0001176948srt:ConsolidationEliminationsMemberus-gaap:ManagementServiceMember2022-07-012022-09-30

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


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

For the quarterly period ended ~~March 31,~~September 30, 2022


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

For the transition period from to

Commission File No. 001-36429

ARES MANAGEMENT CORPORATION

(Exact name of Registrant as specified in its charter)


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

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

(Address of principal executive office) (Zip Code)

(310) 201-4100

(Registrant’s telephone number, including area code)

N/A

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

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


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

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

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

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

Large Accelerated Filer

Accelerated Filer

☐

Non-Accelerated Filer

☐

Smaller Reporting Company

☐

Emerging Growth Company

☐

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

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

As of ~~May 3,~~October 31, 2022 there were ~~171,567,438~~173,420,074 of the registrant’s shares of Class A common stock outstanding, 3,489,911 of the registrant’s shares of non-voting common stock outstanding, 1,000 shares of the registrant's Class B common stock outstanding, and ~~118,464,968~~117,275,157 of the registrant's Class C common stock outstanding.

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						Page
PART I—FINANCIAL INFORMATION
Item 1. Financial Information - Unaudited						9
Condensed Consolidated Statements of Financial Condition as of ~~March 31,~~September 30, 2022 and December 31, 2021						9
Condensed Consolidated Statements of Operations for the three and nine months ended ~~March 31,~~September 30, 2022 and 2021						10
Condensed Consolidated Statements of Comprehensive Income for the three and nine months ended ~~March 31,~~September 30, 2022 and 2021						11
Condensed Consolidated Statements of Changes in Equity for the three and nine months ended ~~March 31,~~September 30, 2022 and for the year ended December 31, 2021						12
Condensed Consolidated Statements of Cash Flows for the ~~three~~nine months ended ~~March 31,~~September 30, 2022 and 2021						14
Notes to the Condensed Consolidated Financial Statements						15
Item 2. Management’s Discussion And Analysis Of Financial Condition And Results Of Operations						5560
Item 3. Quantitative and Qualitative Disclosures about Market Risk						~~101~~126
Item 4. Controls And Procedures						~~102~~127
PART II—OTHER INFORMATION
Item 1. Legal Proceedings						~~102~~128
Item 1A. Risk Factors						~~103~~128
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds						~~103~~128
Item 3. Defaults Upon Senior Securities						~~103~~128
Item 4. Mine Safety Disclosure						~~103~~128
Item 5. Other Information						~~103~~128
Item 6. Exhibits						~~105~~129
Signatures						~~106~~130

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Cautionary Note Regarding Forward-Looking Statements

This report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), which reflect our current views with respect to, among other things, future events, operations and financial performance. You can identify these forward-looking statements by the use of forward-looking words such as “outlook,” “believes,” “expects,” “potential,” “continues,” “may,” “will,” “should,” “seeks,” “predicts,” “intends,” “plans,” “estimates,” “anticipates,” “foresees” or negative versions of those words, other comparable words or other statements that do not relate to historical or factual matters. The forward-looking statements are based on our beliefs, assumptions and expectations of our future performance, taking into account all information currently available to us. Such forward-looking statements are subject to various risks and uncertainties and assumptions relating to our operations, financial results, financial condition, business prospects, growth strategy and liquidity. Some of these factors are described in this report and in our Annual Report on Form 10-K for the year ended December 31, 2021, under the headings “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Item 1A. Risk Factors.” These factors should not be construed as exhaustive and should be read in conjunction with the risk factors and other cautionary statements that are included in this report and in our other periodic filings. If one or more of these or other risks or uncertainties materialize, or if our underlying assumptions prove to be incorrect, our actual results may vary materially from those indicated in these forward-looking statements. New risks and uncertainties arise over time, and it is not possible for us to predict those events or how they may affect us. Therefore, you should not place undue reliance on these forward-looking statements. Any forward-looking statement speaks only as of the date on which it is made. We do not undertake any obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise, except as required by law.

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

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

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

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

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global wealth management channel. Additionally, the OMG provides services to certain of the Company’s managed funds and vehicles, which reimburse the OMG for expenses equal to the costs of services provided. The OMG’s revenues and expenses are not allocated to our reportable segments but we consider the cost structure of the OMG when evaluating our financial performance. This information constitutes non-GAAP financial information within the meaning of Regulation G, as promulgated by the SEC. Our management uses this information to assess the performance of our reportable segments and the OMG, and we believe that this information enhances the ability of shareholders to analyze our performance. For more information, see “Note 15. Segment Reporting,” to our unaudited condensed consolidated financial statements included in this Quarterly Report on Form 10-Q.

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Glossary

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

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

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

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

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

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

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

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

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

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

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

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

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

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

•“fee paying AUM” or “FPAUM” refers to the AUM from which we directly earn management fees. FPAUM is equal to the sum of all the individual fee bases of our funds that directly contribute to our management fees. For

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our funds other than CLOs, our FPAUM represents the amount of limited partner capital commitments for certain closed-end funds within the reinvestment period, the amount of limited partner invested capital for the aforementioned closed-end funds beyond the reinvestment period and the portfolio value, gross asset value or NAV. For the CLOs we manage, our FPAUM is equal to the gross amount of aggregate collateral balance, at par, adjusted for defaulted or discounted collateral;

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

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

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

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

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

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

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

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

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

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•“our funds” refers to the funds, alternative asset companies, trusts, co-investment vehicles and other entities and accounts that are managed or co-managed by the Ares Operating Group, and which are structured to pay fees. It

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also includes funds managed by Ivy Hill Asset Management, L.P., a wholly owned portfolio company of ARCC and an SEC-registered investment adviser;

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

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

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

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

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

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

•“Series A Preferred Stock” refers to the preferred stock, $0.01 par value per share, of the Company designated as 7.00% Series A Preferred Stock. The Series A Preferred Stock was redeemed in full on June 30, 2021;

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

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

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

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

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

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

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PART I—FINANCIAL INFORMATION

Item 1. Financial Statements

Ares Management Corporation

Condensed Consolidated Statements of Financial Condition

(Amounts in Thousands, Except Share Data)


		As of					As of
		March 31, 2022		December 31, 2021			September 30, 2022		December 31, 2021
		(unaudited)					(unaudited)
Assets	Assets					Assets
Cash and cash equivalents	Cash and cash equivalents	$	346,042	$	343,655	Cash and cash equivalents	$	361,500	$	343,655
Investments (includes accrued carried interest of $3,137,561 and $2,998,421 at March 31, 2022 and December 31, 2021, respectively)		3,861,835		3,684,264
Investments (includes accrued carried interest of $3,290,381 and $2,998,421 at September 30, 2022 and December 31, 2021, respectively)						Investments (includes accrued carried interest of $3,290,381 and $2,998,421 at September 30, 2022 and December 31, 2021, respectively)	4,112,393		3,684,264
Due from affiliates	Due from affiliates	494,518		670,383		Due from affiliates	561,503		670,383
Other assets	Other assets	285,836		334,755		Other assets	275,189		334,755
Right-of-use operating lease assets						Right-of-use operating lease assets	159,686		167,652
Intangible assets, net						Intangible assets, net	1,238,108		1,422,818
Goodwill	Goodwill	1,000,289		787,972		Goodwill	996,740		787,972
Intangible assets, net		1,490,591		1,422,818
Right-of-use operating lease assets		161,088		167,652
Assets of Consolidated Funds:	Assets of Consolidated Funds:					Assets of Consolidated Funds:
Cash and cash equivalents	Cash and cash equivalents	483,210		1,049,191		Cash and cash equivalents	683,976		1,049,191
U.S. Treasury securities, at fair value	U.S. Treasury securities, at fair value	1,000,615		1,000,285		U.S. Treasury securities, at fair value	1,005,094		1,000,285
Investments, at fair value	Investments, at fair value	11,661,567		11,816,393		Investments, at fair value	11,569,191		11,816,393
Due from affiliates	Due from affiliates	1,125		7,234		Due from affiliates	7,736		7,234
Receivable for securities sold	Receivable for securities sold	304,282		281,132		Receivable for securities sold	189,823		281,132
Other assets	Other assets	40,205		39,430		Other assets	45,387		39,430
Total assets	Total assets	$	21,131,203	$	21,605,164	Total assets	$	21,206,326	$	21,605,164
Liabilities	Liabilities					Liabilities
Accounts payable, accrued expenses and other liabilities	Accounts payable, accrued expenses and other liabilities	$	263,412	$	279,673	Accounts payable, accrued expenses and other liabilities	$	305,131	$	279,673
Accrued compensation	Accrued compensation	285,109		310,222		Accrued compensation	595,330		310,222
Due to affiliates	Due to affiliates	194,407		198,553		Due to affiliates	122,307		198,553
Performance related compensation payable	Performance related compensation payable	2,286,748		2,190,352		Performance related compensation payable	2,402,019		2,190,352
Debt obligations	Debt obligations	1,942,624		1,503,709		Debt obligations	2,018,462		1,503,709
Operating lease liabilities	Operating lease liabilities	197,312		205,075		Operating lease liabilities	193,180		205,075
Liabilities of Consolidated Funds:	Liabilities of Consolidated Funds:					Liabilities of Consolidated Funds:
Accounts payable, accrued expenses and other liabilities	Accounts payable, accrued expenses and other liabilities	93,766		103,258		Accounts payable, accrued expenses and other liabilities	121,994		103,258

Payable for securities purchased	Payable for securities purchased	561,154		1,118,456		Payable for securities purchased	419,726		1,118,456
CLO loan obligations, at fair value	CLO loan obligations, at fair value	10,397,615		10,657,661		CLO loan obligations, at fair value	10,313,881		10,657,661
Fund borrowings	Fund borrowings	145,088		127,771		Fund borrowings	149,546		127,771
Total liabilities	Total liabilities	16,367,235		16,694,730		Total liabilities	16,641,576		16,694,730
Commitments and contingencies	Commitments and contingencies	0		0		Commitments and contingencies
Redeemable interest in Consolidated Funds	Redeemable interest in Consolidated Funds	1,000,000		1,000,000		Redeemable interest in Consolidated Funds	1,004,994		1,000,000
Redeemable interest in Ares Operating Group entities	Redeemable interest in Ares Operating Group entities	96,347		96,008		Redeemable interest in Ares Operating Group entities	92,108		96,008
Non-controlling interests in Consolidated Funds	Non-controlling interests in Consolidated Funds	700,913		591,452		Non-controlling interests in Consolidated Funds	834,710		591,452
Non-controlling interests in Ares Operating Group entities	Non-controlling interests in Ares Operating Group entities	1,273,660		1,397,747		Non-controlling interests in Ares Operating Group entities	1,121,277		1,397,747
Stockholders' Equity	Stockholders' Equity					Stockholders' Equity

Class A common stock, $0.01 par value, 1,500,000,000 shares authorized (171,461,115 shares and 168,351,305 shares issued and outstanding at March 31, 2022 and December 31, 2021, respectively)		1,715		1,684
Non-voting common stock, $0.01 par value, 500,000,000 shares authorized (3,489,911 shares issued and outstanding at March 31, 2022 and December 31, 2021)		35		35
Class B common stock, $0.01 par value, 1,000 shares authorized (1,000 shares issued and outstanding at March 31, 2022 and December 31, 2021)		—		—
Class C common stock, $0.01 par value, 499,999,000 shares authorized (118,464,968 shares and 118,609,332 shares issued and outstanding at March 31, 2022 and December 31, 2021, respectively)		1,185		1,186
Class A common stock, $0.01 par value, 1,500,000,000 shares authorized (172,402,437 shares and 168,351,305 shares issued and outstanding at September 30, 2022 and December 31, 2021, respectively)						Class A common stock, $0.01 par value, 1,500,000,000 shares authorized (172,402,437 shares and 168,351,305 shares issued and outstanding at September 30, 2022 and December 31, 2021, respectively)	1,724		1,684
Non-voting common stock, $0.01 par value, 500,000,000 shares authorized (3,489,911 shares issued and outstanding at September 30, 2022 and December 31, 2021)						Non-voting common stock, $0.01 par value, 500,000,000 shares authorized (3,489,911 shares issued and outstanding at September 30, 2022 and December 31, 2021)	35		35
Class B common stock, $0.01 par value, 1,000 shares authorized (1,000 shares issued and outstanding at September 30, 2022 and December 31, 2021)						Class B common stock, $0.01 par value, 1,000 shares authorized (1,000 shares issued and outstanding at September 30, 2022 and December 31, 2021)	—		—
Class C common stock, $0.01 par value, 499,999,000 shares authorized (118,275,157 shares and 118,609,332 shares issued and outstanding at September 30, 2022 and December 31, 2021, respectively)						Class C common stock, $0.01 par value, 499,999,000 shares authorized (118,275,157 shares and 118,609,332 shares issued and outstanding at September 30, 2022 and December 31, 2021, respectively)	1,183		1,186
Additional paid-in-capital	Additional paid-in-capital	1,851,057		1,913,559		Additional paid-in-capital	1,911,736		1,913,559
Accumulated deficit	Accumulated deficit	(154,925)		(89,382)		Accumulated deficit	(374,198)		(89,382)
Accumulated other comprehensive loss, net of tax	Accumulated other comprehensive loss, net of tax	(6,019)		(1,855)		Accumulated other comprehensive loss, net of tax	(28,819)		(1,855)
Total stockholders' equity	Total stockholders' equity	1,693,048		1,825,227		Total stockholders' equity	1,511,661		1,825,227
Total equity	Total equity	3,667,621		3,814,426		Total equity	3,467,648		3,814,426
Total liabilities, redeemable interest, non-controlling interests and equity	Total liabilities, redeemable interest, non-controlling interests and equity	$	21,131,203	$	21,605,164	Total liabilities, redeemable interest, non-controlling interests and equity	$	21,206,326	$	21,605,164

See accompanying notes to the unaudited condensed consolidated financial statements.

Table of Contents

Ares Management Corporation

Condensed Consolidated Statements of Operations

(Amounts in Thousands, Except Share Data)

(unaudited)


		Three months ended March 31,				Three months ended September 30,		Nine months ended September 30,
		2022		2021				2022		2021		2022		2021
Revenues	Revenues						Revenues
Management fees	Management fees	$	477,332	$	320,273		Management fees	$	548,458	$	448,262	$	1,546,350	$	1,135,821
Carried interest allocation	Carried interest allocation	178,289		297,535			Carried interest allocation	192,186		460,651		417,779		1,610,707
Incentive fees	Incentive fees	16,422		2,820			Incentive fees	8,882		696		29,979		19,420
Principal investment income	Principal investment income	8,326		25,100			Principal investment income	11,582		14,250		15,521		86,477
Administrative, transaction and other fees	Administrative, transaction and other fees	34,630		12,660			Administrative, transaction and other fees	40,182		24,860		108,090		49,501
Total revenues	Total revenues	714,999		658,388			Total revenues	801,290		948,719		2,117,719		2,901,926
Expenses	Expenses						Expenses
Compensation and benefits	Compensation and benefits	357,243		231,850			Compensation and benefits	425,419		335,569		1,155,031		837,108
Performance related compensation	Performance related compensation	129,405		221,432			Performance related compensation	142,934		331,141		316,818		1,208,954
General, administrative and other expenses	General, administrative and other expenses	120,523		67,656			General, administrative and other expenses	319,352		134,453		562,441		285,471

Expenses of Consolidated Funds	Expenses of Consolidated Funds	4,513		4,171			Expenses of Consolidated Funds	10,397		12,104		28,364		31,575
Total expenses	Total expenses	611,684		525,109			Total expenses	898,102		813,267		2,062,654		2,363,108
Other income (expense)	Other income (expense)						Other income (expense)
Net realized and unrealized gains on investments	Net realized and unrealized gains on investments	8,109		5,433			Net realized and unrealized gains on investments	4,431		8,334		10,765		18,744
Interest and dividend income	Interest and dividend income	1,502		960			Interest and dividend income	2,086		1,376		5,064		6,818
Interest expense	Interest expense	(15,646)		(6,695)			Interest expense	(18,307)		(11,523)		(51,174)		(25,125)
Other income (expense), net		1,784		(4,149)
Net realized and unrealized gains on investments of Consolidated Funds		15,968		16,422
Other income, net							Other income, net	2,601		36,654		10,194		30,686
Net realized and unrealized gains (losses) on investments of Consolidated Funds							Net realized and unrealized gains (losses) on investments of Consolidated Funds	(30)		34,245		8,031		44,720
Interest and other income of Consolidated Funds	Interest and other income of Consolidated Funds	120,290		115,839			Interest and other income of Consolidated Funds	158,415		104,028		396,080		333,745
Interest expense of Consolidated Funds	Interest expense of Consolidated Funds	(74,013)		(71,025)			Interest expense of Consolidated Funds	(112,762)		(61,578)		(266,028)		(191,577)
Total other income		57,994		56,785
Income before taxes		161,309		190,064
Income tax expense		20,411		25,754
Net income		140,898		164,310
Total other income, net							Total other income, net	36,434		111,536		112,932		218,011
Income (loss) before taxes							Income (loss) before taxes	(60,378)		246,988		167,997		756,829
Income tax expense (benefit)							Income tax expense (benefit)	(11,599)		30,275		22,272		104,487
Net income (loss)							Net income (loss)	(48,779)		216,713		145,725		652,342
Less: Net income attributable to non-controlling interests in Consolidated Funds	Less: Net income attributable to non-controlling interests in Consolidated Funds	47,382		49,858			Less: Net income attributable to non-controlling interests in Consolidated Funds	16,340		47,370		48,700		102,255
Net income attributable to Ares Operating Group entities		93,516		114,452
Net income (loss) attributable to Ares Operating Group entities							Net income (loss) attributable to Ares Operating Group entities	(65,119)		169,343		97,025		550,087
Less: Net income attributable to redeemable interest in Ares Operating Group entities	Less: Net income attributable to redeemable interest in Ares Operating Group entities	399		32			Less: Net income attributable to redeemable interest in Ares Operating Group entities	93		324		35		693
Less: Net income attributable to non-controlling interests in Ares Operating Group entities		47,254		56,042
Net income attributable to Ares Management Corporation		45,863		58,378
Less: Net income (loss) attributable to non-controlling interests in Ares Operating Group entities							Less: Net income (loss) attributable to non-controlling interests in Ares Operating Group entities	(29,666)		84,293		46,942		264,646
Net income (loss) attributable to Ares Management Corporation							Net income (loss) attributable to Ares Management Corporation	(35,546)		84,726		50,048		284,748
Less: Series A Preferred Stock dividends paid	Less: Series A Preferred Stock dividends paid	—		5,425			Less: Series A Preferred Stock dividends paid	—		—		—		10,850

Net income attributable to Ares Management Corporation Class A and non-voting common stockholders		$	45,863	$	52,953
Net income per share of Class A and non-voting common stock:
Less: Series A Preferred Stock redemption premium							Less: Series A Preferred Stock redemption premium	—		—		—		11,239
Net income (loss) attributable to Ares Management Corporation Class A and non-voting common stockholders							Net income (loss) attributable to Ares Management Corporation Class A and non-voting common stockholders	$	(35,546)	$	84,726	$	50,048	$	262,659
Net income (loss) per share of Class A and non-voting common stock:							Net income (loss) per share of Class A and non-voting common stock:
Basic	Basic	$	0.24	$	0.33		Basic	$	(0.22)	$	0.49	$	0.23	$	1.55
Diluted	Diluted	$	0.24	$	0.32		Diluted	$	(0.22)	$	0.45	$	0.23	$	1.48
Weighted-average shares of Class A and non-voting common stock:	Weighted-average shares of Class A and non-voting common stock:						Weighted-average shares of Class A and non-voting common stock:
Basic	Basic	174,215,251		149,271,822			Basic	175,631,144		168,931,621		175,010,241		161,071,151
Diluted	Diluted	174,215,251		163,664,384			Diluted	175,631,144		186,522,157		175,010,241		177,143,438

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

See accompanying notes to the unaudited condensed consolidated financial statements.

Table of Contents

Ares Management Corporation

Condensed Consolidated Statements of Comprehensive Income

(Amounts in Thousands)

(unaudited)

Three months ended March 31,
2022 2021
Net income $ 140,898 $ 164,310
Other comprehensive income:
Foreign currency translation adjustments, net of tax (12,393) (10,573)
Total comprehensive income 128,505 153,737
Less: Comprehensive income attributable to non-controlling interests in Consolidated Funds 42,287 40,786
Less: Comprehensive income (loss) attributable to redeemable interest in Ares Operating Group entities 68 (558)
Less: Comprehensive income attributable to non-controlling interests in Ares Operating Group entities 44,451 55,676
Comprehensive income attributable to Ares Management Corporation $ 41,699 $ 57,833


	Three months ended September 30,				Nine months ended September 30,
	2022		2021		2022		2021
Net income (loss)	$	(48,779)	$	216,713	$	145,725	$	652,342
Other comprehensive income (loss):
Foreign currency translation adjustments, net of tax	(29,611)		(11,324)		(71,648)		(18,439)
Total comprehensive income (loss)	(78,390)		205,389		74,077		633,903
Less: Comprehensive income attributable to non-controlling interests in Consolidated Funds	7,141		42,015		24,506		89,784
Less: Comprehensive loss attributable to redeemable interest in Ares Operating Group entities	(840)		(32)		(2,225)		(67)
Less: Comprehensive income (loss) attributable to non-controlling interests in Ares Operating Group entities	(37,518)		81,947		28,712		262,492
Comprehensive income (loss) attributable to Ares Management Corporation	$	(47,173)	$	81,459	$	23,084	$	281,694

See accompanying notes to the unaudited condensed consolidated financial statements.

Table of Contents

Ares Management Corporation

Condensed Consolidated Statements of Changes in Equity

(Amounts in Thousands)

(unaudited)


		Class A Common Stock		Non- voting Common Stock		Class C Common Stock		Additional Paid-in-Capital		Accumulated deficit		Accumulated Other Comprehensive Income (loss)		Non-Controlling Interest in Ares Operating Group Entities		Non-Controlling Interest in Consolidated Funds		Total Equity			Series A Preferred Stock		Class A Common Stock		Non-voting Common Stock		Class C Common Stock		Additional Paid-in-Capital		Accumulated deficit		Accumulated Other Comprehensive Income (loss)		Non-Controlling Interest in Ares Operating Group Entities		Non-Controlling Interest in Consolidated Funds		Total Equity
Balance at December 31, 2021	Balance at December 31, 2021	$	1,684	$	35	$	1,186	$	1,913,559	$	(89,382)	$	(1,855)	$	1,397,747	$	591,452	$	3,814,426	Balance at December 31, 2021	$	—	$	1,684	$	35	$	1,186	$	1,913,559	$	(89,382)	$	(1,855)	$	1,397,747	$	591,452	$	3,814,426

Changes in ownership interests and related tax benefits	Changes in ownership interests and related tax benefits	28		—		(1)		(110,577)		—		—		(90,843)		19,202		(182,191)		Changes in ownership interests and related tax benefits	—		28		—		(1)		(110,577)		—		—		(90,843)		19,202		(182,191)
Issuances of common stock	Issuances of common stock	1		—		—		12,834		—		—		—		—		12,835		Issuances of common stock	—		1		—		—		12,834		—		—		—		—		12,835
Capital contributions	Capital contributions	—		—		—		—		—		—		1,079		82,930		84,009		Capital contributions	—		—		—		—		—		—		—		1,079		82,930		84,009
Dividends/Distributions	Dividends/Distributions	—		—		—		—		(111,406)		—		(100,480)		(34,958)		(246,844)		Dividends/Distributions	—		—		—		—		—		(111,406)		—		(100,480)		(34,958)		(246,844)
Net income	Net income	—		—		—		—		45,863		—		47,254		47,382		140,499		Net income	—		—		—		—		—		45,863		—		47,254		47,382		140,499
Currency translation adjustment, net of tax	Currency translation adjustment, net of tax	—		—		—		—		—		(4,164)		(2,803)		(5,095)		(12,062)		Currency translation adjustment, net of tax	—		—		—		—		—		—		(4,164)		(2,803)		(5,095)		(12,062)
Equity compensation	Equity compensation	—		—		—		31,896		—		—		21,706		—		53,602		Equity compensation	—		—		—		—		31,896		—		—		21,706		—		53,602
Stock option exercises	Stock option exercises	2		—		—		3,345		—		—		—		—		3,347		Stock option exercises	—		2		—		—		3,345		—		—		—		—		3,347
Balance at March 31, 2022	Balance at March 31, 2022	$	1,715	$	35	$	1,185	$	1,851,057	$	(154,925)	$	(6,019)	$	1,273,660	$	700,913	$	3,667,621	Balance at March 31, 2022	—		1,715		35		1,185		1,851,057		(154,925)		(6,019)		1,273,660		700,913		3,667,621

Changes in ownership interests and related tax benefits																				Changes in ownership interests and related tax benefits	—		—		—		(1)		(5,599)		—		—		(3,135)		5,815		(2,920)

Capital contributions																				Capital contributions	—		—		—		—		—		—		—		969		135,350		136,319

Dividends/Distributions																				Dividends/Distributions	—		—		—		—		—		(111,506)		—		(82,958)		(18,680)		(213,144)
Net income (loss)																				Net income (loss)	—		—		—		—		—		39,731		—		29,354		(15,022)		54,063
Currency translation adjustment, net of tax																				Currency translation adjustment, net of tax	—		—		—		—		—		—		(11,173)		(7,575)		(9,900)		(28,648)
Equity compensation																				Equity compensation	—		—		—		—		29,569		—		—		19,990		—		49,559
Stock option exercises																				Stock option exercises	—		3		—		—		5,294		—		—		—		—		5,297
Balance at June 30, 2022																				Balance at June 30, 2022	—		1,718		35		1,184		1,880,321		(226,700)		(17,192)		1,230,305		798,476		3,668,147

Changes in ownership interests and related tax benefits																				Changes in ownership interests and related tax benefits	—		3		—		(1)		(3,173)		—		—		(4,354)		(479)		(8,004)

Capital contributions																				Capital contributions	—		—		—		—		—		—		—		1,549		80,366		81,915
Dividends/Distributions																				Dividends/Distributions	—		—		—		—		—		(111,952)		—		(88,041)		(50,794)		(250,787)
Net income (loss)																				Net income (loss)	—		—		—		—		—		(35,546)		—		(29,666)		16,340		(48,872)
Currency translation adjustment, net of tax																				Currency translation adjustment, net of tax	—		—		—		—		—		—		(11,627)		(7,852)		(9,199)		(28,678)
Equity compensation																				Equity compensation	—		—		—		—		28,704		—		—		19,336		—		48,040
Stock option exercises																				Stock option exercises	—		3		—		—		5,884		—		—		—		—		5,887
Balance at September 30, 2022																				Balance at September 30, 2022	$	—	$	1,724	$	35	$	1,183	$	1,911,736	$	(374,198)	$	(28,819)	$	1,121,277	$	834,710	$	3,467,648

See accompanying notes to the unaudited condensed consolidated financial statements.

Table of Contents

Ares Management Corporation

Condensed Consolidated Statements of Changes in Equity

(Amounts in Thousands)

(unaudited)


		Series A Preferred Stock		Class A Common Stock		Non- voting Common Stock		Class C Common Stock		Additional Paid-in-Capital		Accumulated deficit		Accumulated Other Comprehensive Income (loss)		Non-Controlling Interest in Ares Operating Group Entities		Non-Controlling Interest in Consolidated Funds		Total Equity			Series A Preferred Stock		Class A Common Stock		Non-voting Common Stock		Class C Common Stock		Additional Paid-in-Capital		Accumulated deficit		Accumulated Other Comprehensive Income (loss)		Non-Controlling Interest in Ares Operating Group Entities		Non-Controlling Interest in Consolidated Funds		Total Equity
Balance at December 31, 2020	Balance at December 31, 2020	$	298,761	$	1,472	$	—	$	1,124	$	1,043,669	$	(151,824)	$	483	$	738,369	$	539,720	$	2,471,774	Balance at December 31, 2020	$	298,761	$	1,472	$	—	$	1,124	$	1,043,669	$	(151,824)	$	483	$	738,369	$	539,720	$	2,471,774

Changes in ownership interests and related tax benefits	Changes in ownership interests and related tax benefits	—		26		—		(2)		(41,686)		—		—		(44,477)		—		(86,139)		Changes in ownership interests and related tax benefits	—		26		—		(2)		(41,686)		—		—		(44,477)		—		(86,139)

Capital contributions	Capital contributions	—		—		—		—		—		—		—		—		11,011		11,011		Capital contributions	—		—		—		—		—		—		—		—		11,011		11,011
Dividends/Distributions	Dividends/Distributions	(5,425)		—		—		—		—		(74,684)		—		(67,084)		(38,829)		(186,022)		Dividends/Distributions	(5,425)		—		—		—		—		(74,684)		—		(67,084)		(38,829)		(186,022)
Net income	Net income	5,425		—		—		—		—		52,953		—		56,042		49,858		164,278		Net income	5,425		—		—		—		—		52,953		—		56,042		49,858		164,278
Currency translation adjustment, net of tax	Currency translation adjustment, net of tax	—		—		—		—		—		—		(545)		(366)		(9,072)		(9,983)		Currency translation adjustment, net of tax	—		—		—		—		—		—		(545)		(366)		(9,072)		(9,983)
Equity compensation	Equity compensation	—		—		—		—		31,752		—		—		23,897		—		55,649		Equity compensation	—		—		—		—		31,752		—		—		23,897		—		55,649

Balance at March 31, 2021	Balance at March 31, 2021	298,761		1,498		—		1,122		1,033,735		(173,555)		(62)		706,381		552,688		2,420,568		Balance at March 31, 2021	298,761		1,498		—		1,122		1,033,735		(173,555)		(62)		706,381		552,688		2,420,568

Changes in ownership interests and related tax benefits	Changes in ownership interests and related tax benefits	—		3		—		—		(165,886)		—		—		143,867		—		(22,016)		Changes in ownership interests and related tax benefits	—		3		—		—		(165,886)		—		—		143,867		—		(22,016)
Issuances of common stock	Issuances of common stock	—		122		35		—		827,273		—		—		—		—		827,430		Issuances of common stock	—		122		35		—		827,273		—		—		—		—		827,430
Capital contributions	Capital contributions	—		—		—		54		—		—		—		317,595		34,994		352,643		Capital contributions	—		—		—		54		—		—		—		317,595		34,994		352,643
Redemption of preferred stock	Redemption of preferred stock	(310,000)		—		—		—		—		—		—		—		—		(310,000)		Redemption of preferred stock	(310,000)		—		—		—		—		—		—		—		—		(310,000)
Dividends/Distributions	Dividends/Distributions	(5,425)		—		—		—		—		(82,825)		—		(63,585)		(33,460)		(185,295)		Dividends/Distributions	(5,425)		—		—		—		—		(82,825)		—		(63,585)		(33,460)		(185,295)
Net income	Net income	16,664		—		—		—		—		124,980		—		124,311		5,027		270,982		Net income	16,664		—		—		—		—		124,980		—		124,311		5,027		270,982
Currency translation adjustment, net of tax	Currency translation adjustment, net of tax	—		—		—		—		—		—		758		558		1,956		3,272		Currency translation adjustment, net of tax	—		—		—		—		—		—		758		558		1,956		3,272
Equity compensation	Equity compensation	—		—		—		—		41,003		—		—		28,501		—		69,504		Equity compensation	—		—		—		—		41,003		—		—		28,501		—		69,504
Stock option exercises	Stock option exercises	—		8		—		—		14,019		—		—		—		—		14,027		Stock option exercises	—		8		—		—		14,019		—		—		—		—		14,027
Balance at June 30, 2021	Balance at June 30, 2021	—		1,631		35		1,176		1,750,144		(131,400)		696		1,257,628		561,205		3,441,115		Balance at June 30, 2021	—		1,631		35		1,176		1,750,144		(131,400)		696		1,257,628		561,205		3,441,115

Changes in ownership interests and related tax benefits	Changes in ownership interests and related tax benefits	—		38		—		(21)		79,787		—		—		(187,454)		—		(107,650)		Changes in ownership interests and related tax benefits	—		38		—		(21)		79,787		—		—		(187,454)		—		(107,650)

Capital contributions	Capital contributions	—		—		—		33		—		—		—		211,444		(126,339)		85,138		Capital contributions	—		—		—		33		—		—		—		211,444		(126,339)		85,138
Dividends/Distributions	Dividends/Distributions	—		—		—		—		—		(82,307)		—		(68,083)		(12,481)		(162,871)		Dividends/Distributions	—		—		—		—		—		(82,307)		—		(68,083)		(12,481)		(162,871)
Net income	Net income	—		—		—		—		—		84,726		—		84,293		47,370		216,389		Net income	—		—		—		—		—		84,726		—		84,293		47,370		216,389
Currency translation adjustment, net of tax	Currency translation adjustment, net of tax	—		—		—		—		—		—		(3,267)		(2,346)		(5,355)		(10,968)		Currency translation adjustment, net of tax	—		—		—		—		—		—		(3,267)		(2,346)		(5,355)		(10,968)
Equity compensation	Equity compensation	—		—		—		—		38,607		—		—		27,384		—		65,991		Equity compensation	—		—		—		—		38,607		—		—		27,384		—		65,991
Stock option exercises	Stock option exercises	—		7		—		—		13,375		—		—		—		—		13,382		Stock option exercises	—		7		—		—		13,375		—		—		—		—		13,382
Balance at September 30, 2021	Balance at September 30, 2021	—		1,676		35		1,188		1,881,913		(128,981)		(2,571)		1,322,866		464,400		3,540,526		Balance at September 30, 2021	—		1,676		35		1,188		1,881,913		(128,981)		(2,571)		1,322,866		464,400		3,540,526

Changes in ownership interests and related tax benefits	Changes in ownership interests and related tax benefits	—		3		—		(2)		(5,504)		—		—		(9,671)		13,487		(1,687)		Changes in ownership interests and related tax benefits	—		3		—		(2)		(5,504)		—		—		(9,671)		13,487		(1,687)

Capital contributions	Capital contributions	—		—		—		—		—		—		—		9,981		113,978		123,959		Capital contributions	—		—		—		—		—		—		—		9,981		113,978		123,959
Dividends/Distributions	Dividends/Distributions	—		—		—		—		—		(84,490)		—		(70,448)		(14,127)		(169,065)		Dividends/Distributions	—		—		—		—		—		(84,490)		—		(70,448)		(14,127)		(169,065)
Net income	Net income	—		—		—		—		—		124,089		—		125,794		18,114		267,997		Net income	—		—		—		—		—		124,089		—		125,794		18,114		267,997
Currency translation adjustment, net of tax	Currency translation adjustment, net of tax	—		—		—		—		—		—		716		526		(4,400)		(3,158)		Currency translation adjustment, net of tax	—		—		—		—		—		—		716		526		(4,400)		(3,158)
Equity compensation	Equity compensation	—		—		—		—		27,348		—		—		18,699		—		46,047		Equity compensation	—		—		—		—		27,348		—		—		18,699		—		46,047
Stock option exercises	Stock option exercises	—		5		—		—		9,802		—		—		—		—		9,807		Stock option exercises	—		5		—		—		9,802		—		—		—		—		9,807
Balance at December 31, 2021	Balance at December 31, 2021	$	—	$	1,684	$	35	$	1,186	$	1,913,559	$	(89,382)	$	(1,855)	$	1,397,747	$	591,452	$	3,814,426	Balance at December 31, 2021	$	—	$	1,684	$	35	$	1,186	$	1,913,559	$	(89,382)	$	(1,855)	$	1,397,747	$	591,452	$	3,814,426

See accompanying notes to the unaudited condensed consolidated financial statements.

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Ares Management Corporation

Condensed Consolidated Statements of Cash Flows

(Amounts in Thousands)

(unaudited)


		Three months ended March 31,				Nine months ended September 30,
		2022		2021				2022		2021
Cash flows from operating activities:	Cash flows from operating activities:						Cash flows from operating activities:
Net income	Net income	$	140,898	$	164,310		Net income	$	145,725	$	652,342

Adjustments to reconcile net income to net cash provided by operating activities		53,473		44,284
Adjustments to reconcile net income to net cash used in operating activities							Adjustments to reconcile net income to net cash used in operating activities	320,950		71,133

Adjustments to reconcile net income to net cash used in operating activities allocable to non-controlling interests in Consolidated Funds	Adjustments to reconcile net income to net cash used in operating activities allocable to non-controlling interests in Consolidated Funds	(97,772)		(1,208,180)			Adjustments to reconcile net income to net cash used in operating activities allocable to non-controlling interests in Consolidated Funds	(1,128,425)		(1,688,085)

Cash flows due to changes in operating assets and liabilities	Cash flows due to changes in operating assets and liabilities	132,346		(7,044)			Cash flows due to changes in operating assets and liabilities	313,649		(149,438)

Cash flows due to changes in operating assets and liabilities allocable to redeemable and non-controlling interest in Consolidated Funds	Cash flows due to changes in operating assets and liabilities allocable to redeemable and non-controlling interest in Consolidated Funds	(4,795)		265,512			Cash flows due to changes in operating assets and liabilities allocable to redeemable and non-controlling interest in Consolidated Funds	(195,504)		(729,703)

Net cash provided by (used in) operating activities		224,150		(741,118)
Net cash used in operating activities							Net cash used in operating activities	(543,605)		(1,843,751)
Cash flows from investing activities:	Cash flows from investing activities:						Cash flows from investing activities:
Purchase of furniture, equipment and leasehold improvements, net of disposals	Purchase of furniture, equipment and leasehold improvements, net of disposals	(8,524)		(3,284)			Purchase of furniture, equipment and leasehold improvements, net of disposals	(28,388)		(15,152)
Acquisitions, net of cash acquired	Acquisitions, net of cash acquired	(301,624)		—			Acquisitions, net of cash acquired	(301,658)		(1,057,426)
Net cash used in investing activities	Net cash used in investing activities	(310,148)		(3,284)			Net cash used in investing activities	(330,046)		(1,072,578)
Cash flows from financing activities:	Cash flows from financing activities:						Cash flows from financing activities:

Net proceeds from issuance of Class A and non-voting common stock							Net proceeds from issuance of Class A and non-voting common stock	—		827,430
Proceeds from Credit Facility	Proceeds from Credit Facility	860,000		168,000			Proceeds from Credit Facility	940,000		468,000
Proceeds from issuance of senior notes		488,915		—
Proceeds from issuance of senior and subordinated notes							Proceeds from issuance of senior and subordinated notes	488,915		450,000

Repayments of Credit Facility	Repayments of Credit Facility	(905,000)		—			Repayments of Credit Facility	(910,000)		(318,000)

Dividends and distributions	Dividends and distributions	(211,886)		(141,768)			Dividends and distributions	(608,220)		(438,568)
Series A Preferred Stock dividends	Series A Preferred Stock dividends	—		(5,425)			Series A Preferred Stock dividends	—		(10,850)

Redemption of Series A Preferred Stock							Redemption of Series A Preferred Stock	—		(310,000)

Stock option exercises	Stock option exercises	3,347		—			Stock option exercises	14,531		27,409
Taxes paid related to net share settlement of equity awards	Taxes paid related to net share settlement of equity awards	(183,027)		(84,590)			Taxes paid related to net share settlement of equity awards	(194,223)		(221,287)
Other financing activities	Other financing activities	856		341			Other financing activities	2,457		1,976
Allocable to redeemable and non-controlling interests in Consolidated Funds:	Allocable to redeemable and non-controlling interests in Consolidated Funds:						Allocable to redeemable and non-controlling interests in Consolidated Funds:
Contributions from redeemable and non-controlling interests in Consolidated Funds	Contributions from redeemable and non-controlling interests in Consolidated Funds	82,930		941,935			Contributions from redeemable and non-controlling interests in Consolidated Funds	298,646		919,666
Distributions to non-controlling interests in Consolidated Funds	Distributions to non-controlling interests in Consolidated Funds	(34,958)		(38,829)			Distributions to non-controlling interests in Consolidated Funds	(104,432)		(84,770)
Borrowings under loan obligations by Consolidated Funds	Borrowings under loan obligations by Consolidated Funds	49,317		7,000			Borrowings under loan obligations by Consolidated Funds	1,120,680		1,456,887
Repayments under loan obligations by Consolidated Funds	Repayments under loan obligations by Consolidated Funds	(57,457)		(29,453)			Repayments under loan obligations by Consolidated Funds	(121,273)		(74,909)
Net cash provided by financing activities	Net cash provided by financing activities	93,037		817,211			Net cash provided by financing activities	927,081		2,692,984
Effect of exchange rate changes	Effect of exchange rate changes	(4,652)		(2,749)			Effect of exchange rate changes	(35,585)		(20,763)
Net change in cash and cash equivalents	Net change in cash and cash equivalents	2,387		70,060			Net change in cash and cash equivalents	17,845		(244,108)
Cash and cash equivalents, beginning of period	Cash and cash equivalents, beginning of period	343,655		539,812			Cash and cash equivalents, beginning of period	343,655		539,812
Cash and cash equivalents, end of period	Cash and cash equivalents, end of period	$	346,042	$	609,872		Cash and cash equivalents, end of period	$	361,500	$	295,704
Supplemental disclosure of non-cash financing activities:	Supplemental disclosure of non-cash financing activities:						Supplemental disclosure of non-cash financing activities:
Issuance of Class A common stock in connection with acquisitions		$	12,835	$	—
Issuance of AOG Units and Class A common stock in connection with acquisitions							Issuance of AOG Units and Class A common stock in connection with acquisitions	$	12,835	$	511,069

See accompanying notes to the unaudited condensed consolidated financial statements.

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Ares Management Corporation

Notes to the Unaudited Condensed Consolidated Financial Statements

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

1. ORGANIZATION

Ares Management Corporation (the “Company”), a Delaware corporation, together with its subsidiaries, is a leading global alternative investment manager operating integrated groups across Credit, Private Equity, Real Assets, ~~Secondary Solutions~~Secondaries and Strategic Initiatives. Information about segments should be read together with “Note 15. Segment Reporting.” Subsidiaries of the Company serve as the general partners and/or investment managers to various investment funds and managed accounts within each investment group (the “Ares Funds”). These subsidiaries provide investment advisory services to the Ares Funds in exchange for management fees.

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

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

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

Redeemable Interest and Non-Controlling Interests in Ares Operating Group Entities

The non-controlling interests in AOG entities represent a component of equity and net income attributable to the owners of the Ares Operating Group Units (“AOG Units”) that are not held directly or indirectly by the Company. These owners consist predominantly of Ares Owners Holdings L.P. but also include other strategic distribution partnerships with whom the Company has established joint ventures and other non-controlling strategic investors. Non-controlling interests in AOG entities are adjusted for contributions to and distributions from AOG during the reporting period and are allocated income from the AOG entities either based on their historical ownership percentage for the proportional number of days in the reporting period or based on the activity associated with certain membership interests.

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

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying condensed consolidated financial statements are prepared in accordance with the generally accepted accounting principles in the United States (“GAAP”) for interim financial information and instructions to the Quarterly Report on Form 10-Q. The condensed consolidated financial statements, including these notes, are unaudited and exclude some of the disclosures required in annual financial statements. Management believes it has made all necessary adjustments so that the condensed consolidated financial statements are presented fairly and that estimates made in preparing its condensed consolidated financial statements are reasonable and prudent, and that all such adjustments are of a normal recurring

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Ares Management Corporation

Notes to the Unaudited Condensed Consolidated Financial Statements (Continued)

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

nature. The operating results presented for interim periods are not necessarily indicative of the results that may be expected for any other interim period or for the entire year. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements included in the Annual Report on Form 10-K for the year ended December 31, 2021 filed with the Securities and Exchange Commission (“SEC”).

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

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

Recent Accounting Pronouncements

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

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848). The amendments in this update provide optional expedients and exceptions for applying generally accepted accounting principles to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. The amendments in this update apply only to contracts, hedging relationships, and other transactions that reference the London Interbank Offered Rate ("LIBOR") or another reference rate expected to be discontinued because of reference rate reform. In January 2021, the FASB issued ASU No. 2021-01, Reference Rate Reform (Topic 848), to clarify that certain optional expedients and exceptions in Topic 848 for contract modifications and hedge accounting apply to derivative instruments that use an interest rate for margining, discounting, or contract price alignment that is modified as a result of reference rate reform. An entity may elect to adopt the amendments in ASU 2020-04 and ASU 2021-01 at any time after March 12, 2020 but no later than December 31, 2022. The expedients and exceptions provided by the amendments do not apply to contract modifications and hedging relationships entered into or evaluated after December 31, 2022, except for hedging transactions as of December 31, 2022, that an entity has elected certain optional expedients for and that are retained through the end of the hedging relationship. The Company ~~is currently evaluating the impact of~~has concluded this guidance will not have a material impact on its unaudited condensed consolidated financial statements.

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Ares Management Corporation

Notes to the Unaudited Condensed Consolidated Financial Statements (Continued)

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

3. BUSINESS COMBINATIONS

Acquisition of Landmark Partners, LLC (collectively with its subsidiaries, “Landmark”)

On June 2, 2021, a subsidiary of the Company completed the acquisition of 100% of the equity interests of Landmark, a subsidiary of BrightSphere Investment Group Inc. (NYSE: BSIG) and Landmark Investment Holdings L.P., in accordance with the purchase agreement entered into on March 30, 2021 (the “Landmark Acquisition”). As a result of the Landmark Acquisition, the Company expanded into the secondaries market with Landmark’s focus of managing private equity, real estate and infrastructure secondaries funds. Following the completion of the Landmark Acquisition, the results of Landmark are included in a newly created ~~Secondary Solutions~~Secondaries Group segment.

The acquisition date fair value of the consideration transferred totaled $1.1 billion, which consisted of the following:


Cash	$	803,309
Equity(1)	299,420
Total	$	1,102,729

(1)5,415,278 AOG Units were issued in connection with the Landmark Acquisition and increased Ares Owners Holdings L.P.’s ownership interest in the AOG entities.

The following is a summary of the fair values of assets acquired and liabilities assumed for the Landmark Acquisition as of June 2, 2021, based upon third party valuations of certain intangible assets. The fair value of assets acquired and liabilities assumed are estimated to be:


Cash	$	25,645
Other tangible assets	23,403
Intangible assets:
Management contracts	425,880
Client relationships	197,160
Trade name	86,200
Total intangible assets	709,240
Total identifiable assets acquired	758,288
Accounts payable, accrued expenses and other liabilities	~~73,215~~73,216

Net identifiable assets acquired	~~685,073~~685,072
Goodwill	~~417,656~~417,657
Net assets acquired	$	1,102,729

The carrying value of goodwill associated with Landmark was $417.7 million as of the acquisition date and is entirely allocated to the ~~Secondary Solutions~~Secondaries Group segment. The goodwill is attributable primarily to expected synergies and the assembled workforce of Landmark.

In connection with the Landmark Acquisition, the Company allocated $425.9 million, $197.2 million and $86.2 million of the purchase price to the fair value of the management contracts, client relationships and trade name, respectively. The acquired management contracts and client relationships had a weighted average amortization period as of the acquisition date of 7.4 years and 11.8 years, respectively. ~~The~~At the acquisition date, the trade name was determined to have an indefinite useful life ~~at the time of the Landmark Acquisition~~ and iswas not subject to amortization as the Company ~~intends Landmark to continue~~intended to operate under its brand name into perpetuity.

~~Supplemental information~~ During the three months ended September 30, 2022, the Company recognized non-cash impairment charges on certain of the ~~Company’s consolidated results on an unaudited pro forma basis, as if~~intangible assets from the Landmark ~~Acquisition had been consummated as of January 1, 2020, is as follows:~~Acquisition. See “Note 4. Goodwill and Intangible Assets” for further discussion.

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Ares Management Corporation

Notes to the Unaudited Condensed Consolidated Financial Statements (Continued)

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

~~Three months ended March 31,~~

~~2021~~

~~Total revenues~~

~~695,076~~

~~Net income attributable to Ares Management Corporation Class A and non-voting common stockholders~~

~~31,365~~

Supplemental information of the Company’s consolidated results on an unaudited pro forma basis, as if the Landmark Acquisition had been consummated as of January 1, 2020, is as follows:


	Three months ended September 30,			Nine months ended September 30,
		2021			2021
Total revenues		$	948,719		$	2,966,540
Net income attributable to Ares Management Corporation Class A and non-voting common stockholders		$	87,542		$	257,361

The unaudited pro forma supplemental information is based on estimates and assumptions, which the Company believes are reasonable. These results are not necessarily indicative of the Company’s consolidated financial condition or statements of operations in future periods or the results that actually would have been realized had the Company and Landmark been a combined entity during the periods presented. These pro forma amounts have been calculated after applying the following adjustments that were directly attributable to the Landmark Acquisition:

•adjustments to include the impact of the additional amortization that would have been charged assuming the fair value adjustments to intangible assets had been applied on January 1, 2020, together with the consequential tax effects;

•adjustments to include the AOG Units issued as consideration for the Landmark Acquisition, as if they were issued on January 1, 2020, and the resulting change in ownership attributable to Ares Management Corporation;

•adjustments to reflect the pro-rata economic ownership attributable to Ares Management Corporation;

•adjustments to reflect the tax effects of the Landmark Acquisition and the related adjustments as if Landmark had been included in the Company’s results as of January 1, 2020; and

•adjustments to include Landmark Acquisition related transaction costs in earnings in 2020.

Acquisition of Black Creek Group

On July 1, 2021, a subsidiary of the Company completed the acquisition of 100% of the equity interests of Black Creek Group’s U.S. real estate investment advisory and distribution business (“Black Creek”) in accordance with the purchase agreement entered into on May 20, 2021 (the “Black Creek Acquisition”). Black Creek is a leading real estate investment management firm that operates in core and core-plus real estate strategies across two non-traded Real Estate Investment Trusts (“REITs”) and various institutional fund vehicles. Following the completion of the Black Creek Acquisition, the results of Black Creek are included within the Real Assets Group segment.

Acquisition of AMP Capital’s Infrastructure Debt Platform (“Infrastructure Debt Acquisition”)

On February 10, 2022, a subsidiary of the Company completed the acquisition of AMP Capital’s Infrastructure Debt platform in accordance with the purchase agreement entered into on December 23, 2021 (the “Infrastructure Debt Acquisition”). The Infrastructure Debt Acquisition adds complementary investment capabilities to Ares’ current activities in the rapidly growing infrastructure asset class. Following the completion of the Infrastructure Debt Acquisition, the results of the infrastructure debt platform are presented within the Real Assets Group. See “Note 15. Segment Reporting” for further discussion on the Company’s change in segment composition during the first quarter of 2022.

The acquisition date fair value of the consideration transferred totaled $328.6 million, consisting of $315.8 million in cash and $12.8 million of restricted units of Class A common stock that were granted and vested on the acquisition close date.

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Ares Management Corporation

Notes to the Unaudited Condensed Consolidated Financial Statements (Continued)

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

4. GOODWILL AND INTANGIBLE ASSETS

Intangible Assets, Net

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


		Weighted Average Amortization Period as of March 31, 2022 In Years		As of March 31,				As of December 31,				Weighted Average Amortization Period as of September 30, 2022 In Years			As of September 30,				As of December 31,
			2022			2021								2022			2021
Management contracts	Management contracts		6.0			$	707,073			$	641,737		Management contracts	5.2			$	586,077			$	641,737
Client relationships	Client relationships	10.4		262,301				229,501		Client relationships		9.9			262,301				229,501
Trade name	Trade name	8.2		11,079				11,079		Trade name		7.8			11,079				11,079
Other	Other	2.6		500				500		Other		2.1			500				500
Finite-lived intangible assets	Finite-lived intangible assets			980,953				882,817		Finite-lived intangible assets					859,957				882,817
Foreign currency translation	Foreign currency translation			987				1,792		Foreign currency translation					(2,972)				1,792
Total finite-lived intangible assets	Total finite-lived intangible assets			981,940				884,609		Total finite-lived intangible assets					856,985				884,609
Less: accumulated amortization	Less: accumulated amortization			(145,349)				(115,791)		Less: accumulated amortization					(186,677)				(115,791)
Finite-lived intangible assets, net	Finite-lived intangible assets, net			836,591				768,818		Finite-lived intangible assets, net					670,308				768,818
Management contracts	Management contracts			567,800				567,800		Management contracts					567,800				567,800
Trade name	Trade name			86,200				86,200		Trade name					—				86,200
Indefinite-lived intangible assets	Indefinite-lived intangible assets			654,000				654,000		Indefinite-lived intangible assets					567,800				654,000
Intangible assets, net	Intangible assets, net			$	1,490,591			$	1,422,818	Intangible assets, net					$	1,238,108			$	1,422,818

In connection with the Infrastructure Debt Acquisition, the Company allocated $68.7 million and $32.8 million of the purchase price to the fair value of the acquired management contracts and client relationships, respectively. The acquired management contracts and client relationships had a weighted average amortization period from the date of acquisition of 5.2 years and 8.4 years, respectively.

During the three months ended September 30, 2022, the Company decided to rebrand its secondaries group as Ares Secondaries and to discontinue the ongoing use of the Landmark trade name. As a result, the Company recorded an impairment charge equal to the Landmark trade name’s carrying value of $86.2 million.

Separately, in connection with lower than expected fundraising for an acquired Landmark private equity secondaries fund, the Company recorded a non-cash impairment charge of $88.4 million to the fair value of a management contract during the three months ended September 30, 2022. The primary indicator of impairment was lower fee paying assets under management from the acquired Landmark private equity secondaries fund. Also connected to the lower fundraising projections associated with the acquired Landmark private equity secondaries fund, the Company reversed all previously recorded expenses associated with the Landmark management incentive plan. See “Note 9. Commitments and Contingencies” for further discussion. In addition, the Company recorded non-cash impairment charges of $3.7 million, $3.1 million, and $0.2 million to the fair value of management contracts acquired in connection with the Landmark Acquisition, the Black Creek Acquisition and the SSG Acquisition, respectively. The primary indicator of impairment was the shorter expected lives of certain funds as a result of returning capital to fund investors sooner than initially planned. The impairment charges for the intangible assets acquired in connection with the Landmark Acquisition, the Black Creek Acquisition and the SSG Acquisition are included within the Secondaries Group, the Real Assets Group and Strategic Initiatives, respectively.

The Company expects lower future cash flows to be generated by these management contracts over the remaining useful lives of the funds. The Company determined that the carrying value of the intangible assets exceeded the expected undiscounted future cash flows and recorded impairment charges equal to the difference between its carrying value of each asset and the asset’s estimated fair value, which was calculated using a discounted cash flow methodology.

The non-cash impairment charges represents an acceleration of amortization expense and totaled $181.6 million for the three and nine months ended September 30, 2022. Amortization expense associated with intangible assets, excluding the accelerated amortization from the non-cash impairment charges described above, was ~~$33.2~~$32.7 million and ~~$10.6~~$32.8 million for the three months ended ~~March 31,~~September 30, 2022 and 2021, respectively, and $101.5 million and $60.7 million for the nine months ended September 30, 2022 and 2021, respectively. Amortization expense is presented within general, administrative and other ~~expenses within the Condensed Consolidated Statements of Operations. During the first quarter of 2022, the Company removed $3.4 million of intangible assets that were fully amortized.~~

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Ares Management Corporation

Notes to the Unaudited Condensed Consolidated Financial Statements (Continued)

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

expenses in the Condensed Consolidated Statements of Operations. During the nine months ended September 30, 2022, the Company removed $210.6 million of impaired and fully amortized intangible assets.

