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Ares Management has agreed to pay up to $5.2bn to buy the international arm of real estate investment manager GLP Capital Partners, in one of the largest combinations in the private investment industry in recent years.
The deal will add $44bn in assets to Ares’s business — taking it towards its goal of managing more than $750bn by 2028 — and extend it beyond its core credit franchise. It also puts Ares much closer in size to its larger peers, including Blackstone, Apollo Global Management and KKR.
The takeover of GLP Capital’s international business, which excludes its funds in Greater China, will nearly double Ares’s investment business in the property sector, giving it large real estate holdings in Japan and Europe.
Ares chief executive Michael Arougheti told the Financial Times the deal would make it one of the three largest investors in industrial real estate, putting it behind Blackstone and Prologis. The Los Angeles-based group managed just under $450bn at the end of June.
Top executives at Ares, led by billionaire Arougheti — who is also a co-owner of the Baltimore Orioles baseball team — have turned to takeovers to expand the private investment business, which has more than doubled in size since the end of 2020.
In 2021 it bought secondaries investor Landmark Partners for $1.1bn, which was followed closely by the buyout of US real estate investment firm Black Creek. Then in 2023 it purchased Asia-focused private equity group Crescent Point Capital.
Ares will pay $1.8bn in cash for the business known as GCP and fund the remainder of the $3.7bn purchase price with its own shares. It has also agreed to a long-term incentive plan with GCP’s top leaders, which could lift the payouts they receive by a further $1.5bn through 2027. Ares may choose to pay the majority of that with stock.
Arougheti said Ares was drawn to the deal as the Federal Reserve was cutting interest rates and demand for data centres continued to explode.
“We are able to come into the deal having underwritten property values in a higher interest rate environment,” Arougheti said. “As interest rates come down . . . you should see an improvement in economics. We’re buying in at the right time.”
The groundswell in the data centre business has unleashed a race by some of the largest money managers. Ares’s investment comes a day after rival credit investment shop Blue Owl announced it had agreed to buy IPI Partners, an investor in data centre infrastructure with $10.5bn under management, for $1bn. Last month BlackRock partnered with Microsoft on a $30bn artificial intelligence investment fund to help finance data centres.
“This market is so massive in terms of the data centre demand,” Arougheti said. “There is still a significant undersupply of capital to meet that demand.”
