BlackRock has announced its plan to acquire real estate investment firm ElmTree Funds to be integrated into its new private financing solutions (PFS) business.
ElmTree sits in the commercial net lease sector, with a focus on single tenant, real estate assets. It currently has six office locations and investment in 122 properties across the US.
The net lease market is estimated to sit at US$1 trillion ($1.5 trillion), it said.
Upon completion of the deal, ElmTree will be integrated into BlackRock’s PFS division that is being formed through BlackRock’s acquisition of HPS Investment Partners which completed last week. PFS will combine BlackRock’s private credit, GP and LP solutions, and private and liquid CLO businesses into one integrated platform.
The inclusion of ElmTree will help PFS to scale its real estate offering and expand into new markets, BlackRock said.
“Together, the platform will be positioned to deliver attractive risk-adjusted returns with favourable structures, offering clients the long-term, stable income investment solutions they seek for their portfolios, while meeting the operational needs of investment-grade companies that drive the economy,” the firm said.
Scott Kapnick, chairman of PFS and chief executive of HPS, said: “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 chief executive and founder, James Koman, said: “Our specialised bricks-and-mortar expertise will be augmented by HPS’ 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.”
The transaction is expected to close in the third quarter of 2025, subject to regulatory approvals and customary closing conditions.
BlackRock has been especially active with acquisitions in this space as it has completed acquisitions with HPS, private markets research house Preqin and Global Infrastructure Partners (GIP) all within the last 12 months in a bid to become a major player in private markets.
Speaking at its Investor Day earlier this year, it identified at least four new $500 million revenue-generating businesses which are being “built from the ground up”, one of which is described as “private markets to wealth”. This includes by providing personalised multi-asset wealth portfolios at scale with customised model solutions that incorporate public and private market investments.
The US asset manager said it already has over US$1 trillion in assets under management across its wealth channel and over 30,000 financial advisers using the BlackRock models in their portfolios. They are all looking to increase their exposure and insight to private markets, he said, for income, diversification and attractive returns.
