Document And Entity Information
Document And Entity Information - shares | 6 Months Ended | |
Jun. 30, 2018 | Jul. 27, 2018 | |
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 | Jun. 30, 2018 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 98,398,340 | |
Document Fiscal Year Focus | 2,018 | |
Document Fiscal Period Focus | Q2 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Financial Condition - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 | Jun. 30, 2017 | Dec. 31, 2016 |
Assets | ||||
Investments, at fair value | $ 1,724,571 | |||
Other assets | 130,341 | |||
Goodwill | $ 143,848 | 143,895 | ||
Total assets | 10,144,735 | 8,563,522 | ||
Liabilities | ||||
Total liabilities | 8,609,486 | 7,103,230 | ||
Commitments and contingencies | ||||
Preferred equity (12,400,000 shares issued and outstanding at June 30, 2018 and December 31, 2017) | 298,761 | 298,761 | ||
Controlling interest in Ares Management, L.P.: | ||||
Shareholders' equity (98,398,340 shares and 82,280,033 shares issued and outstanding at June 30, 2018 and at December 31, 2017, respectively) | 349,981 | 279,065 | ||
Accumulated other comprehensive loss, net of tax | (6,758) | (4,208) | ||
Total controlling interest in Ares Management, L.P. | 343,223 | 274,857 | ||
Total equity | 1,535,249 | 1,460,292 | ||
Total liabilities and equity | 10,144,735 | 8,563,522 | ||
Ares Management L.P | ||||
Assets | ||||
Cash and cash equivalents | 125,448 | 118,929 | $ 137,256 | $ 342,861 |
Investments, at fair value | 1,466,247 | 1,724,571 | ||
Due from affiliates | 172,428 | 165,750 | ||
Deferred tax asset, net | 42,942 | 8,326 | ||
Other assets | 100,183 | 130,341 | ||
Intangible assets, net | 33,999 | 40,465 | ||
Goodwill | 143,848 | 143,895 | ||
Liabilities | ||||
Accounts payable, accrued expenses and other liabilities | 73,227 | 81,955 | ||
Accrued compensation | 87,254 | 27,978 | ||
Due to affiliates | 62,344 | 39,184 | ||
Performance related compensation payable | 730,782 | 822,084 | ||
Debt obligations | 370,628 | 616,176 | ||
Controlling interest in Ares Management, L.P.: | ||||
Shareholders' equity (98,398,340 shares and 82,280,033 shares issued and outstanding at June 30, 2018 and at December 31, 2017, respectively) | 349,981 | 279,065 | ||
Accumulated other comprehensive loss, net of tax | (6,758) | (4,208) | ||
Total controlling interest in Ares Management, L.P. | 343,223 | 274,857 | ||
Consolidated Funds | ||||
Assets | ||||
Cash and cash equivalents | 836,274 | 556,500 | ||
Investments, at fair value | 6,968,067 | 5,582,842 | ||
Due from affiliates | 13,704 | 15,884 | ||
Other assets | 1,197 | 1,989 | ||
Dividends and interest receivable | 14,634 | 12,568 | ||
Receivable for securities sold | 225,764 | 61,462 | ||
Liabilities | ||||
Accounts payable, accrued expenses and other liabilities | 69,040 | 64,316 | ||
Due to affiliates | 0 | 0 | ||
Payable for securities purchased | 744,534 | 350,145 | ||
CLO loan obligations, at fair value | 6,333,239 | 4,963,194 | ||
Fund borrowings | 138,438 | 138,198 | ||
Non-controlling interest in Consolidated Funds | 577,217 | 528,488 | ||
Non-controlling interest in Ares Operating Group entities | 577,217 | 528,488 | ||
AOG | ||||
Liabilities | ||||
Non-controlling interest in Ares Operating Group entities | $ 316,048 | $ 358,186 |
Condensed Consolidated Stateme3
Condensed Consolidated Statements of Financial Condition (Parenthetical) - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 |
Investments | $ 1,724,571 | |
Preferred equity, shares issued (in shares) | 12,400,000 | 12,400,000 |
Preferred equity, shares outstanding (in shares) | 12,400,000 | 12,400,000 |
Partners' Capital shares issued (in shares) | 98,398,340 | 82,280,033 |
Partners' Capital shares outstanding (in shares) | 98,398,340 | 82,280,033 |
Ares Management L.P | ||
Investments | $ 1,466,247 | $ 1,724,571 |
Ares Management L.P | Accrued Interest | ||
Investments | $ 985,035 | $ 1,077,236 |
Condensed Consolidated Stateme4
Condensed Consolidated Statements of Operations - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Expenses | ||||
Total expenses | $ 221,017 | $ 448,197 | $ 427,300 | $ 939,664 |
Other income (expense) | ||||
Total other income (expense) | 67,926 | (8,920) | 70,166 | 47,715 |
Income (loss) before taxes | 51,072 | 115,080 | 113,118 | (75,508) |
Income tax expense (benefit) | 36,903 | 1,253 | 24,528 | (33,011) |
Net income (loss) | 14,169 | 113,827 | 88,590 | (42,497) |
Net income (loss) attributable to Ares Management, L.P. | (11,775) | 49,878 | 29,173 | 8,744 |
Less: Preferred equity dividend paid | 5,425 | 5,425 | 10,850 | 10,850 |
Net income (loss) attributable to Ares Management, L.P. common shareholders | $ (17,200) | $ 44,453 | $ 18,323 | $ (2,106) |
Net income (loss) attributable to Ares Management, L.P. per common share: | ||||
Basic (in dollars per share) | $ (0.20) | $ 0.54 | $ 0.16 | $ (0.04) |
Diluted (in dollars per unit) | $ (0.20) | $ 0.53 | $ 0.16 | $ (0.04) |
Weighted-average common shares: | ||||
Basic (in shares) | 98,037,252 | 81,829,086 | 91,861,946 | 81,469,967 |
Diluted (in shares) | 98,037,252 | 84,319,882 | 91,861,946 | 81,469,967 |
Dividend declared and paid per common share (in dollar per share) | $ 0.37 | $ 0.13 | $ 0.77 | $ 0.41 |
Ares Management L.P | ||||
Revenues | ||||
Total revenues | $ 204,163 | $ 572,197 | $ 470,252 | $ 816,441 |
Expenses | ||||
Compensation and benefits | 138,992 | 131,219 | 273,631 | 255,558 |
Performance related compensation | (13,005) | 261,705 | 12,873 | 302,407 |
General, administrative and other expenses | 59,918 | 50,751 | 104,368 | 98,089 |
Transaction support expense | 0 | 0 | 0 | 275,177 |
Other income (expense) | ||||
Net realized and unrealized gain (loss) on investments | 3,267 | (6,588) | 2,428 | (5,700) |
Interest and dividend income | 2,356 | 1,462 | 5,703 | 3,386 |
Interest expense | (6,076) | (5,354) | (12,945) | (10,233) |
Other income (expense), net | (1,987) | 2,822 | (2,298) | 19,318 |
Income tax expense (benefit) | 36,834 | 857 | 24,459 | (33,875) |
Consolidated Funds | ||||
Expenses | ||||
Expenses of Consolidated Funds | 35,112 | 4,522 | 36,428 | 8,433 |
Other income (expense) | ||||
Net realized and unrealized gain (loss) on investments | 34,487 | (12,713) | 21,402 | 19,323 |
Interest expense | (56,754) | (26,875) | (101,179) | (58,197) |
Interest and other income of Consolidated Funds | 92,633 | 38,326 | 157,055 | 79,818 |
Income tax expense (benefit) | 69 | 396 | 69 | 864 |
Net income (loss) attributable to non-controlling interests related to consolidated VIEs | 9,882 | (8,647) | 10,249 | 7,208 |
AOG | ||||
Other income (expense) | ||||
Net income (loss) attributable to non-controlling interests related to consolidated VIEs | 16,062 | 72,596 | 49,168 | (58,449) |
Management fees | Ares Management L.P | ||||
Revenues | ||||
Total revenues | 194,032 | 180,768 | 383,547 | 352,813 |
Carried interest allocation | ||||
Revenues | ||||
Total revenues | 40,685 | |||
Carried interest allocation | Ares Management L.P | ||||
Revenues | ||||
Total revenues | (13,444) | 333,808 | 40,685 | 385,815 |
Incentive fees | Ares Management L.P | ||||
Revenues | ||||
Total revenues | 7,740 | 4,216 | 12,811 | 7,381 |
Principal investment income | Ares Management L.P | ||||
Revenues | ||||
Total revenues | 1,871 | 38,307 | 6,780 | 40,894 |
Administrative, transaction and other fees | ||||
Revenues | ||||
Total revenues | 0 | 0 | 0 | 0 |
Administrative, transaction and other fees | Ares Management L.P | ||||
Revenues | ||||
Total revenues | $ 13,964 | $ 15,098 | $ 26,429 | $ 29,538 |
Condensed Consolidated Stateme5
Condensed Consolidated Statements of Operations (Parenthetical) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Ares Management L.P | Affiliated entity | ARCC | ||||
Management fees, part I fees | $ 29,866 | $ 19,143 | $ 58,283 | $ 52,400 |
Condensed Consolidated Stateme6
Condensed Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Net income (loss) | $ 14,169 | $ 113,827 | $ 88,590 | $ (42,497) |
Other comprehensive income: | ||||
Foreign currency translation adjustments | (5,690) | |||
Ares Management L.P | ||||
Other comprehensive income: | ||||
Foreign currency translation adjustments | (12,377) | 2,029 | (6,892) | 5,471 |
Total comprehensive income (loss) | 1,792 | 115,856 | 81,698 | (37,026) |
Comprehensive income (loss) attributable to Ares Management, L.P. | (14,532) | 50,213 | 26,623 | 10,280 |
Consolidated Funds | ||||
Other comprehensive income: | ||||
Less: Comprehensive income (loss) attributable to non-controlling interests | 4,193 | (8,818) | 7,735 | 7,038 |
AOG | ||||
Other comprehensive income: | ||||
Less: Comprehensive income (loss) attributable to non-controlling interests | $ 12,131 | $ 74,461 | $ 47,340 | $ (54,344) |
Condensed Consolidated Stateme7
Condensed Consolidated Statements of Changes in Equity - USD ($) $ in Thousands | Total | Ares Management L.P | Ares Management L.PAccumulated Other Comprehensive Loss | AOGNon-Controlling interest | Consolidated FundsNon-Controlling interest | Partners' CapitalAres Management L.P | Partners' CapitalPreferred Partner | Non-Controlling interestAOG |
Increase (Decrease) in Stockholders' Equity | ||||||||
Adoption of ASU | $ 0 | |||||||
Adoption of ASU | ASC 606 | (22,611) | $ 0 | $ (17,117) | $ 5,333 | $ (10,827) | $ 0 | $ (17,117) | |
Adoption of ASU | ASU 2018-02 | 0 | (1,202) | 1,202 | |||||
As adjusted balance at January 1, 2018 | 1,437,681 | (4,208) | 341,069 | 533,821 | 268,238 | 298,761 | ||
Balance at Dec. 31, 2017 | 1,460,292 | (4,208) | 358,186 | 528,488 | 279,065 | 298,761 | ||
Increase (Decrease) in Stockholders' Equity | ||||||||
Changes in ownership interests | 21,564 | 14,099 | 7,465 | |||||
Contributions | 178,037 | 764 | 70,990 | 106,283 | ||||
Dividends/Distributions | (227,773) | (111,851) | (35,329) | (69,743) | (10,850) | |||
Net income | 88,590 | 49,168 | 10,249 | 18,323 | 10,850 | |||
Currency translation adjustment | (5,690) | $ (6,892) | (1,348) | (1,828) | (2,514) | |||
Equity compensation | 42,840 | 24,627 | 18,213 | |||||
Balance at Jun. 30, 2018 | $ 1,535,249 | $ (6,758) | $ 316,048 | $ 577,217 | $ 349,981 | $ 298,761 |
Condensed Consolidated Stateme8
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2018 | Jun. 30, 2017 | |
Cash flows from operating activities: | ||
Net income (loss) | $ 88,590 | $ (42,497) |
Adjustments to reconcile net income (loss) to net cash used in operating activities | 225,963 | (92,537) |
Cash flows due to changes in operating assets and liabilities | 66,925 | (144,249) |
Net cash used in operating activities | (1,287,645) | (304,160) |
Cash flows from investing activities: | ||
Purchase of furniture, equipment and leasehold improvements, net | (7,126) | (21,194) |
Net cash used in investing activities | (7,126) | (21,194) |
Allocable to non-controlling interests in Consolidated Funds: | ||
Net cash provided by financing activities | 1,293,059 | 108,063 |
Ares Management L.P | ||
Cash flows from financing activities: | ||
Proceeds from issuance of common shares | 105,333 | 0 |
Proceeds from credit facility | 325,000 | 165,000 |
Proceeds from term notes | 44,050 | 70,009 |
Repayments of credit facility | (410,000) | (30,000) |
Repayments of term loans | (206,089) | 0 |
Distributions | (181,594) | (102,315) |
Preferred equity distributions | (10,850) | (10,850) |
Taxes paid in net settlement of vested common shares | (17,225) | (13,471) |
Stock option exercise | 950 | 1,036 |
Tax from share-based payment | 44 | 81 |
Other financing activities | 764 | 1,583 |
Allocable to non-controlling interests in Consolidated Funds: | ||
Effect of exchange rate changes | 8,231 | 11,686 |
Net change in cash and cash equivalents | 6,519 | (205,605) |
Cash and cash equivalents, beginning of period | 118,929 | 342,861 |
Cash and cash equivalents, end of period | 125,448 | 137,256 |
Consolidated Funds | ||
Cash flows from operating activities: | ||
Adjustments to reconcile net income (loss) to net cash used in operating activities | (1,634,788) | (61,985) |
Cash flows due to changes in operating assets and liabilities | (34,335) | 37,108 |
Allocable to non-controlling interests in Consolidated Funds: | ||
Contributions from non-controlling interests in Consolidated Funds | 70,990 | 47,265 |
Distributions to non-controlling interests in Consolidated Funds | (35,329) | (46,876) |
Borrowings under loan obligations by Consolidated Funds | 2,206,816 | 1,314,026 |
Repayments under loan obligations by Consolidated Funds | (599,801) | $ (1,287,425) |
Cash and cash equivalents, beginning of period | 556,500 | |
Cash and cash equivalents, end of period | $ 836,274 |
ORGANIZATION
ORGANIZATION | 6 Months Ended |
Jun. 30, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
ORGANIZATION | ORGANIZATION Ares Management, L.P. ("the Company"), a Delaware limited partnership treated as a corporation for U.S. federal income tax purposes, is a leading global alternative asset management firm that operates three distinct but complementary investment groups: Credit, Private Equity and Real Estate. 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”). 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 company, and its sole assets are equity interests in Ares Holdings Inc. (“AHI”), Ares Offshore Holdings, Ltd., and Ares AI Holdings L.P., each of which is directly or indirectly wholly owned by the Company. 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. Change in Company Tax Status Election Effective March 1, 2018, the Company elected to be treated as a corporation for U.S. federal income tax purposes. The Company’s legal structure remains a Delaware limited partnership. In connection with the tax election, the Company amended and restated its partnership agreement to, among other things, reflect the new tax classification and change the name of its common units and preferred units to common shares and preferred shares, respectively. The terms of such common shares and preferred shares, and the associated rights, otherwise remain unchanged. Further, other terminology has been modified to be consistent with a corporation's results. For example, distributions are now referred to as dividends, and earnings per common unit are now referred to as earnings per common share. Comparative periods conform with the current period's presentation. |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 6 Months Ended |
Jun. 30, 2018 | |
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, 2017 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. Adoption of ASC 606 Effective January 1, 2018, the Company adopted the Financial Accounting Standards Board (“FASB”) Topic 606 (“ASC 606”), Revenue from Contracts with Customers . The Company adopted ASC 606 to all applicable contracts under the modified retrospective approach using the practical expedient provided for within paragraph 606-10-65-1(f)(3); therefore, the presentation of prior year periods has not been adjusted. The Company recognized the cumulative effect of initially adopting ASC 606 as an adjustment to the opening balance of components of equity as of January 1, 2018. Pursuant to ASC 606, the Company recognizes 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 Company expects to be entitled in exchange for those goods or services. Under this standard, revenue is based on a contract with a determinable transaction price and distinct performance obligations with probable collectability. Revenues cannot be recognized until the performance obligation(s) are satisfied and control is transferred to the customer. The Company's adoption of ASC 606 impacted the timing and recognition of incentive fees in the Company’s consolidated statements of operations. The adoption of ASC 606 did not have an impact on the Company’s management fees, administrative fees, transaction fees or other fees. The details of the significant changes and quantitative impact of the adoption of ASC 606 are further discussed below. The adoption of ASC 606 had the following impact on the Company’s revenue streams: Revenues of the Company Impact of ASC 606 Management fees No Impact - Management fees are recognized as revenue in the period advisory services are rendered. Performance income - Carried interest allocation No impact. See discussion below for change in accounting policy. Performance income - Incentive fees See discussion below for impact. Administrative, transaction and other fees No Impact - Administrative, transaction and other fees are recognized as revenue in the period in which the related services are rendered. Performance Income Performance income consists of carried interest and incentive fees. Carried Interest In certain fund structures, typically in private equity and real estate equity funds, carried interest is allocated to the Company based on cumulative fund performance to date, subject to the achievement of minimum return levels in accordance with the respective terms set out in each fund’s governing documents. At the end of each reporting period, a fund will allocate carried interest applicable to the Company based upon an assumed liquidation of that fund's net assets on the reporting date, irrespective of whether such amounts have been realized. Carried interest is recorded to the extent such amounts have been allocated, and may be subject to reversal to the extent that the amount allocated ultimately exceeds the amount due to the Company based on a fund’s cumulative investment returns. Carried interest is realized when an underlying investment is profitably disposed of and the fund’s cumulative returns are in excess of the specific hurdle rates as defined in the applicable governing documents. Since carried interest is subject to reversal, the Company may need to accrue for potential repayment of previously received carried interest. This accrual represents all amounts previously distributed to the Company that would need to be repaid to the funds if the funds were to be liquidated based on the current fair value of the underlying funds’ investments as of the reporting date. The actual repayment obligations, however, generally do not become realized until the end of a fund’s life. As of June 30, 2018 , if the funds were liquidated at their fair values, there would be a $0.2 million repayment obligation, and accordingly, the Company recorded a contingent repayment liability as June 30, 2018 . As of December 31, 2017 , 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 December 31, 2017 . Prior to January 1, 2018, the Company accounted for carried interest under Method 2 described in ASC 605-20-S99-1, which provides guidance on accounting for incentive-based performance income, including carried interest. Since Method 2 is no longer available following the adoption of ASC 606, the Company has reassessed its accounting policy for carried interest, and has determined that carried interest is within scope of ASC 323, Investments-Equity Method and Joint Ventures, and out of scope under the scoping provision of ASC 606. Therefore, following the election of ASC 323, the Company accounted for carried interest, which represents a performance-based capital allocation from an investment fund to the Company, as earnings from financial assets within the scope of ASC 323. Accordingly, the Company recognizes carried interest allocation as a separate revenue line item in the Condensed Consolidated Statements of Operations. Uncollected carried interest as of the reporting date is recorded within investments in the Condensed Consolidated Statements of Financial Condition. The Company has applied the change in accounting principle on a full retrospective basis, and prior periods presented have been recast to conform with the current period's presentation. The change in accounting principle did not change the timing or the amount of carried interest recognized. Instead, the change in accounting principle resulted in reclassification from performance income to carried interest allocation, and therefore did not have any impact on net income. See the tables below for the impact of the change in accounting principle of carried interest . Incentive Fees Incentive fees earned on the performance of certain fund structures, typically in credit funds, are recognized based on the fund’s performance during the period, subject to the achievement of minimum return levels in accordance with the respective terms set out in each fund’s investment management agreement. Incentive fees are realized at the end of a measurement period, typically annually. Once realized, such fees are no longer subject to reversal. Prior to January 1, 2018, the Company accounted for incentive fees under Method 2 as described above. However, the accounting for incentive fees is separate and distinct from the accounting for carried interest because the incentive fees are contractual fee arrangements and do not represent allocations of returns from partners' capital accounts. The Company now accounts for incentive fees in accordance with ASC 606. Accordingly, the Company recognizes incentive fee revenue only when the amount is realized and no longer subject to reversal. Therefore, the Company no longer recognizes unrealized incentive fees in revenues in the condensed consolidated financial statements. The adoption of ASC 606 results in the delayed recognition of unrealized incentive fees in the condensed consolidated financial statements until they become realized at the end of the measurement period, which is typically annually. The Company adopted ASC 606 for incentive fees using the modified retrospective approach with an effective date of January 1, 2018. The cumulative effect of the adoption resulted in the reversal of $22.6 million of unrealized incentive fees and is presented as a reduction to the opening balances of components of equity as of January 1, 2018. The following tables present the adjustments made in connection with the Company's change in accounting principle related to carried interest under ASC 323, Investments-Equity Method and Joint Ventures on the financial statement line items for the periods presented in the condensed consolidated financial statements: Condensed Consolidated Statement of Financial Condition As of December 31, 2017 As Previously Reported Adjustments As Adjusted (audited) Assets Investments ($1,077,236 of accrued carried interest) $ 647,335 $ 1,077,236 $ 1,724,571 Performance income receivable 1,099,847 (1,099,847 ) — Other assets 107,730 22,611 (1) 130,341 (1) Unrealized incentive fees receivable balance as of December 31, 2017. Condensed Consolidated Statement of Operations Three Months Ended June 30, 2017 As Previously Reported Adjustments As Adjusted Revenues Performance fees $ 338,024 $ (338,024 ) $ — Carried interest allocation — 333,808 333,808 Incentive fees — 4,216 4,216 Principal investment income — 38,307 38,307 Total revenues 533,890 38,307 572,197 Other income (expense) Net realized and unrealized gain on investments 30,079 (36,667 ) (6,588 ) Interest and dividend income 3,102 (1,640 ) 1,462 Condensed Consolidated Statement of Operations Six Months Ended June 30, 2017 As Previously Reported Adjustments As Adjusted Revenues Performance fees $ 393,196 $ (393,196 ) $ — Carried interest allocation — 385,815 385,815 Incentive fees — 7,381 7,381 Principal investment income — 40,894 40,894 Total revenues 775,547 40,894 816,441 Other income (expense) Net realized and unrealized gain on investments 32,734 (38,434 ) (5,700 ) Interest and dividend income 5,846 (2,460 ) 3,386 The Company's change in accounting policy related to carried interest did not impact the Condensed Consolidated Statements of Comprehensive Income, Condensed Consolidated Statements of Changes in Equity or Condensed Consolidated Statements of Cash Flows for the year ended December 31, 2017. The following tables present the impact of incentive fees on the condensed consolidated financial statements upon the adoption of ASC 606 effective January 1, 2018: Condensed Consolidated Statement of Financial Condition As of January 1, 2018 As adjusted December 31, 2017 Adjustments As Adjusted for ASC 606 adoption Investments $ 1,724,571 $ — $ 1,724,571 Other assets 130,341 (22,611 ) (1) 107,730 Total assets 8,563,522 (22,611 ) 8,540,911 Total liabilities 7,103,230 — 7,103,230 Cumulative effect adjustment to equity(2) — (22,611 ) (22,611 ) Total equity 1,460,292 (22,611 ) 1,437,681 Total liabilities, non-controlling interests and equity 8,563,522 (22,611 ) 8,540,911 (1) Unrealized incentive fees receivable balance as of December 31, 2017. (2) See detail below. Condensed Consolidated Statement of Changes in Equity Preferred Equity Shareholders' Capital Accumulated Other Comprehensive Loss Non-controlling interest in Ares Operating Group Entities Non-Controlling Interest in Consolidated Funds Total Equity Balance at December 31, 2017 $ 298,761 $ 279,065 $ (4,208 ) $ 358,186 $ 528,488 $ 1,460,292 Cumulative effect of the adoption of ASC 606 — (10,827 ) — (17,117 ) 5,333 (22,611 ) As adjusted balance at January 1, 2018 $ 298,761 $ 268,238 $ (4,208 ) $ 341,069 $ 533,821 $ 1,437,681 In accordance with the ASC 606 disclosure requirements, the following tables present the adjustments made by the Company to remove the effects of adopting ASC 606 on the condensed consolidated financial statements as of and for the three and six months ended June 30, 2018 : Condensed Consolidated Statement of Financial Condition As of June 30, 2018 As Reported Adjustments Balances without adoption of ASC 606 Assets Cash and cash equivalents $ 125,448 $ — $ 125,448 Investments ($985,035 of accrued carried interest) $ 1,466,247 $ 1,466,247 Due from affiliates $ 172,428 $ 172,428 Deferred tax asset, net $ 42,942 $ (199 ) $ 42,743 Other assets 100,183 26,195 126,378 Total assets 10,144,735 25,996 10,170,731 Commitments and contingencies Non-controlling interest in Consolidated Funds 577,217 (3,473 ) 573,744 Non-controlling interest in Ares Operating Group entities 316,048 18,109 334,157 Controlling interest in Ares Management, L.P.: Shareholders' equity (98,398,340 shares issued and outstanding) 349,981 11,443 361,424 Accumulated other comprehensive loss, net of tax (6,758 ) (83 ) (6,841 ) Total controlling interest in Ares Management, L.P 343,223 11,360 354,583 Total equity 1,535,249 25,996 1,561,245 Total liabilities and equity 10,144,735 25,996 10,170,731 Condensed Consolidated Statement of Operations Three Months Ended June 30, 2018 As Reported Adjustments Balances without adoption of ASC 606 Revenues Incentive fees $ 7,740 $ 2,924 $ 10,664 Total revenues 204,163 2,924 207,087 Expenses Expenses of Consolidated Funds 35,112 — 35,112 Total expenses 221,017 — 221,017 Other income (expense) Other income (expense), net (1,987 ) 12 (1,975 ) Total other income 67,926 12 67,938 Income before taxes 51,072 2,936 54,008 Income tax benefit 36,903 (50 ) 36,853 Net income 14,169 2,986 17,155 Less: Net income (loss) attributable to non-controlling interests in Consolidated Funds 9,882 3,579 13,461 Less: Net income attributable to non-controlling interests in Ares Operating Group entities 16,062 (433 ) 15,629 Net income attributable to Ares Management, L.P. (11,775 ) (160 ) (11,935 ) Less: Preferred equity dividend paid 5,425 5,425 Net income attributable to Ares Management, L.P. common shareholders (17,200 ) (160 ) (17,360 ) Condensed Consolidated Statement of Operations Six Months Ended June 30, 2018 As Reported Adjustments Balances without adoption of ASC 606 Revenues Incentive fees $ 12,811 $ 3,780 $ 16,591 Total revenues 470,252 3,780 474,032 Expenses Expenses of Consolidated Funds 36,428 — 36,428 Total expenses 427,300 — 427,300 Income before taxes 113,118 3,780 116,898 Income tax benefit 24,528 200 24,728 Net income 88,590 3,580 92,170 Less: Net income (loss) attributable to non-controlling interests in Consolidated Funds 10,249 1,860 12,109 Less: Net income attributable to non-controlling interests in Ares Operating Group entities 49,168 1,104 50,272 Net income attributable to Ares Management, L.P. 29,173 616 29,789 Less: Preferred equity dividend paid 10,850 10,850 Net income attributable to Ares Management, L.P. common shareholders 18,323 616 18,939 Condensed Consolidated Statement of Comprehensive Income Three Months Ended June 30, 2018 As Reported Adjustments Balances without adoption of ASC 606 Net income $ 14,169 $ 2,986 $ 17,155 Other comprehensive income: Foreign currency translation adjustments (12,377 ) (444 ) (12,821 ) Total comprehensive income 1,792 2,542 4,334 Less: Comprehensive income attributable to non-controlling interests in Consolidated Funds 4,193 3,579 7,772 Less: Comprehensive income attributable to non-controlling interests in Ares Operating Group entities 12,131 — 12,131 Comprehensive income attributable to Ares Management, L.P. $ (14,532 ) $ (1,037 ) $ (15,569 ) Condensed Consolidated Statement of Comprehensive Income Six Months Ended June 30, 2018 As Reported Adjustments Balances without adoption of ASC 606 Net income $ 88,590 $ 3,580 $ 92,170 Other comprehensive income: Foreign currency translation adjustments (6,892 ) (195 ) (7,087 ) Total comprehensive income 81,698 3,385 85,083 Less: Comprehensive income attributable to non-controlling interests in Consolidated Funds 7,735 1,860 9,595 Less: Comprehensive income attributable to non-controlling interests in Ares Operating Group entities 47,340 992 48,332 Comprehensive income attributable to Ares Management, L.P. $ 26,623 $ 533 $ 27,156 Condensed Consolidated Statement of Cash Flows Six Months Ended June 30, 2018 As Reported Adjustments Balances without adoption of ASC 606 Cash flows from operating activities: Net income $ 88,590 $ 3,580 $ 92,170 Cash flows due to changes in operating assets and liabilities 66,925 (1,720 ) 65,205 Cash flows due to changes in operating assets and liabilities allocable to non-controlling interests in Consolidated Funds (34,335 ) (1,860 ) (36,195 ) Recent Accounting Pronouncements The Company considers the applicability and impact of all FASB ASUs 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. 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 2018, the FASB issued ASU 2018-02, Income Statement-Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income. ASU 2018-02 allows a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from Public Law No. 115-97 (the “Tax Cuts and Jobs Act”). Consequently, the amendments eliminate the stranded tax effects resulting from the Tax Cuts and Jobs Act and will improve the usefulness of information reported to financial statement users. However, because the amendments only relate to the reclassification of the income tax effects of the Tax Cuts and Jobs Act, the underlying guidance that requires that the effect of a change in tax laws or rates be included in income from continuing operations is not affected. This ASU also requires certain disclosures about stranded tax effects. ASU 2018-02 is effective for all entities for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. Early adoption is permitted, including adoption in any interim period, (1) for public business entities for reporting periods for which financial statements have not yet been issued and (2) for all other entities for reporting periods for which financial statements have not yet been made available for issuance. The guidance should be applied either in the period of adoption or retrospectively to each period (or periods) in which the effect of the change in the U.S. federal corporate income tax rate in the Tax Cuts and Jobs Act is recognized. The Company adopted ASU 2018-02 in the three months ended March 31, 2018. As a result of the adoption of ASU 2018-02, $1.2 million of stranded tax effects resulting from the Tax Cuts and Jobs Act were reclassified from accumulated other comprehensive income to shareholders' equity during the three months ended March 31, 2018. |
GOODWILL AND INTANGIBLE ASSETS
GOODWILL AND INTANGIBLE ASSETS | 6 Months Ended |
Jun. 30, 2018 | |
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 June 30, 2018 As of June 30, As of December 31, 2018 2017 Management contracts 3.0 years $ 42,335 $ 67,306 Client relationships 10.0 years 38,600 38,600 Trade name 4.0 years 3,200 3,200 Other(1) 0.7 years 180 — Intangible assets 84,315 109,106 Less: accumulated amortization (50,316 ) (68,641 ) Intangible assets, net $ 33,999 $ 40,465 (1) In connection with the CION Ares Diversified Credit Fund, the Company pays upfront commissions to brokers that sell class C shares in the fund. The Company is then entitled to 12 months of service fees from the sold shares, which are recorded as revenue. Amortization expense associated with intangible assets was $3.3 million and $5.2 million for the three months ended June 30, 2018 and 2017 , respectively, and $6.6 million and $10.5 million for the six months ended June 30, 2018 and 2017 , respectively, and is presented within general, administrative and other expenses within the Condensed Consolidated Statements of Operations. During the first quarter of 2018, the Company removed $25.0 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, 2017 $ 32,196 $ 58,600 $ 53,099 $ 143,895 Foreign currency translation — — (47 ) (47 ) Balance as of June 30, 2018 $ 32,196 $ 58,600 $ 53,052 $ 143,848 There was no impairment of goodwill recorded during the six months ended June 30, 2018 and 2017 . The impact of foreign currency translation is reflected within other comprehensive income. |
INVESTMENTS
INVESTMENTS | 6 Months Ended |
Jun. 30, 2018 | |
Investments in and Advances to Affiliates [Abstract] | |
INVESTMENTS | INVESTMENTS The Company’s investments are comprised of: Percentage of total investments June 30, December 31, June 30, December 31, 2018 2017 2018 2017 As adjusted As adjusted Private Investment Partnership Interests: Equity method private investment partnership interests - principal (1) $ 348,831 $ 340,354 23.8 % 19.7 % Equity method - carried interest (1) 985,035 1,077,236 67.2 % 62.5 % Equity method private investment partnership interests - other 70,780 74,439 4.8 % 4.3 % Other private investment partnership interests 38,097 35,748 2.6 % 2.1 % Total private investment partnership interests 1,442,743 1,527,777 98.4 % 88.6 % Collateralized loan obligations 22,125 195,158 1.5 % 11.3 % Common stock 1,379 1,636 0.1 % 0.1 % Total investments $ 1,466,247 $ 1,724,571 (1) Interest or portion of the interest is denominated in foreign currency and is translated into U.S. dollars at each reporting date. Equity Method Investments The Company’s equity method investments include investments that are not consolidated but over which the Company exerts significant influence. The Company evaluates each of its equity method investments to determine if any were significant under SEC guidance. For the three and six months ended June 30, 2018 and 2017, no individual equity method investment held by the Company met the significance criteria. The Company recognized net gains related to its equity method investments of $3.8 million and $38.3 million for the three months ended June 30, 2018 and 2017 , respectively, and $7.3 million and $41.3 million for the six months ended June 30, 2018 and 2017 , respectively. These amounts are included within both principal investment income and within net realized and unrealized gain on investments within the Consolidated Statements of Operations. The material assets of the Company's equity method investments are expected to generate long-term capital appreciation and/or interest income; the material liabilities are debt instruments collateralized by, or related to, the financing of the assets; and net income is materially comprised of the changes in fair value of these net assets. Investments of the Consolidated Funds Investments held in the Consolidated Funds are summarized below: Fair value at Fair value as a percentage of total investments at June 30, December 31, June 30, December 31, 2018 2017 2018 2017 United States: Fixed income securities: Consumer discretionary $ 1,714,080 $ 1,295,732 24.8 % 23.2 % Consumer staples 76,664 55,073 1.1 % 1.0 % Energy 169,208 176,836 2.4 % 3.2 % Financials 424,838 270,520 6.1 % 4.8 % Healthcare, education and childcare 665,530 449,888 9.6 % 8.1 % Industrials 407,280 370,926 5.8 % 6.6 % Information technology 175,704 167,089 2.5 % 3.0 % Materials 189,786 185,170 2.7 % 3.3 % Telecommunication services 625,619 399,617 9.0 % 7.2 % Utilities 79,660 77,102 1.1 % 1.4 % Total fixed income securities (cost: $4,573,566 4,528,369 3,447,953 65.1 % 61.8 % Equity securities: Energy 60 126 0.0 % 0.0 % Total equity securities (cost: $2,265 and $2,265 at June 30, 2018 and December 31, 2017, respectively) 60 126 0.0 % 0.0 % Partnership and interests Partnership and interests 251,608 232,332 3.6 % 4.2 % Total partnership and LLC interests (cost: $206,000 and $190,000 at June 30, 2018 and December 31, 2017, respectively) 251,608 232,332 3.6 % 4.2 % Fair value at Fair value as a percentage of total investments at June 30, December 31, June 30, December 31, 2018 2017 2018 2017 Europe: Fixed income securities: Consumer discretionary $ 772,714 $ 604,608 11.1 % 10.8 % Energy 14,833 2,413 0.2 % 0.0 % Consumer staples 90,207 76,361 1.3 % 1.4 % Financials 127,141 81,987 1.8 % 1.5 % Healthcare, education and childcare 234,696 209,569 3.4 % 3.8 % Industrials 124,690 145,706 1.8 % 2.6 % Information technology 21,329 21,307 0.3 % 0.4 % Materials 184,342 213,395 2.6 % 3.8 % Telecommunication services 256,032 182,543 3.7 % 3.3 % Total fixed income securities (cost: $1,849,235 and $1,545,297 at June 30, 2018 and December 31, 2017, respectively) 1,825,984 1,537,889 26.2 % 27.6 % Equity securities: Healthcare, education and childcare 51,010 63,155 0.7 % 1.1 % Total equity securities (cost: $67,198 and $67,198 at June 30, 2018 and December 31, 2017, respectively) 51,010 63,155 0.7 % 1.1 % Asia and other: Fixed income securities: Consumer discretionary 1,878 2,008 0.0 % 0.0 % Financials 4,288 12,453 0.1 % 0.2 % Telecommunication services 20,888 21,848 0.3 % 0.4 % Total fixed income securities (cost: $27,737 and $36,180 at June 30, 2018 and December 31, 2017, respectively) 27,054 36,309 0.4 % 0.6 % Equity securities: Consumer discretionary 43,647 59,630 0.6 % 1.1 % Consumer staples 42,717 45,098 0.6 % 0.8 % Healthcare, education and childcare 44,637 44,637 0.6 % 0.8 % Industrials 50,795 16,578 0.7 % 0.3 % Total equity securities (cost: $122,418 and $122,418 at June 30, 2018 and December 31, 2017, respectively) 181,796 165,943 2.5 % 3.0 % Fair value at Fair value as a percentage of total investments at June 30, December 31, June 30, December 31, 2018 2017 2018 2017 Canada: Fixed income securities: Consumer discretionary $ 7,287 $ 6,757 0.1 % 0.1 % Consumer staples 36,420 15,351 0.5 % 0.3 % Energy 4,895 33,715 0.1 % 0.6 % Industrials 27,356 18,785 0.4 % 0.3 % Telecommunication services 12,569 6,189 0.2 % 0.1 % Total fixed income securities (cost: $89,165 and $80,201 at June 30, 2018 and December 31, 2017, respectively) 88,527 80,797 1.3 % 1.4 % Equity securities: Consumer discretionary — 5,912 — % 0.1 % Total equity securities (cost: $ 0 and $17,202 at June 30, 2018 and December 31, 2017, respectively) — 5,912 — % 0.1 % Australia: Fixed income securities: Consumer discretionary 11,932 10,863 0.2 % 0.2 % Energy 1,727 1,563 0.0 % 0.0 % Total fixed income securities (cost: $13,915 and $12,714 at June 30, 2018 and December 31, 2017, respectively) 13,659 12,426 0.2 % 0.2 % Total fixed income securities 6,483,593 5,115,374 93.2 % 91.6 % Total equity securities 232,866 235,136 3.2 % 4.2 % Total partnership interests 251,608 232,332 3.6 % 4.2 % Total investments, at fair value $ 6,968,067 $ 5,582,842 At June 30, 2018 and December 31, 2017 , no single issuer or investment, including derivative instruments and underlying portfolio investments of the Consolidated Funds, had a fair value that exceeded 5.0% of the Company’s total assets. |
