Slide 1: Ares Management Corporation Reports Fourth Quarter and Full Year 2020 Results
Ares Management Corporation Reports Fourth Quarter and Full Year 2020 Results LOS ANGELES--Ares Management Corporation (NYSE:ARES) today reported its financial results for its fourth quarter and full year ended December 31, 2020. GAAP net income attributable to Ares Management Corporation was $79.3
Slide 2: 2021 Annual Stockholders Meeting and Conference Call Information
2021 Annual Stockholders Meeting The Board of Directors set April 19, 2021 as the record date for the Company’s 2021 Annual Meeting of Stockholders. The 2021 Annual Meeting of Stockholders will be held on June 16, 2021. Conference Call and Webcast Information Ares will host a conference call on Febr
Slide 3: Earnings Presentation Fourth Quarter and Full Year 2020
Exhibit 99.2 Earnings Presentation Fourth Quarter and Full Year 2020
Slide 4: 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 5: Fourth Quarter and Full Year 2020 Highlights
Fourth Quarter and Full Year 2020 Highlights ∙ Total Assets Under Management ("AUM") of $197.0 billion ∙ Total Fee Paying AUM ("FPAUM") of $126.0 billion ∙ Available Capital of $56.3 billion Assets Under ∙ AUM Not Yet Paying Fees available for future deployment of $37.1 billion Management ∙ Raised $
Slide 6: Gross New Capital Commitments
Gross New Capital Commitments(1) $ in billions Q4 2020 FY 2020 Full Year Commentary Credit Group European Direct Lending $4.3 $14.5 Equity commitments to various funds including $11.1 billion for the fifth flagship European direct lending fund ARCC and affiliates 0.6 4.0 Primarily additional debt co
Slide 7: Assets Under Management
Assets Under Management AUM as of December 31, 2020 was $197.0 billion, an increase of 32.3% from prior year(1) ∙ The increase of $48.1 billion was driven by capital raising across all of our segments, including our fifth flagship European direct lending fund, closings for our sixth flagship corpora
Slide 8: Management Fees by Duration and Fund Type
Management Fees by Duration and Fund Type For the year ended December 31, 2020: ∙ 77% of management fees were earned from funds with three or more years remaining in duration ∙ 90% of management fees were earned from permanent capital, closed end funds and CLOs Duration Fund Type 1% 2% 3% 10% 7% 6%
Slide 9: AUM and FPAUM by Duration
AUM and FPAUM by Duration As of December 31, 2020, approximately 67% of AUM and 66% of FPAUM had a duration longer than 3 years ∙ Initial duration exceeded 7 years for approximately 74% of AUM based on each fund's first close AUM FPAUM 5% 6% 12% 15% 15% 17% 10% 11% 67% 66% 13% 11% 21% 16% 24% 24% Pe
Slide 10: Available Capital and AUM Not Yet Paying Fees
Available Capital and AUM Not Yet Paying Fees Available Capital as of December 31, 2020 was $56.3 billion, an increase of 62.7% from prior year ∙ The increase of $21.7 billion was driven primarily by fundraising in U.S. and European direct lending, including closings for our fifth flagship European
Slide 11: AUM Not Yet Paying Fees
AUM Not Yet Paying Fees As of December 31, 2020, AUM Not Yet Paying Fees of $40.0 billion could generate approximately $428.3 million in potential incremental annual management fees, of which $400.9 million relates to the $37.1 billion of AUM available for future deployment(1) ∙ The $37.1 billion of
Slide 12: Incentive Eligible AUM and Incentive Generating AUM
Incentive Eligible AUM and Incentive Generating AUM Incentive Eligible AUM as of December 31, 2020 was $117.0 billion, an increase of 33.9% from prior year ∙ The increase of $29.6 billion was primarily driven by capital raising across the following strategies: U.S. and European direct lending, and a
Slide 13: Capital Deployment
Capital Deployment(1) Q4-20 Capital Deployment Breakdown Total Gross Invested Capital for the year ended December 31, ($ in billions) 2020 was $26.7 billion compared to $27.4 billion for the year ended December 31, 2019 $0.4 ∙ Of the total amount, $21.4 billion was related to deployment $1.2 by our
Slide 14: GAAP Statements of Operations
GAAP Statements of Operations Three months ended December 31, Year ended December 31, $ in thousands, except share data 2020 2019 2020 2019 Revenues Management fees (includes ARCC Part I Fees of $57,269, $184,141 and $48,060, $164,396 for the $327,458 $265,321 $1,150,608 $979,417 three months and ye
Slide 15: RI and Other Measures Financial Summary
RI and Other Measures Financial Summary Three months ended December 31, Year ended December 31, $ in thousands, except share data (and as otherwise noted) 2020 2019 % Change 2020 2019 % Change (1) Management fees $334,984 $273,261 23% $1,186,565 $1,012,530 17% Other fees 7,027 5,049 39 19,948 18,078
