Exhibit 99.2 First Quarter 2019 Earnings Presentation
Important Notice This presentation is prepared for Ares Management Corporation (NYSE: ARES) for the benefit of its public stockholders. This presentation is solely for information purposes in connection with evaluating the business, operations and financial results of Ares Management Corporation (“Ares”) and certain of its affiliates. Any discussion of specific Ares entities is provided solely to demonstrate such entities’ role within the Ares organization and their contribution to the business, operations and financial results of Ares. This presentation may not be referenced, quoted or linked by website, in whole or in part, except as agreed to in writing by Ares. 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, 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 speak only as of the date of this presentation. Ares assumes no obligation to update or revise any such forward-looking statements except as required by law. 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, and assumes no responsibility for independent verification of such 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, and shall not be construed as, an offer to buy or sell, or the solicitation of an offer to buy or sell, any securities, any investment funds, vehicles or accounts, any investment advice, or any other service by Ares of any of its affiliates or subsidiaries. Nothing in this presentation constitutes the provision of any tax, accounting, financial, investment, regulatory, legal or other advice by Ares or its advisors. Management uses certain non-GAAP financial measures, including assets under management, fee paying assets under management, fee related earnings and realized income, 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. The statements contained in this presentation are made as of March 31, 2019, unless another time is specified in relation to them, and access to this presentation at any given time shall not give rise to any interpretation that there has been no change in the facts set forth in this presentation since that date. 2
First Quarter Highlights • Total Assets Under Management ("AUM") of $136.7 billion • Total Fee Paying AUM ("FPAUM") of $87.2 billion Assets Under • Available Capital of $35.0 billion Management • AUM Not Yet Earning Fees available for future deployment of $23.8 billion • Raised $6.5 billion in gross new capital with net inflows of $5.7 billion(1) for the quarter ended March 31, 2019 • Capital deployment of $7.4 billion during the quarter ended March 31, 2019, including $6.4 billion related to our drawdown funds • Q1-19 GAAP net income attributable to Ares Management Corporation of $44.9 million • Q1-19 GAAP basic and diluted earnings per share of Class A common stock of $0.36 • Q1-19 GAAP management fees of $224.7 million(2) Financial Results • Q1-19 unconsolidated management and other fees of $236.1 million(2) • Q1-19 Fee Related Earnings of $71.3 million • Q1-19 Realized Income of $104.6 million • Q1-19 after-tax Realized Income of $0.35 per share of Class A common stock(3) • Declared quarterly dividend of $0.32 per share of Class A common stock(4) Corporate Actions • Declared quarterly dividend of $0.4375 per share of Series A preferred stock(5) 1. Net inflows represents gross commitments less redemptions. 2. Includes ARCC Part I Fees of $38.4 million for the three months ended March 31, 2019. Differences between GAAP and unconsolidated management fees represents $8.4 million from Consolidated Funds that is eliminated upon consolidation. Unconsolidated other fees represents $3.1 million primarily of transaction-based fees earned from Credit Group funds and the difference between unconsolidated other fees and GAAP administrative, transaction and other fees represents $6.6 million of administrative fees that are netted against the respective expenses. 3. After-tax Realized Income per share of Class A common stock is net of the preferred share dividend. 4. Payable on June 28, 2019 to shareholders of record as of June 14, 2019. 5. Payable on June 30, 2019 to shareholders of record as of June 15, 2019. As June 15, 2019 falls on a Saturday, the effective record date for the dividend will be Friday, June 14, 2019. 3
#ACACAC #1E3154 Gross New Capital Commitments(1) #225070 #828282 $ in millions Q1 2019 Comments Credit Group CLOs $2,122 Closed two new U.S. CLOs and priced one new U.S. CLO and one new European CLO #D2D2D2 #49749B Alternative Credit 1,267 New and additional equity commitments to various funds U.S. Direct Lending 969 New and additional equity and debt commitments to various funds European Direct Lending 738 New and additional equity and debt commitments to various funds #679FD1 ARCC and affiliates 237 Additional commitments to SDLP Other Credit Funds 363 New and additional equity and debt commitments to various funds Total Credit Group $5,696 Private Equity Group #75B8F4 Private Equity Funds $31 New equity commitments Total Private Equity Group $31 Real Estate Group #A7D1EA U.S. Debt $553 New and additional equity and debt commitments to various funds U.S. and European Equity 182 New and additional equity commitments to various funds and co-investments #DBE6EF Total Real Estate Group $735 Total $6,462 1. Represents gross new commitments during the period, including equity and debt commitments and gross inflows into our open-ended managed accounts and sub-advised accounts. 4
Assets Under Management AUM of $136.7 billion as of March 31, 2019, an increase of 21.5% from prior year(1) • The increase of $24.2 billion was driven by fundraising, primarily across European and U.S. direct lending, syndicated loans and alternative credit funds in our Credit Group FPAUM of $87.2 billion as of March 31, 2019, an increase of 16.3% from prior year • The increase of $12.2 billion was attributable to deployment of capital in funds across U.S. and European direct lending strategies and new commitments to syndicated loans strategy AUM ($ in billions) FPAUM ($ in billions) $136.7 $87.2 $130.7 $81.9 $11.8 $75.0 $7.0 $112.5 $11.3 $7.0 $23.8 $6.8 $17.3 $10.9 $23.5 $17.1 $16.7 $24.3 $95.9 $101.1 $57.8 $62.9 $77.3 $51.5 Q1-18 Q4-18 Q1-19 Q1-18 Q4-18 Q1-19 Credit Private Equity Real Estate Credit Private Equity Real Estate 1. AUM amounts include funds managed by Ivy Hill Asset Management, L.P., a wholly owned portfolio company of Ares Capital Corporation and a registered investment adviser ("IHAM"). 5
Management Fees by Duration and Fund Type For the three month period ended March 31, 2019: ◦ 84% of management fees come from funds with three or more years remaining in duration ◦ 90% of management fees are derived from permanent capital, closed end funds and CLOs Q1-19 Unconsolidated Management Fees: $233.0 million 1% 1% 2% 5% 7% 10% 7% 3% 39% 44% 84% 90% 19% 39% 23% Permanent Capital 3 to 6 years 7 to 9 years Closed End Funds Permanent Capital CLOs 10 or more years Differentiated Fewer Than 3 years Managed Accounts Open End Funds Other Managed Accounts(1) Managed Accounts 1. Differentiated managed accounts have been managed by the firm for longer than three years, are investing in illiquid strategies or are co-investments structured to pay management fees. 6
AUM and FPAUM by Duration As of March 31, 2019, approximately 72% of AUM and 73% of FPAUM had a duration longer than 3 years ◦ At time of fund closing, the initial duration was greater than 7 years for approximately 75% of AUM AUM: $136.7 billion FPAUM: $87.2 billion 14% 17% 4% 22%4% 7% 12% 16% 7 17% 18% % 10% 6% 10% 7% 72% 5% 73% 13% 19% 37% 28% 24% 30% Permanent Capital 10 or more years 7 to 9 years 3 to 6 years Fewer Than 3 years Differentiated Managed Managed Accounts Accounts(1) 1. Differentiated managed accounts have been managed by the firm for longer than three years, are investing in illiquid strategies or are co-investments structured to pay management fees. 7
Available Capital and AUM Not Yet Earning Fees Available Capital of $35.0 billion as of March 31, 2019, an increase of 31.9% from prior year • The increase of $8.5 billion was driven by new commitments, primarily in European and U.S. direct lending funds in our Credit Group AUM Not Yet Earning Fees of $27.0 billion as of March 31, 2019, an increase of 56.2% from prior year • The increase of $9.7 billion was driven by new commitments across European and U.S. direct lending funds in our Credit Group Available Capital ($ in millions) AUM Not Yet Earning Fees ($ in millions) $38,075 $28,180 $35,048 $27,016 $4,466 $1,681 $4,619 $1,691 $1,753 $1,517 $26,576 $6,747 $5,559 $3,499 $17,291 $959 $7,925 $1,813 $24,808 $23,746 $26,862 $24,870 $14,519 $15,152 Q1-18 Q4-18 Q1-19 Q1-18 Q4-18 Q1-19 Credit Private Equity Real Estate Credit Private Equity Real Estate 8
