UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended March 31, 2025

Or

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

For the transition period from                     to                     .

Commission File No. 000-52596

ARES REAL ESTATE INCOME TRUST INC.

(Exact name of registrant as specified in its charter)

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

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

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

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

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

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

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

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

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

Under the registrant's charter, shares of the registrant's Class S common stock are separated into a series called Class S-R and another series called Class S-PR; shares of the registrant's Class D common stock are separated into a series called Class D-R and another series called Class D-PR; shares of the registrant's Class I common stock are separated into a series called Class I-R and another series called Class I-PR. In order to mirror common industry terminology, in this Quarterly Report on Form 10-Q the registrant refers to these separate series of common stock as different “classes”.

As of May 5, 2025, there were 25,975,754 shares of the registrant’s Class T-R common stock, 40,829,924 shares of the registrant’s Class S-R common stock, 5,914,575 shares of the registrant’s Class D-R common stock, 58,254,743 shares of the registrant’s Class I-R common stock, 41,615,095 shares of the registrant’s Class E common stock, 1,819,474 shares of the registrant’s Class S-PR common stock, 10,258 shares of the registrant’s Class D-PR stock and 3,727,153 shares of the registrant’s Class I-PR common stock outstanding.

ARES REAL ESTATE INCOME TRUST INC.

TABLE OF CONTENTS

		Page
PART I. FINANCIAL INFORMATION
Item 1.	Financial Statements:
	Condensed Consolidated Balance Sheets as of March 31, 2025 (unaudited) and December 31, 2024	3
	Condensed Consolidated Statements of Operations for the Three Months Ended March 31, 2025 and 2024 (unaudited)	4
	Condensed Consolidated Statements of Comprehensive Income (Loss) for the Three Months Ended March 31, 2025 and 2024 (unaudited)	5
	Condensed Consolidated Statements of Equity for the Three Months Ended March 31, 2025 and 2024 (unaudited)	6
	Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2025 and 2024 (unaudited)	7
	Notes to Condensed Consolidated Financial Statements (unaudited)	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	30
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	52
Item 4.	Controls and Procedures	53
PART II. OTHER INFORMATION
Item 1A.	Risk Factors	53
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	53
Item 5.	Other Information	56
Item 6.	Exhibits	57

2

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

ARES REAL ESTATE INCOME TRUST INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

	As of
(in thousands, except per share data)	March 31, 2025		December 31, 2024
	(Unaudited)
ASSETS
Net investment in real estate properties	$	4,707,130	$	4,731,403
Investments in real estate debt and securities (includes $168,463 and $165,401 at fair value as of March 31, 2025 and December 31, 2024, respectively)		313,194		353,258
Debt-related investments, held for sale		—		193,902
Investments in unconsolidated joint venture partnerships (includes $37,676 and $38,386 at fair value as of March 31, 2025 and December 31, 2024, respectively)		292,853		212,296
Cash and cash equivalents		33,998		19,554
Restricted cash		9,675		7,865
DST Program Loans (includes $98,544 and $71,068 at fair value as of March 31, 2025 and December 31, 2024, respectively)		148,329		120,853
Other assets		79,687		92,118
Total assets	$	5,584,866	$	5,731,249
LIABILITIES AND EQUITY
Liabilities
Accounts payable and accrued expenses	$	72,320	$	74,814
Debt, net		2,364,100		2,700,468
Intangible lease liabilities, net		44,428		46,098
Financing obligations, net (includes $1,170,464 and $878,386 at fair value as of March 31, 2025 and December 31, 2024, respectively)		1,677,795		1,385,620
Distribution fees payable to affiliates		67,590		69,922
Other liabilities		41,926		38,975
Total liabilities		4,268,159		4,315,897
Commitments and contingencies (Note 14)
Redeemable noncontrolling interests		8,994		9,381
Equity
Stockholders’ equity:
Preferred stock, $0.01 par value per share—200,000 shares authorized, none issued and outstanding		—		—
Common stock, $0.01 par value per share (Note 8)		1,779		1,803
Additional paid-in capital		1,939,531		1,956,646
Distributions in excess of earnings		(1,251,085)		(1,216,344)
Accumulated other comprehensive income		1,395		3,719
Total stockholders’ equity		691,620		745,824
Noncontrolling interests		616,093		660,147
Total equity		1,307,713		1,405,971
Total liabilities and equity	$	5,584,866	$	5,731,249

See accompanying Notes to Condensed Consolidated Financial Statements.

3

ARES REAL ESTATE INCOME TRUST INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

	For the Three Months Ended
	March 31,
(in thousands, except per share data)	2025		2024
Revenues:
Rental revenues	$	106,396	$	88,131
Debt-related income		9,989		11,311
Total revenues		116,385		99,442
Operating expenses:
Rental expenses		39,709		32,500
Real estate-related depreciation and amortization		45,873		35,470
General and administrative expenses		2,905		3,337
Advisory fees		11,404		9,972
Acquisition costs and reimbursements		1,355		2,043
Total operating expenses		101,246		83,322
Other income (expenses):
Income from unconsolidated joint venture partnerships		3,514		2,282
Interest expense		(55,384)		(44,234)
Gain on sale of real estate property		9,983		—
Unrealized gain on DST Program Loans		15		—
Unrealized (loss) gain on financing obligations		(4,138)		2,821
Provision for current expected credit losses		99		133
Other income and expenses		1,315		1,289
Total other income (expenses)		(44,596)		(37,709)
Net loss before income tax expense		(29,457)		(21,589)
Income tax expense		(4,638)		—
Net loss		(34,095)		(21,589)
Net loss attributable to redeemable noncontrolling interests		126		111
Net loss attributable to noncontrolling interests		15,943		6,477
Net loss attributable to common stockholders	$	(18,026)	$	(15,001)
Weighted-average shares outstanding—basic		178,628		195,679
Weighted-average shares outstanding—diluted		337,447		281,373
Net loss attributable to common stockholders per common share—basic and diluted	$	(0.10)	$	(0.08)

See accompanying Notes to Condensed Consolidated Financial Statements.

4

ARES REAL ESTATE INCOME TRUST INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(Unaudited)

	For the Three Months Ended
	March 31,
(in thousands)	2025		2024
Net loss	$	(34,095)	$	(21,589)
Change from cash flow hedging activities		(4,359)		4,769
Change from activities related to available-for-sale debt securities		(15)		(14)
Comprehensive loss		(38,469)		(16,834)
Comprehensive loss attributable to redeemable noncontrolling interests		142		87
Comprehensive loss attributable to noncontrolling interests		17,985		5,053
Comprehensive loss attributable to common stockholders	$	(20,342)	$	(11,694)

See accompanying Notes to Condensed Consolidated Financial Statements.

5

ARES REAL ESTATE INCOME TRUST INC.

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

(Unaudited)

	Stockholders’ Equity
								Accumulated
				Additional		Distributions		Other
	Common Stock			Paid-in		in Excess of		Comprehensive		Noncontrolling		Total
(in thousands)	Shares	Amount		Capital		Earnings		Income (Loss)		Interests		Equity
FOR THE THREE MONTHS ENDED MARCH 31, 2024
Balance as of December 31, 2023	197,228	$	1,972	$	1,895,789	$	(1,108,823)	$	6,359	$	316,119	$	1,111,416
Net loss (excludes $111 attributable to redeemable noncontrolling interests)	—		—		—		(15,001)		—		(6,477)		(21,478)
Change from securities and cash flow hedging activities (excludes $24 attributable to redeemable noncontrolling interests)	—		—		—		—		3,307		1,424		4,731
Issuance of common stock	2,029		21		16,433		—		—		—		16,454
Share-based compensation	—		—		75		—		—		—		75
Upfront offering costs, including selling commissions, dealer manager fees, and offering costs	—		—		(1,267)		—		—		—		(1,267)
Trailing distribution fees	—		—		278		1,317		—		844		2,439
Redemptions of common stock	(4,772)		(47)		(38,302)		—		—		—		(38,349)
Issuances of OP Units for DST Interests	—		—		—		—		—		72,034		72,034
Other noncontrolling interests net contributions	—		—		—		—		—		279		279
Distributions declared (excludes $144 attributable to redeemable noncontrolling interests)	—		—		—		(19,568)		—		(8,433)		(28,001)
Redemption value allocation adjustment to redeemable noncontrolling interests	—		—		200		—		—		—		200
Redemptions of noncontrolling interests	—		—		—		—		—		(8,074)		(8,074)
Reallocation of stockholders' equity and noncontrolling interests	—		—		24,570		—		(236)		(24,334)		—
Balance as of March 31, 2024	194,485	$	1,946	$	1,897,776	$	(1,142,075)	$	9,430	$	343,382	$	1,110,459
FOR THE THREE MONTHS ENDED MARCH 31, 2025
Balance as of December 31, 2024	180,311	$	1,803	$	1,956,646	$	(1,216,344)	$	3,719	$	660,147	$	1,405,971
Net loss (excludes $126 attributable to redeemable noncontrolling interests)	—		—		—		(18,026)		—		(15,943)		(33,969)
Change from securities and cash flow hedging activities (excludes $16 attributable to redeemable noncontrolling interests)	—		—		—		—		(2,316)		(2,042)		(4,358)
Issuance of common stock	2,760		28		20,954		—		—		—		20,982
Share-based compensation	—		—		75		—		—		—		75
Upfront offering costs, including selling commissions, dealer manager fees, and offering costs	—		—		(720)		—		—		—		(720)
Trailing distribution fees	—		—		503		1,146		—		683		2,332
Redemptions of common stock	(5,198)		(52)		(39,349)		—		—		—		(39,401)
Other noncontrolling interests net distributions	—		—		—		—		—		(92)		(92)
Distributions declared (excludes $124 attributable to redeemable noncontrolling interests)	—		—		—		(17,861)		—		(15,756)		(33,617)
Redemption value allocation adjustment to redeemable noncontrolling interests	—		—		(379)		—		—		—		(379)
Redemptions of noncontrolling interests (excludes $500 attributable to redeemable noncontrolling interests)	—		—		—		—		—		(9,111)		(9,111)
Reallocation of stockholders' equity and noncontrolling interests	—		—		1,801		—		(8)		(1,793)		—
Balance as of March 31, 2025	177,873	$	1,779	$	1,939,531	$	(1,251,085)	$	1,395	$	616,093	$	1,307,713

See accompanying Notes to Condensed Consolidated Financial Statements.

6

ARES REAL ESTATE INCOME TRUST INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

	For the Three Months Ended March 31,
(in thousands)	2025		2024
Operating activities:
Net loss	$	(34,095)	$	(21,589)
Adjustments to reconcile net loss to net cash provided by operating activities:
Real estate-related depreciation and amortization		45,873		35,470
Straight-line rent and amortization of above- and below-market leases		(2,243)		(2,375)
Gain on sale of real estate property		(9,983)		—
Unrealized gain on DST Program Loans		(15)		—
Income from unconsolidated joint venture partnerships		(3,514)		(2,282)
Provision for current expected credit losses		(99)		(133)
Amortization of deferred financing costs		2,805		2,433
Decrease in financing obligation liability appreciation		—		(69)
Unrealized loss (gain) on financing obligations		4,138		(2,821)
Paid-in-kind interest on investments in real estate debt and securities		(6,678)		(5,808)
Distributions of earnings from unconsolidated joint venture partnerships		3,833		236
Amortization of interest rate cap premiums		2,477		3,381
Other		476		88
Changes in operating assets and liabilities
Other assets, accounts payable and accrued expenses and other liabilities		4,154		1,261
Debt-related investments, held for sale		193,902		—
Net cash provided by operating activities		201,031		7,792
Investing activities:
Real estate acquisitions		(30,755)		—
Capital expenditures		(6,355)		(13,322)
Proceeds from disposition of real estate property		25,710		—
Investments in debt-related investments		(1,587)		(14,910)
Principal collections on debt-related investments		47,360		2,083
Investments in unconsolidated joint venture partnerships		(83,055)		(34,095)
Distribution from joint venture partnerships		2,904		—
Investments in available-for-sale debt securities		—		(2,993)
Principal collections on available-for-sale debt securities		1,714		—
Other		11		310
Net cash used in investing activities		(44,053)		(62,927)
Financing activities:
Repayments of mortgage notes		(581)		(531)
Proceeds from line of credit		202,220		157,258
Repayments of line of credit		(541,000)		(167,000)
Redemptions of common stock		(39,401)		(38,349)
Distributions paid to common stockholders, redeemable noncontrolling interest holders and noncontrolling interest holders		(23,537)		(17,401)
Proceeds from issuance of common stock		13,279		8,179
Proceeds from financing obligations, net		261,010		131,157
Offering costs for issuance of common stock and private placements		(3,615)		(4,545)
Cash payout of DST Interests		—		(3,217)
Redemption of noncontrolling interests		(9,111)		(8,074)
Redemption of redeemable noncontrolling interests		—		(1,954)
Debt issuance costs paid		(10)		(125)
Other		(57)		—
Net cash (used in) provided by financing activities		(140,803)		55,398
Effect of exchange rate changes on cash, cash equivalents and restricted cash		79		(6)
Net increase in cash, cash equivalents and restricted cash		16,254		257
Cash, cash equivalents and restricted cash, at beginning of period		27,419		19,666
Cash, cash equivalents and restricted cash, at end of period	$	43,673	$	19,923

See accompanying Notes to Condensed Consolidated Financial Statements.

7

ARES REAL ESTATE INCOME TRUST INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1. BASIS OF PRESENTATION

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

The accompanying unaudited condensed consolidated financial statements included herein have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Accordingly, certain disclosures normally included in the annual audited financial statements prepared in accordance with accounting principles generally accepted in the U.S. (“GAAP”) have been omitted. As such, the accompanying unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes contained in our Annual Report on Form 10-K for the year ended December 31, 2024, filed with the SEC on March 6, 2025 (“2024 Form 10-K”).

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

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

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

8

2. INVESTMENTS IN REAL ESTATE PROPERTIES

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

	As of
(in thousands)	March 31, 2025		December 31, 2024 (1)
Land	$	864,862	$	860,990
Buildings and improvements		4,338,239		4,323,688
Intangible lease assets		364,643		365,132
Right of use asset		13,637		13,637
Investment in real estate properties		5,581,381		5,563,447
Accumulated depreciation and amortization		(874,251)		(832,044)
Net investment in real estate properties	$	4,707,130	$	4,731,403

(1) Includes three properties with an aggregate accounting basis of $16.0 million that has met the criteria of held for sale as of December 31, 2024.

Acquisitions

During the three months ended March 31, 2025, we acquired 100% of the following properties through asset acquisitions:

(in thousands)	Property Type	Acquisition Date	Total Purchase Price (1)
2025 Acquisitions:
Richmond Airport Logistics Center IV	Industrial	2/19/2025	$	2,307
Argyle Forest Self Storage	Self-Storage	3/24/2025		11,900
Norfolk Self Storage	Self-Storage	3/28/2025		16,685
Total 2025 acquisitions			$	30,892

(1) Total purchase price is equal to the total consideration paid plus any debt assumed at fair value. There was no debt assumed in connection with the 2025 acquisitions.

During the three months ended March 31, 2025, we allocated the purchase price of our acquisitions to land, building and improvements and intangible lease assets as follows:

	As of
(in thousands)	March 31, 2025
Land	$	6,685
Building and improvements		23,027
Intangible lease assets		1,180
Total purchase price (1)	$	30,892

(1) Total purchase price is equal to the total consideration paid plus any debt assumed at fair value. There was no debt assumed in connection with the 2025 acquisitions.

The weighted-average amortization period for the intangible lease assets and liabilities acquired in connection with our acquisitions during the three months ended March 31, 2025, as of the respective date of each acquisition, was 1.5 years.

