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13, 2023
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DIVIDEND CAPITAL DIVERSIFIED PROPERTY FUND INC.
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Chairman of the Board of Directors
For the Board of Directors of
Ares Real Estate Income Trust Inc.
TO BE HELD ON
JULY 6, 2023
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1-855-737-3182.
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Partner, Secretary
April
518One Tabor Center, 1200 Seventeenth Street, 17th Floor,Suite 2900, Denver, Colorado 80202
FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 23, 2016JULY 6, 2023
i. a proposal to elect seven directors to serve until the 2024 annual meeting of stockholders and until their respective successors are duly elected and qualify; ii. a proposal to ratify the appointment of KPMG LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2023; and iii. any other business that may properly come before the Annual Meeting or any postponement or adjournment of the Annual Meeting.
TABLE OF CONTENTS
i INFORMATION ABOUT THE MEETING AND VOTING What is the date and time of the Annual Meeting and where will it be held? The Annual Meeting will be held on Who is entitled to vote at the Annual Meeting? Our Board of Directors has fixed the close of business on How many shares of common stock are outstanding? As of the close of business on How many votes do I have? You are entitled to one vote for each share of our common stock that you held as of the record date. What will I be voting on at the Annual Meeting? At the Annual Meeting, you will be asked to: • elect seven directors to serve until the 2024 annual meeting of stockholders and until their respective successors are duly elected and qualify; • ratify the appointment of KPMG LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2023; and • act on any other business that may properly come before the Annual Meeting. How does the Board of Directors recommend that I vote on each proposal? The Board of Directors recommends a vote: • FOR the election of the nominees to our Board of Directors; and • FOR the ratification of the appointment of KPMG LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2023. What is the quorum requirement for the Annual Meeting? A quorum will be present if the holders of 50% of the outstanding shares of our common stock entitled to vote are present, in person or by proxy, at the Annual Meeting. If you have returned a valid proxy or, if you hold your shares in your own name as holder of record and you attend the Annual Meeting in person, your shares will be counted for the purpose of determining whether there is a quorum. Broker “non-votes” are also counted as present and entitled to vote for purposes of determining a quorum. A broker “non-vote” occurs when a broker holding shares of our common stock for a beneficial owner is present at the meeting, in person or by proxy, and entitled to vote, but does not vote on a particular proposal because the broker does not have discretionary voting power with respect to that item and has not received voting instructions from the beneficial owner. If a quorum is not present, the Annual Meeting may be adjourned by the chairman of the meeting until a quorum has been obtained. If a quorum is not present after an adjournment, the chairman of the meeting may determine, in the chairman’s sole discretion, not to proceed with the Annual Meeting, which would result in the current Board of Directors being held over until the earlier of our 2024 annual meeting of stockholders or the date, if any, on which their successors are duly elected and qualify. 1 What vote is required to approve each proposal? Provided that a quorum is present, (i) the election of the nominees to our Board of Directors requires the affirmative vote of holders of a majority of the shares of our common stock represented in person or by proxy at the Annual
Abstentions and broker “non-votes”, if any, will have the effect of votes against the election of the nominees to our Board of Directors. Abstentions and broker “non-votes”, if any, will have no effect on the result of the vote on the ratification of KPMG LLP as our independent registered public accounting firm for the fiscal year ending December 31, How can I vote? You can vote in person at the Annual Meeting or by proxy. If you hold your shares of our common stock in your own name as a holder of record, you have the following four options for submitting your vote by proxy: 1. if you received printed proxy materials, by signing, dating, and mailing the proxy card in the postage- paid envelope provided; 2. via the Internet at www.proxyvote.com, as provided in the proxy card, the Internet Availability Notice, and in this Proxy Statement; 3. by (i) touch-tone telephone at the toll-free number provided in the proxy card and the Internet Availability Notice, or (ii) with a live agent by telephone at 1-855-737-3182 between 9:00 a.m. and 9:00 p.m. EST, as provided in this Proxy Statement. For those stockholders with Internet access, we encourage you to vote via the Internet, since this method of voting is quick, convenient, and cost-efficient. When you vote via the Internet or by telephone prior to the Annual Meeting date, your vote is recorded immediately and there is no risk that postal delays will cause your vote to arrive late and, therefore, not be counted. If your shares of our common stock are held on your behalf by a broker, bank, or other nominee, you will receive instructions from them that you must follow to have your shares voted at the Annual Meeting. How will proxies be voted? Shares represented by valid proxies will be voted as specified on the proxy unless it is properly revoked prior thereto. If no specification is made on the proxy as to any one or more of the proposals, the shares of our common stock represented by the proxy will be voted as follows: • FOR the election of the nominees to our Board of Directors; • FOR the ratification of the appointment of KPMG LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2023; and • in the discretion of the proxy holder on any other business that properly comes before the Annual Meeting. As of the date of this Proxy Statement, we are not aware of any other matter to be raised at the Annual Meeting. How can I change my vote or revoke a proxy? If you hold shares of our common stock in your own name as a holder of record, you may revoke your proxy at any time prior to the date and time of the Annual Meeting through any of the following methods: • send written notice of revocation, prior to the Annual Meeting, to our Partner, Secretary, Mr. Joshua J. Widoff (the “Secretary”), at One Tabor Center at 1200 Seventeenth Street, Suite 2900, Denver, Colorado 80202; 2 • properly sign, date, and mail a new proxy card to our Secretary; • dial the toll-free number provided in the proxy card, the Internet Availability Notice, and in this Proxy Statement and authorize your proxy again; • log onto the Internet site provided in the proxy card, the Internet Availability Notice, and in this Proxy Statement and authorize your proxy again; or • attend the Annual Meeting and vote your shares in person. Please note that merely attending the Annual Meeting, without further action, will not revoke your proxy. If shares of our common