AUM Not Yet Earning Fees As of March 31, 2019, AUM Not Yet Earning Fees of $27.0 billion could generate approximately $258.9 million in potential incremental annual management fees, of which $224.1 million relates to the $23.8 billion of AUM available for future deployment(1) • The $23.8 billion of AUM Not Yet Earning Fees available for future deployment includes approximately $17.9 billion relating to U.S. and European direct lending funds and $2.8 billion in alternative credit funds AUM Not Yet Earning Fees Available for Future AUM Not Yet Earning Fees: $27.0 billion Deployment: $23.8 billion $334 $1,383 $1,491 $1,522 $525 $23,777 $21,761 $23.8 billion of AUM Not Yet Earning Fees was available for future deployment ($ in millions) ($ in millions) Capital Available for Future Deployment Capital Available for Deployment for Follow-on Investments (2) Available Capital Currently in Funds Unlikely to Be Drawn Due to Leverage Targets and Restrictions Credit Private Equity Real Estate Funds in or Expected to Be in Wind-down 1. No assurance can be made that such results will be achieved. Assumes the AUM Not Yet Earning Fees as of March 31, 2019 is invested and such fees are paid on an annual basis. Does not reflect any associated reductions in management fees from certain existing funds, some of which may be material. There is no assurance such capital will be invested. Reference to $258.9 million includes approximately $20.7 million in potential incremental management fees from deploying undrawn/available credit facilities at ARCC (in excess of its current leverage), which may not be drawn due to leverage target limitations and restrictions until June 21, 2019. Note that ARCC has announced its intention to increase its target leverage (over a one to three year period) to a range of 0.9X to 1.25X debt-to-equity beginning on June 21, 2019, as provided for in the 2018 Small Business Credit Availability Act. Such additional management fees from deploying undrawn/available credit in excess of 1X leverage are not reflected above. Note that no potential ARCC Part I Fees are reflected in any of the amounts above. 2. 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. As of March 31, 2019, capital available for deployment for follow-on investments could generate approximately $14.1 million in potential management fees. There is no assurance such capital will be invested. 9
Incentive Eligible AUM and Incentive Generating AUM Incentive Eligible AUM of $79.9 billion as of March 31, 2019, an increase of 22.5% from prior year • The increase of $14.7 billion was primarily driven by fundraising across European and U.S. direct lending funds in our Credit Group Incentive Generating AUM(1) of $29.2 billion as of March 31, 2019, an increase of 25.0% from prior year • The increase was primarily driven by additional funds exceeding their hurdle rates in our Credit Group, as well as deployment of capital within funds exceeding hurdle rates as of March 31, 2019 Of the $52.5 billion of Incentive Eligible AUM that is currently invested, 55.7% is Incentive Generating • Excluding the capital gains fee potential from the largely debt oriented ARCC portfolio, 75.2% of Incentive Eligible AUM that is currently invested is Incentive Generating Q1-19 Incentive Generating to Incentive Eligible Incentive Eligible AUM AUM Reconciliation ($ in millions) ($ in millions) Private Real Credit Equity Estate Total $78,378 $79,867 Incentive $7,515 $7,455 Generating AUM $18,471 $7,789 $2,983 $29,243 $65,199 $7,522 $18,913 $19,642 + Uninvested IEAUM 18,340 5,631 3,372 27,343 $20,085 + IEAUM below hurdle 2,330 6,222 1,100 9,652 $51,950 $52,770 $37,592 +ARCC Part II Fees below Hurdle(2) 13,629 — — 13,629 Incentive Eligible Q1-18 Q4-18 Q1-19 AUM $52,770 $19,642 $7,455 $79,867 Credit Private Equity Real Estate 1. Incentive Generating AUM includes $8.9 billion of AUM from funds generating unrealized incentive income that is not recognized as revenue by Ares until such fees are crystallized or no longer subject to reversal. 2. ARCC Part II Fees are paid in arrears as of the end of each calendar year when the cumulative aggregate realized capital gains exceed the cumulative aggregate realized capital losses and aggregate unrealized capital depreciation, less the aggregate amount of Part II Fees paid in all prior years since inception. As of March 31, 2019, this calculation resulted in ARCC being below the required hurdle for payment to the Company of any ARCC Part II Fees by approximately 0.08% of the value of the underlying portfolio. 10
Capital Deployment(1) • Total gross invested capital during Q1-19 of $7.4 billion compared to Q1-19 Capital Deployment Breakdown: $7.4 billion $5.8 billion in Q1-18 ($ in millions) ◦ Of the total amount, $6.4 billion was related to deployment in our drawdown funds compared to $4.5 billion for the same period in 2018 $812 ◦ Of our drawdown funds, the most active investment strategies were European direct lending, U.S. direct lending, corporate private $1,363 equity and U.S. real estate equity $5,204 Credit Private Equity Real Estate Q1-19 Capital Deployment in Drawdown Funds: Q1-19 Capital Deployment by Type: $7.4 billion $6.4 billion ($ in millions) ($ in millions) $6,379 $812 $1,000 (2) $4,478 $4,584 $1,363 $350 $535 $1,591 $1,237 $6,379 $4,204 $2,537 $2,812 Q1-18 Q4-18 Q1-19 Drawdown Funds Non-drawdown Funds(2) Credit Private Equity Real Estate 1. Capital deployment figures exclude deployment from permanent capital vehicles. 2. Non-drawdown funds amounts includes new capital deployed by managed accounts and CLOs but excludes recycled capital. 11
GAAP Statements of Operations $ in thousands, except share data Three Months Ended March 31, 2019 2018 Revenues Management fees (includes ARCC Part I Fees of $38,393 and $28,417 for the three months ended March 31, 2019 and 2018, respectively) $224,659 $189,515 Carried interest allocation 197,293 54,129 Incentive fees 16,815 5,071 Principal investment income 28,759 4,909 Administrative, transaction and other fees 9,671 12,465 Total revenues 477,197 266,089 Expenses Compensation and benefits 156,846 134,639 Performance related compensation 156,520 25,878 General, administrative and other expenses 51,187 44,450 Expenses of Consolidated Funds 4,554 1,316 Total expenses 369,107 206,283 Other income (expense) Net realized and unrealized gain (loss) on investments 3,476 (839) Interest and dividend income 1,844 3,347 Interest expense (5,589) (6,869) Other expense, net (4,497) (311) Net realized and unrealized gain (loss) on investments of Consolidated Funds 4,364 (13,085) Interest and other income of the Consolidated Funds 93,184 64,422 Interest expense of the Consolidated Funds (64,912) (44,425) Total other income 27,870 2,240 Income before taxes 135,960 62,046 Income tax expense (benefit) 14,384 (12,375) Net income 121,576 74,421 Less: Net income attributable to non-controlling interests in Consolidated Funds 17,624 367 Less: Net income attributable to non-controlling interests in Ares Operating Group entities 59,003 33,106 Net income attributable to Ares Management Corporation 44,949 40,948 Series A Preferred Stock dividends paid 5,425 5,425 Net income attributable to Ares Management Corporation Class A common stockholders $39,524 $35,523 Net income attributable to Ares Management Corporation per share of Class A common stock: Basic $0.36 $0.39 Diluted $0.36 $0.28 Weighted-average shares of Class A common stock Basic 102,906,494 85,617,932 Diluted 110,699,112 213,852,928 Dividends declared and paid per share of Class A common stock $0.32 $0.40 12
