CONSOLIDATION

Investments in Consolidated Variable Interest Entities

The Company consolidates entities in which the Company has a variable interest 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 carried at 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 are as follows:



	As of June 30,		As of December 31,
	2017		2016
Maximum exposure to loss attributable to the Company's investment in non-consolidated VIEs	$	371,688	$	268,950
Maximum exposure to loss attributable to the Company's investment in consolidated VIEs	$	140,478	$	153,746
Assets of consolidated VIEs	$	3,936,175	$	3,822,010
Liabilities of consolidated VIEs	$	3,471,917	$	3,360,329



	For the Three Months Ended June 30,					For the Six Months Ended June 30,
	2017			2016		2017		2016
Net income (loss) attributable to non-controlling interests related to consolidated VIEs	$	(8,647	)	$	1,054	$	7,208	$	(10,925	)

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, 2017 and December 31, 2016 and results from operations for the three and six months ended June 30, 2017 and 2016.



	As of June 30, 2017
	Consolidated Company Entities			Consolidated Funds		Eliminations			Consolidated
Assets
Cash and cash equivalents	$	137,256		$	—	$	—		$	137,256
Investments (includes fair value investments of $577,280)	739,159			—		(140,478		)	598,681
Performance fees receivable	1,085,407			—		(2,632		)	1,082,775
Due from affiliates	162,380			—		(5,008		)	157,372
Deferred tax asset, net	39,080			—		—			39,080
Other assets	101,520			—		—			101,520
Intangible assets, net	47,766			—		—			47,766
Goodwill	143,824			—		—			143,824
Assets of Consolidated Funds
Cash and cash equivalents	—			424,652		—			424,652
Investments, at fair value	—			3,441,802		—			3,441,802
Due from affiliates	—			5,503		—			5,503
Dividends and interest receivable	—			6,797		—			6,797
Receivable for securities sold	—			52,494		—			52,494
Other assets	—			4,927		—			4,927
Total assets	$	2,456,392		$	3,936,175	$	(148,118	)	$	6,244,449
Liabilities
Accounts payable, accrued expenses and other liabilities	$	84,745		$	—	$	—		$	84,745
Accrued compensation	89,100			—		—			89,100
Due to affiliates	23,891			—		—			23,891
Performance fee compensation payable	844,789			—		—			844,789
Debt obligations	510,856			—		—			510,856
Liabilities of Consolidated Funds
Accounts payable, accrued expenses and other liabilities	—			33,638		—			33,638
Due to affiliates	—			7,639		(7,639		)	—
Payable for securities purchased	—			231,634		—			231,634
CLO loan obligations, at fair value	—			3,115,281		(21,683		)	3,093,598
Fund borrowings	—			83,725		—			83,725
Total liabilities	1,553,381			3,471,917		(29,322		)	4,995,976
Commitments and contingencies
Preferred equity (12,400,000 units issued and outstanding)	298,761			—		—			298,761
Non-controlling interest in Consolidated Funds	—			464,258		(118,796		)	345,462
Non-controlling interest in Ares Operating Group entities	333,641			—		—			333,641
Controlling interest in Ares Management, L.P.:
Partners' Capital (82,131,000 units issued and outstanding)	278,012			—		—			278,012
Accumulated other comprehensive loss, net of tax	(7,403		)	—		—			(7,403		)
Total controlling interest in Ares Management, L.P.	270,609			—		—			270,609
Total equity	903,011			464,258		(118,796		)	1,248,473
Total liabilities and equity	$	2,456,392		$	3,936,175	$	(148,118	)	$	6,244,449



	As of December 31, 2016
	Consolidated Company Entities			Consolidated Funds		Eliminations			Consolidated
Assets
Cash and cash equivalents	$	342,861		$	—	$	—		$	342,861
Investments (includes fair value investments of $448,336)	622,215			—		(153,744		)	468,471
Performance fees receivable	767,429			—		(8,330		)	759,099
Due from affiliates	169,252			—		(6,316		)	162,936
Deferred tax asset, net	6,731			—		—			6,731
Other assets	65,565			—		—			65,565
Intangible assets, net	58,315			—		—			58,315
Goodwill	143,724			—		—			143,724
Assets of Consolidated Funds
Cash and cash equivalents	—			455,280		—			455,280
Investments, at fair value	—			3,330,203		—			3,330,203
Due from affiliates	—			3,592		—			3,592
Dividends and interest receivable	—			8,479		—			8,479
Receivable for securities sold	—			21,955		—			21,955
Other assets	—			2,501		—			2,501
Total assets	$	2,176,092		$	3,822,010	$	(168,390	)	$	5,829,712
Liabilities
Accounts payable, accrued expenses and other liabilities	$	83,336		$	—	$	—		$	83,336
Accrued compensation	131,736			—		—			131,736
Due to affiliates	17,959			—		(395		)	17,564
Performance fee compensation payable	598,050			—		—			598,050
Debt obligations	305,784			—		—			305,784
Liabilities of Consolidated Funds
Accounts payable, accrued expenses and other liabilities	—			21,056		—			21,056
Due to affiliates	—			10,599		(10,599		)	—
Payable for securities purchased	—			208,742		—			208,742
CLO loan obligations, at fair value	—			3,064,862		(33,750		)	3,031,112
Fund borrowings	—			55,070		—			55,070
Total liabilities	1,136,865			3,360,329		(44,744		)	4,452,450
Commitments and contingencies
Preferred equity (12,400,000 units issued and outstanding)	298,761			—		—			298,761
Non-controlling interest in Consolidated Funds	—			461,681		(123,646		)	338,035
Non-controlling interest in Ares Operating Group entities	447,615			—		—			447,615
Controlling interest in Ares Management, L.P.:
Partners' Capital (80,814,732 units issued and outstanding)	301,790			—		—			301,790
Accumulated other comprehensive loss, net of tax	(8,939		)	—		—			(8,939		)
Total controlling interest in Ares Management, L.P.	292,851			—		—			292,851
Total equity	1,039,227			461,681		(123,646		)	1,377,262
Total liabilities and equity	$	2,176,092		$	3,822,010	$	(168,390	)	$	5,829,712



