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Section 1: 8-K (8-K)

Document




UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
______________________________________________________
 
FORM 8-K
 
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
 
Date of report (Date of earliest event reported) February 15, 2018
 
ARES MANAGEMENT, L.P.
(Exact Name of Registrant as Specified in Charter)
 
Delaware
 
001-36429
 
80-0962035
(State or Other Jurisdiction
of Incorporation)
 
(Commission
File Number)
 
(IRS Employer
Identification No.)
 
2000 Avenue of the Stars, 12th Floor, Los Angeles, CA
 
90067
(Address of Principal Executive Offices)
 
(Zip Code)
 
Registrant’s telephone number, including area code (310) 201-4100
 
 
(Former Name or Former Address, if Changed Since Last Report)
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
 
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).

Emerging growth company o

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

 



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Item 2.02 Results of Operations and Financial Condition.
 
On February 15, 2018, the registrant issued a press release and a detailed earnings presentation announcing its financial results for the fourth quarter and year ended December 31, 2017. A copy of the summary press release and the earnings presentation are attached hereto as Exhibit 99.1 and Exhibit 99.2, respectively, and incorporated herein by reference.
 
The information disclosed under this Item 2.02, including Exhibit 99.1 and 99.2 hereto, is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 and shall not be deemed incorporated by reference into any filing made under the Securities Act of 1933, except as expressly set forth by specific reference in such filing.
 
Item 7.01 Regulation FD Disclosure.
 
On February 15, 2018, the registrant issued a press release announcing (i) that, effective March 1, 2018, it has elected to be taxed as a corporation and (ii) the declaration of a distribution for the five months ended February 28, 2018 of $0.40 per common unit, inclusive of $0.25 per common unit for the fourth quarter of 2017 and $0.15 per common unit for the first two months of the first quarter of 2018, payable on February 28, 2018 to common unitholders of record as of February 26, 2018. The distribution represents a portion of the estimated after tax distributable earnings generated for the five month period ended February 28, 2018. For March 2018, the first month that the registrant is taxed as a corporation, Ares declared a dividend of $0.0933 per common share payable on April 30, 2018 to holders of record on April 16, 2018. The text of the press release is included as Exhibit 99.1 to this Form 8-K.
     The information disclosed under this Item 7.01, including Exhibit 99.1, 99.2 and 99.3 hereto, is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 and shall not be deemed incorporated by reference into any filing made under the Securities Act of 1933, except as expressly set forth by specific reference in such filing.

Item 9.01 Financial Statements and Exhibits.
 
(d)                               Exhibits:
 
Exhibit Number
 
Description
 
 
 
 
Press Release of Ares Management, L.P., dated February 15, 2018
 
Presentation of Ares Management, L.P., dated February 15, 2018
 
Presentation on Corporate Status Election, dated February 15, 2018


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SIGNATURES
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
 
 
 
ARES MANAGEMENT, L.P.
 
 
 
By: Ares Management GP LLC, its general partner
Dated: February 15, 2018
 
 
 
 
 
 
 
 
 
By:
/s/ Michael R. McFerran
 
 
Name:
Michael R. McFerran
 
 
Title:
Chief Financial Officer & Chief Operating Officer


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Exhibit Index
Exhibit Number
 
Description
 
 
 
99.1

 
Press Release of Ares Management, L.P., dated February 15, 2018
99.2

 
Presentation of Ares Management, L.P., dated February 15, 2018
99.3

 
Presentation on Corporate Status Election, dated February 15, 2018



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Section 2: EX-99.1 (EXHIBIT 99.1)

Exhibit


Exhibit 99.1
 392204507_areslogoa01.jpg

 
ARES MANAGEMENT, L.P. REPORTS FOURTH QUARTER AND FULL YEAR 2017 RESULTS
 
LOS ANGELES--Ares Management, L.P. (NYSE:ARES) today reported its financial results for its fourth quarter and year ended December 31, 2017.
“The fourth quarter of 2017 concluded a record year for Ares as we generated year over year management fee and fee related earnings growth of 13% and 26%, respectively.  We saw double digit growth in our assets under management and margin improvement from scale efficiencies in our business,” said Michael Arougheti, Chief Executive Officer of Ares.  “Our after-tax economic net income growth of 37% reflected strong fund investment performance across our primary investment strategies.  Going forward, we believe that Ares is well-positioned to capitalize on the industry growth for alternative investments and to continue to perform well for our investors.”

“This morning, we announced that we have changed our corporate tax status which we believe will simplify our structure, broaden our potential investor base, improve our liquidity and trading volume and provide a more attractive currency for strategic acquisitions,” said Michael McFerran, Chief Operating Officer and Chief Financial Officer of Ares. “In concurrence with this change, Ares will begin paying a steady, quarterly dividend for each calendar year based on the growth in our after-tax core fee related earnings.  This dividend policy should reduce the historical volatility of our distributions, and allow us to retain a greater portion of our earnings for growth and potential share repurchases.”

Common Distribution
Ares declared a distribution of $0.40 per common unit for the five months ended February 28, 2018, inclusive of $0.25 per common unit for the fourth quarter of 2017 and $0.15 per common unit for the first two months of the first quarter of 2018, payable on February 28, 2018 to common unitholders of record at the close of business on February 26, 2018. The distribution represents a portion of the estimated after tax distributable earnings generated for the five month period ended February 28, 2018.
Common Dividend
For March 2018, the first month that Ares is taxed as a corporation, Ares declared a dividend of $0.0933 per common share payable on April 30, 2018 to holders of record on April 16, 2018.
Preferred Distribution
Ares declared a distribution of $0.4375 per Series A Preferred Unit with a payment date of March 31, 2018 to preferred unitholders of record as of the close of business on March 15, 2018.
Recent Developments
Ares elected to change its tax classification from a partnership to a C-Corporation to be effective March 1, 2018. Investors will receive a final
Schedule K-1 for the period from January 1, 2018 through February 28, 2018.  Investors receiving dividends after March 1, 2018 will receive Form 1099-DIV reporting.  

Additional Information
Ares issued two detailed presentations regarding its fourth quarter and full year 2017 results and its corporate status election, which can be viewed at www.aresmgmt.com on the Investor Resources section of our home page under Events and Presentations. The presentations are titled “Fourth Quarter and Full Year 2017 Earnings Presentation” and “Presentation on Corporate Status Election.”  We also filed our Fourth Quarter and Full Year 2017 Earnings Presentation and Presentation on Corporate Status Election on Form 8-K for the year ended December 31, 2017 with the U.S. Securities and Exchange Commission on February 15, 2018 and will file our Annual Report on Form 10-K for the year ended December 31, 2017 with the U.S. Securities and Exchange Commission on February 26, 2018. Copies of our filings with the SEC are available through our website at www.aresmgmt.com by selecting the SEC Filings sub-tab under the Investor Resources section, as well as on the SEC’s website at www.sec.gov. Unitholders can request a printed copy of the complete audited financial statements free of charge upon request to IRARES@aresmgmt.com or by written request addressed to Ares Management, L.P, Attn: Investor Relations, 245 Park Ave, 44th Floor New York, NY 10167.

Conference Call and Webcast Information
Ares will host a conference call on February 15, 2018 at 12:00 p.m. ET to discuss fourth quarter and full year 2017 results. All interested parties are invited to participate via telephone or the live webcast, which will be hosted on a webcast link located on the Home page of the Investor Resources section of our website at http://www.aresmgmt.com. Please visit the website to test your connection before the webcast. Domestic callers can access the conference call by dialing (888) 317-6003. International callers can access the conference call by dialing +1 (412) 317-6061. All callers will need to enter the Participant Elite Entry Number 2006273 followed by the # sign and reference “Ares Management, L.P.” once connected with the operator. All callers are asked to dial in 10-15 minutes prior to the call so that name and company information can be collected. For interested parties, an archived replay of the call will be available through March 15, 2018 (Eastern Time) to domestic callers by dialing (877)

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344-7529 and to international callers by dialing +1 (412) 317-0088. For all replays, please reference conference number 10116126. An archived replay will also be available through March 15, 2018 on a webcast link located on the Home page of the Investor Resources section of our website.
About Ares Management, L.P.
Ares Management, L.P. is a publicly traded, leading global alternative asset manager with approximately $106.4 billion of assets under management as of December 31, 2017 and more than 15 offices in the United States, Europe, Asia and Australia. Since its inception in 1997, Ares has adhered to a disciplined investment philosophy that focuses on delivering strong risk-adjusted investment returns throughout market cycles. Ares believes each of its three distinct but complementary investment groups in Credit, Private Equity and Real Estate is a market leader based on assets under management and investment performance. Ares was built upon the fundamental principle that each group benefits from being part of the greater whole. For more information, visit www.aresmgmt.com.
Forward-Looking Statements
Statements included herein may constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, which relate to future events or our future performance or financial condition. These statements are not guarantees of future performance, condition or results and involve a number of risks and uncertainties. Actual results may differ materially from those in the forward-looking statements as a result of a number of factors, including those described from time to time in our filings with the Securities and Exchange Commission. Ares Management, L.P. undertakes no duty to update any forward-looking statements made herein or on the webcast/conference call.
Nothing in this press release constitutes an offer to sell or solicitation of an offer to buy any securities of Ares or an investment fund managed by Ares or its affiliates.
 
Investor Relations Contacts
Carl Drake
Veronica Mendiola
Cameron Rudd
cdrake@aresmgmt.com
vmendiola@aresmgmt.com
crudd@aresmgmt.com
(800) 340-6597
 
 
 




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Section 3: EX-99.2 (EXHIBIT 99.2)

q417ex992earningspresent
Fourth Quarter and Full Year 2017 Earnings Presentation Exhibit 99.2


 
2 Important Notice This presentation contains “forward looking statements” within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, that are subject to risks and uncertainties. Actual outcomes and results could differ materially from those suggested by this presentation due to the impact of many factors beyond the control of Ares Management, L.P. (“Ares”), including those listed in the “Risk Factors” section of our filings with the Securities and Exchange Commission (“SEC”). Any such forward-looking statements are made pursuant to the safe harbor provisions available under applicable securities laws and Ares assumes no obligation to update or revise any such forward-looking statements. Certain information discussed in this presentation was derived from third party sources and has not been independently verified and, accordingly, Ares makes no representation or warranty in respect of this information. The following slides contain summaries of certain financial and statistical information about Ares. The information contained in this presentation is summary information that is intended to be considered in the context of Ares’ SEC filings and other public announcements that Ares may make, by press release or otherwise, from time to time. Ares undertakes no duty or obligation to publicly update or revise the forward-looking statements or other information contained in this presentation. In addition, this presentation contains information about Ares, its affiliated funds and certain of their respective personnel and affiliates, and their respective historical performance. You should not view information related to the past performance of Ares and its affiliated funds, as indicative of future results. Certain information set forth herein includes estimates and targets and involves significant elements of subjective judgment and analysis. Further, such information, unless otherwise stated, is before giving effect to management and incentive fees and deductions for taxes. No representations are made as to the accuracy of such estimates or targets or that all assumptions relating to such estimates or targets have been considered or stated or that such estimates or targets will be realized. This presentation does not constitute an offer to sell or the solicitation of an offer to buy any securities of Ares. Management uses certain non-GAAP financial measures, including assets under management, fee paying assets under management, economic net income and distributable earnings, to evaluate Ares’ performance and that of its business segments. Management believes that these measures provide investors with a greater understanding of Ares’ business and that investors should review the same supplemental non-GAAP financial measures that management uses to analyze Ares’ performance. The measures described herein represent those non-GAAP measures used by management, in each case, before giving effect to the consolidation of certain funds that the company consolidates with its results in accordance with GAAP. These measures should be considered in addition to, and not in lieu of, Ares’ financial statements prepared in accordance with GAAP. The definitions and reconciliations of these measures to the most directly comparable GAAP measures, as well as an explanation of why we use these measures, are included in the Appendix. Amounts and percentages may reflect rounding adjustments and consequently totals may not appear to sum. For the definitions of certain terms used in this presentation, please refer to the "Glossary" slide in the appendix.


 
3 Fourth Quarter and Year Ended 2017 Highlights 1. Net inflows represents gross commitments less redemptions. 2. Includes ARCC Part I Fees of $29.0 million and $105.5 million for the three months and year ended December 31, 2017, respectively. Difference between GAAP and unconsolidated management fees represents $7.4 million and $22.4 million from Consolidated Funds that are eliminated upon consolidation for Q4-17 and FY 2017, respectively. Q4-17 and FY 2017 Other fees of $5.4 million and $22.4 million, respectively, represents primarily transaction based fees earned from Credit Group funds. 3. Total pro forma units of 216,682,844 includes the sum of common units, Ares Operating Group Units that are exchangeable for common units on a one-for-one basis and the dilutive effects of the Company’s equity- based awards. Please refer to slides 19, 20 and 34 in this presentation for further information. After-tax Economic Net Income per unit is net of the preferred unit distribution. 4. After-tax Distributable Earnings per common unit is net of the preferred unit distribution. 5. Payable on February 28, 2018 to unitholders of record as of February 26, 2018. 6. Payable on March 31, 2018 to unitholders of record as of March 15, 2018. Assets Under Management • Total Assets Under Management ("AUM") of $106.4 billion • Total Fee Paying AUM ("FPAUM") of $72.5 billion • Available Capital of $25.1 billion • AUM Not Yet Earning Fees of $14.5 billion • Raised $2.7 billion and $16.7 billion in gross new capital with net inflows of $2.1 billion and $13.9 billion(1) for the quarter and year ended December 31, 2017, respectively • Capital deployment of $4.0 billion and $16.4 billion for the quarter and year ended December 31, 2017, respectively, of which $2.9 billion and $12.6 billion was related to our drawdown funds for these periods Financial Results Distributable Earnings and Common Distributions • Q4-17 and FY 2017 GAAP net income attributable to Ares Management, L.P. of $39.6 million and $76.2 million, respectively • Q4-17 and FY 2017 GAAP basic earnings per common unit of $0.40 and $0.62 and diluted earnings per common unit of $0.39 and $0.62, respectively • Q4-17 and FY 2017 GAAP management fees of $186.4 million and $722.4 million, respectively(2) • Q4-17 and FY 2017 unconsolidated management and other fees of $199.3 million and $767.3 million, respectively(2) • Q4-17 and FY 2017 Fee Related Earnings of $58.9 million and $217.0 million, respectively, resulting in a 30% and 28% Fee Related Earnings margin, respectively • Q4-17 and FY 2017 Performance Related Earnings of $73.5 million and $250.7 million, respectively • Q4-17 and FY 2017 Realized Income of $74.8 million and $325.4 million, respectively, and Q4-17 and FY 2017 after-tax Realized Income of $0.28 per unit and $1.27 per unit, respectively(3) • Q4-17 and FY 2017 Economic Net Income of $132.4 million and $467.7 million, respectively, and Q4-17 and FY 2017 after-tax Economic Net Income of $0.54 per unit and $1.93 per unit, respectively(3) • Q4-17 and FY 2017 Distributable Earnings of $60.6 million and $271.6 million, respectively • Q4-17 and FY 2017 After-tax Distributable Earnings of $0.26 per common unit and $1.18 per common unit, respectively(4) • Declared a distribution of $0.40 per common unit for the five months ended February 28, 2018, inclusive of $0.25 per common unit for the fourth quarter and $0.15 per common unit for the first two months of the first quarter, bringing the full year distribution to $1.10 per common unit (5) • Declared Q4-17 distributions of $0.4375 per preferred unit(6)


 
4 Recent Developments Since Year End Election Details • Public unitholders will receive a final Schedule K-1 for the period from January 1, 2018 through February 28, 2018 • For distributions made after March 1, 2018, investors will receive income reported on a Form 1099- DIV • Ares elected to change its tax classification from a partnership to a corporation, effective March 1, 2018 Dividend Policy • For the month of March 2018, Ares declared a $0.0933 per share dividend to common shareholders to be paid on April 30, 2018 to holders of record on April 16, 2018 • Ares intends to provide a steady annual dividend for each calendar year with future changes based on the level and growth of after-tax fee related earnings • Although Ares may declare special dividends in times of heightened performance fees, Ares intends to retain performance fee earnings to fund future growth and for potential share repurchases Ares posted a presentation with additional information, which can be viewed at www.aresmgmt.com on the Investor Resources section of our home page under Events and Presentations. The presentation is titled "Presentation on Corporate Status Election." We also furnished the presentation on Form 8-K with the U.S. Securities and Exchange Commission on February 15, 2018.


