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MarketScreener Homepage  >  Equities  >  Nyse  >  Ares Management Corporation    ARES

ARES MANAGEMENT CORPORATION

(ARES)
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Ares Management : Investor Presentation

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11/05/2019 | 06:15am EST

Ares Investor Presentation

November 2019

Disclaimer

The information contained in this presentation is summary information that is intended to be considered in the context of Ares Management Corporation (NYSE: ARES) ("Ares") SEC filings and other public announcements that Ares may make, by press release or otherwise, from time to time. Ares undertakes no duty or obligation to publicly update or revise the forward-looking statements or other information contained in this presentation. These materials contain information about Ares, its affiliated funds and certain of their respective personnel and affiliates, information about their respective historical performance and general information about the market. You should not view information related to the past performance of Ares and its affiliated funds or information about the market, as indicative of future results, the achievement of which cannot be assured. Certain Ares Fund securities may be offered through our affiliate, Ares Investor Services LLC ("AIS"), a broker- dealer registered with the SEC, and a member of FINRA and SIPC.

Nothing in these materials should be construed as a recommendation to invest in any securities that may be issued by Ares or as legal, accounting or tax advice. None of Ares, its affiliated funds or any affiliate of Ares or its affiliated funds makes any representation or warranty, express or implied, as to the accuracy or completeness of the information contained herein and nothing contained herein shall be relied upon as a promise or representation whether as to the past or future performance. Certain information set forth herein includes estimates, projections and targets and involves significant elements of subjective judgment and analysis. Further, such information, unless otherwise stated, is before giving effect to management and incentive fees and deductions for taxes. No representations are made as to the accuracy of such estimates, projections or targets or that all assumptions relating to such estimates, projections or targets have been considered or stated or that such estimates, projections or targets will be realized.

These materials are not intended as an offer to sell, or the solicitation of an offer to purchase, any security, the offer and/or sale of which can only be made by definitive offering documentation. Any offer or solicitation with respect to any securities that may be issued by Ares will be made only by means of definitive offering memoranda or prospectus, which will be provided to prospective investors and will contain material information that is not set forth herein, including risk factors relating to any such investment.

Statements included herein may constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, which relate to future events or Ares' future performance or financial condition. These statements are based on certain assumptions about future events or conditions and involve a number of risks and uncertainties. These statements are not guarantees of future performance, condition or results. Actual results may differ materially from those in the forward-looking statements as a result of a number of factors, including those described from time to time in our filings with the SEC. Ares undertakes no duty to update any forward-looking statements made herein.

An investment in Ares will be discrete from an investment in any funds or other investment programs managed by Ares and the results or performance of such other investment programs is not indicative of the results or performance that will be achieved by Ares or such investment programs. Moreover, neither the realized returns nor the unrealized values attributable to one Ares fund are directly applicable to an investment in any other Ares fund.

An investment in Ares may be volatile and can suffer from adverse or unexpected market moves or other adverse events. Investors may suffer the loss of their entire investment. The information set forth herein is as of the date of this presentation unless otherwise indicated and Ares undertakes no duty to update any of the information set forth herein.

Management uses certain non-GAAP financial performance measures to evaluate Ares' performance and that of its business segments. Management believes that these measures provide investors with a greater understanding of Ares' business and that investors should review the same supplemental non-GAAP financial measures that management uses to analyze Ares' performance. The measures described herein represent those non-GAAP measures used by management, in each case before giving effect to the consolidation of certain funds that Ares consolidates with its results in accordance with GAAP. These measures should be considered in addition to, and not in lieu of Ares' financial statements prepared in accordance with GAAP. Please refer to the Appendix for definitions and explanations of these non-GAAP measures and reconciliations to the most directly comparable GAAP measures. Amounts and percentages may reflect rounding adjustments and consequently totals may not appear to sum.

Some funds managed by Ares or its affiliates may be unregistered private investment partnerships, funds or pools that may invest and trade in many different markets, strategies and instruments and are not subject to the same regulatory requirements as mutual funds, including mutual fund requirements to provide certain periodic and standardized pricing and valuation information to investors. Fees vary and may potentially be high. In addition, in light of the various investment strategies of such other investment partnerships, funds and/or pools, it is noted that such other investment programs may have portfolio investments inconsistent with those of the strategy or investment vehicle proposed herein. For the definitions of certain terms used in this presentation, please refer to the "Glossary" slide in the appendix.

This may contain information from BofA Merrill Lynch, used with permission. BOFA MERRILL LYNCH IS LICENSING THE ICE BOFAML INDICES AND RELATED DATA "AS IS," MAKES NO WARRANTIES REGARDING SAME, DOES NOT GUARANTEE THE SUITABILITY, QUALITY, ACCURACY, TIMELINESS, AND/OR COMPLETENESS OF THE ICE BOFAML INDICES OR ANY DATA INCLUDED IN, RELATED TO, OR DERIVED THEREFROM, ASSUMES NO LIABILITY IN CONNECTION WITH THEIR USE, AND DOES NOT SPONSOR, ENDORSE, OR RECOMMEND ARES MANAGEMENT, OR ANY OF ITS PRODUCTS OR SERVICES. REF: AM-00358

2

Overview of Ares Management

With Approximately $144 Billion in Assets Under Management, Ares Management Corporation is a Leading Global Alternative Asset Manager With Three Distinct but Complementary Investment Groups

Profile

Global Footprint

Founded:

1997

AUM:

$144bn

Employees:

1,200+

Investment Professionals:

~465

Global Offices:

20+

Direct Institutional Relationships:

935+

Listing: NYSE - Market Capitalization:(1)

~$7.3bn

The Ares Edge

Founded with consistent

Deep management team

credit based approach to

with integrated and

investments

collaborative approach

20+ year track record of

Pioneer and a leader in

compelling risk adjusted

leveraged finance and

returns through market

private credit

cycles

AUM

Strategies

Credit

Private Equity

Real Estate

$106.3bn

$25.5bn

$12.5bn

Direct Lending

Corporate Private Equity

Real Estate Equity

Liquid Credit

SpecialOpportunities

Real Estate Debt

Alternative Credit

Energy Opportunities

Infrastructure and Power

Note: As of September 30, 2019. AUM amounts include funds managed by Ivy Hill Asset Management, L.P., a wholly owned portfolio company of Ares Capital Corporation and registered investment adviser. Past performance is not indicative of future results.

1. As of November 1, 2019.

3

Ares Investment Thesis

High Growth Financial Services Company Well-positioned to Deliver Attractive Shareholder Returns by Executing on a Straightforward Business Model

Leading Platform

  • Global and scaled investing presence with unique origination capability
  • Three complementary businesses drive synergies
  • Long track record of demonstrated investment performance
  • Continuity of management and investment professionals
  • Broad, supportive and growing investor base

Stable and Diversified Model

  • High-qualityand diverse revenues primarily compromised of management fees
  • Dividend supported by stable and growing fee related earnings
  • Consistent management fee growth through cycles
  • Long-lived,locked-up capital
  • Scalable model facilitates operating margin expansion

Compelling Growth Story

  • Attractive industry fundamentals
  • New product offerings and expansion of distribution channels
  • Strong fundraising
  • Strategic growth through opportunistic M&A
  • Path to shareholder value creation through FRE growth and retention of PRE

Past performance is not indicative of future results.

4

Creating "Ecosystems"

We Believe the Breadth and Scale of Our Activities Drives Value and Investment Performance

Corporate Assets

Real Assets

Liquid Securities /

Secondary Markets

Self Originated Credit /

Asset Financing

Equity /

Asset Ownership

Sourcing Benefits

Complete capital structure solutions drive originations

  • Broad offering to help meet client needs

Deep domain experience and networks

  • Highly experienced teams and large market presence facilitate transaction flow

Power of incumbency

  • Large portfolio and strong relationships provide attractive future opportunities

Evaluation Benefits

Information and research advantages

  • Differentiated information enhances investment decisions
  • Shared research across the platform

Better relative value lens

  • Identify attractive risk adjusted returns across capital structures and markets

Execution Benefits

Disciplined structuring and pricing

  • Active investment role improves control over outcomes

Capital structure arbitrage

  • Bring flexible capital to most attractive tranche of the capital structure

Liquid / Illiquid market arbitrage

  • Exploit inefficiencies in primaryANDsecondary markets

5

History of Growth

Growth Every Year in Number of Funds and Investors, AUM and Management Fee Revenues

# of Funds and Investors(1)

# Funds

242

# Investors

202

150

937

783

624

84

38

166 182

AUM(2)

Management Fee Revenue(3)

($ in billions)

($ in millions)

$144

$963

$106

$745

$82

$598

$49

$324

$25

$170

2008 2011 2014 2017 Q3-19

2008 2011 2014 2017 Q3-19

2008 2011 2014 2017

LTM

Q3-19

Note: There can be no guarantee that Ares can or will sustain such growth.

