Document And Entity Information
Document And Entity Information - shares | 9 Months Ended | |
Sep. 30, 2017 | Oct. 27, 2017 | |
Document and Entity Information | ||
Entity Registrant Name | ARES MANAGEMENT LP | |
Entity Central Index Key | 1,176,948 | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2017 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 82,211,302 | |
Document Fiscal Year Focus | 2,017 | |
Document Fiscal Period Focus | Q3 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Financial Condition - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
Assets | ||
Goodwill | $ 143,880 | $ 143,724 |
Total assets | 8,019,437 | 5,829,712 |
Liabilities | ||
Total liabilities | 6,641,516 | 4,452,450 |
Commitments and contingencies | ||
Preferred equity (12,400,000 units issued and outstanding at September 30, 2017 and December 31, 2016) | 298,761 | 298,761 |
Controlling interest in Ares Management, L.P.: | ||
Partners' capital (82,211,302 units and 80,814,732 units issued and outstanding at September 30, 2017 and at December 31, 2016, respectively) | 275,410 | 301,790 |
Accumulated other comprehensive loss, net of tax | (4,486) | (8,939) |
Total controlling interest in Ares Management, L.P. | 270,924 | 292,851 |
Total equity | 1,377,921 | 1,377,262 |
Total liabilities and equity | 8,019,437 | 5,829,712 |
Ares Management L.P | ||
Assets | ||
Cash and cash equivalents | 186,437 | 342,861 |
Investments, at fair value | 584,695 | 468,471 |
Performance fees receivable | 997,578 | 759,099 |
Due from affiliates | 161,432 | 162,936 |
Deferred tax asset, net | 36,661 | 6,731 |
Other assets | 103,885 | 65,565 |
Intangible assets, net | 44,115 | 58,315 |
Goodwill | 143,880 | 143,724 |
Liabilities | ||
Accounts payable, accrued expenses and other liabilities | 94,351 | 83,336 |
Accrued compensation | 133,799 | 131,736 |
Due to affiliates | 17,207 | 17,564 |
Performance fee compensation payable | 780,201 | 598,050 |
Debt obligations | 486,007 | 305,784 |
Controlling interest in Ares Management, L.P.: | ||
Partners' capital (82,211,302 units and 80,814,732 units issued and outstanding at September 30, 2017 and at December 31, 2016, respectively) | 275,410 | 301,790 |
Accumulated other comprehensive loss, net of tax | (4,486) | (8,939) |
Total controlling interest in Ares Management, L.P. | 270,924 | 292,851 |
Consolidated Funds | ||
Assets | ||
Cash and cash equivalents | 799,609 | 455,280 |
Investments, at fair value | 4,915,029 | 3,330,203 |
Due from affiliates | 8,047 | 3,592 |
Other assets | 2,082 | 2,501 |
Dividends and interest receivable | 10,061 | 8,479 |
Receivable for securities sold | 25,926 | 21,955 |
Liabilities | ||
Accounts payable, accrued expenses and other liabilities | 50,992 | 21,056 |
Due to affiliates | 0 | 0 |
Payable for securities purchased | 481,055 | 208,742 |
CLO loan obligations, at fair value | 4,476,643 | 3,031,112 |
Fund borrowings | 121,261 | 55,070 |
Non-controlling interest in Consolidated Funds | 459,723 | 338,035 |
Non-controlling interest in Ares Operating Group entities | 459,723 | 338,035 |
AOG | ||
Liabilities | ||
Non-controlling interest in Ares Operating Group entities | $ 348,513 | $ 447,615 |
Condensed Consolidated Stateme3
Condensed Consolidated Statements of Financial Condition (Parenthetical) - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
Preferred equity, units issued (in units) | 12,400,000 | 12,400,000 |
Preferred equity, units outstanding (in units) | 12,400,000 | 12,400,000 |
Partners' Capital units issued (in units) | 82,211,302 | 80,814,732 |
Partners' Capital units outstanding (in units) | 82,211,302 | 80,814,732 |
Ares Management L.P | ||
Fair value of investments | $ 581,614 | $ 448,336 |
Condensed Consolidated Stateme4
Condensed Consolidated Statements of Operations - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Revenues | ||||
Administrative and other fees | $ 0 | |||
Total revenues | 283,671 | $ 335,460 | $ 1,059,218 | $ 841,010 |
Expenses | ||||
Total expenses | 254,127 | 283,374 | 1,193,791 | 716,847 |
Other income (expense) | ||||
Total other income | 58,880 | 73,339 | 147,489 | 75,294 |
Income before taxes | 88,424 | 125,425 | 12,916 | 199,457 |
Income tax expense (benefit) | 4,552 | 7,641 | (28,459) | 7,868 |
Net income | 83,872 | 117,784 | 41,375 | 191,589 |
Net income attributable to Ares Management, L.P. | 27,838 | 43,305 | 36,582 | 77,793 |
Less: Preferred equity distributions paid | 5,425 | 6,751 | 16,275 | 6,751 |
Net income attributable to Ares Management, L.P. common unitholders | $ 22,413 | $ 36,554 | $ 20,307 | $ 71,042 |
Net income attributable to Ares Management, L.P. per common unit: | ||||
Basic (in dollars per unit) | $ 0.26 | $ 0.45 | $ 0.22 | $ 0.87 |
Diluted (in dollars per unit) | $ 0.26 | $ 0.43 | $ 0.22 | $ 0.86 |
Weighted-average common units: | ||||
Basic (in units) | 82,166,852 | 80,793,984 | 81,704,815 | 80,741,460 |
Diluted (in units) | 82,166,852 | 84,464,591 | 81,704,815 | 82,667,049 |
Distribution declared and paid per common unit (in units per share) | $ 0.31 | $ 0.28 | $ 0.72 | $ 0.63 |
Ares Management L.P | ||||
Revenues | ||||
Management fees (includes ARCC Part I Fees of $24,036, $76,436 and $33,260, $90,884 for the three and nine months ended September 30, 2017 and 2016, respectively) | $ 183,177 | $ 163,609 | $ 535,990 | $ 480,563 |
Performance fees | 87,008 | 164,482 | 480,204 | 337,686 |
Administrative and other fees | 13,486 | 7,369 | 43,024 | 22,761 |
Total revenues | 283,671 | 335,460 | 1,059,218 | 841,010 |
Expenses | ||||
Compensation and benefits | 129,347 | 111,916 | 384,905 | 335,249 |
Performance fee compensation | 58,637 | 123,173 | 361,044 | 253,739 |
General, administrative and other expenses | 47,104 | 38,197 | 145,193 | 116,845 |
Transaction support expense | 0 | 0 | 275,177 | 0 |
Other income (expense) | ||||
Investment income and net interest income (expense) | (1,831) | (1,681) | (6,218) | (47) |
Other income (expense), net | (2,492) | 23,042 | 16,826 | 33,956 |
Net realized and unrealized gain on investments | 7,209 | 19,358 | 39,943 | 21,349 |
Consolidated Funds | ||||
Expenses | ||||
Expenses of the Consolidated Funds | 19,039 | 10,088 | 27,472 | 11,014 |
Other income (expense) | ||||
Investment income and net interest income (expense) | 20,054 | 8,737 | 41,675 | 25,759 |
Net realized and unrealized gain on investments | 35,940 | 23,883 | 55,263 | (5,723) |
Net income (loss) attributable to non-controlling interests related to consolidated VIEs | 18,195 | 7,861 | 25,403 | (3,064) |
AOG | ||||
Other income (expense) | ||||
Net income (loss) attributable to non-controlling interests related to consolidated VIEs | 37,839 | 66,511 | (20,610) | 116,404 |
Less: Net income attributable to redeemable interests in Ares Operating Group entities | $ 0 | $ 107 | $ 0 | $ 456 |
Condensed Consolidated Stateme5
Condensed Consolidated Statements of Operations (Parenthetical) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Ares Management L.P | ||||
Interest expense | $ 5,343 | $ 4,136 | $ 15,576 | $ 13,819 |
Ares Management L.P | Affiliated entity | ARCC | ||||
Management fees, part I fees | 24,036 | 33,260 | 76,436 | 90,884 |
Consolidated Funds | ||||
Interest expense | $ 28,127 | $ 26,413 | $ 86,324 | $ 67,469 |
Condensed Consolidated Stateme6
Condensed Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Net income | $ 83,872 | $ 117,784 | $ 41,375 | $ 191,589 |
Other comprehensive income: | ||||
Foreign currency translation adjustments | 11,514 | |||
Ares Management L.P | ||||
Other comprehensive income: | ||||
Foreign currency translation adjustments | 6,043 | (2,241) | 11,514 | (12,566) |
Total comprehensive income | 89,915 | 115,543 | 52,889 | 179,023 |
Comprehensive income attributable to Ares Management, L.P. | 30,755 | 42,452 | 41,035 | 73,027 |
Consolidated Funds | ||||
Other comprehensive income: | ||||
Less: Comprehensive income (loss) attributable to non-controlling interests | 18,017 | 7,861 | 25,055 | (3,064) |
AOG | ||||
Other comprehensive income: | ||||
Less: Comprehensive income (loss) attributable to non-controlling interests | 41,143 | 65,125 | (13,201) | 108,651 |
Less: Comprehensive income attributable to redeemable interests in Ares Operating Group entities | $ 0 | $ 105 | $ 0 | $ 409 |
Condensed Consolidated Stateme7
Condensed Consolidated Statements of Changes in Equity - 9 months ended Sep. 30, 2017 - USD ($) $ in Thousands | Total | Ares Management L.P | Ares Management L.PAccumulated Other Comprehensive Loss | Ares Management L.PNon-Controlling interest | Consolidated FundsNon-Controlling interest | Partners' CapitalAres Management L.P | Partners' CapitalPreferred Partner |
Balance at Dec. 31, 2016 | $ 1,377,262 | $ (8,939) | $ 447,615 | $ 338,035 | $ 301,790 | $ 298,761 | |
Increase (Decrease) in Stockholders' Equity | |||||||
Changes in ownership interests | (16,476) | (8,994) | (7,482) | ||||
Contributions | 147,601 | 1,884 | 145,717 | ||||
Distributions | (234,367) | (110,127) | (49,084) | (58,881) | (16,275) | ||
Net income (loss) | 41,375 | (20,610) | 25,403 | 20,307 | 16,275 | ||
Currency translation adjustment | 11,514 | $ 11,514 | 4,453 | 7,409 | (348) | ||
Equity compensation | 51,012 | 31,336 | 19,676 | ||||
Balance at Sep. 30, 2017 | $ 1,377,921 | $ (4,486) | $ 348,513 | $ 459,723 | $ 275,410 | $ 298,761 |
Condensed Consolidated Stateme8
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2017 | Sep. 30, 2016 | |
Cash flows from operating activities: | ||
Net income | $ 41,375 | $ 191,589 |
Adjustments to reconcile net income to net cash (used in) provided operating activities | (52,314) | 24,989 |
Cash flows due to changes in operating assets and liabilities | (78,593) | (30,485) |
Net cash used in operating activities | (1,192,250) | (259,359) |
Cash flows from investing activities: | ||
Purchase of furniture, equipment and leasehold improvements, net | (27,926) | (8,167) |
Net cash used in investing activities | (27,926) | (8,167) |
Allocable to non-controlling interest in Consolidated Funds: | ||
Net cash provided by financing activities | 1,051,647 | 489,702 |
Ares Management L.P | ||
Cash flows from financing activities: | ||
Proceeds from credit facility | 245,000 | 147,000 |
Proceeds from term notes | 70,009 | 0 |
Repayments of credit facility | (135,000) | (257,000) |
Proceeds from the issuance of preferred equity, net of issuance costs | 0 | 298,637 |
Distributions | (169,008) | (150,424) |
Preferred equity distributions | (16,275) | (6,751) |
Net settlement of vested common units | (13,910) | 0 |
Stock option exercise | 1,036 | 0 |
Excess tax benefit related to stock option exercise | 81 | 0 |
Other financing activities | 1,541 | (701) |
Allocable to non-controlling interest in Consolidated Funds: | ||
Effect of exchange rate changes | 12,105 | (6,876) |
Net change in cash and cash equivalents | (156,424) | 215,300 |
Cash and cash equivalents, beginning of period | 342,861 | 121,483 |
Cash and cash equivalents, end of period | 186,437 | 336,783 |
Consolidated Funds | ||
Cash flows from operating activities: | ||
Adjustments to reconcile net income to net cash (used in) provided operating activities | (1,157,088) | (506,849) |
Cash flows due to changes in operating assets and liabilities | 54,370 | 61,397 |
Allocable to non-controlling interest in Consolidated Funds: | ||
Contributions from non-controlling interests in Consolidated Funds | 145,717 | 93,128 |
Distributions to non-controlling interests in Consolidated Funds | (49,084) | (61,270) |
Borrowings under loan obligations by Consolidated Funds | 2,438,491 | 530,731 |
Repayments under loan obligations by Consolidated Funds | (1,466,951) | $ (103,648) |
Cash and cash equivalents, beginning of period | 455,280 | |
Cash and cash equivalents, end of period | $ 799,609 |
ORGANIZATION
ORGANIZATION | 9 Months Ended |
Sep. 30, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
ORGANIZATION | ORGANIZATION Ares Management, L.P. ("the Company"), a Delaware limited partnership, is a leading global alternative asset management firm that operates three distinct but complementary investment groups: the Credit Group, the Private Equity Group and the Real Estate Group. Information about segments should be read together with Note 14, “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”), which are generally organized as pass-through entities for income tax purposes. Such subsidiaries provide investment advisory services to the Ares Funds in exchange for management fees. Ares is managed and operated by its general partner, Ares Management GP LLC. Unless the context requires otherwise, references to “Ares” or the “Company” refer to Ares Management, L.P. together with its subsidiaries. The Company is a holding partnership, and the Company’s sole assets are equity interests in Ares Holdings Inc. (“AHI”), Ares Offshore Holdings, Ltd., and Ares AI Holdings L.P. In this quarterly report, the following of the Company’s subsidiaries are collectively referred to as the “Ares Operating Group”: Ares Offshore Holdings L.P. (“Ares Offshore”), Ares Holdings L.P. (“Ares Holdings”), and Ares Investments L.P. (“Ares Investments”). The Company, indirectly through its wholly owned subsidiaries, is the general partner of each of the Ares Operating Group entities. 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. Non-Controlling Interests in Ares Operating Group Entities The non-controlling interests in Ares Operating Group (“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 interests are adjusted for contributions to and distributions from AOG during the reporting period and are allocated income from the AOG entities based on their historical ownership percentage for the proportional number of days in the reporting period. |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 9 Months Ended |
Sep. 30, 2017 | |
Accounting Policies [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 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. 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 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, 2016 filed with the SEC. The condensed consolidated financial statements include the accounts and activities of the AOG entities, their consolidated subsidiaries and certain Consolidated Funds. These Consolidated Funds include certain Ares-affiliated funds, related co-investment entities and collateralized loan obligations (“CLOs”) (collectively, the “Consolidated Funds”) managed by Ares Management LLC (“AM LLC”) and its wholly owned subsidiaries. Including the results of the Consolidated Funds significantly increases the reported amounts of the assets, liabilities, revenues, expenses and cash flows in the accompanying condensed consolidated financial statements; however, the Consolidated Funds results included herein have no direct effect on the net income attributable to controlling interests or on total controlling equity. Instead, economic ownership interests of the investors in the Consolidated Funds are reflected as non-controlling interests in Consolidated Funds in the accompanying condensed consolidated financial statements. Further, cash flows allocable to non-controlling interest in Consolidated Funds are specifically identifiable in the Condensed Consolidated Statements of Cash Flows. 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. Transaction Support Expense On January 3, 2017, ARCC and American Capital, Ltd. (“ACAS”) consummated a merger transaction valued at approximately $4.2 billion (the "ARCC-ACAS Transaction"). To support the ARCC-ACAS Transaction, the Company, through its subsidiary Ares Capital Management LLC, which serves as the investment adviser to ARCC, paid $275.2 million to ACAS shareholders in accordance with the terms and conditions set forth in the merger agreement. Recent Accounting Pronouncements The Company considers the applicability and impact of all Financial Accounting Standards Board (“FASB") Accounting Standards Updates ("ASU") issued. ASUs not listed below were assessed and either determined to be not applicable or expected to have minimal impact on the Company's condensed consolidated financial statements. Revenue Recognition: In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606). ASU 2014-09 requires entities to recognize revenue in a way that depicts the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled to in exchange for those goods or services. The guidance includes a five-step framework that requires an entity to: (i) identify the contract(s) with a customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, (iv) allocate the transaction price to the performance obligations in the contract, and (v) recognize revenue when the entity satisfies a performance obligation. This ASU provides alternative methods of adoption. In August 2015, the FASB issued ASU 2015-14, Revenue from Contracts with Customers, Deferral of the Effective Date. ASU 2015-14 defers the effective date of ASU 2014-09 by one year to December 15, 2017 for fiscal years, and interim periods within those years, beginning after that date and permits early adoption of the standard, but not before the original effective date for fiscal years beginning after December 15, 2016. In March, April and May 2016, the FASB issued additional ASUs clarifying certain aspects of ASU 2014-09. The core principle of ASU 2014-09 was not changed by the additional guidance. During 2016, four ASUs: ASU 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations; ASU 2016-10, Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing; ASU 2016-12, Revenue from Contracts with Customers (Topic 606): Narrow Scope Improvements and Practical Expedients; and ASU 2016-20 , Technical Corrections and Improvements to Topic 606, Revenue from Contracts with Customers , were issued to provide clarification to previously issued revenue recognition guidance (ASU 2014-09) that has not yet been implemented. These updates are required to be adopted with ASU 2014-09, but are not expected to change its application by the Company. The Company has substantially completed its assessment of the impact of the revenue recognition guidance. The assessment includes a detailed review of investment management agreements, establishing which agreements are expected to be in place, and understanding when revenue would be recognized under those agreements. Accordingly, the Company has preliminarily concluded that carried interests, which are a performance-based capital allocation to the Company based on cumulative fund performance to date, represent equity method investments that are not in the scope of the amended revenue recognition guidance. Effective January 1, 2018, the Company will change its policy for recognition and measurement of carried interest. This accounting policy change will not change the timing or amount of revenue recognized related to carried interest. These amounts are currently recognized within performance fees in the Condensed Consolidated Statements of Operations. Under the equity method of accounting the Company will recognize its allocations of carried interest or incentive fees along with the allocations proportionate to the Company’s ownership in each fund. The Company will apply a full retrospective application and prior periods presented will be recast. The impact of adoption will be a reclassification of carried interest to equity income and will have no impact on net income (loss) attributable to Ares Management, L.P. The Company has preliminarily concluded that the majority of its performance-based incentive fees are within the scope of the amended revenue recognition guidance. This accounting change will delay recognition of unrealized incentive fees compared to our current accounting treatment, and it is not expected to have a material impact on the Company’s financial statements. The Company has evaluated the impact of the amended revenue recognition guidance on other revenue streams including management fees and it is not expected to have a material impact on its financial statements. The Company is still evaluating considerations for reporting certain revenues gross versus net. Other Guidance: In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). The objective of the guidance in ASU 2016-02 is to increase transparency and comparability among organizations by recognizing lease assets and liabilities in the balance sheet and disclosing key information. ASU 2016-02 amends previous lease guidance, which required a lessee to categorize and account for leases as either operating leases or capital leases, and instead requires a lessee to recognize a lease liability and a right-of-use asset on the entity’s balance sheet for all leases with terms that exceed one year. The lease liability and right-of-use asset are to be carried at the present value of remaining expected future lease payments. The guidance should be applied using a modified retrospective approach. ASU 2016-02 is effective for public entities for annual reporting periods beginning after December 15, 2018 and interim periods within those reporting periods, with early adoption permitted. The Company is currently compiling all leases and right–of–use terms to evaluate the impact of this guidance on its condensed consolidated financial statements. In January 2017, the FASB issued ASU 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business. ASU 2017-01 clarifies the definition of a business with the objective of adding guidance to assist with evaluating whether a transaction should be accounted for as an acquisition or a disposal of a business. This ASU provides specific evaluation process, and factors that should be used in this determination. The guidance should be applied prospectively. ASU 2017-01 is effective for public entities for annual reporting periods beginning after December 15, 2017 and interim periods within those reporting periods, with early adoption permitted. This guidance will not have a material impact on the Company's condensed consolidated financial statements. In January 2017, the FASB issued ASU 2017-04, Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. Currently, goodwill impairment requires an entity to perform a two-step test to determine the amount of goodwill impairment. In Step 1, an entity compares the fair value of a reporting unit with its carrying amount, including goodwill. If the carrying amount of the reporting unit exceeds its fair value, the entity performs Step 2 and compares the implied fair value of goodwill with the carrying amount of that goodwill for that reporting unit. An impairment charge equal to the amount by which the carrying amount of goodwill for the reporting unit exceeds the implied fair value of that goodwill is recorded, limited to the amount of goodwill allocated to that reporting unit. ASU 2017-04 simplifies the goodwill impairment test by removing Step 2 of the test. An entity will apply a one-step quantitative test and record the amount of goodwill impairment as the excess of a reporting unit's carrying amount over its fair value, not to exceed the total amount of goodwill allocated to the reporting unit. The new guidance does not amend the optional qualitative assessment of goodwill impairment. The guidance should be applied prospectively. ASU 2017-04 is effective for public entities for annual reporting periods beginning after December 15, 2019 and interim periods within those reporting periods, with early adoption permitted. This guidance will not have a material impact on the Company's condensed consolidated financial statements. In February 2017, the FASB issued ASU 2017-05, Other Income-Gains and Losses from the Derecognition of Nonfinancial Assets (Subtopic 610-20): Clarifying the Scope of Asset Derecognition Guidance and Accounting for Partial Sales of Nonfinancial Assets. ASU 2017-05 clarifies the application of current accounting guidance to the derecognition of nonfinancial assets, including partial sales of nonfinancial assets. This ASU specifies that an entity should allocate the consideration to each distinct asset using the guidance established in ASC 606 on allocating the transaction price to performance obligations. For partial sales of nonfinancial assets, ASU 2017-05 also requires an entity to derecognize a portion of the nonfinancial asset when the entity no longer has a controlling financial interest in the legal entity holding the asset and the entity has transferred control of the asset in accordance with ASC 606. Any noncontrolling or retained interest should be measured at fair value. The guidance should be adopted using either a full or modified retrospective approach. ASU 2017-05 is effective for public entities for annual reporting periods beginning after December 15, 2017 and interim periods within those reporting periods, with early adoption permitted. The Company is currently evaluating the impact of this guidance on its condensed consolidated financial statements. In May 2017, the FASB issued ASU 2017-09, Compensation-Stock Compensation (Topic 718): Scope of Modification Accounting. ASU 2017-09 clarifies the application of current accounting guidance to the modification of share-based compensation awards. This ASU specifies that an entity should account for the impact of an award modification in accordance with ASC Topic 718 unless all of the following conditions are met: (i) the fair value of the modified award is the same as the fair value of the original award prior to the modification; (ii) the vesting conditions of the modified award are the same as the original award prior to the modification; and (iii) the classification of the modified award as an equity instrument or liability instrument is the same as the original award. The guidance should be applied prospectively to awards modified on or after the adoption date. ASU 2017-09 is effective for public entities for annual reporting periods beginning after December 15, 2017 and interim periods within those reporting periods, with early adoption permitted. This guidance will not have a material impact on the Company's condensed consolidated financial statements. |
GOODWILL AND INTANGIBLE ASSETS
GOODWILL AND INTANGIBLE ASSETS | 9 Months Ended |
Sep. 30, 2017 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
GOODWILL AND INTANGIBLE ASSETS | GOODWILL AND INTANGIBLE ASSETS Finite Lived Intangible Assets, Net The Company's intangible assets include acquired management contracts, client relationships, a trade name, and the future benefits of managing new assets for existing clients that were recognized at fair value as of their acquisition dates. The following table summarizes the carrying value, net of accumulated amortization, for the Company's intangible assets: Weighted Average Amortization Period as of September 30, 2017 As of September 30, As of December 31, 2017 2016 Management contracts 1.9 years $ 67,306 $ 111,939 Client relationships 10.8 years 38,600 38,600 Trade name 4.8 years 3,200 3,200 Intangible assets 109,106 153,739 Foreign currency translation — (3,205 ) Total intangible assets 109,106 150,534 Less: accumulated amortization (64,991 ) (92,219 ) Intangible assets, net $ 44,115 $ 58,315 Amortization expense associated with intangible assets was $3.7 million and $6.4 million for the three months ended September 30, 2017 and 2016 , respectively, and $14.2 million and $20.8 million for the nine months ended September 30, 2017 and 2016 , respectively, and is presented within general, administrative and other expenses within the Condensed Consolidated Statements of Operations. During the first quarter of 2017, the Company removed $41.4 million of intangible assets that were fully amortized. Goodwill The following table summarizes the carrying value of the Company's goodwill assets: Credit Private Real Total Balance as of December 31, 2016 $ 32,196 $ 58,600 $ 52,928 $ 143,724 Foreign currency translation — — 156 156 Balance as of September 30, 2017 $ 32,196 $ 58,600 $ 53,084 $ 143,880 There was no impairment of goodwill recorded during the nine months ended September 30, 2017 and 2016 . The impact of foreign currency translation is reflected within other comprehensive income. |
INVESTMENTS
INVESTMENTS | 9 Months Ended |
Sep. 30, 2017 | |
Investments In And Advances To Affiliates [Abstract] | |
INVESTMENTS | INVESTMENTS The Company’s investments are composed of: (i) investments presented at fair value as a result of the election of the fair value option or in accordance with investment company accounting, (ii) equity method investments (using equity method or fair value option) and (iii) held-to-maturity investments. Fair Value Investments, excluding Equity Method Investments Held at Fair Value Fair value at Fair value as a percentage of total investments at September 30, December 31, September 30, December 31, 2017 2016 2017 2016 Private Investment Partnership Interests: AREA Sponsor Holdings, LLC $ 26,002 $ 28,898 4.6 % 6.8 % ACE II Master Fund, L.P. (1)(2) 19,141 22,042 3.4 % 5.2 % Ares Corporate Opportunities Fund III, L.P. 114,674 97,549 20.3 % 22.9 % Ares Corporate Opportunities Fund IV, L.P. (2) 34,990 37,308 6.2 % 8.7 % Resolution Life L.P. 36,439 33,410 6.5 % 7.8 % Other private investment partnership interests (1)(3) 168,732 118,075 30.0 % 27.7 % Total private investment partnership interests (cost: $293,804 and $256,638 at September 30, 2017 and December 31, 2016, respectively) 399,978 337,282 71.0 % 79.1 % Collateralized loan obligations (cost: $163,011 and $89,743 at September 30, 2017 and December 31, 2016, respectively) (3) 162,261 89,111 28.8 % 20.9 % Common stock (cost: $1,132 and $124 at September 30, 2017 and December 31, 2016, respectively) (3) 1,304 100 0.2 % 0.0 % Total fair value investments (cost: $457,947 and $346,505 at September 30, 2017 and December 31, 2016, respectively) $ 563,543 $ 426,493 (1) Investment or portion of the investment is denominated in foreign currency; fair value is translated into U.S. dollars at each reporting date. (2) Represents underlying security that is held through various legal entities. (3) No single issuer or investment had a fair value that exceeded 5% of the Company's total assets. 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's equity method investments, including those where the fair value option was elected, are summarized below: As of September 30, As of December 31, 2017 2016 Equity method investment $ 3,081 $ 3,616 Equity method investments at fair value 18,071 21,843 Total equity method investments $ 21,152 $ 25,459 The material assets of the Company's equity method investments are investments for which long term capital appreciation is expected, the material liabilities are debt instruments collateralized by, or related to, the financing of the assets and net income is primarily composed of the changes in fair value of these net assets. Held-to-Maturity Investments The Company classifies certain investments as held-to-maturity investments when the Company has the positive intent and ability to hold the securities to maturity. Held-to-maturity securities are reported as investments and are recorded at amortized cost. A summary of the cost and fair value of CLO notes classified as held-to maturity investments is as follows: As of September 30, As of December 31, 2017 2016 Amortized cost $ — $ 16,519 Unrealized loss, net — (116 ) Fair value $ — $ 16,403 Based on the Company's ability and intent to hold the investments until maturity and the underlying credit performance of such investments, the Company has determined that the net unrealized losses are temporary impairments as of December 31, 2016 . During the third quarter ended September 30, 2017 , the Company redeemed its remaining held-to-maturity investments balance of $18.5 million at par, which approximated the amortized cost, with no gain or loss recognized. Redemption occurred in connection with the restructuring and refinancing of the underlying collateral facility during the third quarter ended September 30, 2017 . Investments of the Consolidated Funds Investments held in the Consolidated Funds are summarized below: Fair value at Fair value as a percentage of total investments at September 30, December 31, September 30, December 31, 2017 2016 2017 2016 United States: Fixed income securities: Consumer discretionary $ 1,124,210 $ 665,773 22.6 % 20.0 % Consumer staples 55,357 64,840 1.1 % 1.9 % Energy 138,687 45,409 2.8 % 1.4 % Financials 234,828 139,285 4.8 % 4.2 % Healthcare, education and childcare 396,747 246,403 8.0 % 7.4 % Industrials 298,186 149,632 6.1 % 4.5 % Information technology 138,390 194,394 2.8 % 5.8 % Materials 163,728 139,994 3.3 % 4.2 % Telecommunication services 337,695 261,771 6.9 % 7.9 % Utilities 54,548 47,800 1.1 % 1.4 % Total fixed income securities (cost: $2,949,788 and $1,945,977 at September 30, 2017 and December 31, 2016, respectively) 2,942,376 1,955,301 59.5 % 58.7 % Equity securities: Energy 158 421 0.0 % 0.0 % Partnership and LLC interests 224,010 171,696 4.6 % 5.2 % Total equity securities (cost: $192,265 and $149,872 at September 30, 2017 and December 31, 2016, respectively) 224,168 172,117 4.6 % 5.2 % Fair value at Fair value as a percentage of total investments at September 30, December 31, September 30, December 31, 2017 2016 2017 2016 Europe: Fixed income securities: Consumer discretionary $ 523,953 $ 274,678 10.6 % 8.2 % Consumer staples 72,446 39,197 1.5 % 1.2 % Financials 43,702 28,769 0.9 % 0.9 % Healthcare, education and childcare 199,823 111,589 4.1 % 3.4 % Industrials 106,808 118,466 2.2 % 3.6 % Information technology 46,512 49,507 0.9 % 1.5 % Materials 235,505 124,629 4.8 % 3.7 % Telecommunication services 143,972 118,632 2.9 % 3.6 % Utilities 9,427 4,007 0.2 % 0.1 % Total fixed income securities (cost: $1,383,866 and $892,108 at September 30, 2017 and December 31, 2016, respectively) 1,382,148 869,474 28.1 % 26.2 % Equity securities: Consumer staples — 1,517 — % 0.0 % Healthcare, education and childcare 57,562 41,329 1.2 % 1.2 % Telecommunication services — 24 — % 0.0 % Total equity securities (cost: $67,198 and $67,290 at September 30, 2017 and December 31, 2016, respectively) 57,562 42,870 1.2 % 1.2 % Asia and other: Fixed income securities: Consumer discretionary 27,950 24,244 0.6 % 0.7 % Financials 22,402 1,238 0.5 % 0.0 % Healthcare, education and childcare — 10,010 — % 0.3 % Telecommunication services 22,830 8,696 0.5 % 0.3 % Total fixed income securities (cost: $73,146 and $46,545 at September 30, 2017 and December 31, 2016, respectively) 73,182 44,188 1.6 % 1.3 % Equity securities: Consumer discretionary 48,161 44,642 1.0 % 1.3 % Consumer staples 47,208 50,101 1.0 % 1.5 % Healthcare, education and childcare 44,637 32,598 0.9 % 1.0 % Industrials 16,578 16,578 0.3 % 0.5 % Total equity securities (cost: $122,418 and $122,418 at September 30, 2017 and December 31, 2016, respectively) 156,584 143,919 3.2 % 4.3 % Fair value at Fair value as a percentage of total investments at September 30, December 31, September 30, December 31, 2017 2016 2017 2016 Canada: Fixed income securities: Consumer discretionary $ 4,093 $ — 0.1 % — % Consumer staples 10,387 5,256 0.2 % 0.2 % Energy 28,459 12,830 0.6 % 0.4 % Healthcare, education and childcare — 15,509 — % 0.5 % Industrials 12,464 1,401 0.3 % 0.0 % Telecommunication services 9,725 13,852 0.2 % 0.4 % Total fixed income securities (cost: $64,567 and $48,274 at September 30, 2017 and December 31, 2016, respectively) 65,128 48,848 1.4 % 1.5 % Equity securities: Consumer discretionary 7,862 164 0.2 % 0.0 % Total equity securities (cost: $17,202 and $408 at September 30, 2017 and December 31, 2016, respectively) 7,862 164 0.2 % 0.0 % Australia: Fixed income securities: Consumer discretionary 3,142 5,627 0.1 % 0.2 % Energy 2,877 6,046 0.1 % 0.2 % Industrials — 2,926 — % 0.1 % Utilities — 21,154 — % 0.6 % Total fixed income securities (cost: $6,910 and $37,975 at September 30, 2017 and December 31, 2016, respectively) 6,019 35,753 0.2 % 1.1 % Equity securities: Utilities — 17,569 — % 0.5 % Total equity securities (cost: $0 and $18,442 at September 30, 2017 and December 31, 2016, respectively) — 17,569 — % 0.5 % Total fixed income securities 4,468,853 2,953,564 90.8 % 88.8 % Total equity securities 446,176 376,639 9.2 % 11.2 % Total investments, at fair value $ 4,915,029 $ 3,330,203 At September 30, 2017 and December 31, 2016 , no single issuer or investments, 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. |