 
5 Gross New Capital Commitments – Fourth Quarter and Full Year 2017(1) 1. Represents gross new commitments during Q4-17 and full year 2017, including equity and debt commitments and gross inflows into our open-ended managed accounts and sub-advised accounts. $ in millions Q4 2017 FY 2017 Full Year Commentary Credit Group U.S. CLOs $607 $3,479 Closed four and priced one new U.S. CLO in 2017 Ares Private Credit Solutions ("APCS") 1,330 3,365 New equity commitments ARCC and affiliates 257 2,041 New equity and debt commitments to ARCC, IHAM and SDLP Other U.S. Direct Lending 154 2,899 New and additional equity and debt commitments to various funds and SMAs Ares Capital Europe III ("ACE III") — 571 Additional debt commitments Other E.U. Direct Lending — 864 New equity commitments to various funds and SMAs Other Credit Funds 247 1,702 New and additional equity and debt commitments to various funds and SMAs Total Credit Group $2,595 $14,921 Private Equity Group Fifth Power and Infrastructure Strategy — $300 Additional equity commitments Private Equity Asia 33 56 Additional equity commitments Total Private Equity Group $33 $356 Real Estate Group U.S. and E.U. Equity $33 $934 $690mm of equity commitments to Ninth U.S. Value Add Fund in 2017 and additional commitments across various funds and co-investments ACRE — 509 Additional debt commitments Total Real Estate Group $33 $1,443 Total $2,661 $16,720 #679FD1 #49749B #225070 #1E3154 #75B8F4 #DBE6EF #A7D1EA #ACACAC #828282 #D2D2D2


 
6 Assets Under Management 1. For FY 2017, distributions totaled approximately $5.7 billion and redemptions totaled approximately $2.9 billion. AUM of $106.4 billion as of December 31, 2017 increased 11.8% year over year • $16.7 billion in gross new capital commitments for 2017, including $10.0 billion in equity commitments and $6.7 billion in debt commitments ◦ AUM growth was partially offset by distributions/redemptions of $8.6 billion,(1) primarily in funds past their reinvestment periods in the Credit and Private Equity Groups, and by reduction in leverage of $6.8 billion, primarily due to run-off in U.S. and E.U. CLOs and paydowns of loans in ARCC's SSLP program ◦ Q4-17 net new commitments were $2.4 billion, of which approximately $0.4 billion is already earning fees and another $2.0 billion is expected to become FPAUM upon deployment or initiation of the fee accrual period FPAUM of $72.5 billion as of December 31, 2017 increased 19.8% year over year • Increase in FPAUM was primarily attributable to management fees turning on for ACOF V (effective March 3, 2017), new fundraising in U.S. CLOs and deployment of capital in direct lending funds in the Credit Group, largely offset by run-off in U.S. syndicated loans and other liquid credit funds AUM ($ in billions) FPAUM ($ in billions) Q4-16 Q3-17 Q4-17 $60.5 $70.5 $71.7 $25.0 $24.6 $24.5 $9.8 $95.3 $10.5 $105.6 $10.2 $106.4 Q4-16 Q3-17 Q4-17 $42.7 $48.6 $49.4 $11.3 $16.8 $16.9$6.5 $60.5 $7.0 $72.4 $6.2 $72.5 Credit Private Equity Real Estate Credit Private Equity Real Estate


 
7 AUM, FPAUM and Management Fees by Duration As of December 31, 2017, approximately 72% of AUM, 70% of FPAUM and 81% of management fees had a duration longer than 3 years ◦ At time of fund closing, approximately 82% of AUM and 79% of FPAUM had a duration longer than 3 years ◦ In addition, approximately 91% of our Q4-17 management fees came from funds with a duration greater than 3 years at time of closing ◦ At inception, the initial duration of approximately 80% of of AUM as of December 31, 2017 was greater than 7 years Permanent Capital 10 or more years 7 to 9 years 3 to 6 years Fewer Than 3 years Managed Accounts 14% 24% 7% 17% 7 % 30% 6% 22% 6% 20% 72% 15% 70% FPAUM: $72.5 billionAUM: $106.4 billion Management Fees: $193.9 million 81% 16% 16% 10% 30% 11% 17% 18% 19% 11%22% 9% 21% 39% 17%7% 18% 10% 9%


 
8 Available Capital and AUM Not Yet Earning Fees Available Capital as of December 31, 2017 increased 8.2% year over year ◦ The increase was primarily driven by new and additional commitments to U.S. direct lending funds, which were partially offset by capital deployment in the Credit, Private Equity and Real Estate Groups AUM Not Yet Earning Fees as of December 31, 2017 decreased 18.2% year over year ◦ The decrease was primarily driven by FPAUM for ACOF V, which began to pay management fees in Q1 2017, partially offset by new fundraising in funds within the Credit Group Available Capital ($ in millions) AUM Not Yet Earning Fees ($ in millions) Q4-16 Q3-17 Q4-17 $8,330 $12,735 $12,996 $11,876 $9,908 $9,366 $3,029 $23,235 $3,114 $25,757 $2,770 $25,132 Credit Private Equity Real EstateCredit Private Equity Real Estate Q4-16 Q3-17 Q4-17 $7,522 $11,572 $11,440 $9,313 $2,304 $2,214 $917 $17,752 $920 $14,796 $863 $14,517


 
9 Incentive Eligible AUM and Incentive Generating AUM . 1. ARCC Part II Fees are paid when cumulative aggregate realized capital gains exceed cumulative aggregate realized capital losses and aggregate unrealized capital depreciation less any amounts paid in previous periods. As of December 31, 2017, cumulative aggregate realized capital gains were below the required hurdle by an amount less than 0.8% of the underlying portfolio of $11.8 billion. Incentive Eligible AUM Incentive Eligible AUM of $62.2 billion as of December 31, 2017 increased 22.5% year over year ◦ The increase was driven primarily by new and additional fundraising across U.S. direct lending funds in our Credit Group Incentive Generating AUM of $22.7 billion as of December 31, 2017 increased 28.2% year over year ◦ The increase was primarily driven by additional funds exceeding their hurdle rates in 2017 and continued deployment in Credit and Private Equity funds that were exceeding hurdle rates as of December 31, 2016 and remained above hurdle rates as of December 31, 2017 Of the $40.4 billion of incentive eligible AUM that is currently invested, 56.2% is incentive generating ◦ Excluding the capital gains fee potential from the largely debt oriented ARCC portfolio, 80% of incentive eligible AUM that is currently invested is incentive generating ($ in millions) Credit Private Equity Real Estate Credit PrivateEquity Real Estate Total Incentive Generating AUM $10,848 $8,665 $3,197 $22,710 + Uninvested IEAUM 10,019 9,590 2,136 21,745 + IEAUM below hurdle 2,454 1,768 1,483 5,705 + ARCC Part II Fees below Hurdle(1) 12,018 - - 12,018 Incentive Eligible AUM $35,339 $20,023 $6,816 $62,178 Q4-17 Incentive Generating to Incentive Eligible AUM Reconciliation Q4-16 Q3-17 Q4-17 $24,708 $33,710 $35,339 $19,462 $19,601 $20,023 $6,577 $50,747 $7,121 $60,432 $6,816 $62,178


 
10 $9,208 $860 $696 AUM Not Yet Earning Fees Available for Future Deployment: $10.8 billion AUM Not Yet Earning Fees As of December 31, 2017, AUM Not Yet Earning Fees of $14.5 billion could generate approximately $158.2 million in potential incremental annual base management fees, of which $118 million relates to the $10.8 billion of AUM Available for Future Deployment* ◦ The $10.8 billion includes approximately $7.3 billion relating to U.S. and E.U. direct lending funds, $1.3 billion in structured credit funds and $0.9 billion in private equity funds, among other funds *No assurance can be made that such results will be achieved. Assumes the AUM not yet paying fees as of December 31, 2017 is invested and such fees are paid on an annual basis. Does not reflect any associated reductions in management fees from certain funds, some of which may be material. Reference to $158.2 million includes approximately $26.6 million in potential incremental management fees from deploying undrawn/available credit facilities at ARCC (in excess of 0.75 x leverage) which may not be drawn due to leverage target limitations. Excludes any potential ARCC Part I Fees. 1. Capital available for deployment for follow-on investments represents capital committed to funds that are past their investment periods but for which capital is available to be called for follow-on investments in existing portfolio companies. There is no assurance such capital will be invested. $10.8 billion of AUM Not Yet Earning Fees was available for future deployment as of December 31, 2017 ($ in millions)($ in millions) Capital Available for Future Deployment Capital Available for Deployment for Follow-on Investments (1) Available Capital Currently in Funds Unlikely to Be Drawn Due to Leverage Targets and Restrictions Funds in or Expected to Be in Wind-down Credit Private Equity Real Estate AUM Not Yet Earning Fees: $14.5 billion $10,764 $1,585 $1,772 $396


 
11 $3,065 $718 $168 Q4-17 Capital Deployment Breakdown: $4.0 billion Capital Deployment(1) Total gross invested capital for the year ended December 31, 2017 of $16.4 billion compared to $10.2 billion for the year ended December 31, 2016 ◦ Of the total amount, $12.6 billion was related to deployment in drawdown funds compared to $6.7 billion for the same period in 2016 Total gross invested capital during Q4-17 of $4.0 billion compared to $2.8 billion in Q4-16 ◦ Of the total amount, $2.9 billion was related to deployment in our drawdown funds compared to $1.3 billion for the same period in 2016 ($ in millions) (2) 1. Capital deployment figures exclude deployment from permanent capital vehicles. 2. Non-drawdown funds includes new capital deployed by managed accounts and CLOs but excludes recycled capital. $2,916 $1,035 Drawdown Funds Non-drawdown Funds(2) Credit Private Equity Real Estate Credit Private Equity Real Estate FY-17 Strategies • U.S. Direct Lending • E.U. Direct Lending • Corporate Private Equity • Structured Credit • E.U. Real Estate Equity • U.S. Real Estate Equity FY 2017 Capital Deployment in Drawdown Funds: $12.6 billion FY 16 FY 17 $4,626 $8,316 $648 $3,415 $1,389 $6,663 $908 $12,639 Q4-17 Strategies • U.S. Direct Lending • E.U. Direct Lending • Corporate Private Equity • Structured Credit • E.U. Real Estate Equity Q4-16 Q4-17 $839 $2,030$84 $718 $418 $1,341 $168 $2,916 ($ in millions) ($ in millions)


 
12 $ in thousands, except share data Three Months Ended December 31, Year Ended December 31, 2017 2016 2017 2016 Revenues Management fees (includes ARCC Part I Fees of $29,031, $105,467 and $30,297, $121,181 for the three and twelve months ended December 31, 2017 and 2016, respectively) $186,429 $161,505 $722,419 $642,068 Performance fees 156,470 180,166 636,674 517,852 Administrative and other fees 13,382 16,524 56,406 39,285 Total revenues 356,281 358,195 1,415,499 1,199,205 Expenses Compensation and benefits 129,204 112,476 514,109 447,725 Performance fee compensation 118,678 134,107 479,722 387,846 General, administrative and other expenses 51,537 42,931 196,730 159,776 Transaction support expense — — 275,177 — Consolidated Funds' expenses 11,548 10,059 39,020 21,073 Total expenses 310,967 299,573 1,504,758 1,016,420 Other income (expense) Net realized and unrealized gain on investments 27,091 6,902 67,034 28,251 Interest and dividend income 3,357 10,009 12,715 23,781 Interest expense (5,643) (4,162) (21,219) (17,981) Other income, net 2,644 1,694 19,470 35,650 Net realized and unrealized gain (loss) on investments of Consolidated Funds 44,861 3,666 100,124 (2,057) Interest and other income of Consolidated Funds 59,722 45,715 187,721 138,943 Interest expense of Consolidated Funds (40,403) (23,983) (126,727) (91,452) Total other income 91,629 39,841 239,118 115,135 Income before taxes 136,943 98,463 149,859 297,920 Income tax expense (benefit) 5,407 3,147 (23,052) 11,019 Net income 131,536 95,316 172,911 286,901 Less: Net income attributable to non-controlling interests in Consolidated Funds 35,415 6,450 60,818 3,386 Less: Net income attributable to redeemable interests in Ares Operating Group entities — — — 456 Less: Net income attributable to non-controlling interests in Ares Operating Group entities 56,525 54,847 35,915 171,251 Net income attributable to Ares Management, L.P. 39,596 34,019 76,178 111,808 Preferred equity distributions paid 5,425 5,425 21,700 12,176 Net income attributable to Ares Management, L.P. common unitholders $34,171 $28,594 $54,478 $99,632 Net income attributable to Ares Management, L.P. per common unit Basic $0.40 $0.35 $0.62 $1.22 Diluted $0.39 $0.34 $0.62 $1.20 Weighted-average common units Basic 82,233,242 80,804,833 81,838,007 80,749,671 Diluted 86,548,224 83,777,502 81,838,007 82,937,030 Distribution declared and paid per common unit $0.41 $0.20 $1.13 $0.83 GAAP Statements of Operations


 
13 RI, ENI and Other Measures Financial Summary 1. Includes ARCC Part I Fees of $29.0 million and $30.3 million for the three months ended December 31, 2017 and 2016, respectively, and $105.5 million and $121.2 million for the year ended December 31, 2017 and 2016, respectively. 2. Includes compensation and benefits expenses attributable to OMG of $28.7 million and $22.2 million for the three months ended December 31, 2017 and 2016, respectively, and $113.6 million and $99.4 million for FY-17 and FY-16, respectively. 3. Includes G&A expenses attributable to OMG of $18.4 million and $16.3 million for the three months ended December 31, 2017 and 2016, respectively, and $75.1 million and $60.9 million for the year ended December 31, 2017 and 2016, respectively, which are not allocated to an operating segment. 4. Non-core/non-recurring other items includes one-time acquisition costs, non-cash depreciation and amortization and placement fees and underwriting costs associated with selected strategies. See slide 14 in this presentation for additional details. 5. After income tax Distributable Earnings attributable to common unitholders per unit calculation uses total common units outstanding, assuming no exchange of Ares Operating Group Units. 6. Units of 216,682,844 includes the sum of common units, Ares Operating Group Units that are exchangeable for common units on a one-for-one basis and the dilutive effects of the Company’s equity-based awards. 7. Total fee revenue is calculated as management fees plus net performance fees. 8. Effective management fee rate represents the quotient of management fees and the aggregate fee bases for the quarters presented. The effective rate shown excludes the effect of one-time catch-up fees. $ in thousands, except share data (unless otherwise noted) Three Months Ended December 31, Year Ended December 31, 2017 2016 % Change 2017 2016 % Change Management fees(1) $193,856 $165,375 17% $744,825 $659,451 13% Other fees 5,433 9,574 (43)% 22,431 12,351 82% Compensation and benefits expenses(2) (104,497) (94,539) 11% (413,735) (384,715) 8% General, administrative and other expenses(3) (35,891) (32,008) 12% (136,531) (114,737) 19% Fee Related Earnings $58,901 $48,402 22% $216,990 $172,350 26% Realized net performance fees $12,786 $20,736 (38)% $75,457 $94,734 (20)% Realized net investment income 3,068 21,863 (86)% 32,993 33,244 (1)% Realized Income $74,755 $91,001 (18)% $325,440 $300,328 8% Unrealized net performance fees $26,847 $27,503 (2)% $88,523 $38,890 128% Unrealized net investment income 30,765 (4,752) (747)% 53,744 17,765 203% Economic Net Income $132,367 $113,752 16% $467,707 $356,983 31% (-) Unrealized net performance fees $26,847 $27,503 (2)% $88,523 $38,890 128% (-) Unrealized net investment income (loss) 30,765 (4,752) (747)% 53,744 17,765 203% (-) Non-core/non-recurring other cash uses(4) 14,172 11,531 23% 53,805 36,022 49% Distributable Earnings $60,583 $79,470 (24)% $271,635 $264,306 3% (-) Preferred unit distribution $5,425 $5,425 —% $21,700 $12,176 78% Distributable Earnings, net of preferred unit distribution $55,158 $74,045 (26)% $249,935 $252,130 (1)% After-tax Distributable Earnings per common unit, net of preferred unit distribution $0.26 $0.31 (16)% $1.18 $1.00 18% After-tax Realized Income, net of preferred unit distribution $60,358 $73,682 (18)% $273,624 $248,686 10% After-tax Realized Income per common unit, net of preferred unit distribution $0.23 $0.30 (23)% $1.08 $0.98 10% After-tax Economic Net Income, net of preferred unit distribution $116,789 $95,081 23% $415,742 $303,560 37% After-tax Economic Net Income per unit, net of preferred unit distribution(6) $0.54 $0.44 23% $1.93 $1.42 36% Net performance fees $39,633 $48,239 (18)% $163,980 $133,624 23% Net investment income 33,833 17,111 98% 86,737 51,009 70% Performance Related Earnings $73,466 $65,350 12% $250,717 $184,633 36% Other Data Total fee revenue(7) $233,489 $213,614 9% $908,805 $793,075 15% Effective management fee rate(8) 1.05% 1.08% (3)% 1.06% 1.09% (3)%


