In a significant collaboration, UAE and US firms have made a $1 billion investment in a European real estate credit platform. Abu Dhabi’s sovereign investor Mubadala, Aldar Properties, and US alternative investment manager Ares Management have announced the joint venture to capitalize on promising opportunities in real estate investments the region.
UAE and US combine expertise
Mubadala will emerge as the majority stakeholder in the newly formed venture, with a 50 percent share. Aldar Properties, Abu Dhabi’s largest listed developer, will own a 30 percent stake. Meanwhile, Ares Management, based in Los Angeles, will hold the remaining 20 percent. The combined expertise of the investing entities from the UAE and US is poised to reshape the European real estate credit landscape.
Rapid growth anticipated
The combined capital commitments from Mubadala, Aldar, and Ares for the platform are expected to grow to approximately $2 billion. With leverage factored in, the total available capital will surpass an impressive $5 billion. The ambitious growth targets signal confidence in the venture’s potential to deliver substantial returns.
Aldar’s additional investment
Moreover, Aldar Properties will reinforce its commitment by injecting an additional $100 million into an existing European private real estate credit strategy established by Mubadala and Ares in 2021. This move underscores Aldar’s confidence in the ongoing success of the joint initiatives.
The announcement comes in light of Aldar’s strategic expansion into the UK, marked by the $291 million acquisition of developer London Square. This move signals Aldar’s intent to diversify its revenue streams and expand its geographical footprint. Additionally, it will gain exposure to high-growth alternative real estate asset classes.
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Rising importance of private credit
Private credit, or non-bank lending, is becoming increasingly pivotal in real estate finance in mature markets. With strong market fundamentals and growing borrower demand for diversified funding sources, the collaboration could leverage the defensive characteristics of the real estate credit asset class.
Phil Moore, Partner and Head of European Real Estate Debt at Ares Real Estate highlighted the global opportunity for flexible private real estate lenders. The platform will benefit from attractive supply/demand dynamics in residential, mixed-use, and adjacent real estate sectors.
Moreover, market data from Mordor Intelligence projects the UK real estate market’s value to reach nearly $451 billion by 2028. Thus, it is growing at a compound annual rate of 5.75 percent. Similarly, the European market is expected to hit $2.33 trillion by 2028. This reflects a compound annual growth rate of 4.5 percent, according to the research firm.
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