10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2019

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from             to            

Commission File No. 001-36429

ARES MANAGEMENT CORPORATION

(Exact name of Registrant as specified in its charter)

Delaware	80-0962035
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification Number)

2000 Avenue of the Stars, 12th Floor, Los Angeles, CA 90067

(Address of principal executive office) (Zip Code)

(310) 201‑4100

(Registrant’s telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Class A common stock, par value $0.01 per share	ARES	New York Stock Exchange
7.00% Series A Preferred Stock, par value $0.01 per share	ARES.PRA	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days: Yes x  No ¨

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S‑T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x  No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non‑accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company.” and “emerging growth company” in Rule 12b‑2 of the Exchange Act.

Large Accelerated Filer  x Accelerated Filer  ☐ Non‑Accelerated Filer  ☐ Smaller Reporting Company ☐ Emerging Growth Company ☐

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

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b‑2 of the Exchange Act). Yes ☐  No x

As of October 31, 2019 there were 114,745,595 of the registrant’s shares of Class A common stock outstanding, 1,000 shares of the registrant's Class B common stock outstanding, and 1 share of the registrant's Class C common stock outstanding.

TABLE OF CONTENTS

			Page
PART I—FINANCIAL INFORMATION
Item 1.	Financial Information - Unaudited		7
		Condensed Consolidated Statements of Financial Condition as of September 30, 2019 and December 31, 2018	7
		Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2019 and September 30, 2018	8
		Condensed Consolidated Statements of Comprehensive Income for the three and nine months ended September 30, 2019 and September 30, 2018	9
		Condensed Consolidated Statements of Changes in Equity for the three and nine months ended September 30, 2019 and the year ended December 31, 2018	10
		Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2019 and September 30, 2018	12
		Notes to the Condensed Consolidated Financial Statements	13
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		53
Item 3.	Quantitative and Qualitative Disclosures About Market Risk		94
Item 4.	Controls and Procedures		94
PART II—OTHER INFORMATION			95
Item 1.	Legal Proceedings		95
Item 1A.	Risk Factors		95
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		95
Item 3.	Defaults Upon Senior Securities		95
Item 4.	Mine Safety Disclosures		95
Item 5.	Other Information		96
Item 6.	Exhibits		97
Signatures			98

2

Cautionary Note Regarding Forward‑Looking Statements

This report contains forward‑looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), which reflect our current views with respect to, among other things, future events, operations and financial performance. You can identify these forward‑looking statements by the use of forward‑looking words such as “outlook,” “believes,” “expects,” “potential,” “continues,” “may,” “will,” “should,” “seeks,” “approximately,” “predicts,” “intends,” “plans,” “estimates,” “anticipates” or the negative version of those words, other comparable words or other statements that do not relate to historical or factual matters. The forward‑looking statements are based on our beliefs, assumptions and expectations of our future performance, taking into account all information currently available to us. Such forward‑looking statements are subject to various risks and uncertainties and assumptions relating to our operations, financial results, financial condition, business prospects, growth strategy and liquidity. Some of these factors are described in this report and in our Annual report on Form 10-K for the year ended December 31, 2018, under the headings “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Risk Factors.” These factors should not be construed as exhaustive and should be read in conjunction with the risk factors and other cautionary statements that are included in this report and in our other periodic filings. If one or more of these or other risks or uncertainties materialize, or if our underlying assumptions prove to be incorrect, our actual results may vary materially from those indicated in these forward‑looking statements. New risks and uncertainties arise over time, and it is not possible for us to predict those events or how they may affect us. Therefore, you should not place undue reliance on these forward‑looking statements. Any forward‑looking statement speaks only as of the date on which it is made. We do not undertake any obligation to publicly update or review any forward‑looking statement, whether as a result of new information, future developments or otherwise, except as required by law.

Under generally accepted accounting principles in the United States (“GAAP”), we are required to consolidate (a) entities other than limited partnerships and entities similar to limited partnerships in which we hold a majority voting interest or have majority ownership and control over the operational, financial and investing decisions of that entity, including Ares‑affiliates and affiliated funds and co‑investment entities, for which we are presumed to have controlling financial interests, and (b) entities that we concluded are variable interest entities (“VIEs”), including limited partnerships and collateralized loan obligations, for which we are deemed to be the primary beneficiary. When an entity is consolidated, we reflect the assets, liabilities, revenues, expenses and cash flows of the entity in our consolidated financial statements on a gross basis, subject to eliminations from consolidation, including the elimination of the management fees, performance income and other fees that we earn from the entity. However, the presentation of performance related compensation and other expenses associated with generating such revenues is not affected by the consolidation process. In addition, as a result of the consolidation process, the net income attributable to third‑party investors in consolidated entities is presented as net income attributable to non‑controlling interests in Consolidated Funds in our Condensed Consolidated Statements of Operations.

In this quarterly report on Form 10-Q, in addition to presenting our results on a consolidated basis in accordance with GAAP, we present revenues, expenses and other results on a (i) “segment basis,” which deconsolidates these entities and therefore shows the results of our reportable segments without giving effect to the consolidation of the entities and (ii) “Unconsolidated Reporting basis,” which shows the results of our reportable segments on a combined segment basis together with our Operations Management Group. In addition to our three segments, we have an Operations Management Group (the “OMG”) that consists of shared resource groups to support our reportable segments by providing infrastructure and administrative support in the areas of accounting/finance, operations, information technology, strategy and relationship management, 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. This information constitutes non‑GAAP financial information within the meaning of Regulation G, as promulgated by the SEC. Our management uses this information to assess the performance of our reportable segments and our OMG, and we believe that this information enhances the ability of shareholders to analyze our performance. For more information, see “Notes to the Condensed Consolidated Financial Statements - Note 14. Segment Reporting.”

3

Glossary

When used in this report, unless the context otherwise requires:

• “ARCC Part I Fees” refers to a quarterly performance income on the net investment income of Ares Capital Corporation (NASDAQ: ARCC) (“ARCC”). Such fees from ARCC are classified as management fees as they are paid quarterly, predictable and recurring in nature, are not subject to contingent repayment and are typically cash settled each quarter;

• “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”, “the Company”, “we”, “us” and “our” refer to (i) Ares Management Corporation and its subsidiaries following the Conversion and (ii) Ares Management, L.P. and its subsidiaries prior to the Conversion;

• “Ares Operating Group Unit” or an “AOG Unit” refers to, collectively, a partnership unit in each of the Ares Operating Group entities;

• “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 is equal to initial principal amounts adjusted for paydowns;

• “available capital” (also referred to as “dry powder”) 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;

• “CLOs” refers to “our funds” that are structured as collateralized loan obligations;

• “Conversion” refers to our conversion effective November 26, 2018 from a Delaware limited partnership named Ares Management, L.P. into a Delaware corporation named Ares Management Corporation;

• “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;

• “Co‑Founders” refers to Michael Arougheti, David Kaplan, John Kissick, Antony Ressler and Bennett Rosenthal;

• “Credit Facility” refers to the revolving credit facility of the Ares Operating Group;

• "effective management fee rate” represents the annualized fees divided by the average fee paying AUM for the period;

• “fee paying AUM” or “FPAUM” refers to the AUM from which we directly earn management fees. Fee paying AUM is equal to the sum of all the individual fee bases of our funds that directly contribute to our management fees;

• “fee related earnings” 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 core operating performance;

• “GAAP” refers to accounting principles generally accepted in the United States of America;

• “Holdco Members” refers to Michael Arougheti, David Kaplan, Antony Ressler, Bennett Rosenthal, Ryan Berry, R. Kipp deVeer and Michael McFerran;

• “Incentive eligible AUM” or “IEAUM” refers to the AUM of our funds from which performance income may be generated, regardless of whether or not they are currently generating performance income. It generally represents

4

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 (from which we generally do not earn performance income). With respect to ARCC's AUM, only ARCC Part II Fees may be generated from IEAUM;

• “Incentive generating AUM” or “IGAUM” refers to the AUM of our funds that are currently generating, on a realized or unrealized 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 generally do not earn performance income). ARCC is only included in IGAUM when Part II Fees are being generated;

• “management fees” refers to fees we earn for advisory services provided to our funds, which are generally based on a defined percentage of fair value of assets, total commitments, invested capital, net asset value, net investment income, total assets or par value of the investment portfolios managed by us and also include ARCC Part I Fees that are classified as management fees as they are predictable and recurring in nature, not subject to contingent repayment and generally cash‑settled each quarter;

• “net inflows of capital” refers to 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;

• “net performance income” refers to performance income net of performance related compensation, which is the portion of the performance income earned from certain funds that is payable to our professionals;

• “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;

• “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 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;

• “performance income” refers to income we earn based on the performance of a fund, that is generally based on certain specific hurdle rates as defined in the fund’s investment management or partnership agreements and may be either an incentive fee or carried interest;

• “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 expense, 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;

• “SEC” refers to the Securities and Exchange Commission;

• “Senior Notes” or the "AFC Notes" refers to senior notes issued by a wholly owned subsidiary of Ares Holdings;

• "Series A Preferred Stock" refers to the preferred stock, $0.01 par value per share, of the Company designated as 7.00% Series A Preferred Stock; and

5

• “Term Loans” refers to term loans held by wholly owned subsidiaries of Ares Management LLC (“AM LLC”).

References in this Quarterly Report on Form 10-Q to (1) “common shares” and “preferred shares” refer to shares of our Class A common stock and the Series A Preferred Stock, respectively, previously outstanding prior to our Conversion and (2) “common shareholders” and “preferred shareholders” refer to holders of shares of our Class A common stock and shares of the Series A Preferred Stock, respectively, prior to our Conversion.

Many of the terms used in this report, including AUM, FPAUM, FRE and RI, may not be comparable to similarly titled measures used by other companies. In addition, our definitions of AUM and FPAUM are not based on any definition of AUM or FPAUM that is set forth in the agreements governing the investment funds that we manage and may differ from definitions of AUM or FPAUM set forth in other agreements to which we are a party or definitions used by the SEC or other regulatory bodies. Further, FRE and RI are not measures of performance calculated in accordance with GAAP. We use FRE and RI as measures of operating performance, not as measures of liquidity. FRE and RI should not be considered in isolation or as substitutes for operating income, net income, operating cash flows, or other income or cash flow statement data prepared in accordance with GAAP. The use of FRE and RI without consideration of related GAAP measures is not adequate due to the adjustments described above. Our management compensates for these limitations by using FRE and RI as supplemental measures to our GAAP results. We present these measures to provide a more complete understanding of our performance as our management measures it. Amounts and percentages throughout this report may reflect rounding adjustments and consequently totals may not appear to sum.

6

PART I—FINANCIAL INFORMATION

Item 1.  Financial Statements

Ares Management Corporation 

Condensed Consolidated Statements of Financial Condition 

(Amounts in Thousands, Except Share Data)

	As of September 30,			As of December 31,
	2019			2018
	(unaudited)
Assets
Cash and cash equivalents	$	152,203		$	110,247
Investments (includes accrued carried interest of $1,250,191 and $841,079, at September 30, 2019 and December 31, 2018, respectively)	1,779,864			1,326,137
Due from affiliates	245,276			199,377
Other assets	296,302			377,651
Right-of-use operating lease assets	148,170			—
Assets of Consolidated Funds:
Cash and cash equivalents	575,621			384,644
Investments, at fair value	8,271,481			7,673,165
Due from affiliates	14,978			17,609
Receivable for securities sold	85,701			42,076
Other assets	27,160			23,786
Total assets	$	11,596,756		$	10,154,692
Liabilities
Accounts payable, accrued expenses and other liabilities	$	71,077		$	83,221
Accrued compensation	168,539			29,389
Due to affiliates	57,551			82,411
Performance related compensation payable	905,949			641,737
Debt obligations	246,442			480,952
Right-of-use operating lease liabilities	174,078			—
Liabilities of Consolidated Funds:
Accounts payable, accrued expenses and other liabilities	83,698			83,876
Payable for securities purchased	514,717			471,390
CLO loan obligations, at fair value	7,407,720			6,678,091
Fund borrowings	124,203			209,284
Total liabilities	9,753,974			8,760,351
Commitments and contingencies
Non-controlling interest in Consolidated Funds	639,676			503,637
Non-controlling interest in Ares Operating Group entities	450,985			302,780
Stockholders' Equity
Series A Preferred Stock, $0.01 par value, 1,000,000,000 shares authorized (12,400,000 shares issued and outstanding at September 30, 2019 and December 31, 2018)	298,761			298,761
Class A common stock, $0.01 par value, 1,500,000,000 shares authorized (114,719,768 shares and 101,594,095 shares issued and outstanding at September 30, 2019 and at December 31, 2018, respectively)	1,147			1,016
Class B common stock, $0.01 par value, 1,000 shares authorized (1,000 shares issued and outstanding at September 30, 2019 and at December 31, 2018)	—			—
Class C common stock, $0.01 par value, 499,999,000 shares authorized (1 share issued and outstanding at September 30, 2019 and at December 31, 2018)	—			—
Additional paid-in-capital	507,531			326,007
Retained earnings	(44,308		)	(29,336		)
Accumulated other comprehensive loss, net of tax	(11,010		)	(8,524		)
Total stockholders' equity	752,121			587,924
Total equity	1,842,782			1,394,341
Total liabilities, non-controlling interests and equity	$	11,596,756		$	10,154,692

See accompanying notes to the condensed consolidated financial statements.

7

Ares Management Corporation

Condensed Consolidated Statements of Operations  

(Amounts in Thousands, Except Share Data)

(unaudited)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2019			2018			2019			2018
Revenues
Management fees (includes ARCC Part I Fees of $38,786, $116,336 and $33,377, $91,660 for the three and nine months ended September 30, 2019 and 2018, respectively)	$	251,591		$	204,524		$	714,096		$	588,071
Carried interest allocation	186,803			31,902			503,808			72,587
Incentive fees	1,712			872			28,747			13,683
Principal investment income (loss)	11,389			(7,464		)	45,992			(684		)
Administrative, transaction and other fees	14,995			10,943			35,866			37,372
Total revenues	466,490			240,777			1,328,509			711,029
Expenses
Compensation and benefits	166,216			145,594			485,232			419,225
Performance related compensation	139,216			17,606			388,424			30,479
General, administrative and other expenses	79,385			51,155			195,988			155,523
Expenses of Consolidated Funds	10,884			12,833			30,865			49,261
Total expenses	395,701			227,188			1,100,509			654,488
Other income (expense)
Net realized and unrealized gains on investments	1,522			5,542			5,519			7,970
Interest and dividend income	2,030			808			5,526			6,511
Interest expense	(4,691		)	(4,143		)	(16,073		)	(17,088		)
Other income (expense), net	(1,870		)	811			(1,570		)	(1,487		)
Net realized and unrealized gains (losses) on investments of Consolidated Funds	(992		)	5,437			3,256			26,839
Interest and other income of Consolidated Funds	107,922			93,062			303,312			250,117
Interest expense of Consolidated Funds	(71,134		)	(62,763		)	(204,051		)	(163,942		)
Total other income	32,787			38,754			95,919			108,920
Income before taxes	103,576			52,343			323,919			165,461
Income tax expense	11,701			5,131			35,590			29,659
Net income	91,875			47,212			288,329			135,802
Less: Net income attributable to non-controlling interests in Consolidated Funds	15,908			13,169			41,878			23,418
Less: Net income attributable to non-controlling interests in Ares Operating Group entities	42,636			18,133			136,032			67,301
Net income attributable to Ares Management Corporation	33,331			15,910			110,419			45,083
Less: Series A Preferred Stock dividends paid	5,425			5,425			16,275			16,275
Net income attributable to Ares Management Corporation Class A common stockholders	$	27,906		$	10,485		$	94,144		$	28,808
Net income attributable to Ares Management Corporation per share of Class A common stock
Basic	$	0.24		$	0.09		$	0.84		$	0.25
Diluted	$	0.23		$	0.09		$	0.81		$	0.25
Weighted-average shares of Class A common stock:(1)
Basic	108,481,929			98,706,419			105,546,219			94,168,582
Diluted	121,890,022			98,706,419			116,418,136			94,168,582

(1) Three and nine months ended September 30, 2018 represents common units.

Substantially all revenue is earned from affiliated funds of the Company. See accompanying notes to the condensed consolidated financial statements.  

8

Ares Management Corporation

Condensed Consolidated Statements of Comprehensive Income  

(Amounts in Thousands)

(unaudited)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2019			2018			2019			2018
Net income	$	91,875		$	47,212		$	288,329		$	135,802
Other comprehensive income:
Foreign currency translation adjustments, net of tax	(9,429		)	(1,919		)	(10,336		)	(8,811		)
Total comprehensive income	82,446			45,293			277,993			126,991
Less: Comprehensive income attributable to non-controlling interests in Consolidated Funds	10,962			12,669			36,779			20,404
Less: Comprehensive income attributable to non-controlling interests in Ares Operating Group entities	40,284			17,359			133,281			64,699
Comprehensive income attributable to Ares Management Corporation	$	31,200		$	15,265		$	107,933		$	41,888

See accompanying notes to the condensed consolidated financial statements.

9

Ares Management Corporation

Condensed Consolidated Statements of Changes in Equity 

(Amounts in Thousands)

(unaudited)

	Series A Preferred Stock			Class A Common Stock			Additional Paid-in-Capital			Retained Earnings			Accumulated Other Comprehensive Income (loss)			Non-Controlling Interest in Ares Operating Group Entities			Non-Controlling Interest in Consolidated Funds			Total Equity
Balance at December 31, 2018	$	298,761		$	1,016		$	326,007		$	(29,336	)	$	(8,524	)	$	302,780		$	503,637		$	1,394,341
Relinquished with deconsolidation of funds	—			—			—			—			—			—			(55		)	(55		)
Changes in ownership interests and related tax benefits	—			15			(6,339		)	—			—			(12,073		)	—			(18,397		)
Contributions	—			—			—			—			—			1,876			54,035			55,911
Dividends/Distributions	(5,425		)	—			—			(35,367		)	—			(40,112		)	(20,736		)	(101,640		)
Net income	5,425			—			—			39,524			—			59,003			17,624			121,576
Currency translation adjustment	—			—			—			—			1,284			1,459			(1,659		)	1,084
Equity compensation	—			—			12,637			—			—			14,367			—			27,004
Balance at March 31, 2019	298,761			1,031			332,305			(25,179		)	(7,240		)	327,300			552,846			1,479,824
Changes in ownership interests and related tax benefits	—			5			(32,128		)	—			—			20,615			—			(11,508		)
Repurchases of Class A common stock	—			(4		)	(10,445		)	—			—			—			—			(10,449		)
Contributions	—			—			—			—			—			—			61,464			61,464
Dividends/Distributions	(5,425		)	—			—			(36,782		)	—			(40,103		)	(10,219		)	(92,529		)
Net income	5,425			—			—			26,714			—			34,393			8,346			74,878
Currency translation adjustment	—			—			—			—			(1,639		)	(1,858		)	1,506			(1,991		)
Equity compensation	—			—			11,306			—			—			12,535			—			23,841
Stock option exercises	—			43			78,751			—			—			—			—			78,794
Balance at June 30, 2019	$	298,761		$	1,075		$	379,789		$	(35,247	)	$	(8,879	)	$	352,882		$	613,943		$	1,602,324
Changes in ownership interests and related tax benefits	—			1			(94,004		)	—			—			95,212			—			1,209
Repurchases of Class A common stock	—			—			—			—			—			—			—			—
Contributions	—			70			206,635			—			—			—			49,391			256,096
Dividends/Distributions	(5,425		)	—			—			(36,967		)	—			(48,970		)	(34,620		)	(125,982		)
Net income	5,425			—			—			27,906			—			42,636			15,908			91,875
Currency translation adjustment	—			—			—			—			(2,131		)	(2,352		)	(4,946		)	(9,429		)
Equity compensation	—			—			10,816			—			—			11,577			—			22,393
Stock option exercises	—			1			4,295			—			—			—			—			4,296
Balance at September 30, 2019	$	298,761		$	1,147		$	507,531		$	(44,308	)	$	(11,010	)	$	450,985		$	639,676		$	1,842,782

See accompanying notes to the condensed consolidated financial statements.

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Ares Management Corporation

Condensed Consolidated Statements of Changes in Equity 

(Amounts in Thousands)

(unaudited)

	Preferred Equity			Series A Preferred Stock			Shareholders' Equity			Class A Common Stock		Additional Paid-in-Capital		Retained Earnings			Accumulated Other Comprehensive Income (loss)			Non-Controlling Interest in Ares Operating Group Entities			Non-Controlling Interest in Consolidated Funds			Total Equity
Balance at December 31, 2017	$	298,761		$	—		$	279,065		$	—	$	—	$	—		$	(4,208	)	$	358,186		$	528,488		$	1,460,292
Cumulative effect of the adoption of ASC 606	—			—			(10,827		)	—		—		—			—			(17,117		)	5,333			(22,611		)
As adjusted balance at January 1, 2018	298,761			—			268,238			—		—		—			(4,208		)	341,069			533,821			1,437,681
Adoption of ASU 2018-02	—			—			1,202			—		—		—			(1,202		)	—			—			—
Changes in ownership interests and related tax benefits	—			—			(8,351		)	—		—		—			—			18,810			—			10,459
Contributions	—			—			105,441			—		—		—			—			—			8,000			113,441
Dividends/Distributions	(5,425		)	—			(33,103		)	—		—		—			—			(58,677		)	(983		)	(98,188		)
Net income	5,425			—			35,523			—		—		—			—			33,106			367			74,421
Currency translation adjustment	—			—			—			—		—		—			1,409			2,103			3,175			6,687
Equity compensation	—			—			8,285			—		—		—			—			12,409			—			20,694
Balance at March 31, 2018	298,761			—			377,235			—		—		—			(4,001		)	348,820			544,380			1,565,195
Changes in ownership interests and related tax benefits	—			—			15,816			—		—		—			—			(4,711		)	—			11,105
Contributions	—			—			842			—		—		—			—			764			62,990			64,596
Dividends/Distributions	(5,425		)	—			(36,640		)	—		—		—			—			(53,174		)	(34,346		)	(129,585		)
Net income	5,425			—			(17,200		)	—		—		—			—			16,062			9,882			14,169
Currency translation adjustment	—			—			—			—		—		—			(2,757		)	(3,931		)	(5,689		)	(12,377		)
Equity compensation	—			—			9,928			—		—		—			—			12,218			—			22,146
Balance at June 30, 2018	298,761			—			349,981			—		—		—			(6,758		)	316,048			577,217			1,535,249
Changes in ownership interests and related tax benefits	—			—			(34,678		)	—		—		—			—			3,499			—			(31,179		)
Contributions	—			—			—			—		—		—			—			917			—			917
Dividends/Distributions	(5,425		)	—			(34,667		)	—		—		—			—			(30,928		)	(11,466		)	(82,486		)
Net income	5,425			—			10,485			—		—		—			—			18,133			13,169			47,212
Currency translation adjustment	—			—			—			—		—		—			(645		)	(774		)	(500		)	(1,919		)
Equity compensation	—			—			10,600			—		—		—			—			12,925			—			23,525
Balance at September 30, 2018	298,761			—			301,721			—		—		—			(7,403		)	319,820			578,420			1,491,319
Consolidation of a new fund	—			—			—			—		—		—			—			—			42,942			42,942
Changes in ownership interests and related tax benefits	—			—			501			—		9,140		—			—			(1,237		)	—			8,404
Contributions	—			—			—			—		—		—			—			1,447			19			1,466
Dividends/Distributions	—			(5,425		)	(91		)	—		—		(30,348		)	—			(35,018		)	(112,915		)	(183,797		)
Net income	—			5,425			5,500			—		—		1,012			—			7,306			(2,906		)	16,337
Currency translation adjustment	—			—			—			—		—		—			(1,121		)	(1,335		)	(1,923		)	(4,379		)
Equity compensation	—			—			7,432			—		2,820		—			—			11,797			—			22,049
Reclassifications resulting from conversion to a corporation	(298,761		)	298,761			(315,063		)	1,016		314,047		—			—			—			—			—
Balance at December 31, 2018	$	—		$	298,761		$	—		$	1,016	$	326,007	$	(29,336	)	$	(8,524	)	$	302,780		$	503,637		$	1,394,341

See accompanying notes to the condensed consolidated financial statements.