 
14 GAAP to Non-GAAP Reconciliation – Unconsolidated Reporting Basis Note: This table is a reconciliation of income (loss) before provision for income taxes on a consolidated basis to RI, ENI, FRE, PRE and DE on unconsolidated basis, which shows the results of the reportable segments on a combined basis together with the Operations Management Group. Management believes that this presentation is more meaningful than a reconciliation to the reportable segments on a segment basis because such reconciliation would exclude the Operations Management Group. Differences may arise due to rounding. $ in thousands Three Months Ended December 31, Year Ended December 31, 2017 2016 2017 2016 Economic Net Income. Realized Income and Fee Related Earnings: Income before taxes $136,943 $98,463 $149,859 $297,920 Adjustments: Amortization of intangibles 3,650 5,876 17,850 26,638 Depreciation expense 3,173 2,275 12,631 8,215 Equity compensation expenses 17,614 11,880 69,711 39,065 Acquisition and merger-related expenses 1,177 152 259,899 (16,902) Placement fees and underwriting costs 5,448 1,538 19,765 6,424 Offering costs — — 688 — Other non-cash income (1,730) — (1,730) (1,728) Expense of non-controlling interests in consolidated subsidiaries 1,332 — 1,739 — Income before taxes of non-controlling interests in Consolidated Funds, net of eliminations (35,240) (6,432) (62,705) (2,649) Economic Net Income 132,367 113,752 467,707 356,983 Unconsolidated performance fee income - unrealized (102,448) (110,138) (325,915) (228,472) Unconsolidated performance fee compensation expense - unrealized 75,601 82,635 237,392 189,582 Unconsolidated net investment income - unrealized (30,765) 4,752 (53,744) (17,765) Realized Income 74,755 91,001 325,440 300,328 Unconsolidated performance fee income - realized (55,863) (72,208) (317,787) (292,998) Unconsolidated performance fee compensation expense - realized 43,077 51,472 242,330 198,264 Unconsolidated net investment income - realized (3,068) (21,863) (32,993) (33,244) Fee Related Earnings 58,901 48,402 216,990 172,350 Unconsolidated performance fee – realized 55,863 72,208 317,787 292,998 Unconsolidated performance fee compensation expense – realized (43,077) (51,472) (242,330) (198,264) Unconsolidated investment and other income realized, net 3,065 21,863 32,987 33,244 Less: One-time acquisition costs (1,177) (352) (4,878) (841) Dividend equivalent (5,569) (1,524) (14,997) (5,323) Non-cash items 43 (13) 576 870 Income tax expense (2,286) (5,829) (4,857) (16,089) Placement fees and underwriting costs (2,007) (1,538) (16,324) (6,424) Depreciation (3,173) (2,275) (12,631) (8,215) Offering costs — — (688) — Distributable Earnings $60,583 $79,470 $271,635 $264,306 Performance Related Earnings Economic Net Income $132,367 $113,752 $467,707 $356,983 Less: Fee Related Earnings (58,901) (48,402) (216,990) (172,350) Performance Related Earnings $73,466 $65,350 $250,717 $184,633


 
15 GAAP to Non-GAAP Reconciliation – Unconsolidated Reporting Basis (cont.) Note: These tables are a reconciliation of consolidated performance fee income, realized and unrealized performance fee income and net investment income to unconsolidated basis, which assist in the reconciliation of GAAP Net Income to fee related earnings and distributable earnings. These reconciliations show the results of the reportable segments on a combined basis together with the Operations Management Group. Management believes that this presentation is more meaningful than a reconciliation to the reportable segments on a segment basis because such reconciliation would exclude the Operations Management Group. Differences may arise due to rounding. 1. Related to performance fees for AREA Sponsor Holdings LLC. Changes in value of this investment are reflected within other income in the Company’s Consolidated Statements of Operations. $ in thousands Three months Ended December 31, Year Ended December 31, 2017 2016 2017 2016 Performance fee and net investment income reconciliation: Unconsolidated performance fee income - realized $55,863 $72,208 $317,787 $292,998 Performance fee income - realized earned from Consolidated Funds (3) — (8,089) — Performance fee - realized reclass(1) (540) (2,314) (2,721) (7,367) Performance fee income - realized $55,320 $69,894 $306,977 $285,631 Unconsolidated performance fee income - unrealized $102,448 $110,138 $325,915 $228,472 Performance fee income - unrealized earned from Consolidated Funds (1,330) (1,213) 2,997 (1,139) Performance fee - unrealized reclass(1) 32 1,347 785 4,888 Performance fee income - unrealized $101,150 $110,272 $329,697 $232,221 Unconsolidated net investment income $33,833 $17,111 $86,737 $51,009 Net investment income from Consolidated Funds 55,548 21,574 129,223 42,244 Performance fee - reclass(1) 508 967 1,936 2,479 Change in value of contingent consideration — 189 20,156 17,675 Other non-cash income 1,730 — 1,730 1,728 Offering costs — — (688) — Other income of non-controlling interests in consolidated subsidiaries 10 — 24 — GAAP total other income $91,629 $39,841 $239,118 $115,135


 
16 Credit Group(1) Note: Past performance is not indicative of future results. The Credit Group had ~235 investment professionals, over 1,450 portfolio companies and 139 active funds as of December 31, 2017. 1. Segment results are shown before the unallocated support costs of the Operations Management Group. See “GAAP to Non-GAAP Reconciliation – Unconsolidated Reporting Basis” on slides 14-15. 2. This table is a financial summary only. See slides 25-26 for complete financial results. 3. Includes ARCC Part I Fees of $29.0 million and $30.3 million for Q4-17 and Q4-16, respectively, and $105.5 million and $121.2 million for FY 2017 and FY 2016, respectively. The 2017 amounts are net of the $10 million quarterly ARCC– ACAS transaction fee waiver. 4. The net return for E.U. direct lending is 2.4% for Q4-17 and 11.3% for FY-17. Gross and net returns for E.U. direct lending are represented by a composite made up of the ACE II and ACE III Euro-denominated feeder funds. The gross and net returns for the composite made up of the ACE II and ACE III U.S. dollar denominated feeder funds are 3.0% and 2.2% for Q4-17 and 14.4% and 10.6% for FY-17, respectively. Returns in the chart are shown for the Euro- denominated composite as it is the larger of the two composites. Composite returns are calculated by asset-weighting the underlying fund-level returns. Returns include the reinvestment of income and other earnings from securities or other investments and reflect the deduction of all trading expenses. Gross returns do not reflect the deduction of management fees, carried interest, if applicable, or any other expenses. Net returns are reduced by applicable management fees, accrued carried interest, if applicable, and other expenses. 5. Net performance returns: 4.4% for U.S. syndicated loan funds and 7.6% for U.S. high yield funds. Performance for syndicated loans is represented by the U.S. Bank Loan Aggregate Composite. Performance for high yield is represented by the U.S. High Yield Composite. • Management and other fees increased 9% and 10% (after giving effect to ARCC Part 1 fee waiver) for the three month and twelve month periods ended December 31, 2017, respectively, compared to the same periods ended December 31, 2016, primarily driven by deployment in U.S. and E.U. direct lending strategies and by a 16% increase in FPAUM. The increase was partially offset by the liquidation and run-off of older vintage funds • Performance Related Earnings decreased by 61% and 48% for the three month and twelve month periods ended December 31, 2017, respectively, compared to the same periods ended December 31, 2016, primarily driven by the wind down of legacy CLOs and reduced market appreciation in Credit Strategies Funds, offset slightly by strong returns in our E.U. direct lending credit funds • Distributable Earnings decreased by 12% and 9% for the three month and twelve month periods ended December 31, 2017, respectively, compared to the same periods ended December 31, 2016, primarily driven by lower net realized performance fees and net realized investment income, partially offset by increases in fee related earnings Financial Summary and Highlights(2) 16% FY 2017 increase in FPAUM 12% Q4-17 increase in Fee Related Earnings E.U. Direct Lending: 15.4%(4) High Yield: 8.2%(5) Syndicated Loans: 4.9%(5) FY 2017 gross returns $ in thousands Q4-17 Q4-16 % Change FY 2017 FY 2016 % Change Management and other fees(3) $132,283 $121,496 9% $502,296 $454,617 10% Fee Related Earnings $72,366 $64,507 12% $276,966 $243,177 14% Net performance fees $5,768 $13,156 (56)% $30,781 $36,405 (15)% Investment income 6,778 11,632 (42)% 18,242 42,895 (57)% Interest expense (3,605) (1,880) 92% (12,405) (8,609) 44% Net investment income 3,173 9,752 (67)% 5,837 34,286 (83)% Performance Related Earnings $8,941 $22,908 (61)% $36,618 $70,691 (48)% Realized Income $70,019 $75,582 (7)% $293,724 $301,706 (3)% Economic Net Income $81,307 $87,415 (7)% $313,584 $313,868 < 1% Distributable Earnings $64,335 $73,457 (12)% $268,737 $294,814 (9)% AUM ($ in billions) $71.7 $60.5 19% FPAUM ($ in billions) $49.4 $42.7 16%


 
17 Private Equity Group(1) Note: Past performance is not indicative of future results. The Private Equity Group had ~95 investment professionals, 33 portfolio companies, 63 U.S. Power and Energy Assets and 21 active funds as of December 31, 2017. 1. Segment results are shown before the unallocated support costs of the Operations Management Group. See “GAAP to Non-GAAP Reconciliation – Unconsolidated Reporting Basis” on slides 14-15. 2. This table is a financial summary only. See slides 25-26 for complete financial results. 3. Performance for corporate private equity portfolio is represented by the ACOF I-V Aggregate, which is comprised of investments held by ACOF I, ACOF II, ACOF III, ACOF IV and ACOF V. Performance returns are gross time-weighted rates of return calculated on a quarterly basis. Returns include the reinvestment of income and other earnings from securities or other investments and reflect the deduction of all trading expenses. Gross returns do not reflect the deduction of management fees, carried interest, if applicable, or any other expenses. Net returns are reduced by applicable management fees, accrued carried interest, if applicable, and other expenses. Net returns for corporate private equity portfolio was 4.7% for Q4-17 and 18.3% for the last twelve months..We believe aggregated performance returns reflect overall quarterly performance returns in a strategy, but are not necessarily investable funds or products themselves. • Management and other fees increased 38% and 34% for the three month and twelve month periods ended December 31, 2017, respectively, compared to the same periods ended December 31, 2016, primarily attributable to ACOF V, which began paying management fees in March 2017. This increase was partially offset by the reduction in management fees attributable to the step down in fee rate and fee basis for ACOF IV in connection with the launch of ACOF V • Performance Related Earnings for the three months ended December 31, 2017 increased by 7% from the same period ended December 31, 2016 due to an increase in net investment income, primarily driven by an increase in gross return in the corporate private equity portfolio.(3) For the twelve months ended December 31, 2017, Performance Related Earnings increased by 38%, primarily driven by significant market appreciation in ACOF III's portfolio • Distributable Earnings increased by 5% and 30% for the three month and twelve month periods ended December 31, 2017, respectively, compared to the same periods ended December 31, 2016. The increase in Distributable Earnings was primarily driven by increases in fee related earnings and realized performance fees. Realizations included the partial monetization of private and public holdings across ACOF III and IV portfolios Financial Summary and Highlights(2) 30% FY 2017 growth in Distributable Earnings 55% FY 2017 increase in Fee Related Earnings 26.5% FY 2017 gross return in Corporate Private Equity portfolio(3) $ in thousands Q4-17 Q4-16 % Change FY 2017 FY 2016 % Change Management and other fees $51,307 $37,251 38% $199,993 $149,334 34% Fee Related Earnings $29,237 $18,341 59% $113,863 $73,379 55% Net performance fees $25,185 $29,076 (13)% $96,729 $84,421 15% Investment income 18,978 12,596 51% 65,285 34,739 88% Interest expense (1,079) (1,388) (22)% (5,218) (5,589) (7)% Net investment income 17,899 11,208 60% 60,067 29,150 106% Performance Related Earnings $43,084 $40,284 7% $156,796 $113,571 38% Realized Income $43,701 $40,922 7% $192,814 $149,544 29% Economic Net Income $72,321 $58,625 23% $270,659 $186,950 45% Distributable Earnings $42,037 $39,978 5% $187,733 $144,140 30% AUM ($ in billions) $24.5 $25.0 (2)% FPAUM ($ in billions) $16.9 $11.3 50%


 
18 Real Estate Group(1) Note: Past performance is not indicative of future results. The Real Estate Group had ~70 investment professionals, over 170 properties and 42 active funds as of December 31, 2017. 1. Segment results are shown before the unallocated support costs of the Operations Management Group. See “GAAP to Non-GAAP Reconciliation – Unconsolidated Reporting Basis” on slides 14-15. 2. This table is a financial summary only. See slides 25-26 for complete financial results. 3. Returns are gross time-weighted rates of return and do not reflect the deduction of management fees or carried interest, or fund expenses, if applicable. Gross return for U.S. equity is represented by U.S. Fund VIII and gross return for E.U. equity is represented by EF IV. EF IV is made up of two feeder funds, one denominated in U.S. dollars and one denominated in Euros. The gross returns are for the U.S. dollar denominated feeder fund as that is the larger of the two feeders. Gross returns do not reflect the deduction of management fees, carried interest, if applicable, or any other expenses including taxes. The funds shown represent the significant funds with at least 2 years from initial investment. Net returns are reduced by applicable management fees, accrued carried interest, if applicable, and other expenses. Net returns for U.S. equity and E.U. equity were 2.9% and 4.7% for Q4-17 and 13.5% and 17.9% for FY-17, respectively. The gross and net returns for the Euro denominated feeder fund were 5.5% and 4.6% for Q4-17 and 22.9% and 18.0% for FY-17, respectively. • Management and other fees declined 3% and 4% for the three month and twelve month periods ended December 31, 2017, respectively, compared to the same periods ended December 31, 2016, primarily driven by run-off and liquidations in vintage funds in the U.S. equity strategy, partially offset by new fundraising for E.U. and U.S. equity strategies • Performance Related Earnings increased by $9.0 million and $25.7 million for the three month and twelve month periods ended December 31, 2017, respectively, compared to the same periods ended December 31, 2016, primarily driven by continued strong appreciation in EF IV and US VIII as well as other equity strategies in the U.S. and Europe • Distributable Earnings increased by 39% for the three months ended December 31, 2017, compared to the three months ended December 31, 2016, primarily driven by increases in fee related earnings and net realized investment income, partially offset by a decrease in net realized performance fees. Distributable Earnings decreased by 11% for the twelve months ended December 31, 2017, compared to the twelve months ended December 31, 2016, primarily driven by a decline in fee related earnings and net realized performance fees, partially offset by an increase in net realized investment income Financial Summary and Highlights(2) 130% FY 2017 growth in Performance Related Earnings 68% FY 2017 increase in Economic Net income U.S. Equity: 19.2% E.U. Equity: 24.1% FY 2017 Gross Returns(3) $ in thousands Q4-17 Q4-16 % Change FY 2017 FY 2016 % Change Management and other fees $15,699 $16,202 (3)% $64,967 $67,851 (4)% Fee Related Earnings $4,389 $4,076 8% $14,862 $16,157 (8)% Net performance fees $8,680 $6,007 44% $36,470 $12,798 185% Investment income (loss) 4,510 (1,987) NM 10,655 8,010 33% Interest expense (393) (268) 47% (1,650) (1,056) 56% Net investment income 4,117 (2,255) (283)% 9,005 6,954 29% Performance Related Earnings $12,797 $3,752 241% $45,475 $19,752 130% Realized Income $7,907 $7,965 (1)% $24,527 $26,611 (8)% Economic Net Income $17,186 $7,828 120% $60,337 $35,909 68% Distributable Earnings $6,593 $4,727 39% $19,189 $21,594 (11)% AUM ($ in billions) $10.2 $9.8 4% FPAUM ($ in billions) $6.2 $6.5 (5)%


