15. CONSOLIDATION

Investments in Consolidated Variable Interest Entities

The Company consolidates entities that the Company has a variable interest in, and as the general partner or investment manager, has both the power to direct the most significant activities and a potentially significant economic interest. Investments in the consolidated VIEs are reported at their carrying value, which approximates fair value, and represents the Company’s maximum exposure to loss.

Investments in Non-Consolidated Variable Interest Entities

The Company holds interests in certain VIEs that are not consolidated as the Company is not the primary beneficiary. The Company's interest in such entities generally is in the form of direct equity interests, fixed fee arrangements or both. The maximum exposure to loss represents the potential loss of assets by the Company relating to these non-consolidated entities. Investments in the non-consolidated VIEs are held at their carrying value, which approximates fair value.

The Company's interests and the Consolidated Funds' interests in consolidated and non-consolidated VIEs, as presented in the Condensed Consolidated Statements of Financial Condition, and their respective maximum exposure to loss relating to non-consolidated VIEs (excluding fixed arrangements) are as follows:


	As of June 30,		As of December 31,
	2016		2015
Maximum exposure to loss attributable to the Company's investment in non-consolidated VIEs	$	292,196	$	284,169
Maximum exposure to loss attributable to the Company's investment in consolidated VIEs	$	152,829	$	160,858
Assets of consolidated VIEs	$	2,850,793	$	2,759,981
Liabilities of consolidated VIEs	$	2,388,228	$	2,256,517

	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2016		2015		2016		2015
Net income (loss) attributable to non-controlling interests related to consolidated VIEs	$	1,054	$	12,629	$	(10,925)	$	1,515

CONSOLIDATING SCHEDULES

The following supplemental financial information illustrates the consolidating effects of the Consolidated Funds on the Company’s financial condition as of June 30, 2016 and December 31, 2015 and results from operations for the three and six months ended June 30, 2016 and 2015.


	As of June 30, 2016
	Consolidated		Consolidated
	Company Entities		Funds		Eliminations		Consolidated
Assets
Cash and cash equivalents	$	264,588	$	—	$	—	$	264,588
Investments (includes fair value investments of $463,533)		637,366		—		(152,829)		484,537
Performance fees receivable		632,382		—		(6,318)		626,064
Due from affiliates		169,265		—		(3,226)		166,039
Intangible assets, net		70,568		—		—		70,568
Goodwill		143,855		—		—		143,855
Other assets		65,160		—		—		65,160
Assets of Consolidated Funds
Cash and cash equivalents				233,532		—		233,532
Investments, at fair value		—		2,529,173		—		2,529,173
Due from affiliates		—		10,125		—		10,125
Dividends and interest receivable		—		9,545		—		9,545
Receivable for securities sold		—		65,384		—		65,384
Other assets		—		3,034		—		3,034
Total assets	$	1,983,184	$	2,850,793	$	(162,373)	$	4,671,604
Liabilities
Accounts payable, accrued expenses and other liabilities	$	104,617	$	—	$	—	$	104,617
Accrued compensation		91,743		—		—		91,743
Due to affiliates		19,352		—		(256)		19,096
Performance fee compensation payable		480,979		—		—		480,979
Debt obligations		279,430		—		—		279,430
Equity compensation put option liability		20,000		—		—		20,000
Deferred tax liability, net		6,628		—		—		6,628
Liabilities of Consolidated Funds
Accounts payable, accrued expenses and other liabilities		—		10,741		—		10,741
Due to affiliates		—		5,598		(5,598)		—
Payable for securities purchased		—		162,898		—		162,898
CLO loan obligations		—		2,196,507		(28,161)		2,168,346
Fund borrowings		—		12,484		—		12,484
Total liabilities		1,002,749		2,388,228		(34,015)		3,356,962
Commitments and contingencies
Redeemable interest in Ares Operating Group entities		23,521		—		—		23,521
Preferred equity (12,400,000 units issued and outstanding at June 30, 2016)		298,971		—		—		298,971
Non-controlling interest in Consolidated Funds		—		462,565		(128,358)		334,207
Non-controlling interest in Ares Operating Group entities		397,640		—		—		397,640
Controlling interest in Ares Management, L.P.:
Partners' Capital (80,791,108 units issued and outstanding)		268,835		—		—		268,835
Accumulated other comprehensive loss		(8,532)		—		—		(8,532)
Total controlling interest in Ares Management, L.P		260,303		—		—		260,303
Total equity		956,914		462,565		(128,358)		1,291,121
Total liabilities, redeemable interests, non-controlling interests and equity	$	1,983,184	$	2,850,793	$	(162,373)	$	4,671,604


