ZARE 10-K & 10-Q changes, risk factors and insider trading

There is no public trading market for the shares of our common stock and we do not anticipate that there will be a public trading market for our shares; therefore, our stockholders’ ability to dispose of their shares will likely be limited to redemption by us. If theour stockholder doesstockholders sell their shares to us, theour stockholderstockholders may receive less than the price they paid.

There is no public market for the shares of our common stock and we currently have no obligation or plans to apply for listing on any public securities market. Therefore, redemption of the shares of our common stock by us will likely be the only way for theour stockholders to dispose of their shares. We will redeem shares at a price equal to the transaction price on the last calendar day of the applicable month (which will generally be equal to our most recently disclosed monthly NAV per share), and not based on the price at which theour stockholders initially purchased their shares. We may redeem theour stockholder’sstockholders’ shares if they fail to maintain a minimum balance of $2,000 of shares, even if the stockholder’stheir failure to meet the minimum balance is caused solely by a decline in our NAV. Subject to limited exceptions, shares that have not been outstanding for at least one year will be redeemed at 95% of the transaction price, which will inure indirectly to the benefit of our remaining stockholders. As a result of this and the fact that our NAV will fluctuate, stockholders may receive less than the price they paid for their shares upon redemption by us pursuant to our share redemption program.

Our continuous private offering (the “Private Offering”) is being conducted in reliance on a private offering exemption from registration under the Securities Act, and if the Company fails to comply with the requirements of such exemption, our stockholders would have the right to rescind their purchase of Sharesshares of our common stock if they so desired.

Our ability to redeem stockholderour stockholders’ shares may be limited, and our board of directors may make exceptions to, modify or suspend our share redemption program at any time.

We may redeem fewer shares than have been requested in any particular month to be redeemed under our share redemption program, or none at all, in our discretion at any time. We may redeem fewer shares than have been requested due to lack of readily available funds because of adverse market conditions beyond our control, the need to maintain liquidity for our operations or because we have determined that investing in real property or other illiquid investments is a better use of our capital than redeeming our shares. In addition, the total amount of aggregate redemptions of our 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 classesshares 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,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 and could even be zero.. In addition, 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. 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,inflows), rather than to net redemptions, which could limit the amountnumber of shares redeemed in a given month or quarter despite our receiving a net capital inflow for that month or quarter.

The vast majority of our assets will consist of properties which cannot generally be readily liquidated on short notice without impacting our ability to realize full value upon their disposition. Therefore, we may not always have a sufficient amount of cash to immediately satisfy redemption requests. Our board of directors may make exceptions to, modify or suspend our share redemption program.program at any time. In addition, limited partners in our Operating Partnership may have different redemption rights with respect to partnership interests in the Operating Partnership (“OP Units”) and may be treated differently than our stockholders requesting redemption under our share redemption program. As a result, theour stockholders’ ability to have their shares redeemed by us may be limited, and our shares should be considered as having only limited liquidity and at times may be illiquid. See Item 5, “Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities—Share Redemption Program and Other Redemptions” of this Annual Report on Form 10-K.10-K for more information about our share redemption program.

The current limitations of our share redemption program are based, in part, on the number of outstanding shares. Thus, the ability of a single investor, or of a group of investors acting similarly, to redeem all of their shares may be limited if they own a large percentage of our outstanding shares. Similarly, if a single investor, or a group of investors acting in concert or independently, owns a large percentage of our outstanding shares, a significant redemption request by such investor or investors could significantly further limit our ability to satisfy redemption requests of other investors of such classes. Such concentrations could arise in a variety of circumstances. For example, we could sell a large number of our shares to one or more institutional investors. In addition, we may issue a significant number of our shares in connection with an acquisition of another company or a portfolio of properties to a single investor or a group of investors that may request redemption at similar times following the acquisition. As of December 31, 2024,2025, based on the NAV per share of $7.59$8.04 on that date, we had outstanding approximately $204.6$183.8 million in Class T-R shares, $332.0$293.0 million in Class S-R shares, $46.4$45.9 million in Class D-R shares, $447.6$499.9 million in Class I-R shares, $327.7$319.9 million in Class E shares, $5.0$46.3 million in Class S-PR shares, $0.1$3.2 million in Class D-PR shares, $69.6 million in Class I-PR shares and $4.6$204.2 million in I-PRClass B shares.

The purchase and redemption price for shares of our common stock will generally be based on our most recently disclosed monthly NAV, which will generally be our prior month’s NAV per share as of the last calendar day of such month (subject to material changes) and will not be based on any public trading market. We generally expect our transaction price to be equal to our NAV as of a date approximately one month prior to the dates when share purchases and redemptions take place. For example, if theour stockholders wish to subscribe for shares of our common stock in October, the subscription request must be received in good order at least five business days before November 1. Generally, the offering price would equal the NAV per share of the applicable class as of the last calendar day of September, plus applicable upfront selling commissions and dealer manager fees. If accepted, the stockholdertheir subscription would be effective on the first calendar day of November. Conversely, if theour stockholders wish to submit their shares for redemption in October, the 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 October. If accepted, the stockholders’their shares would be redeemed as of the last calendar day of October and, generally, the redemption price would equal the NAV per share of the applicable class as of the last calendar day of September, subject to reduction for early redemption. In each of these cases, the NAV that is ultimately determined as of the last day of October may be higher or lower than the NAV as of the last day of September used for determining the transaction price. Therefore, the price at which theour stockholders purchase shares may be higher than the current NAV per share at the time of sale and the price at which they redeem shares may be lower than the current NAV per share at the time of redemption.

Economic events affecting the U.S. economy, such as the general negative performance of the real estate sector, could cause our stockholders to seek to sell their shares to us pursuant to our share redemption program at a time when such events are adversely affecting the performance of our assets. Even if we decide to satisfy all resulting redemption requests, our cash flow could be materially adversely affected. In addition, if we determine to sell assets to satisfy redemption requests, we may not be able to realize the return on such assets that we may have been able to achieve had we sold at a more favorable time, and our results of operations and financial condition, including, without limitation, the breadth of our portfolio by property type and location, could be materially adversely affected.

We currently expect to use a portion of the proceeds from our securities offerings to satisfy redemption requests, in particular redemption requests from our Class E stockholders who comprise a significant portion of our stockholders, have generally held their shares for a number of years and have demonstrated significant demand for liquidity in recent years.requests. We have redeemed approximately $191.6$122.5 million of shares of our common stock during the year ended December 31, 2024.2025. Using the proceeds from our securities offerings for redemptions will reduce the net proceeds available to retire debt or acquire additional properties, which may result in reduced liquidity and profitability or restrict our ability to grow our NAV.

We commenced our initial public offering in January 2006 and commenced operations later that year. At that time, we only offered Class E shares of common stock (referred to at that time simply as our shares of “common stock”), and our share redemption program for Class E stockholders (which was more restrictive than our current share redemption program) was subject to limitations that included a maximum number of redemptions during any calendar year of 5% of the weighted-average number of shares outstanding during the prior calendar year. Beginning in the first quarter of 2009 through the third quarter of 2016, redemption requests from Class E stockholders exceeded the redemption limits set forth in the Class E share redemption program and associated offering materials, and we conducted a number of self-tender offers to supplement this liquidity. As a result, we redeemed only a portion of the shares from investors who sought redemption during that period, either through the redemption program or self-tender offers, and theour stockholders were required to resubmit redemption requests periodically in order to renew their requests to either have their shares redeemed pursuant to the share redemption program or purchased pursuant to a tender offer.

