New fund targets distressed real estate and redevelopment projects
Ares Management, the investment arm of Ares Commercial Real Estate, has secured over $3.3 billion to invest in opportunistic real estate ventures across the United States.
This marks the largest fundraise to date for Ares’ real estate division, significantly surpassing the $2.2 billion secured for its predecessor fund, the company said.
The new fund, Ares US Real Estate Opportunity Fund IV (AREOF IV), will focus on distressed real estate assets, undermanaged properties, and redevelopment opportunities in key US markets. This effort is part of a broader strategy, which, in combination with Ares' European real estate initiatives, now gives the firm $5.5 billion in capital to target real estate investments across both regions.
“As capital markets stabilize, we are observing significant opportunities for AREOF IV,” David Roth, partner and co-head of AREOF IV, said in a press release. “We believe the mounting need for capital infusions to bridge gaps created by the deleveraging that has occurred over the past two years has yielded an attractive investible universe of high-quality real estate in desirable markets.”
The fund has already been active, acquiring and redeveloping properties. One notable investment includes the $1.07 billion acquisition and redevelopment of the Hyatt Regency Orlando, one of the largest hotel deals of 2024. Additionally, the fund provided preferred equity for the conversion of 55 Broad Street in New York's Financial District, one of the largest office-to-residential conversions in the city's history.
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The fund's investors included sovereign wealth funds, pensions, insurance companies, and private banks, spanning regions such as the Americas, Asia, Europe, and the Middle East.
“Meaningful enhancements to strengthen our origination and execution capabilities, particularly within the sectors and markets that we find most attractive, have enabled us to deploy a significant portion of the Fund in recent investments,” said Andrew Holm and Jay Glaubach, partners and co-heads of the fund. “We look forward to building on this progress while seeking to generate compelling risk-adjusted returns for our investors.”
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