Aldar Properties, Mubadala Investment Company (Mubadala) and Ares Management (Ares) have entered into a new partnership to jointly invest $1 billion in private real estate credit opportunities in the United Kingdom and Europe over the next three to five years.
As part of this transaction, Mubadala will hold a 50 percent stake in the new platform, with 30 percent held by Aldar and the remaining 20 percent by Ares.
Additionally, Aldar will invest $100 million into an existing European private real estate credit strategy first established by Mubadala and Ares in 2021, which focuses on senior secured debt with a first lien on physical real estate assets, including office, multifamily residential, industrial, retail, and hospitality.
Over time, the Ares European Real Estate Debt strategy is expected to upsize to approximately $2 billion in capital commitments from Mubadala, Aldar and Ares funds. Including anticipated leverage, the total available capital for the strategy is expected to be in excess of $5 billion.
With a total investment of $400 million, Aldar will broaden its focus from the traditional equity investments it is known for in the region, to diversifying its investment portfolio across the capital structure by entering the private credit space. By doing so with reputable and established players, from a funding, asset class and sector perspective, Aldar is gaining a meaningful foothold in a high growth market, particularly as the market continues to mature and in the context of the strong growth witnessed in non-bank lending.
Talal Al Dhiyebi Group CEO – Aldar Properties
“Private credit is an increasingly important element of real estate finance in mature markets. With the rising prevalence of non-bank lending, as credit conditions tighten and stricter capital requirements are implemented, we see a substantial opportunity for Aldar as a strategic real estate investor. This partnership between Mubadala, Ares, and Aldar is wholly unique, blending financial strength, a proven track record and in-depth knowledge of the real estate sector and asset classes. It is an ideal opportunity in terms of timing to gain both high quality exposure to a key asset class and a solid foothold in a market that is not only scalable but that also offers favorable risk-adjusted returns through market cycles.”
Mr. Omar Eraiqaat, Deputy CEO of Disruptive Investments at Mubadala, said that “Mubadala has strong and strategic relationships with both Ares and Aldar, and this new platform leverages the collective strengths of each party to invest in the private real estate credit market in the United Kingdom and Europe. This collaborative approach reflects our shared commitment to identifying and capitalizing on unique investment opportunities that deliver sustainable, long-term returns.”
Ares, a leading global investment manager, with approximately $49 billion of real estate assets under management and over 250 real estate investment professionals globally, will provide a dedicated investment team mandated to cover real estate debt deal origination, portfolio monitoring, and deal pipeline execution.
Leveraging a highly collaborative approach across the Ares platform, the Ares European Real Estate Debt team is fully integrated into Ares’ global real estate team and benefits from the firm’s global leadership position in credit. Since launching in January of 2022, the Ares European Real Estate Debt team has originated and closed on over $1.2 billion of real estate loans across Europe, as of September 30, 2023.
Mr. Phil Moore, Partner and Head of European Real Estate Debt in Ares Real Estate,stated that “The global opportunity for flexible private real estate lenders continues to grow as we see ongoing retrenchment of traditional sources of capital. We remain focused on leveraging our cycle-tested team, global market perspective and disciplined approach to capitalize on our high conviction sectors, including the residential, mixed-use and adjacent spaces, all of which continue to benefit from attractive supply/demand dynamics. Our most recent investments reflect our ability to step into complex situations and provide flexibility up and down the risk/return spectrum at scale. We look forward to further pursuing attractive lending opportunities and executing on our debt investment strategy in Europe alongside Mubadala and Aldar.”
The announcement follows Aldar’s recent expansion into the UK with the acquisition of London Square, the company’s inaugural direct investment beyond the MENA region. Moreover, the investment in UK and European private credit serves as an extension of the company’s international expansion strategy. The strategy is focused on investing in mature markets outside of Aldar’s home region and aims to accelerate the company’s growth through diversifying its revenue and geographic presence and increasing its portfolio and investment exposure to high-growth alternative real estate asset classes.
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