UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2023

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from             to            

Commission File No. 001-36429

ARES MANAGEMENT CORPORATION

(Exact name of Registrant as specified in its charter)

Delaware	80-0962035
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification Number)

2000 Avenue of the Stars, 12th Floor, Los Angeles, CA 90067

(Address of principal executive office) (Zip Code)

(310) 201-4100

(Registrant’s telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Class A common stock, par value $0.01 per share	ARES	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days: Yes x  No ¨

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x  No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company.” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer  x Accelerated Filer ☐ Non-Accelerated Filer ☐ Smaller Reporting Company ☐ Emerging Growth Company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐  No x

As of July 28, 2023 there were 181,355,274 of the registrant’s shares of Class A common stock outstanding, 3,489,911 of the registrant’s shares of non-voting common stock outstanding, 1,000 shares of the registrant’s Class B common stock outstanding, and 119,674,321 of the registrant’s Class C common stock outstanding.

TABLE OF CONTENTS

	Page
PART I—FINANCIAL INFORMATION
Item 1. Financial Statements	9
Condensed Consolidated Statements of Financial Condition as of June 30, 2023 and December 31, 2022	9
Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2023 and 2022	10
Condensed Consolidated Statements of Comprehensive Income for the three and six months ended June 30, 2023 and 2022	11
Condensed Consolidated Statements of Changes in Equity for the three and six months ended June 30, 2023 and for the year ended December 31, 2022	12
Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2023 and 2022	14
Notes to the Condensed Consolidated Financial Statements	15
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	58
Item 3. Quantitative and Qualitative Disclosures about Market Risk	120
Item 4. Controls and Procedures	122
PART II—OTHER INFORMATION
Item 1. Legal Proceedings	123
Item 1A. Risk Factors	123
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	123
Item 3. Defaults Upon Senior Securities	123
Item 4. Mine Safety Disclosure	123
Item 5. Other Information	124
Item 6. Exhibits	125
Signatures	126

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Cautionary Note Regarding Forward-Looking Statements

This report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), which reflect our current views with respect to, among other things, future events, operations and financial performance. You can identify these forward-looking statements by the use of forward-looking words such as “outlook,” “believes,” “expects,” “potential,” “continues,” “may,” “will,” “should,” “seeks,” “predicts,” “intends,” “plans,” “estimates,” “anticipates,” “foresees” or negative versions of those words, other comparable words or other statements that do not relate to historical or factual matters. The forward-looking statements are based on our beliefs, assumptions and expectations of our future performance, taking into account all information currently available to us. Such forward-looking statements are subject to various risks and uncertainties and assumptions relating to our operations, financial results, financial condition, business prospects, growth strategy and liquidity. Some of these factors are described in this report and in our Annual Report on Form 10-K for the year ended December 31, 2022, under the headings “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Item 1A. Risk Factors.” These factors should not be construed as exhaustive and should be read in conjunction with the risk factors and other cautionary statements that are included in this report and in our other periodic filings. If one or more of these or other risks or uncertainties materialize, or if our underlying assumptions prove to be incorrect, our actual results may vary materially from those indicated in these forward-looking statements. New risks and uncertainties arise over time, and it is not possible for us to predict those events or how they may affect us. Therefore, you should not place undue reliance on these forward-looking statements. Any forward-looking statement speaks only as of the date on which it is made. We do not undertake any obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise, except as required by law.

References in this Quarterly Report on Form 10-Q to the “Ares Operating Group” refer to Ares Holdings L.P. (“Ares Holdings”). References in this Quarterly Report on Form 10-Q to an “Ares Operating Group Unit” or an “AOG Unit” refers to a partnership unit in the Ares Operating Group entity.

The use of any defined term in this report to mean more than one entities, persons, securities or other items collectively is solely for convenience of reference and in no way implies that such entities, persons, securities or other items are one indistinguishable group. For example, notwithstanding the use of the defined terms “Ares,” “we” and “our” in this report to refer to Ares Management Corporation and its subsidiaries, each subsidiary of Ares Management Corporation is a standalone legal entity that is separate and distinct from Ares Management Corporation and any of its other subsidiaries.

Under generally accepted accounting principles in the United States (“GAAP”), we are required to consolidate (a) entities other than limited partnerships and entities similar to limited partnerships in which we hold a majority voting interest or have majority ownership and control over the operational, financial and investing decisions of that entity, including Ares-affiliates and affiliated funds and co-investment vehicles, for which we are presumed to have controlling financial interests, and (b) entities that we concluded are variable interest entities (“VIEs”), including limited partnerships and collateralized loan obligations, for which we are deemed to be the primary beneficiary. When an entity is consolidated, we reflect the assets, liabilities, revenues, expenses and cash flows of the entity in our unaudited condensed consolidated financial statements on a gross basis, subject to eliminations from consolidation, including the elimination of the management fees, carried interest, incentive fees and other fees that we earn from the entity. However, the presentation of performance related compensation and other expenses associated with generating such revenues is not affected by the consolidation process. In addition, as a result of the consolidation process, the net income attributable to third-party investors in consolidated entities is presented as net income attributable to non-controlling interests in Consolidated Funds within Condensed Consolidated Statements of Operations. We also consolidate joint ventures that we have established with third-party investors for strategic distribution and expansion purposes. The results of these entities are reflected on a gross basis in the unaudited condensed consolidated financial statements, subject to eliminations from consolidation, and net income attributable to third-party investors in the consolidated joint ventures is presented within net income attributable to redeemable interest and non-controlling interests in Ares Operating Group entities.

In this Quarterly Report on Form 10-Q, in addition to presenting our results on a consolidated basis in accordance with GAAP, we present revenues, expenses and other results on a: (i) “segment basis,” which deconsolidates the consolidated funds and removes the proportional results attributable to third-party investors in the consolidated joint ventures, and therefore shows the results of our operating segments without giving effect to the consolidation of these entities and (ii) “unconsolidated reporting basis,” which shows the results of our operating segments on a combined segment basis together with our Operations Management Group. In addition to our operating segments, we have an Operations Management Group (the “OMG”). The OMG consists of shared resource groups to support our operating segments by providing infrastructure and administrative support in the areas of accounting/finance, operations, information technology, legal, compliance, human resources, strategy and relationship management and distribution. The OMG includes Ares Wealth Management Solutions, LLC (“AWMS”) that

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facilitates the product development, distribution, marketing and client management activities for investment offerings in the global wealth management channel. Additionally, the OMG provides services to certain of the Company’s managed funds and vehicles, which reimburse the OMG for expenses equal to the costs of services provided. The OMG’s revenues and expenses are not allocated to our operating segments but we consider the cost structure of the OMG when evaluating our financial performance. This information constitutes non-GAAP financial information within the meaning of Regulation G, as promulgated by the SEC. Our management uses this information to assess the performance of our operating segments and the OMG, and we believe that this information enhances the ability of shareholders to analyze our performance. For more information, see “Note 13. Segment Reporting,” within our unaudited condensed consolidated financial statements included in this Quarterly Report on Form 10-Q.

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Glossary

When used in this report, unless the context otherwise requires:

•“American-style waterfall” generally refers to carried interest that the general partner is entitled to receive after a fund investment is realized and the investors in the fund have received distributions in excess of the capital contributed for that investment and all prior realized investments (including allocable expenses) plus a preferred return;

•“ARCC Part II Fees” refers to fees from Ares Capital Corporation (NASDAQ: ARCC) (“ARCC”) that are paid in arrears as of the end of each calendar year when the cumulative aggregate realized capital gains exceed the cumulative aggregate realized capital losses and aggregate unrealized capital depreciation, less the aggregate amount of ARCC Part II Fees paid in all prior years since inception;

•“Ares”, the “Company”, “AMC”, “we”, “us” and “our” refer to Ares Management Corporation and its subsidiaries;

•“Ares Operating Group entities” refers to, collectively, Ares Holdings, L.P. (“Ares Holdings”) and any future entity designated by our board of directors in its sole discretion as an Ares Operating Group entity;

•“Ares Operating Group Unit” or an “AOG Unit” refers to, collectively, a partnership unit in the Ares Operating Group entities including Ares Holdings and any future entity designated by our board of directors in its sole discretion as an Ares Operating Group entity;

•“assets under management” or “AUM” generally refers to the assets we manage. For our funds other than CLOs, our AUM represents the sum of the net asset value (“NAV”) of such funds, the drawn and undrawn debt (at the fund-level including amounts subject to restrictions) and uncalled committed capital (including commitments to funds that have yet to commence their investment periods). NAV refers to the fair value of the assets of a fund less the fair value of the liabilities of the fund. For the CLOs we manage, our AUM is equal to initial principal amounts adjusted for paydowns. AUM also includes the proceeds raised in the initial public offerings of special purpose acquisition companies (“SPACs”) sponsored by us, less any redemptions;

•“AUM not yet paying fees” (also referred to as “shadow AUM”) refers to AUM that is not currently paying fees and is eligible to earn management fees upon deployment;

•“available capital” (also referred to as “dry powder”) is comprised of uncalled committed capital and undrawn amounts under credit facilities and may include AUM that may be canceled or not otherwise available to invest;

•“catch-up fees” refers to management fees that are one-time in nature and represents management fees charged to fund investors in subsequent closings of a fund that apply to the time period between the fee initiation date and the subsequent closing date;

•“CLOs” refers to “our funds” that are structured as collateralized loan obligations;

•“Consolidated Funds” refers collectively to certain Ares funds, co-investment vehicles, CLOs and SPACs that are required under GAAP to be consolidated in our consolidated financial statements;

•“Credit Facility” refers to the revolving credit facility of the Ares Operating Group;

•“effective management fee rate” represents the annualized fees divided by the average fee paying AUM for the period, excluding the impact of one-time catch-up fees;

•“European-style waterfall” generally refers to carried interest that the general partner is entitled to receive after the investors in a fund have received distributions in an amount equal to all prior capital contributions plus a preferred return;

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•“fee paying AUM” or “FPAUM” refers to the AUM from which we directly earn management fees. FPAUM is equal to the sum of all the individual fee bases of our funds that directly contribute to our management fees. For our funds other than CLOs, our FPAUM represents the amount of limited partner capital commitments for certain closed-end funds within the reinvestment period, the amount of limited partner invested capital for the aforementioned closed-end funds beyond the reinvestment period and the portfolio value, gross asset value or NAV. For the CLOs we manage, our FPAUM is equal to the gross amount of aggregate collateral balance, at par, adjusted for defaulted or discounted collateral;

•“fee related earnings” or “FRE”, a non-GAAP measure, is used to assess core operating performance by determining whether recurring revenue, primarily consisting of management fees and fee related performance revenues, is sufficient to cover operating expenses and to generate profits. FRE differs from income before taxes computed in accordance with GAAP as FRE excludes net performance income, investment income from our funds and adjusts for certain other items that we believe are not indicative of our core operating performance. Fee related performance revenues, together with fee related performance compensation, is presented within FRE because it represents incentive fees from perpetual capital vehicles that are measured and received on a recurring basis and are not dependent on realization events from the underlying investments;

•“fee related performance revenues” refers to incentive fees from perpetual capital vehicles that are: (i) measured and expected to be received on a recurring basis and (ii) not dependent on realization events from the underlying investments. Certain vehicles are subject to hold back provisions that limit the amounts paid in a particular year. Such hold back amounts may be paid in subsequent years, subject to their extended performance conditions;

•“GAAP” refers to accounting principles generally accepted in the United States of America;

•“Holdco Members” refers to Michael Arougheti, David Kaplan, Antony Ressler, Bennett Rosenthal, Ryan Berry and R. Kipp deVeer;

•“Incentive eligible AUM” or “IEAUM” generally refers to the AUM of our funds and other entities from which carried interest and incentive fees may be generated, regardless of whether or not they are currently generating carried interest and incentive fees. It generally represents the NAV plus uncalled equity or total assets plus uncalled debt, as applicable, of our funds for which we are entitled to receive carried interest and incentive fees, excluding capital committed by us and our professionals (from which we generally do not earn carried interest and incentive fees), as well as proceeds raised in the initial public offerings of SPACs sponsored by us, less any redemptions. With respect to ARCC’s AUM, only ARCC Part II Fees may be generated from IEAUM;

•“Incentive generating AUM” or “IGAUM” refers to the AUM of our funds and other entities that are currently generating carried interest and incentive fees on a realized or unrealized basis. It generally represents the NAV or total assets of our funds, as applicable, for which we are entitled to receive carried interest and incentive fees, excluding capital committed by us and our professionals (from which we generally do not earn carried interest and incentive fees). ARCC is only included in IGAUM when ARCC Part II Fees are being generated;

•“management fees” refers to fees we earn for advisory services provided to our funds, which are generally based on a defined percentage of fair value of assets, total commitments, invested capital, net asset value, net investment income, total assets or par value of the investment portfolios managed by us. Management fees include Part I Fees, a quarterly fee based on the net investment income of certain funds;    

•“net inflows of capital” refers to net new commitments during the period, including equity and debt commitments and gross inflows into our open-ended managed accounts and sub-advised accounts, as well as new debt and equity issuances by our publicly-traded vehicles minus redemptions from our open-ended funds, managed accounts and sub-advised accounts;

•“net performance income” refers to performance income net of related compensation that is typically payable to our professionals;

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•“our funds” refers to the funds, alternative asset companies, trusts, co-investment vehicles and other entities and accounts that are managed or co-managed by the Ares Operating Group, and which are structured to pay fees. It also includes funds managed by Ivy Hill Asset Management, L.P., a wholly owned portfolio company of ARCC and an SEC-registered investment adviser;

•“Part I Fees” refers to a quarterly fee on the net investment income of ARCC and CION Ares Diversified Credit Fund (“CADC”). Such fees are classified as management fees as they are predictable and recurring in nature, not subject to contingent repayment and generally cash-settled each quarter, unless subject to a payment deferral;

•“performance income” refers to income we earn based on the performance of a fund that is generally based on certain specific hurdle rates as defined in the fund’s investment management or partnership agreements and may be either performance revenue or carried interest, but in all cases excludes fee related performance revenues;

•“performance revenue” refers to all incentive fees other than those presented as fee related performance revenues;

•“perpetual capital” refers to the AUM of: (i) our publicly-traded vehicles including ARCC, Ares Commercial Real Estate Corporation (NYSE: ACRE) (“ACRE”) and Ares Dynamic Credit Allocation Fund, Inc. (NYSE: ARDC) (“ARDC”); (ii) our non-traded vehicles, including our non-traded Real Estate Investment Trusts (“REITs”), Ares Private Markets Fund (“APMF”), Ares Strategic Income Fund (“ASIF”) and CADC; (iii) Aspida Holdings Ltd. (together with its subsidiaries, “Aspida”); and (iv) certain other commingled funds and managed accounts that have an indefinite term, are not in liquidation, and for which there is no immediate requirement to return invested capital to investors upon the realization of investments. Perpetual Capital - Managed Accounts refers to managed accounts for single investors primarily in illiquid strategies that meet the Perpetual Capital criteria. Perpetual Capital - Private Commingled Funds refers to commingled funds that meet the Perpetual Capital criteria, not including our publicly traded vehicles or non-traded vehicles. Perpetual Capital may be withdrawn by investors under certain conditions, including through an election to redeem an investor’s fund investment or to terminate the investment management agreement, which in certain cases may be terminated on 30 days’ prior written notice. In addition, the investment management or advisory agreements of certain of our publicly-traded and non-traded vehicles have one year terms, which are subject to annual renewal by such vehicles;

•“realized income” or “RI”, a non-GAAP measure, is an operating metric used by management to evaluate performance of the business based on operating performance and the contribution of each of the business segments to that performance, while removing the fluctuations of unrealized income and losses, which may or may not be eventually realized at the levels presented and whose realizations depend more on future outcomes than current business operations. RI differs from income before taxes by excluding: (i) operating results of our Consolidated Funds; (ii) depreciation and amortization expense; (iii) the effects of changes arising from corporate actions; (iv) unrealized gains and losses related to carried interest, incentive fees and investment performance; and adjusting for certain other items that we believe are not indicative of our operating performance. Changes arising from corporate actions include equity-based compensation expenses, the amortization of intangible assets, transaction costs associated with mergers, acquisitions and capital activities, underwriting costs and expenses incurred in connection with corporate reorganization. Placement fee adjustment represents the net portion of either expense deferral or amortization that is required to match the timing of expense recognition with the period over which management fees are expected to be earned from the associated fund for segment purposes but have been expensed up front in accordance with GAAP. For periods in which the amortization of placement fees for segment purposes is higher than the GAAP expense, the placement fee adjustment is presented as a reduction to RI;

•“SEC” refers to the Securities and Exchange Commission;

•“2024 Senior Notes” refers to senior notes issued by a wholly owned subsidiary of Ares Holdings in October 2014 with a maturity in October 2024;

•“2030 Senior Notes” refers to senior notes issued by a wholly owned subsidiary of Ares Holdings in June 2020 with a maturity in June 2030;

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•“2051 Subordinated Notes” refers to subordinated notes issued by a wholly owned subsidiary of Ares Holdings in June 2021 with a maturity in June 2051; and

•“2052 Senior Notes” refers to senior notes issued by a wholly owned subsidiary of Ares Holdings in January 2022 with a maturity in February 2052.

Many of the terms used in this report, including AUM, FPAUM, FRE and RI, may not be comparable to similarly titled measures used by other companies. In addition, our definitions of AUM and FPAUM are not based on any definition of AUM or FPAUM that is set forth in the agreements governing the investment funds that we manage and may differ from definitions of AUM or FPAUM set forth in other agreements to which we are a party or definitions used by the SEC or other regulatory bodies. Further, FRE and RI are not measures of performance calculated in accordance with GAAP. We use FRE and RI as measures of operating performance, not as measures of liquidity. FRE and RI should not be considered in isolation or as substitutes for operating income, net income, operating cash flows, or other income or cash flow statement data prepared in accordance with GAAP. The use of FRE and RI without consideration of related GAAP measures is not adequate due to the adjustments described above. Our management compensates for these limitations by using FRE and RI as supplemental measures to our GAAP results. We present these measures to provide a more complete understanding of our performance as our management measures it.

Amounts and percentages throughout this report may reflect rounding adjustments and consequently totals may not appear to sum.

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PART I—FINANCIAL INFORMATION

Item 1. Financial Statements

Ares Management Corporation 

Condensed Consolidated Statements of Financial Condition
(Amounts in Thousands, Except Share Data)

	As of
	June 30, 2023		December 31, 2022
	(unaudited)
Assets
Cash and cash equivalents	$	276,827	$	389,987
Investments (includes accrued carried interest of $3,524,644 and $3,106,577 at June 30, 2023 and December 31, 2022, respectively)	4,466,226		3,974,734
Due from affiliates	643,444		758,472
Other assets	252,646		381,137
Right-of-use operating lease assets	170,911		155,950
Intangible assets, net	1,130,673		1,208,220
Goodwill	998,020		999,656
Assets of Consolidated Funds:
Cash and cash equivalents	812,164		724,641
Investments held in trust account	1,000,949		1,013,382
Investments, at fair value	13,090,939		12,191,251
Due from affiliates	11,388		15,789
Receivable for securities sold	197,729		124,050
Other assets	66,890		65,570
Total assets	$	23,118,806	$	22,002,839
Liabilities
Accounts payable, accrued expenses and other liabilities	$	267,198	$	231,921
Accrued compensation	250,790		510,130
Due to affiliates	192,153		252,798
Performance related compensation payable	2,579,564		2,282,209
Debt obligations	2,299,731		2,273,854
Operating lease liabilities	206,816		190,616
Liabilities of Consolidated Funds:
Accounts payable, accrued expenses and other liabilities	225,294		168,286
Due to affiliates	920		4,037
Payable for securities purchased	554,555		314,193
CLO loan obligations, at fair value	11,460,999		10,701,720
Fund borrowings	65,050		168,046
Total liabilities	18,103,070		17,097,810
Commitments and contingencies
Redeemable interest in Consolidated Funds	1,000,749		1,013,282
Redeemable interest in Ares Operating Group entities	22,517		93,129
Non-controlling interests in Consolidated Funds	971,309		1,074,356
Non-controlling interests in Ares Operating Group entities	1,271,157		1,135,023
Stockholders’ Equity
Class A common stock, $0.01 par value, 1,500,000,000 shares authorized (181,231,808 shares and 173,892,036 shares issued and outstanding at June 30, 2023 and December 31, 2022, respectively)	1,812		1,739
Non-voting common stock, $0.01 par value, 500,000,000 shares authorized (3,489,911 shares issued and outstanding at June 30, 2023 and December 31, 2022)	35		35
Class B common stock, $0.01 par value, 1,000 shares authorized (1,000 shares issued and outstanding at June 30, 2023 and December 31, 2022)	—		—
Class C common stock, $0.01 par value, 499,999,000 shares authorized (119,674,321 shares and 117,231,288 shares issued and outstanding at June 30, 2023 and December 31, 2022, respectively)	1,197		1,172
Additional paid-in-capital	2,182,173		1,970,754
Accumulated deficit	(425,526)		(369,475)
Accumulated other comprehensive loss, net of tax	(9,687)		(14,986)
Total stockholders’ equity	1,750,004		1,589,239
Total equity	3,992,470		3,798,618
Total liabilities, redeemable interest, non-controlling interests and equity	$	23,118,806	$	22,002,839

See accompanying notes to the unaudited condensed consolidated financial statements.

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Ares Management Corporation

Condensed Consolidated Statements of Operations

(Amounts in Thousands, Except Share Data)

(unaudited)

	Three months ended June 30,				Six months ended June 30,
	2023		2022		2023		2022
Revenues
Management fees	$	615,271	$	520,560	$	1,215,787	$	997,892
Carried interest allocation	418,466		47,304		569,954		225,593
Incentive fees	7,950		4,675		16,873		21,097
Principal investment income (loss)	6,888		(4,387)		29,646		3,939
Administrative, transaction and other fees	44,711		33,278		74,388		67,908
Total revenues	1,093,286		601,430		1,906,648		1,316,429
Expenses
Compensation and benefits	367,550		375,775		728,331		729,612
Performance related compensation	315,780		41,073		427,438		173,884
General, administrative and other expenses	141,153		122,566		289,498		243,089
Expenses of Consolidated Funds	13,255		13,454		21,107		17,967
Total expenses	837,738		552,868		1,466,374		1,164,552
Other income (expense)
Net realized and unrealized gains (losses) on investments	5,481		(1,775)		6,996		6,334
Interest and dividend income	2,690		1,476		6,529		2,978
Interest expense	(25,839)		(17,221)		(50,825)		(32,867)
Other income (expense), net	(5,887)		5,809		(6,810)		7,593
Net realized and unrealized gains (losses) on investments of Consolidated Funds	98,426		(7,907)		109,126		8,061
Interest and other income of Consolidated Funds	234,454		117,375		457,392		237,665
Interest expense of Consolidated Funds	(182,904)		(79,253)		(339,591)		(153,266)
Total other income, net	126,421		18,504		182,817		76,498
Income before taxes	381,969		67,066		623,091		228,375
Income tax expense	49,714		13,460		83,520		33,871
Net income	332,255		53,606		539,571		194,504
Less: Net income (loss) attributable to non-controlling interests in Consolidated Funds	67,681		(15,022)		94,374		32,360
Net income attributable to Ares Operating Group entities	264,574		68,628		445,197		162,144
Less: Net income (loss) attributable to redeemable interest in Ares Operating Group entities	734		(457)		(1,090)		(58)
Less: Net income attributable to non-controlling interests in Ares Operating Group entities	119,326		29,354		207,734		76,608
Net income attributable to Ares Management Corporation Class A and non-voting common stockholders	$	144,514	$	39,731	$	238,553	$	85,594
Net income per share of Class A and non-voting common stock:
Basic	$	0.75	$	0.21	$	1.25	$	0.45
Diluted	$	0.74	$	0.21	$	1.24	$	0.45
Weighted-average shares of Class A and non-voting common stock:
Basic	182,999,515		175,157,558		180,998,934		174,694,645
Diluted	194,058,041		175,157,558		192,161,816		174,694,645

Substantially all revenue is earned from affiliated funds of the Company.

See accompanying notes to the unaudited condensed consolidated financial statements.

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Ares Management Corporation

Condensed Consolidated Statements of Comprehensive Income

(Amounts in Thousands)

(unaudited)

	Three months ended June 30,				Six months ended June 30,
	2023		2022		2023		2022
Net income	$	332,255	$	53,606	$	539,571	$	194,504
Other comprehensive income:
Foreign currency translation adjustments, net of tax	(4,435)		(29,644)		2,204		(42,037)
Total comprehensive income	327,820		23,962		541,775		152,467
Less: Comprehensive income (loss) attributable to non-controlling interests in Consolidated Funds	58,996		(24,922)		88,079		17,365
Less: Comprehensive income (loss) attributable to redeemable interest in Ares Operating Group entities	575		(1,453)		(1,397)		(1,385)
Less: Comprehensive income attributable to non-controlling interests in Ares Operating Group entities	121,077		21,779		211,241		66,230
Comprehensive income attributable to Ares Management Corporation	$	147,172	$	28,558	$	243,852	$	70,257

     

See accompanying notes to the unaudited condensed consolidated financial statements.

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Ares Management Corporation

Condensed Consolidated Statements of Changes in Equity 

(Amounts in Thousands)

(unaudited)

	Class A Common Stock		Non-voting Common Stock		Class C Common Stock		Additional Paid-in-Capital		Accumulated Deficit		Accumulated Other Comprehensive Loss		Non-Controlling Interest in Ares Operating Group Entities		Non-Controlling Interest in Consolidated Funds		Total Equity
Balance at December 31, 2022	$	1,739	$	35	$	1,172	$	1,970,754	$	(369,475)	$	(14,986)	$	1,135,023	$	1,074,356	$	3,798,618
Changes in ownership interests and related tax benefits	19		—		34		(36,777)		—		—		87,541		(4,689)		46,128
Issuances of common stock	14		—		—		115,350		—		—		—		—		115,364
Capital contributions	—		—		—		—		—		—		1,172		93,585		94,757
Dividends/Distributions	—		—		—		—		(145,386)		—		(103,363)		(20,933)		(269,682)
Net income	—		—		—		—		94,039		—		88,408		26,693		209,140
Currency translation adjustment, net of tax	—		—		—		—		—		2,641		1,756		2,390		6,787
Equity compensation	—		—		—		41,541		—		—		27,537		—		69,078
Stock option exercises	5		—		—		9,175		—		—		—		—		9,180
Balance at March 31, 2023	1,777		35		1,206		2,100,043		(420,822)		(12,345)		1,238,074		1,171,402		4,079,370
Changes in ownership interests and related tax benefits	10		—		(9)		(151)		—		—		(4,086)		(322,729)		(326,965)
Issuances of common stock	—		—		—		737		—		—		—		—		737
Capital contributions	—		—		—		—		—		—		1,071		78,632		79,703
Dividends/Distributions	—		—		—		—		(149,218)		—		(109,651)		(14,992)		(273,861)
Net income	—		—		—		—		144,514		—		119,326		67,681		331,521
Currency translation adjustment, net of tax	—		—		—		—		—		2,658		1,751		(8,685)		(4,276)
Equity compensation	—		—		—		37,609		—		—		24,672		—		62,281
Stock option exercises	25		—		—		43,935		—		—		—		—		43,960
Balance at June 30, 2023	$	1,812	$	35	$	1,197	$	2,182,173	$	(425,526)	$	(9,687)	$	1,271,157	$	971,309	$	3,992,470

See accompanying notes to the unaudited condensed consolidated financial statements.

12

Ares Management Corporation

Condensed Consolidated Statements of Changes in Equity 

(Amounts in Thousands)

(unaudited)

	Class A Common Stock		Non-voting Common Stock		Class C Common Stock		Additional Paid-in-Capital		Accumulated Deficit		Accumulated Other Comprehensive Loss		Non-Controlling Interest in Ares Operating Group Entities		Non-Controlling Interest in Consolidated Funds		Total Equity
Balance at December 31, 2021	$	1,684	$	35	$	1,186	$	1,913,559	$	(89,382)	$	(1,855)	$	1,397,747	$	591,452	$	3,814,426
Changes in ownership interests and related tax benefits	28		—		(1)		(110,577)		—		—		(90,843)		19,202		(182,191)
Issuances of common stock	1				—		12,834		—		—		—		—		12,835
Capital contributions	—		—		—		—		—		—		1,079		82,930		84,009
Dividends/Distributions	—		—		—		—		(111,406)		—		(100,480)		(34,958)		(246,844)
Net income	—		—		—		—		45,863		—		47,254		47,382		140,499
Currency translation adjustment, net of tax	—		—		—		—		—		(4,164)		(2,803)		(5,095)		(12,062)
Equity compensation	—		—		—		31,896		—		—		21,706		—		53,602
Stock option exercises	2				—		3,345		—		—		—		—		3,347
Balance at March 31, 2022	1,715		35		1,185		1,851,057		(154,925)		(6,019)		1,273,660		700,913		3,667,621
Changes in ownership interests and related tax benefits	—		—		(1)		(5,599)		—		—		(3,135)		5,815		(2,920)
Capital contributions	—		—		—		—		—		—		969		135,350		136,319
Dividends/Distributions	—		—		—		—		(111,506)		—		(82,958)		(18,680)		(213,144)
Net income (loss)	—		—		—		—		39,731		—		29,354		(15,022)		54,063
Currency translation adjustment, net of tax	—		—		—		—		—		(11,173)		(7,575)		(9,900)		(28,648)
Equity compensation	—		—		—		29,569		—		—		19,990		—		49,559
Stock option exercises	3		—		—		5,294		—		—		—		—		5,297
Balance at June 30, 2022	1,718		35		1,184		1,880,321		(226,700)		(17,192)		1,230,305		798,476		3,668,147
Changes in ownership interests and related tax benefits	3		—		(1)		(3,173)		—		—		(4,354)		(479)		(8,004)
Capital contributions	—		—		—		—		—		—		1,549		80,366		81,915
Dividends/Distributions	—		—		—		—		(111,952)		—		(88,041)		(50,794)		(250,787)
Net income (loss)	—		—		—		—		(35,546)		—		(29,666)		16,340		(48,872)
Currency translation adjustment, net of tax	—		—		—		—		—		(11,627)		(7,852)		(9,199)		(28,678)
Equity compensation	—		—		—		28,704		—		—		19,336		—		48,040
Stock option exercises	3		—		—		5,884		—		—		—		—		5,887
Balance at September 30, 2022	1,724		35		1,183		1,911,736		(374,198)		(28,819)		1,121,277		834,710		3,467,648
Changes in ownership interests and related tax benefits	12		—		(11)		22,936		—		—		(7,348)		(20,532)		(4,943)
Capital contributions	—		—		—		—		—		—		1,598		250,750		252,348
Dividends/Distributions	—		—		—		—		(112,770)		—		(115,364)		(73,859)		(301,993)
Net income	—		—		—		—		117,493		—		105,950		70,633		294,076
Currency translation adjustment, net of tax	—		—		—		—		—		13,833		9,416		12,654		35,903
Equity compensation	—		—		—		29,411		—		—		19,494		—		48,905
Stock option exercises	3		—		—		6,671		—		—		—		—		6,674
Balance at December 31, 2022	$	1,739	$	35	$	1,172	$	1,970,754	$	(369,475)	$	(14,986)	$	1,135,023	$	1,074,356	$	3,798,618

See accompanying notes to the unaudited condensed consolidated financial statements.

13

Ares Management Corporation

Condensed Consolidated Statements of Cash Flows

(Amounts in Thousands)

(unaudited)

	Six months ended June 30,
	2023		2022
Cash flows from operating activities:
Net income	$	539,571	$	194,504
Adjustments to reconcile net income to net cash provided by (used in) operating activities	149,773		61,073
Adjustments to reconcile net income to net cash provided by (used in) operating activities allocable to non-controlling interests in Consolidated Funds	(884,231)		(855,803)
Cash flows due to changes in operating assets and liabilities	69,426		157,160
Cash flows due to changes in operating assets and liabilities allocable to redeemable and non-controlling interest in Consolidated Funds	133,981		(125,132)
Net cash provided by (used in) operating activities	8,520		(568,198)
Cash flows from investing activities:
Purchase of furniture, equipment and leasehold improvements, net of disposals	(21,127)		(18,448)
Acquisitions, net of cash acquired	—		(301,677)
Net cash used in investing activities	(21,127)		(320,125)
Cash flows from financing activities:
Proceeds from Credit Facility	495,000		700,000
Proceeds from issuance of senior notes	—		488,915
Repayments of Credit Facility	(470,000)		(720,000)
Dividends and distributions	(510,501)		(406,366)
Stock option exercises	53,140		8,644
Taxes paid related to net share settlement of equity awards	(133,570)		(189,485)
Other financing activities	1,554		1,834
Allocable to redeemable and non-controlling interests in Consolidated Funds:
Contributions from redeemable and non-controlling interests in Consolidated Funds	680,991		218,280
Distributions to non-controlling interests in Consolidated Funds	(35,925)		(53,638)
Redemptions of redeemable interests in Consolidated Funds	(538,985)		—
Borrowings under loan obligations by Consolidated Funds	535,464		814,183
Repayments under loan obligations by Consolidated Funds	(174,669)		(46,873)
Net cash provided by (used in) financing activities	(97,501)		815,494
Effect of exchange rate changes	(3,052)		(17,959)
Net change in cash and cash equivalents	(113,160)		(90,788)
Cash and cash equivalents, beginning of period	389,987		343,655
Cash and cash equivalents, end of period	$	276,827	$	252,867
Supplemental disclosure of non-cash financing activities:
Issuance of Class A common stock in connection with acquisition-related activity	$	116,101	$	12,835
Issuance of AOG Units in connection with settlement of management incentive program	$	245,647	$	—

    

See accompanying notes to the unaudited condensed consolidated financial statements.

14

Ares Management Corporation

Notes to the Unaudited Condensed Consolidated Financial Statements

(Dollars in Thousands, Except Share Data and As Otherwise Noted)

1. ORGANIZATION

Ares Management Corporation (the “Company”), a Delaware corporation, together with its subsidiaries, is a leading global alternative investment manager operating integrated groups across Credit, Private Equity, Real Assets and Secondaries. Information about segments should be read together with “Note 13. Segment Reporting.” Subsidiaries of the Company serve as the general partners and/or investment managers to various investment funds and managed accounts within each investment group (the “Ares Funds”). These subsidiaries provide investment advisory services to the Ares Funds in exchange for management fees.

The accompanying unaudited financial statements include the condensed consolidated results of the Company and its subsidiaries. The Company is a holding company that operates and controls all of the businesses and affairs of and conducts all of its material business activities through Ares Holdings L.P. (“Ares Holdings”). Ares Holdings represents all the activities of the “Ares Operating Group” or “AOG” and may be referred to interchangeably. The Company, indirectly through its wholly owned subsidiary, Ares Holdco LLC, is the general partner of the Ares Operating Group entity.

The Company and its wholly owned subsidiaries manages or controls certain entities that have been consolidated in the accompanying financial statements as described in “Note 2. Summary of Significant Accounting Policies.” These entities include Ares funds, co-investment vehicles, collateralized loan obligations or funds (collectively “CLOs”) and special purpose acquisition companies (“SPACs”) (collectively, the “Consolidated Funds”).

Including the results of the Consolidated Funds significantly increases the reported amounts of the assets, liabilities, revenues, expenses and cash flows within the accompanying unaudited condensed consolidated financial statements. However, the Consolidated Funds results included herein have no direct effect on the net income attributable to Ares Management Corporation or to its Stockholders’ Equity, except where accounting for a redemption or liquidation preference requires the reallocation of ownership based on specific terms of a profit sharing agreement. Instead, economic ownership interests of the investors in the Consolidated Funds are reflected as redeemable and non-controlling interests in Consolidated Funds. Further, cash flows allocable to redeemable and non-controlling interest in Consolidated Funds are specifically identifiable within the Condensed Consolidated Statements of Cash Flows.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements are prepared in accordance with the generally accepted accounting principles in the United States (“GAAP”) for interim financial information and instructions to the Quarterly Report on Form 10-Q. The unaudited condensed consolidated financial statements, including these notes, are unaudited and exclude some of the disclosures required in annual financial statements. Management believes it has made all necessary adjustments so that the unaudited condensed consolidated financial statements are presented fairly and that estimates made in preparing its unaudited condensed consolidated financial statements are reasonable and prudent, and that all such adjustments are of a normal recurring nature. The operating results presented for interim periods are not necessarily indicative of the results that may be expected for any other interim period or for the entire year. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements included in the Annual Report on Form 10-K for the year ended December 31, 2022 filed with the Securities and Exchange Commission (“SEC”).

The unaudited condensed consolidated financial statements include the accounts and activities of the AOG entities, their consolidated subsidiaries and certain Consolidated Funds. All intercompany balances and transactions have been eliminated upon consolidation.

The Company has reclassified certain prior period amounts to conform to the current year presentation.

Non-Controlling Interests in Ares Operating Group Entities

The non-controlling interests in AOG entities represent a component of equity and net income attributable to the owners of the Ares Operating Group Units (“AOG Units”) that are not held directly or indirectly by the Company. These owners consist predominantly of Ares Owners Holdings L.P. but also include other strategic distribution partnerships with whom the Company has established joint ventures and other non-controlling strategic investors. Non-controlling interests in

15

Ares Management Corporation

Notes to the Unaudited Condensed Consolidated Financial Statements (Continued)

(Dollars in Thousands, Except Share Data and As Otherwise Noted)

AOG entities are adjusted for contributions to and distributions from AOG during the reporting period and are allocated income from the AOG entities either based on their historical ownership percentage for the proportional number of days in the reporting period or based on the activity associated with certain membership interests.

Redeemable Interest

On July 1, 2020, the Company completed its acquisition of a majority interest in SSG Capital Holdings Limited and its operating subsidiaries (“SSG” and subsequently rebranded as “Ares SSG”) (the “SSG Acquisition”). In connection with the SSG Acquisition, the former owners of SSG retained a 20% ownership interest in the operations acquired by the Company. In certain circumstances, the Company had the ability to acquire full ownership of SSG pursuant to a contractual arrangement to be initiated by the Company or by the former owners of SSG. Since the acquisition of the remaining interest in SSG was not within the Company's sole discretion, the ownership interest held by the former owners of SSG was classified as a redeemable interest and represented mezzanine equity.

Redeemable interest in AOG entities was initially recorded at fair value on the date of the SSG Acquisition within mezzanine equity within the Condensed Consolidated Statements of Financial Condition. Income (loss) was allocated based on the ownership percentage attributable to the redeemable interest. As of the date of acquisition, the Company determined that the redemption of the redeemable interest was probable. At each balance sheet date, the carrying value of the redeemable interest is presented at the redemption amount, as defined in accordance with the terms of a contractual arrangement between the Company and the former owners of SSG, to the extent that the redemption amount exceeded the initial measurement on the date of acquisition. The Company recognizes changes in the redemption amount with corresponding adjustments against retained earnings, or additional paid-in-capital in the absence of retained earnings, within stockholders’ equity within the Condensed Consolidated Statements of Financial Condition.

In connection with a merger agreement to acquire the remaining 20% ownership interest in the Ares SSG fee-generating business that was retained by the former owners of SSG (the “SSG Buyout”), a portion of the redeemable interest in AOG entities was purchased on March 31, 2023 and the Company now owns 100% of Ares SSG’s fee-generating business. The SSG Buyout was effectuated through newly issued shares of Class A common stock. The remaining redeemable interest in AOG entities represents ownership in certain investments that were not included in the SSG Buyout and continues to be presented at the redemption amount within mezzanine equity within the Condensed Consolidated Statements of Financial Condition.

Redeemable interest in Consolidated Funds represent the Class A ordinary shares issued by each of the Company’s sponsored SPACs, as applicable. On April 25, 2023, Ares Acquisition Corporation II (NYSE: AACT) (“AAC II”), Ares’ second sponsored SPAC, consummated its initial public offering. The initial public offering generated gross proceeds of $500.0 million. The Class A ordinary shares, issued by Ares Acquisition Corporation (NYSE: AAC) (“AAC I” and such shares, the “AAC I Class A ordinary shares”) and the Class A ordinary shares, issued by AAC II (the “AAC II Class A ordinary shares”, and, together with the AAC I Class A ordinary shares, the “Class A ordinary shares”) are redeemable for cash by the public shareholders in the event that the SPACs do not complete a business combination or tender offer associated with shareholder approval provisions. The Class A ordinary shareholders have redemption rights that are considered to be outside of either SPAC’s control. At each balance sheet date, the carrying value of the redeemable interest is presented at the redemption amount. During the first quarter of 2023, in connection with the extension of the period to complete a business combination, AAC I shareholders elected to redeem an aggregate amount of $539.0 million that was paid from AAC I’s trust account. At June 30, 2023, the remaining 46,997,081 AAC I Class A ordinary shares and all 50,000,000 AAC II Class A ordinary shares are presented at the redemption amount within mezzanine equity within the Condensed Consolidated Statements of Financial Condition.