 
19 Realized Income per Unit Data 1. Pro forma units of 216,682,844 includes the sum of common units, Ares Operating Group Units that are exchangeable for common units on a one-for-one basis and the dilutive effects of the Company’s equity-based awards. 2. The Company has 12,400,000 of 7% Series A Preferred Units outstanding as of December 31, 2017. 3. The provision for income taxes on RI was calculated by multiplying (1) Ares Management, L.P.’s share of RI that is subject to corporate level taxes (reduced by the interest expense attributable to an intercompany loan between Ares Management, L.P. and a corporate subsidiary) by (2) those subsidiaries’ effective corporate tax rate. Three Months Ended December 31, Year Ended December 31, $ in thousands, except shara data 2017 2016 2017 2016 Realized Income per unit Realized Income before taxes $74,755 $91,001 $325,440 $300,328 (-) Entity level foreign, state and local taxes (2,290) (5,830) (4,862) (16,092) Realized Income after entity level foreign, state and local taxes $72,465 $85,171 $320,578 $284,236 Realized Income per unit(1) $0.33 $0.40 $1.48 $1.33 After-tax Realized Income, net of preferred unit distribution Realized Income after entity level, foreign, state and local taxes $72,465 $85,171 $320,578 $284,236 (-) Preferred unit distribution(2) (5,425) (5,425) (21,700) (12,176) Realized Income, net of preferred unit distribution 67,040 79,746 298,878 272,060 (-) Income tax provision(3) (6,682) (6,064) (25,254) (23,374) After-tax Realized Income, net of preferred unit distribution $60,358 $73,682 $273,624 $248,686 After-tax Realized Income per unit(1) $0.28 $0.34 $1.27 $1.15 After-tax Realized Income per common unit Realized Income after entity level, foreign, state and local taxes $67,040 $79,746 $298,878 $272,060 x Common unit ownership % 38.72% 38.04% 38.61% 37.96% Realized Income attributable to common unitholders $25,959 $30,335 $115,421 $103,244 (-) Income tax provision(3) (6,682) (6,064) (25,254) (23,374) After-tax Realized Income attributable to common unitholders $19,277 $24,271 $90,167 $79,870 After-tax Realized Income per common unit $0.23 $0.30 $1.08 $0.98


 
20 Economic Net Income per Unit Data 1. Pro forma units of 216,682,844 includes the sum of common units, Ares Operating Group Units that are exchangeable for common units on a one-for-one basis and the dilutive effects of the Company’s equity-based awards. 2. The Company has 12,400,000 of 7% Series A Preferred Units outstanding as of December 31, 2017. 3. The provision for income taxes on ENI was calculated by multiplying (1) Ares Management, L.P.’s share of ENI that is subject to corporate level taxes (reduced by the interest expense attributable to an intercompany loan between Ares Management, L.P. and a corporate subsidiary) by (2) those subsidiaries’ effective corporate tax rate. Three Months Ended December 31, Year Ended December 31, $ in thousands, except shara data 2017 2016 2017 2016 Economic Net Income per unit Economic Net Income before taxes $132,367 $113,752 $467,707 $356,983 (-) Entity level foreign, state and local taxes (2,290) (5,830) (4,862) (16,092) Economic Net Income after entity level foreign, state and local taxes $130,077 $107,922 $462,845 $340,891 Economic Net Income per unit(1) $0.60 $0.50 $2.14 $1.59 After-tax Economic Net Income, net of preferred unit distribution Economic Net Income after entity level, foreign, state and local taxes $130,077 $107,922 $462,845 $340,891 (-) Preferred unit distribution(2) (5,425) (5,425) (21,700) (12,176) Economic Net Income, net of preferred unit distribution 124,652 102,497 441,145 328,715 (-) Income tax provision(3) (7,863) (7,416) (25,403) (25,155) After-tax Economic Net Income, net of preferred unit distribution $116,789 $95,081 $415,742 $303,560 After-tax Economic Net Income per unit(1) $0.54 $0.44 $1.93 $1.42 After-tax Economic Net Income per common unit Economic Net Income after entity level, foreign, state and local taxes $124,652 $102,497 $441,145 $328,715 x Common unit ownership % 38.72% 38.04% 38.61% 37.96% Economic Net Income attributable to common unitholders $48,268 $38,990 $170,326 $124,783 (-) Income tax provision(3) (7,863) (7,416) (25,403) (25,155) After-tax Economic Net Income attributable to common unitholders $40,405 $31,574 $144,923 $99,628 After-tax Economic Net Income per common unit $0.48 $0.39 $1.74 $1.22


 
21 $ in thousands, except share data Three Months Ended December 31, Year Ended December 31, 2017 2016 2017 2016 Distributable Earnings per Ares Operating Group Unit(1) outstanding Distributable Earnings $60,583 $79,470 $271,635 $264,306 (-) Preferred unit distribution(2) (5,425) (5,425) (21,700) (12,176) Distributable Earnings, net of preferred unit distribution $55,158 $74,045 $249,935 $252,130 x Ares Operating Group Units(1) ownership % 61.25% 61.74% 61.33% 61.91% Distributable Earnings attributable to Ares Operating Group Units(1) $33,784 $45,718 $153,282 $156,098 Distributable Earnings per Ares Operating Group Unit outstanding(1) $0.26 $0.35 $1.18 $1.18 Distributable Earnings per common unit outstanding Distributable Earnings, net of preferred unit distribution $55,158 $74,045 $249,935 $252,130 x Common unitholder ownership % 38.75% 38.26% 38.67% 38.09% Distributable Earnings attributable to common unitholders $21,374 $28,330 $96,653 $96,035 (-) Current provision for income taxes(3) — (3,664) — (14,934) After-tax Distributable Earnings attributable to common unitholders $21,374 $24,666 $96,653 $81,101 Distributable Earnings per common unit, net of preferred unit distribution $0.26 $0.31 $1.18 $1.00 Actual Distribution per common unit $0.25 $0.28 $1.10 $0.91 Distributable Earnings per Unit Data 1. Exchangeable into common units. 2. The Company has 12,400,000 of 7% Series A Preferred Units outstanding as of December 31, 2017.. 3. The current provision for income taxes of Ares Management, L.P. on Distributable Earnings (DE) represents the current provision for income taxes on pre-tax net income or loss (reduced by the pro forma interest expense attributable to an intercompany loan between Ares Management, L.P. and a corporate subsidiary).


 
22 Substantial balance sheet value related to investments in Ares managed vehicles and net performance fees receivable ▪ $118.9 million in cash and cash equivalents, $616.2 million in debt obligations with $210.0 million drawn against the $1.065 billion revolving credit facility as of December 31, 2017 ◦ As of December 31, 2017, investments reported on a GAAP basis were $647.3 million. On an unconsolidated basis, investments were $823.0 million(1) ◦ As of December 31, 2017, gross performance fees receivable reported on a GAAP basis were $1,099.8 million. On an unconsolidated basis, performance fees receivable were $1,105.2 million(2) ◦ As of December 31, 2017, net performance fees receivable reported on a GAAP basis were $253.2 million. On an unconsolidated basis, performance fees receivable were $258.6 million(2) ◦ As of December 31, 2017, net performance fees receivable reported on a GAAP basis increased 57.2% compared to the fourth quarter of 2016. On an unconsolidated basis, net performance fees receivable increased 52.6% compared to the fourth quarter of 2016. 28% 54% 18%25% 56% 19% Balance Sheet 1. As of December 31, 2017, was invested in non-Ares managed vehicles. Difference between GAAP and unconsolidated investments represents investments of $175.6 million in Consolidated Funds that are eliminated upon consolidation. 2. Difference between GAAP and unconsolidated gross and net performance fees receivable of $5.3 million represents fees earned from Consolidated Funds that are eliminated upon consolidation. FY 2017: $258.6 million Net Performance Fees Receivable by Group – Unconsolidated Net Performance Fees Receivable by Group – GAAP FY 2017: $253.2 million Credit Private Equity Real Estate Credit Private Equity Real Estate


 
23 Corporate Data Board of Directors Michael Arougheti Co-Founder, Chief Executive Officer and President of Ares Paul G. Joubert Founding Partner of EdgeAdvisors and Investing Partner in Common Angels Ventures David Kaplan Co-Founder and Partner of Ares, Co-Head of Private Equity Group John Kissick Co-Founder and Former Partner of Ares Michael Lynton Former Chief Executive Officer of Sony Entertainment Dr. Judy D. Olian Dean of UCLA Anderson School of Management and the John E. Anderson Chair in Management Antony P. Ressler Co-Founder and Executive Chairman of Ares Bennett Rosenthal Co-Founder and Partner of Ares, Co-Head of Private Equity Group Executive Officers Michael Arougheti Co-Founder, Chief Executive Officer and President Ryan Berry Partner, Chief Marketing and Strategy Officer Kipp deVeer Partner David Kaplan Co-Founder and Partner Michael McFerran Partner, Chief Financial Officer and Chief Operating Officer Antony P. Ressler Co-Founder and Executive Chairman Bennett Rosenthal Co-Founder and Partner Michael Weiner Executive Vice President, Chief Legal Officer of Ares Research Coverage Autonomous Patrick Davitt (646) 561-6254 Bank of America Merrill Lynch Michael Carrier (646) 855-5004 Credit Suisse Craig Sigenthaler (212) 325-3104 Goldman Sachs Alexander Blostein (212) 357-9976 JP Morgan Kenneth Worthington (212) 622-6613 Keefe, Bruyette & Woods Robert Lee (212) 887-7732 Morgan Stanley Michael Cyprys (212) 761-7619 RBC Capital Markets Kenneth Lee (212) 905-5995 SunTrust Robinson Humphrey Douglas Mewhirter (404) 926-5745 Wells Fargo Securities Christopher Harris (212) 214-5009 Corporate Counsel Proskauer Rose LLP Los Angeles, CA Corporate Headquarters 2000 Avenue of the Stars 12th Floor Los Angeles, CA 90067 Tel: (310) 201-4100 Fax: (310) 201-4170 Independent Registered Public Accounting Firm Ernst & Young LLP Los Angeles, CA Securities Listing NYSE: ARES NYSE: ARES PR A Transfer Agent American Stock Transfer & Trust Company, LLC 6201 15th Avenue Brooklyn, NY 11210 Tel: (877) 681-8121 Fax: (718) 236-2641 info@amstock.com www.amstock.com Investor Relations Contacts Carl Drake Partner/Head of Ares Management, LLC Public Investor Relations and Communications Tel: (678) 538-1981 cdrake@aresmgmt.com Veronica Mendiola Vice President Tel: (212) 808-1150 General IR Contact Tel (U.S.): (800) 340-6597 Tel (International): (212) 808-1101 IRARES@aresmgmt.com Please visit our website at: www.aresmgmt.com


 
Appendix


 
25 Financial Details – Segments 1. Includes results of the reportable segments on a combined basis together with the Operations Management Group. See “GAAP to Non-GAAP Reconciliation – unconsolidated Reporting Basis” on slides 14-15. Three Months Ended December 31, 2017 $ in thousands Credit Group Private Equity Group Real Estate Group Operations Management Group Total (1) Management fees (Credit Group includes ARCC Part I Fees of $29,031) $127,287 $50,939 $15,630 $— $193,856 Other fees 4,996 368 69 — 5,433 Compensation and benefits (49,375) (17,707) (8,738) (28,677) (104,497) General, administrative and other expenses (10,542) (4,363) (2,572) (18,414) (35,891) Fee Related Earnings $72,366 $29,237 $4,389 ($47,091) $58,901 Performance fees - realized $1,130 $49,008 $5,725 $— $55,863 Performance fees - unrealized 13,134 73,397 15,917 — 102,448 Performance fee compensation - realized (569) (39,203) (3,305) — (43,077) Performance fee compensation - unrealized (7,927) (58,017) (9,657) — (75,601) Net performance fees $5,768 $25,185 $8,680 $— $39,633 Investment income - realized ($1,947) $5,061 $1,381 $663 $5,158 Investment income (loss) - unrealized 5,464 13,275 2,703 8,405 29,847 Interest and other investment income 3,261 642 426 142 4,471 Interest expense (3,605) (1,079) (393) (566) (5,643) Net investment income $3,173 $17,899 $4,117 $8,644 $33,833 Performance Related Earnings $8,941 $43,084 $12,797 $8,644 $73,466 Realized Income $70,019 $43,701 $7,907 ($46,872) $74,755 Economic Net Income $81,307 $72,321 $17,186 ($38,447) $132,367 Distributable Earnings $64,335 $42,037 $6,593 ($52,382) $60,583 Three Months Ended December 31, 2016 $ in thousands Credit Group Private Equity Group Real Estate Group Operations Management Group Total (1) Management fees (Credit Group includes ARCC Part I Fees of $30,297) $112,482 $36,690 $16,203 $— $165,375 Other fees 9,014 561 (1) — 9,574 Compensation and benefits (47,833) (14,720) (9,764) (22,222) (94,539) General, administrative and other expenses (9,156) (4,190) (2,362) (16,300) (32,008) Fee Related Earnings $64,507 $18,341 $4,076 ($38,522) $48,402 Performance fees - realized $6,811 $59,138 $6,259 $— $72,208 Performance fees - unrealized 24,395 78,439 7,304 — 110,138 Performance fee compensation - realized (1,794) (47,311) (2,367) — (51,472) Performance fee compensation - unrealized (16,256) (61,190) (5,189) — (82,635) Net performance fees $13,156 $29,076 $6,007 $— $48,239 Investment income - realized $4,538 $4,132 $519 $5,487 $14,676 Investment income (loss) - unrealized 2,592 417 (2,525) (6,657) (6,173) Interest and other investment income 4,502 8,047 19 202 12,770 Interest expense (1,880) (1,388) (268) (626) (4,162) Net investment income (loss) $9,752 $11,208 ($2,255) ($1,594) $17,111 Performance Related Earnings $22,908 $40,284 $3,752 ($1,594) $65,350 Realized Income $75,582 $40,922 $7,965 ($33,468) $91,001 Economic Net Income $87,415 $58,625 $7,828 ($40,116) $113,752 Distributable Earnings $73,457 $39,978 $4,727 ($38,692) $79,470


