Ares Management (ARES) 28 Apr 222022 Q1 Earnings call transcript

Welcome to Ares Management Corporation's First Quarter Earnings Conference Call. At this time, all participants are in a listen-only mode.

As a reminder, this conference call is being recorded on Thursday, April 28, 2022. I will now turn the call over to Carl Drake, Head of Public Markets Investor Relations for Ares Management.

Good morning, and thank you for joining us today for our first quarter conference call. Michael Chief Chief Financial by Jarrod Officer; today our Phillips, Officer. joined Arougheti, Executive our and I'm

We also have today who a number of be during executives available Q&A. will with us

comments statements and SEC subject I remind want identified Before including and filings. are this factors in we forward-looking you our to begin, risk that contain call made uncertainties, to those risks during our in

past obligation results Please to materially, undertake is that update also such differ and Our could guarantee no actual a statements. any forward-looking note results. of performance not we future

financial the this which isolation will During substitute sell accordance increase announced of Please Class we refer offer on call, Investor any the share as morning, an of on its June the Please a per call This purchase XX. to our available nonvoting fund. Ares Accepted or not presentation common stock. offer an The to of record Resources over reconciliations paid of XXXX, interest we to note this for holders in This represents quarter certain considered in on a dividend be $X.XX to of we website comparable Generally non-GAAP and earnings quarter quarter for to common solicitation prepared in of a will second dividend declared A Principles. XX% with measures, that to that first an be measures GAAP an our same dividend ago. year June XX, of constitutes most measures a should for Accounting from refer the directly measures. on section nothing our or

business will to over Now, some financial I who the quarterly Arougheti, will start highlights. turn with Michael call and

everyone and Carl I Thank you, morning. is doing hope well. good

were which of across incredibly XXXX especially to markets strategies. investment activity the us our the fourth led most for record active and financing During quarter,

in in sharp we inflation first typically volatility During the up stepped uncertainty interest Ukraine of a its the quarter. China, against lockdowns a 'XX, of quarter beginning saw fight rates. protracted and in rise added slow first and The prolonged further seasonally war the Fed to and

of across shifted management the markets, private some point, would we to XX%. part XX% and the DNA growth fee-related that and in execution yet slowed, there markets, that income markets, of Ares, tapped traded despite in to typically At volatility On more our key where As general year-over-year respectively is basis, a increasing our transaction many our our backdrop, all our to realized it have metrics. continued markets. financing find opportunities challenging XX% and the earnings larger increased certainty strong manage a result, activity transitioning scale to navigate of To financial across and increased transactions. quarter the activity is and first fees

fee-related earnings XX% the Importantly, our over accounted months. and our realized for XX% for of last income for quarter the first XX

With continues invest, to global the this continued of are FRE that core have a unabated see Our across bright volatility. increasing fundraising strong over coming for fund growth all continuing believe returns capital we compelling groups. earnings for record in and our equivalent of premium market strong is pipeline less search performance, of reliable our growth a the rates, visibility five and the that growth XX remain billion gratifying interest investors prospects liquid next in available and face volatility we the robust over continued months for we business as $XX of Despite the especially to believe over with years. quarters XX% income

to quarter performance, capital and investors capital investment believe investment accounted of of We as continued reflects Existing our billion allocated than continue, direct for of raised and expect continued designed our solutions, our new our $XX.X general during our strong we scaling across investors XX% we During the remain more with strategies this broadening our the we and first serve trend funds growth, gross first existing base. offering quarter, largely of our platform. underpenetrated expanding new the clients. to investor existing existing our as strategies and raise

to across situations several in sixth on billion three the in our continue market, fund aggressively close We APAC estate to for to $XXX two real highlights a retail $X.X million the lending for markets. $XXX direct closings growth sixth all and our expand $X.X distribution for trends and Landmark first fund. institutional, included opportunistic investors in additional billion our channels, secondaries these commingled of long-running first our funds, insurance funds opportunities Notable add million $XXX for capitalize and quarter, our Fund, special European on million our Asian new fund, for special the

notable of aggregate, Our perpetual an funds year-over-year, to our One And higher continue XX% we're fund, we capital billion. scale. first where was reopening in highlight of alternative our credit quarter raised billion also $X.X open-ended or the AUM. more the than XX% $XX additional core reaching

branded being Ares nontraded platform. as to of also scale part Black continue Ares and the REITs, now REITs, forward Our Creek benefit from

first nontraded our continues two million quarter, performance REITs, the to be saw $XXX strong. For totaling inflows and

with our first scale Our $X.X billion collectively quarter. also interval commitments capital credit than fund totaled new perpetual continues $X.X more and of flows the in to billion

the the months, funds year-end. flagship toward XX over than to to expected expect several next our we including more out market looking largest have funds launch So, commingled of different XX in