	As of December 31, 2015
	Consolidated		Consolidated
	Company Entities		Funds		Eliminations		Consolidated
Assets
Cash and cash equivalents	$	121,483	$	—	$	—	$	121,483
Investments (includes fair value investments of $446,779)		636,092		—		(167,805)		468,287
Performance fees receivable		541,852		—		(7,191)		534,661
Due from affiliates		149,771		—		(4,789)		144,982
Other assets		62,975		—		—		62,975
Intangible assets, net		84,971		—		—		84,971
Goodwill		144,067		—		—		144,067
Assets of Consolidated Funds
Cash and cash equivalents		—		159,507		—		159,507
Investments, at fair value		—		2,559,783		—		2,559,783
Due from affiliates		—		13,360		(437)		12,923
Dividends and interest receivable		—		13,005		—		13,005
Receivable for securities sold		—		13,416		—		13,416
Other assets		—		1,348		—		1,348
Total assets	$	1,741,211	$	2,760,419	$	(180,222)	$	4,321,408
Liabilities
Accounts payable, accrued expenses and other liabilities	$	102,734	$	—	$	(108)	$	102,626
Accrued compensation		125,032		—		—		125,032
Due to affiliates		13,016		—		(115)		12,901
Performance fee compensation payable		401,715		—		—		401,715
Debt obligations		389,120		—		—		389,120
Equity compensation put option liability		20,000		—		—		20,000
Deferred tax liability, net		21,288		—		—		21,288
Liabilities of Consolidated Funds
Accounts payable, accrued expenses and other liabilities		—		18,956		(5)		18,951
Due to affiliates		—		5,617		(5,617)		—
Payable for securities purchased		—		51,778		—		51,778
CLO loan obligations		—		2,202,628		(28,276)		2,174,352
Fund borrowings		—		11,734		—		11,734
Total liabilities		1,072,905		2,290,713		(34,121)		3,329,497
Commitments and contingencies
Redeemable interest in Ares Operating Group entities		23,505		—		—		23,505
Non-controlling interest in Consolidated Funds:
Non-controlling interest in Consolidated Funds		—		466,339		(146,101)		320,238
Equity appropriated for Consolidated Funds		—		3,367		—		3,367
Non-controlling interest in Consolidated Funds		—		469,706		(146,101)		323,605
Non-controlling interest in Ares Operating Group entities		397,883		—		—		397,883
Controlling interest in Ares Management, L.P.:
Partners' Capital ( 80,679,600 units issued and outstanding)		251,537		—		—		251,537
Accumulated other comprehensive loss		(4,619)		—		—		(4,619)
Total controlling interest in Ares Management, L.P		246,918		—		—		246,918
Total equity		644,801		469,706		(146,101)		968,406
Total liabilities, redeemable interests, non-controlling interests and equity	$	1,741,211	$	2,760,419	$	(180,222)	$	4,321,408


	For the Three Months Ended June 30, 2016
	Consolidated		Consolidated
	Company Entities		Funds		Eliminations		Consolidated
Revenues
Management fees (includes ARCC Part I Fees of $28,999)	$	162,612	$	—	$	(4,091)	$	158,521
Performance fees		203,902		—		(751)		203,151
Administrative and other fees		7,863		—		—		7,863
Total revenues		374,377		—		(4,842)		369,535
Expenses
Compensation and benefits		112,654		—		—		112,654
Performance fee compensation		151,896		—		—		151,896
General, administrative and other expense		38,686		—		—		38,686
Consolidated Fund expenses		—		5,288		(4,589)		699
Total expenses		303,236		5,288		(4,589)		303,935
Other income (expense)
Net interest and investment expense (net of interest expense of $4,828)		5,845		—		(852)		4,993
Other income, net		5,673		—		—		5,673
Net realized and unrealized loss on investments		(714)		—		(2,437)		(3,151)
Net interest and investment income of Consolidated Funds (net of interest expense of $18,607)		—		8,336		1,354		9,690
Net realized and unrealized loss on investments of Consolidated Funds		—		(1,168)		1,369		201
Total other income		10,804		7,168		(566)		17,406
Income before taxes		81,945		1,880		(819)		83,006
Income tax expense (benefit)		(4,441)		7		—		(4,434)
Net income		86,386		1,873		(819)		87,440
Less: Net income attributable to non-controlling interests in Consolidated Funds		—		1,873		(819)		1,054
Less: Net income attributable to redeemable interests in Ares Operating Group entities		339		—		—		339
Less: Net income attributable to non-controlling interests in Ares Operating Group entities		48,473		—		—		48,473
Net income attributable to Ares Management, L.P.	$	37,574	$	—	$	—	$	37,574