FAIR VALUE
FAIR VALUE | 6 Months Ended |
Jun. 30, 2018 | |
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 June 30, 2018 : Financial Instruments of the Company Level I Level II Level III Investments Total Assets, at fair value Investments: Fixed income-collateralized loan obligations $ — $ — $ 22,125 $ — $ 22,125 Equity securities 353 1,026 — — 1,379 Partnership interests — — 47,219 38,097 85,316 Total investments, at fair value 353 1,026 69,344 38,097 108,820 Derivatives—foreign exchange contracts — 803 — — 803 Total assets, at fair value $ 353 $ 1,829 $ 69,344 $ 38,097 $ 109,623 Liabilities, at fair value Derivatives—foreign exchange contracts $ — $ (2,252 ) $ — $ — $ (2,252 ) Total liabilities, at fair value $ — $ (2,252 ) $ — $ — $ (2,252 ) Financial Instruments of the Consolidated Funds Level I Level II Level III Total Assets, at fair value Investments: Fixed income investments: Bonds $ — $ 88,672 $ 7,634 $ 96,306 Loans — 5,886,315 474,741 6,361,056 Collateralized loan obligations — 26,231 — 26,231 Total fixed income investments — 6,001,218 482,375 6,483,593 Equity securities 48,283 — 184,583 232,866 Partnership interests — — 251,608 251,608 Total investments, at fair value 48,283 6,001,218 918,566 6,968,067 Derivatives: Asset swaps - other — — 953 953 Total assets, at fair value $ 48,283 $ 6,001,218 $ 919,519 $ 6,969,020 Liabilities, at fair value Asset swaps - other $ — $ — $ (723 ) $ (723 ) Loan obligations of CLOs — (6,333,239 ) — (6,333,239 ) Total liabilities, at fair value $ — $ (6,333,239 ) $ (723 ) $ (6,333,962 ) The tables below summarize the financial assets and financial liabilities measured at fair value for the Company and Consolidated Funds as of December 31, 2017 : Financial Instruments of the Company Level I Level II Level III Investments Total Assets, at fair value Investments: Fixed income-collateralized loan obligations $ — $ — $ 195,158 $ — $ 195,158 Equity securities 520 1,116 — — 1,636 Partnership interests — — 44,769 35,998 80,767 Total investments, at fair value 520 1,116 239,927 35,998 277,561 Derivatives—foreign exchange contracts — 498 — — 498 Total assets, at fair value $ 520 $ 1,614 $ 239,927 $ 35,998 $ 278,059 Liabilities, at fair value Derivatives—foreign exchange contracts $ — $ (2,639 ) $ — $ — $ (2,639 ) Total liabilities, at fair value $ — $ (2,639 ) $ — $ — $ (2,639 ) Financial Instruments of the Consolidated Funds Level I Level II Level III Total Assets, at fair value Investments: Fixed income investments: Bonds $ — $ 82,151 $ 7,041 $ 89,192 Loans — 4,755,335 260,848 5,016,183 Collateralized loan obligations — 10,000 — 10,000 Total fixed income investments — 4,847,486 267,889 5,115,375 Equity securities 72,558 — 162,577 235,135 Partnership interests — — 232,332 232,332 Total investments, at fair value 72,558 4,847,486 662,798 5,582,842 Derivatives: Asset swaps - other — — 1,366 1,366 Total derivative assets, at fair value — — 1,366 1,366 Total assets, at fair value $ 72,558 $ 4,847,486 $ 664,164 $ 5,584,208 Liabilities, at fair value Asset swaps - other $ — $ — $ (462 ) $ (462 ) Loan obligations of CLOs — (4,963,194 ) — (4,963,194 ) Total liabilities, at fair value $ — $ (4,963,194 ) $ (462 ) $ (4,963,656 ) The following tables set forth a summary of changes in the fair value of the Level III measurements for the three months ended June 30, 2018 : Level III Assets Level III Assets and Liabilities of the Company Fixed Income Partnership Total Balance, beginning of period $ 242,984 $ 44,769 $ 287,753 Sales/settlements(2) (219,744 ) — (219,744 ) Realized and unrealized appreciation (depreciation), net (1,115 ) 2,450 1,335 Balance, end of period $ 22,125 $ 47,219 $ 69,344 Increase (decrease) in unrealized appreciation/depreciation included in earnings related to financial assets and liabilities still held at the reporting date $ (100 ) $ 2,450 $ 2,350 Level III Assets of Consolidated Funds Equity Securities Fixed Income Partnership Derivatives, Net Total Balance, beginning of period $ 160,422 $ 240,763 $ 252,700 $ 86 $ 653,971 Transfer in — 94,776 — — 94,776 Transfer out — (68,328 ) — — (68,328 ) Purchases(1) — 273,879 6,000 — 279,879 Sales/settlements(2) — (57,206 ) — (17 ) (57,223 ) Amortized discounts/premiums — (9 ) — (21 ) (30 ) Realized and unrealized appreciation (depreciation), net 24,161 (1,500 ) (7,092 ) 182 15,751 Balance, end of period $ 184,583 $ 482,375 $ 251,608 $ 230 $ 918,796 Increase (decrease) in unrealized appreciation/depreciation included in earnings related to financial assets still held at the reporting date $ (2,090 ) $ (3,785 ) $ — $ 134 $ (5,741 ) (1) Purchases include paid‑in‑kind interest and securities received in connection with restructurings. (2) Sales/settlements include distributions, principal redemptions and securities disposed of in connection with restructurings. The following tables set forth a summary of changes in the fair value of the Level III measurements for the three months ended June 30, 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 $ 108,253 $ 33,410 $ 141,663 $ 1,909 Purchases(1) 60,242 — 60,242 — Sales/settlements(2) (3,324 ) — (3,324 ) — Realized and unrealized depreciation, net (364 ) — (364 ) 31 Balance, end of period $ 164,807 $ 33,410 $ 198,217 $ 1,940 Increase (decrease) in unrealized appreciation/depreciation included in earnings related to financial assets and liabilities still held at the reporting date $ (625 ) $ — $ (625 ) $ 31 Level III Assets of Consolidated Funds Equity Securities Fixed Income Partnership Interests Derivatives, Net Total Balance, beginning of period $ 142,358 $ 278,829 $ 196,690 $ 845 $ 618,722 Transfer in 444 18,356 — — 18,800 Transfer out — (108,757 ) — — (108,757 ) Purchases(1) — 56,292 50,000 — 106,292 Sales/settlements(2) — (60,481 ) (30,000 ) (888 ) (91,369 ) Amortized discounts/premiums — (78 ) — (100 ) (178 ) Realized and unrealized appreciation, net 3,472 3,418 1,050 2,952 10,892 Balance, end of period $ 146,274 $ 187,579 $ 217,740 $ 2,809 $ 554,402 Increase (decrease) in unrealized appreciation/depreciation included in earnings related to financial assets still held at the reporting date $ 3,472 $ (277 ) $ 1,050 $ 3,145 $ 7,390 (1) Purchases include paid‑in‑kind interest and securities received in connection with restructurings. (2) Sales/settlements include distributions, principal redemptions and securities disposed of in connection with restructurings. The following tables set forth a summary of changes in the fair value of the Level III measurements for the six months ended June 30, 2018 : Level III Assets Level III Assets and Liabilities of the Company Fixed Income Partnership Total Balance, beginning of period $ 195,158 $ 44,769 $ 239,927 Deconsolidation of fund 78 — 78 Purchases(1) 48,731 — 48,731 Sales/settlements(2) (220,571 ) — (220,571 ) Realized and unrealized appreciation (depreciation), net (1,271 ) 2,450 1,179 Balance, end of period $ 22,125 $ 47,219 $ 69,344 Increase (decrease) in unrealized appreciation/depreciation included in earnings related to financial assets and liabilities still held at the reporting date $ (829 ) $ 2,450 $ 1,621 Level III Assets of Consolidated Funds Equity Securities Fixed Income Partnership Derivatives, Net Total Balance, beginning of period $ 162,577 $ 267,889 $ 232,332 $ 904 $ 663,702 Deconsolidation of fund (233 ) (233 ) Transfer in — 95,450 — — 95,450 Transfer out — (73,777 ) — — (73,777 ) Purchases(1) — 313,462 16,000 — 329,462 Sales/settlements(2) — (117,503 ) — (194 ) (117,697 ) Amortized discounts/premiums — 35 — (14 ) 21 Realized and unrealized appreciation (depreciation), net 22,006 (2,948 ) 3,276 (466 ) 21,868 Balance, end of period $ 184,583 $ 482,375 $ 251,608 $ 230 $ 918,796 Increase (decrease) in unrealized appreciation/depreciation included in earnings related to financial assets still held at the reporting date $ (12,211 ) $ (1,671 ) $ 3,276 $ (566 ) $ (11,172 ) (1) Purchases include paid‑in‑kind interest and securities received in connection with restructurings. (2) Sales/settlements include distributions, principal redemptions and securities disposed of in connection with restructurings. The following tables set forth a summary of changes in the fair value of the Level III measurements for the six months ended June 30, 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) 80,684 169 80,853 — Sales/settlements(2) (5,241 ) — (5,241 ) — Realized and unrealized appreciation (depreciation), net 253 (169 ) 84 (20,216 ) Balance, end of period $ 164,807 $ 33,410 $ 198,217 $ 1,940 Increase (decrease) in unrealized appreciation/depreciation included in earnings related to financial assets and liabilities still held at the reporting date $ (155 ) $ — $ (155 ) $ 61 Level III Assets of Consolidated Funds Equity Securities Fixed Income Partnership Interests Derivatives, Net Total Balance, beginning of period $ 130,690 $ 242,253 $ 171,696 $ (2,708 ) $ 541,931 Transfer in — 34,182 — — 34,182 Transfer out (6,160 ) (108,806 ) — — (114,966 ) Purchases(1) 6,692 93,111 73,000 — 172,803 Sales/settlements(2) — (76,714 ) (30,000 ) 1,966 (104,748 ) Amortized discounts/premiums — 46 — 216 262 Realized and unrealized appreciation, net 15,052 3,507 3,044 3,335 24,938 Balance, end of period $ 146,274 $ 187,579 $ 217,740 $ 2,809 $ 554,402 Increase (decrease) in unrealized appreciation/depreciation included in earnings related to financial assets still held at the reporting date $ 15,749 $ (785 ) $ 3,044 $ 3,914 $ 21,922 (1) Purchases include paid‑in‑kind interest and securities received in connection with restructurings. (2) Sales/settlements include distributions, principal redemptions and securities disposed of in connection with restructurings. 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. For the six months ended June 30, 2018 , 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 June 30, 2018 : Fair Value Valuation Technique(s) Significant Unobservable Input(s) Range Assets Partnership interests $ 47,219 Other N/A N/A Collateralized loan obligations 22,125 Broker quotes and/or 3rd party pricing services N/A N/A Total $ 69,344 The following table summarizes the quantitative inputs and assumptions used for the Company’s Level III measurements as of December 31, 2017 : Fair Value Valuation Technique(s) Significant Unobservable Input(s) Range Assets Partnership interests $ 44,769 Other N/A N/A Collateralized loan obligations 195,158 Broker quotes and/or 3rd party pricing services N/A N/A Total $ 239,927 The following table summarizes the quantitative inputs and assumptions used for the Consolidated Funds’ Level III measurements as of June 30, 2018 : Fair Value Valuation Technique(s) Significant Unobservable Input(s) Range Weighted Assets Equity securities $ 51,010 Enterprise value market multiple analysis EBITDA multiple(2) 7.7x 7.7 44,637 Market approach (comparable companies) Net income multiple 51.8x 51.8 Illiquidity discount 25.0% 25.0% 60 Broker quotes and/or 3rd party pricing services N/A N/A N/A 88,876 Transaction price(1) N/A N/A N/A Partnership interest 251,608 Discounted cash flow Discount rate 17.0% 17.0% Fixed income securities 434,397 Broker quotes and/or 3rd party pricing services N/A N/A N/A 47,978 Income approach Yield 7.8% - 15.2% 11.3% Derivative instruments 953 Broker quotes and/or 3rd party pricing services N/A N/A N/A Total assets $ 919,519 Liabilities Derivatives instruments $ (723 ) Broker quotes and/or 3rd party pricing services N/A N/A N/A Total liabilities $ (723 ) (1) 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, 2017 : Fair Value Valuation Technique(s) Significant Unobservable Input(s) Range Weighted Average Assets Equity securities $ 63,155 Enterprise value market multiple analysis EBITDA multiple 2.7x 2.7x 61,215 Market approach (comparable companies) Net income multiple 27.0x - 36.2x 33.7x 126 Broker quotes and/or 3rd party pricing services N/A N/A N/A 38,081 Transaction price(1) N/A N/A N/A Partnership interest 232,332 Discounted cash flow Discount rate 19.0% 19.0% Fixed income securities 222,413 Broker quotes and/or 3rd party pricing services N/A N/A N/A 45,243 Income approach Yield 10.8% - 22.5% 12.1% 233 Market approach (comparable companies) EBITDA multiple 6.5x 6.5x Derivative instruments 1,366 Broker quotes and/or 3rd party pricing services N/A N/A N/A Total assets $ 664,164 Liabilities Derivatives instruments $ (462 ) Broker quotes and/or 3rd party pricing services N/A N/A N/A Total liabilities $ (462 ) (1) Transaction price consists of securities purchased or restructured. The Company determined that there has been no change to the valuation based on the underlying assumptions used at the closing of such transactions. 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 June 30, 2018 As of December 31, 2017 Fair Value Unfunded Fair Value Unfunded Non-core investments(1) $ 38,097 $ 16,286 $ 35,998 $ 16,492 Total $ 38,097 $ 16,286 $ 35,998 $ 16,492 (1) Non-core investments are reported within OMG. |
DERIVATIVE FINANCIAL INSTRUMENT
DERIVATIVE FINANCIAL INSTRUMENTS | 6 Months Ended |
Jun. 30, 2018 | |
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 June 30, 2018 and December 31, 2017 : As of June 30, 2018 As of December 31, 2017 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 $ 13,733 $ 803 $ 86,130 $ 2,252 $ 13,724 $ 498 $ 51,026 $ 2,639 Total derivatives, at fair value(2) $ 13,733 $ 803 $ 86,130 $ 2,252 $ 13,724 $ 498 $ 51,026 $ 2,639 As of June 30, 2018 As of December 31, 2017 Assets Liabilities Assets Liabilities Consolidated Funds Notional(1) Fair Value Notional(1) Fair Value Notional(1) Fair Value Notional(1) Fair Value Asset swap - other 4,558 953 1,351 723 5,363 1,366 1,840 462 Total derivatives, at fair value(3) 4,558 953 1,351 723 5,363 1,366 1,840 462 (1) Represents the total contractual amount of derivative assets and liabilities outstanding. (2) As of June 30, 2018 and December 31, 2017 , the Company had the right to, but elected not to, offset $0.8 million and $0.5 million of its derivative assets and liabilities, respectively. (3) As of June 30, 2018 and December 31, 2017 , the Consolidated Funds offset $0.3 million and $0.4 million of their derivative assets and liabilities, respectively. |
DEBT
DEBT | 6 Months Ended |
Jun. 30, 2018 | |
Debt Disclosure [Abstract] | |
DEBT | DEBT The following table summarizes the Company’s and its subsidiaries’ debt obligations: As of June 30, 2018 As of December 31, 2017 Debt Origination Date Maturity Original Borrowing Amount Carrying Interest Rate Carrying Interest Rate Credit Facility(1) Revolver 2/24/2022 N/A $ 125,000 3.63% $ 210,000 3.09% Senior Notes(2) 10/8/2014 10/8/2024 $ 250,000 245,628 4.21% 245,308 4.21% 2015 Term Loan(3) 9/2/2015 7/29/2026 — — N/A 35,037 2.86% 2016 Term Loan(4) 12/21/2016 1/15/2029 — — N/A 25,948 3.08% 2017 Term Loan A(4) 3/22/2017 1/22/2028 — — N/A 17,407 2.90% 2017 Term Loan B(4) 5/10/2017 10/15/2029 — — N/A 35,062 2.90% 2017 Term Loan C(4) 6/22/2017 7/30/2029 — — N/A 17,078 2.88% 2017 Term Loan D(4) 11/16/2017 10/15/2030 — — N/A 30,336 2.77% Total debt obligations $ 370,628 $ 616,176 (1) The AOG entities are borrowers under the Credit Facility, which 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 June 30, 2018 , 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 CLOs. 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 to cover the Term Loans, 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 June 30, 2018 , the Company and its subsidiaries were in compliance with all covenants under the debt obligations. The Company typically incurs and pays debt issuance costs when entering into a new debt obligation or when amending an existing debt agreement. Debt issuance costs related to the 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. Subsequent to the removal of the U.S. risk retention requirements related to open–market CLO managers, the Company sold $219.3 million of its CLO securities and used the proceeds to pay off the related 2015-2017 Term Loans and settle a repurchase agreement of $206.0 million during the three months ended June 30, 2018 . The resulting loss from the debt extinguishment was immaterial. The following table presents the activity of the Company's debt issuance costs: Credit Facility Senior Notes Term Loans Repurchase Agreement Loan Unamortized debt issuance costs as of December 31, 2017 $ 6,543 $ 1,571 $ 1,171 $ — Debt issuance costs incurred — — 173 259 Amortization of debt issuance costs (786 ) (121 ) (56 ) (7 ) Debt extinguishment expense — — (1,288 ) (252 ) Unamortized debt issuance costs as of June 30, 2018 $ 5,757 $ 1,450 $ — $ — 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. As of June 30, 2018 and December 31, 2017 the following loan obligations were outstanding and classified as liabilities of the Company’s Consolidated CLOs: As of June 30, 2018 As of December 31, 2017 Loan Obligations Fair Value of Loan Obligations Weighted Loan Fair Value of Loan Obligations Weighted Average Remaining Maturity In Years Senior secured notes(1) $ 6,189,246 $ 6,111,930 11.00 $ 4,801,582 $ 4,776,883 10.57 Subordinated notes(2) 319,840 221,309 11.40 276,169 186,311 11.25 Total loan obligations of Consolidated CLOs $ 6,509,086 $ 6,333,239 $ 5,077,751 $ 4,963,194 (1) Original borrowings under the senior secured notes totaled $6.2 billion , with various maturity dates ranging from October 2024 to October 2030. The weighted average interest rate as of June 30, 2018 was 5.21% . (2) Original borrowings under the subordinated notes totaled $319.8 million , with various maturity dates ranging from October 2024 to October 2030. The notes do not have contractual interest rates, instead holders of the notes receive distributions from the excess cash flows generated by each Consolidated CLO. Loan obligations of the Consolidated CLOs are collateralized by the assets held by the Consolidated CLOs, consisting of cash and cash equivalents, corporate loans, corporate bonds and other securities. The assets of one Consolidated CLO may not be used to satisfy the liabilities of another Consolidated CLO. Loan obligations of the Consolidated CLOs include floating rate notes, deferrable floating rate notes, revolving lines of credit and subordinated notes. Amounts borrowed under the notes are repaid based on available cash flows subject to priority of payments under each Consolidated CLO’s governing documents. Based on the terms of these facilities, the creditors of the facilities have no recourse to the Company. Credit Facilities of the Consolidated Funds Certain Consolidated Funds maintain credit facilities to fund investments between capital drawdowns. These facilities generally are collateralized by the unfunded capital commitments of the Consolidated Funds’ limited partners, bear an annual commitment fee based on unfunded commitments and contain various affirmative and negative covenants and reporting obligations, including restrictions on additional indebtedness, liens, margin stock, affiliate transactions, dividends and distributions, release of capital commitments and portfolio asset dispositions. The creditors of these facilities have no recourse to the Company 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 applicable law. Credit facilities of the Consolidated Funds are reflected at cost in the Condensed Consolidated Statements of Financial Condition. As of June 30, 2018 and December 31, 2017 , 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 June 30, 2018 and December 31, 2017 : As of June 30, 2018 As of December 31, 2017 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 $ 13,376 3.88% $ 12,942 2.88% 6/29/2019 46,632 46,632 EURIBOR + 1.55% (2) 48,042 1.55% (2) 3/7/2019 71,500 71,500 3.47% 71,500 2.88% Revolving Term Loan 1/31/2022 1,900 1,216 8.07% — —% 8/19/2019 11,429 5,714 9.32% 5,714 5.86% Total borrowings $ 138,438 $ 138,198 (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 | 6 Months Ended |
Jun. 30, 2018 | |
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 June 30, 2018 , the Company has not had prior claims or losses pursuant to these contracts and expects the risk of loss to be remote. Commitments As of June 30, 2018 and December 31, 2017 , the Company had aggregate unfunded commitments of $284.5 million and $285.7 million , respectively, including commitments to both non-consolidated funds and Consolidated Funds. Total unfunded commitments included $16.3 million and $16.5 million in commitments to funds not managed by the Company as of June 30, 2018 and December 31, 2017 , respectively. ARCC Fee Waiver In conjunction with ARCC's acquisition of American Capital, Ltd. (“ACAS”), 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. The maximum amount of fees that may be waived in a quarter is $10 million , and if ARCC Part I Fees are less than $10 million in any single quarter, the shortfall will not carryover to subsequent quarters. As of June 30, 2018 , there are five remaining quarters as part of the fee waiver agreement, with a maximum of $50 million in potential waivers. ARCC Part I Fees are reported net of the fee waiver. Performance Income 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 June 30, 2018 and December 31, 2017 , if the Company assumed all existing investments were worthless, the amount of performance income subject to potential repayment, net of tax, which may differ from the recognition of revenue, would have been approximately $472.9 million and $476.1 million , respectively, of which approximately $367.5 million and $370.0 million , respectively, is reimbursable to the Company by certain professionals who are the recipients of such performance income. Management believes the possibility of all of the investments becoming worthless is remote. As of June 30, 2018 , if the funds were liquidated at their fair values, there would be $0.2 million of repayment obligations, and accordingly, the Company recorded a contingent repayment liability as June 30, 2018 . As of December 31, 2017 , 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 December 31, 2017 . 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 | 6 Months Ended |
Jun. 30, 2018 | |
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, carried interest allocation, incentive fees, investment income, 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 accrued carried interest allocations and incentive fees receivable, which are presented within investments and other assets, respectively, 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 incentive fees. Performance income the Company earns from the funds can be distributed to professionals or their related entities 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 June 30, As of December 31, 2018 2017 Due from affiliates: Management fees receivable from non-consolidated funds $ 132,132 $ 126,506 Payments made on behalf of and amounts due from non-consolidated funds and employees 40,296 39,244 Due from affiliates—Company $ 172,428 $ 165,750 Amounts due from portfolio companies and non-consolidated funds $ 13,704 $ 15,884 Due from affiliates—Consolidated Funds $ 13,704 $ 15,884 Due to affiliates: Management fee rebate payable to non-consolidated funds $ 2,603 $ 5,213 Management fees received in advance 4,746 1,729 Tax receivable agreement liability 12,925 3,503 Payable to company employees(1) 24,701 24,542 Payments made by non-consolidated funds on behalf of and payable by the Company 17,369 4,197 Due to affiliates—Company $ 62,344 $ 39,184 (1) Prior year amount of $24.5 million was reclassified from performance related compensation payable to due to affiliates to conform with current year presentation. 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. The Company reimbursed ARCC approximately $0.6 million for certain recurring rent and utilities incurred by ARCC during the first quarter of 2018. In addition, during the three months ended June 30, 2018, the Company reimbursed ARCC approximately $2.2 million , $3.0 million , $3.2 million and $2.9 million of rent and utilities for the years ended 2017, 2016, 2015 and 2014, respectively, for an aggregate reimbursement to ARCC of $11.8 million . Beginning April 1, 2018, the Company will bear these expenses. ARCC Investment Advisory and Management Agreement In connection with ARCC's board approval of the modification of the asset coverage requirement applicable to senior securities from 200% to 150% effective on June 21, 2019, (unless ARCC receives earlier stockholder approval), the investment advisory and management agreement will be amended prior to June 21, 2019 (or such earlier date), to reduce the annual base management fee paid to the Company from 1.5% to 1.0% on all assets financed using leverage over 1.0 times debt to equity. |
INCOME TAXES
INCOME TAXES | 6 Months Ended |
Jun. 30, 2018 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | INCOME TAXES Effective March 1, 2018, the Company elected to be treated as a corporation for U.S. federal income tax purposes, while remaining a limited partnership under state law. A portion of the Company’s operations was and continues to be held through AHI and corporate subsidiaries of Ares Investments. AHI and such corporate subsidiaries are U.S. corporations and subject to U.S. corporate tax on earnings that flow through from subsidiary entities. The income of such corporations has historically been subject to U.S. federal, state and local income taxes, and certain of its foreign subsidiaries continue to be subject to foreign income taxes (for which a foreign tax credit can generally offset U.S. corporate taxes imposed on the same income). Prior to March 1, 2018, a substantial portion of the Company’s earnings flowed through to owners of the Company without being subject to entity level income taxes. Consequently, a significant portion of the Company’s earnings did not reflect a provision for income taxes except those for foreign, state, city and local income taxes incurred at the entity level. Beginning March 1, 2018, this portion of the Company’s earnings was subject to U.S. corporate tax. The Company’s income tax provision includes corporate income taxes and other entity level income taxes, as well as income taxes incurred by certain affiliated funds that are consolidated in these financial statements. The Company recorded an income tax expense of $36.9 million and $24.5 million for the three and six months ended June 30, 2018 , respectively. In connection with its election to be taxed as a corporation effective March 1, 2018, the Company recorded two significant one-time deferred tax items. The first item is a deferred tax liability arising from the embedded net unrealized gains of both carried interest and the investment portfolio that were not previously subject to corporate taxes. Cash taxes will only be paid on unrealized gains to the extent realized. The second item is a deferred tax asset representative of book to tax bases differences resulting from allocations of equity account balances upon ownership changes. This asset will ultimately be unwound on conversion of the AOG units to common shares by the private unitholders, will have no impact on the Statement of Operations and will not result in the Company paying any more or less taxes. During the quarter ended June 30, 2018, the Company determined it did not control the actions of the AOG unitholders and, therefore, the timing of the recognition of the benefit, and established a $28.9 million valuation allowance against the deferred tax asset, effectively increasing the provision for income taxes. Consequently, this deferred tax asset had no impact on the income tax provision for the six months ended June 30, 2018. The Company had an income tax expense of $1.3 million for the three months ended June 30, 2017 . For the six months ended June 30, 2017 , the Company had an income tax benefit of $33.0 million primarily driven by the one-time ARCC-ACAS transaction support payment. Supplemental information on an unaudited pro forma basis, as if the Company's election to be treated as a corporation for U.S. federal income tax purposes was effective for the three and six months ended June 30, 2017 is as follows: Three Months Ended June 30, 2017 2018 2017 Pro forma Provision for Income Taxes - The Company Income tax expense of the Company $ 36,834 $ 857 $ 18,815 Provision for Income Taxes - Consolidated Funds Income tax expense of the Consolidated Funds 69 396 396 Total Provision for Income Taxes $ 36,903 $ 1,253 $ 19,211 Six Months Ended June 30, 2017 2018 2017 Pro forma Provision for Income Taxes - The Company Income tax expense (benefit) of the Company $ 24,459 $ (33,875 ) $ (9,528 ) Provision for Income Taxes - Consolidated Funds Income tax expense of the Consolidated Funds 69 864 864 Total Provision for Income Taxes $ 24,528 $ (33,011 ) $ (8,664 ) The 2017 pro forma tax information was calculated as if the Company's election to be treated as a corporation for U.S. federal income tax purposes was effective for the three and six months ended June 30, 2017 . 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 entities that are subject to income taxes and those subsidiaries that are not. For the three and six months ended June 30, 2018 and 2017 , 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 June 30, 2018 , the Company’s U.S. federal income tax returns for the years 2014 through 2018 are open under the normal statute of limitations and therefore subject to examination. State and local tax returns are generally subject to audit from 2014 to 2018 . Foreign tax returns are generally subject to audit from 2013 to 2018 . Although the outcome of tax audits is always uncertain, the Company does not believe the outcome of any future audit will have a material adverse effect on the Company’s condensed consolidated financial statements. |
EARNINGS PER COMMON SHARE
EARNINGS PER COMMON SHARE | 6 Months Ended |
Jun. 30, 2018 | |
Earnings Per Share [Abstract] | |
EARNINGS PER COMMON SHARE | EARNINGS PER COMMON SHARE Basic earnings per common share are computed by dividing income available to common shareholders by the weighted‑average number of common shares outstanding during the period. Diluted earnings per common share are computed using the more dilutive method of either the two-class method or the treasury stock method. For the three and six months ended June 30, 2018 and the six months June 30, 2017 , the two-class method was the more dilutive method for the unvested restricted units. For the three months ended June 30, 2017 , 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 share for the three and six months ended June 30, 2018 and 2017 excludes the following options, restricted units and AOG Units, as their effect would have been anti-dilutive: For the Three Months Ended For the Six Months Ended 2018 2017 2018 2017 Options 19,111,390 21,155,026 19,471,589 21,244,858 Restricted units 15,271,381 39,082 15,811,964 14,463,590 AOG Units 120,231,237 130,249,329 124,211,007 130,325,826 The following table presents the computation of basic and diluted earnings per common share: For the Three Months Ended For the Six Months Ended 2018 2017 2018 2017 Net income (loss) attributable to Ares Management, L.P. common shareholders $ (17,200 ) $ 44,453 $ 18,323 $ (2,106 ) Earnings distributed to participating securities (restricted units) (1,970 ) (419 ) (3,877 ) (1,246 ) Net income (loss) available to common shareholders $ (19,170 ) $ 44,034 $ 14,446 $ (3,352 ) Basic weighted-average common shares 98,037,252 81,829,086 91,861,946 81,469,967 Basic earnings (loss) per common share $ (0.20 ) $ 0.54 $ 0.16 $ (0.04 ) Net income (loss) attributable to Ares Management, L.P. common shareholders $ (17,200 ) $ 44,453 $ 18,323 $ (2,106 ) Earnings distributed to participating securities (restricted units) (1,970 ) — (3,877 ) (1,246 ) Net income (loss) available to common shareholders $ (19,170 ) $ 44,453 $ 14,446 $ (3,352 ) Effect of dilutive shares: Restricted units — 2,490,796 — — Diluted weighted-average common shares 98,037,252 84,319,882 91,861,946 81,469,967 Diluted earnings (loss) per common share $ (0.20 ) $ 0.53 $ 0.16 $ (0.04 ) |
EQUITY COMPENSATION
EQUITY COMPENSATION | 6 Months Ended |
Jun. 30, 2018 | |
