Ares U.S. Real Estate Opportunity Fund IV, L.P. (“AREOF IV”)
U.S. Real Estate Markets - Macro Overview
» Choppy market ahead will create compelling investment opportunities
Inflation
remains
8%
7%
6%
5%
4%
3%
2%
1%
50%
40%
30%
20%
10%
0%
-10%
-20%
-30%
-40%
-50%
Dec-15
Apr-16
Aug-16
Dec-16
Apr-17
Aug-17
Dec-17
Jan 20
Mar 20
Jun 20
Apr-18
Aug-18
Dec-18
Apr-19
Aug-19
Dec-19
YOY Headline PCE Inflation
elevated
Apr-20
Aug-20
Dec-20
Apr-21
Aug-21
Dec-21
Apr-22
Aug-22
Dec-22
YOY Core PCE Inflation
REIT prices have fallen significantly
Bramy
Watan
21
Aug 20
Oct 20
Jan 21
Mar 21
May 21
Aug 21
Oct
Dec 21
Mar 22
May 22
Jul 22
Sep 22
Dec 22
Feb 23
Apr 23
Jul 23
Sep 23
Apr-23
Aug-23
S&P 500
29%
U.S. REIT
Index
(19)%
6
5
4
2
0
2018
QoQ, Seasonally Adjusted
Annualized Rate, %
Inverted yield curve and 10-year at record highs
4.0
3.0
2019
2.0
1.0
0.0
(1.0)
(2.0)
(3.0)
Market yield on 10 Year-Treasuries (%)
10-year minus 2-year Yield Curve (bp)
2020
2021
Actual
(0.6)
2022
GDP resilient despite market volatility
2.7
2.6
11
2.2
2023
Source: 1) Bureau of Economic Analysis, as of September 2023; Board of Governors of the Federal Reserve System, as of September 2023; Green
Street Advisors, as of September 2023; Bloomberg, as of September 2023. Note: For illustrative purposes only. There is no assurance the above
trends will continue.
200
w
150
100
50
0
➡Market yield on 2-year Treasuries (%)
(50)
(100)
(150)
(2.0)
1Q'22 20'22 3Q'22 4Q'22 10'23 20'23 3Q'23 40'23
Bloomberg Consensus Forecast
2.1
2.0
ii:
0.4
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