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: First Quarter Highlights
First Quarter Highlights Net inflows represents gross commitments less redemptions. Held final closing of $7.85 billion for ACOF V, including $35 million in Q2-16. Includes ARCC Part I Fees of $28.6 million for the three months ended March 31, 2016. Total units of 213,555,557 includes the sum of com
Slide 3: Gross New Capital Commitments – First Quarter
Gross New Capital Commitments – First Quarter(1) Third Structured Products Fund $222 New and additional equity commitments New equity commitments bringing total raised to date to $2.1 billion in equity and $0.9 billion in debt Third Commingled European Direct Lending Fund $163 commitments ARCC and R
Slide 4: Assets Under Management and Fee Earning Assets Under Management
Assets Under Management and Fee Earning Assets Under Management Note: For definitions of AUM and FEAUM please refer to the “Glossary” slide in the appendix. Capital reduction represents a change in leverage. Past performance is not indicative of future results. Asset growth involved a combination of
Slide 5: AUM and FEAUM Breakdown by Duration
AUM and FEAUM Breakdown by Duration As of March 31, 2016, approximately 79% of AUM and 76% of FEAUM was in capital with a duration greater than 3 years • Managed accounts are typically evergreen Permanent Capital Permanent Capital Managed Accounts Managed Accounts 13% 15% 15% 19% Fewer than 3 years
Slide 6: Incentive Generating AUM and Incentive Eligible AUM
Incentive Generating AUM and Incentive Eligible AUM Incentive Eligible AUM of $47.9 billion as of March 31, 2016 grew 4.6% quarter over quarter Incentive Generating AUM of $10.6 billion as of March 31, 2016 decreased 23.8% quarter over quarter, primarily driven by funds in our Private Equity and Cre
Slide 7: Available Capital and AUM Not Yet Earning Fees Summary
Available Capital and AUM Not Yet Earning Fees Summary Available Capital as of March 31, 2016 increased 21.9% year over year Available Capital increased from $22.4 billion in Q4-15 to $23.0 billion in Q1-16 The increase was driven by new equity commitments in the Private Equity Group and was largely
Slide 8: AUM Not Yet Earning Fees Summary
AUM Not Yet Earning Fees Summary As of March 31, 2016, AUM Not Yet Earning Fees of $16.5 billion could generate approximately $197.6 million in potential incremental annual management fees* $14.2 billion of AUM Not Yet Earning Fees was available for deployment as of March 31, 2016 The $14.2 billion
Slide 9: Capital Deployment
Capital Deployment • Total gross invested capital during Q1-16 of $2.1 billion compared to $4.8 billion in Q1-15 ($ in millions) Of the total amount, $1.1 billion was related to deployment in our drawdown funds compared to $2.1 billion for the same period in 2015 Of our drawdown funds, the most acti
Slide 10: Financial Summary
Financial Summary Includes ARCC Part I Fees of $28.6 million and $29.0 million for Q1-16 and Q1-15, respectively, and $121.1 million and $119.3 million for LTM Q1-16 and LTM Q1-15, respectively. Includes compensation and benefits expenses attributable to OMG of $34.7 million and $28.9 million for th
Slide 11: Credit Group
Credit Group(1) Note: The Credit Group had ~200 investment professionals, 1,000+ portfolio companies and 125 active funds as of March 31, 2016. Segment results are shown before the unallocated support costs of the Operations Management Group. See “GAAP to Non-GAAP Reconciliation – Stand Alone Report
Slide 12: Private Equity Group
Private Equity Group(1) Note: The Private Equity Group had ~70 investment professionals, 25 portfolio companies, 75 U.S. Power and Energy Assets and ~15 active funds as of March 31, 2016. Segment results are shown before the unallocated support costs of the Operations Management Group. See “GAAP to