Goodwill

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


		Credit Group		Private Equity Group		Real Assets Group		Secondary Solutions Group		Strategic Initiatives		Total			Credit Group		Private Equity Group		Real Assets Group		Secondaries Group		Strategic Initiatives		Total

Balance as of December 31, 2021	Balance as of December 31, 2021	$	32,196	$	58,600	$	53,339	$	417,738	$	226,099	$	787,972	Balance as of December 31, 2021	$	32,196	$	58,600	$	53,339	$	417,738	$	226,099	$	787,972
Acquisitions	Acquisitions	—		—		213,313		(97)		—		213,216		Acquisitions	—		—		213,424		(96)		—		213,328
Reallocation	Reallocation	—		(10,530)		10,530		—		—		—		Reallocation	—		(10,530)		10,530		—		—		—
Foreign currency translation	Foreign currency translation	—		—		—		(7)		(892)		(899)		Foreign currency translation	—		—		—		(35)		(4,525)		(4,560)
Balance as of March 31, 2022		$	32,196	$	48,070	$	277,182	$	417,634	$	225,207	$	1,000,289
Balance as of September 30, 2022														Balance as of September 30, 2022	$	32,196	$	48,070	$	277,293	$	417,607	$	221,574	$	996,740

In connection with the Infrastructure Debt Acquisition, the Company allocated ~~$213.3~~$213.4 million of the purchase price to goodwill.

In connection with the establishment of the Real Assets Group described in “Note 15. Segment Reporting,” the Company had an associated change in its reporting units and reallocated goodwill of $10.5 million from the Private Equity Group to the Real Assets Group using a relative fair value allocation approach. The former Real Estate Group has been transferred in its entirety to the Real Assets Group and the total goodwill of $53.3 million has been reallocated from the former Real Estate Group to the Real Assets Group accordingly.

There was no impairment of goodwill recorded during the ~~three~~nine months ended ~~March 31,~~September 30, 2022 and 2021. The impact of foreign currency translation is reflected within other comprehensive ~~income.~~income (loss).

5. INVESTMENTS

The Company’s investments are comprised of the following:


						Percentage of total investments									Percentage of total investments
		March 31,		December 31,		March 31,		December 31,			September 30,		December 31,		September 30,		December 31,

		2022		2021		2022		2021			2022		2021		2022		2021
Equity method investments:	Equity method investments:									Equity method investments:
Equity method - carried interest	Equity method - carried interest	$	3,137,561	$	2,998,421	81.2	%	81.4	%	Equity method - carried interest	$	3,290,381	$	2,998,421	80.0	%	81.4	%
Equity method private investment partnership interests - principal	Equity method private investment partnership interests - principal	503,369		473,887		13.0		12.9		Equity method private investment partnership interests - principal	526,110		473,887		12.8		12.9
Equity method private investment partnership interests and other (held at fair value)	Equity method private investment partnership interests and other (held at fair value)	123,089		117,539		3.2		3.2		Equity method private investment partnership interests and other (held at fair value)	125,499		117,539		3.0		3.2
Equity method private investment partnership interests and other	Equity method private investment partnership interests and other	44,887		40,580		1.2		1.1		Equity method private investment partnership interests and other	47,564		40,580		1.2		1.1
Total equity method investments	Total equity method investments	3,808,906		3,630,427		98.6		98.6		Total equity method investments	3,989,554		3,630,427		97.0		98.6

Collateralized loan obligations	Collateralized loan obligations	29,876		30,815		0.8		0.8		Collateralized loan obligations	24,243		30,815		0.6		0.8
Other fixed income	Other fixed income	21,582		21,582		0.5		0.5		Other fixed income	21,582		21,582		0.4		0.5
Collateralized loan obligations and other fixed income, at fair value	Collateralized loan obligations and other fixed income, at fair value	51,458		52,397		1.3		1.3		Collateralized loan obligations and other fixed income, at fair value	45,825		52,397		1.0		1.3

Common stock, at fair value	Common stock, at fair value	1,471		1,440		0.1		0.1		Common stock, at fair value	77,014		1,440		2.0		0.1
Total investments	Total investments	$	3,861,835	$	3,684,264					Total investments	$	4,112,393	$	3,684,264

Equity Method Investments

The Company’s equity method investments include investments that are not consolidated but over which the Company exerts significant influence. The Company evaluates each of its equity method investments to determine if any were significant as defined by guidance from the SEC. As of and for the three and nine months ended ~~March 31,~~September 30, 2022 and 2021, no individual equity method investment held by the Company met the significance criteria.

The Company recognized net gains related to its equity method investments of $15.2 million and $26.6 million for the three months ended March 31, 2022 and 2021, respectively. The net gains were included within principal investment income, net realized and unrealized gains on investments, and interest and dividend income within the Condensed Consolidated Statements of Operations.

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Ares Management Corporation

Notes to the Unaudited Condensed Consolidated Financial Statements (Continued)

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

The Company recognized net gains related to its equity method investments of $16.2 million and $18.9 million for the three months ended September 30, 2022 and 2021, respectively, and net gains of $25.1 million and $99.3 million for the nine months ended September 30, 2022 and 2021, respectively. The net gains were included within principal investment income, net realized and unrealized gains on investments, and interest and dividend income in the Condensed Consolidated Statements of Operations.

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

Investments of the Consolidated Funds

Investments held in the Consolidated Funds are summarized below:

Fair Value at Percentage of total investments as of
March 31, December 31, March 31, December 31,
2022 2021 2022 2021
Fixed income investments:
Bonds $ 876,607 $ 857,125 6.9 % 6.7%
Loans 9,462,121 9,910,689 74.7 77.3
U.S. Treasury securities 1,000,615 1,000,285 7.9 7.8
Investments in CLO warehouse 10,000 — 0.1 —
Total fixed income investments 11,349,343 11,768,099 89.6 91.8
Equity securities 351,780 340,272 2.8 2.7
Partnership interests 961,059 708,307 7.6 5.5
Total investments, at fair value $ 12,662,182 $ 12,816,678


	Fair Value at				Percentage of total investments as of

	September 30,		December 31,		September 30,		December 31,
	2022		2021		2022		2021
Fixed income investments:
Bonds	$	751,385	$	857,125	6.0	%	6.7%
Loans	8,986,386		9,910,689		71.4		77.3
U.S. Treasury securities	1,005,094		1,000,285		8.0		7.8

Total fixed income investments	10,742,865		11,768,099		85.4		91.8
Equity securities	698,236		340,272		5.6		2.7
Partnership interests	1,133,184		708,307		9.0		5.5
Total investments, at fair value	$	12,574,285	$	12,816,678

As of ~~March 31,~~September 30, 2022 and December 31, 2021, no single issuer or investment, including derivative instruments and underlying portfolio investments of the Consolidated Funds, had a fair value that exceeded 5.0% of the Company’s total assets.

6. FAIR VALUE

Fair Value Measurements

GAAP establishes a hierarchical disclosure framework that prioritizes the inputs used in measuring financial instruments at fair value into three levels based on their market price observability. Market price observability is affected by a number of factors, including the type of instrument and the characteristics specific to the instrument. Financial instruments with readily available quoted prices from an active market or for which fair value can be measured based on actively quoted prices generally have a higher degree of market price observability and a lesser degree of judgment inherent in measuring fair value.

Financial assets and liabilities measured and reported at fair value are classified as follows:

•Level I—Quoted prices in active markets for identical instruments.

•Level II—Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in inactive markets; and model-derived valuations with directly or indirectly observable significant inputs. Level II inputs include prices in markets with few transactions, non-current prices, prices for which little public information exists or prices that vary substantially over time or among brokered market makers. Other inputs include interest rate, yield curve, volatility, prepayment risk, loss severity, credit risk and default rate.

•Level III—Valuations that rely on one or more significant unobservable inputs. These inputs reflect the Company’s assessment of the assumptions that market participants would use to value the instrument based on the best information available.

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Ares Management Corporation

Notes to the Unaudited Condensed Consolidated Financial Statements (Continued)

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

In some instances, an instrument may fall into more than one level of the fair value hierarchy. In such instances, the instrument’s level within the fair value hierarchy is based on the lowest of the three levels (with Level III being the lowest) that is significant to the fair value measurement. The Company’s assessment of the significance of an input requires judgment and considers factors specific to the instrument. The Company accounts for the transfer of assets into or out of each fair value hierarchy level as of the beginning of the reporting period.

~~Table of Contents~~

~~Ares Management Corporation~~

~~Notes to the Unaudited Condensed Consolidated Financial Statements (Continued)~~

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

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

The following tables summarize the financial assets and financial liabilities measured at fair value for the Company and the Consolidated Funds as of ~~March 31,~~September 30, 2022:


Financial Instruments of the Company	Financial Instruments of the Company	Level I		Level II		Level III		Investments Measured at NAV		Total		Financial Instruments of the Company	Level I		Level II		Level III		Investments Measured at NAV		Total
Assets, at fair value	Assets, at fair value											Assets, at fair value
Investments:	Investments:											Investments:
Collateralized loan obligations and other fixed income	Collateralized loan obligations and other fixed income	$	—	$	—	$	51,458	$	—	$	51,458	Collateralized loan obligations and other fixed income	$	—	$	—	$	45,825	$	—	$	45,825
Common stock and other equity securities	Common stock and other equity securities	—		1,471		114,499		—		115,970		Common stock and other equity securities	—		77,014		117,272		—		194,286
Partnership interests	Partnership interests	—		—		2,575		6,016		8,591		Partnership interests	—		—		2,575		5,652		8,227
Total investments, at fair value	Total investments, at fair value	—		1,471		168,532		6,016		176,019		Total investments, at fair value	—		77,014		165,672		5,652		248,338
Derivatives-foreign currency forward contracts and interest rate swaps		—		5,457		—		—		5,457
Derivatives-foreign currency forward contracts												Derivatives-foreign currency forward contracts	—		9,247		—		—		9,247
Total assets, at fair value	Total assets, at fair value	$	—	$	6,928	$	168,532	$	6,016	$	181,476	Total assets, at fair value	$	—	$	86,261	$	165,672	$	5,652	$	257,585
Liabilities, at fair value	Liabilities, at fair value											Liabilities, at fair value
Derivatives-foreign currency forward contracts	Derivatives-foreign currency forward contracts	$	—	$	(203)	$	—	$	—	$	(203)	Derivatives-foreign currency forward contracts	$	—	$	(6,581)	$	—	$	—	$	(6,581)
Contingent consideration	Contingent consideration	—		—		(10,550)		—		(10,550)		Contingent consideration	—		—		(11,000)		—		(11,000)
Total liabilities, at fair value	Total liabilities, at fair value	$	—	$	(203)	$	(10,550)	$	—	$	(10,753)	Total liabilities, at fair value	$	—	$	(6,581)	$	(11,000)	$	—	$	(17,581)

Financial Instruments of the Consolidated Funds Level I Level II Level III Investments
Measured
at NAV Total
Assets, at fair value
Investments:
Fixed income investments:
Bonds $ — $ 547,060 $ 329,547 $ — $ 876,607
Loans — 8,932,367 529,754 — 9,462,121
U.S. Treasury securities 1,000,615 — — — 1,000,615
Collateralized loan obligations — 10,000 — — 10,000
Total fixed income investments 1,000,615 9,489,427 859,301 — 11,349,343
Equity securities 640 — 351,140 — 351,780
Partnership interests — — 241,123 719,936 961,059
Total assets, at fair value $ 1,001,255 $ 9,489,427 $ 1,451,564 $ 719,936 $ 12,662,182
Liabilities, at fair value
Derivatives:
Warrants $ (8,240) $ — $ — $ — $ (8,240)
Asset swaps — — (3,162) — (3,162)
Total derivative liabilities, at fair value (8,240) — (3,162) — (11,402)
Loan obligations of CLOs — (10,397,615) — — (10,397,615)
Total liabilities, at fair value $ (8,240) $ (10,397,615) $ (3,162) $ — $ (10,409,017)


Financial Instruments of the Consolidated Funds	Level I		Level II		Level III		Investments Measured at NAV		Total
Assets, at fair value
Investments:
Fixed income investments:
Bonds	$	—	$	495,501	$	255,884	$	—	$	751,385
Loans	—		8,321,661		664,725		—		8,986,386
U.S. Treasury securities	1,005,094		—		—		—		1,005,094

Total fixed income investments	1,005,094		8,817,162		920,609		—		10,742,865
Equity securities	646		—		526,051		171,539		698,236
Partnership interests	—		—		252,634		880,550		1,133,184
Total investments, at fair value	1,005,740		8,817,162		1,699,294		1,052,089		12,574,285
Derivatives:
Derivatives-foreign exchange contracts	—		536		—		—		536

Total derivative assets, at fair value	—		536		—		—		536
Total assets, at fair value	$	1,005,740	$	8,817,698	$	1,699,294	$	1,052,089	$	12,574,821
Liabilities, at fair value
Derivatives:
Warrants	$	(2,000)	$	—	$	—	$	—	$	(2,000)
Forward foreign currency contracts	—		(496)		—		—		(496)
Asset swaps	—		—		(3,353)		—		(3,353)
Total derivative liabilities, at fair value	(2,000)		(496)		(3,353)		—		(5,849)
Loan obligations of CLOs	—		(10,313,881)		—		—		(10,313,881)
Total liabilities, at fair value	$	(2,000)	$	(10,314,377)	$	(3,353)	$	—	$	(10,319,730)

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Ares Management Corporation

Notes to the Unaudited Condensed Consolidated Financial Statements (Continued)

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

The following tables summarize the financial assets and financial liabilities measured at fair value for the Company and the Consolidated Funds as of December 31, 2021:


Financial Instruments of the Company	Level I		Level II		Level III		Investments Measured at NAV		Total
Assets, at fair value
Investments:
Collateralized loan obligations and other fixed income	$	—	$	—	$	52,397	$	—	$	52,397
Common stock and other equity securities	—		1,440		108,949		—		110,389
Partnership interests	—		—		2,575		6,016		8,591
Total investments, at fair value	—		1,440		163,921		6,016		171,377
Derivatives-foreign currency forward contracts	—		5,682		—		—		5,682
Total assets, at fair value	$	—	$	7,122	$	163,921	$	6,016	$	177,059
Liabilities, at fair value
Derivatives-foreign currency forward contracts	$	—	$	(328)	$	—	$	—	$	(328)
Contingent consideration	—		—		(57,435)		—		(57,435)
Total liabilities, at fair value	$	—	$	(328)	$	(57,435)	$	—	$	(57,763)


Financial Instruments of the Consolidated Funds	Level I		Level II		Level III		Investments Measured at NAV		Total
Assets, at fair value
Investments:
Fixed income investments:
Bonds	$	—	$	525,393	$	331,732	$	—	$	857,125
Loans	—		9,499,469		411,220		—		9,910,689
U. S. Treasury Securities	1,000,285		—		—		—		1,000,285
Total fixed income investments	1,000,285		10,024,862		742,952		—		11,768,099
Equity securities	956		133		339,183		—		340,272
Partnership interests	—		—		238,673		469,634		708,307





Total assets, at fair value	$	1,001,241	$	10,024,995	$	1,320,808	$	469,634	$	12,816,678
Liabilities, at fair value
Derivatives:
Derivatives-foreign exchange contracts	$	(17,822)	$	—	$	—	$	—	$	(17,822)
Asset swaps	—		—		(3,105)		—		(3,105)
Total derivative liabilities, at fair value	(17,822)		—		(3,105)		—		(20,927)
Loan obligations of CLOs	—		(10,657,661)		—		—		(10,657,661)
Total liabilities, at fair value	$	(17,822)	$	(10,657,661)	$	(3,105)	$	—	$	(10,678,588)

Table of Contents

Ares Management Corporation

Notes to the Unaudited Condensed Consolidated Financial Statements (Continued)

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

The following tables set forth a summary of changes in the fair value of the Level III measurements for the three months ended ~~March 31,~~September 30, 2022:


Level III Assets and Liabilities of the Company	Level III Assets and Liabilities of the Company	Equity Securities		Fixed Income		Partnership Interests		Contingent Consideration		Total		Level III Assets and Liabilities of the Company	Equity Securities		Fixed Income		Partnership Interests		Contingent Consideration		Total
Balance, beginning of period	Balance, beginning of period	$	108,949	$	52,397	$	2,575	$	(57,435)	$	106,486	Balance, beginning of period	$	113,881	$	46,356	$	2,575	$	(10,748)	$	152,064
Transfer in due to changes in consolidation		1,491		—		—		—		1,491

Purchases(1)												Purchases(1)	894		—		—		—		894
Change in fair value												Change in fair value	—		—		—		(252)		(252)
Sales/settlements~~(1)~~(2)	Sales/settlements~~(1)~~(2)	(213)		(885)		—		47,873		46,775		Sales/settlements~~(1)~~(2)	(1,179)		(505)		—		—		(1,684)
Change in fair value		—		—		—		(988)		(988)
Realized and unrealized appreciation (depreciation), net		4,272		(54)		—		—		4,218
Realized and unrealized appreciation(depreciation), net												Realized and unrealized appreciation(depreciation), net	3,676		(26)		—		—		3,650
Balance, end of period	Balance, end of period	$	114,499	$	51,458	$	2,575	$	(10,550)	$	157,982	Balance, end of period	$	117,272	$	45,825	$	2,575	$	(11,000)	$	154,672
Change in net unrealized appreciation/depreciation and fair value included in earnings related to financial assets and liabilities still held at the reporting date		$	4,272	$	(54)	$	—	$	(988)	$	3,230
Change in net unrealized appreciation/depreciation included in earnings related to financial assets and liabilities still held at the reporting date												Change in net unrealized appreciation/depreciation included in earnings related to financial assets and liabilities still held at the reporting date	$	7,111	$	(26)	$	—	$	(252)	$	6,833

Level III Net Assets of Consolidated Funds Equity
Securities Fixed
Income Partnership
Interests Derivatives, Net Total
Balance, beginning of period $ 339,183 $ 742,952 $ 238,673 $ (3,105) $ 1,317,703
Transfer in — 171,945 — — 171,945
Transfer out — (90,417) — — (90,417)
Purchases(2)
7,320 143,577 24,000 — 174,897
Sales/settlements(1)
(10,189) (97,975) (21,500) (2) (129,666)
Amortized discounts/premiums — 654 — — 654
Realized and unrealized appreciation (depreciation), net 14,826 (11,435) (50) (55) 3,286
Balance, end of period $ 351,140 $ 859,301 $ 241,123 $ (3,162) $ 1,448,402
Change in net unrealized appreciation/depreciation included in earnings related to financial assets still held at the reporting date $ 20 $ (9,031) $ (50) $ (112) $ (9,173)


Level III Net Assets of Consolidated Funds	Equity Securities		Fixed Income		Partnership Interests		Derivatives, Net		Total
Balance, beginning of period	$	480,914	$	1,076,254	$	250,123	$	(3,035)	$	1,804,256

Transfer in	—		171,687		—		—		171,687
Transfer out	—		(350,079)		—		—		(350,079)
Purchases(1)	49,024		173,253		31,258		—		253,535
Sales/settlements(2)	(64)		(132,226)		(22,328)		—		(154,618)
Amortized discounts/premiums	—		521		—		—		521
Realized and unrealized appreciation(depreciation), net	(3,823)		(18,801)		(6,419)		(318)		(29,361)
Balance, end of period	$	526,051	$	920,609	$	252,634	$	(3,353)	$	1,695,941
Change in net unrealized appreciation/depreciation included in earnings related to financial assets still held at the reporting date	$	(3,836)	$	(9,067)	$	5,421	$	(447)	$	(7,929)

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

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

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

Table of Contents

Ares Management Corporation

Notes to the Unaudited Condensed Consolidated Financial Statements (Continued)

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

The following tables set forth a summary of changes in the fair value of the Level III measurements for the three months ended ~~March 31,~~September 30, 2021:

Level III Assets of the Company Equity
Securities Fixed Income Partnership Interests Total
Balance, beginning of period $ 88,412 $ 53,349 $ 2,575 $ 144,336
Sales/settlements(1)
— (1,539) — (1,539)
Realized and unrealized appreciation, net 821 1,720 — 2,541
Balance, end of period $ 89,233 $ 53,530 $ 2,575 $ 145,338
Change in net unrealized appreciation included in earnings related to financial assets still held at the reporting date $ 821 $ 1,720 $ — $ 2,541



Level III Assets and Liabilities of the Company	Equity Securities		Fixed Income		Partnership Interests		Contingent Consideration		Total
Balance, beginning of period	$	107,240	$	55,840	$	2,575	$	—	$	165,655

Established in connection with acquisition	—		—		—		(34,200)		(34,200)
Purchases(1)	—		708		—		—		708
Sales/settlements(2)	—		(2,904)		—		—		(2,904)
Realized and unrealized appreciation (depreciation), net	1,157		663		—		(7,213)		(5,393)
Balance, end of period	$	108,397	$	54,307	$	2,575	$	(41,413)	$	123,866
Change in net unrealized appreciation/depreciation included in earnings related to financial assets still held at the reporting date	$	1,157	$	675	$	—	$	(7,213)	$	(5,381)

Level III Net Assets of Consolidated Funds Equity
Securities Fixed
Income Partnership Interests Derivatives, Net Total
Balance, beginning of period $ 221,043 $ 542,305 $ 231,857 $ 1,060 $ 996,265
Transfer in 2,289 221,555 — — 223,844
Transfer out (33) (209,002) — — (209,035)
Purchases(2)
8,308 137,655 1,000 — 146,963
Sales/settlements(1)
(424) (127,350) — 185 (127,589)
Amortized discounts/premiums — 770 — — 770
Realized and unrealized appreciation (depreciation), net (549) (5,553) 10,595 (3,346) 1,147
Balance, end of period $ 230,634 $ 560,380 $ 243,452 $ (2,101) $ 1,032,365
Change in net unrealized appreciation/depreciation included in earnings related to financial assets still held at the reporting date $ (582) $ (863) $ 10,594 $ (2,705) $ 6,444


Level III Net Assets of Consolidated Funds	Equity Securities		Fixed Income		Partnership Interests		Derivatives, Net		Total
Balance, beginning of period	$	229,300	$	455,426	$	255,278	$	(1,658)	$	938,346

Transfer in	—		18,792		—		—		18,792
Transfer out	—		(209,282)		—		—		(209,282)
Purchases(1)	27,346		219,180		—		—		246,526
Sales/settlements(2)	(313)		(88,584)		(30,000)		625		(118,272)
Amortized discounts/premiums	—		394		—		—		394
Realized and unrealized appreciation (depreciation), net	2,913		6,750		12,280		(155)		21,788
Balance, end of period	$	259,246	$	402,676	$	237,558	$	(1,188)	$	898,292
Change in net unrealized appreciation/depreciation included in earnings related to financial assets still held at the reporting date	$	2,912	$	1,607	$	12,280	$	(63)	$	16,736

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

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

~~(2)~~

Table of Contents

Ares Management Corporation

Notes to the Unaudited Condensed Consolidated Financial Statements (Continued)

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

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



Level III Assets and Liabilities of the Company	Equity Securities		Fixed Income		Partnership Interests		Contingent Consideration		Total
Balance, beginning of period	$	108,949	$	52,397	$	2,575	$	(57,435)	$	106,486
Transfer in due to changes in consolidation	1,491		—		—		—		1,491
Purchases(1)	894		—		—		—		894

Sales/settlements(2)	(2,326)		(2,383)		—		47,873		43,164
Change in fair value	—		—		—		(1,438)		(1,438)
Realized and unrealized appreciation (depreciation), net	8,264		(4,189)		—		—		4,075
Balance, end of period	$	117,272	$	45,825	$	2,575	$	(11,000)	$	154,672
Change in net unrealized appreciation/depreciation and fair value included in earnings related to financial assets and liabilities still held at the reporting date	$	10,330	$	(4,189)	$	—	$	(1,438)	$	4,703


Level III Net Assets of Consolidated Funds	Equity Securities		Fixed Income		Partnership Interests		Derivatives, Net		Total
Balance, beginning of period	$	339,183	$	742,952	$	238,673	$	(3,105)	$	1,317,703

Transfer in	—		321,939		—		—		321,939
Transfer out	—		(213,658)		—		—		(213,658)
Purchases(1)	166,667		551,408		58,258		—		776,333
Sales/settlements(2)	(28,444)		(405,904)		(52,828)		—		(487,176)
Amortized discounts/premiums	—		1,274		—		—		1,274
Realized and unrealized appreciation (depreciation), net	48,645		(77,402)		8,531		(248)		(20,474)
Balance, end of period	$	526,051	$	920,609	$	252,634	$	(3,353)	$	1,695,941
Change in net unrealized appreciation/depreciation included in earnings related to financial assets still held at the reporting date	$	22,304	$	(69,982)	$	344	$	(643)	$	(47,977)

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

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

Table of Contents

Ares Management Corporation

Notes to the Unaudited Condensed Consolidated Financial Statements (Continued)

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

The following tables set forth a summary of changes in the fair value of the Level III measurements for the nine months ended September 30, 2021:



Level III Assets of the Company	Equity Securities		Fixed Income		Partnership Interests		Contingent Consideration		Total
Balance, beginning of period	$	88,412	$	53,349	$	2,575	$	—	$	144,336
Transfer in due to changes in consolidation	—		7,623		—		—		7,623
Established in connection with acquisition	—		—		—		(34,200)		(34,200)
Purchases(1)	19,278		1,689		—		—		20,967
Sales/settlements(2)	—		(12,120)		—		—		(12,120)
Realized and unrealized appreciation (depreciation), net	707		3,766		—		(7,213)		(2,740)
Balance, end of period	$	108,397	$	54,307	$	2,575	$	(41,413)	$	123,866
Change in net unrealized appreciation/depreciation included in earnings related to financial assets still held at the reporting date	$	707	$	2,315	$	—	$	(7,213)	$	(4,191)


Level III Net Assets of Consolidated Funds	Equity Securities		Fixed Income		Partnership Interests		Derivatives, Net		Total
Balance, beginning of period	$	221,043	$	542,305	$	231,857	$	1,060	$	996,265
Transfer out due to changes in consolidation	(157)		(49,326)		—		—		(49,483)
Transfer in	2,195		47,818		—		—		50,013
Transfer out	(33)		(216,177)		—		—		(216,210)
Purchases(1)	36,201		437,426		13,000		—		486,627
Sales/settlements(2)	(876)		(371,006)		(32,000)		301		(403,581)
Amortized discounts/premiums	1		1,464		—		—		1,465
Realized and unrealized appreciation (depreciation), net	872		10,172		24,701		(2,549)		33,196
Balance, end of period	$	259,246	$	402,676	$	237,558	$	(1,188)	$	898,292
Change in net unrealized appreciation/depreciation included in earnings related to financial assets still held at the reporting date	$	790	$	2,700	$	24,701	$	(1,670)	$	26,521

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

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

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

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Ares Management Corporation

Notes to the Unaudited Condensed Consolidated Financial Statements (Continued)

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

The following tables summarize the quantitative inputs and assumptions used for the Company’s and the Consolidated Funds' Level III measurements as of ~~March 31,~~September 30, 2022:

Level III Measurements of the Company

Fair Value

Valuation Technique(s)

Significant Unobservable Input(s)

Range

Weighted Average

Level III Measurements of the Company

Fair Value

Valuation Technique(s)

Significant Unobservable Input(s)

Range

Weighted Average

Assets

Equity securities

14,610

Transaction price(1)

N/A

15,504

Transaction price(1)

N/A

53,462

Discounted cash flow

Discount rates

14% - 20%

14.3%

56,154

Discounted cash flow

Discount rate

16.0%

46,426

Market approach

Multiple of book value

1.4x

45,614

Market approach

Multiple of book value

1.4x

Partnership interests

2,575

Other

N/A

Partnership interests

2,575

Other

N/A

Collateralized loan obligations

29,876

Broker quotes and/or 3rd party pricing services

N/A

Collateralized loan obligations

24,243

Broker quotes and/or 3rd party pricing services

N/A

Other fixed income

21,583

Other

N/A

Other fixed income

21,582

Other

N/A

Total assets

168,532

Total assets

165,672

Liabilities

Contingent consideration

(10,550)

Monte Carlo simulation

Discount rates

8.5%

Contingent consideration

(11,000)

Other

N/A

Volatility

18.0%

Total liabilities

(10,550)

Total liabilities

(11,000)

Level III Measurements of the Consolidated Funds

Fair Value

Valuation Technique(s)

Significant Unobservable Input(s)

Range

Weighted Average

Level III Measurements of the Consolidated Funds

Fair Value

Valuation Technique(s)

Significant Unobservable Input(s)

Range

Weighted Average

Assets

Equity securities

2,168

Market approach

EBITDA multiples(2)

9.3x - 55.9x

12.8x

1,196

Market approach

EBITDA multiple(2)

7.0x - 55.8x

17.6x

216,820

Market approach

Multiple of book values

1.0x - 27.5x

5.5x

116,792

Market approach

Multiple of book value

1.0x - 1.2x

1.1x

199,536

Discounted cash flow

Discount rate

20.0%

147,078

Discounted cash flow

Discount rate

20.0%

551

Other

N/A

352

Other

N/A

Yield analysis

Yields

12.5% - 15.2%

12.9%

Broker quotes and/or 3rd party pricing services

N/A

Broker quotes and/or 3rd party pricing services

N/A

85,711

Transaction price(1)

N/A

106,883

Transaction price(1)

N/A

Partnership interest

241,123

Discounted cash flow

Discount rate

18.4%

Partnership interest

252,634

Discounted cash flow

Discount rate

23.4%

Fixed income securities

716,870

Broker quotes and/or 3rd party pricing services

N/A

799,759

Broker quotes and/or 3rd party pricing services

N/A

140,539

Income approach

Yield

1.5% -21.8%

12.8%

107,133

Yield analysis

Yields

5.6% - 23.0%

10.8%

1,891

Transaction price

N/A

12,394

Transaction price

N/A

1,323

Other

N/A

Total assets

1,451,564

Total assets

1,699,294

Liabilities

Derivative instruments

(3,162)

Broker quotes and/or 3rd party pricing services

N/A

Derivative instruments

(3,353)

Broker quotes and/or 3rd party pricing services

N/A

Total liabilities

(3,162)

Total liabilities

(3,353)

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

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

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Ares Management Corporation

Notes to the Unaudited Condensed Consolidated Financial Statements (Continued)

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

The following tables summarize the quantitative inputs and assumptions used for the Company’s and the Consolidated Funds' Level III measurements as of December 31, 2021:

Level III Measurements of the Company Fair Value Valuation Technique(s) Significant Unobservable Input(s) Range Weighted Average
Assets
Equity securities
$ 14,610
Transaction price(1)
N/A N/A N/A
50,690 Discounted cash flow Discount rates 14.0% - 20.0% 14.3%
43,649 Market approach Multiple of book value 1.4x 1.4x
Partnership interests 2,575 Other N/A N/A N/A
Collateralized loan obligations 30,815 Broker quotes and/or 3rd party pricing services N/A N/A N/A
Other fixed income 21,582 Other N/A N/A N/A
Total assets $ 163,921
Liabilities
Contingent Consideration $ (9,562) Monte Carlo simulation Discount rates 8.5% 8.5%
Volatility 18% 18%
(47,873) Other N/A N/A N/A
Total liabilities $ (57,435)
Level III Measurements of the Consolidated Funds Fair Value Valuation Technique(s) Significant Unobservable Input(s) Range Weighted Average
Assets
Equity securities
$ 1,261 Market approach
EBITDA multiple(2)
1.0x - 64.4x 17.5x
140,185 Market approach Multiple of book value 1.0x- 1.2x 1.1x
123,685 Discounted cash flow Discount rate 20.0% 20.0%
11 Broker quotes and/or 3rd party pricing services N/A N/A N/A
74,041
Transaction price(1)
N/A N/A N/A
Partnership interests 238,673 Discounted cash flow Discount rate 23.4% 23.4%
Fixed income securities
614,754 Broker quotes and/or 3rd party pricing services N/A N/A N/A
128,198 Income approach Yield 3.5% - 16.2% 6.7%
Total assets $ 1,320,808
Liabilities
Derivative instruments $ (3,105) Broker quotes and/or 3rd party pricing services N/A N/A N/A
Total liabilities $ (3,105)

Level III Measurements of the Company

Fair Value

Valuation Technique(s)

Significant Unobservable Input(s)

Range

Weighted Average

Assets

Equity securities

14,610

Transaction price(1)

N/A

50,690

Discounted cash flow

Discount rates

14.0% - 20.0%

14.3%

43,649

Market approach

Multiple of book value

1.4x

Partnership interests

2,575

Other

N/A

Collateralized loan obligations

30,815

Broker quotes and/or 3rd party pricing services

N/A

Other fixed income

21,582

Other

N/A

Total assets

163,921

Liabilities

Contingent Consideration

(9,562)

Monte Carlo simulation

Discount rate

8.5%

Volatility

18%

(47,873)

Other

N/A

Total liabilities

(57,435)

Level III Measurements of the Consolidated Funds

Fair Value

Valuation Technique(s)

Significant Unobservable Input(s)

Range

Weighted Average

Assets

Equity securities

1,261

Market approach

EBITDA multiples(2)

1.0x - 64.4x

17.5x

140,185

Market approach

Multiple of book values

1.0x- 1.2x

1.1x

123,685

Discounted cash flow

Discount rate

20.0%

Broker quotes and/or 3rd party pricing services

N/A

74,041

Transaction price(1)

N/A

Partnership interests

238,673

Discounted cash flow

Discount rate

23.4%

Fixed income securities

614,754

Broker quotes and/or 3rd party pricing services

N/A

128,198

Income approach

Yields

3.5% - 16.2%

6.7%

Total assets

1,320,808

Liabilities

Derivative instruments

(3,105)

Broker quotes and/or 3rd party pricing services

N/A

Total liabilities

(3,105)

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

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

The Company has an insurance-related investment in a private fund managed by a third party that is valued using NAV per share. The terms and conditions of this fund do not allow for redemptions without certain events or approvals that are outside the Company's control. This investment had a fair value of $5.7 million and $6.0 million as of ~~March 31,~~September 30, 2022 and December 31, ~~2021.~~2021, respectively. The Company has 0no unfunded commitments for this investment.

The Consolidated Funds have limited partnership interests in private equity funds managed by the Company that are valued using NAV per share. The terms and conditions of these funds do not allow for redemptions without certain events or approvals that are outside the Company's control. As of ~~March 31,~~September 30, 2022, these investments had a fair value of ~~$719.9~~$1,052.1 million and unfunded commitments of ~~$958.5~~$811.3 million. As of December 31, 2021, these investments had a fair value of $469.6 million and unfunded commitments of $1,200.0 million.

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Ares Management Corporation

Notes to the Unaudited Condensed Consolidated Financial Statements (Continued)

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

7. DERIVATIVE FINANCIAL INSTRUMENTS

In the normal course of business, the Company and the Consolidated Funds are exposed to certain risks relating to their ongoing operations and use various types of derivative instruments primarily to mitigate against interest rate and foreign exchange risk. The derivative instruments are not designated as hedging instruments under the accounting standards for derivatives and hedging. The Company recognizes all of its derivative instruments at fair value as either assets or liabilities in the Condensed Consolidated Statements of Financial Condition within other assets or accounts payable, accrued expenses and other liabilities, respectively. These amounts may be offset to the extent that there is a legal right to offset and if elected by management.

The following tables identify the fair value and notional amounts of derivative contracts by major product type on a gross basis for the Company and the Consolidated Funds:


		As of March 31, 2022								As of December 31, 2021									As of September 30, 2022								As of December 31, 2021
		Assets				Liabilities				Assets				Liabilities					Assets				Liabilities				Assets				Liabilities
The Company	The Company	Notional(1)		Fair Value		Notional(1)		Fair Value		Notional(1)		Fair Value		Notional(1)		Fair Value		The Company	Notional(1)		Fair Value		Notional(1)		Fair Value		Notional(1)		Fair Value		Notional(1)		Fair Value
Foreign currency forward contracts and interest rate swaps		$	61,198	$	5,457	$	11,612	$	203	$	409,018	$	5,682	$	11,011	$	328
Foreign currency forward contracts																		Foreign currency forward contracts	$	80,239	$	9,247	$	175,453	$	6,581	$	409,018	$	5,682	$	11,011	$	328

Total derivatives, at fair value(2)	Total derivatives, at fair value(2)	$	61,198	$	5,457	$	11,612	$	203	$	409,018	$	5,682	$	11,011	$	328	Total derivatives, at fair value(2)	$	80,239	$	9,247	$	175,453	$	6,581	$	409,018	$	5,682	$	11,011	$	328

As of March 31, 2022 As of December 31, 2021
Assets Liabilities Assets Liabilities
Consolidated Funds
Notional(1)
Fair Value
Notional(1)
Fair Value
Notional(1)
Fair Value
Notional(1)
Fair Value
Warrants $ — $ — $ 230,000 $ 8,240 $ — $ — $ 230,000 $ 17,822
Asset swaps 55,988 — 49,502 3,162 56,000 — 49,516 3,105
Total derivatives, at fair value(3)
$ 55,988 $ — $ 279,502 $ 11,402 $ 56,000 $ — $ 279,516 $ 20,927


	As of September 30, 2022								As of December 31, 2021
	Assets				Liabilities				Assets				Liabilities
Consolidated Funds	Notional(1)		Fair Value		Notional(1)		Fair Value		Notional(1)		Fair Value		Notional(1)		Fair Value
Foreign currency forward contracts	$	536	$	536	$	496	$	496	$	—	$	—	$	—	$	—
Warrants	—		—		230,000		2,000		—		—		230,000		17,822
Asset swaps	55,963		—		49,475		3,353		56,000		—		49,516		3,105
Total derivatives, at fair value(3)	$	56,499	$	536	$	279,971	$	5,849	$	56,000	$	—	$	279,516	$	20,927

(1)Represents the total contractual amount of derivative assets and liabilities outstanding.

(2)As of ~~March 31,~~September 30, 2022 and December 31, 2021, the Company had the right to, but elected not to, offset ~~$0.2~~$6.6 million and $0.3 million of its derivative ~~liabilities, respectively.~~liabilities.

(3)As of ~~March 31,~~September 30, 2022 and December 31, 2021, the Consolidated Funds offset an immaterial amount of their derivative assets and ~~liabilities, respectively.~~liabilities.

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Ares Management Corporation

Notes to the Unaudited Condensed Consolidated Financial Statements (Continued)

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

8. DEBT

The following table summarizes the Company’s and its subsidiaries’ debt obligations:
As of March 31, 2022 As of December 31, 2021
Debt Origination Date Maturity Original Borrowing Amount Carrying
Value Interest Rate Carrying
Value Interest Rate
Credit Facility(1)
Revolving 3/31/2027 N/A $ 370,000 1.41% $ 415,000 1.25%
2024 Senior Notes(2)
10/8/2014 10/8/2024 $ 250,000 248,154 4.21 247,979 4.21
2030 Senior Notes(3)
6/15/2020 6/15/2030 400,000 396,267 3.28 396,156 3.28
2052 Senior Notes(4)
1/21/2022 2/1/2052 500,000 483,584 3.77 — —
2051 Subordinated Notes(5)
6/30/2021 6/30/2051 450,000 444,619 4.13 444,574 4.13
Total debt obligations $ 1,942,624 $ 1,503,709


					As of September 30, 2022			As of December 31, 2021


	Debt Origination Date	Maturity	Original Borrowing Amount		Carrying Value		Interest Rate	Carrying Value		Interest Rate
Credit Facility(1)	Revolving	3/31/2027	N/A		$	445,000	3.87%	$	415,000	1.25%
2024 Senior Notes(2)	10/8/2014	10/8/2024	$	250,000	248,511		4.21	247,979		4.21
2030 Senior Notes(3)	6/15/2020	6/15/2030	400,000		396,490		3.28	396,156		3.28
2052 Senior Notes(4)	1/21/2022	2/1/2052	500,000		483,750		3.77	—		—
2051 Subordinated Notes(5)	6/30/2021	6/30/2051	450,000		444,711		4.13	444,574		4.13
Total debt obligations					$	2,018,462		$	1,503,709

(1)On March 31, 2022, the Company amended the Credit Facility to, among other things, increase the revolver commitments from $1.090 billion to $1.275 billion with an accordion feature of $375.0 million, replace the LIBOR ~~rate~~based-rate with a Secured Overnight Financing ~~Rate-based rate~~Rate (“SOFR”) based-rate plus an applicable credit spread adjustment and extend the maturity date from March 2026 to March 2027. On July 6, 2022, the Company increased the revolver commitments from $1.275 billion to $1.325 billion via the accordion. The AOG entities are borrowers under the Credit Facility. The Credit Facility has a variable interest rate based on SOFR or a base rate plus an applicable margin, which is subject to adjustment based on the achievement of certain environmental, social and governance-related targets, with an unused commitment fee paid quarterly, which is subject to change with the Company’s underlying credit agency rating. As of ~~March 31,~~September 30, 2022, base rate loans bear interest calculated based on the base rate and the SOFR loans bear interest calculated based on SOFR plus 1.00%. The unused commitment fee is 0.10% per annum. There is a base rate and SOFR floor of zero.

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

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

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

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

As of ~~March 31,~~September 30, 2022, the Company and its subsidiaries were in compliance with all covenants under the debt obligations.

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

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


		Credit Facility		Senior Notes		Subordinated Notes			Credit Facility		Senior Notes		Subordinated Notes

Unamortized debt issuance costs as of December 31, 2021	Unamortized debt issuance costs as of December 31, 2021	$	5,274	$	3,689	$	5,426	Unamortized debt issuance costs as of December 31, 2021	$	5,274	$	3,689	$	5,426
Debt issuance costs incurred	Debt issuance costs incurred	1,456		5,415		—		Debt issuance costs incurred	1,517		5,436		—
Amortization of debt issuance costs	Amortization of debt issuance costs	(310)		(194)		(45)		Amortization of debt issuance costs	(957)		(582)		(137)

Unamortized debt issuance costs as of March 31, 2022		$	6,420	$	8,910	$	5,381
Unamortized debt issuance costs as of September 30, 2022								Unamortized debt issuance costs as of September 30, 2022	$	5,834	$	8,543	$	5,289

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Ares Management Corporation

Notes to the Unaudited Condensed Consolidated Financial Statements (Continued)

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

Loan Obligations of the Consolidated CLOs

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

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


		As of March 31, 2022					As of December 31, 2021						As of September 30, 2022				As of December 31, 2021

		Loan Obligations		Fair Value of Loan Obligations		Weighted Average Remaining Maturity In Years	Loan Obligations		Fair Value of Loan Obligations		Weighted Average Remaining Maturity In Years		Fair Value of Loan Obligations		Weighted Average Interest Rate	Weighted Average Remaining Maturity In Years	Fair Value of Loan Obligations		Weighted Average Interest Rate	Weighted Average Remaining Maturity In Years
Senior secured notes~~(1)~~	Senior secured notes~~(1)~~	$	9,894,645	$	9,798,127	9.2	$	10,031,419	$	10,016,638	9.4	Senior secured notes~~(1)~~	$	9,664,638	3.41%	8.8	$	10,016,638	1.93%	9.4
Subordinated notes~~(2)~~(1)	Subordinated notes~~(2)~~(1)	787,473		599,488		7.9	792,575		641,023		8.1	Subordinated notes~~(2)~~(1)	649,243		N/A	7.0	641,023		N/A	8.1
Total loan obligations of Consolidated CLOs	Total loan obligations of Consolidated CLOs	$	10,682,118	$	10,397,615		$	10,823,994	$	10,657,661		Total loan obligations of Consolidated CLOs	$	10,313,881			$	10,657,661

(1)As of March 31, 2022 and December 31, 2021, original borrowings under the senior secured notes totaled $9.9 billion with various maturity dates ranging from September 2026 to July 2034 and $10.0 billion with various maturity dates ranging from September 2026 to July 2034, respectively. The weighted average interest rate as of March 31, 2022 and December 31, 2021, were 2.00% and 1.93%, respectively.

~~(2)~~As of March 31, 2022 and December 31, 2021, original borrowings under the subordinated notes totaled $787.5 million, with various maturity dates ranging from September 2026 to July 2034 and $792.6 million with various maturity dates ranging from September 2026 to July 2034, respectively. The notes do not have contractual interest rates; instead, holders of the notes receive distributions from the excess cash flows generated by each Consolidated CLO.

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

Credit Facilities of the Consolidated Funds

Certain Consolidated Funds maintain credit facilities to fund investments between capital drawdowns. These facilities generally are collateralized by the unfunded capital commitments of the Consolidated Funds’ limited partners, bear an annual commitment fee based on unfunded commitments and contain various affirmative and negative covenants and reporting obligations, including restrictions on additional indebtedness, liens, margin stock, affiliate transactions, dividends and distributions, release of capital commitments and portfolio asset dispositions. The creditors of these facilities have no recourse to the Company and only have recourse to a subsidiary of the Company to the extent the debt is guaranteed by such subsidiary. As of ~~March 31,~~September 30, 2022 and December 31, 2021, the Consolidated Funds were in compliance with all covenants under such credit facilities.

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


					As of March 31, 2022			As of December 31, 2021							As of September 30, 2022			As of December 31, 2021

Consolidated Funds' Debt Facilities	Consolidated Funds' Debt Facilities	Maturity Date	Total Capacity		Outstanding Loan(1)		Effective Rate	Outstanding Loan(1)		Effective Rate	Consolidated Funds' Debt Facilities	Maturity Date	Total Capacity		Outstanding Loan(1)		Effective Rate	Outstanding Loan(1)		Effective Rate

		10/13/2022	$	112,817	$	112,817	2.05%	$	71,500	1.59%		10/13/2022	$	112,817	$	77,496	4.04%	$	71,500	1.59%
		7/1/2023	18,000		16,271		2.13	16,271		1.73		7/1/2023	18,000		15,550		4.69	16,271		1.73
		7/23/2024	75,000		16,000		3.84	40,000		3.09		7/23/2024	75,000		56,500		5.97	40,000		3.09
		9/24/2026	150,000		—		N/A	—		N/A		9/24/2026	150,000		—		N/A	—		N/A
												9/12/2027	54,000		—		N/A	—		N/A
Total borrowings of Consolidated Funds	Total borrowings of Consolidated Funds				$	145,088		$	127,771		Total borrowings of Consolidated Funds				$	149,546		$	127,771

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

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Notes to the Unaudited Condensed Consolidated Financial Statements (Continued)

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

9. COMMITMENTS AND CONTINGENCIES

Indemnification Arrangements

Consistent with standard business practices in the normal course of business, the Company enters into contracts that contain indemnities for affiliates of the Company, persons acting on behalf of the Company or such affiliates and third parties. The terms of the indemnities vary from contract to contract and the Company’s maximum exposure under these arrangements cannot be determined and has not been recorded in the Condensed Consolidated Statements of Financial Condition. As of ~~March 31,~~September 30, 2022, the Company has not had prior claims or losses pursuant to these contracts and expects the risk of loss to be remote.

Commitments

As of ~~March 31,~~September 30, 2022 and December 31, 2021, the Company had aggregate unfunded commitments to invest in funds it manages or to support certain strategic initiatives of ~~$720.8~~$605.7 million and $677.3 million, respectively.

Guarantees

The Company has entered into agreements with financial institutions to guarantee credit facilities held by certain funds. In the ordinary course of business, the guarantee of credit facilities held by funds may indicate control and result in consolidation of the fund. As of ~~March 31,~~September 30, 2022 and December 31, 2021, the Company’s maximum exposure to losses from guarantees was ~~$17.3~~$76.7 million and $209.7 million, respectively.

Contingent Liabilities

In connection with the Landmark Acquisition, the Company established a management incentive program (the “Landmark MIP”) with certain professionals of Landmark. The Landmark MIP represents a contingent liability not to exceed $300.0 million and is based on the achievement of revenue targets from the fundraising of certain Landmark funds during a measurement period.

The Company expects to settle this liability with a combination of 15% cash and 85% equity awards. Expense associated with the cash component is recognized ratably over the measurement period, which will end on the earlier of the final fundraising date or December 31, 2022. Expense associated with the equity component is recognized ratably over the service period, which will continue for four years beyond the measurement period end date. The Landmark MIP ishas been remeasured each period with incremental changes in fair value included within compensation and benefits expense ~~within~~in the Condensed Consolidated Statements of Operations. AtIn connection with current fundraising expectations for an acquired Landmark private equity secondaries fund, the ~~measurement period end date, the cash component will be paid and restricted units for the balance of~~revenue targets on which the Landmark MIP ~~will~~is contingent are not expected to be ~~granted at fair value. The unpaid liability at~~achieved so the ~~measurement period end date will be reclassified from liability to additional paid-in-capital and any difference between the fair value~~Company reversed all previously recorded expenses of $36.7 million associated with the Landmark MIP atduring the ~~measurement period end date~~three months ended September 30, 2022. The reversal of expense was recorded within compensation and ~~the previously recorded compensation~~benefits expense ~~will be recognized over the remaining~~ ~~four~~ year service period as equity-based compensation expense. As of both March 31, 2022 and December 31, 2021, the fair value of the contingent liability was estimated to be $145.7 million. As of March 31, 2022 and December 31, 2021, the Company has accrued $29.9 million and $21.0 million, respectively, within accrued compensation withinin the Condensed Consolidated Statements of ~~Financial Condition. Compensation expense of $8.9 million for the three months ended March 31, 2022 is presented within compensation and benefits within the Condensed Consolidated Statements of~~ Operations.

The purchase agreement with Black Creek contains provisions obligating the Company to make payments in an aggregate amount not to exceed $275.0 million to certain senior professionals and advisors upon the achievement of certain revenue targets through a measurement period no later than December 31, 2024. ~~Because these future payments require~~The revenue targets were achieved and the maximum contingent payment was recorded during the three months ended September 30, 2022.

Of the total contingent liability, 96% required continued service through the measurement period ~~this consideration~~and is accounted for as compensation expense instead of as a component of purchase consideration. The fair value of this contingent liability iswas remeasured at each reporting date with compensation expense recorded ratably over the service period, which iswas the Black Creek Acquisition date through the ~~earlier of the measurement period end date or the~~ achievement date. As of ~~March 31,~~September 30, 2022 and December 31, 2021, the fair value of the contingent liability was ~~$253.2~~$264.0 million and $229.5 million, respectively. As of ~~March 31,~~September 30, 2022 and December 31, 2021, the Company has ~~accrued $83.6~~recorded $264.0 million and $45.9 million, respectively, within accrued compensation ~~within~~in the Condensed Consolidated Statements of Financial Condition. Compensation expense of ~~$37.7~~$130.6 million and $218.1 million for the three and nine months ended ~~March 31,~~September 30, 2022, respectively, and $13.5 million for the three and nine months ended September 30, 2021 is presented within compensation and benefits ~~within~~in the Condensed Consolidated Statements of Operations.

The remaining 4% portion of the contingent liability did not require continued service through the measurement period and is accounted for as contingent consideration that is a component of purchase consideration. The fair value of this contingent liability was remeasured at each reporting date with changes in fair value recorded within other expense over the service period. As of September 30, 2022 and December 31, 2021, the fair value of the contingent liability was $11.0 million and $9.6 million, respectively. Other expense of $0.3 million and $1.4 million for the three and nine months ended September 30, 2022,

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Ares Management Corporation

Notes to the Unaudited Condensed Consolidated Financial Statements (Continued)

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

respectively, and of $3.0 million for each of the three and nine months ended September 30, 2021, is presented within other income (expense), net in the Condensed Consolidated Statements of Operations.

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

The Company expects to settle each portion of the liability with a combination of 15% cash and 85% equity awards. Expense associated with the cash components are recognized ratably over the respective measurement periods, which will end on the final fundraising date for each of the infrastructure debt funds included in the Infrastructure Debt MIP agreement. Expense associated with the equity component is recognized ratably over the service periods, which will continue for four years beyond each of the measurement period end dates. The Infrastructure Debt MIP is remeasured each period with incremental changes in fair value included within compensation and benefits expense ~~within~~in the Condensed Consolidated Statements of Operations. At each of the measurement period end dates, the cash component will be paid and restricted units for the portion of the Infrastructure Debt MIP award earned will be granted at fair value. The unpaid liability at the respective measurement period end dates will be reclassified from liability to additional paid-in-capital and any difference between the fair value of the Infrastructure Debt MIP award earned at the respective measurement period end date and the previously recorded compensation expense will be recognized over the remaining four year service period as equity-based compensation expense. As of ~~March 31,~~September 30, 2022, the fair value of the contingent liability was estimated to be ~~$39.8~~$39.2 million. Compensation expense of ~~$1.4~~$2.8 million and $7.1 million for the three and nine months ended ~~March 31,~~September 30, 2022, respectively, is presented within compensation and benefits ~~within~~in the Condensed Consolidated Statements of Operations with an equal offset presented within accrued compensation ~~within~~in the Condensed Consolidated Statements of Financial Condition.

Carried Interest

Carried interest is affected by changes in the fair values of the underlying investments in the funds that are advised by the Company. Valuations, on an unrealized basis, can be significantly affected by a variety of external factors including, but not limited to, public equity market volatility, industry trading multiples and interest rates. Generally, if at the termination of a fund (and increasingly at interim points in the life of a fund), the fund has not achieved investment returns that (in most cases) exceed the preferred return threshold or (in all cases) the general partner receives net profits over the life of the fund in excess of its allocable share under the applicable partnership agreement, the Company will be obligated to repay carried interest that was received by the Company in excess of the amounts to which the Company is entitled. This contingent obligation is normally reduced by income taxes paid by the Company related to its carried interest.

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

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

At ~~March 31,~~September 30, 2022 and December 31, 2021, if the Company assumed all existing investments were worthless, the amount of carried interest subject to potential repayment, net of tax distributions, which may differ from the recognition of revenue, would have been approximately ~~$185.5~~$185.3 million and $194.6 million, respectively, of which approximately ~~$146.3~~$145.0 million and $153.3 million, respectively, is reimbursable to the Company by certain professionals who are the recipients of such carried interest. Management believes the possibility of all of the investments becoming worthless is remote. As of ~~March 31,~~September 30, 2022 and December 31, 2021, if the funds were liquidated at their fair values, there would be 0no contingent repayment obligation or liability.

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Ares Management Corporation

Notes to the Unaudited Condensed Consolidated Financial Statements (Continued)

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

Litigation

From time to time, the Company is named as a defendant in legal actions relating to transactions conducted in the ordinary course of business. Although there can be no assurance of the outcome of such legal actions, in the opinion of

~~Table of Contents~~

~~Ares Management Corporation~~

~~Notes to the Unaudited Condensed Consolidated Financial Statements (Continued)~~

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

management, the Company does not have a potential liability related to any current legal proceeding or claim that would individually or in the aggregate materially affect its results of operations, financial condition or cash flows.