Slide 16: GAAP to Non-GAAP Reconciliation – Unconsolidated Reporting Basis
GAAP to Non-GAAP Reconciliation – Unconsolidated Reporting Basis Three months ended December 31, Year ended December 31, $ in thousands 2020 2019 2020 2019 Realized Income and Fee Related Earnings: Income before taxes $275,153 $101,261 $379,478 $425,180 Adjustments: Amortization of intangibles(1) 9,
Slide 17: GAAP to Non-GAAP Reconciliation – Unconsolidated Reporting Basis (cont'd)
GAAP to Non-GAAP Reconciliation – Unconsolidated Reporting Basis (cont'd) Three months ended December 31, Year ended December 31, $ in thousands 2020 2019 2020 2019 Performance income and net investment income reconciliation: Carried interest allocation $264,228 $118,064 $505,608 $621,872 Incentive
Slide 18: Credit Group
Credit Group(1) ∙ Management and other fees increased by 18% for both Q4-20 and FY-20, compared to Q4-19 and FY-19, primarily driven by deployment in funds in the U.S. and European direct lending strategies and an increase in ARCC Part I Fees ∙ Fee Related Earnings increased by 21% for both Q4-20 an
Slide 19: Private Equity Group
Private Equity Group(1) ∙ Management and other fees increased by 14% and 5% for Q4-20 and FY-20, respectively, compared to Q4-19 and FY-19, primarily due to deployment in ASOF and to the sixth flagship corporate private equity fund, which began paying fees in Q4-20 ∙ Fee Related Earnings decreased b
Slide 20: Real Estate Group
Real Estate Group(1) ∙ Management and other fees increased by 34% and 12% for Q4-20 and FY-20, respectively, compared to Q4-19 and FY-19, primarily driven by management fees generated with the launch of our third U.S. opportunistic real estate equity fund and the launch of our third European value a
Slide 21: Realized Income per Share Data
Realized Income per Share Data Three months ended December 31, Year ended December 31, $ in thousands, except share data 2020 2019 2020 2019 After-tax Realized Income, net of Series A Preferred Stock dividends Realized Income before taxes $186,155 $206,136 $581,956 $503,486 Entity level foreign, sta
Slide 22: Balance Sheet
Balance Sheet Substantial balance sheet value related to investments primarily in Ares managed vehicles and net accrued performance income ∙ As of December 31, 2020, our balance sheet included $539.8 million in cash and cash equivalents and $643.0 million in debt obligations with no amounts drawn ag
Slide 23: Corporate Data
Corporate Data Board of Directors Executive Officers Research Coverage Investor Relations Contacts Michael Arougheti Michael Arougheti Bank of America Merrill Lynch Carl Drake Co-Founder, Chief Executive Officer Co-Founder, Chief Executive Officer Michael Carrier Partner/Head of Ares Management, LLC
Slide 24: Appendix
Appendix
Slide 25: Financial Details – Segments (Q4 2020)
Financial Details – Segments Three Months Ended December 31, 2020 Private Real Operations Credit Equity Estate Strategic Management $ in thousands Group Group Group Initiatives Group Total(1) Management fees (Credit Group includes ARCC Part I Fees of $57,269) $234,542 $60,954 $26,221 $13,267 $— $334
Slide 26: Financial Details – Segments (FY 2020)
Financial Details – Segments Year Ended December 31, 2020 Private Real Operations Credit Equity Estate Strategic Management $ in thousands Group Group Group Initiatives Group Total(1) Management fees (Credit Group includes ARCC Part I Fees of $184,141) $841,138 $221,160 $97,680 $26,587 $— $1,186,565
Slide 27: AUM Rollforward
AUM Rollforward Q4-20 AUM Rollforward Strategic $ in millions Credit Private Equity Real Estate Initiatives Total Q3-20 Ending Balance $131,228 $26,690 $14,379 $6,940 $179,237 Acquisitions — — — 2,243 2,243 Net new par/equity commitments 9,976 596 271 15 10,858 Net new debt commitments 1,822 — 150 —
Slide 28: FPAUM Rollforward
FPAUM Rollforward Q4-20 FPAUM Rollforward Strategic $ in millions Credit Private Equity Real Estate Initiatives Total Q3-20 Ending Balance $81,305 $17,719 $9,433 $4,289 $112,746 Acquisitions — — — 2,243 2,243 Commitments 2,387 4,028 194 — 6,609 Subscriptions/deployment/increase in leverage 3,916 253
Slide 29: AUM and FPAUM by Strategy
AUM and FPAUM by Strategy As of December 31, 2020 $ in billions AUM % AUM FPAUM % FPAUM Credit Syndicated Loans $28.0 19% $27.1 31% High Yield 2.8 2 2.9 3 Multi-Asset Credit 3.0 2 2.5 3 Alternative Credit 12.9 9 6.3 7 U.S. Direct Lending(1) 56.5 39 32.3 37 European Direct Lending 42.3 29 16.9 19 Cre
Slide 30: Balance Sheet Investments by Strategy
Balance Sheet Investments by Strategy(1) $ in millions December 31, 2020 December 31, 2019 Credit Syndicated Loans(2) $107.7 $104.7 Multi-Asset Credit 6.6 3.9 Alternative Credit 23.0 21.0 U.S. Direct Lending 53.5 61.3 European Direct Lending 35.7 32.8 Credit $226.5 $223.7 Private Equity ACOF IV $27.
