Ares Management to Buy Black Creek Group
Posted on 05/21/2021
A unit of Ares Management Corporation has entered into a definitive agreement to acquire 100% of Denver-based Black Creek Group, LLC’s U.S. real estate investment advisory and distribution business, a real estate investment management firm. Founded in 1993 by John Blumberg, Evan H. Zucker, and Jim Mulvihill, Black Creek had approximately US$ 11.6 billion of assets under management, as of March 31, 2021, in core / core-plus real estate strategies across two non-traded Real Estate Investment Trusts and various institutional fund vehicles. The acquisition will also transform Ares’ retail distribution capability and increase Ares’ perpetual, non-traded REIT capital by US$ 5.1 billion with the addition of two separate non-traded REITs. As one of the leading retail fundraising platforms for non-traded REITs, Black Creek’s over 80-person broker dealer team distributes and markets to more than 70 relationships that have access to over 100,000 financial advisors.
Upon closing, key members of the Black Creek leadership team will remain in place and become part of the Ares Real Estate Group, which is led by Bill Benjamin. The transaction consideration will include an upfront amount comprised of a combination of cash and Ares Operating Group Units in addition to a potential performance-based earnout payable in a combination of cash and Ares equity. The transaction is expected to be accretive to Ares’ after-tax fee related earnings per share of Class A common stock and after-tax realized income per share of Class A common stock in the first year and a more meaningful driver of growth in earnings in the years ahead. The transaction is expected to close early in the third quarter of 2021 and is subject to customary closing conditions, including regulatory approvals.
Advisors
Eastdil Secured, LLC acted as financial advisor to Ares and Latham & Watkins LLP served as legal counsel. Hodes Weill & Associates acted as financial advisor to Black Creek and Simpson Thacher & Bartlett LLP served as legal counsel.
Investor Base
45% of Black Creek’s investors are retail, 28% public pension, 19% asset manager, 6% private pension, and 2% other institutional. Black Creek as a roster of 30-plus institutional investors. Property type by AUM is 84% industrial, 6% office, 7% retail, and 3% multifamily.
Black Creek had brought Rajat Dhanda to become president of the firm, a position he started in May 2017. Prior to joining Black Creek Group, Dhanda spent 26 years at Morgan Stanley, leading key divisions of their institutional and Wealth Management platforms, while also serving on the firm’s Management and Risk Committee for his last eight years. Most recently, he was head of Investment Products and Services in Wealth Management, which was responsible for all of the products distributed by Morgan Stanley’s financial advisors.
In September 2018, John Blumberg died at the age of 59 from pancreatic cancer.
Ares Buying Spree
In April 2021, Ares Management entered into the secondaries market business by acquiring Landmark Partners from BrightSphere Financial Group in a US$ 1.08 billion deal.