 
26 1. Includes results of the reportable segments on a combined basis together with the Operations Management Group. See “GAAP to Non-GAAP Reconciliation – unconsolidated Reporting Basis” on slides 14-15. Year Ended December 31, 2017 $ in thousands Credit Group Private Equity Group Real Estate Group Operations Management Group Total (1) Management fees (Credit Group includes ARCC Part I Fees of $105,467) $481,466 $198,498 $64,861 $— $744,825 Other fees 20,830 1,495 106 — 22,431 Compensation and benefits (192,022) (68,569) (39,586) (113,558) (413,735) General, administrative and other expenses (33,308) (17,561) (10,519) (75,143) (136,531) Fee Related Earnings $276,966 $113,863 $14,862 ($188,701) $216,990 Performance fees - realized $21,087 $287,092 $9,608 $— $317,787 Performance fees - unrealized 54,196 191,559 80,160 — 325,915 Performance fee compensation - realized (9,218) (228,774) (4,338) — (242,330) Performance fee compensation - unrealized (35,284) (153,148) (48,960) — (237,392) Net performance fees $30,781 $96,729 $36,470 — $163,980 Investment income - realized $7,102 $22,625 $5,534 $3,880 $39,141 Investment income - unrealized 5,480 38,754 2,626 8,627 55,487 Interest and other investment income 5,660 3,906 2,495 1,267 13,328 Interest expense (12,405) (5,218) (1,650) (1,946) (21,219) Net investment income (loss) $5,837 $60,067 $9,005 $11,828 $86,737 Performance Related Earnings $36,618 $156,796 $45,475 $11,828 $250,717 Realized Income $293,724 $192,814 $24,527 ($185,625) $325,440 Economic Net Income $313,584 $270,659 $60,337 ($176,873) $467,707 Distributable Earnings $268,737 $187,733 $19,189 ($204,024) $271,635 Year Ended December 31, 2016 $ in thousands Credit Group Private Equity Group Real Estate Group Operations Management Group Total (1) Management fees (Credit Group includes ARCC Part I Fees of $121,181) $444,664 $147,790 $66,997 $— $659,451 Other fees 9,953 1,544 854 — 12,351 Compensation and benefits (182,901) (61,276) (41,091) (99,447) (384,715) General, administrative and other expenses (28,539) (14,679) (10,603) (60,916) (114,737) Fee Related Earnings $243,177 $73,379 $16,157 ($160,363) $172,350 Performance fees - realized $51,435 $230,162 $11,401 $— $292,998 Performance fees - unrealized 22,851 188,287 17,334 — 228,472 Performance fee compensation - realized (11,772) (184,072) (2,420) — (198,264) Performance fee compensation - unrealized (26,109) (149,956) (13,517) — (189,582) Net performance fees $36,405 $84,421 $12,798 $— $133,624 Investment income (loss) - realized $4,928 $18,773 $931 ($14,606) $10,026 Investment income (loss) - unrealized 11,848 (613) 5,418 (2,197) 14,456 Interest and other investment income 26,119 16,579 1,661 149 44,508 Interest expense (8,609) (5,589) (1,056) (2,727) (17,981) Net investment income (loss) $34,286 $29,150 $6,954 ($19,381) $51,009 Performance Related Earnings $70,691 $113,571 $19,752 ($19,381) $184,633 Realized Income $301,706 $149,544 $26,611 ($177,533) $300,328 Economic Net Income $313,868 $186,950 $35,909 ($179,744) $356,983 Distributable Earnings $294,814 $144,140 $21,594 ($196,242) $264,306 Financial Details – Segments


 
27 AUM and FPAUM Rollforward . Credit l AUM increased by 1.8% from Q3-17 driven by additional equity commitments to APCS and a new U.S. CLO and an increase in fund value across various strategies, partially offset by distributions and capital reductions l FPAUM increased by 1.7% from Q3-17, primarily driven by new capital commitments in liquid strategies and deployment in Direct Lending funds paid on invested capital, partially offset by run-off in U.S. syndicated loans and other liquid credit funds Private Equity l AUM remained relatively flat from Q3-17 driven by strong appreciation in various corporate private equity funds, largely offset by distributions, primarily in our corporate private equity funds l FPAUM increased by 0.4% from Q3-17 driven by new commitments and deployment in various private equity funds, largely offset by distributions Real Estate l AUM decreased 3.4% from Q3-17, primarily driven by distributions in our U.S. and E.U. equity strategies, slightly offset by an increase in fund value l FPAUM decreased by 11.5% from Q3-17, primarily driven by run-offs in funds past their investment periods in our U.S. and E.U. equity strategies Q4-17 Total AUM Rollforward ($ in millions) LTM Total AUM Rollforward ($ in millions) Credit Private Equity Real Estate Total Credit Private Equity Real Estate Total Q3-17 Ending Balance $70,477 $24,575 $10,593 $105,645 Q4-16 Ending Balance $60,466 $25,041 $9,752 $95,259 Acquisitions — — — — Acquisitions 3,605 — — 3,605 Commitments 2,341 33 33 2,407 Commitments 14,659 356 1,309 16,324 Capital reductions (1,098) (1) (45) (1,144) Capital reductions (6,728) (5) (97) (6,830) Distributions/redemptions (786) (337) (536) (1,659) Distributions/redemptions (4,124) (3,009) (1,502) (8,635) Changes in fund value 798 260 184 1,242 Changes in fund value 3,854 2,147 767 6,768 Q4-17 Ending Balance $71,732 $24,530 $10,229 $106,491 Q4-17 Ending Balance $71,732 $24,530 $10,229 $106,491 QoQ change $1,255 ($45) ($364) $846 YoY change $11,266 ($511) $477 $11,232 Q4-17 Total FPAUM Rollforward ($ in millions) LTM Total FPAUM Rollforward ($ in millions) Credit Private Equity Real Estate Total Credit Private Equity Real Estate Total Q3-17 Ending Balance $48,622 $16,784 $6,992 $72,398 Q4-16 Ending Balance $42,709 $11,314 $6,540 $60,563 Acquisitions — — — — Acquisitions 2,789 — — 2,789 Commitments 841 33 30 904 Commitments 5,060 7,955 665 13,680 Subscriptions/deployment/increase in leverage 1,584 199 123 1,906 Subscriptions/deployment/increase in leverage 5,094 1,122 582 6,798 Distributions/redemptions/decrease in leverage (1,876) (187) (354) (2,417) Distributions/redemptions/decrease in leverage (8,733) (1,606) (841) (11,180) Changes in fund value 283 29 55 367 Changes in fund value 2,322 (375) 183 2,130 Change in fee basis (4) — (657) (661) Change in fee basis 209 (1,552) (940) (2,283) Q4-17 Ending Balance $49,450 $16,858 $6,189 $72,497 Q4-17 Ending Balance $49,450 $16,858 $6,189 $72,497 QoQ change $828 $74 ($803) $99 YoY change $6,741 $5,544 ($351) $11,934


 
28 AUM and FPAUM by Strategy(1) 1. As of December 31, 2017. 2. AUM includes ARCC, IHAM and SDLP AUM of $14.5 billion, $3.8 billion and $1.9 billion, respectively. ARCC’s wholly owned portfolio company, IHAM, an SEC registered investment adviser, manages 21 funds and serves as the sub-manager or sub-adviser for two other funds as of December 31, 2017. Strategy ($ in billions) AUM % AUM FPAUM % FPAUM Credit Syndicated Loans $16.5 23% $15.3 31% High Yield 4.7 6% 4.6 9% Credit Opportunities 3.3 5% 2.8 6% Structured Credit 4.8 7% 3.4 7% U.S. Direct Lending(2) 30.6 43% 16.9 34% E.U. Direct Lending 11.8 16% 6.4 13% Total Credit Group $71.7 100% $49.4 100% Private Equity Corporate Private Equity ACOF V $7.8 32% $7.6 45% ACOF IV 5.5 22% 2.9 17% ACOF III 4.5 18% 1.5 9% ACOF I-II 0.5 2% 0.0 — ACOF Asia 0.3 1% 0.1 1% U.S Power and Energy Infrastructure EIF I-IV and Co-investment Vehicles 3.5 14% 3.2 19% EIF V 0.9 4% 0.8 5% Special Situations Special Situations 1.5 7% 0.8 4% Private Equity Group $24.5 100% $16.9 100% Real Estate U.S. Equity $4.6 45% $3.1 50% E.U. Equity 2.7 26% 2.0 32% Debt 2.9 29% 1.1 18% Real Estate Group $10.2 100% $6.2 100% Total $106.4 $72.5


 
29 Balance Sheet Investments by Strategy Note: Reflects the balance sheet of Ares Management, L.P. and its consolidated subsidiaries, excluding the effect of Consolidated Funds. *Through investments in Ares CLOs. $ in thousands December 31, 2017 December 31, 2016 Credit Syndicated Loans* $246,460 $140,667 Credit Opportunities 4,464 4,035 Structured Credit 14,067 9,004 U.S. Direct Lending 61,411 37,696 E.U. Direct Lending 48,672 44,882 Credit Group $375,074 $236,284 Private Equity ACOF I - II $4,047 $5,503 ACOF III 120,598 97,549 ACOF IV 35,984 37,308 ACOF Asia 80,738 71,769 U.S. Power & Energy Infrastructure 9,353 17,361 Special Situations 25,863 27,927 Private Equity $276,583 $257,417 Real Estate U.S. Equity $74,617 $62,208 E.U. Equity 15,914 13,077 Real Estate $90,531 $75,285 Operations Management Group Other $80,767 $53,229 Other $80,767 $53,229 Total $822,955 $622,215


 
30 Significant Fund Performance Metrics* The following table presents the performance data for significant funds in the Credit Group that are not drawdown funds: Note: Past performance is not indicative of future results. AUM and Net Returns as of December 31, 2017 unless otherwise noted. The above table includes fund performance metrics for significant funds which includes those that contributed at least 1% of total management fees for the year ended December 31, 2017 or comprised 1% or more of the Company’s total FPAUM as of December 31, 2017, and for which we have sole discretion for investment decisions within the fund. Please see significant fund performance endnotes on slides 32-33 for additional information. Return information presented may not reflect actual returns earned by investors in the applicable fund. ARCC is a publicly traded vehicle. * We do not present fund performance metrics for significant funds with less than two years of historical information, except for those significant funds which pay management fees on invested capital, in which case performance is shown at the earlier of (i) the one year anniversary of the fund's first investment and (ii) such time the fund is 50% or more invested. As of December 31, 2017 Returns (%)(1) Fourth Quarter Year-To-Date Since Inception(2) Year of Inception AUM (in millions) Gross Net Gross Net Gross Net Investment Strategy Credit ARCC(3) 2004 $14,520 N/A 3.3% N/A 10.8% N/A 11.8% U.S. Direct Lending Sub-advised Client A(4) 2007 $723 0.6% 0.5% 8.1% 7.7% 8.0% 7.6% High Yield ELIS XI(4) 2013 $716 1.1% 1.0% 4.9% 4.4% 3.6% 3.1% Syndicated Loans Separately Managed Account Client A(4) * 2015 $1,155 2.4% 2.3% 11.2% 10.7% 7.1% 6.6% Structured Credit Separately Managed Account Client B(4) * 2016 $830 0.7% 0.6% 7.0% 6.7% 6.7% 6.3% High Yield


 
31 Significant Fund Performance Metrics* Note: Past performance is not indicative of future results. AUM and Net Returns as of December 31, 2017 unless otherwise noted. The above table includes fund performance metrics for significant funds which includes those that contributed at least 1% of total management fees for the year ended December 31, 2017 or comprised 1% or more of the Company’s total FPAUM as of December 31, 2017, and for which we have sole discretion for investment decisions within the fund. Please see significant fund performance endnotes on slides 31-32 for additional information. Return information presented may not reflect actual returns earned by investors in the applicable fund. * We do not present fund performance metrics for significant funds with less than two years of historical information, except for those significant funds which pay management fees on invested capital, in which case performance is shown at the earlier of (i) the one year anniversary of the fund's first investment and (ii) such time the fund is 50% or more invested. The following table presents the performance data for our significant funds, all of which are drawdown funds: As of December 31, 2017 Credit Year of Inception AUM Original Capital Commitment Cumulative Invested Capital Realized Proceeds(5) Unrealized Value(6) Total Value MOIC IRR Primary Investment Strategy($ in millions) Gross(7) Net(8) Gross(9) Net(10) ACE II(11) 2013 $1,509 $1,216 $977 $458 $796 $1,254 1.4x 1.3x 10.2% 7.5% E.U. Direct Lending ACE III(12) 2015 5,184 2,822 1,951 102 2,099 2,201 1.2x 1.1x 17.5% 13.1% E.U. Direct Lending Private Equity Year of Inception Original Capital Commitment Cumulative Invested Capital Realized Proceeds(1) Unrealized Value(2) Total Value MOIC IRR Primary Investment Strategy($ in millions) AUM Gross(3) Net(4) Gross(5) Net(6) USPF III 2007 $824 $1,350 $1,808 $1,764 $814 $2,578 1.4x 1.4x 7.8% 5.1% U.S. Power and Energy Infrastructure ACOF III 2008 4,548 3,510 3,867 6,181 4,220 10,401 2.7x 2.3x 31.3% 23.4% Corporate Private Equity USPF IV 2010 1,827 1,688 1,846 809 1,639 2,447 1.3x 1.2x 10.1% 6.5% U.S. Power and Energy Infrastructure ACOF IV 2012 5,479 4,700 3,836 2,492 4,313 6,806 1.8x 1.5x 23.6% 16.1% Corporate Private Equity EIF V(7)* 2015 882 801 313 77 371 448 1.4x 1.6x NA NA U.S. Power and Energy Infrastructure ACOF V* 2017 7,798 7,850 1,415 14 1,483 1,497 1.1x 1.0x NA NA Corporate Private Equity Real Estate Year of Inception Original Capital Commitment Cumulative Invested Capital Realized Proceeds(1) Unrealized Value(2) Total Value MOIC IRR Primary Investment Strategy($ in millions) AUM Gross(3) Net(4) Gross(5) Net(6) EF IV(7) 2014 $1,022 $1,302 $1,057 $434 $1,008 $1,442 1.4x 1.2x 20.6% 12.9% E.U. Real Estate Equity EPEP II(8)* 2015 698 747 298 143 226 370 1.2x 1.1x NA NA E.U. Real Estate Equity


 
32 Significant Fund Performance Metrics Endnotes Credit 1. Returns are time-weighted rates of return and include the reinvestment of income and other earnings from securities or other investments and reflect the deduction of all trading expenses. 2. Since inception returns are annualized. 3. Net returns are calculated using the fund's NAV and assume dividends are reinvested at the closest quarter-end NAV to the relevant quarterly ex-dividend dates. Additional information related to ARCC can be found in its financial statements filed with the SEC, which are not part of this report. 4. Gross returns do not reflect the deduction of management fees or any other expenses. Net returns are calculated by subtracting the applicable management fee from the gross returns on a monthly basis. 5. Realized proceeds represent the sum of all cash distributions to all partners and if applicable, exclude tax and incentive distributions made to the general partner. 6. Unrealized value represents the fund's NAV reduced by the accrued performance fees, if applicable. There can be no assurance that unrealized values will be realized at the valuations indicated. 7. The gross multiple of invested capital (“MoIC”) is calculated at the fund-level and is based on the interests of the fee-paying limited partners and if applicable, excludes interests attributable to the non-fee paying limited partners and/or the general partner which does not pay management fees or performance fees. The gross MoIC is before giving effect to management fees, performance fees as applicable and other expenses. 8. The net MoIC is calculated at the fund-level and is based on the interests of the fee-paying limited partners and if applicable, excludes those interests attributable to the non-fee paying limited partners and/or the general partner which does not pay management fees or performance fees. The net MoIC is after giving effect to management fees, performance fees as applicable and other expenses. 9. The gross IRR is an annualized since inception gross internal rate of return of cash flows to and from the fund and the fund’s residual value at the end of the measurement period. Gross IRR reflects returns to the fee-paying limited partners and if applicable, excludes interests attributable to the non-fee paying limited partners and/or the general partner which does not pay management fees or performance fees. The cash flow dates used in the gross IRR calculation are based on the actual dates of the cash flows. Gross IRRs are calculated before giving effect to management fees, performance fees as applicable, and other expenses. 10. The net IRR is an annualized since inception net internal rate of return of cash flows to and from the fund and the fund’s residual value at the end of the measurement period. Net IRRs reflect returns to the fee- paying limited partners and if applicable, exclude interests attributable to the non-fee paying limited partners and/or the general partner who does not pay management fees or performance fees. The cash flow dates used in the net IRR calculations are based on the actual dates of the cash flows. The net IRRs are calculated after giving effect to management fees, performance fees as applicable, and other expenses. The funds may utilize a credit facility during the investment period and for general cash management purposes. Net fund-level IRRs would have been lower had such fund called capital from its limited partners instead of utilizing the credit facility. 11. ACE II is made up of two feeder funds, one denominated in U.S. dollars and one denominated in Euros. The gross and net IRR and gross and net MoIC presented in the chart are for the U.S. dollar denominated feeder fund as that is the larger of the two feeders. The gross and net IRR for the Euro denominated feeder fund are 12.5% and 9.4%, respectively. The gross and net MoIC for the Euro denominated feeder fund are 1.5x and 1.3x, respectively. Original capital commitments are converted to U.S. dollars at the prevailing exchange rate at the time of the fund's closing. All other values for ACE II are for the combined fund and are converted to U.S. dollars at the prevailing quarter-end exchange rate. The variance between the gross and net MoICs and the net IRRs for the U.S. dollar denominated and Euro denominated feeder funds is driven by the U.S. GAAP mark-to-market reporting of the foreign currency hedging program in the U.S. dollar denominated feeder fund. The feeder fund will be holding the foreign currency hedges until maturity, and therefore is expected to ultimately recognize a gain while mitigating the currency risk associated with the initial principal investments. 12. ACE III is made up of two feeder funds, one denominated in U.S. dollars and one denominated in Euros. The gross and net MoIC presented in the chart are for the Euro denominated feeder fund as that is the larger of the two feeders. The gross and net IRR for the U.S. dollar denominated feeder fund are 17.5% and 12.8%, respectively. The gross and net MoIC for the U.S. dollar denominated feeder fund are 1.2x and 1.1x, respectively. Original capital commitments are converted to U.S. dollars at the prevailing exchange rate at the time of the fund's closing. All other values for ACE III are for the combined fund and are converted to U.S. dollars at the prevailing quarter-end exchange rate.


