Ares Management (ARES) 1 Nov 242024 Q3 Earnings call transcript

[Operator Instructions] Welcome to Ares Management Corporation's Third Quarter Earnings Conference Call. [Operator Instructions] As a reminder, this conference call is being recorded on Friday, November 1, 2024.

I will now turn the call over to Greg Mason Co-Head of Public Markets, Investor Relations for Ares Management.

Good morning, and thank you for joining us today for our third quarter conference call.

Speaking on the call today will be Michael Arougheti, our Chief Executive Officer; and Jarrod Phillips, our Chief Financial Officer.

executives Q&A today session. several available will have the during also with who us be We

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

of nothing results actual any and performance forward-looking an this Please statements. materially, any not such or sell an that is no offer past Ares and to in interest undertake of or Our we differ future a constitutes call a Fund. Ares guarantee purchase also on an could update obligation results note to to offer solicitation

isolation we certain refer most substitute refer our to a GAAP presentation website for call, accordance which for to Resources non-GAAP measures this of the comparable prepared should measures third of generally our will available Please or considered the principles. measures. from on accepted directly accounting Investor the in as measures, During earnings in quarter with to financial not reconciliations be section

XX, nonvoting to for of to the year December on common our be holders stock, a XX% and Note common plan representing our of of quarter month. share an dividend that we file we same A XXXX, we Form declared fourth this XX. the will December XX-Q on dividend increase paid quarter per over $X.XX This our company's that Class ago. morning, dividend on record later The announced

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

doing morning, you're good hope and all Greg, well. Thanks, I everybody.

pipelines starting continue as our improving momentum, and modestly fundamental for leading transaction see portfolios. Lower are for During to coming in our as the across backdrop increasing we'll transaction up fundraising the optimistic have the cutting a third we're impact, business the market supportive to valuations rate our that to and investment positive over rates performance higher remains expected strength tone solid short-term firm, activity. activity see progresses. constructive, underlying quarter, transaction year real we macroeconomic the in the assets is showing of and rate-sensitive estate cycle increasing The more volumes

financial growth global year-over-year management on During the growth $XX fees, deployment growth our nearly XX% quarter, in generated including fee-related is earnings XX% highest XX% we growth quarter strong of across was in growth income. our second realized metrics, by supported in third billion, which and This record. our

deployment billion up set brings to be $XX.X should and XXXX year. record to This year-to-date a

nearly raised the $XX over gross year third are our fundraising. $XX during for best tracking also to With In of addition, billion capital have raised ever quarter. billion we year-to-date, we now

available and We're deployment over poised an strategies due for our and an record next the will that level strengthen capital deployment market to more our strong broaden future out of even across year. improving expectation

in our Our due and and real heightened that the fundraising strategies, demand including strategies. credit liquid direct credit, this success year well we're infrastructure institutional to as estate strong across as retail is private seeing in interest alternative debt debt global our lending, part credit investor

While reported and position believe our years performance declined market in our multiple private that long-dated X has through experience to market-leading a credit the cycles. for fundraising testament is straight, differentiated we

interest can interest a regardless of that Investors continue of return strong absolute in seeing We're equivalents to over the excess improving and in prioritize real yield rates. the market assets. secondary investments variety strategies of traded generate durable also interest and level

including gross in we new $XX.X In across private the billion raised third capital, $XX.X our billion than credit strategies. more quarter,

credit more strategies. Over the billion past in XX private months, we've $XX than raised our

lending III, the highlights commitments in SDL equity senior our raised in a close business: and credit on third direct the we In final touch debt of for To quarter, $X.X fund. third fundraising few U.S. a billion

vintage We will amount This size our of lending. is our approximately have double U.S. nearly billion second franchise direct expect capacity, the reflects III related of and including SDL leverage. anticipated and investment $XX leading vehicles in

fund, $XX.X prior this we quarter, also across our investments Fund, the XXX to $XX sixth date for committed currently well the to billion to has which approximately equity already LP companies. compared X EUR vintage. In third investing billion We're European total in XX Direct closed underway EUR of in third on commitments bringing billion Lending approximately billion

quarter, that direct ever fourth We fund the anticipate this this be close market. in holding final believe lending will fund largest a for raised and European the we the in

the and EUR billion way capital our X to on well well-diversified We of building a fund have than are more for called portfolio.

growing launches, new vintage close fund recently also the fourth first on our and this franchises. sports-related and around institutional a of and differentiated fund investors. number various demand for beginning sports, in later for strategy, both expect and including our the In retail to value terms and opportunities the products from We're access seeing media launched new open- of products closed-end investors seeking third of entertainment quarter. We're significant we special working

strategy we than team become capital. an is a partner to up billion, as around $XXX large professional the estimate in early pioneer a in more addressable trusted has Our globe open institutional and was to sports this continue leagues market, which

a and the our a $X.X Opportunity related third totaled U.S. fund for including to increase final the which Estate close brought Fund, the fourth for quarter previous XX% vintage. billion, vehicles over Fundraising Real billion, $X.X

the our challenging ability Our real in fundraising a franchise meaningfully we've reflects estate vintage and scale delivered leading estate for environment investors. performance to that real latest relative this

debt. real which estate by billion, real debt, from finally, over in aggressive competition raised the in fund European including value-add exceed increasingly debt the X.X that banks and $X.X see the estate our the totaling previous billion strategies less we billion. opportunities as strong we And completed During in to evidenced the in million estate raised real estate, risk-adjusted pace attractive our we quarter, the demand across for $XXX quarter, European continue are first EUR vintage, to with close $X on and we fourth real

seeing as We're secondaries our group, fund strategies existing across and strong new also launch we scale series. momentum

which For to and which product its a hold commitments, private soon vehicles to example, structured XX% financing close in launched the related $X will fund global seeks of provide solutions, with general on of The funds. first already is partners target. million billion approximately equity fund's we directly recently secondaries $XXX focused the initial

and would previous actively approximately equity vehicles the than our billion million which commitments related third scaling the also $X.X We're $XXX and more vintage fund, infrastructure secondaries to of in vintage. than raise shortly, expect fund nearly the or to bring larger XX% we

