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Ares to Buy GCP For $5.2B, Becoming Top 3 Industrial Player

Ares Management announced plans to acquire GLP Capital Partners for up to $5.2B.

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Good morning. Ares Management announced plans to acquire GLP Capital Partners for up to $5.2B. The acquisition would make Ares one of the top players globally in the industrial real estate sector.

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🎙️ Listen Now: In this episode of No Cap by CRE Daily, hosts Jack Stone and Alex Gornik sit down with Aleksandr Gampel, Co-Founder of Cuby, to explore how Cuby is revolutionizing the construction industry.

Market Snapshot

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MAJOR M&A

Ares Management to Acquire GLP Capital Partners in $5.2B Deal

Ares Management to Acquire GLP Capital Partners in $5.2B Deal

Ares Management (ARES), an alternative asset manager based in Los Angeles, announced plans to acquire GLP Capital Partners for up to $5.2B. The acquisition would make Ares one of the top three industrial players globally.

The bigger leagues: With the acquisition of GCP, Ares’ total real estate AUM would surge to approximately $96B. GCP currently manages $44B in assets across the U.S., Europe, Japan, and other global markets. The addition of GCP's 320 MSF of industrial properties, along with investments in digital infrastructure and self-storage, will turn Ares into a top three global contender in the industrial sector.

Perfectly aligned: Ares CEO Michael Arougheti emphasized the strength of industrial, which is valued at $2T and continues to benefit from robust e-commerce growth. The GCP acquisition aligns with Ares' strategic focus on long-term growth potential. GCP's strong presence in data centers also complements the growing demand for digital infrastructure, with significant capital expenditures expected to exceed $1T over the next three years.

➥ THE TAKEAWAY

Global goalposts: The deal with GCP will enhance Ares' global footprint, particularly in Japan, where GCP has nearly $20B in AUM and investments in Japan Real Estate Investment Trusts (JREITs). GCP's success in established and emerging markets like Brazil and Vietnam will also provide geographic diversification opportunities for Ares, contributing to the firm's overall growth strategy.

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✍️ Editor’s Picks

  • Simplify waterfall distributions: Discover why mastering LPAs is essential and see how Agora’s innovative waterfall tool can empower you to automate and streamline your distributions in this exclusive webinar

  • Damage assessment: Hurricane Milton hit Florida late last night, sweeping across the Sunshine State into Thursday morning, causing widespread damage and potentially $175B in losses.

  • Real estate resurgence: US pending home sales have surged 2% YoY, led by Phoenix's 14.1% growth, influenced by a Federal Reserve rate cut, as Florida lags behind due to recent storm surges.

  • Bidding wars begin: Brooklyn's Q3 residential real estate market saw highly competitive activity with a $975K median price and 4% YoY growth, driven mostly by cash deals and wealthier buyers.

  • City Hall scandal: The Manhattan DA's office is investigating Mayor Eric Adams’ administration for potential bribery and money laundering, one of five ongoing probes.

🏘️ MULTIFAMILY

  • Investing impactfully: The new Turner Multifamily Impact Fund III plans to invest over $2.3B in affordable housing and has already acquired 483 units in key markets.

  • B-Side Apartments: JLL (JLL) just sold B-Side Apartments, a 147-unit Minneapolis community, to Turner Impact Capital for the Turner Multifamily Impact Fund III.

  • Multifamily millions: Ponderosa Park, a 120-unit multifamily property in Flagstaff, AZ, was sold to Bridge Partners for $28.05M.

  • Leasing launch: A JV has started leasing Highgate at Livingston, a 169-unit luxury apartment project in Northern NJ, with rents starting at $2.45K per month.

🏭 Industrial

  • Mega-merger: Ares Management will potentially acquire GLP Capital Partners for $3.7B in cash and shares, with a total deal value of up to $5.2B, making it one of the largest real estate firms globally.

  • Straight winning: Ares Management also just secured the biggest 2024 Miami warehouse deal for $147M, marking its third major South Florida acquisition.

  • Records on the move: The Brooklyn District Attorney's Records Division leased slightly over 52 KSF at Industry City near Sunset Park for $1.2M–$1.6M per year, with a renewal option.

  • Industrial boom: A savvy seller just achieved a 10x return on a 305 KSF warehouse sale in Northeast Philadelphia's industrial market, which is staying hot.

🏬 RETAIL

  • Retail surge: Atlanta’s retail rents are standing out by growing at double the national rate due to a tight and highly competitive real estate market.

  • Mall revival: 2024 has been great for malls, with a 7.3% boost in foot traffic thanks in part to a strong back-to-school season, highlighting the enduring popularity of teen retailers.

  • Experiential growth: Fine arts and ‘experiential’ tenants dominated New York City's Q3 retail leasing activity as consumers continue to seek entertainment-driven experiences.

  • Sophisticated social scene: September’s top retail leases in NYC included diverse businesses like a 44 KSF grocer, a 24 KSF fashion brand, and new social clubs.

🏢 OFFICE

  • Office pause: No major office projects broke ground in Dallas-Fort Worth last quarter, a rare occurrence that may help ease rising vacancy rates.

  • Vacancies soar: Meanwhile, Bay Area office vacancies have hit record levels, with San Francisco at 34.5%, Oakland at 29.1%, and Silicon Valley at 22%.

  • Real estate rebound: Office vacancies in downtown Minneapolis and St. Paul remain high, reaching 23.4% and 29%, despite modest lease signings.


📈 CHART OF THE DAY

According to Green Street, after several years in decline, average CRE prices are slowly climbing again, with multifamily properties leading the recovery, while offices are still lagging behind.


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