 
33 Significant Fund Performance Metrics Endnotes (cont’d) Private Equity 1. Realized proceeds represent the sum of all cash dividends, interest income, other fees and cash proceeds from realizations of interests in portfolio investments. 2. Unrealized value represents the fair market value of remaining investments. There can be no assurance that unrealized investments will be realized at the valuations indicated. 3. The gross MoIC is calculated at the investment-level and is based on the interests of all partners. The gross MoIC is before giving effect to management fees, performance fees as applicable and other expenses. 4. The net MoIC for the U.S. power and energy infrastructure funds is calculated at the fund-level. The net MoIC for the corporate private equity funds is calculated at the investment-level. For all funds, the net MoIC is based on the interests of the fee-paying limited partners and if applicable, excludes those interests attributable to the non-fee paying limited partners and/or the general partner who does not pay management fees or performance fees. The net MoIC is after giving effect to management fees, performance fees as applicable and other expenses. 5. The gross IRR is an annualized since inception gross internal rate of return of cash flows to and from investments and the residual value of the investments at the end of the measurement period. Gross IRRs reflect returns to all partners. Cash flows used in the gross IRR calculation are assumed to occur at month-end. The gross IRRs are calculated before giving effect to management fees, performance fees as applicable, and other expenses. 6. The net IRR for the U.S. power and energy infrastructure funds is an annualized since inception net internal rate of return of cash flows to and from the fund and the fund’s residual value at the end of the measurement period. The cash flow dates used in the net IRR calculations are based on the actual dates of the cash flows. The net IRR for the corporate private equity funds is an annualized since inception net internal rate of return of cash flows to and from investments and the residual value of the investments at the end of the measurement period. The funds may utilize a credit facility during the investment period and for general cash management purposes. Net fund-level IRRs would have been lower had such fund called capital from its limited partners instead of utilizing the credit facility. Cash flows used in the net IRR calculations are assumed to occur at month end. For all funds, the net IRRs are calculated after giving effect to management fees, performance fees as applicable, and other expenses and exclude commitments by the general partner and Schedule I investors who do not pay either management fees or carried interest. Including the timing on contribution and distributions to and from the corporate private equity funds, net investor IRRs since inception for ACOF III is 22.7% and for ACOF IV is 15.2%. 7. The Gross MoIC is lower than the Net MoIC due to the fund's utilization of a credit facility to fund an investment that is currently under construction and not generating cash flow. Real Estate 1. Realized proceeds include distributions of operating income, sales and financing proceeds received. 2. Unrealized value represents the fair market value of remaining investments. There can be no assurance that unrealized investments will be realized at the valuations indicated. 3. The gross MoIC is calculated at the investment level and is based on the interests of all partners. The gross MoIC for all funds is before giving effect to management fees, performance fees as applicable and other expenses. 4. The net MoIC is calculated at the fund-level and is based on the interests of the fee-paying partners and, if applicable, excludes interests attributable to the non fee-paying partners and/or the general partner who does not pay management fees or performance fees or has such fees rebated outside of the fund. The net MoIC is after giving effect to management fees, performance fees as applicable and other expenses. 5. The gross IRR is an annualized since inception gross internal rate of return of cash flows to and from investments and the residual value of the investments at the end of the measurement period. Gross IRRs reflect returns to all partners. Cash flows used in the gross IRR calculation are assumed to occur at quarter-end. The gross IRRs are calculated before giving effect to management fees, performance fees as applicable, and other expenses. 6. The net IRR is an annualized since inception net internal rate of return of cash flows to and from the fund and the fund’s residual value at the end of the measurement period. Net IRRs reflect returns to the fee-paying partners and, if applicable, excludes interests attributable to the non fee-paying partners and/or the general partner who does not pay management fees or performance fees or has such fees rebated outside of the fund. The cash flow dates used in the net IRR calculation are based on the actual dates of the cash flows. The net IRRs are calculated after giving effect to management fees, performance fees as applicable, and other expenses. The funds may utilize a credit facility during the investment period and for general cash management purposes. Net fund-level IRRs would have been lower had such fund called capital from its limited partners instead of utilizing the credit facility. 7. EF IV is made up of two parallel funds, one denominated in U.S. dollars and one denominated in Euros. The gross and net MoIC and gross and net IRRs presented in the chart are for the U.S. dollar denominated parallel fund as that is the larger of the two funds. The gross and net IRRs for the Euro denominated parallel fund are 20.8% and 14.2%, respectively. The gross and net MoIC for the Euro denominated parallel fund are 1.4x and 1.2x, respectively. Original capital commitments are converted to U.S. dollars at the prevailing exchange rate at the time of fund's closing.  All other values for EF IV are for the combined fund and are converted to U.S. dollars at the prevailing quarter-end exchange rate. 8. EPEP II is made up of dual currency investors and Euro currency investors. The gross and net MoIC presented in the chart are for dual currency investors as dual currency investors represent the largest group of investors in the fund. Multiples exclude foreign currency gains and losses since dual currency investors fund capital contributions and receive distributions in local deal currency (GBP or EUR) and therefore, do not realize foreign currency gains or losses. The gross and net MoIC for the Euro currency investors, which include foreign currency gains and losses, are 1.2x and 1.1x, respectively. Original capital commitments are converted to U.S. dollars at the prevailing exchange rate at the time of fund's closing. All other values for EPEP II are for the combined fund and are converted to U.S. dollars at the prevailing quarter-end exchange rate.


 
34 Weighted Average Unit Information 1. Represents units exchangeable for Ares Management, L.P. common units on a one-for-one basis. 2. We apply the treasury stock method to determine the dilutive weighted-average common units represented by our restricted stock to be settled in common units and options to acquire common units. Under the treasury stock method, compensation expense attributed to future services and not yet recognized is presumed to be used to acquire outstanding common units, thus reducing the weighted-average number of units and the dilutive effect of these awards. 3. Represents proportional dilutive impact based upon the percentage of Ares Operating Group owned by Ares Management, L.P. (38.72% and 38.04% as of December 31, 2017 and 2016, respectively). Q4-17 Q4-16 GAAP Units Adjusted Common Units GAAP Units Adjusted Common Units Ares Management, L.P. weighted average common units 82,233,242 82,233,242 80,804,833 80,804,833 Ares Operating Group Units exchangeable into common units(1) 130,134,620 — 130,431,193 — Dilutive effect of unvested restricted common units(2)(3) 4,314,982 1,670,857 2,972,669 1,130,803 Total Pro Forma Units 216,682,844 83,904,099 214,208,695 81,935,636


 
35 Additional Information Distributions Targeted Net Returns(1) Investor Base as % of AUM(1) Credit Group: Public Entity & Related: 21% l Ares declared a distribution of $0.40 per common unit for the five months ended February 28, 2018, inclusive of $0.25 per common unit for the fourth quarter and $0.15 per common unit for the first two months of the first quarter, payable on February 28, 2018 to common unitholders of record at the close of business on February 26, 2018 l Syndicated Loans and High Yield Bonds: Benchmark Outperformance(2) l 600+ institutional investors(3) l 200,000+ retail investors across our public funds(4) l Credit Opportunities: 8-12% l Structured Credit: 5-15% Institutional Intermediated: 12% l Direct Lending: 5-15%(5) l For March 2018, the first month that Ares is taxed as a corporation, Ares declared a dividend of $0.0933 per common share payable on April 30, 2018, to holders of record on April 16, 2018 l Ares declared a distribution of $0.4375 per Series A Preferred Unit with a payment date of March 31, 2018 to preferred unitholders of record as of the close of business on March 15, 2018 Institutional Direct: 67% Real Estate Group: l Pension: 43% l Real Estate Debt: 5-12% l SWF: 14% l Real Estate Equity: 12-18% l Bank/Private Bank: 12% l Investment Manager: 5% Private Equity Group: l Insurance: 16% l Corporate Private Equity: 18-22% l Endowment: 2% l U.S. Power and Energy Infrastructure: 15-17% l Other: 8% l Special Situations: 15-20% Total Direct Institutional Investors: ~785 No assurance can be made that such results will be achieved. 1. As of December 31, 2017, unless otherwise noted. 2. Ares bank loan and high yield strategies are typically benchmarked against the Credit Suisse Leveraged Loan Index (“CSLLI”) and the BofA Merrill Lynch U.S. High Yield Master II Index (“H0A0”), respectively. While the other credit strategies cited above are absolute return focused, our bank loan and high yield funds seek to outperform these respective indices over market cycles. Q4-17 returns for the CSLLI and the H0A0 were 1.17% and 0.41%, respectively. FY 2017 returns for the CSLLI and the H0A0 were 4.25% and 7.48%, respectively. NOTE: Certain of Ares funds are not benchmarked against any particular index due to fund specific portfolio constraints. 3. Most recent data available as of January 23, 2018. 4. As of March 8, 2017 for ARCC, April 12, 2017 for ACRE, October 19, 2017 for ACSF and April 28, 2017 for ARDC. 5. Includes funds managed or co-managed by Ares. Also includes funds managed by IHAM, a wholly owned portfolio company of ARCC, and a registered investment adviser.


 
36 RI, ENI and Other Measures –Financial Data(1) 1. Unconsolidated results represent the operating segments plus OMG but exclude the effect of Consolidated Funds. 2. Includes ARCC Part I Fees of $105.5 million, $121.2 million and $121.5 million for the years ended December 31, 2017, 2016 and 2015, respectively. 3. Compensation and benefits expenses include expense reimbursements of $23.9 million and $21.6 million for the year ended December 31, 2016 and 2015, respectively, that were previously presented as administrative and other fees. 4. G&A expenses include expense reimbursements of $3.0 million and $4.4 million for the year ended December 31,2016 and 2015, respectively, that were previously presented as administrative and other fees. $ in thousands Year ended December 31, 2017 2016 2015 Credit Group $481,466 $444,664 $432,769 Private Equity Group 198,498 147,790 152,104 Real Estate Group 64,861 66,997 66,045 Management fees(2) $744,825 $659,451 $650,918 Other fees $22,431 $12,351 $4,599 Compensation and benefits expenses(3) (413,735) (384,715) (360,622) General, administrative and other expense(4) (136,531) (114,737) (117,903) Fee Related Earnings $216,990 $172,350 $176,992 Net performance fees - realized $75,457 $94,734 $56,757 Net performance fees - unrealized 88,523 38,890 (14,845) Net investment income (loss) - realized 32,993 33,244 24,836 Net investment income (loss) - unrealized 53,744 17,765 (27,362) Performance Related Earnings $250,717 $184,633 $39,386 Realized Income $325,440 $300,328 $258,585 Economic Net Income $467,707 $356,983 $216,378 Other Data Total Fee Revenue $908,805 $793,075 $692,830 Distributable Earnings $271,635 $264,306 $230,589 Management Fees as % of Total Fees 82% 83% 94% Fee Related Earnings as % of Economic Net Income 46% 48% 82% Fee Related Earnings as % of Distributable Earnings 80% 65% 77%


 
37 GAAP to Non-GAAP Reconciliation – Unconsolidated Reporting Basis Note: This table is a reconciliation of income before provision for income taxes on a consolidated basis to RI, ENI, FRE, PRE and DE on a Stand Alone basis, which shows the results of the reportable segments on a combined basis together with the Operations Management Group. Management believes that this presentation is more meaningful than a reconciliation to the reportable segments on a segment basis because such reconciliation would exclude the Operations Management Group. $ in thousands Year ended December 31, 2017 2016 2015 Economic net income, realized income and fee related earnings: Income before taxes $149,859 $297,920 $81,484 Adjustments: Amortization of intangibles 17,850 26,638 46,227 Depreciation expense 12,631 8,215 6,942 Equity compensation expenses 69,711 39,065 32,244 Acquisition and merger-related expenses 259,899 (16,902) 34,864 Placement fees and underwriting costs 19,765 6,424 8,825 Offering costs 688 — — Other non-cash (income) expense (1,730) (1,728) 110 Expense of non-controlling interests in consolidated subsidiaries 1,739 — — (Income) loss before taxes of non-controlling interests in Consolidated Funds, net of eliminations (62,705) (2,649) 5,682 Economic net income $467,707 $356,983 $216,378 Unconsolidated performance fee income - unrealized (325,915) (228,472) (31,647) Unconsolidated performance fee compensation expense - unrealized 237,392 189,582 46,492 Unconsolidated net investment income (loss) - unrealized (53,744) (17,765) 27,362 Realized Income $325,440 $300,328 $258,585 Unconsolidated performance fee income - realized ($317,787) ($292,998) ($121,948) Unconsolidated performance fee compensation expense - realized 242,330 198,264 65,191 Unconsolidated net investment income (loss) (32,993) (33,244) (24,836) Fee related earnings $216,990 $172,350 $176,992 Unconsolidated performance fee – realized $317,787 $292,998 $121,948 Unconsolidated performance fee compensation expense – realized (242,330) (198,264) (65,191) Unconsolidated investment and other income, net 32,987 33,244 24,836 Less: One-time acquisition costs (4,878) (841) (2,916) Dividend equivalent (14,997) (5,323) (3,337) Non-cash items 576 870 (758) Income tax expense (4,857) (16,089) (5,208) Placement fees and underwriting costs (16,324) (6,424) (8,825) Depreciation (12,631) (8,215) (6,952) Offering costs (688) — — Distributable earnings $271,635 $264,306 $230,589 Performance related earnings Economic net income $467,707 $356,983 $216,378 Less: fee related earnings (216,990) (172,350) (176,992) Performance Related Earnings $250,717 $184,633 $39,386


