Slide 1: Important Notice
Important Notice This presentation contains “forward looking statements” within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, that are subject to risks and uncertainties. Actual outcomes and results could differ materially from those suggested by this presentation du
Slide 2: Second Quarter Highlights
Second Quarter Highlights • Available Capital increased to $24.3 billion • Fee Related Earnings of $39.6 million *Additional metric established to provide transparency on AUM currently paying direct management fees. For definition of FPAUM, please refer to the “Glossary” slide in the appendix. 1. Ne
Slide 3: Gross New Capital Commitments – Second Quarter
Gross New Capital Commitments – Second Quarter(1) 1. Represents gross new commitments during Q2-16, including equity and debt commitments and gross inflows into our open-ended managed accounts and sub-advised accounts. $ in millions Q2 2016 Comments Credit Group Ares Capital Europe III ("ACE III") $
Slide 4: Assets Under Management
Assets Under Management AUM of $95.3 billion as of June 30, 2016 increased 8.8% year over year • • $24.7 billion in gross new capital commitments over the last twelve months Q2-16 gross new commitments of $4.4 billion, of which $1.4 billion is already earning fees and another $2.6 billion is expecte
Slide 5: AUM, FEAUM and FPAUM Duration
AUM, FEAUM and FPAUM Duration As of June 30, 2016, approximately 78% of AUM, 75% of FEAUM and 72% of FPAUM was in capital with a duration greater than 3 years 16% 12% 15% 20% 23% 17% 6% 8% 15% 8% 5% 26% 21% 22% 25% 31% 25% Permanent Capital 10 or more years 7 to 9 years 3 to 6 years Fewer Than 3 yea
Slide 6: Incentive Eligible AUM and Incentive Generating AUM
Incentive Eligible AUM and Incentive Generating AUM Note: For definitions of IGAUM and IEAUM please refer to the “Glossary” slide in the appendix. Significant funds not contributing incentive fees as of June 30, 2016 included ACOF Asia, Ares European Real Estate Fund IV, ACRE and ARCC. However, ARCC
Slide 7: Available Capital and AUM Not Yet Earning Fees Summary
Available Capital and AUM Not Yet Earning Fees Summary Available Capital as of June 30, 2016 increased 32.5% year over year and 5.7% quarter over quarter • Available Capital increased from $23.0 billion in Q1-16 to $24.3 billion in Q2-16 The increase was primarily driven by new fund commitments to m
Slide 8: AUM Not Yet Earning Fees Summary
$698 $915 $356 AUM Not Yet Earning Fees Summary As of June 30, 2016, AUM Not Yet Earning Fees of $17.7 billion could generate approximately $206.1 million in potential incremental annual management fees, of which $186.3 million relates to the $15.7 billion of AUM Available for Future Deployment* $15
Slide 9: Capital Deployment
Capital Deployment Total gross invested capital during Q2-16 of $4.4 billion compared to $4.1 billion in Q2-15 Of the total amount, $2.4 billion was related to deployment in our drawdown funds compared to $1.6 billion for the same period in 2015 Of our drawdown funds, the most active investment stra
Slide 10: GAAP Statements of Operations
GAAP Statements of Operations 11
Slide 11: Stand Alone Financial Summary
Stand Alone Financial Summary 1. Includes ARCC Part I Fees of $29.0 million and $29.3 million for the three months ended June 30, 2016 and June 30, 2015, respectively, and $57.6 million and $58.3 million for the six months ended June 30, 2016 and June 30, 2015, respectively. 2. Includes compensation
Slide 12: GAAP to Non-GAAP Reconciliation – Stand Alone Reporting Basis
GAAP to Non-GAAP Reconciliation – Stand Alone Reporting Basis I ncome before ta xes Adjustments: $83,006 $57,551 $74,032 $104,001 Amorti za ti on of i nta ngi bl es 7,121 16,646 14,384 27,538 Depreci a ti on expens e 1,934 1,951 3,792 3,223 Equi ty compens a ti on expens es 9,536 7,798 18,709 15,719
Slide 13: GAAP to Non-GAAP Reconciliation – Stand Alone Reporting Basis (cont.)
