Ares Management Raises Over $3.3 Billion of U.S. Opportunistic Real Estate Capital

Rhea-AI Summary

Ares Management (NYSE: ARES) has successfully closed its Ares U.S. Real Estate Opportunity Fund IV (AREOF IV), raising over $3.3 billion for opportunistic real estate investments in the U.S. This marks the largest Ares Real Estate closed-end fundraise to date, significantly surpassing the $2.2 billion raised for its predecessor fund. Combined with capital raised for its European opportunistic real estate strategy, Ares now has $5.5 billion in aggregate opportunistic capital.

AREOF IV focuses on acquiring distressed assets, enhancing undermanaged properties, and pursuing risk-mitigated development in desirable submarkets. The fund has already made notable investments, including the $1.07 billion acquisition and redevelopment of the Hyatt Regency Orlando and providing preferred equity for the conversion of 55 Broad Street in New York City's Financial District.

Positive

• Raised over $3.3 billion for AREOF IV, the largest Ares Real Estate closed-end fundraise to date
• Combined with European strategy, Ares has $5.5 billion in aggregate opportunistic capital
• Acquired and redeveloped Hyatt Regency Orlando for $1.07 billion
• Provided preferred equity for major office-to-residential conversion in New York City
• Attracted diverse set of investors from Americas, Middle East, Asia, and Europe
• Ares Real Estate oversees approximately $52 billion of assets under management

Negative

• None.

Insights

Financial Analyst

Ares Management's successful raise of over $3.3 billion for AREOF IV signifies strong investor confidence in their real estate strategy. This largest-ever fundraise for Ares' real estate division, surpassing the previous fund by $1.1 billion, demonstrates robust demand for opportunistic real estate investments. The fund's focus on distressed assets and special situations positions it well to capitalize on current market dislocations. With $5.5 billion in aggregate opportunistic capital, Ares is poised to be a major player in both U.S. and European markets. The diverse investor base, spanning multiple continents and institution types, further validates the fund's appeal and Ares' reputation in the alternative investment space.

Real Estate Expert

AREOF IV's strategy aligns well with current market conditions. The focus on acquiring distressed assets and enhancing undermanaged properties could yield significant returns in a stabilizing market. The fund's recent investments, including the $1.07 billion Hyatt Regency Orlando acquisition and the 55 Broad Street office-to-residential conversion in NYC, showcase its ability to execute large-scale, complex deals. These projects highlight a trend towards adaptive reuse and value-add strategies in prime locations. With $52 billion AUM and a team of 270+ professionals across 17 offices, Ares has the scale and local expertise to identify and capitalize on opportunities across diverse markets and property types.

Market Research Analyst

The successful fundraise for AREOF IV amid challenging market conditions is a testament to the growing investor appetite for opportunistic real estate strategies. The significant increase in fund size from its predecessor indicates a shift in investor allocations towards alternative investments, particularly those targeting distressed and special situation opportunities. The fund's diverse global investor base suggests a broad recognition of potential dislocations in the U.S. real estate market. The focus on bridging capital gaps created by recent deleveraging points to ongoing stress in the real estate sector, which could present lucrative opportunities for well-capitalized players like Ares. This fundraise may signal the start of a new cycle of opportunistic real estate investing.

AREOF IV Marks Largest Ares Real Estate Closed-End Fundraise in Firm’s History to Capitalize on Significant Investment Opportunities in Dislocated Market

NEW YORK--(BUSINESS WIRE)-- Ares Management Corporation (NYSE: ARES) (“Ares”), a leading global alternative investment manager, announced today the final closing of Ares U.S. Real Estate Opportunity Fund IV, L.P. (“AREOF IV” or the “Fund”). Ares raised over $3.3 billion to invest in opportunistic real estate in the U.S. through equity commitments to the Fund and related transaction vehicles. This marks the largest Ares Real Estate closed-end fundraise to date and is a significant increase from the $2.2 billion of commitments raised for the predecessor fund and related transaction vehicles.