Leases

The Company leases office space and certain office equipment. The Company's leases have remaining lease terms of one to 11eleven years. The tables below present certain supplemental quantitative disclosures regarding the Company's leases:

As of March 31, As of December 31,
Classification 2022 2021
Operating lease assets Right-of-use operating lease assets $ 161,088 $ 167,652
Finance lease assets
Other assets(1)
859 1,011
Total lease assets $ 161,947 $ 168,663
Operating lease liabilities Operating lease liabilities $ 197,312 $ 205,075
Finance lease obligations Accounts payable, accrued expenses and other liabilities 528 936
Total lease liabilities $ 197,840 $ 206,011


		As of September 30,		As of December 31,

	Classification	2022		2021
Operating lease assets	Right-of-use operating lease assets	$	159,686	$	167,652
Finance lease assets	Other assets(1)	543		1,011
Total lease assets		$	160,229	$	168,663

Operating lease liabilities	Operating lease liabilities	$	193,180	$	205,075
Finance lease obligations	Accounts payable, accrued expenses and other liabilities	393		936
Total lease liabilities		$	193,573	$	206,011

(1) Finance lease assets are recorded net of accumulated amortization of ~~$1.7~~$2.0 million and $1.6 million as of ~~March 31,~~September 30, 2022 and December 31, 2021, respectively.


Maturity of lease liabilities	Maturity of lease liabilities	Operating Leases		Finance Leases		Maturity of lease liabilities	Operating Leases		Finance Leases
2022	2022	$	32,355	$	207	2022	$	10,732	$	68
2023	2023	38,872		167		2023	40,866		166
2024	2024	38,252		162		2024	43,390		161
2025	2025	36,638		11		2025	41,842		10
2026	2026	27,482		—		2026	29,819		—
After 2026	After 2026	39,639		—		After 2026	39,882		—
Total future payments	Total future payments	213,238		547		Total future payments	206,531		405
Less: interest	Less: interest	15,926		19		Less: interest	13,351		12
Total lease liabilities	Total lease liabilities	$	197,312	$	528	Total lease liabilities	$	193,180	$	393


			Three months ended March 31,					Three months ended September 30,			Nine months ended September 30,
		Classification		2022		2021				Classification	2022		2021		2022		2021
Operating lease expense	Operating lease expense	General, administrative and other expenses		$	10,063	$	8,493		Operating lease expense	General, administrative and other expenses	$	11,168	$	9,697	$	31,302	$	27,203
Finance lease expense:	Finance lease expense:								Finance lease expense:
Amortization of finance lease assets	Amortization of finance lease assets	General, administrative and other expenses		162		126			Amortization of finance lease assets	General, administrative and other expenses	144		154		488		408
Interest on finance lease liabilities	Interest on finance lease liabilities	Interest expense		5		10			Interest on finance lease liabilities	Interest expense	3		7		12		24
Total lease expense	Total lease expense			$	10,230	$	8,629		Total lease expense		$	11,315	$	9,858	$	31,802	$	27,635


		Three months ended March 31,				Nine months ended September 30,
Other information	Other information	2022		2021			Other information	2022		2021
Cash paid for amounts included in the measurement of lease liabilities:	Cash paid for amounts included in the measurement of lease liabilities:						Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows for operating leases	Operating cash flows for operating leases	$	11,125	$	8,419		Operating cash flows for operating leases	$	33,156	$	26,704
Operating cash flows for finance leases	Operating cash flows for finance leases	5		25			Operating cash flows for finance leases	19		34
Financing cash flows for finance leases	Financing cash flows for finance leases	389		341			Financing cash flows for finance leases	525		463

Leased assets obtained in exchange for new finance lease liabilities							Leased assets obtained in exchange for new finance lease liabilities	13		189
Leased assets obtained in exchange for new operating lease liabilities	Leased assets obtained in exchange for new operating lease liabilities	1,378		13,374			Leased assets obtained in exchange for new operating lease liabilities	20,687		55,461

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Notes to the Unaudited Condensed Consolidated Financial Statements (Continued)

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


		As of March 31,		As of December 31,			As of September 30,		As of December 31,

Lease term and discount rate	Lease term and discount rate	2022		2021		Lease term and discount rate	2022		2021
Weighted-average remaining lease terms (in years):	Weighted-average remaining lease terms (in years):					Weighted-average remaining lease terms (in years):
Operating leases	Operating leases	5.8		6.0		Operating leases	5.4		6.0
Finance leases	Finance leases	2.5		1.8		Finance leases	2.2		1.8
Weighted-average discount rate:	Weighted-average discount rate:					Weighted-average discount rate:
Operating leases	Operating leases	2.84	%	1.81	%	Operating leases	2.77	%	1.81	%
Finance leases	Finance leases	2.73	%	2.94	%	Finance leases	2.88	%	2.94	%

10. RELATED PARTY TRANSACTIONS

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

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

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

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

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


		As of March 31,		As of December 31,			As of September 30,		As of December 31,

		2022		2021			2022		2021
Due from affiliates:	Due from affiliates:					Due from affiliates:
Management fees receivable from non-consolidated funds	Management fees receivable from non-consolidated funds	$	360,692	$	372,249	Management fees receivable from non-consolidated funds	$	439,961	$	372,249
Incentive fee receivable from non-consolidated funds	Incentive fee receivable from non-consolidated funds	30,209		211,243		Incentive fee receivable from non-consolidated funds	8,134		211,243
Payments made on behalf of and amounts due from non-consolidated funds and employees	Payments made on behalf of and amounts due from non-consolidated funds and employees	103,617		86,891		Payments made on behalf of and amounts due from non-consolidated funds and employees	113,408		86,891
Due from affiliates—Company	Due from affiliates—Company	$	494,518	$	670,383	Due from affiliates—Company	$	561,503	$	670,383
Amounts due from non-consolidated funds	Amounts due from non-consolidated funds	$	1,125	$	7,234	Amounts due from non-consolidated funds	$	7,736	$	7,234
Due from affiliates—Consolidated Funds	Due from affiliates—Consolidated Funds	$	1,125	$	7,234	Due from affiliates—Consolidated Funds	$	7,736	$	7,234
Due to affiliates:	Due to affiliates:					Due to affiliates:
Management fee received in advance and rebates payable to non-consolidated funds	Management fee received in advance and rebates payable to non-consolidated funds	$	7,686	$	10,160	Management fee received in advance and rebates payable to non-consolidated funds	$	5,744	$	10,160
Tax receivable agreement liability	Tax receivable agreement liability	98,975		100,542		Tax receivable agreement liability	98,975		100,542
Undistributed carried interest and incentive fees	Undistributed carried interest and incentive fees	65,885		66,494		Undistributed carried interest and incentive fees	12,724		66,494
Payments made by non-consolidated funds on behalf of and payable by the Company	Payments made by non-consolidated funds on behalf of and payable by the Company	21,861		21,357		Payments made by non-consolidated funds on behalf of and payable by the Company	4,864		21,357
Due to affiliates—Company	Due to affiliates—Company	$	194,407	$	198,553	Due to affiliates—Company	$	122,307	$	198,553

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Ares Management Corporation

Notes to the Unaudited Condensed Consolidated Financial Statements (Continued)

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

Due from Ares Funds and Portfolio Companies

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

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~~Ares Management Corporation~~

~~Notes to the Unaudited Condensed Consolidated Financial Statements (Continued)~~

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

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

11. INCOME TAXES

The Company’s income tax provision includes corporate income taxes and other entity level income taxes, as well as income taxes incurred by certain affiliated funds that are consolidated in these financial statements. For the three and nine months ended ~~March 31,~~September 30, 2022, the Company recorded income tax benefit and income tax expense of $11.6 million and $22.3 million, respectively. For the three and nine months ended September 30, 2021, the Company recorded income tax expense of ~~$20.4~~$30.3 million and ~~$25.8~~$104.5 million, respectively.

The Company’s effective income tax rate is dependent on many factors, including the estimated nature and amounts of income and expenses allocated to the non-controlling interests without being subject to federal, state and local income taxes at the corporate level. Additionally, the Company’s effective tax rate is influenced by the amount of income tax provision recorded for any affiliated funds and co-investment entities that are consolidated in the Company's condensed consolidated financial statements. For the three and nine months ended ~~March 31,~~September 30, 2022 and 2021, the Company recorded its interim income tax provision utilizing the estimated annual effective tax rate.

The income tax effects of temporary differences give rise to significant portions of deferred tax assets and liabilities, which are presented on a net basis. As of ~~March 31,~~September 30, 2022 and December 31, 2021, the Company recorded a net deferred tax asset of ~~$35.5~~$63.2 million and $39.4 million, respectively, within other assets in the Condensed Consolidated Statements of Financial Condition.

The Company files its tax returns as prescribed by the tax laws of the jurisdictions in which it operates. In the normal course of business, the Company is subject to examination by U.S. federal, state, local and foreign tax authorities. With limited exceptions, the Company is no longer subject to income tax audits by taxing authorities for any years prior to 2018. Although the outcome of tax audits is always uncertain, the Company does not believe the outcome of any future audit will have a material adverse effect on the Company’s condensed consolidated financial statements.

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Notes to the Unaudited Condensed Consolidated Financial Statements (Continued)

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

12. EARNINGS PER SHARE

For the ~~three~~nine months ended ~~March 31,~~September 30, 2022, the Company had Class A and non-voting common stock outstanding. The non-voting common stock has the same economic rights as the Class A common stock; therefore, earnings per share is presented on a combined basis. Income of the Company has been allocated on a proportionate basis to the two common stock classes.

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

For the three and nine months ended ~~March 31,~~September 30, 2022, the two-class method was the more dilutive method. For the three and nine months ended ~~March 31,~~September 30, 2021, the treasury stock method was the more dilutive method.

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

Three months ended March 31,
2022 2021
AOG Units — 112,353,043


	Three months ended September 30,		Nine months ended September 30,
	2022	2021	2022	2021

Restricted units	—	450	—	167
AOG Units	—	119,855,724	—	115,394,058

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


		Three months ended March 31,				Three months ended September 30,		Nine months ended September 30,
		2022		2021				2022		2021		2022		2021
Basic earnings per share of Class A and non-voting common stock:	Basic earnings per share of Class A and non-voting common stock:						Basic earnings per share of Class A and non-voting common stock:
Net income attributable to Ares Management Corporation Class A and non-voting common stockholders		$	45,863	$	52,953
Net income (loss) attributable to Ares Management Corporation Class A and non-voting common stockholders							Net income (loss) attributable to Ares Management Corporation Class A and non-voting common stockholders	$	(35,546)	$	84,726	$	50,048	$	262,659
Distributions on unvested restricted units	Distributions on unvested restricted units	(3,585)		(3,255)			Distributions on unvested restricted units	(3,555)		(1,440)		(10,601)		(8,142)

Net income available to Class A and non-voting common stockholders		$	42,278	$	49,698
Undistributed earnings allocable to participating unvested restricted units							Undistributed earnings allocable to participating unvested restricted units	—		(306)		—		(2,858)
Net income (loss) available to Class A and non-voting common stockholders							Net income (loss) available to Class A and non-voting common stockholders	$	(39,101)	$	82,980	$	39,447	$	251,659
Basic weighted-average shares of Class A and non-voting common stock	Basic weighted-average shares of Class A and non-voting common stock	174,215,251		149,271,822			Basic weighted-average shares of Class A and non-voting common stock	175,631,144		168,931,621		175,010,241		161,071,151
Basic earnings per share of Class A and non-voting common stock		$	0.24	$	0.33
Basic earnings (loss) per share of Class A and non-voting common stock							Basic earnings (loss) per share of Class A and non-voting common stock	$	(0.22)	$	0.49	$	0.23	$	1.55

Diluted earnings per share of Class A and non-voting common stock:	Diluted earnings per share of Class A and non-voting common stock:						Diluted earnings per share of Class A and non-voting common stock:
Net income available to Class A and non-voting common stockholders		$	45,863	$	52,953
Net income (loss) available to Class A and non-voting common stockholders							Net income (loss) available to Class A and non-voting common stockholders	$	(35,546)	$	84,726	$	50,048	$	262,659
Distributions on unvested restricted units	Distributions on unvested restricted units	(3,585)		—			Distributions on unvested restricted units	(3,555)		—		(10,601)		—
Net income attributable to Ares Management Corporation Class A and non-voting common stockholders		$	42,278	$	52,953
Net income (loss) attributable to Ares Management Corporation Class A and non-voting common stockholders							Net income (loss) attributable to Ares Management Corporation Class A and non-voting common stockholders	$	(39,101)	$	84,726	$	39,447	$	262,659
Effect of dilutive shares:	Effect of dilutive shares:						Effect of dilutive shares:
Restricted units	Restricted units	—		9,218,424			Restricted units	—		12,273,068		—		10,807,242
Options	Options	—		5,174,138			Options	—		5,317,468		—		5,265,045

Diluted weighted-average shares of Class A and non-voting common stock	Diluted weighted-average shares of Class A and non-voting common stock	174,215,251		163,664,384			Diluted weighted-average shares of Class A and non-voting common stock	175,631,144		186,522,157		175,010,241		177,143,438
Diluted earnings per share of Class A and non-voting common stock		$	0.24	$	0.32
Diluted earnings (loss) per share of Class A and non-voting common stock							Diluted earnings (loss) per share of Class A and non-voting common stock	$	(0.22)	$	0.45	$	0.23	$	1.48

Dividend declared and paid per Class A and non-voting common stock	Dividend declared and paid per Class A and non-voting common stock	$	0.61	$	0.47		Dividend declared and paid per Class A and non-voting common stock	$	0.61	$	0.47	$	1.83	$	1.41

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Notes to the Unaudited Condensed Consolidated Financial Statements (Continued)

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

13. EQUITY COMPENSATION

Equity Incentive Plan

Equity-based compensation is granted under the Company's 2014 Equity Incentive Plan (as amended, the “Equity Incentive Plan”). The total number of shares available to be issued under the Equity Incentive Plan resets based on a formula defined in the Equity Incentive Plan and may increase on January 1 of each year. On January 1, 2022, the total number of shares available for issuance under the Equity Incentive Plan reset to 49,293,000 shares and as of ~~March 31,~~September 30, 2022, ~~44,627,032~~44,524,646 shares remained available for issuance.

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

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


		Three months ended March 31,				Three months ended September 30,		Nine months ended September 30,
		2022		2021				2022		2021		2022		2021
Restricted units	Restricted units	$	53,650	$	44,087		Restricted units	$	48,117	$	36,390	$	151,403	$	127,219
Restricted units with a market condition	Restricted units with a market condition	—		11,562			Restricted units with a market condition	—		29,601		—		63,925
Equity-based compensation expense	Equity-based compensation expense	$	53,650	$	55,649		Equity-based compensation expense	$	48,117	$	65,991	$	151,403	$	191,144

Restricted Units

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

Restricted units are delivered net of the holder's payroll related taxes upon vesting. For the ~~three~~nine months ended ~~March 31,~~September 30, 2022, ~~5.1~~5.4 million restricted units vested and ~~2.8~~3.0 million shares of Class A common stock were delivered to the holders. For the ~~three~~nine months ended ~~March 31,~~September 30, 2021, ~~4.2~~8.2 million restricted units vested and ~~2.4~~4.4 million shares of Class A common stock were delivered to the holders.

The holders of restricted units, other than awards that have not yet been issued as described in the subsequent sections, generally have the right to receive as current compensation an amount in cash equal to (i) the amount of any dividend paid with respect to a share of Class A common stock multiplied by (ii) the number of restricted units held at the time such dividends are declared (“Dividend Equivalent”). During the ~~three~~nine months ended ~~March 31,~~September 30, 2022, the Company declared dividends of $0.61 per share to Class A common stockholders at the close of business on March 17, 2022, June 16, 2022 and September 16, 2022. For the three and nine months ended ~~March 31,~~September 30, 2022, Dividend Equivalents were made to the holders of restricted units in the aggregate amount of ~~$8.0~~$7.9 million and $23.9 million, respectively, which are presented as dividends ~~within~~in the Condensed Consolidated Statements of Changes in Equity. When units are forfeited, the cumulative amount of Dividend Equivalents previously paid is reclassified to compensation and benefits expense in the Condensed Consolidated Statements of Operations.

During the first quarter of 2022, the Company approved the future grant of restricted units to certain senior executives in each of 2023, 2024 and 2025, subject to the holder’s continued employment and acceleration in certain instances. The vesting period of these awards are at a rate of 25% per year, beginning on the second anniversary of the grant date. Given that these future restricted units have been communicated to the recipient, the Company accounts for these awards as if they have been granted and recognizes the compensation expense on a straight-line basis over the service period. The restricted units that have been approved and communicated but not yet granted are not eligible to receive a Dividend Equivalent until the grant date.

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Notes to the Unaudited Condensed Consolidated Financial Statements (Continued)

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

The following table presents unvested restricted units' activity:


		Restricted Units	Weighted Average Grant Date Fair Value Per Unit			Restricted Units	Weighted Average Grant Date Fair Value Per Unit
Balance - January 1, 2022	Balance - January 1, 2022	18,323,036	$	36.43	Balance - January 1, 2022	18,323,036	$	36.43
Granted	Granted	3,789,737	74.77		Granted	4,050,786	74.62
Vested	Vested	(4,996,756)	26.07		Vested	(5,333,182)	26.89
Forfeited	Forfeited	(63,769)	50.90		Forfeited	(222,432)	53.83
Balance - March 31, 2022		17,052,248	$	47.94
Balance - September 30, 2022					Balance - September 30, 2022	16,818,208	$	48.43

The total compensation expense expected to be recognized in all future periods associated with the restricted units is approximately ~~$680.4~~$589.5 million as of ~~March 31,~~September 30, 2022 and is expected to be recognized over the remaining weighted average period of ~~4.1~~3.6 years.

Options

~~Each~~Upon exercise, each option entitles the holders to purchase from the Company ~~upon exercise thereof, 1~~one share of Class A common stock at the stated exercise price. The term of the options is generally ten years, beginning on the grant date.

A summary of options activity during the ~~three~~nine months ended ~~March 31,~~September 30, 2022 is presented below:


		Options	Weighted Average Exercise Price		Weighted Average Remaining Life (in years)	Aggregate Intrinsic Value			Options	Weighted Average Exercise Price		Weighted Average Remaining Life (in years)	Aggregate Intrinsic Value
Balance - January 1, 2022	Balance - January 1, 2022	6,306,282	$	19.00	2.3	$	392,692	Balance - January 1, 2022	6,306,282	$	19.00	2.3	$	392,692

Granted								Granted	—			—	—
Exercised	Exercised	(176,154)	19.00		—	—		Exercised	(784,782)	19.00		—	—

Balance - March 31, 2022		6,130,128	$	19.00	2.1	$	381,478
Exercisable at March 31, 2022		6,130,128	$	19.00	2.1	$	381,478
Expired								Expired	—	—		—	—
Forfeited								Forfeited	—	—		—	—
Balance - September 30, 2022								Balance - September 30, 2022	5,521,500	$	19.00	1.6	$	237,148
Exercisable at September 30, 2022								Exercisable at September 30, 2022	5,521,500	$	19.00	1.6	$	237,148

Net cash proceeds from exercises of stock options were ~~$3.3~~$14.5 million for the ~~three~~nine months ended ~~March 31,~~September 30, 2022. The Company realized tax benefits of approximately ~~$1.4~~$6.1 million from those exercises.

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Notes to the Unaudited Condensed Consolidated Financial Statements (Continued)

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

14. EQUITY AND REDEEMABLE INTEREST

Common Stock

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

In February 2022, the Company's board of directors authorized the renewal of the stock repurchase program that allows for the repurchase of up to $150 million of shares of Class A common stock. Under the program, shares may be repurchased from time to time in open market purchases, privately negotiated transactions or otherwise, including in reliance on Rule 10b5-1 of the Securities Act. The program is scheduled to expire in March 2023. Repurchases under the program, if any, will depend on the prevailing market conditions and other factors. During the ~~three~~nine months ended ~~March 31,~~September 30, 2022 and 2021, the Company did not repurchase any shares as part of the stock repurchase program.

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


		Class A Common Stock	Non-Voting Common Stock	Class B Common Stock	Class C Common Stock	Total		Class A Common Stock	Non-Voting Common Stock	Class B Common Stock	Class C Common Stock	Total
Balance - December 31, 2021	Balance - December 31, 2021	168,351,305	3,489,911	1,000	118,609,332	290,451,548	Balance - December 31, 2021	168,351,305	3,489,911	1,000	118,609,332	290,451,548
Exchanges of AOG Units	Exchanges of AOG Units	140,229	—	—	(140,229)	—	Exchanges of AOG Units	305,040	—	—	(305,040)	—

Redemptions of AOG Units							Redemptions of AOG Units	—	—	—	(25,000)	(25,000)
Stock option exercises, net of shares withheld for tax	Stock option exercises, net of shares withheld for tax	176,154	—	—	—	176,154	Stock option exercises, net of shares withheld for tax	772,228	—	—	—	772,228

Vesting of restricted stock awards, net of shares withheld for tax	Vesting of restricted stock awards, net of shares withheld for tax	2,793,427	—	—	—	2,793,427	Vesting of restricted stock awards, net of shares withheld for tax	2,973,864	—	—	—	2,973,864
Cancellation of AOG Units	Cancellation of AOG Units	—	—	—	(4,135)	(4,135)	Cancellation of AOG Units	—	—	—	(4,135)	(4,135)
Balance - March 31, 2022		171,461,115	3,489,911	1,000	118,464,968	293,416,994
Balance - September 30, 2022							Balance - September 30, 2022	172,402,437	3,489,911	1,000	118,275,157	294,168,505

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


									Daily Average Ownership									Daily Average Ownership
		As of March 31, 2022			As of December 31, 2021			Three months ended March 31,				As of September 30, 2022		As of December 31, 2021			Three months ended September 30,			Nine months ended September 30,
		AOG Units	Direct Ownership Interest		AOG Units	Direct Ownership Interest			2022		2021			AOG Units	Direct Ownership Interest		AOG Units	Direct Ownership Interest		2022		2021		2022		2021
Ares Management Corporation	Ares Management Corporation	174,951,026	59.63	%	171,841,216	59.16	%		59.51	%	57.06	%	Ares Management Corporation	175,892,348	59.79	%	171,841,216	59.16	%	59.74	%	58.50	%	59.64	%	58.26	%
Ares Owners Holdings, L.P.	Ares Owners Holdings, L.P.	118,464,968	40.37		118,609,332	40.84			40.49		42.94		Ares Owners Holdings, L.P.	118,275,157	40.21		118,609,332	40.84		40.26		41.50		40.36		41.74
Total	Total	293,415,994	100.00	%	290,450,548	100.00	%						Total	294,167,505	100.00	%	290,450,548	100.00	%

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

Redeemable Interest

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



	Total







Balance - December 31, 2021	$	96,008
Changes in ownership interests and related tax benefits	231
~~Distributions~~	~~(8)~~
Net income	399
Currency translation adjustment, net of tax	(331)
Equity compensation	48
Distributions	(8)
Balance - March 31, 2022	$	96,347
Changes in ownership interests and related tax benefits	(1,445)
Net loss	(457)
Currency translation adjustment, net of tax	(996)
Equity compensation	77

Distributions	(8)
Balance- June 30, 2022	93,518
Changes in ownership interests and related tax benefits	1,214
Net income	93
Currency translation adjustment, net of tax	(933)
Equity compensation	77
Distributions	(1,861)
Balance- September 30, 2022	$	92,108

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


	Total


Balance - December 31, 2021	$	1,000,000
Change in redemption value	—
Balance - March 31, 2022	$1,000,000
Change in redemption value	—
Balance - June 30, 2022	1,000,000
Change in redemption value	4,994
Balance - September 30, 2022
$
1,004,994

15. SEGMENT REPORTING

The Company operates through its distinct operating segments. On January 1, 2022, the Company changed its segment composition and established the Real Assets Group. The Real Assets Group consists of the activities of the former Real Estate Group and the infrastructure and power strategy, now referred to as infrastructure opportunities, that was formerly presented within the Private Equity Group. The Real Assets Group also includes infrastructure debt following the Infrastructure Debt Acquisition. The Company reclassified activities from the infrastructure opportunities strategy in the Private Equity Group and from the former Real Estate Group to the Real Assets Group to better align the segment presentation with how the asset classes within the investment strategies are managed. The Company has modified historical results to conform with its current presentation. During the three months ended September 30, 2022, the Company decided to rename the Secondary Solutions Group segment to the Secondaries Group. The segment name change did not result in any change to the composition of the Company’s segments and therefore did not result in any change to historical results. The Company operating segments are summarized below:

Credit Group: The Credit Group manages credit strategies across the liquid and illiquid spectrum, including syndicated loans, high yield bonds, multi-asset credit, alternative credit investments and direct lending. The syndicated loans strategy focuses on evaluating individual credit opportunities related primarily to non-investment grade senior secured loans and primarily targets first lien secured debt, with a secondary focus on second lien secured loans and subordinated and other unsecured loans. The high yield bond strategy seeks to deliver a diversified portfolio of liquid, traded non-investment grade corporate bonds, including secured, unsecured and subordinated debt instruments. Multi-asset credit is a “go anywhere”

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Notes to the Unaudited Condensed Consolidated Financial Statements (Continued)

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

strategy designed to offer investors a flexible solution to global credit investing by allowing us to tactically allocate between multiple asset classes in various market conditions. The alternative credit strategy seeks to capitalize on asset-focused investment opportunities that fall outside of traditional, well-defined markets such as corporate debt, real estate and private equity. The alternative credit strategy emphasizes downside protection and capital preservation through a focus on investments that tend to share the following key attributes: asset security, covenants, structural protections and cash flow velocity. The direct lending strategy is one of the largest self-originating direct lenders to the U.S. and European markets and has a multi-channel origination strategy designed to address a broad set of investment opportunities in the middle market. The direct lending team maintains a flexible investment strategy with the capability to invest in first lien senior secured loans (including “unitranche” loans which are loans that combine senior and subordinated debt, generally in a first lien position), second lien senior secured loans, subordinated debt, preferred equity and non-control equity co-investments in private middle market companies. U.S. direct lending activities are managed through a publicly traded business development company, ARCC, as well as through private commingled funds and separately managed accounts (“SMAs”).

Private Equity Group: The Private Equity Group broadly categorizes its investment strategies as corporate private equity and special opportunities. In the corporate private equity strategy, the Company targets four principal transactions types: (i) prudently leveraged control buyouts; (ii) growth equity; (iii) rescue capital; and (iv) distressed-for-control. This differentiated strategy, together with the broad resources of the Ares platform, widens our universe of potential investment opportunities and allows us to remain active across various market environments and to be highly selective in making

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~~Notes to the Unaudited Condensed Consolidated Financial Statements (Continued)~~

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

investments by identifying the most attractive relative value opportunities. The corporate private equity strategy also includes our energy opportunities fund which serves as a companion fund and employs our flexible capital strategy to provide creative capital solutions across the energy industry. In the special opportunities strategy, the Company employs an “all weather” flexible capital strategy to finance debt and non-control equity solutions in middle market companies undergoing transformational change or stress. The strategy seeks to consistently invest in a range of private, special-situation opportunities and flex into distressed public market debt when attractive.

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

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

The infrastructure strategy focuses on investment strategies broadly categorized as infrastructure opportunities and infrastructure debt. Infrastructure opportunities is a market leader in infrastructure and power investing with a focus on climate infrastructure, natural gas generation and energy transportation sectors. The infrastructure opportunities strategy targets essential infrastructure assets and companies with stable cash flow profiles through long-term contracts and high-barriers to entry. The infrastructure debt strategy was formed during the first quarter of 2022 in connection with the Infrastructure Debt Acquisition. The infrastructure debt strategy targets global assets and businesses with defensive characteristics across the digital, transport, energy and utility sectors. Leveraging the established long standing relationships, the strategy seeks to generate exclusive deal flow and high-quality investment opportunities.

~~Secondary Solutions~~Secondaries Group: The ~~Secondary Solutions~~Secondaries Group was formed during the second quarter of 2021 in connection with the Landmark Acquisition. The ~~Secondary Solutions~~Secondaries Group invests in secondary markets across a range of alternative asset class strategies, including private equity, real estate and infrastructure. The Company acquires interests across a range of partnership vehicles, including funds, multi-asset portfolios and single asset joint ventures. Activities within each strategy include recapitalizing and restructuring the funds, including transactions that can address pending fund maturity, strategy change or the need for additional equity capital. The private equity secondaries strategy targets opportunities in non-competitive channels and makes investments

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Notes to the Unaudited Condensed Consolidated Financial Statements (Continued)

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

in durable, performing assets with attractive capital structures. In the real estate secondaries strategy, the Company seeks broad diversification by property sector and geography and to drive investment results through underwriting, transaction structuring and portfolio construction. In the infrastructure secondaries strategy, the Company focuses on achieving diversification through a portfolio that provides inflation protection and exposure to uncorrelated assets.

Strategic Initiatives: Strategic Initiatives represents an all-other category that includes operating segments and strategic investments that seek to expand the Company’s reach and its scale in new and existing global markets. Strategic Initiatives includes activities from (i) Ares SSG, the Asia-Pacific platform that makes credit and special situations investments through its local originating presence on behalf of its institutional client base, (ii) Ares Insurance Solutions (“AIS”), the Company’s insurance platform that provides solutions to insurance clients including asset management, capital solutions and corporate development and (iii) Ares Acquisition Corporation (NYSE: AAC) (“AAC”), the Company’s first sponsored SPAC, among others.

The OMG consists of shared resource groups to support the Company’s operating segments by providing infrastructure and administrative support in the areas of accounting/finance, operations, information technology, legal, compliance, human resources, strategy, relationship management and distribution. The OMG includes Ares Wealth Management Solutions, LLC (“AWMS”) that facilitates the product development, distribution, marketing and client management activities for investment offerings in the global wealth management channel. Additionally, the OMG provides

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~~Notes to the Unaudited Condensed Consolidated Financial Statements (Continued)~~

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

services to certain of the Company’s managed funds and vehicles, which reimburse the OMG for expenses equal to the costs of services provided. The OMG’s revenues and expenses are not allocated to the Company’s reportable segments but the Company does consider the financial results of the OMG when evaluating its financial performance.

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

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

Realized income (“RI”) is an operating metric used by management to evaluate performance of the business based on operating performance and the contribution of each of the business segments to that performance, while removing the fluctuations of unrealized income and expenses, which may or may not be eventually realized at the levels presented and whose realizations depend more on future outcomes than current business operations. RI differs from income before taxes by excluding (i) operating results of the Consolidated Funds, (ii) depreciation and amortization expense, (iii) the effects of changes arising from corporate actions, (iv) unrealized gains and losses related to carried interest, incentive fees and investment performance and (v) certain other items that the Company believes are not indicative of operating performance. Changes arising from corporate actions include equity-based compensation expenses, the amortization of intangible assets, transaction costs associated with mergers, acquisitions and capital activities, underwriting costs and expenses incurred in connection with corporate reorganization. RI is reduced by deferred placement fees, which represent the portion of placement fees that have been deferred and amortized over the expected life of each fund's life for segment purposes but have been expensed up front in accordance with GAAP. For periods in which the amortization of placement fees for segment purposes is higher than the GAAP expense, ~~the difference represents~~ a placement fee adjustment ~~that~~ is presented as a reduction to RI. Management believes RI is a more appropriate metric to evaluate the Company's current business operations.

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

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Notes to the Unaudited Condensed Consolidated Financial Statements (Continued)

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

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

Three months ended March 31, 2022
Credit Group Private Equity Group Real
Assets Group Secondary Solutions Group Strategic Initiatives Total
Segments OMG Total
Management fees $ 303,159 $ 45,957 $ 72,487 $ 44,504 $ 16,814 $ 482,921 $ — $ 482,921
Fee related performance revenues 12,353 — 358 — — 12,711 — 12,711
Other fees 5,766 297 7,866 — 50 13,979 5,876 19,855
Compensation and benefits (105,696) (19,566) (33,637) (11,640) (7,401) (177,940) (64,067) (242,007)
General, administrative and other expenses (16,697) (6,288) (7,637) (3,078) (1,726) (35,426) (32,384) (67,810)
Fee related earnings 198,885 20,400 39,437 29,786 7,737 296,245 (90,575) 205,670
Performance income—realized 7,363 2,212 34,293 — — 43,868 — 43,868
Performance related compensation—realized (4,580) (1,786) (22,209) — — (28,575) — (28,575)
Realized net performance income 2,783 426 12,084 — — 15,293 — 15,293
Investment income—realized 415 1,603 3,453 — 861 6,332 — 6,332
Interest and other investment income (expense)—realized 5,726 1,502 2,777 644 3 10,652 (284) 10,368
Interest expense (3,414) (3,373) (2,389) (465) (5,838) (15,479) (167) (15,646)
Realized net investment income (loss) 2,727 (268) 3,841 179 (4,974) 1,505 (451) 1,054
Realized income $ 204,395 $ 20,558 $ 55,362 $ 29,965 $ 2,763 $ 313,043 $ (91,026) $ 222,017
Three months ended March 31, 2021
Credit Group Private Equity Group Real Assets Group Secondary Solutions Group Strategic Initiatives Total
Segments OMG Total
Management fees $ 232,877 $ 39,138 $ 39,825 $ — $ 15,623 $ 327,463 $ — $ 327,463
Fee related performance revenues 1,370 — 666 — — 2,036 — 2,036
Other fees 5,969 108 648 — 79 6,804 — 6,804
Compensation and benefits (81,203) (16,848) (20,179) — (4,740) (122,970) (44,407) (167,377)
General, administrative and other expenses (10,809) (4,486) (3,677) — (2,035) (21,007) (18,656) (39,663)
Fee related earnings 148,204 17,912 17,283 — 8,927 192,326 (63,063) 129,263
Performance income—realized 2,446 71,218 1,281 — — 74,945 — 74,945
Performance related compensation—realized (2,055) (57,026) (776) — — (59,857) — (59,857)
Realized net performance income 391 14,192 505 — — 15,088 — 15,088
Investment income (loss)—realized — (8,898) 1,506 — — (7,392) — (7,392)
Interest and other investment income—realized 3,669 118 2,354 — 33 6,174 355 6,529
Interest expense (1,515) (1,453) (1,335) — (2,302) (6,605) (90) (6,695)
Realized net investment income (loss) 2,154 (10,233) 2,525 — (2,269) (7,823) 265 (7,558)
Realized income $ 150,749 $ 21,871 $ 20,313 $ — $ 6,658 $ 199,591 $ (62,798) $ 136,793


	Three months ended September 30, 2022
	Credit Group		Private Equity Group		Real Assets Group		Secondaries Group		Strategic Initiatives		Total Segments		OMG		Total
Management fees	$	345,871	$	52,316	$	91,013	$	44,385	$	18,183	$	551,768	$	—	$	551,768
Fee related performance revenues	—		—		855		235		—		1,090		—		1,090
Other fees	8,143		556		11,493		—		67		20,259		7,547		27,806
Compensation and benefits	(102,839)		(26,865)		(46,947)		(19,191)		(7,859)		(203,701)		(61,084)		(264,785)
General, administrative and other expenses	(18,257)		(7,824)		(10,032)		(3,215)		(1,486)		(40,814)		(41,907)		(82,721)
Fee related earnings	232,918		18,183		46,382		22,214		8,905		328,602		(95,444)		233,158
Performance income—realized	3,045		—		26,939		—		—		29,984		—		29,984
Performance related compensation—realized	(1,737)		(5)		(17,115)		(1)		—		(18,858)		—		(18,858)
Realized net performance income (loss)	1,308		(5)		9,824		(1)		—		11,126		—		11,126
Investment income—realized	4,495		8		339		—		—		4,842		—		4,842
Interest and other investment income (expense)—realized	8,893		201		2,180		424		1,096		12,794		(171)		12,623
Interest expense	(3,904)		(4,183)		(3,095)		(1,753)		(5,244)		(18,179)		(128)		(18,307)
Realized net investment income (loss)	9,484		(3,974)		(576)		(1,329)		(4,148)		(543)		(299)		(842)
Realized income	$	243,710	$	14,204	$	55,630	$	20,884	$	4,757	$	339,185	$	(95,743)	$	243,442

	Three months ended September 30, 2021
	Credit Group		Private Equity Group		Real Assets Group		Secondaries Group		Strategic Initiatives		Total Segments		OMG		Total
Management fees	$	271,591	$	56,817	$	67,934	$	41,064	$	16,544	$	453,950	$	—	$	453,950
Fee related performance revenues	—		—		579		—		—		579		—		579
Other fees	5,798		370		3,681		—		2		9,851		3,446		13,297
Compensation and benefits	(86,502)		(23,220)		(33,070)		(11,955)		(5,316)		(160,063)		(66,107)		(226,170)
General, administrative and other expenses	(14,930)		(4,984)		(6,674)		(2,593)		(1,774)		(30,955)		(28,142)		(59,097)
Fee related earnings	175,957		28,983		32,450		26,516		9,456		273,362		(90,803)		182,559
Performance income—realized	6,332		34,316		4,114		—		—		44,762		—		44,762
Performance related compensation—realized	(3,079)		(27,483)		(2,809)		—		—		(33,371)		—		(33,371)
Realized net performance income	3,253		6,833		1,305		—		—		11,391		—		11,391
Investment income—realized	618		1,878		1,841		—		1,025		5,362		—		5,362
Interest and other investment income (expense)—realized	4,716		4,861		918		699		163		11,357		(270)		11,087
Interest expense	(2,392)		(2,505)		(1,904)		(427)		(4,135)		(11,363)		(160)		(11,523)
Realized net investment income (loss)	2,942		4,234		855		272		(2,947)		5,356		(430)		4,926
Realized income	$	182,152	$	40,050	$	34,610	$	26,788	$	6,509	$	290,109	$	(91,233)	$	198,876

4345

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Ares Management Corporation

Notes to the Unaudited Condensed Consolidated Financial Statements (Continued)

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



	Nine months ended September 30, 2022
	Credit Group		Private Equity Group		Real Assets Group		Secondaries Group		Strategic Initiatives		Total Segments		OMG		Total
Management fees	$	972,201	$	145,669	$	254,233	$	135,090	$	52,377	$	1,559,570	$	—	$	1,559,570
Fee related performance revenues	12,628		—		2,178		235		—		15,041		—		15,041
Other fees	20,528		1,261		27,924		—		181		49,894		19,721		69,615
Compensation and benefits	(301,822)		(70,724)		(121,183)		(45,964)		(22,059)		(561,752)		(196,492)		(758,244)
General, administrative and other expenses	(52,734)		(21,992)		(28,308)		(9,250)		(5,575)		(117,859)		(109,516)		(227,375)
Fee related earnings	650,801		54,214		134,844		80,111		24,924		944,894		(286,287)		658,607
Performance income—realized	58,941		2,212		78,637		4,156		—		143,946		—		143,946
Performance related compensation—realized	(35,675)		(1,791)		(50,510)		(3,515)		—		(91,491)		—		(91,491)
Realized net performance income	23,266		421		28,127		641		—		52,455		—		52,455
Investment income—realized	6,519		2,283		4,224		—		858		13,884		—		13,884
Interest and other investment income (expense)—realized	21,006		1,898		7,597		3,268		6,613		40,382		(1,450)		38,932
Interest expense	(10,856)		(11,185)		(8,197)		(3,775)		(16,687)		(50,700)		(474)		(51,174)
Realized net investment income (loss)	16,669		(7,004)		3,624		(507)		(9,216)		3,566		(1,924)		1,642
Realized income	$	690,736	$	47,631	$	166,595	$	80,245	$	15,708	$	1,000,915	$	(288,211)	$	712,704

	Nine months ended September 30, 2021
	Credit Group		Private Equity Group		Real Assets Group		Secondaries Group		Strategic Initiatives		Total Segments		OMG		Total
Management fees	$	764,702	$	135,930	$	150,691	$	53,962	$	48,963	$	1,154,248	$	—	$	1,154,248
Fee related performance revenues	1,331		—		1,938		—		—		3,269		—		3,269
Other fees	18,494		726		4,604		—		82		23,906		3,446		27,352
Compensation and benefits	(253,597)		(62,047)		(73,438)		(16,244)		(15,440)		(420,766)		(158,943)		(579,709)
General, administrative and other expenses	(37,716)		(15,351)		(14,212)		(3,452)		(5,580)		(76,311)		(69,872)		(146,183)
Fee related earnings	493,214		59,258		69,583		34,266		28,025		684,346		(225,369)		458,977
Performance income—realized	76,924		159,479		10,317		—		—		246,720		—		246,720
Performance related compensation—realized	(48,619)		(127,706)		(6,983)		—		—		(183,308)		—		(183,308)
Realized net performance income	28,305		31,773		3,334		—		—		63,412		—		63,412
Investment income (loss)—realized	1,858		(4,387)		13,877		—		1,347		12,695		—		12,695
Interest and other investment income—realized	14,354		9,825		4,783		701		2,824		32,487		170		32,657
Interest expense	(5,372)		(5,434)		(4,528)		(432)		(8,962)		(24,728)		(397)		(25,125)
Realized net investment income (loss)	10,840		4		14,132		269		(4,791)		20,454		(227)		20,227
Realized income	$	532,359	$	91,035	$	87,049	$	34,535	$	23,234	$	768,212	$	(225,596)	$	542,616

Table of Contents

Ares Management Corporation

Notes to the Unaudited Condensed Consolidated Financial Statements (Continued)

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

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


		Three months ended March 31,			Three months ended September 30,				Nine months ended September 30,
			2022			2021			2022		2021		2022		2021
Segment revenues	Segment revenues							Segment revenues
Management fees	Management fees		$	482,921		$	327,463	Management fees	$	551,768	$	453,950	$	1,559,570	$	1,154,248
Fee related performance revenues	Fee related performance revenues		12,711			2,036		Fee related performance revenues	1,090		579		15,041		3,269
Other fees	Other fees		13,979			6,804		Other fees	20,259		9,851		49,894		23,906
Performance income—realized	Performance income—realized		43,868			74,945		Performance income—realized	29,984		44,762		143,946		246,720
Total segment revenues	Total segment revenues		$	553,479		$	411,248	Total segment revenues	$	603,101	$	509,142	$	1,768,451	$	1,428,143
Segment expenses	Segment expenses							Segment expenses
Compensation and benefits	Compensation and benefits		$	177,940		$	122,970	Compensation and benefits	$	203,701	$	160,063	$	561,752	$	420,766
General, administrative and other expenses	General, administrative and other expenses		35,426			21,007		General, administrative and other expenses	40,814		30,955		117,859		76,311
Performance related compensation—realized	Performance related compensation—realized		28,575			59,857		Performance related compensation—realized	18,858		33,371		91,491		183,308
Total segment expenses	Total segment expenses		$	241,941		$	203,834	Total segment expenses	$	263,373	$	224,389	$	771,102	$	680,385
Segment realized net investment income (expense)	Segment realized net investment income (expense)							Segment realized net investment income (expense)
Investment income (loss)—realized			$	6,332		$	(7,392)
Investment income—realized								Investment income—realized	$	4,842	$	5,362	$	13,884	$	12,695
Interest and other investment income —realized	Interest and other investment income —realized		10,652			6,174		Interest and other investment income —realized	12,794		11,357		40,382		32,487
Interest expense	Interest expense		(15,479)			(6,605)		Interest expense	(18,179)		(11,363)		(50,700)		(24,728)
Total segment realized net investment income (expense)	Total segment realized net investment income (expense)		$	1,505		$	(7,823)	Total segment realized net investment income (expense)	$	(543)	$	5,356	$	3,566	$	20,454

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


		Three months ended March 31,			Three months ended September 30,				Nine months ended September 30,
			2022			2021			2022		2021		2022		2021
Total consolidated revenue	Total consolidated revenue		$	714,999		$	658,388	Total consolidated revenue	$	801,290	$	948,719	$	2,117,719	$	2,901,926
Performance income—unrealized	Performance income—unrealized		(133,532)			(224,954)		Performance income—unrealized	(170,654)		(415,317)		(280,037)		(1,381,697)
Management fees of Consolidated Funds eliminated in consolidation	Management fees of Consolidated Funds eliminated in consolidation		11,479			11,706		Management fees of Consolidated Funds eliminated in consolidation	11,682		11,051		34,523		33,416

Incentive fees of Consolidated Funds eliminated in consolidation	Incentive fees of Consolidated Funds eliminated in consolidation		34			1,525		Incentive fees of Consolidated Funds eliminated in consolidation	—		—		34		1,528
Administrative, transaction and other fees of Consolidated Funds eliminated in consolidation	Administrative, transaction and other fees of Consolidated Funds eliminated in consolidation		4,769			4,145		Administrative, transaction and other fees of Consolidated Funds eliminated in consolidation	3,946		4,264		13,030		13,157
Administrative fees(1)	Administrative fees(1)		(19,475)			(9,808)		Administrative fees(1)	(16,099)		(15,632)		(50,947)		(34,754)
OMG revenue	OMG revenue		(5,876)			—		OMG revenue	(7,681)		(3,446)		(19,974)		(3,446)
Performance income (loss) reclass(2)			(14)			55
Performance income reclass(2)								Performance income reclass(2)	—		680		(14)		1,285

Principal investment income, net of eliminations	Principal investment income, net of eliminations		(8,326)			(25,100)		Principal investment income, net of eliminations	(11,582)		(14,250)		(15,521)		(86,477)
Net income of non-controlling interests in consolidated subsidiaries	Net income of non-controlling interests in consolidated subsidiaries		(10,579)			(4,709)		Net income of non-controlling interests in consolidated subsidiaries	(7,801)		(6,927)		(30,362)		(16,795)
Total consolidation adjustments and reconciling items	Total consolidation adjustments and reconciling items		(161,520)			(247,140)		Total consolidation adjustments and reconciling items	(198,189)		(439,577)		(349,268)		(1,473,783)
Total segment revenue	Total segment revenue		$	553,479		$	411,248	Total segment revenue	$	603,101	$	509,142	$	1,768,451	$	1,428,143

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

(2)Related to performance income for AREA Sponsor Holdings LLC, an investment pool. Changes in value of this investment are reflected within net realized and unrealized gains (losses) on investments in the Company’s Condensed Consolidated Statements of Operations.

4447

Table of Contents

Ares Management Corporation

Notes to the Unaudited Condensed Consolidated Financial Statements (Continued)

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

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


		Three months ended March 31,			Three months ended September 30,				Nine months ended September 30,
			2022			2021			2022		2021		2022		2021
Total consolidated expenses	Total consolidated expenses		$	611,684		$	525,109	Total consolidated expenses	$	898,102	$	813,267	$	2,062,654	$	2,363,108
Performance related compensation-unrealized	Performance related compensation-unrealized		(91,198)			(160,337)		Performance related compensation-unrealized	(124,466)		(296,044)		(207,115)		(1,022,393)
Expenses of Consolidated Funds added in consolidation	Expenses of Consolidated Funds added in consolidation		(16,077)			(17,436)		Expenses of Consolidated Funds added in consolidation	(22,129)		(23,206)		(63,071)		(66,653)
Expenses of Consolidated Funds eliminated in consolidation	Expenses of Consolidated Funds eliminated in consolidation		11,564			13,265		Expenses of Consolidated Funds eliminated in consolidation	11,746		11,102		34,948		35,078
Administrative fees(1)	Administrative fees(1)		(18,890)			(9,808)		Administrative fees(1)	(15,574)		(15,632)		(50,422)		(34,754)
OMG expenses	OMG expenses		(96,451)			(63,063)		OMG expenses	(102,991)		(94,249)		(306,008)		(228,815)
Acquisition and merger-related expense	Acquisition and merger-related expense		(9,042)			(8,590)		Acquisition and merger-related expense	(1,852)		(754)		(12,046)		(18,364)
Equity compensation expense	Equity compensation expense		(53,602)			(55,649)		Equity compensation expense	(48,041)		(65,991)		(151,202)		(191,144)
Acquisition-related compensation expense(2)	Acquisition-related compensation expense(2)		(48,001)			—		Acquisition-related compensation expense(2)	(96,697)		(28,194)		(204,189)		(32,824)
Placement fees	Placement fees		693			(297)		Placement fees	(9,729)		(32,413)		(7,611)		(33,740)
Depreciation and amortization expense(3)	Depreciation and amortization expense(3)		(38,126)			(14,100)		Depreciation and amortization expense(3)	(219,339)		(36,668)		(297,795)		(71,742)

Expense of non-controlling interests in consolidated subsidiaries	Expense of non-controlling interests in consolidated subsidiaries		(10,613)			(5,260)		Expense of non-controlling interests in consolidated subsidiaries	(5,657)		(6,829)		(27,041)		(17,372)
Total consolidation adjustments and reconciling items	Total consolidation adjustments and reconciling items		(369,743)			(321,275)		Total consolidation adjustments and reconciling items	(634,729)		(588,878)		(1,291,552)		(1,682,723)
Total segment expenses	Total segment expenses		$	241,941		$	203,834	Total segment expenses	$	263,373	$	224,389	$	771,102	$	680,385

(2)Represents ~~components of the purchase agreements associated with~~ contingent obligations resulting from the Landmark Acquisition, the Black Creek Acquisition and the Infrastructure Debt Acquisition that are recorded as compensation expense and are presented within compensation and benefits in the Company’s Condensed Consolidated Statements of Operations.

(3)The three and nine months ended September 30, 2022 include non-cash impairment charges of $181.6 million recorded on certain intangible assets.

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


		Three months ended March 31,			Three months ended September 30,				Nine months ended September 30,
			2022			2021			2022		2021		2022		2021
Total consolidated other income	Total consolidated other income		$	57,994		$	56,785	Total consolidated other income	$	36,434	$	111,536	$	112,932	$	218,011
Investment (income) loss—unrealized	Investment (income) loss—unrealized		7,854			(22,168)		Investment (income) loss—unrealized	57		(3,609)		9,995		(60,588)
Interest and other investment (income) loss—unrealized	Interest and other investment (income) loss—unrealized		(6,032)			3,950		Interest and other investment (income) loss—unrealized	(4,600)		(1,405)		(16,661)		3,057
Other income from Consolidated Funds added in consolidation, net	Other income from Consolidated Funds added in consolidation, net		(66,848)			(67,316)		Other income from Consolidated Funds added in consolidation, net	(38,434)		(76,287)		(132,852)		(178,195)
Other expense from Consolidated Funds eliminated in consolidation, net	Other expense from Consolidated Funds eliminated in consolidation, net		(7,518)			(4,112)		Other expense from Consolidated Funds eliminated in consolidation, net	(1,922)		(4,973)		(13,655)		(13,783)
OMG other expense	OMG other expense		4,593			333		OMG other expense	3,016		37		8,700		646
Performance (income) loss reclass(1)			14			(55)
Performance income reclass(1)								Performance income reclass(1)	—		(680)		14		(1,285)
Principal investment income	Principal investment income		14,490			25,095		Principal investment income	9,438		20,719		37,421		96,448
Other (income) expense, net	Other (income) expense, net		1,981			(473)		Other (income) expense, net	(1,060)		(34,812)		934		(34,666)
Other (income) loss of non-controlling interests in consolidated subsidiaries			(5,023)			138
Other income of non-controlling interests in consolidated subsidiaries								Other income of non-controlling interests in consolidated subsidiaries	(3,472)		(5,170)		(3,262)		(9,191)
Total consolidation adjustments and reconciling items	Total consolidation adjustments and reconciling items		(56,489)			(64,608)		Total consolidation adjustments and reconciling items	(36,977)		(106,180)		(109,366)		(197,557)
Total segment realized net investment income (expense)	Total segment realized net investment income (expense)		$	1,505		$	(7,823)	Total segment realized net investment income (expense)	$	(543)	$	5,356	$	3,566	$	20,454

(1)Related to performance income for AREA Sponsor Holdings LLC. Changes in value of this investment are reflected within net realized and unrealized gains (losses) on investments in the Company’s Condensed Consolidated Statements of Operations.

4548

Table of Contents

Ares Management Corporation

Notes to the Unaudited Condensed Consolidated Financial Statements (Continued)

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

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


		Three months ended March 31,			Three months ended September 30,				Nine months ended September 30,
			2022			2021			2022		2021		2022		2021
Income before taxes			$	161,309		$	190,064
Income (loss) before taxes								Income (loss) before taxes	$	(60,378)	$	246,988	$	167,997	$	756,829
Adjustments:	Adjustments:							Adjustments:
Depreciation and amortization expense(1)	Depreciation and amortization expense(1)		38,126			14,100		Depreciation and amortization expense(1)	219,339		36,668		297,795		71,742
Equity compensation expense	Equity compensation expense		53,017			55,649		Equity compensation expense	47,516		65,991		150,677		191,144
Acquisition-related compensation expense~~(1)~~(2)	Acquisition-related compensation expense~~(1)~~(2)		48,001			—		Acquisition-related compensation expense~~(1)~~(2)	96,697		28,194		204,189		32,824

Acquisition and merger-related expense	Acquisition and merger-related expense		9,042			8,590		Acquisition and merger-related expense	1,852		754		12,046		18,364
Placement fees	Placement fees		(693)			297		Placement fees	9,729		32,413		7,611		33,740
OMG expense, net	OMG expense, net		95,168			63,396		OMG expense, net	98,325		90,840		294,734		226,015
Other (income) expense, net	Other (income) expense, net		1,981			(473)		Other (income) expense, net	(1,059)		(34,812)		934		(34,666)
Net (income) expense of non-controlling interests in consolidated subsidiaries			(4,989)			689
Net income of non-controlling interests in consolidated subsidiaries								Net income of non-controlling interests in consolidated subsidiaries	(5,616)		(5,268)		(6,583)		(8,614)
Income before taxes of non-controlling interests in Consolidated Funds, net of eliminations	Income before taxes of non-controlling interests in Consolidated Funds, net of eliminations		(47,407)			(49,886)		Income before taxes of non-controlling interests in Consolidated Funds, net of eliminations	(16,489)		(47,372)		(48,897)		(102,331)
Total performance income—unrealized	Total performance income—unrealized		(133,532)			(224,954)		Total performance income—unrealized	(170,654)		(415,317)		(280,037)		(1,381,697)
Total performance related compensation—unrealized	Total performance related compensation—unrealized		91,198			160,337		Total performance related compensation—unrealized	124,466		296,044		207,115		1,022,393
Total investment (income) loss—unrealized			1,822			(18,218)
Total investment income—unrealized								Total investment income—unrealized	(4,543)		(5,014)		(6,666)		(57,531)
Realized income	Realized income		313,043			199,591		Realized income	339,185		290,109		1,000,915		768,212
Total performance income—realized	Total performance income—realized		(43,868)			(74,945)		Total performance income—realized	(29,984)		(44,762)		(143,946)		(246,720)
Total performance related compensation—realized	Total performance related compensation—realized		28,575			59,857		Total performance related compensation—realized	18,858		33,371		91,491		183,308
Total investment income—realized	Total investment income—realized		(1,505)			7,823		Total investment income—realized	543		(5,356)		(3,566)		(20,454)
Fee related earnings	Fee related earnings		$	296,245		$	192,326	Fee related earnings	$	328,602	$	273,362	$	944,894	$	684,346

(1)~~Represents components~~The three and nine months ended September 30, 2022 include non-cash impairment charges of ~~the purchase agreements associated with~~$181.6 million recorded on certain intangible assets.

