Ares Management (ARES) 8 Feb 242023 Q4 Earnings call transcript

Welcome to the Ares Management Corporation Fourth Quarter and Year Ended Earnings Conference Call. [Operator Instructions] As a reminder, this call is being recorded on Thursday, February 8, 2024. I'll now turn the call over to Greg Mason, Co-Head of Public Markets Investor Relations for Ares Management. Please go ahead, sir.

Good morning, and thank you for joining us today for our fourth quarter and year-end 2023 conference call. role Michael Financial Chief who Officer; to new by Phillips, Officer; has today Markets a Chief Public our and advisory joined Arougheti, team. Executive our Jarrod moved Investor I'm Relations our within Carl Drake,

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

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

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

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

certain available GAAP and comparable generally as for a our XX-K month. Please measures accounting considered directly measures, full refer most call, should which our year earnings to we to will with be the file substitute refer or of our During on quarter this accordance the for plan this in reconciliations accepted we from in non-GAAP website Form Resources financial isolation Note the fourth principles. to prepared to measures that of measures. later section Investor presentation not

record announced common nonvoting XX% on call. later of XX. dividend will $X.XX and per the dividend increase dividend holders of an new March This ago. higher XXXX, the with will March The the in common be quarter Class Jarrod level representing that a A of over on a quarter we color we declared XX, this increase starting the share year morning, additional first our paid of to provide drivers for same on quarterly our dividends, stock, company's of on

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

Despite a experienced We're we to Thank was good and everybody report is across we you, in well. hope ended $XX fundraising This morning, a largest of great for than XXXX, the for our fundraising execution very fronts difficult quarter. funds, on industry, than and more from I raising was many $XX year fourth doing year strong capital pleased with Great. a second billion quarter. billion Greg, our of a that fourth everyone. record institutional year, including demand directly it in raised investors. amount more our strong

vintage, the more dry We entered in XXXX what having in drive to the earnings growth strong providing in in attractive to powder enviable the than billion we invest of position opportunity an is $XXX ahead. believe years

fourth quarter, the rates to were quarter able on transaction record. greater quarter record matched for strongest market In Against interest which and to growing our second as up economy. to investment certainty this gained backdrop, the activity deployment our the with of our respect year, platform we participants leverage picked highest

Our over jumped more year and first to we're into that our deployment of levels the quarter. third QX higher-than-typical activity have time compared of encouraged for this spilled than XX% quarter,

year. And are is of the fact, generated set consistent and resonating that We performance across strategies direct also Asia strategies. in and XXXX. our lending believe cycles our in for with additional broad relative returns investment U.S., strong continued investors, our deliver We performance our LPs dollars through to Europe double-digit committing

increased excluding growth our many our we in growth XX% and our of fees fee-related including and For financial AUM than the earnings. I'd more year, across FRPR, in XX% key year-over-year. management drove earnings, metrics, add double-digit by growth fee-related that XX%

to down where the business. XX% We believe management speaks ability generate M&A our growth over that of in activity of market our was resiliency level fee-centric earnings to fee-related this a

the in I walk will we we to that highlight strong little another believe you are year Jarrod for later points. as do key a few but forward, call, through want headed Going a

as that for economic higher expectation interest First, we viewed And transaction year. growth is start relief and better-than-expected help it lower the activity for rates significant we to the a drive expect the will believe deal markets.

the that We demands to and activity. of private supportive also believe capital the other aging also factors equity powder of like return LPs dry higher are by

Fortunately the we've for in professionals believe positioned adding peak market due well deployment made, us, in investment investments to significant that for activity in since net we we're activity a pickup the XXX XXXX. that

And of professionals. increase to investment capable us market that's in engine should efficiencies headcount origination an doing drive across more. enable of activity an built greater We've much our

net function a in acceleration performance expect this step we of and in our performing income. believe net XXXX. recognition been have a to we're that inflection since we beyond. European We're an income waterfall point growing XXXX of our funds And performance from up and growth the year realized Secondly, that and approaching therefore, an nearing ramp and realized

could we income we added see of believe in that but still accelerate if an environments. to and this early transaction in tougher, As realizations, our deployment does, from resilient forward Overall, see of a in too to market variety activity make benefit, pulled call. realizations slower more active during positioned business fact, it's more environments. is markets operate market We're improve, well but can market

investors for year. yet some believe fundraising over spilled year closings with that momentum strategy also estate not strong debt new real year, strategies opportunistic fundraises of we we as only large with strong our expected Third, In the of new our and for offerings. but as up estate, experienced real this another have XXXX, we're credit launching several our of into set lot we're largest and private a demand our secondary funds our we

new walk where activities on we heading you the through provide recent into year. insights stand some Let to me

behind fourth the For QX. on we billion the third raised quarter, record our we raised what was quarter slightly $XX.X and just highest in

year-end in great anticipated final second QX, total the our commitments billion, third $XX.X surpassed credit to at leverage equity bringing with our already in equity to quarter including we with thereafter. billion ability previous U.S. with $X make continue of leverage. total the in lending commitments in we further senior We've fund raising the LP commitments our In new strategies, progress, billion $X.X billion from close $X.X capacity another the anticipate to capacity add vintage, and investment a direct

size another million quarter, billion during fund European Our commitments billion. into X.X XXXX. and anticipated XX EUR quarter. in lending we sixth total in commitments far expect of later With facility the thus previous EUR and our has EUR now fund capital. the final fund fourth XX equity for close raised investable with leverage, leverage XXX the matched the X.X over And We've of direct the a vintage, in over EUR essentially EUR upside billion a further equity this billion first closed new