The Fund, in combination with capital raised for the most recent vintage of Ares’ European opportunistic real estate strategy, positions Ares with $5.5 billion of aggregate opportunistic capital aimed to capitalize on attractive new investment opportunities in the U.S. and Europe.

Consistent with its predecessors, AREOF IV focuses on acquiring real estate assets out of distressed ownership structures and special situations, enhancing and repositioning undermanaged assets, and pursuing risk-mitigated development and redevelopment in desirable submarkets.

“As capital markets stabilize, we are observing significant opportunities for AREOF IV,” said David Roth, Partner and Co-Head of Ares U.S. Real Estate. “We believe the mounting need for capital infusions to bridge gaps created by the deleveraging that has occurred over the past two years has yielded an attractive investible universe of high-quality real estate in desirable markets.”

“Meaningful enhancements to strengthen our origination and execution capabilities, particularly within the sectors and markets that we find most attractive, have enabled us to deploy a significant portion of the Fund in recent investments,” said Andrew Holm and Jay Glaubach, Partners and Co-Heads of Ares U.S. Real Estate Investments. “We look forward to building on this progress while seeking to generate compelling risk-adjusted returns for our investors.”

AREOF IV’s current portfolio includes the recent acquisition and redevelopment of the Hyatt Regency Orlando for $1.07 billion, marking one of the largest hotel transactions of 2024 to date. In July 2023, the Fund also provided preferred equity for the conversion of 55 Broad Street in New York City’s Financial District, one of the largest office-to-residential conversions in New York City history.

The Fund attracted commitments from a diverse set of new and incumbent investors across the Americas, the Middle East, Asia and Europe representing a broad array of institutions, including sovereign wealth funds, public pensions, corporate pensions, insurance companies, endowments, family offices and private banks.

Ares Real Estate oversees approximately $52 billion of assets under management and has more than 270 investment professionals across seventeen local offices in key markets in the U.S. and Europe as of June 30, 2024. The team leverages the power of Ares’ platform and its vertically integrated operating capabilities to execute equity and debt strategies that pursue investments across markets, capital structures and property types covering the breadth of the risk-return spectrum.

About Ares Management Corporation

Ares Management Corporation (NYSE: ARES) is a leading global alternative investment manager offering clients complementary primary and secondary investment solutions across the credit, real estate, private equity and infrastructure asset classes. We seek to provide flexible capital to support businesses and create value for our stakeholders and within our communities. By collaborating across our investment groups, we aim to generate consistent and attractive investment returns throughout market cycles. As of June 30, 2024, Ares Management Corporation's global platform had over $447 billion of assets under management with more than 2,950 employees operating across North America, Europe, Asia Pacific and the Middle East. For more information, please visit www.aresmgmt.com.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240913180027/en/

Media:

Brennan O’Toole

media@aresmgmt.com

Source: Ares Management Corporation

FAQ

How much capital did Ares Management raise for AREOF IV?

Ares Management raised over $3.3 billion for the Ares U.S. Real Estate Opportunity Fund IV (AREOF IV).

What is the investment focus of AREOF IV?

AREOF IV focuses on acquiring distressed real estate assets, enhancing undermanaged properties, and pursuing risk-mitigated development in desirable submarkets in the U.S.

What major investment has AREOF IV made recently?

AREOF IV recently acquired and is redeveloping the Hyatt Regency Orlando for $1.07 billion, one of the largest hotel transactions of 2024.

How does AREOF IV compare to its predecessor fund?

AREOF IV raised over $3.3 billion, significantly more than the $2.2 billion raised for its predecessor fund and related transaction vehicles.

What is the total opportunistic capital Ares has for real estate investments?

Combining AREOF IV and the European opportunistic real estate strategy, Ares has $5.5 billion in aggregate opportunistic capital for investments in the U.S. and Europe.