 
38 GAAP to Non-GAAP Reconciliation – Unconsolidated Reporting Basis (cont.) Note: These tables are a reconciliation of consolidated performance fee income, realized and unrealized performance fee income and net investment income to a Stand Alone basis, which assist in the reconciliation of GAAP Net Income to fee related earnings and distributable earnings. These reconciliations show the results of the reportable segments on a combined basis together with the Operations Management Group. Management believes that this presentation is more meaningful than a reconciliation to the reportable segments on a segment basis because such reconciliation would exclude the Operations Management Group. Differences may arise due to rounding. 1. Related to performance fees for AREA Sponsor Holdings LLC. Changes in value of this investment are reflected within other (income) expense in the Company’s Condensed Consolidated Statements of Operations. $ in thousands Year ended December 31, 2017 2016 2015 Performance fee and net investment income reconciliation: Unconsolidated performance fee income - realized $317,787 $292,998 $121,948 Performance fee income - realized earned from Consolidated Funds (8,089) — (1,769) Performance fee - realized reclass(2) (2,721) (7,367) (6,472) Performance fee income - realized $306,977 $285,631 $113,707 Unconsolidated performance fee income - unrealized $325,915 $228,472 $31,647 Performance fee income - unrealized earned from Consolidated Funds 2,997 (1,139) 6,187 Performance fee - unrealized reclass(2) 785 4,888 (926) Performance fee income - unrealized $329,697 $232,221 $36,908 Unconsolidated net investment income (loss) $86,737 $51,009 ($2,526) Net investment income from Consolidated Funds 129,223 42,244 25,702 Performance fee - reclass (2) 1,936 2,479 7,398 Change in value of contingent consideration 20,156 17,675 21,064 Other non-cash income (expense) 1,730 1,728 (110) Merger-related expenses — — (15,446) Offering costs (688) — — Other Income of non-controlling interests in consolidated subsidiaries 24 — — GAAP total other income $239,118 $115,135 $36,082


 
39 Glossary ARCC Part I Fees ARCC Part I Fees refers to a quarterly performance fee on the investment income from ARCC. ARCC Part II Fees ARCC Part II Fees refers to fees based on ARCC's net capital gains, which are paid annually. Ares Operating Group Units Ares Operating Group Unit refers to, collectively, a partnership unit in each of the Ares Operating Group entities. Assets Under Management Assets Under Management (or “AUM”) refers to the assets we manage. For our funds other than CLOs, our AUM represents the sum of the net asset value of such funds, the drawn and undrawn debt (at the fund level including amounts subject to restrictions) and uncalled committed capital (including commitments to funds that have yet to commence their investment periods). For our funds that are CLOs, our AUM represents subordinated notes (equity) plus all drawn and undrawn debt tranches. AUM Not Yet Earning Fees AUM Not Yet Earning Fees, also referred to as Shadow AUM, is our AUM that is not currently generating fees and is eligible to earn management fees upon deployment. Available Capital Available Capital is comprised of uncalled committed capital and undrawn amounts under credit facilities and may include AUM that may be canceled or not otherwise available to invest (also referred to as "Dry Powder"). Consolidated Funds Consolidated Funds refers collectively to certain Ares-affiliated funds, related co-investment entities and certain CLOs that are required under GAAP to be consolidated in our consolidated financial statements. Distributable Earnings Distributable earnings (or “DE”), a non-GAAP measure, is an operating metric that assesses our performance without the effects of our consolidated funds and the impact of unrealized income and expenses, which generally fluctuate with fair value changes. Among other things, this metric also is used to assist in determining amounts potentially available for distribution. However, the declaration, payment, and determination of the amount of distributions to unitholders, if any, is at the sole discretion of our Board of Directors, which may change our distribution policy at any time. Distributable earnings is calculated as the sum of Fee Related Earnings, realized performance fees, realized performance fee compensation, realized net investment and other income, and is reduced by expenses arising from transaction costs associated with acquisitions, placement fees and underwriting costs, expenses incurred in connection with corporate reorganization and depreciation. Distributable earnings differs from income before taxes computed in accordance with GAAP as it is typically presented before giving effect to unrealized performance fees, unrealized performance fee compensation, unrealized net investment income, amortization of intangibles, and equity compensation expense. DE is presented prior to the effect of income taxes attributable to Ares Holdings Inc, and to distributions made to our preferred unitholders, unless otherwise noted. Economic Net Income Economic net income (or “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 our business segments. ENI 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, and (e) certain other items that we believe are not indicative of our 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, placement fees and underwriting costs and expenses incurred in connection with corporate reorganization.


 
40 Glossary (cont’d) Fee Paying Assets Under Management Fee paying AUM (or “FPAUM”) refers to the AUM on which we directly earn management fees. Fee paying AUM is equal to the sum of all the individual fee bases of our funds that directly contribute to our management fees. Fee Related Earnings Fee related earnings (or “FRE”), a non-GAAP measure, refers to a component of ENI that is used to assess core operating performance by determining whether recurring revenue, primarily consisting of management fees, is sufficient to cover operating expenses and to generate profits. FRE differs from income before taxes computed in accordance with GAAP as it adjusts for the items included in the calculation of ENI and excludes performance fees, performance fee compensation, investment income from our Consolidated Funds and non-consolidated funds and certain other items that we believe are not indicative of our performance. Gross Invested Capital Gross Invested Capital refers to the aggregate amount of new capital invested by our funds during a given period, and includes investments made by our draw-down funds and permanent capital vehicles (and affiliated funds) and new capital raised and invested by our open-ended managed accounts, sub advised accounts and CLOs, but excludes capital that is reinvested (after receiving repayments of capital) by our open-ended managed accounts, sub advised accounts and CLOs. Incentive Generating Assets Under Management Incentive generating AUM (or “IGAUM”) refers to the AUM of our funds that are currently generating, on a realized or unrealized basis, performance fee revenue. It generally represents the NAV of our funds for which we are entitled to receive a performance fee, excluding capital committed by us and our professionals (which generally is not subject to a performance fee). With respect to ARCC, only ARCC Part II Fees may be generated from IGAUM .Incentive Eligible Assets Under Management Incentive eligible AUM (or “IEAUM”) refers to the AUM of our funds that are eligible to produce performance fee revenue, regardless of whether or not they are currently generating performance fees. It generally represents the NAV plus uncalled equity of our funds for which we are entitled to receive a performance fee, excluding capital committed by us and our professionals (which generally is not subject to a performance fee). Net Inflows of Capital Represents net new commitments during the period, including equity and debt commitments and gross inflows into our open-ended managed accounts and sub-advised accounts, as well as equity offerings by our publicly traded vehicles minus redemptions from our open-ended funds, managed accounts and sub-advised accounts. Operations Management Group In addition to our three segments, we have an Operations Management Group (the “OMG”) that consists of five independent, shared resource groups to support our reportable 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. The OMG’s expenses are not allocated to our three reportable segments but we consider the cost structure of the OMG when evaluating our financial performance. Our management uses this information to assess the performance of our reportable segments and our Operations Management Group, and we believe that this information enhances the ability of unitholders to analyze our performance.


 
41 Glossary (cont’d) Our Funds Our funds refers to the funds, alternative asset companies, co-investment vehicles and other entities and accounts that are managed or co-managed by the Ares Operating Group, and which are structured to pay fees. It also includes funds managed by Ivy Hill Asset Management, L.P., a wholly owned portfolio company of ARCC, and a registered investment adviser. Performance Fees Performance fees refers to fees we earn based on the performance of a fund, which are generally based on certain specific hurdle rates as defined in the fund’s investment management or partnership agreements and may be structured as either an incentive fee or as carried interest. Performance Related Earnings Performance related earnings (or “PRE”) , a non-GAAP measure, is used to assess our investment performance net of performance fee compensation. PRE differs from income (loss) before taxes computed in accordance with GAAP as it only includes performance fees, performance fee compensation and total investment and other income that we earn from our Consolidated Funds and non-consolidated funds. Permanent Capital Permanent capital refers to capital of our funds that do not have redemption provisions or a requirement to return capital to investors upon exiting the investments made with such capital, except as required by applicable law, which funds currently consist of Ares Capital Corporation (“ARCC”), Ares Commercial Real Estate Corporation (“ACRE”), and Ares Dynamic Credit Allocation Fund, Inc. (“ARDC”); such funds may be required, or elect, to return all or a portion of capital gains and investment income. Realized Income Realized income (or “RI”), a non-GAAP measure, is an operating metric used by management to evaluate performance of the business based on tangible 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 fees and investment performance and (e) certain other items that we believe are not indicative of our tangible 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, placement fees and underwriting costs and expenses incurred in connection with corporate reorganization. Senior Secured Loan Fund LLC Senior Secured Loan Fund LLC (or ‘‘SSLP’’) is a program co-managed by a subsidiary of Ares through which ARCC co-invests with affiliates of General Electric Company. Syndicated Loans Strategy Syndicated loans strategy refers to a diversified portfolio of liquid, traded non-investment grade secured loans to corporate issuers, including an allocation to syndicated middle market loans. Total Fee Revenue Total fee revenue refers to the sum of segment management fees and net performance fees.


 
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Section 4: EX-99.3 (EXHIBIT 99.3)

ex993presentationoncorpo
Confidential – Not for Publication or Distribution Presentation on Corporate Status Election February 15, 2018


 
Confidential – Not for Publication or Distribution 2 Disclaimer This presentation contains “forward looking statements” within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, that are subject to risks and uncertainties. Actual outcomes and results could differ materially from those suggested by this presentation due to the impact of many factors beyond the control of Ares Management, L.P. (“Ares”), including those listed in the “Risk Factors” section of our filings with the Securities and Exchange Commission (“SEC”). Any such forward-looking statements are made pursuant to the safe harbor provisions available under applicable securities laws and Ares assumes no obligation to update or revise any such forward- looking statements. The information contained in this presentation is summary information that is intended to be considered in the context of Ares’ SEC filings and other public announcements that Ares may make, by press release or otherwise, from time to time. Ares undertakes no duty or obligation to publicly update or revise the forward-looking statements or other information contained in this presentation. Certain information set forth herein includes estimates, projections, targets and unrealized performance information and involves significant elements of subjective judgment and analysis. Further, such information, unless otherwise stated, is before giving effect to management and incentive fees and deductions for taxes. No representations are made as to the accuracy of such estimates, projections, targets or unrealized performance information or that all assumptions relating to such estimates, projections, targets or unrealized performance information have been considered or stated or that such estimates, projections, targets or unrealized performance information will be realized. In addition, this presentation contains certain illustrative information that is intended to aid a consideration of how the tax election and other matters described herein might have affected our historical results. This is not pro forma information prepared in accordance with GAAP. In addition, you should not view information related to the past performance of Ares as indicative of future results, the achievement of which cannot be assured. Nothing in these materials should be construed as a recommendation to invest in any securities that may be issued by Ares or as legal, accounting or tax advice. None of Ares, its affiliated funds or any affiliate of Ares or its affiliated funds makes any representation or warranty, express or implied, as to the accuracy or completeness of the information contained herein and nothing contained herein shall be relied upon as a promise or representation whether as to the past or future performance. These materials are not intended as an offer to sell, or the solicitation of an offer to purchase, any security, the offer and/or sale of which can only be made by definitive offering documentation. Any offer or solicitation with respect to any securities that may be issued by Ares will be made only by means of definitive offering memoranda or prospectus, which will be provided to prospective investors and will contain material information that is not set forth herein, including risk factors relating to any such investment. This presentation addresses only certain U.S. federal income tax consequences applicable to Ares’ unitholders generally. Ares does not provide tax advice and nothing herein should be considered as such. Each recipient should consult its tax advisor concerning the particular U.S. federal income, U.S. federal estate or gift, state, local, foreign and other tax consequences to it.


 
Confidential – Not for Publication or Distribution 3 Certain Tax Considerations The Election for Ares Management, L.P. to be Taxed as a Corporation We have filed an election with the Internal Revenue Service (“IRS”) to be treated as a U.S. corporation for U.S. federal income tax purposes, with an effective date expected to be March 1, 2018 (the “Effective Date”) (collectively, the “Tax Election”). Although we will be treated as a corporation for U.S. federal income tax purposes, we will remain a limited partnership under state law. Unitholders will receive a final Schedule K-1 reflecting their allocable share of the partnership’s items for the period beginning January 1, 2018 and ending on the day immediately before the Effective Date. We expect that neither Ares Management, L.P. nor its unitholders will recognize a material amount of gain or loss as a result of the Tax Election. Immediately following the Effective Date, the aggregate tax basis of the units held by a unitholder will equal the aggregate tax basis in such units immediately before the Effective Date (reduced by the unitholder’s allocable share of our liabilities) and increased by the gain, if any, recognized by such unitholder as a result of the Tax Election. We believe that a unitholder’s holding period in the units will generally be long-term. There is no assurance, however, that such treatment will be respected by the IRS. The foregoing discussion is based on our expectation that all the relevant tax requirements for non-recognition treatment will have been met. The rules governing the U.S. federal income tax treatment of the Tax Election are complex and their application to non-U.S. unitholders, in particular, is unclear. Accordingly, unitholders should consult their tax advisors regarding the tax treatment of the Tax Election in light of their particular situation. Differences in Taxation of Partnerships and Corporations and Their Owners An entity treated as a partnership for U.S. federal income tax purposes is not a taxable entity and generally incurs no U.S. federal income tax liability. Instead, each partner is required to take into account its share of items of income, gain, loss and deduction of the partnership in computing its U.S. federal income tax liability, regardless of whether distributions are made to it by the partnership. Distributions by an entity treated as a partnership to a partner are generally not taxable to the partnership or the partner and instead reduce a partner’s adjusted basis in its partnership interest. An entity treated as a corporation for U.S. federal income tax purposes is a taxable entity and generally pays U.S. federal income tax on its taxable income. The maximum U.S. federal tax rate imposed on the net income of an entity treated as a corporation was recently changed from 35% to 21% for taxable years beginning after December 31, 2017. Such rate may be further changed in the future. An owner of an entity treated as a corporation generally is not taxed on any income earned by the entity until the entity distributes to it either cash or property. A distribution from an entity treated as a corporation is generally treated as a dividend to the extent it is paid from current or accumulated earnings and profits. We expect any dividends made to U.S. individuals and certain other qualifying owners to constitute “qualified dividend” income that is generally taxed at a favorable, lower tax rate than the ordinary income tax rate, if the requisite holding periods have been met. If the distribution exceeds current and accumulated earnings and profits, the excess is treated as a nontaxable return of capital, reducing the owner’s tax basis in the stock to the extent of the owner’s tax basis in that stock. Any remaining excess is treated as capital gain. Because entities treated as corporations are taxed on their own taxable income, and because owners of such entities are taxed on any dividends distributed from such entities, there are two levels of potential tax upon income earned by entities treated as corporations. Beginning on the Effective Date, our unitholders (including holders of Series A Preferred Units) will be subject to the tax treatment applicable to owners of entities that are treated as corporations described above. The foregoing description addresses only certain U.S. federal income tax consequences of the Tax Election applicable to unitholders generally. Each unitholder should consult its tax advisor concerning the particular U.S. federal income, U.S. federal estate or gift, state, local, foreign and other tax consequences of the Tax Election to it.