Although all properly submitted redemption requests and/or tenders in our self-tender offers have been satisfied beginning with the fourth quarter of 2016, in the future we could experience situations like that described above in which redemption demand exceeds capacity. Our current share redemption program has different limitations than our share redemption program did during that time, but it remains true that our ability to redeem theour stockholderstockholders’ shares may still be limited, and our board of directors may make exceptions to modify or suspend our share redemption program at any time. Furthermore, we may redeem fewer shares than have been requested in any particular month to be redeemed under our share redemption program, or none at all, in our discretion at any time. If a redemption request under our share redemption program is unsatisfied, it must be resubmitted after the start of the next month or quarter, or upon the recommencement of the share redemption program, as applicable.

In our annual report and in other investor communications, we disclose certain historical NAV and total return information. This information may be presented on a class-by-class basis or on a weighted-average basis across all our classes. The information may go back one month, one quarter, or longer periods. While we believe this historical information is useful, investors should understand that any historical return presentation is inherently limited in its applicability to the future, for a variety of reasons. We may have performed better in certain past time periods than others, and we cannot predict the future performance of ourthe companyCompany specifically or the broader economy and real estate markets more generally. Furthermore, from time to time we make changes to our portfolio, our investment focus, or structural aspects of ourthe companyCompany that may make past returns less comparable. Over time, we have made changes to the fees and reimbursements we pay to the Advisor (in connection with managing our operations) and the dealer manager for our securities offerings, Ares Wealth Management Solutions, LLC (the “Dealer Manager”), and participating broker-dealers (in connection with our securities offerings). Our share classes have different upfront fees and different class-specific fees that make their returns different from those of other classes and from average returns that may be shown. In some cases, we have changed the names of our share classes and the fees that affect their returns. Over time, we have also made changes to the frequency with which, and the methodologies with which, we estimate the value of our shares.

We have not identified future investments that we will make with the proceeds of our securities offerings. As a result, stockholders will not be able to evaluate the economic merits, transaction terms or other financial or operational data concerning our future investments prior to purchasing shares of our common stock. Stockholders must rely on the Advisor and our board of directors to implement our investment policies, to evaluate our investment opportunities and to structure the terms of our investments. Because theour stockholders cannot evaluate all of the investments we will make in advance of purchasing shares of our common stock, this additional risk may hinder theour stockholders’ ability to achieve their own personal investment objectives related to portfolio diversification, risk-adjusted investment returns and other objectives.

The primary component of our NAV is the value of our investments. The valuation methodologies used to value our properties and certain real estate-related assets involve subjective judgments regarding such factors as comparable sales, rental revenue and operating expense data, known contingencies, the capitalization or discount rate, and projections of future rent and expenses based on appropriate analysis. Additionally, appraisals of our properties are in part based on historical transaction data. As a result, valuations and appraisals of our properties, real estate-related assets and real estate-related liabilities are only estimates of current market value. Ultimate realization of the value of an asset or liability depends to a great extent on economic and other conditions beyond our control and the control of the Independent Valuation Advisor (as defined below) and other parties involved in the valuation of our assets and liabilities. Further, these valuations may not necessarily represent the price at which an asset or liability would sell, because market prices of assets and liabilities are best determined by negotiation between a willing buyer and seller. As such, the carrying value of an asset may not reflect the price at which the asset could be sold in the market, and the difference between carrying value and the ultimate sales price could be material. In addition, accurate valuations are more difficult to obtain in times of low transaction volume because there are fewer market transactions that can be considered in the context of the appraisal. Valuations used for determining our NAV also are generally made without consideration of the expenses that would be incurred by us in connection with disposing of assets and liabilities. Therefore, the valuations of our properties, our investments in real estate-related assets and our liabilities may not correspond to the timely realizable value upon a sale of those assets and liabilities. In addition, the value of our interest in any joint venture or partnership that is a minority interest or is restricted as to salability or transferability may reflect or be adjusted for a minority or liquidity discount. In addition to being a month old when share purchases and redemptions take place, our NAV does not currently represent enterprise value and may not accurately reflect the actual prices at which our assets could be liquidated on any given day, the value a third party would pay for all or substantially all of our shares, or the price that our shares would trade at on a national stock exchange. The stock price of shares of a publicly traded REIT may materially differ than the NAV of a non-tradednon-exchange traded REIT with comparable portfolios. While any changes in the value of our real estate portfolio will ultimately be reflected in future calculations of NAV, there will be no retroactive adjustment in the valuation of such assets or liabilities, the price of our shares of common stock, the price we paid to redeem shares of our common stock or NAV-based fees we paid to the Advisor and the Dealer Manager to the extent such valuations prove to not accurately reflect the true estimate of value and are not a precise measure of realizable value. Because the price theour stockholders will pay for shares of our common stock in our securities offerings, and the price at which their shares may be redeemed by us pursuant to our share redemption program, are generally based on our estimated NAV per share, theour stockholders may pay more than realizable value or receive less than realizable value for their investment.

Our valuation procedures and our NAV are not subject to GAAP and will not be subject to independent audit. Our NAV may differ from equity (net assets) reflected on our audited financial statements, even if we are required to adopt a fair value basis of accounting for GAAP financial statement purposes. Additionally, we are dependent on the Advisor to be reasonably aware of material events specific to our properties (such as customer disputes, damage, litigation and environmental issues) that may cause the value of a property to change materially and to promptly notify the Independent Valuation Advisor so that the information may be reflected in our real property portfolio valuation. In addition, the implementation and coordination of our valuation procedures include certain subjective judgments of the Advisor, such as whether the Independent Valuation Advisor should be notified of events specific to our properties that could affect their valuations, as well as of the Independent Valuation Advisor and other parties we engage, as to whether adjustments to asset and liability valuations are appropriate. Accordingly, theour stockholders must rely entirely on our board of directors to adopt appropriate valuation procedures and on the Independent Valuation Advisor and other parties we engage in order to arrive at our NAV, which may not correspond to realizable value upon a sale of our assets.

There are no existing rules or regulatory bodies that specifically govern the manner in which we calculate our NAV. As a result, it is important that stockholders pay particular attention to the specific methodologies and assumptions we use to calculate our NAV. Other peer REITs may use different methodologies or assumptions to determine their NAV. In addition, each year our board of directors, including a majority of our independent directors, will review the appropriateness of our valuation procedures and may, at any time, adopt changes to the valuation procedures. If we acquire real properties as a portfolio, we may pay a premium over the amount that we would pay for the assets individually. Our board of directors may change these or other aspects of our valuation procedures, which changes may have an adverse effect on our NAV and the price at which theour stockholders may sell shares to us under our share redemption program. See Item 5, “Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities—Net Asset Value Per Share” and our valuation procedures attached as Exhibit 99.2 to this Annual Report on Form 10-K for more details regarding our valuation methodologies, assumptions and procedures.

Our NAV and the NAV of stockholderour stockholders’ shares may be diluted in connection with current and future securities offerings.

In the future we may conduct other offerings of common stock (whether existing or new classes), preferred stock, debt securities or of interests in the Operating Partnership. We may also amend the terms of our existing securities offerings. We may structure or amend such offerings to attract institutional investors or other sources of capital. The costs of our current and future securities offerings may negatively impact our ability to pay distributions and our stockholders’ overall return.

Because we generally do not mark to market our property-level mortgages, corporate-level credit facilities and other secured and unsecured debt that are intended to be held to maturity, or our associated interest rate hedges that are intended to be held to maturity, the realizable value of ourthe companyCompany or our assets that are encumbered by debt may be higher or lower than the value used in the calculation of our NAV.

