BlackRock struck a deal to acquire ElmTree Funds, a St. Louis-based net-lease real estate investment firm managing $7.3 billion in assets.
The investment giant will pay primarily in stock upfront with additional consideration tied to ElmTree’s performance over five years, according to a press release. Financial terms of the acquisition were not disclosed.
ElmTree will fold into Private Financing Solutions, BlackRock’s platform created through its acquisition of HPS Investment Partners, which closed a week ago. The move positions PFS to scale its real estate offering while expanding into owner-operator markets.
Founded in 2011, ElmTree specializes in commercial net-lease properties, focusing on single-tenant, build-to-suit assets critical to corporate tenants’ operations. The firm operates six offices and holds investments in 122 properties across 31 states.
The 14-year-old firm targets primary and secondary markets with properties net-leased to investment-grade tenants on a long-term basis.
“Structural shifts in the real estate sector are creating new opportunities for private capital,” said Scott Kapnick, PFS chair and HPS CEO. “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.”
Chief executive officer James Koman will continue leading ElmTree’s investment strategies under the new structure. He emphasized the $1 trillion net-lease market opportunity and the mission-critical nature of industrial build-to-suit assets.
“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,” Koman said.
The acquisition follows BlackRock’s completion of its HPS purchase last week, creating a $190 billion private credit platform that combines public and private financing solutions.
The ElmTree transaction aligns with BlackRock’s broader push into alternative investments and real estate, accelerated by the HPS deal. By combining ElmTree’s owner-operator expertise with HPS’s credit investment capabilities, the platform aims to deliver stable income solutions for institutional clients.
The transaction is expected to close in the third quarter.
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