	For the Three Months Ended June 30, 2017
	Consolidated Company Entities			Consolidated Funds			Eliminations			Consolidated
Revenues
Management fees (includes ARCC Part I Fees of $19,143)	$	185,560		$	—		$	(4,792	)	$	180,768
Performance fees	337,542			—			482			338,024
Administrative and other fees	15,098			—			—			15,098
Total revenues	538,200			—			(4,310		)	533,890
Expenses
Compensation and benefits	131,219			—			—			131,219
Performance fee compensation	261,705			—			—			261,705
General, administrative and other expense	50,751			—			—			50,751
Expenses of the Consolidated Funds	—			8,825			(4,303		)	4,522
Total expenses	443,675			8,825			(4,303		)	448,197
Other income (expense)
Investment income and net interest expense (includes interest expense of $5,354)	(1,497		)	—			(755		)	(2,252		)
Other income, net	2,822			—			—			2,822
Net realized and unrealized gain on investments	27,481			—			2,598			30,079
Investment income and net interest income of the Consolidated Funds (includes interest expense of $26,875)	—			(4,103		)	15,554			11,451
Net realized and unrealized loss on investments of the Consolidated Funds	—			953			(13,666		)	(12,713		)
Total other income	28,806			(3,150		)	3,731			29,387
Income (loss) before taxes	123,331			(11,975		)	3,724			115,080
Income tax expense (benefit)	857			396			—			1,253
Net income (loss)	122,474			(12,371		)	3,724			113,827
Less: Net loss attributable to non-controlling interests in Consolidated Funds	—			(12,371		)	3,724			(8,647		)
Less: Net income attributable to non-controlling interests in Ares Operating Group entities	72,596			—			—			72,596
Net income attributable to Ares Management, L.P.	49,878			—			—			49,878
Less: Preferred equity distributions paid	5,425			—			—			5,425
Net income attributable to Ares Management, L.P. common unitholders	$	44,453		$	—		$	—		$	44,453



	For the Three Months Ended June 30, 2016
	Consolidated Company Entities			Consolidated 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
Expenses of the Consolidated Funds	—			5,288			(4,589		)	699
Total expenses	303,236			5,288			(4,589		)	303,935
Other income (expense)
Investment income and net interest and investment income (includes 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		)
Investment income and net interest income of the Consolidated Funds (includes interest expense of $18,607)	—			8,336			1,354			9,690
Net realized and unrealized gain (loss) on investments of the 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. common unitholders	$	37,574		$	—		$	—		$	37,574



	For the Six Months Ended June 30, 2017
	Consolidated Company Entities			Consolidated Funds		Eliminations			Consolidated
Revenues
Management fees (includes ARCC Part I Fees of $52,400)	$	362,341		$	—	$	(9,528	)	$	352,813
Performance fees	395,584			—		(2,388		)	393,196
Administrative and other fees	29,538			—		—			29,538
Total revenues	787,463			—		(11,916		)	775,547
Expenses
Compensation and benefits	255,558			—		—			255,558
Performance fee compensation	302,407			—		—			302,407
General, administrative and other expense	98,089			—		—			98,089
Transaction support expense	275,177			—		—			275,177
Expenses of the Consolidated Funds	—			19,334		(10,901		)	8,433
Total expenses	931,231			19,334		(10,901		)	939,664
Other income (expense)
Investment income and net interest expense (includes interest expense of $10,233)	(2,458		)	—		(1,929		)	(4,387		)
Other income, net	19,318			—		—			19,318
Net realized and unrealized gain on investments	43,328			—		(10,594		)	32,734
Investment income and net interest income of the Consolidated Funds (includes interest expense of $58,197)	—			3,903		17,718			21,621
Net realized and unrealized income on investments of the Consolidated Funds	—			31,392		(12,069		)	19,323
Total other income	60,188			35,295		(6,874		)	88,609
Income (loss) before taxes	(83,580		)	15,961		(7,889		)	(75,508		)
Income tax expense (benefit)	(33,875		)	864		—			(33,011		)
Net income (loss)	(49,705		)	15,097		(7,889		)	(42,497		)
Less: Net income attributable to non-controlling interests in Consolidated Funds	—			15,097		(7,889		)	7,208
Less: Net loss attributable to non-controlling interests in Ares Operating Group entities	(58,449		)	—		—			(58,449		)
Net income attributable to Ares Management, L.P.	8,744			—		—			8,744
Less: Preferred equity distributions paid	10,850			—		—			10,850
Net loss attributable to Ares Management, L.P. common unitholders	$	(2,106	)	$	—	$	—		$	(2,106	)



	For the Six Months Ended June 30, 2016
	Consolidated Company Entities			Consolidated 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
Expenses of the Consolidated Funds	—			11,267			(10,341		)	926
Total expenses	432,547			11,267			(10,341		)	433,473
Other income (expense)
Investment income and net interest income (includes 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
Investment income and net interest income of the Consolidated Funds (includes interest expense of $41,056)	—			13,610			3,412			17,022
Net realized and unrealized loss on investments of the Consolidated Funds	—			(29,245		)	(361		)	(29,606		)
Total other income (expense)	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. common unitholders	$	34,484		$	—		$	—		$	34,484