Ares Raises A Record $3.3B To Spend On Distressed Real Estate

Alternative investment manager Ares has raised over $3.3B in capital, its largest closed-end fundraise to date, as the final closing amount for its Ares U.S. Real Estate Opportunity Fund IV. 

Announced Tuesday, Ares now has $5.5B of capital when combined with the fund's predecessor, which racked up $2.2B in commitments, according to a press release. 

New and previous investors across the globe, including public and corporate pensions, insurance companies, sovereign wealth funds, private banks and endowments, committed to the fund. 

The investment manager plans to use the fund to capitalize on U.S. and European real estate opportunities by acquiring distressed assets and repositioning undermanaged ones. It also will go towards risk-mitigated development and redevelopment in its desired submarkets. 

Ares' partner and co-head of U.S. real estate, David Roth, said in a press release the company is "observing significant opportunities" for the fund as capital markets stabilize. Ares stated to an investor that AREOF IV has a four-year investment window, according to CoStar.

The fund's portfolio includes two big projects. The first is one of the largest hotel transactions of the year so far, the $1B purchase and redevelopment of a Hyatt Regency in Orlando. 

Last year, the fund contributed preferred equity to 55 Broad St, Silverstein Properties' office-to-residential conversion project. The developer acquired majority interest in the property and is in the process of turning the 410K SF office into 571 market-rate apartments with Metro Loft. The project is the largest of its kind in New York City history.

In July, Ares broke another one of its records when it closed a direct lending fund worth $34B in base capital. Total equity commitments for that fund surpassed its $10B target, coming in at $15B, according to Reuters. 

The Los Angeles-based company has $447B in assets under management, its website states.