Ares' secondaries transaction is million momentum, credit diversified to significant business fund secondaries seeing recently a portfolio $XXX and date credit new Our also completed credit highly secondaries the of team largest stakes.

with market when for and our investor The promising is need a relationships more the globe. around Ares growing than X,XXX match the sponsor X,XXX secondaries institutional for area liquidity you

in with As many accelerating expanding an momentum wealth leader of channel you a and product we be the continue to know, suite.

private real offer durable assets the individual investors income, to delivering solutions globally. Our markets wealth and tax core exposure advantaged channel diversified equity

pace During is third products flows same we billion period in totaled the total commitments of raised over billion, $X.X the which over more semi-liquid year-to-date into nearly leveraging our products. quarter, the equity Through fundraising equity wealth over AUM, well last our quarter, management third Xx and including the $X year. than $X billion

management Including XX, fund, We quarter. September initial into a wealth continued over and the recently momentum in commitments management raised our fourth and has tax-efficient in billion raised September $XXX successfully leverage, through we've seventh core $XX launched an million which wealth product, AUM in October. infrastructure equity

in equity $X.X billion October fundraising to date month was flows our largest semi-liquid approximately our with lastly, And wealth products. across

on now banks, U.S. We make distribution gain RIAs partnerships. in and private platforms, meaningful globally. we XX% continue year see the across to and other our progress platforms We're past to XX our products distribution the continue wirehouses, up expanding traction

AUM have our expansion We're total, wealth from ago. over of year pleased from distribution year-to-date of the And is are as international semi-liquid of management XX% a outside $XX XX% billion which in U.S. with inflows wealth increase a the the products across we

our retail funds, total in from billion. vehicles and our exceeds from publicly $XX investors AUM networth traded combining the channel high campaign our AUM When

XXXX end with for in expect mid SMAs, while Aspida of funds wealth X/X year-to-date, funds year, public or total management, now capital we our accounted Campaign institutional full gross billion approximately funds of billion. and For $XX to above fundraising XX%. record closed-end the the range, have well accounted XXXX over raised $XX for

the inflows our CLOs and the and of fundraising to remainder more into than year perpetual expect affiliate. and along growing XX We of activities with funds funds active different campaign Aspida, for including SMAs, into our through consist XXXX our XX insurance funds continued

investing to Turning activities. our

and up earlier third quarter. totaled improvement driven This has year. XX% deployment gross the XX% our an in private issue higher this improved the for New quarter's to activity a last over XX% moderately quarter, net credit strategies, which from ratio for first from has

$XX lending, net with in quarter billion and of gross nearly companies deployment $X nearly U.S. we XXX billion. In totaling direct European more commitments the than invested across

breadth we focus the superior the segments. origination middle-market value of lower available an the core Given spectrum in those our increased of due on to across including market invest market middle relative companies, opportunities capabilities, and currently

We and our strongest our extend also with borrowers. leveraged expand our incumbency to relationships of many

existing U.S. borrowers our was our portfolio deployment third roughly these dollar XX% with commitments to approximately the quarter, and lending direct we During of companies. doubled

markets, on with to illustrates with we core portfolio relationships the the generate broader coverage and establish this our companies believe ability risk-adjusted focusing alongside returns and our By of and grow incumbency phases. our best-performing We growth middle in higher power can companies. their lower earlier can

of focusing the $X.X we $XX credit, approximately the team of that over in segment illiquid we compared and are to more billion AUM. the billion credit year. in believe nonrated manager an same than of in on with asset-based AUM illiquid an quarter, third nearly returning liquid quarter higher XX last both and XX% sectors, alternative investment a $XX we increase With largest deployed billion With professionals the the

us over digital classes required. been has with and team auto XX deep on across in to our asset focus buses investing in infrastructure is favor leases, has where relative value, residential certain Europe, enables finance, U.S. asset recently, Most in and management. scaled experience the assets, in fund capital we While on our active which and hone asset team

in A billion London. include prime mixed-use which GBP role our XXX preferred neighborhood our leases commitment joint Park, in for great couple for a a leading CAL $X.X is with examples and auto of venture equity Wembley million Automotive

with alternative to directly we including In financing team partner that the bilateral relief capital addition, to our basis Bank. with on a announced provide Investec agreement credit solutions, recent banks continues

we're of which CAGR continuing has over to asset-backed that and increased in the our important rated with companies insurance grade investment-grade AUM segment, liquid growth Aspida. partnerships our third-party though, past significant $XX XX% billion X We're a It's seeing to note, scale investment at through liquid years.

and originations third In addition, generate continuing flows growth with we to organic in in and strong quarter. than annuity the $X continues flows expect billion strong the fixed reinsurance more fourth Aspida in quarter,