11

Ares Management Corporation

Condensed Consolidated Statements of Cash Flows

(Amounts in Thousands) 

(unaudited)

	For the Nine Months Ended September 30,
	2019			2018
Cash flows from operating activities:
Net income	$	288,329		$	135,802
Adjustments to reconcile net income to net cash used in operating activities	59,736			268,526
Adjustments to reconcile net income to net cash used in operating activities allocable to non-controlling interests in Consolidated Funds	(1,826,610		)	(2,181,999		)
Cash flows due to changes in operating assets and liabilities	19,038			90,140
Cash flows due to changes in operating assets and liabilities allocable to non-controlling interests in Consolidated Funds	(220,577		)	(35,683		)
Net cash used in operating activities	(1,680,084		)	(1,723,214		)
Cash flows from investing activities:
Purchase of furniture, equipment and leasehold improvements, net	(12,073		)	(14,437		)
Net cash used in investing activities	(12,073		)	(14,437		)
Cash flows from financing activities:
Proceeds from issuance of Class A common stock	206,705			105,333
Proceeds from credit facility	265,000			410,000
Proceeds from term notes	—			44,050
Repayments of credit facility	(500,000		)	(515,000		)
Repayments of term loans	—			(206,089		)
Dividends and distributions	(238,301		)	(247,189		)
Series A Preferred Stock dividends and distributions	(16,275		)	(16,275		)
Repurchases of Class A common stock	(10,449		)	—
Stock option exercises	83,090			950
Taxes paid related to net share settlement of equity awards	(32,022		)	(17,376		)
Other financing activities	(3,240		)	1,681
Allocable to non-controlling interests in Consolidated Funds:
Contributions from non-controlling interests in Consolidated Funds	164,890			70,990
Distributions to non-controlling interests in Consolidated Funds	(65,575		)	(46,795		)
Borrowings under loan obligations by Consolidated Funds	2,482,341			3,135,421
Repayments under loan obligations by Consolidated Funds	(585,496		)	(986,699		)
Net cash provided by financing activities	1,750,668			1,733,002
Effect of exchange rate changes	(16,555		)	7,912
Net change in cash and cash equivalents	41,956			3,263
Cash and cash equivalents, beginning of period	110,247			118,929
Cash and cash equivalents, end of period	$	152,203		$	122,192

See accompanying notes to the condensed consolidated financial statements.

12

Ares Management Corporation

Notes to the Unaudited Condensed Consolidated Financial Statements

(Dollars in Thousands, Except Share Data and As Otherwise Noted)

1. ORGANIZATION 

Ares Management Corporation (the "Company"), a Delaware corporation, together with its subsidiaries, is a leading global alternative investment manager operating three integrated businesses across Credit, Private Equity and Real Estate. Information about segments should be read together with Note 14, “Segment Reporting.” Subsidiaries of the Company serve as the general partners and/or investment managers to various investment funds and managed accounts within each investment group (the “Ares Funds”). Such subsidiaries provide investment advisory services to the Ares Funds in exchange for management fees. Ares is managed and operated by its Board of Directors and Executive Management Committee. Unless the context requires otherwise, references to “Ares” or the “Company” refer to Ares Management, L.P., together with its subsidiaries prior to November 26, 2018 and thereafter to Ares Management Corporation, together with its subsidiaries.

The accompanying unaudited financial statements include the condensed consolidated results of the Company and its subsidiaries. The Company is a holding company, and the Company’s sole assets are equity interests in Ares Holdings Inc. (“AHI”), Ares Offshore Holdings, Ltd., and Ares AI Holdings L.P. In this quarterly report, the following of the Company’s subsidiaries are collectively referred to as the “Ares Operating Group”: Ares Offshore Holdings L.P. (“Ares Offshore”), Ares Holdings L.P. (“Ares Holdings”), and Ares Investments L.P. (“Ares Investments”). The Company, indirectly through its wholly owned subsidiaries, is the general partner of each of the Ares Operating Group entities. The Company operates and controls all of the businesses and affairs of and conducts all of its material business activities through the Ares Operating Group.

Non-Controlling Interests in Ares Operating Group Entities

The non-controlling interests in Ares Operating Group (“AOG”) entities represent a component of equity and net income attributable to the owners of the Ares Operating Group Units (“AOG Units”) that are not held directly or indirectly by the Company. These interests are adjusted for contributions to and distributions from AOG during the reporting period and are allocated income from the AOG entities based on their historical ownership percentage for the proportional number of days in the reporting period. 

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying condensed consolidated financial statements are prepared in accordance with the generally accepted accounting principles in the United States (“GAAP”) for interim financial information and instructions to the Quarterly Report on Form 10-Q. The condensed consolidated financial statements, including these notes, are unaudited and exclude some of the disclosures required in annual financial statements. Management believes it has made all necessary adjustments so that the condensed consolidated financial statements are presented fairly and that estimates made in preparing its condensed consolidated financial statements are reasonable and prudent, and that all such adjustments are of a normal recurring nature. The operating results presented for interim periods are not necessarily indicative of the results that may be expected for any other interim period or for the entire year. These condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements included in the Annual Report on Form 10-K for the year ended December 31, 2018 filed with the Securities and Exchange Commission ("SEC").

The condensed consolidated financial statements include the accounts and activities of the AOG entities, their consolidated subsidiaries and certain Consolidated Funds. All intercompany balances and transactions have been eliminated upon consolidation.

The Company has reclassified certain prior period amounts to conform to the current year presentation.

Adoption of ASC 842

Effective January 1, 2019, the Company adopted the Financial Accounting Standards Board (“FASB”) Topic 842 (“ASC 842”), Leases. The Company adopted ASC 842 under the modified retrospective approach using the practical expedient provided for within paragraph 842-10-65-1; therefore, the presentation of prior year periods has not been adjusted. No cumulative effect of initially adopting ASC 842 as an adjustment to the opening balance of components of equity as of January 1, 2019 was necessary as the recognition of the right-of-use operating lease assets equaled the corresponding lease liabilities. The amount established in conjunction with the implementation was consistent with the amount previously disclosed.

13

Ares Management Corporation

Notes to the Unaudited Condensed Consolidated Financial Statements (Continued)

(Dollars in Thousands, Except Share Data and As Otherwise Noted)

The Company has entered into operating and finance leases for corporate offices and certain equipment and makes the determination if an arrangement constitutes a lease at inception. Operating leases are included in right-of-use operating lease assets and right-of-use operating lease liabilities in the Company's Condensed Consolidated Statements of Financial Condition. Finance leases are included in accounts payable, accrued expenses and other liabilities in the Condensed Consolidated Statements of Financial Condition. Leases with an initial term of 12 months or less are not recorded on the Condensed Consolidated Statements of Financial Condition.

Right-of-use leases assets represent the Company's right to use an underlying asset for the lease term and right-of-use lease liabilities represent the Company's obligation to make lease payments arising from the lease. Operating lease right-of-use assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. As most of the Company's leases do not provide an implicit rate, the Company uses the its incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. The Company uses the implicit rate when readily determinable. The right-of-use operating lease asset also includes any lease prepayments and excludes lease incentives. Lease terms may include options to extend or terminate the lease when it is reasonably certain that the company will exercise that option. Lease expense is primarily recognized on a straight-line basis over the lease term. The Company has lease agreements with lease and non-lease components, which are generally accounted for separately. However, for certain equipment leases where the non-lease components are not material, the Company account for the lease and non-lease components as a single lease component.

Recent Accounting Pronouncements

The Company considers the applicability and impact of all accounting standard updates ("ASU") issued. ASUs not listed below were assessed and either determined to be not applicable or expected to have minimal impact on its condensed consolidated financial statements.

In May 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. The objective of the guidance in ASU 2016-13 is to allow entities to recognize estimated credit losses in the period that the change in valuation occurs. ASU 2016-13 requires an entity to present financial assets measured on an amortized cost basis on the balance sheet net of an allowance for credit losses. Available for sale and held to maturity debt securities are also required to be held net of an allowance for credit losses. The guidance should be applied using a modified retrospective approach. ASU 2016-13 is effective for public entities for annual reporting periods beginning after December 15, 2019 and interim periods within those reporting periods. Early adoption is permitted for annual and quarterly reporting periods beginning after December 15, 2018. In April and May 2019, ASU 2019-04, Codification Improvements to Topic 326, Financial Instruments-Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments and ASU 2019-05, Financial Instruments-Credit Losses (Topic 326): Targeted Transition Relief, were issued to provide clarification to previously issued credit losses guidance (ASU 2016-13) that has not yet been implemented. These updates are required to be adopted with ASU 2016-13. The Company is currently evaluating the impact of these pronouncements on its condensed consolidated financial statements.

In August 2018, the FASB issued ASU 2018-15, Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract (a consensus of the FASB Emerging Issues Task Force). ASU 2018-15 amends ASC 350-40 to address a customer’s accounting for implementation costs incurred in a cloud computing arrangement that is a service contract. This ASU aligns the accounting for costs incurred to implement a cloud computing arrangement that is a service arrangement with the guidance on capitalizing costs associated with developing or obtaining internal-use software. Specifically, ASU 2018-15 amends ASC 350 to include in its scope implementation costs of a cloud computing arrangement that is a service contract and clarifies that a customer should apply ASC 350-40 to determine which implementation costs should be capitalized in a cloud computing arrangement that is considered a service contract. The accounting for the service element of a hosting arrangement that is a service contract is not affected by these amendments. In addition, this ASU states that a cloud computing arrangement that is a service contract does not give rise to a recognizable intangible asset because it is an executory service contract. Consequently, any costs incurred to implement a cloud computing arrangement that is a service contract would not be capitalized as an intangible asset since they do not form part of an intangible asset but instead would be characterized in the financial statements in the same manner as other service costs and assets related to service contracts such as prepaid expense. That is, these costs would be capitalized as part of the service contract and the related amortization would be consistent with the ongoing periodic costs of the underlying cloud computing arrangement. ASU 2018-15 is effective for public entities for annual reporting periods beginning after December 15, 2019 and interim periods within those reporting periods, with early adoption permitted. The guidance may be applied either prospectively or retrospectively. The Company is currently evaluating the impact of this guidance on its condensed consolidated financial statements.

14

Ares Management Corporation

Notes to the Unaudited Condensed Consolidated Financial Statements (Continued)

(Dollars in Thousands, Except Share Data and As Otherwise Noted)

In October 2018, the FASB issued ASU 2018-17, Consolidation (Topic 810): Targeted Improvements to Related Party Guidance for Variable Interest Entities. ASU 2018-17, amends ASC 810 to address whether indirect interests held through related parties in common control arrangements should be considered on a proportional basis for determining whether fees paid to decision makers and service providers are variable interests. This is consistent with how indirect interests held through related parties under common control are considered for determining whether a reporting entity must consolidate a VIE. For example, if a decision maker or service provider owns a 20 percent interest in a related party and that related party owns a 40 percent interest in the legal entity being evaluated, the decision maker’s or service provider’s indirect interest in the VIE held through the related party under common control should be considered the equivalent of an eight percent direct interest for determining whether its fees are variable interests. ASU 2018-17 is effective for public entities for annual reporting periods beginning after December 15, 2019 and interim periods within those reporting periods, with early adoption permitted. The guidance should be applied retrospectively. The Company is currently evaluating the impact of this guidance on its condensed consolidated financial statements.

3. GOODWILL AND INTANGIBLE ASSETS

Finite Lived Intangible Assets, Net

The following table summarizes the carrying value, net of accumulated amortization, for the Company's intangible assets, included within other assets in the Condensed Consolidated Statements of Financial Condition:

	Weighted Average Amortization Period as of September 30, 2019	As of September 30,			As of December 31,
		2019			2018
Management contracts	2.4 years	$	12,498		$	42,335
Client relationships	8.8 years	6,341			38,600
Trade name	2.8 years	378			3,200
Intangible assets		19,217			84,135
Less: accumulated amortization		(10,837		)	(52,701		)
Intangible assets, net		$	8,380		$	31,434

Amortization expense associated with intangible assets, excluding impairment charges, was $0.6 million and $1.2 million for the three months ended September 30, 2019 and 2018, respectively, and $3.0 million and $7.8 million for the nine months ended September 30, 2019 and 2018, respectively, and is presented within general, administrative and other expenses within the Condensed Consolidated Statements of Operations. During the first quarter of 2019, the Company removed $29.8 million of intangible assets that were fully amortized.

During the three months ended September 30, 2019, the Company recorded a non-cash impairment charge of $20.0 million

to general, administrative and other expenses within the Condensed Consolidated Statements of Operations related to certain intangible assets recorded in connection with the Company’s acquisition of Energy Investors Funds (“EIF”).  The EIF funds are a component of the Private Equity Group operating segment. The primary indicator of impairment was lower legacy EIF investor commitments into successor funds from the Company’s original projections and the Company’s decision to no longer introduce successor funds under its EIF trade name. As a result, the Company expects a decrease in the future expected cash flows from management fees generated by EIF’s existing client relationships and a decrease in royalties attributed to EIF’s trade name.  The Company determined that the carrying value of these intangible assets exceeded the expected undiscounted future cash flows and recorded an impairment charge equal to the difference between its carrying value of each asset and the asset’s estimated fair value, as calculated using a discounted cash flow methodology. Following the recognition of the impairment charge, the Company removed $35.1 million of the client relationships and trade name intangible assets to reflect the adjusted carrying value to be amortized over the remaining useful life.

15

Ares Management Corporation

Notes to the Unaudited Condensed Consolidated Financial Statements (Continued)

(Dollars in Thousands, Except Share Data and As Otherwise Noted)

Goodwill

The following table summarizes the carrying value of the Company's goodwill assets, included within other assets in the Condensed Consolidated Statements of Financial Condition:

	Credit		Private Equity		Real Estate			Total
Balance as of December 31, 2018	$	32,196	$	58,600	$	52,990		$	143,786
Foreign currency translation	—		—		(65		)	(65		)
Balance as of September 30, 2019	$	32,196	$	58,600	$	52,925		$	143,721

There was no impairment of goodwill recorded during the nine months ended September 30, 2019 and 2018. The impact of foreign currency translation is reflected within other comprehensive income.

4. INVESTMENTS

The Company’s investments are comprised of the following:

					Percentage of total investments as of
	September 30,		December 31,		September 30,		December 31,
	2019		2018		2019		2018
Private Investment Partnership Interests and Other:
Equity method private investment partnership interests - principal (1)	$	379,338	$	357,655	21.3	%	27.0	%
Equity method - carried interest (1)	1,250,191		841,079		70.2	%	63.4	%
Equity method private investment partnership interests and other (held at fair value)	49,162		46,450		2.8	%	3.5	%
Equity method private investment partnership interests and other	17,497		18,845		1.0	%	1.4	%
Total private investment partnership interests and other	1,696,188		1,264,029		95.3	%	95.3	%
Collateralized loan obligations	23,417		20,824		1.3	%	1.6	%
Other fixed income	59,096		40,000		3.3	%	3.0	%
Collateralized loan obligations and other fixed income, at fair value	82,513		60,824		4.6	%	4.6	%
Common stock, at fair value	1,163		1,284		0.1	%	0.1	%
Total investments	$	1,779,864	$	1,326,137

(1) Investment or portion of the investment is denominated in foreign currency and is translated into U.S. dollars at each reporting date.

Equity Method Investments

The Company’s equity method investments include investments that are not consolidated but over which the Company exerts significant influence. The Company evaluates each of its equity method investments to determine if any were significant as defined by guidance from the SEC. As of and for the three and nine months ended September 30, 2019 and 2018, no individual equity method investment held by the Company met the significance criteria.

The Company recognized net gains related to its equity method investments of $11.1 million for the three months ended September 30, 2019, and $45.6 million and $3.5 million for the nine months ended September 30, 2019 and 2018, respectively. The Company recognized a net loss related to its equity method investments of $3.8 million for the three months ended September 30, 2018. The net gains and losses were included within principal investment income, net realized and unrealized gains on investments, and interest and dividend income within the Condensed Consolidated Statements of Operations.

With respect to the Company's equity method investments, the material assets are expected to generate either long-term capital appreciation and or interest income, the material liabilities are debt instruments collateralized by, or related to, the financing of the assets and net income is materially comprised of the changes in fair value of these net assets.

16

Ares Management Corporation

Notes to the Unaudited Condensed Consolidated Financial Statements (Continued)

(Dollars in Thousands, Except Share Data and As Otherwise Noted)

Investments of the Consolidated Funds

Investments held in the Consolidated Funds are summarized below:

	Fair value at				Fair value as a percentage of total investments as of
	September 30,		December 31,		September 30,		December 31,
	2019		2018		2019		2018
Fixed income investments:
Bonds	$	205,727	$	318,499	2.5	%	4.3	%
Loans	7,614,571		6,886,749		92.1	%	89.8	%
Total fixed income investments	7,820,298		7,205,248		94.6	%	94.1	%
Equity securities	152,026		196,470		1.8	%	2.4	%
Partnership interests	299,157		271,447		3.6	%	3.5	%
Total investments, at fair value	$	8,271,481	$	7,673,165

5. FAIR VALUE

Fair Value Measurements

GAAP establishes a hierarchal disclosure framework that prioritizes the inputs used in measuring financial instruments at fair value into three levels based on their market price observability. Market price observability is affected by a number of factors, including the type of instrument and the characteristics specific to the instrument. Financial instruments with readily available quoted prices from an active market or for which fair value can be measured based on actively quoted prices generally have a higher degree of market price observability and a lesser degree of judgment inherent in measuring fair value.

Financial assets and liabilities measured and reported at fair value are classified as follows:

• Level I—Quoted prices in active markets for identical instruments.

• Level II—Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in inactive markets; and model‑derived valuations with directly or indirectly observable significant inputs. Level II inputs include prices in markets with few transactions, non-current prices, prices for which little public information exists or prices that vary substantially over time or among brokered market makers. Other inputs include interest rates, yield curves, volatilities, prepayment risks, loss severities, credit risks and default rates.

• Level III—Valuations that rely on one or more significant unobservable inputs. These inputs reflect the Company’s assessment of the assumptions that market participants would use to value the instrument based on the best information available.

In some instances, an instrument may fall into more than one level of the fair value hierarchy. In such instances, the instrument’s level within the fair value hierarchy is based on the lowest of the three levels (with Level III being the lowest) that is significant to the fair value measurement. The Company’s assessment of the significance of an input requires judgment and considers factors specific to the instrument. The Company accounts for the transfer of assets into or out of each fair value hierarchy level as of the beginning of the reporting period.

