Ares US Real Estate Opportunity Fund III, L.P Market and Portfolio Update
Disclaimer (continued)
Coronavirus and Public Health Emergency Risks
As of March 17, 2020, there is an outbreak of a novel and highly contagious form of coronavirus ("COVID-19"), which the World Health Organization has declared to constitute a pandemic. The outbreak
of COVID-19 has resulted in numerous deaths, adversely impacted global commercial activity, and contributed to significant volatility in certain equity and debt markets. The global impact of the
outbreak is rapidly evolving, and many countries have reacted by instituting quarantines, prohibitions on travel and the closure offices, businesses, schools, retail stores, and other public venues.
Businesses are also implementing similar precautionary measures. Such measures, as well as the general uncertainty surrounding the dangers and impact of COVID-19, are creating significant
disruption in supply chains and economic activity and are having a particularly adverse impact on transportation, hospitality, tourism, entertainment and other industries. The impact of ČOVID-19 has
led to significant volatility and declines in the global public equity markets and it is uncertain how long this volatility will continue. As COVID-19 continues to spread, the potential impacts, including a
global, regional or other economic recession, are increasingly uncertain and difficult to assess.
Any public health emergency, including any outbreak of COVID-19 or other existing or new epidemic diseases, or the threat thereof, and the resulting financial and economic market uncertainty could
have a significant adverse impact on the Fund, the pricing and fair value of its investments and real estate assets and its subsidiaries, and could adversely affect the Fund's ability to fulfill its
investment objectives.
The extent of the impact of any public health emergency on the Fund's and its subsidiaries' operational and financial performance will depend on many factors, including the duration and scope of
such public health emergency, the extent of any related travel advisories and restrictions implemented, the impact of such public health emergency on overall supply and demand, goods and services,
investor liquidity, consumer confidence and levels of economic activity and the extent of its disruption to important global, regional and local supply chains and economic markets, all of which are
highly uncertain and cannot be predicted. The effects of a public health emergency may materially and adversely impact (i) the value and performance of the Fund and its investments, (ii) the ability of
the Fund and/or its subsidiaries to continue to meet loan covenants or repay loans on a timely basis or at all, (iii) the ability of the Fund and/or its subsidiaries to repay their debt obligations, on a
timely basis or at all or (iv) the Fund's ability to source, manage and divest investments and the Fund's ability to achieve its investment objectives, all of which could result in significant losses to the
Fund.
All unrealized performance information, investment strategy, and targeted returns presented throughout this presentation were prepared as of the dates indicated. Such information was prepared at
such times in good faith based on a number of fundamental assumptions as of such dates, including assumptions relating to the broader economy, macro and applicable micro economic conditions,
the geopolitical landscape, interest rates, availability and pricing of credit, liquidity and depth of transactional markets, health, population, and the environment, etc. With the unprecedented (and to
date uncurable) advancement of COVID-19, most of those assumptions at the current time appear to be materially off or in a state of suspension. Consequently, all unrealized performance information,
the portions of the investment strategy which related to targeted returns, and valuations of current investments held within or warehoused for the Fund are at the time of this writing indeterminate,
but presumed to be materially lower than those last presented. While in the medium to longer term the Manager believes the Fund should see attractive opportunities consistent with its larger
investment themes and strategy, it will likely take some time for the markets to recover.
In addition, the operations of the Fund, its subsidiaries and investments, the General Partner and the Manager may be significantly impacted, or even temporarily or permanently halted, as a result of
government quarantine measures, voluntary and precautionary restrictions on travel or meetings and other factors related to a public health emergency, including its potential adverse impact on the
health of any such entity's personnel.
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