In accordance with our valuation procedures, 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 rates hedges, are valued at par (i.e.i.e.. at their respective outstanding balances). Because we often utilize interest rate hedges to stabilize interest payments (i.e.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 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; the associated premium or discount on such debt will then be amortized through loan maturity. As a result of this policy, the realizable value of ourthe companyCompany or our assets that are encumbered by debt used in the calculation of our NAV may be higher or lower than the value that would be derived if such debt instruments were marked to market. For example, if we decide to sell one or more assets, we may re-classify those assets as held-for-sale, which could then have a positive or negative impact on our calculation of NAV to the extent any associated debt is definitively intended to be prepaid. In some cases, such difference may be significant. 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 December 31, 20242025 was $42.5$6.7 million lower than the carrying value used for calculation of our NAV for such debt in aggregate; meaning that if we used the fair value of our debt rather than the carrying value used for calculation of our NAV (and treated the associated hedge as part of the same financial instrument), our NAV would have been higher by approximately $42.5$6.7 million, or $0.12$0.01 per share, not taking into account all of the other items that impact our monthly NAV, as of December 31, 2024.2025. As of December 31, 2024,2025, we classified all of our debt as intended to be held to maturity.

Because the Advisor and the Dealer Manager are related,affiliates of, or otherwise related to, the Sponsor, investors do not have the benefit of an independent due diligence review and investigation of the type normally performed by an unrelated, independent underwriter in connection with a securities offering. In addition, DLA Piper LLP (US) has acted as counsel to us, the Advisor and the Dealer Manager in connection with our securities offerings and, therefore, investors do not have the benefit of a due diligence review that might otherwise be performed by independent counsel. Under applicable legal ethics rules, DLA Piper LLP (US) may be precluded from representing us due to a conflict of interest between us and the Dealer Manager. If any situation arises in which our interests are in conflict with those of the Dealer Manager or its related parties, we would be required to retain additional counsel and may incur additional fees and expenses. The lack of an independent due diligence review and investigation increases the risk of our stockholders’ investment.

We have taken certain actions to increase the stock ownership in our Company by our management team, the Advisor and our directors over the past couple of years,directors, including the implementation of certain stock-based awards. The current level of ownership by management may be less than the management teams of other public real estate companies and, as a result, our investors may be at a greater risk of loss than the Advisor and other members of our management, especially as compared to these other companies in which stock ownership by management and directors may be significantly greater.

Our board of directors intends to authorize a monthly distribution of a certain dollar amount per share of our common stock using monthly record dates. However, the payment of class-specific fees results in different amounts of distributions being paid with respect to each class of shares. In addition, the expenses incurred in our operations reduce the amount of cash available for distribution to our stockholders. Distributions may also be negatively impacted by the failure to deploy our net proceeds on an expeditious basis, the inability to find suitable investments that are not dilutive to our distributions, the poor performance of our investments (including vacancy or decline in rental rates), an increase in expenses for any reason (including expending funds for redemptions) and due to numerous other factors. Any request by the holders of OP Units to redeem some or all of their OP Units for cash may also impact the amount of cash available for distribution to our stockholders. In addition, our board of directors, in its discretion, may retain any portion of such funds for working capital. We cannot assure theour stockholders that sufficient cash will be available to make distributions to our stockholdersthem or that the amount of distributions will not either decrease or fail to increase over time. From time to time, we may adjust our distribution level and we may make such an adjustment at any time.

Our total distributions declared for the years ended December 31, 2025, 2024, 2023, and 20222023 were $139.4 million, $122.0 million, $103.7 million, and $87.4$103.7 million, respectively, which includes $31.9$31.8 million, $32.7$31.9 million, and $29.9$32.7 million, respectively, of distributions reinvested in our shares pursuant to our distribution reinvestment plan. Our cash flow from operations the years ended December 31, 2025, 2024, 2023, and 20222023 was $253.6 million, $(169.5) million, $16.0 million, and $62.5$16.0 million, respectively. Accordingly, total distributions were not fully funded by cash flows from operations. In such cases, the shortfalls were funded from proceeds from our distribution reinvestment plan, borrowings or sale of DST Interests. In addition, for years in which total distributions were fully funded from our operations, in some cases our distributions were not fully funded from our operations for individual quarters. In such cases, the shortfalls were funded from proceeds from our distribution reinvestment plan, borrowings or sale of DST Interests. In the future, we may continue to fund our monthly regular distributions from sources other than cash flow from operations. Our long-term strategy is to strive to fund the payment of regular distributions to our stockholders entirely from our operations, but there may be quarters or even years when that is not the case. It will be up to theour board of directors to determine the distribution level taking many factors into consideration beyond just cash flow from operations. If we are unsuccessful in investing the capital we raise from our securities offerings or decide to invest our capital in lower yielding assets, we may be required to fund our distributions to our stockholders from a combination of our operating, investing and financing activities, which include net proceeds of our securities offerings, dispositions and borrowings (including borrowings secured by our assets), or to reduce the level of our distributions. Using certain of these sources may result in a liability to us, which would require a future repayment. The use of these sources for distributions and the ultimate repayment of any liabilities incurred could adversely impact our ability to pay distributions in future periods, decrease the amount of cash we have available for new investments, repayment of debt, share redemptions and other corporate purposes, and potentially reduce our stockholders’ overall return and adversely impact and dilute the value of their investment in shares of our common stock. We may pay distributions from sources other than cash flow from operations, including, without limitation, the sale of assets, borrowings or offering proceeds. Our ability to pay distributions solely from cash flows from operations has been impacted by certain factors, including the current yield environment. All distributions result in a decrease to our NAV while cash flow generated from our operations results in an increase to NAV. While we strive to fund our distributions solely from our cash flow from operations, in the long run, we also focus on total stockholder return as a metric for evaluating our distribution level in the event that it is not being fully covered by cash flow from operations. Any cash flow from operations in excess of our distributions results in a net increase to NAV (ignoringwithout giving effect to other factors). Conversely, if and when our distributions exceed our cash flow from operations, the net effect would be and has been a decrease to NAV (ignoring other factors). We have not established a limit on the amount of our distributions that may be paid from any of these sources.

We could suffer from delays in locating suitable investments. The more money we raise in our securities offerings, the more difficult it will be to invest the net offering proceeds promptly. Therefore, the large size of our securities offerings increases the risk of delays in investing our net offering proceeds. Our reliance on the Advisor to locate suitable investments for us at times when the management of the Advisor is simultaneously seeking to locate suitable investments for other entities sponsored or advised by affiliates of the Sponsor could also delay the investment of the proceeds of our securities offerings. Delays we encounter in the selection, acquisition and development of income-producing properties would likely negatively affect our NAV, limit our ability to pay distributions to theour stockholders and reduce their overall returns.

The performance component of the advisory fee is calculated on the basis of the overall investment return provided to holders of Fund Interests over a calendar year, so it may not be consistent with the return on our stockholders’ shares.

The performance component of the advisory fee is calculated on the basis of the overall investment return provided to holders of Fund Interests (as defined below) (i.e., our outstanding shares and OP Units held by third parties) in any calendar year such that the Special OP Unitholder, which is a wholly-owned subsidiary of our Advisor will receive the lesser of (1) 12.5% of (a) the annual total return amount less (b) any loss carryforward, and (2) the amount equal to (x) the annual total return amount, less (y) any loss carryforward, less (z) the amount needed to achieve an annual total return amount equal to 5% of the NAV per Fund Interest at the beginning of such year (the “Hurdle Amount”). The foregoing calculations are calculated on a per Fund Interest basis and multiplied by the weighted-average Fund Interests outstanding during the year. The “annual total return amount” referred to above means all distributions paid or accrued per Fund Interest plus any change in NAV per Fund Interest since the end of the prior calendar year, adjusted to exclude the negative impact on annual total return resulting from our payment or obligation to pay, or distribute, as applicable, the performance component of the advisory fee as well as ongoing distribution fees (i.e., our ongoing class-specific fees). The “loss carryforward” referred to above will track any negative annual total return amounts from prior years and offset the positive annual total return amount for purposes of the calculation of the performance component of the advisory fee. Therefore, payment of the performance component of the advisory fee (1) is contingent upon the annual total return to the holders of Fund Interests exceeding the 5% return, (2) will vary in amount based on our actual performance and (3) cannot, in and of itself, cause the overall return to the holders of Fund Interests for the year to be reduced below 5%. In addition, if the Special OP Unitholder receives a performance component of the advisory fee, it will not be obligated to return any portion of such advisory fees based on our subsequent performance. We completed the 2024 calendar year with a cumulativeThe loss carryforward thatis will apply to future performance participation allocations. The cumulative loss carryforwardzero as of December 31, 2024 is approximately $0.45 per Fund Interest, which takes into account a $0.41 per Fund Interest loss carryforward generated in the 2023 calendar year. Realization of the loss carryforward is contingent on future performance. Even after such offset, future performance participation allocations will be subject to the Hurdle Amount.2025.

