Ares Real Estate Income Trust Secures $200 Million Capital Infusion

Ares Real Estate Income Trust Inc., a non-traded perpetual life real estate investment trust sponsored by Ares Real Estate, announced a significant capital raise from an affiliate of its adviser. Also, its aggregate net asset value was approximately $2.64 billion as of Sept. 30, 2025, a 0.75% increase from August’s nearly $2.62 billion.

In mid-October, the REIT executed a subscription agreement with Ares Apogee Finance HoldCo LP, or Apogee SPV, an entity affiliated with the company’s adviser, Ares Commercial Real Estate Management LLC. Under the agreement, Apogee SPV will purchase $200 million worth of Class B common stock.

The capital commitment is being funded by the company’s sponsor and an institutional investor. The shares will be issued on Nov. 3 at the NAV per share of the company’s Class I-PR common stock as of Sept. 30.

The transaction is structured to provide long-term stability for the REIT. First, the $200 million investment is subject to a three-year lock-up period from the purchase date, preventing Apogee SPV from redeeming the shares until the liquidity date.

After the lock-up expires, Apogee SPV’s quarterly redemption requests will be subordinate to those of all other common stockholders, meaning retail investors’ requests are prioritized. Post-lock-up, Apogee SPV gains a limited right to require the company to repurchase up to $5 million of its shares per quarter, independent of the existing share redemption program.

The subordinate redemption status and limited repurchase rights terminate if Apogee SPV’s shares are held by a non-affiliate, or if the adviser stops managing the company, in which case Apogee SPV’s redemption rights would become pari passu, i.e., equal with all other stockholders.

The agreement also establishes mechanisms to manage Apogee SPV’s ownership concentration and provides flexibility for future financing.

• If the combined ownership of Apogee SPV and its affiliates reaches 25% or more of the company’s outstanding common stock, either party may require a mandatory repurchase of shares to bring the ownership back down to 24.99%.
• Apogee SPV may convert its Class B common shares into the publicly available Class I-PR common shares, subject to an ownership limit on the resulting voting common stock.

The initial sale of the Class B shares to Apogee SPV was conducted as a private placement, exempt from registration requirements of the U.S. Securities and Exchange Commission due to Apogee SPV’s status as an institutional accredited investor.

As of Sept. 30, the REIT’s consolidated portfolio spanned 137 real estate properties totaling approximately 28.7 million square feet across 34 U.S. markets, maintaining a high occupancy rate of 93.8%. During the third quarter, the company expanded its industrial and residential holdings, acquiring eight industrial properties and one residential property for an aggregate contractual purchase price of $478.6 million. This was partially offset by a strategic disposition, selling one office property for a contractual sales price of $80 million, realizing a strong gain over the property’s accounting basis of approximately $32.5 million.

Rent growth on comparable commercial leases executed over the trailing 12 months – a measure of performance – averaged 19.7% on a cash basis and 37.2% on a GAAP basis. The company’s industrial properties, in particular, demonstrated comparable lease rent growth, averaging 24.8% (cash basis) and 46% (GAAP basis).

Despite this commercial strength, the residential segment saw a modest rent decline, with new and renewal residential leases averaging a 1.5% decline over the same period. The company, however, said its properties are still positioned for future growth, with estimated weighted-average rents currently 22.3% below market for industrial properties and 5.4% below market for residential properties.

Financially, the company maintained a controlled leverage ratio of 34.9% as of the end of September, calculated as net borrowings divided by the fair value of certain assets. The weighted-average interest rate on consolidated borrowings stood at 4.92%.

The third quarter also saw strong capital inflow, with the company raising gross proceeds of approximately $523.7 million, which included proceeds from its distribution reinvestment plan and the sale of interests in its Delaware statutory trust program.

Regarding shareholder liquidity, the company fulfilled all redemption requests submitted for July, August, and September. The aggregate dollar amount of common stock and operating partnership unit redemptions successfully honored totaled $36.9 million.

Previously, AltsWire reported the REIT’s 3.5% increase in its monthly distribution to shareholders, effective July 2025. Since, the company has paid a monthly gross distribution of $0.03450 per share, an increase from the previous rate of $0.03333 per share that had been in place since July 2023.

As previously reported by AltsWire, the REIT closed its public primary offering effective July 2, 2024, and started a perpetual private offering of multiple classes of common stock, including a distribution reinvestment plan. The REIT continues to file reports as a public reporting company, and shareholders who purchased shares in the public offering. continue to have access to its share redemption program.

Ares Real Estate Income Trust was originally launched in January 2006. The property portfolio currently includes office, retail, residential, industrial, and “other” properties.

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