versus well, in this that solutions and we're offering billion a meet of uniquely is integrating for and experiencing to quarter. business example for in fundraising on having year the globally that last year The The up debt a AUM positive We continues demand that but year's quarter these increasing be is coming ago. we global the acquisitions attractive growth believe new believe strategic to We assets infrastructure of the ended XX% to in infrastructure of of significant next acquisition will and majority during that of in be same more the present record investor is driven discussions variety space report privatization platform made A this infrastructure growth, team needs are expect this dictate solid We the $XXX period of with energy AUM debt need have positioned flagship we and geographies. versus ultimately relation across sustainable our We the vast opportunities. by expect large to of to significant will levels. population organic, be and digital timing final to first fundraises the will growth great in XXXX fundraising and segments a first year year, but the the capital this our have industries which infrastructure. economic fundraising the by transition quarter. credit closed we and next our infrastructure shift decade believe tally

Wealth we XXX largest expand believe second geographic is Management into owned to distribution Ares expand to professionals reach The are and Solutions the continue seeking and markets manager. new our business by platform has our capabilities. wealth enhance alternative now we over our any which We group to overseas

this we begin with our to make private reflect fundraising year. We later wirehouses and banks increasing large progress to this expect and distribution see continue in to

backing secondary to with the launch $XXX new of On institutional markets leveraged fund private solutions front, the new secondary several than million experience product a more seed investors. we our including

have experience managers nontraded which one largest the the we BDC In an significant is where a for area new as filed country. of in addition, we BDC

March We quarter at XX. the and over $XX continued billion first channel at stands $X in the now our billion our momentum AUM raising retail in retail

scale I continue will fundraising special the other activity. impacted first retail by under demonstrated volatility ago. still volatility that markets year secular than is a the this quarters just the to gaining as trading the active expect opportunities breadth We which our Despite $XX and XX% were first year-over-year were which in In temporarily We billion experienced coming and capabilities momentum more quarter. credit, active billion markets created investment across flexibility, we making strong strategies earlier, increase by quarter invested and investments of discussed we trends. a years. $XX whereas compares seasonality for Certain deployment we for our us and situations and driven remained in more during the

assets we Management. to and point purchase To well focus we grow a this perform middle throughout cycles. Annaly $X.X on to franchise billion entered that into continue Capital funds that lending week, direct will agreement our an from continue We expect earlier will market credit market high-quality where portfolio

relationships our we're with the first including the across our recently serve As a we in also estate portfolio further portfolio sponsors. names strong major deployment, deployment lending real Deployment provide our knew new new sector, year-over-year up in accelerate seeing quite XX% player industrial quarter, to and portfolio acquired was funds. additional and in this incumbency on well solidify existing will benefits acquisition and the this direct

fund months. the of in our of generated inflation last had gross gross and rising performance our segments composite performance XX% had only portfolio XX.X% first estate real the XX-month and the for rates quarter estate quarter. Real XX last XX.X% of X% estate real US and certain the in equity of as period for returns a equity In strong continued impact and European its the for composite interest first on terms the modest returns quarter

excellent multifamily and generating performance portfolios, return our rates the REITs, an in completion our our of industrial European new industrial and and rental nontraded to A-REIT strong above on in rates selection our and In net AI-REIT generating a with US underweights remains XX.X% and higher the significant driven builds property estate from multifamily trends benefit to continue base rent overweighting growth first a was return REITs Our cases. underwriting The with types submarket portfolios quarter and retail in first quarter utilization performance by real properties across office hospitality. X.X%. and high net nontraded of

led strategy generated factors our the in our growth in credit, to quarter. private Within operating across credit returns these of strong assets. All income net strong has

Ares in direct net US for generated a the fund, Our X.X% the months. Capital of XX Corporation quarter flagship first XX.X% last and return lending

generated of months. steady European the the gross and X.X% XX.X% for returns quarter Our lending direct for last XX strategy

some defensive our for a senior on our quarter of high-yield and in focus in asset a XX.X% floating outperformed of first portfolios. credit, XX secured performance the Our benchmarks by in benefited our months. our we and loans XX-month quarter quarter X.X% the portfolio. situations these and return with And multi-asset the inclusion from with rate the a generated last Asia, gross underperformance with predominantly global syndicated slight liquid special fund along periods in of for strategies in composite, driven high-yield first baskets the industries, In in selection

continue equity private Our volatile public the markets. to equity returns outperform

for XX% returns period, opportunities while X.X% the last returns XX-month months. XX% the in the Our generated first negative quarter of first X% and of Ares ACOF for gross gross composite, the positive and special quarter generated XX in

for Our secondary estate returns performance, strategies the Jarrod? of trailing trailing the the walk also while gross that, returns now call XX-month quarter continued XX.X% over turn for months. the generating financial through private X.X% with XX gross quarter the results, And equity and and strong I over first XX.X% will XX.X% of real for their to to Jarrod the quarter with period, generated