  1. Represents direct institutional investors.
  2. AUM amounts include funds managed by Ivy Hill Asset Management, L.P., a wholly owned portfolio company of Ares Capital Corporation and a registered investment adviser.
  3. Includes quarterly performance income on the investment income of Ares Capital Corporation ("ARCC Part I Fees").

6

Diversified & Growing Investor Base

We Believe Our Deep and Expanding Investor Relationships Can Be Attributed to Our Performance

AUM Mix by Investor(1)

($ in billions)

Direct AUM Mix by Geography(1)

($ in billions)

$144.3

Institutional

Institutional

Direct

Intermediarie

$99.9

s, $17.8, 12%

Pension,

~69%

Public

$39.7, 28%

Entities

and Related,

$26.6, 19%

Other,

Insurance,

$16.5, 11%

$6.2, 4%

Bank/Private Bank,

Endowment,

Sovereign $16.1, 11%

$1.7, 1%

Wealth,

Investment

$12.3, 9%

Manager,

$7.4, 5%

$99.9

Middle East,

Other, $0.4,

$7.3, 7%

1%

Asia &

Australia,

$14.1, 14%

North

America,

$55.8, 56%

Europe,

$22.3, 22%

Note:

1. As of September 30, 2019. Includes funds managed or co-managed by Ares. Also includes funds managed by Ivy Hill Asset Management, L.P. Percentages may not add to 100% due to rounding.

7

Investors Deepening Relationship with Ares

Increasing Growth and Cross-Selling Across Platform with New and Existing Investors

Institutional Direct Investors

In addition to institutional direct investors, Ares has

225,000+ retail investors across public funds(1)

CAGR

937

18%

21%

12%

24%

30%

25%

12%

29%

211

26%

2012

Q3-19

Pension

High Net Worth

Bank/Private Bank

Insurance

Investment Manager

Endowment/Foundation

Sovereign Wealth Fund

Sub-Advisory / Other

Ares

Additional Investors Investing Across Funds

Ares has cross marketed its existing investors into new funds…

360

39

321

76

5

71

2012

Q3-19

2-5 Funds

> 5 Funds

Experienced in Cross-Selling Across Investment Groups

AUM ($ in billions)

…and into multiple strategies across platform

$52.3

$14.8

$37.5

$9.6

2012

Q3-19

2 Groups

3 Groups

Note: Past performance is not indicative of future results. There can be no guarantee that Ares can or will sustain such growth.

1. As of April 8, 2019 for ARCC, February 26, 2019 for ACRE and April 15, 2019 for ARDC.

8

Diversified and Stable Business & Revenue Model

Revenue Model Supports Stability and Growth of Earnings

9

Stable and Diversified Management Fee Driven Business Model

Consistent 85%+ Fee Revenue from Stable, Cross-Platform Management Fees

Total Unconsolidated Fee Revenue Composition(1)

$1,070mm

$967mm

8%

2%

$843mm

11%

8%

3%

Realized Net Performance Income

$767mm

9%

8%

3%

Other Fees

$712mm

12%

20%

$670mm

8%

8%

Mgmt. Fees: Real

2%

10%

1%

21%

Estate

9%

1%

9%

Mgmt. Fees: Private

13%

24%

Equity

14%

21%

19%

Mgmt. Fees:

Credit

62%

57%

56%

62%

61%

58%

2014

2015

2016

2017

2018

LTM Q3-19

89% in Mgmt. Fees

91% in Mgmt. Fees

86% in Mgmt. Fees

88% in Mgmt. Fees

87% in Mgmt. Fees

90% in Mgmt. Fees

1. Total fee revenue is calculated as management fees plus realized net performance income and other fees. Percentage of management fees includes the following amounts attributable to ARCC Part I Fees: 20% in 2014, 19% in 2015, 18% in 2016, 14% in 2017, 15% for 2018 and 16% in LTM Q3 2019; Management fees have been adjusted for the movement of our special situations strategy from our Credit Group into our Private Equity Group that became effective July 1, 2016. All other periods have been adjusted to conform with the current presentation.

10

Stable Management Fee Revenue Growth Through Cycles

Ares has Experienced Consistent Management Fee Growth Regardless of Market Volatility

(Indexed at 100)1

($ in millions)

700

'07-'09 Management Fee

$1,000

CAGR: 28%

600

$800

500

$600

400

300

$400

200

$200

100

0

$0

'06

'07

'08

'09

'10

'11

'12

'13

'14

'15

'16

'17

'18

LTM

Management Fees

MSCI World Index

High Yield(2)

VIX(3)

Q3-19

Note:

  1. Benchmarks initial data point at 100 with changes compared to initial data point.
  2. Represents the ICE BofAML U.S. High Yield Master II Index ("HOAO") yield to worst per Yieldbook.
  3. Represents CBOE Volatility Index.

11

Stable, Long Duration AUM

AUM and Management Fees Supported by Long-Dated Assets

AUM Mix by Duration(1)

Management Fee Mix by Duration(1)

  • The initial duration was greater than 7 years for approximately 74% of AUM
  • 70% of AUM has a duration of > 3 years
  • Management fees supported by long duration AUM, which also benefit frommark-to-market insulation
  • 82% of management fees with a duration of > 3 years
    o36% of management fees from permanent capital vehicles

4%

70% > 3 years

1%

13%

82% > 3 years

17%

11%

10%

6%

36%

9%

13%

22%

34%

4%

20%

Permanent Capital

10 or more years

7 to 9 years

3 to 6 years

Fewer than 3 years

Differentiated Managed

Managed Accounts

Accounts(2)

Note: AUM amounts include funds managed by Ivy Hill Asset Management, L.P.

  1. As of September 30, 2019.
  2. Differentiated managed accounts have been managed by the firm for longer than three years, are investing in illiquid strategies or areco-investments structured to pay management fees.

12

Significant Remaining Capacity for Investment

Investment Capacity Leaves Room for Growth Across Market Cycles

$28.2

$26.4

$1.7

$1.7

$2.6

$2.1

$18.0

As of September 30, 2019,

AUM Not Yet

$15.5

$0.9

$14.5

$26.4 billion of our total AUM

Earning Fees

$0.9

$0.9

was Not Yet Earning

$bn

$9.3

$24.8

$9.2

$7.2

$2.2

$21.7

Management Fees

$1.9

$11.4

$7.3

$7.7

$5.8

2014

2015

2016

2017

2018

Q3-19

$86.2

$78.4

$7.8

$7.5

$60.4

$18.9

$21.4

$50.7

$7.1

$45.8

As of September 30, 2019, Our

$6.6

Incentive Eligible AUM

$37.4

$6.8

$19.6

Incentive Eligible AUM totaled

$bn

$16.7

$19.5

$86.2 billion

$57.0

$11.0

$52.0

$22.2

$24.7

$33.7

$20.0

2014

2015

2016

2017

2018

Q3-19

Credit

Private Equity

Real Estate

Note: As of July 1, 2016, the special opportunities strategy moved out of our Credit Group and into our Private Equity Group. Historical results have been adjusted to conform with the current presentation. No assurance can be made that such results will be achieved.

13

AUM Not Yet Earning Fees

As of September 30, 2019, AUM Not Yet Earning Fees of $26.4 billion could generate approximately $253.2 million in potential incremental annual management fees, of which $235.6 million relates to the $24.2 billion of AUM available for future deployment(1)

  • The $24.2 billion of AUM Not Yet Earning Fees available for future deployment includes approximately $18.5 billion relating to U.S. and European direct lending funds, $2.5 billion in alternative credit funds and $2.0 billion in our Real Estate Group funds

AUM Not Yet Earning Fees: $26.4 billion

AUM Not Yet Earning Fees Available for Future

Deployment: $24.2 billion

($ in millions)

Capital Available for Future Deployment

Capital Available for Deployment for Follow-on Investments (2)

Funds in or Expected to Be in Wind-down

$24.2 billion of AUM Not Yet Earning Fees

was available for future deployment

($ in millions)

Credit

Private Equity

Real Estate

  1. No assurance can be made that such results will be achieved. Assumes the AUM Not Yet Earning Fees as of September 30, 2019 is invested and such fees are paid on an annual basis. Does not reflect any associated reductions in management fees from certain existing funds, some of which may be material. There is no assurance such capital will be invested. Reference to $253.2 million includes approximately $32.4 million in potential incremental management fees from deploying undrawn/available credit facilities at ARCC (in excess of its current leverage up to its target leverage of 1.25x debt to equity). Effective June 21, 2019, ARCC has increased its target leverage to a range of 0.9x to 1.25x debt to equity, as provided for in the 2018 Small Business Credit Availability Act. No assurance can be made that such capital will be invested. Note that no potential ARCC Part I Fees are reflected in any of the amounts above.
  2. Capital available for deployment forfollow-on investments represents capital committed to funds that are past their investment periods but have capital available to be called for follow-on investments in existing portfolio companies. As of September 30, 2019, capital available for deployment for follow-on investments could generate approximately $17.6 million in potential management fees. There is no assurance such capital will be invested.

