Investment manager BlackRock has announced that it has entered into a definitive agreement to acquire ElmTree Funds, a firm specialized in net lease real estate investments, with $7.3 billion in assets under management as of March 31, 2025.
According to the company, the initial payment for the transaction will be made primarily in stock, with additional compensation contingent on ElmTree’s performance over the next five years. Full financial terms of the agreement have not been disclosed.
Founded in 2011 and headquartered in St. Louis, Missouri, ElmTree has established itself as a leading operator in the commercial net lease sector. Its model focuses on build-to-suit properties for single tenants, designed for essential operations of large corporations. The firm currently has six offices and a portfolio of 122 properties across 31 U.S. states.
Once the acquisition is completed, ElmTree will be integrated into the new Private Financing Solutions (PFS) platform, the result of the recent merger between BlackRock and HPS Investment Partners.
With this addition, PFS aims to scale its presence in the real estate sector, expanding into new markets as an owner-operator. ElmTree will contribute its extensive expertise and network in the commercial real estate market, while HPS will bring its established capabilities as a private credit investor. The synergy between both entities aims to deliver investment solutions with stable income and risk-adjusted returns for both institutional clients and investment-grade companies.
“Structural shifts in the real estate market are creating significant opportunities for private capital. The combination of a leading investor in triple net lease with our private financing platform will allow us to seize those opportunities and offer innovative solutions to our clients,” said Scott Kapnick, chairman of the PFS executive office and CEO of HPS.
James Koman, founder and CEO of ElmTree, noted that the net lease market is estimated at one trillion dollars and reaffirmed the company’s commitment to the build-to-suit industrial model. “Our specialized expertise will be enhanced by HPS’s ability to provide financing and strategic solutions that empower businesses and developers. By joining HPS and BlackRock, we’ll be better positioned to meet market demand and grow alongside our partners,” said Koman.
Koman will continue to lead ElmTree’s investment strategies following the acquisition. The transaction is expected to close in the third quarter of 2025, subject to regulatory approvals and customary closing conditions.
Legal advisors to BlackRock and HPS on the transaction included Skadden, Arps, Slate, Meagher & Flom LLP; Fried, Frank, Harris, Shriver & Jacobson LLP; and Sidley Austin LLP. Goldman Sachs & Co. LLC acted as financial advisor to HPS. On ElmTree’s side, Berkshire Global Advisors served as financial advisor and Kirkland & Ellis LLP as legal advisor.