Slide 13: Real Estate Group
Real Estate Group(1) Note: The Real Estate Group had ~70 investment professionals, 155 properties and ~45 active funds as of March 31, 2016. Segment results are shown before the unallocated support costs of the Operations Management Group. See “GAAP to Non-GAAP Reconciliation – Stand Alone Reporting
Slide 14: Economic Net Income per Unit Data
Economic Net Income per Unit Data Economi c Net Income Before Ta xes $24,148 $51,440 $6,032 $75,977 $82,930 (-) Enti ty Level Forei gn, Sta te a nd Loca l Ta xes (1,615) (2,919) (905) (906) (479) Economi c Net Income After Enti ty Level , Forei gn, Sta te a nd Loca l Ta xes $22,533 $48,521 $5,127 $7
Slide 15: Distributable Earnings per Unit Data
Distributable Earnings per Unit Data Di s tri buta bl e Ea rni ngs $41,281 $50,754 $39,584 $72,956 $67,295 x Ares Opera ti ng Group Uni ts (1) Owners hi p % 62.13% 62.14% 62.14% 62.14% 62.15% Di s tri buta bl e Ea rni ngs $41,281 $50,754 $39,584 $72,956 $67,295 x Common Uni thol der Owners hi p % 37
Slide 16: Balance Sheet Highlights
Balance Sheet Highlights • $109.9 million in cash & cash equivalents and $192.0 million drawn against the $1.03 billion revolving credit facility as of March 31, 2016 • Substantial balance sheet value related to investments in Ares managed vehicles and net performance fees receivable As of March 31,
Slide 17: GAAP Statement of Operations
GAAP Statement of Operations Management fees (includes ARCC Part I Fees of $28,625 and $29,042 for the three months ended March 31, 2016 and 2015, res pectively) $158,433 $158,701 Performance fees (29,947) 104,925 Other fees 7,529 6,279 Compensation and benefits 110,679 101,851 Performance fee compe
Slide 18: Corporate Data
Corporate Data Board of Directors Michael Arougheti Co-Founder and President of Ares Paul G. Joubert Founding Partner of Edge Advisors and Investing Partner in Common Angels Ventures David Kaplan Co-Founder and Partner of Ares, Co-Head of Private Equity Group John Kissick Co-Founder and President of
Slide 19: Corporate Data
ee Data tars Cote of rte Egat Group Jo ie Present fees Mehl ton ht Cxcte Ofer otSony etetonmert 0 tty 009 ‘Sina of Management ‘Antony? taser Otear ot rer tives comand Prat ey Group Preset of ee eam enanin Parr end ofa Seon arty Manager of reat ene Dennis Parner, ret Group ripe deveer Cred oun eh Got
Slide 20: Financial Details - Total Standalone
Financial Details - Total Standalone(1) Stand alone results represent the operating segments plus OMG but exclude the effect of Consolidated Funds. Includes ARCC Part I Fees of $28.6 million, $31.5 million, $31.7 million, $29.3 million, and $29.0 million for Q1-16, Q4-15, Q3-15, Q2-15, and Q1-15, re
Slide 21: Financial Details - Segments
Financial Details - Segments $ in thousands Private Real Operations Total Credit Equity Estate Total Management Stand Group Group Group Segments Group Alone Management Fees (includes ARCC Part I Fees of $28,625) $109,441 $36,482 $16,745 $162,668 - $162,668 Administrative Fees and Other Income 1 09 3
Slide 22: Assets Under Management and Fee Earning Assets Under Management
Assets Under Management and Fee Earning Assets Under Management Commitments 785 2,119 114 3,018 Commitments 12,031 8,409 1,615 22,055 Capital reductions (2,613) - (69) (2,682) Capital reductions (11,110) (6) (223) (11,339) Distributions/redemptions (990) (17) (237) (1,243) Distributions/redemptions
Slide 23: AUM and FEAUM by Strategy
Strategy(1) AUM and FEAUM by Bank Loans $17.0 28% $16.5 34% High Yi el d 3.4 6% 3.4 7% Credit Opportunities 3.1 5% 2.4 5% Asset-Backed 2.8 5% 2.5 5% Special Situations 1.8 3% 0.9 2% U.S. Direct Lending(2) 22.8 38% 18.7 38% E.U. Direct Lending 9.2 15% 4.3 9% ACOF V $7.8 34% $0.0 0% ACOF IV 5.0 21% 4.
