BlackRock has reached a deal to acquire ElmTree Funds, a St. Louis-based real estate investment firm with $7.3 billion in assets, giving the giant asset manager a vital foothold in the growing net-lease property segment.
Terms of the transaction, announced Monday, were not disclosed. BlackRock said it will fund the deal primarily through stock, with additional compensation tied to ElmTree’s performance over the next five years.
The acquisition is expected to close in the third quarter, pending regulatory approval.
Founded in 2011, ElmTree manages a portfolio of 122 commercial properties across 31 US states. The firm specializes in industrial and build-to-suit developments leased to single tenants, often corporations seeking long-term control of critical operations infrastructure. Its assets span both primary and secondary markets, with offices in New York, Chicago, Austin, Phoenix and Newport Beach, California.
The team of investment professionals at ElmTree have executed on more than $20 billion of real estate assets as of August last year, including more than $10 billion invested in single-tenant, net-leased properties, a release the firm published that month indicates.
In that release, ElmTree unveiled an early investor incentive program for its ElmTree Industrial Trust, a perpetual life, non-traded industrial REIT that was designed specifically for the high-net-worth market.
It also highlighted a related offering geared towards the independent broker-dealer market, ElmTree Industrial Access Trust, and announced the hiring of two industry executives, Michael Wasz and Fletcher Galloway, to advance its commitment to the RIA and IBD spaces, respectively.
The ElmTree deal marks another step in BlackRock’s push into private markets and follows its $12 billion purchase of HPS Investment Partners last year It completed the acquisiton last week.
Once finalized, ElmTree will become part of Private Financing Solutions, an investing platform formed from the HPS deal, combining private credit, CLOs, and now, real estate holdings under one umbrella.
Scott Kapnick, chairman of Private Financing Solutions and CEO of HPS, said the acquisition aligns with BlackRock’s broader strategy to deepen capabilities across alternatives.
“Structural shifts in the real estate sector are creating new opportunities for private capital,” Kapnick said on Monday. “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.”
James Koman, founder and CEO of ElmTree, will remain in charge of the firm’s investment strategies following the acquisition. He pointed to the size of the net-lease market and institutional demand for yield as driving factors.
“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,” Koman said.
BlackRock held a bullish outlook on real estate within private markets in a report late last year, highlighting expectations of a rebound based on easing interest rates – a factor that's been disrupted by uncertainty from tariffs by the Trump administration, Federal Reserve Jerome Powell said in recent comments – as well as strength in the underlying market.
"Unlike prior real-estate cycles, fundamentals have been relatively solid outside of the office sector, thanks to a tight labor market in many developed economies globally. We have also seen income growth hold up relatively well in many sectors, such as US industrials and US apartments," the BlackRock report stated.
For financial advisors, the transaction reinforces BlackRock’s broader commitment to private assets as a source of long-duration income and diversification. The firm now manages $190 billion in private credit strategies and continues to emphasize multi-asset income solutions, particularly for clients seeking yield outside traditional bond markets.
ElmTree’s integration may also create new packaged investment options for advisors, particularly in real assets or alternative income models, as BlackRock looks to scale its private market offerings.
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