New Mexico SIC backs Ares and Almanac real estate funds
New Mexico State Investment Council (SIC) is investing in the latest real estate funds of Ares Management and Almanac Realty Investors.
Late last year, IPE Real Assets reported that Ares Management was planning to raise €1.25bn (€1.04bn) for its fifth European real estate fund. New Mexico SIC has approved a $75m commitment to Ares Europe Fund V, according to a board meeting report.
Vince Smith, the deputy state investment officer for New Mexico SIC, said: “It’s our opinion that the market in Europe is now one where much of the capital is being invested in core real estate. This gives our capital and the fund managed by Ares access to some strong investment opportunities.”
Smith said Ares had “proved to be a strong manager for us”. New Mexico SIC has invested in previous funds, including Ares Europe Fund IV to which it also made a €75m commitment.
According to New Mexico SIC, the new Ares fund plans to invest 30% of its capital in the UK, 25% in Germany, 15% in France, 20% in other western European markets and 10% in central Europe.
It will invest 80% in existing assets that can be improved and 20% in developments, targeting a net internal rate of return in the mid-teens.
New Mexico SIC is also investing $75m in Almanac Realty Securities VIII, a fund that invests in real estate companies.
Smith said: “We like investing with Almanac, as their investment strategy gives us diversification as the manager has a very different strategy from other managers in our real estate portfolio.”
In October last year, IPE Real Assets reproted that Almanac Realty planned to raise $1.3bn for ARS VIII fund.
Almanac provides growth capital to public and private companies that own and operate real estate.
It recently made an investment of up to $400m with Merritt Properties, which is expected to help grow its portfolio by 20% to 30% through the acquisition, development and redevelopment of primarily industrial properties in the Baltimore-Washington DC corridor.