Ares Management Acquires AREA Property Partners

By Keith Loria, Contributing Editor 

In one of the industry’s biggest transactions of 2013, Ares Management L.L.C., a Los Angeles-based investment firm, has signed a definitive agreement to acquire AREA Property Partners, L.P., a top-tier real estate management firm investing across North America, Europe and India. 

The acquisition will bring Ares Real Estate Group’s total committed capital to $8 billion once AREA’s $6 billion in real-estate equity investments in North America and Europe is added to its portfolio. The transaction also includes the acquisition of the minority stake in AREA held by National Australia Bank.

“AREA’s expertise in value-add and opportunistic equity investing and mezzanine debt will complement our real estate group’s current capabilities in real estate private lending,” Tony Ressler, senior partner & chairman of the Executive Committee of Ares Management, said in a company statement.  “Further, the entire Ares Management platform will greatly benefit from AREA’s geographic reach, market insights, industry relationships and seasoned investment professionals—especially Lee Neibart in the U.S. and Bill Benjamin in Europe.” 

AREA Property Partners was founded in 1993 by prominent U.S. real estate investor William Mack and Apollo Global Management, L.L.C., under the name Apollo Real Estate Advisors. Over the past 20 years it has overseen the investment of multiple real estate funds and joint ventures, investing nearly $14 billion in more than 600 transactions with an aggregate value in excess of $70 billion.

Mack announced that he will be stepping down as Chairman of AREA to focus on actively managing his family’s real estate initiatives, investments and philanthropic pursuits. Meanwhile, his son Richard Mack, AREA’s North America CEO, will become a senior advisor to the Ares Real Estate Group. 

By bringing AREA into its fold, Ares Management becomes a sizeable player in the industry and will be adding some of AREA’s top leadership executives to its team. 

Neibart, AREA’s CEO, will become a senior partner of the Ares Real Estate Group and become global co-head of the group with John Bartling, a senior partner of the Ares Real Estate Group. Additionally, Benjamin, AREA’s head of Europe and India, is set to become a senior partner of the Ares Real Estate Group and will continue as head of Europe and India Real Estate.

“As we transition to this exciting new phase of joining Ares, we want to acknowledge Bill Mack for his foresight, investment insights and unwavering integrity, which shaped the philosophy that has guided our firm over the past two decades.  It was his vision and long-term commitment to building AREA that led to this opportunity to partner with Ares,” Neibart said in a statement. “Combining the complementary skill sets and asset classes of both firms will yield superior sourcing opportunities and enhanced credit analysis and information flow that will enable us to bring new products to investors while offering creative debt and equity financing solutions to the marketplace.” 

Neither Ares Management nor AREA Property Partners was available to comment further, but many in the industry have expressed their opinions. 

“My feeling on this is that this is a statement of confidence in the real estate market on the part of Ares and the apparent position of the former owners of AREA that now is the time to take money off of the table to prepare for the rest of new business cycle,” Matt Bear, a principal of Avison Young, told Commercial Property Executive. 

The deal remains subject to customary closing conditions including regulatory and investor approval. 

Proskauer lawyers advising Ares Management on the transaction were partners Monica Shilling (Los Angeles, M&A), Sean Hill (Boston, Private Investment Funds), Michael Woronoff (Los Angeles, M&A) and Arnold May (Boston, Tax) and associates Jonathan Benloulou, Joyce Men (Los Angeles, Corporate) and Anne Kim (Los Angeles, Tax).