Ares Management (ARES) 9 Feb 232022 Q4 Earnings call transcript

Hello, and welcome to Ares Management Corporation's Fourth Quarter and Year-End 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 February 9, 2023.

I will now turn the call over to Carl Drake, Head of Public Markets Investor Relations at Ares Management. Please go ahead.

you year-end us XXXX thank fourth for and and quarter conference afternoon, for today joining our Good call. Chief I'm our joined Officer. our Chief Arougheti, Financial Executive Officer; today and Jarrod by Michael Phillips,

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

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

undertake results no to could such differ statements. actual we forward-looking and Our any obligation materially, update

Please future also in sell interest offer note an this guarantee that an past performance an to is results call any not Ares a or offer on of purchase of a Fund. solicitation and nothing to constitutes

measures, a not from, accepted During in isolation for considered substitute accounting which should accordance this will principles. non-GAAP call, we with or be prepared refer measures in to generally financial certain

for the to available Please section of refer earnings GAAP comparable year to website presentation of full measures. our quarter Resources Investor most and directly reconciliations the on fourth our the measures

drivers of we will plan morning, our the share call. dividend for on the XX-K March our ago. This holders a quarterly its per month. we record of will March to and that, additional dividend quarter The year color on dividend the announced A, common stock, significant dividend on increase in XX. same the our nonvoting XXXX will be increase later XX, paid an provide of file of Class XX% that Jarrod common this our in we later declared of Form $X.XX representing first to quarter Note over

Arougheti, and financial the highlights. and year-end some start turn with will call who Now, over business to Mike I'll quarterly

per financial good throughout year, our doing afternoon. realized Class hope XX% investors. strong Thanks, operational also while A markets XX% of earnings, generated delivering management in XX% and volatility Despite year well. metrics. common uncertainty Carl, performance a our income fee-related fees, and we exceptional across Year-over-year, the for in we and in strong and the share, in is grew after-tax growth significant everybody and performance fund I

challenging isn't our management model past growth and approach us as outperformance have to fee-centric turbulent new markets to our accelerate recessions. enabled financial investing flexible market during This during and cycles business Ares,

The investments strong belief of relative only the further fixed alternative our markets publicly year, last equity performance in to private of compared the income traded benefits investing. reinforces market and

to into expanded AUM. well robust alternatives, XX% Investors to as alternative just XXXX, which expect heading global investors continued a total remain strong in believe investment With capabilities that we allocated we our growth allocations. increase and their pipeline significantly under for we're over represent fundraising positioned

multiple to a company was year our acquisitions, the integration, XXXX and was of position platform, strategic year transformational growth. a platform XXXX for building future for While with

added year, professionals wealth the and heads XXX Asia XXX management, Pacific. in and including Europe we management XX During in senior and fundraising with origination in approximately investing, wealth new and

We capabilities strategic retail partners. expansion, deepening the and enhancing also platform product year relationships with through distribution growing spent distribution our our

and annuity significant originating and late directly contracts with insurance finished began affiliated Our in the momentum. Aspida year growth business, June

We relationships also and investors our in institutional new our continue a significant experienced strategic to with existing expand and increase institutional partnerships.

products. through nearly while new AUM of XX% we investors year, reups added At Ares. was over inflows our investors, the end coming that XX% multiple of For funds either commitments XXXX, managed XXX the or institutional investors existing seeing over from from by new held of to

the billion, $XX an XX% $XXX in billion fourth primarily with billion than including fundraising from by quarter. at ended driven $XXX.X AUM, the in year increase of end billion $XX the We of XXXX of more

our perpetual capital many have large of smaller from from last managed sources, a and certain year, market the our didn't fundraising funds, growing benefited including accounts base commingled we Although, funds. in non-campaign other funds fund

To that of institutional capital outside XX over XXXX, raised point commingled billion largest was in of billion from fundraising our $XX of fund $XX the families.

We also to continue to innovate base. our new offer and strategies investor

of strategies five fundraising years more or last was our didn't than Ares. from exist that new year products For ago XX% example, at

infrastructure billion sub that and a our capital in our leadership During ever the Fund raised close which is approximately the of a believe related fund opportunistic final Infrastructure vehicles. Fund Infrastructure held We US notable is testament billion; debt the more segment including real our on fourth fourth we committed including close estate on quarter, to Debt V $X Debt market. fund fundraises, that reached $X.X of a of than first V, largest and

a million non-traded equity our private through in and a in of Also $XXX BDC on January million closed facility. Ares commitments $XXX leverage placement November raised

slowdown lower fee-paying experienced approach, a that positive $XXX a all-weather proceeds program leverage our our and XXXX we careful REITs net into remain inflows redemption benefits capital While sticky our XXXX non-traded flows believe combined our million requests. use of of gross two We program quarterly AUM. investment within $XXX of exchange of inclusive million of our with versus exchange quarterly

in distribution addition, ramp inflows added continue products bank over time, wirehouse and additional to we efforts. distribution large REITs. suite two around sales growing or for more for wirehouses to or expect We these our relationships the non-trade first our relationships second year. we're capabilities the from a of In still private half add the we In anticipate this new we as retail of December,

looking allocators that and robust. in the be evergreen are and and asset firm affluent both exposure the to for across institutional channel meaningfully strategies opportunity space across to suited classes for worth time, retail drawdown net growth Over mass believers under style alternative will offer to long-term the compared investors investors. our products to we to alternatives. are allocated alternatives primary Retail intend investors high are retail their key We expand meaningfully some

the market. we for in recall, families may us be to a without fundraising largest you XXXX our record of expect fund As many didn't year

largest well in year's of be will last aggregate by of record in will driven believe our $XX billion. approach recent excess the of commingled our our XXXX, families, and For fundraising several XXXX we of launch fund

in commingled including largest approximately seven commingled perpetual aggregate, the XX we institutional XX funds year life In expect and funds. our of this have to market the

