Ares U.S. Real Estate Opportunity Fund IV, L.P. (“AREOF IV”)

Risk Factors General Risks of Real Estate Investment All real estate investments, ranging from equity investments to debt investments, are subject to some degree of risk. No assurances can be given that the fair market value of any real estate investments held by the Fund will not decrease in the future or that the Fund will recognize full value for any investment that the Fund is required to sell for liquidity reasons. Important Investment Considerations and Risks of Investing. An investment in the value-add or opportunistic strategy entails a significant degree of risk and, therefore, should be undertaken only by investors capable of evaluating the risks of the strategy and bearing the risks it represents. Vehicle returns are unpredictable and, accordingly, the value-add strategy investment program is not suitable as the sole investment vehicle for an investor. There can be no assurance that the value-add strategy will meet its investment objectives or otherwise be able to successfully carry out its investment program. An investor should only invest in the value-add strategy if such investor is able to withstand a total loss of its investment. Uncertainty of Fair Value. Fair value returns presented herein are based on manager's estimate of fair values for unrealized investments. A valuation is only an estimate of value and is not a precise measure of realizable value. Ultimate realization of the market value of an asset depends to a great extent on economic and other conditions beyond the control of the manager. Further, valuations do not necessarily represent the price at which a real estate investment would sell since definitive market prices of real estate investments can only be determined by negotiation between a willing buyer and seller. As such, the fair value of an investment may not reflect the price at which the investment could be sold in the market, and the difference between the fair value and the ultimate sales price could be material. Allocation of Investment Opportunities The General Partner, Ares Management and their affiliates may, from time to time, be presented with investment opportunities that fall within the Fund's investment objectives and the investment objectives of one or more funds managed by Ares. In the event the Manager determines that the Fund and one or more funds managed by Ares should participate in the same investment opportunity at the same time, the Manager shall allocate such investment opportunity in accordance with Ares' Investment Allocation Policy. None of the General Partner, the Manager or Ares Management or their affiliates has any affirmative obligation to offer any investments to the Fund or to inform the Fund before offering investments to any other fund managed by Ares. A copy of Ares' Investment Allocation Policy is available upon request. Co-Investments The Fund may co-invest in the same investment opportunity together with other funds managed by Ares and in certain circumstances in a side-by-side, programmatic and/or joint venture basis with, or offer co-investment opportunities to co-investors. The commitment of co-investors to an investment may be substantial and such investments may involve risks not present in investments where such co-investors are not involved. Further, it is possible that a co-investor may experience financial, legal or regulatory difficulties, may at any time have economic, tax or business interests or goals that are inconsistent with those of the Fund, may take a different view from Ares or the General Partner as to the appropriate strategy for an investment, or may be in a position to take action contrary to the Fund's investment objectives. Additionally, the Fund's position could also be diluted or subordinated by subsequent investments of co-investors. Finally, the Fund may in certain circumstances be liable for the actions or omissions of co-investors. Principal Interest Risk between Ares Funds Ares Management and its affiliates may invest in different parts of the capital structure of a real estate asset in which the Fund invests therefore their respective interests may diverge significantly in the case of financial distress of such real estate asset. There can be no assurance that the terms of or the return on the Fund's investment will be equivalent to or better than the terms of or the returns obtained by Ares or any Ares fund(s) participating in such transactions. Transactions with Ares Affiliates The Fund may retain affiliates of Ares to perform certain services, as well as engage certain companies in which an affiliate and/or a fund managed by Ares holds an equity interest to provide services with respect to any or all of the Fund's investments and/or engage certain companies in which the Fund holds an equity interest to provide services with respect to any or all of the Fund's investments or an investment held by an affiliate and/or a fund managed by Ares. The fee potential for affiliates of Ares, both current and future, inherent in a particular transaction could constitute a conflict of interest as it may be an incentive for the Manager to seek to refer or recommend a transaction to the Fund. Material Non-Public Information Ares, the Manager, the General Partner, the Fund investment professionals and certain of their officers, directors, employees, agents and affiliates may acquire confidential or material non-public information or be restricted from initiating transactions in certain securities. Due to these restrictions, the Fund may not be able to initiate a transaction that it might otherwise have initiated and may not be able to dispose of an investment that it otherwise might have disposed. Principal Transactions, Borrowing, and Cross-Transactions Ares and its affiliates may engage in transactions with the Fund and its investments for its own account. Ares and its affiliates may retain management and/or other fees as well as income and may otherwise profit from such transactions. With regards to cross-transactions, there can be no assurance another transaction could not be made on more favorable terms or that a purchaser would not pay more for the sale of an investment. While such cross-transactions generally will not require the consent of the Fund under applicable law, cross-transactions may result in conflicts of interests, as the Fund may not receive the same price as if such buy and sell transactions were exposed to market forces. Warehoused Investments Prior to or in connection with the initial closing, the General Partner or its affiliates may, directly or indirectly, enter into contracts to acquire one or more investments with the intent of warehousing such investments for the Fund, and the General Partner may designate such investments as warehoused target investments for the Fund., with an expectation that upon receipt of entitlements and completion of satisfactory due diligence, the investment will be closed into the Fund. Such warehoused investments shall be transferred to the Fund at or promptly after the initial closing for an amount equal to the cost of such investment plus interest thereon at a rate determined by the General Partner, compounded annually, with respect to the equity invested in such warehoused investment, calculated as of the date of the acquisition of such investment. Illiquidity of Investments The investments to be made by the Fund are likely to be illiquid, and it is unlikely that there will be a public market for any of the investments held by the Fund. The illiquid nature of the Fund's investments will limit the Fund's ability to respond to changes in economic and other conditions. While an investment may be disposed of at any time, the Fund may hold an interest in one or more investments that the Manager believed could be exited prior to the end of the Fund's term, but for a variety of economic, legal, political or other reasons remain unsold on the date on which the Fund will be dissolved, either by expiration of the Fund's term or otherwise. Please refer to the Fund's Private Placement Memorandum for further information regarding Risk Factors and Conflicts of Interest associated with the Fund. ØARES