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Ares Management has agreed to acquire the international division of real estate investment manager GLP Capital Partners for up to $5.2 billion, making it the private investment industry’s largest acquisition in recent years.
The deal adds $44 billion in assets to Ares’ business, expanding beyond its core credit franchise with a goal of managing more than $750 billion by 2028. It turns out. Ares’ size also puts it much closer to larger peers such as Blackstone, Apollo Global Management and KKR.
The acquisition of GLP Capital’s international business (excluding Greater China funds) will nearly double Ares’ investment business in the real estate sector, giving it a significant amount of real estate holdings in Japan and Europe.
Ares CEO Michael Arrogetti told the Financial Times that the deal would make the company one of the three largest investors in industrial real estate, after Blackstone and Prologis. The Los Angeles-based group had just under $450 billion under management at the end of June.
Ares’ management, led by billionaire Arrogeti, who also co-owns the Baltimore Orioles baseball team, has turned to acquisitions to expand its private investment business, which has more than doubled in size since late 2020. .
In 2021, it acquired secondary investment firm Landmark Partners for $1.1 billion, followed closely by the acquisition of US real estate investment firm Black Creek. In 2023, it acquired Crescent Point Capital, an Asia-focused private equity group.
Ares will pay $1.8 billion in cash for the business, known as GCP, and will finance the remaining $3.7 billion in its own stock. It has also agreed to a long-term incentive plan with GCP’s top leaders, which could increase its dividend receipts by an additional $1.5 billion by 2027. Ares may choose to pay most of it in stock.
Arrogeti said Ares was attracted to the deal because the Federal Reserve is cutting interest rates and demand for data centers continues to soar.
“Even in a high interest rate environment, we are able to assume the value of the property and enter into a contract,” Mr. Arrogeti said. “As interest rates come down… you should see an improvement in the economics. We are making acquisitions at the right time.”
The rise in the data center business has sparked competition among some major asset management companies. Ares’ investment comes a day after rival credit investment shop Blue Owl announced it had agreed to buy IPI Partners, a data center infrastructure investment firm with $10.5 billion in assets under management, for $1 billion. Last month, BlackRock partnered with Microsoft on a $30 billion artificial intelligence investment fund to help finance data centers.
“This market is huge in terms of demand for data centers,” Arrogeti said. “There remains a significant lack of capital to meet that demand.”