X fund. the months with XX% initiatives. Pathfinder by team tie-in cap its fund interest and a II predecessor charitable II carried XX% its and will billion The to total Pathfinder whereby a education least fund, first be almost close. fund as $X its October, in And hit final donated held with health of global predecessor was at is in structured its and received unique Ares The after target. only support surpassing the commitments, larger hard $X.X close billion our than

total U.S. million charitable fund previous $X funds family $XX $XXX equity have commitments real To Ares in bringing raised to another the approximately billion, We the our opportunistic contributions. result Pathfinder generated estate commitments million exceeding that of vintage. equity date, over fourth in would returns for

billion most Within estate $X.X billion. we in equity, assets debt $XXX raised real real QX, of we we'll private estate, continue another XXXX. also to fundraising of total commitments $X.X in throughout and strategy, our and during million Within raised equity our bringing European debt approximately commitments

fund we the predecessor Estate commitments, of which size raising latest of the final secondaries, which the fund, the We was Fund a secondaries affiliated held to now matched top position. estate for have our us puts great vehicles. inclusive secondaries a close market market co-invest In largest closed fundraise the largest This in date. estate Real fundraisers, $X.X IX, real X billion real completed in

continues decade. acceleration management we distribution here growth the see wealth is within area and as see an starting the attracting focus, to an number to of management of sector in products channel growing set of Fundraising the We're next a significant be [indiscernible] potential partners. over wealth

billion we $X.X the in fourth commitments. quarter, equity For raised

full we to commitments and According in public in nearly managers alternative to year, ranked data, overall equity XXXX among fundraising share raised gain difficult $X debt and including were commitments. third-party in billion management industry were wealth For billion, the able in $X.X the we the a we environment. top X as market

had carried into million over the strong we wealth as for largest X January over momentum $XXX inflows, Our month our products. totaling across ever quarter our fourth has in

year. fundraising in to efforts the Now after past XX the months, half of first in this our infrastructure the we're see over increase materially international place also set putting

on through walk few products. me Let an these update of a wealth

commitments $XXX And January million European during million nontraded fourth closing the $XXX raised ASIF over BDC equity Our ASIF X. nearly quarter. our raised in on equivalent

During X strong raised January, underpins the wealth for million in funds additional an in continued aggregate, fundraising $XXX expectation during our channel which XXXX. these the

the APMF, over house fund significant first quarter. raised Ares seeing in gain wire on is Within $XXX fourth a with launched momentum. we're roughly ramp now the our to and And scale million Fund Markets equity, in in today, which private Private assets million $XXX or and in its continuing September

flows Both market $X.X REITs funds QX both for REIT fourth net combined full in outperformed and to full the as basis. than net nontraded more billion a X $XXX year raised the Our on we and nontraded positive overall million the year. generate flow meaningfully continued the quarter for

is business. area high focus Another strategic our insurance of affiliated

its the target in we XXXX. AUM track with nearly with by doubling beginning on Aspida $XX end in the billion of year. year billion finished billion last in more our at of $X AUM remain assets, than the $XX.X And of

quarter billion, Aspida both and has annuity our deployment in had $XX returns holders attractive for equity operational and very scale quarter the We highest achieved on totaling investors. record. is fourth Aspida now second strong matching generating

quarter the continue investment groups. alternative performance will be shape. portfolios in quarter increased nearly fund third our across Fourth XX% and credit group lending direct excellent but over driven discuss U.S. the strong by results to detail, more European our credit from Jarrod in and deployment our

to We our segment. And continue see credit U.S. acceleration EBITDA Direct portfolios. within in to year-over-year Lending growth an saw private strong EBITDA across X% approximately equity and of we our fact, growth

of defaults XX% the at have continue end Our debt corporate lower-than-historical year, to credit invested to loan low value. senior than and levels which the of portfolios, in more were

to allocation to housing global industrial XX% similar sectors in with the sectors self-storage. of adjacent multifamily portfolio fundamentals to continues student like assets, estate resilient performing best another in XX% gross portfolio Our in our real and and experience the due XX%

total AUM. our underweight of than X% at U.S. We're X% about real meaningfully of in estate our office and less portfolio

estate real in the estate a real York. million, has asset leading recently opportunistic $XXX special and teams office capital seek The increasingly in has in scarce. and JV Our New with of we'll York opportunities as distressed in venture class and joint become to owner buildings commercial for commitments invest a high-quality investor New formed

And now commentary additional and to the I'd over year. our like the outlook Jarrod? call to our for results financial Jarrod turn for on

market we AUM and FPA Despite deployment in everyone. fees, fee-related hello, nearly key earnings, management year-over-year including and double-digit and Mike, event. a metric, Thanks, growth experienced difficult backdrop financial income, monetizations, for every realized

XX% Our deployment increased strategies. global management of driven alternative our for and year quarter our within for both and capital, primarily credit invested the direct strong the lending fourth fees especially by full

that FRPR totaled from In XXXX. XXXX of million, the an the $XX of FRE fourth quarter despite in funds FRE increase XX% fourth from steep a million real in estate in quarter, decline contributed $XXX

billion For FRE increased prior the in first for exceeded the $X the and year. company's time from history full our year, XX%

generate nontraded impacted our our not FRPR partly Of was expected. course, the did growth REITs from by any that FRE fact as year-over-year we we

increased specifically ago. little a Our the a from provided XX%-plus FRE, REITs, of XXXX, nontraded our that real excluding guidance ahead XX% estate we over FRPR our year

a remain differentiator again than income key FRE in earnings realized Ares our XXXX. for accounted XX% as for FRE-rich Our more of