Dispositions

During the three months ended March 31, 2025, we sold three industrial properties for net proceeds of approximately $25.7 million and recorded a net gain on sale of $10.0 million. During the three months ended March 31, 2024, we did not sell any properties.

9

Intangible Lease Assets and Liabilities

Intangible lease assets and liabilities as of March 31, 2025 and December 31, 2024 included the following:

	As of March 31, 2025						As of December 31, 2024
			Accumulated						Accumulated
(in thousands)	Gross		Amortization		Net		Gross		Amortization		Net
Intangible lease assets (1)	$	339,311	$	(260,302)	$	79,009	$	339,800	$	(253,545)	$	86,255
Above-market lease assets (1)		25,332		(21,522)		3,810		25,332		(21,168)		4,164
Below-market lease liabilities		(84,910)		40,482		(44,428)		(84,910)		38,812		(46,098)

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

Rental Revenue Adjustments and Depreciation and Amortization Expense

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

	For the Three Months Ended March 31,
(in thousands)	2025		2024
Increase (decrease) to rental revenue:
Straight-line rent adjustments	$	927	$	1,582
Above-market lease amortization		(354)		(234)
Below-market lease amortization		1,670		1,027
Real estate-related depreciation and amortization:
Depreciation expense	$	37,423	$	29,845
Intangible lease asset amortization		8,450		5,625

3. INVESTMENTS IN UNCONSOLIDATED JOINT VENTURE PARTNERSHIPS

The following table summarizes our investments in unconsolidated joint venture partnerships as of March 31, 2025 and December 31, 2024:

	Number of Joint Venture						Investments in Unconsolidated
	Partnerships as of		Ownership Percentage as of				Joint Venture Partnerships as of
	March 31,	December 31,	March 31,		December 31,		March 31,		December 31,
($ in thousands)	2025	2024	2025		2024		2025		2024
Investments in unconsolidated joint venture partnerships, carried at cost:
Credit Lease joint venture partnerships	3	3	50.0	%	50.0	%	$	101,010	$	101,569
Data Center joint venture partnerships	2	2	10.0 - 10.1	%	10.0 - 10.2	%		53,007		42,663
Real Estate Debt joint venture partnerships (1)	2	2	19.9 - 20.0	%	19.9 - 20.0	%		101,160		29,678
Total investments in unconsolidated joint venture partnerships, carried at cost								255,177		173,910
Investments in unconsolidated joint venture partnerships, carried at fair value:
Industrial joint venture partnerships (1)	1	1	27.4	%	27.4	%		37,676		38,386
Total investments in unconsolidated joint venture partnerships, carried at fair value								37,676		38,386
Total							$	292,853	$	212,296

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

As of March 31, 2025, we had unfunded commitments of $144.0 million, in aggregate, related to our investments in unconsolidated joint venture partnerships.

10

The following table summarizes income (loss) in unconsolidated joint venture partnerships for the three months ended March 31, 2025 and 2024:

	For the Three Months Ended March 31,
(in thousands)	2025		2024
Income (loss) from unconsolidated joint venture partnerships, carried at cost:
Equity in income from unconsolidated joint venture partnerships	$	2,600	$	1,202
Total income (loss) from unconsolidated joint venture partnerships, carried at cost		2,600		1,202
Income (loss) from unconsolidated joint venture partnerships, carried at fair value:
Gain on investment		827		1,387
Foreign currency gain (loss) on investment		1,082		(482)
Total income from unconsolidated joint venture partnerships, carried at fair value		1,909		905
Other foreign currency gain (loss):
Foreign currency (loss) gain on debt held in foreign currencies		(1,074)		181
Foreign currency gain (loss) on remeasurement of cash and cash equivalents		79		(6)
Total other foreign currency (loss) gain		(995)		175
Total	$	3,514	$	2,282

4. INVESTMENTS IN REAL ESTATE DEBT AND SECURITIES

Debt-Related Investments

The following table summarizes our debt-related investments as of March 31, 2025 and December 31, 2024:

					Weighted-Average			Weighted-Average
($ in thousands)	Carrying Amount (1)		Outstanding Principal (1)		Interest Rate			Remaining Life (Years)
As of March 31, 2025
Senior loans, carried at cost (2)	$	144,731	$	145,358		9.3	%		0.9
Senior loans, carried at fair value		29,414		29,414		7.8			2.0
Total debt-related investments	$	174,145	$	174,772		9.0	%		1.1
As of December 31, 2024
Senior loans, carried at cost (2)	$	187,857	$	188,759		8.6	%		0.8
Senior loans, carried at fair value		28,844		28,844		7.8			2.3
Total debt-related investments	$	216,701	$	217,603		8.5	%		1.0

(1) The difference between the carrying amount and the outstanding principal amount of our debt-related investments carried at cost consists of unamortized purchase discount, deferred financing costs, loan origination costs, and any recorded credit loss reserves, if applicable. For our debt-related investments carried at fair value, the difference between the carrying amount and the outstanding principal amount is cumulative unrealized gains or losses.

(2) As of March 31, 2025 and December 31, 2024, we had one senior loan that was in default and on non-accrual status with a carrying value of $46.6 million. During the three months ended March 31, 2025, we did not receive any interest payments in cash on this investment. During the three months ended March 31, 2024 and prior to being placed on non-accrual status, we recognized $1.4 million in debt-related income, of which $0.6 million was capitalized to the principal balance. Weighted-average interest rate excludes this senior loan from its calculations as of March 31, 2025 and December 31, 2024.

During the three months ended March 31, 2025, we received $47.4 million of full principal repayments on three senior loan debt-related investments. During the three months ended March 31, 2024, we received $2.1 million of partial repayments on one mezzanine loan debt-related investment.

As of March 31, 2025, we had one debt-related investment for which we have elected the fair value option and which is carried at fair value. The carrying amount and the outstanding principal amount was $29.4 million, with a total current commitment of $29.4 million as of March 31, 2025. During the three months ended March 31, 2025, we did not recognize any gains or losses on this investment. As of December 31, 2024, we had one debt-related investment for which we have elected the fair value option and which is carried at fair

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value. The carrying amount and the outstanding principal amount was $28.8 million, with a total current commitment of $29.4 million as of December 31, 2024.

Current Expected Credit Losses

As of March 31, 2025, our reserve for current expected credit losses (“CECL Reserve”) for our debt-related investment portfolio was $0.4 million or 0.2% of our debt-related investment carried at cost with a total current commitment balance of $179.9 million, which was comprised of $145.4 million of funded commitments and $34.5 million of unfunded commitments with associated CECL Reserves of $0.3 million and $0.1 million, respectively. As of December 31, 2024, our CECL Reserve for our debt-related investment carried at cost portfolio was $0.5 million or 0.2% of our debt-related investment carried at cost total current commitment balance of $227.2 million, which was comprised of $188.8 million of funded commitments and $38.4 million of unfunded commitments with associated CECL Reserves of $0.4 million and $0.1 million, respectively. Our $46.6 million loan on non-accrual status is a loan in which repayment is expected to be provided substantially through the operation or sale of the collateral and the borrower is experiencing financial difficulty, therefore we have adopted the practical expedient to measure the allowance for credit loss based on the fair value of collateral resulting in no allowance for this loan as of March 31, 2025 and December 31, 2024.

During both the three months ended March 31, 2025 and March 31, 2024, we recognized a decrease in provision for current expected credit losses of $0.1 million. There have been no write-offs or recoveries related to any of our existing debt-related investments.

The following table summarizes activity related to our CECL Reserve on funded commitments for the three months ended March 31, 2025 and 2024:

	For the Three Months Ended March 31,
(in thousands)	2025		2024
Balance at beginning of the year	$	341	$	1,327
Provision for current expected credit losses		(84)		145
Write-offs		—		—
Recoveries		—		—
Ending balance (1)	$	257	$	1,472

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

The following table summarizes activity related to our CECL Reserve on unfunded commitments for the three months ended March 31, 2025 and 2024:

	For the Three Months Ended March 31,
(in thousands)	2025		2024
Balance at beginning of the year	$	123	$	670
Provision for current expected credit losses		(15)		(278)
Write-offs		—		—
Recoveries		—		—
Ending balance (1)	$	108	$	392

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

Debt-Related Investments, Held For Sale

We had no debt-related investments classified as held for sale as of March 31, 2025. As of December 31, 2024, we had one debt-related investment classified as held for sale. The carrying amount was $193.9 million and the outstanding principal amount was $196.0 million, with an interest rate of 7.0% and maturity date of January 2027 as of December 31, 2024.

During the three months ended March 31, 2025, we originated one loan with a principal balance of $91.6 million. Additionally, during the three months ended March 31, 2025, we sold two loans, including one of which was held for sale as of December 31, 2024, totaling $285.4 million, equal to the carrying cost of the debt-related investments on the dates of sale, to a joint venture partnership in

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which we have an ownership interest. We have recognized $0.9 million of origination fee income during the three months ended March 31, 2025 related to these debt-related investments.

Available-for-Sale Debt Securities

As of March 31, 2025 we had one preferred equity investment, one commercial real estate collateralized loan obligation (“CRE CLO” or multiple “CRE CLOs”) and one commercial mortgage-backed security (“CMBS”) designated as available-for-sale debt securities. As of December 31, 2024, we had one preferred equity investment, one CRE CLO and one CMBS designated as available-for-sale debt securities. As of March 31, 2025 and December 31, 2024, the weighted-average remaining term of our CRE CLOs and CMBS, which is based on the estimated fully extended maturity dates of the underlying loans of the debt security, was 2.3 years and 2.5 years, respectively, and the remaining term of our preferred equity investment was 1.8 years and 2.1 years, respectively. We had no unfunded commitments related to our preferred equity investment as of March 31, 2025 or December 31, 2024. There were no credit losses associated with our available-for-sale debt securities as of March 31, 2025 or December 31, 2024. The following table summarizes our investments in available-for-sale debt securities as of March 31, 2025 and December 31, 2024:

(in thousands)	Face Amount		Amortized Cost		Unamortized Discount		Unamortized Fees (1)		Unrealized Gain, Net (2)		Fair Value
As of March 31, 2025
CRE CLOs & CMBS	$	11,610	$	11,551	$	59	$	—	$	97	$	11,648
Preferred equity		127,912		127,401		—		511		—		127,401
Total debt securities	$	139,522	$	138,952	$	59	$	511	$	97	$	139,049
As of December 31, 2024
CRE CLOs	$	13,325	$	13,258	$	67	$	—	$	112	$	13,370
Preferred equity		123,767		123,187		—		580		—		123,187
Total debt securities	$	137,092	$	136,445	$	67	$	580	$	112	$	136,557

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

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

5. DEBT

A summary of our consolidated debt is as follows:

	Weighted-Average
	Effective Interest Rate as of					Balance as of
	March 31,		December 31,			March 31,		December 31,
($ in thousands)	2025		2024		Current Maturity Date	2025		2024
Line of credit (1)	5.79	%	5.82	%	November 2025	$	210,522	$	548,228
Term loan (2)	3.85		3.36		November 2026		400,000		400,000
Term loan (3)	4.53		4.53		January 2027		400,000		400,000
Fixed-rate mortgage notes	4.52		4.52		January 2027 - May 2031		654,214		654,795
Floating-rate mortgage notes (4)	6.04		6.05		October 2025 - October 2026		714,151		714,151
Total principal amount / weighted-average (5)	4.98	%	5.01	%		$	2,378,887	$	2,717,174
Less: unamortized debt issuance costs						$	(20,854)	$	(23,034)
Add: unamortized mark-to-market adjustment on assumed debt							6,067		6,328
Total debt, net						$	2,364,100	$	2,700,468
Gross book value of properties encumbered by debt						$	2,310,939	$	2,309,100

(1) The effective interest rate for our borrowings in U.S. dollars, which was $173.0 million as of March 31, 2025, is calculated based on the Term Secured Overnight Financing Rate (“Term SOFR”) plus an 11.448 basis point adjustment (“Adjusted Term SOFR”), plus a margin ranging from 1.25% to 2.00% depending on our consolidated leverage ratio. The effective interest rate for our

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borrowings in pound sterling, which was $37.5 million as of March 31, 2025 when converted to U.S. dollars, is calculated based on the Sterling Overnight Index Average Reference Rate (“SONIA”) plus a 3.26 basis point adjustment, plus a margin ranging from 1.25% to 2.00% depending on our consolidated leverage ratio. As of March 31, 2025, the unused and available portions under the line of credit were approximately $689.5 million and $349.7 million, respectively. The weighted-average interest rate is the all-in interest rate. The line of credit is available for general business purposes including, but not limited to, refinancing of existing indebtedness and financing the acquisition of permitted investments, including commercial properties.

(2) The effective interest rate is calculated based on Adjusted Term SOFR, plus a margin ranging from 1.20% to 1.90% depending on our consolidated leverage ratio. Total commitments for this term loan are $400.0 million. The weighted-average interest rate is the all-in interest rate, including the effects of interest rate swap agreements relating to $100.0 million in borrowings under this term loan and interest rate cap agreements relating to $200.0 million in borrowings under this term loan.

(3) The effective interest rate is calculated based on Adjusted Term SOFR, plus a margin ranging from 1.20% to 1.90% depending on our consolidated leverage ratio. Total commitments for this term loan are $400.0 million. The weighted-average interest rate is the all-in interest rate, including the effects of interest rate swap agreements relating to $275.0 million in borrowings under this term loan and interest rate cap agreements relating to $50.0 million in borrowings under this term loan.

(4) The effective interest rate is calculated based on Adjusted Term SOFR plus a margin. As of both March 31, 2025 and December 31, 2024, our floating rate mortgage notes were subject to interest rate spreads ranging from 1.55% to 2.50%. The weighted-average interest rate is the all-in interest rate, including the effects of interest rate cap agreements which capped the effective interest rates of our four floating-rate mortgage notes ranging from 4.45% and 6.54%, respectively, as of March 31, 2025.

(5) The weighted-average remaining term of our consolidated borrowings was 2.0 years as of March 31, 2025, excluding the impact of certain extension options.

For the three months ended March 31, 2025 and 2024, the amount of interest incurred related to our consolidated indebtedness, excluding amortization of debt issuance costs, was $34.9 million and $26.1 million, respectively, including $2.5 million and $3.4 million, respectively, related to the amortization of our interest rate cap premiums. See “Note 6” for the amount of interest incurred related to the DST Program (as defined below).

As of March 31, 2025, the principal payments due on our consolidated debt during each of the next five years and thereafter were as follows:

(in thousands)	Line of Credit (1)		Term Loans		Mortgage Notes (2)		Total
Remainder of 2025	$	210,522	$	—	$	110,347	$	320,869
2026		—		400,000		610,665		1,010,665
2027		—		400,000		177,034		577,034
2028		—		—		90,477		90,477
2029		—		—		270,385		270,385
Thereafter		—		—		109,457		109,457
Total principal payments	$	210,522	$	800,000	$	1,368,365	$	2,378,887

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

(2) A $115.0 million mortgage note matures in January 2027 and may be extended pursuant to two one-year extension options, subject to certain conditions. A $51.6 million mortgage note matures in January 2026 and may be extended pursuant to a one-year extension option, subject to certain conditions. A $475.0 million mortgage note matures in October 2026 and may be extended pursuant to three one-year extension options, subject to certain conditions.

Debt Covenants

Our line of credit, term loans and mortgage note agreements contain various property-level covenants, including customary affirmative and negative covenants. In addition, the line of credit and term loan agreements contain certain corporate-level financial covenants, including leverage ratio, fixed charge coverage ratio and tangible net worth thresholds. We were in compliance with our debt covenants as of March 31, 2025.