We're larger are preferred capital as quality does consolidating higher Not allocations as in less investors fundraising, competitive scale other only managers flight with us it benefit enhance this observing managers. advantages players to their have our a to deploy. but could

the we in are sixth As example, a largest late funds the direct last investors European our an of working funds most towards year, commitment and making close. lending predecessor first launched

this first expect have We substantial fund early QX late a in close or in QX. to

previous see leverage. lending for as fund expect first capital including second third for to for billion US with that lending these fund vintages the fund and was quarter. similar direct US European demand combined and We also recently for launched just funds $XX our well the two total direct slated senior over The the close

credit the market our alternative fund in of March we close vintage April. is first and Additionally, anticipate a second late the or in

credit As flexible reminder, generate large on assets our a focused of that diversified deployed capital, contractual alternative portfolios strategy flows. cash

carries the a global and investment XX% performance team fund the education, charitable Ares the Ares tied half towards from carry, hunger, fighting from to of The where and half global structure Foundation. initiatives goes Charitable unique fee

the these all and seventh distressed suited buyout is these environment credit corporate flexible market for which ability team's Initial in addition to private particularly products. fund, to well very approach traditional believe volatile control investments recently three the we equity across active large investor our strong for fundraising funds expect engagement We has private transactions. we in current all and demand due of invest been launched of for for to

activity, billion market third a drive transaction Turning lower increase share strong investment XX% capital, our representing the continued to In deployment. $XX.X deployed compared private platform. the we credit to gains QX, of the activity in overall Despite quarter. across aggregate to

a year to last $XX.X pretty which in deployed year AUM year-over-year. paying we On given our the $XXX.X XX% This the deal which is to slowdown believe to billion, invested compared a $XX.X increase billion remarkable drove flat full we year. compared last overall activity fee we basis, was billion,

with yields attractive our fees We XX% XX% see first covenant opportunities credit of direct across and on lien funds to with good all-in continue very packages. loans to private investment

in just market, to by of first beginning to equity driven estate where closing we're quarter, real come fourth opportunistic a opportunities investment pressures. number In we liquidity small the see held the

business, in a of liquidity market, opportunities activity Overall, GP-led LPs our and seek take to our quarter team we're LP- private in has of as public many capital, In solutions. credit can capital mix secondaries a special in our for seek fund number more opportunities liquidity active constrained strategies PE been of vehicles. our into fund and value-enhancing the growing deployed million liquidity legacy transactions, accelerate certain that both among the with seeing our advantage purchases. enterprise business, $XXX or seeing rescue distressed over we're In stressed and sponsors

for Going commingled large of the capital have nearly and available our products advantage billion to strong closes for capital take of we in base forward, the a coming expect with $XX to opportunities market our months, clients. large several first

$X.X billion, business of platform second doubled after affiliated $X half In earlier insurance June. that its is legacy from an without attractive an the including back June building fourth associated with in of $X.X book. additional our momentum to annuity the mentioned gaining We're in in I portfolio launching AUM origination the billion now billion issues the nearly XXXX, the Aspida assets up quarter.

further capital, we in scale our coming expect years. to insurance seek third-party As the we affiliated platform raise to additional

portfolios the these continue rate our structure rates. head from Our And XX% half credit, are assets defensively generally our as positioning. top rising in we of nearly of invested into the in to benefit further the floating With capital Year. positioned generally are which New enhances assets interest we

with continue months' our to last strong fundamentals, direct for XX% growth weighted loans EBITDA and X% US European trends year-end and resilience as both our European credit as the metrics continued solid of with In at portfolios. and XX we well low XX.X% see defaults of respectively, US and to average value portfolios, in comparable lending

see approximately and to Our XX% of with global rental our continues occupancy multifamily, industrial comprises our portfolio of which sectors real rates, conviction gross and growth strong highest estate high assets.

science high-conviction single-family gross addition, and In adjacent XX% assets. as self-storage life sectors another other for of such accounted rental,

XX% the leases new non-traded leased. comparable the year XX.X% rent new or AREIT of And AI leases during of lease is of at and reported space the portfolio, renewed our In increase and average on industrial-only previous or Our above our XX% XX% growth of renewals REIT, issued REIT portfolio rate. an over respectively. multifamily XX.X% increases

portfolio allocation structure. and to in office X% that's the capital be the global US in real underweight our exposure continues with in is less the than overall senior portfolio Our in largely an across global of the real estate estate debt most

to sectors and positioned in business are portfolios and of continue Our defensive light with private equity services perform industrials. more X% healthcare, EBITDA growth group's year-over-year like

to continue year. consistent all ultimately across we We that public markets of performance. our XXXX, outperformed our In business result experience composite strong is returns strong strategy the believe our for and that the secular growth a comparable nearly of

And I'd performance Jarrod turn call additional over comments to for of to on like the our Jarrod? our funds. on the financials details now and

Mike. review our thank Then with begin and you I'll today. I'll on an afternoon, the year. fourth outlook Thanks, and for full for XXXX the update quarter Good joining us everyone beyond. a of provide and

strong in experienced fee metric, when we earnings, both year year. the and including FDAUM every full stated, growth related Mike and prior to management the AUM fees, fourth compared realized financial quarter for nearly the income, As

Starting management past with capital. the XXXX, our results centric driven our fee business In quarter XX% seen full strong of as model Ares despite invested environment. delivered in year, by XX% the the and Management for fourth deployment and FRE-rich for increased turbulent the primarily our fees revenues, markets, economic strong we've

key enables short stability manage better fee us dislocations. management remains market to Our and differentiator and for business model a long-term our

management long movements. As severe XX% risk of fees during from significant capital of which year-end, perpetual derived redemptions reduces either of dated funds, our even were the or market

in approximately was million retail among respectively. funds, and administrative and real of up $XX quarter and leasing Other spread acquisition XX% evenly structuring, and and credit income XXXX, the for capital and for was $XX estate fourth fee just fee Other was development revenues. fees fees distribution origination XX%, pretty shy million income

from generated related For XXXX, or fee $XXX.X XX% recognized FRPR million of full in to compared we about for performance measured two revenues in for million nearly the contribution from was FRPR million that year which XXXX, quarter $XXX.X full XXXX. the credit of strong year the REITs in performance $XX.X non-traded in income million reflects XX annually fee performance life $XXX.X silent and eligible our are payments. funds perpetual income from fourth two The

