Ares Management Corp
For the period ended Mar 31, 2025. Filed May 12, 2025.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Mar 31, 2025 · Filed May 12, 2025
ARES$133.98+0.2%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-09-30; filed 2024-11-08.
0001628280-24-046482
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2025-03-31; filed 2025-05-12.
0001628280-25-024412
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 322 previous paragraphs and 331 current paragraphs.
162 unchanged; 75 reworded; 84 added; 83 removed; 2 previous and 10 current paragraphs rearranged.
Tables are not compared: 80 previous and 91 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (84)
Current report
During the first quarter of 2025, global equity and debt markets experienced volatility driven by elevated inflation, economic slowdown and potential implications of U.S. trade tariffs. The U.S. public equity markets declined amid investor concerns regarding the impact of the proposed tariffs while international markets outperformed. European markets showed positive performance due to potential increased defense spending. The APAC markets performed favorably, with macroeconomic conditions supporting consumption in Southeast Asia, India and Australia. The U.S. announced tariffs on all imports from China and plans for reciprocal tariffs on countries imposing duties on U.S. imports. Despite these challenges, APAC transaction volumes remained steady as optimism for heightened deal activity focusing on companies in Southeast Asia with market-leading positions.
Current report
The private equity industry navigated a dynamic landscape shaped by evolving macroeconomic conditions and policy shifts, particularly the impact that the macroeconomic and global trade environment may have on exit activity. This environment has contributed to heightened focus on companies with strong organic growth and attractive strategic transaction opportunities. We believe that shifting towards value creation strategies emphasizing operational improvements, talent optimization and digital transformation is essential to ensure long-term competitiveness.
Current report
The commercial real estate markets experienced a slowdown in the current quarter due to heightened interest rates and the uncertainty around the recent trade policy shifts. Despite these headwinds, property values and capitalization rates remained steady. The European real estate markets are continuing to show slower signs of recovery, with the volatility in interest rates having a greater impact on performance during the quarter. While performance varies by sector and geography, we believe multifamily and industrial properties will continue to benefit from favorable long-term structural trends. In addition, renewable energy transaction volume remained strong, which has supported elevated renewable energy revenue contract prices. The convergence of digital infrastructure and artificial intelligence adoption, paired with surging power demand expectations continue to support infrastructure investment opportunities.
Current report
GCP Acquisition Overview
Current report
The GCP Acquisition adds geographic exposure in Asia with a significant logistics platform in Japan, logistics platforms in emerging economies such as Brazil and Vietnam and an expanded presence in Europe and the U.S. The GCP Acquisition has broadened our vertically integrated operating and development capabilities across sectors and regions. We anticipate that the size and composition of fees earned, particularly our other fees, will be impacted by these expanded capabilities.
Current report
The activities of GCP International are reflected within our results of operations beginning on March 1, 2025. Therefore, our analysis compared to the prior year period will lack comparability, particularly in our Real Assets Group segment. Because the activities of GCP International represent one month of activity within the current quarter, we will separately discuss the significant impact of the GCP Acquisition within our discussion of our results of operations.
Current report
In addition, various components of the agreed upon purchase price for the GCP Acquisition are required to be accounted for as compensation because the payments were made to certain individuals that became Ares employees on March 1, 2025. Because they are required to be accounted for as compensation, these amounts have been excluded from purchase consideration and will have a varying impact on our results of operations in the current quarter as well as in future periods. Following the integration period, we expect to generate cost savings as we begin to execute on synergy opportunities.
Current report
In connection with the GCP Acquisition, we also entered into contingent compensation arrangements with the sellers and with certain of its professionals that became Ares employees. The portion of the arrangements that are attributable to the sellers represents a component of purchase consideration that will be accounted for as contingent consideration. The portion of the arrangements that are attributable to the professionals that became Ares employees requires continued service through the measurement periods and will be accounted for as compensation. These arrangements will have a varying impact on our results of operations in the current quarter as well as in future periods that is dependent on these classifications as well as the expected attainment of the measurement criteria.
Current report
For further discussion, see “Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Consolidated Results of Operations of the Company” as well as “Note 3. Business Combinations” and “Note 8. Commitments and Contingencies” within our unaudited condensed consolidated financial statements.
Current report
The following is an overview of our fee arrangements by strategy that were impacted as a result of the GCP Acquisition.
Current report
Management Fees. Details regarding our management fees from J-REIT are presented below:
Current report
Details regarding our management fees by strategy, excluding J-REIT described above, are presented below:
Current report
(1) Represents the average remaining contract term pursuant to the funds’ governing documents within each strategy, excluding perpetual capital vehicles, as of March 31, 2025.
Current report
(2) Following the expiration or termination of the investment period the basis on which management fees are earned for certain closed-end funds in this strategy changes from committed capital to invested capital with no change in the management fee rate. In addition, certain real estate funds pay a management fee of 7.50% of net operating income. For these funds, we present an effective fee rate as a percentage of GAV.
Current report
Incentive Fees. Details regarding our fee related performance revenues, excluding publicly-traded and perpetual wealth vehicles, are presented below:
Current report
Carried Interest Allocation. Details regarding our carried interest, which is generally based on a fund’s eligible profits, are presented below:
Current report
Administrative, Transaction and Other Fees. Details regarding our other fees are presented below:
Current report
See “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Components of Consolidated Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2024 for a comprehensive overview of the components of our consolidated results of operations, including an overview of fee arrangements for other strategies that were not impacted as a result of the GCP Acquisition.
Current report
Three Months Ended March 31, 2025 Compared to Three Months Ended March 31, 2024
Current report
Revenues
Current report
Principal Investment Income. For equity method investments where we serve as general partner, we present the activity of net realized and unrealized gains on investments and realized investment income together with net capital activity. The following tables present the change in fair value of our equity method investments where we serve as general partner ($ in millions):
Current report
•Net capital activities driven by investments made in various real estate funds, partially offset by the return of capital associated with an investment in a European real estate debt fund
Current report
•Principal investment income, primarily due to interest income from newly admitted investors in an insurance fund
Current report
•Net capital activities from investments in European direct lending, alternative credit and infrastructure debt funds, partially offset by transfers of capital investments within APAC credit funds to employee co-investment vehicles
Current report
Administrative, Transaction and Other Fees. The increase for the three months ended March 31, 2025 compared to the same period in 2024 was primarily driven by incremental fees following the completion of the GCP Acquisition. GCP International enhances our vertically integrated capabilities in real estate which enables us to generate additional leasing, development and property management fees. These fees contributed $13.6 million for the three months ended March 31, 2025.
Current report
Compensation and Benefits. In connection with the GCP Acquisition, various components of the agreed upon purchase price are required to be accounted for as compensation because the payments were made to certain individuals that became Ares employees following the GCP Acquisition. The GCP Acquisition contributed $151.0 million in incremental compensation and benefits for the three months ended March 31, 2025. The current quarter included equity-based compensation expense of $119.1 million from newly issued equity awards, including $108.8 million from the immediately vested portion of these awards. The three months ended March 31, 2025 also included: (i) one month of employment related costs of $17.9 million; (ii) other compensation costs of $8.8 million that were settled in cash at the close of the GCP Acquisition; and (iii) compensation expense of $5.2 million for certain contingent compensation arrangements established in connection with the GCP Acquisition. See “Note 8. Commitments and Contingencies” within our unaudited condensed consolidated financial statements for a further description of the contingent liabilities related to the GCP Acquisition arrangements.
Current report
Compensation and benefits, excluding the impact from the GCP Acquisition, increased by $93.2 million or 23%for the three months ended March 31, 2025 compared to the same period in 2024. The increase in expenses reflects the continued growth in salary and benefits for increased staff levels. The most significant expense increases were equity-based compensation, salary expense and payroll-related taxes. Equity-based compensation expense increased by $46.5 million from the prior year period as a result of newly issued unvested awards, magnified by our increased stock price. In addition, we accelerated expense for certain awards requiring no future service as retirement provisions have been achieved. These provisions increased expense by $25.0 million and $17.4 million for the three months ended March 31, 2025 and 2024, respectively.
Current report
Average headcount increased by 22% to 3,504 professionals for the year-to-date period in 2025 from 2,868 professionals in 2024. The acquisition of GCP International added 950 professionals to our period end headcount as of March 31, 2025, which represents an average of 316 professionals for the year-to-date period.