17

Ares Management Corporation

Notes to the Unaudited Condensed Consolidated Financial Statements (Continued)

(Dollars in Thousands, Except Share Data and As Otherwise Noted)

Fair Value of Financial Instruments Held by the Company and Consolidated Funds

The tables below summarize the financial assets and financial liabilities measured at fair value for the Company and the Consolidated Funds as of September 30, 2019:

Financial Instruments of the Company	Level I		Level II			Level III		Investments Measured at NAV		Total
Assets, at fair value
Investments:
Collateralized loan obligations and other fixed income	$	—	$	—		$	82,513	$	—	$	82,513
Common stock and other equity securities	128		1,035			12,397		—		13,560
Partnership interests	—		—			35,192		1,573		36,765
Total investments, at fair value	128		1,035			130,102		1,573		132,838
Derivatives—foreign exchange contracts	—		4,201			—		—		4,201
Total assets, at fair value	$	128	$	5,236		$	130,102	$	1,573	$	137,039
Liabilities, at fair value
Derivatives—foreign exchange contracts	$	—	$	(163	)	$	—	$	—	$	(163	)
Total liabilities, at fair value	$	—	$	(163	)	$	—	$	—	$	(163	)

Financial Instruments of the Consolidated Funds	Level I		Level II			Level III			Total
Assets, at fair value
Investments:
Fixed income investments:
Bonds	$	—	$	197,204		$	8,523		$	205,727
Loans	—		7,337,934			276,637			7,614,571
Total fixed income investments	—		7,535,138			285,160			7,820,298
Equity securities	37,185		—			114,841			152,026
Partnership interests	—		—			299,157			299,157
Total investments, at fair value	37,185		7,535,138			699,158			8,271,481
Derivatives:
Foreign exchange contracts	—		1,042			—			1,042
Asset swaps - other	—		—			236			236
Total assets, at fair value	$	37,185	$	7,536,180		$	699,394		$	8,272,759
Liabilities, at fair value
Foreign exchange contracts	$	—	$	(1,025	)	$	—		$	(1,025	)
Asset swaps - other	—		—			(2,788		)	(2,788		)
Loan obligations of CLOs	—		(7,407,720		)	—			(7,407,720		)
Total liabilities, at fair value	$	—	$	(7,408,745	)	$	(2,788	)	$	(7,411,533	)

18

Ares Management Corporation

Notes to the Unaudited Condensed Consolidated Financial Statements (Continued)

(Dollars in Thousands, Except Share Data and As Otherwise Noted)

The tables below summarize the financial assets and financial liabilities measured at fair value for the Company and the Consolidated Funds as of December 31, 2018:

Financial Instruments of the Company	Level I		Level II			Level III		Investments Measured at NAV		Total
Assets, at fair value
Investments:
Collateralized loan obligations and other fixed income	$	—	$	—		$	60,824	$	—	$	60,824
Common stock and other equity securities	280		1,004			10,397		—		11,681
Partnership interests	—		—			35,192		861		36,053
Total investments, at fair value	280		1,004			106,413		861		108,558
Derivatives-foreign exchange contracts	—		1,066			—		—		1,066
Total assets, at fair value	$	280	$	2,070		$	106,413	$	861	$	109,624
Liabilities, at fair value
Derivatives—foreign exchange contracts	$	—	$	(869	)	$	—	$	—	$	(869	)
Total liabilities, at fair value	$	—	$	(869	)	$	—	$	—	$	(869	)

Financial Instruments of the Consolidated Funds	Level I		Level II			Level III			Total
Assets, at fair value
Investments:
Fixed income investments:
Bonds	$	—	$	316,850		$	1,649		$	318,499
Loans	—		6,340,440			546,309			6,886,749
Total fixed income investments	—		6,657,290			547,958			7,205,248
Equity securities	45,718		—			150,752			196,470
Partnership interests	—		—			271,447			271,447
Total investments, at fair value	45,718		6,657,290			970,157			7,673,165
Derivatives:
Foreign exchange contracts	—		1,881			—			1,881
Asset swaps - other	—		—			1,328			1,328
Total derivative assets, at fair value	—		1,881			1,328			3,209
Total assets, at fair value	$	45,718	$	6,659,171		$	971,485		$	7,676,374
Liabilities, at fair value
Foreign exchange contracts	$	—	$	(1,864	)	$	—		(1,864		)
Asset swaps - other	—		—			(648		)	(648		)
Loan obligations of CLOs	—		(6,678,091		)	—			(6,678,091		)
Total liabilities, at fair value	$	—	$	(6,679,955	)	$	(648	)	$	(6,680,603	)

19

Ares Management Corporation

Notes to the Unaudited Condensed Consolidated Financial Statements (Continued)

(Dollars in Thousands, Except Share Data and As Otherwise Noted)

The following tables set forth a summary of changes in the fair value of the Level III measurements for the three months ended September 30, 2019:

	Level III Assets
Level III Assets of the Company	Equity  Securities		Fixed Income			Partnership  Interests		Total
Balance, beginning of period	$	12,397	$	64,051		$	35,192	$	111,640
Purchases(1)	—		25,010			—		25,010
Sales/settlements(2)	—		(5,243		)	—		(5,243		)
Realized and unrealized depreciation, net	—		(1,305		)	—		(1,305		)
Balance, end of period	$	12,397	$	82,513		$	35,192	$	130,102
Increase in net unrealized depreciation included in earnings related to financial assets still held at the reporting date	$	—	$	(1,357	)	$	—	$	(1,357	)

Level III Assets of Consolidated Funds	Equity  Securities			Fixed  Income			Partnership Interests			Derivatives, Net			Total
Balance, beginning of period	$	131,732		$	274,412		$	293,857		$	58		$	700,059
Transfer in	—			122,554			—			—			122,554
Transfer out	—			(103,148		)	—			—			(103,148		)
Purchases(1)	710			95,011			2,000			—			97,721
Sales/settlements(2)	(13,597		)	(102,198		)	(5,000		)	(1,848		)	(122,643		)
Amortized discounts/premiums	—			107			—			(17		)	90
Realized and unrealized appreciation (depreciation), net	(4,004		)	(1,578		)	8,300			(745		)	1,973
Balance, end of period	$	114,841		$	285,160		$	299,157		$	(2,552	)	$	696,606
Increase (decrease) in net unrealized appreciation/depreciation included in earnings related to financial assets still held at the reporting date	$	(3,582	)	$	(765	)	$	8,300		$	(1,023	)	$	2,930

(1) Purchases include paid‑in‑kind interest and securities received in connection with restructurings.

(2) Sales/settlements include distributions, principal redemptions and securities disposed of in connection with restructurings.

20

Ares Management Corporation

Notes to the Unaudited Condensed Consolidated Financial Statements (Continued)

(Dollars in Thousands, Except Share Data and As Otherwise Noted)

The following tables set forth a summary of changes in the fair value of the Level III measurements for the nine months ended September 30, 2019:

	Level III Assets
Level III Assets of the Company	Equity  Securities		Fixed Income			Partnership  Interests		Total
Balance, beginning of period	$	10,397	$	60,824		$	35,192	$	106,413
Deconsolidation of fund	—		10,021			—		10,021
Purchases(1)	2,000		27,157			—		29,157
Sales/settlements(2)	—		(16,413		)	—		(16,413		)
Realized and unrealized appreciation, net	—		924			—		924
Balance, end of period	$	12,397	$	82,513		$	35,192	$	130,102
Increase in net unrealized appreciation included in earnings related to financial assets still held at the reporting date	$	—	$	1,121		$	—	$	1,121

Level III Assets of Consolidated Funds	Equity  Securities			Fixed  Income			Partnership Interests			Derivatives, Net			Total
Balance, beginning of period	$	150,752		$	547,958		$	271,447		$	680		$	970,837
Deconsolidation of fund	(10,325		)	(174,593		)	—			—			(184,918		)
Transfer in	—			85,179			—			—			85,179
Transfer out	—			(199,498		)	—			—			(199,498		)
Purchases(1)	11,595			282,190			10,000			—			303,785
Sales/settlements(2)	(18,734		)	(260,422		)	(7,000		)	(2,424		)	(288,580		)
Amortized discounts/premiums	—			17			—			4			21
Realized and unrealized appreciation (depreciation), net	(18,447		)	4,329			24,710			(812		)	9,780
Balance, end of period	$	114,841		$	285,160		$	299,157		$	(2,552	)	$	696,606
Increase (decrease) in net unrealized appreciation/depreciation included in earnings related to financial assets still held at the reporting date	$	(18,018	)	$	1,017		$	24,710		$	(1,031	)	$	6,678

(1) Purchases include paid‑in‑kind interest and securities received in connection with restructurings.

(2) Sales/settlements include distributions, principal redemptions and securities disposed of in connection with restructurings.

21

Ares Management Corporation

Notes to the Unaudited Condensed Consolidated Financial Statements (Continued)

(Dollars in Thousands, Except Share Data and As Otherwise Noted)

The following tables set forth a summary of changes in the fair value of the Level III measurements for the three months ended September 30, 2018:

	Level III Assets
Level III Assets of the Company	Equity  Securities		Fixed Income			Partnership  Interests			Total
Balance, beginning of period	$	—	$	22,125		$	47,219		$	69,344
Transfer in	500		—			—			500
Purchases(1)	750		2,314			—			3,064
Sales/settlements(2)	—		(1,976		)	—			(1,976		)
Realized and unrealized appreciation (depreciation), net	9,147		185			(5,390		)	3,942
Balance, end of period	$	10,397	$	22,648		$	41,829		$	74,874
Increase (decrease) in net unrealized appreciation/depreciation included in earnings related to financial assets still held at the reporting date	$	9,147	$	220		$	(5,390	)	$	3,977

Level III Assets of Consolidated Funds	Equity  Securities			Fixed  Income			Partnership Interests		Derivatives, Net			Total
Balance, beginning of period	$	184,583		$	482,375		$	251,608	$	230		$	918,796
Transfer in	—			118,624			—		124			118,748
Transfer out	—			(264,659		)	—		—			(264,659		)
Purchases(1)	—			124,784			9,000		—			133,784
Sales/settlements(2)	—			(78,395		)	—		799			(77,596		)
Amortized discounts/premiums	—			(46		)	—		4			(42		)
Realized and unrealized appreciation (depreciation), net	(4,224		)	1,350			9,174		(336		)	5,964
Balance, end of period	$	180,359		$	384,033		$	269,782	$	821		$	834,995
Increase (decrease) in net unrealized appreciation/depreciation included in earnings related to financial assets still held at the reporting date	$	(13,164	)	$	3,468		$	—	$	125		$	(9,571	)

(1) Purchases include paid‑in‑kind interest and securities received in connection with restructurings.

(2) Sales/settlements include distributions, principal redemptions and securities disposed of in connection with restructurings.

22

Ares Management Corporation

Notes to the Unaudited Condensed Consolidated Financial Statements (Continued)

(Dollars in Thousands, Except Share Data and As Otherwise Noted)

The following tables set forth a summary of changes in the fair value of the Level III measurements for the nine months ended September 30, 2018:

	Level III Assets
Level III Assets of the Company	Equity  Securities		Fixed Income			Partnership  Interests			Total
Balance, beginning of period	$	—	$	195,158		$	44,769		$	239,927
Deconsolidation of fund	—		78			—			78
Transfer in	250								250
Purchases(1)	1,000		51,045			—			52,045
Sales/settlements(2)	—		(222,546		)	—			(222,546		)
Realized and unrealized appreciation (depreciation), net	9,147		(1,087		)	(2,940		)	5,120
Balance, end of period	$	10,397	$	22,648		$	41,829		$	74,874
Increase (decrease) in net unrealized appreciation/depreciation included in earnings related to financial assets still held at the reporting date	$	9,147	$	(648	)	$	(2,940	)	$	5,559

Level III Assets of Consolidated Funds	Equity  Securities		Fixed  Income			Partnership Interests		Derivatives, Net			Total
Balance, beginning of period	$	162,577	$	267,889		$	232,332	$	904		$	663,702
Deconsolidation of fund	—		(233		)	—		—			(233		)
Transfer in	—		68,665			—		—			68,665
Transfer out	—		(49,463		)	—		—			(49,463		)
Purchases(1)	—		262,278			25,000		—			287,278
Sales/settlements(2)	—		(163,559		)	—		606			(162,953		)
Amortized discounts/premiums	—		(62		)	—		(10		)	(72		)
Realized and unrealized appreciation (depreciation), net	17,782		(1,482		)	12,450		(679		)	28,071
Balance, end of period	$	180,359	$	384,033		$	269,782	$	821		$	834,995
Increase (decrease) in net unrealized appreciation/depreciation included in earnings related to financial assets still held at the reporting date	$	17,782	$	593		$	12,450	$	(863	)	$	29,962

(1) Purchases include paid‑in‑kind interest and securities received in connection with restructurings.

(2) Sales/settlements include distributions, principal redemptions and securities disposed of in connection with restructurings.

The Company recognizes transfers between the levels as of the beginning of the period. Transfers out of Level III were generally attributable to certain investments that experienced a more significant level of market activity during the period and thus were valued using observable inputs either from independent pricing services or multiple brokers. Transfers into Level III were generally attributable to certain investments that experienced a less significant level of market activity during the period and thus were only able to obtain one or fewer quotes from a broker or independent pricing service.

23

Ares Management Corporation

Notes to the Unaudited Condensed Consolidated Financial Statements (Continued)

(Dollars in Thousands, Except Share Data and As Otherwise Noted)

The following table summarizes the quantitative inputs and assumptions used for the Company’s and the Consolidated Funds' Level III measurements as of September 30, 2019:

Level III Measurements of the Company	Fair Value		Valuation Technique(s)	Significant Unobservable Input(s)	Range
Assets
Equity securities	$	12,397	Transaction price(1)	N/A	N/A
Partnership interests	35,192		Discounted cash flow	Discount rate	8.0%
Collateralized loan obligations	23,417		Broker quotes and/or 3rd party pricing services	N/A	N/A
Other fixed income	59,096		Other	N/A	N/A
Total	$	130,102

Level III Measurements of the Consolidated Funds	Fair Value			Valuation Technique(s)	Significant Unobservable Input(s)	Range	Weighted Average
Assets
Equity securities
	$	719		Enterprise value market multiple analysis	EBITDA multiple(2)	9.0x - 21.0x	14.6x
	71,056			Other	Net income multiple	35.7x - 39.0x	37.1x
					Illiquidity discount	25.0%	25.0%
	43,066			Transaction price(1)	N/A	N/A	N/A
Partnership interest	299,157			Discounted cash flow	Discount rate	20.7%	20.7%
Fixed income securities
	210,969			Broker quotes and/or 3rd party pricing services	N/A	N/A	N/A
	74,191			Income approach	Yield	4.9% - 13.1%	9.7%
Derivative instruments	236			Broker quotes and/or 3rd party pricing services	N/A	N/A	N/A
Total assets	$	699,394
Liabilities
Derivatives instruments	$	(2,788	)	Broker quotes and/or 3rd party pricing services	N/A	N/A	N/A
Total liabilities	$	(2,788	)

(1) Transaction price consists of securities recently purchased or restructured. The Company determined that there was no change to the valuation based on the underlying assumptions used at the closing of such transactions.

(2) “EBITDA” in the table above is a non-GAAP financial measure and refers to earnings before interest, tax, depreciation and amortization.

24

Ares Management Corporation

Notes to the Unaudited Condensed Consolidated Financial Statements (Continued)

(Dollars in Thousands, Except Share Data and As Otherwise Noted)

The following table summarizes the quantitative inputs and assumptions used for the Company’s and the Consolidated Funds' Level III measurements as of December 31, 2018:

Level III Measurements of the Company	Fair Value		Valuation Technique(s)	Significant Unobservable Input(s)	Range
Assets
Equity securities	$	10,397	Transaction price(1)	N/A	N/A
Partnership interests	35,192		Discounted cash flow	Discount rate	8.0%
Collateralized loan obligations	20,824		Broker quotes and/or 3rd party pricing services	N/A	N/A
Other fixed income	40,000		Other	N/A	N/A
Total	$	106,413

Level III Measurements of the Consolidated Funds	Fair Value			Valuation Technique(s)	Significant Unobservable Input(s)	Range	Weighted Average
Assets
Equity securities
	$	23,871		Enterprise value market multiple analysis	EBITDA multiple(2)	7.2x - 22.9x	7.7x
	41,562			Other	Net income multiple	38.8x	38.8x
					Illiquidity discount	25.0%	25.0%
	271,447			Discounted cash flow	Discount rate	20.8%	20.8%
	85,319			Transaction price(1)	N/A	N/A	N/A
Fixed income securities
	441,368			Broker quotes and/or 3rd party pricing services	N/A	N/A	N/A
	106,590			Income approach	Yield	1.0% - 14.8%	9.6%
Derivative instruments	1,328			Broker quotes and/or 3rd party pricing services	N/A	N/A	N/A
Total assets	$	971,485
Liabilities
Derivatives instruments	$	(648	)	Broker quotes and/or 3rd party pricing services	N/A	N/A	N/A
Total liabilities	$	(648	)

(1) Transaction price consists of securities purchased or restructured. The Company determined that there has been no change to the valuation based on the underlying assumptions used at the closing of such transactions.

(2) “EBITDA” in the table above is a non-GAAP financial measure and refers to earnings before interest, tax, depreciation and amortization.

The Company has an insurance-related investment in a private fund managed by a third party that is valued using net asset value (“NAV”) per share. The terms and conditions of this fund do not allow for redemptions without certain events or approvals that are outside the Company's control. This investment had a fair value of $1.6 million and $0.8 million as of September 30, 2019 and December 31, 2018, respectively. The Company has no unfunded commitments for this investment.

25

Ares Management Corporation

Notes to the Unaudited Condensed Consolidated Financial Statements (Continued)

(Dollars in Thousands, Except Share Data and As Otherwise Noted)

6. DERIVATIVE FINANCIAL INSTRUMENTS

In the normal course of business, the Company and the Consolidated Funds are exposed to certain risks relating to their ongoing operations and use various types of derivative instruments primarily to mitigate against credit and foreign exchange risk. The derivative instruments are not designated as hedging instruments under the accounting standards for derivatives and hedging. The Company recognizes all of its derivative instruments at fair value as either assets or liabilities in the Condensed Consolidated Statements of Financial Condition within other assets or accounts payable, accrued expenses and other liabilities, respectively. These amounts may be offset to the extent that there is a legal right to offset and if elected by management.

The following tables identify the fair value and notional amounts of derivative contracts by major product type on a gross basis for the Company and the Consolidated Funds as of September 30, 2019 and December 31, 2018:

	As of September 30, 2019								As of December 31, 2018
	Assets				Liabilities				Assets				Liabilities
The Company	Notional(1)		Fair Value		Notional(1)		Fair Value		Notional(1)		Fair Value		Notional(1)		Fair Value
Foreign exchange contracts	$	102,524	$	4,201	$	5,065	$	163	$	33,026	$	1,066	$	27,140	$	869
Total derivatives, at fair value(2)	$	102,524	$	4,201	$	5,065	$	163	$	33,026	$	1,066	$	27,140	$	869

	As of September 30, 2019								As of December 31, 2018
	Assets				Liabilities				Assets				Liabilities
Consolidated Funds	Notional(1)		Fair Value		Notional(1)		Fair Value		Notional(1)		Fair Value		Notional(1)		Fair Value
Foreign exchange contracts	$	1,042	$	1,042	$	1,042	$	1,025	$	1,881	$	1,881	$	1,881	$	1,864
Asset swap - other	2,466		236		4,668		2,788		5,226		1,328		2,605		648
Total derivatives, at fair value(3)	$	3,508	$	1,278	$	5,710	$	3,813	$	7,107	$	3,209	$	4,486	$	2,512

(1) Represents the total contractual amount of derivative assets and liabilities outstanding.

(2) As of September 30, 2019 and December 31, 2018, the Company had the right to, but elected not to, offset $0.2 million and $0.9 million of its derivative liabilities, respectively.

(3) As of September 30, 2019 and December 31, 2018, the Consolidated Funds offset $1.8 million and $5.7 million of their derivative assets and liabilities, respectively.

26

Ares Management Corporation

Notes to the Unaudited Condensed Consolidated Financial Statements (Continued)

(Dollars in Thousands, Except Share Data and As Otherwise Noted)

7. DEBT

The following table summarizes the Company’s and its subsidiaries’ debt obligations:

					As of September 30, 2019			As of December 31, 2018
	Debt Origination Date	Maturity	Original Borrowing Amount		Carrying Value		Interest Rate	Carrying Value		Interest Rate
Credit Facility(1)	Revolver	3/21/2024	N/A		$	—	N/A	$	235,000	4.00%
Senior Notes(2)	10/8/2014	10/8/2024	$	250,000	246,442		4.21%	245,952		4.21%
Total debt obligations					$	246,442		$	480,952

(1) The AOG entities are borrowers under the Credit Facility, which provides a $1.065 billion revolving line of credit. It has a variable interest rate based on LIBOR or a base rate plus an applicable margin with an unused commitment fee paid quarterly, which is subject to change with the Company’s underlying credit agency rating. On March 21, 2019, the Company amended the Credit Facility to, among other things, extend the maturity date from February 2022 to March 2024 and to reduce borrowing costs on the drawn and undrawn amounts. As of September 30, 2019, base rate loans bear interest calculated based on the base rate plus 0.25% and the LIBOR rate loans bear interest calculated based on LIBOR plus 1.25%. The unused commitment fee is 0.15% per annum. There is a base rate and LIBOR floor of zero.

(2) The Senior Notes were issued in October 2014 by Ares Finance Co. LLC, a subsidiary of the Company, at 98.268% of the face amount with interest paid semi-annually. The Company may redeem the Senior Notes prior to maturity, subject to the terms of the indenture.

As of September 30, 2019, the Company and its subsidiaries were in compliance with all covenants under the debt obligations. 

The Company typically incurs and pays debt issuance costs when entering into a new debt obligation or when amending an existing debt agreement. Debt issuance costs related to the Company's Senior Notes are recorded as a reduction of the corresponding debt obligation, and debt issuance costs related to the Credit Facility are included in other assets in the Condensed Consolidated Statements of Financial Condition. All debt issuance costs are amortized over the remaining term of the related obligation.

The following table presents the activity of the Company's debt issuance costs:

	Credit Facility			Senior Notes
Unamortized debt issuance costs as of December 31, 2018	$	4,972		$	1,334
Debt issuance costs incurred	1,547			—
Amortization of debt issuance costs	(991		)	(174		)
Unamortized debt issuance costs as of September 30, 2019	$	5,528		$	1,160

Loan Obligations of the Consolidated CLOs

Loan obligations of the Consolidated Funds that are CLOs ("Consolidated CLOs") represent amounts due to holders of debt securities issued by the Consolidated CLOs. The Company measures the loan obligations of the Consolidated CLOs using the fair value of the financial assets of its Consolidated CLOs.

27

Ares Management Corporation

Notes to the Unaudited Condensed Consolidated Financial Statements (Continued)

(Dollars in Thousands, Except Share Data and As Otherwise Noted)

As of September 30, 2019 and December 31, 2018, the following loan obligations were outstanding and classified as liabilities of the Consolidated CLOs:

	As of September 30, 2019					As of December 31, 2018
	Loan Obligations		Fair Value of Loan Obligations		Weighted  Average Remaining Maturity  In Years	Loan Obligations		Fair Value of Loan Obligations		Weighted Average Remaining Maturity  In Years
Senior secured notes(1)	$	7,225,041	$	7,162,677	10.99	$	6,642,616	$	6,391,643	10.94
Subordinated notes(2)	393,308		245,043		11.08	455,333		286,448		11.21
Total loan obligations of Consolidated CLOs	$	7,618,349	$	7,407,720		$	7,097,949	$	6,678,091

(1) Original borrowings under the senior secured notes totaled $7.2 billion, with various maturity dates ranging from July 2028 to April 2032. The weighted average interest rate as of September 30, 2019 was 3.06%.