stock are held on your behalf by a broker, bank, or other nominee, you must contact them to receive instructions as to how you may revoke your proxy. Who is soliciting my proxy, and who pays the cost of this proxy solicitation? The enclosed proxy is solicited by and on behalf of our Board of Directors. The expense of preparing, printing, and mailing this Proxy Statement and the proxies solicited hereby will be borne by the Company. In addition to the use of the mail, proxies may be solicited by officers and directors, without additional remuneration, by personal interview, telephone, or otherwise. The Company will also request brokerage firms, nominees, custodians, and fiduciaries to forward proxy materials to the beneficial owners of shares held of record as of the close of business on the record date and will provide reimbursement for the cost of forwarding the material. The Company has engaged Broadridge Investor Communications Solutions, Inc. (“Broadridge”) to solicit proxies for the Annual Meeting. The services to be performed $300,000. Where can I find the voting results after the Annual Meeting? American Election Services LLC, our independent tabulating agent, will count the votes and act as the Inspector of Election. We will publish the voting results in a Current Report on Form 8-K to be filed with the Securities and Exchange Commission (the “Commission”) within four business days after the Annual Meeting. We keep all proxies, ballots, and voting tabulations confidential as a matter of practice. We permit only our Inspector of Election, American Election Services, LLC, to examine these documents. Where can I find the Company’s Annual Report on Form 10-K? A copy of our Annual Report on Form 10-K for our fiscal year ended December 31, 3 BOARD OF DIRECTORS Our Board of Directors consists of Our Board of Directors has determined that Messrs. Charles B. Duke, Brian P. Mathis, Daniel J. Sullivan, and John P. Woodberry are independent within the meaning of the applicable (i) provisions set forth in our charter, (ii) requirements set forth in the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and the applicable Commission rules, and (iii) although our shares are not listed on the New York Stock Exchange (“NYSE”), independence rules set forth in the NYSE Listed Company Manual. To be considered independent under the NYSE rules, our Board of Directors must determine that a director does not have a material relationship with us and/or our consolidated subsidiaries (either directly or as a partner, stockholder, or officer of an organization that has a relationship with any of those entities). Our charter defines an “independent director” as a person who has not been, directly or indirectly, associated with Ares real estate (“Ares Real Estate”), our Sponsor (as defined in our charter), or the Company’s advisor, • ownership interests in our Sponsor, our Advisor, or any of their affiliates; • employment by our Sponsor, our Advisor, or any of their affiliates; • service as an officer or director of our Sponsor, our Advisor, or any of their affiliates; • performance of services, other than as a director for us; • service as a director or trustee of more than three real estate investment trusts organized by our Sponsor or advised by our Advisor; or • maintenance of a material business or professional relationship with our Sponsor, our Advisor, or any of their affiliates. We refer to our directors who are not independent as our “interested directors.” Our charter sets forth the material business or professional relationships that cause a person to be associated with us and therefore not eligible to serve as an independent director. A business or professional relationship isper se material if the prospective independent director received more than five percent of his annual gross income in the last two years from our Sponsor, our Advisor, or any affiliate of our Sponsor or Advisor, or if more than five percent of his net worth, on a fair market value basis, has come from our Sponsor, our Advisor, or any affiliate of our Sponsor or Advisor. 4 PROPOSAL NO. 1: ELECTION OF DIRECTORS The Board of Directors has recommended that Messrs. qualify. Each nominee has consented to being named in this Proxy Statement and to serve if elected. If, prior to the Annual Meeting, any nominee should become unavailable to serve, the shares of voting securities represented by a properly executed and returned proxy will be voted for such additional person as shall be designated by the Board of Directors, unless the Board of Directors determines to reduce the number of directors in accordance with the Company’s charter and bylaws. Set forth below is certain information about our directors, including their respective position, age, biographical information, directorships held in the previous five years, and the experience, qualifications, attributes, and/or skills that led the Board of Directors to determine that the person should serve as our director. All of our directors have terms expiring on the date of the Annual Meeting and are being nominated for re-election to serve until the
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THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE “FOR” THE ELECTION OF THE NOMINEES FOR DIRECTORS IDENTIFIED ABOVE. 9 CORPORATE GOVERNANCE Board Leadership Structure We separate the roles of As an interested director, Mr. Oversight of Risk Management Our Board of Directors, either directly or through designated committees, including the Audit Committee, discussed further below, oversees our risk management through its involvement in our investment, financing, financial reporting, and compliance activities. We, through our Advisor, maintain internal audit, compliance and legal departments that serve our Board of Directors and our Audit Committee in their risk management oversight. Further, our management team provides our Board of Directors and our Audit Committee with periodic updates that comprehensively address areas of our business that may pose significant risks to us. We emphasize the importance of professional business conduct and ethics through our corporate governance initiatives. Our Board of Directors consists of a majority of independent directors. Our Conflicts Resolution Committee, Code of Business Conduct and Ethics Our Board of Directors has adopted a Code of Business Conduct and Ethics, which applies to all employees of our Advisor, and our officers and directors, including our Additionally, our Board of Directors has adopted a Code of Ethics specifically for the unique and critical roles of our Our Internet address is 10 Board and Committee Meetings During the year ended December 31,
Audit Committee. The members of our Audit Committee are Messrs. Duke, Our Audit Committee meets on a regular basis, at least quarterly and more frequently as necessary. Our Audit Committee’s primary function is to assist our Board of Directors in fulfilling its oversight responsibilities by reviewing the financial information to be provided to stockholders and others, reviewing our system of internal controls, which management has established, overseeing the audit and financial reporting process, including the preapproval of services performed by our independent registered public accounting firm, and overseeing certain areas of risk management.