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 shares available to be issued under the Equity Incentive Plan resets and may increase on January 1 each year. Accordingly, on January 1, 2018 , the total number of shares available for issuance under the Equity Incentive Plan increased to 31,853,504 shares, and as of June 30, 2018 , 29,311,383 shares 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 Six Months Ended 2018 2017 2018 2017 Restricted units $ 18,516 $ 14,601 $ 36,547 $ 25,818 Options 3,630 3,931 6,293 7,413 Phantom units 361 385 754 775 Equity-based compensation expense $ 22,507 $ 18,917 $ 43,594 $ 34,006 Restricted Units Each restricted unit represents an unfunded, unsecured right of the holder to receive a common share on a specific date. The restricted units generally vest and are settled in common shares 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 either the first or second 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 share multiplied by (ii) the number of restricted units held at the time such distributions are declared (“Dividend Equivalent”). For the three and six months ended June 30, 2018 , Dividend Equivalents were made to the holders of restricted units in the aggregate amount of $5.8 million and $12.4 million , respectively, which are presented as dividends within the Condensed Consolidated Statements of Changes in Equity. When restricted units are forfeited, the cumulative amount of dividend equivalents previously paid is reclassified to compensation and benefits expense in the Condensed Consolidated Statements of Operations. The following table presents unvested restricted units' activity during the six months ended June 30, 2018 : Restricted Units Weighted Average Grant Date Fair Value Per Unit Balance - January 1, 2018 13,751,888 $ 17.58 Granted 3,681,702 23.58 Vested (1,903,923 ) 16.93 Forfeited (258,286 ) 19.55 Balance - June 30, 2018 15,271,381 $ 19.07 The total compensation expense expected to be recognized in all future periods associated with the restricted units is approximately $215.0 million as of June 30, 2018 and is expected to be recognized over the remaining weighted average period of 3.48 years . Options A summary of options activity during the six months ended June 30, 2018 is presented below: Options Weighted Average Exercise Price Weighted Average Remaining Life (in years) Aggregate Intrinsic Value Balance - January 1, 2018 20,495,025 $ 18.99 6.09 $ 20,611 Granted — — Exercised (50,000 ) 19.00 — 90 Expired (889,432 ) 19.00 — Forfeited (444,203 ) 19.00 — Balance - June 30, 2018 19,111,390 $ 18.99 5.81 $ 32,655 Exercisable at June 30, 2018 12,715,808 $ 19.00 5.78 $ 21,672 As of June 30, 2018 , there was $12.3 million of total unrecognized compensation expense that is expected to be recognized over the remaining weighted average period of 0.85 years . Net cash proceeds from the exercises of stock options was $1.0 million for the six months ended June 30, 2018 . The Company realized tax benefits of approximately $0.04 million from those exercises. Phantom Units A summary of unvested phantom unit activity during the six months ended June 30, 2018 is presented below: Phantom Units Weighted Average Balance - January 1, 2018 156,153 $ 19.00 Vested (70,352 ) 19.00 Forfeited (16,200 ) 19.00 Balance - June 30, 2018 69,601 $ 19.00 The fair value of the phantom unit awards is remeasured at each reporting period and was $ 20.70 per unit as of June 30, 2018 . Based on the fair value of the awards at June 30, 2018 , $1.2 million of unrecognized compensation expense in connection with phantom units outstanding is expected to be recognized over a weighted average period of 0.85 years . During the six months ended June 30, 2018 , the Company paid $1.6 million to settle vested phantom units. |
EQUITY
EQUITY | 6 Months Ended |
Jun. 30, 2018 | |
Stockholders' Equity Note [Abstract] | |
EQUITY | EQUITY Ares Management, L.P. Common Shares Common shares represent limited partnership interests in the Company. The holders of common shares are entitled to participate pro rata in distributions from the Company and to exercise the rights or privileges that are available to common shareholders under the Company’s partnership agreement. The common shareholders 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. During the quarter ended March 31, 2018, an affiliate of Alleghany Corporation (“Alleghany”) exchanged 9,750,000 of its AOG Units into 9,750,000 common shares. Common Share Offering On March 12, 2018, AREC Holdings Ltd., a wholly owned subsidiary of Abu Dhabi Investment Authority (collectively, “ADIA”), and the Company completed a public offering of 15,000,000 common shares. In connection with this offering, ADIA sold 10,000,000 of its previously issued and outstanding common shares from which the Company received no proceeds. Additionally, the Company issued 5,000,000 common shares from which it received $105.9 million in gross proceeds. The Company incurred approximately $0.5 million of expenses in connection with this offering transaction. The expenses have been treated as a reduction of the proceeds received from the offering and are presented on a net basis together with the proceeds from the offering in shareholders' equity in the Condensed Consolidated Statements of Changes in Equity. In April 2018, the underwriters in the offering exercised a portion of their option to purchase 1,130,000 additional common shares from ADIA. The Company did not receive any of the proceeds from the underwriters' exercise. The expenses incurred by the Company related to the option exercise have been included in other income (expense), net in the Condensed Consolidated Statements of Operations. ADIA paid the underwriting discounts and commissions and/or similar charges incurred for the sale of the common shares. The following table presents each partner's AOG Units and corresponding ownership interest in each of the Ares Operating Group entities as of June 30, 2018 and December 31, 2017 , as well as its daily average ownership of AOG Units in each of the Ares Operating Group entities for the six months ended June 30, 2018 and 2017 . Daily Average Ownership As of June 30, 2018 As of December 31, 2017 For the Three Months Ended June 30, For the Six Months Ended June 30, AOG Units Direct Ownership Interest AOG Units Direct Ownership Interest 2018 2017 2018 2017 Ares Management, L.P. 98,398,340 45.03 % 82,280,033 38.75 % 44.92 % 38.58 % 42.51 % 38.47 % Ares Owners Holding L.P. 117,379,305 53.71 % 117,576,663 55.36 % 53.82 % 55.53 % 54.40 % 55.63 % Affiliate of Alleghany Corporation 2,750,000 1.26 % 12,500,000 5.89 % 1.26 % 5.89 % 3.09 % 5.90 % Total 218,527,645 100.00 % 212,356,696 100.00 % Preferred Equity As of June 30, 2018 and December 31, 2017 , the Company had 12,400,000 shares 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 share. |
SEGMENT REPORTING
SEGMENT REPORTING | 6 Months Ended |
Jun. 30, 2018 | |
Segment Reporting [Abstract] | |
SEGMENT REPORTING | SEGMENT REPORTING The Company operates through its three distinct operating segments. During the six months ended June 30, 2018 , 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 $86.9 billion of assets under management and 152 funds as of June 30, 2018 . 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 June 30, 2018 , 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 $23.6 billion of assets under management as of June 30, 2018 , broadly categorizing its investment strategies as corporate private equity, U.S. power and energy infrastructure and special situations. As of June 30, 2018 the group managed five corporate private equity commingled funds focused on North America and Europe and three focused on greater China, six 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 $10.9 billion of assets under management across 43 funds as of June 30, 2018 . 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 OMG that consists of six 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) the effects of changes arising from corporate actions, and (e) 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, underwriting costs, and expenses incurred in connection with corporate reorganization. Beginning in 2018, placement fees are no longer excluded but are amortized to match the period over which management fees are recognized. This change had an immaterial impact to FRE and RI for the current period. 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 income, performance related 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 related compensation. PRE differs from income (loss) before taxes computed in accordance with GAAP as it only includes performance income, performance related compensation and total investment and other income earned from the Consolidated Funds and non-consolidated funds. Realized income (“RI”), a non-GAAP measure, is an operating metric used by management to evaluate performance of the business based on operating performance and the contribution of each of the business segments to that performance, while removing the fluctuations of unrealized income and expenses, which may or may not be eventually realized at the levels presented and whose realizations depend more on future outcomes than current business operations. RI differs from net income by excluding (a) income tax expense, (b) operating results of our Consolidated Funds, (c) depreciation and amortization expense, (d) the effects of changes arising from corporate actions, (e) unrealized gains and losses related to performance income and investment performance and (f) certain other items that we believe are not indicative of our operating performance. Changes arising from corporate actions include equity-based compensation expenses, the amortization of intangible assets, transaction costs associated with mergers, acquisitions and capital transactions, underwriting costs and expenses incurred in connection with corporate reorganization. Beginning in 2018, placement fees are no longer excluded but are amortized to match the period over which management fees are recognized. This change had an immaterial impact to FRE and RI for the current period. Prior to the introduction of RI, management used distributable earnings for this evaluation. Management believes RI is a more appropriate metric to evaluate the Company's current business operations. Management makes operating decisions and assesses the performance of each of the Company’s business segments based on financial and operating metrics and other data that is presented before giving effect to the consolidation of any of the Consolidated Funds. Consequently, all segment data excludes the assets, liabilities and operating results related to the Consolidated Funds and non‑consolidated funds. The following table presents the financial results for the Company’s operating segments, as well as the OMG, for the three months ended June 30, 2018 : Credit Group Private Equity Group Real Total OMG Total Management fees (Credit Group includes ARCC Part I Fees of $29,866) $ 135,848 $ 49,318 $ 17,138 $ 202,304 $ — $ 202,304 Other fees 6,877 337 7 7,221 — 7,221 Compensation and benefits (51,892 ) (18,672 ) (8,768 ) (79,332 ) (31,059 ) (110,391 ) General, administrative and other expenses (11,041 ) (4,175 ) (2,391 ) (17,607 ) (19,489 ) (37,096 ) Fee related earnings 79,792 26,808 5,986 112,586 (50,548 ) 62,038 Performance income—realized 41,672 80,415 521 122,608 — 122,608 Performance income—unrealized (4,568 ) (133,605 ) 13,830 (124,343 ) — (124,343 ) Performance related compensation—realized (23,577 ) (64,311 ) 7 (87,881 ) — (87,881 ) Performance related compensation—unrealized 2,759 106,912 (8,785 ) 100,886 — 100,886 Net performance income 16,286 (10,589 ) 5,573 11,270 — 11,270 Investment income (loss)—realized 595 9,016 (250 ) 9,361 798 10,159 Investment income (loss)—unrealized 1,617 290 (525 ) 1,382 2,866 4,248 Interest and other investment income (expense) 3,428 3,039 (1,218 ) 5,249 623 5,872 Interest expense (3,596 ) (1,440 ) (452 ) (5,488 ) (588 ) (6,076 ) Net investment income (loss) 2,044 10,905 (2,445 ) 10,504 3,699 14,203 Performance related earnings 18,330 316 3,128 21,774 3,699 25,473 Economic net income $ 98,122 $ 27,124 $ 9,114 $ 134,360 $ (46,849 ) $ 87,511 Realized income $ 97,921 $ 53,408 $ 6,479 $ 157,808 $ (49,754 ) $ 108,054 The following table presents the financial results for the Company’s operating segments, as well as the OMG, for the three months ended June 30, 2017 : Credit Group Private Equity Group Real Total OMG Total Management fees (Credit Group includes ARCC Part I Fees of $19,143) $ 112,654 $ 56,427 $ 16,479 $ 185,560 $ — $ 185,560 Other fees 5,663 338 19 6,020 — 6,020 Compensation and benefits (45,160 ) (18,388 ) (9,714 ) (73,262 ) (30,584 ) (103,846 ) General, administrative and other expenses (8,048 ) (4,345 ) (3,091 ) (15,484 ) (18,862 ) (34,346 ) Fee related earnings 65,109 34,032 3,693 102,834 (49,446 ) 53,388 Performance income—realized 7,883 64,780 1,467 74,130 — 74,130 Performance income—unrealized 5,093 228,747 29,789 263,629 — 263,629 Performance related compensation—realized (1,898 ) (50,914 ) (161 ) (52,973 ) — (52,973 ) Performance related compensation—unrealized (6,079 ) (184,021 ) (18,632 ) (208,732 ) — (208,732 ) Net performance income 4,999 58,592 12,463 76,054 — 76,054 Investment income—realized 2,525 2,717 373 5,615 1,340 6,955 Investment income (loss)—unrealized (3,450 ) 25,354 1,134 23,038 (2,728 ) 20,310 Interest and other investment income 2,958 1,983 1,534 6,475 225 6,700 Interest expense (3,065 ) (1,397 ) (429 ) (4,891 ) (463 ) (5,354 ) Net investment income (loss) (1,032 ) 28,657 2,612 30,237 (1,626 ) 28,611 Performance related earnings 3,967 87,249 15,075 106,291 (1,626 ) 104,665 Economic net income $ 69,076 $ 121,281 $ 18,768 $ 209,125 $ (51,072 ) $ 158,053 Realized income $ 73,181 $ 50,151 $ 5,181 $ 128,513 $ (48,346 ) $ 80,167 The following table presents the financial results for the Company’s operating segments, as well as the OMG, for the six months ended June 30, 2018 : Credit Group Private Equity Group Real Total OMG Total Management fees (Credit Group includes ARCC Part I Fees of $58,283) $ 267,614 $ 99,205 $ 32,311 $ 399,130 $ — $ 399,130 Other fees 12,607 677 10 13,294 — 13,294 Compensation and benefits (102,172 ) (37,871 ) (16,407 ) (156,450 ) (61,665 ) (218,115 ) General, administrative and other expenses (20,670 ) (8,216 ) (4,823 ) (33,709 ) (38,105 ) (71,814 ) Fee related earnings 157,379 53,795 11,091 222,265 (99,770 ) 122,495 Performance fees—realized 46,743 84,813 14,159 145,715 — 145,715 Performance fees—unrealized 11,524 (112,539 ) 11,790 (89,225 ) — (89,225 ) Performance fee compensation—realized (26,665 ) (67,871 ) (8,214 ) (102,750 ) — (102,750 ) Performance fee compensation—unrealized 9,935 88,218 (8,276 ) 89,877 — 89,877 Net performance fees 41,537 (7,379 ) 9,459 43,617 — 43,617 Investment income—realized 1,366 9,687 3,100 14,153 1,636 15,789 Investment income (loss)—unrealized 1,348 (3,860 ) (1,757 ) (4,269 ) 4,097 (172 ) Interest and other investment income (expense) 5,624 3,368 (201 ) 8,791 1,870 10,661 Interest expense (8,269 ) (2,668 ) (872 ) (11,809 ) (1,136 ) (12,945 ) Net investment income 69 6,527 270 6,866 6,467 13,333 Performance related earnings 41,606 (852 ) 9,729 50,483 6,467 56,950 Economic net income $ 198,985 $ 52,943 $ 20,820 $ 272,748 $ (93,303 ) $ 179,445 Realized income $ 176,778 $ 80,735 $ 20,148 $ 277,661 $ (97,534 ) $ 180,127 The following table presents the financial results for the Company’s operating segments, as well as the OMG, for the six months ended June 30, 2017 : Credit Group Private Equity Group Real Total OMG Total Management fees (Credit Group includes ARCC Part I Fees of $52,400) $ 234,001 $ 96,246 $ 32,094 $ 362,341 $ — $ 362,341 Other fees 10,166 678 10 10,854 — 10,854 Compensation and benefits (96,863 ) (31,606 ) (19,450 ) (147,919 ) (56,537 ) (204,456 ) General, administrative and other expenses (16,089 ) (8,543 ) (5,822 ) (30,454 ) (38,175 ) (68,629 ) Fee related earnings 131,215 56,775 6,832 194,822 (94,712 ) 100,110 Performance fees—realized 16,661 64,780 1,494 82,935 — 82,935 Performance fees—unrealized 8,029 260,984 43,877 312,890 — 312,890 Performance fee compensation—realized (7,183 ) (50,914 ) (177 ) (58,274 ) — (58,274 ) Performance fee compensation—unrealized (7,537 ) (209,526 ) (27,070 ) (244,133 ) — (244,133 ) Net performance fees 9,970 65,324 18,124 93,418 — 93,418 Investment income—realized 2,843 3,296 2,156 8,295 3,199 11,494 Investment income (loss)—unrealized 1,139 33,900 690 35,729 (4,135 ) 31,594 Interest and other investment income 2,939 2,135 1,353 6,427 1,099 7,526 Interest expense (5,523 ) (2,910 ) (861 ) (9,294 ) (939 ) (10,233 ) Net investment income (loss) 1,398 36,421 3,338 41,157 (776 ) 40,381 Performance related earnings 11,368 101,745 21,462 134,575 (776 ) 133,799 Economic net income $ 142,583 $ 158,520 $ 28,294 $ 329,397 $ (95,488 ) $ 233,909 Realized income $ 143,126 $ 72,496 $ 9,769 $ 225,391 $ (91,551 ) $ 133,840 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 Six Months Ended 2018 2017 2018 2017 Segment Revenues Management fees (includes ARCC Part I Fees of $29,866, $58,283 and $19,143, $52,400 for the three and six months ended June 30, 2018 and 2017, respectively) $ 202,304 $ 185,560 $ 399,130 $ 362,341 Other fees 7,221 6,020 13,294 10,854 Performance income—realized 122,608 74,130 145,715 82,935 Performance income—unrealized (124,343 ) 263,629 (89,225 ) 312,890 Total segment revenues $ 207,790 $ 529,339 $ 468,914 $ 769,020 Segment Expenses Compensation and benefits $ 79,332 $ 73,262 $ 156,450 $ 147,919 General, administrative and other expenses 17,607 15,484 33,709 30,454 Performance related compensation—realized 87,881 52,973 102,750 58,274 Performance related compensation—unrealized (100,886 ) 208,732 (89,877 ) 244,133 Total segment expenses $ 83,934 $ 350,451 $ 203,032 $ 480,780 Other Income (Expense) Investment income—realized $ 9,361 $ 5,615 $ 14,153 $ 8,295 Investment income (loss)—unrealized 1,382 23,038 (4,269 ) 35,729 Interest and other investment income 5,249 6,475 8,791 6,427 Interest expense (5,488 ) (4,891 ) (11,809 ) (9,294 ) Total segment other income $ 10,504 $ 30,237 $ 6,866 $ 41,157 The following table reconciles segment revenue to Ares consolidated revenues: For the Three Months Ended For the Six Months Ended 2018 2017 2018 2017 Total segment revenue $ 207,790 $ 529,339 $ 468,914 $ 769,020 Revenue of Consolidated Funds eliminated in consolidation (25,123 ) (169 ) (30,233 ) (18,357 ) Administrative fees(1) 6,770 9,132 13,182 18,738 Performance income reclass(2) 31 (217 ) 1,006 (241 ) Principal investment income 14,722 34,166 17,430 47,335 Revenue of non-controlling interests in consolidated subsidiaries(3) (27 ) (54 ) (47 ) (54 ) Total consolidated adjustments and reconciling items (3,627 ) 42,858 1,338 47,421 Total consolidated revenue $ 204,163 $ 572,197 $ 470,252 $ 816,441 (1) Represents administrative fees that are presented in administrative, transaction and other fees in the Company’s Condensed Consolidated Statements of Operations and are netted against the respective expenses for segment reporting. (2) Related to performance income for AREA Sponsor Holdings LLC, an investment pool. Changes in value of this investment are reflected within other income (expense) in the Company’s Condensed Consolidated Statements of Operations. (3) Adjustments for administrative fees reimbursed 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 Six Months Ended 2018 2017 2018 2017 Total segment expenses $ 83,934 $ 350,451 $ 203,032 $ 480,780 Expenses of Consolidated Funds added in consolidation 47,382 8,825 56,011 19,334 Expenses of Consolidated Funds eliminated in consolidation (12,270 ) (4,303 ) (19,583 ) (10,901 ) Administrative fees(1) 6,770 9,132 13,182 18,738 OMG expenses 50,548 49,446 99,770 94,712 Acquisition and merger-related expenses 47 724 (272 ) 276,060 Equity compensation expense 22,507 18,917 43,594 34,006 Placement fees and underwriting costs 1,852 6,383 3,516 9,822 Amortization of intangibles 3,285 5,274 6,572 10,549 Depreciation expense 4,426 2,774 8,315 5,990 Other expenses(3) 11,836 — 11,836 — Expenses of non-controlling interests in consolidated subsidiaries(2) 700 574 1,327 574 Total consolidation adjustments and reconciling items 137,083 97,746 224,268 458,884 Total consolidated expenses $ 221,017 $ 448,197 $ 427,300 $ 939,664 (1) Represents administrative fees that are presented in administrative, transaction and other fees in the Company’s Condensed Consolidated Statements of Operations and are netted against the respective expenses for segment reporting. (2) Costs being borne by certain of our joint venture partners. (3) Includes $11.8 million payment to ARCC for rent and utilities for the years ended 2017, 2016, 2015 and 2014, and the first quarter of 2018. The following table reconciles segment other income (expense) to Ares consolidated other income: For the Three Months Ended For the Six Months Ended 2018 2017 2018 2017 Total segment other income $ 10,504 $ 30,237 $ 6,866 $ 41,157 Other income (expense) from Consolidated Funds added in consolidation, net 69,193 (3,150 ) 76,445 35,295 Other expense from Consolidated Funds eliminated in consolidation, net 993 (410 ) 534 (433 ) Other income of non-controlling interests in consolidated subsidiaries 8 5 15 5 OMG other income (expense) 3,699 (1,626 ) 6,467 (776 ) Performance income reclass(1) (31 ) 217 (1,006 ) 241 Principal investment income (14,722 ) (34,166 ) (17,430 ) (47,335 ) Changes in value of contingent consideration — (32 ) — 20,216 Other non-cash expense (1,715 ) — (1,722 ) — Offering costs (3 ) 5 (3 ) (655 ) Total consolidation adjustments and reconciling items 57,422 (39,157 ) 63,300 6,558 Total consolidated other income $ 67,926 $ (8,920 ) $ 70,166 $ 47,715 (1) Related to performance income 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, RI, FRE and PRE: For the Three Months Ended For the Six Months Ended 2018 2017 2018 2017 Economic net income Income (loss) before taxes $ 51,072 $ 115,080 $ 113,118 $ (75,508 ) Adjustments: Amortization of intangibles 3,285 5,274 6,572 10,549 Depreciation expense 4,426 2,774 8,315 5,990 Equity compensation expenses 22,507 18,917 43,594 34,006 Acquisition and merger-related expenses 47 756 (272 ) 255,844 Placement fees and underwriting costs 1,852 6,383 3,516 9,822 OMG expenses, net 46,849 51,072 93,303 95,488 Offering costs 3 (5 ) 3 655 Other expense(2) 13,551 — 13,558 — Expense of non-controlling interests in consolidated subsidiaries(1) 719 623 1,359 623 (Income) loss before taxes of non-controlling interests in Consolidated Funds, net of eliminations (9,951 ) 8,251 (10,318 ) (8,072 ) Total consolidation adjustments and reconciling items 83,288 94,045 159,630 404,905 Economic net income 134,360 209,125 272,748 329,397 Total performance income - unrealized 124,343 (263,629 ) 89,225 (312,890 ) Total performance related compensation - unrealized (100,886 ) 208,732 (89,877 ) 244,133 Total investment (income) loss - unrealized (9 ) (25,715 ) 5,565 (35,249 ) Realized income 157,808 128,513 277,661 225,391 Total performance income - realized (122,608 ) (74,130 ) (145,715 ) (82,935 ) Total performance related compensation - realized 87,881 52,973 102,750 58,274 Total investment income - realized (10,495 ) (4,522 ) (12,431 ) (5,908 ) Fee related earnings 112,586 102,834 222,265 194,822 Performance related earnings Economic net income $ 134,360 $ 209,125 $ 272,748 $ 329,397 Less: fee related earnings (112,586 ) (102,834 ) (222,265 ) (194,822 ) Performance related earnings $ 21,774 $ 106,291 $ 50,483 $ 134,575 (1) Adjustments for administrative fees reimbursed and other revenue items attributable to certain of our joint venture partners. (2) Includes $11.8 million payment to ARCC for rent and utilities for the years ended 2017, 2016, 2015 and 2014, and the first quarter of 2018. |
CONSOLIDATION
CONSOLIDATION | 6 Months Ended |
Jun. 30, 2018 | |
Condensed Financial Information 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 June 30, As of December 31, 2018 2017 Maximum exposure to loss attributable to the Company's investment in non-consolidated VIEs $ 241,231 $ 251,376 Maximum exposure to loss attributable to the Company's investment in consolidated VIEs 190,400 175,620 Assets of consolidated VIEs 8,059,640 6,231,245 Liabilities of consolidated VIEs 7,302,896 5,538,054 For the Three Months Ended For the Six Months Ended 2018 2017 2018 2017 Net income (loss) attributable to non-controlling interests related to consolidated VIEs $ 9,882 $ (8,647 ) $ 10,249 $ 7,208 CONSOLIDATING SCHEDULES The following supplemental financial information illustrates the consolidating effects of the Consolidated Funds on the Company's financial condition as of June 30, 2018 and December 31, 2017 and results from operations for the three and six months ended June 30, 2018 and 2017 . As of June 30, 2018 Consolidated Consolidated Eliminations Consolidated Assets Cash and cash equivalents $ 125,448 $ — $ — $ 125,448 Investments ($985,035 of accrued carried interest) 1,656,647 — (190,400 ) 1,466,247 Due from affiliates 179,200 — (6,772 ) 172,428 Deferred tax asset, net 42,942 — — 42,942 Other assets 100,183 — — 100,183 Intangible assets, net 33,999 — — 33,999 Goodwill 143,848 — — 143,848 Assets of Consolidated Funds Cash and cash equivalents — 836,274 — 836,274 Investments, at fair value — 6,968,067 — 6,968,067 Due from affiliates — 13,704 — 13,704 Dividends and interest receivable — 14,634 — 14,634 Receivable for securities sold — 225,764 — 225,764 Other assets — 1,197 — 1,197 Total assets $ 2,282,267 $ 8,059,640 $ (197,172 ) $ 10,144,735 Liabilities Accounts payable, accrued expenses and other liabilities $ 73,227 $ — $ — $ 73,227 Accrued compensation 87,254 — — 87,254 Due to affiliates 62,344 — — 62,344 Performance related compensation payable 730,782 — — 730,782 Debt obligations 370,628 — — 370,628 Liabilities of Consolidated Funds Accounts payable, accrued expenses and other liabilities — 69,040 — 69,040 Due to affiliates — 6,772 (6,772 ) — Payable for securities purchased — 744,534 — 744,534 CLO loan obligations, at fair value — 6,344,112 (10,873 ) 6,333,239 Fund borrowings — 138,438 — 138,438 Total liabilities 1,324,235 7,302,896 (17,645 ) 8,609,486 Commitments and contingencies Preferred equity (12,400,000 shares issued and outstanding) 298,761 — — 298,761 Non-controlling interest in Consolidated Funds — 756,744 (179,527 ) 577,217 Non-controlling interest in Ares Operating Group entities 316,048 — — 316,048 Controlling interest in Ares Management, L.P.: Shareholders' equity (98,398,340 shares issued and outstanding) 349,981 — — 349,981 Accumulated other comprehensive loss, net of tax (6,758 ) — — (6,758 ) Total controlling interest in Ares Management, L.P. 343,223 — — 343,223 Total equity 958,032 756,744 (179,527 ) 1,535,249 Total liabilities and equity $ 2,282,267 $ 8,059,640 $ (197,172 ) $ 10,144,735 As of December 31, 2017 As adjusted Consolidated Consolidated Eliminations Consolidated Assets Cash and cash equivalents $ 118,929 $ — $ — $ 118,929 Investments ($1,077,236 of accrued carried interest) 1,900,191 — (175,620 ) 1,724,571 Due from affiliates 171,701 — (5,951 ) 165,750 Deferred tax asset, net 8,326 — — 8,326 Other assets 135,674 — (5,333 ) 130,341 Intangible assets, net 40,465 — — 40,465 Goodwill 143,895 — — 143,895 Assets of Consolidated Funds Cash and cash equivalents — 556,500 — 556,500 Investments, at fair value — 5,582,842 — 5,582,842 Due from affiliates — 15,884 — 15,884 Dividends and interest receivable — 12,568 — 12,568 Receivable for securities sold — 61,462 — 61,462 Other assets — 1,989 — 1,989 Total assets $ 2,519,181 $ 6,231,245 $ (186,904 ) $ 8,563,522 Liabilities Accounts payable, accrued expenses and other liabilities $ 81,955 $ — $ — $ 81,955 Accrued compensation 27,978 — — 27,978 Due to affiliates 39,184 — — 39,184 Performance related compensation payable 822,084 — — 822,084 Debt obligations 616,176 — — 616,176 Liabilities of Consolidated Funds Accounts payable, accrued expenses and other liabilities — 64,316 — 64,316 Due to affiliates — 11,285 (11,285 ) — Payable for securities purchased — 350,145 — 350,145 CLO loan obligations, at fair value — 4,974,110 (10,916 ) 4,963,194 Fund borrowings — 138,198 — 138,198 Total liabilities 1,587,377 5,538,054 (22,201 ) 7,103,230 Commitments and contingencies Preferred equity (12,400,000 shares issued and outstanding) 298,761 — — 298,761 Non-controlling interest in Consolidated Funds — 693,191 (164,703 ) 528,488 Non-controlling interest in Ares Operating Group entities 358,186 — — 358,186 Controlling interest in Ares Management, L.P.: Shareholders' equity (82,280,033 shares issued and outstanding) 279,065 — — 279,065 Accumulated other comprehensive loss, net of tax (4,208 ) — — (4,208 ) Total controlling interest in Ares Management, L.P. 274,857 — — 274,857 Total equity 931,804 693,191 (164,703 ) 1,460,292 Total liabilities and equity $ 2,519,181 $ 6,231,245 $ (186,904 ) $ 8,563,522 For the Three Months Ended June 30, 2018 Consolidated Entities Consolidated Eliminations Consolidated Revenues Management fees (includes ARCC Part I Fees of $29,866) $ 202,304 $ — $ (8,272 ) $ 194,032 Carried interest allocation (13,444 ) — (13,444 ) Incentive fees 11,740 (4,000 ) 7,740 Principal investment income 14,722 — (12,851 ) 1,871 Administrative, transaction and other fees 13,964 — — 13,964 Total revenues 229,286 — (25,123 ) 204,163 Expenses Compensation and benefits 138,992 — — 138,992 Performance related compensation (13,005 ) — — (13,005 ) General, administrative and other expense 59,918 — — 59,918 Expenses of the Consolidated Funds — 47,382 (12,270 ) 35,112 Total expenses 185,905 47,382 (12,270 ) 221,017 Other income (expense) Net realized and unrealized gain on investments 4,438 — (1,171 ) 3,267 Interest and dividend income 2,356 — — 2,356 Interest expense (6,076 ) — — (6,076 ) Other expense, net (2,978 ) — 991 (1,987 ) Net realized and unrealized gain on investments of the Consolidated Funds — 33,819 668 34,487 Interest and other income of the Consolidated Funds — 92,633 — 92,633 Interest expense of the Consolidated Funds — (57,259 ) 505 (56,754 ) Total other income (expense) (2,260 ) 69,193 993 67,926 Income before taxes 41,121 21,811 (11,860 ) 51,072 Income tax expense 36,834 69 — 36,903 Net income 4,287 21,742 (11,860 ) 14,169 Less: Net income attributable to non-controlling interests in Consolidated Funds — 21,742 (11,860 ) 9,882 Less: Net income attributable to non-controlling interests in Ares Operating Group entities 16,062 — — 16,062 Net loss attributable to Ares Management, L.P. (11,775 ) — — (11,775 ) Less: Preferred equity dividend paid 5,425 — — 5,425 Net loss attributable to Ares Management, L.P. common shareholders $ (17,200 ) $ — $ — $ (17,200 ) For the Three Months Ended June 30, 2017 As adjusted Consolidated Consolidated Eliminations Consolidated Revenues Management fees (includes ARCC Part I Fees of $19,143) $ 185,560 $ — $ (4,792 ) $ 180,768 Carried interest allocation 333,814 — (6 ) 333,808 Incentive fees 3,728 — 488 4,216 Principal investment income 34,166 — 4,141 38,307 Administrative, transaction and other fees 15,098 — — 15,098 Total revenues 572,366 — (169 ) 572,197 Expenses Compensation and benefits 131,219 — — 131,219 Performance related compensation 261,705 — — 261,705 General, administrative and other expense 50,751 — — 50,751 Expenses of the Consolidated Funds — 8,825 (4,303 ) 4,522 Total expenses 443,675 8,825 (4,303 ) 448,197 Other income (expense) Net realized and unrealized loss on investments (5,044 ) — (1,544 ) (6,588 ) Interest and dividend income 2,216 — (754 ) 1,462 Interest expense (5,354 ) — — (5,354 ) Other income, net 2,822 — — 2,822 Net realized and unrealized gain on investments of the Consolidated Funds — 953 (13,666 ) (12,713 ) Interest and other income of the Consolidated Funds — 38,326 — 38,326 Interest expense of Consolidated Funds — (42,429 ) 15,554 (26,875 ) Total other expense (5,360 ) (3,150 ) (410 ) (8,920 ) Income (loss) before taxes 123,331 (11,975 ) 3,724 115,080 Income tax expense 857 396 — 1,253 Net income (loss) 122,474 (12,371 ) 3,724 113,827 Less: Net loss attributable to non-controlling interests in Consolidated Funds — (12,371 ) 3,724 (8,647 ) Less: Net income attributable to non-controlling interests in Ares Operating Group entities 72,596 — — 72,596 Net income attributable to Ares Management, L.P. 49,878 — — 49,878 Less: Preferred equity dividend paid 5,425 — — 5,425 Net income attributable to Ares Management, L.P. common shareholders $ 44,453 $ — $ — $ 44,453 For the Six Months Ended June 30, 2018 Consolidated Entities Consolidated Eliminations Consolidated Revenues Management fees (includes ARCC Part I Fees of $58,283) $ 399,130 $ — $ (15,583 ) $ 383,547 Carried interest allocation 40,685 — — 40,685 Incentive fees 16,811 — (4,000 ) 12,811 Principal investment income 17,430 — (10,650 ) 6,780 Administrative, transaction and other fees 26,429 — — 26,429 Total revenues 500,485 — (30,233 ) 470,252 Expenses Compensation and benefits 273,631 — — 273,631 Performance related compensation 12,873 — — 12,873 General, administrative and other expense 104,368 — — 104,368 Expenses of the Consolidated Funds — 56,011 (19,583 ) 36,428 Total expenses 390,872 56,011 (19,583 ) 427,300 Other income (expense) Net realized and unrealized gain on investments 3,260 — (832 ) 2,428 Interest and dividend income 5,703 — — 5,703 Interest expense (12,945 ) — — (12,945 ) Other expense, net (2,831 ) — 533 (2,298 ) Net realized and unrealized gain on investments of the Consolidated Funds — 21,367 35 21,402 Interest and other income of the Consolidated Funds — 157,055 — 157,055 Interest expense of consolidated Funds — (101,977 ) 798 (101,179 ) Total other income (expense) (6,813 ) 76,445 534 70,166 Income before taxes 102,800 20,434 (10,116 ) 113,118 Income tax expense 24,459 69 — 24,528 Net income 78,341 20,365 (10,116 ) 88,590 Less: Net income attributable to non-controlling interests in Consolidated Funds — 20,365 (10,116 ) 10,249 Less: Net income attributable to non-controlling interests in Ares Operating Group entities 49,168 — — 49,168 Net income attributable to Ares Management, L.P. 29,173 — — 29,173 Less: Preferred equity dividend paid 10,850 — — 10,850 Net income attributable to Ares Management, L.P. common shareholders $ 18,323 $ — $ — $ 18,323 For the Six Months Ended June 30, 2017 As Adjusted Consolidated Consolidated Eliminations Consolidated Revenues Management fees (includes ARCC Part I Fees of $52,400) $ 362,341 $ — $ (9,528 ) $ 352,813 Carried interest allocation 386,829 — (1,014 ) 385,815 Incentive fees 8,755 — (1,374 ) 7,381 Principal investment income 47,335 — (6,441 ) 40,894 Administrative, transaction and other fees 29,538 — — 29,538 Total revenues 834,798 — (18,357 ) 816,441 Expenses Compensation and benefits 255,558 — — 255,558 Performance related compensation 302,407 — — 302,407 General, administrative and other expense 98,089 — — 98,089 Transaction support expense 275,177 — — 275,177 Expenses of the Consolidated Funds — 19,334 (10,901 ) 8,433 Total expenses 931,231 19,334 (10,901 ) 939,664 Other income (expense) Net realized and unrealized loss on investments (1,291 ) — (4,409 ) (5,700 ) Interest and dividend income 5,059 — (1,673 ) 3,386 Interest expense (10,233 ) — — (10,233 ) Other income, net 19,318 — — 19,318 Net realized and unrealized gain on investments of the Consolidated Funds — 31,392 (12,069 ) 19,323 Interest and other income of the Consolidated Funds — 79,818 — 79,818 Interest expense of Consolidated Funds — (75,915 ) 17,718 (58,197 ) Total other income 12,853 35,295 (433 ) 47,715 Income (loss) before taxes (83,580 ) 15,961 (7,889 ) (75,508 ) Income tax expense (benefit) (33,875 ) 864 — (33,011 ) Net income (loss) (49,705 ) 15,097 (7,889 ) (42,497 ) Less: Net income attributable to non-controlling interests in Consolidated Funds — 15,097 (7,889 ) 7,208 Less: Net loss attributable to non-controlling interests in Ares Operating Group entities (58,449 ) — — (58,449 ) Net income attributable to Ares Management, L.P. 8,744 — — 8,744 Less: Preferred equity dividend paid 10,850 — — 10,850 Net loss attributable to Ares Management, L.P. common shareholders $ (2,106 ) $ — $ — $ (2,106 ) |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 6 Months Ended |
Jun. 30, 2018 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | SUBSEQUENT EVENTS The Company evaluated all events or transactions that occurred after June 30, 2018 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 July 2018 , the board of directors of the Company's general partner declared a quarterly dividend of $0.28 per common share to common shareholders of record at the close of business on September 14, 2018 , with a payment date of September 28, 2018 . In July 2018 , the board of directors of the Company's general partner declared a quarterly dividend of $0.4375 per preferred equity share to preferred equity shareholders of record at the close of business on September 15, 2018 , with a payment date of September 30, 2018 . In July 2018, the board of directors of the Company's general partner authorized the repurchase, from time to time in open market purchases, privately negotiated transactions or otherwise, of the Company's Preferred Equity with an aggregate liquidation preference of up to $50.0 million . Such purchases, if any, will depend on the prevailing market conditions and other factors. |
SUMMARY OF SIGNIFICANT ACCOUN25
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 6 Months Ended |
Jun. 30, 2018 | |
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, 2017 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. |
