Ares Real Estate Income Trust Cuts Leverage to 28%; Revenue Up 29%
Ares Real Estate Income Trust cut its leverage ratio to 28% as of June 30, down from 36% at the end of 2025, while quarterly rental revenue climbed nearly 29% year over year, the nontraded real estate investment trust reported. The results contrast with those of sister fund Ares Industrial Real Estate Income Trust, the sponsor’s industrial-only nontraded REIT, which reported essentially flat total assets and softening same-store occupancy over the same period.
The fund’s total assets grew to $7.68 billion as of June 30, up from $7.27 billion at the end of 2025. Rental revenue for the quarter reached $140.6 million, up from $109.2 million a year earlier, and six-month rental revenue rose to $278 million from $215.6 million, an increase the fund attributed primarily to growth from acquisitions rather than performance at existing properties. The fund’s consolidated portfolio consisted of 152 properties totaling approximately 32 million square feet across 34 U.S. markets as of quarter-end. During the first half of the year, the fund acquired properties for $273.1 million and invested $99.2 million in unconsolidated joint venture partnerships and real estate debt and securities. It also leased approximately 1.3 million square feet, including 500,000 square feet of new leases and 800,000 square feet of renewals.
The fund raised $171.2 million in gross proceeds from the sale of 21.1 million shares of common stock through its continuous public offering during the first six months of the year, including proceeds from its distribution reinvestment plan. The fund also continued a pattern of affiliate capital support that began in late 2025.
On May 19, the fund amended an existing subscription agreement with Ares Apogee Finance HoldCo L.P., an entity affiliated with its adviser, to sell an additional 12.2 million Class B shares for $100 million, raising Apogee’s total investment in the fund to $300 million, following an initial $200 million purchase in November 2025. Ten days later, on May 29, the fund entered a separate subscription agreement with a second Ares affiliate, Ares Perigee Finance HoldCo L.P., which purchased its own $100 million stake, also in the form of 12.2 million Class B shares. Combined, total affiliate equity commitments in the fund reached $400 million since October 2025. Class B shares outstanding grew to 49.9 million as of June 30 from 25.4 million at the end of 2025, reflecting the May transactions. Apogee’s shares carry a three-year lock-up from their original October 2025 purchase date, after which its redemption requests become subordinate to those of other common stockholders, the fund previously disclosed.
The affiliate-capital pattern continued after the quarter closed. In July, Ares Real Estate Income Trust acquired nine retail centers in Arizona and Texas — roughly 28% of the former Whitestone REIT portfolio — for approximately $473 million, its share of a $1.7 billion take-private of the publicly traded REIT, led by a private fund affiliated with Ares Management. The deal, which closed July 14, is a related-party transaction: the fund’s co-investor in the acquisition is a fund affiliated with its own sponsor.
Ares Industrial Real Estate Income Trust’s second-quarter results were markedly different. Total assets were essentially unchanged at $7.8 billion as of June 30. The fund directly owned and managed 276 industrial buildings totaling approximately 58 million square feet across 31 U.S. markets, with 442 tenants, and was 88% occupied and 89% leased as of quarter-end. Rental revenue rose by approximately $16.6 million for the first six months of the year compared with the same period in 2025, and by approximately $5 million in the second quarter compared with the first, which the fund attributed to non-same-store revenue tied to portfolio growth, partially offset by lower occupancy in its same-store portfolio.
The industrial fund made $193.9 million in acquisitions during the first half of the year, including a Washington, D.C.-area distribution center and a multi-property portfolio. It raised $157.1 million in gross proceeds from the sale of approximately 11.9 million shares during the same period, including proceeds from its distribution reinvestment plan. Redemptions of operating partnership units totaled $18.4 million for the six months ended June 30, down from $22.4 million in the same period a year earlier. The industrial fund has not disclosed a comparable pattern of affiliate capital support.
Both funds are sponsored by Ares Management and externally managed by Ares-affiliated advisers. Ares Real Estate Income Trust previously reported a 45% increase in industrial rents and a $401 million first-quarter capital raise.
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