Conflicts Resolution Committee.The members of our Conflicts Resolution Committee are Messrs. Sullivan and Woodberry, each of whom is an independent director. Our Board of Directors has delegated to our Conflicts Resolution Committee the responsibility to consider and resolve all conflicts that may arise between us programs sponsored or advised by affiliates of our Sponsor. Compensation Committee.We do not have a standing Compensation Committee. Our Board of Directors may establish a Compensation Committee in the future to administer our equity incentive plans. The primary function of a Compensation Committee would be to administer the granting of awards to our independent directors and selected employees of our Advisor, based upon recommendations from our Advisor, and to set the terms and conditions of such awards in accordance with the equity incentive plans. A Compensation Committee, if formed, will consist entirely of our independent directors. We do not have a charter that governs the process of setting compensation. For information regarding the determination of compensation to our Advisor and its affiliates, see the “Compensation Nominating and Corporate Governance Committee.
11 and Mathis, each of whom is an independent director. Mr. Woodberry is the chairman of the Nominating and Corporate Governance Committee. Prior to each annual meeting of stockholders at which directors are to be elected or reelected, or after a vacancy arises on the Board of Directors or a director Stockholders may recommend individuals to our
Delegation of Authority to AREIT Advisors Committee.
Our Board of Directors, including a majority of the independent directors, must approve all real property
Employee, Officer We do not have a hedging policy at this time. For the year ended December 31, 2022, there were no hedging transactions by any of our officers and directors or
their designees. Stockholder and Interested Party Communications with Directors We provide the opportunity for our stockholders and other interested parties to communicate with any member, or all members, of our Board of Directors by mail. To communicate with our Board of Directors, correspondence should be addressed to our Board of Directors or any one or more individual directors 12 or group or committee of directors by either name or title. All such correspondence should be sent to the following address: The Board of Directors of c/o 1200 Seventeenth Street, Denver, Colorado 80202 All communications received as described above will be opened by our Secretary for the sole purpose of determining whether the contents constitute a communication to our directors. Any contents that are not in the nature of advertising, promotions of a product or service, or patently offensive material will be forwarded promptly to the director or directors to whom it is addressed. In the case of communications to our Board of Directors or to any group of directors, our Secretary will make sufficient copies of the contents to send to each addressee. 13 EXECUTIVE OFFICERS The following table shows the names and ages of our current executive officers and the positions held by each individual. A description of the business experience of each individual for at least the past five years follows the
14 Scott W. Recknor has served as
15 COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS Compensation of Directors
On October 11, 2021, our Board of Directors hired an independent compensation consultant, FW Cook, to conduct a comprehensive review and assessment of our independent director compensation. Based upon that review, on December 22, 2021, our Board of Directors, including all of our independent directors, approved the following independent director compensation. As of January 1, 2022, we pay each of our independent directors RSU Awards In addition, as of January 1, 2022, at each annual meeting of stockholders the independent directors RSUs The independent directors accrue dividend equivalents on unsettled RSUs, in amounts and with accrual dates that mirror the dividend amounts and payment dates on the underlying Class I shares. Any such dividend equivalent is paid in the form of additional RSUs, is subject to the same terms and vesting as the underlying RSUs with respect to which the dividend equivalents are paid, and is settled in shares at the same time as the underlying RSUs with respect to which the dividend equivalents are paid. The following table sets forth information concerning the compensation of our independent directors for the year ended December 31,
(1) Includes fees earned 2022. 16 (2) Independent Directors Annual Award (3) Reflects the Executive Compensation Compensation Discussion and Analysis Because our advisory agreement provides that our Advisor assumes principal responsibility for managing our affairs, we have no employees, and our executive officers, in their capacities as such, do not receive compensation from us, nor do they work exclusively on our affairs. In their capacities as officers or employees of our Advisor or its affiliates, they devote such portion of their time to our affairs as is required for the performance of the duties of our Advisor under the advisory agreement. The compensation received by our executive officers is not paid or determined by us, but rather by an affiliate of the Advisor based on all of the services provided by these Compensation Committee Report We do not currently have a Compensation Committee, however, our Compensation Committee, if formed, would be comprised entirely of independent directors. In lieu of a formal Compensation Committee, our independent directors perform an equivalent function. Our independent directors have reviewed and discussed the Compensation Discussion and Analysis (“CD&A”) above with management. Based on the independent directors’ review of the CD&A and their discussions of the CD&A with management, the independent directors recommended to the Board of Directors, and the Board of Directors has approved, that the CD&A be included in this Proxy Statement.