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

4649

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Ares Management Corporation

Notes to the Unaudited Condensed Consolidated Financial Statements (Continued)

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

16. CONSOLIDATION

Investments in Consolidated Variable Interest Entities

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

Investments in Non-Consolidated Variable Interest Entities

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

The Company's interests in consolidated and non-consolidated VIEs, as presented in the Condensed Consolidated Statements of Financial Condition, and its respective maximum exposure to loss relating to non-consolidated VIEs are as follows:


		As of March 31,		As of December 31,			As of September 30,		As of December 31,

		2022		2021			2022		2021
Maximum exposure to loss attributable to the Company's investment in non-consolidated VIEs(1)	Maximum exposure to loss attributable to the Company's investment in non-consolidated VIEs(1)	$	362,552	$	353,768	Maximum exposure to loss attributable to the Company's investment in non-consolidated VIEs(1)	$	377,935	$	353,768
Maximum exposure to loss attributable to the Company's investment in consolidated VIEs(1)	Maximum exposure to loss attributable to the Company's investment in consolidated VIEs(1)	601,252		583,192		Maximum exposure to loss attributable to the Company's investment in consolidated VIEs(1)	533,941		583,192
Assets of consolidated VIEs	Assets of consolidated VIEs	12,495,278		13,197,321		Assets of consolidated VIEs	12,501,069		13,197,321
Liabilities of consolidated VIEs	Liabilities of consolidated VIEs	11,221,527		12,018,655		Liabilities of consolidated VIEs	11,173,216		12,018,655

(1)As of ~~March 31,~~September 30, 2022 and December 31, 2021, the Company's maximum exposure of loss for CLO securities was equal to the cumulative fair value of our capital interest in CLOs that are managed and totaled ~~$101.3~~$82.2 million and $103.8 million, respectively.

Three months ended March 31,
2022 2021
Net income attributable to non-controlling interests related to consolidated VIEs $ 38,462 $ 27,816


	Three months ended September 30,				Nine months ended September 30,
	2022		2021		2022		2021
Net income attributable to non-controlling interests related to consolidated VIEs	$	8,733	$	38,597	$	28,470	$	84,285

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Ares Management Corporation

Notes to the Unaudited Condensed Consolidated Financial Statements (Continued)

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

Consolidating Schedules

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

As of March 31, 2022
Consolidated
Company
Entities Consolidated
Funds Eliminations Consolidated
Assets
Cash and cash equivalents $ 346,042 $ — $ — $ 346,042
Investments (includes $3,137,561 of accrued carried interest) 4,458,910 — (597,075) 3,861,835
Due from affiliates 529,720 — (35,202) 494,518
Other assets 289,238 — (3,402) 285,836
Goodwill 1,000,289 — — 1,000,289
Intangible assets, net 1,490,591 — — 1,490,591
Right-of-use operating lease assets 161,088 — — 161,088
Assets of Consolidated Funds
Cash and cash equivalents — 483,210 — 483,210
U.S. Treasury securities, at fair value — 1,000,615 — 1,000,615
Investments, at fair value — 11,656,848 4,719 11,661,567
Due from affiliates — 11,646 (10,521) 1,125
Receivable for securities sold — 304,282 — 304,282
Other assets — 40,205 — 40,205
Total assets $ 8,275,878 $ 13,496,806 $ (641,481) $ 21,131,203
Liabilities
Accounts payable, accrued expenses and other liabilities $ 273,933 $ — $ (10,521) $ 263,412
Accrued compensation 285,109 — — 285,109
Due to affiliates 194,407 — — 194,407
Performance related compensation payable 2,286,748 — — 2,286,748
Debt obligations 1,942,624 — — 1,942,624
Operating lease liabilities 197,312 — — 197,312
Liabilities of Consolidated Funds
Accounts payable, accrued expenses and other liabilities — 100,084 (6,318) 93,766
Due to affiliates — 33,886 (33,886) —
Payable for securities purchased — 561,154 — 561,154
CLO loan obligations, at fair value — 10,434,437 (36,822) 10,397,615
Fund borrowings — 145,088 — 145,088
Total liabilities 5,180,133 11,274,649 (87,547) 16,367,235
Commitments and contingencies 0 0 0 0
Redeemable interest in Consolidated Funds — 1,000,000 — 1,000,000
Redeemable interest in Ares Operating Group entities 96,347 — — 96,347
Non-controlling interest in Consolidated Funds — 1,222,157 (521,244) 700,913
Non-controlling interest in Ares Operating Group entities 1,286,921 — (13,261) 1,273,660
Stockholders' Equity
Class A common stock, $0.01 par value, 1,500,000,000 shares authorized (171,461,115 shares issued and outstanding) 1,715 — — 1,715
Non-voting common stock, $0.01 par value, 500,000,000 shares authorized (3,489,911 shares issued and outstanding) 35 — — 35
Class B common stock, $0.01 par value, 1,000 shares authorized (1,000 shares issued and outstanding) — — — —
Class C common stock, $0.01 par value, 499,999,000 shares authorized (118,464,968 shares issued and outstanding) 1,185 — — 1,185
Additional paid-in-capital 1,870,486 — (19,429) 1,851,057
Accumulated deficit (154,925) — — (154,925)
Accumulated other comprehensive loss, net of tax (6,019) — — (6,019)
Total stockholders' equity 1,712,477 — (19,429) 1,693,048
Total equity 2,999,398 1,222,157 (553,934) 3,667,621
Total liabilities, redeemable interest, non-controlling interests and equity $ 8,275,878 $ 13,496,806 $ (641,481) $ 21,131,203

~~Table of Contents~~

~~Ares Management Corporation~~

~~Notes to the Unaudited Condensed Consolidated Financial Statements (Continued)~~

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

As of December 31, 2021
Consolidated
Company
Entities Consolidated
Funds Eliminations Consolidated
Assets
Cash and cash equivalents $ 343,655 $ — $ — $ 343,655
Investments (includes $2,998,421 of accrued carried interest) 4,271,836 — (587,572) 3,684,264
Due from affiliates 696,963 — (26,580) 670,383
Other assets 338,685 — (3,930) 334,755
Goodwill 787,972 — — 787,972
Intangible assets, net 1,422,818 — — 1,422,818
Right-of-use operating lease assets 167,652 — — 167,652
Assets of Consolidated Funds
Cash and cash equivalents — 1,049,191 — 1,049,191
U.S. Treasury securities, at fair value — 1,000,285 — 1,000,285
Investments, at fair value — 11,812,093 4,300 11,816,393
Due from affiliates — 16,761 (9,527) 7,234
Receivable for securities sold — 281,132 — 281,132
Other assets — 39,430 — 39,430
Total assets $ 8,029,581 $ 14,198,892 $ (623,309) $ 21,605,164
Liabilities
Accounts payable, accrued expenses and other liabilities $ 289,200 $ — $ (9,527) $ 279,673
Accrued compensation 310,222 — — 310,222
Due to affiliates 198,553 — — 198,553
Performance related compensation payable 2,190,352 — — 2,190,352
Debt obligations 1,503,709 — — 1,503,709
Operating lease liabilities 205,075 — — 205,075
Liabilities of Consolidated Funds
Accounts payable, accrued expenses and other liabilities — 117,139 (13,881) 103,258
Due to affiliates — 26,210 (26,210) —
Payable for securities purchased — 1,118,456 — 1,118,456
CLO loan obligations, at fair value — 10,698,681 (41,020) 10,657,661
Fund borrowings — 127,771 — 127,771
Total liabilities 4,697,111 12,088,257 (90,638) 16,694,730
Commitments and contingencies 0 0 0 0
Redeemable interest in Consolidated Funds — 1,000,000 — 1,000,000
Redeemable interest in Ares Operating Group entities 96,008 — — 96,008
Non-controlling interest in Consolidated Funds — 1,110,635 (519,183) 591,452
Non-controlling interest in Ares Operating Group entities 1,403,255 — (5,508) 1,397,747
Stockholders' Equity
Class A common stock, $0.01 par value, 1,500,000,000 shares authorized (168,351,305 shares issued and outstanding) 1,684 — — 1,684
Non-voting common stock, $0.01 par value, 500,000,000 shares authorized (3,489,911 shares issued and outstanding) 35 — — 35
Class B common stock, $0.01 par value, 1,000 shares authorized (1,000 shares issued and outstanding) — — — —
Class C common stock, $0.01 par value, 499,999,000 shares authorized (118,609,332 shares issued and outstanding) 1,186 — — 1,186
Additional paid-in-capital 1,921,539 — (7,980) 1,913,559
Accumulated deficit (89,382) — — (89,382)
   Accumulated other comprehensive income, net of tax (1,855) — — (1,855)
       Total stockholders' equity 1,833,207 — (7,980) 1,825,227
       Total equity 3,236,462 1,110,635 (532,671) 3,814,426
       Total liabilities, redeemable interest, non-controlling interests and equity $ 8,029,581 $ 14,198,892 $ (623,309) $ 21,605,164

~~Table of Contents~~

~~Ares Management Corporation~~

~~Notes to the Unaudited Condensed Consolidated Financial Statements (Continued)~~

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

Three months ended March 31, 2022
Consolidated
Company
Entities Consolidated
Funds Eliminations Consolidated
Revenues
Management fees $ 488,811 $ — $ (11,479) $ 477,332
Carried interest allocation 178,289 — — 178,289
Incentive fees 16,456 — (34) 16,422
Principal investment income 14,490 — (6,164) 8,326
Administrative, transaction and other fees 39,399 — (4,769) 34,630
Total revenues 737,445 — (22,446) 714,999
Expenses
Compensation and benefits 357,243 — — 357,243
Performance related compensation 129,405 — — 129,405
General, administrative and other expense 120,523 — — 120,523
Expenses of the Consolidated Funds — 16,077 (11,564) 4,513
Total expenses 607,171 16,077 (11,564) 611,684
Other income (expense)
Net realized and unrealized gains (losses) on investments (4,926) — 13,035 8,109
Interest and dividend income 3,410 — (1,908) 1,502
Interest expense (15,646) — — (15,646)
Other income, net 790 — 994 1,784
Net realized and unrealized gains on investments of the Consolidated Funds — 23,011 (7,043) 15,968
Interest and other income of the Consolidated Funds — 121,284 (994) 120,290
Interest expense of the Consolidated Funds — (77,447) 3,434 (74,013)
Total other income (expense) (16,372) 66,848 7,518 57,994
Income before taxes 113,902 50,771 (3,364) 161,309
Income tax expense 20,386 25 — 20,411
Net income 93,516 50,746 (3,364) 140,898
Less: Net income attributable to non-controlling interests in Consolidated Funds — 50,746 (3,364) 47,382
Net income attributable to Ares Operating Group entities 93,516 — — 93,516
Less: Net income attributable to redeemable interest in Ares Operating Group entities 399 — — 399
Less: Net income attributable to non-controlling interests in Ares Operating Group entities 47,254 — — 47,254
Net income attributable to Ares Management Corporation Class A and non-voting common stockholders $ 45,863 $ — $ — $ 45,863

~~Table of Contents~~

~~Ares Management Corporation~~

~~Notes to the Unaudited Condensed Consolidated Financial Statements (Continued)~~

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

Three months ended March 31, 2021
Consolidated
Company
Entities Consolidated
Funds Eliminations Consolidated
Revenues
Management fees $ 331,979 $ — $ (11,706) $ 320,273
Carried interest allocation 297,535 — — 297,535
Incentive fees 4,345 — (1,525) 2,820
Principal investment income 25,095 — 5 25,100
Administrative, transaction and other fees 16,805 — (4,145) 12,660
Total revenues 675,759 — (17,371) 658,388
Expenses
Compensation and benefits 231,850 — — 231,850
Performance related compensation 221,432 — — 221,432
General, administrative and other expense 67,656 — — 67,656
Expenses of the Consolidated Funds — 17,436 (13,265) 4,171
Total expenses 520,938 17,436 (13,265) 525,109
Other income (expense)
Net realized and unrealized gains (losses) on investments (6,118) — 11,551 5,433
Interest and dividend income 1,863 — (903) 960
Interest expense (6,695) — — (6,695)
Other expense, net (3,693) — (456) (4,149)
Net realized and unrealized gains on investments of the Consolidated Funds — 26,468 (10,046) 16,422
Interest and other income of the Consolidated Funds — 115,383 456 115,839
Interest expense of the Consolidated Funds — (74,535) 3,510 (71,025)
Total other income (expense) (14,643) 67,316 4,112 56,785
Income before taxes 140,178 49,880 6 190,064
Income tax expense 25,726 28 — 25,754
Net income 114,452 49,852 6 164,310
Less: Net income attributable to non-controlling interests in Consolidated Funds — 49,852 6 49,858
Net income attributable to Ares Operating Group entities 114,452 — — 114,452
Less: Net income attributable to redeemable interest in Ares Operating Group entities 32 — — 32
Less: Net income attributable to non-controlling interests in Ares Operating Group entities 56,042 — — 56,042
Net income attributable to Ares Management Corporation 58,378 — — 58,378
Less: Series A Preferred Stock dividends paid 5,425 — — 5,425
Net income attributable to Ares Management Corporation Class A common stockholders $ 52,953 $ — $ — $ 52,953


	As of September 30, 2022
	Consolidated Company Entities		Consolidated Funds		Eliminations		Consolidated
Assets
Cash and cash equivalents	$	361,500	$	—	$	—	$	361,500
Investments (includes $3,290,381 of accrued carried interest)	4,638,092		—		(525,699)		4,112,393
Due from affiliates	744,981		—		(183,478)		561,503
Other assets	275,189		—		—		275,189
Right-of-use operating lease assets	159,686		—		—		159,686
Intangible assets, net	1,238,108		—		—		1,238,108
Goodwill	996,740		—		—		996,740
Assets of Consolidated Funds
Cash and cash equivalents	—		683,976		—		683,976
U.S. Treasury securities, at fair value	—		1,005,094		—		1,005,094
Investments, at fair value	—		11,564,696		4,495		11,569,191
Due from affiliates	—		17,537		(9,801)		7,736
Receivable for securities sold	—		189,823		—		189,823
Other assets	—		45,387		—		45,387
Total assets	$	8,414,296	$	13,506,513	$	(714,483)	$	21,206,326
Liabilities
Accounts payable, accrued expenses and other liabilities	$	314,932	$	—	$	(9,801)	$	305,131
Accrued compensation	595,330		—		—		595,330
Due to affiliates	122,307		—		—		122,307
Performance related compensation payable	2,402,019		—		—		2,402,019
Debt obligations	2,018,462		—		—		2,018,462

Operating lease liabilities	193,180		—		—		193,180
Liabilities of Consolidated Funds
Accounts payable, accrued expenses and other liabilities	—		123,527		(1,533)		121,994
Due to affiliates	—		178,983		(178,983)		—
Payable for securities purchased	—		419,726		—		419,726
CLO loan obligations, at fair value	—		10,343,840		(29,959)		10,313,881
Fund borrowings	—		149,546		—		149,546
Total liabilities	5,646,230		11,215,622		(220,276)		16,641,576
Commitments and contingencies
Redeemable interest in Consolidated Funds	—		1,004,994		—		1,004,994
Redeemable interest in Ares Operating Group entities	92,108		—		—		92,108
Non-controlling interest in Consolidated Funds	—		1,285,897		(451,187)		834,710
Non-controlling interest in Ares Operating Group entities	1,138,659		—		(17,382)		1,121,277
Stockholders' Equity

Class A common stock, $0.01 par value, 1,500,000,000 shares authorized (172,402,437 shares issued and outstanding)	1,724		—		—		1,724
Non-voting common stock, $0.01 par value, 500,000,000 shares authorized (3,489,911 shares issued and outstanding)	35		—		—		35
Class B common stock, $0.01 par value, 1,000 shares authorized (1,000 shares issued and outstanding)	—		—		—		—
Class C common stock, $0.01 par value, 499,999,000 shares authorized (118,275,157 shares issued and outstanding)	1,183		—		—		1,183
Additional paid-in-capital	1,937,374		—		(25,638)		1,911,736
Accumulated deficit	(374,198)		—		—		(374,198)
Accumulated other comprehensive loss, net of tax	(28,819)		—		—		(28,819)
Total stockholders' equity	1,537,299		—		(25,638)		1,511,661
Total equity	2,675,958		1,285,897		(494,207)		3,467,648
Total liabilities, redeemable interest, non-controlling interests and equity	$	8,414,296	$	13,506,513	$	(714,483)	$	21,206,326

Table of Contents

Ares Management Corporation

Notes to the Unaudited Condensed Consolidated Financial Statements (Continued)

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

Three months ended March 31, 2022
Consolidated
Company
Entities Consolidated
Funds Eliminations Consolidated
Cash flows from operating activities:
Net income $ 93,516 $ 50,746 $ (3,364) $ 140,898
Adjustments to reconcile net income to net cash provided by operating activities 43,970 — 9,503 53,473
Adjustments to reconcile net income to net cash provided by (used in) operating activities allocable to non-controlling interests in Consolidated Funds: — (104,815) 7,043 (97,772)
Cash flows due to changes in operating assets and liabilities allocable to redeemable and non-controlling interest in Consolidated Funds: 125,246 — 7,100 132,346
Change in cash and cash equivalents held at Consolidated Funds — (568,394) 563,599 (4,795)
Net cash provided by (used in) operating activities 262,732 (622,463) 583,881 224,150
Cash flows from investing activities:
Purchase of furniture, equipment and leasehold improvements, net of disposals (8,524) — — (8,524)
Acquisitions, net of cash acquired (301,624) — — (301,624)
Net cash used in investing activities (310,148) — — (310,148)
Cash flows from financing activities:
Proceeds from Credit Facility 860,000 — — 860,000
Proceeds from senior notes 488,915 — — 488,915
Repayments of Credit Facility (905,000) — — (905,000)
Dividends and distributions (211,886) — — (211,886)
Stock option exercises 3,347 — — 3,347
Taxes paid related to net share settlement of equity awards (183,027) — — (183,027)
Other financing activities 856 — — 856
Allocable to redeemable and non-controlling interests in Consolidated Funds:
Contributions from redeemable and non-controlling interests in Consolidated Funds — 104,803 (21,873) 82,930
Distributions to non-controlling interests in Consolidated Funds — (38,931) 3,973 (34,958)
Borrowings under loan obligations by Consolidated Funds — 49,317 — 49,317
Repayments under loan obligations by Consolidated Funds — (57,457) — (57,457)
Net cash provided by financing activities 53,205 57,732 (17,900) 93,037
Effect of exchange rate changes (3,402) (1,250) — (4,652)
Net change in cash and cash equivalents 2,387 (565,981) 565,981 2,387
Cash and cash equivalents, beginning of period 343,655 1,049,191 (1,049,191) 343,655
Cash and cash equivalents, end of period $ 346,042 $ 483,210 $ (483,210) $ 346,042
Supplemental disclosure of non-cash financing activities:
Issuance of Class A common stock in connection with acquisitions $ 12,835 $ — $ — $ 12,835


	As of December 31, 2021
	Consolidated Company Entities		Consolidated Funds		Eliminations		Consolidated
Assets
Cash and cash equivalents	$	343,655	$	—	$	—	$	343,655
Investments (includes $2,998,421 of accrued carried interest)	4,271,836		—		(587,572)		3,684,264
Due from affiliates	696,963		—		(26,580)		670,383
Other assets	338,685		—		(3,930)		334,755
Right-of-use operating lease assets	167,652		—		—		167,652
Intangible assets, net	1,422,818		—		—		1,422,818
Goodwill	787,972		—		—		787,972
Assets of Consolidated Funds
Cash and cash equivalents	—		1,049,191		—		1,049,191
U.S. Treasury securities, at fair value	—		1,000,285		—		1,000,285
Investments, at fair value	—		11,812,093		4,300		11,816,393
Due from affiliates	—		16,761		(9,527)		7,234
Receivable for securities sold	—		281,132		—		281,132
Other assets	—		39,430		—		39,430
Total assets	$	8,029,581	$	14,198,892	$	(623,309)	$	21,605,164
Liabilities
Accounts payable, accrued expenses and other liabilities	$	289,200	$	—	$	(9,527)	$	279,673
Accrued compensation	310,222		—		—		310,222
Due to affiliates	198,553		—		—		198,553
Performance related compensation payable	2,190,352		—		—		2,190,352
Debt obligations	1,503,709		—		—		1,503,709
Operating lease liabilities	205,075		—		—		205,075
Liabilities of Consolidated Funds
Accounts payable, accrued expenses and other liabilities	—		117,139		(13,881)		103,258
Due to affiliates	—		26,210		(26,210)		—
Payable for securities purchased	—		1,118,456		—		1,118,456
CLO loan obligations, at fair value	—		10,698,681		(41,020)		10,657,661
Fund borrowings	—		127,771		—		127,771
Total liabilities	4,697,111		12,088,257		(90,638)		16,694,730
Commitments and contingencies
Redeemable interest in Consolidated Funds	—		1,000,000		—		1,000,000
Redeemable interest in Ares Operating Group entities	96,008		—		—		96,008
Non-controlling interest in Consolidated Funds	—		1,110,635		(519,183)		591,452
Non-controlling interest in Ares Operating Group entities	1,403,255		—		(5,508)		1,397,747
Stockholders' Equity

Class A common stock, $0.01 par value, 1,500,000,000 shares authorized (168,351,305 shares issued and outstanding)	1,684		—		—		1,684
Non-voting common stock, $0.01 par value, 500,000,000 shares authorized (3,489,911 shares issued and outstanding)	35		—		—		35
Class B common stock, $0.01 par value, 1,000 shares authorized (1,000 shares issued and outstanding)	—		—		—		—
Class C common stock, $0.01 par value, 499,999,000 shares authorized (118,609,332 shares issued and outstanding)	1,186		—		—		1,186
Additional paid-in-capital	1,921,539		—		(7,980)		1,913,559
Accumulated deficit	(89,382)		—		—		(89,382)
Accumulated other comprehensive loss, net of tax	(1,855)		—		—		(1,855)
Total stockholders' equity	1,833,207		—		(7,980)		1,825,227
Total equity	3,236,462		1,110,635		(532,671)		3,814,426
Total liabilities, redeemable interest, non-controlling interests and equity	$	8,029,581	$	14,198,892	$	(623,309)	$	21,605,164

Table of Contents

Ares Management Corporation

Notes to the Unaudited Condensed Consolidated Financial Statements (Continued)

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

Three months ended March 31, 2021
Consolidated
Company
Entities Consolidated
Funds Eliminations Consolidated
Cash flows from operating activities:
Net income $ 114,452 $ 49,852 $ 6 $ 164,310
Adjustments to reconcile net income to net cash provided by (used in) operating activities: 34,292 — 9,992 44,284
Adjustments to reconcile net income to net cash provided by (used in) operating activities allocable to non-controlling interests in Consolidated Funds: — (1,208,767) 587 (1,208,180)
Cash flows due to changes in operating assets and liabilities (11,336) — 4,292 (7,044)
Cash flows due to changes in operating assets and liabilities allocable to non-controlling interest in Consolidated Funds — 314,126 (48,614) 265,512
Net cash provided by (used in) operating activities 137,408 (844,789) (33,737) (741,118)
Cash flows from investing activities:
Purchase of furniture, equipment and leasehold improvements, net of disposals (3,284) — — (3,284)
Net cash used in investing activities (3,284) — — (3,284)
Cash flows from financing activities:
Proceeds from Credit Facility 168,000 — — 168,000
Dividends and distributions (141,768) — — (141,768)
Series A Preferred Stock dividends (5,425) — — (5,425)
Taxes paid related to net share settlement of equity awards (84,590) — — (84,590)
Other financing activities 341 — — 341
Allocable to non-controlling interests in Consolidated Funds:
Contributions from non-controlling interests in Consolidated Funds — 955,083 (13,148) 941,935
Distributions to non-controlling interests in Consolidated Funds — (50,822) 11,993 (38,829)
Borrowings under loan obligations by Consolidated Funds — 7,000 — 7,000
Repayments under loan obligations by Consolidated Funds — (29,453) — (29,453)
Net cash provided by (used in) financing activities (63,442) 881,808 (1,155) 817,211
Effect of exchange rate changes (622) (2,127) — (2,749)
Net change in cash and cash equivalents 70,060 34,892 (34,892) 70,060
Cash and cash equivalents, beginning of period 539,812 522,377 (522,377) 539,812
Cash and cash equivalents, end of period $ 609,872 $ 557,269 $ (557,269) $ 609,872


	Three months ended September 30, 2022
	Consolidated Company Entities		Consolidated Funds		Eliminations		Consolidated
Revenues
Management fees	$	560,140	$	—	$	(11,682)	$	548,458
Carried interest allocation	192,186		—		—		192,186
Incentive fees	8,882		—		—		8,882
Principal investment income	9,438		—		2,144		11,582
Administrative, transaction and other fees	44,128		—		(3,946)		40,182
Total revenues	814,774		—		(13,484)		801,290
Expenses
Compensation and benefits	425,419		—		—		425,419
Performance related compensation	142,934		—		—		142,934
General, administrative and other expense	319,366		—		(14)		319,352
Expenses of the Consolidated Funds	—		22,129		(11,732)		10,397
Total expenses	887,719		22,129		(11,746)		898,102
Other income (expense)
Net realized and unrealized gains on investments	5,433		—		(1,002)		4,431
Interest and dividend income	5,820		—		(3,734)		2,086
Interest expense	(18,307)		—		—		(18,307)
Other income, net	3,132		—		(531)		2,601
Net realized and unrealized losses on investments of the Consolidated Funds	—		(3,760)		3,730		(30)
Interest and other income of the Consolidated Funds	—		157,884		531		158,415
Interest expense of the Consolidated Funds	—		(115,690)		2,928		(112,762)
Total other income (expense), net	(3,922)		38,434		1,922		36,434
Income (loss) before taxes	(76,867)		16,305		184		(60,378)
Income tax expense (benefit)	(11,748)		149		—		(11,599)
Net income (loss)	(65,119)		16,156		184		(48,779)
Less: Net income attributable to non-controlling interests in Consolidated Funds	—		16,156		184		16,340
Net loss attributable to Ares Operating Group entities	(65,119)		—		—		(65,119)
Less: Net income attributable to redeemable interest in Ares Operating Group entities	93		—		—		93
Less: Net loss attributable to non-controlling interests in Ares Operating Group entities	(29,666)		—		—		(29,666)



Net loss attributable to Ares Management Corporation Class A and non-voting common stockholders	$	(35,546)	$	—	$	—	$	(35,546)

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Ares Management Corporation

Notes to the Unaudited Condensed Consolidated Financial Statements (Continued)

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


	Three months ended September 30, 2021
	Consolidated Company Entities		Consolidated Funds		Eliminations		Consolidated
Revenues
Management fees	$	459,313	$	—	$	(11,051)	$	448,262
Carried interest allocation	460,651		—		—		460,651
Incentive fees	696		—		—		696
Principal investment income	20,719		—		(6,469)		14,250
Administrative, transaction and other fees	29,124		—		(4,264)		24,860
Total revenues	970,503		—		(21,784)		948,719
Expenses
Compensation and benefits	335,569		—		—		335,569
Performance related compensation	331,141		—		—		331,141
General, administrative and other expense	134,453		—		—		134,453
Expenses of the Consolidated Funds	—		23,206		(11,102)		12,104
Total expenses	801,163		23,206		(11,102)		813,267
Other income (expense)
Net realized and unrealized gains on investments	2,759		—		5,575		8,334
Interest and dividend income	2,702		—		(1,326)		1,376
Interest expense	(11,523)		—		—		(11,523)
Other income, net	36,338		—		316		36,654
Net realized and unrealized gains on investments of the Consolidated Funds	—		36,695		(2,450)		34,245
Interest and other income of the Consolidated Funds	—		104,344		(316)		104,028
Interest expense of the Consolidated Funds	—		(64,752)		3,174		(61,578)
Total other income, net	30,276		76,287		4,973		111,536
Income before taxes	199,616		53,081		(5,709)		246,988
Income tax expense	30,273		2		—		30,275
Net income	169,343		53,079		(5,709)		216,713
Less: Net income attributable to non-controlling interests in Consolidated Funds	—		53,079		(5,709)		47,370
Net income attributable to Ares Operating Group entities	169,343		—		—		169,343
Less: Net income attributable to redeemable interest in Ares Operating Group entities	324		—		—		324
Less: Net income attributable to non-controlling interests in Ares Operating Group entities	84,293		—		—		84,293



Net income attributable to Ares Management Corporation Class A common stockholders	$	84,726	$	—	$	—	$	84,726

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Ares Management Corporation

Notes to the Unaudited Condensed Consolidated Financial Statements (Continued)

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


	Nine months ended September 30, 2022
	Consolidated Company Entities		Consolidated Funds		Eliminations		Consolidated
Revenues
Management fees	$	1,580,873	$	—	$	(34,523)	$	1,546,350
Carried interest allocation	417,779		—		—		417,779
Incentive fees	30,013		—		(34)		29,979
Principal investment income	37,421		—		(21,900)		15,521
Administrative, transaction and other fees	121,120		—		(13,030)		108,090
Total revenues	2,187,206		—		(69,487)		2,117,719
Expenses
Compensation and benefits	1,155,031		—		—		1,155,031
Performance related compensation	316,818		—		—		316,818
General, administrative and other expense	562,682		—		(241)		562,441
Expenses of the Consolidated Funds	—		63,071		(34,707)		28,364
Total expenses	2,034,531		63,071		(34,948)		2,062,654
Other income (expense)
Net realized and unrealized gains (losses) on investments	(9,926)		—		20,691		10,765
Interest and dividend income	17,605		—		(12,541)		5,064
Interest expense	(51,174)		—		—		(51,174)
Other income, net	9,920		—		274		10,194
Net realized and unrealized gains on investments of the Consolidated Funds	—		12,445		(4,414)		8,031
Interest and other income of the Consolidated Funds	—		396,354		(274)		396,080
Interest expense of the Consolidated Funds	—		(275,947)		9,919		(266,028)
Total other income (expense)	(33,575)		132,852		13,655		112,932
Income before taxes	119,100		69,781		(20,884)		167,997
Income tax expense	22,075		197		—		22,272
Net income	97,025		69,584		(20,884)		145,725
Less: Net income attributable to non-controlling interests in Consolidated Funds	—		69,584		(20,884)		48,700
Net income attributable to Ares Operating Group entities	97,025		—		—		97,025
Less: Net income attributable to redeemable interest in Ares Operating Group entities	35		—		—		35
Less: Net income attributable to non-controlling interests in Ares Operating Group entities	46,942		—		—		46,942



Net income attributable to Ares Management Corporation Class A and non-voting common stockholders	$	50,048	$	—	$	—	$	50,048

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Ares Management Corporation

Notes to the Unaudited Condensed Consolidated Financial Statements (Continued)

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


	Nine months ended September 30, 2021
	Consolidated Company Entities		Consolidated Funds		Eliminations		Consolidated
Revenues
Management fees	$	1,169,237	$	—	$	(33,416)	$	1,135,821
Carried interest allocation	1,610,707		—		—		1,610,707
Incentive fees	20,948		—		(1,528)		19,420
Principal investment income	96,448		—		(9,971)		86,477
Administrative, transaction and other fees	62,658		—		(13,157)		49,501
Total revenues	2,959,998		—		(58,072)		2,901,926
Expenses
Compensation and benefits	837,108		—		—		837,108
Performance related compensation	1,208,954		—		—		1,208,954
General, administrative and other expense	285,471		—		—		285,471
Expenses of the Consolidated Funds	—		66,653		(35,078)		31,575
Total expenses	2,331,533		66,653		(35,078)		2,363,108
Other income (expense)
Net realized and unrealized gains on investments	10,602		—		8,142		18,744
Interest and dividend income	9,695		—		(2,877)		6,818
Interest expense	(25,125)		—		—		(25,125)
Other income, net	30,861		—		(175)		30,686
Net realized and unrealized gains on investments of the Consolidated Funds	—		46,541		(1,821)		44,720
Interest and other income of the Consolidated Funds	—		333,570		175		333,745
Interest expense of the Consolidated Funds	—		(201,916)		10,339		(191,577)
Total other income	26,033		178,195		13,783		218,011
Income before taxes	654,498		111,542		(9,211)		756,829
Income tax expense	104,411		76		—		104,487
Net income	550,087		111,466		(9,211)		652,342
Less: Net income attributable to non-controlling interests in Consolidated Funds	—		111,466		(9,211)		102,255
Net income attributable to Ares Operating Group entities	550,087		—		—		550,087
Less: Net income attributable to redeemable interest in Ares Operating Group entities	693		—		—		693
Less: Net income attributable to non-controlling interests in Ares Operating Group entities	264,646		—		—		264,646
Net income attributable to Ares Management Corporation	284,748		—		—		284,748
Less: Series A Preferred Stock dividends paid	10,850		—		—		10,850
Less: Series A Preferred Stock redemption premium	11,239		—		—		11,239
Net income attributable to Ares Management Corporation Class A common stockholders	$	262,659	$	—	$	—	$	262,659

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Ares Management Corporation

Notes to the Unaudited Condensed Consolidated Financial Statements (Continued)

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


	Nine months ended September 30, 2022
	Consolidated Company Entities		Consolidated Funds		Eliminations		Consolidated
Cash flows from operating activities:
Net income	$	97,025	$	69,584	$	(20,884)	$	145,725

Adjustments to reconcile net income to net cash provided by operating activities	382,823		—		(61,873)		320,950








Adjustments to reconcile net income to net cash used in operating activities allocable to non-controlling interests in Consolidated Funds	—		(1,132,839)		4,414		(1,128,425)




Cash flows due to changes in operating assets and liabilities	160,957		—		152,692		313,649





Cash flows due to changes in operating assets and liabilities allocable to redeemable and non-controlling interest in Consolidated Funds	—		(427,022)		231,518		(195,504)




Net cash provided by (used in) operating activities	640,805		(1,490,277)		305,867		(543,605)
Cash flows from investing activities:
Purchase of furniture, equipment and leasehold improvements, net of disposals	(28,388)		—		—		(28,388)
Acquisitions, net of cash acquired	(301,658)		—		—		(301,658)
Net cash used in investing activities	(330,046)		—		—		(330,046)
Cash flows from financing activities:

Proceeds from Credit Facility	940,000		—		—		940,000
Proceeds from senior notes	488,915		—		—		488,915
Repayments of Credit Facility	(910,000)		—		—		(910,000)

Dividends and distributions	(608,220)		—		—		(608,220)



Stock option exercises	14,531		—		—		14,531
Taxes paid related to net share settlement of equity awards	(194,223)		—		—		(194,223)
Other financing activities	2,457		—		—		2,457
Allocable to redeemable and non-controlling interests in Consolidated Funds:
Contributions from redeemable and non-controlling interests in Consolidated Funds	—		362,752		(64,106)		298,646
Distributions to non-controlling interests in Consolidated Funds	—		(227,886)		123,454		(104,432)
Borrowings under loan obligations by Consolidated Funds	—		1,120,680		—		1,120,680
Repayments under loan obligations by Consolidated Funds	—		(121,273)		—		(121,273)
Net cash provided by (used in) financing activities	(266,540)		1,134,273		59,348		927,081
Effect of exchange rate changes	(26,374)		(9,211)		—		(35,585)
Net change in cash and cash equivalents	17,845		(365,215)		365,215		17,845
Cash and cash equivalents, beginning of period	343,655		1,049,191		(1,049,191)		343,655
Cash and cash equivalents, end of period	$	361,500	$	683,976	$	(683,976)	$	361,500
Supplemental disclosure of non-cash financing activities:
Issuance of Class A common stock in connection with acquisitions	$	12,835	$	—	$	—	$	12,835

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Ares Management Corporation

Notes to the Unaudited Condensed Consolidated Financial Statements (Continued)

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


	Nine months ended September 30, 2021
	Consolidated Company Entities		Consolidated Funds		Eliminations		Consolidated
Cash flows from operating activities:
Net income	$	550,087	$	111,466	$	(9,211)	$	652,342
Adjustments to reconcile net income to net cash provided by (used in) operating activities	(28,467)		—		99,600		71,133







Adjustments to reconcile net income to net cash used in operating activities allocable to non-controlling interests in Consolidated Funds	—		(1,697,529)		9,444		(1,688,085)





Cash flows due to changes in operating assets and liabilities	(153,361)		—		3,923		(149,438)





Cash flows due to changes in operating assets and liabilities allocable to non-controlling interest in Consolidated Funds	—		343,253		(1,072,956)		(729,703)




Net cash provided by (used in) operating activities	368,259		(1,242,810)		(969,200)		(1,843,751)
Cash flows from investing activities:
Purchase of furniture, equipment and leasehold improvements, net of disposals	(15,152)		—		—		(15,152)
Acquisitions, net of cash acquired	(1,057,426)		—		—		(1,057,426)
Net cash used in investing activities	(1,072,578)		—		—		(1,072,578)
Cash flows from financing activities:
Net proceeds from issuance of Class A and non-voting common stock	827,430		—		—		827,430
Proceeds from Credit Facility	468,000		—		—		468,000
Proceeds from subordinated notes	450,000		—		—		450,000

Repayments of Credit Facility	(318,000)		—		—		(318,000)
Dividends and distributions	(438,568)		—		—		(438,568)
Series A Preferred Stock dividends	(10,850)		—		—		(10,850)
Redemption of Series A Preferred Stock	(310,000)		—		—		(310,000)
Stock option exercises	27,409		—		—		27,409
Taxes paid related to net share settlement of equity awards	(221,287)		—		—		(221,287)
Other financing activities	1,976		—		—		1,976
Allocable to non-controlling interests in Consolidated Funds:
Contributions from non-controlling interests in Consolidated Funds	—		1,027,454		(107,788)		919,666
Distributions to non-controlling interests in Consolidated Funds	—		(102,701)		17,931		(84,770)
Borrowings under loan obligations by Consolidated Funds	—		1,456,887		—		1,456,887
Repayments under loan obligations by Consolidated Funds	—		(74,909)		—		(74,909)
Net cash provided by financing activities	476,110		2,306,731		(89,857)		2,692,984
Effect of exchange rate changes	(15,899)		(4,864)		—		(20,763)
Net change in cash and cash equivalents	(244,108)		1,059,057		(1,059,057)		(244,108)
Cash and cash equivalents, beginning of period	539,812		522,377		(522,377)		539,812
Cash and cash equivalents, end of period	$	295,704	$	1,581,434	$	(1,581,434)	$	295,704
Supplemental disclosure of non-cash financing activities
Issuance of AOG Units in connection with acquisitions	$	511,069	$	—	$	—	$	511,069

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Ares Management Corporation

Notes to the Unaudited Condensed Consolidated Financial Statements (Continued)

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

17. SUBSEQUENT EVENTS

The Company evaluated all events or transactions that occurred after ~~March 31,~~September 30, 2022 through the date the unaudited condensed consolidated financial statements were issued. During this period, the Company had the following material subsequent events that require disclosure:

In ~~April~~October 2022, the Company's board of directors declared a quarterly dividend of $0.61 per share of Class A and non-voting common stock payable on ~~June~~December 30, 2022 to common stockholders of record at the close of business on ~~June~~December 16, 2022.

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

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

The following discussion and analysis should be read in conjunction with the unaudited condensed consolidated financial statements of Ares Management Corporation and the related notes included in this Quarterly Report on Form 10-Q and the audited financial statements and the related notes included in the 2021 Annual Report on Form 10-K of Ares Management ~~Corporation and the related notes.~~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.

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,~~September 30, 2022, approximately ~~94%~~95% of our management fees were derived from perpetual capital vehicles and other 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 of operations, including the fair value of our AUM, are affected by a variety of factors, particularly in the United States and Western Europe, including conditions in the global financial markets and the economic and political environments.

~~The continued escalation of~~Global markets remained volatile during the ~~military~~third quarter, fueled by tightening monetary policies and geopolitical uncertainty, including the conflict ~~and humanitarian crisis~~ in Ukraine ~~rising commodity pressures,~~ and ~~persistent interest-rate volatility shifted sentiment to a broad risk-off environment during~~surrounding region. The outlook for future macroeconomic growth remained generally weak, with expectations of further softening of demand. Year-over-year inflation in the ~~first quarter of 2022.~~U.S. and Europe remained elevated and were further impacted by global supply chain issues and energy trade disruptions. Specifically, the ICE BAML High Yield Master II Index, a high yield bond index, ~~returned a negative 4.5%~~declined 0.7% in the ~~first~~third quarter of 2022 ~~as spreads widened amid higher interest rates,~~and 14.6% in the ~~Federal Reserve’s further indication of future interest rate hikes, and the Russia-Ukraine crisis’ effects on commodity inflation.~~year-to-date period. Meanwhile, the Credit Suisse Leveraged Loan Index (“CSLLI”), a leveraged loan index, returned ~~a negative 0.1% for~~1.2% in the ~~first~~third quarter ~~of 2022, as demand for floating rate instruments remained robust against~~and declined 3.3% in the ~~backdrop of rising interest rate risk.~~

year-to-date period.

In Europe, high yield ~~bond~~bonds and leveraged ~~loan spreads widened alongside~~loans performed similarly to their U.S. ~~counterparts amid a volatile~~counterparts. Increasing concerns of potential recession and ~~complex macroeconomic backdrop.~~inflationary pressures put downward pressure on the asset class in Europe. The ICE BAML European Currency High Yield Index ~~returned a negative 4.7%~~declined 0.9% in the quarter and 15.6% in the year-to-date period, while the Credit Suisse Western European Leveraged Loan Index returned ~~a negative 0.5% for~~0.8% in the quarter ~~as a result of signals from~~and declined 6.0% in the ~~European Central Bank and investor concerns and the risk-off sentiment in high yield gradually impacted the loan market as the conflict in Ukraine escalated during the quarter.~~year-to-date period.

The global equity markets ~~have experienced heightened volatility, ongoing supply chain issues, continued high inflation and growing expectations for tightening monetary conditions from global central banks. In~~broadly declined during the ~~U.S.,~~third quarter with the weakened macroeconomic environment. The S&P 500 Index ~~returned a negative 5.0% for~~declined 4.9% in the ~~quarter. Outside of~~quarter and 23.9% in the ~~U.S.,~~year-to-date period while the MSCI All Country World Index ex USA ~~Index returned a negative 5.4%~~declined 9.9% in the quarter and 26.5% for the ~~quarter.~~year-to-date period.

The private equity market started the first quarter of 2022 off strong as activity was buoyed by elevated valuations, a robust private equity secondary market and low interest rates. As the quarter progressed, the marketmarkets experienced heightened volatility that is expected to ~~stay, at least~~continue in the near-term. Continued asset selectivity, portfolio construction, portfolio diversification and a differentiated view to drive value creation are instrumental in delivering attractive returns to investors. Recent ~~events~~trends have had a more pronounced negative impact on ~~causing downturns in~~ certain industries, including ~~but not limited to~~ the energy ~~hospitality, travel,~~and retail ~~and restaurant~~ industries, which are industries in which some of our funds have made investments. As of ~~March 31,~~September 30, 2022, approximately 2% of our total AUM was invested in the energy sector (including oil and gas exploration and midstream investments) and approximately 2% in the retail sector.

The commercial real estate markets continued to be impacted by the macroeconomic environment, particularly the effect of rapidly rising interest rates on the asset class. Given the rise in interest rates by central banks globally, property valuations are beginning to show early signs of the cycle turning, with capitalization rate compressions waning and in certain cases yields widening. However, we believe some of these market trends will be offset by continued strong fundamentals, such as occupancy and rental rates, in certain property types, including multifamily and industrial. The FTSE EPRA/NAREIT

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2021 also marked a year of recovery for U.S. & European commercial real estate, however the start of 2022 has brought challenges particularly around inflation and rising interest rates. Higher inflation globally helped nominal real estate rent growth and values, although higher interest rates caused by the prospect of monetary tightening are likely to raise financing costs incrementally. The FTSE EPRA/NAREIT Developed Europe and the FTSE NAREIT All Equity REITs indices ~~returned a negative 5.5%~~declined 16.4% and ~~a negative 5.9%~~10.8%, respectively, for the ~~quarter.~~quarter and declined 39.4% and 27.9%, respectively, for the year-to-date period.

We believe our ~~portfolio is~~portfolios across all strategies are well positioned for ~~potential volatility caused by changes in rates.~~a rising interest rate environment. On a market value basis, approximately ~~91%~~90% of our debt assets and ~~63%~~59% of our total assets were floating rate instruments as of ~~March 31, 2022, which we believe helps mitigate volatility associated with changes in interest rates.~~September 30, 2022.

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.

Table of Contents

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

Credit
Group Private Equity Group Real Assets
Group Secondary Solutions Group Strategic Initiatives Total AUM
Balance at 12/31/2021 $ 192,710 $ 33,404 $ 45,919 $ 22,119 $ 11,623 $ 305,775
Acquisitions — — 8,184 199 — 8,383
Net new par/equity commitments 4,159 570 3,058 1,080 1,184 10,051
Net new debt commitments 2,340 — 1,105 — — 3,445
Capital reductions (397) (3) (262) — (5) (667)
Distributions (1,003) (383) (1,128) (575) (154) (3,243)
Redemptions (410) — (136) — — (546)
Change in fund value (476) (23) 1,787 645 (112) 1,821
Balance at 3/31/2022 $ 196,923 $ 33,565 $ 58,527 $ 23,468 $ 12,536 $ 325,019
Average AUM(1)
$ 194,818 $ 33,485 $ 56,315 $ 22,794 $ 12,081 $ 319,493
Credit
Group Private Equity Group Real Assets
Group Secondary Solutions Group Strategic Initiatives Total AUM
Balance at 12/31/2020 $ 145,472 $ 23,954 $ 18,293 $ — $ 9,261 $ 196,980
Net new par/equity commitments(2)
4,519 (21) 730 — 700 5,928
Net new debt commitments 2,543 — 1,880 — — 4,423
Capital reductions (545) (2) (232) — — (779)
Distributions (740) (582) (223) — (131) (1,676)
Redemptions (536) — — — — (536)
Change in fund value 403 2,024 327 — 64 2,818
Balance at 3/31/2021 $ 151,116 $ 25,373 $ 20,775 $ — $ 9,894 $ 207,158
Average AUM(3)
$ 148,296 $ 24,664 $ 19,536 $ — $ 9,578 $ 202,074
(1) Represents the average of beginning and ending balances except for the infrastructure debt funds within the Real Assets Group, which represents the average calculated using AUM on the date of the Infrastructure Debt Acquisition and the subsequent quarter-end.
(2) Reallocation of capital among the segments may occur for pools of capital with investment mandates in more than one investment strategy. This reallocation activity is presented within net new par/equity commitments and may result in balances presented to be negative.
(3) Represents the average of beginning and ending balances.


	Credit Group		Private Equity Group		Real Assets Group		Secondaries Group		Strategic Initiatives		Total AUM
Balance at 6/30/2022	$	201,911	$	33,412	$	62,577	$	23,892	$	12,521	$	334,313

Net new par/equity commitments	3,684		1,337		2,166		441		1,108		8,736
Net new debt commitments	3,702		—		404		—		1,372		5,478
Capital reductions	(547)		(2)		(224)		—		—		(773)
Distributions	(1,646)		(82)		(511)		(1,084)		(1,118)		(4,441)
Redemptions	(329)		—		(180)		—		—		(509)
Change in fund value	(2,295)		601		763		(460)		3		(1,388)
Balance at 9/30/2022	$	204,480	$	35,266	$	64,995	$	22,789	$	13,886	$	341,416


	Credit Group		Private Equity Group		Real Assets Group		Secondaries Group		Strategic Initiatives		Total AUM
Balance at 6/30/2021	$	167,587	$	26,910	$	23,547	$	19,476	$	10,366	$	247,886
Acquisitions	—		—		13,719		—		—		13,719
Net new par/equity commitments	9,050		1,653		2,401		1,130		213		14,447
Net new debt commitments	5,533		200		250		—		—		5,983
Capital reductions	(381)		(2)		(41)		—		(29)		(453)
Distributions	(944)		(1,133)		(1,065)		(535)		202		(3,475)
Redemptions	(267)		—		(28)		—		—		(295)
Change in fund value	655		1,334		1,452		672		84		4,197
Balance at 9/30/2021	$	181,233	$	28,962	$	40,235	$	20,743	$	10,836	$	282,009





	Credit Group		Private Equity Group		Real Assets Group		Secondaries Group		Strategic Initiatives		Total AUM
Balance at 12/31/2021	$	192,712	$	33,404	$	45,919	$	22,119	$	11,623	$	305,777
Acquisitions	—		—		8,184		199		—		8,383
Net new par/equity commitments	13,216		2,137		8,589		2,386		2,725		29,053
Net new debt commitments	10,225		—		2,953		—		1,372		14,550
Capital reductions	(1,001)		(206)		(521)		—		(5)		(1,733)
Distributions	(3,481)		(602)		(2,526)		(2,209)		(1,443)		(10,261)
Redemptions	(1,134)		—		(398)		—		—		(1,532)
Change in fund value	(6,057)		533		2,795		294		(386)		(2,821)
Balance at 9/30/2022	$	204,480	$	35,266	$	64,995	$	22,789	$	13,886	$	341,416


	Credit Group		Private Equity Group		Real Assets Group		Secondaries Group		Strategic Initiatives		Total AUM
Balance at 12/31/2020	$	145,472	$	23,954	$	18,293	$	—	$	9,261	$	196,980
Acquisitions	—		—		13,719		19,513		—		33,232
Net new par/equity commitments	24,999		1,704		5,337		1,231		1,393		34,664
Net new debt commitments	13,496		200		2,655		—		29		16,380
Capital reductions	(2,491)		(7)		(273)		—		(29)		(2,800)
Distributions	(2,504)		(2,827)		(2,062)		(659)		(178)		(8,230)
Redemptions	(1,242)		—		(35)		—		—		(1,277)
Change in fund value	3,503		5,938		2,601		658		360		13,060
Balance at 9/30/2021	$	181,233	$	28,962	$	40,235	$	20,743	$	10,836	$	282,009

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

AUM: ~~$325.0~~$341.4

AUM: ~~$207.2~~$282.0

FPAUM

Non-fee paying(1)

AUM not yet paying fees

~~Non-fee paying(1)~~

(1) Includes ~~$12.0~~$14.0 billion and ~~$9.1~~$8.5 billion of AUM of funds from which we indirectly earn management fees as of ~~March 31,~~September 30, 2022 and 2021, respectively and includes $3.4 billion and ~~$2.5~~$3.1 billion of non-fee paying AUM based on our general partner commitment as of ~~March 31,~~September 30, 2022 and 2021, respectively.

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

~~Table of Contents~~

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.

Table of Contents

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


	Credit Group		Private Equity Group		Real Assets Group		Secondaries Group		Strategic Initiatives		Total
Balance at 6/30/2022	$	129,723	$	17,691	$	39,231	$	17,554	$	7,092	$	211,291

Commitments	2,377		—		1,133		412		634		4,556
Subscriptions/deployment/increase in leverage	6,561		1,486		835		96		820		9,798
Capital reductions	(505)		—		—		—		(8)		(513)
Distributions	(1,657)		(206)		(566)		(221)		(935)		(3,585)
Redemptions	(471)		—		(180)		—		—		(651)
Change in fund value	(1,737)		(3)		(235)		(170)		(153)		(2,298)
Change in fee basis	—		(14)		3		49		—		38
Balance at 9/30/2022	$	134,291	$	18,954	$	40,221	$	17,720	$	7,450	$	218,636


	Credit Group		Private Equity Group		Real Assets Group		Secondaries Group		Strategic Initiatives		Total
Balance at 6/30/2021	$	99,588	$	15,007	$	15,542	$	16,927	$	6,621	$	153,685
Acquisitions	—		—		7,155		—		—		7,155
Commitments	2,864		1,427		1,647		278		233		6,449
Subscriptions/deployment/increase in leverage	6,095		576		1,464		7		379		8,521
Capital reductions	(335)		—		—		—		(121)		(456)
Distributions	(1,468)		(515)		(669)		(73)		(273)		(2,998)
Redemptions	(296)		—		(28)		—		—		(324)
Change in fund value	(46)		5		588		83		53		683
Change in fee basis	—		(6)		(5)		(37)		—		(48)
Balance at 9/30/2021	$	106,402	$	16,494	$	25,694	$	17,185	$	6,892	$	172,667



	Credit Group		Private Equity Group		Real Assets Group		Secondaries Group		Strategic Initiatives		Total
Balance at 12/31/2021	$	117,390	$	16,689	$	28,615	$	18,364	$	6,787	$	187,845
Acquisitions	—		—		4,855		131		—		4,986
Commitments	8,591		—		5,394		1,919		2,514		18,418
Subscriptions/deployment/increase in leverage	21,894		3,699		3,266		415		1,810		31,084
Capital reductions	(3,283)		—		(91)		—		(242)		(3,616)
Distributions	(4,212)		(1,182)		(1,829)		(1,081)		(1,518)		(9,822)
Redemptions	(1,344)		—		(408)		—		—		(1,752)
Change in fund value	(4,744)		(4)		1,243		749		(820)		(3,576)
Change in fee basis	(1)		(248)		(824)		(2,777)		(1,081)		(4,931)
Balance at 9/30/2022	$	134,291	$	18,954	$	40,221	$	17,720	$	7,450	$	218,636


	Credit Group		Private Equity Group		Real Assets Group		Secondaries Group		Strategic Initiatives		Total
Balance at 12/31/2020	$	88,017	$	17,493	$	13,931	$	—	$	6,596	$	126,037
Acquisitions	—		—		7,155		16,839		—		23,994
Commitments(1)	6,705		1,579		3,477		378		(66)		12,073
Subscriptions/deployment/increase in leverage	17,178		1,843		2,187		9		1,504		22,721
Capital reductions	(1,618)		—		(32)		—		(302)		(1,952)
Distributions	(3,783)		(1,661)		(1,244)		(73)		(952)		(7,713)
Redemptions	(1,298)		—		(35)		—		—		(1,333)
Change in fund value	1,201		5		567		81		112		1,966
Change in fee basis	—		(2,765)		(312)		(49)		—		(3,126)
Balance at 9/30/2021	$	106,402	$	16,494	$	25,694	$	17,185	$	6,892	$	172,667



(1) Reallocation of capital among the segments may occur for pools of capital with investment mandates in more than one investment strategy. This reallocation activity is presented within commitments and may result in balances presented to be negative.

