Ares Management is set to acquire a 36-property U.S. industrial portfolio from EQT Real Estate for about $650 million, marking the global alternative investment firm's second major logistics deal with the Swedish private equity giant in just four months.
Ares and EQT have been the two most active buyers of industrial properties in the United States over the past 24 months, with nearly equal deal totals of slightly more than $9 billion, CoStar data shows. The two firms have outpaced the third-largest buyer over that period, Blackstone, with acquisitions totaling $7.5 billion.
The latest transaction is being financed through a new commercial mortgage-backed securities deal in the works.
The agreement comes as vacancy in the U.S. industrial sector has increased for nearly three years, reaching 7.6% as of the first quarter, according to CoStar. Due to elevated vacancy, annual rent growth has slowed to 1.3%, its lowest rate since 2012.
In November, EQT completed the sale of two U.S. logistics portfolios totaling 4.2 million square feet across 33 properties, marking a strategic exit after working to improve the value. Ares was the buyer of the 23-property portfolio.
Ares' back-to-back EQT acquisitions continue its aggressive push to dominate United States industrial real estate.
Founded in 1997, the company manages alternative investments globally and employs about 4,200 people across more than 55 offices worldwide. Its industrial real estate division alone employs over 700 professionals across 44 global offices, a footprint that expanded significantly when Ares acquired industrial-focused Black Creek Group in 2021.
Ares declined to comment to CoStar News. EQT did not respond to a request for comment.
National portfolio
The latest transaction spans roughly 7.3 million square feet across 13 states and 18 markets, according to Fitch Ratings, which analyzed the deal's CMBS financing structure.
Wells Fargo, Barclays Capital Real Estate and Bank of America are expected to co-originate a $500 million floating-rate mortgage loan to finance the acquisition. The deal is scheduled to close on March 30.
Ares is also slated to pump in $168.2 million in equity to complete the purchase.
The portfolio comprises 21 small to midsize distribution facilities, seven bulk distribution centers and eight shallow-bay industrial properties. The largest concentration is in Illinois, with seven properties totaling 1.57 million square feet, followed by Ohio with six properties totaling 1.53 million square feet, according to Fitch.
Chicago, Cincinnati and Atlanta rank as the three largest markets by net rentable area, the bond rating firm said.
The properties were 95.6% leased as of Feb. 1 with 38 distinct tenants and a weighted average gross rent of $5.78 per square foot. Thirty-three of the 36 properties are single-tenanted. Major tenants include Nike, FedEx and Walmart, which collectively anchor roughly 22% of the portfolio's net rentable area.
EQT restructures
EQT's sales cap a multiyear effort to stabilize occupancy and drive rent growth across last-mile and bulk distribution facilities in 11 major metropolitan areas.
At the same time, the firm is refreshing its industrial holdings.
On Monday, EQT announced it has acquired a portfolio comprising nine buildings totaling about 2 million square feet in Southern New Jersey for an undisclosed amount. The portfolio is a master-planned industrial park less than 1 mile from Interstate 295, with access to the Philadelphia and New York metropolitan areas.
That purchase comes just two weeks after closing a $575 million purchase of 17 properties totaling 3.2 million square feet from Mapletree Investments.