Black Creek Diversified Property Fund 424B3 Prospectus supplement

Filed Pursuant to Rule 424(b)(3)

Registration No. 333-252212

ARES REAL ESTATE INCOME TRUST INC.

SUPPLEMENT NO. 2 DATED MAY 15, 2024

TO THE PROSPECTUS DATED APRIL 12, 2024

This prospectus supplement (this “Supplement”) is part of and should be read in conjunction with the prospectus of Ares Real Estate Income Trust Inc. dated April 12, 2024, as supplemented by Supplement No. 1 dated April 15, 2024 (the “Prospectus”). Unless otherwise defined herein, capitalized terms used in this Supplement shall have the same meanings as in the Prospectus.

The purpose of this Supplement is to disclose:

● the transaction price for each class of our common stock as of June 1, 2024;

● the calculation of our April 30, 2024 net asset value (“NAV”) per share, as determined in accordance with our valuation procedures, for each of our share classes;

● the status of this offering;

● the planned closing of the public primary offering;

● an update on our assets and performance;

● updated information with respect to our real properties;

● updated information with respect to our real estate debt and securities;

● updated information with respect to our DST Program and debt obligations;

● updated selected information regarding our operations;

● updated information regarding distributions;

● updated information regarding redemptions;

● updated information regarding fees and expenses payable to our Advisor, our Dealer Manager and their affiliates;

● updated certain historical NAV information;

● updated information regarding the Advisory Agreement;

● updated information regarding our suitability standards;

● updates to our Plan of Distribution;

● updated experts information; and

● our Quarterly Report on Form 10-Q for the quarter ended March 31, 2024.

●             JUNE 1, 2024 TRANSACTION PRICE

The transaction price for each share class of our common stock for subscriptions accepted (and distribution reinvestment plan issuances) as of June 1, 2024 (and redemptions as of May 31, 2024) is as follows:

Share Class	Transaction Price (per share)
Class T	$	7.6794
Class S		7.6794
Class D		7.6794
Class I		7.6794
Class E		7.6794

The transaction price for each of our share classes is equal to such class’s NAV per share as of April 30, 2024. A calculation of the NAV per share is set forth below. The purchase price of our common stock for each share class equals the transaction price of such class, plus applicable upfront selling commissions and dealer manager fees.

●             APRIL 30, 2024 NAV PER SHARE

Our board of directors, including a majority of our independent directors, has adopted valuation procedures, as amended from time to time, that contain a comprehensive set of methodologies to be used in connection with the calculation of our NAV. Our most recent NAV per share for each share class, which is updated as of the last calendar day of each month, is posted on our website at areswmsresources.com/investment-solutions/AREIT and is also available on our toll-free, automated telephone line at (888) 310-9352. With the approval of our board of directors, including a majority of our independent directors, we have engaged Altus Group U.S. Inc., a third-party valuation firm, to serve as our independent valuation advisor (“Altus Group” or the “Independent Valuation Advisor”) with respect to helping us administer the valuation and review process for the real properties in our portfolio, providing monthly real property appraisals and valuations for certain of our debt-related assets, reviewing annual third-party real property appraisals, reviewing the internal valuations of DST Program Loans and debt-related liabilities performed by Ares Commercial Real

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Estate Management LLC (our “Advisor”), providing quarterly valuations of our properties subject to master lease obligations associated with the DST Program, and assisting in the development and review of our valuation procedures.

As used below, “Fund Interests” means our outstanding shares of common stock, along with the partnership units in our operating partnership (“OP Units”), which may be or were held directly or indirectly by the Advisor, our former sponsor Black Creek Diversified Property Advisors Group LLC, members or affiliates of the former sponsor, and third parties, and “Aggregate Fund NAV” means the NAV of all the Fund Interests.

The following table sets forth the components of Aggregate Fund NAV as of April 30, 2024 and March 31, 2024:

	As of
(in thousands)	April 30, 2024		March 31, 2024
Investments in residential properties	$	1,802,200	$	1,804,150
Investments in industrial properties		1,715,150		1,702,300
Investments in retail properties		683,700		685,350
Investments in office properties		496,250		497,900
Investments in other properties (1)		58,750		58,550
Total investment in real estate properties		4,756,050		4,748,250
Investments in real estate debt and securities		396,899		394,961
Investments in unconsolidated joint venture partnerships		215,153		211,139
DST Program Loans		110,542		120,684
Total investments		5,478,644		5,475,034
Cash and cash equivalents		16,667		15,739
Restricted cash		4,329		4,184
Other assets		63,277		65,179
Line of credit, term loans and mortgage notes		(1,962,814)		(1,967,444)
Financing obligations associated with our DST Program		(1,266,156)		(1,316,786)
Other liabilities		(81,822)		(90,080)
Accrued performance participation allocation		—		—
Accrued advisory fees		(3,315)		(3,304)
Noncontrolling interests in consolidated joint venture partnerships		(6,210)		(6,310)
Aggregate Fund NAV	$	2,242,600	$	2,176,212
Total Fund Interests outstanding		292,027		282,632

(1) Includes self-storage properties.

The following table sets forth the NAV per Fund Interest as of April 30, 2024 and March 31, 2024:

			Class T		Class S		Class D		Class I		Class E
(in thousands, except per Fund Interest data)	Total		Shares		Shares		Shares		Shares		Shares		OP Units
As of April 30, 2024
Monthly NAV	$	2,242,600	$	218,015	$	365,140	$	51,972	$	485,504	$	358,766	$	763,203
Fund Interests outstanding		292,027		28,389		47,548		6,768		63,221		46,718		99,383
NAV Per Fund Interest	$	7.6794	$	7.6794	$	7.6794	$	7.6794	$	7.6794	$	7.6794	$	7.6794
As of March 31, 2024
Monthly NAV	$	2,176,212	$	218,695	$	366,440	$	52,937	$	496,342	$	363,082	$	678,716
Fund Interests outstanding		282,632		28,402		47,591		6,875		64,462		47,155		88,147
NAV Per Fund Interest	$	7.6998	$	7.6998	$	7.6998	$	7.6998	$	7.6998	$	7.6998	$	7.6998

Under GAAP, we record liabilities for ongoing distribution fees that (i) we currently owe the Dealer Manager under the terms of our dealer manager agreement and (ii) we estimate we may pay to the Dealer Manager in future periods for our Fund Interests. As of April 30, 2024, we estimated approximately $66.5 million of ongoing distribution fees were potentially payable to the Dealer Manager. We do not deduct the liability for estimated future distribution fees in our calculation of NAV since we intend for our NAV to reflect our estimated value on the date that we determine our NAV. Accordingly, our estimated NAV at any given time does not include consideration of any estimated future distribution fees that may become payable after such date.

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We include no discounts to our NAV for the illiquid nature of our shares, including the limitations on our stockholders’ ability to redeem shares under our share redemption program and our ability to modify or suspend our share redemption program at any time. Our NAV generally does not reflect the potential impact of exit costs (e.g. selling costs and commissions related to the sale of a property) that would likely be incurred if our assets and liabilities were liquidated or sold today. While we may use market pricing concepts to value individual components of our NAV, our per share NAV is not derived from the market pricing information of open-end real estate funds listed on stock exchanges.

Our NAV is not a representation, warranty or guarantee that: (i) we would fully realize our NAV upon a sale of our assets; (ii) shares of our common stock would trade at our per share NAV on a national securities exchange; and (iii) a stockholder would be able to realize the per share NAV if such stockholder attempted to sell his or her shares to a third party.

The valuations of our real properties as of April 30, 2024, excluding certain newly acquired properties that are currently held at cost which we believe reflects the fair value of such properties, were provided by the Independent Valuation Advisor in accordance with our valuation procedures. Certain key assumptions that were used by the Independent Valuation Advisor in the discounted cash flow analysis are set forth in the following table based on weighted-averages by property type.

	Residential		Industrial		Retail		Office		Other		Weighted-Average Basis
Exit capitalization rate	5.3	%	5.8	%	6.5	%	7.1	%	5.6	%	5.9	%
Discount rate / internal rate of return	6.9	%	7.3	%	7.3	%	8.5	%	7.6	%	7.3	%
Average holding period (years)	10.0		10.0		10.0		10.0		10.0		10.0

A change in the exit capitalization and discount rates used would impact the calculation of the value of our real property. For example, assuming all other factors remain constant, the changes listed below would result in the following effects on the value of our real properties, excluding certain newly acquired properties that are currently held at cost which we believe reflects the fair value of such properties:

Input	Hypothetical Change	Residential		Industrial		Retail		Office		Other		Weighted-Average Values
Exit capitalization rate (weighted-average)	0.25% decrease	3.1	%	3.0	%	2.3	%	2.6	%	2.8	%	2.9	%
	0.25% increase	(2.8)	%	(2.8)	%	(2.1)	%	(2.4)	%	(2.6)	%	(2.7)	%
Discount rate (weighted-average)	0.25% decrease	2.0	%	2.0	%	1.9	%	2.1	%	1.9	%	2.0	%
	0.25% increase	(1.9)	%	(2.0)	%	(1.8)	%	(2.0)	%	(1.9)	%	(1.9)	%

From September 30, 2017 through November 30, 2019, we valued our debt-related investments and real estate-related liabilities generally in accordance with fair value standards under GAAP. Beginning with our valuation for December 31, 2019, our property-level mortgages, corporate-level credit facilities and other secured and unsecured debt that are intended to be held to maturity (which for fixed rate debt not subject to interest rate hedges may be the date near maturity at which time the debt will be eligible for prepayment at par for purposes herein), including those subject to interest rate hedges, were valued at par (i.e. at their respective outstanding balances). In addition, because we utilize interest rate hedges to stabilize interest payments (i.e. to fix all-in interest rates through interest rate swaps or to limit interest rate exposure through interest rate caps) on individual loans, each loan and associated interest rate hedge is treated as one financial instrument which is valued at par if intended to be held to maturity. This policy of valuing at par applies regardless of whether any given interest rate hedge is considered as an asset or liability for GAAP purposes. Notwithstanding, if we acquire an investment and assume associated in-place debt from the seller that is above or below market, then consistent with how we recognize assumed debt for GAAP purposes when acquiring an asset with pre-existing debt in place, the liabilities used in the determination of our NAV will include the market value of such debt based on market value as of the closing date. The associated premium or discount on such debt as of closing that is reflected in our liabilities will then be amortized through loan maturity. Per our valuation policy, the corresponding investment is valued on an unlevered basis for purposes of determining NAV. Accordingly, all else equal, we would not recognize an immediate gain or loss to our NAV upon acquisition of an investment whereby we assume associated pre-existing debt that is above or below market. As of April 30, 2024, we classified all of our debt as intended to be held to maturity, and our liabilities included mark-to-market adjustments for pre-existing debt that we assumed upon acquisition.

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●             STATUS OF THIS OFFERING

As of May 1, 2024, we had raised gross proceeds of approximately $316.5 million from the sale of approximately 36.0 million shares in this offering, including proceeds from our distribution reinvestment plan of approximately $51.9 million. As of May 1, 2024, approximately $9.68 billion in shares remained available for sale pursuant to this offering, including approximately $1.45 billion in shares available for sale through our distribution reinvestment plan.

●             CLOSING OF THE PUBLIC PRIMARY OFFERING

AREIT is a NAV-based perpetual-life REIT, which means that we intend to raise capital perpetually and do not intend to consider a liquidity event. While we have decided to close our public primary offering of shares effective July 2, 2024, our status as a NAV-based perpetual-life REIT and intention to raise capital perpetually has not changed, and we are not considering a liquidity event. We will continue to accept subscriptions for primary shares in the public offering through the July 1, 2024 purchase date. While we expect to close our public primary offering on July 2, 2024, we reserve the right to further extend the duration of the offering. If we determine to extend the public primary offering beyond that date, we will provide an update in a subsequent prospectus supplement.

The decision to close the public offering of primary shares is not reflective of adverse developments at the Company or an unfavorable view of real estate fundamentals. The long-term fundamental drivers of our portfolio remain very much intact, and we believe that the recent market displacement has created one of the most compelling deployment opportunities in many years. AREIT remains an active net buyer of real property and other real-estate related assets, and favorable market dynamics continue to drive meaningful value for our portfolio through rent growth. In-place rents across the portfolio are well below market rents on average, meaning an impactful mark-to-market opportunity still exists to be unlocked.

Our management team remains in place and committed to carrying out our investment objectives of (i) providing current income to stockholders in the form of regular cash distributions, (ii) preserving and protecting stockholders’ capital contributions, (iii) realizing capital appreciation in our net asset value from active investment management and asset management and (iv) providing portfolio diversification in the form of multi-asset class investing in direct real property and other real estate-related assets.

We will continue to be a “public reporting company” under the Exchange Act, which means that we will continue to make public filings with the Commission, including Quarterly Reports on Form 10-Q, Annual Reports on Form 10-K, and Current Reports on Form 8-K. Furthermore, we expect to continue making monthly distributions and to continue the distribution reinvestment plan offering, which investors can continue to elect to participate in.

We have not made any changes to the share redemption program in connection with the close of our public primary offering of shares and expect that the share redemption program will remain open under its current terms. Investors who wish to redeem their shares may still request redemption, subject to the limitations described in the share redemption program. We have not made any changes to the valuation procedures used in connection with the calculation of our NAV, which are described in the “Net Asset Value Calculation and Valuation Procedures” section of the Prospectus. We intend to continue to operate in accordance with the requirements for qualification as a real estate investment trust for U.S. federal income tax purposes, and stockholder tax information will continue to be reported on Form 1099.

Prior to and following the close of the public primary offering, stockholders and financial professionals will continue to be able to access Company information through our public filings with the Commission. Prior to the close of the public primary offering, this information will continue to be available on our public website as well. Following the close of the public primary offering, stockholders and financial professionals will be able to access Company information by signing in to our website at areswmsresources.com/investment-solutions/AREIT using their account number, email or CRD number. In addition, stockholders will continue to receive statements in the same manner they do today.

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●             UPDATE ON OUR ASSETS AND PERFORMANCE

As of April 30, 2024, our consolidated investments include 99 real estate properties totaling approximately 20.1 million square feet located in 33 markets throughout the U.S., which were 95.2% leased.

As of April 30, 2024, our leverage ratio was 36.1% (calculated as outstanding principal balance of our borrowings less cash and cash equivalents, divided by the fair value of our real property, net investments in unconsolidated joint venture partnerships, investments in real estate-related securities and debt-related investments not associated with the DST Program, as determined in accordance with our valuation procedures).

Quarter-to-date through April 30, 2024, we raised gross proceeds of approximately $52.0 million, including proceeds from our distribution reinvestment plan and the sale of DST Interests (including $0.4 million of DST Interests financed by DST Program Loans). The aggregate dollar amount of common stock and OP Unit redemptions requested for April, which were redeemed in full on May 1, 2024, was $20.7 million. During April 2024, we issued 11.3 million OP Units in exchange for DST Interests for a net investment of $88.8 million.

The following table sets forth the total returns for the periods ended April 30, 2024:

	Trailing One-Month (1)		Year-to-Date (1)		One-Year (Trailing 12-Months)(1)		Since NAV Inception Annualized (1)(2)
Class T Share Total Return (with upfront selling commissions and dealer manager fees) (3)	(3.29)	%	(6.20)	%	(10.27)	%	5.54	%
Class T Share Total Return (without upfront selling commissions and dealer manager fees) (3)	0.10		(2.91)		(7.13)		5.66
Class S Share Total Return (with upfront selling commissions and dealer manager fees) (3)	(3.29)		(6.20)		(10.27)		5.54
Class S Share Total Return (without upfront selling commissions and dealer manager fees) (3)	0.10		(2.91)		(7.13)		5.66
Class D Share Total Return (3)	0.15		(2.72)		(6.58)		5.88
Class I Share Total Return (3)	0.17		(2.64)		(6.34)		6.26
Class E Share Total Return (3)	0.17		(2.64)		(6.34)		6.30

(1) Performance is measured by total return, which includes income and appreciation (i.e., distributions and changes in NAV) and is a compound rate of return that assumes reinvestment of all distributions for the respective time period, and excludes upfront selling commissions and dealer manager fees paid by investors, except for returns noted “with upfront selling commissions and dealer manager fees” (“Total Return”). Past performance is not a guarantee of future results. Current performance may be higher or lower than the performance data quoted.

(2) NAV inception was September 30, 2012, which is when we first sold shares of our common stock after converting to an NAV-based REIT on July 12, 2012. Investors in our fixed price offerings prior to NAV inception on September 30, 2012 are likely to have a lower return.

(3) The Total Returns presented are based on actual NAVs at which shareholders transacted, calculated pursuant to our valuation procedures. From NAV inception to November 30, 2019, these NAVs reflected mark-to-market adjustments on our borrowing-related interest rate hedge positions; and from September 1, 2017 to November 30, 2019, these NAVs also reflected mark-to-market adjustments on our borrowing-related debt instruments. Prior to September 1, 2017, our valuation policies dictated marking borrowing-related debt instruments to par except in certain circumstances; therefore, we did not formally track mark-to-market adjustments on our borrowing-related debt instruments during such time.

●             REAL PROPERTIES

Acquisitions. During the three months ended March 31, 2024, we did not acquire any properties.

As of the date of this Supplement, and subsequent to March 31, 2024, we acquired (excluding properties related to our DST Program) one industrial property and one residential property for an aggregate contractual purchase price of $194.1 million.

Dispositions. During the three months ended March 31, 2024, we did not dispose of any properties.

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●             REAL ESTATE DEBT AND SECURITIES

Debt-Related Investments. As of March 31, 2024, we had six floating-rate debt-related investments with a weighted-average interest rate of 10.6% and a weighted-average remaining life of 1.4 years. As of March 31, 2024, the aggregate outstanding principal was $265.3 million, the aggregate carrying amount was $262.8 million and total aggregate commitments were up to $329.7 million.

Available-for-Sale Debt Securities. As of March 31, 2024, we had three available-for-sale debt securities, which were comprised of one CRE CLO, one CMBS and one preferred equity investment. As of March 31, 2024, the aggregate fair value of these investments was $128.7 million.

●             DST PROGRAM AND DEBT OBLIGATIONS

The following table summarizes our DST Program Loans as of March 31, 2024 and December 31, 2023:

							Weighted-Average			Weighted-Average
($ in thousands)	Outstanding Principal		Unrealized Gain, Net (1)		Book Value		Interest Rate			Remaining Life (Years)
As of March 31, 2024
DST Program Loans, carried at cost	$	103,268	$	N/A	$	103,268		5.2	%		8.0
DST Program Loans, carried at fair value		19,914		—		19,914		6.3	%		10.0
Total	$	123,182	$	—	$	123,182		5.4	%		8.3
As of December 31, 2023
DST Program Loans, carried at cost	$	109,266	$	N/A	$	109,266		5.1	%		8.4
DST Program Loans, carried at fair value		7,753		—		7,753		6.4	%		10.0
Total	$	117,019	$	—	$	117,019		5.2	%		8.5

(1) Represents cumulative unrealized gain or loss on DST Program Loans carried at fair value.

The following table summarizes our financing obligations, net as of March 31, 2024 and December 31, 2023:

	DST Interests		Unamortized		Total		Unrealized		Book
($ in thousands)	Sold (1)		Program Costs		Appreciation (2)		Gain, Net (3)		Value
As of March 31, 2024
Financing obligations, carried at cost	$	1,169,757	$	(932)	$	—	$	N/A	$	1,168,825
Financing obligations, carried at fair value		245,127		N/A		N/A		(3,753)		241,374
Total	$	1,414,884	$	(932)	$	—	$	(3,753)	$	1,410,199
As of December 31, 2023
Financing obligations, carried at cost	$	1,238,639	$	(863)	$	11,269	$	N/A	$	1,249,045
Financing obligations, carried at fair value		102,977		N/A		N/A		(932)		102,045
Total	$	1,341,616	$	(863)	$	11,269	$	(932)	$	1,351,090

(1) DST Interests sold are presented net of upfront fees.

(2) Represents cumulative financing obligation liability appreciation on financing obligations carried at cost.

(3) Represents cumulative unrealized gain or loss on financing obligations carried at fair value.

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The following table presents our DST Program activity for the three months ended March 31, 2024 and year ended December 31, 2023:

	For the Three Months Ended		For the Year Ended
(in thousands)	March 31, 2024		December 31, 2023
DST Interests sold	$	147,297	$	479,155
DST Interests financed by DST Program Loans		12,161		51,360
Income earned from DST Program Loans (1)		1,581		5,155
Decrease in financing obligation liability appreciation (2)		(69)		(459)
Rent obligation incurred under master lease agreements (2)		16,064		57,916

(1) Included in other income and expenses on the condensed consolidated statements of operations.

(2) Included in interest expense on the condensed consolidated statements of operations.

We record DST Interests as financing obligation liabilities for accounting purposes. If we exercise our option to reacquire a DST Property by issuing OP Units in exchange for DST Interests, we relieve the related financing obligation liability and DST Program Loans and record the issuance of the OP Units as an issuance of equity. During the three months ended March 31, 2024 and year ended December 31, 2023, 9.0 million OP Units and 27.3 million OP Units, respectively, were issued in exchange for DST Interests, for a net investment of $72.0 million and $228.3 million, respectively, in accordance with our UPREIT structure. In addition, we paid $3.2 million in cash in exchange for DST Interests during the three months ended March 31, 2024. There was no cash paid in exchange for DST Interests during the year ended December 31, 2023.

Debt Obligations. Our consolidated indebtedness is currently comprised of borrowings under our line of credit, term loans and mortgage notes. As of March 31, 2024, we had approximately $2.0 billion of consolidated indebtedness with a weighted-average interest rate of 4.46%, which includes the effects of the interest rate swap and cap agreements. The weighted-average remaining term of our consolidated debt as of March 31, 2024 was 2.9 years, excluding the impact of certain extension options. The total gross book value of properties encumbered by our consolidated debt as of March 31, 2024 was approximately $1.4 billion.

●             SELECTED INFORMATION REGARDING OUR OPERATIONS

Additional Measures of Performance

Funds From Operations (“FFO”) and Adjusted Funds From Operations (“AFFO”)

We believe that FFO and AFFO, in addition to net income (loss) and cash flows from operating activities as defined by GAAP, are useful supplemental performance measures that our management uses to evaluate our consolidated operating performance. However, these supplemental, non-GAAP measures should not be considered as alternatives to net income (loss) or to cash flows from operating activities as indications of our performance and are not intended to be used as liquidity measures indicative of cash flow available to fund our cash needs, including our ability to make distributions to our stockholders. No single measure can provide users of financial information with sufficient information and only our disclosures read as a whole can be relied upon to adequately portray our financial position, liquidity and results of operations. In addition, other REITs may define FFO, AFFO and similar measures differently and choose to treat certain accounting line items in a manner different from us due to specific differences in investment and operating strategy or for other reasons.

FFO. As defined by the National Association of Real Estate Investment Trusts (“NAREIT”), FFO is a non-GAAP measure that excludes certain items such as real estate-related depreciation and amortization. We believe FFO is a meaningful supplemental measure of our operating performance that is useful to investors because depreciation and amortization in accordance with GAAP implicitly assumes that the value of real estate assets diminishes predictably over time. By excluding gains or losses on the sale of assets, we believe FFO provides a helpful additional measure of our consolidated operating performance on a comparative basis. We use FFO as an indication of our consolidated operating performance and as a guide to making decisions about future investments.

AFFO. AFFO further adjusts FFO to reflect the performance of our portfolio by adjusting for items we believe are not directly attributable to our operations. Our adjustments to FFO to arrive at AFFO include removing the impact of (i) our performance participation allocation, (ii) unrealized (gain) loss from changes in fair value of financial instruments and (iii) increase (decrease) in financing obligation liability appreciation, as applicable.

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Although some REITs may present certain performance measures differently, we believe FFO and AFFO generally facilitate a comparison to other REITs that have similar operating characteristics to us. We believe investors are best served if the information that is made available to them allows them to align their analyses and evaluation with the same performance metrics used by management in planning and executing our business strategy. Neither the SEC, NAREIT, nor any regulatory body has passed judgment on the acceptability of the adjustments used to calculate AFFO. In the future, the SEC, NAREIT, or a regulatory body may decide to standardize the allowable adjustments across the non-traded REIT industry at which point we may adjust our calculations and characterizations of AFFO.