Adoption of ASC 606 and Recent Accounting Pronouncements | Adoption of ASC 606 Effective January 1, 2018, the Company adopted the Financial Accounting Standards Board (“FASB”) Topic 606 (“ASC 606”), Revenue from Contracts with Customers . The Company adopted ASC 606 to all applicable contracts under the modified retrospective approach using the practical expedient provided for within paragraph 606-10-65-1(f)(3); therefore, the presentation of prior year periods has not been adjusted. The Company recognized the cumulative effect of initially adopting ASC 606 as an adjustment to the opening balance of components of equity as of January 1, 2018. Pursuant to ASC 606, the Company recognizes 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 Company expects to be entitled in exchange for those goods or services. Under this standard, revenue is based on a contract with a determinable transaction price and distinct performance obligations with probable collectability. Revenues cannot be recognized until the performance obligation(s) are satisfied and control is transferred to the customer. The Company's adoption of ASC 606 impacted the timing and recognition of incentive fees in the Company’s consolidated statements of operations. The adoption of ASC 606 did not have an impact on the Company’s management fees, administrative fees, transaction fees or other fees. The details of the significant changes and quantitative impact of the adoption of ASC 606 are further discussed below. Recent Accounting Pronouncements The Company considers the applicability and impact of all FASB ASUs 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. 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 2018, the FASB issued ASU 2018-02, Income Statement-Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income. ASU 2018-02 allows a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from Public Law No. 115-97 (the “Tax Cuts and Jobs Act”). Consequently, the amendments eliminate the stranded tax effects resulting from the Tax Cuts and Jobs Act and will improve the usefulness of information reported to financial statement users. However, because the amendments only relate to the reclassification of the income tax effects of the Tax Cuts and Jobs Act, the underlying guidance that requires that the effect of a change in tax laws or rates be included in income from continuing operations is not affected. This ASU also requires certain disclosures about stranded tax effects. ASU 2018-02 is effective for all entities for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. Early adoption is permitted, including adoption in any interim period, (1) for public business entities for reporting periods for which financial statements have not yet been issued and (2) for all other entities for reporting periods for which financial statements have not yet been made available for issuance. The guidance should be applied either in the period of adoption or retrospectively to each period (or periods) in which the effect of the change in the U.S. federal corporate income tax rate in the Tax Cuts and Jobs Act is recognized. The Company adopted ASU 2018-02 in the three months ended March 31, 2018. As a result of the adoption of ASU 2018-02, $1.2 million of stranded tax effects resulting from the Tax Cuts and Jobs Act were reclassified from accumulated other comprehensive income to shareholders' equity during the three months ended March 31, 2018. |
Performance Income | Performance Income Performance income consists of carried interest and incentive fees. Carried Interest In certain fund structures, typically in private equity and real estate equity funds, carried interest is allocated to the Company based on cumulative fund performance to date, subject to the achievement of minimum return levels in accordance with the respective terms set out in each fund’s governing documents. At the end of each reporting period, a fund will allocate carried interest applicable to the Company based upon an assumed liquidation of that fund's net assets on the reporting date, irrespective of whether such amounts have been realized. Carried interest is recorded to the extent such amounts have been allocated, and may be subject to reversal to the extent that the amount allocated ultimately exceeds the amount due to the Company based on a fund’s cumulative investment returns. Carried interest is realized when an underlying investment is profitably disposed of and the fund’s cumulative returns are in excess of the specific hurdle rates as defined in the applicable governing documents. Since carried interest is subject to reversal, the Company may need to accrue for potential repayment of previously received carried interest. This accrual represents all amounts previously distributed to the Company that would need to be repaid to the funds if the funds were to be liquidated based on the current fair value of the underlying funds’ investments as of the reporting date. The actual repayment obligations, however, generally do not become realized until the end of a fund’s life. As of June 30, 2018 , if the funds were liquidated at their fair values, there would be a $0.2 million repayment obligation, and accordingly, the Company recorded a contingent repayment liability as June 30, 2018 . As of December 31, 2017 , 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 December 31, 2017 . Prior to January 1, 2018, the Company accounted for carried interest under Method 2 described in ASC 605-20-S99-1, which provides guidance on accounting for incentive-based performance income, including carried interest. Since Method 2 is no longer available following the adoption of ASC 606, the Company has reassessed its accounting policy for carried interest, and has determined that carried interest is within scope of ASC 323, Investments-Equity Method and Joint Ventures, and out of scope under the scoping provision of ASC 606. Therefore, following the election of ASC 323, the Company accounted for carried interest, which represents a performance-based capital allocation from an investment fund to the Company, as earnings from financial assets within the scope of ASC 323. Accordingly, the Company recognizes carried interest allocation as a separate revenue line item in the Condensed Consolidated Statements of Operations. Uncollected carried interest as of the reporting date is recorded within investments in the Condensed Consolidated Statements of Financial Condition. The Company has applied the change in accounting principle on a full retrospective basis, and prior periods presented have been recast to conform with the current period's presentation. The change in accounting principle did not change the timing or the amount of carried interest recognized. Instead, the change in accounting principle resulted in reclassification from performance income to carried interest allocation, and therefore did not have any impact on net income. See the tables below for the impact of the change in accounting principle of carried interest . Incentive Fees Incentive fees earned on the performance of certain fund structures, typically in credit funds, are recognized based on the fund’s performance during the period, subject to the achievement of minimum return levels in accordance with the respective terms set out in each fund’s investment management agreement. Incentive fees are realized at the end of a measurement period, typically annually. Once realized, such fees are no longer subject to reversal. Prior to January 1, 2018, the Company accounted for incentive fees under Method 2 as described above. However, the accounting for incentive fees is separate and distinct from the accounting for carried interest because the incentive fees are contractual fee arrangements and do not represent allocations of returns from partners' capital accounts. The Company now accounts for incentive fees in accordance with ASC 606. Accordingly, the Company recognizes incentive fee revenue only when the amount is realized and no longer subject to reversal. Therefore, the Company no longer recognizes unrealized incentive fees in revenues in the condensed consolidated financial statements. The adoption of ASC 606 results in the delayed recognition of unrealized incentive fees in the condensed consolidated financial statements until they become realized at the end of the measurement period, which is typically annually. The Company adopted ASC 606 for incentive fees using the modified retrospective approach with an effective date of January 1, 2018. The cumulative effect of the adoption resulted in the reversal of $22.6 million of unrealized incentive fees and is presented as a reduction to the opening balances of components of equity as of January 1, 2018. |
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. |
SUMMARY OF SIGNIFICANT ACCOUN26
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Accounting Policies [Abstract] | |
Schedule of New Accounting Pronouncements | The following tables present the adjustments made in connection with the Company's change in accounting principle related to carried interest under ASC 323, Investments-Equity Method and Joint Ventures on the financial statement line items for the periods presented in the condensed consolidated financial statements: Condensed Consolidated Statement of Financial Condition As of December 31, 2017 As Previously Reported Adjustments As Adjusted (audited) Assets Investments ($1,077,236 of accrued carried interest) $ 647,335 $ 1,077,236 $ 1,724,571 Performance income receivable 1,099,847 (1,099,847 ) — Other assets 107,730 22,611 (1) 130,341 (1) Unrealized incentive fees receivable balance as of December 31, 2017. Condensed Consolidated Statement of Operations Three Months Ended June 30, 2017 As Previously Reported Adjustments As Adjusted Revenues Performance fees $ 338,024 $ (338,024 ) $ — Carried interest allocation — 333,808 333,808 Incentive fees — 4,216 4,216 Principal investment income — 38,307 38,307 Total revenues 533,890 38,307 572,197 Other income (expense) Net realized and unrealized gain on investments 30,079 (36,667 ) (6,588 ) Interest and dividend income 3,102 (1,640 ) 1,462 Condensed Consolidated Statement of Operations Six Months Ended June 30, 2017 As Previously Reported Adjustments As Adjusted Revenues Performance fees $ 393,196 $ (393,196 ) $ — Carried interest allocation — 385,815 385,815 Incentive fees — 7,381 7,381 Principal investment income — 40,894 40,894 Total revenues 775,547 40,894 816,441 Other income (expense) Net realized and unrealized gain on investments 32,734 (38,434 ) (5,700 ) Interest and dividend income 5,846 (2,460 ) 3,386 The Company's change in accounting policy related to carried interest did not impact the Condensed Consolidated Statements of Comprehensive Income, Condensed Consolidated Statements of Changes in Equity or Condensed Consolidated Statements of Cash Flows for the year ended December 31, 2017. The following tables present the impact of incentive fees on the condensed consolidated financial statements upon the adoption of ASC 606 effective January 1, 2018: Condensed Consolidated Statement of Financial Condition As of January 1, 2018 As adjusted December 31, 2017 Adjustments As Adjusted for ASC 606 adoption Investments $ 1,724,571 $ — $ 1,724,571 Other assets 130,341 (22,611 ) (1) 107,730 Total assets 8,563,522 (22,611 ) 8,540,911 Total liabilities 7,103,230 — 7,103,230 Cumulative effect adjustment to equity(2) — (22,611 ) (22,611 ) Total equity 1,460,292 (22,611 ) 1,437,681 Total liabilities, non-controlling interests and equity 8,563,522 (22,611 ) 8,540,911 (1) Unrealized incentive fees receivable balance as of December 31, 2017. (2) See detail below. Condensed Consolidated Statement of Changes in Equity Preferred Equity Shareholders' Capital Accumulated Other Comprehensive Loss Non-controlling interest in Ares Operating Group Entities Non-Controlling Interest in Consolidated Funds Total Equity Balance at December 31, 2017 $ 298,761 $ 279,065 $ (4,208 ) $ 358,186 $ 528,488 $ 1,460,292 Cumulative effect of the adoption of ASC 606 — (10,827 ) — (17,117 ) 5,333 (22,611 ) As adjusted balance at January 1, 2018 $ 298,761 $ 268,238 $ (4,208 ) $ 341,069 $ 533,821 $ 1,437,681 In accordance with the ASC 606 disclosure requirements, the following tables present the adjustments made by the Company to remove the effects of adopting ASC 606 on the condensed consolidated financial statements as of and for the three and six months ended June 30, 2018 : Condensed Consolidated Statement of Financial Condition As of June 30, 2018 As Reported Adjustments Balances without adoption of ASC 606 Assets Cash and cash equivalents $ 125,448 $ — $ 125,448 Investments ($985,035 of accrued carried interest) $ 1,466,247 $ 1,466,247 Due from affiliates $ 172,428 $ 172,428 Deferred tax asset, net $ 42,942 $ (199 ) $ 42,743 Other assets 100,183 26,195 126,378 Total assets 10,144,735 25,996 10,170,731 Commitments and contingencies Non-controlling interest in Consolidated Funds 577,217 (3,473 ) 573,744 Non-controlling interest in Ares Operating Group entities 316,048 18,109 334,157 Controlling interest in Ares Management, L.P.: Shareholders' equity (98,398,340 shares issued and outstanding) 349,981 11,443 361,424 Accumulated other comprehensive loss, net of tax (6,758 ) (83 ) (6,841 ) Total controlling interest in Ares Management, L.P 343,223 11,360 354,583 Total equity 1,535,249 25,996 1,561,245 Total liabilities and equity 10,144,735 25,996 10,170,731 Condensed Consolidated Statement of Operations Three Months Ended June 30, 2018 As Reported Adjustments Balances without adoption of ASC 606 Revenues Incentive fees $ 7,740 $ 2,924 $ 10,664 Total revenues 204,163 2,924 207,087 Expenses Expenses of Consolidated Funds 35,112 — 35,112 Total expenses 221,017 — 221,017 Other income (expense) Other income (expense), net (1,987 ) 12 (1,975 ) Total other income 67,926 12 67,938 Income before taxes 51,072 2,936 54,008 Income tax benefit 36,903 (50 ) 36,853 Net income 14,169 2,986 17,155 Less: Net income (loss) attributable to non-controlling interests in Consolidated Funds 9,882 3,579 13,461 Less: Net income attributable to non-controlling interests in Ares Operating Group entities 16,062 (433 ) 15,629 Net income attributable to Ares Management, L.P. (11,775 ) (160 ) (11,935 ) Less: Preferred equity dividend paid 5,425 5,425 Net income attributable to Ares Management, L.P. common shareholders (17,200 ) (160 ) (17,360 ) Condensed Consolidated Statement of Operations Six Months Ended June 30, 2018 As Reported Adjustments Balances without adoption of ASC 606 Revenues Incentive fees $ 12,811 $ 3,780 $ 16,591 Total revenues 470,252 3,780 474,032 Expenses Expenses of Consolidated Funds 36,428 — 36,428 Total expenses 427,300 — 427,300 Income before taxes 113,118 3,780 116,898 Income tax benefit 24,528 200 24,728 Net income 88,590 3,580 92,170 Less: Net income (loss) attributable to non-controlling interests in Consolidated Funds 10,249 1,860 12,109 Less: Net income attributable to non-controlling interests in Ares Operating Group entities 49,168 1,104 50,272 Net income attributable to Ares Management, L.P. 29,173 616 29,789 Less: Preferred equity dividend paid 10,850 10,850 Net income attributable to Ares Management, L.P. common shareholders 18,323 616 18,939 Condensed Consolidated Statement of Comprehensive Income Three Months Ended June 30, 2018 As Reported Adjustments Balances without adoption of ASC 606 Net income $ 14,169 $ 2,986 $ 17,155 Other comprehensive income: Foreign currency translation adjustments (12,377 ) (444 ) (12,821 ) Total comprehensive income 1,792 2,542 4,334 Less: Comprehensive income attributable to non-controlling interests in Consolidated Funds 4,193 3,579 7,772 Less: Comprehensive income attributable to non-controlling interests in Ares Operating Group entities 12,131 — 12,131 Comprehensive income attributable to Ares Management, L.P. $ (14,532 ) $ (1,037 ) $ (15,569 ) Condensed Consolidated Statement of Comprehensive Income Six Months Ended June 30, 2018 As Reported Adjustments Balances without adoption of ASC 606 Net income $ 88,590 $ 3,580 $ 92,170 Other comprehensive income: Foreign currency translation adjustments (6,892 ) (195 ) (7,087 ) Total comprehensive income 81,698 3,385 85,083 Less: Comprehensive income attributable to non-controlling interests in Consolidated Funds 7,735 1,860 9,595 Less: Comprehensive income attributable to non-controlling interests in Ares Operating Group entities 47,340 992 48,332 Comprehensive income attributable to Ares Management, L.P. $ 26,623 $ 533 $ 27,156 Condensed Consolidated Statement of Cash Flows Six Months Ended June 30, 2018 As Reported Adjustments Balances without adoption of ASC 606 Cash flows from operating activities: Net income $ 88,590 $ 3,580 $ 92,170 Cash flows due to changes in operating assets and liabilities 66,925 (1,720 ) 65,205 Cash flows due to changes in operating assets and liabilities allocable to non-controlling interests in Consolidated Funds (34,335 ) (1,860 ) (36,195 ) The adoption of ASC 606 had the following impact on the Company’s revenue streams: Revenues of the Company Impact of ASC 606 Management fees No Impact - Management fees are recognized as revenue in the period advisory services are rendered. Performance income - Carried interest allocation No impact. See discussion below for change in accounting policy. Performance income - Incentive fees See discussion below for impact. Administrative, transaction and other fees No Impact - Administrative, transaction and other fees are recognized as revenue in the period in which the related services are rendered. |
GOODWILL AND INTANGIBLE ASSETS
GOODWILL AND INTANGIBLE ASSETS (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
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 June 30, 2018 As of June 30, As of December 31, 2018 2017 Management contracts 3.0 years $ 42,335 $ 67,306 Client relationships 10.0 years 38,600 38,600 Trade name 4.0 years 3,200 3,200 Other(1) 0.7 years 180 — Intangible assets 84,315 109,106 Less: accumulated amortization (50,316 ) (68,641 ) Intangible assets, net $ 33,999 $ 40,465 (1) In connection with the CION Ares Diversified Credit Fund, the Company pays upfront commissions to brokers that sell class C shares in the fund. The Company is then entitled to 12 months of service fees from the sold shares, which are recorded as revenue. |
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, 2017 $ 32,196 $ 58,600 $ 53,099 $ 143,895 Foreign currency translation — — (47 ) (47 ) Balance as of June 30, 2018 $ 32,196 $ 58,600 $ 53,052 $ 143,848 |
INVESTMENTS (Tables)
INVESTMENTS (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Investments in and Advances to Affiliates [Abstract] | |
Summary of investments held | The Company’s investments are comprised of: Percentage of total investments June 30, December 31, June 30, December 31, 2018 2017 2018 2017 As adjusted As adjusted Private Investment Partnership Interests: Equity method private investment partnership interests - principal (1) $ 348,831 $ 340,354 23.8 % 19.7 % Equity method - carried interest (1) 985,035 1,077,236 67.2 % 62.5 % Equity method private investment partnership interests - other 70,780 74,439 4.8 % 4.3 % Other private investment partnership interests 38,097 35,748 2.6 % 2.1 % Total private investment partnership interests 1,442,743 1,527,777 98.4 % 88.6 % Collateralized loan obligations 22,125 195,158 1.5 % 11.3 % Common stock 1,379 1,636 0.1 % 0.1 % Total investments $ 1,466,247 $ 1,724,571 (1) Interest or portion of the interest is denominated in foreign currency and is translated into U.S. dollars at each reporting date. Investments held in the Consolidated Funds are summarized below: Fair value at Fair value as a percentage of total investments at June 30, December 31, June 30, December 31, 2018 2017 2018 2017 United States: Fixed income securities: Consumer discretionary $ 1,714,080 $ 1,295,732 24.8 % 23.2 % Consumer staples 76,664 55,073 1.1 % 1.0 % Energy 169,208 176,836 2.4 % 3.2 % Financials 424,838 270,520 6.1 % 4.8 % Healthcare, education and childcare 665,530 449,888 9.6 % 8.1 % Industrials 407,280 370,926 5.8 % 6.6 % Information technology 175,704 167,089 2.5 % 3.0 % Materials 189,786 185,170 2.7 % 3.3 % Telecommunication services 625,619 399,617 9.0 % 7.2 % Utilities 79,660 77,102 1.1 % 1.4 % Total fixed income securities (cost: $4,573,566 4,528,369 3,447,953 65.1 % 61.8 % Equity securities: Energy 60 126 0.0 % 0.0 % Total equity securities (cost: $2,265 and $2,265 at June 30, 2018 and December 31, 2017, respectively) 60 126 0.0 % 0.0 % Partnership and interests Partnership and interests 251,608 232,332 3.6 % 4.2 % Total partnership and LLC interests (cost: $206,000 and $190,000 at June 30, 2018 and December 31, 2017, respectively) 251,608 232,332 3.6 % 4.2 % Fair value at Fair value as a percentage of total investments at June 30, December 31, June 30, December 31, 2018 2017 2018 2017 Europe: Fixed income securities: Consumer discretionary $ 772,714 $ 604,608 11.1 % 10.8 % Energy 14,833 2,413 0.2 % 0.0 % Consumer staples 90,207 76,361 1.3 % 1.4 % Financials 127,141 81,987 1.8 % 1.5 % Healthcare, education and childcare 234,696 209,569 3.4 % 3.8 % Industrials 124,690 145,706 1.8 % 2.6 % Information technology 21,329 21,307 0.3 % 0.4 % Materials 184,342 213,395 2.6 % 3.8 % Telecommunication services 256,032 182,543 3.7 % 3.3 % Total fixed income securities (cost: $1,849,235 and $1,545,297 at June 30, 2018 and December 31, 2017, respectively) 1,825,984 1,537,889 26.2 % 27.6 % Equity securities: Healthcare, education and childcare 51,010 63,155 0.7 % 1.1 % Total equity securities (cost: $67,198 and $67,198 at June 30, 2018 and December 31, 2017, respectively) 51,010 63,155 0.7 % 1.1 % Asia and other: Fixed income securities: Consumer discretionary 1,878 2,008 0.0 % 0.0 % Financials 4,288 12,453 0.1 % 0.2 % Telecommunication services 20,888 21,848 0.3 % 0.4 % Total fixed income securities (cost: $27,737 and $36,180 at June 30, 2018 and December 31, 2017, respectively) 27,054 36,309 0.4 % 0.6 % Equity securities: Consumer discretionary 43,647 59,630 0.6 % 1.1 % Consumer staples 42,717 45,098 0.6 % 0.8 % Healthcare, education and childcare 44,637 44,637 0.6 % 0.8 % Industrials 50,795 16,578 0.7 % 0.3 % Total equity securities (cost: $122,418 and $122,418 at June 30, 2018 and December 31, 2017, respectively) 181,796 165,943 2.5 % 3.0 % Fair value at Fair value as a percentage of total investments at June 30, December 31, June 30, December 31, 2018 2017 2018 2017 Canada: Fixed income securities: Consumer discretionary $ 7,287 $ 6,757 0.1 % 0.1 % Consumer staples 36,420 15,351 0.5 % 0.3 % Energy 4,895 33,715 0.1 % 0.6 % Industrials 27,356 18,785 0.4 % 0.3 % Telecommunication services 12,569 6,189 0.2 % 0.1 % Total fixed income securities (cost: $89,165 and $80,201 at June 30, 2018 and December 31, 2017, respectively) 88,527 80,797 1.3 % 1.4 % Equity securities: Consumer discretionary — 5,912 — % 0.1 % Total equity securities (cost: $ 0 and $17,202 at June 30, 2018 and December 31, 2017, respectively) — 5,912 — % 0.1 % Australia: Fixed income securities: Consumer discretionary 11,932 10,863 0.2 % 0.2 % Energy 1,727 1,563 0.0 % 0.0 % Total fixed income securities (cost: $13,915 and $12,714 at June 30, 2018 and December 31, 2017, respectively) 13,659 12,426 0.2 % 0.2 % Total fixed income securities 6,483,593 5,115,374 93.2 % 91.6 % Total equity securities 232,866 235,136 3.2 % 4.2 % Total partnership interests 251,608 232,332 3.6 % 4.2 % Total investments, at fair value $ 6,968,067 $ 5,582,842 |
FAIR VALUE (Tables)
FAIR VALUE (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
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 June 30, 2018 : Financial Instruments of the Company Level I Level II Level III Investments Total Assets, at fair value Investments: Fixed income-collateralized loan obligations $ — $ — $ 22,125 $ — $ 22,125 Equity securities 353 1,026 — — 1,379 Partnership interests — — 47,219 38,097 85,316 Total investments, at fair value 353 1,026 69,344 38,097 108,820 Derivatives—foreign exchange contracts — 803 — — 803 Total assets, at fair value $ 353 $ 1,829 $ 69,344 $ 38,097 $ 109,623 Liabilities, at fair value Derivatives—foreign exchange contracts $ — $ (2,252 ) $ — $ — $ (2,252 ) Total liabilities, at fair value $ — $ (2,252 ) $ — $ — $ (2,252 ) Financial Instruments of the Consolidated Funds Level I Level II Level III Total Assets, at fair value Investments: Fixed income investments: Bonds $ — $ 88,672 $ 7,634 $ 96,306 Loans — 5,886,315 474,741 6,361,056 Collateralized loan obligations — 26,231 — 26,231 Total fixed income investments — 6,001,218 482,375 6,483,593 Equity securities 48,283 — 184,583 232,866 Partnership interests — — 251,608 251,608 Total investments, at fair value 48,283 6,001,218 918,566 6,968,067 Derivatives: Asset swaps - other — — 953 953 Total assets, at fair value $ 48,283 $ 6,001,218 $ 919,519 $ 6,969,020 Liabilities, at fair value Asset swaps - other $ — $ — $ (723 ) $ (723 ) Loan obligations of CLOs — (6,333,239 ) — (6,333,239 ) Total liabilities, at fair value $ — $ (6,333,239 ) $ (723 ) $ (6,333,962 ) The tables below summarize the financial assets and financial liabilities measured at fair value for the Company and Consolidated Funds as of December 31, 2017 : Financial Instruments of the Company Level I Level II Level III Investments Total Assets, at fair value Investments: Fixed income-collateralized loan obligations $ — $ — $ 195,158 $ — $ 195,158 Equity securities 520 1,116 — — 1,636 Partnership interests — — 44,769 35,998 80,767 Total investments, at fair value 520 1,116 239,927 35,998 277,561 Derivatives—foreign exchange contracts — 498 — — 498 Total assets, at fair value $ 520 $ 1,614 $ 239,927 $ 35,998 $ 278,059 Liabilities, at fair value Derivatives—foreign exchange contracts $ — $ (2,639 ) $ — $ — $ (2,639 ) Total liabilities, at fair value $ — $ (2,639 ) $ — $ — $ (2,639 ) Financial Instruments of the Consolidated Funds Level I Level II Level III Total Assets, at fair value Investments: Fixed income investments: Bonds $ — $ 82,151 $ 7,041 $ 89,192 Loans — 4,755,335 260,848 5,016,183 Collateralized loan obligations — 10,000 — 10,000 Total fixed income investments — 4,847,486 267,889 5,115,375 Equity securities 72,558 — 162,577 235,135 Partnership interests — — 232,332 232,332 Total investments, at fair value 72,558 4,847,486 662,798 5,582,842 Derivatives: Asset swaps - other — — 1,366 1,366 Total derivative assets, at fair value — — 1,366 1,366 Total assets, at fair value $ 72,558 $ 4,847,486 $ 664,164 $ 5,584,208 Liabilities, at fair value Asset swaps - other $ — $ — $ (462 ) $ (462 ) Loan obligations of CLOs — (4,963,194 ) — (4,963,194 ) Total liabilities, at fair value $ — $ (4,963,194 ) $ (462 ) $ (4,963,656 ) |
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 June 30, 2018 : Level III Assets Level III Assets and Liabilities of the Company Fixed Income Partnership Total Balance, beginning of period $ 242,984 $ 44,769 $ 287,753 Sales/settlements(2) (219,744 ) — (219,744 ) Realized and unrealized appreciation (depreciation), net (1,115 ) 2,450 1,335 Balance, end of period $ 22,125 $ 47,219 $ 69,344 Increase (decrease) in unrealized appreciation/depreciation included in earnings related to financial assets and liabilities still held at the reporting date $ (100 ) $ 2,450 $ 2,350 Level III Assets of Consolidated Funds Equity Securities Fixed Income Partnership Derivatives, Net Total Balance, beginning of period $ 160,422 $ 240,763 $ 252,700 $ 86 $ 653,971 Transfer in — 94,776 — — 94,776 Transfer out — (68,328 ) — — (68,328 ) Purchases(1) — 273,879 6,000 — 279,879 Sales/settlements(2) — (57,206 ) — (17 ) (57,223 ) Amortized discounts/premiums — (9 ) — (21 ) (30 ) Realized and unrealized appreciation (depreciation), net 24,161 (1,500 ) (7,092 ) 182 15,751 Balance, end of period $ 184,583 $ 482,375 $ 251,608 $ 230 $ 918,796 Increase (decrease) in unrealized appreciation/depreciation included in earnings related to financial assets still held at the reporting date $ (2,090 ) $ (3,785 ) $ — $ 134 $ (5,741 ) (1) Purchases include paid‑in‑kind interest and securities received in connection with restructurings. (2) Sales/settlements include distributions, principal redemptions and securities disposed of in connection with restructurings. The following tables set forth a summary of changes in the fair value of the Level III measurements for the three months ended June 30, 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 $ 108,253 $ 33,410 $ 141,663 $ 1,909 Purchases(1) 60,242 — 60,242 — Sales/settlements(2) (3,324 ) — (3,324 ) — Realized and unrealized depreciation, net (364 ) — (364 ) 31 Balance, end of period $ 164,807 $ 33,410 $ 198,217 $ 1,940 Increase (decrease) in unrealized appreciation/depreciation included in earnings related to financial assets and liabilities still held at the reporting date $ (625 ) $ — $ (625 ) $ 31 Level III Assets of Consolidated Funds Equity Securities Fixed Income Partnership Interests Derivatives, Net Total Balance, beginning of period $ 142,358 $ 278,829 $ 196,690 $ 845 $ 618,722 Transfer in 444 18,356 — — 18,800 Transfer out — (108,757 ) — — (108,757 ) Purchases(1) — 56,292 50,000 — 106,292 Sales/settlements(2) — (60,481 ) (30,000 ) (888 ) (91,369 ) Amortized discounts/premiums — (78 ) — (100 ) (178 ) Realized and unrealized appreciation, net 3,472 3,418 1,050 2,952 10,892 Balance, end of period $ 146,274 $ 187,579 $ 217,740 $ 2,809 $ 554,402 Increase (decrease) in unrealized appreciation/depreciation included in earnings related to financial assets still held at the reporting date $ 3,472 $ (277 ) $ 1,050 $ 3,145 $ 7,390 (1) Purchases include paid‑in‑kind interest and securities received in connection with restructurings. (2) Sales/settlements include distributions, principal redemptions and securities disposed of in connection with restructurings. The following tables set forth a summary of changes in the fair value of the Level III measurements for the six months ended June 30, 2018 : Level III Assets Level III Assets and Liabilities of the Company Fixed Income Partnership Total Balance, beginning of period $ 195,158 $ 44,769 $ 239,927 Deconsolidation of fund 78 — 78 Purchases(1) 48,731 — 48,731 Sales/settlements(2) (220,571 ) — (220,571 ) Realized and unrealized appreciation (depreciation), net (1,271 ) 2,450 1,179 Balance, end of period $ 22,125 $ 47,219 $ 69,344 Increase (decrease) in unrealized appreciation/depreciation included in earnings related to financial assets and liabilities still held at the reporting date $ (829 ) $ 2,450 $ 1,621 Level III Assets of Consolidated Funds Equity Securities Fixed Income Partnership Derivatives, Net Total Balance, beginning of period $ 162,577 $ 267,889 $ 232,332 $ 904 $ 663,702 Deconsolidation of fund (233 ) (233 ) Transfer in — 95,450 — — 95,450 Transfer out — (73,777 ) — — (73,777 ) Purchases(1) — 313,462 16,000 — 329,462 Sales/settlements(2) — (117,503 ) — (194 ) (117,697 ) Amortized discounts/premiums — 35 — (14 ) 21 Realized and unrealized appreciation (depreciation), net 22,006 (2,948 ) 3,276 (466 ) 21,868 Balance, end of period $ 184,583 $ 482,375 $ 251,608 $ 230 $ 918,796 Increase (decrease) in unrealized appreciation/depreciation included in earnings related to financial assets still held at the reporting date $ (12,211 ) $ (1,671 ) $ 3,276 $ (566 ) $ (11,172 ) (1) Purchases include paid‑in‑kind interest and securities received in connection with restructurings. (2) Sales/settlements include distributions, principal redemptions and securities disposed of in connection with restructurings. The following tables set forth a summary of changes in the fair value of the Level III measurements for the six months ended June 30, 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) 80,684 169 80,853 — Sales/settlements(2) (5,241 ) — (5,241 ) — Realized and unrealized appreciation (depreciation), net 253 (169 ) 84 (20,216 ) Balance, end of period $ 164,807 $ 33,410 $ 198,217 $ 1,940 Increase (decrease) in unrealized appreciation/depreciation included in earnings related to financial assets and liabilities still held at the reporting date $ (155 ) $ — $ (155 ) $ 61 Level III Assets of Consolidated Funds Equity Securities Fixed Income Partnership Interests Derivatives, Net Total Balance, beginning of period $ 130,690 $ 242,253 $ 171,696 $ (2,708 ) $ 541,931 Transfer in — 34,182 — — 34,182 Transfer out (6,160 ) (108,806 ) — — (114,966 ) Purchases(1) 6,692 93,111 73,000 — 172,803 Sales/settlements(2) — (76,714 ) (30,000 ) 1,966 (104,748 ) Amortized discounts/premiums — 46 — 216 262 Realized and unrealized appreciation, net 15,052 3,507 3,044 3,335 24,938 Balance, end of period $ 146,274 $ 187,579 $ 217,740 $ 2,809 $ 554,402 Increase (decrease) in unrealized appreciation/depreciation included in earnings related to financial assets still held at the reporting date $ 15,749 $ (785 ) $ 3,044 $ 3,914 $ 21,922 (1) Purchases include paid‑in‑kind interest and securities received in connection with restructurings. (2) Sales/settlements include distributions, principal redemptions and securities disposed of in connection with restructurings. |
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 June 30, 2018 : Fair Value Valuation Technique(s) Significant Unobservable Input(s) Range Assets Partnership interests $ 47,219 Other N/A N/A Collateralized loan obligations 22,125 Broker quotes and/or 3rd party pricing services N/A N/A Total $ 69,344 The following table summarizes the quantitative inputs and assumptions used for the Company’s Level III measurements as of December 31, 2017 : Fair Value Valuation Technique(s) Significant Unobservable Input(s) Range Assets Partnership interests $ 44,769 Other N/A N/A Collateralized loan obligations 195,158 Broker quotes and/or 3rd party pricing services N/A N/A Total $ 239,927 The following table summarizes the quantitative inputs and assumptions used for the Consolidated Funds’ Level III measurements as of June 30, 2018 : Fair Value Valuation Technique(s) Significant Unobservable Input(s) Range Weighted Assets Equity securities $ 51,010 Enterprise value market multiple analysis EBITDA multiple(2) 7.7x 7.7 44,637 Market approach (comparable companies) Net income multiple 51.8x 51.8 Illiquidity discount 25.0% 25.0% 60 Broker quotes and/or 3rd party pricing services N/A N/A N/A 88,876 Transaction price(1) N/A N/A N/A Partnership interest 251,608 Discounted cash flow Discount rate 17.0% 17.0% Fixed income securities 434,397 Broker quotes and/or 3rd party pricing services N/A N/A N/A 47,978 Income approach Yield 7.8% - 15.2% 11.3% Derivative instruments 953 Broker quotes and/or 3rd party pricing services N/A N/A N/A Total assets $ 919,519 Liabilities Derivatives instruments $ (723 ) Broker quotes and/or 3rd party pricing services N/A N/A N/A Total liabilities $ (723 ) (1) 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, 2017 : Fair Value Valuation Technique(s) Significant Unobservable Input(s) Range Weighted Average Assets Equity securities $ 63,155 Enterprise value market multiple analysis EBITDA multiple 2.7x 2.7x 61,215 Market approach (comparable companies) Net income multiple 27.0x - 36.2x 33.7x 126 Broker quotes and/or 3rd party pricing services N/A N/A N/A 38,081 Transaction price(1) N/A N/A N/A Partnership interest 232,332 Discounted cash flow Discount rate 19.0% 19.0% Fixed income securities 222,413 Broker quotes and/or 3rd party pricing services N/A N/A N/A 45,243 Income approach Yield 10.8% - 22.5% 12.1% 233 Market approach (comparable companies) EBITDA multiple 6.5x 6.5x Derivative instruments 1,366 Broker quotes and/or 3rd party pricing services N/A N/A N/A Total assets $ 664,164 Liabilities Derivatives instruments $ (462 ) Broker quotes and/or 3rd party pricing services N/A N/A N/A Total liabilities $ (462 ) (1) Transaction price consists of securities purchased or restructured. The Company determined that there has been no change to the valuation based on the underlying assumptions used at the closing of such transactions. |
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 June 30, 2018 As of December 31, 2017 Fair Value Unfunded Fair Value Unfunded Non-core investments(1) $ 38,097 $ 16,286 $ 35,998 $ 16,492 Total $ 38,097 $ 16,286 $ 35,998 $ 16,492 (1) Non-core investments are reported within OMG. |
DERIVATIVE FINANCIAL INSTRUME30
DERIVATIVE FINANCIAL INSTRUMENTS (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
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 June 30, 2018 and December 31, 2017 : As of June 30, 2018 As of December 31, 2017 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 $ 13,733 $ 803 $ 86,130 $ 2,252 $ 13,724 $ 498 $ 51,026 $ 2,639 Total derivatives, at fair value(2) $ 13,733 $ 803 $ 86,130 $ 2,252 $ 13,724 $ 498 $ 51,026 $ 2,639 As of June 30, 2018 As of December 31, 2017 Assets Liabilities Assets Liabilities Consolidated Funds Notional(1) Fair Value Notional(1) Fair Value Notional(1) Fair Value Notional(1) Fair Value Asset swap - other 4,558 953 1,351 723 5,363 1,366 1,840 462 Total derivatives, at fair value(3) 4,558 953 1,351 723 5,363 1,366 1,840 462 (1) Represents the total contractual amount of derivative assets and liabilities outstanding. (2) As of June 30, 2018 and December 31, 2017 , the Company had the right to, but elected not to, offset $0.8 million and $0.5 million of its derivative assets and liabilities, respectively. (3) As of June 30, 2018 and December 31, 2017 , the Consolidated Funds offset $0.3 million and $0.4 million of their derivative assets and liabilities, respectively. |
DEBT (Tables)
DEBT (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Debt Disclosure [Abstract] | |