INDEPENDENT DIRECTORS: Charles B. Duke Daniel J. Sullivan John P. Woodberry Brian P. Mathis The foregoing report shall not be deemed to be “soliciting material” or incorporated by reference by any general statement incorporating by reference this Proxy Statement into any filing under the Securities Act of 1933, as amended (the “Securities Act”), or under the Exchange Act, except to the extent that we specifically incorporate this information by reference, and shall not otherwise be deemed filed under such Acts. Compensation Committee Interlocks and Insider Participation We do not currently have a Compensation Committee, however, we intend that our Compensation Committee, if formed, would be comprised entirely of independent directors. In lieu of a formal Compensation Committee, our independent directors perform an equivalent function. None of our independent directors served as one of our officers or employees or as an officer or employee of any of our subsidiaries during the fiscal year ended December 31, We do not expect that any of our executive officers will serve as a director or member of the compensation committee of any entity whose executive officers include a member of our Compensation Committee, if formed. 17 Equity Incentive Plans Second Amended and Restated Equity Incentive Plan On March 12, 2015, our Board of Directors adopted the Second Amended and Restated Equity Incentive Plan (the “Equity Incentive Plan”). The Equity Incentive Plan was approved by our stockholders on June 23, 2015. The Equity Incentive Plan provides for the granting of cash-based awards and stock-based awards, including stock options, stock appreciation rights, restricted stock, and stock units to our employees (if we have any in the future), our independent directors, employees of the Advisor or its affiliates, other advisors and consultants of ours and of the Advisor selected by the plan administrator for participation in the Equity Incentive Plan, and any prospective director, officer, employee, consultant, or advisor of the Company and the Advisor. Any such stock-based awards, including stock options, stock appreciation rights, restricted stock, and stock units will provide for exercise prices, where applicable, that are not less than the fair market value of shares of our common stock on the date of the grant. Our Board of Directors administers the Equity Incentive Plan as the plan administrator, with sole authority to select participants, determine the types of awards to be granted and determine all the terms and conditions of the awards, including whether the grant, vesting or settlement of awards may be subject to the attainment of one or more performance goals. No awards will be granted under the Equity Incentive Plan if the grant, vesting and/or exercise of the awards would jeopardize our status as a real estate investment trust for tax purposes or otherwise violate the ownership and transfer restrictions imposed under our charter. Unless determined by the plan administrator, no award granted under the Equity Incentive Plan will be transferable except through the laws of descent and distribution. An aggregate maximum of 5.0 million shares of our common stock may be issued upon grant, vesting or exercise of awards under the Equity Incentive Plan, although the Board of Directors, to date, has only authorized and reserved for issuance a total of 2.0 million shares of our common stock under the Equity Incentive Plan. In addition, to any individual in any single calendar year no more than 200,000 shares may be made subject to stock options or stock appreciation rights under the Equity Incentive Plan and no more than 200,000 shares may be made subject to other stock-based awards under the Equity Incentive Plan. Further, no more than $1.0 million may be paid under a cash-based award to any individual in a single calendar year. If any shares subject to an award Under the Equity Incentive Plan, the plan administrator will determine the treatment of awards in the event of a change in our control. The Equity Incentive Plan will automatically expire on March 12, 2025, unless earlier terminated by our Board of Directors. Our Board of Directors may terminate the Equity Incentive Plan at any time. The expiration or other termination of the Equity Incentive Plan will have no adverse impact on any award that is outstanding at the time the Equity Incentive Plan expires or is terminated without the consent of the holder of the outstanding award. Our Board of Directors may amend the Equity Incentive Plan at any time, but no amendment will adversely affect any award on a retroactive basis without the consent of the holder of the outstanding award, and no amendment to Equity Incentive Plan will be effective without the approval of our stockholders if such approval is required by any law, regulation or rule applicable to the Equity Incentive Plan. The same is true for any amendment to remove the prohibition on repricing. No amendment will be made that could jeopardize the status of the Company as a REIT under the Code. 18 Secondary Equity Incentive Plan On March 12, 2015, the Board of Directors also adopted the Amended and Restated Secondary Equity Incentive Plan (the “Secondary Plan”). The Secondary Plan was approved by our stockholders on June 23, 2015. The Secondary Plan is substantially similar to the Equity Incentive Plan, except that under the Secondary Plan, an eligible participant is any person, trust, association or entity to which the plan administrator desires to grant an award. An aggregate maximum of 5.0 million shares may be issued upon grant, vesting or exercise of awards under the Secondary Plan, although the Board of Directors, to date, has only authorized and reserved for issuance a total of 2.0 million shares of our common stock under the Secondary Plan. The following table gives information regarding our equity incentive plans as of
(1) Restricted stock units (“RSUs”) with respect to Class I shares of our common stock that were granted to our independent directors and had not been settled as of December 31, 2022 are included in the number of securities to be issued upon exercise of outstanding options, warrants, and rights but are not reflected in the weighted-average exercise price of outstanding options, warrants, and rights. (2) We have two equity incentive plans. Under each plan, an aggregate maximum of 5.0 million shares may be issued upon grant, vesting or exercise of awards, although the Board of Directors, as of December 31, 2022 has only authorized and reserved for issuance a total of 2.0 million shares of our common stock under each plan. (3) Amount represents the number of RSUs with respect to Class I shares of our common stock that were granted to our independent directors and had not yet vested as of December 31, 2022.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The following table shows, as of April Unless otherwise indicated below, each person or entity has an address in care of our principal executive offices at
* Less than 1%. (1) Each beneficial owner has the sole power to vote and dispose of all common stock held by that beneficial owner. Beneficial ownership is determined in accordance with Rule 13d-3 under the Exchange Act. Common stock issuable upon redemption of OP Units are | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires our directors, our officers, and certain beneficial owners, or, collectively, reporting persons, to file reportsperson holding the OP Units, but are not treated as outstanding for the purpose of holdings and transactions in our sharescomputing the percentage ownership of common stock with the Commission. To our knowledge, based solely on review of copies of such reports, during the year ended December 31, 2015, all of such reporting persons complied with all Section 16(a) filing requirements applicable to them.
any other person.
