Multinational investment firm BlackRock is making big moves in the asset management business.
BlackRock has entered an agreement to acquire ElmTree Funds, a real estate investment firm focusing on single-tenant, built-to-suit commercial properties with $7.3 billion in assets under management, according to a Monday announcement.
A spokesperson for BlackRock declined to provide the acquisition price for the ElmTree deal, but the announcement said payment for the purchase will be primarily in stock, with the potential of “additional consideration” depending on ElmTree’s performance over the next five years. The transaction is expected to close during the third quarter of this year.
ElmTree has investments in 122 properties across 31 U.S. states. Once the deal closes, the firm will be integrated into BlackRock’s Private Financing Solutions (PFS) platform, the announcement said.
BlackRock created PFS through its $12 billion purchase of credit firm HPS Investment Partners last year, according to Bloomberg, which first reported the news. The platform has “broad capabilities across senior and junior credit solutions, asset-based finance, real estate, private placements and CLOs,” according to a December release.
“Structural shifts in the real estate sector are creating new opportunities for private capital,” Scott Kapnick, chairman of PFS’s executive office and CEO of HPS, said in a statement.
“The combination of a premier triple-net investor with our leading private financing solutions platform will position us to capture these opportunities for our clients,” Kapnick added. “ElmTree has the team, expertise and relationships that will help drive growth and deliver differentiated investment solutions.”
Founded in 2011, ElmTree has six offices across the U.S. in St. Louis, New York City, Chicago, Austin, Phoenix and Newport Beach, Calif., according to its website.
As part of the acquisition, ElmTree will position PFS to scale its real estate offering, expand into new markets as an owner-operator, and accelerate its long-term growth, according to the release.
In addition, the platform will be “positioned to deliver attractive risk-adjusted returns with favorable structures” and offer clients the “long-term, stable income investment solutions they seek for their portfolios,” the release said.
“Our specialized bricks-and-mortar expertise will be augmented by HPS’s ability to provide financing and other solutions that fuel the corporations and developers driving the economy forward,” said ElmTree CEO and founder James Koman, who will continue to lead ElmTree’s investment strategies as part of the new deal.
“By joining HPS and BlackRock, we are better positioned to meet market demand and serve our partners by growing alongside them for the long term,” Koman added.
The deal also comes as part of BlackRock’s larger acquisition spree, after purchasing both HPS and Global Infrastructure Partners last year, Bloomberg reported.
Also last year, BlackRock expanded its current 1 million-square-foot New York City headquarters at Related Companies’ 50 Hudson Yards by more than 50,000 square feet, as Commercial Observer previously reported.
Isabelle Durso can be reached at idurso@commercialobserver.com.
