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 U.S. 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 2023 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 March 31, 2024, 95% of our management fees were derived from perpetual capital vehicles or 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., Europe and Asia-Pacific.

The following table presents returns of selected market indices:

																								Returns (%)
Type of Index						Name of Index						Region												Three months ended March 31, 2024
High yield bonds						ICE BAML High Yield Master II Index						U.S.												1.5
High yield bonds						ICE BAML European Currency High Yield Index						Europe												1.7
Leveraged loans						Credit Suisse Leveraged Loan Index (“CSLLI”)						U.S.												2.5
Leveraged loans						Credit Suisse Western European Leveraged Loan Index						Europe												2.0
Equities						S&P 500 Index						U.S.												10.6
Equities						MSCI All Country World Ex-U.S. Index						Non-U.S.												4.7
Real estate equities						FTSE NAREIT All Equity REITs Index						U.S.												(2.3)
Real estate equities						FTSE EPRA/NAREIT Developed Europe Index						Europe												(3.5)

Global markets began the year positively amid modest inflation and optimistic signaling by central banks. Despite the headwinds and ongoing conflicts in the Middle East and Ukraine, U.S. and European high yield bonds and leveraged loans returned positive performance. The Asian-Pacific markets experienced mixed performance as the region overall continued to show growth primarily driven by resilient demand in Southeast Asia, India and Australia, while opportunities have been limited in China from uncertainty surrounding the economy. Overall, reduced lending activity by banks and limited capital accessibility continued to support private credit growth.

Global equity markets continued to rally into the first quarter of 2024 following a positive finish to 2023. While the public markets began the year positively, the private markets continued to experience challenges with downward pressure on valuations and muted opportunities for realizations. The private equity markets continue to experience a prolonged slowdown in deal activity and we believe potential liquidity constraints from investors have increased the need for flexible capital solutions. Businesses have struggled to navigate this challenging growth and uncertain macroeconomic environment, which we believe has heightened the need for partnerships with value-add managers. This environment underscores the importance of investing in

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resilient industries where we have the ability to drive fundamental business growth and deliver a systematic approach to long-term value creation.

The commercial real estate markets continued to be impacted by the macroeconomic environment. European and U.S. real estate deal activity remained subdued with limited transactional liquidity. Given the higher interest rate environment, property valuations remain soft, though capitalization rate yields are beginning to stabilize following the sustained widening seen in 2023. We believe certain of these market trends will be offset by continued strong fundamentals, such as occupancy and rental rates, in property types that include multifamily and industrial.

The current market environment has had a more pronounced negative impact on certain industries, including energy, which is an industry in which few of our funds have made investments. As of March 31, 2024, 1% of our total AUM was invested in debt and equity investments in the energy sector (of which less than 1% of our total AUM was invested in midstream investments and also includes oil and gas exploration) and less than 1% of our total AUM was invested in renewable energy investments.

We believe our portfolios across all strategies are well positioned for a fluctuating interest rate environment. On a market value basis, approximately 85% of our debt assets and 56% of our total assets were floating rate instruments as of March 31, 2024.

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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.

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

						Credit Group						Real Assets Group						Private Equity Group						Secondaries Group						Other Businesses						Total AUM
Balance at 12/31/2023						$	299,350					$	65,413					$	24,551					$	24,760					$	4,772					$	418,846
Acquisitions						—						—						—						—						71						71
Net new par/equity commitments						7,735						408						315						969						1,515						10,942
Net new debt commitments						6,112						—						—						—						—						6,112
Capital reductions						(1,485)						(128)						(2)						—						—						(1,615)
Distributions						(3,563)						(846)						(36)						(164)						(135)						(4,744)
Redemptions						(2,517)						(434)						(2)						—						—						(2,953)
Net allocations among investment strategies						715						—						(47)						—						(668)						—
Change in fund value						2,292						(309)						(303)						76						(76)						1,680
Balance at 3/31/2024						$	308,639					$	64,104					$	24,476					$	25,641					$	5,479					$	428,339
						Credit Group						Real Assets Group						Private Equity Group						Secondaries Group						Other Businesses						Total AUM
Balance at 12/31/2022						$	239,299					$	66,061					$	21,029					$	21,961					$	3,647					$	351,997
Net new par/equity commitments						9,040						765						50						1,246						3,481						14,582
Net new debt commitments						1,423						—						—						—						—						1,423
Capital reductions						(2,081)						(403)						(3)						—						—						(2,487)
Distributions						(1,588)						(1,663)						(266)						(424)						(1,920)						(5,861)
Redemptions						(1,376)						(538)						—						—						(539)						(2,453)
Net allocations among investment strategies						816						—						—						—						(816)						—
Change in fund value						3,601						(108)						(154)						111						(356)						3,094
Balance at 3/31/2023						$	249,134					$	64,114					$	20,656					$	22,894					$	3,497					$	360,295

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

			AUM: $428.3						AUM: $360.3

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

(1) Includes $14.7 billion and $14.6 billion of AUM of funds from which we indirectly earn management fees as of March 31, 2024 and 2023, respectively, and includes $4.1 billion and $3.7 billion of non-fee paying AUM from our general partner and employee commitments as of March 31, 2024 and 2023, respectively.

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

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						Real Assets Group						Private Equity Group						Secondaries Group						Other Businesses						Total
Balance at 12/31/2023						$	185,280					$	41,338					$	13,124					$	19,040					$	3,575					$	262,357
Acquisitions						—						—						—						—						55						55
Commitments						3,778						296						—						900						1,321						6,295
Deployment/subscriptions/increase in leverage						7,221						862						—						61						—						8,144
Capital reductions						(2,764)						(12)						—						—						—						(2,776)
Distributions						(3,662)						(306)						—						(99)						(135)						(4,202)
Redemptions						(2,149)						(434)						(2)						—						—						(2,585)
Net allocations among investment strategies						886						—						—						—						(886)						—
Change in fund value						543						(404)						(19)						(2)						68						186
Change in fee basis						693						(504)						(538)						(9)						—						(358)
Balance at 3/31/2024						$	189,826					$	40,836					$	12,565					$	19,891					$	3,998					$	267,116
						Credit Group						Real Assets Group						Private Equity Group						Secondaries Group						Other Businesses						Total
Balance at 12/31/2022						$	158,441					$	41,607					$	11,281					$	17,668					$	2,064					$	231,061
Commitments						1,081						596						—						107						2,372						4,156
Deployment/subscriptions/increase in leverage						4,984						221						—						110						—						5,315
Capital reductions						(1,533)						(279)						—						—						—						(1,812)
Distributions						(2,536)						(632)						—						(197)						(645)						(4,010)
Redemptions						(1,377)						(538)						—						—						—						(1,915)
Net allocations among investment strategies						816						—						—						—						(816)						—
Change in fund value						1,342						(47)						—						108						(240)						1,163
Change in fee basis						—						—						—						(49)						—						(49)
Balance at 3/31/2023						$	161,218					$	40,928					$	11,281					$	17,747					$	2,735					$	233,909

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

			FPAUM: $267.1						FPAUM: $233.9

			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 $60.3 billion and $55.3 billion from funds that primarily invest in illiquid strategies as of March 31, 2024 and 2023, 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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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.

Perpetual Capital Assets Under Management

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

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 March 31, 2024 and 2023, 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 - Non-Traded Vehicles						Perpetual Capital - Managed Accounts						Perpetual Capital - Private Commingled Vehicles						Long-Dated Funds(1)						Other

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

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Available Capital and Assets Under Management Not Yet Paying Fees

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

			Credit						Real Assets						Private Equity						Secondaries						Other Businesses

As of March 31, 2024, AUM Not Yet Paying Fees includes $64.6 billion of AUM available for future deployment that could generate approximately $621.5 million in potential incremental annual management fees. As of March 31, 2023, AUM Not Yet Paying Fees included $50.5 billion of AUM available for future deployment that could generate approximately $483.0 million in potential incremental annual management fees.

Incentive Eligible Assets Under Management and Incentive Generating Assets Under Management

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

			Credit						Real Assets						Private Equity						Secondaries						Other Businesses

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As of March 31, 2024, perpetual capital IGAUM generating fee related performance revenues totaled $19.2 billion, composed of $18.2 billion within the Credit Group and $1.0 billion within the Secondaries Group. Fee related performance revenues are not recognized by us until such fees are crystallized and no longer subject to reversal. As of March 31, 2023, perpetual capital IGAUM from which we generated fee related performance revenues totaled $12.9 billion, composed of $12.6 billion within the Credit Group and $0.3 billion within the Secondaries Group.

Fund Performance Metrics

Fund performance information for our 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 or 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.

Consolidation and Deconsolidation of Ares Funds

Consolidated Funds represented approximately 4% of our AUM as of March 31, 2024 and 1% of total revenues for the three months ended March 31, 2024. As of March 31, 2024, we consolidated 28 CLOs, 11 private funds and one SPAC, and as of March 31, 2023, we consolidated 25 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 consolidation 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 our SPACs that are redeemable for cash by the public shareholders in the event that the SPAC does not complete a business combination or tender offer associated with shareholder approval provisions.

We generally deconsolidate funds and CLOs when we are no longer deemed to have a controlling interest in the entity. During the three months ended March 31, 2024 and 2023, 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

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 March 31,												Favorable (Unfavorable)
																											2024						2023						$ Change						% Change
Total revenues																											$	707,363					$	813,362					$	(105,999)					(13)%
Total expenses																											(538,493)						(628,636)						90,143						14
Total other income, net																											62,178						56,396						5,782						10
Less: Income tax expense																											27,233						33,806						6,573						19
Net income																											203,815						207,316						(3,501)						(2)
Less: Net income attributable to non-controlling interests in Consolidated Funds																											66,716						26,693						40,023						150
Net income attributable to Ares Operating Group entities																											137,099						180,623						(43,524)						(24)
Less: Net income (loss) attributable to redeemable interest in Ares Operating Group entities																											73						(1,824)						1,897						NM
Less: Net income attributable to non-controlling interests in Ares Operating Group entities																											63,999						88,408						(24,409)						(28)
Net income attributable to Ares Management Corporation Class A and non-voting common stockholders																											$	73,027					$	94,039					(21,012)						(22)

Three Months Ended March 31, 2024 Compared to Three Months Ended March 31, 2023

Consolidated Results of Operations of the Company

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

Revenues

															Three months ended March 31,												Favorable (Unfavorable)
																											2024						2023						$ Change						% Change
Revenues
Management fees																											$	687,692					$	600,516					$	87,176					15%
Carried interest allocation																											(32,478)						151,488						(183,966)						NM
Incentive fees																											8,667						8,923						(256)						(3)
Principal investment income																											7,050						22,758						(15,708)						(69)
Administrative, transaction and other fees																											36,432						29,677						6,755						23
Total revenues																											$	707,363					$	813,362					(105,999)						(13)

Management Fees. Capital deployment in direct lending, alternative credit and opportunistic credit funds within the Credit Group led to a rise in FPAUM and additional management fees of $54.8 million for the three months ended March 31, 2024 compared to the same period in 2023. Part I Fees contributed $22.8 million to the increase over the comparative periods. The increase in Part I Fees was primarily due to: (i) the 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; and (ii) ASIF and AESIF that began generating Part I Fees after the first quarter of 2023. Within the Private Equity Group, funds that we manage as a result of the acquisition of the investment management business and related operating entities collectively doing business as Crescent Point Capital (“Crescent Point”) (the “Crescent Point Acquisition”), which was completed on October 2, 2023, generated $7.4 million in additional management fees for the three months ended March 31, 2024. For detail regarding the fluctuations of management fees within each of our segments see “—Results of Operations by Segment.”