As a result, the performance component is not directly tied to the performance of the shares that stockholders purchase, the class of shares purchased, or the time period during which theour stockholders own their shares. The performance component may be payable to the Special OP Unitholder even if the NAV of the stockholders’ shares at the end of the calendar year is below their purchase price, and the thresholds at which increases in NAV count towards the overall return to the holders of Fund Interests are not based on theour stockholders’ purchase price. Because of the class-specific allocations of the ongoing distribution fee, which differ among classes, we do not expect the overall return of each class of Fund Interests to ever be the same. However, if and when the performance component of the advisory fee is payable, the expense will be allocated among all holders of Fund Interests ratably according to the NAV of their units or shares, regardless of the different returns achieved by different classes of Fund Interests during the year. Further, stockholders who redeem their shares during a given year may redeem their shares at a lower NAV per share as a result of an accrual for the estimated performance component of the advisory fee, even if no performance component is ultimately payable to the Special OP Unitholder at the end of such calendar year.

Payment of fees and expenses to the Advisor and the Dealer Manager reduces the cash available for distribution and increases the risk that theour stockholders will not be able to recover the amount of their investment in our shares.

Pursuant to our agreements with the Advisor and its affiliates, we are obligated to pay substantial compensation to the Advisor and its affiliates. Subject to limitations in our charter, the fees, compensation, income, expense reimbursements, interestsinterest and other payments that we are required to pay to the Advisor and its affiliates may increase or decrease during our securities offerings or future offerings if such change is approved by a majority of our board of directors, including a majority of the independent directors. These types of payments to the Advisor and its affiliates will decrease the amount of cash we have available for operations and new investments and could negatively impact our NAV, our ability to pay distributions and theour stockholdersstockholders’ overall return.

We have broad authority to incur debt, and high debt levels could hinder our ability to make distributions and could decrease the value of theour stockholders’ investment in shares of our common stock.

Under our charter, we have a limitation on borrowing which precludes us from borrowing in excess of 300% of the value of our net assets, provided that we may exceed this limit if a higher level of borrowing is approved by a majority of our independent directors. High debt levels would cause us to incur higher interest charges, would result in higher debt service payments, could be accompanied by restrictive covenants and would generally make us more subject to the risks associated with leverage. These factors could limit the amount of cash we have available to distribute and could result in a decline in our NAV and in the value of theour stockholders’ investment in shares of our common stock.

In addition, our ability to increase our revenues and operating income partially depends on steady growth of demand for the products and services offered by the customers located in the assets that we own and manage. A drop in demand, as a result of a slowdown in the U.S. and global economyeconomies or otherwise, could result in a reduction in performance of our customers and consequently, adversely affect our results of operations, NAV and returns to our stockholders.

In order to maintain what we deem to be sufficient liquidity for our redemption program itwe may cause us to keep more of our assets in securities, cash, cash equivalents and other short-term investments than we would otherwise likelike, which would affect returns.

Our board of directors also adopted a delegation of authority policy and, pursuant to such policy, has delegated the authority for certain actions to the AREIT Advisors Committee, which is not a committee of our board of directors, but rather is the Advisor’s investment and management committee for ourthe companyCompany and consists of certain of our officers and officers of the Advisor. Our board of directors has delegated to the AREIT Advisors Committee certain responsibilities with respect to certain acquisition, disposition, leasing, capital expenditure and borrowing decisions, which may result in our making riskier investments and which could adversely affect our results of operations, financial condition, NAV and cash flows.

The Advisor assists our board of directors in developing, overseeing, implementing and coordinating our NAV procedures. It assists our Independent Valuation Advisor in valuing our real property portfolio by providing the firm with property-level information, including (i) historical and projected operating revenues and expenses of the property; (ii) lease agreements on the property; and (iii) revenues and expenses of the property. Our Independent Valuation Advisor assumes and relies upon the accuracy and completeness of all such information, and does not undertake any duty or responsibility to verify independently any of such information and relies upon us and the Advisor to advise if any material information previously provided becomes inaccurate or was required to be updated during the period of its review. In addition, the Advisor may be the approved pricing source for certain assets and liabilities, and its discretion with respect to the valuations of such assets and liabilities could affect our NAV. Because the Advisor is paid fees for its services based on our NAV, the Advisor could be motivated to influence our NAV and NAV procedures such that they result in anour NAV exceedingexceeds realizable value, due to the impact of higher valuations on the compensation to be received by the Advisor. If our NAV is calculated in a way that is not reflective of our actual NAV, then the purchase price of shares of our common stock on a given date may not accurately reflect the value of our portfolio, and theour stockholders’ shares may be worth less than the purchase price.

Some of our executive officers, three of our directors and other key personnel are also officers, directors, managers, and/or key personnel inof the Advisor, the Dealer Manager and/or other entities related to the Sponsor. The Advisor and its affiliates receive substantial fees from us in return for their services and these fees could influence their advice to us. Among other matters, the compensation arrangements could affect their judgment with respect to:

While our joint venture partners and co-owners have generally been third parties, we have and may in the future enter into joint ventures, co-investment or other arrangements with affiliates of the Sponsor or entities sponsored or advised by affiliates of the Sponsor to acquire, develop and/or manage property, debt and other investments. Such investments may raise potential conflicts of interest between us and such other investment vehicles managed by the Sponsor, or the Advisor or its affiliates, including determining which of such entities should enter into any particular joint venture, co-investment or other arrangement agreement. Joint venture, co-investment or other arrangement partners affiliated with the Advisor or sponsored or advised by affiliates of the Sponsor or its affiliates may have economic or business interests or goals which are or may become inconsistent with our business interests or goals. In addition, should any such joint venture, co-investment or other arrangement be consummated, the Advisor and its affiliates may face a conflict in structuring the terms of the relationship between the interests and the interests of other parties, in managing the joint venture, co-investment or other arrangement, and in resolving any conflicts or exercising any rights in connection with the joint venture, co-investment or other arrangement. Since the Advisor will make various decisions on our behalf, agreements and transactions between us and the Advisor’s affiliates or entities sponsored or advised by affiliates of the Sponsor or its affiliates will not have the benefit of arm’s-length negotiations of the type normally conducted between unrelated parties. Furthermore, when such other investment vehicles managed by the Advisor or its affiliates have interests or requirements that do not align with our interests, including differing liquidity needs or desired investment horizons, conflicts may arise in the manner in which any voting or control rights are exercised with respect to the relevant investment, potentially resulting in an adverse impact on us. If we participate in a co-investment with an investment vehicle managed by the Advisor or its affiliates and such vehicle fails to fund its capital obligations with respect to the investment, we may be required to, or we may elect to, cover such capital obligations and invest additional funds. In addition, if we and such other investment vehicle managed by the Advisor or its affiliates invest in different classes or types of debt or equity investments relating to the same underlying property or properties, actions may be taken by such other investment vehicles that are adverse to our interests, including, but not limited to, during a work-out, restructuring, foreclosure or insolvency proceeding or similar matter occurring with respect to such investment. Ares has adopted a co-investment policy designed to ensure the fair allocation of co-investment opportunities, including compliance with applicable regulatory requirements as well as contractual obligations under the applicable governing documents of other entities sponsored or advised by affiliates of Ares. In exercising their discretion to allocate co-investment opportunities with respect to a particular investment to and among potential co-investors and the terms thereof, Ares, the Advisor and their respective affiliates, in a manner consistent with the co-investment policy, are permitted to consider some or all of a wide range of factors, including, but not limited to, strategic advantages that may result from a potential co-investor’s participation in a co-investment opportunity, whether a potential co-investor has the requisite resources to evaluate and make the investment, and the tax and legal characteristics of a potential investment or a potential co-investor.