Thank us. you, for Mike. joining you Hello and everyone, thank

stated, volatility, despite year-over-year market increased slowdown typical per share fee-related and income Mike the As seasonal which management strong we A Class by compounded of growth stock. earnings, fees, realized in achieved RI was

to fee Starting our drive for fee revenues The with quarter capital perpetual from as million XX% acquisition, structuring funds. the and year quarter, XX% the by AUM. quarter. amount our totaled When than Our billion. typical assets fees previous XX% managed was combined funds their long-dated due fees had end, AUM in managed capital funds strong to the accounts certain our perpetual organic strong Other our of fees $XX.X up perpetual we fundraising management continued REITs fees at performance first increased with stability fee-related a but development-related us in revenues, of previously fees in the fees our increase to a from manage with fourth addition came with evident, which of paying retail from increased long-term platform, management of our year-end. to We year-over-year, in perspective. over management growth non-traded direct predominantly approximately allows billion either crystallize AMP in the we've in in as of and plus quarterly to come lending property typically from quarter, at small X% origination $XXX our the accounts and $XX as quarter triple our income our expect the more our driven our of stated credit, will FRPR growth

FRE, XX% of in increase XXXX. our first And realized $XXX.X generated over the quarter. first quarter of an the of quarter, XX% we million For income accounted the of it over for

Class which slightly FRE versus quarter quarter to over XX% for and about Our on quarter We in our the was XX% first the fourth the we points XXX continue totaled FRE track XXXX. first for XX% our margin realization per market with believe compound FRE growth basis be of up more A dividends plus common up annual quarter, of of activity and through target was to margin by end the the first modest rate Due in XXXX. and run realized performance income. stock, XXXX $XX.X million the volatility

on future our performance strong X.X% year-over-year is on which performance The portfolio. the of and quarter potential. increased to led the growth income group yields and the based However, reflecting cash our realization the up in was from is accrued million, largely credit XXX% increase the portfolio returns in net by $XXX.X

a our debt instruments. XX% from in credit impact floating limited are prices to rates of our in expect We asset assets group as rising rate

the to as increase nature these benefit interest further. expect We rates from of rate floating assets

Going our forward, rates. the in we impact credit and cushions portfolio to the absorb built significant of believe interest inflation rising have companies

generally fund above our low loan Ares X.X coverage believe its the portfolio that reported X.X our we direct lending interest XX%, senior much largest credit of XX-year net historically was example, of portfolio which average at in of is representative For its Capital, value stood average times which times. at to is

$XX.X drove million the strong participation the an gross non-traded the balance of Ares. of for performance first our REIT's performance addition sheet REITs In on accrual in quarter in

Day, based style time. in additional we an the income of start last year August, remains Since for While value $X.X performance funds strong since At waterfall Day, AUM that is accrued waterfall our it $XX.X billion included style in income, two fee-related net such fund's or our performance forecast. included were billion to year we've not not the the these in realized on outlined our of performance this future in for returns net to from revenues Investor AUM is had European Investor that our at funds. we vehicles subject European the in raised funds a potential it that

$XXX.X the quarter's second Looking this of Class will quarter's and We first million, ahead of levels. for the at or share waterfall of After-tax $XXX our current net already few income accrued European-style a XX% this in $X.XX first years XXXX. common $X.XX RI over from quarter amount of of are be million the performance totaled recognizable funds. of $XXX quarter, in first the is believe income from area over next up XX% Realized our stock million the XXXX. in just pacing A our portion up for was first per quarter quarter realizations first

related metrics. Turning and AUM to

Our X% from assets up fourth under than quarter $XXX billion, of management XX% increase XXXX. of quarter and totaled an $XXX in more the first from billion the

from acquisition billion debt business. quarter Our $X.X of the included AUM growth first infrastructure the in AMP's

of totaled X% fourth AUM, up quarter first end, the over the at quarter increase XXXX. XX% from fee-paying $XXX quarter an approximately billion of from and Our

a in direct to opportunities. debt take special advantage alternative in constant market in growth with likely by fee-paying credit, was primarily well-prepared Our infrastructure volatility strategies, a deployment AUM the estate which through opportunity be are from on driven and our billion acquisition. paid we're debt XXXX, lending invested real AUM fee-paying to $X along With of capital meaningful theme

yet represents potential of $XXX and over of We our that's available XX% annual Our deployed XX% corresponds billion $XX.X fees, for management totaling the total management AUM an with fees. last future ended fees a of XX deployment available year-over-year. billion, million, if to months capital to grew record quarter increase which paying not $XX.X over