independent valuation firm and other parties involved in determining our monthly NAV;
Compensation to our Advisor
Our Advisor and its affiliates are paid fees and reimbursed certain expenses
| | | | Class T | | | Class S | | | Class D | | | Class I | | ||||||
| Selling commissions (as % of transaction price) | | | up to 3.00% | | | up to 3.50% | | | | | —% | | | | | | —% | | |
| Dealer manager fees (as % of transaction price) | | | 0.50% | | | —% | | | | | —% | | | | | | —% | | |
| Distribution fees (as % of NAV per annum) | | | 0.85% | | | 0.85% | | | | | 0.25% | | | | | | —% | | |
behalf. The following table summarizes alldetails the fixed component of the compensation and fees, including reimbursement of expenses, that are payable by us to our Advisor.
| | | | Fixed Advisory Fee | | ||||
| | | | | 1.10% | | | |
% of consideration received by us or our
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| (per annum)(1) | | |||||||
| | | | 1.10 | |||||
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Property Management Agreement
We are a party to a property management agreement dated January 9, 2006, or the “Property Management Agreement”, with Dividend Capital Property Management LLC, or the “Property Manager”. Under the Property Management Agreement, the Property Manager may perform certain property management services for us and our Operating Partnership. The Property Manager is an affiliate of our Advisor and was organized in April 2002 to lease and manage real properties acquired by Dividend Capital-affiliated entities or other third parties. Pursuant to the Property Management Agreement, we will pay the Property Manager a property management fee equal to a market-based percentage of the annual gross revenues of each of our real properties managed by the Property Manager. The actual percentage will be variable and is dependent upon geographic location and product type (such as office, industrial, retail, multifamily, hospitality, and other property types). In addition, we may pay the Property Manager a separate fee for the one-time initial lease-up of newly constructed real properties it manages for us in an amount not to exceed the fee customarily charged in arm’s-length transactions by others rendering similar services in the same geographic area for similar real properties as determined by a survey of brokers and agents in such area. Historically, we have primarily relied on third-party property managers, and we have not paid any significant amount of a property management fee to the Property Manager. The Property Manager is presently directly or indirectly majority owned, controlled, and/or managed by John A. Blumberg, James R. Mulvihill, Evan H. Zucker, and/or their affiliates.
Dealer Manager Agreement
We entered into a dealer manager agreement dated July 12, 2012, or the “Prior Dealer Manager Agreement,” with Dividend Capital Securities LLC, or the “Dealer Manager,” in connection with our “best efforts” offering of Class A, Class W and Class I shares of our common stock pursuant to a Registration Statement on Form S-11 (Reg. No. 333-175989) (the “Prior Offering”). Pursuant to the Prior Dealer Manager Agreement, our Dealer Manager served as the dealer manager for the Prior Offering. Our Dealer Manager is an entity related to our Advisor and a member firm of FINRA.
Under the Prior Dealer Manager Agreement, our Dealer Manager provided certain sales, promotional, and marketing services to us in connection with the distribution of the shares of common stock offered pursuant to our Prior Offering prospectus. Pursuant to the Dealer Manager Agreement, we paid our Dealer Manager a sales commission of up to 3.0% of the NAV per Class A share sold in the primary offering, subject to the reduction of the sales commission in certain circumstances, and a distribution fee which accrued daily in an amount equal to 1/365th of 0.50% of the amount of our NAV per share for our Class A shares for such day. We also paid our Dealer Manager a dealer manager fee which accrued daily in an amount equal to 1/365th of 0.60% of our NAV per share for each of our Class A and Class W shares and in an amount equal to 1/365th of 0.10% of our NAV per share for our Class I shares for such day. We will continue paying such dealer manager fees and distribution fee with respect to shares sold in the Prior Offering until the earlier to occur of the following: (i) a listing of the class of such shares on a national securities exchange, (ii) following the completion of the Prior Offering, total underwriting compensation in the Prior Offering equaling 10% of the gross proceeds from the primary portion of the Prior Offering, or (iii) such shares no longer being outstanding. The sales commissions, distribution fees, and dealer manager fees may all be reallowed to participating broker dealers who are members of FINRA. Our Dealer Manager may also receive a portion of the organization and offering expense reimbursement amounts described above under “— Compensation to our Advisor”. Our Dealer Manager is presently directly or indirectly majority owned by John A. Blumberg, James R. Mulvihill, Evan H. Zucker, and/or their affiliates.
Pursuant to an amendment to our Prior Dealer Manager Agreement entered into on May 31, 2013, from time to time we could agree to pay our Dealer Manager a primary dealer fee in the amount of up to 5.0% of the gross proceeds raised from the sale of Class I shares in the primary portion of the Prior Offering, provided that the total gross proceeds raised with respect to which the primary dealer fee will apply would not exceed $300,000,000. Pursuant to this amendment, our Dealer Manager retained 0.5% of such gross proceeds and reallowed the remainder of the primary dealer fee to the participating broker-dealers involved in selling such Class I shares based on the portion of the gross proceeds raised from their customers. The primary dealer fee is considered underwriting compensation (as defined in accordance with, and subject to the underwriting compensation limits of, applicable FINRA rules).
On September 16, 2015, the Company entered into a Second Amended and Restated Dealer Manager Agreement (the “Second Amended Dealer Manager Agreement”) with our Dealer Manager in connection with our “best efforts” offering of up to $1,000,000,000 of the Company’s Class A, Class W and Class I shares of our common stock pursuant to a Registration Statement on Form S-11 (Reg. No. 333-197767) (the “Follow-On Offering”). Pursuant to the Second Amended Dealer Manager Agreement, our Dealer Manager serves as the dealer manager for the Follow-On Offering.