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

quarter, fourth XXX we've year lower core FRPR, ratio discussed was comparable the was contractual for basis margin to margin the has due a past, compensation margin Excluding a our which XX.X% in the FRE points versus ago. up the which

continued $XX margin available capital over raised and over our as With balance $XXX in billion, we of billion deploy we to see XXXX expansion capital. an expect

XXXX. core roughly continue rate that FRE goal We our we're to to track of run reach end the by XX% believe of margin on

$XXX was Let million revenues performance or into driven in of spreads call. conference totaled guidance In part movements tighter $XXX the from well FRPR. to last positive about this currency our of quarter's as the which loan higher-than-expected XXXX above result totaled FRPR me high end as by of credit $XXX turn to XXXX. year-end. provided fee-related the group million, a quarter, A FRPR $XX compared on our as million million in was we credit fourth outperformance large pricing

APMF, our generated of product. FRPR secondaries in our remainder was a The group retail-focused from

We and could are excited momentum for contributions scales. the to see as the about FRPR APMF growing fund

not XXXX. in Fundamentals during FRPR funds As generate make real our And returns need FRPR. however. across will and XXXX these AIREIT both nontraded from AREIT earning any we estate did mentioned, I negative REITs for before X remain resilient, up to

We will funds rates see interest need moderate can rates FRPR. stabilize likely these generate cap to additional and before

reason likely in we resume opposed XXXX as nontraded REITs that FRPR XXXX. would this it from more alone, the is For to see X

waterfall in European-style the quarter funds. with Our including realization compared net significantly income million million totaling performance $XX in to fourth QX of $XX quarter, realized activity increased the

nearly net funds. from income For XX% realized performance European wire our [indiscernible] came year, full of

performance In on XXXX, $XX.X fees, incentive perpetual up income regular from are we incentive a net in occur generated $XX net from from XXXX. which addition, in basis we not also non-European fees, funds. style realized realized million that income performance from derived million generated In

for for $XX realized common be waterfalls vary as quarter's talked million but XXXX, quarters time quarter. We're they'll into are to the exact and last within estimate received fourth recognized most second this before, European-style forward was waterfall fourth As in a about [indiscernible] given pulled I the net larger style quarter the can with relatively typically performance that reviewing horizon, amounts. income which about European

for expectations in are of more $XXX or European-style $XXX years we from amount, million waterfall XXXX million performance funds. and expect higher X the Of our modestly income next approximately said, with this XXXX. $XXX in That million net approximately

we're term, of net long life the raised. these than of funds more $X.X [indiscernible] European-style over Over targeting realized the income billion performance

March of activity timing on the early levels. discussed, transaction have recognition we on fee -- depends As the partially

the amount net our waterfall to particularly AUM was nearly incentive-eligible the AUM $XXX private excess XXXX, of of credit million In funds. by EU-style of growth this hurdle compounding deployment rates higher floating that balance the million of and rates, incentive-generating fees and in increase increased XX% The of funds. driven performance accrued in yields of to $XXX an our with our leading largely

from $X.X Realized for totaled for income a record XX% a income full $XXX fourth And realized billion, the million. exceeded the increase quarter year, XXXX.

year, to income from tax granted the year by benefited to realized our of tax full deductions rate were XXXX, of this on of our our the For IPO effective options exercise are year. related on employees. was Last options the XXth set the X.X%. anniversary expire we IPO These as part and

result, significant income of amount in with unexercised. the effective on recur. normalized XX% Therefore, to associated realized tax a trivial our tax accordingly, range more rate And these only XXXX. in not options anticipate deductions we will a related to a XX% As be of remain an options

driven growth. almost As and was AUM of the over up by billion, entirely nearly year year-end, previous $XXX our XX% totaled organic

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

capital billion. totaled $XXX.X Our available

nearly management for representing million AUM incremental over yet have we available potential in $XXX future not fees. billion of deployment, fees future So paying $XX

portfolios Mike continue perform well. to As very highlighted, our

double-digit For year, the our direct and opportunity lending we special full in strategies Europe our as in strategy. returns U.S., as Asia well experienced

and estate, real with by markets. Within return pressured rate strategies valuation. real interest single-digit cap performed delivering a higher expectations, in which our In high our in impacted were line volatile infrastructure assets, volatility, returns rates