Recent Accounting Pronouncements

The Company considers the applicability and impact of all accounting standard updates (“ASU”) issued by the Financial Accounting Standards Board (“FASB”). ASUs were assessed and determined either to be not applicable or expected to have an immaterial impact on its unaudited condensed consolidated financial statements.

16

Ares Management Corporation

Notes to the Unaudited Condensed Consolidated Financial Statements (Continued)

(Dollars in Thousands, Except Share Data and As Otherwise Noted)

3. GOODWILL AND INTANGIBLE ASSETS

Intangible Assets, Net

The following table summarizes the carrying value, net of accumulated amortization, of the Company’s intangible assets:

	Weighted Average Amortization Period (in years) as of June 30, 2023	As of June 30,		As of December 31,
		2023		2022
Management contracts	4.6	$	571,750	$	586,077
Client relationships	9.2	262,301		262,301
Trade name	0.0	—		11,079
Other	1.3	500		500
Finite-lived intangible assets		834,551		859,957
Foreign currency translation		(477)		935
Total finite-lived intangible assets		834,074		860,892
Less: accumulated amortization		(271,201)		(220,472)
Finite-lived intangible assets, net		562,873		640,420
Management contracts		567,800		567,800
Indefinite-lived intangible assets		567,800		567,800
Intangible assets, net		$	1,130,673	$	1,208,220

During the second quarter of 2023, the Company recorded non-cash impairment charges of $4.4 million and $0.7 million to the fair value of management contracts of certain funds within the Real Assets Group and Credit Group, respectively. The primary indicator of impairment was the lower than expected future fee revenue generated from these funds. During the first quarter of 2023, the Company rebranded Ares SSG as Asia credit and discontinued the use of the SSG trade name. As a result, the Company recorded a non-cash impairment charge equal to the SSG trade name’s carrying value of $7.8 million to accelerate the amortization expense in the first quarter of 2023.

Amortization expense associated with intangible assets, excluding the accelerated amortization described above, was $30.4 million and $35.6 million for the three months ended June 30, 2023 and 2022, respectively, and $64.0 million and $68.7 million for the six months ended June 30, 2023 and 2022, respectively, and is presented within general, administrative and other expenses within the Condensed Consolidated Statements of Operations. During the six months ended June 30, 2023, the Company removed $25.4 million of impaired and fully-amortized intangible assets.

Goodwill

The following table summarizes the carrying value of the Company’s goodwill:

	Credit Group		Private Equity Group		Real Assets Group		Secondaries Group		Other		Total
Balance as of December 31, 2022	$	32,196	$	48,070	$	277,183	$	417,620	$	224,587	$	999,656
Acquisitions	—		—		22		—		—		22
Reallocation	224,587		—		—		—		(224,587)		—
Foreign currency translation	(1,667)		—		—		9		—		(1,658)
Balance as of June 30, 2023	$	255,116	$	48,070	$	277,205	$	417,629	$	—	$	998,020

In connection with the SSG Buyout described in “Note 2. Summary of Significant Accounting Policies,” the former Ares SSG reporting unit has been transferred in its entirety to the Credit Group and the total goodwill of $224.6 million has been reallocated accordingly.

There was no impairment of goodwill recorded during the six months ended June 30, 2023 and 2022. The impact of foreign currency translation is reflected within other comprehensive income within the Condensed Consolidated Statements of Comprehensive Income.

17

Ares Management Corporation

Notes to the Unaudited Condensed Consolidated Financial Statements (Continued)

(Dollars in Thousands, Except Share Data and As Otherwise Noted)

4. INVESTMENTS

The Company’s investments are comprised of the following:

					Percentage of total investments
	June 30,		December 31,		June 30,	December 31,
	2023		2022		2023	2022
Equity method investments:
Equity method - carried interest	$	3,524,644	$	3,106,577	78.9%	78.2%
Equity method private investment partnership interests - principal	571,638		543,592		12.8	13.7
Equity method private investment partnership interests and other (held at fair value)	166,496		123,170		3.7	3.1
Equity method private investment partnership interests and other	47,497		47,439		1.1	1.2
Total equity method investments	4,310,275		3,820,778		96.5	96.2
Collateralized loan obligations	20,490		25,163		0.5	0.6
Other fixed income	53,287		51,771		1.2	1.2
Collateralized loan obligations and other fixed income, at fair value	73,777		76,934		1.7	1.8
Common stock, at fair value	82,174		77,022		1.8	2.0
Total investments	$	4,466,226	$	3,974,734

Equity Method Investments

The Company’s equity method investments include investments that are not consolidated but over which the Company exerts significant influence. The Company evaluates each of its equity method investments to determine if any were significant as defined by guidance from the SEC. As of and for the three and six months ended June 30, 2023 and 2022, no individual equity method investment held by the Company met the significance criteria.

The Company recognized a net gain and a net loss related to its equity method investments of $9.1 million and $6.4 million for the three months ended June 30, 2023 and 2022, respectively, and net gains of $33.1 million and $8.8 million for the six months ended June 30, 2023 and 2022, respectively. The net gains and net losses were included within principal investment income, net realized and unrealized gains (losses) on investments, and interest and dividend income within the Condensed Consolidated Statements of Operations.

With respect to the Company’s equity method investments, the material assets are expected to generate either long term capital appreciation and/or interest income, the material liabilities are debt instruments collateralized by, or related to, the financing of the assets and net income is materially comprised of the changes in fair value of these net assets.

Investments of the Consolidated Funds

Investments held in the Consolidated Funds are summarized below:

	Fair Value at				Percentage of total investments as of
	June 30,		December 31,		June 30,	December 31,
	2023		2022		2023	2022
Fixed income investments:
Loans	$	10,152,326	$	9,280,522	72.1%	70.3%
Investments held in trust account	1,000,949		1,013,382		7.1	7.7
Bonds	579,696		786,961		4.1	6.0
Total fixed income investments	11,732,971		11,080,865		83.3	84.0
Partnership interests	1,287,240		1,392,169		9.1	10.5
Equity securities	1,071,677		731,599		7.6	5.5
Total investments, at fair value	$	14,091,888	$	13,204,633

As of June 30, 2023 and December 31, 2022, no single issuer or investment, including derivative instruments and underlying portfolio investments of the Consolidated Funds, had a fair value that exceeded 5.0% of the Company’s total assets.

18

Ares Management Corporation

Notes to the Unaudited Condensed Consolidated Financial Statements (Continued)

(Dollars in Thousands, Except Share Data and As Otherwise Noted)

5. FAIR VALUE

Fair Value of Financial Instruments Held by the Company and Consolidated Funds

The following tables summarize the financial assets and financial liabilities measured at fair value for the Company and the Consolidated Funds as of June 30, 2023:

Financial Instruments of the Company	Level I		Level II		Level III		Investments Measured at NAV		Total
Assets, at fair value
Investments:
Common stock and other equity securities	$	—	$	82,174	$	165,371	$	—	$	247,545
Collateralized loan obligations and other fixed income	—		—		73,777		—		73,777
Partnership interests	—		—		—		1,125		1,125
Total investments, at fair value	—		82,174		239,148		1,125		322,447
Derivatives-foreign currency forward contracts	—		3,345		—		—		3,345
Total assets, at fair value	$	—	$	85,519	$	239,148	$	1,125	$	325,792
Liabilities, at fair value
Derivatives-foreign currency forward contracts	$	—	$	(2,318)	$	—	$	—	$	(2,318)
Total liabilities, at fair value	$	—	$	(2,318)	$	—	$	—	$	(2,318)

Financial Instruments of the Consolidated Funds	Level I		Level II		Level III		Investments Measured at NAV		Total
Assets, at fair value
Investments:
Fixed income investments:
Loans	$	—	$	9,504,196	$	648,130	$	—	$	10,152,326
Investments held in trust account	1,000,949		—		—		—		1,000,949
Bonds	—		579,695		1		—		579,696
Total fixed income investments	1,000,949		10,083,891		648,131		—		11,732,971
Partnership interests	—		—		—		1,287,240		1,287,240
Equity securities	701		4,911		1,066,065		—		1,071,677
Total investments, at fair value	1,001,650		10,088,802		1,714,196		1,287,240		14,091,888
Derivatives-foreign currency forward contracts	—		2,399		—		—		2,399
Total assets, at fair value	$	1,001,650	$	10,091,201	$	1,714,196	$	1,287,240	$	14,094,287
Liabilities, at fair value
Loan obligations of CLOs	$	—	$	(11,460,999)	$	—	$	—	$	(11,460,999)
Derivatives:
Warrants	(16,000)		—		—		—		(16,000)
Asset swaps	—		—		(2,693)		—		(2,693)
Foreign currency forward contracts	—		(2,468)		—		—		(2,468)
Total derivative liabilities, at fair value	(16,000)		(2,468)		(2,693)		—		(21,161)
Total liabilities, at fair value	$	(16,000)	$	(11,463,467)	$	(2,693)	$	—	$	(11,482,160)

19

Ares Management Corporation

Notes to the Unaudited Condensed Consolidated Financial Statements (Continued)

(Dollars in Thousands, Except Share Data and As Otherwise Noted)

The following tables summarize the financial assets and financial liabilities measured at fair value for the Company and the Consolidated Funds as of December 31, 2022:

Financial Instruments of the Company	Level I		Level II		Level III		Investments Measured at NAV		Total
Assets, at fair value
Investments:
Common stock and other equity securities	$	—	$	77,022	$	121,785	$	—	$	198,807
Collateralized loan obligations and other fixed income	—		—		76,934		—		76,934
Partnership interests	—		—		—		1,385		1,385
Total investments, at fair value	—		77,022		198,719		1,385		277,126
Derivatives-foreign currency forward contracts	—		4,173		—		—		4,173
Total assets, at fair value	$	—	$	81,195	$	198,719	$	1,385	$	281,299
Liabilities, at fair value
Derivatives-foreign currency forward contracts	$	—	$	(3,423)	$	—	$	—	$	(3,423)
Total liabilities, at fair value	$	—	$	(3,423)	$	—	$	—	$	(3,423)

Financial Instruments of the Consolidated Funds	Level I		Level II		Level III		Investments Measured at NAV		Total
Assets, at fair value
Investments:
Fixed income investments:
Loans	$	—	$	8,663,678	$	616,844	$	—	$	9,280,522
Investments held in trust account	1,013,382		—		—		—		1,013,382
Bonds	—		534,137		252,824		—		786,961
Total fixed income investments	1,013,382		9,197,815		869,668		—		11,080,865
Partnership interests	—		—		368,655		1,023,514		1,392,169
Equity securities	719		—		730,880		—		731,599
Total investments, at fair value	1,014,101		9,197,815		1,969,203		1,023,514		13,204,633
Derivatives-foreign currency forward contracts	—		2,900		—		—		2,900
Total assets, at fair value	$	1,014,101	$	9,200,715	$	1,969,203	$	1,023,514	$	13,207,533
Liabilities, at fair value
Loan obligations of CLOs	$	—	$	(10,701,720)	$	—	$	—	$	(10,701,720)
Derivatives:
Warrants	(9,326)		—		—		—		(9,326)
Asset swaps	—		—		(3,556)		—		(3,556)
Foreign currency forward contracts	—		(2,942)		—		—		(2,942)
Total derivative liabilities, at fair value	(9,326)		(2,942)		(3,556)		—		(15,824)
Total liabilities, at fair value	$	(9,326)	$	(10,704,662)	$	(3,556)	$	—	$	(10,717,544)

20

Ares Management Corporation

Notes to the Unaudited Condensed Consolidated Financial Statements (Continued)

(Dollars in Thousands, Except Share Data and As Otherwise Noted)

The following tables set forth a summary of changes in the fair value of the Level III measurements for the three months ended June 30, 2023:

Level III Assets of the Company	Equity Securities		Fixed Income		Total
Balance, beginning of period	$	125,073	$	75,169	$	200,242
Purchases(1)	38,208		771		38,979
Sales/settlements(2)	(881)		(841)		(1,722)
Realized and unrealized appreciation (depreciation), net	2,971		(1,322)		1,649
Balance, end of period	$	165,371	$	73,777	$	239,148
Change in net unrealized appreciation/depreciation included in earnings related to financial assets still held at the reporting date	$	2,971	$	(1,322)	$	1,649

Level III Net Assets of Consolidated Funds	Equity Securities		Fixed Income		Partnership Interests		Derivatives, Net		Total
Balance, beginning of period	$	932,635	$	732,804	$	374,049	$	(1,698)	$	2,037,790
Transfer out due to changes in consolidation	(2,076)		(4,563)		(374,049)		—		(380,688)
Transfer in	—		57,540		—		—		57,540
Transfer out	—		(214,205)		—		—		(214,205)
Purchases(1)	48,645		250,912		—		—		299,557
Sales/settlements(2)	(4)		(177,095)		—		(149)		(177,248)
Amortized discounts/premiums	—		421		—		—		421
Realized and unrealized appreciation (depreciation), net	86,865		2,317		—		(846)		88,336
Balance, end of period	$	1,066,065	$	648,131	$	—	$	(2,693)	$	1,711,503
Change in net unrealized appreciation/depreciation included in earnings related to financial assets and liabilities still held at the reporting date	$	86,879	$	(27,469)	$	—	$	(1,055)	$	58,355

(1)Purchases include paid-in-kind interest and securities received in connection with restructurings.

(2)Sales/settlements include distributions, principal redemptions and securities disposed of in connection with restructurings.

21

Ares Management Corporation

Notes to the Unaudited Condensed Consolidated Financial Statements (Continued)

(Dollars in Thousands, Except Share Data and As Otherwise Noted)

The following tables set forth a summary of changes in the fair value of the Level III measurements for the three months ended June 30, 2022:

Level III Assets and Liabilities of the Company	Equity Securities		Fixed Income		Partnership Interests		Contingent Consideration		Total
Balance, beginning of period	$	114,499	$	51,458	$	2,575	$	(10,550)	$	157,982
Change in fair value	—		—		—		(198)		(198)
Sales/settlements(1)	(934)		(993)		—		—		(1,927)
Realized and unrealized appreciation (depreciation), net	316		(4,109)		—		—		(3,793)
Balance, end of period	$	113,881	$	46,356	$	2,575	$	(10,748)	$	152,064
Change in net unrealized appreciation/depreciation and fair value included in earnings related to financial assets and liabilities still held at the reporting date	$	316	$	(4,109)	$	—	$	(198)	$	(3,991)

Level III Net Assets of Consolidated Funds	Equity Securities		Fixed Income		Partnership Interests		Derivatives, Net		Total
Balance, beginning of period	$	351,140	$	859,301	$	241,123	$	(3,162)	$	1,448,402
Transfer in	—		358,779		—		—		358,779
Transfer out	—		(152,750)		—		—		(152,750)
Purchases(2)	110,322		201,882		3,000		—		315,204
Sales/settlements(1)	(18,422)		(140,607)		(9,000)		—		(168,029)
Amortized discounts/premiums	—		177		—		—		177
Realized and unrealized appreciation (depreciation), net	37,874		(50,528)		15,000		127		2,473
Balance, end of period	$	480,914	$	1,076,254	$	250,123	$	(3,035)	$	1,804,256
Change in net unrealized appreciation/depreciation included in earnings related to financial assets and liabilities still held at the reporting date	$	25,622	$	(37,145)	$	15,000	$	(64)	$	3,413

(1)Sales/settlements include distributions, principal redemptions and securities disposed of in connection with restructurings.

(2)Purchases include paid-in-kind interest and securities received in connection with restructurings.

22

Ares Management Corporation

Notes to the Unaudited Condensed Consolidated Financial Statements (Continued)

(Dollars in Thousands, Except Share Data and As Otherwise Noted)

The following tables set forth a summary of changes in the fair value of the Level III measurements for the six months ended June 30, 2023:

Level III Assets of the Company	Equity Securities		Fixed Income		Total
Balance, beginning of period	$	121,785	$	76,934	$	198,719
Purchases(1)	38,260		1,966		40,226
Sales/settlements(2)	(836)		(2,377)		(3,213)
Realized and unrealized appreciation (depreciation), net	6,162		(2,746)		3,416
Balance, end of period	$	165,371	$	73,777	$	239,148
Change in net unrealized appreciation/depreciation included in earnings related to financial assets still held at the reporting date	$	5,949	$	(2,533)	$	3,416

Level III Net Assets of Consolidated Funds	Equity Securities		Fixed Income		Partnership Interests		Derivatives, Net		Total
Balance, beginning of period	$	730,880	$	869,668	$	368,655	$	(3,556)	$	1,965,647
Transfer out due to changes in consolidation	(2,076)		(4,563)		(374,049)		—		(380,688)
Transfer in	—		195,575		—		—		195,575
Transfer out	—		(489,165)		—		—		(489,165)
Purchases(1)	229,016		391,086		49,000		—		669,102
Sales/settlements(2)	(126)		(325,968)		(48,889)		(149)		(375,132)
Amortized discounts/premiums	—		963		—		—		963
Realized and unrealized appreciation, net	108,371		10,535		5,283		1,012		125,201
Balance, end of period	$	1,066,065	$	648,131	$	—	$	(2,693)	$	1,711,503
Change in net unrealized appreciation/depreciation included in earnings related to financial assets and liabilities still held at the reporting date	$	108,324	$	(20,381)	$	—	$	814	$	88,757

(1)Purchases include paid-in-kind interest and securities received in connection with restructurings.

(2)Sales/settlements include distributions, principal redemptions and securities disposed of in connection with restructurings.

23

Ares Management Corporation

Notes to the Unaudited Condensed Consolidated Financial Statements (Continued)

(Dollars in Thousands, Except Share Data and As Otherwise Noted)

The following tables set forth a summary of changes in the fair value of the Level III measurements for the six months ended June 30, 2022:

Level III Assets and Liabilities of the Company	Equity  Securities		Fixed Income		Partnership Interests		Contingent Consideration		Total
Balance, beginning of period	$	108,949	$	52,397	$	2,575	$	(57,435)	$	106,486
Transfer in due to changes in consolidation	1,491		—		—		—		1,491
Sales/settlements(1)	(1,147)		(1,878)		—		47,873		44,848
Change in fair value	—		—		—		(1,186)		(1,186)
Realized and unrealized appreciation (depreciation), net	4,588		(4,163)		—		—		425
Balance, end of period	$	113,881	$	46,356	$	2,575	$	(10,748)	$	152,064
Change in net unrealized appreciation/depreciation and fair value included in earnings related to financial assets and liabilities still held at the reporting date	$	4,588	$	(4,163)	$	—	$	(1,186)	$	(761)

Level III Net Assets of Consolidated Funds	Equity Securities		Fixed Income		Partnership Interests		Derivatives, Net		Total
Balance, beginning of period	$	339,183	$	742,952	$	238,673	$	(3,105)	$	1,317,703
Transfer in	—		338,080		—		—		338,080
Transfer out	—		(80,261)		—		—		(80,261)
Purchases(2)	117,642		367,274		27,000		—		511,916
Sales/settlements(1)	(28,611)		(226,660)		(30,500)		(2)		(285,773)
Amortized discounts/premiums	—		679		—		—		679
Realized and unrealized appreciation (depreciation), net	52,700		(65,810)		14,950		72		1,912
Balance, end of period	$	480,914	$	1,076,254	$	250,123	$	(3,035)	$	1,804,256
Change in net unrealized appreciation/depreciation included in earnings related to financial assets and liabilities still held at the reporting date	$	26,150	$	(61,044)	$	14,445	$	(175)	$	(20,624)

(1)Sales/settlements include distributions, principal redemptions, securities disposed of in connection with restructurings and contingent consideration payments.

(2)Purchases include paid-in-kind interest and securities received in connection with restructurings.

Transfers out of Level III were generally attributable to certain investments that experienced a more significant level of market activity during the period and thus were valued using observable inputs either from independent pricing services or multiple brokers. Transfers into Level III were generally attributable to certain investments that experienced a less significant level of market activity during the period and thus were only able to obtain one or fewer quotes from a broker or independent pricing service.

24

Ares Management Corporation

Notes to the Unaudited Condensed Consolidated Financial Statements (Continued)

(Dollars in Thousands, Except Share Data and As Otherwise Noted)

The following tables summarize the quantitative inputs and assumptions used for the Company’s and the Consolidated Funds’ Level III measurements as of June 30, 2023:

Level III Measurements of the Company	Fair Value		Valuation Technique(s)	Significant Unobservable Input(s)	Range	Weighted Average
Assets
Equity securities
	$	62,702	Market approach	Multiple of book value	2.4x	2.4x
	52,125		Transaction price(1)	N/A	N/A	N/A
	49,778		Market approach	Multiple of book value	1.3x	1.3x
	766		Market approach	EBITDA multiple(2)	13.0x	13.0x
Fixed income investments
	31,705		Transaction price(1)	N/A	N/A	N/A
	21,582		Other	N/A	N/A	N/A
	20,490		Broker quotes and/or 3rd party pricing services	N/A	N/A	N/A
Total assets	$	239,148

Level III Measurements of the Consolidated Funds	Fair Value		Valuation Technique(s)	Significant Unobservable Input(s)	Range	Weighted Average
Assets
Equity securities
	$	592,725	Discounted cash flow	Discount rate	8.0% - 18.0%	12.0%
	436,375		Market approach	Multiple of book value	1.0x - 1.3x	1.2x
	36,064		Market approach	Net income multiple	30.0x	30.0x
	766		Market approach	EBITDA multiple(2)	6.3x - 32.5x	15.9x
	135		Other	N/A	N/A	N/A
Fixed income investments
	522,269		Broker quotes and/or 3rd party pricing services	N/A	N/A	N/A
	116,265		Market approach	Yield	8.8% - 24.5%	13.0%
	5,769		Transaction price(1)	N/A	N/A	N/A
	2,980		Market approach	EBITDA multiple(2)	6.3x - 32.5x	8.8x
	848		Other	N/A	N/A	N/A
Total assets	$	1,714,196
Liabilities
Derivative instruments	$	(2,693)	Broker quotes and/or 3rd party pricing services	N/A	N/A	N/A
Total liabilities	$	(2,693)

(1)Transaction price consists of securities purchased or restructured. The Company determined that there was no change to the valuation based on the underlying assumptions used at the closing of such transactions.

(2)“EBITDA” in the table above is a non-GAAP financial measure and refers to earnings before interest, tax, depreciation and amortization.

25

Ares Management Corporation

Notes to the Unaudited Condensed Consolidated Financial Statements (Continued)

(Dollars in Thousands, Except Share Data and As Otherwise Noted)

The following tables summarize the quantitative inputs and assumptions used for the Company’s and the Consolidated Funds’ Level III measurements as of December 31, 2022:

Level III Measurements of the Company	Fair Value		Valuation Technique(s)	Significant Unobservable Input(s)	Range	Weighted Average
Assets
Equity securities
	$	62,129	Market approach	Multiple of book value	3.2x	3.2x
	44,166		Market approach	Multiple of book value	1.3x	1.3x
	15,490		Transaction price(1)	N/A	N/A	N/A
Fixed income investments
	30,189		Transaction price(1)	N/A	N/A	N/A
	25,163		Broker quotes and/or 3rd party pricing services	N/A	N/A	N/A
	21,582		Other	N/A	N/A	N/A
Total assets	$	198,719

Level III Measurements of the Consolidated Funds	Fair Value		Valuation Technique(s)	Significant Unobservable Input(s)	Range	Weighted Average
Assets
Equity securities
	$	401,229	Discounted cash flow	Discount rate	8.0% - 18.0%	12.0%
	290,258		Market approach	Multiple of book value	1.0x - 1.2x	1.2x
	36,681		Market approach	Net income multiple	30.0x	30.0x
	2,064		Market approach	EBITDA multiple(2)	6.3x - 31.0x	13.6x
	648		Other	N/A	N/A	N/A
Partnership interests	368,655		Discounted cash flow	Discount rate	10.3% - 22.0%	18.9%
Fixed income investments
	731,708		Broker quotes and/or 3rd party pricing services	N/A	N/A	N/A
	125,612		Market approach	Yield	6.6% - 21.7%	12.8%
	6,155		Transaction price(1)	N/A	N/A	N/A
	4,479		Market approach	EBITDA multiple(2)	8.0x - 9.0x	8.5x
	1,714		Other	N/A	N/A	N/A
Total assets	$	1,969,203
Liabilities
Derivative instruments	$	(3,556)	Broker quotes and/or 3rd party pricing services	N/A	N/A	N/A
Total liabilities	$	(3,556)

(1)Transaction price consists of securities purchased or restructured. The Company determined that there has been no change to the valuation based on the underlying assumptions used at the closing of such transactions.

(2)“EBITDA” in the table above is a non-GAAP financial measure and refers to earnings before interest, tax, depreciation and amortization.

The Company has an insurance-related investment in a private fund managed by a third party that is valued using NAV per share. The terms and conditions of this fund do not allow for redemptions without certain events or approvals that are outside the Company’s control. This investment had a fair value of $1.1 million and $1.4 million as of June 30, 2023 and December 31, 2022, respectively. The Company has no unfunded commitments for this investment.

The Consolidated Funds have limited partnership interests in private equity funds managed by the Company that are valued using NAV per share. The terms and conditions of these funds do not allow for redemptions without certain events or approvals that are outside the Company’s control. As of June 30, 2023, these investments had a fair value of $1,287.2 million and unfunded commitments of $1,002.3 million. As of December 31, 2022, these investments had a fair value of $1,023.5 million and unfunded commitments of $869.0 million.

26

Ares Management Corporation

Notes to the Unaudited Condensed Consolidated Financial Statements (Continued)

(Dollars in Thousands, Except Share Data and As Otherwise Noted)

6. DEBT

The following table summarizes the Company’s and its subsidiaries’ debt obligations:

					As of June 30, 2023			As of December 31, 2022
	Debt Origination Date	Maturity	Original Borrowing Amount		Carrying Value		Interest Rate	Carrying Value		Interest Rate
Credit Facility(1)	Revolving	3/31/2027	N/A		$	725,000	6.19%	$	700,000	5.37%
2024 Senior Notes(2)	10/8/2014	10/8/2024	$	250,000	249,055		4.21	248,693		4.21
2030 Senior Notes(3)	6/15/2020	6/15/2030	400,000		396,825		3.28	396,602		3.28
2052 Senior Notes(4)	1/21/2022	2/1/2052	500,000		484,002		3.77	483,802		3.77
2051 Subordinated Notes(5)	6/30/2021	6/30/2051	450,000		444,849		4.13	444,757		4.13
Total debt obligations					$	2,299,731		$	2,273,854

(1)The revolver commitments were $1.325 billion as of June 30, 2023. Ares Holdings is the borrower under the Credit Facility. The Credit Facility has a variable interest rate based on Secured Overnight Financing Rate (“SOFR”) or a base rate plus an applicable margin, which is subject to adjustment based on the achievement of certain environmental, social and governance-related targets, with an unused commitment fee paid quarterly, which is subject to change with the Company’s underlying credit agency rating. As of June 30, 2023, base rate loans bear interest calculated based on the base rate and the SOFR loans bear interest calculated based on SOFR plus 1.00%. The unused commitment fee is 0.10% per annum. There is a base rate and SOFR floor of zero.

(2)The 2024 Senior Notes were issued in October 2014 by Ares Finance Co. LLC, an indirect subsidiary of the Company, at 98.27% of the face amount with interest paid semi-annually. The Company may redeem the 2024 Senior Notes prior to maturity, subject to the terms of the indenture governing the 2024 Notes.

(3)The 2030 Senior Notes were issued in June 2020 by Ares Finance Co. II LLC, an indirect subsidiary of the Company, at 99.77% of the face amount with interest paid semi-annually. The Company may redeem the 2030 Senior Notes prior to maturity, subject to the terms of the indenture governing the 2030 Notes.

(4)The 2052 Senior Notes were issued in January 2022 by Ares Finance Co. IV LLC, an indirect subsidiary of the Company, at 97.78% of the face amount with interest paid semi-annually. The Company may redeem the 2052 Senior Notes prior to maturity, subject to the terms of the indenture governing the 2052 Notes.

(5)The 2051 Subordinated Notes were issued in June 2021 by Ares Finance Co. III LLC, an indirect subsidiary of the Company with interest paid semi-annually at a fixed rate of 4.125%. Beginning June 30, 2026, the interest rate will reset on every fifth year based on the five-year U.S. Treasury Rate plus 3.237%. The Company may redeem the 2051 Subordinated Notes prior to maturity or defer interest payments up to five consecutive years, subject to the terms of the indenture governing the 2051 Subordinated Notes.

As of June 30, 2023, the Company and its subsidiaries were in compliance with all covenants under the debt obligations.

The Company typically incurs and pays debt issuance costs when entering into a new debt obligation or when amending an existing debt agreement. Debt issuance costs related to the 2024, 2030 and 2052 Senior Notes (the “Senior Notes”) and 2051 Subordinated Notes are recorded as a reduction of the corresponding debt obligation, and debt issuance costs related to the Credit Facility are included within other assets within the Condensed Consolidated Statements of Financial Condition. All debt issuance costs are amortized over the remaining term of the related obligation into interest expense within the Condensed Consolidated Statements of Operations.

The following table presents the activity of the Company’s debt issuance costs:

	Credit Facility		Senior Notes		Subordinated Notes
Unamortized debt issuance costs as of December 31, 2022	$	5,510	$	8,393	$	5,243
Amortization of debt issuance costs	(649)		(391)		(92)
Unamortized debt issuance costs as of June 30, 2023	$	4,861	$	8,002	$	5,151

Loan Obligations of the Consolidated CLOs

Loan obligations of the Consolidated Funds that are CLOs (“Consolidated CLOs”) represent amounts due to holders of debt securities issued by the Consolidated CLOs. The Company measures the loan obligations of the Consolidated CLOs using the fair value of the financial assets of its Consolidated CLOs.

27

Ares Management Corporation

Notes to the Unaudited Condensed Consolidated Financial Statements (Continued)

(Dollars in Thousands, Except Share Data and As Otherwise Noted)

The following loan obligations were outstanding and classified as liabilities of the Consolidated CLOs:

	As of June 30, 2023				As of December 31, 2022
	Fair Value of Loan Obligations		Weighted  Average  Interest Rate	Weighted  Average  Remaining Maturity  (in years)	Fair Value of Loan Obligations		Weighted  Average  Interest Rate	Weighted Average Remaining Maturity  (in years)
Senior secured notes	$	10,813,054	6.08%	8.4	$	10,142,545	4.84%	8.8
Subordinated notes(1)	647,945		N/A	7.3	559,175		N/A	7.8
Total loan obligations of Consolidated CLOs	$	11,460,999			$	10,701,720

(1)The notes do not have contractual interest rates; instead, holders of the notes receive distributions from the excess cash flows generated by each Consolidated CLO.

Loan obligations of the Consolidated CLOs are collateralized by the assets held by the Consolidated CLOs, consisting of cash and cash equivalents, corporate loans, corporate bonds and other securities. The assets of one Consolidated CLO may not be used to satisfy the liabilities of another Consolidated CLO. Loan obligations of the Consolidated CLOs include floating rate notes, deferrable floating rate notes, revolving lines of credit and subordinated notes. Amounts borrowed under the notes are repaid based on available cash flows subject to priority of payments under each Consolidated CLO’s governing documents. Based on the terms of these facilities, the creditors of the facilities have no recourse to the Company.

Credit Facilities of the Consolidated Funds

Certain Consolidated Funds maintain credit facilities to fund investments between capital drawdowns. These facilities generally are collateralized by the unfunded capital commitments of the Consolidated Funds’ limited partners, bear an annual commitment fee based on unfunded commitments and contain various affirmative and negative covenants and reporting obligations, including restrictions on additional indebtedness, liens, margin stock, affiliate transactions, dividends and distributions, release of capital commitments and portfolio asset dispositions. The creditors of these facilities have no recourse to the Company and only have recourse to a subsidiary of the Company to the extent the debt is guaranteed by such subsidiary. As of June 30, 2023 and December 31, 2022, the Consolidated Funds were in compliance with all covenants under such credit facilities.

The Consolidated Funds had the following revolving bank credit facilities outstanding:

					As of June 30, 2023					As of December 31, 2022
Consolidated Funds’ Debt Facilities	Maturity Date	Total Capacity			Outstanding Loan(1)			Effective Rate		Outstanding Loan(1)		Effective Rate
Credit Facilities:
	10/13/2023(2)	$	112,817	(2)	N/A		(2)	N/A	(2)	$	77,496	5.89%
	7/1/2024	18,000			$	15,550		6.75%		15,550		6.25
	7/23/2024	100,000			49,500			8.03		75,000		7.28
	9/24/2026	150,000			—			N/A		—		N/A
	9/12/2027	54,000			—			N/A		—		N/A
Total borrowings of Consolidated Funds					$	65,050				$	168,046

(1)The fair values of the borrowings approximate the carrying value as the interest rate on the borrowings is a floating rate.

(2)Represents a credit facility of a Consolidated Fund that was deconsolidated during the three months ended June 30, 2023. The total capacity represents the balance as of December 31, 2022.

7. COMMITMENTS AND CONTINGENCIES

Indemnification Arrangements

Consistent with standard business practices in the normal course of business, the Company enters into contracts that contain indemnities for affiliates of the Company, persons acting on behalf of the Company or such affiliates and third parties. The terms of the indemnities vary from contract to contract and the Company’s maximum exposure under these arrangements cannot be determined and has not been recorded within the Condensed Consolidated Statements of Financial Condition. As of

28

Ares Management Corporation

Notes to the Unaudited Condensed Consolidated Financial Statements (Continued)

(Dollars in Thousands, Except Share Data and As Otherwise Noted)

June 30, 2023, the Company has not had prior claims or losses pursuant to these contracts and expects the risk of loss to be remote.

Commitments

As of June 30, 2023 and December 31, 2022, the Company had aggregate unfunded commitments to invest in funds it manages or to support certain strategic initiatives of $902.4 million and $677.9 million, respectively.

Guarantees

The Company has entered into agreements with financial institutions to guarantee credit facilities held by certain funds. In the ordinary course of business, the guarantee of credit facilities held by funds may indicate control and result in consolidation of the fund. As of June 30, 2023 and December 31, 2022, the Company’s maximum exposure to losses from guarantees was $76.7 million and $31.5 million, respectively.

Contingent Liabilities

In connection with the acquisition of AMP Capital’s Infrastructure Debt platform (the “Infrastructure Debt Acquisition”) during the first quarter of 2022, the Company established a management incentive program (the “Infrastructure Debt MIP”) with certain professionals. The Infrastructure Debt MIP represents a contingent liability not to exceed $48.5 million and is based on the achievement of revenue targets from the fundraising of certain infrastructure debt funds during the measurement periods.

The Company expects to settle each portion of the liability with a combination of 15% cash and 85% equity awards. Expense associated with the cash components are recognized ratably over the respective measurement periods, which will end on the final fundraising date for each of the infrastructure debt funds included in the Infrastructure Debt MIP agreement. Expense associated with the equity component is recognized ratably over the service periods, which will continue for four years beyond each of the measurement period end dates. The Infrastructure Debt MIP is remeasured each period with incremental changes in fair value included within compensation and benefits expense within the Condensed Consolidated Statements of Operations. Following each of the measurement period end dates, the cash component will be paid and restricted units for the portion of the Infrastructure Debt MIP award earned will be granted at fair value. The unpaid liability at the respective measurement period end dates will be reclassified from liability to additional paid-in-capital and any difference between the fair value of the Infrastructure Debt MIP award earned at the respective measurement period end date and the previously recorded compensation expense will be recognized over the remaining four year service period as equity-based compensation expense.

The revenue target was achieved for one of the infrastructure debt funds during the fourth quarter of 2022. As of December 31, 2022, the fair value of the contingent liability related to this portion of the award was $21.8 million and the Company recorded $7.0 million within accrued compensation within the Condensed Consolidated Statements of Financial Condition. During the first quarter of 2023, the associated liability for this portion of the award was settled with a $3.4 million cash payment and the remaining amount equity-settled and reclassified to additional paid-in-capital. For the three and six months ended June 30, 2022, compensation expense of $2.2 million and $3.3 million, respectively, related to the achieved portion of the award is presented within compensation and benefits within the Condensed Consolidated Statements of Operations.

As of June 30, 2023, the maximum contingent liability associated with the remaining Infrastructure Debt MIP is $15.0 million. As of June 30, 2023 and December 31, 2022, the fair value of the contingent liability was $13.7 million. As of June 30, 2023 and December 31, 2022, the Company has recorded $3.3 million and $2.2 million, respectively, within accrued compensation within the Condensed Consolidated Statements of Financial Condition. Compensation expense associated with the remaining Infrastructure Debt MIP of $0.6 million and $0.7 million for the three months ended June 30, 2023 and 2022, respectively, and $1.2 million and $1.0 million for the six months ended June 30, 2023 and 2022, respectively, is presented within compensation and benefits within the Condensed Consolidated Statements of Operations.

Carried Interest

Carried interest is affected by changes in the fair values of the underlying investments in the funds that are advised by the Company. Valuations, on an unrealized basis, can be significantly affected by a variety of external factors including, but not

29

Ares Management Corporation

Notes to the Unaudited Condensed Consolidated Financial Statements (Continued)

(Dollars in Thousands, Except Share Data and As Otherwise Noted)

limited to, public equity market volatility, industry trading multiples and interest rates. Generally, if at the termination of a fund (and increasingly at interim points in the life of a fund), the fund has not achieved investment returns that (in most cases) exceed the preferred return threshold or (in all cases) the general partner receives net profits over the life of the fund in excess of its allocable share under the applicable partnership agreement, the Company will be obligated to repay carried interest that was received by the Company in excess of the amounts to which the Company is entitled. This contingent obligation is normally reduced by income taxes paid by the Company related to its carried interest. 

Senior professionals of the Company who have received carried interest distributions are responsible for funding their proportionate share of any contingent repayment obligations. However, the governing agreements of certain of the Company’s funds provide that if a current or former professional does not fund his or her respective share for such fund, then the Company may have to fund additional amounts beyond what was received in carried interest, although the Company will generally retain the right to pursue any remedies under such governing agreements against those carried interest recipients who fail to fund their obligations.

Additionally, at the end of the life of the funds there could be a payment due to a fund by the Company if the Company has recognized more carried interest than was ultimately earned. The general partner obligation amount, if any, will depend on final realized values of investments at the end of the life of the fund.

At June 30, 2023 and December 31, 2022, if the Company assumed all existing investments were worthless, the amount of carried interest subject to potential repayment, net of tax distributions, which may differ from the recognition of revenue, would have been approximately $93.7 million and $128.4 million, respectively, of which approximately $73.5 million and $101.0 million, respectively, is reimbursable to the Company by certain professionals who are the recipients of such carried interest. Management believes the possibility of all of the investments becoming worthless is remote. As of June 30, 2023 and December 31, 2022, if the funds were liquidated at their fair values, there would be no contingent repayment obligation or liability.

Litigation

From time to time, the Company is named as a defendant in legal actions relating to transactions conducted in the ordinary course of business. Although there can be no assurance of the outcome of such legal actions, in the opinion of management, the Company does not have a potential liability related to any current legal proceeding or claim that would individually or in the aggregate materially affect its results of operations, financial condition or cash flows.

30

Ares Management Corporation

Notes to the Unaudited Condensed Consolidated Financial Statements (Continued)

(Dollars in Thousands, Except Share Data and As Otherwise Noted)

Leases

The Company leases primarily consists of operating leases for office space and certain office equipment. The Company’s leases have remaining lease terms of one to 11 years. The Company also has finance leases which are not material. The tables below present certain supplemental quantitative disclosures regarding the Company’s operating leases:

Maturity of operating lease liabilities	As of June 30, 2023
2023	$	21,147
2024	46,864
2025	44,077
2026	32,275
2027	22,920
Thereafter	63,659
Total future payments	230,942
Less: interest	24,126
Total operating lease liabilities	$	206,816

	Six months ended June 30,
Other information	2023		2022
Cash paid for amounts included in the measurement of operating lease liabilities:
Operating cash flows for operating leases	$	22,724	$	22,170
Leased assets obtained in exchange for new operating lease liabilities	37,277		5,066

	As of June 30,	As of December 31,
Lease term and discount rate	2023	2022
Weighted-average remaining lease terms (in years):	6.2	5.5
Weighted-average discount rate:	3.40%	2.72%

Operating lease expense was $10.4 million and $10.1 million for the three months ended June 30, 2023 and 2022, respectively, and $22.3 million and $20.1 million for the six months ended June 30, 2023 and 2022, respectively, and is presented within general, administrative and other expenses within the Condensed Consolidated Statements of Operations.

