Ares Management (ARES) 28 Apr 232023 Q1 Earnings call transcript

Good morning, and thank you for joining us today for our First Quarter Conference Call. I'm joined today by Michael Arougheti, our Chief Executive Officer; and Jarrod Phillips, our Chief Financial Officer.

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

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

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

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

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

on directly the our website plan first quarter measures. XX-Q available month. Form of the earnings Please early Note, our Resources refer our Investor presentation for measures to section to comparable we of reconciliations file next the to most GAAP

on representing we non-voting declared XXXX, This announced The the to holders quarter increase common an on our Class record we be dividend June ago. year XXth, A same XX% dividend for common the quarter will XXth. dividend and paid on of per a our stock, morning, second company's of share of of $X.XX June

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

Thanks everybody morning I doing well. everyone. Carl. is Good hope

a uneven the participate Following in transaction start in and off the first in. across was slow to quarter debt a activity and various markets got we markets, equity XXXX volatile that

system, banking banking see late the in of began progressed, created of economy, thawing the uncertainty interest signs dislocation the some path about in sector We but the to as and the the rates. quarter considerable ultimately, quarter the

be investment asset-light participants volatility, balance capital our market us tends from to retrench. sheet-driven when other Fortunately, insulate our business to model opportunistic for long-term us enables and Ares,

expected track year, show continued our quarter, largest we're growth, metrics commingled in of our significant with fundraising the For market funds year. more and a this the to strong for year-over-year seven first business on

fund and billion first the quarter, of quarter AUM. new ended raised in $XXX billion the we commitments In $XX with

XX% in fees fee-related of of growth for a strong in quarter performance earnings, strong generated fund also delivering XX% We while and management year-over-year investors. our

our continues we seasonally European was will later. with for Our first performance receivable our but realization next build. as activity And light, and realized net Jarrod year year, accrued guidance net discuss performance income waterfall quarter this remain on original track to

investor continue private our to market, We with see higher the managers flight for as offerings. observing In their preferred investors to consolidating alternative robust a are demand quality capital we're managers. larger, allocations

of seeing half of Many the are targeted significant funds is more working encouraging. investors represent pipelines closing or first our largest that fund of with closes toward the and commitments size

and from also having existing high We a re-up benefit investors. crossover rate from

was of the For billion existing direct first over investors. quarter, capital in raised from $XX XX% our Ares

European last outlined we're raising lending credit fund fund. and alternative our direct second quarter, our we actively As sixth

demand and the seen fund, total close and to-date, quarter. $X.X accepted through European end robust from that amount have to For early we've $X.X first lending billion than anticipate our of subscriptions of This the sixth includes LTV bring QX, first billion more commitments. the subscriptions accepted of direct through investors will

for the this total in €XX that close, will including momentum which fund fund the predecessor leverage. capital, strong at continue We fund exceed and billion and billion fundraising €XX to see commitments LP had anticipate of fund, final

also is alternative seeing Our second credit fund demand. significant

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

first of through This first end closed accepted commitments a $X.X May, and of close $X.X the approximately includes quarter. total through of anticipate, date We've to subscriptions the billion. billion

final and year. fund, this predecessor, we're commitments for demand later to easily to this robust targeting this $X.X we the expect close a totaled which exceed its that fund billion With of

incentive between fee for split contributions and investment fund, our fees, interest closed-end donated equally of performance of education open-end to the These health will the This tied where endeavor carries XX% are for fund, the unique initiatives. fund our global carried like predecessor and a to team its and be charitable support X% Ares.

over credit donations. of billion based charitable have our potential designated And this reached Inclusive of tie-in. platform capital closing, fund's to-date, alternative the first upon credit funds $XX for performance with will predecessor $XX.X the approximately million have alternative already charitable

the In secondary our us leading capital private We strategic particularly entered secondaries business, credit joint due well sector, positions that leader $X and to into knowledge, with with and sponsors. a a to billion. middle-market secondaries companies a credit with market investor relationships believe initial approximately this we large growing in credit venture franchise, insights, our be of

intend presence after credit first This new acquisition. with the recent year. expected can platforms the this is later types another in further launch to We of acquired this example extensions scale growth close secondaries commingled fund, our with the shortly great product strategy and of we bring that to our of first

senior our respect fundraisers, With our early either or QX. QX US to a other to sizable direct for fund, lending track we're third hold first late closing on

As a in billion $X in billion leverage. commitments capital, fund and $XX fund approximately reminder, second LP our including had total

second our first equity seventh We third over next the fund for secondaries fund, fund, private closes our climate corporate quarters. several also infrastructure our infrastructure anticipate and

Later different offerings launch closing US fund direct have this perpetual year, next to And market co-mingled the in expect early addition this and CLOs. our XX in overall, and year, nearly capital lending capital expect first fund, managed to accounts expected our with we to third junior we year. the

Corp. their We a of with IPO we SPAC, $XXX final Ares II. partially The our close last to $XXX Finally, offering, the $XXX underwriters option for the million the exercised to million. priced base over-allotment get deal upsized significant second of to demand saw million. week, Acquisition

this a AAC of closing, differentiated the January second that to year and IPO asset was SPAC class. and the this since of end largest largest And platform the believe strong US the our we of At XXXX. validation IPO this approach is

