With ElmTree Funds Purchase, BlackRock Gets Deeper Into Industrial
The net lease investor has $7.3 billion in assets under management.
BlackRock has pushed further into industrial real estate, inking a deal to acquire ElmTree Funds, a build-to-suit net lease specialist in the industrial sector. ElmTree currently has about $7.3 billion in assets under management. The deal is expected to close in the third quarter of this year.
BlackRock is paying for ElmTree mainly in stock, though the parties declined to disclose the purchase price. They did say, however, that there is the potential for further incentive payments, based on ElmTree’s performance through 2030.
With the net lease market valued at $1 trillion, ElmTree remains confident in the industrial build-to-suit model due to the mission-critical nature of this asset class, CEO James Koman said in a statement. Koman will continue to head ElmTree after the acquisition.
The deal comes at a time when the net lease industry seems to be recovering, though not quite as rapidly as commercial real estate as a whole. Net lease investment volume increased by 9 percent year-over-year in the first quarter of 2025 to $9.6 billion, according to CBRE data. By contrast, commercial real estate investment volume was up by 14 percent compared with the same quarter a year ago.
Industrial managed to capture nearly half of investment volume in the net lease sector in the first quarter (49 percent), up from 46 percent a year earlier, CBRE reported. Retail-associated deals also increased, while office volume was down year-over-year.
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Another indication of improvement in the net lease sector is stabilization after three years of cap rate increases, with the second quarter of 2025 marking a notable change in pricing momentum, The Boulder Group reported.
Narrowing bid-ask spreads and continued institutional interest in the sector—further boosted by the BlackRock-ElmTree deal—suggest improved market liquidity. In the industrial net lease sector, cap rates averaged 7.23 percent, Boulder noted. That is unchanged from the previous quarter.
BlackRock expands logistics infrastructure
Under the terms of the deal, ElmTree will be combined with HPS Investment Partners, which BlackRock acquired in late 2024 for $12 billion. The combined platform will be called Private Financing Solutions. HPS, an alternative credit provider, has about $157 billion in assets under management.
St. Louis-based ElmTree’s 2024 acquisitions totaled 2.37 million square feet, located in a diverse range of markets, including southern California, Iowa, Michigan, Mississippi, Missouri, Tennessee and Texas. Its total investment for the year was nearly $500 million.
The ElmTree acquisition also comes not long after BlackRock made an investment in related logistics infrastructure. In March, the company made the largest infrastructure investment in its history, agreeing to acquire a portfolio of 43 ports in more than 20 countries.
In that transaction, Hong Kong-based CK Hutchison Holding sold all its shares in Hutchison Port Holdings and Hutchison Port Group Holdings, in a deal valued at $22.8 billion. Included in the 43 ports are four major ones along the Panama Canal, as well as others in Mexico, the Netherlands, Egypt, Australia, Pakistan and elsewhere.
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