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,
	2018		2017
Maximum exposure to loss attributable to the Company's investment in non-consolidated VIEs	$	241,231	$	251,376
Maximum exposure to loss attributable to the Company's investment in consolidated VIEs	190,400		175,620
Assets of consolidated VIEs	8,059,640		6,231,245
Liabilities of consolidated VIEs	7,302,896		5,538,054



	For the Three Months Ended June 30,					For the Six Months Ended June 30,
	2018		2017			2018		2017
Net income (loss) attributable to non-controlling interests related to consolidated VIEs	$	9,882	$	(8,647	)	$	10,249	$	7,208

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, 2018 and December 31, 2017 and results from operations for the three and six months ended June 30, 2018 and 2017.



	As of June 30, 2018
	Consolidated Company Entities			Consolidated Funds		Eliminations			Consolidated
Assets
Cash and cash equivalents	$	125,448		$	—	$	—		$	125,448
Investments ($985,035 of accrued carried interest)	1,656,647			—		(190,400		)	1,466,247
Due from affiliates	179,200			—		(6,772		)	172,428
Deferred tax asset, net	42,942			—		—			42,942
Other assets	100,183			—		—			100,183
Intangible assets, net	33,999			—		—			33,999
Goodwill	143,848			—		—			143,848
Assets of Consolidated Funds
Cash and cash equivalents	—			836,274		—			836,274
Investments, at fair value	—			6,968,067		—			6,968,067
Due from affiliates	—			13,704		—			13,704
Dividends and interest receivable	—			14,634		—			14,634
Receivable for securities sold	—			225,764		—			225,764
Other assets	—			1,197		—			1,197
Total assets	$	2,282,267		$	8,059,640	$	(197,172	)	$	10,144,735
Liabilities
Accounts payable, accrued expenses and other liabilities	$	73,227		$	—	$	—		$	73,227
Accrued compensation	87,254			—		—			87,254
Due to affiliates	62,344			—		—			62,344
Performance related compensation payable	730,782			—		—			730,782
Debt obligations	370,628			—		—			370,628
Liabilities of Consolidated Funds
Accounts payable, accrued expenses and other liabilities	—			69,040		—			69,040
Due to affiliates	—			6,772		(6,772		)	—
Payable for securities purchased	—			744,534		—			744,534
CLO loan obligations, at fair value	—			6,344,112		(10,873		)	6,333,239
Fund borrowings	—			138,438		—			138,438
Total liabilities	1,324,235			7,302,896		(17,645		)	8,609,486
Commitments and contingencies
Preferred equity (12,400,000 shares issued and outstanding)	298,761			—		—			298,761
Non-controlling interest in Consolidated Funds	—			756,744		(179,527		)	577,217
Non-controlling interest in Ares Operating Group entities	316,048			—		—			316,048
Controlling interest in Ares Management, L.P.:
Shareholders' equity (98,398,340 shares issued and outstanding)	349,981			—		—			349,981
Accumulated other comprehensive loss, net of tax	(6,758		)	—		—			(6,758		)
Total controlling interest in Ares Management, L.P.	343,223			—		—			343,223
Total equity	958,032			756,744		(179,527		)	1,535,249
Total liabilities and equity	$	2,282,267		$	8,059,640	$	(197,172	)	$	10,144,735



