BREIT, private equity giant Blackstone's $68 billion real estate investment trust, has appointed Rob Harper as president while the incumbent AJ Agarwal takes a nine-month sabbatical.
The Blackstone REIT said in a filing on Tuesday that Agarwal will be on an educational sabbatical at Stanford University starting in mid-September and will remain an "observer of the board" throughout that time. He stepped down from his role as president on Tuesday.
Harper, who joined the private equity firm in 2002, is head of asset management.
“Blackstone has a deep bench of talent and we are fortunate to have Rob, who has been invaluable to BREIT and instrumental to its success since inception,” Frank Cohen, chief executive of BREIT, said in the filing. “We look forward to AJ’s return but we know he will enjoy his academic year at Stanford after 31 years at Blackstone.”
BREIT is a major real estate investor across the United States but has come under pressure in recent months as commercial property markets have been hit by negative sentiment around rising interest rates and fears of economic recession, as well as the future of the office market.
In a stockholder update late last month, BREIT said it had delivered strong performance for investors across market cycles at 1.8% in the second quarter of 2023, as well as a 12% net return on an annual basis since inception over six years ago, nearly triple the return of the publicly traded REITs.
But BREIT still sees requests for withdrawals from the trust exceed its limits, a situation that has continued since November when requests exceeded a preset 5% of the net asset value of the fund.
Last month it said that redemption requests had declined in June.
"In June 2023, BREIT received $3.8 billion in requests under the Repurchase Plan, which is 29% lower than the peak in January 2023 and the lowest month of repurchase requests this year," the firm said.
The private equity firm had paid out $8.1 billion to redeeming shareholders since 30 November, it said.
Since BREIT’s formation over six years ago, its share plan has allowed for repurchases up to 2% of net asset value in any month and 5% of NAV in a calendar quarter. The structure has been designed to prevent the need to sell assets to meet redemption requests and help preserve long-term shareholder value, according to the fund.
Nontraded REITS are not publicly traded on an open exchange but are still registered with the Securities and Exchange Council, and they have made it standard business practice to determine their own methods for how they allow investors to redeem shares.
In its latest stockholder update BREIT said 84% of the portfolio is concentrated in rental housing, industrial and data faciliities, and that 71% is in the Sun Belt markets of the United States. All of this means it is well-placed for strong performance, it argues. "Not all real estate is created equal" with higher interest rates and "changes in the way we live and work driving a significant bifurcation in performance across real estate sectors," it said.
"While there continue to be challenges in commodity office, where BREIT has virtually no exposure, there is still demand for the best real estate in the best markets, which we believe BREIT owns," it said. It reports BREIT’s portfolio has generated an estimated 7%-plus cash flow growth year to date, "more than double inflation" these days.
And it said as the largest owner of student housing in the United States, it is focused on an "all-weather sector where accelerating supply and demand fundamentals are driving outsized market rent growth" and its focus on last-mile logistics is leading to strong performance.
BREIT has updated Harper's role to president of Blackstone Real Estate Income Trust and head of real estate asset management Americas on its website.
Since joining Blackstone in 2002, the company said Harper has been involved in an analysis of Blackstone’s real estate equity and debt investments in all property types. He has previously worked for the firm in Los Angeles and London, where he served as head of Europe for the Blackstone Real Estate Debt Strategies business. He serves as a board member for the Global Heritage Fund and the McIntire School of Commerce Foundation Board at the University of Virginia. His prior board memberships include Invitation Homes, Park Hotels & Resorts and Extended Stay America.
Prior to joining Blackstone, he worked for Morgan Stanley’s real estate private equity group in Los Angeles and San Francisco.
Harper received a bachelor's degree from the McIntire School of Commerce at the University of Virginia.