Good morning. I'm Julie Solomon. I'm a partner and co-head of the Aries Real Estate Group, and I will be joined shortly by Keith Derman, co-head of Infrastructure Opportunities. And today we will be giving you an update on real assets at Aries. We'll touch on what the business looks like today as the second largest business at Aries, and we'll talk about the drivers of our continued growth.
So today... Ares Real Assets comprises roughly $64 billion of AUM in the U.S., Europe, and Asia. We invest up and down the capital structure as owners, operators, and lenders to real assets globally. Keith and I represent a very large team who are cycle-tested, who have been investing for decades, and who are local in the very large addressable markets where we invest. We've experienced a lot of growth in real assets at Ares.
We've grown over 32% over the past five years since 2018, and that has come primarily from organic growth. Our assets have performed, we've been successful at fundraising, and we've made two strategic acquisitions, one in each of our businesses. The first Mike talked about earlier today, which was the acquisition of the Black Creek Group in 2021. Black Creek brought numerous capabilities into Ares, including being one of the largest owners and operators of industrial in the United States.
And then in 2022, Patrick and the team joined us. We acquired ANP Capital, one of the private credit meters in the infrastructure market, and that business has continued to thrive. So we believe the scale that we have grown to Our team's reputation in the marketplace, the track record, and the results that we've delivered to our clients has differentiated us in the marketplace.
Now, to capture the benefits of the scale that we've created, we have a platform that resembles much of what you've heard about today. We want to be a full solutions provider, and we have built out strategies to do just that. And we think that brings three key benefits. to both real estate and infrastructure. The first is that it allows us to have the most relevance in the markets where we invest.
We are a preferred counterparty, and that brings a large set of opportunities into the firm. And then we're able to assess relative value and where we want to be in the capital structure, the capital that we manage. And thirdly, it provides us a suite of strategies. that we can deliver to our institutional and retail clients globally. So now I will spend a few minutes talking about real estate specifically, and then I'll hand it over to Keith to talk about infrastructure.
So real estate today at Aries encompasses just about 50 billion of AUM. Also significant growth within our real estate business. We have grown through organic efforts.
Again, asset performance, even in the market environment, we've been in and fundraising that we have attracted. Just as Tony said earlier, I will echo, assets follow performance. And that's what we've achieved for our business. And what we look to do is to be able to deliver the widest set of opportunities in the real estate group as well. And we've done that through our growth.
I'm proud to say that three years into just approaching the anniversary of the acquisition of Black Creek, we are now the third largest owner and operator of industrial in the United States and a growing and similar footprint in Europe. Our private real estate debt business that Brian Donahoe talked about and manages has tripled in the U.S. and Europe over the past five years. And we are a top three alternatives manager for non-traded REITs. So we have seen the success in our business.
And importantly, we have experienced this success through what has been a fairly difficult time in the real estate market. And that's because we entered 2022. with resilient portfolios heavily invested in multifamily and industrial, and we've invested in our people and our business infrastructure, with over 270 people on the ground in 17 offices. We are a real estate group within a large global firm that has so much information coming in from the thousands of companies that are the tenants that reside in our building, or driving the markets where we invest.
And all of that... presence, all of those experiences of our people has led to the construction of very strong portfolios. Today, roughly 84% of our portfolio is invested in industrial, multifamily, and adjacent sectors that exhibit very strong health dynamics, like student housing, like triple net lease, like single family.
And so importantly, we've concentrated in the right sectors today. But we have experience in all sectors. And I want to pause on this page because this is what we have been building for.
To have direct operating capabilities in our highest conviction sectors, but also to be able to reach into our longstanding network of JV partner relationships that are generating really strong sources of deal flow as well. So having the operating capability and our JV partner relationships. And the additional investments we've made in companies that can provide us with that deal flow, it's given us better opportunities to select from.
We have larger sets of data within our captive portfolios that allows us to underwrite better. And then we are able to deliver improved economics onto our clients. So you take the combination of sector expertise, the relationships, that sit and extend beyond those 270 professionals. You marry that with structuring expertise that our team has developed for decades and decades in the industry.
