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Ares in €100m European deal

The Los Angeles-based alternative asset manager has acquired a 480,000 square foot office and retail portfolio consisting of eight properties located across five European countries.

Alternatives asset manager Ares Management’s real estate arm, Ares Real Estate Group, has bought a €100 million European portfolio from German property company and fund manager IVG Immobolien’s IVG Institutional Funds.

The Los Angeles-based firm has acquired the 480,000 square foot office and retail portfolio consisting of eight properties located across five European countries: the UK, Germany, Sweden, Poland and the Netherlands.

“Not only do the properties within the portfolio provide an attractive initial yield, we believe they also present several asset management opportunities, which is consistent with the objectives of our growing value-add business,” said Wilson Lamont, a partner in the Ares Real Estate Group, in a statement.

The deal comes hot on the heels of two fund raises by Ares. In January, it held final closes on the $1.3 billion Ares European Real Estate Fund IV and the $824 million Ares US Real Estate Fund VIII.

Target returns for the new European fund are 16 percent to 20 percent gross IRR and 12 percent to 16 percent net IRR over three to five year holding period. Ares' predecessor fund, the 2008 vintage AREA European Real Estate Fund III, is showing net IRRs of 6.22 net and 1.5x, and is projected to deliver gross IRRs of 13.44 percent and 1.7x.

As of September 30, Ares Management’s real estate group managed approximately $9.6 billion of assets under management through commingled funds, separately managed accounts and other fund types, as well as through its publicly traded commercial mortgage REIT, Ares Commercial Real Estate Corporation.