ARES INDUSTRIAL REAL ESTATE INCOME TRUST INC. MANAGEMENT REPORT OF FINANCIAL POSITION AND RESULTS OF OPERATIONS (Form 10-Q)

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References to the terms "we," "our," or "us" refer to Ares Industrial Real
Estate Income Trust Inc. and its consolidated subsidiaries. The following
discussion and analysis should be read together with our unaudited condensed
consolidated financial statements and notes thereto included in this Quarterly
Report on Form 10-Q.

           CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q includes certain statements that may be
deemed forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of
the Securities Exchange Act of 1934, as amended (the "Exchange Act"). Such
forward-looking statements relate to, without limitation, our ability to raise
capital and effectively and timely deploy the net proceeds from our public
offerings, the expected use of net proceeds from our public offerings, our
reliance on the Advisor and the Sponsor, our understanding of our competition
and our ability to compete effectively, our financing needs, our expected
leverage, the effects of our current strategies, rent and occupancy growth,
general conditions in the geographic area where we will operate, our future debt
and financial position, our future capital expenditures, future distributions
and acquisitions (including the amount and nature thereof), other developments
and trends of the real estate industry, investment strategies and the expansion
and growth of our operations. Forward-looking statements are generally
identifiable by the use of the words "may," "will," "should," "expect," "could,"
"intend," "plan," "anticipate," "estimate," "believe," "continue," "project," or
the negative of these words or other comparable terminology. These statements
are not guarantees of future performance, and involve certain risks,
uncertainties and assumptions that are difficult to predict.

The forward-looking statements included herein are based upon our current
expectations, plans, estimates, assumptions, and beliefs that involve numerous
risks and uncertainties. Assumptions relating to the foregoing involve judgments
with respect to, among other things, present and future economic, competitive
and market conditions, and future business decisions, all of which are difficult
or impossible to predict accurately and many of which are beyond our control.
Although we believe that the expectations reflected in such forward-looking
statements are based on reasonable assumptions, our actual results and
performance could differ materially from those set forth in the forward-looking
statements. Factors that could have a material adverse effect on our operations
and future prospects include, but are not limited to:

? Our ability to raise capital and effectively deploy the net proceeds raised in

our public offerings in accordance with our investment strategy and objectives;

? The failure of properties to work as expected;

? Risks associated with acquisitions, disposals and development of properties;

? Our inability to successfully integrate acquired properties and operations;

The failure of successful integration Black Creek Group in the business,

? operations and corporate culture of Ares, and to retain Black Creek Group

personnel following the acquisition by Ares of Black Creek Group WE real estate

investment advice and distribution activity in July 2021;

? Unforeseen delays or increased costs associated with any development project;

? The availability of cash flow from operating activities for distributions and

capital expenditure;

Defaults or non-renewal of leases by customers, renewals of leases at prices below

? expected rent, or failure to rent properties at all or on favorable rents and

terms;

Difficulties in general economic conditions and in real estate, debt and

? securities markets in particular, including those related to COVID-19

pandemic;

? Changes in laws or regulations, including changes to laws governing the

taxation of real estate investment trusts (“REITs”);

? Our inability to obtain, renew or extend necessary financing or access debt

or stock markets;

? Conflicts of interest arising from our relationship with the Sponsor, the

Advisor and their affiliates;

? The risks associated with using debt to finance our business activities, including

refinancing and interest rate risks;

? Increase in interest rates, operating costs or capital higher than expected

   expenditures;


 ? Changes to GAAP; and


? Our ability to continue to qualify as REITs.

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Any of the assumptions underlying forward-looking statements could prove to be
inaccurate. Our stockholders are cautioned not to place undue reliance on any
forward-looking statements included in this Quarterly Report on Form 10-Q. All
forward-looking statements are made as of the date of this Quarterly Report on
Form 10-Q and the risk that actual results will differ materially from the
expectations expressed in this Quarterly Report on Form 10-Q will increase with
the passage of time. Except as otherwise required by the federal securities
laws, we undertake no obligation to publicly update or revise any
forward-looking statements after the date of this Quarterly Report on Form 10-Q,
whether as a result of new information, future events, changed circumstances, or
any other reason. In light of the significant uncertainties inherent in the
forward-looking statements included in this Quarterly Report on Form 10-Q,
including, without limitation, the risks described under "Risk Factors," the
inclusion of such forward-looking statements should not be regarded as a
representation by us or any other person that the objectives and plans set forth
in this Quarterly Report on Form 10-Q will be achieved.

