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BlackRock Moves Deeper Into Private Credit With Net Lease Acquisition

BlackRock’s latest acquisition brings $7.3B in net lease real estate under its belt as it strengthens its private credit platform.

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Good morning. BlackRock is making another major move in private credit, adding a $7.3B industrial portfolio to its arsenal as it leans further into net-leased assets.

Today’s issue is brought to you by Agrippa—an AI-powered platform that strategically connects commercial real estate Capital Seekers with Capital Providers.

🎙️ This week on No Cap podcast, Andover Properties CEO Brian Cohen shares how he scaled a self-storage empire, why today’s best deals are in once-overlooked assets, and how AI and data are driving their competitive edge.

Market Snapshot

S&P 500
GSPC
6,229.98
Pct Chg:
-0.79%
FTSE NAREIT
FNER
764.32
Pct Chg:
-0.46%
10Y Treasury
TNX
4.415%
Pct Chg:
+0.02
SOFR
30-DAY AVERAGE
4.303%
Pct Chg:
-0.00
*Data as of 07/07/2025 market close.

INVESTMENT STRATEGY

BlackRock Moves Deeper Into Private Credit With $7.3B Net Lease Acquisition

BlackRock is buying real estate private equity firm ElmTree Funds, whose portfolio includes Amazon's fulfillment center in Tulsa, Oklahoma. (CoStar)

The asset management giant is acquiring industrial net lease firm ElmTree Funds to deepen its push into real estate-backed private credit.

The deal: BlackRock will acquire ElmTree Funds, a St. Louis-based real estate investment firm managing $7.3 billion in assets across 122 properties nationwide. The transaction, primarily structured as a stock deal, includes performance-based earnouts over the next five years. Terms were not disclosed.

Strategic fit: The acquisition feeds directly into BlackRock’s Private Financing Solutions platform, which now spans private real estate, infrastructure, and credit. Combined with HPS Investment Partners—acquired earlier this year—the platform will manage nearly $200 billion in client assets. ElmTree’s footprint brings real estate sourcing and operating capabilities under the PFS umbrella.

Net lease appeal: Founded in 2011, ElmTree focuses on build-to-suit, single-tenant industrial assets, often leased to investment-grade tenants on a triple-net basis. These “mission-critical” properties offer predictable income and minimal landlord responsibilities—traits increasingly attractive in uncertain markets. ElmTree’s assets are spread across 31 states and supported by offices in key metros like Chicago, Phoenix, and Austin.

Investor outlook: Amid economic and geopolitical volatility, institutional investors are gravitating toward lower-volatility, inflation-protected assets. Industrial net lease real estate fits the bill, offering a stable return profile tied to long-term corporate tenants.

➥ THE TAKEAWAY

Private capital play: With net lease activity gaining steam in 2025 and bond yields pressuring returns elsewhere, BlackRock is moving early to lock in income-producing assets and scale its private credit reach—all before the next wave of capital piles in.


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✍️ Editor’s Picks

  • Rent slowdown: US apartment rent growth cooled in Q225 for the first time in over a year, as a wave of new construction gave renters more options.

  • CRE boost: Trump’s new “Big, Beautiful Bill” offers major incentives for US real estate, particularly in fossil fuel-related infrastructure and construction projects.

  • Premium surge: US home insurance costs have jumped 40% since 2019, driven by a surge in natural disasters and worsening climate risks.

  • Political pivot: Presumptive NYC Mayor Zohran Mamdani has toned down his earlier radical housing rhetoric, with recent zoning and rent policy ideas aligning more with establishment norms than expected.

  • Return rebound: Life insurance companies posted a 2.73% total return on commercial mortgages in Q125, reversing a late-2024 dip as Treasury yields fell and inflation cooled.

  • Muted month: REITs were flat in June, with office, specialty, and gaming sectors gaining while others lagged behind broader market gains.

🏘️ MULTIFAMILY

  • Red tape: Dallas is moving to eliminate a $150 loophole that allows residents to delay zoning cases, a tactic often used to stall development projects.

  • Occupancy climb: US apartment occupancy rose to 95.6% in June 2025, with just six of the top 150 markets still seeing YoY declines.

  • Trouble mounting: Steve Croman, one of NYC’s most notorious landlords, faces foreclosure on six Manhattan buildings over unpaid insurance and water bills.

  • Zoning overhaul: California and Berkeley rolled back key housing restrictions, clearing the way for denser development by gutting CEQA requirements and ending century-old single-family zoning laws.

  • Suburban surge: North of Dallas, rapid growth driven by corporate moves, new housing, and major infrastructure is turning farmland into a booming suburban frontier.

🏭 Industrial

  • Demand dip: Uncertainty around tariffs, rising costs, and oversupply have brought industrial construction starts to a decade low.

  • Betting small: Kayne Anderson and BKM Capital have launched a $1.5B joint venture targeting overlooked small- and mid-bay industrial properties.

  • Data dominance: Data center REITs are outperforming amid market volatility, posting strong returns, NOI growth, and attracting major capital.

  • Rent freeze: Industrial rent growth nearly stalled in Q2 as lingering uncertainty over Trump-era tariffs and post-pandemic supply gluts cooled demand.

🏬 RETAIL

  • Ownership change: Big 5 Sporting Goods will be taken private in a $112.7M all-cash deal by Capitol Hill Group and Worldwide Golf.

  • Branch strategy: Mid-size banks are turning to sale-leasebacks of branch real estate to unlock capital.

  • Balanced market: Houston’s retail market remains steady in mid-2025, with slowing construction and leasing offset by strong suburban demand.

  • Luxury leasing: Miami’s Lincoln Road is seeing a retail resurgence, as global brands like Alo Yoga, Victoria’s Secret, and All’Antico Vinaio lease premium space.

🏢 OFFICE

  • Corporate retreat: Chevron has listed 400K SF for sublease at Bishop Ranch as it continues its retreat from California.

  • Global backing: Saudi Arabia’s Public Investment Fund is taking a majority stake in a $1B Manhattan skyscraper project with Related Cos.

  • Capital relocation: Oaktree Capital is relocating its LA HQ to City National Plaza, leaving behind Brookfield’s debt-troubled Wells Fargo North Tower.

  • Historic reinvention: Terminal Warehouse, once a freight hub and nightclub, is now one of NYC’s largest adaptive-reuse projects.

  • Footprint reduction: LexisNexis is cutting its Raleigh office space in half as it relocates to a smaller hub on NC State’s Centennial Campus.

🏨 HOSPITALITY

  • Resort selloff: Blackstone is buying Allegiant’s over-budget, underperforming Sunseeker Resort in Florida for $200M, a steep discount from its development cost. 

  • Palm pursuit: Brookfield is in talks to acquire the Sofitel Dubai The Palm for around $545M, eyeing its first luxury hotel deal in Dubai.

  • Hotel takeover: Magna Hospitality has acquired the Midtown Hilton Garden Inn out of foreclosure for $10M.

  • Green build: Winooski, Vermont, is adding a net-zero, LEED-certified project downtown with a hotel, garage, and workforce housing.


A MESSAGE FROM OPTICWISE

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*This is a paid advertisement. Please see the full disclosure at the bottom of the newsletter.


📈 CHART OF THE DAY

Live Oak, Dime, and EagleBank are carrying the highest CRE exposure relative to equity, all well above the 300% risk threshold.


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