Global alternative investment manager Ares has been awarded a public-private partnership with the Community of Madrid to develop more than 3,600 affordable rental residential units across the city.
As part of its Plan Vive, the Community of Madrid has awarded Ares a 50-year concession to invest €400 mln in developing housing across 13 municipalities in Madrid. Ares has committed to developing this portfolio within three years and to cap the rent per unit at a material discount to current market rent, providing important affordable housing for lower- and middle-income residents.
Avalon Properties, an asset manager majority-owned by Ares, will oversee the assets as part of Ares’ Madrid rental residential strategy, which will now total more than 5,600 units across the Madrid region, over 80% of which will consist of new builds and the majority of which will have rents under €700 per month.
As part of the investment, Ares has partnered with Madrid-based companies Aedas Homes, a major residential developer in Spain, and Grupo Sanjose, a global construction company, to act as the project manager and developer, and constructor, respectively.
‘We are excited to have been selected by the Community of Madrid for this public-private partnership that we believe will bring much needed affordable housing to the region’s residents with a focus on environmentally sustainable living,’ said Kevin Cahill, partner in the Ares Real Estate Group. ‘Plan Vive highlights the growing opportunity for introducing private capital to address critical public issues, like Europe’s affordable housing shortage, and we believe that this creative partnership structure provides a template for other municipalities across Europe.’
The Ares Real Estate Group has been investing in European rental residential since 2013. Contrary to reports in local media outlets which were picked up by PropertyEU, Ares has denied that it is evaluating the sale of its residential portfolio in Spain.
The company said it has no plans to divest a €400 mln portfolio of 1,800 built-to-rent units. Instead, it is looking to grow its exposure to the Spanish residential sector. ‘We believe the Madrid residential projects exemplify Ares’ broader focus on meeting the significant demand for affordable housing across the European market, which benefits our local communities and our fund investors,’ said John Ruane, partner and co-head of European Real Estate Equity at Ares.
