01—Abstract
Summary
Summary of the 10-K filed February 25, 2026. Cited figures are marked; the original filing is the authoritative source.
Ares Management Corp. (NYSE: ARES) closed 2025 with record scale and a sharp step-up in earnings power.
Assets under management reached $622.5 billiona, up 29% year over year, and the firm raised $113.2 billion of gross new capital and deployed $145.8 billion. Total revenues rose 44% to $5.60 billion, driven largely by a $1.15 billion carried interest allocation (up from $390 million), management fees up 25% to $3.68 billion, and a $1.1 billion lift in administrative, transaction and other fees tied to the March 2025 GCP International acquisition. GAAP net income attributable to Ares Management Corporation rose 14% to $527 million, but net income to Class A and non-voting common holders fell 3% to $426 million after $101 million of Series B preferred dividends, and GAAP results were weighed down by a $301 million non-cash revaluation of GCP earnout liabilities.
The more important investor metric is fee related earnings (FRE), which grew 30% to $1.78 billionb, and realized income (RI), which grew 26% to $1.85 billion. Management highlights that 93% of management fees came from perpetual capital or long-dated funds, that AUM not yet paying fees implies roughly $730 million of potential incremental annual management fees, and that dry powder reached $156.0 billion. Management fees are expected to decline by about $40 million in 2026 from the ACOF VI fee step-down.
The quarterly dividend on Class A common stock was set at $1.35c for 2026, up from $1.12 per quarter in 2025, and it is tied to FRE after current taxes. Key risks include a higher leverage profile after the GCP deal (Credit Facility borrowings of $1.38 billion and total debt of $3.94 billion), goodwill and intangibles that rose to $5.6 billion, a 2025 effective tax rate of 15.3%, a $580 million TRA liability, the concentration of management fees in ARCC (about 31% of Credit Group fees), and a governance structure in which the Holdco Members control the Class B vote while the Ares Ownership Condition is met. The auditor (Ernst & Young) issued an unqualified opinion and excluded GCP International from the internal control assessment, which covers about 2% of assets and 6% of revenue.
02—Key points
Key Highlights
- AUM of $622.5 billion, up 29% in 2025 (5-year CAGR of 26%); $113.2 billion of gross new capital raised from over 540 institutional investors and 190+ vehicles, with 79% of direct institutional fundraising from existing investors.
- Fee related earnings rose 30% to $1.78 billion and realized income rose 26% to $1.85 billion; FRE growth was led by Credit (+16%) and Real Assets (+119%, driven by GCP).
- Carried interest allocation nearly tripled to $1.15 billion, led by Credit funds ($756 million) and Private Equity funds ($177 million, versus a $294 million reversal in 2024), though much of it is unrealized and subject to reversal.
- GAAP net income attributable to Ares Management Corp. rose 14% to $527 million, but income to common holders declined 3% to $426 million after $101 million of Series B preferred dividends; diluted EPS was $1.71 versus $2.04 in 2024.
- GCP International acquisition (closed March 1, 2025, $3.9 billion consideration) added $2.3 billion of goodwill and $1.3 billion of intangibles, and generated $360 million of revenue for the 10 months owned; a $301 million non-cash contingent consideration revaluation hit other expense.
- Balance sheet leverage increased: Credit Facility drawn at $1.38 billion, total debt of $3.94 billion, cash of $489 million; the Credit Facility was extended to April 2030 and upsized to $1.84 billion.
- Dividend policy is fixed quarterly, set at $1.35 per Class A share for 2026 (up from $1.12 quarterly in 2025), and is reassessed annually based on FRE after current taxes; the TRA liability rose to $580 million and estimated early-termination payments are about $2.4 billion.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2025filed February 25, 2026Financial Statements
FY2025 against FY2024
| Line item | FY2025FY2024 | Change |
|---|---|---|
| Revenue | $5.60B$3.88B | +44.2% |
| SG&A Expenses | $996.08M$736.50M | +35.2% |
| Operating Expenses | $4.71B$2.94B | +60.2% |
| Net Income | $426.11M$440.96M | −3.4% |
05—Questions
Frequently Asked Questions
How did Ares's core earnings (fee related earnings) perform in 2025?
FRE increased 30% to $1.78 billion, up from $1.36 billion in 2024. Credit Group FRE rose 16% to $1.82 billion, and Real Assets FRE more than doubled to $465 million, reflecting the GCP acquisition and higher management and property-related fees. Operations Management Group costs of $808 million partially offset segment gains.
Why did GAAP net income to common shareholders decline even though revenue rose sharply?
Total revenues rose 44%, but expenses grew faster: performance-related compensation more than doubled to $1.09 billion, compensation and benefits rose to $2.57 billion (including about $228 million of GCP-related equity compensation and $71 million of earnout expense), and other income (expense) included a $301 million non-cash charge from revaluing GCP contingent consideration. Series B preferred dividends of $101 million also reduced income available to common stockholders.
How sustainable are Ares's management fees, and what is the outlook for 2026?
Management fees are relatively durable: 93% came from perpetual capital or long-dated funds, and AUM not yet paying fees ($78.8 billion available for deployment plus $4.3 billion of development assets) implies about $730 million of potential incremental annual fees. Offsetting this, management expects roughly $40 million lower fees from ACOF VI in 2026 as its fee rate steps down. ARCC contributes about 31% of Credit Group management fees, so ARCC's asset growth and fee terms are a key sensitivity.
What are the main risks from the increased leverage and acquisitions?
Total debt rose to $3.94 billion, with $1.38 billion drawn on the Credit Facility at a floating SOFR-based rate, so higher short-term rates raise interest costs. Interest expense rose 20% to $172 million. Goodwill and intangibles increased to $5.6 billion, and the GCP earnouts (up to $1.5 billion combined) remain subject to fair value changes. Management also flags integration costs, potential impairments and the risk that the acquired platform does not deliver expected synergies.
How does the governance structure affect Class A shareholders?
Ares is a controlled company. While the Ares Ownership Condition is met (it currently is), the Class B and Class C stockholders, controlled by the Holdco Members, hold more than 70% of the voting power of the designated stock. Class A holders have very limited ability to elect directors or influence major corporate actions, and the Class I director (Antony Ressler) effectively holds a veto over board actions. Class A holders also have no vote on a sale of the company, which could limit takeover premiums.
06—Continue