BlackRock expands real estate holdings, buys ElmTree Funds with $7.3 billion in assets. Check details | Company Business News

BlackRock Inc has announced its agreement to acquire ElmTree Funds, a real estate firm which leases 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.

Deal structure and financial details

ElmTree will be integrated into Private Financing Solutions, BlackRock’s newly established platform created through the firm’s $12 billion purchase of HPS Investment Partners last year, Bloomberg reported.

The payment for ElmTree will primarily be settled in stock, with the potential for additional consideration based on ElmTree’s performance over the next five years.

While the purchase price and other financial details aren’t yet disclosed, the transaction is expected to be completed in the third quarter of this year.

ElmTree’s niche business area

The real estate firm was founded in 2011 by James G. Koman who currently also serves as the chief executive officer (CEO) of the firm.

ElmTree has offices in various locations, including St. Louis, New York, Chicago, Austin, Phoenix and Newport Beach, California. Other than that, the firm also has investments in 122 properties across the 31 cities of the United States.

The deal will allow ElmTree, which is currently focusing on industrial real estate, to expand into new markets as an owner-operator, according to the statement cited by Bloomberg.

“Our specialized bricks-and-mortar expertise will be augmented by HPS’s ability to provide financing and other solutions,” James Koman, ElmTree’s founder and CEO, said in the statement.

BlackRock’s hold in real estate market

While the ElmTree purchase is considered small compared to the $11.6 trillion in assets that BlackRock oversees in recent times, it deepens CEO Larry Fink’s objective to tap into private markets over the past two years in search of heftier fees.

BlackRock has also bought other real estate firms such as HPS and Global Infrastructure Partners as part of its acquisition spree in this particular industry, the news agency reported.