Ares Management Closes $1B Fund

The firm’s ninth investment vehicle is significantly larger than the fund that closed in 2014, on the strength of support from both current and new investors.

By Gail Kalinoski

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6433 SE Lake Road

Ares Management Corp.’s Ares U.S. Real Estate Fund IX has closed at approximately $1.04 billion, with significantly more money from a greater pool of investors than the previous fund, which closed at $825 million four years ago.

The fund, which primarily targets investments in multifamily, industrial and office properties across the U.S., received strong support from existing investors as well as new entrants, according to Ares Management. The global investors included pension funds, insurance companies, sovereign wealth funds, endowments, non-profits, foundations, financial institutions, including a private banking platform and an asset manager, as well as family offices. Pension fund investors included the $33.9 billion Texas Permanent School Fund, Austin, and the $24.5 billion San Francisco City & Employees’ Retirement System, according to the Pensions & Investments web site.

Ares Management noted returning U.S. Fund VIII investors increased their commitments by an average of 65 percent. There were also 15 new investors, including 13 that were new to the Ares fund platform. Investors outside the U.S. represented more than half the total.

“It is very gratifying to receive the strong support from our long-term investors and to attract many new investors to our expanding real estate platform,” Steven Wolf, partner & chief investment officer for U.S. equity in the Ares Real Estate Group, said in a prepared statement. “This increased successor fund underscores the cycle-tested and consistently strong performance of the Ares Real Estate Group’s strategies.”

The fund is approximately 50 percent committed, with 12 investments made across a diverse portfolio including more than 4,300 multifamily units and 15.7 million square feet of industrial and office space.

“We are excited about the composition of the fund’s portfolio, with 50 percent of the capital raised or committed and an excellent pipeline of compelling new investment opportunities,” Howard Huang, partner in the Ares Real Estate Group, said in a prepared statement. “We remain committed to find off-market value opportunities across our national footprint in the U.S.”

The Ares Real Estate Group manages public and private equity and debt strategies with about $10.6 billion of assets under management as of Sept. 30. It is part of Ares Management Corp., which has numerous U.S. and global offices, and is a leading global alternative asset manager, with approximately $125 billion of assets under management as of Sept. 30.

Ares makes deals

While it is not clear whether the deal was made through the U.S. Fund IX, Ares Management recently teamed up with Specht Development to acquire a nearly 1 million-square-foot industrial property in Milwaukie, Ore., for 48.5 million. A 992,190-square-foot SUPERVALU distribution center is located on the site. The property comprises warehouse, distribution and manufacturing space, as well as a freezer/cooler space and 48,000-square-foot office.

In July, Ares Management and Polinger Development Co. acquired a two-building office complex in Fairfax, Va.,—WillowWood I and II—with plans to renovate the 57,250-square-foot and 124,358-square-foot properties. The joint venture expects to add a state-of-the-art conference center, a tenant lounge and upgraded fitness center. The buildings are located are among four in the WillowWood Plaza, the city’s largest office campus. Several months later, the joint venture team appointed Cushman & Wakefield as the exclusive leasing agent.

Image courtesy of Specht Development

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