RI and Other Measures Financial Summary $ in thousands, except share data (and as otherwise noted) Three Months Ended March 31, Twelve Months Ended March 31, 2019 2018 % Change 2019 2018 % Change Management fees(1) $233,012 $196,826 18% $872,930 $764,870 14% Other fees 3,075 6,073 (49)% 21,290 23,670 (10)% Compensation and benefits expenses(2) (123,489) (107,724) 15% (472,020) (420,849) 12% General, administrative and other expenses(3) (41,326) (34,718) 19% (156,073) (136,966) 14% Fee Related Earnings $71,272 $60,457 18% $266,127 $230,725 15% Realized net performance income $19,356 $8,238 135% $116,728 $80,191 46% Realized net investment income 14,004 3,378 NM 45,100 32,924 37% Realized Income $104,632 $72,073 45% $427,955 $343,840 24% After-tax Realized Income, net of Series A Preferred Stock dividends(4) $89,019 $63,809 40% $371,136 $296,000 25% After-tax Realized Income per share of Class A common stock, net of Series A Preferred Stock dividends(5) $0.35 $0.27 30% $1.50 $1.20 25% Other Data Total fee revenue(6) $252,368 $205,064 23% $989,658 $845,061 17% Effective management fee rate(7) 1.09% 1.06% 3% 1. Includes ARCC Part I Fees of $38.4 million and $28.4 million for the three months ended March 31, 2019 and 2018, respectively, and $138.8 million and $100.6 million for Q1-19 LTM and Q1-18 LTM, respectively. 2. Includes compensation and benefits expenses attributable to the Operations Management Group of $32.7 million and $30.2 million for the three months ended March 31, 2019 and 2018, respectively, and $127.3 million and $115.3 million for Q1-19 LTM and Q1-18 LTM, respectively, which are not allocated to an operating segment. 3. Includes G&A expenses attributable to Operations Management Group of $20.6 million and $18.4 million for the three months ended March 31, 2019 and 2018, respectively, and $77.3 million and $73.3 million for Q1-19 LTM and Q1-18 LTM, respectively, which are not allocated to an operating segment. 4. Q1-19 after-tax Realized Income includes $3.7 million of current income tax related to realized performance income and $6.4 million of current income tax related to FRE, of which $1.8 million is entity level taxes and $4.6 million is corporate level taxes. Q1-18 after-tax Realized Income includes $1.0 million of current income tax related to realized performance income and $1.8 million of current income tax related to FRE, of which $0.7 million is entity level taxes and $1.1 million is corporate level taxes. 5. Calculation of after-tax Realized Income per share of Class A common stock uses total average shares of Class A common stock outstanding and proportional dilutive effects of the Ares' equity-based awards. See slide 31 for additional details. 6. Total fee revenue is calculated as management fees plus realized net performance income. 7. Effective management fee rate represents the quotient of management fees and the aggregate fee bases for the periods presented. The effective rate shown excludes the effect of one-time catch-up fees. 13
GAAP to Non-GAAP Reconciliation – Unconsolidated Reporting Basis $ in thousands Three Months Ended March 31, Twelve Months Ended March 31, 2019 2018 2019 2018 Realized Income and Fee Related Earnings: Income before taxes $135,960 $62,046 $258,255 $402,493 Adjustments: Amortization of intangibles 1,211 3,287 6,956 15,862 Depreciation expense 4,613 3,889 16,779 13,304 Equity compensation expenses(1) 27,552 21,087 96,189 75,709 Acquisition and merger-related expenses 1,773 (319) 5,028 4,492 Placement fees and underwriting costs 521 1,664 19,200 17,990 Other (income) expense, net (1) 7 13,481 (1,695) Expense of non-controlling interests in consolidated subsidiaries 876 640 3,579 2,379 Income before taxes of non-controlling interests in Consolidated Funds, net of eliminations (17,045) (367) (37,321) (46,749) Unconsolidated performance income - unrealized (146,575) (35,118) 135,755 (311,772) Unconsolidated performance related compensation - unrealized 107,303 11,009 (125,049) 213,000 Unconsolidated net investment (income) loss - unrealized (11,556) 4,248 35,103 (41,173) Realized Income $104,632 $72,073 $427,955 $343,840 Unconsolidated performance income - realized $(68,573) $(23,107) $(402,673) $(332,089) Unconsolidated performance related compensation - realized 49,217 14,869 285,945 251,898 Unconsolidated net investment income - realized (14,004) (3,378) (45,100) (32,924) Fee Related Earnings $71,272 $60,457 $266,127 $230,725 Note: This table is a reconciliation of income before provision for income taxes on a GAAP basis to RI and FRE on an 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. 1. For the three months and twelve months ended March 31, 2019 and 2018, equity compensation expense was attributable to the following: (i) IPO awards and other non-recurring awards of $13.3 million, $55.9 million, $11.2 million and $51.8 million, respectively; (ii) annual bonus awards of $8.0 million, $20.8 million, $6.2 million and $14.7 million, respectively; and (iii) discretionary awards of $6.3 million, $19.6 million, $3.7 million and $9.2 million, respectively. 14
GAAP to Non-GAAP Reconciliation – Unconsolidated Reporting Basis (cont.) $ in thousands Three Months Ended March 31, Twelve Months Ended March 31, 2019 2018 2019 2018 Performance income and net investment income reconciliation: Carried interest allocation $197,293 $54,129 $185,574 $622,576 Incentive fees 16,815 5,071 75,124 18,126 Carried interest allocation and incentive fees $214,108 $59,200 $260,698 $640,702 Performance income - realized earned from Consolidated Funds $434 $0 $4,434 $4,667 Performance income - reclass(1) 606 (975) 1,786 937 Unconsolidated performance income - unrealized (146,575) (35,118) 135,755 (311,772) Performance income - unrealized earned from Consolidated Funds — — — (2,445) Performance income - realized $68,573 $23,107 $402,673 $332,089 Total consolidated other income $27,870 $2,240 $121,872 $120,279 Net investment income from Consolidated Funds (31,579) (6,793) (139,937) (122,181) Performance income - reclass (1) (606) 975 (1,786) (937) Principal investment income 29,892 2,708 28,231 78,570 Other (income) expense, net (1) 7 1,645 (1,603) Other expense of non-controlling interests in consolidated subsidiaries (16) (7) (28) (31) Investment (income) loss - unrealized (16,424) 4,420 29,965 (39,783) Interest and other investment (income) loss - unrealized 4,868 (172) 5,138 (1,390) Total realized net investment income $14,004 $3,378 $45,100 $32,924 Note: These tables reconcile consolidated carried interest allocation and incentive fees reported in accordance with GAAP to unconsolidated realized performance income and consolidated GAAP other income to unconsolidated realized net investment income. 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 income for AREA Sponsor Holdings LLC. Changes in value of this investment are reflected within net realized and unrealized gain (loss) on investments in Ares' Consolidated Statements of Operations. 15
Credit Group(1) • Management and other fees increased by 21% for Q1-19 compared to Q1-18, primarily due to deployment in U.S. and European direct lending strategies and an increase in ARCC Part I Fees • Fee related earnings increased by 20% for Q1-19 compared to Q1-18, primarily driven by higher management fees • Realized income increased by 32% for Q1-19 compared to Q1-18, primarily driven by an increase in fee related earnings and higher incentive fees from direct lending funds Financial Summary and Highlights(2) $ in thousands Q1-19 Q1-18 % Change Q1-19 LTM Q1-18 LTM % Change 20% Management and other fees(3) $166,032 $137,496 21% $616,682 $513,942 20% Q1-19 increase in Fee Related Earnings Fee Related Earnings $92,179 $76,948 20% $340,384 $284,384 20% Realized net performance income $9,262 $1,983 NM $53,008 $10,359 NM 22% Realized net investment income (loss) 1,864 (713) NM 4,033 3,830 5% Q1-19 increase in Realized Income $103,305 $78,218 32% $397,425 $298,573 33% FPAUM AUM ($ in billions) $101.1 $77.3 31% European Direct Lending: FPAUM ($ in billions) $62.9 $51.5 22% 3.6%(4) High Yield: 7.5%(5) (5) Syndicated Loans: 4.5% Q1-19 gross returns Note: Past performance is not indicative of future results. The Credit Group had ~250 investment professionals, over 1,600 portfolio companies and 165 active funds as of March 31, 2019. 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 slide 23 for complete financial results. 3. Includes ARCC Part I Fees of $38.4 million and $28.4 million for Q1-19 and Q1-18, respectively, and $138.8 million and $100.6 million for Q1-19 LTM and Q1-18 LTM, respectively. The amounts are net of the $10 million quarterly ARCC– ACAS transaction fee waiver, which is effective through Q3-19. 4. The net return for European direct lending is 2.7% for Q1-19. Gross and net returns for European 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 3.8% and 3.0% for Q1-19. Returns in the chart are shown for the Euro-denominated composite as this is the base denomination of the funds. 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, carried interest, if applicable, and other expenses. We believe aggregated performance returns reflect overall quarterly performance returns in a strategy, but are not necessarily investable funds or products themselves. 5. Net performance returns: 4.3% for U.S. Syndicated Loan funds and 7.4% for U.S. High Yield funds. Performance for syndicated loans is represented by the U.S. Bank Loan Aggregate Composite which includes all actual, fully discretionary, fee-paying, funds that are benchmarked to the Credit Suisse Leveraged Loan Index and primarily invested in USD denominated banks loans. Such funds may have limited allocations to high yield and structured securities. Performance for high yield is represented by the U.S. High Yield Composite which includes all actual, fully discretionary, fee-paying, separately managed funds that primarily invest in U.S. high yield fixed income securities and are benchmarked to the BofA Merrill Lynch US High Yield Master II Constrained Index, or a similar index. 16