The following unaudited table presents a reconciliation of GAAP net income (loss) to NAREIT FFO and AFFO:

(in thousands, except per share data)	For the Three Months Ended March 31, 2024		For the Year Ended December 31, 2023
GAAP net loss	$	(21,589)	$	(83,213)
Weighted-average shares outstanding—diluted		281,373		267,556
GAAP net loss per common share—diluted	$	(0.08)	$	(0.31)
Adjustments to arrive at FFO:
Real estate-related depreciation and amortization		35,470		149,985
Gain on sale of real estate property		—		(36,884)
Our share of adjustments from joint venture partnerships		1,341		7,114
NAREIT FFO	$	15,222	$	37,002
NAREIT FFO per common share—diluted	$	0.05	$	0.14
Adjustments to arrive at AFFO:
Unrealized (gain) loss on financial instruments (1)		(2,954)		3,435
Decrease in financing obligation liability appreciation		(69)		(459)
Our share of adjustments from joint venture partnerships		(1,765)		733
AFFO	$	10,434	$	40,711

(1) Unrealized (gain) loss on financial instruments primarily relates to mark-to-market changes on our derivatives not designated as cash flow hedges, mark-to-market changes on our financing obligations for which we have elected the fair value option, valuation allowance on our debt-related investments and changes to our provision for current expected credit losses.

●             DISTRIBUTIONS

Beginning in the third quarter of 2023, our board of directors authorized an increase to the amount of monthly gross distributions for each class of our common stock, such that distributions in the amount of $0.03333 per share were paid to stockholders. The new monthly gross distribution per share reflects an increase to the amount of the previous monthly gross distribution of $0.03125 per share that had been paid since January 31, 2018. The distributions on Class T shares, Class S shares and Class D shares of our common stock are reduced by the respective distribution fees that are payable with respect to Class T shares, Class S shares and Class D shares. The distributions are paid on or about the last business day of each respective month to stockholders of record as of the close of business on the last business day of each respective month. There can be no assurances that this new distribution rate will be maintained in future periods.

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The following table outlines sources used, as determined on a GAAP basis, to pay total gross distributions (which are paid in cash or reinvested in shares of our common stock through our distribution reinvestment plan (“DRIP”)) for the periods indicated below:

	For the Three Months Ended March 31, 2024				For the Year Ended December 31, 2023
($ in thousands)	Amount		Percentage		Amount		Percentage
Distributions:
Paid in cash (1)	$	19,907	70.7	%	$	70,982	68.4	%
Reinvested in shares		8,238	29.3			32,731	31.6
Total (2)	$	28,145	100.0	%	$	103,713	100.0	%
Sources of Distributions:
Cash flows from operating activities	$	7,792	27.7	%	$	15,958	15.4	%
Borrowings		12,115	43.0			55,024	53.0
DRIP (3)		8,238	29.3			32,731	31.6
Total (2)	$	28,145	100.0	%	$	103,713	100.0	%

(1) Includes other cash distributions consisting of: (i) distributions paid to noncontrolling interest holders; and (ii) ongoing distribution fees paid to the Dealer Manager with respect to Class T, Class S and Class D shares and OP Units.

(2) Includes distributions paid to holders of OP Units for redeemable noncontrolling interests.

(3) Stockholders may elect to have their distributions reinvested in shares of our common stock through our distribution reinvestment plan.

For the three months ended March 31, 2024 and year ended December 31, 2023, our FFO was $15.2 million, or 54.1% of our total distributions, and $37.0 million, or 35.7% of our total distributions, respectively. FFO is a non-GAAP operating metric and should not be used as a liquidity measure. However, management believes the relationship between FFO and distributions may be meaningful for investors to better understand the sustainability of our operating performance compared to distributions made. Refer to “Additional Measures of Performance” above for the definition of FFO, as well as a detailed reconciliation of our GAAP net income (loss) to FFO.

●             REDEMPTIONS

Below is a summary of redemptions and repurchases pursuant to our share redemption program for the three months ended March 31, 2024 and year ended December 31, 2023. All eligible redemption requests were fulfilled for the periods presented. Eligible redemption requests are requests submitted in good order by the request submission deadline set forth in the share redemption program. Our board of directors may modify or suspend our current share redemption programs if it deems such action to be in the best interest of our stockholders.

	For the Three Months Ended		For the Year Ended
(in thousands, except for per share data)	March 31, 2024		December 31, 2023
Number of shares redeemed or repurchased		4,772		22,815
Aggregate dollar amount of shares redeemed or repurchased	$	38,349	$	193,859
Average redemption or repurchase price per share	$	8.04	$	8.50

For the three months ended March 31, 2024 and year ended December 31, 2023, we received and redeemed 100% of eligible redemption requests for an aggregate amount of approximately $38.3 million and $193.9 million, respectively, which we redeemed using cash flows from operating activities in excess of our distributions paid in cash, cash on hand, proceeds from our current public offerings, proceeds from the disposition of properties, and borrowings under our line of credit. We generally repay funds borrowed from our line of credit from a variety of sources including: cash flows from operating activities in excess of our distributions; proceeds from our current public offerings; proceeds from the disposition of properties and other longer-term borrowings.

For purposes of the share redemption program, redemption requests received in a month are included on the last day of such month because that is the last day the stockholders have rights in the Company. We record these redemptions in our financial statements as having occurred on the first day of the next month following receipt of the redemption request because shares redeemed in a given month are considered outstanding through the last day of the month.

S-9

●             FEES AND EXPENSES PAYABLE TO OUR ADVISOR, OUR DEALER MANAGER AND THEIR AFFILIATES

The table below summarizes the fees and expenses incurred by us for services provided by the Advisor and its affiliates, and by the Dealer Manager related to the services the Dealer Manager provided in connection with our securities offerings and any related amounts payable. Refer to the section of the Prospectus entitled “The Advisor and the Advisory Agreement—Summary of Fees, Commissions and Reimbursements” for more information regarding these fees and expenses.

	For the Three Months Ended		For the Year Ended		Payable as of
(in thousands)	March 31, 2024		December 31, 2023		March 31, 2024		December 31, 2023
Selling commissions and dealer manager fees (1)	$	101	$	1,189	$	—	$	—
Ongoing distribution fees (1)(2)		2,286		8,896		772		804
Advisory fees—fixed component		9,972		38,645		3,304		3,281
Other fees and expense reimbursements—Advisor (3)(4)		3,683		13,788		4,495		3,909
Other expense reimbursements—Dealer Manager		40		335		355		84
Property accounting fee (5)		477		1,884		160		170
DST Program selling commissions, dealer manager and distribution fees (1)		2,351		9,693		359		308
Other DST Program related costs—Advisor (4)		2,252		8,114		171		171
Total	$	21,162	$	82,544	$	9,616	$	8,727

(1) All or a portion of these amounts will be retained by, or reallowed (paid) to, participating broker-dealers and servicing broker-dealers.

(2) The distribution fees are payable monthly in arrears. Additionally, we accrue for future estimated amounts payable related to ongoing distribution fees. The future estimated amounts payable were approximately $64.2 million and $66.7 million as of March 31, 2024 and December 31, 2023, respectively.

(3) Other expense reimbursements include certain expenses incurred for organization and offering, acquisition and general administrative services provided to us under the Advisory Agreement, including, but not limited to, certain expenses described below after footnote 5, allocated rent paid to both third parties and affiliates of our Advisor, equipment, utilities, insurance, travel and entertainment.

(4) Includes costs reimbursed to the Advisor related to the DST Program.

(5) The cost of the property management fee, including the property accounting fee, is generally borne by the tenant or tenants at each real property, either via a direct reimbursement to us or, in the case of tenants subject to a gross lease, as part of the lease cost. In certain circumstances, we may pay for a portion of the property management fee, including the property accounting fee, without reimbursement from the tenant or tenants at a real property.

Certain of the expense reimbursements described in the table above include a portion of the compensation expenses of officers and employees of the Advisor or its affiliates related to activities for which the Advisor did not otherwise receive a separate fee. Amounts incurred related to these compensation expenses for the three months ended March 31, 2024 and year ended December 31, 2023 were approximately $3.4 million and $12.6 million, respectively. No reimbursement is made for compensation of our named executive officers unless the named executive officer is providing stockholder services, as outlined in the Advisory Agreement.

●             CERTAIN HISTORICAL NAV INFORMATION

The following table shows our NAV per share at the end of each quarter during 2023 and 2024:

Date	Class T		Class S		Class D		Class I		Class E
March 31, 2023	$	8.63	$	8.63	$	8.63	$	8.63	$	8.63
June 30, 2023	$	8.39	$	8.39	$	8.39	$	8.39	$	8.39
September 30, 2023	$	8.22	$	8.22	$	8.22	$	8.22	$	8.22
December 31, 2023	$	8.02	$	8.02	$	8.02	$	8.02	$	8.02
March 31, 2024	$	7.70	$	7.70	$	7.70	$	7.70	$	7.70

Our share sales and redemptions are made based on the applicable NAV per share carried out to four decimal places. Our most recent NAV per share for each class is (i) posted on our website, areswmsresources.com/investment-solutions/AREIT, and (ii) made available on our toll-free, automated telephone line, (888) 310-9352. In addition, we will disclose in a prospectus or prospectus supplement filed with the Commission the principal valuation components of our monthly NAV calculations.

S-10

●             ADVISORY AGREEMENT

Effective as of April 30, 2024, we, the Operating Partnership and the Advisor renewed the Second Amended and Restated Advisory Agreement (2023), dated as of June 3, 2023 and effective through April 30, 2024 (the “2023 Advisory Agreement”), for an additional one-year term by entering into the Amended and Restated Advisory Agreement (2024) (the “2024 Advisory Agreement”). In addition to the renewal, the 2024 Advisory Agreement amends the 2023 Advisory Agreement by clarifying that the property accounting services provided by the Advisor do not include financial systems and software and consultants related thereto, and that the Advisor may be reimbursed for expenses related to such financial systems and software and consultants related thereto.

Accordingly, all references in the Prospectus to the Advisory Agreement for periods on and after April 30, 2024 pertain to the 2024 Advisory Agreement.

●             SUITABILITY STANDARDS

The following supersedes and replaces the suitability requirement for Kansas investors in the section titled "Suitability Standards" of the Prospectus and all other similar disclosure:

In addition to our suitability requirements, it is recommended by the Office of the Kansas Securities Commissioner that Kansas investors limit their aggregate investment in our securities and other similar investments to not more than 10% of their liquid net worth.

The following supersedes and replaces Section 9.l) of Appendix A: Form of Subscription Agreement within the Prospectus and all other similar disclosure:

If I am (we are) a KANSAS investor, I (we) acknowledge that it is recommended by the Office of the Kansas Securities Commissioner that Kansas investors limit their aggregate investment in our securities and other similar investments to not more than 10% of their liquid net worth. Liquid net worth shall be defined as that portion of the purchaser’s total net worth that is comprised of cash, cash equivalents, and readily marketable securities, as determined in conformity with U.S. generally accepted accounting principles.

●             PLAN OF DISTRIBUTION

The following supersedes and replaces the first paragraph under the caption, “Supplemental Fees and Commissions,” in the section titled “Plan of Distribution—Underwriting Compensation” of the Prospectus:

In addition to the fees and commissions described above, the Dealer Manager may elect to pay supplemental fees or commissions to participating broker-dealers and servicing broker-dealers with respect to shares sold in the primary offering. For example, certain of the participating broker-dealers receive an additional ongoing fee based on the aggregate net asset value of all outstanding shares of our common stock held by the broker-dealer’s clients. If such supplemental fees or commissions are paid with respect to an investment, the investor will be notified by their broker-dealer and/or through disclosure on the subscription agreement or materials that accompany the subscription agreement. Such supplemental fees or commissions may be paid at the time of sale or over time. Any such supplemental fees and commissions will be considered underwriting compensation subject to the 10% underwriting compensation limit described below and will not be reimbursed by us, but may be reimbursed by the Advisor or one of its affiliates.

●             EXPERTS

The statements included in this Supplement under the section titled “April 30, 2024 NAV Per Share,” relating to the role of Altus Group U.S. Inc. have been reviewed by Altus Group U.S. Inc., an independent valuation advisor, and are included in this Supplement given the authority of such advisor as experts in real estate valuations.

●             QUARTERLY REPORT ON FORM 10-Q FOR THE QUARTER ENDED MARCH 31, 2024

On May 10, 2024, we filed our Quarterly Report on Form 10-Q for the quarter ended March 31, 2024 with the Commission. The report (without exhibits) is attached to this Supplement.

S-11

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

☒Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended March 31, 2024

Or

☐Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from                     to                     .

Commission File No. 000-52596

ARES REAL ESTATE INCOME TRUSTINC.

(Exact name of registrant as specified in its charter)

Maryland	30-0309068
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
One Tabor Center, 1200 Seventeenth Street, Suite 2900, Denver, CO	80202
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (303) 228-2200

Securities registered pursuant to Section 12(b) of the Act: None

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.   Yes  ☒    No  ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).   Yes  ☒    No  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☐	Smaller reporting company	☐
Non-accelerated filer	☒			Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.    ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).   Yes  ☐    No   ☒

As of May 6, 2024, there were 28,330,773 shares of the registrant’s Class T common stock, 47,187,846 shares of the registrant’s Class S common stock, 6,618,607 shares of the registrant’s Class D common stock, 62,880,899 shares of the registrant’s Class I common stock and 46,143,716 shares of the registrant’s Class E common stock outstanding.

ARES REAL ESTATE INCOME TRUST INC.

TABLE OF CONTENTS

		Page
PART I. FINANCIAL INFORMATION
Item 1.	Financial Statements:
	Condensed Consolidated Balance Sheets as of March 31, 2024 (unaudited) and December 31, 2023	3
	Condensed Consolidated Statements of Operations for the Three Months Ended March 31, 2024 and 2023 (unaudited)	4
	Condensed Consolidated Statements of Comprehensive Income (Loss) for the Three Months Ended March 31, 2024 and 2023 (unaudited)	5
	Condensed Consolidated Statements of Equity for the Three Months Ended March 31, 2024 and 2023 (unaudited)	6
	Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2024 and 2023 (unaudited)	7
	Notes to Condensed Consolidated Financial Statements (unaudited)	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	28
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	49
Item 4.	Controls and Procedures	50
PART II. OTHER INFORMATION
Item 1A.	Risk Factors	50
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	50
Item 5.	Other Information	52
Item 6.	Exhibits	54

2

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

ARES REAL ESTATE INCOME TRUST INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

	As of
(in thousands, except per share data)	March 31, 2024		December 31, 2023
	(Unaudited)
ASSETS
Net investment in real estate properties	$	3,866,890	$	3,889,314
Investments in unconsolidated joint venture partnerships (includes $34,092 and $0 at fair value as of March 31, 2024 and December 31, 2023, respectively)		189,273		153,305
Investments in real estate debt and securities (includes $128,667 and $122,375 at fair value as of March 31, 2024 and December 31, 2023, respectively)		391,442		370,176
Cash and cash equivalents		15,739		15,052
Restricted cash		4,184		4,614
DST Program Loans (includes $19,914 and $7,753 at fair value as of March 31, 2024 and December 31, 2023, respectively)		123,182		117,019
Other assets		90,957		89,926
Total assets	$	4,681,667	$	4,639,406
LIABILITIES AND EQUITY
Liabilities
Accounts payable and accrued expenses	$	64,785	$	66,386
Debt, net		1,951,690		1,961,120
Intangible lease liabilities, net		36,053		37,079
Financing obligations, net (includes $241,374 and $102,045 at fair value as of March 31, 2024 and December 31, 2023, respectively)		1,410,199		1,351,090
Distribution fees payable to affiliates		64,217		66,656
Other liabilities		32,949		33,913
Total liabilities		3,559,893		3,516,244
Commitments and contingencies (Note 14)
Redeemable noncontrolling interests		11,315		11,746
Equity
Stockholders’ equity:
Preferred stock, $0.01 par value—200,000 shares authorized, none issued and outstanding		—		—
Class T common stock, $0.01 par value—500,000 shares authorized, 28,402 shares and 28,432 shares issued and outstanding, respectively		284		284
Class S common stock, $0.01 par value—500,000 shares authorized, 47,591 shares and 48,145 shares issued and outstanding, respectively		476		482
Class D common stock, $0.01 par value—500,000 shares authorized, 6,875 shares and 6,930 shares issued and outstanding, respectively		69		69
Class I common stock, $0.01 par value—500,000 shares authorized, 64,462 shares and 65,511 shares issued and outstanding, respectively		645		655
Class E common stock, $0.01 par value—500,000 shares authorized, 47,155 shares and 48,210 shares issued and outstanding, respectively		472		482
Additional paid-in capital		1,897,776		1,895,789
Distributions in excess of earnings		(1,142,075)		(1,108,823)
Accumulated other comprehensive income		9,430		6,359
Total stockholders’ equity		767,077		795,297
Noncontrolling interests		343,382		316,119
Total equity		1,110,459		1,111,416
Total liabilities and equity	$	4,681,667	$	4,639,406

See accompanying Notes to Condensed Consolidated Financial Statements.

3

ARES REAL ESTATE INCOME TRUST INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

	For the Three Months Ended
	March 31,
(in thousands, except per share data)	2024		2023
Revenues:
Rental revenues	$	88,131	$	77,960
Debt-related income		11,311		5,761
Total revenues		99,442		83,721
Operating expenses:
Rental expenses		32,500		28,300
Real estate-related depreciation and amortization		35,470		33,197
General and administrative expenses		3,337		3,044
Advisory fees		9,972		9,538
Acquisition costs and reimbursements		2,043		1,169
Valuation allowance on debt-related investment		—		2,520
Total operating expenses		83,322		77,768
Other income (expenses):
Income (loss) from unconsolidated joint venture partnerships		2,282		(2,446)
Interest expense		(44,234)		(37,545)
Gain on sale of real estate property		—		36,884
Unrealized gain on financing obligations		2,821		—
Loss on extinguishment of debt and financing commitments, net		—		(700)
Loss on derivative instruments		—		(103)
Provision for current expected credit losses		133		(5,630)
Other income and expenses		1,289		1,016
Total other income (expenses)		(37,709)		(8,524)
Net loss		(21,589)		(2,571)
Net loss attributable to redeemable noncontrolling interests		111		18
Net loss attributable to noncontrolling interests		6,477		549
Net loss attributable to common stockholders	$	(15,001)	$	(2,004)
Weighted-average shares outstanding—basic		195,679		206,774
Weighted-average shares outstanding—diluted		281,373		263,026
Net loss attributable to common stockholders per common share—basic and diluted	$	(0.08)	$	(0.01)

See accompanying Notes to Condensed Consolidated Financial Statements.

4

ARES REAL ESTATE INCOME TRUST INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(Unaudited)

	For the Three Months Ended
	March 31,
(in thousands)	2024		2023
Net loss	$	(21,589)	$	(2,571)
Change from cash flow hedging activities		4,769		(7,056)
Change from activities related to available-for-sale debt securities		(14)		77
Comprehensive loss		(16,834)		(9,550)
Comprehensive loss attributable to redeemable noncontrolling interests		5,053		73
Comprehensive loss attributable to noncontrolling interests		87		2,222
Comprehensive loss attributable to common stockholders	$	(11,694)	$	(7,255)

See accompanying Notes to Condensed Consolidated Financial Statements.

5

ARES REAL ESTATE INCOME TRUST INC.

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

(Unaudited)

	Stockholders’ Equity
								Accumulated
				Additional		Distributions		Other
	Common Stock			Paid-in		in Excess of		Comprehensive		Noncontrolling		Total
(in thousands)	Shares	Amount		Capital		Earnings		Income (Loss)		Interests		Equity
FOR THE THREE MONTHS ENDED MARCH 31, 2023
Balance as of December 31, 2022	206,108	$	2,061	$	1,898,510	$	(973,395)	$	16,083	$	250,608	$	1,193,867
Net loss (excludes $18 attributable to redeemable noncontrolling interests)	—		—		—		(2,004)		—		(549)		(2,553)
Change from securities and cash flow hedging activities (excludes $55 attributable to redeemable noncontrolling interests)	—		—		—		—		(5,251)		(1,673)		(6,924)
Issuance of common stock	5,366		54		47,637		—		—		—		47,691
Share-based compensation	—		—		75		—		—		—		75
Upfront offering costs, including selling commissions, dealer manager fees, and offering costs	—		—		(1,437)		—		—		—		(1,437)
Trailing distribution fees	—		—		(793)		1,461		—		1,132		1,800
Redemptions of common stock	(4,026)		(40)		(35,415)		—		—		—		(35,455)
Other noncontrolling interests net distributions	—		—		—		—		—		(4)		(4)
Distributions declared (excludes $192 attributable to redeemable noncontrolling interests)	—		—		—		(19,382)		—		(5,079)		(24,461)
Redemption value allocation adjustment to redeemable noncontrolling interests	—		—		74		—		—		—		74
Redemptions of noncontrolling interests	—		—		(2,170)		—		—		(8,760)		(10,930)
Reallocation of stockholders' equity and noncontrolling interests	—		—		(2,427)		—		(204)		2,631		—
Balance as of March 31, 2023	207,448	$	2,075	$	1,904,054	$	(993,320)	$	10,628	$	238,306	$	1,161,743
FOR THE THREE MONTHS ENDED MARCH 31, 2024
Balance as of December 31, 2023	197,228	$	1,972	$	1,895,789	$	(1,108,823)	$	6,359	$	316,119	$	1,111,416
Net loss (excludes $111 attributable to redeemable noncontrolling interests)	—		—		—		(15,001)		—		(6,477)		(21,478)
Change from securities and cash flow hedging activities (excludes $24 attributable to redeemable noncontrolling interests)	—		—		—		—		3,307		1,424		4,731
Issuance of common stock	2,029		21		16,433		—		—		—		16,454
Share-based compensation	—		—		75		—		—		—		75
Upfront offering costs, including selling commissions, dealer manager fees, and offering costs	—		—		(1,267)		—		—		—		(1,267)
Trailing distribution fees	—		—		278		1,317		—		844		2,439
Redemptions of common stock	(4,772)		(47)		(38,302)		—		—		—		(38,349)
Issuances of OP Units for DST Interests	—		—		—		—		—		72,034		72,034
Other noncontrolling interests net contributions	—		—		—		—		—		279		279
Distributions declared (excludes $144 attributable to redeemable noncontrolling interests)	—		—		—		(19,568)		—		(8,433)		(28,001)
Redemption value allocation adjustment to redeemable noncontrolling interests	—		—		200		—		—		—		200
Redemptions of noncontrolling interests	—		—		—		—		—		(8,074)		(8,074)
Reallocation of stockholders' equity and noncontrolling interests	—		—		24,570		—		(236)		(24,334)		—
Balance as of March 31, 2024	194,485	$	1,946	$	1,897,776	$	(1,142,075)	$	9,430	$	343,382	$	1,110,459

See accompanying Notes to Condensed Consolidated Financial Statements.

6

ARES REAL ESTATE INCOME TRUST INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

	For the Three Months Ended March 31,
(in thousands)	2024		2023
Operating activities:
Net loss	$	(21,589)	$	(2,571)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Real estate-related depreciation and amortization		35,470		33,197
Straight-line rent and amortization of above- and below-market leases		(2,375)		(1,896)
Gain on sale of real estate property		—		(36,884)
Valuation allowance on debt-related investment		—		2,520
(Income) loss from unconsolidated joint venture partnerships		(2,282)		2,446
Loss on extinguishment of debt and financing commitments, net		—		700
Provision for current expected credit losses		(133)		5,630
Amortization of deferred financing costs		2,433		1,960
(Decrease) increase in financing obligation liability appreciation		(69)		2,862
Unrealized gain on financing obligations		(2,821)		—
Unrealized loss on derivative instruments not designated as cash flow hedges		—		1,224
Paid-in-kind interest on investments in real estate debt and securities		(5,808)		(318)
Distributions of earnings from unconsolidated joint venture partnerships		236		433
Amortization of interest rate cap premiums		3,381		418
Other		88		(416)
Changes in operating assets and liabilities
Other assets, accounts payable and accrued expenses and other liabilities		1,261		(1,331)
Cash settlement of accrued performance participation allocation		—		(23,747)
Net cash provided by (used in) operating activities		7,792		(15,773)
Investing activities:
Real estate acquisitions		—		(14,697)
Capital expenditures		(13,322)		(12,837)
Proceeds from disposition of real estate property		—		53,735
Investments in debt-related investments		(14,910)		(615)
Principal collections on debt-related investments		2,083		—
Investments in unconsolidated joint venture partnerships		(34,095)		(7,673)
Investments in available-for-sale debt securities		(2,993)		—
Other		310		1,257
Net cash (used in) provided by investing activities		(62,927)		19,170
Financing activities:
Repayments of mortgage notes		(531)		(70,932)
Proceeds from line of credit		157,258		208,000
Repayments of line of credit		(167,000)		(166,000)
Redemptions of common stock		(38,349)		(35,455)
Distributions paid to common stockholders, redeemable noncontrolling interest holders and noncontrolling interest holders		(17,401)		(14,505)
Proceeds from issuance of common stock		8,179		39,700
Proceeds from financing obligations, net		131,157		83,834
Offering costs for issuance of common stock and private placements		(4,545)		(4,157)
Cash payout of DST Interests		(3,217)		—
Redemption of noncontrolling interests		(8,074)		(10,930)
Redemption of redeemable noncontrolling interests		(1,954)		—
Debt issuance costs paid		(125)		(45)
Interest rate cap premiums		—		(9,340)
Net cash provided by financing activities		55,398		20,170
Effect of exchange rate changes on cash, cash equivalents and restricted cash		(6)		—
Net increase in cash, cash equivalents and restricted cash		257		23,567
Cash, cash equivalents and restricted cash, at beginning of period		19,666		17,186
Cash, cash equivalents and restricted cash, at end of period	$	19,923	$	40,753

See accompanying Notes to Condensed Consolidated Financial Statements.