Schedule of borrowings outstanding | The following table presents the activity of the Company's debt issuance costs: Credit Facility Senior Notes Term Loans Repurchase Agreement Loan Unamortized debt issuance costs as of December 31, 2017 $ 6,543 $ 1,571 $ 1,171 $ — Debt issuance costs incurred — — 173 259 Amortization of debt issuance costs (786 ) (121 ) (56 ) (7 ) Debt extinguishment expense — — (1,288 ) (252 ) Unamortized debt issuance costs as of June 30, 2018 $ 5,757 $ 1,450 $ — $ — he Consolidated Funds had the following revolving bank credit facilities and term loan outstanding as of June 30, 2018 and December 31, 2017 : As of June 30, 2018 As of December 31, 2017 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 $ 13,376 3.88% $ 12,942 2.88% 6/29/2019 46,632 46,632 EURIBOR + 1.55% (2) 48,042 1.55% (2) 3/7/2019 71,500 71,500 3.47% 71,500 2.88% Revolving Term Loan 1/31/2022 1,900 1,216 8.07% — —% 8/19/2019 11,429 5,714 9.32% 5,714 5.86% Total borrowings $ 138,438 $ 138,198 (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. s of June 30, 2018 and December 31, 2017 the following loan obligations were outstanding and classified as liabilities of the Company’s Consolidated CLOs: As of June 30, 2018 As of December 31, 2017 Loan Obligations Fair Value of Loan Obligations Weighted Loan Fair Value of Loan Obligations Weighted Average Remaining Maturity In Years Senior secured notes(1) $ 6,189,246 $ 6,111,930 11.00 $ 4,801,582 $ 4,776,883 10.57 Subordinated notes(2) 319,840 221,309 11.40 276,169 186,311 11.25 Total loan obligations of Consolidated CLOs $ 6,509,086 $ 6,333,239 $ 5,077,751 $ 4,963,194 (1) Original borrowings under the senior secured notes totaled $6.2 billion , with various maturity dates ranging from October 2024 to October 2030. The weighted average interest rate as of June 30, 2018 was 5.21% . (2) Original borrowings under the subordinated notes totaled $319.8 million , with various maturity dates ranging from October 2024 to October 2030. The notes do not have contractual interest rates, instead holders of the notes receive distributions from the excess cash flows generated by each Consolidated CLO. The following table summarizes the Company’s and its subsidiaries’ debt obligations: As of June 30, 2018 As of December 31, 2017 Debt Origination Date Maturity Original Borrowing Amount Carrying Interest Rate Carrying Interest Rate Credit Facility(1) Revolver 2/24/2022 N/A $ 125,000 3.63% $ 210,000 3.09% Senior Notes(2) 10/8/2014 10/8/2024 $ 250,000 245,628 4.21% 245,308 4.21% 2015 Term Loan(3) 9/2/2015 7/29/2026 — — N/A 35,037 2.86% 2016 Term Loan(4) 12/21/2016 1/15/2029 — — N/A 25,948 3.08% 2017 Term Loan A(4) 3/22/2017 1/22/2028 — — N/A 17,407 2.90% 2017 Term Loan B(4) 5/10/2017 10/15/2029 — — N/A 35,062 2.90% 2017 Term Loan C(4) 6/22/2017 7/30/2029 — — N/A 17,078 2.88% 2017 Term Loan D(4) 11/16/2017 10/15/2030 — — N/A 30,336 2.77% Total debt obligations $ 370,628 $ 616,176 (1) The AOG entities are borrowers under the Credit Facility, which 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 June 30, 2018 , 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 CLOs. 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 to cover the Term Loans, 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) | 6 Months Ended |
Jun. 30, 2018 | |
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 June 30, As of December 31, 2018 2017 Due from affiliates: Management fees receivable from non-consolidated funds $ 132,132 $ 126,506 Payments made on behalf of and amounts due from non-consolidated funds and employees 40,296 39,244 Due from affiliates—Company $ 172,428 $ 165,750 Amounts due from portfolio companies and non-consolidated funds $ 13,704 $ 15,884 Due from affiliates—Consolidated Funds $ 13,704 $ 15,884 Due to affiliates: Management fee rebate payable to non-consolidated funds $ 2,603 $ 5,213 Management fees received in advance 4,746 1,729 Tax receivable agreement liability 12,925 3,503 Payable to company employees(1) 24,701 24,542 Payments made by non-consolidated funds on behalf of and payable by the Company 17,369 4,197 Due to affiliates—Company $ 62,344 $ 39,184 (1) Prior year amount of $24.5 million was reclassified from performance related compensation payable to due to affiliates to conform with current year presentation. |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Income Tax Disclosure [Abstract] | |
Schedule of provision for income taxes | Supplemental information on an unaudited pro forma basis, as if the Company's election to be treated as a corporation for U.S. federal income tax purposes was effective for the three and six months ended June 30, 2017 is as follows: Three Months Ended June 30, 2017 2018 2017 Pro forma Provision for Income Taxes - The Company Income tax expense of the Company $ 36,834 $ 857 $ 18,815 Provision for Income Taxes - Consolidated Funds Income tax expense of the Consolidated Funds 69 396 396 Total Provision for Income Taxes $ 36,903 $ 1,253 $ 19,211 Six Months Ended June 30, 2017 2018 2017 Pro forma Provision for Income Taxes - The Company Income tax expense (benefit) of the Company $ 24,459 $ (33,875 ) $ (9,528 ) Provision for Income Taxes - Consolidated Funds Income tax expense of the Consolidated Funds 69 864 864 Total Provision for Income Taxes $ 24,528 $ (33,011 ) $ (8,664 ) |
EARNINGS PER COMMON SHARE (Tabl
EARNINGS PER COMMON SHARE (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Earnings Per Share [Abstract] | |
Schedule of antidilutive securities excluded from earnings per common unit | The computation of diluted earnings per common share for the three and six months ended June 30, 2018 and 2017 excludes the following options, restricted units and AOG Units, as their effect would have been anti-dilutive: For the Three Months Ended For the Six Months Ended 2018 2017 2018 2017 Options 19,111,390 21,155,026 19,471,589 21,244,858 Restricted units 15,271,381 39,082 15,811,964 14,463,590 AOG Units 120,231,237 130,249,329 124,211,007 130,325,826 |
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 share: For the Three Months Ended For the Six Months Ended 2018 2017 2018 2017 Net income (loss) attributable to Ares Management, L.P. common shareholders $ (17,200 ) $ 44,453 $ 18,323 $ (2,106 ) Earnings distributed to participating securities (restricted units) (1,970 ) (419 ) (3,877 ) (1,246 ) Net income (loss) available to common shareholders $ (19,170 ) $ 44,034 $ 14,446 $ (3,352 ) Basic weighted-average common shares 98,037,252 81,829,086 91,861,946 81,469,967 Basic earnings (loss) per common share $ (0.20 ) $ 0.54 $ 0.16 $ (0.04 ) Net income (loss) attributable to Ares Management, L.P. common shareholders $ (17,200 ) $ 44,453 $ 18,323 $ (2,106 ) Earnings distributed to participating securities (restricted units) (1,970 ) — (3,877 ) (1,246 ) Net income (loss) available to common shareholders $ (19,170 ) $ 44,453 $ 14,446 $ (3,352 ) Effect of dilutive shares: Restricted units — 2,490,796 — — Diluted weighted-average common shares 98,037,252 84,319,882 91,861,946 81,469,967 Diluted earnings (loss) per common share $ (0.20 ) $ 0.53 $ 0.16 $ (0.04 ) |
EQUITY COMPENSATION (Tables)
EQUITY COMPENSATION (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
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 Six Months Ended 2018 2017 2018 2017 Restricted units $ 18,516 $ 14,601 $ 36,547 $ 25,818 Options 3,630 3,931 6,293 7,413 Phantom units 361 385 754 775 Equity-based compensation expense $ 22,507 $ 18,917 $ 43,594 $ 34,006 |
Summary of unvested restricted units' activity | The following table presents unvested restricted units' activity during the six months ended June 30, 2018 : Restricted Units Weighted Average Grant Date Fair Value Per Unit Balance - January 1, 2018 13,751,888 $ 17.58 Granted 3,681,702 23.58 Vested (1,903,923 ) 16.93 Forfeited (258,286 ) 19.55 Balance - June 30, 2018 15,271,381 $ 19.07 |
Summary of unvested options activity | A summary of options activity during the six months ended June 30, 2018 is presented below: Options Weighted Average Exercise Price Weighted Average Remaining Life (in years) Aggregate Intrinsic Value Balance - January 1, 2018 20,495,025 $ 18.99 6.09 $ 20,611 Granted — — Exercised (50,000 ) 19.00 — 90 Expired (889,432 ) 19.00 — Forfeited (444,203 ) 19.00 — Balance - June 30, 2018 19,111,390 $ 18.99 5.81 $ 32,655 Exercisable at June 30, 2018 12,715,808 $ 19.00 5.78 $ 21,672 |
Summary of unvested phantom units activity | A summary of unvested phantom unit activity during the six months ended June 30, 2018 is presented below: Phantom Units Weighted Average Balance - January 1, 2018 156,153 $ 19.00 Vested (70,352 ) 19.00 Forfeited (16,200 ) 19.00 Balance - June 30, 2018 69,601 $ 19.00 |
SEGMENT REPORTING (Tables)
SEGMENT REPORTING (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
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 June 30, 2018 : Credit Group Private Equity Group Real Total OMG Total Management fees (Credit Group includes ARCC Part I Fees of $29,866) $ 135,848 $ 49,318 $ 17,138 $ 202,304 $ — $ 202,304 Other fees 6,877 337 7 7,221 — 7,221 Compensation and benefits (51,892 ) (18,672 ) (8,768 ) (79,332 ) (31,059 ) (110,391 ) General, administrative and other expenses (11,041 ) (4,175 ) (2,391 ) (17,607 ) (19,489 ) (37,096 ) Fee related earnings 79,792 26,808 5,986 112,586 (50,548 ) 62,038 Performance income—realized 41,672 80,415 521 122,608 — 122,608 Performance income—unrealized (4,568 ) (133,605 ) 13,830 (124,343 ) — (124,343 ) Performance related compensation—realized (23,577 ) (64,311 ) 7 (87,881 ) — (87,881 ) Performance related compensation—unrealized 2,759 106,912 (8,785 ) 100,886 — 100,886 Net performance income 16,286 (10,589 ) 5,573 11,270 — 11,270 Investment income (loss)—realized 595 9,016 (250 ) 9,361 798 10,159 Investment income (loss)—unrealized 1,617 290 (525 ) 1,382 2,866 4,248 Interest and other investment income (expense) 3,428 3,039 (1,218 ) 5,249 623 5,872 Interest expense (3,596 ) (1,440 ) (452 ) (5,488 ) (588 ) (6,076 ) Net investment income (loss) 2,044 10,905 (2,445 ) 10,504 3,699 14,203 Performance related earnings 18,330 316 3,128 21,774 3,699 25,473 Economic net income $ 98,122 $ 27,124 $ 9,114 $ 134,360 $ (46,849 ) $ 87,511 Realized income $ 97,921 $ 53,408 $ 6,479 $ 157,808 $ (49,754 ) $ 108,054 The following table presents the financial results for the Company’s operating segments, as well as the OMG, for the three months ended June 30, 2017 : Credit Group Private Equity Group Real Total OMG Total Management fees (Credit Group includes ARCC Part I Fees of $19,143) $ 112,654 $ 56,427 $ 16,479 $ 185,560 $ — $ 185,560 Other fees 5,663 338 19 6,020 — 6,020 Compensation and benefits (45,160 ) (18,388 ) (9,714 ) (73,262 ) (30,584 ) (103,846 ) General, administrative and other expenses (8,048 ) (4,345 ) (3,091 ) (15,484 ) (18,862 ) (34,346 ) Fee related earnings 65,109 34,032 3,693 102,834 (49,446 ) 53,388 Performance income—realized 7,883 64,780 1,467 74,130 — 74,130 Performance income—unrealized 5,093 228,747 29,789 263,629 — 263,629 Performance related compensation—realized (1,898 ) (50,914 ) (161 ) (52,973 ) — (52,973 ) Performance related compensation—unrealized (6,079 ) (184,021 ) (18,632 ) (208,732 ) — (208,732 ) Net performance income 4,999 58,592 12,463 76,054 — 76,054 Investment income—realized 2,525 2,717 373 5,615 1,340 6,955 Investment income (loss)—unrealized (3,450 ) 25,354 1,134 23,038 (2,728 ) 20,310 Interest and other investment income 2,958 1,983 1,534 6,475 225 6,700 Interest expense (3,065 ) (1,397 ) (429 ) (4,891 ) (463 ) (5,354 ) Net investment income (loss) (1,032 ) 28,657 2,612 30,237 (1,626 ) 28,611 Performance related earnings 3,967 87,249 15,075 106,291 (1,626 ) 104,665 Economic net income $ 69,076 $ 121,281 $ 18,768 $ 209,125 $ (51,072 ) $ 158,053 Realized income $ 73,181 $ 50,151 $ 5,181 $ 128,513 $ (48,346 ) $ 80,167 The following table presents the financial results for the Company’s operating segments, as well as the OMG, for the six months ended June 30, 2018 : Credit Group Private Equity Group Real Total OMG Total Management fees (Credit Group includes ARCC Part I Fees of $58,283) $ 267,614 $ 99,205 $ 32,311 $ 399,130 $ — $ 399,130 Other fees 12,607 677 10 13,294 — 13,294 Compensation and benefits (102,172 ) (37,871 ) (16,407 ) (156,450 ) (61,665 ) (218,115 ) General, administrative and other expenses (20,670 ) (8,216 ) (4,823 ) (33,709 ) (38,105 ) (71,814 ) Fee related earnings 157,379 53,795 11,091 222,265 (99,770 ) 122,495 Performance fees—realized 46,743 84,813 14,159 145,715 — 145,715 Performance fees—unrealized 11,524 (112,539 ) 11,790 (89,225 ) — (89,225 ) Performance fee compensation—realized (26,665 ) (67,871 ) (8,214 ) (102,750 ) — (102,750 ) Performance fee compensation—unrealized 9,935 88,218 (8,276 ) 89,877 — 89,877 Net performance fees 41,537 (7,379 ) 9,459 43,617 — 43,617 Investment income—realized 1,366 9,687 3,100 14,153 1,636 15,789 Investment income (loss)—unrealized 1,348 (3,860 ) (1,757 ) (4,269 ) 4,097 (172 ) Interest and other investment income (expense) 5,624 3,368 (201 ) 8,791 1,870 10,661 Interest expense (8,269 ) (2,668 ) (872 ) (11,809 ) (1,136 ) (12,945 ) Net investment income 69 6,527 270 6,866 6,467 13,333 Performance related earnings 41,606 (852 ) 9,729 50,483 6,467 56,950 Economic net income $ 198,985 $ 52,943 $ 20,820 $ 272,748 $ (93,303 ) $ 179,445 Realized income $ 176,778 $ 80,735 $ 20,148 $ 277,661 $ (97,534 ) $ 180,127 The following table presents the financial results for the Company’s operating segments, as well as the OMG, for the six months ended June 30, 2017 : Credit Group Private Equity Group Real Total OMG Total Management fees (Credit Group includes ARCC Part I Fees of $52,400) $ 234,001 $ 96,246 $ 32,094 $ 362,341 $ — $ 362,341 Other fees 10,166 678 10 10,854 — 10,854 Compensation and benefits (96,863 ) (31,606 ) (19,450 ) (147,919 ) (56,537 ) (204,456 ) General, administrative and other expenses (16,089 ) (8,543 ) (5,822 ) (30,454 ) (38,175 ) (68,629 ) Fee related earnings 131,215 56,775 6,832 194,822 (94,712 ) 100,110 Performance fees—realized 16,661 64,780 1,494 82,935 — 82,935 Performance fees—unrealized 8,029 260,984 43,877 312,890 — 312,890 Performance fee compensation—realized (7,183 ) (50,914 ) (177 ) (58,274 ) — (58,274 ) Performance fee compensation—unrealized (7,537 ) (209,526 ) (27,070 ) (244,133 ) — (244,133 ) Net performance fees 9,970 65,324 18,124 93,418 — 93,418 Investment income—realized 2,843 3,296 2,156 8,295 3,199 11,494 Investment income (loss)—unrealized 1,139 33,900 690 35,729 (4,135 ) 31,594 Interest and other investment income 2,939 2,135 1,353 6,427 1,099 7,526 Interest expense (5,523 ) (2,910 ) (861 ) (9,294 ) (939 ) (10,233 ) Net investment income (loss) 1,398 36,421 3,338 41,157 (776 ) 40,381 Performance related earnings 11,368 101,745 21,462 134,575 (776 ) 133,799 Economic net income $ 142,583 $ 158,520 $ 28,294 $ 329,397 $ (95,488 ) $ 233,909 Realized income $ 143,126 $ 72,496 $ 9,769 $ 225,391 $ (91,551 ) $ 133,840 |
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 Six Months Ended 2018 2017 2018 2017 Segment Revenues Management fees (includes ARCC Part I Fees of $29,866, $58,283 and $19,143, $52,400 for the three and six months ended June 30, 2018 and 2017, respectively) $ 202,304 $ 185,560 $ 399,130 $ 362,341 Other fees 7,221 6,020 13,294 10,854 Performance income—realized 122,608 74,130 145,715 82,935 Performance income—unrealized (124,343 ) 263,629 (89,225 ) 312,890 Total segment revenues $ 207,790 $ 529,339 $ 468,914 $ 769,020 Segment Expenses Compensation and benefits $ 79,332 $ 73,262 $ 156,450 $ 147,919 General, administrative and other expenses 17,607 15,484 33,709 30,454 Performance related compensation—realized 87,881 52,973 102,750 58,274 Performance related compensation—unrealized (100,886 ) 208,732 (89,877 ) 244,133 Total segment expenses $ 83,934 $ 350,451 $ 203,032 $ 480,780 Other Income (Expense) Investment income—realized $ 9,361 $ 5,615 $ 14,153 $ 8,295 Investment income (loss)—unrealized 1,382 23,038 (4,269 ) 35,729 Interest and other investment income 5,249 6,475 8,791 6,427 Interest expense (5,488 ) (4,891 ) (11,809 ) (9,294 ) Total segment other income $ 10,504 $ 30,237 $ 6,866 $ 41,157 |
Schedule of segment revenues components | The following table reconciles segment revenue to Ares consolidated revenues: For the Three Months Ended For the Six Months Ended 2018 2017 2018 2017 Total segment revenue $ 207,790 $ 529,339 $ 468,914 $ 769,020 Revenue of Consolidated Funds eliminated in consolidation (25,123 ) (169 ) (30,233 ) (18,357 ) Administrative fees(1) 6,770 9,132 13,182 18,738 Performance income reclass(2) 31 (217 ) 1,006 (241 ) Principal investment income 14,722 34,166 17,430 47,335 Revenue of non-controlling interests in consolidated subsidiaries(3) (27 ) (54 ) (47 ) (54 ) Total consolidated adjustments and reconciling items (3,627 ) 42,858 1,338 47,421 Total consolidated revenue $ 204,163 $ 572,197 $ 470,252 $ 816,441 (1) Represents administrative fees that are presented in administrative, transaction and other fees in the Company’s Condensed Consolidated Statements of Operations and are netted against the respective expenses for segment reporting. (2) Related to performance income for AREA Sponsor Holdings LLC, an investment pool. Changes in value of this investment are reflected within other income (expense) in the Company’s Condensed Consolidated Statements of Operations. (3) Adjustments for administrative fees reimbursed 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 Six Months Ended 2018 2017 2018 2017 Total segment expenses $ 83,934 $ 350,451 $ 203,032 $ 480,780 Expenses of Consolidated Funds added in consolidation 47,382 8,825 56,011 19,334 Expenses of Consolidated Funds eliminated in consolidation (12,270 ) (4,303 ) (19,583 ) (10,901 ) Administrative fees(1) 6,770 9,132 13,182 18,738 OMG expenses 50,548 49,446 99,770 94,712 Acquisition and merger-related expenses 47 724 (272 ) 276,060 Equity compensation expense 22,507 18,917 43,594 34,006 Placement fees and underwriting costs 1,852 6,383 3,516 9,822 Amortization of intangibles 3,285 5,274 6,572 10,549 Depreciation expense 4,426 2,774 8,315 5,990 Other expenses(3) 11,836 — 11,836 — Expenses of non-controlling interests in consolidated subsidiaries(2) 700 574 1,327 574 Total consolidation adjustments and reconciling items 137,083 97,746 224,268 458,884 Total consolidated expenses $ 221,017 $ 448,197 $ 427,300 $ 939,664 (1) Represents administrative fees that are presented in administrative, transaction and other fees in the Company’s Condensed Consolidated Statements of Operations and are netted against the respective expenses for segment reporting. (2) Costs being borne by certain of our joint venture partners. (3) Includes $11.8 million payment to ARCC for rent and utilities for the years ended 2017, 2016, 2015 and 2014, and the first quarter of 2018. |
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 Six Months Ended 2018 2017 2018 2017 Total segment other income $ 10,504 $ 30,237 $ 6,866 $ 41,157 Other income (expense) from Consolidated Funds added in consolidation, net 69,193 (3,150 ) 76,445 35,295 Other expense from Consolidated Funds eliminated in consolidation, net 993 (410 ) 534 (433 ) Other income of non-controlling interests in consolidated subsidiaries 8 5 15 5 OMG other income (expense) 3,699 (1,626 ) 6,467 (776 ) Performance income reclass(1) (31 ) 217 (1,006 ) 241 Principal investment income (14,722 ) (34,166 ) (17,430 ) (47,335 ) Changes in value of contingent consideration — (32 ) — 20,216 Other non-cash expense (1,715 ) — (1,722 ) — Offering costs (3 ) 5 (3 ) (655 ) Total consolidation adjustments and reconciling items 57,422 (39,157 ) 63,300 6,558 Total consolidated other income $ 67,926 $ (8,920 ) $ 70,166 $ 47,715 (1) Related to performance income 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, RI, FRE and PRE: For the Three Months Ended For the Six Months Ended 2018 2017 2018 2017 Economic net income Income (loss) before taxes $ 51,072 $ 115,080 $ 113,118 $ (75,508 ) Adjustments: Amortization of intangibles 3,285 5,274 6,572 10,549 Depreciation expense 4,426 2,774 8,315 5,990 Equity compensation expenses 22,507 18,917 43,594 34,006 Acquisition and merger-related expenses 47 756 (272 ) 255,844 Placement fees and underwriting costs 1,852 6,383 3,516 9,822 OMG expenses, net 46,849 51,072 93,303 95,488 Offering costs 3 (5 ) 3 655 Other expense(2) 13,551 — 13,558 — Expense of non-controlling interests in consolidated subsidiaries(1) 719 623 1,359 623 (Income) loss before taxes of non-controlling interests in Consolidated Funds, net of eliminations (9,951 ) 8,251 (10,318 ) (8,072 ) Total consolidation adjustments and reconciling items 83,288 94,045 159,630 404,905 Economic net income 134,360 209,125 272,748 329,397 Total performance income - unrealized 124,343 (263,629 ) 89,225 (312,890 ) Total performance related compensation - unrealized (100,886 ) 208,732 (89,877 ) 244,133 Total investment (income) loss - unrealized (9 ) (25,715 ) 5,565 (35,249 ) Realized income 157,808 128,513 277,661 225,391 Total performance income - realized (122,608 ) (74,130 ) (145,715 ) (82,935 ) Total performance related compensation - realized 87,881 52,973 102,750 58,274 Total investment income - realized (10,495 ) (4,522 ) (12,431 ) (5,908 ) Fee related earnings 112,586 102,834 222,265 194,822 Performance related earnings Economic net income $ 134,360 $ 209,125 $ 272,748 $ 329,397 Less: fee related earnings (112,586 ) (102,834 ) (222,265 ) (194,822 ) Performance related earnings $ 21,774 $ 106,291 $ 50,483 $ 134,575 (1) Adjustments for administrative fees reimbursed and other revenue items attributable to certain of our joint venture partners. (2) Includes $11.8 million payment to ARCC for rent and utilities for the years ended 2017, 2016, 2015 and 2014, and the first quarter of 2018. |
CONSOLIDATION (Tables)
CONSOLIDATION (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Condensed Financial Information 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 June 30, As of December 31, 2018 2017 Maximum exposure to loss attributable to the Company's investment in non-consolidated VIEs $ 241,231 $ 251,376 Maximum exposure to loss attributable to the Company's investment in consolidated VIEs 190,400 175,620 Assets of consolidated VIEs 8,059,640 6,231,245 Liabilities of consolidated VIEs 7,302,896 5,538,054 For the Three Months Ended For the Six Months Ended 2018 2017 2018 2017 Net income (loss) attributable to non-controlling interests related to consolidated VIEs $ 9,882 $ (8,647 ) $ 10,249 $ 7,208 |
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 June 30, 2018 and December 31, 2017 and results from operations for the three and six months ended June 30, 2018 and 2017 . As of June 30, 2018 Consolidated Consolidated Eliminations Consolidated Assets Cash and cash equivalents $ 125,448 $ — $ — $ 125,448 Investments ($985,035 of accrued carried interest) 1,656,647 — (190,400 ) 1,466,247 Due from affiliates 179,200 — (6,772 ) 172,428 Deferred tax asset, net 42,942 — — 42,942 Other assets 100,183 — — 100,183 Intangible assets, net 33,999 — — 33,999 Goodwill 143,848 — — 143,848 Assets of Consolidated Funds Cash and cash equivalents — 836,274 — 836,274 Investments, at fair value — 6,968,067 — 6,968,067 Due from affiliates — 13,704 — 13,704 Dividends and interest receivable — 14,634 — 14,634 Receivable for securities sold — 225,764 — 225,764 Other assets — 1,197 — 1,197 Total assets $ 2,282,267 $ 8,059,640 $ (197,172 ) $ 10,144,735 Liabilities Accounts payable, accrued expenses and other liabilities $ 73,227 $ — $ — $ 73,227 Accrued compensation 87,254 — — 87,254 Due to affiliates 62,344 — — 62,344 Performance related compensation payable 730,782 — — 730,782 Debt obligations 370,628 — — 370,628 Liabilities of Consolidated Funds Accounts payable, accrued expenses and other liabilities — 69,040 — 69,040 Due to affiliates — 6,772 (6,772 ) — Payable for securities purchased — 744,534 — 744,534 CLO loan obligations, at fair value — 6,344,112 (10,873 ) 6,333,239 Fund borrowings — 138,438 — 138,438 Total liabilities 1,324,235 7,302,896 (17,645 ) 8,609,486 Commitments and contingencies Preferred equity (12,400,000 shares issued and outstanding) 298,761 — — 298,761 Non-controlling interest in Consolidated Funds — 756,744 (179,527 ) 577,217 Non-controlling interest in Ares Operating Group entities 316,048 — — 316,048 Controlling interest in Ares Management, L.P.: Shareholders' equity (98,398,340 shares issued and outstanding) 349,981 — — 349,981 Accumulated other comprehensive loss, net of tax (6,758 ) — — (6,758 ) Total controlling interest in Ares Management, L.P. 343,223 — — 343,223 Total equity 958,032 756,744 (179,527 ) 1,535,249 Total liabilities and equity $ 2,282,267 $ 8,059,640 $ (197,172 ) $ 10,144,735 As of December 31, 2017 As adjusted Consolidated Consolidated Eliminations Consolidated Assets Cash and cash equivalents $ 118,929 $ — $ — $ 118,929 Investments ($1,077,236 of accrued carried interest) 1,900,191 — (175,620 ) 1,724,571 Due from affiliates 171,701 — (5,951 ) 165,750 Deferred tax asset, net 8,326 — — 8,326 Other assets 135,674 — (5,333 ) 130,341 Intangible assets, net 40,465 — — 40,465 Goodwill 143,895 — — 143,895 Assets of Consolidated Funds Cash and cash equivalents — 556,500 — 556,500 Investments, at fair value — 5,582,842 — 5,582,842 Due from affiliates — 15,884 — 15,884 Dividends and interest receivable — 12,568 — 12,568 Receivable for securities sold — 61,462 — 61,462 Other assets — 1,989 — 1,989 Total assets $ 2,519,181 $ 6,231,245 $ (186,904 ) $ 8,563,522 Liabilities Accounts payable, accrued expenses and other liabilities $ 81,955 $ — $ — $ 81,955 Accrued compensation 27,978 — — 27,978 Due to affiliates 39,184 — — 39,184 Performance related compensation payable 822,084 — — 822,084 Debt obligations 616,176 — — 616,176 Liabilities of Consolidated Funds Accounts payable, accrued expenses and other liabilities — 64,316 — 64,316 Due to affiliates — 11,285 (11,285 ) — Payable for securities purchased — 350,145 — 350,145 CLO loan obligations, at fair value — 4,974,110 (10,916 ) 4,963,194 Fund borrowings — 138,198 — 138,198 Total liabilities 1,587,377 5,538,054 (22,201 ) 7,103,230 Commitments and contingencies Preferred equity (12,400,000 shares issued and outstanding) 298,761 — — 298,761 Non-controlling interest in Consolidated Funds — 693,191 (164,703 ) 528,488 Non-controlling interest in Ares Operating Group entities 358,186 — — 358,186 Controlling interest in Ares Management, L.P.: Shareholders' equity (82,280,033 shares issued and outstanding) 279,065 — — 279,065 Accumulated other comprehensive loss, net of tax (4,208 ) — — (4,208 ) Total controlling interest in Ares Management, L.P. 274,857 — — 274,857 Total equity 931,804 693,191 (164,703 ) 1,460,292 Total liabilities and equity $ 2,519,181 $ 6,231,245 $ (186,904 ) $ 8,563,522 |
Schedule of results from operations | For the Three Months Ended June 30, 2018 Consolidated Entities Consolidated Eliminations Consolidated Revenues Management fees (includes ARCC Part I Fees of $29,866) $ 202,304 $ — $ (8,272 ) $ 194,032 Carried interest allocation (13,444 ) — (13,444 ) Incentive fees 11,740 (4,000 ) 7,740 Principal investment income 14,722 — (12,851 ) 1,871 Administrative, transaction and other fees 13,964 — — 13,964 Total revenues 229,286 — (25,123 ) 204,163 Expenses Compensation and benefits 138,992 — — 138,992 Performance related compensation (13,005 ) — — (13,005 ) General, administrative and other expense 59,918 — — 59,918 Expenses of the Consolidated Funds — 47,382 (12,270 ) 35,112 Total expenses 185,905 47,382 (12,270 ) 221,017 Other income (expense) Net realized and unrealized gain on investments 4,438 — (1,171 ) 3,267 Interest and dividend income 2,356 — — 2,356 Interest expense (6,076 ) — — (6,076 ) Other expense, net (2,978 ) — 991 (1,987 ) Net realized and unrealized gain on investments of the Consolidated Funds — 33,819 668 34,487 Interest and other income of the Consolidated Funds — 92,633 — 92,633 Interest expense of the Consolidated Funds — (57,259 ) 505 (56,754 ) Total other income (expense) (2,260 ) 69,193 993 67,926 Income before taxes 41,121 21,811 (11,860 ) 51,072 Income tax expense 36,834 69 — 36,903 Net income 4,287 21,742 (11,860 ) 14,169 Less: Net income attributable to non-controlling interests in Consolidated Funds — 21,742 (11,860 ) 9,882 Less: Net income attributable to non-controlling interests in Ares Operating Group entities 16,062 — — 16,062 Net loss attributable to Ares Management, L.P. (11,775 ) — — (11,775 ) Less: Preferred equity dividend paid 5,425 — — 5,425 Net loss attributable to Ares Management, L.P. common shareholders $ (17,200 ) $ — $ — $ (17,200 ) For the Three Months Ended June 30, 2017 As adjusted Consolidated Consolidated Eliminations Consolidated Revenues Management fees (includes ARCC Part I Fees of $19,143) $ 185,560 $ — $ (4,792 ) $ 180,768 Carried interest allocation 333,814 — (6 ) 333,808 Incentive fees 3,728 — 488 4,216 Principal investment income 34,166 — 4,141 38,307 Administrative, transaction and other fees 15,098 — — 15,098 Total revenues 572,366 — (169 ) 572,197 Expenses Compensation and benefits 131,219 — — 131,219 Performance related compensation 261,705 — — 261,705 General, administrative and other expense 50,751 — — 50,751 Expenses of the Consolidated Funds — 8,825 (4,303 ) 4,522 Total expenses 443,675 8,825 (4,303 ) 448,197 Other income (expense) Net realized and unrealized loss on investments (5,044 ) — (1,544 ) (6,588 ) Interest and dividend income 2,216 — (754 ) 1,462 Interest expense (5,354 ) — — (5,354 ) Other income, net 2,822 — — 2,822 Net realized and unrealized gain on investments of the Consolidated Funds — 953 (13,666 ) (12,713 ) Interest and other income of the Consolidated Funds — 38,326 — 38,326 Interest expense of Consolidated Funds — (42,429 ) 15,554 (26,875 ) Total other expense (5,360 ) (3,150 ) (410 ) (8,920 ) Income (loss) before taxes 123,331 (11,975 ) 3,724 115,080 Income tax expense 857 396 — 1,253 Net income (loss) 122,474 (12,371 ) 3,724 113,827 Less: Net loss attributable to non-controlling interests in Consolidated Funds — (12,371 ) 3,724 (8,647 ) Less: Net income attributable to non-controlling interests in Ares Operating Group entities 72,596 — — 72,596 Net income attributable to Ares Management, L.P. 49,878 — — 49,878 Less: Preferred equity dividend paid 5,425 — — 5,425 Net income attributable to Ares Management, L.P. common shareholders $ 44,453 $ — $ — $ 44,453 For the Six Months Ended June 30, 2018 Consolidated Entities Consolidated Eliminations Consolidated Revenues Management fees (includes ARCC Part I Fees of $58,283) $ 399,130 $ — $ (15,583 ) $ 383,547 Carried interest allocation 40,685 — — 40,685 Incentive fees 16,811 — (4,000 ) 12,811 Principal investment income 17,430 — (10,650 ) 6,780 Administrative, transaction and other fees 26,429 — — 26,429 Total revenues 500,485 — (30,233 ) 470,252 Expenses Compensation and benefits 273,631 — — 273,631 Performance related compensation 12,873 — — 12,873 General, administrative and other expense 104,368 — — 104,368 Expenses of the Consolidated Funds — 56,011 (19,583 ) 36,428 Total expenses 390,872 56,011 (19,583 ) 427,300 Other income (expense) Net realized and unrealized gain on investments 3,260 — (832 ) 2,428 Interest and dividend income 5,703 — — 5,703 Interest expense (12,945 ) — — (12,945 ) Other expense, net (2,831 ) — 533 (2,298 ) Net realized and unrealized gain on investments of the Consolidated Funds — 21,367 35 21,402 Interest and other income of the Consolidated Funds — 157,055 — 157,055 Interest expense of consolidated Funds — (101,977 ) 798 (101,179 ) Total other income (expense) (6,813 ) 76,445 534 70,166 Income before taxes 102,800 20,434 (10,116 ) 113,118 Income tax expense 24,459 69 — 24,528 Net income 78,341 20,365 (10,116 ) 88,590 Less: Net income attributable to non-controlling interests in Consolidated Funds — 20,365 (10,116 ) 10,249 Less: Net income attributable to non-controlling interests in Ares Operating Group entities 49,168 — — 49,168 Net income attributable to Ares Management, L.P. 29,173 — — 29,173 Less: Preferred equity dividend paid 10,850 — — 10,850 Net income attributable to Ares Management, L.P. common shareholders $ 18,323 $ — $ — $ 18,323 For the Six Months Ended June 30, 2017 As Adjusted Consolidated Consolidated Eliminations Consolidated Revenues Management fees (includes ARCC Part I Fees of $52,400) $ 362,341 $ — $ (9,528 ) $ 352,813 Carried interest allocation 386,829 — (1,014 ) 385,815 Incentive fees 8,755 — (1,374 ) 7,381 Principal investment income 47,335 — (6,441 ) 40,894 Administrative, transaction and other fees 29,538 — — 29,538 Total revenues 834,798 — (18,357 ) 816,441 Expenses Compensation and benefits 255,558 — — 255,558 Performance related compensation 302,407 — — 302,407 General, administrative and other expense 98,089 — — 98,089 Transaction support expense 275,177 — — 275,177 Expenses of the Consolidated Funds — 19,334 (10,901 ) 8,433 Total expenses 931,231 19,334 (10,901 ) 939,664 Other income (expense) Net realized and unrealized loss on investments (1,291 ) — (4,409 ) (5,700 ) Interest and dividend income 5,059 — (1,673 ) 3,386 Interest expense (10,233 ) — — (10,233 ) Other income, net 19,318 — — 19,318 Net realized and unrealized gain on investments of the Consolidated Funds — 31,392 (12,069 ) 19,323 Interest and other income of the Consolidated Funds — 79,818 — 79,818 Interest expense of Consolidated Funds — (75,915 ) 17,718 (58,197 ) Total other income 12,853 35,295 (433 ) 47,715 Income (loss) before taxes (83,580 ) 15,961 (7,889 ) (75,508 ) Income tax expense (benefit) (33,875 ) 864 — (33,011 ) Net income (loss) (49,705 ) 15,097 (7,889 ) (42,497 ) Less: Net income attributable to non-controlling interests in Consolidated Funds — 15,097 (7,889 ) 7,208 Less: Net loss attributable to non-controlling interests in Ares Operating Group entities (58,449 ) — — (58,449 ) Net income attributable to Ares Management, L.P. 8,744 — — 8,744 Less: Preferred equity dividend paid 10,850 — — 10,850 Net loss attributable to Ares Management, L.P. common shareholders $ (2,106 ) $ — $ — $ (2,106 ) |
ORGANIZATION (Details)
ORGANIZATION (Details) | 6 Months Ended |
Jun. 30, 2018segment | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Number of investing groups | 3 |
SUMMARY OF SIGNIFICANT ACCOUN39
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Condensed Consolidated Statement of Financial Condition) (Details) - USD ($) $ in Thousands | Jun. 30, 2018 | Jan. 01, 2018 | Dec. 31, 2017 | Jun. 30, 2017 | Dec. 31, 2016 |
Assets | |||||
Investments, at fair value | $ 1,724,571 | ||||
Other assets | 130,341 | ||||
Total assets | $ 10,144,735 | 8,563,522 | |||
Commitments and contingencies | |||||
Shareholders' equity (98,398,340 shares and 82,280,033 shares issued and outstanding at June 30, 2018 and at December 31, 2017, respectively) | 349,981 | 279,065 | |||
Accumulated other comprehensive loss, net of tax | (6,758) | (4,208) | |||
Total controlling interest in Ares Management, L.P. | 343,223 | 274,857 | |||
Total equity | 1,535,249 | 1,460,292 | |||
Total liabilities and equity | $ 10,144,735 | $ 8,563,522 | |||
Partners' Capital shares issued (in shares) | 98,398,340 | 82,280,033 | |||
Partners' Capital shares outstanding (in shares) | 98,398,340 | 82,280,033 | |||
Ares Management L.P | |||||
Assets | |||||
Cash and cash equivalents | $ 125,448 | $ 118,929 | $ 137,256 | $ 342,861 | |
Investments, at fair value | 1,466,247 | 1,724,571 | |||
Due from affiliates | 172,428 | 165,750 | |||
Deferred tax asset, net | 42,942 | 8,326 | |||
Other assets | 100,183 | 130,341 | |||
Shareholders' equity (98,398,340 shares and 82,280,033 shares issued and outstanding at June 30, 2018 and at December 31, 2017, respectively) | 349,981 | 279,065 | |||
Accumulated other comprehensive loss, net of tax | (6,758) | (4,208) | |||
Total controlling interest in Ares Management, L.P. | 343,223 | 274,857 | |||
Ares Management L.P | Accrued Interest | |||||
Assets | |||||
Investments, at fair value | 985,035 | 1,077,236 | |||
Consolidated Funds | |||||
Assets | |||||
Cash and cash equivalents | 836,274 | 556,500 | |||
Investments, at fair value | 6,968,067 | 5,582,842 | |||
Due from affiliates | 13,704 | 15,884 | |||
Other assets | 1,197 | 1,989 | |||
Non-controlling interest in Consolidated Funds | 577,217 | 528,488 | |||
Non-controlling interest in Ares Operating Group entities | 577,217 | 528,488 | |||
AOG | |||||
Assets | |||||
Non-controlling interest in Ares Operating Group entities | 316,048 | 358,186 | |||
ASC 323 | Ares Management L.P | |||||
Assets | |||||
Investments, at fair value | 1,724,571 | ||||
Performance income receivable | 0 | ||||
Other assets | 130,341 | ||||
ASC 323 | As Previously Reported | Ares Management L.P | |||||
Assets | |||||
Investments, at fair value | 647,335 | ||||
Performance income receivable | 1,099,847 | ||||
Other assets | 107,730 | ||||
ASC 323 | Adjustments | Ares Management L.P | |||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Cumulative effect of ASU adoption | $ 22,600 | ||||
Assets | |||||
Investments, at fair value | 1,077,236 | ||||