Private Equity Group(1) • Management and other fees increased 2% for Q1-19 compared to Q1-18 primarily driven by new commitments in our energy opportunities fund and deployment of capital within SSF IV • Fee related earnings decreased 3% primarily driven by an increase in compensation offset by higher management fees • Realized income increased by 61% for Q1-19 compared to Q1-18, primarily driven by monetizations within ACOF III Financial Summary and Highlights(2) $ in thousands Q1-19 Q1-18 % Change Q1-19 LTM Q1-18 LTM % Change 61% Management and other fees $51,396 $50,227 2% $200,359 $210,061 (5)% Q1-19 increase in Fee Related Earnings $26,143 $26,987 (3)% $105,192 $118,107 (11)% Realized Income Realized net performance income $8,826 $838 NM $36,044 $59,156 (39)% Realized net investment income (loss) 9,055 (498) NM 25,993 20,533 27% Realized Income $44,024 $27,327 61% $167,229 $197,796 (15)% Q1-19: 8.7% Gross return in AUM ($ in billions) $23.8 $24.3 (2)% Corporate Private FPAUM ($ in billions) $17.3 $16.7 4% Equity portfolio(3) Note: Past performance is not indicative of future results. The Private Equity Group had ~97 investment professionals, 44 portfolio companies, 55 Infrastructure and Power Assets and 22 active funds and related co-investment vehicles as of March 31, 2019. 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 slide 23 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 asset-level 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 including taxes. Net returns are reduced by applicable management fees, accrued carried interest, if applicable, and other expenses. Net asset- level returns for corporate private equity portfolio was 7.0% for Q1-19. We believe aggregated performance returns reflect overall quarterly performance returns in a strategy, but are not necessarily investable funds or products themselves. 17
Real Estate Group(1) • Management and other fees increased 23% for Q1-19 compared to Q1-18, primarily driven by capital deployment within two new equity funds in U.S. and Europe and to $1.0 million of catch-up fees attributable to the new equity fund in Europe • Fee related earning increased 22% for Q1-19 compared to Q1-18, primarily driven by higher management fees • Realized income decreased by 20% for Q1-19 compared to Q1-18, primarily driven by higher monetization activity within EF IV during Q1-18 Financial Summary and Highlights(2) $ in thousands Q1-19 Q1-18 % Change Q1-19 LTM Q1-18 LTM % Change 22% Management and other fees $18,659 $15,176 23% $77,179 $64,537 20% Q1-19 increase in Fee Related Fee Related Earnings $6,243 $5,105 22% $25,088 $16,828 49% Earnings Realized net performance income $1,268 $5,417 (77)% $27,676 $10,676 159% Realized net investment income 3,466 3,147 10% 12,149 6,104 99% 8% Realized Income $10,977 $13,669 (20)% $64,913 $33,608 93% Q1-19 increase in AUM ($ in billions) $11.8 $10.9 8% AUM FPAUM ($ in billions) $7.0 $6.8 3% U.S. Equity: 4.2% European Equity: 1.2% Q1-19 Gross Returns(3) Note: Past performance is not indicative of future results. The Real Estate Group had ~72 investment professionals, over 170 properties and 45 active funds as of March 31, 2019. 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 slide 23 for complete financial results. 3. Returns are gross time-weighted rates of return and do not reflect the deduction of management fees, carried interest, if applicable, or fund expenses. Gross return for U.S. equity is represented by U.S. Fund VIII and gross return for European 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. Returns in the chart are shown for the Euro-denominated composite as this is the base denomination of the funds. Gross returns do not reflect the deduction of management fees, carried interest, if applicable, or any other expenses including taxes. Net returns are reduced by applicable management fees, accrued carried interest, if applicable, and other expenses. Net returns for U.S. equity and European equity were 3.1% and 0.8%, respectively, for Q1-19. The gross and net returns for the dollar denominated feeder fund for EF IV were 1.7% and 1.2%, respectively, for Q1-19. 18
Realized Income per Share Data Three Months Ended March 31, $ in thousands, except share data 2019 2018 After-tax Realized Income, net of Series A Preferred Stock dividends Realized Income before taxes $104,632 $72,073 Entity level foreign, state and local taxes (1,839) (666) Series A Preferred Stock dividends(1) (5,425) (5,425) Realized Income, net of Series A Preferred Stock dividends $97,368 $65,982 Income taxes(2) $(8,349) $(2,173) After-tax Realized Income, net of Series A Preferred Stock dividends $89,019 $63,809 After-tax Realized Income per share(3) $0.39 $0.29 After-tax Realized Income per share of Class A common stock Realized Income, net of Series A Preferred Stock dividends $97,368 $65,982 x Average ownership % of Ares Operating Group 46.80% 40.04% Realized Income attributable to Class A common stockholders $45,565 $26,416 Income taxes(2) $(8,349) $(2,173) After-tax Realized Income attributable to Class A common stockholders $37,216 $24,243 After-tax Realized Income per share of Class A common stock(4) $0.35 $0.27 1. Ares has 12,400,000 of 7% Series A Preferred Shares outstanding as of March 31, 2019. 2. Amount represents the current corporate taxes paid by Ares for the periods presented and exclude the effects of $4.8 million of deferred income tax expense primarily related to net unrealized performance income and net unrealized investment income. These effects have been excluded as net unrealized performance income and net unrealized investment income have been excluded from RI. For the purposes of evaluating FRE after-tax we first allocate the taxes to realized performance income. Taxes are allocated to realized performance income based on our 23.95% statutory tax rate. The remaining portion of current corporate taxes is allocated to FRE. All differences between the current portion of taxable income and RI are attributed to FRE. For the quarter ending March 31, 2019, these differences totaled $3.4 million and reduced our tax rate from 23.95% to 19.35%. The primary differences between the current portion of taxable income and RI are related to the timing of certain items, primarily vesting of equity awards, payment of placement fees, depreciation and amortization. FRE tax rates may fluctuate based on the total amount of realized performance income and the amount of timing differences between the current portion of taxable income and RI. 3. Weighted average shares used for RI of 227,695,143 includes the sum of shares of Class A common stock, Ares Operating Group Units that are exchangeable for shares of Class A common stock on a one-for- one basis and the dilutive effects of Ares' equity-based awards. Please refer to slide 31 in this presentation for further information. 4. Calculation of after-tax Realized Income per share of Class A common stock uses the total average shares of Class A common stock outstanding and the dilutive effects of Ares' equity-based awards. See slide 31 for additional details. 19