Within and the a strong are horizon. activity, rising performance we on dynamics point real meaningful supply-demand promising asset inflection the at markets, with transaction fundamental

real on a continued sectors, which estate highest student we our the $X more Across was including ago, same single-family in year period with industrial, housing strategies, quarter, the a versus up meaningfully third invested rental. multifamily, billion than conviction and emphasis our

infrastructure opportunities to segment, our real I clean continue that on energy infrastructure the the digital estate, digital in transaction update see highlight before investments. industrial And an sectors. global we to a energy provide long-term Within renewable minute want growth to focus and our recent announcements, I take Infrastructure we and on related

and capital advantage and and than X industrial for more Over demand supply which of to manufacturing expanding capabilities past of in demand clean investment we've the the global base reorganization decades in rising energy e-commerce, take for reshoring, AI, reversing is the decade, globalizing trade. infrastructure chains, been the of renewable energy our markets

U.S. square manufacturing in For to over support suggest and energy expanded up And production XXX to hours reshoring X the next logistics manufacturing will instance, decade. that XXXX, of estimates by the the AI new the feet terawatt billion base. support of of need will require

led approximately small to the manufacturing digital X-Energy, company. deployment with in As Recently, for that developing $XXX by building new at existing or largest of the and and of as partners Amazon, investment and several seeking clean date a an both in SMR advance and safe, and in Dow Ares SMRs. round reliable example, investors Ares made Amazon financing modular power strategic along are economies X-Energy, the aimed such announced invested fourth is reactors nuclear generation X-Energy which growing a million strategic U.S. to the

enhance with but strategic I'd also only recently believe like of perspective, to importance real assets Now mix, business acquisitions our announced X profile. that reemphasize diversify our our growth which and will the we not

expand to for us X International areas GCP firm. The enables into our transaction critical of importance

region, within real our expands like in it strategically of sectors First, the energy. digital and clean industrial, highest APAC and Japan conviction in many infrastructure our assets Vietnam including important presence

year, growth acquisition Following of considered. and GCP far scale, have and in and we SSG opportunities asset that the XX represented strategically our International away opportunity record Point the in track last positioning, been XXXX Crescent region nearly evaluating managers the and inorganic most we compelling team

integrated Second. Vietnam capabilities estate industrial The our and real transaction Japan, Brazil. expands vertically Europe, into

market the businesses largest our U.S., we as of scale. value proposition expanding integrated players to globally enabling our while revenue LPs vertically one industrial participants new us vertical will in the and our believe capabilities these As other that to create enhance streams

Third.

existing complements and opportunities, and I on time management a believe gaining center business that We that $X with buying infrastructure asset at growth manager capabilities. that are a growing there And compelling while and more X cycle our International data which near-term growth the are in with just global development real we a significant these many focus billion pipeline, a opportune an synergy opportunities presence are potential. we climate presents, provides estate development GCP rapidly in

also this advantage purchase the have trends transaction across well as signed may billion Walton we're $X.X us is industrial-focused the real manager estate nearshoring opportunity. seen Mexico, that capitalize Walton take Street an an to supply Street to This with agreement on AUM team and XX. You chains, enables that in Mexico to seeing particularly market of positioned June of we

relationships their for Ares base other institutional there firms that equity firms these important our these long-standing will scale be provide certain a cases, private of the Assets both and that also group globe. of and client with team each of are X these products. addition had In in intriguing principles synergies believe with believe we the of we across us to great cultural estate fit. players leading one Clearly, the makes will real Real We

discuss turn in our to over call Jarrod? to more Jarrod now And the I'll detail. financial results

year-over-year more Thanks, Mike. everyone. gross year and In deliver income. continued than and year growth strong we're the for in and billion in morning, this to both and gross deployment. Real AUM and growth raised With a in high-teens $XX FRE deployment, already Asset record with Good $XX quarter, third we management tracking fees toward mid-XXs results fundraising billion

a or we not mix When you to us deployment amount $XX sectors. paying fees, combine in paying of billion European more this yet AUM future stockholders. in ideally return realization strong normalized and earnings AUM fees, a yet to with earnings potential, our of future AUM, and visibility we realizations state our record not have A many waterfall positions believe shadow capitalize on for FRE-rich for

Looking earnings, at revenues. quarter's this starting with

fees. of to $XXX totaled period million paying by of in the net an same primarily year, last the Our over quarter, compared net XX% driven positive deployment management increase AUM fees not our

along quota. from with APMF, which credit open-ended performance Fee-related will $XX earned crystallization totaled third from smaller revenues a be our fund, typically primarily alternative of quarter million, core the contribution

full our now quarter annual anticipate alternative be the year core each and we first year. third an this realization from our significant will This credit of open-ended occurring crystallization represents funds, in

We continue the the majority group be the crystallize fourth to managed our credit fiscal most annually as our accounts the realized of at of FRPR of expect year. to quarter end separately in

rates. December be in and subject from million million changes these $XXX net total value change $XXX in revenues we're as by group foreign based impacted range our The exchange XX loans to in remains in point, return these for quarter. $XX on this could in of forecasting the of credit the At are to million and spreads and fourth movements performance amount through to a performance credit million fee-related fees $XX FRPR underlying

fees by increased Compensation about event onetime million fees, expenses, was Overall, of XX% were headcount excluding quarter-over-quarter the the $X.X related FRPR by from expenses driven benefit professional expenses flat and along compensation, professions. additional X essentially including lower with for year-ago period, compensation. consulting our Part offset higher G&A higher as and

strong We QX, newly distribution and in with office travel lease expenses expected to for supplemental York due expenses, start costs our growth. higher expanded fees G&A along to move recent related New up expect will our moderately headcount higher seasonal

on me certain from more decline management funds the raised. supplemental the wealth spend reflects distribution a mix the paid to fees, million, $XX fundraising international a partners. distribution management supplemental moment which on let houses wealth a distribution $XX domestic Now fees of are wire second from quarter Quarterly which million, totaled shift

able million compensation $X were discussed with distribution we have offset decrease Part the X fees a FRPR of expense We previously. fees the supplemental to and that associated through in

the fees our net and points. FRE $X margin quarter, supplemental distribution a points. and supplemental FRE XXX FRE $XX year-to-date of our On by the by reduced by million million basis During distribution margin have fees FRE lowered XXX our net basis reduced basis,

