have different interests than holders of common shares and may at times have disproportionate influence over our affairs.
Holders of any preferred shares that we may issue will have the right to elect certain members of our Board of Trustees and have class voting rights on certain matters.
The 1940 Act requires that holders of preferred shares must be entitled as a class to elect two trustees at all times and to elect a majority of the trustees if dividends on such preferred shares are in arrears by two years or more, until such arrearage is eliminated. In addition, certain matters under the 1940 Act require the separate vote of the holders of any issued and outstanding preferred shares, including changes in fundamental investment restrictions and conversion to open-end status and, accordingly, preferred shareholders could veto any such changes. Restrictions imposed on the declarations and payment of dividends or other distributions to the holders of our common shares and preferred shares, both by the 1940 Act and by requirements imposed by rating agencies, might impair our ability to maintain our tax treatment as a RIC for U.S. federal income tax purposes.
4. We note that the Registration Statement is missing information and exhibits and contains numerous sections that indicate that they will be added, completed or updated by amendment. Please expect comments on such portions when you add, complete or update them in any pre-effective amendment, on disclosures made in response to this letter, on information supplied supplementally, or on exhibits filed in any pre-effective amendment. Please plan accordingly.
Response: The Fund respectfully acknowledges the Staff’s comment.
Registration Statement
Summary Risk Factors
5. Please bold bullets six and seven on page 3 and bullets one and five on page 4 to better highlight these risks. Additionally, please add risk disclosure to bullet seven on page 3 to clarify that the Fund does not intend to list its Common Shares on any securities exchange. Finally, please add risk disclosure to this section addressing the following risks:
a. The Fund intends to invest primarily in private instruments for which very little public information exists; and
b. The Fund expects to invest in securities rated below investment grade, which are often referred to as “junk.”
Securities and Exchange Commission
April 8, 2025
Please also cross-reference the discussion regarding the risks associated with a leveraged capital structure.
Response: The Fund has deleted the sixth bullet on page 3, as it is duplicative of the seventh bullet. With respect to the remainder of the Staff’s comment, the Fund has revised its disclosure accordingly.
Item 1. Business
6. With respect to the Fund’s real estate-related debt origination, please disclose:
a. Any limits on loan origination by the Fund, including a description of any limits imposed by the Fund’s investment restrictions;
Response: The Fund has revised this disclosure to indicate that, subject to the restrictions of applicable law, there are no limits on the Fund’s ability to originate loans.
b. The loan selection process, including maturity and duration of individual loans, borrower and loan types and geographic location of the borrower;
Response: The Fund respectfully submits that the existing disclosure, which is included below, addresses the loan selection process, geographic location and loan type. The Fund has revised its disclosure with respect to maturity and duration of individual loans and borrower type as follows:
BREC will aim to originate, acquire, finance and manage a portfolio consisting of a broad range of real estate-related investments in or relating to private and public debt, equity or other interests on a global basis. BREC will generally focus on sourcing investments and primarily invest (70% or greater) in the U.S., given that investments outside the U.S. generally will not be BDC Qualifying Assets. BREC expects its borrowers to primarily be special purpose vehicles formed to invest in real estate.
BREC does not have limits on maturity and duration of individual loans and has the flexibility to invest across different strategies and geographies where we find the most compelling value and opportunities – Global Lending, Real Estate Securities and Structured Solutions. We will maintain a focus on lending on high-quality assets across these strategies:
c. Whether the Fund will be involved in servicing the loans and, if so, as description of its servicing obligations;
Response: The Fund does not expect to be involved in the servicing of loans; however, if this changes in the future the Fund will update its disclosure accordingly.
d. Whether the Fund or any of its affiliates will or has set up its own online lending platform to originate these loans; and
Securities and Exchange Commission
April 8, 2025
Response: Neither the Fund nor any of its affiliates has or expects to set up its own online lending platform to originate loans; however, if this changes in the future the Fund will update its disclosure accordingly.
e. Whether creditors of a securitization vehicle will have recourse against other Fund assets in the event of default or otherwise.