Balance Sheet • Substantial balance sheet value related to investments in Ares managed vehicles and net accrued performance income receivable ◦ As of March 31, 2019, $120.5 million in cash and cash equivalents, $566.1 million in debt obligations including $320.0 million drawn against our $1.065 billion revolving credit facility ◦ As of March 31, 2019, the fair value of our corporate investment portfolio was $505.6 million in accordance with GAAP. On an unconsolidated basis, our corporate investment portfolio was $781.8 million(1) ◦ As of March 31, 2019, gross accrued performance income reported on a GAAP and unconsolidated basis was $970.6 million ▪ As of March 31, 2019, accrued performance income, net of performance related compensation reported on a GAAP basis and unconsolidated basis was $266.3 million, which increased by 6.9% from December 31, 2018 Net Performance Income Receivable by Group – GAAP Net Performance Income Receivable by Group – GAAP and Unconsolidated basis and Unconsolidated basis Q4 2018: $249.0 million Q1 2019: $266.3 million 28% 25% 32% 30% 40% 45% Credit Private Equity Real Estate 1. As of March 31, 2019, $46.7 million was invested in non-Ares managed vehicles. Difference between GAAP and unconsolidated investments represents investments of $276.2 million in Consolidated Funds that are eliminated upon consolidation. Corporate investment portfolio excludes accrued carried interest allocation of $970.4 million. 20
Corporate Data Board of Directors Executive Officers Research Coverage Investor Relations Contacts Michael Arougheti Michael Arougheti Bank of America Merrill Lynch Carl Drake Co-Founder, Chief Executive Officer and Co-Founder, Chief Executive Officer and Michael Carrier Partner/Head of Ares Management, LLC President of Ares President (646) 855-5004 Public Investor Relations and Communications Antoinette Bush Ryan Berry Credit Suisse Tel: (678) 538-1981 Executive Vice President and Global Head Partner, Chief Marketing and Strategy Craig Siegenthaler cdrake@aresmgmt.com of Government Affairs of News Corp Officer (212) 325-3104 Veronica Mayer Paul G. Joubert Kipp deVeer Goldman Sachs Partner, Head of Credit Group Principal Founding Partner of EdgeAdvisors and Alexander Blostein Tel: (212) 808-1150 Investing Partner in Converge Venture (212) 357-9976 vmendiola@aresmgmt.com Partners David Kaplan Co-Founder and Partner Jefferies Cameron Rudd David Kaplan Gerald O'Hara Senior Associate Co-Founder and Partner of Ares, Co-Head Michael McFerran (415) 229-1510 Partner, Chief Operating Officer and Chief Tel: (678) 538-1986 of Private Equity Group crudd@aresmgmt.com Financial Officer JP Morgan John Kissick Kenneth Worthington General IR Contact Co-Founder and Former Partner of Ares Antony P. Ressler (212) 622-6613 Co-Founder and Executive Chairman Tel (U.S.): (800) 340-6597 Michael Lynton Keefe, Bruyette & Woods Tel (International): Chairman of Snap Inc. Bennett Rosenthal Robert Lee Co-Founder and Partner (212) 808-1101 (212) 887-7732 IRARES@aresmgmt.com Dr. Judy D. Olian President of Quinnipiac University Michael Weiner Morgan Stanley Executive Vice President, Chief Legal Officer Please visit our website at: Michael Cyprys www.aresmgmt.com Antony P. Ressler and Secretary (212) 761-7619 Co-Founder and Executive Chairman of Ares Oppenheimer Chris Kotowski Transfer Agent Bennett Rosenthal (212) 667-6699 Co-Founder and Partner of Ares, Co-Head Corporate Headquarters American Stock Transfer & Trust Company, of Private Equity Group RBC Capital Markets Kenneth Lee LLC 2000 Avenue of the Stars (212) 905-5995 6201 15th Avenue 12th Floor Brooklyn, NY 11210 Los Angeles, CA 90067 UBS Investment Bank Tel: (877) 681-8121 Tel: (310) 201-4100 Brent Dilts Fax: (718) 236-2641 Fax: (310) 201-4170 (212) 713-1841 info@amstock.com www.amstock.com Wells Fargo Securities Corporate Counsel Christopher Harris (443) 263-6513 Kirkland & Ellis LLP Securities Listing Los Angeles, CA NYSE: ARES Independent Registered Public Accounting NYSE: ARES.PRA Firm Ernst & Young LLP Los Angeles, CA 21
Appendix
Financial Details – Segments Three Months Ended March 31, 2019 $ in thousands Private Real Operations Credit Equity Estate Management Group Group Group Group Total(1) Management fees (Credit Group includes ARCC Part I Fees of $38,393) $162,966 $51,396 $18,650 $— $233,012 Other fees 3,066 — 9 — 3,075 Compensation and benefits (60,348) (21,196) (9,284) (32,661) (123,489) General, administrative and other expenses (13,505) (4,057) (3,132) (20,632) (41,326) Fee Related Earnings $92,179 $26,143 $6,243 ($53,293) $71,272 Performance income—realized $21,925 $44,123 $2,525 $— $68,573 Performance related compensation—realized (12,663) (35,297) (1,257) — (49,217) Realized net performance income $9,262 $8,826 $1,268 $— $19,356 Investment income—realized $858 $10,936 $3,480 $— $15,274 Interest and other investment income—realized 2,905 294 1,105 15 4,319 Interest expense (1,899) (2,175) (1,119) (396) (5,589) Realized net investment income $1,864 $9,055 $3,466 $(381) $14,004 Realized income $103,305 $44,024 $10,977 ($53,674) $104,632 Three Months Ended March 31, 2018 $ in thousands Private Real Operations Credit Equity Estate Management (1) Group Group Group Group Total Management fees (Credit Group includes ARCC Part I Fees of $28,417) $131,766 $49,887 $15,173 $— $196,826 Other fees 5,730 340 3 — 6,073 Compensation and benefits (50,694) (19,199) (7,639) (30,192) (107,724) General, administrative and other expenses (9,854) (4,041) (2,432) (18,391) (34,718) Fee Related Earnings $76,948 $26,987 $5,105 ($48,583) $60,457 Performance income—realized $5,071 $4,398 $13,638 $— $23,107 Performance related compensation—realized (3,088) (3,560) (8,221) — (14,869) Realized net performance income $1,983 $838 $5,417 $— $8,238 Investment income—realized $771 $671 $3,350 $838 $5,630 Interest and other investment income—realized 3,189 59 217 1,152 4,617 Interest expense (4,673) (1,228) (420) (548) (6,869) Realized net investment income $(713) $(498) $3,147 $1,442 $3,378 Realized income $78,218 $27,327 $13,669 ($47,141) $72,073 1. Includes results of the reportable segments on a combined basis together with the Operations Management Group. See “GAAP to Non-GAAP Reconciliation – Unconsolidated Reporting Basis” on slides 14-15. 23
AUM and FPAUM Rollforward Q1-19 Total AUM Rollforward ($ in millions) LTM Total AUM Rollforward ($ in millions) $ in thousands Credit Private Equity Real Estate Total $ in thousands Credit Private Equity Real Estate Total Q4-18 Ending Balance $95,836 $23,487 $11,340 $130,663 Q1-18 Ending Balance $77,310 $24,303 $10,896 $112,509 Commitments 5,531 31 635 6,197 Commitments 30,121 1,616 2,701 34,438 Capital reductions (104) (3) — (107) Capital reductions (2,602) (7) (140) (2,749) Distributions (527) (637) (339) (1,503) Distributions (2,197) (2,251) (2,117) (6,565) Redemptions (717) — — (717) Redemptions (2,956) — — (2,956) Changes in fund value 1,057 900 174 2,131 Changes in fund value 1,400 117 470 1,987 Q1-19 Ending Balance $101,076 $23,778 $11,810 $136,664 Q1-19 Ending Balance $101,076 $23,778 $11,810 $136,664 QoQ change $5,240 $291 $470 $6,001 YoY change $23,766 ($525) $914 $24,155 Q1-19 Total FPAUM Rollforward ($ in millions) LTM Total FPAUM Rollforward ($ in millions) $ in thousands Credit Private Equity Real Estate Total $ in thousands Credit Private Equity Real Estate Total Q4-18 Ending Balance $57,847 $17,071 $6,952 $81,870 Q1-18 Ending Balance $51,540 $16,663 $6,751 $74,954 Commitments 1,838 81 86 2,005 Commitments 5,677 1,117 899 7,693 Subscriptions/deployment/increase in leverage 3,933 313 156 4,402 Subscriptions/deployment/increase in leverage 12,403 1,004 699 14,106 Capital Reductions (85) (4) — (89) Capital Reductions (1,411) (140) (102) (1,653) Distributions (523) (141) (181) (845) Distributions (2,603) (1,182) (1,031) (4,816) Redemptions (857) — — (857) Redemptions (3,013) (4) — (3,017) Changes in fund value 905 2 (38) 869 Changes in fund value 465 (7) (104) 354 Change in fee basis (134) — — (134) Change in fee basis (134) (129) (137) (400) Q1-19 Ending Balance $62,924 $17,322 $6,975 $87,221 Q1-19 Ending Balance $62,924 $17,322 $6,975 $87,221 QoQ change $5,077 $251 $23 $5,351 YoY change $11,384 $659 $224 $12,267 l AUM increased by 30.7% from Q1-18, primarily driven by new commitments to European and U.S. direct lending and syndicated loans strategies Credit l FPAUM increased by 22.1% from Q1-18, primarily driven by deployment in U.S. and European direct lending funds paid on invested capital and new commitments to syndicated loans strategy l AUM decreased by -2.2% from Q1-18, driven by realizations across funds in corporate private equity and infrastructure and power strategies Private Equity l FPAUM increased by 4.0% from Q1-18, driven by new commitments to energy opportunities strategy and deployment of capital in special opportunities strategy l AUM increased by 8.4% from Q1-18, driven by new commitments across funds in all three Real Estate strategies and appreciation primarily in U.S. equity funds Real Estate l FPAUM increased by 3.3% from Q1-18, driven by new commitments and deployment of capital in funds across European and U.S. equity strategies 24
