Blackstone Real Estate Trust, a $68 billion real estate trust managed by Blackstone Inc., has announced that its president, A.J. Agarwal, will be taking a sabbatical for nine months, starting from September 15th. During this period, Rob Harper, currently the head of asset management at Blackstone, will assume the role of president. Agarwal will remain involved as an observer of the board.
The sabbatical comes at a time when Blackstone Real Estate Income Trust (BREIT) has been facing challenges due to investors seeking to withdraw funds amid rising interest rates and a global flight for cash. To manage the situation, BREIT has limited withdrawals for the past nine months, although the redemption queue has been easing recently.
Agarwal will be using this time to pursue a continuing education program at Stanford University. He stepped down as president of BREIT on August 14th after serving the company for 31 years.
Blackstone, which has built BREIT into a major player in the real estate industry, expressed confidence in Harper as he assumes the role of president during Agarwal’s sabbatical. Frank Cohen, CEO of BREIT, acknowledged Harper’s invaluable contributions to the company’s success and expressed excitement for Agarwal’s return after his academic year at Stanford.
BREIT has experienced varying returns over the years, with the major share class posting a net return of 2.6% in the first seven months of this year, compared to an 8.4% gain in 2022 and a 30% increase in 2021. The commercial real estate market has been impacted by rising borrowing costs and changing demand for properties such as offices. According to Green Street, a real estate analytics firm, prices have fallen by 12% in the past year through July.
To navigate these challenges, BREIT has shifted its focus to properties like student housing, industrial warehouses, and data centers, which have boosted returns. The trust has reduced exposure to commodity offices.
Blackstone has been in discussions for several years regarding leadership changes within its real estate business, which houses BREIT. Wesley LePatner took over the leadership of the Core+ property business in February, while Cohen continued as chairman and CEO of BREIT, as well as global chairman of Core+.
This move is part of Blackstone’s ongoing efforts to adapt and optimize its real estate operations amidst market fluctuations and changing investor demands. Despite the challenges faced by BREIT, Blackstone’s deep bench of talent is providing stability and resilience to the real estate trust.