7

ARES REAL ESTATE INCOME TRUST INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1. BASIS OF PRESENTATION

Unless the context otherwise requires, the “Company,” “we,” “our” or “us” refers to Ares Real Estate Income Trust Inc. and its consolidated subsidiaries. We are externally managed by Ares Commercial Real Estate Management LLC (the “Advisor”).

The accompanying unaudited condensed consolidated financial statements included herein have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Accordingly, certain disclosures normally included in the annual audited financial statements prepared in accordance with accounting principles generally accepted in the U.S. (“GAAP”) have been omitted. As such, the accompanying unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes contained in our Annual Report on Form 10-K for the year ended December 31, 2023, filed with the SEC on March 13, 2024 (“2023 Form 10-K”).

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Global macroeconomic conditions, including heightened inflation, changes to fiscal and monetary policy, higher interest rates and challenges in the supply chain, coupled with the conflicts in Ukraine and in the Middle East, have the potential to negatively impact us. These current macroeconomic conditions may continue or aggravate and could cause the United States to experience an economic slowdown or recession. We anticipate our business and operations could be materially adversely affected by a prolonged recession in the United States.

In the opinion of management, the accompanying unaudited condensed consolidated financial statements contain all adjustments and eliminations, consisting only of normal recurring adjustments necessary for a fair presentation in conformity with GAAP.

As used herein, the term “commercial” refers to our office, retail and industrial properties or customers, as applicable.

Reclassifications

Certain items in our condensed consolidated statements of cash flows for the three months ended March 31, 2023 have been reclassified to conform to the 2024 presentation.

Revision of Noncontrolling Interests

During the year ended December 31, 2023, we identified misstatements associated with allocations between stockholders’ equity and noncontrolling interests. Specifically, noncontrolling interests were not adjusted through additional paid-in capital and accumulated other comprehensive income within stockholders’ equity to reflect the changing ownership percentage of third-party holders of partnership units (“OP Units”) in AREIT Operating Partnership LP (the “Operating Partnership”) for each period dating back to 2008. Based on an analysis of Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 250, Accounting Changes and Error Corrections and Staff Accounting Bulletin 99 “Materiality,” we determined that these allocation misstatements were immaterial to the previously issued condensed consolidated financial statements. These immaterial misstatements have no impact on our net income, net assets, cash flows, or the value of our common stock or OP Units.

Each period the ownership of the Operating Partnership varies between us, as the general partner and a limited partner, and the other limited partners of the Operating Partnership. This occurs for a variety of reasons, including the issuance of common stock or OP Units at net asset value (“NAV”), the redemption of common stock or OP Units at NAV, and the exchange or transfer of OP Units. Transactions that change our ownership interest in the Operating Partnership are accounted for as equity transactions if we retain our controlling financial interest in the Operating Partnership and no gain or loss is recognized in net income. Subsequently, the net equity balance in the Operating Partnership should be adjusted to reflect the changes in ownership of the Operating Partnership between us and the other limited partners. These adjustments are based on each partner’s respective ownership at the end of each period and are reflected as a reallocation between additional paid-in capital and accumulated other comprehensive income within stockholders’ equity and noncontrolling interests within our equity section on our condensed consolidated balance sheets and our unaudited condensed consolidated statements of equity.

8

The following table summarizes the effects of these reallocations on prior period balances:

			Cumulative Adjustment		Current Period
($ in thousands)	As Previously Reported		Prior to Period		Quarterly Reallocation		As Revised
As of March 31, 2023
Additional paid-in capital	$	1,751,993	$	154,488	$	(2,427)	$	1,904,054
Accumulated other comprehensive income (loss)	$	7,897	$	2,935	$	(204)	$	10,628
Noncontrolling interests	$	393,098	$	(157,423)	$	2,631	$	238,306

Foreign Currency

The U.S. dollar is the functional and reporting currency of the Company. All foreign currency asset and liability amounts are monetary assets and liabilities and therefore are remeasured into U.S. dollars based on the spot rate at the end of each period.

We have executed borrowings in the same foreign currency as our foreign investments to protect against the foreign currency exchange rate risk inherent in transactions denominated in foreign currencies. As our foreign currency asset and liability amounts are associated with a foreign currency denominated investment in unconsolidated joint venture partnership, we have included all foreign currency unrealized gains and losses within income from investments in unconsolidated joint venture partnerships on the condensed consolidated statements of operations.

2. INVESTMENTS IN REAL ESTATE PROPERTIES

The following table summarizes our consolidated investments in real estate properties:

	As of
(in thousands)	March 31, 2024		December 31, 2023
Land	$	754,149	$	754,149
Buildings and improvements		3,482,944		3,505,921
Intangible lease assets		324,498		330,291
Right of use asset		13,637		13,637
Investment in real estate properties		4,575,228		4,603,998
Accumulated depreciation and amortization		(708,338)		(714,684)
Net investment in real estate properties	$	3,866,890	$	3,889,314

Dispositions

During the three months ended March 31, 2024, we did not sell any properties. During the three months ended March 31, 2023, we sold one partial retail property for net proceeds of approximately $53.7 million and recorded a net gain on sale of $36.9 million.

Intangible Lease Assets and Liabilities

Intangible lease assets and liabilities as of March 31, 2024 and December 31, 2023 included the following:

	As of March 31, 2024						As of December 31, 2023
			Accumulated						Accumulated
(in thousands)	Gross		Amortization		Net		Gross		Amortization		Net
Intangible lease assets (1)	$	300,943	$	(234,352)	$	66,591	$	306,365	$	(234,172)	$	72,193
Above-market lease assets (1)		23,555		(20,388)		3,167		23,926		(20,525)		3,401
Below-market lease liabilities		(72,418)		36,365		(36,053)		(73,556)		36,477		(37,079)

(1) Included in net investment in real estate properties on the condensed consolidated balance sheets.

9

Rental Revenue Adjustments and Depreciation and Amortization Expense

The following table summarizes straight-line rent adjustments, amortization recognized as an increase (decrease) to rental revenues from above- and below-market lease assets and liabilities and real estate-related depreciation and amortization expense:

	For the Three Months Ended March 31,
(in thousands)	2024		2023
Increase (decrease) to rental revenue:
Straight-line rent adjustments	$	1,582	$	1,068
Above-market lease amortization		(234)		(186)
Below-market lease amortization		1,027		1,014
Real estate-related depreciation and amortization:
Depreciation expense	$	29,845	$	26,417
Intangible lease asset amortization		5,625		6,780

3. INVESTMENTS IN UNCONSOLIDATED JOINT VENTURE PARTNERSHIPS

We hold investments in unconsolidated joint venture partnerships that are accounted for under the equity method of accounting or the fair value option. We made our first investment in unconsolidated joint venture partnerships for which we have elected the fair value option during the first quarter of 2024. We account for these investments at fair value with the associated unrealized gains and losses recorded as a component of income from unconsolidated joint venture partnerships on our condensed consolidated statements of operations.

The following table summarizes our investments in unconsolidated joint venture partnerships as of March 31, 2024 and December 31, 2023:

	Number of Joint Venture						Investments in Unconsolidated
	Partnerships as of		Ownership Percentage as of				Joint Venture Partnerships as of
	March 31,	December 31,	March 31,		December 31,		March 31,		December 31,
($ in thousands)	2024	2023	2024		2023		2024		2023
Investments in unconsolidated joint venture partnerships, carried at cost:
Residential joint venture partnerships	1	1	85.0	%	85.0	%	$	23,643	$	23,932
Net Lease joint venture partnerships	3	3	50.0	%	50.0	%		105,170		104,232
Data Center joint venture partnerships	2	2	10.0	%	10.0	%		26,168		24,977
Real Estate Debt joint venture partnerships (1)	1	1	19.9	%	19.9	%		200		164
Total investments in unconsolidated joint venture partnerships, carried at cost								155,181		153,305
Investments in unconsolidated joint venture partnerships, carried at fair value:
Industrial joint venture partnerships (1)	1	—	27.4	%	N/A			34,092		—
Total investments in unconsolidated joint venture partnerships, carried at fair value								34,092		—
Total							$	189,273	$	153,305

(1) Includes joint venture partnerships that invest in assets and properties in Europe.

As of March 31, 2024, we had unfunded commitments of $208.6 million, in aggregate, related to our investments in unconsolidated joint venture partnerships.

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The following table summarizes income (loss) in unconsolidated joint venture partnerships for the three months ended March 31, 2024 and 2023:

	For the Three Months Ended March 31,
(in thousands)	2024		2023
Income (loss) from unconsolidated joint venture partnerships, carried at cost:
Equity in income (loss) from unconsolidated joint venture partnerships	$	1,202	$	(2,446)
Total income (loss) from unconsolidated joint venture partnerships, carried at cost		1,202		(2,446)
Income (loss) from unconsolidated joint venture partnerships, carried at fair value:
Gain on investment		1,387		—
Foreign currency loss on investment		(482)		—
Total income from unconsolidated joint venture partnerships, carried at fair value		905		—
Other foreign currency gain (loss):
Foreign currency gain on debt held in foreign currencies		181		—
Foreign currency loss on remeasurement of cash and cash equivalents		(6)		—
Total other foreign currency gain		175		—
Total	$	2,282	$	(2,446)

4. INVESTMENTS IN REAL ESTATE DEBT AND SECURITIES

Debt-Related Investments

The following table summarizes our debt-related investments as of March 31, 2024 and December 31, 2023:

					Weighted-Average			Weighted-Average
($ in thousands)	Carrying Amount (1)		Outstanding Principal (1)		Interest Rate			Remaining Life (Years)
As of March 31, 2024
Senior loans	$	159,002	$	160,602		10.1	%		2.0
Mezzanine loans		103,773		104,685		11.4			0.6
Total debt-related investments	$	262,775	$	265,287		10.6	%		1.4
As of December 31, 2023
Senior loans	$	141,737	$	143,550		9.8	%		2.2
Mezzanine loans		106,064		106,768		11.4			0.9
Total debt-related investments	$	247,801	$	250,318		10.5	%		1.6

(1) The difference between the carrying amount and the outstanding principal amount of the debt-related investments consists of unamortized purchase discount, deferred financing costs, loan origination costs, and any recorded credit loss reserves, if applicable.

Current Expected Credit Losses

As of March 31, 2024, our reserve for current expected credit losses (“CECL Reserve”) for our debt-related investment portfolio was $1.9 million or 0.6% of our debt-related investment commitment balance of $329.7 million. As of March 31, 2024, the debt-related investment commitment balance was comprised of $265.3 million of funded commitments and $64.4 million of unfunded commitments with associated CECL Reserves of $1.5 million and $0.4 million, respectively. As of December 31, 2023, our CECL Reserve for our debt-related investment portfolio was $2.0 million or 0.6% of our debt-related investment commitment balance of $331.2 million. As of December 31, 2023, the debt-related investment commitment balance was comprised of $250.3 million of funded commitments and $80.9 million of unfunded commitments with associated CECL Reserves of $1.3 million and $0.7 million, respectively.

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The following table summarizes activity related to our CECL Reserve on funded commitments for the three months ended March 31, 2024 and 2023:

	For the Three Months Ended March 31,
($ in thousands)	2024		2023
Balance at beginning of the year	$	1,327	$	—
Provision for current expected credit losses		145		3,492
Write-offs		—		—
Recoveries		—		—
Ending balance (1)	$	1,472	$	3,492

(1) The CECL Reserve related to funded commitments is included in investments in real estate debt and securities on the condensed consolidated balance sheets.

The following table summarizes activity related to our CECL Reserve on unfunded commitments for the three months ended March 31, 2024 and 2023:

	For the Three Months Ended March 31,
($ in thousands)	2024		2023
Balance at beginning of the year	$	670	$	—
Provision for current expected credit losses		(278)		2,138
Write-offs		—		—
Recoveries		—		—
Ending balance (1)	$	392	$	2,138

(1) The CECL Reserve related to unfunded commitments is included in other liabilities on the condensed consolidated balance sheets.

During the three months ended March 31, 2024, we received $2.1 million of partial principal repayments on one mezzanine loan debt-related investment. There were no principal repayments on debt-related investments during the three months ended March 31, 2023.

Available-for-Sale Debt Securities

As of March 31, 2024 we had one preferred equity investment, one commercial real estate collateralized loan obligations (“CRE CLO” or multiple “CRE CLOs”) and one commercial mortgage-backed security (“CMBS”) designated as available-for-sale debt securities. As of December 31, 2023, we had one preferred equity investment and one CRE CLO designated as available-for-sale debt securities. As of March 31, 2024 and December 31, 2023, the weighted-average remaining term of our CRE CLOs and CMBS, which is based on the estimated fully extended maturity dates of the underlying loans of the debt security, was 3.2 years and 3.1 years, respectively, and the remaining term of our preferred equity investment was 2.8 years and 3.1 years, respectively. We had no unfunded commitments related to our preferred equity investment as of March 31, 2024 or December 31, 2023. There were no credit losses associated with our available-for-sale debt securities as of March 31, 2024 or December 31, 2023. The following table summarizes our investments in available-for-sale debt securities as of March 31, 2024 and December 31, 2023:

($ in thousands)	Face Amount		Amortized Cost		Unamortized Discount		Unamortized Fees (1)		Unrealized Gain, Net (2)		Fair Value
As of March 31, 2024
CRE CLOs & CMBS	$	17,482	$	17,396	$	86	$	—	$	144	$	17,540
Preferred equity		111,916		111,127		—		789		—		111,127
Total debt securities	$	129,398	$	128,523	$	86	$	789	$	144	$	128,667
As of December 31, 2023
CRE CLOs	$	14,910	$	14,825	$	85	$	—	$	158	$	14,983
Preferred equity		108,250		107,392		—		858		—		107,392
Total debt securities	$	123,160	$	122,217	$	85	$	858	$	158	$	122,375

(1) Includes unamortized loan origination fees received on debt securities.

(2) Represents cumulative unrealized gain beginning from acquisition date.

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5. DEBT

A summary of our consolidated debt is as follows:

	Weighted-Average
	Effective Interest Rate as of					Balance as of
	March 31,		December 31,			March 31,		December 31,
($ in thousands)	2024		2023		Current Maturity Date	2024		2023
Line of credit (1)	5.37	%	5.35	%	November 2025	$	357,077	$	367,000
Term loan (2)	3.36		3.31		November 2026		400,000		400,000
Term loan (3)	4.31		4.26		January 2027		400,000		400,000
Fixed-rate mortgage notes	4.46		4.46		January 2027 - May 2031		595,660		596,191
Floating-rate mortgage notes (4)	5.25		5.25		October 2024 - October 2026		207,600		207,600
Total principal amount / weighted-average (5)	4.46	%	4.43	%		$	1,960,337	$	1,970,791
Less: unamortized debt issuance costs						$	(15,754)	$	(17,038)
Add: unamortized mark-to-market adjustment on assumed debt							7,107		7,367
Total debt, net						$	1,951,690	$	1,961,120
Gross book value of properties encumbered by debt						$	1,393,709	$	1,391,173

(1) The effective interest rate for our borrowings in U.S. dollars, which was $323.0 million as of March 31, 2024, is calculated based on the Term Secured Overnight Financing Rate (“Term SOFR”) plus an 11.448 basis point adjustment (“Adjusted Term SOFR”), plus a margin ranging from 1.25% to 2.00% depending on our consolidated leverage ratio. The effective interest rate for our borrowings in pound sterling, which was $34.1 million as of March 31, 2024 when converted to U.S. dollars, is calculated based on the Sterling Overnight Index Average Reference Rate (“SONIA”) plus a 3.26 basis point adjustment, plus a margin ranging from 1.25% to 2.00% depending on our consolidated leverage ratio. As of March 31, 2024, the unused and available portions under the line of credit were approximately $542.9 million and $357.5 million, respectively. The weighted-average interest rate is the all-in interest rate, including the effects of interest rate cap agreements relating to $150.0 million in borrowings under this line of credit. The line of credit is available for general business purposes including, but not limited to, refinancing of existing indebtedness and financing the acquisition of permitted investments, including commercial properties.

(2) The effective interest rate is calculated based on Adjusted Term SOFR, plus a margin ranging from 1.20% to 1.90% depending on our consolidated leverage ratio. Total commitments for this term loan are $400.0 million. The weighted-average interest rate is the all-in interest rate, including the effects of interest rate swap agreements relating to $200.0 million in borrowings under this term loan and interest rate cap agreements relating to $200.0 million in borrowings under this term loan.

(3) The effective interest rate is calculated based on Adjusted Term SOFR, plus a margin ranging from 1.20% to 1.90% depending on our consolidated leverage ratio. Total commitments for this term loan are $400.0 million. The weighted-average interest rate is the all-in interest rate, including the effects of interest rate swap agreements relating to $350.0 million in borrowings under this term loan and an interest rate cap agreement relating to $50.0 million in borrowings under this term loan.

(4) The effective interest rate is calculated based on Adjusted Term SOFR plus a margin ranging from 1.55% to 2.50%. The weighted-average interest rate is the all-in interest rate, including the effects of interest rate cap agreements which capped the effective interest rates of our two floating-rate mortgage notes at 5.61% and 4.66%, respectively, as of March 31, 2024.

(5) The weighted-average remaining term of our consolidated borrowings was 2.9 years as of March 31, 2024, excluding the impact of certain extension options.

For the three months ended March 31, 2024 and 2023, the amount of interest incurred related to our consolidated indebtedness, excluding amortization of debt issuance costs, was $26.1 million and $19.6 million, respectively. See “Note 6” for the amount of interest incurred related to the DST Program (as defined below).

13

As of March 31, 2024, the principal payments due on our consolidated debt during each of the next five years and thereafter were as follows:

(in thousands)	Line of Credit (1)		Term Loans		Mortgage Notes (2)		Total
Remainder of 2024	$	—	$	—	$	128,708	$	128,708
2025		357,077		—		2,646		359,723
2026		—		400,000		85,396		485,396
2027		—		400,000		177,034		577,034
2028		—		—		90,477		90,477
Thereafter		—		—		318,999		318,999
Total principal payments	$	357,077	$	800,000	$	803,260	$	1,960,337

(1) The term of the line of credit may be extended pursuant to two six-month extension options, subject to certain conditions.

(2) A $127.0 million mortgage note matures in October 2024 and the term may be extended pursuant to a one-year extension option, subject to certain conditions. A $115.0 million mortgage note matures in January 2027 and may be extended pursuant to two one-year extension options, subject to certain conditions.

Debt Covenants

Our line of credit, term loans and mortgage note agreements contain various property-level covenants, including customary affirmative and negative covenants. In addition, the line of credit and term loan agreements contain certain corporate-level financial covenants, including leverage ratio, fixed charge coverage ratio and tangible net worth thresholds. We were in compliance with our debt covenants as of March 31, 2024.

Derivative Instruments

To manage interest rate risk for certain of our variable-rate debt, we use interest rate derivative instruments as part of our risk management strategy. These derivatives are designed to mitigate the risk of future interest rate increases by either providing a fixed interest rate or capping the variable interest rate for a limited, pre-determined period of time. Interest rate swaps designated as cash flow hedges involve the receipt of variable-rate amounts from a counterparty in exchange for us making fixed-rate payments over the life of the interest rate swap agreements without exchange of the underlying notional amount. Interest rate caps involve the receipt of variable amounts from a counterparty at the end of each period in which the interest rate exceeds the agreed fixed price. Certain of our variable-rate borrowings are not hedged, and therefore, to an extent, we have ongoing exposure to interest rate movements.

For derivative instruments that are designated and qualify as cash flow hedges, the gain or loss is recorded as a component of accumulated other comprehensive income (loss) (“AOCI”) on the condensed consolidated balance sheets and is reclassified into earnings as interest expense for the same period that the hedged transaction affects earnings, which is when the interest expense is recognized on the related debt. During the next 12 months, we estimate that $12.3 million will be reclassified as a decrease to interest expense related to active effective hedges of existing floating-rate debt. For derivatives that are not designated and do not qualify as hedges, changes in fair value are recognized through income. As a result, in periods with high interest rate volatility, we may experience significant fluctuations in our net income (loss).

14

The following table summarizes the location and fair value of our consolidated derivative instruments on our condensed consolidated balance sheets:

	Number of			Fair Value
($ in thousands)	Contracts	Notional Amount (1)			Other Assets	Other Liabilities
As of March 31, 2024
Interest rate swaps designated as cash flow hedges	9	$	550,000	$	11,646	$	—
Interest rate caps designated as cash flow hedges	8		607,600		21,997
Total derivative instruments	17	$	1,157,600	$	33,643	$	—
As of December 31, 2023
Interest rate swaps designated as cash flow hedges	12	$	650,000	$	10,510	$	—
Interest rate caps designated as cash flow hedges	8		507,600		21,746		—
Total derivative instruments	20	$	1,157,600	$	32,256	$	—

(1) As of December 31, 2023, notional amount excludes an aggregate $100.0 million of notional amount for three interest rate cap agreements entered into in November 2023 with effective dates in February 2024. These interest rate cap agreements replaced separate interest rate swap agreements with an aggregate $100.0 million of notional amount that expired at the end of January 2024.

The following table presents the effect of our consolidated derivative instruments on our condensed consolidated financial statements:

	For the Three Months Ended
	March 31,
(in thousands)	2024		2023
Derivative instruments designated as cash flow hedges:
Gain (loss) recognized in AOCI	$	9,659	$	(4,000)
Amount reclassified from AOCI as a decrease into interest expense		(4,890)		(3,056)
Total interest expense presented in the condensed consolidated statements of operations in which the effects of cash flow hedges are recorded		44,234		37,545
Derivative instruments not designated as cash flow hedges:
Unrealized loss on derivative instruments recognized in other income (expenses) (1)	$	—	$	(1,224)
Realized gain on derivative instruments recognized in other income (expenses) (2)		—		1,121

(1) Unrealized loss on changes in fair value of derivative instruments relates to mark-to-market changes on our derivatives not designated as cash flow hedges.

(2) Realized gain on derivative instruments relates to interim settlements for our derivatives not designated as cash flow hedges.

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6. DST PROGRAM

We have a program to raise capital through private placement offerings by selling beneficial interests (“DST Interests”) in specific Delaware statutory trusts (a “DST” or multiple “DSTs”) holding real properties (the “DST Program”). Under the DST Program, each private placement offers interests in one or more real properties placed into one or more DSTs by the Operating Partnership or its affiliates (each, a “DST Property” and collectively, the “DST Properties”). In order to facilitate additional capital raise through the DST Program, we have made and may continue to offer loans (“DST Program Loans”) to finance a portion of the sale of DST Interests to potential investors.

The following table summarizes our DST Program Loans as of March 31, 2024 and December 31, 2023:

							Weighted-Average			Weighted-Average
($ in thousands)	Outstanding Principal		Unrealized Gain, Net (1)		Book Value		Interest Rate			Remaining Life (Years)
As of March 31, 2024
DST Program Loans, carried at cost	$	103,268	$	N/A	$	103,268		5.2	%		8.0
DST Program Loans, carried at fair value		19,914		—		19,914		6.3	%		10.0
Total	$	123,182	$	—	$	123,182		5.4	%		8.3
As of December 31, 2023
DST Program Loans, carried at cost	$	109,266	$	N/A	$	109,266		5.1	%		8.4
DST Program Loans, carried at fair value		7,753		—		7,753		6.4	%		10.0
Total	$	117,019	$	—	$	117,019		5.2	%		8.5

(1) Represents cumulative unrealized gain or loss on DST Program Loans carried at fair value.