FAIR VALUE
FAIR VALUE | 9 Months Ended |
Sep. 30, 2017 | |
Fair Value Disclosures [Abstract] | |
FAIR VALUE | FAIR VALUE Fair Value Measurements GAAP establishes a hierarchal disclosure framework that prioritizes the inputs used in measuring financial instruments at fair value into three levels based on their market 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 rates, yield curves, volatilities, prepayment risks, loss severities, credit risks and default rates. • 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. 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. Fair Value of Financial Instruments Held by the Company and Consolidated Funds The tables below summarize the financial assets and financial liabilities measured at fair value for the Company and Consolidated Funds as of September 30, 2017 : Financial Instruments of the Company Level I Level II Level III Investments Total Assets, at fair value Investments: Fixed income-collateralized loan obligations $ — $ — $ 162,261 $ — $ 162,261 Equity securities 300 1,004 — — 1,304 Partnership interests — — 36,439 381,610 418,049 Total investments, at fair value 300 1,004 198,700 381,610 581,614 Derivatives—foreign exchange contracts — 1,310 — — 1,310 Total assets, at fair value $ 300 $ 2,314 $ 198,700 $ 381,610 $ 582,924 Liabilities, at fair value Derivatives—foreign exchange contracts $ — $ (4,194 ) $ — $ — $ (4,194 ) Total liabilities, at fair value $ — $ (4,194 ) $ — $ — $ (4,194 ) Financial Instruments of the Consolidated Funds Level I Level II Level III Total Assets, at fair value Investments: Fixed income investments: Bonds $ — $ 91,683 $ 7,373 $ 99,056 Loans — 4,037,594 312,203 4,349,797 Collateralized loan obligations — 20,000 — 20,000 Total fixed income investments — 4,149,277 319,576 4,468,853 Equity securities 65,150 158 156,858 222,166 Partnership interests — — 224,010 224,010 Total investments, at fair value 65,150 4,149,435 700,444 4,915,029 Derivatives—other — — 1,328 1,328 Total assets, at fair value $ 65,150 $ 4,149,435 $ 701,772 $ 4,916,357 Liabilities, at fair value Derivatives—other $ — $ — $ (201 ) $ (201 ) Loan obligations of CLOs — (4,476,643 ) — (4,476,643 ) Total liabilities, at fair value $ — $ (4,476,643 ) $ (201 ) $ (4,476,844 ) The tables below summarize the financial assets and financial liabilities measured at fair value for the Company and Consolidated Funds as of December 31, 2016 : Financial Instruments of the Company Level I Level II Level III Investments Total Assets, at fair value Investments: Fixed income-collateralized loan obligations $ — $ — $ 89,111 $ — $ 89,111 Equity securities 100 — — — 100 Partnership interests — — 33,410 325,715 359,125 Total investments, at fair value 100 — 122,521 325,715 448,336 Derivatives—foreign exchange contracts — 3,171 — — 3,171 Total assets, at fair value $ 100 $ 3,171 $ 122,521 $ 325,715 $ 451,507 Liabilities, at fair value Contingent considerations $ — $ — $ (22,156 ) $ — $ (22,156 ) Total liabilities, at fair value $ — $ — $ (22,156 ) $ — $ (22,156 ) Financial Instruments of the Consolidated Funds Level I Level II Level III Total Assets, at fair value Investments: Fixed income investments: Bonds $ — $ 104,886 $ 37,063 $ 141,949 Loans — 2,606,423 199,217 2,805,640 Collateralized loan obligations — — 5,973 5,973 Total fixed income investments — 2,711,309 242,253 2,953,562 Equity securities 56,662 17,569 130,690 204,921 Partnership interests — — 171,696 171,696 Other — 24 — 24 Total investments, at fair value 56,662 2,728,902 544,639 3,330,203 Derivatives: Foreign exchange contracts — 529 — 529 Other — — 291 291 Total derivative assets, at fair value — 529 291 820 Total assets, at fair value $ 56,662 $ 2,729,431 $ 544,930 $ 3,331,023 Liabilities, at fair value Derivatives—other $ — $ — $ (2,999 ) $ (2,999 ) Loan obligations of CLOs — (3,031,112 ) — (3,031,112 ) Total liabilities, at fair value $ — $ (3,031,112 ) $ (2,999 ) $ (3,034,111 ) The following tables set forth a summary of changes in the fair value of the Level III measurements for the three months ended September 30, 2017 : Level III Assets Level III Liabilities Level III Assets and Liabilities of the Company Fixed Income Partnership Total Contingent Considerations Balance, beginning of period $ 164,807 $ 33,410 $ 198,217 $ 1,940 Purchases(1) 29,911 — 29,911 — Sales/settlements(2) (33,062 ) — (33,062 ) (1,000 ) Expired contingent considerations — — — (1,000 ) Realized and unrealized appreciation, net 605 3,029 3,634 60 Balance, end of period $ 162,261 $ 36,439 $ 198,700 $ — Increase in unrealized appreciation/depreciation included in earnings related to financial assets and liabilities still held at the reporting date $ 442 $ 3,029 $ 3,471 $ — Level III Assets of Consolidated Funds Equity Securities Fixed Income Partnership Derivatives, Net Total Balance, beginning of period $ 146,274 $ 187,579 $ 217,740 $ 2,809 $ 554,402 Transfer in — 86,420 — — 86,420 Transfer out (271 ) (60,550 ) — (4 ) (60,825 ) Purchases(1) — 139,903 15,000 — 154,903 Sales(2) (3,701 ) (49,783 ) (15,000 ) — (68,484 ) Additions(3) — 14,479 — 1,393 15,872 Settlements, net — — — (3,127 ) (3,127 ) Amortized discounts/premiums — 63 — 101 164 Realized and unrealized appreciation, net 14,556 1,465 6,270 (45 ) 22,246 Balance, end of period $ 156,858 $ 319,576 $ 224,010 $ 1,127 $ 701,571 Increase (decrease) in unrealized appreciation/depreciation included in earnings related to financial assets still held at the reporting date $ 12,830 $ 920 $ 6,270 $ (2,021 ) $ 17,999 (1) Purchases include paid‑in‑kind interest and securities received in connection with restructurings. (2) Sales include distributions, principal redemptions and securities disposed of in connection with restructurings. (3) Additions relate a CLO that was refinanced and restructured that is now consolidated. The following tables set forth a summary of changes in the fair value of the Level III measurements for the three months ended September 30, 2016 : Level III Assets Level III Liabilities Level III Assets and Liabilities of the Company Fixed Income Partnership Total Contingent Considerations Balance, beginning of period $ 54,155 $ 44,746 $ 98,901 $ 41,035 Purchases(1) 4 833 837 — Sales/settlements(2) (943 ) — (943 ) (1,000 ) Realized and unrealized appreciation (depreciation), net 2,721 (12,169 ) (9,448 ) (17,690 ) Balance, end of period $ 55,937 $ 33,410 $ 89,347 $ 22,345 Increase (decrease) in unrealized appreciation/depreciation included in earnings related to financial assets and liabilities still held at the reporting date $ 2,479 $ (6,237 ) $ (3,758 ) $ (17,690 ) Level III Assets of Consolidated Funds Equity Securities Fixed Income Partnership Interests Derivatives, Net Total Balance, beginning of period $ 143,334 $ 237,372 $ 115,440 $ (2,076 ) $ 494,070 Transfer in 18,135 54,202 — — 72,337 Transfer out — (70,910 ) — — (70,910 ) Purchases(1) 6,171 94,527 21,433 — 122,131 Sales(2) (290 ) (45,002 ) (2,933 ) — (48,225 ) Settlements, net — — — (543 ) (543 ) Amortized discounts/premiums — 374 — 214 588 Realized and unrealized appreciation (depreciation), net (2,374 ) 2,077 5,260 2,275 7,238 Balance, end of period $ 164,976 $ 272,640 $ 139,200 $ (130 ) $ 576,686 Increase (decrease) in unrealized appreciation/depreciation included in earnings related to financial assets still held at the reporting date $ (59 ) $ (2,977 ) $ 5,261 $ 2,143 $ 4,368 (1) Purchases include paid‑in‑kind interest and securities received in connection with restructurings. (2) Sales include distributions, principal redemptions and securities disposed of in connection with restructurings. 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, 2017 : Level III Assets Level III Liabilities Level III Assets and Liabilities of the Company Fixed Income Partnership Total Contingent Considerations Balance, beginning of period $ 89,111 $ 33,410 $ 122,521 $ 22,156 Purchases(1) 110,595 169 110,764 — Sales/settlements(2) (38,303 ) — (38,303 ) (1,000 ) Expired contingent considerations — — — (1,000 ) Realized and unrealized appreciation (depreciation), net 858 2,860 3,718 (20,156 ) Balance, end of period $ 162,261 $ 36,439 $ 198,700 $ — Increase (decrease) in unrealized appreciation/depreciation included in earnings related to financial assets and liabilities still held at the reporting date $ 29 $ 3,029 $ 3,058 $ — Level III Assets of Consolidated Funds Equity Securities Fixed Income Partnership Derivatives, Net Total Balance, beginning of period $ 130,690 $ 242,253 $ 171,696 $ (2,708 ) $ 541,931 Transfer in — 48,646 — — 48,646 Transfer out (6,581 ) (100,228 ) — (4 ) (106,813 ) Purchases(1) 6,692 224,600 88,000 — 319,292 Sales(2) (3,701 ) (114,286 ) (45,000 ) — (162,987 ) Additions(3) — 14,479 — 1,393 15,872 Settlements, net — — — (976 ) (976 ) Amortized discounts/premiums — 132 — 317 449 Realized and unrealized appreciation, net 29,758 3,980 9,314 3,105 46,157 Balance, end of period $ 156,858 $ 319,576 $ 224,010 $ 1,127 $ 701,571 Increase (decrease) in unrealized appreciation/depreciation included in earnings related to financial assets still held at the reporting date $ 19,175 $ (429 ) $ 9,314 $ (787 ) $ 27,273 (1) Purchases include paid‑in‑kind interest and securities received in connection with restructurings. (2) Sales include distributions, principal redemptions and securities disposed of in connection with restructurings. (3) Additions relate to a CLO that was refinanced and restructured that is now consolidated. 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, 2016 : Level III Assets Level III Liabilities Level III Assets and Liabilities of the Company Fixed Income Partnership Total Contingent Considerations Balance, beginning of period $ 55,752 $ 51,703 $ 107,455 $ 40,831 Purchases(1) 11 9,000 9,011 — Sales/settlements(2) (3,236 ) — (3,236 ) (1,000 ) Realized and unrealized appreciation (depreciation), net 3,410 (27,293 ) (23,883 ) (17,486 ) Balance, end of period $ 55,937 $ 33,410 $ 89,347 $ 22,345 Increase (decrease) in unrealized appreciation/depreciation included in earnings related to financial assets and liabilities still held at the reporting date $ 2,043 $ (7,293 ) $ (5,250 ) $ (17,486 ) Level III Assets of Consolidated Funds Equity Securities Fixed Income Partnership Interests Derivatives, Net Total Balance, beginning of period $ 129,809 $ 249,490 $ 86,902 $ (10,307 ) $ 455,894 Transfer in 15,760 64,796 — — 80,556 Transfer out (344 ) (75,192 ) — — (75,536 ) Purchases(1) 15,839 132,958 34,533 — 183,330 Sales(2) (290 ) (85,430 ) (3,233 ) — (88,953 ) Settlements, net — — — 45 45 Amortized discounts/premiums — 1,103 — 298 1,401 Realized and unrealized appreciation (depreciation), net 4,202 (15,085 ) 20,998 9,834 19,949 Balance, end of period $ 164,976 $ 272,640 $ 139,200 $ (130 ) $ 576,686 Increase (decrease) in unrealized appreciation/depreciation included in earnings related to financial assets still held at the reporting date $ 4,385 $ (10,760 ) $ 20,998 $ 8,617 $ 23,240 (1) Purchases include paid‑in‑kind interest and securities received in connection with restructurings. (2) Sales include distributions, principal redemptions and securities disposed of in connection with restructurings. The Company recognizes transfers between the levels as of the beginning of the period. 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. Two of the Company's investments were transferred from a Level II to a Level I fair value measurement as of June 30, 2017 at their fair values totaling $7.5 million as of the transfer date. The investments transferred are equity securities that were previously thinly traded that began to have significant levels of market activity to support quoted market prices during the second quarter of 2017. For the nine months ended September 30, 2016 , there were no transfers between Level I and Level II fair value measurements. The following table summarizes the quantitative inputs and assumptions used for the Company’s Level III measurements as of September 30, 2017 : Fair Value Valuation Technique(s) Significant Unobservable Input(s) Range Assets Partnership interests $ 36,439 Other N/A N/A Collateralized loan obligations 162,261 Broker quotes and/or 3rd party pricing services N/A N/A Total $ 198,700 The following table summarizes the quantitative inputs and assumptions used for the Company’s Level III measurements as of December 31, 2016 : Fair Value Valuation Technique(s) Significant Unobservable Input(s) Range Assets Partnership interests $ 33,410 Other N/A N/A Collateralized loan obligations 89,111 Broker quotes and/or 3rd party pricing services N/A N/A Total $ 122,521 Liabilities Contingent consideration liabilities $ 20,278 Other N/A N/A 1,878 Discounted cash flow Discount rate 6.5% Total $ 22,156 The following table summarizes the quantitative inputs and assumptions used for the Consolidated Funds’ Level III measurements as of September 30, 2017 : Fair Value Valuation Technique(s) Significant Unobservable Input(s) Range Weighted Assets Equity securities $ 57,562 Enterprise value market multiple analysis EBITDA multiple(2) 2.8x 2.8x 61,215 Market approach (comparable companies) Net income multiple 30.0x - 45.0x 34.7x 224,010 Discounted cash flow Discount rate 18.5% 18.5% 38,081 Recent transaction price(1) N/A N/A N/A Fixed income securities 238,764 Broker quotes and/or 3rd party pricing services N/A N/A N/A 80,590 Income approach Yield 4.9% - 14.3% 9.4% 222 Market approach (comparable companies) EBITDA multiple(2) 5.6x 5.6x Derivative instruments of Consolidated Funds 1,328 Broker quotes and/or 3rd party pricing services N/A N/A N/A Total assets $ 701,772 Liabilities Derivatives instruments of Consolidated Funds $ (201 ) Broker quotes and/or 3rd party pricing services N/A N/A N/A Total liabilities $ (201 ) (1) Recent transaction price consists of securities recently 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. The following table summarizes the quantitative inputs and assumptions used for the Consolidated Funds’ Level III measurements as of December 31, 2016 : Fair Value Valuation Technique(s) Significant Unobservable Input(s) Range Weighted Average Assets Equity securities $ 43,011 Enterprise value market multiple analysis EBITDA multiple(2) 2.0x - 11.2x 2.3x 32,598 Market approach (comparable companies) Net income multiple 30.0x - 40.0x 35.0x 421 Broker quotes and/or 3rd party pricing services N/A N/A N/A 171,696 Discounted cash flow Discount rate 20% 20% 54,660 Recent transaction price(1) N/A N/A N/A Fixed income securities 170,231 Broker quotes and/or 3rd party pricing services N/A N/A N/A 6,693 Enterprise value market multiple analysis EBITDA multiple(2) 7.1x 7.1x 5,473 Income approach Collection rates 1.2x 1.2x 28,595 Income approach Yield 6.0% - 13.6% 10.9% 24,052 Discounted cash flow Discount rate 7.8% - 15.3% 11.1% 1,776 Market approach (comparable companies) EBITDA multiple(2) 6.5x 6.5x 4,887 Recent transaction price(1) N/A N/A N/A 546 Market approach EBITDA multiple(2) 6.1x 6.1x Derivative instruments of Consolidated Funds 291 Broker quotes and/or 3rd party pricing services N/A N/A N/A Total assets $ 544,930 Liabilities Derivatives instruments of Consolidated Funds $ (2,999 ) Broker quotes and/or 3rd party pricing services N/A N/A N/A Total liabilities $ (2,999 ) (1) Recent 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's investments valued using net asset value (“NAV”) per share have terms and conditions that do not allow for redemption without certain events or approvals that are outside the Company's control. A summary of fair value by segment and the remaining unfunded commitments are presented below: As of September 30, 2017 As of December 31, 2016 Segment Fair Value Unfunded Fair Value Unfunded Credit Group $ 77,220 $ 79,303 $ 53,131 $ 30,896 Private Equity Group 188,615 91,311 181,096 96,687 Real Estate Group 83,484 48,816 71,669 35,708 Non-core investments(1) 32,291 20,023 19,819 34,500 Totals $ 381,610 $ 239,453 $ 325,715 $ 197,791 (1) Non-core investments are reported within the Company's Operations Management Group ("OMG"). |
DERIVATIVE FINANCIAL INSTRUMENT
DERIVATIVE FINANCIAL INSTRUMENTS | 9 Months Ended |
Sep. 30, 2017 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
DERIVATIVE FINANCIAL INSTRUMENTS | 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 credit 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 September 30, 2017 and December 31, 2016 : As of September 30, 2017 As of December 31, 2016 Assets Liabilities Assets Liabilities The Company Notional(1) Fair Value Notional(1) Fair Value Notional(1) Fair Value Notional(1) Fair Value Foreign exchange contracts $ 37,907 $ 1,310 $ 124,536 $ 4,194 $ 62,830 $ 3,171 $ — $ — Total derivatives, at fair value(2) $ 37,907 $ 1,310 $ 124,536 $ 4,194 $ 62,830 $ 3,171 $ — $ — As of September 30, 2017 As of December 31, 2016 Assets Liabilities Assets Liabilities Consolidated Funds Notional(1) Fair Value Notional(1) Fair Value Notional(1) Fair Value Notional(1) Fair Value Foreign exchange contracts $ — $ — $ — $ — $ 25,304 $ 529 $ — $ — Other financial instruments 6,071 1,328 (2,368 ) (201 ) 3,575 291 (204 ) (2,999 ) Total derivatives, at fair value(3) 6,071 1,328 (2,368 ) (201 ) 28,879 820 (204 ) (2,999 ) Other—equity(4) — — — — 253 24 — — Total $ 6,071 $ 1,328 $ (2,368 ) $ (201 ) $ 29,132 $ 844 $ (204 ) $ (2,999 ) (1) Represents the total contractual amount of derivative assets and liabilities outstanding. (2) As of September 30, 2017 , the Company had the right to, but elected not to, offset $1.3 million of its derivative assets and liabilities. As of December 31, 2016 , the Company did not have any derivative liabilities to offset its derivative assets. (3) As of September 30, 2017 and December 31, 2016 , the Consolidated Funds offset $0.7 million and $1.4 million of their derivative assets and liabilities, respectively. (4) Represents the fair value of warrants which are presented as equity securities within investments of the Consolidated Funds in the Condensed Consolidated Statements of Financial Condition. |
DEBT
DEBT | 9 Months Ended |
Sep. 30, 2017 | |
Debt Disclosure [Abstract] | |
DEBT | DEBT The following table summarizes the Company’s and its subsidiaries’ debt obligations: As of September 30, 2017 As of December 31, 2016 Debt Origination Date Maturity Original Borrowing Amount Carrying Interest Rate Carrying Interest Rate Credit Facility(1) Revolver 2/24/2022 N/A $ 110,000 2.75% $ — —% Senior Notes(2) 10/8/2014 10/8/2024 $ 250,000 245,149 4.21% 244,684 4.21% 2015 Term Loan(3) 9/2/2015 7/29/2026 $ 35,205 35,032 2.79% 35,063 2.74% 2016 Term Loan(4) 12/21/2016 1/15/2029 $ 26,376 25,999 3.02% 26,037 2.66% 2017 Term Loan A(4) 3/22/2017 1/22/2028 $ 17,600 17,474 2.70% N/A N/A 2017 Term Loan B(4) 5/10/2017 10/15/2029 $ 35,198 35,147 2.63% N/A N/A 2017 Term Loan C(4) 6/22/2017 7/30/2029 $ 17,211 17,206 2.75% N/A N/A Total debt obligations $ 486,007 $ 305,784 (1) The AOG entities are borrowers under the Credit Facility, which, as amended in February 2017 and increased in September 2017, provides a $1.065 billion revolving line of credit. It has a variable interest rate based on LIBOR or a base rate plus an applicable margin with an unused commitment fee paid quarterly, which is subject to change with the Company’s underlying credit agency rating. As of September 30, 2017, base rate loans bear interest calculated based on the base rate plus 0.50% and the LIBOR rate loans bear interest calculated based on LIBOR plus 1.50%. The unused commitment fee is 0.20% per annum. There is a base rate and LIBOR floor of zero . (2) The Senior Notes were issued in October 2014 by Ares Finance Co. LLC, a subsidiary of the Company, at 98.268% of the face amount with interest paid semi-annually. The Company may redeem the Senior Notes prior to maturity, subject to the terms of the indenture . (3) The 2015 Term Loan was entered into in August 2015 by a subsidiary of the Company that acts as a manager to a CLO. The 2015 Term Loan is secured by collateral in the form of CLO senior tranches owned by the Company. To the extent the assets are not sufficient to cover the Term Loan, there is no further recourse to the Company to fund or repay the remaining balance. Interest is paid quarterly, and the Company also pays a fee of 0.025% of a maximum investment amount . (4) The 2016 and 2017 Term Loans ("Term Loans") were entered into by a subsidiary of the Company that acts as a manager to a CLO. The Term Loans are secured by collateral in the form of CLO senior tranches and subordinated notes owned by the Company. Collateral associated with one of the Term Loans may be used to satisfy outstanding liabilities of another term loan should the collateral fall short. To the extent the assets associated with these Term Loans are not sufficient, there is no further recourse to the Company to fund or repay the remaining balance. Interest is paid quarterly, and the Company also pays a fee of 0.03% of a maximum investment amount. As of September 30, 2017 , the Company and its subsidiaries were in compliance with all covenants under the Credit Facility, Senior Notes and Term Loan obligations. Debt obligations of the Company and its subsidiaries are reflected at cost. 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 Company's Senior Notes and Term Loans 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 term of the related obligation. The following table shows the activity of the Company's debt issuance costs: Credit Facility Senior Notes Term Loans Unamortized debt issuance costs as of December 31, 2016 $ 4,800 $ 1,803 $ 526 Debt issuance costs incurred 3,387 — 253 Amortization of debt issuance costs (1,258 ) (174 ) (48 ) Unamortized debt issuance costs as of September 30, 2017 $ 6,929 $ 1,629 $ 731 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. Several of the Consolidated CLOs issued preferred shares representing the subordinated interests that are mandatorily redeemable upon the maturity dates of the senior secured loan obligations. As a result, these shares have been classified as liabilities and are included in CLO loan obligations in the Condensed Consolidated Statements of Financial Condition. As of September 30, 2017 and December 31, 2016 the following loan obligations were outstanding and classified as liabilities of the Company’s Consolidated CLOs: As of September 30, 2017 As of December 31, 2016 Loan Obligations Fair Value of Loan Obligations Weighted Loan Fair Value of Loan Obligations Weighted Average Remaining Maturity In Years Senior secured notes(1) $ 4,298,009 $ 4,279,766 10.56 $ 2,839,779 $ 2,841,440 9.68 Subordinated notes(2) 274,341 196,877 11.15 284,046 189,672 9.97 Total loan obligations of Consolidated CLOs $ 4,572,350 $ 4,476,643 $ 3,123,825 $ 3,031,112 (1) Original borrowings under the senior secured notes totaled $4.3 billion , with various maturity dates ranging from October 2024 to April 2030. The weighted average interest rate as of September 30, 2017 was 4.25% . (2) Original borrowings under the subordinated notes totaled $274.3 million , with various maturity dates ranging from October 2024 to April 2030. They do not have contractual interest rates, but instead 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 except to the extent the debt is guaranteed by a subsidiary or if a general partner is liable for the Consolidated Fund’s liabilities under the applicable law. Credit facilities of the Consolidated Funds are reflected at cost in the Condensed Consolidated Statements of Financial Condition. As of September 30, 2017 and December 31, 2016 , the Consolidated Funds were in compliance with all covenants under such credit facilities. The Consolidated Funds had the following revolving bank credit facilities and term loan outstanding as of September 30, 2017 and December 31, 2016 : As of September 30, 2017 As of December 31, 2016 Consolidated Funds' Debt Facilities Maturity Date Total Capacity Outstanding Loan(1) Effective Rate Outstanding Loan(1) Effective Rate Credit Facilities: 1/1/2023 $ 18,000 $ 12,942 2.75% $ 12,942 2.38% 6/30/2018 47,284 30,599 1.55% (2) 42,128 1.55% (2) 3/7/2018 71,500 71,500 2.62% N/A N/A Revolving Term Loan 8/19/2019 11,429 6,220 5.74% N/A N/A Total borrowings $ 121,261 $ 55,070 (1) The fair values of the borrowings approximate the carrying value as the interest rate on the borrowings is a floating rate. (2) The effective rate is based on the three month EURIBOR or zero , whichever is higher, plus an applicable margin. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 9 Months Ended |
Sep. 30, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | 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 September 30, 2017 , 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 September 30, 2017 and December 31, 2016 , the Company had aggregate unfunded commitments of $316.5 million and $535.3 million , respectively, including commitments to both non-consolidated funds and Consolidated Funds. Total unfunded commitments included $20.0 million and $89.2 million in commitments to funds not managed by the Company as of September 30, 2017 and December 31, 2016 , respectively. In connection with the acquisition of EIF, contingent consideration was payable to EIF’s former membership interest holders if certain funds and co-investment vehicles met certain revenue and fee paying commitment targets during their commitment period. Since the revenue and fee paying targets were not met, the liability associated with the EIF contingent consideration, which was $20.3 million as of December 31, 2016 , was reversed in the first quarter of 2017, resulting in a $20.3 million gain recorded within other income (expense) on the Company's Condensed Consolidated Statements of Operations. ARCC Fee Waiver In conjunction with the ARCC-ACAS Transaction, the Company agreed to waive up to $10 million per quarter of ARCC's Part I Fees for ten calendar quarters, which began in the second quarter of 2017. ARCC Part I Fees will only be waived to the extent they are paid. If Part I Fees are less than $10 million in any single quarter the shortfall will not carryover to the subsequent quarters. As of September 30, 2017 , there are eight remaining quarters as part of the fee waiver agreement, with a maximum of $80 million in potential waivers. ARCC Part I Fees are shown net of the fee waiver. Performance Fees 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. At September 30, 2017 and December 31, 2016 , if the Company assumed all existing investments were worthless, the amount of performance fees subject to potential repayment, net of tax, which may differ from the recognition of revenue, would have been approximately $471.8 million and $418.3 million , respectively, of which approximately $366.6 million and $323.9 million , respectively, is reimbursable to the Company by certain professionals who are the recipients of such performance fees. Management believes the possibility of all of the investments becoming worthless is remote. As of September 30, 2017 and December 31, 2016 , if the funds were liquidated at their fair values, there would be no repayment obligation, and accordingly, the Company did not record a contingent repayment liability as of either date. Litigation From time to time, the Company is named as a defendant in legal actions relating to transactions conducted in the ordinary course of business. Although there can be no assurance of the outcome of such legal actions, in the opinion of management, the Company does not have a potential liability related to any current legal proceeding or claim that would individually or in the aggregate materially affect its results of operations, financial condition or cash flows. |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 9 Months Ended |
Sep. 30, 2017 | |
Related Party Transactions [Abstract] | |
RELATED PARTY TRANSACTIONS | RELATED PARTY TRANSACTIONS Substantially all of the Company’s revenue is earned from its affiliates, including management fees, performance fees, other fees, and administrative expense reimbursements. The related accounts receivable are included within due from affiliates within the Condensed Consolidated Statements of Financial Condition, except that performance fees receivable are presented separately within the Condensed Consolidated Statements of Financial Condition. The Company has investment management agreements with various funds and accounts that it manages. In accordance with these agreements, the Consolidated Funds bear certain operating costs and expenses which are initially paid by the Company and subsequently reimbursed by the Consolidated Funds. The Company also has entered into agreements with related parties to be reimbursed for its expenses incurred for providing administrative services to such related parties, including ARCC, ACRE, ARDC, Ivy Hill Asset Management, L.P., ACF FinCo I L.P, and CION Ares Diversified Credit Fund. Employees and other related parties may be permitted to participate in co-investment vehicles that invest in Ares funds alongside fund investors. Participation is limited by law to individuals who qualify under applicable securities laws. These employee co-investment vehicles generally do not require the participants to pay management or performance fees. Performance fees from the funds can be distributed to professionals on a current basis, subject to repayment by the subsidiary of the Company that acts as general partner of the relevant fund in the event that certain specified return thresholds are not ultimately achieved. The professionals have personally guaranteed, subject to certain limitations, the obligations of these subsidiaries in respect of this general partner obligation. Such guarantees are several and not joint, and are limited to distributions received by the relevant recipient. The Company considers its professionals and non-consolidated funds to be affiliates. Amounts due from and to affiliates were composed of the following: As of September 30, As of December 31, 2017 2016 Due from affiliates: Management fees receivable from non-consolidated funds $ 120,242 $ 123,781 Payments made on behalf of and amounts due from non-consolidated funds and employees 41,190 39,155 Due from affiliates—Company $ 161,432 $ 162,936 Amounts due from portfolio companies and non-consolidated funds $ 8,047 $ 3,592 Due from affiliates—Consolidated Funds $ 8,047 $ 3,592 Due to affiliates: Management fee rebate payable to non-consolidated funds $ 4,822 $ 7,914 Management fees received in advance 4,608 1,788 Tax receivable agreement liability 4,748 4,748 Payments made by non-consolidated funds on behalf of and payable by the Company 3,029 3,114 Due to affiliates—Company $ 17,207 $ 17,564 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 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. |
INCOME TAXES
INCOME TAXES | 9 Months Ended |
Sep. 30, 2017 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | INCOME TAXES A substantial portion of the Company’s earnings flow through to owners of the Company without being subject to entity level income taxes. Consequently, a significant portion of the Company’s earnings reflects no provision for income taxes except those for foreign, state, city and local income taxes incurred at the entity level. A portion of the Company’s operations is held through AHI, as well as corporate subsidiaries of Ares Holdings and Ares Investments, which are U.S. corporations for tax purposes. AHI is subject to U.S. corporate tax on earnings that flow through from Ares Holdings with respect to both AOG Units and preferred units. The income of these U.S. corporations is subject to U.S. federal, state and local income taxes and certain of its foreign subsidiaries are subject to foreign income taxes (for which a foreign tax credit can generally offset U.S. corporate taxes imposed on the same income). The Company’s income tax provision includes corporate level income taxes and entity level income taxes, as well as income taxes incurred by certain affiliated funds that are consolidated in these financial statements. The Company had an income tax expense of $4.6 million and $7.6 million for the three months ended September 30, 2017 and 2016, respectively. For the nine months ended September 30, 2017 , the Company had an income tax benefit of $28.5 million primarily driven by the one-time ARCC-ACAS transaction support payment compared to an income tax expense of $7.9 million for the nine months ended September 30, 2016 . The Company’s effective income tax rate is dependent on many factors, including the estimated nature of many amounts and the mix of revenues and expenses between U.S. corporate subsidiaries that are subject to income taxes and those subsidiaries that are not. For the three and nine months ended September 30, 2017 and 2016 , the Company has utilized the discrete effective tax rate method to calculate its interim income tax provision. The discrete method is applied when the application of the estimated annual effective tax rate is impractical because it is not possible to reliably estimate the annual effective tax rate. The discrete method treats the year to date period as if it was the annual period and determines the income tax expense or benefit on that basis. Additionally, the Company’s effective tax rate is influenced by the amount of income tax provision recorded for any affiliated funds that are consolidated in these financial statements. Consequently, the effective income tax rate is subject to significant variation from period to period. 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 federal, state, local and foreign tax regulators. As of September 30, 2017 , the Company’s U.S. federal income tax returns for the years 2014 through 2017 are open under the normal statute of limitations and therefore subject to examination. State and local tax returns are generally subject to audit from 2013 to 2017 . Foreign tax returns are generally subject to audit from 2012 to 2017 . 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. |
EARNINGS PER COMMON UNIT
EARNINGS PER COMMON UNIT | 9 Months Ended |
Sep. 30, 2017 | |
Earnings Per Share [Abstract] | |
EARNINGS PER COMMON UNIT | EARNINGS PER COMMON UNIT Basic earnings per common unit are computed by dividing income available to common unitholders by the weighted‑average number of common units outstanding during the period. Diluted earnings per common unit are computed using the more dilutive method of either the two-class method or the treasury stock method. For the three and nine months ended September 30, 2017 , the two-class method was the more dilutive method for the unvested restricted units. For the three and nine months ended September 30, 2016 , the treasury stock method was the more dilutive method for the unvested restricted units. No participating securities had rights to undistributed earnings during any period presented. The computation of diluted earnings per common unit for the three and nine months ended September 30, 2017 and 2016 excludes the following options, restricted units and AOG Units, as their effect would have been anti-dilutive: For the Three Months Ended For the Nine Months Ended 2017 2016 2017 2016 Options 21,022,924 22,164,772 21,170,880 23,008,147 Restricted units 13,742,856 — 14,223,345 62,909 AOG units 130,192,448 130,852,861 130,280,878 131,858,404 The following table presents the computation of basic and diluted earnings per common unit: For the Three Months Ended For the Nine Months Ended 2017 2016 2017 2016 Net income attributable to Ares Management, L.P. common unitholders $ 22,413 $ 36,554 $ 20,307 $ 71,042 Earnings distributed to participating securities (restricted units) (1,003 ) (480 ) (2,248 ) (895 ) Preferred stock dividends(1) — — — (8 ) Net income available to common unitholders $ 21,410 $ 36,074 $ 18,059 $ 70,139 Basic weighted-average common units 82,166,852 80,793,984 81,704,815 80,741,460 Basic earnings per common unit $ 0.26 $ 0.45 $ 0.22 $ 0.87 Net income attributable to Ares Management, L.P. common unitholders $ 22,413 $ 36,554 $ 20,307 $ 71,042 Earnings distributed to participating securities (restricted units) (1,003 ) — (2,248 ) — Preferred stock dividends(1) — — — (8 ) Net income available to common unitholders $ 21,410 $ 36,554 $ 18,059 $ 71,034 Effect of dilutive units: Restricted units — 3,670,607 — 1,925,589 Diluted weighted-average common units 82,166,852 84,464,591 81,704,815 82,667,049 Diluted earnings per common unit $ 0.26 $ 0.43 $ 0.22 $ 0.86 (1) Dividends relate to the preferred shares that were issued by Ares Real Estate Holdings LLC and were redeemed on July 1, 2016. |
