BlackRock has announced that it has entered into a definitive agreement to acquire ElmTree Funds, a net-lease real estate investment firm managing a total of $7.3 billion in assets as of March 31, 2025. The initial payment will primarily be made in stock, with the potential for more compensation based on ElmTree’s performance over the next five years.
Founded in 2011, ElmTree is a recognized leader in the commercial net-lease sector, specializing in single-tenant and build-to-suit real estate assets that are crucial to the core operations and growth of corporate tenants. ElmTree operates as an owner-operator, boasting significant relationships with both corporations and developers, as well as a wide geographic presence that includes six office locations and investments in 122 properties across 31 U.S. states.
Once the deal is finalized, ElmTree will be integrated into Private Financing Solutions (PFS), the new platform established through BlackRock’s merger with HPS Investment Partners.
The merger of PFS and ElmTree will enhance PFS’s real estate offerings and facilitate entry into new markets as an owner-operator. ElmTree’s expertise and strong relationships, combined with HPS’s market knowledge as a top credit investor, will accelerate long-term growth. Together, they will deliver attractive, risk-adjusted returns and stable long-term income solutions for clients.
The inclusion of long-term performance incentives is designed to align the interests of BlackRock and ElmTree leadership, with ElmTree CEO and founder James Koman continuing to lead the ElmTree investment strategies.
Advisors/counsel: Skadden, Arps, Slate, Meagher & Flom, Fried, Frank, Harris, Shriver & Jacobson, and Sidley Austin are acting as legal counsel to BlackRock and HPS. Goldman Sachs served as financial advisor to HPS. Berkshire Global Advisors served as financial advisor and Kirkland & Ellis acted as legal counsel to ElmTree Funds.
KEY QUOTES:
“Structural shifts in the real estate sector are creating new opportunities for private capital. 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. ElmTree has the team, expertise, and relationships that will help drive growth and deliver differentiated investment solutions, and we are thrilled to welcome Jim and his entire team.”
Scott Kapnick, Chairman of PFS Executive Office and CEO of HPS
“The net lease market is estimated at $1 trillion, and our continued belief in the industrial build-to-suit model is rooted in the mission-critical nature of this asset class. 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. 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.”
ElmTree CEO and Founder James Koman