The following table summarizes our financing obligations, net as of March 31, 2024 and December 31, 2023:

	DST Interests		Unamortized		Total		Unrealized		Book
($ in thousands)	Sold (1)		Program Costs		Appreciation (2)		Gain, Net (3)		Value
As of March 31, 2024
Financing obligations, carried at cost	$	1,169,757	$	(932)	$	—	$	N/A	$	1,168,825
Financing obligations, carried at fair value		245,127		N/A		N/A		(3,753)		241,374
Total	$	1,414,884	$	(932)	$	—	$	(3,753)	$	1,410,199
As of December 31, 2023
Financing obligations, carried at cost	$	1,238,639	$	(863)	$	11,269	$	N/A	$	1,249,045
Financing obligations, carried at fair value		102,977		N/A		N/A		(932)		102,045
Total	$	1,341,616	$	(863)	$	11,269	$	(932)	$	1,351,090

(1) DST Interests sold are presented net of upfront fees.

(2) Represents cumulative financing obligation liability appreciation on financing obligations carried at cost.

(3) Represents cumulative unrealized gain or loss on financing obligations carried at fair value.

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The following table presents our DST Program activity for the three months ended March 31, 2024 and 2023:

		For the Three Months Ended March 31,
(in thousands)		2024		2023
DST Interests sold	$	147,297	$	101,795
DST Interests financed by DST Program Loans		12,161		14,015
Income earned from DST Program Loans (1)		1,581		1,017
(Decrease) increase in financing obligation liability appreciation (2)		(69)		2,862
Rent obligation incurred under master lease agreements (2)		16,064		13,583

(1) Included in other income and expenses on the condensed consolidated statements of operations.

(2) Included in interest expense on the condensed consolidated statements of operations.

We record DST Interests as financing obligation liabilities for accounting purposes. If we exercise our option to reacquire a DST Property by issuing OP Units in exchange for DST Interests, we relieve the related financing obligation liability and DST Program Loans and record the issuance of the OP Units as an issuance of equity. During the three months ended March 31, 2024, 9.0 million OP Units were issued in exchange for DST Interests for a net investment of $72.0 million in accordance with our Umbrella Partnership Real Estate Investment Trust (“UPREIT”) structure. In addition, we paid $3.2 million in cash in exchange for DST Interests during the three months ended March 31, 2024. There were no OP Units issued or cash paid in exchange for DST Interests in accordance with our UPREIT structure during the three months ended March 31, 2023.

Refer to “Note 11” for detail relating to the fees paid to the Advisor and its affiliates for raising capital through the DST Program.

7. FAIR VALUE

We estimate the fair value of our financial assets and liabilities using available market information and valuation methodologies we believe to be appropriate for these purposes. Considerable judgment and a high degree of subjectivity are involved in developing these estimates and, accordingly, they are not necessarily indicative of the amounts that we would realize upon disposition of our financial assets and liabilities.

Fair Value Measurements on a Recurring Basis

The following table presents our financial assets and liabilities measured at fair value on a recurring basis:

							Total
(in thousands)	Level 1		Level 2		Level 3		Fair Value
As of March 31, 2024
Assets:
Derivative instruments	$	—	$	33,643	$	—	$	33,643
Investments in unconsolidated joint venture partnerships		—		—		34,092		34,092
Available-for-sale debt securities		—		17,540		111,127		128,667
DST Program Loans		—		—		19,914		19,914
Total assets measured at fair value	$	—	$	51,183	$	165,133	$	216,316
Liabilities:
Financing obligations	$	—	$	—	$	241,374	$	241,374
Total liabilities measured at fair value	$	—	$	—	$	241,374	$	241,374
As of December 31, 2023
Assets:
Derivative instruments	$	—	$	32,256	$	—	$	32,256
Available-for-sale debt securities		—		14,983		107,392		122,375
DST Program Loans		—		—		7,753		7,753
Total assets measured at fair value	$	—	$	47,239	$	115,145	$	162,384
Liabilities:
Financing obligations	$	—	$	—	$	102,045	$	102,045
Total liabilities measured at fair value	$	—	$	—	$	102,045	$	102,045

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The following methods and assumptions were used to estimate the fair value of each class of financial assets and liabilities:

Derivative Instruments. The derivative instruments are interest rate swaps and interest rate caps whose fair value is estimated using market-standard valuation models. Such models involve using market-based observable inputs, including interest rate curves. We incorporate credit valuation adjustments to appropriately reflect both our nonperformance risk and the respective counterparty’s nonperformance risk in the fair value measurements, which we have concluded are not material to the valuation. Due to these derivative instruments being unique and not actively traded, the fair value is classified as Level 2. See “Note 5” above for further discussion of our derivative instruments.

Investments in Unconsolidated Joint Venture Partnerships. We have elected the fair value option on certain investments in unconsolidated joint venture partnerships. We separately value the real estate assets held by the unconsolidated joint venture partnerships to arrive at a fair value for our investments in unconsolidated joint venture partnerships. The fair value of real estate assets held by the unconsolidated joint venture partnerships is estimated using a direct capitalization methodology that is based on applying a capitalization rate to the estimated rental income to be generated by the real estate assets of the unconsolidated joint venture partnerships. The capitalization rate used in estimating the fair value of these investments is considered Level 3.

Available-for-Sale Debt Securities. The available-for-sale debt securities are either preferred equity investments in real estate properties, CRE CLOs or CMBS. The fair value for CRE CLOs and CMBS are estimated using third-party broker quotes, which provide valuation estimates based upon contractual cash flows, observable inputs comprising credit spreads and market liquidity. We incorporate credit valuation adjustments to appropriately reflect both our nonperformance risk and the respective counterparty’s nonperformance risk in the fair value measurements, which we have concluded are not material to the valuation. Due to these CRE CLOs and CMBS being unique and not actively traded, the fair value is classified as Level 2. The preferred equity investments are unlikely to have readily available market quotations. In such cases, the initial value will generally be determined using the acquisition price of such investment if acquired, or the par value of such investment if originated. Following the initial measurement, fair value is estimated by utilizing or reviewing certain of the following: (i) market yield data, (ii) discounted cash flow modeling, (iii) collateral asset performance, (iv) local or macro real estate performance, (v) capital market conditions, (vi) debt yield, debt-service coverage and/or loan-to-value ratios, and (vii) borrower financial condition and performance. The inputs used in estimating the fair value of these preferred equity investments are generally considered Level 3.

DST Program Loans. The estimate of fair value of DST Program Loans takes into consideration various factors including current market rates and conditions and similar agreements with comparable loan-to-value ratios and credit profiles, as applicable. DST Program Loans with near-term maturities are generally valued at par. The inputs used in estimating the fair value of these financial assets are generally considered Level 3.

Financing Obligations. The estimate of fair value of financing obligations takes into consideration various factors including current market rates and conditions, leasing and other activity at the underlying DST Program investments, remaining master lease payments to DST investors, and the current portion of DST Program offerings sold to DST investors. The inputs used in estimating the fair value of these financial liabilities are generally considered Level 3.

The following table presents our financial assets measured at fair value on a recurring basis using Level 3 inputs:

	Investments in
	Unconsolidated Joint		Available-For-Sale		DST Program
($ in thousands)	Venture Partnerships		Debt Securities		Loans		Total
Balance as of December 31, 2023	$	—	$	107,392	$	7,753	$	115,145
Purchases and contributions		33,187		—		12,161		45,348
Paid-in-kind interest		—		3,666		—		3,666
Gain on investment (1)		1,387		—		—		1,387
Foreign currency loss on investment (1)		(482)		—		—		(482)
Amortization of loan origination fees (2)		—		69		—		69
Balance as of March 31, 2024	$	34,092	$	111,127	$	19,914	$	165,133

(1) Included in income from investments in unconsolidated joint venture partnerships on the condensed consolidated statements of operations.

(2) Included in debt-related income on the condensed consolidated statements of operations.

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The following table presents our financial liabilities measured at fair value on a recurring basis using Level 3 inputs:

	Financing
($ in thousands)	Obligations
Balance as of December 31, 2023	$	102,045
DST Interests sold, net of upfront fees		142,150
Unrealized gain on financing obligations		(2,821)
Balance as of March 31, 2024	$	241,374

The following table presents the quantitative inputs and assumptions used for items categorized in Level 3 of the fair value hierarchy as of March 31, 2024:

			Valuation	Unobservable	Impact to Valuation from
($ in thousands)		Fair Value	Technique	Inputs	an Increase to Input
Assets:
Investments in unconsolidated joint venture partnerships	$	34,092	Direct Capitalization	Capitalization Rate		Decrease
Available-for-sale debt securities (1)		111,127	Yield Method	Market Yield		Decrease
DST Program Loans		19,914	Yield Method	Market Yield		Decrease
Liabilities:
Financing obligations	$	241,374	Discounted Cash Flow	Discount Rate Exit Capitalization Rate		Decrease Decrease

(1) As of March 31, 2024, the market yield used in determining the fair value of our available-for sale debt security was 13.3%.

The following table presents the quantitative inputs and assumptions used for items categorized in Level 3 of the fair value hierarchy as of December 31, 2023:

			Valuation	Unobservable	Impact to Valuation from
($ in thousands)		Fair Value	Technique	Inputs	an Increase to Input
Assets:
Available-for-sale debt securities (1)	$	107,392	Yield Method	Market Yield		Decrease
DST Program Loans		7,753	Yield Method	Market Yield		Decrease
Liabilities:
Financing obligations	$	102,045	Discounted Cash Flow	Discount Rate Exit Capitalization Rate		Decrease Decrease

(1) As of December 31, 2023, the market yield used in determining the fair value of our available-for sale debt security was 13.3%.

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Financial Assets and Liabilities Not Measured at Fair Value

As of March 31, 2024 and December 31, 2023, the fair values of cash and cash equivalents, restricted cash, tenant receivables, accounts payable and accrued expenses and distribution fees payable approximate their carrying values because of the short-term nature of these instruments. The table below includes fair values for certain of our financial instruments for which it is practicable to estimate fair value. The carrying values and fair values of these financial instruments were as follows:

		As of March 31, 2024				As of December 31, 2023
	Level in Fair	Carrying		Fair		Carrying		Fair
(in thousands)	Value Hierarchy	Value (1)		Value		Value (1)		Value
Assets:
Debt-related investments	3	$	265,287	$	265,505	$	250,318	$	250,215
DST Program Loans (2)	3		103,268		100,770		109,266		107,297
Liabilities:
Line of credit	3	$	357,077	$	357,077	$	367,000	$	367,000
Term loans	3		800,000		800,000		800,000		800,000
Mortgage notes	3		803,260		771,474		803,791		778,235

(1) The carrying value reflects the principal amount outstanding.

(2) Only includes instruments for which we have not elected the fair value option and do not record at fair value on the condensed consolidated balance sheets.

The initial value of debt-related investments will generally be determined using the acquisition price of such investment if acquired, or the par value of such investment if originated. Following the initial measurement, fair value is estimated by utilizing or reviewing certain of the following: (i) market yield data, (ii) discounted cash flow modeling, (iii) collateral asset performance, (iv) local or macro real estate performance, (v) capital market conditions, (vi) debt yield, debt-service coverage and/or loan-to-value ratios, and (vii) borrower financial condition and performance. The estimate of fair value of DST Program Loans, line of credit, term loans and mortgage notes takes into consideration various factors including current market rates and conditions and similar agreements with comparable loan-to-value ratios and credit profiles, as applicable. Debt instruments with near-term maturities are generally valued at par.

8. EQUITY

Public Offerings

We may conduct ongoing public offerings that will not have a predetermined duration, subject to continued compliance with the rules and regulations of the SEC and applicable state laws. On May 3, 2022, the SEC declared our registration statement on Form S-11 with respect to our fourth public offering of up to $10.0 billion of shares of its common stock effective, and the fourth public offering commenced the same day. We ceased selling shares of our common stock under our third public offering of up to $3.0 billion of shares immediately upon the effectiveness of the registration statement for the fourth public offering. Under the fourth public offering, we are offering up to $8.5 billion of shares of our common stock in the primary offering and up to $1.5 billion of shares of our common stock pursuant to our distribution reinvestment plan, in any combination of Class T shares, Class S shares, Class D shares and Class I shares. We may reallocate amounts between the primary offering and distribution reinvestment plan.

Pursuant to our public offerings, we offered and continue to offer shares of our common stock at the “transaction price,” plus applicable upfront selling commissions and dealer manager fees. The “transaction price” generally is equal to the NAV per share of our common stock most recently disclosed. Our NAV per share is calculated as of the last calendar day of each month for each of our outstanding classes of stock, and will be available generally within 15 calendar days after the end of the applicable month. Shares issued pursuant to our distribution reinvestment plan are offered at the transaction price, as indicated above, in effect on the distribution date. We may update a previously disclosed transaction price in cases where we believe there has been a material change (positive or negative) to our NAV per share relative to the most recently disclosed monthly NAV per share.

During the three months ended March 31, 2024, we raised gross proceeds of approximately $16.5 million from the sale of approximately 2.0 million shares of our common stock in our current ongoing public offerings, including proceeds from our distribution reinvestment plan of approximately $8.3 million.

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Common Stock

The following table describes the changes in each class of common shares during the periods presented below:

	Class T	Class S	Class D	Class I	Class E	Total
(in thousands)	Shares	Shares	Shares	Shares	Shares	Shares
FOR THE THREE MONTHS ENDED MARCH 31, 2023
Balance as of December 31, 2022	26,884	49,237	7,871	69,142	52,974	206,108
Issuance of common stock:
Primary shares	1,325	972	45	2,117	—	4,459
Distribution reinvestment plan	134	227	40	331	175	907
Redemptions of common stock	(69)	(561)	(240)	(2,557)	(599)	(4,026)
Conversions	(101)	24	(277)	354	—	—
Balance as of March 31, 2023	28,173	49,899	7,439	69,387	52,550	207,448
FOR THE THREE MONTHS ENDED MARCH 31, 2024
Balance as of December 31, 2023	28,432	48,145	6,930	65,511	48,210	197,228
Issuance of common stock:
Primary shares	261	250	37	453	—	1,001
Distribution reinvestment plan	160	270	41	371	186	1,028
Redemptions of common stock	(375)	(1,011)	(118)	(2,027)	(1,241)	(4,772)
Conversions	(76)	(63)	(15)	154	—	—
Balance as of March 31, 2024	28,402	47,591	6,875	64,462	47,155	194,485

Distributions

The following table summarizes our distribution activity (including distributions to noncontrolling interests and distributions reinvested in shares of our common stock) for the periods below:

	Amount
			Common Stock
	Declared per		Distributions		Other Cash		Reinvested in		Distribution		Gross
(in thousands, except per share data)	Common Share (1)		Paid in Cash		Distributions (2)		Shares		Fees (3)		Distributions (4)
2024
March 31	$	0.10000	$	10,013	$	8,577	$	8,238	$	1,317	$	28,145
Total	$	0.10000	$	10,013	$	8,577	$	8,238	$	1,317	$	28,145
2023
March 31	$	0.09375	$	9,912	$	5,271	$	8,009	$	1,461	$	24,653
June 30		0.09375		9,896		5,510		7,974		1,463		24,843
September 30		0.10000		10,335		6,451		8,431		1,430		26,647
December 31		0.10000		10,127		7,739		8,317		1,387		27,570
Total	$	0.38750	$	40,270	$	24,971	$	32,731	$	5,741	$	103,713

(1) Amount reflects the total gross quarterly distribution rate authorized by our board of directors per Class T share, per Class S share, per Class D share, per Class I share and per Class E share of common stock. Distributions were declared and paid as of monthly record dates. These monthly distributions have been aggregated and presented on a quarterly basis. The distributions on Class T shares, Class S shares and Class D shares of common stock are reduced by the respective distribution fees that are payable with respect to Class T shares, Class S shares and Class D shares.

(2) Consists of distribution fees paid to Ares Wealth Management Solutions, LLC (the “Dealer Manager”) with respect to OP Units and distributions paid to holders of OP Units and other noncontrolling interest holders.

(3) Distribution fees are paid monthly to the Dealer Manager, with respect to Class T shares, Class S shares and Class D shares. All or a portion of these amounts will be retained by, or reallowed (paid) to, participating broker-dealers and servicing broker-dealers.

(4) Gross distributions are total distributions before the deduction of any distribution fees relating to Class T shares, Class S shares and Class D shares issued in the primary portion of our current public offerings.

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Redemptions and Repurchases

Below is a summary of redemptions and repurchases pursuant to our share redemption program for the three months ended March 31, 2024 and 2023. All eligible redemption requests were fulfilled for the periods presented. Eligible redemption requests are requests submitted in good order by the request submission deadline set forth in the share redemption program. Our board of directors may modify or suspend our current share redemption programs if it deems such action to be in the best interest of our stockholders.

	For the Three Months Ended March 31,
(in thousands, except for per share data)	2024		2023
Number of shares redeemed or repurchased		4,772		4,026
Aggregate dollar amount of shares redeemed or repurchased	$	38,349	$	35,455
Average redemption or repurchase price per share	$	8.04	$	8.81

9. REDEEMABLE NONCONTROLLING INTERESTS

The Operating Partnership’s net income and loss will generally be allocated to the general partner and the limited partners in accordance with the respective percentage interest in the OP Units issued by the Operating Partnership.

The Operating Partnership issued OP Units to the Advisor and Black Creek Diversified Property Advisors Group LLC (the “Former Sponsor”) as payment of the performance participation allocation (also referred to as the performance component of the advisory fee) pursuant to that certain advisory agreement by and among the Company, the Operating Partnership, and the Advisor (the “Advisory Agreement”). The Advisor and Former Sponsor subsequently transferred these OP Units to its members or their affiliates or redeemed for cash. We have classified these OP Units as redeemable noncontrolling interests in mezzanine equity on the condensed consolidated balance sheets. The redeemable noncontrolling interests are recorded at the greater of the carrying amount, adjusted for its share of the allocation of income or loss and dividends, or the redemption value, which is equivalent to fair value, of such OP Units at the end of each measurement period. As of both March 31, 2024 and December 31, 2023, we had redeemable OP Units outstanding of 1.4 million.

The following table summarizes the redeemable noncontrolling interests activity for the three months ended March 31, 2024 and 2023:

	For the Three Months Ended March 31,
($ in thousands)	2024		2023
Balance at beginning of the year	$	11,746	$	18,130
Distributions to redeemable noncontrolling interests		(144)		(192)
Net loss attributable to redeemable noncontrolling interests		(111)		(18)
Change from securities and cash flow hedging activities attributable to redeemable noncontrolling interests		24		(55)
Redemption value allocation adjustment to redeemable noncontrolling interests (1)		(200)		(74)
Ending balance	$	11,315	$	17,791

(1) Represents the adjustment recorded in order to mark to the redemption value, which is equivalent to fair value, at the end of the measurement period.

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10. NONCONTROLLING INTERESTS

OP Units

The following table summarizes the number of OP Units issued and outstanding to third-party investors (excludes interests held by redeemable noncontrolling interest holders):

	For the Three Months Ended March 31,
(in thousands)	2024	2023
Balance at beginning of period	78,737	55,079
Issuance of units	8,976	—
Redemption of units	(1,009)	(1,240)
Balance at end of period	86,704	53,839

Subject to certain restrictions and limitations, the holders of OP Units may redeem all or a portion of their OP Units for either: shares of the equivalent class of common stock, cash or a combination of both. If we elect to redeem OP Units for shares of our common stock, we will generally deliver one share of our common stock for each such OP Unit redeemed (subject to any redemption fees withheld), and such shares may, subsequently, only be redeemed for cash in accordance with the terms of our share redemption program. If we elect to redeem OP Units for cash, the cash delivered per unit will equal the then-current NAV per unit of the applicable class of OP Units (subject to any redemption fees withheld), which will equal the then-current NAV per share of our corresponding class of shares. During the three months ended March 31, 2024 and 2023, the aggregate amount of OP Units redeemed was $8.1 million and $10.9 million, respectively. The estimated maximum redemption value of the aggregate outstanding OP Units issued to third-party investors as of March 31, 2024 and December 31, 2023 was $680.1 million and $641.1 million, respectively.

11. RELATED PARTY TRANSACTIONS

Summary of Fees and Expenses

The table below summarizes the fees and expenses incurred by us for services provided by the Advisor and its affiliates, and by the Dealer Manager related to the services the Dealer Manager provided in connection with our securities offerings and any related amounts payable:

	For the Three Months Ended March 31,				Payable as of
(in thousands)	2024		2023		March 31, 2024		December 31, 2023
Selling commissions and dealer manager fees (1)	$	101	$	512	$	—	$	—
Ongoing distribution fees (1)(2)		2,286		2,154		772		804
Advisory fees—fixed component		9,972		9,538		3,304		3,281
Other fees and expense reimbursements—Advisor (3)(4)		3,683		3,106		4,495		3,909
Other expense reimbursements—Dealer Manager		40		—		355		84
Property accounting fee (5)		477		489		160		170
DST Program selling commissions, dealer manager and distribution fees (1)		2,351		2,671		359		308
Other DST Program related costs—Advisor (4)		2,252		1,931		171		171
Total	$	21,162	$	20,401	$	9,616	$	8,727

(1) All or a portion of these amounts will be retained by, or reallowed (paid) to, participating broker-dealers and servicing broker-dealers.

(2) The distribution fees are payable monthly in arrears. Additionally, we accrue for future estimated amounts payable related to ongoing distribution fees. The future estimated amounts payable were approximately $64.2 million and $66.7 million as of March 31, 2024 and December 31, 2023, respectively.

(3) Other expense reimbursements include certain expenses incurred for organization and offering, acquisition and general administrative services provided to us under the Advisory Agreement, including, but not limited to, certain expenses described below after footnote 5, allocated rent paid to both third parties and affiliates of our Advisor, equipment, utilities, insurance, travel and entertainment.

(4) Includes costs reimbursed to the Advisor related to the DST Program.

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(5) The cost of the property management fee, including the property accounting fee, is generally borne by the tenant or tenants at each real property, either via a direct reimbursement to us or, in the case of tenants subject to a gross lease, as part of the lease cost. In certain circumstances, we may pay for a portion of the property management fee, including the property accounting fee, without reimbursement from the tenant or tenants at a real property.

Certain of the expense reimbursements described in the table above include a portion of the compensation expenses of officers and employees of the Advisor or its affiliates related to activities for which the Advisor did not otherwise receive a separate fee. Amounts incurred related to these compensation expenses for the three months ended March 31, 2024 and 2023 were approximately $3.4 million and $2.8 million, respectively. No reimbursement is made for compensation of our named executive officers unless the named executive officer is providing stockholder services, as outlined in the Advisory Agreement.

Performance Participation Allocation

The allocation of the performance participation interest is ultimately determined at the end of each calendar year and will be paid in Class I OP Units or cash, at the election of the Advisor. The performance hurdle was not achieved as of either March 31, 2024 or 2023, therefore no performance participation allocation expense was recognized in our condensed consolidated statements of operations for the three months ended March 31, 2024 and 2023.

12. NET INCOME (LOSS) PER COMMON SHARE

The computation of our basic and diluted net income (loss) per share attributable to common stockholders is as follows:

	For the Three Months Ended March 31,
(in thousands, except per share data)	2024		2023
Net loss attributable to common stockholders—basic	$	(15,001)	$	(2,004)
Net loss attributable to redeemable noncontrolling interests		(111)		(18)
Net loss attributable to noncontrolling interests		(6,477)		(549)
Net loss attributable to common stockholders—diluted	$	(21,589)	$	(2,571)
Weighted-average shares outstanding—basic		195,679		206,774
Incremental weighted-average shares effect of conversion of noncontrolling interests		85,694		56,252
Weighted-average shares outstanding—diluted		281,373		263,026
Net loss per share attributable to common stockholders:
Basic	$	(0.08)	$	(0.01)
Diluted	$	(0.08)	$	(0.01)

13. SUPPLEMENTAL CASH FLOW INFORMATION

Supplemental cash flow information and disclosure of non-cash investing and financing activities is as follows:

	For the Three Months Ended March 31,
(in thousands)	2024		2023
Supplemental disclosure of non-cash investing and financing activities:
Distributions reinvested in common stock	$	8,275	$	7,990
Decrease in accrued future ongoing distribution fees		(2,439)		(1,800)
Increase in DST Program Loans receivable through DST Program capital raising		12,161		14,015
Issuances of OP Units for DST Interests		72,034		—

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Restricted Cash

Restricted cash consists of lender and property-related escrow accounts. The following table presents the components of the beginning of period and end of period cash, cash equivalents and restricted cash reported within the condensed consolidated statements of cash flows:

	For the Three Months Ended March 31,
(in thousands)	2024		2023
Beginning of period:
Cash and cash equivalents	$	15,052	$	13,336
Restricted cash		4,614		3,850
Cash, cash equivalents and restricted cash	$	19,666	$	17,186
End of period:
Cash and cash equivalents	$	15,739	$	36,894
Restricted cash		4,184		3,859
Cash, cash equivalents and restricted cash	$	19,923	$	40,753

14. COMMITMENTS AND CONTINGENCIES

Litigation

From time to time, we and our subsidiaries may be involved in various claims and legal actions arising in the ordinary course of business. As of March 31, 2024, we and our subsidiaries were not involved in any material legal proceedings.

