UAE-based Aldar Properties and Mubadala Investment Company have partnered with Ares Management (Ares) to jointly invest $1 billion in private real estate credit opportunities in the United Kingdom and Europe over the next three to five years.

Mubadala will hold a 50% stake in the new partnership, with a 30% stake held by Aldar and the remaining 20% by Ares, the companies said in a joint statement on Wednesday.

Additionally, Aldar will invest $100 million into an existing European private real estate credit strategy established by Mubadala and US-based alternative investment manager Ares in 2021.

Over time, the Ares European Real Estate Debt strategy is expected to upsize to $2 billion in capital commitments from Mubadala, Aldar and Ares funds.

The total available capital for the strategy is expected to exceed $5 billion, including the anticipated leverage.

With a total investment of $400 million, Aldar will broaden its focus from regional equity investments to diversifying its investment portfolio across the capital structure by entering the private credit space.

Ares will provide a dedicated investment team to cover real estate debt deal origination, portfolio monitoring, and deal pipeline execution. The US-based alternative investment manager has $49 billion of real estate assets under management and over 250 real estate investment professionals globally,

Since launching in January 2022, the Ares European Real Estate Debt team has closed on over $1.2 billion of real estate loans across Europe as of September 30, 2023.

Earlier this month, Aldar bought London-based developer London Square for an enterprise value of 1.07 billion UAE dirhams ($291 million) in its first acquisition outside the Middle East.

(Editing by Seban Scaria seban.scaria@lseg.com)