However, well we once rates property to we strong positioned fundamentals cap remained the underlying and believe generate resilient, performance stabilize. are

multifamily rent and and portfolio growth. new industrial the our XXXX, our positive on a to in rent portfolio continue XX% lease renewal see growth saw example, rates, For same-store

go-forward with level. fundraising anticipate comments process, our and series on of significant large our strategies. X We on coupled with outlook our launch year or will dividend that and some effective as stated new Mike Now let our momentum additional me fund closes continue provide our recent this across more fundraises earlier,

by fundraises insurance, management our larger co-mingled vehicles. open- these from funds, and be other inflows supported and SMAs and wealth growing funds, will expect We smaller ongoing closed-end

in of to our across in expect have different market the strategies funds we fact, XX XXXX. In XX approximately

unlikely of of by to And AUM we target will that strong it match in another we of be already Although be well our $XXX to pace billion year. the we XXXX. XXXX, it ahead our the reach expect amount raised are we in end

activity fee-related trajectory positioned that market pace deployment if mind in for we're Keep amount than With strong. levels our earnings dry a on remain more is powder, rather the dependent our well deployment higher fundraising of activity. record of

our a for significant our to at This Based fee-related to the coming year. relative outperformance dividend. year, leads set me level our the our beginning and each our earnings on fixed At of dividend increase we've the XXXX. stock, quarterly per strong on of quarterly nonvoting elected this compared A to Class $X.XX XX% for growth dividend common a dividends to FRE year, company's and to our prospects the increase share we

we Day public on an provide Investor to of continue anniversary our XX-year And business Exchange. growth the through XXXX. will on of on we per we'll Finally, I'm XX, Investor goals XX% another with more listing be that Day announce our to that pleased track our the or and of New At dividend share on FRE objectives. York update common time, and with coincide guidance XXXX hold Stock to May

I'll the over now back turn to call Mike.

and believe a a powder, record that well ahead Great. more strongly outlook, amount investment portfolio. we're and performing diversified for the market year Thanks, promising more expanded Jarrod. dry we of In a platform closing, very positioned with an

that vehicles across we've to platform strategies, business. new to more personnel, beginning years investments The the and few over past contribute the distribution new made in new our new meaningfully

our insurance, in Asia management, platforms. wealth and momentum Ares seeing example, For secondaries we're infrastructure,

a our brand companies. prospective business relative the fund strengthening our for our deliver assets to is investors, our also efficiencies in strong growth to and and better be is portfolio performance differentiation, come. years source in to Collectively, further create fund under positioned with continues management investors drive Our and operational returns of

And to growth we're generate one meaningful as strong prospects reaching European Jarrod And our and mentioned, for poised when I'm continuing that our is I realized and our we're waterfall our the work so point I'm our the people appreciative hard believe with the dedication of FRE you and investors' of that as now culture. across deeply income employees differentiators ahead. support globe. continue with to greatest the for combine proud inflection grateful our in years our of our realizations, also company. always,

And think questions. line open with that, operator, I now for could we the

First Instructions] [Operator question from comes Wolfe Research. Chubak with Steven

I wanted with So start one off to alt on just credit the outlook.

expectation credit. Just some down, end that alt Basel watered get get on I could III opportunity deployment to perspective was in hoping your game proposal the given

specifically? still you Do areas hearing despite your bank some in substantial that partners like trades what and see And ABF are red cap opportunity potential you of a softening? from

good credit. about identifying it's Yes, in talked before. think, opportunity in were question. the a Obviously, I We've this growing early, we alternative

I people right important cyclical. now secular so with in happening think it's things private credit appreciate that many both and like

the a grow is a GSE. nice the that given finance So trends us And much we been has larger secular trend, the alt market-leading the call wave apparatus wake intact smaller what for in backdrop more the credit first street with to and of last post business the companies the very a the in securitization formation has there. capital of have the of the dismantling driving proliferation on lot of and think years XX GSE that started been actually it,

banking that's is partner we to Basel I last saw generally of area them with cyclical navigate in largely a of exclusive sheet there balance emerge alt obviously, think challenges. of but focus. sector in accelerated early some the year, III challenges all Obviously, an business keen And been area credit of some focus now an the our their help that not banks with and opportunity, to

a continue III We we dialogues are a that on resolution We that call think recent those I about continuing. we will that end game. the And talked the risk did regardless sizable And public did with of ongoing they on transfer about side. trade transaction our were last Basel and of PacWest. actually partnership

there coming structural. were repositioning, restructuring think get the learned I out and I we in sector you're we think the banks, rethinking of go of going positioning. And of partner ourselves phase as what lot balance as a through and that. to them regional, they struggles And proven sheet sheet just once first past largely this a core we regional for GSIBs balance businesses super have and put out

continued think very deployment. in continue. I'd over So new year, spill it's a credit. and seeing that level that strong We fourth into I -- expect the it alt well quarter We're for had activity to bodes

to That's constructive of increase of hoping great. the comments some follow-up, the dividend the for Jarrod, some on into especially FRE was of Appreciate all in and of dig made color. my And deployment. drivers the you I and light

the magnitude to increase, normal FRE coming year. XX% imply close of does the the Just given payout, a assuming creep, XX% share of the some it in growth

FRE wanted Just a expansion. that uplift. drivers for reasonable expectation of that's help sense a unpack of some get Maybe FRE to just the that,

Sure set pegged one the thing. out I we that but necessarily XXXX, it was to FRE we with perfectly when things match our back FRE. articulated And think policy dividend it of didn't we in

grow. So the to so we as FRE expect do grows, dividend

we've outpaced growth. the dividend had of years, And everyone growth I think last as against FRE knows, for the couple

And as is. the bit determining that so certainly, we're a gives tailwind us dividend what of a

of as forward, what what trends of lot we terms expect in And as us and FRE well we as of this seen a with the positive of saw some especially assurance we've the for so that the quarter expectations deployment, in in the expectations gives far setting look year dividend year, and we year. fourth our a

establish guidance that year the coverage generate provided, have to we of what we waterfall that combine terms some the you we in that. with adequate then know of And we'll that and EU for

for XX% historically for it's XX% or haven't X, our would not of what X pay a a out a and dividend. we So necessarily targeted ratio we

indicative And around we we it have well. So we FRE the is XX% growth feel level. more that of that feel like good as positivity or at

comes Craig Siegenthaler America. question Bank next of with Our from

ASIF. And with like on raised carries on So our is sounds one first million. momentum around $X billion last $XXX it that another It year. in January