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Derivative Instruments

To manage interest rate risk for certain of our variable-rate debt, we use interest rate derivative instruments as part of our risk management strategy. These derivatives are designed to mitigate the risk of future interest rate increases by either providing a fixed interest rate or capping the variable interest rate for a limited, pre-determined period of time. Interest rate swaps designated as cash flow hedges involve the receipt of variable-rate amounts from a counterparty in exchange for us making fixed-rate payments over the life of the interest rate swap agreements without exchange of the underlying notional amount. Interest rate caps involve the receipt of variable amounts from a counterparty at the end of each period in which the interest rate exceeds the agreed fixed price.

For derivative instruments that are designated and qualify as cash flow hedges, the gain or loss is recorded as a component of accumulated other comprehensive income (loss) (“AOCI”) on the condensed consolidated balance sheets and is reclassified into earnings as interest expense for the same period that the hedged transaction affects earnings, which is when the interest expense is recognized on the related debt. During the next 12 months, we estimate that $1.4 million will be reclassified as a decrease to interest expense related to active effective hedges of existing floating-rate debt. For derivatives that are not designated and do not qualify as hedges, changes in fair value are recognized through income. As a result, in periods with high interest rate volatility, we may experience significant fluctuations in our net income (loss).

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

	Number of	Current Notional		Fair Value
($ in thousands)	Contracts	Amount			Other Assets	Other Liabilities
As of March 31, 2025
Interest rate swaps designated as cash flow hedges	6	$	375,000	$	3,970	$	—
Interest rate caps designated as cash flow hedges	8		966,300		9,888		—
Total derivative instruments	14	$	1,341,300	$	13,858	$	—
As of December 31, 2024
Interest rate swaps designated as cash flow hedges	10	$	475,000	$	6,866	$	—
Interest rate caps designated as cash flow hedges	8		912,600		13,824		—
Interest rate caps not designated as cash flow hedges	1		53,700		3		—
Total derivative instruments	19	$	1,441,300	$	20,693	$	—

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

	For the Three Months Ended
	March 31,
(in thousands)	2025		2024
Derivative instruments designated as cash flow hedges:
(Loss) gain recognized in AOCI	$	(2,657)	$	9,659
Amount reclassified from AOCI as a decrease into interest expense		(1,702)		(4,890)
Total interest expense presented in the condensed consolidated statements of operations in which the effects of cash flow hedges are recorded		55,384		44,234

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6. DST PROGRAM

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

The following table summarizes our DST Program Loans as of March 31, 2025 and December 31, 2024:

							Weighted-Average			Weighted-Average
($ in thousands)	Outstanding Principal		Unrealized Loss, Net (1)		Book Value		Interest Rate			Remaining Life (Years)
As of March 31, 2025
DST Program Loans, carried at cost	$	49,785	$	N/A	$	49,785		6.0	%		8.2
DST Program Loans, carried at fair value		98,546		(2)		98,544		6.9	%		9.6
Total	$	148,331	$	(2)	$	148,329		6.6	%		9.1
As of December 31, 2024
DST Program Loans, carried at cost	$	49,785	$	N/A	$	49,785		6.0	%		8.5
DST Program Loans, carried at fair value		71,085		(17)		71,068		7.0	%		9.6
Total	$	120,870	$	(17)	$	120,853		6.6	%		9.1

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

The following table summarizes our financing obligations, net as of March 31, 2025 and December 31, 2024:

	DST Interests		Unamortized		Total		Unrealized		Book
(in thousands)	Sold (1)		Program Costs		Appreciation (2)		Loss, Net (3)		Value
As of March 31, 2025
Financing obligations, carried at cost	$	507,607	$	(276)	$	—	$	N/A	$	507,331
Financing obligations, carried at fair value		1,165,224		N/A		N/A		5,240		1,170,464
Total	$	1,672,831	$	(276)	$	—	$	5,240	$	1,677,795
As of December 31, 2024
Financing obligations, carried at cost	$	507,607	$	(373)	$	—	$	N/A	$	507,234
Financing obligations, carried at fair value		877,284		N/A		N/A		1,102		878,386
Total	$	1,384,891	$	(373)	$	—	$	1,102	$	1,385,620

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

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

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

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The following table presents our DST Program activity for the three months ended March 31, 2025 and 2024:

	For the Three Months Ended March 31,
(in thousands)		2025		2024
DST Interests sold	$	294,867	$	147,297
DST Interests financed by DST Program Loans		27,461		12,161
Income earned from DST Program Loans (1)		2,191		1,581
Unrealized gain on DST Program Loans		15		—
Unrealized (loss) gain on financing obligations		(4,138)		2,821
Decrease in financing obligation liability appreciation (2)		—		(69)
Rent obligation incurred under master lease agreements (2)		17,967		16,064

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

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

We record DST Interests as financing obligation liabilities for accounting purposes. If we exercise our option to reacquire a DST Property by issuing partnership units (“OP Units”), cash or a combination of OP Units and cash in the Operating Partnership in exchange for DST Interests, we relieve the related financing obligation liability and DST Program Loans and record the issuance of the OP Units as an issuance of equity. During the three months ended March 31, 2024, 9.0 million OP Units were issued in exchange for DST Interests for a net investment of $72.0 million, in accordance with our UPREIT structure. In addition, we paid $3.2 million in cash in exchange for DST Interests during the three months ended March 31, 2024. There have been no OP Units issued in accordance with our UPREIT structure or cash paid in exchange for DST Interests during the three months ended March 31, 2025.

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

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7. FAIR VALUE

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

Fair Value Measurements on a Recurring Basis

The following table presents our financial assets and liabilities measured at fair value on a recurring basis as of March 31, 2025 and December 31, 2024:

							Total
(in thousands)	Level 1		Level 2		Level 3		Fair Value
As of March 31, 2025
Assets:
Derivative instruments	$	—	$	13,858	$	—	$	13,858
Investments in unconsolidated joint venture partnerships		—		—		37,676		37,676
Debt-related investments		—		—		29,414		29,414
Available-for-sale debt securities		—		11,648		127,401		139,049
DST Program Loans		—		—		98,544		98,544
Total assets measured at fair value	$	—	$	25,506	$	293,035	$	318,541
Liabilities:
Financing obligations	$	—	$	—	$	1,170,464	$	1,170,464
Total liabilities measured at fair value	$	—	$	—	$	1,170,464	$	1,170,464
As of December 31, 2024
Assets:
Derivative instruments	$	—	$	20,693	$	—	$	20,693
Investments in unconsolidated joint venture partnerships		—		—		38,386		38,386
Debt-related investments		—		—		28,844		28,844
Available-for-sale debt securities		—		13,370		123,187		136,557
DST Program Loans		—		—		71,068		71,068
Total assets measured at fair value	$	—	$	34,063	$	261,485	$	295,548
Liabilities:
Financing obligations	$	—	$	—	$	878,386	$	878,386
Total liabilities measured at fair value	$	—	$	—	$	878,386	$	878,386

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

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

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

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Debt-Related Investments. Our debt-related investments are unlikely to have readily available market quotations. In such cases, we will generally determine the initial value based on the acquisition price of such investments, if we acquire the investment, or the par value of such investment, if we originate the investment. Following the initial measurement, fair value is estimated by utilizing or reviewing certain of the following: (i) market yield data, (ii) discounted cash flow modeling, (iii) collateral asset performance, (iv) local or macro real estate performance, (v) capital market conditions, (vi) debt yield, debt-service coverage and/or loan-to-value ratios, and (vii) borrower financial condition and performance. These inputs are generally considered Level 3.

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

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

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

The following table presents our financial assets measured at fair value on a recurring basis using Level 3 inputs as of March 31, 2025:

	Investments in
	Unconsolidated Joint		Debt-Related		Available-For-Sale		DST Program
(in thousands)	Venture Partnerships		Investments		Debt Securities		Loans		Total
Balance as of December 31, 2024	$	38,386	$	28,844	$	123,187	$	71,068	$	261,485
Purchases and contributions		—		—		—		27,461		27,461
Paid-in-kind interest		—		570		4,145		—		4,715
Distributions received		(2,619)		—		—		—		(2,619)
Gain on financial assets		827		—		—		15		842
Foreign currency gain on investment		1,082		—		—		—		1,082
Amortization of loan origination fees (1)		—		—		69		—		69
Balance as of March 31, 2025	$	37,676	$	29,414	$	127,401	$	98,544	$	293,035

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

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The following table presents our financial assets measured at fair value on a recurring basis using Level 3 inputs as of March 31, 2024:

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

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

The following table presents our financial liabilities measured at fair value on a recurring basis using Level 3 inputs as of March 31, 2025:

	Financing
(in thousands)	Obligations
Balance as of December 31, 2024	$	878,386
DST Interests sold, net of upfront fees		287,940
Unrealized loss on financing obligations		4,138
Balance as of March 31, 2025	$	1,170,464

The following table presents our financial liabilities measured at fair value on a recurring basis using Level 3 inputs as of March 31, 2024:

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

The following table presents the quantitative inputs and assumptions used for items categorized in Level 3 of the fair value hierarchy as of March 31, 2025:

			Valuation	Unobservable	Impact to Valuation from
(in thousands)		Fair Value	Technique	Inputs	an Increase to Input
Assets:
Investments in unconsolidated joint venture partnerships	$	37,676	Direct Capitalization	Capitalization Rate		Decrease
Debt-related investments		29,414	Yield Method	Market Yield		Decrease
Available-for-sale debt securities (1)		127,401	Yield Method	Market Yield		Decrease
DST Program Loans		98,544	Yield Method	Market Yield		Decrease
Liabilities:
Financing obligations	$	1,170,464	Discounted Cash Flow	Discount Rate Exit Capitalization Rate		Decrease Decrease

(1) As of March 31, 2025, the market yield used in determining the fair value of our available-for sale debt security was 13.3%.

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

			Valuation	Unobservable	Impact to Valuation from
(in thousands)		Fair Value	Technique	Inputs	an Increase to Input
Assets:
Investments in unconsolidated joint venture partnerships	$	38,386	Direct Capitalization	Capitalization Rate		Decrease
Debt-related investments		28,844	Yield Method	Market Yield		Decrease
Available-for-sale debt securities (1)		123,187	Yield Method	Market Yield		Decrease
DST Program Loans		71,068	Yield Method	Market Yield		Decrease
Liabilities:
Financing obligations	$	878,386	Discounted Cash Flow	Discount Rate Exit Capitalization Rate		Decrease Decrease

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

Financial Assets and Liabilities Not Measured at Fair Value

As of March 31, 2025 and December 31, 2024, the fair values of cash and cash equivalents, restricted cash, tenant receivables, accounts payable and accrued expenses and distribution fees payable approximate their carrying values because of the short-term nature of these instruments. The table below includes fair values for certain of our financial instruments for which it is practicable to estimate fair value. The carrying values and fair values of these financial instruments were as follows:

		As of March 31, 2025				As of December 31, 2024
	Level in Fair	Carrying		Fair		Carrying		Fair
(in thousands)	Value Hierarchy	Value (1)		Value		Value (1)		Value
Assets:
Debt-related investments (2)	3	$	145,358	$	144,121	$	384,759	$	383,490
DST Program Loans (2)	3		49,785		49,652		49,785		49,583
Liabilities:
Line of credit	3	$	210,522	$	210,522	$	548,228	$	548,228
Term loans	3		800,000		800,000		800,000		800,000
Mortgage notes	3		1,368,365		1,355,895		1,368,946		1,340,398

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

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

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

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8. EQUITY

Securities Offerings

We may conduct continuous securities offerings that will not have a predetermined duration, subject to continued compliance with the rules and regulations of the SEC and applicable state laws. On May 3, 2022, the SEC declared our registration statement on Form S-11 with respect to our fourth public offering of up to $10.0 billion of shares of its common stock effective, and the fourth public offering commenced the same day. We ceased selling shares of our common stock under our third public offering of up to $3.0 billion of shares immediately upon the effectiveness of the registration statement for the fourth public offering. Under the fourth public offering, we offered up to $8.5 billion of shares of our common stock in the primary offering and up to $1.5 billion of shares of our common stock pursuant to our distribution reinvestment plan, in any combination of Class T-R shares, Class S-R shares, Class D-R shares and Class I-R shares. On May 16, 2024, we announced our decision to close the fourth primary public offering effective July 2, 2024. We accepted subscriptions for primary shares in the public offering through the July 1, 2024 purchase date. On August 22, 2024, we amended our registration statement on Form S-11 with respect to our fourth public offering to make it a distribution reinvestment plan only registration statement on Form S-3 pursuant to Rule 415(a)(1)(ii) under the Securities Act of 1933, as amended (the “Securities Act”) and we expect to continue making monthly distributions and the distribution reinvestment plan offering, which investors can continue to elect to participate in. On August 2, 2024, we initiated a private offering exempt from registration under the Securities Act (the “Private Offering”), which offers Class S-PR shares, Class D-PR shares and Class I-PR shares.

The Class T-R shares, Class S-R shares, Class D-R shares, Class I-R shares, Class E shares, Class S-PR shares, Class D-PR shares, and Class I-PR shares, all of which are collectively referred to herein as shares of common stock, have identical rights and privileges, including identical voting rights, but have differing fees that are payable on a class-specific basis. The per share amount of distributions paid on Class T-R shares, Class S-R shares, Class D-R shares, Class S-PR shares, and Class D-PR shares will be lower than the per share amount of distributions paid on Class E shares, Class I-R shares and Class I-PR shares because of the distribution fees payable with respect to Class T-R shares, Class S-R shares, Class D-R shares, Class S-PR shares and Class D-PR shares sold in our securities offerings.

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

During the three months ended March 31, 2025, we raised gross proceeds of approximately $21.0 million from the sale of approximately 2.8 million shares of our common stock in our securities offerings, including proceeds from our distribution reinvestment plans (“DRIP”) of approximately $7.7 million.

Common Stock

The following table describes the number of shares of each class of our common stock authorized and issued and outstanding as of March 31, 2025 and December 31, 2024:

	March 31, 2025		December 31, 2024
(in thousands)	Shares Authorized	Shares Issued and Outstanding	Shares Authorized	Shares Issued and Outstanding
Class T-R, $0.01 par value per share	100,000	26,362	100,000	26,972
Class S-R, $0.01 par value per share	100,000	41,791	100,000	43,761
Class D-R, $0.01 par value per share	100,000	5,991	100,000	6,110
Class I-R, $0.01 par value per share	600,000	58,632	600,000	58,998
Class E, $0.01 par value per share	100,000	42,060	100,000	43,190
Class S-PR, $0.01 par value per share	400,000	1,469	400,000	660
Class D-PR, $0.01 par value per share	400,000	23	400,000	13
Class I-PR, $0.01 par value per share	700,000	1,545	700,000	607

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

	Class T-R	Class S-R	Class D-R	Class I-R	Class E	Class S-PR	Class D-PR	Class I-PR	Total
(in thousands)	Shares	Shares	Shares	Shares	Shares	Shares	Shares	Shares	Shares
FOR THE THREE MONTHS ENDED MARCH 31, 2024
Balance as of December 31, 2023 (1)	28,432	48,145	6,930	65,511	48,210	—	—	—	197,228
Issuance of common stock:
Primary shares	261	250	37	453	—	—	—	—	1,001
Distribution reinvestment plan	160	270	41	371	186	—	—	—	1,028
Redemptions of common stock	(375)	(1,011)	(118)	(2,027)	(1,241)	—	—	—	(4,772)
Conversions	(76)	(63)	(15)	154	—	—	—	—	—
Balance as of March 31, 2024 (1)	28,402	47,591	6,875	64,462	47,155	—	—	—	194,485
FOR THE THREE MONTHS ENDED MARCH 31, 2025
Balance as of December 31, 2024	26,972	43,761	6,110	58,998	43,190	660	13	607	180,311
Issuance of common stock:
Primary shares	—	—	—	—	—	800	10	932	1,742
Distribution reinvestment plan	157	264	37	374	171	9	—	6	1,018
Redemptions of common stock	(301)	(1,580)	(156)	(1,860)	(1,301)	—	—	—	(5,198)
Conversions	(466)	(654)	—	1,120	—	—	—	—	—
Balance as of March 31, 2025	26,362	41,791	5,991	58,632	42,060	1,469	23	1,545	177,873

(1) There is no data presented for Class S-PR shares, Class D-PR shares and Class I-PR shares as of this date because there were no shares of such share classes outstanding.