And what that allows us to do is to make investments that protect our downside during times of uncertainty, but also participate in upside as the market recovers. And that has really been the key to our success. And you could see here, I won't go through each strategy that we manage, but consistently have demonstrated strong performance against the comparable market equivalents across all of our strategies in the U.S. and in Europe and our diversified sector funds and our industrial only funds. And this is the result of having large local teams on the ground, picking the right sectors, the right assets in those sectors.
and in the right structure. And that performance has led to growth in each of the strategies we manage. Our core Core Plus funds, our value add, are opportunistic and in debt, where we've seen a 29% CAGR since 2018. And this all ensures that we are properly capitalized and to take advantage of the market opportunity that's ahead of us.
And it is a large market opportunity ahead of us. Real estate has a $20 trillion global investable market. 13 is professionally managed. Even with our 30% CAGR, which has been very impressive, we still represent just a fraction of a large and fragmented market. And there is a lot of room to grow.
And we have the capabilities to do it. As far as the market today and what is our view? There's still uncertainty in the market, but we believe there are signs of a recovery.
We see it in our own pipeline. We see it in the assets we're bringing to market. There's more liquidity coming in amongst the traditional lenders, although on a very selective basis.
There are buyers that are holding assets or funds that are facing loan maturities, hedge maturities, or fund maturities. And we're starting to see pricing bottom as buyers and sellers are converging. So what's in focus for us against this backdrop?
It's very clear there are four areas of key focus for us. The first is to buy high quality assets and supply constrained markets that have repriced. No sector was immune to the past two years and the dramatic rise in interest rates, but not all suffered the same.
Second, as you heard in the last panel. Direct lending to real estate assets is continued area of focus for us, and we believe we can lend better quality assets. and deliver better yields to our clients.
Third, we are going to leverage our structuring expertise that has been bread and butter to the Aries real estate business for decades, and we will continue to fill the gap in capital structures for owners and sponsors who aren't able to access the same level of debt they could in the past because of the rise in pricing. And fourth is what we call generational assets. This is that once-in-a-lifetime opportunity where we can either buy or lend to assets that, because of the current market dynamics, we wouldn't be able to access elsewhere. Great example of that is a £300 million senior loan we recently made to refinance two prime assets in London. One, Burberry's headquarters in the heart of Mayfair, and the second, the Hilton Kensington in central London.
We were able to take advantage of the retrenchment of the banks and step in on a very large loan that in other market environments we would not have been able to compete on. So this is just a glimpse of what we're doing across the platform, yet we are always focused on growth. And for us, what will drive that growth is first maintaining our performance.
We will continue to drive those results to our clients. Second, we will scale our current strategies. We have room to go. We have built the capabilities to deliver, and we believe we will. We will pursue new strategies that are complementary to what we have right now.
We're excited about Asia. We're excited to continue to expand into segments of the market where we haven't fully built out yet. And if we do all this, if we maintain our performance, we scale our funds, And when we pursue new complementary strategies, we will be able to deepen the relationships with the clients that we have, and we'll be able to expand into new channels to continue on this growth trajectory. So in summary, we feel Aries Real Estate is so well positioned in this current market backdrop, and we will continue to thrive as the market recovers.
I want to thank you for... listening to us talk about the real estate group. And now I will hand it over to my friend and colleague, Keith Derman. Good morning.
I'm Keith Derman, co-head of the Aries Infrastructure Opportunities team. And I have been with the firm for almost 10 years now, since we started a dedicated infrastructure platform back in 2015. The business is now up to $15 billion of assets and feels like we're just getting started. Should be a real big growth area for the firm. Now, I come to work every day incredibly proud of the more than 50 dedicated infrastructure investment professionals who eat, sleep, breathe, structure, finance, develop, construct, own, operate, and manage. infrastructure assets all around the world.