EQUITY COMPENSATION
EQUITY COMPENSATION | 9 Months Ended |
Sep. 30, 2017 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
EQUITY COMPENSATION | EQUITY COMPENSATION Equity Incentive Plan In 2014, the Company adopted the Ares Management, L.P. 2014 Equity Incentive Plan (the "Equity Incentive Plan"). Based on a formula as defined in the Equity Incentive Plan, the total number of units available to be issued under the Equity Incentive Plan resets and may increase on January 1 each year. Accordingly, on January 1, 2017 , the total number of units available for issuance under the Equity Incentive Plan increased to 30,397,280 units, and as of September 30, 2017 , 24,550,987 units remain available for issuance. Generally, unvested phantom units, restricted units and options 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 is included in the following table: For the Three Months Ended For the Nine Months Ended 2017 2016 2017 2016 Restricted units $ 14,555 $ 5,350 $ 40,375 $ 14,797 Options 3,224 2,693 10,637 11,153 Phantom units 312 433 1,085 1,235 Equity-based compensation expense $ 18,091 $ 8,476 $ 52,097 $ 27,185 Restricted Units Each restricted unit represents an unfunded, unsecured right of the holder to receive a common unit on a specific date. The restricted units generally vest and are settled in common units either (i) at a rate of one-third per year, beginning on the third anniversary of the grant date, (ii) in their entirety on the fifth anniversary of the grant date, or (iii) at a rate of one quarter per year, beginning on the first anniversary of the grant date. Compensation expense associated with restricted units is recognized on a straight-line basis over the requisite service period of the award. The holders of restricted units generally have the right to receive as current compensation an amount in cash equal to (i) the amount of any distribution paid with respect to a common unit multiplied by (ii) the number of restricted units held at the time such distributions are declared (“Distribution Equivalent”). For the three and nine months ended September 30, 2017 , Distribution Equivalents were made to the holders of restricted units in the aggregate amount of $4.3 million and $10.3 million , respectively, which are presented as distributions within the Condensed Consolidated Statement of Changes in Equity. When units are forfeited, the cumulative amount of distribution equivalents previously paid is reclassified to compensation and benefits expense in the Condensed Consolidated Statements of Operations. The following table presents unvested restricted units’ activity during the nine months ended September 30, 2017 : Restricted Units Weighted Average Grant Date Fair Value Per Unit Balance - January 1, 2017 8,058,372 $ 16.38 Granted 7,944,144 18.61 Vested (1,833,422 ) 16.56 Forfeited (426,238 ) 17.82 Balance - September 30, 2017 13,742,856 $ 17.58 The total compensation expense expected to be recognized in all future periods associated with the restricted units is approximately $183.2 million as of September 30, 2017 and is expected to be recognized over the remaining weighted average period of 3.69 years . Options A summary of options activity during the nine months ended September 30, 2017 is presented below: Options Weighted Average Exercise Price Weighted Average Remaining Life (in years) Aggregate Intrinsic Value Balance - January 1, 2017 22,232,134 $ 18.99 7.35 Granted — — — Exercised (54,500 ) 19.00 — Expired (433,609 ) 19.00 — Forfeited (721,101 ) 19.00 — Balance - September 30, 2017 21,022,924 $ 18.99 6.56 $ — Exercisable at September 30, 2017 7,106,989 $ 19.00 6.56 $ — As of September 30, 2017 , there was $26.5 million of total unrecognized compensation expense that is expected to be recognized over the remaining weighted average period of 1.60 years . Phantom Units A summary of unvested phantom unit activity during the nine months ended September 30, 2017 is presented below: Phantom Units Weighted Average Balance - January 1, 2017 266,138 $ 19.00 Vested (87,222 ) 19.00 Forfeited (20,872 ) 19.00 Balance - September 30, 2017 158,044 $ 19.00 The fair value of the phantom unit awards is remeasured at each reporting period and was $ 18.65 per unit as of September 30, 2017 . Based on the fair value of the awards at September 30, 2017 , $2.3 million of unrecognized compensation expense in connection with phantom units outstanding is expected to be recognized over a weighted average period of 1.59 years . During the nine months ended September 30, 2017 , the Company paid $1.7 million to settle any vested phantom units. |
EQUITY
EQUITY | 9 Months Ended |
Sep. 30, 2017 | |
Stockholders' Equity Note [Abstract] | |
EQUITY | EQUITY Ares Management, L.P. Common Units: Common units represent limited partnership interests in the Company. The holders of common units are entitled to participate pro rata in distributions from the Company and to exercise the rights or privileges that are available to common unitholders under the Company’s partnership agreement. The common unitholders have limited voting rights and have no right to remove the Company’s general partner, Ares Management GP LLC, or, except in limited circumstances, to elect the directors of the general partner. The following table presents each partner's AOG units and corresponding ownership interest in each of the Ares Operating Group entities as of September 30, 2017 and December 31, 2016 , as well as its daily average ownership of AOG Units in each of the Ares Operating Group entities for the three and nine months ended September 30, 2017 and 2016 . Daily Average Ownership As of September 30, 2017 As of December 31, 2016 For the Three Months Ended September 30, For the Nine Months Ended September 30, AOG Units Direct Ownership Interest AOG Units Direct Ownership Interest 2017 2016 2017 2016 Ares Management, L.P. 82,211,302 38.71 % 80,814,732 38.26 % 38.69 % 38.17 % 38.54 % 37.98 % Ares Owners Holding L.P. 117,673,223 55.40 % 117,928,313 55.82 % 55.42 % 55.92 % 55.56 % 56.14 % Affiliate of Alleghany Corporation 12,500,000 5.89 % 12,500,000 5.92 % 5.89 % 5.91 % 5.90 % 5.88 % Total 212,384,525 100.00 % 211,243,045 100.00 % Preferred Equity As of September 30, 2017 and December 31, 2016 , the Company had 12,400,000 units of Series A Preferred Equity (the “Preferred Equity”) outstanding. When, as and if declared by the Company’s board of directors, distributions on the Preferred Equity are payable quarterly at a rate per annum equal to 7.00% . The Preferred Equity may be redeemed at the Company’s option, in whole or in part, at any time on or after June 30, 2021, at a price of $25.00 per unit. Secondary Offering Pursuant to a prospectus supplement dated March 2, 2017, AREC Holdings Ltd., a wholly owned subsidiary of Abu Dhabi Investment Authority ("ADIA" or “the selling unitholder”) sold 7,500,000 units of the Company's common units through a public secondary offering. The Company did not receive any of the proceeds from the offering. The transaction closed on March 2, 2017. The Company incurred approximately $0.7 million of expenses related to the secondary offering transaction. The fees related to the secondary offering were non-operating expenses and are included in other income (expense), net in the Condensed Consolidated Statements of Operations. The selling unitholder paid the underwriting discounts and commissions and/or similar charges incurred for the sale of the common units. |
SEGMENT REPORTING
SEGMENT REPORTING | 9 Months Ended |
Sep. 30, 2017 | |
Segment Reporting [Abstract] | |
SEGMENT REPORTING | SEGMENT REPORTING The Company operates through its three distinct operating segments. During the nine months ended September 30, 2017 , the Company reclassified certain expenses from OMG to its operating segments. Historical results have been modified to conform to the current period presentation. The Company’s three operating segments are: Credit Group: The Company’s Credit Group is a leading manager of credit strategies across the non-investment grade credit universe in the U.S. and Europe, with approximately $70.5 billion of assets under management and 142 funds as of September 30, 2017 . The Credit Group offers a range of credit strategies across the liquid and illiquid spectrum, including syndicated loans, high yield bonds, credit opportunities, structured credit investments and U.S. and European direct lending. The Credit Group provides solutions for traditional fixed income investors seeking to access the syndicated loans and high yield bond markets and capitalizes on opportunities across traded corporate credit. It additionally provides investors access to directly originated fixed and floating rate credit assets and the ability to capitalize on illiquidity premiums across the credit spectrum. The Credit Group’s syndicated loans strategy focuses on liquid, traded non-investment grade secured loans to corporate issuers. 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. Credit opportunities is a “go anywhere” strategy seeking to capitalize on market inefficiencies and relative value opportunities across the capital structure. The structured credit strategy invests across the capital structures of syndicated collateralized loan obligation vehicles (CLOs) and in directly-originated asset-backed instruments composed of diversified portfolios of consumer and commercial assets. The Company has one of the largest self-originating direct lending platforms in the U.S. and European middle markets, providing one-stop financing solutions for small-to-medium sized companies, which the Company believes are increasingly underserved by traditional lenders. The Company provides investors access to these capabilities through several vehicles, including commingled funds, separately managed accounts and a publicly traded vehicle. The Credit Group conducts its U.S. direct lending activities primarily through ARCC, the largest business development company as of September 30, 2017 , by both market capitalization and total assets. In addition, the Credit Group manages a commercial finance business that provides asset-based and cash flow loans to small and middle-market companies, as well as asset-based facilities to specialty finance companies. The Credit Group’s European direct lending platform is one of the most significant participants in the European middle-market, focusing on self-originated investments in illiquid middle-market credits. Private Equity Group: The Company’s Private Equity Group has approximately $24.6 billion of assets under management as of September 30, 2017 , broadly categorizing its investment strategies as corporate private equity, U.S. power and energy infrastructure and special situations. As of September 30, 2017 the group managed five corporate private equity commingled funds focused on North America and Europe and two focused on greater China, five commingled funds and six related co-investment vehicles focused on U.S. power and energy infrastructure and three special situations funds. In its North American and European flexible capital strategy, the Company targets opportunistic majority or shared-control investments in businesses with strong franchises and attractive growth opportunities in North America and Europe. The U.S. power and energy infrastructure strategy targets U.S. energy infrastructure-related assets across the power generation, transmission and midstream sectors, seeking attractive risk-adjusted equity returns with current cash flow and capital appreciation. The special situations strategy seeks to invest opportunistically across a broad spectrum of distressed or mispriced investments, including corporate debt, rescue capital, private asset-backed investments, post-reorganization securities and non-performing portfolios. Real Estate Group: The Company’s Real Estate Group manages comprehensive public and private equity and debt strategies, with approximately $10.6 billion of assets under management across 42 funds as of September 30, 2017 . Real Estate equity strategies focus on applying hands-on value creation initiatives to mismanaged and capital-starved assets, as well as new development, ultimately selling stabilized assets back into the market. The Real Estate Group manages both a value-add strategy and an opportunistic strategy. The value-add strategy seeks to create value by buying assets at attractive valuations and through active asset management of income-producing properties across the U.S. and Western Europe. The opportunistic strategy focuses on manufacturing core assets through development, redevelopment and fixing distressed capital structures across major properties in the U.S. and Europe. The Company’s debt strategies leverage the Real Estate Group’s diverse sources of capital to directly originate and manage commercial mortgage investments on properties that range from stabilized to requiring hands-on value creation. In addition to managing private debt funds, the Real Estate Group makes debt investments through a publicly traded commercial mortgage real estate investment trust, ACRE. The Company has an Operations Management Group (the “OMG”) that consists of five 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, business development/corporate strategy, legal/compliance and human resources. Additionally, the OMG provides services to certain of the Company’s investment companies and partnerships, which reimburse the OMG for expenses equal to the costs of services provided. The OMG’s expenses are not allocated to the Company’s three reportable segments but the Company does consider the cost structure of the OMG when evaluating its financial performance. Non-GAAP Measures: These measures supplement and should be considered in addition to, and not in lieu of, the Consolidated Statements of Operations prepared in accordance with GAAP. Economic net income (“ENI”), a non-GAAP measure, is an operating metric used by management to evaluate total operating performance, a decision tool for deployment of resources, and an assessment of the performance of the Company’s business segments. ENI differs from net income by excluding (a) income tax expense, (b) operating results of the Consolidated Funds, (c) depreciation and amortization expense, (d) placement fees and underwriting costs, (e) the effects of changes arising from corporate actions, and (f) certain other items that the Company believes are not indicative of its total operating performance. Changes arising from corporate actions include equity-based compensation expenses, the amortization of intangible assets, transaction costs associated with mergers and acquisitions and capital transactions, and expenses incurred in connection with corporate reorganization. Fee related earnings (“FRE”), a non-GAAP measure, refers to a component of ENI that is used to assess core operating performance by determining whether recurring revenue, primarily consisting of management fees, is sufficient to cover operating expenses and to generate profits. FRE differs from income before taxes computed in accordance with GAAP as it adjusts for the items included in the calculation of ENI and excludes performance fees, performance fee compensation, 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. Performance related earnings (“PRE”), a non-GAAP measure, is used to assess the Company’s investment performance net of performance fee compensation. PRE differs from income (loss) before taxes computed in accordance with GAAP as it only includes performance fees, performance fee compensation and total investment and other income earned from the Consolidated Funds and non-consolidated funds. Distributable earnings (“DE”), a non-GAAP measure, is an operating metric that assesses the Company’s performance without the effects of the Consolidated Funds and the impact of unrealized income and expenses, which generally fluctuate with fair value changes. Among other things, this metric also is used to assist in determining amounts potentially available for distribution. However, the declaration, payment, and determination of the amount of distributions to unitholders, if any, is at the sole discretion of the Company’s Board of Directors, which may change the distribution policy at any time. Distributable earnings is calculated as the sum of fee related earnings, realized performance fees, realized performance fee compensation, realized net investment and other income, and is reduced by expenses arising from transaction costs associated with acquisitions, placement fees and underwriting costs, expenses incurred in connection with corporate reorganization and depreciation. Distributable earnings differs from income before taxes computed in accordance with GAAP as it is typically presented before giving effect to unrealized performance fees, unrealized performance fee compensation, unrealized net investment income, amortization of intangibles and equity compensation expense. DE is presented prior to the effect of income taxes attributable to Ares Holdings, Inc. and to distributions made to the Company’s preferred unitholders, unless otherwise noted. 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. The following table presents the financial results for the Company’s operating segments, as well as the OMG, for the three months ended September 30, 2017 : Credit Group Private Equity Group Real Total OMG Total Management fees (Credit Group includes ARCC Part I Fees of $24,036) $ 120,178 $ 51,313 $ 17,137 $ 188,628 $ — $ 188,628 Other fees 5,668 449 27 6,144 — 6,144 Compensation and benefits (46,551 ) (19,256 ) (11,398 ) (77,205 ) (27,577 ) (104,782 ) General, administrative and other expenses (6,851 ) (4,655 ) (2,125 ) (13,631 ) (18,380 ) (32,011 ) Fee related earnings 72,444 27,851 3,641 103,936 (45,957 ) 57,979 Performance fees—realized 3,296 173,304 2,389 178,989 — 178,989 Performance fees—unrealized 33,033 (142,822 ) 20,366 (89,423 ) — (89,423 ) Performance fee compensation—realized (1,466 ) (138,657 ) (856 ) (140,979 ) — (140,979 ) Performance fee compensation—unrealized (19,820 ) 114,395 (12,233 ) 82,342 — 82,342 Net performance fees 15,043 6,220 9,666 30,929 — 30,929 Investment income—realized 6,206 14,268 1,997 22,471 18 22,489 Investment income (loss)—unrealized (1,123 ) (8,421 ) (767 ) (10,311 ) 4,357 (5,954 ) Interest and other investment income (expense) (540 ) 1,129 716 1,305 26 1,331 Interest expense (3,277 ) (1,229 ) (396 ) (4,902 ) (441 ) (5,343 ) Net investment income 1,266 5,747 1,550 8,563 3,960 12,523 Performance related earnings 16,309 11,967 11,216 39,492 3,960 43,452 Economic net income $ 88,753 $ 39,818 $ 14,857 $ 143,428 $ (41,997 ) $ 101,431 Distributable earnings $ 73,120 $ 75,809 $ 4,736 $ 153,665 $ (53,214 ) $ 100,451 The following table presents the financial results for the Company’s operating segments, as well as the OMG, for the three months ended September 30, 2016 : Credit Group Private Equity Group Real Total OMG Total Management fees (Credit Group includes ARCC Part I Fees of $33,260) $ 115,794 $ 35,183 $ 17,819 $ 168,796 $ — $ 168,796 Other fees 280 309 162 751 — 751 Compensation and benefits (45,222 ) (16,697 ) (9,459 ) (71,378 ) (25,960 ) (97,338 ) General, administrative and other expenses (7,274 ) (3,925 ) (2,289 ) (13,488 ) (13,386 ) (26,874 ) Fee related earnings 63,578 14,870 6,233 84,681 (39,346 ) 45,335 Performance fees—realized 22,422 108,245 2,170 132,837 — 132,837 Performance fees—unrealized 11,152 16,569 4,647 32,368 — 32,368 Performance fee compensation—realized (7,241 ) (86,537 ) — (93,778 ) — (93,778 ) Performance fee compensation—unrealized (11,686 ) (13,387 ) (4,322 ) (29,395 ) — (29,395 ) Net performance fees 14,647 24,890 2,495 42,032 — 42,032 Investment income (loss)—realized 588 11,267 (151 ) 11,704 (20,005 ) (8,301 ) Investment income—unrealized 5,460 7,066 6,211 18,737 15,979 34,716 Interest and other investment income 5,940 417 714 7,071 15 7,086 Interest expense (1,831 ) (1,399 ) (242 ) (3,472 ) (664 ) (4,136 ) Net investment income (loss) 10,157 17,351 6,532 34,040 (4,675 ) 29,365 Performance related earnings 24,804 42,241 9,027 76,072 (4,675 ) 71,397 Economic net income $ 88,382 $ 57,111 $ 15,260 $ 160,753 $ (44,021 ) $ 116,732 Distributable earnings $ 81,542 $ 45,481 $ 6,408 $ 133,431 $ (66,696 ) $ 66,735 The following table presents the financial results for the Company’s operating segments, as well as the OMG, for the nine months ended September 30, 2017 : Credit Group Private Equity Group Real Total OMG Total Management fees (Credit Group includes ARCC Part I Fees of $76,436) $ 354,179 $ 147,559 $ 49,231 $ 550,969 $ — $ 550,969 Other fees 15,834 1,127 37 16,998 — 16,998 Compensation and benefits (142,647 ) (50,862 ) (30,848 ) (224,357 ) (84,881 ) (309,238 ) General, administrative and other expenses (22,766 ) (13,198 ) (7,947 ) (43,911 ) (56,729 ) (100,640 ) Fee related earnings 204,600 84,626 10,473 299,699 (141,610 ) 158,089 Performance fees—realized 19,957 238,084 3,883 261,924 — 261,924 Performance fees—unrealized 41,062 118,162 64,243 223,467 — 223,467 Performance fee compensation—realized (8,649 ) (189,571 ) (1,033 ) (199,253 ) — (199,253 ) Performance fee compensation—unrealized (27,357 ) (95,131 ) (39,303 ) (161,791 ) — (161,791 ) Net performance fees 25,013 71,544 27,790 124,347 — 124,347 Investment income—realized 9,049 17,564 4,153 30,766 3,217 33,983 Investment income (loss)—unrealized 16 25,479 (77 ) 25,418 222 25,640 Interest and other investment income 2,399 3,264 2,069 7,732 1,125 8,857 Interest expense (8,800 ) (4,139 ) (1,257 ) (14,196 ) (1,380 ) (15,576 ) Net investment income 2,664 42,168 4,888 49,720 3,184 52,904 Performance related earnings 27,677 113,712 32,678 174,067 3,184 177,251 Economic net income $ 232,277 $ 198,338 $ 43,151 $ 473,766 $ (138,426 ) $ 335,340 Distributable earnings $ 204,402 $ 145,696 $ 12,596 $ 362,694 $ (151,642 ) $ 211,052 The following table presents the financial results for the Company’s operating segments, as well as the OMG, for the nine months ended September 30, 2016 : Credit Group Private Equity Group Real Total OMG Total Management fees (Credit Group includes ARCC Part I Fees of $90,884) $ 332,182 $ 111,100 $ 50,794 $ 494,076 $ — $ 494,076 Other fees 939 983 855 2,777 — 2,777 Compensation and benefits (135,068 ) (46,556 ) (31,327 ) (212,951 ) (77,225 ) (290,176 ) General, administrative and other expenses (19,383 ) (10,489 ) (8,241 ) (38,113 ) (44,616 ) (82,729 ) Fee related earnings 178,670 55,038 12,081 245,789 (121,841 ) 123,948 Performance fees—realized 44,624 171,024 5,142 220,790 — 220,790 Performance fees—unrealized (1,544 ) 109,848 10,030 118,334 — 118,334 Performance fee compensation—realized (9,978 ) (136,761 ) (53 ) (146,792 ) — (146,792 ) Performance fee compensation—unrealized (9,853 ) (88,766 ) (8,328 ) (106,947 ) — (106,947 ) Net performance fees 23,249 55,345 6,791 85,385 — 85,385 Investment income (loss)—realized 390 14,641 412 15,443 (20,093 ) (4,650 ) Investment income (loss)—unrealized 9,256 (1,030 ) 7,943 16,169 4,460 20,629 Interest and other investment income (expense) 21,617 8,532 1,642 31,791 (53 ) 31,738 Interest expense (6,729 ) (4,201 ) (788 ) (11,718 ) (2,101 ) (13,819 ) Net investment income (loss) 24,534 17,942 9,209 51,685 (17,787 ) 33,898 Performance related earnings 47,783 73,287 16,000 137,070 (17,787 ) 119,283 Economic net income $ 226,453 $ 128,325 $ 28,081 $ 382,859 $ (139,628 ) $ 243,231 Distributable earnings $ 221,357 $ 104,162 $ 16,867 $ 342,386 $ (157,550 ) $ 184,836 The following table presents the components of the Company’s operating segments’ revenue, expenses and other income (expense): For the Three Months Ended For the Nine Months Ended 2017 2016 2017 2016 Segment Revenues Management fees (includes ARCC Part I Fees of $24,036, $76,436 and $33,260, $90,884 for the three and nine months ended September 30, 2017 and 2016, respectively) $ 188,628 $ 168,796 $ 550,969 $ 494,076 Other fees 6,144 751 16,998 2,777 Performance fees—realized 178,989 132,837 261,924 220,790 Performance fees—unrealized (89,423 ) 32,368 223,467 118,334 Total segment revenues $ 284,338 $ 334,752 $ 1,053,358 $ 835,977 Segment Expenses Compensation and benefits $ 77,205 $ 71,378 $ 224,357 $ 212,951 General, administrative and other expenses 13,631 13,488 43,911 38,113 Performance fee compensation—realized 140,979 93,778 199,253 146,792 Performance fee compensation—unrealized (82,342 ) 29,395 161,791 106,947 Total segment expenses $ 149,473 $ 208,039 $ 629,312 $ 504,803 Other Income (Expense) Investment income—realized $ 22,471 $ 11,704 $ 30,766 $ 15,443 Investment income (loss)—unrealized (10,311 ) 18,737 25,418 16,169 Interest and other investment income 1,305 7,071 7,732 31,791 Interest expense (4,902 ) (3,472 ) (14,196 ) (11,718 ) Total other income $ 8,563 $ 34,040 $ 49,720 $ 51,685 The following table reconciles segment revenue to Ares consolidated revenues: For the Three Months Ended For the Nine Months Ended 2017 2016 2017 2016 Total segment revenue $ 284,338 $ 334,752 $ 1,053,358 $ 835,977 Revenue of Consolidated Funds eliminated in consolidation (6,822 ) (5,986 ) (18,738 ) (13,439 ) Administrative fees(1) 7,352 6,618 26,090 19,984 Performance fees reclass(2) (1,187 ) 76 (1,428 ) (1,512 ) Revenue of non-controlling interests in consolidated subsidiaries(3) (10 ) — (64 ) — Total consolidated adjustments and reconciling items (667 ) 708 5,860 5,033 Total consolidated revenue $ 283,671 $ 335,460 $ 1,059,218 $ 841,010 (1) Represents administrative fees that are presented in administrative 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 fees for AREA Sponsor Holdings LLC, an investment pool. Changes in value of this investment are reflected within other income (expense) in the Company’s Condensed Consolidated Statements of Operations. (3) Adjustments for administrative fees reimbursed and other revenue items attributable to certain of our joint venture partners. The following table reconciles segment expenses to Ares consolidated expenses: For the Three Months Ended For the Nine Months Ended 2017 2016 2017 2016 Total segment expenses $ 149,473 $ 208,039 $ 629,312 $ 504,803 Expenses of Consolidated Funds added in consolidation 25,862 16,068 45,196 27,334 Expenses of Consolidated Funds eliminated in consolidation (6,823 ) (5,980 ) (17,724 ) (16,320 ) Administrative fees(1) 7,352 6,618 26,090 19,984 OMG expenses 45,957 39,346 141,610 121,841 Acquisition and merger-related expenses 2,818 79 278,878 432 Equity compensation expense 18,091 8,476 52,097 27,185 Placement fees and underwriting costs 4,495 2,202 14,317 4,886 Amortization of intangibles 3,651 6,378 14,200 20,762 Depreciation expense 3,468 2,148 9,458 5,940 Expenses of non-controlling interests in consolidated subsidiaries(2) (217 ) — 357 — Total consolidation adjustments and reconciling items 104,654 75,335 564,479 212,044 Total consolidated expenses $ 254,127 $ 283,374 $ 1,193,791 $ 716,847 (1) Represents administrative fees that are presented in administrative and other fees in the Company’s Condensed Consolidated Statements of Operations and are netted against the respective expenses for segment reporting. (2) Adjustments to eliminate costs being borne by certain of our joint venture partners. The following table reconciles segment other income (expense) to Ares consolidated other income: For the Three Months Ended For the Nine Months Ended 2017 2016 2017 2016 Total other income $ 8,563 $ 34,040 $ 49,720 $ 51,685 Other income from Consolidated Funds added in consolidation, net 55,227 30,181 90,522 14,545 Other income (expense) from Consolidated Funds eliminated in consolidation, net (9,973 ) (5,549 ) (16,847 ) 6,125 Other income of non-controlling interests in consolidated subsidiaries 9 — 14 — OMG other expense 3,960 (4,675 ) 3,184 (17,787 ) Performance fee reclass(1) 1,187 (76 ) 1,428 1,512 Changes in fair value of contingent consideration (60 ) 17,690 20,156 17,486 Other non-cash expense — 1,728 — 1,728 Offering costs (33 ) — (688 ) — Total consolidation adjustments and reconciling items 50,317 39,299 97,769 23,609 Total consolidated other income $ 58,880 $ 73,339 $ 147,489 $ 75,294 (1) Related to performance fees for AREA Sponsor Holdings LLC. Changes in value of this investment are reflected within other (income) expense in the Company’s Condensed Consolidated Statements of Operations. The following table presents the reconciliation of income before taxes as reported in the Condensed Consolidated Statements of Operations to segment results of ENI, FRE, PRE and DE: For the Three Months Ended For the Nine Months Ended 2017 2016 2017 2016 Economic net income Income before taxes $ 88,424 $ 125,425 $ 12,916 $ 199,457 Adjustments: Amortization of intangibles 3,651 6,378 14,200 20,762 Depreciation expense 3,468 2,148 9,458 5,940 Equity compensation expenses 18,091 8,476 52,097 27,185 Acquisition and merger-related expenses 2,878 (17,611 ) 258,722 (17,054 ) Placement fees and underwriting costs 4,495 2,202 14,317 4,886 OMG expenses, net 41,997 44,021 138,426 139,628 Offering costs 33 — 688 — Other non-cash expense — (1,728 ) — (1,728 ) (Income) loss before taxes of non-controlling interests in consolidated subsidiaries (216 ) — 407 — (Income) loss before taxes of non-controlling interests in Consolidated Funds, net of eliminations (19,393 ) (8,558 ) (27,465 ) 3,783 Total consolidation adjustments and reconciling items 55,004 35,328 460,850 183,402 Economic net income 143,428 160,753 473,766 382,859 Total performance fees income - realized (178,989 ) (132,837 ) (261,924 ) (220,790 ) Total performance fees income - unrealized 89,423 (32,368 ) (223,467 ) (118,334 ) Total performance fee compensation - realized 140,979 93,778 199,253 146,792 Total performance fee compensation - unrealized (82,342 ) 29,395 161,791 106,947 Total investment income (8,563 ) (34,040 ) (49,720 ) (51,685 ) Fee related earnings 103,936 84,681 299,699 245,789 Performance fees—realized 178,989 132,837 261,924 220,790 Performance fee compensation—realized (140,979 ) (93,778 ) (199,253 ) (146,792 ) Investment and other income realized, net 21,160 14,777 27,067 33,605 Additional adjustments: Dividend equivalent(1) (3,540 ) (1,649 ) (7,741 ) (3,039 ) One-time acquisition costs(1) (12 ) (12 ) (35 ) (294 ) Income tax expense(1) (343 ) (292 ) (950 ) (773 ) Non-cash items 397 36 533 883 Placement fees and underwriting costs(1) (4,495 ) (2,209 ) (14,317 ) (4,894 ) Depreciation and amortization(1) (1,448 ) (960 ) (4,233 ) (2,889 ) Distributable earnings $ 153,665 $ 133,431 $ 362,694 $ 342,386 Performance related earnings Economic net income $ 143,428 $ 160,753 $ 473,766 $ 382,859 Less: fee related earnings (103,936 ) (84,681 ) (299,699 ) (245,789 ) Performance related earnings $ 39,492 $ 76,072 $ 174,067 $ 137,070 (1) Certain costs are reduced by the amounts attributable to OMG, which is excluded from segment results. |
CONSOLIDATION
CONSOLIDATION | 9 Months Ended |
Sep. 30, 2017 | |
Condensed Financial Information of Parent Company Only Disclosure [Abstract] | |