Current report
General, Administrative and Other Expenses. The GCP Acquisition has contributed $50.2 million in general, administrative and other expenses to the three months ended March 31, 2025. These expenses were driven by: (i) acquisition-related costs of $33.7 million; (ii) amortization expense of $8.8 million for the three months ended March 31, 2025 related to the intangible assets recorded in connection with the GCP Acquisition; and (iii) one month of operating costs of $7.7 million, including temporary transition services agreement in connection with the GCP Acquisition of $1.5 million. The impact from the GCP Acquisition has been excluded from the discussion below.
Current report
General, administrative and other expenses, excluding the impact from the GCP Acquisition, increased by $6.8 million or 4%for the three months ended March 31, 2025 compared to the same period in 2024. The increase in expenses reflects the continued growth to support staff levels and fundraising activities. The most significant expense increases were marketing costs, occupancy costs, information services costs and information technology costs.
Current report
Marketing costs include supplemental distribution fees and placement fees. Supplemental distribution fees increased by $8.7 million for the three months ended March 31, 2025 compared to the same period in 2024 primarily due to ongoing development of our distribution relationships and expansion of our wealth product offerings, and also due to increases in sales volumes and net asset value of our wealth products. Conversely, placement fee expense decreased by $5.0 million for the three months ended March 31, 2025 compared to the same period in 2024. The activity for thethree months ended March 31, 2025 primarily included placement fee expense of $5.6 million due tonew commitments to our third opportunistic credit fund, while thethree months ended March 31, 2024 primarily included placement fee expense of $9.1 million due tonew commitments to Ares Senior Direct Lending Fund III, L.P. (“SDL III”).
Current report
Net Realized and Unrealized Gains on Investments; Interest and Dividend Income. For investments where we do not serve as general partner, we present the activity of net realized and unrealized gains on investments and interest and dividend income together with net capital activity. The following tables present the change in fair value of these investments ($ in millions):
Current report
•Interest and dividend income, primarily due to: (i) interest income generated from our investments in CLOs; and (ii) $11.9 million of interest income earned from treasury-backed securities. Such treasury-backed securities were sold during the first quarter of 2025 and the proceeds from the sale were used to fund the GCP Acquisition. The interest income earned from treasury-backed securities will subside in future periods following the sale of these treasury-backed securities
Current report
•Net capital activities driven by investments made in various real estate funds and in our open-ended infrastructure fund, partially offset by the collection of principal associated with loans that we made within our real estate strategy
Current report
•Interest and dividend income, primarily due to interest income generated from our investments in CLOs
Current report
•Net capital activity driven by the collection of principal associated with loans that we made within our real estate strategy
Current report
Interest Expense. Interest expense decreased for the three months ended March 31, 2025 compared to the same period in 2024 primarily because savings from the reduction in use ofour Credit Facility exceeded the collective interest expense associated with our term debt obligations. The balance of our Credit Facility will vary with needs.
Current report
The purchase agreement in connection with the WSM Acquisition contains contingent consideration that is dependent on the achievement of revenue targets from the fundraising of a real estate equity fund and certain revenue targets associated with growing revenue sources from new business ventures. Other income (expense), net includes $2.3 million of expenses from the revaluation of these contingent liabilities for the three months ended March 31, 2025.
Current report
We use Realized Income (“RI”) as a non-GAAP profit measure in making operating decisions, assessing performance and allocating resources. Fee Related Earnings (“FRE”) is a component of RI that excludes realized activities associated with investment income and performance income.
Current report
FRE and RI should be considered in addition to and not in lieu of, the results of operations, which are discussed further under “—Components of Consolidated Results of Operations” and are prepared in accordance with GAAP. We operate through our distinct operating segments. In the first quarter of 2025, we combined the presentation of real estate strategies and infrastructure strategies within Real Assets. Real estate includes Americas real estate equity, European real estate equity, APAC real estate equity and real estate debt. Americas real estate equity, which we had recently renamed from North American real estate equity, now includes the activities of Brazil following the GCP Acquisition. APAC real estate equity is newly established following the GCP Acquisition and primarily represents the activities in Japan and Vietnam. Infrastructure includes digital infrastructure, infrastructure opportunities and infrastructure debt. Digital infrastructure is newly established following the GCP Acquisition. The change in presentation did not result in any change to the historical composition of our segments.
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Removed paragraphs (83)
Previous report
Global markets continued to perform positively in the third quarter fueled by the easing of monetary policy by the Federal Reserve and several other major central banks, better than expected economic growth and resilient consumer spending. Despite the headwinds and ongoing conflicts in the Middle East and Ukraine, U.S. and European high yield bonds and leveraged loans returned positive performance with stable demand and improved capital markets access. The Asian-Pacific markets experienced favorable performance as the region overall continued to show growth, primarily driven by moderate inflation, low unemployment and lower interest rate expectations driving consumption in Southeast Asia, India and Australia. China announced policy stimulus measures affecting monetary policy, the property sector and equity markets, driving an overall positive investor sentiment. Globally, reduced lending activity by banks and limited capital accessibility continued to support private credit growth.
Previous report
The private equity markets saw a modest recovery, with an increase in private equity deal value in the U.S. We believe that interest rate cuts, stabilizing inflation and improved labor dynamics have improved confidence among sponsors and encouraged transaction activity. Valuation gaps among buyers and sellers are beginning to narrow, creating a more attractive deployment environment. We believe that strong performance will continue to be driven by partnerships with value-add managers and investments in resilient industries where we have the ability to drive fundamental business growth and deliver a systematic approach to long-term value creation.
Previous report
The U.S. and European commercial real estate markets continued to improve in the third quarter, with increased deal activity on a year over year basis that was largely supported by the improving macroeconomic environment. Property valuations and capitalization rates are continuing to show signs of stabilization. We continue to believe that we are well-positioned with strong fundamentals, such as occupancy and rental rates, in property types that include multifamily and industrial.
Previous report
Market factors may have a more pronounced impact on certain industries, including energy, which is an industry in which few of our funds have made investments. As of September 30, 2024, less than 1% of our total AUM was invested in debt and equity investments in the energy sector, including midstream investments, oil and gas exploration, and renewable energy investments.
Previous report
Recent Transactions
Previous report
In September 2024, Ares entered into a definitive agreement to acquire Walton Street Capital Mexico S. de R.L. de C.V. and certain of its affiliates (“WSM”) (“WSM Acquisition”). WSM is a leading real estate asset management platform, focused primarily on the industrial sector in Mexico, with AUM of $2.1 billion as of June 30, 2024.
Previous report
In October 2024, Ares issued 30,000,000 shares of its Series B mandatory convertible preferred stock, par value $0.01 per share (the “Series B Mandatory Convertible Preferred Stock”) (including 3,000,000 shares sold pursuant to the exercise in full of the underwriters’ option to purchase additional shares), for total proceeds of $1,462.5 million (after deducting underwriting discounts but before offering expenses). The Series B Mandatory Convertible Preferred Stock will accumulate dividends at a rate per annum equal to 6.75% on the liquidation preference thereof, and will be payable when, as and if declared by the Company’s board of directors, out of funds legally available for their payment to the extent paid in cash, quarterly in arrears on January 1, April 1, July 1 and October 1 of each year, beginning on January 1, 2025 and ending on, and including, October 1, 2027.
Previous report
In October 2024, Ares issued $750.0 million in aggregate principal amount of 5.60% senior notes with a maturity date of October 2054 (the “2054 Senior Notes”). The 2054 Senior Notes bear interest at a rate of 5.60% per annum, paid semi-annually and accruing from October 11, 2024.
Previous report
We use the following non-GAAP measures to make operating decisions, assess performance and allocate resources:
Previous report
•Fee Related Earnings (“FRE”)
Previous report
•Realized Income (“RI”)
Previous report
Three and Nine Months Ended September 30, 2024 Compared to Three and Nine Months Ended September 30, 2023
Previous report
The activity was principally composed of incentive fees generated from the following funds:
Previous report
The activity for the three and nine months ended September 30, 2023 was primarily composed of: (i) appreciation of certain investments within funds in our corporate private equity, alternative credit and European direct lending strategies; and (ii) dividend income from a European real estate debt fund and LREF VIII; partially offset by (iii) unrealized losses of certain investments within funds in our real estate secondaries strategy. The nine months ended September 30, 2023 also included: (i) appreciation of certain investments within funds in our opportunistic credit and infrastructure debt strategies; and (ii) dividend income from an open-ended core alternative credit fund and SSF IV.
