Ares Real Estate Income Trust – Investigating Securities Claims
Are you concerned about your investment in Ares Real Estate Income Trust? If so, The White Law Group may be able to help you by filing a FINRA Dispute Resolution claim against the brokerage firm that sold you the investment.
According to its website, Ares Real Estate Income Trust Inc. is a diversified NAV REIT that seeks to invest in a diverse portfolio of real property.
What is a NAV REIT?
A NAV REIT (Net Asset Value Real Estate Investment Trust) is a type of non-traded REIT that regularly updates its net asset value (NAV) to reflect the estimated value of its real estate holdings and other assets. Unlike publicly traded REITs, which have stock prices that fluctuate based on market demand, NAV REITs determine their share prices based on periodic appraisals of their portfolio.
NAV REITs are often marketed toward income-seeking investors who want exposure to real estate without the day-to-day volatility of the stock market. However, they require a long-term investment horizon due to their liquidity limitations.
Ares Real Estate Income Trust Announces
In May 2024, according to the DI Wire, Ares Real Estate Income Trust, formerly known as Black Creek Diversified Property Fund, announced a perpetual private offering of multiple classes of common stock, including a distribution reinvestment plan. As part of this transition, the REIT closed its public primary offering on July 2, 2024, but remains an active buyer of real estate assets.
The private offering includes various share classes (T, S, D, I, and E), each with different fees and commissions, and share prices based on the most recent net asset value (NAV), which was $7.68 per share as of April 30, 2024. The shares are not publicly registered and will only be available under exemptions from registration requirements.
The company reportedly emphasized that the public offering closure was not due to negative developments but rather a strategic shift, citing strong market conditions and rent growth opportunities. As of May 1, 2024, the REIT had raised $316.5 million, with $51.9 million from its distribution reinvestment plan. It owns 99 properties across residential, industrial, retail, and office sectors, covering 20.1 million square feet in 33 U.S. markets, with a 95.2% occupancy rate.
The REIT will continue public reporting and maintain its share redemption program for existing shareholders.
Decline in NAV per Share
Currently, the company values its shares of Ares Real Estate Income Trust at $7.59 per share, as of December 31, 2024.
Ares Real Estate Income Trust – Risks of Non-traded REITs
A real estate investment trust (REIT) is a company that owns, and in most cases, operates income-producing real estate. REITs own many types of commercial real estate, ranging from office and apartment buildings to warehouses, hospitals, shopping centers and hotels. Some REITs also engage in financing real estate. The REIT structure was designed to provide a real estate investment structure similar to the structure mutual funds provide for investment in stocks.
Non-traded REITs are complex and high risk investments that are really only suitable for sophisticated investors. Your brokerage firm has a duty to perform due diligence on any investment. They must ensure that the investment is suitable for a particular investor considering that investor’s age, investment objectives, income, net worth, and investment experience. Due to the current risk of devaluation of these REITs, its likely they are only suitable for wealthy and/or sophisticated investors.
Liquidity Issues
Non-traded REITs also face several liquidity issues due to their unique characteristics and structure. They don’t trade on a public exchange like traditional stocks. As a result, if they try to sell the shares on a secondary market before the REIT’s liquidation event, it is almost always at a loss.
Due Diligence
Financial advisors have a fiduciary duty to put their client’s needs ahead of their own. If a stockbroker recommends an investment that is unsuitable for the client or fails to perform adequate due diligence on an investment, the advisor and his/her firm can be held liable for the resulting losses.
The White Law Group continues to investigate the liability that brokerage firms have for unsuitably recommending non-traded REITs such as Ares Real Estate Income Trust.
Class Action vs. Individual FINRA Arbitration Lawsuit
You may wonder whether a large class action lawsuit is a better litigation option for you than an individual FINRA arbitration case. The answer depends on many factors, but typically if the loss sustained is large (say larger than $100,000), an individual arbitration claim is likely a better option. Class actions as a recovery option are more appropriate for grouping large numbers of individuals who have small claims – too small to generally pursue individually.
Free Consultation
If you are concerned about your investment in Ares Real Estate Income Trust, please call the securities attorneys of The White Law Group at (888)637-5510 for a free consultation.
The White Law Group, LLC is a national securities fraud, securities arbitration, investor protection, and securities regulation/compliance law firm dedicated to helping investors in claims in all 50 states against their financial professional or brokerage firm. Since the firm launched in 2010, it has handled over 800 FINRA arbitration cases.
Our firm represents investors in all types of securities related claims, including claims involving stock fraud, broker misrepresentation, churning, unsuitable investments, selling away, and unauthorized trading, among many others.
With over 35 years of securities law experience, The White Law Group has the expertise to help investors defrauded in securities and investment fraud attempt to recover their investment losses.
Last modified: February 11, 2025
