Ares Commercial Real Estate files for IPO

The newly formed specialty finance company of alternative asset manager Ares Management has filed to go public as a REIT.

Ares Commercial Real Estate has filed with the Securities and Exchange Commission for an initial public offering and is aiming to raise $250 million. The filing comes just one month after its parent company, Los-Angeles based alternative asset manager Ares Management, announced its acquisition of Chicago-based real estate debt provider Wrightwood Capital, which added more than 40 new employees to the company and formally established the Ares Commercial Real Estate Group, a subgroup within Ares’ private debt group.

Chicago-based Ares Commercial Real Estate, which focuses on originating, investing in and managing middle-market commercial real estate loans and other commercial real estate-related investments ranging in size from $15 million to $100 million, did not indicate in its filing when the IPO would occur, but it did say it intends to qualify to be taxed as a real estate investment trust beginning with the tax year ending 31 December. The company, which intends to be listed on the New York Stock Exchange under the symbol ‘ACRC’, did not specify the number of shares to be offered or the expected price range in its filing.

Ares Commercial Real Estate, which was incorporated this month, will be managed externally and advised by Ares Commercial Real Estate Management, an affiliate of the alternative asset manager. Ares Commercial Real Estate Management had more than $1 billion in total committed capital under management in commercial real estate-related investments as of 31 August, and an origination, investment and portfolio management team led by the senior investment professionals of the Ares Commercial Real Estate Group. John Bartling, who co-heads the group, currently is the sole director on Ares Commercial Real Estate’s board. Upon completion of the offering, the group’s other co-head, Bruce Cohen, former chief executive of Wrightwood, also will join the board, along with five others. 

Once it goes public, Ares Commercial Real Estate said it will acquire an initial portfolio of recently originated commercial real estate loans owned by ACRC Holdings, a subsidiary of Ares Investments that was formed this month, via a merger with that entity. 

Ares Commercial Real Estate said it will use the net proceeds from its IPO to repay outstanding debt under Wells Fargo and Citibank funding facilities, which the company will assume upon completion of the portfolio acquisition and which will be used to originate qualifying senior commercial mortgage loans and A-notes. The remainder of the proceeds will be used for general corporate and working capital purposes, the company said.