Distributions

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

	Amount
			Common Stock
	Declared per		Distributions		Other Cash		Reinvested in		Distribution		Gross
(in thousands, except per share data)	Common Share (1)		Paid in Cash		Distributions (2)		Shares		Fees (3)		Distributions (4)
2025
March 31	$	0.10000	$	9,036	$	15,880	$	7,679	$	1,146	$	33,741
Total	$	0.10000	$	9,036	$	15,880	$	7,679	$	1,146	$	33,741
2024
March 31	$	0.10000	$	10,013	$	8,577	$	8,238	$	1,317	$	28,145
June 30		0.10000		9,787		9,865		8,046		1,254		28,952
September 30		0.10000		9,449		13,214		7,888		1,204		31,755
December 31		0.10000		9,211		15,018		7,754		1,184		33,167
Total	$	0.40000	$	38,460	$	46,674	$	31,926	$	4,959	$	122,019

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

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

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

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(4) Gross distributions are total distributions before the deduction of any distribution fees relating to Class T-R shares, Class S-R shares, Class D-R shares, Class S-PR shares and Class D-PR shares.

Redemptions and Repurchases

Below is a summary of redemptions and repurchases pursuant to our share redemption program for the three months ended March 31, 2025 and 2024. All eligible redemption requests were fulfilled for the periods presented. Eligible redemption requests are requests submitted in good order by the request submission deadline set forth in the share redemption program. Our board of directors may make exceptions to, modify or suspend our current share redemption programs if it deems such action to be in the best interest of our stockholders.

	For the Three Months Ended March 31,
(in thousands, except for per share data)	2025		2024
Number of shares redeemed or repurchased		5,198		4,772
Aggregate dollar amount of shares redeemed or repurchased	$	39,401	$	38,349
Average redemption or repurchase price per share	$	7.58	$	8.04

9. REDEEMABLE NONCONTROLLING INTERESTS

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

The Operating Partnership issued OP Units to the Advisor and Black Creek Diversified Property Advisors Group LLC (the “Former Sponsor”) as payment of the performance participation allocation (also referred to as the performance component of the advisory fee) pursuant to that certain advisory agreement by and among the Company, the Operating Partnership, and the Advisor (the “Advisory Agreement”). The Advisor and Former Sponsor subsequently transferred these OP Units to its members or their affiliates or redeemed for cash. We have classified these OP Units as redeemable noncontrolling interests in mezzanine equity on the condensed consolidated balance sheets. The redeemable noncontrolling interests are recorded at the greater of the carrying amount, adjusted for its share of the allocation of income or loss and dividends, or the redemption value, which is equivalent to fair value, of such OP Units at the end of each measurement period. As of March 31, 2025 and December 31, 2024, we had redeemable OP Units outstanding of 1.2 million and 1.2 million, respectively.

The following table summarizes the redeemable noncontrolling interests activity for the three months ended March 31, 2025 and 2024:

	For the Three Months Ended March 31,
(in thousands)	2025		2024
Balance at beginning of the year	$	9,381	$	11,746
Distributions to redeemable noncontrolling interests		(124)		(144)
Redemptions of redeemable noncontrolling interests		(500)		—
Net loss attributable to redeemable noncontrolling interests		(126)		(111)
Change from securities and cash flow hedging activities attributable to redeemable noncontrolling interests		(16)		24
Redemption value allocation adjustment to redeemable noncontrolling interests (1)		379		(200)
Ending balance	$	8,994	$	11,315

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

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10. NONCONTROLLING INTERESTS

OP Units

As of March 31, 2025 and December 31, 2024, the Operating Partnership had issued OP Units to third-party investors, representing 46.7% and 46.6%, respectively, of limited partnership interests (excludes interests held by redeemable noncontrolling interest holders).

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

	For the Three Months Ended March 31,
(in thousands)	2025	2024
Balance at beginning of period	158,239	78,737
Issuance of units	—	8,976
Redemption of units	(1,199)	(1,009)
Balance at end of period	157,040	86,704

Subject to certain restrictions and limitations, the holders of OP Units may redeem all or a portion of their OP Units for either: shares of the equivalent class of common stock, cash or a combination of both. If we elect to redeem OP Units for shares of our common stock, we will generally deliver one share of our common stock for each such OP Unit redeemed (subject to any redemption fees withheld), and such shares may, subsequently, only be redeemed for cash in accordance with the terms of our share redemption program. If we elect to redeem OP Units for cash, the cash delivered per unit will equal the then-current NAV per unit of the applicable class of OP Units (subject to any redemption fees withheld), which will equal the then-current NAV per share of our corresponding class of shares. During the three months ended March 31, 2025 and 2024, the aggregate amount of OP Units redeemed was $9.1 million and $8.1 million, respectively. The estimated maximum redemption value of the aggregate outstanding OP Units issued to third-party investors as of March 31, 2025 and December 31, 2024 was $1.20 billion and $1.19 billion, respectively.

11. RELATED PARTY TRANSACTIONS

Summary of Fees and Expenses

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

	For the Three Months Ended March 31,				Payable as of
(in thousands)	2025		2024		March 31, 2025		December 31, 2024
Selling commissions and dealer manager fees (1)	$	50	$	101	$	—	$	—
Ongoing distribution fees (1)(2)		2,634		2,286		906		906
Advisory fees—fixed component		11,404		9,972		3,909		3,646
Other fees and expense reimbursements—Advisor (3)(4)		2,949		3,683		5,304		6,074
Other expense reimbursements—Dealer Manager		45		40		45		125
Property accounting fee (5)		588		477		211		187
DST Program selling commissions, dealer manager and distribution fees (1)		3,940		2,351		617		501
Other DST Program related costs—Advisor (4)		4,186		2,252		211		179
Total	$	25,796	$	21,162	$	11,203	$	11,618

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

(2) The distribution fees are payable monthly in arrears. Additionally, we accrue for future estimated amounts payable related to ongoing distribution fees. The future estimated amounts payable were approximately $67.6 million and $69.9 million as of March 31, 2025 and December 31, 2024, respectively.

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

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

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

Certain of the expense reimbursements described in the table above include a portion of the compensation expenses of officers and employees of the Advisor or its affiliates related to activities for which the Advisor did not otherwise receive a separate fee. Amounts incurred related to these compensation expenses for the three months ended March 31, 2025 and 2024 were approximately $2.6 million and $3.4 million, respectively. No reimbursement is made for compensation of our named executive officers unless the named executive officer is providing stockholder services, as outlined in the Advisory Agreement.

Mortgage Loan Origination Program

During the three months ended March 31, 2025, we sold two loans, including one of which was held for sale as of December 31, 2024, totaling $285.4 million to a joint venture partnership in which we have an ownership interest.

12. NET INCOME (LOSS) PER COMMON SHARE

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

	For the Three Months Ended March 31,
(in thousands, except per share data)	2025		2024
Net loss attributable to common stockholders—basic	$	(18,026)	$	(15,001)
Net loss attributable to redeemable noncontrolling interests		(126)		(111)
Net loss attributable to dilutive noncontrolling interests		(15,899)		(6,477)
Net loss attributable to common stockholders—diluted	$	(34,051)	$	(21,589)
Weighted-average shares outstanding—basic		178,628		195,679
Incremental weighted-average shares effect of conversion of noncontrolling interests		158,819		85,694
Weighted-average shares outstanding—diluted		337,447		281,373
Net loss per share attributable to common stockholders:
Basic	$	(0.10)	$	(0.08)
Diluted	$	(0.10)	$	(0.08)

13. SUPPLEMENTAL CASH FLOW INFORMATION

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

	For the Three Months Ended March 31,
(in thousands)	2025		2024
Supplemental disclosure of non-cash investing and financing activities:
Distributions reinvested in common stock	$	7,703	$	8,275
Decrease in accrued future ongoing distribution fees		(2,332)		(2,439)
Increase in DST Program Loans receivable through DST Program capital raising		27,461		12,161
Issuances of OP Units for DST Interests		—		72,034

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Restricted Cash

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

	For the Three Months Ended March 31,
(in thousands)	2025		2024
Beginning of period:
Cash and cash equivalents	$	19,554	$	15,052
Restricted cash		7,865		4,614
Cash, cash equivalents and restricted cash	$	27,419	$	19,666
End of period:
Cash and cash equivalents	$	33,998	$	15,739
Restricted cash		9,675		4,184
Cash, cash equivalents and restricted cash	$	43,673	$	19,923

14. COMMITMENTS AND CONTINGENCIES

Litigation

From time to time, we and our subsidiaries may be involved in various claims and legal actions arising in the ordinary course of business. As of March 31, 2025, we and our subsidiaries were not involved in any material legal proceedings.

Environmental Matters

A majority of the properties we acquire have been or will be subject to environmental reviews either by us or the previous owners. In addition, we may incur environmental remediation costs associated with certain land parcels we may acquire in connection with the development of land. We have acquired or may in the future acquire certain properties in urban and industrial areas that may have been leased to or previously owned by commercial and industrial companies that discharged hazardous materials. We may purchase various environmental insurance policies to mitigate our exposure to environmental liabilities. We are not aware of any unmitigated environmental liabilities that we believe would have a material adverse effect on our business, financial condition, or results of operations as of March 31, 2025.

Unfunded Commitments

As of March 31, 2025, we had unfunded commitments of $178.5 million to fund various investments in real estate debt and securities and investments in unconsolidated joint venture partnerships.

15. SEGMENT FINANCIAL INFORMATION

Our six reportable segments are residential properties, industrial properties, retail properties, office properties, other properties and investments in real estate debt and securities. Factors used to determine our reportable segments include the physical and economic characteristics of our properties and/or investments and the related operating activities. Our chief operating decision maker (“CODM”) is Jay W. Glaubach, Partner and Co-President.

Our CODM relies on net operating income, among other factors, to make decisions about allocating resources and assessing segment performance. Net operating income is the key performance metric that captures the unique operating characteristics of each segment. Net investment in real estate properties, investments in real estate debt and securities, restricted cash, tenant receivables, straight-line rent receivables and other assets directly assignable to a property or investment are allocated to the segment groupings. Corporate items that are not directly assignable to a property, such as investments in unconsolidated joint venture partnerships and DST Program Loans, are not allocated to segment groupings, but are reflected as reconciling items.

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The following table reflects our total consolidated assets by segment as of March 31, 2025 and December 31, 2024:

	As of
(in thousands)	March 31, 2025		December 31, 2024 (1)
Assets:
Residential properties	$	2,110,930	$	2,126,453
Industrial properties		1,633,475		1,664,506
Retail properties		493,088		497,184
Office properties		364,440		367,025
Other properties (2)		176,149		149,847
Investments in real estate debt and securities		313,194		353,258
Total segment assets		5,091,276		5,158,273
Corporate		493,590		572,976
Total assets	$	5,584,866	$	5,731,249

(1) As of December 31, 2024, our debt-related investment classified as held for sale is included in the corporate grouping.

(2) Includes self-storage properties.

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

The following table is a reconciliation of our reported net income (loss) attributable to common stockholders to our net operating income for the three months ended March 31, 2025 and 2024:

	For the Three Months Ended
	March 31,
(in thousands)	2025		2024
Net loss attributable to common stockholders	$	(18,026)	$	(15,001)
Real estate-related depreciation and amortization		45,873		35,470
General and administrative expenses		2,905		3,337
Advisory fees		11,404		9,972
Performance participation allocation		—		—
Acquisition costs and reimbursements		1,355		2,043
Income from unconsolidated joint venture partnerships		(3,514)		(2,282)
Interest expense		55,384		44,234
Gain on sale of real estate property		(9,983)		—
Unrealized gain on DST Program Loans		(15)		—
Unrealized loss (gain) on financing obligations		4,138		(2,821)
Provision for current expected credit losses		(99)		(133)
Other income and expenses		(1,315)		(1,289)
Income tax expense		4,638		—
Net loss attributable to redeemable noncontrolling interests		(126)		(111)
Net loss attributable to noncontrolling interests		(15,943)		(6,477)
Net operating income	$	76,676	$	66,942

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The following table sets forth consolidated financial results by segment for the three months ended March 31, 2025 and 2024:

									Other		Debt and
(in thousands)	Residential		Industrial		Retail		Office		Properties		Securities		Consolidated
For the Three Months Ended March 31, 2025
Rental revenues	$	42,128	$	32,869	$	15,056	$	13,434	$	2,909	$	—	$	106,396
Debt-related income		—		—		—		—		—		9,989		9,989
Rental expenses		(20,014)		(7,757)		(4,254)		(6,517)		(1,167)		—		(39,709)
Net operating income	$	22,114	$	25,112	$	10,802	$	6,917	$	1,742	$	9,989	$	76,676
For the Three Months Ended March 31, 2024
Rental revenues	$	33,085	$	26,455	$	15,469	$	12,194	$	928	$	—	$	88,131
Debt-related income		—		—		—		—		—		11,311		11,311
Rental expenses		(15,672)		(6,170)		(3,952)		(6,355)		(351)		—		(32,500)
Net operating income	$	17,413	$	20,285	$	11,517	$	5,839	$	577	$	11,311	$	66,942

16. SUBSEQUENT EVENTS

Renewal of Advisory Agreement

We, the Operating Partnership, and the Advisor previously entered into that certain Second Amended and Restated Advisory Agreement (2024), dated as of August 2, 2024 (the “2024 Advisory Agreement”). The term of the 2024 Advisory Agreement continued through April 30, 2025, subject to renewal for an unlimited number of one-year periods. The Company, the Operating Partnership and the Advisor renewed the 2024 Advisory Agreement on substantially the same terms through April 30, 2026, by entering into the Amended and Restated Advisory Agreement (2025) (the “2025 Advisory Agreement”), effective as of April 30, 2025. In addition, the 2025 Advisory Agreement reflects certain immaterial amendments to clarify the descriptions of certain services that will continue to be provided by the Advisor and certain fees and expenses for which the Advisor will continue to be paid and/or reimbursed, as well as to clarify the meanings of certain defined terms.

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

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

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

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

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

● the impact of macroeconomic trends, such as the unemployment rate, availability of credit, impact of inflation, changes in interest rates, uncertainties regarding actual and potential shifts in the U.S. and foreign trade, economic and other policies, including with respect to treaties and tariffs and the conflicts in Ukraine and in the Middle East, which may have a negative effect on the following, among other things:

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

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

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

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

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

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

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

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

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

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

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

● environmental, regulatory and/or safety requirements; and

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

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For further discussion of these and other factors, see Part I, Item 1A, “Risk Factors” in our 2024 Form 10-K. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of future events, new information or otherwise.

OVERVIEW

General

Ares Real Estate Income Trust Inc. is a NAV-based perpetual life REIT that was formed on April 11, 2005, as a Maryland corporation. We are primarily focused on investing in and operating a diverse portfolio of real property. As of March 31, 2025, our consolidated real property portfolio consisted of 124 properties, totaling approximately 24.4 million square feet located in 35 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, six industrial properties, 154 credit lease properties, 13 data center investments and 11 debt-related investments as of March 31, 2025. Unless otherwise noted, these unconsolidated properties and investments are excluded from the presentation of our portfolio data herein.