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

			Three months ended March 31, 2024			Primary Drivers			Three months ended March 31, 2023			Primary Drivers
Credit funds			$	219.6		Primarily from four direct lending funds, one alternative credit fund and three opportunistic credit funds with $35.8 billion of IGAUM generating returns in excess of their hurdle rates. Our direct lending funds have benefited from rising interest rates on predominately floating-rate loans. Ares Private Credit Solutions II, L.P. (“PCS II”), Ares Capital Europe V, L.P. (“ACE V”) and our sixth European direct lending fund generated carried interest allocation of $71.3 million, $39.7 million and $7.7 million, respectively, driven by net investment income on an increasing invested capital base. Ares Capital Europe IV, L.P. (“ACE IV”) generated carried interest allocation of $15.7 million driven by net investment income during the period. Within our alternative credit funds, Ares Pathfinder Fund, L.P. (“Pathfinder I”) generated carried interest allocation of $7.7 million driven by market appreciation of certain investments and net investment income during the period. In addition, within our opportunistic credit funds, Ares Special Opportunities Fund II, L.P. (“ASOF II”) generated carried interest allocation of $30.4 million, driven by improving operating performance of portfolio companies that operate in the retail and healthcare industries. Ares Special Situations Fund IV, L.P. (“SSF IV”) and Ares Special Opportunities Fund, L.P. (“ASOF I”) generated carried interest allocation of $29.8 million and $12.4 million, respectively, primarily due to market appreciation of their investments in Savers Value Village (“SVV”) driven by its higher stock price.			$	195.1		Primarily from two opportunistic credit funds, four direct lending funds and one alternative credit fund with $29.1 billion of IGAUM generating returns in excess of their hurdle rates. Appreciation across several portfolio company investments within opportunistic credit was primarily driven by improving operating performance metrics in companies that operate in the services and retail industries. SSF IV and ASOF I generated carried interest allocation of $53.1 million and $25.3 million, respectively. In addition, within our direct lending and alternative credit funds, ACE V generated carried interest allocation of $44.8 million driven by net investment income on an increasing invested capital base. ACE IV, PCS I, Ares Capital Europe III, L.P. (“ACE III”) and Pathfinder I generated carried interest allocation of $24.0 million, $14.6 million, $9.3 million and $3.4 million, respectively, primarily driven by net investment income during the period. Our direct lending and alternative credit funds have benefited from rising interest rates on predominately floating-rate loans.
Real assets funds			(6.9)			Reversal of unrealized carried interest of $10.8 million from two European real estate equity funds, $4.4 million from Ares European Real Estate Fund IV, L.P. (“EF IV”) and $3.0 million from Ares Real Estate Opportunity Fund III, L.P. (“AREOF III”), driven by lower valuations of certain office, hotel, retail and industrial properties. In addition, the reversal of unrealized carried interest of $1.6 million from Ares Climate Infrastructure Partners, L.P. (“ACIP”) was driven by lower valuations of certain investments. The reversal was partially offset by carried interest allocation of $12.8 million from Ares Infrastructure Debt Fund V, L.P. (“IDF V”), driven by net investment income during the period.			(12.8)			Reversal of unrealized carried interest of $16.5 million from three European real estate equity funds and $5.6 million from three U.S. real estate equity funds primarily driven by lower valuations of certain properties. In addition, reversal of unrealized carried interest of $7.8 million from Ares Energy Investors Fund V, L.P. (“EIF V”) was due to lower valuations of certain investments. Increased operating income and appreciation of certain properties generated carried interest allocation of $7.5 million from two U.S. real estate equity funds and $1.1 million from AREOF III. IDF V generated carried interest allocation of $6.4 million driven by net investment income during the period and ACIP generated carried interest allocation of $4.6 million driven by appreciation of certain investments.
Private equity funds			(236.4)			Reversal of unrealized carried interest allocation of $244.3 million from Ares Corporate Opportunities Fund V, L.P. (“ACOF V”) was driven by lower operating performance metrics of certain portfolio companies that primarily operate in the healthcare and energy industries. The reversal was partially offset by carried interest allocation generated from Ares Corporate Opportunities Fund VI, L.P. (“ACOF VI”) of $28.0 million, driven by appreciation across its investments in several portfolio companies that primarily operate in the services and retail industries and had positive operating performance during the period.			(30.2)			Reversal of unrealized carried interest allocation of $36.5 million from ACOF V was driven by lower operating performance metrics of certain portfolio companies that primarily operate in the healthcare industry. The reversal was partially offset by carried interest allocation of $10.1 million from ACOF VI, driven by appreciation across its investments in several portfolio companies that primarily operate in the services and retail industries.
Secondaries funds			(8.8)			Depreciation across several investments in Landmark Equity Partners XVI, L.P. (“LEP XVI”) and Landmark Equity Partners XVII, L.P. (“LEP XVII”), led to the reversal of unrealized carried interest of $4.5 million and $3.0 million, respectively.			(0.6)			Reversal of unrealized carried interest from LEP XVI driven by depreciation across several investments.
Carried interest allocation			$	(32.5)					$	151.5

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

			Three months ended March 31, 2024			Primary Drivers			Three months ended March 31, 2023			Primary Drivers
Credit funds			$	2.0		Incentive fee generated from a U.S. direct lending fund following its liquidation and incentive fee adjustment from various U.S. and European direct lending funds following the measurement period.			$	1.1		Incentive fee adjustments from two U.S. direct lending funds and one European direct lending fund following the measurement period.
Real assets funds			3.7			Incentive fees generated from an open-ended industrial real estate fund.			4.5			Incentive fees generated from an open-ended industrial real estate fund.
Secondaries funds			3.0			Incentive fees generated from APMF.			3.3			Incentive fees generated from APMF.
Incentive fees			$	8.7					$	8.9

Principal Investment Income. The activity for the three months ended March 31, 2024 was primarily composed of: (i) appreciation of our investments in certain funds in our opportunistic credit, U.S. and European direct lending and alternative credit strategies; (ii) dividend income from our investments in two European real estate funds; (iii) interest income earned in connection with our investment in an insurance fund, as new investors subsequently committed to the fund and were reallocated capital account balances from existing investors; and partially offset by (iv) unrealized losses from our investments in certain funds in our Asia-Pacific (“APAC”) credit, real estate secondaries and corporate private equity strategies.

The activity for the three months ended March 31, 2023 was primarily composed of appreciation of our investments in certain opportunistic credit and European direct lending funds and dividend income from various investments in funds within our opportunistic credit strategy.

Administrative, Transaction and Other Fees. The increase in administrative, transaction and other fees for the three months ended March 31, 2024 compared to the same period in 2023 was primarily driven by: (i) higher administrative fees of $4.3 million from a commercial finance fund during the second quarter of 2023 that were previously eliminated when this fund was consolidated into our results; (ii) higher administrative service fees of $4.4 million primarily from our non-traded vehicles; (iii) higher administrative service fees of $2.4 million that are based on invested capital and are primarily from certain private funds within our Credit Group; and partially offset by (iv) lower development fees of $2.0 million, resulting from a reduction in property-related activities within certain industrial U.S. real estate equity funds.

Expenses

															Three months ended March 31,												Favorable (Unfavorable)
																											2024						2023						$ Change						% Change
Expenses
Compensation and benefits																											$	412,951					$	360,781					$	(52,170)					(14)%
Performance related compensation																											(50,532)						111,658						162,190						NM
General, administrative and other expenses																											170,928						148,345						(22,583)						(15)
Expenses of Consolidated Funds																											5,146						7,852						2,706						34
Total expenses																											$	538,493					$	628,636					(90,143)						(14)

Compensation and Benefits. The increase in compensation and benefits was primarily driven by higher equity-based compensation expense of $23.2 million, which included expenses of $17.4 million and $10.0 million for the three months ended March 31, 2024 and 2023, respectively, in connection with the immediate vesting provisions of certain awards that occurs annually in the first quarter as a retirement benefit for eligible recipients. Further, the number of unvested restricted units being amortized has increased as has the value of these units with our rising stock price.

In addition, compensation and benefits increased due to: (i) an increase in salary expense of $13.7 million, primarily attributable to headcount growth to support the expansion of our business; (ii) higher Part I Fees compensation of $11.0 million; and (iii) an increase in payroll related taxes of $9.2 million, primarily due to our higher stock price associated with the restricted units that vested during the period. The increase in compensation and benefits for the three months ended March 31, 2024 compared to the same period in 2023 was partially offset by lower incentive-based compensation, which is dependent on our operating performance and is expected to fluctuate during the year. Average headcount increased by 12% to 2,868 professionals for the quarter-to-date period in 2024 from 2,558 professionals for the same period in 2023.

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

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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 taxes as well as carried interest and incentive fees allocated to charitable organizations as part of our philanthropic initiatives. Performance related compensation generally represents 60% to 80% of carried interest allocation and incentive fees recognized before giving effect to payroll taxes and will vary based on the mix of funds generating carried interest allocation and incentive fees for that period.

General, Administrative and Other Expenses. The increase in general, administrative and other expenses was primarily due to costs incurred to support fundraising for our funds and distribution of shares in our non-traded vehicles. Placement fees increased by $8.7 million for the three months ended March 31, 2024 compared to the same period in 2023 primarily due to new commitments to our third U.S. senior direct lending fund. Additionally, supplemental distribution fees were $10.8 million and increased by $8.4 million for the three months ended March 31, 2024 when compared to the same period in 2023. These fees will fluctuate with sales volumes and assets under management of our non-traded vehicles and we expect to incur higher supplemental distribution fees in future periods as we continue to develop our distribution relationships and expand our retail product offerings.