AUM and FPAUM by Strategy As of March 31, 2019 Strategy ($ in billions) AUM % AUM FPAUM % FPAUM Credit Syndicated Loans $21.2 21% $19.7 31% High Yield 4.2 4 4.2 7 Credit Opportunities 2.5 2 2.1 3 Alternative Credit 6.6 7 3.2 5 U.S. Direct Lending(1) 42.0 42 23.6 38 European Direct Lending 24.6 24 10.1 16 Credit $101.1 100% $62.9 100% Private Equity Corporate Private Equity ACOF V $8.0 33% $7.6 42% ACOF IV 5.5 23 2.8 16 ACOF III 3.3 14 1.3 8 ACOF I-II 0.4 2 — — ACOF Asia 0.3 1 0.1 1 Infrastructure and Power EIF I-IV and Co-investment Vehicles 2.8 12 2.6 15 EIF V 0.8 3 0.8 5 Energy Opportunities Energy Opportunities 0.9 4 0.8 5 Special Opportunities Special Opportunities 1.8 8 1.3 8 Private Equity $23.8 100% $17.3 100% Real Estate U.S. Equity $3.9 33% $2.6 37% European Equity 3.9 33 3.4 49 Debt 4.0 34 1.0 14 Real Estate $11.8 100% $7.0 100% Total $136.7 $87.2 1. AUM includes ARCC, IHAM, and SDLP AUM of $14.4 billion, $4.1 billion, and $2.7 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 2 other funds as of March 31, 2019. 25
Balance Sheet Investments by Strategy $ in thousands March 31, 2019 December 31, 2018 Credit Syndicated Loans(1) $88,895 $75,029 Credit Opportunities 3,691 3,420 Alternative Credit 21,827 19,518 U.S. Direct Lending 60,832 58,970 European Direct Lending 52,926 47,854 Credit $228,171 $204,791 Private Equity ACOF I - II $3,273 $3,417 ACOF III 85,142 81,658 ACOF IV 39,218 37,207 ACOF Asia 79,467 83,492 Energy Opportunities 6,332 1,741 Infrastructure and Power 31,406 30,487 Special Opportunities 126,078 37,817 Private Equity 370,916 275,819 Real Estate U.S. Equity $106,651 $109,893 European Equity 19,064 16,453 Debt 10,297 18,108 Real Estate $136,012 $144,454 Operations Management Group Other $46,690 $46,449 Other $46,690 $46,449 Total $781,789 $671,513 Note: Reflects the balance sheet of Ares Management Corporation and its consolidated subsidiaries, excluding the effect of Consolidated Funds. 1. Through investments in Ares CLOs. Represents Ares' maximum exposure of loss from its investments in CLOs. 26
Significant Fund Performance Metrics The following table presents the performance data for the significant fund in the Credit Group that is not a drawdown fund: As of March 31, 2019 Returns (%)(1) Current Quarter Year-To-Date Since Inception(2) Year of AUM Inception (in millions) Gross Net Gross Net Gross Net Investment Strategy ARCC(3) 2004 $14,440 N/A 3.0% N/A 3.0% N/A 11.8% U.S. Direct Lending Note: Past performance is not indicative of future results. AUM and Net Returns are as of March 31, 2019 unless otherwise noted. The above table includes fund performance metrics for significant funds which includes those that contributed at least 1% of total management fees for the three months ended March 31, 2019 or comprised 1% or more of Ares' total FPAUM as of March 31, 2019, and for which we have sole discretion for investment decisions within the fund. Please see significant fund performance endnotes on slides 29-30 for additional information. Return information presented may not reflect actual returns earned by investors in the applicable fund. ARCC is a publicly traded vehicle. 27
Significant Fund Performance Metrics (cont’d) The following table presents the performance data for all our significant drawdown funds: As of March 31, 2019 Credit Cumulative MOIC IRR Year of Original Capital Invested Realized Unrealized ($ in millions) Inception AUM Commitments Capital Proceeds(4) Value(5) Total Value Gross(6) Net(7) Gross(8) Net(9) Primary Investment Strategy CSF III 2010 $1,113 $1,135 $1,209 $577 $1,125 $1,702 1.5x 1.4x 8.8% 7.8% European & U.S. Direct Lending ACE III(10) 2015 5,003 2,822 2,479 337 2,723 3,060 1.3x 1.2x 16.1% 12.2% European Direct Lending PCS 2017 3,497 3,365 1,305 81 1,332 1,413 1.1x 1.1x 13.3% 9.1% U.S Direct Lending ACE IV Unlevered(11)* 2,851 738 3 766 769 1.1x 1.0x NA NA 2018 8,936 European Direct Lending ACE IV Levered(11)* 4,819 1,256 8 1,335 1,343 1.1x 1.1x NA NA Private Equity Cumulative MOIC IRR Year of Original Capital Invested Realized Unrealized ($ in millions) Inception AUM Commitments Capital Proceeds(1) Value(2) Total Value Gross(3) Net(4) Gross(5) Net(6) Primary Investment Strategy ACOF III 2008 $3,274 $3,510 $3,867 $7,360 $2,974 $10,334 2.7x 2.3x 29.4% 21.0% Corporate Private Equity USPF IV 2010 1,666 1,688 2,078 1,210 1,559 2,769 1.3x 1.2x 9.0% 5.9% Infrastructure and Power ACOF IV 2012 5,484 4,700 4,164 2,556 4,695 7,251 1.7x 1.5x 18.7% 11.8% Corporate Private Equity EIF V 2015 816 801 751 209 662 871 1.2x 1.1x 13.7% 7.5% Infrastructure and Power SSF IV(7)** 2015 1,452 1,515 2,601 1,245 1,242 2,487 1.0x 0.9x (4.6)% (6.5)% Special Opportunities ACOF V 2017 7,982 7,850 4,433 146 4,759 4,905 1.1x 1.0x 11.4% 3.8% Corporate Private Equity Real Estate Cumulative MOIC IRR Year of Original Capital Invested Realized Unrealized ($ in millions) Inception AUM Commitments Capital Proceeds(1) Value(2) Total Value Gross(3) Net(4) Gross(5) Net(6) Primary Investment Strategy EF IV(7) 2014 $1,067 $1,302 $1,148 $758 $984 $1,742 1.5x 1.3x 19.7% 13.7% European Real Estate Equity VEF IX* 2017 1,027 1,040 586 13 569 582 1.0x 1.0x NA NA U.S. Real Estate Equity Fifth flagship European real estate fund V(8)* 2018 1,277 1,197 283 11 309 320 1.1x 1.0x NA NA European Real Estate Equity Note: Past performance is not indicative of future results. AUM and Net Returns are as of March 31, 2019 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 three months ended March 31, 2019 or comprised 1% or more of Ares' total FPAUM as of March 31, 2019, and for which we have sole discretion for investment decisions within the fund. Please see significant fund performance endnotes on slides 29-30 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 investment performance, which begins on the date of the fund's first investment, 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 or (ii) the date on which the fund has invested at least 50% of its capital. ** In January of 2017, a new team assumed portfolio management of SSF IV. In addition to presenting the cumulative performance measure by SSF IV, we have also adopted a new performance measurement called “SSF IV 2.0”. Since January 2017, SSF IV 2.0 has generated gross and net (realized and unrealized) internal rates of return of 9.2% and 7.2%, respectively, through March 31, 2019. 28
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 presentation. 4. 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. 5. Unrealized value represents the fund's NAV reduced by the accrued incentive allocation, if applicable. There can be no assurance that unrealized values will be realized at the valuations indicated. 6. 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 income. The gross MoIC for CSF III is before giving effect to management fees and performance income, as applicable. The gross MoIC for all other credit funds is before giving effect to management fees, performance income as applicable and other expenses. 7. 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 income. The net MoIC is after giving effect to management fees, performance income, as applicable and other expenses. The funds may utilize a credit facility during the investment period and for general cash management purposes. The net MoIC would have been lower had such fund called capital from its limited partners instead of utilizing the credit facility. 8. 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 income. The cash flow dates used in the gross IRR calculation are based on the actual dates of the cash flows. The gross IRRs for CSF III are calculated before giving effect to management fees and performance income, as applicable. The gross IRRs for all other Credit funds are calculated before giving effect to management fees, performance income, as applicable, and other expenses. 9. 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 income. 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 income, 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 likely have been lower had such fund called capital from its limited partners instead of utilizing the credit facility. 10. 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. The gross and net IRR for the U.S. dollar denominated feeder fund are 16.1% and 12.1%, respectively. The gross and net MoIC for the U.S. dollar denominated feeder fund are 1.3x and 1.2x, 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. 