Is Ares Management (ARES) Quietly Reframing Its Alternative Playbook Around Hyperscale Data Centers?

• Ares Management recently expanded its US data center footprint, with Ares Real Assets funds securing a 314-acre development site in Spotsylvania County, Virginia, and acquiring two fully leased hyperscale facilities in Leesburg totaling 745,000 square feet and 165 MW of IT load.
• These transactions highlight how Ares is pairing its digital infrastructure and real estate capabilities to pursue long-term, contracted cash flows in data centers, a sector tied to accelerating adoption of advanced computing technologies.
• We’ll now examine how Ares’ push into hyperscale data centers in Northern Virginia could influence its investment narrative around alternative assets.

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Ares Management Investment Narrative Recap

To own Ares Management, you have to believe in the long term growth of alternatives, especially fee rich areas like private credit, real assets and infrastructure, while accepting high valuation and margin pressure as key risks. The Virginia hyperscale data center deals modestly reinforce the near term catalyst of scaling newer platforms, but do not materially change the biggest current risk, which is execution and integration across expanding business lines such as data centers and logistics while margins are already tight.

Among recent announcements, Ares’ addition to the S&P 500 and related indices stands out, as it can support liquidity and index driven demand just as the firm leans harder into capital intensive New Economy assets like data centers. That combination of broader market visibility and deepening exposure to long duration, contracted digital infrastructure may prove important as investors weigh high leverage, compressed net margins and the payoff timeline for these newer platforms.

Yet behind the appeal of long term contracted data center cash flows, investors should be aware of the execution risk if Ares’ rapid expansion into complex, capital intensive platforms...

Read the full narrative on Ares Management (it's free!)

Ares Management's narrative projects $7.1 billion revenue and $2.2 billion earnings by 2028.

Uncover how Ares Management's forecasts yield a $183.60 fair value, a 10% upside to its current price.

Exploring Other Perspectives

Three Simply Wall St Community valuations span roughly US$98 to US$201 per share, showing how far apart individual views can be. Against that backdrop, Ares’ push into large scale data centers puts even more focus on whether new platforms can offset fee pressure and sustain earnings growth, so it is worth comparing several of these perspectives before forming your own view.

Explore 3 other fair value estimates on Ares Management - why the stock might be worth 41% less than the current price!

Build Your Own Ares Management Narrative

Disagree with existing narratives? Create your own in under 3 minutes - extraordinary investment returns rarely come from following the herd.

• A great starting point for your Ares Management research is our analysis highlighting 2 key rewards and 3 important warning signs that could impact your investment decision.
• Our free Ares Management research report provides a comprehensive fundamental analysis summarized in a single visual - the Snowflake - making it easy to evaluate Ares Management's overall financial health at a glance.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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