Ares Management’s purchase of three UK retail parks this year is expected to generate an 8% cash-on-cash yield.
It bought the Team Valley Retail Park in Gateshead, the Kingsway West Retail Park in Dundee and Meteor Centre in Derby for a combined £291m (€402.4m).
The deal equated to a 6.45% cash-on-cash return, with the properties expected to generate an 8% cash-on-cash yield after debt.
The transaction was underwritten at a 13% gross IRR, according to a document from the Illinois Municipal Retirement Fund, which recently approved a €100m commitment to the manager.
Ares invested in the 865,298 sqft portfolio, known as Project Hush, for its European Property Enhancement Partners II fund.
Partners II committed £47m to the deal.
Limited partners are projected to achieve an 11-14% gross IRR from the fund, which is investing in retail, office, residential and industrial properties in the UK, France and Germany.
Ares is seeking a total capital raise of $600m for the fund, with a $900m hard cap.
The real estate manager recently bought the 75,000sqm Kustermann Park office asset in Munich, committing €56.2m to the transaction.
The off-market deal was underwritten at a 12.1% gross IRR and a 1.73% gross equity multiple.
Ares acquired the German asset out of insolvency.
While the buildings have undergone some work, their refurbishment has been held back due to a lack of funding.