XX% interest before spike amount, the which Our $XXX.X this amount coupon us. increased first notes for end, senior quarter, XX-year meaningful debt X% was rate $XX.X rates incentive-eligible markets the issued of a with by quarter-over-quarter Earlier fixed successfully X.XX%. opportunistically accessed $XXX creation uninvested of and billion million in a the in future potential of we AUM and year-over-year to value billion. quarter Of opportunities represents at

rating metrics. is business our liquidity business of well-positioned ahead Following a billion, we our serve agencies sheet be the in opportunistic When his AUM potentially financial our issuance affirmed and a balance model. of credit-related and capital believe this our reduce inflation-protected to we $XX well-positioned over assets, this call well-prepared us. any of of for liquidity investing will coupling, now turn and The and light ample our the investment-grade I'll core to model, to we're in ample business uncertainty perpetual of believe more substantial management volatility for market and thoughts believe attractive with of company's rating with We and or portion substantial have amount nature we're back combination our environment. our available assets long-duration fee-centric concluding our the remarks. Mike

Jarrod. Thanks

few some an past not us. balance We uncertainties to impacted from invest we've to the purpose questions Ares helps we be We protection which private floating in in by may and management while during risk. primarily the our fee-centric just and real credit months, received business protect downside markets. of using take drive employ excel turbulent a to mindset about a asset-light that is in of how rate investors structural ahead the but sheet, many Over withstand, model protections growth equity assets degree built inflation strategies, assets have stability.

investing capabilities our in We embedded variety a of also have and restructuring extensive distressed strategies.

recent the COVID We markets some through our during Crisis we've Great like have fee growth a of fastest pandemic. and management and periods AUM and generated record track volatile Financial demonstrated the

our expressing of end AUM I'm or my for more open dedication billion including time And around of all questions. our the forecast of For today. to by $XXX operator employees can also confident hard these and line I appreciation want company. year-end our trajectory growth for Thanks our their our deeply continued in thankful the globe. your by investors XXXX. we for long-term to the of reasons of work support that we that all with for remain

We’ll comes go now question-and-answer Bank America. our ahead. the question with begin And Siegenthaler of Instructions] session. from Please Craig first [Operator

Hope Michael. Good morning, team are the well. doing you and

Hi, Craig.

portfolio. quality So overall about building commentary I on but call on get we of selective migration the the liquidity, and ARCC sense credit Kipp's being wanted to heard a more the

delinquencies, So inflows I restructuring ARCC was just across wondering lending if activity, early-stage business? like not global at and but you on non-accrual trends comment high-level could the direct

what opened Sure. Craig. you there's the because of class we're bit of makes unique positioning think book of this in a it. private the credit is rate with any this in durability the cycle I'm credit you glad so Thanks environment. the all-time a And with asset maybe that, type of into terms this at near hike of I quality highs misunderstanding little going at/or look way about

ARCC we're is board seen year-over-year look X.X% book if we've We the with almost we across before. is talked I So prior three saw that the seeing flow as the cost. think Kipp cash that at positioned indicative had don't cyclical which about growth EBITDA of at coverage year-over-year averages nonaccruals XX% growth. you That low low times Xs. portfolio, interest what within the at record against in

at value. We were loan at that about to portfolio low XX% are very attaching to And loans we entering in value.

amount credit below. significant of a So support

credit understand in increased in deterioration materialize I long even rate that default while to a would given reality used as is to rising book. go rise are loss defaults so environments we see folks there's are and there a the the expecting rates way in And before who

or credit P&L the floating assets given not Ares rate points of these those XXX but think of would of Management. just accretive of increases significantly basis importantly all positioning XXX the I portfolios next rate the be we to expect to private more to

of in the earnings I we LIBOR point XXX just you are short-term think existing expect articulated a But would of consistent infrastructure that situations we would positioning excess mortgage corporate talking at too that were increase most little of in these bit basis whether And rates are I points loans, the the first where we're today. of a based XX% about the you in-place I pretty floors. with on think to Kipp board. the in absorbed down loans, across capital if if that the from on look XXX top they basis ARCC control. the positioning to that's drill structure not their book if call, a increase were loans, all

And that loans value the so subordination we transition. value the I equity work not reflecting that's market underestimate to would through of those as

the be across high-yield and those And through the pretty rise in public the these tend were lot mindful of both outpacing of the and periods two see folks rates for syndicated So market you'll that's at everything the at that equity backdrop this BDC cash and as last talked of rate while go of space loan combination and a back historical of some to a growth look that's what last but the economy, subordination information performance default the I averages that flow periods below about. benefit be is given markets within thing, us. rate to in there's also escalation well to attractive as if happening of you rate look if want hikes, one

a we're good think I in So pretty spot.