Additionally, certain expenses increased during the current period, including occupancy costs, information services and information technology costs. These expenses collectively increased by $10.2 million for the three months ended March 31, 2024 compared to the same period in 2023 to support our growing headcount and the expansion of our business, including occupancy costs for our new corporate headquarters that will be in use later this year.

The increase in general, administrative and other expenses was partially offset by the decrease in amortization expense for intangible assets. For the three months ended March 31, 2023, our results reflected a non-cash impairment charge of $7.8 million to the carrying value of the trade name of SSG Capital Holdings Limited and its operating subsidiaries (“SSG”) as we rebranded and discontinued the use of the SSG trade name. In addition, in the third quarter of 2023, we recognized non-cash impairment charges of $65.7 million to the fair value of certain client relationships from Landmark in connection with lower expected FPAUM in a private equity secondaries fund from existing investors. Excluding the impact non-cash impairment charges described above had on future amortization expense, amortization expense decreased by $3.4 million for the three months ended March 31, 2024 compared to the same period in 2023, as we are no longer amortizing the aforementioned intangible assets.

Other Income (Expense)

															Three months ended March 31,												Favorable (Unfavorable)
																											2024						2023						$ Change						% Change
Other income (expense)
Net realized and unrealized gains on investments																											$	10,516					$	1,515					$	9,001					NM
Interest and dividend income																											5,382						3,839						1,543						40
Interest expense																											(37,824)						(24,986)						(12,838)						(51)
Other income (expense), net																											270						(923)						1,193						NM
Net realized and unrealized gains on investments of Consolidated Funds																											34,424						10,700						23,724						222
Interest and other income of Consolidated Funds																											257,276						222,938						34,338						15
Interest expense of Consolidated Funds																											(207,866)						(156,687)						(51,179)						(33)
Total other income, net																											$	62,178					$	56,396					5,782						10

Net Realized and Unrealized Gains on Investments. The activity for the three months ended March 31, 2024 included: (i) unrealized gains from the appreciation of our investments in APMF and in the subordinated notes of U.S. CLOs, as well as of our strategic investments in a U.S. energy company and in a company that manages real estate owned properties; and partially offset by (ii) unrealized losses from our strategic investment in a non-core insurance related investment and a company that manages portfolios of non-performing loans.

The activity for the three months ended March 31, 2023 was primarily attributable to: (i) unrealized gains from the appreciation of our investments in APMF and the same strategic investment in a company that manages real estate owned properties; and partially offset by (ii) unrealized losses from our investments in the subordinated notes of U.S. CLOs.

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Interest Expense. Interest expense increased for the three months ended March 31, 2024 compared to the same period in 2023 primarily due to the issuance of the 2028 Senior Notes in November 2023 that increased interest expense by $8.2 million. In addition, higher average SOFR rates and a higher average outstanding balance of the Credit Facility also contributed to the increase over the comparative periods.

Other Income (Expense), Net. The activity for the three months ended March 31, 2024 and 2023 primarily included 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.

Income Tax Expense

															Three months ended March 31,												Favorable (Unfavorable)
																											2024						2023						$ Change						% Change
Income before taxes																											$	231,048					$	241,122					$	(10,074)					(4)%
Less: Income tax expense																											27,233						33,806						6,573						19
Net income																											$	203,815					$	207,316					(3,501)						(2)

The decrease in income tax expense was attributable to lower pre-tax income allocable to AMC for the three months ended March 31, 2024 compared to the same period in 2023 as the income attributed to redeemable and non-controlling interests is generally passed through to partners and not subject to corporate income taxes. The calculation of income taxes is also sensitive to any changes in weighted average daily ownership.

The following table summarizes weighted average daily ownership:

												Three months ended March 31,
																		2024						2023
AMC common stockholders																		62.32		%				60.14		%
Non-controlling AOG unitholders																		37.68						39.86

The change in ownership was primarily driven by the exchanges of AOG Units, issuance of Class A common stock in connection with stock option exercises, vesting of restricted stock awards and the Crescent Point Acquisition.

Redeemable and Non-Controlling Interests

															Three months ended March 31,												Favorable (Unfavorable)
																											2024						2023						$ Change						% Change
Net income																											$	203,815					$	207,316					$	(3,501)					(2)%
Less: Net income attributable to non-controlling interests in Consolidated Funds																											66,716						26,693						40,023						150
Net income attributable to Ares Operating Group entities																											137,099						180,623						(43,524)						(24)
Less: Net income (loss) attributable to redeemable interest in Ares Operating Group entities																											73						(1,824)						1,897						NM
Less: Net income attributable to non-controlling interests in Ares Operating Group entities																											63,999						88,408						(24,409)						(28)
Net income attributable to Ares Management Corporation Class A and non-voting common stockholders																											$	73,027					$	94,039					(21,012)						(22)

The change in net income attributable to non-controlling interests in AOG entities over the comparative periods was a result of the respective changes in income before taxes and weighted average daily ownership, as presented above.

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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 March 31,																								Favorable (Unfavorable)
																														2024						2023																								$ Change						% Change
Expenses of the Consolidated Funds																														$	(5,146)					$	(7,852)																							$	2,706					34%
Net realized and unrealized gains on investments of Consolidated Funds																														34,424						10,700																								23,724						222
Interest and other income of Consolidated Funds																														257,276						222,938																								34,338						15
Interest expense of Consolidated Funds																														(207,866)						(156,687)																								(51,179)						(33)
Income before taxes																														78,688						69,099																								9,589						14
Less: Income tax expense (benefit) of Consolidated Funds																														(1,130)						478																								1,608						NM
Net income																														79,818						68,621																								11,197						16
Less: Revenues attributable to Ares Management Corporation eliminated upon consolidation																														8,776						32,688																								(23,912)						(73)
Other income, net attributable to Ares Management Corporation eliminated upon consolidation																														(4,759)						(9,583)																								(4,824)						(50)
General, administrative and other expense attributable to Ares Management Corporation eliminated upon consolidation																														433						343																								(90)						(26)
Net income attributable to non-controlling interests in Consolidated Funds																														$	66,716					$	26,693																							40,023						150

The results of operations of the Consolidated Funds primarily represent activities from certain funds that we are deemed to control. When a fund is consolidated, we reflect the revenues and expenses of the entity on a gross basis, subject to eliminations from consolidation. Substantially all of our results of operations related to the Consolidated Funds are attributable to ownership interests that third parties hold in those funds. The Consolidated Funds are not necessarily the same funds in each year presented due to changes in ownership, changes in limited partners’ or investor rights, and the creation or termination of funds and entities. Accordingly, such amounts may not be comparable for the periods presented, and in any event have no material impact on net income attributable to Ares Management Corporation.

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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 those 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. In February 2024, we announced our intention to reclassify our special opportunities strategy, historically part of our Private Equity Group, to the Credit Group and renamed as opportunistic credit. Opportunistic credit has been reclassified effective January 1, 2024 and is now presented within the Credit Group. Historical periods have been modified to conform to the current period presentation.

The following table sets forth FRE and RI by reportable segment and the OMG ($ in thousands):

																		Three months ended March 31,												Favorable (Unfavorable)
																														2024						2023						$ Change						% Change
Fee Related Earnings:
Credit Group																														$	352,417					$	291,640					$	60,777					21%
Real Assets Group																														46,518						53,662						(7,144)						(13)
Private Equity Group																														15,371						9,123						6,248						68
Secondaries Group																														25,605						25,430						175						1
Other																														2,063						1,281						782						61
Operations Management Group																														(140,304)						(126,499)						(13,805)						(11)
Fee Related Earnings																														$	301,670					$	254,637					47,033						18
Realized Income:
Credit Group																														$	355,968					$	293,158					$	62,810					21%
Real Assets Group																														45,396						52,143						(6,747)						(13)
Private Equity Group																														10,330						8,783						1,547						18
Secondaries Group																														23,117						24,350						(1,233)						(5)
Other																														(5,763)						2,475						(8,238)						NM
Operations Management Group																														(139,892)						(126,617)						(13,275)						(10)
Realized Income																														$	289,156					$	254,292					34,864						14

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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 the OMG ($ in thousands):

			Three months ended March 31,
			2024						2023
Income before taxes			$	231,048					$	241,122
Adjustments:
Depreciation and amortization expense			36,644						45,659
Equity compensation expense			92,421						68,704
Acquisition-related compensation expense(1)			5,504						642
Acquisition and merger-related expense			10,578						4,955
Placement fee adjustment			5,540						(3,232)
Other expense, net			131						91
Income before taxes of non-controlling interests in consolidated subsidiaries			(3,662)						(5,671)
Income before taxes of non-controlling interests in Consolidated Funds, net of eliminations			(65,586)						(27,171)
Total performance (income) loss—unrealized			45,476						(127,713)
Total performance related compensation—unrealized			(64,514)						85,150
Total net investment income—unrealized			(4,424)						(28,244)
Realized Income			289,156						254,292
Total performance income—realized			(23,181)						(31,136)
Total performance related compensation—realized			13,156						23,859
Total investment loss—realized			22,539						7,622
Fee Related Earnings			$	301,670					$	254,637

(1)Represents earnouts in connection with the acquisition of AMP Capital’s infrastructure debt platform (“Infrastructure Debt Acquisition”) and the Crescent Point 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 the OMG.

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Results of Operations by Segment

Credit Group—Three Months Ended March 31, 2024 Compared to Three Months Ended March 31, 2023

Fee Related Earnings

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

												Three months ended March 31,												Favorable (Unfavorable)
																											2024						2023						$ Change						% Change
Management fees																											$	510,966					$	430,467					$	80,499					19%
Fee related performance revenues																											755						600						155						26
Other fees																											9,911						9,149						762						8
Compensation and benefits																											(134,849)						(121,900)						(12,949)						(11)
General, administrative and other expenses																											(34,366)						(26,676)						(7,690)						(29)
Fee Related Earnings																											$	352,417					$	291,640					60,777						21

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

Management fees from funds launched subsequent to the first quarter of 2023 primarily included Ares Pathfinder Fund II, L.P. (“Pathfinder II”), our third U.S. senior direct lending fund and our sixth European direct lending fund, which collectively contributed $16.9 million in additional management fees for the three months ended March 31, 2024.

