Ares Management Closes $1.8B CRE Fund

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Global alternative investment manager Ares Management Corp. has closed its 10th value-add U.S. real estate fund at $1.8 billion. The fund, Ares U.S. Real Estate Fund X LP, was 75 percent larger than its predecessor and surpassed the $1.5 billion target.

The fund, which closed on Sept. 30, received strong support from longstanding investors along with significant demand from new investors, David Roth, partner & co-head of Ares U.S. Real Estate, said in a prepared statement. Roth added that the New York-based firm believes the support validates the trust it has built with investors and the track record of the firm’s funds over multiple  vintages and market cycles. The predecessor fund closed at $1.04 billion in November 2018.

The U.S. value-add strategy used by Ares’ integrated global real estate team is well positioned to capitalize on new opportunities created by the current economic environment, Jay Glaubach, partner & co-head of U.S. Real Estate Investments, said in prepared remarks. U.S. X will be seeking to acquire and improve institutional quality assets in the multifamily and industrial sectors. It will also make select investments in other major and adjacent property types to generate income and appreciation for investors.

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Howard Huang, partner & CIO of Diversified U.S. Equity for Ares, said in a prepared statement the fund’s initial assets, which are focused on durable sectors and markets, will continue to benefit from long-standing secular trends. He said they will continue building a diverse portfolio that delivers current income to investors while implementing longer-term value-add enhancements to their properties.

Other Ares funds

When the predecessor fund, U.S. Fund IX, had its final closing in late 2018, it had also closed with significantly more money from a greater pool of investors than its previous fund. U.S. Fund VIII had closed four years earlier at $825 million. U.S. Fund IX primarily targeted investments in industrial, multifamily and office across the U.S.

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In April 2021, Ares held the final closing of Ares U.S. Real Estate Opportunity Fund III LP with approximately $1.7 billion of commitments. The investment vehicle, which had launched 18 months earlier, exceeded its initial $1.5 billion target. Like its two predecessor funds, AREOF III focuses on selective distressed, repositioning and development opportunities.

Recent deals     

Acting as exclusive advisor to an Ares fund, Cushman & Wakefield in July helped secure $367.8 million for the financing of a 23-buiding, 3 million-square-foot Mid-Atlantic logistics portfolio. J.P. Morgan acted as administrative agent on the loan for the fully leased portfolio. Concentrated along the I-95 distribution corridor, the properties were located in New Jersey, Pennsylvania and Maryland. The assets ranged in size from 7,238 square feet to 478,715 square feet and were leased to 41 tenants.

In June, Ares Management Real Estate acquired two industrial buildings under construction in the Countyline Corporate Park in Hialeah, Fla., for a total of $62 million. According to public records, the 360,845-square foot building traded for $37 million, and a 212,907-square-foot building sold for $25 million.