GAAP to Non-GAAP Reconciliation – Stand Alone Reporting Basis (cont.) Tota l Stand Al one performa nce fee i ncome - rea l i zed $81,604 $59,061 $87,953 $94,700 Tota l Cons ol i da ted Funds ' performance fee i ncome - real i zed Performance fee - real i zed recl a s s (1) - (520) - (1,113) (2,712)
Slide 14: Credit Group
Credit Group(1) CLOs, ACE III and U.S. and E.U. Direct Lending mandates raised over the past year. The increase was partially offset by distributions from fund run off and liquidations • Management fees increased 2% compared to Q2-15, primarily driven by fundraising and deployment in new funds, incl
Slide 15: Private Equity Group
Private Equity Group(1) • • Management fees remained relatively flat compared to Q2-15 as ACOF V has not started its investment period Performance fees increased 184% compared to Q2-15 driven by strong appreciation in our North American/European Flexible Capital funds, including ACOF IV which exceed
Slide 16: Real Estate Group
Real Estate Group(1) • Management fees increased 2% compared to Q2-15, primarily driven by new fund commitments, partially offset by fund liquidations and distributions in funds past their investment periods Performance Related Earnings declined driven by lower net appreciation in certain U.S. equit
Slide 17: Economic Net Income per Unit Data
Economic Net Income per Unit Data Economi c Net Income Before Ta xes $102,351 $75,977 (-) Enti ty Level Forei gn, Sta te a nd Loca l Ta xes (3,367) (906) Economi c Net Income After Enti ty Level , Forei gn, Sta te a nd Loca l Ta xes $98,984 $75,071 (-) Income Ta x Provi s i on (1) (5,286) (6,565) Ec
Slide 18: Distributable Earnings per Unit Data
Distributable Earnings per Unit Data Di s tri buta bl e Ea rni ngs $76,820 $72,956 x Ares Opera ti ng Group Uni ts (1) Owners hi p % 62.08% 62.14% Di s tri buta bl e Ea rni ngs $76,820 $72,956 x Common Uni thol der Owners hi p % 37.92% 37.86% (-) Current Provi s i on for Income Ta xes (2) (3,816) (4
Slide 19: Balance Sheet Highlights
Balance Sheet Highlights $264.6 million in cash & cash equivalents, $279.4 million in debt obligations and no amounts drawn against the $1.03 billion revolving credit facility as of June 30, 2016 Issued $310 million in preferred equity, which generated net proceeds of $299 million Of this amount, $2
Slide 20: Corporate Data
Corporate Data Contacts Partner/Head of Ares Accounting Firm Los Angeles, CA Headquarters Stars 12 Floor Fax: (310) 201-4170 NYSE: ARES PR A & Trust Company, LLC Brooklyn, NY 11210 Fax: (718) 236-2641 www.amstock.com Humphrey (404) 926-5745 Confidential – Not for Publication or Distribution 21 Board
Slide 21: Corporate Data
Corporate Data tars Cota ot Prat ey Gre Jo ie ota hal yon ht nce Ofer olen eteanmert rtd 0.0809 Dron of UCLA Andean ‘Sina of Management deren chien Antony? feser rd chet este Steer ter ennet Rosenthal Prat ey Group Michael rouge John Kick Iwcnalaroupnet——Abtonomous Preset ot es tam Benjamin ‘seen ar
Slide 22: Financial Details – Segments
Financial Details – Segments 23 Includes results of the reportable segments on a combined basis together with the Operations Management Group. See “GAAP to Non-GAAP Reconciliation – Stand Alone Reporting Basis” on slides 13-14.
Slide 23: Financial Details – Segments
Financial Details – Segments 24 Includes results of the reportable segments on a combined basis together with the Operations Management Group. See “GAAP to Non-GAAP Reconciliation – Stand Alone Reporting Basis” on slides 13-14.
Slide 24: AUM, FEAUM and FPAUM Rollforward
AUM, FEAUM and FPAUM Rollforward Commitments 3,881 35 500 4,416 Commitments 13,387 8,424 2,006 23,817 Capital reductions (1,273) (1) (139) (1,413) Capital reductions (11,057) (6) (351) (11,414) Distributions/redemptions (805) (805) (423) (2,033) Distributions/redemptions (3,057) (952) (1,697) (5,706
Slide 25: AUM, FEAUM and FPAUM by Strategy
AUM, FEAUM and FPAUM by Strategy(1) Syndicated Loans $16.9 27% $15.9 32% $15.9 38% High Yield 4.3 7% 4.3 9% 4.3 10% Credit Opportunities 3.3 5% 2.5 5% 2.5 6% Structured Credit 4.0 6% 2.8 6% 2.8 7% Special Situations 1.8 3% 0.8 2% 0.8 2% U.S. Direct Lending(2) 21.9 35% 18.2 37% 10.4 25% E.U. Direct L
Slide 26: Balance Sheet Investments by Strategy
Balance Sheet Investments by Strategy ACOF I $701 $632 ACOF II 9,501 9,055 ACOF III 101,450 108,506 ACOF IV 36,972 30,571 ACOF As i a 71,651 84,602 Fi fth Power/Infra s tructure Fund 8,173 8,471 Syndi ca ted Loa ns * $101,765 $103,060 Credi t Opportuni ti es 23,240 29,548 Speci a l Si tua ti ons 33,