Environmental Matters

A majority of the properties we acquire have been or will be subject to environmental reviews either by us or the previous owners. In addition, we may incur environmental remediation costs associated with certain land parcels we may acquire in connection with the development of land. We have acquired or may in the future acquire certain properties in urban and industrial areas that may have been leased to or previously owned by commercial and industrial companies that discharged hazardous materials. We may purchase various environmental insurance policies to mitigate our exposure to environmental liabilities. We are not aware of any environmental liabilities that we believe would have a material adverse effect on our business, financial condition, or results of operations as of March 31, 2024.

Unfunded Commitments

As of March 31, 2024, we had unfunded commitments of $273.0 million to fund various investments in real estate debt and securities and investments in unconsolidated joint venture partnerships.

15. SEGMENT FINANCIAL INFORMATION

Our six reportable segments are office properties, retail properties, residential properties, industrial properties, other properties and investments in real estate debt and securities. Factors used to determine our reportable segments include the physical and economic characteristics of our properties and/or investments and the related operating activities. Our chief operating decision makers rely on net operating income, among other factors, to make decisions about allocating resources and assessing segment performance. Net operating income is the key performance metric that captures the unique operating characteristics of each segment. Net investment in real estate properties, investments in real estate debt and securities, restricted cash, tenant receivables, straight-line rent receivables and other assets directly assignable to a property or investment are allocated to the segment groupings. Corporate items that are not directly assignable to a property, such as investments in unconsolidated joint venture partnerships and DST Program Loans, are not allocated to segment groupings, but are reflected as reconciling items.

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The following table reflects our total consolidated assets by segment as of March 31, 2024 and December 31, 2023:

	As of
(in thousands)	March 31, 2024		December 31, 2023
Assets:
Office properties	$	365,646	$	373,467
Retail properties		507,138		509,307
Residential properties		1,655,860		1,658,945
Industrial properties		1,342,961		1,353,331
Other properties (1)		54,764		55,130
Investments in real estate debt and securities		391,442		370,176
Corporate		363,856		319,050
Total assets	$	4,681,667	$	4,639,406

(1) Includes self-storage properties.

The following table is a reconciliation of our reported net income (loss) attributable to common stockholders to our net operating income for the three months ended March 31, 2024 and 2023:

	For the Three Months Ended
	March 31,
(in thousands)	2024		2023
Net loss attributable to common stockholders	$	(15,001)	$	(2,004)
Real estate-related depreciation and amortization		35,470		33,197
General and administrative expenses		3,337		3,044
Advisory fees		9,972		9,538
Acquisition costs and reimbursements		2,043		1,169
Valuation allowance on debt-related investment		—		2,520
(Income) loss from unconsolidated joint venture partnerships		(2,282)		2,446
Interest expense		44,234		37,545
Gain on sale of real estate property		—		(36,884)
Unrealized gain on financing obligations		(2,821)		—
Loss on extinguishment of debt and financing commitments, net		—		700
Loss on derivative instruments		—		103
Provision for current expected credit losses		(133)		5,630
Other income and expenses		(1,289)		(1,016)
Net loss attributable to redeemable noncontrolling interests		(111)		(18)
Net loss attributable to noncontrolling interests		(6,477)		(549)
Net operating income	$	66,942	$	55,421

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The following table sets forth consolidated financial results by segment for the three months ended March 31, 2024 and 2023:

									Other		Debt and
(in thousands)	Office		Retail		Residential		Industrial		Properties		Securities		Consolidated
For the Three Months Ended March 31, 2024
Rental revenues	$	12,194	$	15,469	$	33,085	$	26,455	$	928	$	—	$	88,131
Debt-related income		—		—		—		—		—		11,311		11,311
Rental expenses		(6,355)		(3,952)		(15,672)		(6,170)		(351)		—		(32,500)
Net operating income	$	5,839	$	11,517	$	17,413	$	20,285	$	577	$	11,311	$	66,942
Real estate-related depreciation and amortization	$	3,967	$	3,958	$	12,181	$	14,842	$	522	$	—	$	35,470
For the Three Months Ended March 31, 2023
Rental revenues	$	13,349	$	14,518	$	28,848	$	21,245	$	—	$	—	$	77,960
Debt-related income		—		—		—		—		—		5,761		5,761
Rental expenses		(6,630)		(3,584)		(13,190)		(4,896)		—		—		(28,300)
Net operating income	$	6,719	$	10,934	$	15,658	$	16,349	$	—	$	5,761	$	55,421
Real estate-related depreciation and amortization	$	3,963	$	4,035	$	9,489	$	15,710	$	—	$	—	$	33,197

We consider net operating income to be an appropriate supplemental performance measure and believe net operating income provides useful information to our investors regarding our financial condition and results of operations because net operating income reflects the operating performance of our investments and excludes certain items that are not considered to be controllable in connection with the management of the investments, such as real estate-related depreciation and amortization, general and administrative expenses, advisory fees, impairment charges, interest expense, gains on sale of properties, other income and expenses, gains and losses on the extinguishment of debt and noncontrolling interests. However, net operating income should not be viewed as an alternative measure of our financial performance since it excludes such items, which could materially impact our results of operations. Further, our net operating income may not be comparable to that of other real estate companies, as they may use different methodologies for calculating net operating income. Therefore, we believe net income, as defined by GAAP, to be the most appropriate measure to evaluate our overall financial performance.

16. SUBSEQUENT EVENTS

Renewal of Advisory Agreement

Ares Real Estate Income Trust Inc., the Operating Partnership and the Advisor previously entered into that certain Second Amended and Restated Advisory Agreement (2023), effective June 3, 2023 (the “Amended Advisory Agreement”). The term of the Amended Advisory Agreement continued through April 30, 2024, subject to renewal for an unlimited number of one-year periods. Effective as of April 30, 2024, Ares Real Estate Income Trust Inc., the Operating Partnership and the Advisor renewed the Amended Advisory Agreement through April 30, 2025 by entering into the Amended and Restated Advisory Agreement (2024) (the “2024 Advisory Agreement”). The terms of the 2024 Advisory Agreement are substantially the same as the terms of the prior version of the agreement. In addition to the renewal, the 2024 Advisory Agreement amends the Amended Advisory Agreement by clarifying that the property accounting services provided by the Advisor do not include financial systems and software and consultants related thereto, and that the Advisor may be reimbursed for expenses related to such financial systems and software and consultants related thereto.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

References to the terms “we,” “our” or “us” refer to Ares Real Estate Income Trust Inc. and its consolidated subsidiaries. The following discussion and analysis should be read together with our unaudited condensed consolidated financial statements and notes thereto included in this Quarterly Report on Form 10-Q.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q includes certain statements that may be deemed to be “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, or the “Securities Act,” and Section 21E of the Securities Exchange Act of 1934, as amended, or the “Exchange Act.” Such forward-looking statements relate to, without limitation, our future capital expenditures, distributions, acquisitions and dispositions (including the amount and nature thereof), other developments and trends of the real estate industry, business strategies and the expansion and growth of our operations. These statements are based on certain assumptions and analyses made by us in light of our experience and our perception of historical trends, current conditions, expected future developments and other factors we believe are appropriate. We intend such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in Section 27A of the Securities Act and Section 21E of the Exchange Act. Such statements are subject to a number of assumptions, risks and uncertainties which may cause our actual results, performance or achievements to be materially different from future results, performance or achievements expressed or implied by these forward-looking statements. Forward-looking statements are generally identifiable by the use of the words “may,” “will,” “should,” “expect,” “anticipate,” “estimate,” “believe,” “intend,” “project,” “continue,” or the negative of these words, or other similar words or terms. Readers are cautioned not to place undue reliance on these forward-looking statements.

Some of the risks and uncertainties that may cause our actual results, performance or achievements to differ materially from those expressed or implied by forward-looking statements include, among others, the following:

● the impact of macroeconomic trends, such as the unemployment rate, availability of credit, impact of inflation, changes in interest rates, and the conflicts in Ukraine and in the Middle East, which may have a negative effect on the following, among other things:

● the fundamentals of our business, including overall market occupancy, space utilization for our tenants, who we refer to as customers from time-to-time herein, and rental rates;

● the financial condition of our customers, some of which are retail, financial, legal and other professional firms, our lenders, and institutions that hold our cash balances and short-term investments, which may expose us to increased risks of breach or default by these parties;

● customers’ ability to pay rent on their leases or our ability to re-lease space that is or becomes vacant; and

● the value of our real estate assets, which may limit our ability to dispose of assets at attractive prices or obtain or maintain debt financing secured by our properties or on an unsecured basis;

● general risks affecting the real estate industry (including, without limitation, the inability to enter into or renew leases, dependence on customers’ financial condition and competition from other developers, owners and operators of real estate);

● our ability to effectively raise and deploy proceeds from our ongoing securities offerings;

● risks associated with the demand for liquidity under our share redemption program and our ability to meet such demand;

● risks associated with the availability and terms of debt and equity financing and the use of debt to fund acquisitions and developments, including the risk associated with interest rates impacting the cost and/or availability of financing;

● the business opportunities that may be presented to and pursued by us, changes in laws or regulations (including changes to laws governing the taxation of real estate investment trusts (“REITs”));

● conflicts of interest arising out of our relationships with Ares real estate (the “Sponsor”), the Advisor and their affiliates;

● changes in accounting principles, policies and guidelines applicable to REITs;

● environmental, regulatory and/or safety requirements; and

● the availability and cost of comprehensive insurance, including coverage for terrorist acts.

For further discussion of these and other factors, see Part I, Item 1A, “Risk Factors” in our 2023 Form 10-K. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of future events, new information or otherwise.

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OVERVIEW

General

Ares Real Estate Income Trust Inc. is a NAV-based perpetual life REIT that was formed on April 11, 2005, as a Maryland corporation. We are primarily focused on investing in and operating a diverse portfolio of real property. As of March 31, 2024, our consolidated real property portfolio consisted of 99 properties, totaling approximately 20.1 million square feet located in 33 markets throughout the U.S. We also owned, either directly through our unconsolidated joint venture partnerships or indirectly through other entities owned by our unconsolidated joint venture partnerships, one residential property, 161 net lease properties, 10 data center investments and one debt-related investment as of March 31, 2024. Unless otherwise noted, these unconsolidated properties and investments are excluded from the presentation of our portfolio data herein.

We have operated and elected to be treated as a REIT for U.S. federal income tax purposes, commencing with the taxable year ended December 31, 2006, and we intend to continue to operate in accordance with the requirements for qualification as a REIT. We utilize an UPREIT organizational structure to hold all or substantially all of our assets through the Operating Partnership.

We intend to offer shares of our common stock on a continuous basis. We also intend to conduct an ongoing distribution reinvestment plan offering for our stockholders to reinvest distributions in our shares. From time to time, we may file new registration statements on Form S-11 with the SEC to register additional shares of common stock so that we may continuously offer shares of common stock pursuant to Rule 415 under the Securities Act. During the three months ended March 31, 2024, we raised gross proceeds of approximately $16.5 million from the sale of approximately 2.0 million shares of our common stock in our ongoing current public offerings, including proceeds from our distribution reinvestment plan of approximately $8.3 million. See “Note 8 to the Condensed Consolidated Financial Statements” for more information about our current public offerings.

Additionally, we have a program to raise capital through private placement offerings by selling DST Interests. These private placement offerings are exempt from registration requirements pursuant to Section 4(a)(2) of the Securities Act. We anticipate that these interests may serve as replacement properties for investors seeking to complete like-kind exchange transactions under Section 1031 of the Internal Revenue Code of 1986, as amended (the “Code”). Similar to our prior private placement offerings, we expect that the DST Program will give us the opportunity to expand and diversify our capital raise strategies by offering what we believe to be an attractive and unique investment product for investors that may be seeking replacement properties to complete like-kind exchange transactions under Section 1031 of the Code. We also offer DST Program Loans to finance no more than 50% of the purchase price of the DST Interests to certain purchasers of the DST Interests. During the three months ended March 31, 2024, we sold $147.3 million of gross interests related to the DST Program, $12.2 million of which were financed by DST Program Loans. See “Note 6 to the Condensed Consolidated Financial Statements” for additional detail regarding the DST Program.

We currently group our real property portfolio into five categories: office, retail, residential, industrial and other. The following table summarizes our real property portfolio by category as of March 31, 2024:

						Average
				% of Total		Effective Annual						% of
($ and square feet in thousands,	Number of	Number of	Rentable	Rentable		Base Rent per		%		Aggregate		Aggregate
except for per square foot data)	Markets (1)	Real Properties	Square Feet	Square Feet		Square Foot (2)		Leased		Fair Value		Fair Value
Office properties	6	7	1,393	6.9	%	$	36.34	79.7	%	$	497,900	10.5	%
Retail properties	8	18	2,318	11.5			19.92	97.1			685,350	14.4
Residential properties	9	18	4,842	24.1			27.92	92.0			1,804,150	38.0
Industrial properties	28	54	11,402	56.7			7.13	98.4			1,702,300	35.9
Other properties	2	2	171	0.8			25.18	76.7			58,550	1.2
Total real property portfolio	33	99	20,126	100.0	%	$	15.28	95.3	%	$	4,748,250	100.0	%

(1) Reflects the number of unique markets by category and in total. As such, the total number of markets does not equal the sum of the number of markets by category as certain categories are located in the same market.

(2) Amount calculated as total annualized base rent, which includes the impact of any contractual tenant concessions (cash basis) per the terms of the lease, divided by total lease square footage as of March 31, 2024.

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As of March 31, 2024, we had six floating-rate debt-related investments with a weighted-average interest rate of 10.6% and a weighted-average remaining life of 1.4 years. As of March 31, 2024, the aggregate outstanding principal was $265.3 million, the aggregate carrying amount was $262.8 million and total aggregate commitments were up to $329.7 million.

As of March 31, 2024, we had three available-for-sale debt securities, which were comprised of one CRE CLO, one CMBS and one preferred equity investment. As of March 31, 2024, the aggregate fair value of these investments was $128.7 million.

We currently focus our investment activities primarily across the major U.S. property sectors (industrial, residential (which includes and/or may include multi-family and other types of rental housing such as manufactured, student and single-family rental housing), office (which includes and/or may include medical office and life science laboratories) and retail), self-storage properties and investments in real estate debt and securities. To a lesser extent, we strategically invest in and/or intend to invest in geographies outside of the U.S., which may include Canada, Mexico, the United Kingdom, Europe and other foreign jurisdictions, and in other sectors such as triple net lease, properties in sectors adjacent to our primary investment sectors and/or infrastructure, to create a diversified blend of current income and long-term value appreciation. Our near-term investment strategy is likely to prioritize new investments in the industrial, residential and self-storage sectors due to relatively attractive fundamental conditions. We also intend to continue to hold an allocation of properties in the office and retail sectors, the latter of which is largely grocery-anchored.

Net Asset Value

Our board of directors, including a majority of our independent directors, has adopted valuation procedures, as amended from time to time, that contain a comprehensive set of methodologies to be used in connection with the calculation of our NAV. With the approval of our board of directors, including a majority of our independent directors, we have engaged Altus Group U.S. Inc., a third-party valuation firm, to serve as our independent valuation advisor (“Altus Group” or the “Independent Valuation Advisor”) with respect to helping us administer the valuation and review process for the real properties in our portfolio, providing monthly real property appraisals and valuations for certain of our debt-related assets, reviewing annual third-party real property appraisals, reviewing the internal valuations of DST Program Loans and debt-related liabilities performed by our Advisor, providing quarterly valuations of our properties subject to master lease obligations associated with the DST Program, and assisting in the development and review of our valuation procedures. As part of this process, our Advisor reviews the estimates of the values of our real property portfolio, real estate-related assets, and other assets and liabilities within our portfolio for consistency with our valuation guidelines and the overall reasonableness of the valuation conclusions, and informs our board of directors of its conclusions. Although third-party appraisal firms, the Independent Valuation Advisor, or other pricing sources may consider any comments received from us or our Advisor or other valuation sources for their individual valuations, the final estimated fair values of our real properties are determined by the Independent Valuation Advisor in their appraisals and the final estimates of fair values of our real estate-related assets, our other assets, and our liabilities are determined by the applicable pricing source (which may, in certain instances be our Advisor or an affiliate of Ares), subject to the oversight of our board of directors. With respect to the valuation of our real properties, the Independent Valuation Advisor provides our board of directors with periodic valuation reports and is available to meet with our board of directors to review valuation information, as well as our valuation guidelines and the operation and results of the valuation and review process generally. Excluding investments that are bought or sold during a given calendar year, unconsolidated investments held through joint ventures or partnerships are valued by an independent appraiser at least once per calendar year. For valuations during interim periods, not less than quarterly, either (1) our Advisor or a qualified third party that we engage will determine the estimated fair value of the investments owned by unconsolidated affiliates or (2) we will utilize interim valuations determined pursuant to valuation policies and procedures established for such joint ventures or partnerships. All parties engaged by us in connection with our valuation procedures, including the Independent Valuation Advisor, ALPS Fund Services Inc. (“ALPS”), and our Advisor, are subject to the oversight of our board of directors. Our board of directors has the right to engage additional valuation firms and pricing sources to review the valuation process or valuations, if deemed appropriate. At least once each calendar year our board of directors, including a majority of our independent directors, reviews the appropriateness of our valuation procedures with input from the Independent Valuation Advisor. From time to time our board of directors, including a majority of our independent directors, may adopt changes to the valuation procedures if it: (1) determines that such changes are likely to result in a more accurate reflection of NAV or a more efficient or less costly procedure for the determination of NAV without having a material adverse effect on the accuracy of such determination; or (2) otherwise reasonably believes a change is appropriate for the determination of NAV. We will publicly announce material changes to our valuation procedures. See Exhibit 4.4 of this Quarterly Report on Form 10-Q for a more detailed description of our valuation procedures, including important disclosure regarding real property valuations provided by the Independent Valuation Advisor.

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Our valuation procedures, which address specifically each category of our assets and liabilities and are applied separately from the preparation of our financial statements in accordance with GAAP, involve adjustments from historical cost. There are certain factors which cause NAV to be different from total equity or stockholders’ equity on a GAAP basis. Most significantly, the valuation of our real assets, which is the largest component of our NAV calculation, is provided to us by the Independent Valuation Advisor. For GAAP purposes, these assets are generally recorded at depreciated or amortized cost. Another example that will cause our NAV to differ from our GAAP total equity or stockholders’ equity is the straight-lining of rent, which results in a receivable for GAAP purposes that is not included in the determination of our NAV. The fair values of our assets and certain liabilities are determined using widely accepted methodologies and, as appropriate, the GAAP principles within the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification under Topic 820, Fair Value Measurements and Disclosures and are used by ALPS in calculating our NAV per share. However, our valuation procedures and our NAV are not subject to GAAP and will not be subject to independent audit. We did not develop our valuation procedures with the intention of complying with fair value concepts under GAAP and, therefore, there could be differences between our fair values and the fair values derived from the principal market or most advantageous market concepts of establishing fair value under GAAP. The aggregate real property valuation of $4.75 billion compares to a GAAP basis of real properties (net of intangible lease liabilities and before accumulated amortization and depreciation) of $4.50 billion, representing a difference of approximately $245.4 million, or 5.5%.

As used below, “Fund Interests” means our outstanding shares of common stock, along with OP Units, which may be or were held directly or indirectly by the Advisor, the Former Sponsor, members or affiliates of the Former Sponsor, and third parties, and “Aggregate Fund NAV” means the NAV of all the Fund Interests.

The following table sets forth the components of Aggregate Fund NAV as of March 31, 2024 and December 31, 2023:

	As of
(in thousands)	March 31, 2024		December 31, 2023
Investments in office properties	$	497,900	$	560,650
Investments in retail properties		685,350		683,800
Investments in residential properties		1,804,150		1,824,950
Investments in industrial properties		1,702,300		1,690,300
Investments in other properties (1)		58,550		54,950
Total investment in real estate properties		4,748,250		4,814,650
Investments in unconsolidated joint venture partnerships		211,139		178,058
Investments in real estate debt and securities		394,961		373,448
DST Program Loans		120,684		115,050
Total investments		5,475,034		5,481,206
Cash and cash equivalents		15,739		15,052
Restricted cash		4,184		4,614
Other assets		65,179		72,827
Line of credit, term loans and mortgage notes		(1,967,444)		(1,978,158)
Financing obligations associated with our DST Program		(1,316,786)		(1,277,307)
Other liabilities		(90,080)		(82,465)
Accrued performance participation allocation		—		—
Accrued advisory fees		(3,304)		(3,281)
Noncontrolling interests in consolidated joint venture partnerships		(6,310)		(7,175)
Aggregate Fund NAV	$	2,176,212	$	2,225,313
Total Fund Interests outstanding		282,632		277,408

(1) Includes self-storage properties.

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The following table sets forth the NAV per Fund Interest as of March 31, 2024:

			Class T		Class S		Class D		Class I		Class E		OP
(in thousands, except per Fund Interest data)	Total		Shares		Shares		Shares		Shares		Shares		Units
Monthly NAV	$	2,176,212	$	218,695	$	366,440	$	52,937	$	496,342	$	363,082	$	678,716
Fund Interests outstanding		282,632		28,402		47,591		6,875		64,462		47,155		88,147
NAV Per Fund Interest	$	7.6998	$	7.6998	$	7.6998	$	7.6998	$	7.6998	$	7.6998	$	7.6998

Under GAAP, we record liabilities for ongoing distribution fees that (i) we currently owe the Dealer Manager under the terms of our dealer manager agreement and (ii) we estimate we may pay to the Dealer Manager in future periods for our Fund Interests. As of March 31, 2024, we estimated approximately $64.2 million of ongoing distribution fees were potentially payable to the Dealer Manager. We do not deduct the liability for estimated future distribution fees in our calculation of NAV since we intend for our NAV to reflect our estimated value on the date that we determine our NAV. Accordingly, our estimated NAV at any given time does not include consideration of any estimated future distribution fees that may become payable after such date.

Financing obligations associated with our DST Program, as reflected in our NAV table above, represent outstanding proceeds raised from our private placements under the DST Program due to the fact that we have an option (which may or may not be exercised) to purchase the interests in the DSTs and thereby acquire the real property owned by the trusts. We may acquire these properties using OP Units, cash, or a combination of both. See “Note 6 to the Condensed Consolidated Financial Statements” for additional details regarding our DST Program. We may use proceeds raised from our DST Program for the repayment of debt, acquisition of properties and other investments, distributions to our stockholders, payments under our debt obligations and master lease agreements related to properties in our DST Program, redemption payments, capital expenditures and other general corporate purposes. We pay our Advisor an annual, fixed component of our advisory fee of 1.10% of the consideration received for selling interests in DST Properties to third-party investors, net of upfront fees and expense reimbursements payable out of gross proceeds from the sale of such interests and DST Interests financed through DST Program Loans.

We include no discounts to our NAV for the illiquid nature of our shares, including the limitations on our stockholders’ ability to redeem shares under our share redemption program and our ability to modify or suspend our share redemption program at any time. Our NAV generally does not reflect the potential impact of exit costs (e.g. selling costs and commissions related to the sale of a property) that would likely be incurred if our assets and liabilities were liquidated or sold today. While we may use market pricing concepts to value individual components of our NAV, our per share NAV is not derived from the market pricing information of open-end real estate funds listed on stock exchanges.

Our NAV is not a representation, warranty or guarantee that: (i) we would fully realize our NAV upon a sale of our assets; (ii) shares of our common stock would trade at our per share NAV on a national securities exchange; and (iii) a stockholder would be able to realize the per share NAV if such stockholder attempted to sell his or her shares to a third party.

The valuations of our real properties as of March 31, 2024, excluding certain newly acquired properties that are currently held at cost which we believe reflects the fair value of such properties, were provided by the Independent Valuation Advisor in accordance with our valuation procedures. Certain key assumptions that were used by the Independent Valuation Advisor in the discounted cash flow analysis are set forth in the following table based on weighted-averages by property type.