Previous report
The increase for the nine months ended September 30, 2024 compared to the same period in 2023 was driven by: (i) higher administrative service fees of $13.9 million primarily from private funds within our Credit Group that are based on invested capital and from our non-traded vehicles; and (ii) higher administrative fees of $5.1 million from a commercial finance fund that were previously eliminated when this fund was consolidated into our results until the second quarter of 2023; partially offset by (iii) lower credit transaction fees of $9.1 million, primarily from the infrastructure debt strategy which are infrequent in nature and lower loan origination income earned from certain managed accounts within the U.S. direct lending strategy, driven by a lower capacity of investable capital; and (iv) lower asset-based, net distribution fees associated with our non-traded REITs of $3.4 million.
Previous report
Compensation and Benefits. The increases in compensation and benefits for the three and nine months ended September 30, 2024 compared to the same periods in 2023 were primarily driven by increases in equity-based compensation expense of $23.6 million and $72.8 million, respectively. The number of unvested restricted units being amortized has increased as has the value of these units with our rising stock price. In addition, the immediate vesting of certain awards occurs annually in the first quarter as a retirement benefit for eligible recipients and accelerated expense of $17.4 million and $10.0 million for the nine months ended September 30, 2024 and 2023, respectively.
Previous report
In addition, the increases in compensation and benefits for the three and nine months ended September 30, 2024 compared to the same periods in 2023 were driven by: (i) increases in salary expense of $13.7 million and $40.9 million, respectively, primarily attributable to headcount growth to support the expansion of our business; and (ii) higher Part I Fee compensation of $11.9 million and $35.4 million, respectively. The increase for the nine months ended September 30, 2024 compared to the same period in 2023 was also attributable to (i) an increase in payroll related taxes of $11.2 million primarily due to the higher stock price associated with our restricted units that vested during the first quarter of 2024; and (ii) increased compensation and benefits of $11.0 million associated with our retail distribution channel, AWMS, resulting from higher sales employee variable compensation associated with APMF and ASIF. The increase in compensation and benefits for the nine months ended September 30, 2024 compared to the same period in 2023 was partially offset by lower incentive-based compensation, which is dependent on our operating performance and is expected to fluctuate during the year.
Previous report
Compensation and benefits for the three and nine months ended September 30, 2024 also included costs associated with a performance-based, acquisition-related compensation arrangement established in connection with the Crescent Point
Previous report
Acquisition in the fourth quarter of 2023 of $4.8 million and $14.5 million, respectively. See “Note 7. Commitments and Contingencies” for a further description of the contingent liabilities related to the Crescent Point Acquisition arrangement.
Previous report
Average headcount increased by 11% to 2,918 professionals for the year-to-date period in 2024 from 2,621 professionals for the same period in 2023.
Previous report
General, Administrative and Other Expenses. Before giving effect to certain amortization costs associated with the impairment of intangible assets, general, administrative and other expenses increased by 29% and 21% for the three and nine months ended September 30, 2024, respectively, compared to the same periods in 2023. These increases were primarily due to costs incurred to support fundraising for our funds and distribution of shares in our non-traded vehicles, which we refer to as supplemental distribution fees. Supplemental distribution fees increased by $9.7 million and $31.9 million for the three and nine months ended September 30, 2024, respectively, compared to the same periods in 2023. These fees will fluctuate with sales volumes and net asset value of our non-traded vehicles. Placement fees also increased by $9.1 million for the nine months ended September 30, 2024 compared to the same period in 2023 primarily due to new commitments to Ares Senior Direct Lending Fund III, L.P. (“SDL III”).
Previous report
Acquisition-related costs increased by $22.8 million and $29.3 million for the three and nine months ended September 30, 2024, respectively, compared to the same periods in 2023. Acquisition-related costs generally precede a business combination, varying with the size, scale and complexity of the transaction. The majority of the costs incurred in the current year are related to the GCP Acquisition, which is expected to close in the first half of 2025. We also incurred costs in the current year for the various strategic acquisitions, including the WSM Acquisition which is expected to close in the fourth quarter of 2024. We expect to continue to incur acquisition-related costs until acquisitions are completed.
Previous report
Marketing expenses for the year-to-date comparative period have also increased by $7.2 million, driven by investor events, including our first firmwide annual general meeting with investors (“AGM”), that were held during the second quarter of 2024. In prior years, each of our business lines have hosted separate events for their investors throughout the year and as a result of holding a consolidated, firmwide AGM event in the second quarter, we have benefited from lower event costs in the current quarter.
Previous report
During the three and nine months ended September 30, 2024, we recognized a non-cash impairment charge of $8.9 million to the fair value of management contracts of certain funds primarily within the Credit Group. During the three and nine months ended September 30, 2023, we recognized non-cash impairment charges of $65.7 million and $78.6 million, respectively, primarily related to the value of client relationships from the acquisition of Landmark Partners, LLC (the “Landmark Acquisition”).
Previous report
Net Realized and Unrealized Gains (Losses) on Investments. The activity for the three and nine months ended September 30, 2024 included: (i) unrealized gains from the appreciation of our investments in APMF, in the subordinated notes of U.S. CLOs, and in a European liquid credit asset manager, as well as in a company that manages portfolios of non-performing loans; and (ii) net unrealized losses from our strategic investment in a U.S. energy company.
Previous report
The activity for the three months ended September 30, 2024 also included unrealized losses from a company that manages portfolios of real estate owned properties. In addition, the activity for the nine months ended September 30, 2024 included unrealized gains from the appreciation of our investments in a European liquid credit vehicle that is invested in the subordinated notes of European CLOs, partially offset by unrealized losses from our strategic investment in a non-core insurance related company.
Previous report
Interest and dividend income. The activity for the three and nine months ended September 30, 2024 and 2023 included: (i) distributions of investment income from multiple strategic investments; and (ii) interest income generated from our CLO investments.
Previous report
Interest Expense. Interest expense increased for the three and nine months ended September 30, 2024 compared to the same periods in 2023 primarily due to the issuance of the 2028 Senior Notes in November 2023 that increased interest expense by $8.3 million and $24.7 million, respectively. The increase in interest expense for the three months ended September 30, 2024 compared to the same period in 2023 was partially offset by lower interest expense of $4.6 million from our Credit Facility due to the lower average outstanding balance during the current quarter. While we have benefited from lower interest expense from our Credit Facility in the current quarter, interest expense for the year-to-date period when compared to the same period in 2023 increased by $3.3 million from higher average SOFR rates and a higher average outstanding balance during the first six months of 2024 when compared to the same period in 2023. We expect interest expense to trend higher in future periods as the issuance of our 2054 Senior Notes is expected to result in greater interest expense than the collective savings resulting from the repayment of our 2024 Senior Notes in October 2024 and lower anticipated balances from our Credit Facility.
Previous report
Credit Group—Three and Nine Months Ended September 30, 2024 Compared to Three and Nine Months Ended September 30, 2023
Previous report
Management fees from existing funds increased over the comparative periods primarily from the deployment of capital in direct lending and alternative credit funds and separately managed accounts (“SMAs”). SDL III, Ares Senior Direct Lending Fund II, L.P. (“SDL II”), our sixth European direct lending fund, ACE V, an open-ended core alternative credit fund, ASOF II, Pathfinder II and Pathfinder Icollectively generated additional management fees of $39.9 million and $115.4 million for the three and nine months ended September 30, 2024, respectively, compared to the same periods in 2023. SDL III, our sixth European direct lending fund and Pathfinder II launched during the second quarter of 2023.
Previous report
Management fees from ARCC, ASIF and CADC, excluding Part I Fees described below, collectively increased by $30.1 million and $72.2 million for the three and nine months ended September 30, 2024, respectively, compared to the same periods in 2023. The increasesin management fees from ARCC, ASIF and CADC were primarily due to an increase in the average size of their portfolios.
Previous report
Part I Fees increased for the three and nine months ended September 30, 2024 compared to the three and nine months ended September 30, 2023 primarily due to: (i) increases in pre-incentive fee net investment income generated by ARCC, ASIF and CADC, driven by an increase in the average size of their portfolios and by the impact of rising interest rates, given their primarily floating-rate loan portfolios; and (ii) AESIF that began generating Part I Fees after the third quarter of 2023. ASIF contributed additional Part I Fees of $11.7 million and $26.6 million for the three and nine months ended September 30, 2024, respectively, compared to the same periods in 2023. AESIF contributed Part I Fees of $2.8 million and $5.2 million for the three and nine months ended September 30, 2024, respectively.