Management fees from existing funds increased primarily from the deployment of capital in Pathfinder I, Ares Senior Direct Lending Fund II, L.P. (“SDL II”), ASOF II and an open-ended core alternative credit fund. These funds collectively generated additional management fees of $18.3 million for the three months ended March 31, 2024 compared to the same period in 2023. The remaining increase in management fees from funds in existence in both periods was primarily driven by

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deployment of capital in other direct lending funds and separately managed accounts (“SMAs”). Management fees from ARCC, ASIF and CADC, excluding Part I Fees described below, increased by $16.4 million over the comparative periods primarily due to an increase in the average size of ARCC’s and CADC’s portfolio and additional capital raised in ASIF. Conversely, management fees from ACE III decreased by $4.1 million over the comparative periods due to a reduction in fee rate. Management fees from CLOs also increased for the three months ended March 31, 2024 compared to the same period in 2023 primarily due to the net addition of five CLOs for the three months ended March 31, 2024.

Part I Fees increased for the three months ended March 31, 2024 compared to the three months ended March 31, 2023 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. Additionally, ASIF and AESIF contributed $6.0 million and $0.9 million, respectively, to the increase in Part I Fees as both funds began generating Part I Fees after the first quarter of 2023.

The increase in effective management fee rate for the three months ended March 31, 2024 compared to the three months ended March 31, 2023 was primarily driven by the increase in Part I Fees’ contribution to the effective management fee rate.

Other Fees. The increase in other fees for the three months ended March 31, 2024 compared to the three months ended March 31, 2023 was primarily driven by higher administrative service fees of $2.4 million, which were earned from certain private funds that pay on invested capital. The increase in other fees was partially offset by a decrease of $1.6 million in transaction fees primarily due to lower loan origination income from a U.S. direct lending fund, driven by limited capacity of investable capital from certain investors.

Compensation and Benefits. The increase in compensation and benefits for the three months ended March 31, 2024 compared to the three months ended March 31, 2023 was primarily driven by: (i) higher Part I Fees compensation of $11.0 million, corresponding to the increase in revenue; (ii) an increase in salary expense of $3.8 million, primarily attributable to headcount growth to support the expansion of our business; and (iii) an increase in payroll related taxes of $3.7 million, primarily due to our higher stock price associated with the restricted units that vested during the period. The increase in compensation and benefits over the comparative periods was partially offset by lower incentive-based compensation, which is dependent on our operating performance and is expected to fluctuate during the year.

Average headcount increased by 12% to 650 investment and investment support professionals for the quarter-to-date period in 2024 from 579 professionals for the same period in 2023 as we continued to add professionals, primarily to support our growing direct lending and APAC credit platforms.

General, Administrative and Other Expenses. In the effort to develop our distribution relationships and expand our retail product offerings, supplemental distribution fees increased by $3.7 million for the three months ended March 31, 2024 compared to the same period in 2023. Supplemental distribution fees fluctuate with sales volumes and managed assets of our non-traded vehicles.

Additionally, certain expenses increased during the current period, including occupancy costs and information technology costs. These expenses collectively increased by $1.7 million for the three months ended March 31, 2024 compared to the same period in 2023 to support our growing headcount and the expansion of our business, including occupancy costs for our new corporate headquarters that will be in use later this year. We also incurred higher professional service fees of $1.3 million for the three months ended March 31, 2024 compared to the same period in 2023, primarily related to non-reimbursable fund formation costs.

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Realized Income

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

												Three months ended March 31,												Favorable (Unfavorable)
																											2024						2023						$ Change						% Change
Fee Related Earnings																											$	352,417					$	291,640					$	60,777					21%
Performance income—realized																											16,766						7,410						9,356						126
Performance related compensation—realized																											(8,734)						(5,881)						(2,853)						(49)
Realized net performance income																											8,032						1,529						6,503						NM
Investment income (loss)—realized																											(398)						506						(904)						NM
Interest and other investment income—realized																											4,930						8,113						(3,183)						(39)
Interest expense																											(9,013)						(8,630)						(383)						(4)
Realized net investment loss																											(4,481)						(11)						(4,470)						NM
Realized Income																											$	355,968					$	293,158					62,810						21

Realized net performance income for the three months ended March 31, 2024 primarily included (i) tax distributions from Ares Private Credit Solutions, L.P. (“PCS I”) and an alternative credit fund; and (ii) incentive fees primarily from two U.S. direct lending funds and an alternative credit fund. Realized net performance income for the three months ended March 31, 2023 was primarily attributable to carried interest distributions from a U.S. direct lending fund and a European direct lending fund.

Realized net investment loss for the three months ended March 31, 2024 and 2023 largely represents interest expense exceeding investment income during these periods. The activity for both periods included interest income generated from our CLO investments, which we earned a similar level of income from 14 and 15 CLO investments for the three months ended March 31, 2024 and 2023, respectively. The activity for the three months ended March 31, 2023 also included income recognized in connection with distributions from our investment in a commercial finance fund that was sold during the second quarter of 2023.

Interest expense, which is allocated among our segments based on the cost basis of our balance sheet investments, increased over the comparative periods primarily due to the issuance of the 2028 Senior Notes in November 2023 and to higher average SOFR rates and a higher average outstanding balance of our 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 March 31, 2024																		As of December 31, 2023
			Accrued Performance Income						Accrued Performance Compensation						Accrued Net Performance Income						Accrued Performance Income						Accrued Performance Compensation						Accrued Net Performance Income
Pathfinder I			$	162,875					$	138,444					$	24,431					$	155,136					$	131,866					$	23,270
ASOF I			369,420						258,891						110,529						357,016						250,198						106,818
ASOF II			111,339						77,937						33,402						80,926						56,648						24,278
PCS I			126,161						74,549						51,612						123,979						73,258						50,721
PCS II			110,672						65,346						45,326						38,128						22,573						15,555
ACE IV			165,299						107,327						57,972						149,584						97,123						52,461
ACE V			271,905						171,187						100,718						232,201						146,219						85,982
Other credit funds			438,334						283,083						155,251						414,318						263,581						150,737
Total Credit Group			$	1,756,005					$	1,176,764					$	579,241					$	1,551,288					$	1,041,466					$	509,822

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

												As of December 31, 2023						Activity during the period																		As of March 31, 2024
						Waterfall Type						Accrued Performance Income						Change in Unrealized						Realized						Other Adjustments						Accrued Performance Income
Accrued Carried Interest
Pathfinder I						European						$	155,136					$	7,739					$	—					$	—					$	162,875
ASOF I						European						357,016						12,404			—			—						—						369,420
ASOF II						European						80,926						30,413						—						—						111,339
PCS I						European						123,979						8,094						(5,943)						31						126,161
PCS II						European						38,128						71,289						—						1,255						110,672
ACE IV						European						149,584						15,715						—						—						165,299
ACE V						European						232,201						39,704						—						—						271,905
Other credit funds						European						389,887						33,131						(6,627)						(2,243)						414,148
Other credit funds						American						24,431						1,095						(2,913)						1,573						24,186
Total accrued carried interest												1,551,288						219,584						(15,483)						616						1,756,005
Other credit funds						Incentive						—						1,283						(1,283)						—						—
Total Credit Group												$	1,551,288					$	220,867					$	(16,766)					$	616					$	1,756,005

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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						Opportunistic Credit						U.S. Direct Lending						European Direct Lending						APAC Credit						Other**(1)**						Total Credit Group
Balance at 12/31/2023									$	47,299					$	33,886					$	14,554					$	123,073					$	68,264					$	11,920					$	354					$	299,350
Net new par/equity commitments									695						1,828						—						2,462						2,692						—						58						7,735
Net new debt commitments									994						—						—						4,836						662						(380)						—						6,112
Capital reductions									(1,134)						—						—						(553)						51						151						—						(1,485)
Distributions									(45)						(438)						(289)						(1,487)						(1,199)						(105)						—						(3,563)
Redemptions									(1,695)						—						—						(720)						(102)						—						—						(2,517)
Net allocations among investment strategies									—						668						—						—						150						—						(103)						715
Change in fund value									133						537						291						1,570						(317)						77						1						2,292
Balance at 3/31/2024									$	46,247					$	36,481					$	14,556					$	129,181					$	70,201					$	11,663					$	310					$	308,639
									Liquid Credit						Alternative Credit						Opportunistic Credit						U.S. Direct Lending						European Direct Lending						APAC Credit						Other**(1)**						Total Credit Group
Balance at 12/31/2022									$	43,864					$	21,363					$	13,720					$	98,327					$	50,642					$	11,383					$	—					$	239,299
Net new par/equity commitments									401						2,289						—						1,776						4,324						—						250						9,040
Net new debt commitments									466						—						—						740						217						—						—						1,423
Capital reductions									(62)						—						—						(838)						(1,181)						—						—						(2,081)
Distributions									(143)						(248)						(61)						(704)						(397)						(35)						—						(1,588)
Redemptions									(545)						(739)						—						(92)						—						—						—						(1,376)
Net allocations among investment strategies									4						812						—						—						—						—						—						816
Change in fund value									511						340						332						1,003						1,429						(14)						—						3,601
Balance at 3/31/2023									$	44,496					$	23,817					$	13,991					$	100,212					$	55,034					$	11,334					$	250					$	249,134
(1) Activity within Other represents equity commitments to the platform that either have not yet been allocated to an investment strategy or have been allocated in a subsequent period as commitments to an investment strategy.

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

			AUM: $308.6						AUM: $249.1

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

(1) Includes $14.7 billion and $14.6 billion of AUM of funds from which we indirectly earn management fees as of March 31, 2024 and 2023, respectively, and includes $1.7 billion and $1.6 billion of non-fee paying AUM from our general partner and employee commitments as of March 31, 2024 and 2023, 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						Opportunistic Credit						U.S. Direct Lending						European Direct Lending						APAC Credit												Total Credit Group
Balance at 12/31/2023						$	46,140					$	23,218					$	8,490					$	67,596					$	34,246					$	5,590											$	185,280
Commitments						1,223						—						—						2,549						6						—												3,778
Deployment/subscriptions/increase in leverage						—						1,233						340						3,474						1,875						299												7,221
Capital reductions						(967)						—						—						(1,324)						(455)						(18)												(2,764)
Distributions						(46)						(373)						(246)						(2,423)						(250)						(324)												(3,662)
Redemptions						(1,695)						—						—						(88)						(366)						—												(2,149)
Net allocations among investment strategies						—						886						—						—						—						—												886
Change in fund value						367						22						—						603						(478)						29												543
Balance at 3/31/2024						$	45,022					$	24,986					$	8,584					$	70,387					$	35,271					$	5,576											$	189,826
						Liquid Credit						Alternative Credit						Opportunistic Credit						U.S. Direct Lending						European Direct Lending						APAC Credit												Total Credit Group
Balance at 12/31/2022						$	42,191					$	15,904					$	7,166					$	57,568					$	29,561					$	6,051											$	158,441
Commitments						415						25						—						641						—						—												1,081
Deployment/subscriptions/increase in leverage						254						987						703						1,415						1,359						266												4,984
Capital reductions						(62)						—						—						(1,279)						(3)						(189)												(1,533)
Distributions						(105)						(879)						(400)						(738)						(40)						(374)												(2,536)
Redemptions						(544)						(656)						—						(92)						(85)						—												(1,377)
Net allocations among investment strategies						4						812						—						—						—						—												816
Change in fund value						479						68						—						384						414						(3)												1,342
Balance at 3/31/2023						$	42,632					$	16,261					$	7,469					$	57,899					$	31,206					$	5,751											$	161,218

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

			FPAUM: $189.8						FPAUM: $161.2

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

(1)Includes $36.8 billion and $30.9 billion from funds that primarily invest in illiquid strategies as of March 31, 2024 and 2023, 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 March 31, 2024

ARCC contributed approximately 34% of the Credit Group’s total management fees for the three months ended March 31, 2024. In addition, the Credit Group’s other significant funds, which are presented in the tables below, collectively contributed approximately 30% of the Credit Group’s management fees for the three months ended March 31, 2024.