I wanted on sit platforms on if And see year-end? could also, how platform many and overall, how ARCC shelves to to advisers? ramp give track record of today? So an be how you in And by expect important is U.S. European update the vehicle your terms us speeding up do many you with on long-term the [indiscernible] them

Sure. Good question.

clarify, in ASIF track $XXX to Just of ASIF its long the think at successful European counterpart, that and AESIF the do scale from year. momentum was obviously, are the that and million but both end we markets. Craig, benefiting strong into numbers the our to relative record building the both I public saw ] [

Obviously, to I that product. a think cycles, well look market both direct funds is compares through of early that, as leader enjoying you think and And I at lending the run competitor those having momentum definitely the if that that in BDCs tailwind. we're fundraising

and that are the expecting right only in the year, so and first new we one and closing excited significant of actually Europe wealth ASIF had of platform. One products a now August, reasons the in on both of partners actually add those throughout are are number U.S. to both we now, a overseas, in We Asia.

the rest as you'll we increase think the group dramatically get see I So through of year. selling that

or or partner. in there our result is well that And to good have add pretty expectation that, And X probably QX we as needless QX we'll of in that Similarly, fundraising some X on one say this year. should momentum. [indiscernible],

let looks me estate may you Mike, just stick liquids [indiscernible] that's AREIT. expect and reached with in trend have here the like investors inflection. real great. with semi an to do redemption How as And requests it AIREIT

from did potential you receive expect we they're also, X back to following redemptions sales just And weeks snap competitor how your guidance a major then redemptions, ago. currently do given on depressed? that quickly in And positive some decline

in was this we given REIT the our nontraded difficult some and remarks, a in peers. headwinds the the prepared performance year conversation which some Yes, relative XXXX, of our with product of think I rest we're -- around and pleased just redemption the quite said larger performance of to

of quarter had But if the and look throughout we REITs, year, of the the you the is flows an performance actually at which think in I both outlier. positive

I those combination that's of funds. a the positioning of think

terms are unique of XXXX There is little a in less are I some attributes think leveraged. our stickier. product funds Exchange that Those

reduced of into but flows both sales products. in those having So net positive we're seen going having XXXX, obviously,

that peer my performance would interest rates of like And cap expectation you'll to be rate to and we're bottom the up people on sales some there. begin as improves begin hitting pick see feel that

it's early. again, So still

that experience sales peer think But we January the are moderating would and a rates there. tell within see we'll Our that the where us moderated interest set I in ourselves still are accelerate once to get place narrative has redemption the well. as

question next Our Research. comes from Patrick Davitt, Autonomous

boom refinancing of for deal net up. kind headwind as first current ARCC are still volumes a The My highlighted the deployment is trends. could call back on quarter be first in question MA quarter picking

that as up. interest opens volume and new are are the market seeing you take how directing and deal you of ship guys in all vein, in borrower give seeing yield And and between outflows the at What that terms back [indiscernible] refinancing syndicated yet?

in will high-yield up CLO will and are on. active, that the and accelerating market machine loan of open will comments that the get There a want the banks the when interpret and clarify on because take turn how markets that commentary. I call Sure. the were market to is the made the in activity, syndicated more is some I ARCC give not would generally

bad volumes and not fees. transaction necessarily is a picking drive up, that That's higher means because an that activity to higher thing and opportunity there's

is have It's that that focus it's perceive areas the we at I middle people that part think the ARCC across a from on do important what strong very a continue very, globe. big appreciate the very least of to we market.

bit the from private when market, higher doing market a when loan, as growth in levels has of long share. this, time there And moments obviously, providers a of from come yes, the And at there's think middle then we've that the loan share lot gains up. activity I And the credit been And little is heal, misunderstanding as markets a syndicated high-yield are closed. pick end the the can take of market.

some But peers, drive order are growth from dependent we markets we've to transfer not larger a our to that and on the of performance the seen. in unlike market liquid continue of share

on I of to of enhanced levels activity think, than the back deal clarify, the say and writ large, right significantly now the I So think, a is commentary, positive would more I negative. a market turning of

I unlike be markets what liquid significant, are price-driven. is lot markets relationships. the would of that There A private tend mitigants that call in the to to refinancing just just

So for of example, XX% critically our incumbent is deployment That look and to at if in of relationship portfolio. in is you XXXX, our the borrowers. protective actually XXXX was deployment, important

And you refinancing look flowing is instruments, and call even find at into fees, cetera, a exist private these are then market. way as capital of take that et the amount when upfront of liquid in protection, the the to into market, the credit economics spreads tightening their while

market. positive. say actually a here as think good think seeing I net today, that's would a increased transaction I activity, we're And We're liquidity it's thing. So I sitting more generally

I'd as liquid one return I looking of on Ares to credit think don't some liquid highlight managers managers largest the the is normal we're that CLO the heard business. markets at bad that are I yesterday. well. call and for credit in So a the the commentary we of also

a that management market big as beneficiary the Ares opens well. we're from So up, perspective, as

could U.S.? versus Great. any a tracking quick lending follow-up. these of seeing data we And get U.S. on But the ton European we've on portfolio? portfolios. you versus how could detailed portfolios little you strong that Obviously, been U.S. are outcomes the the the us portfolios direct a Are diverge give seeing in bit signs detail more then a

It is remarkably similar.

