Ares US Real Estate Opportunity Fund III

Divergent Sector Performance Driven By Unique Impacts of COVID-19 The pandemic is fueling unprecedented changes in use patterns across asset classes Traditional Model Industrial Supply chains predominantly serviced brick-and-mortar retailers Multifamily Rentals represented a cheaper alternative to for-sale housing Office Corporate tenants under long- term leases with hierarchical, partitioned spaces Hospitality Well-defined price points based on standardized brands and service levels Retail In-person shopping with limited e- commerce penetration Adjacent Sectors SFR, medical office, student housing see niche demand from niche players Real Estate in 2019 Industrial Supply chains revamping for just-in- time e-commerce and omni-channel retailing Multifamily Amenitized communities increasingly cater to higher-income renters by choice Office Serviced/co-working office providers changing the traditional use/lease model Hospitality Increasing pressure on owner/operators from emerging lifestyle brands, home-share platforms and increasing labor costs Retail Adoption of online platforms has changed traditional sales channels; shifts to emphasize dining, entertainment and experiential retail Adjacent Sectors Increasing popularity as investors chase yield Industrial ■ Surging demand from accelerated e-commerce penetration Aided by shortening supply chains and domestic/regional stockpiling of critical goods " ■ ■ ■ M ■ ■ Real Estate Post COVID-19 ■ Multifamily We believe the asset class will remain resilient with support from strong demand Urban/suburban dynamics and collection statistics warrant per-asset scrutiny COVID-related regulatory changes may alter risk/reward in certain markets Office We believe hybrid in-person/remote work arrangements will persist We expect de-densification to impact layouts, locations and overall footprints We expect some resurgence of suburban product vs. urban Future of co-working (e.g WeWork) now even more uncertain Hospitality Lengthening shut-downs have led to deep distress Recovery forecast by 2024/2025 We believe leisure travel will recover first with convention business lagging Significant operating shortfalls for owners and operators Retail Widespread shut-downs of non-essential retailers Multiplying sector bankruptcies ■ Dramatic space compression Oversupply of existing stock in the face of anemic tenant demand Adjacent Sectors Demand drivers accelerate Asset classes mature into institutional sectors with steady growth and yield drivers Ares Based on Ares' Real Estate Group's current observations of the market as of August 31, 2020. There is no guarantee or assurance investment objectives will be achieved. The situation surrounding COVID-19 is fluid and developing rapidly. As such, our views are subject to change at any time. Forward looking statements are not reliable indicators of future events and no guarantee or assurance is given that such activities will occur as expected or at all. Actual events or conditions are unlikely to be consistent with, and may differ materially from, those assumed.*Classified according to Ares' proprietary methodology based on available data. Green circles indicate sectors that we believe are experiencing tailwinds as result of changes created by, or accelerated by, COVID-19; orange circles represent sectors that we believe are exhibiting a more uncertain outlook as a result of COVID-19; red circles represent sectors that are experiencing significant headwinds due to COVID-19 and as a result are unlikely to be sectors that Ares seeks to target. The assumptions underlying this proprietary methodology are subject to change, may not prove to be true and actual risks may be different than the classifications presented herein. Accordingly, no representation or warranty is made in respect of this information.

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