The following table presents the performance data for our significant funds that are not drawdown funds in the Credit Group as of March 31, 2024 ($ in millions):

																		Returns(%)
						Year of Inception						AUM						Current Quarter																		Since Inception**(1)**												Primary Investment Strategy
Fund												Gross						Net																		Gross						Net
ARCC(2)						2004						$	29,169					N/A						4.0																		N/A						12.1						U.S. Direct Lending
CADC(3)						2017						5,569						N/A						2.8																		N/A						6.6						U.S. Direct Lending
Open-ended core alternative credit fund(4)						2021						5,023						3.2						2.4																		10.5						7.9						Alternative Credit

(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.

(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. The fund is made up of a Main Class (“Class M”) and a Constrained Class (“Class C”). Class M includes investors electing to participate in all investments and Class C includes investors electing to be excluded from exposure to liquid investments. Returns presented in the table are for onshore Class M. The current quarter gross and net returns for Class M (offshore) are 3.4% and 2.5%, respectively. The since inception gross and net returns for Class M (offshore) are 10.5% and 7.5%, respectively. The current quarter gross and net returns for Class C (offshore) are 2.6% and 1.9%, respectively. The since inception gross and net returns for Class C (offshore) are 10.4% and 7.5%, respectively. Prior to the current period, returns were reported using the annualized since inception IRR and MoIC. The gross and net IRR for Class M (onshore) are 12.2% and 9.0%, respectively. The gross and net MoIC for Class M (onshore) are 1.1x and 1.1x, respectively. The gross and net IRR for Class M (offshore) are 12.2% and 8.8%, respectively. The gross and net MoIC for Class M (offshore) are 1.1x and 1.1x, respectively. The gross and net IRR for Class C (offshore) are 10.8% and 7.9%, respectively. The gross and net MoIC for Class C (offshore) are 1.2x and 1.1x, respectively.

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The following table presents the performance data of the Credit Group’s significant drawdown funds as of March 31, 2024 ($ 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
SDL I Unlevered			2018						$	4,684					$	922					$	872					$	380					$	688					$	1,068					1.3x						1.2x						9.2						7.1						U.S. Direct Lending
SDL I Levered									2,045						2,022						1,211						1,514						2,725						1.5x						1.3x						15.4						11.5
ACE IV Unlevered(7)			2018						9,996						2,851						2,265						934						1,914						2,848						1.3x						1.2x						8.2						5.8						European Direct Lending
ACE IV Levered(7)									4,819						3,838						2,184						3,052						5,236						1.5x						1.3x						11.1						8.3
ASOF I			2019						5,337						3,518						3,134						1,967						3,193						5,160						1.9x						1.6x						24.9						19.4						Opportunistic Credit
Funds Deploying Capital
Pathfinder I			2020						4,255						3,683						3,177						277						3,560						3,837						1.3x						1.2x						16.6						11.8						Alternative Credit
PCS II			2020						5,702						5,114						3,522						448						3,693						4,141						1.2x						1.1x						11.7						7.8						U.S. Direct Lending
ACE V Unlevered(8)			2020						16,901						7,026						5,095						810						5,172						5,982						1.2x						1.2x						11.5						8.5						European Direct Lending
ACE V Levered(8)									6,376						4,618						1,077						4,720						5,797						1.3x						1.2x						17.1						12.4
ASOF II			2021						7,746						7,128						4,062						10						4,580						4,590						1.2x						1.1x						15.4						10.4						Opportunistic Credit
SDL II Unlevered			2021						15,936						1,989						1,320						163						1,342						1,505						1.2x						1.1x						12.5						9.8						U.S. Direct Lending
SDL II Levered									6,047						3,896						758						3,995						4,753						1.3x						1.2x						20.4						15.5

(1)For funds other than our opportunistic credit funds, realized value represent the sum of all cash distributions to all partners and if applicable, exclude tax and incentive distributions made to the general partner. For our opportunistic credit funds, realized value represent the sum of all cash distributions to the fee-paying limited 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. For funds other than our opportunistic credit funds, the unrealized value is based on all partners. For our opportunistic credit funds, the unrealized value is based on the fee-paying limited partners.

(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 and one feeder fund: ACE IV (D) Levered. ACE IV (E) Levered includes the ACE IV (D) Levered feeder fund. 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 exclude the U.S. dollar denominated feeder fund. The gross and net IRR for ACE IV (G) Unlevered are 9.7% and 7.1%, 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 12.8% and 9.1%, respectively. The gross and net MoIC for ACE IV (G) Levered are 1.5x and 1.4x, respectively. The gross and net IRR for ACE IV (D) Levered are 13.0% and 9.6%, respectively. The gross and net MoIC for ACE IV (D) Levered are 1.6x 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 13.2% and 10.0%, respectively. The gross and net MoIC for ACE V (G) Unlevered are 1.3x and 1.2x, respectively. The gross and net IRR for ACE V (G) Levered are 17.8% and 13.1%, respectively. The gross and net MoIC for ACE V (G) Levered are 1.3x and 1.3x, respectively. The gross and net IRR for ACE V (D) Levered are 16.3% and 12.1%, respectively. The gross and net MoIC for ACE V (D) Levered are 1.3x and 1.2x, respectively. The gross and net IRR for ACE V (Y) Unlevered are 11.2% and 8.1%, respectively. The gross and net MoIC for ACE V (Y) Unlevered are 1.2x and 1.2x, 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.

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Real Assets Group—Three Months Ended March 31, 2024 Compared to Three Months Ended March 31, 2023

Fee Related Earnings

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

															Three months ended March 31,												Favorable (Unfavorable)
																											2024						2023						$ Change						% Change
Management fees																											$	93,814					$	97,470					$	(3,656)					(4)%
Other fees																											5,075						6,462						(1,387)						(21)
Compensation and benefits																											(37,918)						(37,986)						68						0
General, administrative and other expenses																											(14,453)						(12,284)						(2,169)						(18)
Fee Related Earnings																											$	46,518					$	53,662					(7,144)						(13)

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

Management fees decreased for the three months ended March 31, 2024 compared to the three months ended March 31, 2023 primarily due to the early termination of the advisory agreements of two U.S. industrial real estate equity funds, which generated make-whole termination fees of $3.3 million in the prior year period. Management fees decreased over the comparative periods by: (i) $2.3 million from Ares Industrial Real Estate Income Trust, Inc. (“AIREIT”), driven by a decrease in average capital base due to market-based asset depreciation; (ii) $1.7 million from Infrastructure Debt Fund IV, L.P. (“IDF IV”) due to distributions that reduced the fee base as the fund is past its investment period; and (iii) $1.3 million from AREOF III due to a contractual reduction in the fee base that was triggered at the expiration of the fund’s investment period.

The decrease in management fees over the comparative periods was partially offset by increases of: (i) $2.8 million from IDF V that was driven by the deployment of capital; (ii) $2.2 million, excluding catch-up fees of $0.2 million for each period, from our fourth U.S. opportunistic real estate equity fund that was driven by new capital commitments; and (iii) $2.5 million from our second climate infrastructure fund, driven by new capital commitments.

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The increase in effective management fee rate for the three months ended March 31, 2024 compared to the three months ended March 31, 2023 was primarily driven by deployment of capital within our real estate equity funds. Certain of our private real estate equity funds pay a fee on committed capital that increases once that capital is invested. As a result, our effective management fee rate increases as capital is deployed.

Other Fees. The decrease in other fees for the three months ended March 31, 2024 compared to the three months ended March 31, 2023 was primarily attributable to the decrease in development fees resulting from a reduction in property-related activities within certain industrial U.S. real estate equity funds.

Compensation and Benefits. Compensation and benefits remained relatively flat for the three months ended March 31, 2024 compared to the three months ended March 31, 2023. The change over the comparative periods was composed of: (i) an increase in salary expense of $1.5 million, primarily attributable to headcount growth to support the expansion of our business; (ii) an increase in payroll related taxes of $2.1 million, primarily due to our higher stock price associated with the restricted units that vested during the period; and (iii) lower incentive-based compensation, which is dependent on our operating performance and is expected to fluctuate during the year.

Average headcount for the quarter-to-date period increased by 9% to 378 investment and investment support professionals for three months ended March 31, 2024 from 347 professionals for the same period in 2023.

General, Administrative and Other Expenses. The increase in general, administrative and other expenses for the three months ended March 31, 2024 compared to the same period in 2023 was primarily driven by $1.5 million in non-recurring legal expenses.

Realized Income

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

															Three months ended March 31,												Favorable (Unfavorable)
																											2024						2023						$ Change						% Change
Fee Related Earnings																											$	46,518					$	53,662					$	(7,144)					(13)%
Performance income—realized																											3,677						6,086						(2,409)						(40)
Performance related compensation—realized																											(2,228)						(3,758)						1,530						41
Realized net performance income																											1,449						2,328						(879)						(38)
Investment loss—realized																											(457)						(1,772)						1,315						74
Interest and other investment income—realized																											3,835						1,821						2,014						111
Interest expense																											(5,949)						(3,896)						(2,053)						(53)
Realized net investment loss																											(2,571)						(3,847)						1,276						33
Realized Income																											$	45,396					$	52,143					(6,747)						(13)

Realized net performance income for the three months ended March 31, 2024 and 2023 was primarily attributable to incentive fees generated from an open-ended industrial real estate fund that vary due to a three-year measurement period calculated for each investor in the fund and to the fund’s performance during those periods. Realized net performance income for the three months ended March 31, 2023 also included distributions of net investment income from US Real Estate Fund VIII, L.P. (“US VIII”).

