Are you concerned about your investments in Ares Industrial Real Estate Income Trust?
This non-traded REIT, sponsored by Ares Management, has become one of the largest industrial-focused private real estate funds available to retail investors. With a portfolio valued at $8.9 billion as of November 30, 2023, Ares Industrial Real Estate Income Trust invests exclusively in U.S. industrial assets, including bulk and last-mile distribution facilities. While Ares emphasizes strong industrial market fundamentals such as rent growth and low vacancy rates, investors may still face significant risks tied to non-traded REIT structures.
About Ares Industrial Real Estate Income Trust
Launched in 2017, Ares Industrial Real Estate Income Trust is a perpetual-life, non-traded REIT designed to generate distributions, preserve capital, and achieve appreciation through investments in logistics-driven industrial real estate. Managed by Ares Management—a global alternative asset manager with over $378 billion in AUM as of 2023—the trust owns 256 buildings across 29 markets with a total of 54 million square feet that is 97.8% leased.
Unlike publicly traded REITs, shares of Ares Industrial Real Estate Income Trust are not listed on any exchange. This means investors face limited liquidity and must rely on the fund’s share repurchase program, which allows up to 2% monthly and 5% quarterly redemptions. However, these buybacks are not guaranteed and shares held under one year are repurchased at just 95% of NAV.
Performance & Distributions
Performance has varied depending on share class. For example, Class I shares delivered a 10.22% annualized return since inception, while Class T and D shares showed slightly lower net returns after fees. In November 2023, distributions ranged from 3.50% (Class T) to 4.46% (Class I). Despite positive long-term results, the fund’s Class T shares saw a 12.4% price decline in 2023, reflecting volatility even within industrial-focused REITs.
Risks of Investing in Ares Industrial Real Estate Income Trust and Other Non-Traded REITs
- Illiquidity: Shares cannot be easily sold and redemption programs are limited.
- High Fees: Sales charges and distribution fees may significantly reduce net returns.
- Market Exposure: Industrial assets are sensitive to economic slowdowns and logistics demand cycles.
- NAV Volatility: Reported share values may not reflect true market pricing.
- Suitability Concerns: Non-traded REITs are complex products often sold to investors who may not fully understand the risks.
Broker Duties and Due Diligence
Brokerage firms recommending this trust must ensure the investment is suitable based on an investor’s financial profile. Failure to disclose risks such as high fees, illiquidity, or potential NAV declines could give rise to claims against the financial advisor or brokerage firm.
Class Action vs. FINRA Arbitration
If you’ve suffered losses in Ares Industrial Real Estate Income Trust, you may be considering recovery options:
- Class Actions: Typically produce modest, shared recoveries.
- FINRA arbitration: Often provides faster, more direct recourse against the brokerage firm that recommended the investment.
Filing a Complaint Against Your Brokerage Firm
If your advisor unsuitably recommended Ares Industrial Real Estate Income Trust or failed to disclose its risks, you may be eligible to pursue a FINRA arbitration claim.
For a free consultation with a securities attorney, contact The White Law Group at 1-888-637-5510 or visit www.WhiteSecuritiesLaw.com.
FAQs
1. What does Ares Industrial Real Estate Income Trust invest in?
The trust focuses exclusively on U.S. industrial real estate, including large-scale distribution centers and last-mile logistics facilities.
2. Can I redeem my shares at any time?
No. Ares Industrial Real Estate Income Trust offers limited repurchase programs, capped at 2% of NAV monthly and 5% quarterly. Redemptions are not guaranteed.
3. How risky are non-traded REITs like Ares Industrial Real Estate Income Trust compared to public REITs?
They are generally riskier due to illiquidity, lack of transparency, high fees, and volatile valuations, making them unsuitable for many retail investors.