31

Ares Management Corporation

Notes to the Unaudited Condensed Consolidated Financial Statements (Continued)

(Dollars in Thousands, Except Share Data and As Otherwise Noted)

8. RELATED PARTY TRANSACTIONS

Substantially all of the Company’s revenue is earned from its affiliates. The related accounts receivable are included within due from affiliates within the Condensed Consolidated Statements of Financial Condition, except that accrued carried interest allocations, which is predominantly due from affiliated funds, is presented separately within investments within the Condensed Consolidated Statements of Financial Condition.

The Company has investment management agreements with the Ares Funds that it manages. In accordance with these agreements, these Ares Funds may bear certain operating costs and expenses which are initially paid by the Company and subsequently reimbursed by the Ares Funds.

The Company is reimbursed for expenses incurred in providing administrative services to certain related parties, including our public vehicles, and with certain private funds that pay administrative fees based on invested capital. The Company is also party to agreements with certain real estate funds which pay fees to the Company to provide various services, such as administration, acquisition, development, property management and the sale and distribution of fund shares in our non-traded vehicles, among others.

Employees and other related parties may be permitted to participate in co-investment vehicles that generally invest in Ares funds alongside fund investors. Participation is limited by law to individuals who qualify under applicable securities laws. These co-investment vehicles generally do not require these individuals to pay management fees, carried interest or incentive fees.

Carried interest and incentive fees from the funds can be distributed to professionals or their related entities on a current basis, subject, in the case of carried interest programs, to repayment by the subsidiary of the Company that acts as general partner of the relevant fund in the event that certain specified return thresholds are not ultimately achieved. The professionals have personally guaranteed, subject to certain limitations, the obligations of these subsidiaries in respect of this general partner obligation. Such guarantees are several, and not joint, and are limited to distributions received by the relevant recipient.

The Company considers its professionals and non-consolidated funds to be affiliates. Amounts due from and to affiliates were composed of the following:

	As of June 30,		As of December 31,
	2023		2022
Due from affiliates:
Management fees receivable from non-consolidated funds	$	488,015	$	456,314
Incentive fee receivable from non-consolidated funds	15,837		169,979
Payments made on behalf of and amounts due from non-consolidated funds and employees	139,592		132,179
Due from affiliates—Company	$	643,444	$	758,472
Amounts due from non-consolidated funds	$	11,388	$	15,789
Due from affiliates—Consolidated Funds	$	11,388	$	15,789
Due to affiliates:
Management fee received in advance and rebates payable to non-consolidated funds	$	3,972	$	8,701
Tax receivable agreement liability	132,463		118,466
Undistributed carried interest and incentive fees	48,668		121,332
Payments made by non-consolidated funds on behalf of and payable by the Company	7,050		4,299
Due to affiliates—Company	$	192,153	$	252,798
Amounts due to portfolio companies and non-consolidated funds	$	920	$	4,037
Due to affiliates—Consolidated Funds	$	920	$	4,037

Due from and Due to Ares Funds and Portfolio Companies

In the normal course of business, the Company pays certain expenses on behalf of Consolidated Funds and non-consolidated funds for which it is reimbursed. Conversely, Consolidated Funds and non-consolidated funds may pay certain expenses that are reimbursed by the Company. Amounts advanced on behalf of Consolidated Funds are eliminated in

32

Ares Management Corporation

Notes to the Unaudited Condensed Consolidated Financial Statements (Continued)

(Dollars in Thousands, Except Share Data and As Otherwise Noted)

consolidation. Certain expenses initially paid by the Company, primarily professional services, travel and other costs associated with particular portfolio company holdings, are subject to reimbursement by the portfolio companies.

9. INCOME TAXES

The Company’s income tax provision includes corporate income taxes and other entity level income taxes, as well as income taxes incurred by certain affiliated funds that are consolidated in these financial statements. For the three and six months ended June 30, 2023, the Company recorded income tax expense of $49.7 million and $83.5 million, respectively. For the three and six months ended June 30, 2022, the Company recorded income tax expense of $13.5 million and $33.9 million, respectively.

The Company’s effective income tax rate is dependent on many factors, including the estimated nature and amounts of income and expenses allocated to the non-controlling interests without being subject to federal, state and local income taxes at the corporate level. Additionally, the Company’s effective tax rate is influenced by the amount of income tax provision recorded for any affiliated funds and co-investment vehicles that are consolidated in the Company’s unaudited condensed consolidated financial statements. For the three and six months ended June 30, 2023 and 2022, the Company recorded its interim income tax provision utilizing the estimated annual effective tax rate.

The income tax effects of temporary differences give rise to significant portions of deferred tax assets and liabilities, which are presented on a net basis. As of June 30, 2023 and December 31, 2022, the Company recorded a net deferred tax asset of $14.8 million and $68.9 million, respectively, within other assets within the Condensed Consolidated Statements of Financial Condition.

The Company files its tax returns as prescribed by the tax laws of the jurisdictions in which it operates. In the normal course of business, the Company is subject to examination by U.S. federal, state, local and foreign tax authorities. With limited exceptions, the Company is generally no longer subject to corporate income tax audits by taxing authorities for any years prior to 2019. Although the outcome of tax audits is always uncertain, the Company does not believe the outcome of any future audit will have a material adverse effect on the Company’s unaudited condensed consolidated financial statements.

10. EARNINGS PER SHARE

The Company has Class A and non-voting common stock outstanding. The non-voting common stock has the same economic rights as the Class A common stock; therefore, earnings per share is presented on a combined basis. Income of the Company has been allocated on a proportionate basis to the two common stock classes.

Basic earnings per share of Class A and non-voting common stock is computed by using the two-class method. Diluted earnings per share of Class A and non-voting common stock is computed using the more dilutive method of either the two-class method or the treasury stock method.

For the three and six months ended June 30, 2023, the treasury stock method was the more dilutive method. For the three and six months ended June 30, 2022, the two-class method was the more dilutive method.

The computation of diluted earnings per share excludes the following restricted units and restricted units and AOG Units as their effect would have been anti-dilutive:

	Three months ended June 30,		Six months ended June 30,
	2023	2022	2023	2022
Restricted units	—	—	4,131	—
AOG Units	120,137,310	—	119,391,357	—

33

Ares Management Corporation

Notes to the Unaudited Condensed Consolidated Financial Statements (Continued)

(Dollars in Thousands, Except Share Data and As Otherwise Noted)

The following table presents the computation of basic and diluted earnings per common share:

	Three months ended June 30,				Six months ended June 30,
	2023		2022		2023		2022
Basic earnings per share of Class A and non-voting common stock:
Net income attributable to Ares Management Corporation Class A and non-voting common stockholders	$	144,514	$	39,731	$	238,553	$	85,594
Distributions on unvested restricted units	(5,316)		(3,461)		(10,630)		(7,046)
Net income available to Class A and non-voting common stockholders	$	139,198	$	36,270	$	227,923	$	78,548
Basic weighted-average shares of Class A and non-voting common stock	182,999,515		175,157,558		180,998,934		174,694,645
Basic earnings per share of Class A and non-voting common stock	$	0.75	$	0.21	$	1.25	$	0.45
Diluted earnings per share of Class A and non-voting common stock:
Net income attributable to Ares Management Corporation Class A and non-voting common stockholders	$	144,514	$	39,731	$	238,553	$	85,594
Distributions on unvested restricted units	—		(3,461)		—		(7,046)
Net income available to Class A and non-voting common stockholders	$	144,514	$	36,270	$	238,553	$	78,548
Effect of dilutive shares:
Restricted units	8,489,883		—		7,991,062		—
Options	2,568,643		—		3,171,820		—
Diluted weighted-average shares of Class A and non-voting common stock	194,058,041		175,157,558		192,161,816		174,694,645
Diluted earnings per share of Class A and non-voting common stock	$	0.74	$	0.21	$	1.24	$	0.45
Dividend declared and paid per Class A and non-voting common stock	$	0.77	$	0.61	$	1.54	$	1.22

34

Ares Management Corporation

Notes to the Unaudited Condensed Consolidated Financial Statements (Continued)

(Dollars in Thousands, Except Share Data and As Otherwise Noted)

11. EQUITY COMPENSATION

Equity Incentive Plan

In April 2023, the Company’s board of directors approved the Company’s 2023 Equity Incentive Plan (the “Equity Incentive Plan”), subject to approval by stockholders, to replace the Third Amended and Restated 2014 Equity Incentive Plan (“2014 Equity Incentive Plan”). The Equity Incentive Plan was approved by stockholders on June 12, 2023 and as of that date, the number of shares available for issuance under the Equity Incentive Plan was 69,122,318 and may increase on January 1 of each year, based on a formula set forth in the Equity Incentive Plan. No new equity-based compensation awards will be granted under the 2014 Equity Incentive Plan. As of June 30, 2023, 69,122,318 shares remained available for issuance under the Equity Incentive Plan.

Generally, unvested restricted units are forfeited upon termination of employment in accordance with the Equity Incentive Plan. The Company recognizes forfeitures as a reversal of previously recognized compensation expense in the period the forfeiture occurs.

Equity-based compensation expense, net of forfeitures, recorded by the Company is presented in the following table:

	Three months ended June 30,				Six months ended June 30,
	2023		2022		2023		2022
Restricted units	$	62,282	$	49,635	$	131,533	$	103,286

Restricted Units

Each restricted unit represents an unfunded, unsecured right of the holder to receive a share of the Company’s Class A common stock on a specific date. The restricted units generally vest and are settled in shares of Class A common stock either: (i) at a rate of one-third per year, beginning on the third anniversary of the grant date; (ii) at a rate of one quarter per year, beginning on the second anniversary of the grant date or the holder’s employment commencement date or (iii) at a rate of one-third per year, beginning on the first anniversary of the grant date, in each case generally subject to the holder’s continued employment as of the applicable vesting date (subject to accelerated vesting upon certain qualifying terminations of employment or retirement eligibility provisions). Compensation expense associated with restricted units is recognized on a straight-line basis over the requisite service period of the award.

Restricted units are delivered net of the holder’s payroll related taxes upon vesting. For the six months ended June 30, 2023, 3.4 million restricted units vested and 1.9 million shares of Class A common stock were delivered to the holders. For the six months ended June 30, 2022, 5.3 million restricted units vested and 2.9 million shares of Class A common stock were delivered to the holders.

The holders of restricted units, other than awards that have not yet been issued as described in the subsequent sections, generally have the right to receive as current compensation an amount in cash equal to: (i) the amount of any dividend paid with respect to a share of Class A common stock multiplied by (ii) the number of restricted units held at the time such dividends are declared (“Dividend Equivalent”). When units are forfeited, the cumulative amount of Dividend Equivalents previously paid is reclassified to compensation and benefits expense within the Condensed Consolidated Statements of Operations.

The following table summarizes the Company’s dividends declared and Dividend Equivalents paid during the six months ended June 30, 2023:

Record Date	Dividends Per Share		Dividend Equivalents Paid
March 17, 2023	$	0.77	$	12,032
June 16, 2023	0.77		11,874

During the first quarter of 2023, the Company approved the future grant of restricted units to certain senior executives in each of 2024, 2025 and 2026, subject to the holder’s continued employment and acceleration in certain instances. The vesting period of these awards are at a rate of 25% per year, beginning on the second anniversary of the grant date. Given that these future restricted units have been communicated to the recipient, the Company accounts for these awards as if they have been granted and recognizes the compensation expense on a straight-line basis over the service period. The restricted units that have been approved and communicated but not yet granted are not eligible to receive a Dividend Equivalent until the grant date.

35

Ares Management Corporation

Notes to the Unaudited Condensed Consolidated Financial Statements (Continued)

(Dollars in Thousands, Except Share Data and As Otherwise Noted)

The following table presents unvested restricted units’ activity:

	Restricted Units	Weighted Average Grant Date Fair Value Per Unit
Balance - December 31, 2022	16,662,999	$	48.76
Granted	4,734,184	78.75
Vested	(3,427,972)	38.18
Forfeited	(183,028)	57.58
Balance - June 30, 2023	17,786,183	$	58.69

The total compensation expense expected to be recognized in all future periods associated with the restricted units is approximately $776.2 million as of June 30, 2023 and is expected to be recognized over the remaining weighted average period of 3.6 years.

Options

Upon exercise, each option entitles the holders to purchase from the Company one share of Class A common stock at the stated exercise price. The term of the options is generally 10 years, beginning on the grant date.

A summary of options activity during the six months ended June 30, 2023 is presented below:

	Options	Weighted Average Exercise Price		Weighted Average Remaining Life (in years)	Aggregate Intrinsic Value
Balance - December 31, 2022	5,170,219	$	19.00	1.3	$	255,616
Exercised	(3,249,192)	19.00		—	—
Expired	—	—		—	—
Forfeited	—	—		—	—
Balance - June 30, 2023	1,921,027	$	19.00	0.8	$	149,475
Exercisable at June 30, 2023	1,921,027	$	19.00	0.8	$	149,475

Net cash proceeds from exercises of stock options were $53.1 million for the six months ended June 30, 2023. The Company realized tax benefits of approximately $30.9 million from those exercises.

12. EQUITY AND REDEEMABLE INTEREST

Common Stock

The Company’s common stock consists of Class A, Class B, Class C and non-voting common stock, each $0.01 par value per share. The non-voting common stock has the same economic rights as the Class A common stock. Sumitomo Mitsui Banking Corporation (“SMBC”) is the sole holder of the non-voting common stock. The Class B common stock and Class C common stock are non-economic and holders are not entitled to dividends from the Company or to receive any assets of the Company in the event of any dissolution, liquidation or winding up of the Company. Ares Management GP LLC is the sole holder of the Class B common stock and Ares Voting LLC (“Ares Voting”) is the sole holder of the Class C common stock.

In February 2023, the Company's board of directors authorized the renewal of the stock repurchase program that allows for the repurchase of up to $150 million of shares of Class A common stock. Under the program, shares may be repurchased from time to time in open market purchases, privately negotiated transactions or otherwise, including in reliance on Rule 10b5-1 of the Securities Act. The program is scheduled to expire in March 2024. Repurchases under the program, if any, will depend on the prevailing market conditions and other factors. During the six months ended June 30, 2023 and 2022, the Company did not repurchase any shares as part of the stock repurchase program.

36

Ares Management Corporation

Notes to the Unaudited Condensed Consolidated Financial Statements (Continued)

(Dollars in Thousands, Except Share Data and As Otherwise Noted)

The following table presents the changes in each class of common stock:

	Class A Common Stock	Non-Voting Common Stock	Class B Common Stock	Class C Common Stock	Total
Balance - December 31, 2022	173,892,036	3,489,911	1,000	117,231,288	294,614,235
Issuance of stock	1,391,426	—	—	—	1,391,426
Issuance of AOG Units(1)	—	—	—	3,473,026	3,473,026
Exchanges of AOG Units	1,029,993	—	—	(1,029,993)	—
Stock option exercises, net of shares withheld for tax	2,972,093	—	—	—	2,972,093
Vesting of restricted stock awards, net of shares withheld for tax	1,946,260	—	—	—	1,946,260
Balance - June 30, 2023	181,231,808	3,489,911	1,000	119,674,321	304,397,040

(1) Represents issuance of AOG Units to the recipients of the management incentive program from the acquisition of Black Creek Group’s real estate investment advisory and distribution business (the “Black Creek Acquisition”), which relieved the associated liability following the maximum contingent payment being met as of December 31, 2022. Pursuant to an agreement with the recipients of the Black Creek Acquisition management incentive program, a portion of such AOG Units were issued in lieu of cash consideration which was payable pursuant to the Black Creek Acquisition management incentive program. Issuances of Class C Common stock corresponds with increases in Ares Owners Holdings L.P.’s ownership interest in the AOG entities.

The following table presents each partner’s AOG Units and corresponding ownership interest in each of the Ares Operating Group entities, as well as its daily average ownership of AOG Units in each of the Ares Operating Group entities:

							Daily Average Ownership
	As of June 30, 2023			As of December 31, 2022			Three months ended June 30,				Six months ended June 30,
	AOG Units	Direct Ownership Interest		AOG Units	Direct Ownership Interest		2023		2022		2023		2022
Ares Management Corporation	184,721,719	60.68	%	177,381,947	60.21	%	60.37	%	59.66	%	60.25	%	59.58	%
Ares Owners Holdings, L.P.	119,674,321	39.32		117,231,288	39.79		39.63		40.34		39.75		40.42
Total	304,396,040	100.00	%	294,613,235	100.00	%

37

Ares Management Corporation

Notes to the Unaudited Condensed Consolidated Financial Statements (Continued)

(Dollars in Thousands, Except Share Data and As Otherwise Noted)

Redeemable Interest

The following table summarizes the activities associated with the redeemable interest in Ares Operating Group entities:

	Total
Balance - December 31, 2021	$	96,008
Changes in ownership interests and related tax benefits	231
Net income	399
Currency translation adjustment, net of tax	(331)
Equity compensation	48
Distributions	(8)
Balance - March 31, 2022	96,347
Changes in ownership interests and related tax benefits	(1,445)
Net loss	(457)
Currency translation adjustment, net of tax	(996)
Equity compensation	77
Distributions	(8)
Balance - June 30, 2022	93,518
Changes in ownership interests and related tax benefits	1,214
Net income	93
Currency translation adjustment, net of tax	(933)
Equity compensation	77
Distributions	(1,861)
Balance - September 30, 2022	92,108
Net loss	(886)
Currency translation adjustment, net of tax	1,834
Equity compensation	83
Distribution	(10)
Balance - December 31, 2022	93,129
Changes in ownership interests and related tax benefits	(66,506)
Net loss	(1,824)
Currency translation adjustment, net of tax	(148)
Equity compensation	174
Distributions	(2,883)
Balance - March 31, 2023	21,942
Net income	734
Currency translation adjustment, net of tax	(159)
Balance- June 30, 2023	$	22,517

38

Ares Management Corporation

Notes to the Unaudited Condensed Consolidated Financial Statements (Continued)

(Dollars in Thousands, Except Share Data and As Otherwise Noted)

The following table summarizes the activities associated with the redeemable interest in Consolidated Funds:

	Total
Balance - December 31, 2021	$	1,000,000
Change in redemption value	—
Balance - March 31, 2022	1,000,000
Change in redemption value	—
Balance - June 30, 2022	1,000,000
Change in redemption value	4,994
Balance - September 30, 2022	1,004,994
Change in redemption value	8,288
Balance - December 31, 2022	1,013,282
Change in redemption value	10,504
Redemption	(538,985)
Balance - March 31, 2023	484,801
Gross proceeds from the initial public offering of AAC II	500,000
Change in redemption value	15,948
Balance - June 30, 2023	$	1,000,749

39

Ares Management Corporation

Notes to the Unaudited Condensed Consolidated Financial Statements (Continued)

(Dollars in Thousands, Except Share Data and As Otherwise Noted)

13. SEGMENT REPORTING

The Company operates through its distinct operating segments. On March 31, 2023, the Company executed the SSG Buyout. The Company rebranded Ares SSG as Ares Asia and the Ares SSG credit business, including the Asian special situations, Asian secured lending and APAC direct lending strategies, as Asia credit. Asia credit has been reclassified effective January 1, 2023 and is now presented within the Credit Group. In connection with this reclassification, the Company will no longer use Strategic Initiatives to describe all other operating segments, instead reporting the collective results as Other. The Company reclassified activities of Asia credit to the Credit Group to better align the segment presentation with the global asset classes and investment strategies. The Company has modified historical results to conform with its current presentation. The Company operating segments are summarized below:

Credit Group: The Credit Group manages credit strategies across the liquid and illiquid spectrum, including liquid credit, alternative credit and direct lending. Our liquid credit investment solutions help traditional fixed income investors access the syndicated loan and high yield bond markets and capitalize on opportunities across multi-asset credit. The syndicated loans strategy focuses on evaluating individual credit opportunities related primarily to non-investment grade senior secured loans and primarily targets first lien secured debt, with a secondary focus on second lien secured loans and subordinated and other unsecured loans. The high yield bond strategy seeks to deliver a diversified portfolio of liquid, traded non-investment grade corporate bonds, including secured, unsecured and subordinated debt instruments. Multi-asset credit is a “go anywhere” strategy designed to offer investors a flexible solution to global credit investing by allowing us to tactically allocate between multiple asset classes in various market conditions. The alternative credit strategy seeks to capitalize on asset-focused investment opportunities that fall outside of traditional, well-defined markets such as corporate debt, real estate and private equity. The alternative credit strategy emphasizes downside protection and capital preservation through a focus on investments that tend to share the following key attributes: asset security, covenants, structural protections and cash flow velocity. The direct lending strategy is one of the largest self-originating direct lenders, lending in the U.S., European and Asia-Pacific markets with a multi-channel origination strategy designed to address a broad set of investment opportunities in the middle market. The direct lending team maintains a flexible investment strategy with the capability to invest in first lien senior secured loans (including unitranche loans which are loans that combine senior and subordinated debt, generally in a first lien position), second lien senior secured loans, subordinated debt, preferred equity and non-control equity co-investments in private middle market companies. U.S. direct lending activities are managed through a publicly-traded business development company (“BDC”), Ares Capital Corporation (“ARCC”), our non-traded BDC, Ares Strategic Income Fund (“ASIF”), as well as through private commingled funds and separately managed accounts (“SMAs”). Our Asia credit platform provides flexible, value-add capital solutions to complex situations through our local origination presence and experience.

Private Equity Group: The Private Equity Group broadly categorizes its investment strategies as corporate private equity and special opportunities. In the corporate private equity strategy, the Company targets four principal transactions types: (i) prudently leveraged control buyouts; (ii) growth equity; (iii) rescue capital and (iv) distressed-for-control. This differentiated strategy, together with the broad resources of the Ares platform, widens our universe of potential investment opportunities and allows us to remain active across various market environments and to be highly selective in making investments by identifying the most attractive relative value opportunities. In the special opportunities strategy, the Company employs a flexible capital strategy to finance debt and non-control equity solutions in middle market companies undergoing transformational change or stress. The strategy seeks to consistently invest in a range of private, special-situation opportunities and flex into distressed public market debt when attractive.

Real Assets Group: The Real Assets Group manages comprehensive equity and debt strategies across real estate and infrastructure investments.

The real estate strategy focuses on activities categorized as core/core-plus, value-add, opportunistic and debt. Real estate equity strategies involve high-quality properties and locations and de-risked developments with an opportunity to create value through repositioning, lease-up, re-tenanting, redevelopment, and/or complex recapitalizations. The U.S. core/core-plus investment activities focuses on the acquisition of assets with strong long-term cash flow potential and durable tenancy diversified across end-user industries and geographies. The value-add investment activities focus on acquiring underperforming, income-producing, institutional-quality assets that can be improved through select value-creation initiatives across the U.S. and Europe. The opportunistic activities focus on capitalizing on distressed and special situations, repositioning underperforming assets and undertaking select development and redevelopment projects across the U.S. and Europe. The real estate debt strategy primarily focuses on directly originating a wide range of financing opportunities in the U.S. and Europe leveraging the Real Asset Group’s diverse sources of capital. In addition to managing private commingled funds and SMAs investing in equity and debt strategies, the real estate strategy also makes investments through Ares Real Estate Income Trust,

40

Ares Management Corporation

Notes to the Unaudited Condensed Consolidated Financial Statements (Continued)

(Dollars in Thousands, Except Share Data and As Otherwise Noted)

Inc. (“AREIT”) and Ares Industrial Real Estate Income Trust, Inc. (“AIREIT”), its non-traded REITs, and ACRE, a publicly traded commercial mortgage REIT.

The infrastructure strategy focuses on investment strategies broadly categorized as infrastructure opportunities and infrastructure debt. Infrastructure opportunities is a market leader in infrastructure and power investing with a focus on climate infrastructure, natural gas generation and energy transportation sectors. The infrastructure opportunities strategy targets essential infrastructure assets and companies with stable cash flow profiles through long-term contracts and high-barriers to entry. The infrastructure debt strategy targets global assets and businesses with defensive characteristics across the digital, transport, energy and utility sectors. Leveraging the established long standing relationships, the strategy seeks to generate exclusive deal flow and high-quality investment opportunities.

Secondaries Group: The Secondaries Group invests in secondary markets across a range of alternative asset class strategies, including private equity, real estate, infrastructure and credit. The Company acquires interests across a range of partnership vehicles, including funds, multi-asset portfolios and single asset joint ventures. Activities within each strategy include recapitalizing and restructuring the funds, including transactions that can address pending fund maturity, strategy change or the need for additional equity capital. The private equity secondaries strategy seeks to achieve attractive secondary cash flow and diversification characteristics by investing across the spectrum of private equity secondaries transactions, including through Ares Private Markets Fund (“APMF”). In the real estate secondaries strategy, the Company seeks broad diversification by property sector and geography and to drive investment results through underwriting, transaction structuring and portfolio construction. In the infrastructure secondaries strategy, the Company focuses on achieving diversification through a portfolio that provides inflation protection and exposure to uncorrelated assets. The credit secondaries strategy seeks to create a highly diversified portfolio of primarily senior secured private credit interests across North America and Europe, acquired directly or indirectly through secondary market transactions.

Other: Other represents a compilation of operating segments and strategic investments that seek to expand the Company’s reach and its scale in new and existing global markets but individually do not meet reporting thresholds. These results include activities from: (i) Ares Insurance Solutions (“AIS”), the Company’s insurance platform that provides solutions to insurance clients including asset management, capital solutions and corporate development and (ii) the SPACs sponsored by the Company, among others.

The OMG consists of shared resource groups to support the Company’s operating segments by providing infrastructure and administrative support in the areas of accounting/finance, operations, information technology, legal, compliance, human resources, strategy, relationship management and distribution. The OMG includes Ares Wealth Management Solutions, LLC (“AWMS”) that facilitates the product development, distribution, marketing and client management activities for investment offerings in the global wealth management channel. Additionally, the OMG provides services to certain of the Company’s managed funds and vehicles, which reimburse the OMG for expenses equal to the costs of services provided. The OMG’s revenues and expenses are not allocated to the Company’s operating segments but the Company does consider the financial results of the OMG when evaluating its financial performance.

Segment Profit Measures: These measures supplement and should be considered in addition to, and not in lieu of, the Condensed Consolidated Statements of Operations prepared in accordance with GAAP.

Fee related earnings (“FRE”) is used to assess core operating performance by determining whether recurring revenue, primarily consisting of management fees and fee related performance revenues, is sufficient to cover operating expenses and to generate profits. FRE differs from income before taxes computed in accordance with GAAP as it excludes net performance income, investment income from our funds and adjusts for certain other items that the Company believes are not indicative of its core operating performance. Fee related performance revenues, together with fee related performance compensation, is presented within FRE because it represents incentive fees from perpetual capital vehicles that is measured and received on a recurring basis and not dependent on realization events from the underlying investments.

Realized income (“RI”) is an operating metric used by management to evaluate performance of the business based on operating performance and the contribution of each of the business segments to that performance, while removing the fluctuations of unrealized income and expenses, which may or may not be eventually realized at the levels presented and whose realizations depend more on future outcomes than current business operations. RI differs from income before taxes by excluding: (i) operating results of the Consolidated Funds; (ii) depreciation and amortization expense; (iii) the effects of changes arising from corporate actions; (iv) unrealized gains and losses related to carried interest, incentive fees and investment performance; and adjusting for certain other items that the Company believes are not indicative of operating performance. Changes arising from corporate actions include equity-based compensation expenses, the amortization of intangible assets,

41

Ares Management Corporation

Notes to the Unaudited Condensed Consolidated Financial Statements (Continued)

(Dollars in Thousands, Except Share Data and As Otherwise Noted)

transaction costs associated with mergers, acquisitions and capital activities, underwriting costs and expenses incurred in connection with corporate reorganization. Placement fee adjustment represents the net portion of either expense deferral or amortization that is required to match the timing of expense recognition with the period over which management fees are expected to be earned from the associated fund for segment purposes but have been expensed up front in accordance with GAAP. For periods in which the amortization of placement fees for segment purposes is higher than the GAAP expense, the placement fee adjustment is presented as a reduction to RI. Management believes RI is a more appropriate metric to evaluate the Company’s current business operations.

Management makes operating decisions and assesses the performance of each of the Company’s business segments based on financial and operating metrics and other data that is presented before giving effect to the consolidation of any of the Consolidated Funds. Consequently, all segment data excludes the assets, liabilities and operating results related to the Consolidated Funds and non-consolidated funds. Total assets by segments is not disclosed because such information is not used by the Company’s chief operating decision maker in evaluating the segments.

42

Ares Management Corporation

Notes to the Unaudited Condensed Consolidated Financial Statements (Continued)

(Dollars in Thousands, Except Share Data and As Otherwise Noted)

The following tables present the financial results for the Company’s operating segments, as well as the OMG:

	Three months ended June 30, 2023
	Credit Group		Private Equity Group		Real Assets Group		Secondaries Group		Other		Total Segments		OMG		Total
Management fees	$	422,662	$	55,518	$	95,239	$	41,785	$	6,548	$	621,752	$	—	$	621,752
Fee related performance revenues	222		—		334		298		—		854		—		854
Other fees	9,142		738		11,846		5		135		21,866		7,848		29,714
Compensation and benefits	(122,922)		(20,348)		(40,638)		(16,623)		(3,386)		(203,917)		(86,011)		(289,928)
General, administrative and other expenses	(23,443)		(7,734)		(10,863)		(4,151)		(588)		(46,779)		(49,467)		(96,246)
Fee related earnings	285,661		28,174		55,918		21,314		2,709		393,776		(127,630)		266,146
Performance income—realized	62,760		69,678		2,737		5,460		—		140,635		—		140,635
Performance related compensation—realized	(39,040)		(53,723)		(1,668)		(4,678)		—		(99,109)		—		(99,109)
Realized net performance income	23,720		15,955		1,069		782		—		41,526		—		41,526
Investment income (loss)—realized	17,565		2,084		(1,549)		—		—		18,100		—		18,100
Interest and other investment income—realized	5,672		1,863		2,393		182		1,839		11,949		328		12,277
Interest expense	(8,001)		(5,735)		(4,106)		(2,451)		(5,535)		(25,828)		(11)		(25,839)
Realized net investment income (loss)	15,236		(1,788)		(3,262)		(2,269)		(3,696)		4,221		317		4,538
Realized income	$	324,617	$	42,341	$	53,725	$	19,827	$	(987)	$	439,523	$	(127,313)	$	312,210
	Three months ended June 30, 2022
	Credit Group		Private Equity Group		Real Assets Group		Secondaries Group		Other		Total Segments		OMG		Total
Management fees	$	338,134	$	47,396	$	90,733	$	46,201	$	2,417	$	524,881	$	—	$	524,881
Fee related performance revenues	275		—		965		—		—		1,240		—		1,240
Other fees	6,633		408		8,565		—		50		15,656		6,298		21,954
Compensation and benefits	(98,688)		(24,293)		(40,599)		(15,133)		(1,398)		(180,111)		(71,341)		(251,452)
General, administrative and other expenses	(19,445)		(7,880)		(10,639)		(2,957)		(698)		(41,619)		(35,225)		(76,844)
Fee related earnings	226,909		15,631		49,025		28,111		371		320,047		(100,268)		219,779
Performance income—realized	48,533		—		17,405		4,156		—		70,094		—		70,094
Performance related compensation—realized	(29,358)		—		(11,186)		(3,514)		—		(44,058)		—		(44,058)
Realized net performance income	19,175		—		6,219		642		—		26,036		—		26,036
Investment income (loss)—realized	1,607		672		432		—		(1)		2,710		—		2,710
Interest and other investment income (expense)—realized	6,682		195		2,640		2,200		5,219		16,936		(995)		15,941
Interest expense	(3,657)		(3,629)		(2,713)		(1,557)		(5,486)		(17,042)		(179)		(17,221)
Realized net investment income (loss)	4,632		(2,762)		359		643		(268)		2,604		(1,174)		1,430
Realized income	$	250,716	$	12,869	$	55,603	$	29,396	$	103	$	348,687	$	(101,442)	$	247,245

43

Ares Management Corporation

Notes to the Unaudited Condensed Consolidated Financial Statements (Continued)

(Dollars in Thousands, Except Share Data and As Otherwise Noted)

	Six months ended June 30, 2023
	Credit Group		Private Equity Group		Real Assets Group		Secondaries Group		Other		Total Segments		OMG		Total
Management fees	$	828,312	$	110,175	$	192,709	$	81,648	$	11,527	$	1,224,371	$	—	$	1,224,371
Fee related performance revenues	822		—		334		3,569		—		4,725		—		4,725
Other fees	18,012		1,411		18,308		5		185		37,921		12,488		50,409
Compensation and benefits	(239,138)		(42,658)		(78,624)		(30,035)		(6,526)		(396,981)		(170,978)		(567,959)
General, administrative and other expenses	(45,038)		(17,300)		(23,147)		(8,443)		(1,196)		(95,124)		(95,639)		(190,763)
Fee related earnings	562,970		51,628		109,580		46,744		3,990		774,912		(254,129)		520,783
Performance income—realized	69,353		88,135		8,823		5,460		—		171,771		—		171,771
Performance related compensation—realized	(44,037)		(68,827)		(5,426)		(4,678)		—		(122,968)		—		(122,968)
Realized net performance income	25,316		19,308		3,397		782		—		48,803		—		48,803
Investment income (loss)—realized	18,071		2,963		(3,321)		—		170		17,883		—		17,883
Interest and other investment income—realized	12,090		3,724		4,214		1,407		8,187		29,622		236		29,858
Interest expense	(15,821)		(11,350)		(8,002)		(4,756)		(10,859)		(50,788)		(37)		(50,825)
Realized net investment income (loss)	14,340		(4,663)		(7,109)		(3,349)		(2,502)		(3,283)		199		(3,084)
Realized income	$	602,626	$	66,273	$	105,868	$	44,177	$	1,488	$	820,432	$	(253,930)	$	566,502
	Six months ended June 30, 2022
	Credit Group		Private Equity Group		Real Assets Group		Secondaries Group		Other		Total Segments		OMG		Total
Management fees	$	655,623	$	93,353	$	163,220	$	90,705	$	4,901	$	1,007,802	$	—	$	1,007,802
Fee related performance revenues	12,628		—		1,323		—		—		13,951		—		13,951
Other fees	12,399		705		16,431		—		100		29,635		12,174		41,809
Compensation and benefits	(209,399)		(43,859)		(74,236)		(26,773)		(3,784)		(358,051)		(135,408)		(493,459)
General, administrative and other expenses	(37,638)		(14,168)		(18,276)		(6,035)		(928)		(77,045)		(67,609)		(144,654)
Fee related earnings	433,613		36,031		88,462		57,897		289		616,292		(190,843)		425,449
Performance income—realized	55,896		2,212		51,698		4,156		—		113,962		—		113,962
Performance related compensation—realized	(33,938)		(1,786)		(33,395)		(3,514)		—		(72,633)		—		(72,633)
Realized net performance income	21,958		426		18,303		642		—		41,329		—		41,329
Investment income—realized	2,022		2,275		3,885		—		860		9,042		—		9,042
Interest and other investment income (expense)—realized	12,410		1,697		5,417		2,844		5,220		27,588		(1,279)		26,309
Interest expense	(7,125)		(7,002)		(5,102)		(2,022)		(11,270)		(32,521)		(346)		(32,867)
Realized net investment income (loss)	7,307		(3,030)		4,200		822		(5,190)		4,109		(1,625)		2,484
Realized income	$	462,878	$	33,427	$	110,965	$	59,361	$	(4,901)	$	661,730	$	(192,468)	$	469,262

44

Ares Management Corporation

Notes to the Unaudited Condensed Consolidated Financial Statements (Continued)

(Dollars in Thousands, Except Share Data and As Otherwise Noted)

The following table presents the components of the Company’s operating segments’ revenue, expenses and realized net investment income:

	Three months ended June 30,				Six months ended June 30,
	2023		2022		2023		2022
Segment revenues
Management fees	$	621,752	$	524,881	$	1,224,371	$	1,007,802
Fee related performance revenues	854		1,240		4,725		13,951
Other fees	21,866		15,656		37,921		29,635
Performance income—realized	140,635		70,094		171,771		113,962
Total segment revenues	$	785,107	$	611,871	$	1,438,788	$	1,165,350
Segment expenses
Compensation and benefits	$	203,917	$	180,111	$	396,981	$	358,051
General, administrative and other expenses	46,779		41,619		95,124		77,045
Performance related compensation—realized	99,109		44,058		122,968		72,633
Total segment expenses	$	349,805	$	265,788	$	615,073	$	507,729
Segment realized net investment income (expense)
Investment income—realized	$	18,100	$	2,710	$	17,883	$	9,042
Interest and other investment income —realized	11,949		16,936		29,622		27,588
Interest expense	(25,828)		(17,042)		(50,788)		(32,521)
Total segment realized net investment income (expense)	$	4,221	$	2,604	$	(3,283)	$	4,109

The following table reconciles the Company’s consolidated revenues to segment revenue:

	Three months ended June 30,				Six months ended June 30,
	2023		2022		2023		2022
Total consolidated revenue	$	1,093,286	$	601,430	$	1,906,648	$	1,316,429
Performance (income) loss—unrealized	(288,220)		24,149		(415,933)		(109,383)
Management fees of Consolidated Funds eliminated in consolidation	12,005		11,362		23,606		22,841
Performance income of Consolidated Funds eliminated in consolidation	3,946		—		7,491		34
Administrative, transaction and other fees of Consolidated Funds eliminated in consolidation	2,135		4,315		6,978		9,084
Administrative fees(1)	(16,888)		(15,373)		(30,538)		(34,848)
OMG revenue	(7,848)		(6,417)		(12,488)		(12,293)
Principal investment (income) loss, net of eliminations	(6,888)		4,387		(29,646)		(3,939)
Net revenue of non-controlling interests in consolidated subsidiaries	(6,421)		(11,982)		(17,330)		(22,575)
Total consolidation adjustments and reconciling items	(308,179)		10,441		(467,860)		(151,079)
Total segment revenue	$	785,107	$	611,871	$	1,438,788	$	1,165,350

(1)Represents administrative fees from expense reimbursements that are presented within administrative, transaction and other fees within the Company’s Condensed Consolidated Statements of Operations and are netted against the respective expenses for segment reporting.

45

Ares Management Corporation

Notes to the Unaudited Condensed Consolidated Financial Statements (Continued)

(Dollars in Thousands, Except Share Data and As Otherwise Noted)

The following table reconciles the Company’s consolidated expenses to segment expenses:

	Three months ended June 30,				Six months ended June 30,
	2023		2022		2023		2022
Total consolidated expenses	$	837,738	$	552,868	$	1,466,374	$	1,164,552
Performance related compensation-unrealized	(215,496)		8,549		(300,646)		(82,649)
Expenses of Consolidated Funds added in consolidation	(25,395)		(24,865)		(45,036)		(40,942)
Expenses of Consolidated Funds eliminated in consolidation	12,171		11,638		24,303		23,202
Administrative fees(1)	(16,890)		(15,958)		(30,167)		(34,848)
OMG expenses	(135,478)		(106,566)		(266,617)		(203,017)
Acquisition and merger-related expense	(2,757)		(1,152)		(7,712)		(10,194)
Equity compensation expense	(62,282)		(49,559)		(131,359)		(103,161)
Acquisition-related compensation expense(2)	(600)		(59,491)		(1,242)		(107,492)
Placement fee adjustment	3,744		1,425		6,976		2,118
Depreciation and amortization expense	(42,991)		(40,330)		(88,650)		(78,456)
Expense of non-controlling interests in consolidated subsidiaries	(1,959)		(10,771)		(11,151)		(21,384)
Total consolidation adjustments and reconciling items	(487,933)		(287,080)		(851,301)		(656,823)
Total segment expenses	$	349,805	$	265,788	$	615,073	$	507,729

(1)Represents administrative fees from expense reimbursements that are presented within administrative, transaction and other fees within the Company’s Condensed Consolidated Statements of Operations and are netted against the respective expenses for segment reporting.

(2)Represents contingent obligations resulting from the acquisition of Landmark Partners, LLC (the “Landmark Acquisition”), the Black Creek Acquisition and the Infrastructure Debt Acquisition that are recorded as compensation expense and are presented within compensation and benefits within the Company’s Condensed Consolidated Statements of Operations.

