Ares U.S. Real Estate Opportunity Fund IV, L.P. (“AREOF IV”)
Endnotes
Please refer to the Fund's Private Placement Memorandum, available in the data room here, for further information regarding Risk Factors and Conflicts of Interest associated with the
Fund.
1. The aggregated performance of AREOF, AREOF II and AREOF III reflect the aggregate fair value returns of these investment vehicles as of June 30, 2023, but such performance
returns do not reflect any single investor's performance. Aggregate performance results have inherent limitations, and no representation is being made that any investor will or
is likely to achieve profits similar to those shown. Given Ares did not offer a single investment vehicle that held the full interest in all of the assets of AREOF, AREOF II and AREOF
III, an investor was not able to invest in these assets as presented and no individual investor has achieved the investment performance indicated herein.
2. Gross IRR and Gross EM: Gross IRR is an internal rate of return generally based on aggregate periodic cash flow activities made or anticipated to be made between a specific
vehicle and its investment (or portfolio of investments, as applicable), including cash flows attributable to any sales, dispositions, reinvestment of proceeds, financing and/or
refinancing and operating activities. Gross EM is generally the sum of proceeds received or anticipated to be received by a vehicle from its investment (or portfolio of
investments, as applicable) plus the applicable value of the vehicle's investments (as further described below), divided by the aggregate dollars the vehicle invested or projects
to invest in such investment (or portfolio of vestments, as applicable). Notwithstanding the forgoing, Gross IRR and Gross EM figures for realized investments are calculated
based on actual cash flows and are not based on projections or fair values. Gross IRRS and EMS do not reflect or include the impact of applicable management fees, performance
fees or carried interest, fund level expenses, working capital, use of subscription financing and other expenses (collectively, "Fund-Level Expenses”). Gross IRR and EM figures
take into account the vehicle's use of investment-level leverage.
3. Net IRR and Net EM: Net IRR is an internal rate of return generally based on aggregate periodic cash flow activities between a specific vehicle and its limited partners. Net EM is
generally the sum of all distributions made or anticipated to be made to the limited partners of the vehicle plus the anticipated value of the vehicle's investments (as further
described below), divided by the aggregate dollars contributed or projected to be contributed by the limited partners to the vehicle. Notwithstanding the forgoing, Net IRR and
Net EM figures for vehicles that have realized their investment(s) are calculated based on actual cash flows. Net IRRS and EMS generally include the impact of Fund-Level
Expenses. Each of AREOF, AREOF II and AREOF III utilized a credit facility during the capital raising period and for general cash management purposes. Net IRRs would be lower
had AREOF, AREOF II and AREOF III called capital from limited partners instead of utilizing the credit facility. The General Partner and any of its affiliates that do not bear
management fee or carried interest are excluded for purposes of calculating the Net IRR and Net EM. The net returns for AREOF reflect full management fees charged under the
vehicle's governing documents and do not reflect any management fee breaks granted to limited partners. The net returns for AREOF II and AREOF III reflect the blended returns
after taking into account any management fee breaks granted to limited partners, and therefore as of June 30, 2023 net returns for AREOF II based on full management fees are
26.68% (which is 0.27% lower than the blended return for AREOF II) and net returns for AREOF III based on full management fees are 36.0% (which 1.21% lower than the blended
return for AREOF III). The returns presented herein reflect the returns of the main entry point of AREOF, AREOF II, and AREOF III, as applicable, and do not reflect the return of any
feeder or parallel vehicle. The return earned by investors may vary materially from those presented. The implied net asset level return is calculated by applying a fee reduction to
the gross return based on the ratio between the fund's actual gross and net return and applies that ratio to the gross asset level return to derive the implied net return. Ares
believes this is the appropriate approach to derive an approximate net return given Ares does not allocate expenses to specific investments.
4. Los Ratio: represents Equity Invested less Realized Proceeds for all AREOF, AREOF II and AREOF III investments that have been realized at a less than 1.0x EM divided by the total
equity invested by the fund as of June 30, 2023.
5. Fair Value IRRS and EMS: Fair Value IRRS and EMS are calculated as described in notes b and c assuming the vehicle's remaining investment (or investments, as applicable)
were liquidated at fair values as of June 30, 2023 and proceeds were distributed accordingly. Fair values are based on the manager's estimates of the fair market value of any
unrealized investments. The manager is responsible for the valuation policies, processes and procedures related to the fair value of real estate investments and valuations are
performed quarterly on an internal basis and are reviewed by external auditors on an annual basis at year-end as part of a vehicle's annual financial audit. Fair value
determinations, and particularly fair value determinations of private investments, are inherently uncertain, may fluctuate over short periods of time, and may be based on
estimates. As a result, determinations of fair value may differ materially from the values that would have been used if a ready market for these investments existed and may
differ materially from the values that the vehicle may ultimately realize. There can be no assurance that fair values will be achieved.
6. Loan-to-Value ("LTV"): Loan-to-Value is the ratio of a loan to the market value of the underlying property when stabilized, measured on a portfolio basis. LTV is based on the
Fund's share of debt for invested deals as of June 30, 2023. The use of leverage magnifies the potential for gain or loss on the amount invested and may increase the risk of
investments.
7.
Fund Vintage: reflects (i) with respect to AREOF, the date of the fund's first investment because while AREOF held its initial closing in 2008, it did not commence investment
activity until 2012 as a result of market conditions, and (ii) with respect to AREOF II and AREOF III, the date of initial closing of capital commitments.
8. Vehicle Size or Equity Raised: reflects the aggregate amount of capital committed to, in each case, AREOF, AREOF II, AREOF III and their co-investment vehicles as of June 30,
2023.
9. Equity Invested: represents the amount of equity invested into investments (including reinvestment of capital) that have closed as of June 30, 2023, not including amounts
attributable to any financing or refinancing.
10. Realized Proceeds: reflects the positive cash flow received from distributions and sale proceeds.
11. Liquidation Value: represents the manager's fair value marks for each investment at June 30, 2023. Fair value marks are not a reliable indicator of future performance and no
guarantee or assurance is given that such proceeds or returns will be achieved or that an investment will not result in a loss.
12. Total Value: reflects the sum of Realized Proceeds and Liquidation Value at June 30, 2023.
ØARES
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