(2) Original borrowings under the subordinated notes totaled $393.3 million, with various maturity dates ranging from July 2028 to April 2032. The notes do not have contractual interest rates, instead holders of the notes receive distributions from the excess cash flows generated by each Consolidated CLO.

Loan obligations of the Consolidated CLOs are collateralized by the assets held by the Consolidated CLOs, consisting of cash and cash equivalents, corporate loans, corporate bonds and other securities. The assets of one Consolidated CLO may not be used to satisfy the liabilities of another Consolidated CLO. Loan obligations of the Consolidated CLOs include floating rate notes, deferrable floating rate notes, revolving lines of credit and subordinated notes. Amounts borrowed under the notes are repaid based on available cash flows subject to priority of payments under each Consolidated CLO’s governing documents. Based on the terms of these facilities, the creditors of the facilities have no recourse to the Company.

Credit Facilities of the Consolidated Funds

Certain Consolidated Funds maintain credit facilities to fund investments between capital drawdowns. These facilities generally are collateralized by the unfunded capital commitments of the Consolidated Funds’ limited partners, bear an annual commitment fee based on unfunded commitments and contain various affirmative and negative covenants and reporting obligations, including restrictions on additional indebtedness, liens, margin stock, affiliate transactions, dividends and distributions, release of capital commitments and portfolio asset dispositions. The creditors of these facilities have no recourse to the Company and only have recourse to a subsidiary of the Company to the extent the debt is guaranteed by such subsidiary. Credit facilities of the Consolidated Funds are reflected at cost in the Condensed Consolidated Statements of Financial Condition. As of September 30, 2019 and December 31, 2018, the Consolidated Funds were in compliance with all covenants under such credit facilities.

28

Ares Management Corporation

Notes to the Unaudited Condensed Consolidated Financial Statements (Continued)

(Dollars in Thousands, Except Share Data and As Otherwise Noted)

The Consolidated Funds had the following revolving bank credit facilities and term loan outstanding as of September 30, 2019 and December 31, 2018:

				As of September 30, 2019				As of December 31, 2018
Consolidated Funds' Debt Facilities	Maturity Date	Total Capacity		Outstanding Loan(1)		Effective Rate		Outstanding Loan(1)		Effective Rate
Credit Facilities:
	1/1/2023	$	18,000	$	17,550	3.69%		$	14,953	3.98%
	12/29/2019(2)	—		—		—%		43,624		1.55%	(3)
	3/7/2020	71,500		71,500		3.47%		71,500		3.47%
	6/30/2021	190,785		11,818		1.00%	(3)	38,844		1.00%	(3)
	7/15/2028	75,000		22,000		4.75%		39,000		4.75%
Revolving Term Loan	1/31/2022	1,900		1,335		8.07%		1,363		8.07%
Total borrowings of Consolidated Funds				$	124,203			$	209,284

(1) The fair values of the borrowings approximate the carrying value as the interest rate on the borrowings is a floating rate.

(2) On August 27, 2019, the facility was terminated at the Consolidated Fund's discretion.

(3) The effective rate is based on the three month EURIBOR or zero, whichever is higher, plus a spread of 1.00% or 1.55%.

8. COMMITMENTS AND CONTINGENCIES

Indemnification Arrangements

Consistent with standard business practices in the normal course of business, the Company enters into contracts that contain indemnities for affiliates of the Company, persons acting on behalf of the Company or such affiliates and third parties. The terms of the indemnities vary from contract to contract and the Company’s maximum exposure under these arrangements cannot be determined and has not been recorded in the Condensed Consolidated Statements of Financial Condition. As of September 30, 2019, the Company has not had prior claims or losses pursuant to these contracts and expects the risk of loss to be remote.

Commitments

As of September 30, 2019 and December 31, 2018, the Company had aggregate unfunded commitments to invest in funds it manages or to support certain strategic initiatives of $303.9 million and $267.6 million, respectively.

Performance Income

Generally, if at the termination of a fund (and increasingly at interim points in the life of a fund), the fund has not achieved investment returns that (in most cases) exceed the preferred return threshold or (in all cases) the general partner receives net profits over the life of the fund in excess of its allocable share under the applicable partnership agreement, the Company will be obligated to repay carried interest that was received by the Company in excess of the amounts to which the Company is entitled. This contingent obligation is normally reduced by income taxes paid by the Company related to its carried interest. 

At September 30, 2019 and December 31, 2018, if the Company assumed all existing investments were worthless, the amount of performance income subject to potential repayment, net of tax, which may differ from the recognition of revenue, would have been approximately $405.6 million and $469.0 million, respectively, of which approximately $301.2 million and $351.9 million, respectively, is reimbursable to the Company by certain professionals who are the recipients of such performance income. Management believes the possibility of all of the investments becoming worthless is remote. As of September 30, 2019 and December 31, 2018, if the funds were liquidated at their fair values, there would be $0.4 million of repayment obligations for both periods, so the Company recorded a contingent repayment liability as of each respective period that is presented on a gross basis within accrued carried interest within investments and performance related compensation payable on the Company's Condensed Consolidated Statements of Financial Condition.

29

Ares Management Corporation

Notes to the Unaudited Condensed Consolidated Financial Statements (Continued)

(Dollars in Thousands, Except Share Data and As Otherwise Noted)

Litigation

From time to time, the Company is named as a defendant in legal actions relating to transactions conducted in the ordinary course of business. Although there can be no assurance of the outcome of such legal actions, in the opinion of management, the Company does not have a potential liability related to any current legal proceeding or claim that would individually or in the aggregate materially affect its results of operations, financial condition or cash flows.

Leases

The Company leases office space and certain office equipment. The Company's leases have remaining lease terms of one to 11 years. The tables below present certain supplemental quantitative disclosures regarding the Company's leases as of and for the period ending September 30, 2019:

	Classification	As of September 30, 2019
Operating lease assets	Right-of-use operating lease assets	$	148,170
Finance lease assets	Other assets(1)	1,231
Total lease assets		$	149,401
Operating lease liabilities	Right-of-use operating lease liabilities	$	174,078
Finance lease obligations	Accounts payable, accrued expenses and other liabilities	1,009
Total lease liabilities		$	175,087

(1) Finance lease assets are recorded net of accumulated amortization of $0.5 million as of September 30, 2019.

	Classification	Three months ended September 30, 2019		Nine months ended September 30, 2019
Operating lease expense	General, administrative and other expenses	$	7,314	$	21,463
Finance lease expense:
Amortization of finance lease assets	General, administrative and other expenses	89		194
Interest on finance lease liabilities	Interest expense	9		30
Total lease expense		$	7,412	$	21,687

Maturity of lease liabilities	Operating Leases		Finance Leases
2019	$	8,150	$	10
2020	30,008		358
2021	29,132		358
2022	30,307		329
2023	26,760		3
After 2023	74,469		2
Total future payments	198,826		1,060
Less: interest	24,748		51
Total lease liabilities	$	174,078	$	1,009

30

Ares Management Corporation

Notes to the Unaudited Condensed Consolidated Financial Statements (Continued)

(Dollars in Thousands, Except Share Data and As Otherwise Noted)

Lease term and discount rate	As of September 30, 2019
Weighted-average remaining lease terms (in years):
Operating leases	6.7
Finance leases	2.5
Weighted-average discount rate:
Operating leases	4.00	%
Finance leases	3.44	%

Other information	Nine months ended September 30, 2019
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases	$	23,273
Operating cash flows from finance leases	54
Financing cash flows from finance leases	283
Leased assets obtained in exchange for new finance lease liabilities	128
Leased assets obtained in exchange for new operating lease liabilities	49,833

9. RELATED PARTY TRANSACTIONS

Substantially all of the Company’s revenue is earned from its affiliates, including management fees, carried interest allocation, incentive fees, principal investment income and administrative expense reimbursements. The related accounts receivable are included within due from affiliates within the Condensed Consolidated Statements of Financial Condition, except that accrued carried interest allocations and incentive fees receivable, which are predominantly due from affiliated funds, are presented separately within investments and other assets, respectively, within the Condensed Consolidated Statements of Financial Condition.

The Company has investment management agreements with Ares Funds that it manages. In accordance with these agreements, these Ares Funds may bear certain operating costs and expenses which are initially paid by the Company and subsequently reimbursed by the Ares Funds.

The Company also has entered into agreements to be reimbursed for its expenses incurred for providing administrative services to certain related parties, including ARCC, ACRE, ARDC, Ivy Hill Asset Management, L.P., ACF FinCo I L.P. and CION Ares Diversified Credit Fund.

Employees and other related parties may be permitted to participate in co-investment vehicles that generally invest in Ares funds alongside fund investors. Participation is limited by law to individuals who qualify under applicable securities laws. These co-investment vehicles generally do not require these individuals to pay management or performance income.

Performance income the Company earns from the funds can be distributed to professionals or their related entities on a current basis, subject to repayment by the subsidiary of the Company that acts as general partner of the relevant fund in the event that certain specified return thresholds are not ultimately achieved. The professionals have personally guaranteed, subject to certain limitations, the obligations of these subsidiaries in respect of this general partner obligation. Such guarantees are several, and not joint, and are limited to distributions received by the relevant recipient.

31

Ares Management Corporation

Notes to the Unaudited Condensed Consolidated Financial Statements (Continued)

(Dollars in Thousands, Except Share Data and As Otherwise Noted)

The Company considers its professionals and non-consolidated funds to be affiliates. Amounts due from and to affiliates were composed of the following:

	As of September 30,		As of December 31,
	2019		2018
Due from affiliates:
Management fees receivable from non-consolidated funds	$	184,262	$	151,455
Payments made on behalf of and amounts due from non-consolidated funds and employees	61,014		47,922
Due from affiliates—Company	$	245,276	$	199,377
Amounts due from portfolio companies and non-consolidated funds	$	14,978	$	17,609
Due from affiliates—Consolidated Funds	$	14,978	$	17,609
Due to affiliates:
Management fee rebate payable to non-consolidated funds	$	2,225	$	2,105
Management fees received in advance	4,096		5,491
Tax receivable agreement liability	24,927		24,927
Undistributed carried interest and incentive fees	18,366		31,162
Payments made by non-consolidated funds on behalf of and payable by the Company	7,937		18,726
Due to affiliates—Company	$	57,551	$	82,411

Due from Ares Funds and Portfolio Companies

In the normal course of business, the Company pays certain expenses on behalf of Consolidated Funds and non-consolidated funds for which it is reimbursed. Amounts advanced on behalf of Consolidated Funds are eliminated in consolidation. Certain expenses initially paid by the Company, primarily professional services, travel and other costs associated with particular portfolio company holdings, are subject to reimbursement by the portfolio companies. The Company reimbursed ARCC approximately $0.6 million for certain recurring rent and utilities incurred by ARCC during the first quarter of 2018. In addition, in the second quarter ended June 30, 2018, the Company reimbursed ARCC approximately $2.2 million, $3.0 million, $3.2 million and $2.9 million of rent and utilities for the years ended 2017, 2016, 2015 and 2014, respectively, for an aggregate reimbursement to ARCC of $11.8 million. Beginning April 1, 2018, the Company directly incurs these expenses.

ARCC Investment Advisory and Management Agreement    

In connection with ARCC's board approval of the modification of the asset coverage requirement applicable to senior securities from 200% to 150% effective on June 21, 2019, the investment advisory and management agreement was amended effective June 6, 2019 to reduce the annual base management fee paid to the Company from 1.5% to 1.0% on all assets financed using leverage over 1.0 times debt to equity.

ARCC Fee Waiver

In conjunction with ARCC's acquisition of American Capital, Ltd. (“ACAS”), the Company agreed to waive up to $10 million per quarter of ARCC's Part I Fees for ten calendar quarters, which began with the second quarter of 2017 and ended with the third quarter of 2019. ARCC Part I Fees are reported net of the fee waiver. For the three and nine months ended September 30, 2019 and 2018, the Company waived $10.0 million and $30.0 million, respectively.

32

Ares Management Corporation

Notes to the Unaudited Condensed Consolidated Financial Statements (Continued)

(Dollars in Thousands, Except Share Data and As Otherwise Noted)

10. INCOME TAXES

Effective March 1, 2018, the Company elected to be treated as a corporation for U.S. federal and state income tax purposes (the “Tax Election”). Upon the effectiveness of this election, all earnings are subject to U.S. federal, state and local income taxes and certain of its foreign subsidiaries are subject to foreign income taxes (for which a foreign tax credit can generally offset U.S. corporate taxes imposed on the same income). Prior to March 1, 2018, a substantial portion of the Company's share of carried interest and investment income flowed through to investors without being subject to corporate level income taxes. Consequently, the Company did not reflect a provision for income taxes on such income except those for foreign, state and local income taxes incurred at the entity level. Beginning March 1, 2018, the Company's share of unrealized gains and income items became subject to U.S. corporate tax.

The Company’s income tax provision includes corporate income taxes and other entity level income taxes, as well as income taxes incurred by certain affiliated funds that are consolidated in these financial statements. For the three and nine months ended September 30, 2019, the Company recorded income tax expense of $11.7 million and $35.6 million, respectively. For the three and nine months ended September 30, 2018, the Company recorded income tax expense of $5.1 million and $29.7 million, respectively. In connection with its election to be taxed as a corporation effective March 1, 2018, the Company recorded a significant one-time deferred tax liability arising from the embedded net unrealized gains of both carried interest and the investment portfolio that were not previously subject to corporate taxes.

The Company’s effective income tax rate is dependent on many factors, including the estimated nature and amounts of income and expenses allocated to the non-controlling interests without being subject to federal, state and local income taxes at the corporate level. Additionally, the Company’s effective tax rate is influenced by the amount of income tax provision recorded for any affiliated funds and co-investment entities that are consolidated in the Company's condensed consolidated financial statements. For the three and nine months ended September 30, 2019, the Company recorded its interim income tax provision utilizing the estimated annual effective tax rate. In 2018, the Company utilized the discrete effective tax rate method to calculate its interim income tax provision since the conversion to a U.S. corporation for tax purposes occurred in an interim period.

The income tax effects of temporary differences give rise to significant portions of deferred tax assets and liabilities, which are presented on a net basis. As of September 30, 2019 and December 31, 2018, the Company recorded a net deferred tax asset of $39.2 million and $42.1 million, respectively, within other assets in the Condensed Consolidated Statements of Financial Condition.

The Company files its tax returns as prescribed by the tax laws of the jurisdictions in which it operates. In the normal course of business, the Company is subject to examination by U.S. federal, state, local and foreign tax authorities. With limited exceptions, the Company is no longer subject to income tax audits by taxing authorities for any years prior to 2015. Although the outcome of tax audits is always uncertain, the Company does not believe the outcome of any future audit will have a material adverse effect on the Company’s condensed consolidated financial statements.

11. EARNINGS PER SHARE

Basic earnings per share of Class A common stock is computed by using the two-class method. Diluted earnings per share of Class A common stock is computed using the more dilutive method of either the two-class method or the treasury stock method. For the three and nine months ended September 30, 2019, the treasury stock method was the more dilutive method. For the three and nine months ended September 30, 2018, the two-class method was the more dilutive method.

The computation of diluted earnings per share for the three and nine months ended September 30, 2019 and 2018 excludes the following options, restricted units and AOG Units, as their effect would have been anti-dilutive:

	For the Three Months Ended September 30,		For the Nine Months Ended September 30,
	2019	2018	2019	2018
Options	9,132,017	19,102,583	10,085,774	19,345,651
Restricted units	7,922,322	15,635,997	9,504,741	15,874,847
AOG Units	116,707,849	119,822,657	116,844,099	122,732,149

33

Ares Management Corporation

Notes to the Unaudited Condensed Consolidated Financial Statements (Continued)

(Dollars in Thousands, Except Share Data and As Otherwise Noted)

The following table presents the computation of basic and diluted earnings per share:

	For the Three Months Ended September 30,						For the Nine Months Ended September 30,
	2019			2018			2019			2018
Net income attributable to Ares Management Corporation Class A common stockholders	$	27,906		$	10,485		$	94,144		$	28,808
Distributions on participating unvested restricted units	(1,927		)	(1,567		)	(5,630		)	(5,667		)
Net income available to Class A common stockholders	$	25,979		$	8,918		$	88,514		$	23,141
Basic weighted-average shares of Class A common stock	108,481,929			98,706,419			105,546,219			94,168,582
Basic earnings per share of Class A common stock	$	0.24		$	0.09		$	0.84		$	0.25
Net income attributable to Ares Management Corporation Class A common stockholders	$	27,906		$	10,485		$	94,144		$	28,808
Distributions on unvested restricted units	—			(1,567		)	—			(5,667		)
Net income available to Class A common stockholders	$	27,906		$	8,918		$	94,144		$	23,141
Effect of dilutive shares:
Restricted units	8,722,690			—			7,140,271			—
Options	4,685,403			—			3,731,646			—
Diluted weighted-average shares of Class A common stock	121,890,022			98,706,419			116,418,136			94,168,582
Diluted earnings per share of Class A common stock	$	0.23		$	0.09		$	0.81		$	0.25
Dividends declared and paid per Class A common stock	$	0.32		$	0.28		$	0.96		$	1.05

12. EQUITY COMPENSATION

Equity Incentive Plan

In 2014, the Company adopted the 2014 Equity Incentive Plan, as amended and restated on March 1, 2018 and as further amended and restated effective November 26, 2018 (the “Equity Incentive Plan”). Based on a formula as defined in the Equity Incentive Plan, the total number of shares available to be issued under the Equity Incentive Plan resets and may increase on January 1 each year. Accordingly, on January 1, 2019, the total number of shares available for issuance under the Equity Incentive Plan reset to 32,792,005 shares, and as of September 30, 2019, 29,232,054 shares remain available for issuance.

Generally, unvested phantom shares, restricted units and options are forfeited upon termination of employment in accordance with the Equity Incentive Plan. The Company recognizes forfeitures as a reversal of previously recognized compensation expense in the period the forfeiture occurs.

Equity-based compensation expense, net of forfeitures is included in the following table:

	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
	2019		2018		2019		2018
Restricted units	$	21,430	$	19,251	$	66,226	$	55,798
Restricted units with a market condition	911		614		2,702		614
Options	52		3,660		4,310		9,953
Phantom shares	—		415		736		1,169
Equity-based compensation expense	$	22,393	$	23,940	$	73,974	$	67,534

34

Ares Management Corporation

Notes to the Unaudited Condensed Consolidated Financial Statements (Continued)

(Dollars in Thousands, Except Share Data and As Otherwise Noted)

Restricted Units

Each restricted unit represents an unfunded, unsecured right of the holder to receive a share of the Company's Class A common stock on a specific date. The restricted units generally vest and are settled in shares of Class A common stock either (i) at a rate of one‑third per year, beginning on the third anniversary of the grant date, (ii) in their entirety on the fifth anniversary of the grant date, (iii) at a rate of one quarter per year, beginning on either the first or second anniversary of the grant date or the holder's employment commencement date, or (iv) at a rate of one third per year, beginning on the first anniversary of the grant date in each case generally subject to the holder’s continued employment as of the applicable vesting date (subject to accelerated vesting upon certain qualifying terminations of employment). Compensation expense associated with restricted units is recognized on a straight-line basis over the requisite service period of the award.

The holders of restricted units other than the market condition awards described below generally have the right to receive as current compensation an amount in cash equal to (i) the amount of any dividend paid with respect to a share of Class A common stock multiplied by (ii) the number of restricted units held at the time such dividends are declared (“Dividend Equivalent”). During the nine months ended September 30, 2019, the Company declared dividends of $0.32, $0.32 and $0.32 per share to Class A common stockholders at the close of business on March 15, 2019, June 14, 2019 and September 16, 2019, respectively. For the three and nine months ended September 30, 2019, Dividend Equivalents were made to the holders of restricted units in the aggregate amount of $5.3 million and $16.1 million, respectively, which are presented as dividends within the Condensed Consolidated Statements of Changes in Equity. When units are forfeited, the cumulative amount of dividend equivalents previously paid is reclassified to compensation and benefits expense in the Condensed Consolidated Statements of Operations.

The following table presents unvested restricted units' activity during the nine months ended September 30, 2019:

	Restricted Units		Weighted Average Grant Date Fair Value Per Unit
Balance - January 1, 2019	16,255,475		$	19.21
Granted	4,202,622		20.61
Vested	(3,579,050	)	17.95
Forfeited	(234,035	)	19.33
Balance - September 30, 2019	16,645,012		$	19.83

The total compensation expense expected to be recognized in all future periods associated with the restricted units is approximately $216.2 million as of September 30, 2019 and is expected to be recognized over the remaining weighted average period of 2.93 years.

Restricted Unit Awards with a Market Condition

The following table presents the unvested market condition awards' activity during the nine months ended September 30, 2019:

	Market Condition Awards Units	Weighted Average Grant Date Fair Value Per Unit
Balance - January 1, 2019	1,333,334	$	9.30
Granted	—	—
Vested	—	—
Forfeited	—	—
Balance - September 30, 2019	1,333,334	$	9.30

The total compensation expense expected to be recognized in all future periods associated with the market condition awards is approximately $8.2 million as of September 30, 2019 and is expected to be recognized over the remaining weighted average period of 2.43 years.

35

Ares Management Corporation

Notes to the Unaudited Condensed Consolidated Financial Statements (Continued)

(Dollars in Thousands, Except Share Data and As Otherwise Noted)

Options

A summary of options activity during the nine months ended September 30, 2019 is presented below:

	Options		Weighted Average Exercise Price		Weighted Average Remaining Life (in years)	Aggregate Intrinsic Value
Balance - January 1, 2019	18,741,504		$	18.99	4.88	$	—
Exercised	(4,515,448	)	19.00		—	—
Expired	(366,366	)	19.00		—	—
Forfeited	(42,270	)	19.00		—	—
Balance - September 30, 2019	13,817,420		$	18.99	4.50	$	108,079
Exercisable at September 30, 2019	13,707,603		$	18.99	4.49	$	107,167

Net cash proceeds from exercises of stock options were $83.1 million for the nine months ended September 30, 2019. The Company realized tax benefits of approximately $3.6 million from those exercises.

