Ares Management Corporation said Friday that funds managed by the Ares Real Estate Group (Ares) were awarded an innovative public-private partnership with the Community of Madrid to develop more than 3,600 affordable rental residential units in Madrid.
As part of its Plan VIVE, the Community of Madrid has awarded Ares a 50-year concession to invest €400 million in developing housing across 13 municipalities in Madrid.
”Ares has committed to developing this portfolio within three years and to cap the rent per unit at a material discount to current market rent, providing important affordable housing for lower- and middle-income residents,” the company said in a statement.
Avalon Properties, an asset manager majority-owned by Ares, will oversee the assets as part of Ares’ Madrid rental residential strategy, which will now total more than 5,600 units across the Madrid region, over 80% of which will consist of new builds and the majority of which will have rents under €700 per month.
As part of the investment, Ares has partnered with Madrid-based companies AEDAS Homes, a residential developer in Spain, and Grupo SANJOSE, a global construction company, to act as the project manager and developer, and constructor, respectively.
”All project plans have been developed with what we believe is a strong focus on environmentally conscious design, construction and operations, including Grade A energy efficiency certification, materials specifically selected and sourced to minimize environmental impact and efficient design for waste management and water usage. The homes themselves will feature a modern fit-out and residents will benefit from a wide range of amenities such as a gym, swimming pool and indoor and outdoor communal spaces,” said the company.
“We are excited to have been selected by the Community of Madrid for this public-private partnership that we believe will bring much needed affordable housing to the region’s residents with a focus on environmentally sustainable living,” said Kevin Cahill, Partner in the Ares Real Estate Group.
“Plan VIVE highlights the growing opportunity for introducing private capital to address critical public issues, like Europe’s affordable housing shortage, and we believe that this creative partnership structure provides a template for other municipalities across Europe. We look forward to working closely with the Community of Madrid, AEDAS and SANJOSE in realizing the important benefits for all stakeholders,” continued Cahill.
“We believe the Madrid residential projects exemplify Ares’ broader focus on meeting the significant demand for affordable housing across the European market, which benefits our local communities and our fund investors,” said John Ruane, Partner and Co-Head of European Real Estate Equity at Ares.
“Over the last several years, we have built our thesis by making creative local investments related to the need for affordable housing in multiple regions across Europe, including Denmark, Germany, Ireland, Poland and Spain. Through our demonstrated experience and ability to provide flexible capital solutions, we are seeking to advance Ares’ commitment to corporate responsibility by investing in projects with a focus on positive social and environmental impact, and we believe there is significant market opportunity to further expand these efforts.”