	As of December 31, 2017
	As adjusted
	Consolidated Company Entities			Consolidated Funds		Eliminations			Consolidated
Assets
Cash and cash equivalents	$	118,929		$	—	$	—		$	118,929
Investments ($1,077,236 of accrued carried interest)	1,900,191			—		(175,620		)	1,724,571
Due from affiliates	171,701			—		(5,951		)	165,750
Deferred tax asset, net	8,326			—		—			8,326
Other assets	135,674			—		(5,333		)	130,341
Intangible assets, net	40,465			—		—			40,465
Goodwill	143,895			—		—			143,895
Assets of Consolidated Funds
Cash and cash equivalents	—			556,500		—			556,500
Investments, at fair value	—			5,582,842		—			5,582,842
Due from affiliates	—			15,884		—			15,884
Dividends and interest receivable	—			12,568		—			12,568
Receivable for securities sold	—			61,462		—			61,462
Other assets	—			1,989		—			1,989
Total assets	$	2,519,181		$	6,231,245	$	(186,904	)	$	8,563,522
Liabilities
Accounts payable, accrued expenses and other liabilities	$	81,955		$	—	$	—		$	81,955
Accrued compensation	27,978			—		—			27,978
Due to affiliates	39,184			—		—			39,184
Performance related compensation payable	822,084			—		—			822,084
Debt obligations	616,176			—		—			616,176
Liabilities of Consolidated Funds
Accounts payable, accrued expenses and other liabilities	—			64,316		—			64,316
Due to affiliates	—			11,285		(11,285		)	—
Payable for securities purchased	—			350,145		—			350,145
CLO loan obligations, at fair value	—			4,974,110		(10,916		)	4,963,194
Fund borrowings	—			138,198		—			138,198
Total liabilities	1,587,377			5,538,054		(22,201		)	7,103,230
Commitments and contingencies
Preferred equity (12,400,000 shares issued and outstanding)	298,761			—		—			298,761
Non-controlling interest in Consolidated Funds	—			693,191		(164,703		)	528,488
Non-controlling interest in Ares Operating Group entities	358,186			—		—			358,186
Controlling interest in Ares Management, L.P.:
Shareholders' equity (82,280,033 shares issued and outstanding)	279,065			—		—			279,065
Accumulated other comprehensive loss, net of tax	(4,208		)	—		—			(4,208		)
Total controlling interest in Ares Management, L.P.	274,857			—		—			274,857
Total equity	931,804			693,191		(164,703		)	1,460,292
Total liabilities and equity	$	2,519,181		$	6,231,245	$	(186,904	)	$	8,563,522



	For the Three Months Ended June 30, 2018
	Consolidated Company Entities			Consolidated Funds			Eliminations			Consolidated
Revenues
Management fees (includes ARCC Part I Fees of $29,866)	$	202,304		$	—		$	(8,272	)	$	194,032
Carried interest allocation	(13,444		)				—			(13,444		)
Incentive fees	11,740						(4,000		)	7,740
Principal investment income	14,722			—			(12,851		)	1,871
Administrative, transaction and other fees	13,964			—			—			13,964
Total revenues	229,286			—			(25,123		)	204,163
Expenses
Compensation and benefits	138,992			—			—			138,992
Performance related compensation	(13,005		)	—			—			(13,005		)
General, administrative and other expense	59,918			—			—			59,918
Expenses of the Consolidated Funds	—			47,382			(12,270		)	35,112
Total expenses	185,905			47,382			(12,270		)	221,017
Other income (expense)
Net realized and unrealized gain on investments	4,438			—			(1,171		)	3,267
Interest and dividend income	2,356			—			—			2,356
Interest expense	(6,076		)	—			—			(6,076		)
Other expense, net	(2,978		)	—			991			(1,987		)
Net realized and unrealized gain on investments of the Consolidated Funds	—			33,819			668			34,487
Interest and other income of the Consolidated Funds	—			92,633			—			92,633
Interest expense of the Consolidated Funds	—			(57,259		)	505			(56,754		)
Total other income (expense)	(2,260		)	69,193			993			67,926
Income before taxes	41,121			21,811			(11,860		)	51,072
Income tax expense	36,834			69			—			36,903
Net income	4,287			21,742			(11,860		)	14,169
Less: Net income attributable to non-controlling interests in Consolidated Funds	—			21,742			(11,860		)	9,882
Less: Net income attributable to non-controlling interests in Ares Operating Group entities	16,062			—			—			16,062
Net loss attributable to Ares Management, L.P.	(11,775		)	—			—			(11,775		)
Less: Preferred equity dividend paid	5,425			—			—			5,425
Net loss attributable to Ares Management, L.P. common shareholders	$	(17,200	)	$	—		$	—		$	(17,200	)



