Ares Subsidiary to Snap Up Assets of Black Creek, Expects 29B in AUMs
Ares Management Corporation (ARES) revealed that its subsidiary has inked a deal to acquire all the assets of Black Creek Group’s U.S. real estate investment advisory and distribution business. Shares of ARES have jumped 33.4% over the past year.
Black Creek Group is a prominent real estate investment management firm that invests in institutional-quality commercial real estate across the U.S. It has a solid retail investor base with $11.6 billion of assets under management (AUMs) as of March 31, 2021.
Per the terms of the deal, the consideration will include a combination of cash and Ares Operating Group Units in addition to a potential performance-based payment.
The acquisition is expected to close in the third quarter of 2021 and is subject to certain regulatory approvals. (See ARES stock analysis on TipRanks)
The deal is expected to be accretive to EPS from the very first year with more significant EPS growth in future years.
Management estimates that Black Creek’s solid distribution channels will significantly expand the scale of its existing and new products. Combined AUMs are forecasted to increase to $29 billion.
Additionally, the inclusion of two separate non-traded REITs will boost Ares’ perpetual, non-traded REIT capital by $5.1 billion.
ARES’s CEO Michael Arougheti commented, “We are very pleased to enter into this strategic transaction with Black Creek, which further scales our real estate business, expands us into core / core-plus strategies and provides us with a leading non-traded REIT retail distribution platform.”
He further added, “We believe that this highly complementary combination will add meaningful revenue synergies for our real estate business as we offer new products to our existing investor base.”
On April 29, post the company’s Q1 results, Oppenheimer analyst Chris Kotowski reiterated a Hold rating on the stock but did not assign any price target.
Overall, the stock has a Moderate Buy consensus rating based on 4 Buy and 3 Holds. The average analyst price target of $62 implies 14% upside potential from current levels.
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