XX% of large the As July non-traded closed in a fact, REIT versus XXXX was the X, driven in reminder, received the of FRPR XXX% XXXX. XXXX increase by as we acquisition only Creek in the partially FRPR the on Black we

increased have and generated XX% base these of to billion AUM to expand during as than underlying funds $XX.X FRPR continues XXXX. funds Our more

from harder fee growth interest our reasonable funds FRPR think REITs XXXX above in of rates. forward, to Looking We we for credit the trajectory funds. compared is income base non-traded credit FRPR outlook due earning real in to to and our in it's anticipate predict expect fixed rates as rates our higher to

funds require real modest hurdle to the FRPR will some Our depreciation our And, is meet harder future therefore, estimate. estate related to rates.

associated our As XXXX. relates compensation FRE, FRPR the it expense was in to when XX.X% our margin considering

structure taxes. paying employees Our contractual margin our on remain some below should of XX% compensation XX% FRPR due payroll associated to to and

was the very $XX to it our lower margin during FRE with impacted credit. negatively from fourth million million on million from $XX our QX, real the quarter estate $XX our While FRE in to accretive and FRE overall contributing FRPR still margin

fourth XX% of the an fees higher million, increase the For and fourth FRE from management driven XXXX, totaled $XXX.X by quarter, FRPR. of quarter

For income, accounted more for XX, the year XX% realized XX% approximately than XXXX our from ended XX% XX% in up FRE an XXXX, XXXX. increase approximately of in $XXX.X year. from million, prior the and totaled FRE of December

also differentiator and key compound years we a are FRE to XX% This predictability our three and believe past earnings. XX% earnings add FRE-rich be over and annual they respectively. five Ares can of Our rate for our growth overall by and the seen and consistency

year. full and for margin FRE XX% the fourth totaled for Our XX.X% quarter the

lower margin Excluding a our to for FRPR, quarter margin fourth the year. has I the and related that previously was taxes XX.X% due compensation for mentioned, the and full which XX.X%

continue margin FRE drag of We FRPR. including track to be run XXXX, XX% goal year-end rate even the our by on achieve from to margin

XXXX, back of pacing and investments in we in now towards margin our for office made XX% expansion the personnel the upcoming in target preparation many Regarding have our cycle. front fundraising

our the effect over levels carry dampened The expansion hires margin of and in XXXX higher will XXXX. staffing these full year into

with XXXX As these in XXXX and resume coupled an expect expected and larger from in half the capital in we deployed back with raised funds, step-up see commingled a margin slowdown growth, we growth large to XXXX. headcount of

million from European quarter, group, and fourth and performance over performance our totaling credit realization Our net from XX% an realized European funds. fourth direct XXXX. of Net activity fees income million, increased lending included US of the in with $XX the increase incentive $XX income distributions from quarter our largely waterfall

related private Our fund. of equity $XX waterfall to realized ASOF group million EU also from net performance income largely distributions

the for up $XXX quarter income of Realized totaled the a record XXXX. from million, XX% fourth quarter fourth

For realized of XXXX. full XX% Class A up the $X.XX for of quarter per $X.X billion, XX% fourth increase a versus exceeded income year, was After-tax fourth the stock share realized income XXXX. from the quarter, common

For share versus after-tax up A the per XX%. dividend XXXX full of income XX% $X.XX of stock was year realized XXXX $X.XX exceeded our XXXX of and by Class

billion, to quarter the as billion third $XXX of $XXX and year-end AUM our $XXX compared year-end, totaled XXXX. of for As billion

totaled year-end, XX% year-end an of at from $XXX.X billion XXXX. fee-paying AUM increase Our

AUM Our alternative opportunities fee-paying US meaningful growth across deployment capital. credit on management fees was which lending and our pay EU by driven in special invested strategies, direct and primarily

Looking forward further to continue fee-paying take our in we well AUM. we believe positioned advantage are and volatility XXXX, the growing to markets of

potential. earnings billion significant Our as representing available year-end, future $XX was of capital

dry our a expect we accelerated We as powder period will enter of increase fundraise.

of fees most management our invested our majority since earn of we reminder, capital. a As deployment funds upon on fees the earn

over million on We fees. $XX.X management deployment, a paying with not generally of prior $XXX of do which potential incremental the ended their represents the available yet have result, not fees. future AUM, in for billion funds management future fees vintages step-downs As these year

$XXX AUM net quarter, was our $XX due performance from of $XX billion Our decline quarter, million, incentive year-end. end un-invested eligible $XXX amount XX% In to at XXXX by the increased of to previous the This net from fourth stood at of income million billion. $XX.X a million realizations. accrued the

this, performance European Of income XX% style accrued was funds. approximately at million in net of year-end waterfall $XXX

year. our the by year, net income versus X% increased full the prior For performance accrued

Day, growing the that we life. of accrued at Investor European pay highlighted fees that of have performance a majority fees we final of years performance waterfall style the funds in our fund the substantially vast As their number

performance year-end. year. we style incentive nearly style For income totaled XXXX, of waterfall billion represented example, net realized European $XXX funds, eligible of income the in $XXX waterfall In net total performance AUM European at million which realized funds, the from for XX%

from income performance years income expect funds style continue total of the to realized the net net to we majority ahead. performance in Importantly, account European our for significant

we our and expect funds older European Investor continued at in see release in Day increase out as laid to enter our mature XXXX, periods. style we funds As a harvest

$XXX fourth stated past period, European approximately and recognized Last we approximately were $XX million quarter. expected that funds had to million investment quarter, we be their in style the in