14

Incentive Eligible AUM and Incentive Generating AUM

Incentive Eligible AUM as of September 30, 2019 was $86.2 billion, an increase of 13.0% from prior year

  • The increase of $10 billion was primarily driven by capital raising across U.S. and European direct lending funds in our Credit Group

Incentive Generating AUM(1)as of September 30, 2019 was $38.7 billion, an increase of 4.1% from prior year

  • The increase was primarily driven by ACOF V exceeding its hurdle rate in our Private Equity Group, as well as deployment of capital within funds exceeding hurdle rates as of September 30, 2019

Of the $59.0 billion of Incentive Eligible AUM that is currently invested, 65.6% is Incentive Generating

  • Excluding the ARCC Part II fees(2)that are based on capital gains from the largely debt oriented ARCC portfolio, 86.1% of Incentive Eligible AUM that is currently invested is Incentive Generating

Incentive Eligible AUM

($ in millions)

Credit

Private Equity

Real Estate

Q3-19 Incentive Generating to Incentive Eligible

AUM Reconciliation

($ in millions)

Private

Real

Credit

Total

Equity

Estate

Incentive

Generating AUM

$20,438

$15,127

$3,116

$38,681

+ Uninvested

IEAUM

19,052

4,905

3,273

27,230

+ IEAUM below

hurdle

3,477

1,385

1,395

6,257

+ARCC Part II Fees

below Hurdle(2)

14,058

-

-

14,058

Incentive Eligible

AUM

$57,025

$21,417

$7,784

$86,226

  1. Incentive Generating AUM includes $9.9 billion of AUM from funds generating unrealized incentive income that is not recognized as revenue by Ares until such fees are crystallized or no longer subject to reversal.
  2. ARCC Part II Fees are paid in arrears as of the end of each calendar year when the cumulative aggregate realized capital gains exceed the cumulative aggregate realized capital losses and aggregate unrealized capital depreciation, less the aggregate amount of Part II Fees paid in all prior years since inception. As of September 30, 2019, this calculation resulted in ARCC being below the required hurdle for payment to Ares of any ARCC Part II Fees by <0.1% of the value of the underlying portfolio.

15

Multiple Growth Opportunities in Attractive Industry

Leveraging the Ares Platform to Capitalize on Industry Tailwinds for Further Growth

Platform Attributes

  • Global, scaled investment platform
  • Diverse product offerings and unique investment sourcing capabilities
  • Demonstrated track record of investment performance
  • Experienced and cohesive team

Industry Trends

  • Rotation from liquid to illiquid assets
  • Banks leaving void for private capital to fill
  • Retailization of alternatives
  • Growing pension liability gap and insurance yield demand
  • Consolidation of LP relationships

Growth Accelerators

Levers to Drive

Future acquisitions

Organic Growth

facilitated by more liquid

stock currency

  • Fundraising growth and

increased cross-selling

Opportunistically expand

during market dislocations

  • New product offerings and

investment solutions

Strategic acquisitions and

portfolio purchases

  • New distribution channels

Team lift-outs and strategic

Geographic expansion

joint ventures and

partnerships

  • Deployment of dry powder
  • Realization of returns from incentive eligible AUM

Note: Past performance is not indicative of future results and there can be no assurance that any historical trends will continue.

16

Growing Global Demand for Alternatives

Investors Look To Alternative Investing as an Attractive and Needed Complement to Traditional Portfolio Allocations

The Secular Shift Toward a Low Interest Environment Limits Ability For

Traditional Portfolio Allocations to Reach Target Returns(1)

Consequently, The Increasing Asset Liability Gap for Pension Funds Highlights Urgent Need for Higher Returning Investment Alternatives(2)

10.0

8.0

(%)

/ Return

6.0

4.0

Yield

2.0

0.0

Highest U.S. Public Pension Expected Return (8.00%)(3)

Lowest U.S. Public Pension Expected Return (5.25%)(3)

Pension Assets as a Percentage of Liabilities

102%

100%

95%

90%

89%

87%

86%

85%85%

84%

80%

78%

76%74%

73%73%

72%72%

72%72%72%

70%

60%

10yr Treasury Rate

We believe the increasing gap between pension assets and liabilities driven by a low

interest rate environment demonstrates the need for higher yielding investments that are

less correlated to traded markets

  1. Source: Macrotrends. Data as of 10/22/2019.
  2. Center for Retirement Research at Boston College. March 2019.
  3. National Association of State Retirement Administrators.

17

Market Shift Toward Private Capital

Private Equity Markets Continue to Take Share Vs. Public Equity Markets and the Opportunity for Further Growth Exists

U.S. & European Public Vs Private Dollar Volume(1)

$800

2018 was the first year when private dollar volume

exceeded that of public IPO and follow on capital raises

$700

$600

$500

$400

$300

$200

$100

$0

2014

2015

2016

2017

2018

IPO & Follow On $ Volume

Private Equity $ Volume

Private Companies Far Outweigh Public Companies Which is

Exaggerated in The Middle Market Segments(2)

20,000

17,941

Number of U.S. Public and Private

Companies by Annual Revenue

15,000

10,170

10,000

5,000

3,035

1,565

1,370 1,309

517

589

480

482

0

$50mm -

$100mm -

$250mm -

$500mm -

$1+bn

$100mm

$250mm

$500mm

$1bn

Private Companies

Public Companies

  1. Source: North American and European public market follow on and IPO data per Refinitv and PE transaction volume data per Preqin.
  2. Source: World Economic Forum as of April 2018.

18

Growth of Alternative Asset

Investors are Continuing t0 Move into Alternative Asset Classes in Search for Higher Returning Assets

Private Equity, Private Debt and Infrastructure are Expected to Draw the Most Interest from Investors Over the Long Term

Projected Growth of Private Capital by Selected Segment(2)

Investors intending to increase allocation over the long term(1)

2018

2023

Natural Resources/

50%

48%

Infrastructure

46%

$0.7tn

+157%

$1.8tn

Private Debt

36%

$0.8tn

+75%

$1.4tn

29%

Private Equity

$3.6tn

+36%

$4.9tn

Real Estate

$0.9tn

+33%

$1.2tn

Hedge Funds

Infrastructure

Private Debt

Private Equity

Real Estate

$3.6tn

+31%

$4.7tn

Natural

Resources

Note: There can be no guarantee that Ares can or will sustain such growth, or that any estimates will be realized.

1.

Preqin Investor Outlook Alternative Assets H1-19.

2.

Source: Preqin as of 2019.

19

Ares' AUM Growing in Excess of Alternative and Traditional Markets

Ares' AUM Growth Has Been 2x the Growth Rate of Alternatives

Global, Alternative and Ares AUM(1)

+9%

CAGR

Ares AUM

+6%

+24% CAGR

+23%

($ in trillions)

CAGR

CAGR

+7%

($ in billions)

CAGR

Alternative AUM

$21

$150

+12% CAGR

$150

+4%

Global AUM

CAGR

$125

$125

+8% CAGR

$14

$100

$11

$100

$75

$144

$145

$75

$6

$5

$106

$98

$111

$50

$50

$3

$59

$64

$60

$25

$25

$37

$7

$18

$0

$0

2004

2007

2012

2017

Q3-19

2020E

2025E

Global AUM

Alternative AUM

Ares AUM

(Global/Alternative AUM $ in trillions)

(Ares AUM $ in billions)

Note: There can be no guarantee that Ares can or will sustain such growth, or that any estimates will be realized.

1. PWC Report October, 2018 - Asset & Wealth Management Revolution: Pressure on Profitability. Data excludes High Net Worth and Mass Affluent segments.

20

Strong Growth in Fund Families

Performance has Driven Strong Investor Demand for Larger Subsequent Funds and New Strategies

Private Equity: Ares Corporate Opportunities Funds

Credit: Ares Capital Europe Funds(1)

($ in millions)

($ in millions)

$7,584

$7,850

$4,840

$3,510

$1,750

$751

$481

Fund:

ACOF I

ACOF III

ACOF V

Fund:

ACE I

ACE II

ACE III(2)

ACE IV

Vintage:

Aug '02

Feb '08

Dec '15

Vintage:

Jun '07

Aug '12

Jul '15

Jan '18

Real Estate: Ares US Real Estate Funds

Credit: ARCC AUM

Credit: Ares Private Credit Solutions Fund

($ in millions)

$1,040

($ in millions)

Permanent Capital Vehicle

($ in millions)

$16,977

Raised $3.4Bn for Inaugural Fund, ~$1Bn in

$756

$824

Excess of Target, with 60% new clients

$3,365

$450

$256

$183

$0

Fund:

Fund I

Fund III

Fund VII

Fund VIII

Fund IX

As of:

Dec '04

Sep '19

Fund:

-

PCS

Vintage:

Sep '93

Mar '98

Aug '07

Sep '13

May '17

Vintage:

-

Jan '17

Note: As of September 30, 2019, AUM amounts include funds managed by Ivy Hill Asset Management, L.P. Past performance is not indicative of future results. There can be no guarantee that Ares can or will sustain such growth. Funds shown represent final fund close amounts.