PREVIEW

General

Ares Industrial Real Estate Income Trust Inc. is a Maryland corporation formed
on August 12, 2014 to make investments in income-producing real estate assets
consisting primarily of high-quality distribution warehouses and other
industrial properties that are leased to creditworthy corporate customers. We
currently operate as a REIT for U.S. federal income tax purposes, and elected to
be treated as a REIT beginning with our taxable year ended December 31, 2017. We
utilize an Umbrella Partnership Real Estate Investment Trust ("UPREIT")
organizational structure to hold all or substantially all of our assets through
the Operating Partnership.

We intend to conduct a continuous offering that will not have a predetermined
duration, subject to continued compliance with the rules and regulations of the
SEC and applicable state laws. In order to execute this strategy in compliance
with federal securities laws, we intend to file new registration statements to
replace existing registration statements, such that there will not be any lag
from one offering to the next. On August 4, 2021, the SEC declared our
registration statement on Form S-11 with respect to our third public offering of
up to $5.0 billion of shares of our common stock effective, and the third public
offering commenced the same day. Our second public offering of up to $2.0
billion of shares of common stock was terminated immediately upon the
effectiveness of the registration statement for the third public offering. Under
the third public offering, we are offering up to $3.75 billion of shares of our
common stock in the primary offering and up to $1.25 billion of shares of our
common stock pursuant to our distribution reinvestment plan, in any combination
of Class T shares, Class D shares and Class I shares. We may reallocate amounts
between the primary offering and distribution reinvestment plan.

Pursuant to our public offerings, we offered and continue to offer shares of our
common stock at the "transaction price," plus applicable selling commissions and
dealer manager fees. The "transaction price" generally is equal to the net asset
value ("NAV") per share of our common stock most recently disclosed. Our NAV per
share is calculated as of the last calendar day of each month for each of our
outstanding classes of common stock, and is available generally within 15
calendar days after the end of the applicable month. Shares issued pursuant to
our distribution reinvestment plan are offered at the transaction price, as
indicated above, in effect on the distribution date. We may update a previously
disclosed transaction price in cases where we believe there has been a material
change (positive or negative) to our NAV per share relative to the most recently
disclosed monthly NAV per share. See "Net Asset Value" below for further detail.

Additionally, we have a program to raise capital through private placement
offerings by selling DST Interests. These private placement offerings are exempt
from registration requirements pursuant to Section 4(a)(2) of the Securities
Act. We anticipate that these interests may serve as replacement properties for
investors seeking to complete like-kind exchange transactions under Section 1031
of the Code. We expect that the DST Program will give us the opportunity to
expand and diversify our capital raise strategies by offering what we believe to
be an attractive and unique investment product for investors that may be seeking
replacement properties to complete like-kind exchange transactions. We also make
loans ("DST Program Loans") to finance no more than 50% of the purchase price of
the DST Interests to certain purchasers of the interests in the Delaware
statutory trusts. During the three months ended March 31, 2022, we sold $157.1
million of gross interests related to the DST Program, $12.7 million of which
were financed by DST Program Loans. See "Note 6 to the Condensed Consolidated
Financial Statements" for additional detail regarding the DST Program.

During the three months ended March 31, 2022, we raised gross proceeds of
approximately $252.8 million from the sale of 20.0 million shares of our common
stock, including shares issued pursuant to our distribution reinvestment plan.
See "Note 8 to the Condensed Consolidated Financial Statements" for information
concerning our public offerings.

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As of March 31, 2022, we directly owned and managed a real estate portfolio that
included 202 industrial buildings totaling approximately 39.3 million square
feet located in 29 markets throughout the U.S., with 354 customers, and was
97.3% occupied (99.0% leased) with a weighted-average remaining lease term
(based on square feet) of approximately 4.4 years. The occupied rate reflects
the square footage with a paying customer in place. The leased rate includes the
occupied square footage and additional square footage with leases in place that
have not yet commenced. As of March 31, 2022 our real estate portfolio included:

194 industrial buildings totaling approximately 38.1 million square feet

? included our operating portfolio, which includes stabilized properties, and

was 98.3% occupied (99.6% leased) with a weighted average remaining lease term

(based on square feet) approximately 4.4 years; and

8 industrial buildings totaling approximately 1.2 million square feet including

our value-added portfolio, which includes properties acquired with the intention

? to be repositioned or redeveloped, or recently completed buildings that have not yet

reached stabilization. It is generally considered that a building is stabilized on the

earlier than the first anniversary of the completion of the structural work of a building or

building reaching 90% occupancy.