Credit
Group Private Equity Group Real Assets
Group Secondary Solutions Group Strategic Initiatives Total
Balance at 12/31/2021 $ 117,390 $ 16,689 $ 28,615 $ 18,364 $ 6,787 $ 187,845
Acquisitions — — 4,855 131 — 4,986
Commitments 2,250 — 2,184 697 1,464 6,595
Subscriptions/deployment/increase in leverage 6,919 115 909 69 455 8,467
Capital reductions (2,585) — — — (11) (2,596)
Distributions (1,701) (446) (891) (472) (257) (3,767)
Redemptions (396) — (138) — — (534)
Change in fund value (441) — 1,418 738 (330) 1,385
Change in fee basis — (217) (825) (1,457) (836) (3,335)
Balance at 3/31/2022 $ 121,436 $ 16,141 $ 36,127 $ 18,070 $ 7,272 $ 199,046
Average FPAUM(1)
$ 119,415 $ 16,416 $ 34,800 $ 18,218 $ 7,030 $ 195,879
Credit
Group Private Equity Group Real Assets
Group Secondary Solutions Group Strategic Initiatives Total
Balance at 12/31/2020 $ 88,017 $ 17,493 $ 13,931 $ — $ 6,596 $ 126,037
Commitments(2)
1,585 79 496 — (231) 1,929
Subscriptions/deployment/increase in leverage 4,539 592 337 — 538 6,006
Capital reductions (837) — (32) — (1) (870)
Distributions (1,322) (576) (141) — (256) (2,295)
Redemptions (646) — — — — (646)
Change in fund value 279 (1) (92) — (20) 166
Change in fee basis — (2,739) — — — (2,739)
Balance at 3/31/2021 $ 91,615 $ 14,848 $ 14,499 $ — $ 6,626 $ 127,588
Average FPAUM(3)
$ 89,817 $ 16,171 $ 14,216 $ — $ 6,611 $ 126,815
(1) Represents the average of beginning and ending balances except for the infrastructure debt funds within the Real Assets Group, which represents the average calculated using AUM on the date of the Infrastructure Debt Acquisition and the subsequent quarter-end.
(2) Reallocation of capital among the segments may occur for pools of capital with investment mandates in more than one investment strategy. This reallocation activity is presented within commitments and may result in balances presented to be negative.
(3) Represents the average of beginning and ending balances.

Table of Contents

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

FPAUM: ~~$199.0~~$218.6

FPAUM: ~~$127.6~~$172.7

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 ~~$48.6~~$54.9 billion and ~~$24.8~~$38.3 billion from funds that primarily invest in illiquid strategies as of ~~March 31,~~September 30, 2022 and 2021, respectively. The underlying investments held in these funds are generally subject to less market volatility than investments held in liquid strategies.

~~Table of Contents~~

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.

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

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

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

Table of Contents

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

Credit

Private Equity

Real Assets

~~Secondary Solutions~~Secondaries

Strategic Initiatives

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

Credit

Private Equity

Real Assets

~~Secondary Solutions~~Secondaries

Strategic Initiatives

As of ~~March 31,~~September 30, 2022, AUM Not Yet Paying Fees includes ~~$58.2~~$45.8 billion of AUM available for future deployment which could generate approximately ~~$557.0~~$441.3 million in potential incremental annual management fees. As of ~~March 31,~~September 30, 2021, AUM Not Yet Paying Fees includes ~~$37.6~~$50.3 billion of AUM available for future deployment which could generate approximately ~~$395.7~~$488.7 million in potential incremental annual management fees.

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

Credit

Real Assets

Secondaries

Strategic Initiatives

As of ~~March 31,~~September 30, 2022, perpetual capital AUM of $88.9 billion included ~~75%~~76% from commingled funds and ~~25%~~24% from managed accounts. As of ~~March 31,~~September 30, 2021, perpetual capital AUM of $71.5 billion included ~~64%~~72% from commingled funds and ~~36%~~28% from managed accounts. As of September 30, 2022, perpetual capital IGAUM from which we will generate fee

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related performance revenues totaled $24.0 billion, composed of $10.2 billion from managed accounts within the Credit Group and $13.8 billion from commingled funds within the Real Assets Group.

Management Fees By Type

We view the duration of funds we manage as a metric to measure the stability of our future management fees. For the three months ended ~~March 31,~~September 30, 2022 and 2021, ~~94%~~95% and ~~95%~~94%, respectively, 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:

Long-Dated Funds(1)

Perpetual Capital - Commingled Funds

Perpetual Capital - Managed Accounts

Other

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

Fund Performance Metrics

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

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

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

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Consolidation and Deconsolidation of Ares Funds

Consolidated Funds represented approximately 4% of our AUM as of ~~March 31,~~September 30, 2022, 2% of our management fees and less than 1% of our carried interest and incentive fees for the ~~three~~nine months ended ~~March 31,~~September 30, 2022. As of ~~March 31,~~September 30, 2022, we consolidated 2325 CLOs and 10 private funds and one SPAC, and as of ~~March 31,~~September 30, 2021, we consolidated 2122 CLOs, ~~nine~~10 private funds and one SPAC.

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

The assets and liabilities of our Consolidated Funds are held within separate legal entities and, as a result, the liabilities of our Consolidated Funds are typically non-recourse to us. Generally, the consolidation of our Consolidated Funds has a significant gross-up effect on our assets, liabilities and cash flows but has no net effect on the net income attributable to us or our stockholders' equity, except where a reallocation of ownership occurs based on specific redemption or liquidation preference terms. 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 in our unaudited condensed consolidated financial statements. Redeemable interest in Consolidated Funds represent the shares issued by Ares Acquisition Corporation (“AAC”) that are redeemable for cash by the public shareholders in connection with AAC’s failure to complete a business combination or tender offer associated with stockholder approval provisions.

We generally deconsolidate funds and CLOs when we are no longer deemed to have a controlling interest in the entity. During the ~~three~~nine months ended ~~March 31,~~September 30, 2022, ~~and 2021,~~ we did not deconsolidate any entities. During the nine months ended September 30, 2021, we deconsolidated one CLO as a result of a significant change in ownership.

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 16. Consolidation” to our unaudited condensed consolidated financial statements included herein.

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Results of Operations

Consolidated Results of Operations

We consolidate funds and entities where we are deemed to hold a controlling financial interest. The Consolidated Funds are not necessarily the same entities in each year presented due to changes in ownership, changes in limited partners' or investor rights, and the creation and termination of funds and entities. The consolidation of these funds and entities had no effect on net income attributable to us for the periods presented. As such, we separate the analysis of the Consolidated Funds and evaluate that activity in total. The following table and discussion sets forth information regarding our consolidated results of operations ($ in thousands):

Three months ended March 31, Favorable (Unfavorable)
2022 2021 $ Change % Change
Revenues
Management fees $ 477,332 $ 320,273 $ 157,059 49 %
Carried interest allocation 178,289 297,535 (119,246) (40)
Incentive fees 16,422 2,820 13,602 NM
Principal investment income 8,326 25,100 (16,774) (67)
Administrative, transaction and other fees 34,630 12,660 21,970 174
Total revenues 714,999 658,388 56,611 9
Expenses
Compensation and benefits 357,243 231,850 (125,393) (54)
Performance related compensation 129,405 221,432 92,027 42
General, administrative and other expenses 120,523 67,656 (52,867) (78)
Expenses of Consolidated Funds 4,513 4,171 (342) (8)
Total expenses 611,684 525,109 (86,575) (16)
Other income (expense)
Net realized and unrealized gains on investments 8,109 5,433 2,676 49
Interest and dividend income 1,502 960 542 56
Interest expense (15,646) (6,695) (8,951) (134)
Other income (expense), net 1,784 (4,149) 5,933 NM
Net realized and unrealized gains on investments of Consolidated Funds 15,968 16,422 (454) (3)
Interest and other income of Consolidated Funds 120,290 115,839 4,451 4
Interest expense of Consolidated Funds (74,013) (71,025) (2,988) (4)
Total other income 57,994 56,785 1,209 2
Income before taxes 161,309 190,064 (28,755) (15)
Income tax expense 20,411 25,754 5,343 21
Net income 140,898 164,310 (23,412) (14)
Less: Net income attributable to non-controlling interests in Consolidated Funds 47,382 49,858 (2,476) (5)
Net income attributable to Ares Operating Group entities 93,516 114,452 (20,936) (18)
Less: Net income attributable to redeemable interest in Ares Operating Group entities 399 32 367 NM
Less: Net income attributable to non-controlling interests in Ares Operating Group entities 47,254 56,042 (8,788) (16)
Net income attributable to Ares Management Corporation 45,863 58,378 (12,515) (21)
Less: Series A Preferred Stock dividends paid — 5,425 (5,425) (100)
Net income attributable to Ares Management Corporation Class A and non-voting common stockholders $ 45,863 $ 52,953 (7,090) (13)



	Three months ended September 30,				Favorable (Unfavorable)			Nine months ended September 30,				Favorable (Unfavorable)
	2022		2021		$ Change		% Change	2022		2021		$ Change		% Change
Revenues
Management fees	$	548,458	$	448,262	$	100,196	22%	$	1,546,350	$	1,135,821	$	410,529	36%
Carried interest allocation	192,186		460,651		(268,465)		(58)	417,779		1,610,707		(1,192,928)		(74)
Incentive fees	8,882		696		8,186		NM	29,979		19,420		10,559		54
Principal investment income	11,582		14,250		(2,668)		(19)	15,521		86,477		(70,956)		(82)
Administrative, transaction and other fees	40,182		24,860		15,322		62	108,090		49,501		58,589		118
Total revenues	801,290		948,719		(147,429)		(16)	2,117,719		2,901,926		(784,207)		(27)
Expenses
Compensation and benefits	425,419		335,569		(89,850)		(27)	1,155,031		837,108		(317,923)		(38)
Performance related compensation	142,934		331,141		188,207		57	316,818		1,208,954		892,136		74
General, administrative and other expenses	319,352		134,453		(184,899)		(138)	562,441		285,471		(276,970)		(97)

Expenses of Consolidated Funds	10,397		12,104		1,707		14	28,364		31,575		3,211		10
Total expenses	898,102		813,267		(84,835)		(10)	2,062,654		2,363,108		300,454		13
Other income (expense)
Net realized and unrealized gains on investments	4,431		8,334		(3,903)		(47)	10,765		18,744		(7,979)		(43)
Interest and dividend income	2,086		1,376		710		52	5,064		6,818		(1,754)		(26)
Interest expense	(18,307)		(11,523)		(6,784)		(59)	(51,174)		(25,125)		(26,049)		(104)
Other income, net	2,601		36,654		(34,053)		(93)	10,194		30,686		(20,492)		(67)
Net realized and unrealized gains (losses) on investments of Consolidated Funds	(30)		34,245		(34,275)		NM	8,031		44,720		(36,689)		(82)
Interest and other income of Consolidated Funds	158,415		104,028		54,387		52	396,080		333,745		62,335		19
Interest expense of Consolidated Funds	(112,762)		(61,578)		(51,184)		(83)	(266,028)		(191,577)		(74,451)		(39)
Total other income, net	36,434		111,536		(75,102)		(67)	112,932		218,011		(105,079)		(48)
Income (loss) before taxes	(60,378)		246,988		(307,366)		NM	167,997		756,829		(588,832)		(78)
Income tax expense (benefit)	(11,599)		30,275		41,874		NM	22,272		104,487		82,215		79
Net income (loss)	(48,779)		216,713		(265,492)		NM	145,725		652,342		(506,617)		(78)

Less: Net income attributable to non-controlling interests in Consolidated Funds	16,340		47,370		(31,030)		(66)	48,700		102,255		(53,555)		(52)
Net income (loss) attributable to Ares Operating Group entities	(65,119)		169,343		(234,462)		NM	97,025		550,087		(453,062)		(82)
Less: Net income attributable to redeemable interest in Ares Operating Group entities	93		324		(231)		(71)	35		693		(658)		(95)
Less: Net income (loss) attributable to non-controlling interests in Ares Operating Group entities	(29,666)		84,293		(113,959)		NM	46,942		264,646		(217,704)		(82)
Net income (loss) attributable to Ares Management Corporation	(35,546)		84,726		(120,272)		NM	50,048		284,748		(234,700)		(82)
Less: Series A Preferred Stock dividends paid	—		—		—		—	—		10,850		(10,850)		(100)
Less: Series A Preferred Stock redemption premium	—		—		—		—	—		11,239		11,239		100
Net income (loss) attributable to Ares Management Corporation Class A and non-voting common stockholders	$	(35,546)	$	84,726	(120,272)		NM	$	50,048	$	262,659	(212,611)		(81)

NM - Not Meaningful

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Three and Nine Months Ended ~~March 31,~~September 30, 2022 Compared to Three and Nine Months Ended ~~March 31,~~September 30, 2021

Consolidated Results of Operations of the Company

Management Fees. Management fees increased by ~~$157.1~~$100.2 million, or ~~49%~~22%, for the three months ended ~~March 31,~~September 30, 2022 compared to the three months ended ~~March 31,~~September 30, 2021 and by $410.5 million, or 36%, for the nine months ended September 30, 2022 compared to the nine months ended September 30, 2021.The increase was primarily driven by higher FPAUM from capital deployment in direct lending funds. ~~Management~~The Landmark Acquisition, which was completed on June 2, 2021, contributed additional fees ~~also increased by $44.5~~of $80.1 million ~~$27.3 million and $5.0 million in connection with~~for the ~~Landmark Acquisition,~~nine months ended September 30, 2022 compared to the nine months ended September 30, 2021. Funds from the Black Creek Acquisition, which was completed on July 1, 2021, contributed additional fees of $17.1 million and $76.9 million for the three and nine months ended September 30, 2022, respectively, compared to the three and nine months ended September 30, 2021 primarily driven by additional capital raised in the non-traded REITs and also fees generated for the full period for the nine months ended September 30, 2022. The Infrastructure Debt Acquisition, which was completed on February 10, 2022, contributed additional fees of $10.7 million and $25.3 million for the three and nine months ended September 30, 2022, respectively. 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. Carried interest allocation decreased by ~~$119.2~~$268.5 million, or ~~40%~~58%, for the three months ended ~~March 31,~~September 30, 2022 compared to the three months ended ~~March 31,~~September 30, 2021 and by $1,192.9 million, or 74%, for the nine months ended September 30, 2022 compared to the nine months ended September 30, 2021. The activity was principally composed of the following ($ in millions):


		Three months ended March 31, 2022		Primary Drivers	Three months ended March 31, 2021		Primary Drivers		Three months ended September 30, 2022		Primary Drivers	Three months ended September 30, 2021		Primary Drivers
Credit funds	Credit funds	$	74.3	Primarily from four direct lending funds and one alternative credit fund with $18.9 billion of IGAUM generating returns in excess of their hurdle rates. Ares Private Credit Solutions, L.P. ("PCS"), Ares Capital Europe IV, L.P. (“ACE IV”) and Ares Capital Europe V, L.P. (“ACE V”) generated carried interest allocation of $10.6 million, $9.6 million and $20.4 million, respectively. The carried interest allocation generated by these funds was driven by net investment income on an increasing invested capital base. Ares Capital Europe III, L.P. (“ACE III”) generated carried interest allocation of $6.5 million primarily driven by net investment income during the period. In addition, Ares Pathfinder Fund, L.P. (“Pathfinder”) generated carried interest allocation of $14.3 million that was driven by market appreciation of various investments.	$	85.6	Primarily from four direct lending funds and one alternative credit fund with $11.7 billion of IGAUM generating returns in excess of their hurdle rates, primarily consisting of: $15.5 million from PCS, $27.9 million from ACE IV and $12.0 million from Pathfinder. The carried interest allocation generated by these funds was driven by net investment income on an increasing invested capital base. In addition, ACE III generated carried interest allocation of $9.5 million primarily driven by net investment income during the period.	Credit funds	$	43.0	Primarily from two direct lending funds with $13.3 billion of IGAUM generating returns in excess of their hurdle rates. Ares Capital Europe V L.P. (“ACE V”) generated $17.6 million of carried interest allocation driven by net investment income on an increasing invested capital base. Ares Capital Europe IV, L.P. (“ACE IV”) generated carried interest allocation of $12.5 million, driven by net investment income during the period.	$	92.6	Primarily from four direct lending funds and one alternative credit fund with $16.1 billion of IGAUM generating returns in excess of their hurdle rates. Ares Private Credit Solutions, L.P. (“PCS”) and ACE IV generated carried interest allocation of $11.7 million and $27.5 million, respectively. ACE V also generated $18.0 million of carried interest allocation. The carried interest allocation generated by these funds was driven by net investment income on an increasing invested capital base. Ares Capital Europe III (“ACE III”) generated carried interest allocation of $10.5 million driven by net investment income during the period. Ares Pathfinder Fund, L.P. (“Pathfinder”) generated carried interest allocation of $16.0 million that was driven by market appreciation of various investments.
Private equity funds	Private equity funds	(3.2)		Market depreciation across several investments that led to the reversal of unrealized carried interest allocation of $51.6 million for Ares Corporate Opportunities Fund IV, L.P. (“ACOF IV”) primarily due to market depreciation of its investment in the AZEK Company (“AZEK”) driven by global equity market volatility. The market depreciation was partially offset by market appreciation across several portfolio company investments, primarily operating in services, technology, retail and healthcare industries that generated carried interest allocation of $17.0 million from Ares Corporate Opportunities Fund V, L.P. (“ACOF V”), $21.0 million from Ares Special Opportunities Fund, L.P. (“ASOF”) and $11.3 million from Ares Corporate Opportunities Fund VI, L.P. (“ACOF VI”).	183.6		ACOF IV generated carried interest allocation of $105.8 million primarily due to market appreciation of its investment in AZEK following its initial public offering. In addition, market appreciation across several investments generated carried interest allocation of $43.3 million from ASOF and $18.4 million from ACOF VI.	Private equity funds	130.4		Appreciation across several portfolio company investments, driven by improving operating performance metrics from portfolio companies that primarily operate in industries such as retail, healthcare and energy, generated carried interest allocation of $45.1 million from Ares Corporate Opportunities Fund V, L.P. (“ACOF V”), $20.4 million from Ares Corporate Opportunities Fund VI, L.P. (“ACOF VI”), $28.0 million from Ares Special Situations Fund IV, L.P. (“SSF IV”) and $35.6 million from Ares Special Opportunities Fund, L.P. (“ASOF”).	235.4		Market appreciation across several portfolio company investments, primarily operating in the services and technology, retail and healthcare industries, generated carried interest allocation of $141.5 million from ACOF V, $72.5 million from ASOF and $16.9 million from ACOF VI. Market depreciation across several investments led to a reversal of carried interest allocation for Ares Corporate Opportunities Fund IV, L.P. (“ACOF IV”) of $6.9 million, primarily due to a lower stock price for AZEK.
Real assets funds	Real assets funds	54.5		Market appreciation from properties within real estate equity funds, primarily driven by gains from several industrial and multifamily assets, generated carried interest allocation of $16.8 million from Ares US Real Estate Opportunity Fund III, L.P. (“AREOF III”), $9.7 million from US Real Estate Fund VIII, L.P. (“US VIII”), $16.7 million from US Real Estate Fund IX, L.P. ("US IX") and $13.6 million from four real estate equity funds. The market appreciation was partially offset by market depreciation that led to the reversal of unrealized carried interest allocation of $15.7 million from Ares Energy Investors Fund V, L.P. (“EIF V”) primarily due to lower valuations in certain investments due to volatility in the energy markets.	28.0		Market appreciation from properties within real estate equity funds, primarily driven by industrial and multifamily assets, generated carried interest allocation of $9.2 million from US IX and $8.1 million from US VIII.	Real assets funds	33.7		Ares Climate Infrastructure Partners, L.P. (“ACIP”) and related vehicles and Ares Energy Investors Fund V, L.P. (“EIF V”) generated carried interest allocation of $30.0 million and $29.8 million, respectively, due to market appreciation of certain investments. Appreciation from properties within Ares U.S. Real Estate Fund VIII, L.P. (“US VIII”), driven by increasing operating income primarily from industrial and multifamily investments, generated carried interest allocation of $3.5 million. In addition, realized gains from the sale of properties generated carried interest allocation of $6.4 million from Ares U.S. Real Estate Opportunity Fund III, L.P. (“AREOF III”). The activity was partially offset by the reversal of unrealized carried interest of $32.2 million from Ares European Real Estate Fund V, L.P. (“EF V”), driven by a lower stock price for one of its publicly traded investments, and $5.7 million from Ares European Real Estate Fund IV, L.P. (“EF IV”) due to lower valuations of certain properties.	95.4		Market appreciation from properties within real estate equity funds, primarily driven by gains generated across several industrial and multifamily assets, generated carried interest allocation of $11.5 million from US VIII, $35.8 million from Ares U.S. Real Estate Fund IX, L.P (“US IX”), $12.7 million from AREOF III, $11.0 million from EF IV and $13.8 million from EF V. Market depreciation across several investments led to a reversal of carried interest allocation for EIF V of $7.1 million primarily due to a decrease in value of certain energy investments.
Secondary solutions funds		52.7		Market appreciation of certain investments held in Landmark Equity Partners XVI, L.P. (“LEP XVI”) and Landmark Real Estate Partners VIII, L.P. (“LREP VIII”) that generated carried interest allocation of $15.8 million and $24.4 million, respectively.	—		N/A
Secondaries funds								Secondaries funds	(15.0)		Depreciation across several investments in Landmark Equity Partners XVI, L.P. (“LEP XVI”), primarily driven by the impact of foreign exchange revaluations on underlying limited partnership interests, led to the reversal of unrealized carried interest of $20.7 million, partially offset by market appreciation of certain investments in Landmark Real Estate Partners VIII, L.P. (“LREP VIII”) that generated carried interest allocation of $11.6 million.	37.7		Market appreciation of certain investments held in LEP XVI and LREP VIII that generated carried interest allocation of $14.1 million and $17.3 million, respectively.
Strategic initiatives funds	Strategic initiatives funds	—		N/A	0.3		Market appreciation of investments in an Asian secured lending fund.	Strategic initiatives funds	0.1		Carried interest allocation generated from Ares SSG Secured Lending Opportunities III, L.P. ("SLO III") primarily driven by higher net investment income.	(0.4)		Reversal driven by the market influence of residential housing lending in Asia on certain investments held in SLO III.
Carried interest allocation	Carried interest allocation	$	178.3		$	297.5		Carried interest allocation	$	192.2		$	460.7

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	Nine months ended September 30, 2022		Primary Drivers	Nine months ended September 30, 2021		Primary Drivers
Credit funds	$	134.5	Primarily from four direct lending funds and one alternative credit fund with $19.7 billion of IGAUM generating returns in excess of their hurdle rates. ACE V and Pathfinder generated carried interest allocation of $53.8 million and $25.9 million, respectively, driven by net investment income on an increasing invested capital base. ACE IV, ACE III and PCS generated carried interest allocation of $32.8 million, $10.2 million and $10.2 million, respectively, primarily driven by net investment income during the period.	$	292.8	Primarily from four direct lending funds and one alternative credit fund with $16.1 billion of IGAUM generating returns in excess of their hurdle rates. PCS and ACE IV generated carried interest allocation of $45.3 million and $84.7 million, respectively. ACE V also generated carried interest allocation of $32.5 million. The carried interest allocation generated by these funds was driven by net investment income on an increasing invested capital base. ACE III generated carried interest allocation of $36.4 million primarily driven by net investment income during the period. In addition, Pathfinder generated carried interest allocation of $43.3 million that was driven by market appreciation of various investments.
Private equity funds	127.7		Appreciation across several portfolio company investments, driven by improving operating performance metrics from portfolio companies that primarily operate in industries such as services, technology, retail, healthcare and energy, generated carried interest allocation of $84.8 million from ACOF V, $51.3 million from ACOF VI, $23.6 million from SSF IV and $39.3 million from ASOF. The appreciation was partially offset by the reversal of unrealized carried interest allocation of $24.5 million and $58.6 million from Ares Corporate Opportunities Fund III, L.P. (“ACOF III”) and ACOF IV, respectively, primarily driven by lower stock prices for certain publicly traded investments.	982.6		ACOF IV generated carried interest allocation of $171.1 million primarily due to market appreciation of its investment in AZEK driven by its higher stock price. In addition, market appreciation across several portfolio company investments, primarily operating in the services and technology, retail and healthcare industries, generated carried interest allocation of $532.2 million from ACOF V, $192.4 million from ASOF and $63.9 million from ACOF VI.
Real assets funds	110.8		ACIP and related vehicles and EIF V generated carried interest allocation of $34.1 million and $24.4 million, respectively, due to market appreciation of certain investments. Appreciation from properties within real estate equity funds, driven by increasing operating income primarily from industrial and multifamily investments, generated carried interest allocation of $17.6 million from US IX, $15.7 million from US VIII and $9.4 million from Ares U.S. Real Estate Fund X, L.P. (“US X”). In addition, realized gains from the sale of properties generated carried interest allocation of $29.7 million from AREOF III. The activity was partially offset by the reversal of unrealized carried interest of $42.2 million from EF V, driven by a lower stock price for one of its publicly traded investments.	236.3		Market appreciation from properties within real estate equity funds, primarily driven by gains generated across several industrial and multifamily assets, generated carried interest allocation of $33.1 million from US VIII, $61.6 million from US IX, $17.5 million from AREOF III, $10.9 million from EF IV and $61.3 million from EF V.
Secondaries funds	44.6		Market appreciation of certain investments held in LREP VIII that generated carried interest allocation of $37.8 million.	98.9		Market appreciation of certain investments held in LEP XVI and LREP VIII that generated carried interest allocation of $54.6 million and $26.1 million, respectively.
Strategic initiatives funds	0.2		Carried interest allocation generated from SLO III primarily driven by higher net investment income.	0.1		Market appreciation of certain investments held in SLO III.
Carried interest allocation	$	417.8		$	1,610.7

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Incentive Fees. Incentive fees increased by ~~$13.6 million to $16.4~~$8.2 million for the three months ended ~~March 31,~~September 30, 2022 compared to the three months ended ~~March 31,~~September 30, 2021 and by $10.6 million, or 54%, for the nine months ended September 30, 2022 compared to the nine months ended September 30, 2021. The activity was principally composed of the following ($ in millions):


		Three months ended March 31, 2022		Primary Drivers	Three months ended March 31, 2021		Primary Drivers		Three months ended September 30, 2022		Primary Drivers	Three months ended September 30, 2021		Primary Drivers
Credit funds	Credit funds	$	15.4	Incentive fees that were recognized during the period from three direct lending funds and one alternative credit fund.	$	2.1	Incentive fees that crystallized during the period from two direct lending funds.	Credit funds	$	0.1	Incentive fees generated from a U.S. CLO.	$	0.1	Incentive fees generated from one alternative credit fund.
Real assets funds	Real assets funds	1.0		Incentive fees generated from an industrial real estate fund and ACRE.	0.7		Incentive fees generated from ACRE.	Real assets funds	8.6		Incentive fees generated from an industrial real estate fund and ACRE.	0.6		Incentive fees generated from ACRE.
Secondaries funds								Secondaries funds	0.2		Incentive fees generated from APMF.	—		N/A
Incentive fees	Incentive fees	$	16.4		$	2.8		Incentive fees	$	8.9		$	0.7

									Nine months ended September 30, 2022		Primary Drivers	Nine months ended September 30, 2021		Primary Drivers
Credit funds								Credit funds	$	15.9	Incentive fees generated from three direct lending funds and one alternative credit fund.	$	17.5	Incentive fees generated from one alternative credit fund and one CLO.
Real assets funds								Real assets funds	13.5		Incentive fees generated from an industrial real estate fund and ACRE.	1.9		Incentive fees generated from ACRE.
Secondaries funds								Secondaries funds	0.6		Incentive fees generated from a private equity secondaries fund and APMF.	—		N/A
Incentive fees								Incentive fees	$	30.0		$	19.4

Principal Investment Income. Principal investment income decreased by ~~$16.8~~$2.7 million, or ~~67%~~19%, for the three months ended ~~March 31,~~September 30, 2022 compared to the three months ended ~~March 31,~~September 30, 2021 and decreased by $71.0 million, or 82%, for the nine months ended September 30, 2022 compared to the nine months ended September 30, 2021. The activity for the three and nine months ended ~~March 31,~~September 30, 2022 was primarily driven by increasing operating income from underlying properties associated with funds in our U.S. real estate equity and real estate secondaries strategies. The activity for the three months ended March 31, 2022 was also driven by marketdue to appreciation of various investments across funds in our infrastructure opportunities and special opportunities strategies. The activity for the nine months ended September 30, 2022 also included dividend income from various investments across funds in our U.S. and European direct lending strategies and realizations from the sale of underlying properties held by funds in our U.S. real estate equity strategy.

The activity for the three and nine months ended September 30, 2021 was driven by market appreciation of several investments in funds within our private equity secondaries, real estate secondaries and special opportunities strategies. The activity for the ~~three~~nine months ended ~~March 31,~~September 30, 2021 ~~was primarily driven by~~also included market appreciation of ~~ACOF IV’s investment in AZEK and of~~ various investments ~~in ACOF III~~within our corporate private equity extended value fund and ACOF VI.

Administrative, Transaction and Other Fees. Administrative, transaction and other fees increased by ~~$22.0~~$15.3 million, or ~~174%~~62%, for the three months ended ~~March 31,~~September 30, 2022 compared to the three months ended ~~March 31,~~September 30, 2021 and by $58.6 million, or 118%, for the nine months ended September 30, 2022 compared to the nine months ended September 30, 2021. The ~~increase was~~increases were primarily due to ~~new fee streams following the completion of the Black Creek Acquisition. Black Creek serves as an integrated property development and real estate investment management specialist, generating various~~higher property-related fees, such as acquisition, development and property management, and the distribution of fund shares in our non-traded REITs. These fees collectively ~~contributed $13.7~~increased by $13.6 million and $41.2 million for the three and nine months ended ~~March 31, 2022. We also earn fees from the Black Creek funds that we manage for administrative services, which contributed $7.6 million for~~September 30, 2022, respectively, compared to the three and nine months ended ~~March 31, 2022.~~September 30, 2021. In addition, certain private funds pay administrative fees on invested capital and ~~an increase~~deployment will result in ~~deployment resulted in an increase to this~~a higher fee base. Administrative fees from these private funds increased by ~~$1.6~~$1.8 million and $5.2 million for the three and nine months ended ~~March 31,~~September 30, 2022, respectively, compared to the three and nine months ended September 30, 2021. The administrative fees from the funds that were acquired in the Black Creek Acquisition on July 1, 2021 increased by $15.4 million for the nine months ended September 30, 2022 compared to the ~~three months ended March 31,~~same period in 2021.

Compensation and Benefits. Compensation and benefits increased by ~~$125.4~~$89.9 million, or ~~54%~~27%, for the three months ended ~~March 31,~~September 30, 2022 compared to the three months ended ~~March 31,~~September 30, 2021 and by $317.9 million, or 38%, for the nine months ended September 30, 2022 compared to the nine months ended September 30, 2021. The ~~increase was~~increases were primarily driven by (i) headcount growth to support the expansion of our business, ~~and~~ (ii) strategic initiatives and ~~acquisitions.~~acquisitions, (iii) higher incentive compensation attributable to improved operating performance and (iv) higher employee commission expense in connection with the sale and distribution of fund shares in our non-traded REITs. Average headcount for the ~~quarter-to-date~~year-to-date period increased by ~~45%~~34% to ~~2,113~~2,238 professionals for the 2022 period from ~~1,460~~1,674 professionals for the same period in 2021.

Headcount growth attributable to ~~the Landmark Acquisition and Black Creek Acquisition~~our strategic acquisitions contributed ~~$48.9~~$102.6 million ~~in recurring employment related costs~~ to the ~~three~~increase in salaries and benefits for the nine months ended ~~March 31, 2022. Headcount growth attributable~~September 30, 2022 when compared to the same period in 2021, of which the Infrastructure

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Debt Acquisition that closed in the first quarter of 2022 has contributed ~~$2.5~~$4.9 million and $12.7 million in recurring employment related costs for the ~~period from February 10,~~three and nine months ended September 30, 2022, ~~through March 31, 2022 and will increase ratably in future reporting periods.~~ respectively.

The performance-based, acquisition-related compensation arrangements (“earnouts”) that were established in connection with the Landmark Acquisition, Black Creek Acquisition and Infrastructure Debt Acquisition ~~also contributed $48.0 million to the three months ended March 31, 2022. The earnouts~~ are based on the achievement of revenue targets for certain funds. As all earnouts are subject to the continued and future services of senior professionals and advisors, they are required to be recorded as compensation expense and recognized ratably over the respective service periods. The revenue targets for the Black Creek earnout were achieved and the maximum contingent payment was recorded during the three months ended September 30, 2022. Compensation expense related to the Black Creek earnout was $130.6 million and $218.1 million for the three and nine months ended September 30, 2022, respectively, and $13.5 million for the three and nine months ended September 30, 2021. Compensation expense related to the Infrastructure Debt earnout was $2.8 million and $7.1 million for the three and nine months ended September 30, 2022, respectively. In connection with current fundraising expectations for an acquired Landmark private equity secondaries fund, we determined that the revenue targets on which the Landmark earnout is contingent are not expected to be achieved. This resulted in a reversal of all previously recorded expenses of $36.7 million and $21.0 million for the three and nine months ended September 30, 2022, respectively, compared to compensation expense of $14.7 million and $19.3 million for the three and nine months ended September 30, 2021, respectively. See “Note 9. Commitments and Contingencies” for a further description of the contingent liabilities related to these arrangements.

~~Table of Contents~~

The following table presents equity compensation expense based on the different types of restricted unit awards. Amounts presented include recurring expense, accelerated expense recognized in connection with the achievement of a performance condition and reversal of previously recognized expense resulting from forfeituresawards ($ in thousands):


		Three months ended March 31,			Favorable (Unfavorable)					Three months ended September 30,			Favorable (Unfavorable)						Nine months ended September 30,									Favorable (Unfavorable)
			2022			2021		$ Change	% Change							2022				2021			$ Change			% Change			2022		2021				$ Change		% Change
Non-recurring awards:	Non-recurring awards:													Non-recurring awards:
Multi-year future grants	Multi-year future grants		$	10,896		$	7,114	(3,782)	(53)					Multi-year future grants		$	11,099			$	7,886		$	(3,213)		(41)			$	32,271	$	25,021			$	(7,250)	(29)
Performance-based awards	Performance-based awards		—			11,562		11,562	100					Performance-based awards		—				186			186			100			—		20,499				20,499		100

Performance-based awards - accelerated											Performance-based awards - accelerated	—			29,415			29,415				100			—		43,426						43,426	100
Other non-recurring awards	Other non-recurring awards		1,820			6,230		4,410	71					Other non-recurring awards		1,622				5,099			3,477			68			5,803		17,832				12,029		67
Total non-recurring awards	Total non-recurring awards		12,716			24,906		12,190	49					Total non-recurring awards		12,721				42,586			29,865			70			38,074		106,778				68,704		64
Recurring annual awards:	Recurring annual awards:													Recurring annual awards:
Discretionary awards	Discretionary awards		20,968			17,175		(3,793)	(22)					Discretionary awards		24,142				11,986			(12,156)			(101)			69,275		47,938				(21,337)		(45)
Bonus awards	Bonus awards		19,966			13,568		(6,398)	(47)					Bonus awards		11,255				11,419			164			1			44,054		36,428				(7,626)		(21)
Total recurring annual awards	Total recurring annual awards		40,934			30,743		(10,191)	(33)					Total recurring annual awards		35,397				23,405			(11,992)			(51)			113,329		84,366				(28,963)		(34)
Equity compensation expense, net	Equity compensation expense, net		$	53,650		$	55,649	1,999	4					Equity compensation expense, net		$	48,118			$	65,991		17,873			27			$	151,403	$	191,144			39,741		21

Equity compensation expense decreased by ~~$2.0~~$17.9 million and by $39.7 million for the three and nine months ended ~~March 31,~~September 30, 2022, respectively, compared to the three and nine months ended ~~March 31,~~September 30, 2021. The ~~decrease was~~decreases were primarily attributable to non-recurring equity compensation expense recognized during the three and nine months ended ~~March 31,~~September 30, 2021 related to performance-based awards with market conditions that were granted to certain executive officers in the first quarter of 2021 and to ~~one-time time-based~~other non-recurring awards ~~granted to certain employees~~with service conditions that substantially vested prior to 2022. The decrease in equity compensation expense was partially offset by the increase in awards granted as part of the recurring annual award programs. ~~During the three months ended March 31, 2022, additional~~Additional multi-year future grants were approved in the first quarter of 2022 with grant dates in 2023, 2024 and 2025. Given that these future restricted units have been communicated to the recipient, we account for these awards as if they have been granted and recognize the compensation expense on a straight-line basis over the service period.

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

Performance Related Compensation. Performance related compensation decreased by ~~$92.0~~$188.2 million, or ~~42%~~57%, for the three months ended ~~March 31,~~September 30, 2022 compared to the three months ended ~~March 31,~~September 30, 2021 and by $892.1 million, or 74%, for the nine months ended September 30, 2022 compared to the nine months ended September 30, 2021. Changes in performance related compensation are directly associated with the changes in carried interest allocation and incentive fees described above and may include performance allocations to charitable organizations as part of our philanthropic initiatives.

General, Administrative and Other Expenses. General, administrative and other expenses increased by ~~$52.9~~$184.9 million, or ~~78%~~138%, for the three months ended ~~March 31,~~September 30, 2022 compared to the three months ended ~~March 31,~~ September 30, 2021 and by $277.0 million, or 97%, for the nine months ended September 30, 2022 compared to the nine months ended September 30,

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2021. ~~The~~During the three months ended September 30, 2022, we recognized non-cash impairment charges of $181.6 million to certain intangible assets comprised of i) $86.2 million to the carrying value of the Landmark ~~Acquisition, Black Creek~~trade name following our decision to rebrand our secondaries group as Ares Secondaries and to discontinue the ongoing use of the Landmark trade name, ii) $88.4 million to the fair value of a management contract in connection with lower than expected FPAUM resulting from missing fundraising targets for an acquired Landmark private equity secondaries fund and iii) $7.1 million of accelerated amortization expense in connection with the impairment of certain acquired management contracts as a result of returning capital to fund investors sooner than initially planned. See “Note 4. Goodwill and Intangible Assets” for a further description of the impairment of intangible assets.

The Infrastructure Debt Acquisition, ~~have~~which was completed on February 10, 2022, has contributed ~~$33.3~~$6.2 million and $16.0 million in general, administrative and other expenses to the three and nine months ended ~~March 31, 2022.~~September 30, 2022, respectively. These expenses ~~were driven by~~increased primarily due to (i) amortization expense of ~~$22.8~~$4.6 million ~~for the three months ended March 31, 2022~~and $12.2 million related to the intangible assets recorded in connection with the ~~Landmark Acquisition,~~ acquisition and (ii) certain professional services of $0.9 million and $1.7 million for the three and nine months ended September 30, 2022, respectively. In addition, the Black Creek Acquisition and ~~Infrastructure Debt Acquisition.~~ Landmark Acquisition have collectively contributed to an increase in general, administrative and other expenses of $54.4 million for the first half of 2022 compared to the same period in 2021. These expenses ~~also included~~primarily consisted of (i) amortization expense of $33.8 million related to the intangible assets recorded in connection with the acquisitions and (ii) certain recurring operating expenses, including occupancy costs, information services, ~~and~~ information technology and office services of ~~$10.5~~$7.1 million. ~~The~~

Excluding the impact from the ~~Landmark~~Black Creek Acquisition, ~~Black Creek~~Landmark Acquisition and Infrastructure Debt Acquisition, ~~has been excluded from the discussion below.~~

~~Certain~~certain expenses have also increased during the current period, including occupancy costs to support our growing headcount, ~~and~~as well as information services and information technology costs to support the expansion of our business. Collectively, these expenses increased by ~~$3.1~~$4.9 million and $10.3 million for the three and nine months ended September 30, 2022, respectively, compared to the same periods in 2021. Other operating expenses, most notably travel, marketing sponsorships and certain fringe benefits, collectively increased by $11.2 million and $34.4 million for the three and nine months ended September 30, 2022, respectively, compared to the same periods in 2021, as travel, marketing and company events have returned to pre-pandemic levels.

Placement fees were $18.3 million for the three months ended ~~March 31,~~September 30, 2022, ~~when~~a decrease of $21.2 million compared to the three months ended September 30, 2021, and $30.7 million for the nine months ended September 30, 2022, a decrease of $17.8 million compared to the nine months ended September 30, 2021. The activity for the three and nine months ended September 30, 2022 was primarily attributable to new commitments to Ares Special Opportunities Fund II, L.P. (“ASOF II”). The activity for the three and nine months ended September 30, 2021 was primarily attributable to new commitments to Ares Private Credit Solutions II, L.P. (“PCS II”) and Ares Senior Direct Lending Fund II, L.P. (“SDL II”).

Acquisition-related costs decreased by $6.4 million for the nine months ended September 30, 2022 compared to the same period in 2021. ~~Placement fees have also increased by $2.5 million~~Acquisition-related costs generally precede a business combination, vary with the complexity of the transaction and may occur even when acquisitions are not successfully completed. The activity for the ~~three~~nine months ended ~~March 31,~~September 30, 2022 ~~compared~~was primarily attributable to the ~~three~~Infrastructure Debt Acquisition, whereas the activity for the nine months ended ~~March 31,~~September 30, 2021 ~~primarily due to new commitments to~~was largely composed of the ~~Ares Private Credit Solutions II, L.P. (“~~Black Creek Acquisition and~~PCS II”)~~ Landmark Acquisition, which were collectively larger in terms of size and ~~our second special opportunities fund.~~scope.

There continue to be positive developments in the recovery from the COVID-19 pandemic that have reduced restrictions on travel and gathering. Those operating expenses that were impacted by the pandemic, particularly marketing sponsorships and events, increased after the first half of 2021. Our operating expenses, most notably travel, marketing and certain office services and fringe benefits, increased by $7.4 million for the three months ended March 31, 2022, when compared to the same period in 2021. However, travel expenses were $2.5 million lower for the three months ended March 31, 2022 when compared to the pre-pandemic period in 2019 despite the significant addition in headcount and the number of funds that we manage.

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Net Realized and Unrealized Gains on Investments. Net realized and unrealized gains on investments ~~increased~~decreased by ~~$2.7~~$3.9 million, or ~~49%~~47%, for the three months ended ~~March 31,~~September 30, 2022 compared to the three months ended ~~March 31,~~September 30, 2021 and decreased by $8.0 million, or 43%, for the nine months ended September 30, 2022 compared to the nine months ended September 30, 2021. The activity for the three and nine months ended ~~March 31,~~September 30, 2022 and 2021 was primarily attributable to unrealized gains from certain strategic initiative ~~related~~ investments made in connection with our acquisition of SSG. The activity for ~~three~~the nine months ended ~~March 31,~~September 30, 2022 also included unrealized losses on our investments in the subordinated notes of U.S. CLOs. The CSLLI declined 3.3% for the nine months ended September 30, 2022 compared to a positive return of 4.7% for the nine months ended September 30, 2021. The activity for the three and nine months ended September 30, 2021 was ~~primarily~~also attributable to unrealized gains on ~~certain strategic initiative related~~our investments ~~and on our~~in the subordinated notes of U.S. ~~CLO investments.~~CLOs.

Interest Expense. Interest expense increased by ~~$9.0~~$6.8 million, or ~~134%~~59%, for the three months ended ~~March 31,~~September 30, 2022 compared to the three months ended ~~March 31,~~September 30, 2021 and by $26.0 million, or 104%, for the nine months ended September 30, 2022 compared to the nine months ended September 30, 2021. The issuance of the 2052 Senior Notes in January 2022 increased interest expense by ~~$3.6~~$4.7 million and $12.9 million for the three and nine months ended ~~March 31,~~September 30, 2022, respectively, compared to the same periods in 2021. Higher average interest rates, driven by rising SOFR rates, and ~~is expected~~a higher average outstanding balance of the Credit Facility in the third quarter of 2022 also contributed to ~~result~~an increase in interest expense of ~~$4.6~~$2.2 million and $3.7 million for the ~~full quarter prospectively.~~three and nine months ended September 30, 2022, respectively, compared to the same

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periods in the prior year. The issuance of the 2051 Subordinated Notes on the last day of the second quarter of 2021 has also increased interest expense by ~~$4.7~~$9.3 million for ~~three~~the nine months ended ~~March 31,~~September 30, 2022 ~~when~~ compared to the same period in 2021.

Other Income, ~~(Expense),~~ Net. Other income, ~~(expense),~~ net ~~increased~~decreased by ~~$5.9~~$34.1 million, ~~to $1.8 million~~or 93%, for the three months ended ~~March 31,~~September 30, 2022 compared to the three months ended ~~March 31,~~September 30, 2021 and decreased by $20.5 million, or 67%, for the nine months ended September 30, 2022 compared to the nine months ended September 30, 2021. Other income, ~~(expense),~~ net includes transaction gains (losses) associated with currency fluctuations impacting the revaluation of non-functional currency ~~balances~~balances. Transaction gains of $1.9 million and ~~was based on the fluctuations in currency exchange rates~~$10.7 million for the three and nine months ended ~~March 31,~~September 30, 2022, ~~and 2021. Transaction gains during the three months ended March 31, 2022~~respectively, were primarily attributable to the British pound weakening against the ~~U.S. dollar, while~~Euro. The three and nine months ended September 30, 2021 included transaction gains of $1.3 million and transaction losses ~~during the three months ended March 31, 2021 were~~of $4.0 million, respectively, primarily attributable to the partial recovery of the Euro in the third quarter of 2021 against the losses incurred in the first half of 2021 from the Euro weakening against the British ~~pound strengthening against Euro.~~pound.

Other income, net also includes the change in fair value of a contingent obligation recognized in connection with the Black Creek Acquisition. The purchase agreement with Black Creek contains ~~a provision~~provisions that ~~requires~~required us to record aseparate contingent consideration ~~liability~~liabilities that isare (i) dependent on the achievement of revenue targets for certain funds that were acquired in the Black Creek ~~funds. For~~Acquisition and (ii) obligated us to pay the sellers 50% of the incentive fees realized for the non-traded REITs for the year ended December 31, 2021. The revenue targets for the Black Creek earnout were fully achieved and the maximum contingent payment was recorded during the three months ended ~~March 31,~~September 30, 2022. For the three and nine months ended September 30, 2022, we recorded ~~$1.0~~$0.3 million and $1.4 million, respectively, in expense for the revaluation of the contingent obligation related to the achievement of revenue targets compared to $3.0 million in expense for each of the three and nine months ended September 30, 2021. The three and nine months ended September 30, 2021 also included $4.2 million in expense for the revaluation of ~~this~~the contingent ~~obligation.~~obligation related to the 50% portion of incentive fees payable to the sellers. See ~~“Note~~Note 9. Commitments and ~~Contingencies”~~Contingencies for a further description of the contingency.

Finally, other income, net for the three and nine months ended September 30, 2021 included a $42.3 million bargain purchase gain from the Black Creek Acquisition. The bargain purchase gain resulted from the fair value of the identifiable tangible and intangible assets that we acquired exceeding the purchase consideration.

Income Tax Expense (Benefit) Income tax expense (benefit) decreased by ~~$5.3~~$41.9 million ~~or 21%,~~to a tax benefit of $11.6 million for the three months ended ~~March 31,~~September 30, 2022 and by $82.2 million, or 79%, for the nine months ended September 30, 2022 compared to the ~~three~~nine months ended ~~March 31,~~September 30, 2021. The ~~decrease over the comparative periods was primarily driven by the 19% decrease in income before taxes for the Company and its consolidated subsidiaries~~. ~~The decrease in income tax expense was also~~decreases were attributable to ~~a lower tax rate for~~ the ~~three months ended March 31, 2022, driven by higher equity-based compensation from the vesting of performance-based awards~~net losses allocable to AMC during the three months ended ~~March 31, 2021.~~September 30, 2022. The ~~decrease in~~calculation of income ~~tax expense was partially offset by the increase~~taxes is sensitive to any changes in weighted average daily ownership. The weighted average daily ownership for AMC common stockholders increased from ~~57.1%~~58.5% and 58.3% for the three and nine months ended ~~March 31,~~September 30, 2021 to ~~59.5%~~59.7% and 59.6% for the three and nine months ended ~~March 31,~~September 30, 2022. The changes in ownership were primarily driven by the issuance of Class A common stock in connection with stock option exercises and vesting of restricted stock ~~awards and private and public offerings of Class A and non-voting common stock.~~awards. The increase in the weighted average daily ownership for the AMC common stockholders was partially offset by the issuance of AOG Units in connection with the Landmark Acquisition and the Black Creek Acquisition that increased the ownership of AOG Units not held by AMC.

Redeemable and Non-Controlling Interests. Net income (loss) attributable to redeemable and non-controlling interests in AOG entities represents results attributable to the holders of AOG Units and other ownership interests that are not held by AMC. In connection with the SSG Acquisition, the former owners of SSG retained an ownership interest in a subsidiary of an AOG entity that is reflected as redeemable interest in AOG entities. Net income attributable to redeemable interest in AOG entities is allocated based on the ownership percentage for periods presented.

Net income (loss) attributable to non-controlling interests in AOG entities is generally allocated based on the weighted average daily ownership of the other AOG unitholders, except for income (loss) generated from certain joint venture partnerships. Net income (loss) is allocated to other strategic distribution partners with whom we have established joint ventures based on the respective ownership percentages and based on the activity of certain membership interests. ~~For~~Net income of $5.5 million, $6.5 million and $4.9 million, $7.9 million for the three and nine months ended ~~March 31,~~September 30, 2022 and 2021, ~~net income of $4.6 million and net loss of $0.7 million,~~ respectively, was allocated based on ownership percentages of the strategic distribution partners and the activity of those membership interests.

Net income (loss) attributable to non-controlling interests in AOG entities decreased by ~~$8.8~~$114.0 million ~~or 16%,~~ for the three months ended ~~March 31,~~September 30, 2022 compared to the three months ended ~~March 31,~~September 30, 2021 and by $217.7 million, or 82%, for the nine months ended September 30, 2022 compared to the nine months ended September 30, 2021. The changes in the comparative periods are a result of the respective changes in income before taxes and weighted average daily ownership. The weighted average daily ownership for the non-controlling AOG unitholders decreased from ~~42.9%~~41.5% and 41.7% for the three and nine months ended ~~March 31,~~September 30, 2021 to ~~40.5%~~40.3% and 40.4% for the three and nine months ended ~~March 31,~~September 30, 2022.

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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)					Three months ended September 30,		Favorable (Unfavorable)						Nine months ended September 30,									Favorable (Unfavorable)
			2022			2021		$ Change			% Change				2022				2021			$ Change			% Change			2022			2021			$ Change			% Change
Expenses of the Consolidated Funds	Expenses of the Consolidated Funds		$	(4,513)		$	(4,171)	$	(342)		(8)%		Expenses of the Consolidated Funds		$	(10,397)			$	(12,104)		$	1,707		14%			$	(28,364)		$	(31,575)		$	3,211		10%
Net realized and unrealized gains on investments of Consolidated Funds			15,968			16,422		(454)			(3)
Net realized and unrealized gains (losses) on investments of Consolidated Funds												Net realized and unrealized gains (losses) on investments of Consolidated Funds		(30)			34,245				(34,275)			NM		8,031				44,720			(36,689)			(82)
Interest and other income of Consolidated Funds	Interest and other income of Consolidated Funds		120,290			115,839		4,451			4		Interest and other income of Consolidated Funds		158,415				104,028			54,387			52			396,080			333,745			62,335			19
Interest expense of Consolidated Funds	Interest expense of Consolidated Funds		(74,013)			(71,025)		(2,988)			(4)		Interest expense of Consolidated Funds		(112,762)				(61,578)			(51,184)			(83)			(266,028)			(191,577)			(74,451)			(39)
Income before taxes	Income before taxes		57,732			57,065		667			1		Income before taxes		35,226				64,591			(29,365)			(45)			109,719			155,313			(45,594)			(29)
Income tax expense of Consolidated Funds	Income tax expense of Consolidated Funds		(25)			(28)		3			11		Income tax expense of Consolidated Funds		(149)				(2)			(147)			NM			(197)			(76)			(121)			(159)
Net income	Net income		57,707			57,037		670			1		Net income		35,077				64,589			(29,512)			(46)			109,522			155,237			(45,715)			(29)
Less: Revenues attributable to Ares Management Corporation eliminated upon consolidation	Less: Revenues attributable to Ares Management Corporation eliminated upon consolidation		22,446			17,371		5,075			29		Less: Revenues attributable to Ares Management Corporation eliminated upon consolidation		13,484				21,784			(8,300)			(38)			69,487			58,072			11,415			20
Less: Other expense, net attributable to Ares Management Corporation eliminated upon consolidation			(12,121)			(10,192)		(1,929)			(19)
Less: Other income (expense), net attributable to Ares Management Corporation eliminated upon consolidation												Less: Other income (expense), net attributable to Ares Management Corporation eliminated upon consolidation		5,267			(4,565)				9,832			NM		(8,424)				(5,090)			(3,334)			(66)
Add: General, administrative and other expense attributable to Ares Management Corporation eliminated upon consolidation												Add: General, administrative and other expense attributable to Ares Management Corporation eliminated upon consolidation		14			—				(14)			NM		241				—			(241)			NM
Net income attributable to non-controlling interests in Consolidated Funds	Net income attributable to non-controlling interests in Consolidated Funds		$	47,382		$	49,858	(2,476)			(5)		Net income attributable to non-controlling interests in Consolidated Funds		$	16,340			$	47,370		(31,030)			(66)			$	48,700		$	102,255		(53,555)			(52)

NM - Not Meaningful

The results of operations of the Consolidated Funds primarily represents activity from certain CLOs that we are deemed to control. Expenses primarily reflect professional fees that were incurred as a result of debt issuance costs related to the issuance of new, refinanced or restructured CLOs. These fees were expensed in the period incurred, as CLO debt is recorded at fair value on our Consolidated Statements of Financial Condition. As of ~~March 31,~~September 30, 2022 and ~~March 31,~~September 30, 2021, we consolidated 2325 and 2122 CLOs, respectively. ~~Expenses,~~For the three and nine months ended September 30, 2022, expenses were primarily driven by professional fees incurred from the issuance of two new U.S. CLOs during 2022. For the three and nine months ended September 30, 2021, expenses were primarily driven by professional fees incurred from the issuance of two new U.S. CLOs and the restructure of the European CLOs legal entities. Net realized and unrealized gains fluctuated for the comparative periods, primarily due to a significant change in the value of loans held by the CLOs. The CSLLI declined 3.3% for the nine months ended September 30, 2022 compared to a positive return of 4.7% for the nine months ended September 30, 2021. The increases in interest and other income and interest expense ~~remained relatively flat for the three months ended March 31, 2022 compared~~were attributable to the consolidation of three ~~months ended March 31,~~CLOs subsequent to the second quarter of 2021 and one CLO that closed during the last week of the second quarter of 2021.

Revenues, other income (expense), net and general, administrative and other expense attributable to AMC represents management fees, incentive fees, principal investment income, ~~and~~ administrative, transaction and other fees and general, administrative and other expense that are attributable to AMC’s proportional share in the activity of the Consolidated Funds and is eliminated from the respective components of ~~AMC's~~AMC’s results upon consolidation. The ~~increase~~decrease in revenues attributable to AMC for the three months ended ~~March 31,~~September 30, 2022 ~~when~~ compared to the same period in 2021 was primarily attributable to lower principal investment income from a fund invested in insurance companies, while the increase for the nine months ended September 30, 2022 compared to the same period in 2021 was primarily attributable to higher principal investment income from a fund invested in insurance companies and an Asian corporate private equity fund.