CONSOLIDATION | CONSOLIDATION Investments in Consolidated Variable Interest Entities The Company consolidates entities in which the Company has a variable interest and, as the general partner or investment manager, has both the power to direct the most significant activities and a potentially significant economic interest. Investments in the consolidated VIEs are reported at their carrying value, which approximates fair value, and represents the Company’s maximum exposure to loss. Investments in Non-Consolidated Variable Interest Entities The Company holds interests in certain VIEs that are not consolidated as the Company is not the primary beneficiary. The Company's interest in such entities generally is in the form of direct equity interests, fixed fee arrangements or both. The maximum exposure to loss represents the potential loss of assets by the Company relating to these non-consolidated entities. Investments in the non-consolidated VIEs are carried at fair value. The Company's interests and the Consolidated Funds' interests in consolidated and non-consolidated VIEs, as presented in the Condensed Consolidated Statements of Financial Condition, and their respective maximum exposure to loss relating to non-consolidated VIEs are as follows: As of September 30, As of December 31, 2017 2016 Maximum exposure to loss attributable to the Company's investment in non-consolidated VIEs $ 364,860 $ 268,950 Maximum exposure to loss attributable to the Company's investment in consolidated VIEs $ 162,295 $ 153,746 Assets of consolidated VIEs $ 5,760,754 $ 3,822,010 Liabilities of consolidated VIEs $ 5,152,179 $ 3,360,329 For the Three Months Ended For the Nine Months Ended 2017 2016 2017 2016 Net income (loss) attributable to non-controlling interests related to consolidated VIEs $ 18,195 $ 7,861 $ 25,403 $ (3,064 ) CONSOLIDATING SCHEDULES The following supplemental financial information illustrates the consolidating effects of the Consolidated Funds on the Company's financial condition as of September 30, 2017 and December 31, 2016 and results from operations for the three and nine months ended September 30, 2017 and 2016 . As of September 30, 2017 Consolidated Consolidated Eliminations Consolidated Assets Cash and cash equivalents $ 186,437 $ — $ — $ 186,437 Investments (includes fair value investments of $581,614) 746,990 — (162,295 ) 584,695 Performance fees receivable 1,001,581 — (4,003 ) 997,578 Due from affiliates 166,214 — (4,782 ) 161,432 Deferred tax asset, net 36,661 — — 36,661 Other assets 103,885 — — 103,885 Intangible assets, net 44,115 — — 44,115 Goodwill 143,880 — — 143,880 Assets of Consolidated Funds Cash and cash equivalents — 799,609 — 799,609 Investments, at fair value — 4,915,029 — 4,915,029 Due from affiliates — 8,047 — 8,047 Dividends and interest receivable — 10,061 — 10,061 Receivable for securities sold — 25,926 — 25,926 Other assets — 2,082 — 2,082 Total assets $ 2,429,763 $ 5,760,754 $ (171,080 ) $ 8,019,437 Liabilities Accounts payable, accrued expenses and other liabilities $ 94,351 $ — $ — $ 94,351 Accrued compensation 133,799 — — 133,799 Due to affiliates 17,207 — — 17,207 Performance fee compensation payable 780,201 — — 780,201 Debt obligations 486,007 — — 486,007 Liabilities of Consolidated Funds Accounts payable, accrued expenses and other liabilities — 50,992 — 50,992 Due to affiliates — 8,786 (8,786 ) — Payable for securities purchased — 481,055 — 481,055 CLO loan obligations, at fair value — 4,490,085 (13,442 ) 4,476,643 Fund borrowings — 121,261 — 121,261 Total liabilities 1,511,565 5,152,179 (22,228 ) 6,641,516 Commitments and contingencies Preferred equity (12,400,000 units issued and outstanding) 298,761 — — 298,761 Non-controlling interest in Consolidated Funds — 608,575 (148,852 ) 459,723 Non-controlling interest in Ares Operating Group entities 348,513 — — 348,513 Controlling interest in Ares Management, L.P.: Partners' capital (82,211,302 units issued and outstanding) 275,410 — — 275,410 Accumulated other comprehensive loss, net of tax (4,486 ) — — (4,486 ) Total controlling interest in Ares Management, L.P. 270,924 — — 270,924 Total equity 918,198 608,575 (148,852 ) 1,377,921 Total liabilities and equity $ 2,429,763 $ 5,760,754 $ (171,080 ) $ 8,019,437 As of December 31, 2016 Consolidated Consolidated Eliminations Consolidated Assets Cash and cash equivalents $ 342,861 $ — $ — $ 342,861 Investments (includes fair value investments of $448,336) 622,215 — (153,744 ) 468,471 Performance fees receivable 767,429 — (8,330 ) 759,099 Due from affiliates 169,252 — (6,316 ) 162,936 Deferred tax asset, net 6,731 — — 6,731 Other assets 65,565 — — 65,565 Intangible assets, net 58,315 — — 58,315 Goodwill 143,724 — — 143,724 Assets of Consolidated Funds Cash and cash equivalents — 455,280 — 455,280 Investments, at fair value — 3,330,203 — 3,330,203 Due from affiliates — 3,592 — 3,592 Dividends and interest receivable — 8,479 — 8,479 Receivable for securities sold — 21,955 — 21,955 Other assets — 2,501 — 2,501 Total assets $ 2,176,092 $ 3,822,010 $ (168,390 ) $ 5,829,712 Liabilities Accounts payable, accrued expenses and other liabilities $ 83,336 $ — $ — $ 83,336 Accrued compensation 131,736 — — 131,736 Due to affiliates 17,959 — (395 ) 17,564 Performance fee compensation payable 598,050 — — 598,050 Debt obligations 305,784 — — 305,784 Liabilities of Consolidated Funds Accounts payable, accrued expenses and other liabilities — 21,056 — 21,056 Due to affiliates — 10,599 (10,599 ) — Payable for securities purchased — 208,742 — 208,742 CLO loan obligations, at fair value — 3,064,862 (33,750 ) 3,031,112 Fund borrowings — 55,070 — 55,070 Total liabilities 1,136,865 3,360,329 (44,744 ) 4,452,450 Commitments and contingencies Preferred equity (12,400,000 units issued and outstanding) 298,761 — — 298,761 Non-controlling interest in Consolidated Funds — 461,681 (123,646 ) 338,035 Non-controlling interest in Ares Operating Group entities 447,615 — — 447,615 Controlling interest in Ares Management, L.P.: Partners' capital (80,814,732 units issued and outstanding) 301,790 — — 301,790 Accumulated other comprehensive loss, net of tax (8,939 ) — — (8,939 ) Total controlling interest in Ares Management, L.P. 292,851 — — 292,851 Total equity 1,039,227 461,681 (123,646 ) 1,377,262 Total liabilities and equity $ 2,176,092 $ 3,822,010 $ (168,390 ) $ 5,829,712 For the Three Months Ended September 30, 2017 Consolidated Entities Consolidated Eliminations Consolidated Revenues Management fees (includes ARCC Part I Fees of $24,036) $ 188,628 $ — $ (5,451 ) $ 183,177 Performance fees 88,379 — (1,371 ) 87,008 Administrative and other fees 13,486 — — 13,486 Total revenues 290,493 — (6,822 ) 283,671 Expenses Compensation and benefits 129,347 — — 129,347 Performance fee compensation 58,637 — — 58,637 General, administrative and other expense 47,104 — — 47,104 Expenses of the Consolidated Funds — 25,862 (6,823 ) 19,039 Total expenses 235,088 25,862 (6,823 ) 254,127 Other income (expense) Investment income and net interest expense (includes interest expense of $5,343) (1,606 ) — (225 ) (1,831 ) Other expense, net (2,492 ) — — (2,492 ) Net realized and unrealized gain on investments 17,724 — (10,515 ) 7,209 Investment income and net interest income of the Consolidated Funds (includes interest expense of $28,127) — 7,169 12,885 20,054 Net realized and unrealized gain on investments of the Consolidated Funds — 48,058 (12,118 ) 35,940 Total other income 13,626 55,227 (9,973 ) 58,880 Income before taxes 69,031 29,365 (9,972 ) 88,424 Income tax expense 3,354 1,198 — 4,552 Net income 65,677 28,167 (9,972 ) 83,872 Less: Net income attributable to non-controlling interests in Consolidated Funds — 28,167 (9,972 ) 18,195 Less: Net income attributable to non-controlling interests in Ares Operating Group entities 37,839 — — 37,839 Net income attributable to Ares Management, L.P. 27,838 — — 27,838 Less: Preferred equity distributions paid 5,425 — — 5,425 Net income attributable to Ares Management, L.P. common unitholders $ 22,413 $ — $ — $ 22,413 For the Three Months Ended September 30, 2016 Consolidated Consolidated Eliminations Consolidated Revenues Management fees (includes ARCC Part I Fees of $33,260) $ 168,796 $ — $ (5,187 ) $ 163,609 Performance fees 165,281 — (799 ) 164,482 Administrative and other fees 7,369 — — 7,369 Total revenues 341,446 — (5,986 ) 335,460 Expenses Compensation and benefits 111,916 — — 111,916 Performance fee compensation 123,173 — — 123,173 General, administrative and other expense 38,197 — — 38,197 Expenses of the Consolidated Funds — 16,068 (5,980 ) 10,088 Total expenses 273,286 16,068 (5,980 ) 283,374 Other income (expense) Investment income and net interest expense (includes interest expense of $4,136) (675 ) — (1,006 ) (1,681 ) Other income, net 23,042 — — 23,042 Net realized and unrealized gain on investments 26,340 — (6,982 ) 19,358 Investment income and net interest income of the Consolidated Funds (includes interest expense of $26,413) — 6,525 2,212 8,737 Net realized and unrealized gain on investments of the Consolidated Funds — 23,656 227 23,883 Total other income 48,707 30,181 (5,549 ) 73,339 Income before taxes 116,867 14,113 (5,555 ) 125,425 Income tax expense 6,944 697 — 7,641 Net income 109,923 13,416 (5,555 ) 117,784 Less: Net income attributable to non-controlling interests in Consolidated Funds — 13,416 (5,555 ) 7,861 Less: Net income attributable to redeemable interests in Ares Operating Group entities 107 — — 107 Less: Net income attributable to non-controlling interests in Ares Operating Group entities 66,511 — — 66,511 Net income attributable to Ares Management, L.P. 43,305 — — 43,305 Less: Preferred equity distributions paid 6,751 — — 6,751 Net income attributable to Ares Management, L.P. common unitholders $ 36,554 $ — $ — $ 36,554 For the Nine Months Ended September 30, 2017 Consolidated Entities Consolidated Eliminations Consolidated Revenues Management fees (includes ARCC Part I Fees of $76,436) $ 550,969 $ — $ (14,979 ) $ 535,990 Performance fees 483,963 — (3,759 ) 480,204 Administrative and other fees 43,024 — — 43,024 Total revenues 1,077,956 — (18,738 ) 1,059,218 Expenses Compensation and benefits 384,905 — — 384,905 Performance fee compensation 361,044 — — 361,044 General, administrative and other expense 145,193 — — 145,193 Transaction support expense 275,177 — — 275,177 Expenses of the Consolidated Funds — 45,196 (17,724 ) 27,472 Total expenses 1,166,319 45,196 (17,724 ) 1,193,791 Other income (expense) Investment income and net interest expense (includes interest expense of $15,576) (4,064 ) — (2,154 ) (6,218 ) Other income, net 16,826 — — 16,826 Net realized and unrealized gain on investments 61,052 — (21,109 ) 39,943 Investment income and net interest income of the Consolidated Funds (includes interest expense of $86,324) — 11,072 30,603 41,675 Net realized and unrealized gain on investments of the Consolidated Funds — 79,450 (24,187 ) 55,263 Total other income 73,814 90,522 (16,847 ) 147,489 Income (loss) before taxes (14,549 ) 45,326 (17,861 ) 12,916 Income tax expense (benefit) (30,521 ) 2,062 — (28,459 ) Net income 15,972 43,264 (17,861 ) 41,375 Less: Net income attributable to non-controlling interests in Consolidated Funds — 43,264 (17,861 ) 25,403 Less: Net loss attributable to non-controlling interests in Ares Operating Group entities (20,610 ) — — (20,610 ) Net income attributable to Ares Management, L.P. 36,582 — — 36,582 Less: Preferred equity distributions paid 16,275 — — 16,275 Net income attributable to Ares Management, L.P. common unitholders $ 20,307 $ — $ — $ 20,307 For the Nine Months Ended September 30, 2016 Consolidated Consolidated Eliminations Consolidated Revenues Management fees (includes ARCC Part I Fees of $90,884) $ 494,076 $ — $ (13,513 ) $ 480,563 Performance fees 337,612 — 74 337,686 Administrative and other fees 22,761 — — 22,761 Total revenues 854,449 — (13,439 ) 841,010 Expenses Compensation and benefits 335,249 — — 335,249 Performance fee compensation 253,739 — — 253,739 General, administrative and other expense 116,845 — — 116,845 Expenses of the Consolidated Funds — 27,334 (16,320 ) 11,014 Total expenses 705,833 27,334 (16,320 ) 716,847 Other income (expense) Investment income and net interest income (expense) (includes interest expense of $13,819) 3,177 — (3,224 ) (47 ) Other income, net 33,956 — — 33,956 Net realized and unrealized gain on investments 17,491 — 3,858 21,349 Investment income and net interest income of the Consolidated Funds (includes interest expense of $67,469) — 20,133 5,626 25,759 Net realized and unrealized loss on investments of the Consolidated Funds — (5,588 ) (135 ) (5,723 ) Total other income 54,624 14,545 6,125 75,294 Income (loss) before taxes 203,240 (12,789 ) 9,006 199,457 Income tax expense (benefit) 8,587 (719 ) — 7,868 Net income (loss) 194,653 (12,070 ) 9,006 191,589 Less: Net loss attributable to non-controlling interests in Consolidated Funds — (12,070 ) 9,006 (3,064 ) Less: Net income attributable to redeemable interests in Ares Operating Group entities 456 — — 456 Less: Net income attributable to non-controlling interests in Ares Operating Group entities 116,404 — — 116,404 Net income attributable to Ares Management, L.P. 77,793 — — 77,793 Less: Preferred equity distributions paid 6,751 — — 6,751 Net income attributable to Ares Management, L.P. common unitholders $ 71,042 $ — $ — $ 71,042 |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 9 Months Ended |
Sep. 30, 2017 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | SUBSEQUENT EVENTS The Company evaluated all events or transactions that occurred after September 30, 2017 through the date the condensed consolidated financial statements were issued. During this period the Company had the following material subsequent events that require disclosure: In November 2017, the board of directors of the Company's general partner declared a quarterly distribution of $0.41 per common unit to common unitholders of record at the close of business on November 17, 2017 , with a payment date of December 1, 2017 . In November 2017, the board of directors of the Company's general partner declared a quarterly distribution of $0.4375 per preferred equity unit to preferred equity unitholders of record at the close of business on December 15, 2017 , with a payment date of December 31, 2017 . |
SUMMARY OF SIGNIFICANT ACCOUN25
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 9 Months Ended |
Sep. 30, 2017 | |
Accounting Policies [Abstract] | |
Basis of Accounting | 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. 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 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, 2016 filed with the SEC. The condensed consolidated financial statements include the accounts and activities of the AOG entities, their consolidated subsidiaries and certain Consolidated Funds. These Consolidated Funds include certain Ares-affiliated funds, related co-investment entities and collateralized loan obligations (“CLOs”) (collectively, the “Consolidated Funds”) managed by Ares Management LLC (“AM LLC”) and its wholly owned subsidiaries. Including the results of the Consolidated Funds significantly increases the reported amounts of the assets, liabilities, revenues, expenses and cash flows in the accompanying condensed consolidated financial statements; however, the Consolidated Funds results included herein have no direct effect on the net income attributable to controlling interests or on total controlling equity. Instead, economic ownership interests of the investors in the Consolidated Funds are reflected as non-controlling interests in Consolidated Funds in the accompanying condensed consolidated financial statements. Further, cash flows allocable to non-controlling interest in Consolidated Funds are specifically identifiable in the Condensed Consolidated Statements of Cash Flows. All intercompany balances and transactions have been eliminated upon consolidation. |
Reclassifications | The Company has reclassified certain prior period amounts to conform to the current year presentation. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements The Company considers the applicability and impact of all Financial Accounting Standards Board (“FASB") Accounting Standards Updates ("ASU") issued. ASUs not listed below were assessed and either determined to be not applicable or expected to have minimal impact on the Company's condensed consolidated financial statements. Revenue Recognition: In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606). ASU 2014-09 requires entities to recognize revenue in a way that depicts the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled to in exchange for those goods or services. The guidance includes a five-step framework that requires an entity to: (i) identify the contract(s) with a customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, (iv) allocate the transaction price to the performance obligations in the contract, and (v) recognize revenue when the entity satisfies a performance obligation. This ASU provides alternative methods of adoption. In August 2015, the FASB issued ASU 2015-14, Revenue from Contracts with Customers, Deferral of the Effective Date. ASU 2015-14 defers the effective date of ASU 2014-09 by one year to December 15, 2017 for fiscal years, and interim periods within those years, beginning after that date and permits early adoption of the standard, but not before the original effective date for fiscal years beginning after December 15, 2016. In March, April and May 2016, the FASB issued additional ASUs clarifying certain aspects of ASU 2014-09. The core principle of ASU 2014-09 was not changed by the additional guidance. During 2016, four ASUs: ASU 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations; ASU 2016-10, Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing; ASU 2016-12, Revenue from Contracts with Customers (Topic 606): Narrow Scope Improvements and Practical Expedients; and ASU 2016-20 , Technical Corrections and Improvements to Topic 606, Revenue from Contracts with Customers , were issued to provide clarification to previously issued revenue recognition guidance (ASU 2014-09) that has not yet been implemented. These updates are required to be adopted with ASU 2014-09, but are not expected to change its application by the Company. The Company has substantially completed its assessment of the impact of the revenue recognition guidance. The assessment includes a detailed review of investment management agreements, establishing which agreements are expected to be in place, and understanding when revenue would be recognized under those agreements. Accordingly, the Company has preliminarily concluded that carried interests, which are a performance-based capital allocation to the Company based on cumulative fund performance to date, represent equity method investments that are not in the scope of the amended revenue recognition guidance. Effective January 1, 2018, the Company will change its policy for recognition and measurement of carried interest. This accounting policy change will not change the timing or amount of revenue recognized related to carried interest. These amounts are currently recognized within performance fees in the Condensed Consolidated Statements of Operations. Under the equity method of accounting the Company will recognize its allocations of carried interest or incentive fees along with the allocations proportionate to the Company’s ownership in each fund. The Company will apply a full retrospective application and prior periods presented will be recast. The impact of adoption will be a reclassification of carried interest to equity income and will have no impact on net income (loss) attributable to Ares Management, L.P. The Company has preliminarily concluded that the majority of its performance-based incentive fees are within the scope of the amended revenue recognition guidance. This accounting change will delay recognition of unrealized incentive fees compared to our current accounting treatment, and it is not expected to have a material impact on the Company’s financial statements. The Company has evaluated the impact of the amended revenue recognition guidance on other revenue streams including management fees and it is not expected to have a material impact on its financial statements. The Company is still evaluating considerations for reporting certain revenues gross versus net. Other Guidance: In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). The objective of the guidance in ASU 2016-02 is to increase transparency and comparability among organizations by recognizing lease assets and liabilities in the balance sheet and disclosing key information. ASU 2016-02 amends previous lease guidance, which required a lessee to categorize and account for leases as either operating leases or capital leases, and instead requires a lessee to recognize a lease liability and a right-of-use asset on the entity’s balance sheet for all leases with terms that exceed one year. The lease liability and right-of-use asset are to be carried at the present value of remaining expected future lease payments. The guidance should be applied using a modified retrospective approach. ASU 2016-02 is effective for public entities for annual reporting periods beginning after December 15, 2018 and interim periods within those reporting periods, with early adoption permitted. The Company is currently compiling all leases and right–of–use terms to evaluate the impact of this guidance on its condensed consolidated financial statements. In January 2017, the FASB issued ASU 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business. ASU 2017-01 clarifies the definition of a business with the objective of adding guidance to assist with evaluating whether a transaction should be accounted for as an acquisition or a disposal of a business. This ASU provides specific evaluation process, and factors that should be used in this determination. The guidance should be applied prospectively. ASU 2017-01 is effective for public entities for annual reporting periods beginning after December 15, 2017 and interim periods within those reporting periods, with early adoption permitted. This guidance will not have a material impact on the Company's condensed consolidated financial statements. In January 2017, the FASB issued ASU 2017-04, Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. Currently, goodwill impairment requires an entity to perform a two-step test to determine the amount of goodwill impairment. In Step 1, an entity compares the fair value of a reporting unit with its carrying amount, including goodwill. If the carrying amount of the reporting unit exceeds its fair value, the entity performs Step 2 and compares the implied fair value of goodwill with the carrying amount of that goodwill for that reporting unit. An impairment charge equal to the amount by which the carrying amount of goodwill for the reporting unit exceeds the implied fair value of that goodwill is recorded, limited to the amount of goodwill allocated to that reporting unit. ASU 2017-04 simplifies the goodwill impairment test by removing Step 2 of the test. An entity will apply a one-step quantitative test and record the amount of goodwill impairment as the excess of a reporting unit's carrying amount over its fair value, not to exceed the total amount of goodwill allocated to the reporting unit. The new guidance does not amend the optional qualitative assessment of goodwill impairment. The guidance should be applied prospectively. ASU 2017-04 is effective for public entities for annual reporting periods beginning after December 15, 2019 and interim periods within those reporting periods, with early adoption permitted. This guidance will not have a material impact on the Company's condensed consolidated financial statements. In February 2017, the FASB issued ASU 2017-05, Other Income-Gains and Losses from the Derecognition of Nonfinancial Assets (Subtopic 610-20): Clarifying the Scope of Asset Derecognition Guidance and Accounting for Partial Sales of Nonfinancial Assets. ASU 2017-05 clarifies the application of current accounting guidance to the derecognition of nonfinancial assets, including partial sales of nonfinancial assets. This ASU specifies that an entity should allocate the consideration to each distinct asset using the guidance established in ASC 606 on allocating the transaction price to performance obligations. For partial sales of nonfinancial assets, ASU 2017-05 also requires an entity to derecognize a portion of the nonfinancial asset when the entity no longer has a controlling financial interest in the legal entity holding the asset and the entity has transferred control of the asset in accordance with ASC 606. Any noncontrolling or retained interest should be measured at fair value. The guidance should be adopted using either a full or modified retrospective approach. ASU 2017-05 is effective for public entities for annual reporting periods beginning after December 15, 2017 and interim periods within those reporting periods, with early adoption permitted. The Company is currently evaluating the impact of this guidance on its condensed consolidated financial statements. In May 2017, the FASB issued ASU 2017-09, Compensation-Stock Compensation (Topic 718): Scope of Modification Accounting. ASU 2017-09 clarifies the application of current accounting guidance to the modification of share-based compensation awards. This ASU specifies that an entity should account for the impact of an award modification in accordance with ASC Topic 718 unless all of the following conditions are met: (i) the fair value of the modified award is the same as the fair value of the original award prior to the modification; (ii) the vesting conditions of the modified award are the same as the original award prior to the modification; and (iii) the classification of the modified award as an equity instrument or liability instrument is the same as the original award. The guidance should be applied prospectively to awards modified on or after the adoption date. ASU 2017-09 is effective for public entities for annual reporting periods beginning after December 15, 2017 and interim periods within those reporting periods, with early adoption permitted. This guidance will not have a material impact on the Company's condensed consolidated financial statements. |
Fair Value Measurements | Fair Value Measurements GAAP establishes a hierarchal disclosure framework that prioritizes the inputs used in measuring financial instruments at fair value into three levels based on their market 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 rates, yield curves, volatilities, prepayment risks, loss severities, credit risks and default rates. • 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. 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. |
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 credit 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. |
GOODWILL AND INTANGIBLE ASSETS
GOODWILL AND INTANGIBLE ASSETS (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of carrying value for the Company's intangible assets | The following table summarizes the carrying value, net of accumulated amortization, for the Company's intangible assets: Weighted Average Amortization Period as of September 30, 2017 As of September 30, As of December 31, 2017 2016 Management contracts 1.9 years $ 67,306 $ 111,939 Client relationships 10.8 years 38,600 38,600 Trade name 4.8 years 3,200 3,200 Intangible assets 109,106 153,739 Foreign currency translation — (3,205 ) Total intangible assets 109,106 150,534 Less: accumulated amortization (64,991 ) (92,219 ) Intangible assets, net $ 44,115 $ 58,315 |
Schedule of goodwill rollforward | The following table summarizes the carrying value of the Company's goodwill assets: Credit Private Real Total Balance as of December 31, 2016 $ 32,196 $ 58,600 $ 52,928 $ 143,724 Foreign currency translation — — 156 156 Balance as of September 30, 2017 $ 32,196 $ 58,600 $ 53,084 $ 143,880 |
INVESTMENTS (Tables)
INVESTMENTS (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Investments In And Advances To Affiliates [Abstract] | |
Summary of investments held | Investments held in the Consolidated Funds are summarized below: Fair value at Fair value as a percentage of total investments at September 30, December 31, September 30, December 31, 2017 2016 2017 2016 United States: Fixed income securities: Consumer discretionary $ 1,124,210 $ 665,773 22.6 % 20.0 % Consumer staples 55,357 64,840 1.1 % 1.9 % Energy 138,687 45,409 2.8 % 1.4 % Financials 234,828 139,285 4.8 % 4.2 % Healthcare, education and childcare 396,747 246,403 8.0 % 7.4 % Industrials 298,186 149,632 6.1 % 4.5 % Information technology 138,390 194,394 2.8 % 5.8 % Materials 163,728 139,994 3.3 % 4.2 % Telecommunication services 337,695 261,771 6.9 % 7.9 % Utilities 54,548 47,800 1.1 % 1.4 % Total fixed income securities (cost: $2,949,788 and $1,945,977 at September 30, 2017 and December 31, 2016, respectively) 2,942,376 1,955,301 59.5 % 58.7 % Equity securities: Energy 158 421 0.0 % 0.0 % Partnership and LLC interests 224,010 171,696 4.6 % 5.2 % Total equity securities (cost: $192,265 and $149,872 at September 30, 2017 and December 31, 2016, respectively) 224,168 172,117 4.6 % 5.2 % Fair value at Fair value as a percentage of total investments at September 30, December 31, September 30, December 31, 2017 2016 2017 2016 Europe: Fixed income securities: Consumer discretionary $ 523,953 $ 274,678 10.6 % 8.2 % Consumer staples 72,446 39,197 1.5 % 1.2 % Financials 43,702 28,769 0.9 % 0.9 % Healthcare, education and childcare 199,823 111,589 4.1 % 3.4 % Industrials 106,808 118,466 2.2 % 3.6 % Information technology 46,512 49,507 0.9 % 1.5 % Materials 235,505 124,629 4.8 % 3.7 % Telecommunication services 143,972 118,632 2.9 % 3.6 % Utilities 9,427 4,007 0.2 % 0.1 % Total fixed income securities (cost: $1,383,866 and $892,108 at September 30, 2017 and December 31, 2016, respectively) 1,382,148 869,474 28.1 % 26.2 % Equity securities: Consumer staples — 1,517 — % 0.0 % Healthcare, education and childcare 57,562 41,329 1.2 % 1.2 % Telecommunication services — 24 — % 0.0 % Total equity securities (cost: $67,198 and $67,290 at September 30, 2017 and December 31, 2016, respectively) 57,562 42,870 1.2 % 1.2 % Asia and other: Fixed income securities: Consumer discretionary 27,950 24,244 0.6 % 0.7 % Financials 22,402 1,238 0.5 % 0.0 % Healthcare, education and childcare — 10,010 — % 0.3 % Telecommunication services 22,830 8,696 0.5 % 0.3 % Total fixed income securities (cost: $73,146 and $46,545 at September 30, 2017 and December 31, 2016, respectively) 73,182 44,188 1.6 % 1.3 % Equity securities: Consumer discretionary 48,161 44,642 1.0 % 1.3 % Consumer staples 47,208 50,101 1.0 % 1.5 % Healthcare, education and childcare 44,637 32,598 0.9 % 1.0 % Industrials 16,578 16,578 0.3 % 0.5 % Total equity securities (cost: $122,418 and $122,418 at September 30, 2017 and December 31, 2016, respectively) 156,584 143,919 3.2 % 4.3 % Fair value at Fair value as a percentage of total investments at September 30, December 31, September 30, December 31, 2017 2016 2017 2016 Canada: Fixed income securities: Consumer discretionary $ 4,093 $ — 0.1 % — % Consumer staples 10,387 5,256 0.2 % 0.2 % Energy 28,459 12,830 0.6 % 0.4 % Healthcare, education and childcare — 15,509 — % 0.5 % Industrials 12,464 1,401 0.3 % 0.0 % Telecommunication services 9,725 13,852 0.2 % 0.4 % Total fixed income securities (cost: $64,567 and $48,274 at September 30, 2017 and December 31, 2016, respectively) 65,128 48,848 1.4 % 1.5 % Equity securities: Consumer discretionary 7,862 164 0.2 % 0.0 % Total equity securities (cost: $17,202 and $408 at September 30, 2017 and December 31, 2016, respectively) 7,862 164 0.2 % 0.0 % Australia: Fixed income securities: Consumer discretionary 3,142 5,627 0.1 % 0.2 % Energy 2,877 6,046 0.1 % 0.2 % Industrials — 2,926 — % 0.1 % Utilities — 21,154 — % 0.6 % Total fixed income securities (cost: $6,910 and $37,975 at September 30, 2017 and December 31, 2016, respectively) 6,019 35,753 0.2 % 1.1 % Equity securities: Utilities — 17,569 — % 0.5 % Total equity securities (cost: $0 and $18,442 at September 30, 2017 and December 31, 2016, respectively) — 17,569 — % 0.5 % Total fixed income securities 4,468,853 2,953,564 90.8 % 88.8 % Total equity securities 446,176 376,639 9.2 % 11.2 % Total investments, at fair value $ 4,915,029 $ 3,330,203 Fair Value Investments, excluding Equity Method Investments Held at Fair Value Fair value at Fair value as a percentage of total investments at September 30, December 31, September 30, December 31, 2017 2016 2017 2016 Private Investment Partnership Interests: AREA Sponsor Holdings, LLC $ 26,002 $ 28,898 4.6 % 6.8 % ACE II Master Fund, L.P. (1)(2) 19,141 22,042 3.4 % 5.2 % Ares Corporate Opportunities Fund III, L.P. 114,674 97,549 20.3 % 22.9 % Ares Corporate Opportunities Fund IV, L.P. (2) 34,990 37,308 6.2 % 8.7 % Resolution Life L.P. 36,439 33,410 6.5 % 7.8 % Other private investment partnership interests (1)(3) 168,732 118,075 30.0 % 27.7 % Total private investment partnership interests (cost: $293,804 and $256,638 at September 30, 2017 and December 31, 2016, respectively) 399,978 337,282 71.0 % 79.1 % Collateralized loan obligations (cost: $163,011 and $89,743 at September 30, 2017 and December 31, 2016, respectively) (3) 162,261 89,111 28.8 % 20.9 % Common stock (cost: $1,132 and $124 at September 30, 2017 and December 31, 2016, respectively) (3) 1,304 100 0.2 % 0.0 % Total fair value investments (cost: $457,947 and $346,505 at September 30, 2017 and December 31, 2016, respectively) $ 563,543 $ 426,493 (1) Investment or portion of the investment is denominated in foreign currency; fair value is translated into U.S. dollars at each reporting date. (2) Represents underlying security that is held through various legal entities. (3) No single issuer or investment had a fair value that exceeded 5% of the Company's total assets. |
Schedule of equity method investments | The Company's equity method investments, including those where the fair value option was elected, are summarized below: As of September 30, As of December 31, 2017 2016 Equity method investment $ 3,081 $ 3,616 Equity method investments at fair value 18,071 21,843 Total equity method investments $ 21,152 $ 25,459 |
Summary of cost and fair value of investments classified as HTM | A summary of the cost and fair value of CLO notes classified as held-to maturity investments is as follows: As of September 30, As of December 31, 2017 2016 Amortized cost $ — $ 16,519 Unrealized loss, net — (116 ) Fair value $ — $ 16,403 |
FAIR VALUE (Tables)
FAIR VALUE (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Fair Value Disclosures [Abstract] | |
Summary of valuation of investments and other financial instruments by fair value hierarchy levels | The tables below summarize the financial assets and financial liabilities measured at fair value for the Company and Consolidated Funds as of September 30, 2017 : Financial Instruments of the Company Level I Level II Level III Investments Total Assets, at fair value Investments: Fixed income-collateralized loan obligations $ — $ — $ 162,261 $ — $ 162,261 Equity securities 300 1,004 — — 1,304 Partnership interests — — 36,439 381,610 418,049 Total investments, at fair value 300 1,004 198,700 381,610 581,614 Derivatives—foreign exchange contracts — 1,310 — — 1,310 Total assets, at fair value $ 300 $ 2,314 $ 198,700 $ 381,610 $ 582,924 Liabilities, at fair value Derivatives—foreign exchange contracts $ — $ (4,194 ) $ — $ — $ (4,194 ) Total liabilities, at fair value $ — $ (4,194 ) $ — $ — $ (4,194 ) Financial Instruments of the Consolidated Funds Level I Level II Level III Total Assets, at fair value Investments: Fixed income investments: Bonds $ — $ 91,683 $ 7,373 $ 99,056 Loans — 4,037,594 312,203 4,349,797 Collateralized loan obligations — 20,000 — 20,000 Total fixed income investments — 4,149,277 319,576 4,468,853 Equity securities 65,150 158 156,858 222,166 Partnership interests — — 224,010 224,010 Total investments, at fair value 65,150 4,149,435 700,444 4,915,029 Derivatives—other — — 1,328 1,328 Total assets, at fair value $ 65,150 $ 4,149,435 $ 701,772 $ 4,916,357 Liabilities, at fair value Derivatives—other $ — $ — $ (201 ) $ (201 ) Loan obligations of CLOs — (4,476,643 ) — (4,476,643 ) Total liabilities, at fair value $ — $ (4,476,643 ) $ (201 ) $ (4,476,844 ) The tables below summarize the financial assets and financial liabilities measured at fair value for the Company and Consolidated Funds as of December 31, 2016 : Financial Instruments of the Company Level I Level II Level III Investments Total Assets, at fair value Investments: Fixed income-collateralized loan obligations $ — $ — $ 89,111 $ — $ 89,111 Equity securities 100 — — — 100 Partnership interests — — 33,410 325,715 359,125 Total investments, at fair value 100 — 122,521 325,715 448,336 Derivatives—foreign exchange contracts — 3,171 — — 3,171 Total assets, at fair value $ 100 $ 3,171 $ 122,521 $ 325,715 $ 451,507 Liabilities, at fair value Contingent considerations $ — $ — $ (22,156 ) $ — $ (22,156 ) Total liabilities, at fair value $ — $ — $ (22,156 ) $ — $ (22,156 ) Financial Instruments of the Consolidated Funds Level I Level II Level III Total Assets, at fair value Investments: Fixed income investments: Bonds $ — $ 104,886 $ 37,063 $ 141,949 Loans — 2,606,423 199,217 2,805,640 Collateralized loan obligations — — 5,973 5,973 Total fixed income investments — 2,711,309 242,253 2,953,562 Equity securities 56,662 17,569 130,690 204,921 Partnership interests — — 171,696 171,696 Other — 24 — 24 Total investments, at fair value 56,662 2,728,902 544,639 3,330,203 Derivatives: Foreign exchange contracts — 529 — 529 Other — — 291 291 Total derivative assets, at fair value — 529 291 820 Total assets, at fair value $ 56,662 $ 2,729,431 $ 544,930 $ 3,331,023 Liabilities, at fair value Derivatives—other $ — $ — $ (2,999 ) $ (2,999 ) Loan obligations of CLOs — (3,031,112 ) — (3,031,112 ) Total liabilities, at fair value $ — $ (3,031,112 ) $ (2,999 ) $ (3,034,111 ) |
Summary of changes in the fair value of the Level III investments | The following tables set forth a summary of changes in the fair value of the Level III measurements for the three months ended September 30, 2017 : Level III Assets Level III Liabilities Level III Assets and Liabilities of the Company Fixed Income Partnership Total Contingent Considerations Balance, beginning of period $ 164,807 $ 33,410 $ 198,217 $ 1,940 Purchases(1) 29,911 — 29,911 — Sales/settlements(2) (33,062 ) — (33,062 ) (1,000 ) Expired contingent considerations — — — (1,000 ) Realized and unrealized appreciation, net 605 3,029 3,634 60 Balance, end of period $ 162,261 $ 36,439 $ 198,700 $ — Increase in unrealized appreciation/depreciation included in earnings related to financial assets and liabilities still held at the reporting date $ 442 $ 3,029 $ 3,471 $ — Level III Assets of Consolidated Funds Equity Securities Fixed Income Partnership Derivatives, Net Total Balance, beginning of period $ 146,274 $ 187,579 $ 217,740 $ 2,809 $ 554,402 Transfer in — 86,420 — — 86,420 Transfer out (271 ) (60,550 ) — (4 ) (60,825 ) Purchases(1) — 139,903 15,000 — 154,903 Sales(2) (3,701 ) (49,783 ) (15,000 ) — (68,484 ) Additions(3) — 14,479 — 1,393 15,872 Settlements, net — — — (3,127 ) (3,127 ) Amortized discounts/premiums — 63 — 101 164 Realized and unrealized appreciation, net 14,556 1,465 6,270 (45 ) 22,246 Balance, end of period $ 156,858 $ 319,576 $ 224,010 $ 1,127 $ 701,571 Increase (decrease) in unrealized appreciation/depreciation included in earnings related to financial assets still held at the reporting date $ 12,830 $ 920 $ 6,270 $ (2,021 ) $ 17,999 (1) Purchases include paid‑in‑kind interest and securities received in connection with restructurings. (2) Sales include distributions, principal redemptions and securities disposed of in connection with restructurings. (3) Additions relate a CLO that was refinanced and restructured that is now consolidated. The following tables set forth a summary of changes in the fair value of the Level III measurements for the three months ended September 30, 2016 : Level III Assets Level III Liabilities Level III Assets and Liabilities of the Company Fixed Income Partnership Total Contingent Considerations Balance, beginning of period $ 54,155 $ 44,746 $ 98,901 $ 41,035 Purchases(1) 4 833 837 — Sales/settlements(2) (943 ) — (943 ) (1,000 ) Realized and unrealized appreciation (depreciation), net 2,721 (12,169 ) (9,448 ) (17,690 ) Balance, end of period $ 55,937 $ 33,410 $ 89,347 $ 22,345 Increase (decrease) in unrealized appreciation/depreciation included in earnings related to financial assets and liabilities still held at the reporting date $ 2,479 $ (6,237 ) $ (3,758 ) $ (17,690 ) Level III Assets of Consolidated Funds Equity Securities Fixed Income Partnership Interests Derivatives, Net Total Balance, beginning of period $ 143,334 $ 237,372 $ 115,440 $ (2,076 ) $ 494,070 Transfer in 18,135 54,202 — — 72,337 Transfer out — (70,910 ) — — (70,910 ) Purchases(1) 6,171 94,527 21,433 — 122,131 Sales(2) (290 ) (45,002 ) (2,933 ) — (48,225 ) Settlements, net — — — (543 ) (543 ) Amortized discounts/premiums — 374 — 214 588 Realized and unrealized appreciation (depreciation), net (2,374 ) 2,077 5,260 2,275 7,238 Balance, end of period $ 164,976 $ 272,640 $ 139,200 $ (130 ) $ 576,686 Increase (decrease) in unrealized appreciation/depreciation included in earnings related to financial assets still held at the reporting date $ (59 ) $ (2,977 ) $ 5,261 $ 2,143 $ 4,368 (1) Purchases include paid‑in‑kind interest and securities received in connection with restructurings. (2) Sales include distributions, principal redemptions and securities disposed of in connection with restructurings. 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, 2017 : Level III Assets Level III Liabilities Level III Assets and Liabilities of the Company Fixed Income Partnership Total Contingent Considerations Balance, beginning of period $ 89,111 $ 33,410 $ 122,521 $ 22,156 Purchases(1) 110,595 169 110,764 — Sales/settlements(2) (38,303 ) — (38,303 ) (1,000 ) Expired contingent considerations — — — (1,000 ) Realized and unrealized appreciation (depreciation), net 858 2,860 3,718 (20,156 ) Balance, end of period $ 162,261 $ 36,439 $ 198,700 $ — Increase (decrease) in unrealized appreciation/depreciation included in earnings related to financial assets and liabilities still held at the reporting date $ 29 $ 3,029 $ 3,058 $ — Level III Assets of Consolidated Funds Equity Securities Fixed Income Partnership Derivatives, Net Total Balance, beginning of period $ 130,690 $ 242,253 $ 171,696 $ (2,708 ) $ 541,931 Transfer in — 48,646 — — 48,646 Transfer out (6,581 ) (100,228 ) — (4 ) (106,813 ) Purchases(1) 6,692 224,600 88,000 — 319,292 Sales(2) (3,701 ) (114,286 ) (45,000 ) — (162,987 ) Additions(3) — 14,479 — 1,393 15,872 Settlements, net — — — (976 ) (976 ) Amortized discounts/premiums — 132 — 317 449 Realized and unrealized appreciation, net 29,758 3,980 9,314 3,105 46,157 Balance, end of period $ 156,858 $ 319,576 $ 224,010 $ 1,127 $ 701,571 Increase (decrease) in unrealized appreciation/depreciation included in earnings related to financial assets still held at the reporting date $ 19,175 $ (429 ) $ 9,314 $ (787 ) $ 27,273 (1) Purchases include paid‑in‑kind interest and securities received in connection with restructurings. (2) Sales include distributions, principal redemptions and securities disposed of in connection with restructurings. (3) Additions relate to a CLO that was refinanced and restructured that is now consolidated. |
