BlackRock, the world’s biggest asset manager, is to adapt its investing process for its higher risk and return real estate strategies to a centralized approach, bringing an end to the autonomy of long-standing, regional investment committees. The move is expected to be formalized by the end of the year.
The manager’s real asset’s business, which has approximately $80 billion of real assets under management, is understood to have today circulated a memo, seen by PERE, detailing the promotion of Thomas Mueller-Borja, the co-portfolio manager of the firm’s European Value Add Fund series, to the additional title of global chief investment officer of Global Value Add Real Estate. Reporting to Anne Valentine Andrews, BlackRock’s global head of real assets, Mueller-Borja will oversee a weekly global investment committee responsible for greenlighting all transactions for the manager’s US, European and Asian value-add fund series.
In the memo, she said: “We are continuing to work on numerous initiatives to bring our platform closer together, drive increased knowledge exchange, collaboration and scaling of best practices.
“Thomas has played a key role in the development and vision of our Value Add Real Estate growth strategy and through his existing role on the various investment committees across North America, Europe and Asia-Pacific has allowed him to gain insight and provide investment excellence across regions. In his new role, Thomas will, be responsible for driving consistent decision-making, investment processes, underwriting and governance across our Global Value Add Real Estate franchises as well as be accountable for investment management and performance across funds.”
Since their inception, the series have attracted an aggregate of more than $4 billion across five funds from institutional investors to date.
The global committee will include 10 members, including BlackRock’s regional real estate heads Paul Tebbit, Ben Young and John Saunders. Notably, it also includes senior sustainability and research heads, each of whom will have voting rights on investments. That is one key change between BlackRock’s global committee and the manager’s previous regional investment committees.
Another is that all committee members will be required to co-invest in every future value-add fund raised, regardless of region. Historically, there was some cross-regional co-investing among senior investment executives, but it was not consistent.
“The idea is to be co-invested in each regional fund going forward,” Mueller-Borja confirmed. “There’s clear interest from investors in that alignment.”
The global committee structure only impacts new funds, with existing investment committees remaining in place for existing funds.
On the notion of centralizing functions, Mueller-Borja said: “I’d say we’re globalizing. It’s a nuance but an important distinction. Members remain embedded in their regions. In this time of macro-volatility, it is important for us to find value locally. Structural trends can emerge in one region and then become relevant in other regions.”
He also emphasized the importance of sustainability and research leaders having votes on investments. “With every investment, there must be a net-zero pathway, a greenhouse gas reduction plan. We want to demonstrate perfect alignment between commercial outcomes and sustainability.”
Within BlackRock’s real assets under management, $39 billion is real estate, $28 billion of which is equity investments, the remainder credit and listed holdings.
The creation of a global committee follows an adjustment to its key people roster in the summer. Read about that here.