And today we have two dedicated infrastructure strategies, a go anywhere, do everything, or maybe almost everything, global diversified infrastructure credit solutions business, which is run by Patrick, who you just heard from, as well as our equity strategy, which I oversee with my longtime partner, Andy Pike. That business is leveraged to the energy transition with particular emphasis around what we refer to as climate infrastructure and green digital. And those businesses are quite a bit different as far as their strategies, but they provide the same exposure and benefits of infrastructure, which are real assets, long-term contracts, essential services, uncorrelated return, as well as a hedge against inflation.
Now, within the AIO business, we've perfected what we call a value-add, flexible capital style of investing. And we're focused particularly around the energy transition and the drivers of what we think of as the modern infrastructure of today and tomorrow. And we're deeply tenured sector specialists. We love to develop and construct physical projects. But we also invest in what we think of as infrastructure growth equity into platforms, into companies that are looking to scale their own infrastructure portfolios.
We also flex up and down the capital stack, looking to create portfolios that have capital appreciation. yield, and the all-important downside protection. And the flexibility around how we invest, what we invest in, and where we invest, really, it creates a large funnel for origination and makes us a solutions provider.
Now, you heard from Patrick, but just a quick snapshot on the infrastructure credit business, also highly accomplished. It's a great platform, fantastic team. They provide credit solutions to all of the leading infrastructure sponsors in the market today, based in US, Europe, and Asia. And they do cover it all, energy, renewables, transportation, and digital. They provide junior capital, senior acquisition, bridge, Unitron, you name it, they can do it.
And they have invested more than $12 billion historically, usually as a lead arranger or sole lender in... a transaction. Now, Pat showed you this slide already. I wanted to show it to you again, because I want to reiterate how just absolutely massive the capital needs in infrastructure are.
It's staggering. It's actually almost funny money sometimes when you start to use the word trillions. But I want to emphasize that the mega trends that are supporting this capital need, they're both overlapping.
and self-reinforcing. And from our perspective, that creates a chain reaction of investment opportunity. And our expertise in these areas really position us for success and for growth well into the future. Now, I just want to dial in for a moment around the equity business at Aries.
About five, six years ago, we redirected our focus. around climate infrastructure and green digital. We did that because we found that they were the most attractive, most compelling segments of the asset class.
And there's really four principal attributes that I think make them the envy of other segments of infrastructure. Number one is the capital intensity of this sector. I pointed out those numbers for you already.
The second is the high growth nature of these asset classes. Year over year, there's more dollars and more dollars, more demand for these projects, for these companies coming into service. The third is the durability of these megatrends.
It feels almost permanent. It's hard to imagine that in the future, digitization and decarbonization are less important than they already are today. And then finally, resilience. These assets have long-term contracts.
They have credit-worthy counterparties. They have fantastic uncorrelated return. Now, I just want to give you a quick flyover on the two most recent infrastructure funds. We have Ares Climate Infrastructure Partners 1, and we have IDF 5, which was the largest in the credit fund series. Both are fully committed today.
Both are targeting at the high end or above their target return expectations. I know that Andy, Patrick, and I and all the other partners are very, very proud of this performance. But we're really just pleased with the underlying asset quality that we've been able to compile into these funds. And I think that's a function of the asset class, the strength of the asset class, but also the experience and the capabilities of our team. So where are we going to go from here?
We're $15 billion today. We are primed for growth. We're going to do it a number of ways.
We're looking to expand the business geographically. For AIO, that means Europe in the near term and Asia as well. For IDF, that means increased focus on Asia as well as the developed areas of LATAM.
From a sector perspective, It means that we're going to follow the energy transition into other segments of infrastructure, and we're going to lean in around climate and digital, as I think you heard from Mike and others communicate earlier. And then finally, as far as products, on the equity side, we will be looking to expand into the core and to the core plus markets, which combined with the infrastructure credit business and AIO gives us over a thousand basis points of return opportunities within infrastructure. So thank you very much for letting me give you a quick snapshot into the infrastructure business at Aries. And with that...
I'm going to invite a gaggle of secondaries professionals up on the stage to talk about their expanding business. Thank you.