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BREIT Names New President As Agarwal Goes On Sabbatical

Blackstone's New York office at 345 Park Ave.

The leadership of Blackstone’s $68B real estate fund is seeing a temporary shake-up as its president prepares to go on a nine-month sabbatical.

Blackstone Real Estate Income Trust named Rob Harper, who had served as head of asset management, its new president, taking over for current BREIT President A.J. Agarwal beginning on Sept. 15, according to a filing with the Securities and Exchange Commission.

During that time, Agarwal will be an observer on the board, according to the filing, first reported by Bloomberg. Agarwal is heading to Stanford University for a continuing education stint.

"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," BREIT Chairman and CEO Frank Cohen said in the filing. "BREIT and its stockholders will benefit from Rob’s 20 years of Blackstone real estate experience and deep BREIT expertise. We look forward to A.J.’s return but we know he will enjoy his academic year at Stanford after 31 years at Blackstone."

Harper has been with BREIT since 2002. He had headed its asset management since 2016 and prior to that, he was head of Europe for Blackstone’s real estate debt strategies business. 

While investments are trending up for nontraded REITs like BREIT, the funds are still struggling with a massive influx of withdrawal requests as the Federal Reserve continues to hike interest rates

BREIT has limited withdrawals for nine consecutive months as investors have sought to pull out far more than the nontraded REIT's limit on share repurchases, which is 2% of its net asset value in a given month and a maximum of 5% in a given quarter.

Through the first six months of the year, BREIT has fulfilled $6.8B of share repurchase requests. It redeemed 29%, 30% and 17% of withdrawal requests in April, May and June, respectively, reaching the quarterly limit of 5%, according to an SEC filing.

It has still brought in new investor capital. It secured a $4B investment from the University of California's investment arm in January. In the second quarter, investors put $800M into BREIT, compared to the $3.4B that was taken out.

Meanwhile, the REIT has been listing a number of assets for sale. Last month, it agreed to sell Simply Self Storage for $2.2B to Public Storage and it is looking to sell an 815K SF Atlanta office tower that it picked up last year, as it continues to veer from the struggling office asset class. More than half of BREIT's investments are in rental housing, but it has $3B in the office sector, according to its Q2 filing

In the filing, BREIT noted that it's considering disposing another office property, saying it has "recognized an impairment of $105.2 million related predominantly to one office property and to a lesser extent affordable housing properties" and that it is looking at disposing of said investments in the near term. 

BREIT is looking to add more concentration into the data center asset class. Last month, it announced plans to funnel $8B into QTS Data Centers. Data centers made up 5% of BREIT's real estate holdings as of June 30. Office made up 2%.