$XX In recognized the from of funds. actually million style fourth performance quarter, we income European

at the due Now investment more still above style have rates, their than interest year-end, we generating European $XXX in nature accounts past many hurdle these of of periods. to million their funds

We style respectively. approximately income million performance funds of XXXX million from and realized net in European now XXXX and expect $XXX $XXX

to some realized entered we performance annual their to the raised grow years Beyond period. over as of harvest XXXX, direct our lending past currently few income expect funds commingled net larger continue

to August European year-end waterfall As an XXXX, income update about approximately funds billion. $X.X since of by realized our has increased the billion future through expected raised net XXXX Investor Day aggregate from $X

funds other market factors. In episodic, and monetizations be terms on American will and style dependent our market conditions of and depend

million American past net periods. in their investment income funds style We and $XXX approximately performance have accrued

realized our shares. were income effective For exchanged units fully XXXX, assuming the operating approximately tax all full was common group on in X%, into rate year our

XX% basis, to higher would a on a effective we slightly from the the range level with on ranging XX% XXXX, fully-exchanged of realization. expect depending tax For rate

As year. US was touched credit our direct quarter reflects gross strong earlier, the our part consistent X.X% strategies in XXXX our on full generated In long-term returns the senior X.X% the Mike and in for for and growth of AUM another year. performance lending

just the fourth X.X% Our quarter for another return quarter year. record and reported net a publicly-traded Ares the of X.X% generating BDC for Capital core and fourth earnings year, had full strong

particularly rate for direct related return for positive impacting minus lending X.X% portfolios. much X.X% the generated a with market-based fixed the and quarter of decline gross junior those strategies Our adjustments a the year, securities in to

lending XX.X% for for of European year. generated and the X% the Our strategies gross quarter returns direct

significantly these the liquid markets of All strategies for have returned of excess in full comparable the year.

US equity estate for and returns for X% real the the returns year, year, indices. estate declined composite Although, outperforming gross X% but declined in European public for quarter, significantly and real up were X.X% gross our the equity REIT still funds quarter, XX.X% the the declined

and Despite weighed exit in declined strong and have the non-traded as discount sectors, higher Within have X.X% of REITs, generated AREIT REIT for interest a on for for fundamentals the market XX.X% generated XX.X% and industrial net a return return the the net X.X% year. AI our the multifamily and rates quarter a fourth rates broadly values and fourth multiples. quarter for return year

Our performance statistics equity the occupancy significantly rental broader and growth by referenced private Mike both the earlier. our during of strong year. In markets equity strategies the was supported that outperformed

equity composite X.X% X.X% private corporate full quarter returns for generated year. for the the gross Our of and

a the quarter year. for I and for return the of Fund generated X.X% X.X% full Our Opportunities Special gross

for gross for equity generated Private returns Our minus returns secondary XX.X% minus the of for positive for the X.X% year. gross Real minus full year. quarter a lag and generated of and strategy secondaries secondaries the reports a one-quarter the estate quarter X.X% returns X.X% on basis.

Based at the quarterly the a prospects, year, our of per to increase Carl annual, significant of as our elected our year. we've or outperformance beginning mentioned. level dividend dividends $X.XX to in Class of non-voting our growth the XX% $X.XX share relative we to the from look on dividend strong coming set stock, earnings dividend fixed fee-related for to a common A and XXXX, At quarterly share per increase our the and $X.XX

growth based on powder prospects dividend flexible We is for FRE from strategy significant level pipeline. fundraising new and deployment our believe of level our appropriate current and this dry large our our

turn Before on our call forward Mike, the I me back touch outlook. to let

a share market and XX% rate we growth recall, for more have growth per the dividends in XXXX per the of year-end expectations from year August and these pleased this XX% will A a margin meaningfully of FRE including XXXX, Up of you our to Class XXXX. per gave outperformed I'm with long-term CAGR in through guidance over Day As point, billion FRE of run XX% we target of XX%, Investor in AUM FRE year. say $XXX at mid-XXXX a to

on per more on would base expect do XXXX our eligible in of elements expect in not from remain our growth XX% of to annual growing XX% from We through levels other guidance, or a rate we FRPR harder FRPR attractive non-traded growth to rate that REITs. contemplated As predict. FRPR year guidance. FRE We Investor to excluding exceed Investor generate was of growth XXXX but we naturally clarify our our track Day, FRE is or to like the Day the meet funds, a

his call to now turn I'll back for concluding remarks. Mike the over

Thanks, Jarrod.

in that and a of to in enhanced these market the teams the position us large we an capability for We believe back-office growth a strong across invest capitalize fundraising segment a strengthened global front- ahead. and with our XXXX to So up we're platform. to years spent cycle, strengthening investments in a set addressable investing talent greater and on now

foundation into Based on that's have years growth. of laid, good several the visibility we already next been the

acquisitions potential we're earnings recent and future that our from excited. addition, earnings seeing all have us In synergies, strong very contributions

to focus and strive stronger to continue a positive makes communities. areas. our investors, and stakeholders our a our DEI as higher are at make for on Our we us workforce and executing Overall, a level better ESG impact culture teams our impacted we as

areas strategic new build a the that as have platform gaps potential relates we businesses to transactions opportunities. organically. a activity our We platform it to acquisitions And higher. now product for M&A products leverage That identified and result, to high-growth advantages As investment our LPs. in for broader add-on can areas, acquisitions, recent growth we'll where specific is as continue new strong filled to our look said, we and attractive bar naturally bring

to subject remaining approvals. Ares of of closing business this with receipt the agreed regulatory the management founders, to Just purchase XX% week, owned the still we by SSG's original

purchase the contemplated remaining the Our mutually original but of stake agreement was the accelerate timing. to agreed in parties both

In this will planning entirely Pacific and Ares transaction, rebrand be expect the continued all connection with almost we're stock platform to for Asia, our it region. Asia business growth in the

I'm and every for to and deeply of deliver stakeholders time for proud our today. and of for grateful to you and continuing the thank your they company hard that investors' of to support our team dedication want I for our incredibly work all day also appreciative do all our

think ready the that operator, I And open for questions. we're to with line

Instructions] Our [Operator ahead. line from go question the Bank today you. of first Thank from comes America. Craig Please Siegenthaler of

Your line now open. is

I hope, well? Hey, is doing everybody Mike.