The Second Amended Dealer Manager Agreement is an amendment and restatement of the Prior Dealer Manager Agreement. The purpose of the Second Amended Dealer Manager Agreement is to engage our Dealer Manager with respect to the Follow-On Offering. As amended, the Second Amended Dealer Manager Agreement may be made to apply to future offerings by naming them in a schedule to the agreement, with the consent of the Company and our Dealer Manager. Pursuant to the Second Amended Dealer Manager Agreement, we pay (i) selling commissions on Class A shares sold in the primary offering of up to 3.0% of the public offering price per share, (ii) a dealer manager fee which accrues daily in an amount equal to 1/365th of 0.6% of our NAV per share of Class A and Class W shares outstanding and an amount equal to 1/365th of 0.1% of our NAV per share of Class I shares outstanding on such day on a continuous basis, and (iii) a distribution fee which accrues daily in an amount equal to 1/365th of 0.5% of our NAV per Class A share outstanding on such day on a continuous basis. Subject to FINRA limitations on underwriting compensation, we will continue to pay the dealer manager fee and distribution fee until the earlier to occur of the following: (i) a listing of the class of such shares on a national securities exchange or (ii) such shares no longer being outstanding.
Pursuant to the Second Amended Dealer Manager Agreement, from time to time we may agree to pay our Dealer Manager a primary dealer fee in the amount of up to 5.0% of the gross proceeds raised from the sale of Class I shares in the primary portion of the Follow-On Offering, provided that the total gross proceeds raised with respect to which the primary dealer fee will apply may not exceed $100,000,000. Pursuant to this agreement, our Dealer Manager retains 0.5% of such gross proceeds and reallows the remainder of the primary dealer fee to the participating broker-dealers involved in selling such Class I shares based on the portion of the gross proceeds raised from their customers. The primary dealer fee is considered underwriting compensation (as defined in accordance with, and subject to the underwriting compensation limits of, applicable FINRA rules).
As of December 31, 2015, we have paid a primary dealer fee of $2.5 million with respect to $50.8 million of the total gross proceeds raised in the Follow-on Offering. The maximum primary dealer fee we will pay our Dealer Manager pursuant to the Second Amended Dealer Manager Agreement is $5 million, although in the future we may enter into subsequent amendments to the Second Amended Dealer Manager Agreement to provide for additional primary dealer fee payments.
Compensation to our Advisor and its Affiliates
The table below provides information regarding fees and expenses paid or payable to our Advisor, our Dealer Manager, and their affiliates in connection with their services provided to us. The table includes amounts incurred and payable for the year ended December 31, 2015 (amounts in thousands).
| For the Year Ended December 31, | ||||||||
| 2015 | 2014 | |||||||
| Advisory fees(1) | $ | 17,083 | $ | 15,919 | ||||
| Other reimbursements paid to our Advisor(2) | 9,008 | 8,287 | ||||||
| Other reimbursements paid to our Dealer Manager | 441 | 591 | ||||||
| Advisory fees related to the disposition of real properties | 4,962 | 2,064 | ||||||
| Development management fee | 88 | 181 | ||||||
| Dealer manager, distribution and primary dealer fees(3) | 2,962 | 2,533 | ||||||
| Total | $ | 34,544 | $ | 29,575 | ||||
Our independent directors evaluate at least annually whether the compensation that we contract to pay to our Advisor and its affiliates is reasonable in relation to the nature and quality of services performed and that such compensation is within the limits prescribed by our charter. Our independent directors also supervise the performance of our Advisor and its affiliates and the compensation we pay to them to determine that the provisions of our compensation arrangements are carried out. Our Board of Directors also reviews all of our general and administrative expenses on at least an annual basis, which includes certain amounts reimbursed by us to our Advisor.
Product Specialists
During the year ended December 31, 2012, our Advisor entered into a product specialist agreement with BCG TRT Advisors LLC (“BCG”), in connection with advisory services related to our investments in real estate securities assets. Pursuant to this agreement, a portion of the asset management fee that our Advisor receives from us related to real estate securities investments is reallowed to BCG in exchange for services provided. Our Advisor incurred approximately $24,000 related to services provided by BCG during the year ended December 31, 2015.
DST Program
In March 2016, we,
Under the DST Program, each private placement will offer interests in one or more real properties placed into one or more Delaware statutory trust(s) by the Operating Partnership or its affiliates (“DST Properties”). We anticipate that these interests may serve as replacement properties for investors seeking to complete like-kind exchange transactions under Section 1031
During the years ended December 31, 2022, 2021, and 2020, we sold approximately $759.0 million, $292.7 million, and $278.2 million, respectively, of gross interests related to the DST Program, $51.5 million, $26.0 million and $26.5 million of which were financed by the DST Program Loans, respectively. During the years ended December 31, 2022, 2021, and 2020, we incurred rent obligations of approximately $47.0 million, $28.4 million and $19.4 million, respectively, under our master lease agreements with investors who are participating in the DST Program. Additionally, during the years ended December 31, 2022 and 2021, 28.8 million and 15.0 million OP Units, respectively, were issued in exchange for DST Interests for a net investment of $252.6 million and $115.7 million, respectively, in accordance with our UPREIT structure.
