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Ares Joins Ranks of Blackstone, Prologis With Potential $5.2B Takeover of GLP Capital Partners

Ares Management announced that it has agreed to acquire GLP Capital Partners, minus its operations in China, in a deal the company valued at $3.7 billion, including $1.8 billion in cash and $1.9 billion in Ares Class A common shares. While the deal isn't closed just yet, it would make Los Angeles-based firms one of the largest players in industrial real estate.

The Financial Times reported the deal as Ares paying up to $5.2 billion. The additional amount refers to the "long-term performance incentives designed to align GCP International leadership with the interests of fund clients and Ares stockholders." That could add another $1.5 billion through 2027. The FT did say this was one of the largest merger and acquisition (M&A) deals in private investment in recent years.

GCP is a global alternative asset firm with $44 billion in assets under management, which added to the current AUM of Ares will total approximately $96 billion in real estate assets. Ares reportedly has more than doubled in size since 2020 through takeovers.

Ares said that GCP had a long history of addressing new economic sectors with beneficial long-term trends, such as industrial, digital infrastructure, and self-storage. The to-be-acquired firm has operations in Japan, Europe, and the U.S. and is active in such emerging economies as Brazil and Vietnam. The company has also invested heavily in global data center investments and "over 1GW of IT capacity in key markets across London, Tokyo, Osaka and São Paulo, and has a substantial pipeline for future growth."

Given that GCP also was managing more than 320 million square feet of industrial properties as of June 30, 2024, Ares chief executive Michael Arougheti told the FT that would make his company one of the three largest investors in industrial real estate after Blackstone and Prologis.

According to Ares, industrial real estate is a $2 trillion sector with ongoing strong fundamentals across market cycles and enjoys favorable conditions and trends, including e-commerce growth and institutional and retail investor demand.

Ares said that GCP will additionally help expand the company's presence in Japan through a large industrial presence with almost $20 billion of AUM, as of June 30, 2024. That includes the large publicly listed Japan Real Estate Investment Trusts (JREIT). GCP's industrial businesses in Europe and the U.S. have been successful for a long time.

Also, Ares points to data center demand with capital expenditure expected to exceed $1 trillion over the next three years, including "data and compute needs, cloud migration, data security, and artificial intelligence."

Reprinted with permission from the Thursday, 10 October 2024 05:29:05 EST online edition of GlobeSt © 2024 ALM Media Properties, LLC. All rights reserved. Further duplication without permission is prohibited, contact 877-256-2472 or reprints@alm.com.