Summary of quantitative inputs and assumptions used for Level III inputs | The following table summarizes the quantitative inputs and assumptions used for the Company’s Level III measurements as of September 30, 2017 : Fair Value Valuation Technique(s) Significant Unobservable Input(s) Range Assets Partnership interests $ 36,439 Other N/A N/A Collateralized loan obligations 162,261 Broker quotes and/or 3rd party pricing services N/A N/A Total $ 198,700 The following table summarizes the quantitative inputs and assumptions used for the Company’s Level III measurements as of December 31, 2016 : Fair Value Valuation Technique(s) Significant Unobservable Input(s) Range Assets Partnership interests $ 33,410 Other N/A N/A Collateralized loan obligations 89,111 Broker quotes and/or 3rd party pricing services N/A N/A Total $ 122,521 Liabilities Contingent consideration liabilities $ 20,278 Other N/A N/A 1,878 Discounted cash flow Discount rate 6.5% Total $ 22,156 The following table summarizes the quantitative inputs and assumptions used for the Consolidated Funds’ Level III measurements as of September 30, 2017 : Fair Value Valuation Technique(s) Significant Unobservable Input(s) Range Weighted Assets Equity securities $ 57,562 Enterprise value market multiple analysis EBITDA multiple(2) 2.8x 2.8x 61,215 Market approach (comparable companies) Net income multiple 30.0x - 45.0x 34.7x 224,010 Discounted cash flow Discount rate 18.5% 18.5% 38,081 Recent transaction price(1) N/A N/A N/A Fixed income securities 238,764 Broker quotes and/or 3rd party pricing services N/A N/A N/A 80,590 Income approach Yield 4.9% - 14.3% 9.4% 222 Market approach (comparable companies) EBITDA multiple(2) 5.6x 5.6x Derivative instruments of Consolidated Funds 1,328 Broker quotes and/or 3rd party pricing services N/A N/A N/A Total assets $ 701,772 Liabilities Derivatives instruments of Consolidated Funds $ (201 ) Broker quotes and/or 3rd party pricing services N/A N/A N/A Total liabilities $ (201 ) (1) Recent transaction price consists of securities recently 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. The following table summarizes the quantitative inputs and assumptions used for the Consolidated Funds’ Level III measurements as of December 31, 2016 : Fair Value Valuation Technique(s) Significant Unobservable Input(s) Range Weighted Average Assets Equity securities $ 43,011 Enterprise value market multiple analysis EBITDA multiple(2) 2.0x - 11.2x 2.3x 32,598 Market approach (comparable companies) Net income multiple 30.0x - 40.0x 35.0x 421 Broker quotes and/or 3rd party pricing services N/A N/A N/A 171,696 Discounted cash flow Discount rate 20% 20% 54,660 Recent transaction price(1) N/A N/A N/A Fixed income securities 170,231 Broker quotes and/or 3rd party pricing services N/A N/A N/A 6,693 Enterprise value market multiple analysis EBITDA multiple(2) 7.1x 7.1x 5,473 Income approach Collection rates 1.2x 1.2x 28,595 Income approach Yield 6.0% - 13.6% 10.9% 24,052 Discounted cash flow Discount rate 7.8% - 15.3% 11.1% 1,776 Market approach (comparable companies) EBITDA multiple(2) 6.5x 6.5x 4,887 Recent transaction price(1) N/A N/A N/A 546 Market approach EBITDA multiple(2) 6.1x 6.1x Derivative instruments of Consolidated Funds 291 Broker quotes and/or 3rd party pricing services N/A N/A N/A Total assets $ 544,930 Liabilities Derivatives instruments of Consolidated Funds $ (2,999 ) Broker quotes and/or 3rd party pricing services N/A N/A N/A Total liabilities $ (2,999 ) (1) Recent 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. |
Summary of fair value by segment along with the remaining unfunded commitment and any redemption restriction of investments valued using NAV per share | The Company's investments valued using net asset value (“NAV”) per share have terms and conditions that do not allow for redemption without certain events or approvals that are outside the Company's control. A summary of fair value by segment and the remaining unfunded commitments are presented below: As of September 30, 2017 As of December 31, 2016 Segment Fair Value Unfunded Fair Value Unfunded Credit Group $ 77,220 $ 79,303 $ 53,131 $ 30,896 Private Equity Group 188,615 91,311 181,096 96,687 Real Estate Group 83,484 48,816 71,669 35,708 Non-core investments(1) 32,291 20,023 19,819 34,500 Totals $ 381,610 $ 239,453 $ 325,715 $ 197,791 (1) Non-core investments are reported within the Company's Operations Management Group ("OMG"). |
DERIVATIVE FINANCIAL INSTRUME29
DERIVATIVE FINANCIAL INSTRUMENTS (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Schedule of fair value and notional amounts of derivative contracts by major product type on a gross basis | 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 September 30, 2017 and December 31, 2016 : As of September 30, 2017 As of December 31, 2016 Assets Liabilities Assets Liabilities The Company Notional(1) Fair Value Notional(1) Fair Value Notional(1) Fair Value Notional(1) Fair Value Foreign exchange contracts $ 37,907 $ 1,310 $ 124,536 $ 4,194 $ 62,830 $ 3,171 $ — $ — Total derivatives, at fair value(2) $ 37,907 $ 1,310 $ 124,536 $ 4,194 $ 62,830 $ 3,171 $ — $ — As of September 30, 2017 As of December 31, 2016 Assets Liabilities Assets Liabilities Consolidated Funds Notional(1) Fair Value Notional(1) Fair Value Notional(1) Fair Value Notional(1) Fair Value Foreign exchange contracts $ — $ — $ — $ — $ 25,304 $ 529 $ — $ — Other financial instruments 6,071 1,328 (2,368 ) (201 ) 3,575 291 (204 ) (2,999 ) Total derivatives, at fair value(3) 6,071 1,328 (2,368 ) (201 ) 28,879 820 (204 ) (2,999 ) Other—equity(4) — — — — 253 24 — — Total $ 6,071 $ 1,328 $ (2,368 ) $ (201 ) $ 29,132 $ 844 $ (204 ) $ (2,999 ) (1) Represents the total contractual amount of derivative assets and liabilities outstanding. (2) As of September 30, 2017 , the Company had the right to, but elected not to, offset $1.3 million of its derivative assets and liabilities. As of December 31, 2016 , the Company did not have any derivative liabilities to offset its derivative assets. (3) As of September 30, 2017 and December 31, 2016 , the Consolidated Funds offset $0.7 million and $1.4 million of their derivative assets and liabilities, respectively. (4) Represents the fair value of warrants which are presented as equity securities within investments of the Consolidated Funds in the Condensed Consolidated Statements of Financial Condition. |
DEBT (Tables)
DEBT (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Debt Disclosure [Abstract] | |
Schedule of borrowings outstanding | The following table shows the activity of the Company's debt issuance costs: Credit Facility Senior Notes Term Loans Unamortized debt issuance costs as of December 31, 2016 $ 4,800 $ 1,803 $ 526 Debt issuance costs incurred 3,387 — 253 Amortization of debt issuance costs (1,258 ) (174 ) (48 ) Unamortized debt issuance costs as of September 30, 2017 $ 6,929 $ 1,629 $ 731 As of September 30, 2017 and December 31, 2016 the following loan obligations were outstanding and classified as liabilities of the Company’s Consolidated CLOs: As of September 30, 2017 As of December 31, 2016 Loan Obligations Fair Value of Loan Obligations Weighted Loan Fair Value of Loan Obligations Weighted Average Remaining Maturity In Years Senior secured notes(1) $ 4,298,009 $ 4,279,766 10.56 $ 2,839,779 $ 2,841,440 9.68 Subordinated notes(2) 274,341 196,877 11.15 284,046 189,672 9.97 Total loan obligations of Consolidated CLOs $ 4,572,350 $ 4,476,643 $ 3,123,825 $ 3,031,112 (1) Original borrowings under the senior secured notes totaled $4.3 billion , with various maturity dates ranging from October 2024 to April 2030. The weighted average interest rate as of September 30, 2017 was 4.25% . (2) Original borrowings under the subordinated notes totaled $274.3 million , with various maturity dates ranging from October 2024 to April 2030. They do not have contractual interest rates, but instead receive distributions from the excess cash flows generated by each Consolidated CLO. The Consolidated Funds had the following revolving bank credit facilities and term loan outstanding as of September 30, 2017 and December 31, 2016 : As of September 30, 2017 As of December 31, 2016 Consolidated Funds' Debt Facilities Maturity Date Total Capacity Outstanding Loan(1) Effective Rate Outstanding Loan(1) Effective Rate Credit Facilities: 1/1/2023 $ 18,000 $ 12,942 2.75% $ 12,942 2.38% 6/30/2018 47,284 30,599 1.55% (2) 42,128 1.55% (2) 3/7/2018 71,500 71,500 2.62% N/A N/A Revolving Term Loan 8/19/2019 11,429 6,220 5.74% N/A N/A Total borrowings $ 121,261 $ 55,070 (1) The fair values of the borrowings approximate the carrying value as the interest rate on the borrowings is a floating rate. (2) The effective rate is based on the three month EURIBOR or zero , whichever is higher, plus an applicable margin. The following table summarizes the Company’s and its subsidiaries’ debt obligations: As of September 30, 2017 As of December 31, 2016 Debt Origination Date Maturity Original Borrowing Amount Carrying Interest Rate Carrying Interest Rate Credit Facility(1) Revolver 2/24/2022 N/A $ 110,000 2.75% $ — —% Senior Notes(2) 10/8/2014 10/8/2024 $ 250,000 245,149 4.21% 244,684 4.21% 2015 Term Loan(3) 9/2/2015 7/29/2026 $ 35,205 35,032 2.79% 35,063 2.74% 2016 Term Loan(4) 12/21/2016 1/15/2029 $ 26,376 25,999 3.02% 26,037 2.66% 2017 Term Loan A(4) 3/22/2017 1/22/2028 $ 17,600 17,474 2.70% N/A N/A 2017 Term Loan B(4) 5/10/2017 10/15/2029 $ 35,198 35,147 2.63% N/A N/A 2017 Term Loan C(4) 6/22/2017 7/30/2029 $ 17,211 17,206 2.75% N/A N/A Total debt obligations $ 486,007 $ 305,784 (1) The AOG entities are borrowers under the Credit Facility, which, as amended in February 2017 and increased in September 2017, provides a $1.065 billion revolving line of credit. It has a variable interest rate based on LIBOR or a base rate plus an applicable margin with an unused commitment fee paid quarterly, which is subject to change with the Company’s underlying credit agency rating. As of September 30, 2017, base rate loans bear interest calculated based on the base rate plus 0.50% and the LIBOR rate loans bear interest calculated based on LIBOR plus 1.50%. The unused commitment fee is 0.20% per annum. There is a base rate and LIBOR floor of zero . (2) The Senior Notes were issued in October 2014 by Ares Finance Co. LLC, a subsidiary of the Company, at 98.268% of the face amount with interest paid semi-annually. The Company may redeem the Senior Notes prior to maturity, subject to the terms of the indenture . (3) The 2015 Term Loan was entered into in August 2015 by a subsidiary of the Company that acts as a manager to a CLO. The 2015 Term Loan is secured by collateral in the form of CLO senior tranches owned by the Company. To the extent the assets are not sufficient to cover the Term Loan, there is no further recourse to the Company to fund or repay the remaining balance. Interest is paid quarterly, and the Company also pays a fee of 0.025% of a maximum investment amount . (4) The 2016 and 2017 Term Loans ("Term Loans") were entered into by a subsidiary of the Company that acts as a manager to a CLO. The Term Loans are secured by collateral in the form of CLO senior tranches and subordinated notes owned by the Company. Collateral associated with one of the Term Loans may be used to satisfy outstanding liabilities of another term loan should the collateral fall short. To the extent the assets associated with these Term Loans are not sufficient, there is no further recourse to the Company to fund or repay the remaining balance. Interest is paid quarterly, and the Company also pays a fee of 0.03% of a maximum investment amount. |
RELATED PARTY TRANSACTIONS (Tab
RELATED PARTY TRANSACTIONS (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Related Party Transactions [Abstract] | |
Schedule of amounts due from and to affiliates | 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 September 30, As of December 31, 2017 2016 Due from affiliates: Management fees receivable from non-consolidated funds $ 120,242 $ 123,781 Payments made on behalf of and amounts due from non-consolidated funds and employees 41,190 39,155 Due from affiliates—Company $ 161,432 $ 162,936 Amounts due from portfolio companies and non-consolidated funds $ 8,047 $ 3,592 Due from affiliates—Consolidated Funds $ 8,047 $ 3,592 Due to affiliates: Management fee rebate payable to non-consolidated funds $ 4,822 $ 7,914 Management fees received in advance 4,608 1,788 Tax receivable agreement liability 4,748 4,748 Payments made by non-consolidated funds on behalf of and payable by the Company 3,029 3,114 Due to affiliates—Company $ 17,207 $ 17,564 |
EARNINGS PER COMMON UNIT (Table
EARNINGS PER COMMON UNIT (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Earnings Per Share [Abstract] | |
Schedule of antidilutive securities excluded from earnings per common unit | The computation of diluted earnings per common unit for the three and nine months ended September 30, 2017 and 2016 excludes the following options, restricted units and AOG Units, as their effect would have been anti-dilutive: For the Three Months Ended For the Nine Months Ended 2017 2016 2017 2016 Options 21,022,924 22,164,772 21,170,880 23,008,147 Restricted units 13,742,856 — 14,223,345 62,909 AOG units 130,192,448 130,852,861 130,280,878 131,858,404 |
Schedule of the computation of basic and diluted earnings per common unit | The following table presents the computation of basic and diluted earnings per common unit: For the Three Months Ended For the Nine Months Ended 2017 2016 2017 2016 Net income attributable to Ares Management, L.P. common unitholders $ 22,413 $ 36,554 $ 20,307 $ 71,042 Earnings distributed to participating securities (restricted units) (1,003 ) (480 ) (2,248 ) (895 ) Preferred stock dividends(1) — — — (8 ) Net income available to common unitholders $ 21,410 $ 36,074 $ 18,059 $ 70,139 Basic weighted-average common units 82,166,852 80,793,984 81,704,815 80,741,460 Basic earnings per common unit $ 0.26 $ 0.45 $ 0.22 $ 0.87 Net income attributable to Ares Management, L.P. common unitholders $ 22,413 $ 36,554 $ 20,307 $ 71,042 Earnings distributed to participating securities (restricted units) (1,003 ) — (2,248 ) — Preferred stock dividends(1) — — — (8 ) Net income available to common unitholders $ 21,410 $ 36,554 $ 18,059 $ 71,034 Effect of dilutive units: Restricted units — 3,670,607 — 1,925,589 Diluted weighted-average common units 82,166,852 84,464,591 81,704,815 82,667,049 Diluted earnings per common unit $ 0.26 $ 0.43 $ 0.22 $ 0.86 (1) Dividends relate to the preferred shares that were issued by Ares Real Estate Holdings LLC and were redeemed on July 1, 2016. |
EQUITY COMPENSATION (Tables)
EQUITY COMPENSATION (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Schedule of equity-based compensation expense, net of assumed forfeitures | Equity-based compensation expense, net of forfeitures is included in the following table: For the Three Months Ended For the Nine Months Ended 2017 2016 2017 2016 Restricted units $ 14,555 $ 5,350 $ 40,375 $ 14,797 Options 3,224 2,693 10,637 11,153 Phantom units 312 433 1,085 1,235 Equity-based compensation expense $ 18,091 $ 8,476 $ 52,097 $ 27,185 |
Summary of unvested restricted units' activity | The following table presents unvested restricted units’ activity during the nine months ended September 30, 2017 : Restricted Units Weighted Average Grant Date Fair Value Per Unit Balance - January 1, 2017 8,058,372 $ 16.38 Granted 7,944,144 18.61 Vested (1,833,422 ) 16.56 Forfeited (426,238 ) 17.82 Balance - September 30, 2017 13,742,856 $ 17.58 |
Summary of unvested options activity | A summary of options activity during the nine months ended September 30, 2017 is presented below: Options Weighted Average Exercise Price Weighted Average Remaining Life (in years) Aggregate Intrinsic Value Balance - January 1, 2017 22,232,134 $ 18.99 7.35 Granted — — — Exercised (54,500 ) 19.00 — Expired (433,609 ) 19.00 — Forfeited (721,101 ) 19.00 — Balance - September 30, 2017 21,022,924 $ 18.99 6.56 $ — Exercisable at September 30, 2017 7,106,989 $ 19.00 6.56 $ — |
Summary of unvested phantom units activity | A summary of unvested phantom unit activity during the nine months ended September 30, 2017 is presented below: Phantom Units Weighted Average Balance - January 1, 2017 266,138 $ 19.00 Vested (87,222 ) 19.00 Forfeited (20,872 ) 19.00 Balance - September 30, 2017 158,044 $ 19.00 |
SEGMENT REPORTING (Tables)
SEGMENT REPORTING (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Segment Reporting [Abstract] | |
Schedule of financial results for Company's operating segments, as well as the OMG | The following table presents the financial results for the Company’s operating segments, as well as the OMG, for the three months ended September 30, 2017 : Credit Group Private Equity Group Real Total OMG Total Management fees (Credit Group includes ARCC Part I Fees of $24,036) $ 120,178 $ 51,313 $ 17,137 $ 188,628 $ — $ 188,628 Other fees 5,668 449 27 6,144 — 6,144 Compensation and benefits (46,551 ) (19,256 ) (11,398 ) (77,205 ) (27,577 ) (104,782 ) General, administrative and other expenses (6,851 ) (4,655 ) (2,125 ) (13,631 ) (18,380 ) (32,011 ) Fee related earnings 72,444 27,851 3,641 103,936 (45,957 ) 57,979 Performance fees—realized 3,296 173,304 2,389 178,989 — 178,989 Performance fees—unrealized 33,033 (142,822 ) 20,366 (89,423 ) — (89,423 ) Performance fee compensation—realized (1,466 ) (138,657 ) (856 ) (140,979 ) — (140,979 ) Performance fee compensation—unrealized (19,820 ) 114,395 (12,233 ) 82,342 — 82,342 Net performance fees 15,043 6,220 9,666 30,929 — 30,929 Investment income—realized 6,206 14,268 1,997 22,471 18 22,489 Investment income (loss)—unrealized (1,123 ) (8,421 ) (767 ) (10,311 ) 4,357 (5,954 ) Interest and other investment income (expense) (540 ) 1,129 716 1,305 26 1,331 Interest expense (3,277 ) (1,229 ) (396 ) (4,902 ) (441 ) (5,343 ) Net investment income 1,266 5,747 1,550 8,563 3,960 12,523 Performance related earnings 16,309 11,967 11,216 39,492 3,960 43,452 Economic net income $ 88,753 $ 39,818 $ 14,857 $ 143,428 $ (41,997 ) $ 101,431 Distributable earnings $ 73,120 $ 75,809 $ 4,736 $ 153,665 $ (53,214 ) $ 100,451 The following table presents the financial results for the Company’s operating segments, as well as the OMG, for the three months ended September 30, 2016 : Credit Group Private Equity Group Real Total OMG Total Management fees (Credit Group includes ARCC Part I Fees of $33,260) $ 115,794 $ 35,183 $ 17,819 $ 168,796 $ — $ 168,796 Other fees 280 309 162 751 — 751 Compensation and benefits (45,222 ) (16,697 ) (9,459 ) (71,378 ) (25,960 ) (97,338 ) General, administrative and other expenses (7,274 ) (3,925 ) (2,289 ) (13,488 ) (13,386 ) (26,874 ) Fee related earnings 63,578 14,870 6,233 84,681 (39,346 ) 45,335 Performance fees—realized 22,422 108,245 2,170 132,837 — 132,837 Performance fees—unrealized 11,152 16,569 4,647 32,368 — 32,368 Performance fee compensation—realized (7,241 ) (86,537 ) — (93,778 ) — (93,778 ) Performance fee compensation—unrealized (11,686 ) (13,387 ) (4,322 ) (29,395 ) — (29,395 ) Net performance fees 14,647 24,890 2,495 42,032 — 42,032 Investment income (loss)—realized 588 11,267 (151 ) 11,704 (20,005 ) (8,301 ) Investment income—unrealized 5,460 7,066 6,211 18,737 15,979 34,716 Interest and other investment income 5,940 417 714 7,071 15 7,086 Interest expense (1,831 ) (1,399 ) (242 ) (3,472 ) (664 ) (4,136 ) Net investment income (loss) 10,157 17,351 6,532 34,040 (4,675 ) 29,365 Performance related earnings 24,804 42,241 9,027 76,072 (4,675 ) 71,397 Economic net income $ 88,382 $ 57,111 $ 15,260 $ 160,753 $ (44,021 ) $ 116,732 Distributable earnings $ 81,542 $ 45,481 $ 6,408 $ 133,431 $ (66,696 ) $ 66,735 The following table presents the financial results for the Company’s operating segments, as well as the OMG, for the nine months ended September 30, 2017 : Credit Group Private Equity Group Real Total OMG Total Management fees (Credit Group includes ARCC Part I Fees of $76,436) $ 354,179 $ 147,559 $ 49,231 $ 550,969 $ — $ 550,969 Other fees 15,834 1,127 37 16,998 — 16,998 Compensation and benefits (142,647 ) (50,862 ) (30,848 ) (224,357 ) (84,881 ) (309,238 ) General, administrative and other expenses (22,766 ) (13,198 ) (7,947 ) (43,911 ) (56,729 ) (100,640 ) Fee related earnings 204,600 84,626 10,473 299,699 (141,610 ) 158,089 Performance fees—realized 19,957 238,084 3,883 261,924 — 261,924 Performance fees—unrealized 41,062 118,162 64,243 223,467 — 223,467 Performance fee compensation—realized (8,649 ) (189,571 ) (1,033 ) (199,253 ) — (199,253 ) Performance fee compensation—unrealized (27,357 ) (95,131 ) (39,303 ) (161,791 ) — (161,791 ) Net performance fees 25,013 71,544 27,790 124,347 — 124,347 Investment income—realized 9,049 17,564 4,153 30,766 3,217 33,983 Investment income (loss)—unrealized 16 25,479 (77 ) 25,418 222 25,640 Interest and other investment income 2,399 3,264 2,069 7,732 1,125 8,857 Interest expense (8,800 ) (4,139 ) (1,257 ) (14,196 ) (1,380 ) (15,576 ) Net investment income 2,664 42,168 4,888 49,720 3,184 52,904 Performance related earnings 27,677 113,712 32,678 174,067 3,184 177,251 Economic net income $ 232,277 $ 198,338 $ 43,151 $ 473,766 $ (138,426 ) $ 335,340 Distributable earnings $ 204,402 $ 145,696 $ 12,596 $ 362,694 $ (151,642 ) $ 211,052 The following table presents the financial results for the Company’s operating segments, as well as the OMG, for the nine months ended September 30, 2016 : Credit Group Private Equity Group Real Total OMG Total Management fees (Credit Group includes ARCC Part I Fees of $90,884) $ 332,182 $ 111,100 $ 50,794 $ 494,076 $ — $ 494,076 Other fees 939 983 855 2,777 — 2,777 Compensation and benefits (135,068 ) (46,556 ) (31,327 ) (212,951 ) (77,225 ) (290,176 ) General, administrative and other expenses (19,383 ) (10,489 ) (8,241 ) (38,113 ) (44,616 ) (82,729 ) Fee related earnings 178,670 55,038 12,081 245,789 (121,841 ) 123,948 Performance fees—realized 44,624 171,024 5,142 220,790 — 220,790 Performance fees—unrealized (1,544 ) 109,848 10,030 118,334 — 118,334 Performance fee compensation—realized (9,978 ) (136,761 ) (53 ) (146,792 ) — (146,792 ) Performance fee compensation—unrealized (9,853 ) (88,766 ) (8,328 ) (106,947 ) — (106,947 ) Net performance fees 23,249 55,345 6,791 85,385 — 85,385 Investment income (loss)—realized 390 14,641 412 15,443 (20,093 ) (4,650 ) Investment income (loss)—unrealized 9,256 (1,030 ) 7,943 16,169 4,460 20,629 Interest and other investment income (expense) 21,617 8,532 1,642 31,791 (53 ) 31,738 Interest expense (6,729 ) (4,201 ) (788 ) (11,718 ) (2,101 ) (13,819 ) Net investment income (loss) 24,534 17,942 9,209 51,685 (17,787 ) 33,898 Performance related earnings 47,783 73,287 16,000 137,070 (17,787 ) 119,283 Economic net income $ 226,453 $ 128,325 $ 28,081 $ 382,859 $ (139,628 ) $ 243,231 Distributable earnings $ 221,357 $ 104,162 $ 16,867 $ 342,386 $ (157,550 ) $ 184,836 |
Schedule of segment’ revenue, expenses and other income (expense) | The following table presents the components of the Company’s operating segments’ revenue, expenses and other income (expense): For the Three Months Ended For the Nine Months Ended 2017 2016 2017 2016 Segment Revenues Management fees (includes ARCC Part I Fees of $24,036, $76,436 and $33,260, $90,884 for the three and nine months ended September 30, 2017 and 2016, respectively) $ 188,628 $ 168,796 $ 550,969 $ 494,076 Other fees 6,144 751 16,998 2,777 Performance fees—realized 178,989 132,837 261,924 220,790 Performance fees—unrealized (89,423 ) 32,368 223,467 118,334 Total segment revenues $ 284,338 $ 334,752 $ 1,053,358 $ 835,977 Segment Expenses Compensation and benefits $ 77,205 $ 71,378 $ 224,357 $ 212,951 General, administrative and other expenses 13,631 13,488 43,911 38,113 Performance fee compensation—realized 140,979 93,778 199,253 146,792 Performance fee compensation—unrealized (82,342 ) 29,395 161,791 106,947 Total segment expenses $ 149,473 $ 208,039 $ 629,312 $ 504,803 Other Income (Expense) Investment income—realized $ 22,471 $ 11,704 $ 30,766 $ 15,443 Investment income (loss)—unrealized (10,311 ) 18,737 25,418 16,169 Interest and other investment income 1,305 7,071 7,732 31,791 Interest expense (4,902 ) (3,472 ) (14,196 ) (11,718 ) Total other income $ 8,563 $ 34,040 $ 49,720 $ 51,685 |
Schedule of segment revenues components | The following table reconciles segment revenue to Ares consolidated revenues: For the Three Months Ended For the Nine Months Ended 2017 2016 2017 2016 Total segment revenue $ 284,338 $ 334,752 $ 1,053,358 $ 835,977 Revenue of Consolidated Funds eliminated in consolidation (6,822 ) (5,986 ) (18,738 ) (13,439 ) Administrative fees(1) 7,352 6,618 26,090 19,984 Performance fees reclass(2) (1,187 ) 76 (1,428 ) (1,512 ) Revenue of non-controlling interests in consolidated subsidiaries(3) (10 ) — (64 ) — Total consolidated adjustments and reconciling items (667 ) 708 5,860 5,033 Total consolidated revenue $ 283,671 $ 335,460 $ 1,059,218 $ 841,010 (1) Represents administrative fees that are presented in administrative 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 fees for AREA Sponsor Holdings LLC, an investment pool. Changes in value of this investment are reflected within other income (expense) in the Company’s Condensed Consolidated Statements of Operations. (3) Adjustments for administrative fees reimbursed and other revenue items attributable to certain of our joint venture partners. |
Schedule of segment expenses components | The following table reconciles segment expenses to Ares consolidated expenses: For the Three Months Ended For the Nine Months Ended 2017 2016 2017 2016 Total segment expenses $ 149,473 $ 208,039 $ 629,312 $ 504,803 Expenses of Consolidated Funds added in consolidation 25,862 16,068 45,196 27,334 Expenses of Consolidated Funds eliminated in consolidation (6,823 ) (5,980 ) (17,724 ) (16,320 ) Administrative fees(1) 7,352 6,618 26,090 19,984 OMG expenses 45,957 39,346 141,610 121,841 Acquisition and merger-related expenses 2,818 79 278,878 432 Equity compensation expense 18,091 8,476 52,097 27,185 Placement fees and underwriting costs 4,495 2,202 14,317 4,886 Amortization of intangibles 3,651 6,378 14,200 20,762 Depreciation expense 3,468 2,148 9,458 5,940 Expenses of non-controlling interests in consolidated subsidiaries(2) (217 ) — 357 — Total consolidation adjustments and reconciling items 104,654 75,335 564,479 212,044 Total consolidated expenses $ 254,127 $ 283,374 $ 1,193,791 $ 716,847 (1) Represents administrative fees that are presented in administrative and other fees in the Company’s Condensed Consolidated Statements of Operations and are netted against the respective expenses for segment reporting. (2) Adjustments to eliminate costs being borne by certain of our joint venture partners. |
Schedule of segment other income (expense) components | The following table reconciles segment other income (expense) to Ares consolidated other income: For the Three Months Ended For the Nine Months Ended 2017 2016 2017 2016 Total other income $ 8,563 $ 34,040 $ 49,720 $ 51,685 Other income from Consolidated Funds added in consolidation, net 55,227 30,181 90,522 14,545 Other income (expense) from Consolidated Funds eliminated in consolidation, net (9,973 ) (5,549 ) (16,847 ) 6,125 Other income of non-controlling interests in consolidated subsidiaries 9 — 14 — OMG other expense 3,960 (4,675 ) 3,184 (17,787 ) Performance fee reclass(1) 1,187 (76 ) 1,428 1,512 Changes in fair value of contingent consideration (60 ) 17,690 20,156 17,486 Other non-cash expense — 1,728 — 1,728 Offering costs (33 ) — (688 ) — Total consolidation adjustments and reconciling items 50,317 39,299 97,769 23,609 Total consolidated other income $ 58,880 $ 73,339 $ 147,489 $ 75,294 (1) Related to performance fees for AREA Sponsor Holdings LLC. Changes in value of this investment are reflected within other (income) expense in the Company’s Condensed Consolidated Statements of Operations. |
Reconciliation of segment results to the Company's income before taxes and total assets | The following table presents the reconciliation of income before taxes as reported in the Condensed Consolidated Statements of Operations to segment results of ENI, FRE, PRE and DE: For the Three Months Ended For the Nine Months Ended 2017 2016 2017 2016 Economic net income Income before taxes $ 88,424 $ 125,425 $ 12,916 $ 199,457 Adjustments: Amortization of intangibles 3,651 6,378 14,200 20,762 Depreciation expense 3,468 2,148 9,458 5,940 Equity compensation expenses 18,091 8,476 52,097 27,185 Acquisition and merger-related expenses 2,878 (17,611 ) 258,722 (17,054 ) Placement fees and underwriting costs 4,495 2,202 14,317 4,886 OMG expenses, net 41,997 44,021 138,426 139,628 Offering costs 33 — 688 — Other non-cash expense — (1,728 ) — (1,728 ) (Income) loss before taxes of non-controlling interests in consolidated subsidiaries (216 ) — 407 — (Income) loss before taxes of non-controlling interests in Consolidated Funds, net of eliminations (19,393 ) (8,558 ) (27,465 ) 3,783 Total consolidation adjustments and reconciling items 55,004 35,328 460,850 183,402 Economic net income 143,428 160,753 473,766 382,859 Total performance fees income - realized (178,989 ) (132,837 ) (261,924 ) (220,790 ) Total performance fees income - unrealized 89,423 (32,368 ) (223,467 ) (118,334 ) Total performance fee compensation - realized 140,979 93,778 199,253 146,792 Total performance fee compensation - unrealized (82,342 ) 29,395 161,791 106,947 Total investment income (8,563 ) (34,040 ) (49,720 ) (51,685 ) Fee related earnings 103,936 84,681 299,699 245,789 Performance fees—realized 178,989 132,837 261,924 220,790 Performance fee compensation—realized (140,979 ) (93,778 ) (199,253 ) (146,792 ) Investment and other income realized, net 21,160 14,777 27,067 33,605 Additional adjustments: Dividend equivalent(1) (3,540 ) (1,649 ) (7,741 ) (3,039 ) One-time acquisition costs(1) (12 ) (12 ) (35 ) (294 ) Income tax expense(1) (343 ) (292 ) (950 ) (773 ) Non-cash items 397 36 533 883 Placement fees and underwriting costs(1) (4,495 ) (2,209 ) (14,317 ) (4,894 ) Depreciation and amortization(1) (1,448 ) (960 ) (4,233 ) (2,889 ) Distributable earnings $ 153,665 $ 133,431 $ 362,694 $ 342,386 Performance related earnings Economic net income $ 143,428 $ 160,753 $ 473,766 $ 382,859 Less: fee related earnings (103,936 ) (84,681 ) (299,699 ) (245,789 ) Performance related earnings $ 39,492 $ 76,072 $ 174,067 $ 137,070 (1) Certain costs are reduced by the amounts attributable to OMG, which is excluded from segment results. |
CONSOLIDATION (Tables)
CONSOLIDATION (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Condensed Financial Information of Parent Company Only Disclosure [Abstract] | |
Schedule of interest in VIEs | The Company's interests and the Consolidated Funds' interests in consolidated and non-consolidated VIEs, as presented in the Condensed Consolidated Statements of Financial Condition, and their respective maximum exposure to loss relating to non-consolidated VIEs are as follows: As of September 30, As of December 31, 2017 2016 Maximum exposure to loss attributable to the Company's investment in non-consolidated VIEs $ 364,860 $ 268,950 Maximum exposure to loss attributable to the Company's investment in consolidated VIEs $ 162,295 $ 153,746 Assets of consolidated VIEs $ 5,760,754 $ 3,822,010 Liabilities of consolidated VIEs $ 5,152,179 $ 3,360,329 For the Three Months Ended For the Nine Months Ended 2017 2016 2017 2016 Net income (loss) attributable to non-controlling interests related to consolidated VIEs $ 18,195 $ 7,861 $ 25,403 $ (3,064 ) |
