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Ares readies fifth European RE fundraise

The Los Angeles-based alternative asset manager closed the predecessor vehicle, Ares European Real Estate Fund (EF) IV, on $1.3bn in January 2015. 

Ares Management is preparing to market its fifth European real estate fund, co-founder Michael Arougheti said on the firm’s second-quarter earnings call Friday.

The Los Angeles-based firm closed Ares European Real Estate Fund (EF) IV in January 2015 on $1.3 billion, beating its $1 billion target. The fourth fund is expected to be invested in residential, retail, office and industrial real estate in major markets in the region, including the UK, Germany and France.

At the end of the year, or early next year, Ares will launch EF V, Arougheti said. A spokesman declined to further comment on the fundraise.

Park Hill Group was the placement agent for EF IV, but PERE understands the New York-based firm is not working on the successor vehicle.

Ares invested $875 million of EF IV capital as of June 30, and the fund generated a 13 percent net internal rate of return with a 1.2x equity multiple, according to the earnings report. The firm targets a 12-18 percent net internal rate of return for its real estate equity funds.

EF IV, previously known as AREA European Real Estate Fund IV, launched in March 2012, before its manager, the private equity real estate firm AREA Property Partners was acquired by asset manager Ares Management a year later. Limited partners in the vehicle included the Illinois Municipal Retirement Fund, which earmarked $50 million, and the New Mexico State Investment Council, which committed $75 million, according to PERE data.

In the second quarter, Ares’ real estate group raised $872 million of equity in total, including $415 million for the first close of Ares US Real Estate Fund IX in May. Ares has a $1 billion target for the opportunistic vehicle, according to PERE data.

Overall, Ares managed $104 billion, up 9 percent year-on-year, as of June 30.