Response: The Fund confirms that it does not expect that creditors of a securitization vehicle will have recourse against other Fund assets in the event of default or otherwise.
Please also explain in correspondence whether any party other than the Fund will be paid any fees – including structuring or similar fees – in connection with the creation or operation of a securitization vehicle.
Response: The Fund confirms that there are no current plans for any party other than customary unaffiliated underwriters, placement agents and service providers to be paid any fees – including structuring or similar fees – in connection with the creation or operation of a securitization vehicle originated or issued by the Fund.
7. Please clarify whether the Fund will invest directly in real property (as suggested in the principal risk factors). If yes, please disclose how such investments will be structured (in addition to responses to comment 23, below) and provide corresponding strategy disclosure. Please also disclose what percentage of the Fund’s portfolio will consist of real property.
Response: The Fund confirms that, while it would seek to hold any real property it owns in a taxable subsidiary, it does not currently intend to invest directly in real property in the ordinary course, except that it may invest in real property subject to leases, such as net leases, if such investments are expected to (i) make regular distributions, dividends, interest, rent or other similar types of payments and (ii) generate returns primarily from income. The risk factor noted is intended to generally cover situations in which a foreclosure occurs, and the Fund becomes the owner of the underlying property of the applicable special purpose vehicle. The Fund has expanded the disclosure to reflect that the Fund may invest in real property subject to net leases by adding the following disclosure:
Our investments in net leased commercial properties expose us to risks.
We may invest in commercial properties subject to net leases, which exposes us to risks related to net leased commercial properties.
Typically, net leases require the tenant to pay substantially all of the operating costs associated with the properties, such as insurance, real estate taxes and costs of maintaining the property, and make the tenant responsible for maintaining, operating and managing the property. Therefore, our net lease investments are materially dependent on the financial stability and ability to achieve business success of our tenants, which in turn is materially dependent on a wide range of factor beyond their control and ours, such as changes in consumer preferences, local economic conditions and interest rate levels, among other macroeconomic factors. In addition, net leases typically have longer lease terms and there can be no assurance contractual rental increases will result in market rates for the full term of the lease.
Securities and Exchange Commission
April 8, 2025
Any termination of or default on a lease by any tenant would result in lost revenue from the property and could require us to use another source of capital to meet debt payments and other costs related to the property. If a tenant becomes bankrupt, our rights as a property owner will be restricted, including by limiting the amount of unpaid rent we can collect, and the tenant will have additional rights, including authority to reject and terminate its lease. If a lease is terminated for any reason, in addition to losing revenue, we may also incur substantial costs, including capital expenditures and maintenance costs required for the property to be suitable for and attractive to desirable tenants. There can be no assurance we will be able to lease any vacant property on a timely basis, favorable terms or at all.
8. With respect to the Fund’s 80% policy, please explain in the disclosure what is meant by “other debt-like or credit-oriented investments with a debt-like return and risk profile,” and provide the types of primary investments that would fulfill this description, including disclosure that makes clear the nexus of such investments to the Fund’s 80% policy to invest in private real estate credit investments. In this regard, we note the Investment Strategy disclosure indicates the Fund invest in public debt and equity, in addition to private credit. Please also confirm that the Company will not include unfunded commitments or equity investments in its 80% policy. Also include disclosure of whether the policy will be fundamental or non-fundamental, and if the latter, also disclose that investors will be given 60 days’ advance notice of any change in such policy.