Realized net investment loss for the three months ended March 31, 2024 and 2023 largely represents interest expense exceeding investment income during these periods. Interest expense, which is allocated among our segments based on the cost basis of our balance sheet investments, increased over the comparative periods primarily due to the issuance of the 2028 Senior Notes in November 2023 and to higher average SOFR rates and a higher average outstanding balance of our Credit Facility.

Realized net investment loss for the three months ended March 31, 2024 was partially offset by dividend income received from a European real estate fund.

Realized net investment loss for the three months ended March 31, 2023 included realized losses recognized from a real estate debt vehicle, driven by interest expense with no associated investment income during the period. Such realized loss is not expected to recur in 2024 as we no longer hold the investment. Realized net investment loss for the prior year period was partially offset by distributions of net investment income from an infrastructure opportunities and an infrastructure debt vehicle.

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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 March 31, 2024																		As of December 31, 2023
			Accrued Performance Income						Accrued Performance Compensation						Accrued Net Performance Income						Accrued Performance Income						Accrued Performance Compensation						Accrued Net Performance Income
US VIII			$	31,441					$	20,165					$	11,276					$	32,199					$	20,651					$	11,548
US Real Estate Fund IX, L.P. (“US IX”)			92,573						57,396						35,177						89,958						55,774						34,184
AREOF III			32,696						19,618						13,078						35,715						21,429						14,286
EF IV			44,790						26,874						17,916						49,150						29,490						19,660
EIF V			95,380						71,301						24,079						93,598						69,969						23,629
IDF V			67,478						40,497						26,981						56,065						33,677						22,388
Other real assets funds			124,182						82,160						42,022						140,167						92,468						47,699
Total Real Assets Group			$	488,540					$	318,011					$	170,529					$	496,852					$	323,458					$	173,394

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

												As of December 31, 2023						Activity during the period																		As of March 31, 2024
						Waterfall Type						Accrued Performance Income						Change in Unrealized						Realized						Other Adjustments						Accrued Performance Income
Accrued Carried Interest
US VIII						European						$	32,199					$	(758)					$	—					$	—					$	31,441
US IX						European						89,958						2,615						—						—						92,573
AREOF III						European						35,715						(3,019)						—						—						32,696
EF IV						American						49,150						(4,360)						—						—						44,790
EIF V						European						93,598						1,782						—						—						95,380
IDF V						European						56,065						12,783						—						(1,370)						67,478
Other real assets funds						European						112,477						(3,825)						—						(13)						108,639
Other real assets funds						American						27,690						(12,134)						(13)						—						15,543
Total accrued carried interest												496,852						(6,916)						(13)						(1,383)						488,540
Other real assets funds						Incentive						—						3,664						(3,664)						—						—
Total Real Assets Group												$	496,852					$	(3,252)					$	(3,677)					$	(1,383)					$	488,540

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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 12/31/2023			$	29,177					$	9,386					$	11,152					$	6,248					$	9,450					$	65,413
Net new par/equity commitments			297						—						12						—						99						408
Capital reductions			—						—						(128)						—						—						(128)
Distributions			(177)						(16)						(80)						(3)						(570)						(846)
Redemptions			(364)						—						(70)						—						—						(434)
Change in fund value			(264)						(156)						(16)						54						73						(309)
Balance at 3/31/2024			$	28,669					$	9,214					$	10,870					$	6,299					$	9,052					$	64,104
			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			588						15						162						—						—						765
Capital reductions			(245)						—						(158)						—						—						(403)
Distributions			(1,508)						(14)						(62)						(17)						(62)						(1,663)
Redemptions			(256)						—						(282)						—						—						(538)
Change in fund value			(201)						(29)						5						(2)						119						(108)
Balance at 3/31/2023			$	29,838					$	8,533					$	10,826					$	5,175					$	9,742					$	64,114

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

			AUM: $64.1						AUM: $64.1

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

(1) Includes $0.6 billion of non-fee paying AUM from our general partner and employee commitments as of March 31, 2024 and 2023.

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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 12/31/2023						$	20,844					$	6,189					$	3,277					$	5,148					$	5,880					$	41,338
Commitments						296						—						—						—						—						296
Deployment/subscriptions/increase in leverage						246						119						102						39						356						862
Capital reductions						—						(12)						—						—						—						(12)
Distributions						(141)						(31)						(57)						(69)						(8)						(306)
Redemptions						(364)						—						(70)						—						—						(434)
Change in fund value						(290)						(125)						13						58						(60)						(404)
Change in fee basis						(504)						—						—						—						—						(504)
Balance at 3/31/2024						$	20,087					$	6,140					$	3,265					$	5,176					$	6,168					$	40,836
						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						581						15						—						—						—						596
Deployment/subscriptions/increase in leverage						19						18						39						46						99						221
Capital reductions						(245)						—						(34)						—						—						(279)
Distributions						(396)						(55)						(63)						—						(118)						(632)
Redemptions						(256)						—						(282)						—						—						(538)
Change in fund value						(191)						73						14						—						57						(47)
Balance at 3/31/2023						$	21,300					$	5,685					$	3,365					$	4,570					$	6,008					$	40,928

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

			FPAUM: $40.8						FPAUM: $40.9

			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.

Real Assets Group—Fund Performance Metrics as of March 31, 2024

The four significant funds presented in the tables below collectively contributed approximately 40% of the Real Assets Group’s management fees for the three months ended March 31, 2024.

The following table presents the performance data for our significant funds that are not drawdown funds in the Real Assets Group as of March 31, 2024 ($ in millions):

																														Returns(%)
						Year of Inception						AUM												Year-To-Date												Since Inception**(1)**												Primary Investment Strategy
Fund																								Gross						Net						Gross						Net
Ares Real Estate Income Trust, Inc. (“AREIT”)(2)						2012						$	5,289																	N/A						(2.8)						N/A						6.3						U.S. Real Estate Equity
AIREIT(3)						2017						7,499																		N/A						(4.0)						N/A						8.8						U.S. Real Estate Equity
Open-ended industrial real estate fund(4)						2017						4,666																		(1.9)						(1.9)						18.7						15.2						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 March 31, 2024 ($ 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 Deploying Capital
IDF V(7)						2020						$	4,768					$	4,585					$	3,645					$	566					$	3,455					$	4,021					1.1x						1.1x						12.4						9.5						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 V is made up of U.S. Dollar hedged, Euro unhedged, GBP hedged, Yen hedged, and single investor parallel funds. 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 single investor U.S. Dollar parallel fund are 9.9% and 7.6%, respectively. The gross and net MoIC for the single investor U.S. Dollar parallel fund are 1.1x and 1.1x, respectively. The gross and net IRR for the Euro unhedged parallel fund are 11.9% and 9.0%, respectively. The gross and net MoIC for the Euro unhedged parallel fund are 1.1x and 1.1x, respectively. The gross and net IRR for the GBP hedged parallel fund are 12.0% and 8.9%, respectively. The gross and net MoIC for the GBP hedged parallel fund are 1.1x and 1.1x, respectively. The gross and net IRR for the Yen hedged parallel fund are 11.0% and 7.7%, respectively. The gross and net MoIC for the Yen hedged 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 V are for the combined fund and are converted to U.S. Dollars at the prevailing quarter-end exchange rate.

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Private Equity Group—Three Months Ended March 31, 2024 Compared to Three Months Ended March 31, 2023

Fee Related Earnings

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

															Three months ended March 31,												Favorable (Unfavorable)
																											2024						2023						$ Change						% Change
Management fees																											$	34,933					$	29,840					$	5,093					17%
Other fees																											439						394						45						11
Compensation and benefits																											(14,785)						(16,626)						1,841						11
General, administrative and other expenses																											(5,216)						(4,485)						(731)						(16)
Fee Related Earnings																											$	15,371					$	9,123					6,248						68

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

Management fees for the comparative periods increased primarily due to fees from funds that we manage as a result of the Crescent Point Acquisition that generated $7.4 million in additional fees for the three months ended March 31, 2024. The increase in management fees was partially offset by a decrease of $2.7 million in fees from an energy opportunities fund, driven by the change in fee base from capital commitments to invested capital and reduction in fee rate from 1.50% to 0.75%. Both the change in fee base and the reduction in fee rate were contractually triggered at the expiration of the fund’s investment period.

The increase in effective management fee rate for the three months ended March 31, 2024 compared to the three months ended March 31, 2023 was primarily driven by certain funds from the Crescent Point Acquisition that have a higher effective management fee rate than the average effective management fee rate of the funds within corporate private equity.

Compensation and Benefits. The decrease in compensation and benefits for the three months ended March 31, 2024 compared to the same period in 2023 was primarily driven by lower incentive-based compensation as it is dependent on our operating performance and is expected to fluctuate each period. The decrease for the three months ended March 31, 2024 compared to the same period in 2023 was partially offset by an increase in salary and benefits costs of $2.9 million related to the increase in headcount from the Crescent Point Acquisition.

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Average headcount increased by 13% to 106 investment and investment support professionals for the quarter-to-date period in 2024 from 94 professionals for the same period in 2023, primarily due to the Crescent Point Acquisition.

General, Administrative and Other Expenses. The increase in general, administrative and other expenses for the three months ended March 31, 2024 compared to the same period in 2023 largely reflects Crescent Point’s operating expenses following the Crescent Point Acquisition.

Realized Income

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

															Three months ended March 31,												Favorable (Unfavorable)
																											2024						2023						$ Change						% Change
Fee Related Earnings																											$	15,371					$	9,123					$	6,248					68%
Performance income—realized																											2,738						17,640						(14,902)						(84)
Performance related compensation—realized																											(2,194)						(14,220)						12,026						85
Realized net performance income																											544						3,420						(2,876)						(84)
Investment income—realized																											120						879						(759)						(86)
Interest and other investment income—realized																											184						166						18						11
Interest expense																											(5,889)						(4,805)						(1,084)						(23)
Realized net investment loss																											(5,585)						(3,760)						(1,825)						(49)
Realized Income																											$	10,330					$	8,783					1,547						18

Realized net performance income for the three months ended March 31, 2024 was attributable to realized gains from Ares Corporate Opportunities Fund IV, L.P. (“ACOF IV”) investment in an energy company. Realized net performance income for the three months ended March 31, 2023 included realized gains from the partial sale of ACOF IV’s investment in the AZEK Company (“AZEK”).

