Ares, the highly acquisitive US real estate investor, is in talks to buy a large slice of the £1.84 billion of commercial real estate effectively up for sale as the UK's largest wealth manager St James's Place winds down all three of its UK property funds.
Ares has been running the slide rule over the portfolio and has now reached agreement on five assets for which it will pay more than £200 million.
Those assets are understood to include 25 Great Pulteney Street, an office in London's West End, the Albany Park multilet industrial estate in Frimley, with the three others industrial and retail assets.
Announcing the proposed wind-down last year, St James' Place blamed the downturn in property markets since the COVID-19 pandemic began, which it termed “a challenging period for the sector as a whole”, as well as the expected regulatory changes to open-ended property funds being explored by the Financial Conduct Authority and the Bank of England.
The company is winding down its Property Unit Trust, Pension and Life funds, which collectively have £1.84 billion of assets. The Property Unit Trust holds £789.4 million of real estate assets, the Property Pension Fund has £622.8 million, and the Property Life Fund £428.4 million.
25 Great Pulteney Street in Soho is in the Pension Fund while Albany Park is in the Life Fund.
St James's Place has said it would sell all of the assets and expects the process for the majority to take about two years, with investors to receive returns on a "regular basis".
Orchard Street, the specialist real estate fund manager which managed the funds, has been replaced by Invesco to handling the wind-down.
St James's Place suspended its dealings in its property unit trust in October 2023, joining other open-ended funds. The other two funds had been subject to deferred withdrawals.
Negative sentiment towards open-ended property funds has built in recent years as various economic shocks including the Brexit vote and the COVID-19 pandemic have highlighted the so-called liquidity mismatch between real estate, which takes time to sell, particularly in difficult market conditions, and regular dealing fund investments.
The Bank of England and Financial Conduct Authority have both been pursuing major but long-running reviews of UK open-ended real estate funds to tackle the mismatch between daily trading and the ability to sell real estate in difficult market conditions, with the FCA notably suggesting there should be an up to 180-day delay on redemption requests.
Ares Management Corporation is a leading global alternative investment manager offering clients complementary primary and secondary investment solutions across the credit, real estate, private equity and infrastructure asset classes. As of December 31, 2024, Ares Management Corporation's global platform had over $484 billion of assets under management, with operations across North America, Europe, Asia Pacific and the Middle East.
Ares, St James's Place and Invesco declined to comment.