"Mubadala has strong and strategic relationships with both Ares and Aldar, and this new platform leverages the collective strengths of each party to invest in the private real estate credit market in the United Kingdom and Europe," Omar Eraiqaat, deputy chief executive officer of disruptive investments at Mubadala, said in the statement.
Aldar, an Abu Dhabi-based property developer, is also planning to invest $100 million into an existing strategy that Mubadala and Ares established in 2021. The firms now expect that strategy — which is known as the Ares European Real Estate Debt strategy — will be upsized to $2 billion over time. Including anticipated leverage, the total available capital for the strategy is expected exceed $5 billion.
"Private credit is an increasingly important element of real estate finance in mature markets," Talal Al Dhiyebi, group CEO of Aldar, said in the statement. "With the rising prevalence of non-bank lending, as credit conditions tighten and stricter capital requirements are implemented, we see a substantial opportunity for Aldar as a strategic real estate investor."
Sovereign wealth funds are increasingly pushing into the $1.6 trillion private credit market, which has been gaining traction over the past few years as investment banks and traditional debt investors pulled back from leveraged debt amid fears around rate rises and an economic slowdown. Last month, Mubadala said it would be an anchor investor in a new special situations fund set up by Starz Real Estate.
"The global opportunity for flexible private real estate lenders continues to grow as we see ongoing retrenchment of traditional sources of capital," Phil Moore, a partner and head of European real estate debt at Ares. "We look forward to further pursuing attractive lending opportunities and executing on our debt investment strategy in Europe alongside Mubadala and Aldar."