											Weighted-
	Office		Retail		Residential		Industrial		Other		Average Basis
Exit capitalization rate	7.1	%	6.5	%	5.3	%	5.8	%	5.6	%	5.8	%
Discount rate / internal rate of return	8.4	%	7.3	%	6.9	%	7.3	%	7.6	%	7.3	%
Average holding period (years)	10.0		10.0		10.0		10.0		10.0		10.0

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A change in the exit capitalization and discount rates used would impact the calculation of the value of our real property. For example, assuming all other factors remain constant, the changes listed below would result in the following effects on the value of our real properties, excluding certain newly acquired properties that are currently held at cost which we believe reflects the fair value of such properties:

	Hypothetical											Weighted-
Input	Change	Office		Retail		Residential		Industrial		Other		Average Values
Exit capitalization rate (weighted-average)	0.25% decrease	2.6	%	2.3	%	3.1	%	3.0	%	2.8	%	2.9	%
	0.25% increase	(2.4)	%	(2.1)	%	(2.8)	%	(2.8)	%	(2.6)	%	(2.7)	%
Discount rate (weighted-average)	0.25% decrease	2.1	%	1.9	%	2.0	%	2.0	%	1.9	%	2.0	%
	0.25% increase	(2.0)	%	(1.8)	%	(1.9)	%	(2.0)	%	(1.9)	%	(1.9)	%

From September 30, 2017 through November 30, 2019, we valued our debt-related investments and real estate-related liabilities generally in accordance with fair value standards under GAAP. Beginning with our valuation for December 31, 2019, our property-level mortgages, corporate-level credit facilities and other secured and unsecured debt that are intended to be held to maturity (which for fixed rate debt not subject to interest rate hedges may be the date near maturity at which time the debt will be eligible for prepayment at par for purposes herein), including those subject to interest rate hedges, were valued at par (i.e. at their respective outstanding balances). In addition, because we utilize interest rate hedges to stabilize interest payments (i.e. to fix all-in interest rates through interest rate swaps or to limit interest rate exposure through interest rate caps) on individual loans, each loan and associated interest rate hedge is treated as one financial instrument which is valued at par if intended to be held to maturity. This policy of valuing at par applies regardless of whether any given interest rate hedge is considered as an asset or liability for GAAP purposes. Notwithstanding, if we acquire an investment and assume associated in-place debt from the seller that is above-or below-market, then consistent with how we recognize assumed debt for GAAP purposes when acquiring an asset with pre-existing debt in place, the liabilities used in the determination of our NAV will include the market value of such debt based on market value as of the closing date. The associated premium or discount on such debt as of closing that is reflected in our liabilities will then be amortized through loan maturity. Per our valuation policy, the corresponding investment is valued on an unlevered basis for purposes of determining NAV. Accordingly, all else equal, we would not recognize an immediate gain or loss to our NAV upon acquisition of an investment whereby we assume associated pre-existing debt that is above- or below-market. As of March 31, 2024, we classified all of our debt as intended to be held to maturity, and our liabilities included mark-to-market adjustments for pre-existing debt that we assumed upon acquisition. We currently estimate the fair value of our debt (inclusive of associated interest rate hedges) that was intended to be held to maturity as of March 31, 2024 was $53.9 million lower than the carrying value used for purposes of calculating our NAV (as described above) for such debt in aggregate; meaning that if we used the fair value of our debt rather than the carrying value used for purposes of calculating our NAV (and treated the associated hedge as part of the same financial instrument), our NAV would have been higher by approximately $53.9 million, or $0.19 per share, not taking into account all of the other items that impact our monthly NAV, as of March 31, 2024.

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Reconciliation of Stockholders’ Equity and Noncontrolling Interests to NAV

The following table reconciles stockholders’ equity and noncontrolling interests per our condensed consolidated balance sheet to our NAV as of March 31, 2024:

(in thousands)	As of March 31, 2024
Total stockholders' equity	$	767,077
Noncontrolling interests		343,382
Total equity under GAAP		1,110,459
Adjustments:
Accrued distribution fee (1)		64,217
Redeemable noncontrolling interests (2)		11,315
Unrealized net appreciation (depreciation) on real estate and financial assets and liabilities (3)		339,874
Unrealized gain (loss) on investments in unconsolidated joint venture partnerships (4)		21,866
Accumulated depreciation and amortization (5)		671,973
Other adjustments (6)		(43,492)
Aggregate Fund NAV	$	2,176,212

(1) Accrued distribution fee represents the accrual for the full cost of the distribution fee for Class T, Class S, and Class D shares and OP Units. Under GAAP, we accrued the full cost of the distribution fee payable over the life of each share (assuming such share remains outstanding the length of time required to pay the maximum distribution fee) as an offering cost at the time we sold the Class T, Class S, and Class D shares. Similarly, we accrued a liability for future distribution fees we expect will be paid based on our estimate of how long Class T, Class S, and Class D OP Units will be outstanding, also as an offering cost. For purposes of calculating the NAV, we recognize the distribution fee as a reduction of NAV on a monthly basis when such fee is paid and do not deduct the liability for estimated future distribution fees that may become payable after the date as of which our NAV is calculated.

(2) Redeemable noncontrolling interests are related to our OP Units, and are included in our determination of NAV but not included in equity under GAAP.

(3) Our investments in real estate and certain of our financial assets and liabilities, including our debt, certain of our financing obligations, certain of our DST Program Loans, and certain of our investments in real estate debt and securities, are presented at their carrying value in our condensed consolidated financial statements. As such, any increases or decreases in the fair market value of our investments in real estate and certain of our financial assets and liabilities are not included in our GAAP results. For purposes of determining our NAV, our investments in real estate, investments in real estate debt and securities, financing obligations, and DST Program Loans are recorded at fair value. Notwithstanding, our property-level mortgages and corporate-level credit facilities that are intended to be held to maturity are valued at par (i.e. at their respective outstanding balances).

(4) Certain of our investments in unconsolidated joint venture partnerships are presented using the equity method of accounting in our condensed consolidated financial statements. As such, certain increases or decreases in the fair market value of the underlying investments or debt instruments associated with those investments in unconsolidated joint venture partnerships are not included in our GAAP results. For purposes of determining our NAV, the investments in the underlying real estate and certain of the underlying debt instruments are recorded at fair value and reflected in our NAV at our proportional ownership interest.

(5) We depreciate our investments in real estate and amortize certain other assets and liabilities in accordance with GAAP. Such depreciation and amortization is not recorded for purposes of determining our NAV.

(6) Includes (i) straight-line rent receivables, which are recorded in accordance with GAAP but not recorded for purposes of determining our NAV, (ii) certain interest rate hedges, which are recorded at fair value in accordance with GAAP but are not included for purposes of determining our NAV if intended to be held to maturity, and (iii) other minor adjustments.

Performance

Our NAV decreased from $8.02 per share as of December 31, 2023 to $7.70 per share as of March 31, 2024. The decrease in NAV was primarily driven by expansion in the capital market assumptions that are a major factor used in the valuation of our real estate portfolio. This decrease was partially offset by strong leasing and above-average market rent growth in our industrial properties.

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Effective December 31, 2019, our board of directors approved amendments to our valuation procedures which revised the way we value property-level mortgages, corporate-level credit facilities, other secured and unsecured debt and associated interest rate hedges when loans, including associated interest rate hedges, are intended to be held to maturity, effectively eliminating all mark-to-market adjustments for such loans and hedges from the calculation of our NAV. The following table summarizes the impact of interest rate movements on our share class returns assuming we continued to include the mark-to-market adjustments for all borrowing-related interest rate hedge and debt instruments beginning with the December 31, 2019 NAV:

					One-Year								Since NAV
	Trailing				(Trailing		Three-Year		Five-Year		Ten-Year		Inception
(as of March 31, 2024) (1)	Three-Months		Year-to-Date		12-Months)		Annualized		Annualized		Annualized		Annualized (2)
Class T Share Total Return (with upfront selling commissions and dealer manager fees) (3)	(6.29)	%	(6.29)	%	(10.38)	%	3.13	%	4.35	%	4.71	%	5.57	%
Adjusted Class T Share Total Return (with upfront selling commissions and dealer manager fees) (continued inclusion of mark-to-market adjustments for borrowing-related interest rate hedge and debt instruments) (4)	(5.86)	%	(5.86)	%	(10.79)	%	4.02	%	4.70	%	4.88	%	5.72	%
Difference	(0.43)	%	(0.43)	%	0.41	%	(0.89)	%	(0.35)	%	(0.17)	%	(0.15)	%
Class T Share Total Return (without upfront selling commissions and dealer manager fees) (3)	(3.01)	%	(3.01)	%	(7.25)	%	4.31	%	5.07	%	5.02	%	5.69	%
Adjusted Class T Share Total Return (without upfront selling commissions and dealer manager fees) (continued inclusion of mark-to-market adjustments for borrowing-related interest rate hedge and debt instruments) (4)	(2.56)	%	(2.56)	%	(7.67)	%	5.22	%	5.42	%	5.19	%	5.84	%
Difference	(0.45)	%	(0.45)	%	0.42	%	(0.91)	%	(0.35)	%	(0.17)	%	(0.15)	%
Class S Share Total Return (with upfront selling commissions and dealer manager fees) (3)	(6.29)	%	(6.29)	%	(10.38)	%	3.13	%	4.35	%	4.71	%	5.57	%
Adjusted Class S Share Total Return (with upfront selling commissions and dealer manager fees) (continued inclusion of mark-to-market adjustments for borrowing-related interest rate hedge and debt instruments) (4)	(5.86)	%	(5.86)	%	(10.79)	%	4.02	%	4.70	%	4.88	%	5.72	%
Difference	(0.43)	%	(0.43)	%	0.41	%	(0.89)	%	(0.35)	%	(0.17)	%	(0.15)	%
Class S Share Total Return (without upfront selling commissions and dealer manager fees) (3)	(3.01)	%	(3.01)	%	(7.25)	%	4.31	%	5.07	%	5.02	%	5.69	%
Adjusted Class S Share Total Return (without upfront selling commissions and dealer manager fees) (continued inclusion of mark-to-market adjustments for borrowing-related interest rate hedge and debt instruments) (4)	(2.56)	%	(2.56)	%	(7.67)	%	5.22	%	5.42	%	5.19	%	5.84	%
Difference	(0.45)	%	(0.45)	%	0.42	%	(0.91)	%	(0.35)	%	(0.17)	%	(0.15)	%
Class D Share Total Return (3)	(2.86)	%	(2.86)	%	(6.69)	%	4.94	%	5.70	%	5.61	%	5.91	%
Adjusted Class D Share Total Return (continued inclusion of mark-to-market adjustments for borrowing-related interest rate hedge and debt instruments) (4)	(2.42)	%	(2.42)	%	(7.11)	%	5.85	%	6.05	%	5.79	%	6.06	%
Difference	(0.44)	%	(0.44)	%	0.42	%	(0.91)	%	(0.35)	%	(0.18)	%	(0.15)	%
Class I Share Total Return (3)	(2.80)	%	(2.80)	%	(6.46)	%	5.20	%	5.96	%	5.96	%	6.29	%
Adjusted Class I Share Total Return (continued inclusion of mark-to-market adjustments for borrowing-related interest rate hedge and debt instruments) (4)	(2.36)	%	(2.36)	%	(6.88)	%	6.11	%	6.32	%	6.14	%	6.44	%
Difference	(0.44)	%	(0.44)	%	0.42	%	(0.91)	%	(0.36)	%	(0.18)	%	(0.15)	%
Class E Share Return Total Return (3)	(2.80)	%	(2.80)	%	(6.46)	%	5.20	%	5.96	%	6.00	%	6.33	%
Adjusted Class E Share Total Return (continued inclusion of mark-to-market adjustments for borrowing-related interest rate hedge and debt instruments) (4)	(2.36)	%	(2.36)	%	(6.88)	%	6.11	%	6.32	%	6.17	%	6.48	%
Difference	(0.44)	%	(0.44)	%	0.42	%	(0.91)	%	(0.36)	%	(0.17)	%	(0.15)	%

(1) Performance is measured by total return, which includes income and appreciation (i.e., distributions and changes in NAV) and is a compound rate of return that assumes reinvestment of all distributions for the respective time period, and excludes upfront selling commissions and dealer manager fees paid by investors, except for returns noted “with upfront selling commissions and dealer manager fees” (“Total Return”). Past performance is not a guarantee of future results. Current performance may be higher or lower than the performance data quoted.

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(2) NAV inception was September 30, 2012, which is when we first sold shares of our common stock after converting to an NAV-based REIT on July 12, 2012. Investors in our fixed price offerings prior to NAV inception on September 30, 2012 are likely to have a lower return.

(3) The Total Returns presented are based on actual NAVs at which stockholders transacted, calculated pursuant to our valuation procedures. From NAV inception to November 30, 2019, these NAVs reflected mark-to-market adjustments on our borrowing-related interest rate hedge positions; and from September 1, 2017 to November 30, 2019, these NAVs also reflected mark-to-market adjustments on our borrowing-related debt instruments. Prior to September 1, 2017, our valuation policies dictated marking borrowing-related debt instruments to par except in certain circumstances; therefore, we did not formally track mark-to-market adjustments on our borrowing-related debt instruments during such time.

(4) The Adjusted Total Returns presented are based on adjusted NAVs calculated as if we had continued to mark our hedge and debt instruments to market following a policy change to largely exclude borrowing-related interest rate hedge and debt marks to market from our NAV calculations (except in certain circumstances pursuant to our valuation procedures), beginning with our NAV calculated as of December 31, 2019 NAV. Therefore, the NAVs used in the calculation are identical to those presented per Note (3) above from NAV inception through November 30, 2019. The adjusted NAVs include the incremental impacts to advisory fees and performance fees; however, the adjusted NAVs are not assumed to have impacted any share purchase or redemption. For calculation purposes, transactions were assumed to occur at the adjusted NAVs.

Trends Affecting Our Business

Our results of operations are affected by a variety of factors, including conditions in both the U.S. and global financial markets and the economic and political environments.

Macroeconomic performance during the first quarter of 2024 has shown continued inflationary pressures, higher revisions to future interest rate levels, ongoing regulatory uncertainty and greater geopolitical risks. The publicly traded equity and credit markets delivered positive returns for most asset classes, as the stability of the U.S. banking system and resilient fundamental macroeconomic performance drove improved investor demand and generally reduced risk premiums. Despite the overall improvement in the liquid capital markets, the commercial real estate markets continue to be impacted by certain property-specific and macroeconomic factors. Most notably, the first quarter of 2024 was another period of higher revisions for future market rate expectations amidst generally restrictive credit conditions, especially from regulated lending institutions that are adjusting their business models to increase capital requirements for direct loans. Collectively, these market dynamics pose challenges to commercial real estate values and transaction activity. Although the Federal Reserve has signaled for a potential decrease in interest rates in 2024, heightened inflation has indicated that interest rates may remain higher than previously expected. There is no certainty that there will be a decrease in interest rates in 2024, and there is no certainty as to the magnitude or pace of potential decreases, especially if inflation accelerates. Periods of excessive or prolonged inflation and rising interest rates may negatively impact our customers’ businesses, resulting in increased vacancy, concessions or bad debt expense, which may adversely and materially affect our net operating income and NAV. Additionally, office properties, in particular, continue to experience particular headwinds driven by the increased prevalence of remote work and elevated costs to operate, improve or repurpose office properties. These factors have largely resulted in lower demand for office space and have driven elevated levels of vacancy and default rates.

We believe that some of these market trends may be offset by the material decline in new commercial real estate developments that unfolded throughout 2023 and has continued into 2024. Ultimately, this lack of future inventory may result in a shortage of contemporary, in demand properties in the years to come. Alongside this trend, there is a significant amount of unspent capital targeting commercial real estate properties that could support values and elevate transaction activities. We also believe that the potentially adverse market trends described above may be offset by the continued strong operating fundamentals of real estate. Capitalization rate yields are beginning to stabilize following the sustained widening seen in 2023 and we believe that real estate operating fundamentals remain favorable across our preferred sectors, supported by positive rent growth, low vacancy rates and demand generally outpacing supply in certain sectors like multifamily and industrial.

We believe our portfolio is well-positioned in this market environment. However, there is no guarantee that our outlook will remain positive for the long-term, especially if leasing fundamentals weaken in the future.

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RESULTS OF OPERATIONS

Summary of 2024 Activities

During the three months ended March 31, 2024, we completed the following activities:

● We invested an aggregate of $52.0 million in our unconsolidated joint venture partnerships and our investments in real estate debt and securities.

● We leased approximately 177,000 square feet of our commercial properties, which included 56,000 square feet of new leases and 121,000 square feet of renewals. During the first quarter of 2024, rent growth on comparable commercial leases executed during the year averaged 31.8% when calculated using cash basis rental rates and 43.6% when calculated using GAAP basis rental rates. For our residential properties, rent growth on new and renewal leases executed during the first quarter of 2024 averaged 1.2%. As of March 31, 2024, rents across our industrial properties and residential properties, our two largest property segments, are estimated to be 20.9% and 6.3% below market (on a weighted-average basis), respectively, providing the opportunity for meaningful net operating income growth.

● We decreased our leverage ratio from 36.4% as of December 31, 2023, to 36.3% as of March 31, 2024. Our leverage ratio for reporting purposes is calculated as the outstanding principal balance of our borrowings less cash and cash equivalents divided by the fair value of our real property, net investments in unconsolidated joint venture partnerships, investments in real estate-related securities and debt-related investments not associated with the DST Program (determined in accordance with our valuation procedures).

● We raised gross proceeds of $163.8 million from the sale of our common stock and DST Interests. This includes $16.5 million from the sale of 2.0 million shares of our common stock in our ongoing public offerings, including proceeds from our distribution reinvestment plan of approximately $8.3 million and $147.3 million of gross capital through private placement offerings by selling DST Interests, $12.2 million of which were financed by DST Program Loans.

● We redeemed 4.8 million shares of common stock at a weighted-average purchase price of $8.04 per share for an aggregate amount of $38.3 million.

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Results for the Three Months Ended March 31, 2024 Compared to Prior Periods

The following table sets forth information regarding our consolidated results of operations for the three months ended March 31, 2024, as compared to the three months ended December 31, 2023, and for the three months ended March 31, 2024 as compared to the three months ended March 31, 2023:

	For the Three Months Ended				Change				For the Three Months Ended March 31,				Change
($ in thousands, except per share data)	March 31, 2024		December 31, 2023		$		%		2024		2023		$		%
Revenues:
Rental revenues	$	88,131	$	84,462	$	3,669	4.3	%	$	88,131	$	77,960	$	10,171	13.0	%
Debt-related income		11,311		9,388		1,923	20.5			11,311		5,761		5,550	96.3
Total revenues		99,442		93,850		5,592	6.0			99,442		83,721		15,721	18.8
Operating expenses:
Rental expenses		32,500		31,004		1,496	4.8			32,500		28,300		4,200	14.8
Real estate-related depreciation and amortization		35,470		50,784		(15,314)	(30.2)			35,470		33,197		2,273	6.8
General and administrative expenses		3,337		2,833		504	17.8			3,337		3,044		293	9.6
Advisory fees		9,972		9,823		149	1.5			9,972		9,538		434	4.6
Acquisition costs and reimbursements		2,043		1,984		59	3.0			2,043		1,169		874	74.8
Valuation allowance on debt-related investment		—		(5,579)		5,579	100.0			—		2,520		(2,520)	(100.0)
Total operating expenses		83,322		90,849		(7,527)	(8.3)			83,322		77,768		5,554	7.1
Other income (expenses):
Income (loss) from unconsolidated joint venture partnerships		2,282		149		2,133	NM			2,282		(2,446)		4,728	NM
Interest expense		(44,234)		(39,123)		(5,111)	(13.1)			(44,234)		(37,545)		(6,689)	(17.8)
Gain on sale of real estate property		—		—		—	—			—		36,884		(36,884)	(100.0)
Unrealized gain on financing obligations		2,821		932		1,889	NM			2,821		—		2,821	NM
Loss on extinguishment of debt and financing commitments, net		—		—		—	—			—		(700)		700	100.0
Gain (loss) on derivative instruments		—		113		(113)	(100.0)			—		(103)		103	100.0
Provision for current expected credit losses		133		953		(820)	(86.0)			133		(5,630)		5,763	NM
Other income and expenses		1,289		1,620		(331)	(20.4)			1,289		1,016		273	26.9
Total other income (expenses)		(37,709)		(35,356)		(2,353)	(6.7)			(37,709)		(8,524)		(29,185)	NM
Net loss		(21,589)		(32,355)		10,766	33.3			(21,589)		(2,571)		(19,018)	NM
Net loss attributable to redeemable noncontrolling interests		111		207		(96)	(46.4)			111		18		93	NM
Net loss attributable to noncontrolling interests		6,477		8,885		(2,408)	(27.1)			6,477		549		5,928	NM
Net loss attributable to common stockholders	$	(15,001)	$	(23,263)	$	8,262	35.5	%	$	(15,001)	$	(2,004)	$	(12,997)	NM	%
Weighted-average shares outstanding—basic		195,679		198,315		(2,636)	(1.3)	%		195,679		206,774		(11,095)	(5.4)	%
Weighted-average shares outstanding—diluted		281,373		275,672		5,701	2.1	%		281,373		263,026		18,347	7.0	%
Net loss attributable to common stockholders per common share—basic and diluted	$	(0.08)	$	(0.12)	$	0.04	33.3	%	$	(0.08)	$	(0.01)	$	(0.07)	NM	%

NM = Not meaningful

Total Revenues. For the three months ended March 31, 2024, in aggregate, total revenues increased by $5.6 million and $15.7 million, respectively, as compared to the three months ended December 31, 2023 and March 31, 2023, primarily due to the factors described below.

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Rental Revenues. Rental revenues are comprised of rental income, straight-line rent, and amortization of above- and below-market lease assets and liabilities. For the three months ended March 31, 2024, total rental revenues increased by $3.7 million and $10.2 million, respectively, as compared to the three months ended December 31, 2023 and March 31, 2023, primarily due to the increase in non-same store revenues resulting from significant net growth in our portfolio and increased market rents at various properties, partially offset by reduced occupancy at our Bala Pointe and Eden Prairie properties. See “Same Store Portfolio Results of Operations” below for further details of the same store revenues.

The following table presents the components of our consolidated rental revenues:

	For the Three Months Ended				Change				For the Three Months Ended March 31,				Change
(in thousands)	March 31, 2024		December 31, 2023		$		%		2024		2023		$		%
Rental income	$	85,756	$	82,967	$	2,789	3.4	%	$	85,756	$	76,064	$	9,692	12.7	%
Straight-line rent		1,582		646		936	NM			1,582		1,068		514	48.1
Amortization of above- and below-market intangibles		793		849		(56)	(6.6)			793		828		(35)	(4.2)
Total rental revenues	$	88,131	$	84,462	$	3,669	4.3	%	$	88,131	$	77,960	$	10,171	13.0	%

NM = Not meaningful

Debt-Related Income. Debt-related income is comprised of interest income and amortization related to our debt-related investments and debt securities. For the three months ended March 31, 2024, total debt-related income increased by $1.9 million and $5.6 million, respectively, as compared to the three months ended December 31, 2023 and March 31, 2023, primarily due to the growth of our investments in real estate debt and securities.

Total Operating Expenses. For the three months ended March 31, 2024, in aggregate, total operating expenses decreased by $7.5 million as compared to the three months ended December 31, 2023 and increased by $5.6 million as compared to the three months ended March 31, 2023, primarily due to the factors described below.

Rental Expenses. Rental expenses include certain property operating expenses typically reimbursed by our customers at our commercial properties, such as real estate taxes, property insurance, property management fees, repair and maintenance, and include certain non-recoverable expenses, such as consulting services and roof repairs. For the three months ended March 31, 2024, total rental expenses increased by $1.5 million and $4.2 million, respectively, as compared to the three months ended December 31, 2023 and March 31, 2023, primarily due to (i) an increase in non-same store rental expenses resulting from significant net growth in our portfolio and (ii) an increase in real estate taxes across our portfolio. See “Same Store Portfolio Results of Operations” below for further details of the same store expenses.