Thanks. Craig. here, good All

an quality on ready indicators up And the with a early banks getting quarter Ares' you in of your building to a portfolio have defaults. prepared private credit update and is also what So get rise January in for terms across fourth corporate in reserves portfolios? recession, US how for wanted we seen in credit

Sure.

state across size seeing proxy we're play of portfolios I'll is at on, what announced, the the good just but you private existing the probably within give I and I the a the for given they Ares. fact think Kipp's so of that ARCC the here news view portfolios credit broader it's and think good a of indicator my

at it We you that EBITDA about was our X.X% LTM year-over-year announced growth if period-over-period. book in European, true and that look it for was

book. still think fundamental growth, we're I slower good many within seeing that while So there's like strength

prior lot assets sheet of than credit a Two private and prior in and on are downturns. subordination in both last higher the cycles credit these two saw up and real a amount we've corporate higher than assets talked benefiting we balance equity the about sitting significantly of from calls, this are

the of a then rate by speaking XX% as rates I there's value. they're reason to positioning loan and the of a generally lot terms to look is borne discount transfer if And from that ultimately will the equity in value value, so in valuation around rising you I and to mention be And at think loan equity the the debt. from shifts impact changes, the

say Needless coverage. close Interest given is base the consistent go cycles still at points, portfolios that coverage where though and does seen as point strain the basis rates prior we've it low to with in on interest put make comfortable starting XXX levels up were. are to us

and So Craig actually a is performance necessarily fundamental earnings up. are makes slowing, us rates in about cycles pace. conversation unique happening we've when what slow is seen we're down a whereas, defaults now the are and time not right seeing at so beginning rates strong earnings going going to And prior at much faster

excess about significant credit defaults. of interesting because accumulating conversation any return ahead situation really perspective, a we're private it's from the a So potential

in still the end And will value, ARCC's year, rates at is about and that historical it return. where in to the stood total look we default that To on activity, to they're largely should that averages. you increase at beneficial see non-accrual be perspective if believe fair while activity an I well-below X.X% point, of amendment which put

lot So for pretty unique private a think and performance, liquidity in offense pretty existing on Board the credit. both if the position terms I of exposures of and but platform vintage need interesting be, to a powder across play defend dry

Kipp, you to there. know I don't covered if wanted lot I add? a

that fourth that other through it, the the we expect of year, and will on the not a got we for call this amendment the our for thing said increases yesterday was I'd only quarter Mike. most Craig, it’s huge I concern you into that in and activity first standpoint. did the BDC think continue from see but throughout cause modest some

Mike, Kipp comprehensive you, the there. Thank for response

a I likes the be we'll level? know M&A here recession the think financial And also always holdco Allied think acquisition should about of remember recessions. I And Just opportunistic how opportunistic as Ares should my to then BDC at follow-up, the ARCC the at But in level, transpire? we in crisis.

early are parts being our say Yeah. a expect a Craig, the Look us core are lot who still certain and publicly certain entry M&A should traded acquire assets competitors that expect parent the on attractive market to or to but there constrained to subsidiaries businesses corporate for would that will the extent the either experience are. we I investors chances points little to It's at do portfolios how needless within of and think themselves of for you given within company as of have It's managers. opportunistic that are at we I opportunistic those opportunities that liquidity and we'll present portfolio.

Thank you, Mike.

today you. comes Thank of open. question your next the line line Goldman from now Please Blostein Sachs. go from ahead, is Alex The

Hi, your everybody deployment. good deal start think could active for we environment new have When slow to hoping the I with credit question been Mike a at seem question. was Thanks fairly around kind good just the maybe what of look quarter for activity. was fourth I pulse opportunities we getting a you afternoon. or generally morning for on very in

more a expand bit active. you were maybe little where So, guys

active little to seeing be XXXX more less where kind so in expect the looking areas active active far how a are of you banks. little more into in and importantly a And what you're

But are more So little not market banks. has the backdrop lot given a constructive? fact more bit of I'm that the market a activity to starting come to the bit the little gotten from assuming a back they

Alex. question the for Thanks Yes.

terms when generally this different after to and totaled up was noted was the it XXXX year and challenging right was backdrop obviously par in we transaction pleased what a just what remarks, interesting of on we that everything of market XXXX in a markets prepared activity. that see capital velocity I was with was deployment our for in So,

asset sheet platform that to speaks liquid to the illiquid of I And transitioning. the breadth ability by of markets funds move between speaks around of and and to when the that and it balance are think the markets opportunistically geography, by our the class pivot most

the private about opportunities being than before we markets to that public drill down were where this public were into markets in was shift slight a we've more attractive mix So, in talked work, towards we to the self-originating if markets. obviously frankly you as were what seeing. were is capital the put emerge And there

the come markets and to more we as of continues. side were to the start those more that another As in with line well on one to be start opportunistic private house able

look transaction Right dynamic bank where the private you in today, liquidity provider. So, competitive liquidity, the access pretty high-yield the volumes important. equity in meaning lower marginal challenged lower solutions now are access is given markets, challenged public markets to have loan and even market the market

irrespective a we're So, lower ample M&A things environment. finding to do of

to volumes were at perspective. see development, When we you we're up pick from the I where a stabilized in ultimately agree look private at they to least think M&A going that until markets rate not pipeline all we

year the that view get we is cycle own my and fair as would the consensus M&A there's the has see on. hiking turn perspective the of personal end over, pent-up I back demand general towards So, that a a everyone and we'll amount machine expect of

Places last fund where closed Opportunistic opportunities highlight year active. our we also active. equity, debt estate active. second very like obviously credit, places like alternative very real I'd and been, has very special

but really, So, opportunity. mix investment exciting shift of a a really still little bit

for that. guys things earnings growth a the wanted the of cetera a you into that the Obviously, to supported for Thanks and morning. sort that already robust by XX% you little you. My down for announced et Great. dividend this on question probably all very bit have discussed second outlook Jarrod call. I fee-related drill

that's of style of and partially sort fact you be it effectively growth by But incorporate informs do or seeing is raising much, your hey the as north that look confidence could that what a FRE rise way of in and confidence around above dividend we've that to of increase in gives the going typical kind will what FREs that and cash flows are that almost continue seen the contribution you those Thanks. waterfall European past?