  1. Reflects equity commitments converted to USD at 1.1669 EUR/USD.
  2. Reflects both debt and equity commitments.

21

Multiple Avenues for Growth

Ares is Making Substantial Investments in Strategies to Offer More Client Solutions and is Expanding Into New Channels to Reach New Investors

1

2

3

4

5

6

Organic

New Products

New Channels

New Geographies

New Partnerships

Strategic Mergers and Acquisitions

  • Larger subsequent funds
  • Cross-marketour strategies to existing clients
  • Growth of business development and investor relations groups
  • Enter adjacent asset classes
  • Continue to develop differentiated solutions
  • Insurance
  • Sub-advisorypartners
  • Traded andnon-traded retail
  • Intermediary relationships
  • Family offices andhigh-net-worth
  • Continued expansion in Europe and Asia
  • Potential new international markets
  • Strategic partnerships
  • Joint ventures
  • Acquisitions of scale
  • Tuck-inopportunities
  • Management teamlift-outs
  • Opportunistic portfolio purchases

22

Growth in Key Financial Metrics

Well Positioned for Future Opportunities

History of Increased Performance

Strong Balance Sheet Enables Growth

2014

Q3-19 LTM

($ in millions)

Management Fees1

$963

Balance Sheet Investments

($ in millions)

by Strategy

Assets

9/30/19

Cash

$152

$49

$598

$137

$247

Investments

726

$293

Net Performance

344

Fee Related Earnings

Income Receivable

$303

($ in millions)

Credit

Real Estate

$147

Private Equity

Other

Debt Capitalization

Maturity

9/30/19

Credit Facility ($1,065)

2024

$0

Realized Income

$421

($ in millions)

Senior Notes

2024

246

$273

Total Debt Obligations

$246

Note: Past performance is not indicative of future results. There can be no guarantee that Ares can or will sustain such growth.

1. Management fees include ARCC Part I Fees.

23

Path to Shareholder Value Creation

Shareholder Value Driven by Diversity and Composition of our AUM and Growth in our Fee Related Earnings Plus Reinvestment of our Realized Performance Related Earnings

Fee Related Earnings

Realized Performance Related Earnings

16% CAGR since end of 2014

$118 million avg. annual Realized Performance Related Earnings(1)

  • Diversity and composition of AUM drive stable earnings
  • Record level of deployable AUM not yet earning fees
  • Increased fee opportunities from ARCC
  • Increased sizes of successor funds drive earnings growth
  • Increased core and adjacent fund strategies raising new
    AUM
  • Scale efficiencies to drive margin expansion
  • Realize accrued net performance fees
  • Realize income from balance sheet investments(2)
  • Increase new performance fees by deploying record level ofun-invested incentive eligible AUM
  • Convert incentive eligible AUM into incentive generating AUM through deployment
  • New fundraising of incentive eligible AUM

Steady, annual qualified dividend pegged to after-tax Fee Related Earnings(3)with retained

earnings invested in organic & inorganic growth

Note: Past performance is not indicative of future results. There can be no guarantee that Ares can or will sustain such growth.

  1. Represents three year average for the period from 10/1/2016 through 9/30/2019.
  2. Ares balance sheet investments have generated gross IRRs since inception (annualized) of approximately 10.7%.
  3. The declaration, payment, and determination of the amount of future dividends, if any, is at the sole discretion of our Board of Directors, which may change our dividend policy at any time.

24

Our Approach to Current Market Conditions

We are Taking a Defensive Posture in our Investing Strategies, and our Approach is Supported by our Successful Playbook During Past Cycles

Disciplined Approach to Achieving Targeted Returns in Current Market

  • Maintaining significant dry powder
  • Taking defensive investment approach
  • Heightened focus on selectivity
  • Using flexible investing strategies
  • Staying senior in capital structure as appropriate
  • Use conservative matched leverage
  • Focusing on strongly performing incumbent borrowers
  • Capitalizing on scale advantages
  • Leveraging industry specialization
  • Performing enhanced due diligence techniques

We leverage our credit and management fee centric business model, our long-term, locked up capital,

flexible strategies and asset light balance sheet to navigate well through business cycles

25

Appendix

26

Ares Credit Group

Integrated Scaled Global Platform Combines Direct Origination, Deep Fundamental Credit Research and Broad Perspective of Relative Value

$106.3 billion AUM(1)

32 Partners averaging 25 years of experience

~275 dedicated investment professionals

Origination, Research & Investment Management

16 portfolio managers

60+ industry research and alternative credit professionals

~130 direct origination professionals

15 distressed and restructuring specialists

Syndication, Trading & Servicing

5 trading professionals in the U.S. and Europe

7 dedicated capital markets professionals

33 direct lending professionals focused solely on asset management

Investor Relations & Business Operations

Established investor relations and client service across the Americas,

Europe, Asia, Australia and the Middle East

Advantages

Deep Investment

Access to Differentiated

Ability to Express

Information to Inform

Opportunity Set

Relative Value

Credit Decisions

Leading Platform of Liquid Credit, Alternative Credit & Direct Lending Strategies

Syndicated

Alternative

Middle

Private Mezz/

Market Cash

Loans

Credit

Opportunistic

Flow Loans

High Yield

Asset Based

Project

Lending

Finance

Liquid Credit

Illiquid Credit

Accolades(2)

ARCC Received Most Honored

Global Fundraising, BDC

Top Quartile Rankings

Lender of the Year

(Americas), Lender

Designation & Highest

(Europe), & Fundraising

Rankings for Best Investor

for Several Funds

(Europe)

(Europe) of the Year

Relations Program

2Q'19

2018

2018

We have experienced teams across the platform that are positioned for excellence in investing and client service

Note: As of September 30, 2019, unless otherwise noted.

  1. AUM amounts include funds managed by Ivy Hill Asset Management, L.P., a wholly owned portfolio company of Ares Capital Corporation and a registered investment adviser.
  2. The performance, awards/ratings noted herein relate only to selected funds/strategies and may not be representative of any given client's experience and should not be viewed as indicative of Ares' past performance or its funds' future performance. All investments involve risk, including loss of principal.

Please see the Notes at the end of this presentation.

27

Ares Private Equity Group

We Seek to Deliver Consistent Investment Performance in our Differentiated Private Equity Fund Families Across Various Market Environments

$25.5 billion AUM(1)

Multi-Asset Class Expertise / Flexible Capital

28 Partners - Average 25 Years of Experience

Structured

Stressed /

Growth

Recap

~115 dedicated investment professionals

Distressed

Equity

Solutions

Several Dedicated Coverage Pods:

Rescue

Structured

Buyouts

Financing

Equity

Consumer / Retail

Energy

Healthcare

Industrials

Credit

Equity

Services /

Special

Los Angeles Headquartered with Well-EstablishedLocal Market Presence

Technology

Opportunities

ChinaEurope

Infrastructure &

Power

San Francisco Los Angeles

Boston

London

Chicago

New York

Shanghai

Chengdu

Hong Kong

Robust

Differentiated

Systematic Approach

Sourcing Model

Market Intelligence

to Value Creation

1. As of September 30, 2019.

28

Ares Real Estate Group

Global Real Estate Equity and Debt Platform That Combines Local Relationships, Differentiated Market Intelligence and Deep Property Level Experience Having Invested ~$20 Billion of Capital in 700+ Deals Since 1993

$12.5 billion AUM

Leading Platform of Real Estate Strategies

13 Partners - Average 23 Years of Experience

US Senior Debt

US & Europe Value-Add

75 Investment Professionals

Specialized Expertise Across Property Types

Multifamily

Industrial

Office

Retail Hospitality

US Mezzanine Debt

US & Europe

Opportunistic

Debt

Equity

Global Real Estate Platform with Local Reach

Accolades(1)

Top 15 Real Estate

Rated Special

Manager Based on

Servicing Platform

2014-19 Equity Raised

2016 - 2019

San Francisco

Chicago

Los Angeles

Legend

New York

London

Amsterdam(4)

Ares Real Estate Office(2)

Washington, D.C.

Frankfurt

Ares Real Estate Market

Coverage Location(3)

Paris

Luxembourg

Atlanta

Madrid

Additional Business

Infrastructure/Support

Office

Cycle-Tested Team & Results

Access to Real-Time Property

Disciplined Approach to Value

Market & Corporate Trends

Creation and Risk Mitigation

As of September 30, 2019. Please see the Notes at the end of this presentation.