Thank bear on and for in the properties guys did provided BDC you space an with the could week, seeing you, bad opportunities you you Annaly follow-up like Ares? this a inorganic which but thinking the seeing had just And when Michael. Very market other be earlier what just big accretive accretive back helpful. guys the exit business, are opportunity just to last especially Allied you acquired which that FRE

different portfolio an acquisitions Craig more much than interesting those those are like both but made, platform purchases an value the inorganic it's both Allied at obviously of because and we've say an ways. you or accretive are distinction look some in Yes. Annaly that I add would project

example productive a transition Annaly that. asset I portfolios think early seeing more dialogue We the opportunities around and of today. are great of is days even the And market in

in refocus of liquidity of in players repositioning Annaly the friends at some of we'll on position our market them. would I of is that Some strategies the other of expect and see core a of more case it the is and and kind

Thank you, Michael.

well. Thanks, Do Craig.

question with be muted. KBW. might ahead. Robert speaking comes next go from Lee The if line Robert, Please you’re your

Yes. questions. Thanks Obviously, a Appreciate about taking Sorry of talk Mike for I my you everyone’s little lot bit mean about it. and But a discussion been talk you're little talked seeing obviously wanted outlook. you side? out about PE year well. that. other then bit -- with? about I this about And fundraising. getting to more you're cycles into what doing little can next you maybe a as get a to drawn your maybe you continued asset other demand. to maybe from the of LP maybe which but funds us seeing? back coming may the also what bit share to be year classes you having flagship end remind speak Could market there's

in platforms trend But across to probably so market the two is because is things unpack talk just of alt or quick an we as order. I'll the larger three that secular reminder them of which overarching in share the hands the to Rob, just and in landscape There's our consolidation continuing. maybe Sure. try hit about a

than a asset that's different think in maybe Ares So are I slightly experience smaller I managers. the think folks And single like being fundraising. or having that reflected

more largely is in level side we're is are equity of the active it I but that which to, deployment has we of because it's private the something experiencing I say of seeing, you're the what as that referring house back would the which say, sooner think GP And base couple last of expected. the versus relationships re-ups re-underwriting what a market equity the are would new. I private over years of occurred entrenched to number spending than is incumbent coming managers and time,

have focused of of that the so, are not equity market, space. probably And benefit, who getting in space, are entrenched part are within number products private on re-ups, a shelf larger will managers think because the managers who there again, I more the multiple the people

are this great a will at commentary XX% We deployed strategies side year or seeing timing. to of year. of ops fund some in is, is diversity went next trend you in business. was the and the the affect side the XXXX what a experiencing just are market and That slowdown question, that second of the sometime about momentum out ACOF of to Rob, just We real the expect the today. us, record told that's into today. business equity market a that of we the not we we the your Uniquely, with private we similar of of be special In lot and in the parts business. fundraising coming year, at this depending other that news we our our all be good any not the and the talked is, business, beginning if coming brought year in on to were hard fund, deployment, cap the will But year, latter or which is end demand family towards of not credit of this asset would we've for about the got the early fund great backdrop

a about solid unique the there billion. flagship no had quarter, think first quarter first first I But we $XX scale. in what's long really time of for at time, in the fund a there's

our vehicles is a strategies, that of capital of floor across vehicles, that you'll retail the see now getting just higher perpetual earnings host CLO well franchise. from as capital what through when broad and distribution as go we're So presentation, a gathering you

you're flagship relative And families big be little fund, of into Obviously, the market with will of what lending of US private has of a to a coming half we'll year, a direct retail beginning how on see significant of is see infrastructure I funds. the will benefit see And really, our year. that that bit so, last position. some year this is Deployment platform, back earlier. European one to and year fund. fund is, positioning. the to to diversification we one ACOF. I kind our Similar get larger One leadership the climate ahead The as of next market couple funds, our mentioned, back delta, that it big of and could credit of been pace be

a to deployment We'll based pace year, like funds through get looking there's what XXXX see investment not the at a probably So insignificant function pulled that how on that the at the like of the up. number time. it's of picks and going really that environment we as larger get looks forward, may deployment be we're

Thanks helpful. for was That Great. my taking questions.

Sachs. The next question Goldman with go ahead. comes Blostein Please from Alex

And, last Mike, just how you're that could a temporarily. little expand you point around of within sort little deployment, on light strategy the deployment bit, you building has especially credit, slower, I a seeing albeit fact in the Good been maybe made activity sponsor of Hi. hoping morning. the was capital

of bit to lot of of of, kind in, So opportunistic of the versus could you credit, come of ability distressed larger and maybe quite on in more to again, a some perhaps the but opportunities, for and more the balance form that of unit maybe helping Ares versus the have some that that participated community -- help kind within checks. write a deploy sponsor We've of deals tranche dependency us to seen the a capital little sizable type more. deployment Thanks. others frame the sort number

remarks, deploying market what from the pretty the I'm is to of function strategies, just our environment diversity a going because ended, comes I'm that -- deployment Sure. we we're the going hinted at quarter-to-quarter. where consistently prepared of you Where of with this because is. to in start

probably our more an alternative new portfolios. in environment transaction credit the and opportunistic sits So particularly credit if space within private volume that we're actively is means in equity lower, where M&A that special deploying we're

so, strategies. And flexibility broadening is, happening the out and of what's scale we're the

across XXXX. we consistent And both is billion what plus put seeing You're look non-drawdown did funds, higher $XX.X the which quarter-over-quarter. first at entire than drawdown you deployment XX% platform, of more quarter work, in QX about and the to we