The following table reconciles the Company’s consolidated other income to segment realized net investment income:

	Three months ended June 30,				Six months ended June 30,
	2023		2022		2023		2022
Total consolidated other income	$	126,421	$	18,504	$	182,817	$	76,498
Investment (income) loss—unrealized	(43,939)		2,084		(72,924)		9,938
Interest and other investment (income) loss—unrealized	4,310		(6,029)		4,518		(12,061)
Other income from Consolidated Funds added in consolidation, net	(146,934)		(27,570)		(209,851)		(94,418)
Other expense from Consolidated Funds eliminated in consolidation, net	(10,492)		(4,215)		(14,943)		(11,733)
OMG other expense	1,153		1,091		1,804		5,684
Principal investment income	65,242		13,493		100,699		27,983
Other expense, net	212		13		303		1,994
Other loss of non-controlling interests in consolidated subsidiaries	8,248		5,233		4,294		224
Total consolidation adjustments and reconciling items	(122,200)		(15,900)		(186,100)		(72,389)
Total segment realized net investment income (expense)	$	4,221	$	2,604	$	(3,283)	$	4,109

46

Ares Management Corporation

Notes to the Unaudited Condensed Consolidated Financial Statements (Continued)

(Dollars in Thousands, Except Share Data and As Otherwise Noted)

The following table presents the reconciliation of income before taxes as reported in the Condensed Consolidated Statements of Operations to segment results of RI and FRE:

	Three months ended June 30,				Six months ended June 30,
	2023		2022		2023		2022
Income before taxes	$	381,969	$	67,066	$	623,091	$	228,375
Adjustments:
Depreciation and amortization expense	42,991		40,330		88,650		78,456
Equity compensation expense	62,284		50,144		130,988		103,161
Acquisition-related compensation expense(1)	600		59,491		1,242		107,492
Acquisition and merger-related expense	2,757		1,152		7,712		10,194
Placement fee adjustment	(3,744)		(1,425)		(6,976)		(2,118)
OMG expense, net	128,783		101,241		255,933		196,409
Other expense, net	212		12		303		1,993
(Income) loss before taxes of non-controlling interests in consolidated subsidiaries	3,786		4,022		(1,885)		(967)
(Income) loss before taxes of non-controlling interests in Consolidated Funds, net of eliminations	(67,762)		14,999		(94,933)		(32,408)
Total performance (income) loss—unrealized	(288,220)		24,149		(415,933)		(109,383)
Total performance related compensation—unrealized	215,496		(8,549)		300,646		82,649
Total investment income—unrealized	(39,629)		(3,945)		(68,406)		(2,123)
Realized income	439,523		348,687		820,432		661,730
Total performance income—realized	(140,635)		(70,094)		(171,771)		(113,962)
Total performance related compensation—realized	99,109		44,058		122,968		72,633
Total investment (income) loss—realized	(4,221)		(2,604)		3,283		(4,109)
Fee related earnings	$	393,776	$	320,047	$	774,912	$	616,292

(1)Represents contingent obligations resulting from the Landmark Acquisition, the Black Creek Acquisition and the Infrastructure Debt Acquisition that are recorded as compensation expense and are presented within compensation and benefits within the Company’s Condensed Consolidated Statements of Operations.

47

Ares Management Corporation

Notes to the Unaudited Condensed Consolidated Financial Statements (Continued)

(Dollars in Thousands, Except Share Data and As Otherwise Noted)

14. CONSOLIDATION

Deconsolidated Funds

Certain funds that have historically been consolidated in the financial statements that are no longer consolidated because, as of the reporting period: (a) such funds have been liquidated or dissolved; or (b) the Company is no longer deemed to be the primary beneficiary of the VIEs as it no longer has a significant economic interest. During the six months ended June 30, 2023, one private fund experienced a significant change in ownership that resulted in deconsolidation of the entity. During the six months ended June 30, 2022, the Company did not deconsolidate any entity.

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 fair value and represent 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 in consolidated and non-consolidated VIEs, as presented within the Condensed Consolidated Statements of Financial Condition, its respective maximum exposure to loss relating to non-consolidated VIEs, and its net income attributable to non-controlling interests related to consolidated VIEs, as presented within the Condensed Consolidated Statements of Operations, are as follows:

	As of June 30,		As of December 31,
	2023		2022
Maximum exposure to loss attributable to the Company’s investment in non-consolidated VIEs(1)	$	410,725	$	393,549
Maximum exposure to loss attributable to the Company’s investment in consolidated VIEs(1)	786,662		537,239
Assets of consolidated VIEs	14,186,814		13,128,088
Liabilities of consolidated VIEs	12,443,170		11,593,867

(1)As of June 30, 2023 and December 31, 2022, the Company’s maximum exposure of loss for CLO securities was equal to the cumulative fair value of our capital interest in CLOs and totaled $77.9 million and $82.0 million, respectively.

	Three months ended June 30,				Six months ended June 30,
	2023		2022		2023		2022
Net income (loss) attributable to non-controlling interests related to consolidated VIEs	$	63,461	$	(18,725)	$	100,592	$	19,737

48

Ares Management Corporation

Notes to the Unaudited Condensed Consolidated Financial Statements (Continued)

(Dollars in Thousands, Except Share Data and As Otherwise Noted)

Consolidating Schedules

The following supplemental financial information illustrates the consolidating effects of the Consolidated Funds on the Company’s financial condition, results from operations and cash flows:

	As of June 30, 2023
	Consolidated Company Entities		Consolidated Funds		Eliminations		Consolidated
Assets
Cash and cash equivalents	$	276,827	$	—	$	—	$	276,827
Investments (includes $3,524,644 of accrued carried interest)	5,272,838		—		(806,612)		4,466,226
Due from affiliates	766,101		—		(122,657)		643,444
Other assets	252,646		—		—		252,646
Right-of-use operating lease assets	170,911		—		—		170,911
Intangible assets, net	1,130,673		—		—		1,130,673
Goodwill	998,020		—		—		998,020
Assets of Consolidated Funds
Cash and cash equivalents	—		812,164		—		812,164
Investments held in trust account	—		1,000,949		—		1,000,949
Investments, at fair value	—		13,090,939		—		13,090,939
Due from affiliates	—		22,432		(11,044)		11,388
Receivable for securities sold	—		197,729		—		197,729
Other assets	—		66,890		—		66,890
Total assets	$	8,868,016	$	15,191,103	$	(940,313)	$	23,118,806
Liabilities
Accounts payable, accrued expenses and other liabilities	$	278,207	$	—	$	(11,009)	$	267,198
Accrued compensation	250,790		—		—		250,790
Due to affiliates	192,153		—		—		192,153
Performance related compensation payable	2,579,564		—		—		2,579,564
Debt obligations	2,299,731		—		—		2,299,731
Operating lease liabilities	206,816		—		—		206,816
Liabilities of Consolidated Funds
Accounts payable, accrued expenses and other liabilities	—		237,560		(12,266)		225,294
Due to affiliates	—		123,612		(122,692)		920
Payable for securities purchased	—		554,555		—		554,555
CLO loan obligations, at fair value	—		11,557,946		(96,947)		11,460,999
Fund borrowings	—		65,050		—		65,050
Total liabilities	5,807,261		12,538,723		(242,914)		18,103,070
Commitments and contingencies
Redeemable interest in Consolidated Funds	—		1,000,749		—		1,000,749
Redeemable interest in Ares Operating Group entities	22,517		—		—		22,517
Non-controlling interest in Consolidated Funds	—		1,651,631		(680,322)		971,309
Non-controlling interest in Ares Operating Group entities	1,277,871		—		(6,714)		1,271,157
Stockholders’ Equity
Class A common stock, $0.01 par value, 1,500,000,000 shares authorized (181,231,808 shares issued and outstanding)	1,812		—		—		1,812
Non-voting common stock, $0.01 par value, 500,000,000 shares authorized (3,489,911 shares issued and outstanding)	35		—		—		35
Class B common stock, $0.01 par value, 1,000 shares authorized (1,000 shares issued and outstanding)	—		—		—		—
Class C common stock, $0.01 par value, 499,999,000 shares authorized (119,674,321 shares issued and outstanding)	1,197		—		—		1,197
Additional paid-in-capital	2,192,536		—		(10,363)		2,182,173
Accumulated deficit	(425,526)		—		—		(425,526)
Accumulated other comprehensive loss, net of tax	(9,687)		—		—		(9,687)
Total stockholders’ equity	1,760,367		—		(10,363)		1,750,004
Total equity	3,038,238		1,651,631		(697,399)		3,992,470
Total liabilities, redeemable interest, non-controlling interests and equity	$	8,868,016	$	15,191,103	$	(940,313)	$	23,118,806

49

Ares Management Corporation

Notes to the Unaudited Condensed Consolidated Financial Statements (Continued)

(Dollars in Thousands, Except Share Data and As Otherwise Noted)

	As of December 31, 2022
	Consolidated Company Entities		Consolidated Funds		Eliminations		Consolidated
Assets
Cash and cash equivalents	$	389,987	$	—	$	—	$	389,987
Investments (includes $3,106,577 of accrued carried interest)	4,515,955		—		(541,221)		3,974,734
Due from affiliates	949,532		—		(191,060)		758,472
Other assets	381,137		—		—		381,137
Right-of-use operating lease assets	155,950		—		—		155,950
Intangible assets, net	1,208,220		—		—		1,208,220
Goodwill	999,656		—		—		999,656
Assets of Consolidated Funds
Cash and cash equivalents	—		724,641		—		724,641
Investments held in trust account	—		1,013,382		—		1,013,382
Investments, at fair value	—		12,187,392		3,859		12,191,251
Due from affiliates	—		26,531		(10,742)		15,789
Receivable for securities sold	—		124,050		—		124,050
Other assets	—		65,570		—		65,570
Total assets	$	8,600,437	$	14,141,566	$	(739,164)	$	22,002,839
Liabilities
Accounts payable, accrued expenses and other liabilities	$	242,663	$	—	$	(10,742)	$	231,921
Accrued compensation	510,130		—		—		510,130
Due to affiliates	252,798		—		—		252,798
Performance related compensation payable	2,282,209		—		—		2,282,209
Debt obligations	2,273,854		—		—		2,273,854
Operating lease liabilities	190,616		—		—		190,616
Liabilities of Consolidated Funds
Accounts payable, accrued expenses and other liabilities	—		175,435		(7,149)		168,286
Due to affiliates	—		191,238		(187,201)		4,037
Payable for securities purchased	—		314,193		—		314,193
CLO loan obligations, at fair value	—		10,797,332		(95,612)		10,701,720
Fund borrowings	—		168,046		—		168,046
Total liabilities	5,752,270		11,646,244		(300,704)		17,097,810
Commitments and contingencies
Redeemable interest in Consolidated Funds	—		1,013,282		—		1,013,282
Redeemable interest in Ares Operating Group entities	93,129		—		—		93,129
Non-controlling interest in Consolidated Funds	—		1,482,040		(407,684)		1,074,356
Non-controlling interest in Ares Operating Group entities	1,147,269		—		(12,246)		1,135,023
Stockholders’ Equity
Class A common stock, $0.01 par value, 1,500,000,000 shares authorized (173,892,036 shares issued and outstanding)	1,739		—		—		1,739
Non-voting common stock, $0.01 par value, 500,000,000 shares authorized (3,489,911 shares issued and outstanding)	35		—		—		35
Class B common stock, $0.01 par value, 1,000 shares authorized ($1,000 shares issued and outstanding)	—		—		—		—
Class C common stock, $0.01 par value, 499,999,000 shares authorized (117,231,288 shares issued and outstanding)	1,172		—		—		1,172
Additional paid-in-capital	1,989,284		—		(18,530)		1,970,754
Accumulated deficit	(369,475)		—		—		(369,475)
Accumulated other comprehensive loss, net of tax	(14,986)		—		—		(14,986)
Total stockholders’ equity	1,607,769		—		(18,530)		1,589,239
Total equity	2,755,038		1,482,040		(438,460)		3,798,618
Total liabilities, redeemable interest, non-controlling interests and equity	$	8,600,437	$	14,141,566	$	(739,164)	$	22,002,839

50

Ares Management Corporation

Notes to the Unaudited Condensed Consolidated Financial Statements (Continued)

(Dollars in Thousands, Except Share Data and As Otherwise Noted)

	Three months ended June 30, 2023
	Consolidated Company Entities		Consolidated Funds		Eliminations		Consolidated
Revenues
Management fees	$	627,276	$	—	$	(12,005)	$	615,271
Carried interest allocation	422,412		—		(3,946)		418,466
Incentive fees	7,950		—		—		7,950
Principal investment income	65,242		—		(58,354)		6,888
Administrative, transaction and other fees	46,846		—		(2,135)		44,711
Total revenues	1,169,726		—		(76,440)		1,093,286
Expenses
Compensation and benefits	367,550		—		—		367,550
Performance related compensation	315,780		—		—		315,780
General, administrative and other expense	141,184		—		(31)		141,153
Expenses of the Consolidated Funds	—		25,395		(12,140)		13,255
Total expenses	824,514		25,395		(12,171)		837,738
Other income (expense)
Net realized and unrealized gains (losses) on investments	(4,555)		—		10,036		5,481
Interest and dividend income	5,487		—		(2,797)		2,690
Interest expense	(25,839)		—		—		(25,839)
Other expense, net	(6,098)		—		211		(5,887)
Net realized and unrealized gains on investments of the Consolidated Funds	—		96,288		2,138		98,426
Interest and other income of the Consolidated Funds	—		234,665		(211)		234,454
Interest expense of the Consolidated Funds	—		(184,019)		1,115		(182,904)
Total other income (expense), net	(31,005)		146,934		10,492		126,421
Income before taxes	314,207		121,539		(53,777)		381,969
Income tax expense	49,633		81		—		49,714
Net income	264,574		121,458		(53,777)		332,255
Less: Net income attributable to non-controlling interests in Consolidated Funds	—		121,458		(53,777)		67,681
Net income attributable to Ares Operating Group entities	264,574		—		—		264,574
Less: Net income attributable to redeemable interest in Ares Operating Group entities	734		—		—		734
Less: Net income attributable to non-controlling interests in Ares Operating Group entities	119,326		—		—		119,326
Net income attributable to Ares Management Corporation Class A and non-voting common stockholders	$	144,514	$	—	$	—	$	144,514

51

Ares Management Corporation

Notes to the Unaudited Condensed Consolidated Financial Statements (Continued)

(Dollars in Thousands, Except Share Data and As Otherwise Noted)

	Three months ended June 30, 2022
	Consolidated Company Entities		Consolidated Funds		Eliminations		Consolidated
Revenues
Management fees	$	531,922	$	—	$	(11,362)	$	520,560
Carried interest allocation	47,304		—		—		47,304
Incentive fees	4,675		—		—		4,675
Principal investment income (loss)	13,493		—		(17,880)		(4,387)
Administrative, transaction and other fees	37,593		—		(4,315)		33,278
Total revenues	634,987		—		(33,557)		601,430
Expenses
Compensation and benefits	375,775		—		—		375,775
Performance related compensation	41,073		—		—		41,073
General, administrative and other expense	122,793		—		(227)		122,566
Expenses of the Consolidated Funds	—		24,865		(11,411)		13,454
Total expenses	539,641		24,865		(11,638)		552,868
Other income (expense)
Net realized and unrealized losses on investments	(10,433)		—		8,658		(1,775)
Interest and dividend income	8,375		—		(6,899)		1,476
Interest expense	(17,221)		—		—		(17,221)
Other income, net	5,998		—		(189)		5,809
Net realized and unrealized losses on investments of the Consolidated Funds	—		(6,806)		(1,101)		(7,907)
Interest and other income of the Consolidated Funds	—		117,186		189		117,375
Interest expense of the Consolidated Funds	—		(82,810)		3,557		(79,253)
Total other income (expense), net	(13,281)		27,570		4,215		18,504
Income before taxes	82,065		2,705		(17,704)		67,066
Income tax expense	13,437		23		—		13,460
Net income	68,628		2,682		(17,704)		53,606
Less: Net income (loss) attributable to non-controlling interests in Consolidated Funds	—		2,682		(17,704)		(15,022)
Net income attributable to Ares Operating Group entities	68,628		—		—		68,628
Less: Net loss attributable to redeemable interest in Ares Operating Group entities	(457)		—		—		(457)
Less: Net income attributable to non-controlling interests in Ares Operating Group entities	29,354		—		—		29,354
Net income attributable to Ares Management Corporation Class A and non-voting common stockholders	$	39,731	$	—	$	—	$	39,731

52

Ares Management Corporation

Notes to the Unaudited Condensed Consolidated Financial Statements (Continued)

(Dollars in Thousands, Except Share Data and As Otherwise Noted)

	Six months ended June 30, 2023
	Consolidated Company Entities		Consolidated Funds		Eliminations		Consolidated
Revenues
Management fees	$	1,239,393	$	—	$	(23,606)	$	1,215,787
Carried interest allocation	577,307		—		(7,353)		569,954
Incentive fees	17,011		—		(138)		16,873
Principal investment income	100,699		—		(71,053)		29,646
Administrative, transaction and other fees	81,366		—		(6,978)		74,388
Total revenues	2,015,776		—		(109,128)		1,906,648
Expenses
Compensation and benefits	728,331		—		—		728,331
Performance related compensation	427,438		—		—		427,438
General, administrative and other expense	289,872		—		(374)		289,498
Expenses of the Consolidated Funds	—		45,036		(23,929)		21,107
Total expenses	1,445,641		45,036		(24,303)		1,466,374
Other income (expense)
Net realized and unrealized gains on investments	3,297		—		3,699		6,996
Interest and dividend income	12,663		—		(6,134)		6,529
Interest expense	(50,825)		—		—		(50,825)
Other expense, net	(7,112)		—		302		(6,810)
Net realized and unrealized gains on investments of the Consolidated Funds	—		94,219		14,907		109,126
Interest and other income of the Consolidated Funds	—		457,694		(302)		457,392
Interest expense of the Consolidated Funds	—		(342,062)		2,471		(339,591)
Total other income (expense), net	(41,977)		209,851		14,943		182,817
Income before taxes	528,158		164,815		(69,882)		623,091
Income tax expense	82,961		559		—		83,520
Net income	445,197		164,256		(69,882)		539,571
Less: Net income attributable to non-controlling interests in Consolidated Funds	—		164,256		(69,882)		94,374
Net income attributable to Ares Operating Group entities	445,197		—		—		445,197
Less: Net loss attributable to redeemable interest in Ares Operating Group entities	(1,090)		—		—		(1,090)
Less: Net income attributable to non-controlling interests in Ares Operating Group entities	207,734		—		—		207,734
Net income attributable to Ares Management Corporation Class A and non-voting common stockholders	$	238,553	$	—	$	—	$	238,553

53

Ares Management Corporation

Notes to the Unaudited Condensed Consolidated Financial Statements (Continued)

(Dollars in Thousands, Except Share Data and As Otherwise Noted)

	Six months ended June 30, 2022
	Consolidated Company Entities		Consolidated Funds		Eliminations		Consolidated
Revenues
Management fees	$	1,020,733	$	—	$	(22,841)	$	997,892
Carried interest allocation	225,593		—		—		225,593
Incentive fees	21,131		—		(34)		21,097
Principal investment income	27,983		—		(24,044)		3,939
Administrative, transaction and other fees	76,992		—		(9,084)		67,908
Total revenues	1,372,432		—		(56,003)		1,316,429
Expenses
Compensation and benefits	729,612		—		—		729,612
Performance related compensation	173,884		—		—		173,884
General, administrative and other expense	243,316		—		(227)		243,089
Expenses of the Consolidated Funds	—		40,942		(22,975)		17,967
Total expenses	1,146,812		40,942		(23,202)		1,164,552
Other income (expense)
Net realized and unrealized gains (losses) on investments	(15,359)		—		21,693		6,334
Interest and dividend income	11,785		—		(8,807)		2,978
Interest expense	(32,867)		—		—		(32,867)
Other income, net	6,788		—		805		7,593
Net realized and unrealized gains on investments of the Consolidated Funds	—		16,205		(8,144)		8,061
Interest and other income of the Consolidated Funds	—		238,470		(805)		237,665
Interest expense of the Consolidated Funds	—		(160,257)		6,991		(153,266)
Total other income (expense), net	(29,653)		94,418		11,733		76,498
Income before taxes	195,967		53,476		(21,068)		228,375
Income tax expense	33,823		48		—		33,871
Net income	162,144		53,428		(21,068)		194,504
Less: Net income attributable to non-controlling interests in Consolidated Funds	—		53,428		(21,068)		32,360
Net income attributable to Ares Operating Group entities	162,144		—		—		162,144
Less: Net loss attributable to redeemable interest in Ares Operating Group entities	(58)		—		—		(58)
Less: Net income attributable to non-controlling interests in Ares Operating Group entities	76,608		—		—		76,608
Net income attributable to Ares Management Corporation Class A and non-voting common stockholders	$	85,594	$	—	$	—	$	85,594

54

Ares Management Corporation

Notes to the Unaudited Condensed Consolidated Financial Statements (Continued)

(Dollars in Thousands, Except Share Data and As Otherwise Noted)

	Six months ended June 30, 2023
	Consolidated Company Entities		Consolidated Funds		Eliminations		Consolidated
Cash flows from operating activities:
Net income	$	445,197	$	164,256	$	(69,882)	$	539,571
Adjustments to reconcile net income to net cash provided by operating activities	(108,264)		—		258,037		149,773
Adjustments to reconcile net income to net cash used in operating activities allocable to non-controlling interests in Consolidated Funds	—		(869,324)		(14,907)		(884,231)
Cash flows due to changes in operating assets and liabilities	130,743		—		(61,317)		69,426
Cash flows due to changes in operating assets and liabilities allocable to non-controlling interest in Consolidated Funds	—		144,378		(10,397)		133,981
Net cash provided by (used in) operating activities	467,676		(560,690)		101,534		8,520
Cash flows from investing activities:
Purchase of furniture, equipment and leasehold improvements, net of disposals	(21,127)		—		—		(21,127)
Net cash used in investing activities	(21,127)		—		—		(21,127)
Cash flows from financing activities:
Proceeds from Credit Facility	495,000		—		—		495,000
Repayments of Credit Facility	(470,000)		—		—		(470,000)
Dividends and distributions	(510,501)		—		—		(510,501)
Stock option exercises	53,140		—		—		53,140
Taxes paid related to net share settlement of equity awards	(133,570)		—		—		(133,570)
Other financing activities	1,554		—		—		1,554
Allocable to redeemable and non-controlling interests in Consolidated Funds:
Contributions from redeemable and non-controlling interests in Consolidated Funds	—		880,426		(199,435)		680,991
Distributions to non-controlling interests in Consolidated Funds	—		(46,303)		10,378		(35,925)
Redemptions of redeemable interests in Consolidated Funds	—		(538,985)		—		(538,985)
Borrowings under loan obligations by Consolidated Funds	—		535,464		—		535,464
Repayments under loan obligations by Consolidated Funds	—		(174,669)		—		(174,669)
Net cash provided by (used in) financing activities	(564,377)		655,933		(189,057)		(97,501)
Effect of exchange rate changes	4,668		(7,720)		—		(3,052)
Net change in cash and cash equivalents	(113,160)		87,523		(87,523)		(113,160)
Cash and cash equivalents, beginning of period	389,987		724,641		(724,641)		389,987
Cash and cash equivalents, end of period	$	276,827	$	812,164	$	(812,164)	$	276,827
Supplemental disclosure of non-cash financing activities:
Issuance of Class A common stock in connection with acquisition-related activity	$	116,101	$	—	$	—	$	116,101
Issuance of AOG Units in connection with settlement of management incentive program	$	245,647	$	—	$	—	$	245,647

55

Ares Management Corporation

Notes to the Unaudited Condensed Consolidated Financial Statements (Continued)

(Dollars in Thousands, Except Share Data and As Otherwise Noted)

	Six months ended June 30, 2022
	Consolidated Company Entities		Consolidated Funds		Eliminations		Consolidated
Cash flows from operating activities:
Net income	$	162,144	$	53,428	$	(21,068)	$	194,504
Adjustments to reconcile net income to net cash provided by operating activities	147,828		—		(86,755)		61,073
Adjustments to reconcile net income to net cash used in operating activities allocable to non-controlling interests in Consolidated Funds	—		(863,947)		8,144		(855,803)
Cash flows due to changes in operating assets and liabilities	48,203		—		108,957		157,160
Cash flows due to changes in operating assets and liabilities allocable to non-controlling interest in Consolidated Funds	—		(255,233)		130,101		(125,132)
Net cash provided by (used in) operating activities	358,175		(1,065,752)		139,379		(568,198)
Cash flows from investing activities:
Purchase of furniture, equipment and leasehold improvements, net of disposals	(18,448)		—		—		(18,448)
Acquisitions, net of cash acquired	(301,677)		—		—		(301,677)
Net cash used in investing activities	(320,125)		—		—		(320,125)
Cash flows from financing activities:
Proceeds from Credit Facility	700,000		—		—		700,000
Proceeds from senior notes	488,915		—		—		488,915
Repayments of Credit Facility	(720,000)		—		—		(720,000)
Dividends and distributions	(406,366)		—		—		(406,366)
Stock option exercises	8,644		—		—		8,644
Taxes paid related to net share settlement of equity awards	(189,485)		—		—		(189,485)
Other financing activities	1,834		—		—		1,834
Allocable to non-controlling interests in Consolidated Funds:
Contributions from non-controlling interests in Consolidated Funds	—		242,975		(24,695)		218,280
Distributions to non-controlling interests in Consolidated Funds	—		(164,035)		110,397		(53,638)
Borrowings under loan obligations by Consolidated Funds	—		814,183		—		814,183
Repayments under loan obligations by Consolidated Funds	—		(46,873)		—		(46,873)
Net cash provided by (used in) financing activities	(116,458)		846,250		85,702		815,494
Effect of exchange rate changes	(12,380)		(5,579)		—		(17,959)
Net change in cash and cash equivalents	(90,788)		(225,081)		225,081		(90,788)
Cash and cash equivalents, beginning of period	343,655		1,049,191		(1,049,191)		343,655
Cash and cash equivalents, end of period	$	252,867	$	824,110	$	(824,110)	$	252,867
Supplemental disclosure of non-cash financing activities:
Issuance of Class A common stock in connection with acquisition-related activity	$	12,835	$	—	$	—	$	12,835

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Ares Management Corporation

Notes to the Unaudited Condensed Consolidated Financial Statements (Continued)

(Dollars in Thousands, Except Share Data and As Otherwise Noted)

15. SUBSEQUENT EVENTS

The Company evaluated all events or transactions that occurred after June 30, 2023 through the date the unaudited condensed consolidated financial statements were issued. During this period, the Company had the following material subsequent events that require disclosure:

In July 2023, the Company’s board of directors declared a quarterly dividend of $0.77 per share of Class A and non-voting common stock payable on September 29, 2023 to common stockholders of record at the close of business on September 15, 2023.

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Item 2.  Management’s Discussion and Analysis of Financial Condition and Results of Operations

Ares Management Corporation is a Delaware corporation. Unless the context otherwise requires, references to “Ares,” “we,” “us,” “our,” and the “Company” are intended to mean the business and operations of Ares Management Corporation and its consolidated subsidiaries. The following discussion analyzes the financial condition and results of operations of the Company. “Consolidated Funds” refers collectively to certain Ares funds, co-investment vehicles, CLOs and SPACs that are required under generally accepted accounting principles in the United States (“GAAP”) to be consolidated in our unaudited condensed consolidated financial statements included in this Quarterly Report on Form 10-Q. Additional terms used by the Company are defined in the Glossary and throughout the Management’s Discussion and Analysis in this Quarterly Report on Form 10-Q.

The following discussion and analysis should be read in conjunction with the unaudited condensed consolidated financial statements of Ares Management Corporation and the related notes included in this Quarterly Report on Form 10-Q and the audited financial statements and the related notes included in the 2022 Annual Report on Form 10-K of Ares Management Corporation.

Amounts and percentages presented throughout our discussion and analysis of financial condition and results of operations may reflect rounded results in thousands (unless otherwise indicated) and consequently, totals may not appear to sum. In addition, illustrative charts may not be presented at scale.

Period-over-period analysis of current year compared to prior year may be deemed to be not meaningful and is designated as “NM” within the discussion and analysis of financial condition and results of operations.

Trends Affecting Our Business

We believe that our disciplined investment philosophy across our distinct but complementary investment groups contributes to the stability of our performance throughout market cycles. For the three months ended June 30, 2023, approximately 95% of our management fees were derived from perpetual capital vehicles and long-dated funds. Our funds have a stable base of committed capital enabling us to invest in assets with a long-term focus over different points in a market cycle and to take advantage of market volatility. However, our results from operations, including the fair value of our AUM, are affected by a variety of factors. Conditions in the global financial markets and economic and political environments may impact our business, particularly in the U.S., Western Europe and Asia.

    The following table presents returns of selected market indices:

			Returns (%)
Type of Index	Name of Index	Region	Three months ended June 30, 2023	Six months ended June 30, 2023
High yield bonds	ICE BAML High Yield Master II Index	U.S.	1.6	5.4
High yield bonds	ICE BAML European Currency High Yield Index	Europe	1.5	4.3
Leveraged loans	Credit Suisse Leveraged Loan Index (“CSLLI”)	U.S.	3.1	6.3
Leveraged loans	Credit Suisse Western European Leveraged Loan Index	Europe	3.0	6.7
Equities	S&P 500 Index	U.S.	8.7	16.9
Equities	MSCI All Country World Ex-U.S. Index	Non-U.S.	3.3	11.8
Real estate equities	FTSE NAREIT All Equity REITs Index	U.S.	1.2	3.0
Real estate equities	FTSE EPRA/NAREIT Developed Europe Index	Europe	(3.1)	(7.5)

Global markets rallied during the first half of 2023, driven by normalization of the macroeconomic environment. Leveraged credit spreads continued to tighten as interest rates and inflationary pressures have showed signs of moderation and private credit activity remained resilient throughout the quarter as there has been consistent demand for alternative sources of capital.

Volatility in the private equity markets continued due to elevated interest rates, which impacts the cost of financing available for leveraged buyout transactions. Valuations also continue to experience downward pressure from the macroeconomic environment. The current market environment has had a more pronounced negative impact on certain industries, including energy and retail, which are industries in which some of our funds have made investments. As of June 30, 2023, we had minimal exposure as 1.4% of our total AUM was invested in the energy sector (of which 1.2% of our total AUM was invested in midstream investments and also includes oil and gas exploration) and 2.3% of our total AUM was invested in the retail sector. We believe that the current environment could lead to opportunities for distressed investments. Continued asset

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selectivity, portfolio diversification and a differentiated view to drive value creation, will be instrumental in delivering attractive returns to investors.

The commercial real estate markets continued to be impacted by the macroeconomic environment in the first half of 2023, particularly in Europe with the ongoing war in Ukraine continuing to influence investor sentiment. Pan-European and U.S. real estate deal activity was subdued with limited transactional liquidity. Property valuations remain depressed with capitalization rate compressions waning and yields widening. However, we believe certain of these market trends will be offset by continued strong fundamentals, such as occupancy and rental rates, in certain property types, including multifamily and industrial.

We believe our portfolios across all strategies are well positioned for a rising interest rate environment. On a market value basis, approximately 87% of our debt assets and 58% of our total assets were floating rate instruments as of June 30, 2023.

Recent Transactions

On July 17, 2023, Ares entered into a definitive agreement to acquire 100% of Crescent Point Capital, a leading Asia-focused private equity firm with approximately $3.8 billion of AUM as of March 31, 2023. The transaction is expected to close in the fourth quarter of 2023 and is subject to customary closing conditions, including regulatory approvals.

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Managing Business Performance

Operating Metrics

We measure our business performance using certain operating metrics that are common to the alternative asset management industry, which are discussed below.

Assets Under Management

AUM refers to the assets we manage and is viewed as a metric to measure our investment and fundraising performance as it reflects assets generally at fair value plus available uncalled capital.

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The tables below present rollforwards of our total AUM by segment ($ in millions):

	Credit Group		Private Equity Group		Real Assets Group		Secondaries Group		Other(1)		Total AUM
Balance at 3/31/2023	$	235,143	$	34,647	$	64,114	$	22,894	$	3,497	$	360,295
Net new par/equity commitments	9,936		—		1,824		142		2,493		14,395
Net new debt commitments	2,835		—		150		—		—		2,985
Capital reductions	(352)		(2)		(1)		—		—		(355)
Distributions	(1,882)		(473)		(1,314)		(129)		(112)		(3,910)
Redemptions	(434)		—		(418)		—		—		(852)
Net allocations among investment strategies	1,739		—		—		—		(1,739)		—
Change in fund value	3,156		1,281		416		95		67		5,015
Balance at 6/30/2023	$	250,141	$	35,453	$	64,771	$	23,002	$	4,206	$	377,573
	Credit Group		Private Equity Group		Real Assets Group		Secondaries Group		Other		Total AUM
Balance at 3/31/2022	$	206,706	$	33,565	$	58,527	$	23,468	$	2,753	$	325,019
Net new par/equity commitments	5,203		230		3,365		865		604		10,267
Net new debt commitments	4,183		—		1,444		—		—		5,627
Capital reductions	(58)		(202)		(34)		—		—		(294)
Distributions	(944)		(138)		(887)		(551)		(62)		(2,582)
Redemptions	(394)		—		(83)		—		—		(477)
Net allocations among investment strategies	443		—		—		—		(443)		—
Change in fund value	(3,409)		(43)		245		110		(150)		(3,247)
Balance at 6/30/2022	$	211,730	$	33,412	$	62,577	$	23,892	$	2,702	$	334,313
	Credit Group		Private Equity Group		Real Assets Group		Secondaries Group		Other(1)		Total AUM
Balance at 12/31/2022	$	225,579	$	34,749	$	66,061	$	21,961	$	3,647	$	351,997
Net new par/equity commitments	18,977		50		2,589		1,389		4,139		27,144
Net new debt commitments	4,258		—		150		—		—		4,408
Capital reductions	(2,433)		(5)		(405)		—		—		(2,843)
Distributions	(3,409)		(800)		(2,976)		(554)		(198)		(7,937)
Redemptions	(1,810)		—		(956)		—		(539)		(3,305)
Net allocations among investment strategies	2,554		—		—		—		(2,554)		—
Change in fund value	6,425		1,459		308		206		(289)		8,109
Balance at 6/30/2023	$	250,141	$	35,453	$	64,771	$	23,002	$	4,206	$	377,573
	Credit Group		Private Equity Group		Real Assets Group		Secondaries Group		Other		Total AUM
Balance at 12/31/2021	$	201,405	$	33,404	$	45,919	$	22,119	$	2,928	$	305,775
Acquisitions	—		—		8,184		199		—		8,383
Net new par/equity commitments	10,427		800		6,423		1,945		722		20,317
Net new debt commitments	6,523		—		2,549		—		—		9,072
Capital reductions	(460)		(204)		(297)		—		—		(961)
Distributions	(2,071)		(521)		(2,015)		(1,126)		(90)		(5,823)
Redemptions	(804)		—		(219)		—		—		(1,023)
Net allocations among investment strategies	573		—		—		—		(573)		—
Change in fund value	(3,863)		(67)		2,033		755		(285)		(1,427)
Balance at 6/30/2022	$	211,730	$	33,412	$	62,577	$	23,892	$	2,702	$	334,313
(1) Equity commitments and distributions reported during the first quarter of 2023 were each overstated by $1.8 billion for our insurance platform presented within Other. These amounts have been properly reflected in the current period and had no impact on AUM, FPAUM, net flows or any other amounts for any period presented.

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The components of our AUM are presented below ($ in billions):

AUM: $377.6 AUM: $334.3

FPAUM Non-fee paying(1) AUM not yet paying fees

(1) Includes $14.9 billion and $12.4 billion of AUM of funds from which we indirectly earn management fees as of June 30, 2023 and 2022, respectively and includes $3.6 billion and $3.4 billion of non-fee paying AUM based on our general partner commitment as of June 30, 2023 and 2022, respectively.

Please refer to “— Results of Operations by Segment” for a more detailed presentation of AUM by segment for each of the periods presented.

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Fee Paying Assets Under Management

FPAUM refers to AUM from which we directly earn management fees and is equal to the sum of all the individual fee bases of our funds that directly contribute to our management fees.

The tables below present rollforwards of our total FPAUM by segment ($ in millions):

	Credit Group		Private Equity Group		Real Assets Group		Secondaries Group		Other(1)		Total
Balance at 3/31/2023	$	153,749	$	18,750	$	40,928	$	17,747	$	2,735	$	233,909
Commitments	1,444		—		870		136		1,975		4,425
Deployment/subscriptions/increase in leverage	6,315		901		988		193		(118)		8,279
Capital reductions	(347)		—		(50)		—		—		(397)
Distributions	(1,931)		(693)		(1,096)		(73)		(104)		(3,897)
Redemptions	(473)		—		(431)		—		—		(904)
Net allocations among investment strategies	1,770		—		—		—		(1,770)		—
Change in fund value	1,224		—		(173)		(220)		57		888
Change in fee basis	—		(4)		98		12		—		106
Balance at 6/30/2023	$	161,751	$	18,954	$	41,134	$	17,795	$	2,775	$	242,409
	Credit Group		Private Equity Group		Real Assets Group		Secondaries Group		Other		Total
Balance at 3/31/2022	$	126,861	$	16,141	$	36,127	$	18,070	$	1,847	$	199,046
Commitments	3,796		—		2,077		811		587		7,271
Deployment/subscriptions/increase in leverage	8,986		2,099		1,522		251		(38)		12,820
Capital reductions	(415)		—		(90)		—		—		(505)
Distributions	(1,133)		(530)		(370)		(388)		(46)		(2,467)
Redemptions	(476)		—		(91)		—		—		(567)
Net allocations among investment strategies	403		—		—		—		(403)		—
Change in fund value	(2,591)		(3)		56		179		(317)		(2,676)
Change in fee basis	(8)		(16)		—		(1,369)		(238)		(1,631)
Balance at 6/30/2022	$	135,423	$	17,691	$	39,231	$	17,554	$	1,392	$	211,291
	Credit Group		Private Equity Group		Real Assets Group		Secondaries Group		Other(1)		Total
Balance at 12/31/2022	$	151,275	$	18,447	$	41,607	$	17,668	$	2,064	$	231,061
Commitments	2,526		—		1,467		243		3,621		7,857
Deployment/subscriptions/increase in leverage	10,595		1,604		1,210		299		49		13,757
Capital reductions	(1,881)		—		(329)		—		—		(2,210)
Distributions	(4,066)		(1,093)		(1,730)		(266)		(190)		(7,345)
Redemptions	(1,850)		—		(969)		—		—		(2,819)
Net allocations among investment strategies	2,586		—		—		—		(2,586)		—
Change in fund value	2,566		—		(220)		(112)		(183)		2,051
Change in fee basis	—		(4)		98		(37)		—		57
Balance at 6/30/2023	$	161,751	$	18,954	$	41,134	$	17,795	$	2,775	$	242,409
	Credit Group		Private Equity Group		Real Assets Group		Secondaries Group		Other		Total
Balance at 12/31/2021	$	122,110	$	16,689	$	28,615	$	18,364	$	2,067	$	187,845
Acquisitions	—		—		4,855		131		—		4,986
Commitments	7,391		—		4,261		1,508		706		13,866
Deployment/subscriptions/increase in leverage	16,360		2,213		2,432		320		(38)		21,287
Capital reductions	(3,011)		—		(91)		—		—		(3,102)
Distributions	(3,062)		(975)		(1,261)		(861)		(74)		(6,233)
Redemptions	(872)		—		(229)		—		—		(1,101)
Net allocations among investment strategies	503		—		—		—		(503)		—
Change in fund value	(3,153)		(2)		1,476		918		(528)		(1,289)
Change in fee basis	(843)		(234)		(827)		(2,826)		(238)		(4,968)
Balance at 6/30/2022	$	135,423	$	17,691	$	39,231	$	17,554	$	1,392	$	211,291
(1) Commitments and distributions reported during the first quarter of 2023 were each overstated by $1.8 billion for our insurance platform presented within Other. These amounts have been properly reflected in the current period and had no impact on AUM, FPAUM, net flows or any other amounts for any period presented.

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The charts below present FPAUM by its fee bases ($ in billions):

FPAUM: $242.4 FPAUM: $211.3

Invested capital/other(1) Market value(2) Collateral balances (at par) Capital commitments

    

(1)Other consists of ACRE’s FPAUM, which is based on ACRE’s stockholders’ equity.

(2)Includes $56.2 billion and $54.0 billion from funds that primarily invest in illiquid strategies as of June 30, 2023 and 2022, respectively. The underlying investments held in these funds are generally subject to less market volatility than investments held in liquid strategies.

Please refer to “— Results of Operations by Segment” for detailed information by segment of the activity affecting total FPAUM for each of the periods presented.

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Incentive Eligible Assets Under Management, Incentive Generating Assets Under Management and Available Capital

IEAUM generally represents the NAV plus uncalled equity or total assets plus uncalled debt, as applicable, of our funds from which we are entitled to receive carried interest and incentive fees, excluding capital committed by us and our professionals (from which we do not earn carried interest and incentive fees). With respect to ARCC’s AUM, only ARCC Part II Fees may be generated from IEAUM.

