Ares Management Corporation has become the latest investment manager to launch a European real estate lending strategy.
The Los Angeles-based organisation, which has a 10-year track record in US real estate debt, announced the hiring of a team of property finance specialists and the close of a first loan for the strategy, with €113 million provided in the Belgian market.
Ares has hired Philip Moore as a partner to lead the team. Moore was previously a managing director at US private equity firm Carlyle, where he led the real estate investment activities in Europe and North America for the company’s Credit Opportunities Fund.
Alessandro Luca, formerly a member of Goldman Sachs’ real estate financing division, joining in 2012, has been hired as a principal. Anisa Dudhia, a lawyer specialising in real estate finance, has also been hired as vice-president and counsel in the Ares legal team.
In its announcement, Ares said it expects to continue to add professionals to the team in the near term.
Although Ares is only now expanding its real estate lending activities into Europe, the company’s property business has been an equity investor for 25 years in Europe’s commercial property markets. Announcing the new strategy, Bill Benjamin, partner, and head of the Ares Real Estate Group, explained it will expand the company’s offer in Europe’s real estate markets.
“As we continue to grow this team, we believe our greater focus on European real estate debt complements our existing Ares Real Estate team and platform and further differentiates us in the marketplace as a comprehensive solutions provider,” said Benjamin.
Through the new business unit, Ares says it will focus on originating and managing commercial real estate loans against quality Western European assets. It will target a range of sectors including residential, industrial, office, hospitality, retail and mixed-use assets. The company will seek to leverage the relationships fostered by its real estate equity, corporate direct lending, and US real estate debt platforms to source deals.
Ares said the business will provide a “range of creative and flexible financing solutions across the capital structure” for borrowers, as it seeks attractive risk-adjusted returns for its investors.
The company did not divulge details of its maiden European lending deal beyond confirming that the €113 million loan financed the acquisition of a landmark office complex in Belgium through a fund managed by the Ares Real Estate Group.
Several organisations with a background in buying real estate in Europe have launched lending strategies in the region in the last two years. They include London-based manager Tristan Capital Partners, which launched a whole loans strategy in 2021. US managers that have entered the market in the last two years include AllianceBernstein and Invesco Real Estate.
Market observers say banks’ reduced appetites for risk, exacerbated by the pandemic, is presenting alternative lenders with more opportunities to achieve attractive risk-adjusted returns through property lending. Several managers have also said investors are increasingly eager to commit capital to European real estate debt strategies, which they see as a defensive investment while property values are high.
Moore commented that he and the rest of the team are joining Ares at a “pivotal time for our industry and the evolving market landscape”.
He added: “Bolstered by Ares’ scale and collaborative approach and demonstrated by our first loan, we believe we are well positioned to directly source loans and provide innovative financing solutions in the UK and Western Europe. Our pipeline of pending and future transactions continues to build as we seek to capitalise on the Ares platform and the robust market opportunity.”