The following table presents the various components of our rental expenses:

	For the Three Months Ended				Change				For the Three Months Ended March 31,				Change
(in thousands)	March 31, 2024		December 31, 2023		$		%		2024		2023		$		%
Real estate taxes	$	13,620	$	12,297	$	1,323	10.8	%	$	13,620	$	12,448	$	1,172	9.4	%
Repairs and maintenance		6,214		6,662		(448)	(6.7)			6,214		5,780		434	7.5
Utilities		3,001		2,801		200	7.1			3,001		2,888		113	3.9
Property management fees		2,182		2,117		65	3.1			2,182		1,933		249	12.9
Insurance		1,838		1,817		21	1.2			1,838		1,184		654	55.2
Other		5,645		5,310		335	6.3			5,645		4,067		1,578	38.8
Total rental expenses	$	32,500	$	31,004	$	1,496	4.8	%	$	32,500	$	28,300	$	4,200	14.8	%

Real Estate-Related Depreciation and Amortization. For the three months ended March 31, 2024, in aggregate, real estate-related depreciation and amortization expense decreased by $15.3 million, as compared to the three months ended December 31, 2023, primarily due to accelerated depreciation expense at our Bala Pointe property recorded in the fourth quarter of 2023 due to planned demolition of the building in advance of redevelopment. Real estate-related depreciation and amortization expense increased by $2.3 million for the three months ended March 31, 2024, as compared to the same period in 2023, primarily due to significant net growth in our portfolio.

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Other Remaining Operating Expenses. In aggregate, the remaining operating expenses increased by $6.3 million for the three months ended March 31, 2024, as compared to the three months ended December 31, 2023, primarily due to an increase in our valuation allowance on debt-related investment of $5.6 million due to a reversal of a valuation allowance being recorded in the fourth quarter of 2023.

In aggregate, the remaining operating expenses decreased by $0.9 million for the three months ended March 31, 2024, as compared to the same period in 2023, primarily due to a decrease in our valuation allowance on debt-related investment of $2.5 million, partially offset by an increase in acquisition costs and reimbursements of $0.9 million.

Other Income and Expenses. In aggregate, the remaining items that comprise our net income (loss) had a $(2.4) million impact on our net income (loss) for the three months ended March 31, 2024, as compared to the three months ended December 31, 2023, primarily due to the following:

● an increase in interest expense of $5.1 million driven primarily by higher interest expense on financing obligations associated with an increase in the sale of interests related to our DST Program and higher interest expense on certain variable interest rate debt.

Partially offset by:

● an increase in income (loss) from unconsolidated joint venture partnerships of $2.1 million driven by positive performance of our investments in unconsolidated joint venture partnerships; and

● an increase in unrealized gain on financing obligations of $1.9 million driven by changes in valuations of properties in our DST Program.

In aggregate, the remaining items that comprise our net income (loss) had a $(29.2) million impact on our net income (loss) for the three months ended March 31, 2024, as compared to the three months ended March 31, 2023, primarily due to the following:

● a decrease in gain on sale of real estate property of $36.9 million, as we did not dispose of any properties during the three months ended March 31, 2024; and

● an increase in interest expense of $6.7 million driven primarily by higher interest expense on financing obligations associated with an increase in the sale of interests related to our DST Program and higher interest expense on certain variable interest rate debt and our new mortgage note entered into in December 2023.

Partially offset by:

● a decrease in our provision for current expected credit losses of $5.8 million driven by the reduction of our CECL Reserve during the three months ended March 31, 2024; and

● an increase in income (loss) from unconsolidated joint venture partnerships of $4.7 million driven by positive performance of our investments in unconsolidated joint venture partnerships.

Same Store Portfolio Results of Operations

Property net operating income (“NOI”) is a supplemental non-GAAP measure of our property operating results. We define property NOI as rental revenues less operating expenses. While we believe our net income (loss), as defined by GAAP, to be the most appropriate measure to evaluate our overall performance, we consider property NOI to be an appropriate supplemental performance measure. We believe property NOI provides useful information to our investors regarding our results of operations because property NOI reflects the operating performance of our properties and excludes certain items that are not considered to be controllable in connection with the management of properties, such as real estate-related depreciation and amortization, general and administrative expenses, advisory fees, impairment charges, interest expense, gains on sale of properties, other income and expenses, gains and losses on the extinguishment of debt and noncontrolling interests. However, property NOI should not be viewed as an alternative measure of our financial performance since it excludes such items, which could materially impact our results of operations. Further, our property NOI may not be comparable to that of other real estate companies, as they may use different methodologies for calculating property NOI, therefore, our investors should consider net income (loss) as the primary indicator of our overall financial performance.

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We evaluate the performance of consolidated operating properties we own and manage using a same store analysis because the population of properties in this analysis is consistent from period to period, thereby eliminating the effects of any material changes in the composition of the aggregate portfolio on performance measures. We have defined the same store portfolio to include consolidated operating properties owned for the entirety of both the current and prior reporting periods for which the operations had been stabilized. Unconsolidated properties are excluded from the same store portfolio because we account for our interest in our joint venture partnership using the equity method of accounting; therefore, our proportionate share of income and loss is recognized in income (loss) of our unconsolidated joint venture partnership on the condensed consolidated statements of operations. Other operating properties not meeting the same store criteria are reflected in the non-same store portfolio. Our same store analysis may not be comparable to that of other real estate companies and should not be considered to be more relevant or accurate in evaluating our operating performance than current GAAP methodology.

The same store operating portfolio for the three months ended March 31, 2024 as compared to the three months ended December 31, 2023 presented below includes 94 properties totaling 19.4 million square feet owned as of October 1, 2023, which represented 96.6% of total rentable square feet as of March 31, 2024. The same store operating portfolio for the three months ended March 31, 2024 as compared to the three months ended March 31, 2023 presented below includes 89 properties totaling approximately 18.2 million square feet owned as of January 1, 2023, which represented 90.5% of total rentable square feet as of March 31, 2024. We had no properties in our other properties segment that were considered same store as of March 31, 2024.

The following table reconciles GAAP net income (loss) to same store portfolio property NOI for the three months ended March 31, 2024, as compared to the three months December 31, 2023 and for the three months ended March 31, 2024, as compared to the three months ended March 31, 2023:

	For the Three Months Ended				For the Three Months Ended March 31,
(in thousands)	March 31, 2024		December 31, 2023		2024		2023
Net loss attributable to common stockholders	$	(15,001)	$	(23,263)	$	(15,001)	$	(2,004)
Debt-related income		(11,311)		(9,388)		(11,311)		(5,761)
Real estate-related depreciation and amortization		35,470		50,784		35,470		33,197
General and administrative expenses		3,337		2,833		3,337		3,044
Advisory fees		9,972		9,823		9,972		9,538
Acquisition costs and reimbursements		2,043		1,984		2,043		1,169
Valuation allowance on debt-related investment		—		(5,579)		—		2,520
(Income) loss from unconsolidated joint venture partnerships		(2,282)		(149)		(2,282)		2,446
Interest expense		44,234		39,123		44,234		37,545
Gain on sale of real estate property		—		—		—		(36,884)
Unrealized gain on financing obligations		(2,821)		(932)		(2,821)		—
Loss on extinguishment of debt and financing commitments, net		—		—		—		700
(Gain) loss on derivative instruments		—		(113)		—		103
Provision for current expected credit losses		(133)		(953)		(133)		5,630
Other income and expenses		(1,289)		(1,620)		(1,289)		(1,016)
Net loss attributable to redeemable noncontrolling interests		(111)		(207)		(111)		(18)
Net loss attributable to noncontrolling interests		(6,477)		(8,885)		(6,477)		(549)
Property net operating income	$	55,631	$	53,458	$	55,631	$	49,660
Less: Non-same store property NOI		971		279		3,801		(119)
Same store property NOI	$	54,660	$	53,179	$	51,830	$	49,779

Our real property markets are aggregated into five reportable property segments: office, retail, residential, industrial and other. Our property segments are based on our internal reporting of operating results used to assess performance based on the type of our properties. These property segments are comprised of the markets by which management and its operating teams conduct and monitor business. See “Note 15 to the Condensed Consolidated Financial Statements” for further information on our segments. Management considers rental revenues and property NOI aggregated by property segment to be an appropriate way to analyze performance.

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The following table includes a breakout of results for our same store portfolio by property segment for rental revenues, rental expenses and property NOI for the three months ended March 31, 2024, as compared to the three months ended December 31, 2023 for the three months ended March 31, 2024, as compared to the three months ended March 31, 2023:

	For the Three Months Ended						Change				For the Three Months Ended March 31,						Change
($ in thousands, except per square foot data)	March 31, 2024			December 31, 2023				$	%		2024			2023			$		%
Rental revenues:
Office	$	12,194		$	11,804		$	390	3.3	%	$	12,194		$	13,348		$	(1,154)	(8.6)	%
Retail		15,492			14,979			513	3.4			15,492			14,088			1,404	10.0
Residential		31,977			31,905			72	0.2			29,252			28,847			405	1.4
Industrial		25,972			24,885			1,087	4.4			23,862			21,245			2,617	12.3
Total same store rental revenues		85,635			83,573			2,062	2.5			80,800			77,528			3,272	4.2
Non-same store properties		2,496			889			1,607	NM			7,331			432			6,899	NM
Total rental revenues	$	88,131		$	84,462		$	3,669	4.3	%	$	88,131		$	77,960		$	10,171	13.0	%
Rental expenses:
Office	$	(5,797)		$	(5,293)		$	(504)	(9.5)	%	$	(5,797)		$	(6,351)		$	554	8.7	%
Retail		(3,948)			(4,132)			184	4.5			(3,948)			(3,315)			(633)	(19.1)
Residential		(15,209)			(15,817)			608	3.8			(13,810)			(13,191)			(619)	(4.7)
Industrial		(6,021)			(5,152)			(869)	(16.9)			(5,415)			(4,892)			(523)	(10.7)
Total same store rental expenses		(30,975)			(30,394)			(581)	(1.9)			(28,970)			(27,749)			(1,221)	(4.4)
Non-same store properties		(1,525)			(610)			(915)	NM			(3,530)			(551)			(2,979)	NM
Total rental expenses	$	(32,500)		$	(31,004)		$	(1,496)	(4.8)	%	$	(32,500)		$	(28,300)		$	(4,200)	(14.8)	%
Property NOI:
Office	$	6,397		$	6,511		$	(114)	(1.8)	%	$	6,397		$	6,997		$	(600)	(8.6)	%
Retail		11,544			10,847			697	6.4			11,544			10,773			771	7.2
Residential		16,768			16,088			680	4.2			15,442			15,656			(214)	(1.4)
Industrial		19,951			19,733			218	1.1			18,447			16,353			2,094	12.8
Total same store property NOI		54,660			53,179			1,481	2.8			51,830			49,779			2,051	4.1
Non-same store properties		971			279			692	NM			3,801			(119)			3,920	NM
Total property NOI	$	55,631		$	53,458		$	2,173	4.1	%	$	55,631		$	49,660		$	5,971	12.0	%
Same store average percentage leased:
Office		79.2	%		78.0	%						79.2	%		85.0	%
Retail		97.3			97.4							97.3			95.9
Residential		92.2			92.4							92.4			94.5
Industrial		98.3			99.0							98.9			99.7
Same store average annualized base rent per square foot:
Office	$	36.21		$	35.46						$	36.21		$	34.82
Retail		19.92			19.81							19.92			19.39
Residential		28.11			27.26							28.44			27.60
Industrial		7.21			7.03							7.05			5.96

NM = Not meaningful

Office Segment. For the three months ended March 31, 2024, our office segment same store property NOI remained consistent as compared to the three months ended December 31, 2023. Our office segment same store property NOI decreased by $0.6 million for the three months ended March 31, 2024 as compared to the three months ended March 31, 2023, primarily due to decreased occupancy at our Eden Prairie and CityView properties, partially offset by reduced operating expenses at various properties in 2024.

Retail Segment. For the three months ended March 31, 2024, our retail segment same store property NOI increased by $0.7 million and $0.8 million, respectively, as compared to the three months ended December 31, 2023 and March 31, 2023, primarily due to increased termination fee revenue at our Beaver Creek property and increased occupancy at certain of our properties, partially offset by increased bad debt expense at various properties in 2024.

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Residential Segment. For the three months ended March 31, 2024, our residential segment same store property NOI increased by approximately $0.7 million as compared to the three months ended December 31, 2023, primarily due to reduced real estate tax expense at various properties in 2024. Our residential segment same store property NOI decreased by $0.2 million for the three months ended March 31, 2024 as compared to the three months ended March 31, 2023, primarily due to increased operating expenses, partially offset by increased market rents at certain of our properties in 2024.

Industrial Segment. For the three months ended March 31, 2024, our industrial segment same store property NOI remained consistent as compared to the three months ended December 31, 2023. Our industrial segment same store property NOI increased by $2.1 million for the three months ended March 31, 2024 as compared to the three months ended March 31, 2023, primarily due to increased market rents at certain of our properties, partially offset by increased bad debt expense at various properties during 2024.

ADDITIONAL MEASURES OF PERFORMANCE

Funds From Operations (“FFO”) and Adjusted Funds From Operations (“AFFO”)

We believe that FFO and AFFO, in addition to net income (loss) and cash flows from operating activities as defined by GAAP, are useful supplemental performance measures that our management uses to evaluate our consolidated operating performance. However, these supplemental, non-GAAP measures should not be considered as alternatives to net income (loss) or to cash flows from operating activities as indications of our performance and are not intended to be used as liquidity measures indicative of cash flow available to fund our cash needs, including our ability to make distributions to our stockholders. No single measure can provide users of financial information with sufficient information and only our disclosures read as a whole can be relied upon to adequately portray our financial position, liquidity and results of operations. In addition, other REITs may define FFO, AFFO and similar measures differently and choose to treat certain accounting line items in a manner different from us due to specific differences in investment and operating strategy or for other reasons.

FFO. As defined by the National Association of Real Estate Investment Trusts (“NAREIT”), FFO is a non-GAAP measure that excludes certain items such as real estate-related depreciation and amortization. We believe FFO is a meaningful supplemental measure of our operating performance that is useful to investors because depreciation and amortization in accordance with GAAP implicitly assumes that the value of real estate assets diminishes predictably over time. By excluding gains or losses on the sale of assets, we believe FFO provides a helpful additional measure of our consolidated operating performance on a comparative basis. We use FFO as an indication of our consolidated operating performance and as a guide to making decisions about future investments.

AFFO. AFFO further adjusts FFO to reflect the performance of our portfolio by adjusting for items we believe are not directly attributable to our operations. Our adjustments to FFO to arrive at AFFO include removing the impact of (i) our performance participation allocation, (ii) unrealized (gain) loss from changes in fair value of financial instruments and (iii) increase (decrease) in financing obligation liability appreciation, as applicable.

Although some REITs may present certain performance measures differently, we believe FFO and AFFO generally facilitate a comparison to other REITs that have similar operating characteristics to us. We believe investors are best served if the information that is made available to them allows them to align their analyses and evaluation with the same performance metrics used by management in planning and executing our business strategy. Neither the SEC, NAREIT, nor any regulatory body has passed judgment on the acceptability of the adjustments used to calculate AFFO. In the future, the SEC, NAREIT, or a regulatory body may decide to standardize the allowable adjustments across the non-traded REIT industry at which point we may adjust our calculations and characterizations of AFFO.

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The following unaudited table presents a reconciliation of GAAP net income (loss) to NAREIT FFO and AFFO:

	For the Three Months Ended March 31,
(in thousands, except per share data)	2024		2023
GAAP net loss	$	(21,589)	$	(2,571)
Weighted-average shares outstanding—diluted		281,373		263,026
GAAP net loss per common share—diluted	$	(0.08)	$	(0.01)
Adjustments to arrive at FFO:
Real estate-related depreciation and amortization		35,470		33,197
Gain on sale of real estate property		—		(36,884)
Our share of adjustments from joint venture partnerships		1,341		3,024
NAREIT FFO	$	15,222	$	(3,234)
NAREIT FFO per common share—diluted	$	0.05	$	(0.01)
Adjustments to arrive at AFFO:
Unrealized (gain) loss on financial instruments (1)		(2,954)		9,374
(Decrease) increase in financing obligation liability appreciation		(69)		2,862
Our share of adjustments from joint venture partnerships		(1,765)		286
AFFO	$	10,434	$	9,288

(1) Unrealized (gain) loss on financial instruments primarily relates to mark-to-market changes on our derivatives not designated as cash flow hedges, mark-to-market changes on our financing obligations for which we have elected the fair value option, valuation allowance on our debt-related investments and changes to our provision for current expected credit losses.

LIQUIDITY AND CAPITAL RESOURCES

Liquidity

Our primary sources of capital for meeting our cash requirements include debt financings, cash generated from operating activities, net proceeds from our current public and private offerings, asset sales and repayments from investments in real estate debt and securities. Our principal uses of funds are distributions to our stockholders, payments under our debt obligations and payments pursuant to the master lease agreements related to properties in our DST Program, redemption payments, acquisition of properties and other investments and capital expenditures. Over time, we intend to fund a majority of our cash needs, including the repayment of debt and capital expenditures, from operating cash flows and refinancings. As of March 31, 2024, we had approximately $129.3 million of borrowings, including scheduled amortization payments, and $65.3 million of future minimum lease payments related to the properties in our DST Program coming due in the next 12 months. In addition, we have $273.0 million in unfunded commitments related to our investments in unconsolidated joint venture partnerships and our investments in real estate debt and securities as of March 31, 2024. We expect to be able to repay our principal and interest obligations and fund our capital commitments over the next 12 months and beyond through operating cash flows, refinancings, borrowings under our line of credit, proceeds from capital raise and/or disposition proceeds. Additionally, given the increase in market volatility, increased interest rates, high inflation and the potential recessionary environment, we may experience a decreased pace of net proceeds raised from our current public offering, reducing our ability to purchase assets, which may similarly delay the returns generated from our investments and affect our NAV.

Our Advisor, subject to the oversight of our board of directors and, under certain circumstances, the investment committee or other committees established by our board of directors, will evaluate potential acquisitions or dispositions and will engage in negotiations with buyers, sellers and lenders on our behalf. Pending investment in property, debt, or other investments, we may decide to temporarily invest any unused proceeds from our securities offerings in certain investments that are expected to yield lower returns than those earned on real estate assets. These lower returns may affect our NAV and our ability to make distributions to our stockholders. Potential future sources of capital include proceeds from secured or unsecured financings from banks or other lenders, proceeds from our current public and private offerings, proceeds from the sale of assets and undistributed funds from operations.

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As of March 31, 2024, our financial position was strong with 36.3% leverage, calculated as outstanding principal balance of our borrowings less cash and cash equivalents divided by the fair value of our real property, net investments in our unconsolidated joint venture partnerships, investments in real estate-related securities and debt-related investments not associated with the DST Program (determined in accordance with our valuation procedures). In addition, our consolidated portfolio was 94.8% occupied (95.3% leased) as of March 31, 2024 and is diversified across 99 properties totaling 20.1 million square feet across 33 geographic markets. Our properties contain a diverse roster of 416 commercial customers, large and small, and has an allocation based on fair value of real properties as determined by our NAV calculation of 38.0% residential, 35.9% industrial, 14.4% retail which is primarily grocery-anchored, 10.5% office and 1.2% other properties in adjacent sectors.

We believe that our cash on-hand, anticipated net offering proceeds, proceeds from our line of credit, and other financing and disposition activities should be sufficient to meet our anticipated future acquisition, operating, debt service, distribution and redemption requirements.

Cash Flows. The following table summarizes our cash flows for the following periods:

	For the Three Months Ended March 31,
(in thousands)	2024		2023		$ Change
Total cash provided by (used in):
Operating activities	$	7,792	$	(15,773)	$	23,565
Investing activities		(62,927)		19,170		(82,097)
Financing activities		55,398		20,170		35,228
Effect of exchange rate changes on cash, cash equivalents and restricted cash		(6)		—		(6)
Net increase in cash, cash equivalents and restricted cash	$	257	$	23,567	$	(23,310)

Net cash provided by operating activities increased by $23.6 million for the three months ended March 31, 2024, compared to the same period in 2023, primarily due to the $23.7 million settlement of the 2022 performance participation allocation in cash in January 2023.

Net cash used in investing activities increased by $82.1 million for the three months ended March 31, 2024, compared to the same period in 2023, primarily due to a decrease in proceeds from disposition of real estate property of $53.7 million and an increase in investments in debt-related investments and unconsolidated joint venture partnerships of $40.7 million. These drivers were partially offset by a decrease in real estate property acquisition activity of $14.7 million.

Net cash provided by financing activities increased by $35.2 million for the three months ended March 31, 2024, compared to the same period in 2023, primarily due to an increase in net borrowing activity of $18.7 million and an increase in net offering activity from our DST Program and public offering of $15.4 million.

Capital Resources and Uses of Liquidity

In addition to our cash and cash equivalents balances available, our capital resources and uses of liquidity are as follows:

Line of Credit and Term Loans. As of March 31, 2024, we had an aggregate of $1.7 billion of commitments under our unsecured credit agreement, including $900.0 million under our line of credit and $800.0 million under our two term loans. As of that date, we had: (i) $357.1 million outstanding under our line of credit; and (ii) $800.0 million outstanding under our term loans. The weighted-average effective interest rate across all of our unsecured borrowings is 4.31%, which includes the effect of the interest rate swap and cap agreements related to $950.0 million in borrowings under our line of credit and our term loans.

As of March 31, 2024, the unused and available portions under our line of credit were $542.9 million and $357.5 million, respectively. Our $900.0 million line of credit matures in November 2025, and may be extended pursuant to two six-month extension options, subject to certain conditions, including the payment of extension fees. One $400.0 million term loan matures in November 2026, with no extension option available. Our other $400.0 million term loan matures in January 2027, with no extension option available. Our line of credit borrowings are available for general corporate purposes, including but not limited to the refinancing of other debt, payment of redemptions, acquisition and operation of permitted investments. Refer to “Note 5 to the Condensed Consolidated Financial Statements” for additional information regarding our line of credit and term loans.

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Mortgage Notes. As of March 31, 2024, we had property-level borrowings of approximately $803.3 million outstanding with a weighted-average remaining term of 3.7 years. These borrowings are secured by mortgages or deeds of trust and related assignments and security interests in the collateralized properties, and had a weighted-average interest rate of 4.66%. Refer to “Note 5 to the Condensed Consolidated Financial Statements” for additional information regarding the mortgage notes.

Debt Covenants. Our line of credit, term loan and mortgage note agreements contain various property-level covenants, including customary affirmative and negative covenants. In addition, our line of credit and term loan agreements contain certain corporate level financial covenants, including leverage ratio, fixed charge coverage ratio and tangible net worth thresholds. These covenants may limit our ability to incur additional debt, or to pay distributions. We were in compliance with our debt covenants as of March 31, 2024.

Leverage. We use financial leverage to provide additional funds to support our investment activities. We may finance a portion of the purchase price of any real estate asset that we acquire with borrowings on a short or long-term basis from banks, life insurance companies and other lenders. We calculate our leverage for reporting purposes as the outstanding principal balance of our borrowings less cash and cash equivalents divided by the fair value of our real property, net investments in our unconsolidated joint venture partnerships, investments in real estate-related securities and debt-related investments not associated with the DST Program (determined in accordance with our valuation procedures). We had leverage of 36.3% as of March 31, 2024. Our current target leverage ratio is between 40-60%. Although we will generally work to maintain our targeted leverage ratio, there are no assurances that we will maintain the targeted range disclosed above or achieve any other leverage ratio that we may target in the future. Due to the increase in interest rates, increased market volatility and the potential of a global recession in the near-term, the cost of financing or refinancing our assets may affect returns generated by our investments. Additionally, these factors may cause our borrowing capacity to be reduced, which could similarly delay or reduce benefits to our stockholders.

Future Minimum Lease Payments Related to the DST Program. As of March 31, 2024, we had $1.31 billion of future minimum lease payments related to the DST Program. The underlying interests of each property that is sold to investors pursuant to the DST Program are leased back by an indirect wholly-owned subsidiary of the Operating Partnership on a long-term basis of up to 29 years.

Offering Proceeds. For the three months ended March 31, 2024, the amount of aggregate gross proceeds raised from our current public offerings (including shares issued pursuant to the distribution reinvestment plan) was $16.5 million ($15.5 million net of direct selling costs).

Distributions. To obtain the favorable tax treatment accorded to REITs, we normally will be required each year to distribute to our stockholders at least 90% of our real estate investment trust taxable income, determined without regard to the deduction for distributions paid and by excluding net capital gains. The payment of distributions is determined by our board of directors and may be adjusted at its discretion at any time. Distribution levels are set by our board of directors at a level it believes to be appropriate and sustainable based upon a review of a variety of factors including the current and anticipated market conditions, current and anticipated future performance and make-up of our investments, our overall financial projections and expected future cash needs. We intend to continue to make distributions on a monthly basis.