The Advisor is subject to regulation as an investment adviser by various regulatory authorities that are charged with protecting the interests of its clients, including us. Instances of criminal activity and fraud by participants in the investment management industry and disclosures of trading and other abuses by participants in the financial services industry have led the United States government and regulators to increase the rules and regulations governing, and oversight of, the United States financial system. This activity resulted in changes to the laws and regulations governing the investment management industry and more aggressive enforcement of the existing laws and regulations. The Advisor could be subject to civil liability, criminal liability, or sanction, including revocation of its registration as an investment adviser, revocation of the licenses of its employees, censures, fines, or temporary suspension or permanent bar from conducting business, if it is found to have violated any of these laws or regulations. Any such liability or sanction could adversely affect the Advisor’s ability to manage our business. The Advisor must continually address conflicts between its interests and those of its clients, including us. In addition, the CommissionSEC and other regulators have increased their scrutiny of potential conflicts of interest. The Advisor has procedures and controls that are reasonably designed to address these issues. However, appropriately dealing with conflicts of interest is complex and difficult and if the Advisor fails, or appears to fail, to deal appropriately with conflicts of interest, it could face litigation or regulatory proceedings or penalties, any of which could adversely affect its ability to manage our business.

We are affected by the fiscal and monetary policies of the United States government and its agencies, including the policies of the Federal Reserve, which regulates the supply of money and credit in the United States. Changes in fiscal and monetary policies are beyond our control and are difficult to predict. Although the Federal Reserve decreasedresumed theits federalmonetary fundseasing cycle with an aggregate 75 basis point rate multiple timesreduction in 2024, the rate continues to be elevated and2025, there can be no assurance that the ratesrate will continue to decrease or that itthey will not be increased in 20252026 or beyond. While lower market rates and increased capital markets liquidity supports commercial real estate property transactions and values, regulated lending institutions areremain adjustingunder significant pressure to their business models to increase capital requirements for direct loans to real estate and thus continue to be constrained in providing capital for commercial real estate properties. Additionally,In 2025, rising operating costs, such as property insurance and raw material costs for property development and improvements, have further pressured cash flow performance across many real estate property types. Changes in the federal funds rate as well as the other policies of the Federal Reserve affect interest rates, which have a significant impact on our financial condition.

Currently, the Federal Deposit Insurance Corporation (“FDIC”) generally, only insures amounts up to $250,000 per depositor per insured bank. A small proportion of our cash and cash equivalents, primarily those used to fund property-level working capital needs, are currently held in FDIC-insured bank accounts. To the extent that we have deposited funds with banking institutions, then if any of such institutions ultimately fail, we would lose the amount of our deposits over the then current FDIC insurance limit. The loss of our deposits could reduce the amount of cash we have available to distribute or invest and would likely result in a decline in the value of theour stockholders’ investments.

No single measure can provide investors with sufficient information and investors should consider all of our disclosures as a whole in order to adequately understand our financial position, liquidity and results of operations. Because of the differences between FFO, AFFO and GAAP net income or loss, FFO and AFFO may not be accurate indicators of our operating performance, especially during periods in which we are acquiring properties. In addition, FFO and AFFO are not necessarily indicative of cash flow available to fund cash needs and investors should not consider FFO and AFFO as alternatives to cash flows from operations or as indications of our liquidity, or indicative of funds available to fund our cash needs, including our ability to make distributions to our stockholders. Neither the SEC nor any other regulatory body has passed judgment on the acceptability of the adjustments that we use to calculate FFO and AFFO. Also, because not all companies calculate FFO and AFFO the same way, comparisons with other companies may not be meaningful.

GeopoliticalEven instability,though includingmacroeconomic actualvolatility and potential shifts in U.S. foreign, trade, economic and other policies (including as a result of the 2024 U.S. presidential and congressional elections), the war between Russia and Ukraine, the conflictsslowed in the MiddleU.S. East,towards asthe wellend asof other2025, global events have created macroeconomic uncertainty at a global level. Thethe current macroeconomic environment is characterized by inflation, labor shortages or interruptions, changing interest rates, foreign currency exchange volatility and volatility in global capital markets. Market and economic disruptions have affected, and may in the future affect, consumer confidence levels and spending, bankruptcy rates, levels of incurrence and default on consumer debt and home prices, among other factors. We cannot assure you that market disruptions, including the increased cost of funding for certain governments and financial institutions, will not impact the global economy. The risks associated with our business are more severe during periods of economic slowdown or recession and since such periods are accompanied by declining real estate values, our business could be materially adversely affected.

There iscontinues to be significant uncertainty about the future relationship between the U.S. and other countries with respect to trade policies, treaties and tariffs. Developments relating to tariffs between the U.S. and other countries, or the perception that they could occur, mayor reactionary measures in response thereto, including retaliatory tariffs, legal challenges, or currency manipulation, could have a materialan adverse effect on global economic conditions and the stability of global financial markets, and maycould significantly reduce global trade and, in particular, trade between the impacted nations and the U.S. Any of these factors could depress economic activity and impact our borrowers and the value of our collateral. Moreover, concerns over the United States’ debt ceiling and budget-deficit have driven downgrades by rating agencies to the U.S. government’s credit rating, which could cause borrowing costs to rise further,rise, negatively impacting both the perception of credit risk associated with our debt portfolio and our ability to access the debt markets on favorable terms. Although U.S. lawmakers passed legislation to raise the federal debt ceiling on multiple occasions, ratingthe agenciespolitical havedifficulty loweredin orreaching threatenedan toagreement lowerwithout repeated crises has undermined market confidence in the long-termstability sovereignand creditpredictability ratingof onU.S. the United States.policymaking. Market conditions may also make it difficult for us to extend the maturity of or refinance our existing indebtedness or to access or obtain new indebtedness with similar terms and any failure to do so could have a material adverse effect on our business.

We believe the risks associated with our business are more severe during periods of economic downturn if these periods are accompanied by declining values in real estate. For example, a prolonged economic downturn could negatively impact our property investments as a result of increased customer delinquencies and/or defaults under our leases, generally lower demand for rentable space, potential oversupply of rentable space leading to increased concessions, and/or tenant improvement expenditures, or reduced rental rates to maintain occupancies. Our operations could be negatively affected to a greater extent if an economic downturn occurs, is prolonged or becomes more severe, which could significantly harm our revenues, results of operations, financial condition, liquidity, business prospects and our ability to make distributions to our stockholders. If the current macroeconomic environment worsens and an economic slowdown or a recession occurs or real estate values continue to decline, our results of operations, financial condition, liquidity and business and our ability to pay dividends to our stockholders could be materially and adversely affected.

A major public health crisis, pandemic or epidemic, like the COVID-19 pandemic,epidemic could disrupt the U.S. and global economyeconomies and industries in which we operate and negatively impact us.

A major public health crisis, pandemic or epidemic could impact the U.S. and global economy.economies. Disruptions to commercial activity (such as the imposition of quarantines or travel restrictions) or, more generally, a failure to contain or effectively manage a public health crisis may adversely impact our financial condition, results of operations and ability to pay distributions to our stockholders. Public health crises, pandemics and epidemics could contribute to adverse impacts on global commercial activity and the inability of tenants to pay rent on their leases, or inability to re-lease space that becomes vacant. Such volatility may also materially adversely affect our liquidity position, which could disrupt our business and materially adversely materially impact our financial results.