In addition, pursuant to the dealer manager agreement for the DST Program, we, or our subsidiaries, are obligated to pay directly or reimburse the Advisor and the Dealer Manager if they pay on our behalf, any organization and offering expenses (other than selling commissions and the dealer manager fee) as and when incurred. These expenses may include reimbursements for the bona fide due diligence expenses of participating broker-dealers, supported by detailed and itemized invoices, and similar diligence expenses of investment advisers, legal fees of the Dealer Manager, reimbursements for(a) customary travel, lodging, meals and reasonable entertainment expenses of registered persons associatedincurred in connection with the Dealer Manager, the costprivate placements; (b) costs and expenses of conducting educational conferences held by us, including costs reimbursement for registered persons associated with the Dealer Manager and registered representatives of participating broker-dealers to attendseminars, attending broker-dealer sponsored conferences, or educational conferences sponsored by us,ADREX; (c) customary promotional items; and attendance(d) legal fees and costs reimbursement for registered persons associated withof the Dealer ManagerManager.
We intend to recoup the costsperformance components of the selling commissions andadvisory fee due to our Advisor. Furthermore, because our Advisor funds certain Dealer Manager personnel costs that are not reimbursed under the DST Program dealer manager fees described above throughagreement, we have also agreed to pay our Advisor a purchase price “mark-up” offee equal to the initial estimated fair value of thefee paid by DST PropertiesProgram investors for these costs, which is up to be sold to investors, thereby placing the economic burden of these up-front fees on the investors purchasing such interests. In addition, to offset some or all of our organization and offering expenses associated with the private placements, we will add a purchase price mark-up of the estimated fair value of the DST Properties to be sold to investors in the amount of 1.5% of the grosstotal equity proceeds. Collectively, these purchase price mark-ups total up to 8% ofamount paid for the gross equity proceeds raised in the private placements. Additionally, we will be paid, by investors purchasing interests, a non-accountable reimbursement equal to 1.0% of gross equity proceeds for real estate transaction costs that we expect to incur in selling or buying these Interests. Also, investors purchasing interests will be required to pay their own respective closing costs upon the initial sale of the interests.
DCX
Additionally,Properties and the sale of any DST Property to a third party, and (iv) up to 1.0% of the gross equity proceeds as compensation for developing and maintaining the DST Program technology and intellectual property. Furthermore, to the extent that the Operating Partnership exercises its fair market value purchase option to acquire the interests from the investors at a later time in exchange for OP Units, and such investors subsequently submit such OP Units for redemption pursuant to the terms of our Operating Partnership, a redemption fee of up to 1.0% of the amount otherwise payable to a limited partner upon redemption will be paid to DST Manager (or such other amount as may be set forth in the applicable DST Program offering documents).
| | | | For the Year Ended December 31, | | | Payable as of December 31, | | ||||||||||||||||||||||||
| (in thousands) | | | 2022 | | | 2021 | | | 2020 | | | 2022 | | | 2021 | | |||||||||||||||
Selling commissions and dealer manager fees(1) | | | | $ | 4,289 | | | | | $ | 2,656 | | | | | $ | 1,498 | | | | | $ | — | | | | | $ | — | | |
Ongoing distribution fees(1)(2) | | | | | 6,800 | | | | | | 3,206 | | | | | | 2,024 | | | | | | 748 | | | | | | 394 | | |
| Advisory fees – fixed component | | | | | 33,747 | | | | | | 21,433 | | | | | | 17,211 | | | | | | 2,868 | | | | | | 2,094 | | |
Performance participation allocation(3) | | | | | 23,747 | | | | | | 15,327 | | | | | | 4,608 | | | | | | 23,747 | | | | | | 15,327 | | |
Other expense reimbursements – Advisor(4)(5) | | | | | 11,346 | | | | | | 11,070 | | | | | | 10,002 | | | | | | 4,192 | | | | | | 1,443 | | |
| Other expense reimbursements – Dealer Manager | | | | | 372 | | | | | | 376 | | | | | | 516 | | | | | | 109 | | | | | | — | | |
Property accounting fee(6) | | | | | 1,289 | | | | | | — | | | | | | — | | | | | | 478 | | | | | | — | | |
DST Program selling commissions, dealer manager and distribution fees(1) | | | | | 22,467 | | | | | | 9,871 | | | | | | 4,097 | | | | | | 241 | | | | | | 219 | | |
Other DST Program related costs – Advisor(5) | | | | | 14,860 | | | | | | 6,318 | | | | | | 4,085 | | | | | | 146 | | | | | | 87 | | |
| Total | | | | $ | 118,917 | | | | | $ | 70,257 | | | | | $ | 44,041 | | | | | $ | 32,529 | | | | | $ | 19,564 | | |
named executive officers unless the named executive officer is providing stockholder services, as outlined in the Advisory Agreement. There were $115,475 and $193,373 of reimbursement amounts, respectively, related
| Date | | | Name | | | Transaction Type (Acquisition or Disposition of Shares) | | | Number of Shares | | | Then-current NAV per Share | | ||||||
| 4/1/23 | | | Jay W. Glaubach | | | Acquisition | | | | | 57,471.925 | | | | | $ | 8.6999 | | |
| 4/1/23 | | | David A. Roth | | | Acquisition | | | | | 28,735.962 | | | | | $ | 8.6999 | | |
We are subject
Independent Directors
Our independent directors evaluate at least annually whether the compensation that we contract to pay to ourthe Advisor and its affiliates is reasonable in relation to the nature and quality of the services performed and to our investment performance and that such compensation is withinperformance. Our charter also contains the limits prescribedfollowing requirements relating to approval by our charter. In addition,Board of Directors and independent director approval of transactions between us, on the one hand, and the Advisor or any of its affiliates (each, a “Related Party”), on the other hand:
Acquisitions Involving Affiliates
believe they are in the best interests of its stockholders. The basis for this conclusion is outlined below.