Performance income receivable | (1,099,847) | ||||
Other assets | $ 22,611 | ||||
ASC 606 | Adjustments | |||||
Assets | |||||
Investments, at fair value | 0 | ||||
Deferred tax asset, net | (199) | ||||
Other assets | 26,195 | (22,611) | |||
Total assets | 25,996 | (22,611) | |||
Non-controlling interest in Consolidated Funds | (3,473) | ||||
Shareholders' equity (98,398,340 shares and 82,280,033 shares issued and outstanding at June 30, 2018 and at December 31, 2017, respectively) | 11,443 | ||||
Accumulated other comprehensive loss, net of tax | (83) | ||||
Total controlling interest in Ares Management, L.P. | 11,360 | ||||
Total equity | 25,996 | (22,611) | |||
Total liabilities and equity | 25,996 | (22,611) | |||
ASC 606 | Balances without adoption of ASC 606 | |||||
Assets | |||||
Investments, at fair value | 1,724,571 | ||||
Other assets | 107,730 | ||||
Total assets | 10,170,731 | 8,540,911 | |||
Commitments and contingencies | |||||
Shareholders' equity (98,398,340 shares and 82,280,033 shares issued and outstanding at June 30, 2018 and at December 31, 2017, respectively) | 361,424 | ||||
Accumulated other comprehensive loss, net of tax | (6,841) | ||||
Total controlling interest in Ares Management, L.P. | 354,583 | ||||
Total equity | 1,561,245 | 1,437,681 | |||
Total liabilities and equity | 10,170,731 | $ 8,540,911 | |||
ASC 606 | Ares Management L.P | Adjustments | |||||
Assets | |||||
Cash and cash equivalents | 0 | ||||
ASC 606 | Ares Management L.P | Balances without adoption of ASC 606 | |||||
Assets | |||||
Cash and cash equivalents | 125,448 | ||||
Investments, at fair value | 1,466,247 | ||||
Due from affiliates | 172,428 | ||||
Deferred tax asset, net | 42,743 | ||||
Other assets | 126,378 | ||||
ASC 606 | Consolidated Funds | Balances without adoption of ASC 606 | |||||
Assets | |||||
Non-controlling interest in Consolidated Funds | 573,744 | ||||
ASC 606 | AOG | Adjustments | |||||
Assets | |||||
Non-controlling interest in Ares Operating Group entities | 18,109 | ||||
ASC 606 | AOG | Balances without adoption of ASC 606 | |||||
Assets | |||||
Non-controlling interest in Ares Operating Group entities | 334,157 | ||||
Carried interest allocation | |||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Repayment obligation | $ 200 |
SUMMARY OF SIGNIFICANT ACCOUN40
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Condensed Consolidated Statement of Operations) (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Expenses | ||||
Total expenses | $ 221,017 | $ 448,197 | $ 427,300 | $ 939,664 |
Total other income (expense) | 67,926 | (8,920) | 70,166 | 47,715 |
Income (loss) before taxes | 51,072 | 115,080 | 113,118 | (75,508) |
Income tax expense (benefit) | 36,903 | 1,253 | 24,528 | (33,011) |
Net income (loss) | 14,169 | 113,827 | 88,590 | (42,497) |
Net income (loss) attributable to Ares Management, L.P. | (11,775) | 49,878 | 29,173 | 8,744 |
Less: Preferred equity dividend paid | 5,425 | 5,425 | 10,850 | 10,850 |
Net income (loss) attributable to Ares Management, L.P. common shareholders | (17,200) | 44,453 | 18,323 | (2,106) |
Balances without adoption of ASC 606 | ||||
Expenses | ||||
Less: Preferred equity dividend paid | 5,425 | |||
Ares Management L.P | ||||
Revenues | ||||
Total revenues | 204,163 | 572,197 | 470,252 | 816,441 |
Expenses | ||||
Net realized and unrealized gain (loss) on investments | 3,267 | (6,588) | 2,428 | (5,700) |
Interest and dividend income | 2,356 | 1,462 | 5,703 | 3,386 |
Other income (expense), net | (1,987) | 2,822 | (2,298) | 19,318 |
Income tax expense (benefit) | 36,834 | 857 | 24,459 | (33,875) |
Consolidated Funds | ||||
Expenses | ||||
Expenses of Consolidated Funds | 35,112 | 4,522 | 36,428 | 8,433 |
Net realized and unrealized gain (loss) on investments | 34,487 | (12,713) | 21,402 | 19,323 |
Income tax expense (benefit) | 69 | 396 | 69 | 864 |
Net income (loss) attributable to non-controlling interests related to consolidated VIEs | 9,882 | (8,647) | 10,249 | 7,208 |
Consolidated Funds | Balances without adoption of ASC 606 | ||||
Expenses | ||||
Net income (loss) attributable to non-controlling interests related to consolidated VIEs | 13,461 | |||
AOG | ||||
Expenses | ||||
Net income (loss) attributable to non-controlling interests related to consolidated VIEs | 16,062 | 72,596 | 49,168 | (58,449) |
AOG | Balances without adoption of ASC 606 | ||||
Expenses | ||||
Net income (loss) attributable to non-controlling interests related to consolidated VIEs | 15,629 | |||
ASC 323 | As Previously Reported | Ares Management L.P | ||||
Revenues | ||||
Total revenues | 533,890 | 775,547 | ||
Expenses | ||||
Net realized and unrealized gain (loss) on investments | 30,079 | 32,734 | ||
Interest and dividend income | 3,102 | 5,846 | ||
ASC 323 | Adjustments | Ares Management L.P | ||||
Revenues | ||||
Total revenues | 38,307 | 40,894 | ||
Expenses | ||||
Net realized and unrealized gain (loss) on investments | (36,667) | (38,434) | ||
Interest and dividend income | (1,640) | (2,460) | ||
ASC 606 | Adjustments | ||||
Expenses | ||||
Total expenses | 0 | 0 | ||
Total other income (expense) | 12 | |||
Income (loss) before taxes | 2,936 | 3,780 | ||
Income tax expense (benefit) | (50) | 200 | ||
Net income (loss) | 2,986 | 3,580 | ||
Net income (loss) attributable to Ares Management, L.P. | (160) | 616 | ||
Net income (loss) attributable to Ares Management, L.P. common shareholders | (160) | 616 | ||
ASC 606 | Balances without adoption of ASC 606 | ||||
Expenses | ||||
Total expenses | 221,017 | 427,300 | ||
Total other income (expense) | 67,938 | |||
Income (loss) before taxes | 54,008 | 116,898 | ||
Income tax expense (benefit) | 36,853 | 24,728 | ||
Net income (loss) | 17,155 | 92,170 | ||
Net income (loss) attributable to Ares Management, L.P. | (11,935) | 29,789 | ||
Less: Preferred equity dividend paid | 10,850 | |||
Net income (loss) attributable to Ares Management, L.P. common shareholders | (17,360) | 18,939 | ||
ASC 606 | Ares Management L.P | Adjustments | ||||
Revenues | ||||
Total revenues | 2,924 | 3,780 | ||
Expenses | ||||
Other income (expense), net | 12 | |||
ASC 606 | Ares Management L.P | Balances without adoption of ASC 606 | ||||
Revenues | ||||
Total revenues | 207,087 | 474,032 | ||
Expenses | ||||
Other income (expense), net | (1,975) | |||
ASC 606 | Consolidated Funds | Adjustments | ||||
Expenses | ||||
Expenses of Consolidated Funds | 0 | 0 | ||
Net income (loss) attributable to non-controlling interests related to consolidated VIEs | 3,579 | 1,860 | ||
ASC 606 | Consolidated Funds | Balances without adoption of ASC 606 | ||||
Expenses | ||||
Expenses of Consolidated Funds | 35,112 | 36,428 | ||
Net income (loss) attributable to non-controlling interests related to consolidated VIEs | 12,109 | |||
ASC 606 | AOG | Adjustments | ||||
Expenses | ||||
Net income (loss) attributable to non-controlling interests related to consolidated VIEs | (433) | 1,104 | ||
ASC 606 | AOG | Balances without adoption of ASC 606 | ||||
Expenses | ||||
Net income (loss) attributable to non-controlling interests related to consolidated VIEs | 50,272 | |||
Performance fees | Ares Management L.P | ||||
Revenues | ||||
Total revenues | 0 | 0 | ||
Performance fees | ASC 323 | As Previously Reported | Ares Management L.P | ||||
Revenues | ||||
Total revenues | 338,024 | 393,196 | ||
Performance fees | ASC 323 | Adjustments | Ares Management L.P | ||||
Revenues | ||||
Total revenues | (338,024) | (393,196) | ||
Carried interest allocation | ||||
Revenues | ||||
Total revenues | 40,685 | |||
Carried interest allocation | Ares Management L.P | ||||
Revenues | ||||
Total revenues | (13,444) | 333,808 | 40,685 | 385,815 |
Carried interest allocation | ASC 323 | As Previously Reported | Ares Management L.P | ||||
Revenues | ||||
Total revenues | 0 | 0 | ||
Carried interest allocation | ASC 323 | Adjustments | Ares Management L.P | ||||
Revenues | ||||
Total revenues | 333,808 | 385,815 | ||
Incentive fees | Ares Management L.P | ||||
Revenues | ||||
Total revenues | 7,740 | 4,216 | 12,811 | 7,381 |
Incentive fees | ASC 323 | As Previously Reported | Ares Management L.P | ||||
Revenues | ||||
Total revenues | 0 | 0 | ||
Incentive fees | ASC 323 | Adjustments | Ares Management L.P | ||||
Revenues | ||||
Total revenues | 4,216 | 7,381 | ||
Incentive fees | ASC 606 | Ares Management L.P | Adjustments | ||||
Revenues | ||||
Total revenues | 2,924 | 3,780 | ||
Incentive fees | ASC 606 | Ares Management L.P | Balances without adoption of ASC 606 | ||||
Revenues | ||||
Total revenues | 10,664 | 16,591 | ||
Principal investment income | Ares Management L.P | ||||
Revenues | ||||
Total revenues | $ 1,871 | 38,307 | $ 6,780 | 40,894 |
Principal investment income | ASC 323 | As Previously Reported | Ares Management L.P | ||||
Revenues | ||||
Total revenues | 0 | 0 | ||
Principal investment income | ASC 323 | Adjustments | Ares Management L.P | ||||
Revenues | ||||
Total revenues | $ 38,307 | $ 40,894 |
SUMMARY OF SIGNIFICANT ACCOUN41
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Impact of Incentive Fees) (Details) - USD ($) $ in Thousands | Jun. 30, 2018 | Jan. 01, 2018 | Dec. 31, 2017 |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Investments | $ 1,724,571 | ||
Other assets | 130,341 | ||
Total assets | $ 10,144,735 | 8,563,522 | |
Total liabilities | 8,609,486 | 7,103,230 | |
Cumulative effect of the adoption of ASC 606 | 0 | ||
Total equity | 1,535,249 | 1,460,292 | |
Total liabilities and equity | 10,144,735 | 8,563,522 | |
ASC 606 | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Cumulative effect of the adoption of ASC 606 | $ (22,611) | ||
Adjustments | ASC 606 | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Investments | $ 0 | ||
Other assets | 26,195 | (22,611) | |
Total assets | 25,996 | (22,611) | |
Total liabilities | 0 | ||
Cumulative effect of the adoption of ASC 606 | (22,611) | ||
Total equity | 25,996 | (22,611) | |
Total liabilities and equity | 25,996 | (22,611) | |
Balances without adoption of ASC 606 | ASC 606 | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Investments | 1,724,571 | ||
Other assets | 107,730 | ||
Total assets | 10,170,731 | 8,540,911 | |
Total liabilities | 7,103,230 | ||
Cumulative effect of the adoption of ASC 606 | (22,611) | ||
Total equity | 1,561,245 | 1,437,681 | |
Total liabilities and equity | $ 10,170,731 | $ 8,540,911 |
SUMMARY OF SIGNIFICANT ACCOUN42
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Condensed Consolidated Statement of Changes in Equity) (Details) - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Total equity | $ 1,535,249 | $ 1,460,292 |
Cumulative effect of the adoption of ASC 606 | 0 | |
As adjusted balance at January 1, 2018 | 1,437,681 | |
Ares Management L.P | Accumulated Other Comprehensive Loss | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Total equity | (6,758) | (4,208) |
As adjusted balance at January 1, 2018 | (4,208) | |
AOG | Non-Controlling interest | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Total equity | 316,048 | 358,186 |
As adjusted balance at January 1, 2018 | 341,069 | |
Consolidated Funds | Non-Controlling interest | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Total equity | 577,217 | 528,488 |
As adjusted balance at January 1, 2018 | 533,821 | |
Partners' Capital | Ares Management L.P | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Total equity | 349,981 | 279,065 |
As adjusted balance at January 1, 2018 | 268,238 | |
Partners' Capital | Preferred Partner | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Total equity | $ 298,761 | 298,761 |
As adjusted balance at January 1, 2018 | 298,761 | |
ASC 606 | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Cumulative effect of the adoption of ASC 606 | (22,611) | |
ASC 606 | Ares Management L.P | Accumulated Other Comprehensive Loss | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Cumulative effect of the adoption of ASC 606 | 0 | |
ASC 606 | AOG | Non-Controlling interest | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Cumulative effect of the adoption of ASC 606 | (17,117) | |
ASC 606 | Consolidated Funds | Non-Controlling interest | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Cumulative effect of the adoption of ASC 606 | 5,333 | |
ASC 606 | Partners' Capital | Ares Management L.P | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Cumulative effect of the adoption of ASC 606 | (10,827) | |
ASC 606 | Partners' Capital | Preferred Partner | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Cumulative effect of the adoption of ASC 606 | $ 0 |
SUMMARY OF SIGNIFICANT ACCOUN43
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Condensed Consolidated Statement of Comprehensive Income) (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||
Net income (loss) | $ 14,169 | $ 113,827 | $ 88,590 | $ (42,497) |
Other comprehensive income: | ||||
Foreign currency translation adjustments | (5,690) | |||
Ares Management L.P | ||||
Other comprehensive income: | ||||
Foreign currency translation adjustments | (12,377) | 2,029 | (6,892) | 5,471 |
Total comprehensive income (loss) | 1,792 | 115,856 | 81,698 | (37,026) |
Comprehensive income (loss) attributable to Ares Management, L.P. | (14,532) | 50,213 | 26,623 | 10,280 |
Consolidated Funds | ||||
Other comprehensive income: | ||||
Less: Comprehensive income (loss) attributable to non-controlling interests | 4,193 | (8,818) | 7,735 | 7,038 |
AOG | ||||
Other comprehensive income: | ||||
Less: Comprehensive income (loss) attributable to non-controlling interests | 12,131 | $ 74,461 | 47,340 | $ (54,344) |
Adjustments | ASC 606 | ||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||
Net income (loss) | 2,986 | 3,580 | ||
Adjustments | Ares Management L.P | ASC 606 | ||||
Other comprehensive income: | ||||
Foreign currency translation adjustments | (444) | (195) | ||
Total comprehensive income (loss) | 2,542 | 3,385 | ||
Comprehensive income (loss) attributable to Ares Management, L.P. | (1,037) | 533 | ||
Adjustments | Consolidated Funds | ASC 606 | ||||
Other comprehensive income: | ||||
Less: Comprehensive income (loss) attributable to non-controlling interests | 3,579 | 1,860 | ||
Adjustments | AOG | ASC 606 | ||||
Other comprehensive income: | ||||
Less: Comprehensive income (loss) attributable to non-controlling interests | 0 | 992 | ||
Balances without adoption of ASC 606 | ASC 606 | ||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||
Net income (loss) | 17,155 | 92,170 | ||
Balances without adoption of ASC 606 | Ares Management L.P | ASC 606 | ||||
Other comprehensive income: | ||||
Foreign currency translation adjustments | (12,821) | (7,087) | ||
Total comprehensive income (loss) | 4,334 | 85,083 | ||
Comprehensive income (loss) attributable to Ares Management, L.P. | (15,569) | 27,156 | ||
Balances without adoption of ASC 606 | Consolidated Funds | ASC 606 | ||||
Other comprehensive income: | ||||
Less: Comprehensive income (loss) attributable to non-controlling interests | 7,772 | 9,595 | ||
Balances without adoption of ASC 606 | AOG | ASC 606 | ||||
Other comprehensive income: | ||||
Less: Comprehensive income (loss) attributable to non-controlling interests | $ 12,131 | $ 48,332 |
SUMMARY OF SIGNIFICANT ACCOUN44
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Condensed Consolidated Statement of Cash Flows) (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Cash flows from operating activities: | ||||
Net income (loss) | $ 14,169 | $ 113,827 | $ 88,590 | $ (42,497) |
Cash flows due to changes in operating assets and liabilities | 66,925 | (144,249) | ||
Consolidated Funds | ||||
Cash flows from operating activities: | ||||
Cash flows due to changes in operating assets and liabilities | (34,335) | $ 37,108 | ||
ASC 606 | Adjustments | ||||
Cash flows from operating activities: | ||||
Net income (loss) | 3,580 | |||
Cash flows due to changes in operating assets and liabilities | (1,720) | |||
ASC 606 | Balances without adoption of ASC 606 | ||||
Cash flows from operating activities: | ||||
Net income (loss) | 92,170 | |||
Cash flows due to changes in operating assets and liabilities | 65,205 | |||
ASC 606 | Consolidated Funds | Adjustments | ||||
Cash flows from operating activities: | ||||
Cash flows due to changes in operating assets and liabilities | (1,860) | |||
ASC 606 | Consolidated Funds | Balances without adoption of ASC 606 | ||||
Cash flows from operating activities: | ||||
Cash flows due to changes in operating assets and liabilities | $ (36,195) |
SUMMARY OF SIGNIFICANT ACCOUN45
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Recent Accounting Pronouncements) (Details) $ in Millions | 3 Months Ended |
Mar. 31, 2018USD ($) | |
Accounting Policies [Abstract] | |
Reclassification from accumulated other comprehensive income to shareholders' equity | $ 1.2 |
GOODWILL AND INTANGIBLE ASSET46
GOODWILL AND INTANGIBLE ASSETS (Carrying Value of Intangible Assets) (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||||
Jun. 30, 2018 | Mar. 31, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | Dec. 31, 2017 | |
Finite-lived intangible assets, net | ||||||
Intangible assets | $ 84,315 | $ 84,315 | $ 109,106 | |||
Less: accumulated amortization | (50,316) | (50,316) | (68,641) | |||
Intangible assets, net | 33,999 | $ 33,999 | 40,465 | |||
Fully-amortized intangibles, amount removed during the period | $ 25,000 | |||||
Service fee period | 12 months | |||||
General, administrative and other expense | ||||||
Finite-lived intangible assets, net | ||||||
Amortization expense | 3,300 | $ 5,200 | $ 6,600 | $ 10,500 | ||
Management contracts | ||||||
Finite-lived intangible assets, net | ||||||
Weighted average amortization period | 3 years | |||||
Intangible assets | 42,335 | $ 42,335 | 67,306 | |||
Client relationships | ||||||
Finite-lived intangible assets, net | ||||||
Weighted average amortization period | 10 years | |||||
Intangible assets | 38,600 | $ 38,600 | 38,600 | |||
Trade name | ||||||
Finite-lived intangible assets, net | ||||||
Weighted average amortization period | 4 years | |||||
Intangible assets | 3,200 | $ 3,200 | 3,200 | |||
Other1 | ||||||
Finite-lived intangible assets, net | ||||||
Weighted average amortization period | 8 months 12 days | |||||
Intangible assets | $ 180 | $ 180 | $ 0 |
GOODWILL AND INTANGIBLE ASSET47
GOODWILL AND INTANGIBLE ASSETS (Goodwill) (Details) - USD ($) | 6 Months Ended | |
Jun. 30, 2018 | Jun. 30, 2017 | |
Goodwill [Roll Forward] | ||
Goodwill, beginning balance | $ 143,895,000 | |
Foreign currency translation | (47,000) | |
Goodwill, ending balance | 143,848,000 | |
Goodwill impairment | 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 | 53,099,000 | |
Foreign currency translation | (47,000) | |
Goodwill, ending balance | $ 53,052,000 |
INVESTMENTS (Fair Value Investm
INVESTMENTS (Fair Value Investments, excluding Equity Method Investments Held at Fair Value) (Details) - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 |
Investments | ||
Fair Value | $ 38,097 | $ 35,998 |
Ares Management L.P | ||
Investments | ||
Equity method investments | 1,466,247 | 1,724,571 |
Fair Value | 85,316 | 80,767 |
Total private investment partnership interests | 108,820 | 277,561 |
Collateralized loan obligations | 22,125 | 195,158 |
Equity securities | $ 1,379 | $ 1,636 |
Percentage of total investments | 1.50% | 11.30% |
Partnership interests | Ares Management L.P | ||
Investments | ||
Total private investment partnership interests | $ 1,442,743 | $ 1,527,777 |
Percentage of total investments | 98.40% | 88.60% |
Common Stock | Ares Management L.P | ||
Investments | ||
Equity securities | $ 1,379 | $ 1,636 |
Percentage of total investments | 0.10% | 0.10% |
Partnership interests | Ares Management L.P | ||
Investments | ||
Equity method investments | $ 348,831 | $ 340,354 |
Percentage of total investments | 23.80% | 19.70% |
Equity method - carried interest | Ares Management L.P | ||
Investments | ||
Equity method investments | $ 985,035 | $ 1,077,236 |
Percentage of total investments | 67.20% | 62.50% |
Equity method private investment partnership interests - other | Ares Management L.P | ||
Investments | ||
Equity method investments | $ 70,780 | $ 74,439 |
Percentage of total investments | 4.80% | 4.30% |
Other private investment partnership Interests | Ares Management L.P | ||
Investments | ||
Fair Value | $ 38,097 | $ 35,748 |
Percentage of total investments | 2.60% | 2.10% |
INVESTMENTS (Equity Method Inve
INVESTMENTS (Equity Method Investments) (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Investments in and Advances to Affiliates [Abstract] | ||||
Equity method investments | $ 3.8 | $ 38.3 | $ 7.3 | $ 41.3 |
INVESTMENTS (Investments of the
INVESTMENTS (Investments of the Consolidated Funds) (Details) - Consolidated Funds $ in Thousands | 6 Months Ended | 12 Months Ended |
Jun. 30, 2018USD ($)issuer | Dec. 31, 2017USD ($)issuer | |
Investments | ||
Total investments | $ 6,968,067 | $ 5,582,842 |
Number of single issuers above 5% | issuer | 0 | 0 |
Single issuer or investor threshold, as a percent | 5.00% | 5.00% |
Fixed Income | ||
Investments | ||
Total investments | $ 6,483,593 | $ 5,115,374 |
Percentage of total investments | 93.20% | 91.60% |
Equity securities | ||
Investments | ||
Total investments | $ 232,866 | $ 235,136 |
Percentage of total investments | 3.20% | 4.20% |
Partnership Interests | Partnership and interests | ||
Investments | ||
Total investments | $ 251,608 | $ 232,332 |
Percentage of total investments | 3.60% | 4.20% |
United States | Fixed Income | ||
Investments | ||
Total investments | $ 4,528,369 | $ 3,447,953 |
Percentage of total investments | 65.10% | 61.80% |
Investments, at cost | $ 4,573,566 | $ 3,459,318 |
United States | Fixed Income | Consumer discretionary | ||
Investments | ||
Total investments | $ 1,714,080 | $ 1,295,732 |
Percentage of total investments | 24.80% | 23.20% |
United States | Fixed Income | Consumer staples | ||
Investments | ||
Total investments | $ 76,664 | $ 55,073 |
Percentage of total investments | 1.10% | 1.00% |
United States | Fixed Income | Energy | ||
Investments | ||
Total investments | $ 169,208 | $ 176,836 |
Percentage of total investments | 2.40% | 3.20% |
United States | Fixed Income | Financials | ||
Investments | ||
Total investments | $ 424,838 | $ 270,520 |
Percentage of total investments | 6.10% | 4.80% |
United States | Fixed Income | Healthcare, education and childcare | ||
Investments | ||
Total investments | $ 665,530 | $ 449,888 |
Percentage of total investments | 9.60% | 8.10% |
United States | Fixed Income | Industrials | ||
Investments | ||
Total investments | $ 407,280 | $ 370,926 |
Percentage of total investments | 5.80% | 6.60% |
United States | Fixed Income | Information technology | ||
Investments | ||
Total investments | $ 175,704 | $ 167,089 |
Percentage of total investments | 2.50% | 3.00% |
United States | Fixed Income | Materials | ||
Investments | ||
Total investments | $ 189,786 | $ 185,170 |
Percentage of total investments | 2.70% | 3.30% |
United States | Fixed Income | Telecommunication services | ||
Investments | ||
Total investments | $ 625,619 | $ 399,617 |
Percentage of total investments | 9.00% | 7.20% |
United States | Fixed Income | Utilities | ||
Investments | ||
Total investments | $ 79,660 | $ 77,102 |
Percentage of total investments | 1.10% | 1.40% |
United States | Equity securities | ||
Investments | ||
Total investments | $ 60 | $ 126 |
Percentage of total investments | 0.00% | 0.00% |
Investments, at cost | $ 2,265 | $ 2,265 |
United States | Equity securities | Energy | ||
Investments | ||
Total investments | $ 60 | $ 126 |
Percentage of total investments | 0.00% | 0.00% |
United States | Partnership Interests | ||
Investments | ||
Total investments | $ 251,608 | $ 232,332 |
Percentage of total investments | 3.60% | 4.20% |
Investments, at cost | $ 206,000 | $ 190,000 |
United States | Partnership Interests | Partnership and interests | ||
Investments | ||
Total investments | $ 251,608 | $ 232,332 |
Percentage of total investments | 3.60% | 4.20% |
Europe | Fixed Income | ||
Investments | ||
Total investments | $ 1,825,984 | $ 1,537,889 |
Percentage of total investments | 26.20% | 27.60% |
Investments, at cost | $ 1,849,235 | $ 1,545,297 |
Europe | Fixed Income | Consumer discretionary | ||
Investments | ||
Total investments | $ 772,714 | $ 604,608 |
Percentage of total investments | 11.10% | 10.80% |
Europe | Fixed Income | Consumer staples | ||
Investments | ||
Total investments | $ 90,207 | $ 76,361 |
Percentage of total investments | 1.30% | 1.40% |
Europe | Fixed Income | Energy | ||
Investments | ||
Total investments | $ 14,833 | $ 2,413 |
Percentage of total investments | 0.20% | 0.00% |
Europe | Fixed Income | Financials | ||
Investments | ||
Total investments | $ 127,141 | $ 81,987 |
Percentage of total investments | 1.80% | 1.50% |
Europe | Fixed Income | Healthcare, education and childcare | ||
Investments | ||
Total investments | $ 234,696 | $ 209,569 |
Percentage of total investments | 3.40% | 3.80% |
Europe | Fixed Income | Industrials | ||
Investments | ||
Total investments | $ 124,690 | $ 145,706 |
Percentage of total investments | 1.80% | 2.60% |
Europe | Fixed Income | Information technology | ||
Investments | ||
Total investments | $ 21,329 | $ 21,307 |
Percentage of total investments | 0.30% | 0.40% |
Europe | Fixed Income | Materials | ||
Investments | ||
Total investments | $ 184,342 | $ 213,395 |
Percentage of total investments | 2.60% | 3.80% |
Europe | Fixed Income | Telecommunication services | ||
Investments | ||
Total investments | $ 256,032 | $ 182,543 |
Percentage of total investments | 3.70% | 3.30% |
Europe | Equity securities | ||
Investments | ||
Total investments | $ 51,010 | $ 63,155 |
Percentage of total investments | 0.70% | 1.10% |
Investments, at cost | $ 67,198 | $ 67,198 |
Europe | Equity securities | Healthcare, education and childcare | ||
Investments | ||
Total investments | $ 51,010 | $ 63,155 |
Percentage of total investments | 0.70% | 1.10% |
Asia and other | Fixed Income | ||
Investments | ||
Total investments | $ 27,054 | $ 36,309 |
Percentage of total investments | 0.40% | 0.60% |
Investments, at cost | $ 27,737 | $ 36,180 |
Asia and other | Fixed Income | Consumer discretionary | ||
Investments | ||
Total investments | $ 1,878 | $ 2,008 |
Percentage of total investments | 0.00% | 0.00% |
Asia and other | Fixed Income | Financials | ||
Investments | ||
Total investments | $ 4,288 | $ 12,453 |
Percentage of total investments | 0.10% | 0.20% |
Asia and other | Fixed Income | Telecommunication services | ||
Investments | ||
Total investments | $ 20,888 | $ 21,848 |
Percentage of total investments | 0.30% | 0.40% |
Asia and other | Equity securities | ||
Investments | ||
Total investments | $ 181,796 | $ 165,943 |
Percentage of total investments | 2.50% | 3.00% |
Investments, at cost | $ 122,418 | $ 122,418 |
Asia and other | Equity securities | Consumer discretionary | ||
Investments | ||
Total investments | $ 43,647 | $ 59,630 |
Percentage of total investments | 0.60% | 1.10% |
Asia and other | Equity securities | Consumer staples | ||
Investments | ||
Total investments | $ 42,717 | $ 45,098 |
Percentage of total investments | 0.60% | 0.80% |
Asia and other | Equity securities | Healthcare, education and childcare | ||
Investments | ||
Total investments | $ 44,637 | $ 44,637 |
Percentage of total investments | 0.60% | 0.80% |
Asia and other | Equity securities | Industrials | ||
Investments | ||
Total investments | $ 50,795 | $ 16,578 |
Percentage of total investments | 0.70% | 0.30% |
Canada | Fixed Income | ||
Investments | ||
Total investments | $ 88,527 | $ 80,797 |
Percentage of total investments | 1.30% | 1.40% |
Investments, at cost | $ 89,165 | $ 80,201 |
Canada | Fixed Income | Consumer discretionary | ||
Investments | ||
Total investments | $ 7,287 | $ 6,757 |
Percentage of total investments | 0.10% | 0.10% |
Canada | Fixed Income | Consumer staples | ||
Investments | ||
Total investments | $ 36,420 | $ 15,351 |
Percentage of total investments | 0.50% | 0.30% |
Canada | Fixed Income | Energy | ||
Investments | ||
Total investments | $ 4,895 | $ 33,715 |
Percentage of total investments | 0.10% | 0.60% |
Canada | Fixed Income | Industrials | ||
Investments | ||
Total investments | $ 27,356 | $ 18,785 |
Percentage of total investments | 0.40% | 0.30% |
Canada | Fixed Income | Telecommunication services | ||
Investments | ||
Total investments | $ 12,569 | $ 6,189 |
Percentage of total investments | 0.20% | 0.10% |
Canada | Equity securities | ||
Investments | ||
Total investments | $ 0 | $ 5,912 |
Percentage of total investments | 0.00% | 0.10% |
Investments, at cost | $ 0 | $ 17,202 |
Canada | Equity securities | Energy | ||
Investments | ||
Total investments | $ 0 | $ 5,912 |
Percentage of total investments | 0.00% | 0.10% |
Australia | Fixed Income | ||
Investments | ||
Total investments | $ 13,659 | $ 12,426 |
Percentage of total investments | 0.20% | 0.20% |
Investments, at cost | $ 13,915 | $ 12,714 |
Australia | Fixed Income | Consumer discretionary | ||
Investments | ||
Total investments | $ 11,932 | $ 10,863 |
Percentage of total investments | 0.20% | 0.20% |
Australia | Fixed Income | Energy | ||
Investments | ||
Total investments | $ 1,727 | $ 1,563 |
Percentage of total investments | 0.00% | 0.00% |
FAIR VALUE (Assets and Liabilit
FAIR VALUE (Assets and Liabilities Measured at Fair Value) (Details) - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 |
Assets, at fair value | ||
Partnership interest | $ 38,097 | $ 35,998 |
Consolidated Funds | ||
Assets, at fair value | ||
Fixed income securities | 6,483,593 | 5,115,375 |
Equity securities | 232,866 | 235,135 |
Partnership interest | 251,608 | 232,332 |
Total investments, at fair value | 6,968,067 | 5,582,842 |
Total derivative assets, at fair value | 1,366 | |
Total assets, at fair value | 6,969,020 | 5,584,208 |
Liabilities, at fair value | ||
Loan obligations of CLOs | (6,333,239) | (4,963,194) |
Total liabilities, at fair value | (6,333,962) | (4,963,656) |
Consolidated Funds | Asset swaps - other | ||
Assets, at fair value | ||
Total derivative assets, at fair value | 953 | 1,366 |
Liabilities, at fair value | ||
Derivative liabilities | (723) | (462) |
Consolidated Funds | Collateralized loan obligations | ||
Assets, at fair value | ||
Fixed income securities | 26,231 | 10,000 |
Consolidated Funds | Bonds | ||
Assets, at fair value | ||
Fixed income securities | 96,306 | 89,192 |
Consolidated Funds | Loans | ||
Assets, at fair value | ||
Fixed income securities | 6,361,056 | 5,016,183 |
Consolidated Funds | Level I | ||
Assets, at fair value | ||
Fixed income securities | 0 | 0 |
Equity securities | 48,283 | 72,558 |
Partnership interest | 0 | 0 |
Total investments, at fair value | 48,283 | 72,558 |
Total derivative assets, at fair value | 0 | |
Total assets, at fair value | 48,283 | 72,558 |
Liabilities, at fair value | ||
Loan obligations of CLOs | 0 | 0 |
Total liabilities, at fair value | 0 | 0 |
Consolidated Funds | Level I | Asset swaps - 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 | Collateralized loan obligations | ||
Assets, at fair value | ||
Fixed income securities | 0 | 0 |
Consolidated Funds | Level I | Bonds | ||
Assets, at fair value | ||
Fixed income securities | 0 | 0 |
Consolidated Funds | Level I | Loans | ||
Assets, at fair value | ||
Fixed income securities | 0 | 0 |
Consolidated Funds | Level II | ||
Assets, at fair value | ||
Fixed income securities | 6,001,218 | 4,847,486 |
Equity securities | 0 | 0 |
Partnership interest | 0 | 0 |
Total investments, at fair value | 6,001,218 | 4,847,486 |
Total derivative assets, at fair value | 0 | |
Total assets, at fair value | 6,001,218 | 4,847,486 |
Liabilities, at fair value | ||
Loan obligations of CLOs | (6,333,239) | (4,963,194) |
Total liabilities, at fair value | (6,333,239) | (4,963,194) |
Consolidated Funds | Level II | Asset swaps - 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 | Collateralized loan obligations | ||
Assets, at fair value | ||
Fixed income securities | 26,231 | 10,000 |
Consolidated Funds | Level II | Bonds | ||
Assets, at fair value | ||
Fixed income securities | 88,672 | 82,151 |
Consolidated Funds | Level II | Loans | ||
Assets, at fair value | ||
Fixed income securities | 5,886,315 | 4,755,335 |
Consolidated Funds | Level III | ||
Assets, at fair value | ||
Fixed income securities | 482,375 | 267,889 |
Equity securities | 184,583 | 162,577 |
Partnership interest | 251,608 | 232,332 |
Total investments, at fair value | 918,566 | 662,798 |
Total derivative assets, at fair value | 1,366 | |
Total assets, at fair value | 919,519 | 664,164 |
Liabilities, at fair value | ||
Loan obligations of CLOs | 0 | 0 |
Total liabilities, at fair value | (723) | (462) |
Consolidated Funds | Level III | Asset swaps - other | ||
Assets, at fair value | ||
Total derivative assets, at fair value | 953 | 1,366 |
Liabilities, at fair value | ||
Derivative liabilities | (723) | (462) |
Consolidated Funds | Level III | Collateralized loan obligations | ||
Assets, at fair value | ||
Fixed income securities | 0 | 0 |
Consolidated Funds | Level III | Bonds | ||
Assets, at fair value | ||
Fixed income securities | 7,634 | 7,041 |
Consolidated Funds | Level III | Loans | ||
Assets, at fair value | ||
Fixed income securities | 474,741 | 260,848 |
Ares Management L.P | ||
Assets, at fair value | ||
Equity securities | 1,379 | 1,636 |
Partnership interest | 85,316 | 80,767 |
Total investments, at fair value | 108,820 | 277,561 |
Total assets, at fair value | 109,623 | 278,059 |
Liabilities, at fair value | ||
Derivatives—foreign exchange contracts | (2,639) | |
Total liabilities, at fair value | (2,252) | (2,639) |
Ares Management L.P | Foreign exchange contracts | ||
Assets, at fair value | ||
Total derivative assets, at fair value | 803 | 498 |
Liabilities, at fair value | ||
Derivative liabilities | (2,252) | |
Ares Management L.P | Collateralized loan obligations | ||
Assets, at fair value | ||
Fixed income securities | 22,125 | 195,158 |
Ares Management L.P | Level I | ||
Assets, at fair value | ||
Equity securities | 353 | 520 |
Partnership interest | 0 | 0 |
Total investments, at fair value | 353 | 520 |
Total assets, at fair value | 353 | 520 |
Liabilities, at fair value | ||
Derivatives—foreign exchange contracts | 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 | Collateralized loan obligations | ||
Assets, at fair value | ||
Fixed income securities | 0 | 0 |
Ares Management L.P | Level II | ||
Assets, at fair value | ||
Equity securities | 1,026 | 1,116 |
Partnership interest | 0 | 0 |
Total investments, at fair value | 1,026 | 1,116 |
Total assets, at fair value | 1,829 | 1,614 |
Liabilities, at fair value | ||
Derivatives—foreign exchange contracts | (2,639) | |
Total liabilities, at fair value | (2,252) | (2,639) |
Ares Management L.P | Level II | Foreign exchange contracts | ||
Assets, at fair value | ||
Total derivative assets, at fair value | 803 | 498 |
Liabilities, at fair value | ||
Derivative liabilities | (2,252) | |
Ares Management L.P | Level II | Collateralized loan obligations | ||
Assets, at fair value | ||
Fixed income securities | 0 | 0 |
Ares Management L.P | Level III | ||
Assets, at fair value | ||
Equity securities | 0 | 0 |
Partnership interest | 47,219 | 44,769 |
Total investments, at fair value | 69,344 | 239,927 |
Total assets, at fair value | 69,344 | 239,927 |
Liabilities, at fair value | ||
Derivatives—foreign exchange contracts | 0 | |
Total liabilities, at fair value | 0 | 0 |
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 | Collateralized loan obligations | ||
Assets, at fair value | ||
Fixed income securities | 22,125 | 195,158 |
Ares Management L.P | Investments Measured at NAV | ||
Assets, at fair value | ||
Partnership interest | 38,097 | 35,998 |
Total investments, at fair value | 38,097 | 35,998 |
Total assets, at fair value | $ 38,097 | $ 35,998 |
FAIR VALUE (Changes in Fair Val
FAIR VALUE (Changes in Fair Value of Level III Measurements) (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Consolidated Funds | ||||
Changes in the fair value of the Level III investments | ||||
Balance, beginning of period | $ 653,971 | $ 618,722 | $ 663,702 | $ 541,931 |
Deconsolidation of fund | (233) | |||
Transfer in | 94,776 | 18,800 | 95,450 | 34,182 |
Transfer out | (68,328) | (108,757) | (73,777) | (114,966) |
Purchases | 279,879 | 106,292 | 329,462 | 172,803 |
Sales | (91,369) | (117,697) | (104,748) | |
Settlements, net | (57,223) | |||
Amortized discounts/premiums | (30) | (178) | 21 | 262 |
Realized and unrealized appreciation (depreciation), net | 15,751 | 10,892 | 21,868 | 24,938 |
Balance, end of period | 918,796 | 554,402 | 918,796 | 554,402 |
Increase (decrease) in unrealized appreciation/depreciation included in earnings related to financial assets still held at the reporting date | (5,741) | 7,390 | (11,172) | 21,922 |
