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Ares Real Estate Income Trust Starts Perpetual Private Offering, Closes Public Offering

Ares Real Estate Income Trust, a publicly registered net asset value-based perpetual life real estate investment trust formerly known as Black Creek Diversified Property Fund, announced that it intends to commence a perpetual private offering of multiple classes of common stock, including a distribution reinvestment plan.

In conjunction with the announcement, the REIT reported that it will close its public primary offering of shares effective July 2, 2024. It noted that it was not currently considering a liquidity event and would remain an active buyer of real estate assets.

The company plans to offer multiple classes of common stock, with different upfront selling commissions and dealer manager fees, and different ongoing distribution fees. The per share purchase price will vary and will generally equal the REIT’s most recently disclosed net asset value per share, as determined monthly, plus applicable upfront selling commissions and dealer manager fees.  The shares of common stock will not be registered under the Securities Act of 1933, as amended, and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements.

The REIT’s NAV per share for each class of common stock – Classes T, S, D, I, and E – was approximately $7.68 as of April 30, 2024.

Ares Real Estate Income Trust said that the close of the public offering was “not reflective of adverse developments at the company or an unfavorable view of the 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. [The REIT] 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.”

It will continue to file reports as a public reporting company, and shareholders who purchased shares in the public offering will continue to have access to its share redemption program.

As of May 1, 2024, the Ares REIT had raised gross proceeds of approximately $316.5 million from the sale of approximately 36 million shares in the offering, including proceeds from its 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 the distribution reinvestment plan.

Ares Real Estate Income Trust launched in January 2006 and reported total assets of $4.7 billion and total liabilities of $3.6 billion in its most recent quarterly report. The company owns 99 properties across the residential, industrial, retail, and office sectors, which were 95.2% leased. The properties total approximately 20.1 million square feet located in 33 markets throughout the United States.

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