IGAUM generally represents the AUM of our funds that are currently generating carried interest and incentive fees on a realized or unrealized basis. It represents the basis on which we are entitled to receive carried interest and incentive fees. The basis is typically the NAV or total assets of the fund, excluding amounts on which we do not earn carried interest and incentive fees, such as capital committed by us and our professionals. ARCC is only included in IGAUM when ARCC Part II Fees are being generated.

The charts below present our IEAUM and IGAUM by segment ($ in billions):

Credit Private Equity Real Assets Secondaries Other

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The charts below present our available capital and AUM not yet paying fees by segment ($ in billions):

Credit Private Equity Real Assets Secondaries Other

As of June 30, 2023, AUM Not Yet Paying Fees includes $55.6 billion of AUM available for future deployment that could generate approximately $551.6 million in potential incremental annual management fees. As of June 30, 2022, AUM Not Yet Paying Fees included $52.7 billion of AUM available for future deployment that could generate approximately $505.2 million in potential incremental annual management fees.

The chart below presents our perpetual capital AUM by segment and type ($ in billions):

As of June 30, 2023, perpetual capital IGAUM generating fee related performance revenues totaled $14.8 billion, composed of $13.7 billion within the Credit Group, $0.7 billion within the Real Assets Group and $0.4 billion within the Secondaries Group. Fee related performance revenues are not recognized by us until such fees are crystallized and no longer

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subject to reversal. As of June 30, 2022, perpetual capital IGAUM from which we generated fee related performance revenues totaled $19.0 billion, composed of $9.7 billion within the Credit Group and $9.3 billion within the Real Assets Group.

Management Fees By Type

We view the duration of funds we manage as a metric to measure the stability of our future management fees. For both the three months ended June 30, 2023 and 2022, 95% of management fees were earned from perpetual capital or long-dated funds. The charts below present the composition of our segment management fees by the initial fund duration:

    

Perpetual Capital - Publicly-Traded
Vehicles Perpetual Capital - Managed Accounts Perpetual Capital - Private Commingled Vehicles Perpetual Capital - Non-Traded
Vehicles Long-Dated Funds(1) Other

(1) Long-dated funds generally have a contractual life of five years or more at inception.

Fund Performance Metrics

Fund performance information for our investment funds considered to be “significant funds” is included throughout this discussion with analysis to facilitate an understanding of our results of operations for the periods presented. Our significant funds are commingled funds that either contributed at least 1% of our total management fees or represented at least 1% of the Company’s total FPAUM for the past two consecutive quarters. In addition to management fees, each of our significant funds may generate carried interest and incentive fees upon the achievement of performance hurdles. The fund performance information reflected in this discussion and analysis is not indicative of our overall performance. An investment in Ares is not an investment in any of our funds. Past performance is not indicative of future results. As with any investment, there is always the potential for gains as well as the possibility of losses. There can be no assurance that any of these funds or our other existing and future funds will achieve similar returns.

Fund performance metrics for significant funds may be marked as “NM” as they may not be considered meaningful due to the limited time since the initial investment and/or early stage of capital deployment.

To further facilitate an understanding of the impact a significant fund may have on our results, we present our drawdown funds as either harvesting investments or deploying capital to indicate the fund’s stage in its life cycle. A fund harvesting investments is generally not seeking to deploy capital into new investment opportunities, while a fund deploying capital is generally seeking new investment opportunities.

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Consolidation and Deconsolidation of Ares Funds

Consolidated Funds represented approximately 4% of our AUM as of June 30, 2023, 2% of our management fees and 1% of our carried interest and incentive fees for the six months ended June 30, 2023. As of June 30, 2023, we consolidated 26 CLOs, nine private funds and two SPACs, and as of June 30, 2022, we consolidated 24 CLOs, 10 private funds and one SPAC.

The activity of the Consolidated Funds is reflected within the unaudited condensed consolidated financial statement line items indicated by reference thereto. The impact of the Consolidated Funds also typically will decrease management fees, carried interest allocation and incentive fees reported under GAAP to the extent these amounts are eliminated upon consolidation.

The assets and liabilities of our Consolidated Funds are held within separate legal entities and, as a result, the liabilities of our Consolidated Funds are typically non-recourse to us. Generally, the consolidation of our Consolidated Funds has a significant gross-up effect on our assets, liabilities and cash flows but has no net effect on the net income attributable to us or our stockholders’ equity, except where accounting for a redemption or liquidation preference requires the reallocation of ownership based on specific terms of a profit sharing agreement. The net economic ownership interests of our Consolidated Funds, to which we have no economic rights, are reflected as redeemable and non-controlling interests in the Consolidated Funds within our unaudited condensed consolidated financial statements. Redeemable interest in Consolidated Funds represent the shares issued by Ares Acquisition Corporation (NYSE: AAC) (“AAC I”) and Ares Acquisition Corporation II (NYSE: AACT) (“AAC II”), our sponsored SPACs, that are redeemable for cash by the public shareholders in connection with their failure to complete a business combination or tender offer associated with stockholder approval provisions.

We generally deconsolidate funds and CLOs when we are no longer deemed to have a controlling interest in the entity. During the six months ended June 30, 2023, we deconsolidated one private fund as a result of significant change in ownership. During the six months ended June 30, 2022, we did not deconsolidate any entities.

The performance of our Consolidated Funds is not necessarily consistent with, or representative of, the combined performance trends of all of our funds.

For the actual impact that consolidation had on our results and further discussion on consolidation and deconsolidation of funds, see “Note 14. Consolidation” within our unaudited condensed consolidated financial statements included herein.

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Results of Operations

Consolidated Results of Operations

We consolidate funds and entities where we are deemed to hold a controlling financial interest. The Consolidated Funds are not necessarily the same entities in each year presented due to changes in ownership, changes in limited partners’ or investor rights, and the creation and termination of funds and entities. The consolidation of these funds and entities had no effect on net income attributable to us for the periods presented. Although the consolidated results presented below include the results of our operations together with those of the Consolidated Funds and other joint ventures, we separate our analysis of those items primarily impacting the Company from those of the Consolidated Funds.

The following table presents our summarized consolidated results of operations ($ in thousands):

	Three months ended June 30,				Favorable (Unfavorable)			Six months ended June 30,				Favorable (Unfavorable)
	2023		2022		$ Change		% Change	2023		2022		$ Change		% Change
Total revenues	$	1,093,286	$	601,430	$	491,856	82%	$	1,906,648	$	1,316,429	$	590,219	45%
Total expenses	(837,738)		(552,868)		(284,870)		(52)	(1,466,374)		(1,164,552)		(301,822)		(26)
Total other income, net	126,421		18,504		107,917		NM	182,817		76,498		106,319		139
Income tax expense	(49,714)		(13,460)		(36,254)		(269)	(83,520)		(33,871)		(49,649)		(147)
Net income	332,255		53,606		278,649		NM	539,571		194,504		345,067		177
Less: Net income (loss) attributable to non-controlling interests in Consolidated Funds	67,681		(15,022)		82,703		NM	94,374		32,360		62,014		192
Net income attributable to Ares Operating Group entities	264,574		68,628		195,946		286	445,197		162,144		283,053		175
Less: Net income (loss) attributable to redeemable interest in Ares Operating Group entities	734		(457)		1,191		NM	(1,090)		(58)		(1,032)		NM
Less: Net income attributable to non-controlling interests in Ares Operating Group entities	119,326		29,354		89,972		NM	207,734		76,608		131,126		171
Net income attributable to Ares Management Corporation Class A and non-voting common stockholders	$	144,514	$	39,731	104,783		264	$	238,553	$	85,594	152,959		179

Three and Six Months Ended June 30, 2023 Compared to Three and Six Months Ended June 30, 2022 

Consolidated Results of Operations of the Company

The following discussion sets forth information regarding our consolidated results of operations:

Revenues.

	Three months ended June 30,				Favorable (Unfavorable)			Six months ended June 30,				Favorable (Unfavorable)
	2023		2022		$ Change		% Change	2023		2022		$ Change		% Change
Revenues
Management fees	$	615,271	$	520,560	$	94,711	18%	$	1,215,787	$	997,892	$	217,895	22%
Carried interest allocation	418,466		47,304		371,162		NM	569,954		225,593		344,361		153
Incentive fees	7,950		4,675		3,275		70	16,873		21,097		(4,224)		(20)
Principal investment income (loss)	6,888		(4,387)		11,275		NM	29,646		3,939		25,707		NM
Administrative, transaction and other fees	44,711		33,278		11,433		34	74,388		67,908		6,480		10
Total revenues	$	1,093,286	$	601,430	491,856		82	$	1,906,648	$	1,316,429	590,219		45

Management Fees. Capital deployment in direct lending funds within the Credit Group led to a rise in FPAUM and additional management fees of $38.0 million and $79.8 million for the three and six months ended June 30, 2023, respectively, compared to the three and six months ended June 30, 2022. Part I Fees contributed to an increase of $29.8 million and $65.0 million for the three and six months ended June 30, 2023, respectively, compared to the three and six months ended June 30, 2022 primarily due to an increase in pre-incentive fee net investment income generated by ARCC and CADC, driven by an increase in the average size of their portfolios and the impact of rising interest rates, given their primarily floating-rate loan portfolios. Within the Real Assets Group, the non-traded REITs contributed additional fees of $3.8 million and $11.8 million for the three and six months ended June 30, 2023, respectively, compared to the three and six months ended June 30, 2022 from

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additional capital raised. In addition, the acquisition of AMP Capital’s infrastructure debt platform (the “Infrastructure Debt Acquisition”), which was completed on February 10, 2022, contributed additional fees of $2.1 million and $8.1 million for the three and six months ended June 30, 2023, respectively, compared to the three and six months ended June 30, 2022. For detail regarding the fluctuations of management fees within each of our segments see “—Results of Operations by Segment.”

Carried Interest Allocation. The activity was principally composed of the following ($ in millions):

	Three months ended June 30, 2023		Primary Drivers	Three months ended June 30, 2022		Primary Drivers
Credit funds	$	106.4	Primarily from three direct lending funds and one alternative credit fund with $22.1 billion of IGAUM generating returns in excess of their hurdle rates. Ares Capital Europe V, L.P. (“ACE V”) generated carried interest allocation of $33.9 million driven by net investment income on an increasing invested capital base. Ares Pathfinder Fund, L.P. (“Pathfinder”) generated carried interest allocation of $31.2 million driven by market appreciation of certain investments and net investment income during the period. Ares Capital Europe IV, L.P. (“ACE IV”) and Ares Private Credit Solutions, L.P. (“PCS I”) generated carried interest allocation of $16.1 million and $7.9 million, respectively, primarily driven by net investment income during the period. Our credit funds have benefited from rising interest rates on predominately floating-rate loans.	$	17.3	Primarily from three direct lending funds and one alternative credit fund with $17.1 billion of IGAUM generating returns in excess of their hurdle rates. ACE V generated $15.7 million of carried interest allocation driven by net investment income on an increasing invested capital base. ACE IV and Ares Capital Europe III, L.P. (“ACE III”) generated carried interest allocation of $10.7 million and $2.4 million, respectively, driven by net investment income during the period. Pathfinder generated carried interest allocation of $10.9 million that was primarily driven by market appreciation of various investments. The activity was partially offset by a reversal of unrealized carried interest allocation from two direct lending funds due to lower net investment income and from two alternative credit funds due to market depreciation of investments during the period.
Private equity funds	275.5		Appreciation of Ares Corporate Opportunities Fund V, L.P. (“ACOF V”), Ares Special Situations Fund IV, L.P. (“SSF IV”) and Ares Special Opportunities Fund, L.P.’s (“ASOF I”) investments, predominately in Savers Value Village, Inc. (“SVV”) following its initial public offering, generated carried interest allocation of $86.3 million, $68.8 million and $60.1 million, respectively. The carried interest allocation generated from these funds was also due to appreciation across several other portfolio company investments, driven by improving operating performance metrics from portfolio companies that primarily operate in the services and retail industries. In addition, Ares Corporate Opportunities Fund VI, L.P. (“ACOF VI”) generated carried interest allocation of $70.9 million, driven by improving operating performance metrics from portfolio companies that primarily operate in the retail and healthcare industries and market appreciation of an investment in a services company. The appreciation was partially offset by the reversal of unrealized carried interest allocation of $10.4 million from Ares Corporate Opportunities Fund IV, L.P. (“ACOF IV”) primarily driven by lower operating performance metrics of a portfolio company that operates in the healthcare industry and lower stock price of a publicly-traded portfolio company that operates in the retail industry.	0.4		Market appreciation across several portfolio company investments that primarily operate in the services, technology, retail and healthcare industries, generated carried interest allocation of $22.7 million from ACOF V and $19.5 million from ACOF VI. Conversely, the declining macroeconomic environment caused broad decreases in valuations of the publicly traded investments of our funds. SSF IV and ASOF I had a reversal of unrealized carried interest of $13.4 million and $17.3 million, respectively. ACOF IV had a reversal of unrealized carried interest of $8.9 million primarily due to the decrease in valuation of its investment in the AZEK Company (“AZEK”).
Real assets funds	37.3		Appreciation from properties within real estate equity funds, driven by increasing operating income primarily from industrial and multifamily investments, generated carried interest allocation of $6.4 million from Ares European Property Enhancement Partners III, SCSp. (“EPEP III”), $4.8 million from US Real Estate Fund IX, L.P. (“US IX”), $4.5 million from Ares U.S. Real Estate Opportunity Fund III, L.P. (“AREOF III”) and $3.5 million from US Real Estate Fund X, L.P. (“US X”). Ares Infrastructure Debt Fund V L.P. (“IDF V”) generated carried interest allocation of $8.3 million driven by net investment income. Ares Energy Investors Fund V, L.P. (“EIF V”) also generated $4.4 million of carried interest allocation driven by net investment income during the period.	22.8		Appreciation from properties within real estate equity funds, driven by increasing operating income primarily from industrial and multifamily investments, generated carried interest allocation of $6.5 million from AREOF III, $2.4 million from US Real Estate Fund VIII, L.P. (“US VIII”), $3.2 million from US IX and $6.4 million from four real estate equity funds. EIF V also generated $10.4 million of carried interest allocation due to market appreciation of certain investments.
Secondaries funds	(0.7)		Reversal of unrealized carried interest from Landmark Equity Partners XVI, L.P. (“LEP XVI”), driven primarily by market depreciation of certain portfolio investments.	6.8		Market appreciation of certain investments in a private equity secondaries fund, Landmark Real Estate Partners VIII, L.P. (“LREP VIII”) and LEP XVI that generated carried interest allocation of $2.0 million, $1.8 million and $1.5 million, respectively.
Carried interest allocation	$	418.5		$	47.3

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	Six months ended June 30, 2023		Primary Drivers	Six months ended June 30, 2022		Primary Drivers
Credit funds	$	222.9	Primarily from three direct lending funds and one alternative credit fund with $22.1 billion of IGAUM generating returns in excess of their hurdle rates. ACE V generated carried interest allocation of $78.7 million driven by net investment income on an increasing invested capital base. ACE IV and PCS I generated carried interest allocation of $40.2 million and $22.5 million, respectively, primarily driven by net investment income during the period. Pathfinder generated carried interest allocation of $34.7 million driven by market appreciation of certain investments and net investment income during the period. Our credit funds have benefited from rising interest rates on predominately floating-rate loans.	$	91.6	Primarily from four direct lending funds and one alternative credit fund with $19.1 billion of IGAUM generating returns in excess of their hurdle rates. ACE V generated carried interest allocation of $36.1 million driven by net investment income on an increasing invested capital base. ACE IV, PCS I and ACE III generated carried interest allocation of $20.3 million, $9.8 million and $9.0 million, respectively, primarily driven by net investment income during the period. In addition, Pathfinder generated carried interest allocation of $25.2 million that was driven by market appreciation of various investments. The activity was partially offset by a reversal of unrealized carried interest allocation from one U.S. direct lending fund due to lower net investment income and from two alternative credit funds due to market depreciation of investments during the period.
Private equity funds	323.7		Appreciation of SSF IV, ASOF I and ACOF V’s investments, predominately in SVV following its initial public offering, generated carried interest allocation of $121.9 million, $85.4 million and $49.9 million, respectively. The carried interest allocation generated from these funds was also due to appreciation across several other portfolio company investments, driven by improving operating performance metrics from portfolio companies that primarily operate in the services and retail industries. In addition, ACOF VI generated carried interest allocation of $81.0 million, driven by improving operating performance of portfolio companies that primarily operate in the retail and healthcare industries and market appreciation of an investment in a services company. The appreciation was partially offset by the reversal of unrealized carried interest allocation of $10.6 million from ACOF IV primarily driven by lower operating performance metrics and market depreciation of a portfolio company that operates in the healthcare industry and lower stock price of a publicly-traded portfolio company that operates in the retail industry.	(2.7)		The declining macroeconomic environment caused broad decreases in valuations of the publicly traded investments of our funds. ACOF IV had a reversal of unrealized carried interest of $60.6 million primarily from its diminishing investment in AZEK. Conversely, market appreciation across several portfolio company investments that primarily operate in industries such as services, technology, retail and healthcare, generated carried interest allocation of $39.7 million from ACOF V, $3.7 million from ASOF I and $30.9 million from ACOF VI.
Real assets funds	24.6		IDF V generated carried interest allocation of $14.6 million driven by net investment income. Appreciation from properties within real estate equity funds, driven by increasing operating income primarily from industrial and multifamily investments, generated carried interest allocation of $9.5 million from two U.S. real estate equity funds, $5.6 million from AREOF III and $2.4 million from US X. The appreciation was partially offset by the reversal of unrealized carried interest allocation of $9.6 million from two European real estate equity funds primarily driven by market depreciation of certain properties.	77.3		Appreciation from properties within real estate equity funds, driven by increasing operating income primarily from industrial and multifamily investments, generated carried interest allocation of $23.3 million from AREOF III, $12.1 million from US VIII, $19.9 million from US IX and $19.8 million from four real estate equity funds. The appreciation was partially offset by the reversal of unrealized carried interest allocation of $5.4 million from EIF V.
Secondaries funds	(1.2)		Reversal of unrealized carried interest from LEP XVI of $8.2 million, driven primarily by market depreciation of certain portfolio investments. The reversal was partially offset by appreciation of certain investments of LREP VIII, which generated carried interest allocation of $6.8 million.	59.4		Market appreciation of certain investments held in LREP VIII, and LEP XVI that generated carried interest allocation of $26.3 million and $18.5 million, respectively. Three private equity secondaries funds also generated carried interest allocation of $7.6 million.
Carried interest allocation	$	570.0		$	225.6

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Incentive Fees. The activity was principally composed of the following ($ in millions):

	Three months ended June 30, 2023		Primary Drivers	Three months ended June 30, 2022		Primary Drivers
Credit funds	$	5.8	Incentive fees generated from two alternative credit funds.	$	0.4	Incentive fees generated from one direct lending fund.
Real assets funds	1.9		Incentive fees generated from an industrial real estate fund and ACRE.	3.9		Incentive fees generated from an industrial real estate fund and ACRE.
Secondaries funds	0.3		Incentive fees generated from APMF.	0.4		Incentive fees generated from a private equity secondaries fund.
Incentive fees	$	8.0		$	4.7
	Six months ended June 30, 2023		Primary Drivers	Six months ended June 30, 2022		Primary Drivers
Credit funds	$	7.0	Incentive fees generated from two alternative credit funds.	$	15.8	Incentive fees generated from three direct lending funds and one alternative credit fund.
Real assets funds	6.3		Incentive fees generated from an industrial real estate fund and ACRE.	4.9		Incentive fees generated from an industrial real estate fund and ACRE.
Secondaries funds	3.6		Incentive fees generated from APMF.	0.4		Incentive fees generated from a private equity secondaries fund.
Incentive fees	$	16.9		$	21.1

Principal Investment Income (Loss). The activity for the three and six months ended June 30, 2023 was primarily composed of: (i) appreciation of certain investments in funds within our corporate private equity and special opportunities strategies; (ii) dividend income from various investments in funds within our special opportunities strategy; partially offset by (iii) unrealized losses in certain investments of LREP VIII. The six months ended June 30, 2023 also included appreciation of certain investments in funds within our European direct lending strategy.

The activity for the three and six months ended June 30, 2022 was driven by a declining macroeconomic environment that negatively impacted the global equity and credit markets, leading to a broad decrease in valuations. In spite of a weak second quarter, the results from the first quarter contributed to the positive result for the six months ended June 30, 2022 primarily due to realizations from the sale of underlying properties held by funds in our U.S. real estate equity strategy and market appreciation of various investments across funds in our infrastructure debt and U.S. and European direct lending strategies.

Administrative, Transaction and Other Fees. The increases in administrative, transaction and other fees for the three and six months ended June 30, 2023 compared to the three and six months ended June 30, 2022 primarily resulted from: (i) higher transaction fees of $7.2 million and $9.3 million, respectively, mostly from $6.7 million of transaction fees generated within the infrastructure debt strategy during the second quarter of 2023 and from certain credit funds; (ii) an increase of $4.9 million in administrative fees from a commercial finance fund that are no longer eliminated as the fund was deconsolidated during the second quarter of 2023; (iii) an increase of $1.7 million and $3.4 million, respectively, in net asset-based distribution fees associated with our non-traded REITs; and (iv) an increase of $1.4 million and $3.1 million, respectively, in administrative service fees from certain private funds that pay on invested capital, driven by deployment.

The increases in administrative, transaction and other fees for the three and six months ended June 30, 2023 compared to the three and six months ended June 30, 2022 were partially offset by decreases in: (i) facilitation fees from the 1031 exchange program associated with our non-traded REITs of $2.9 million and $5.5 million, respectively; (ii) acquisition and development fees resulting from decreased activity of $2.5 million and $3.6 million, respectively; and (iii) program administration fees resulting from the management and creation of our 1031 exchange program that is used by our non-traded REITs, of $0.8 million and $1.8 million, respectively.

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Expenses.

	Three months ended June 30,				Favorable (Unfavorable)			Six months ended June 30,				Favorable (Unfavorable)
	2023		2022		$ Change		% Change	2023		2022		$ Change		% Change
Expenses
Compensation and benefits	$	367,550	$	375,775	$	8,225	2%	$	728,331	$	729,612	$	1,281	0%
Performance related compensation	315,780		41,073		(274,707)		NM	427,438		173,884		(253,554)		(146)
General, administrative and other expenses	141,153		122,566		(18,587)		(15)	289,498		243,089		(46,409)		(19)
Expenses of Consolidated Funds	13,255		13,454		199		1	21,107		17,967		(3,140)		(17)
Total expenses	$	837,738	$	552,868	(284,870)		(52)	$	1,466,374	$	1,164,552	(301,822)		(26)

Compensation and Benefits. The decreases in compensation and benefits were primarily driven by the performance-based, acquisition-related compensation arrangements (“earnouts”) that were established in connection with the acquisition of Landmark Partners, LLC (the “Landmark Acquisition”), the acquisition of Black Creek Group’s real estate investment advisory and distribution business (the “Black Creek Acquisition”) and Infrastructure Debt Acquisition, which were based on the achievement of revenue targets for certain funds. As these earnouts are subject to the continued and future services of senior professionals and advisors, they are required to be recorded as compensation expense and recognized ratably over the respective service periods. The associated compensation expense decreased by $58.9 million and $106.3 million for the three and six months ended June 30, 2023, respectively, compared to the three and six months ended June 30, 2022.

The revenue targets for the Black Creek Acquisition earnout were achieved and the maximum contingent payment was recorded during the third quarter of 2022. Compensation expense related to the Black Creek earnout was $49.8 million and $87.5 million for the three and six months ended June 30, 2022, respectively.

In connection with the fundraising for an acquired Landmark private equity secondaries fund, the revenue targets on which the Landmark earnout were contingent were not achieved and the associated compensation expense was reversed during the third quarter of 2022. Compensation expense related to the Landmark earnout was $6.9 million and $15.7 million for the three and six months ended June 30, 2022, respectively.

The revenue target for one of the infrastructure debt funds from the Infrastructure Debt Acquisition earnout was achieved during the fourth quarter of 2022. In connection with the achievement of the earnout for the one infrastructure debt fund, a portion of the associated liability was paid in cash and the remaining portion was equity-settled. Compensation expense related to the achieved portion of the award was $2.2 million and $3.3 million for the three and six months ended June 30, 2022, respectively. The excess fair value of $14.8 million over the liability at the time the earnout was achieved will be recognized over the remaining four year service period as equity-based compensation expense, including $0.9 million and $1.8 million that was recognized during the three and six months ended June 30, 2023, respectively. Compensation expense related to the other infrastructure debt funds subject to the Infrastructure Debt earnout was $0.6 million and $0.7 million for the three months ended June 30, 2023 and 2022, respectively, and $1.2 million and $1.0 million for the six months ended June 30, 2023 and 2022, respectively. See “Note 7. Commitments and Contingencies” for a further description of the contingent liabilities related to the Infrastructure Debt Acquisition arrangement.

The decreases in compensation and benefits for the three and six months ended June 30, 2023 compared to the three and six months ended June 30, 2022 were partially offset by: (i) increases in salary expense of $18.0 million and $38.9 million, respectively, primarily attributable to headcount growth to support the expansion of our business; (ii) higher Part I Fees compensation of $16.8 million and $36.5 million, respectively; and (iii) higher equity-based compensation expense of $12.6 million and $28.2 million, respectively, as discussed below. Average headcount increased by 19% to 2,577 professionals for the year-to-date period in 2023 from 2,170 professionals for the same period in 2022.

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The following table presents equity-based compensation expense based on the different types of restricted unit awards ($ in thousands):

	Three months ended June 30,				Favorable (Unfavorable)			Six months ended June 30,				Favorable (Unfavorable)
	2023		2022		$ Change		% Change	2023		2022		$ Change		% Change
Awards that do not recur annually:
Multi-year future grants	$	13,039	$	10,979	$	(2,060)	(19)%	$	25,254	$	21,171	$	(4,083)	(19)%
Other awards that do not recur annually	2,388		1,657		(731)		(44)	4,936		4,181		(755)		(18)
Total awards that do not recur annually	15,427		12,636		(2,791)		(22)	30,190		25,352		(4,838)		(19)
Recurring annual awards:
Discretionary awards	30,395		24,166		(6,229)		(26)	58,600		45,135		(13,465)		(30)
Bonus awards	16,460		12,833		(3,627)		(28)	42,743		32,799		(9,944)		(30)
Total recurring annual awards	46,855		36,999		(9,856)		(27)	101,343		77,934		(23,409)		(30)
Equity-based compensation expense	$	62,282	$	49,635	(12,647)		(25)	$	131,533	$	103,286	(28,247)		(27)

The increases in equity-based compensation expense for the three and six months ended June 30, 2023 compared to the three and six months ended June 30, 2022 were primarily attributable to the increase in awards granted under our recurring annual award programs, which included the acceleration of $10.0 million and $7.5 million of expense for the six months ended June 30, 2023 and 2022, respectively, in connection with awards made to certain individuals that meet immediate vesting conditions based on the combination of their age and years of service.

For detail regarding the fluctuations of compensation and benefits within each of our segments see “—Results of Operations by Segment.”

Performance Related Compensation. Changes in performance related compensation are directly associated with the changes in carried interest allocation and incentive fees described above and include associated payroll-related tax expenses and performance allocations to charitable organizations as part of our philanthropic initiatives.

General, Administrative and Other Expenses. Travel, marketing and certain fringe benefits, collectively increased by $3.9 million and $15.4 million for the three and six months ended June 30, 2023, respectively, compared to the same periods in 2022 as we: (i) conducted more in-person company meetings and events with a focus on promoting collaboration; and (ii) continued to increase our marketing efforts driven by more investor meetings and events. Certain expenses have also increased during the comparative periods, including occupancy costs to support our growing headcount, as well as information services and information technology costs to support the expansion of our business. Collectively, these expenses increased by $6.4 million and $12.3 million for the three and six months ended June 30, 2023, respectively, compared to the same periods in 2022. Additionally, professional service fees have increased by $3.1 million and $8.4 million for the three and six months ended June 30, 2023, respectively, compared to the same periods in 2022 primarily to support the expanding platform and the reorganization of our income tax compliance function.

In addition, amortization expense increased by $8.1 million for the six months ended June 30, 2023 compared to the six months ended June 30, 2022. In connection with a merger agreement to acquire the remaining 20% ownership interest in SSG Capital Holdings Limited and its operating subsidiaries’ (“SSG” and subsequently rebranded as “Ares SSG”) fee-generating business that was retained by the former owners of SSG (the “SSG Buyout”), we made the decision to rebrand Ares SSG as Asia credit and discontinued the ongoing use of the SSG trade name. As a result, the Company recorded a non-cash impairment charge of $7.8 million representing the carrying value of SSG’s trade name during the first quarter of 2023. During the second quarter of 2023, we recognized non-cash impairment charges of $5.1 million to the fair value of management contracts of certain funds in connection with lower than expected future fee revenue generated from these funds. The majority of the impairment charges was recognized due to the shortened investment period of an infrastructure debt fund as we directed existing limited partner commitments to other investment vehicles within the strategy. During the third quarter of 2022, we recognized non-cash impairment charges of $181.6 million in connection with intangible assets associated with Landmark’s trade name, management contracts of certain Landmark funds, Black Creek funds and SSG funds and resulted in the amortization expense associated with these intangible assets to decrease in subsequent periods. Excluding the non-cash impairment charges described above, amortization expense decreased by $5.2 million and $4.7 million for the three and six months ended June 30, 2023, respectively, compared to the same periods in 2022.

Acquisition-related costs decreased by $2.5 million for the six months ended June 30, 2023 compared to the same period in 2022 due to timing of strategic opportunities. Acquisition-related costs generally precede a business combination, vary with the complexity of the transaction and may occur even when acquisitions are not successfully completed.

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Other income, net.

	Three months ended June 30,				Favorable (Unfavorable)			Six months ended June 30,				Favorable (Unfavorable)
	2023		2022		$ Change		% Change	2023		2022		$ Change		% Change
Other income (expense)
Net realized and unrealized gains (losses) on investments	$	5,481	$	(1,775)	$	7,256	NM	$	6,996	$	6,334	$	662	10%
Interest and dividend income	2,690		1,476		1,214		82	6,529		2,978		3,551		119
Interest expense	(25,839)		(17,221)		(8,618)		(50)	(50,825)		(32,867)		(17,958)		(55)
Other income (expense), net	(5,887)		5,809		(11,696)		NM	(6,810)		7,593		(14,403)		NM
Net realized and unrealized gains (losses) on investments of Consolidated Funds	98,426		(7,907)		106,333		NM	109,126		8,061		101,065		NM
Interest and other income of Consolidated Funds	234,454		117,375		117,079		100	457,392		237,665		219,727		92
Interest expense of Consolidated Funds	(182,904)		(79,253)		(103,651)		(131)	(339,591)		(153,266)		(186,325)		(122)
Total other income, net	$	126,421	$	18,504	107,917		NM	$	182,817	$	76,498	106,319		139

Net Realized and Unrealized Gains (Losses) on Investments. The activity for the three and six months ended June 30, 2023 was primarily attributable to unrealized gains from APMF, partially offset by unrealized losses from our investments in the subordinated notes of U.S. CLOs. The activity for the three and six months ended June 30, 2023 and 2022 also included unrealized gains from certain strategic initiative related investments made in connection with our acquisition of SSG.

The activity for the three months ended June 30, 2022 was attributable to unrealized losses on our investments in the subordinated notes of U.S. CLOs. The activity for the three and six months ended June 30, 2022 was driven by a declining macroeconomic environment that negatively impacted the global equity and credit markets, leading to a broad decrease in valuations.

Interest Expense. Higher average interest rates, driven by rising SOFR rates, and a higher average outstanding balance of the Credit Facility contributed to an increase in interest expense for the three and six months ended June 30, 2023 compared to the same periods in 2022.

Other Income (Expense), Net. The activity for the three and six months ended June 30, 2023 and 2022 largely represents transaction gains (losses) associated with currency fluctuations impacting the revaluation of assets and liabilities denominated in foreign currencies other than an entity’s functional currency. Transaction losses of $6.0 million and $6.9 million for the three and six months ended June 30, 2023, respectively, were primarily attributable to the British pound strengthening against the Euro and U.S. dollar, while transaction gains of $5.8 million and $8.8 million for the three and six months ended June 30, 2022, respectively, were primarily attributable to the British pound weakening against Euro and U.S. dollar.

Income Tax Expense.

	Three months ended June 30,				Favorable (Unfavorable)			Six months ended June 30,				Favorable (Unfavorable)
	2023		2022		$ Change		% Change	2023		2022		$ Change		% Change
Income before taxes	$	381,969	$	67,066	$	314,903	NM	$	623,091	$	228,375	$	394,716	173%
Income tax expense	(49,714)		(13,460)		(36,254)		(269)	(83,520)		(33,871)		(49,649)		(147)
Net income	$	332,255	$	53,606	278,649		NM	$	539,571	$	194,504	345,067		177

Income Tax Expense The increases in income tax expense were attributable to higher pre-tax income allocable to AMC for the three and six months ended June 30, 2023 compared to the three and six months ended June 30, 2022. The calculation of income taxes is also sensitive to any changes in weighted average daily ownership. The weighted average daily ownership for AMC common stockholders increased from 59.7% and 59.6% for the three and six months ended June 30, 2022, respectively, to 60.4% and 60.3% for the three and six months ended June 30, 2023, respectively. The changes in ownership were primarily driven by the issuance of Class A common stock in connection with stock option exercises, vesting of restricted stock awards and the completion of the SSG Buyout. The increase in the weighted average daily ownership for AMC common stockholders was partially offset by the issuance of AOG Units in connection with the settlement of the Black Creek earnout that increased the ownership of AOG Units not held by AMC.

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Redeemable and Non-Controlling Interests.

	Three months ended June 30,				Favorable (Unfavorable)			Six months ended June 30,				Favorable (Unfavorable)
	2023		2022		$ Change		% Change	2023		2022		$ Change		% Change
Net income	$	332,255	$	53,606	$	278,649	NM	$	539,571	$	194,504	$	345,067	177%
Less: Net income (loss) attributable to non-controlling interests in Consolidated Funds	67,681		(15,022)		82,703		NM	94,374		32,360		62,014		192
Net income attributable to Ares Operating Group entities	264,574		68,628		195,946		286	445,197		162,144		283,053		175
Less: Net income (loss) attributable to redeemable interest in Ares Operating Group entities	734		(457)		1,191		NM	(1,090)		(58)		(1,032)		NM
Less: Net income attributable to non-controlling interests in Ares Operating Group entities	119,326		29,354		89,972		NM	207,734		76,608		131,126		171
Net income attributable to Ares Management Corporation Class A and non-voting common stockholders	$	144,514	$	39,731	104,783		264	$	238,553	$	85,594	152,959		179

Redeemable and Non-Controlling Interests. Net income (loss) attributable to redeemable and non-controlling interests in AOG entities represents results attributable to the holders of AOG Units and other ownership interests that are not held by AMC. In connection with our acquisition of SSG, the former owners of SSG retained an ownership interest in a subsidiary of an AOG entity that is reflected as redeemable interest in AOG entities. Net income (loss) attributable to redeemable interest in AOG entities is allocated based on the ownership percentage for periods presented. In connection with the SSG Buyout, a portion of the redeemable interest in AOG entities was purchased on March 31, 2023 and the Company now owns 100% of Ares SSG’s fee-generating business. As the SSG Buyout was completed on the last day of the first quarter, 100% of the income associated with Ares SSG’s fee generating business is attributable to AOG entities beginning in the second quarter. Following the SSG Buyout, legacy owners of SSG retained an ownership interest in certain non-controlled investments that will continue to be reflected as redeemable interests, and the income generated by these investments will continue to be allocated based on ownership. Net income attributable to non-controlling interests in AOG entities is generally allocated based on the weighted average daily ownership of the other AOG unitholders, except for income (loss) generated from certain joint venture partnerships. Net income (loss) is allocated to other strategic distribution partners with whom we have established joint ventures based on the respective ownership percentages and based on the activity of certain membership interests. We allocated net income (loss) based on ownership percentages of the strategic distribution partners and the activity of those membership interests as follows: net loss of $4.5 million and net income of $3.0 million for the three and six months ended June 30, 2023, respectively, and net loss of $3.6 million and net income of $1.0 million for the three and six months ended June 30, 2022, respectively.

The changes in net income attributable to non-controlling interests in AOG entities over the comparative periods is a result of the respective changes in income before taxes and weighted average daily ownership. The weighted average daily ownership for the non-controlling AOG unitholders decreased from 40.3% and 40.4% for the three and six months ended June 30, 2022 to 39.6% and 39.8% for the three and six months ended June 30, 2023, respectively.

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Consolidated Results of Operations of the Consolidated Funds

The following table presents the results of operations of the Consolidated Funds ($ in thousands):

	Three months ended June 30,				Favorable (Unfavorable)			Six months ended June 30,				Favorable (Unfavorable)
	2023		2022		$ Change		% Change	2023		2022		$ Change		% Change
Expenses of the Consolidated Funds	$	(13,255)	$	(13,454)	$	199	1%	$	(21,107)	$	(17,967)	$	(3,140)	(17)%
Net realized and unrealized gains (losses) on investments of Consolidated Funds	98,426		(7,907)		106,333		NM	109,126		8,061		101,065		NM
Interest and other income of Consolidated Funds	234,454		117,375		117,079		100	457,392		237,665		219,727		92
Interest expense of Consolidated Funds	(182,904)		(79,253)		(103,651)		(131)	(339,591)		(153,266)		(186,325)		(122)
Income before taxes	136,721		16,761		119,960		NM	205,820		74,493		131,327		176
Income tax expense of Consolidated Funds	(81)		(23)		(58)		(252)	(559)		(48)		(511)		NM
Net income	136,640		16,738		119,902		NM	205,261		74,445		130,816		176
Less: Revenues attributable to Ares Management Corporation eliminated upon consolidation	76,440		33,557		42,883		128	109,128		56,003		53,125		95
Less: Other income (expense), net attributable to Ares Management Corporation eliminated upon consolidation	(7,450)		(1,570)		(5,880)		NM	2,133		(13,691)		15,824		NM
General, administrative and other expense attributable to Ares Management Corporation eliminated upon consolidation	31		227		196		86	374		227		(147)		(65)
Net income (loss) attributable to non-controlling interests in Consolidated Funds	$	67,681	$	(15,022)	82,703		NM	$	94,374	$	32,360	62,014		192

The results of operations of the Consolidated Funds primarily represent activities from certain CLOs that we are deemed to control. Expenses primarily reflect professional service fees that were incurred as a result of debt issuance costs related to the issuance of new, refinanced or restructured CLOs. These fees were expensed in the period incurred, as CLO debt is recorded at fair value on our Condensed Consolidated Statements of Financial Condition. As of June 30, 2023 and June 30, 2022, we consolidated 26 and 24 CLOs, respectively. The expenses for the three and six months ended June 30, 2023 were primarily driven by professional service fees incurred by AAC I in connection with a potential business combination, partially offset by lower expenses due to the deconsolidation of a commercial finance fund during the second quarter of 2023. For the three and six months ended June 30, 2022, expenses were primarily driven by professional fees incurred from the issuance of a new U.S. CLO.

The increases in net realized and unrealized gains on investments over the comparative periods were primarily driven by the increase in value of certain investments from a fund invested in insurance companies, a European liquid credit vehicle and a private equity fund, partially offset by the unrealized losses from the increase in value of warrant liabilities of AAC I and by lower unrealized gains from certain investments of an Asian corporate private equity fund in the current year periods. The increases in interest and other income and in interest expense were primarily attributable to the impact from rising interest rates on our consolidated CLOs. Interest and other income and interest expense also increased due to two consolidated CLOs that were launched subsequent to the second quarter of 2022.

Revenues, other income (expense), net and general, administrative and other expense attributable to AMC represents management fees, incentive fees, principal investment income, administrative, transaction and other fees and general, administrative and other expense that are attributable to AMC’s proportional share of the results of the Consolidated Funds that is eliminated from the respective components of AMC’s results upon consolidation. The increases in revenues attributable to AMC for the three and six months ended June 30, 2023 compared to the same periods in 2022 were primarily attributable to higher principal investment income and carried interest allocation from a fund invested in insurance companies.

Other income (expense), net attributable to AMC for the three and six months ended June 30, 2023 primarily consisted of unrealized losses on our investment in AAC II, partially offset by unrealized gain on our investment in a vehicle that primarily invests in private equity strategies. The activity for the six months ended June 30, 2023 also included unrealized gains on our investment in AAC I. The activity for the three and six months ended June 30, 2022 primarily consisted of unrealized losses on our investments in the subordinated notes of CLOs and AAC I.