Thanks one. Alex. into wrapped Look, a it's those of factors all number

are First related the is, conviction That's mentioned to our have the in the growth. growth of We more FRPR lot per guidance REIT, year that's I ex predict. to little because a FRE script. difficult our on yes, the a we as bit at reiterated XX%

that have strength. that know we So we

And We you continue see in. easily coming where covered to into our FRE a next year growth. as of also a year strong mentioned, waterfalls for very nice based just off style of European we the the year, then, came on going pipeline we the dividend

appropriate you factors that high for the level dividend when the those we year. of together confidence So mix degree all that's have a

Great. Thank you, both.

you. Thank

Thanks, Alex.

from question from Budish today ahead. of go The next Benjamin comes line the Barclays. Please,

open. now is line Your

my Hey, call. much the taking for guys. very so Thanks to said up on beginning something the questions. I follow wanted Mike at of you

how investors sort institutional allocations? are under about their You just I'm remain of under-allocated AUM. generally said XX% little with clients your of curious, all global a thinking to

a in of a they mean Do denominator about to credit there equity. you're about lot in kind thinking separately? about private heard credit the private curious more just I'm we've particular? think some I how run Is your that. to effect of tend from peers room in lot

Yes.

good equity generally we're funds. impacting, the success in way would private think, would have and I most. call, strategies and news effect speaking, real equity in denominator been assets with regular credit, is with I the say, private market or growth is good market, what private I equity

bit a the effect it's valuations sides You and of private think, comps equation. a that of are also little numerator public hitting lagging have in both I so, that sense

in unique growth franchise, and the Our in a the differently transitioning bit around having buyouts, sheet little in private the core we balance distressed with invest to our which business industries. is, invest in traditional a able for I to is And prepared setup. companies obviously, positioned to pretty buyout distressed as addition equity mentioned think remarks, in SOF control ability

interesting segments X% being other paper of would shy was true a say as as the that article I just in institutional private doubling. of allocations, ago, probably that's an see allocations a talking an investor pension commitment And credit to For the about for general with most couple example, and that, of of there just weeks well.

to So demand into that the we're And appetite not under-allocated. we many actually the cases, think people are for private And cycle question, seeing increased any going your are seeing in increase. reflection, I reduced credit.

at, way in credit in are vintage looking rate. put rates put lien the a easier generally this first credit easier landscape, in credit Number the generating And this look private XX% capture secured who speaking, is three, if return, you're to senior perspective, like market performing return just excess deploy an to money it of two, ground. it's to and to across to you credit in short floating so, XX% for duration in folks

That's X% liquidity-enhancing, actually to a a are really or X% compelling on the place bogey to beat endowments but lot probably be whether pension these or is on trying end and companies of basis, a low investors, because a high institutional on of relative funds insurance they're end. the it value

So up fixed if actually current excess short that your your everything of refill hurdle to generating XX you're you on with still is and duration return plus gave bucket equity book. of the rise in at in rates floating the income helping

lot So a play dollars would landscape the driving credit expect and I at there's here that to into private continue.

one really That's Great. Maybe helpful. follow-up. quick

expecting You of mentioned next you to the of whole. sort several you a the of an the strategy smaller could give acquired growth of rest the contribution Asia update part from over years? us -- are It's you on business. What the the But there? there kind

Sure.

the would and incentives under forward just a we pull indication there along but brand. shared drive versus XXX% for we're the Just really us to as it an growth opportunity felt regulatory for unified Ares vision opportunity across still to by waiting XX% align give clarify approval. growth and to owning that better of region a the just we that We really see signed, decided

I So excited there. acceleration we're about indication would see it. good a of this we what is think super And

way you And lending being exist of have in business, being a bought the a leader and business. fund distressed performed businesses ownership. other of special a grown senior the two the and that at both legacy we funds years families of our today families well in was If SSG credit in two one private and those look sits businesses regular more

people been had We've of the region. Zealand successful capabilities we a prior business. adding on about an talked and lending closing direct Australian-New that We've launch across calls and

there. senior We've secondaries estate added our real our around We have and business expand raised professionals folks capital and to added secondaries in infrastructure and business.

scale for say the level offer a Europe and APAC that necessarily of or same don't US is will the breadth our those do a lot I size while and developing there our and the each in all will business high So in represented markets maturity are European opportunity strategies be at region. of be as that markets of the similar our of and of would U.S. it markets at the a vision opportunity still of

evolve to but that. markets obviously capital So from standpoint, to it's regulatory the build going see that's going formation need And we're and to a mature vision. while take a us to the and

but been a that to is I good growth of similar a growing think obviously from growth good have enjoying news they pace the and smaller that standpoint platform to the off the continue. rest of at a we'd base, expect

Hey, great. much. Thanks so

next Thank from Stanley. today Cyprys from ahead. Michael the question comes Please you. go The line of Morgan

open. now is line Your

in on I was I of years. the build-out? circle been here elaborate to some for earlier you where Good in up past kind guys comments the What's investments this of comp the of we hoping compared we wanted taking about and How of put then Thanks my that are think could terms you've Thank terms double-digit left to to back you couple that of XXXX? in making Hi. maybe morning. should about question. that platform made the you. And translating over you be thinking in G&A point. into we at growth how should XXXX? about growth the