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

We intend to offer shares of our common stock on a continuous basis. We also intend to conduct an ongoing distribution reinvestment plan offering for our stockholders to reinvest distributions in our shares. During the three months ended March 31, 2025, we raised gross proceeds of approximately $21.0 million from the sale of approximately 2.8 million shares of our common stock in our ongoing securities offerings, including proceeds from our distribution reinvestment plans of approximately $7.7 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. 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 of the Internal Revenue Code of 1986, as amended (the “Code”). Similar to our prior private placement offerings, we expect that the DST Program will give us the opportunity to expand and diversify our capital raise strategies by offering what we believe to be an attractive and unique investment product for investors that may be seeking replacement properties to complete like-kind exchange transactions under Section 1031 of the Code. We also offer DST Program Loans to finance no more than 50% of the purchase price of the DST Interests to certain purchasers of the DST Interests. During the three months ended March 31, 2025, we sold $294.9 million of gross interests related to the DST Program, $27.5 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.

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As of March 31, 2025, our total investment portfolio consisted of the following sector allocations:

Real Estate (1)

(1) Calculated using the fair value of our real property, investments in unconsolidated joint venture partnerships, investments in real estate-related securities and debt-related investments not associated with the DST Program (determined in accordance with our valuation procedures). Includes our pro-rata share of fair value of real estate investments in our unconsolidated joint venture partnerships (determined in accordance with our valuation procedures).

We currently group our real property portfolio into five categories: residential, industrial, retail, office and other. The following table summarizes our real property portfolio by category as of March 31, 2025:

						Average
				% of Total		Effective Annual						% of
($ and square feet in thousands,	Number of	Number of	Rentable	Rentable		Base Rent per		%		Aggregate		Aggregate
except for per square foot data)	Markets (1)	Real Properties	Square Feet	Square Feet		Square Foot (2)		Leased		Fair Value		Fair Value
Residential properties	11	22	6,070	24.9	%	$	28.87	91.5	%	$	2,345,050	40.2	%
Industrial properties	28	67	13,841	56.7			7.11	97.4			2,128,750	36.5
Retail properties	8	18	2,292	9.4			20.40	94.8			703,950	12.1
Office properties	6	7	1,381	5.6			38.00	80.6			462,500	7.9
Other properties	5	10	837	3.4			18.33	83.1			193,700	3.3
Total real property portfolio	35	124	24,421	100.0	%	$	15.45	94.2	%	$	5,833,950	100.0	%

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

(2) Amount calculated as total annualized base rent, which includes the impact of any contractual tenant concessions (cash basis) per the terms of the lease, divided by total lease square footage as of March 31, 2025.

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As of March 31, 2025, we had three floating-rate debt-related investments with a weighted-average interest rate of 9.0% and a weighted-average remaining life of 1.1 years. As of March 31, 2025, the aggregate outstanding principal was $174.8 million, the aggregate carrying amount was $174.1 million and total aggregate current commitments were up to $209.3 million.

As of March 31, 2025, we had three available-for-sale debt securities, which were comprised of one CRE CLO, one CMBS and one preferred equity investment. As of March 31, 2025, the aggregate fair value of these investments was $139.0 million.

During the three months ended March 31, 2025, we originated one loan with a principal balance of $91.6 million. Additionally, during the three months ended March 31, 2025 we sold two loans, including one of which was held for sale as of December 31, 2024, totaling $285.4 million, equal to the carrying cost of the debt-related investments on the dates of sale, to a joint venture partnership in which we have an ownership interest. We have recognized $0.9 million of origination fee income during the three months ended March 31, 2025 related to these debt-related investments.

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)), self-storage properties and investments in real estate debt and securities. To a lesser extent, we strategically invest in and/or intend to invest in geographies outside of the U.S., which may include Canada, Mexico, the United Kingdom, Europe and other foreign jurisdictions, and in other sectors such as 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.

Net Asset Value

Our board of directors, including a majority of our independent directors, has adopted valuation procedures, as amended from time to time, that contain a comprehensive set of methodologies to be used in connection with the calculation of our NAV. With the approval of our board of directors, including a majority of our independent directors, we have engaged Altus Group U.S. Inc., a third-party valuation firm, to serve as our independent valuation advisor (“Altus Group” or the “Independent Valuation Advisor”) with respect to helping us administer the valuation and review process for the real properties in our portfolio, providing monthly real property appraisals and valuations for certain of our debt-related assets, reviewing annual third-party real property appraisals, reviewing the internal valuations of DST Program Loans and debt-related liabilities performed by our Advisor, providing quarterly valuations of our properties subject to master lease obligations associated with the DST Program, and assisting in the development and review of our valuation procedures. See Exhibit 99.2 of this Quarterly Report on Form 10-Q for a more detailed description of our valuation procedures, including important disclosure regarding real property valuations provided by the Independent Valuation Advisor.

Our valuation procedures, which address specifically each category of our assets and liabilities and are applied separately from the preparation of our financial statements in accordance with GAAP, involve adjustments from historical cost. There are certain factors which cause NAV to be different from total equity or stockholders’ equity on a GAAP basis. Most significantly, the valuation of our real assets, which is the largest component of our NAV calculation, is provided to us by the Independent Valuation Advisor. For GAAP purposes, these assets are generally recorded at depreciated or amortized cost. Another example that will cause our NAV to differ from our GAAP total equity or stockholders’ equity is the straight-lining of rent, which results in a receivable for GAAP purposes that is not included in the determination of our NAV. The fair values of our assets and certain liabilities are determined using widely accepted methodologies and, as appropriate, the GAAP principles within the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification under Topic 820, Fair Value Measurements and Disclosures and are used by ALPS in calculating our NAV per share. However, our valuation procedures and our NAV are not subject to GAAP and will not be subject to independent audit. We did not develop our valuation procedures with the intention of complying with fair value concepts under GAAP and, therefore, there could be differences between our fair values and the fair values derived from the principal market or most advantageous market concepts of establishing fair value under GAAP. The aggregate real property valuation of $5.83 billion compares to a GAAP basis of real properties (net of intangible lease liabilities and before accumulated amortization and depreciation) of $5.50 billion, representing a difference of approximately $337.5 million, or 6.1%.

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

The following table sets forth the components of Aggregate Fund NAV as of March 31, 2025 and December 31, 2024:

	As of
(in thousands)	March 31, 2025		December 31, 2024
Investments in residential properties	$	2,345,050	$	2,331,100
Investments in industrial properties		2,128,750		2,102,900
Investments in retail properties		703,950		694,900
Investments in office properties		462,500		464,850
Investments in other properties (1)		193,700		164,300
Total investment in real estate properties		5,833,950		5,758,050
Investments in real estate debt and securities		313,095		549,471
Investments in unconsolidated joint venture partnerships		316,800		235,413
DST Program Loans		148,196		120,651
Total investments		6,612,041		6,663,585
Cash and cash equivalents		33,998		19,554
Restricted cash		9,675		7,865
Other assets		58,891		71,071
Line of credit, term loans and mortgage notes		(2,384,954)		(2,723,502)
Financing obligations associated with our DST Program		(1,627,277)		(1,335,598)
Other liabilities		(103,977)		(105,577)
Accrued performance participation allocation		—		—
Accrued advisory fees		(3,909)		(3,646)
Noncontrolling interests in consolidated joint venture partnerships		(18,433)		(15,832)
Aggregate Fund NAV	$	2,576,055	$	2,577,920
Total Fund Interests outstanding		336,093		339,795

(1) Includes self-storage properties.

The following table sets forth the NAV per Fund Interest as of March 31, 2025:

(in thousands, except per Fund Interest data)	Total		Class T-R Shares		Class S-R Shares		Class D-R Shares		Class I-R Shares		Class E Shares		Class S-PR Shares		Class D-PR Shares		Class I-PR Shares		OP Units
Monthly NAV	$	2,576,055	$	202,055	$	320,318	$	45,920	$	449,395	$	322,379	$	11,256	$	180	$	11,840	$	1,212,712
Fund Interests outstanding		336,093		26,362		41,791		5,991		58,632		42,060		1,469		23		1,545		158,220
NAV Per Fund Interest	$	7.6647	$	7.6647	$	7.6647	$	7.6647	$	7.6647	$	7.6647	$	7.6647	$	7.6647	$	7.6647	$	7.6647

Under GAAP, we record liabilities for ongoing distribution fees that we estimate we may pay in future periods for the Fund Interests. As of March 31, 2025, we estimated approximately $67.6 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.

Financing obligations associated with our DST Program, as reflected in our NAV table above, represent outstanding proceeds raised from our private placements under the DST Program due to the fact that we have an option (which may or may not be exercised) to purchase the interests in the DSTs and thereby acquire the real property owned by the trusts. We may acquire these properties using

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OP Units, cash, or a combination of both. See “Note 6 to the Condensed Consolidated Financial Statements” for additional details regarding our DST Program. We may use proceeds raised from our DST Program for the repayment of debt, acquisition of properties and other investments, distributions to our stockholders, payments under our debt obligations and master lease agreements related to properties in our DST Program, redemption payments, capital expenditures and other general corporate purposes. We pay our Advisor an annual, fixed component of our advisory fee of 1.10% of the consideration received for selling interests in DST Properties to third-party investors, net of upfront fees and expense reimbursements payable out of gross proceeds from the sale of such interests and DST Interests financed through DST Program Loans.

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

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

The valuations of our real properties as of March 31, 2025, excluding certain newly acquired properties that are currently held at cost which we believe reflects the fair value of such properties, were provided by the Independent Valuation Advisor in accordance with our valuation procedures. Certain key assumptions that were used by the Independent Valuation Advisor in the discounted cash flow analysis are set forth in the following table based on weighted-averages by property type.

											Weighted-
	Residential		Industrial		Retail		Office		Other		Average Basis
Exit capitalization rate	5.3	%	5.8	%	6.4	%	7.3	%	5.6	%	5.7	%
Discount rate / internal rate of return	7.0	%	7.4	%	7.3	%	8.8	%	7.7	%	7.4	%
Average holding period (years)	10.0		10.0		10.0		10.0		10.0		10.0

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

	Hypothetical											Weighted-
Input	Change	Residential		Industrial		Retail		Office		Other		Average Values
Exit capitalization rate (weighted-average)	0.25% decrease	3.2	%	3.0	%	2.3	%	2.5	%	2.8	%	3.0	%
	0.25% increase	(2.9)	%	(2.8)	%	(2.2)	%	(2.3)	%	(2.6)	%	(2.7)	%
Discount rate (weighted-average)	0.25% decrease	2.0	%	2.0	%	1.9	%	2.0	%	1.9	%	2.0	%
	0.25% increase	(1.9)	%	(2.0)	%	(1.8)	%	(2.0)	%	(1.9)	%	(1.9)	%

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

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whereby we assume associated pre-existing debt that is above- or below-market. As of March 31, 2025, we classified all of our debt as intended to be held to maturity, and our liabilities included mark-to-market adjustments for pre-existing debt that we assumed upon acquisition. We currently estimate the fair value of our debt (inclusive of associated interest rate hedges) that was intended to be held to maturity as of March 31, 2025 was $21.0 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 $21.0 million, or $0.07 per share, not taking into account all of the other items that impact our monthly NAV, as of March 31, 2025.

Reconciliation of Stockholders’ Equity and Noncontrolling Interests to NAV

The following table reconciles stockholders’ equity and noncontrolling interests per our condensed consolidated balance sheet to our NAV as of March 31, 2025:

(in thousands)	As of March 31, 2025
Total stockholders' equity	$	691,620
Noncontrolling interests		616,093
Total equity under GAAP		1,307,713
Adjustments:
Accrued distribution fee (1)		67,590
Redeemable noncontrolling interests (2)		8,994
Unrealized net appreciation (depreciation) on real estate and financial assets and liabilities (3)		387,765
Unrealized gain (loss) on investments in unconsolidated joint venture partnerships (4)		23,947
Accumulated depreciation and amortization (5)		833,769
Other adjustments (6)		(53,723)
Aggregate Fund NAV	$	2,576,055

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

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

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

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

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

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

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Performance

Our NAV increased from $7.59 per share as of December 31, 2024 to $7.66 per share as of March 31, 2025. 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.

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

					One-Year
	Trailing				(Trailing		Three-Year		Five-Year		Ten-Year		Since Inception
(as of March 31, 2025) (1)	Three-Months		Year-to-Date		12-Months)		Annualized		Annualized		Annualized		Annualized (2)
Class T-R Share Total Return (with upfront selling commissions and dealer manager fees) (3)	(1.31)	%	(1.31)	%	0.53	%	(1.41)	%	3.69	%	4.22	%	5.52	%
Adjusted Class T-R Share Total Return (with upfront selling commissions and dealer manager fees) (continued inclusion of mark-to-market adjustments for borrowing-related interest rate hedge and debt instruments) (4)	(2.11)	%	(2.11)	%	(1.08)	%	(1.83)	%	3.97	%	4.24	%	5.53	%
Difference	0.80	%	0.80	%	1.61	%	0.42	%	(0.28)	%	(0.02)	%	(0.01)	%
Class T-R Share Total Return (without upfront selling commissions and dealer manager fees) (3)	2.15	%	2.15	%	4.05	%	(0.27)	%	4.41	%	4.53	%	5.63	%
Adjusted Class T-R Share Total Return (without upfront selling commissions and dealer manager fees) (continued inclusion of mark-to-market adjustments for borrowing-related interest rate hedge and debt instruments) (4)	1.31	%	1.31	%	2.38	%	(0.70)	%	4.69	%	4.54	%	5.64	%
Difference	0.84	%	0.84	%	1.67	%	0.43	%	(0.28)	%	(0.01)	%	(0.01)	%
Class S-R Share Total Return (with upfront selling commissions and dealer manager fees) (3)	(1.31)	%	(1.31)	%	0.53	%	(1.41)	%	3.69	%	4.22	%	5.52	%
Adjusted Class S-R Share Total Return (with upfront selling commissions and dealer manager fees) (continued inclusion of mark-to-market adjustments for borrowing-related interest rate hedge and debt instruments) (4)	(2.11)	%	(2.11)	%	(1.08)	%	(1.83)	%	3.97	%	4.24	%	5.53	%
Difference	0.80	%	0.80	%	1.61	%	0.42	%	(0.28)	%	(0.02)	%	(0.01)	%
Class S-R Share Total Return (without upfront selling commissions and dealer manager fees) (3)	2.15	%	2.15	%	4.05	%	(0.27)	%	4.41	%	4.53	%	5.63	%
Adjusted Class S-R Share Total Return (without upfront selling commissions and dealer manager fees) (continued inclusion of mark-to-market adjustments for borrowing-related interest rate hedge and debt instruments) (4)	1.31	%	1.31	%	2.38	%	(0.70)	%	4.69	%	4.54	%	5.64	%
Difference	0.84	%	0.84	%	1.67	%	0.43	%	(0.28)	%	(0.01)	%	(0.01)	%
Class D-R Share Total Return (3)	2.30	%	2.30	%	4.67	%	0.33	%	5.04	%	5.13	%	5.81	%
Adjusted Class D-R Share Total Return (continued inclusion of mark-to-market adjustments for borrowing-related interest rate hedge and debt instruments) (4)	1.46	%	1.46	%	3.00	%	(0.11)	%	5.32	%	5.14	%	5.82	%
Difference	0.84	%	0.84	%	1.67	%	0.44	%	(0.28)	%	(0.01)	%	(0.01)	%
Class I-R Share Total Return (3)	2.36	%	2.36	%	4.94	%	0.58	%	5.30	%	5.46	%	6.18	%
Adjusted Class I-R Share Total Return (continued inclusion of mark-to-market adjustments for borrowing-related interest rate hedge and debt instruments) (4)	1.52	%	1.52	%	3.25	%	0.14	%	5.58	%	5.47	%	6.19	%
Difference	0.84	%	0.84	%	1.69	%	0.44	%	(0.28)	%	(0.01)	%	(0.01)	%
Class E Share Return Total Return (3)	2.36	%	2.36	%	4.94	%	0.58	%	5.30	%	5.48	%	6.21	%
Adjusted Class E Share Total Return (continued inclusion of mark-to-market adjustments for borrowing-related interest rate hedge and debt instruments) (4)	1.52	%	1.52	%	3.25	%	0.14	%	5.58	%	5.49	%	6.23	%
Difference	0.84	%	0.84	%	1.69	%	0.44	%	(0.28)	%	(0.01)	%	(0.02)	%