We are highly dependent on the information systems of Ares Management Corporation (“Ares”) and systems failures could significantly disrupt our business, which may, in turn, negatively affect our operating results and our ability to pay distributions.

Furthermore, aan earthquake, wildfire or other disaster or a disruption in the infrastructure that supports our business, including a disruption involving electronic communications, human resources systems or other services used by us, our Advisor, Ares or third parties with whom we conduct business, could havematerially a material adverse effect ondisrupt our abilityoperations toand continueadversely to operateaffect our business withoutand interruption.financial results. Although Ares has disaster recovery programs in place, these may not be sufficient to mitigate the harm that may result from such a disaster or disruption. In addition, insurance and other safeguards might only partially reimburse us for any losses as a result of such a disaster or disruption, if at all.

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 December 31, 2024,2025, our consolidated real property portfolio consisted of 124143 properties totaling approximately 24.630.5 million square feet located in 3734 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, 161150 credit lease properties, seven21 industrial properties, 1315 data center investments and five27 debt-related investments as of December 31, 2024.2025. Unless otherwise noted, these unconsolidated properties are excluded from the presentation of our portfolio data herein.

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. During the year ended December 31, 2024,2025, we raised gross proceeds of approximately $61.8$335.5 million from the sale of approximately 8.042.8 million shares of our common stock in our ongoing securities offerings, including proceeds from our distribution reinvestment plan of approximately $32.1$31.6 million. See “Note 10 to the Consolidated Financial Statements” in Item 8, “Financial Statements and Supplementary Data” for more information about our securities 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 Rule 506(b) of Regulation D under 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 (“Section 1031 Exchanges”) of 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 year ended December 31, 2024,2025, we sold $797.0$1.22 millionbillion of gross interests related to the DST Program, $63.3$99.8 million of which were financed by DST Program Loans. See “Note 7 to the Consolidated Financial Statements” in Item 8, “Financial Statements and Supplementary Data” for additional detail regarding the DST Program.

As of December 31, 2024,2025, we had sixfour floating-rate debt-related investments with a weighted-average interest rate of 8.5%7.7% and a weighted-average remaining life of 1.01.7 years. As of December 31, 2024,2025, the aggregate outstanding principal was $217.6$182.5 million, the aggregate carrying amount was $216.7$182.3 million and total aggregate current commitments were up to $256.6$215.9 million.

As of December 31, 2024,2025, we had threetwo investments in available-for-sale debt securities, which were comprised of one CRE CLO, one CMBS and one preferred equity investment, and one equity security investment. As of December 31, 2024,2025, the aggregate fair value of these investments was $136.6$121.0 million.

We currently focus our investment activities primarily across the major U.S. property sectors (residential (which includes and/or may include multi-family and other types of rental housing such as manufactured, student and single-family rental housing), industrial, retail and office (which includes and/or may include medical office and life science laboratories)), data center 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, EuropeEurope, Japan and other foreign jurisdictions, and in other sectors such as credit lease and self-storage, 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 residential and industrial sectors due to relatively attractive fundamental conditions. We also intend to continue to hold an allocation of properties in the retail and office sectors, the former of which is largely grocery-anchored.

OffsettingRising operating costs placed pressure on cash flow performance across many real estate property types in 2025. Triple net leases within the commercial sector help offset some of these challenges,impacts. thereAlthough certain markets are showing a recovery, office properties nationally continue to experience challenges driven by remote work and elevated costs to operate, improve or repurpose these office properties. These factors have largely resulted in lower demand for office space and have driven elevated levels of vacancy rates and default rates. Additionally, the real estate sector experienced significant new supply coming out of the pandemic which has caused vacancy rates to rise off historical lows and rent growth to moderate. Offsetting new deliveries has been a significant decline in new commercialconstruction realstarts estatedriven developmentby thathigher beganinterest in 2023 and continued in 2024.rates. Ultimately, this lack of new future inventory may result in a shortage of contemporary, in demandin-demand properties in the years to come, furthering the disparity between supply and demand dynamics. In addition, there is a significant amount of unspent capital targeting commercial real estate properties that could support values and elevate transaction activities. Property valuations are showing signs of recovery, and capitalization rates areremained stabilizing or compressingsteady and we believe certain of these market trends will be offset by continued strong operating fundamentals, such as occupancy and rental rates, in property types that include multifamily and industrial.

During 2024,the year ended December 31, 2025, we completed the following activities:

Debt-Related Income. Debt-related income is comprised of interest income and amortization related to our debt-related investments and debt securities. Total debt-related income increaseddecreased by $15.5$0.4 million for the year ended December 31, 20242025 as compared to the year ended December 31, 2023 primarily due to the growth of our investments in real estate debt and securities.2024.

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 tenant leasing costs. Total rental expenses increased by approximately $17.4$31.0 million for the year ended December 31, 2024,2025, as compared to the same period in 2023,2024, primarily due to an increase in non-same store rental expenses resulting from significant net growth in our portfolio; and an increase in real estate taxes at various industrial properties.portfolio. See “Same Store Portfolio Results of Operations” below for further details of the same store expenses.

Real Estate-Related Depreciation and Amortization. In aggregate, real estate-related depreciation and amortization expense increased by $2.8$44.0 million for the year ended December 31, 2024,2025, as compared to the previous year, primarily due to significant net growth in our portfolio, partially offset by the accelerated depreciation expense at our Bala Pointe property due to planned demolition of the building in advance of redevelopment in 2023.portfolio.

Other Remaining Operating Expenses. In aggregate, the remaining operating expenses increased by $4.9$27.7 million for the year ended December 31, 2024,2025, as compared to the same period in 2023,2024, primarily due to an increase in advisory fees and performance participation allocation of $2.1$27.1 million resulting from increased capital raised through our public offerings and aDST reversalProgram and the positive performance of the full valuation allowance of $1.8 million on our debt-related investments.portfolio.

Our real property markets are aggregated into fivesix reportable property segments: residential, industrial, retail, office, data center 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 1718 to the Consolidated Financial Statements” in Item 8, “Financial Statements and Supplementary Data” 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.

IndustrialResidential Segment. Our industrialresidential segment same store property NOI increaseddecreased by approximately $4.2$4.8 million for the year ended December 31, 20242025 compared to the same period in 2023,2024, primarily due to increased rentaloperating ratesexpenses at variouscertain industrialof our residential properties, partiallyas offsetwell byas reduced occupancymarket rent and increased rent concessions at Orlandocertain Vof andour Northresidential 5th Street.properties.

OfficeIndustrial Segment. Our officeindustrial segment same store property NOI remainedincreased constantby $0.4 million for the year ended December 31, 20242025 compared to the same period in 2023.2024.

ResultsRetail Segment. Our retail segment same store property NOI decreased by $0.6 million for the Yearyear Endedended December 31, 20232025 Comparedcompared to the Yearsame Endedperiod Decemberin 31, 20222024.

Our primary sources of capital for meeting our cash requirements include debt financings, cash generated from operating activities, net proceeds from our securities 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 December 31, 2024,2025, we had approximately $659.2$479.4 million of borrowings, including scheduled amortization payments, becoming payable within the next 12 months, though the terms of the associated loan agreements for $548.2$475.0 million of these borrowings can be extended pursuant to twothree six-monthone-year extension options, subject to certain conditions. As of December 31, 2024,2025, we had approximately $65.8$112.7 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 $256.6$442.0 million in unfunded commitments related to our investments in unconsolidated joint venture partnerships and our investments in real estate debt and securities as of December 31, 2024.2025. 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, increasedchanges in interest rates and high inflation, we have experienced a decreased pace of net proceeds raised from our securities offerings, reducing our ability to purchase assets, which may similarly delay the returns generated from our investments and affect our NAV.

