BlackRock, Inc. said Monday it had entered into a definitive agreement to acquire ElmTree Funds, a net-lease real estate investment firm with $7.3 billion in total assets under management as of March 31. Upfront consideration will be paid primarily in stock, with the potential for additional consideration subject to ElmTree performance over the next five years. Additional financial terms were not disclosed.
Upon closing, ElmTree will be integrated into Private Financing Solutions (PFS), the new platform created through BlackRock’s combination with HPS Investment Partners, a part of BlackRock. Founded in 2011, ElmTree has developed significant corporate and developer relationships and a broad geographic footprint, including six office locations and investments in 122 properties across 31 U.S. states.
Scott Kapnick, chairman of PFS Executive Office and CEO of HPS, said, “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.”
At St. Louis-based ElmTree, CEO and founder James Koman said, “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.”
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 served as financial advisor to HPS. Berkshire Global Advisors served as financial advisor and Kirkland & Ellis LLP acted as legal counsel to ElmTree Funds.
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