Schedule of consolidating effects of the Consolidated Funds on the Company's financial condition | The following supplemental financial information illustrates the consolidating effects of the Consolidated Funds on the Company's financial condition as of September 30, 2017 and December 31, 2016 and results from operations for the three and nine months ended September 30, 2017 and 2016 . As of September 30, 2017 Consolidated Consolidated Eliminations Consolidated Assets Cash and cash equivalents $ 186,437 $ — $ — $ 186,437 Investments (includes fair value investments of $581,614) 746,990 — (162,295 ) 584,695 Performance fees receivable 1,001,581 — (4,003 ) 997,578 Due from affiliates 166,214 — (4,782 ) 161,432 Deferred tax asset, net 36,661 — — 36,661 Other assets 103,885 — — 103,885 Intangible assets, net 44,115 — — 44,115 Goodwill 143,880 — — 143,880 Assets of Consolidated Funds Cash and cash equivalents — 799,609 — 799,609 Investments, at fair value — 4,915,029 — 4,915,029 Due from affiliates — 8,047 — 8,047 Dividends and interest receivable — 10,061 — 10,061 Receivable for securities sold — 25,926 — 25,926 Other assets — 2,082 — 2,082 Total assets $ 2,429,763 $ 5,760,754 $ (171,080 ) $ 8,019,437 Liabilities Accounts payable, accrued expenses and other liabilities $ 94,351 $ — $ — $ 94,351 Accrued compensation 133,799 — — 133,799 Due to affiliates 17,207 — — 17,207 Performance fee compensation payable 780,201 — — 780,201 Debt obligations 486,007 — — 486,007 Liabilities of Consolidated Funds Accounts payable, accrued expenses and other liabilities — 50,992 — 50,992 Due to affiliates — 8,786 (8,786 ) — Payable for securities purchased — 481,055 — 481,055 CLO loan obligations, at fair value — 4,490,085 (13,442 ) 4,476,643 Fund borrowings — 121,261 — 121,261 Total liabilities 1,511,565 5,152,179 (22,228 ) 6,641,516 Commitments and contingencies Preferred equity (12,400,000 units issued and outstanding) 298,761 — — 298,761 Non-controlling interest in Consolidated Funds — 608,575 (148,852 ) 459,723 Non-controlling interest in Ares Operating Group entities 348,513 — — 348,513 Controlling interest in Ares Management, L.P.: Partners' capital (82,211,302 units issued and outstanding) 275,410 — — 275,410 Accumulated other comprehensive loss, net of tax (4,486 ) — — (4,486 ) Total controlling interest in Ares Management, L.P. 270,924 — — 270,924 Total equity 918,198 608,575 (148,852 ) 1,377,921 Total liabilities and equity $ 2,429,763 $ 5,760,754 $ (171,080 ) $ 8,019,437 As of December 31, 2016 Consolidated Consolidated Eliminations Consolidated Assets Cash and cash equivalents $ 342,861 $ — $ — $ 342,861 Investments (includes fair value investments of $448,336) 622,215 — (153,744 ) 468,471 Performance fees receivable 767,429 — (8,330 ) 759,099 Due from affiliates 169,252 — (6,316 ) 162,936 Deferred tax asset, net 6,731 — — 6,731 Other assets 65,565 — — 65,565 Intangible assets, net 58,315 — — 58,315 Goodwill 143,724 — — 143,724 Assets of Consolidated Funds Cash and cash equivalents — 455,280 — 455,280 Investments, at fair value — 3,330,203 — 3,330,203 Due from affiliates — 3,592 — 3,592 Dividends and interest receivable — 8,479 — 8,479 Receivable for securities sold — 21,955 — 21,955 Other assets — 2,501 — 2,501 Total assets $ 2,176,092 $ 3,822,010 $ (168,390 ) $ 5,829,712 Liabilities Accounts payable, accrued expenses and other liabilities $ 83,336 $ — $ — $ 83,336 Accrued compensation 131,736 — — 131,736 Due to affiliates 17,959 — (395 ) 17,564 Performance fee compensation payable 598,050 — — 598,050 Debt obligations 305,784 — — 305,784 Liabilities of Consolidated Funds Accounts payable, accrued expenses and other liabilities — 21,056 — 21,056 Due to affiliates — 10,599 (10,599 ) — Payable for securities purchased — 208,742 — 208,742 CLO loan obligations, at fair value — 3,064,862 (33,750 ) 3,031,112 Fund borrowings — 55,070 — 55,070 Total liabilities 1,136,865 3,360,329 (44,744 ) 4,452,450 Commitments and contingencies Preferred equity (12,400,000 units issued and outstanding) 298,761 — — 298,761 Non-controlling interest in Consolidated Funds — 461,681 (123,646 ) 338,035 Non-controlling interest in Ares Operating Group entities 447,615 — — 447,615 Controlling interest in Ares Management, L.P.: Partners' capital (80,814,732 units issued and outstanding) 301,790 — — 301,790 Accumulated other comprehensive loss, net of tax (8,939 ) — — (8,939 ) Total controlling interest in Ares Management, L.P. 292,851 — — 292,851 Total equity 1,039,227 461,681 (123,646 ) 1,377,262 Total liabilities and equity $ 2,176,092 $ 3,822,010 $ (168,390 ) $ 5,829,712 |
Schedule of results from operations | For the Three Months Ended September 30, 2017 Consolidated Entities Consolidated Eliminations Consolidated Revenues Management fees (includes ARCC Part I Fees of $24,036) $ 188,628 $ — $ (5,451 ) $ 183,177 Performance fees 88,379 — (1,371 ) 87,008 Administrative and other fees 13,486 — — 13,486 Total revenues 290,493 — (6,822 ) 283,671 Expenses Compensation and benefits 129,347 — — 129,347 Performance fee compensation 58,637 — — 58,637 General, administrative and other expense 47,104 — — 47,104 Expenses of the Consolidated Funds — 25,862 (6,823 ) 19,039 Total expenses 235,088 25,862 (6,823 ) 254,127 Other income (expense) Investment income and net interest expense (includes interest expense of $5,343) (1,606 ) — (225 ) (1,831 ) Other expense, net (2,492 ) — — (2,492 ) Net realized and unrealized gain on investments 17,724 — (10,515 ) 7,209 Investment income and net interest income of the Consolidated Funds (includes interest expense of $28,127) — 7,169 12,885 20,054 Net realized and unrealized gain on investments of the Consolidated Funds — 48,058 (12,118 ) 35,940 Total other income 13,626 55,227 (9,973 ) 58,880 Income before taxes 69,031 29,365 (9,972 ) 88,424 Income tax expense 3,354 1,198 — 4,552 Net income 65,677 28,167 (9,972 ) 83,872 Less: Net income attributable to non-controlling interests in Consolidated Funds — 28,167 (9,972 ) 18,195 Less: Net income attributable to non-controlling interests in Ares Operating Group entities 37,839 — — 37,839 Net income attributable to Ares Management, L.P. 27,838 — — 27,838 Less: Preferred equity distributions paid 5,425 — — 5,425 Net income attributable to Ares Management, L.P. common unitholders $ 22,413 $ — $ — $ 22,413 For the Three Months Ended September 30, 2016 Consolidated Consolidated Eliminations Consolidated Revenues Management fees (includes ARCC Part I Fees of $33,260) $ 168,796 $ — $ (5,187 ) $ 163,609 Performance fees 165,281 — (799 ) 164,482 Administrative and other fees 7,369 — — 7,369 Total revenues 341,446 — (5,986 ) 335,460 Expenses Compensation and benefits 111,916 — — 111,916 Performance fee compensation 123,173 — — 123,173 General, administrative and other expense 38,197 — — 38,197 Expenses of the Consolidated Funds — 16,068 (5,980 ) 10,088 Total expenses 273,286 16,068 (5,980 ) 283,374 Other income (expense) Investment income and net interest expense (includes interest expense of $4,136) (675 ) — (1,006 ) (1,681 ) Other income, net 23,042 — — 23,042 Net realized and unrealized gain on investments 26,340 — (6,982 ) 19,358 Investment income and net interest income of the Consolidated Funds (includes interest expense of $26,413) — 6,525 2,212 8,737 Net realized and unrealized gain on investments of the Consolidated Funds — 23,656 227 23,883 Total other income 48,707 30,181 (5,549 ) 73,339 Income before taxes 116,867 14,113 (5,555 ) 125,425 Income tax expense 6,944 697 — 7,641 Net income 109,923 13,416 (5,555 ) 117,784 Less: Net income attributable to non-controlling interests in Consolidated Funds — 13,416 (5,555 ) 7,861 Less: Net income attributable to redeemable interests in Ares Operating Group entities 107 — — 107 Less: Net income attributable to non-controlling interests in Ares Operating Group entities 66,511 — — 66,511 Net income attributable to Ares Management, L.P. 43,305 — — 43,305 Less: Preferred equity distributions paid 6,751 — — 6,751 Net income attributable to Ares Management, L.P. common unitholders $ 36,554 $ — $ — $ 36,554 For the Nine Months Ended September 30, 2017 Consolidated Entities Consolidated Eliminations Consolidated Revenues Management fees (includes ARCC Part I Fees of $76,436) $ 550,969 $ — $ (14,979 ) $ 535,990 Performance fees 483,963 — (3,759 ) 480,204 Administrative and other fees 43,024 — — 43,024 Total revenues 1,077,956 — (18,738 ) 1,059,218 Expenses Compensation and benefits 384,905 — — 384,905 Performance fee compensation 361,044 — — 361,044 General, administrative and other expense 145,193 — — 145,193 Transaction support expense 275,177 — — 275,177 Expenses of the Consolidated Funds — 45,196 (17,724 ) 27,472 Total expenses 1,166,319 45,196 (17,724 ) 1,193,791 Other income (expense) Investment income and net interest expense (includes interest expense of $15,576) (4,064 ) — (2,154 ) (6,218 ) Other income, net 16,826 — — 16,826 Net realized and unrealized gain on investments 61,052 — (21,109 ) 39,943 Investment income and net interest income of the Consolidated Funds (includes interest expense of $86,324) — 11,072 30,603 41,675 Net realized and unrealized gain on investments of the Consolidated Funds — 79,450 (24,187 ) 55,263 Total other income 73,814 90,522 (16,847 ) 147,489 Income (loss) before taxes (14,549 ) 45,326 (17,861 ) 12,916 Income tax expense (benefit) (30,521 ) 2,062 — (28,459 ) Net income 15,972 43,264 (17,861 ) 41,375 Less: Net income attributable to non-controlling interests in Consolidated Funds — 43,264 (17,861 ) 25,403 Less: Net loss attributable to non-controlling interests in Ares Operating Group entities (20,610 ) — — (20,610 ) Net income attributable to Ares Management, L.P. 36,582 — — 36,582 Less: Preferred equity distributions paid 16,275 — — 16,275 Net income attributable to Ares Management, L.P. common unitholders $ 20,307 $ — $ — $ 20,307 For the Nine Months Ended September 30, 2016 Consolidated Consolidated Eliminations Consolidated Revenues Management fees (includes ARCC Part I Fees of $90,884) $ 494,076 $ — $ (13,513 ) $ 480,563 Performance fees 337,612 — 74 337,686 Administrative and other fees 22,761 — — 22,761 Total revenues 854,449 — (13,439 ) 841,010 Expenses Compensation and benefits 335,249 — — 335,249 Performance fee compensation 253,739 — — 253,739 General, administrative and other expense 116,845 — — 116,845 Expenses of the Consolidated Funds — 27,334 (16,320 ) 11,014 Total expenses 705,833 27,334 (16,320 ) 716,847 Other income (expense) Investment income and net interest income (expense) (includes interest expense of $13,819) 3,177 — (3,224 ) (47 ) Other income, net 33,956 — — 33,956 Net realized and unrealized gain on investments 17,491 — 3,858 21,349 Investment income and net interest income of the Consolidated Funds (includes interest expense of $67,469) — 20,133 5,626 25,759 Net realized and unrealized loss on investments of the Consolidated Funds — (5,588 ) (135 ) (5,723 ) Total other income 54,624 14,545 6,125 75,294 Income (loss) before taxes 203,240 (12,789 ) 9,006 199,457 Income tax expense (benefit) 8,587 (719 ) — 7,868 Net income (loss) 194,653 (12,070 ) 9,006 191,589 Less: Net loss attributable to non-controlling interests in Consolidated Funds — (12,070 ) 9,006 (3,064 ) Less: Net income attributable to redeemable interests in Ares Operating Group entities 456 — — 456 Less: Net income attributable to non-controlling interests in Ares Operating Group entities 116,404 — — 116,404 Net income attributable to Ares Management, L.P. 77,793 — — 77,793 Less: Preferred equity distributions paid 6,751 — — 6,751 Net income attributable to Ares Management, L.P. common unitholders $ 71,042 $ — $ — $ 71,042 |
ORGANIZATION (Details)
ORGANIZATION (Details) | 9 Months Ended |
Sep. 30, 2017segment | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Number of investing groups | 3 |
SUMMARY OF SIGNIFICANT ACCOUN37
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - ARCC - American Capital Ltd. $ in Millions | Jan. 03, 2017USD ($) |
Business Acquisition [Line Items] | |
Merger transaction value | $ 4,200 |
Payments to shareholders | $ 275.2 |
GOODWILL AND INTANGIBLE ASSET38
GOODWILL AND INTANGIBLE ASSETS (Carrying Value of Intangible Assets) (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||||
Sep. 30, 2017 | Mar. 31, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | Dec. 31, 2016 | |
Finite-lived intangible assets, net | ||||||
Intangible assets | $ 109,106 | $ 109,106 | $ 153,739 | |||
Foreign currency translation | 0 | 0 | (3,205) | |||
Total intangible assets | 109,106 | 109,106 | 150,534 | |||
Less: accumulated amortization | (64,991) | (64,991) | (92,219) | |||
Intangible assets, net | 44,115 | 44,115 | 58,315 | |||
Fully-amortized intangibles, amount removed during the period | $ 41,400 | |||||
General, administrative and other expense | ||||||
Finite-lived intangible assets, net | ||||||
Amortization expense | 3,700 | $ 6,400 | $ 14,200 | $ 20,800 | ||
Management contracts | ||||||
Finite-lived intangible assets, net | ||||||
Weighted average amortization period | 1 year 10 months 24 days | |||||
Intangible assets | 67,306 | $ 67,306 | 111,939 | |||
Client relationships | ||||||
Finite-lived intangible assets, net | ||||||
Weighted average amortization period | 10 years 9 months 18 days | |||||
Intangible assets | 38,600 | $ 38,600 | 38,600 | |||
Trade name | ||||||
Finite-lived intangible assets, net | ||||||
Weighted average amortization period | 4 years 9 months 18 days | |||||
Intangible assets | $ 3,200 | $ 3,200 | $ 3,200 |
GOODWILL AND INTANGIBLE ASSET39
GOODWILL AND INTANGIBLE ASSETS (Goodwill) (Details) - USD ($) | 9 Months Ended | |
Sep. 30, 2017 | Sep. 30, 2016 | |
Goodwill [Roll Forward] | ||
Goodwill, beginning balance | $ 143,724,000 | |
Foreign currency translation | 156,000 | |
Goodwill, ending balance | 143,880,000 | |
Impairments of goodwill | 0 | $ 0 |
Credit | ||
Goodwill [Roll Forward] | ||
Goodwill, beginning balance | 32,196,000 | |
Foreign currency translation | 0 | |
Goodwill, ending balance | 32,196,000 | |
Private Equity | ||
Goodwill [Roll Forward] | ||
Goodwill, beginning balance | 58,600,000 | |
Foreign currency translation | 0 | |
Goodwill, ending balance | 58,600,000 | |
Real Estate | ||
Goodwill [Roll Forward] | ||
Goodwill, beginning balance | 52,928,000 | |
Foreign currency translation | 156,000 | |
Goodwill, ending balance | $ 53,084,000 |
INVESTMENTS (Fair Value Investm
INVESTMENTS (Fair Value Investments, excluding Equity Method Investments Held at Fair Value) (Details) $ in Thousands | 9 Months Ended | 12 Months Ended |
Sep. 30, 2017USD ($)issuer | Dec. 31, 2016USD ($)issuer | |
Investments | ||
Number of single issuers above 5% | issuer | 0 | 0 |
Single issuer or investor threshold, as a percent | 5.00% | 5.00% |
Ares Management L.P | ||
Investments | ||
Fair value investments | $ 563,543 | $ 426,493 |
Investments, at cost | 457,947 | 346,505 |
Partnership interests | Ares Management L.P | ||
Investments | ||
Fair value investments | $ 399,978 | $ 337,282 |
Fair value as a percentage of total investments | 71.00% | 79.10% |
Investments, at cost | $ 293,804 | $ 256,638 |
Collateralized Debt Obligations | Ares Management L.P | ||
Investments | ||
Investments, at cost | 163,011 | 89,743 |
Common Stock | Ares Management L.P | ||
Investments | ||
Investments, at cost | 1,132 | 124 |
AREA Sponsor Holdings, LLC | Ares Management L.P | ||
Investments | ||
Fair value investments | $ 26,002 | $ 28,898 |
Fair value as a percentage of total investments | 4.60% | 6.80% |
ACE II Master Fund L.P. | Ares Management L.P | ||
Investments | ||
Fair value investments | $ 19,141 | $ 22,042 |
Fair value as a percentage of total investments | 3.40% | 5.20% |
Ares Corporate Opportunities Fund III, L.P. | Ares Management L.P | ||
Investments | ||
Fair value investments | $ 114,674 | $ 97,549 |
Fair value as a percentage of total investments | 20.30% | 22.90% |
Ares Corporate Opportunities Fund IV, L.P. | Ares Management L.P | ||
Investments | ||
Fair value investments | $ 34,990 | $ 37,308 |
Fair value as a percentage of total investments | 6.20% | 8.70% |
Resolution Life L.P. | Ares Management L.P | ||
Investments | ||
Fair value investments | $ 36,439 | $ 33,410 |
Fair value as a percentage of total investments | 6.50% | 7.80% |
Other private investment partnership Interests | Ares Management L.P | ||
Investments | ||
Fair value investments | $ 168,732 | $ 118,075 |
Fair value as a percentage of total investments | 30.00% | 27.70% |
Collateralized loan obligations | Ares Management L.P | ||
Investments | ||
Fair value investments | $ 162,261 | $ 89,111 |
Fair value as a percentage of total investments | 28.80% | 20.90% |
Common stock | Ares Management L.P | ||
Investments | ||
Fair value investments | $ 1,304 | $ 100 |
Fair value as a percentage of total investments | 0.20% | 0.00% |
INVESTMENTS (Equity Method Inve
INVESTMENTS (Equity Method Investments) (Details) - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
Investments In And Advances To Affiliates [Abstract] | ||
Equity method investment | $ 3,081 | $ 3,616 |
Equity method investments at fair value | 18,071 | 21,843 |
Total equity method investments | $ 21,152 | $ 25,459 |
INVESTMENTS (Held to Maturity)
INVESTMENTS (Held to Maturity) (Details) - USD ($) | 3 Months Ended | |
Sep. 30, 2017 | Dec. 31, 2016 | |
Investments In And Advances To Affiliates [Abstract] | ||
Amortized cost | $ 0 | $ 16,519,000 |
Unrealized loss, net | 0 | (116,000) |
Fair value | 0 | $ 16,403,000 |
Sales of investments during the period | 18,500,000 | |
Realized gain or loss | $ 0 |
INVESTMENTS (Investments of the
INVESTMENTS (Investments of the Consolidated Funds) (Details) $ in Thousands | 9 Months Ended | 12 Months Ended |
Sep. 30, 2017USD ($)issuer | Dec. 31, 2016USD ($)issuer | |
Investments | ||
Number of single issuers above 5% | issuer | 0 | 0 |
Single issuer or investor threshold, as a percent | 5.00% | 5.00% |
Consolidated Funds | ||
Investments | ||
Investments | $ 4,915,029 | $ 3,330,203 |
Number of single issuers above 5% | issuer | 0 | 0 |
Single issuer or investor threshold, as a percent | 5.00% | 5.00% |
Consolidated Funds | Fixed Income | ||
Investments | ||
Investments | $ 4,468,853 | $ 2,953,564 |
Fair value as a percentage of total investments | 90.80% | 88.80% |
Consolidated Funds | Equity securities | ||
Investments | ||
Investments | $ 446,176 | $ 376,639 |
Fair value as a percentage of total investments | 9.20% | 11.20% |
Consolidated Funds | United States | Fixed Income | ||
Investments | ||
Investments | $ 2,942,376 | $ 1,955,301 |
Fair value as a percentage of total investments | 59.50% | 58.70% |
Investments, at cost | $ 2,949,788 | $ 1,945,977 |
Consolidated Funds | United States | Fixed Income | Consumer discretionary | ||
Investments | ||
Investments | $ 1,124,210 | $ 665,773 |
Fair value as a percentage of total investments | 22.60% | 20.00% |
Consolidated Funds | United States | Fixed Income | Consumer staples | ||
Investments | ||
Investments | $ 55,357 | $ 64,840 |
Fair value as a percentage of total investments | 1.10% | 1.90% |
Consolidated Funds | United States | Fixed Income | Energy | ||
Investments | ||
Investments | $ 138,687 | $ 45,409 |
Fair value as a percentage of total investments | 2.80% | 1.40% |
Consolidated Funds | United States | Fixed Income | Financials | ||
Investments | ||
Investments | $ 234,828 | $ 139,285 |
Fair value as a percentage of total investments | 4.80% | 4.20% |
Consolidated Funds | United States | Fixed Income | Healthcare, education and childcare | ||
Investments | ||
Investments | $ 396,747 | $ 246,403 |
Fair value as a percentage of total investments | 8.00% | 7.40% |
Consolidated Funds | United States | Fixed Income | Industrials | ||
Investments | ||
Investments | $ 298,186 | $ 149,632 |
Fair value as a percentage of total investments | 6.10% | 4.50% |
Consolidated Funds | United States | Fixed Income | Information technology | ||
Investments | ||
Investments | $ 138,390 | $ 194,394 |
Fair value as a percentage of total investments | 2.80% | 5.80% |
Consolidated Funds | United States | Fixed Income | Materials | ||
Investments | ||
Investments | $ 163,728 | $ 139,994 |
Fair value as a percentage of total investments | 3.30% | 4.20% |
Consolidated Funds | United States | Fixed Income | Telecommunication services | ||
Investments | ||
Investments | $ 337,695 | $ 261,771 |
Fair value as a percentage of total investments | 6.90% | 7.90% |
Consolidated Funds | United States | Fixed Income | Utilities | ||
Investments | ||
Investments | $ 54,548 | $ 47,800 |
Fair value as a percentage of total investments | 1.10% | 1.40% |
Consolidated Funds | United States | Equity securities | ||
Investments | ||
Investments | $ 224,168 | $ 172,117 |
Fair value as a percentage of total investments | 4.60% | 5.20% |
Investments, at cost | $ 192,265 | $ 149,872 |
Consolidated Funds | United States | Equity securities | Energy | ||
Investments | ||
Investments | $ 158 | $ 421 |
Fair value as a percentage of total investments | 0.00% | 0.00% |
Consolidated Funds | United States | Equity securities | Partnership and LLC interests | ||
Investments | ||
Investments | $ 224,010 | $ 171,696 |
Fair value as a percentage of total investments | 4.60% | 5.20% |
Consolidated Funds | Europe | Fixed Income | ||
Investments | ||
Investments | $ 1,382,148 | $ 869,474 |
Fair value as a percentage of total investments | 28.10% | 26.20% |
Investments, at cost | $ 1,383,866 | $ 892,108 |
Consolidated Funds | Europe | Fixed Income | Consumer discretionary | ||
Investments | ||
Investments | $ 523,953 | $ 274,678 |
Fair value as a percentage of total investments | 10.60% | 8.20% |
Consolidated Funds | Europe | Fixed Income | Consumer staples | ||
Investments | ||
Investments | $ 72,446 | $ 39,197 |
Fair value as a percentage of total investments | 1.50% | 1.20% |
Consolidated Funds | Europe | Fixed Income | Financials | ||
Investments | ||
Investments | $ 43,702 | $ 28,769 |
Fair value as a percentage of total investments | 0.90% | 0.90% |
Consolidated Funds | Europe | Fixed Income | Healthcare, education and childcare | ||
Investments | ||
Investments | $ 199,823 | $ 111,589 |
Fair value as a percentage of total investments | 4.10% | 3.40% |
Consolidated Funds | Europe | Fixed Income | Industrials | ||
Investments | ||
Investments | $ 106,808 | $ 118,466 |
Fair value as a percentage of total investments | 2.20% | 3.60% |
Consolidated Funds | Europe | Fixed Income | Information technology | ||
Investments | ||
Investments | $ 46,512 | $ 49,507 |
Fair value as a percentage of total investments | 0.90% | 1.50% |
Consolidated Funds | Europe | Fixed Income | Materials | ||
Investments | ||
Investments | $ 235,505 | $ 124,629 |
Fair value as a percentage of total investments | 4.80% | 3.70% |
Consolidated Funds | Europe | Fixed Income | Telecommunication services | ||
Investments | ||
Investments | $ 143,972 | $ 118,632 |
Fair value as a percentage of total investments | 2.90% | 3.60% |
Consolidated Funds | Europe | Fixed Income | Utilities | ||
Investments | ||
Investments | $ 9,427 | $ 4,007 |
Fair value as a percentage of total investments | 0.20% | 0.10% |
Consolidated Funds | Europe | Equity securities | ||
Investments | ||
Investments | $ 57,562 | $ 42,870 |
Fair value as a percentage of total investments | 1.20% | 1.20% |
Investments, at cost | $ 67,198 | $ 67,290 |
Consolidated Funds | Europe | Equity securities | Consumer staples | ||
Investments | ||
Investments | $ 0 | $ 1,517 |
Fair value as a percentage of total investments | 0.00% | 0.00% |
Consolidated Funds | Europe | Equity securities | Healthcare, education and childcare | ||
Investments | ||
Investments | $ 57,562 | $ 41,329 |
Fair value as a percentage of total investments | 1.20% | 1.20% |
Consolidated Funds | Europe | Equity securities | Telecommunication services | ||
Investments | ||
Investments | $ 0 | $ 24 |
Fair value as a percentage of total investments | 0.00% | 0.00% |
Consolidated Funds | Asia and other | Fixed Income | ||
Investments | ||
Investments | $ 73,182 | $ 44,188 |
Fair value as a percentage of total investments | 1.60% | 1.30% |
Investments, at cost | $ 73,146 | $ 46,545 |
Consolidated Funds | Asia and other | Fixed Income | Consumer discretionary | ||
Investments | ||
Investments | $ 27,950 | $ 24,244 |
Fair value as a percentage of total investments | 0.60% | 0.70% |
Consolidated Funds | Asia and other | Fixed Income | Financials | ||
Investments | ||
Investments | $ 22,402 | $ 1,238 |
Fair value as a percentage of total investments | 0.50% | 0.00% |
Consolidated Funds | Asia and other | Fixed Income | Healthcare, education and childcare | ||
Investments | ||
Investments | $ 0 | $ 10,010 |
Fair value as a percentage of total investments | 0.00% | 0.30% |
Consolidated Funds | Asia and other | Fixed Income | Telecommunication services | ||
Investments | ||
Investments | $ 22,830 | $ 8,696 |
Fair value as a percentage of total investments | 0.50% | 0.30% |
Consolidated Funds | Asia and other | Equity securities | ||
Investments | ||
Investments | $ 156,584 | $ 143,919 |
Fair value as a percentage of total investments | 3.20% | 4.30% |
Investments, at cost | $ 122,418 | $ 122,418 |
Consolidated Funds | Asia and other | Equity securities | Consumer discretionary | ||
Investments | ||
Investments | $ 48,161 | $ 44,642 |
Fair value as a percentage of total investments | 1.00% | 1.30% |
Consolidated Funds | Asia and other | Equity securities | Consumer staples | ||
Investments | ||
Investments | $ 47,208 | $ 50,101 |
Fair value as a percentage of total investments | 1.00% | 1.50% |
Consolidated Funds | Asia and other | Equity securities | Healthcare, education and childcare | ||
Investments | ||
Investments | $ 44,637 | $ 32,598 |
Fair value as a percentage of total investments | 0.90% | 1.00% |
Consolidated Funds | Asia and other | Equity securities | Industrials | ||
Investments | ||
Investments | $ 16,578 | $ 16,578 |
Fair value as a percentage of total investments | 0.30% | 0.50% |
Consolidated Funds | Canada | Fixed Income | ||
Investments | ||
Investments | $ 65,128 | $ 48,848 |
Fair value as a percentage of total investments | 1.40% | 1.50% |
Investments, at cost | $ 64,567 | $ 48,274 |
Consolidated Funds | Canada | Fixed Income | Consumer discretionary | ||
Investments | ||
Investments | $ 4,093 | $ 0 |
Fair value as a percentage of total investments | 0.10% | 0.00% |
Consolidated Funds | Canada | Fixed Income | Consumer staples | ||
Investments | ||
Investments | $ 10,387 | $ 5,256 |
Fair value as a percentage of total investments | 0.20% | 0.20% |
Consolidated Funds | Canada | Fixed Income | Energy | ||
Investments | ||
Investments | $ 28,459 | $ 12,830 |
Fair value as a percentage of total investments | 0.60% | 0.40% |
Consolidated Funds | Canada | Fixed Income | Healthcare, education and childcare | ||
Investments | ||
Investments | $ 0 | $ 15,509 |
Fair value as a percentage of total investments | 0.00% | 0.50% |
Consolidated Funds | Canada | Fixed Income | Industrials | ||
Investments | ||
Investments | $ 12,464 | $ 1,401 |
Fair value as a percentage of total investments | 0.30% | 0.00% |
Consolidated Funds | Canada | Fixed Income | Telecommunication services | ||
Investments | ||
Investments | $ 9,725 | $ 13,852 |
Fair value as a percentage of total investments | 0.20% | 0.40% |
Consolidated Funds | Canada | Equity securities | ||
Investments | ||
Investments | $ 7,862 | $ 164 |
Fair value as a percentage of total investments | 0.20% | 0.00% |
Investments, at cost | $ 17,202 | $ 408 |
Consolidated Funds | Canada | Equity securities | Energy | ||
Investments | ||
Investments | $ 7,862 | $ 164 |
Fair value as a percentage of total investments | 0.20% | 0.00% |
Consolidated Funds | Australia | Fixed Income | ||
Investments | ||
Investments | $ 6,019 | $ 35,753 |
Fair value as a percentage of total investments | 0.20% | 1.10% |
Investments, at cost | $ 6,910 | $ 37,975 |
Consolidated Funds | Australia | Fixed Income | Consumer discretionary | ||
Investments | ||
Investments | $ 3,142 | $ 5,627 |
Fair value as a percentage of total investments | 0.10% | 0.20% |
Consolidated Funds | Australia | Fixed Income | Energy | ||
Investments | ||
Investments | $ 2,877 | $ 6,046 |
Fair value as a percentage of total investments | 0.10% | 0.20% |
Consolidated Funds | Australia | Fixed Income | Industrials | ||
Investments | ||
Investments | $ 0 | $ 2,926 |
Fair value as a percentage of total investments | 0.00% | 0.10% |
Consolidated Funds | Australia | Fixed Income | Utilities | ||
Investments | ||
Investments | $ 0 | $ 21,154 |
Fair value as a percentage of total investments | 0.00% | 0.60% |
Consolidated Funds | Australia | Equity securities | ||
Investments | ||
Investments | $ 0 | $ 17,569 |
Fair value as a percentage of total investments | 0.00% | 0.50% |
Investments, at cost | $ 0 | $ 18,442 |
Consolidated Funds | Australia | Equity securities | Utilities | ||
Investments | ||
Investments | $ 0 | $ 17,569 |
Fair value as a percentage of total investments | 0.00% | 0.50% |
FAIR VALUE (Assets and Liabilit
FAIR VALUE (Assets and Liabilities Measured at Fair Value) (Details) - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
Assets, at fair value | ||
Investments Measured at NAV | $ 381,610 | $ 325,715 |
Ares Management L.P | ||
Assets, at fair value | ||
Investments | 581,614 | 448,336 |
Investments Measured at NAV | 381,610 | 325,715 |
Total derivative assets, at fair value | 1,310 | 3,171 |
Total assets, at fair value | 582,924 | 451,507 |
Liabilities, at fair value | ||
Contingent considerations | (22,156) | |
Total liabilities, at fair value | (4,194) | (22,156) |
Ares Management L.P | Foreign exchange contracts | ||
Liabilities, at fair value | ||
Derivative liabilities | (4,194) | |
Ares Management L.P | Fixed income-collateralized loan obligations | ||
Assets, at fair value | ||
Investments | 162,261 | 89,111 |
Ares Management L.P | Equity securities | ||
Assets, at fair value | ||
Investments | 1,304 | 100 |
Ares Management L.P | Partnership interests | ||
Assets, at fair value | ||
Investments | 418,049 | 359,125 |
Investments Measured at NAV | 381,610 | 325,715 |
Ares Management L.P | Level I | ||
Assets, at fair value | ||
Investments | 300 | 100 |
Total assets, at fair value | 300 | 100 |
Liabilities, at fair value | ||
Contingent considerations | 0 | |
Total liabilities, at fair value | 0 | 0 |
Ares Management L.P | Level I | Foreign exchange contracts | ||
Assets, at fair value | ||
Total derivative assets, at fair value | 0 | 0 |
Liabilities, at fair value | ||
Derivative liabilities | 0 | |
Ares Management L.P | Level I | Fixed income-collateralized loan obligations | ||
Assets, at fair value | ||
Investments | 0 | 0 |
Ares Management L.P | Level I | Equity securities | ||
Assets, at fair value | ||
Investments | 300 | 100 |
Ares Management L.P | Level I | Partnership interests | ||
Assets, at fair value | ||
Investments | 0 | 0 |
Ares Management L.P | Level II | ||
Assets, at fair value | ||
Investments | 1,004 | 0 |
Total assets, at fair value | 2,314 | 3,171 |
Liabilities, at fair value | ||
Contingent considerations | 0 | |
Total liabilities, at fair value | (4,194) | 0 |
Ares Management L.P | Level II | Foreign exchange contracts | ||
Assets, at fair value | ||
Total derivative assets, at fair value | 1,310 | 3,171 |
Liabilities, at fair value | ||
Derivative liabilities | (4,194) | |
Ares Management L.P | Level II | Fixed income-collateralized loan obligations | ||
Assets, at fair value | ||
Investments | 0 | 0 |
Ares Management L.P | Level II | Equity securities | ||
Assets, at fair value | ||
Investments | 1,004 | 0 |
Ares Management L.P | Level II | Partnership interests | ||
Assets, at fair value | ||
Investments | 0 | 0 |
Ares Management L.P | Level III | ||
Assets, at fair value | ||
Investments | 198,700 | 122,521 |
Total assets, at fair value | 198,700 | 122,521 |
Liabilities, at fair value | ||
Contingent considerations | (22,156) | |
Total liabilities, at fair value | 0 | (22,156) |
Ares Management L.P | Level III | Foreign exchange contracts | ||
Assets, at fair value | ||
Total derivative assets, at fair value | 0 | 0 |
Liabilities, at fair value | ||
Derivative liabilities | 0 | |
Ares Management L.P | Level III | Fixed income-collateralized loan obligations | ||
Assets, at fair value | ||
Investments | 162,261 | 89,111 |
Ares Management L.P | Level III | Equity securities | ||
Assets, at fair value | ||
Investments | 0 | 0 |
Ares Management L.P | Level III | Partnership interests | ||
Assets, at fair value | ||
Investments | 36,439 | 33,410 |
Consolidated Funds | ||
Assets, at fair value | ||
Investments | 4,915,029 | 3,330,203 |
Total derivative assets, at fair value | 820 | |
Total assets, at fair value | 4,916,357 | 3,331,023 |
Liabilities, at fair value | ||
Loan obligations of CLOs | (4,476,643) | (3,031,112) |
Total liabilities, at fair value | (4,476,844) | (3,034,111) |
Consolidated Funds | Foreign exchange contracts | ||
Assets, at fair value | ||
Total derivative assets, at fair value | 529 | |
Consolidated Funds | Derivatives—other | ||
Assets, at fair value | ||
Total derivative assets, at fair value | 1,328 | 291 |
Liabilities, at fair value | ||
Derivative liabilities | (201) | (2,999) |
Consolidated Funds | Fixed income-collateralized loan obligations | ||
Assets, at fair value | ||
Investments | 20,000 | 5,973 |
Consolidated Funds | Equity securities | ||
Assets, at fair value | ||
Investments | 222,166 | 204,921 |
Consolidated Funds | Partnership interests | ||
Assets, at fair value | ||
Investments | 224,010 | 171,696 |
Consolidated Funds | Bonds | ||
Assets, at fair value | ||
Investments | 99,056 | 141,949 |
Consolidated Funds | Loans | ||
Assets, at fair value | ||
Investments | 4,349,797 | 2,805,640 |
Consolidated Funds | Fixed Income | ||
Assets, at fair value | ||
Investments | 4,468,853 | 2,953,562 |
Consolidated Funds | Other | ||
Assets, at fair value | ||
Investments | 24 | |
Consolidated Funds | Level I | ||
Assets, at fair value | ||
Investments | 65,150 | 56,662 |
Total derivative assets, at fair value | 0 | |
Total assets, at fair value | 65,150 | 56,662 |
Liabilities, at fair value | ||
Loan obligations of CLOs | 0 | 0 |
Total liabilities, at fair value | 0 | 0 |
Consolidated Funds | Level I | Foreign exchange contracts | ||
Assets, at fair value | ||
Total derivative assets, at fair value | 0 | |
Consolidated Funds | Level I | Derivatives—other | ||
Assets, at fair value | ||
Total derivative assets, at fair value | 0 | 0 |
Liabilities, at fair value | ||
Derivative liabilities | 0 | 0 |
Consolidated Funds | Level I | Fixed income-collateralized loan obligations | ||
Assets, at fair value | ||
Investments | 0 | 0 |
Consolidated Funds | Level I | Equity securities | ||
Assets, at fair value | ||
Investments | 65,150 | 56,662 |
Consolidated Funds | Level I | Partnership interests | ||
Assets, at fair value | ||
Investments | 0 | 0 |
Consolidated Funds | Level I | Bonds | ||
Assets, at fair value | ||
Investments | 0 | 0 |
Consolidated Funds | Level I | Loans | ||
Assets, at fair value | ||
Investments | 0 | 0 |
Consolidated Funds | Level I | Fixed Income | ||
Assets, at fair value | ||
Investments | 0 | 0 |
Consolidated Funds | Level I | Other | ||
Assets, at fair value | ||
Investments | 0 | |
Consolidated Funds | Level II | ||
Assets, at fair value | ||
Investments | 4,149,435 | 2,728,902 |
Total derivative assets, at fair value | 529 | |
Total assets, at fair value | 4,149,435 | 2,729,431 |
Liabilities, at fair value | ||
Loan obligations of CLOs | (4,476,643) | (3,031,112) |
Total liabilities, at fair value | (4,476,643) | (3,031,112) |
Consolidated Funds | Level II | Foreign exchange contracts | ||
Assets, at fair value | ||
Total derivative assets, at fair value | 529 | |
Consolidated Funds | Level II | Derivatives—other | ||
Assets, at fair value | ||
Total derivative assets, at fair value | 0 | 0 |
Liabilities, at fair value | ||
Derivative liabilities | 0 | 0 |
Consolidated Funds | Level II | Fixed income-collateralized loan obligations | ||
Assets, at fair value | ||
Investments | 20,000 | 0 |
Consolidated Funds | Level II | Equity securities | ||
Assets, at fair value | ||
Investments | 158 | 17,569 |
Consolidated Funds | Level II | Partnership interests | ||
Assets, at fair value | ||
Investments | 0 | 0 |
Consolidated Funds | Level II | Bonds | ||
Assets, at fair value | ||
Investments | 91,683 | 104,886 |
Consolidated Funds | Level II | Loans | ||
Assets, at fair value | ||
Investments | 4,037,594 | 2,606,423 |
Consolidated Funds | Level II | Fixed Income | ||
Assets, at fair value | ||
Investments | 4,149,277 | 2,711,309 |
Consolidated Funds | Level II | Other | ||
Assets, at fair value | ||
Investments | 24 | |
Consolidated Funds | Level III | ||
Assets, at fair value | ||
Investments | 700,444 | 544,639 |
Total derivative assets, at fair value | 291 | |
Total assets, at fair value | 701,772 | 544,930 |
Liabilities, at fair value | ||
Loan obligations of CLOs | 0 | 0 |
Total liabilities, at fair value | (201) | (2,999) |
Consolidated Funds | Level III | Foreign exchange contracts | ||
Assets, at fair value | ||
Total derivative assets, at fair value | 0 | |
Consolidated Funds | Level III | Derivatives—other | ||
Assets, at fair value | ||
Total derivative assets, at fair value | 1,328 | 291 |
Liabilities, at fair value | ||
Derivative liabilities | (201) | (2,999) |
Consolidated Funds | Level III | Fixed income-collateralized loan obligations | ||
Assets, at fair value | ||
Investments | 0 | 5,973 |
Consolidated Funds | Level III | Equity securities | ||
Assets, at fair value | ||
Investments | 156,858 | 130,690 |
Consolidated Funds | Level III | Partnership interests | ||
Assets, at fair value | ||
Investments | 224,010 | 171,696 |
Consolidated Funds | Level III | Bonds | ||
Assets, at fair value | ||
Investments | 7,373 | 37,063 |
Consolidated Funds | Level III | Loans | ||
Assets, at fair value | ||
Investments | 312,203 | 199,217 |
Consolidated Funds | Level III | Fixed Income | ||
Assets, at fair value | ||