These triple same period the in supplemental distribution the fees than last are more year. expense amount

initially pressure the we earnings scale the assets supplemental these margins life management Although fees the fee-related channel, the and be of valuable. fees on in incentive and pay wealth that FRE we addition as distribution believe would channel, which in associated perpetual our very put

Importantly, expect these onetime greater gain we fees the absorption we as scale to channel. in

XX% FRE and the higher year, from FRPR. $XXX primarily management the totaled increase fees quarter, due During million, third to a previous approximately

in remained part the unchanged FRE due at aforementioned supplemental quarter fees. year same essentially XX.X% Our margin to from a ago, distribution the

we new For from is of lower along a hires. of in our lower a our in on distribution costs we the expect higher income quarter This part credit FRPR meaningful XX%. the margins the overall fees in in ramp the expected but primarily discussed approximately sequential fourth supplemental FRE total impact fee to compensation the and sequentially margin with FRE, increase quarter, total due

in interest XXXX do deployment of within FRE broadening full our out show growth we a of XXXX. margins number leverage we moderately our wealth margin improved across in higher can. anticipate XXXX strategies beginning our to driven an rates and to FRE an year, compared to With investment greater acceleration in the decline, FRE operating and expansion expect For by in a

quarter point As was realizations. the at in this quarter life we flagged on the waterfall in second fund's lighter European-style cycle, our third

since quarter, reminder, period yet in of accrued first full performance generally the funds, As in the QX third from our funds our split and for to XX% XX% recognized of we're and realized net European performance our income net XX% a in remaining between fourth harvest the and [indiscernible] XX% is approximately our with quarters. XX% not

our realized only net an million by In third from funds credit American we funds with generated waterfall. of quarter, mainly estate $X real sales of absence income, performance driven waterfalls, European an style that have and material style and

fourth we American European net million funds. income our the $XX performance from style For both $XX to estimating are quarter realized XXXX, and of million in

realized XXXX, net continue For European our expected the income. we good visibility performance ramp to style have on continued in

net $XXX For estimate between XXXX, million. income we $XXX million realized European style and to be performance

backdrop, our performance And style to well. a would American more we with crude better potentially income of of macro environment expect as recognize

For to expect performance our XXXX realized in style European increase year-over-year significant income XXXX, compared we net continue another levels. to our

income per third of XX% of $X.XX, the from stock the XX% up previous the quarter third realized totaled share income quarter Class A Realized after-tax and in $XXX common increase million, XXXX. a in year was

XX, $XXX ago of up As year AUM September from billion, our period. the was XX%

up the at $XXX year. XX% previous end billion quarter, of the AUM fee Our reached paying from the

approximately billion yet approximately end, annual quarter $XX AUM fees, fees Part Our deployment paying at not or for not $XXX any X future representing in increased potential to million management FRPR. fees including available

to performance billion. reaching compared this over which uninvested, represents is third increased income. $XXX Our potential incentive XX% significant AUM for quarter amount, billion eligible XXXX, Of of $XX the by

nearly from credit, real and quarter-over-quarter the accrued jumped our XX% income and quarter, equity In primarily appreciation across million, capital net performance income relatively rates to strong compounding above hurdle our private $XXX third assets funds. our

QX over Finally, group, from X.X% strategies. from strategy within is I'd ranging Across ranging gross credit with underscored to credit XX-month our composites generated by XX%. fund returns private our broad to X% like quarterly strong gross our which to our highlight X.X%, outperformance returns performance,

credit Our positioned positive continue capital a well fundamental to approximately in variety credit limited assets scenarios, issues, senior of of are we are and as credit corporate see believe structure. particularly growth our portfolios we the economic in for XX%

average to interest Notably, quarterly significantly in the loan historical market loan-to-value portfolio well below XX% portfolio improved the coverage of at levels XX in EBITDA past ARCC reported and than company average over stood improvements lower growth. averages, nonaccruals double-digit the Furthermore, the XX%, weighted years. roughly

asset of composites, infrastructure for we returns the real X% the for XX X.X% Across and last and quarter months. gross our generated debt

relative comparable market equity real delivering strong Our strategies equivalents. returns are to estate

fund X net and We we continue quarter, to our returns nontraded real each real estate saw includes portfolios. positive third collectively in brought in quarterly valuations in see our of in positive which And and fundamentals estate modest inputs. appreciation This REITs, the our composites.

general, the underlying believe bottoming are now saw to in a values we In most and generally spring pressure rates property on cash rise. during asset property cap flows for we classes downward more while seeing continue

just under private equity gross return Sabres its of the composite corporate X fund was a Village. by position impacted Value in Our as quarterly X%, public at