Previous report
Conversely, management fees from ASOF I and Ares Senior Direct Lending Fund, L.P. (“SDL I”), collectively decreased by $6.8 million and$16.7 million for the three and nine months ended September 30, 2024, respectively, compared to the same periods in 2023 resulting from distributions that reduced the fee bases as the funds are past their investment periods. Management fees from Ares Capital Europe III, L.P. (“ACE III”)also decreased by $4.2 million and$12.6 million for the three and nine months ended September 30, 2024, respectively, compared to the same periods in 2023, primarilydue to the reduction in fee rate.
Previous report
The increases in effective management fee rate for the three and nine months ended September 30, 2024 compared to the three and nine months ended September 30, 2023 were primarily driven by the increase in Part I Fees’ contribution to the effective management fee rate.
Previous report
Fee Related Performance Revenues. The increases for the three and nine months ended September 30, 2024 compared to the three and nine months ended September 30, 2023 were primarily attributable to incentive fees earned from an open-ended core alternative credit fund, which has a measurement period that crystallizes fees annually during the third quarter.
Previous report
Other Fees. The increases in other fees for the three and nine months ended September 30, 2024 compared to the three and nine months ended September 30, 2023 were primarily driven by higher administrative service fees of $1.9 million and $6.0 million, respectively, which were earned from certain private funds that pay on invested capital.
Previous report
Conversely, the increase in compensation and benefits for the nine months ended September 30, 2024 compared to the same period in 2023 was partially offset by lower incentive-based compensation, which is dependent on our operating performance and is expected to fluctuate during the year.
Previous report
General, Administrative and Other Expenses. The increases in general, administrative and other expenses were primarily due to costs incurred to support fundraising for our funds and distribution of shares in our non-traded vehicles. Supplemental distribution fees were $8.6 million and $21.9 million for the three and nine months ended September 30, 2024. Such supplemental distribution fees increased by $4.9 million and $15.1 million for the three and nine months ended September 30, 2024, respectively, compared to the same periods in 2023, as we develop our distribution relationships and expand our retail product offerings. These supplemental distribution fees are expected to fluctuate with sales volumes and net asset values of our non-traded vehicles and will reduce Part I Fee compensation to the extent that Part I Fees are earned. The increase in general, administrative and other expenses for the nine months ended September 30, 2024 compared to the same period in 2023 was also driven by: (i) placement fees of $1.9 million, primarily due to new commitments to SDL III; and (ii) travel and marketing costs of $3.1 million, driven by investor events held during the second quarter of 2024, including our firmwide AGM event.
Previous report
Realized net performance income for the three months ended September 30, 2024 primarily included (i) incentive fees earned from a U.S. CLO that was driven by the reset of its capital structure and extension of its reinvestment period; and (ii) incentive fees earned from a U.S. direct lending fund. Realized net performance income for the three months ended September 30, 2023 primarily included incentive fees earned from an alternative credit fund. In addition, realized net performance income for the nine months ended September 30, 2024 and 2023 included: (i) tax distributions from ACE IV, ACE V, PCS I and ASOF I; and (ii) incentive fees earned from two alternative credit funds that have annual measurement periods in the second quarter. Realized net performance income for the nine months ended September 30, 2024 also included tax distributions from an alternative credit fund, while realized net performance income for the nine months ended September 30, 2023 included tax distributions from ACE III.
Previous report
Realized net investment income for the three and nine months ended September 30, 2024 and 2023 included interest income generated from our CLO investments, where we earned a similar level of income from: (i) 12 and 13 CLO investments for the three months ended September 30, 2024 and 2023, respectively; and (ii) 15 and 16 CLO investments for the nine months ended September 30, 2024 and 2023, respectively. The activity for the three and nine months ended September 30, 2024 also included dividend income from our investments in an APAC credit fund and a European liquid credit vehicle that is invested in the subordinated notes of European CLOs. The activity for the nine months ended September 30, 2024 also included income recognized in connection with distributions from our investment in a U.S. direct lending fund, while the nine months ended September 30, 2023 included distributions from our investment in a commercial finance fund that was sold during the second quarter of 2023.
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Reworded paragraphs (75)
Previous wording
We believe that our disciplined investment philosophy across our distinct but complementary investment groups contributes to the stability of our performance throughout market cycles. For the three months ended September 30, 2024, 95% of our management fees were derived from perpetual capital vehicles or long-dated funds. Our funds have a stable base of committed capital enabling us to invest in assets with a long-term focus over different points in a market cycle and to take advantage of market volatility. However, our results from operations, including the fair value of our AUM, are affected by a variety of factors. Conditions in the global financial markets and economic and political environments may impact our business, particularly in the U.S., Europe and Asia-Pacific (“APAC”).
Current wording
We believe that our disciplined investment philosophy across our distinct but complementary investment groups contributes to the stability of our performance throughout market cycles. For the three months ended March 31, 2025, 92% of our management fees were derived from perpetual capital vehicles or long-dated funds. Our funds have a stable base of committed capital enabling us to invest in assets with a long-term focus over different points in a market cycle and to take advantage of market volatility. However, our results from operations, including the fair value of our AUM, are affected by a variety of factors. Conditions in the global financial markets and economic and political environments may impact our business, particularly in the U.S., Europe and Asia-Pacific (“APAC”).
Previous wording
We believe our portfolios across all strategies are well positioned for a fluctuating interest rate environment. On a market value basis, approximately 85% of our debt assets and 57% of our total assets were floating rate instruments as of September 30, 2024.
Current wording
We believe our portfolios across all strategies are well positioned for a fluctuating interest rate environment. On a market value basis, approximately 85% of our debt assets and 52% of our total assets were floating rate instruments as of March 31, 2025.
Previous wording
We measure our business performance using certain operating metrics that are common to the alternative asset management industry and are discussed below.
Current wording
We measure our business performance using certain operating metrics that are common to the alternative investment management industry and are discussed below.
Previous wording
(1) Includes $14.4 billion and $15.2 billion of AUM of funds from which we indirectly earn management fees as of September 30, 2024 and 2023, respectively, and includes $4.2 billion and $3.6 billion of non-fee paying AUM from our general partner and employee commitments as of September 30, 2024 and 2023, respectively.
Current wording
(1) Includes $14.1 billion and $14.7 billion of AUM of funds from which we indirectly earn management fees as of March 31, 2025 and 2024, respectively, and includes $5.2 billion and $4.1 billion of non-fee paying AUM from our general partner and employee commitments as of March 31, 2025 and 2024, respectively.
Previous wording
(2)Includes $67.8 billion and $56.8 billion from funds that primarily invest in illiquid strategies as of September 30, 2024 and 2023, respectively. The underlying investments held in these funds are generally subject to less market volatility than investments held in liquid strategies.
Current wording
(2)Includes $76.7 billion and $60.3 billion from funds that primarily invest in illiquid strategies as of March 31, 2025 and 2024, respectively. The underlying investments held in these funds are generally subject to less market volatility than investments held in liquid strategies.
Previous wording
We view the duration of funds we manage as a metric to measure the stability of our future management fees. For both the three months ended September 30, 2024 and 2023, 95% of management fees were earned from perpetual capital or long-dated funds.
Current wording
We view the duration of funds we manage as a metric to measure the stability of our future management fees. For the three months ended March 31, 2025 and 2024, 92% and 95%, respectively, of management fees were earned from perpetual capital or long-dated funds.
Previous wording
As of September 30, 2024, AUM Not Yet Paying Fees includes $74.1 billion of AUM available for future deployment that could generate approximately $721.5 million in potential incremental annual management fees. As of September 30, 2023,
Current wording
As of March 31, 2025, AUM Not Yet Paying Fees includes $81.5 billion of AUM available for future deployment that could generate approximately $764.4 million in potential incremental annual management fees, which represents 29% embedded gross base management fee growth upon deployment. As of March 31, 2024, AUM Not Yet Paying Fees included $64.6 billion of AUM available for future deployment that could generate approximately $621.5 million in potential incremental annual management fees. Development assets not yet stabilized represents fund assets that are in the development stage. Upon completion of development, management fees generally increase with a change in fee base, in fee rate or both. As of March 31, 2025, development assets not yet stabilized could generate approximately $22.7 million in potential incremental annual management fees.