  1. The performance, awards/ratings noted herein relate only to selected funds/strategies and may not be representative of any given client's experience and should not be viewed as indicative of Ares' past performance or its funds' future performance. All investments involve risk, including loss of principal.
  2. Includes Ares Management Corporation ("ARES") principal and originating offices where real estate activities take place.
  3. In Spain and Germany, Ares Real Estate Group does not maintain a physical office, but has an investment professional dedicated to this market.
  4. Non-Areslocation providing administrative and support functions to the Ares Real Estate Group

29

Significant Fund Performance Metrics

The following table presents the performance data for the significant fund in the Credit Group that is not a drawdown fund:

As of September 30, 2019

Returns (%)(1)

Current Quarter

Year-To-Date

Since Inception(2)

Year of Inception

AUM (in millions)

Gross

Net

Gross

Net

Gross

Net

Investment Strategy

ARCC(3)

2004

$16,977

N/A

2.4%

N/A

8.4%

N/A

11.8%

U.S. Direct Lending

Note: Past performance is not indicative of future results. AUM and Net Returns are as of September 30, 2019 unless otherwise noted. The above table includes fund performance metrics for significant funds which includes those that contributed at least 1% of total management fees for the nine months ended September 30, 2019 or comprised 1% or more of Ares' total FPAUM as of September 30, 2019, and for which we have sole discretion for investment decisions within the fund. Please see significant fund performance endnotes on slides 36-37 for additional information. Return information presented may not reflect actual returns earned by investors in the applicable fund. ARCC is a publicly traded vehicle.

30

Significant Fund Performance Metrics (cont'd)

The following table presents the performance data for all our significant drawdown funds:

As of September 30, 2019

Credit

Cumulative

MOIC

IRR

Year of

Original Capital

Invested

Realized

Unrealized

($ in millions)

Inception

AUM

Commitments

Capital

Proceeds(4)

Value(5)

Total Value

Gross(6)

Net(7)

Gross(8)

Net(9)

Primary Investment Strategy

CSF III

2010

$1,152

$1,135

$1,209

$617

$1,128

$1,745

1.5x

1.4x

9.1%

7.8%

European & U.S. Direct Lending

ACE III(10)

2015

4,859

2,822

2,428

535

2,501

3,036

1.3x

1.2x

13.7%

10.1%

European Direct Lending

PCS

2017

3,592

3,365

1,678

130

1,776

1,906

1.2x

1.1x

13.6%

9.5%

U.S Direct Lending

ACE IV Unlevered(11)

2018

8,745

2,851

1,190

20

1,234

1,254

1.1x

1.1x

13.3%

9.7%

European Direct Lending

ACE IV Levered(11)

4,819

2,007

50

2,127

2,177

1.1x

1.1x

20.3%

15.1%

SDL Unlevered(12)

2018

4,202

922

170

3

175

178

1.1x

1.0x

N/A

N/A

U.S Direct Lending

SDL Levered(12)

2,045

377

7

398

405

1.1x

1.1x

N/A

N/A

Private Equity

Cumulative

MOIC

IRR

Year of

Original Capital

Invested

Realized

Unrealized

($ in millions)

Inception

AUM

Commitments

Capital

Proceeds(1)

Value(2)

Total Value

Gross(3)

Net(4)

Gross(5)

Net(6)

Primary Investment Strategy

ACOF III

2008

$3,155

$3,510

$3,908

$7,659

$2,893

$10,552

2.7x

2.3x

29.1%

20.9%

Corporate Private Equity

USPF IV

2010

1,618

1,688

2,120

1,227

1,581

2,808

1.3x

1.2x

8.4%

5.0%

Infrastructure and Power

ACOF IV

2012

5,625

4,700

4,180

2,709

4,882

7,591

1.8x

1.6x

18.3%

11.8%

Corporate Private Equity

EIF V

2015

855

801

794

275

690

965

1.2x

1.1x

14.3%

8.0%

Infrastructure and Power

SSF IV(7)

2015

1,545

1,515

3,050

1,676

1,341

3,017

1.0x

0.9x

(1.0)%

(2.9)%

Special Opportunities

ACOF V

2017

8,420

7,850

5,669

186

6,481

6,667

1.2x

1.1x

15.8%

8.0%

Corporate Private Equity

First flagship energy

2018

1,125

1,000

733

6

902

908

1.2x

1.1x

N/A

N/A

Energy Opportunities

opportunities fund*

Real Estate

Cumulative

MOIC

IRR

Year of

Original Capital

Invested

Realized

Unrealized

($ in millions)

Inception

AUM

Commitments

Capital

Proceeds(1)

Value(2)

Total Value

Gross(3)

Net(4)

Gross(5)

Net(6)

Primary Investment Strategy

EF IV(7)

2014

$1,029

$1,302

$1,087

$821

$881

1,702

1.6x

1.3x

19.2%

13.5%

European Real Estate Equity

US IX*

2017

1,035

1,040

687

26

680

706

1.1x

1.0x

N/A

N/A

U.S. Real Estate Equity

EF V(8)*

2018

1,921

1,968

339

41

336

377

1.1x

1.0x

N/A

N/A

European Real Estate Equity

Note: Past performance is not indicative of future results. AUM and Net Returns are as of September 30, 2019 unless otherwise noted. The above table includes fund performance metrics for significant funds which includes those that contributed at least 1% of total management fees for the nine months ended September 30, 2019 or comprised 1% or more of Ares' total FPAUM as of September 30, 2019, and for which we have sole discretion for investment decisions within the fund. Please see significant fund performance endnotes on slides 36-37 for additional information. Return information presented may not reflect actual returns earned by investors in the applicable fund.

  • We do not present fund performance metrics for significant funds with less than two years of investment performance, which begins on the date of the fund's first investment, except for those significant funds which pay management fees on invested capital, in which case performance is shown at the earlier of (i) the one year anniversary of the fund's first investment or (ii) the date on which the fund has invested at least 50% of its capital.

31

GAAP Statements of Operations

$ in thousands, except share data

For the Nine Months Ended

Year Ended December 31,

9.30.19

9.30.18

2018

2017

2016

2015

2014

Revenues

Management fees

$714,096

$588,071

$802,502

$722,419

$642,068

$634,399

$486,477

Carried interest allocation

503,808

72,587

42,410

620,454

494,580

146,038

63,884

Incentive fees

28,747

13,683

63,380

16,220

23,272

4,577

27,528

Principal investment income (loss)

45,992

(684)

(1,455)

64,444

55,168

11,290

6,527

Administrative, transaction and other fees

35,866

37,372

51,624

56,406

39,285

29,428

26,000

Total revenues

1,328,509

711,029

958,461

1,479,943

1,254,373

825,732

610,416

Expenses

Compensation and benefits

485,232

419,225

570,380

514,109

447,725

414,454

456,372

Performance related compensation

388,424

30,479

30,254

479,722

387,846

111,683

170,028

General, administrative and other expenses

195,988

155,523

215,964

196,730

159,776

224,798

166,839

Transaction support expense

-

-

-

275,177

-

-

-

Expenses of Consolidated Funds

30,865

49,261

53,764

39,020

21,073

18,105

66,800

Total expenses

1,100,509

654,488

870,362

1,504,758

1,016,420

769,040

860,039

Other income (expense)

Net realized and unrealized gains (losses) on investments

5,519

7,970

(1,884)

8,262

(7,629)

12,913

26,206

Interest and dividend income

5,526

6,511

7,028

7,043

4,493

6,851

6,639

Interest expense

(16,073)

(17,088)

(21,448)

(21,219)

(17,981)

(18,949)

(8,617)

Debt extinguishment expense

-

-

-

-

-

(11,641)

-

Other income (expense), net

(1,570)

(1,487)

(851)

19,470

35,650

21,680

(2,422)

Net realized and unrealized gains (losses) on investments of Consolidated Funds

3,256

26,839

(1,583)

100,124

(2,057)

(24,616)

513,270

Interest and other income of Consolidated Funds

303,312

250,117

337,875

187,721

138,943

117,373

937,835

Interest expense of Consolidated Funds

(204,051)

(163,942)

(222,895)

(126,727)

(91,452)

(78,819)

(666,373)

Total other income

95,919

108,920

96,242

174,674

59,967

24,792

806,538

Income (loss) before taxes

323,919

165,461

184,341

149,859

297,920

81,484

556,915

Income tax expense (benefit)

35,590

29,659

32,202

(23,052)

11,019

19,064

11,253

Net income

288,329

135,802

152,139

172,911

286,901

62,420

545,662

Less: Net income (loss) attributable to non-controlling interests in Consolidated Funds

41,878

23,418

20,512

60,818

3,386

(5,686)

417,793

Less: Net income attributable to redeemable interests in Consolidated Funds

-

-

-

-

-

-

2,565

Less: Net income attributable to redeemable interests in Ares Operating Group entities

-

-

-

-

456

338

731

Less: Net income attributable to non-controlling interests in Ares Operating Group entities

136,032

67,301

74,607

35,915

171,251

48,390

89,585

Net income attributable to Ares Management Corporation

110,419

45,083

57,020

76,178

111,808

19,378

34,988

Less: Series A Preferred Stock dividends paid

16,275

16,275

21,700

21,700

12,176

-

-

Net income attributable to Ares Management Corporation Class A common stockholders