Daniel J. Sullivan
John P. Woodberry
Brian P. Mathis
Mortgage Loans Involving Affiliates
Our charter prohibits us from investing in or making mortgage loans in which the transaction is with our Sponsor, our Advisor, our directors, or any of their affiliates unless an independent expert appraises the underlying property. We must keep the appraisal for at least five years and make it available for inspection and duplication by any of our stockholders. In addition, we must obtain a mortgagee’s or owner’s title insurance policy or commitment as to the priority of the mortgage or the condition of the title. Our charter prohibits us from making or investing in any mortgage loans that are subordinate to any lien or other indebtedness of our Sponsor, our Advisor, our directors, or any of their affiliates.
Issuance of Options and Warrants to Certain Affiliates
Our charter prohibits the issuance of options or warrants to purchase our common stock to our Sponsor, our Advisor, our directors, or any of their affiliates (i) on terms more favorable than we would offer such options or warrants to unaffiliated third parties or (ii) in excess of an amount equal to 10% of our outstanding common stock on the date of grant.
Repurchase of Shares of Common Stock
Our charter prohibits us from paying a fee to our Sponsor, our Advisor, our directors, or any of their affiliates in connection with our repurchase of our common stock.
Loans and Expense Reimbursements Involving Affiliates
Except with respect to certain mortgage loans as described above or loans to wholly owned subsidiaries, we will not make any loans to our Sponsor, our Advisor, our directors, or any of their affiliates. In addition, we will not borrow from these parties unless a majority of the directors not otherwise interested in the transaction (including a majority of the independent directors not otherwise interested in the transaction) approve the transaction as being fair, competitive, and commercially reasonable, and no less favorable to us than comparable loans between unaffiliated parties. These restrictions on loans will only apply to advances of cash that are commonly viewed as loans, as determined by our Board of Directors. By way of example only, the prohibition on loans would not restrict advances of cash for legal expenses or other costs incurred as a result of any legal action for which indemnification is being sought, nor would the prohibition limit our ability to advance reimbursable expenses incurred by directors or our Advisor or its affiliates.
|
Daniel J. Sullivan
John P. Woodberry
Fiscal Year 2015
| Fiscal Year 2014
| |||||||
| Audit Fees: | $ | 844,415 | $ | 894,915 | ||||
| Audit-Related Fees: | — | — | ||||||
| Tax Fees: | — | — | ||||||
| All Other Fees: | — | — | ||||||
| Total: | $ | 844,415 | $ | 894,915 | ||||
| | | | Fiscal Year 2022 | | | Fiscal Year 2021 | | ||||||
| Audit Fees: | | | | $ | 950,000 | | | | | $ | 779,000 | | |
| Audit-Related Fees: | | | | | — | | | | | | — | | |
| Tax Fees: | | | | | — | | | | | | — | | |
| All Other Fees: | | | | | — | | | | | | — | | |
| Total: | | | | $ | 950,000 | | | | | $ | 779,000 | | |
REGISTERED PUBLIC ACCOUNTING FIRM
If the appointment is not ratified by the stockholders for any reason, it will have no impact on the Audit Committee’s appointment of KPMG LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2023. Only the Audit Committee can hire or terminate our independent registered public accounting firm.
THE RATIFICATION OF THE APPOINTMENT OF KPMG LLP AS THE COMPANY’S
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE FISCAL YEAR
ENDING DECEMBER 31,
2023.
FOR THE 20172024 ANNUAL MEETING
15, 2023; provided, however, that in the event that the date of the annual meeting is advanced or delayed by more than 30 days from the first anniversary of the date of the preceding year’s annual meeting, in order for notice by the stockholder to be timely, such notice must be so delivered not earlier than the 150th day prior to the date of such annual meeting and not later than 5:00 p.m., Mountain Time, on the later of the 120th day prior to the date of such annual meeting or the tenth day following the day on which public announcement of the date of such meeting is first made.
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| Denver, Colorado April 13, 2023 | |
| | |
| | Joshua J. Widoff |
|
Denver, Colorado
April 21, 2016
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The Notice of Annual Meeting and Proxy Statement and Annual Report are available atwww.proxyvote.com www.proxyvote.com. ARES REAL ESTATE INCOME TRUST INC. Annual Meeting of Stockholders July 6, 2023 11:00 AM MDT This proxy is solicited by the Board of Directors The stockholder(s), on the reverse side of this ballot, hereby appoint(s) Joshua J. Widoff and Lainie P. Minnick, or either of them, as proxies, each with the power to appoint his or her substitute, and hereby authorize(s) them to represent and to vote, as designated on the reverse side of this ballot, all of the shares of stock of ARES REAL ESTATE INCOME TRUST INC. that the stockholder(s) is/are entitled to vote at the Annual Meeting of Stockholders to be held at 11:00 AM MDT, on July 6, 2023, at the Tabor Center located at 1200 Seventeenth Street, Denver, Colorado 80202, and any adjournment or postponement thereof (i) as designated by the Stockholder(s) on the reverse side of this ballot, and (ii) in the discretion of the proxies on any other matter that may properly come before the Annual Meeting of Stockholders or any postponement or adjournment thereof. This proxy, when properly executed, will be voted in the manner directed herein. If no such direction is made, this proxy will be voted in accordance with the Board of Directors' recommendations. This proxy will be voted in the discretion of the proxies on any matter other than the proposals set forth on the reverse side of this ballot that is properly brought before the Annual Meeting of Stockholders or any postponement or adjournment thereof. Continued and to be signed on reverse side
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