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**BlackRock to Acquire ElmTree Funds in Strategic Expansion of Real Estate Portfolio**
BlackRock, Inc. has announced a definitive agreement to acquire ElmTree Funds, a prominent net-lease real estate investment firm with $7.3 billion in assets under management as of March 31. The deal will be structured with upfront consideration paid primarily in BlackRock stock, with the potential for additional compensation based on ElmTree’s performance over the next five years. Further financial terms of the agreement were not disclosed.
Following the closing of the transaction, ElmTree will be integrated into Private Financing Solutions (PFS), the real estate and credit platform formed through BlackRock’s combination with HPS Investment Partners. Founded in 2011, ElmTree brings deep industry relationships and a broad national presence, including six office locations and investments in 122 properties across 31 states.
Scott Kapnick, Chairman of the PFS Executive Office and CEO of HPS, commented on the acquisition, saying, “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.”
James Koman, CEO and founder of St. Louis-based ElmTree, emphasized the strategic advantages of the partnership, stating, “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.”
Legal counsel for BlackRock and HPS includes Skadden, Arps, Slate, Meagher & Flom LLP; Fried, Frank, Harris, Shriver & Jacobson LLP; and Sidley Austin LLP. Goldman Sachs acted as financial advisor to HPS. ElmTree Funds was advised by Berkshire Global Advisors and represented legally by Kirkland & Ellis LLP.
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