ACOF of returns Our corporate rate X.X% of XX.X%, equity gross private respectively, inception and return has and XX.X%. generated of XX-month most VI and a gross quarterly since has recent fund internal

demonstrate fundamentals EBITDA strong growth. private organic corporate to continued equity double-digit year-over-year with portfolios Our

turn I'll closing it back Now to Mike comments. for

to Jarrod. in Great. to continue an improving well that positioned is I believe succeed transaction environment. Thanks, Ares

continued the of of out need system and institutional penetration credit, clean investors. of wealth management business drivers and business, our relationships to consolidation our critical Our global are are of including in asset-light sheet to significant the alternatives growing among investment and many we moving platform channel positive influencing infrastructure for elements growth the on the fee-centric balance of secular energy There the our capitalize assets GP private strategy the seek banking industry. as and our

more we for expect operating We asset growth real overall normalize fully XXXX. as believe and efficiencies strategies to begin associated will to that contribute these engines growth in to also our rates improving see growth our

I'm the future also across and company. business our globe I'm drives work their for and and collaborating dedication. the success our team for grateful deeply deeply of of talented ongoing current hard investors' appreciative our our support always, As

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

Instructions] our Siegenthaler from first America. of [Operator We'll take Bank question with Craig

seeing the your semi-liquid to just III, And and We're drawdown raises fund private Fund lead institutional in drawdown the vehicles Direct billion note, record. which an and industry private of competitors some is Ares big industry of big just closed raised across channel. one continue a very credit the in just the channel wealth sizable Lending $XX Senior the

just powder, So BSL given year, especially heading next this do into see the ramp of any in industry you with dry AUM reopening and market? to deployments challenges the

couple Greg. Thanks, Sure. A of highlight. to things

we the credit sequentially X actually the As fundraising private for said in last years. down prepared is remarks,

actually things and the becoming of larger has trend that that's been decade, deployed this a the dollar is are more the been to and close the managers. one getting dollars of in the a in So for concentrated place hands raised that getting you're seeing, actually

diversification just the to risk for lot the a to benefits larger origination, get cetera. as management, relates of and with with systems, it et ability significant investment to in portfolio has managers that the do deployed think I scale

think leaders to when at say by size there's in of don't raised the I the funds read market. So too it's across look you much capital getting the that the market a

nicely which M&A tell high-quality in also finding has something each continue is numbers, you a it in When you different, the fairly we're market. concentrated the what to deployment assets the and is look business benign ways been grow deployment would at to

in place. think a we're good I So

that prepared invested the if III already you remarks, in about we're at close. XX% talked billion we fund, $XX final As at the on look SDL

capital capital some you in give of the just and perspective will the that of So raising terms deployment. the pacing

again estate, appreciate this global. but grow real a not private important presentation private couple to of for sponsor getting about TAM just Investor and this all credit business a the months Day is business, the did the a is it's details, of infrastructure, back, alternative this without into we credit lending it's across And broad-based that talk credit, in that continues people corporates,

in trends place. secular are there And

traded market BSL obviously, is coming trend mentioned, market. a but that there's from seeing You competition sub back, I debanking outpacing general the investment-grade we're whatever think

obviously we But to So a the it, actually way still competitive the that attention saying to long-winded think market we relative is we're dynamic. of the credit see opportunity. private paying undercapitalized as

point the there. for thanks Mike,

has years I been think lack overall And driving BDC the market if it the think year do versus the with X changes the that other up? direction? in you thing rerisking Do next consolidation public 'XX to head the activity that the last and fundraising of potential trend you has of picking in does, couple 'XX. actually think

I again, and for manager we've get are you see a conversation I in dispersion the in we public meaningful performance. the size. on think When rooted trend as quality consolidation already into an that is because this broader across think long performance beginning about look actually, that to at to landscape. And don't that's important thing I held keep an eye market, view the that a you time scale drives BDC

the the important less BDC important. So part of I an think ecosystem, but public obviously market is

people credit BDCs. refer the include keep the private of The mind, size in do public to most other published around to the thing not market numbers that

for data, excluding is published the the publicly traded So is BDC market. it's example,

next our Sachs. from Blostein take Alex question Goldman We'll with

opportunity driver asset-backed the on couple and First kind of really last credit way about differentiated origination of kind Lots being that finance a around of quarters. of private opportunities the space. we've question of X.X just for in in talked the focus

to of can further to accelerate you the their additional order your you in need partnerships market? of that kind if think update of there capabilities curious us you do of origination So part on sort

own our have simple And we to look teams culture. that I continue answer, think tenet is partnerships. grow Alex, as either the JV important is no. Obviously, an to business, we'll in-house partnership or of

we mentioned to them a script, is effectively to track our with up the investment that vehicle set they for with purchase CAL joint record auto in we originate. billion prime venture lessor Automotive, up a So and signed venture multi-decade new and recently which example, joint leases prime $X.X in

we folks that certain And as talking said that tactical talking Ares people a long-term we've about something this teams that's you that's where are there see things are owning are platforms, origination in more some kind like partnership. there it about So us sustainable employees through opportunities. you'll see of are joint owning of do there are that and are origination some before, then between where may venture great.

we investment out and we expertise, market. reiterate, We we market professionals XX that certain different markets of to is come have domain this where have in are XX favor. investable asset and focusing there cover over classes believe Just on

that diversified, opportunity have the we origination continue important been in team, situated, growing. market and pace it's but at the So and a it's grow that broad lot the the and that's capability currently can is of asset to class as scale

Got margins. right. for makes That you FRE sense. it. one Jarrod, All on

a getting this of bit a So reset year. little

the focus appreciate I given I dynamics the distribution not the of color there. channel in kind and retail on line like just surprisingly, guess, So top growth.