EBITDA at look is year-over-year ARCC that you X% portfolio quarter. for about from the in quoted growth prior accelerated numbers the If X% had were an the that EBITDA

actually amazing, If growth was XX%. look funding, direct which the EBITDA you at year-over-year European is pretty

XX% LTVs versus XX% the in are little X.X Interest Europe, of range kind higher X.X. Europe. bit bit in XX%, a higher. is little a in in versus coverage They're Europe

seeing right we're EBITDA articulate largely revenue take of resilience you if portfolio Europe they're surprising different and the credit exposure, momentum a amount But to and now. just in fundamental the of But within all similar. ways

Ben Our question Budish next from Barclays. from comes

Ben This for Nick on the line is morning. this

I the is continue the remarks, X%. the rate historical low. on noted believe to -- in nonaccual Kipp earnings rate call nonaccrual yesterday, the prepared remain nonaccruals ARCC about So

to So line there's kind think almost average the will we stay been historic normalized for the of direct lower nonaccruals you kind how longer? of nonaccruals think portfolio in reset where to for macro backdrop about do return about X%? back a And

question. It's a good

and I see definition, defaults, that rates the uptick the will which I longer, just bad assumption you well, articulated think backdrop higher will it but necessarily think Kipp by a is stay thing. an not rate for given that's in

improvement people private to particularly in terms leverage the on structures. a amount trying structural subordination is And market credit the keep we of these what capital the focus in equity in market, lending the lot of of

there's And equity protect private about the of at value. so bottom to at of look to equity dry you the lot of powder with capital sitting trillion value $X.X trillion structures look market, XX%, of private if of the or $X structure a these at loans you of XX% when

And so by that some company prior a these to the are where cycles you companies underperformance of at rates better fundamental were able more They're that the driven part nonaccrual, I even there's you of think unlike seeing leverage. have of performing level. many higher access are being is what for if

that the a below are capital places coming they're terms lot private to protect of and first in those amendment. also the sponsors in modification resolve, And from But you. to value easier both equity the

is industry the we running say higher would obviously are. than I

that think at to a economy standpoint. credit we're continue to continues strong. from But be The outperform peak we rates. I

level, don't stay I this a So up expect would that tick rates to going to little I but to bit, that historical think at levels. if we're return

Our Goldman Sachs. next from with question Alex comes Blostein

as wanted on about for the Luke is sense in of liquidity industry. in? trajectory credit. what the Alex. a the This of you how across for of the the dig state to of growth can outside of to LP growth if outside business? we alluded for into do And thinking factor get business I key How that particular, you secondaries you're view drivers does that, And

a we bearing And are my both terms business a of diversifying time distribution for now lot at remarks, No, obviously, long the very significant channel, those in fund been investments, geography. fruit Sure. class and structure, highlighted momentum. asset concluding I in have have of as

Credit So as business. of It's host here, the around of the a credit illiquid and right? capital thing one well our is various not at look strategies liquid globe structure. at parts

way the think at is that are significant people the we businesses the are like across spectrum. performance the structured you those and credit many these stacking, that have funds that way maturing, we still while feel And growth look if

secondaries all infrastructure estate whether piece interesting dealing fundamentally over real which these challenge. everyone you of look and if is the sheet same an performance sheet of because on liquidity right balance is at balance it's or an a asset, a challenge, or comment now, with a buyout the It's strong of assets, levered

a hiking minimizes assets for in how we're but of the of problem not the case and time accelerate market owner companies and kind way the lot the and when use so to for very that the And same rate through other the that you It's in expands runway the going in we're in. these do side first market time just these long every into of to cycle businesses the duration bring or transition, of capital a out asset get to it. dilution, a is

in and we're of equity, through where could kind some making we're lending, we're debt coming come could first where number opportunistic doing It taking be It secondaries. through could It business, where a second with be any then be that's loan. our direct And minority lien or could PE, equity restructured it of investing. forms. credit

growth thesis growth are this And in markets being to and I primary by dramatically secondaries creative in So the for growth driven solutions secondaries, seeing cyclical cyclical. the for volumes is need the up the landscape. across the again, opportunity resolve global just secular pick the Secular pretty we And base. installed investment is think on basis. a

we stating are have equity capital think funds these origination maybe think given I corporate relationships real cost advantage. And really of uniquely these be situations positioned credit in And estate, each of assets, and real come the infrastructure, have our markets, the of good and given the just that we a we into and that GP obvious, at could private I fact various depth provider. strong in a really solution

So we are working hard that to continue to in raise business. capital

real a about, for leading talked very successful had we fundraise we estate practice. As our

fund, Our into opportunity. PMF, the is scale which our continues nontraded to

of early growth in meaningful very having business. We're credit secondaries our success

growth to and new enthusiastic the actually acquisition and an market. in capitalize the made transformed into we're market on about interesting ability really So we've it. And and our it's secondaries of opportunity example a that a repositioned

secondaries. Again, I into some think try I market full to be it's set resolve to [indiscernible]. But coming be just of product that's to going this the it's think these don't to going

Sure. if to detail. guess I my was Understood. quick. That And the great. appreciate we turn all follow-up credit real for

rates Or a rates With from interest lower fundraising? does above which the a outlook asset it a the headwind some of you attractive think class at more at lower perspective? with LP always become level LP for spread in to an demand least a potential of base there an relative make today, is it And shift rate perhaps is do where environment, how about credit?

