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**BlackRock to Acquire ElmTree Funds in Strategic Net-Lease Expansion**
BlackRock, Inc. announced on Monday that it has entered into a definitive agreement to acquire ElmTree Funds, a real estate investment firm specializing in net-lease properties. As of March 31, ElmTree managed approximately $7.3 billion in total assets. The initial payment for the acquisition will be made primarily in BlackRock stock, with the possibility of additional payments based on ElmTree’s performance over the next five years. Further financial details were not disclosed.
Following the closing of the transaction, ElmTree will be integrated into Private Financing Solutions (PFS), a newly formed platform resulting from the combination of BlackRock and HPS Investment Partners. Founded in 2011, ElmTree brings with it a broad national presence including six office locations and investments in 122 properties across 31 states. The firm also nurtures strong relationships with corporations and developers across the U.S.
Scott Kapnick, chairman of PFS Executive Office and CEO of HPS, commented on the deal:
“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’s CEO and founder, James Koman, added:
“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.”
The acquisition transaction is being supported by several major law firms and financial advisers. Skadden, Arps, Slate, Meagher & Flom LLP, Fried, Frank, Harris, Shriver & Jacobson LLP, and Sidley Austin LLP are acting as legal counsel to BlackRock and HPS. Goldman Sachs is serving as the exclusive financial advisor to HPS. On ElmTree’s side, Berkshire Global Advisors is acting as financial advisor and Kirkland & Ellis LLP is providing legal counsel.
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