In the latest blockbuster example of AUM gobbling ™, BlackRock is buying industrial net-lease specialist ElmTree Funds ($7.3B AUM). The primarily stock deal gives Larry Fink’s mega money-manager a portfolio of 250+ (incl. pipeline) largely built-to-suit properties, and crucially, a vehicle that provides CRE construction loans & perm debt. BlackRock’s folding ElmTree into a new unit christened Private Financing Solutions that includes HPS ($157B AUM), the private-credit behemoth it agreed to buy last year for $12B and just closed on. Its other closely watched asset in the unit is Preqin, whose rankings on fund performance can make/break RE managers; at the time of that $3.2B deal, Fink said that “we believe we could index the private markets.”

“Uncertainty is always the thing you want to fight against as an investor. But the problem is, uncertainty is also what creates the most opportunities.” 🎱
“This is a Jon Gray-style deal, where you're buying EOP and then slicing it up as quickly as possible.” 🍕
“They have the hardest working man in America. He'll do anything to make it happen.” 🏋

New York real estate is reacting w/ fear & loathing to the prospect of a Zohran Mamdani mayoralty. It’s gone past scare rhetoric into investors actually pulling out of deals, but is that an overreaction? We discuss on the latest ed. of the pod. We then dive into Hyatt’s have your cake and eat it too $2B sale of Playa Properties to Tortuga – some great hospitality inside ⚾ in that one. Finally, we head back to NYC to break down the various sweeteners developers are offering for that coveted casino license. Listen on Spotify here, YouTube here or Apple Podcasts here. If interested in advertising, hit us up here. And please, go tell Prof G to have us on to talk CRE – there’s a dire need for real talk in this space.

Global Infrastructure Partners, which BlackRock bought for $12.5B last year, is also folded into the unit. This M&A spree comes 7Y after BlackRock’s previous private-credit bet, which did not go too well: “It was a disaster,” one fmr. BlackRocker told the FT of its ‘18 deal for Tennenbaum Capital Partners, which saw BlackRock in the unenviable position of doing riskier direct lending deals but not being big enough to call the shots when they went sour. The Scott Kapnick-led HPS team, which will now oversee BlackRock’s full pvt. credit portfolio, will be tasked w/ unwinding some of the messier Tennenbaum deals.

Also read: Private Credit’s Manifest Destiny
📺 : Commercial Real Estate's M&A Frenzy Explained

Editor’s note: The just-passed BBB contains some girthy wins for CRE, notable among them the enshrinement of Opportunity Zones in the tax code as a permanent fixture. For some nitty-gritty takeaways, we turned to Savoy Equity Partners’ Barrett Linburg, a Texas-based developer and big evangelist for the program. Here’s his take – hit him up directly for any wonky qs/quibbles- HS

By Barrett Linburg

My biggest OZ takeaway from the just-passed "One Big Beautiful Bill?" Much better than expected.

The most significant change is that OZs are now a PERMANENT part of the tax code. That's something that doesn't happen very often, and allows investors to play the long game. Haters may say that the next administration or Congress will just come and make it "un-permanent;" OZs, however, enjoy solid bipartisan support.

In its first iteration, the OZ program existed in theory from 2018-2047. In practice, however, it was a 10Y program, given that the map itself disappeared after 2028. In this iteration though, a new map will be designated every 10 years and an OZ Fund can elect to take a step-up in basis any time between Y10 and Y30 (when it becomes a mandatory step up). As a fund manager and developer, understanding how to invest within this framework is interesting. A fund can develop, refi, and reinvest cash flow in new projects within OZ census tracts for 30Y before taking a step-up in basis – that's a lot of compounding.

As a reminder: The only other time in the tax code that you can get a basis step-up is when you die. I prefer OZ investing 🪦

Pre-'26, OZ investors, developers, and fund managers will see basically no change except new transparency requirements, in the form of a new OZ tax return starting in tax year 2027. Treasury will now track and publish employment numbers by census tract, poverty rates w/ before/after comparisons, median family income changes, demographic data, rent burden as a percentage of income, and homeownership rates.

Prior to this, we had no way of proving even basic economic improvements spurred by the program. Now, we'll have comprehensive data on employment, income, and housing costs – real measures of community impact.

Governors are about to get busy. It's their job to designate a quarter of their state's low-income census tracts as OZ, effective Jan. '27. Note that the existing OZ map won't end until Dec. '28, so for 2Y there will be two maps within which to invest. 🗺 🗾

The big changes to OZ will start 1/1/27. After that date, investors will receive a 5Y deferral on their initial tax bill along w/ a 10% discount when it comes due. They can also get up to a 30% discount on the bill if they make an investment into a rural area. Any player already investing in such markets would be nuts not to try and layer in OZ benefits with the enhanced rural incentives. 🧺

When tax incentives become permanent, they stop being optional for CPAs, RIAs and wealth managers to understand. Today, a lot of them out there can't spell OZ, and I think that'll change. More capital will flow into the OZ ecosystem because of these changes: permanence, better deferral, more defined reporting, and a more educated group of advisors & participants.

Saudi’s $1T Public Investment Fund is Related’s equity on the redevelopment of 625 Madison, the planned redevelopment of the office tower that Related bought from SL Green for $630M+ last year. Related had paid a handsome price ($1,100/ 🦶 ) for the 550K sf property – compare that to the $800-ish / 🦶 Gary Barnett reportedly paid for 655 Madison a few months later (tho Gary’s option on that property prob explains part of that discount). But w/ Saudi SWF money as your equity, basis becomes less of an issue 🤷

Per WSJ, PIF has already contributed $200M to the $1B+ project, which has gone through various concepts since the Saudis came on board for a 2/3 stake: a mixed-use resi/retail joint w/ an ultra-luxe hotel was among the contenders, but Related is now thinking of going w/ 800K+ sf of trophy office space, per CO. (How back are we!)

This isn’t Related’s first sword dance w/ the Saudis: In ‘20, PIF made a debt investment into the developer that is convertible to a 15% equity stake. The firm had made a similar deal w/ Saudi conglomerate Olayan and Emirati SWF Mubadala back in ‘07.

Watching from the sidelines: Ben Ashkenazy, who was outgunned by SLG here