Consolidated Funds | Equity securities | ||||
Changes in the fair value of the Level III investments | ||||
Balance, beginning of period | 160,422 | 142,358 | 162,577 | 130,690 |
Deconsolidation of fund | ||||
Transfer in | 0 | 444 | 0 | 0 |
Transfer out | 0 | 0 | 0 | (6,160) |
Purchases | 0 | 0 | 0 | 6,692 |
Sales | 0 | 0 | 0 | |
Settlements, net | 0 | |||
Amortized discounts/premiums | 0 | 0 | 0 | 0 |
Realized and unrealized appreciation (depreciation), net | 24,161 | 3,472 | 22,006 | 15,052 |
Balance, end of period | 184,583 | 146,274 | 184,583 | 146,274 |
Increase (decrease) in unrealized appreciation/depreciation included in earnings related to financial assets still held at the reporting date | (2,090) | 3,472 | (12,211) | 15,749 |
Consolidated Funds | Fixed Income | ||||
Changes in the fair value of the Level III investments | ||||
Balance, beginning of period | 240,763 | 278,829 | 267,889 | 242,253 |
Deconsolidation of fund | (233) | |||
Transfer in | 94,776 | 18,356 | 95,450 | 34,182 |
Transfer out | (68,328) | (108,757) | (73,777) | (108,806) |
Purchases | 273,879 | 56,292 | 313,462 | 93,111 |
Sales | (60,481) | (117,503) | (76,714) | |
Settlements, net | (57,206) | |||
Amortized discounts/premiums | (9) | (78) | 35 | 46 |
Realized and unrealized appreciation (depreciation), net | (1,500) | 3,418 | (2,948) | 3,507 |
Balance, end of period | 482,375 | 187,579 | 482,375 | 187,579 |
Increase (decrease) in unrealized appreciation/depreciation included in earnings related to financial assets still held at the reporting date | (3,785) | (277) | (1,671) | (785) |
Consolidated Funds | Partnership interests | ||||
Changes in the fair value of the Level III investments | ||||
Balance, beginning of period | 252,700 | 196,690 | 232,332 | 171,696 |
Deconsolidation of fund | ||||
Transfer in | 0 | 0 | 0 | 0 |
Transfer out | 0 | 0 | 0 | 0 |
Purchases | 6,000 | 50,000 | 16,000 | 73,000 |
Sales | (30,000) | 0 | (30,000) | |
Settlements, net | 0 | |||
Amortized discounts/premiums | 0 | 0 | 0 | 0 |
Realized and unrealized appreciation (depreciation), net | (7,092) | 1,050 | 3,276 | 3,044 |
Balance, end of period | 251,608 | 217,740 | 251,608 | 217,740 |
Increase (decrease) in unrealized appreciation/depreciation included in earnings related to financial assets still held at the reporting date | 0 | 1,050 | 3,276 | 3,044 |
Consolidated Funds | Derivatives, Net | ||||
Changes in the fair value of the Level III investments | ||||
Balance, beginning of period | 86 | 845 | 904 | (2,708) |
Deconsolidation of fund | ||||
Transfer in | 0 | 0 | 0 | 0 |
Transfer out | 0 | 0 | 0 | 0 |
Purchases | 0 | 0 | 0 | 0 |
Sales | (888) | (194) | 1,966 | |
Settlements, net | (17) | |||
Amortized discounts/premiums | (21) | (100) | (14) | 216 |
Realized and unrealized appreciation (depreciation), net | 182 | 2,952 | (466) | 3,335 |
Balance, end of period | 230 | 2,809 | 230 | 2,809 |
Increase (decrease) in unrealized appreciation/depreciation included in earnings related to financial assets still held at the reporting date | 134 | 3,145 | (566) | 3,914 |
Ares Management L.P | ||||
Changes in the fair value of the Level III investments | ||||
Balance, beginning of period | 287,753 | 141,663 | 239,927 | 122,521 |
Deconsolidation of fund | 78 | |||
Purchases | 60,242 | 48,731 | 80,853 | |
Sales | (219,744) | (3,324) | (220,571) | (5,241) |
Realized and unrealized appreciation (depreciation), net | 1,335 | (364) | 1,179 | 84 |
Balance, end of period | 69,344 | 198,217 | 69,344 | 198,217 |
Increase (decrease) in unrealized appreciation/depreciation included in earnings related to financial assets still held at the reporting date | 2,350 | (625) | 1,621 | (155) |
Contingent Considerations | ||||
Balance, beginning of period | 1,909 | 22,156 | ||
Purchases | 0 | 0 | ||
Sales/settlement | 0 | 0 | ||
Realized and unrealized appreciation (depreciation), net | 31 | (20,216) | ||
Balance, end of period | 1,940 | 1,940 | ||
Increase (decrease) in unrealized appreciation/depreciation included in earnings related to financial assets and liabilities still held at the reporting date | 31 | 61 | ||
Ares Management L.P | Fixed Income | ||||
Changes in the fair value of the Level III investments | ||||
Balance, beginning of period | 242,984 | 108,253 | 195,158 | 89,111 |
Deconsolidation of fund | 78 | |||
Purchases | 60,242 | 48,731 | 80,684 | |
Sales | (219,744) | (3,324) | (220,571) | (5,241) |
Realized and unrealized appreciation (depreciation), net | (1,115) | (364) | (1,271) | 253 |
Balance, end of period | 22,125 | 164,807 | 22,125 | 164,807 |
Increase (decrease) in unrealized appreciation/depreciation included in earnings related to financial assets still held at the reporting date | (100) | (625) | (829) | (155) |
Ares Management L.P | Partnership interests | ||||
Changes in the fair value of the Level III investments | ||||
Balance, beginning of period | 44,769 | 33,410 | 44,769 | 33,410 |
Deconsolidation of fund | 0 | |||
Purchases | 0 | 0 | 169 | |
Sales | 0 | 0 | 0 | 0 |
Realized and unrealized appreciation (depreciation), net | 2,450 | 0 | 2,450 | (169) |
Balance, end of period | 47,219 | 33,410 | 47,219 | 33,410 |
Increase (decrease) in unrealized appreciation/depreciation included in earnings related to financial assets still held at the reporting date | $ 2,450 | $ 0 | $ 2,450 | $ 0 |
FAIR VALUE (Valuation Technique
FAIR VALUE (Valuation Techniques) (Details) $ in Thousands | Jun. 30, 2018USD ($) | Dec. 31, 2017USD ($) |
Assets | ||
Partnership interest | $ 38,097 | $ 35,998 |
Consolidated Funds | ||
Assets | ||
Equity securities | 232,866 | 235,135 |
Partnership interest | 251,608 | 232,332 |
Collateralized loan obligations | 6,333,239 | 4,963,194 |
Fixed income securities | 6,483,593 | 5,115,375 |
Derivative instruments | 1,366 | |
Total assets | 6,969,020 | 5,584,208 |
Liabilities | ||
Liabilities, at fair value | (6,333,962) | (4,963,656) |
Consolidated Funds | Level III | ||
Assets | ||
Equity securities | 184,583 | 162,577 |
Partnership interest | 251,608 | 232,332 |
Collateralized loan obligations | 0 | 0 |
Fixed income securities | 482,375 | 267,889 |
Derivative instruments | 1,366 | |
Total assets | 919,519 | 664,164 |
Liabilities | ||
Liabilities, at fair value | (723) | (462) |
Consolidated Funds | Level III | Broker quotes and/or 3rd party pricing services | ||
Assets | ||
Equity securities | 60 | 126 |
Fixed income securities | 434,397 | 222,413 |
Derivative instruments | 953 | 1,366 |
Liabilities | ||
Derivatives instruments | (723) | (462) |
Consolidated Funds | Level III | Enterprise value market multiple analysis | ||
Assets | ||
Equity securities | $ 51,010 | $ 63,155 |
Consolidated Funds | Level III | Enterprise value market multiple analysis | EBITDA multiple | ||
Unobservable Input | ||
Equity securities | 7.7 | 2.7 |
Consolidated Funds | Level III | Enterprise value market multiple analysis | EBITDA multiple | Weighted Average | ||
Unobservable Input | ||
Equity securities | 7.66 | 2.7 |
Consolidated Funds | Level III | Market approach | ||
Assets | ||
Equity securities | $ 44,637 | $ 61,215 |
Fixed income securities | $ 233 | |
Consolidated Funds | Level III | Market approach | EBITDA multiple | ||
Unobservable Input | ||
Fixed income securities | 6.5 | |
Consolidated Funds | Level III | Market approach | EBITDA multiple | Weighted Average | ||
Unobservable Input | ||
Fixed income securities | 6.5 | |
Consolidated Funds | Level III | Market approach | Net income multiple | ||
Unobservable Input | ||
Equity securities | 51.8 | |
Consolidated Funds | Level III | Market approach | Net income multiple | Minimum | ||
Unobservable Input | ||
Equity securities | 27 | |
Consolidated Funds | Level III | Market approach | Net income multiple | Maximum | ||
Unobservable Input | ||
Equity securities | 36.2 | |
Consolidated Funds | Level III | Market approach | Net income multiple | Weighted Average | ||
Unobservable Input | ||
Equity securities | 51.8 | 33.7 |
Consolidated Funds | Level III | Market approach | Illiquidity discount | ||
Unobservable Input | ||
Equity securities | 0.250 | 0.25 |
Consolidated Funds | Level III | Market approach | Illiquidity discount | Weighted Average | ||
Unobservable Input | ||
Equity securities | 0.250 | 0.25 |
Consolidated Funds | Level III | Discounted cash flow | ||
Assets | ||
Partnership interest | $ 251,608 | $ 232,332 |
Consolidated Funds | Level III | Discounted cash flow | Discount rate | ||
Unobservable Input | ||
Partnership interest | 0.170 | 0.190 |
Consolidated Funds | Level III | Discounted cash flow | Discount rate | Weighted Average | ||
Unobservable Input | ||
Partnership interest | 0.170 | 0.190 |
Consolidated Funds | Level III | Transaction price | ||
Assets | ||
Equity securities | $ 88,876 | $ 38,081 |
Consolidated Funds | Level III | Income approach | ||
Assets | ||
Fixed income securities | $ 47,978 | $ 45,243 |
Consolidated Funds | Level III | Income approach | Yield | Minimum | ||
Unobservable Input | ||
Fixed income securities | 0.078 | 0.108 |
Consolidated Funds | Level III | Income approach | Yield | Maximum | ||
Unobservable Input | ||
Fixed income securities | 0.152 | 0.225 |
Consolidated Funds | Level III | Income approach | Yield | Weighted Average | ||
Unobservable Input | ||
Fixed income securities | 0.113 | 0.121 |
Ares Management L.P | ||
Assets | ||
Equity securities | $ 1,379 | $ 1,636 |
Partnership interest | 85,316 | 80,767 |
Total assets | 109,623 | 278,059 |
Liabilities | ||
Liabilities, at fair value | (2,252) | (2,639) |
Ares Management L.P | Level III | ||
Assets | ||
Equity securities | 0 | 0 |
Partnership interest | 47,219 | 44,769 |
Total assets | 69,344 | 239,927 |
Liabilities | ||
Liabilities, at fair value | 0 | 0 |
Ares Management L.P | Level III | Other | ||
Assets | ||
Partnership interest | 47,219 | 44,769 |
Ares Management L.P | Level III | Broker quotes and/or 3rd party pricing services | ||
Assets | ||
Collateralized loan obligations | $ 22,125 | $ 195,158 |
FAIR VALUE (Investments Using N
FAIR VALUE (Investments Using NAV per Share) (Details) - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 |
FAIR VALUE | ||
Fair Value | $ 38,097 | $ 35,998 |
Unfunded Commitments | 16,286 | 16,492 |
Non-core investments | ||
FAIR VALUE | ||
Fair Value | 38,097 | 35,998 |
Unfunded Commitments | $ 16,286 | $ 16,492 |
DERIVATIVE FINANCIAL INSTRUME55
DERIVATIVE FINANCIAL INSTRUMENTS (Details) - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 |
Liabilities | ||
Derivative asset, amount not offset | $ 800 | $ 800 |
Derivative liability, amount not offset | 500 | 500 |
Ares Management L.P | ||
Assets | ||
Notional amount, Assets | 13,733 | 13,724 |
Fair Value, Assets | 803 | 498 |
Liabilities | ||
Notional amount, Liabilities | 86,130 | 51,026 |
Fair Value, Liabilities | 2,252 | 2,639 |
Ares Management L.P | Foreign exchange contracts | ||
Assets | ||
Notional amount, Assets | 13,733 | 13,724 |
Fair Value, Assets | 803 | 498 |
Liabilities | ||
Notional amount, Liabilities | 86,130 | 51,026 |
Fair Value, Liabilities | 2,252 | 2,639 |
Consolidated Funds | ||
Assets | ||
Notional amount, Assets | 4,558 | 5,363 |
Fair Value, Assets | 953 | 1,366 |
Liabilities | ||
Notional amount, Liabilities | 1,351 | 1,840 |
Fair Value, Liabilities | 723 | 462 |
Derivative asset, amount offset | 300 | 300 |
Derivative liability, amount offset | 400 | 400 |
Consolidated Funds | Asset swap - other | ||
Assets | ||
Notional amount, Assets | 4,558 | 5,363 |
Fair Value, Assets | 953 | 1,366 |
Liabilities | ||
Notional amount, Liabilities | 1,351 | 1,840 |
Fair Value, Liabilities | $ 723 | $ 462 |
DEBT (Debt Obligations) (Detail
DEBT (Debt Obligations) (Details) - USD ($) | 1 Months Ended | 6 Months Ended | |
Oct. 31, 2014 | Jun. 30, 2018 | Dec. 31, 2017 | |
DEBT | |||
Repurchase agreement | $ 206,000,000 | ||
Ares Management L.P | |||
DEBT | |||
Carrying Value | 370,628,000 | $ 616,176,000 | |
Ares Management L.P | Collateralized loan obligations | |||
DEBT | |||
Collateralized loan obligations | 219,300,000 | ||
Ares Management L.P | Credit Facility | |||
DEBT | |||
Carrying Value | $ 125,000,000 | $ 210,000,000 | |
Interest Rate | 3.63% | 3.09% | |
Maximum borrowing capacity | $ 1,065,000,000 | ||
Unused commitment fees | 0.20% | ||
Interest rate | 0.00% | ||
Ares Management L.P | Credit Facility | Base rate | |||
DEBT | |||
Interest rate spread | 0.50% | ||
Ares Management L.P | Credit Facility | LIBOR | |||
DEBT | |||
Interest rate spread | 1.50% | ||
Ares Management L.P | Senior Notes | |||
DEBT | |||
Original Borrowing Amount | $ 250,000,000 | ||
Carrying Value | $ 245,628,000 | $ 245,308,000 | |
Interest Rate | 4.21% | 4.21% | |
Ares Management L.P | Term Loan 2015 | |||
DEBT | |||
Original Borrowing Amount | $ 0 | ||
Carrying Value | $ 0 | $ 35,037,000 | |
Interest Rate | 2.86% | ||
Commitment fee percentage | 0.025% | ||
Ares Management L.P | Term Loan 2016 | |||
DEBT | |||
Original Borrowing Amount | $ 0 | ||
Carrying Value | $ 0 | $ 25,948,000 | |
Interest Rate | 3.08% | ||
Ares Management L.P | Term Loan 2017 | |||
DEBT | |||
Commitment fee percentage | 0.03% | ||
Ares Management L.P | Term Loan 2017 Due January 2028 | |||
DEBT | |||
Original Borrowing Amount | $ 0 | ||
Carrying Value | 0 | $ 17,407,000 | |
Interest Rate | 2.90% | ||
Ares Management L.P | Term Loan 2017 Due October 2029 | |||
DEBT | |||
Original Borrowing Amount | 0 | ||
Carrying Value | 0 | $ 35,062,000 | |
Interest Rate | 2.90% | ||
Ares Management L.P | Term Loan 2017 Due July 2029 | |||
DEBT | |||
Original Borrowing Amount | 0 | ||
Carrying Value | 0 | $ 17,078,000 | |
Interest Rate | 2.88% | ||
Ares Management L.P | Term Loan 2017 Due October 2030 | |||
DEBT | |||
Original Borrowing Amount | 0 | ||
Carrying Value | $ 0 | $ 30,336,000 | |
Interest Rate | 2.77% | ||
Ares Management L.P | AFC Notes | |||
DEBT | |||
Debt issuance percentage | 98.268% |
DEBT (Debt Issuance Costs) (Det
DEBT (Debt Issuance Costs) (Details) - Ares Management L.P $ in Thousands | 6 Months Ended |
Jun. 30, 2018USD ($) | |
Credit Facility | |
Debt Issuance Costs [Roll Forward] | |
Unamortized debt issuance costs as of December 31, 2017 | $ 6,543 |
Debt issuance costs incurred | 0 |
Amortization of debt issuance costs | (786) |
Debt extinguishment expense | 0 |
Unamortized debt issuance costs as of June 30, 2018 | 5,757 |
Senior Notes | |
Debt Issuance Costs [Roll Forward] | |
Unamortized debt issuance costs as of December 31, 2017 | 1,571 |
Debt issuance costs incurred | 0 |
Amortization of debt issuance costs | (121) |
Debt extinguishment expense | 0 |
Unamortized debt issuance costs as of June 30, 2018 | 1,450 |
Term Loans | |
Debt Issuance Costs [Roll Forward] | |
Unamortized debt issuance costs as of December 31, 2017 | 1,171 |
Debt issuance costs incurred | 173 |
Amortization of debt issuance costs | (56) |
Debt extinguishment expense | (1,288) |
Unamortized debt issuance costs as of June 30, 2018 | 0 |
Repurchase Agreement Loan | |
Debt Issuance Costs [Roll Forward] | |
Unamortized debt issuance costs as of December 31, 2017 | 0 |
Debt issuance costs incurred | 259 |
Amortization of debt issuance costs | (7) |
Debt extinguishment expense | (252) |
Unamortized debt issuance costs as of June 30, 2018 | $ 0 |
DEBT (Loan Obligations of the C
DEBT (Loan Obligations of the Consolidated CLOs) (Details) - Consolidated Funds - USD ($) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2018 | Dec. 31, 2017 | |
DEBT | ||
Fair Value of Loan Obligations | $ 6,333,239,000 | $ 4,963,194,000 |
Collateralized loan obligations | ||
DEBT | ||
Loan Obligations | 6,509,086,000 | 5,077,751,000 |
Fair Value of Loan Obligations | 6,333,239,000 | 4,963,194,000 |
Senior secured notes | Collateralized loan obligations | ||
DEBT | ||
Loan Obligations | 6,189,246,000 | 4,801,582,000 |
Fair Value of Loan Obligations | $ 6,111,930,000 | $ 4,776,883,000 |
Weighted Average Remaining Maturity In Years | 11 years | 10 years 6 months 25 days |
Debt instrument face amount | $ 6,200,000,000 | |
Weighted average interest rate (as a percent) | 5.21% | |
Subordinated notes / preferred shares | Collateralized loan obligations | ||
DEBT | ||
Loan Obligations | $ 319,840,000 | $ 276,169,000 |
Fair Value of Loan Obligations | $ 221,309,000 | $ 186,311,000 |
Weighted Average Remaining Maturity In Years | 11 years 14 days | 11 years 3 months |
Debt instrument face amount | $ 319,800,000 |
DEBT (Credit Facilities of the
DEBT (Credit Facilities of the Consolidated Funds) (Details) - Consolidated Funds - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 |
DEBT | ||
Total borrowings | $ 138,438 | $ 138,198 |
Credit facility with maturity 1/1/2023 | ||
DEBT | ||
Total Capacity | 18,000 | |
Outstanding Loan | $ 13,376 | $ 12,942 |
Effective Rate | 3.88% | 2.88% |
Credit facility with maturity 06/30/2018 | ||
DEBT | ||
Total Capacity | $ 46,632 | |
Outstanding Loan | $ 46,632 | $ 48,042 |
Effective Rate | 1.55% | |
Interest rate | 0.00% | 0.00% |
Credit facility with maturity 03/07/2018 | ||
DEBT | ||
Total Capacity | $ 71,500 | |
Outstanding Loan | $ 71,500 | $ 71,500 |
Effective Rate | 3.47% | 2.88% |
Revolving Term Loan | ||
DEBT | ||
Total Capacity | $ 1,900 | |
Outstanding Loan | $ 1,216 | $ 0 |
Effective Rate | 8.07% | 0.00% |
Credit facility with maturity 08/19/2019 | ||
DEBT | ||
Total Capacity | $ 11,429 | |
Outstanding Loan | $ 5,714 | $ 5,714 |
Effective Rate | 9.32% | 5.86% |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Details) - USD ($) | 3 Months Ended | 6 Months Ended | |
Jun. 30, 2017 | Jun. 30, 2018 | Dec. 31, 2017 | |
COMMITMENTS AND CONTINGENCIES | |||
Unfunded capital commitments | $ 284,500,000 | $ 285,700,000 | |
Performance Income | |||
Performance Income | |||
Performance income subject to potential clawback provision | 472,900,000 | 476,100,000 | |
Performance income subject to potential claw back provision that are reimbursable by professionals | 367,500,000 | 370,000,000 | |
Performance income subject to potential claw back provision, repayment obligation | 200,000 | ||
Kayne Anderson Capital Advisors L.P. | |||
COMMITMENTS AND CONTINGENCIES | |||
Unfunded capital commitments | $ 16,300,000 | $ 16,500,000 | |
American Capital Ltd | ARCC | |||
COMMITMENTS AND CONTINGENCIES | |||
Maximum fees waived | $ 10,000,000 | ||
Term of fee waiver | 30 months | ||
Maximum amount shortfall that will not carryover, less than | $ 10,000,000 | ||
Remaining term | 15 months | ||
Remaining fees waived | $ 50,000,000 |
RELATED PARTY TRANSACTIONS (Det
RELATED PARTY TRANSACTIONS (Details) - USD ($) $ in Thousands | Jun. 21, 2019 | Jun. 01, 2019 | Jun. 30, 2018 | Jun. 25, 2018 | Mar. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 |
Ares Management L.P | |||||||||
Due from affiliates: | |||||||||
Due from affiliates | $ 172,428 | $ 165,750 | |||||||
Due to affiliates: | |||||||||
Due to affiliates | 62,344 | 39,184 | |||||||
Ares Management L.P | Affiliated entity | |||||||||
Due from affiliates: | |||||||||
Management fees receivable from non-consolidated funds | 132,132 | 126,506 | |||||||
Payments made on behalf of and amounts due from non-consolidated funds and employees | 40,296 | 39,244 | |||||||
Due to affiliates: | |||||||||
Management fee rebate payable to non-consolidated funds | 2,603 | 5,213 | |||||||
Management fees received in advance | 4,746 | 1,729 | |||||||
Tax receivable agreement liability | 12,925 | 3,503 | |||||||
Payable to company employees | 24,701 | 24,542 | |||||||
Payments made by non-consolidated funds on behalf of and payable by the Company | 17,369 | 4,197 | |||||||
Ares Management L.P | Affiliated entity | ARCC | |||||||||
Due to affiliates: | |||||||||
Asset coverage percentage | 200.00% | ||||||||
Annual base management fee percentage | 1.50% | ||||||||
Ares Management L.P | Affiliated entity | ARCC | Forecast | |||||||||
Due to affiliates: | |||||||||
Asset coverage percentage | 150.00% | ||||||||
Annual base management fee percentage | 1.00% | ||||||||
Debt to equity ratio | 1 | ||||||||
Ares Management L.P | Affiliated entity | ARCC | Rent and other occupancy expenses | |||||||||
Due to affiliates: | |||||||||
Due to affiliates | 11,800 | $ 600 | 2,200 | $ 3,000 | $ 3,200 | $ 2,900 | |||
Consolidated Funds | |||||||||
Due from affiliates: | |||||||||
Due from affiliates | 13,704 | 15,884 | |||||||
Due to affiliates: | |||||||||
Due to affiliates | 0 | 0 | |||||||
Consolidated Funds | Affiliated entity | |||||||||
Due from affiliates: | |||||||||
Due from affiliates | $ 13,704 | $ 15,884 |
INCOME TAXES (Narrative) (Detai
INCOME TAXES (Narrative) (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | Mar. 31, 2018 | |
Income Tax Disclosure [Abstract] | |||||
Income tax expense (benefit) | $ 36,903 | $ 1,253 | $ 24,528 | $ (33,011) | |
Valuation allowance | $ 28,900 |
INCOME TAXES (Provision for Inc
INCOME TAXES (Provision for Income Taxes) (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Provision for income taxes | ||||
Income tax expense (benefit) | $ 36,903 | $ 1,253 | $ 24,528 | $ (33,011) |
Pro Forma | ||||
Provision for income taxes | ||||
Income tax expense (benefit) | 19,211 | (8,664) | ||
Consolidated Funds | ||||
Provision for income taxes | ||||
Income tax expense (benefit) | 69 | 396 | 69 | 864 |
Consolidated Funds | Pro Forma | ||||
Provision for income taxes | ||||
Income tax expense (benefit) | 396 | 864 | ||
Ares Management L.P | ||||
Provision for income taxes | ||||
Income tax expense (benefit) | $ 36,834 | 857 | $ 24,459 | (33,875) |
Ares Management L.P | Pro Forma | ||||
Provision for income taxes | ||||
Income tax expense (benefit) | $ 18,815 | $ (9,528) |
EARNINGS PER COMMON SHARE (Anti
EARNINGS PER COMMON SHARE (Antidilutive) (Details) - shares | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
AOG | ||||
Earnings per common unit | ||||
Antidilutive securities excluded from calculation of earnings per common unit (in units) | 120,231,237 | 130,249,329 | 124,211,007 | 130,325,826 |
Options | ||||
Earnings per common unit | ||||
Antidilutive securities excluded from calculation of earnings per common unit (in units) | 19,111,390 | 21,155,026 | 19,471,589 | 21,244,858 |
Restricted units | ||||
Earnings per common unit | ||||
Antidilutive securities excluded from calculation of earnings per common unit (in units) | 15,271,381 | 39,082 | 15,811,964 | 14,463,590 |
EARNINGS PER COMMON SHARE (Comp
EARNINGS PER COMMON SHARE (Computation of Basic and Diluted Earnings Per Common Unit) (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Basic | ||||
Net income (loss) attributable to Ares Management, L.P. common shareholders | $ (17,200) | $ 44,453 | $ 18,323 | $ (2,106) |
Earnings distributed to participating securities (restricted units) | (1,970) | (419) | (3,877) | (1,246) |
Net income (loss) available to common shareholders | $ (19,170) | $ 44,034 | $ 14,446 | $ (3,352) |
Basic weighted-average common shares (in shares) | 98,037,252 | 81,829,086 | 91,861,946 | 81,469,967 |
Earnings per common share, basic (in dollars per share) | $ (0.20) | $ 0.54 | $ 0.16 | $ (0.04) |
Diluted | ||||
Earnings distributed to participating securities (restricted units) | $ (1,970) | $ 0 | $ (3,877) | $ (1,246) |
Net income (loss) available to common shareholders | $ (19,170) | $ 44,453 | $ 14,446 | $ (3,352) |
Effect of dilutive shares: | ||||
Diluted weighted-average common shares (in shares) | 98,037,252 | 84,319,882 | 91,861,946 | 81,469,967 |
Diluted earnings (loss) per common share (in dollars per share) | $ (0.20) | $ 0.53 | $ 0.16 | $ (0.04) |
Restricted units | ||||
Effect of dilutive shares: | ||||
Dilutive shares (in shares) | 0 | 2,490,796 | 0 | 0 |
EQUITY COMPENSATION (Equity Inc
EQUITY COMPENSATION (Equity Incentive Plan) (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | Jan. 01, 2018 | |
Equity compensation | |||||
Equity compensation expenses | $ 22,507 | $ 18,917 | $ 43,594 | $ 34,006 | |
Restricted units | |||||
Equity compensation | |||||
Equity compensation expenses | 18,516 | 14,601 | 36,547 | 25,818 | |
Options | |||||
Equity compensation | |||||
Equity compensation expenses | 3,630 | 3,931 | 6,293 | 7,413 | |
Phantom units | |||||
Equity compensation | |||||
Equity compensation expenses | $ 361 | $ 385 | $ 754 | $ 775 | |
Ares Management L.P | |||||
Equity compensation | |||||
Total number of units available for grant under the Equity Incentive Plan (in units) | 29,311,383 | 29,311,383 | 31,853,504 |
EQUITY COMPENSATION (Restricted
EQUITY COMPENSATION (Restricted Units) (Details) - Restricted units $ / shares in Units, $ in Millions | 3 Months Ended | 6 Months Ended |
Jun. 30, 2018USD ($)$ / sharesshares | Jun. 30, 2018USD ($)$ / sharesshares | |
Equity compensation | ||
Distribution equivalents made to holders | $ | $ 5.8 | $ 12.4 |
Units | ||
Balance at the beginning of the period (in units) | shares | 13,751,888 | |
Granted (in units) | shares | 3,681,702 | |
Vested (in units) | shares | (1,903,923) | |
Forfeited (in units) | shares | (258,286) | |
Balance at the end of the period (in units) | shares | 15,271,381 | 15,271,381 |
Weighted Average Grant Date Fair Value | ||
Balance at the beginning of the period (in dollars per share) | $ / shares | $ 17.58 | |
Granted (in dollars per share) | $ / shares | 23.58 | |
Vested (in dollars per share) | $ / shares | 16.93 | |
Forfeited (in dollars per share) | $ / shares | 19.55 | |
Balance at the end of the period (in dollars per share) | $ / shares | $ 19.07 | $ 19.07 |
Unrecognized compensation expenses | $ | $ 215 | $ 215 |
Weighted average period of compensation expense expected to be recognized | 3 years 5 months 23 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 | 6 Months Ended | 12 Months Ended |
Jun. 30, 2018 | Dec. 31, 2017 | |
Options | ||
Balance at the beginning of the period (in units) | 20,495,025 | |
Granted (in units) | 0 | |
Exercised (in units) | (50,000) | |
Expired (in units) | (889,432) | |
Forfeited (in units) | (444,203) | |
Balance at the end of the period (in units) | 19,111,390 | 20,495,025 |
Exercisable at the end of the period (in units) | 12,715,808 | |
Weighted Average Exercise Price | ||
Balance at the beginning of the period (in dollars per unit) | $ 18.99 | |
Granted (in dollars per unit) | ||
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 | 6 years 1 month 2 days | |
Expected to vest at the end of the period | 5 years 9 months 22 days | |
Exercisable at the end of the period | 5 years 9 months 11 days | |
Aggregate Intrinsic Value | ||
Beginning balance | $ 20,611 | |
Exercised | 90 | |
Ending balance | 32,655 | $ 20,611 |
Exercisable | 21,672 | |
Unrecognized compensation expenses | $ 12,300 | |
Weighted average period of compensation expense expected to be recognized | 10 months 6 days | |
Stock option exercise | $ 1,000 | |
Tax benefit from exercise of stock options | $ 40 |
EQUITY COMPENSATION (Phantom Un
EQUITY COMPENSATION (Phantom Units) (Details) - Phantom Shares $ / shares in Units, $ in Millions | 6 Months Ended |
Jun. 30, 2018USD ($)$ / sharesshares | |
Units | |
Balance at the beginning of the period (in units) | shares | 156,153 |
Vested (in units) | shares | (70,352) |
Forfeited (in units) | shares | (16,200) |
Balance at the end of the period (in units) | shares | 69,601 |
Weighted Average Grant Date Fair Value | |
Balance at the beginning of the period (in dollars per share) | $ 19 |
Vested (in dollars per share) | 19 |
Forfeited (in dollars per share) | 19 |
Balance at the end of the period (in dollars per share) | 19 |
Share price (USD per share) | $ 20.7 |
Unrecognized compensation expenses | $ | $ 1.2 |
Weighted average period of compensation expense expected to be recognized | 10 months 6 days |
Cash used to settle awards | $ | $ 1.6 |
EQUITY (Details)
EQUITY (Details) - USD ($) | Mar. 12, 2018 | Apr. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | Dec. 31, 2017 |
STOCKHOLDERS' EQUITY AND MEMBERS' CAPITAL | ||||||||
AOG Units (in units) | 218,527,645 | 218,527,645 | 212,356,696 | |||||
Direct Ownership Interest | 100.00% | 100.00% | 100.00% | |||||
Dividend rate, percentage | 7.00% | |||||||
Redemption price (dollars per unit) | $ 25 | $ 25 | ||||||
Preferred Equity | ||||||||
STOCKHOLDERS' EQUITY AND MEMBERS' CAPITAL | ||||||||
Issuance of common shares (in shares) | 12,400,000 | 12,400,000 | 12,400,000 | |||||
Ares Management, L.P. | ||||||||
STOCKHOLDERS' EQUITY AND MEMBERS' CAPITAL | ||||||||
AOG Units (in units) | 98,398,340 | 98,398,340 | 82,280,033 | |||||
Direct Ownership Interest | 45.03% | 45.03% | 38.75% | |||||
Daily Average Ownership | 44.92% | 38.58% | 42.51% | 38.47% | ||||
Ares Management L.P | Affiliate of Alleghany Corporation | ||||||||
STOCKHOLDERS' EQUITY AND MEMBERS' CAPITAL | ||||||||
Shares issued (in shares) | 9,750,000 | |||||||
Ares Management, L.P. | Affiliate of Alleghany Corporation | ||||||||
STOCKHOLDERS' EQUITY AND MEMBERS' CAPITAL | ||||||||
Shares converted (in shares) | 9,750,000 | |||||||
Ares Owners Holding L.P. | ||||||||
STOCKHOLDERS' EQUITY AND MEMBERS' CAPITAL | ||||||||
AOG Units (in units) | 117,379,305 | 117,379,305 | 117,576,663 | |||||
Direct Ownership Interest | 53.71% | 53.71% | 55.36% | |||||
Daily Average Ownership | 53.82% | 55.53% | 54.40% | 55.63% | ||||
Affiliate of Alleghany Corporation | ||||||||
STOCKHOLDERS' EQUITY AND MEMBERS' CAPITAL | ||||||||
AOG Units (in units) | 2,750,000 | 2,750,000 | 12,500,000 | |||||
Direct Ownership Interest | 1.26% | 1.26% | 5.89% | |||||
Daily Average Ownership | 1.26% | 5.89% | 3.09% | 5.90% | ||||
Secondary Offering | ||||||||
STOCKHOLDERS' EQUITY AND MEMBERS' CAPITAL | ||||||||
Number of units sold (in units) | 15,000,000 | |||||||
Fees related to secondary offering | $ 500,000 | |||||||
Secondary Offering | Ares Management L.P | ||||||||
STOCKHOLDERS' EQUITY AND MEMBERS' CAPITAL | ||||||||
Number of units sold (in units) | 5,000,000 | |||||||
Proceeds from sale of equity | $ 105,900,000 | |||||||
Secondary Offering | ADIA | ||||||||
STOCKHOLDERS' EQUITY AND MEMBERS' CAPITAL | ||||||||
Number of units sold (in units) | 10,000,000 | |||||||
Proceeds from sale of equity | $ 0 | |||||||
Underwriting | Ares Management L.P | ||||||||
STOCKHOLDERS' EQUITY AND MEMBERS' CAPITAL | ||||||||
Number of units sold (in units) | 1,130,000 |
SEGMENT REPORTING (Narrative) (
SEGMENT REPORTING (Narrative) (Details) $ in Billions | 6 Months Ended |
Jun. 30, 2018USD ($)segmentgroupfund | |
Segment reporting | |
Number operating segments | segment | 3 |
Ares Management L.P | Credit Group | |
Segment reporting | |
Assets under management | $ | $ 86.9 |
Number of funds managed | 152 |
Ares Management L.P | Private Equity | |
Segment reporting | |
Assets under management | $ | $ 23.6 |
Number of private equity commingled funds focus North America and Europe | 5 |
Number of funds focused on U.S. energy and power assets | 6 |
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 | $ | $ 10.9 |
Number of funds managed | 43 |
Ares Management L.P | OMG | |
Segment reporting | |
Number of independent shared resource groups to support entity's operating segments | group | 6 |
Greater China | Ares Management L.P | Private Equity | |
Segment reporting | |
Number of commingled funds | 3 |
SEGMENT REPORTING (Operating Se
SEGMENT REPORTING (Operating Segments) (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Operating segment | ||||
Segment reporting | ||||
Fee related earnings | $ 112,586 | $ 102,834 | $ 222,265 | $ 194,822 |
Performance income—realized | 122,608 | 74,130 | 145,715 | 82,935 |
Performance income—unrealized | (124,343) | 263,629 | (89,225) | 312,890 |
Total performance related compensation - realized | (87,881) | (52,973) | (102,750) | (58,274) |
Investment income (loss)—unrealized | 9 | 25,715 | (5,565) | 35,249 |
Net investment income (loss) | 10,495 | 4,522 | 12,431 | 5,908 |
Performance related earnings | 21,774 | 106,291 | 50,483 | 134,575 |
Economic net income | 134,360 | 209,125 | 272,748 | 329,397 |
Realized income | 157,808 | 128,513 | 277,661 | 225,391 |
OMG | ||||
Segment reporting | ||||
Compensation and benefits | (31,059) | (30,584) | (61,665) | (56,537) |
General, administrative and other expenses | (19,489) | (18,862) | (38,105) | (38,175) |
Fee related earnings | (50,548) | (49,446) | (99,770) | (94,712) |
Performance income—realized | 0 | 0 | 0 | 0 |
Performance income—unrealized | 0 | 0 | 0 | 0 |
Total performance related compensation - realized | 0 | 0 | 0 | 0 |
Performance related compensation—unrealized | 0 | 0 | 0 | 0 |
Net performance income | 0 | 0 | 0 | 0 |
Investment income—realized | 798 | 1,340 | 1,636 | 3,199 |
Investment income (loss)—unrealized | 2,866 | (2,728) | 4,097 | (4,135) |
Interest and other investment income | 623 | 225 | 1,870 | 1,099 |
Interest expense | (588) | (463) | (1,136) | (939) |
Net investment income (loss) | 3,699 | (1,626) | 6,467 | (776) |
Performance related earnings | 3,699 | (1,626) | 6,467 | (776) |
Economic net income | (46,849) | (51,072) | (93,303) | (95,488) |
Realized income | (49,754) | (48,346) | (97,534) | (91,551) |
Total | ||||
Segment reporting | ||||
Compensation and benefits | (110,391) | (103,846) | (218,115) | (204,456) |
General, administrative and other expenses | (37,096) | (34,346) | (71,814) | (68,629) |
Fee related earnings | 62,038 | 53,388 | 122,495 | 100,110 |
Performance income—realized | 122,608 | 74,130 | 145,715 | 82,935 |
Performance income—unrealized | (124,343) | 263,629 | (89,225) | 312,890 |
Total performance related compensation - realized | (87,881) | (52,973) | (102,750) | (58,274) |
Performance related compensation—unrealized | 100,886 | (208,732) | 89,877 | (244,133) |
Net performance income | 11,270 | 76,054 | 43,617 | 93,418 |
Investment income—realized | 10,159 | 6,955 | 15,789 | 11,494 |
Investment income (loss)—unrealized | 4,248 | 20,310 | (172) | 31,594 |
Interest and other investment income | 5,872 | 6,700 | 10,661 | 7,526 |
Interest expense | (6,076) | (5,354) | (12,945) | (10,233) |
Net investment income (loss) | 14,203 | 28,611 | 13,333 | 40,381 |
Performance related earnings | 25,473 | 104,665 | 56,950 | 133,799 |
Economic net income | 87,511 | 158,053 | 179,445 | 233,909 |
Realized income | 108,054 | 80,167 | 180,127 | 133,840 |
Ares Management L.P | ||||
Segment reporting | ||||
Total revenues | 204,163 | 572,197 | 470,252 | 816,441 |
Compensation and benefits | (138,992) | (131,219) | (273,631) | (255,558) |
General, administrative and other expenses | (59,918) | (50,751) | (104,368) | (98,089) |
Ares Management L.P | Affiliated entity | ARCC | ||||
Segment reporting | ||||
Management fees, part I fees | 29,866 | 19,143 | 58,283 | 52,400 |
Ares Management L.P | Operating segment | ||||
Segment reporting | ||||
Compensation and benefits | (79,332) | (73,262) | (156,450) | (147,919) |
General, administrative and other expenses | (17,607) | (15,484) | (33,709) | (30,454) |
Fee related earnings | 112,586 | 102,834 | 222,265 | 194,822 |
Performance income—realized | 122,608 | 74,130 | 145,715 | 82,935 |
Performance income—unrealized | (124,343) | 263,629 | (89,225) | 312,890 |
Total performance related compensation - realized | (87,881) | (52,973) | (102,750) | (58,274) |
Performance related compensation—unrealized | 100,886 | (208,732) | 89,877 | (244,133) |
Net performance income | 11,270 | 76,054 | 43,617 | 93,418 |
Investment income—realized | 9,361 | 5,615 | 14,153 | 8,295 |
Investment income (loss)—unrealized | 1,382 | 23,038 | (4,269) | 35,729 |
Interest and other investment income | 5,249 | 6,475 | 8,791 | 6,427 |
Interest expense | (5,488) | (4,891) | (11,809) | (9,294) |
Net investment income (loss) | 10,504 | 30,237 | 6,866 | 41,157 |
Performance related earnings | 21,774 | 106,291 | 50,483 | 134,575 |
Economic net income | 134,360 | 209,125 | 272,748 | 329,397 |
Realized income | 157,808 | 128,513 | 277,661 | 225,391 |
Ares Management L.P | Operating segment | Credit Group | ||||
Segment reporting | ||||
Compensation and benefits | (51,892) | (45,160) | (102,172) | (96,863) |
General, administrative and other expenses | (11,041) | (8,048) | (20,670) | (16,089) |
Fee related earnings | 79,792 | 65,109 | 157,379 | 131,215 |
Performance income—realized | 41,672 | 7,883 | 46,743 | 16,661 |
Performance income—unrealized | (4,568) | 5,093 | 11,524 | 8,029 |
Total performance related compensation - realized | (23,577) | (1,898) | (26,665) | (7,183) |
Performance related compensation—unrealized | 2,759 | (6,079) | 9,935 | (7,537) |
Net performance income | 16,286 | 4,999 | 41,537 | 9,970 |
Investment income—realized | 595 | 2,525 | 1,366 | 2,843 |
Investment income (loss)—unrealized | 1,617 | (3,450) | 1,348 | 1,139 |
Interest and other investment income | 3,428 | 2,958 | 5,624 | 2,939 |
Interest expense | (3,596) | (3,065) | (8,269) | (5,523) |
Net investment income (loss) | 2,044 | (1,032) | 69 | 1,398 |
Performance related earnings | 18,330 | 3,967 | 41,606 | 11,368 |
Economic net income | 98,122 | 69,076 | 198,985 | 142,583 |
