Ares Management teams with Forte for German resi acquisition

Los Angeles-headquartered Ares Management LLC made its first foray into German real estate earlier this month, when it teamed up with Frankfurt-based Forte Real Estate to buy a residential portfolio located across several large cities in western and north-western Germany. The deal was a distressed opportunity originating from insolvency administrator Pluta, one of the biggest German insolvency law firms.

According to Ares Management, the portfolio consists of 1,692 residential units with 109,000 sqm of lettable space, in cities such as Hamburg, Bremen, Düsseldorf, Essen, Bielefeld and Duisburg. With opportunity investor Forte acting as co-investor and asset manager, the plan is to add value and reposition the portfolio, which currently has a 15% vacancy rate, prior to a subsequent sale.

According to Bill Benjamin, senior partner and European head of Ares Real Estate, “This transaction reflects Ares’ continued interest in the German residential market, which we believe offers strong fundamental value and excellent liquidity. One fundamental that is driving this market is that the German residential housing sector continues to be highly affordable as the growth in rental rates has been outpaced by the growth in disposable income.”

Ares has been looking to step up its investment in activity since acquiring fellow-American AREA Property Partners last year, which has an investment platform across the USA, Europe and India. As a group, it invests its more than €70bn of capital under management across the capital structure, from senior debt to common equity; this is its first German acquisition, but it looks like there will be more to follow.