37

					One-Year
	Trailing				(Trailing		Three-Year		Five-Year		Ten-Year		Since Inception
(as of March 31, 2025) (1)	Three-Months		Year-to-Date		12-Months)		Annualized		Annualized		Annualized		Annualized (2)
Class S-PR Share Total Return (with upfront selling commissions and dealer manager fees) (3)	(1.43)	%	(1.43)	%	n/a	%	n/a	%	n/a	%	n/a	%	1.67	%
Adjusted Class S-PR Share Total Return (with upfront selling commissions and dealer manager fees) (continued inclusion of mark-to-market adjustments for borrowing-related interest rate hedge and debt instruments) (4)	(2.23)	%	(2.23)	%	n/a	%	n/a	%	n/a	%	n/a	%	1.19	%
Difference	0.80	%	0.80	%	n/a	%	n/a	%	n/a	%	n/a	%	0.48	%
Class S-PR Share Total Return (without upfront selling commissions and dealer manager fees) (3)	2.15	%	2.15	%	n/a	%	n/a	%	n/a	%	n/a	%	5.36	%
Adjusted Class S-PR Share Total Return (without upfront selling commissions and dealer manager fees) (continued inclusion of mark-to-market adjustments for borrowing-related interest rate hedge and debt instruments) (4)	1.31	%	1.31	%	n/a	%	n/a	%	n/a	%	n/a	%	4.86	%
Difference	0.84	%	0.84	%	n/a	%	n/a	%	n/a	%	n/a	%	0.50	%
Class D-PR Share Total Return (with upfront selling commissions) (3)	0.76	%	0.76	%	n/a	%	n/a	%	n/a	%	n/a	%	1.82	%
Adjusted Class D-PR Share Total Return (with upfront selling commissions) (continued inclusion of mark-to-market adjustments for borrowing-related interest rate hedge and debt instruments) (4)	(0.06)	%	(0.06)	%	n/a	%	n/a	%	n/a	%	n/a	%	1.21	%
Difference	0.82	%	0.82	%	n/a	%	n/a	%	n/a	%	n/a	%	0.61	%
Class D-PR Share Total Return (without upfront selling commissions) (3)	2.30	%	2.30	%	n/a	%	n/a	%	n/a	%	n/a	%	3.37	%
Adjusted Class D-PR Share Total Return (without upfront selling commissions) (continued inclusion of mark-to-market adjustments for borrowing-related interest rate hedge and debt instruments) (4)	1.46	%	1.46	%	n/a	%	n/a	%	n/a	%	n/a	%	2.76	%
Difference	0.84	%	0.84	%	n/a	%	n/a	%	n/a	%	n/a	%	0.61	%
Class I-PR Share Total Return (3)	2.36	%	2.36	%	n/a	%	n/a	%	n/a	%	n/a	%	5.87	%
Adjusted Class I-PR Share Total Return (continued inclusion of mark-to-market adjustments for borrowing-related interest rate hedge and debt instruments) (4)	1.52	%	1.52	%	n/a	%	n/a	%	n/a	%	n/a	%	5.38	%
Difference	0.84	%	0.84	%	n/a	%	n/a	%	n/a	%	n/a	%	0.49	%

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

(2) NAV inception date for Class T-R shares, Class S-R shares, Class D-R shares, Class I-R shares (formerly known as Class T shares, Class S shares, Class D shares and Class I shares, respectively) and Class E shares was September 30, 2012, which is when we first sold shares of our common stock after converting to an NAV-based REIT on July 12, 2012. Investors in our fixed price offerings prior to NAV inception on September 30, 2012 are likely to have a lower return. The inception date for Class I-PR shares and Class S-PR shares was September 3, 2024 and the inception date for Class D-PR was December 2, 2024, which is when we first sold shares of such share classes of our common stock. Since inception returns are not annualized for shared classes outstanding less than one year.

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

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

Trends Affecting Our Business

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

Commercial real estate property transaction volumes increased year over year across most major property types with enhanced liquidity from capital markets sources supporting market activity during the first quarter; however, the commercial real estate markets faced headwinds in the current quarter due to heightened interest rates and the uncertainty around the recent trade policy shifts.

Continued rising operating costs, such as property insurance and raw material costs for property development and improvements, placed pressure on cash flow performance across many real estate property types in the first quarter of 2025. Office properties, in particular, continue to experience challenges driven by remote work and elevated costs to operate, improve or repurpose office properties. These factors have largely resulted in lower demand for office space and have driven elevated levels of vacancy rates and default rates. Offsetting some of these challenges, there has been a significant decline in new commercial real estate development that began in 2023 and has continued benefitting existing in-demand property types. Ultimately, this lack of new future inventory may result in a shortage of contemporary, in-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 and capitalization rates remained steady 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.

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

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RESULTS OF OPERATIONS

Summary of 2025 Activities

During the three months ended March 31, 2025, we completed the following activities:

● We acquired one industrial property and two self-storage properties for an aggregate contractual purchase price of approximately $30.4 million. We invested an aggregate of $84.6 million in our unconsolidated joint venture partnerships and our investments in real estate debt and securities.

● We sold three industrial properties for net proceeds of approximately $25.7 million and recorded a net gain on sale of $10.0 million related to the sale of this property.

● We leased approximately 0.5 million square feet of our commercial properties, which were substantially renewals.

● We increased our leverage ratio from 41.2% as of December 31, 2024, to 36.3% as of March 31, 2025. Our leverage ratio for reporting purposes is calculated as the outstanding principal balance of our borrowings less cash and cash equivalents divided by the fair value of our real property, net investments in unconsolidated joint venture partnerships, investments in real estate-related securities and debt-related investments not associated with the DST Program (determined in accordance with our valuation procedures).

● We raised gross proceeds of $315.9 million from the sale of our common stock and DST Interests. This includes $21.0 million from the sale of 2.8 million shares of our common stock in our securities offerings, including proceeds from our distribution reinvestment plans of $7.7 million, and $294.9 million of gross capital through private placement offerings by selling DST Interests, $27.5 million of which were financed by DST Program Loans.

● We redeemed 5.2 million shares of common stock at a weighted-average purchase price of $7.58 per share for an aggregate amount of $39.4 million.

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Results for the Three Months Ended March 31, 2025 Compared to Prior Periods

The following table sets forth information regarding our consolidated results of operations for the three months ended March 31, 2025, as compared to the three months ended December 31, 2024, and for the three months ended March 31, 2025, as compared to the three months ended March 31, 2024:

	For the Three Months Ended				Change				For the Three Months Ended March 31,				Change
($ in thousands, except per share data)	March 31, 2025		December 31, 2024		$		%		2025		2024		$		%
Revenues:
Rental revenues	$	106,396	$	97,435	$	8,961	9.2	%	$	106,396	$	88,131	$	18,265	20.7	%
Debt-related income		9,989		10,506		(517)	(4.9)			9,989		11,311		(1,322)	(11.7)
Total revenues		116,385		107,941		8,444	7.8			116,385		99,442		16,943	17.0
Operating expenses:
Rental expenses		39,709		32,765		6,944	21.2			39,709		32,500		7,209	22.2
Real estate-related depreciation and amortization		45,873		41,786		4,087	9.8			45,873		35,470		10,403	29.3
General and administrative expenses		2,905		3,452		(547)	(15.8)			2,905		3,337		(432)	(12.9)
Advisory fees		11,404		10,697		707	6.6			11,404		9,972		1,432	14.4
Acquisition costs and reimbursements		1,355		1,474		(119)	(8.1)			1,355		2,043		(688)	(33.7)
Total operating expenses		101,246		90,174		11,072	12.3			101,246		83,322		17,924	21.5
Other income (expenses):
Income from unconsolidated joint venture partnerships		3,514		3,482		32	0.9			3,514		2,282		1,232	54.0
Interest expense		(55,384)		(50,780)		(4,604)	(9.1)			(55,384)		(44,234)		(11,150)	(25.2)
Gain on sale of real estate property		9,983		11,865		(1,882)	(15.9)			9,983		—		9,983	NM
Unrealized gain on DST Program Loans		15		147		(132)	(89.8)			15		—		15	NM
Unrealized (loss) gain on financing obligations		(4,138)		(11,002)		6,864	62.4			(4,138)		2,821		(6,959)	NM
Gain on extinguishment of debt and financing obligations, net		—		19,250		(19,250)	(100.0)			—		—		—	NM
Gain on derivative instruments		—		402		(402)	(100.0)			—		—		—	NM
Provision for current expected credit losses		99		59		40	67.8			99		133		(34)	(25.6)
Other income and expenses		1,315		1,908		(593)	(31.1)			1,315		1,289		26	2.0
Total other income (expenses)		(44,596)		(24,669)		(19,927)	(80.8)			(44,596)		(37,709)		(6,887)	(18.3)
Net loss before income tax expense		(29,457)		(6,902)		(22,555)	NM			(29,457)		(21,589)		(7,868)	(36.4)
Income tax expense		(4,638)		(3,178)		(1,460)	(45.9)			(4,638)		—		(4,638)	NM
Net loss		(34,095)		(10,080)		(24,015)	NM			(34,095)		(21,589)		(12,506)	(57.9)
Net loss attributable to redeemable noncontrolling interests		126		38		88	NM			126		111		15	13.5
Net loss attributable to noncontrolling interests		15,943		4,522		11,421	NM			15,943		6,477		9,466	NM
Net loss attributable to common stockholders	$	(18,026)	$	(5,520)	$	(12,506)	NM	%	$	(18,026)	$	(15,001)	$	(3,025)	(20.2)	%
Weighted-average shares outstanding—basic		178,628		181,468		(2,840)	(1.6)	%		178,628		195,679		(17,051)	(8.7)	%
Weighted-average shares outstanding—diluted		337,447		331,545		5,902	1.8	%		337,447		281,373		56,074	19.9	%
Net loss attributable to common stockholders per common share—basic and diluted	$	(0.10)	$	(0.03)	$	(0.07)	NM	%	$	(0.10)	$	(0.08)	$	(0.02)	(25.0)	%

NM = Not meaningful

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Total Revenues. For the three months ended March 31, 2025, in aggregate, total revenues increased by $8.4 million and $16.9 million, respectively, as compared to the three months ended December 31, 2024 and March 31, 2024, primarily due to the factors described below.

Rental Revenues. Rental revenues are comprised of rental income, straight-line rent, and amortization of above- and below-market lease assets and liabilities. For the three months ended March 31, 2025, total rental revenues increased by $9.0 million and $18.3 million, respectively, as compared to the three months ended December 31, 2024 and March 31, 2024, primarily due to the increase in non-same store revenues resulting from significant net growth in our portfolio. See “Same Store Portfolio Results of Operations” below for further details of the same store revenues.

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

	For the Three Months Ended				Change				For the Three Months Ended March 31,				Change
($ in thousands)	March 31, 2025		December 31, 2024		$		%		2025		2024		$		%
Rental income	$	104,153	$	95,124	$	9,029	9.5	%	$	104,153	$	85,756	$	18,397	21.5	%
Straight-line rent		927		1,292		(365)	(28.3)			927		1,582		(655)	(41.4)
Amortization of above- and below-market intangibles		1,316		1,019		297	29.1			1,316		793		523	66.0
Total rental revenues	$	106,396	$	97,435	$	8,961	9.2	%	$	106,396	$	88,131	$	18,265	20.7	%

Debt-Related Income. Debt-related income is comprised of interest income and amortization related to our debt-related investments and debt securities. For the three months ended March 31, 2025, total debt-related income decreased by $0.5 million and $1.3 million, respectively, as compared to the three months ended December 31, 2024 and March 31, 2024, primarily due to the repayment of three senior loans from our investments in real estate debt and securities.

Total Operating Expenses. For the three months ended March 31, 2025, in aggregate, total operating expenses increased by $11.1 million and $17.9 million, respectively, as compared to the three months ended December 31, 2024 and March 31, 2024, primarily due to the factors described below.

Rental Expenses. Rental expenses include certain property operating expenses typically reimbursed by our customers at our commercial properties, such as real estate taxes, property insurance, property management fees, repair and maintenance, and include certain non-recoverable expenses, such as consulting services and tenant leasing costs. Substantially all of our commercial properties are subject to leases on a “triple net basis” in which customers pay their proportionate share of real estate taxes, insurance, common area maintenance, and certain other operating costs. For the three months ended March 31, 2025, total rental expenses increased by $6.9 million as compared to the three months ended December 31, 2024, primarily due to increase in non-same store rental expenses resulting from significant net growth in our portfolio; and an increase in real estate taxes at various residential properties. For the three months ended March 31, 2025, total rental expenses increased by $7.2 million, as compared to the three months ended March 31, 2024, primarily due to increase in non-same store rental expenses resulting from significant net growth in our portfolio. See “Same Store Portfolio Results of Operations” below for further details of the same store expenses.

Real Estate-Related Depreciation and Amortization. For the three months ended March 31, 2025, in aggregate, real estate-related depreciation and amortization expense increased by $4.1 million and $10.4 million, respectively, as compared to the three months ended December 31, 2024 and March 31, 2024, primarily due to significant net growth in our portfolio.

Other Remaining Operating Expenses. In aggregate, the remaining operating expenses remained consistent for the three months ended March 31, 2025, as compared to the three months ended December 31, 2024. In aggregate, the remaining operating expenses increased by $0.3 million for the three months ended March 31, 2025, as compared to the three months ended March 31, 2024, primarily due to an increase in advisory fees of $1.4 million, partially offset by a $0.7 million decrease in acquisition costs and reimbursements.

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Other Income and Expenses. In aggregate, the remaining items that comprise our net income (loss) had a $(21.4) million impact on our net income (loss) for the three months ended March 31, 2025, as compared to the three months ended December 31, 2024, primarily due to the following:

● a decrease in gain on extinguishment of debt and financing obligations, net of $19.3 million driven in the fourth quarter by the recognition of a gain on our financing obligations upon extinguishment when we exercised a purchase option for certain properties in our DST Program; and

● an increase in interest expense of $4.6 million driven primarily by increase in financing obligations from the sale of DST Interests as well as the expiration of interest rate swaps on certain variable interest rate borrowings.

Partially offset by:

● a decrease in unrealized loss on financing obligations of $6.9 million driven by changes in valuations of properties in our DST Program.

In aggregate, the remaining items that comprise our net income (loss) had a $(11.5) million impact on our net income (loss) for the three months ended March 31, 2025, as compared to the three months ended March 31, 2024, primarily due to the following:

● an increase in interest expense of $11.2 million driven primarily by new mortgage notes.

● an increase in unrealized loss on financing obligations of $7.0 million driven by changes in valuations of properties in our DST Program; and

● an increase in income tax expense of $4.6 million, primarily driven by activities of our taxable REIT subsidiaries associated with our DST Program, which resulted in taxable income for the period.

Partially offset by:

● an increase in gain on sale of real estate property of $10.0 million driven by the sale of three industrial properties during the three months ended March 31, 2025, as compared to no dispositions during the three months ended March 31, 2024.

Same Store Portfolio Results of Operations

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

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

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The same store operating portfolio for the three months ended March 31, 2025 as compared to the three months ended December 31, 2024 presented below includes 103 properties totaling 20.7 million square feet owned as of October 1, 2024, which represented 84.7% of total rentable square feet as of March 31, 2025. The same store operating portfolio for the three months ended March 31, 2025 as compared to the three months ended March 31, 2024 presented below includes 94 properties totaling approximately 19.4 million square feet owned as of January 1, 2024, which represented 79.3% of total rentable square feet as of March 31, 2025.