the about in So talked that past. we've

noise guess back a I for XXXX if expansion of of to to, normal into again, FRPR entirely basis margin out it, the Ares could likely of noise? you look discussion. XXX call get kind it FRPR FRE we is exclude XXXX, from and excluding kind But more But maybe points-or-so from this into

but investments. the be from continue of and we And away cost said from at in Day. to where is our Investor capability back we grow? focus are hear primary And sometimes is because to morning. future takes we you Great to could that can margin, investing I'd at would margin the our Sure. go certainly that we actual what increase the what this how

be what we doing. And want that's not to

will into that expect deploy see However, certainly XXXX as and expansion, say of we a you'll the I that. amount deployment did as year-over-year margin with that we in will prepared do that of helps remarks, mentioned and expand. pace continue that slight margin we And

it think at still of not be out an the within as have XXX to range that's anything date that that I basis GCP we And we points of anything don't exact nature. or from Day. that will X laid close And including Investor

have what just right we the that's So now. standard

margin in positive think wealth, over just to obviously if fees, base which Alex, excluded math, mentioning you the doing points would we case, I basis those, kind are the XXX of distribution scaled out. given you the simple variance if those the back have growth

worthwhile a get investment. timing and Makes a totally sense. it. I thing, It's No, it's

question We'll Wolfe from Chubak with take our Research. next Steven

Brendan ] how the broadly lot start, focus around guess credit market between over past year. I has the much a been is Steven. for [ narrowed that syndicated O'Brien private to This in the and of filling and there's spread

partake some competitors. club have deals you While to middle do of to out of some market remarks, as the you bigger the in a on the larger prepared focus your much you there, relative alluded

middle both? simply do in to a of combination is increased as compression you competition? see So to some at I wanted a lack you a the just function of being relative to larger get spread activity. view Or or any higher a whether sense in market new differences compression deal of level, And supply spread the as

I really add and which healthy would losses a X/X, is and economic market. lower-than-expected in defaults backdrop the

class. an in risk of obviously, be spreads absolute of the and to foremost asset a of basis, on people's they're perception going credit So reflection first

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great ARCC I sensitivity I on to color. and my touch you wanted ASIF. for know in filings Part gave And for X That's fees. the follow-up, your

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credit You have spread. base you rates, your have

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important -- it's XXX rates to big but impact our interest point look it's would per in can you represents at basis linearly again, of their and by So again, you probably decline just ARCC $X at a understand sensitivity million how FRE part X, look disclosures chunk that queue, in the When year. the which works.

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TD We'll Katz with question Cowen. take our Bill next from

Commentary.

for sort gross you I of have number had might you're little a [indiscernible] us. guided to front earlier, maybe mid-XXs just strong suggest in full another the missed would wondering which year, where was So if unpack strength? bit inflow I of it, seeing mid-XXs fourth could the you quarter

think comps And wondering as this next of year, to maybe think blocks through the if as into you us think building through sort year? was about can I help we you

want to take that you Jarrod, do one?

thing. Sure

as our products So continue the have retail well buildout a as in next and comingled of will raise, year, fund terms number we of products. to different the

of and bit that continue Mike and fundraising we about we've call. that that channel to about things come that's the the talked from a I talked raise have that floor a our a lot all of retail with of lot capabilities little is of you this One on the of build-out

fundraises I'd number special have occur. vintage. still like have the we vintages And the strategies market in a continue had from have funds above large next to had that to year, strategy. expect we'll prior commingled opportunity our that different But of see successive

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it's So really platform-wide.

market from I from the all last in like it different that of ASIC had it across SPL funds won't about or broadening think a platform, total will be platform coming one next dominant over years. couple will really of different have like And XX we of fund be be and the out funds the number the a year. we'll but

Okay. opportunity very We're And distribution in just you does certainly your What general days relationships on large into another from or It side? X the and are a like seem wealth hearing early distribution and follow-up. denominator. with management just you these economics here are allocating a the months that's disproportionate in a how winner, access? is distributors a opportunity for on as the opportunities any the channel actually that But the seeing price they're there of deteriorating. concentration conversations economics are of of Ares emerging the

not. We're

one everyone performance. seen servicing of obviously share, the of was the distribution in look we've quite the brand, as of the the in ourselves X as folks, on the to last, X in call is diversifying of there of and that The the certain years, record but top product investment are here, you strength the them, made a share. has significant. market I generally the I broadening our breadth TAM about, at it's capability, out just think the we've channel, hands that think been there If players. considerable more being We've and concentration picked it, up so suite, actually talked based that track of leaders . And are emerging actually

see channel-wide I to the to talked think to continue hands market, made and private about of continue and share to concentration what necessary that win. similar will the significant platforms I of the institutional early investments see market were you growth you'll in So in the credit

next Hawken take We'll UBS. Brennan with from question our

But question sort question on totally you are upward costs that of answer and something with continue it today? to put happening that's should the appreciate across distribution or headwind here a would platforms uniformly out these different that the and follow-up laid cascade pressure precision. last hard this we might a anticipate increasing of be of different the to platforms impact across sort beyond Sort

cost is the distribution the fairly across industry. So uniform

it's as a different where and a actually so economies And I to it's we pretty our Ares that experience begin want see headwind not though tailwind, really is scale. you than significant set. as of make to it's refer And this again, sure a to because having peer don't

funds So upfront that absorption a that if we capital pretty those raise on fee fee. the fee dollar raised, distribution pay there's an day permanent the quick semipermanent of or turn is to upfront management and

of as margin, we Jarrod our absorption to the FRE as so as a on to see you'll turn said broader management we're it scale products. faster faster prepared for the experiencing as the number continue And on and fees remarks, a that "headwind" while now of

kind obviously I ramp. of a to people experiencing. it it We're meaningful this that highlighting is it And -- heads are we're their to But will about we'll get our So have don't so what we going see that can expect experiencing that we keep uniform. as talking peers and it as around change.