Beginning in the third quarter of 2023, our board of directors authorized an increase to the amount of monthly gross distributions for each class of our common stock, such that distributions in the amount of $0.03333 per share were paid to stockholders. The new monthly gross distribution per share reflects an increase to the amount of the previous monthly gross distribution of $0.03125 per share that had been paid since January 31, 2018. The distributions on Class T shares, Class S shares and Class D shares of our common stock are reduced by the respective distribution fees that are payable with respect to Class T shares, Class S shares and Class D shares. The distributions are paid on or about the last business day of each respective month to stockholders of record as of the close of business on the last business day of each respective month. There can be no assurances that this new distribution rate will be maintained in future periods.

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The following table outlines sources used, as determined on a GAAP basis, to pay total gross distributions (which are paid in cash or reinvested in shares of our common stock through our distribution reinvestment plan (“DRIP”)) for the periods indicated below:

	For the Three Months Ended March 31, 2024				For the Three Months Ended March 31, 2023
($ in thousands)	Amount		Percentage		Amount		Percentage
Distributions:
Paid in cash (1)	$	19,907	70.7	%	$	16,644	67.5	%
Reinvested in shares		8,238	29.3			8,009	32.5
Total (2)	$	28,145	100.0	%	$	24,653	100.0	%
Sources of Distributions:
Cash flows from operating activities	$	7,792	27.7	%	$	—	—	%
Borrowings		12,115	43.0			16,644	67.5
DRIP (3)		8,238	29.3			8,009	32.5
Total (2)	$	28,145	100.0	%	$	24,653	100.0	%

(1) Includes other cash distributions consisting of: (i) distributions paid to noncontrolling interest holders; and (ii) ongoing distribution fees paid to the Dealer Manager with respect to Class T, Class S and Class D shares and OP Units.

(2) Includes distributions paid to holders of OP Units for redeemable noncontrolling interests.

(3) Stockholders may elect to have their distributions reinvested in shares of our common stock through our distribution reinvestment plan.

For the three months ended March 31, 2024 and 2023, our FFO was $15.2 million, or 54.1% of our total distributions, and $(3.2) million, or (13.1)% of our total distributions, respectively. FFO is a non-GAAP operating metric and should not be used as a liquidity measure. However, management believes the relationship between FFO and distributions may be meaningful for investors to better understand the sustainability of our operating performance compared to distributions made. Refer to “Additional Measures of Performance” above for the definition of FFO, as well as a detailed reconciliation of our GAAP net income (loss) to FFO.

Redemptions. Below is a summary of redemptions and repurchases pursuant to our share redemption program for the three months ended March 31, 2024 and 2023. All eligible redemption requests were fulfilled for the periods presented. Eligible redemption requests are requests submitted in good order by the request submission deadline set forth in the share redemption program. Our board of directors may modify or suspend our current share redemption programs if it deems such action to be in the best interest of our stockholders. Refer to Part II, Item 2. “Unregistered Sales of Equity Securities and Use of Proceeds—Share Redemption Program” for detail regarding our share redemption program.

	For the Three Months Ended March 31,
(in thousands, except for per share data)	2024		2023
Number of shares redeemed or repurchased		4,772		4,026
Aggregate dollar amount of shares redeemed or repurchased	$	38,349	$	35,455
Average redemption or repurchase price per share	$	8.04	$	8.81

For the three months ended March 31, 2024 and 2023, we received and redeemed 100% of eligible redemption requests for an aggregate amount of approximately $38.3 million and $35.5 million, respectively, which we redeemed using cash flows from operating activities in excess of our distributions paid in cash, cash on hand, proceeds from our current public offerings, proceeds from the disposition of properties, and borrowings under our line of credit. We generally repay funds borrowed from our line of credit from a variety of sources including: cash flows from operating activities in excess of our distributions; proceeds from our current public offerings; proceeds from the disposition of properties and other longer-term borrowings.

For purposes of the share redemption program, redemption requests received in a month are included on the last day of such month because that is the last day the stockholders have rights in the Company. We record these redemptions in our financial statements as having occurred on the first day of the next month following receipt of the redemption request because shares redeemed in a given month are considered outstanding through the last day of the month.

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CRITICAL ACCOUNTING ESTIMATES

Our unaudited condensed consolidated financial statements have been prepared in accordance with GAAP and in conjunction with the rules and regulations of the SEC. The preparation of our unaudited condensed consolidated financial statements requires significant management judgments, assumptions and estimates about matters that are inherently uncertain. These judgments affect the reported amounts of assets and liabilities and our disclosure of contingent assets and liabilities at the dates of the condensed consolidated financial statements and the reported amounts of revenue and expenses during the reporting periods. With different estimates or assumptions, materially different amounts could be reported in our condensed consolidated financial statements. Additionally, other companies may utilize different estimates that may impact the comparability of our results of operations to those of companies in similar businesses. For a detailed description of our critical accounting estimates, see Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our 2023 Form 10-K. As of March 31, 2024, our critical accounting estimates have not changed from those described in our 2023 Form 10-K.

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Interest Rate Risk

We have been and may continue to be exposed to the impact of interest rate changes. Our interest rate risk management objectives are to limit the impact of interest rate changes on earnings and cash flows, and optimize overall borrowing costs. To achieve these objectives, we plan to borrow on a fixed interest rate basis and also utilize interest rate swap and cap agreements on certain variable interest rate debt in order to limit the effects of changes in interest rates on our results of operations. As of March 31, 2024, our consolidated debt outstanding consisted of borrowings under our line of credit, term loans and mortgage notes. In addition, we plan to purchase or originate variable rate debt investments, which can offset interest rate risk associated with our variable interest rate consolidated debt.

Fixed Interest Rate Debt. As of March 31, 2024, our fixed interest rate debt consisted of $595.7 million under our mortgage notes and $550.0 million of borrowings under our term loans that were effectively fixed through the use of interest rate swaps. In total, our fixed interest rate debt represented 58.4% of our total consolidated debt as of March 31, 2024. Interest rate fluctuations will generally not affect our future earnings or cash flows on our fixed interest rate debt unless such instruments mature or are otherwise terminated. However, interest rate changes could affect the fair value of our fixed interest rate debt. As of March 31, 2024, the fair value and the carrying value of our consolidated fixed interest rate debt, excluding the values of any associated hedges, was $1.11 billion and $1.15 billion, respectively. The fair value estimate of this debt was estimated using a discounted cash flow analysis utilizing rates we would expect to pay for debt of a similar type and remaining maturity if the loans were originated on March 31, 2024. Given we generally expect to hold our fixed interest rate debt instruments to maturity or when they otherwise open up for prepayment at par, and the amounts due under such debt instruments should be limited to the outstanding principal balance and any accrued and unpaid interest at such time, we do not expect that the resulting change in fair value of our fixed interest rate debt instruments due to market fluctuations in interest rates would have a significant impact on our operating cash flows.

Variable Interest Rate Debt. As of March 31, 2024, our consolidated variable interest rate debt consisted of $357.1 million of borrowings under our line of credit, $250.0 million of borrowings under our term loans and $207.6 million under our mortgage notes, which represented 41.6% of our total consolidated debt. Interest rate changes on the variable portion of our consolidated variable-rate debt could impact our future earnings and cash flows, but would not necessarily affect the fair value of such debt. As of March 31, 2024, we were exposed to market risks related to fluctuations in interest rates on $814.7 million of consolidated borrowings; however, $607.6 million of these borrowings are capped through the use of eight interest rate cap agreements. A hypothetical 25 basis points increase in the all-in rate on the outstanding balance of our consolidated variable interest rate debt as of March 31, 2024, would increase our annual interest expense by approximately $0.5 million, including the effects of our interest rate cap agreements.In addition, we have originated and/or purchased variable rate debt-related investments with aggregate commitments of $329.7 million and aggregate outstanding principal of $265.3 million as of March 31, 2024, which can offset the interest rate risk associated with our variable interest rate borrowings.

Derivative Instruments. As of March 31, 2024, we had 17 outstanding and effective derivative instruments, with a total notional amount of $1.16 billion. These derivative instruments were comprised of interest rate swaps and interest rate caps that were designed to mitigate the risk of future interest rate increases by either providing a fixed interest rate or capping the variable interest rate for a limited, pre-determined period of time. See “Note 5 to the Condensed Consolidated Financial Statements” for further detail on our derivative instruments. We are exposed to credit risk of the counterparty to our interest rate cap and swap agreements in the event of non-performance under the terms of the agreements. If we were not able to replace these caps or swaps in the event of non-performance by the counterparty, we would be subject to variability of the interest rate on the amount outstanding under our debt that is fixed or capped through the use of the swaps or caps, respectively.

Variable Interest Rate Debt Investments. In the case of a significant increase in interest rates, additional debt service payments due from our borrowers may strain the operating cash flows of the real estate assets underlying our mortgages and, potentially, contribute to non-performance or, in severe cases, default, which may be mitigated by borrower purchased interest rate caps. Alternatively, in the case of a significant decrease in interest rates, our debt-related investments could be adversely impacted and interest income from our debt-related investments could decrease substantially, which could reduce the effectiveness of our interest rate risk strategy, as described above.

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Foreign Currency Risk

We currently have investments in unconsolidated joint venture partnerships that invest in assets and properties located in countries outside of the U.S. that are subject to the effects of exchange rate movements between the foreign currency of each real estate investment and the U.S. dollar, which may affect future costs and cash flows as well as amounts remeasured into U.S. dollars for inclusion in our condensed consolidated financial statements. We execute borrowings in the same foreign currencies as our foreign investments to protect against the foreign currency exchange rate risk inherent in transactions denominated in foreign currencies. We estimate that as of March 31, 2024, a hypothetical 10% decline in the exchange rates of foreign currencies against the U.S. dollar would not result in a material change to our investment balances and would be largely offset by the currency conversions of our borrowings in the same foreign currencies.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Under the direction of our principal executive officer and principal financial officer, we evaluated the effectiveness of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of March 31, 2024. Based on this evaluation, our principal executive officer and principal financial officer have concluded that, as of March 31, 2024, our disclosure controls and procedures were effective.

Internal Control Over Financial Reporting

There have not been any changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the three months ended March 31, 2024 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION

ITEM 1A. RISK FACTORS

In addition to the other information set forth in this report, you should carefully consider the risk factors discussed in Part I, Item 1A, “Risk Factors” of our 2023 Form 10-K, which could materially affect our business, financial condition and/or future results. The risks described in our 2023 Form 10-K, are not the only risks facing us. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and/or operating results.

There have been no material changes to the risk factors disclosed in our 2023 Form 10-K.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Share Redemption Program

While stockholders may request on a monthly basis that we redeem all or any portion of their shares pursuant to our share redemption program, we are not obligated to redeem any shares and may choose to redeem only some, or even none, of the shares that have been requested to be redeemed in any particular month, in our discretion. In addition, our ability to fulfill redemption requests is subject to a number of limitations. As a result, share redemptions may not be available each month. Under our share redemption program, to the extent we choose to redeem shares in any particular month, we will only redeem shares as of the last calendar day of that month (each such date, a “Redemption Date”). Shares redeemed on the Redemption Date remain outstanding on the Redemption Date and are no longer outstanding on the day following the Redemption Date. Redemptions will be made at the transaction price in effect on the Redemption Date, except that shares that have not been outstanding for at least one year will be redeemed at 95% of the transaction price (an “Early Redemption Deduction”). The Early Redemption Deduction may be waived in certain circumstances including: (i) in the case of redemption requests arising from the death or qualified disability of the holder; (ii) in the event that a stockholder’s shares are redeemed because the stockholder has failed to maintain the $2,000 minimum account balance or (iii) with respect to shares purchased through our distribution reinvestment plan. To have his or her shares redeemed, a stockholder’s redemption request and required documentation must be received in good order by 4:00 p.m. (Eastern time) on the second to last business day of the applicable month. Settlements of share redemptions will be made within three business days of the Redemption Date. An investor may withdraw its redemption request by notifying the transfer agent before 4:00 p.m. (Eastern time) on the last business day of the applicable month.

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The total amount of aggregate redemptions of Class T, Class S, Class D, Class I and Class E shares (based on the price at which the shares are redeemed) will be limited during each calendar month to 2% of the aggregate NAV of all classes as of the last calendar day of the previous quarter and in each calendar quarter will be limited to 5% of the aggregate NAV of all classes of shares as of the last calendar day of the previous calendar quarter; provided, however, that every month and quarter each class of our common stock will be allocated capacity within such aggregate limit to allow stockholders in such class to either (a) redeem shares (based on the price at which the shares are redeemed) equal to at least 2% of the aggregate NAV of such share class as of the last calendar day of the previous quarter, or, if more limiting, (b) redeem shares (based on the price at which the shares are redeemed) over the course of a given quarter equal to at least 5% of the aggregate NAV of such share class as of the last calendar day of the previous quarter (collectively referred to herein as the “2% and 5% limits”), which in the second and third months of a quarter could be less than 2% of the NAV of such share class. In the event that we determine to redeem some but not all of the shares submitted for redemption during any month, shares redeemed at the end of the month will be redeemed on a pro rata basis. Even if the class-specific allocations are exceeded for a class, the program may offer such class additional capacity under the aggregate program limits. Redemptions and pro rata treatment, if necessary, will first be applied within the class-specific allocated capacity and then applied on an aggregate basis to the extent there is remaining capacity. All unsatisfied redemption requests must be resubmitted after the start of the next month or quarter, or upon the recommencement of the share redemption program, as applicable.

For both the aggregate and class-specific allocations described above, (i) provided that the share redemption program has been operating and not suspended for the first month of a given quarter and that all properly submitted redemption requests were satisfied, any unused capacity for that month will carry over to the second month and (ii) provided that the share redemption program has been operating and not suspended for the first two months of a given quarter and that all properly submitted redemption requests were satisfied, any unused capacity for those two months will carry over to the third month. In no event will such carry-over capacity permit the redemption of shares with aggregate value (based on the redemption price per share for the month the redemption is effected) in excess of 5% of the combined NAV of all classes of shares as of the last calendar day of the previous calendar quarter (provided that for these purposes redemptions may be measured on a net basis as described in the paragraph below).

We currently measure the foregoing redemption allocations and limitations based on net redemptions during a month or quarter, as applicable. The term “net redemptions” means, during the applicable period, the excess of our share redemptions (capital outflows) over the proceeds from the sale of our shares (capital inflows). For purposes of measuring our redemption capacity pursuant to our share redemption program, proceeds from new subscriptions in a month are included in capital inflows on the first day of the next month because that is the first day on which such stockholders have rights in the Company. Also for purposes of measuring our redemption capacity pursuant to our share redemption program, redemption requests received in a month are included in capital outflows on the last day of such month because that is the last day stockholders have rights in the Company. We record these redemptions in our financial statements as having occurred on the first day of the next month following receipt of the redemption request because shares redeemed in a given month are outstanding through the last day of the month. Net redemptions for the class-specific allocations will be based only on the capital inflows and outflows of that class, while net redemptions for the overall program limits would be based on capital inflows and outflows of all classes. Thus, for any given calendar quarter, the maximum amount of redemptions during that quarter will be equal to (i) 5% of the combined NAV of all classes of shares as of the last calendar day of the previous calendar quarter, plus (ii) proceeds from sales of new shares in this offering (including purchases pursuant to our distribution reinvestment plan) and the Class E distribution reinvestment plan offering since the beginning of the current calendar quarter. The same would apply for a given month, except that redemptions in a month would be subject to the 2% limit described above (subject to potential carry-over capacity), and netting would be measured on a monthly basis. With respect to future periods, our board of directors may choose whether the allocations and limitations will be applied to “gross redemptions,” i.e., without netting against capital inflows, rather than to net redemptions. If redemptions for a given month or quarter are measured on a gross basis rather than on a net basis, the redemption limitations could limit the amount of shares redeemed in a given month or quarter despite our receiving a net capital inflow for that month or quarter. In order for our board of directors to change the application of the allocations and limitations from net redemptions to gross redemptions or vice versa, we will provide notice to stockholders in a prospectus supplement or special or periodic report filed by us, as well as in a press release or on our website, at least 10 days before the first business day of the quarter for which the new test will apply. The determination to measure redemptions on a gross basis, or vice versa, will only be made for an entire quarter, and not particular months within a quarter.

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Although the vast majority of our assets consist of properties that cannot generally be readily liquidated on short notice without impacting our ability to realize full value upon their disposition, we intend to maintain a number of sources of liquidity including (i) cash equivalents (e.g. money market funds), other short-term investments, U.S. government securities, agency securities and liquid real estate-related securities and (ii) one or more borrowing facilities. We may fund redemptions from any available source of funds, including operating cash flows, borrowings, proceeds from our offerings and our sale of DST Interests and/or sales of our assets.

Should redemption requests, in our judgment, place an undue burden on our liquidity, adversely affect our operations or risk having an adverse impact on the Company as a whole, or should we otherwise determine that investing our liquid assets in real properties or other illiquid investments rather than redeeming our shares is in the best interests of the company as a whole, then we may choose to redeem fewer shares than have been requested to be redeemed, or none at all. Further, our board of directors may modify or suspend our share redemption program if it deems such action to be in our best interest and the best interest of our stockholders. If the transaction price for the applicable month is not made available by the tenth business day prior to the last business day of the month (or is changed after such date), then no redemption requests will be accepted for such month and stockholders who wish to have their shares redeemed the following month must resubmit their redemption requests. The above description of the share redemption program is a summary of certain of the terms of the share redemption program. Please see the full text of the share redemption program, which is incorporated by reference as Exhibit 4.2 to this Quarterly Report on Form 10-Q, for all the terms and conditions.

The table below summarizes the redemption activity for the three months ended March 31, 2024, for which all eligible redemption requests were redeemed in full:

				Total Number of Shares	Maximum Number of
				Redeemed as Part of	Shares That May Yet Be
	Total Number of	Average Price		Publicly Announced	Redeemed Pursuant
(shares in thousands)	Shares Redeemed	Paid Per Share (1)		Plans or Programs	to the Program (2)
For the Month Ended:
January 31, 2024	1,123	$	8.14	1,123	—
February 29, 2024	1,890		8.02	1,890	—
March 31, 2024 (3)	1,759		7.99	1,759	—
Total	4,772	$	8.04	4,772	—

(1) Amount represents the average price paid to investors upon redemption.

(2) We limit the number of shares that may be redeemed under the share redemption program as described above.

(3) Redemption requests accepted in March 2024 are considered redeemed on April 1, 2024 for accounting purposes and, as a result, are not included in the table above. This differs from how we treat capital outflows for purposes of the limitations of our share redemption program. For purposes of measuring our redemption capacity pursuant to our share redemption program, redemption requests received in a month are included in capital outflows on the last day of such month because that is the last day stockholders have rights in the Company and we redeemed $48.9 million of shares of common stock for the three months ended March 31, 2024.

ITEM 5. OTHER INFORMATION

Distribution Reinvestment Plan Suitability Requirement

Pursuant to the terms of our distribution reinvestment plan (“DRIP”), participants in the DRIP must promptly notify us if at any time they fail to meet the current suitability requirements for making an investment in us.

The current suitability standards require that Class E stockholders participating in the DRIP other than investors in Arizona, California, Ohio and Oregon have either:

● a net worth (exclusive of home, home furnishings and automobiles) of $150,000 or more; or

● a net worth (exclusive of home, home furnishings and automobiles) of at least $45,000 and had during the last tax year, or estimate that such investor will have during the current tax year, a minimum of $45,000 annual gross income.

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The current suitability standards require that Class E stockholders participating in the DRIP in Arizona, California, Ohio and Oregon have either:

● a net worth (exclusive of home, home furnishings and automobiles) of $250,000 or more; or

● a net worth (exclusive of home, home furnishings and automobiles) of at least $70,000 and had during the last tax year, or estimate that such investor will have during the current tax year, a minimum of $70,000 annual gross income.

In addition, Class E stockholders participating in the DRIP in Ohio and Oregon must have a net worth of at least 10 times their investment in us and any of our affiliates. The current suitability standards for Class T, Class S, Class D and Class I stockholders participating in the DRIP are listed in the section entitled “Suitability Standards” in our current Class T, Class S, Class D and Class I current public offering prospectus on file at www.sec.gov and on our website at areswmsresources.com/investment-solutions/AREIT.

Stockholders can notify us of any changes to their ability to meet the suitability requirements or change their DRIP election by contacting us at Ares Real Estate Income Trust Inc., Investor Relations, One Tabor Center, 1200 Seventeenth Street, Suite 2900, Denver, Colorado 80202, Telephone: (303) 228-2200.

Rule 10b5-1 Trading Plans

During the three months ended March 31, 2024, none of the Company’s directors or executive officers adopted or terminated any contract, instruction or written plan for the purchase or sale of the Company’s securities that was intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) or any “non-Rule 10b5-1 trading arrangement.”

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ITEM 6. EXHIBITS

Exhibit Number	Description
3.1	Articles of Restatement. Incorporated by reference to Exhibit 3.1 to the Annual Report on Form 10-K filed with the SEC on March 21, 2012.
3.2	Articles of Amendment (name change). Incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K filed with the SEC on July 12, 2012.
3.3	Articles Supplementary (Class A shares). Incorporated by reference to Exhibit 3.2 to the Current Report on Form 8-K filed with the SEC on July 12, 2012.
3.4	Articles Supplementary (Class W shares). Incorporated by reference to Exhibit 3.3 to the Current Report on Form 8-K filed with the SEC on July 12, 2012.
3.5	Articles Supplementary (Class I shares). Incorporated by reference to Exhibit 3.4 to the Current Report on Form 8-K filed with the SEC on July 12, 2012.
3.6	Certificate of Correction to Articles of Restatement. Incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K filed with the SEC on March 26, 2014.
3.7	Certificate of Correction to Articles of Restatement. Incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K filed with the SEC on August 30, 2016.
3.8	Articles of Amendment (revised terms of share classes). Incorporated by reference to Exhibit 3.8 to the Post-Effective Amendment No. 10 to Registration Statement on Form S-11 (File No. 333-197767) filed with the SEC on September 1, 2017.
3.9	Articles of Amendment (name change). Incorporated by reference to Exhibit 3.9 to the Post-Effective Amendment No. 10 to Registration Statement on Form S-11 (File No. 333-197767) filed with the SEC on September 1, 2017.
3.10	Articles of Amendment (name change). Incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K filed with the SEC on December 3, 2021.
3.11	Tenth Amended and Restated Bylaws. Incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K filed with the SEC on March 3, 2023.
4.1	Fifth Amended and Restated Distribution Reinvestment Plan. Incorporated by reference to Appendix B to the Pre-Effective Amendment No. 1 to Registration Statement on Form S-11 (File No. 333-222630) filed with the SEC on August 17, 2018.
4.2	Third Amended and Restated Share Redemption Program effective as of December 1, 2021. Incorporated by reference to Exhibit 4.1 to the Current Report on Form 8-K filed with the SEC on December 3, 2021.
4.3	Statement regarding transfer restrictions, preferences, limitations and rights of holders of shares of common stock (to appear on stock certificate or to be sent upon request and without charge to stockholders issued shares without certificates). Incorporated by reference to Exhibit 4.5 to the Post-Effective Amendment No. 10 to Registration Statement on Form S-11 (File No. 333-197767) filed with the SEC on September 1, 2017.
4.4	Net Asset Value Calculation and Valuation Procedures. Incorporated by reference to Exhibit 99.2 to the Current Report on Form 8-K filed with the SEC on December 15, 2023.
4.5	Multiple Class Plan. Incorporated by reference to Exhibit 4.5 to the Quarterly Report on Form 10-Q filed with the SEC on August 12, 2019.
31.1*	Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*	Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1*	Certification of Principal Executive Officer and Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
99.1*	Consent of Altus Group U.S. Inc.

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Exhibit Number	Description
101	The following materials from Ares Real Estate Income Trust Inc.’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2024, filed on May 10, 2024, formatted in iXBRL (Inline eXtensible Business Reporting Language): (i) Condensed Consolidated Balance Sheets, (ii) Condensed Consolidated Statements of Operations, (iii) Condensed Consolidated Statements of Comprehensive Income (Loss), (iv) Condensed Consolidated Statements of Equity, (v) Condensed Consolidated Statements of Cash Flows, and (vi) Notes to the Condensed Consolidated Financial Statements.
104	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).

* Filed or furnished herewith.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

		ARES REAL ESTATE INCOME TRUST INC.
May 10, 2024	By:	/s/ JEFFREY W. TAYLOR
		Jeffrey W. Taylor Partner, Co-President (Principal Executive Officer)
May 10, 2024	By:	/s/ TAYLOR M. PAUL
		Taylor M. Paul Managing Director, Chief Financial Officer and Treasurer (Principal Financial Officer and Principal Accounting Officer)

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