Other income (expense), net attributable to AMC for the three and nine months ended September 30, 2022 and 2021 was primarily attributable to unrealized losses on our investments in the subordinated notes of U.S. CLOs. Other income (expense), net attributable to AMC for the three months ended September 30, 2022 and 2021 also included unrealized losses on investments from our SPAC.

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Segment Analysis

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

Non-GAAP Financial Measures

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

•Fee Related Earnings (“FRE”)

•Realized Income (“RI”)

These non-GAAP financial measures supplement and should be considered in addition to and not in lieu of, the results of operations, which are discussed further under “—Components of Consolidated Results of Operations” and are prepared in accordance with GAAP. On January 1, 2022, we changed our segment composition and established the Real Assets Group. The Real Assets Group consists of the activities of the former Real Estate Group and the infrastructure and power strategy, now referred to as infrastructure opportunities, that was formerly presented within the Private Equity Group. The Real Assets Group also includes infrastructure debt following the Infrastructure Debt Acquisition. We reclassified activities from the infrastructure opportunities strategy in the Private Equity Group and from the former Real Estate Group to the Real Assets Group to better align the segment presentation with how the asset classes within the investment strategies are managed. Historical periods have been modified to conform to the current period presentation. During the third quarter of 2022, we renamed the Secondary Solutions Group segment to the Secondaries Group. The segment name change did not result in any change to the composition of our segments and therefore did not result in any change to historical results. The following table sets forth FRE and RI by reportable segment and OMG ($ in thousands):



	Three months ended September 30,				Favorable (Unfavorable)			Nine months ended September 30,				Favorable (Unfavorable)
	2022		2021		$ Change		% Change	2022		2021		$ Change		% Change
Fee Related Earnings:
Credit Group	$	232,918	$	175,957	$	56,961	32%	$	650,801	$	493,214	$	157,587	32%
Private Equity Group	18,183		28,983		(10,800)		(37)	54,214		59,258		(5,044)		(9)
Real Assets Group	46,382		32,450		13,932		43	134,844		69,583		65,261		94
Secondaries Group	22,214		26,516		(4,302)		(16)	80,111		34,266		45,845		134
Strategic Initiatives	8,905		9,456		(551)		(6)	24,924		28,025		(3,101)		(11)
Operations Management Group	(95,444)		(90,803)		(4,641)		(5)	(286,287)		(225,369)		(60,918)		(27)
Fee Related Earnings	$	233,158	$	182,559	50,599		28	$	658,607	$	458,977	199,630		43
Realized Income:
Credit Group	$	243,710	$	182,152	$	61,558	34%	$	690,736	$	532,359	$	158,377	30%
Private Equity Group	14,204		40,050		(25,846)		(65)	47,631		91,035		(43,404)		(48)
Real Assets Group	55,630		34,610		21,020		61	166,595		87,049		79,546		91
Secondaries Group	20,884		26,788		(5,904)		(22)	80,245		34,535		45,710		132
Strategic Initiatives	4,757		6,509		(1,752)		(27)	15,708		23,234		(7,526)		(32)
Operations Management Group	(95,743)		(91,233)		(4,510)		(5)	(288,211)		(225,596)		(62,615)		(28)
Realized Income	$	243,442	$	198,876	44,566		22	$	712,704	$	542,616	170,088		31

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Three months ended March 31, Favorable (Unfavorable)
2022 2021 $ Change % Change
Fee Related Earnings:
Credit Group $ 198,885 $ 148,204 $ 50,681 34%
Private Equity Group 20,400 17,912 2,488 14
Real Assets Group 39,437 17,283 22,154 128
Secondary Solutions Group 29,786 — 29,786 NM
Strategic Initiatives 7,737 8,927 (1,190) (13)
Operations Management Group (90,575) (63,063) (27,512) (44)
Fee Related Earnings $ 205,670 $ 129,263 76,407 59
Realized Income:
Credit Group $ 204,395 $ 150,749 $ 53,646 36%
Private Equity Group 20,558 21,871 (1,313) (6)
Real Assets Group 55,362 20,313 35,049 173
Secondary Solutions Group 29,965 — 29,965 NM
Strategic Initiatives 2,763 6,658 (3,895) (59)
Operations Management Group (91,026) (62,798) (28,228) (45)
Realized Income $ 222,017 $ 136,793 85,224 62

~~NM - Not Meaningful~~

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 in the Condensed Consolidated Statements of Operations to RI and FRE of the reportable segments and OMG ($ in thousands):


		Three months ended March 31,				Three months ended September 30,				Nine months ended September 30,
		2022		2021				2022		2021		2022		2021
Income before taxes		$	161,309	$	190,064
Income (loss) before taxes							Income (loss) before taxes	$	(60,378)	$	246,988	$	167,997	$	756,829
Adjustments:	Adjustments:						Adjustments:
Depreciation and amortization expense(1)	Depreciation and amortization expense(1)	38,126		14,100			Depreciation and amortization expense(1)	219,339		36,668		297,795		71,742
Equity compensation expense	Equity compensation expense	53,017		55,649			Equity compensation expense	47,516		65,991		150,677		191,144
Acquisition-related compensation expense~~(1)~~(2)	Acquisition-related compensation expense~~(1)~~(2)	48,001		—			Acquisition-related compensation expense~~(1)~~(2)	96,697		28,194		204,189		32,824

Acquisition and merger-related expense	Acquisition and merger-related expense	9,042		8,590			Acquisition and merger-related expense	1,852		754		12,046		18,364
Placement fees	Placement fees	(693)		297			Placement fees	9,729		32,413		7,611		33,740
Other (income) expense, net	Other (income) expense, net	1,981		(473)			Other (income) expense, net	(1,059)		(34,812)		934		(34,666)
Net (income) expense of non-controlling interests in consolidated subsidiaries		(4,989)		689
Net income of non-controlling interests in consolidated subsidiaries							Net income of non-controlling interests in consolidated subsidiaries	(5,616)		(5,268)		(6,583)		(8,614)
Income before taxes of non-controlling interests in Consolidated Funds, net of eliminations	Income before taxes of non-controlling interests in Consolidated Funds, net of eliminations	(47,407)		(49,886)			Income before taxes of non-controlling interests in Consolidated Funds, net of eliminations	(16,489)		(47,372)		(48,897)		(102,331)
Total performance income—unrealized	Total performance income—unrealized	(133,532)		(224,954)			Total performance income—unrealized	(170,789)		(415,317)		(280,290)		(1,381,697)
Total performance related compensation—unrealized	Total performance related compensation—unrealized	91,198		160,337			Total performance related compensation—unrealized	124,466		296,044		207,115		1,022,393
Total net investment (income) loss—unrealized	Total net investment (income) loss—unrealized	5,964		(17,620)			Total net investment (income) loss—unrealized	(1,826)		(5,407)		110		(57,112)
Realized Income	Realized Income	222,017		136,793			Realized Income	243,442		198,876		712,704		542,616
Total performance income—realized	Total performance income—realized	(43,868)		(74,945)			Total performance income—realized	(29,984)		(44,762)		(143,946)		(246,720)
Total performance related compensation—realized	Total performance related compensation—realized	28,575		59,857			Total performance related compensation—realized	18,858		33,371		91,491		183,308
Total investment (income) loss—realized	Total investment (income) loss—realized	(1,054)		7,558			Total investment (income) loss—realized	842		(4,926)		(1,642)		(20,227)
Fee Related Earnings	Fee Related Earnings	$	205,670	$	129,263		Fee Related Earnings	$	233,158	$	182,559	$	658,607	$	458,977

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

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For the specific components and calculations of these non-GAAP measures, as well as a reconciliation of the reportable segments to the most comparable measures in accordance with GAAP, see “Note 15. Segment Reporting”, to our unaudited condensed consolidated financial statements included in this Quarterly Report on Form 10-Q. Discussed below are our results of operations for our reportable segments and OMG.

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Results of Operations by Segment

Credit Group—Three and Nine Months Ended ~~March 31,~~September 30, 2022 Compared to Three and Nine Months Ended ~~March 31,~~September 30, 2021

Fee Related Earnings:

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


		Three months ended March 31,	Favorable (Unfavorable)					Three months ended September 30,				Favorable (Unfavorable)						Nine months ended September 30,				Favorable (Unfavorable)
				2022		2021			$ Change		% Change			2022		2021			$ Change		% Change		2022		2021		$ Change		% Change
Management fees	Management fees			$	303,159	$	232,877		$	70,282	30%		Management fees	$	345,871	$	271,591		$	74,280	27%		$	972,201	$	764,702	$	207,499	27%
Fee related performance revenues	Fee related performance revenues			12,353		1,370			10,983		NM		Fee related performance revenues	—		—			—		—		12,628		1,331		11,297		NM
Other fees	Other fees			5,766		5,969			(203)		(3)		Other fees	8,143		5,798			2,345		40		20,528		18,494		2,034		11
Compensation and benefits	Compensation and benefits			(105,696)		(81,203)			(24,493)		(30)		Compensation and benefits	(102,839)		(86,502)			(16,337)		(19)		(301,822)		(253,597)		(48,225)		(19)
General, administrative and other expenses	General, administrative and other expenses			(16,697)		(10,809)			(5,888)		(54)		General, administrative and other expenses	(18,257)		(14,930)			(3,327)		(22)		(52,734)		(37,716)		(15,018)		(40)
Fee Related Earnings	Fee Related Earnings			$	198,885	$	148,204		50,681		34		Fee Related Earnings	$	232,918	$	175,957		56,961		32		$	650,801	$	493,214	157,587		32

NM - Not Meaningful

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

Management fees on existing funds increased primarily from deployment of capital with Pathfinder, ACE V ~~SDL~~ and PCS II collectively generating additional fees of $20.3 million and $66.5 million for the three and nine months ended September 30, 2022, respectively, compared to the three and nine months ended September 30, 2021. Management fees from SDL II, which launched at the end of the second quarter of 2021, increased by $9.6 million and $26.9 million for the three and nine months ended ~~March 31,~~September 30, 2022, respectively, compared to the three and nine months ended ~~March 31,~~September 30, 2021. The launch of our

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open-end core alternative credit fund in the third quarter of 2021 also contributed to the increase in management fees, generating additional fees of $5.2 million and $9.1 million for the three and nine months ended September 30, 2022, respectively, compared to the same periods in 2021. Management fees from ARCC, excluding Part I Fees described below, increased by ~~$15.3~~$12.6 million ~~over~~and $42.3 million for the ~~period~~three and nine months ended September 30, 2022, respectively, primarily due to an increase in the average size of ARCC's portfolio. The remaining increases in management fees from funds in existence in both periods was primarily driven by deployment of capital in other direct lending funds and SMAs. Management fees from CLOs also increased primarily due to the net addition of seven and six CLOs for the three and nine months ended September 30, 2022, respectively, compared to the same periods in 2021.

Part I Fees increased for the three and nine months ended September 30, 2022 compared to the three and nine months ended September 30, 2021 primarily due to an increase in pre-incentive fee net investment income generated by ARCC and CADC, driven by an increase in ~~originations and in~~ the average size of their ~~portfolios. Management fees from~~

~~Table~~portfolios as well as the impact of ~~Contents~~

~~CLOs also increased primarily due to the net addition of four CLOs for the three months ended March 31, 2022 compared to the three months ended March 31, 2021. The launch of~~ ~~Ares Senior Direct Lending Fund II, L.P. (“SDL II”)~~ ~~subsequent to the first quarter of 2021 also contributed to the increase in management fees, generating fees of $7.8 million for the three months ended March 31, 2022.~~rising interest rates.

The ~~decrease~~decreases in effective management fee rate for the three and nine months ended ~~March 31,~~September 30, 2022 compared to the three and nine months ended ~~March 31,~~September 30, 2021 ~~was~~were primarily driven by growth in lower fee generating strategies such as CLOs and our alternative credit funds, as well as deployment in ~~SDL~~Ares Senior Direct Lending Fund L.P. (“SDL”) and SDL II that have fee rates below 1.00%. ~~The decrease was also driven by the decrease in Part I Fees' contribution to the effective management fee rate due to the proportional increase in fees from other credit funds.~~

Fee Related Performance Revenues.Fee related performance revenues increased by ~~$11.0~~$11.3 million to $12.6 million for the ~~three~~nine months ended ~~March 31,~~September 30, 2022 compared to the ~~three~~nine months ended ~~March 31, 2021. The~~September 30, 2021.The increase was primarily attributable to fee related performance revenues from three direct lending funds for the ~~three~~nine months ended ~~March 31,~~September 30, 2022 ~~compared to~~and one direct lending fund for the ~~three~~nine months ended ~~March 31,~~September 30, 2021. We expect the majority of our fee related performance revenues to be recognized in the fourth quarter in connection with the typical measurement period end date of each applicable fund’s performance against the annual performance hurdles.

Compensation and Benefits. Compensation and benefits increased by ~~$24.5~~$16.3 million, or ~~30%~~19%, for the three months ended ~~March 31,~~September 30, 2022 compared to the three months ended ~~March 31,~~September 30, 2021 and by $48.2 million, or 19%, for the nine months ended September 30, 2022 compared to the nine months ended September 30, 2021. The ~~increase was~~increases were primarily driven by ~~(i) an~~higher incentive compensation attributable to increased fee revenues and improved operating performance. The increase in compensation and benefits for the three months ended September 30, 2022 compared to the same period in 2021 was partially offset by a decrease in payroll taxes of $3.9 million primarily attributable to the vesting of non-recurring equity compensation awards in the third quarter of 2021. The nine months ended September 30, 2022 also included fee related performance compensation of $7.4 million from direct lending SMAs ~~(ii)~~from the first quarter of 2022 and ~~increase in~~ payroll related taxes of $7.2 million primarily attributable to the increase in restricted unit awards that vested ~~(iii) headcount growth and merit increases and (iv) higher Part I Fees compensation~~in the first quarter of ~~$2.7 million for the three months ended March 31, 2022, when compared to the same period in 2021.~~2022.

Average headcount for the ~~quarter-to-date~~year-to-date period increased by 4%3% to ~~433~~444 investment and investment support professionals for the ~~first~~third quarter of 2022 ~~period~~ from ~~416~~429 professionals for the same period in 2021 as we ~~added additional~~continued to add professionals to support our growing U.S. and European direct lending and alternative credit platforms.

General, Administrative and Other Expenses. General, administrative and other expenses increased by ~~$5.9~~$3.3 million, or ~~54%~~22%, for the three months ended ~~March 31,~~September 30, 2022 compared to the three months ended ~~March 31,~~September 30, 2021 and by $15.0 million, or 40%, for the nine months ended September 30, 2022 compared to the nine months ended September 30, 2021. Travel, marketing sponsorships and certain fringe benefits collectively increased by $2.1 million and $7.5 million for the three and nine months ended September 30, 2022, respectively, compared to the same periods in 2021, as marketing and company events returned to pre-pandemic levels and travel continues to ramp up toward historical levels. In connection with our fundraising efforts, amortization of placement fees ~~and certain intermediary fees have collectively~~has increased by ~~$2.0~~$4.4 million for the ~~three~~nine months ended ~~March 31,~~September 30, 2022 ~~when~~ compared to the same period in 2021. The ~~increase was~~increases were primarily associated with new commitments to PCS II and SDL II. Certain expenses have also increased during the current period, including information services and information technology to support the expansion of our business. Collectively, these expenses increased by $0.7 million for the three months ended March 31, 2021, when compared to the same period in 2021.

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There continue to be positive developments in the recovery from the COVID-19 pandemic that have reduced restrictions on travel and gathering. Those operating expenses that were impacted by the pandemic, particularly marketing sponsorships and events, increased after the first half of 2021. Our operating expenses, most notably travel, entertainment and marketing sponsorships, and certain office services and fringe benefits, increased by $2.7 million for the three months ended March 31, 2022, when compared to the same period in 2021.

Realized Income:

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


		Three months ended March 31,				Favorable (Unfavorable)				Three months ended September 30,		Favorable (Unfavorable)				Nine months ended September 30,				Favorable (Unfavorable)
		2022		2021		$ Change		% Change				2022		2021		$ Change		% Change		2022		2021		$ Change		% Change
Fee Related Earnings	Fee Related Earnings	$	198,885	$	148,204	$	50,681	34	%		Fee Related Earnings	$	232,918	$	175,957	$	56,961	32	%	$	650,801	$	493,214	$	157,587	32%
Performance income—realized	Performance income—realized	7,363		2,446		4,917		201			Performance income—realized	3,045		6,332		(3,287)		(52)		58,941		76,924		(17,983)		(23)
Performance related compensation—realized	Performance related compensation—realized	(4,580)		(2,055)		(2,525)		(123)			Performance related compensation—realized	(1,737)		(3,079)		1,342		44		(35,675)		(48,619)		12,944		27
Realized net performance income	Realized net performance income	2,783		391		2,392		NM			Realized net performance income	1,308		3,253		(1,945)		(60)		23,266		28,305		(5,039)		(18)
Investment income—realized	Investment income—realized	415		—		415		NM			Investment income—realized	4,495		618		3,877		NM		6,519		1,858		4,661		251
Interest and other investment income—realized	Interest and other investment income—realized	5,726		3,669		2,057		56			Interest and other investment income—realized	8,893		4,716		4,177		89		21,006		14,354		6,652		46
Interest expense	Interest expense	(3,414)		(1,515)		(1,899)		(125)			Interest expense	(3,904)		(2,392)		(1,512)		(63)		(10,856)		(5,372)		(5,484)		(102)
Realized net investment income	Realized net investment income	2,727		2,154		573		27			Realized net investment income	9,484		2,942		6,542		222		16,669		10,840		5,829		54
Realized Income	Realized Income	$	204,395	$	150,749	53,646		36			Realized Income	$	243,710	$	182,152	61,558		34		$	690,736	$	532,359	158,377		30

NM - Not Meaningful

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Realized net performance income for the ~~three~~nine months ended ~~March 31,~~September 30, 2022 and 2021 was primarily attributable to tax distributions from ~~two European direct lending funds~~ACE III, ACE IV and ~~incentive fees on one alternative credit fund.~~PCS. Realized net performance income for the ~~three~~nine months ended ~~March 31, 2021 was primarily attributable to~~September 30, 2022 also included incentive fees ~~on one direct lending fund.~~from an alternative credit fund, while the nine months ended September 30, 2021 also included incentive fees from an alternative credit fund and a CLO.

Realized net investment income for the three and nine months ended ~~March 31,~~September 30, 2022 and 2021 was primarily attributable to interest income generated from our CLO investments. Realized net investment income for the three and nine months ended ~~March 31,~~September 30, 2022 also included ~~income recognized in connection with~~realizations from the settlement of forward contracts entered into to hedge our exposure to foreign currency fluctuations, primarily from the Euro, and included distributions from a ~~commercial finance~~U.S. direct lending fund and a European direct lending fund. ~~Realized net investment income for~~In addition, the ~~three~~nine months ended ~~March 31,~~September 30, 2022 ~~and 2021 also~~ included ~~interest~~liquidating distributions from a European direct lending fund. Interest expense, ~~allocations~~which is allocated based on the cost basis of ~~investments. Interest expense~~investments, increased over the comparative ~~period~~periods primarily due to the issuance of the 2051 Subordinated Notes and the 2052 Senior Notes in June 2021 and January 2022, respectively.

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, 2022						As of December 31, 2021							As of September 30, 2022						As of December 31, 2021

		Accrued Performance Income		Accrued Performance Compensation		Accrued Net Performance Income		Accrued Performance Income		Accrued Performance Compensation		Accrued Net Performance Income			Accrued Performance Income		Accrued Performance Compensation		Accrued Net Performance Income		Accrued Performance Income		Accrued Performance Compensation		Accrued Net Performance Income
ACE III	ACE III	$	106,095	$	63,657	$	42,438	$	99,551	$	59,731	$	39,820	ACE III	$	102,777	$	61,666	$	41,111	$	99,551	$	59,731	$	39,820
ACE IV	ACE IV	156,193		96,840		59,353		146,580		90,879		55,701		ACE IV	161,710		100,260		61,450		146,580		90,879		55,701
ACE V	ACE V	71,931		43,159		28,772		51,482		30,889		20,593		ACE V	105,232		63,139		42,093		51,482		30,889		20,593
PCS	PCS	142,378		84,150		58,228		132,050		77,780		54,270		PCS	117,483		69,419		48,064		132,050		77,780		54,270
PCS II	PCS II	13,942		8,224		5,718		9,053		5,345		3,708		PCS II	—		—		—		9,053		5,345		3,708
Other credit funds	Other credit funds	170,187		119,511		50,676		156,717		105,064		51,653		Other credit funds	182,996		130,415		52,581		156,717		105,064		51,653
Total Credit Group	Total Credit Group	$	660,726	$	415,541	$	245,185	$	595,433	$	369,688	$	225,745	Total Credit Group	$	670,198	$	424,899	$	245,299	$	595,433	$	369,688	$	225,745

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

As of December 31, 2021 Activity during the period As of March 31, 2022
Waterfall Type Accrued Performance Income Change in Unrealized Realized Other Adjustments Accrued Performance Income
Accrued Carried Interest
ACE III European $ 99,551 $ 6,544 $ — $ — $ 106,095
ACE IV European 146,580 9,613 — — 156,193
ACE V European 51,482 20,449 — — 71,931
PCS European 132,050 10,616 — (288) 142,378
PCS II European 9,053 4,798 — 91 13,942
Other credit funds European 156,453 22,316 (4,268) (4,578) 169,923
Other credit funds American 264 — — — 264
Total accrued carried interest 595,433 74,336 (4,268) (4,775) 660,726
Other credit funds Incentive — 3,095 (3,095) — —
Total Credit Group $ 595,433 $ 77,431 $ (7,363) $ (4,775) $ 660,726












		As of December 31, 2021		Activity during the period						As of September 30, 2022
	Waterfall Type	Accrued Performance Income		Change in Unrealized		Realized		Foreign Exchange and Other Adjustments		Accrued Performance Income
Accrued Carried Interest
ACE III	European	$	99,551	$	10,176	$	(7,448)	$	498	$	102,777
ACE IV	European	146,580		32,758		(18,779)		1,151		161,710
ACE V	European	51,482		53,750		—		—		105,232
PCS	European	132,050		10,209		(24,143)		(633)		117,483
PCS II	European	9,053		(8,908)		—		(145)		—
Other credit funds	European	156,453		36,571		(5,310)		(4,968)		182,746
Other credit funds	American	264		(14)		—		—		250
Total accrued carried interest		595,433		134,542		(55,680)		(4,097)		670,198

Other credit funds	Incentive	—		3,261		(3,261)		—		—
Total Credit Group		$	595,433	$	137,803	$	(58,941)	$	(4,097)	$	670,198

7284

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Credit Group—Assets Under Management

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


																		Syndicated Loans			High Yield			Multi-Asset Credit			Alternative Credit			U.S. Direct Lending			European Direct Lending			Total Credit Group
Balance at 6/30/2022																Balance at 6/30/2022		$	33,537		$	3,197		$	5,379		$	19,249		$	92,710		$	47,839		$	201,911

Net new par/equity commitments																Net new par/equity commitments		347			36			74			1,917			1,249			61			3,684
Net new debt commitments																Net new debt commitments		403			—			—			—			3,299			—			3,702
Capital reductions																Capital reductions		(53)			—			—			(45)			(433)			(16)			(547)
Distributions																Distributions		(31)			(4)			3			(607)			(728)			(279)			(1,646)
Redemptions																Redemptions		(76)			(134)			(136)			100			(83)			—			(329)
Change in fund value																Change in fund value		(310)			(11)			(47)			(269)			242			(1,900)			(2,295)
Balance at 9/30/2022																Balance at 9/30/2022		$	33,817		$	3,084		$	5,273		$	20,345		$	96,256		$	45,705		$	204,480

																	Syndicated Loans			High Yield			Multi-Asset Credit			Alternative Credit			U.S. Direct Lending			European Direct Lending			Total Credit Group
Balance at 6/30/2021																Balance at 6/30/2021		$	29,306		$	3,152		$	3,929		$	14,493		$	68,586		$	48,121		$	167,587

Net new par/equity commitments																Net new par/equity commitments		151			284			427			3,173			3,795			1,220			9,050
Net new debt commitments																Net new debt commitments		1,010			—			100			—			3,670			753			5,533
Capital reductions																Capital reductions		(339)			—			—			—			(43)			1			(381)
Distributions																Distributions		(21)			—			14			(273)			(392)			(272)			(944)
Redemptions																Redemptions		(82)			(81)			(65)			—			(39)			—			(267)
Change in fund value																Change in fund value		(90)			36			56			123			776			(246)			655
Balance at 9/30/2021																Balance at 9/30/2021		$	29,935		$	3,391		$	4,461		$	17,516		$	76,353		$	49,577		$	181,233

		Syndicated Loans		High Yield		Multi-Asset Credit		Alternative Credit		U.S. Direct Lending		European Direct Lending		Total Credit Group				Syndicated Loans			High Yield			Multi-Asset Credit			Alternative Credit			U.S. Direct Lending			European Direct Lending			Total Credit Group
Balance at 12/31/2021	Balance at 12/31/2021	$	31,491	$	3,632	$	5,212	$	17,424	$	85,849	$	49,102	$	192,710	Balance at 12/31/2021		$	31,491		$	3,632		$	5,212		$	17,424		$	85,849		$	49,104		$	192,712

Net new par/equity commitments	Net new par/equity commitments	256		159		564		1,588		1,526		66		4,159		Net new par/equity commitments		972			259			857			4,806			5,930			392			13,216
Net new debt commitments	Net new debt commitments	1,010		—		—		—		1,330		—		2,340		Net new debt commitments		2,970			—			—			—			6,101			1,154			10,225
Capital reductions	Capital reductions	(73)		—		—		—		(324)		—		(397)		Capital reductions		(171)			—			—			(45)			(757)			(28)			(1,001)
Distributions	Distributions	(26)		(3)		9		(145)		(562)		(276)		(1,003)		Distributions		(80)			(9)			13			(881)			(1,679)			(845)			(3,481)
Redemptions	Redemptions	(66)		(86)		(20)		(203)		(35)		—		(410)		Redemptions		(257)			(308)			(197)			(199)			(173)			—			(1,134)
Change in fund value	Change in fund value	(207)		(149)		(88)		(70)		613		(575)		(476)		Change in fund value		(1,108)			(490)			(612)			(760)			985			(4,072)			(6,057)
Balance at 3/31/2022		$	32,385	$	3,553	$	5,677	$	18,594	$	88,397	$	48,317	$	196,923
Average AUM(1)		$	31,938	$	3,593	$	5,445	$	18,009	$	87,123	$	48,710	$	194,818
Balance at 9/30/2022																Balance at 9/30/2022		$	33,817		$	3,084		$	5,273		$	20,345		$	96,256		$	45,705		$	204,480

		Syndicated Loans		High Yield		Multi-Asset Credit		Alternative Credit		U.S. Direct Lending		European Direct Lending		Total Credit Group				Syndicated Loans			High Yield			Multi-Asset Credit			Alternative Credit			U.S. Direct Lending			European Direct Lending			Total Credit Group
Balance at 12/31/2020	Balance at 12/31/2020	$	27,967	$	2,863	$	2,953	$	12,897	$	56,516	$	42,276	$	145,472	Balance at 12/31/2020		$	27,967		$	2,863		$	2,953		$	12,897		$	56,516		$	42,276		$	145,472

Net new par/equity commitments	Net new par/equity commitments	115		101		393		1,230		1,067		1,613		4,519		Net new par/equity commitments		754			609			1,388			4,968			12,395			4,885			24,999
Net new debt commitments	Net new debt commitments	722		—		—		—		1,821		—		2,543		Net new debt commitments		2,306			—			100			—			7,966			3,124			13,496
Capital reductions	Capital reductions	(59)		—		—		—		(451)		(35)		(545)		Capital reductions		(603)			—			—			—			(1,801)			(87)			(2,491)
Distributions	Distributions	(39)		—		(3)		(97)		(339)		(262)		(740)		Distributions		(81)			—			8			(467)			(1,129)			(835)			(2,504)
Redemptions	Redemptions	(89)		(82)		(78)		(235)		(41)		(11)		(536)		Redemptions		(249)			(237)			(206)			(415)			(124)			(11)			(1,242)
Change in fund value	Change in fund value	(175)		45		67		148		778		(460)		403		Change in fund value		(159)			156			218			533			2,530			225			3,503
Balance at 3/31/2021		$	28,442	$	2,927	$	3,332	$	13,943	$	59,351	$	43,121	$	151,116
Average AUM(1)		$	28,205	$	2,895	$	3,143	$	13,420	$	57,934	$	42,699	$	148,296
Balance at 9/30/2021																Balance at 9/30/2021		$	29,935		$	3,391		$	4,461		$	17,516		$	76,353		$	49,577		$	181,233

(1) Represents the average of beginning and ending balances.

Table of Contents

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

AUM: ~~$196.9~~$204.5

AUM: ~~$151.1~~$181.2

FPAUM

Non-fee paying(1)

AUM not yet paying fees

~~Non-fee paying(1)~~

(1) Includes ~~$12.0~~$14.0 billion and ~~$9.1~~$8.5 billion of AUM of funds from which we indirectly earn management fees as of ~~March 31,~~September 30, 2022 and 2021, respectively, and includes $1.0 ~~billion and $0.9~~ billion of non-fee paying AUM based on our general partner commitment as of ~~March 31,~~September 30, 2022 and ~~2021, respectively.~~

2021.

7386

Table of ~~Contents~~ Contents

Credit Group—Fee Paying AUM

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

Syndicated Loans High
Yield Multi-Asset Credit Alternative Credit U.S. Direct Lending European Direct Lending Total Credit Group
Balance at 12/31/2021 $ 30,327 $ 3,632 $ 4,714 $ 8,742 $ 46,128 $ 23,847 $ 117,390
Commitments 248 159 584 286 973 — 2,250
Subscriptions/deployment/increase in leverage 1 — 5 2,454 2,473 1,986 6,919
Capital reductions (73) — — (11) (1,344) (1,157) (2,585)
Distributions (13) (3) (9) (223) (1,216) (237) (1,701)
Redemptions (66) (86) (16) (147) (35) (46) (396)
Change in fund value (123) (149) (89) 14 208 (302) (441)
Balance at 3/31/2022 $ 30,301 $ 3,553 $ 5,189 $ 11,115 $ 47,187 $ 24,091 $ 121,436
Average FPAUM(1)
$ 30,314 $ 3,593 $ 4,952 $ 9,929 $ 46,658 $ 23,969 $ 119,415
Syndicated Loans High
Yield Multi-Asset Credit Alternative Credit U.S. Direct Lending European Direct Lending Total Credit Group
Balance at 12/31/2020 $ 27,171 $ 2,861 $ 2,457 $ 6,331 $ 32,337 $ 16,860 $ 88,017
Commitments 138 101 415 481 450 — 1,585
Subscriptions/deployment/increase in leverage — — — 618 902 3,019 4,539
Capital reductions (59) — (18) — (725) (35) (837)
Distributions (10) — (7) (102) (1,054) (149) (1,322)
Redemptions (88) (82) (78) (235) (32) (131) (646)
Change in fund value (352) 45 64 (49) 423 148 279
Balance at 3/31/2021 $ 26,800 $ 2,925 $ 2,833 $ 7,044 $ 32,301 $ 19,712 $ 91,615
Average FPAUM(1)
$ 26,986 $ 2,893 $ 2,645 $ 6,688 $ 32,319 $ 18,286 $ 89,817
(1) Represents the average of beginning and ending balances.


	Syndicated Loans		High Yield		Multi-Asset Credit		Alternative Credit		U.S. Direct Lending		European Direct Lending		Total Credit Group
Balance at 6/30/2022	$	32,121	$	3,197	$	4,904	$	12,413	$	51,769	$	25,319	$	129,723

Commitments	1,117		36		89		694		441		—		2,377
Subscriptions/deployment/increase in leverage	—		—		—		1,904		2,355		2,302		6,561
Capital reductions	(53)		—		(12)		—		(113)		(327)		(505)
Distributions	(21)		(4)		(14)		(480)		(977)		(161)		(1,657)
Redemptions	(76)		(134)		(144)		100		(83)		(134)		(471)
Change in fund value	(287)		(11)		(48)		(359)		146		(1,178)		(1,737)

Balance at 9/30/2022	$	32,801	$	3,084	$	4,775	$	14,272	$	53,538	$	25,821	$	134,291


	Syndicated Loans		High Yield		Multi-Asset Credit		Alternative Credit		U.S. Direct Lending		European Direct Lending		Total Credit Group
Balance at 6/30/2021	$	28,211	$	3,149	$	3,423	$	7,916	$	36,101	$	20,788	$	99,588

Commitments	1,099		284		514		303		664		—		2,864
Subscriptions/deployment/increase in leverage	19		—		41		391		3,153		2,491		6,095
Capital reductions	(290)		—		—		—		(36)		(9)		(335)
Distributions	(15)		—		(34)		(201)		(1,108)		(110)		(1,468)
Redemptions	(82)		(77)		(61)		—		(40)		(36)		(296)
Change in fund value	(128)		35		53		(90)		390		(306)		(46)

Balance at 9/30/2021	$	28,814	$	3,391	$	3,936	$	8,319	$	39,124	$	22,818	$	106,402




	Syndicated Loans		High Yield		Multi-Asset Credit		Alternative Credit		U.S. Direct Lending		European Direct Lending		Total Credit Group
Balance at 12/31/2021	$	30,327	$	3,632	$	4,714	$	8,742	$	46,128	$	23,847	$	117,390

Commitments	3,923		259		954		1,597		1,858		—		8,591
Subscriptions/deployment/increase in leverage	1		—		5		5,471		9,675		6,742		21,894
Capital reductions	(171)		—		(41)		(25)		(1,507)		(1,539)		(3,283)
Distributions	(50)		(9)		(42)		(795)		(2,802)		(514)		(4,212)
Redemptions	(257)		(308)		(204)		(143)		(173)		(259)		(1,344)
Change in fund value	(972)		(490)		(611)		(574)		359		(2,456)		(4,744)

Balance at 9/30/2022	$	32,801	$	3,084	$	4,775	$	14,272	$	53,538	$	25,821	$	134,291


	Syndicated Loans		High Yield		Multi-Asset Credit		Alternative Credit		U.S. Direct Lending		European Direct Lending		Total Credit Group
Balance at 12/31/2020	$	27,171	$	2,861	$	2,457	$	6,331	$	32,337	$	16,860	$	88,017

Commitments	2,265		609		1,194		1,119		1,518		—		6,705
Subscriptions/deployment/increase in leverage	714		—		356		1,694		7,463		6,951		17,178
Capital reductions	(554)		—		(18)		—		(790)		(256)		(1,618)
Distributions	(37)		—		(68)		(441)		(2,656)		(581)		(3,783)
Redemptions	(249)		(234)		(189)		(294)		(99)		(233)		(1,298)
Change in fund value	(496)		155		204		(90)		1,351		77		1,201

Balance at 9/30/2021	$	28,814	$	3,391	$	3,936	$	8,319	$	39,124	$	22,818	$	106,402

Table of Contents

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

FPAUM: ~~$121.4~~$134.3

FPAUM: ~~$91.6~~$106.4

Invested capital

Market value(1)

Collateral balances (at par)

(1)Includes ~~$27.3~~$29.9 billion and ~~$20.9~~$24.6 billion from funds that primarily invest in illiquid strategies as of ~~March 31,~~September 30, 2022 and 2021, respectively. The underlying investments held in these funds are generally subject to less market volatility than investments held in liquid strategies.

7488

Table of ~~Contents~~ Contents

Credit Group—Fund Performance Metrics as of ~~March 31,~~September 30, 2022

ARCC contributed approximately 41% of the Credit Group’s total management fees for the ~~three~~nine months ended ~~March 31,~~September 30, 2022. In addition, ~~nine~~eight other significant funds, ACE III, ACE IV, ACE V, CADC, PCS, PCS II, SDL and SDL II, ~~and an open-ended secured finance fund,~~ collectively contributed approximately 27% of the Credit Group’s management fees for the ~~three~~nine months ended ~~March 31,~~September 30, 2022.

The following table presents the performance data for our significant funds that are not drawdown funds in the Credit Group as of ~~March 31,~~September 30, 2022 ($ in millions):

Returns(%)(1)

Returns(%)

Year of Inception

AUM

Year-To-Date

Since Inception(2)

Primary
Investment Strategy

Year of Inception

AUM

Current Quarter

Year-To-Date

Since Inception(1)

Primary
Investment Strategy

Fund

Gross

Net

Gross

Net

Fund

AUM

Gross

Net

Gross

Net

Gross

Primary
Investment Strategy

ARCC(3)

2004

25,291

N/A

2.7

N/A

12.1

U.S. Direct Lending

ARCC(2)

2004

25,654

N/A

1.1

N/A

5.1

N/A

11.9

U.S. Direct Lending

CADC~~(4)~~(3)

2017

3,591

N/A

1.2

N/A

6.5

U.S. Direct Lending

CADC~~(4)~~(3)

2017

4,096

N/A

1.0

N/A

(2.2)

N/A

5.2

U.S. Direct Lending

Open-ended secured finance fund(5)

2018

2,053

0.9

0.8

3.3

2.6

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.

~~(2)Since inception returns are annualized.~~

~~(3)~~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 ~~financial statements filed~~filings with the SEC, which are not part of this report.

~~(4)~~(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 ~~financial statements filed~~filings with the SEC, which are not part of this report.

~~(5)~~Gross returns do not reflect the deduction of management fees or other expenses. Net returns are calculated by subtracting the applicable management fees and other expenses from the gross returns on a monthly basis. This fund is a master/feeder structure and its AUM and returns include activity from its' investment in an affiliated Ares fund. Returns presented in the table are expressed in U.S. Dollars and are for the master fund, excluding the share class hedges. The year-to-date, and since inception returns (gross / net) for the pound sterling hedged Cayman feeder, the fund's sole feeder, are as follows: 1.0% / 0.8%, 2.1% / 1.5%.

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The following table presents the performance data of our significant drawdown funds as of ~~March 31,~~September 30, 2022 ($ 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				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	Fund												Gross(3)						Net(4)			Gross(5)		Net(6)		Fund																	Gross(3)												Net(4)												Gross(5)									Net(6)
Funds Harvesting Investments	Funds Harvesting Investments																																													Funds Harvesting Investments
ACE III(7)	ACE III(7)	2015		$	5,033		$	2,822		$	2,455		$	1,029		$	2,460		$	3,489		1.6x		1.4x		11.9			8.6				European Direct Lending			ACE III(7)		2015					$	4,613					$	2,822					$	2,249					$	1,090					$	2,179					$	3,269					1.6x						1.4x						11.7					8.5				European Direct Lending
PCS	PCS	2017	3,733			3,365			2,649			1,350			2,108			3,458			1.4x		1.3x		13.3		9.6				U.S. Direct Lending		PCS			2017					3,535						3,365						2,653						1,580						1,938						3,518						1.4x						1.3x						12.1					8.6				U.S. Direct Lending
SDL Unlevered																												SDL Unlevered		2018				5,468					922						872						156						810						966						1.2x						1.1x						8.5						6.4					U.S. Direct Lending
SDL Levered																												SDL Levered									2,045					2,022						584						1,856						2,440						1.3x						1.2x						16.1						11.8
Funds Deploying Capital	Funds Deploying Capital																															Funds Deploying Capital
ACE IV Unlevered(8)	ACE IV Unlevered(8)	2018	10,357			2,851			2,332			397			2,286			2,683			1.2x		1.1x		8.6		6.1				European Direct Lending		ACE IV Unlevered(8)			2018					9,310						2,851						2,048						451						1,966						2,417						1.2x						1.2x						8.6					6.1				European Direct Lending
ACE IV Levered(8)	ACE IV Levered(8)			4,819			3,921			858			3,980			4,838			1.3x			1.2x		12.8		9.4			ACE IV Levered(8)						4,819									3,559						993						3,556						4,549						1.4x						1.3x						12.7						9.3
SDL Unlevered		2018		5,879			922			718			142			768			910			1.1x		1.1x		9.4			7.1								U.S. Direct Lending
SDL Levered						2,045			1,703			491			1,606			2,097			1.3x		1.2x		18.5		13.8

ACE V Unlevered(9)	ACE V Unlevered(9)	2020	15,191			7,026			2,762			36			2,896			2,932			1.1x		1.1x		14.9		11.2				European Direct Lending		ACE V Unlevered(9)		2020							14,869						7,026						3,453						94						3,616						3,710						1.1x						1.1x						14.1					10.6				European Direct Lending
ACE V Levered(9)	ACE V Levered(9)			6,376			2,504			60			2,703			2,763			1.1x			1.1x		24.6		18.9			ACE V Levered(9)									6,376							3,131						141						3,370						3,511						1.2x						1.1x						22.7						17.0
PCS II		2020		5,193			5,114			1,650			—			1,733			1,733			1.1x		1.0x		NM			NM							U.S Direct Lending
PCS II(10)																												PCS II(10)		2020					5,232					5,114							2,405						15						2,368						2,383						1.0x						1.0x						1.0						(1.4)					U.S. Direct Lending
SDL II Unlevered	SDL II Unlevered	2021	13,265			1,989			408			—			423			423			1.0x		1.0x		NM		NM				U.S Direct Lending		SDL II Unlevered		2021					13,577						1,989						642						16						650						666						1.1x						1.0x						6.9					4.8				U.S. Direct Lending
SDL II Levered	SDL II Levered			5,936			1,236			—			1,315			1,315			1.1x			1.1x		NM		NM			SDL II Levered									6,047								1,704						89						1,741						1,830						1.1x						1.1x						12.8						8.8

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

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

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

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

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

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

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

(7)ACE III is made up of two feeder funds, one denominated in U.S. dollars and one denominated in Euros. The gross and net IRR and MoIC presented in the table are for the Euro denominated feeder fund. The gross and net IRR for the U.S. dollar denominated feeder fund are ~~12.7%~~12.1% and ~~9.3%~~8.9%, respectively. The gross and net MoIC for the U.S. dollar denominated feeder fund are 1.6x and ~~1.4x,~~1.5x, 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 III are for the combined fund and are converted to U.S. dollars at the prevailing quarter-end exchange rate.

(8)ACE IV is made up of four parallel funds, two denominated in Euros and two denominated in pound sterling: ACE IV (E) Unlevered, ACE IV (G) Unlevered, ACE IV (E) Levered and ACE IV (G) Levered. The gross and net IRR and MoIC presented in the table are for ACE IV (E) Unlevered and ACE IV (E) Levered. Metrics for ACE IV (E) Levered are inclusive of a U.S. dollar denominated feeder fund, which has not been presented separately The gross and net IRR for ACE IV (G) Unlevered are ~~10.0%~~9.8% and ~~7.1%~~7.0%, respectively. The gross and net MoIC for ACE IV (G) Unlevered are ~~1.2x~~1.3x and 1.2x, respectively. The gross and net IRR for ACE IV (G) Levered are ~~13.9%~~13.5% and ~~10.0%~~9.7%, respectively. The gross and net MoIC for ACE IV (G) Levered are ~~1.3x~~1.4x and ~~1.2x,~~1.3x, 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.

(9)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. The gross and net MoIC presented in the table are for ACE V (E) Unlevered and ACE V (E) Levered. Metrics for ACE V (E) Unlevered are inclusive of a Japanese yen denominated feeder fund, which has not been presented separately. Metrics for ACE V (E) Levered are inclusive of a U.S. dollar denominated feeder fund, which has not been presented separately. The gross and net IRR for ACE V (G) Unlevered are ~~14.7%~~14.9% and 11.0%, respectively. The gross and net MoIC for ACE V (G) Unlevered are 1.1x and 1.1x, respectively. The gross and net IRR for ACE V (G) Levered are ~~23.7%~~22.6% and ~~16.9%~~16.3%, respectively. The gross and net MoIC for ACE V (G) Levered are ~~1.1x~~1.2x and 1.1x, respectively. Original capital commitments are converted to U.S. dollars at the prevailing exchange rate at the time of the fund's closing. All other values for ACE V Unlevered and ACE V Levered are for the combined levered and unlevered parallel funds and are converted to U.S. dollars at the prevailing quarter-end exchange rate.

(10)Gross and net fund-level IRRs for PCS II are ~~presented~~shown on a non-annualized ~~basis.~~

basis as the time elapsed from the date of the first capital call is less than one year.

7690

Table of ~~Contents~~ Contents

Private Equity Group—Three and Nine Months Ended ~~March 31,~~September 30, 2022 Compared to Three and Nine Months Ended ~~March 31,~~September 30, 2021

Fee Related Earnings:

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


												Three months ended September 30,								Favorable (Unfavorable)						Nine months ended September 30,								Favorable (Unfavorable)
		Three months ended March 31,				Favorable (Unfavorable)			Three months ended September 30,
		2022		2021		$ Change		% Change			2022								2021			$ Change			% Change				2022				2021			$ Change			% Change
Management fees	Management fees	$	45,957	$	39,138	$	6,819	17%		Management fees				$	52,316			$	56,817		$	(4,501)		(8)%				$	145,669			$	135,930		$	9,739		7%
Other fees	Other fees	297		108		189		175		Other fees		556				370				186			50			1,261				726				535			74
Compensation and benefits	Compensation and benefits	(19,566)		(16,848)		(2,718)		(16)		Compensation and benefits		(26,865)				(23,220)				(3,645)			(16)			(70,724)				(62,047)				(8,677)			(14)
General, administrative and other expenses	General, administrative and other expenses	(6,288)		(4,486)		(1,802)		(40)		General, administrative and other expenses		(7,824)				(4,984)				(2,840)			(57)			(21,992)				(15,351)				(6,641)			(43)
Fee Related Earnings	Fee Related Earnings	$	20,400	$	17,912	2,488		14		Fee Related Earnings		$	18,183			$	28,983			(10,800)			(37)			$	54,214			$	59,258			(5,044)			(9)

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

Management fees ~~increased~~decreased for the three months ended ~~March 31,~~September 30, 2022 compared to the three months ended ~~March 31,~~September 30, 2021 primarily due to ~~new commitments in~~one-time catch-up fees of $11.5 million that were generated from ACOF VI in the prior year period. Management fees for the three and nine months ended September 30, 2022 included increases of $2.2 million and $9.7 million, respectively, compared to the same periods in 2021 primarily driven by deployment in ASOF. ASOF II, which launched during the fourth quarter of 2021, contributed $7.4 million and ~~our second special opportunities fund~~$10.6 million in management fees for the three and nine months ended September 30, 2022, respectively. Management fees for ACOF IV, ACOF V and SSF IV decreased by ~~$4.8~~$7.5 million ~~$4.5 million~~for the nine months ended September 30, 2022 compared to the same period in 2021 due to various asset realizations and ~~$0.5 million, respectively~~. distributions that reduced the fee bases. The increase in management fees for the nine months ended September 30, 2022 was also partially offset by ~~a decrease~~one-time catch up fees of ~~$2.2~~$2.5 million generated from ACOF ~~IV and ACOF V due to distributions resulting~~VI in ~~reductions to its fee bases.~~the prior year period.

Table of Contents

The increase in effective management fee rate for the for the three and nine months ended ~~March 31,~~September 30, 2022, respectively, compared to the ~~three months ended March 31,~~same periods in 2021 was primarily driven by ~~additional commitments to ACOF VI and increased~~ deployment of capital in ASOF ~~both~~and ASOF II, each of which have a higher effective management fee rate than the Private Equity Group’s average effective management fee rate.

Compensation and Benefits. Compensation and benefits increased by ~~$2.7~~$3.6 million, or 16%, for the three months ended ~~March 31,~~September 30, 2022 compared to the three months ended ~~March 31,~~September 30, 2021 and by $8.7 million, or 14%, for the nine months ended September 30, 2022 compared to the nine months ended September 30, 2021. The ~~increase was~~increases were primarily driven by higher incentive ~~compensation resulting from increased fee revenues and increase in payroll related taxes due to merit increases for the three months ended March 31, 2022, when compared to the same period in 2021.~~compensation.

General, Administrative and Other Expenses. General, administrative and other expenses increased by ~~$1.8~~$2.8 million, or ~~40%~~57%, for the three months ended ~~March 31,~~September 30, 2022 compared to the three months ended ~~March 31,~~September 30, 2021 and by $6.6 million, or 43%, for the nine months ended September 30, 2022 compared to the nine months ended September 30, 2021. Travel, marketing sponsorships and certain fringe benefits collectively increased by $0.6 million and $2.2 million for the three and nine months ended September 30, 2022, respectively, compared to the same periods in 2021, as marketing and company events returned to pre-pandemic levels and travel continues to ramp up toward historical levels. In connection with our fundraising efforts, amortization of placement fees has increased by ~~$0.9~~$1.0 million and $3.0 million for the three and nine months ended ~~March 31,~~September 30, 2022, ~~when~~respectively, compared to the same ~~period~~periods in ~~2021. The increase was~~2021, primarily ~~associated with~~driven by new commitments to ~~our second special opportunities fund.~~ASOF II.

There continue to be positive developments in the recovery from the COVID-19 pandemic that have reduced restrictions on travel and gathering. Those operating expenses that were impacted by the pandemic, particularly marketing sponsorships and events, increased after the first half of 2021. Our operating expenses, most notably travel and entertainment, and certain office services and fringe benefits, increased by $0.3 million for the three months ended March 31, 2022, when compared to the same period in 2021.

~~Table of Contents~~

Realized Income:

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


		Three months ended March 31,				Favorable (Unfavorable)				Three months ended September 30,		Favorable (Unfavorable)				Nine months ended September 30,				Favorable (Unfavorable)
		2022		2021		$ Change		% Change				2022		2021		$ Change		% Change		2022		2021		$ Change		% Change
Fee Related Earnings	Fee Related Earnings	$	20,400	$	17,912	$	2,488	14	%		Fee Related Earnings	$	18,183	$	28,983	$	(10,800)	(37)	%	$	54,214	$	59,258	$	(5,044)	(9)%
Performance income—realized	Performance income—realized	2,212		71,218		(69,006)		(97)			Performance income—realized	—		34,316		(34,316)		(100)		2,212		159,479		(157,267)		(99)
Performance related compensation—realized	Performance related compensation—realized	(1,786)		(57,026)		55,240		97			Performance related compensation—realized	(5)		(27,483)		27,478		100		(1,791)		(127,706)		125,915		99
Realized net performance income	Realized net performance income	426		14,192		(13,766)		(97)			Realized net performance income	(5)		6,833		(6,838)		NM		421		31,773		(31,352)		(99)
Investment income (loss)—realized	Investment income (loss)—realized	1,603		(8,898)		10,501		NM			Investment income (loss)—realized	8		1,878		(1,870)		(100)		2,283		(4,387)		6,670		NM
Interest and other investment income—realized	Interest and other investment income—realized	1,502		118		1,384		NM			Interest and other investment income—realized	201		4,861		(4,660)		(96)		1,898		9,825		(7,927)		(81)
Interest expense	Interest expense	(3,373)		(1,453)		(1,920)		(132)			Interest expense	(4,183)		(2,505)		(1,678)		(67)		(11,185)		(5,434)		(5,751)		(106)
Realized net investment loss		(268)		(10,233)		9,965		97
Realized net investment income (loss)											Realized net investment income (loss)	(3,974)		4,234		(8,208)		NM		(7,004)		4		(7,008)		NM
Realized Income	Realized Income	$	20,558	$	21,871	(1,313)		(6)			Realized Income	$	14,204	$	40,050	(25,846)		(65)		$	47,631	$	91,035	(43,404)		(48)

NM - Not Meaningful

Realized net ~~performance income for the three months ended March 31, 2021 was primarily attributable to realizations from a partial sale of ACOF IV's position in AZEK.~~

~~Realized net~~ investment loss for the three and nine months ended ~~March 31,~~September 30, 2022 ~~was attributable to~~largely represents interest expense ~~allocations~~exceeding limited realization activity during these periods. Interest expense, which is allocated based on the cost basis of investments, ~~exceeding limited realization activity during the quarter. Interest expense has~~ increased over the comparative ~~period~~periods primarily due to the issuance of the 2051 Subordinated Notes and the 2052 Senior Notes in June 2021 and January 2022, respectively.

Realized net performance income and realized net investment ~~loss~~income for the three and nine months ended ~~March 31,~~September 30, 2021 was primarily attributable to realizations from the monetization of ACOF IV’s investment in Farrow & Ball following the sale of the company and of various assets in a fund within our special opportunities strategy. Realized net performance income for the nine months ended September 30, 2021 also included realizations from partial sales of ACOF IV’s position in AZEK. For the nine months ended September 30, 2021, realized ~~losses~~net investment income was offset by a realized loss recognized in connection with an Asian corporate private equity fund’s sale of its investment in a dairy farm ~~company, partially offset by realizations from a partial sale~~company.

Table of ~~ACOF IV’s position in AZEK.~~Contents

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, 2022						As of December 31, 2021							As of September 30, 2022						As of December 31, 2021

		Accrued Performance Income		Accrued Performance Compensation		Accrued Net Performance Income		Accrued Performance Income		Accrued Performance Compensation		Accrued Net Performance Income			Accrued Performance Income		Accrued Performance Compensation		Accrued Net Performance Income		Accrued Performance Income		Accrued Performance Compensation		Accrued Net Performance Income
ACOF III	ACOF III	$	30,087	$	24,070	$	6,017	$	43,510	$	34,808	$	8,702	ACOF III	$	18,988	$	15,190	$	3,798	$	43,510	$	34,808	$	8,702
ACOF IV	ACOF IV	334,042		267,233		66,809		387,901		310,321		77,580		ACOF IV	327,046		261,637		65,409		387,901		310,321		77,580
ACOF V	ACOF V	683,115		546,492		136,623		666,074		532,859		133,215		ACOF V	750,833		600,666		150,167		666,074		532,859		133,215
ACOF VI	ACOF VI	84,593		67,674		16,919		73,261		58,608		14,653		ACOF VI	124,562		99,650		24,912		73,261		58,608		14,653

ASOF	ASOF	359,831		251,882		107,949		338,857		237,200		101,657		ASOF	378,132		264,692		113,440		338,857		237,200		101,657

Other funds	Other funds	46,570		30,206		16,364		33,526		21,787		11,739		Other funds	69,850		46,017		23,833		33,526		21,787		11,739
Total Private Equity Group	Total Private Equity Group	$	1,538,238	$	1,187,557	$	350,681	$	1,543,129	$	1,195,583	$	347,546	Total Private Equity Group	$	1,669,411	$	1,287,852	$	381,559	$	1,543,129	$	1,195,583	$	347,546

~~Table of Contents~~

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

As of December 31, 2021 Activity during the period As of March 31, 2022
Waterfall Type Accrued Carried Interest Change in Unrealized Realized Other Adjustments Accrued Carried Interest
ACOF III American $ 43,510 $ (13,423) $ — $ — $ 30,087
ACOF IV American 387,901 (51,647) (2,212) — 334,042
ACOF V American 666,074 17,041 — — 683,115
ACOF VI American 73,261 11,332 — — 84,593
ASOF European 338,857 20,974 — — 359,831
Other funds European 7,356 7,242 — 493 15,091
Other funds American 26,170 5,309 — — 31,479
Total Private Equity Group $ 1,543,129 $ (3,172) $ (2,212) $ 493 $ 1,538,238


		As of December 31, 2021		Activity during the period						As of September 30, 2022
	Waterfall Type	Accrued Carried Interest		Change in Unrealized		Realized		Other Adjustments		Accrued Carried Interest
ACOF III	American	$	43,510	$	(24,522)	$	—	$	—	$	18,988
ACOF IV	American	387,901		(58,643)		(2,212)		—		327,046
ACOF V	American	666,074		84,759		—		—		750,833
ACOF VI	American	73,261		51,301		—		—		124,562
ASOF	European	338,857		39,275		—		—		378,132
Other funds	European	30,784		38,208		—		799		69,791
Other funds	American	2,742		(2,683)		—		—		59
Total Private Equity Group		$	1,543,129	$	127,695	$	(2,212)	$	799	$	1,669,411

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Private Equity Group—Assets Under Management

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

Corporate Private Equity Special Opportunities Total Private Equity Group
Balance at 12/31/2021 $ 21,639 $ 11,765 $ 33,404
Net new par/equity commitments — 570 570
Capital reductions (3) — (3)
Distributions (285) (98) (383)
Change in fund value (145) 122 (23)
Balance at 3/31/2022 $ 21,206 $ 12,359 $ 33,565
Average AUM(1)
$ 21,423 $ 12,062 $ 33,485
Corporate Private Equity Special Opportunities Total Private Equity Group
Balance at 12/31/2020 $ 18,233 $ 5,721 $ 23,954
Net new par/equity commitments 29 (50) (21)
Capital reductions (2) — (2)
Distributions (582) — (582)
Change in fund value 1,705 319 2,024
Balance at 3/31/2021 $ 19,383 $ 5,990 $ 25,373
Average AUM(1)
$ 18,808 $ 5,856 $ 24,664
(1) Represents the average of beginning and ending balances.