Phantom Shares

A summary of unvested phantom shares' activity during the nine months ended September 30, 2019 is presented below:

	Phantom Shares		Weighted Average Grant Date Fair Value Per Share
Balance - January 1, 2019	66,287		$	19.00
Vested	(61,502	)	19.00
Forfeited	(4,785	)	19.00
Balance - September 30, 2019	—		$	—

During the nine months ended September 30, 2019 the Company paid $1.5 million to settle vested phantom shares.

13. EQUITY

Common Stock

The Company completed its conversion from a Delaware limited partnership to a Delaware corporation (the "Conversion") effective on November 26, 2018. Prior to the Conversion, common shares represented limited partnership interests in the Company. The holders of common shares were entitled to participate pro rata in distributions from the Company and to exercise the rights or privileges that were available to common shareholders under the Company’s limited partnership agreement. The common shareholders had limited voting rights and had no right to remove the Company’s general partner, Ares Management GP LLC, or, except in limited circumstances, to elect the directors of the general partner.     

Since the Conversion on November 26, 2018, the Company's common stock consists of Class A, Class B and Class C common stock. As a result of the Conversion on November 26, 2018, (i) each outstanding common share representing limited partner interests in the Company before the Conversion converted into one issued and outstanding, fully paid and nonassessable share of Class A common stock, $0.01 par value per share, of the Company, (ii) the general partner share of the Company before the Conversion converted into 1,000 issued and outstanding, fully paid and nonassessable shares of Class B common stock, $0.01 par value per share, of the Company and (iii) the special voting share of the Company before the Conversion converted into one issued and outstanding, fully paid and nonassessable share, of Class C common stock, $0.01 par value per share, of the Company.

The Class B common stock and Class C common stock are non-economic and holders are not entitled to (i) dividends from the Company or (ii) receive any assets of the Company in the event of any dissolution, liquidation or winding up of the Company. Ares Management GP LLC is the sole holder of the Class B common stock and Ares Voting LLC is the sole holder of the Class C common stock.

36

Ares Management Corporation

Notes to the Unaudited Condensed Consolidated Financial Statements (Continued)

(Dollars in Thousands, Except Share Data and As Otherwise Noted)

In February 2019, the Company's board of directors authorized the repurchase of up to $150 million of shares of Class

A common stock. Under this stock repurchase program, shares may be repurchased from time to time in open market purchases,

privately negotiated transactions or otherwise, including in reliance on Rule 10b5-1 of the Securities Act. The program is scheduled to expire in February 2020. Repurchases under the program, if any, will depend on the prevailing market conditions and other factors. During the three months ended September 30, 2019, the Company did not repurchase any shares as part of the stock repurchase program. During the nine months ended September 30, 2019, the Company repurchased 0.4 million shares at a total cost of $10.4 million. As of September 30, 2019, the amount remaining available for repurchases under the program was $139.6 million.

On September 20, 2019, the Company sold 7,000,000 shares of its Class A common stock in an underwritten public offering (the "Offering") from which it received $207.3 million in gross proceeds. The Company incurred approximately $0.6 million of expenses in connection with the Offering. The expenses have been recorded as a reduction in the proceeds received and are presented on a net basis together with contributions in additional paid-in-capital within the Condensed Consolidated Statements of Changes in Equity.

The following table presents the changes in each class of common stock for the nine months ended September 30, 2019:

	Class A Common Stock		Class B Common Stock	Class C Common Stock	Total
Balance - January 1, 2019	101,594,095		1,000	1	101,595,096
Issuance of stock	7,000,000		—	—	7,000,000
Exchanges of AOG Units	97,493		—	—	97,493
Stock option exercises	4,422,644		—	—	4,422,644
Repurchases of stock	(400,000	)	—	—	(400,000	)
Vesting of restricted stock awards	2,005,536		—	—	2,005,536
Balance Outstanding - September 30, 2019	114,719,768		1,000	1	114,720,769

The following table presents each partner's AOG Units and corresponding ownership interest in each of the Ares Operating Group entities as of September 30, 2019 and December 31, 2018, as well as its daily average ownership of AOG Units in each of the Ares Operating Group entities for the three and nine months ended September 30, 2019 and 2018.

							Daily Average Ownership
	As of September 30, 2019			As of December 31, 2018			For the Three Months Ended September 30,				For the Nine Months Ended September 30,
	AOG Units	Direct Ownership Interest		AOG Units	Direct Ownership Interest		2019		2018		2019		2018
Ares Management Corporation	114,719,768	49.57	%	101,594,095	46.47	%	48.17	%	45.17	%	47.46	%	43.42	%
Ares Owners Holding L.P.	116,707,849	50.43	%	117,019,274	53.53	%	51.83	%	53.67	%	52.54	%	54.14	%
Affiliate of Alleghany Corporation	—	—	%	—	—	%	—	%	1.16	%	—	%	2.44	%
Total	231,427,617	100.00	%	218,613,369	100.00	%

37

Ares Management Corporation

Notes to the Unaudited Condensed Consolidated Financial Statements (Continued)

(Dollars in Thousands, Except Share Data and As Otherwise Noted)

Preferred Stock

In connection with the Conversion on November 26, 2018, each 7.00% Series A preferred share of the Company before the Conversion was converted into one share of 7.00% Series A Preferred Stock, $0.01 par value per share of the Company. As of September 30, 2019 and December 31, 2018, the Company had 12,400,000 shares of the Series A Preferred Stock outstanding. When, as and if declared by the Company’s board of directors, dividends on the Series A Preferred Stock are payable quarterly at a rate per annum equal to 7.00%. The Series A Preferred Stock may be redeemed at the Company’s option, in whole or in part, at any time on or after June 30, 2021, at a price per share of $25.00.

14. SEGMENT REPORTING

The Company operates through its three distinct operating segments. During the nine months ended September 30, 2019, the Company reclassified certain expenses from OMG to its operating segments. The Company has modified historical results to conform with its current presentation.

The Company’s three operating segments are:

Credit Group: The Company’s Credit Group is a leading manager of credit strategies across the non-investment grade credit universe in the U.S. and Europe, with approximately $106.3 billion of AUM and 173 funds as of September 30, 2019. The Credit Group offers a range of credit strategies across the liquid and illiquid spectrum, including syndicated loans, high yield bonds, credit opportunities, alternative credit investments and U.S. and European direct lending. The Credit Group provides solutions for traditional fixed income investors seeking to access the syndicated loans and high yield bond markets and capitalizes on opportunities across traded corporate credit. It additionally provides investors access to directly originated fixed and floating rate credit assets and the ability to capitalize on illiquidity premiums across the credit spectrum. The Credit Group’s syndicated loans strategy focuses on liquid, traded non-investment grade secured loans to corporate borrowers. The high yield bond strategy seeks to deliver a diversified portfolio of liquid, traded non-investment grade corporate bonds, including secured, unsecured and subordinated debt instruments. Credit opportunities is a “go anywhere” strategy seeking to capitalize on market inefficiencies and relative value opportunities across the capital structure. The alternative credit strategy seeks investment opportunities that fall outside of traditional, well-defined markets such as corporate debt, real estate and private equity. Alternative credit investments include certain structural features designed to protect value and minimize loss such as asset security, seniority, covenants, and cash flow prioritization. These investments include asset-backed securities, specialty assets, real assets, and structured credit. The Company has one of the largest self-originating direct lending platforms in the U.S. and European middle markets, providing one-stop financing solutions for small-to-medium sized companies, which the Company believes are increasingly underserved by traditional lenders. The Company provides investors access to these capabilities through several vehicles, including commingled funds, separately managed accounts and a publicly traded vehicle. The Credit Group conducts its U.S. direct lending activities primarily through ARCC, the largest business development company as of September 30, 2019, by both market capitalization and total assets. The Credit Group’s European direct lending platform is one of the most significant participants in the European middle-market, focusing on self-originated investments in illiquid middle-market credits. In addition, the Credit Group manages a commercial finance business that provides asset-based and cash flow loans to small and middle-market companies, as well as asset-based facilities to specialty finance companies.

Private Equity Group:  The Company’s Private Equity Group has approximately $25.5 billion of AUM as of September 30, 2019, broadly categorizing its investment strategies as corporate private equity, infrastructure and power, special opportunities and energy opportunities. As of September 30, 2019 the group managed five corporate private equity commingled funds focused on North America and Europe and three focused on greater China, five commingled funds and six related co-investment vehicles focused on infrastructure and power, three commingled special opportunities funds and the Company's first energy opportunities fund. In its North American and European flexible capital corporate private equity strategy, the Company targets opportunistic majority or shared-control investments in businesses with strong franchises and attractive growth opportunities in North America and Europe. The infrastructure and power strategy targets infrastructure-related assets across the power generation, transmission, midstream sectors and renewables seeking attractive risk-adjusted equity returns with current cash flow and capital appreciation. The special opportunities strategy seeks to invest opportunistically across a broad spectrum of distressed or mispriced investments, including corporate debt, rescue capital, private asset-backed investments, post-reorganization securities and non-performing portfolios. The energy opportunities strategy targets investments in the energy industry where its flexible capital can provide attractive risk-adjusted returns while mitigating commodity risk.

38

Ares Management Corporation

Notes to the Unaudited Condensed Consolidated Financial Statements (Continued)

(Dollars in Thousands, Except Share Data and As Otherwise Noted)

Real Estate Group:  The Company’s Real Estate Group manages comprehensive equity and debt strategies, with approximately $12.5 billion of AUM across 46 funds as of September 30, 2019. Real Estate equity strategies focus on applying hands-on value creation initiatives to mismanaged and capital-starved assets, as well as new development, ultimately selling stabilized assets back into the market. The Real Estate Group manages both a value-add strategy and an opportunistic strategy. The value-add strategy seeks to create value by buying assets at attractive valuations and through active asset management of income-producing properties across the U.S. and Western Europe. The opportunistic strategy focuses on manufacturing core assets through development, redevelopment and fixing distressed capital structures across major properties in the U.S. and Europe. The Company’s debt strategies leverage the Real Estate Group’s diverse sources of capital to directly originate and manage commercial mortgage investments on properties that range from stabilized to requiring hands-on value creation.  In addition to managing private debt funds, the Real Estate Group makes debt investments through a publicly traded commercial mortgage REIT, ACRE. 

The Company has an OMG that consists of shared resource groups to support the Company’s operating segments by providing infrastructure and administrative support in the areas of accounting/finance, operations, information technology, strategy and relationship management, legal, compliance and human resources. Additionally, the OMG provides services to certain of the Company’s investment companies and partnerships, which reimburse the OMG for expenses equal to the costs of services provided. The OMG’s expenses are not allocated to the Company’s three reportable segments but the Company does consider the cost structure of the OMG when evaluating its financial performance.

Segment Profit Measures: These measures supplement and should be considered in addition to, and not in lieu of, the Condensed Consolidated Statements of Operations prepared in accordance with GAAP.

Fee related earnings (“FRE”) 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 the Consolidated Funds and non-consolidated funds and certain other items that the Company believes are not indicative of its core operating performance.

Realized income (“RI”) 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 the 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 the Company believes are not indicative of 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 from RI but are amortized to match the period over which management fees are recognized. Management believes RI is a more appropriate metric to evaluate the Company's current business operations.

Management makes operating decisions and assesses the performance of each of the Company’s business segments based on financial and operating metrics and other data that is presented before giving effect to the consolidation of any of the Consolidated Funds. Consequently, all segment data excludes the assets, liabilities and operating results related to the Consolidated Funds and non‑consolidated funds.

39

Ares Management Corporation

Notes to the Unaudited Condensed Consolidated Financial Statements (Continued)

(Dollars in Thousands, Except Share Data and As Otherwise Noted)

The following table presents the financial results for the Company’s operating segments, as well as the OMG, for the three months ended September 30, 2019:

	Credit Group			Private Equity Group			Real Estate Group			Total Segments			OMG			Total
Management fees (Credit Group includes ARCC Part I Fees of $38,786)	$	178,447		$	54,543		$	26,988		$	259,978		$	—		$	259,978
Other fees	5,174			141			28			5,343			—			5,343
Compensation and benefits	(67,770		)	(19,226		)	(14,523		)	(101,519		)	(34,061		)	(135,580		)
General, administrative and other expenses	(12,789		)	(5,532		)	(3,341		)	(21,662		)	(21,405		)	(43,067		)
Fee related earnings	103,062			29,926			9,152			142,140			(55,466		)	86,674
Performance income—realized	1,037			—			6,277			7,314			—			7,314
Performance related compensation—realized	(630		)	—			(1,412		)	(2,042		)	—			(2,042		)
Realized net performance income	407			—			4,865			5,272			—			5,272
Investment income—realized	114			47			2,015			2,176			—			2,176
Interest and other investment income (expense) —realized	6,964			435			1,588			8,987			(11		)	8,976
Interest expense	(1,561		)	(1,628		)	(967		)	(4,156		)	(535		)	(4,691		)
Realized net investment income (loss)	5,517			(1,146		)	2,636			7,007			(546		)	6,461
Realized income	$	108,986		$	28,780		$	16,653		$	154,419		$	(56,012	)	$	98,407

The following table presents the financial results for the Company’s operating segments, as well as the OMG, for the three months ended September 30, 2018:

	Credit Group			Private Equity Group			Real Estate Group			Total Segments			OMG			Total
Management fees (Credit Group includes ARCC Part I Fees of $33,377)	$	145,414		$	48,287		$	19,961		$	213,662		$	—		$	213,662
Other fees	3,656			206			10			3,872			—			3,872
Compensation and benefits	(55,239		)	(17,443		)	(10,733		)	(83,415		)	(31,957		)	(115,372		)
General, administrative and other expenses	(10,921		)	(5,866		)	(2,856		)	(19,643		)	(18,102		)	(37,745		)
Fee related earnings	82,910			25,184			6,382			114,476			(50,059		)	64,417
Performance income—realized	1,729			52,729			17,110			71,568			—			71,568
Performance related compensation—realized	(1,113		)	(42,045		)	(16,865		)	(60,023		)	—			(60,023		)
Realized net performance income	616			10,684			245			11,545			—			11,545
Investment income—realized	1,063			8,104			6,846			16,013			22			16,035
Interest and other investment income—realized	1,604			1,032			486			3,122			442			3,564
Interest expense	(1,527		)	(1,577		)	(417		)	(3,521		)	(622		)	(4,143		)
Realized net investment income (loss)	1,140			7,559			6,915			15,614			(158		)	15,456
Realized income	$	84,666		$	43,427		$	13,542		$	141,635		$	(50,217	)	$	91,418

40

Ares Management Corporation

Notes to the Unaudited Condensed Consolidated Financial Statements (Continued)

(Dollars in Thousands, Except Share Data and As Otherwise Noted)

The following table presents the financial results for the Company’s operating segments, as well as the OMG, for the nine months ended September 30, 2019:

	Credit Group			Private Equity Group			Real Estate Group			Total Segments			OMG			Total
Management fees (Credit Group includes ARCC Part I Fees of $116,336)	$	513,760		$	158,101		$	67,408		$	739,269		$	—		$	739,269
Other fees	12,179			141			709			13,029			—			13,029
Compensation and benefits	(193,083		)	(61,713		)	(35,735		)	(290,531		)	(100,716		)	(391,247		)
General, administrative and other expenses	(39,675		)	(14,501		)	(9,996		)	(64,172		)	(61,911		)	(126,083		)
Fee related earnings	293,181			82,028			22,386			397,595			(162,627		)	234,968
Performance income—realized	38,921			62,492			10,468			111,881			—			111,881
Performance related compensation—realized	(22,857		)	(49,993		)	(3,638		)	(76,488		)	—			(76,488		)
Realized net performance income	16,064			12,499			6,830			35,393			—			35,393
Investment income—realized	662			12,013			7,041			19,716			—			19,716
Interest and other investment income (expense) —realized	14,500			4,047			4,812			23,359			(13		)	23,346
Interest expense	(5,368		)	(6,239		)	(3,136		)	(14,743		)	(1,330		)	(16,073		)
Realized net investment income (loss)	9,794			9,821			8,717			28,332			(1,343		)	26,989
Realized income	$	319,039		$	104,348		$	37,933		$	461,320		$	(163,970	)	$	297,350

The following table presents the financial results for the Company’s operating segments, as well as the OMG, for the nine months ended September 30, 2018:

	Credit Group			Private Equity Group			Real Estate Group			Total Segments			OMG			Total
Management fees (Credit Group includes ARCC Part I Fees of $91,660)	$	413,028		$	147,492		$	52,272		$	612,792		$	—		$	612,792
Other fees	16,263			883			20			17,166			—			17,166
Compensation and benefits	(158,204		)	(55,314		)	(27,140		)	(240,658		)	(92,829		)	(333,487		)
General, administrative and other expenses	(32,069		)	(14,082		)	(7,679		)	(53,830		)	(55,729		)	(109,559		)
Fee related earnings	239,018			78,979			17,473			335,470			(148,558		)	186,912
Performance income—realized	48,472			137,542			31,269			217,283			—			217,283
Performance related compensation—realized	(27,778		)	(109,916		)	(25,079		)	(162,773		)	—			(162,773		)
Realized net performance income	20,694			27,626			6,190			54,510			—			54,510
Investment income—realized	2,429			17,791			9,946			30,166			1,658			31,824
Interest and other investment income—realized	7,828			4,011			1,370			13,209			2,178			15,387
Interest expense	(9,796		)	(4,245		)	(1,289		)	(15,330		)	(1,758		)	(17,088		)
Realized net investment income	461			17,557			10,027			28,045			2,078			30,123
Realized income	$	260,173		$	124,162		$	33,690		$	418,025		$	(146,480	)	$	271,545

41

Ares Management Corporation

Notes to the Unaudited Condensed Consolidated Financial Statements (Continued)

(Dollars in Thousands, Except Share Data and As Otherwise Noted)

The following table presents the components of the Company’s operating segments’ revenue, expenses and realized net investment income:

	For the Three Months Ended September 30,						For the Nine Months Ended September 30,
	2019			2018			2019			2018
Segment revenues
Management fees (includes ARCC Part I Fees of $38,786, $116,336 and $33,377, $91,660 for the three and nine months ended September 30, 2019 and 2018, respectively)	$	259,978		$	213,662		$	739,269		$	612,792
Other fees	5,343			3,872			13,029			17,166
Performance income—realized	7,314			71,568			111,881			217,283
Total segment revenues	$	272,635		$	289,102		$	864,179		$	847,241
Segment expenses
Compensation and benefits	$	101,519		$	83,415		$	290,531		$	240,658
General, administrative and other expenses	21,662			19,643			64,172			53,830
Performance related compensation—realized	2,042			60,023			76,488			162,773
Total segment expenses	$	125,223		$	163,081		$	431,191		$	457,261
Segment realized net investment income
Investment income—realized	$	2,176		$	16,013		$	19,716		$	30,166
Interest and other investment income- realized	8,987			3,122			23,359			13,209
Interest expense	(4,156		)	(3,521		)	(14,743		)	(15,330		)
Total segment realized net investment income	$	7,007		$	15,614		$	28,332		$	28,045

The following table reconciles the Company's consolidated revenues to segment revenue:

	For the Three Months Ended September 30,						For the Nine Months Ended September 30,
	2019			2018			2019			2018
Total consolidated revenue	$	466,490		$	240,777		$	1,328,509		$	711,029
Performance (income) loss-unrealized	(181,174		)	37,999			(426,411		)	127,224
Management fees of Consolidated Funds eliminated in consolidation	8,780			9,138			25,928			24,721
Incentive fees of Consolidated Funds eliminated in consolidation	—			—			5,184			4,000
Principal investment (income) loss of Consolidated Funds eliminated in consolidation	2,476			(422		)	(656		)	10,228
Administrative fees(1)	(9,649		)	(7,084		)	(22,853		)	(20,266		)
Performance income (loss) reclass(2)	(27		)	795			553			(211		)
Principal investment (income) loss	(13,865		)	7,886			(45,336		)	(9,544		)
Net (revenue) expense of non-controlling interests in consolidated subsidiaries	(396		)	13			(739		)	60
Total consolidation adjustments and reconciling items	(193,855		)	48,325			(464,330		)	136,212
Total segment revenue	$	272,635		$	289,102		$	864,179		$	847,241

(1) Represents administrative fees that are presented in administrative, transaction and other fees in the Company’s Condensed Consolidated Statements of Operations and are netted against the respective expenses for segment reporting.

(2) Related to performance income for AREA Sponsor Holdings LLC, an investment pool. Changes in value of this investment are reflected within net realized and unrealized gains (losses) on investments in the Company’s Condensed Consolidated Statements of Operations.

42

Ares Management Corporation

Notes to the Unaudited Condensed Consolidated Financial Statements (Continued)

(Dollars in Thousands, Except Share Data and As Otherwise Noted)

The following table reconciles the Company's consolidated expenses to segment expenses:

	For the Three Months Ended September 30,						For the Nine Months Ended September 30,
	2019			2018			2019			2018
Total consolidated expenses	$	395,701		$	227,188		$	1,100,509		$	654,488
Performance related compensation-unrealized	(137,174		)	42,417			(311,936		)	132,294
Expenses of Consolidated Funds added in consolidation	(19,664		)	(21,971		)	(61,977		)	(77,982		)
Expenses of Consolidated Funds eliminated in consolidation	8,780			9,138			31,112			28,721
Administrative fees(1)	(9,649		)	(7,084		)	(22,853		)	(20,266		)
OMG expenses	(55,466		)	(50,059		)	(162,627		)	(148,558		)
Acquisition and merger-related expense	(4,777		)	(253		)	(10,757		)	19
Equity compensation expense	(22,393		)	(23,940		)	(73,974		)	(67,534		)
Unamortized placement fees	(4,366		)	(6,194		)	(17,319		)	(9,710		)
Depreciation and amortization expense(2)	(24,564		)	(5,347		)	(35,609		)	(20,234		)
Other expense(3)	—			—			—			(11,836		)
Expense of non-controlling interests in consolidated subsidiaries	(1,205		)	(814		)	(3,378		)	(2,141		)
Total consolidation adjustments and reconciling items	(270,478		)	(64,107		)	(669,318		)	(197,227		)
Total segment expenses	$	125,223		$	163,081		$	431,191		$	457,261

(1) Represents administrative fees that are presented in administrative, transaction and other fees in the Company’s Condensed Consolidated Statements of Operations and are netted against the respective expenses for segment reporting.

