This week, alternative assets investor Ares Management Corporation, which currently invests $207 billion of client money across credit, private equity, real estate and other unlisted assets, announced that it is buying the entire U.S. real estate investment advisory and distribution business of Black Creek Group, the real estate investment manager with some $11.6 billion in client assets, and a commercial footprint in 31 U.S. markets across its 28-year management track record. A purchase price for the transaction was not made public.
Black Creek currently manages two non-traded REITs and a number of various institutional fund vehicles, supported by major institutional investors and an established base of real investors in the industrial, multi-family, office and retail property sub-sectors.
In announcing the deal this week, Ares said the Black Creek acquisition would complement its existing real estate debt and U.S. and European value-add and opportunistic funds, as well as add significant exposure to industrial properties, which are a high-conviction area for Ares. The firm says $2 trillion industrial real estate sector exhibits “consistent fundamentals across diverse market cycles and is positioned to benefit from heightened institutional interest driven in part by secular tailwinds and the accelerated growth of e-commerce.”
The deal will also transform Ares’ own retail distribution capacity and grow its perpetual, non-traded REIT capital by some $5.1 billion as it absorbs Black Creek’s two private REITs.
“We are very pleased to enter into this strategic transaction with Black Creek, which further scales our real estate business, expands us into core / core-plus strategies and provides us with a leading non-traded REIT retail distribution platform,” said Michael Arougheti, Chief Executive Officer and President of Ares. “We believe that this highly complementary combination will add meaningful revenue synergies for our real estate business as we offer new products to our existing investor base.”
“This acquisition presents an attractive opportunity to further enhance our team’s capabilities and grow our leading global real estate equity and debt business to approximately $29 billion in assets under management with offices spanning across the U.S. and Europe,” said Bill Benjamin, Partner and Head of the Ares Real Estate Group. “We are very excited to partner with senior management at Black Creek to offer new strategies, expand our sourcing networks and bolster execution. We have known and respected the team at Black Creek for many years and we believe there is a strong cultural alignment, which positions us for long-term success of our combined businesses.”
“We are excited to join the Ares team and we believe this is a highly complementary combination of people, investment products and resources,” said Raj Dhanda, Chief Executive Officer at Black Creek Group. “As a leading firm with extensive global relationships and a collaborative culture, Ares was the ideal partner for Black Creek Group and this agreement will allow the combined Ares Real Estate Group to expand our capabilities, reach and growth potential. We are excited for our leadership teams to work together and capitalize on what we believe will be a promising future.”