	Corporate Private Equity		Special Opportunities		Total Private Equity Group
Balance at 6/30/2022	$	21,270	$	12,142	$	33,412

Net new par/equity commitments	—		1,337		1,337

Capital reductions	(2)		—		(2)
Distributions	(79)		(3)		(82)

Change in fund value	367		234		601
Balance at 9/30/2022	$	21,556	$	13,710	$	35,266


	Corporate Private Equity		Special Opportunities		Total Private Equity Group
Balance at 6/30/2021	$	20,603	$	6,307	$	26,910

Net new par/equity commitments	1,453		200		1,653
Net new debt commitments	—		200		200
Capital reductions	(2)		—		(2)
Distributions	(864)		(269)		(1,133)

Change in fund value	828		506		1,334
Balance at 9/30/2021	$	22,018	$	6,944	$	28,962




	Corporate Private Equity		Special Opportunities		Total Private Equity Group
Balance at 12/31/2021	$	21,639	$	11,765	$	33,404

Net new par/equity commitments	—		2,137		2,137

Capital reductions	(6)		(200)		(206)
Distributions	(469)		(133)		(602)

Change in fund value	392		141		533
Balance at 9/30/2022	$	21,556	$	13,710	$	35,266


	Corporate Private Equity		Special Opportunities		Total Private Equity Group
Balance at 12/31/2020	$	18,233	$	5,721	$	23,954

Net new par/equity commitments	1,554		150		1,704
Net new debt commitments	—		200		200
Capital reductions	(7)		—		(7)
Distributions	(2,273)		(554)		(2,827)

Change in fund value	4,511		1,427		5,938
Balance at 9/30/2021	$	22,018	$	6,944	$	28,962

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

AUM: ~~$33.6~~$35.2

AUM: ~~$25.4~~$29.0

FPAUM

Non-fee paying(1)

AUM not yet paying fees

(1) Includes ~~$1.3~~$1.1 billion and ~~$1.1~~$1.2 billion of non-fee paying AUM based on our general partner commitment as of ~~March 31,~~September 30, 2022 and 2021, respectively.

Table of Contents

Private Equity Group—Fee Paying AUM

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

Corporate Private Equity Special Opportunities Total Private Equity Group
Balance at 12/31/2021 $ 12,473 $ 4,216 $ 16,689
Subscriptions/deployment/increase in leverage 17 98 115
Distributions (87) (359) (446)
Change in fee basis (217) — (217)
Balance at 3/31/2022 $ 12,186 $ 3,955 $ 16,141
Average FPAUM(1)
$ 12,330 $ 4,086 $ 16,416
Corporate Private Equity Special Opportunities Total Private Equity Group
Balance at 12/31/2020 $ 14,770 $ 2,723 $ 17,493
Commitments 79 — 79
Subscriptions/deployment/increase in leverage 108 484 592
Distributions (410) (166) (576)
Change in fund value (1) — (1)
Change in fee basis (2,739) — (2,739)
Balance at 3/31/2021 $ 11,807 $ 3,041 $ 14,848
Average FPAUM(1)
$ 13,289 $ 2,882 $ 16,171
(1) Represents the average of beginning and ending balances.


	Corporate Private Equity		Special Opportunities		Total Private Equity Group
Balance at 6/30/2022	$	12,116	$	5,575	$	17,691


Subscriptions/deployment/increase in leverage	21		1,465		1,486

Distributions	(25)		(181)		(206)

Change in fund value	(2)		(1)		(3)
Change in fee basis	(14)		—		(14)
Balance at 9/30/2022	$	12,096	$	6,858	$	18,954


	Corporate Private Equity		Special Opportunities		Total Private Equity Group
Balance at 6/30/2021	$	11,748	$	3,259	$	15,007

Commitments	1,427		—		1,427
Subscriptions/deployment/increase in leverage	89		487		576

Distributions	(471)		(44)		(515)

Change in fund value	5		—		5
Change in fee basis	(6)		—		(6)
Balance at 9/30/2021	$	12,792	$	3,702	$	16,494




	Corporate Private Equity		Special Opportunities		Total Private Equity Group
Balance at 12/31/2021	$	12,473	$	4,216	$	16,689


Subscriptions/deployment/increase in leverage	38		3,661		3,699

Distributions	(163)		(1,019)		(1,182)

Change in fund value	(4)		—		(4)
Change in fee basis	(248)		—		(248)
Balance at 9/30/2022	$	12,096	$	6,858	$	18,954


	Corporate Private Equity		Special Opportunities		Total Private Equity Group
Balance at 12/31/2020	$	14,770	$	2,723	$	17,493

Commitments	1,579		—		1,579
Subscriptions/deployment/increase in leverage	535		1,308		1,843

Distributions	(1,332)		(329)		(1,661)

Change in fund value	5		—		5
Change in fee basis	(2,765)		—		(2,765)
Balance at 9/30/2021	$	12,792	$	3,702	$	16,494

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

FPAUM: ~~$16.1~~$19.0

FPAUM: ~~$14.8~~$16.5

Invested capital

Capital commitments

Private Equity Group—Fund Performance Metrics as of ~~March 31,~~September 30, 2022

Three significant funds, ACOF V, ASOF and ACOF VI, collectively contributed approximately ~~80%~~75% of the Private Equity Group’s management fees for the ~~three~~nine months ended ~~March 31,~~September 30, 2022.

The following table presents the performance data of our significant drawdown funds as of ~~March 31,~~September 30, 2022 ($ 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		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	Fund										Gross(3)					Net(4)		Gross(5)		Net(6)		Fund									Gross(3)								Net(4)							Gross(5)				Net(6)

Funds Deploying Capital	Funds Deploying Capital																																		Funds Deploying Capital
ACOF V	ACOF V	2017	$	9,220	$	7,850	$	7,396	$	3,132		$	8,424	$	11,556		1.6x		1.4x		16.2		11.5	Corporate Private Equity	ACOF V		2017		$	9,426			$	7,850			$	7,415			$	3,243		$	8,702			$	11,945		1.6x		1.4x		15.4		11.0		Corporate Private Equity
ASOF	ASOF	2019	5,536		3,518		4,965		2,784			4,113		6,897			1.6x		1.5x		46.3		36.0	Special Opportunities	ASOF	2019		5,430				3,518				5,407				2,964			4,420				7,384			1.6x		1.5x		33.8		26.1		Special Opportunities
ACOF VI	ACOF VI	2020	6,140		5,743		2,789		291			3,092		3,383			1.2x		1.1x		23.7		37.7	Corporate Private Equity	ACOF VI	2020		6,327				5,743				3,728				323			4,279				4,602			1.2x		1.1x		21.5		22.2		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)For the corporate private equity funds, the gross MoIC is calculated at the investment-level and is based on the interests of all partners. The gross MoIC is before giving effect to management fees, carried interest, as applicable, and other expenses. For the special opportunities funds, 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. The gross MoICs for the corporate private equity ~~and special opportunities~~ funds are also calculated before giving effect to any bridge financings. Inclusive of bridge financings, the gross MoIC would be 1.5x for ACOF V and 1.2x for ACOF ~~VI, and 1.6x for ASOF, respectively.~~VI.

(4)The net MoIC for ASOF is calculated at the fund-level. 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. The net MoIC for the corporate private equity funds is calculated at the investment level. For all funds, 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 and carried interest, other expenses and credit facility interest expenses, as applicable. The net MoICs for the corporate private equity ~~and special opportunities~~ funds are also calculated before giving effect to any bridge financings. Inclusive of bridge financings, the net MoIC would be ~~1.3x~~1.4x for ACOF V and 1.1x for ACOF ~~VI, and 1.4x for ASOF.~~VI.

(5)For the corporate private equity funds, the gross IRR is an annualized since inception gross internal rate of return of cash flows to and from investments and the residual value of the investments at the end of the measurement period. Gross IRRs reflect returns to all partners. 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. For the special opportunities funds 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 for the corporate private equity ~~and special opportunities~~ funds are also calculated before giving effect to any bridge financings. Inclusive of bridge financings, the gross IRRs would be ~~16.1%~~15.3% for ACOF V ~~22.2%~~and 20.1% for ACOF ~~VI, and 44.9% for ASOF.~~VI.

(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 non-fee paying limited partners 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 for the corporate private equity ~~and special opportunities~~ funds are also calculated before giving effect to any bridge financings. Inclusive of bridge financings, the net IRRs would be ~~11.6%~~11.1% for ACOF V ~~27.1%~~and 18.4% for ACOF ~~VI, and 34.9% for ASOF.~~VI.

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Real Assets Group—Three and Nine Months Ended ~~March 31,~~September 30, 2022 Compared to Three and Nine Months Ended ~~March 31,~~September 30, 2021

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)				Three months ended September 30,					Favorable (Unfavorable)				Nine months ended September 30,			Favorable (Unfavorable)
			2022		2021			$ Change		% Change		2022		2021		$ Change		% Change	2022		2021		$ Change		% Change
Management fees	Management fees		$	72,487	$	39,825		$	32,662	82%	Management fees	$	91,013	$	67,934	$	23,079	34%	$	254,233	$	150,691	$	103,542	69%
Fee related performance revenues	Fee related performance revenues		358		666			(308)		(46)	Fee related performance revenues	855		579		276		48	2,178		1,938		240		12
Other fees	Other fees		7,866		648			7,218		NM	Other fees	11,493		3,681		7,812		212	27,924		4,604		23,320		NM
Compensation and benefits	Compensation and benefits		(33,637)		(20,179)			(13,458)		(67)	Compensation and benefits	(46,947)		(33,070)		(13,877)		(42)	(121,183)		(73,438)		(47,745)		(65)
General, administrative and other expenses	General, administrative and other expenses		(7,637)		(3,677)			(3,960)		(108)	General, administrative and other expenses	(10,032)		(6,674)		(3,358)		(50)	(28,308)		(14,212)		(14,096)		(99)
Fee Related Earnings	Fee Related Earnings		$	39,437	$	17,283		22,154		128	Fee Related Earnings	$	46,382	$	32,450	13,932		43	$	134,844	$	69,583	65,261		94

NM - Not Meaningful

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

Management fees increased by $27.8 million and $102.2 million for the three and nine months ended ~~March 31,~~September 30, 2022, respectively, compared to the three and nine months ended ~~March 31,~~September 30, 2021 ~~primarily~~ due to funds from the Black Creek Acquisition and Infrastructure Debt Acquisition. ~~The Infrastructure Debt Acquisition closed on February 10, 2022~~Excluding one-time catch-up fees of $1.8 million and ~~fees earned from funds in this strategy are expected to increase ratably in future reporting periods. Management fees from Ares Climate Infrastructure Partners, L.P. (“ACIP”)~~ ~~increased by$2.6~~$4.8 million for the three and nine months ended ~~March 31,~~September 30, 2022, respectively, management fees from US X increased by $2.7 million and $9.4 millionfor the three and nine months ended September 30, 2022, respectively, compared to the same periods in 2021. Management fees also increased by $3.9 million and $10.5 million, for the three and nine months ended ~~March 31, 2021~~September 30, 2022, respectively, due to ~~additional~~new commitments. to our sixth European real estate equity fund. Management fees from real estate debt funds increased by ~~$2.2~~$2.0 million and $6.4 million for the ~~period~~three and nine months ended September 30, 2022, respectively, compared to the same periods in 2021, primarily due to the continued fundraising and subsequent deployment within these open-ended funds. The increases in management fees were partially offset by decreases driven by one-time catch-up fees

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generated by Ares European Property Enhancement Partners III, SCSp and ACIP in the prior year periods. In addition, management fees from US IX and EF V collectively decreased by $4.6 million and $11.9 million for the three and nine months ended September 30, 2022, respectively, compared to the same periods in 2021. The fee base for US IX has been reduced due to various asset realizations and distributions and the fee base for EF V changed from committed capital to invested capital following the launch of our sixth European real estate equity fund.

The ~~decrease~~decreases in effective management fee rate for the three and nine months ended ~~March 31,~~September 30, 2022 compared to the three and nine months ended ~~March 31,~~September 30, 2021 ~~was~~were primarily due to ~~the increase in~~recently acquired funds with effective management fees rates below 0.75%, including funds within our infrastructure debt strategy ~~our~~and certain newly managed core/core-plus and industrial U.S. real estate equity ~~funds and~~funds. The decreases were also attributable to deployment in our real estate debt funds ~~driven by increased deployment.~~that have effective management fee rates below 0.75%. The ~~decrease~~decreases in effective management fee ~~rate is~~rates were partially offset by ~~an increase~~additional capital raised in ~~management fees from other real estate equity funds. Our most recent real estate equity funds pay a fee~~

~~Table of Contents~~

~~on committed capital that increases once that capital is invested. As a result,~~ our non-traded REITs, which have effective management fee ~~rate decreases immediately following capital raising~~rates between 1.10% and ~~increases as capital is subsequently deployed.~~1.25%.

Other Fees. Other fees increased by ~~$7.2~~$7.8 million, ~~to $7.9 million~~or 212%, for the three months ended ~~March 31,~~September 30, 2022 compared to the three months ended ~~March 31,~~September 30, 2021 and by $23.3 million for the nine months ended September 30, 2022 compared to the nine months ended September 30, 2021. ~~The increase~~These increases primarily ~~represents~~represent higher fees that were generated under the investment management agreements of the funds that wewere acquired in the Black Creek Acquisition, including property-related fees, such as acquisition, development and property ~~management.~~management, of $5.8 million and $17.8 million for the three and nine months ended September 30, 2022, respectively, compared to the same periods in 2021, of which $4.6 million and $6.9 million for the comparative periods related to development fees from AIREIT. These property-related fees are recognized as services are performed which may result in periodic fluctuations. Other fees also includes upfront transaction fees, referred to as facilitation fees, which are generated when investors contribute real property through a like-kind 1031 exchange for fund shares. For the three and nine months ended September 30, 2022 when compared to the same periods in 2021, we have recognized facilitation fees of $0.7 million and $3.8 million, respectively.

Compensation and Benefits. Compensation and benefits increased by ~~$13.5~~$13.9 million, or ~~67%~~42%, for the three months ended ~~March 31,~~September 30, 2022 compared to the three months ended ~~March 31,~~September 30, 2021 and by $47.7 million, or 65%, for the nine months ended September 30, 2022 compared to the nine months ended September 30, 2021. The increases were primarily driven by headcount growth from acquisitions and to support the expansion of our business, as we continued to add professionals to support our growing U.S. real estate equity and infrastructure opportunities platforms. Headcount growth attributable to the Infrastructure Debt Acquisition contributed $3.9 million and $9.4 million in recurring employment related costs for the three and nine months ended September 30, 2022, respectively. The increase in salaries and benefits ~~was primarily driven by compensation and benefit expenses~~for the nine months ending September 30, 2022 included $21.7 million from the first two quarters of ~~$9.5 million and $2.0 million, respectively, associated with the investment and investment support professionals hired as part of~~2022 related to the Black Creek Acquisition ~~and Infrastructure Debt Acquisition. Compensation and benefit expenses in relation to~~which did not have comparable results as the ~~professionals hired as part~~transaction closed at the beginning of the ~~Infrastructure Debt Acquisition will increase ratably in future reporting periods.~~third quarter of 2021.

Average headcount for the ~~quarter-to-date period~~third quarter of 2022 increased by ~~119%~~29% to ~~278~~328 investment and investment support professionals for the ~~first quarter of~~ 2022 period from ~~127~~255 professionals for the same period in 2021, including ~~133~~25 professionals from the Infrastructure Debt Acquisition. Average headcount for the year-to-date period increased by 79% to 303 investment and investment support professionals for the third quarter of 2022 from 169 professionals for the same period in 2021, including 146 professionals from the Black Creek Acquisition and the Infrastructure Debt Acquisition.

General, Administrative and Other Expenses. General, administrative and other expenses increased by ~~$4.0~~$3.4 million, or ~~108%~~50%, for the three months ended ~~March 31,~~September 30, 2022 compared to the three months ended ~~March 31,~~September 30, 2021 and by $14.1 million, or 99%, for the nine months ended September 30, 2022 compared to the nine months ended September 30, 2021. The ~~change was principally driven by an~~Infrastructure Debt Acquisition has contributed general, administrative and other expenses of $1.4 million and $3.0 million for the three and nine months ended September 30, 2022, respectively. The increase in general, administrative and other expenses for the nine months ending September 30, 2022 included $4.7 million from the first two quarters of ~~$3.0~~2022 related to the Black Creek Acquisition which did not have comparable results as the transaction closed at the beginning of the third quarter of 2021.

Excluding the impact from the acquisitions, other operating expenses, most notably travel, marketing sponsorships and certain fringe benefits, collectively increased by $2.7 million for the nine months ended September 30, 2022 compared to the same period in 2021, as travel, marketing and company events have returned to pre-pandemic levels. Certain expenses, primarily the occupancy costs, information technology and information ~~technology~~services, have also increased by $0.7 million and $1.4 million for the three and nine months ended September 30, 2022, respectively, compared to the same periods in 2021, to support the expanding platform following the Black Creek Acquisition and Infrastructure Debt Acquisition, by higher travel, entertainment and marketing sponsorships expenses and by higher placement fees, primarily associated with new commitments to ACIP and our open-ended industrial real estate fund.platform.

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Realized Income:

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


			Three months ended March 31,			Favorable (Unfavorable)						Three months ended September 30,										Favorable (Unfavorable)								Nine months ended September 30,							Favorable (Unfavorable)
		Three months ended March 31,			Favorable (Unfavorable)						Three months ended September 30,								Favorable (Unfavorable)										Nine months ended September 30,							Favorable (Unfavorable)
				2022				2021		$ Change					% Change	2022						2021			$ Change					% Change			2022				2021			$ Change			% Change
Fee Related Earnings	Fee Related Earnings					$	39,437		$	17,283				$	22,154			128%			Fee Related Earnings		$	46,382			$	32,450			$	13,932			43%			$	134,844		$	69,583		$	65,261		94%
Performance income—realized	Performance income—realized					34,293			1,281				33,012				NM				Performance income—realized		26,939				4,114				22,825				NM			78,637			10,317			68,320			NM
Performance related compensation—realized	Performance related compensation—realized					(22,209)			(776)				(21,433)				NM			Performance related compensation—realized		(17,115)				(2,809)				(14,306)				NM			(50,510)			(6,983)			(43,527)			NM
Realized net performance income	Realized net performance income					12,084			505				11,579				NM			Realized net performance income		9,824				1,305				8,519				NM			28,127			3,334			24,793			NM
Investment income—realized	Investment income—realized					3,453			1,506				1,947				129			Investment income—realized		339				1,841				(1,502)				(82)			4,224			13,877			(9,653)			(70)
Interest and other investment income—realized	Interest and other investment income—realized					2,777			2,354				423				18			Interest and other investment income—realized		2,180				918				1,262				137			7,597			4,783			2,814			59
Interest expense	Interest expense					(2,389)			(1,335)				(1,054)				(79)			Interest expense		(3,095)				(1,904)				(1,191)				(63)			(8,197)			(4,528)			(3,669)			(81)
Realized net investment income						3,841			2,525				1,316				52
Realized net investment income (loss)																				Realized net investment income (loss)		(576)				855				(1,431)				NM			3,624			14,132			(10,508)			(74)
Realized Income	Realized Income					$	55,362		$	20,313			35,049				173			Realized Income		$	55,630			$	34,610			21,020				61			$	166,595		$	87,049		79,546			91

NM - Not Meaningful

Realized net performance income and realized net investment income for the three and nine months ended ~~March 31,~~September 30, 2022 were primarily attributable to ~~distributions~~realizations from US VIII driven by ~~sales of investments in two~~ multifamily ~~properties.~~

and industrial property sales. Realized net performance income for the three and nine months ended ~~March 31,~~September 30, 2022 also included incentive fees generated from an industrial real estate fund.

Realized net performance income and realized net investment income for the three and nine months ended September 30, 2021 ~~was~~were primarily ~~generated~~attributable to realizations from the sale of ~~a property~~multiple properties held in ~~a European~~U.S. real estate equity ~~fund.~~funds. Realized net investment income for the ~~three~~nine months ended ~~March 31,~~September 30, 2021 was ~~primarily~~also attributable to ~~a distribution~~monetization of various assets in an infrastructure opportunities fund and to distributions from a real estate debt ~~vehicle.~~vehicles, driven by operating income during the period.

~~Realized net investment income for the three months ended March 31, 2022 and 2021 also included interest~~Interest expense, ~~allocations~~which is allocated based on the cost basis of ~~investments. Interest expense~~investments, increased over the comparative ~~period~~periods primarily due to the issuance of the 2051 Subordinated Notes and the 2052 Senior Notes in June 2021 and January 2022, respectively.

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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, 2022 As of December 31, 2021
Accrued Performance Income Accrued Performance Compensation Accrued Net Performance Income Accrued Performance Income Accrued Performance Compensation Accrued Net Performance Income
US VIII $ 64,184 $ 41,078 $ 23,106 $ 88,112 $ 56,391 $ 31,721
US IX 126,813 78,624 48,189 110,074 68,246 41,828
EF IV 72,335 43,402 28,933 70,600 42,361 28,239
EF V 71,143 49,800 21,343 69,946 48,962 20,984
AREOF III 41,034 24,620 16,414 24,204 14,523 9,681
EIF V 46,851 35,021 11,830 62,592 46,787 15,805
Other real assets funds 139,419 86,666 52,753 110,155 68,599 41,556
Other fee generating funds(1)
3,763 — 3,763 3,777 — 3,777
Total Real Assets Group $ 565,542 $ 359,211 $ 206,331 $ 539,460 $ 345,869 $ 193,591

~~(1)Relates to investment income from AREA Sponsor Holdings LLC that is reclassified for segment reporting to align with the character of the underlying income generated.~~


	As of September 30, 2022						As of December 31, 2021


	Accrued Performance Income		Accrued Performance Compensation		Accrued Net Performance Income		Accrued Performance Income		Accrued Performance Compensation		Accrued Net Performance Income
US VIII	$	38,159	$	24,421	$	13,738	$	88,112	$	56,391	$	31,721
US IX	127,697		79,172		48,525		110,074		68,246		41,828
EF IV	66,665		40,000		26,665		70,600		42,361		28,239
EF V	27,760		19,432		8,328		69,946		48,962		20,984
AREOF III	53,867		32,320		21,547		24,204		14,523		9,681
EIF V	87,029		65,054		21,975		62,592		46,787		15,805
Other real assets funds	186,025		114,968		71,057		113,932		68,599		45,333
Total Real Assets Group	$	587,202	$	375,367	$	211,835	$	539,460	$	345,869	$	193,591

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

As of December 31, 2021 Activity during the period As of March 31, 2022
Waterfall
Type Accrued Performance
Income Change in Unrealized Realized Other
Adjustments Accrued
Performance
Income
Accrued Carried Interest
US VIII European $ 88,112 $ 9,714 $ (33,642) $ — $ 64,184
US IX European 110,074 16,739 — — 126,813
EF IV American 70,600 1,735 — — 72,335
EF V American 69,946 1,197 — — 71,143
AREOF III European 24,204 16,830 — — 41,034
EIF V European 62,592 (15,741) — — 46,851
Other real assets funds European 41,186 13,116 — 5,376 59,678
Other real assets funds American 68,969 10,772 — — 79,741
Other fee generating funds(1)
American 3,777 (14) — — 3,763
Total accrued carried interest 539,460 54,348 (33,642) 5,376 565,542
Other real estate funds Incentive — 651 (651) — —
Total Real Assets Group $ 539,460 $ 54,999 $ (34,293) $ 5,376 $ 565,542












		As of December 31, 2021		Activity during the period						As of September 30, 2022
	Waterfall Type	Accrued Performance Income		Change in Unrealized		Realized		Foreign Exchange and Other Adjustments		Accrued Performance Income
Accrued Carried Interest
US VIII	European	$	88,112	$	15,667	$	(65,620)	$	—	$	38,159
US IX	European	110,074		17,623		—		—		127,697
EF IV	American	70,600		(3,935)		—		—		66,665
EF V	American	69,946		(42,186)		—		—		27,760
AREOF III	European	24,204		29,663		—		—		53,867
EIF V	European	62,592		24,437		—		—		87,029
Other real assets funds	European	52,262		61,675		(709)		4,100		117,328
Other real assets funds	American	61,670		7,765		(1,000)		262		68,697
Total accrued carried interest		539,460		110,709		(67,329)		4,362		587,202
Other real assets funds	Incentive	—		11,308		(11,308)		—		—
Total Real Assets Group		$	539,460	$	122,017	$	(78,637)	$	4,362	$	587,202

~~(1)Relates to investment income from AREA Sponsor Holdings LLC that is reclassified for segment reporting to align with the character of the underlying income generated.~~

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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 12/31/2021 $ 24,677 $ 6,827 $ 9,659 $ 4,756 $ — $ 45,919
Acquisitions — — — — 8,184 8,184
Net new par/equity commitments 1,598 1,183 227 — 50 3,058
Net new debt commitments 705 — 400 — — 1,105
Capital reductions (234) — (28) — — (262)
Distributions (750) (308) (47) (23) — (1,128)
Redemptions (91) — (45) — — (136)
Change in fund value 2,056 (19) 59 (309) — 1,787
Balance at 3/31/2022 $ 27,961 $ 7,683 $ 10,225 $ 4,424 $ 8,234 $ 58,527
Average AUM(1)
$ 26,319 $ 7,255 $ 9,942 $ 4,590 $ 8,209 $ 56,315
U.S. Real Estate Equity European Real Estate Equity Real Estate
Debt Infrastructure Opportunities Infrastructure Debt Total Real Assets Group
Balance at 12/31/2020 $ 4,404 $ 4,811 $ 5,593 $ 3,485 $ — $ 18,293
Net new par/equity commitments 433 94 203 — — 730
Net new debt commitments — — 1,880 — — 1,880
Capital reductions — — (232) — — (232)
Distributions (43) (96) (32) (52) — (223)
Change in fund value 115 (39) 38 213 — 327
Balance at 3/31/2021 $ 4,909 $ 4,770 $ 7,450 $ 3,646 $ — $ 20,775
Average AUM(2)
$ 4,657 $ 4,791 $ 6,522 $ 3,566 $ — $ 19,536
(1) Represents the average of beginning and ending balances except for the infrastructure debt funds within the Real Assets Group, which represents the average calculated using AUM on the date of the Infrastructure Debt Acquisition and the subsequent quarter-end.
(2) Represents the average of beginning and ending balances.


			U.S. Real Estate Equity			European Real Estate Equity			Real Estate Debt			Infrastructure Opportunities			Infrastructure Debt			Total Real Assets Group
Balance at 6/30/2022	$	30,271		$	8,558		$	11,372		$	4,316		$	8,060		$	62,577

Net new par/equity commitments	1,170			20			99			366			511			2,166
Net new debt commitments	200			—			204			—			—			404
Capital reductions	(200)			—			(24)			—			—			(224)
Distributions	(248)			(50)			(49)			(112)			(52)			(511)
Redemptions	(180)			—			—			—			—			(180)
Change in fund value	121			(495)			68			751			318			763
Balance at 9/30/2022	$	31,134		$	8,033		$	11,670		$	5,321		$	8,837		$	64,995


			U.S. Real Estate Equity			European Real Estate Equity			Real Estate Debt			Infrastructure Opportunities			Infrastructure Debt			Total Real Assets Group
Balance at 6/30/2021	$	5,702		$	5,648		$	8,375		$	3,822		$	—		$	23,547
Acquisitions			13,719			—			—			—			—			13,719
Net new par/equity commitments	791			1,040			246			324			—			2,401
Net new debt commitments	—			—			250			—			—			250
Capital reductions	—			—			(41)			—			—			(41)
Distributions	(488)			(180)			(39)			(358)			—			(1,065)
Redemptions	(28)			—			—			—			—			(28)
Change in fund value	1,399			57			50			(54)			—			1,452
Balance at 9/30/2021	$	21,095		$	6,565		$	8,841		$	3,734		$	—		$	40,235




			U.S. Real Estate Equity			European Real Estate Equity			Real Estate Debt			Infrastructure Opportunities			Infrastructure Debt			Total Real Assets Group
Balance at 12/31/2021	$	24,677		$	6,827		$	9,659		$	4,756		$	—		$	45,919
Acquisitions	—			—			—			—			8,184			8,184
Net new par/equity commitments	4,467			2,038			955			431			698			8,589
Net new debt commitments	1,305			419			1,229			—			—			2,953
Capital reductions	(434)			—			(87)			—			—			(521)
Distributions	(1,301)			(409)			(144)			(433)			(239)			(2,526)
Redemptions	(308)			—			(90)			—			—			(398)
Change in fund value	2,728			(842)			148			567			194			2,795
Balance at 9/30/2022	$	31,134		$	8,033		$	11,670		$	5,321		$	8,837		$	64,995


			U.S. Real Estate Equity			European Real Estate Equity			Real Estate Debt			Infrastructure Opportunities			Infrastructure Debt			Total Real Assets Group
Balance at 12/31/2020	$	4,404		$	4,811		$	5,593		$	3,485		$	—		$	18,293
Acquisitions	13,719			—			—			—			—			13,719
Net new par/equity commitments	1,985			1,917			843			592			—			5,337
Net new debt commitments	—			—			2,655			—			—			2,655
Capital reductions	—			—			(273)			—			—			(273)
Distributions	(788)			(475)			(107)			(692)			—			(2,062)
Redemptions	(28)			—			(7)			—			—			(35)
Change in fund value	1,803			312			137			349			—			2,601
Balance at 9/30/2021	$	21,095		$	6,565		$	8,841		$	3,734		$	—		$	40,235

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

AUM: ~~$58.5~~$65.0

AUM: ~~$20.8~~$40.2

FPAUM

Non-fee paying(1)

AUM not yet paying fees

(1) Includes $0.6 billion and $0.5 billion of non-fee paying AUM based on our general partner commitment as of ~~March 31,~~September 30, 2022 and 2021,

respectively.

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Real Assets Group—Fee Paying AUM

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

U.S. Real Estate Equity European Real Estate Equity Real Estate
Debt Infrastructure Opportunities Infrastructure Debt Total Real Assets Group
Balance at 12/31/2021 $ 15,687 $ 4,916 $ 3,516 $ 4,496 $ — $ 28,615
Acquisitions — — — — 4,855 4,855
Commitments 1,026 1,155 3 — — 2,184
Subscriptions/deployment/increase in leverage 355 94 369 48 43 909
Distributions (416) (208) (46) (221) — (891)
Redemptions (91) — (47) — — (138)
Change in fund value 1,484 (126) 60 — — 1,418
Change in fee basis (6) (819) — — — (825)
Balance at 3/31/2022 $ 18,039 $ 5,012 $ 3,855 $ 4,323 $ 4,898 $ 36,127
Average FPAUM(1)
$ 16,863 $ 4,964 $ 3,686 $ 4,410 $ 4,877 $ 34,800
U.S. Real Estate Equity European Real Estate Equity Real Estate
Debt Infrastructure Opportunities Infrastructure Debt Total Real Assets Group
Balance at 12/31/2020 $ 3,659 $ 4,088 $ 2,505 $ 3,679 $ — $ 13,931
Commitments 301 94 101 — — 496
Subscriptions/deployment/increase in leverage 119 10 208 — — 337
Capital reductions — — (32) — — (32)
Distributions (43) (54) (44) — — (141)
Change in fund value — (122) 30 — — (92)
Balance at 3/31/2021 $ 4,036 $ 4,016 $ 2,768 $ 3,679 $ — $ 14,499
Average FPAUM(2)
$ 3,848 $ 4,052 $ 2,637 $ 3,679 $ — $ 14,216
(1) Represents the average of beginning and ending balances except for the infrastructure debt funds within the Real Assets Group, which represents the average calculated using FPAUM on the date of the Infrastructure Debt Acquisition and the subsequent quarter-end.
(2) Represents the average of beginning and ending balances.


	U.S. Real Estate Equity		European Real Estate Equity		Real Estate Debt		Infrastructure Opportunities		Infrastructure Debt		Total Real Assets Group
Balance at 6/30/2022	$	19,934	$	5,352	$	3,953	$	4,474	$	5,518	$	39,231

Commitments	1,113		20		—		—		—		1,133
Subscriptions/deployment/increase in leverage	52		171		11		106		495		835

Distributions	(136)		(11)		(51)		(154)		(214)		(566)
Redemptions	(180)		—		—		—		—		(180)
Change in fund value	119		(315)		74		—		(113)		(235)
Change in fee basis	3		—		—		—		—		3
Balance at 9/30/2022	$	20,905	$	5,217	$	3,987	$	4,426	$	5,686	$	40,221


	U.S. Real Estate Equity		European Real Estate Equity		Real Estate Debt		Infrastructure Opportunities		Infrastructure Debt		Total Real Assets Group
Balance at 6/30/2021	$	4,365	$	4,339	$	3,113	$	3,725	$	—	$	15,542
Acquisitions	7,155		—		—		—		—		7,155
Commitments	721		602		—		324		—		1,647
Subscriptions/deployment/increase in leverage	931		234		299		—		—		1,464

Distributions	(114)		(158)		(103)		(294)		—		(669)
Redemptions	(28)		—		—		—		—		(28)
Change in fund value	610		(65)		43		—		—		588
Change in fee basis	—		(5)		—		—		—		(5)
Balance at 9/30/2021	$	13,640	$	4,947	$	3,352	$	3,755	$	—	$	25,694




	U.S. Real Estate Equity		European Real Estate Equity		Real Estate Debt		Infrastructure Opportunities		Infrastructure Debt		Total Real Assets Group
Balance at 12/31/2021	$	15,687	$	4,916	$	3,516	$	4,496	$	—	$	28,615
Acquisitions	—		—		—		—		4,855		4,855
Commitments	3,661		1,627		106		—		—		5,394
Subscriptions/deployment/increase in leverage	663		427		574		306		1,296		3,266
Capital reductions	—		(10)		(81)		—		—		(91)
Distributions	(759)		(246)		(185)		(376)		(263)		(1,829)
Redemptions	(308)		—		(100)		—		—		(408)
Change in fund value	1,966		(678)		157		—		(202)		1,243
Change in fee basis	(5)		(819)		—		—		—		(824)
Balance at 9/30/2022	$	20,905	$	5,217	$	3,987	$	4,426	$	5,686	$	40,221


	U.S. Real Estate Equity		European Real Estate Equity		Real Estate Debt		Infrastructure Opportunities		Infrastructure Debt		Total Real Assets Group
Balance at 12/31/2020	$	3,659	$	4,088	$	2,505	$	3,679	$	—	$	13,931
Acquisitions	7,155		—		—		—		—		7,155
Commitments	1,630		1,053		202		592		—		3,477
Subscriptions/deployment/increase in leverage	1,067		271		849		—		—		2,187
Capital reductions	—		—		(32)		—		—		(32)
Distributions	(322)		(298)		(283)		(341)		—		(1,244)
Redemptions	(28)		—		(7)		—		—		(35)
Change in fund value	611		(162)		118		—		—		567
Change in fee basis	(132)		(5)		—		(175)		—		(312)
Balance at 9/30/2021	$	13,640	$	4,947	$	3,352	$	3,755	$	—	$	25,694

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

FPAUM: ~~$36.1~~$40.2

FPAUM: ~~$14.5~~$25.7

Market value(1)

Invested capital/other(2)

Capital commitments

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

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

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Real Assets Group—Fund Performance Metrics as of ~~March 31,~~September 30, 2022

~~Five~~Four significant funds, Ares Industrial Real Estate Income Trust, Inc. (“AIREIT”), Ares Real Estate Income Trust, Inc. (“AREIT”), ~~EF V,~~ Infrastructure Debt Fund IV (“IDF IV”) and an open-ended industrial real estate fund, collectively contributed approximately ~~45%~~41% of the Real Assets Group’s management fees for the ~~three~~nine months ended ~~March 31,~~September 30, 2022.

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,~~September 30, 2022 ($ in millions):

Returns(%)(1)

Returns(%)

Year of Inception

AUM

Year-To-Date

Since Inception(2)

Primary
Investment Strategy

Year of Inception

AUM

Current Quarter

Year-To-Date

Since Inception(1)

Primary
Investment Strategy

Fund

Gross

Net

Gross

Net

Fund

AUM

Gross

Net

Gross

Net

Gross

Primary
Investment Strategy

AREIT~~(3)~~(2)

2012

4,261

N/A

7.5

N/A

8.0

U.S. Real Estate Equity

AREIT~~(3)~~(2)

2012

N/A

1.4

N/A

12.3

N/A

8.1

AIREIT~~(4)~~(3)

2017

6,857

N/A

17.2

N/A

14.7

U.S. Real Estate Equity

AIREIT~~(4)~~(3)

2017

8,131

N/A

1.7

N/A

26.6

N/A

14.9

U.S. Real Estate Equity

Open-ended industrial real estate fund~~(5)~~(4)

2017

5,676

19.8

16.7

32.2

26.5

U.S. Real Estate Equity

Open-ended industrial real estate fund~~(5)~~(4)

2017

5,791

1.4

1.1

22.7

18.9

29.1

24.0

U.S. Real Estate Equity

(1)~~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.~~

~~(2)~~Since inception returns are annualized.

~~(3)~~(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 ~~financial statements filed~~filings with the SEC, which are not part of this report.

~~(4)~~(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 ~~financial statements filed~~filings with the SEC, which are not part of this report.

~~(5)~~(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 our significant drawdown ~~funds~~fund as of ~~March 31,~~September 30, 2022 ($ 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		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	Fund												Gross(3)						Net(4)			Gross(5)		Net(6)		Fund									Gross(3)						Net(4)						Gross(5)					Net(6)
Fund Harvesting Investments	Fund Harvesting Investments																																				Fund Harvesting Investments
IDF IV(7)	IDF IV(7)	2018		$	3,349		$	4,012		$	3,726		$	1,032		$	3,364		$	4,396		1.2x		1.1x		9.4		7.1		Infrastructure Debt		IDF IV(7)	2018		$	3,411		$	4,012		$	4,322		$	1,628		$	3,114		$	4,742		1.2x	1.1x		7.9	5.7		Infrastructure Debt
Fund Deploying Capital
EF V(8)		2018	2,123			1,968			1,300			479			1,274			1,753			1.4x		1.2x		22.2		14.5		European Real Estate Equity

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

(3)The gross MoIC is calculated at the ~~investment~~fund level and is based on the interests of ~~all partners.~~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 ~~for all funds~~ 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 or has such fees rebated outside of the fund.~~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 ~~investments~~the fund and the fund’s residual value ~~of the investments~~ at the end of the measurement period. Gross ~~IRRs reflect~~IRR reflects returns to ~~all partners. Cash flows~~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 ~~assumed to occur at quarter-end.~~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, 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~~non-fee paying limited partners and/or the general partner which does not pay management fees or carried ~~interest or has such fees rebated outside of the fund.~~interest. The cash flow dates used in the net IRR ~~calculation~~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, and other expenses.~~applicable. The funds may utilize a credit facility during the investment period and for general cash management purposes. Net fund-level IRRs would generally have been lower had such fund called capital from its limited partners instead of utilizing the credit facility.

(7)IDF IV is made up of U.S. Dollar hedged, U.S. Dollar unhedged, Euro unhedged, ~~and~~ Yen hedged parallel ~~funds. Gross IRRs~~funds and ~~MoICs are not calculated for individual~~a single investor U.S. Dollar parallel ~~funds. The gross asset level IRRs and MoICs presented in the table represent the gross IRR and gross MoIC for the combined~~ fund. The gross ~~IRR~~ and MoIC are presented in U.S. Dollars with the investment cash flows converted from the currency of the underlying asset to U.S. Dollars at the spot exchange rate prevailing at the date of the first cash flow for each investment. The net IRR and MoIC presented in the table are for the U.S. Dollar hedged parallel fund. The gross and net ~~IRRs~~IRR for the U.S. Dollar unhedged ~~Euro unhedged~~parallel fund are 6.2% and ~~Yen hedged parallel funds are 6.9%, 6.8% and 6.1%~~4.0%, respectively. The gross and net ~~MoICs~~MoIC for the U.S. Dollar unhedged parallel fund are 1.1x and 1.1x, respectively. The gross and net IRR for the Euro unhedged parallel fund are 10.8% and 8.5%, respectively. The gross and net MoIC for the Euro unhedged parallel fund are 1.2x and 1.2x, respectively. The gross and net IRR for the Yen hedged parallel ~~funds~~fund are 6.8% and 4.7%, respectively. The gross and net MoIC for the Yen hedged parallel fund are 1.1x and 1.1x, respectively. The gross and net IRR for the single investor U.S. Dollar parallel fund are 4.9% and 2.9%, respectively. The gross and net MoIC for the single investor U.S. Dollar parallel fund are 1.1x and ~~1.1x,~~1.0x, respectively. Original capital commitments are converted to U.S. Dollars at the prevailing exchange rate at the time of fund's closing. All other values for IDF IV are for the combined fund and are converted to U.S. Dollars at the prevailing quarter-end exchange rate.

~~(8)~~EF V is made up of two parallel funds, one denominated in U.S. dollars and one denominated in Euros. The gross and net IRR and MoIC presented in the table are for the Euro denominated parallel fund. The gross and net MoIC for the U.S. Dollar denominated parallel fund are 1.4x and 1.2x, respectively. The gross and net IRR for the U.S. Dollar denominated parallel fund are 22.3% and 15.0%, 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 EF V are for the combined fund and are converted to U.S. dollars at the prevailing quarter-end exchange rate.

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~~Secondary Solutions~~Secondaries Group—Three and Nine Months Ended ~~March 31,~~September 30, 2022 Compared to Three MonthsEnded September 30, 2021 andthe Period June 2, 2021 through September 30, 2021

The activity for the nine months ended September 30, 2021 represents results subsequent to the Landmark Acquisition that closed on June 2, 2021 and is not comparable to the results for the nine months ended September 30, 2022.

Fee Related Earnings:

The following table presents the components of the ~~Secondary Solutions~~Secondaries Group's FRE ($ in thousands):


	Three months ended September 30,				Favorable (Unfavorable)			Nine months ended September 30,		For the period June 2 through September 30,

($ in thousands)	2022		2021		$ Change		% Change	2022		2021
Management fees	$	44,385	$	41,064	$	3,321	8%	$	135,090	$	53,962
Fee related performance revenues	235		—		235		NM	235		—

Compensation and benefits	(19,191)		(11,955)		(7,236)		(61)	(45,964)		(16,244)
General, administrative and other expenses	(3,215)		(2,593)		(622)		(24)	(9,250)		(3,452)
Fee Related Earnings	$	22,214	$	26,516	(4,302)		(16)	$	80,111	$	34,266

NM - Not Meaningful

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

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Excluding one-time catch-up fees of $4.0 million for the three months ended September 30, 2022 and $2.3 million for the three months ended September 30, 2021, management fees increased by $2.2 million for the three months ended September 30, 2022 compared to the same period in 2021 primarily due to new commitments to our 17th private equity secondaries fund and related vehicles. Our ninth real estate secondaries fund, excluding one-time catch up fees of $1.0 million, generated additional fees of $3.5 million for the three months ended September 30, 2022 compared to the three months ended September 30, 2021. The increase in management fees was partially offset by the decrease in management fees from Landmark Equity Partners XV, L.P. (“LEP XV”) and LREP VIII of $3.4 million and $2.3 million, respectively, for the three months ended September 30, 2022 compared to the three months ended September 30, 2021; the decrease was due to the changes in fee base of both funds to reported value, which largely reflects the NAV of each funds’ limited partnership interests, from called capital plus unfunded commitments for LEP XV and from committed capital for LREP VIII.

Fee Related Performance Revenues. The activity for the three and nine months ended September 30, 2022 was attributable to fee related performance revenues from APMF.

Compensation and Benefits. Compensation and benefits increased by $7.2 million, or 61%, for the three months ended September 30, 2022 compared to the three months ended September 30, 2021. The increase in salaries and benefits was primarily driven by the increase in incentive compensation.

Realized Income:

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


	Three months ended September 30,				Favorable (Unfavorable)			Nine months ended September 30,		For the period June 2 through September 30,

($ in thousands)	2022		2021		$ Change		% Change	2022		2021
Fee Related Earnings	$	22,214	$	26,516	$	(4,302)	(16)%	$	80,111	$	34,266
Performance income—realized	—		—		—		—	4,156		—
Performance related compensation—realized	(1)		—		(1)		NM	(3,515)		—
Realized net performance income	(1)		—		(1)		NM	641		—

Interest and other investment income—realized	424		699		(275)		(39)	3,268		701
Interest expense	(1,753)		(427)		(1,326)		NM	(3,775)		(432)
Realized net investment income (loss)	(1,329)		272		(1,601)		NM	(507)		269
Realized Income	$	20,884	$	26,788	(5,904)		(22)	$	80,245	$	34,535


	~~Three months ended March 31, 2022~~

~~Management fees~~	$	~~44,504~~

~~Compensation and benefits~~	~~(11,640)~~
~~General, administrative and other expenses~~	~~(3,078)~~
~~Fee Related Earnings~~	$	~~29,786~~

~~Realized net investment income~~	~~179~~
~~Realized Income~~	$	~~29,965~~

~~Secondary Solutions Group—Management Fees~~

~~The activity for the period presented represents management fees primarily from the Landmark Acquisition that closed on June 2, 2021. The effective management fee rate for the period was 0.90%.~~
NM - Not Meaningful

~~Secondary Solutions~~Realized net performance income for the nine months ended September 30, 2022 was primarily attributable to tax distributions from LREP VIII.

Realized net investment income for the nine months ended September 30, 2022 included dividend income received from a real estate secondaries fund and an infrastructure secondaries fund. Interest expense, which is allocated based on the cost basis of investments, increased over the comparative periods primarily due to the issuance of the 2051 Subordinated Notes and the 2052 Senior Notes in June 2021 and January 2022, respectively.

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Secondaries Group—Performance Income

In the ~~Secondary Solutions~~Secondaries Group, we are entitled to carried interest from the funds with closings subsequent to the completion of the Landmark Acquisition and to carried interest we acquired through the purchase of an ownership ~~interest~~interests in certain Landmark GP entities. The following table presents the accrued carried interest, also referred to as accrued performance income, and related performance compensation for the ~~Secondary Solutions Group~~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, 2022 As of December 31, 2021
Accrued Performance Income Accrued Performance Compensation Accrued Net Performance Income Accrued Performance Income Accrued Performance Compensation Accrued Net Performance Income
LEP XVI $ 175,251 $ 148,964 $ 26,287 $ 159,490 $ 135,566 $ 23,924
LREP VIII 105,211 89,429 15,782 80,772 68,656 12,116
Other fee generating funds 65,905 55,645 10,260 58,013 49,108 8,905
Total Secondary Solutions Group $ 346,367 $ 294,038 $ 52,329 $ 298,275 $ 253,330 $ 44,945


	As of September 30, 2022						As of December 31, 2021
	Accrued Performance Income		Accrued Performance Compensation		Accrued Net Performance Income		Accrued Performance Income		Accrued Performance Compensation		Accrued Net Performance Income
LEP XVI	$	154,019	$	130,916	$	23,103	$	159,490	$	135,566	$	23,924
LREP VIII	114,970		97,724		17,246		80,772		68,656		12,116



Other fee generating funds	61,472		52,251		9,221		58,013		49,108		8,905
Total Secondaries Group	$	330,461	$	280,891	$	49,570	$	298,275	$	253,330	$	44,945

The following table presents the change in accrued ~~carried interest~~performance income for the ~~Secondary Solutions~~Secondaries Group ($ in thousands):

As of December 31, 2021 Activity during the period As of March 31, 2022
Waterfall Type Accrued Carried Interest Change in Unrealized Realized Accrued Carried Interest
LEP XVI European $ 159,490 $ 15,761 $ — $ 175,251
LREP VIII European 80,772 24,439 — 105,211
Other fee generating funds European 58,013 7,892 — 65,905
Total Secondary Solutions Group $ 298,275 $ 48,092 $ — $ 346,367


		As of December 31, 2021		Activity during the period				As of September 30, 2022
	Waterfall Type	Accrued Carried Interest		Change in Unrealized		Realized		Accrued Carried Interest
Accrued Carried Interest
LEP XVI	European	$	159,490	$	(5,471)	$	—	$	154,019
LREP VIII	European	80,772		37,848		(3,650)		114,970



Other fee generating funds	European	58,013		3,569		(110)		61,472
Total accrued carried interest		298,275		35,946		(3,760)		330,461
Other secondaries funds	Incentive	—		396		(396)		—
Total Secondaries Group		$	298,275	$	36,342	$	(4,156)	$	330,461

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~~Secondary Solutions~~Secondaries Group—Assets Under Management

The table below presents the rollforward of AUM for the ~~Secondary Solutions~~Secondaries Group ($ in millions):


												Private Equity Secondaries			Real Estate Secondaries			Infrastructure Secondaries			Total Secondaries Group
Balance at 6/30/2022											Balance at 6/30/2022	$	14,707		$	7,522		$	1,663		$	23,892

Net new par/equity commitments											Net new par/equity commitments	239			202			—			441

Distributions											Distributions	(891)			(189)			(4)			(1,084)

Change in fund value											Change in fund value	(627)			155			12			(460)
Balance at 9/30/2022											Balance at 9/30/2022	$	13,428		$	7,690		$	1,671		$	22,789

										Private Equity Secondaries				Real Estate Secondaries			Infrastructure Secondaries			Total Secondaries Group
Balance at 6/30/2021											Balance at 6/30/2021	$	12,316		$	5,570		$	1,590		$	19,476

Net new par/equity commitments											Net new par/equity commitments	1,130			—			—			1,130

Distributions											Distributions	(250)			(268)			(17)			(535)

Change in fund value											Change in fund value	463			184			25			672
Balance at 9/30/2021											Balance at 9/30/2021	$	13,659		$	5,486		$	1,598		$	20,743

		Private Equity Secondaries		Real Estate Secondaries		Infrastructure Secondaries		Total Secondary Solutions Group				Private Equity Secondaries			Real Estate Secondaries			Infrastructure Secondaries			Total Secondaries Group
Balance at 12/31/2021	Balance at 12/31/2021	$	13,833	$	6,662	$	1,624	$	22,119		Balance at 12/31/2021	$	13,833		$	6,662		$	1,624		$	22,119
Acquisitions	Acquisitions	199		—		—		199			Acquisitions	199			—			—			199
Net new par/equity commitments	Net new par/equity commitments	168		912		—		1,080			Net new par/equity commitments	887			1,425			74			2,386

Distributions	Distributions	(109)		(420)		(46)		(575)			Distributions	(1,178)			(876)			(155)			(2,209)

Change in fund value	Change in fund value	214		376		55		645			Change in fund value	(313)			479			128			294
Balance at 3/31/2022		$	14,305	$	7,530	$	1,633	$	23,468
Average AUM(1)		$	14,069	$	7,096	$	1,629	$	22,794
Balance at 9/30/2022											Balance at 9/30/2022	$	13,428		$	7,690		$	1,671		$	22,789

												Private Equity Secondaries			Real Estate Secondaries			Infrastructure Secondaries			Total Secondaries Group
Balance at 12/31/2020											Balance at 12/31/2020	$	—		$	—		$	—		$	—
Acquisitions											Acquisitions	12,275			5,641			1,597			19,513
Net new par/equity commitments											Net new par/equity commitments	1,231			—			—			1,231

Distributions											Distributions	(301)			(335)			(23)			(659)

Change in fund value											Change in fund value	454			180			24			658
Balance at 9/30/2021											Balance at 9/30/2021	$	13,659		$	5,486		$	1,598		$	20,743

(1) Represents the average of beginning and ending balances.

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


AUM: $22.8						AUM: ~~$23.5~~$20.8

FPAUM

AUM not yet paying fees

Non-fee paying(1)

(1) Includes $0.4 billion of non-fee paying AUM based on our general partner commitment as of ~~March 31, 2022.~~September 30, 2022 and 2021.