$XX demand a to billion our from billion end. shadow investor pipeline, increased over With our year-end seeing robust at which and strong initial $XX of already fundraising we're quarter at rebuilding AUM,

strength what we fundraising increases believe continued for further we with us expect outlook attractive the in quarters, deployment to opportunistic see coming our more to is positive in an be our in investment environment. capital, enabling available our With

wealth In we're we've or Fund, our channel, Income recently BDC, launched that ASIF. Strategic Ares management excited announce to the non-traded

also US remain vehicles expanding European the to take of this products, and track We distribution and for targeting dedicated adding our partners Asian retail we're later globally, regions on advantage planned credit our distribution our year to continue products including expertise. and

flows our non-traded $XXX in redemption net proceeds, quarterly million the of approximately While quarterly approximately into million versus combined to others, experience of we, with remained Exchange quarter gross program our unlike slower $XXX positive two inflows a requests. REITs, like others, our continue XXXX inclusive of first

across advisers We the education ultimately presence the that financial private global a handful can leadership large classes, a thought gravitate that and of asset retail in believe provide and success to players clients. attractive distribution service who market products all and have and will teams their all to

expansion that With and of the Access cementing leaders products portal, the we're we Ares alternative Ares, retail June, distribution as our continued in one our believe market. and in launch of education the retail in

for billion beginning From typical the expectations with at in fee-paying and strategies track for internal deployment market many as the That slower the we decreased of quarter year, year. across a $XX.X was the our AUM of gross factors in growth on with remain to seasonal expected, line the objectives our first perspective, deployment activity. quarter and due of said, our was, the

of We reliability are share the smaller and experience believe expect transaction that pay as solutions. our a sponsors that in credit pool and our private opportunities and benefit will capital strategies market issuers dividends we of this taking more flexible

deployment higher regional capital out pipeline Our is portfolio banks, often pipelines asset-backed including the dislocated alternative is and in In transactions. in the our numerous opportunities as are asset more building see sales credit, strategies strong, our in of pipeline team opportunistic their addition markets. normal very to of regulatory trades, that investment seeing

opportunities special In need of and that pipeline in retreat to our Private as significant other number from We're banks extend a growing struggle market. pickup their seen as from seeing their Equity a amend team solutions structures. opportunities capital providers has companies Group, they traditional and the our

in compelling to the to fund redemption provide and basis. for a fresh gap opportunities debt opportunities on markets, complexes capital we're need starting currently into the where estate, that The funding can pipeline in structured real requests. In opportunities refinancing the we from meet most step interesting see liquidity are

transaction In quarter. direct lending, which we're should increase activity larger us deal opportunities, second set in up beginning for an some to and see the more in deployment

returns base rates, investment for capital meaningfully excess vintage expected credit significant attractive spreads. and The private improved higher are more credit terms, with structures, this conservative of

In business, we're seek look legacy our fund GP-led sponsors and of opportunities and as fund both LP growing certain to into vehicles. a LPs seeing certain accelerate liquidity liquidity number secondaries

of billion of take several platform large be constrained to expect for very can affiliated for have advantage months, our building in that our strategies clients. insurance closes the environment a many the in have With to additional This we annuity is take products capital overall, the strong its attractive also business. of liquidity to market a market. capital origination $XX.X base of advantage we for and our commingled coming So, available opportunities

billion at associated charges the protected of from the without is now and We have surrender portfolio and of over with large issues AUM a $X.X Aspida, book. legacy XX% over

consistent ultimately to further expect business believe fund performance. continue insurance our experience secular growth to the we raise strong platform. affiliated forward, to strong of our result our We and continue to we Going is capital third-party scale that across

portfolios see resilience portfolio are through continuing our defaults, growth flow generally with higher credit fundamentals. and to positive we funds' interest continue Our companies, solid metrics. cash flow cash rates see low growth, to our flowing in Despite to

European steady high year-over-year our to and In continue US remained EBITDA XX% XX% and between Europe. direct US growth. loan-to-value lending the portfolios to direct and see for our example, For lending, mid- single-digit statistics

to a at our our fair business, totaled value, is and which proxy the X.X% historical for cost direct Corporation, lending below non-accruals which of be portfolio Capital Ares continue averages. At X.X% XX-year good US at

the metrics credit increase rates. in benign significant despite levels base at remain These

credit-related experienced our a significant from As have a de a with result, lending in minimis offset funds increase direct issues. coupons

moderating high estate portfolio continues growth strong, Our rates. see rental global to occupancy real and but

than the triple including and account of industrial rental. assets, Our highest for conviction another of gross invested XX% alternative XX% in portfolio's self-storage, and sectors, single-family our sectors with lease, multifamily favored more net

multifamily, retention we on to saw our spreads XX In rent XX% In comparable of the more months. see our months last over industrial same-store and continue same-store a growth the XX basis, XX%-or-better tenant re-leasing approximately over growth last portfolio. than XX% across annual industrial,

standpoint, hospitality be assets. to and underweight From office, meaningfully we an retail, to allocation continue

only portfolio. X% office is US global exposure real estate Our of equity our

as And lastly, supported increased perform our to PE well in our private EBITDA year-over-year XX%, accretive corporate equity portfolio acquisitions including synergies. and by group, growth continues

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

everyone thank Thanks and us joining Hello today. for Mike. you

growth in management fees, FPAUM financial AUM, strong compared experienced As and Mike again our metrics, the stated, realized income, XXXX. we first once to fee-related earnings, including of quarter

despite from and management challenges the continued in volatility market sector. FRE-rich quarter, in business rates, and interest Our fee-centric rising continued strong model geopolitical the the banking deliver results uncertainty the first significant stemming to

strengthened of has year. sets the deployment-driven during In second our position up year-to-date half that addition, margin in our and raised the amount available growth capital this expansion capital greater sizable we've for and FRE us of

revenues. with Starting

fees fee was quarter $XXX in capital. $XX XXXX. income XX% our quarter, to driven the million with by Other totaled Our year, of the compared of management last over in period approximately deployment the first an million of line primarily of same largely increase available

