Ares buys big in Germany

The European property arm of Ares Management, formerly called Area Property Partners, has bought a portfolio of 1,692 residential units via the insolvency of a former affiliate of   BGP Investment as it looks to assemble a large platform of German housing assets.  

Ares Management’s European real estate group has bought a large portfolio of rented residential assets in Germany where it is looking to build up a significant platform.

The European arm of the firm formerly known Area Property Partners and before that, Apollo Real Estate Advisors, has bought 1,692 units totaling almost 1.2 million square meters of housing in several large cities in west and north-west Germany.

Ares bought the package of residential assets out of an insolvency administrator to a former affiliate of BGP Investment, the European real estate company which started out as a joint venture in 2005 between Australia’s Babcock & Brown and the GPT Group and ran into liquidity problems in 2008.

Bill Benjamin, senior partner of Ares Real Estate Group said Ares had “continued interest” in the German residential market, believing the sector offered “strong fundamental value and excellent liquidity”. No price tag was attached to the deal.

Ares, which is still raising a European property fund but has made no announcement on its progress to date, said it would be working with local operating partner Forte based in Frankfurt to add value and reposition the properties.

Benjamin added: “One fundamental that is driving this market is that the German residential housing sector continues to be highly affordable as the growth in rental rates has been outpaced by the growth in disposable income.”

The company added the deal was part of its new program to roll-up distressed German residential properties given the country’s market depth and investment opportunities.