Response: The Fund’s name has been revised to Blackstone Private Real Estate Credit and Income Fund, and references to “debt-like” and “credit-oriented investments with a debt-like return and risk profile” have been removed from the Fund’s 80% policy. The Fund’s 80% policy has been revised as fo
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CORRESP 1 filename1.htm CORRESP Simpson Thacher & Bartlett LLP 425 LEXINGTON AVENUE NEW YORK, NY 10017 TELEPHONE: +1-212-455-2000 FACSIMILE: +1-212-455-2502 Direct Dial Number (212) 455-2516 E -mail Address BWells@stblaw.com April 8, 2025 Via EDGAR Emily Rowland Securities and Exchange Commission Division of Investment Management 100 F Street, N.E. Washington, D.C. 20549 Re: Blackstone Private Real Estate Credit and Income Fund Registration Statement on Form 10 File No. 000-56726 Dear Ms. Rowland: On behalf of Blackstone Private Real Estate Credit and Income Fund (formerly, Blackstone Private Real Estate Credit Fund, the “Fund”), we hereby file this letter with the Securities and Exchange Commission (the “Commission”) in response to comments received from the staff of the Division of Investment Management (the “Staff”) of the Commission received by the undersigned via email on March 17, 2025 (the “Comment Letter”) with respect to the above-referenced registration statement on Form 10 (the “Registration Statement”). We are providing the following responses to the Comment Letter. For convenience of reference, the Staff’s comments have been reproduced herein. Unless otherwise defined below, capitalized terms shall have the meanings given to them in the Registration Statement. The responses and information described below are based upon information provided to us by the Fund. The Fund will file a pre-effective amendment to the Registration Statement reflecting the changes described herein at a later date. General Comments 1. The Registration Statement states that the Fund intends to file an election to be regulated as a BDC under the Investment Company Act of 1940 (the “Investment Company Act”) as soon as reasonably practical following its filing of this Form 10. In correspondence, please advise as to when the Fund expects to file such election. Response: The Fund expects to file an election to be regulated as a BDC under the Investment Company Act prior to commencing investment activities. Securities and Exchange Commission April 8, 2025 2. Please advise in correspondence if the Fund or Advisor expects to submit or rely upon any exemptive applications or no-action relief requests in connection with the Registration Statement or operations of the Fund, other than the Order, and application for a new co-investment exemptive order which would supersede the Order if granted, as described in the Registration Statement. Response: The Fund hereby confirms that it does not currently expect to submit or rely on any exemptive applications or no-action relief requests in connection with the Registration Statement or operations of the Fund other than the existing Order and, if granted, the aforementioned new co-investment exemptive order. 3. Please confirm that the Fund does not intend to issue debt securities or preferred stock within a year from the effective date of the Registration Statement. If the Fund plans to issue preferred shares within a year from the effectiveness of the Registration Statement, please include additional disclosure of risks to holders of Common Shares in the event of a preferred shares offering. Response: The Fund may issue debt or preferred stock within one year from the effective date of the Registration Statement. Accordingly, the Fund has added the following disclosure: If we issue preferred shares or convertible debt securities, the NAV of our common shares may become more volatile. We cannot assure you that the issuance of preferred shares or convertible debt securities, if any, would result in a higher yield or return to the holders of our common shares. The issuance of preferred shares or convertible debt securities would likely cause the NAV of our common shares to become more volatile. If the dividend rate on the preferred shares, or the interest rate on the convertible debt securities, were to approach the net rate of return on our investment portfolio, the benefit of such leverage to the holders of our common shares would be reduced. If the dividend rate on the preferred shares, or the interest rate on the convertible debt securities, were to exceed the net rate of return on our portfolio, the use of leverage would result in a lower rate of return to the holders of common shares than if we had not issued the preferred shares or convertible debt securities. Any decline in the NAV of our investment would be borne entirely by the holders of our common shares. Therefore, if the market value of our portfolio were to decline, the leverage would result in a greater decrease in NAV to the holders of our common shares than if we were not leveraged through the issuance of preferred shares or debt securities. There is also a risk that, in the event of a sharp decline in the value of our net assets, we would be in danger of failing to maintain required asset coverage ratios, which may be required by the preferred shares or convertible debt, or our current investment income might not be sufficient to meet the dividend requirements on the preferred