Concurrently with the BTC II Partnership Transaction (as described in "Note 4 to
the Condensed Consolidated Financial Statements") on February 15, 2022, we and
our joint venture partners formed the BTC II B Partnership, through which we
co-own five properties that were part of the original BTC II Portfolio and were
not part of the BTC II Partnership Transaction. As of March 31, 2022, we owned
and managed five buildings that were either under construction or in the
pre-construction phase totaling approximately 1.8 million square feet, through
our 8.0% minority ownership interest in the BTC II B Partnership. Unless
otherwise noted, these buildings are excluded from the presentation of our
portfolio data herein.

We have used, and intend to continue to use, the net proceeds from our offerings
primarily to make investments in real estate assets. We may use the net proceeds
from our offerings to make other real estate-related investments and debt
investments and to pay distributions. The number and type of properties we may
acquire and debt and other investments we may make will depend upon real estate
market conditions, the amount of proceeds we raise in our offerings, and other
circumstances existing at the time we make our investments.

Our primary investment objectives include the following:

? preserve and protect the capital contributions of our shareholders;

? provide current income to our shareholders in the form of

distributions; and

? achieve capital appreciation in our net asset value through active investment management and

asset Management.


There is no assurance that we will attain our investment objectives. Our charter
places numerous limitations on us with respect to the manner in which we may
invest our funds. In most cases these limitations cannot be changed unless our
charter is amended, which may require the approval of our stockholders.

We may acquire assets free and clear of mortgage or other indebtedness by paying
the entire purchase price in cash or equity securities, or a combination
thereof, and we may selectively encumber all or only certain assets with debt.
The proceeds from our borrowings may be used to fund investments, make capital
expenditures, pay distributions, and for general corporate purposes.

We expect to manage our corporate financing strategy under the current mortgage
lending and corporate financing environment by considering various lending
sources, which may include long-term fixed-rate mortgage loans, floating-rate
mortgage notes, unsecured or secured lines of credit or term loans, private
placement or public bond issuances, and the assumption of existing loans in
connection with certain property acquisitions, or any combination of the
foregoing.

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Net Asset Value
Our board of directors, including a majority of our independent directors, has
adopted valuation procedures, as amended from time to time, that contain a
comprehensive set of methodologies to be used in connection with the calculation
of our NAV. With the approval of our board of directors, including a majority of
our independent directors, we have engaged Altus Group U.S. Inc., a third-party
valuation firm, to serve as our independent valuation advisor ("Altus Group" or
the "Independent Valuation Advisor") with respect to providing monthly real
property appraisals, reviewing annual third-party real property appraisals,
reviewing the internal valuations of debt-related assets and liabilities
performed by our Advisor, helping us administer the valuation and review process
for the real properties in our portfolio, and assisting in the development and
review of our valuation procedures. As part of this process, our Advisor reviews
the estimates of the values of our real property portfolio, real estate-related
assets, and other assets and liabilities within our portfolio for consistency
with our valuation guidelines and the overall reasonableness of the valuation
conclusions, and informs our board of directors of its conclusions. Although
third-party appraisal firms, the Independent Valuation Advisor, or other pricing
sources may consider any comments received from us or our Advisor or other
valuation sources for their individual valuations, the final estimated fair
values of our real properties are determined by the Independent Valuation
Advisor and the final estimates of fair values of our real estate-related
assets, our other assets, and our liabilities are determined by the applicable
pricing source (which may, in certain instances be our Advisor or an affiliate
of Ares), subject to the oversight of our board of directors. With respect to
the valuation of our real properties, the Independent Valuation Advisor provides
our board of directors with periodic valuation reports and is available to meet
with our board of directors to review valuation information, as well as our
valuation guidelines and the operation and results of the valuation and review
process generally. Excluding real properties that are bought or sold during a
given calendar year, unconsolidated real properties held through joint ventures
or partnerships are valued by a third-party appraiser at least once per calendar
year. For valuations during interim periods, either the Advisor will determine
the estimated fair value of the real properties owned by unconsolidated
affiliates or we will utilize interim valuations determined pursuant to
valuation policies and procedures for such joint ventures or partnerships. All
parties engaged by us in connection with our valuation procedures, including the
Independent Valuation Advisor, ALPS Fund Services Inc. ("ALPS"), and our
Advisor, are subject to the oversight of our board of directors. Our board of
directors has the right to engage additional valuation firms and pricing sources
to review the valuation process or valuations, if deemed appropriate. At least
once each calendar year our board of directors, including a majority of our
independent directors, reviews the appropriateness of our valuation procedures
with input from the Independent Valuation Advisor. From time to time our board
of directors, including a majority of our independent directors, may adopt
changes to the valuation procedures if it: (1) determines that such changes are
likely to result in a more accurate reflection of NAV or a more efficient or
less costly procedure for the determination of NAV without having a material
adverse effect on the accuracy of such determination; or (2) otherwise
reasonably believes a change is appropriate for the determination of NAV. We
will publicly announce material changes to our valuation procedures. See Exhibit
99.2 of this Quarterly Report on Form 10-Q for a more detailed description of
our valuation procedures, including important disclosure regarding real property
valuations provided by the Independent Valuation Advisor.