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Segment Analysis

For segment reporting purposes, revenues and expenses are presented before giving effect to the results of our Consolidated Funds and the results attributable to non-controlling interests of joint ventures that we consolidate. As a result, segment revenues from management fees, fee related performance revenues, performance income and investment income are different than those presented on a consolidated basis in accordance with GAAP. Revenues recognized from Consolidated Funds are eliminated in consolidation and results attributable to the non-controlling interests of joint ventures have been excluded by us. Furthermore, expenses and the effects of other income (expense) are different than related amounts presented on a consolidated basis in accordance with GAAP due to the exclusion of the results of Consolidated Funds and the non-controlling interests of joint ventures.

Non-GAAP Financial Measures

We use the following non-GAAP measures to make operating decisions, assess performance and allocate resources:

•Fee Related Earnings (“FRE”)

•Realized Income (“RI”)

These non-GAAP financial measures supplement and should be considered in addition to and not in lieu of, the results of operations, which are discussed further under “—Components of Consolidated Results of Operations” and are prepared in accordance with GAAP. We operate through our distinct operating segments. On March 31, 2023, we executed the SSG Buyout. We rebranded Ares SSG as Ares Asia and the Ares SSG credit business, including the Asian special situations, Asian secured lending and APAC direct lending strategies, as Asia credit. Asia credit has been reclassified effective January 1, 2023 and is now presented within the Credit Group. In connection with this reclassification, we will no longer use Strategic Initiatives to describe all other operating segments, instead reporting the collective results as Other. Historical periods have been modified to conform to the current period presentation. The following table sets forth FRE and RI by reportable segment and OMG ($ in thousands):

	Three months ended June 30,				Favorable (Unfavorable)			Six months ended June 30,				Favorable (Unfavorable)
	2023		2022		$ Change		% Change	2023		2022		$ Change		% Change
Fee Related Earnings:
Credit Group	$	285,661	$	226,909	$	58,752	26%	$	562,970	$	433,613	$	129,357	30%
Private Equity Group	28,174		15,631		12,543		80	51,628		36,031		15,597		43
Real Assets Group	55,918		49,025		6,893		14	109,580		88,462		21,118		24
Secondaries Group	21,314		28,111		(6,797)		(24)	46,744		57,897		(11,153)		(19)
Other	2,709		371		2,338		NM	3,990		289		3,701		NM
Operations Management Group	(127,630)		(100,268)		(27,362)		(27)	(254,129)		(190,843)		(63,286)		(33)
Fee Related Earnings	$	266,146	$	219,779	46,367		21	$	520,783	$	425,449	95,334		22
Realized Income:
Credit Group	$	324,617	$	250,716	$	73,901	29%	$	602,626	$	462,878	$	139,748	30%
Private Equity Group	42,341		12,869		29,472		229	66,273		33,427		32,846		98
Real Assets Group	53,725		55,603		(1,878)		(3)	105,868		110,965		(5,097)		(5)
Secondaries Group	19,827		29,396		(9,569)		(33)	44,177		59,361		(15,184)		(26)
Other	(987)		103		(1,090)		NM	1,488		(4,901)		6,389		NM
Operations Management Group	(127,313)		(101,442)		(25,871)		(26)	(253,930)		(192,468)		(61,462)		(32)
Realized Income	$	312,210	$	247,245	64,965		26	$	566,502	$	469,262	97,240		21

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Income before provision for income taxes is the GAAP financial measure most comparable to RI and FRE. The following table presents the reconciliation of income before taxes as reported within the Condensed Consolidated Statements of Operations to RI and FRE of the reportable segments and OMG ($ in thousands):

	Three months ended June 30,				Six months ended June 30,
	2023		2022		2023		2022
Income before taxes	$	381,969	$	67,066	$	623,091	$	228,375
Adjustments:
Depreciation and amortization expense	42,991		40,330		88,650		78,456
Equity compensation expense	62,284		50,144		130,988		103,161
Acquisition-related compensation expense(1)	600		59,491		1,242		107,492
Acquisition and merger-related expense	2,757		1,152		7,712		10,194
Placement fee adjustment	(3,744)		(1,425)		(6,976)		(2,118)
Other expense, net	212		12		303		1,993
(Income) loss before taxes of non-controlling interests in consolidated subsidiaries	3,786		4,022		(1,885)		(967)
(Income) loss before taxes of non-controlling interests in Consolidated Funds, net of eliminations	(67,762)		14,999		(94,933)		(32,408)
Total performance (income) loss—unrealized	(288,220)		24,031		(415,933)		(109,501)
Total performance related compensation—unrealized	215,496		(8,549)		300,646		82,649
Total net investment (income) loss—unrealized	(38,159)		(4,028)		(66,403)		1,936
Realized Income	312,210		247,245		566,502		469,262
Total performance income—realized	(140,635)		(70,094)		(171,771)		(113,962)
Total performance related compensation—realized	99,109		44,058		122,968		72,633
Total investment (income) loss—realized	(4,538)		(1,430)		3,084		(2,484)
Fee Related Earnings	$	266,146	$	219,779	$	520,783	$	425,449

(1)Represents contingent obligations (earnouts) in connection with the Landmark Acquisition, the Black Creek Acquisition and the Infrastructure Debt Acquisition that are recorded as compensation expense and are presented within compensation and benefits within the Company’s Condensed Consolidated Statements of Operations.

For the specific components and calculations of these non-GAAP measures, as well as additional reconciliations to the most comparable measures in accordance with GAAP, see “Note 13. Segment Reporting” within our unaudited condensed consolidated financial statements included in this Quarterly Report on Form 10-Q. Discussed below are our results of operations for our reportable segments and OMG.

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Results of Operations by Segment

Credit Group—Three and Six Months Ended June 30, 2023 Compared to Three and Six Months Ended June 30, 2022

Fee Related Earnings:

The following table presents the components of the Credit Group’s FRE ($ in thousands):

	Three months ended June 30,				Favorable (Unfavorable)			Six months ended June 30,				Favorable (Unfavorable)
	2023		2022		$ Change		% Change	2023		2022		$ Change		% Change
Management fees	$	422,662	$	338,134	$	84,528	25%	$	828,312	$	655,623	$	172,689	26%
Fee related performance revenues	222		275		(53)		(19)	822		12,628		(11,806)		(93)
Other fees	9,142		6,633		2,509		38	18,012		12,399		5,613		45
Compensation and benefits	(122,922)		(98,688)		(24,234)		(25)	(239,138)		(209,399)		(29,739)		(14)
General, administrative and other expenses	(23,443)		(19,445)		(3,998)		(21)	(45,038)		(37,638)		(7,400)		(20)
Fee Related Earnings	$	285,661	$	226,909	58,752		26	$	562,970	$	433,613	129,357		30

Management Fees. The chart below presents Credit Group management fees and effective management fee rates ($ in millions):

Management fees on existing funds increased primarily from deployment of capital with Pathfinder, an open-end core alternative credit fund, ACE V, Ares Private Credit Solutions II, L.P. (“PCS II”) and Ares Senior Direct Lending Fund II, L.P. (“SDL II”) collectively generating additional fees of $28.7 million and $59.4 million for the three and six months ended June 30, 2023, respectively, compared to the three and six months ended June 30, 2022. Management fees from ARCC, excluding Part I Fees described below, increased by $4.1 million and $10.2 million for the three and six months ended June 30, 2023,

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respectively, compared to the three and six months ended June 30, 2022 primarily due to an increase in the average size of ARCC’s portfolio. Excluding one-time catch-up fees, management fees from our sixth Asian special situations fund increased by $3.3 million and $6.0 million for the three and six months ended June 30, 2023, respectively, compared to the same periods in 2022 primarily due to new limited partner capital commitments and to the incremental fees attributable to us following the completion of the SSG Buyout on March 31, 2023. The remaining increase in management fees from funds in existence in both periods was primarily driven by deployment of capital in other direct lending funds and SMAs. Management fees from CLOs also increased for the three and six months ended June 30, 2023 compared to the same periods in 2022 primarily due to the net addition of five CLOs since June 30, 2022.

Part I Fees increased for the three and six months ended June 30, 2023 compared to the three and six months ended June 30, 2022 primarily due to an increase in pre-incentive fee net investment income generated by ARCC and CADC, driven by an increase in the average size of their portfolios and by the impact of rising interest rates, given their primarily floating-rate loan portfolios.

The increases in effective management fee rate for the three and six months ended June 30, 2023 compared to the three and six months ended June 30, 2022 were primarily driven by the increases in Part I Fees’ contribution to the effective management fee rate and deployment in ACE V, which has a higher effective management fee rate than the Credit Group’s average effective management fee rate.

Fee Related Performance Revenues. We expect the majority of our fee related performance revenues to be recognized in the fourth quarter in connection with the typical measurement period end date of each applicable fund’s performance against the annual performance hurdles. The decrease for the six months ended June 30, 2023 compared to the six months ended June 30, 2022 was primarily attributable to timing of incentive fees recognized from direct lending funds in the prior year period once the associated performance conditions were met and the fees were no longer subject to reversal.

Other Fees. The increases in other fees for the three and six months ended June 30, 2023 compared to the same periods in 2022 were primarily driven by: (i) higher transaction fees of $0.9 million and $2.9 million, respectively, representing a portion of the loan origination income generated from certain credit funds; and (ii) higher administrative service fees of $1.7 million and $2.8 million, respectively, mostly earned from certain private funds that pay on invested capital, driven by additional deployment.

Compensation and Benefits. The increases in compensation and benefits for the three and six months ended June 30, 2023 compared to the same periods in 2022 were primarily driven by: (i) higher Part I Fees compensation of $16.8 million and $36.5 million, respectively; and (ii) an increase in salary expense of $4.5 million and $7.6 million, respectively, primarily attributable to headcount growth to support the expansion of our business. The increase in compensation and benefits for the six months ended June 30, 2023 compared to the same period in 2022 was partially offset by: (i) lower fee related performance compensation of $8.0 million corresponding to the decreases in fee related performance revenues; (ii) decrease in payroll related taxes of $2.7 million, primarily attributable to fewer restricted units vesting during 2023; and (iii) lower incentive-based compensation that we believe will increase throughout the remainder of the current year and exceed prior year levels. The increases described above included $1.6 million of expense recognized in connection with the SSG Buyout which did not have comparable results as the transaction closed on March 31, 2023.

Average headcount increased by 12% to 532 investment and investment support professionals for the year-to-date period in 2023 from 477 professionals for the same period in 2022 as we continued to add professionals primarily to support our growing U.S. direct lending and Asia credit platforms.

General, Administrative and Other Expenses. Occupancy costs, information technology and information services collectively increased by $2.6 million and $4.4 million for the three and six months ended June 30, 2023, respectively, compared to the same periods in 2022, to support our growing headcount and the expansion of our business. Travel and marketing have also increased by $0.9 million and $2.7 million for the three and six months ended June 30, 2023, respectively, compared to the same periods in 2022, as marketing efforts continued to increase driven by more investor meetings and events. The increases described above included $0.4 million of expense recognized in connection with the SSG Buyout which did not have comparable results as the transaction closed on March 31, 2023.

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Realized Income:

The following table presents the components of the Credit Group’s RI ($ in thousands):

	Three months ended June 30,				Favorable (Unfavorable)			Six months ended June 30,				Favorable (Unfavorable)
	2023		2022		$ Change		% Change	2023		2022		$ Change		% Change
Fee Related Earnings	$	285,661	$	226,909	$	58,752	26%	$	562,970	$	433,613	$	129,357	30%
Performance income—realized	62,760		48,533		14,227		29	69,353		55,896		13,457		24
Performance related compensation—realized	(39,040)		(29,358)		(9,682)		(33)	(44,037)		(33,938)		(10,099)		(30)
Realized net performance income	23,720		19,175		4,545		24	25,316		21,958		3,358		15
Investment income—realized	17,565		1,607		15,958		NM	18,071		2,022		16,049		NM
Interest and other investment income—realized	5,672		6,682		(1,010)		(15)	12,090		12,410		(320)		(3)
Interest expense	(8,001)		(3,657)		(4,344)		(119)	(15,821)		(7,125)		(8,696)		(122)
Realized net investment income	15,236		4,632		10,604		229	14,340		7,307		7,033		96
Realized Income	$	324,617	$	250,716	73,901		29	$	602,626	$	462,878	139,748		30

Realized net performance income for the three and six months ended June 30, 2023 and 2022 was primarily attributable to tax distributions from ACE III, ACE IV and PCS I. Realized net performance income for the three and six months ended June 30, 2023 also included tax distributions from ACE V and incentive fees from two alternative credit funds. Realized net performance income for the three and six months ended June 30, 2022 also included incentive fees from one alternative credit fund.

Realized net investment income for the three and six months ended June 30, 2023 was primarily attributable to realized gains from the sale of our investment in a commercial finance fund. The activity for the three and six months ended June 30, 2023 and 2022 included realized net investment income attributable to interest income generated from our CLO investments. Realized net investment income for the six months ended June 30, 2023 and June 30, 2022 also included income recognized in connection with distributions from a commercial finance fund and will not recur given the sale of this investment, as described above. Realized net investment income for the three and six months ended June 30, 2022 also included liquidating distributions from a European direct lending fund. Interest expense, which is allocated among our segments based on the cost basis of balance sheet investments, increased over the comparative periods primarily due to rising SOFR rates and a higher average outstanding balance of the Credit Facility.

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Credit Group—Performance Income

The following table presents the accrued carried interest, also referred to as accrued performance income, and related performance compensation for the Credit Group. Accrued net performance income excludes net performance income that has been realized but not yet received as of the reporting date ($ in thousands):

	As of June 30, 2023						As of December 31, 2022
	Accrued Performance Income		Accrued Performance Compensation		Accrued Net Performance Income		Accrued Performance Income		Accrued Performance Compensation		Accrued Net Performance Income
ACE III	$	101,718	$	61,031	$	40,687	$	100,774	$	60,465	$	40,309
ACE IV	187,009		115,946		71,063		168,204		104,286		63,918
ACE V	175,786		105,472		70,314		115,969		69,581		46,388
PCS I	110,984		65,580		45,404		98,143		57,994		40,149
Pathfinder	123,569		105,034		18,535		88,879		75,547		13,332
Other credit funds	126,590		71,882		54,708		93,640		52,482		41,158
Total Credit Group	$	825,656	$	524,945	$	300,711	$	665,609	$	420,355	$	245,254

The following table presents the change in accrued performance income for the Credit Group ($ in thousands):

		As of December 31, 2022		Activity during the period						As of June 30, 2023
	Waterfall Type	Accrued Performance Income		Change in Unrealized		Realized		Other Adjustments		Accrued Performance Income
Accrued Carried Interest
ACE III	European	$	100,774	$	5,340	$	(4,284)	$	(112)	$	101,718
ACE IV	European	168,204		40,163		(20,912)		(446)		187,009
ACE V	European	115,969		78,718		(18,585)		(316)		175,786
PCS I	European	98,143		22,520		(9,876)		197		110,984
Pathfinder	European	88,879		34,690		—		—		123,569
Other credit funds	European	91,997		40,770		(8,147)		1,008		125,628
Other credit funds	American	1,643		701		(1,325)		(57)		962
Total accrued carried interest		665,609		222,902		(63,129)		274		825,656
Other credit funds	Incentive	—		6,224		(6,224)		—		—
Total Credit Group		$	665,609	$	229,126	$	(69,353)	$	274	$	825,656

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Credit Group—Assets Under Management

The tables below present rollforwards of AUM for the Credit Group ($ in millions):

	Liquid Credit		Alternative Credit		U.S. Direct Lending		European Direct Lending		Asia Credit		Other(1)		Total Credit Group
Balance at 3/31/2023	$	44,496	$	23,817	$	100,212	$	55,034	$	11,334	$	250	$	235,143
Net new par/equity commitments	383		2,013		2,387		5,013		65		75		9,936
Net new debt commitments	—		341		2,494		—		—		—		2,835
Capital reductions	(203)		—		(149)		—		—		—		(352)
Distributions	(59)		(434)		(766)		(453)		(170)		—		(1,882)
Redemptions	(220)		(136)		(78)		—		—		—		(434)
Net allocations among investment strategies	(33)		1,772		—		—		—		—		1,739
Change in fund value	354		441		1,343		891		127		—		3,156
Balance at 6/30/2023	$	44,718	$	27,814	$	105,443	$	60,485	$	11,356	$	325	$	250,141
	Liquid Credit		Alternative Credit		U.S. Direct Lending		European Direct Lending		Asia Credit		Other		Total Credit Group
Balance at 3/31/2022	$	41,615	$	18,594	$	88,397	$	48,317	$	9,783	$	—	$	206,706
Net new par/equity commitments	653		854		3,155		266		275		—		5,203
Net new debt commitments	1,556		—		1,473		1,154		—		—		4,183
Capital reductions	(45)		—		(1)		(12)		—		—		(58)
Distributions	(25)		(126)		(389)		(290)		(114)		—		(944)
Redemptions	(244)		(95)		(55)		—		—		—		(394)
Net allocations among investment strategies	—		443		—		—		—		—		443
Change in fund value	(1,397)		(421)		130		(1,596)		(125)		—		(3,409)
Balance at 6/30/2022	$	42,113	$	19,249	$	92,710	$	47,839	$	9,819	$	—	$	211,730
	Liquid Credit		Alternative Credit		U.S. Direct Lending		European Direct Lending		Asia Credit		Other(1)		Total Credit Group
Balance at 12/31/2022	$	43,864	$	21,363	$	98,327	$	50,642	$	11,383	$	—	$	225,579
Net new par/equity commitments	785		4,302		4,163		9,337		65		325		18,977
Net new debt commitments	466		341		3,234		217		—		—		4,258
Capital reductions	(265)		—		(987)		(1,181)		—		—		(2,433)
Distributions	(201)		(682)		(1,470)		(851)		(205)		—		(3,409)
Redemptions	(764)		(876)		(170)		—		—		—		(1,810)
Net allocations among investment strategies	(30)		2,584		—		—		—		—		2,554
Change in fund value	863		782		2,346		2,321		113		—		6,425
Balance at 6/30/2023	$	44,718	$	27,814	$	105,443	$	60,485	$	11,356	$	325	$	250,141
	Liquid Credit		Alternative Credit		U.S. Direct Lending		European Direct Lending		Asia Credit		Other		Total Credit Group
Balance at 12/31/2021	$	40,335	$	17,424	$	85,849	$	49,102	$	8,695	$	—	$	201,405
Net new par/equity commitments	1,632		2,276		4,681		331		1,507		—		10,427
Net new debt commitments	2,567		—		2,802		1,154		—		—		6,523
Capital reductions	(118)		—		(325)		(12)		(5)		—		(460)
Distributions	(41)		(238)		(951)		(566)		(275)		—		(2,071)
Redemptions	(415)		(299)		(90)		—		—		—		(804)
Net allocations among investment strategies	(3)		576		—		—		—		—		573
Change in fund value	(1,844)		(490)		744		(2,170)		(103)		—		(3,863)
Balance at 6/30/2022	$	42,113	$	19,249	$	92,710	$	47,839	$	9,819	$	—	$	211,730
(1) Activity within Other represents equity commitments to the platform that have not yet been allocated to an investment strategy.

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The components of our AUM for the Credit Group are presented below ($ in billions):

    

AUM: $250.1 AUM: $211.7

FPAUM Non-fee paying(1) AUM not yet paying fees

(1) Includes $14.9 billion and $12.4 billion of AUM of funds from which we indirectly earn management fees as of June 30, 2023 and 2022, respectively, and includes $1.2 billion of non-fee paying AUM based on our general partner commitment as of June 30, 2023 and 2022, respectively.

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Credit Group—Fee Paying AUM

The tables below present rollforwards of fee paying AUM for the Credit Group ($ in millions):

	Liquid Credit		Alternative Credit		U.S. Direct Lending		European Direct Lending		Asia Credit			Total Credit Group
Balance at 3/31/2023	$	42,632	$	16,261	$	57,899	$	31,206	$	5,751		$	153,749
Commitments	883		40		456		—		65			1,444
Deployment/subscriptions/increase in leverage	27		2,082		2,497		1,100		609			6,315
Capital reductions	(203)		—		(54)		(87)		(3)			(347)
Distributions	(92)		(232)		(694)		(122)		(791)			(1,931)
Redemptions	(223)		(136)		(78)		(36)		—			(473)
Net allocations among investment strategies	(34)		1,804		—		—		—		0	1,770
Change in fund value	458		84		420		262		—			1,224
Balance at 6/30/2023	$	43,448	$	19,903	$	60,446	$	32,323	$	5,631		$	161,751
	Liquid Credit		Alternative Credit		U.S. Direct Lending		European Direct Lending		Asia Credit			Total Credit Group
Balance at 3/31/2022	$	39,043	$	11,115	$	47,187	$	24,091	$	5,425		$	126,861
Commitments	2,905		171		445		—		275			3,796
Deployment/subscriptions/increase in leverage	—		1,112		4,847		2,454		573			8,986
Capital reductions	(74)		(14)		(49)		(55)		(223)			(415)
Distributions	(38)		(49)		(608)		(115)		(323)			(1,133)
Redemptions	(247)		(95)		(55)		(79)		—			(476)
Net allocations among investment strategies	—		403		—		—		—			403
Change in fund value	(1,367)		(230)		2		(977)		(19)			(2,591)
Change in fee basis	—		—		—		—		(8)			(8)
Balance at 6/30/2022	$	40,222	$	12,413	$	51,769	$	25,319	$	5,700		$	135,423
	Liquid Credit		Alternative Credit		U.S. Direct Lending		European Direct Lending		Asia Credit			Total Credit Group
Balance at 12/31/2022	$	42,191	$	15,904	$	57,568	$	29,561	$	6,051		$	151,275
Commitments	1,299		65		1,097		—		65			2,526
Deployment/subscriptions/increase in leverage	281		3,069		3,912		2,458		875			10,595
Capital reductions	(265)		—		(1,333)		(91)		(192)			(1,881)
Distributions	(197)		(1,110)		(1,432)		(162)		(1,165)			(4,066)
Redemptions	(767)		(792)		(170)		(121)		—			(1,850)
Net allocations among investment strategies	(30)		2,616		—		—		—		0	2,586
Change in fund value	936		151		804		678		(3)			2,566
Balance at 6/30/2023	$	43,448	$	19,903	$	60,446	$	32,323	$	5,631		$	161,751
	Liquid Credit		Alternative Credit		U.S. Direct Lending		European Direct Lending		Asia Credit			Total Credit Group
Balance at 12/31/2021	$	38,673	$	8,742	$	46,128	$	23,847	$	4,720		$	122,110
Commitments	3,896		331		1,417		—		1,747			7,391
Deployment/subscriptions/increase in leverage	6		3,566		7,320		4,440		1,028			16,360
Capital reductions	(147)		(25)		(1,394)		(1,212)		(233)			(3,011)
Distributions	(58)		(248)		(1,825)		(352)		(579)			(3,062)
Redemptions	(414)		(243)		(90)		(125)		—			(872)
Net allocations among investment strategies	(3)		506		—		—		—			503
Change in fund value	(1,731)		(216)		213		(1,279)		(140)			(3,153)
Change in fee basis	—		—		—		—		(843)			(843)
Balance at 6/30/2022	$	40,222	$	12,413	$	51,769	$	25,319	$	5,700		$	135,423

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The charts below present FPAUM for the Credit Group by its fee bases ($ in billions):

    

FPAUM: $161.7 FPAUM: $135.4

Invested capital Market value(1) Collateral balances (at par) Capital commitments

(1)Includes $32.1 billion and $29.6 billion from funds that primarily invest in illiquid strategies as of June 30, 2023 and 2022, respectively. The underlying investments held in these funds are generally subject to less market volatility than investments held in liquid strategies.

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Credit Group—Fund Performance Metrics as of June 30, 2023

ARCC contributed approximately 38% of the Credit Group’s total management fees for the six months ended June 30, 2023. In addition, eight other significant funds, CADC, Ares Senior Direct Lending Fund, L.P. (“SDL”), ACE IV, ACE V, PCS II, Pathfinder, SDL II and an open-ended core alternative credit fund, collectively contributed approximately 28% of the Credit Group’s management fees for the six months ended June 30, 2023.

    The following table presents the performance data for our significant funds that are not drawdown funds in the Credit Group as of June 30, 2023 ($ in millions):

				Returns(%)
	Year of Inception	AUM		Current Quarter		Year-To-Date		Since Inception(1)		Primary Investment Strategy
Fund				Gross	Net	Gross	Net	Gross	Net
ARCC(2)	2004	$	26,230	N/A	3.3	N/A	6.3	N/A	11.9	U.S. Direct Lending
CADC(3)	2017	4,497		N/A	2.7	N/A	5.6	N/A	5.6	U.S. Direct Lending

(1)Since inception returns are annualized.

(2)Returns are time-weighted rates of return and include the reinvestment of income and other earnings from securities or other investments and reflect the deduction of all trading expenses. Net returns are calculated using the fund’s NAV and assume dividends are reinvested at the closest quarter-end NAV to the relevant quarterly ex-dividend dates. Additional information related to ARCC can be found in its filings with the SEC, which are not part of this report.

(3)Returns are time-weighted rates of return and include the reinvestment of income and other earnings from securities or other investments and reflect the deduction of all trading expenses. Returns are shown for institutional share class. Shares of other classes may have lower returns due to higher selling commissions and fees. Net returns are calculated using the fund’s NAV and assume distributions are reinvested at the NAV on the date of distribution. Additional information related to CADC can be found in its filings with the SEC, which are not part of this report.

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The following table presents the performance data of the Credit Group’s significant drawdown funds as of June 30, 2023 ($ in millions):

	Year of Inception	AUM		Original Capital Commitments		Capital Invested to Date		Realized Value(1)		Unrealized Value(2)		Total Value		MoIC		IRR(%)		Primary Investment Strategy
Fund														Gross(3)	Net(4)	Gross(5)	Net(6)
Fund Harvesting Investment
SDL I Unlevered	2018	$	5,122	$	922	$	872	$	253	$	762	$	1,015	1.2x	1.2x	8.5	6.4	U.S. Direct Lending
SDL I Levered				2,045		2,022		779		1,764		2,543		1.4x	1.3x	14.8	10.8
ACE IV Unlevered(7)	2018	10,258		2,851		2,288		611		2,188		2,799		1.3x	1.2x	8.4	6.1	European Direct Lending
ACE IV Levered(7)				4,819		3,870		1,326		3,822		5,148		1.4x	1.3x	12.1	8.8
Funds Deploying Capital
ACE V Unlevered(8)	2020	16,994		7,026		5,148		298		5,377		5,675		1.1x	1.1x	11.3	8.3	European Direct Lending
ACE V Levered(8)				6,376		4,669		417		4,890		5,307		1.2x	1.1x	17.6	12.4
PCS II	2020	5,412		5,114		3,180		142		3,189		3,331		1.1x	1.1x	6.4	4.2	U.S. Direct Lending
Pathfinder	2020	4,160		3,683		2,496		169		2,832		3,001		1.3x	1.2x	20.2	14.7	Alternative Credit
SDL II Unlevered	2021	15,413		1,989		1,026		72		1,040		1,112		1.1x	1.1x	11.3	8.6	U.S. Direct Lending
SDL II Levered				6,047		3,237		356		3,288		3,644		1.2x	1.1x	19.6	14.5
Open-ended core alternative credit fund(9)	2021	3,494		3,479		2,463		151		2,476		2,627		1.1x	1.1x	9.8	7.0	Alternative Credit

(1)Realized value represents the sum of all cash distributions to all partners and if applicable, exclude tax and incentive distributions made to the general partner.

(2)Unrealized value represents the fund’s NAV reduced by the accrued incentive allocation, if applicable. There can be no assurance that unrealized values will be realized at the valuations indicated.

(3)The gross multiple of invested capital (“MoIC”) is calculated at the fund-level and is based on the interests of the fee-paying limited partners and if applicable, excludes interests attributable to the non-fee paying limited partners and/or the general partner which does not pay management fees or carried interest. The gross MoIC is before giving effect to management fees, carried interest and other expenses, as applicable, but after giving effect to credit facility interest expenses, as applicable. The funds may utilize a credit facility during the investment period and for general cash management purposes. Early in the life of a fund, the gross fund-level MoICs would generally have been lower had such fund called capital from its limited partners instead of utilizing the credit facility.

(4)The net MoIC is calculated at the fund-level and is based on the interests of the fee-paying limited partners and if applicable, excludes those interests attributable to the non-fee paying limited partners and/or the general partner which does not pay management fees or carried interest. The net MoIC is after giving effect to management fees and carried interest, other expenses and credit facility interest expenses, as applicable. The funds may utilize a credit facility during the investment period and for general cash management purposes. Early in the life of a fund, the net fund-level MoICs would generally have been lower had such fund called capital from its limited partners instead of utilizing the credit facility.

(5)The gross IRR is an annualized since inception gross internal rate of return of cash flows to and from the fund and the fund’s residual value at the end of the measurement period. Gross IRR reflects returns to the fee-paying limited partners and, if applicable, excludes interests attributable to the non-fee paying limited partners and/or the general partner which does not pay management fees or carried interest. The cash flow dates used in the gross IRR calculation are based on the actual dates of the cash flows. The gross IRRs are calculated before giving effect to management fees, carried interest and other expenses, as applicable, but after giving effect to credit facility interest expenses, as applicable. The funds may utilize a credit facility during the investment period and for general cash management purposes. Gross fund-level IRRs would generally have been lower had such fund called capital from its limited partners instead of utilizing the credit facility.

(6)The net IRR is an annualized since inception net internal rate of return of cash flows to and from the fund and the fund’s residual value at the end of the measurement period. Net IRRs reflect returns to the fee-paying limited partners and, if applicable, exclude interests attributable to the non-fee paying limited partners and/or the general partner which does not pay management fees or carried interest. The cash flow dates used in the net IRR calculations are based on the actual dates of the cash flows. The net IRRs are calculated after giving effect to management fees and carried interest, other expenses and credit facility interest expenses, as applicable. The funds may utilize a credit facility during the investment period and for general cash management purposes. Net fund-level IRRs would generally have been lower had such fund called capital from its limited partners instead of utilizing the credit facility.

(7)ACE IV is made up of four parallel funds, two denominated in Euros and two denominated in pound sterling: ACE IV (E) Unlevered, ACE IV (G) Unlevered, ACE IV (E) Levered and ACE IV (G) Levered. The gross and net IRR and MoIC presented in the table are for ACE IV (E) Unlevered and ACE IV (E) Levered. Metrics for ACE IV (E) Levered are inclusive of a U.S. dollar denominated feeder fund, which has not been presented separately. The gross and net IRR for ACE IV (G) Unlevered are 9.8% and 7.2%, respectively. The gross and net MoIC for ACE IV (G) Unlevered are 1.4x and 1.3x, respectively. The gross and net IRR for ACE IV (G) Levered are 13.3% and 9.6%, respectively. The gross and net MoIC for ACE IV (G) Levered are 1.5x and 1.4x, respectively. Original capital commitments are converted to U.S. dollars at the prevailing exchange rate at the time of the fund’s closing. All other values for ACE IV Unlevered and ACE IV Levered are for the combined levered and unlevered parallel funds and are converted to U.S. dollars at the prevailing quarter-end exchange rate.

(8)ACE V is made up of four parallel funds, two denominated in Euros and two denominated in pound sterling: ACE V (E) Unlevered, ACE V (G) Unlevered, ACE V (E) Levered, and ACE V (G) Levered, and two feeder funds: ACE V (D) Levered and ACE V (Y) Unlevered. ACE V (E) Levered includes the ACE V (D) Levered feeder fund and ACE V (E) Unlevered includes the ACE V (Y) Unlevered feeder fund. The gross and net IRR and gross and net MoIC presented in the table are for ACE V (E) Unlevered and ACE V (E) Levered. Metrics for ACE V (E) Levered exclude the ACE V (D) Levered feeder fund and metrics for ACE V (E) Unlevered exclude the ACE V (Y) Unlevered feeder fund. The gross and net IRR for ACE V (G) Unlevered are 12.6% and 9.3%, respectively. The gross and net MoIC for ACE V (G) Unlevered are 1.2x and 1.1x, respectively. The gross and net IRR for ACE V (G) Levered are 17.9% and 12.7%, respectively. The gross and net MoIC for ACE V (G) Levered are 1.2x and 1.2x, respectively. The gross and net IRR for ACE V (D) Levered are 16.3% and 11.7%, respectively. The gross and net MoIC for ACE V (D) Levered are 1.2x and 1.1x, respectively. The gross and net IRR for ACE V (Y) Unlevered are 10.5% and 7.4%, respectively. The gross and net MoIC for ACE V (Y) Unlevered are 1.1x and 1.1x, respectively. Original capital commitments are converted to U.S. dollars at the prevailing exchange rate at the time of the fund's closing. All other values for ACE V Unlevered and ACE V Levered are for the combined levered and unlevered parallel funds and are converted to U.S. dollars at the prevailing quarter-end exchange rate.

(9)Performance for the open-ended core alternative credit fund, a perpetual capital vehicle, is presented as a drawdown fund as investor commitments to the fund are drawn sequentially in order of closing date, typically over a period of approximately 12 to 18 months. The fund is made up of a Class M (“Main Class”) and a Class C (“Constrained Class”). The Main Class includes investors electing to participate in all investments and the Constrained Class includes investors electing to be excluded from exposure to liquid investments. The gross and net IRR and gross and net MoIC presented in the table are for the Main Class. The gross and net IRRs for the Constrained Class are 9.4% and 6.7%, respectively. The gross and net MoIC for the Constrained Class are 1.1x and 1.1x, respectively.

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Private Equity Group—Three and Six Months Ended June 30, 2023 Compared to Three and Six Months Ended June 30, 2022

Fee Related Earnings:

The following table presents the components of the Private Equity Group’s FRE ($ in thousands):

	Three months ended June 30,				Favorable (Unfavorable)			Six months ended June 30,				Favorable (Unfavorable)
	2023		2022		$ Change		% Change	2023		2022		$ Change		% Change
Management fees	$	55,518	$	47,396	$	8,122	17%	$	110,175	$	93,353	$	16,822	18%
Other fees	738		408		330		81	1,411		705		706		100
Compensation and benefits	(20,348)		(24,293)		3,945		16	(42,658)		(43,859)		1,201		3
General, administrative and other expenses	(7,734)		(7,880)		146		2	(17,300)		(14,168)		(3,132)		(22)
Fee Related Earnings	$	28,174	$	15,631	12,543		80	$	51,628	$	36,031	15,597		43

Management Fees. The chart below presents Private Equity Group management fees and effective management fee rates ($ in millions):

Management fees from Ares Special Opportunities Fund II, L.P. (“ASOF II”) increased by $10.4 million and $21.7 million for the three and six months ended June 30, 2023, respectively, compared to the three and six months ended June 30, 2022 primarily driven by deployment. Management fees from ACOF IV decreased by $1.5 million and $3.0 million for the three and six months ended June 30, 2023, respectively, compared to the same periods in 2022 as the fund stopped paying fees during the fourth quarter of 2022.

The increases in effective management fee rate for the three and six months ended June 30, 2023 compared to the same periods in 2022 were primarily driven by deployment of capital in ASOF II, which has a higher effective management fee rate than the Private Equity Group’s average effective management fee rate.

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Compensation and Benefits. Although salary and benefits costs have modestly increased during the 2023 comparative periods to reflect changes in staffing and merit increases, compensation and benefits have decreased for the three and six months ended June 30, 2023 compared to the same periods in 2022, primarily driven by lower incentive-based compensation that we believe will increase throughout the remainder of the current year to better align with the growth in revenues.

Average headcount increased slightly by 2% to 118 investment and investment support professionals for the year-to-date period in 2023 from 116 professionals for the same period in 2022.

General, Administrative and Other Expenses. Amortization of placement fees increased by $0.8 million and $1.9 million for the three and six months ended June 30, 2023, respectively, compared to the same periods in 2022 primarily driven by new limited partner capital commitments to ASOF II subsequent to the second quarter of 2022 and through its final close in the fourth quarter of 2022. Certain expenses have also increased during the current period, primarily from occupancy costs to support our professionals that are based in higher cost locations and from additional research subscriptions used by our investment professionals. Collectively, these expenses increased by $0.5 million and $1.1 million for the three and six months ended June 30, 2023, respectively, compared to the same periods in 2022.

Travel and marketing collectively decreased by $0.9 million for the three months ended June 30, 2023 compared to the same period in 2022 due to the timing of annual marketing events that occurred during the first quarter of 2023 but were held in the second quarter in the prior year.

Realized Income:

The following table presents the components of the Private Equity Group’s RI ($ in thousands):

	Three months ended June 30,				Favorable (Unfavorable)			Six months ended June 30,				Favorable (Unfavorable)
	2023		2022		$ Change		% Change	2023		2022		$ Change		% Change
Fee Related Earnings	$	28,174	$	15,631	$	12,543	80%	$	51,628	$	36,031	$	15,597	43%
Performance income—realized	69,678		—		69,678		NM	88,135		2,212		85,923		NM
Performance related compensation—realized	(53,723)		—		(53,723)		NM	(68,827)		(1,786)		(67,041)		NM
Realized net performance income	15,955		—		15,955		NM	19,308		426		18,882		NM
Investment income—realized	2,084		672		1,412		210	2,963		2,275		688		30
Interest and other investment income—realized	1,863		195		1,668		NM	3,724		1,697		2,027		119
Interest expense	(5,735)		(3,629)		(2,106)		(58)	(11,350)		(7,002)		(4,348)		(62)
Realized net investment loss	(1,788)		(2,762)		974		35	(4,663)		(3,030)		(1,633)		(54)
Realized Income	$	42,341	$	12,869	29,472		229	$	66,273	$	33,427	32,846		98

Realized net performance income for the three and six months ended June 30, 2023 was primarily attributable to realized gains from the partial sale of ACOF IV’s investment in AZEK and to a tax distribution from ASOF I.

Realized net investment loss for the three and six months ended June 30, 2023 and 2022 largely represents interest expense exceeding net investment and other income during these periods. Interest expense, which is allocated among our segments based on the cost basis of balance sheet investments, increased over the comparative periods primarily due to rising SOFR rates and a higher average outstanding balance of the Credit Facility. Realized investment income for the three and six months ended June 30, 2023 also includes realized gains from the partial sale of ACOF IV’s investment in AZEK.

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Private Equity Group—Performance Income

The following table presents the accrued carried interest, also referred to as accrued performance income, and related performance compensation for the Private Equity Group ($ in thousands):

	As of June 30, 2023						As of December 31, 2022
	Accrued Performance Income		Accrued Performance Compensation		Accrued Net Performance Income		Accrued Performance Income		Accrued Performance Compensation		Accrued Net Performance Income
ACOF IV	$	208,696	$	166,957	$	41,739	$	282,624	$	226,099	$	56,525
ACOF V	792,824		634,259		158,565		742,962		594,369		148,593
ACOF VI	228,190		182,552		45,638		147,185		117,748		29,437
ASOF I	387,247		271,073		116,174		326,471		228,529		97,942
Other funds	234,334		166,300		68,034		108,997		75,583		33,414
Total Private Equity Group	$	1,851,291	$	1,421,141	$	430,150	$	1,608,239	$	1,242,328	$	365,911

The following table presents the change in accrued carried interest for the Private Equity Group ($ in thousands):

		As of December 31, 2022		Activity during the period						As of June 30, 2023
	Waterfall Type	Accrued Carried Interest		Change in Unrealized		Realized		Other Adjustments		Accrued Carried Interest
ACOF IV	American	$	282,624	$	(10,634)	$	(63,294)	$	—	$	208,696
ACOF V	American	742,962		49,862		—		—		792,824
ACOF VI	American	147,185		81,005		—		—		228,190
ASOF I	European	326,471		85,363		(24,587)		—		387,247
Other funds	European	92,509		123,517		—		7,490		223,516
Other funds	American	16,488		(5,416)		(254)		—		10,818
Total Private Equity Group		$	1,608,239	$	323,697	$	(88,135)	$	7,490	$	1,851,291

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Private Equity Group—Assets Under Management

The tables below present rollforwards of AUM for the Private Equity Group ($ in millions):

	Corporate Private Equity		Special Opportunities		Total Private Equity Group
Balance at 3/31/2023	$	20,656	$	13,991	$	34,647
Capital reductions	(2)		—		(2)
Distributions	(385)		(88)		(473)
Change in fund value	772		509		1,281
Balance at 6/30/2023	$	21,041	$	14,412	$	35,453
	Corporate Private Equity		Special Opportunities		Total Private Equity Group
Balance at 3/31/2022	$	21,206	$	12,359	$	33,565
Net new par/equity commitments	—		230		230
Capital reductions	(2)		(200)		(202)
Distributions	(105)		(33)		(138)
Change in fund value	171		(214)		(43)
Balance at 6/30/2022	$	21,270	$	12,142	$	33,412
	Corporate Private Equity		Special Opportunities		Total Private Equity Group
Balance at 12/31/2022	$	21,029	$	13,720	$	34,749
Net new par/equity commitments	50		—		50
Capital reductions	(5)		—		(5)
Distributions	(651)		(149)		(800)
Change in fund value	618		841		1,459
Balance at 6/30/2023	$	21,041	$	14,412	$	35,453
	Corporate Private Equity		Special Opportunities		Total Private Equity Group
Balance at 12/31/2021	$	21,639	$	11,765	$	33,404
Net new par/equity commitments	—		800		800
Capital reductions	(4)		(200)		(204)
Distributions	(390)		(131)		(521)
Change in fund value	25		(92)		(67)
Balance at 6/30/2022	$	21,270	$	12,142	$	33,412

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The components of our AUM for the Private Equity Group are presented below ($ in billions):

    

AUM: $35.5 AUM: $33.4

FPAUM Non-fee paying(1) AUM not yet paying fees

(1) Includes $1.3 billion and $1.2 billion of non-fee paying AUM based on our general partner commitment as of June 30, 2023 and 2022, respectively.