As of December 31, 2024,2025, our financial position was strong with 41.2%35.5% leverage, calculated as outstanding principal balance of our borrowingsborrowings, including secured financings on debt-related investments, 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-relatedestate securitiesdebt and debt-related investmentssecurities not associated with the DST Program (determined in accordance with our valuation procedures). In addition, our consolidated portfolio was 94.7%94.5% occupied (94.8%94.9% leased) as of December 31, 20242025 and is diversified across 124143 properties totaling 24.630.5 million square feet across 3734 geographic markets. Our properties contain a diverse roster of 444445 commercial customers, large and small, and has an allocation based on fair value of real properties as determined by our NAV calculation of 40.5%35.3% residential, 36.5%39.7% industrial, 12.1%9.6% retail, which is primarily grocery-anchored, 8.1%5.3% officeoffice, 7.4% data center and 2.8%2.7% other properties in adjacent sectors.

Line of Credit and Term Loans. As of December 31, 2024,2025, we had an aggregate of $1.70$2.0 billion of commitments under our unsecured credit agreement, including $900.0$1.0 millionbillion under our line of credit and $800.0$1.0 millionbillion under our two term loans. As of that date, we had: (i) $548.2$744.3 million outstanding under our line of credit; and (ii) $800.0$1.0 millionbillion outstanding under our term loans. The weighted-average effective interest rate across all of our unsecured borrowings is 4.71%,4.65%, which includes the effect of the interest rate swap and cap agreements related to $725.0$925.0 million in borrowings under our line of credit and our term loans.

As of December 31, 2024,2025, the unused and available portions under our line of credit were $351.8$255.7 million and $297.1$255.5 million, respectively. Our $900.0$1.0 millionbillion line of credit matures in NovemberJune 2025,2029, and may be extended pursuant to twoa six-monthone-year extension options,option, subject to certain conditions, including the payment of extension fees. One $400.0$700.0 million term loan matures in NovemberJune 2026,2029,and withmay nobe extended pursuant to a one-year extension option available.option. Our other $400.0$300.0 million term loan matures in JanuaryJune 2027,2029, withand nomay be extended pursuant to a one-year extension option available.option. 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 6 to the Consolidated Financial Statements” in Item 8, “Financial Statements and Supplementary Data” for additional information regarding our line of credit and term loans.

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 MarchJune 31,30, 2026, our consolidated real property portfolio consisted of 144152 properties, totaling approximately 30.532 million square feet located in 34 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, 154 credit lease properties, 2131 industrial properties, 18 data center investments and 3233 debt-related investments as of MarchJune 31,30, 2026. Unless otherwise noted, these unconsolidated properties and investments are excluded from the presentation of our portfolio data herein.

We intend to offer shares of our common stock on a continuous basis, subject to continued compliance with the rules and regulations of the SEC and applicable state laws. We also intend to conduct an ongoing distribution reinvestment plan offering for our stockholders to reinvest distributions in our shares. During the threesix months ended MarchJune 31,30, 2026, we raised gross proceeds of approximately $70.8$371.2 million from the sale of 8.845.6 million shares of our common stock in our ongoing securities offerings, including proceeds from our distribution reinvestment plans of approximately $8.4$17.2 million. See “Note 8 to the Condensed Consolidated Financial Statements” for more information about our securities offerings.

Additionally, we have a program to raise capital through private placement offerings by selling DST Interests. During the threesix months ended MarchJune 31,30, 2026, we sold $330.4$676.5 million of gross interests related to the DST Program, $29.2$58.7 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.

As of MarchJune 31,30, 2026, our total investment portfolio consisted of the following sector allocations:

As of MarchJune 31,30, 2026, we had foursix floating-rate debt-related investments with a weighted-average interest rate of 7.7%7.4% and a weighted-average remaining life of 1.51.6 years. As of MarchJune 31,30, 2026, the aggregate outstanding principal was $183.7$234.3 million, the aggregate carrying amount was $183.5$234.1 million and total aggregate current commitments were up to $213.4$261.4 million.

As of MarchJune 31,30, 2026, we had three investments in securities. As of MarchJune 31,30, 2026, the aggregate fair value of these investments was$123.6was $128.6 million.

During the threesix months ended MarchJune 31,30, 2026, we originated fourfive loans through our mortgage loan origination program with a total principal balance of $304.4$362.2 million. Additionally, during the threesix months ended MarchJune 31,30, 20262026, we sold onefive loanloans totalingfor $134.9$359.3 million,million equaland torecorded the$459 carryingthousand costin ofrealized the debt-related investmentslosses on thethese dates of sale, to a joint venture partnership in which we have an ownership interest.investments. During the three and six months ended MarchJune 31,30, 2026, we recognized origination fee income related to our mortgage loan origination program of $0.5$1.1 million.million and $1.6 million, respectively.

We currently focus our investment activities primarily across the major U.S. property sectors (residential (which includes and/or may include multi-family and other types of rental housing such as manufactured, student and single-family rental housing), industrial, retail and office (which includes and/or may include medical office and life science laboratories)), data center 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, Japan and other foreign jurisdictions, and in other sectors such as credit lease and self-storage, 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 residential,residential and industrial sectors due to relatively attractive fundamental conditions. We also intend to continue to hold an allocation of properties in the retail and office sectors, the former of which is largely grocery-anchored.

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, affiliates of the Sponsor and the Advisor, 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 MarchJune 31,30, 2026 and December 31, 2025:

The following table sets forth the NAV per Fund Interest as of MarchJune 31,30, 2026:

Under GAAP, we record liabilities for ongoing distribution fees that we estimate we may pay in future periods for the Fund Interests. As of MarchJune 31,30, 2026, we estimated approximately $82.7$104.6 million of ongoing distribution fees were potentially payable. 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.

The valuations of our real properties as of MarchJune 31,30, 2026, 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.

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 MarchJune 31,30, 2026, 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 MarchJune 31,30, 2026 was $12.2$23.4 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 $12.2$23.4 million, or $0.03$0.05 per share, not taking into account all of the other items that impact our monthly NAV, as of MarchJune 31,30, 2026.

The following table reconciles stockholders’ equity and noncontrolling interests per our condensed consolidated balance sheet to our NAV as of MarchJune 31,30, 2026:

Our NAV increased from $8.04 per share as of December 31, 2025 to $8.15$8.22 per share as of MarchJune 31,30, 2026. The increase in NAV was primarily driven by the performance of our real estate portfolio with strong leasing, continued rent growth, and stabilizing capital markets.

During the firstsecond quarter of 2026, the U.S. economy continued to expand, supported by continued consumer spending with moderating expectations for U.S. gross domestic product growth and low levels of unemployment amidst heightened geopolitical tensions. During this time, the commercial real estate market exhibited stable to improvingmoderating conditions. Specifically, individual property transaction volumes expandedslowed in the second quarter while broad market indices demonstrated flat to increasing commercial real estate values on a year-over-year basis.values.

WhileDuring the quarter, the Federal Reserve has signaled a potential forheld interest raterates reductionssteady and restated its commitment towards its inflation goals, which may result in 2026,future theremonetary policy actions. There is no certainty that there will be a decreasechange in interest rates or of the magnitude or pace of potential decreases, especially if inflation accelerates.changes.

During the threesix months ended MarchJune 31,30, 2026, we completed the following activities:

•We acquired onethree self-storage propertyproperties and seven industrial properties for aan aggregate contractual purchase price of approximately $11.2$273.1 million. We also invested an aggregate of $37.0$99.2 million in our unconsolidated joint venture partnerships and our investments in real estate debt and securities.

•We decreased our leverage ratio from 35.5%36% as of December 31, 2025, to 33.4%28% as of MarchJune 31,30, 2026. Our leverage ratio for reporting purposes is calculated as outstanding principal balance of our borrowings, including secured financings on debt-related investments, less cash and cash equivalents, divided by the fair value of our real property, net investments in unconsolidated joint venture partnerships and investments in real estate debt and securities not associated with the DST Program (determined in accordance with our valuation procedures).