Yes.

the your that I these the equivalents. our market think return be you is relative excess markets the own mean in available public investor I question. base experience would to buying answered

changes the exposures. this have But rate of buying investor not ultimately, in we phases management. prior. They're active lower volatility. or different nonbenchmark cycle They're They're seen demand buying through buying

demand. very The down. time, haven't they impact We've go rates they up, been this long down, and balls go seen really go investor go doing and on up, a we

point institutional we're of while rates And these I move retail. think expect still exposures going to as wouldn't that most I development a they see in in both becoming core at flowing and markets now we're they're out. the growing, that are capital investor portfolios,

come One to that increased it TBD. access could spur differentiated but that's our ability because rates demand argue deployment, of drive down and just to maybe could if continue spread,

Our from Morgan with Michael next comes Stanley. question Cyprys

the circle activity strength to on continuing to nice commentary your of Just quarter. sounds wanted deployment. the into is in quarter. It's It for pick back you up like guys. continues the growth to first Pace some of

of deployment, how some on backdrop you expect hoping elaborate could seeing you you're in was I of strength deployment the here areas to 'XX biggest relative where improvement take shape 'XX. the So in to the

part Mike, said. again, good of what business I'll just Every it's right And reiterate has the I now. on a just question. turned

little capital at and close our But year, of was billion of billion capital, we like a in $XXX a have $XX was in argue most deployed down XXXX tough look over would uninvested may deployment, which a deployment people We what sound lot. $XX billion to that from if you XXXX.

guardrails kind we depth So and I are of the know now capability what have. the the of think we platform set that given

If which about you look QX at against 'XX, $XX billion. specifically, billion $XX QX was

prior, So had we strong typical a year I seasonal a pattern QX well see. that's as think and we that

optimistic is of half first at that's would about given think, others year. at early to it higher be the But the causing, to least it than going seasonality. and normally like feel be least QX, in And us feels goings, the activity I going into

we're with a is credit, that lot across market is I PE a said, But for a in of businesses because needs starved coming capital secondaries, institutional into doing equity really our really board assets, it's solution. real each of a what base the installed of that across big like

we're year-on-year different consistent what as quarter-on-quarter. pretty And but we're seeing. off so cycles even pop It's the I a page, again, board, rates -- really and or because X jumping deployment standpoint normally, talking which the will not wouldn't unique really it's Mike. quite setup all one the They've been out, highlight when from for economy, outlooks is or businesses or any about X across that's

Great.

about asset-based taking And on set you're add talk you 'XX? could the you market Ares? question you'd the parts see capabilities, in biggest I talk in more to to see opportunity particularly about specifically where was ABF follow-up which that a fixed the hoping just more opportunity finance. steps of Maybe for asset-backed expand, you Just space. do here finance, like

to is be. And in going I the opportunity Yes. set have always hard where It's of the in happening across largest probably various one to function think the a mean finance. market. I of asset-based we say asset what's capabilities the broader it's classes

that talk in-house But and the across I I market, it's management between the few broad of platforms the capability dedicated and the we the origination important we finance waterfront. meaning bottom sheet. of that asset-based noninvestment-grade one of think structured we about of side and are the are the products differentiating balance investment-grade when the half has think portfolio that side And market

part largest And the the, market. base and I would capital nonhigh of grade have the think team that I the call far by against we what

So in the some growth space. of our will continue be peers have appropriately of high-grade part the there articulated to

We as well. are in participating that

noninvestment-grade will of there in leadership real I a advantage growth there. we have market. the part be And think I think continue to the And

question Back about banks risk we and just are fund transfers, portfolio risk transfers, to earlier finance. acquisitions, active the very liquidity partnerships, and on

of market, things are the I banking I'd right of now, say, that coming All the are the would in transition continue. and prominent to that out expect

flow of are probably kind that's saying getting where much the we're So function too structure, would with where to because, again, a of the our say price and is of we we market which always into find seeing that's opposed without that, counterparties. corner biggest I maybe of attractive detail, amount asset-based as

Our comes with Brennan Hawken from UBS. question next

in FRPR. to on Hoping drill

that's it momentum, like the real So message on about momentum in the got good feel secondaries you and estate, guys sounds hold. and APMF clearly

how about FRPR thinking be So should credit? in we

as year-end. seemed tightening though the in It spreads

not on. probably we something that's So count should

to should sensitivity that forward is cuts see rates? and of how an we FRPR And had? it quantify out curve if rate how much the So the plays we impact then policy to about lower possible thinking be and

at not Overall, the it's the a question. is end certainly year here. with the But that, that benefited that caught Sure. I of the the Thanks spreads and and you think component. us for component, main on

rate the been is aspect year. which has which it, tailwind of for -- The big interest pretty main does component a this

terms reset that we is X year this there these have into in a looking Now that every the because about benefit lag on rates advantage average actually happens months. on the of we interest

increases still rate impact So full felt necessarily the across portfolio. even haven't interest of the we

the rates that declining, way the So happens you occurs think impact that that interest as about actually are as there's till lag on good, same well. it lag a

overall impact on So an doesn't have a rate the interest reset huge actually balance.