Slide 27: Significant Fund Performance Metrics
Significant Fund Performance Metrics Note: Past performance is not indicative of future results. AUM and Net Returns as of June 30, 2016 unless otherwise noted. The above table includes fund performance metrics for significant funds that contributed at least 1% of total management fees for the quart
Slide 28: Significant Fund Performance Metrics (cont’d)
Significant Fund Performance Metrics (cont’d) The following represents additional performance data for the Company’s significant and other funds that are structured as closed-end commingled funds:(12) Credit (13)(16)(19)(22)(23) ACE II $1,216 $867 $113 $1,038 $1,151 1.4x 1.4x Private Equity (14)(17)
Slide 29: Significant Fund Performance Metrics Endnotes
Significant Fund Performance Metrics Endnotes 1. AUM equals the sum of the NAV for such fund, the drawn and undrawn debt (at the fund-level including amounts subject to restrictions) and uncalled committed capital. The AUM for CSF, a fund of funds, includes AUM that has been committed to other Ares
Slide 30: Significant Fund Performance Metrics Endnotes (cont’d)
Significant Fund Performance Metrics Endnotes (cont’d) 19. 20. 21. The Gross MoIC as of June 30, 2016 is before giving effect to management fees, performance fees and other expenses. The multiple is calculat ed at the fund-level and is based on the interests of all partners. The Gross MoIC as of Jun
Slide 31: Weighted Average Unit Information
Weighted Average Unit Information Ares Management, L.P. Common Units Outstanding 80,715,723 80,715,723 80,683,051 80,683,051 Ares Operating Group Units Exchangeable into Common Units (1) 132,350,586 - 612,243 132,382,815 489,691 - 185,435 Dilutive Effect of Unvested Restricted Common Units(2)(3) 1,6
Slide 32: Additional Information
Additional Information • 450+ institutional investors(3) (4) No assurance can be made that such results will be achieved. 1. 2. As of June 30, 2016, unless otherwise noted. Ares bank loan and high yield strategies are typically benchmarked against the Credit Suisse Leveraged Loan Index (“CSLLI”) and
Slide 33: Stand Alone Financial Data
Data(1) Stand Alone –Financial Credi t Group $439,723 $419,673 Pri va te Equi ty Group 145,150 90,690 Rea l Es ta te Group 66,045 87,683 Other Fees 4,599 6,300 Compens a ti on a nd Benefi ts Expens es (3) (360,622) (354,362) Genera l , Admi ni s tra ti ve a nd Other Expens e(4) (117,903) (102,720) N
Slide 34: GAAP to Non-GAAP Reconciliation – Stand Alone Reporting Basis
GAAP to Non-GAAP Reconciliation – Stand Alone Reporting Basis Income before ta xes Adjustments: $81,484 $556,915 Amorti za ti on of i nta ngi bl es 46,228 27,610 Depreci a ti on expens e 6,941 7,347 Equi ty compens a ti on expens es 32,244 83,230 Acqui s i ti on a nd merger-rel a ted expens es 34,86
Slide 35: GAAP to Non-GAAP Reconciliation – Stand Alone Reporting Basis (cont.)
GAAP to Non-GAAP Reconciliation – Stand Alone Reporting Basis (cont.) Total Sta nd Al one performa nce fee i ncome - rea l i zed $121,946 $146,494 Total Cons olidated Funds' performance fee income - rea lized (1,769) (95,308) Performa nce fee - real i zed recl a s s (2) (6,472) (1,856) Total Sta nd
Slide 36: Glossary
Glossary ARCC Part I Fees ARCC Part I Fees refers to fees based on ARCC’s net investment income (before giving effect to ARCC Part I Fees and ARCC Part II Fees). ARCC Part II Fees ARCC Part II Fees refers to fees based on ARCC's net capital gains, which are paid annually. Ares Operating Group Units
Slide 37: Glossary (cont’d)
Glossary (cont’d) Fee Paying Assets Under Management Fee paying AUM (or “FPAUM”) refers to the AUM on which we directly earn management fees. Fee paying AUM is equal to the sum of all the individual fee bases of our funds that contribute directly to our management fees. Gross Invested Capital Gross
Slide 38: Glossary (cont’d)
Glossary (cont’d) Performance Related Earnings Performance related earnings (or “PRE”), a non-GAAP measure, is used to assess our investment performance net of performance fee compensation. PRE differs from income (loss) before taxes computed in accordance with GAAP as it only includes performance f
Slide 39: Glossary (cont’d)
Glossary (cont’d) ur Funds Performance Related Earnings Performance Fees Permanent Capital Senior Secured Loan Fund ttc ‘Syndicated Loans Strategy Stand Alone Total Fee Revenue ‘Our funds refers tothe funds, alternative asset companies, co-investment vehicles and other entities and accounts that are