Ares Management Corporation (NYSE: ARES) has solidified its position as a leading global alternative investment manager by announcing the acquisition of Walton Street Capital Mexico S. de R.L. de C.V. (“Walton Street Mexico”) from Walton Street Capital, L.L.C. (“Walton Street”). This strategic move, finalized through a definitive agreement, brings a premier real estate asset management platform under the Ares umbrella, specifically targeting the burgeoning industrial sector in Mexico. As of June 30, 2024, Walton Street Mexico boasts a robust portfolio of US$2.1 billion in assets under management, making this acquisition a significant expansion for Ares Real Estate.
Walton Street Mexico, under the leadership of Federico Martin del Campo, Managing Partner and CEO, brings to Ares a seasoned team of over 15 investment professionals. This team has cultivated deep expertise in the Mexican real estate market, particularly within the industrial sector, over two decades. Their track record speaks volumes, having navigated and transacted across key Mexican markets, amassing a portfolio of over 51 million square feet of industrial real estate spread across more than 250 properties since 2010. This impressive growth has attracted a diverse range of tenants from Mexico’s largest industrial sectors, highlighting Walton Street Capital Mexico’s strong market presence and operational excellence.
For Ares Real Estate, this acquisition is a calculated step in its long-term growth strategy. The firm has consistently focused on expanding into key geographies and sectors poised for long-term structural growth. The industrial real estate sector has remained a high-conviction area for Ares, evidenced by its existing $28.1 billion industrial portfolio spanning over 230 million square feet across the U.S. and Europe, as of June 30, 2024. By integrating Walton Street Mexico, Ares Real Estate gains immediate access to a leading platform in a high-growth market, leveraging the acquired team’s extensive experience and well-established local networks to further expand its global industrial footprint.
The benefits of this acquisition are mutual. Walton Street Capital Mexico will now operate under the umbrella of Ares’ global Real Estate group, gaining access to a vast network and resources. Ares Real Estate manages a substantial $52 billion in assets and employs over 270 investment professionals, equipped with leading capabilities across debt and equity strategies, major real estate sectors, and diverse geographies. This integration promises to enhance Walton Street Mexico’s capabilities and market reach within the robust Ares platform.
Michael Arougheti, Chief Executive Officer and President of Ares, emphasized the strategic rationale behind the acquisition, stating, “We are excited to announce this transaction and believe that the Walton Street Mexico team will bring great insights to Ares as we continue to grow our leading global industrial real estate platform. We are seeing a meaningful shift in supply chain dynamics globally with Mexico emerging as an attractive location for skilled manufacturing and we believe that these trends will continue to increase demand for warehouse space in the country.” Arougheti also noted the alignment of values and the distinctive edge that Federico and his team bring to Ares Real Estate.
David Roth, Co-Head of Ares U.S. Real Estate, echoed this sentiment, welcoming the Walton Street Mexico team and highlighting the strategic timing of the acquisition. “We believe that we are entering Mexico at an opportune time to capitalize on continued growth and outperformance of the industrial real estate sector in North America,” Roth stated, underscoring the strategic advantage of expanding into the Mexican market now.
Jeff Quicksilver, Co-Founder and Managing Partner of Walton Street Capital, expressed pride in the growth of Walton Street Mexico under their leadership. He noted that the sale is strategically timed to allow Walton Street Capital to concentrate on the expansion of its U.S. real estate equity and debt investment platforms, indicating a strategic realignment for Walton Street Capital as a whole.
Federico Martin del Campo expressed enthusiasm about joining Ares, citing “cultural and skill set synergies” between the two teams. He believes this partnership will significantly bolster their ability to achieve strategic growth objectives in Mexico, leveraging Ares’ global real estate team and capitalizing on the attractive industrial investment opportunities within the region.
The acquisition is anticipated to be immediately accretive to Ares’ after-tax realized income per share of Class A and non-voting common stock, signaling a positive financial outlook for the transaction. The deal is expected to formally close in the fourth quarter of 2024, contingent upon customary closing conditions, including necessary regulatory approvals.
For this transaction, Latham & Watkins LLP acted as legal counsel for Ares, while Kirkland & Ellis LLP and Mayer Brown LLP provided legal counsel to Walton Street. Berkshire Global Advisors L.P. served as the financial advisor to Walton Street, completing a team of top-tier advisors on this significant acquisition.
This acquisition marks a significant step for Ares Management in strengthening its global real estate platform and capitalizing on the promising industrial sector in Mexico, facilitated by the deep expertise and market leadership of Walton Street Capital Mexico. The union is poised to drive further growth and value creation in the increasingly important North American industrial real estate landscape.