	For the Three Months Ended June 30, 2017
	As adjusted
	Consolidated Company Entities			Consolidated Funds			Eliminations			Consolidated
Revenues
Management fees (includes ARCC Part I Fees of $19,143)	$	185,560		$	—		$	(4,792	)	$	180,768
Carried interest allocation	333,814			—			(6		)	333,808
Incentive fees	3,728			—			488			4,216
Principal investment income	34,166			—			4,141			38,307
Administrative, transaction and other fees	15,098			—			—			15,098
Total revenues	572,366			—			(169		)	572,197
Expenses
Compensation and benefits	131,219			—			—			131,219
Performance related 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)
Net realized and unrealized loss on investments	(5,044		)	—			(1,544		)	(6,588		)
Interest and dividend income	2,216			—			(754		)	1,462
Interest expense	(5,354		)	—			—			(5,354		)
Other income, net	2,822			—			—			2,822
Net realized and unrealized gain on investments of the Consolidated Funds	—			953			(13,666		)	(12,713		)
Interest and other income of the Consolidated Funds	—			38,326			—			38,326
Interest expense of Consolidated Funds	—			(42,429		)	15,554			(26,875		)
Total other expense	(5,360		)	(3,150		)	(410		)	(8,920		)
Income (loss) before taxes	123,331			(11,975		)	3,724			115,080
Income tax expense	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 dividend paid	5,425			—			—			5,425
Net income attributable to Ares Management, L.P. common shareholders	$	44,453		$	—		$	—		$	44,453



	For the Six Months Ended June 30, 2018
	Consolidated Company Entities			Consolidated Funds			Eliminations			Consolidated
Revenues
Management fees (includes ARCC Part I Fees of $58,283)	$	399,130		$	—		$	(15,583	)	$	383,547
Carried interest allocation	40,685			—			—			40,685
Incentive fees	16,811			—			(4,000		)	12,811
Principal investment income	17,430			—			(10,650		)	6,780
Administrative, transaction and other fees	26,429			—			—			26,429
Total revenues	500,485			—			(30,233		)	470,252
Expenses
Compensation and benefits	273,631			—			—			273,631
Performance related compensation	12,873			—			—			12,873
General, administrative and other expense	104,368			—			—			104,368
Expenses of the Consolidated Funds	—			56,011			(19,583		)	36,428
Total expenses	390,872			56,011			(19,583		)	427,300
Other income (expense)
Net realized and unrealized gain on investments	3,260			—			(832		)	2,428
Interest and dividend income	5,703			—			—			5,703
Interest expense	(12,945		)	—			—			(12,945		)
Other expense, net	(2,831		)	—			533			(2,298		)
Net realized and unrealized gain on investments of the Consolidated Funds	—			21,367			35			21,402
Interest and other income of the Consolidated Funds	—			157,055			—			157,055
Interest expense of consolidated Funds	—			(101,977		)	798			(101,179		)
Total other income (expense)	(6,813		)	76,445			534			70,166
Income before taxes	102,800			20,434			(10,116		)	113,118
Income tax expense	24,459			69			—			24,528
Net income	78,341			20,365			(10,116		)	88,590
Less: Net income attributable to non-controlling interests in Consolidated Funds	—			20,365			(10,116		)	10,249
Less: Net income attributable to non-controlling interests in Ares Operating Group entities	49,168			—			—			49,168
Net income attributable to Ares Management, L.P.	29,173			—			—			29,173
Less: Preferred equity dividend paid	10,850			—			—			10,850
Net income attributable to Ares Management, L.P. common shareholders	$	18,323		$	—		$	—		$	18,323



	For the Six Months Ended June 30, 2017
	As Adjusted
	Consolidated Company Entities			Consolidated Funds			Eliminations			Consolidated
Revenues
Management fees (includes ARCC Part I Fees of $52,400)	$	362,341		$	—		$	(9,528	)	$	352,813
Carried interest allocation	386,829			—			(1,014		)	385,815
Incentive fees	8,755			—			(1,374		)	7,381
Principal investment income	47,335			—			(6,441		)	40,894
Administrative, transaction and other fees	29,538			—			—			29,538
Total revenues	834,798			—			(18,357		)	816,441
Expenses
Compensation and benefits	255,558			—			—			255,558
Performance related 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)
Net realized and unrealized loss on investments	(1,291		)	—			(4,409		)	(5,700		)
Interest and dividend income	5,059			—			(1,673		)	3,386
Interest expense	(10,233		)	—			—			(10,233		)
Other income, net	19,318			—			—			19,318
Net realized and unrealized gain on investments of the Consolidated Funds	—			31,392			(12,069		)	19,323
Interest and other income of the Consolidated Funds	—			79,818			—			79,818
Interest expense of Consolidated Funds	—			(75,915		)	17,718			(58,197		)
Total other income	12,853			35,295			(433		)	47,715
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 dividend paid	10,850			—			—			10,850
Net loss attributable to Ares Management, L.P. common shareholders	$	(2,106	)	$	—		$	—		$	(2,106	)