XXXX, fees through of XX volume, for ability that In market and $XXX Ares. quarter million, be management volatility a increase management last environment deployment FRE significant XX% higher and is differentiator the continues by grow FRE from our to an totaled by characterized months. driven first from a fees transaction to of over lower the

margin from Our in fourth margin quarter, first the FRPR. fourth the excluding large line XX.X%, point a roughly from in quarter basis quarter, the impact totaled XX.X% with from the improvement the XX.X% FRE for the XX but

significant stated to XXXX we we on over next the with we continue last of the the as have historical that second impact to in and quarters. absorb deploy a As raise hiring growth step-up will and in expect and margin half raised we quarter's see capital call, XXXX several XXXX, larger resume our of the

margin As on be such, track FRE goal year-end of by rate we XXXX. continue achieve to our a to run XX%

equity over activity quarter, volume net realization monetization reduced volatility the of was limited opportunities. transaction market million, realized income in significantly Our and as first lower performance $X with

direction optimistic funds market of monetization peak are the economy, could increased once see has clarity around we and that opportunity. the Fed We an rate the

credit-light is continue XXXX, funds. waterfall credit the which quarter, $XXX limited Despite European largely track income expect in realized for on in million first we to from we derived and the remain

we QX, currently coming visibility our from fourth the $XX remainder waterfall XXXX, payments in from tax in funds For the net have performance with on of million distribution-related likely European realized least at quarter. income

European XX% and Generally, to be certain payments recorded occur are distribution we remaining fund beyond, types reach and funds. seasonality expect then in finalized. stages waterfall in the to in of to these We quarter, of XX% do realizations second the most of the XXXX in to distributions of our the lives for expect once less harvest the as start fourth quarter we

Realized XXXX. income totaled quarter common After-tax share realized quarter X% the XX% the higher up in of the per from stock the $X.XX, first million, period. was level first $XXX A than of of income Class year-ago

billion As year AUM of March XXst, to ago. $XXX our a $XXX billion compared totaled

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

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

mentioned, As deployment our and expectations quarter-ending with actual were environment slower for deployment in first and Mike a AUM expectations and in assumed AUM. our fee-paying quarter our fundraising results the line

shadow sets stage management which deployment the growth. AUM, for highlighted, and we're rebuilding Mike future As higher fee our

fees yet incremental which $XX for of management paying deployment totaled Our over million end, billion $XXX future quarter AUM fees. future available not potential at represents

from was Of quarter of uninvested $XX to Our increased $XXX year-end. billion XX% incentive-eligible billion. first the this at by AUM XXXX amount,

net this which performance first income in In $XX is nearly European performance million the of to year-end, rose $XXX funds reinvestment Of was accrued quarter. net period. an from their quarter, million, of million increase or style $XXX accrued $XXX at are million of the previous our past funds, waterfall XX% million from income $XXX that

extended an despite generally well performance, of their strategies benchmarks. market relative fund perform volatility, continue Regarding to period our to

strategies. presentation, full of fund performance in the to our highlight earnings are wanted our While some details we larger

first our months. and X% gross performance with from positive X% In strategies to returns X%, Direct for the across quarter, composite key XX credit, Lending for and US the all delivered credit last European alternative XX% to ranging

both volatility are the equity, investment take of in the of over private public meaningfully These high-yield core and year. designed In markets the equity the to outperformed our advantage past strategies have strategies markets.

generated composite and the XX a of return quarter Our X.X% special opportunities gross months. last over XX% in the first

more in months. Our corporate private equity but for quarter, composite than last XX X% points was the down the a modest XX up basis

composite declined in the growth months quarter, our estate, real for XX was largely up slightly gross was rates. basis modestly Within over US increases by points real last equity but return estate the XX cap flow as offset cash

announced Lastly, XX% that management of as we didn't quarter, we closed the own. we purchase business last Ares of SSG's the already remaining

in Our region AUM. has offices in billion business managing $XX X nearly the XX people across now approximately

in what expanding Asia-Pacific estate, secondaries, hope real alternative a and Asia. mirror we have expand region geographic credit, initiatives and under reach Europe, to We the investing across equity, growth including product time to the over and in rebranded our set Ares recent infrastructure. and investment We're US capabilities our growth

we quarterly deck, is supplemental our to business reflect this historical to wholly posted Ares credit the our we include owned business within reclassifies financial SSG In segment. Ares, credit a the regular which by now results existing former Ares Group. our Credit within materials, funds SSG addition Since

remain financial we I growth to provided last deployment before our I guidance based wanted and our back to that objectives on pass on outlook, earnings fundraising and over we our Finally, call. with reiterate the on call Mike, Mike? the track that

support and infrastructure next we the needed our In several ambitions on deployment years. significant Jarrod. investing the talent Thanks focused the and fundraising in XXXX, to for

we're of us important on our we set beyond. and which great a will executing for now for growth start we're year, believe and several this these focused off strong remainder fundraises, with to the This up goals, on of year

with organically great financial and scaling process on in pleased We've of also and We're our acquisitions plan now have both other strides broadening few in made acquired over we're businesses through these years. integrated suite, the We're platforms, products synergies. strategic new the and our product past and fully with to strategic objectives. these

the growth the the the nontraded BDC of of our our of including along our executed our and launches credit strategies markets the private fund channel. wealth channel, direct launch Australian lending formation on with objectives, and and in in already institutional several secondary We've of AWMS

We our exciting debt also have strategy. for infrastructure growth plans

we in believe market take that So, volatile positioned the conclusion, is to our business well advantage of backdrop.

recessions better believe at than I another Looking similar some that of period. and performance, periods our market historical have come as our during we're potentially we growth fastest equipped ever dislocations. the of approach

larger the and believe we more have to team we to of market take capital, this positions our we well opportunities expect which Currently, us tools toolbox, environment. more that in in see a available many advantage

