Ares Management Expands CRE Debt Business, Acquires Wrightwood Capital
- Aug 18, 2011
August 18, 2011
By Barbra Murray, Contributing Editor
Alternative-asset investment-management firm Ares Management L.L.C. has acquired the commercial real estate investment platform of debt-capital provider Wrightwood Capital. By snapping up Wrightwood, which has executed over $3.9 billion in loans and investments since 2004, Ares has greatly increased the Ares Private Debt Group’s presence in the commercial real estate lending market in one fell swoop.
Ares will incorporate the Wrightwood business into the Ares Commercial Real Estate investment division. The ACRE team will welcome a staff of 40 Wrightwood professionals, including Bruce Cohen, Wrightwood’s former CEO, who is now an ACRE senior partner. Cohen will spearhead ACRE with Jon Bartling, fellow senor partner and Ares’ global head of real estate.
“The addition of the Wrightwood investment platform enhances ACRE’s ability to address a significant and growing need for financing solutions in middle-market commercial real estate,” Bartling said. “We have seen this story unfold in middle-market corporate credit and the ability for ARCC to continuously take meaningful market share from traditional lenders who are under pressure to withdraw and/or are unable to adapt.” ARCC, or Ares Capital Corporation, is a specialty finance company managed by a subsidiary of Ares Management.
A substantial segment of the market share does appear to be up for grabs, as most traditional lenders continue to isolate borrowers with excessive requirements. In its July 2011 Senior Loan Officer Opinion Survey on Bank Lending Practices, the Board of Governors of the Federal Reserve System found that the net fraction of domestic banks that indicated that they had eased standards on CRE loans during the second quarter stood near zero, as was the case in the previous two quarters. “Standards for all types of CRE lending remain tight relative to the range that has prevailed since 2005 at most banks,” the Board concluded.
While lenders hold steady in their conservative lending practices, the call for loans grows louder. “On net, more than one-third of large domestic banks described demand for CRE loans as having strengthened over the previous three months.”
*This story was updated at 3:42 p.m. EST on August 18, 2011.