US investment firm Ares Management Corporation is to buy the international business of global industrial real estate giant GLP Capital Partners - excluding China - in a transaction valued at $3.7 billion.
Ares said the deal is made up of around $1.8 billion in cash and approximately $1.9 billion in Ares Class A Common Shares. It added that the acquisition will establish Ares Real Estate as one of the largest global vertically integrated platforms and nearly doubles its assets under management to approximately $96 billion across North America, Europe, Asia and Latin America. It estimates it will create a top three owner and operator of industrial assets globally.
Singapore-based GLP's GCP International is a global alternative asset management firm with $44 billion of assets under management, as of June 30, 2024. Its major focuses are industrial real estate, digital infrastructure and self-storage.
It has vertically integrated platforms with a large local presence in major geographies, including Japan, Europe and the U.S. It is also a leading industrial platform in emerging economies, such as Brazil and Vietnam.
The firm is also a major investor in global data centers, with several large hyperscale development projects under way, representing over 1GW of IT capacity in markets across London, Tokyo, Osaka and São Paulo, and it has a major pipeline to be built out.
GCP International manages 23 funds supported by an institutional investor base and investment, management and property development professionals managing more than 320 million square feet of industrial properties, as of June 30, 2024.
It is one of the UK's largest owners of industrial real estate and one of the most prominent Asian investors in the UK alongside Logicor, owner China Investment Corporation, and Singaporean sovereign wealth fund GIC.
GLP’s 23 million-square-foot ownership footprint in the UK largely comprises its Magna Park and G-Park developments. For a recent interview with its UK boss Bruce Topley about the group's plans across Europe, click here.
The acquisition gives Ares a major foothold in Asia to add to its significant presence in the US and Europe. It has become an increasingly busy investor in industrial since it bought Denver based Black Creek's real estate business in 2021.
It completed a £200 million acquisition of a Royal London Asset Management portfolio of industrial in the UK earlier this year and last month bought the $2.1 billion industrial asset management platform Walton Street Mexico.
Explaining the rationale for the acquisition, in a joint statement Ares and GCP International said: "The approximately $2 trillion industrial real estate sector continues to exhibit strong and resilient fundamentals across market cycles, accelerated by long-term demand tailwinds, including the growth of e-commerce, and it is well positioned to continue to benefit from both institutional and retail investor demand.
"Similarly, data center demand from both hyperscale and enterprise customers continues to accelerate with capital expenditure expected to materially exceed $1 trillion over the next three years, buoyed by global secular trends driven by the increase in data and compute needs, cloud migration, data security and most recently artificial intelligence."
Ares said GCP International adds scale and capabilities in attractive Asia markets, through one of the largest industrial platforms in Japan with nearly $20 billion of AUM, as of June 30, 2024, including one of the largest publicly listed Japan Real Estate Investment Trusts and a second scaled institutional perpetual vehicle managed by GCP International. GCP International’s industrial businesses in Europe and the U.S. have "long track records of success".
Michael Arougheti, chief executive officer and president of Ares, added: "We have long admired the global real estate experience of GCP and its capabilities in facilitating the economy of the future, which includes investing in and managing industrial, data center and self-storage assets.
“As a combined business, we believe that Ares’ and GCP International’s experienced management teams, highly collaborative cultures and investment track records will create a powerhouse in global real assets investing."
“We have strong conviction that combining GCP International’s and Ares’ investment and operating capabilities, expansive networks and collaborative cultures will create one of the world’s leading real assets investment management businesses,” added Ming Mei, co-founder and CEO of GCP and GLP.
The transaction will follow a separation of GCP International from GLP Capital Partners’ remaining business, which will remain independent and headquartered in Singapore with a focus on investing in Greater China.
Mei will serve as CEO of GLP and GCP’s remaining business, along with its leadership team in China and some other global executives. He will also continue to support GCP International’s and Ares’ growth as an Ares partner and senior adviser. Steele and GCP International’s leadership teams responsible for managing and operating the funds in Japan, Europe, the U.S., Brazil and Vietnam will join Ares.
The transaction is expected to close in the first half of 2025. Ares has secured fully committed bridge financing from Morgan Stanley Senior Funding, Inc. and Citigroup Global Markets Inc for the transaction.
The transaction is expected to be "modestly accretive" to Ares’s after-tax realised income per share of Class A and non-voting common stock in the first full calendar year, following the acquisition with "meaningfully higher accretion expected in future years".
Eastdil Secured, Barclays, Goldman Sachs & Co and Wells Fargo Securities were financial advisors to Ares, with Latham & Watkins acting as legal counsel. Citigroup, Morgan Stanley & Co, Greenhill, a Mizuho affiliate, UOB Group and Deutsche Bank were financial advisers to GCP International and Kirkland & Ellis served as legal counsel.
Ares Management Corporation is a leading global alternative investment manager advising across the credit, real estate, private equity and infrastructure asset classes. As of June 30, 2024, Ares Management Corporation's global platform had more than $447 billion of assets under management, with more than 2,950 employees operating across North America, Europe, Asia Pacific and the Middle East.