11. ACE IV is made up of four parallel funds: ACE IV (E) Unlevered, ACE IV (G) Unlevered, ACE IV (E) Levered, and ACE IV (G) Levered. The gross and net MoIC presented in the chart are for ACE IV (E) Unlevered and ACE IV (E) Levered. Metrics for ACE IV (E) Levered are inclusive of a U.S. Dollar denominated feeder fund, which has not been presented separately. The gross and net MoIC for ACE IV (G) Unlevered are 1.1x and 1.0x, respectively. The gross and net MoIC for ACE IV (G) Levered are 1.1x and 1.1.x, 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 IV Unlevered and ACE IV Levered are for the combined levered and unlevered parallel funds and are converted to U.S. Dollars at the prevailing quarter-end exchange rate. 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, carried interest as applicable and other expenses. 4. The net MoIC for the infrastructure and power, and special opportunities 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 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, carried interest, as applicable, and other expenses. The funds may utilize a credit facility during the investment period and for general cash management purposes. The net MoIC would have been lower had such fund called capital from its limited partners instead of utilizing the credit facility. 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. For ASSF IV, cash flows used in the gross IRR calculation are based on the actual dates of the cash flows. For all other funds, cash flows are assumed to occur at month-end. The gross IRRs are calculated before giving effect to management fees, carried interest, as applicable, and other expenses. 29
Significant Fund Performance Metrics Endnotes (cont’d) Private Equity - Cont. 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 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 carried interest. 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, carried interest 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. The funds may utilize a credit facility during the investment period and for general cash management purposes. Net fund-level IRRs would have generally been lower had such fund called capital from its limited partners instead of utilizing the credit facility. 7. SSF IV 2.0 investments represent (i) existing and re-underwritten positions by the new team on January 1, 2017 and (ii) all new investments made by the new team since January 1, 2017. As part of the re-underwriting process, each liquid investment in the ASSF IV portfolio was evaluated and a determination was made whether to continue to hold such investment in the ASSF IV portfolio or dispose of such investment. At the same time, legacy illiquid investments have been excluded from SSF IV 2.0 track record as it was not possible to dispose of such investments in the near-term due to their private, illiquid nature. Since January 2017, SSF IV 2.0 has generated gross and net internal rates of return of 9.2% and 7.2% through March 31, 2019. The IRR is an annualized since inception 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. Cash flows used in the IRRs calculations are based on the actual dates of the cash flows. The gross IRRs are calculated before giving effect to management fees, performance fees as applicable, and other expenses. The net IRRs are calculated after giving effect to estimated management fees, performance fees, and other expenses. Real Estate 1. Realized proceeds include distributions of operating income, sales and financing proceeds received. 2. Unrealized value represents the fair 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 income 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 income or has such fees rebated outside of the fund. The net MoIC is after giving effect to management fees, performance income as applicable and other expenses. Net fund-level MoICs would generally likely have been lower had such fund called capital from its limited partners instead of utilizing the credit facility. 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 income 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 income 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 income 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 generally likely 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 Euro denominated parallel fund. The gross and net IRRs for the U.S. Dollar denominated parallel fund are 19.3% and 13.5%, respectively. The gross and net MoIC for the U.S. Dollar denominated parallel 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 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. Our fifth flagship European real estate fund is made up of two parallel funds, one denominated in U.S. Dollars and one denominated in Euros. The gross MoIC presented in the chart is for the Euro denominated parallel fund. The gross and net MoIC for the U.S. Dollar denominated parallel fund are 1.1x and 1.0x, 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 our fifth flagship European real estate fund are for the combined fund and are converted to U.S. Dollars at the prevailing quarter-end exchange rate. 30
Weighted Average Shares Q1-19 Q1-18 Common Shares, Common Shares, GAAP Shares As Adjusted(3) Total Shares As Adjusted(3) Weighted average shares of Class A common stock 102,906,494 102,906,494 85,617,932 85,617,932 Ares Operating Group Units exchangeable into shares of Class A common stock(1) 116,996,031 — 128,234,996 — Dilutive effect of unvested restricted common units(2) 5,485,250 2,566,900 5,842,185 2,338,971 Dilutive effect of unvested options(2) 2,307,368 1,079,765 2,420,008 968,872 Total Weighted Average Shares Used For Realized Income(4) 227,695,143 106,553,159 222,115,121 88,925,775 1. Represents units exchangeable for shares of Class A common stock on a one-for-one basis. 2. We apply the treasury stock method to determine the dilutive weighted-average common shares represented by our restricted units to be settled in shares of Class A common stock and options to acquire shares of Class A common stock. Under the treasury stock method, compensation expense attributed to future services and not yet recognized is presumed to be used to acquire outstanding shares of Class A common stock, thus reducing the weighted-average number of shares and the dilutive effect of these awards. 3. Represents proportional dilutive impact based upon the average percentage of Ares Operating Group owned by Ares Management Corporation (46.8% and 40.04% as of March 31, 2019 and 2018, respectively). 4. Excludes Class B common stock and Class C common stock as they are not entitled to any economic benefits of Ares in an event of dissolution, liquidation, or winding up of Ares. 31
Additional Information Targeted Net Returns(1) Investor Base as a % of AUM(1) Credit Group: Public Entity & Related: 17% l Syndicated Loans and High Yield Bonds: Benchmark Outperformance(2) l 700+ institutional investors (4) l Credit Opportunities: 8-12% l 200,000+ retail investors across our public funds(5) l Alternative Credit: 5-15% l Direct Lending: 5-15%(3) Institutional Intermediated: 13% Private Equity Group: Institutional Direct: 70% l Corporate Private Equity: 18-22% l Pension: 41% l Infrastructure and Power: 10-15% l Insurance: 16% l Special Opportunities: 15-20% l Bank/Private Bank: 15% l Energy Opportunities: 18-22% l SWF: 13% l Investment Manager: 7% Real Estate Group: l Other: 7% l Real Estate Debt: 4-14% l Endowment: 2% l Real Estate Equity: 12-18% Total Direct Institutional Investors: 909 Corporate and Tax Information Ares' conversion from a Delaware limited partnership to a Delaware corporation was completed on November 26, 2018. Dividends to common and preferred stockholders are now reported on Form 1099 DIV and stockholders may be eligible for the favorable tax rates applicable to qualified dividend income. No assurance can be made that such results will be achieved. 1. As of March 31, 2019, 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. Q1-19 returns for the CSLLI and the H0A0 were 3.8% and 7.4%, respectively. NOTE: Certain of Ares funds are not benchmarked against any particular index due to fund specific portfolio constraints. 3. 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. 4. Most recent data available as of April 15, 2019. 5. As of April 8, 2019 for ARCC, March 28, 2019 for ARES, February 26, 2019 for ACRE and April 15, 2019 for ARDC. 32
