BlackRock, the world’s largest money manager with $4.5 trillion of assets under management, is merging its real estate and infrastructure businesses into a new real assets group, as part of the company’s third reorganization in four years.
The new group will be led by Jim Barry, who will remain BlackRock’s global head of infrastructure. The firm’s real estate team is led by global head Marcus Sperber and global chief investment officer Simon Treacy. In an internal memo seen by PERE, BlackRock chief executive Lawrence Fink and president Rob Kapito said that Sperber “will also play a key leadership role in the new group” and will report to Barry.
“As our infrastructure and real estate businesses have grown, our clients and consultants have been seeking to engage with us across a broader range of illiquid capabilities,” Mark McCombe, global head of BlackRock's institutional client business, and Matthew Botein, global co-head of BlackRock Alternative Investors, wrote in a separate internal memo. “Clients increasingly are viewing 'Real Assets' as a distinct and more integrated asset class, and we believe there is an opportunity for us to be at the forefront of both thinking and investing in this space.”
According to the memo, BlackRock's real assets platform currently includes more than 320 professionals across 22 offices globally and manages more than $29 billion of assets under management. In its 2014 annual report, BlackRock held $22 billion of assets under management in real estate, accounting for nearly all of its $22.8 billion real assets allocation. The company will announce its fourth-quarter and year-end 2015 earnings results on Friday.
Although real estate currently representing the bulk of the company's real assets platform, PERE understands that the company appointed Barry, who is based in Dublin, to lead the real assets group given his success in building out the infrastructure business over the past few years. Last June, BlackRock agreed to buy Infraestructura Institutional, a Mexican infrastructure investment firm with about $1 billion of invested and committed capital.
In a November report, BlackRock noted that “institutional investment in real assets has grown in the last three years.” Motivations for the increase in real asset allocations included macro environment considerations, increasing returns, replacing or enhancing current income, addressing long-duration liabilities, overall portfolio diversification, portfolio rebalancing and inflation protection.
According to the report, “real estate dominates the real asset allocations,” with 96 percent of survey respondents reporting some allocation to the asset class, compared with 66 percent for infrastructure and 29 percent for commodities.
BlackRock’s real estate platform invests across the risk/return spectrum in both the private and public markets. Its private real estate equity investment structures include commingled funds, separate accounts, joint ventures and co-investment vehicles.
BlackRock’s formation of a new real assets team is part of a major management reshuffling that has also included appointing new heads of its multi-asset and fixed-income groups. Bloomberg reported the company's reorganization yesterday.