Realized net investment loss for the three months ended March 31, 2024 and 2023 was primarily attributable to interest expense exceeding investment income during these periods. Interest expense, which is allocated among our segments based on the cost basis of our balance sheet investments, increased over the comparative periods primarily due to the issuance of the 2028 Senior Notes in November 2023 and to higher average SOFR rates and a higher average outstanding balance of our Credit Facility.

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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 March 31, 2024																		As of December 31, 2023
			Accrued Performance Income						Accrued Performance Compensation						Accrued Net Performance Income						Accrued Performance Income						Accrued Performance Compensation						Accrued Net Performance Income
ACOF IV			$	164,181					$	131,474					$	32,707					$	181,317					$	145,197					$	36,120
ACOF V			230,560						184,887						45,673						474,878						380,807						94,071
ACOF VI			365,119						311,490						53,629						337,142						289,118						48,024
Other funds			49,505						36,552						12,953						55,178						42,295						12,883
Total Private Equity Group			$	809,365					$	664,403					$	144,962					$	1,048,515					$	857,417					$	191,098

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

												As of December 31, 2023						Activity during the period																		As of March 31, 2024
						Waterfall Type						Accrued Carried Interest						Change in Unrealized						Realized												Accrued Carried Interest
ACOF IV						American						$	181,317					$	(14,398)					$	(2,738)											$	164,181
ACOF V						American						474,878						(244,318)						—												230,560
ACOF VI						American						337,142						27,977						—												365,119
Other funds						European						46,078						(2,409)						—												43,669
Other funds						American						9,100						(3,264)						—												5,836
Total Private Equity Group												$	1,048,515					$	(236,412)					$	(2,738)											$	809,365

Private Equity Group—Assets Under Management

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

						Corporate Private Equity						APAC Private Equity						Other**(1)**						Total Private Equity Group
Balance at 12/31/2023						$	20,998					$	3,414					$	139					$	24,551
Net new par/equity commitments						254						3						58						315
Capital reductions						(2)						—						—						(2)
Distributions						(25)						(11)						—						(36)
Redemptions						—						(2)						—						(2)
Net allocations among investment strategies						150						—						(197)						(47)
Change in fund value						(145)						(158)						—						(303)
Balance at 3/31/2024						$	21,230					$	3,246					$	—					$	24,476
						Corporate Private Equity						APAC Private Equity						Other						Total Private Equity Group
Balance at 12/31/2022						$	20,939					$	90					$	—					$	21,029
Net new par/equity commitments						50						—						—						50
Capital reductions						(3)						—						—						(3)
Distributions						(266)						—						—						(266)
Change in fund value						(155)						1						—						(154)
Balance at 3/31/2023						$	20,565					$	91					$	—					$	20,656
(1) Activity within Other represents equity commitments to the platform that either have not yet been allocated to an investment strategy or have been allocated in a subsequent period as commitments to an investment strategy.

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

			AUM: $24.5						AUM: $20.6

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

(1) Includes $1.3 billion and $1.0 billion of non-fee paying AUM from our general partner and employee commitments as of March 31, 2024 and 2023, respectively.

Private Equity Group—Fee Paying AUM

The tables below present rollforwards of fee paying AUM for the Private Equity Group ($ in millions). There was no change in fee paying AUM for the Private Equity Group for the three months ended March 31, 2023:

						Corporate Private Equity						APAC Private Equity												Total Private Equity Group
Balance at 12/31/2023						$	11,459					$	1,665											$	13,124
Redemptions						—						(2)												(2)
Change in fund value						(19)						—												(19)
Change in fee basis						(536)						(2)												(538)
Balance at 3/31/2024						$	10,904					$	1,661											$	12,565
						Corporate Private Equity						APAC Private Equity												Total Private Equity Group
Balance at 12/31/2022						$	11,277					$	4											$	11,281
Balance at 3/31/2023						$	11,277					$	4											$	11,281

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

			FPAUM: $12.6						FPAUM: $11.3

						Invested capital									Capital commitments

Private Equity Group—Fund Performance Metrics as of March 31, 2024

The two significant funds presented in the table below collectively contributed approximately 71% of the Private Equity Group’s management fees for the three months ended March 31, 2024.

The following table presents the performance data of the Private Equity Group’s significant drawdown funds as of March 31, 2024 ($ 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						$	8,597					$	7,850					$	7,611					$	3,515					$	8,087					$	11,602					1.5x						1.4x						10.7						8.1						Corporate Private Equity
Funds Deploying Capital
ACOF VI						2020						7,575						5,743						5,129						746						6,745						7,491						1.4x						1.3x						23.6						16.7						Corporate Private Equity

(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 8.2% for ACOF V and 15.7% for ACOF VI.

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Secondaries Group—Three Months Ended March 31, 2024 Compared to Three Months Ended March 31, 2023

Fee Related Earnings

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

															Three months ended March 31,												Favorable (Unfavorable)
																											2024						2023						$ Change						% Change
Management fees																											$	44,421					$	39,863					$	4,558					11%
Fee related performance revenues																											2,962						3,271						(309)						(9)
Other fees																											4						—						4						NM
Compensation and benefits																											(12,714)						(13,412)						698						5
General, administrative and other expenses																											(9,068)						(4,292)						(4,776)						(111)
Fee Related Earnings																											$	25,605					$	25,430					175						1

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

Management fees increased for the three months ended March 31, 2024 compared to the three months ended March 31, 2023 primarily due to higher management fees from APMF of $3.0 million due to additional capital raised and also 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. Management fees included catch-up fees of $0.2 million from our third infrastructure secondaries fund for the three months ended March 31, 2024 and $0.9 million from Landmark Real Estate Fund IX, L.P. (“LREF IX”) for the three months ended March 31, 2023. Excluding catch-up fees, management fees increased over the comparative periods by: (i) $0.6 million from our third infrastructure secondaries fund, which launched during the fourth quarter of 2023; and (ii) $1.7 million from LREF IX. The increases in management fees for these funds was primarily driven by capital commitments.

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The increase in effective management fee rate for the three months ended March 31, 2024 compared to the three months ended March 31, 2023 was primarily due to additional capital raised by APMF, as well as the higher fee rate for APMF following the expiration of the fee waiver provided for the twelve months from the fund’s inception.

Compensation and Benefits. The decrease in compensation and benefits for the three months ended March 31, 2024 compared to the three months ended March 31, 2023 was primarily driven by lower fee related performance compensation of $2.0 million. Pursuant to a contractual expense limitation agreement with APMF to reduce its expense ratio, we have agreed to temporarily reimburse the fund for certain expenses in excess of 0.30% per annum of the average monthly net assets of each class of APMF shares. Such reimbursements, as well as supplemental distribution fees paid by us to brokerage firms, will result in a corresponding decrease in discretionary fee related performance compensation until reimbursed expenses have been recovered from fee related performance revenues earned from APMF. The decrease over the comparative period was partially offset by an increase in payroll related taxes of $0.8 million primarily due to our higher stock price associated with the restricted units that vested during the period.

Average headcount increased by 11% to 111 investment and investment support professionals for the quarter-to-date period in 2024 from 100 professionals for the same period in 2023.

General, Administrative and Other Expenses. In an effort to accelerate the growth of APMF’s assets, we entered into agreements beginning in the second quarter of 2023 that pay distribution partners a supplemental distribution fee based on assets and/or sales. These agreements resulted in $3.5 million of expenses for the three months ended March 31, 2024 and are expected to fluctuate with sales and the growth in assets. These supplemental distribution fees will reduce fee related performance compensation to the extent that fee related performance revenues are earned from APMF. Additionally, certain other expenses have also increased during the current period, primarily occupancy costs, which support our growing headcount based in higher cost locations, and information technology costs. Collectively, these expenses increased by $1.3 million for the three months ended March 31, 2024 compared to the same period in 2023.

Realized Income

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

															Three months ended March 31,												Favorable (Unfavorable)
																											2024						2023						$ Change						% Change
Fee Related Earnings																											$	25,605					$	25,430					$	175					1%
Interest and other investment income—realized																											210						1,225						(1,015)						(83)
Interest expense																											(2,698)						(2,305)						(393)						(17)
Realized net investment loss																											(2,488)						(1,080)						(1,408)						(130)
Realized Income																											$	23,117					$	24,350					(1,233)						(5)

Realized net investment loss for the three months ended March 31, 2024 and 2023 largely represents interest expense exceeding investment income during these periods. Interest expense, which is allocated among our segments based on the cost basis of our balance sheet investments, increased over the comparative periods primarily due to the issuance of the 2028 Senior Notes in November 2023 and to higher average SOFR rates and a higher average outstanding balance of our Credit Facility. The activity for the three months ended March 31, 2023 also included dividend income received from APMF.

Secondaries Group—Performance Income

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 March 31, 2024																		As of December 31, 2023
			Accrued Performance Income						Accrued Performance Compensation						Accrued Net Performance Income						Accrued Performance Income						Accrued Performance Compensation						Accrued Net Performance Income
LEP XVI			$	124,175					$	106,272					$	17,903					$	128,650					$	110,053					$	18,597
Landmark Real Estate Fund VIII, L.P. (“LREF VIII”)			95,812						83,415						12,397						97,366						84,256						13,110
Other secondaries funds			53,940						46,435						7,505						57,339						48,897						8,442
Total Secondaries Group			$	273,927					$	236,122					$	37,805					$	283,355					$	243,206					$	40,149

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

												As of December 31, 2023						Activity during the period																		As of March 31, 2024
						Waterfall Type						Accrued Carried Interest						Change in Unrealized						Realized												Accrued Carried Interest
Accrued Carried Interest
LEP XVI						European						$	128,650					$	(4,475)					$	—											$	124,175
LREF VIII						European						97,366						(1,554)						—												95,812
Other secondaries funds						European						57,339						(3,399)						—												53,940
Total Secondaries Group												$	283,355					$	(9,428)					$	—											$	273,927

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						Total Secondaries Group
Balance at 12/31/2023			$	13,174					$	7,826					$	2,380					$	1,380					$	—					$	24,760
Net new par/equity commitments			536						150						215						68						—						969
Distributions			(140)						(23)						—						(1)						—						(164)
Change in fund value			10						22						29						15						—						76
Balance at 3/31/2024			$	13,580					$	7,975					$	2,624					$	1,462					$	—					$	25,641
			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			21						237						—						938						50						1,246
Distributions			(258)						(96)						(70)						—						—						(424)
Change in fund value			138						(26)						(1)						—						—						111
Balance at 3/31/2023			$	12,670					$	7,667					$	1,569					$	938					$	50					$	22,894
(1) Activity within Other represents equity commitments to the platform that either have not yet been allocated to an investment strategy or have been allocated in a subsequent period as commitments to an investment strategy.

