In April, Larry Fink, CEO of BlackRock, the world’s largest asset management firm with more than $11 trillion in assets under management in 2024, argued that 401(k) plans should invest more in private assets, in his annual letter to investors. Then in June, BlackRock made a bold investment move by partnering with Great Gray Trust Company, which offers 401(k) investments, to provide a target date with a 5%-to-20% allocation to private investments in the first half of 2026.
Now, BlackRock is pushing deeper into private markets. Yesterday, the asset management firm announced that it has entered into an 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, 2025.
ElmTree has a broad geographic footprint, including six office locations and investments in 122 properties across 31 U.S. states. Upon closing, ElmTree will be integrated into Private Financing Solutions, the new platform created through BlackRock’s combination with HPS Investment Partners, a new BlackRock acquisition.
The deal, which is expected to close within the next three months, gives BlackRock a firm that has $7.3 billion in assets under management. ElmTree specializes in "build to suit" industrial real estate facilities.
Fink has touted BlackRock's shift to private markets as a strategy aiming to give its customers better returns than the “classic 60/40 portfolio” that “may no longer fully represent true diversification,” said Fink, in his letter. ”The future standard portfolio may look more like 50/30/20—stocks, bonds, and private assets like real estate, infrastructure, and private credit.”
BlackRock is among a number of big Wall Street money managers now pushing for private assets to be added to retirement savings accounts through low-cost mutual funds. In May, Empower opened the door to private market investments for its 401(k) participants by partnering with Goldman Sachs and other asset managers through managed accounts.
Last week, the Securities and Exchange Commission announced that it would prioritize the risks and benefits of “Private Market Investments in Retirement Accounts” as an objective for 2026, in its Report to Congress.
Related: BlackRock CEO calls for more private assets in 401(k) plans, in letter to investors
“Structural shifts in the real estate sector are creating new opportunities for private capital,” said Scott Kapnick, Chairman of PFS Executive Office and CEO of HPS. “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.”
The ElmTree transaction is expected to close in the third quarter of 2025 subject to regulatory approvals and customary closing conditions.
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