QX So seasonally get only as know out is year, into we'll slow. the we because

volume If QX. you look last volume and up at QX lot in particularly year, the showed ramp that a transaction in of in

portfolio it's where quite some of continue. will not given BDC opportunity or us up. think going job year-over-year actually we're that deployment. in QX relationships exactly within our know of is community. versus our the a of for within these good the have given the So to into parts two-third that Kipp, continue a reliance reduces existing we good position delever to issue We've on is In value on from and actually differentiator example that's optimistic, either portfolio meaningful that scale, show within benefits quite way market the articulated volumes. of the as deployment share quarter, to M&A we're business of I every But names did who's existing growth. deployment more the the seeing articulating share we came positioned other the of pretty our gains the and both the for terms capital focused trend and market someone the and that We're and new equity just new a they the deployment deliver business pace of sure incumbent

I We markets QX And for call. on just if chime think market the things here showing Europe, position on actually business everyone Asian I earnings the about pipeline slightly That because deploying now. in share is to we So a that. activity" to said obviously, deemphasize pretty is could there. Kipp starting the different different The build "reliance well right PE have want on sponsor a he and talked has the opportunities. disagrees, But us outgrown this side. are

at new up. sitting rerating that but transaction to here expect caution dry repricing the And building I the would of did given we through terms once QX, appropriately say the I'm sidelines we're today powder on at mitigant at what deals as QX Kipp activity shadow environment to to you is. amount think look articulated pipeline is the get of private the and or starting looking least is valuation up of market better of to pick a we in a the community now pick relative getting activity equity actually the deployment that

Thanks. Great. Super helpful.

The comes RBC with Markets. next question Please Kenneth go from Capital Lee ahead.

you talked equity some across private around of your businesses? with could us but estate You the Wondering for the talk and higher of just businesses? you my about if thoughts about other wondering could interest rest question. real Thanks credit, Hi. taking some if implications share of rates

private credit landscape, assets duration rate most pretty it's amount lending tailwind floating when their across through direct exposures for they so cover I short part important We look floors. And dead at are think the takeaway that all be Yes. folks beat you the won't us. of a the for an that I for going are that horse, do is to but our meaningful

the inflation are that in at then look inherent there portfolio. book assets you real hedges If

NOI similarly seen even cap being of seeing you against think, side, reflected asset side, and the that's credit on seeing and I increases on back value the between positioned and the in these the what give are been debate assets. floating And not the rates. that tell historically But little have and to the duration multifamily about has generally short the a industrial And right bit everything I on right. based think kind we backdrop we're rates this with a increases classes. they types do the rate portfolios, emphasis in property relationship to and has any rising the utilization in in equity always on submarkets to there's experience we're will our side. interest And of I on On rent color all up rates

uniquely the there. now in we're think given we more I the than benefit industrial positioned even have exposures to past

PE. have say I comes remarks more said down but do to orientation prepared towards And really it so as would price. at an in growth, I the reasonable we a And it's growth

one in see as rate would valuation theory portfolio. And to the some implication discount resets the expect so in

they're has extent those to ample set. You we'll outpaces so that an give a been the that's there's experience really have assets. our opportunities value less that opportunities funds And reset, And into saw this public peer given our back bit but be to you tend growth that's a of the deployment more percentage levered the the in that are that and been historically I portfolios little and growth the benefiting those similarly positioning far. the little clarify special would that because the rate our And floating the given market. a exposures than experience corporate of from quarter there we bit rate fund in work credit-oriented our opportunity to just capital put given

few to are existing places in So and of exposures meaningful to negative. the on going impact very a where portfolio have the interest rates the themselves in

if Got may. And one follow-up just you. Very helpful. I

impact later your about talked seeing wealth you fundraising this channel of solutions year. the some potentially distribution terms management on In

Just upon just you just that? wondering more give color could expand if bit Thanks. little that and a around

Sure.

talk the we being that distribution nice getting talked our vehicles, and growth. new but three we've in year-over-year the the two with existing And also the already quarter-over-quarter by That's showing terms platforms. I'm product to it REITs our are and they're platforms non-traded deeper adding comes of credit channel. interval the in grow As of we're about funds putting sequential about opportunity business to into month-over-month, fund and that our aside the building expanding are how existing listed just we out non-traded going on

BDC. industrial what either the leverage there's to on the platforms. the I secondary at back a private non-traded talking the we have the getting but was the product. hope that logic which And up we half obviously, the showing a secondary larger space scale. broaden fund those specifically at meaningful have new Black year. onto that the high not so will through in or gets credit our our of a when brand this to pretty launch in relationships will And engine, of around hopes number and platforms we of depending in referring mentioned just the that markets to filed registration we're of distribution with And ability then, acquisition and which in going Ares we're half capability, out going And quarter, REITs. broader, I'm about, momentum of part we yet some of our is we've the new And position given the launched really And the it when private process, have non-traded Creek back deeper we're fund that's year. REITs growth as which the launched to new really look show private It's equity the we

start The our on the well. wealth distribution APAC and today, distribution. globalizing Up thing largely we're capabilities North we've the franchise. as been of to teams globalization out Eurozone working focused on management until And American the across it's been is third the and building region

Thanks. Great. Very helpful. again.