(2) 2019 period includes a $20.0 million non-cash impairment charge on certain intangible assets

(3) 2018 period includes $11.8 million payment to ARCC for rent and utilities for the years ended 2017, 2016, 2015 and 2014, and the first quarter of 2018.

The following table reconciles the Company's consolidated other income to segment realized net investment income:

	For the Three Months Ended September 30,						For the Nine Months Ended September 30,
	2019			2018			2019			2018
Total consolidated other income	$	32,787		$	38,754		$	95,919		$	108,920
Investment (income) loss - unrealized	(4,138		)	26,121			(12,703		)	30,390
Interest and other investment (income) loss - unrealized	3,044			(765		)	3,394			531
Other expense from Consolidated Funds added in consolidation, net	(37,070		)	(34,645		)	(101,285		)	(111,090		)
Other income from Consolidated Funds eliminated in consolidation, net	(1,124		)	(86		)	(1,214		)	(620		)
OMG other (income) expense	87			(5,079		)	(71		)	(11,546		)
Performance (income) loss reclass(1)	27			(795		)	(553		)	211
Principal investment income (loss)	13,865			(7,886		)	45,336			9,544
Other (income) expense, net	(461		)	3			(460		)	1,728
Other income of non-controlling interests in consolidated subsidiaries	(10		)	(8		)	(31		)	(23		)
Total consolidation adjustments and reconciling items	(25,780		)	(23,140		)	(67,587		)	(80,875		)
Total segment realized net investment income	$	7,007		$	15,614		$	28,332		$	28,045

(1) Related to performance income for AREA Sponsor Holdings LLC. Changes in value of this investment are reflected within net realized and unrealized gains (losses) on investments in the Company’s Condensed Consolidated Statements of Operations.

43

Ares Management Corporation

Notes to the Unaudited Condensed Consolidated Financial Statements (Continued)

(Dollars in Thousands, Except Share Data and As Otherwise Noted)

The following table presents the reconciliation of income before taxes as reported in the Condensed Consolidated Statements of Operations to segment results of RI and FRE:

	For the Three Months Ended September 30,						For the Nine Months Ended September 30,
	2019			2018			2019			2018
Income before taxes	$	103,576		$	52,343		$	323,919		$	165,461
Adjustments:
Depreciation and amortization expense(1)	24,564			5,347			35,609			20,234
Equity compensation expense	22,393			23,940			73,974			67,534
Acquisition and merger-related expense	4,777			253			10,757			(19		)
Unamortized placement fees	4,366			6,194			17,319			9,710
OMG expense, net	55,553			44,980			162,556			137,012
Other (income) expense, net(2)	(461		)	3			(460		)	13,564
Net expense of non-controlling interests in consolidated subsidiaries	799			819			2,608			2,178
Income before taxes of non-controlling interests in Consolidated Funds, net of eliminations	(16,054		)	(13,182		)	(41,178		)	(23,500		)
Total performance (income) loss - unrealized	(181,174		)	37,999			(426,411		)	127,224
Total performance related compensation - unrealized	137,174			(42,417		)	311,936			(132,294		)
Total investment (income) loss - unrealized	(1,094		)	25,356			(9,309		)	30,921
Realized income	154,419			141,635			461,320			418,025
Total performance income - realized	(7,314		)	(71,568		)	(111,881		)	(217,283		)
Total performance related compensation - realized	2,042			60,023			76,488			162,773
Total investment income - realized	(7,007		)	(15,614		)	(28,332		)	(28,045		)
Fee related earnings	$	142,140		$	114,476		$	397,595		$	335,470

(1) 2019 period includes a $20.0 million non-cash impairment charge on certain intangible assets

(2) 2018 period includes $11.8 million payment to ARCC for rent and utilities for the years ended 2017, 2016, 2015 and 2014, and the first quarter of 2018.

44

Ares Management Corporation

Notes to the Unaudited Condensed Consolidated Financial Statements (Continued)

(Dollars in Thousands, Except Share Data and As Otherwise Noted)

15. CONSOLIDATION

Investments in Consolidated Variable Interest Entities  

The Company consolidates entities in which the Company has a variable interest and as the general partner or investment manager, has both the power to direct the most significant activities and a potentially significant economic interest. Investments in the consolidated VIEs are reported at fair value and represent the Company’s maximum exposure to loss.

Investments in Non-Consolidated Variable Interest Entities

The Company holds interests in certain VIEs that are not consolidated as the Company is not the primary beneficiary. The Company's interest in such entities generally is in the form of direct equity interests, fixed fee arrangements or both. The maximum exposure to loss represents the potential loss of assets by the Company relating to these non-consolidated entities. Investments in the non-consolidated VIEs are carried at fair value.

The Company's interests in consolidated and non-consolidated VIEs, as presented in the Condensed Consolidated Statements of Financial Condition, and its respective maximum exposure to loss relating to non-consolidated VIEs are as follows:

	As of September 30,		As of December 31,
	2019		2018
Maximum exposure to loss attributable to the Company's investment in non-consolidated VIEs	$	270,980	$	222,477
Maximum exposure to loss attributable to the Company's investment in consolidated VIEs	196,198		186,455
Assets of consolidated VIEs	8,974,941		8,141,280
Liabilities of consolidated VIEs	8,160,607		7,479,383

	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
	2019		2018		2019		2018
Net income attributable to non-controlling interests related to consolidated VIEs	$	15,908	$	13,169	$	41,878	$	23,418

45

Ares Management Corporation

Notes to the Unaudited Condensed Consolidated Financial Statements (Continued)

(Dollars in Thousands, Except Share Data and As Otherwise Noted)

Consolidating Schedules

The following supplemental financial information illustrates the consolidating effects of the Consolidated Funds on the Company's financial condition as of September 30, 2019 and December 31, 2018 and results from operations for the three and nine months ended September 30, 2019 and 2018.  

	As of September 30, 2019
	Consolidated Company  Entities			Consolidated Funds		Eliminations			Consolidated
Assets
Cash and cash equivalents	$	152,203		$	—	$	—		$	152,203
Investments (includes $1,250,191 of accrued carried interest)	1,976,062			—		(196,198		)	1,779,864
Due from affiliates	254,005			—		(8,729		)	245,276
Other assets	296,302			—		—			296,302
Right-of-use operating lease assets	148,170			—		—			148,170
Assets of Consolidated Funds
Cash and cash equivalents	—			575,621		—			575,621
Investments, at fair value	—			8,271,481		—			8,271,481
Due from affiliates	—			14,978		—			14,978
Receivable for securities sold	—			85,701		—			85,701
Other assets	—			27,160		—			27,160
Total assets	$	2,826,742		$	8,974,941	$	(204,927	)	$	11,596,756
Liabilities
Accounts payable, accrued expenses and other liabilities	$	71,077		$	—	$	—		$	71,077
Accrued compensation	168,539			—		—			168,539
Due to affiliates	57,551			—		—			57,551
Performance related compensation payable	905,949			—		—			905,949
Debt obligations	246,442			—		—			246,442
Right-of-use operating lease liabilities	174,078			—		—			174,078
Liabilities of Consolidated Funds
Accounts payable, accrued expenses and other liabilities	—			83,698		—			83,698
Due to affiliates	—			8,729		(8,729		)	—
Payable for securities purchased	—			514,717		—			514,717
CLO loan obligations, at fair value	—			7,429,260		(21,540		)	7,407,720
Fund borrowings	—			124,203		—			124,203
Total liabilities	1,623,636			8,160,607		(30,269		)	9,753,974
Commitments and contingencies
Non-controlling interest in Consolidated Funds	—			814,334		(174,658		)	639,676
Non-controlling interest in Ares Operating Group entities	450,985			—		—			450,985
Stockholders' Equity
Series A Preferred Stock, $0.01 par value, 1,000,000,000 shares authorized (12,400,000 shares issued and outstanding)	298,761			—		—			298,761
Class A common stock, $0.01 par value, 1,500,000,000 shares authorized (114,719,768 shares issued and outstanding)	1,147			—		—			1,147
Class B common stock, $0.01 par value, 1,000 shares authorized (1,000 shares issued and outstanding)	—			—		—			—
Class C common stock, $0.01 par value, 499,999,000 shares authorized (1 share issued and outstanding)	—			—		—			—
Additional paid-in-capital	507,531			—		—			507,531
Retained earnings	(44,308		)	—		—			(44,308		)
Accumulated other comprehensive loss, net of tax	(11,010		)	—		—			(11,010		)
Total stockholders' equity	752,121			—		—			752,121
Total equity	1,203,106			814,334		(174,658		)	1,842,782
Total liabilities, non-controlling interests and equity	$	2,826,742		$	8,974,941	$	(204,927	)	$	11,596,756

46

Ares Management Corporation

Notes to the Unaudited Condensed Consolidated Financial Statements (Continued)

(Dollars in Thousands, Except Share Data and As Otherwise Noted)

	As of December 31, 2018
	Consolidated Company  Entities			Consolidated Funds		Eliminations			Consolidated
Assets
Cash and cash equivalents	$	110,247		$	—	$	—		$	110,247
Investments (includes $841,079 of accrued carried interest)	1,512,592			—		(186,455		)	1,326,137
Due from affiliates	207,924			—		(8,547		)	199,377
Other assets	377,651			—		—			377,651
Assets of Consolidated Funds
Cash and cash equivalents	—			384,644		—			384,644
Investments, at fair value	—			7,673,165		—			7,673,165
Due from affiliates	—			17,609		—			17,609
Receivable for securities sold	—			42,076		—			42,076
Other assets	—			23,786		—			23,786
Total assets	$	2,208,414		$	8,141,280	$	(195,002	)	$	10,154,692
Liabilities
Accounts payable, accrued expenses and other liabilities	$	83,221		$	—	$	—		$	83,221
Accrued compensation	29,389			—		—			29,389
Due to affiliates	82,411			—		—			82,411
Performance related compensation payable	641,737			—		—			641,737
Debt obligations	480,952			—		—			480,952
Liabilities of Consolidated Funds
Accounts payable, accrued expenses and other liabilities	—			83,876		—			83,876
Due to affiliates	—			8,547		(8,547		)	—
Payable for securities purchased	—			471,390		—			471,390
CLO loan obligations	—			6,706,286		(28,195		)	6,678,091
Fund borrowings	—			209,284		—			209,284
Total liabilities	1,317,710			7,479,383		(36,742		)	8,760,351
Commitments and contingencies
Non-controlling interest in Consolidated Funds	—			661,897		(158,260		)	503,637
Non-controlling interest in Ares Operating Group entities	302,780			—		—			302,780
Stockholders' Equity
Series A Preferred Stock, $0.01 par value, 1,000,000,000 shares authorized (12,400,000 units issued and outstanding)	298,761			—		—			298,761
Class A common stock, $0.01 par value, 1,500,000,000 shares authorized (101,594,095 shares issued and outstanding)	1,016			—		—			1,016
Class B common stock, $0.01 par value, 1,000 shares authorized (1,000 shares issued and outstanding)	—			—		—			—
Class C common stock, $0.01 par value, 499,999,000 shares authorized (1 share issued and outstanding)	—			—		—			—
Additional paid-in-capital	326,007			—		—			326,007
Retained earnings	(29,336		)	—		—			(29,336		)
Accumulated other comprehensive loss, net of taxes	(8,524		)	—		—			(8,524		)
Total stockholders' equity	587,924			—		—			587,924
Total equity	890,704			661,897		(158,260		)	1,394,341
Total liabilities, non-controlling interests and equity	$	2,208,414		$	8,141,280	$	(195,002	)	$	10,154,692

47

Ares Management Corporation

Notes to the Unaudited Condensed Consolidated Financial Statements (Continued)

(Dollars in Thousands, Except Share Data and As Otherwise Noted)

	For the Three Months Ended September 30, 2019
	Consolidated Company  Entities			Consolidated Funds			Eliminations			Consolidated
Revenues
Management fees (includes ARCC Part I Fees of $38,786)	$	260,371		$	—		$	(8,780	)	$	251,591
Carried interest allocation	186,803			—			—			186,803
Incentive fees	1,712			—			—			1,712
Principal investment income	13,865			—			(2,476		)	11,389
Administrative, transaction and other fees	14,995			—			—			14,995
Total revenues	477,746			—			(11,256		)	466,490
Expenses
Compensation and benefits	166,216			—			—			166,216
Performance related compensation	139,216			—			—			139,216
General, administrative and other expense	79,385			—			—			79,385
Expenses of the Consolidated Funds	—			19,664			(8,780		)	10,884
Total expenses	384,817			19,664			(8,780		)	395,701
Other income (expense)
Net realized and unrealized gains (losses) on investments	(522		)	—			2,044			1,522
Interest and dividend income	2,800			—			(770		)	2,030
Interest expense	(4,691		)	—			—			(4,691		)
Other expense, net	(2,994		)	—			1,124			(1,870		)
Net realized and unrealized gains (losses) on investments of the Consolidated Funds	—			1,399			(2,391		)	(992		)
Interest and other income of the Consolidated Funds	—			107,922			—			107,922
Interest expense of the Consolidated Funds	—			(72,251		)	1,117			(71,134		)
Total other income (expense)	(5,407		)	37,070			1,124			32,787
Income before taxes	87,522			17,406			(1,352		)	103,576
Income tax expense	11,555			146			—			11,701
Net income	75,967			17,260			(1,352		)	91,875
Less: Net income attributable to non-controlling interests in Consolidated Funds	—			17,260			(1,352		)	15,908
Less: Net income attributable to non-controlling interests in Ares Operating Group entities	42,636			—			—			42,636
Net income attributable to Ares Management Corporation	33,331			—			—			33,331
Less: Series A Preferred Stock dividends paid	5,425			—			—			5,425
Net income attributable to Ares Management Corporation Class A common stockholders	$	27,906		$	—		$	—		$	27,906

48

Ares Management Corporation

Notes to the Unaudited Condensed Consolidated Financial Statements (Continued)

(Dollars in Thousands, Except Share Data and As Otherwise Noted)

	For the Three Months Ended September 30, 2018
	Consolidated Company  Entities			Consolidated Funds			Eliminations			Consolidated
Revenues
Management fees (includes ARCC Part I Fees of $33,377)	$	213,662		$	—		$	(9,138	)	$	204,524
Carried interest allocation	31,902						—			31,902
Incentive fees	872						—			872
Principal investment loss	(7,886		)	—			422			(7,464		)
Administrative, transaction and other fees	10,943			—			—			10,943
Total revenues	249,493			—			(8,716		)	240,777
Expenses
Compensation and benefits	145,594			—			—			145,594
Performance related compensation	17,606			—			—			17,606
General, administrative and other expense	51,155			—			—			51,155
Expenses of the Consolidated Funds	—			21,971			(9,138		)	12,833
Total expenses	214,355			21,971			(9,138		)	227,188
Other income (expense)
Net realized and unrealized gains on investments	6,540			—			(998		)	5,542
Interest and dividend income	901			—			(93		)	808
Interest expense	(4,143		)	—			—			(4,143		)
Other income, net	725			—			86			811
Net realized and unrealized gains on investments of the Consolidated Funds	—			4,686			751			5,437
Interest and other income of the Consolidated Funds	—			93,062			—			93,062
Interest expense of the Consolidated Funds	—			(63,103		)	340			(62,763		)
Total other income	4,023			34,645			86			38,754
Income before taxes	39,161			12,674			508			52,343
Income tax expense	5,118			13			—			5,131
Net income	34,043			12,661			508			47,212
Less: Net income attributable to non-controlling interests in Consolidated Funds	—			12,661			508			13,169
Less: Net income attributable to non-controlling interests in Ares Operating Group entities	18,133			—			—			18,133
Net income attributable to Ares Management L.P.	15,910			—			—			15,910
Less: Preferred equity dividends paid	5,425			—			—			5,425
Net income attributable to Ares Management L.P. common shareholders	$	10,485		$	—		$	—		$	10,485

49

Ares Management Corporation

Notes to the Unaudited Condensed Consolidated Financial Statements (Continued)

(Dollars in Thousands, Except Share Data and As Otherwise Noted)

	For the Nine Months Ended September 30, 2019
	Consolidated Company  Entities			Consolidated Funds			Eliminations			Consolidated
Revenues
Management fees (includes ARCC Part I Fees of $116,336)	$	740,024		$	—		$	(25,928	)	$	714,096
Carried interest allocation	503,808			—			—			503,808
Incentive fees	33,931			—			(5,184		)	28,747
Principal investment income	45,336			—			656			45,992
Administrative, transaction and other fees	35,866			—			—			35,866
Total revenues	1,358,965			—			(30,456		)	1,328,509
Expenses
Compensation and benefits	485,232			—			—			485,232
Performance related compensation	388,424			—			—			388,424
General, administrative and other expense	195,988			—			—			195,988
Expenses of the Consolidated Funds	—			61,977			(31,112		)	30,865
Total expenses	1,069,644			61,977			(31,112		)	1,100,509
Other income (expense)
Net realized and unrealized gains on investments	4,829			—			690			5,519
Interest and dividend income	7,448			—			(1,922		)	5,526
Interest expense	(16,073		)	—			—			(16,073		)
Other expense, net	(2,784		)	—			1,214			(1,570		)
Net realized and unrealized gains on investments of the Consolidated Funds	—			4,661			(1,405		)	3,256
Interest and other income of the Consolidated Funds	—			303,312			—			303,312
Interest expense of the Consolidated Funds	—			(206,688		)	2,637			(204,051		)
Total other income (expense)	(6,580		)	101,285			1,214			95,919
Income before taxes	282,741			39,308			1,870			323,919
Income tax expense (benefit)	36,290			(700		)	—			35,590
Net income	246,451			40,008			1,870			288,329
Less: Net income attributable to non-controlling interests in Consolidated Funds	—			40,008			1,870			41,878
Less: Net income attributable to non-controlling interests in Ares Operating Group entities	136,032			—			—			136,032
Net income attributable to Ares Management Corporation	110,419			—			—			110,419
Less: Series A Preferred Stock dividends paid	16,275			—			—			16,275
Net income attributable to Ares Management Corporation Class A common stockholders	$	94,144		$	—		$	—		$	94,144

50

Ares Management Corporation

Notes to the Unaudited Condensed Consolidated Financial Statements (Continued)

(Dollars in Thousands, Except Share Data and As Otherwise Noted)

	For the Nine Months Ended September 30, 2018
	Consolidated Company  Entities			Consolidated Funds			Eliminations			Consolidated
Revenues
Management fees (includes ARCC Part I Fees of $91,660)	$	612,792		$	—		$	(24,721	)	$	588,071
Carried interest allocation	72,587			—			—			72,587
Incentive fees	17,683			—			(4,000		)	13,683
Principal investment income (loss)	9,544			—			(10,228		)	(684		)
Administrative, transaction and other fees	37,372			—			—			37,372
Total revenues	749,978			—			(38,949		)	711,029
Expenses
Compensation and benefits	419,225			—			—			419,225
Performance related compensation	30,479			—			—			30,479
General, administrative and other expense	155,523			—			—			155,523
Expenses of the Consolidated Funds	—			77,982			(28,721		)	49,261
Total expenses	605,227			77,982			(28,721		)	654,488
Other income (expense)
Net realized and unrealized gains on investments	9,800			—			(1,830		)	7,970
Interest and dividend income	6,604			—			(93		)	6,511
Interest expense	(17,088		)	—			—			(17,088		)
Other expense, net	(2,106		)	—			619			(1,487		)
Net realized and unrealized gains on investments of the Consolidated Funds	—			26,053			786			26,839
Interest and other income of the Consolidated Funds	—			250,117			—			250,117
Interest expense of the Consolidated Funds	—			(165,080		)	1,138			(163,942		)
Total other income (expense)	(2,790		)	111,090			620			108,920
Income before taxes	141,961			33,108			(9,608		)	165,461
Income tax expense	29,577			82			—			29,659
Net income	112,384			33,026			(9,608		)	135,802
Less: Net income attributable to non-controlling interests in Consolidated Funds	—			33,026			(9,608		)	23,418
Less: Net income attributable to non-controlling interests in Ares Operating Group entities	67,301			—			—			67,301
Net income attributable to Ares Management L.P.	45,083			—			—			45,083
Less: Preferred equity dividends paid	16,275			—			—			16,275
Net income attributable to Ares Management L.P. common shareholders	$	28,808		$	—		$	—		$	28,808

51

Ares Management Corporation

Notes to the Unaudited Condensed Consolidated Financial Statements (Continued)

(Dollars in Thousands, Except Share Data and As Otherwise Noted)

16. SUBSEQUENT EVENTS

The Company evaluated all events or transactions that occurred after September 30, 2019 through the date the condensed consolidated financial statements were issued. During this period, the Company had the following material subsequent events that require disclosure:

In October 2019, the Company's board of directors declared a quarterly dividend of $0.32 per share of Class A common stock payable on December 31, 2019 to common stockholders of record at the close of business on December 17, 2019.

In October 2019, the Company's board of directors declared a quarterly dividend of $0.4375 per share of Series A Preferred Stock payable on December 31, 2019 to preferred stockholders of record at the close of business on December 15, 2019. As December 15, 2019 falls on a Sunday, the effective record date for the dividend will be Friday, December 13, 2019.

52

Item 2.  Management’s Discussion And Analysis Of Financial Condition And Results Of Operations

Ares Management Corporation is a Delaware corporation, which was formerly a limited partnership formed on November 15, 2013 and which converted to a Delaware corporation effective on November 26, 2018. Unless the context otherwise requires, references to “Ares,” “we,” “us,” “our,” and the “Company” are intended to mean the business and operations of Ares Management Corporation and its consolidated subsidiaries. The following discussion analyzes the financial condition and results of operations of the Company. “Consolidated Funds” refers collectively to certain Ares‑affiliated funds, related co‑ investment entities and certain CLOs that are required under generally accepted accounting principles in the United States (“GAAP”) to be consolidated in our condensed consolidated financial statements included in this Quarterly Report on Form 10‑Q. Additional terms used by the Company are defined in the Glossary and throughout the Management's Discussion and Analysis in this Quarterly Report on Form 10-Q.

The following discussion and analysis should be read in conjunction with the unaudited condensed consolidated financial statements and the related notes included in this Quarterly Report on Form 10‑Q and the audited consolidated financial statements and the related notes included in the 2018 Annual Report on Form 10-K of Ares Management Corporation.