shares or the 2 Securities and Exchange Commission April 8, 2025 interest payments on the debt securities. In order to counteract such an event, we might need to liquidate investments in order to fund the redemption of some or all of the preferred shares or convertible debt securities. In addition, we would pay (and the holders of our common shares would bear) all costs and expenses relating to the issuance and ongoing maintenance of the preferred shares, debt securities, convertible debt, or any combination of these securities. Holders of preferred shares or convertible debt securities may have different interests than holders of common shares and may at times have disproportionate influence over our affairs. Holders of any preferred shares that we may issue will have the right to elect certain members of our Board of Trustees and have class voting rights on certain matters. The 1940 Act requires that holders of preferred shares must be entitled as a class to elect two trustees at all times and to elect a majority of the trustees if dividends on such preferred shares are in arrears by two years or more, until such arrearage is eliminated. In addition, certain matters under the 1940 Act require the separate vote of the holders of any issued and outstanding preferred shares, including changes in fundamental investment restrictions and conversion to open-end status and, accordingly, preferred shareholders could veto any such changes. Restrictions imposed on the declarations and payment of dividends or other distributions to the holders of our common shares and preferred shares, both by the 1940 Act and by requirements imposed by rating agencies, might impair our ability to maintain our tax treatment as a RIC for U.S. federal income tax purposes. 4. We note that the Registration Statement is missing information and exhibits and contains numerous sections that indicate that they will be added, completed or updated by amendment. Please expect comments on such portions when you add, complete or update them in any pre-effective amendment, on disclosures made in response to this letter, on information supplied supplementally, or on exhibits filed in any pre-effective amendment. Please plan accordingly. Response: The Fund respectfully acknowledges the Staff’s comment. Registration Statement Summary Risk Factors 5. Please bold bullets six and seven on page 3 and bullets one and five on page 4 to better highlight these risks. Additionally, please add risk disclosure to bullet seven on page 3 to clarify that the Fund does not intend to list its Common Shares on any securities exchange. Finally, please add risk disclosure to this section addressing the following risks: a. The Fund intends to invest primarily in private instruments for which very little public information exists; and b. The Fund expects to invest in securities rated below investment grade, which are often referred to as “junk.” 3 Securities and Exchange Commission April 8, 2025 Please also cross-reference the discussion regarding the risks associated with a leveraged capital structure. Response: The Fund has deleted the sixth bullet on page 3, as it is duplicative of the seventh bullet. With respect to the remainder of the Staff’s comment, the Fund has revised its disclosure accordingly. Item 1. Business 6. With respect to the Fund’s real estate-related debt origination, please disclose: a. Any limits on loan origination by the Fund, including a description of any limits imposed by the Fund’s investment restrictions; Response: The Fund has revised this disclosure to indicate that, subject to the restrictions of applicable law, there are no limits on the Fund’s ability to originate loans. b. The loan selection process, including maturity and duration of individual loans, borrower and loan types and geographic location of the borrower; Response: The Fund respectfully submits that the existing disclosure, which is included below, addresses the loan selection process, geographic location and loan type. The Fund has revised its disclosure with respect to maturity and duration of individual loans and borrower type as follows: BREC will aim to originate, acquire, finance and manage a portfolio consisting of a broad range of real estate-related investments in or relating to private and public debt, equity or other interests on a global basis. BREC will generally focus on sourcing investments and primarily invest (70% or greater) in the U.S., given that investments outside the U.S. generally will not be BDC Qualifying Assets. BREC expects its borrowers to primarily be special purpose vehicles formed to invest in real estate. BREC does not have limits on maturity and duration of individual loans and has the flexibility to invest across different strategies and geographies where we find the most compelling value and opportunities – Global Lending, Real Estate Securities and Structured Solutions. We will maintain a focus on lending on high-quality assets across these strategies: c. Whether the Fund will be involved in servicing the loans and, if so, as description of its servicing obligations; Response: The Fund does not expect to be involved in the servicing of loans; however, if this changes in the future the Fund will update its disclosure accordingly. d. Whether the Fund or any of its affiliates will or has set up its own online lending platform to