BlackRock, Inc. has announced a definitive agreement to acquire ElmTree Funds, a real estate investment firm with $7.3 billion in assets under management as of March 31, 2025. The transaction will primarily involve stock payments, with additional consideration dependent on ElmTree's performance over the next five years. Further financial details have not been disclosed.
ElmTree Funds, established in 2011, specializes in commercial net-lease real estate and focuses on single tenant, build-to-suit properties crucial to corporate operations and growth. With six office locations and investments across 122 properties in 31 U.S. states, ElmTree is recognized for its significant corporate relationships and broad geographic presence.
Upon completion of the acquisition, ElmTree will be integrated into BlackRock’s Private Financing Solutions (PFS), a platform formed through BlackRock's combination with HPS Investment Partners. This integration aims to enhance PFS's real estate offerings and expand its market reach as an owner-operator.
Scott Kapnick, Chairman of PFS Executive Office and CEO of HPS Investment Partners, stated that "structural shifts in the real estate sector are creating new opportunities for private capital." He emphasized that the partnership with ElmTree would enable PFS to capture these opportunities for clients by leveraging ElmTree's expertise and relationships.
James Koman, CEO and Founder of ElmTree Funds, highlighted the potential within the net lease market valued at approximately $1 trillion. He expressed confidence that joining forces with HPS and BlackRock would better position ElmTree to meet market demands while supporting their partners' long-term growth.
The transaction includes long-term performance incentives designed to align interests between BlackRock and ElmTree leadership. James Koman will continue leading ElmTree’s investment strategies post-acquisition. The deal is expected to close in the third quarter of 2025 following regulatory approvals.
Legal counsel for BlackRock and HPS includes Skadden, Arps, Slate, Meagher & Flom LLP; Fried, Frank, Harris, Shriver & Jacobson LLP; Sidley Austin LLP; while Goldman Sachs & Co. LLC served as financial advisor to HPS. Berkshire Global Advisors acted as financial advisor for ElmTree Funds alongside legal counsel from Kirkland & Ellis LLP.
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ElmTree Funds operates from St. Louis, Missouri focusing on strategic investments in commercial real estate sectors across primary and secondary U.S markets leased long-term to investment-grade tenants.