BlackRock has acquired ElmTree Funds, a US-based real estate investment firm managing $7.3bn in assets, in a move that expands its private markets platform following the acquisition of HPS Investment Partners.

The deal, primarily paid in stock with additional consideration based on future performance, will see ElmTree integrated into BlackRock’s new Private Financing Solutions (PFS) platform. This platform was recently formed through the combination with HPS.

ElmTree focuses on net-lease real estate assets, especially build-to-suit properties leased to single tenants. The integration aims to scale BlackRock’s real estate offering and deliver more tailored investment solutions.

Scott Kapnick, Chairman of PFS and CEO of HPS, noted: “Structural shifts in the real estate sector are creating new opportunities for private capital.” He added that the ElmTree team would help drive growth and deliver differentiated offerings.

ElmTree’s founder and CEO, James Koman, will continue to lead its investment strategies. “The net lease market is estimated at $1tn, and our continued belief in the industrial build-to-suit model is rooted in the mission-critical nature of this asset class,” said Koman. He highlighted that joining BlackRock and HPS would enhance their ability to scale and support partners.

The acquisition aligns with BlackRock’s broader push into private markets, where the firm is targeting $400bn in cumulative fundraising by 2030 as part of efforts to boost revenue to $35bn.

Goldman Sachs advised HPS, while BlackRock and HPS received legal counsel from Skadden, Fried Frank, and Sidley Austin. ElmTree was advised by Berkshire Global Advisors and Kirkland & Ellis.

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