Investments | $ 319,576 | 242,253 |
Consolidated Funds | Level III | Other | ||
Assets, at fair value | ||
Investments | $ 0 |
FAIR VALUE (Changes in Fair Val
FAIR VALUE (Changes in Fair Value of Level III Measurements) (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2017USD ($) | Jun. 30, 2017USD ($)investment | Sep. 30, 2016USD ($) | Sep. 30, 2017USD ($) | Sep. 30, 2016USD ($) | |
Contingent Considerations | |||||
Number of investments transferred | investment | 2 | ||||
Transfer from a Level II to a Level I fair value measurement | $ 7,500 | ||||
Ares Management L.P | |||||
Changes in the fair value of the Level III investments | |||||
Balance, beginning of period | $ 198,217 | $ 98,901 | $ 122,521 | $ 107,455 | |
Purchases | 29,911 | 837 | 110,764 | 9,011 | |
Sales/settlements | (33,062) | (943) | (38,303) | (3,236) | |
Realized and unrealized appreciation (depreciation), net | 3,634 | (9,448) | 3,718 | (23,883) | |
Balance, end of period | 198,700 | 198,217 | 89,347 | 198,700 | 89,347 |
Increase (decrease) in unrealized appreciation/depreciation included in earnings related to financial assets still held at the reporting date | 3,471 | (3,758) | 3,058 | (5,250) | |
Contingent Considerations | |||||
Balance, beginning of period | 1,940 | 41,035 | 22,156 | 40,831 | |
Purchases | 0 | 0 | 0 | 0 | |
Sales/settlement | (1,000) | (1,000) | (1,000) | (1,000) | |
Expired contingent considerations | (1,000) | (1,000) | |||
Realized and unrealized appreciation, net | 60 | (17,690) | (20,156) | (17,486) | |
Balance, end of period | 0 | 1,940 | 22,345 | 0 | 22,345 |
Increase in unrealized appreciation/depreciation included in earnings related to financial assets and liabilities still held at the reporting date | 0 | (17,690) | 0 | (17,486) | |
Ares Management L.P | Fixed Income | |||||
Changes in the fair value of the Level III investments | |||||
Balance, beginning of period | 164,807 | 54,155 | 89,111 | 55,752 | |
Purchases | 29,911 | 4 | 110,595 | 11 | |
Sales/settlements | (33,062) | (943) | (38,303) | (3,236) | |
Realized and unrealized appreciation (depreciation), net | 605 | 2,721 | 858 | 3,410 | |
Balance, end of period | 162,261 | 164,807 | 55,937 | 162,261 | 55,937 |
Increase (decrease) in unrealized appreciation/depreciation included in earnings related to financial assets still held at the reporting date | 442 | 2,479 | 29 | 2,043 | |
Ares Management L.P | Partnership interests | |||||
Changes in the fair value of the Level III investments | |||||
Balance, beginning of period | 33,410 | 44,746 | 33,410 | 51,703 | |
Purchases | 0 | 833 | 169 | 9,000 | |
Sales/settlements | 0 | 0 | 0 | 0 | |
Realized and unrealized appreciation (depreciation), net | 3,029 | (12,169) | 2,860 | (27,293) | |
Balance, end of period | 36,439 | 33,410 | 33,410 | 36,439 | 33,410 |
Increase (decrease) in unrealized appreciation/depreciation included in earnings related to financial assets still held at the reporting date | 3,029 | (6,237) | 3,029 | (7,293) | |
Consolidated Funds | |||||
Changes in the fair value of the Level III investments | |||||
Balance, beginning of period | 554,402 | 494,070 | 541,931 | 455,894 | |
Transfer in | 86,420 | 72,337 | 48,646 | 80,556 | |
Transfer out | (60,825) | (70,910) | (106,813) | (75,536) | |
Purchases | 154,903 | 122,131 | 319,292 | 183,330 | |
Sales/settlements | (68,484) | (48,225) | (162,987) | (88,953) | |
Additions | 15,872 | 15,872 | |||
Settlements, net | (3,127) | (543) | (976) | 45 | |
Amortized discounts/premiums | 164 | 588 | 449 | 1,401 | |
Realized and unrealized appreciation (depreciation), net | 22,246 | 7,238 | 46,157 | 19,949 | |
Balance, end of period | 701,571 | 554,402 | 576,686 | 701,571 | 576,686 |
Increase (decrease) in unrealized appreciation/depreciation included in earnings related to financial assets still held at the reporting date | 17,999 | 4,368 | 27,273 | 23,240 | |
Consolidated Funds | Equity securities | |||||
Changes in the fair value of the Level III investments | |||||
Balance, beginning of period | 146,274 | 143,334 | 130,690 | 129,809 | |
Transfer in | 0 | 18,135 | 0 | 15,760 | |
Transfer out | (271) | 0 | (6,581) | (344) | |
Purchases | 0 | 6,171 | 6,692 | 15,839 | |
Sales/settlements | (3,701) | (290) | (3,701) | (290) | |
Additions | 0 | 0 | |||
Settlements, net | 0 | 0 | 0 | 0 | |
Amortized discounts/premiums | 0 | 0 | 0 | 0 | |
Realized and unrealized appreciation (depreciation), net | 14,556 | (2,374) | 29,758 | 4,202 | |
Balance, end of period | 156,858 | 146,274 | 164,976 | 156,858 | 164,976 |
Increase (decrease) in unrealized appreciation/depreciation included in earnings related to financial assets still held at the reporting date | 12,830 | (59) | 19,175 | 4,385 | |
Consolidated Funds | Fixed Income | |||||
Changes in the fair value of the Level III investments | |||||
Balance, beginning of period | 187,579 | 237,372 | 242,253 | 249,490 | |
Transfer in | 86,420 | 54,202 | 48,646 | 64,796 | |
Transfer out | (60,550) | (70,910) | (100,228) | (75,192) | |
Purchases | 139,903 | 94,527 | 224,600 | 132,958 | |
Sales/settlements | (49,783) | (45,002) | (114,286) | (85,430) | |
Additions | 14,479 | 14,479 | |||
Settlements, net | 0 | 0 | 0 | 0 | |
Amortized discounts/premiums | 63 | 374 | 132 | 1,103 | |
Realized and unrealized appreciation (depreciation), net | 1,465 | 2,077 | 3,980 | (15,085) | |
Balance, end of period | 319,576 | 187,579 | 272,640 | 319,576 | 272,640 |
Increase (decrease) in unrealized appreciation/depreciation included in earnings related to financial assets still held at the reporting date | 920 | (2,977) | (429) | (10,760) | |
Consolidated Funds | Partnership interests | |||||
Changes in the fair value of the Level III investments | |||||
Balance, beginning of period | 217,740 | 115,440 | 171,696 | 86,902 | |
Transfer in | 0 | 0 | 0 | 0 | |
Transfer out | 0 | 0 | 0 | 0 | |
Purchases | 15,000 | 21,433 | 88,000 | 34,533 | |
Sales/settlements | (15,000) | (2,933) | (45,000) | (3,233) | |
Additions | 0 | 0 | |||
Settlements, net | 0 | 0 | 0 | 0 | |
Amortized discounts/premiums | 0 | 0 | 0 | 0 | |
Realized and unrealized appreciation (depreciation), net | 6,270 | 5,260 | 9,314 | 20,998 | |
Balance, end of period | 224,010 | 217,740 | 139,200 | 224,010 | 139,200 |
Increase (decrease) in unrealized appreciation/depreciation included in earnings related to financial assets still held at the reporting date | 6,270 | 5,261 | 9,314 | 20,998 | |
Consolidated Funds | Derivatives, Net | |||||
Changes in the fair value of the Level III investments | |||||
Balance, beginning of period | 2,809 | (2,076) | (2,708) | (10,307) | |
Transfer in | 0 | 0 | 0 | 0 | |
Transfer out | (4) | 0 | (4) | 0 | |
Purchases | 0 | 0 | 0 | 0 | |
Sales/settlements | 0 | 0 | 0 | 0 | |
Additions | 1,393 | 1,393 | |||
Settlements, net | (3,127) | (543) | (976) | 45 | |
Amortized discounts/premiums | 101 | 214 | 317 | 298 | |
Realized and unrealized appreciation (depreciation), net | (45) | 2,275 | 3,105 | 9,834 | |
Balance, end of period | 1,127 | $ 2,809 | (130) | 1,127 | (130) |
Increase (decrease) in unrealized appreciation/depreciation included in earnings related to financial assets still held at the reporting date | $ (2,021) | $ 2,143 | $ (787) | $ 8,617 |
FAIR VALUE (Valuation Technique
FAIR VALUE (Valuation Techniques) (Details) $ in Thousands | 9 Months Ended | 12 Months Ended |
Sep. 30, 2017USD ($) | Dec. 31, 2016USD ($) | |
Ares Management L.P | ||
FAIR VALUE | ||
Assets, at fair value | $ 582,924 | $ 451,507 |
Liabilities, at fair value | 4,194 | 22,156 |
Ares Management L.P | Level III | ||
FAIR VALUE | ||
Assets, at fair value | 198,700 | 122,521 |
Liabilities, at fair value | 0 | 22,156 |
Ares Management L.P | Level III | Liabilities | Other Valuation Technique | ||
FAIR VALUE | ||
Liabilities, at fair value | 20,278 | |
Ares Management L.P | Level III | Liabilities | Discounted cash flow | ||
FAIR VALUE | ||
Liabilities, at fair value | $ 1,878 | |
Unobservable Input | ||
Discount rate | 6.50% | |
Ares Management L.P | Level III | Partnership interests | Other Valuation Technique | ||
FAIR VALUE | ||
Assets, at fair value | 36,439 | $ 33,410 |
Ares Management L.P | Level III | Fixed income-collateralized loan obligations | Broker quotes and/or 3rd party pricing services | ||
FAIR VALUE | ||
Assets, at fair value | 162,261 | 89,111 |
Consolidated Funds | ||
FAIR VALUE | ||
Assets, at fair value | 4,916,357 | 3,331,023 |
Liabilities, at fair value | 4,476,844 | 3,034,111 |
Consolidated Funds | Level III | ||
FAIR VALUE | ||
Assets, at fair value | 701,772 | 544,930 |
Liabilities, at fair value | 201 | 2,999 |
Consolidated Funds | Level III | Derivatives liabilities of Consolidated Funds | Broker quotes and/or 3rd party pricing services | ||
FAIR VALUE | ||
Liabilities, at fair value | 201 | 2,999 |
Consolidated Funds | Level III | Equity securities | Broker quotes and/or 3rd party pricing services | ||
FAIR VALUE | ||
Assets, at fair value | 421 | |
Consolidated Funds | Level III | Equity securities | Discounted cash flow | ||
FAIR VALUE | ||
Assets, at fair value | $ 224,010 | $ 171,696 |
Unobservable Input | ||
Discount rate | 18.50% | 20.00% |
Consolidated Funds | Level III | Equity securities | Discounted cash flow | Weighted Average | ||
Unobservable Input | ||
Discount rate | 18.50% | 20.00% |
Consolidated Funds | Level III | Equity securities | Enterprise value market multiple analysis | ||
FAIR VALUE | ||
Assets, at fair value | $ 57,562 | $ 43,011 |
Unobservable Input | ||
EBITDA multiple | 2.8 | |
Consolidated Funds | Level III | Equity securities | Enterprise value market multiple analysis | Minimum | ||
Unobservable Input | ||
EBITDA multiple | 2 | |
Consolidated Funds | Level III | Equity securities | Enterprise value market multiple analysis | Maximum | ||
Unobservable Input | ||
EBITDA multiple | 11.2 | |
Consolidated Funds | Level III | Equity securities | Enterprise value market multiple analysis | Weighted Average | ||
Unobservable Input | ||
EBITDA multiple | 2.8 | 2.3 |
Consolidated Funds | Level III | Equity securities | Market approach (comparable companies) | ||
FAIR VALUE | ||
Assets, at fair value | $ 61,215 | $ 32,598 |
Unobservable Input | ||
Illiquidity discount (as a percent) | 25.00% | |
Consolidated Funds | Level III | Equity securities | Market approach (comparable companies) | Minimum | ||
Unobservable Input | ||
Net income multiple | 30 | 30 |
Illiquidity discount (as a percent) | 25.00% | |
Consolidated Funds | Level III | Equity securities | Market approach (comparable companies) | Maximum | ||
Unobservable Input | ||
Net income multiple | 45 | 40 |
Consolidated Funds | Level III | Equity securities | Market approach (comparable companies) | Weighted Average | ||
Unobservable Input | ||
Net income multiple | 34.7 | 35 |
Illiquidity discount (as a percent) | 25.00% | 25.00% |
Consolidated Funds | Level III | Equity securities | Recent transaction price | ||
FAIR VALUE | ||
Assets, at fair value | $ 38,081 | $ 54,660 |
Consolidated Funds | Level III | Fixed Income | Broker quotes and/or 3rd party pricing services | ||
FAIR VALUE | ||
Assets, at fair value | 238,764 | 170,231 |
Consolidated Funds | Level III | Fixed Income | Discounted cash flow | ||
FAIR VALUE | ||
Assets, at fair value | $ 24,052 | |
Consolidated Funds | Level III | Fixed Income | Discounted cash flow | Minimum | ||
Unobservable Input | ||
Discount rate | 7.80% | |
Consolidated Funds | Level III | Fixed Income | Discounted cash flow | Maximum | ||
Unobservable Input | ||
Discount rate | 15.30% | |
Consolidated Funds | Level III | Fixed Income | Discounted cash flow | Weighted Average | ||
Unobservable Input | ||
Discount rate | 11.10% | |
Consolidated Funds | Level III | Fixed Income | Enterprise value market multiple analysis | ||
FAIR VALUE | ||
Assets, at fair value | $ 6,693 | |
Unobservable Input | ||
EBITDA multiple | 7.1 | |
Consolidated Funds | Level III | Fixed Income | Enterprise value market multiple analysis | Weighted Average | ||
Unobservable Input | ||
EBITDA multiple | 7.1 | |
Consolidated Funds | Level III | Fixed Income | Market approach (comparable companies) | ||
FAIR VALUE | ||
Assets, at fair value | $ 222 | $ 1,776 |
Unobservable Input | ||
EBITDA multiple | 5.6 | 6.5 |
Consolidated Funds | Level III | Fixed Income | Market approach (comparable companies) | Weighted Average | ||
Unobservable Input | ||
EBITDA multiple | 5.6 | 6.5 |
Consolidated Funds | Level III | Fixed Income | Recent transaction price | ||
FAIR VALUE | ||
Assets, at fair value | $ 4,887 | |
Consolidated Funds | Level III | Fixed Income | Income approach, Yield | ||
FAIR VALUE | ||
Assets, at fair value | $ 80,590 | $ 28,595 |
Consolidated Funds | Level III | Fixed Income | Income approach, Yield | Minimum | ||
Unobservable Input | ||
Yield | 4.90% | 6.00% |
Consolidated Funds | Level III | Fixed Income | Income approach, Yield | Maximum | ||
Unobservable Input | ||
Yield | 14.30% | 13.60% |
Consolidated Funds | Level III | Fixed Income | Income approach, Yield | Weighted Average | ||
Unobservable Input | ||
Yield | 9.40% | 10.90% |
Consolidated Funds | Level III | Fixed Income | Income approach, collection rate | ||
FAIR VALUE | ||
Assets, at fair value | $ 5,473 | |
Unobservable Input | ||
Collection rates | 1.2 | |
Consolidated Funds | Level III | Fixed Income | Income approach, collection rate | Weighted Average | ||
Unobservable Input | ||
Collection rates | 1.2 | |
Consolidated Funds | Level III | Fixed Income | Market approach | ||
FAIR VALUE | ||
Assets, at fair value | $ 546 | |
Consolidated Funds | Level III | Fixed Income | Market approach | Minimum | ||
Unobservable Input | ||
EBITDA multiple | 6.1 | |
Consolidated Funds | Level III | Fixed Income | Market approach | Weighted Average | ||
Unobservable Input | ||
EBITDA multiple | 6.1 | |
Consolidated Funds | Level III | Derivative Financial Instruments | Broker quotes and/or 3rd party pricing services | ||
FAIR VALUE | ||
Assets, at fair value | $ 1,328 | $ 291 |
FAIR VALUE (Investments Using N
FAIR VALUE (Investments Using NAV per Share) (Details) - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
FAIR VALUE | ||
Fair Value | $ 381,610 | $ 325,715 |
Unfunded Commitments | 239,453 | 197,791 |
Credit Group | ||
FAIR VALUE | ||
Fair Value | 77,220 | 53,131 |
Unfunded Commitments | 79,303 | 30,896 |
Private Equity Group | ||
FAIR VALUE | ||
Fair Value | 188,615 | 181,096 |
Unfunded Commitments | 91,311 | 96,687 |
Real Estate Group | ||
FAIR VALUE | ||
Fair Value | 83,484 | 71,669 |
Unfunded Commitments | 48,816 | 35,708 |
Non-core investments | ||
FAIR VALUE | ||
Fair Value | 32,291 | 19,819 |
Unfunded Commitments | $ 20,023 | $ 34,500 |
DERIVATIVE FINANCIAL INSTRUME48
DERIVATIVE FINANCIAL INSTRUMENTS (Details) - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
Liabilities | ||
Derivative asset, amount not offset | $ 1,300 | |
Derivative liability, amount not offset | 1,300 | |
Ares Management L.P | ||
Assets | ||
Notional amount, Assets | 37,907 | $ 62,830 |
Fair Value, Assets | 1,310 | 3,171 |
Liabilities | ||
Notional amount, Liabilities | 124,536 | 0 |
Fair Value, Liabilities | 4,194 | 0 |
Ares Management L.P | Foreign exchange contracts | ||
Assets | ||
Notional amount, Assets | 37,907 | 62,830 |
Fair Value, Assets | 1,310 | 3,171 |
Liabilities | ||
Notional amount, Liabilities | 124,536 | 0 |
Fair Value, Liabilities | 4,194 | 0 |
Consolidated Funds | ||
Assets | ||
Notional amount, Assets | 6,071 | 28,879 |
Fair Value, Assets | 1,328 | 820 |
Notional amount, Total | 6,071 | 29,132 |
Fair Value, Total | 1,328 | 844 |
Liabilities | ||
Notional amount, Liabilities | (2,368) | (204) |
Fair Value, Liabilities | (201) | (2,999) |
Derivative asset, amount offset | 700 | 1,400 |
Derivative liability, amount offset | 700 | 1,400 |
Consolidated Funds | Foreign exchange contracts | ||
Assets | ||
Notional amount, Assets | 0 | 25,304 |
Fair Value, Assets | 0 | 529 |
Liabilities | ||
Notional amount, Liabilities | 0 | 0 |
Fair Value, Liabilities | 0 | 0 |
Consolidated Funds | Other financial instruments | ||
Assets | ||
Notional amount, Assets | 6,071 | 3,575 |
Fair Value, Assets | 1,328 | 291 |
Liabilities | ||
Notional amount, Liabilities | (2,368) | (204) |
Fair Value, Liabilities | (201) | (2,999) |
Consolidated Funds | Other equity | ||
Assets | ||
Notional amount, Assets | 0 | 253 |
Fair Value, Assets | 0 | 24 |
Liabilities | ||
Notional amount, Liabilities | 0 | 0 |
Fair Value, Liabilities | $ 0 | $ 0 |
DEBT (Debt Obligations) (Detail
DEBT (Debt Obligations) (Details) - Ares Management L.P - USD ($) | 1 Months Ended | 9 Months Ended | |
Oct. 31, 2014 | Sep. 30, 2017 | Dec. 31, 2016 | |
DEBT | |||
Carrying Value | $ 486,007,000 | $ 305,784,000 | |
Credit Facility | |||
DEBT | |||
Carrying Value | $ 110,000,000 | $ 0 | |
Interest Rate | 2.75% | 0.00% | |
Maximum borrowing capacity | $ 1,065,000,000 | ||
Unused commitment fees | 0.20% | ||
Interest rate | 0.00% | ||
Credit Facility | Base rate | |||
DEBT | |||
Interest rate spread | 0.50% | ||
Credit Facility | LIBOR | |||
DEBT | |||
Interest rate spread | 1.50% | ||
Senior Notes | |||
DEBT | |||
Original Borrowing Amount | $ 250,000,000 | ||
Carrying Value | $ 245,149,000 | $ 244,684,000 | |
Interest Rate | 4.21% | 4.21% | |
Term Loan 2015 | |||
DEBT | |||
Original Borrowing Amount | $ 35,205,000 | ||
Carrying Value | $ 35,032,000 | $ 35,063,000 | |
Interest Rate | 2.79% | 2.74% | |
Unused commitment fees | 0.025% | ||
Term Loan 2016 | |||
DEBT | |||
Original Borrowing Amount | $ 26,376,000 | ||
Carrying Value | $ 25,999,000 | $ 26,037,000 | |
Interest Rate | 3.02% | 2.66% | |
Unused commitment fees | 0.03% | ||
Term Loan 2017 | |||
DEBT | |||
Unused commitment fees | 0.03% | ||
Term Loan 2017 Due January 2028 | |||
DEBT | |||
Original Borrowing Amount | $ 17,600,000 | ||
Carrying Value | $ 17,474,000 | ||
Interest Rate | 2.70% | ||
Term Loan 2017 Due October 2029 | |||
DEBT | |||
Original Borrowing Amount | $ 35,198,000 | ||
Carrying Value | $ 35,147,000 | ||
Interest Rate | 2.63% | ||
Term Loan 2017 Due July 2029 | |||
DEBT | |||
Original Borrowing Amount | $ 17,211,000 | ||
Carrying Value | $ 17,206,000 | ||
Interest Rate | 2.75% | ||
AFC Notes | |||
DEBT | |||
Debt issuance percentage | 98.268% |
DEBT (Debt Issuance Costs) (Det
DEBT (Debt Issuance Costs) (Details) - Ares Management L.P $ in Thousands | 9 Months Ended |
Sep. 30, 2017USD ($) | |
Credit Facility | |
Debt Issuance Costs [Roll Forward] | |
Unamortized debt issuance costs as of December 31, 2016 | $ 4,800 |
Debt issuance costs incurred | 3,387 |
Amortization of debt issuance costs | (1,258) |
Unamortized debt issuance costs as of September 30, 2017 | 6,929 |
Senior Notes | |
Debt Issuance Costs [Roll Forward] | |
Unamortized debt issuance costs as of December 31, 2016 | 1,803 |
Debt issuance costs incurred | 0 |
Amortization of debt issuance costs | (174) |
Unamortized debt issuance costs as of September 30, 2017 | 1,629 |
Term Loans | |
Debt Issuance Costs [Roll Forward] | |
Unamortized debt issuance costs as of December 31, 2016 | 526 |
Debt issuance costs incurred | 253 |
Amortization of debt issuance costs | (48) |
Unamortized debt issuance costs as of September 30, 2017 | $ 731 |
DEBT (Loan Obligations of the C
DEBT (Loan Obligations of the Consolidated CLOs) (Details) - Consolidated Funds - USD ($) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2017 | Dec. 31, 2016 | |
DEBT | ||
Fair Value of Loan Obligations | $ 4,476,643,000 | $ 3,031,112,000 |
Fixed income-collateralized loan obligations | ||
DEBT | ||
Loan Obligations | 4,572,350,000 | 3,123,825,000 |
Fair Value of Loan Obligations | 4,476,643,000 | 3,031,112,000 |
Senior secured notes | Fixed income-collateralized loan obligations | ||
DEBT | ||
Loan Obligations | 4,298,009,000 | 2,839,779,000 |
Fair Value of Loan Obligations | $ 4,279,766,000 | $ 2,841,440,000 |
Weighted Average Remaining Maturity In Years | 9 years 9 months 10 days | 9 years 8 months 4 days |
Debt instrument face amount | $ 4,300,000,000 | |
Weighted average interest rate (as a percent) | 4.25% | |
Subordinated notes / preferred shares | Fixed income-collateralized loan obligations | ||
DEBT | ||
Loan Obligations | $ 274,341,000 | $ 284,046,000 |
Fair Value of Loan Obligations | $ 196,877,000 | $ 189,672,000 |
Weighted Average Remaining Maturity In Years | 10 years 18 days | 9 years 11 months 19 days |
Debt instrument face amount | $ 274,300,000 |
DEBT (Credit Facilities of the
DEBT (Credit Facilities of the Consolidated Funds) (Details) - Consolidated Funds - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
DEBT | ||
Total borrowings | $ 121,261 | $ 55,070 |
Credit facility with maturity 1/1/2023 | ||
DEBT | ||
Total Capacity | 18,000 | |
Outstanding Loan | $ 12,942 | $ 12,942 |
Effective Rate | 2.75% | 2.38% |
Credit facility with maturity 06/30/2018 | ||
DEBT | ||
Total Capacity | $ 47,284 | |
Outstanding Loan | $ 30,599 | $ 42,128 |
Effective Rate | 1.55% | 1.55% |
Interest rate | 0.00% | 0.00% |
Credit facility with maturity 03/07/2018 | ||
DEBT | ||
Total Capacity | $ 71,500 | |
Outstanding Loan | $ 71,500 | |
Effective Rate | 2.62% | |
Credit facility with maturity 08/19/2019 | ||
DEBT | ||
Total Capacity | $ 11,429 | |
Outstanding Loan | $ 6,220 | |
Effective Rate | 5.74% |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Details) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Sep. 30, 2017 | Dec. 31, 2016 | |
COMMITMENTS AND CONTINGENCIES | |||||
Unfunded capital commitments | $ 316,500,000 | $ 316,500,000 | $ 535,300,000 | ||
Performance Fees | |||||
Performance Fees | |||||
Performance fees subject to potential clawback provision | 471,800,000 | 471,800,000 | 418,300,000 | ||
Performance fees subject to potential claw back provision that are reimbursable by professionals | 366,600,000 | 366,600,000 | 323,900,000 | ||
EIF Management, LLC | |||||
COMMITMENTS AND CONTINGENCIES | |||||
Unfunded commitment related to acquisition | 20,300,000 | ||||
Reverse in contingent consideration liability | $ 20,300,000 | ||||
Kayne Anderson Capital Advisors L.P. | |||||
COMMITMENTS AND CONTINGENCIES | |||||
Unfunded capital commitments | 20,000,000 | 20,000,000 | $ 89,200,000 | ||
ARCC | American Capital Ltd. | |||||
ARCC and American Capital, Ltd. Merger Agreement | |||||
Maximum fees waived | 10,000,000 | ||||
Term of fee waiver | 30 months | ||||
Maximum amount that shortfall will not carry over | 10,000,000 | ||||
Remaining fees waived | $ 80,000,000 | $ 80,000,000 | |||
Remaining term of fee waiver | 24 months |
RELATED PARTY TRANSACTIONS (Det
RELATED PARTY TRANSACTIONS (Details) - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
Ares Management L.P | ||
Due from affiliates: | ||
Due from affiliates | $ 161,432 | $ 162,936 |
Due to affiliates: | ||
Due to affiliates | 17,207 | 17,564 |
Ares Management L.P | Affiliated entity | ||
Due from affiliates: | ||
Management fees receivable from non-consolidated funds | 120,242 | 123,781 |
Payments made on behalf of and amounts due from non-consolidated funds and employees | 41,190 | 39,155 |
Due to affiliates: | ||
Management fee rebate payable to non-consolidated funds | 4,822 | 7,914 |
Management fees received in advance | 4,608 | 1,788 |
Tax receivable agreement liability | 4,748 | 4,748 |
Payments made by non-consolidated funds on behalf of and payable by the Company | 3,029 | 3,114 |
Consolidated Funds | ||
Due from affiliates: | ||
Due from affiliates | 8,047 | 3,592 |
Due to affiliates: | ||
Due to affiliates | 0 | 0 |
Consolidated Funds | Affiliated entity | ||
Due from affiliates: | ||
Due from affiliates | $ 8,047 | $ 3,592 |
INCOME TAXES (Details)
INCOME TAXES (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Income Tax Disclosure [Abstract] | ||||
Income tax expense (benefit) | $ 4,552 | $ 7,641 | $ (28,459) | $ 7,868 |
EARNINGS PER COMMON UNIT (Antid
EARNINGS PER COMMON UNIT (Antidilutive) (Details) - shares | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
AOG | ||||
Earnings per common unit | ||||
Antidilutive securities excluded from calculation of earnings per common unit (in units) | 130,192,448 | 130,852,861 | 130,280,878 | 131,858,404 |
Options | ||||
Earnings per common unit | ||||
Antidilutive securities excluded from calculation of earnings per common unit (in units) | 21,022,924 | 22,164,772 | 21,170,880 | 23,008,147 |
Restricted units | ||||
Earnings per common unit | ||||
Antidilutive securities excluded from calculation of earnings per common unit (in units) | 13,742,856 | 0 | 14,223,345 | 62,909 |
EARNINGS PER COMMON UNIT (Compu
EARNINGS PER COMMON UNIT (Computation of Basic and Diluted Earnings Per Common Unit) (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Basic | ||||
Net income attributable to Ares Management, L.P. common unitholders | $ 22,413 | $ 36,554 | $ 20,307 | $ 71,042 |
Earnings distributed to participating securities (restricted units) | (1,003) | (480) | (2,248) | (895) |
Preferred stock dividends | 0 | 0 | 0 | (8) |
Net income available to common unitholders | $ 21,410 | $ 36,074 | $ 18,059 | $ 70,139 |
Basic weighted-average common units (in units) | 82,166,852 | 80,793,984 | 81,704,815 | 80,741,460 |
Earnings per common unit, basic (in dollars per unit) | $ 0.26 | $ 0.45 | $ 0.22 | $ 0.87 |
Diluted | ||||
Earnings distributed to participating securities (restricted units) | $ (1,003) | $ 0 | $ (2,248) | $ 0 |
Preferred stock dividends | 0 | 0 | 0 | (8) |
Net income available to common unitholders | $ 21,410 | $ 36,554 | $ 18,059 | $ 71,034 |
Effect of dilutive units: | ||||
Diluted weighted-average common units (in units) | 82,166,852 | 84,464,591 | 81,704,815 | 82,667,049 |
Diluted earnings per common unit (in dollars per unit) | $ 0.26 | $ 0.43 | $ 0.22 | $ 0.86 |
Restricted units | ||||
Effect of dilutive units: | ||||
Restricted units (in units) | 0 | 3,670,607 | 0 | 1,925,589 |
EQUITY COMPENSATION (Equity Inc
EQUITY COMPENSATION (Equity Incentive Plan) (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | Jan. 01, 2017 | |
Equity compensation | |||||
Equity compensation expenses | $ 18,091 | $ 8,476 | $ 52,097 | $ 27,185 | |
Restricted units | |||||
Equity compensation | |||||
Equity compensation expenses | 14,555 | 5,350 | 40,375 | 14,797 | |
Options | |||||
Equity compensation | |||||
Equity compensation expenses | 3,224 | 2,693 | 10,637 | 11,153 | |
Phantom units | |||||
Equity compensation | |||||
Equity compensation expenses | $ 312 | $ 433 | $ 1,085 | $ 1,235 | |
Ares Management L.P | |||||
Equity compensation | |||||
Total number of units available for grant under the Equity Incentive Plan (in units) | 24,550,987 | 24,550,987 | 30,397,280 |
EQUITY COMPENSATION (Restricted
EQUITY COMPENSATION (Restricted Units) (Details) - Restricted units $ / shares in Units, $ in Millions | 3 Months Ended | 9 Months Ended |
Sep. 30, 2017USD ($)$ / sharesshares | Sep. 30, 2017USD ($)$ / sharesshares | |
Equity compensation | ||
Distribution equivalents made to holders | $ | $ 4.3 | $ 10.3 |
Units | ||
Balance at the beginning of the period (in units) | shares | 8,058,372 | |
Granted (in units) | shares | 7,944,144 | |
Vested (in units) | shares | (1,833,422) | |
Forfeited (in units) | shares | (426,238) | |
Balance at the end of the period (in units) | shares | 13,742,856 | 13,742,856 |
Weighted Average Grant Date Fair Value | ||
Balance at the beginning of the period (in dollars per unit) | $ / shares | $ 16.38 | |
Granted (in dollars per unit) | $ / shares | 18.61 | |
Vested (in dollars per unit) | $ / shares | 16.56 | |
Forfeited (in dollars per unit) | $ / shares | 17.82 | |
Balance at the end of the period (in dollars per unit) | $ / shares | $ 17.58 | $ 17.58 |
Unrecognized compensation expenses | $ | $ 183.2 | $ 183.2 |
Weighted average period of compensation expense expected to be recognized | 3 years 8 months 8 days | |
Third Anniversary of Grant Date | ||
Equity compensation | ||
Annual award vesting percentage | 33.33% | |
First Anniversary of Grant Date | ||
Equity compensation | ||
Annual award vesting percentage | 25.00% |
EQUITY COMPENSATION (Options) (
EQUITY COMPENSATION (Options) (Details) - Stock Options - USD ($) $ / shares in Units, $ in Thousands | 9 Months Ended | 12 Months Ended |
Sep. 30, 2017 | Dec. 31, 2016 | |
Options | ||
Balance at the beginning of the period (in units) | 22,232,134 | |
Granted (in units) | 0 | |
Exercised (in units) | (54,500) | |
Expired (in units) | (433,609) | |
Forfeited (in units) | (721,101) | |
Balance at the end of the period (in units) | 21,022,924 | 22,232,134 |
Exercisable at the end of the period (in units) | 7,106,989 | |
Weighted Average Exercise Price | ||
Balance at the beginning of the period (in dollars per unit) | $ 18.99 | |
Granted (in dollars per unit) | 0 | |
Exercised (in dollars per unit) | 19 | |
Expired (in dollars per unit) | 19 | |
Forfeited (in dollars per unit) | 19 | |
Balance at the end of the period (in dollars per unit) | 18.99 | $ 18.99 |
Exercisable at the end of the period (in dollars per unit) | $ 19 | |
Weighted Average Remaining Life | ||
Weighted average remaining life | 7 years 4 months 5 days | |
Expected to vest at the end of the period | 6 years 6 months 22 days | |
Exercisable at the end of the period | 6 years 6 months 22 days | |
Aggregate Intrinsic Value | ||
Balance at the end of the period (in dollars) | $ 0 | |
Exercisable at end of the period (in dollars) | 0 | |
Unrecognized compensation expenses | $ 26,500 | |
Weighted average period of compensation expense expected to be recognized | 1 year 7 months 6 days |
EQUITY COMPENSATION (Phantom Un
EQUITY COMPENSATION (Phantom Units) (Details) - Phantom units $ / shares in Units, $ in Millions | 9 Months Ended |
Sep. 30, 2017USD ($)$ / sharesshares | |
Units | |
Balance at the beginning of the period (in units) | shares | 266,138 |
Vested (in units) | shares | (87,221.6) |
Forfeited (in units) | shares | (20,872) |
Balance at the end of the period (in units) | shares | 158,044 |
Weighted Average Grant Date Fair Value | |
Balance at the beginning of the period (in dollars per unit) | $ 19 |
Vested (in dollars per unit) | 19 |
Forfeited (in dollars per unit) | 19 |
Balance at the end of the period (in dollars per unit) | 19 |
Share price (USD per share) | $ 18.65 |
Unrecognized compensation expenses | $ | $ 2.3 |
Weighted average period of compensation expense expected to be recognized | 1 year 7 months 2 days |
Cash used to settle awards | $ | $ 1.7 |
EQUITY (Details)
EQUITY (Details) - USD ($) $ / shares in Units, $ in Millions | Mar. 02, 2017 | Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | Dec. 31, 2016 |
STOCKHOLDERS' EQUITY AND MEMBERS' CAPITAL | ||||||
AOG Units (in units) | 212,384,525 | 212,384,525 | 211,243,045 | |||
Direct Ownership Interest | 100.00% | 100.00% | 100.00% | |||
Dividend rate, percentage | 7.00% | |||||
Redemption price (dollars per unit) | $ 25 | $ 25 | ||||
Fees related to secondary offering | $ 0.7 | |||||
Preferred Equity | ||||||
STOCKHOLDERS' EQUITY AND MEMBERS' CAPITAL | ||||||
Issuance of common units (in units) | 12,400,000 | 12,400,000 | 12,400,000 | |||
Ares Owners Holding L.P. | ||||||
STOCKHOLDERS' EQUITY AND MEMBERS' CAPITAL | ||||||
AOG Units (in units) | 117,673,223 | 117,673,223 | 117,928,313 | |||
Direct Ownership Interest | 55.40% | 55.40% | 55.82% | |||
Daily Average Ownership | 55.42% | 55.92% | 55.56% | 56.14% | ||
Affiliate of Alleghany Corporation | ||||||
STOCKHOLDERS' EQUITY AND MEMBERS' CAPITAL | ||||||
AOG Units (in units) | 12,500,000 | 12,500,000 | 12,500,000 | |||
Direct Ownership Interest | 5.89% | 5.89% | 5.92% | |||
Daily Average Ownership | 5.89% | 5.91% | 5.90% | 5.88% | ||
ADIA | ||||||
STOCKHOLDERS' EQUITY AND MEMBERS' CAPITAL | ||||||
Number of units sold (in units) | 7,500,000 | |||||
Ares Management, L.P. | ||||||
STOCKHOLDERS' EQUITY AND MEMBERS' CAPITAL | ||||||
AOG Units (in units) | 82,211,302 | 82,211,302 | 80,814,732 | |||
Direct Ownership Interest | 38.71% | 38.71% | 38.26% | |||
Daily Average Ownership | 38.69% | 38.17% | 38.54% | 37.98% |
SEGMENT REPORTING (Narrative) (
SEGMENT REPORTING (Narrative) (Details) $ in Billions | 9 Months Ended |
Sep. 30, 2017USD ($)segmentgroupfund | |
Segment reporting | |
Number operating segments | segment | 3 |
Ares Management L.P | Credit Group | |
Segment reporting | |
Assets under management | $ | $ 70.5 |
Number of funds managed | 142 |
Ares Management L.P | Private Equity | |
Segment reporting | |
Assets under management | $ | $ 24.6 |
Number of private equity commingled funds focus North America and Europe | 5 |
Number of funds focused on U.S. energy and power assets | 5 |
Number of co-investment vehicles focused on U.S. energy and power assets | 6 |
Number of special situation funds | 3 |
Ares Management L.P | Real Estate | |
Segment reporting | |
Assets under management | $ | $ 10.6 |
Number of funds managed | 42 |
Ares Management L.P | OMG | |
Segment reporting | |
Number of independent shared resource groups to support entity's operating segments | group | 5 |
Greater China | Ares Management L.P | Private Equity | |
Segment reporting | |
Number of commingled funds | 2 |
SEGMENT REPORTING (Operating Se
SEGMENT REPORTING (Operating Segments) (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Segment reporting | ||||
Other fees | $ 0 | |||
Operating segment | ||||
Segment reporting | ||||
Fee related earnings | 103,936 | $ 84,681 | $ 299,699 | $ 245,789 |
Performance fees—realized | 178,989 | 132,837 | 261,924 | 220,790 |
Performance fees—unrealized | (89,423) | 32,368 | 223,467 | 118,334 |
Total performance fee compensation - realized | (140,979) | (93,778) | (199,253) | (146,792) |
Performance fee compensation—unrealized | 82,342 | (29,395) | (161,791) | (106,947) |
Net investment income | 8,563 | 34,040 | 49,720 | 51,685 |
Performance related earnings | 39,492 | 76,072 | 174,067 | 137,070 |
Economic net income | 143,428 | 160,753 | 473,766 | 382,859 |
Distributable earnings | 153,665 | 133,431 | 362,694 | 342,386 |
OMG | ||||
Segment reporting | ||||
Management fees (includes ARCC Part I Fees of $24,036, $76,436 and $33,260, $90,884 for the three and nine months ended September 30, 2017 and 2016, respectively) | 0 | 0 | 0 | 0 |
Other fees | 0 | 0 | 0 | 0 |
Compensation and benefits | (27,577) | (25,960) | (84,881) | (77,225) |
General, administrative and other expenses | (18,380) | (13,386) | (56,729) | (44,616) |
Fee related earnings | (45,957) | (39,346) | (141,610) | (121,841) |
Performance fees—realized | 0 | 0 | 0 | 0 |
Performance fees—unrealized | 0 | 0 | 0 | 0 |
Total performance fee compensation - realized | 0 | 0 | 0 | 0 |
Performance fee compensation—unrealized | 0 | 0 | 0 | 0 |
Net performance fees | 0 | 0 | 0 | 0 |
Investment income (loss)—realized | 18 | (20,005) | 3,217 | (20,093) |
Investment income (loss)—unrealized | 4,357 | 15,979 | 222 | 4,460 |
Interest and other investment income (expense) | 26 | 15 | 1,125 | (53) |
Interest expense | (441) | (664) | (1,380) | (2,101) |
Net investment income | 3,960 | (4,675) | 3,184 | (17,787) |
Performance related earnings | 3,960 | (4,675) | 3,184 | (17,787) |
Economic net income | (41,997) | (44,021) | (138,426) | (139,628) |
Distributable earnings | (53,214) | (66,696) | (151,642) | (157,550) |
Total | ||||
Segment reporting | ||||
Management fees (includes ARCC Part I Fees of $24,036, $76,436 and $33,260, $90,884 for the three and nine months ended September 30, 2017 and 2016, respectively) | 188,628 | 168,796 | 550,969 | 494,076 |
Other fees | 6,144 | 751 | 16,998 | 2,777 |
Compensation and benefits | (104,782) | (97,338) | (309,238) | (290,176) |
General, administrative and other expenses | (32,011) | (26,874) | (100,640) | (82,729) |
Fee related earnings | 57,979 | 45,335 | 158,089 | 123,948 |
Performance fees—realized | 178,989 | 132,837 | 261,924 | 220,790 |
Performance fees—unrealized | (89,423) | 32,368 | 223,467 | 118,334 |
Total performance fee compensation - realized | (140,979) | (93,778) | (199,253) | (146,792) |
Performance fee compensation—unrealized | 82,342 | (29,395) | (161,791) | (106,947) |
Net performance fees | 30,929 | 42,032 | 124,347 | 85,385 |
Investment income (loss)—realized | 22,489 | (8,301) | 33,983 | (4,650) |
Investment income (loss)—unrealized | (5,954) | 34,716 | 25,640 | 20,629 |