Realized income | 97,921 | 73,181 | 176,778 | 143,126 |
Ares Management L.P | Operating segment | Private Equity | ||||
Segment reporting | ||||
Compensation and benefits | (18,672) | (18,388) | (37,871) | (31,606) |
General, administrative and other expenses | (4,175) | (4,345) | (8,216) | (8,543) |
Fee related earnings | 26,808 | 34,032 | 53,795 | 56,775 |
Performance income—realized | 80,415 | 64,780 | 84,813 | 64,780 |
Performance income—unrealized | (133,605) | 228,747 | (112,539) | 260,984 |
Total performance related compensation - realized | (64,311) | (50,914) | (67,871) | (50,914) |
Performance related compensation—unrealized | 106,912 | (184,021) | 88,218 | (209,526) |
Net performance income | (10,589) | 58,592 | (7,379) | 65,324 |
Investment income—realized | 9,016 | 2,717 | 9,687 | 3,296 |
Investment income (loss)—unrealized | 290 | 25,354 | (3,860) | 33,900 |
Interest and other investment income | 3,039 | 1,983 | 3,368 | 2,135 |
Interest expense | (1,440) | (1,397) | (2,668) | (2,910) |
Net investment income (loss) | 10,905 | 28,657 | 6,527 | 36,421 |
Performance related earnings | 316 | 87,249 | (852) | 101,745 |
Economic net income | 27,124 | 121,281 | 52,943 | 158,520 |
Realized income | 53,408 | 50,151 | 80,735 | 72,496 |
Ares Management L.P | Operating segment | Real Estate | ||||
Segment reporting | ||||
Compensation and benefits | (8,768) | (9,714) | (16,407) | (19,450) |
General, administrative and other expenses | (2,391) | (3,091) | (4,823) | (5,822) |
Fee related earnings | 5,986 | 3,693 | 11,091 | 6,832 |
Performance income—realized | 521 | 1,467 | 14,159 | 1,494 |
Performance income—unrealized | 13,830 | 29,789 | 11,790 | 43,877 |
Total performance related compensation - realized | 7 | (161) | (8,214) | (177) |
Performance related compensation—unrealized | (8,785) | (18,632) | (8,276) | (27,070) |
Net performance income | 5,573 | 12,463 | 9,459 | 18,124 |
Investment income—realized | (250) | 373 | 3,100 | 2,156 |
Investment income (loss)—unrealized | (525) | 1,134 | (1,757) | 690 |
Interest and other investment income | (1,218) | 1,534 | (201) | 1,353 |
Interest expense | (452) | (429) | (872) | (861) |
Net investment income (loss) | (2,445) | 2,612 | 270 | 3,338 |
Performance related earnings | 3,128 | 15,075 | 9,729 | 21,462 |
Economic net income | 9,114 | 18,768 | 20,820 | 28,294 |
Realized income | 6,479 | 5,181 | 20,148 | 9,769 |
Management fees | OMG | ||||
Segment reporting | ||||
Total revenues | 0 | 0 | 0 | 0 |
Management fees | Total | ||||
Segment reporting | ||||
Total revenues | 202,304 | 185,560 | 399,130 | 362,341 |
Management fees | Ares Management L.P | ||||
Segment reporting | ||||
Total revenues | 194,032 | 180,768 | 383,547 | 352,813 |
Management fees | Ares Management L.P | Operating segment | ||||
Segment reporting | ||||
Total revenues | 202,304 | 185,560 | 399,130 | 362,341 |
Management fees | Ares Management L.P | Operating segment | Credit Group | ||||
Segment reporting | ||||
Total revenues | 135,848 | 112,654 | 267,614 | 234,001 |
Management fees | Ares Management L.P | Operating segment | Private Equity | ||||
Segment reporting | ||||
Total revenues | 49,318 | 56,427 | 99,205 | 96,246 |
Management fees | Ares Management L.P | Operating segment | Real Estate | ||||
Segment reporting | ||||
Total revenues | 17,138 | 16,479 | 32,311 | 32,094 |
Other fees | OMG | ||||
Segment reporting | ||||
Total revenues | 0 | 0 | 0 | 0 |
Other fees | Total | ||||
Segment reporting | ||||
Total revenues | 7,221 | 6,020 | 13,294 | 10,854 |
Other fees | Ares Management L.P | Operating segment | ||||
Segment reporting | ||||
Total revenues | 7,221 | 6,020 | 13,294 | 10,854 |
Other fees | Ares Management L.P | Operating segment | Credit Group | ||||
Segment reporting | ||||
Total revenues | 6,877 | 5,663 | 12,607 | 10,166 |
Other fees | Ares Management L.P | Operating segment | Private Equity | ||||
Segment reporting | ||||
Total revenues | 337 | 338 | 677 | 678 |
Other fees | Ares Management L.P | Operating segment | Real Estate | ||||
Segment reporting | ||||
Total revenues | $ 7 | $ 19 | $ 10 | $ 10 |
SEGMENT REPORTING (Revenue, Exp
SEGMENT REPORTING (Revenue, Expenses and Other Income (Expense) (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Segment revenues | ||||
Total segment revenues | $ 204,163 | $ 572,197 | $ 470,252 | $ 816,441 |
Segment expenses | ||||
Total expenses | 221,017 | 448,197 | 427,300 | 939,664 |
Segment other income | ||||
Total other income (expense) | 67,926 | (8,920) | 70,166 | 47,715 |
Operating segment | ||||
Segment revenues | ||||
Performance income—realized | 122,608 | 74,130 | 145,715 | 82,935 |
Performance income—unrealized | (124,343) | 263,629 | (89,225) | 312,890 |
Segment expenses | ||||
Total performance related compensation - realized | 87,881 | 52,973 | 102,750 | 58,274 |
Segment other income | ||||
Investment income (loss)—unrealized | 9 | 25,715 | (5,565) | 35,249 |
Ares Management L.P | ||||
Segment revenues | ||||
Total revenues | 204,163 | 572,197 | 470,252 | 816,441 |
Segment expenses | ||||
Compensation and benefits | 138,992 | 131,219 | 273,631 | 255,558 |
General, administrative and other expenses | 59,918 | 50,751 | 104,368 | 98,089 |
Ares Management L.P | Operating segment | ||||
Segment revenues | ||||
Performance income—realized | 122,608 | 74,130 | 145,715 | 82,935 |
Performance income—unrealized | (124,343) | 263,629 | (89,225) | 312,890 |
Total segment revenues | 207,790 | 529,339 | 468,914 | 769,020 |
Segment expenses | ||||
Compensation and benefits | 79,332 | 73,262 | 156,450 | 147,919 |
General, administrative and other expenses | 17,607 | 15,484 | 33,709 | 30,454 |
Total performance related compensation - realized | 87,881 | 52,973 | 102,750 | 58,274 |
Total performance fee compensation - unrealized | (100,886) | 208,732 | (89,877) | 244,133 |
Total expenses | 83,934 | 350,451 | 203,032 | 480,780 |
Segment other income | ||||
Investment income—realized | 9,361 | 5,615 | 14,153 | 8,295 |
Investment income (loss)—unrealized | 1,382 | 23,038 | (4,269) | 35,729 |
Interest and other investment income | 5,249 | 6,475 | 8,791 | 6,427 |
Interest expense | (5,488) | (4,891) | (11,809) | (9,294) |
Total other income (expense) | 10,504 | 30,237 | 6,866 | 41,157 |
Management fees | Ares Management L.P | ||||
Segment revenues | ||||
Total revenues | 194,032 | 180,768 | 383,547 | 352,813 |
Management fees | Ares Management L.P | Operating segment | ||||
Segment revenues | ||||
Total revenues | 202,304 | 185,560 | 399,130 | 362,341 |
Other fees | Ares Management L.P | Operating segment | ||||
Segment revenues | ||||
Total revenues | $ 7,221 | $ 6,020 | $ 13,294 | $ 10,854 |
SEGMENT REPORTING (Revenue Reco
SEGMENT REPORTING (Revenue Reconciliation) (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Revenue adjustment | ||||
Revenues | $ 204,163 | $ 572,197 | $ 470,252 | $ 816,441 |
Ares Management L.P | ||||
Revenue adjustment | ||||
Total revenues | 204,163 | 572,197 | 470,252 | 816,441 |
Operating segment | Ares Management L.P | ||||
Revenue adjustment | ||||
Revenues | 207,790 | 529,339 | 468,914 | 769,020 |
Reconciling items | ||||
Revenue adjustment | ||||
Revenues | (3,627) | 42,858 | 1,338 | 47,421 |
Principal investment income | 14,722 | 34,166 | 17,430 | 47,335 |
Reconciling items | Non-Controlling interest | Subsidiaries | ||||
Revenue adjustment | ||||
Revenues | (27) | (54) | (47) | (54) |
Reconciling items | Performance income reclass | ||||
Revenue adjustment | ||||
Performance fee reclass | 31 | (217) | 1,006 | (241) |
Consolidated Funds | Reconciling items | ||||
Revenue adjustment | ||||
Revenues | (25,123) | (169) | (30,233) | (18,357) |
Administrative, transaction and other fees | ||||
Revenue adjustment | ||||
Total revenues | 0 | 0 | 0 | 0 |
Administrative, transaction and other fees | Ares Management L.P | ||||
Revenue adjustment | ||||
Total revenues | 13,964 | 15,098 | 26,429 | 29,538 |
Administrative, transaction and other fees | Reconciling items | ||||
Revenue adjustment | ||||
Total revenues | $ 6,770 | $ 9,132 | $ 13,182 | $ 18,738 |
SEGMENT REPORTING (Expenses) (D
SEGMENT REPORTING (Expenses) (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||||||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | Mar. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Segment Reporting, Other Significant Reconciling Item [Line Items] | |||||||||
Expenses | $ 221,017 | $ 448,197 | $ 427,300 | $ 939,664 | |||||
Equity compensation expenses | 22,507 | 18,917 | 43,594 | 34,006 | |||||
Ares Management L.P | |||||||||
Segment Reporting, Other Significant Reconciling Item [Line Items] | |||||||||
Acquisition and merger-related expenses | 0 | 0 | 0 | 275,177 | |||||
Due to affiliates | 62,344 | 62,344 | $ 39,184 | ||||||
Ares Management L.P | Affiliated entity | ARCC | Rent and other occupancy expenses | |||||||||
Segment Reporting, Other Significant Reconciling Item [Line Items] | |||||||||
Due to affiliates | 11,800 | 11,800 | $ 600 | 2,200 | $ 3,000 | $ 3,200 | $ 2,900 | ||
Consolidated Funds | |||||||||
Segment Reporting, Other Significant Reconciling Item [Line Items] | |||||||||
Due to affiliates | 0 | 0 | 0 | ||||||
Operating segment | |||||||||
Segment Reporting, Other Significant Reconciling Item [Line Items] | |||||||||
Acquisition and merger-related expenses | 47 | 756 | (272) | 255,844 | |||||
Equity compensation expenses | 22,507 | 18,917 | 43,594 | 34,006 | |||||
Placement fees and underwriting costs | 1,852 | 6,383 | 3,516 | 9,822 | |||||
Amortization of intangibles | 3,285 | 5,274 | 6,572 | 10,549 | |||||
Depreciation expense | 4,426 | 2,774 | 8,315 | 5,990 | |||||
Operating segment | Ares Management L.P | |||||||||
Segment Reporting, Other Significant Reconciling Item [Line Items] | |||||||||
Expenses | 83,934 | 350,451 | 203,032 | 480,780 | |||||
Reconciling items | |||||||||
Segment Reporting, Other Significant Reconciling Item [Line Items] | |||||||||
Expenses | 137,083 | 97,746 | 224,268 | 458,884 | |||||
Administrative fees | 6,770 | 9,132 | 13,182 | 18,738 | |||||
Acquisition and merger-related expenses | 47 | 724 | (272) | 276,060 | |||||
Equity compensation expenses | 22,507 | 18,917 | 43,594 | 34,006 | |||||
Placement fees and underwriting costs | 1,852 | 6,383 | 3,516 | 9,822 | |||||
Amortization of intangibles | 3,285 | 5,274 | 6,572 | 10,549 | |||||
Depreciation expense | 4,426 | 2,774 | 8,315 | 5,990 | |||||
Other expenses | 11,836 | 0 | 11,836 | 0 | |||||
Reconciling items | Non-Controlling interest | Subsidiaries | |||||||||
Segment Reporting, Other Significant Reconciling Item [Line Items] | |||||||||
Expenses | 700 | 574 | 1,327 | 574 | |||||
Reconciling items | Consolidated Funds | |||||||||
Segment Reporting, Other Significant Reconciling Item [Line Items] | |||||||||
Expenses | 47,382 | 8,825 | 56,011 | 19,334 | |||||
Eliminations | |||||||||
Segment Reporting, Other Significant Reconciling Item [Line Items] | |||||||||
Expenses | (12,270) | (4,303) | (19,583) | (10,901) | |||||
Acquisition and merger-related expenses | 0 | ||||||||
Eliminations | Ares Management L.P | |||||||||
Segment Reporting, Other Significant Reconciling Item [Line Items] | |||||||||
Due to affiliates | 0 | 0 | |||||||
Eliminations | Consolidated Funds | |||||||||
Segment Reporting, Other Significant Reconciling Item [Line Items] | |||||||||
Expenses | (12,270) | (4,303) | (19,583) | (10,901) | |||||
Due to affiliates | (6,772) | (6,772) | $ (11,285) | ||||||
OMG | |||||||||
Segment Reporting, Other Significant Reconciling Item [Line Items] | |||||||||
Expenses | $ 50,548 | $ 49,446 | $ 99,770 | $ 94,712 |
SEGMENT REPORTING (Other Income
SEGMENT REPORTING (Other Income (Expense)) (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Segment Reporting, Other Significant Reconciling Item [Line Items] | ||||
Total consolidated other income | $ 67,926 | $ (8,920) | $ 70,166 | $ 47,715 |
Operating segment | ||||
Segment Reporting, Other Significant Reconciling Item [Line Items] | ||||
Other non-cash expense | (13,551) | 0 | (13,558) | 0 |
Offering costs | (3) | 5 | (3) | (655) |
Operating segment | Ares Management L.P | ||||
Segment Reporting, Other Significant Reconciling Item [Line Items] | ||||
Total consolidated other income | 10,504 | 30,237 | 6,866 | 41,157 |
Reconciling items | ||||
Segment Reporting, Other Significant Reconciling Item [Line Items] | ||||
Total consolidated other income | 57,422 | (39,157) | 63,300 | 6,558 |
Principal investment income | (14,722) | (34,166) | (17,430) | (47,335) |
Changes in value of contingent consideration | 0 | (32) | 0 | 20,216 |
Other non-cash expense | (1,715) | 0 | (1,722) | 0 |
Offering costs | (3) | 5 | (3) | (655) |
Reconciling items | Subsidiaries | Non-Controlling interest | ||||
Segment Reporting, Other Significant Reconciling Item [Line Items] | ||||
Total consolidated other income | 8 | 5 | 15 | 5 |
Reconciling items | Performance income reclass | ||||
Segment Reporting, Other Significant Reconciling Item [Line Items] | ||||
Performance fee reclass | (31) | 217 | (1,006) | 241 |
Reconciling items | Consolidated Funds | ||||
Segment Reporting, Other Significant Reconciling Item [Line Items] | ||||
Total consolidated other income | 69,193 | (3,150) | 76,445 | 35,295 |
Eliminations | ||||
Segment Reporting, Other Significant Reconciling Item [Line Items] | ||||
Total consolidated other income | 993 | (410) | 534 | (433) |
Eliminations | Consolidated Funds | ||||
Segment Reporting, Other Significant Reconciling Item [Line Items] | ||||
Total consolidated other income | 993 | (410) | 534 | (433) |
OMG | ||||
Segment Reporting, Other Significant Reconciling Item [Line Items] | ||||
Total consolidated other income | $ 3,699 | $ (1,626) | $ 6,467 | $ (776) |
SEGMENT REPORTING (Reconciliati
SEGMENT REPORTING (Reconciliation of Income Before Taxes) (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||||||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | Mar. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Economic net income | |||||||||
Income (loss) before taxes | $ 51,072 | $ 115,080 | $ 113,118 | $ (75,508) | |||||
Adjustments: | |||||||||
Equity compensation expenses | 22,507 | 18,917 | 43,594 | 34,006 | |||||
Consolidated Funds | |||||||||
Adjustments: | |||||||||
(Income) loss before taxes of non-controlling interests in Consolidated Funds, net of eliminations | 9,882 | (8,647) | 10,249 | 7,208 | |||||
Total investment income - realized | (92,633) | (38,326) | (157,055) | (79,818) | |||||
Due to affiliates | 0 | 0 | $ 0 | ||||||
Operating segment | |||||||||
Economic net income | |||||||||
Income (loss) before taxes | 51,072 | 115,080 | 113,118 | (75,508) | |||||
Adjustments: | |||||||||
Amortization of intangibles | 3,285 | 5,274 | 6,572 | 10,549 | |||||
Depreciation expense | 4,426 | 2,774 | 8,315 | 5,990 | |||||
Equity compensation expenses | 22,507 | 18,917 | 43,594 | 34,006 | |||||
Acquisition and merger-related expenses | 47 | 756 | (272) | 255,844 | |||||
Placement fees and underwriting costs | 1,852 | 6,383 | 3,516 | 9,822 | |||||
Offering costs | 3 | (5) | 3 | 655 | |||||
Other expense | 13,551 | 0 | 13,558 | 0 | |||||
Economic net income | 134,360 | 209,125 | 272,748 | 329,397 | |||||
Total performance income - unrealized | 124,343 | (263,629) | 89,225 | (312,890) | |||||
Total performance related compensation - unrealized | (100,886) | 208,732 | (89,877) | 244,133 | |||||
Total investment (income) loss - unrealized | (9) | (25,715) | 5,565 | (35,249) | |||||
Realized income | 157,808 | 128,513 | 277,661 | 225,391 | |||||
Total performance income - realized | (122,608) | (74,130) | (145,715) | (82,935) | |||||
Total performance related compensation - realized | 87,881 | 52,973 | 102,750 | 58,274 | |||||
Total investment income - realized | (10,495) | (4,522) | (12,431) | (5,908) | |||||
Fee related earnings | 112,586 | 102,834 | 222,265 | 194,822 | |||||
Economic net income | 134,360 | 209,125 | 272,748 | 329,397 | |||||
Performance related earnings | 21,774 | 106,291 | 50,483 | 134,575 | |||||
Operating segment | Consolidated Funds | |||||||||
Adjustments: | |||||||||
(Income) loss before taxes of non-controlling interests in Consolidated Funds, net of eliminations | (9,951) | 8,251 | (10,318) | (8,072) | |||||
Reconciling items | |||||||||
Adjustments: | |||||||||
Amortization of intangibles | 3,285 | 5,274 | 6,572 | 10,549 | |||||
Depreciation expense | 4,426 | 2,774 | 8,315 | 5,990 | |||||
Equity compensation expenses | 22,507 | 18,917 | 43,594 | 34,006 | |||||
Acquisition and merger-related expenses | 47 | 724 | (272) | 276,060 | |||||
Placement fees and underwriting costs | 1,852 | 6,383 | 3,516 | 9,822 | |||||
Offering costs | 3 | (5) | 3 | 655 | |||||
Other expense | 1,715 | 0 | 1,722 | 0 | |||||
Total consolidation adjustments and reconciling items | 83,288 | 94,045 | 159,630 | 404,905 | |||||
OMG | |||||||||
Adjustments: | |||||||||
OMG expenses, net | 46,849 | 51,072 | 93,303 | 95,488 | |||||
Economic net income | (46,849) | (51,072) | (93,303) | (95,488) | |||||
Total performance income - unrealized | 0 | 0 | 0 | 0 | |||||
Total investment (income) loss - unrealized | (2,866) | 2,728 | (4,097) | 4,135 | |||||
Realized income | (49,754) | (48,346) | (97,534) | (91,551) | |||||
Total performance income - realized | 0 | 0 | 0 | 0 | |||||
Total performance related compensation - realized | 0 | 0 | 0 | 0 | |||||
Total investment income - realized | (3,699) | 1,626 | (6,467) | 776 | |||||
Fee related earnings | (50,548) | (49,446) | (99,770) | (94,712) | |||||
Economic net income | (46,849) | (51,072) | (93,303) | (95,488) | |||||
Performance related earnings | 3,699 | (1,626) | 6,467 | (776) | |||||
Subsidiaries | Operating segment | |||||||||
Adjustments: | |||||||||
(Income) loss before taxes of non-controlling interests in Consolidated Funds, net of eliminations | 719 | 623 | 1,359 | 623 | |||||
Ares Management L.P | |||||||||
Adjustments: | |||||||||
Acquisition and merger-related expenses | 0 | 0 | 0 | 275,177 | |||||
Due to affiliates | 62,344 | 62,344 | 39,184 | ||||||
Ares Management L.P | Operating segment | |||||||||
Adjustments: | |||||||||
Economic net income | 134,360 | 209,125 | 272,748 | 329,397 | |||||
Total performance income - unrealized | 124,343 | (263,629) | 89,225 | (312,890) | |||||
Total investment (income) loss - unrealized | (1,382) | (23,038) | 4,269 | (35,729) | |||||
Realized income | 157,808 | 128,513 | 277,661 | 225,391 | |||||
Total performance income - realized | (122,608) | (74,130) | (145,715) | (82,935) | |||||
Total performance related compensation - realized | 87,881 | 52,973 | 102,750 | 58,274 | |||||
Total investment income - realized | (10,504) | (30,237) | (6,866) | (41,157) | |||||
Fee related earnings | 112,586 | 102,834 | 222,265 | 194,822 | |||||
Economic net income | 134,360 | 209,125 | 272,748 | 329,397 | |||||
Performance related earnings | 21,774 | $ 106,291 | 50,483 | $ 134,575 | |||||
Ares Management L.P | ARCC | Affiliated entity | Rent and other occupancy expenses | |||||||||
Adjustments: | |||||||||
Due to affiliates | $ 11,800 | $ 11,800 | $ 600 | $ 2,200 | $ 3,000 | $ 3,200 | $ 2,900 |
CONSOLIDATION (Variable Interes
CONSOLIDATION (Variable Interest Entities) (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | Dec. 31, 2017 | |
Variable Interest Entity [Line Items] | |||||
Assets of consolidated VIEs | $ 10,144,735 | $ 10,144,735 | $ 8,563,522 | ||
Liabilities of consolidated VIEs | 8,609,486 | 8,609,486 | 7,103,230 | ||
Consolidated Funds | |||||
Variable Interest Entity [Line Items] | |||||
Net income (loss) attributable to non-controlling interests related to consolidated VIEs | 9,882 | $ (8,647) | 10,249 | $ 7,208 | |
Non-Consolidated Variable Interest Entities | |||||
Variable Interest Entity [Line Items] | |||||
Maximum exposure to loss attributable to the Company's investment in VIEs | 241,231 | 241,231 | 251,376 | ||
Consolidated VIEs | |||||
Variable Interest Entity [Line Items] | |||||
Maximum exposure to loss attributable to the Company's investment in VIEs | 190,400 | 190,400 | 175,620 | ||
Consolidated VIEs | Consolidated Funds | |||||
Variable Interest Entity [Line Items] | |||||
Assets of consolidated VIEs | 8,059,640 | 8,059,640 | 6,231,245 | ||
Liabilities of consolidated VIEs | $ 7,302,896 | $ 7,302,896 | $ 5,538,054 |
CONSOLIDATION (Balance Sheet) (
CONSOLIDATION (Balance Sheet) (Details) - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 | Jun. 30, 2017 | Dec. 31, 2016 |
Assets | ||||
Investments, at fair value | $ 1,724,571 | |||
Other assets | 130,341 | |||
Goodwill | $ 143,848 | 143,895 | ||
Total assets | 10,144,735 | 8,563,522 | ||
Liabilities | ||||
Total liabilities | 8,609,486 | 7,103,230 | ||
Commitments and contingencies | ||||
Preferred equity (12,400,000 shares issued and outstanding at June 30, 2018 and December 31, 2017) | 298,761 | 298,761 | ||
Controlling interest in Ares Management, L.P.: | ||||
Shareholders' equity (98,398,340 shares and 82,280,033 shares issued and outstanding at June 30, 2018 and at December 31, 2017, respectively) | 349,981 | 279,065 | ||
Accumulated other comprehensive loss, net of tax | (6,758) | (4,208) | ||
Total controlling interest in Ares Management, L.P. | 343,223 | 274,857 | ||
Total equity | 1,535,249 | 1,460,292 | ||
Total liabilities and equity | $ 10,144,735 | $ 8,563,522 | ||
Preferred equity, shares issued (in shares) | 12,400,000 | 12,400,000 | ||
Preferred equity, shares outstanding (in shares) | 12,400,000 | 12,400,000 | ||
Partners' Capital shares issued (in shares) | 98,398,340 | 82,280,033 | ||
Partners' Capital shares outstanding (in shares) | 98,398,340 | 82,280,033 | ||
Reportable legal entity | ||||
Liabilities | ||||
Preferred equity (12,400,000 shares issued and outstanding at June 30, 2018 and December 31, 2017) | $ 298,761 | $ 298,761 | ||
Eliminations | ||||
Assets | ||||
Total assets | (197,172) | (186,904) | ||
Liabilities | ||||
Total liabilities | (17,645) | (22,201) | ||
Commitments and contingencies | ||||
Preferred equity (12,400,000 shares issued and outstanding at June 30, 2018 and December 31, 2017) | 0 | 0 | ||
Controlling interest in Ares Management, L.P.: | ||||
Total equity | (179,527) | (164,703) | ||
Total liabilities and equity | (197,172) | (186,904) | ||
Consolidated Funds | ||||
Assets | ||||
Cash and cash equivalents | 836,274 | 556,500 | ||
Investments, at fair value | 6,968,067 | 5,582,842 | ||
Due from affiliates | 13,704 | 15,884 | ||
Other assets | 1,197 | 1,989 | ||
Dividends and interest receivable | 14,634 | 12,568 | ||
Receivable for securities sold | 225,764 | 61,462 | ||
Liabilities | ||||
Accounts payable, accrued expenses and other liabilities | 69,040 | 64,316 | ||
Due to affiliates | 0 | 0 | ||
Payable for securities purchased | 744,534 | 350,145 | ||
CLO loan obligations, at fair value | 6,333,239 | 4,963,194 | ||
Fund borrowings | 138,438 | 138,198 | ||
Non-controlling interest in Ares Operating Group entities | 577,217 | 528,488 | ||
Controlling interest in Ares Management, L.P.: | ||||
Total investments | 6,968,067 | 5,582,842 | ||
Consolidated Funds | Reportable legal entity | ||||
Assets | ||||
Cash and cash equivalents | 836,274 | 556,500 | ||
Investments, at fair value | 6,968,067 | 5,582,842 | ||
Due from affiliates | 13,704 | 15,884 | ||
Other assets | 1,197 | 1,989 | ||
Dividends and interest receivable | 14,634 | 12,568 | ||
Receivable for securities sold | 225,764 | 61,462 | ||
Total assets | 8,059,640 | 6,231,245 | ||
Liabilities | ||||
Accounts payable, accrued expenses and other liabilities | 69,040 | 64,316 | ||
Due to affiliates | 6,772 | 11,285 | ||
Payable for securities purchased | 744,534 | 350,145 | ||
CLO loan obligations, at fair value | 6,344,112 | 4,974,110 | ||
Fund borrowings | 138,438 | 138,198 | ||
Total liabilities | 7,302,896 | 5,538,054 | ||
Commitments and contingencies | ||||
Non-controlling interest in Ares Operating Group entities | 756,744 | 693,191 | ||
Controlling interest in Ares Management, L.P.: | ||||
Total equity | 756,744 | 693,191 | ||
Total liabilities and equity | 8,059,640 | 6,231,245 | ||
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 | (6,772) | (11,285) | ||
Payable for securities purchased | 0 | 0 | ||
CLO loan obligations, at fair value | (10,873) | (10,916) | ||
Fund borrowings | 0 | 0 | ||
Non-controlling interest in Ares Operating Group entities | (179,527) | (164,703) | ||
AOG | ||||
Liabilities | ||||
Non-controlling interest in Ares Operating Group entities | 316,048 | 358,186 | ||
AOG | Reportable legal entity | ||||
Liabilities | ||||
Non-controlling interest in Ares Operating Group entities | 316,048 | 358,186 | ||
Ares Management L.P | ||||
Assets | ||||
Cash and cash equivalents | 125,448 | 118,929 | $ 137,256 | $ 342,861 |
Investments, at fair value | 1,466,247 | 1,724,571 | ||
Due from affiliates | 172,428 | 165,750 | ||
Deferred tax asset, net | 42,942 | 8,326 | ||
Other assets | 100,183 | 130,341 | ||
Intangible assets, net | 33,999 | 40,465 | ||
Goodwill | 143,848 | 143,895 | ||
Liabilities | ||||
Accounts payable, accrued expenses and other liabilities | 73,227 | 81,955 | ||
Accrued compensation | 87,254 | 27,978 | ||
Due to affiliates | 62,344 | 39,184 | ||
Performance related compensation payable | 730,782 | 822,084 | ||
Debt obligations | 370,628 | 616,176 | ||
Controlling interest in Ares Management, L.P.: | ||||
Shareholders' equity (98,398,340 shares and 82,280,033 shares issued and outstanding at June 30, 2018 and at December 31, 2017, respectively) | 349,981 | 279,065 | ||
Accumulated other comprehensive loss, net of tax | (6,758) | (4,208) | ||
Total controlling interest in Ares Management, L.P. | 343,223 | 274,857 | ||
Total investments | 108,820 | 277,561 | ||
Ares Management L.P | Accrued Interest | ||||
Assets | ||||
Investments, at fair value | 985,035 | 1,077,236 | ||
Ares Management L.P | Reportable legal entity | ||||
Assets | ||||
Cash and cash equivalents | 125,448 | 118,929 | ||
Investments, at fair value | 1,656,647 | 1,900,191 | ||
Due from affiliates | 179,200 | 171,701 | ||
Deferred tax asset, net | 42,942 | 8,326 | ||
Other assets | 100,183 | 135,674 | ||
Intangible assets, net | 33,999 | 40,465 | ||
Goodwill | 143,848 | 143,895 | ||
Total assets | 2,282,267 | 2,519,181 | ||
Liabilities | ||||
Accounts payable, accrued expenses and other liabilities | 73,227 | 81,955 | ||
Accrued compensation | 87,254 | 27,978 | ||
Due to affiliates | 62,344 | 39,184 | ||
Performance related compensation payable | 730,782 | 822,084 | ||
Debt obligations | 370,628 | 616,176 | ||
Total liabilities | 1,324,235 | 1,587,377 | ||
Commitments and contingencies | ||||
Controlling interest in Ares Management, L.P.: | ||||
Shareholders' equity (98,398,340 shares and 82,280,033 shares issued and outstanding at June 30, 2018 and at December 31, 2017, respectively) | 349,981 | 279,065 | ||
Accumulated other comprehensive loss, net of tax | (6,758) | (4,208) | ||
Total controlling interest in Ares Management, L.P. | 343,223 | 274,857 | ||
Total equity | 958,032 | 931,804 | ||
Total liabilities and equity | 2,282,267 | 2,519,181 | ||
Ares Management L.P | Eliminations | ||||
Assets | ||||
Cash and cash equivalents | 0 | |||
Investments, at fair value | (190,400) | (175,620) | ||
Due from affiliates | (6,772) | (5,951) | ||
Deferred tax asset, net | 0 | 0 | ||
Other assets | 0 | (5,333) | ||
Intangible assets, net | 0 | |||
Goodwill | 0 | |||
Liabilities | ||||
Accounts payable, accrued expenses and other liabilities | 0 | |||
Accrued compensation | 0 | |||
Due to affiliates | 0 | |||
Performance related compensation payable | 0 | |||
Debt obligations | 0 | |||
Controlling interest in Ares Management, L.P.: | ||||
Shareholders' equity (98,398,340 shares and 82,280,033 shares issued and outstanding at June 30, 2018 and at December 31, 2017, respectively) | 0 | |||
Accumulated other comprehensive loss, net of tax | 0 | |||
Total controlling interest in Ares Management, L.P. | $ 0 | $ 0 |
CONSOLIDATION (Income Statement
CONSOLIDATION (Income Statement) (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Expenses | ||||
Total expenses | $ 221,017 | $ 448,197 | $ 427,300 | $ 939,664 |
Other income (expense) | ||||
Total other income (expense) | 67,926 | (8,920) | 70,166 | 47,715 |
Income (loss) before taxes | 51,072 | 115,080 | 113,118 | (75,508) |
Income tax expense (benefit) | 36,903 | 1,253 | 24,528 | (33,011) |
Net income (loss) | 14,169 | 113,827 | 88,590 | (42,497) |
Net income (loss) attributable to Ares Management, L.P. | (11,775) | 49,878 | 29,173 | 8,744 |
Less: Preferred equity dividend paid | 5,425 | 5,425 | 10,850 | 10,850 |
Net income (loss) attributable to Ares Management, L.P. common shareholders | (17,200) | 44,453 | 18,323 | (2,106) |
Eliminations | ||||
Revenues | ||||
Total revenues | (25,123) | (169) | (30,233) | (18,357) |
Expenses | ||||
Compensation and benefits | 0 | |||
Performance related compensation | 0 | |||
General, administrative and other expenses | 0 | |||
Transaction support expense | 0 | |||
Total expenses | (12,270) | (4,303) | (19,583) | (10,901) |
Other income (expense) | ||||
Net realized and unrealized gain (loss) on investments | (1,171) | (1,544) | (832) | (4,409) |
Interest and dividend income | 0 | (754) | 0 | (1,673) |
Interest expense | 0 | 0 | 0 | |
Other income (expense), net | 991 | 533 | ||
Total other income (expense) | 993 | (410) | 534 | (433) |
Income (loss) before taxes | (11,860) | 3,724 | (10,116) | (7,889) |
Income tax expense (benefit) | 0 | |||
Net income (loss) | (11,860) | 3,724 | (10,116) | (7,889) |
Less: Preferred equity dividend paid | 0 | 0 | 0 | 0 |
Net income (loss) attributable to Ares Management, L.P. common shareholders | 0 | 0 | 0 | 0 |
Consolidated Funds | ||||
Expenses | ||||
Expenses of Consolidated Funds | 35,112 | 4,522 | 36,428 | 8,433 |
Other income (expense) | ||||
Net realized and unrealized gain (loss) on investments | 34,487 | (12,713) | 21,402 | 19,323 |
Interest expense | (56,754) | (26,875) | (101,179) | (58,197) |
Interest and other income of Consolidated Funds | 92,633 | 38,326 | 157,055 | 79,818 |
Income tax expense (benefit) | 69 | 396 | 69 | 864 |
Net income (loss) attributable to non-controlling interests related to consolidated VIEs | 9,882 | (8,647) | 10,249 | 7,208 |
Consolidated Funds | Reportable legal entity | ||||
Expenses | ||||
Expenses of Consolidated Funds | 47,382 | 8,825 | 56,011 | 19,334 |
Total expenses | 47,382 | 8,825 | 56,011 | 19,334 |
Other income (expense) | ||||
Net realized and unrealized gain (loss) on investments | 33,819 | 953 | 21,367 | 31,392 |
Interest expense | (57,259) | (42,429) | (101,977) | (75,915) |
Interest and other income of Consolidated Funds | 92,633 | 38,326 | 157,055 | 79,818 |
Total other income (expense) | 69,193 | (3,150) | 76,445 | 35,295 |
Income (loss) before taxes | 21,811 | (11,975) | 20,434 | 15,961 |
Income tax expense (benefit) | 69 | 396 | 69 | 864 |
Net income (loss) | 21,742 | (12,371) | 20,365 | 15,097 |
Net income (loss) attributable to non-controlling interests related to consolidated VIEs | 21,742 | (12,371) | 20,365 | 15,097 |
Consolidated Funds | Eliminations | ||||
Expenses | ||||
Expenses of Consolidated Funds | (12,270) | (4,303) | (19,583) | (10,901) |
Total expenses | (12,270) | (4,303) | (19,583) | (10,901) |
Other income (expense) | ||||
Net realized and unrealized gain (loss) on investments | 668 | (13,666) | 35 | (12,069) |
Interest expense | 505 | 15,554 | 798 | 17,718 |
Interest and other income of Consolidated Funds | 0 | 0 | 0 | 0 |
Total other income (expense) | 993 | (410) | 534 | (433) |
Net income (loss) attributable to non-controlling interests related to consolidated VIEs | (11,860) | 3,724 | (10,116) | (7,889) |
AOG | ||||
Other income (expense) | ||||
Net income (loss) attributable to non-controlling interests related to consolidated VIEs | 16,062 | 72,596 | 49,168 | (58,449) |
AOG | Reportable legal entity | ||||
Other income (expense) | ||||
Net income (loss) attributable to non-controlling interests related to consolidated VIEs | 16,062 | 72,596 | 49,168 | (58,449) |
AOG | Eliminations | ||||
Other income (expense) | ||||
Net income (loss) attributable to non-controlling interests related to consolidated VIEs | 0 | |||
Ares Management L.P | ||||
Revenues | ||||
Total revenues | 204,163 | 572,197 | 470,252 | 816,441 |
Expenses | ||||
Compensation and benefits | 138,992 | 131,219 | 273,631 | 255,558 |
Performance related compensation | (13,005) | 261,705 | 12,873 | 302,407 |
General, administrative and other expenses | 59,918 | 50,751 | 104,368 | 98,089 |
Transaction support expense | 0 | 0 | 0 | 275,177 |
Other income (expense) | ||||
Net realized and unrealized gain (loss) on investments | 3,267 | (6,588) | 2,428 | (5,700) |
Interest and dividend income | 2,356 | 1,462 | 5,703 | 3,386 |
Interest expense | (6,076) | (5,354) | (12,945) | (10,233) |
Other income (expense), net | (1,987) | 2,822 | (2,298) | 19,318 |
Income tax expense (benefit) | 36,834 | 857 | 24,459 | (33,875) |
Ares Management L.P | Affiliated entity | ARCC | ||||
Revenues | ||||
Management fees, part I fees | 29,866 | 19,143 | 58,283 | 52,400 |
Ares Management L.P | Reportable legal entity | ||||
Revenues | ||||
Total revenues | 229,286 | 572,366 | 500,485 | 834,798 |
Expenses | ||||
Compensation and benefits | 138,992 | 131,219 | 273,631 | 255,558 |
Performance related compensation | (13,005) | 261,705 | 12,873 | 302,407 |
General, administrative and other expenses | 59,918 | 50,751 | 104,368 | 98,089 |
Transaction support expense | 275,177 | |||
Total expenses | 185,905 | 443,675 | 390,872 | 931,231 |
Other income (expense) | ||||
Net realized and unrealized gain (loss) on investments | 4,438 | (5,044) | 3,260 | (1,291) |
Interest and dividend income | 2,356 | 2,216 | 5,703 | 5,059 |
Interest expense | (6,076) | (5,354) | (12,945) | (10,233) |
Other income (expense), net | (2,978) | 2,822 | (2,831) | 19,318 |
Total other income (expense) | (2,260) | (5,360) | (6,813) | 12,853 |
Income (loss) before taxes | 41,121 | 123,331 | 102,800 | (83,580) |
Income tax expense (benefit) | 36,834 | 857 | 24,459 | (33,875) |
Net income (loss) | 4,287 | 122,474 | 78,341 | (49,705) |
Net income (loss) attributable to Ares Management, L.P. | (11,775) | 49,878 | 29,173 | 8,744 |
Less: Preferred equity dividend paid | 5,425 | 5,425 | 10,850 | 10,850 |
Net income (loss) attributable to Ares Management, L.P. common shareholders | (17,200) | 44,453 | 18,323 | (2,106) |
Management fees | Eliminations | ||||
Revenues | ||||
Total revenues | (8,272) | (4,792) | (15,583) | (9,528) |
Management fees | Ares Management L.P | ||||
Revenues | ||||
Total revenues | 194,032 | 180,768 | 383,547 | 352,813 |
Management fees | Ares Management L.P | Reportable legal entity | ||||
Revenues | ||||
Total revenues | 202,304 | 185,560 | 399,130 | 362,341 |
Carried interest allocation | ||||
Revenues | ||||
Total revenues | 40,685 | |||
Carried interest allocation | Eliminations | ||||
Revenues | ||||
Total revenues | 0 | (6) | 0 | (1,014) |
Carried interest allocation | Ares Management L.P | ||||
Revenues | ||||
Total revenues | (13,444) | 333,808 | 40,685 | 385,815 |
Carried interest allocation | Ares Management L.P | Reportable legal entity | ||||
Revenues | ||||
Total revenues | (13,444) | 333,814 | 40,685 | 386,829 |
Incentive fees | Eliminations | ||||
Revenues | ||||
Total revenues | (4,000) | 488 | (4,000) | (1,374) |
Incentive fees | Ares Management L.P | ||||
Revenues | ||||
Total revenues | 7,740 | 4,216 | 12,811 | 7,381 |
Incentive fees | Ares Management L.P | Reportable legal entity | ||||
Revenues | ||||
Total revenues | 11,740 | 3,728 | 16,811 | 8,755 |
Principal investment income | Eliminations | ||||
Revenues | ||||
Total revenues | (12,851) | 4,141 | (10,650) | (6,441) |
Principal investment income | Ares Management L.P | ||||
Revenues | ||||
Total revenues | 1,871 | 38,307 | 6,780 | 40,894 |
Principal investment income | Ares Management L.P | Reportable legal entity | ||||
Revenues | ||||
Total revenues | 14,722 | 34,166 | 17,430 | 47,335 |
Administrative, transaction and other fees | ||||
Revenues | ||||
Total revenues | 0 | 0 | 0 | 0 |
Administrative, transaction and other fees | Eliminations | ||||
Revenues | ||||
Total revenues | 0 | 0 | 0 | 0 |
Administrative, transaction and other fees | Ares Management L.P | ||||
Revenues | ||||
Total revenues | 13,964 | 15,098 | 26,429 | 29,538 |
Administrative, transaction and other fees | Ares Management L.P | Reportable legal entity | ||||
Revenues | ||||
Total revenues | $ 13,964 | $ 15,098 | $ 26,429 | $ 29,538 |
SUBSEQUENT EVENTS (Details)
SUBSEQUENT EVENTS (Details) - Subsequent event | 1 Months Ended |
Jul. 31, 2018USD ($)$ / shares | |
Subsequent events | |
Quarterly distribution declared (in dollars per unit) | $ 0.28 |
Preferred equity quarterly distribution (in dollars per unit) | $ 0.4375 |
Preferred Shares | |
Subsequent events | |
Authorized amount in preferred share buyback | $ | $ 50,000,000 |