Slide 31: Significant Fund Performance Metrics
Significant Fund Performance Metrics The following table presents the performance data for the significant funds in the Credit Group that are not drawdown funds: As of December 31, 2020 Returns(%)(1) Current Quarter Year -to-Date Since Inception (2) Primary Investment ($ in millions) Year of Incepti
Slide 32: Significant Fund Performance Metrics (cont’d)
Significant Fund Performance Metrics (cont’d) The following table presents the performance data for our significant drawdown funds (cont'd): As of December 31, 2020 Capital MOIC IRR(%) Year of Original Capital Invested to Realized Unrealized Total Primary Investment ($ in millions) Inception AUM Com
Slide 33: Significant Fund Performance Metrics Endnotes
Significant Fund Performance Metrics Endnotes Credit 1. 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. 2. Since inception returns are annualized. 3. Net return
Slide 34: Significant Fund Performance Metrics Endnotes (cont’d)
Significant Fund Performance Metrics Endnotes (cont’d) Private Equity 1. Realized value represents the sum of all cash dividends, interest income, other fees and cash proceeds from realizations of interests in portfolio investments. Realized value excludes any proceeds related to bridge financings.
Slide 35: Significant Fund Performance Metrics Endnotes (cont’d)
Significant Fund Performance Metrics Endnotes (cont’d) Real Estate 1. Realized value includes distributions of operating income, sales and financing proceeds received. 2. Unrealized value represents the fair value of remaining investments. There can be no assurance that unrealized investments will b
Slide 36: Supplemental Performance Metrics
Supplemental Performance Metrics The following table presents the performance data for commingled funds that were previously reported as significant funds in prior years: As of December 31, 2020 Original MOIC IRR(%) Year of Capital Capital Invested Realized Unrealized Total Primary Investment ($ in
Slide 37: Supplemental Performance Metrics Endnotes
Supplemental Performance Metrics Endnotes Credit 1. Realized proceeds represent the sum of all cash distributions to all partners and if applicable, exclude tax and incentive distributions made to the general partner. 2. Unrealized value represents the fund's NAV reduced by the accrued incentive all
Slide 38: Supplemental Performance Metrics Endnotes (cont’d)
Supplemental Performance Metrics Endnotes (cont’d) Private Equity (cont’d) 5. For the corporate private equity and infrastructure and power funds, the gross IRR is an annualized since inception gross internal rate of return of cash flows to and from investments and the residual value of the investme
Slide 39: Weighted Average Shares
Weighted Average Shares Q4-20 Q4-19 Common Shares, Common Shares, Total Shares As Adjusted(3) Total Shares As Adjusted(3) Weighted average shares of Class A common stock 144,592,791 144,592,791 114,943,915 114,943,915 Ares Operating Group Units exchangeable into shares of Class A common stock(1) 114
Slide 40: RI and Other Measures – Financial Data
RI and Other Measures – Financial Data(1) Year ended December 31, $ in thousands 2020 2019 2018 (2) Credit Group $841,138 $713,853 $564,899 Private Equity Group 221,160 211,614 198,182 Real Estate Group 97,680 87,063 73,663 Strategic Initiatives 26,587 — — Management fees 1,186,565 1,012,530 836,744
Slide 41: GAAP to Non-GAAP Reconciliation – Unconsolidated Reporting Basis
GAAP to Non-GAAP Reconciliation – Unconsolidated Reporting Basis Year ended December 31, $ in thousands 2020 2019 2018 Realized Income and Fee Related Earnings: Income before taxes $379,478 $425,180 $184,341 Adjustments: Amortization of intangibles(1) 21,195 23,460 9,032 Depreciation expense 19,467
Slide 42: 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 2020 2019 2018 Performance income and net investment income reconciliation: Carried interest allocation $505,608 $621,872 $42,410 Incentive fees 37,902 69,197 63,380 Carried interest allo
Slide 43: Glossary
Glossary ARCC Part I Fees ARCC Part I Fees refers to a quarterly performance income on the net investment income of Ares Capital Corporation (NASDAQ: ARCC) (“ARCC”). Such fees from ARCC are classified as management fees as they are predictable and recurring in nature, not subject to contingent repay
Slide 44: Glossary (cont’d)
Glossary (cont’d) 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 fro
Slide 45: Glossary (cont’d)
Glossary (cont’d) Performance Income Performance Income refers to income we earn based on the performance of a fund that is generally based on certain specific hurdle rates as defined in the fund’s investment management or partnership agreements and may be either an incentive fee or carried interest