BlackRock Expands Real Estate Portfolio with $7.3 Billion ElmTree Funds Acquisition
BlackRock Inc. has announced its agreement to acquire ElmTree Funds, a real estate firm that specializes in leasing custom-built commercial properties to single-tenant renters. The acquisition will add an investor with $7.3 billion in total assets under management to BlackRock’s portfolio.
The deal structure is primarily stock-based, with the potential for additional consideration based on ElmTree’s performance over the next five years. While the exact purchase price and other financial details have not been disclosed, the transaction is expected to close by the third quarter of this year.
ElmTree will be integrated into BlackRock’s Private Financing Solutions, a platform created through the firm’s $12 billion purchase of HPS Investment Partners last year. This integration is expected to enhance BlackRock’s capabilities in the private financing market.
ElmTree was founded in 2011 by James G. Koman, who currently serves as the CEO of the firm. The company has offices in St. Louis, New York, Chicago, Austin, Phoenix, and Newport Beach, California. ElmTree has investments in 122 properties across 31 cities in the United States, primarily focusing on industrial real estate.
The acquisition will allow ElmTree to expand into new markets as an owner-operator, according to a statement cited by Bloomberg. James Koman, ElmTree’s founder and CEO, commented, “Our specialized bricks-and-mortar expertise will be augmented by HPS’s ability to provide financing and other solutions.”
While the ElmTree purchase is relatively small compared to the $11.6 trillion in assets that BlackRock oversees, it aligns with CEO Larry Fink’s strategy to tap into private markets over the past two years. BlackRock has also acquired other real estate firms, such as HPS and Global Infrastructure Partners, as part of its broader acquisition strategy in the real estate industry.
This acquisition is expected to deepen BlackRock’s presence in the real estate market, providing the firm with additional opportunities to generate higher fees through its expanded portfolio and enhanced capabilities in private financing solutions.