Previous wording
Fee related performance revenues are not recognized by us until such fees are crystallized and no longer subject to reversal. As of September 30, 2024, perpetual capital IGAUM that could generate fee related performance revenues totaled $20.4 billion, composed of $18.5 billion within the Credit Group and $1.9 billion within the Secondaries Group. As of September 30, 2023, perpetual capital IGAUM from which we could generate fee related performance revenues totaled $14.3 billion, composed of $13.9 billion within the Credit Group and $0.4 billion within the Secondaries Group. As of September 30, 2024 and 2023, IGAUM included $42.8 billion and $35.7 billion, respectively, of AUM from funds generating incentive income that is not recognized by Ares until such fees are crystallized or no longer subject to reversal.
Current wording
Fee related performance revenues are not recognized by us until such fees are crystallized and no longer subject to reversal. As of March 31, 2025, perpetual capital IGAUM that could potentially result in crystallized fee related performance revenues totaled $25.7 billion, composed of $19.5 billion within the Credit Group, $3.5 billion within the Real Assets Group and $2.7 billion within the Secondaries Group. As of March 31, 2024, perpetual capital IGAUM that could potentially result in crystallized fee related performance revenues totaled $19.2 billion, composed of $18.2 billion within the Credit Group and $1.0 billion within the Secondaries Group. As of March 31, 2025 and 2024, IGAUM included $37.9 billion and $37.6 billion, respectively, of AUM from funds generating incentive income that is not recognized by Ares until such fees are crystallized or no longer subject to reversal.
Previous wording
Fund performance information for our funds considered to be “significant funds” is included throughout this discussion with analysis to facilitate an understanding of our results of operations for the periods presented. Our significant funds are commingled funds that either contributed at least 1% of our total management fees or comprised at least 1% of the Company’s total FPAUM for the past two consecutive quarters. In addition to management fees, each of our significant funds may generate carried interest or incentive fees upon the achievement of performance hurdles. The fund performance information reflected in this discussion and analysis is not indicative of our overall performance. An investment in Ares is not an investment in any of our funds. Past performance is not indicative of future results. As with any investment, there is always the potential for gains as well as the possibility of losses. There can be no assurance that any of these funds or our other existing and future funds will achieve similar returns.
Current wording
Fund performance information for our funds considered to be “significant funds” is included throughout this discussion with analysis to facilitate an understanding of our results of operations for the periods presented. Our significant funds are commingled funds that either contributed at least 1% of our total management fees or comprised at least 1% of our total FPAUM for each of the last two consecutive quarters. In addition to management fees, each of our significant funds may generate carried interest or incentive fees upon the achievement of performance hurdles. The fund performance information reflected in this discussion and analysis is not indicative of our overall performance. An investment in Ares is not an investment in any of our funds. Past performance is not indicative of future results. As with any investment, there is always the potential for gains as well as the possibility of losses. There can be no assurance that any of these funds or our other existing and future funds will achieve similar returns.
Previous wording
To further facilitate an understanding of the impact a significant fund may have on our results, we present our drawdown funds as either harvesting investments or deploying capital to indicate the fund’s stage in its life cycle. A fund harvesting investments is generally not seeking to deploy capital into new investment opportunities, while a fund deploying capital is generally seeking new investment opportunities.
Current wording
To further facilitate an understanding of the impact a significant fund may have on our results, we present our drawdown funds as either harvesting investments or deploying capital to indicate the fund’s stage in its life cycle. A fund harvesting investments is past its investment period and opportunistically seeking to monetize investments, while a fund deploying capital is generally seeking new investment opportunities.
Previous wording
These non-GAAP financial measures supplement and should be considered in addition to and not in lieu of, the results of operations, which are discussed further under “—Components of Consolidated Results of Operations” and are prepared in accordance with GAAP. We operate through our distinct operating segments. On January 1, 2024, we changed our segment composition. The special opportunities strategy, historically part of the Private Equity Group, is now referred to as opportunistic credit and is presented within the Credit Group. Historical results have been modified to conform with the current presentation.
Current wording
Components of Consolidated Results of Operations
Previous wording
In October 2024, Ares entered into a definitive agreement to acquire the international business of GLP Capital Partners Limited and certain of its affiliates, excluding its operations in Greater China (“GCP International”) and existing capital commitments to certain managed funds (such acquisition of GCP International and the capital commitments, the “GCP Acquisition”). GCP International is a global alternative asset management firm with AUM of $44.0 billion as of June 30, 2024. The total initial consideration for the GCP Acquisition is approximately $3.7 billion, comprised of approximately $1.8 billion of cash consideration and approximately $1.9 billion of equity consideration, in each case subject to certain adjustments. The sellers are also eligible to additional variable consideration in the form of an earn-out provision not to exceed $1.5 billion.
Current wording
On March 1, 2025, we completed the acquisition of the international business of GLP Capital Partners Limited and certain of its affiliates, excluding its operations in Greater China (“GCP International”), and existing capital commitments to certain managed funds (such acquisition of GCP International and the capital commitments, the “GCP Acquisition”). The GCP Acquisition adds complementary real estate and digital infrastructure investment capabilities and expands the Company’s geographic presence. The activities of GCP International are included within the Real Assets Group segment.
Previous wording
Consolidated Funds represented approximately 4% of our AUM as of September 30, 2024 and less than 1% of total revenues for the nine months ended September 30, 2024. As of September 30, 2024, we consolidated 28 CLOs, 10 private funds and one SPAC, and as of September 30, 2023, we consolidated 26 CLOs, nine private funds and two SPACs.
Current wording
Consolidated Funds represented approximately 3% of our AUM as of March 31, 2025 and 2% of total revenues for the three months ended March 31, 2025. As of March 31, 2025, we consolidated 27 CLOs, 11 private funds and one SPAC, and as of March 31, 2024, we consolidated 28 CLOs, 10 private funds and one SPAC.
Previous wording
We generally deconsolidate funds and CLOs when we are no longer deemed to have a controlling interest in the entity. During the nine months ended September 30, 2024, we did not deconsolidate any entities. During the nine months ended September 30, 2023, we deconsolidated one private fund as a result of significant change in ownership.
Current wording
We generally deconsolidate funds and CLOs when we are no longer deemed to have a controlling interest in the entity. During the three months ended March 31, 2025 and 2024, we did not deconsolidate any entities.
Previous wording
Management Fees. Capital deployment in direct lending, alternative credit and opportunistic credit funds within the Credit Group led to a rise in FPAUM, contributing to increases in management fees of$63.2 million and$177.9 million for thethree and nine months ended September 30, 2024, respectively, compared to the same periods in 2023. Part I Fees increased by $26.7 million and$78.6 million for thethree and nine months ended September 30, 2024, respectively, compared to the same periods in 2023. The increases in Part I Fees were primarily due to: (i) the increases in pre-incentive fee net investment income generated by ARCC, ASIF and CADC, driven by an increase in the average size of their portfolios and the impact of rising interest rates, given their primarily floating-rate loan portfolios; and (ii) the increases in pre-incentive fee net investment income from AESIF that began generating Part I Fees after the third quarter of 2023. Within the Private Equity Group, funds that we manage as a result of the Crescent Point Acquisition, which was completed on October 2, 2023, generated additional fees of $7.5 million and $22.1 million for the three and nine months ended September 30, 2024, respectively. For detail regarding the fluctuations of management fees within each of our segments, see “—Results of Operations by Segment.”
Current wording
Management Fees. Within the Credit Group, capital raised by our publicly-traded and perpetual wealth vehicles contributed to an increase in management fees of$41.6 millionfor thethree months ended March 31, 2025 compared to the same period in 2024. Capital deployment in private funds within our direct lending and alternative credit strategies led to a rise in FPAUM, contributing to an increase in management fees of$23.4 million for thethree months ended March 31, 2025 compared to the same period in 2024. Part I Fees increased by $15.1 million for thethree months ended March 31, 2025 compared to the same period in 2024. The increase in Part I Fees was primarily due to the increase in pre-incentive fee net investment income generated by ASIF, CADC and our open-ended European direct lending fund, driven by an increase in the average size of their portfolios. Within the Real Assets Group, funds that we manage as a result of the GCP Acquisition and the acquisition of Walton Street Capital Mexico S. de R.L. de C.V. and certain of its affiliates (“WSM”) (“WSM Acquisition”), generated $29.4 million in additional management fees for the three months ended March 31, 2025. For detail regarding the fluctuations of management fees within each of our segments, see “—Results of Operations by Segment.”
