ElmTree Makes 6 Acquisitions for $300M

By Gail Kalinoski

Jim Koman, managing principal, ElmTree Funds (Image courtesy of ElmTree Funds)

ElmTree Funds, a St. Louis-based real estate private equity firm and fund manager, has expanded its portfolio by more than 2 million square feet through acquiring six fully leased single-tenant properties in Alabama, Michigan, Missouri and South Carolina. The firm spent approximately $300 million on the assets, which consisted of three office, two industrial and one health-care properties.

“We continue to identify compelling net lease acquisition opportunities and seek transactions in the marketplace,” Jim Koman, managing principal at ElmTree Funds, said in a prepared statement. “These transactions represent ideal purchases for us as the properties are located in fundamentally strong markets with tenants under long-term leases.”

Jacobs Building (Image courtesy of Yardi Matrix)

The largest of the properties is a 1.2 million-square-foot build-to-suit industrial property located in the Southwest leased to a confidential investment-grade tenant. Another highlight is a 375,466-square-foot build-to-suit industrial development in Valley, Ala., leased to WestRock Co., a paper and packaging company.

The largest of the office assets acquired is a 210,126-square-foot property leased to Jacobs Engineering Group Inc. in Greenville, S.C. The two- to three-story building is located at 1041 East Butler Road on 22.5 acres and was sold by The Simpson Org. to ElmTree, according to Yardi Matrix data. Built in 1990, the asset previously traded in August 2014, when Highwoods Properties sold it to The Simpson Org. for $20.1 million, the data provider shows.

The other assets are:

• a 115,000-square-foot build-to-suit office property in Detroit leased to Hella KGaA Hueck & Co., a German automotive parts supplier;
• a 100,000-square-foot build-to-suit property in metro Detroit leased to Tenneco Inc., a global supplier of ride performance and clean air products and systems;
• a 15,720-square-foot build-to-suit health-care property in Kansas City, Mo., leased to Baxalta Inc., a biopharmaceutical company.

Growing portfolio

Since its founding in 2011, ElmTree has acquired, developed or financed more than $6 billion in office, industrial and health-care properties. The firm targets investments in secondary and tertiary markets in the U.S. leased to investment-grade tenants on a long-term basis.

Nearly a year ago, ElmTree sold a portfolio to IRA Capital Advisors for $127.5 million, encompassing three industrial facilities—including one in Florence, Ky., leased to Smithfield Inc.—two office properties and a health-care asset.

In May 2017, the firm recapitalized its ElmTree Net Lease Fund 11 portfolio with a $950 million investment from a wholly owned subsidiary of China Life Insurance Group, one of China’s largest insurance corporations. China Life bought a 95 percent stake in the 5.5 million-square-foot portfolio, which had 48 single-tenant assets across 20 states, comprised of 56 percent industrial, 29 percent office and 15 percent health-care properties when the transaction was completed.