Our valuation procedures, which address specifically each category of our assets
and liabilities and are applied separately from the preparation of our financial
statements in accordance with GAAP, involve adjustments from historical cost.
There are certain factors which cause NAV to be different from total equity or
stockholders' equity on a GAAP basis. Most significantly, the valuation of our
real assets, which is the largest component of our NAV calculation, is provided
to us by the Independent Valuation Advisor. For GAAP purposes, these assets are
generally recorded at depreciated or amortized cost. Another example that will
cause our NAV to differ from our GAAP total equity or stockholders' equity is
the straight-lining of rent, which results in a receivable for GAAP purposes
that is not included in the determination of our NAV. The fair values of our
assets and certain liabilities are determined using widely accepted
methodologies and, as appropriate, the GAAP principles within the FASB
Accounting Standards Codification under Topic 820, Fair Value Measurements and
Disclosures and are used by ALPS in calculating our NAV per share. However, our
valuation procedures and our NAV are not subject to GAAP and will not be subject
to independent audit. We did not develop our valuation procedures with the
intention of complying with fair value concepts under GAAP and, therefore, there
could be differences between our fair values and the fair values derived from
the principal market or most advantageous market concepts of establishing fair
value under GAAP. The aggregate real property valuation of $6.86 billion
compares to a GAAP basis of real properties (net of intangible lease liabilities
and before accumulated amortization and depreciation) of $5.36 billion,
representing a difference of approximately $1.5 billion, or 28.1%.

As used below, "Fund Interests" means our outstanding shares of common stock,
along with OP Units, which may be or were held directly or indirectly by the
Advisor, the Former Sponsor, members or affiliates of the Former Sponsor, and
third parties, and "Aggregate Fund NAV" means the NAV of all the Fund Interests.

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The following table shows the components of the fund’s overall net asset value as of
March 31, 2022 and December 31, 2021:

                                                                             As of
(in thousands)                                                March 31, 2022     December 31, 2021
Investments in industrial properties                         $      6,860,200   $         5,677,050
Investment in unconsolidated joint venture partnership                 20,441               147,952
DST Program Loans                                                      81,338                68,772
Cash and cash equivalents                                             277,374               216,848
Other assets                                                           58,220                36,317
Line of credit, term loans and mortgage notes                     (2,352,726)           (2,261,140)
Financing obligations associated with our DST Program               (681,045)             (499,964)
Other liabilities                                                   (105,351)              (73,467)
Accrued performance participation allocation                         (83,300)              (81,185)
Accrued fixed component of advisory fee                               (4,955)               (3,864)
Aggregate Fund NAV                                           $      4,070,196   $         3,227,319
Total Fund Interests outstanding                                      280,832               258,170


The following table shows the net asset value per interest of the fund as of March 31, 2022:

(in thousands, except per Fund
Interest data)                           Total       Class T Shares     Class D Shares     Class I Shares    OP Units
Monthly NAV                           $ 4,070,196   $      3,115,681   $        220,639   $        668,181   $  65,695
Fund Interests outstanding                280,832            214,973       
     15,223             46,103       4,533
NAV Per Fund Interest                 $     14.49   $          14.49   $          14.49   $          14.49   $   14.49

The increase in net asset value per interest of the fund for the month ended March 31, 2022 stemmed primarily from strong rental growth, above-market average rental growth and strengthening capital markets.

Under GAAP, we record liabilities for ongoing distribution fees that (i) we
currently owe the Dealer Manager under the terms of the dealer manager agreement
and (ii) we estimate we may pay to the Dealer Manager in future periods for
shares of our common stock. As of March 31, 2022, we estimated approximately
$88.7 million of ongoing distribution fees were potentially payable to the
Dealer Manager. We do not deduct the liability for estimated future distribution
fees in our calculation of NAV since we intend for our NAV to reflect our
estimated value on the date that we determine our NAV. Accordingly, our
estimated NAV at any given time does not include consideration of any estimated
future distribution fees that may become payable after such date.