	For the Three Months Ended June 30, 2015
	Consolidated		Consolidated
	Company Entities		Funds		Eliminations		Consolidated
Revenues
Management fees (includes ARCC Part I Fees of $29,250)	$	160,487	$	—	$	(3,898)	$	156,589
Performance fees		76,616		—		1,033		77,649
Administrative and other fees		7,033		—		(107)		6,926
Total revenues		244,136		—		(2,972)		241,164
Expenses
Compensation and benefits		99,085		—		—		99,085
Performance fee compensation		56,544		—		—		56,544
General, administrative and other expense		53,331		—		—		53,331
Consolidated Fund expenses		—		7,614		(4,005)		3,609
Total expenses		208,960		7,614		(4,005)		212,569
Other income (expense)
Net interest and investment income (net of interest expense of $3,654)		3,615		—		(969)		2,646
Other income (expense), net		(1,991)		—		298		(1,693)
Net realized and unrealized gain on investments		7,789		—		(2,909)		4,880
Net interest and investment income of Consolidated Funds (net of interest expense of $19,043)		—		11,743		894		12,637
Net realized and unrealized gain (loss) on investments of Consolidated Funds		—		10,924		(438)		10,486
Total other income		9,413		22,667		(3,124)		28,956
Income before taxes		44,589		15,053		(2,091)		57,551
Income tax expense		5,770		333		—		6,103
Net income		38,819		14,720		(2,091)		51,448
Less: Net income attributable to non-controlling interests in Consolidated Funds		—		14,720		(2,091)		12,629
Less: Net income attributable to redeemable interests in Ares Operating Group entities		185		—		—		185
Less: Net income attributable to non-controlling interests in Ares Operating Group entities		26,548		—		—		26,548
Net income attributable to Ares Management, L.P.	$	12,086	$	—	$	—	$	12,086


	For the Six Months Ended June 30, 2016
	Consolidated		Consolidated
	Company Entities		Funds		Eliminations		Consolidated
Revenues
Management fees (includes ARCC Part I Fees of $57,624)	$	325,280	$	—	$	(8,326)	$	316,954
Performance fees		172,331		—		873		173,204
Administrative and other fees		15,392		—		—		15,392
Total revenues		513,003		—		(7,453)		505,550
Expenses
Compensation and benefits		223,333		—		—		223,333
Performance fee compensation		130,566		—		—		130,566
General, administrative and other expense		78,648		—		—		78,648
Consolidated Fund expenses		—		11,267		(10,341)		926
Total expenses		432,547		11,267		(10,341)		433,473
Other income (expense)
Net interest and investment income (net of interest expense of $9,683)		3,852		—		(2,218)		1,634
Other income, net		10,914		—		—		10,914
Net realized and unrealized gain (loss) on investments		(8,849)		—		10,840		1,991
Net interest and investment income of Consolidated Funds (net of interest expense of $41,056)		—		13,610		3,412		17,022
Net realized and unrealized loss on investments of Consolidated Funds		—		(29,245)		(361)		(29,606)
Total other income (loss)		5,917		(15,635)		11,673		1,955
Income (loss) before taxes		86,373		(26,902)		14,561		74,032
Income tax expense (benefit)		1,647		(1,416)		—		231
Net income (loss)		84,726		(25,486)		14,561		73,801
Less: Net loss attributable to non-controlling interests in Consolidated Funds		—		(25,486)		14,561		(10,925)
Less: Net income attributable to redeemable interests in Ares Operating Group entities		349		—		—		349
Less: Net income attributable to non-controlling interests in Ares Operating Group entities		49,893		—		—		49,893
Net income attributable to Ares Management, L.P.	$	34,484	$	—	$	—	$	34,484


	For the Six Months Ended June 30, 2015
	Consolidated		Consolidated
	Company Entities		Funds		Eliminations		Consolidated
Revenues
Management fees (includes ARCC Part I Fees of $58,292)	$	322,803	$	—	$	(7,513)	$	315,290
Performance fees		179,714		—		2,860		182,574
Administrative and other fees		14,383		—		(1,178)		13,205
Total revenues		516,900		—		(5,831)		511,069
Expenses
Compensation and benefits		200,936		—		—		200,936
Performance fee compensation		132,936		—		—		132,936
General, administrative and other expense		98,878		—		—		98,878
Consolidated Fund expenses		—		22,973		(8,691)		14,282
Total expenses		432,750		22,973		(8,691)		447,032
Other income (expense)
Net interest and investment income (net of interest expense of $7,338)		5,964		—		(1,905)		4,059
Other income (expense), net		(5,044)		—		1,476		(3,568)
Net realized and unrealized gain on investments		17,085		—		2,634		19,719
Net interest and investment income of Consolidated Funds (net of interest expense of $36,144)		—		17,957		3,585		21,542
Net realized and unrealized gain on investments of Consolidated Funds		—		2,127		(3,915)		(1,788)
Total other income		18,005		20,084		1,875		39,964
Income (loss) before taxes		102,155		(2,889)		4,735		104,001
Income tax expense		9,831		331		—		10,162
Net income (loss)		92,324		(3,220)		4,735		93,839
Less: Net income (loss) attributable to non-controlling interests in Consolidated Funds		—		(3,220)		4,735		1,515
Less: Net income attributable to redeemable interests in Ares Operating Group entities		428		—		—		428
Less: Net income attributable to non-controlling interests in Ares Operating Group entities		61,354		—		—		61,354
Net income attributable to Ares Management, L.P.	$	30,542	$	—	$	—	$	30,542