Previous wording
For detail regarding the fluctuations of incentive fees within each of our segments, see discussion of fee related performance revenues and realized net performance income within “—Results of Operations by Segment”.
Current wording
We earned higher incentive fees for the three months ended March 31, 2025 compared to the three months ended March 31, 2024 primarily from a European direct lending fund and from APMF. For further detail regarding the incentive fees within each of our segments, see discussion of fee related performance revenues and realized net performance income within “—Results of Operations by Segment.”
Previous wording
Principal Investment Income. The activity for the three and nine months ended September 30, 2024 was primarily composed of: (i) appreciation of certain investments in funds within our real estate debt and European direct lending strategies; (ii) distributions of investment income from an infrastructure debt fund; (iii) realized gains from the sale of an infrastructure opportunities fund’s investment in a wind energy company. The activity for the nine months ended September 30, 2024 also included: (i) interest income earned from new investors subsequently committed to an insurance fund, where capital account balances are reallocated from existing investors in exchange for interest to compensate for carrying costs; (ii) appreciation of certain investments in funds within our infrastructure opportunities and U.S. direct lending strategies; and (iii) distributions of investment income from funds within our real estate debt and European direct lending strategies; partially offset by (iv) unrealized losses from certain investments in funds within our real estate secondaries, APAC credit, private equity secondaries and opportunistic credit strategies.
Current wording
The activity for the three months ended March 31, 2025 was primarily attributable to:
Previous wording
Administrative, Transaction and Other Fees. The increase for the three months ended September 30, 2024 compared to the same period in 2023 was primarily driven by: (i) higher administrative service fees of $4.6 million, primarily from private funds within our Credit Group that are based on invested capital and from our non-traded vehicles; and (ii) higher development fees of $1.7 million from property-related activities within certain U.S. real estate equity funds; partially offset by (iii) lower asset-based, net distribution fees associated with our non-traded REITs of $0.9 million.
Current wording
The increase in fees over the comparative period was also driven by higher administrative service fees of $3.9 million primarily from private funds within our Credit Group that are based on invested capital and from our perpetual wealth vehicles.
Previous wording
The increase in compensation and benefits for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023 was primarily driven by (i) an increase in salary expenses of $5.3 million, primarily attributable to headcount growth to support the expansion of our business; and (ii) an increase in payroll related taxes of $2.5 million, primarily due to the higher stock price associated with our restricted units that vested during the first quarter of 2024. Conversely, the increase in compensation and benefits for the nine months ended September 30, 2024 compared to the same period in 2023 was partially offset by (i) lower incentive-based compensation; and (ii) higher administrative fees reimbursement for expenses for the current year period.
Current wording
The increase in compensation and benefits for the three months ended March 31, 2025 compared to the same period in 2024 was also driven by: (i) an increase in payroll-related taxes of $17.2 million, primarily due to the higher stock price associated with equity awards that vested during the current quarter; and (ii) an increase in salary expense of $12.7 million primarily attributable to headcount growth to support the expansion of our business.
Previous wording
In addition, occupancy costs, information services and information technology costs collectively increased by $10.5 million and $30.0 million for the three and nine months ended September 30, 2024, respectively, compared to the same periods in 2023 to support our growing headcount and the expansion of our business, including costs for our new corporate headquarters that we occupied beginning in third quarter of 2024.
Current wording
In addition, occupancy costs, information services and information technology costs collectively increased by $7.9 million for the three months ended March 31, 2025 compared to the same period in 2024. The increases in these expenses were primarily to support our growing headcount and the expansion of our business, with occupancy costs also being impacted by the expansion of our New York office.
Previous wording
The activity for the three and nine months ended September 30, 2023 was primarily attributable to: (i) unrealized gains from the appreciation of our investments in APMF and in certain strategic investments in companies that manage real estate owned properties and portfolios of non-performing loans; partially offset by (ii) unrealized losses from our strategic investment in a U.S. financial technology company.
Current wording
•Unrealized gains from our strategic investments in a U.S. energy company, primarily as a result of the increase in value of our various common and preferred equity investments, as well as unrealized gains on our investments from: (i) APMF; (ii) certain strategic investments in a company that manages real estate owned properties; partially offset by (iii) unrealized losses from our strategic investment in a non-core insurance related investment and a company that manages portfolios of non-performing loans
Previous wording
Other Income (Expense), Net. The activity for the three and nine months ended September 30, 2024 and 2023 primarily included transaction gains (losses) associated with currency fluctuations impacting the revaluation of assets and liabilities denominated in foreign currencies other than an entity’s functional currency. Transaction losses for the three and nine months ended September 30, 2024 were primarily attributable to the British Pound strengthening against the U.S. dollar and Euro. Transaction gains for the three months ended September 30, 2023 were primarily attributable to the Euro strengthening against the U.S. dollar and British pound. Despite the gains during the third quarter of 2023, we recognized transaction losses for the nine months ended September 30, 2023 primarily due to the Euro weakening against the U.S. dollar and British pound for the year-to-date period.
Current wording
Other Income (Expense), Net. The activity for the three months ended March 31, 2025 and 2024 included transaction gains (losses) associated with currency fluctuations impacting the revaluation of assets and liabilities denominated in foreign currencies other than an entity’s functional currency. Transaction losses for the three months ended March 31, 2025 were primarily attributable to the U.S. dollar weakening against the British Pound and Euro and the associated impact on entities with functional currencies other than the U.S. dollar.
Previous wording
The increases in income tax expense were attributable to higher pre-tax income allocable to AMC for the three and nine months ended September 30, 2024 compared to the same periods in 2023 as the income attributed to redeemable and non-controlling interests is generally passed through to partners and not subject to corporate income taxes. The calculation of income taxes is also sensitive to any changes in weighted average daily ownership.
Current wording
The decrease in income tax expense was attributable to lower pre-tax income allocable to AMC for the three months ended March 31, 2025 compared to the same period in 2024 as the income attributed to redeemable and non-controlling interests is generally passed through to partners and not subject to corporate income taxes. As income tax expense also includes any taxes accrued in foreign or local jurisdictions, the calculation of total income taxes is sensitive to any changes in income subject to tax at the entity level.
Previous wording
The changes in ownership for the comparative periods were primarily driven by the issuances of shares of Class A common stock in connection with exchanges of AOG Units, the public offering that closed in June 2024 and the subsequent exercise of the underwriter’s option to purchase additional shares in July 2024 (the “Offering”), stock option exercises, vesting of restricted stock awards and the Crescent Point Acquisition.
Current wording
The change in ownership compared to the prior year period was primarily driven by the issuances of shares of Class A common stock in connection with exchanges of Ares Operating Group Units (“AOG Units”), the GCP Acquisition, the public offering that closed during the second quarter of 2024 (the “Offering”) and vesting of restricted unit awards.
Previous wording
The change in net income attributable to non-controlling interests in AOG entities over the comparative periods was a result of the respective changes in income before taxes and weighted average daily ownership, as presented above.
Current wording
The change in net income attributable to non-controlling interests in AOG entities compared to the prior year was a result of the respective changes in income before taxes and weighted average daily ownership, as presented above.
Previous wording
Income before provision for income taxes is the GAAP financial measure most comparable to RI and FRE. The following table presents the reconciliation of income before taxes as reported within the Condensed Consolidated Statements of Operations to RI and FRE of the reportable segments and the OMG ($ in thousands):
Current wording
Income before provision for income taxes is the GAAP financial measure most comparable to RI. The following table presents the reconciliation of income before taxes as reported within the Condensed Consolidated Statements of Operations to RI and FRE of the reportable segments and the OMG ($ in thousands):
Previous wording
(1)Represents contingent obligations (“earnouts”) in connection with the acquisitions of AMP Capital’s infrastructure debt platform (“Infrastructure Debt Acquisition”) and Crescent Point Capital (“Crescent Point”) (the “Crescent Point Acquisition”) that are recorded as compensation expense and are presented within compensation and benefits within the Company’s Condensed Consolidated Statements of Operations.
Current wording
(1)Represents bonus payments, contingent liabilities (“earnouts”) and other costs in connection with various acquisitions that are recorded as compensation expense and are presented within compensation and benefits within our Condensed Consolidated Statements of Operations.