The following table reconciles GAAP net income (loss) to same store portfolio property NOI for the three months ended March 31, 2025, as compared to the three months ended December 31, 2024, and for the three months ended March 31, 2025, as compared to the three months ended March 31, 2024:

	For the Three Months Ended				For the Three Months Ended March 31,
(in thousands)	March 31, 2025		December 31, 2024		2025		2024
Net loss attributable to common stockholders	$	(18,026)	$	(5,520)	$	(18,026)	$	(15,001)
Debt-related income		(9,989)		(10,506)		(9,989)		(11,311)
Real estate-related depreciation and amortization		45,873		41,786		45,873		35,470
General and administrative expenses		2,905		3,452		2,905		3,337
Advisory fees		11,404		10,697		11,404		9,972
Acquisition costs and reimbursements		1,355		1,474		1,355		2,043
Income from unconsolidated joint venture partnerships		(3,514)		(3,482)		(3,514)		(2,282)
Interest expense		55,384		50,780		55,384		44,234
Gain on sale of real estate property		(9,983)		(11,865)		(9,983)		—
Unrealized gain on DST Program Loans		(15)		(147)		(15)		—
Unrealized loss (gain) on financing obligations		4,138		11,002		4,138		(2,821)
Gain on extinguishment of debt and financing obligations, net		—		(19,250)		—		—
Gain on derivative instruments		—		(402)		—		—
Provision for current expected credit losses		(99)		(59)		(99)		(133)
Other income and expenses		(1,315)		(1,908)		(1,315)		(1,289)
Income tax expense		4,638		3,178		4,638		—
Net loss attributable to redeemable noncontrolling interests		(126)		(38)		(126)		(111)
Net loss attributable to noncontrolling interests		(15,943)		(4,522)		(15,943)		(6,477)
Property net operating income	$	66,687	$	64,670	$	66,687	$	55,631
Less: Non-same store property NOI		7,965		2,504		12,017		186
Same store property NOI	$	58,722	$	62,166	$	54,670	$	55,445

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

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The following table includes a breakout of results for our same store portfolio by property segment for rental revenues, rental expenses and property NOI for the three months ended March 31, 2025, as compared to the three months ended December 31, 2024, and the three months ended March 31, 2025, as compared to the three months ended March 31, 2024:

($ in thousands,	For the Three Months Ended						Change				For the Three Months Ended March 31,						Change
except per square foot data)	March 31, 2025			December 31, 2024				$	%		2025			2024			$		%
Rental revenues:
Residential	$	35,425		$	35,407		$	18	0.1	%	$	32,674		$	33,084		$	(410)	(1.2)	%
Industrial		27,805			27,324			481	1.8			26,075			25,695			380	1.5
Retail		15,056			15,268			(212)	(1.4)			15,056			15,367			(311)	(2.0)
Office		13,434			12,639			795	6.3			13,434			12,194			1,240	10.2
Other		2,909			2,985			(76)	(2.5)			918			929			(11)	(1.2)
Total same store rental revenues		94,629			93,623			1,006	1.1			88,157			87,269			888	1.0
Non-same store properties		11,767			3,812			7,955	NM			18,239			862			17,377	NM
Total rental revenues	$	106,396		$	97,435		$	8,961	9.2	%	$	106,396		$	88,131		$	18,265	20.7	%
Rental expenses:
Residential	$	(17,163)		$	(14,106)		$	(3,057)	(21.7)	%	$	(16,022)		$	(15,673)		$	(349)	(2.2)	%
Industrial		(6,868)			(6,629)			(239)	(3.6)			(6,413)			(6,084)			(329)	(5.4)
Retail		(4,195)			(4,056)			(139)	(3.4)			(4,195)			(3,919)			(276)	(7.0)
Office		(6,517)			(5,458)			(1,059)	(19.4)			(6,517)			(5,797)			(720)	(12.4)
Other		(1,164)			(1,208)			44	3.6			(340)			(351)			11	3.1
Total same store rental expenses		(35,907)			(31,457)			(4,450)	(14.1)			(33,487)			(31,824)			(1,663)	(5.2)
Non-same store properties		(3,802)			(1,308)			(2,494)	NM			(6,222)			(676)			(5,546)	NM
Total rental expenses	$	(39,709)		$	(32,765)		$	(6,944)	(21.2)	%	$	(39,709)		$	(32,500)		$	(7,209)	(22.2)	%
Property NOI:
Residential	$	18,262		$	21,301		$	(3,039)	(14.3)	%	$	16,652		$	17,411		$	(759)	(4.4)	%
Industrial		20,937			20,695			242	1.2			19,662			19,611			51	0.3
Retail		10,861			11,212			(351)	(3.1)			10,861			11,448			(587)	(5.1)
Office		6,917			7,181			(264)	(3.7)			6,917			6,397			520	8.1
Other		1,745			1,777			(32)	(1.8)			578			578			—	—
Total same store property NOI		58,722			62,166			(3,444)	(5.5)			54,670			55,445			(775)	(1.4)
Non-same store properties		7,965			2,504			5,461	NM			12,017			186			11,831	NM
Total property NOI	$	66,687		$	64,670		$	2,017	3.1	%	$	66,687		$	55,631		$	11,056	19.9	%
Same store average percentage leased:
Residential		91.8	%		92.0	%						91.7	%		92.3	%
Industrial		97.0			97.1							96.8			98.3
Retail		95.4			96.7							95.4			97.3
Office		79.7			80.0							79.7			79.2
Other		83.4			83.1							82.8			77.4
Same store average annualized base rent per square foot:
Residential	$	28.63		$	28.56						$	27.83		$	27.93
Industrial		7.55			7.48							7.52			7.27
Retail		20.40			20.15							20.40			20.04
Office		37.87			37.68							37.87			36.21
Other		19.07			19.85							23.52			25.14

NM = Not meaningful

Residential Segment. For the three months ended March 31, 2025, our residential segment same store property NOI decreased by $3.0 million, as compared to the three months ended December 31, 2024, primarily due to increase in real estate tax expense. For the three months ended March 31, 2025, our residential segment same store property NOI decreased by $0.8 million, as compared to the three months ended March 31, 2024, primarily due to reduced market rents, increased vacancy and rent concessions as well as increased operating expenses.

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Industrial Segment. For the three months ended March 31, 2025, our industrial segment same store property NOI increased by $0.2 million as compared to the three months ended December 31, 2024, primarily due to increased renewal rates. For the three months ended March 31, 2025, our industrial segment same store property NOI remained consistent as compared to the three months ended March 31, 2024.

Retail Segment. For the three months ended March 31, 2025, our retail segment same store property NOI decreased by $0.4 million and $0.6 million, respectively, as compared to the three months ended December 31, 2024 and March 31, 2024, primarily due to reduced occupancy at our 270 Center property.

Office Segment. For the three months ended March 31, 2025, our office segment same store property NOI decreased by $0.3 million as compared to the three months ended December 31, 2024, primarily due to increased operating expenses in 2025, offset by increased occupancy at various properties. Our office segment same store property NOI increased by $0.5 million for the three months ended March 31, 2025 as compared to the three months ended March 31, 2024, primarily due to increased occupancy at various properties.

Other Segment. For the three months ended March 31, 2025, our other segment same store property NOI remained consistent as compared to the three months ended December 31, 2024 and March 31, 2024.

ADDITIONAL MEASURES OF PERFORMANCE

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

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

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

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

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

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

	For the Three Months Ended March 31,
(in thousands, except per share data)	2025		2024
GAAP net loss	$	(34,095)	$	(21,589)
Weighted-average shares outstanding—diluted		337,447		281,373
GAAP net loss per common share—diluted	$	(0.10)	$	(0.08)
Adjustments to arrive at FFO:
Real estate-related depreciation and amortization		45,873		35,470
Gain on sale of real estate property		(9,983)		—
Our share of adjustments from joint venture partnerships		853		1,341
FFO	$	2,648	$	15,222
FFO per common share—diluted	$	0.01	$	0.05
Adjustments to arrive at AFFO:
Unrealized loss (gain) on financial instruments (1)		4,024		(2,954)
Decrease in financing obligation liability appreciation		—		(69)
Our share of adjustments from joint venture partnerships		(959)		(1,765)
AFFO	$	5,713	$	10,434

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

LIQUIDITY AND CAPITAL RESOURCES

Liquidity

Our primary sources of capital for meeting our cash requirements include debt financings, cash generated from operating activities, net proceeds from our 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 March 31, 2025, we had approximately $374.6 million of borrowings, including scheduled amortization payments, becoming payable within the next 12 months, though the terms of the associated loan agreements for $210.5 million of these borrowings can be extended pursuant to two six-month extension options and the terms of the associated mortgage loan agreement for $51.6 million of these borrowings can be extended pursuant to a one-year extension option, each subject to certain conditions. As of March 31, 2025, we had approximately $80.1 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 $178.5 million in unfunded commitments related to our investments in unconsolidated joint venture partnerships and our investments in real estate debt and securities as of March 31, 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, increased 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.

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

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As of March 31, 2025, our financial position was strong with 36.3% leverage, calculated as outstanding principal balance of our borrowings less cash and cash equivalents divided by the fair value of our real property, net investments in our unconsolidated joint venture partnerships, investments in real estate-related securities and debt-related investments not associated with the DST Program (determined in accordance with our valuation procedures). In addition, our consolidated portfolio was 94.1% occupied (94.2% leased) as of March 31, 2025 and is diversified across 124 properties totaling 24.4 million square feet across 35 geographic markets. Our properties contain a diverse roster of 446 commercial customers, large and small, and has an allocation based on fair value of real properties as determined by our NAV calculation of 40.2% residential, 36.5% industrial, 12.1% retail which is primarily grocery-anchored, 7.9% office and 3.3% other properties in adjacent sectors.

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

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

	For the Three Months Ended March 31,
(in thousands)	2025		2024		$ Change
Total cash provided by (used in):
Operating activities	$	201,031	$	7,792	$	193,239
Investing activities		(44,053)		(62,927)		18,874
Financing activities		(140,803)		55,398		(196,201)
Effect of exchange rate changes on cash, cash equivalents and restricted cash		79		(6)		85
Net increase in cash, cash equivalents and restricted cash	$	16,254	$	257	$	15,997

Net cash provided by operating activities increased by $193.2 million for the three months ended March 31, 2025, compared to the same period in 2024, primarily due to the sale of our held for sale debt-related investment.

Net cash used in investing activities decreased by $18.9 million for the three months ended March 31, 2025, compared to the same period in 2024, primarily due to an increase in net principal collections on debt-related investments of $58.6 million and an increase in proceeds from the dispositions of real estate property of $25.7 million, partially offset by an increase in investments in investments in unconsolidated joint venture partnerships of $49.0 million and an increase in net real estate acquisitions and capital expenditures of $23.8 million.

Net cash provided by financing activities decreased by $196.2 million for the three months ended March 31, 2025, compared to the same period in 2024, primarily due to a decrease in net borrowing activity of $329.1 million, partially offset by an increase in net offering activity of $135.9 million.

Capital Resources and Uses of Liquidity

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

Line of Credit and Term Loans. As of March 31, 2025, we had an aggregate of $1.70 billion of commitments under our unsecured credit agreement, including $900.0 million under our line of credit and $800.0 million under our two term loans. As of that date, we had: (i) $210.5 million outstanding under our line of credit; and (ii) $800.0 million outstanding under our term loans. The weighted-average effective interest rate across all of our unsecured borrowings is 4.53%, which includes the effect of the interest rate swap and cap agreements related to $625.0 million in borrowings under our line of credit and our term loans.

As of March 31, 2025, the unused and available portions under our line of credit were $689.5 million and $349.7 million, respectively. Our $900.0 million line of credit matures in November 2025, and may be extended pursuant to two six-month extension options, subject to certain conditions, including the payment of extension fees. One $400.0 million term loan matures in November 2026, with no extension option available. Our other $400.0 million term loan matures in January 2027, with no extension option available. Our line of credit borrowings are available for general corporate purposes, including but not limited to the refinancing of other debt, payment of redemptions, acquisition and operation of permitted investments. Refer to “Note 5 to the Condensed Consolidated Financial Statements” for additional information regarding our line of credit and term loans.

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Mortgage Notes. As of March 31, 2025, we had property-level borrowings of $1.37 billion outstanding with a weighted-average remaining term of approximately 2.4 years. These borrowings are secured by mortgages or deeds of trust and related assignments and security interests in the collateralized properties, and had a weighted-average interest rate of 5.31%. Refer to “Note 5 to the Condensed Consolidated Financial Statements” for additional information regarding the mortgage notes.

Debt Covenants. Our line of credit, term loan and mortgage note agreements contain various property-level covenants, including customary affirmative and negative covenants. In addition, our line of credit and term loan agreements contain certain corporate level financial covenants, including leverage ratio, fixed charge coverage ratio and tangible net worth thresholds. These covenants may limit our ability to incur additional debt, or to pay distributions. We were in compliance with our debt covenants as of March 31, 2025.

Leverage. We use financial leverage to provide additional funds to support our investment activities. We may finance a portion of the purchase price of any real estate asset that we acquire with borrowings on a short or long-term basis from banks, life insurance companies and other lenders. We calculate our leverage for reporting purposes as the outstanding principal balance of our borrowings less cash and cash equivalents divided by the fair value of our real property, net investments in our unconsolidated joint venture partnerships, investments in real estate-related securities and debt-related investments not associated with the DST Program (determined in accordance with our valuation procedures). We had leverage of 36.3% as of March 31, 2025. Our current target leverage ratio is between 40-60%. Although we will generally work to maintain our targeted leverage ratio, there are no assurances that we will maintain the targeted range disclosed above or achieve any other leverage ratio that we may target in the future. Due to higher interest rates and increased market volatility, the cost of financing or refinancing our assets may affect returns generated by our investments. Additionally, these factors may cause our borrowing capacity to be reduced, which could similarly delay or reduce benefits to our stockholders.

Future Minimum Lease Payments Related to the DST Program. As of March 31, 2025, we had $1.66 billion of future minimum lease payments related to the DST Program. The underlying interests of each property that is sold to investors pursuant to the DST Program are leased back by an indirect wholly-owned subsidiary of the Operating Partnership on a long-term basis of up to 29 years.

Offering Proceeds. For the three months ended March 31, 2025, the amount of aggregate gross proceeds raised from our securities offerings (including shares issued pursuant to the distribution reinvestment plans) was $21.0 million ($20.3 million net of direct selling costs).

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

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

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

	For the Three Months Ended March 31, 2025				For the Three Months Ended March 31, 2024
($ in thousands)	Amount		Percentage		Amount		Percentage
Distributions:
Paid in cash (1)	$	26,062	77.2	%	$	19,907	70.7	%
Reinvested in shares		7,679	22.8			8,238	29.3
Total (2)	$	33,741	100.0	%	$	28,145	100.0	%
Sources of Distributions:
Cash flows from operating activities	$	26,062	77.2	%	$	7,792	27.7	%
Borrowings		—	—			12,115	43.0
DRIP (3)		7,679	22.8			8,238	29.3
Total (2)	$	33,741	100.0	%	$	28,145	100.0	%

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

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

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

For the three months ended March 31, 2025 and 2024, our FFO was $2.6 million, or 7.8% of our total distributions, and $15.2 million, or 54.1% of our total distributions, respectively. FFO is a non-GAAP operating metric and should not be used as a liquidity measure. However, management believes the relationship between FFO and distributions may be meaningful for investors to better understand the sustainability of our operating performance compared to distributions made. Refer to “Additional Measures of Performance” above for the definition of FFO, as well as a detailed reconciliation of our GAAP net income (loss) to FFO.

