Five for fighting
BlackRock (NYSE: BLK) subsidiary ElmTree and affiliate HPS Investment Partners filed a Form 10 with the SEC to register its new perpetual, non-traded REIT called HPS Net Lease Income REIT.
The trust intends to focus acquisitions on build-to-suit industrial properties subject to net leases with single tenant that are often rated investment grade by S&P, Moody’s, or Fitch. Specific asset types will lean toward distribution/logistics, manufacturing, cold storage, and data centers.
Primary targets include early-stage partnership: either through investing in the development stage or acquiring newly constructed assets. The REIT defines build-to-suit as “properties whose location, design, physical fit out and/or management are customized to the specific needs of the tenant, often with capital investment funded by the tenant.”
BlackRock acquired both ElmTree and HPS in 2025. Founded in 2011, ElmTree has invested over $10.5 billion across 257 properties (59 million square feet) since inception and employs a 27-person team dedicated to net lease.
Filings note ElmTree holds direct relationships with 100 corporate investment grade tenants and more than 400 developers. The REIT points to three key demand-driven secular trends that will support the continued growth of industrial net lease opportunities: (i) the age and obsolescence of the current U.S. industrial real estate stock; (ii) reshoring of supply chain related facilities; and (iii) continued penetration of e-commerce sales.
As the fifth perpetual, non-traded net lease REIT to launch in this new era of the product type, HPS Net Lease Income REIT is similarly structured to like-kind offerings from Blue Owl, Fortress, Morgan Stanley, and New Mountain with a management fee based on net asset value and promote above a 5% annual return hurdle. Stabilized leverage ratio is planned for 60-70%.
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