Our balance and position us others portfolio asset-light scale, long-term puts opportunistic robust cannot. to capital investment flexibility the capabilities sheet, and in management when be in

grateful always, and dedication appreciative I'm for I'm our continuing of support of As company. and investors' the our work for hard our team,

And I can for open questions. think up operator, line the now we

Thank you.

a will conduct We session. Instructions] now [Operator question-and-answer

from comes of Siegenthaler Craig question Bank Please with proceed. First America.

everyone Mike. ASIF is the first is and congrats Hope one fundraising. Hey launch. on doing My on well

interested your interest sales also credit parallel. busy fund funds multiple must then you be between in in institutional on raising And very, equity conversations and how But are flagships private this your teams So, and trending? very [Indiscernible]. your re-up moment, levels can comment I'm at especially

Sure. Obviously, we comment in on market. specific funds don't the

with for in I'll about. relative themes well fund vehicle size the vehicle. credit pretty commingled just funds as as accomplished some closes credit quick what our you core and prior to saw give think Obviously, alternative maybe, meaningful of a European the you couple to So, credit we first

the prepared in in came quarter were XX% in, remarks, commitments about the that existings. talked as And the from we of

the receptivity you you additional for give we end, and good should Also, $X of re-up saw in plus. since an those just our the alone, in a existings. from pretty two funds that quarter appetite brought commitments indication So, billion

momentum that And so continues.

all ability in are rates, private interest benefit received, the rising defensive actively being a very credit well generally from I things positioning the class would say, environment. surprisingly, to transaction given more speaking, deploy of the to not lower asset

continue, And I retail. would, again, expect institutional for both that to and

don't regular buyout. it I non-differentiated from for those invest just would environment growth equity, if to reduced and what would of that's And coming transaction pure reduced to denominator function largely I that ability seeing in equity. the appetite are effect. not by but call money back investors, We way LPs mean And private I private be therefore, know a

our still of a early I we've We're that business have we fund have SOF capability but been in approach. we for control differentiated in actively record, days remind with a fund, for the private fund that franchise. and that would successful in our over XX alongside years equity Obviously, but track do raise, consistent that a you invests pretty distress

are that, the hope tell. too so opportunistic differentiated strategies And given experience, expectation but early are of strategy for we'll the a still way ability that a to have our play and to and lot distressed credit that our

that redeemable. to side? some the But be funds And credit, within lot perceived discount refocusing liquid the sort on know how demand trend to now side? valuation a that between I are of your shift and of you demand And of seeing the really Thanks you in your tend liquid then any liquid credit, front, seeing Mike. -- are given kind of just are credit just private on open the sales in liquid vehicles

It's question. on inflows -- actually a we first the in liquid business saw quarter. credit really We've good good our

liquid opportunity do to the point, So, markets. your the people I value credit think in see

flex credit core funds I'd also ASOF, those illiquid. ability between ARCC, at the you Pathfinder, if all look have liquid and our even point out, private to funds,

we'll opportunity private there better the markets up. of so deployment should those And offering redeploy time the significantly that side that when public the expect then are house and be you harvesting gains to obviously spending value, into when picks

of funds" see that, as amount that is liquid existing investors reflected in a in there are dynamism think market our taking well. So, the and that advantage fair the opportunity. I "private And that's of fundraising

Mike. Thanks Great.

Thanks Craig.

Beatty UBS. Adam next proceed. with comes question Please from Our

good Thank you morning. and

the the in are positive Just want very although to that, channel, seemed which acknowledging thing given obviously have to up good ticked ask backdrop. wealth about management redemption requests flows still somewhat, net that a

to you're or to what or be wondering redemption motivation just Thank request. you? for specific get that. have what it the you. great as seeing class the just But elevated on the would real Is needs asset your It drivers client estate or thoughts liquidity

and that differentiated Yes, good fund. -- the as in and question, the REIT it's the both I to complex flows see as well interval from fortunate Adam. again, some of credit are And we've a continuing we think peers net we're

expect billion as channel the we're there. $X.X highlighted, demand And and our bringing retail non-traded capital, half with recently we into the we healthy of the launched of have back that year BDC in and

in So, tell also And alt within seeing the top to still appetite the channel the wealth and do RIA at that would platforms, grow the you alt exposure to house large is desire for the we intact. flows, is intact. talking that of the the it most know of that

So, look what's we motivation know -- never when going for at really the I redemption. on, you

of redeemed, a shares out more and little in redemptions on we the portfolios think coming they peer owned that and bit there of market I the leverage less those of a on getting was were geographies. some early certain folks of was unwind REIT and comment leverage some the saw

it's those and real apportion of combination to is just now in estate Adam, a liquidity. perceived think those think at the you obviously, commentary But the market but commercial the I two a opportunity play. general way, I are I two highlighted, definitely can't in things probably any risk client and which that quantitative on outflows

it data, that some those and slowing. appear rates, of reverse. just I think when see and cap hopefully we outflows of to peer stabilized you'd looking rates And I that get are data market stabilized some will that say, does trend at the the

you're and helpful. do some that? layer there? at resource-intensive annuity somewhat annuity see growth to improvement That's how you, originations. underwriting to It much Mike. just of can as what Thank then capacity be you turn Thanks. on But and productivity least of kind to Excellent. then just there Aspida the And and capacity assuming growing I kind to just wanted will

So, way platform, I of as one about tried talked that organically that the I built it's but don't of we've think the one of we benefits dealing prepared platform, remarks, we we're is the challenges. paperless annuity of pretty not in with or scaling. terms is also book fully surrenders in legacy if But articulate, appreciated, a sales know Aspida is which actually insurance things and tech-enabled to efficient have we've managing the the

