In January, Ares Management made the first change to its real estate top brass in nearly a decade. The Los Angeles-based alternative investment manager promoted Julie Solomon, formerly global chief operating officer of real estate, to co-head of the business alongside Bill Benjamin, who had previously been the sole head since 2016.
The creation of the new real estate leadership structure had two primary drivers, one of which was the platform’s expansion to approximately $49 billion of assets under management and more than 250 investment professionals across 16 local offices in the US and Europe. Ares holds the sixth spot on the PERE 100 ranking of the world’s largest real estate managers by capital raised.
“We have had exponential growth in the past five years or so,” Benjamin said, noting the growth was both organic – from the firm raising successively larger real estate funds – and inorganic, from the acquisition of industrial manager Black Creek in 2021.
Eventual succession was the other factor in naming a new co-head for the business. “At some point in time, and that time is not tomorrow, I’m going to hand over the reins of running the business on a day-to-day basis,” said Benjamin, who has 37 years of industry experience to Solomon’s 23 years. “You fix the roof when the sun is shining. And we want a sustainable senior leadership team.”
The decision to split the global real estate head role into two was made over the course of last year, he added. “This is an ambitious business within an ambitious firm. To get the business to the next step, I want a partner.”
‘Complementary’ co-heads
Benjamin and Solomon began working together at AREA Property Partners – which Ares acquired in 2013 – having joined the predecessor firm in 1995 and 2006, respectively.
“Julie and I have worked together for nearly 20 years, so this is really a progression of our partnership. She is a strong leader and knows how to operate a business of this scale and complexity,” Benjamin said.
Following the Black Creek acquisition, Solomon, who previously served as head of product management and investor relations, was promoted to global COO of Ares Real Estate in 2022. She “played a key, key part in what has been really a successful integration,” Benjamin said. “We have had little to no attrition.”
The day-to-day running of the business continues as it has been, said Solomon. Benjamin remains chair of the investment committee, of which Solomon has been an active member for many years. However, as co-heads, “together we manage the oversight and long-term vision for the business,” she said.
The two co-heads work together in a “very complementary way,” Benjamin remarked. “I historically have leaned towards the investment side given my role on the investment committee and as COO Julie tended to be more focused on the operations and capital raising efforts. Going forward, as co-heads, we will be nimble as we think it is critical to be involved in all aspects of the business as opposed to a more siloed approach.”
Added Solomon: “I think what Bill and I have developed for our people is they trust the two of us to communicate openly and often, and that we are very clear on what the objectives are for the business. And when a decision needs to be made, whether it’s investment-oriented, strategic or organizational in nature, they know they’re going to get a consistent answer with a 360 degree view.”
Growth story
Within the real estate business, the greatest growth over the past 18 months has been in deepening the operating capabilities and depth of expertise within the real estate team, Solomon said. With the ownership of Black Creek, “we see the benefits of that operating model where we are part of every point of the value chain,” she said. “We’ve looked at that blueprint, and we have started to apply that to other high-conviction sectors and strategies.”
For example, the real estate business is expanding upon its long history of investing in the multifamily sector with the build out of a vertically-integrated multifamily platform and made a string of hires to lead the business, including former Resource REIT chief investment officer Marshall Hayes as head of multifamily acquisitions in 2022; Todd Farrell, previously president of Quarterra Multifamily, a subsidiary of Lennar Corporation, as its first head of US multifamily development in 2023; and former LivCor executive Jeff Sanford as managing director focusing on US multifamily real estate equity asset management earlier this year.
Similarly, the firm has built on its experience in student housing with the purchase of a minority stake in New York-based residential-focused manager Timberline Real Estate Ventures last year, and in net lease, for which the firm hired a trio of former Realty Income Corporation executives in 2021.
The firm also expanded into European real estate debt in 2022 with a number of key hires that included ex-Carlyle executive Philip Moore to head up the new business. The team had originated and closed on over £1.1 billion ($1.37 billion; €1.28 billion) of real estate loans across Europe as of last June, including a £300 million senior loan to refinance a portfolio comprising a retail property and hotel asset in central London.
“We have been active” around European real estate credit, Benjamin said. “And given the nature of the market, with base rates high and credit spreads high and attractive repo, we believe we’re getting equity returns for debt risk on assets, which if we had bought as equity, we would not make this return.”
He noted that activity has been picking up, with “disproportionate activity in the debt business.” Dealflow is 50-50 between equity and debt, even though the latter makes up less than 30 percent of Ares’ real estate AUM. US and European real estate equity together represent 73 percent of the firm’s AUM in the asset class.
“We’re beginning to see what we now call a capitulation trade, the resignation trade,” where owners have acknowledged that interest rates have stabilized and have decided to sell, Benjamin remarked. “We’re able to buy assets of a quality nature that we wouldn’t have been able to buy two or three years ago.”
Over the last five years, Ares’ overall growth as a firm has been approximately 80 percent organic and 20 percent inorganic, according to Benjamin. When asked if the real estate business continues to pursue additional M&A transactions, he replied: “The answer is we’re always looking. But the criteria has to be that it’s complementary and strategic in its areas of focus. It can’t cannibalize what we have.”
He also added that any new add-on would have to fit culturally. “What Julie and I work on, what we work very, very closely on is organizational design and culture. And it’s something that Ares has always put a premium on. It is not a star system and so it’s important to have collaboration.”
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