Yes.

as at clear. continue mean What Sorry, didn't to distribution see it I you it specific not are partners distribution you to... firms. was alternative could some not other could or not and meant and partners, only I that seeing then other I whether spread is continue this the very we this ramping meaning is

don't No, think. it. Got I

before mitigates. making were about sure Obviously, as been the distribution market we the compensation the channel I versus with that some the international is different wire funds is expense is prepared have houses fairly what for a little we're think upside there our a sharing example, the we domestic team. doing that effectively framework think around landscape we as and well the on in bit structure, remarks, these talked set the about of that recapturing

expect to do of market the the into on sure So I there's differently. we international to broad market, it's focused that market. bleed it that the and pretty but in segments a lot based, make functions wouldn't other that we're But again, absorption, U.S.

to the about waterfall from is out. European XX to million XX to laid prior just adding purely improve $XX I appreciate waterfall, of compare How million that outlook American your you Europeans? the, we that, increase when did the Jarrod, And well? the Mike. think Okay. expectations know the then the or from -- I $XX just as does

we little No, with incentive fees then of and the It's a of [indiscernible]. of add received it's as at qualify end year the bit that European consistent that a along don't waterfall the pretty FRPR waterfall. American

So into going fourth the it's those quarter. things all

question next our Cyprys with take from Stanley. We'll Morgan Michael

could on you see wealth elaborate opportunity maybe maybe private Hoping on infra a a Just core And channel. strength a channel? in set you bit with that strategy, bit elaborate product the in the the you the how question October. new the on flow could

month mentioned unpack on think what that's presence you into in platforms your strength how just to of 'XX? there, cadence seeing you the date largest and the you're I the expanding inflows channel. the Maybe of see

Sure.

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it So was broad-based.

of where the in we basis market there invest The that believe core to unique a in just we're million $XXX to actually, infrastructure. typically get structure that assets premium fund a the advantage of infrastructure point XXX intend in, structure could what And would pretty advantage we XXX a nature fund, we we that seeded happy core produce building. to and and through nontax you it because is now tax just quickly and and quickly the with the was launched have

about Look, around in entertainment So practice. exposure, sports quite unique it's remarks, product think infrastructure but some we media continue has and it a the to nontraded working we platform. prepared as suite nice core a be talked the will really product that we're attractive tax to on the attributes our we build the

systematically as increasing product distribution out expanding we're to develops, set obviously roll we platform And meet our and products the partners. of relationships. can our the where continue We needs

about, talked I diversify. expect, which platforms, up on as So grow XX% and now is XX would continue year-over-year, to that distribution we will, we're and

sequential So rhythmic product pretty that's it's and in that playbook, set, been your it. it's been build the doing we're a then distribution but way expand and the

estate. then And follow-up real just Great. a on question

areas you the you're the And driving space. on on a expect that? leaning bit? you speak unpack see could Maybe deployment across mentioned flows you you REIT transactional of elaborate improvement estate that some as you've Maybe real expect to the you where the just potentially marketplace here? see think improve side? maybe see activity improve nontraded into as I well to What do to the just that

Sure.

I I if have don't they their think Bill we give Julian. and know to perspectives. some of want

Sure. Happy to.

year, debt equity. in seeing quarterly, are real and a over in activity, the both pickup We

quite in some transactions and Our and themes we the in types. large in been across in is seeing product broad-based done some conviction too. pretty highest geographies. And lending time, industrial, pickups have U.S. the in U.K. there, hotel multifamily those both for and Europe are

U.S. be shopping many, at our nibbling industrial, So years, offices in deal Cape in other we're Cod. London, and it in single-family. remains first to offices, many student, retail some residential, Did the very in center your than attractive

what a we're that's flavor So seeing. of

next our Deutsche take We'll question Brian with Bedell Bank. from

questions, X the channel. the retail Maybe I'll One, put in X on segment. my both together for distribution

think at X%-or-so Investor still addressable your just you Day, at I like of market. were something

expand how getting don't into from addressable more advisers So as growth channels can you do in of look about one. the distribution to your and just have selling you expand potentially that that supplemental that as product? think heavy market fees, the That's

the is And that pipeline. product dovetailing then with launch

X I by also perpetual semi-liquid looking at 'XX. think Day XX products at to said you about Investor

GCP. the You're would do products And comment at sports with potentially got with maybe then and ideas now. even you X% more products seemingly, already on -- you've I could

products should 'XX? XX seeing by Just be than maybe we more

GCP. And possible. I'm is you mentioned It glad

clearly estate our to grow offer to going diversify. more think infrastructure, product think, digital and product capability industrial I ability capability now global real our and given their and around I that is

at that to And that the now X pipeline. where we're a Day, XX. At our can you a Investor we may at of outside X. be us got range in So X, said, acquisition to we've couple point we get were as

of product there. pretty much does that access of the That kind with and we said, So pipeline, in gives a it do project investor the already products the portfolio that we're to the here. products current everything

get until market, in not quite in can't like. got looks products we we the new and product. know bringing as that be comment I So of we to kind may we've active point on that these where what the

our that Again, of view think has don't changed. the I part. terms first In

And those with Investor if slightly that every made commentary growing not at part of order in the line important We market, that in achieve it's you're and Day, to ahead. the are objectives. we covering domestic international, the

part the is largest part in RIAs. fastest-growing the but wirehouse in obviously, the the market of the the of is So market platforms,