Interest and other investment income (expense) | 1,331 | 7,086 | 8,857 | 31,738 |
Interest expense | (5,343) | (4,136) | (15,576) | (13,819) |
Net investment income | 12,523 | 29,365 | 52,904 | 33,898 |
Performance related earnings | 43,452 | 71,397 | 177,251 | 119,283 |
Economic net income | 101,431 | 116,732 | 335,340 | 243,231 |
Distributable earnings | 100,451 | 66,735 | 211,052 | 184,836 |
Ares Management L.P | ||||
Segment reporting | ||||
Management fees (includes ARCC Part I Fees of $24,036, $76,436 and $33,260, $90,884 for the three and nine months ended September 30, 2017 and 2016, respectively) | 183,177 | 163,609 | 535,990 | 480,563 |
Other fees | 13,486 | 7,369 | 43,024 | 22,761 |
Compensation and benefits | (129,347) | (111,916) | (384,905) | (335,249) |
General, administrative and other expenses | (47,104) | (38,197) | (145,193) | (116,845) |
Net investment income | (1,831) | (1,681) | (6,218) | (47) |
Ares Management L.P | Affiliated entity | ARCC | ||||
Segment reporting | ||||
Management fees (includes ARCC Part I Fees of $24,036, $76,436 and $33,260, $90,884 for the three and nine months ended September 30, 2017 and 2016, respectively) | 24,036 | 33,260 | 76,436 | 90,884 |
Ares Management L.P | Operating segment | ||||
Segment reporting | ||||
Management fees (includes ARCC Part I Fees of $24,036, $76,436 and $33,260, $90,884 for the three and nine months ended September 30, 2017 and 2016, respectively) | 188,628 | 168,796 | 550,969 | 494,076 |
Other fees | 6,144 | 751 | 16,998 | 2,777 |
Compensation and benefits | (77,205) | (71,378) | (224,357) | (212,951) |
General, administrative and other expenses | (13,631) | (13,488) | (43,911) | (38,113) |
Fee related earnings | 103,936 | 84,681 | 299,699 | 245,789 |
Performance fees—realized | 178,989 | 132,837 | 261,924 | 220,790 |
Performance fees—unrealized | (89,423) | 32,368 | 223,467 | 118,334 |
Total performance fee compensation - realized | (140,979) | (93,778) | (199,253) | (146,792) |
Performance fee compensation—unrealized | 82,342 | (29,395) | (161,791) | (106,947) |
Net performance fees | 30,929 | 42,032 | 124,347 | 85,385 |
Investment income (loss)—realized | 22,471 | 11,704 | 30,766 | 15,443 |
Investment income (loss)—unrealized | (10,311) | 18,737 | 25,418 | 16,169 |
Interest and other investment income (expense) | 1,305 | 7,071 | 7,732 | 31,791 |
Interest expense | (4,902) | (3,472) | (14,196) | (11,718) |
Net investment income | 8,563 | 34,040 | 49,720 | 51,685 |
Performance related earnings | 39,492 | 76,072 | 174,067 | 137,070 |
Economic net income | 143,428 | 160,753 | 473,766 | 382,859 |
Distributable earnings | 153,665 | 133,431 | 362,694 | 342,386 |
Ares Management L.P | Operating segment | Credit Group | ||||
Segment reporting | ||||
Management fees (includes ARCC Part I Fees of $24,036, $76,436 and $33,260, $90,884 for the three and nine months ended September 30, 2017 and 2016, respectively) | 120,178 | 115,794 | 354,179 | 332,182 |
Other fees | 5,668 | 280 | 15,834 | 939 |
Compensation and benefits | (46,551) | (45,222) | (142,647) | (135,068) |
General, administrative and other expenses | (6,851) | (7,274) | (22,766) | (19,383) |
Fee related earnings | 72,444 | 63,578 | 204,600 | 178,670 |
Performance fees—realized | 3,296 | 22,422 | 19,957 | 44,624 |
Performance fees—unrealized | 33,033 | 11,152 | 41,062 | (1,544) |
Total performance fee compensation - realized | (1,466) | (7,241) | (8,649) | (9,978) |
Performance fee compensation—unrealized | (19,820) | (11,686) | (27,357) | (9,853) |
Net performance fees | 15,043 | 14,647 | 25,013 | 23,249 |
Investment income (loss)—realized | 6,206 | 588 | 9,049 | 390 |
Investment income (loss)—unrealized | (1,123) | 5,460 | 16 | 9,256 |
Interest and other investment income (expense) | (540) | 5,940 | 2,399 | 21,617 |
Interest expense | (3,277) | (1,831) | (8,800) | (6,729) |
Net investment income | 1,266 | 10,157 | 2,664 | 24,534 |
Performance related earnings | 16,309 | 24,804 | 27,677 | 47,783 |
Economic net income | 88,753 | 88,382 | 232,277 | 226,453 |
Distributable earnings | 73,120 | 81,542 | 204,402 | 221,357 |
Ares Management L.P | Operating segment | Private Equity | ||||
Segment reporting | ||||
Management fees (includes ARCC Part I Fees of $24,036, $76,436 and $33,260, $90,884 for the three and nine months ended September 30, 2017 and 2016, respectively) | 51,313 | 35,183 | 147,559 | 111,100 |
Other fees | 449 | 309 | 1,127 | 983 |
Compensation and benefits | (19,256) | (16,697) | (50,862) | (46,556) |
General, administrative and other expenses | (4,655) | (3,925) | (13,198) | (10,489) |
Fee related earnings | 27,851 | 14,870 | 84,626 | 55,038 |
Performance fees—realized | 173,304 | 108,245 | 238,084 | 171,024 |
Performance fees—unrealized | (142,822) | 16,569 | 118,162 | 109,848 |
Total performance fee compensation - realized | (138,657) | (86,537) | (189,571) | (136,761) |
Performance fee compensation—unrealized | 114,395 | (13,387) | (95,131) | (88,766) |
Net performance fees | 6,220 | 24,890 | 71,544 | 55,345 |
Investment income (loss)—realized | 14,268 | 11,267 | 17,564 | 14,641 |
Investment income (loss)—unrealized | (8,421) | 7,066 | 25,479 | (1,030) |
Interest and other investment income (expense) | 1,129 | 417 | 3,264 | 8,532 |
Interest expense | (1,229) | (1,399) | (4,139) | (4,201) |
Net investment income | 5,747 | 17,351 | 42,168 | 17,942 |
Performance related earnings | 11,967 | 42,241 | 113,712 | 73,287 |
Economic net income | 39,818 | 57,111 | 198,338 | 128,325 |
Distributable earnings | 75,809 | 45,481 | 145,696 | 104,162 |
Ares Management L.P | Operating segment | Real Estate | ||||
Segment reporting | ||||
Management fees (includes ARCC Part I Fees of $24,036, $76,436 and $33,260, $90,884 for the three and nine months ended September 30, 2017 and 2016, respectively) | 17,137 | 17,819 | 49,231 | 50,794 |
Other fees | 27 | 162 | 37 | 855 |
Compensation and benefits | (11,398) | (9,459) | (30,848) | (31,327) |
General, administrative and other expenses | (2,125) | (2,289) | (7,947) | (8,241) |
Fee related earnings | 3,641 | 6,233 | 10,473 | 12,081 |
Performance fees—realized | 2,389 | 2,170 | 3,883 | 5,142 |
Performance fees—unrealized | 20,366 | 4,647 | 64,243 | 10,030 |
Total performance fee compensation - realized | (856) | 0 | (1,033) | (53) |
Performance fee compensation—unrealized | (12,233) | (4,322) | (39,303) | (8,328) |
Net performance fees | 9,666 | 2,495 | 27,790 | 6,791 |
Investment income (loss)—realized | 1,997 | (151) | 4,153 | 412 |
Investment income (loss)—unrealized | (767) | 6,211 | (77) | 7,943 |
Interest and other investment income (expense) | 716 | 714 | 2,069 | 1,642 |
Interest expense | (396) | (242) | (1,257) | (788) |
Net investment income | 1,550 | 6,532 | 4,888 | 9,209 |
Performance related earnings | 11,216 | 9,027 | 32,678 | 16,000 |
Economic net income | 14,857 | 15,260 | 43,151 | 28,081 |
Distributable earnings | $ 4,736 | $ 6,408 | $ 12,596 | $ 16,867 |
SEGMENT REPORTING (Revenue, Exp
SEGMENT REPORTING (Revenue, Expenses and Other Income (Expense) (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Segment revenues | ||||
Other fees | $ 0 | |||
Total revenues | 283,671 | $ 335,460 | $ 1,059,218 | $ 841,010 |
Segment expenses | ||||
Total expenses | 254,127 | 283,374 | 1,193,791 | 716,847 |
Segment other income | ||||
Total other income | 58,880 | 73,339 | 147,489 | 75,294 |
Operating segment | ||||
Segment revenues | ||||
Performance fees—realized | 178,989 | 132,837 | 261,924 | 220,790 |
Performance fees—unrealized | (89,423) | 32,368 | 223,467 | 118,334 |
Segment expenses | ||||
Performance fee compensation—realized | 140,979 | 93,778 | 199,253 | 146,792 |
Total performance fee compensation - unrealized | (82,342) | 29,395 | 161,791 | 106,947 |
Ares Management L.P | ||||
Segment revenues | ||||
Management fees | 183,177 | 163,609 | 535,990 | 480,563 |
Other fees | 13,486 | 7,369 | 43,024 | 22,761 |
Total revenues | 283,671 | 335,460 | 1,059,218 | 841,010 |
Segment expenses | ||||
Compensation and benefits | 129,347 | 111,916 | 384,905 | 335,249 |
General, administrative and other expenses | 47,104 | 38,197 | 145,193 | 116,845 |
Ares Management L.P | Operating segment | ||||
Segment revenues | ||||
Management fees | 188,628 | 168,796 | 550,969 | 494,076 |
Other fees | 6,144 | 751 | 16,998 | 2,777 |
Performance fees—realized | 178,989 | 132,837 | 261,924 | 220,790 |
Performance fees—unrealized | (89,423) | 32,368 | 223,467 | 118,334 |
Total revenues | 284,338 | 334,752 | 1,053,358 | 835,977 |
Segment expenses | ||||
Compensation and benefits | 77,205 | 71,378 | 224,357 | 212,951 |
General, administrative and other expenses | 13,631 | 13,488 | 43,911 | 38,113 |
Performance fee compensation—realized | 140,979 | 93,778 | 199,253 | 146,792 |
Total performance fee compensation - unrealized | (82,342) | 29,395 | 161,791 | 106,947 |
Total expenses | 149,473 | 208,039 | 629,312 | 504,803 |
Segment other income | ||||
Investment income (loss)—realized | 22,471 | 11,704 | 30,766 | 15,443 |
Investment income (loss)—unrealized | (10,311) | 18,737 | 25,418 | 16,169 |
Interest and other investment income (expense) | 1,305 | 7,071 | 7,732 | 31,791 |
Interest expense | (4,902) | (3,472) | (14,196) | (11,718) |
Total other income | 8,563 | 34,040 | 49,720 | 51,685 |
Affiliated entity | ARCC | Ares Management L.P | ||||
Segment revenues | ||||
Management fees | $ 24,036 | $ 33,260 | $ 76,436 | $ 90,884 |
SEGMENT REPORTING (Revenue Reco
SEGMENT REPORTING (Revenue Reconciliation) (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Revenue adjustment | ||||
Revenues | $ 283,671 | $ 335,460 | $ 1,059,218 | $ 841,010 |
Administrative and other fees | 0 | |||
Reconciling items | ||||
Revenue adjustment | ||||
Revenues | (667) | 708 | 5,860 | 5,033 |
Administrative and other fees | 7,352 | 6,618 | 26,090 | 19,984 |
Reconciling items | Non-Controlling interest | Subsidiaries | ||||
Revenue adjustment | ||||
Revenues | (10) | 0 | (64) | 0 |
Reconciling items | AREA Sponsor Holdings, LLC | ||||
Revenue adjustment | ||||
Performance fee reclass | (1,187) | 76 | (1,428) | (1,512) |
Ares Management L.P | ||||
Revenue adjustment | ||||
Revenues | 283,671 | 335,460 | 1,059,218 | 841,010 |
Administrative and other fees | 13,486 | 7,369 | 43,024 | 22,761 |
Ares Management L.P | Operating segment | ||||
Revenue adjustment | ||||
Revenues | 284,338 | 334,752 | 1,053,358 | 835,977 |
Administrative and other fees | 6,144 | 751 | 16,998 | 2,777 |
Consolidated Funds | Reconciling items | ||||
Revenue adjustment | ||||
Revenues | $ (6,822) | $ (5,986) | $ (18,738) | $ (13,439) |
SEGMENT REPORTING (Expenses) (D
SEGMENT REPORTING (Expenses) (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Segment Reporting, Other Significant Reconciling Item [Line Items] | ||||
Expenses | $ 254,127 | $ 283,374 | $ 1,193,791 | $ 716,847 |
Equity compensation expenses | 18,091 | 8,476 | 52,097 | 27,185 |
Ares Management L.P | ||||
Segment Reporting, Other Significant Reconciling Item [Line Items] | ||||
Acquisition and merger-related expenses | 0 | 0 | 275,177 | 0 |
Operating segment | ||||
Segment Reporting, Other Significant Reconciling Item [Line Items] | ||||
Acquisition and merger-related expenses | 2,878 | (17,611) | 258,722 | (17,054) |
Equity compensation expenses | 18,091 | 8,476 | 52,097 | 27,185 |
Placement fees and underwriting costs | 4,495 | 2,202 | 14,317 | 4,886 |
Amortization of intangibles | 3,651 | 6,378 | 14,200 | 20,762 |
Depreciation expense | 3,468 | 2,148 | 9,458 | 5,940 |
Operating segment | Ares Management L.P | ||||
Segment Reporting, Other Significant Reconciling Item [Line Items] | ||||
Expenses | 149,473 | 208,039 | 629,312 | 504,803 |
Reconciling items | ||||
Segment Reporting, Other Significant Reconciling Item [Line Items] | ||||
Expenses | 104,654 | 75,335 | 564,479 | 212,044 |
Administrative fees | 7,352 | 6,618 | 26,090 | 19,984 |
Acquisition and merger-related expenses | 2,818 | 79 | 278,878 | 432 |
Equity compensation expenses | 18,091 | 8,476 | 52,097 | 27,185 |
Placement fees and underwriting costs | 4,495 | 2,202 | 14,317 | 4,886 |
Amortization of intangibles | 3,651 | 6,378 | 14,200 | 20,762 |
Depreciation expense | 3,468 | 2,148 | 9,458 | 5,940 |
Reconciling items | Non-Controlling interest | Subsidiaries | ||||
Segment Reporting, Other Significant Reconciling Item [Line Items] | ||||
Expenses | (217) | 0 | 357 | 0 |
Reconciling items | Consolidated Funds | ||||
Segment Reporting, Other Significant Reconciling Item [Line Items] | ||||
Expenses | 25,862 | 16,068 | 45,196 | 27,334 |
Eliminations | ||||
Segment Reporting, Other Significant Reconciling Item [Line Items] | ||||
Expenses | (6,823) | (5,980) | (17,724) | (16,320) |
Acquisition and merger-related expenses | 0 | |||
Eliminations | Consolidated Funds | ||||
Segment Reporting, Other Significant Reconciling Item [Line Items] | ||||
Expenses | (6,823) | (5,980) | (17,724) | (16,320) |
OMG | ||||
Segment Reporting, Other Significant Reconciling Item [Line Items] | ||||
Expenses | $ 45,957 | $ 39,346 | $ 141,610 | $ 121,841 |
SEGMENT REPORTING (Other Income
SEGMENT REPORTING (Other Income (Expense)) (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Segment Reporting, Other Significant Reconciling Item [Line Items] | ||||
Total consolidated other income | $ 58,880 | $ 73,339 | $ 147,489 | $ 75,294 |
Operating segment | ||||
Segment Reporting, Other Significant Reconciling Item [Line Items] | ||||
Other non-cash expense | 0 | 1,728 | 0 | 1,728 |
Offering costs | (33) | 0 | (688) | 0 |
Operating segment | Ares Management L.P | ||||
Segment Reporting, Other Significant Reconciling Item [Line Items] | ||||
Total consolidated other income | 8,563 | 34,040 | 49,720 | 51,685 |
Reconciling items | ||||
Segment Reporting, Other Significant Reconciling Item [Line Items] | ||||
Total consolidated other income | 50,317 | 39,299 | 97,769 | 23,609 |
Changes in fair value of contingent consideration | (60) | 17,690 | 20,156 | 17,486 |
Other non-cash expense | 0 | 1,728 | 0 | 1,728 |
Offering costs | (33) | 0 | (688) | 0 |
Reconciling items | Subsidiaries | Non-Controlling interest | ||||
Segment Reporting, Other Significant Reconciling Item [Line Items] | ||||
Total consolidated other income | 9 | 0 | 14 | 0 |
Reconciling items | AREA Sponsor Holdings, LLC | ||||
Segment Reporting, Other Significant Reconciling Item [Line Items] | ||||
Performance fee reclass | 1,187 | (76) | 1,428 | 1,512 |
Reconciling items | Consolidated Funds | ||||
Segment Reporting, Other Significant Reconciling Item [Line Items] | ||||
Total consolidated other income | 55,227 | 30,181 | 90,522 | 14,545 |
Eliminations | ||||
Segment Reporting, Other Significant Reconciling Item [Line Items] | ||||
Total consolidated other income | (9,973) | (5,549) | (16,847) | 6,125 |
Eliminations | Consolidated Funds | ||||
Segment Reporting, Other Significant Reconciling Item [Line Items] | ||||
Total consolidated other income | (9,973) | (5,549) | (16,847) | 6,125 |
OMG | ||||
Segment Reporting, Other Significant Reconciling Item [Line Items] | ||||
Total consolidated other income | $ 3,960 | $ (4,675) | $ 3,184 | $ (17,787) |
SEGMENT REPORTING (Reconciliati
SEGMENT REPORTING (Reconciliation of Income Before Taxes) (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Economic net income | ||||
Income before taxes | $ 88,424 | $ 125,425 | $ 12,916 | $ 199,457 |
Adjustments: | ||||
Equity compensation expenses | 18,091 | 8,476 | 52,097 | 27,185 |
Income tax expense (benefit) | (4,552) | (7,641) | 28,459 | (7,868) |
Operating segment | ||||
Economic net income | ||||
Income before taxes | 88,424 | 125,425 | 12,916 | 199,457 |
Adjustments: | ||||
Amortization of intangibles | 3,651 | 6,378 | 14,200 | 20,762 |
Depreciation expense | 3,468 | 2,148 | 9,458 | 5,940 |
Equity compensation expenses | 18,091 | 8,476 | 52,097 | 27,185 |
Acquisition and merger-related expenses | 2,878 | (17,611) | 258,722 | (17,054) |
Placement fees and underwriting costs | 4,495 | 2,202 | 14,317 | 4,886 |
Offering costs | 33 | 0 | 688 | 0 |
Other non-cash expense | 0 | (1,728) | 0 | (1,728) |
Economic net income | 143,428 | 160,753 | 473,766 | 382,859 |
Total performance fees income - realized | (178,989) | (132,837) | (261,924) | (220,790) |
Total performance fees income - unrealized | 89,423 | (32,368) | (223,467) | (118,334) |
Total performance fee compensation - realized | (140,979) | (93,778) | (199,253) | (146,792) |
Total performance fee compensation - unrealized | (82,342) | 29,395 | 161,791 | 106,947 |
Total investment income | (8,563) | (34,040) | (49,720) | (51,685) |
Fee related earnings | 103,936 | 84,681 | 299,699 | 245,789 |
Investment and other income realized, net | 21,160 | 14,777 | 27,067 | 33,605 |
Dividend equivalent | (3,540) | (1,649) | (7,741) | (3,039) |
One-time acquisition costs | (12) | (12) | (35) | (294) |
Income tax expense (benefit) | (343) | (292) | (950) | (773) |
Non-cash items | 397 | 36 | 533 | 883 |
Placement fees and underwriting costs | (4,495) | (2,209) | (14,317) | (4,894) |
Depreciation and amortization | (1,448) | (960) | (4,233) | (2,889) |
Distributable earnings | 153,665 | 133,431 | 362,694 | 342,386 |
Economic net income | 143,428 | 160,753 | 473,766 | 382,859 |
Performance related earnings | 39,492 | 76,072 | 174,067 | 137,070 |
Operating segment | Subsidiaries | ||||
Adjustments: | ||||
(Income) loss before taxes of non-controlling interests in Consolidated Funds, net of eliminations | (216) | 0 | 407 | 0 |
Reconciling items | ||||
Adjustments: | ||||
Amortization of intangibles | 3,651 | 6,378 | 14,200 | 20,762 |
Depreciation expense | 3,468 | 2,148 | 9,458 | 5,940 |
Equity compensation expenses | 18,091 | 8,476 | 52,097 | 27,185 |
Acquisition and merger-related expenses | 2,818 | 79 | 278,878 | 432 |
Placement fees and underwriting costs | 4,495 | 2,202 | 14,317 | 4,886 |
Offering costs | 33 | 0 | 688 | 0 |
Other non-cash expense | 0 | (1,728) | 0 | (1,728) |
Total consolidation adjustments and reconciling items | 55,004 | 35,328 | 460,850 | 183,402 |
OMG | ||||
Adjustments: | ||||
OMG expenses, net | 41,997 | 44,021 | 138,426 | 139,628 |
Economic net income | (41,997) | (44,021) | (138,426) | (139,628) |
Total performance fees income - realized | 0 | 0 | 0 | 0 |
Total performance fees income - unrealized | 0 | 0 | 0 | 0 |
Total performance fee compensation - realized | 0 | 0 | 0 | 0 |
Total performance fee compensation - unrealized | 0 | 0 | 0 | 0 |
Total investment income | (3,960) | 4,675 | (3,184) | 17,787 |
Fee related earnings | (45,957) | (39,346) | (141,610) | (121,841) |
Distributable earnings | (53,214) | (66,696) | (151,642) | (157,550) |
Economic net income | (41,997) | (44,021) | (138,426) | (139,628) |
Performance related earnings | 3,960 | (4,675) | 3,184 | (17,787) |
Consolidated Funds | ||||
Adjustments: | ||||
(Income) loss before taxes of non-controlling interests in Consolidated Funds, net of eliminations | 18,195 | 7,861 | 25,403 | (3,064) |
Total investment income | (20,054) | (8,737) | (41,675) | (25,759) |
Consolidated Funds | Operating segment | ||||
Adjustments: | ||||
(Income) loss before taxes of non-controlling interests in Consolidated Funds, net of eliminations | $ (19,393) | $ (8,558) | $ (27,465) | $ 3,783 |
CONSOLIDATION (Variable Interes
CONSOLIDATION (Variable Interest Entities) (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | Dec. 31, 2016 | |
Variable Interest Entity [Line Items] | |||||
Assets of consolidated VIEs | $ 8,019,437 | $ 8,019,437 | $ 5,829,712 | ||
Liabilities of consolidated VIEs | 6,641,516 | 6,641,516 | 4,452,450 | ||
Consolidated Funds | |||||
Variable Interest Entity [Line Items] | |||||
Net income (loss) attributable to non-controlling interests related to consolidated VIEs | 18,195 | $ 7,861 | 25,403 | $ (3,064) | |
Non-Consolidated Variable Interest Entities | |||||
Variable Interest Entity [Line Items] | |||||
Maximum exposure to loss attributable to the Company's investment in VIEs | 364,860 | 364,860 | 268,950 | ||
Consolidated VIEs | |||||
Variable Interest Entity [Line Items] | |||||
Maximum exposure to loss attributable to the Company's investment in VIEs | 162,295 | 162,295 | 153,746 | ||
Consolidated VIEs | Consolidated Funds | |||||
Variable Interest Entity [Line Items] | |||||
Assets of consolidated VIEs | 5,760,754 | 5,760,754 | 3,822,010 | ||
Liabilities of consolidated VIEs | $ 5,152,179 | $ 5,152,179 | $ 3,360,329 |
CONSOLIDATION (Balance Sheet) (
CONSOLIDATION (Balance Sheet) (Details) - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 | Sep. 30, 2016 | Dec. 31, 2015 |
Assets | ||||
Goodwill | $ 143,880 | $ 143,724 | ||
Total assets | 8,019,437 | 5,829,712 | ||
Liabilities | ||||
Total liabilities | 6,641,516 | 4,452,450 | ||
Commitments and contingencies | ||||
Preferred equity (12,400,000 units issued and outstanding at September 30, 2017 and December 31, 2016) | 298,761 | 298,761 | ||
Controlling interest in Ares Management, L.P.: | ||||
Partners' capital (82,211,302 units and 80,814,732 units issued and outstanding at September 30, 2017 and at December 31, 2016, respectively) | 275,410 | 301,790 | ||
Accumulated other comprehensive loss, net of tax | (4,486) | (8,939) | ||
Total controlling interest in Ares Management, L.P. | 270,924 | 292,851 | ||
Total equity | 1,377,921 | 1,377,262 | ||
Total liabilities and equity | $ 8,019,437 | $ 5,829,712 | ||
Preferred equity, units issued (in units) | 12,400,000 | 12,400,000 | ||
Preferred equity, units outstanding (in units) | 12,400,000 | 12,400,000 | ||
Partners' Capital units issued (in units) | 82,211,302 | 80,814,732 | ||
Partners' Capital units outstanding (in units) | 82,211,302 | 80,814,732 | ||
Reportable legal entity | ||||
Assets | ||||
Total assets | $ 5,760,754 | |||
Liabilities | ||||
Preferred equity (12,400,000 units issued and outstanding at September 30, 2017 and December 31, 2016) | 298,761 | $ 298,761 | ||
Eliminations | ||||
Assets | ||||
Total assets | (171,080) | (168,390) | ||
Liabilities | ||||
Total liabilities | (22,228) | (44,744) | ||
Commitments and contingencies | ||||
Preferred equity (12,400,000 units issued and outstanding at September 30, 2017 and December 31, 2016) | 0 | 0 | ||
Controlling interest in Ares Management, L.P.: | ||||
Total equity | (148,852) | (123,646) | ||
Total liabilities and equity | (171,080) | (168,390) | ||
Ares Management L.P | ||||
Assets | ||||
Cash and cash equivalents | 186,437 | 342,861 | $ 336,783 | $ 121,483 |
Investments, at fair value | 584,695 | 468,471 | ||
Performance fees receivable | 997,578 | 759,099 | ||
Due from affiliates | 161,432 | 162,936 | ||
Deferred tax asset, net | 36,661 | 6,731 | ||
Other assets | 103,885 | 65,565 | ||
Intangible assets, net | 44,115 | 58,315 | ||
Goodwill | 143,880 | 143,724 | ||
Liabilities | ||||
Accounts payable, accrued expenses and other liabilities | 94,351 | 83,336 | ||
Accrued compensation | 133,799 | 131,736 | ||
Due to affiliates | 17,207 | 17,564 | ||
Performance fee compensation payable | 780,201 | 598,050 | ||
Debt obligations | 486,007 | 305,784 | ||
Controlling interest in Ares Management, L.P.: | ||||
Partners' capital (82,211,302 units and 80,814,732 units issued and outstanding at September 30, 2017 and at December 31, 2016, respectively) | 275,410 | 301,790 | ||
Accumulated other comprehensive loss, net of tax | (4,486) | (8,939) | ||
Total controlling interest in Ares Management, L.P. | 270,924 | 292,851 | ||
Investments | 581,614 | 448,336 | ||
Ares Management L.P | Reportable legal entity | ||||
Assets | ||||
Cash and cash equivalents | 186,437 | 342,861 | ||
Investments, at fair value | 746,990 | 622,215 | ||
Performance fees receivable | 1,001,581 | 767,429 | ||
Due from affiliates | 166,214 | 169,252 | ||
Deferred tax asset, net | 36,661 | 6,731 | ||
Other assets | 103,885 | 65,565 | ||
Intangible assets, net | 44,115 | 58,315 | ||
Goodwill | 143,880 | 143,724 | ||
Total assets | 2,429,763 | 2,176,092 | ||
Liabilities | ||||
Accounts payable, accrued expenses and other liabilities | 94,351 | 83,336 | ||
Accrued compensation | 133,799 | 131,736 | ||
Due to affiliates | 17,207 | 17,959 | ||
Performance fee compensation payable | 780,201 | 598,050 | ||
Debt obligations | 486,007 | 305,784 | ||
Total liabilities | 1,511,565 | 1,136,865 | ||
Commitments and contingencies | ||||
Controlling interest in Ares Management, L.P.: | ||||
Partners' capital (82,211,302 units and 80,814,732 units issued and outstanding at September 30, 2017 and at December 31, 2016, respectively) | 275,410 | 301,790 | ||
Accumulated other comprehensive loss, net of tax | (4,486) | (8,939) | ||
Total controlling interest in Ares Management, L.P. | 270,924 | 292,851 | ||
Total equity | 918,198 | 1,039,227 | ||
Total liabilities and equity | 2,429,763 | 2,176,092 | ||
Ares Management L.P | Eliminations | ||||
Assets | ||||
Cash and cash equivalents | 0 | |||
Investments, at fair value | (162,295) | (153,744) | ||
Performance fees receivable | (4,003) | (8,330) | ||
Due from affiliates | (4,782) | (6,316) | ||
Deferred tax asset, net | 0 | 0 | ||
Other assets | 0 | |||
Intangible assets, net | 0 | |||
Goodwill | 0 | |||
Liabilities | ||||
Accounts payable, accrued expenses and other liabilities | 0 | |||
Accrued compensation | 0 | |||
Due to affiliates | 0 | (395) | ||
Performance fee compensation payable | 0 | |||
Debt obligations | 0 | |||
Controlling interest in Ares Management, L.P.: | ||||
Partners' capital (82,211,302 units and 80,814,732 units issued and outstanding at September 30, 2017 and at December 31, 2016, respectively) | 0 | |||
Accumulated other comprehensive loss, net of tax | 0 | |||
Total controlling interest in Ares Management, L.P. | 0 | 0 | ||
Consolidated Funds | ||||
Assets | ||||
Cash and cash equivalents | 799,609 | 455,280 | ||
Investments, at fair value | 4,915,029 | 3,330,203 | ||
Due from affiliates | 8,047 | 3,592 | ||
Other assets | 2,082 | 2,501 | ||
Dividends and interest receivable | 10,061 | 8,479 | ||
Receivable for securities sold | 25,926 | 21,955 | ||
Liabilities | ||||
Accounts payable, accrued expenses and other liabilities | 50,992 | 21,056 | ||
Due to affiliates | 0 | 0 | ||
Payable for securities purchased | 481,055 | 208,742 | ||
CLO loan obligations, at fair value | 4,476,643 | 3,031,112 | ||
Fund borrowings | 121,261 | 55,070 | ||
Non-controlling interest in Ares Operating Group entities | 459,723 | 338,035 | ||
Controlling interest in Ares Management, L.P.: | ||||
Investments | 4,915,029 | 3,330,203 | ||
Consolidated Funds | Reportable legal entity | ||||
Assets | ||||
Cash and cash equivalents | 799,609 | 455,280 | ||
Investments, at fair value | 4,915,029 | 3,330,203 | ||
Due from affiliates | 8,047 | 3,592 | ||
Other assets | 2,082 | 2,501 | ||
Dividends and interest receivable | 10,061 | 8,479 | ||
Receivable for securities sold | 25,926 | 21,955 | ||
Total assets | 3,822,010 | |||
Liabilities | ||||
Accounts payable, accrued expenses and other liabilities | 50,992 | 21,056 | ||
Due to affiliates | 8,786 | 10,599 | ||
Payable for securities purchased | 481,055 | 208,742 | ||
CLO loan obligations, at fair value | 4,490,085 | 3,064,862 | ||
Fund borrowings | 121,261 | 55,070 | ||
Total liabilities | 5,152,179 | 3,360,329 | ||
Commitments and contingencies | ||||
Non-controlling interest in Ares Operating Group entities | 608,575 | 461,681 | ||
Controlling interest in Ares Management, L.P.: | ||||
Total equity | 608,575 | 461,681 | ||
Total liabilities and equity | 5,760,754 | 3,822,010 | ||
Consolidated Funds | Eliminations | ||||
Assets | ||||
Cash and cash equivalents | 0 | |||
Investments, at fair value | 0 | |||
Due from affiliates | 0 | |||
Other assets | 0 | |||
Dividends and interest receivable | 0 | |||
Receivable for securities sold | 0 | |||
Liabilities | ||||
Accounts payable, accrued expenses and other liabilities | 0 | |||
Due to affiliates | (8,786) | (10,599) | ||
Payable for securities purchased | 0 | 0 | ||
CLO loan obligations, at fair value | (13,442) | (33,750) | ||
Fund borrowings | 0 | 0 | ||
Non-controlling interest in Ares Operating Group entities | (148,852) | (123,646) | ||
AOG | ||||
Liabilities | ||||
Non-controlling interest in Ares Operating Group entities | 348,513 | 447,615 | ||
AOG | Reportable legal entity | ||||
Liabilities | ||||
Non-controlling interest in Ares Operating Group entities | $ 348,513 | $ 447,615 |
CONSOLIDATION (Income Statement
CONSOLIDATION (Income Statement) (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Revenues | ||||
Administrative and other fees | $ 0 | |||
Total revenues | 283,671 | $ 335,460 | $ 1,059,218 | $ 841,010 |
Expenses | ||||
Total expenses | 254,127 | 283,374 | 1,193,791 | 716,847 |
Other income (expense) | ||||
Total other income | 58,880 | 73,339 | 147,489 | 75,294 |
Income before taxes | 88,424 | 125,425 | 12,916 | 199,457 |
Income tax expense (benefit) | 4,552 | 7,641 | (28,459) | 7,868 |
Net income | 83,872 | 117,784 | 41,375 | 191,589 |
Net income attributable to Ares Management, L.P. | 27,838 | 43,305 | 36,582 | 77,793 |
Less: Preferred equity distributions paid | 5,425 | 6,751 | 16,275 | 6,751 |
Net income attributable to Ares Management, L.P. common unitholders | 22,413 | 36,554 | 20,307 | 71,042 |
Reportable legal entity | ||||
Revenues | ||||
Administrative and other fees | 0 | 0 | 0 | |
Eliminations | ||||
Revenues | ||||
Management fees (includes ARCC Part I Fees of $24,036, $76,436 and $33,260, $90,884 for the three and nine months ended September 30, 2017 and 2016, respectively) | (5,451) | (5,187) | (14,979) | (13,513) |
Performance fees | (1,371) | (799) | (3,759) | 74 |
Administrative and other fees | 0 | |||
Total revenues | (6,822) | (5,986) | (18,738) | (13,439) |
Expenses | ||||
Compensation and benefits | 0 | |||
Performance fee compensation | 0 | |||
General, administrative and other expenses | 0 | |||
Transaction support expense | 0 | |||
Total expenses | (6,823) | (5,980) | (17,724) | (16,320) |
Other income (expense) | ||||
Investment income and net interest income (expense) | (225) | (1,006) | (2,154) | (3,224) |
Other income (expense), net | 0 | |||
Net realized and unrealized gain on investments | (10,515) | (6,982) | (21,109) | 3,858 |
Total other income | (9,973) | (5,549) | (16,847) | 6,125 |
Income before taxes | (9,972) | (5,555) | (17,861) | 9,006 |
Income tax expense (benefit) | 0 | |||
Net income | (9,972) | (5,555) | (17,861) | 9,006 |
Less: Preferred equity distributions paid | 0 | 0 | 0 | 0 |
Net income attributable to Ares Management, L.P. common unitholders | 0 | 0 | 0 | 0 |
Ares Management L.P | ||||
Revenues | ||||
Management fees (includes ARCC Part I Fees of $24,036, $76,436 and $33,260, $90,884 for the three and nine months ended September 30, 2017 and 2016, respectively) | 183,177 | 163,609 | 535,990 | 480,563 |
Performance fees | 87,008 | 164,482 | 480,204 | 337,686 |
Administrative and other fees | 13,486 | 7,369 | 43,024 | 22,761 |
Total revenues | 283,671 | 335,460 | 1,059,218 | 841,010 |
Expenses | ||||
Compensation and benefits | 129,347 | 111,916 | 384,905 | 335,249 |
Performance fee compensation | 58,637 | 123,173 | 361,044 | 253,739 |
General, administrative and other expenses | 47,104 | 38,197 | 145,193 | 116,845 |
Transaction support expense | 0 | 0 | 275,177 | 0 |
Other income (expense) | ||||
Investment income and net interest income (expense) | (1,831) | (1,681) | (6,218) | (47) |
Other income (expense), net | (2,492) | 23,042 | 16,826 | 33,956 |
Net realized and unrealized gain on investments | 7,209 | 19,358 | 39,943 | 21,349 |
Interest expense | 5,343 | 4,136 | 15,576 | 13,819 |
Ares Management L.P | Affiliated entity | ARCC | ||||
Revenues | ||||
Management fees (includes ARCC Part I Fees of $24,036, $76,436 and $33,260, $90,884 for the three and nine months ended September 30, 2017 and 2016, respectively) | 24,036 | 33,260 | 76,436 | 90,884 |
Ares Management L.P | Reportable legal entity | ||||
Revenues | ||||
Management fees (includes ARCC Part I Fees of $24,036, $76,436 and $33,260, $90,884 for the three and nine months ended September 30, 2017 and 2016, respectively) | 188,628 | 168,796 | 550,969 | 494,076 |
Performance fees | 88,379 | 165,281 | 483,963 | 337,612 |
Administrative and other fees | 13,486 | 7,369 | 43,024 | 22,761 |
Total revenues | 290,493 | 341,446 | 1,077,956 | 854,449 |
Expenses | ||||
Compensation and benefits | 129,347 | 111,916 | 384,905 | 335,249 |
Performance fee compensation | 58,637 | 123,173 | 361,044 | 253,739 |
General, administrative and other expenses | 47,104 | 38,197 | 145,193 | 116,845 |
Transaction support expense | 275,177 | |||
Total expenses | 235,088 | 273,286 | 1,166,319 | 705,833 |
Other income (expense) | ||||
Investment income and net interest income (expense) | (1,606) | (675) | (4,064) | 3,177 |
Other income (expense), net | (2,492) | 23,042 | 16,826 | 33,956 |
Net realized and unrealized gain on investments | 17,724 | 26,340 | 61,052 | 17,491 |
Total other income | 13,626 | 48,707 | 73,814 | 54,624 |
Income before taxes | 69,031 | 116,867 | (14,549) | 203,240 |
Income tax expense (benefit) | 3,354 | 6,944 | (30,521) | 8,587 |
Net income | 65,677 | 109,923 | 15,972 | 194,653 |
Net income attributable to Ares Management, L.P. | 27,838 | 43,305 | 36,582 | 77,793 |
Less: Preferred equity distributions paid | 5,425 | 6,751 | 16,275 | 6,751 |
Net income attributable to Ares Management, L.P. common unitholders | 22,413 | 36,554 | 20,307 | 71,042 |
Consolidated Funds | ||||
Expenses | ||||
Expenses of the Consolidated Funds | 19,039 | 10,088 | 27,472 | 11,014 |
Other income (expense) | ||||
Investment income and net interest income (expense) | 20,054 | 8,737 | 41,675 | 25,759 |
Net realized and unrealized gain on investments | 35,940 | 23,883 | 55,263 | (5,723) |
Net income (loss) attributable to non-controlling interests related to consolidated VIEs | 18,195 | 7,861 | 25,403 | (3,064) |
Interest expense | 28,127 | 26,413 | 86,324 | 67,469 |
Consolidated Funds | Reportable legal entity | ||||
Expenses | ||||
Expenses of the Consolidated Funds | 25,862 | 16,068 | 45,196 | 27,334 |
Total expenses | 25,862 | 16,068 | 45,196 | 27,334 |
Other income (expense) | ||||
Investment income and net interest income (expense) | 7,169 | 6,525 | 11,072 | 20,133 |
Net realized and unrealized gain on investments | 48,058 | 23,656 | 79,450 | (5,588) |
Total other income | 55,227 | 30,181 | 90,522 | 14,545 |
Income before taxes | 29,365 | 14,113 | 45,326 | (12,789) |
Income tax expense (benefit) | 1,198 | 697 | 2,062 | (719) |
Net income | 28,167 | 13,416 | 43,264 | (12,070) |
Net income (loss) attributable to non-controlling interests related to consolidated VIEs | 28,167 | 13,416 | 43,264 | (12,070) |
Consolidated Funds | Eliminations | ||||
Expenses | ||||
Expenses of the Consolidated Funds | (6,823) | (5,980) | (17,724) | (16,320) |
Total expenses | (6,823) | (5,980) | (17,724) | (16,320) |
Other income (expense) | ||||
Investment income and net interest income (expense) | 12,885 | 2,212 | 30,603 | 5,626 |
Net realized and unrealized gain on investments | (12,118) | 227 | (24,187) | (135) |
Total other income | (9,973) | (5,549) | (16,847) | 6,125 |
Net income (loss) attributable to non-controlling interests related to consolidated VIEs | (9,972) | (5,555) | (17,861) | 9,006 |
AOG | ||||
Other income (expense) | ||||
Net income (loss) attributable to non-controlling interests related to consolidated VIEs | 37,839 | 66,511 | (20,610) | 116,404 |
Less: Net income attributable to redeemable interests in Ares Operating Group entities | 0 | 107 | 0 | 456 |
AOG | Reportable legal entity | ||||
Other income (expense) | ||||
Net income (loss) attributable to non-controlling interests related to consolidated VIEs | 37,839 | 66,511 | $ (20,610) | 116,404 |
Less: Net income attributable to redeemable interests in Ares Operating Group entities | $ 107 | 456 | ||
AOG | Eliminations | ||||
Other income (expense) | ||||
Net income (loss) attributable to non-controlling interests related to consolidated VIEs | $ 0 | |||
Less: Net income attributable to redeemable interests in Ares Operating Group entities | $ 0 |
SUBSEQUENT EVENTS (Details)
SUBSEQUENT EVENTS (Details) - Subsequent event | Nov. 03, 2017$ / shares |
Subsequent events | |
Quarterly distribution declared (in dollars per unit) | $ 0.405 |
Preferred equity quarterly distribution (in dollars per unit) | $ 0.4375 |