Ares Management Corporation · NYSE:ARES
Ares Management — Investor Day (2021)
30 slides from Ares Management's investor day presentation, 2021
Slide 1: Real Estate Overview & Outlook
Real Estate Overview & Outlook David Roth Head of U.S. Real Estate Private Equity Ares Management Corporation Investor Day 2021 - Not for Publication or Distribution
Slide 2: Important Notice
Important Notice This presentation is prepared for Ares Management Corporation (NYSE: ARES) for the benefit of its public stockholders. This presentation is solely for information purposes in connection with evaluating the business, operations and financial results of Ares Management Corporation (“A
Slide 3: Important Notice
Important Notice Dated information: This video may contain dated information. Viewers are cautioned that this video and the associated presentation is maintained here solely for the purposes of providing historical background about Ares Management Corporation. As the video may contain dated informat
Slide 4: Ares Real Estate Group Overview
Ares Real Estate Group Overview Our Real Estate Group combines long standing relationships, local market intelligence, and deep property-level experience to seek to drive differentiated results $33.4B Key Differentiators & Advantages In Real Estate AUM EU Real Estate Scaled Platform with Significant
Slide 5: Global Real Estate Is One of the Largest Addressable Markets
Global Real Estate Is One of the Largest Addressable Markets We believe Ares is well positioned in the global real estate market with a focus on the liquid property types 2020 U.S. Transactions by Property Type2 2020 EU Transactions by Property Type2 23% $~30T 40% 3% 8% Global 4% Commercial 26% Real
Slide 6: Global Real Estate Platform with Local Reach
Global Real Estate Platform with Local Reach Global presence with “boots on the ground” model of real estate professionals located across 17 offices in the U.S. and Europe Current U.S. Real Estate Portfolio1,2 Current European Real Estate Portfolio1 Portfolio of real estate debt and equity investmen
Slide 7: Comprehensive Product Coverage
Comprehensive Product Coverage Full suite of complementary products and strategies brings significant competitive advantages to industry partners and institutional and retail investors Medium Return Target Lower Return Higher Target Return Target Non-Traded REITs Public REITs Open-End Closed-End Inv
Slide 8: Investing Across All Strategies with Attractive Performance
Investing Across All Strategies with Attractive Performance Debt Core / Core-Plus Value-Add Opportunistic Real Estate Debt US IX AREOF II Unlevered Levered 7% 9% 17% 31% Gross IRR5 Gross IRR5 Gross Return1 Gross Return1 /14% Net IRR6 /27% Net IRR6 /6% Net Return2 /8% Net Return2 Diversified Non-Trad
Slide 9: Deliberate and Resilient Portfolio Construction
Deliberate and Resilient Portfolio Construction Our focus on resilient property types led to strong performance through COVID Focus on Resilient Property Types1 Equity Fund Returns Have Rebounded2 U.S. Equity Quarterly Gross Returns 14.3% Overweight 9.2% 7.6% Industrial 6.4% Residential 3.6% 3.4
Slide 10: Key Drivers in Real Estate That Support Our Investment Approach
Key Drivers in Real Estate That Support Our Investment Approach We continue to position our portfolios in property types with sustainable long-term demand drivers Sector Ares View1 Industrial Penetration of E-commerce Suburban Versus Urban Living Multifamily Remote Work Office De-densification Adjac
Slide 11: Performance and Acquisitions Have Supported AUM Growth
Performance and Acquisitions Have Supported AUM Growth AUM growth and growth in our investor base are products of our strong track record AUM Growth1 ($ in billions) $33.4 Includes Black Creek Group 28% Acquisition of AUM in Permanent Capital and perpetual non-traded REITs3 $10.3 ~90% Organic AUM Gr
Slide 12: Consistent Growth in Successor Funds
Consistent Growth in Successor Funds Strong, consistent performance allows Ares to steadily increase fund size, on average, by 70% for each successor vehicle U.S. Value-Add Strategy U.S. Opportunistic Strategy First Close ($ in millions) ($ in millions) Additional Amounts Raised in Subsequent Closin
Slide 13: Expanding Profitability
Expanding Profitability The Real Estate Group has become more profitable with scale Real Estate Group Business Line Fee AUM Growth has Driven Enhanced ($ in millions) Related Earnings (FRE)1 Scaling of the Real Estate Group Fee Related Earnings $39 FRE has grown by over 3x1 since 2015 ($ mm) $13 201
Slide 14: Additional Key Macro Drivers in Real Estate
Additional Key Macro Drivers in Real Estate Core / Core-Plus - Majority of Global Real Retail Investors are Underallocated to Growth in E-Commerce Retail Sales is Estate AUM & Growing Faster1 Real Estate and Alternatives1 Driving Industrial Demand4 Global Real Estate AUM by Strategy Retail Investor