And it see also see them. think have in And go you where so then you about both rapid where to have you do you terms to do I but be of growth, scale? of thinking after

with question We'll from next take Worthington JPMorgan. Ken our

in Are the focusing distribution future? platforms, reasonably costs in something you when still wealth or access environment? more sense your their might this we is allocating distribution And their consider expect buffet it getting when resources that to sophisticated get do that in management you the you you would are is something consider all-you-can-eat

sophisticated. getting it platforms. is concentrated And more continuing think I large the of of more it's support of think education I mentioned, brands the in as number the getting a can I handful that

I so it all-you-can-eat. And don't is think

yield the around equity and durable out outcomes building tax. intentional in I and diversified think it's very been

getting And push the And think expect the number I there's of so to and I the to reduced we're again, seeing managers that That's products in pull an as are a intentionality that And a would that with a collaboration creating. points. access platforms. continue. you're

going the cost dollar of actually us we terms is the the down as to distribution In I on a scale. distribution, distribution, channel of in cost per the highlight again, of basis want for

have scale we the there capability people in the our So is. of platform on and number and based meaningful is distribution economies what capacity of just

we're to focusing ago. you in on think dollar so a was meaningful dollar seeing raise, And per of actually year if own dollars, cost experience decreases the here absolute while we're raised terms per relative all about our what lift cost it in

the In still We negative products. underperforming. is performance it secondary months. like XX last but quite quarter, for secondaries, this lags, negative still returns seems over good Demand is know area that Ares'

going a perspective? here what's maybe on return So from

-- I don't lag. it Yes. does

you have lag a private least think about, first at in equity, effect. is the So to there

in we're talking returns when about secondaries. QX So

all into roll talking life forward the if of buying oftentimes, funds, nuances you numbers. return give are you're secondary without through of discounted over returns You then the portfolios, return how getting of pull maybe back the And and fund. about really QX then

secondaries? So do. of look that it's when across you're inception always inception-to-date at quarter-over-quarter what at more you at to date opposed doing look broadly they're returns And relevant so the to they're family looking when supposed to return funds, to return as speaking,

Brown We'll with take Wells Fargo Mike Securities. last our question from

me Great. follow-up We've seen fund the Thanks some peers. gainable maybe for from another on squeezing filings wealth guess in here. market. I some

fund have with billion a a partner AUM successful that guys interval You level. large crossed $X just the and

fund structure? iterate product Just distribution then Can wanted this outlook even hear to there what's on that you expand wider wealth structure spectrum? your and here for to the a

answer track and the fund. diversified our it it least think exposure, to is is already scaled both record and -- illiquid. regard credit at simple I with That which with a X-year credit diversified is liquid offers

and have I so head And can to a distribution. do we that we start running continue expand think there,

the and the this announced really and to the lot from number call, to talked a what With about is, of think beginning last to product one? the you those angle enhance we're on of, on about will distribution, detail have regard we see it partnerships, some obviously set products

access investment the that have meaningfully what that get? it client distribution can we be getting like to and points the at look partnerships were others performance will terms announced, that of the we're and/or that relative enhance if they the experience accretive can convinced I in to that it or change they experience would of will have the customer currently to product now. and to they we two, And that so returns number the ones are we And have additive in to think have what invest

the have and a discussions credit, or potential convince a had many the of to our market, deliver that very with the little at ABS client market capability to is a we offer market we've credit, syndicated And loan and business, set credit right, client package liquid able our can't private where we're until part bit that market, access so high-yield rated large fixed slower illiquid portion partners, to wants given to move least absolutely going income we market, the broadly there of today, the that ourselves liquid be that the we we're in access the and ourselves there. to to probably product with

track noteworthy, there. But bringing pretty time a obviously talk of but of up lot have there's significant how quite for novel obviously, performance this product some been our about while I it's because at fund running record scale you is, appreciate a and product we've this

all for you those Mike. Thank great. thoughts, Yes,

maybe quick ratio follow-up year. it, know a I XQ. I elevated call the was on I midpoint the or third the unpack way line quarter, quite in you it guess would of for would a so quarter was into guess, Just 'XX correctly, for right comp in a level to FRPR think there imply think think to 'XX? the guide I bit just high about ratio can about, as fourth in FRPR. we If for be the was for the And where comp heard with so it the I XXX XQ, it last XXX about

Sure.

credit at a has little alternative here, open-ended had, comp the different product quarter that ratio we This XX-XX. bit that

that you that's a remind has why But fund this that, that you charitable So also saw tie-in. quarter. I'd

So charities. that various is amount of X% overall to donated

positive what on pretty it's team well coming it's out for doing as influence and innovative of do their that it's because we're So pretty that part to allocation. of

have the is little at forward as European are there is that, ratio you that Looking QX, that different reasons a that well. one in bit comp of funds

born European there's the are tax structure a taxed, a that so employer are as result. different terms have in those And taxes different how funds of

to we the So ratios mid-XXs. that's in guide it's typically a that comp going be and what little off bit somewhere throws your

or presenters at questions to over that our remarks. no additional appears we further the back now turn have I program time. And for it this closing any will

have we time so appreciate by support, quarter. We No, look everybody continued next the us you. with to to much forward spending and speaking and Thank all great we and none. today questions you

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

to dialing through call replay XXXX, page XXX-XXXX. website. X, December section the house on Resources by available to the be on If any replay dialing archived international An also (XXX) X, link callers a call, be callers the XXXX, available you and domestic of of today's will December an through X by webcast our X-XXX-XXX-XXXX part will missed Goodbye. Investor archived located of of