Redemptions. Below is a summary of redemptions and repurchases pursuant to our share redemption program for the three months ended March 31, 2025 and 2024. All eligible redemption requests were fulfilled for the periods presented. Eligible redemption requests are requests submitted in good order by the request submission deadline set forth in the share redemption program. Our board of directors may make exceptions to, modify or suspend our current share redemption programs if it deems such action to be in the best interest of our stockholders. Refer to Part II, Item 2. “Unregistered Sales of Equity Securities and Use of Proceeds—Share Redemption Program” for detail regarding our share redemption program.

	For the Three Months Ended March 31,
(in thousands, except for per share data)	2025		2024
Number of shares redeemed or repurchased		5,198		4,772
Aggregate dollar amount of shares redeemed or repurchased	$	39,401	$	38,349
Average redemption or repurchase price per share	$	7.58	$	8.04

For the three months ended March 31, 2025 and 2024, we received and redeemed 100% of eligible redemption requests for an aggregate amount of approximately $39.4 million and $38.3 million, respectively, which we redeemed using cash flows from operating activities in excess of our distributions paid in cash, cash on hand, proceeds from our securities offerings, proceeds from the disposition of properties, and borrowings under our line of credit. We generally repay funds borrowed from our line of credit from a variety of sources including: cash flows from operating activities in excess of our distributions; proceeds from our securities offerings; proceeds from the disposition of properties and other longer-term borrowings.

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

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CRITICAL ACCOUNTING ESTIMATES

Our unaudited condensed consolidated financial statements have been prepared in accordance with GAAP and in conjunction with the rules and regulations of the SEC. The preparation of our unaudited condensed consolidated financial statements requires significant management judgments, assumptions and estimates about matters that are inherently uncertain. These judgments affect the reported amounts of assets and liabilities and our disclosure of contingent assets and liabilities at the dates of the condensed consolidated financial statements and the reported amounts of revenue and expenses during the reporting periods. With different estimates or assumptions, materially different amounts could be reported in our condensed consolidated financial statements. Additionally, other companies may utilize different estimates that may impact the comparability of our results of operations to those of companies in similar businesses. For a detailed description of our critical accounting estimates, see Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our 2024 Form 10-K. As of March 31, 2025, our critical accounting estimates have not changed from those described in our 2024 Form 10-K.

SUBSEQUENT EVENTS

See "Note 16 to the Condensed Consolidated Financial Statements" for information regarding subsequent events.

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Interest Rate Risk

We have been and may continue to be exposed to the impact of interest rate changes. Our interest rate risk management objectives are to limit the impact of interest rate changes on earnings and cash flows, and optimize overall borrowing costs. To achieve these objectives, we plan to borrow on a fixed interest rate basis and utilize interest rate swap and cap agreements on certain variable interest rate debt in order to limit the effects of changes in interest rates on our results of operations. As of March 31, 2025, our consolidated debt outstanding consisted of borrowings under our line of credit, term loans and mortgage notes. In addition, we plan to purchase or originate variable rate debt investments, which can offset interest rate risk associated with our variable interest rate consolidated debt.

Fixed Interest Rate Debt. As of March 31, 2025, our fixed interest rate debt consisted of $654.2 million under our mortgage notes and $375.0 million of borrowings under our term loans that were effectively fixed through the use of interest rate swaps. In total, our fixed interest rate debt represented 43.3% of our total consolidated debt as of March 31, 2025. Interest rate fluctuations will generally not affect our future earnings or cash flows on our fixed interest rate debt unless such instruments mature or are otherwise terminated. However, interest rate changes could affect the fair value of our fixed interest rate debt. As of March 31, 2025, the fair value and the carrying value of our consolidated fixed interest rate debt, excluding the values of any associated hedges, was $956.5 million and $1.03 billion, respectively. The fair value estimate of this debt was estimated using a discounted cash flow analysis utilizing rates we would expect to pay for debt of a similar type and remaining maturity if the loans were originated on March 31, 2025. Given we generally expect to hold our fixed interest rate debt instruments to maturity or when they otherwise open up for prepayment at par, and the amounts due under such debt instruments should be limited to the outstanding principal balance and any accrued and unpaid interest at such time, we do not expect that the resulting change in fair value of our fixed interest rate debt instruments due to market fluctuations in interest rates would have a significant impact on our operating cash flows.

Variable Interest Rate Debt. As of March 31, 2025, our consolidated variable interest rate debt consisted of $210.5 million of borrowings under our line of credit, $425.0 million of borrowings under our term loans and $714.2 million under our mortgage notes, which represented 56.7% of our total consolidated debt. Interest rate changes on the variable portion of our consolidated variable-rate debt could impact our future earnings and cash flows, but would not necessarily affect the fair value of such debt. As of March 31, 2025, we were exposed to market risks related to fluctuations in interest rates on $1.35 billion of consolidated borrowings; however, $966.3 million of these borrowings are capped through the use of eight interest rate cap agreements. A hypothetical 25 basis points increase in the all-in rate on the outstanding balance of our consolidated variable interest rate debt as of March 31, 2025, would increase our annual interest expense by approximately $1.0 million, including the effects of our interest rate cap agreements. In addition, we have originated and/or purchased variable rate debt-related investments with aggregate current commitments of $162.7 million and aggregate outstanding principal of $128.2 million on accrual status as of March 31, 2025, which can offset the interest rate risk associated with our variable interest rate borrowings.

Derivative Instruments. As of March 31, 2025, we had 14 outstanding derivative instruments, with a total current notional amount of $1.34 billion outstanding and effective. These derivative instruments were comprised of interest rate swaps and interest rate caps that were designed to mitigate the risk of future interest rate increases by either providing a fixed interest rate or capping the variable interest rate for a limited, pre-determined period of time. See “Note 5 to the Condensed Consolidated Financial Statements” for further detail on our derivative instruments. We are exposed to credit risk of the counterparty to our interest rate cap and swap agreements in the event of non-performance under the terms of the agreements. If we were not able to replace these caps or swaps in the event of non-performance by the counterparty, we would be subject to variability of the interest rate on the amount outstanding under our debt that is fixed or capped through the use of the swaps or caps, respectively.

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

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Foreign Currency Risk

We currently have investments in unconsolidated joint venture partnerships that invest in assets and properties located in countries outside of the U.S. that are subject to the effects of exchange rate movements between the foreign currency of each real estate investment and the U.S. dollar, which may affect future costs and cash flows as well as amounts remeasured into U.S. dollars for inclusion in our condensed consolidated financial statements. We execute borrowings in the same foreign currencies as our foreign investments to protect against the foreign currency exchange rate risk inherent in transactions denominated in foreign currencies. We estimate that as of March 31, 2025, a hypothetical 10% decline in the exchange rates of foreign currencies against the U.S. dollar would not result in a material change to our investment balances and would be largely offset by the currency conversions of our borrowings in the same foreign currencies.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Under the direction of our principal executive officer and principal financial officer, we evaluated the effectiveness of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of March 31, 2025. Based on this evaluation, our principal executive officer and principal financial officer have concluded that, as of March 31, 2025, our disclosure controls and procedures were effective.

Internal Control Over Financial Reporting

There have not been any changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the three months ended March 31, 2025 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION

ITEM 1A. RISK FACTORS

In addition to the other information set forth in this report, you should carefully consider the risk factors discussed in Part I, Item 1A, “Risk Factors” of our 2024 Form 10-K, which could materially affect our business, financial condition and/or future results. The risks described in our 2024 Form 10-K, are not the only risks facing us. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and/or operating results.

There have been no material changes to the risk factors disclosed in our 2024 Form 10-K.

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

Unregistered Sales of Equity Securities

On August 2, 2024, we commenced the Private Offering, which is exempt from the registration provisions of the Securities Act pursuant to Section 4(a)(2), Regulation D and/or Regulation S thereunder. Each purchaser of the shares of our common stock sold in the Private Offering is required to represent that it is an "accredited investor" as that term is defined in Rule 501 of Regulation D or a non-U.S. person and is acquiring shares for investment purposes only and not with a view to resale or distribution.

During the three months ended March 31, 2025, we issued and sold 809,000 Class S-PR shares, 10,000 Class D-PR shares and 938,000 Class I-PR shares and generated gross aggregate proceeds of $13.4 million in connection with the Private Offering. During the three months ended March 31, 2025, aggregate upfront selling commissions and dealer manager fees of $50,000 were paid in connection with the Private Offering.

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Share Redemption Program

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

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

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

We currently measure the foregoing redemption allocations and limitations based on net redemptions during a month or quarter, as applicable. The term “net redemptions” means, during the applicable period, the excess of our share redemptions (capital outflows) over the proceeds from the sale of our shares (capital inflows). For purposes of measuring our redemption capacity pursuant to our share redemption program, proceeds from new subscriptions in a month are included in capital inflows on the first day of the next month because that is the first day on which such stockholders have rights in the Company. Also for purposes of measuring our redemption capacity pursuant to our share redemption program, redemption requests received in a month are included in capital outflows on the last day of such month because that is the last day stockholders have rights in the Company. We record these redemptions in our financial statements as having occurred on the first day of the next month following receipt of the redemption

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request because shares redeemed in a given month are outstanding through the last day of the month. Net redemptions for the class-specific allocations will be based only on the capital inflows and outflows of that class, while net redemptions for the overall program limits would be based on capital inflows and outflows of all classes. Thus, for any given calendar quarter, the maximum amount of redemptions during that quarter will be equal to (i) 5% of the combined NAV of all classes of shares as of the last calendar day of the previous calendar quarter, plus (ii) proceeds from sales of new shares in our ongoing securities offerings (including purchases pursuant to our distribution reinvestment plan) since the beginning of the current calendar quarter. The same would apply for a given month, except that redemptions in a month would be subject to the 2% limit described above (subject to potential carry-over capacity), and netting would be measured on a monthly basis. With respect to future periods, our board of directors may choose whether the allocations and limitations will be applied to “gross redemptions,” i.e., without netting against capital inflows, rather than to net redemptions. If redemptions for a given month or quarter are measured on a gross basis rather than on a net basis, the redemption limitations could limit the amount of shares redeemed in a given month or quarter despite our receiving a net capital inflow for that month or quarter. In order for our board of directors to change the application of the allocations and limitations from net redemptions to gross redemptions or vice versa, we will provide notice to stockholders in a memorandum supplement or special or periodic report filed by us, as well as in a press release or on our website, at least 10 days before the first business day of the quarter for which the new test will apply. The determination to measure redemptions on a gross basis, or vice versa, will only be made for an entire quarter, and not particular months within a quarter.

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

Should redemption requests, in our judgment, place an undue burden on our liquidity, adversely affect our operations or risk having an adverse impact on the Company as a whole, or should we otherwise determine that investing our liquid assets in real properties or other illiquid investments rather than redeeming our shares is in the best interests of the company as a whole, then we may choose to redeem fewer shares than have been requested to be redeemed, or none at all. Further, our board of directors may make exceptions to, modify or suspend our share redemption program if it deems such action to be in our best interest and the best interest of our stockholders. If the transaction price for the applicable month is not made available by the tenth business day prior to the last business day of the month (or is changed after such date), then no redemption requests will be accepted for such month and stockholders who wish to have their shares redeemed the following month must resubmit their redemption requests. The above description of the share redemption program is a summary of certain of the terms of the share redemption program. Please see the full text of the share redemption program, which is incorporated by reference as Exhibit 4.3 to this Quarterly Report on Form 10-Q, for all the terms and conditions.

The table below summarizes the redemption activity for the three months ended March 31, 2025, for which all eligible redemption requests were redeemed in full:

				Total Number of Shares	Maximum Number of
				Redeemed as Part of	Shares That May Yet Be
	Total Number of	Average Price		Publicly Announced	Redeemed Pursuant
(shares in thousands)	Shares Redeemed	Paid Per Share (1)		Plans or Programs	to the Program (2)
For the Month Ended:
January 31, 2025	1,557	$	7.53	1,557	—
February 28, 2025	1,718		7.59	1,718	—
March 31, 2025 (3)	1,923		7.62	1,923	—
Total	5,198	$	7.58	5,198	—

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

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

(3) Redemption requests accepted in March 2025 are considered redeemed on April 1, 2025 for accounting purposes and, as a result, are not included in the table above. This differs from how we treat capital outflows for purposes of the limitations of our share redemption program. For purposes of measuring our redemption capacity pursuant to our share redemption program, redemption requests received in a month are included in capital outflows on the last day of such month because that is the last day stockholders have rights in the Company and we redeemed $38.6 million of shares of common stock for the three months ended March 31, 2025.

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ITEM 5. OTHER INFORMATION

Distribution Reinvestment Plan Suitability Requirement

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

The current suitability standards for Class E stockholders participating in the DRIP are listed in the section entitled “Suitability Standards” in our current Class E prospectus on file at www.sec.gov.

The current suitability standards for Class T-R, Class S-R, Class D-R and Class I-R stockholders participating in the DRIP are listed in the section entitled “Suitability Standards” in our current Class T-R, Class S-R, Class D-R and Class I-R fourth public offering prospectus on file at www.sec.gov.

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

Rule 10b5-1 Trading Plans

During the three months ended March 31, 2025, none of the Company’s directors or executive officers adopted or terminated any contract, instruction or written plan for the purchase or sale of the Company’s securities that was intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) or any “non-Rule 10b5-1 trading arrangement.”

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ITEM 6. EXHIBITS

Exhibit Number	Description
3.1	Second Articles of Restatement. Incorporated by reference to Exhibit 3.3 to the Current Report on Form 8-K filed with the SEC on August 6, 2024.
3.2	Tenth Amended and Restated Bylaws. Incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K filed with the SEC on March 3, 2023.
4.1	Sixth Amended and Restated Distribution Reinvestment Plan. Incorporated by reference to Exhibit 99.2 to the Current Report on Form 8-K filed with the SEC on August 6, 2024.
4.2	Private Distribution Reinvestment Plan. Incorporated by reference to Exhibit 4.2 to the Quarterly Report on Form 10-Q filed with the SEC on November 12, 2024.
4.3	Fourth Amended and Restated Share Redemption Program effective as of August 2, 2024. Incorporated by reference to Exhibit 99.1 to the Current Report on Form 8-K filed with the SEC on August 6, 2024.
4.4	Statement regarding transfer restrictions, preferences, limitations and rights of holders of shares of common stock (to appear on stock certificate or to be sent upon request and without charge to stockholders issued shares without certificates). Incorporated by reference to Exhibit 4.3 to the Post-Effective Amendment No. 30 to Registration Statement on Form S-11 (File No. 333-252212) filed with the SEC on August 22, 2024.
4.5	Multiple Class Plan. Incorporated by reference to Exhibit 99.4 to the Current Report on Form 8-K filed with the SEC on August 6, 2024.
31.1*	Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*	Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1*	Certification of Principal Executive Officer and Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
99.1*	Consent of Altus Group U.S. Inc.
99.2	Net Asset Value Calculation and Valuation Procedures. Incorporated by reference to Exhibit 99.3 to the Current Report on Form 8-K filed with the SEC on August 6, 2024
101	The following materials from Ares Real Estate Income Trust Inc.’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2025, filed on May 9, 2025, formatted in iXBRL (Inline eXtensible Business Reporting Language): (i) Condensed Consolidated Balance Sheets, (ii) Condensed Consolidated Statements of Operations, (iii) Condensed Consolidated Statements of Comprehensive Income (Loss), (iv) Condensed Consolidated Statements of Equity, (v) Condensed Consolidated Statements of Cash Flows, and (vi) Notes to the Condensed Consolidated Financial Statements.
104	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).

* Filed or furnished herewith.

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SIGNATURES

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

		ARES REAL ESTATE INCOME TRUST INC.
May 9, 2025	By:	/s/ JEFFREY W. TAYLOR
		Jeffrey W. Taylor Partner, Co-President (Principal Executive Officer)
May 9, 2025	By:	/s/ TAYLOR M. PAUL
		Taylor M. Paul Managing Director, Chief Financial Officer and Treasurer (Principal Financial Officer and Principal Accounting Officer)

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