well. or and That levels stayed not that if the and as rates but rates same. balance, rapidly expect raise do spreads at FX funds were stayed we the could and essentially interest the same would basic essentially would same continue significantly we cut near We with base essentially be be if similar to

can And these to increase so those we the us and opportunity within vehicles, funds SMAs earn as raise perpetual capital does we amount give that well. the that as

that Jarrod, rates I effect that with fee would down of come also add, that structuring rates lag that means usually lagged the declining. and up vehicles those be about generate picking as effect and talked of underwriting flowing FRPR to a earlier, we through transaction as some contribution activity an would is offset

on to like the up would I Excellent. competition. point around follow

substantial pretty market a risk. money aggressively we is why the think [indiscernible] private have don't and addressing were seen But to grow moving firms credit offering. the lot you of raising you Mike, So clear a in

from competitors? why that what's spreads that private view spreads all piling from how potential space increased the do impact the the is in? -- and So capital you into for it coming your And competition on expectation other

of you vocal I and been I've think that pretty capital and on have signal of new noise amount credit. of this, the the kind through private the in distill terms into to entrants

every the markets over annual last rate growth the at in growth it's folks same important, years, basically as XX the participate look market So at first, other if that you private compound grown in. it's credit

just if it It in it's look hasn't -- a grows outpaced grows linearly, [indiscernible]. different so actually But growth, actual at the not you way. it

you the credit supply private markets private across and the private credit a demand. credit are you the structure of users If relative of private there's of say the significant institutional equity credit owners, at the look biggest shortfall still that to spectrum of

example, an private about maybe trillion I mentioned $X if powder as dry the in equity you against powder. of just credit dry today So equity the $XXX private of billion as private use market market there's

against private installed XX% private got the you've base. credit raised equity So

to capital and XX-XX $X see similar you real a that's private equity need in satisfy that been credit said estate. see And just raised. formation if roughly And you debt trends of to private infrastructure trillion emerging to capital you equity, the

plenty of for room there's growth. So

highlight, you Third, and hands I dollars that the look just of get deployed been consolidation and incumbent of has a would is few if are raised That preponderance actual accelerating. case. trend the long-tenured the in lenders. the at large numbers, That

the on at in teams And ability scale and environments in forth. the broader meaningful invest have market better credit, globe, and flexible drive to the in different to benefits deployment to so private around capital so there ability and originate are to origination scale

you we're private increased. are of look raising in that has people So yes, the the at their if number credit saying hand business, that

not But that not dollars where regard look high-yield the as about and at I different. the flowing dollars if the And deployed, market, I've are to getting and earlier the competitive with you talked dynamic syndicated is That's challenges that do think of loan already of market, in the building have part origination deploy to there networks place have the larger been been market. some advantage easiest liquid new entrants that the XX entrenched last for in the taking years. the

larger that lending you the just you will the than market, is in landscape middle But think most AUM. alone, last unchanged. in deployment the total managers at middle if billion numbers look core do And $XX credit business, quarter fourth look we I that market. deployment, for did deployment is business which look we direct articulate there core our be if of the pretty at our than the year, And at competitive you private tougher

to competitive well the but all -- continue execute I immodest, given we're advantages And to do we'll think I don't we continue to So we want sound have. so.

Our from KBW. next Brown, Mike question comes

could as answer with a in question. really handoff and in be same X again, the is markets is on relative case, credit X just that if by rates FRPR part that Maybe your and offset the down, business? I'll your So the Is that terms And for greater magnitude? capital X come structuring the fees to timing start that quick base fees? of follow-up

for first of lag. Yes bit there's a again, But question. X in X, a of part that terms to the of

current for little interact But that against together. a to activity to macro favor. a it ticking bit interest backdrop your X. to close that's going a a they're with up end pretty can allows higher in hasn't reset you rate X that generally, more yet because actually could transaction They're So be tailwind

on target. meaningfully you Great. Okay. surpassed billion then so Pathfinder And your II, $X

the Pathfinder the the for hit term? hard to What long II. You market You're potential in is there. cap back quick, strategy raise this

progress you of be could largest enough fund there vintages, the As through one such your are that strategies this opportunities that? over

I or would yes, I I any for businesses say the cost to you're of again, say or these different different clarify needs is funds just market, parts So of borrower geographic capital sure one as but we it's make think of credit have scaling that private things, families, should of that that right? would the important different you nuances. fund whether

of a has next But for example, that So performance, a lower scaling good the I Pathfinder with II, Pathfinder an of That will open-ended family is different fund cost and been with the in and scaling similarly invest market. good the part core has would expect continue. well sitting ability capital performance. to is to

business. have that obviously is alternative scaling Aspida the with our AUM affiliation credit within We

have and are number third-party a growing. SMAs We that partnerships of insurance

here. is family whole we Pathfinder that that just growth and think it of growing funds, is funds won't the But one see would the clarify the of It's the to be within So have credit surround to alternative just flagships. I going it. you of biggest family nicely, that scale, opportunities I continues core yes,

the I any Arougheti to closing for over conclude Mr. now turn That of call. does the will Q&A portion the call back remarks.

speaking don't we everybody's support next Again, we have And we interest. I forward appreciate any. think No, quarter. Thank to you. look continued and again

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

day. dialing Investor XXX the replay archived will XXX-XXXX the today's any by our callers a international on website. of section an will domestic (XXX) you, located to of callers archived conference webcast this homepage XXX-XXXX. also by be X, part to Resources of link call, call available Thank XXXX, available If replay you great and be missed An through March on dialing have of and the X