Cornerstone Real Estate to Buy Ares Commercial’s Lending Unit

  • Deal will double buyer’s multifamily portfolio to $10 billion
  • CEO gains access to senior-housing and health-care investing

Cornerstone Real Estate Advisers, an asset manager owned by Massachusetts Mutual Life Insurance Co., agreed to buy ACRE Capital Holdings LLC in a bet on multifamily loans.

Cornerstone agreed to pay $93 million to purchase the Plano, Texas-based lender from Ares Commercial Real Estate Corp., the buyer said Wednesday in a statement. The deal will double Cornerstone’s multifamily loan portfolio to $10 billion and is expected to be completed as soon as next quarter, according to the statement.

Chief Executive Officer Scott Brown has been bolstering operations, increasing the assets under management to $50.6 billion at the end of March from about $45 billion when he was named CEO early in 2015. He hired Allstate Corp.’s Joy Winterfield and JPMorgan Chase & Co.’s Albert Yang last year.

“The acquisition of ACRE Capital expands Cornerstone’s national commercial lending platform, further strengthening our relationships with multifamily borrowers, while providing access to other sectors including senior housing and health care,” Brown said in the statement. “The affordable housing segment of the marketplace is under-served, and acquiring ACRE Capital will allow us to meaningfully address the current and looming scarcity in affordable residential housing.”

ACRE Capital has about 106 employees, and will be run by James Henderson, chief investment officer of Cornerstone’s Alternative Investments Group, after the deal closes, according to the statement.

Liquidity, Capital

The transaction will give the seller increased “liquidity and available capital in order to invest accretively in self-originated and attractively structured commercial real estate loans and investments,” Ares Commercial Chief Financial Officer Tae-Sik Yoon said in a separate statement. Ares Commercial is externally managed by a subsidiary of Ares Management LP.

Proskauer Rose was legal counsel for Ares Commercial. Cornerstone used Goodwin Procter and got financial advice from Kimberlite Group.

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