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Ares brings in more than $1bn for two real estate funds

8 Jul 2014

city-at-night-444804-mAres Management’s US and Europe real estate funds have raised more than $1bn through a total of 187 investors.

The private equity firm’s US Real Estate Fund VIII attracted $490m according its filing with the US Securities and Exchange Commission, with 10 LPs committing funds.

Its European Real Estate Fund IV has raised about $556m thanks to 177 investors, just over half its $1bn target. Sales commission paid by Ares for this fund is just over $15.1m.

The European real estate fund has a target return of 16 to 20 per cent gross, and a net IRR of between 12 to 16 per cent, according to details sent to the Public School Employees Retirement System. The LP agreed to commit up to $100m to the fund in March this year.

For its fourth European fund Ares will be constructing a portfolio of office, residential and industrial assets and aims to add value through “intensive asset management” and by developing properties for sale in the most supply-constrained markets.

Ares said it would not be investing in any assets in Russia or the Ukraine.

The firm’s third European Real Estate Fund was launched in 2008 and is currently running a net enterprise multiple of about 1.2x and IRR of 6.2 per cent.

Ares’ recent investments include buying Pegasus Business Park from UK REIT SEGRO for €83.4m with the deal announced yesterday.

Earlier this month the firm bought UK house building company London Square from Graphite Capital for £110m​.

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