The world's largest asset manager has launched a private fund targeting stabilized industrial properties with long-term leases across the United States.
BlackRock, with $13.5 trillion in assets under management, formed HPS Net Lease Income REIT in December following its September acquisition of ElmTree Funds and its July purchase of HPS Investment Partners, the New York-based firm said last week in a registration statement with the Securities and Exchange Commission.
HPS Net Lease Income REIT plans to seek investor-friendly industrial net lease properties, where the tenant typically pays building costs, including taxes, maintenance and insurance.
ElmTree will serve as the real estate investment trust's external investment adviser. The firm manages a 27-person team and has invested more than $10.5 billion across 257 properties since its founding in 2011.
The REIT, based in St. Louis, expects to begin selling stock in the first half of 2026, according to its filing.
"The net lease market is estimated at $1 trillion, and our continued belief in the industrial build-to-suit model is rooted in the mission-critical nature of this asset class," ElmTree CEO James Koman said in a release over the summer announcing the firm's sale to BlackRock.
BlackRock declined to comment to CoStar News.
HPS Net Lease Income REIT intends to invest primarily in early-stage build-to-suit properties through development-stage investments or purchases of newly constructed buildings. It may also acquire existing stabilized properties and pursue sale-leaseback transactions.
The launch represents BlackRock's first major product rollout from its private financing solutions division, which combined HPS' $175 billion credit business with ElmTree's $7.3 billion in net lease real estate. Together, the private financing solutions platform manages about $377 billion in assets and employs more than 600 investment professionals globally.
BlackRock views industrial net leases as a growth opportunity driven by manufacturing reshoring, e-commerce expansion and aging U.S. warehouse infrastructure.
BlackRock executives told analysts during its Jan. 15 year-end earnings call that the firm's net lease real asset strategy would reach U.S. markets in the near term.
Industrial properties now represent 53% of the $58 billion annual net lease market, up from 29% in 2015, according to the SEC filing. U.S. industrial real estate comprises a $3.2 trillion market that has grown at a 7.7% compound annual rate over the past decade.
The REIT projects e-commerce sales will grow from $1.2 trillion in 2025 to $1.5 trillion by 2028. E-commerce requires three times the warehousing space of traditional retail.
ElmTree identified several demand drivers: 68% of Class A industrial stock predates 2000, the average U.S. warehouse is 43 years old and 80% of warehouses lack automation capabilities. More than $3 trillion in U.S. manufacturing investments are pledged to come online by 2030.