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Private Equity Group—Fee Paying AUM

The tables below present rollforwards of fee paying AUM for the Private Equity Group ($ in millions):

	Corporate Private Equity		Special Opportunities		Total Private Equity Group
Balance at 3/31/2023	$	11,281	$	7,469	$	18,750
Deployment/subscriptions/increase in leverage	—		901		901
Distributions	—		(693)		(693)
Change in fee basis	(4)		—		(4)
Balance at 6/30/2023	$	11,277	$	7,677	$	18,954
	Corporate Private Equity		Special Opportunities		Total Private Equity Group
Balance at 3/31/2022	$	12,186	$	3,955	$	16,141
Deployment/subscriptions/increase in leverage	—		2,099		2,099
Distributions	(51)		(479)		(530)
Change in fund value	(3)		—		(3)
Change in fee basis	(16)		—		(16)
Balance at 6/30/2022	$	12,116	$	5,575	$	17,691
	Corporate Private Equity		Special Opportunities		Total Private Equity Group
Balance at 12/31/2022	$	11,281	$	7,166	$	18,447
Deployment/subscriptions/increase in leverage	—		1,604		1,604
Distributions	—		(1,093)		(1,093)
Change in fee basis	(4)		—		(4)
Balance at 6/30/2023	$	11,277	$	7,677	$	18,954
	Corporate Private Equity		Special Opportunities		Total Private Equity Group
Balance at 12/31/2021	$	12,473	$	4,216	$	16,689
Deployment/subscriptions/increase in leverage	17		2,196		2,213
Distributions	(138)		(837)		(975)
Change in fund value	(2)		—		(2)
Change in fee basis	(234)		—		(234)
Balance at 6/30/2022	$	12,116	$	5,575	$	17,691

The charts below present FPAUM for the Private Equity Group by its fee bases ($ in billions):

    

FPAUM: $19.0 FPAUM: $17.7

Invested capital Capital commitments

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Private Equity Group—Fund Performance Metrics as of June 30, 2023

Four significant funds, ACOF V, ASOF I, ACOF VI and ASOF II, collectively contributed approximately 88% of the Private Equity Group’s management fees for the six months ended June 30, 2023.

The following table presents the performance data of the Private Equity Group’s significant drawdown funds as of June 30, 2023 ($ in millions):

	Year of Inception	AUM		Original Capital Commitments		Capital Invested to Date		Realized Value(1)		Unrealized Value(2)		Total Value		MoIC		IRR(%)		Primary Investment Strategy
Fund														Gross(3)	Net(4)	Gross(5)	Net(6)
Fund Harvesting Investments
ACOF V	2017	$	9,461	$	7,850	$	7,415	$	3,492	$	8,701	$	12,193	1.6x	1.4x	14.2	9.9	Corporate Private Equity
Funds Deploying Capital
ASOF I	2019	5,902		3,518		5,404		3,944		4,183		8,127		1.8x	1.6x	30.2	23.6	Special Opportunities
ACOF VI	2020	6,881		5,743		4,398		371		5,562		5,933		1.3x	1.2x	25.4	18.3	Corporate Private Equity
ASOF II	2021	7,065		7,128		4,603		884		3,798		4,682		1.0x	1.0x	0.6	(2.1)	Special Opportunities

(1)Realized value represents the sum of all cash dividends, interest income, other fees and cash proceeds from realizations of interests in portfolio investments. Realized value excludes any proceeds related to bridge financings.

(2)Unrealized value represents the fair market value of remaining investments. Unrealized value does not take into account any bridge financings. There can be no assurance that unrealized investments will be realized at the valuations indicated.

(3)The gross MoIC is calculated at the fund-level and is based on the interests of the fee-paying limited partners and if applicable, excludes interests attributable to the non-fee paying limited partners and/or the general partner which does not pay management fees or carried interest. The gross MoIC is before giving effect to management fees, carried interest, as applicable, and other expenses, but after giving effect to credit facility interest expenses, as applicable. The gross MoICs are also calculated before giving effect to any bridge financings. The funds may utilize a credit facility during the investment period and for general cash management purposes. Early in the life of a fund, the gross fund-level MoICs would generally have been lower had such fund called capital from its limited partners instead of utilizing the credit facility.

(4)The net MoIC is calculated at the fund-level. The net MoIC is based on the interests of the fee-paying limited partners and if applicable, excludes interests attributable to the non-fee paying limited partners and/or the general partner which does not pay management fees or performance fees. The net MoIC is after giving effect to management fees, carried interest, as applicable, and other expenses. The net MoICs are also calculated before giving effect to any bridge financings. Inclusive of bridge financings, the net MoIC would be 1.4x for ACOF V and 1.2x for ACOF VI. The funds may utilize a credit facility during the investment period and for general cash management purposes. Early in the life of a fund, the net fund-level MoICs would generally have been lower had such fund called capital from its limited partners instead of utilizing the credit facility.

(5)The gross IRR is an annualized since inception gross internal rate of return of cash flows to and from the fund and the fund’s residual value at the end of the measurement period. Gross IRRs reflect returns to the fee-paying limited partners and, if applicable, excludes interests attributable to the non-fee paying limited partners and/or the general partner which does not pay management fees or carried interest. The cash flow dates used in the gross IRR calculation are based on the actual dates of the cash flows. The gross IRRs are calculated before giving effect to management fees, carried interest, as applicable, and other expenses, but after giving effect to credit facility interest expenses, as applicable. The gross IRRs are also calculated before giving effect to any bridge financings. The funds may utilize a credit facility during the investment period and for general cash management purposes. Gross fund-level IRRs would generally have been lower had such fund called capital from its limited partners instead of utilizing the credit facility.

(6)The net IRR is an annualized since inception net internal rate of return of cash flows to and from the fund and the fund’s residual value at the end of the measurement period. Net IRRs reflect returns to the fee-paying limited partners and if applicable, exclude interests attributable to the non-fee paying limited partners and/or the general partner which does not pay management fees or carried interest. The cash flow dates used in the net IRR calculation are based on the actual dates of the cash flows. The net IRRs are calculated after giving effect to management fees, carried interest as applicable, and other expenses and exclude commitments by the general partner and Schedule I investors who do not pay either management fees or carried interest. The funds may utilize a credit facility during the investment period and for general cash management purposes. Net fund-level IRRs would generally have been lower had such fund called capital from its limited partners instead of utilizing the credit facility. The net IRRs are also calculated before giving effect to any bridge financings. Inclusive of bridge financings, the net IRRs would be 10.0% for ACOF V and 16.6% for ACOF VI.

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Real Assets Group—Three and Six Months Ended June 30, 2023 Compared to Three and Six Months Ended June 30, 2022

Fee Related Earnings:

The following table presents the components of the Real Assets Group’s FRE ($ in thousands):

	Three months ended June 30,				Favorable (Unfavorable)			Six months ended June 30,				Favorable (Unfavorable)
	2023		2022		$ Change		% Change	2023		2022		$ Change		% Change
Management fees	$	95,239	$	90,733	$	4,506	5%	$	192,709	$	163,220	$	29,489	18%
Fee related performance revenues	334		965		(631)		(65)	334		1,323		(989)		(75)
Other fees	11,846		8,565		3,281		38	18,308		16,431		1,877		11
Compensation and benefits	(40,638)		(40,599)		(39)		—	(78,624)		(74,236)		(4,388)		(6)
General, administrative and other expenses	(10,863)		(10,639)		(224)		(2)	(23,147)		(18,276)		(4,871)		(27)
Fee Related Earnings	$	55,918	$	49,025	6,893		14	$	109,580	$	88,462	21,118		24

Management Fees. The chart below presents Real Assets Group management fees and effective management fee rates ($ in millions):

Management fees from Ares Real Estate Income Trust, Inc. (“AREIT”) and Ares Industrial Real Estate Income Trust, Inc. (“AIREIT”) collectively increased by $3.8 million and $11.8 million for the three and six months ended June 30, 2023, respectively, compared to the same periods in 2022 due to additional capital raised in these funds. Management fees from Infrastructure Debt Fund IV (“IDF IV”) and IDF V collectively increased by $2.4 million and $7.5 million for the three and six months ended June 30, 2023, respectively, compared to the same periods in 2022 primarily due to fees earned for the full period following the close of the Infrastructure Debt Acquisition on February 10, 2022 and deployment within IDF V.

One-time catch-up fees from funds within the Real Assets Group consisted of the following: (i) $0.4 million and $0.5 million for the three and six months ended June 30, 2023, respectively, from our fourth U.S. opportunistic real estate equity fund; (ii) $0.2 million for the six months ended June 30, 2023 and $0.7 million for the three months ended June 30, 2022 from

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our sixth European real estate equity fund; and (iii) $5.3 million and $3.9 million for the three and six months ended June 30, 2022, respectively, from US X.

For the three and six months ended June 30, 2023 compared to the same periods in 2022, management fees, excluding one-time catch-up fees previously discussed, increased by: (i) $2.1 million and $4.2 million, respectively, for our fourth U.S. opportunistic real estate equity fund; (ii) $0.1 million and $1.9 million, respectively, for our sixth European real estate fund; and (iii) $1.3 million and $2.7 million, respectively, for US X. The increases in management fees for these funds was primarily driven by new limited partner capital commitments. Our most recent real estate equity funds pay a fee on committed capital that increases once that capital is invested.

Management fees for the six months ended June 30, 2023 also included one-time, make-whole termination fees of $3.3 million driven by the early termination of the advisory agreements of two U.S. industrial real estate equity funds, which resulted in the acceleration of contractual management fees.

The increases in effective management fee rate for the three and six months ended June 30, 2023 compared to the three and six months ended June 30, 2022 were primarily due to additional capital raised in our non-traded REITs, which have effective management fee rates between 1.10% and 1.25%.

Other Fees. The increases in other fees for the three and six months ended June 30, 2023 compared to the same periods in 2022 were primarily attributable to $6.7 million of transaction fees, which are generated periodically within the infrastructure debt strategy and represent a portion of the loan origination income from those transactions. The increases in other fees were partially offset by decreases for three and six months ended June 30, 2023 compared to the same periods in 2022 of: (i) $2.5 million and $3.6 million, respectively, in acquisition and development fees resulted from decreased activity; and (ii) $0.8 million and $1.8 million, respectively, related to program administration fees resulting from the management and creation of our 1031 exchange program that is used by our non-traded REITs.

Compensation and Benefits. The increases in compensation and benefits for the three and six months ended June 30, 2023, respectively, compared to the same periods in 2022 were primarily driven by increases in salary expense of $2.8 million and $6.4 million, respectively, primarily attributable to headcount growth to support the expansion of our business as we added professionals to our growing U.S. real estate equity and infrastructure debt platforms. The increase in compensation and benefits for the six months ended June 30, 2023 when compared to the same period in 2022 was partially offset by lower incentive-based compensation that we believe will increase throughout the remainder of the current year and will exceed prior year levels. Compensation and benefits for the six months ended June 30, 2023 also included the full period of expense attributable to the infrastructure debt platform which did not have comparable results as the Infrastructure Debt Acquisition closed on February 10, 2022.

Average headcount increased by 20% to 348 investment and investment support professionals for the year-to-date period in 2023 from 290 professionals for the same period in 2022.

General, Administrative and Other Expenses. Certain expenses have increased during the current period, primarily from occupancy costs to support our growing headcount that are based in higher cost locations and from additional research subscriptions used by our investment professionals. Collectively, these expenses increased by $0.6 million and $1.6 million for the three and six months ended June 30, 2023, respectively, compared to the same periods in 2022. For the six months ended June 30, 2023 compared to the same period in 2022, the increase in general, administrative and other expenses was also driven by: (i) travel, marketing and certain fringe benefits, which collectively increased by $1.6 million, as we continued to increase marketing efforts driven by more investor meetings and events and conducted more in-person company meetings and events with a focus on promoting collaboration; and (ii) amortization of placement fees of $0.9 million primarily attributable to new commitments in US X and IDF V in connection with our fundraising efforts. The increases described above include $1.5 million of expense for the six months ended June 30, 2023 compared to the same period in 2022, recognized in connection with the Infrastructure Debt Acquisition which did not have comparable results as the transaction closed on February 10, 2022.

During the second quarter of 2022, we also recognized $0.5 million in one-time expenses related to transition services that were provided by the seller in connection with the Infrastructure Debt Acquisition.

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Realized Income:

The following table presents the components of the Real Assets Group’s RI ($ in thousands):

	Three months ended June 30,				Favorable (Unfavorable)			Six months ended June 30,				Favorable (Unfavorable)
	2023		2022		$ Change		% Change	2023		2022		$ Change		% Change
Fee Related Earnings	$	55,918	$	49,025	$	6,893	14%	$	109,580	$	88,462	$	21,118	24%
Performance income—realized	2,737		17,405		(14,668)		(84)	8,823		51,698		(42,875)		(83)
Performance related compensation—realized	(1,668)		(11,186)		9,518		85	(5,426)		(33,395)		27,969		84
Realized net performance income	1,069		6,219		(5,150)		(83)	3,397		18,303		(14,906)		(81)
Investment income (loss)—realized	(1,549)		432		(1,981)		NM	(3,321)		3,885		(7,206)		NM
Interest and other investment income—realized	2,393		2,640		(247)		(9)	4,214		5,417		(1,203)		(22)
Interest expense	(4,106)		(2,713)		(1,393)		(51)	(8,002)		(5,102)		(2,900)		(57)
Realized net investment income (loss)	(3,262)		359		(3,621)		NM	(7,109)		4,200		(11,309)		NM
Realized Income	$	53,725	$	55,603	(1,878)		(3)	$	105,868	$	110,965	(5,097)		(5)

Realized net performance income for the three and six months ended June 30, 2023 was primarily attributable to incentive fees generated from an open-ended industrial real estate fund.

Realized net investment loss for the three and six months ended June 30, 2023 largely represents interest expense exceeding net investment and other income during the periods. Interest expense, which is allocated among our segments based on the cost basis of balance sheet investments, increased over the comparative periods primarily due to rising SOFR rates and a higher average outstanding balance of the Credit Facility. Realized net investment loss for the three and six months ended June 30, 2023 also included realized losses recognized from a real estate debt vehicle, where carrying costs are exceeding investment returns as a result of limited investment opportunities. The activity for the three and six months ended June 30, 2023 was partially offset by distributions of net investment income from multiple real estate equity and real estate debt vehicles.

Realized net performance income and realized net investment income for the three and six months ended June 30, 2022 were primarily attributable to realizations from US VIII driven by multifamily property sales. Realized net performance income for the three and six months ended June 30, 2022 also included incentive fees generated from an open-ended industrial real estate fund. Realized net investment income for the three and six months ended June 30, 2022 was also attributable to distributions of net investment income from an infrastructure opportunities and real estate debt vehicles.

Real Assets Group—Performance Income

The following table presents the accrued carried interest, also referred to as accrued performance income, and related performance compensation for the Real Assets Group. Accrued net performance income excludes net performance income that has been realized but not yet received as of the reporting date ($ in thousands):

	As of June 30, 2023						As of December 31, 2022
	Accrued Performance Income		Accrued Performance Compensation		Accrued Net Performance Income		Accrued Performance Income		Accrued Performance Compensation		Accrued Net Performance Income
US VIII	$	34,040	$	21,786	$	12,254	$	36,822	$	23,566	$	13,256
US IX	88,560		54,907		33,653		86,905		53,881		33,024
EF IV	61,235		36,742		24,493		61,791		37,075		24,716
AREOF III	47,074		28,245		18,829		41,463		24,878		16,585
EIF V	90,976		68,004		22,972		94,398		70,562		23,836
Other real assets funds	193,235		122,533		70,702		171,489		108,002		63,487
Total Real Assets Group	$	515,120	$	332,217	$	182,903	$	492,868	$	317,964	$	174,904

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The following table presents the change in accrued performance income for the Real Assets Group ($ in thousands):

		As of December 31, 2022		Activity during the period						As of June 30, 2023
	Waterfall Type	Accrued Performance Income		Change in Unrealized		Realized		Other Adjustments		Accrued Performance Income
Accrued Carried Interest
US VIII	European	$	36,822	$	(699)	$	(2,083)	$	—	$	34,040
US IX	European	86,905		1,655		—		—		88,560
EF IV	American	61,791		(556)		—		—		61,235
AREOF III	European	41,463		5,611		—		—		47,074
EIF V	European	94,398		(3,422)		—		—		90,976
Other real assets funds	European	114,782		32,112		—		484		147,378
Other real assets funds	American	56,707		(10,124)		(709)		(17)		45,857
Total accrued carried interest		492,868		24,577		(2,792)		467		515,120
Other real assets funds	Incentive	—		6,031		(6,031)		—		—
Total Real Assets Group		$	492,868	$	30,608	$	(8,823)	$	467	$	515,120

            

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Real Assets Group—Assets Under Management

The tables below present rollforwards of AUM for the Real Assets Group ($ in millions):

	U.S. Real Estate Equity		European Real Estate Equity		Real Estate Debt		Infrastructure Opportunities		Infrastructure Debt		Total Real Assets Group
Balance at 3/31/2023	$	29,838	$	8,533	$	10,826	$	5,175	$	9,742	$	64,114
Net new par/equity commitments	1,055		—		313		456		—		1,824
Net new debt commitments	—		—		150		—		—		150
Capital reductions	—		—		(1)		—		—		(1)
Distributions	(958)		(59)		(69)		(186)		(42)		(1,314)
Redemptions	(298)		—		(120)		—		—		(418)
Change in fund value	(190)		118		26		59		403		416
Balance at 6/30/2023	$	29,447	$	8,592	$	11,125	$	5,504	$	10,103	$	64,771
	U.S. Real Estate Equity		European Real Estate Equity		Real Estate Debt		Infrastructure Opportunities		Infrastructure Debt		Total Real Assets Group
Balance at 3/31/2022	$	27,961	$	7,683	$	10,225	$	4,424	$	8,234	$	58,527
Net new par/equity commitments	1,699		835		629		65		137		3,365
Net new debt commitments	400		419		625		—		—		1,444
Capital reductions	—		—		(34)		—		—		(34)
Distributions	(303)		(51)		(48)		(299)		(186)		(887)
Redemptions	(38)		—		(45)		—		—		(83)
Change in fund value	552		(328)		20		126		(125)		245
Balance at 6/30/2022	$	30,271	$	8,558	$	11,372	$	4,316	$	8,060	$	62,577
	U.S. Real Estate Equity		European Real Estate Equity		Real Estate Debt		Infrastructure Opportunities		Infrastructure Debt		Total Real Assets Group
Balance at 12/31/2022	$	31,460	$	8,561	$	11,161	$	5,194	$	9,685	$	66,061
Net new par/equity commitments	1,643		15		475		456		—		2,589
Net new debt commitments	—		—		150		—		—		150
Capital reductions	(245)		—		(160)		—		—		(405)
Distributions	(2,466)		(72)		(131)		(203)		(104)		(2,976)
Redemptions	(554)		—		(402)		—		—		(956)
Change in fund value	(391)		88		32		57		522		308
Balance at 6/30/2023	$	29,447	$	8,592	$	11,125	$	5,504	$	10,103	$	64,771
	U.S. Real Estate Equity		European Real Estate Equity		Real Estate Debt		Infrastructure Opportunities		Infrastructure Debt		Total Real Assets Group
Balance at 12/31/2021	$	24,677	$	6,827	$	9,659	$	4,756	$	—	$	45,919
Acquisitions	—		—		—		—		8,184		8,184
Net new par/equity commitments	3,297		2,018		856		65		187		6,423
Net new debt commitments	1,105		419		1,025		—		—		2,549
Capital reductions	(234)		—		(63)		—		—		(297)
Distributions	(1,054)		(359)		(95)		(321)		(186)		(2,015)
Redemptions	(129)		—		(90)		—		—		(219)
Change in fund value	2,609		(347)		80		(184)		(125)		2,033
Balance at 6/30/2022	$	30,271	$	8,558	$	11,372	$	4,316	$	8,060	$	62,577

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The components of our AUM for the Real Assets Group are presented below ($ in billions):

    

AUM: $64.8 AUM: $62.6

FPAUM Non-fee paying(1) AUM not yet paying fees

(1) Includes $0.6 billion of non-fee paying AUM based on our general partner commitment as of June 30, 2023 and 2022, respectively.

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Real Assets Group—Fee Paying AUM

The tables below present rollforwards of fee paying AUM for the Real Assets Group ($ in millions):

	U.S. Real Estate Equity		European Real Estate Equity		Real Estate Debt		Infrastructure Opportunities		Infrastructure Debt		Total Real Assets Group
Balance at 3/31/2023	$	21,300	$	5,685	$	3,365	$	4,570	$	6,008	$	40,928
Commitments	419		—		(5)		456		—		870
Deployment/subscriptions/increase in leverage	26		183		175		106		498		988
Capital reductions	—		(29)		(21)		—		—		(50)
Distributions	(433)		—		(76)		(254)		(333)		(1,096)
Redemptions	(298)		—		(133)		—		—		(431)
Change in fund value	(282)		26		63		—		20		(173)
Change in fee basis	—		98		—		—		—		98
Balance at 6/30/2023	$	20,732	$	5,963	$	3,368	$	4,878	$	6,193	$	41,134
	U.S. Real Estate Equity		European Real Estate Equity		Real Estate Debt		Infrastructure Opportunities		Infrastructure Debt		Total Real Assets Group
Balance at 3/31/2022	$	18,039	$	5,012	$	3,855	$	4,323	$	4,898	$	36,127
Commitments	1,522		452		103		—		—		2,077
Deployment/subscriptions/increase in leverage	255		163		194		151		759		1,522
Capital reductions	—		(10)		(80)		—		—		(90)
Distributions	(207)		(27)		(88)		—		(48)		(370)
Redemptions	(38)		—		(53)		—		—		(91)
Change in fund value	363		(238)		22		—		(91)		56
Balance at 6/30/2022	$	19,934	$	5,352	$	3,953	$	4,474	$	5,518	$	39,231
	U.S. Real Estate Equity		European Real Estate Equity		Real Estate Debt		Infrastructure Opportunities		Infrastructure Debt		Total Real Assets Group
Balance at 12/31/2022	$	21,788	$	5,634	$	3,691	$	4,524	$	5,970	$	41,607
Commitments	1,001		15		(5)		456		—		1,467
Deployment/subscriptions/increase in leverage	45		201		214		153		597		1,210
Capital reductions	(245)		(29)		(55)		—		—		(329)
Distributions	(830)		(55)		(139)		(255)		(451)		(1,730)
Redemptions	(554)		—		(415)		—		—		(969)
Change in fund value	(473)		99		77		—		77		(220)
Change in fee basis	—		98		—		—		—		98
Balance at 6/30/2023	$	20,732	$	5,963	$	3,368	$	4,878	$	6,193	$	41,134
	U.S. Real Estate Equity		European Real Estate Equity		Real Estate Debt		Infrastructure Opportunities		Infrastructure Debt		Total Real Assets Group
Balance at 12/31/2021	$	15,687	$	4,916	$	3,516	$	4,496	$	—	$	28,615
Acquisitions	—		—		—		—		4,855		4,855
Commitments	2,548		1,607		106		—		—		4,261
Deployment/subscriptions/increase in leverage	611		257		563		199		802		2,432
Capital reductions	—		(10)		(81)		—		—		(91)
Distributions	(623)		(235)		(134)		(221)		(48)		(1,261)
Redemptions	(129)		—		(100)		—		—		(229)
Change in fund value	1,848		(364)		83		—		(91)		1,476
Change in fee basis	(8)		(819)		—		—		—		(827)
Balance at 6/30/2022	$	19,934	$	5,352	$	3,953	$	4,474	$	5,518	$	39,231

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The charts below present FPAUM for the Real Assets Group by its fee bases ($ in billions):

    

FPAUM: $41.1 FPAUM: $39.2

Market value(1) Invested capital/other(2) Capital commitments

(1)Amounts represent FPAUM from funds that primarily invest in illiquid strategies. The underlying investments held in these funds are generally subject to less market volatility than investments held in liquid strategies.

(2)Other consists of ACRE’s FPAUM, which is based on ACRE’s stockholders’ equity.

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Real Assets Group—Fund Performance Metrics as of June 30, 2023

Four significant funds, AIREIT, AREIT, IDF IV and an open-ended industrial real estate fund, collectively contributed approximately 42% of the Real Assets Group’s management fees for the six months ended June 30, 2023.

The following table presents the performance data for our significant funds that are not drawdown funds in the Real Assets Group as of June 30, 2023 ($ in millions):

				Returns(%)
	Year of Inception	AUM		Current Quarter		Year-To-Date		Since Inception(1)		Primary Investment Strategy
Fund				Gross	Net	Gross	Net	Gross	Net
AREIT(2)	2012	$	5,174	N/A	(1.7)	N/A	(2.8)	N/A	7.2	U.S. Real Estate Equity
AIREIT(3)	2017	8,164		N/A	(2.8)	N/A	(3.7)	N/A	12.1	U.S. Real Estate Equity
Open-ended industrial real estate fund(4)	2017	5,339		(1.9)	(1.8)	(4.5)	(4.2)	22.7	18.6	U.S. Real Estate Equity

(1)Since inception returns are annualized.

(2)Performance is measured by total return, which includes income and appreciation and reinvestment of all distributions for the respective time period. Returns are shown for institutional share class. Shares of other classes may have lower returns due to higher selling commissions and fees. Actual individual stockholder returns will vary. Net returns are calculated using the fund’s NAV and assume distributions are reinvested at the NAV on the date of distribution. The inception date used in the calculation of the since inception return is the date in which the first shares of common stock were sold after converting to a NAV-based REIT. Additional information related to AREIT can be found in its filings with the SEC, which are not part of this report.

(3)Performance is measured by total return, which includes income and appreciation and reinvestment of all distributions for the respective time period. Returns are shown for institutional share class. Shares of other classes may have lower returns due to higher selling commissions and fees. Actual individual stockholder returns will vary. Net returns are calculated using the fund’s NAV and assume distributions are reinvested at the NAV on the date of distribution. Additional information related to AIREIT can be found in its filings with the SEC, which are not part of this report.

(4)Returns are time-weighted rates of return and include the reinvestment of income and other earnings from securities or other investments and reflect the deduction of all trading expenses. Gross returns do not reflect the deduction of management fees, incentive fees, as applicable, or other expenses. Net returns are calculated by subtracting the applicable management fees, incentive fees, as applicable and other expenses from the gross returns on a quarterly basis.

The following table presents the performance data of the Real Assets Group’s significant drawdown fund as of June 30, 2023 ($ in millions):

	Year of Inception	AUM		Original Capital Commitments		Capital Invested to Date		Realized Value(1)		Unrealized Value(2)		Total Value		MoIC		IRR(%)		Primary Investment Strategy
Fund														Gross(3)	Net(4)	Gross(5)	Net(6)
Fund Harvesting Investments
IDF IV(7)	2018	$	3,764	$	4,012	$	4,419	$	1,706	$	3,233	$	4,939	1.2x	1.1x	7.4	5.3	Infrastructure Debt

(1)Realized value includes distributions of operating income, sales and financing proceeds received.

(2)Unrealized value represents the fund's NAV reduced by the accrued incentive allocation, if applicable. There can be no assurance that unrealized values will be realized at the valuations indicated.

(3)The gross MoIC is calculated at the fund level and is based on the interests of the fee-paying limited partners and if applicable, excludes interests attributable to the non-fee paying limited partners and/or the general partner which does not pay management fees or carried interest. The gross MoIC is before giving effect to management fees, carried interest, as applicable, and other expenses, but after giving effect to credit facility interest expenses, as applicable. The funds may utilize a credit facility during the investment period and for general cash management purposes. Early in the life of a fund, the gross fund-level MoICs would generally have been lower had such fund called capital from its limited partners instead of utilizing the credit facility.

(4)The net MoIC is calculated at the fund-level and is based on the interests of the fee-paying limited partners and, if applicable, excludes interests attributable to the non fee-paying limited partners and/or the general partner which does not pay management fees or carried interest. The net MoIC is after giving effect to management fees, carried interest, as applicable, credit facility interest expense, as applicable, and other expenses. The funds may utilize a credit facility during the investment period and for general cash management purposes. Early in the life of a fund, the net fund-level MoICs would generally have been lower had such fund called capital from its limited partners instead of utilizing the credit facility.

(5)The gross IRR is an annualized since inception gross internal rate of return of cash flows to and from the fund and the fund’s residual value at the end of the measurement period. Gross IRR reflects returns to the fee-paying limited partners and, if applicable, excludes interests attributable to the non-fee paying limited partners and/or the general partner which does not pay management fees or carried interest. The cash flow dates used in the gross IRR calculation are based on the actual dates of the cash flows. The gross IRRs are calculated before giving effect to management fees, carried interest and other expenses, but after giving effect to credit facility interest expenses, as applicable. The funds may utilize a credit facility during the investment period and for general cash management purposes. Gross fund-level IRRs would generally have been lower had such fund called capital from its limited partners instead of utilizing the credit facility.

(6)The net IRR is an annualized since inception net internal rate of return of cash flows to and from the fund and the fund’s residual value at the end of the measurement period. Net IRRs reflect returns to the fee-paying limited partners and, if applicable, exclude interests attributable to the non-fee paying limited partners and/or the general partner which does not pay management fees or carried interest. The cash flow dates used in the net IRR calculations are based on the actual dates of the cash flows. The net IRRs are calculated after giving effect to management fees and carried interest, other expenses and credit facility interest expenses, as applicable. The funds may utilize a credit facility during the investment period and for general cash management purposes. Net fund-level IRRs would generally have been lower had such fund called capital from its limited partners instead of utilizing the credit facility.

(7)IDF IV is made up of U.S. Dollar hedged, U.S. Dollar unhedged, Euro unhedged, Yen hedged parallel funds and a single investor U.S. Dollar parallel fund. The gross and net IRR and MoIC presented in the table are for the U.S. Dollar hedged parallel fund. The gross and net IRR for the U.S. Dollar unhedged parallel fund are 6.8% and 4.7%, respectively. The gross and net MoIC for the U.S. Dollar unhedged parallel fund are 1.2x and 1.1x, respectively. The gross and net IRR for the Euro unhedged parallel fund are 7.1% and 4.9%, respectively. The gross and net MoIC for the Euro unhedged parallel fund are 1.2x and 1.1x, respectively. The gross and net IRR for the Yen hedged parallel fund are 5.6% and 3.7%, respectively. The gross and net MoIC for the Yen hedged parallel fund are 1.2x and 1.1x, respectively. The gross and net IRR for the single investor U.S. Dollar parallel fund are 5.7% and 4.3%, respectively. The gross and net MoIC for the single investor U.S. Dollar parallel fund are 1.1x and 1.1x, respectively. Original capital commitments are converted to U.S. Dollars at the prevailing exchange rate at the time of fund's closing. All other values for IDF IV are for the combined fund and are converted to U.S. Dollars at the prevailing quarter-end exchange rate.

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Secondaries Group—Three and Six Months Ended June 30, 2023 Compared to Three and Six Months Ended June 30, 2022

Fee Related Earnings:

The following table presents the components of the Secondaries Group’s FRE ($ in thousands):

	Three months ended June 30,				Favorable (Unfavorable)			Six months ended June 30,				Favorable (Unfavorable)
	2023		2022		$ Change		% Change	2023		2022		$ Change		% Change
Management fees	$	41,785	$	46,201	$	(4,416)	(10)%	$	81,648	$	90,705	$	(9,057)	(10)%
Fee related performance revenues	298		—		298		NM	3,569		—		3,569		NM
Other fees	5		—		5		NM	5		—		5		NM
Compensation and benefits	(16,623)		(15,133)		(1,490)		(10)	(30,035)		(26,773)		(3,262)		(12)
General, administrative and other expenses	(4,151)		(2,957)		(1,194)		(40)	(8,443)		(6,035)		(2,408)		(40)
Fee Related Earnings	$	21,314	$	28,111	(6,797)		(24)	$	46,744	$	57,897	(11,153)		(19)

Management Fees. The chart below presents Secondaries Group management fees and effective management fee rates ($ in millions):

Management fees from Landmark Equity Partners XV, L.P. (“LEP XV”) decreased by $3.6 million and $7.3 million for the three and six months ended June 30, 2023, respectively, compared to the three and six months ended June 30, 2022 primarily due to the change in fee base to reported value, which largely reflects the NAV of each funds’ limited partnership interests, from called capital plus unfunded commitments. Management fees also decreased due to one-time catch-up fees from Landmark Equity Partners XVII, L.P. (“LEP XVII”) of $3.4 million and $4.4 million that were recognized during the three and six months ended June 30, 2022, respectively. The decreases in management fees were partially offset by increases for the three and six months ended June 30, 2023 compared to the same periods in 2022 driven by: (i) additional fees from our ninth real estate secondaries fund, excluding one-time catch-up fees during the periods, of $1.0 million and $4.2 million, respectively,

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generated from new commitments; and (ii) higher fees from APMF of $1.0 million and $1.2 million, respectively, as we contractually agreed to a reduced fee rate of 0.25% from inception through March 31, 2023 that subsequently increased to 1.40% beginning in the second quarter of 2023.

The decreases in effective management fee rates for the three and six months ended June 30, 2023 compared to the same periods in 2022 were primarily driven by the reduction in fee base of LEP XV.

Fee Related Performance Revenues. Fee related performance revenues reflects incentive fees recognized from APMF for the six months ended June 30, 2023. Incentive fees from APMF are calculated based on 12.5% of its investment return each quarter, including income and net appreciation, subject to certain net loss carry-forward provisions.

Compensation and Benefits. The increases in compensation and benefits for the three and six months ended June 30, 2023 compared to the same periods in 2022 were primarily driven by higher salary expense of $0.9 million and $1.6 million, respectively, primarily attributable to headcount growth. For the six months ended June 30, 2023 compared to the same period in 2022, the increase in compensation and benefits was also driven by higher fee related performance compensation of $2.1 million corresponding to the increases in fee related performance revenues.

Average headcount increased by 6% to 101 investment and investment support professionals for the year-to-date period in 2023 from 95 professionals for the same period in 2022.

General, Administrative and Other Expenses. Travel and marketing collectively increased by $0.7 million and $1.6 million for the three and six months ended June 30, 2023, respectively, compared to the same periods in 2022 driven by more in-person company meetings and events and by distribution fees from APMF that are expected to fluctuate with sales and the growth in assets. Additionally, professional service fees have increased by $0.2 million and $0.3 million for the three and six months ended June 30, 2023, respectively, compared to the same periods in 2022, primarily due to recruiting fees to hire professionals that will support anticipated future growth of our investment offerings.

Realized Income:

The following table presents the components of the Secondaries Group’s RI ($ in thousands):

	Three months ended June 30,				Favorable (Unfavorable)			Six months ended June 30,				Favorable (Unfavorable)
	2023		2022		$ Change		% Change	2023		2022		$ Change		% Change
Fee Related Earnings	$	21,314	$	28,111	$	(6,797)	(24)%	$	46,744	$	57,897	$	(11,153)	(19)%
Performance income—realized	5,460		4,156		1,304		31	5,460		4,156		1,304		31
Performance related compensation—realized	(4,678)		(3,514)		(1,164)		(33)	(4,678)		(3,514)		(1,164)		(33)
Realized net performance income	782		642		140		22	782		642		140		22
Interest and other investment income—realized	182		2,200		(2,018)		(92)	1,407		2,844		(1,437)		(51)
Interest expense	(2,451)		(1,557)		(894)		(57)	(4,756)		(2,022)		(2,734)		(135)
Realized net investment income (loss)	(2,269)		643		(2,912)		NM	(3,349)		822		(4,171)		NM
Realized Income	$	19,827	$	29,396	(9,569)		(33)	$	44,177	$	59,361	(15,184)		(26)

Realized net performance income for the three and six months ended June 30, 2023 and 2022 was primarily attributable to tax distributions from LREP VIII.

Realized net investment loss for the three and six months ended June 30, 2023 largely represents interest expense exceeding net investment and other income during the period. Interest expense, which is allocated among our segments based on the cost basis of balance sheet investments, increased over the comparative periods primarily due to rising SOFR rates and a higher average outstanding balance of the Credit Facility. Realized net investment loss for the six months ended June 30, 2023 was partially offset by dividend income received from APMF.

Realized net investment income for the three and six months ended June 30, 2022 was primarily attributable to distributions from an infrastructure secondaries fund.

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Secondaries Group—Performance Income

In the Secondaries Group, we are entitled to carried interest from the funds with closings subsequent to the completion of the Landmark Acquisition and to carried interest we acquired through the purchase of ownership interests in certain Landmark GP entities. The following table presents the accrued carried interest, also referred to as accrued performance income, and related performance compensation for the Secondaries Group. Accrued net performance income excludes net performance income that has been realized but not yet received as of the reporting date ($ in thousands):

	As of June 30, 2023						As of December 31, 2022
	Accrued Performance Income		Accrued Performance Compensation		Accrued Net Performance Income		Accrued Performance Income		Accrued Performance Compensation		Accrued Net Performance Income
LEP XVI	$	133,256	$	113,934	$	19,322	$	141,122	$	120,659	$	20,463
LREP VIII	112,151		96,450		15,701		109,928		94,538		15,390
Other secondaries funds	55,235		47,174		8,061		58,135		49,726		8,409
Total Secondaries Group	$	300,642	$	257,558	$	43,084	$	309,185	$	264,923	$	44,262

The following table presents the change in accrued performance income for the Secondaries Group ($ in thousands):

		As of December 31, 2022		Activity during the period				As of June 30, 2023
	Waterfall Type	Accrued Carried Interest		Change in Unrealized		Realized		Accrued Carried Interest
Accrued Carried Interest
LEP XVI	European	$	141,122	$	(7,866)	$	—	$	133,256
LREP VIII	European	109,928		6,783		(4,560)		112,151
Other secondaries funds	European	58,135		(2,000)		(900)		55,235
Total Secondaries Group		$	309,185	$	(3,083)	$	(5,460)	$	300,642

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Secondaries Group—Assets Under Management

The table below presents the rollforwards of AUM for the Secondaries Group ($ in millions):

	Private Equity Secondaries		Real Estate Secondaries		Infrastructure Secondaries		Credit Secondaries		Other(1)		Total Secondaries Group
Balance at 3/31/2023	$	12,670	$	7,667	$	1,569	$	938	$	50	$	22,894
Net new par/equity commitments	21		121		—		—		—		142
Distributions	(60)		(67)		(2)		—		—		(129)
Change in fund value	(48)		36		107		—		—		95
Balance at 6/30/2023	$	12,583	$	7,757	$	1,674	$	938	$	50	$	23,002
	Private Equity Secondaries		Real Estate Secondaries		Infrastructure Secondaries		Credit Secondaries		Other		Total Secondaries Group
Balance at 3/31/2022	$	14,305	$	7,530	$	1,633	$	—	$	—	$	23,468
Net new par/equity commitments	480		311		74		—		—		865
Distributions	(178)		(267)		(106)		—		—		(551)
Change in fund value	100		(52)		62		—		—		110
Balance at 6/30/2022	$	14,707	$	7,522	$	1,663	$	—	$	—	$	23,892
	Private Equity Secondaries		Real Estate Secondaries		Infrastructure Secondaries		Credit Secondaries		Other(1)		Total Secondaries Group
Balance at 12/31/2022	$	12,769	$	7,552	$	1,640	$	—	$	—	$	21,961
Net new par/equity commitments	42		359		—		938		50		1,389
Distributions	(319)		(163)		(72)		—		—		(554)
Change in fund value	91		9		106		—		—		206
Balance at 6/30/2023	$	12,583	$	7,757	$	1,674	$	938	$	50	$	23,002
	Private Equity Secondaries		Real Estate Secondaries		Infrastructure Secondaries		Credit Secondaries		Other		Total Secondaries Group
Balance at 12/31/2021	$	13,833	$	6,662	$	1,624	$	—	$	—	$	22,119
Acquisitions	199		—		—		—		—		199
Net new par/equity commitments	648		1,223		74		—		—		1,945
Distributions	(287)		(687)		(152)		—		—		(1,126)
Change in fund value	314		324		117		—		—		755
Balance at 6/30/2022	$	14,707	$	7,522	$	1,663	$	—	$	—	$	23,892
(1) Activity within Other represents equity commitments to the platform that have not yet been allocated to an investment strategy.