Telling ability probably And on have opportunity based know, you it. on pull or structure or a moderate side, we'll and and you push product what on the we price terms the our the on where to in on sales view depending the are accelerate yield asset of of offering. deployment we

the perspective, market quarter, type per in $XXX sales, million just of doing capacity this month platform give to the you to some new were on first environment. for in in you we annuity a But about give sense

Mike. a helps you, lot. Thank That Excellent.

next Our proceed. Alex comes Blostein from question Sachs. Goldman with Please

taking question. for Thanks everybody. and Mike the Hey

regional First wanted is zone current market. the space to the in availability guess, to question, dislocation some have I I kind and credit the of broadly across that longer-lasting likely effects, in the environment fact bank on

as large today, some just the the road? be larger businesses mind, of get thoughts I'm you interesting with but on much not could be down rising these the curious that might So of back do in constraints to on really that kind expect lending your get in to what of space Ares

speculating, is but prior us it's informed question by seen obviously, in what this a and It's purely we've cycles. great

are and on just with first sales, the red we The of things very in as environment. themselves this, our our this navigate is seeing of current credit they amount that business. we as biggest is counterparty the other The alternative banks phase a phase mentioned portfolio pipeline prepared healthy trades building the cap first as various remarks, of beneficiary

credit. this. out As that retreat for large market primary their small, the list will think the portions put being kind the create in I'd of alt to probably of and core banks, opportunity at of of both growth that the exit the in coming market, opportunity And I top of businesses

said, beneficiary. think, contraction, estate about significant being That credit I you bank behavior lending, be think and real commercial a when will

you Alex, are commercial at banking exposure, of telling know, think loans held what estate in I real the real commercial you XX% system. you if estate look

And sheets on are real estate commercial average, XX% of regional loan bank balance exposures.

that's credit And property contraction and for so around to is open if us I and big lending going pretty at the a real opportunity stress globally the up think there level, estate business. commercial in

say, maybe to focus they of inability side our the the have and leverage as been Needless the there big SOF beneficiaries reduce house, direct or franchise. banks as the have are larger as aggressive finance be on to franchise our lending

then would to well. beneficiaries of position I given begin ASOF big our and the both structure business, also we highlight, generally, And ACOF distress see just be distress, capital as equity to private and operating they're as going

strategies. of of kind mentioned all our I just So,

going think into think like is direct more this I contraction the benefit, are drive would it, credit about but really say going real, I have I it's to hands to folks I some capital that think Now, more us. of and

rising around for My know, guys secondaries Got a both was That makes sense. question the ton the of you talked about there on business. I it. Mike, GP side and pipeline well, the as That's of perfect. you LP second opportunities side.

I the has little guess growth bit been we recently, management muted. But fee trends more when look a at

the trends months. the of it, don't help the XX XX, So, business us outlook of I growth over resuming management near-term call bridge know, next, for fee that and maybe kind kind

Sure.

now the We're I innovate removed standpoint, two fully integrated, closing. years to of and So, Landmark product was a begun acquisition. we've grow. business the what would been That's from now that from bulk and say, retooled

our are markets first growth we the coming of wealth long-term hopes equity-oriented platform that and So, into there. our put off channel, high the that new we fund, private two our product which for have big private products is the PMS opportunity fund,

of our very acquired currently you current kind the raising deploying well. at estate and behind fund is of Interesting, our now secondaries acquisition, raised And of just real and infra initial business, that always the big we period, look integration vintage the and when a secondaries the our into launch the we're market. was push which are PE credited we two, XX of motivator the for during acquisition strategies as capital fund was kind midstream, and big

So, we're mode. capital formation in

strategies. begin And closings see those, on revenue to invested to on the for begin both tick then capital committed and we begin up, as the obviously, capital credit you'll to have

in reason The this seriously the illiquidity look there are denominator capital of LPs liquidity market. we back to is overarching we're optimistic at effect, and theme so seeing constraint secondary

secondaries, pricing a what I would be needless expect way developing. we're in bid year-to-date long seeing for kind and pipeline likely and market venture. we're LP-led say, for seeing in year just than maybe is it's will XX more the the PE XX, record XX based that of But and time, is for that XXXX market to been attractive the a on XX, the

So, there's there. a real value opportunity

for as GP is to like capital well, the fund funds on that building. we and the with continuation then on funds that's turn for a house think, their experiencing pipeline is and of And raise -- GPs side that things those GP-led going in NAV in are slower side, loans, are between into next the getting earnest

extraordinarily dynamic that So, I think is supply-demand the market good. in

That’s much. great color. Thanks so

from Cyprys Michael comes question Please Morgan proceed. with Stanley. next Our

like back morning. pulling to on can standards, the banks void like where pull in. and Thanks a there. market back opportunity Maybe firms If seem hand, banks would commentary the continue in and to lending the step circling and taking one set leaves yourself credit for the it of question. tighten Hey, that some the on private back

the of some mentioned alt markets fill? CRE much you're Ares and excited in credit. But a can areas and You that private void how

number the banks of other across from your And us the borrow also you on a you remind businesses. banks. where borrow you hand, can from Maybe the

that were have for So, could impact of what you? tighten sort standards they if to

Sure. from of portfolios. XX% It's question. do the to We to an is astute Probably that probably from say to to of I'd G-SIBs. private borrow our where leverage is XX% And we the banks. XX% venture similarly, XX% borrow credit borrower

platforms. with do business to I the going G-SIB as as consolidate share, larger think see more think we this, you're well and in consolidate markets like probably share I the

with disproportionate even sheet. capital us and get balance of of share that is Ares that shrinking hope overall availability, those my like that a will So,

leverage implication, meet return continue to expectations that obviously, which ROAs unlevered need our means down just higher reality, that deflationary. that is means the not available, in obviously market investors, come is market, valuations The that given the though, to if to of is which

same of I the banks think in that constraint don't can they. Obviously, basic say nor we capital the the things And the lot we partners entirety of private would that for symbiotically should we that the channel, do. absorb live about. with already a markets just I talked the Obviously, as that

it's they're trillion. you if market, trillion loans credit entire pushing US you $X C&I base in at at installed if across the landscape, about $X private But the And look banking today. look

order markets So, capital of there's going significant amount formation to be pretty to need fill for if in to significant. the the void a private really it's

