Ares Management Corp Quarterly Report for Q3 Ended Sep 30, 2016

Summary

Ares Management, L.P. (ARES) reported strong financial results for the nine months ended September 30, 2016, driven by significant growth in performance fees across its segments, particularly in Private Equity and Real Estate. Total revenues increased by 28% year-over-year to $841 million, with performance fees seeing a substantial $177 million increase. This surge in performance fees was a key driver of the company's overall profitability, as evidenced by the substantial increase in Economic Net Income (ENI) and Distributable Earnings (DE). The company's Assets Under Management (AUM) also saw healthy growth, reaching $97.3 billion as of September 30, 2016, up from $91.5 billion at the same time last year. This growth was particularly notable in the Credit and Real Estate segments. Ares Management also successfully managed its expense base, with general, administrative, and other expenses decreasing by 22% year-over-year, largely due to lower merger and acquisition-related expenses. The company maintained a strong liquidity position, with $336.8 million in cash and cash equivalents and no outstanding borrowings under its credit facility as of the end of the period.

Key Highlights

• 1Total revenues increased by 28% to $841 million for the nine months ended September 30, 2016, compared to the prior year, driven by a substantial 111% increase in performance fees.
• 2Assets Under Management (AUM) grew to $97.3 billion as of September 30, 2016, from $91.5 billion as of September 30, 2015.
• 3The Credit Group saw a 63% increase in Economic Net Income (ENI) to $90.3 million for the three months ended September 30, 2016, compared to the prior year.
• 4The Private Equity Group reported a 120% increase in ENI to $58.4 million for the three months ended September 30, 2016, year-over-year.
• 5General, administrative, and other expenses decreased by 22% year-over-year to $116.8 million for the nine months ended September 30, 2016, largely due to reduced M&A-related expenses.
• 6The company issued $310 million in Series A Preferred Equity in June 2016, strengthening its capital position.
• 7Cash and cash equivalents increased significantly to $336.8 million as of September 30, 2016, compared to $121.5 million as of December 31, 2015.

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