Thank you.

Please Wells O'Shea Securities. with The next Finian from go comes Fargo question ahead.

increasingly note paper lending Is morning. thereby, Good major the asset and everyone. insurers. these direct lending, competitor? question are Hi, managers, direct a now overlapping originated A to typical rated peers where underlying on structures providing becoming with

say is So the but becoming a does, answer I it that's major wouldn't competitor.

about I lending think through have direct people just think assets mechanisms. you access to different

changing an to yes, company, not we're BDCs, You similar. BDCs, through can can market way as it, commingled it access you exposures dynamic But just access structures. a experiencing folks effective access really the more them. in if structural through access traded structure very it opportunity a can through is would itself, the it of for competitive the market. nontraded in the for It's But rated and note in be you fund you're you can structures. the through efficiently insurance And access it

on offering that Okay. certain then active market the That's at a you this follow-on in Can public for follow-on offering growth helpful. or was about quarter. a should more outlook little ARCC talk we the And think in BDC? cadence if equity there or the a about

that Kipp, do you want to one? take

health that believe is to. Yeah, of something me. that I'm I company. is at issuing hear BDC the hope the can mean, equity we happy – I good for look, everyone long-term We

a that COVID, emerging better positioned. believe of lot to and continue are We competitive traction we've gained from

months. follow-on whole the a opportunity BDCs We been of continue a allows us bit into think of to grow little to that add with a most what's for is of As common, most equity raised would issuance haven't we ATM along for until XX the did But in and an transactions REITs. company in lot scale a our material it think, recall, amazing we years couple cadence we last seven pretty call growth company. over I for other as of

you So – us a just terms you to relatively of sense the have capital It's BDC, can limitations here, accretively. you it to there Obviously, in followed continue way that do what are for of cadence to and terms FTC, in over for build if time there then so a small. do. good it's scale

Mike. and Kipp you, Thank

Finian. Thanks,

The next from ahead. question Please go with Beatty comes Adam UBS.

Thank you, good morning. and

being with underpenetrated You mentioned your client existing base.

maybe in underpenetrated, this, But so correct the being particularly interested mature, seeing, the the of you'll channel, think I in sense. I around penetrated. lot that that the maybe being And of investors sort and institutional bit little you're me of guess, detail more assume, retail makes of your very there newer that channel I'm what in a thinking in institutional terms are a channel and insurance on

allocation So just the more drive or wondering to of question potential for of what that whether and of upward to of kind a your it's going more Thank an toward allocation Ares might alternatives the in mind, you. Ares? penetration

talk XX%, right a we I about funds in. it I'd Overall, investors take invested the figured, are this our about And Jarrod. now, lot talking we're just it's of Sure. that fund Adam, one. of investor penetration, when number is in. is the to other XX% one five. really through number of the of that seeking and for broaden two LPs funds We're about our about the of that the XX% platform is participate

really number number come with a that which further greater in we've that earlier of their percentage the really Ares. number our than grow LPs recent our really much allow but penetration of and and the a different into that higher point that can able we're Mike's of from wallet across having made not we different that will wallet have, like to that offerings share that's have gain sex to a feel to base to we so dependent number, and we our we're a the in of driven number products like commingled allow and lot funds X% penetrate fundraising, acquisitions that So one us fund things on a investor of and choices different it's platforms

looked a by you see kind would you And at strategy. if breakdown, of Yeah. similar it

The at given to cross-selling we've of then in fund we're fund of people the way in just raising. and through math is, you at year, across business. parts our the investors institutional running roughly number if in been understand it across look families see XX-XX any you So different this playing

to maybe new. So that of as from roughly, But half the are on platform are mentioned, the of the I the come existing. investors XX% dollars

taking investing share. And people then with they're on greater us. so as more we're And stay the platform,

Thank numbers. you it. planting and those for it. context out Got the I appreciate