So, it could economy. challenge the

to of that to take risks extremely risk I markets that flip that an they to for capital is get what private and be want will the want is side selective obviously, in the if scarce. paid think the they get opportunity

about seen backdrop. I reasons we're borrowers of for in risk-adjusted the excited that's assets expect we've long a higher to going would that returns the I so we're and And that quality time. one get why higher think

Great. out you in space marketplace the What Thanks. Clearly, key estate. lot of real some across that are you look follow-up on a question CRE. a just of see out? as And commercial the the there risks guys concern around

set signposts playing of you Ares far? guys for you what so can the see are for? What do of And help over How that you looking quantify opportunity could be time. out sort that some are maybe

as I my thoughts. deeper probably same and our at Head do at think he dive. the you a way geographies to you can't is all -- so you Real Benjamin, equal, well, give on can't But Bill either. estate have Estate, segments could Global real of look of commercial as I'll the you look

sectors office prepared is Whereas remarks, are still good So, that right now. obviously, the most we're multifamily industrial we participating severely in strength. seeing of as challenged in fundamental mentioned and the

not is actually more imbalances quite a little interesting. office. there. same and some Europe stresses from US, showing European seeing differentiation bit to work-from-home the European We're starting the supply-demand get retail

also Europe. US a between bifurcation So, and there's

points. have class leveraged biggest with basis the I rates base you a is frankly, up issue, asset that broadly XXX are think

that to and that real challenged value. an seeing, you're plus, we you're piece see future of for has X.X%, a a so becomes primary really in equity XX% our And and in just difficult of this support market, debt market, yields obviously, unlevered if and, owner significant estate pretty implication

of to maturities and in be are a There Bill, kick But as... to that to that stress next So, going deleveraging. on repricing months continue to handful going a to have go of will tack significant coming it are XX the through that that to to market. here up to I'll is market XX the you period pretty

be has would I been already. echoing of Mike. what Thanks, much said

X% biggest our value, fundamentals we global the the and that office it's net where in less very only think asset market, the in believe. the basis, are, underexposed. US, is It's of on I thankfully, XX% a risk I than

was bit -- few So, make a that more our months, contraction be for but growing will the will business. it XX for a an our minutes but to the challenging life touched of upon little debt credit opportunity XX next ago, it

it, that milestones seeing And cap The rates and I'm discount want out the looking terminal sure don't are I for and is what values. to we're yet, bottoming but a in there third-party seeing moderating. not we're call on rates We're we're valuations.

premium. our of We portfolio risk a lot much are getting for of embedding equity

So, we coming. values think are

leasing realistic opportunistic life, of coming the sponsors that more gates end selling like strong touched or and funds a and in liquidity the the But to of to at the There's see in want we market either Mike the money that see their market down bit the the out purchases And from in realism sales then have very we'd market. sectors very in and are more continued upon. or money. in

We next student ahead Europe about in and has been for are where a earlier exposure and now the bit prior we for and we've are of US way leasing to or year, academic in growing the done way, little in both years.

So, on well. as that's a sector that we are bullish very

funds So, use other either of very our create to positions the office in biggest opportunities. debt our the good availability risks, capital are subordinated structure fundamentals but to in capital going and or in equity are ability

Great. you. Thank

Bill. Thanks

Brian with Please Securities. JMP proceed. question Mckenna comes from next Our

Thanks. Great.

on going more So, there's this on a clearly a there's in credit within lot opportunities right lot broadly, everything part private And of the focus given of backdrop of now. just the industry.

more coming So, space. to players see we're starting into and new the more

just of the specifically, see then for over time? it how get So, you be it credit great your updated thoughts private competitive landscape kind evolving and will to on

the you the forming the a to of scale. find think capital to I signal through folks necessary portfolio not of noise, a significance hanging space because Yes, there's have any and infrastructure the building origination investment that or private in credit are lot shingle that really management are

think around players there be I are will And edges. the some so the entrenched and that players the large folks nibble

say a significant entrants But set, would from we're I seeing new share. competitive taking not

We now. that competitors have entrenched a are number undercapitalized of right

would we're this significant actually capital fundraising that will think you the and market, in is a right? are we say jump yes, So, not us some in I a seeing our just cycle. into, given market we reduced where change, which not benefit But

have our in We've private over credit calling XX-plus years, business, look we've last performance. If private sponsors deployed US incredible lending XXX on what with actively been at billion We're our the in XXX we over business. building equity people. you $XXX direct here

record standpoint. You expense replicate both can't and relationship that, really from a track

will the private we've that, across experienced. would expect we landscape. that's position other cycle leadership have players, would to And highlight probably it credit Europe like well, as that share said earlier, true I as continue scale in in I I greater that So, has consolidate behind every market the even an where

Could early Very current for talk you what's BDC look of to just XX product, the that feedback partners going about just to the Thanks over non-traded then in? next new this the ramp helpful. we're Yes. demanded months? follow-up environment then in just that adding Mike. distribution given And And XX on to like terms you the launched. new

Yes.

the the fund to tell. So, again, get it approach scaled. took to too seeding early We of

dividend would So, supported took the and there. growing the that any people meaningful would deal see to channel, the have it we wealth we curve when not into we J as portfolio, issue with

we seeding partner of So, have as of coming as about, in that retail we talked we billion about a have distribution already fund. capital launched ago. prepared first And online our the in talked there week remarks, $X.X through formally we the It in QX.