Slide 15: Acquisition of Black Creek Group Enhances Growth Outlook
Acquisition of Black Creek Group Enhances Growth Outlook Highly complementary combination of investment products, people and resources Identify Opportunity and Next Steps: Integrate Platform to Expand and Drive Scale Build Platform Expand across global institutional investor base Leading Core / Co
Slide 16: Significant Market Opportunity with a Leading Retail Platform
Significant Market Opportunity with a Leading Retail Platform Black Creek Group’s retail platform is a strategic asset to support future growth Non-Traded REIT Fundraising is Dominated by Ares’ Leading Retail Platform the Top 3 Platforms1 $27.3 #2 In 2020 based on dollars raised as measured by Stang
Slide 17: Future Growth Opportunities for the Ares Real Estate Group
Future Growth Opportunities for the Ares Real Estate Group We believe the Ares Real Estate Group is well positioned to meet our target of doubling in size over the next 5 years Broaden Investor Base Pursue Accretive New • Increase relevance of Ares Strategies, Products and products in the retail cha
Slide 18: Appendix
Appendix Ares Management Corporation Investor Day 2021 - Not for Publication or Distribution
Slide 19: GAAP Statement Of Operations
GAAP Statement Of Operations Year Ended December 31, $ in thousands, except share data Q2-21 LTM 2020 2019 2018 2017 2016 2015 2014 Revenues Management fees $1,307,451 $1,150,608 $979,417 $802,502 $722,419 $642,068 $634,399 $486,477 Carried interest allocation 1,583,262 505,608 621,872 42,410 620,45
Slide 20: RI and Other Measures Financial Summary
RI and Other Measures Financial Summary Year Ended December 31, $ in thousands, except share data (and as otherwise noted) Q2-21 LTM 2020 2019 2018 2017 2016 2015 2014 Management fees(1) $1,335,413 $1,186,565 $1,012,530 $836,744 $744,825 $659,451 $650,918 $598,046 Other fees 25,993 19,948 18,078 24,
Slide 21: GAAP to Non-GAAP Reconciliation – Unconsolidated Reporting Basis
GAAP to Non-GAAP Reconciliation – Unconsolidated Reporting Basis Year Ended December 31, $ in thousands Q2-21 LTM 2020 2019 2018 2017 2016 2015 2014 Realized Income and Fee Related Earnings: Income before taxes $944,635 $379,478 $425,180 $184,341 $149,859 $297,920 $81,484 $556,915 Adjustments: Amort
Slide 22: GAAP to Non-GAAP Reconciliation – Unconsolidated Reporting Basis (cont'd)
GAAP to Non-GAAP Reconciliation – Unconsolidated Reporting Basis (cont'd) Year Ended December 31, $ in thousands Q2-21 LTM 2020 2019 2018 2017 2016 2015 2014 Performance income and net investment income reconciliation: Carried interest allocation $1,583,262 $505,608 $621,872 $42,410 $620,454 $494,58
Slide 23: Glossary
Glossary Ares Management Corporation Investor Day 2021 - Not for Publication or Distribution
Slide 24: Glossary
Glossary ARCC Part II Fees ARCC Part II Fees refers to fees that are paid in arrears as of the end of each calendar year when the cumulative aggregate realized capital gains exceed the cumulative aggregate realized capital losses and aggregate unrealized capital depreciation, less the aggregate amou
Slide 25: Glossary
Glossary Fee Related Earnings Fee Related Earnings or “FRE”, a non-GAAP measure, is used to assess core operating performance by determining whether recurring revenue, primarily consisting of management fees, is sufficient to cover operating expenses and to generate profits. FRE differs from income
Slide 26: Glossary
Glossary Our Funds Our Funds refers to the funds, alternative asset companies, co-investment vehicles and other entities and accounts that are managed or co-managed by the Ares Operating Group, and which are structured to pay fees. It also includes funds managed by Ivy Hill Asset Management, L.P., a
Slide 27: Endnotes – Real Estate Overview & Outlook
Endnotes – Real Estate Overview & Outlook Ares Management Corporation Investor Day 2021 - Not for Publication or Distribution
Slide 28: Real Estate Overview & Outlook Endnotes
Real Estate Overview & Outlook Endnotes Global Real Estate Platform with Local Reach 1. Based on Gross Asset Value of all active real estate investments in the Ares Real Estate Group portfolio as of March 31, 2021. 2. U.S. map excludes $23.2 million of Gross Asset Value that cannot be allocated to a
Slide 29: Real Estate Overview & Outlook Endnotes
Real Estate Overview & Outlook Endnotes Deliberate and Resilient Portfolio Construction 1. Based on fair market value of our U.S. Equity funds as of March 31, 2020. 2. Performance for the U.S. real estate equity portfolio is represented by the U.S. equity real estate composite, which is comprised of
Slide 30: Ares Management Corporation Investor Day 2021 - Not for Publication or Distribution
Ares Management Corporation Investor Day 2021 - Not for Publication or Distribution