Amounts and percentages presented throughout our discussion and analysis of financial condition and results of operations may reflect rounded results in thousands (unless otherwise indicated) and consequently, totals may not appear to sum.

Our Business

We are a leading global alternative investment manager that operates integrated businesses, which are our reportable segments. Our reportable segments are the Credit Group, Private Equity Group and Real Estate Group. For a detailed description of our reportable segments, see Note 14, “Segment Reporting,” to our unaudited condensed consolidated financial statements included in this Quarterly Report on Form 10-Q. During the nine months ended September 30, 2019, we reclassified certain expenses from OMG to our operating segments. Historical results have been modified to conform to the current period presentation.

The focus of our business model is to provide our investment management capabilities through various funds and products that meet the needs of a wide range of institutional and retail investors. Our revenues primarily consist of management fees, carried interest allocation, incentive fees, as well as principal investment income, administrative expense reimbursements and transaction fees. Management fees are generally based on a defined percentage of average fair value of assets, total commitments, invested capital, net asset value, net investment income or par value of the investment portfolios we manage. Carried interest allocation and incentive fees are based on certain specific hurdle rates as defined in the funds' applicable investment management or partnership agreements. Carried interest allocation and incentive fees are collectively referred to as performance income in our segment results and non-GAAP measures. Principal investment income consists of interest and dividend income and net realized and unrealized gains (losses) from the equity method investments that we manage. Other income (expense) typically represents investment income, realized gains (losses) and unrealized appreciation (depreciation) resulting from our other investments as well as investments of the Consolidated Funds. Interest expense is a component of other income (expense). We provide administrative services to certain of our affiliated funds that are presented within administrative, transaction and other fees for GAAP reporting but are netted against the respective expenses for segment reporting purposes. We also receive transaction fees from certain funds for activities related to fund transactions, such as loan originations. In accordance with GAAP, we are required to consolidate funds where we have a significant economic interest and substantive control rights. However, for segment reporting purposes, we present revenues, expenses and realized net investment income (loss) on a combined basis, which reflects the results of our reportable segments without giving effect to said consolidation. Accordingly, our segment revenues consist of management fees, other fees and realized performance income. Our segment expenses consist of compensation and benefits, general, administrative and other expenses, net of administrative fees, as well as realized performance income compensation. Our segment realized net investment income (loss) consist of realized net investment income, interest and other investment income and interest expense.

Trends Affecting Our Business

We believe that our disciplined investment philosophy across our three distinct but complementary investment groups contributes to the stability of our performance throughout market cycles. As of September 30, 2019, approximately 70% of our assets under management were in funds with a remaining contractual life of three years or more, approximately 74% were in funds with an initial duration greater than seven years at time of closing and 89% of our management fees are derived from permanent capital, CLOs and closed end funds. Our funds have a stable base of committed capital enabling us to invest in assets with a long-term focus over different points in a market cycle and to take advantage of market volatility. However, our results of operations, including the fair value of our AUM, are affected by a variety of factors, particularly in the United States and Western Europe, including conditions in the global financial markets and the economic and political environments.

53

U.S. credit markets experienced positive performance in the third quarter as accommodative Federal Reserve policy offset volatility resulting from global trade tensions and slowing economic growth concerns. Interest rate cuts in July and September contributed to a relatively stable backdrop for leveraged loan and high yield bond prices. The CSLLI, a leveraged loan index, returned 0.9% in the third quarter of 2019 while the ICE BAML High Yield Master II Index, a high yield bond index, returned 1.2%.

European credit markets experienced similar performance influenced by monetary policy developments and other geopolitical headlines. The Credit Suisse Western European Leveraged Loan Index returned 1.0% during the third quarter of 2019 while the ICE BAML European Currency High Yield Index returned 1.3%.

In the U.S., the S&P 500 Index returned an additional 1.7% in the third quarter bringing year to date returns to over 20% and continuing the strong recovery that began in the first quarter. Outside the U.S., the global equity markets declined in the third quarter as global trade tensions and geopolitical uncertainty weighed on indices. The MSCI All Country World ex USA Index declined 1.8% in the third quarter of 2019, although year to date performance remained strong at 11.6%. The intermediated private equity auction market remains highly competitive and leveraged buy out purchase price multiples remained near historical highs during the third quarter of 2019. Amidst a significant expansion in the size of the corporate debt market, leverage levels continue to increase and are even higher when EBITDA-adjustments are taken into account. These dynamics have led to a significant compression in private equity risk premiums. We continue to believe careful company selection, a focus on high-quality assets and a differentiated view to drive value creation are of paramount importance in the current market environment.

European and U.S. property yields and capitalization rates were generally stable over the third quarter. Across the major European economies, yields on offices in both primary and secondary locations and industrial logistic facilities stayed the same or declined slightly. U.S. capitalization rates were also unmoved across the office, industrial, and apartment sectors and across the gateway and major secondary metros. Recent pricing trends reflected the strength of underlying fundamentals including consumer spending and tight labor markets that bolstered property performance and robust investor appetite for the asset class. Leverage continued to be accretive to property values and the availability of investment capital maintained transaction volumes. Across our targeted markets in both the U.S. and Europe, we continue to find opportunities to capitalize on our deep understanding of local market and overall industry dynamics to acquire and lend on commercial real estate.

Notwithstanding the potential opportunities represented by market volatility, future earnings, cash flows, dividend payments and distributions are affected by a range of factors, including realizations of our funds’ investments, which are subject to significant fluctuations from period to period.

Consolidation and Deconsolidation of Ares Funds

Consolidated funds represented approximately 6.5% of our AUM as of September 30, 2019, 3.5% of our management fees and 1.0% of our performance income for the nine months ended September 30, 2019. As of September 30, 2019, we consolidated 15 CLOs and eight private funds, and as of September 30, 2018, we consolidated 13 CLOs and 10 private funds.

Our CLOs serve as long-term, non-recourse financing for debt investments and as a way to minimize refinancing and maturity risk and secure a fixed cost of funds over an underlying market interest rate. As of September 30, 2019, our maximum exposure of loss for CLO securities was $101.5 million.

The consolidation of these funds significantly impacted interest and other income of Consolidated Funds, interest expense of Consolidated Funds, net realized and unrealized gains (losses) on investments of Consolidated Funds and non-controlling interests in Consolidated Funds, among others, for the three and nine months ended September 30, 2019 and 2018. Also, the consolidation of these funds typically has the impact of decreasing management fees, carried interest allocation and incentive fees reported under GAAP to the extent these are eliminated upon consolidation. For the actual impact that consolidation had on our results, see the Consolidating Schedules within Note 15, “Consolidation”, to our condensed consolidated financial statements included herein.

The assets and liabilities of our Consolidated Funds are held within separate legal entities and, as a result, the liabilities of our Consolidated Funds are typically non-recourse to us. Generally, the consolidation of our Consolidated Funds has a significant gross-up effect on our assets, liabilities and cash flows but has no net effect on the net income attributable to us. The net economic ownership interests of our Consolidated Funds, to which we have no economic rights, are reflected as non-controlling interests in the Consolidated Funds in our condensed consolidated financial statements.

54

We generally deconsolidate funds and CLOs when we are no longer deemed to have a controlling interest in the entity. During the nine months ended September 30, 2019, two entities were liquidated/dissolved and two entities experienced a significant change in ownership that resulted in deconsolidation of the fund and CLO during the period. During the nine months ended September 30, 2018, one entity was liquidated/dissolved and no non-VIEs experienced a significant change in ownership or control that resulted in deconsolidation during the period.

The performance of our Consolidated Funds is not necessarily consistent with, or representative of, the combined performance trends of all of our funds.

Managing Business Performance

Non‑GAAP Financial Measures

We use the following non-GAAP measures to assess and track our performance:

• Fee Related Earnings (FRE)

• Realized Income (RI)

These non‑GAAP financial measures supplement and should be considered in addition to and not in lieu of, the results of operations, which are discussed further under “—Consolidated Results of Operations” and are prepared in accordance with GAAP. For the specific components and calculations of these non-GAAP measures, as well as a reconciliation of these measures to the most comparable measure in accordance with GAAP, see Note 14, “Segment Reporting,” to our condensed consolidated financial statements included in this Quarterly Report on Form 10‑Q.

Operating Metrics

We monitor certain operating metrics that are common to the alternative asset management industry, which are discussed below.

Assets Under Management

Assets under management (“AUM”) refers to the assets we manage. We view AUM as a metric to measure our investment and fundraising performance as it reflects assets generally at fair value plus available uncalled capital. For our funds other than CLOs, our AUM equals the sum of the following:

• net asset value (“NAV”) 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).

NAV refers to the fair value of all of the assets of a fund less the liabilities of the fund.

For CLOs, our AUM is equal to initial principal amounts of notes adjusted for paydowns.

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The tables below provide rollforwards of our total AUM by segment for the three months ended September 30, 2019 and 2018 (in millions):

	Credit Group			Private Equity Group			Real Estate Group			Total AUM
Balance at 6/30/2019	$	105,505		$	24,735		$	11,868		$	142,108
Net new par/equity commitments	593			267			953			1,813
Net new debt commitments	1,704			25			—			1,729
Distributions	(1,173		)	(80		)	(331		)	(1,584		)
Change in fund value	(327		)	568			(9		)	232
Balance at 9/30/2019	$	106,302		$	25,515		$	12,481		$	144,298
Average AUM(1)	$	105,905		$	25,126		$	12,176		$	143,207

	Credit Group			Private Equity Group			Real Estate Group			Total AUM
Balance at 6/30/2018	$	86,858		$	23,602		$	10,910		$	121,370
Net new par/equity commitments	3,618			—			370			3,988
Net new debt commitments	1,904			100			—			2,004
Distributions	(1,534		)	(523		)	(866		)	(2,923		)
Change in fund value	655			(188		)	173			640
Balance at 9/30/2018	$	91,501		$	22,991		$	10,587		$	125,079
Average AUM(1)	$	89,181		$	23,298		$	10,749		$	123,228

(1) Represents the quarterly average of beginning and ending balances.

The tables below provide rollforwards of our total AUM by segment for the nine months ended September 30, 2019 and 2018 (in millions):

	Credit Group			Private Equity Group			Real Estate Group			Total AUM
Balance at 12/31/2018	$	95,836		$	23,487		$	11,340		$	130,663
Net new par/equity commitments	5,507			1,295			1,569			8,371
Net new debt commitments	8,009			25			583			8,617
Distributions	(4,895		)	(1,280		)	(1,319		)	(7,494		)
Change in fund value	1,845			1,988			308			4,141
Balance at 9/30/2019	$	106,302		$	25,515		$	12,481		$	144,298
Average AUM(1)	$	102,180		$	24,379		$	11,875		$	138,434

	Credit Group			Private Equity Group			Real Estate Group			Total AUM
Balance at 12/31/2017	$	71,732		$	24,530		$	10,229		$	106,491
Net new par/equity commitments	16,077			363			1,533			17,973
Net new debt commitments	6,649			100			—			6,749
Distributions	(4,670		)	(1,843		)	(1,397		)	(7,910		)
Change in fund value	1,713			(159		)	222			1,776
Balance at 9/30/2018	$	91,501		$	22,991		$	10,587		$	125,079
Average AUM(1)	$	81,851		$	23,857		$	10,656		$	116,364

(1) Represents the quarterly average of beginning and ending balances.

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The components of our AUM, including the portion that is FPAUM, are presented below as of September 30, 2019 and 2018 (in millions):

AUM: $144,298 AUM: $125,079

FPAUM AUM not yet earning fees Non-fee paying(1) General partner and affiliates

(1) Includes $7.6 billion and $6.7 billion of AUM of funds from which we indirectly earn management fees as of September 30, 2019 and 2018, respectively.

Please refer to “— Results of Operations by Segment” for a more detailed presentation of AUM by segment for each of the periods presented.

Fee Paying Assets Under Management

The following components generally comprise our FPAUM:

• The amount of limited partner capital commitments for certain closed-end funds within the reinvestment period in the Credit Group, certain funds in the Private Equity Group and certain private funds in the Real Estate Group;

• The amount of limited partner invested capital for the aforementioned closed-end funds beyond the reinvestment period as well as the structured assets funds in the Credit Group, certain managed accounts within their reinvestment period, European commingled funds in the Credit Group and co-invest vehicles in the Real Estate Group;

• The gross amount of aggregate collateral balance, for CLOs, at par, adjusted for defaulted or discounted collateral; and

• The portfolio value, gross asset value or NAV, adjusted in certain instances for cash or certain accrued expenses, for the remaining funds in the Credit Group, ARCC, certain managed accounts in the Credit Group and certain debt funds in the Real Estate Group.

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The tables below provide rollforwards of our total FPAUM by segment for the three months ended September 30, 2019 and 2018 (in millions):

	Credit Group			Private Equity Group			Real Estate Group			Total
FPAUM Balance at 6/30/2019	$	64,763		$	17,188		$	7,463		$	89,414
Commitments	690			161			426			1,277
Subscriptions/deployment/increase in leverage	4,769			174			275			5,218
Redemptions/distributions/decrease in leverage	(971		)	—			(234		)	(1,205		)
Change in fund value	(270		)	(4		)	(96		)	(370		)
Change in fee basis	—			(599		)	(418		)	(1,017		)
FPAUM Balance at 9/30/2019	$	68,981		16,920			$	7,416		$	93,317
Average FPAUM(1)	$	66,873		$	17,056		$	7,440		$	91,369

	Credit Group			Private Equity Group			Real Estate Group			Total
FPAUM Balance at 6/30/2018	$	53,336		$	16,589		$	6,963		$	76,888
Commitments	1,267			—			369			1,636
Subscriptions/deployment/increase in leverage	2,810			215			24			3,049
Redemptions/distributions/decrease in leverage	(1,604		)	(70		)	(460		)	(2,134		)
Change in fund value	97			(4		)	4			97
Change in fee basis	—			(106		)	(66		)	(172		)
FPAUM Balance at 9/30/2018	$	55,906		$	16,624		$	6,834		$	79,364
Average FPAUM(1)	$	54,623		$	16,608		$	6,900		$	78,131

(1) Represents the quarterly average of beginning and ending balances.

The tables below provide rollforwards of our total FPAUM by segment for the nine months ended September 30, 2019 and 2018 (in millions):

	Credit Group			Private Equity Group			Real Estate Group			Total
FPAUM Balance at 12/31/2018	$	57,847		$	17,071		$	6,952		$	81,870
Commitments	4,098			242			790			5,130
Subscriptions/deployment/increase in leverage	11,396			675			835			12,906
Redemptions/distributions/decrease in leverage	(5,426		)	(470		)	(645		)	(6,541		)
Change in fund value	1,200			1			(98		)	1,103
Change in fee basis	(134		)	(599		)	(418		)	(1,151		)
FPAUM Balance at 9/30/2019	$	68,981		$	16,920		$	7,416		$	93,317
Average FPAUM(1)	$	63,631		$	17,125		$	7,202		$	87,958

	Credit Group			Private Equity Group			Real Estate Group			Total
FPAUM Balance at 12/31/2017	$	49,450		$	16,858		$	6,189		$	72,497
Commitments	4,082			363			1,232			5,677
Subscriptions/deployment/increase in leverage	6,726			589			440			7,755
Redemptions/distributions/decrease in leverage	(4,938		)	(1,086		)	(758		)	(6,782		)
Change in fund value	593			6			—			599
Change in fee basis	(7		)	(106		)	(269		)	(382		)
FPAUM Balance at 9/30/2018	$	55,906		$	16,624		$	6,834		$	79,364
Average FPAUM(1)	$	52,559		$	16,685		$	6,684		$	75,928

(1) Represents the quarterly average of beginning and ending balances.

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Incentive Eligible Assets Under Management, Incentive Generating Assets Under Management and Available Capital

IEAUM generally represents the NAV plus uncalled equity or total assets plus uncalled debt, as applicable, of our funds from which we are entitled to receive a performance income, excluding capital committed by us and our professionals (from which we generally do not earn performance income). With respect to ARCC's AUM, only ARCC Part II Fees may be generated from IEAUM.

IGAUM generally represents the AUM of our funds that are currently generating on a realized or unrealized 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 generally do not earn performance income). ARCC is only included in IGAUM when Part II Fees are being generated.

The charts below present our IEAUM and IGAUM by segment as of September 30, 2019 and 2018 (in millions):

Credit Private Equity Real Estate

As of September 30, 2019 and 2018, our available capital, which we refer to as dry powder, was $33.8 billion and $34.4 billion, respectively, primarily attributable to our funds in the Credit Group.

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Management Fees Fund Duration

We view the duration of funds we manage as a metric to measure the stability of our future management fees. For the three months ended September 30, 2019 and 2018, 82% and 83%, respectively, of our unconsolidated management fees were attributable to funds with three or more years in duration. The charts below present the composition of our unconsolidated management fees by the initial fund duration for the three months ended September 30, 2019 and 2018:

Permanent Capital 3 to 6 years 7 to 9 years 10 or more years Differentiated Managed Accounts⁽¹⁾ Fewer Than 3 years Managed Accounts

(1) Differentiated managed accounts have been managed by the Company for longer than three years, are investing in illiquid strategies or are co-investments structured to pay management fees.

Fund Performance Metrics

Fund performance information for our investment funds considered to be “significant funds” is included throughout this discussion with analysis to facilitate an understanding of our results of operations for the periods presented. Our significant funds include those that contributed at least 1% of our total management fees for the nine months ended September 30, 2019 or represented at least 1% of the Company’s total FPAUM as of September 30, 2019, and for which we have sole discretion for investment decisions within the fund. In addition to management fees, each of our significant funds may generate performance income upon the achievement of performance hurdles. The fund performance information reflected in this discussion and analysis is not indicative of our overall performance. An investment in Ares is not an investment in any of our funds. Past performance is not indicative of future results. As with any investment there is always the potential for gains as well as the possibility of losses. There can be no assurance that any of these funds or our other existing and future funds will achieve similar returns.

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Results of Operations

Consolidated Results of Operations

We consolidate funds where we are deemed to hold a controlling financial interest. The Consolidated Funds are not necessarily the same entities in each year presented due to changes in ownership, changes in limited partners' rights, and the creation and termination of funds. The consolidation of these funds had no effect on net income attributable to us for the periods presented. The following table and discussion sets forth information regarding our consolidated results of operations for the three and nine months ended September 30, 2019 and 2018 ($ in thousands):

	Three Months Ended September 30,						Favorable (Unfavorable)					Nine Months Ended September 30,						Favorable (Unfavorable)
	2019			2018			$ Change			% Change		2019			2018			$ Change			% Change
Revenues
Management fees (includes ARCC Part I Fees of $38,786, $116,336 and $33,377, $91,660 for the three and nine months ended September 30, 2019 and 2018, respectively)	$	251,591		$	204,524		$	47,067		23	%	$	714,096		$	588,071		$	126,025		21	%
Carried interest allocation	186,803			31,902			154,901			NM		503,808			72,587			431,221			NM
Incentive fees	1,712			872			840			96	%	28,747			13,683			15,064			110	%
Principal investment income (loss)	11,389			(7,464		)	18,853			NM		45,992			(684		)	46,676			NM
Administrative, transaction and other fees	14,995			10,943			4,052			37	%	35,866			37,372			(1,506		)	(4	)%
Total revenues	466,490			240,777			225,713			94	%	1,328,509			711,029			617,480			87	%
Expenses
Compensation and benefits	166,216			145,594			(20,622		)	(14	)%	485,232			419,225			(66,007		)	(16	)%
Performance related compensation	139,216			17,606			(121,610		)	NM		388,424			30,479			(357,945		)	NM
General, administrative and other expenses	79,385			51,155			(28,230		)	(55	)%	195,988			155,523			(40,465		)	(26	)%
Expenses of Consolidated Funds	10,884			12,833			1,949			15	%	30,865			49,261			18,396			37	%
Total expenses	395,701			227,188			(168,513		)	(74	)%	1,100,509			654,488			(446,021		)	(68	)%
Other income (expense)
Net realized and unrealized gains on investments	1,522			5,542			(4,020		)	(73	)%	5,519			7,970			(2,451		)	(31	)%
Interest and dividend income	2,030			808			1,222			151	%	5,526			6,511			(985		)	(15	)%
Interest expense	(4,691		)	(4,143		)	(548		)	(13	)%	(16,073		)	(17,088		)	1,015			6	%
Other income (expense), net	(1,870		)	811			(2,681		)	NM		(1,570		)	(1,487		)	(83		)	(6	)%
Net realized and unrealized gains (losses) on investments of Consolidated Funds	(992		)	5,437			(6,429		)	NM		3,256			26,839			(23,583		)	(88	)%
Interest and other income of Consolidated Funds	107,922			93,062			14,860			16	%	303,312			250,117			53,195			21	%
Interest expense of Consolidated Funds	(71,134		)	(62,763		)	(8,371		)	(13	)%	(204,051		)	(163,942		)	(40,109		)	(24	)%
Total other income	32,787			38,754			(5,967		)	(15	)%	95,919			108,920			(13,001		)	(12	)%
Income before taxes	103,576			52,343			51,233			98	%	323,919			165,461			158,458			96	%
Income tax expense	11,701			5,131			(6,570		)	(128	)%	35,590			29,659			(5,931		)	(20	)%
Net income	91,875			47,212			44,663			95	%	288,329			135,802			152,527			112	%
Less: Net income attributable to non-controlling interests in Consolidated Funds	15,908			13,169			2,739			21	%	41,878			23,418			18,460			79	%
Less: Net income attributable to non-controlling interests in Ares Operating Group entities	42,636			18,133			24,503			135	%	136,032			67,301			68,731			102	%
Net income attributable to Ares Management Corporation	33,331			15,910			17,421			109	%	110,419			45,083			65,336			145	%
Less: Series A Preferred Stock dividends paid	5,425			5,425			—			—	%	16,275			16,275			—			—	%
Net income attributable to Ares Management Corporation Class A common stockholders	$	27,906		$	10,485		17,421			166	%	$	94,144		$	28,808		65,336			227	%

NM - Not Meaningful

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The following section discusses the period-over-period fluctuations of our condensed consolidated results of operations for the three and nine months ended September 30, 2019 compared to 2018.