demand that earnings out of for on call, of think have the is distribution better partner. I next a we'll so sense first steady-state And the kind what

similar that in credit and institutions. to But is again, if that channel you the private is allocated to wealth under credit the private demand believe

product track we're given will that much last years, better our we record the of together given be over the a in the we've But I the that demonstrated next think and once we'll get XX channel. demand there. performance brand ARCC sense all have the time into the

you. Thank it. Got

next Benjamin from proceed. question comes Our Budish Please Barclays. with

you equity back European year. still credit? there. sounds private to confident quite Thanks the look waterfall versus outlook the for wanted of for term the Hi much opportunity. longer like maybe comes question. check It I Can on this on just from much so you're us the taking how remind

more a achievable, you could risk color may we that so easily better as can any what is sense further of the Just be kind challenging. look out there? get And those of provide targets we

early that when that of comments, seasonality my Sure. kind that still you. it bit end-of-the-year -- removing period hear as harvest you and I'll more we are touched I Great Thanks little as remind of my Yes, stages the a see. that from confident we stages pretty on that's enter in we're about amount. prepared to I harvest Ben. still we're the we still in reiterated the the in remarks, of later you and into period,

see in that the here that Right now, tax the in seasonality actual true-up payments the larger tax-related fourth happened that payments with quarter. means quarter we happened to the second a

remarks, reiterated my still drove for so the that's prepared guidance but we what year. And this

the out website, that terms and of put XX% amount our we for is Investor into Relations long-term you can on laid from that presentation In and find credit-oriented. balance about of that you

funds. So, the credit-oriented from majority vast majority of coming the is or it really our

enter will the So, more but ultimately us we a of what And terms mode, subjective will harvest a high into in terms balance. little predictable balance believe in it it's occur once full that's to of predictability that that much be. that bit when what always you allows becomes have

more Maybe Thanks. QX. what one tactical about That's in of it. question kind just Got helpful. happened

initial versus I on think track was expectations. billion deployment you of $XX your mentioned the nearly

of you Just such February, March did ended quarter curious, up to bit what sort you where a in that you be? thought January a of and sort were ahead to result And what in of you'd perhaps degree the extent track slowdown? of

Go chime ahead. Go ahead, in Jarrod. ahead. Go I'll after.

QX, seasonally little the that's is QX we at that looked one bit coming always say expecting is thing remember as slowdown important last year into time. were of a of and I'd we And to absolutely. slow. QX Yes, a

of bit And time. in create then something you've little slowness. February last always the did in banking and always -- little for that years, resulted issues had just We had timeframe in of a the happened few March that bit which that's a sector, you've

begin build remarks, you've think lending. pipelines But I as to in in prepared overall, direct our we mentioned the seen

was and around You've was quarter, with line that seen year a there's what we a slower time, bit beginning what but every activity little overall see expected. happen. in of kind it we to this that's It's more

Thanks Got much. so it.

next from comes Our Capital Please proceed. Markets. RBC with Kenneth Lee question

Hi, thanks question. for my taking

share of deploying given just very the Just or backdrop? private aggressive could macro you your be spreads around to capital credit and in especially Thanks. piggyback if on direct lending, terms attractive given the previous current -- just could capital you on question how deployment. within thoughts Wonder terms and

Sure.

those know to pretty deployment. of look of there's I don't consistent I how the businesses, think size amount So, and you obviously, aggressive. scale a if And say at

European $XX you if about right It's lending was $XX billion billion for So, now. $XX direct in US year-on-year was LTM deployment XXXX. billion. look,

billion. Now, to $XX it's close

about of XX% from or little so talked re-leverage, a scale look either deleverage growth of bit showing through and deployment. to at before, a go a those change coming that's is some on pretty a in are growth. there's the as plan, But And where opportunities ownership. we've businesses this of within companies businesses So, portfolio, deployment those execute now existing steady

given just existing portfolios. So, pipeline opportunity and the diversification of size embedded an in the there's that exists

The way. market definitely our coming is

the have And deployment. so that as I scaling we of capital, should think impact scale also

as into and side a we're as So, to more as "aggressive" said deployment funds the these us closings, successful little well. sets that be the getting up having on market you

you're Europe then Very some tell And follow-up. what especially differences within highlight one the the Maybe lending US? just terms or there. the within Asia, key what announcement you. I of seeing wonder you're if Got us given could helpful seeing of in business? trends Thanks. Perhaps you're you direct SSG about recent seeing with the

the kind the say existing line the the and US and of would in are Europe and portfolios. structure generating right risk of loans new in that I Yes, return now terms performance of we're of

the just in or So, we're roll seeing economic the having were activity. portfolios pleased we're that the transaction with concerns consistency. Eurozone, around I Particularly, more challenging through that the the of folks backdrop think some not

most cases. Just better X.XX% many to getting perspective, put modest between new points loans on basis, are people lower at and of first-lien somewhere three structures in are excited, and priced fee X.XX% protection, those in SOFR some so markets points is in and call a with why things attachment which

high back-of-the-envelope pretty So, is math quality.

into getting unitranche in to is range. loan that XX.X% or mid-teens the that, then And to unlevered. second now First-lien priced XX% the obviously, bleeds into lien the or extent

risk. So, just it's it's pretty equity compelling, to difficult particularly in a market where price

trends, by region. which deployment. we're by of New credit different Australia acquisition it's because and both mature Zealand, types seeing capital I'd more finance buyout say way a in on say to market business hard the similar is and regular it's and Asia-Pacific, country and market,

much would say, legacy to the credit sits parts the of opportunistic play, more which and it's SSG strength of over of in a I other then really special the And team there. speaks market,

opportunistic So, offering plays not probably but it's [Indiscernible] from an as the robust APAC region. consistent, opportunity, standpoint, more the across

helpful Got you. again. Thanks there. Very

Thanks.

Please proceed. Our question Mike KBW. comes next from with Brown

taking questions. Okay, for great. Thanks my

activity assets income the debt in was So, like subdued it the at just real line it the looks segment in by investment quarter, impacted this looking markets.

Q&A, estate does relatively of subdued. made it some you on there in commentary remains based earlier the real activity guys And sound like

quarter? repeat should up? markets a looking then keep to So, weak just should would continues we of that expect line what in when on that the that the second activity in or pick if monitoring, eye to public remain we for here, And at be XQ an

do to Mike, me you take that? want

can I after want. you if this. chime in Yes,

Taking it's in ultimately employee is Yes. funds what taken predict funds weren't seeding we look stakes investment because GP of or our co-invest. that, of a most really hard a as at that our result to us in income have

things. when there is recognize we an of So, episodic some nature

that of of there comes the Now, that's in that have the on expense in the are some vehicles is there there we through in terms fees. of debt-oriented, just use leverage and some line use more that on of

line fee. don't comes through, transaction have So, have that that if a still we actually obviously to we pay

it predict We quarter-to-quarter exactly typically is what and Mike that Bill to have do will as sales period, throughout hard So, both from every mentioned be. earlier.

there's assets, an when occur. predict As of to but that, as the opportunity market really hard or some will may sell thaws to of exactly legacy advantage more it's our that funds take

in to emerge just the on we're credit are your contending update the great next. also to where are where going guess you with -- of what And perspective great. kind Okay, guys credit a risks portfolios. from is I seeing

course, over challenges the do XX about you But of where how continue still, in where out look could point, you real you thinking will think may vantage next your terms like credit from the months, what probably that, is to here? arise. evolve XX so sounds of some occur? from that And as guys to It estate are of

good ball as crystal your Look, as ours. is

real probably leverage that see, think -- of the market. certain just given is estate and profile estate in again, the real to sectors yields I easiest debt

of we could credit there, of market. alt some the consumer weakening I in that we kind our end opportunities business. think could I but think present have exposure don't lower of see a

the saw said, EBITDA is book, equity our growth. growth We had again seeing US seeing not EBITDA of -- business. market a XX% not lending Kind I as private middle side, to the in really for X% we're which proxy on we're X% direct we it. franchise, ARCC just our In good

through. coming are earnings the So,

inflationary stresses you months, balance if corporate a market XX than the it's over-levered now, it's about earnings about look more in in in And really of abating. some right sheets rates are think recession. at I XXX pressures the point basis and the increase base

in of rates. that better or beneficiary worse, for for increase And the big been base we've

coming the coming how to seen it's do a so on up as exchange down. counterparty of is to talking burden a the bed capital And set for side other relieve earnings compensation. cash structure than table, when we've and falling we're are a prior partners our in rates the equity different around where it we loan, out typically, about talking But typically cycles we're when of in defaults, on are

So, capital of we're distress. existing with now conversation. structure inability And really about to conversations while for the return giving flexibility and folks most dealing operational And an their away the service are structures. we're easier that's capital just

that's book. easier on the have it's the right the an bulk Frankly, risk what been to of box and now, conversations loan corporate generally

Mike. thoughts the appreciate really I Great.

Thanks. Sure.

Please with Hone Rufus from comes Capital. BMO question next Our proceed.

Probably for investments of I you good couple Hey, a question comments morning. the that past to back come platform making been years. the Jarrod. around the to some made wanted you've in of over

of rest about on And a you. I And compensation how might play into that that margin we and could Thank outlook? terms XXXX. FRE you for minute in G&A should the was translating spend hoping how the think growth of

Sure.

kind number that. can in used investments of the last different are years that we've of sheet where -- capital had manners. couple we've we've So, our quantify of Obviously, the the acquisitions a for over balance investments you made

funds for there's partner strategy. into that or And a launch investments, you example, other strategy a a you with venture as stake into in then to launch enter new joint also taking a new GP

already of have where activity area lot So, and in like sports out and can entertainment to involved, might have is our your be something so ultimately resources, we're often, for not already off FRE to accretive fund, actually it vehicle that. be depreciative strategy internal margins a That where able individuals branching new a very those an where launch margins. can already you're with that you that because media you of come we a to --

something Or as secondaries like you we're have our build business some that. bringing able business, some use strategy credit and from to of credit a could internal professionals well the outside using secondaries new people where in to people within our as

see sheet terms to So, is are What use amounts, FRE investments the harder to with is of ventures. the you make the of those in co-investments your those balance ultimately impacted a how outset. joint quantify bit to at along from make do little capital --

were in in about we large calls, the year, talked over and to as products business we've back to and were last XXXX As to XXXX going and for we needed middle a have really commingled where out the knew that offices. some coming knew and market to this build we through and very hire of as source is couple originate to the ability we to we those begin serve well and as prepare the that

at last moderate over our to funds. thought So, headcount increases that of we about that would we deploy those extreme new is as digested really and year what year-end, hiring this couple into talked we led that, And to larger those then the as commingled hires, raise began years. that

run second margin deployment the saying into more we'll at Day this to of addition, our see earnestly. we the talked see bit FRE on we still in But what's out about we've us XX% as we year little a coming gone see believe guidance that's that, Investor that So, rate for as expansion the ramp that half to pace that really that at begin really XXXX. that we're laid that we

Jarrod. Thanks

for would further Thank to you. Arougheti I Michael over are closing comments. at questions like time. turn back to this There floor no the

hopefully just some for couple months Talk any want forward thank updates. have to Thank today look to in don't have everybody soon. I everybody again and a great of speaking you. their time other than to and