Ares Management Corp Quarterly Report for Q1 Ended Mar 31, 2018

Summary

Ares Management, L.P. reported total revenues of $266.1 million for the first quarter of 2018, an increase of 9% compared to the prior year's quarter, driven primarily by a 10% rise in management fees to $189.5 million. This growth was supported by increased AUM across its Credit, Private Equity, and Real Estate segments. The company also saw an increase in incentive fees and principal investment income. Total expenses decreased significantly by 58% year-over-year, largely due to the absence of a $275.2 million transaction support expense in Q1 2017 related to the ARCC acquisition. Net income attributable to common shareholders swung from a loss of $46.6 million in Q1 2017 to a gain of $35.5 million in Q1 2018. A significant event during the quarter was Ares Management's election to be treated as a corporation for U.S. federal income tax purposes, effective March 1, 2018. This change is expected to simplify the company's tax structure, potentially expand its investor base, and enhance liquidity. The company also completed a public offering of 5 million common shares, raising $105.9 million in gross proceeds. The company ended the quarter with $115.5 million in cash and cash equivalents and a total debt obligation of $590.2 million.

Key Highlights

• 1Total revenues increased by 9% to $266.1 million in Q1 2018, driven by a 10% increase in management fees to $189.5 million.
• 2Net income attributable to common shareholders improved significantly from a loss of $46.6 million in Q1 2017 to a profit of $35.5 million in Q1 2018.
• 3Total expenses decreased by 58% to $206.3 million, primarily due to the absence of a $275.2 million transaction support expense incurred in Q1 2017.
• 4Ares Management elected to be treated as a corporation for U.S. federal income tax purposes, effective March 1, 2018, aiming for improved investor accessibility and liquidity.
• 5The company completed a public offering of 5 million common shares, raising $105.9 million in gross proceeds.
• 6Assets Under Management (AUM) increased to $112.5 billion as of March 31, 2018, up from $99.8 billion at the end of 2017, reflecting growth across all segments.
• 7The Credit Group saw a 17% increase in Fee Related Earnings (FRE) driven by higher management fees and fee-generating assets.

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