Filed Pursuant to Rule 424(b)(3)

Registration No. 333-252212

ARES REAL ESTATE INCOME TRUST INC.

SUPPLEMENT NO. 2 DATED MAY 15, 2024

TO THE PROSPECTUS DATED APRIL 12, 2024

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

The purpose of this Supplement is to disclose:

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

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

● the status of this offering;

● the planned closing of the public primary offering;

● an update on our assets and performance;

● updated information with respect to our real properties;

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

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

● updated selected information regarding our operations;

● updated information regarding distributions;

● updated information regarding redemptions;

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

● updated certain historical NAV information;

● updated information regarding the Advisory Agreement;

● updated information regarding our suitability standards;

● updates to our Plan of Distribution;

● updated experts information; and

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

●             JUNE 1, 2024 TRANSACTION PRICE

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

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

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

●             APRIL 30, 2024 NAV PER SHARE

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

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

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

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

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

(1) Includes self-storage properties.

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

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

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

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

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

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

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

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

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

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

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●             STATUS OF THIS OFFERING

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

●             CLOSING OF THE PUBLIC PRIMARY OFFERING

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

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

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

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

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

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

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●             UPDATE ON OUR ASSETS AND PERFORMANCE

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

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

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

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

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

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

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

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

●             REAL PROPERTIES

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

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

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

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●             REAL ESTATE DEBT AND SECURITIES

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

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

●             DST PROGRAM AND DEBT OBLIGATIONS

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

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

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

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

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

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

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

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

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

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

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

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

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

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

●             SELECTED INFORMATION REGARDING OUR OPERATIONS

Additional Measures of Performance

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

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

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

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

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

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

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

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

●             DISTRIBUTIONS

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

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

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

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

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

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

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

●             REDEMPTIONS

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

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

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

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

S-9

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

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

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

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

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

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

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

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

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

●             CERTAIN HISTORICAL NAV INFORMATION

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

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

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

S-10

●             ADVISORY AGREEMENT

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

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

●             SUITABILITY STANDARDS

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

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

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

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

●             PLAN OF DISTRIBUTION

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

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

●             EXPERTS

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

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

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

S-11

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended March 31, 2024

Or

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

For the transition period from                     to                     .

Commission File No. 000-52596

ARES REAL ESTATE INCOME TRUSTINC.

(Exact name of registrant as specified in its charter)

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

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

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

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

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

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

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

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

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

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

ARES REAL ESTATE INCOME TRUST INC.

TABLE OF CONTENTS

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

2

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

ARES REAL ESTATE INCOME TRUST INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

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

See accompanying Notes to Condensed Consolidated Financial Statements.

3

ARES REAL ESTATE INCOME TRUST INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

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

See accompanying Notes to Condensed Consolidated Financial Statements.

4

ARES REAL ESTATE INCOME TRUST INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(Unaudited)

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

See accompanying Notes to Condensed Consolidated Financial Statements.

5

ARES REAL ESTATE INCOME TRUST INC.

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

(Unaudited)

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

See accompanying Notes to Condensed Consolidated Financial Statements.

6

ARES REAL ESTATE INCOME TRUST INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

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

See accompanying Notes to Condensed Consolidated Financial Statements.

7

ARES REAL ESTATE INCOME TRUST INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1. BASIS OF PRESENTATION

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

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

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

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

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

Reclassifications

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

Revision of Noncontrolling Interests

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

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

8

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

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

Foreign Currency

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

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

2. INVESTMENTS IN REAL ESTATE PROPERTIES

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

	As of
(in thousands)	March 31, 2024		December 31, 2023
Land	$	754,149	$	754,149
Buildings and improvements		3,482,944		3,505,921
Intangible lease assets		324,498		330,291
Right of use asset