Thanks, Mike. That is... one

you speak that to want one? Jarrod, to

Yeah. Yeah. Sure. Mike. Thanks,

the of That of the new integration first went was XXX about I'd The year. that as hires bit net XXXX, on resulted we the did we in platform about a year thing, really that, say growth and how into platform. through across little the platform a is talk

being that hires those happens throughout as the headwind year, year. the coming Now paid into XXX XXXX have of do full you that for

hiring off in we've seen year, a pace but get that and folks be throughout this at same as and the bit the capabilities to prior ground. little we've expect really brought the certainly and still in integrated year, We them evaluate likely those need assess the to our not fundraising

margin of back So XXXX, then into XXXX, you look into as start you'll we expansion. it see what half the to XXXX see more once is is deploy and and when you'll that's that and significant fundraising completed

So XXXX. in we margin a last as of the year, we beginning would have guided that we of at expansion kind very moderate thought

expansion it still of the then And XXXX XXXX and pacing cycle full received won't that about. of say that we in XX% hiring. really accelerate capital headwinds fundraising and that I'd as margin the that's when from XXXX this that we towards be into we XXXX, that see at year XXXX that from talked you'll stated because we had that, back maybe deploy, plus

for I’m sorry. Thanks just – And that. Great.

G&A Yeah, asked about I was because saying, as well. you

of G&A is So, headcount-related. our about half

a see to as close correlation you growth, headcount grows. very G&A So

events little bit occurring or in other where is are more at of needed platform of terms what terms a investment. half in is times, episodic The what across the capital

when comp thinking G&A, pretty our levels. a there So you're to tie strong about is

Thanks Great. and performance the question And color you the for just funds follow-up fees a there. expect. on all European the style that

XXXX. the million $XXX XXXX and $XXX million on So we you and hear in

required fees I of what's most get to in maturity loans through? these those opposed the an the asset selling variability maturing say crystallized for to either is its and as loans just PE so recession guess, fund. portfolio like the fees upside upon how a us that? I or you. that then to funds, So imagine the those come think off performance in order And Thank about are just races on credit you then it's for to Maybe The new or in could macro in you more challenging potential every environment remind guidance? just, downside the do cycle? of

to exactly it based right life you on duration before the those thinking credit about Generally, nature. there underlying make of the end assets. of – episodic portfolio their They the you're thinking assets much are that When are within in the are Sure. funds don't the are about think that, refinanced. they less

makes balance more lot within that's that what that's the and it a lot So what a drives predictable. of payments

amounts above you do it's As floating those have rise, interest the you're predominantly benefit you portfolio, as see loans rate accrual. consistently that. yield of building those a as today hurdle the And rates rates, that on

accrued as mature variability what's will know currently full come the is in have there difference these the in. what's of realize unrealized par they between Now, amount yield some as will you at and gain currently mature a to related which today, actually that loans you'll loss, does today accrued

that you'll There's So you future a modeled there's accrued in also a years not of from of it. that get an slight interest today benefit rate. benefit aspect get into balance that in increase that's that

have nature. period. couldn't over you of We difference accrued that we've will balances predictable that what their on what a time between why recognize that's are because and several believe So our year we we believe credit that books, more do these

that episodic through later being that and Special some monetizations those that as are there see we're in group their and equity they group to get said, we to lives know Now are already. the end life. Opportunities starting are their private come from on generally those our estate are from European real there But in more style, and of style our their funds still

think in of So to in being see from well in we and you're – rising benefits there portfolio exactly that terms rates. therefore interest nature more it being but that of predictable as as credit-driven right are

Very helpful. Thank you. Great.

Gerry line the you. Jefferies. go from Please The comes of question O'Hara Thank ahead. from next today

Your line is now open.

afternoon. good and Thanks

cited and and Just that are increasingly renewables a as I energy of kind we're guess topics think high-growth thematically, hearing opportunities. I transition about couple of

these about set. hearing solution what So positioning on a end thoughts Mike, sort would or thinking client be from of you're Ares perhaps interested portfolio how to or kind of from demand get your is markets

for Yes. the question. Thanks

spot the transition think I and across important on landscape. topics are that increasingly climate you're energy infrastructure

good an opportunity. identifying were that transition news early the is in as think I we

fifth with fifth our appropriately fund the returns look of to vintages, the fund energy now as traditional into XX% you back here power players. a fund, rearview at relative that renewable renewables And in from in and our that we energy infrastructure X.X high mirror more traditional when being goes now renewable So about deployment and reminder in power transition which in infrastructure pivoted energy. up wound

the trend second and little the some expected in Good I early we the is of climate up long-term our launch while I have think That of to we have are closed it's set secular invested were that couple took years be. fundraise news well are actively was energy a for fund And yet, and us infrastructure that. would recognizing to Candidly ago. confidence with market raising will climate infrastructure the raised a demand not transition, our now exposure there. because given think I fund, first longer and it in well we it than

the infrastructure platform. investor there's obviously US the Act. the and about Reduction market of the business. That's the been in positive Two, bolster talked particularly remarks, family demand. to the heels fund Inflation as also on That catalyst, made team Obviously, has we helping of lot acquisition in lending AMP the we fully-integrated into prepared of a

too transaction We on that from V $X fund had at across the activity billion. broadly close well is the Last they invest for deployed. it And within successful a in transition. infrastructure were IDF while surprisingly spectrum, energy benefiting year not increase appetite in

is into most the And Ares made future which about SPAC are modular of merge really then nuclear Ex we're think forefront our a we out which edge small super that announcement entering generation energy a to at recently, the with excited transaction the is Energy, reactor of transition. we and the business, Acquisition where cutting we fourth which probably is Corp., of

very focused it. on So we're

continued that it, performance be for multiple continue good and with avenues going that have to and us. to invest would products a growth behind We I that's good area think to

update. me. it it. and Great. for Thanks for Appreciate That’s reminder the

Thanks Gerry.