Previous wording
Compensation and Benefits. The increases in compensation and benefits for the three and nine months ended September 30, 2024 compared to the three and nine months ended September 30, 2023 were primarily driven by: (i) higher fee related performance compensation of $31.3 million and $35.0 million, respectively, corresponding to the increases in fee related performance revenues; and (ii) increases in salary expense of $2.2 million and $8.4 million, respectively, primarily attributable to headcount growth to support the expansion of our business. The increases in compensation and benefits over the comparative periods were also driven by higher Part I Fee compensation of $11.9 million and $35.4 million, respectively, corresponding to the increases in Part I Fees that were partially reduced by a portion of supplemental distribution fees we paid to distribution partners. We reduce Part I Fee compensation by a portion of the supplemental distribution fees paid to the extent that Part I Fees are earned. For the three and nine months ended September 30, 2024, we reduced Part I Fee compensation by $3.3 million and $8.0 million, respectively, as reimbursement for supplemental distribution fees paid.
Current wording
Compensation and Benefits. The increase in compensation and benefits for the three months ended March 31, 2025 compared to the three months ended March 31, 2024 was primarily driven by (i) higher fee related performance compensation of $12.8 million, corresponding to the increase in fee related performance revenues; (ii) an increase in payroll-related taxes of $8.1 million, primarily due to the higher stock price associated with equity awards that vested during the current quarter; and (iii) higher Part I Fee compensation of $6.4 million, corresponding to the increase in Part I Fees. For the three months ended March 31, 2025 and 2024, we reduced Part I Fee compensation by $4.8 million and $1.2 million, respectively, to reclaim a portion of the supplemental distribution fees that we paid to distribution partners.
Previous wording
Average headcount increased by 13% to 663 investment and investment support professionals for the year-to-date period in 2024 from 586 professionals for the same period in 2023 as we continued to add professionals, primarily to support our growing direct lending and alternative credit platforms.
Current wording
Average headcount increased by 7% to 698 investment and investment support professionals for the year-to-date period in 2025 from 650 professionals in 2024 to support our growing direct lending and alternative credit platforms.
Previous wording
Additionally, certain expenses increased during the current period, including occupancy costs, information services and information technology costs. These expenses collectively increased by $2.7 million and $6.5 million for the three and nine months ended September 30, 2024, respectively, compared to the same periods in 2023 to support our growing headcount and the expansion of our business, including costs for our new corporate headquarters that we occupied beginning in third quarter of 2024. Separately, total professional service fees rose by $4.9 million and $6.1 million for the three and nine months ended September 30, 2024, respectively, compared to the same periods in 2023, primarily related to certain non-recurring legal fees.
Current wording
Additionally, certain expenses increased during the current period, including occupancy costs, information services and information technology costs. These expenses collectively increased by $2.9 million for the three months ended March 31, 2025 compared to the same period in 2024 to support our growing headcount and the expansion of our business.
Previous wording
The following table presents the accrued carried interest, also referred to as accrued performance income, and related performance compensation for the Credit Group. Accrued net performance income excludes net performance income that has been realized but not yet received as of the reporting date ($ in thousands):
Current wording
The following table presents the accrued carried interest, also referred to as accrued performance income, and related performance compensation for the Credit Group. Accrued net performance income excludes net performance income that has been realized but not yet received as of the reporting date ($ in millions):
Previous wording
(1) Includes $14.4 billion and $15.2 billion of AUM of funds from which we indirectly earn management fees as of September 30, 2024 and 2023, respectively, and includes $1.7 billion and $1.6 billion of non-fee paying AUM from our general partner and employee commitments as of September 30, 2024 and 2023, respectively.
Current wording
(1) Includes $14.1 billion and $14.7 billion of AUM of funds from which we indirectly earn management fees as of March 31, 2025 and 2024, respectively, and includes $2.0 billion and $1.7 billion of non-fee paying AUM from our general partner and employee commitments as of March 31, 2025 and 2024, respectively.
Previous wording
(1)Includes $43.5 billion and $33.4 billion from funds that primarily invest in illiquid strategies as of September 30, 2024 and 2023, respectively. The underlying investments held in these funds are generally subject to less market volatility than investments held in liquid strategies.
Current wording
(1)Includes $50.4 billion and $36.8 billion from funds that primarily invest in illiquid strategies as of March 31, 2025 and 2024, respectively. The underlying investments held in these funds are generally subject to less market volatility than investments held in liquid strategies.
Previous wording
ARCC contributed approximately 34% of the Credit Group’s total management fees for the nine months ended September 30, 2024. In addition, the Credit Group’s other significant funds, which are presented in the tables below, collectively contributed approximately 37% of the Credit Group’s management fees for the nine months ended September 30, 2024.
Current wording
ARCC contributed approximately 32% of the Credit Group’s total management fees for the three months ended March 31, 2025. In addition, the Credit Group’s other significant funds, which are presented in the tables below, collectively contributed approximately 38% of the Credit Group’s management fees for the three months ended March 31, 2025.
Previous wording
(4)Returns are time-weighted rates of return and include the reinvestment of income and other earnings from securities or other investments and reflect the deduction of all trading expenses. The fund is made up of a Main Class (“Class M”) and a Constrained Class (“Class C”). Class M includes investors electing to participate in all investments and Class C includes investors electing to be excluded from exposure to liquid investments. Returns presented in the table are for onshore Class M. The current quarter gross and net returns for Class M (offshore) are 4.4% and 3.0%, respectively. The year-to-date gross and net returns for Class M (offshore) are 11.5% and 8.0%, respectively. The since inception gross and net returns for Class M (offshore) are 11.5% and 8.1%, respectively. The current quarter gross and net returns for Class C (offshore) are 4.0% and 2.8%, respectively. The year-to-date gross and net returns for Class C (offshore) are 10.2% and 7.2%, respectively. The since inception gross and net returns for Class C (offshore) are 11.2% and 8.0%, respectively.
Current wording
(4)Returns are time-weighted rates of return and include the reinvestment of income and other earnings from securities or other investments and reflect the deduction of all trading expenses. The fund is made up of a Main Class (“Class M”) and a Constrained Class (“Class C”). Class M includes investors electing to participate in all investments and Class C includes investors electing to be excluded from exposure to liquid investments. Returns presented in the table are for onshore Class M. The current quarter gross and net returns for Class M (offshore) are 3.0% and 2.1%, respectively. The since inception gross and net returns for Class M (offshore) are 11.6% and 8.2%, respectively. The current quarter gross and net returns for Class C (offshore) are 2.5% and 1.8%, respectively. The since inception gross and net returns for Class C (offshore) are 11.2% and 8.0%, respectively.
Previous wording
(7)ACE IV is made up of four parallel funds, two denominated in Euros and two denominated in pound sterling: ACE IV (E) Unlevered, ACE IV (G) Unlevered, ACE IV (E) Levered and ACE IV (G) Levered and one feeder fund: ACE IV (D) Levered. ACE IV (E) Levered includes the ACE IV (D) Levered feeder fund. The gross and net IRR and MoIC presented in the table are for ACE IV (E) Unlevered and ACE IV (E) Levered. Metrics for ACE IV (E) Levered exclude the U.S. dollar denominated feeder fund. The gross and net IRR for ACE IV (G) Unlevered are 9.7% and 7.1%, respectively. The gross and net MoIC for ACE IV (G) Unlevered are 1.5x and 1.3x, respectively. The gross and net IRR for ACE IV (G) Levered are 12.7% and 9.0%, respectively. The gross and net MoIC for ACE IV (G) Levered are 1.6x and 1.4x, respectively. The gross and net IRR for ACE IV (D) Levered are 12.8% and 9.4%, respectively. The gross and net MoIC for ACE IV (D) Levered are 1.6x and 1.4x, respectively. Original capital commitments are converted to U.S. dollars at the prevailing exchange rate at the time of the fund’s closing. All other values for ACE IV Unlevered and ACE IV Levered are for the combined levered and unlevered parallel funds and are converted to U.S. dollars at the prevailing quarter-end exchange rate.