$94,144

$28,808

$35,320

$54,478

$99,632

$19,378

$34,988

Net income attributable to Ares Management Corporation per share of Class A common stock:

Basic

$0.84

$0.25

$0.30

$0.62

$1.22

$0.23

$0.43

Diluted

$0.81

$0.25

$0.30

$0.62

$1.20

$0.23

$0.43

Weighted-average shares of class A common stock:

Basic

105,546,219

94,168,582

96,023,147

81,838,007

80,749,671

80,673,360

80,358,036

Diluted

116,418,136

94,168,582

96,023,147

81,838,007

82,937,030

80,673,360

80,358,036

Dividend declared and paid per share of Class A common stock

$0.96

$1.05

$1.33

$1.13

$0.83

$0.88

$0.42

32

RI and Other Measures Financial Summary

$ in thousands, except share data (unless otherwise noted)

Management fees(1)

Other fees

Compensation and benefits expenses(2)

General, administrative and other expenses(3)

Fee Related Earnings

Realized net performance income

Realized net investment income

Realized Income

After-tax Realized Income, net of Series A Preferred Stock dividends(4)

After-tax Realized Income per share of Class A common stock, net of Series A Preferred Stock Dividend(5)

Other Data

Total fee revenue(6)

Effective management fee rate(7)

For the Nine Months Ended

Year Ended December 31,

9.30.2019

9.30.2018

2018

2017

2016

2015

2014

$739,269

$612,792

$836,744

$744,825

$659,451

$650,918

$598,046

13,029

17,166

24,288

22,431

12,351

4,599

6,300

(391,247)

(333,487)

(456,255)

(413,735)

(384,715)

(360,622)

(354,362)

(126,083)

(109,559)

(149,465)

(136,531)

(114,737)

(117,903)

(102,720)

$234,968

$186,912

$255,315

$216,990

$172,350

$176,992

$147,264

$35,393

$54,510

$105,610

$75,457

$94,734

$56,757

$65,895

26,989

30,123

34,474

32,993

33,244

24,836

59,660

$297,350

$271,545

$395,396

$325,440

$300,328

$258,585

$272,819

$256,582

$239,584

$345,926

$273,624

$248,686

$224,417

$242,849

$1.01

$1.01

$1.42

$1.08

$0.98

$0.83

$0.93

$774,662

$667,302

$942,354

$820,282

$754,185

$707,675

$662,941

1.09%

1.06%

1.07%

1.06%

1.09%

1.15%

1.17%

Note: All historical filings can be found on the SEC's website.

  1. Includes ARCC Part I Fees of $116.3 million and $91.7 million for YTD 2019 and YTD 2018, respectively.
  2. Includes compensation and benefits expenses attributable to the Operations Management Group of $100.7 million and $92.8 million for YTD 2019 and YTD 2018, respectively, which are not allocated to an operating segment.
  3. Includes G&A expenses attributable to Operations Management Group of $61.9 million and $55.7 million for YTD 2019 and YTD 2018, respectively, which are not allocated to an operating segment.
  4. For the nine months ended September 30, 2019 and 2018,after-tax Realized Income includes current income tax related to: (i) realized performance income of $7.0 million and $8.4 million, respectively and (ii) FRE of $17.4 million and $7.2 million, respectively. Of the current tax related to FRE, this includes (a) entity level taxes of $4.7 million and $6.2 million, respectively, and (iv) corporate level tax expense of $12.7 million, and $1.0 million, respectively.
  5. Calculation ofafter-tax Realized Income per share of Class A common stock uses total average shares of Class A common stock outstanding and proportional dilutive effects of the Ares' equity-based awards.
  6. Total fee revenue is calculated as management fees plus realized net performance income.
  7. Effective management fee rate represents the quotient of management fees and the aggregate fee bases for the periods presented. The effective rate shown excludes the effect ofone-timecatch-up fees.

33

GAAP to Non-GAAP Reconciliation - Unconsolidated Reporting Basis

$ in thousands

Realized Income and Fee Related Earnings:

Income (loss) before taxes

Adjustments:

Depreciation and amortization expense Equity compensation expenses(1)Acquisition and merger-related expenses Placement fees and underwriting costs Offering costs

Other (income) expense, net(2)

Net expense of non-controlling interests in consolidated subsidiaries

(Income) loss before taxes of non-controlling interests in Consolidated Funds, net of eliminations

Unconsolidated performance (income) loss - unrealized Unconsolidated performance related compensation - unrealized Unconsolidated net investment (income) loss - unrealized

Realized Income

Unconsolidated performance income - realized

Unconsolidated performance related compensation - realized

Unconsolidated net investment income - realized

Fee Related Earnings

For the Nine Months Ended

Year Ended December 31,

9.30.19

9.30.18

2018

2017

2016

2015

2014

$323,919

$165,461

$184,341

$149,859

$297,920

$81,484

$556,915

35,609

20,234

25,087

30,481

34,853

53,169

34,956

73,974

67,534

89,724

69,711

39,065

32,244

83,230

10,757

(19)

2,936

259,899

(16,902)

34,864

11,043

17,319

9,710

20,343

19,765

6,424

8,825

14,753

-

3

3

688

-

-

-

(460)

13,561

13,486

(1,730)

(1,728)

110

3,384

2,608

2,178

3,343

1,739

-

-

-

(41,178)

(23,500)

(20,643)

(62,705)

(2,649)

5,682

(415,075)

(426,411)

127,224

247,212

(325,915)

(228,472)

(31,647)

(94,883)

311,936

(132,294)

(221,343)

237,392

189,582

46,492

89,429

(10,723)

21,453

50,907

(53,744)

(17,765)

27,362

(10,933)

$297,350

$271,545

$395,396

$325,440

$300,328

$258,585

$272,819

$(111,881)

$(217,283)

$(357,207)

$(317,787)

$(292,998)

$(121,948)

$(146,494)

76,488

162,773

251,597

242,330

198,264

65,191

80,599

(26,989)

(30,123)

(34,474)

(32,993)

(33,244)

(24,836)

(59,660)

$234,968

$186,912

$255,312

$216,990

$172,350

$176,992

$147,264

Note: This table is a reconciliation of income before provision for income taxes on a GAAP basis to RI and FRE on an unconsolidated basis, which shows the results of the reportable segments on a combined basis together with the Operations Management Group. Management believes that this presentation is more meaningful than a reconciliation to the reportable segments on a segment basis because such reconciliation would exclude the Operations Management Group. Differences may arise due to rounding.

  1. For the nine months ended September 30, 2019 and 2018, equity compensation expense was attributable to the following: (i) IPO awards and othernon-recurring awards of $31.0 million and $40.0 million, respectively; (ii) annual bonus awards of $20.9 million and $14.6 million, respectively; and (iii) discretionary awards of $22.1 million and $12.9 million, respectively.
  2. 2018 period includes $11.8 million payment to ARCC for rent and utilities for the years ended 2017, 2016, 2015 and 2014, and the first quarter of 2018.

34

GAAP to Non-GAAP Reconciliation - Unconsolidated Reporting Basis (cont.)

$ in thousands

For the Nine Months Ended

Year Ended December 31,

9.30.19

9.30.18

2018

2017

2016

2015

2014

Performance income and net investment income reconciliation:

Carried interest allocation

$503,808

$72,587

$42,410

$620,454

$494,580

$146,038

$63,884

Incentive fees

28,747

13,683

63,380

16,220

23,272

4,577

27,528

Carried interest allocation and incentive fees

$532,555

$86,270

$105,790

$636,674

$517,852

$150,615

$91,412

Performance income - realized earned from Consolidated Funds

$5,184

$4,000

4,000

8,089

-

1,769

95,308

Performance income (loss) - reclass (1)

533

(211)

205

1,936

$2,479

7,398

14,587

Unconsolidated performance (income) loss - unrealized

(426,411)

127,224

247,212

(325,915)

(228,472)

(31,647)

(94,883)

Performance (income) loss - unrealized earned from Consolidated Funds

-

-

-

(2,997)

1,139

(6,187)

40,070

Performance income - realized

$111,881

$217,283

$357,207

$317,787

$292,998

$121,948

$146,494

Total consolidated other income (expense)

$95,919

$108,920

$96,242

$174,674

$59,967

$24,792

$806,538

Net investment income from Consolidated Funds

(102,499)

(111,710)

(115,151)

(153,810)

(37,484)

(16,455)

(780,490)

Performance (income) loss - reclass (1)

(553)

211

(205)

(1,936)

(2,479)

(7,398)

(14,587)

Principal investment income

45,336

9,544

1,047

89,031

50,408

2,043

55,748

Change in value of contingent consideration

-

-

-

(20,156)

(17,675)

(21,064)

-

Other (income) expense, net

(460)

1,725

1,650

(1,730)

(1,728)

110

3,384

Merger-related expenses

-

-

-

-

-

15,446

-

Offering costs

-

3

3

688

-

-

-

Other income of non-controlling interests in consolidated subsidiaries

(31)

(23)

(19)

(24)

-

-

-

Investment (income) loss - unrealized

(13,415)

21,046

50,809

(55,487)

(14,456)

27,362

(10,935)

Interest and other investment (income) loss - unrealized

2,692

407

98

1,743

(3,309)

-

-

Total realized net investment income

$26,989

$30,123

$34,474

$32,993

$33,244

$24,836

$59,658

Note: These tables reconcile consolidated carried interest allocation and incentive fees reported in accordance with GAAP to unconsolidated realized performance income and consolidated GAAP other income to unconsolidated realized net investment income. These reconciliations show the results of the reportable segments on a combined basis together with the Operations Management Group. Management believes that this presentation is more meaningful than a reconciliation to the reportable segments on a segment basis because such reconciliation would exclude the Operations Management Group. Differences may arise due to rounding.

1. Related to performance income for AREA Sponsor Holdings LLC. Changes in value of this investment are reflected within net realized and unrealized gains on investments in Ares' Consolidated Statements of Operations.

35

Significant Fund Performance Metrics Endnotes

Credit

  1. Returns aretime-weighted rates of return and include the reinvestment of income and other earnings from securities or other investments and reflect the deduction of all trading expenses.
  2. Since inception returns are annualized.
  3. Net returns are calculated using the fund's NAV and assume dividends are reinvested at the closestquarter-end NAV to the relevant quarterly ex-dividend dates. Additional information related to ARCC can be found in its financial statements filed with the SEC, which are not part of this presentation.
  4. Realized proceeds represent the sum of all cash distributions to all partners and if applicable, exclude tax and incentive distributions made to the general partner.
  5. Unrealized value represents the fund's NAV reduced by the accrued incentive allocation, if applicable. There can be no assurance that unrealized values will be realized at the valuations indicated.
  6. The gross multiple of invested capital ("MoIC") is calculated at thefund-level and is based on the interests of the fee-paying limited partners and if applicable, excludes interests attributable to the non-fee paying limited partners and/or the general partner which does not pay management fees or carried interest. The gross MoIC is before giving effect to management fees, carried interest, other expenses and taxes, as applicable.
  7. The net MoIC is calculated at thefund-level and is based on the interests of the fee-paying limited partners and if applicable, excludes those interests attributable to the non-fee paying limited partners and/or the general partner which does not pay management fees or carried interest. The net MoIC is after giving effect to management fees, carried interest, as applicable, and other expenses. The funds may utilize a credit facility during the investment period and for general cash management purposes. The net MoIC would have been lower had such fund called capital from its limited partners instead of utilizing the credit facility.
  8. The gross IRR is an annualized since inception gross internal rate of return of cash flows to and from the fund and the fund's residual value at the end of the measurement period. Gross IRR reflects returns to thefee-paying limited partners and, if applicable, excludes interests attributable to the non-fee paying limited partners and/or the general partner which does not pay management fees or carried interest. The cash flow dates used in the gross IRR calculation are based on the actual dates of the cash flows. The gross IRRs are calculated before giving effect to management fees, carried interest, other expenses and taxes, as applicable.
  9. The net IRR is an annualized since inception net internal rate of return of cash flows to and from the fund and the fund's residual value at the end of the measurement period. Net IRRs reflect returns to the fee- paying limited partners and, if applicable, exclude interests attributable to thenon-fee paying limited partners and/or the general partner which does not pay management fees or carried interest. The cash flow dates used in the net IRR calculations are based on the actual dates of the cash flows. The net IRRs are calculated after giving effect to management fees, carried interest, as applicable, and other expenses. The funds may utilize a credit facility during the investment period and for general cash management purposes. Net fund-level IRRs would likely have been lower had such fund called capital from its limited partners instead of utilizing the credit facility.
  10. ACE III is made up of two feeder funds, one denominated in U.S. dollars and one denominated in Euros. The gross and net IRR and MoIC presented in the chart are for the Euro denominated feeder fund. The gross and net IRR for the U.S. dollar denominated feeder fund are 15.1% and 11.4%, respectively. The gross and net MoIC for the U.S. dollar denominated feeder fund are 1.4x and 1.3x, respectively. Original capital commitments are converted to U.S. dollars at the prevailing exchange rate at the time of the fund's closing. All other values for ACE III are for the combined fund and are converted to U.S. dollars at the prevailingquarter-end exchange rate.
  11. ACE IV is made up of four parallel funds, two denominated in Euros and two denominated in pound sterling: ACE IV (E) Unlevered, ACE IV (G) Unlevered, ACE IV (E) Levered, and ACE IV (G) Levered. The gross and net IRR and MoIC presented in the chart are for ACE IV (E) Unlevered and ACE IV (E) Levered. Metrics for ACE IV (E) Levered are inclusive of a U.S. dollar denominated feeder fund, which has not been presented separately. The gross and net IRR for ACE IV (G) Unlevered are 16.6% and 11.0%, respectively. The gross and net MoIC for ACE IV (G) Unlevered are 1.1x and 1.1.x, respectively. The gross and net IRR for ACE IV
    (G) Levered are 22.0% and 15.7%, respectively. The gross and net MoIC for ACE IV (G) Levered are 1.1x and 1.1.x, respectively. Original capital commitments are converted to U.S. dollars at the prevailing exchange rate at the time of the fund's closing. All other values for ACE IV Unlevered and ACE IV Levered are for the combined levered and unlevered parallel funds and are converted to U.S. dollars at the prevailing quarter-end exchange rate.
  12. Given the limited amount of time that has elapsed from the date of the first capital call, gross and netfund-level IRRs for SDL Unlevered and SDL Levered have been omitted as such information would not currently be meaningful for investors.

Private Equity

  1. Realized proceeds represent the sum of all cash dividends, interest income, other fees and cash proceeds from realizations of interests in portfolio investments. Realized proceeds excludes any proceeds related to bridge financings.
  2. Unrealized value represents the fair market value of remaining investments. Unrealized value does not take into account any bridge financings. There can be no assurance that unrealized investments will be realized at the valuations indicated.
  3. The gross MoIC is calculated at theinvestment-level and is based on the interests of all partners. The gross MoIC is before giving effect to management fees, carried interest, other expenses and taxes, as applicable. The gross MoIC for the corporate private equity funds is also calculated before giving effect to any bridge financings. Inclusive of bridge financings, gross MoIC would be 1.7x for ACOF IV and 1.2x for
    ACOF V.
  4. The net MoIC for the infrastructure and power and SSF IV is calculated at thefund-level. The net MoIC for the corporate private equity funds is calculated at the investment level. For all funds, the net MoIC is based on the interests of the fee-paying limited partners and if applicable, excludes interests attributable to the non-fee paying limited partners and/or the general partner which does not pay management fees or performance fees. The net MoIC is after giving effect to management fees, carried interest, as applicable, and other expenses. The funds may utilize a credit facility during the investment period and for general cash management purposes. The net MoIC would have been lower had such fund called capital from its limited partners instead of utilizing the credit facility.

36

Significant Fund Performance Metrics Endnotes (cont'd)

Private Equity - Cont.

  1. The gross IRR is an annualized since inception gross internal rate of return of cash flows to and from investments and the residual value of the investments at the end of the measurement period. Gross IRRs reflect returns to all partners. For SSF IV, cash flows used in the gross IRR calculation are based on the actual dates of the cash flows. For all other funds, cash flows are assumed to occur atmonth-end. The gross IRRs are calculated before giving effect to management fees, carried interest, other expenses and taxes, as applicable. The gross IRR for the corporate private equity funds is also calculated before giving effect to any bridge financings. Inclusive of bridge financings, the gross IRR would be 18.2% for ACOF IV and 15.3% for ACOF V.
  2. The net IRR is an annualized since inception net internal rate of return of cash flows to and from the fund and the fund's residual value at the end of the measurement period. Net IRRs reflect returns to thefee-paying limited partners and if applicable, exclude interests attributable to the non-fee paying limited partners and/or the general partner which does not pay management fees or carried interest. The cash flow dates used in the net IRR calculation are based on the actual dates of the cash flows. The net IRRs are calculated after giving effect to management fees, carried interest as applicable, and other expenses and exclude commitments by the general partner and Schedule I investors who do not pay either management fees or carried interest. The funds may utilize a credit facility during the investment period and for general cash management purposes. Net fund-level IRRs would have generally been lower had such fund called capital from its limited partners instead of utilizing the credit facility.
  3. In January 2017, a new team assumed portfolio management of SSF IV. In addition to presenting the cumulative performance measure for SSF IV, we have also adopted a new performance measurement called "SSF IV 2.0". SSF IV 2.0 is a subset of SSF IV positions and is intended to provide insight into the new team's cumulative investment performance. SSF IV 2.0 investments represent (i) existing andre-underwritten positions by the new team on January 1, 2017 and (ii) all new investments made by the new team since January 1, 2017. As part of the re-underwriting process, each liquid investment in the SSF IV portfolio was evaluated and a determination was made whether to continue to hold such investment in the SSF IV portfolio or dispose of such investment. At the same time, legacy illiquid investments have been excluded from the SSF IV 2.0 track record as it was not possible to dispose of such investments in the near-term due to their private, illiquid nature. Since January 2017, SSF IV 2.0 has generated gross and net internal rates of return of 10.8% and 7.1% through September 30, 2019, respectively. The IRR is an annualized since inception internal rate of return of cash flows to and from investments and the residual value of the investments at the end of the measurement period. Cash flows used in the IRRs calculations are based on the actual dates of the cash flows. The gross IRRs are calculated before giving effect to management fees, carried interest, other expenses and taxes, as applicable. The net IRRs are calculated after giving effect to estimated management fees, carried interest and other expenses.

Real Estate

  1. Realized proceeds include distributions of operating income, sales and financing proceeds received.
  2. Unrealized value represents the fair value of remaining investments. There can be no assurance that unrealized investments will be realized at the valuations indicated.
  3. The gross MoIC is calculated at the investment level and is based on the interests of all partners. The gross MoIC for all funds is before giving effect to management fees, carried interest, other expenses and taxes, as applicable.
  4. The net MoIC is calculated at thefund-level and is based on the interests of the fee-paying partners and, if applicable, excludes interests attributable to the non fee-paying partners and/or the general partner which does not pay management fees, carried interest or has such fees rebated outside of the fund. The net MoIC is after giving effect to management fees, carried interest as applicable and other expenses. Net fund-level MoICs would generally likely have been lower had such fund called capital from its limited partners instead of utilizing the credit facility.
  5. The gross IRR is an annualized since inception gross internal rate of return of cash flows to and from investments and the residual value of the investments at the end of the measurement period. Gross IRRs reflect returns to all partners. Cash flows used in the gross IRR calculation are assumed to occur atquarter-end. The gross IRRs are calculated before giving effect to management fees, carried interest, other expenses and taxes, as applicable.
  6. The net IRR is an annualized since inception net internal rate of return of cash flows to and from the fund and the fund's residual value at the end of the measurement period. Net IRRs reflect returns to thefee-paying partners and, if applicable, exclude interests attributable to the non fee-paying partners and/or the general partner which does not pay management fees or carried interest or has such fees rebated outside of the fund. The cash flow dates used in the net IRR calculation are based on the actual dates of the cash flows. The net IRRs are calculated after giving effect to management fees, carried interest as applicable, and other expenses. The funds may utilize a credit facility during the investment period and for general cash management purposes. Net fund-level IRRs would generally likely have been lower had such fund called capital from its limited partners instead of utilizing the credit facility.
  7. EF IV is made up of two parallel funds, one denominated in U.S. dollars and one denominated in Euros. The gross and net MoIC and gross and net IRRs presented in the chart are for the Euro denominated parallel fund. The gross and net IRRs for the U.S. dollar denominated parallel fund are 18.8% and 13.5%, respectively. The gross and net MoIC for the U.S. dollar denominated parallel fund are 1.6x and 1.3x, respectively. Original capital commitments are converted to U.S. dollars at the prevailing exchange rate at the time of fund's closing. All other values for EF IV are for the combined fund and are converted to U.S. dollars at the prevailingquarter-end exchange rate.
  8. EF V is made up of two parallel funds, one denominated in U.S. dollars and one denominated in Euros. The gross MoIC presented in the chart is for the Euro denominated parallel fund. The gross and net MoIC for the U.S. dollar denominated parallel fund are 1.1x and 1.0x, respectively. Original capital commitments are converted to U.S. dollars at the prevailing exchange rate at the time of fund's closing. All other values for EF V are for the combined fund and are converted to U.S. dollars at the prevailingquarter-end exchange rate.

37

Ares Credit Group Slide

  • ARCC received the 2019All-America Executive Team award alongside 66 other companies. Various Ares personnel received first place awards in the following category: IR program. 152 other institutions also received a first-,second-, or third-place ranking in this category. Institutional Investor based these awards on the opinions of 2,742 portfolio managers and buy-side analysts, and 655 sell-side analysts who participated in this survey.
  • Institutional Investor logo from Institutional Investor, ©2019 Institutional Investor, LLC. All rights reserved. Used by permission and protected by the Copyright Laws of the United States. The printing, copying, redistribution, or retransmission of this Content without express written permission is prohibited.
  • Lipper Rankings reported in Lipper Marketplace Best Money Managers, June 30, 2019. Lipper Marketplace is the source of thelong-only and multi-strategy credit rankings. Lipper's Best Money Managers rankings consider only those funds that meet the following qualification: performance must be calculated "net" of all fees and commissions; must include cash; performance must be calculated in U.S. dollars; asset base must be at least $10 million in size for "traditional" U.S. asset classes (equity, fixed income, and balanced accounts); and, the classification of the product must fall into one of the categories which they rank. Lipper defines Short Duration as 1-5 years. Lipper's Active Duration definition does not specify a time period but rather refers to an Active rather than Passive strategy. Ares Institutional Loan Fund was ranked 14 out of 57 for the 20 quarters ended June 30, 2019. Composites for Ares U.S. Bank Loan Aggregate and Ares U.S. High Yield additionally received rankings of 13 of 57 and 4 of 35, respectively, for the 20 quarters ended June 30, 2019.
  • Private Equity International selected Ares Management as Lender of the Year in Europe - 2018. Awards based on an industry wide global survey across 60 categories conducted by Private Equity International. Survey participants voted independently. In addition, survey participants could nominate another firm not listed in the category.
  • Private Debt Investor selected Ares Management for Global Fundraising of the Year, Lender of the Year in Europe, and Fundraising of the Year in Europe and selected Ares Capital Corporation for BDC of the year in the Americas. Awards based on an industry wide global survey across 43 categories conducted by Private Debt Investor. Survey participants voted independently. In addition, survey participants could nominate another firm not listed in the category.

Ares Real Estate Group Slide

  • PERE 100: Ares ranked 13thout of 100. Ranking applies to the Ares Real Estate Group related to selected funds managed therein. The PERE 100 measures equity raised between January 1, 2014 and April 1, 2019 for direct real estate investment through closed-ended, commingled real estate funds and co-investment vehicles that invest alongside these funds. The vehicles must give the general partner discretion over capital and investment decisions and excludes club funds, separate accounts and joint ventures where the general partner does not have discretion over capital and investments. Also excluded are funds with strategies other than real estate value-added and opportunistic (such as core and core-plus), funds not directly investing in real estate (such as fund of funds and debt funds) and funds where the primary strategy is not real estate-focused (such as general private equity funds). Ares did not pay a participation or licensing fee in order to be considered for the PERE 100 ranking.
  • Fitch Ratings assigned a commercial real estate loan level special servicer rating of'CLLSS2-' to Ares Commercial Real Estate Servicer LLC ("ACRES") as of July 11, 2019. To be considered for a
    Fitch rating, Ares paid Fitch a standard, contracted fee for initial and ongoing evaluation. The rating assigned by Fitch Ratings was solicited and assigned or maintained at the request of the rated entity/issuer or a related third party. Fitch Ratings assigns ratings to commercial mortgage special servicers on a scale ranging from Level 1 through Level 5, each of which are described below:
    • Level 1 Servicer Rating: Servicers demonstrating the highest standards in overall servicing ability.
    • Level 2 Servicer Rating: Servicers demonstrating high performance in overall servicing ability.
    • Level 3 Servicer Rating: Servicers demonstrating proficiency in overall servicing ability.
    • Level 4 Servicer Rating: Servicers lacking proficiency due to a weakness in one or more areas of servicing ability.
    • Level 5 Servicer Rating: Servicers demonstrating limited or no proficiency in servicing ability

38

Disclaimer

Ares Management Corporation published this content on 05 November 2019 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 05 November 2019 11:14:00 UTC

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Sales 2020 1 595 M
EBIT 2020 613 M
Net income 2020 234 M
Debt 2020 5 578 M
Yield 2020 4,39%
P/E ratio 2020 19,4x
P/E ratio 2021 16,3x
EV / Sales2020 6,17x
EV / Sales2021 4,95x
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Mean consensus OUTPERFORM
Number of Analysts 13
Average target price 43,25  $
Last Close Price 37,24  $
Spread / Highest target 34,3%
Spread / Average Target 16,1%
Spread / Lowest Target -8,70%
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NameTitle
Michael J. Arougheti President, Chief Executive Officer & Director
Antony Peter Ressler Executive Chairman
Michael Robert McFerran Chief Operating & Financial Officer
Sandesh Hegde Chief Technology Officer & Managing Director
David Benjamin Kaplan Director, Partner & Head-Ares Private Equity Group
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