We include no discounts to our NAV for the illiquid nature of our shares,
including the limitations on our stockholders' ability to redeem shares under
our share redemption program and our ability to suspend our share redemption
program at any time. Our NAV generally does not reflect the potential impact of
exit costs (e.g. selling costs and commissions related to the sale of a
property) that would likely be incurred if our assets and liabilities were
liquidated or sold today. While we may use market pricing concepts to value
individual components of our NAV, our per share NAV is not derived from the
market pricing information of open-end real estate funds listed on stock
exchanges.

Our NAV is not a representation, warranty or guarantee that: (i) we would fully
realize our NAV upon a sale of our assets; (ii) shares of our common stock would
trade at our per share NAV on a national securities exchange; and (iii) a
stockholder would be able to realize the per share NAV if such stockholder
attempted to sell his or her shares to a third party.

The valuations of our real properties as of March 31, 2022, excluding certain
newly acquired properties that are currently held at cost which we believe
reflects the fair value of such properties, were provided by the Independent
Valuation Advisor in accordance with our valuation procedures. Certain key
assumptions that were used by the Independent Valuation Advisor in the
discounted cash flow analysis are set forth in the following table:

                                          Weighted-Average Basis
Exit capitalization rate                                     4.7 %
Discount rate / internal rate of return                      5.7 %
Average holding period (years)                              10.3


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A change in the exit capitalization and discount rates used would impact the
calculation of the value of our real property. For example, assuming all other
factors remain constant, the changes listed below would result in the following
effects on the value of our real properties, excluding certain newly acquired
properties that are currently held at cost which we believe reflects the fair
value of such properties:

                                                                        Increase (Decrease) to the
Input                                             Hypothetical Change     NAV of Real Properties
Exit capitalization rate (weighted-average)       0.25% decrease                               4.0 %
                                                  0.25% increase                             (3.6) %
Discount rate (weighted-average)                  0.25% decrease           
                   2.2 %
                                                  0.25% increase                             (2.1) %

From November 1, 2017 through January 31, 2020, we valued our debt-related
investments and real estate-related liabilities generally in accordance with
fair value standards under GAAP. Beginning with our valuation for February 29,
2020, our property-level mortgages and corporate-level credit facilities that
are intended to be held to maturity (which for fixed rate debt not subject to
interest rate hedges may be the date near maturity at which time the debt will
be eligible for prepayment at par for purposes herein), including those subject
to interest rate hedges, were valued at par (i.e. at their respective
outstanding balances). In addition, because we utilize interest rate hedges to
stabilize interest payments (i.e. to fix all-in interest rates through interest
rate swaps or to limit interest rate exposure through interest rate caps) on
individual loans, each loan and associated interest rate hedge is treated as one
financial instrument which is valued at par if intended to be held to maturity.
This policy of valuing at par applies regardless of whether any given interest
rate hedge is considered as an asset or liability for GAAP purposes.
Notwithstanding, if we acquire an investment and assume associated in-place debt
from the seller that is above or below market, then consistent with how we
recognize assumed debt for GAAP purposes when acquiring an asset with
pre-existing debt in place, the liabilities used in the determination of our NAV
will include the market value of such debt based on market value as of the
closing date. The associated premium or discount on such debt as of closing that
is reflected in our liabilities will then be amortized through loan maturity.
Per our valuation policy, the corresponding investment is valued on an unlevered
basis for purposes of determining NAV. Accordingly, all else equal, we would not
recognize an immediate gain or loss to our NAV upon acquisition of an investment
whereby we assume associated pre-existing debt that is above or below market. As
of March 31, 2022, we classified all of our debt as intended to be held to
maturity, and our liabilities included mark-to-market adjustments for
pre-existing debt that we assumed upon acquisition. We currently estimate the
fair value of our debt (inclusive of associated interest rate hedges) that was
intended to be held to maturity as of March 31, 2022 was $80.8 million lower
than the carrying value used for purposes of calculating our NAV (as described
above) for such debt in aggregate; meaning that if we used the fair value of our
debt rather than the carrying value used for purposes of calculating our NAV
(and treated the associated hedge as part of the same financial instrument), our
NAV would have been higher by approximately $80.8 million, or $0.29 per share,
not taking into account all of the other items that impact our monthly NAV,
as
of March 31, 2022.

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