The ahead. next Stanley. Morgan go question comes from Michael Cyprys Please with

you hoping how Thanks year environment taking a the morning. current evolved in ago? question. that talk and was has about for could Good your underwriting little Hey. I the a looks how bit today criteria versus say

are do And It's obviously, we're question. because you a scenarios we've people for to Mike, now, cost going worried things that and the of market well a all we the whether pass-through I'm a different general but lot accounted to we're cycles, that's debt, input doing which increases. prices, about general things here to our the through service jobs give ability if in, looking ability same at is our answer is underwriting going

approach think risks cycle that investing way I years answer the that's nor simple perspective. framework slightly they're through are the an the maybe changed, this take and different they they expect terms you'll way about in our But said, that to what's investing That them. thinking be think but to successful when that willing the over the a to give that I'll in different I the XX what markets. obviously it you're would has so of where So change take they you're these willing investors like change good and to you led don't underwriting I not in environment us being that's over-index analysis

curious are how… covenant of Are from kind you guess and maybe to the how more credit more about moving I rephrase covenant the senior to in thinking cap Just type you shifting structure? light? book you're

our express structural is in Each yes. which market get capital is, place. of different up uncertainty, the do there you Yeah, you're the in. strategies going lot either differently. said just business structure is you which that through answer a derisk the exactly moving into or that on when to But of a putting it is strategies protections of will more But what where view the depends part

of you're market the that willing are is some in And some what where do you and is that of transition. to

transaction early So a of slows the this will discover clear. market a discover then us again. like Once back activity you of see we view on is And different structure and begin the have in would that then type things you pick will to one market require folks certain we protections return. the reset, reasons the that will a for shift structural very see where price up in have activity to the

cautious again would really as appropriate, say in their not a but So I are people is positioning fundamental shift underwriting. generally in

follow-up retail a secondary non-traded you and Great. those are the that question private If I guys market ask the two retail on could fund BDC products marketplace. bringing to just the

be you differs a sort strategy from your was could going So just the And hoping on talk how that little investment I maybe existing the BDC side, non-traded structured? BDC? bit are about how products of to

Yeah.

but complement capital the PE BDCs fundraising, but public-listed our accessing equity in to leveraging about investor larger to a that curve will roughly be of and within capability, the difficulties billion, earlier equity like the fund question the So to they largely access the calls be it's early way the would will is a private of need stating business, capital at The our PE that scaling also markets fund fund is, the non-listed and public wrapper. that a it obvious in the $XX be of non-traded phenomenon BDCs. structure is that grow retail set a institutional and business least that for thinking pool in just our secondaries work And pretty not actually interesting peer how of the just want grows. versus way maybe because it RIC secondaries access because BDC non-traded order J sort very secondaries administrative just in gets around the is the is that as families, large interesting not you flagship nice the a it ARCC to

fund think will be private standpoint, we to a So our from complementary credit capital do it that offerings. formation

return In terms of how because look it But we relative required to the the in the fund. the actually the the return than different is really public fundamentally launched required tell have what you I in to market non-traded public early will will BDC, too tell, is market.

And the and meaningfully definition so than would vehicle. non-traded to look the listed asset be expect what BDC mix we different by would the in

position peer in we're the set relative to unique unique to a into think I market. bring something that

exposures you the across an our liquid that and nicely line entirety very in As all example, our if one illiquid platform to item. look at has credit continues fund, scale interval which of broad-based

And in I expect see side listed to the the house non-traded so guess. had broader to if I platform across a diversification the of would the versus

Great. Thank you.

from next Please with Robert The question follow-up Lee Instructions] [Operator a is KBW. ahead. go

there know of there? you stock also seemed fee a the thinking of tax I rate I like Thanks just did whatnot, be low or bit. be us around had should in kind a anything a restricted And for notice XQ maybe don't expectations couple came little low. really could also I more grant questions. of issues vesting timing or modeling update know on just follow-up. But quarter, taking were some if rate quick seemed we but down my the there a Jarrod, of about. tax rate Can I seasonally just sometimes maybe it kind kind little

of rate, standard you XX management some rate. something result Sure. as think and impact to than on new fee little it's fee when fees and really products that our of Part fees portfolio bps standard that the a like fee consistent. the the I'd about then bit to our you Aspida But at the your the been coming have rate. also really in say current X% fluctuates on fee lower general, the product is of have our adds down up X a launches And

just So timing it's really quarter-over-quarter. a

year-to-date pretty that's pretty consistent what, think, total to year. tax our it's for the rate it's rate, consistent On -- I and I prior we from rate guided a to that think,

to expect current call XX% XX% range to that let's it in taxes. be We on

think little range. are I to to bit things point so that pretty a quarter-over-quarter And your But there in that good that move that feel about predict. harder that we general, are

That it. was you. Great. Thank

Rob. Thanks,

have questions. We no further

closing our for And remarks. Arougheti this turn So any back the question-and-answer over concludes session. conference I'll to Michael

everybody's look next No. support with taking for and always forward the us quarter. giving appreciate people time. We spend and just time as Thanks to the to today another update

this gentlemen, call and for Ladies concludes today. conference our

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