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~~Secondary Solutions~~Secondaries Group—Fee Paying AUM

The table below presents the rollforward of fee paying AUM for the ~~Secondary Solutions~~Secondaries Group ($ in millions):


												Private Equity Secondaries			Real Estate Secondaries			Infrastructure Secondaries			Total Secondaries Group
Balance at 6/30/2022										Balance at 6/30/2022		$	11,201		$	5,074		$	1,279		$	17,554

Commitments										Commitments		212			200			—			412
Subscriptions/deployment/increase in leverage										Subscriptions/deployment/increase in leverage		9			78			9			96

Distributions										Distributions		(29)			(188)			(4)			(221)

Change in fund value										Change in fund value		(263)			111			(18)			(170)
Change in fee basis										Change in fee basis		50			(1)			—			49
Balance at 9/30/2022										Balance at 9/30/2022		$	11,180		$	5,274		$	1,266		$	17,720

											Private Equity Secondaries			Real Estate Secondaries			Infrastructure Secondaries			Total Secondaries Group
Balance at 6/30/2021										Balance at 6/30/2021		$	10,828		$	4,928		$	1,171		$	16,927

Commitments										Commitments		278			—			—			278
Subscriptions/deployment/increase in leverage										Subscriptions/deployment/increase in leverage		—			—			7			7

Distributions										Distributions		(38)			(28)			(7)			(73)

Change in fund value										Change in fund value		44			28			11			83
Change in fee basis										Change in fee basis		—			(37)			—			(37)
Balance at 9/30/2021										Balance at 9/30/2021		$	11,112		$	4,891		$	1,182		$	17,185

		Private Equity Secondaries		Real Estate Secondaries		Infrastructure Secondaries		Total Secondary Solutions Group				Private Equity Secondaries			Real Estate Secondaries			Infrastructure Secondaries			Total Secondaries Group
Balance at 12/31/2021	Balance at 12/31/2021	$	11,787	$	5,389	$	1,188	$	18,364	Balance at 12/31/2021		$	11,787		$	5,389		$	1,188		$	18,364
Acquisitions	Acquisitions	131		—		—		131		Acquisitions		131			—			—			131
Commitments	Commitments	117		580		—		697		Commitments		806			1,039			74			1,919
Subscriptions/deployment/increase in leverage	Subscriptions/deployment/increase in leverage	57		—		12		69		Subscriptions/deployment/increase in leverage		67			323			25			415

Distributions	Distributions	(11)		(417)		(44)		(472)		Distributions		(88)			(866)			(127)			(1,081)

Change in fund value	Change in fund value	(154)		841		51		738		Change in fund value		(191)			834			106			749
Change in fee basis	Change in fee basis	(33)		(1,424)		—		(1,457)		Change in fee basis		(1,332)			(1,445)			—			(2,777)
Balance at 3/31/2022		$	11,894	$	4,969	$	1,207	$	18,070
Average FPAUM(1)		$	11,841	$	5,179	$	1,198	$	18,218
Balance at 9/30/2022										Balance at 9/30/2022		$	11,180		$	5,274		$	1,266		$	17,720

												Private Equity Secondaries			Real Estate Secondaries			Infrastructure Secondaries			Total Secondaries Group
Balance at 12/31/2020										Balance at 12/31/2020		$	—		$	—		$	—		$	—
Acquisitions										Acquisitions		10,740			4,928			1,171			16,839
Commitments										Commitments		378			—			—			378
Subscriptions/deployment/increase in leverage										Subscriptions/deployment/increase in leverage		2			—			7			9

Distributions										Distributions		(38)			(28)			(7)			(73)

Change in fund value										Change in fund value		42			28			11			81
Change in fee basis										Change in fee basis		(12)			(37)			—			(49)
Balance at 9/30/2021										Balance at 9/30/2021		$	11,112		$	4,891		$	1,182		$	17,185

(1) Represents the average of beginning and ending balances.

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The chart below presents FPAUM for the ~~Secondary Solutions~~Secondaries Group by its fee basis ($ in billions):


FPAUM: $17.7						FPAUM: ~~$18.1~~$17.2

~~Invested capital/other~~

Market value(1)

Invested capital/other

Capital commitments

90113

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~~Secondary Solutions~~Secondaries Group—Fund Performance Metrics as of ~~March 31,~~September 30, 2022

~~Secondary Solutions includes three~~Three significant funds, ~~Landmark Equity Partners~~LEP XV, ~~L.P. (“LEP XV”),~~ LEP XVI and LREP VIII, ~~that~~ collectively contributed approximately ~~59%~~53% of the ~~Secondary Solutions~~Secondaries Group’s management fees for the ~~three~~nine months ended ~~March 31,~~September 30, 2022.

The following table presents the performance data of our significant drawdown funds as of ~~March 31,~~September 30, 2022 ($ 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		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	Fund										Gross(3)					Net(4)		Gross(5)		Net(6)		Fund									Gross(3)								Net(4)							Gross(5)				Net(6)
Funds Harvesting Investments	Funds Harvesting Investments																																		Funds Harvesting Investments
LEP XV(7)	LEP XV(7)	2013	$	2,072	$	3,250	$	2,628	$	2,480		$	1,357	$	3,837		1.6x		1.5x		19.6		14.1	Private Equity Secondaries	LEP XV(7)		2013		$	1,457			$	3,250			$	2,629			$	2,555		$	1,192			$	3,747		1.6x		1.4x		18.2		12.8		Private Equity Secondaries
LEP XVI(7)	LEP XVI(7)	2016	5,898		4,896		2,706		1,694			2,757		4,451			1.8x		1.6x		60.1		40.4	Private Equity Secondaries	LEP XVI(7)	2016		5,321				4,896				2,962				1,739			2,839				4,578			1.7x		1.6x		45.3		30.9		Private Equity Secondaries
LREP VIII(7)	LREP VIII(7)	2016	3,753		3,300		1,745		837			1,701		2,538			1.6x		1.5x		32.3		22.7	Real Estate Secondaries	LREP VIII(7)	2016		3,547				3,300				1,985				1,201			1,695				2,896			1.6x		1.5x		30.6		21.8		Real Estate Secondaries

* For all funds in the ~~Secondary Solutions~~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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Strategic Initiatives—Three and Nine Months Ended ~~March 31,~~September 30, 2022 Compared to Three and Nine Months Ended ~~March 31,~~September 30, 2021

Fee Related Earnings:

The following table presents the components of Strategic Initiatives’ FRE ($ in thousands):

Three months ended March 31, Favorable (Unfavorable)
2022 2021 $ Change % Change
Management fees $ 16,814 $ 15,623 $ 1,191 8%
Other fees 50 79 (29) (37)
Compensation and benefits (7,401) (4,740) (2,661) (56)
General, administrative and other expenses (1,726) (2,035) 309 15
Fee Related Earnings $ 7,737 $ 8,927 (1,190) (13)


	Three months ended September 30,				Favorable (Unfavorable)				Nine months ended September 30,				Favorable (Unfavorable)
	2022		2021		$ Change		% Change		2022		2021		$ Change		% Change
Management fees	$	18,183	$	16,544	$	1,639	10	%	$	52,377	$	48,963	$	3,414	7%
Other fees	67		2		65		NM		181		82		99		121
Compensation and benefits	(7,859)		(5,316)		(2,543)		(48)		(22,059)		(15,440)		(6,619)		(43)
General, administrative and other expenses	(1,486)		(1,774)		288		16		(5,575)		(5,580)		5		—
Fee Related Earnings	$	8,905	$	9,456	(551)		(6)		$	24,924	$	28,025	(3,101)		(11)

~~Table of Contents~~

NM - Not Meaningful

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

Management fees increased for the three and nine months ended ~~March 31,~~September 30, 2022 compared to the three and nine months ended ~~March 31,~~September 30, 2021 primarily driven by ~~deployment from SLO III~~new commitments to our sixth Asian special situations fund and ~~higher asset base~~by additional managed assets in our insurance strategy. ~~Management~~SLO III also contributed to the increase in management fees ~~from the Asian special situations strategy decreased~~ for the three and nine months ended ~~March 31,~~September 30, 2022 compared to the three and nine months ended ~~March 31,~~September 30, 2021 primarily due to deployment of capital. Following the ~~reduction in fee basis for SSG Fund V as a result~~launch of our sixth Asian special situations fund ~~beginning to pay fees~~ in the first quarter of ~~2022. The decrease was~~2022, SSG Capital Partners V, L.P. (“SSG Fund V”) had a reduction in fee base that partially offset bythe increase in management fees ~~from our sixth Asian special situations fund.~~over the comparative periods.

The ~~decrease~~decreases in effective management fee rate for the three and nine months ended ~~March 31,~~September 30, 2022 compared to

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the three and nine months ended ~~March 31,~~September 30, 2021 ~~was~~were primarily driven by the growing fee base of our insurance strategy, which has an effective management fee rate of 0.30%. The effective management fee rate also decreased due to the ~~reduction in fee basis for SSG Fund V, which no longer charges fees on its uninvested capital base following the~~ launch of our sixth Asian special situations ~~fund.~~fund in the first quarter of 2022. Our sixth Asian special situations fund pays a fee on both committed and invested capital. As a result, our effective management fee rate decreases immediately following capital raising and increases as capital is subsequently deployed.

Compensation and Benefits. Compensation and benefits increased by ~~$2.7~~$2.5 million, or ~~56%~~48%, for the three months ended ~~March 31,~~September 30, 2022 compared to the three months ended ~~March 31,~~September 30, 2021 and by $6.6 million, or 43%, for the nine months ended September 30, 2022 compared to the nine months ended September 30, 2021. The ~~increase~~increases in salaries and benefits for the three and nine months ended ~~March 31,~~September 30, 2022 ~~was~~were primarily driven by i) our decision to acquire a team that was dedicated to supporting Ares SSG deal sourcing in India, leading to a corresponding decrease in general, administrative and other expenses; the impact of this decision is expected to continue in future periods, and ii) headcount growth across all strategies to support our strategic ~~initiatives and merit increases.~~initiatives. Average headcount for the ~~quarter-to-date~~year-to-date period increased by ~~30%~~39% to 5664 investment and investment support professionals, ~~for~~including 11 professionals from the ~~first quarter~~expansion of ~~2022 period~~our team in India, from 4346 professionals for the same period in 2021.

General, Administrative and Other Expenses.

~~Table of Contents~~General, administrative and other expenses remained relatively flat for the three and nine months ended September 30, 2022 compared to the same periods in 2021. As described previously, the decision to acquire the deal sourcing team in India contributed to a reduction in professional fees and was offset by increasing occupancy and information services costs to support our expanding workforce for the three and nine months ended September 30, 2022 compared to the same periods in 2021.

Realized Income:

The following table presents the components of Strategic Initiatives RI ($ in thousands):

Three months ended March 31, Favorable (Unfavorable)
2022 2021 $ Change % Change
Fee Related Earnings $ 7,737 $ 8,927 $ (1,190) (13)%
Investment income—realized 861 — 861 NM
Interest and other investment income (loss)—realized 3 33 (30) (91)
Interest expense (5,838) (2,302) (3,536) (154)
Realized net investment loss (4,974) (2,269) (2,705) (119)
Realized Income $ 2,763 $ 6,658 (3,895) (59)


	Three months ended September 30,				Favorable (Unfavorable)			Nine months ended September 30,				Favorable (Unfavorable)
	2022		2021		$ Change		% Change	2022		2021		$ Change		% Change
Fee Related Earnings	$	8,905	$	9,456	$	(551)	(6)%	$	24,924	$	28,025	$	(3,101)	(11)%



Investment income-realized	—		1,025		(1,025)		(100)	858		1,347		(489)		(36)
Interest and other investment income-realized	1,096		163		933		NM	6,613		2,824		3,789		134
Interest expense	(5,244)		(4,135)		(1,109)		(27)	(16,687)		(8,962)		(7,725)		(86)
Realized net investment loss	(4,148)		(2,947)		(1,201)		41	(9,216)		(4,791)		(4,425)		(92)
Realized Income	$	4,757	$	6,509	(1,752)		(27)	$	15,708	$	23,234	(7,526)		(32)

NM - Not Meaningful

~~Realized net investment loss for the three months ended March 31, 2022 and 2021 was primarily attributable to interest~~Interest expense, ~~allocations~~which is allocated based on the cost basis of ~~investments. Interest expense has~~investments, increased over the comparative ~~period~~periods primarily due to the issuance of the 2051 Subordinated Notes and the 2052 Senior Notes in June 2021 and January 2022, respectively.

For the three and nine months ended September 30, 2022, we earned interest income from a fund invested in insurance companies. For the nine months ended September 30, 2021, we received distributions from an investment vehicle that manages a portfolio of non-performing loans.

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Strategic Initiatives—Assets Under Management

The tables below present rollforwards of AUM for Strategic Initiatives ($ in millions):


																Asian Special Situations			Asian Secured Lending			APAC Direct Lending			Insurance			SPACs			Total Strategic Initiatives
Balance at 6/30/2022														Balance at 6/30/2022		$	7,105		$	2,378		$	336		$	1,702		$	1,000		$	12,521

Net new par/equity commitments														Net new par/equity commitments		—			—			100			1,008			—			1,108
Net new debt commitments														Net new debt commitments		—			6			1,366			—			—			1,372

Distributions														Distributions		(394)			(30)			—			(694)			—			(1,118)

Change in fund value														Change in fund value		74			30			(20)			(81)			—			3
Balance at 9/30/2022														Balance at 9/30/2022		$	6,785		$	2,384		$	1,782		$	1,935		$	1,000		$	13,886

															Asian Special Situations			Asian Secured Lending			APAC Direct Lending			Insurance			SPACs			Total Strategic Initiatives
Balance at 6/30/2021														Balance at 6/30/2021		$	5,025		$	2,467		$	—		$	1,874		$	1,000		$	10,366

Net new par/equity commitments														Net new par/equity commitments		—			70			—			143			—			213

Capital reductions														Capital reductions		—			(29)			—			—			—			(29)
Distributions														Distributions		252			(2)			—			(48)			—			202

Change in fund value														Change in fund value		94			(21)			—			11			—			84
Balance at 9/30/2021														Balance at 9/30/2021		$	5,371		$	2,485		$	—		$	1,980		$	1,000		$	10,836

		Asian Special Situations		Asian Secured Lending		APAC Direct Lending		Insurance		SPACs		Total Strategic Initiatives				Asian Special Situations			Asian Secured Lending			APAC Direct Lending			Insurance			SPACs			Total Strategic Initiatives
Balance at 12/31/2021	Balance at 12/31/2021	$	6,239	$	2,456	$	—	$	1,928	$	1,000	$	11,623	Balance at 12/31/2021		$	6,239		$	2,456		$	—		$	1,928		$	1,000		$	11,623

Net new par/equity commitments(1)		860		10		362		(48)		—		1,184

Net new par/equity commitments														Net new par/equity commitments		1,135			10			462			1,118			—			2,725
Net new debt commitments														Net new debt commitments		—			6			1,366			—			—			1,372
Capital reductions	Capital reductions	—		(5)		—		—		—		(5)		Capital reductions		—			(5)			—			—			—			(5)
Distributions	Distributions	(143)		(19)		—		8		—		(154)		Distributions		(598)			(101)			—			(744)			—			(1,443)

Change in fund value	Change in fund value	(6)		29		—		(135)		—		(112)		Change in fund value		9			18			(46)			(367)			—			(386)
Balance at 3/31/2022		$	6,950	$	2,471	$	362	$	1,753	$	1,000	$	12,536
Average AUM(2)		$	6,595	$	2,464	$	181	$	1,841	$	1,000	$	12,081
Balance at 9/30/2022														Balance at 9/30/2022		$	6,785		$	2,384		$	1,782		$	1,935		$	1,000		$	13,886

		Asian Special Situations		Asian Secured Lending		APAC Direct Lending		Insurance		SPACs		Total Strategic Initiatives				Asian Special Situations			Asian Secured Lending			APAC Direct Lending			Insurance			SPACs			Total Strategic Initiatives
Balance at 12/31/2020	Balance at 12/31/2020	$	5,154	$	1,864	$	—	$	2,243	$	—	$	9,261	Balance at 12/31/2020		$	5,154		$	1,864		$	—		$	2,243		$	—		$	9,261

Net new par/equity commitments(1)	Net new par/equity commitments(1)	2		—		—		(302)		1,000		700		Net new par/equity commitments(1)		3			620			—			(230)			1,000			1,393

Distributions	Distributions	(115)		—		—		(16)		—		(131)		Distributions		(73)			(2)			—			(103)			—			(178)

Change in fund value	Change in fund value	78		8		—		(22)		—		64		Change in fund value		287			3			—			70			—			360
Balance at 3/31/2021		$	5,119	$	1,872	$	—	$	1,903	$	1,000	$	9,894
Average AUM(2)		$	5,137	$	1,868	$	—	$	2,073	$	500	$	9,578
Balance at 9/30/2021														Balance at 9/30/2021		$	5,371		$	2,485		$	—		$	1,980		$	1,000		$	10,836

(1) Reallocation of capital among the segments may occur for pools of capital with investment mandates in more than one investment strategy. This reallocation activity is presented within net new par/equity commitments and may result in balances presented to be negative.	(1) Reallocation of capital among the segments may occur for pools of capital with investment mandates in more than one investment strategy. This reallocation activity is presented within net new par/equity commitments and may result in balances presented to be negative.													(1) Reallocation of capital among the segments may occur for pools of capital with investment mandates in more than one investment strategy. This reallocation activity is presented within net new par/equity commitments and may result in balances presented to be negative.
(2) Represents the average of beginning and ending balances.

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

AUM: ~~$12.5~~$13.9

AUM: ~~$9.9~~$10.8

FPAUM

AUM not yet paying fees

Non-fee paying(1)

(1) Includes ~~$0.2~~$0.3 billion and $0.1 billion of non-fee paying AUM based on our general partner commitment as of ~~March 31,~~September 30, 2022 and ~~2021.~~2021, respectively.

Strategic Initiatives—Fee Paying AUM

The tables below present rollforwards of fee paying AUM for Strategic Initiatives ($ in millions):

Asian Special Situations Asian Secured Lending APAC Direct Lending Insurance Total Strategic Initiatives
Balance at 12/31/2021 $ 3,605 $ 1,115 $ — $ 2,067 $ 6,787
Commitments(1)
1,472 — — (8) 1,464
Subscriptions/deployment/increase in leverage 210 245 — — 455
Capital reductions (2) (9) — — (11)
Distributions (209) (47) — (1) (257)
Change in fund value 2 (121) — (211) (330)
Change in fee basis (836) — — — (836)
Balance at 3/31/2022 $ 4,242 $ 1,183 $ — $ 1,847 $ 7,272
Average FPAUM(2)
$ 3,924 $ 1,149 $ — $ 1,957 $ 7,030
Asian Special Situations Asian Secured Lending APAC Direct Lending Insurance Total Strategic Initiatives
Balance at 12/31/2020 $ 3,614 $ 739 $ — $ 2,243 $ 6,596
Commitments(1)
— — — (231) (231)
Subscriptions/deployment/increase in leverage 362 176 — — 538
Capital reductions (1) — — — (1)
Distributions (210) (32) — (14) (256)
Change in fund value — — — (20) (20)
Balance at 3/31/2021 $ 3,765 $ 883 $ — $ 1,978 $ 6,626
Average FPAUM(2)
$ 3,690 $ 811 $ — $ 2,110 $ 6,611
(1) Reallocation of capital among the segments may occur for pools of capital with investment mandates in more than one investment strategy. This reallocation activity is presented within commitments and may result in balances presented to be negative.
(2) Represents the average of beginning and ending balances.


	Asian Special Situations		Asian Secured Lending		APAC Direct Lending		Insurance		Total Strategic Initiatives
Balance at 6/30/2022	$	4,566	$	1,134	$	—	$	1,392	$	7,092

Commitments	—		6		—		628		634
Subscriptions/deployment/increase in leverage	181		499		140		—		820
Capital reductions	(8)		—		—		—		(8)
Distributions	(309)		(208)		—		(418)		(935)

Change in fund value	(12)		—		—		(141)		(153)

Balance at 9/30/2022	$	4,418	$	1,431	$	140	$	1,461	$	7,450


	Asian Special Situations		Asian Secured Lending		APAC Direct Lending		Insurance		Total Strategic Initiatives
Balance at 6/30/2021	$	3,618	$	1,055	$	—	$	1,948	$	6,621

Commitments	—		—		—		233		233
Subscriptions/deployment/increase in leverage	236		143		—		—		379
Capital reductions	—		(121)		—		—		(121)
Distributions	(163)		(62)		—		(48)		(273)

Change in fund value	—		—		—		53		53

Balance at 9/30/2021	$	3,691	$	1,015	$	—	$	2,186	$	6,892

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Table of ~~Contents~~ Contents


.	Asian Special Situations		Asian Secured Lending		APAC Direct Lending		Insurance		Total Strategic Initiatives
Balance at 12/31/2021	$	3,605	$	1,115	$	—	$	2,067	$	6,787

Commitments	1,747		6		—		761		2,514
Subscriptions/deployment/increase in leverage	570		1,138		140		(38)		1,810
Capital reductions	(19)		(223)		—		—		(242)
Distributions	(611)		(485)		—		(422)		(1,518)

Change in fund value	(31)		(120)		—		(669)		(820)
Change in fee basis	(843)		—		—		(238)		(1,081)
Balance at 9/30/2022	$	4,418	$	1,431	$	140	$	1,461	$	7,450


	Asian Special Situations		Asian Secured Lending		APAC Direct Lending		Insurance		Total Strategic Initiatives
Balance at 12/31/2020	$	3,614	$	739	$	—	$	2,243	$	6,596

Commitments(1)	—		—		—		(66)		(66)
Subscriptions/deployment/increase in leverage	952		552		—		—		1,504
Capital reductions	(180)		(122)		—		—		(302)
Distributions	(695)		(154)		—		(103)		(952)

Change in fund value	—		—		—		112		112

Balance at 9/30/2021	$	3,691	$	1,015	$	—	$	2,186	$	6,892


(1) Reallocation of capital among the segments may occur for pools of capital with investment mandates in more than one investment strategy. This reallocation activity is presented within commitments and may result in balances presented to be negative.

The charts below present FPAUM for Strategic Initiatives by its fee basis ($ in billions):

FPAUM: ~~$7.3~~$7.4

FPAUM: ~~$6.6~~$6.9

Market value

Invested capital/other

Capital commitments

~~Strategic Initiatives—Fund Performance Metrics as of March 31, 2022~~

119

Strategic Initiatives includes one significant fund, SSG Capital Partners V, L.P. (“SSG Fund V”), that contributed approximately 27% of the management fees reported in Strategic Initiatives for the three months ended March 31, 2022.

~~The following table presents the performance data of our significant drawdown fund as of March 31, 2022 ($ 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
SSG Fund V 2018 $ 2,124 $ 1,878 $ 1,602 $ 1,063 $ 777 $ 1,840 1.2x 1.1x 34.7 20.2 Asian Special Situations

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

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

~~(3)~~The gross 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 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 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, 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. The gross fund-level IRR 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 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 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.

Table of ~~Contents~~ Contents

Operations Management Group—Three and Nine Months Ended ~~March 31,~~September 30, 2022 Compared to Three and Nine Months Ended ~~March 31,~~September 30, 2021

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)
2022 2021 $ Change % Change
Other fees $ 5,876 $ — $ 5,876 NM
Compensation and benefits (64,067) (44,407) (19,660) (44)
General, administrative and other expenses (32,384) (18,656) (13,728) (74)
Fee Related Earnings $ (90,575) $ (63,063) (27,512) (44)



	Three months ended September 30,				Favorable (Unfavorable)			Nine months ended September 30,				Favorable (Unfavorable)
	2022		2021		$ Change		% Change	2022		2021		$ Change		% Change
Other fees	$	7,547	$	3,446	$	4,101	119%	$	19,721	$	3,446	$	16,275	NM
Compensation and benefits	(61,084)		(66,107)		5,023		8	(196,492)		(158,943)		(37,549)		(24)
General, administrative and other expenses	(41,907)		(28,142)		(13,765)		(49)	(109,516)		(69,872)		(39,644)		(57)
Fee Related Earnings	$	(95,444)	$	(90,803)	(4,641)		(5)	$	(286,287)	$	(225,369)	(60,918)		(27)

NM - Not Meaningful

Other Fees. Other fees ~~of $5.9~~increased by $4.1 million, or 119%, for the three months ended ~~March 31,~~September 30, 2022 ~~represents fees earned through Ares Wealth Management Solutions, LLC (“AWMS”)~~compared to the three months ended September 30, 2021 and by $16.3 million, for the nine months ended September 30, 2022 compared to the nine months ended September 30, 2021. The increase is primarily ~~from asset-based fees that we earn from our non-traded REITs and accompanying 1031 exchange programs. Other fees also includes~~due to trade-based fees from the sale and distribution of our non-traded REITs, net of amounts reallowed to participating broker-dealers.

Compensation and Benefits. Compensation and benefits ~~increased~~decreased by ~~$19.7~~$5.0 million, or ~~44%~~8%, for the three months ended ~~March 31,~~September 30, 2022 compared to the three months ended ~~March 31,~~September 30, 2021 and increased by $37.5 million, or 24%, for the nine months ended September 30, 2022 compared to the nine months ended September 30, 2021. The decrease in salaries and benefits for the three months ended September 30, 2022 when compared to the same period in 2021 was primarily attributable to i) a reduction in incentive compensation from the prior year period of $10.2 million that may fluctuate on a quarterly basis before payments are determined during the fourth quarter, ii) a reduction of payroll taxes from the prior year period of $2.0 million, primarily from the vesting of non-recurring equity compensation awardsok and iii) our decision to engage a third party subject matter expert to support the reorganization of our income tax compliance function which contributed to a reduction in salaries and benefits of $2.8 million for the three months ended September 30, 2022, leading to a corresponding increase ~~continues~~in general, administrative and other expenses. The impact of this reorganization is expected to becontinue in future periods.

Headcount growth attributable to the Black Creek Acquisition, including Ares Wealth Management Solutions, LLC (“AWMS”), Landmark Acquisition and Infrastructure Debt Acquisitioncollectively contributed $34.7 million to the increase in recurring employment related costs for the nine months ended September 30, 2022 compared to the same period in 2021. Additionally, in connection with the sale and distribution of fund shares in our non-traded REITs, we have incurred employee commission expense of $14.9 million during the nine months ended September 30, 2022 compared to the same period in 2021. The increase in salaries and benefits was further driven by (i) ~~the headcount growth from the Infrastructure Debt Acquisition, Black Creek Acquisition~~ ~~and Landmark Acquisition, (ii)~~ the expansion of our strategy and relationship management teams to support global fundraising and ~~(iii)~~(ii) the expansion of our business operations teams to support the growth of our business and other strategic initiatives. ~~In connection with the sale and distribution of shares in our non-traded REITs, we incurred employee commission expense of~~ ~~$6.9 million~~ ~~during the~~ ~~three months ended March 31, 2022~~.

Average headcount for the ~~quarter-to-date period~~third quarter of 2022 increased by ~~51%~~22% to ~~1,136~~1,292 operations management professionals from ~~754~~1,055 professionals for the same period in ~~2021. Average headcount for our operations management professionals increased by 203~~2021, including approximately 10 professionals from the Infrastructure Debt ~~Acquisition, Landmark Acquisition and~~Acquisition. Average headcount for the year-to-date period increased by 40% to 1,215 operations management professionals from 868 professionals for the same period in 2021, including 208 professionals from the Black Creek Acquisition, including ~~AWMS.~~AWMS, the Landmark Acquisition and the Infrastructure Debt Acquisition.

General, Administrative and Other Expenses. General, administrative and other expenses increased by ~~$13.7~~$13.8 million, or ~~74%~~49%, for the three months ended ~~March 31,~~September 30, 2022 compared to the three months ended ~~March 31,~~September 30, 2021 and by $39.6 million, or 57%, for the nine months ended September 30, 2022 compared to the nine months ended September 30, 2021. The ~~change~~increase for the nine months ended September 30, 2022 compared to the same period in 2021 was primarily attributable to our strategic acquisitions and activity from AWMS. The nine months ended September 30, 2022 included ~~an increase in~~$8.1 million of general, administrative and other expenses associated with our acquisitions that are not comparable to the prior year period because the Infrastructure Debt Acquisition closed in the first quarter of ~~$3.1 million from~~2022, the Black Creek Acquisition closed at the beginning of the third quarter of 2021 and the Landmark Acquisition ~~Black Creek Acquisition~~closed in the second quarter of 2021. AWMS facilitates product development, distribution, marketing and ~~Infrastructure Debt Acquisition for~~client management activities to support investment offerings in the ~~three months ended March 31, 2022. The~~global wealth management channel. As we build out our retail distribution infrastructure and capabilities to support prospective sales and AUM growth, we expect marketing and distribution expenses, including travel, to increase in future periods.

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Excluding the impact from the acquisitions, ~~has been excluded from the discussion below.~~

~~Certain~~certain expenses have also increased during the current period ~~including occupancy costs~~ to support ~~our~~the growing ~~headcount and~~headcount. Occupancy costs, information services and information technology ~~to support the expansion of our business. Collectively, these expenses~~costs have increased by ~~$2.4~~$3.2 million and $6.4 million for the three and nine months ended ~~March 31, 2021, when~~September 30, 2022, respectively, compared to the same ~~period~~periods in 2021. ~~The increase was also driven by higher~~Additionally, professional service fees ~~recruiting fees~~have increased by $6.6 million and ~~insurance costs of $4.0~~$13.2 million for the three and nine months ended ~~March 31,~~September 30, 2022, ~~largely~~respectively, primarily due to recruiting fees to support the expanding ~~platform. The three months ended March 31, 2022 also included a $0.8 million charitable contribution~~platform and to the ~~AltFinance program that launched in the second quarter~~reorganization of 2021. AltFinance is an initiative designed to diversify the alternative investment industry by attracting, training and providing career opportunities for college students attending historically black colleges and universities, and we expect to make annual charitable contributions of $3.0 million to the initiative for at least the 10 years following the launch of the program.our income tax compliance function.

There continue to be positive developments in the recovery from the COVID-19 pandemic that have reduced restrictions on travel and gathering. Those operating expenses that were impacted by the pandemic, particularly marketing sponsorships and events, increased after the first half of 2021. OurOther operating expenses, most notably travel, ~~entertainment and~~ marketing sponsorships and certain ~~office services and~~ fringe benefits, collectively increased by ~~$2.3~~$3.4 million and $9.3 million for the three and nine months ended ~~March 31,~~September 30, 2022, ~~when~~respectively, compared to the same ~~period~~periods in ~~2021.~~

~~Table of Contents~~

2021 as travel, marketing and company events have returned to pre-pandemic levels.

Realized Income:

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

Three months ended March 31, Favorable (Unfavorable)
2022 2021 $ Change % Change
Fee Related Earnings $ (90,575) $ (63,063) $ (27,512) (44)%
Interest and other investment income (loss)—realized (284) 355 (639) NM
Interest expense (167) (90) (77) (86)
Realized net investment income (loss) (451) 265 (716) NM
Realized Income $ (91,026) $ (62,798) (28,228) (45)



	Three months ended September 30,				Favorable (Unfavorable)				Nine months ended September 30,				Favorable (Unfavorable)
	2022		2021		$ Change		% Change		2022		2021		$ Change		% Change
Fee Related Earnings	$	(95,444)	$	(90,803)	$	(4,641)	(5)	%	$	(286,287)	$	(225,369)	$	(60,918)	(27)%

Interest and other investment income (loss)—realized	(171)		(270)		99		(37)		(1,450)		170		(1,620)		NM
Interest expense	(128)		(160)		32		20		(474)		(397)		(77)		(19)
Realized net investment loss	(299)		(430)		131		30		(1,924)		(227)		(1,697)		NM
Realized Income	$	(95,743)	$	(91,233)	(4,510)		(5)		$	(288,211)	$	(225,596)	(62,615)		(28)

NM - Not Meaningful

Liquidity and Capital Resources

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

Sources and Uses of Liquidity

Our sources of liquidity are (1) cash on hand, (2) net working capital, (3) cash from operations, including management fees and fee related performance revenues, which are collected monthly, quarterly or semi-annually, and net realized performance income, which may be unpredictable as to amount and timing, (4) fund distributions related to our investments that are unpredictable as to amount and timing and (5) net borrowing from the Credit Facility. As of ~~March 31,~~September 30, 2022, our cash and cash equivalents were ~~$346.0~~$361.5 million, and we had ~~$370.0~~$445.0 million borrowings outstanding under our Credit Facility. Our ability to draw from the Credit Facility is subject to a leverage and other covenants. We remain in compliance with all covenants as of ~~March 31,~~September 30, 2022. We believe that these sources of liquidity will be sufficient to fund our working capital requirements and to meet our commitments in the ordinary course of business and under the current market conditions for the foreseeable future. Cash flows from management fees may be impacted by a slowdown or declines in deployment, declines or write downs in valuations, or a slowdown or negatively impacted fundraising. In addition, management fees may be subject to deferral and fee related performance revenues may be subject to hold backs. Declines or delays and transaction activity may impact our fund distributions and net realized performance income which could adversely impact our cash flows and liquidity. Market conditions may make it difficult to extend the maturity or refinance our existing indebtedness or obtain new indebtedness with similar terms.

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

In the normal course of business, we expect to pay dividends to our Class A and non-voting common stockholders that

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are aligned with our expected fee related earnings after an allocation of current taxes paid. For the purposes of determining this amount, we allocate the current taxes paid to FRE and to realized incentive and investment income in a manner that may be ~~disproportional~~disproportionate to earnings generated by these metrics, and the actual taxes paid on these metrics should they be considered separately. Additionally, our methodology uses the tax benefits from certain expenses that are not included in these non-GAAP metrics, such as equity-based compensation from the vesting of restricted units and the exercise of stock options and from the amortization of intangible assets, among others. We allocate the taxes by multiplying the statutory tax rate currently in effect by our realized performance and net investment income and removing this amount from total current taxes. The remaining current tax paid is the amount that we allocate to FRE. We use this method to allocate the current provision for income taxes to approximate the amount of cash that is available to pay dividends to our stockholders. If cash flows from operations were insufficient to fund dividends over a sustained period of time, we expect that we would suspend or reduce paying such dividends. In addition, there is no assurance that dividends would continue at the current levels or at all.

~~Table of Contents~~

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 8. Debt” and “Note 14. Equity and Redeemable Interest” to 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 our reported cash flows. The primary cash flow activities of our Consolidated Funds include: (1) raising capital from third-party investors, which is reflected as non-controlling interests of our Consolidated Funds, (2) financing certain investments by issuing debt, (3) purchasing and selling investment securities, (4) generating cash through the realization of certain investments, (5) collecting interest and dividend income and (6) distributing cash to investors. Our Consolidated Funds are generally accounted for as investment companies under GAAP; therefore, the character and classification of all Consolidated Fund transactions are presented as cash flows from operations. Liquidity available at our Consolidated Funds is ~~typically~~ not available for corporate liquidity needs, and debt of the Consolidated Funds is non–recourse to the Company except to the extent of the Company's investment in the fund.

Cash Flows

We consolidate funds where we are deemed to hold a controlling interest. The Consolidated Funds are not necessarily the same entities in each year presented due to changes in ownership, changes in limited partners' rights and the creation or termination of funds. The consolidation of these funds had no effect on cash flows attributable to us for the periods presented. As such, we evaluate the activity of the Consolidated Funds and the eliminations resulting from consolidation separately. The following tables and discussion summarize our condensed consolidated statements of cash flows by activities attributable to the Company and to our Consolidated Funds. For more details on the activity of the Company and Consolidated Funds, refer to “Note 16. Consolidation” to our unaudited condensed consolidated financial statements included in this Quarterly Report on Form 10-Q.


		Three months ended March 31,					Nine months ended September 30,
($ in thousands)	($ in thousands)	2022		2021		($ in thousands)	2022		2021
Net cash provided by operating activities	Net cash provided by operating activities	$	262,732	$	137,408	Net cash provided by operating activities	$	640,805	$	368,259
Net cash used in the Consolidated Funds' operating activities, net of eliminations	Net cash used in the Consolidated Funds' operating activities, net of eliminations	(38,582)		(878,526)		Net cash used in the Consolidated Funds' operating activities, net of eliminations	(1,184,410)		(2,212,010)
Net cash provided by (used in) operating activities		224,150		(741,118)
Net cash used in operating activities						Net cash used in operating activities	(543,605)		(1,843,751)
Net cash used in the Company's investing activities	Net cash used in the Company's investing activities	(310,148)		(3,284)		Net cash used in the Company's investing activities	(330,046)		(1,072,578)
Net cash provided by (used in) the Company's financing activities	Net cash provided by (used in) the Company's financing activities	53,205		(63,442)		Net cash provided by (used in) the Company's financing activities	(266,540)		476,110
Net cash provided by the Consolidated Funds' financing activities, net of eliminations	Net cash provided by the Consolidated Funds' financing activities, net of eliminations	39,832		880,653		Net cash provided by the Consolidated Funds' financing activities, net of eliminations	1,193,621		2,216,874
Net cash provided by financing activities	Net cash provided by financing activities	93,037		817,211		Net cash provided by financing activities	927,081		2,692,984
Effect of exchange rate changes	Effect of exchange rate changes	(4,652)		(2,749)		Effect of exchange rate changes	(35,585)		(20,763)
Net change in cash and cash equivalents	Net change in cash and cash equivalents	$	2,387	$	70,060	Net change in cash and cash equivalents	$	17,845	$	(244,108)

Operating Activities

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

Three months ended March 31, Favorable (Unfavorable)
2022 2021 $ Change % Change
Core operating activities $ 226,592 $ 161,093 $ 65,499 41%
Net realized performance income 87,214 5,010 82,204 NM
Net cash used in investment related activities (51,074) (28,695) (22,379) 78
Net cash provided by operating activities $ 262,732 $ 137,408 125,324 91

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	Nine months ended September 30,				Favorable (Unfavorable)
	2022		2021		$ Change		% Change
Core operating activities	$	722,508	$	476,700	$	245,808	52%
Net realized performance income	85,646		37,628		48,018		128
Net cash used in investment related activities	(167,349)		(146,069)		(21,280)		15
Net cash provided by operating activities	$	640,805	$	368,259	272,546		74

NM - Not Meaningful

Cash generated from our core operating activities continues to increase as a result of growing fee revenues and an expanding fee related earnings margin. Net realized performance income ~~which~~ represents a source of cash ~~also increased when compared to the prior year period primarily as a result of receiving payment for~~and includes incentive fees that ~~were~~are realized annually at the end of the measurement period, which is typically at the end of the calendar year. Cash from these realizations are generally received in the

~~Table of Contents~~

~~prior~~ period subsequent to the measurement period. Our incentive fee realizations were higher in the fourth quarter of 2021 compared to the fourth quarter of 2020, which resulted in an increase in cash payments received over the comparative ~~periods.~~period. Net cash used in investment related activities primarily represents net purchases associated with funding capital commitments in our investment portfolio, which represent a use of cash. Our capital commitments continue to increase with our growing assets under management. For further discussion of our capital commitments, see “Note 9. Commitments and Contingencies,” to our unaudited condensed consolidated financial statements included in this Quarterly Report on Form 10-Q.

Net cash used in the Consolidated Funds’ operating activities continues to be principally attributable to net purchases of investment securities by recently launched funds during both periods. Net cash used in the Consolidated Funds’ operating activities for the ~~three~~nine months ended ~~March 31,~~September 30, 2021 included the purchase of U.S. Treasury securities following the initial public offering of our SPAC.

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,					Nine months ended September 30,
		2022		2021			2022		2021
Purchase of furniture, equipment and leasehold improvements, net of disposals	Purchase of furniture, equipment and leasehold improvements, net of disposals	$	(8,524)	$	(3,284)	Purchase of furniture, equipment and leasehold improvements, net of disposals	$	(28,388)	$	(15,152)
Acquisitions, net of cash acquired	Acquisitions, net of cash acquired	(301,624)		—		Acquisitions, net of cash acquired	(301,658)		(1,057,426)
Net cash used in investing activities	Net cash used in investing activities	$	(310,148)	$	(3,284)	Net cash used in investing activities	$	(330,046)	$	(1,072,578)

Net cash used in the Company's investing activities was principally composed of cash used to complete the Infrastructure Debt Acquisition in the current period and .cash used to complete the Black Creek Acquisition and Landmark Acquisition in the prior year period. We also used cash to purchase furniture, fixtures, equipment and leasehold improvements during both years to support the growth in our staffing levels and expanding our global presence.

Financing Activities


		Three months ended March 31,					Nine months ended September 30,
		2022		2021			2022		2021

Net borrowings (repayments) of Credit Facility		$	(45,000)	$	168,000
Proceeds from issuance of senior notes		488,915		—
Net proceeds from issuance of Class A and non-voting common stock						Net proceeds from issuance of Class A and non-voting common stock	$	—	$	827,430
Net borrowings of Credit Facility						Net borrowings of Credit Facility	30,000		150,000
Proceeds from issuance of senior and subordinated notes						Proceeds from issuance of senior and subordinated notes	488,915		450,000

Class A and non-voting common stock dividends	Class A and non-voting common stock dividends	(111,406)		(74,684)		Class A and non-voting common stock dividends	(334,864)		(239,816)
AOG unitholder distributions	AOG unitholder distributions	(100,480)		(67,084)		AOG unitholder distributions	(273,356)		(198,752)
Series A Preferred Stock dividends	Series A Preferred Stock dividends	—		(5,425)		Series A Preferred Stock dividends	—		(10,850)

Redemption of Series A Preferred Stock						Redemption of Series A Preferred Stock	—		(310,000)

Stock option exercises	Stock option exercises	3,347		—		Stock option exercises	14,531		27,409
Taxes paid related to net share settlement of equity awards	Taxes paid related to net share settlement of equity awards	(183,027)		(84,590)		Taxes paid related to net share settlement of equity awards	(194,223)		(221,287)
Other financing activities	Other financing activities	856		341		Other financing activities	2,457		1,976
Net cash provided by (used in) the Company's financing activities	Net cash provided by (used in) the Company's financing activities	$	53,205	$	(63,442)	Net cash provided by (used in) the Company's financing activities	$	(266,540)	$	476,110

Net cash provided by the Company’s financing activities for the three months ended March 31, 2022 included net proceeds from the issuance of the 2052 Senior Notes. These proceeds were used primarily to fund the Infrastructure Debt Acquisition. 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.~~unitholders, resulting in net cash used in the Company’s financing activities for the nine months ended September 30, 2022. Net proceeds from the issuance of the 2052

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Senior Notes contributed to additional cash inflow for the nine months ended September 30, 2022. These proceeds were used primarily to fund the Infrastructure Debt Acquisition.

In connection with the vesting of restricted units that are granted to our employees under the Equity Incentive Plan, we withhold shares equal to the fair value of our employee’s withholding tax liabilities and pay the taxes on their behalf. This use of cash ~~increased~~decreased from the prior period primarily as a result of a lower number of restricted units that vested in the current period, partially offset by our ~~appreciating~~higher stock price, which is the basis on which employee compensation is ~~recognized, and a higher number of restricted units that vested in the current period.~~recognized. The net settlement of shares minimizes the dilutive impact of our Equity Incentive Plan as fewer shares are issued upon vesting. For the ~~three~~nine months ended ~~March 31,~~September 30, 2022 and 2021, we retained and did not issue ~~2.3~~2.5 million shares and ~~1.8~~3.8 million shares, respectively.

Net cash ~~used in~~provided by the ~~Company’s~~Company's financing activities for ~~three~~the nine months ended ~~March 31,~~September 30, 2021 was principally composed of ~~cash used to pay dividends and distributions to~~net proceeds from the public offering of Class A common ~~stockholders~~stock, private offering of Class A common stock and ~~AOG unitholders, respectively.~~non-voting common stock to SMBC and the issuance of the 2051 Subordinated Notes. These proceeds were largely used to fund the Black Creek Acquisition, Landmark Acquisition and redeem the Series A Preferred Stock.

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		Three months ended March 31,					Nine months ended September 30,
		2022		2021			2022		2021
Contributions from redeemable and non-controlling interests in Consolidated Funds, net of eliminations	Contributions from redeemable and non-controlling interests in Consolidated Funds, net of eliminations	$	82,930	$	941,935	Contributions from redeemable and non-controlling interests in Consolidated Funds, net of eliminations	$	298,646	$	919,666
Distributions to non-controlling interests in Consolidated Funds, net of eliminations	Distributions to non-controlling interests in Consolidated Funds, net of eliminations	(34,958)		(38,829)		Distributions to non-controlling interests in Consolidated Funds, net of eliminations	(104,432)		(84,770)
Borrowings under loan obligations by Consolidated Funds	Borrowings under loan obligations by Consolidated Funds	49,317		7,000		Borrowings under loan obligations by Consolidated Funds	1,120,680		1,456,887
Repayments under loan obligations by Consolidated Funds	Repayments under loan obligations by Consolidated Funds	(57,457)		(29,453)		Repayments under loan obligations by Consolidated Funds	(121,273)		(74,909)
Net cash provided by the Consolidated Funds' financing activities	Net cash provided by the Consolidated Funds' financing activities	$	39,832	$	880,653	Net cash provided by the Consolidated Funds' financing activities	$	1,193,621	$	2,216,874

Net cash provided by the Consolidated Funds’ financing activities for the ~~three~~nine months ended ~~March 31,~~September 30, 2022 was ~~principally~~primarily attributable to ~~contributions to a Consolidated Fund to fund investments in limited partnership interests in private equity funds managed by~~ the ~~Company.~~borrowings of two newly issued CLOs.

Net cash provided by the Consolidated Funds’ financing activities for the ~~three~~nine months ended ~~March 31,~~September 30, 2021 was principally attributable to contributions from shareholders in the initial public offering of our ~~SPAC.~~SPAC and to the borrowings of two newly issued CLOs.

Capital Resources

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

We are required to maintain minimum net capital balances for regulatory purposes for our broker-dealer ~~entities and certain subsidiaries operating outside the U.S.~~entities. These net capital requirements ~~in the U.S.~~ 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 its jurisdictions. As a result, we may be restricted in our ability to transfer cash between different operating entities and jurisdictions. As of ~~March 31,~~September 30, 2022, we were required to maintain approximately ~~$46.4~~$48.1 million in net assets within these subsidiaries to meet regulatory net capital and capital adequacy requirements. We remain in compliance with all regulatory requirements.

Holders of AOG Units, subject to the terms of the exchange agreement, may exchange their AOG Units for shares of our Class A common stock on a one-for-one basis. These exchanges are expected to result in increases in the tax basis of the tangible and intangible assets of AMC that otherwise would not have been available. These increases in tax basis may increase depreciation and amortization for U.S. income tax purposes and thereby reduce the amount of tax that we would otherwise be required to pay in the future. We entered into the TRA that provides payment to the TRA recipients of 85% of the amount of actual cash savings, if any, in U.S. federal, state, local and foreign income tax or franchise tax that we actually realize as a result of these increases in tax basis and of certain other tax benefits related to entering into the TRA, including tax benefits attributable to payments under the TRA and interest accrued thereon. Future payments under the TRA in respect of subsequent exchanges are expected to be substantial. The TRA liability balance was $99.0 million and $100.5 million as of ~~March 31,~~September 30, 2022 and December 31, 2021, respectively.

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For a discussion of our debt obligations, including the debt obligations of our consolidated funds, see ~~"Note~~“Note 8. Debt,” to our unaudited condensed consolidated financial statements included in this Quarterly Report on Form 10-Q.

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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. Actual results may also differ from our estimates and judgments due to risks and uncertainties. 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, 2021. 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,” of our unaudited condensed consolidated financial statements included in this Quarterly Report on Form 10-Q.

Commitments and Contingencies

In the normal course of business, we enter into contractual obligations that may require future cash payments. We may also engage in off-balance sheet arrangements, including transactions in derivatives, guarantees, capital commitments to funds, indemnifications and potential contingent ~~repayment~~payment obligations. For further discussion of ~~our derivatives, guarantees, capital commitments, indemnification~~these arrangements, ~~and contingent obligations,~~ see “Note 7. Derivative Financial Instruments” and “Note 9. Commitments and Contingencies” to our unaudited condensed consolidated financial statements included in this Quarterly Report on Form 10-Q.

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Item 3. Quantitative and Qualitative Disclosures About Market Risk

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

Market Risk

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

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

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Credit Risk

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

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

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

At ~~March 31,~~September 30, 2022 and December 31, 2021, we had cash balances with financial institutions in excess of Federal Deposit Insurance Corporation insured limits. We seek to mitigate this exposure by monitoring the credit standing of these financial institutions.

There have been no material changes in our market risks for the ~~three~~nine months ended ~~March 31,~~September 30, 2022. For additional information on our market risks, refer to our Annual Report on Form 10-K for the year ended December 31, 2021, which is accessible on the SEC's website at sec.gov.

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Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures (as that term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) that are designed to ensure that information required to be disclosed in our reports under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosures. Any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. Our management, with the participation of our principal executive officer and principal financial officer, has evaluated the effectiveness of the design and operation of our disclosure controls and procedures as of ~~March 31,~~September 30, 2022. Based upon that evaluation and subject to the foregoing, our principal executive officer and principal financial officer concluded that, as of ~~March 31,~~September 30, 2022, the design and operation of our disclosure controls and procedures were effective to accomplish their objectives at the reasonable assurance level.

Changes in Internal Control over Financial Reporting

There have been no changes in our internal control over financial reporting (as defined in Rule 13a-15(f) and 15d-15(f) under the Exchange Act) during the quarter ended ~~March 31,~~September 30, 2022 that have materially affected, or that are reasonably likely to materially affect, our internal control over financial reporting.

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PART II.

Item 1. Legal Proceedings

From time to time we are involved in various legal proceedings, lawsuits and claims incidental to the conduct of our business, some of which may be material. As of ~~March 31,~~September 30, 2022 and December 31, 2021, we were not subject to any material pending legal proceedings. Our businesses are also subject to extensive regulation, which may result in regulatory proceedings against us.

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Item 1A. Risk Factors

There have been no material changes to the risk factors for the ~~three~~nine months ended ~~March 31,~~September 30, 2022. For a discussion of our other potential risks and uncertainties, see “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2021, which is accessible on the SEC's website at sec.gov.

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

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

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


Period	Total Number of Shares Purchased	Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Approximate Dollar Value of Shares That May Yet be Purchased Under the Plans or Programs (1)
~~January~~July 1, 2022 - ~~January~~July 31, 2022	—	$	—	—	$	150,000
~~February~~August 1, 2022 - ~~February 28,~~August 31, 2022	—	—		—	150,000
~~March~~September 1, 2022 - ~~March 31,~~September 30, 2022	—	—		—	150,000
Total	—			—

(1)In February 2022, our board of directors approved the renewal of our stock repurchase program that authorizes the repurchase of up to $150 million of shares of our Class A common stock. Under this stock repurchase program, shares may be repurchased from time to time in open market purchases, privately negotiated transactions or otherwise, including in reliance on Rule 10b5-1 of the Securities Act. The program is scheduled to expire in March 2023. Repurchases under the program depend on the prevailing market conditions and other factors.

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

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

~~Disclosure Pursuant to Section 219 of the Iran Threat Reduction and Syria Human Rights Act~~

None

Section 219 of the Iran Threat Reduction and Syria Human Rights Act of 2012 (“ITRA”) and Section 13(r) of the Exchange Act, require an issuer to disclose in its annual and quarterly reports whether it or any of its affiliates have knowingly engaged in specified activities or transactions relating to Iran.

On January 31, 2019, funds and accounts managed by Ares’ European direct lending strategy (together, the “Ares funds”) collectively acquired a 32% equity stake in Daisy Group Limited (“Daisy”). Daisy is a provider of communication services to businesses based in the United Kingdom. The Ares funds do not hold a majority equity interest in Daisy and do not have the right to appoint a majority of directors to Daisy’s board of directors.

Subsequent to completion of the Ares funds’ investment in Daisy, in connection with Ares’ routine quarterly survey of its investment funds’ portfolio companies, Daisy informed the Ares funds that it has a customer contract with Melli Bank Plc. Melli Bank Plc has been designated by the Office of Foreign Assets Control within the U.S. Department of Treasury pursuant to Executive Order 13224. Daisy generated a total of £41,546 in annual revenues in 2021 (less than 0.01% of Daisy’s annual

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~~revenues) from its dealings with Melli Bank Plc and de minimis net profits. Daisy entered into the customer contract with Melli Bank Plc prior to the Ares funds’ investment in Daisy.~~

Daisy terminated its contract with Melli Bank Plc on February 26, 2022. Following termination of the contract, Daisy has not engaged and does not intend to engage in any further dealings or transactions with Melli Bank Plc.

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Item 6. Exhibits, Financial Statement Schedules

(a)Exhibits.

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


Exhibit No.						Description
3.1						Second Amended and Restated Certificate of Incorporation of Ares Management Corporation.
3.2						Bylaws of Ares Management Incorporation (incorporated by reference to Exhibit 99.4 to the Registrant’s Current Report on Form 8-K (File No. 001-36429) filed with the SEC on November 15, 2018).
~~4.1~~						Indenture dated as of January 21, 2022 among Ares Finance Co. IV LLC, Ares Holdings L.P., Ares Investments Holdings LLC, Ares Management LLC, Ares Finance Co. LLC, Ares Finance Co. II LLC, Ares Finance Co. III LLC and U.S. Bank National Association, as trustee (incorporated by reference to Exhibit 4.1 to the Registrant’s Current Report on Form 8-K (File No. 001-36429) filed with the SEC on January 21, 2022).
~~4.2~~						First Supplemental Indenture dated as of January 21, 2022 among Ares Finance Co. IV LLC, Ares Holdings L.P., Ares Investments Holdings LLC, Ares Management LLC, Ares Finance Co. LLC, Ares Finance Co. II LLC, Ares Finance Co. III LLC and U.S. Bank National Association, as trustee (incorporated by reference to Exhibit 4.2 to the Registrant’s Current Report on Form 8-K (File No. 001-36429) filed with the SEC on January 21, 2022).
~~4.3~~						Form of 3.650% Senior Note due 2052 (included in Exhibit 4.2 hereto) (incorporated by reference to Exhibit 4.3 to the Registrant’s Current Report on Form 8-K (File No. 001-36429) filed with the SEC on January 21, 2022).
~~10.1~~						Nomination Agreement, dated February 23, 2022, by and between Ares Management Corporation and Ares Partners Holdco LLC (incorporated by reference to Exhibit 10.37 to the Registrant’s Current Report on Form 10-K (File No. 001-36429) filed with the SEC on February 28, 2022).
~~10.2~~						Amendment No. 11, dated as of March 31, 2022, to the Sixth Amended and Restated Credit Agreement, dated as of April 21, 2014, by and among Ares Holdings L.P., Ares Investments L.P., the Guarantors party thereto, the Lenders party thereto and JPMorgan Chase Bank, N.A. (incorporated by reference to Exhibit 10.1 to the Registrant's Current Report on Form 8-K (File No. 001-36429) filed with the SEC on April 6, 2022).
31.1*						Certification of the Chief Executive Officer pursuant to Rule 13a-14(a).
31.2*						Certification of the Chief Financial Officer pursuant to Rule 13a-14(a).
32.1*						Certification of the Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350.
101.INS*101.INS						XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH*101.SCH						Inline XBRL Taxonomy Extension Schema Document.
101.CAL*101.CAL						Inline XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF*101.DEF						Inline XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB*101.LAB						Inline XBRL Taxonomy Extension Label Linkbase Document.
101.PRE*101.PRE						Inline XBRL Taxonomy Extension Presentation Linkbase Document.
104*104.0						Cover Page Interactive Data File - the cover page interactive data file does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

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

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SIGNATURES

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


	ARES MANAGEMENT CORPORATION


Dated: ~~May 9,~~November 7, 2022		By:	/s/ Michael J Arougheti
		Name:	Michael J Arougheti
		Title:	Co-Founder, Chief Executive Officer & President (Principal Executive Officer)


Dated: ~~May 9,~~November 7, 2022		By:	/s/ Jarrod Phillips
		Name:	Jarrod Phillips
		Title:	Chief Financial Officer (Principal Financial and Accounting Officer)

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