RI and Other Measures –Financial Data(1) $ in thousands Year ended December 31, 2018 2017 Credit Group $564,899 $481,466 Private Equity Group 198,182 198,498 Real Estate Group 73,663 64,861 Management fees(2) $836,744 $744,825 Other fees $24,288 $22,431 Compensation and benefits expenses (456,255) (413,735) General, administrative and other expense (149,465) (136,531) Fee Related Earnings $255,312 $216,990 Realized net performance income $105,610 $75,457 Realized net investment income 34,474 32,993 Realized Income $395,396 $325,440 Other Data Total Fee Revenue(3) $942,354 $820,282 Management Fees as % of Total Fees 89% 91% Fee Related Earnings as % of Realized Income 65% 67% 1. Unconsolidated results represent the operating segments plus the Operation Management Group but exclude the effect of Consolidated Funds. 2. Includes ARCC Part I Fees of $128.8 million and $105.5 million for the years ended December 31, 2018 and 2017, respectively. 3. Total fee revenue is calculated as management fees plus realized net performance income. 33
GAAP to Non-GAAP Reconciliation – Unconsolidated Reporting Basis $ in thousands Year ended December 31, 2018 2017 Realized income and fee related earnings: Income before taxes $184,341 $149,859 Adjustments: Amortization of intangibles 9,032 17,850 Depreciation expense 16,055 12,631 Equity compensation expenses 89,724 69,711 Acquisition and merger-related expenses 2,936 259,899 Placement fees and underwriting costs 20,343 19,765 Other (income) expense, net 13,489 (1,042) Expense of non-controlling interests in consolidated subsidiaries 3,343 1,739 Income before taxes of non-controlling interests in Consolidated Funds, net of eliminations (20,643) (62,705) Unconsolidated performance income - unrealized 247,212 (325,915) Unconsolidated performance related compensation - unrealized (221,343) 237,392 Unconsolidated net investment (income) loss - unrealized 50,907 (53,744) Realized Income $395,396 $325,440 Unconsolidated performance fee income - realized $(357,207) ($317,787) Unconsolidated performance related compensation - realized 251,597 242,330 Unconsolidated net investment income (34,474) (32,993) Fee Related Earnings $255,312 $216,990 Note: This table is a reconciliation of income before provision for income taxes on a consolidated basis to RI and FRE 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. 34
GAAP to Non-GAAP Reconciliation – Unconsolidated Reporting Basis (cont.) $ in thousands Year ended December 31, 2018 2017 Performance income and net investment income reconciliation: Carried interest allocation $42,410 $620,454 Incentive fees 63,380 16,220 Carried interest allocation and incentive fees $105,790 $636,674 Performance income - realized earned from Consolidated Funds $4,000 $8,089 Performance income - reclass(1) 205 1,936 Unconsolidated performance income - unrealized 247,212 (325,915) Performance income - unrealized earned from Consolidated Funds — (2,997) Performance income - realized $357,207 $317,787 Total consolidated other income $96,242 $174,674 Net investment income from Consolidated Funds (115,151) (153,810) Performance income - reclass (1) (205) (1,936) Principal investment income 1,047 89,031 Change in value of contingent consideration — (20,156) Other (income) expense, net 1,653 (1,042) Other expense of non-controlling interests in consolidated subsidiaries (19) (24) Investment (income) loss - unrealized 50,809 (55,487) Interest and other investment loss - unrealized 98 1,743 Total realized net investment income $34,474 $32,993 Note: These tables reconcile consolidated carried interest allocation and incentive fees reported in accordance with GAAP to unconsolidated realized performance income and consolidated GAAP other income to unconsolidated realized net investment income. 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 net realized and unrealized gain (loss) on investments in Ares' Consolidated Statements of Operations. 35
Glossary ARCC Part I Fees ARCC Part I Fees refers to a quarterly performance income on the investment income from ARCC. Such fees from ARCC are classified as management fees as they are paid quarterly, predictable and recurring in nature, not subject to contingent repayment and are typically cash settled each quarter. ARCC Part II Fees ARCC Part II Fees refers to fees that are paid in arrears as of the end of each calendar year when the cumulative aggregate realized capital gains exceed the cumulative aggregate realized capital losses and aggregate unrealized capital depreciation, less the aggregate amount of ARCC Part II Fees paid in all prior years since inception 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. Fee Paying Assets Under Fee Paying AUM (or “FPAUM”) refers to the AUM on which we directly earn management fees. Fee Paying AUM is equal to the sum Management 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, 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 excludes performance income, performance related 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 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. 36
Glossary (cont’d) Incentive Eligible Assets Incentive eligible AUM (or “IEAUM”) refers to the AUM of our funds that are eligible to produce performance income, regardless of Under Management whether or not they are currently generating performance income. It generally represents the NAV plus uncalled equity or total assets plus uncalled debt, as applicable, of our funds for which we are entitled to receive a performance income, excluding capital committed by us and our professionals (which generally is not subject to a performance income). Incentive Generating Assets Incentive generating AUM (or “IGAUM”) refers to the AUM of our funds that are currently generating, on a realized or unrealized Under Management basis, performance income. It generally represents the NAV or total assets of our funds, as applicable, for which we are entitled to receive performance income, excluding capital committed by us and our professionals (from which we do not earn performance income). With respect to ARCC, only ARCC Part II Fees may be generated from IGAUM. Net Inflows of Capital Net Inflow 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 In addition to our three segments, we have an Operations Management Group (the “OMG”) that consists of shared resource groups Group 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 OMG, and we believe that this information enhances the ability of shareholders to analyze our performance. 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 Income Performance income refers to income we earn based on the performance of a fund, which is 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. 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. Such 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. 37
Glossary (cont’d) 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 operating performance and the contribution of each of the business segments to that performance, while removing the fluctuations of unrealized income and expenses, which may or may not be eventually realized at the levels presented and whose realizations depend more on future outcomes than current business operations. RI differs from net income by excluding (a) income tax expense, (b) operating results of our Consolidated Funds, (c) depreciation and amortization expense, (d) the effects of changes arising from corporate actions, (e) unrealized gains and losses related to performance income and investment performance and (f) certain other items that we believe are not indicative of our operating performance. Changes arising from corporate actions include equity-based compensation expenses, the amortization of intangible assets, transaction costs associated with mergers, acquisitions and capital transactions, underwriting costs and expenses incurred in connection with corporate reorganization. Beginning in 2018, placement fees are no longer excluded but are amortized to match the period over which management fees are recognized. Prior to the introduction of RI, management used distributable earnings for this evaluation. Management believes RI is a more appropriate metric to evaluate Ares' current business operations. Senior Direct Lending Senior Direct Lending Program (or ‘‘SDLP’’) is a program co-managed by a subsidiary of Ares through which ARCC co-invests with Program Varagon Capital Partners. 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 realized performance income. 38