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

			AUM: $25.6						AUM: $23.0

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

(1) Includes $0.5 billion of non-fee paying AUM from our general partner and employee commitments as of March 31, 2024 and 2023, 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 12/31/2023			$	11,204					$	5,978					$	1,763					$	95											$	19,040
Commitments			536						150						214						—												900
Deployment/subscriptions/increase in leverage			—						60						1						—												61
Distributions			(65)						(16)						—						(18)												(99)
Change in fund value			(35)						39						(6)						—												(2)
Change in fee basis			1						(8)						—						(2)												(9)
Balance at 3/31/2024			$	11,641					$	6,203					$	1,972					$	75											$	19,891
			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			21						86						—						—												107
Deployment/subscriptions/increase in leverage			71						32						7						—												110
Distributions			(43)						(96)						(58)						—												(197)
Change in fund value			(78)						152						34						—												108
Change in fee basis			(35)						(14)						—						—												(49)
Balance at 3/31/2023			$	10,998					$	5,473					$	1,276					$	—											$	17,747

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

FPAUM: $19.9						FPAUM: $17.8

			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 March 31, 2024

LEP XVI contributed approximately 26% of the Secondaries Group’s management fees for the three months ended March 31, 2024.

The following table presents the performance data of the Secondaries Group’s significant drawdown fund as of March 31, 2024 ($ 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
LEP XVI(7)						2016						$	4,691					$	4,896					$	3,806					$	1,990					$	3,116					$	5,106					1.5x						1.3x						24.3						16.1						Private Equity Secondaries

For the 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 Months Ended March 31, 2024 Compared to Three Months Ended March 31, 2023

Fee Related Earnings

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

															Three months ended March 31,												Favorable (Unfavorable)
																											2024						2023						$ Change						% Change
Other fees																											$	4,333					$	4,640					$	(307)					(7)%
Compensation and benefits																											(94,157)						(84,967)						(9,190)						(11)
General, administrative and other expenses																											(50,480)						(46,172)						(4,308)						(9)
Fee Related Earnings																											$	(140,304)					$	(126,499)					(13,805)						(11)

Other Fees. The decrease in other fees for the three months ended March 31, 2024 compared to the three months ended March 31, 2023 was primarily driven by lower asset-based, net distribution fees associated with our non-traded REITs.

Compensation and Benefits. The increase in compensation and benefits for the three months ended March 31, 2024, compared to the three months ended March 31, 2023 was 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; (iii) increased compensation and benefits associated with our retail distribution channel, AWMS, which included higher employee commissions due to increased sales volumes from ASIF and APMF; and (iv) increase in payroll related taxes primarily due to our higher stock price associated with the restricted units that vested during the period. Average headcount increased by 13% to 1,593 professionals for the quarter-to-date period in 2024 from 1,415 professionals for the same period in 2023.

General, Administrative and Other Expenses. Certain expenses increased during the current period, including occupancy costs, information services and information technology costs. These expenses collectively increased by $5.1 million for the three months ended March 31, 2024 compared to the same period in 2023 to support our growing headcount and the expansion of our business, including occupancy costs for our new corporate headquarters that will be in use later this year.

Realized Income

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

															Three months ended March 31,												Favorable (Unfavorable)
																											2024						2023						$ Change						% Change
Fee Related Earnings																											$	(140,304)					$	(126,499)					$	(13,805)					(11)%
Interest and other investment income (loss)—realized																											452						(92)						544						NM
Interest expense																											(40)						(26)						(14)						(54)
Realized net investment income (loss)																											412						(118)						530						NM
Realized Income																											$	(139,892)					$	(126,617)					(13,275)						(10)

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: (i) cash on hand; (ii) net working capital; (iii) 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; (iv) fund distributions related to our investments that are unpredictable as to amount and timing; and (v) net borrowings from the Credit Facility. As of March 31, 2024, our cash and cash equivalents were $346.3 million and we have $425.0 million available 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 March 31, 2024. 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.

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Cash flows from management fees may be impacted by a slowdown in deployment, declines in valuations 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 in 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: (i) provide capital to facilitate the growth of our existing investment management businesses; (ii) fund our investment commitments; (iii) provide capital to facilitate our expansion into businesses that are complementary to our existing investment management businesses as well as other strategic growth initiatives; (iv) pay operating expenses, including cash compensation to our employees; (v) fund capital expenditures; (vi) service our debt; (vii) pay income taxes and make payments under the tax receivable agreement (“TRA”); (viii) make dividend payments to our Class A and non-voting common stockholders in accordance with our dividend policy; and (ix) 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 FRE 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 performance 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 from the amortization of intangible assets, among others. We allocate the taxes by multiplying the statutory tax rate currently in effect by our net 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: (i) raising capital from third-party investors, which is reflected as non-controlling interests of our Consolidated Funds; (ii) financing certain investments by issuing debt; (iii) purchasing and selling investment securities; (iv) generating cash through the realization of certain investments; (v) collecting interest and dividend income; and (vi) 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.

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Cash Flows

The following tables summarize our condensed consolidated statements of cash flows by activities attributable to the Company and 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.

			Three months ended March 31,
			2024						2023
Net cash provided by operating activities			$	458,363					$	148,315
Net cash provided by the Consolidated Funds’ operating activities, net of eliminations			251,682						559,257
Net cash provided by operating activities			710,045						707,572
Net cash used in the Company’s investing activities			(34,071)						(8,877)
Net cash used in the Company’s financing activities			(424,232)						(260,400)
Net cash used in the Consolidated Funds’ financing activities, net of eliminations			(242,400)						(560,744)
Net cash used in financing activities			(666,632)						(821,144)
Effect of exchange rate changes			(11,285)						4,711
Net change in cash and cash equivalents			$	(1,943)					$	(117,738)

The Consolidated Funds had no effect on cash flows attributable to the Company for the periods presented and are excluded from the discussion below. The following discussion focuses on cash flow by activities attributable to the Company.

Operating Activities

In the table below, cash flows from operations are 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, realized net investment income and interest payments. We generated meaningful cash flow from operations in each period presented.

			Three months ended March 31,												Favorable (Unfavorable)
			2024						2023						$ Change						% Change
Core operating activities			$	335,306					$	227,264					$	108,042					48%
Net realized performance income			50,733						(86,835)						137,568						(158)
Net cash provided by investment related activities			72,324						7,886						64,438						NM
Net cash provided by operating activities			$	458,363					$	148,315					310,048						209

Cash generated from our core operating activities increased as a result of growing fee revenues and sustained profitability. Additionally, cash generated from our core operating activities for the three months ended March 31, 2023 was lower when compared to the three months ended March 31, 2024 primarily due to timing of cash collection, including deferring cash collection of our fourth quarter 2022 Part I Fees from the first quarter of 2023 to April 2023.

Net realized performance income represents a source of cash and includes: (i) carried interest distributions that may represent tax distributions or other distributions of income; and (ii) incentive fees that are realized annually at the end of the measurement period, which is typically at the end of the calendar year. Cash received from carried interest distributions and the subsequent payments to employees may not necessarily occur in the same quarter. Cash from the incentive fee activities is generally received in the period subsequent to the measurement period. The increase in net realized performance income over the comparative periods was primarily due to timing of payments to employees for: (i) tax distributions that were both received and paid in the fourth quarter 2023, while tax distributions received in the fourth quarter of 2022 were paid in the first quarter of 2023; and (ii) carried interest distributions and incentive fees that were received in the first quarter of 2024 but not paid as of the end of the quarter.

Net cash provided by investment related activities for the three months ended March 31, 2024 and 2023 primarily represents: (i) distributions received from our capital investments and the repayment of loans that we have made; (ii) sales of our capital investments to employees; offset by (iii) purchases associated with funding capital commitments and strategic investments in our investment portfolio; and (iv) interest payments on our debt obligations. 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.

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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

			Three months ended March 31,
			2024						2023
Purchase of furniture, equipment and leasehold improvements, net of disposals			$	(26,071)					$	(8,877)
Acquisitions, net of cash acquired			(8,000)						—
Net cash used in investing activities			$	(34,071)					$	(8,877)

Net cash used in the Company’s investing activities was principally composed of cash to purchase furniture, fixtures, equipment and leasehold improvements during both periods 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 three months ended March 31, 2024 was predominantly for the build out of our new corporate headquarters that will be in use later this year.

Financing Activities

			Three months ended March 31,
			2024						2023
Net borrowings of Credit Facility			$	80,000					$	95,000
Class A and non-voting common stock dividends			(190,504)						(145,386)
AOG unitholder distributions			(129,542)						(106,246)
Stock option exercises			1,511						9,180
Taxes paid related to net share settlement of equity awards			(186,731)						(113,431)
Other financing activities			1,034						483
Net cash used in the Company’s financing activities			$	(424,232)					$	(260,400)

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 three months ended March 31, 2024 and 2023.

In connection with the vesting of restricted units that are granted to our employees under the 2023 Equity Incentive Plan (the “Equity Incentive Plan”), 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. The use of cash increased from the prior year period as a result of our higher stock price, which resulted in employees recognizing additional compensation. For the three months ended March 31, 2024 and 2023, we net settled and did not issue 1.6 million shares and 1.4 million shares, respectively. The Company’s financing activities also included cash received from stock options exercises with 0.1 million and 0.5 million options exercised for the three months ended March 31, 2024 and 2023, respectively. There were no options outstanding as of March 31, 2024, and we will no longer receive cash or realize any tax benefit from the exercise of stock options.

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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: (i) general economic and business conditions; (ii) our strategic plans and prospects; (iii) our business and investment opportunities; (iv) timing of capital calls by our funds in support of our commitments; (v) our financial condition and operating results; (vi) working capital requirements and other anticipated cash needs; (vii) contractual restrictions and obligations; (viii) legal, tax and regulatory restrictions; (ix) restrictions on the payment of distributions by our subsidiaries to us; and (x) other relevant factors.

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 March 31, 2024, we were required to maintain approximately $64.6 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 (“Cash Tax 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 Benefit Payment”). Effective as of May 1, 2023, pursuant to an amendment to the TRA, to the extent Ares Owners Holdings L.P. would have been a 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 and 100% of any Cash Tax Savings will inure to us. Future payments under the TRA in respect of subsequent exchanges are expected to be substantial. The TRA liability balance was $236.1 million and $191.3 million as of March 31, 2024 and December 31, 2023, 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, 2023. 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,

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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.