you. comes Autonomous go line Patrick from next Please from Davitt today Research. Thank The ahead. the of question

now is line open. Your

could Thanks. seeing the little any how bit quarter? meaningful the evolved and in have obviously, channel everyone. late the end you you're afternoon, in since Most speak that experience flow a kind has been noise, Good of if asked. quarter management press of Maybe impact wealth

Yeah.

news so able we're will numbers these to good how released the publicly get So be see is you doing. guys

different of good from the that some perspective experience we've been is than news our larger the think I having a peers.

platform look non-traded management If AI at REIT our you we wealth obviously have now, REITs two and right AREIT. our

interval fund. our We have

our about actually if And BDC. non-traded markets you had positive as recently talked we've We formed look recently and all private have flows. across we launched four, fund our

if perspective, put inflows that million look a non-traded against in to about about so million, So the $XXX outflows cushion. healthy REITs, QX were you into at inflows $XXX

$XXX Just to million little $XXX contextualize a QX. over was that from in it down

I also but market and noise We've just to the disproportionate that's been not in haven't outflows of seen So we in some case but given, reaction business. real of slower seen the of think of the estate surprisingly the the a the generally the amount some channel throughout year. inflows, transitions course

be in half as this mentioned we two continue we'll I to we expect those where partners prepared a our that into Going prepared growing aggregate, in smaller again in XXXX, puts REITs we're too the just $XX.X remarks, while our two mentioned substantial, base. we aggregating position And products of remarks, add the wirehouse still can That for distribution quite in partners. year. fully early. about adding billion us of But the off new a are first as in

of XXXX able our we're some a we to as you adding terms a through how the in importantly just of grow unique feeds have is some distribution that headwinds our So into relationships. And probably will. most investor exchange do elements have both to if that just we're but business of base program then promotes new REITs stickier we invest, we

closely. it's something So watching we're

long-term We're inflows, slowdown but in believers that outflows. we're modest at We our very channel. are slowing seen net not it not growth the in we're And in experiencing in market. investments least seeing we've as a still the

Thank you. all That's Great. I got. have

go the question The from line comes ahead. from UBS. next Please today of Adam Beatty

is line now open. Your

Good you. Thank Hi. afternoon.

Just business. wanted the update to on get secondaries an

was of fundraising. so I be think I you trunk with to just bit and wanted that the there market some rebranding quarter something at? like on what what back might an -- we're like some outlook out looking to opportune magnitude Thank in last be maybe when you. of A funds Seems market maybe kind little maybe a get time in of how kind the

Sure.

the is right. you're So update

that what the the landmark We're grown. integrated was platform. the way integration very has fully with have pleased We

new earlier a Pacific. platform number added in Europe and We mentioned as have US the I and here the people significant Asia across in of

strengths across have have verticals. just GP tried to leverage to the within solutions kind we a we LP of community set that broader the What of and secondary the build different is

private We a have credit credit. to really we secondaries in plays which the have business, think added we that strength

and We are super raising our excited team have we're actively spun there up something capital about.

the infrastructure market with area in generation are is our growth big a for next of We secondaries, us. which

was in fund, and to ready be currently our the a ninth we'll was equity, some real point are We version back when we point our private acquired. did of at is fund that Ares estate close vintage be we your market market to to And which with into launch coming going with that the forward. strategy the kind of prior of going out what

We're to scaling would there the is also public by anchored markets wealth leverage grow. We're we excited seeing we the that good and to our channel launch able secondaries to management the in which we're to largely continue expect momentum capability. that fund, have

fully-integrated. been has business the So

up we've strategies in the parts that executing. and and into credit opportunities growth I exist Asia think, of prior in we're didn't higher market. the repositioned We've the of acquisition now way and opened to certain a Infra growth

keep the about. but to we'll progress there lot of abreast a everybody So be excited

the that in good. Mike And about of the Thank was maybe fundamentals little might re-ups quarter. very quick lease a quarter quite bit performance negative underlying some then the just than you. one full talked the year Obviously have on good. the seem The mark more strategies Excellent. expected. a in But real a estate the maybe of

for Thank So there other dynamics and ahead time if through that that there's anything you. sense lag XQ? or played just be want a any to get might

correlate there's Look cap of to say debt environment impact how think you standpoint. how real and needless in to sectors rising when estate just changes certain rate increased rate from think challenges from service about have property the Yes. -- to a rates you valuation a increases interest just and about the rate

very have that are comment and strong. to your and of fundamentals multifamily exposures been fortunate XX% industrial close think I we our there to are the in

in in I And pretty And that at think them the all is assets great world that's to so coming in strong gateway continuing the well. real kind growing are is all tenants to base estate it way drive with a you're which about of property even level. equal. We're of performing an where NOI through may with not be that valuations is really created markets think installed

go and fundamental of kind any think rest and in of in when occupancy the In you as drill the of re-leasing we're down not given that assets read the in terms mentioned of into clear. you portfolio own and terms we our deterioration math is re-up what strength QX to versus the fundamental performance. the year, Because would only I we rates pretty rates just able command of

to I landscape. capitalized do be real the to it's up parts reasons markets of It's of more on one certain go distress challenging parts think that market rates why roll estate now take real market are one we're estate our here. opportunistic as appropriately going of through for so focused should worth we're the franchises of that just right continue what make the to to the that sure that of private the advantage

Got Mike. much, it. Make sense. very Thanks

you. Sure. Thank

questions Thank at this are waiting There no time. you. additional

So I'd call the closing pass go to Michael for to Please back like any conference remarks. over ahead.

No have thank their we don't any. We time. everybody for

in Thank little you. next forward tuning we the if the a giving to Sorry, late we we for and and went everybody everybody but update quarter. appreciate support look

Thank call. your participation. today's all concludes you conference This for

your may You lines. disconnect