•We raised gross proceeds of $401.2$1.0 millionbillion from the sale of our common stock and DST Interests. This includes $70.8$371.2 million from the sale of 8.845.6 million shares of our common stock in our securities offerings, including proceeds from our distribution reinvestment plans of $8.4$17.2 million, and $330.4$676.5 million of gross capital through private placement offerings by selling DST Interests, $29.2$58.7 million of which were financed by DST Program Loans.

Results for the Three and Six Months Ended MarchJune 31,30, 2026 Compared to Prior Periods

The following table sets forth information regarding our consolidated results of operations for the three months ended MarchJune 31,30, 2026, as compared to the three months ended December 31, 2025, and for the three months ended March 31, 2026 as compared to the three months ended March 31, 2026, and for the six months ended June 30, 2026 as compared to the six months ended June 30, 2025:

Total OperatingRevenues. Expenses.Total For the three months ended March 31, 2026, as compared to the three months ended December 31, 2025, in aggregate, total operating expenses decreased by $1.3 million, andrevenues for the three months ended MarchJune 31,30, 2026, as compared to the three months ended March 31, 2025,2026, totalin operating expensesaggregate, increased by $33.6$6.0 million and for the six months ended June 30, 2026 as compared to the six months ended June 30, 2025 total revenues increased by $61.6 million, primarily due to the factors described below.

RealDebt-Related Estate-RelatedIncome. DepreciationDebt-related income is comprised of interest income and Amortization.amortization related to our debt-related investments and debt securities. For the three months ended MarchJune 31,30, 2026, as compared to the three months ended DecemberMarch 31, 2025,2026, in aggregate, realtotal estate-relateddebt-related depreciation and amortization expenseincome increased by $3.6$2.8 million, primarily due to netincreased growthorigination fees earned and activity in ourthe portfolio.mortgage Forloan origination program for the three months ended June 30, 2026, as compared to the three months ended March 31, 2026. For the six months ended June 30, 2026, as compared to threethe six months ended MarchJune 31,30, 2025, in aggregate, realtotal estate-relateddebt-related depreciationincome and amortization expense increaseddecreased by $12.5$0.8 million, primarily due to netlower growthaverage inprincipal outstanding on our portfolio.debt-related investments during the six months ended June 30, 2026, as compared to the six months ended June 30, 2025.

Other Remaining Operating Expenses. In aggregate, the remaining operating expenses decreasedincreased by $6.1$4.2 million for the three months ended MarchJune 31,30, 2026, as compared to the three months ended DecemberMarch 31, 2025,2026, primarily due to aan decreaseincrease of $5.9$3.9 million in performanceimpairment participationof allocation,real partiallyestate offsetproperty byduring the three months ended June 30, 2026, and an increase of $1.1$1.2 million of advisory fees primarily driven by the sale of common stock and gross interests related to the DST Program. In aggregate, the remaining operating expenses increased by $15.7$34.5 million for the threesix months ended MarchJune 31,30, 2026, as compared to the threesix months ended MarchJune 31,30, 2025, primarily due to an increase of $10.6$20.4 million in performance participation allocation driven by the positive performance of our portfolio and an increase in advisory fees of $4.3$9.0 million primarily driven by the sale of common stock and gross interests related to the DST Program.

Other Income and Expenses. In aggregate, the remaining items that comprise our net income (loss) had a $(10.5)$13.7 million impact on our net income (loss) for the three months ended MarchJune 31,30, 2026, as compared to the three months ended DecemberMarch 31, 2025,2026, primarily due to the following:

•an increase in income taxfrom expenseunconsolidated joint venture partnerships of $2.6$28.5 million,million primarily driven by activitiespositive performance, including the increase in fair value of ourcertain taxableassets, REIT subsidiaries associated with our DST Program andof our investments in unconsolidated joint venture partnerships, which resulted in taxable income for the periodpartnerships; and

•an increase in unrealized loss on financing obligations of $2.3$10.7 million driven by changes in valuations of properties in our DST Program.

•an increase in income fromtax unconsolidated joint venture partnershipsexpense of $9.1$6.9 millionmillion, primarily driven by positive performance. including the increase in fair valueactivities of certainour assets,taxable ofREIT subsidiaries associated with our DST Program and our investments in unconsolidated joint venture partnerships.partnerships, which resulted in taxable income for the period.

In aggregate, the remaining items that comprise our net income (loss) had a $(1.7)$18.2 million impact on our net income (loss) for the threesix months ended MarchJune 31,30, 2026, as compared to the threesix months ended MarchJune 31,30, 2025, primarily due to the following:

•an increase in income fromtax unconsolidated joint venture partnershipsexpense of $19.1$8.5 millionmillion, primarily driven by positive performance, including the increase in fair valueactivities of certainour assets,taxable ofREIT subsidiaries associated with our DST Program and our investments in unconsolidated joint venture partnerships;partnerships, andwhich resulted in taxable income for the period.

The following table reconciles GAAP net income (loss) to same store portfolio property NOI for the three months ended MarchJune 31, 2026, as compared to the three months ended December 31, 2025, and for the three months ended March 31,30, 2026, as compared to the three months ended March 31, 2026, and for the six months ended June 30, 2026, as compared to the six months ended June 30, 2025:

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 MarchJune 31, 2026, as compared to the three months ended December 31, 2025, and the three months ended March 31,30, 2026, as compared to the three months ended March 31, 2026, and the six months ended June 30, 2026, as compared to the six months ended June 30, 2025:

Residential Segment. For the three months ended June 30, 2026, our residential segment same store property NOI decreased by $1.8 million, as compared to the three months ended March 31, 2026, primarily due to increased operating expenses at various properties. For the six months ended June 30, 2026, our residential segment same store property NOI increased by $1.6$1.4 million, as compared to the threesix months ended DecemberJune 31,30, 2025, primarily due to reduced operating expensesexpenses, reduced bad debt and concessionsreduced vacancies at various properties. For the three months ended March 31, 2026, our residential segment same store property NOI increased by $1.0 million, as compared to the three months ended March 31, 2025, primarily due to reduced operating expenses at various properties.

Industrial Segment. For the three months ended June 30, 2026, our industrial segment same store property NOI remained consistent as compared to the three months ended March 31, 2026. For the six months ended June 30, 2026, our industrial segment same store property NOI increased by $0.7$1.0 million as compared to the threesix months ended DecemberJune 31, 2025, primarily due to increased occupancy and reduced bad debt expense at various properties. For the three months ended March 31, 2026, our industrial segment same store property NOI increased by $0.5 million as compared to the three months ended March 31,30, 2025, primarily due to increased renewal rates and reduced bad debt expense at various properties.

Retail Segment. For the three months ended June 30, 2026, our retail segment same store property NOI decreased by $0.5 million as compared to the three months ended March 31, 2026, primarily due to reduced percentage rent at various properties. For the six months ended June 30, 2026, our retail segment same store property NOI increased by $0.9 million as compared to the three months ended December 31, 2025, primarily due to increased percentage rent at various properties and increased occupancy at one of our properties. For the three months ended March 31, 2026, our retail segment same store property NOI increased by $1.1$1.0 million, as compared to the threesix months ended MarchJune 31,30, 2025, primarily due to increased percentage rent at various properties and increased rental renewal rates at two of our properties.

Office Segment. For the three months ended MarchJune 31,30, 2026, our office segment same store property NOI decreasedremained by $0.4 millionconsistent as compared to the three months ended DecemberMarch 31, 2025, primarily due to reduced early termination fee at one of our properties offset by reduced non-recoverable expenses at various properties.2026. Our office segment same store property NOI decreased by $0.3$1.0 million for threesix months ended MarchJune 31,30, 2026 as compared to the threesix months ended MarchJune 31,30, 2025, primarily due to reduced occupancy at one of our properties.