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The components of our AUM for the Secondaries Group are presented below ($ in billions):

AUM: $23.0 AUM: $23.9

FPAUM AUM not yet paying fees Non-fee paying(1)

(1) Includes $0.5 billion and $0.4 billion of non-fee paying AUM based on our general partner commitment as of June 30, 2023 and 2022, respectively.

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Secondaries Group—Fee Paying AUM

The table below presents the rollforwards of fee paying AUM for the Secondaries Group ($ in millions):

	Private Equity Secondaries		Real Estate Secondaries		Infrastructure Secondaries		Credit Secondaries		Total Secondaries Group
Balance at 3/31/2023	$	10,998	$	5,473	$	1,276	$	—	$	17,747
Commitments	21		115		—		—		136
Deployment/subscriptions/increase in leverage	—		186		7		—		193
Distributions	(16)		(57)		—		—		(73)
Change in fund value	(150)		(41)		(29)		—		(220)
Change in fee basis	(7)		19		—		—		12
Balance at 6/30/2023	$	10,846	$	5,695	$	1,254	$	—	$	17,795
	Private Equity Secondaries		Real Estate Secondaries		Infrastructure Secondaries		Credit Secondaries		Total Secondaries Group
Balance at 3/31/2022	$	11,894	$	4,969	$	1,207	$	—	$	18,070
Commitments	478		259		74		—		811
Deployment/subscriptions/increase in leverage	1		246		4		—		251
Distributions	(48)		(260)		(80)		—		(388)
Change in fund value	225		(120)		74		—		179
Change in fee basis	(1,349)		(20)		—		—		(1,369)
Balance at 6/30/2022	$	11,201	$	5,074	$	1,279	$	—	$	17,554
	Private Equity Secondaries		Real Estate Secondaries		Infrastructure Secondaries		Credit Secondaries		Total Secondaries Group
Balance at 12/31/2022	$	11,062	$	5,313	$	1,293	$	—	$	17,668
Commitments	42		201		—		—		243
Deployment/subscriptions/increase in leverage	67		217		15		—		299
Distributions	(55)		(153)		(58)		—		(266)
Change in fund value	(227)		111		4		—		(112)
Change in fee basis	(43)		6		—		—		(37)
Balance at 6/30/2023	$	10,846	$	5,695	$	1,254	$	—	$	17,795
	Private Equity Secondaries		Real Estate Secondaries		Infrastructure Secondaries		Credit Secondaries		Total Secondaries Group
Balance at 12/31/2021	$	11,787	$	5,389	$	1,188	$	—	$	18,364
Acquisitions	131		—		—		—		131
Commitments	595		839		74		—		1,508
Deployment/subscriptions/increase in leverage	58		246		16		—		320
Distributions	(59)		(678)		(124)		—		(861)
Change in fund value	71		722		125		—		918
Change in fee basis	(1,382)		(1,444)		—		—		(2,826)
Balance at 6/30/2022	$	11,201	$	5,074	$	1,279	$	—	$	17,554

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The chart below presents FPAUM for the Secondaries Group by its fee bases ($ in billions):

FPAUM: $17.8 FPAUM: $17.6

Market value(1) Capital commitments Invested capital/other

(1)Amounts represent FPAUM from funds that primarily invest in illiquid strategies. The underlying investments held in these funds are generally subject to less market volatility than investments held in liquid strategies.

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Secondaries Group—Fund Performance Metrics as of June 30, 2023

Two significant funds, LEP XVI and LREP VIII, collectively contributed approximately 43% of the Secondaries Group’s management fees for the six months ended June 30, 2023.

The following table presents the performance data of the Secondaries Group’s significant drawdown funds as of June 30, 2023 ($ in millions):

	Year of Inception	AUM		Original Capital Commitments		Capital Invested to Date		Realized Value(1)		Unrealized Value(2)		Total Value		MoIC		IRR(%)		Primary Investment Strategy
Fund														Gross(3)	Net(4)	Gross(5)	Net(6)
Funds Harvesting Investments
LEP XVI(7)	2016	$	4,820	$	4,896	$	3,433	$	1,990	$	2,871	$	4,861	1.6x	1.4x	32.0	21.7	Private Equity Secondaries
LREP VIII(7)	2016	3,417		3,300		2,182		1,350		1,682		3,032		1.5x	1.4x	24.5	17.0	Real Estate Secondaries

For all funds in the Secondaries Group, returns are calculated from results of the underlying portfolio that are generally reported on a three month lag and may not include the impact of economic and market activities occurring in the current reporting period.

(1)Realized value represents the sum of all cash distributions to all limited partners and if applicable, exclude tax and incentive distributions made to the general partner.

(2)Unrealized value represents the limited partners’ share of fund’s NAV reduced by the accrued incentive allocation, if applicable. There can be no assurance that unrealized values will be realized at the valuations indicated.

(3)The gross MoIC is calculated at the fund-level and is based on the interests of all partners. If applicable, limiting the gross MoIC to exclude interests attributable to the non-fee paying limited partners and/or the general partner who does not pay management fees or carried interest would have no material impact on the result. The gross MoIC is before giving effect to management fees, carried interest, as applicable, and other expenses, but after giving effect to credit facility interest expenses, as applicable. The funds may utilize a short-term credit facility for general cash management purposes, as well as a long-term credit facility as permitted by the respective fund’s governing documentation. The gross fund-level MoIC would have generally been lower had such fund called capital from its partners instead of utilizing the credit facility.

(4)The net MoIC is calculated at the fund-level and is based on the interests of the fee-paying limited partners and if applicable, excludes those interests attributable to the non-fee paying limited partners and/or the general partner which does not pay management fees or carried interest. The net MoIC is after giving effect to management fees and other expenses, carried interest and credit facility interest expense, as applicable. The funds may utilize a short-term credit facility for general cash management purposes, as well as a long-term credit facility as permitted by the respective fund’s governing documentation. The net fund-level MoICs would generally have been lower had such fund called capital from its limited partners instead of utilizing the credit facility.

(5)The gross IRR is an annualized since inception gross internal rate of return of cash flows to and from the fund and the fund’s residual value at the end of the measurement period. Gross IRR reflects returns to all partners. If applicable, limiting the gross IRR to exclude interests attributable to the non-fee paying limited partners and/or the general partner who does not pay management fees or carried interest would have no material impact on the result. The cash flow dates used in the gross IRR calculation are based on the actual dates of the cash flows. The gross IRRs are calculated before giving effect to management fees, carried interest, as applicable, and other expenses, but after giving effect to credit facility interest expenses, as applicable. The funds may utilize a short-term credit facility for general cash management purposes, as well as a long-term credit facility as permitted by the respective fund’s governing documents. The gross fund-level IRR would generally have been lower had such fund called capital from its partners instead of utilizing the credit facility.

(6)The net IRR is an annualized since inception net internal rate of return of cash flows to and from the fund and the fund’s residual value at the end of the measurement period. Net IRRs reflect returns to the fee-paying limited partners and, if applicable, exclude interests attributable to the non-fee paying limited partners and/or the general partner who does not pay management fees or carried interest. The cash flow dates used in the net IRR calculations are based on the actual dates of the cash flows. The net IRRs are calculated after giving effect to management fees and other expenses, carried interest and credit facility interest expenses, as applicable. The funds may utilize a short-term credit facility for general cash management purposes, as well as a long-term credit facility as permitted by the respective fund’s governing documents. Net fund-level IRRs would generally have been lower had such fund called capital from its limited partners instead of utilizing the credit facility.

(7)The results of each fund is presented on a combined basis with the affiliated parallel funds or accounts, given that the investments are substantially the same.

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Operations Management Group—Three and Six Months Ended June 30, 2023 Compared to Three and Six Months Ended June 30, 2022

Fee Related Earnings:

The following table presents the components of the Operations Management Group’s FRE ($ in thousands):

	Three months ended June 30,				Favorable (Unfavorable)			Six months ended June 30,				Favorable (Unfavorable)
	2023		2022		$ Change		% Change	2023		2022		$ Change		% Change
Other fees	$	7,848	$	6,298	$	1,550	25%	$	12,488	$	12,174	$	314	3%
Compensation and benefits	(86,011)		(71,341)		(14,670)		(21)	(170,978)		(135,408)		(35,570)		(26)
General, administrative and other expenses	(49,467)		(35,225)		(14,242)		(40)	(95,639)		(67,609)		(28,030)		(41)
Fee Related Earnings	$	(127,630)	$	(100,268)	(27,362)		(27)	$	(254,129)	$	(190,843)	(63,286)		(33)

Other Fees. The increases in other fees for the three and six months ended June 30, 2023 compared to the same periods in 2022 were primarily driven by: (i) net asset-based distribution fees associated with our non-traded REITs of $1.7 million and $3.4 million, respectively; (ii) broker-dealer advisory fees of $2.0 million earned in connection with the initial public offering of AAC II during the second quarter of 2023; and (iii) administrative fees reimbursement for expenses that have been excluded from FRE of $1.1 million. The increases in other fees for the three and six months ended June 30, 2023 compared to the same periods in 2022 were partially offset by decreases in facilitation fees from the 1031 exchange program associated with our non-traded REITs of $2.9 million and $5.5 million, respectively.

Compensation and Benefits. The increases in compensation and benefits for the three and six months ended June 30, 2023, respectively, compared to the same periods in 2022 were primarily driven by: (i) the expansion of our strategy and relationship management teams to support global fundraising; (ii) the expansion of our business operations teams to support the growth of our business and other strategic initiatives; and (iii) higher incentive-based compensation that we believe will continue to increase throughout the year and exceed prior year levels. Average headcount increased by 23% to 1,452 operations management professionals for the year-to-date period in 2023 from 1,176 professionals for the same period in 2022.

The increases described above included $1.0 million of expense recognized in connection with the SSG Buyout which did not have comparable results as the transaction closed on March 31, 2023.

Our engagement of a third party subject matter expert to support the reorganization of our income tax compliance function during the third quarter of 2022 reduced salary expense by $2.3 million and $5.9 million for the three and six months ended June 30, 2023, respectively, with a corresponding increase in general, administrative and other expenses. As this reorganization occurred at the end of the second quarter of 2022, the results will be more comparable beginning with the third quarter of 2023.

Employee commissions, which are earned in connection with the sale and distribution of fund shares in our non-traded REITs and private placements of our exchange programs, have been de-emphasized as a component of Ares Wealth Management Solutions, LLC’s (“AWMS”) compensation structure and instead have been replaced with other forms of compensation that are not aligned with the sales volumes of our retail products. This change in the compensation structure will limit expense volatility associated with those sales in future periods.

General, Administrative and Other Expenses. Professional service fees increased by $4.8 million and $11.2 million for the three and six months ended June 30, 2023, respectively, compared to the same periods in 2022 primarily due to the reorganization of our income tax compliance function. Additionally, travel and marketing collectively increased by $2.7 million and $7.4 million for the three and six months ended June 30, 2023, respectively, compared to the same periods in 2022 driven by more investor meetings and events and conducted more in-person company meetings and events with a focus on promoting collaboration. The increases for travel and marketing over the comparative periods were also inclusive of $0.3 million and $2.2 million, respectively, from AWMS, driven by more meetings and events as marketing and communication efforts continued to increase with our expanding retail distribution platform. As we build out our retail distribution infrastructure and capabilities to support prospective sales and AUM growth, we expect marketing and distribution expenses, including travel, to increase in future periods. Separately, certain other expenses also increased by $1.5 million and $2.3 million for the three and six months ended June 30, 2023, respectively, compared to the same periods in 2022 as we increased training to develop the skills of our employees, onboarded individuals participating in our summer internship program and conducted more in-person company meetings and events, including events held globally to celebrate Ares’ 25th anniversary.

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Certain expenses have also increased during the current year to support our growing headcount and the expansion of our business. Most notably, occupancy costs, information technology and information services have collectively increased by $2.8 million and $5.1 million for the three and six months ended June 30, 2023, respectively, compared to the same periods in 2022.

The increases described above included $0.5 million of expense recognized in connection with the SSG Buyout which did not have comparable results as the transaction closed on March 31, 2023.

Realized Income:

The following table presents the components of the OMG’s RI ($ in thousands):

	Three months ended June 30,				Favorable (Unfavorable)			Six months ended June 30,				Favorable (Unfavorable)
	2023		2022		$ Change		% Change	2023		2022		$ Change		% Change
Fee Related Earnings	$	(127,630)	$	(100,268)	$	(27,362)	(27)%	$	(254,129)	$	(190,843)	$	(63,286)	(33)%
Interest and other investment income (loss)—realized	328		(995)		1,323		NM	236		(1,279)		1,515		NM
Interest expense	(11)		(179)		168		94	(37)		(346)		309		89
Realized net investment income (loss)	317		(1,174)		1,491		NM	199		(1,625)		1,824		NM
Realized Income	$	(127,313)	$	(101,442)	(25,871)		(26)	$	(253,930)	$	(192,468)	(61,462)		(32)

Liquidity and Capital Resources

Management assesses liquidity in terms of our ability to generate cash to fund operating, investing and financing activities. Management believes that the Company is well-positioned and its liquidity will continue to be sufficient for its foreseeable working capital needs, contractual obligations, dividend payments, pending acquisitions and strategic initiatives.

Sources and Uses of Liquidity

Our sources of liquidity are (1) cash on hand, (2) net working capital, (3) cash from operations, including management fees and fee related performance revenues, which are collected monthly, quarterly or semi-annually, and net realized performance income, which may be unpredictable as to amount and timing, (4) fund distributions related to our investments that are unpredictable as to amount and timing and (5) net borrowing from the Credit Facility. As of June 30, 2023, our cash and cash equivalents were $276.8 million, and we had $725.0 million borrowings outstanding under our Credit Facility. Our ability to draw from the Credit Facility is subject to leverage and other covenants. We remain in compliance with all covenants as of June 30, 2023. We believe that these sources of liquidity will be sufficient to fund our working capital requirements and to meet our commitments in the ordinary course of business and under the current market conditions for the foreseeable future. Cash flows from management fees may be impacted by a slowdown or declines in deployment, declines or write downs in valuations, or a slowdown or negatively impacted fundraising. In addition, management fees may be subject to deferral and fee related performance revenues may be subject to hold backs. Declines or delays and transaction activity may impact our fund distributions and net realized performance income which could adversely impact our cash flows and liquidity. Market conditions may make it difficult to extend the maturity or refinance our existing indebtedness or obtain new indebtedness with similar terms.

We expect that our primary liquidity needs will continue to be to (1) provide capital to facilitate the growth of our existing investment management businesses, (2) fund our investment commitments, (3) provide capital to facilitate our expansion into businesses that are complementary to our existing investment management businesses as well as other strategic growth initiatives, (4) pay operating expenses, including cash compensation to our employees, and make payments under the tax receivable agreement (“TRA”), (5) fund capital expenditures, (6) service our debt, (7) pay income taxes, (8) make dividend payments to our Class A and non-voting common stockholders in accordance with our dividend policy and (9) pay distributions to AOG unitholders.

In the normal course of business, we expect to pay dividends to our Class A and non-voting common stockholders that are aligned with our expected fee related earnings after an allocation of current taxes paid. For the purposes of determining this amount, we allocate the current taxes paid to FRE and to realized incentive and investment income in a manner that may be disproportionate to earnings generated by these metrics, and the actual taxes paid on these metrics should they be considered separately. Additionally, our methodology uses the tax benefits from certain expenses that are not included in these non-GAAP metrics, such as equity-based compensation from the vesting of restricted units and the exercise of stock options and from the

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amortization of intangible assets, among others. We allocate the taxes by multiplying the statutory tax rate currently in effect by our realized performance and net investment income and removing this amount from total current taxes. The remaining current tax paid is the amount that we allocate to FRE. We use this method to allocate the current provision for income taxes to approximate the amount of cash that is available to pay dividends to our stockholders. If cash flows from operations were insufficient to fund dividends over a sustained period of time, we expect that we would suspend or reduce paying such dividends. In addition, there is no assurance that dividends would continue at the current levels or at all.

Our ability to obtain debt financing and complete stock offerings provides us with additional sources of liquidity. For further discussion of financing transactions occurring in the current period, see “Cash Flows” within this section and “Note 6. Debt” and “Note 12. Equity and Redeemable Interest” within our unaudited condensed consolidated financial statements included in this Quarterly Report on Form 10-Q.

Our unaudited condensed consolidated financial statements reflect the cash flows of our operating businesses as well as those of our Consolidated Funds. The assets of our Consolidated Funds, on a gross basis, are significantly larger than the assets of our operating businesses and therefore have a substantial effect on the amounts reported within our condensed consolidated statements of cash flows . The primary cash flow activities of our Consolidated Funds include: (1) raising capital from third-party investors, which is reflected as non-controlling interests of our Consolidated Funds, (2) financing certain investments by issuing debt, (3) purchasing and selling investment securities, (4) generating cash through the realization of certain investments, (5) collecting interest and dividend income and (6) distributing cash to investors. Our Consolidated Funds are generally accounted for as investment companies under GAAP; therefore, the character and classification of all Consolidated Fund transactions are presented as cash flows from operations. Liquidity available at our Consolidated Funds is not available for corporate liquidity needs, and debt of the Consolidated Funds is non–recourse to the Company except to the extent of the Company’s investment in the fund.

Cash Flows

We consolidate funds where we are deemed to hold a controlling interest. The Consolidated Funds are not necessarily the same entities in each year presented due to changes in ownership, changes in limited partners’ rights and the creation or termination of funds. The consolidation of these funds had no effect on cash flows attributable to us for the periods presented. As such, we evaluate the activity of the Consolidated Funds and the eliminations resulting from consolidation separately. The following tables and discussion summarize our condensed consolidated statements of cash flows by activities attributable to the Company and to our Consolidated Funds. For more details on the activity of the Company and Consolidated Funds, refer to “Note 14. Consolidation” within our unaudited condensed consolidated financial statements included in this Quarterly Report on Form 10-Q.

	Six months ended June 30,
	2023		2022
Net cash provided by operating activities	$	467,676	$	358,175
Net cash used in the Consolidated Funds’ operating activities, net of eliminations	(459,156)		(926,373)
Net cash provided by (used in) operating activities	8,520		(568,198)
Net cash used in the Company’s investing activities	(21,127)		(320,125)
Net cash used in the Company’s financing activities	(564,377)		(116,458)
Net cash provided by the Consolidated Funds’ financing activities, net of eliminations	466,876		931,952
Net cash provided by (used in) financing activities	(97,501)		815,494
Effect of exchange rate changes	(3,052)		(17,959)
Net change in cash and cash equivalents	$	(113,160)	$	(90,788)

Operating Activities

In the table below cash flows from operations have been summarized to present: (i) cash generated from our core operating activities, primarily consisting of profits generated principally from management fees and fee related performance revenues after covering for operating expenses and fee related performance compensation; (ii) net realized performance income; and (iii) net cash from investment related activities including purchases, sales, net realized investment income and interest payments. We generated meaningful cash flow from operations in each period presented.

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	Six months ended June 30,				Favorable (Unfavorable)
	2023		2022		$ Change		% Change
Core operating activities	$	700,914	$	416,026	$	284,888	68%
Net realized performance income	39,337		80,849		(41,512)		(51)
Net cash used in investment related activities	(272,575)		(138,700)		(133,875)		97
Net cash provided by operating activities	$	467,676	$	358,175	109,501		31

Cash generated from our core operating activities increased as a result of growing fee revenues and sustained profitability. Net realized performance income represents a source of cash and includes incentive fees that are realized annually at the end of the measurement period, which is typically at the end of the calendar year. Cash from these realizations are generally received in the period subsequent to the measurement period. Our incentive fee realizations were higher in the fourth quarter of 2021 compared to the fourth quarter of 2022, which resulted in a decrease in cash payments received over the comparative periods.

Net cash used in investment related activities for the six months ended June 30, 2023 primarily represents: (i) purchases associated with funding capital commitments and strategic initiative related investments in our investment portfolio; (ii) interest payments on our debt obligations; offset by (iii) sales of our capital investments to employees. Our investment related activities may fluctuate depending on timing of capital investments and distributions of each fund from year to year. For further discussion of our capital commitments, see “Note 7. Commitments and Contingencies,” within our unaudited condensed consolidated financial statements included in this Quarterly Report on Form 10-Q.

Net cash used in the Consolidated Funds’ operating activities for six months ended June 30, 2023 and 2022 was principally attributable to net purchases of investment securities by recently launched funds during each period. The activity for the six months ended June 30, 2023 included the purchase of U.S. Treasury securities following the initial public offering of AAC II and the sale of U.S. Treasury securities associated with the redemption of Class A ordinary shares in AAC I by public shareholders.

Our working capital needs are generally rising to support the growth of our business, while the capital requirements needed to support fund-related activities vary based upon the specific investment activities being conducted during such period.

Investing Activities

	Six months ended June 30,
	2023		2022
Purchase of furniture, equipment and leasehold improvements, net of disposals	$	(21,127)	$	(18,448)
Acquisitions, net of cash acquired	—		(301,677)
Net cash used in investing activities	$	(21,127)	$	(320,125)

Net cash used in the Company’s investing activities was principally composed of cash to purchase furniture, fixtures, equipment and leasehold improvements during both years to support the growth in our staffing levels and to expand our global presence. Net cash used in the Company’s investing activities for the six months ended June 30, 2022 also included cash used to complete the Infrastructure Debt Acquisition.

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Financing Activities

	Six months ended June 30,
	2023		2022
Net borrowings (repayments) of Credit Facility	$	25,000	$	(20,000)
Proceeds from issuance of senior notes	—		488,915
Class A and non-voting common stock dividends	(294,604)		(222,912)
AOG unitholder distributions	(215,897)		(183,454)
Stock option exercises	53,140		8,644
Taxes paid related to net share settlement of equity awards	(133,570)		(189,485)
Other financing activities	1,554		1,834
Net cash used in the Company’s financing activities	$	(564,377)	$	(116,458)

As a result of generating higher fee related earnings, we increased the level of dividends paid to a growing shareholder base of Class A and non-voting common stockholders and distributions paid to AOG unitholders, resulting in net cash used in the Company’s financing activities for the six months ended June 30, 2023 and 2022.

In connection with the vesting of restricted units that are granted to our employees under the 2023 Equity Incentive Plan (the “Equity Incentive Plan,” which replaced the Third Amended and Restated 2014 Equity Incentive Plan during the second quarter of 2023), we withhold shares equal to the fair value of our employees tax withholding liabilities and pay the taxes on their behalf in cash and thus net issue fewer shares. This use of cash decreased from the prior year primarily as a result of fewer restricted units that vested in the current year. However, such decrease was partially offset by our higher stock price, which resulted in employees recognizing additional compensation. A greater number of restricted units vested in the prior year primarily due to certain awards that vested in their entirety on the fifth anniversary of their applicable grant dates. For the six months ended June 30, 2023 and 2022, we net settled and did not issue 1.5 million shares and 2.4 million shares, respectively. Net cash provided by the Company’s financing activities also included cash received from stock options exercises with 3.2 million and 0.5 million options exercised for the six months ended June 30, 2023 and 2022, respectively.

Net cash provided by the Company’s financing activities for the six months ended June 30, 2022 also included net proceeds from the issuance of the 2052 Senior Notes. These proceeds were used primarily to fund the Infrastructure Debt Acquisition.

	Six months ended June 30,
	2023		2022
Contributions from redeemable and non-controlling interests in Consolidated Funds, net of eliminations	$	680,991	$	218,280
Distributions to non-controlling interests in Consolidated Funds, net of eliminations	(35,925)		(53,638)
Redemptions of redeemable interest in Consolidated Funds	(538,985)		—
Borrowings under loan obligations by Consolidated Funds	535,464		814,183
Repayments under loan obligations by Consolidated Funds	(174,669)		(46,873)
Net cash provided by the Consolidated Funds’ financing activities	$	466,876	$	931,952

Net cash provided by the Consolidated Funds’ financing activities for the six months ended June 30, 2023 was primarily attributable to the borrowing of one newly issued CLO and the contributions from shareholders in the initial public offering of AAC II. Net cash used in the Consolidated Funds’ financing activities included the redemption of Class A ordinary shares in AAC I by public shareholders.

Net cash provided by the Consolidated Funds’ financing activities for the six months ended June 30, 2022 was primarily attributable to the borrowings of one newly issued CLO.

Capital Resources

We intend to use a portion of our available liquidity to pay cash dividends to our Class A and non-voting common stockholders on a quarterly basis in accordance with our dividend policy. Our ability to make cash dividends is dependent on a myriad of factors, including among others: general economic and business conditions; our strategic plans and prospects; our business and investment opportunities; timing of capital calls by our funds in support of our commitments; our financial condition and operating results; working capital requirements and other anticipated cash needs; contractual restrictions and obligations; legal, tax and regulatory restrictions; restrictions on the payment of distributions by our subsidiaries to us and other relevant factors.

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We are required to maintain minimum net capital balances for regulatory purposes for our broker-dealer entities. These net capital requirements are met in part by retaining cash, cash equivalents and investment securities. Additionally, certain of our subsidiaries operating outside the U.S. are also subject to capital adequacy requirements in each of the applicable jurisdictions. As a result, we may be restricted in our ability to transfer cash between different operating entities and jurisdictions. As of June 30, 2023, we were required to maintain approximately $65.8 million in net assets within these subsidiaries to meet regulatory net capital and capital adequacy requirements. We remain in compliance with all regulatory requirements.

Holders of AOG Units, subject to the terms of the exchange agreement, may exchange their AOG Units for shares of our Class A common stock on a one-for-one basis. These exchanges are expected to result in increases in the tax basis of the tangible and intangible assets of AMC that otherwise would not have been available. These increases in tax basis may increase depreciation and amortization for U.S. income tax purposes and thereby reduce the amount of tax that we would otherwise be required to pay in the future. We entered into the TRA that provides payment to the TRA recipients of 85% of the amount of actual cash savings, if any, in U.S. federal, state, local and foreign income tax or franchise tax that we actually realize as a result of these increases in tax basis and of certain other tax benefits related to entering into the TRA, including tax benefits attributable to payments under the TRA and interest accrued thereon (“Tax Receivable Benefit” (as defined in the TRA)). Pursuant to an amendment to the TRA, with an effective date of May 1, 2023, to the extent Ares Owners Holdings L.P. would have been a TRA recipient of certain Tax Benefit Payments under the TRA, for taxable exchanges on or after May 1, 2023, Ares Owners Holdings L.P. will no longer be entitled to any Tax Benefit Payment for such exchanges. Future payments under the TRA in respect of subsequent exchanges are expected to be substantial. The TRA liability balance was $132.5 million and $118.5 million as of June 30, 2023 and December 31, 2022, respectively.

For a discussion of our debt obligations, including the debt obligations of our consolidated funds, see “Note 6. Debt,” within our unaudited condensed consolidated financial statements included in this Quarterly Report on Form 10-Q.

Critical Accounting Estimates

We prepare our unaudited condensed consolidated financial statements in accordance with GAAP. In applying many of these accounting principles, we need to make assumptions, estimates or judgments that affect the reported amounts of assets, liabilities, revenues and expenses in our unaudited condensed consolidated financial statements. We base our estimates and judgments on historical experience and other assumptions that we believe are reasonable under the circumstances. These assumptions, estimates or judgments, however, are both subjective and subject to change, and actual results may differ from our assumptions and estimates. If actual amounts are ultimately different from our estimates, the revisions are included in our results of operations for the period in which the actual amounts become known. For a summary of our significant accounting policies, see “Note 2. Summary of Significant Accounting Policies,” to our unaudited condensed consolidated financial statements included in this Quarterly Report on Form 10-Q and in our Annual Report on Form 10-K for the year ended December 31, 2022. For a summary of our critical accounting estimates, please see "Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Estimates" in our Annual Report on Form 10-K.

Recent Accounting Pronouncements

Information regarding recent accounting pronouncements and their impact on the Company can be found in “Note 2. Summary of Significant Accounting Policies,” within our unaudited condensed consolidated financial statements included in this Quarterly Report on Form 10-Q.

Commitments and Contingencies

In the normal course of business, we enter into contractual obligations that may require future cash payments. We may also engage in off-balance sheet arrangements, including transactions in derivatives, guarantees, capital commitments to funds, indemnifications and potential contingent payment obligations. For further discussion of these arrangements, see “Note 7. Commitments and Contingencies” to our unaudited condensed consolidated financial statements included in this Quarterly Report on Form 10-Q.

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Item 3.  Quantitative and Qualitative Disclosures About Market Risk

Our primary exposure to market risk is related to our role as general partner or investment adviser to our investment funds and the sensitivity to movements in the fair value of their investments, including the effect on management fees, performance income and investment income.

Market Risk

The market price of investments may significantly fluctuate during the period of investment. Investments may decline in value due to factors affecting securities markets generally or particular industries represented in the securities markets. The value of an investment may decline due to general market conditions, which are not specifically related to such investment, such as real or perceived adverse economic conditions, changes in the general outlook for corporate earnings, changes in interest or currency rates or adverse investor sentiment generally. It may also decline due to factors that affect a particular industry or industries, such as labor shortages or increased production costs, supply chain constraints and competitive conditions within an industry.

Our credit orientation has been a central tenet of our business across our debt and equity investment strategies. We believe the combination of high-quality proprietary information flow and a consistent, rigorous approach to managing investments across our strategies has been, and we believe will continue to be, a major driver of our strong risk-adjusted returns and the stability and predictability of our income.

Exchange Rate Risk

We and our funds hold investments that are denominated in foreign currencies that may be affected by movements in the rate of exchange between those currencies and the U.S. dollar. Movements in the exchange rate between currencies impact the management fees, carried interest and incentive fees earned by funds with fee paying AUM denominated in foreign currencies as well as by funds with fee paying AUM denominated in U.S. dollars that hold investments denominated in foreign currencies. Additionally, movements in the exchange rate impact operating expenses for our global offices that transact in foreign currencies and the revaluation of assets and liabilities denominated in non-functional currencies, including cash balances and investments.

We manage our exposure to exchange rate risks through our regular operating activities, wherein we utilize payments received in foreign currencies to fulfill obligations in foreign currencies, and, when appropriate, through the use of derivative financial instruments to hedge the net foreign currency exposure in: the funds that we advise; the balance sheet exposure for certain direct investments denominated in foreign currencies; and the cash flow exposure for foreign currencies.

Credit Risk

We are party to agreements providing for various financial services and transactions that contain an element of risk in the event that the counterparties are unable to meet the terms of such agreements. In such agreements, we depend on the counterparty to make payment or otherwise perform. We generally endeavor to minimize our risk of exposure by limiting to reputable financial institutions the counterparties with which we enter into financial transactions. In other circumstances, availability of financing from financial institutions may be uncertain due to market events, and we may not be able to access these financing markets.

In the ordinary course of business, we may extend loans to our funds or guarantee credit facilities held by our funds and could be subject to risk of loss or repayment if our funds do not perform.

Certain of our funds’ investments include lower-rated and comparable quality unrated distressed investments and other instruments. These issuers can be more sensitive to adverse market conditions, such as a recession or increasing interest rates, as compared to higher rated issuers. We seek to minimize risk exposure by subjecting each prospective investment to our rigorous, credit-oriented investment approach.

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At June 30, 2023 and December 31, 2022, we had cash balances with financial institutions in excess of Federal Deposit Insurance Corporation insured limits. We seek to mitigate this exposure by monitoring the credit standing of these financial institutions. However, uncertainty surrounding global financial stability, including the liquidity of certain banks given the recent strain on the banking system, may have an adverse impact on us. For further consideration, see “Item 1A. Risk Factors—Our business is dependent on bank relationships and the recent strain on the banking system may adversely impact us.”

There have been no material changes in our market risks for the six months ended June 30, 2023. For additional information on our market risks, refer to our Annual Report on Form 10-K for the year ended December 31, 2022, which is accessible on the SEC’s website at www.sec.gov.

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Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures (as that term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) that are designed to ensure that information required to be disclosed in our reports under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosures. Any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. Our management, with the participation of our principal executive officer and principal financial officer, has evaluated the effectiveness of the design and operation of our disclosure controls and procedures as of June 30, 2023. Based upon that evaluation and subject to the foregoing, our principal executive officer and principal financial officer concluded that, as of June 30, 2023, the design and operation of our disclosure controls and procedures were effective to accomplish their objectives at the reasonable assurance level.

Changes in Internal Control over Financial Reporting

There have been no changes in our internal control over financial reporting (as defined in Rule 13a-15(f) and 15d-15(f) under the Exchange Act) during the quarter ended June 30, 2023 that have materially affected, or that are reasonably likely to materially affect, our internal control over financial reporting.

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PART II.

Item 1. Legal Proceedings

From time to time we are involved in various legal proceedings, lawsuits and claims incidental to the conduct of our business, some of which may be material. As of June 30, 2023 and December 31, 2022, we were not subject to any material pending legal proceedings. Our businesses are also subject to extensive regulation, which may result in regulatory proceedings or investigations against us or our funds and their investment advisers, respectively. While the outcome of any such future legal or regulatory proceedings cannot be predicted with certainty, neither we nor our funds or their investment advisers expect that any such future proceedings will have a material effect upon our financial condition or results of operations.

Item 1A.  Risk Factors

In addition to the other information set forth in this report, you should carefully consider the risk factors described in Part I, “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2022 and in Part II, “Item 1A. Risk Factors” in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2023, which are accessible on the SEC’s website at www.sec.gov. The risks described in our Annual Report on Form 10-K for the year ended December 31, 2022 and in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2023 are not the only risks facing us. These risks and additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially and adversely affect our business, financial condition and/or operating results.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

We did not sell any equity securities during the period covered in this report that were not registered under the Securities Act.

Except as set forth below, all unregistered purchases of equity securities during the period covered by this Quarterly Report were previously disclosed in our current reports on Form 8-K or quarterly reports on Form 10-Q ($ in thousands; except share data):

Period	Total Number of Shares Purchased	Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Approximate Dollar Value of Shares that may yet be Purchased Under the Plans or Programs(1)
April 1, 2023 - April 30, 2023	—	$	—	—	$	150,000
May 1, 2023 - May 31, 2023	—	—		—	150,000
June 1, 2023 - June 30, 2023	—	—		—	150,000
Total	—			—

(1)In February 2023, our board of directors approved the renewal of our stock repurchase program that authorizes the repurchase of up to $150 million of shares of our Class A common stock. Under this stock repurchase program, shares may be repurchased from time to time in open market purchases, privately negotiated transactions or otherwise, including in reliance on Rule 10b5-1 of the Securities Act. The program is scheduled to expire in March 2024. Repurchases under the program depend on the prevailing market conditions and other factors.

As permitted by our policies and procedures governing transactions in our securities by our directors, executive officers and other employees, from time to time some of these persons may establish plans or arrangements complying with Rule 10b5-1 under the Exchange Act, and similar plans and arrangements relating to our Class A common stock.

Item 3. Defaults Upon Senior Securities

None.

Item 4.  Mine Safety Disclosures

Not applicable.

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Item 5. Other Information

Rule 10b5-1 Trading Plans

During the quarter ended June 30, 2023, certain executive officers and directors of the Company or a vehicle controlled by them (each, a “Plan Participant”) entered into Rule 10b5-1 trading plan (a “Rule 10b5-1 Trading Plan”) to sell shares of the Company’s Class A common stock, in each case, subject to any applicable volume limitations.

The table below provides certain information regarding each Plan Participant’s Rule 10b5-1 Trading Plan.

Name and Title	Plan Date	Maximum Shares That May Be Sold Under the Plan	Plan Expiration Date
R. Kipp deVeer, Director, Head of Credit Group	May 8, 2023	281,498	May 8, 2024
Bennett Rosenthal, Director, Co-Founder and Chairman of Private Equity Group	May 12, 2023	500,000	April 30, 2024
David Kaplan, Director and Co-Founder	May 12, 2023	500,000	June 30, 2024
Ryan Berry, Chief Marketing and Strategy Officer	June 15, 2023	75,000	August 30, 2024

A Rule 10b5-1 Trading Plan is a written document that pre-establishes the amounts, prices and dates (or formulas for determining the amounts, prices and dates) of future purchases or sales of the Company’s common stock, including, if applicable, shares issued upon exercise of stock options or vesting of restricted stock units.

Each Plan Participant’s Rule 10b5-1 Trading Plan was adopted during an authorized trading period and when such Plan Participant was not in possession of material non-public information and is intended to satisfy the affirmative defense of Rule 10b5-1(c) under the Exchange Act.

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Item 6.  Exhibits, Financial Statement Schedules

(a)Exhibits.

The following is a list of all exhibits filed or furnished as part of this report.

Exhibit No.	Description
3.1	Second Amended and Restated Certificate of Incorporation of Ares Management Corporation (incorporated by reference to Exhibit 3.1 to the Registrant’s Quarterly Report on Form 10-Q (File No. 001-36429) filed with the SEC on May 6, 2021).
3.2	Bylaws of Ares Management Incorporation (incorporated by reference to Exhibit 99.4 to the Registrant’s Current Report on Form 8-K (File No. 001-36429) filed with the SEC on November 15, 2018).
10.1	Fourth Amended and Restated Tax Receivable Agreement, dated May 1, 2023 (incorporated by reference to Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10‑Q (File No. 001-36429) filed with the SEC on May 8, 2023).
10.2#	Ares Management Corporation 2023 Equity Incentive Plan (incorporated by reference to Annex B to the Registrant's Definitive Proxy Statement (File No. 001-36429) filed with the SEC on April 28, 2023).
10.3#	Form of Restricted Unit Agreement under the 2023 Equity Incentive Plan (incorporated by reference to Exhibit 10.3 to the Registrant's Registration Statement on Form S-8 (File No. 333-273232) filed with the SEC on July 13, 2023).
10.4#	Form of Deferred Restricted Unit Agreement under the 2023 Equity Incentive Plan (incorporated by reference to Exhibit 10.4 to the Registrant's Registration Statement on Form S-8 (File No. 333-273232) filed with the SEC on July 13, 2023).
10.5#	Form of Director Restricted Unit Agreement under the 2023 Equity Incentive Plan (incorporated by reference to Exhibit 10.5 to the Registrant's Registration Statement on Form S-8 (File No. 333-273232) filed with the SEC on July 13, 2023).
10.6#	Form of Executive Officer Time-Based Restricted Unit Agreement under the 2023 Equity Incentive Plan (incorporated by reference to Exhibit 10.6 to the Registrant's Registration Statement on Form S-8 (File No. 333-273232) filed with the SEC on July 13, 2023).
10.7#	Form of Executive Officer Performance-Based Restricted Unit Agreement under the 2023 Equity Incentive Plan (incorporated by reference to Exhibit 10.7 to the Registrant's Registration Statement on Form S-8 (File No. 333-273232) filed with the SEC on July 13, 2023).
31.1*	Certification of the Chief Executive Officer pursuant to Rule 13a-14(a).
31.2*	Certification of the Chief Financial Officer pursuant to Rule 13a-14(a).
32.1**	Certification of the Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350.
101.INS	XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH	Inline XBRL Taxonomy Extension Schema Document.
101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB	Inline XBRL Taxonomy Extension Label Linkbase Document.
101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase Document.
104	Cover Page Interactive Data File - the cover page interactive data file does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

# Denotes a management contract or compensation plan or arrangement.

* Filed herewith.
** These certifications are not deemed filed by the SEC and are not to be incorporated by reference in any filing we make under the Securities Act of 1933 or the Securities Exchange Act of 1934, irrespective of any general incorporation language in any filings.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	ARES MANAGEMENT CORPORATION
Dated: August 3, 2023		By:	/s/ Michael J Arougheti
		Name:	Michael J Arougheti
		Title:	Co-Founder, Chief Executive Officer & President (Principal Executive Officer)
Dated: August 3, 2023		By:	/s/ Jarrod Phillips
		Name:	Jarrod Phillips
		Title:	Chief Financial Officer (Principal Financial & Accounting Officer)

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