originate these loans; and 4 Securities and Exchange Commission April 8, 2025 Response: Neither the Fund nor any of its affiliates has or expects to set up its own online lending platform to originate loans; however, if this changes in the future the Fund will update its disclosure accordingly. e. Whether creditors of a securitization vehicle will have recourse against other Fund assets in the event of default or otherwise. Response: The Fund confirms that it does not expect that creditors of a securitization vehicle will have recourse against other Fund assets in the event of default or otherwise. Please also explain in correspondence whether any party other than the Fund will be paid any fees – including structuring or similar fees – in connection with the creation or operation of a securitization vehicle. Response: The Fund confirms that there are no current plans for any party other than customary unaffiliated underwriters, placement agents and service providers to be paid any fees – including structuring or similar fees – in connection with the creation or operation of a securitization vehicle originated or issued by the Fund. 7. Please clarify whether the Fund will invest directly in real property (as suggested in the principal risk factors). If yes, please disclose how such investments will be structured (in addition to responses to comment 23, below) and provide corresponding strategy disclosure. Please also disclose what percentage of the Fund’s portfolio will consist of real property. Response: The Fund confirms that, while it would seek to hold any real property it owns in a taxable subsidiary, it does not currently intend to invest directly in real property in the ordinary course, except that it may invest in real property subject to leases, such as net leases, if such investments are expected to (i) make regular distributions, dividends, interest, rent or other similar types of payments and (ii) generate returns primarily from income. The risk factor noted is intended to generally cover situations in which a foreclosure occurs, and the Fund becomes the owner of the underlying property of the applicable special purpose vehicle. The Fund has expanded the disclosure to reflect that the Fund may invest in real property subject to net leases by adding the following disclosure: Our investments in net leased commercial properties expose us to risks. We may invest in commercial properties subject to net leases, which exposes us to risks related to net leased commercial properties. Typically, net leases require the tenant to pay substantially all of the operating costs associated with the properties, such as insurance, real estate taxes and costs of maintaining the property, and make the tenant responsible for maintaining, operating and managing the property. Therefore, our net lease investments are materially dependent on the financial stability and ability to achieve business success of our tenants, which in turn is materially dependent on a wide range of factor beyond their control and ours, such as changes in consumer preferences, local economic conditions and interest rate levels, among other macroeconomic factors. In addition, net leases typically have longer lease terms and there can be no assurance contractual rental increases will result in market rates for the full term of the lease. 5 Securities and Exchange Commission April 8, 2025 Any termination of or default on a lease by any tenant would result in lost revenue from the property and could require us to use another source of capital to meet debt payments and other costs related to the property. If a tenant becomes bankrupt, our rights as a property owner will be restricted, including by limiting the amount of unpaid rent we can collect, and the tenant will have additional rights, including authority to reject and terminate its lease. If a lease is terminated for any reason, in addition to losing revenue, we may also incur substantial costs, including capital expenditures and maintenance costs required for the property to be suitable for and attractive to desirable tenants. There can be no assurance we will be able to lease any vacant property on a timely basis, favorable terms or at all. 8. With respect to the Fund’s 80% policy, please explain in the disclosure what is meant by “other debt-like or credit-oriented investments with a debt-like return and risk profile,” and provide the types of primary investments that would fulfill this description, including disclosure that makes clear the nexus of such investments to the Fund’s 80% policy to invest in private real estate credit investments. In this regard, we note the Investment Strategy disclosure indicates the Fund invest in public debt and equity, in addition to private credit. Please also confirm that the Company will not include unfunded commitments or equity investments in its 80% policy. Also include disclosure of whether the policy will be fundamental or non-fundamental, and if the latter, also disclose that investors will be given 60 days’ advance notice of any change in such policy. Response: The Fund’s name has been revised to Blackstone Private Real Estate Credit and Income Fund, and references to “debt-like” and “credit-oriented investments with a debt-like return and risk profile” have been removed from the Fund’s 80% policy. The Fund’s 80% policy has been revised as fo