Current wording
(7)ACE IV is made up of four parallel funds, two denominated in Euros and two denominated in pound sterling: ACE IV (E) Unlevered, ACE IV (G) Unlevered, ACE IV (E) Levered and ACE IV (G) Levered and one feeder fund: ACE IV (D) Levered. ACE IV (E) Levered includes the ACE IV (D) Levered feeder fund. The gross and net IRR and MoIC presented in the table are for ACE IV (E) Unlevered and ACE IV (E) Levered. Metrics for ACE IV (E) Levered exclude the U.S. dollar denominated feeder fund. The gross and net IRR for ACE IV (G) Unlevered are 9.7% and 7.1%, respectively. The gross and net MoIC for ACE IV (G) Unlevered are 1.5x and 1.4x, respectively. The gross and net IRR for ACE IV (G) Levered are 12.6% and 9.0%, respectively. The gross and net MoIC for ACE IV (G) Levered are 1.6x and 1.5x, respectively. The gross and net IRR for ACE IV (D) Levered are 12.7% and 9.3%, respectively. The gross and net MoIC for ACE IV (D) Levered are 1.7x and 1.5x, respectively. Original capital commitments are converted to U.S. dollars at the prevailing exchange rate at the time of the fund’s closing. All other values for ACE IV Unlevered and ACE IV Levered are for the combined levered and unlevered parallel funds and are converted to U.S. dollars at the prevailing quarter-end exchange rate.
Previous wording
(8)ACE V is made up of four parallel funds, two denominated in Euros and two denominated in pound sterling: ACE V (E) Unlevered, ACE V (G) Unlevered, ACE V (E) Levered, and ACE V (G) Levered, and two feeder funds: ACE V (D) Levered and ACE V (Y) Unlevered. ACE V (E) Levered includes the ACE V (D) Levered feeder fund and ACE V (E) Unlevered includes the ACE V (Y) Unlevered feeder fund. The gross and net IRR and gross and net MoIC presented in the table are for ACE V (E) Unlevered and ACE V (E) Levered. Metrics for ACE V (E) Levered exclude the ACE V (D) Levered feeder fund and metrics for ACE V (E) Unlevered exclude the ACE V (Y) Unlevered feeder fund. The gross and net IRR for ACE V (G) Unlevered are 12.9% and 9.7%, respectively. The gross and net MoIC for ACE V (G) Unlevered are 1.3x and 1.2x, respectively. The gross and net IRR for ACE V (G) Levered are 17.4% and 12.7%, respectively. The gross and net MoIC for ACE V (G) Levered are 1.4x and 1.3x, respectively. The gross and net IRR for ACE V (D) Levered are 16.3% and 12.2%, respectively. The gross and net MoIC for ACE V (D) Levered are 1.4x and 1.3x, respectively. The gross and net IRR for ACE V (Y) Unlevered are 11.4% and 8.3%, respectively. The gross and net MoIC for ACE V (Y) Unlevered are 1.3x and 1.2x, respectively. Original capital commitments are converted to U.S. dollars at the prevailing exchange rate at the time of the fund's closing. All other values for ACE V Unlevered and ACE V Levered are for the combined levered and unlevered parallel funds and are converted to U.S. dollars at the prevailing quarter-end exchange rate.
Current wording
(8)ACE V is made up of four parallel funds, two denominated in Euros and two denominated in pound sterling: ACE V (E) Unlevered, ACE V (G) Unlevered, ACE V (E) Levered, and ACE V (G) Levered, and two feeder funds: ACE V (D) Levered and ACE V (Y) Unlevered. ACE V (E) Levered includes the ACE V (D) Levered feeder fund and ACE V (E) Unlevered includes the ACE V (Y) Unlevered feeder fund. The gross and net IRR and gross and net MoIC presented in the table are for ACE V (E) Unlevered and ACE V (E) Levered. Metrics for ACE V (E) Levered exclude the ACE V (D) Levered feeder fund and metrics for ACE V (E) Unlevered exclude the ACE V (Y) Unlevered feeder fund. The gross and net IRR for ACE V (G) Unlevered are 12.6% and 9.5%, respectively. The gross and net MoIC for ACE V (G) Unlevered are 1.4x and 1.3x, respectively. The gross and net IRR for ACE V (G) Levered are 16.7% and 12.2%, respectively. The gross and net MoIC for ACE V (G) Levered are 1.5x and 1.3x, respectively. The gross and net IRR for ACE V (D) Levered are 15.7% and 11.8%, respectively. The gross and net MoIC for ACE V (D) Levered are 1.5x and 1.3x, respectively. The gross and net IRR for ACE V (Y) Unlevered are 11.1% and 8.1%, respectively. The gross and net MoIC for ACE V (Y) Unlevered are 1.3x and 1.2x, respectively. Original capital commitments are converted to U.S. dollars at the prevailing exchange rate at the time of the fund's closing. All other values for ACE V Unlevered and ACE V Levered are for the combined levered and unlevered parallel funds and are converted to U.S. dollars at the prevailing quarter-end exchange rate.
Previous wording
Compensation and Benefits. The increase in compensation and benefits for the three months ended September 30, 2024 compared to the three months ended September 30, 2023 was primarily driven by (i) an increase in salary expenses of $1.8 million, primarily attributable to headcount growth to support the expansion of our business; and (ii) higher incentive-based compensation, which is dependent on our operating performance and is expected to fluctuate during the year.
Current wording
The increase in compensation and benefits for the three months ended March 31, 2025 compared to the three months ended March 31, 2024 was also driven by (i) an increase in payroll-related taxes of $3.0 million, primarily due to the higher stock price associated with equity awards that vested during the current quarter; and (ii) an increase in salary expenses of $2.0 million, primarily attributable to headcount growth to support the expansion of our business.
Previous wording
General, Administrative and Other Expenses. The increases in general, administrative and other expenses for the comparative periods were primarily due to marketing and fundraising activities, including supplemental distribution fees charged in connection with an amended servicing arrangement with a distribution partner. Supplemental distribution fees increased by $0.6 million and $2.5 million for the three and nine months ended September 30, 2024, respectively, compared to the same periods in 2023. Marketing expenses for the comparative periods increased by $0.7 million and $2.8 million, respectively, driven by: (i) investor events held during the second quarter of 2024, including our firmwide AGM event; and (ii) fund formation costs for AREOF IV.
Current wording
The increase in general, administrative and other expenses for the three months ended March 31, 2025 compared to the three months ended March 31, 2024 was also driven by marketing and fundraising activities, including supplemental distribution fees charged in connection with an amended servicing arrangement that became effective subsequent to the first quarter of 2024. Supplemental distribution fees increased by $1.3 million for the three months ended March 31, 2025 compared to the same period in 2024. Marketing expenses for the comparative period also increased by $1.3 million driven by investor events held during the current quarter and non-reimbursable fund formation costs for certain real estate debt funds.
Previous wording
The following table presents the accrued carried interest, also referred to as accrued performance income, and related performance compensation for the Real Assets Group. Accrued net performance income excludes net performance income that has been realized but not yet received as of the reporting date ($ in thousands):
Current wording
The following table presents the accrued carried interest, also referred to as accrued performance income, and related performance compensation for the Real Assets Group. Accrued net performance income excludes net performance income that has been realized but not yet received as of the reporting date ($ in millions):
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Rearranged current paragraphs (10)
Current report — wording carried from elsewhere
•Principal investment income, primarily due to: (i) realized gains generated from various real estate debt and U.S. real estate equity funds; and (ii) interest income from newly admitted investors in an insurance fund, where capital account balances are reallocated from existing investors in exchange for interest to compensate for carrying costs
Current report — wording carried from elsewhere
The activity for the three months ended March 31, 2024 was primarily attributable to:
Current report — wording carried from elsewhere
The activity for the three months ended March 31, 2025 was primarily attributable to:
Current report — wording carried from elsewhere
The activity for the three months ended March 31, 2024 was primarily attributable to:
Current report — wording carried from elsewhere
The calculation of income taxes is also sensitive to any changes in weighted average daily ownership. The following table summarizes weighted average daily ownership:
Current report — wording carried from elsewhere
The following table presents the change in accrued performance income for the Credit Group ($ in millions):
Current report — wording carried from elsewhere
The following table presents the change in accrued performance income for the Real Assets Group ($ in millions):
Current report — wording carried from elsewhere
The following table presents the accrued carried interest, also referred to as accrued performance income, and related performance compensation for the Private Equity Group ($ in millions):
Current report — wording carried from elsewhere
The following table presents the change in accrued performance income for the Secondaries Group ($ in millions):
Current report — wording carried from elsewhere
For a discussion of our equity, see “Note 13. Equity and Redeemable Interest” within our unaudited condensed consolidated financial statements included in this Quarterly Report on Form 10-Q.
Rearranged previous paragraphs (2)
Previous report — wording carried elsewhere
AUM Not Yet Paying Fees included $65.7 billion of AUM available for future deployment that could generate approximately $647.4 million in potential incremental annual management fees.
Previous report — wording carried elsewhere
The following table summarizes weighted average daily ownership: