Deal propels it into the top three largest industrial real estate investors, says CEO
Ares Management has entered a $5.2 billion deal to acquire the international arm of real estate investment manager GLP Capital Partners, marking one of the largest mergers in the private investment industry in recent years.
The deal, which excludes GLP’s operations in Greater China, will add $44 billion in assets to Ares’ portfolio pushing the firm closer to its goal of managing more than $750 billion in assets by 2028.
It also nearly doubles Ares’ real estate investments and strengthens its position in Europe and Japan, where GLP has extensive holdings. Ares CEO Michael Arougheti told the Financial Times the acquisition would make Ares the third largest investor in the industrial real estate market, ranking just behind Blackstone and Prologis.
The transaction will be funded through a mix of $1.8 billion in cash and $3.7 billion in Ares shares. A long-term incentive plan for GLP’s leadership could see an additional payout of up to $1.5 billion by 2027, with Ares likely using stock to fulfill part of that payment.
Ares’ growth strategy has been heavily reliant on acquisitions in recent years. In 2021, the firm acquired Landmark Partners for $1.1 billion, followed by the purchase of US-based Black Creek and Asia-focused Crescent Point Capital.
Arougheti said the deal comes at an opportune time as commercial real estate investor sentiment has brightened up in anticipation of Fed rate cuts, which could improve property values in the coming years.
“We are able to come into the deal having underwritten property values in a higher interest rate environment,” Arougheti said. “As interest rates come down, you should see an improvement in economics.
“We’re buying in at the right time.”
Read more: Ares launches $3.3bn fund to capitalize on real estate investments
Ares is also capitalizing on the rising demand for data centers, driven by increased cloud computing and AI technologies. The data center sector has become a major growth area for large investment firms. Just a day before Ares’ deal, Blue Owl announced its acquisition of IPI Partners, a data center investor, for $1 billion.
With data center demand growing rapidly, investment firms are competing to secure real estate for this booming sector. BlackRock recently partnered with Microsoft on a $30 billion AI investment fund aimed at developing data centers.
“This market is so massive in terms of the data center demand,” Arougheti said in an interview with FT. “There is still a significant undersupply of capital to meet that demand.”
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