 
Confidential – Not for Publication or Distribution 4 Summary We believe changing our tax status from a partnership to a corporation will unlock long term value for our public shareholders We believe these strategic decisions will lead to long term shareholder value creation Note: Going forward we will refer to our publicly traded units as “shares” due to their similarity in tax attributes with corporate shares. 1. To be eligible for qualified dividend income tax rates, individual investors must have held shares of stock unhedged for at least 61 days out of the 121-day period that began 60 days before the ex-dividend date. 2. The declaration, payment, and determination of the amount of future dividends, if any, is at the sole discretion of our Board of Directors, which may change our dividend policy at any time. • For distributions made after March 1, 2018, investors will receive income reported on a Form 1099-DIV • Our distributions will generally constitute “qualified dividend income” for U.S. individuals and will be taxed at the same preferential U.S. federal rates as long term capital gains(1) Future Tax Reporting • Ares has declared a $0.40 per common unit distribution for the period from October 1, 2017 through February 28, 2018. This distribution represents Ares’ final cash distribution prior to its corporate election and will be paid on February 28, 2018 to holders of record on February 26, 2018 Final Partnership Cash Distribution • In conjunction with our corporate tax status election, we are adopting a new dividend policy • Ares intends to provide a steady annual dividend for each calendar year with future changes based on the level and growth of after-tax fee related earnings (“FRE”) • Although Ares may declare special dividends in times of heightened performance fees, Ares intends to retain performance fee earnings to fund future growth and for potential share repurchases • For the month of March 2018, Ares declared a $0.0933 per share dividend to common shareholders to be paid on April 30, 2018 to holders of record on April 16, 2018 • For the second, third and fourth quarters of 2018, Ares intends to pay a targeted quarterly dividend to common shareholders of $0.28 per share, or an annualized dividend of $1.12 Dividend Policy(2) • Ares has elected to be taxed as a corporation effective March 1, 2018 • Public unitholders will receive a final Schedule K-1 for the period from January 1, 2018 through February 28, 2018 Timing


 
Confidential – Not for Publication or Distribution 5 Rationale for Change to Corporate Tax Status Corporate Tax Status Offers Multiple Benefits QUALIFIED DIVIDEND TO SHAREHOLDERS • For U.S. individuals, dividends are treated as qualified dividends • Public shareholders will also own a share of a company with greater retained earnings that can be reinvested for growth or used for other accretive purposes SIMPLIFIED TAX STRUCTURE • Public shareholders will now receive Form 1099-DIVs • Election of corporate tax status eliminates legal and tax preparation costs associated with Schedule K-1 preparation, and simplifies shareholder tax reporting BROADER ELIGIBLE SHAREHOLDER UNIVERSE • Ares’ partnership tax status has historically limited its investor universe due to complexities created by its pass-through structure • Elimination of Schedule K-1 reporting reduces tax return complexities for shareholders • We believe this change could open up our shares to a broader shareholder base and enhance our liquidity and trading volume MANAGEMENT FEE CENTRIC MODEL • Management fee revenue has averaged over 80% of total fee income since Ares’ IPO(1) • Ares has historically paid corporate level taxes on its management fees, net of applicable deductions IMPROVED CAPITAL STRUCTURE FLEXIBILITY • Ares now expects to retain earnings to fund future growth and potential share repurchases • Ares expects its shares to be a more liquid and attractive currency for strategic transactions 1. Management fees include ARCC Part I fees.


 
Confidential – Not for Publication or Distribution 6 Structural Considerations for Investors Partnership Tax Status (OLD) • Ares paid corporate taxes on income generated from management fees(2) and from a small portion of its net realized performance fees; the remaining net performance fees passed-through to unitholders and were not subject to corporate tax • Public unitholders of ARES received their allocable share of partnership income and losses through issuance of annual Schedule K-1s • Cash distributions, representing tax liability and a portion of profit distributions, were declared and paid quarterly • Public unitholders’ respective tax obligations were based on their tax status and the character of the income reported on their respective Schedule K-1s • Certain unitholders may have had multi-state tax filing requirements based on the income allocations included in their respective Schedule K-1s Corporate Tax Status (NEW) • Ares will pay corporate taxes on all revenue and public shareholders will have no tax obligations other than on their receipt of qualifying dividends taxed at long term capital gains rates • Ares intends to pay an after-tax qualifying dividend to shareholders on a quarterly basis • U.S. individual shareholders may benefit from preferential tax rates on qualified dividend income • Public shareholders will receive Form 1099-DIVs for the dividends they receive • Public shareholders will no longer receive pass- through income or any Schedule K-1s and will not be subject to possible multi-state tax filing requirements(3) Upon Ares’ corporate tax status election, Ares legal structure will remain intact, however, future distributions will be reportable on Form 1099-DIV. Ares Management, L.P. will continue to own a portion of the underlying income streams from Ares’ businesses(1) Note: Consequences of this slide only apply to the impact of public shareholders arising from their investment in ARES shares. 1. Ares ownership of such businesses will increase as holders of private Operating Group Units exchange their ownership for publicly traded shares. 2. Management fees include ARCC Part I fees. 3. Schedule K-1s will be issued for the period January 1, 2018 through February 28, 2018. Form 1099-DIV will be issued for periods after February 28, 2018. Schedule K-1 elimination negates the need to file in non-resident states. Individual investors may be required to file in non-resident states for other reasons.


 
Confidential – Not for Publication or Distribution 7 Preferred Unitholders Receive blend of ordinary income and qualified dividend income PRE FRE Taxable Income Ares Management, L.P. Income Flow and Tax Impact - Old Common unitholders’ earnings from FRE are subject to corporate level tax, but most performance related earnings are passed through to the common unitholders and are subject to common unitholder individual tax rates Common Unitholders Receive blend of qualified dividend income, capital gain, and ordinary income, which is subject to higher tax rates 61.25% (No corporate entity level tax for private unitholders) Private Unitholders Receive income allocations mostly of ordinary income with some capital gains 38.75%(1) FRE PRE is not subject to entity level tax 38.75% PRE = Corporation = Partnership Note: Does not depict all intermediate entities. The above is not a legal organizational structure chart. This slide is intended to illustrate the flow of income for tax purposes. 1. Ares ownership will increase as holders of private Operating Group Units exchange their ownership for public common shares, among other reasons. Corporate Blocker (37.8% 2017 effective tax rate)


 
Confidential – Not for Publication or Distribution 8 Preferred Shareholders Receive qualified dividends subject to lower tax rate Taxable Income Ares Management, L.P. (24.4% 2018 effective tax rate) Income Flow and Tax Impact - New Corporate tax election makes all common shareholders’ earnings subject to corporate level tax; 100% of our dividends to common shareholders should be treated as qualified dividend income (eligible for preferential individual tax rates) Common Shareholders Receive qualified dividends subject to lower tax rate 61.25% (No Entity Level Tax for Private Unitholders) Private Unitholders Receive income allocations mostly of ordinary income with some capital gains 38.75%(1) FRE & PRE (All income is subject to corporate level tax) Taxable Income = Corporation(2) = Partnership PRE FRE Note: Does not depict all intermediate entities. The above is not a legal organizational structure chart. This slide is intended to illustrate the flow of income for tax purposes. 1. Ares ownership will increase as holders of private Operating Group Units exchange their ownership for public common shares, among other reasons. 2. For tax reporting purposes only.


 
Confidential – Not for Publication or Distribution 9 • Ares has adopted a dividend policy to provide a steady quarterly dividend for each calendar year with future potential changes based on the level and growth of after-tax fee related earnings • Ares plans to retain earnings from realized performance fees to fund in future growth and for potential share repurchases • Ares may consider special dividend declarations during periods of heightened performance fees Adopting Dividend Policy • Ares has declared a one month common dividend for the month of March 2018 of $0.0933 per share to be paid on April 30, 2018 to shareholders of record on April 16, 2018 • Ares intends to pay a target quarterly dividend for the second, third and fourth quarters of 2018 of $0.28 per share New Dividend Declaration • Unitholders of record on February 26, 2018 will receive a final five month distribution of $0.40 per unit • Distribution to be paid on February 28, 2018 • Unitholders will receive a final Schedule K-1 for the two month period ending February 28, 2018 • Starting March 1, 2018, Ares shareholders will receive a Form 1099-DIV for any dividends received Existing Investor Impact New Dividend Policy and Other Information In conjunction with its corporate tax status election, Ares has adopted a new dividend policy that will determine future dividends on the growth of after-tax fee related earnings Note: The declaration, payment, and determination of the amount of future dividends, if any, is at the sole discretion of our Board of Directors, which may change our dividend policy at any time.


 
Confidential – Not for Publication or Distribution 10 Financial Implications From Corporate Tax Status Election Due to the large percentage of Ares FRE already subject to corporate level taxes, the corporate tax status election is expected to have a modest impact to our key earnings metrics Background Tax Information • The reduction in tax rates in 2018 results in corporate tax rates being meaningfully lower on average than individual tax rates, which enables Ares to pay taxes at a lower rate than investors may pay depending on their respective tax status • Ares plans to retain a portion of its earnings and reinvest for future earnings growth and other corporate purposes • This will enable Ares to re-invest and compound earnings generally at a lower tax rate than individual tax rates • Ares’ revenues primarily consist of management fees(1), which are included in FRE, and net investment income and net performance fees, which are collectively included in PRE • Management fees, net of allocable deductions, are currently taxed at corporate rates and the impact of the Corporate status election does not impact after-tax FRE • The impact to Ares’ reported results is limited to the increased tax on PRE which was previously pass-through income • Taxes on PRE will consist of current taxes on realized Performance Fees and deferred taxes on unrealized PRE that may change in subsequent periods until such fees are realized • On slide 11, we illustrate the 2017 financial impact of the corporate tax status election on our current taxes and on a look-through basis to the individual common shareholder(2) assuming a 100% payout of after-tax realized income • On slide 12, we illustrate the 2017 economic benefit to common shareholders from Ares’ dividend policy • On slide 13, we illustrate the impact to our 2017 after-tax ENI per unit, including deferred taxes 1. Management fees include ARCC Part I fees. 2. Based on U.S. individual tax rates applicable to qualified dividend income plus the net investment income tax.


 
Confidential – Not for Publication or Distribution 11 Illustrative Impact of Corporate Tax Status Election on Common Shareholder Income Using illustrative 2017 results and assuming taxable income matches FRE and realized PRE, shareholder after-tax income is moderately higher after the corporate tax election under the new tax rates (dollars in millions) 2017 Partnership Tax Status (Old Tax Law) 2017 Corporate Tax Status (New Tax Law) FRE Realized PRE Total FRE Realized PRE Total Realized Income $217.0 $108.5 $325.5 $217.0 $108.5 $325.5 Tax Rate(1) 37.8% 0% 25.2% 24.4% 24.4% 24.4% Current Corporate Taxes ($82.0) ($0.0) ($82.0) ($52.9) ($26.5) ($79.4) After-tax Realized Income $135.0 $108.5 $243.5 $164.1 $82.0 $246.1 Shareholder After-Tax Income Assuming 100% Payout of After-tax Realized Income Individual Tax Rate 23.8%(2) 30.0%(3) 26.6% 23.8% 23.8% 23.8% Shareholder Taxes ($32.1) ($32.6) ($64.7) ($39.1) ($19.5) ($58.6) After-tax Realized Income $102.9 $76.0 $178.8 $125.0 $62.5 $187.5 Change +4.9% 1. Based on estimated effective tax rates. 2. Based on U.S. individual tax rates applicable to qualified dividend income plus the net investment income tax. 3. Estimated blended tax rate based on the estimated character of income passed through to the investor. • The above analysis compares Ares’ 2017 FRE and realized PRE under our previous tax status as a partnership to our new corporate tax status • Based on our high percentage of FRE as a percentage of realized income, the lower taxes on our FRE offsets the increased taxes on our realized PRE • The break-even tax point occurs based on the mix of FRE and realized PRE within realized income - to the extent that realized PRE is less than approximately 35% of our realized income, the reduction in taxes on FRE more than offsets the additional taxes on realized PRE • More importantly, the individual common shareholder may benefit from an increased percentage of income taxed at qualified dividend income rates


 
Confidential – Not for Publication or Distribution 12 Illustrative Economic Impact of Common Shareholder Benefits Under Ares Dividend Policy In addition to the common shareholder tax benefits associated with Ares’ corporate tax status election, the economic benefits of a company with higher retained earnings further improves common shareholder value Note: This analysis does not take into effect tax on capital gains or losses that would impact the value to retained PRE when public investors sell shares. The declaration, payment, and determination of the amount of future dividends, if any, is at the sole discretion of our Board of Directors, which may change our dividend policy at any time. 1. Based on U.S. individual tax rates applicable to qualified dividend income plus the net investment income tax. 2. Reflects illustrative 2017 results assuming taxable income matches FRE and realized PRE. Total Value Under New Dividend Policy(2) 2017 Corporate Tax Status Realized PRE Retained at Company $82.0 After-tax FRE $164.1 After-tax Realized Income $246.1 Dividends $164.1 Shareholder taxes (23.8% on Dividend)(1) ($39.1) After-tax FRE Realized Income to Shareholder $125.0 + Retained PRE at Company $82.0 Total Common Shareholder Value $207.0 Economic Benefit to Shareholders As referenced on the prior slide: • In addition to slightly higher after-tax income at the corporate level from tax law changes, qualified dividend rates at the individual level allows the shareholders to keep more of their distributions on an after-tax basis assuming a 100% payout ratio of after-tax realized income (1) • However, under Ares’ new dividend policy, the shareholder receives an otherwise lower dividend, representing the after-tax fee related earnings, plus ownership in a company with greater retained earnings that can be reinvested for growth as well as potential share repurchases • This economic benefit of retaining ownership in a company invested in growth increases total potential value to shareholder • Ares plans to retain a portion of its earnings and fund future earnings growth and potential share repurchases, which will enable Ares to re- invest and compound earnings generally at a lower tax rate than individual tax rates • Ares may consider special dividend declarations during periods of heightened performance fee realizations (Dollars in millions)


 
Confidential – Not for Publication or Distribution 13 For the year ended December 31, 2017 (dollars in millions) Total Share Ownership by Common Partnership Taxes at 2017 Rate (37.8%) Corporate Taxes at 2018 Rate (24.4%) FRE $ 217.0 $ 217.0 FRE Taxes (82.0) (52.9) FRE, Net of Taxes $ 135.0 $ 164.1 Realized PRE $ 108.5 $ 108.5 Realized PRE Taxes - (26.5) Realized PRE, Net of Taxes $ 108.5 $ 82.0 Unrealized PRE $ 142.2 $ 142.2 Deferred Tax on Unrealized PRE - (34.7) Unrealized PRE, Net of Taxes $ 142.2 $ 107.5 Summary Economic Net Income (ENI) $ 467.7 $ 467.7 Less: Entity Level Taxes & Preferred Dividend (26.6) (26.6) Less: Current Tax Amount (FRE and Realized PRE) (82.0) (79.4) ENI, Net of Current Tax Amount $ 359.1 $ 361.7 Less: Deferred Tax on Unrealized PRE - (34.7) After-Tax ENI $ 359.1 $ 327.0 After-Tax ENI per Unit(1) $ 1.66 $ 1.51 Accretion / (Dilution) Comparison of Partnership vs. Corporation 1. ENI, Net of Current Tax Amount and Deferred Tax Amount 100% Exchanged -8.9% 2. ENI, Net of Current Tax Amount 100% Exchanged 0.7% 3. ENI, Net of Current Tax Amount and Deferred Tax Amount (Reported) Current 38.75% -3.0% Illustrative Analysis of Corporate Status Election Assuming New Tax Rates on 2017 Results Using illustrative 2017 results and assuming taxable income matches FRE and realized PRE, analysis assumes hypothetical 100% of private Operating Group Units exchanged for public common shares Financial Impact of C-Corp Election 1. Assuming an effective tax rate of 24.4% and 100% of our private Operating Group Units exchanged into public common shares, our ENI per unit would have been approximately 9% lower 2. If we performed this same analysis removing the impact of deferred taxes on unrealized PRE, our earnings per unit would not have been materially changed (+0.7%) 3. Although analysis is not shown, assuming our current 38.75% common ownership, we estimate our reported 2017 after-tax ENI per unit of $1.93 would have been reduced to $1.87 per unit, a decline of 3.0% 1. After-tax earnings per unit for 2017 of $1.66 reflects a hypothetical tax amount of $82 million based on a 37.8% tax rate compared to the tax on ENI of $25.4 million and $1.93 per unit shown in our Fourth Quarter and Full Year 2017 Earnings Presentation.


 
Confidential – Not for Publication or Distribution 14 • Elimination of Schedule K-1 filings and other tax impediments potentially expands our investor base which could help increase our liquidity and trading volume • Asset managers structured with pass-through tax status have historically traded at substantial discounts to asset managers taxed as corporations Potential to Expand Investor Base Key Takeaways 1 • The change in tax rates starting in 2018 results in corporate tax rates being meaningfully lower on average than individual tax rates, enabling Ares to pay taxes at a lower rate than public shareholders may pay depending on their respective tax status Potential Lower Tax Rate to Shareholders • Ares is adopting a steady dividend policy based on the growth of its after-tax fee related earnings which should reduce dividend volatility Steady Dividend Based on After-tax Fee Related Earnings 5 4 • Ares now expects to retain earnings to fund future growth and potential share repurchases • Ares expects its shares to be a more liquid and attractive currency for strategic transactions Improved Capital Structure Flexibility 2 • Public shareholders will now receive Form 1099-DIVs • Tax treatment as a corporation eliminates legal and tax preparation costs associated with Schedule K-1 preparation Simplified Structure 3


 
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