Slide 24: Balance Sheet Investments by Strategy
Balance Sheet Investments by Strategy ACOF I $672 $632 ACOF II 8,861 9,055 ACOF III 116,469 108,506 ACOF IV 29,480 30,571 ACOF As i a 71,318 84,602 EIF V 8,507 8,471 Ba nk Loa ns $101,083 $103,060 Credi t Opportuni ti es 29,594 29,548 As s et Ba cked 2,031 2,065 Speci a l Si tua ti ons 34,359 37,893
Slide 25: Significant Fund Performance Metrics
Significant Fund Performance Metrics ARCC * 2004 $9,768 12.0 11.4 11.0 Credit U.S. Direct Lending (2) Sub-advised Client A 2007 454 7.2 5.2 2.6 Credit High Yield (3)(4) CSF 2008 517 10.0 5.0 3.1 Credit Special Situations (3)(5) Sub-advised Client B 2009 663 5.9 3.5 2.2 Credit Bank Loans (3)(4) ARDC
Slide 26: 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) Credi t (13)(16)(22)(23) ACE II $1,216 $891 $98 $1,054 $1,152 1.4x 1.3x Pri va te Equi ty (14)(17)(
Slide 27: Significant Fund Performance Metrics Endnotes
Significant Fund Performance Metrics Endnotes Assets under management 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 ARCC does not include AUM of General Electric Company’s
Slide 28: Significant Fund Performance Metrics Endnotes (cont’d)
Significant Fund Performance Metrics Endnotes (cont’d) 20. 21. 22. 23. 24. 25. The Gross MoIC as of March 31, 2016 is before giving effect to management fees, performance fees and other expenses. The multiple is calculated at the fund-level and is based on the interests of all partners. The Gross Mo
Slide 29: Weighted Average Unit Information
Weighted Average Unit Information Q1-16 Q4-15 GAAP Units Adjusted Common Units GAAP Units Adjusted Common Units Ares Management, L.P. Common Units Outstanding 80,683,051 80,683,051 80,678,042 80,678,042 Ares Operating Group Units Exchangeable into Common Units(1) 132,382,815 - 132,405,131 - Dilutive
Slide 30: Recent Developments and Additional Information
Recent Developments and Additional Information Recent Developments Targeted Net Returns(1) Capital Base by Duration(1) On April 21, 2016, we held the final closing for our fifth global flexible capital private equity fund, Ares Corporate Opportunities Fund V, bringing total commitments to $7.85 bill
Slide 31: Stand Alone – Annual Financial Data
Data(1) Stand Alone – Annual Financial Credi t Group $383 $419 $440 $108 $109 Pri vate Equi ty Group 94 91 145 37 36 Real Es tate Group 40 88 66 17 17 Admi n. & Other Fees 24 28 30 7 8 Comp. & Benefi ts (305) (373) (382) (93) (102) SG&A (83) (106) (122) (28) (30) Net Performance Fees 102 71 42 27 (1
Slide 32: GAAP to Non-GAAP Reconciliation – Stand Alone Reporting Basis
GAAP to Non-GAAP Reconciliation – Stand Alone Reporting Basis $ in millions Year ended December 31, Three months ended March 31, 2013 2014 2015 2015 2016 Economic net income and fee related earnings: Income (loss) before taxes $873 $557 $81 $46 ($9) Adjustments: Amortization of intangibles 35 28 46
Slide 33: 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 34: Glossary (cont’d)
Glossary (cont’d) Fee Earning Assets Under Management Fee earning AUM (or “FEAUM”) refers to the AUM on which we directly or indirectly earn management fees. Fee earning AUM is equal to the sum of all the individual fee bases of our funds that contribute directly or indirectly to our management fees
Slide 35: Glossary (cont’d)
Glossary (cont’d) Performance Related Earnings Performance related earnings (or “PRE”) refers to a measure used to assess our investment performance and our ability to cover performance fee compensation from performance fees and total investment income. PRE differs from income (loss) before taxes co
Slide 36: Glossary (cont’d)
Glossary (cont’d) Performance Related Earnings Permanent Capital Senior Secured Loan Fund ttc Total Fee Revenue Performance related earnings (or “PRE”) refers to a measure used to assess our investment performance and our ability to cover performance fee compensation from performance fees and total