Three and Nine Months Ended September 30, 2019 Compared to Three and Nine Months Ended September 30, 2018 

Revenues

Management Fees. Total management fees increased by $47.1 million, or 23%, for the three months ended September 30, 2019 compared to the three months ended September 30, 2018 and by $126.0 million, or 21%, for the nine months ended September 30, 2019 compared to the nine months ended September 30, 2018. The increases in total management fees were primarily due to the Credit Group, driven by increases in ARCC Part I Fees and by higher FPAUM from capital deployments in direct lending funds. Total management fees also increased in the Real Estate Group and Private Equity Group by having higher FPAUM from new commitments during the current year. For detail regarding the fluctuations of management fees within each of our segments see “—Results of Operations by Segment.”

Carried Interest Allocation. Carried interest allocation increased by $154.9 million to $186.8 million for the three months ended September 30, 2019 compared to the three months ended September 30, 2018 and by $431.2 million to $503.8 million for the nine months ended September 30, 2019 compared to the nine months ended September 30, 2018.

Carried interest allocation for the three and nine months ended September 30, 2019 and 2018 was principally composed of the following (in millions, unless otherwise noted):

	Three Months Ended September 30, 2019		Primary Drivers	Three Months Ended September 30, 2018			Primary Drivers
Credit funds	$	25.2	10 direct lending funds with $8.9 billion of IGAUM generating returns in excess of their hurdle rates, primarily from Ares Capital Europe III, L.P. (“ACE III”), Ares Capital Europe IV, L.P. (“ACE IV”) and Ares Private Credit Solutions, L.P. (“PCS”) that generated $5.5 million, $14.0 million and $7.2 million of carried interest allocation during the period, respectively.	$	28.3		13 direct lending funds with $14.7 billion of IGAUM generating returns in excess of their hurdle rates, primarily from ACE III, ACE IV and PCS that generated carried interest allocation during the period of $9.8 million, $4.5 million and $3.8 million, respectively.
Private equity funds	146.3		Market appreciation across several Ares Corporate Opportunities Fund V, L.P. ("ACOF V") portfolio companies; and market appreciation of Ares Corporate Opportunities Fund III, L.P.'s (“ACOF III”) investments in Floor & Decor Holdings, Inc. (“Floor & Decor”) and a professional service company resulting from a pending sale of this company.	(56.3		)	Market depreciation of ACOF III's investment in Floor & Decor; offset by market appreciation across several ACOF IV portfolio companies.
Real estate funds	15.3		Market appreciation from multiple properties within three of our U.S. real estate equity funds, Ares European Real Estate Fund IV L.P. (“EF IV”) and a certain European real estate equity fund.	59.9			Market appreciation from multiple properties within six of our U.S. real estate equity funds, EF IV and two European real estate funds.
Carried interest allocation	$	186.8		$	31.9

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	Nine Months Ended September 30, 2019		Primary Drivers	Nine Months Ended September 30, 2018			Primary Drivers
Credit funds	$	97.9	10 direct lending funds with $8.9 billion of IGAUM generating returns in excess of their hurdle rates, primarily from ACE III, ACE IV and PCS that generated $25.4 million, $33.7 million and $23.6 million of carried interest allocation during the period, respectively.	$	69.8		13 direct lending funds with $14.7 billion of IGAUM generating returns in excess of their hurdle rates, primarily from ACE III, ACE IV and PCS that generated carried interest allocation during the period of $32.6 million, $4.5 million and $14.4 million, respectively.
Private equity funds	355.5		Market appreciation of ACOF III's investments in Floor & Decor and a professional service company resulting from a pending sale of this company; increased fair value of Ares Corporate Opportunities Fund IV, L.P.'s ("ACOF IV") investment in a portfolio company resulting from a pending sale of the company; and market appreciation across several ACOF IV and ACOF V portfolio companies.	(84.0		)	Market depreciation of ACOF III's investment in Floor & Decor and a reduction in fair value in an Ares Energy Investors Fund V, L.P. (“EIF V”) portfolio company.
Real estate funds	50.4		Market appreciation from multiple properties within four of our U.S. real estate equity funds, EF IV and three European real estate equity funds.	86.8			Market appreciation from multiple properties within seven of our U.S. real estate equity funds, EF IV and two European real estate funds.
Carried interest allocation	$	503.8		$	72.6

Incentive Fees. Incentive fees increased by $15.1 million, or 110%, for the nine months ended September 30, 2019 compared to the nine months ended September 30, 2018. The increase was primarily driven by direct lending funds that did not generate incentive fees in the prior periods but generated returns in excess of hurdle rates in the current year periods. There were 20 funds with $14.0 billion of AUM and 14 funds with $10.0 billion of AUM for the 2019 and 2018 period, respectively.

Principal Investment Income (Loss). Principal investment income (loss) increased by $18.9 million to $11.4 million for the three months ended September 30, 2019 compared to the three months ended September 30, 2018 and by $46.7 million to $46.0 million for the nine months ended September 30, 2019 compared to the nine months ended September 30, 2018. The increases for the comparative periods were primarily driven by a higher fair value of our investment in ACOF III as a result of market appreciation of Floor & Decor.

Administrative, Transaction and Other Fees. Administrative fees and other fees increased by $4.1 million, or 37%, for the three months ended September 30, 2019 compared to the three months ended September 30, 2018 and decreased by $1.5 million, or 4%, for the nine months ended September 30, 2019 compared to the nine months ended September 30, 2018. The increase for the three month comparative period was primarily due to the renegotiation of an administrative fee agreement with ACF FinCo I L.P. ("ACF"). The renegotiated administration fee allowed more operating expenses to be reimbursed, while eliminating the management fee. For the third quarter of 2019, the gross administration fee for ACF increased by $1.8 million and the management fee of $0.8 million was eliminated. Additionally, there was an increase in administrative fees for ARCC as a result of additional time being spent on the fund by employees. The decrease for the nine month comparative period was primarily driven by fewer transaction-based fees based on loan originations within certain funds in our Credit Group that fluctuate periodically with the volume of syndicated loan originations and with the amount of capital available for deployment.

Expenses

Compensation and Benefits.  Compensation and benefits expenses increased by $20.6 million, or 14%, for the three months ended September 30, 2019 compared to the three months ended September 30, 2018 and by $66.0 million, or 16%, for the nine months ended September 30, 2019 compared to the nine months ended September 30, 2018. The increases were primarily driven by higher incentive compensation attributable to the operating performance of our Company, increases in ARCC Part I Fees compensation and 8% headcount growth.

Equity compensation expense also increased by $6.4 million for the nine months ended September 30, 2019 compared to the nine months ended September 30, 2018 primarily due to additional restricted units granted as part of our annual bonus program and to certain retention awards, including new restricted units granted to our Chief Executive Officer during the third quarter of 2018. Additionally, our annual equity compensation bonus program commenced in 2016 with awards scheduled to vest over a four year service period. As such, equity compensation expense for the 2019 period reflects expenses associated with four years of bonus grants, whereas equity compensation expense for the 2018 comparative period includes only three years of bonus grants.

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Performance Related Compensation.  Performance related compensation increased by $121.6 million to $139.2 million for the three months ended September 30, 2019 compared to the three months ended September 30, 2018 and by $357.9 million to $388.4 million for the nine months ended September 30, 2019 compared to the nine months ended September 30, 2018.The increases in performance related compensation are largely correlated with the respective increases in carried interest allocation and incentive fees described above.

General, Administrative and Other Expenses. General, administrative and other expenses increased by $28.2 million, or 55%, for the three months ended September 30, 2019 compared to the three months ended September 30, 2018 and by $40.5 million, or 26%, for the nine months ended September 30, 2019 compared to the nine months ended September 30, 2018. The increases were primarily due a non-cash impairment charge of $20.0 million that was recognized during the third quarter of 2019 to certain intangible assets that were recorded as part of our acquisition of the Energy Investors Funds ("EIF"). The impairment was recognized since there was a lower number of legacy EIF investors that committed to invest into the successor funds and the decision by management to no longer introduce the successor funds under the EIF trade name. As a result, these changes are expected to decrease the future expected cash flows from management fees generated by EIF's existing client relationships and decrease the royalties attributable to EIF's trade name. The increases were also driven by higher professional service fees of $4.5 million and $10.8 million for the three and nine month comparative periods, respectively, largely as a result of professional services related to due diligence, marketing and legal expenses related to the expansion of our insurance platform and to other strategic initiatives. Additionally, the increases were driven by higher placement fees of $4.1 million and $14.5 million associated with new commitments to a fund in our special opportunities strategy for the three and nine month comparative period, respectively. The prior year periods include an $11.8 million one-time reimbursement to ARCC for certain rent and utilities for the first quarter of 2018 and the years ended 2017, 2016, 2015 and 2014. Beginning in the second quarter of 2018, we began to incur certain expenses that were previously incurred by ARCC. These expenses resulted in approximately $4.4 million in recurring occupancy and marketing related expenses for the nine months ended September 30, 2019.

Expenses of the Consolidated Funds. Expenses of the Consolidated Funds decreased by $1.9 million, or 15%, for the three months ended September 30, 2019 compared to the three months ended September 30, 2018 and by $18.4 million, or 37%, for the nine months ended September 30, 2019 compared to the nine months ended September 30, 2018. The decreases were primarily driven by higher professional fees incurred during the prior year periods as a result of a greater number of CLO debt issuances during those periods. These fees were expensed in the period incurred, as CLO debt is recorded at fair value on our Condensed Consolidated Statements of Financial Condition.

Other Income (Expense)

When evaluating the changes in other income (expense), we separately analyze the other income generated by the Company from the investment returns generated by our Consolidated Funds.

Net Realized and Unrealized Gains on Investments. Net realized and unrealized gains on investments decreased by $4.0 million, or 73%, for the three months ended September 30, 2019 compared to the three months ended September 30, 2018 and by $2.5 million, or 31%, for the nine months ended September 30, 2019 compared to the nine months ended September 30, 2018. Net realized and unrealized gains on investments for the three and nine months ended September 30, 2019 were primarily due to higher net gains from our CLO securities which rebounded from market dislocation at the end of 2018 and due to net gains recognized on our foreign currency hedging instruments. Net realized and unrealized gains on investments for the three and nine months ended September 30, 2018 were primarily due to net gains that were recognized on our non-core investments.

Interest and Dividend Income. Interest and dividend income increased by $1.2 million, or 151%, for the three months ended September 30, 2019 compared to the three months ended September 30, 2018 and decreased by $1.0 million, or 15%, for the nine months ended September 30, 2019 compared to the nine months ended September 30, 2018. The increase for the three month comparative period was primarily attributable to increases in interest income received from our CLO securities and from a U.S. real estate equity fund. During the second quarter of 2018, we sold $219.3 million of our investments in our CLO securities primarily resulting in a decrease in interest income attributable to CLO securities for the comparative periods.

Interest Expense. Interest expense increased by $0.5 million, or 13%, for the three months ended September 30, 2019 compared to the three months ended September 30, 2018 and decreased by $1.0 million, or 6%, for the nine months ended September 30, 2019 compared to the nine months ended September 30, 2018. The increase for the three month comparative period was primarily due to a higher average outstanding balance of the Credit Facility in the third quarter of 2019. The decrease for the nine month comparative period was primarily driven by the pay-off of term loans that had financed certain investments in CLOs during the second quarter of 2018.

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Other Income (Expense), Net. Other income (expense), net is principally composed of transaction gains (losses) associated with currency fluctuations for our businesses domiciled outside of the U.S. and remain volatile based on the fluctuations in foreign currency exchange rates. Other expense, net for the nine months ended September 30, 2018 also included debt extinguishment costs recorded in connection with the repayment of term loans resulting from the removal of US risk retention requirements associated with our syndicated loan business.

Net Realized and Unrealized Gains (Losses) on Investments of Consolidated Funds. Net realized and unrealized gains (losses) on investments of Consolidated Funds decreased from net realized and unrealized gains on investments of Consolidated Funds of $5.4 million for three months ended September 30, 2018 to net realized and unrealized loss on investments of Consolidated Funds of $1.0 million for three months ended September 30, 2019. Net realized and unrealized gains on investments of Consolidated Funds decreased by $23.6 million, or 88%, for the nine months ended September 30, 2019 compared to the nine months ended September 30, 2018. The decreases for the comparative periods were primarily due to lower market prices for certain investments in our Asian private equity fund during the current year periods. The nine months ended September 30, 2019 also included net gains attributable to a European direct lending fund driven by a change in market value of the fund's sole remaining investment and to net gains from increased market value of certain investments in a commercial finance fund.

Interest and Other Income of the Consolidated Funds. Interest and other income of the Consolidated Funds increased by $14.9 million, or 16%, for the three months ended September 30, 2019 compared to the three months ended September 30, 2018 and by $53.2 million, or 21%, for the nine months ended September 30, 2019 compared to the nine months ended September 30, 2018. The increases were primarily driven by additional interest paying assets from four CLOs that we began consolidating subsequent to September 30, 2018 resulting in an increase in interest income for the comparative periods.

Interest Expense of the Consolidated Funds. Interest expense of the Consolidated Funds increased by $8.4 million, or 13%, for the three months ended September 30, 2019 compared to the three months ended September 30, 2018 and by $40.1 million, or 24%, for the nine months ended September 30, 2019 compared to the nine months ended September 30, 2018. The increases were primarily the result of interest expense from the debt issued for four CLOs we began consolidating subsequent to September 30, 2018 resulting in an increase in interest expense for the comparative periods.

Income Tax Expense. Income tax expense increased by $6.6 million, or 128%, for the three months ended September 30, 2019 compared to the three months ended September 30, 2018 and by $5.9 million, or 20%, for the nine months ended September 30, 2019 compared to the nine months ended September 30, 2018. The increases were attributable to an increase in income allocable to Ares Management Corporation that also increased due to higher controlling ownership. Income tax expense for the nine months ended September 30, 2018 also included one-time deferred tax items from the embedded net unrealized gains of both carried interest and the investment portfolio that were not subject to corporate taxes prior to our election to be taxed as a corporation for U.S. federal income tax purposes during 2018.

Non-Controlling Interests.  Net income attributable to non-controlling interests in Ares Operating Group entities represents results attributable to the owners of AOG Units that are not held by Ares Management Corporation and is allocated based on the weighted average daily ownership of the AOG unitholders. The weighted average daily ownership for non-controlling AOG unitholders decreased from 54.8% and 56.6% for the three and nine months ended September 30, 2018 to 51.8% and 52.5% for the three and nine months ended September 30, 2019. The decreases in non–controlling ownership were primarily driven by our Class A common stock offering during the three months ended September 30, 2019 and by stock option exercises and vesting of restricted stock awards during the nine months ended September 30, 2019.

Net income attributable to non-controlling interests in Ares Operating Group entities increased by $24.5 million, or 135%, for the three months ended September 30, 2019 compared to the three months ended September 30, 2018 and by $68.7 million, or 102%, for the nine months ended September 30, 2019 compared to the nine months ended September 30, 2018. The increases were primarily a result of net income increasing at a greater rate than the decrease in non-controlling interests in Ares Operating Group entities.

Segment Analysis

For segment reporting purposes, revenues and expenses are presented on a basis before giving effect to the results of our Consolidated Funds. As a result, segment revenues from management fees, performance income and investment income are different than those presented on a consolidated basis in accordance with GAAP because revenues recognized from Consolidated Funds are eliminated in consolidation. Furthermore, expenses and the effects of other income (expense) are different than related amounts presented on a consolidated basis in accordance with GAAP due to the exclusion of the results of Consolidated Funds.

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Discussed below are our results of operations for each of our three reportable segments. In addition to the three segments, we separately discuss the OMG. This information is used by our management to make operating decisions, assess performance and allocate resources.

FRE, RI and Other Measures

FRE and RI are non‑GAAP financial measures our management uses when making resource deployment decisions and in assessing performance of our segments. For definitions of each of these non-GAAP financial measures see the Glossary. The following table sets forth FRE and RI by segment for the three and nine months ended September 30, 2019 and 2018 ($ in thousands):

	Three Months Ended						Favorable (Unfavorable)					Nine Months Ended						Favorable (Unfavorable)
	September 30,											September 30,
	2019			2018			$ Change			% Change		2019			2018			$ Change			% Change
Fee Related Earnings:
Credit Group	$	103,062		$	82,910		$	20,152		24	%	$	293,181		$	239,018		$	54,163		23	%
Private Equity Group	29,926			25,184			4,742			19	%	82,028			78,979			3,049			4	%
Real Estate Group	9,152			6,382			2,770			43	%	22,386			17,473			4,913			28	%
Operations Management Group	(55,466		)	(50,059		)	(5,407		)	(11	)%	(162,627		)	(148,558		)	(14,069		)	(9	)%
Fee Related Earnings	$	86,674		$	64,417		22,257			35	%	$	234,968		$	186,912		48,056			26	%
Realized Income:
Credit Group	$	108,986		$	84,666		$	24,320		29	%	$	319,039		$	260,173		$	58,866		23	%
Private Equity Group	28,780			43,427			(14,647		)	(34	)%	104,348			124,162			(19,814		)	(16	)%
Real Estate Group	16,653			13,542			3,111			23	%	37,933			33,690			4,243			13	%
Operations Management Group	(56,012		)	(50,217		)	(5,795		)	(12	)%	(163,970		)	(146,480		)	(17,490		)	(12	)%
Realized Income	$	98,407		$	91,418		6,989			8	%	$	297,350		$	271,545		25,805			10	%

Reconciliation of Certain Non-GAAP Measures to Consolidated GAAP Financial Measures

Income before provision for income taxes is the GAAP financial measure most comparable to RI and FRE. The following table presents the reconciliation of income before taxes as reported in the Condensed Consolidated Statements of Operations to RI and FRE (in thousands):

	For the Three Months Ended September 30,						For the Nine Months Ended September 30,
	2019			2018			2019			2018
Income before taxes	$	103,576		$	52,343		$	323,919		$	165,461
Adjustments:
Depreciation and amortization expense	24,564			5,347			35,609			20,234
Equity compensation expense	22,393			23,940			73,974			67,534
Acquisition and merger-related expense	4,777			253			10,757			(19		)
Unamortized placement fees	4,366			6,194			17,319			9,710
Other (income) expense, net	(461		)	3			(460		)	13,564
Net expense of non-controlling interests in consolidated subsidiaries	799			819			2,608			2,178
Income before taxes of non-controlling interests in Consolidated Funds, net of eliminations	(16,054		)	(13,182		)	(41,178		)	(23,500		)
Unconsolidated performance (income) loss - unrealized	(181,174		)	37,999			(426,411		)	127,224
Unconsolidated performance related compensation - unrealized	137,174			(42,417		)	311,936			(132,294		)
Unconsolidated net investment (income) loss - unrealized	(1,553		)	20,119			(10,723		)	21,453
Realized Income	98,407			91,418			297,350			271,545
Unconsolidated performance income - realized	(7,314		)	(71,568		)	(111,881		)	(217,283		)
Unconsolidated performance related compensation - realized	2,042			60,023			76,488			162,773
Unconsolidated net investment income - realized	(6,461		)	(15,456		)	(26,989		)	(30,123		)
Fee Related Earnings	$	86,674		$	64,417		$	234,968		$	186,912

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Results of Operations by Segment

Credit Group—Three and Nine Months Ended September 30, 2019 Compared to Three and Nine Months Ended September 30, 2018

Fee Related Earnings:

The following table presents the components of the Credit Group's FRE and the changes for the comparative periods ($ in thousands):

	Three Months Ended September 30,						Favorable (Unfavorable)					Nine Months Ended September 30,						Favorable (Unfavorable)
	2019			2018			$ Change			% Change		2019			2018			$ Change			% Change
Management fees (includes ARCC Part I Fees of $38,786, $116,336 and $33,377, $91,660 for the three and nine months ended September 30, 2019 and 2018, respectively)	$	178,447		$	145,414		$	33,033		23	%	$	513,760		$	413,028		$	100,732		24	%
Other fees	5,174			3,656			1,518			42	%	12,179			16,263			(4,084		)	(25	)%
Compensation and benefits	(67,770		)	(55,239		)	(12,531		)	(23	)%	(193,083		)	(158,204		)	(34,879		)	(22	)%
General, administrative and other expenses	(12,789		)	(10,921		)	(1,868		)	(17	)%	(39,675		)	(32,069		)	(7,606		)	(24	)%
Fee Related Earnings	$	103,062		$	82,910		20,152			24	%	$	293,181		$	239,018		54,163			23	%

Management Fees

The chart below present Credit Group management fees and effective management fee rates for the three and nine months ended September 30, 2019 ($ in millions):

The increases in management fees were primarily driven by the following: (i) higher ARCC Part I Fees primarily due to greater interest income from an increase in the average size of ARCC's portfolio and due to increases in capital structuring service fees, which were primarily the result of a higher number of transactions with larger portfolio companies in larger issuances; and (ii) additional capital deployment within funds in existence in both periods. CLOs accounted for approximately 9% of the Credit

67

Group's management fees for the three and nine months ended September 30, 2019 and for approximately 10% of the Credit Group's management fees for the three and nine months ended September 30, 2018.

The increases in the effective management fee rate were primarily due to new direct lending funds with higher effective fee rates for the three and nine months ended September 30, 2019 compared to the three and nine months ended September 30, 2018.

Other Fees. Other fees increased by $1.5 million, or 42%, for the three months ended September 30, 2019 compared to the three months ended September 30, 2018 and decreased by $4.1 million, or 25%, for the nine months ended September 30, 2019 compared to the nine months ended September 30, 2018. The increase for the three month comparative period was primarily driven by higher volume of transaction-based fees based on loan originations within certain funds in our Credit Group and an increase in administrative fees that are based on invested capital for certain funds in our Credit Group. The decrease for the nine month comparative period was primarily driven by fewer transaction-based fees based on loan originations within certain funds in our Credit Group that fluctuate periodically with the volume of syndicated loan originations and with the amount of capital available for deployment.

Compensation and Benefits. Compensation and benefits expenses increased by $12.5 million, or 23%, for the three months ended September 30, 2019 compared to the three months ended September 30, 2018 and by $34.9 million, or 22%, for the nine months ended September 30, 2019 compared to the nine months ended September 30, 2018. The increases were primarily driven by higher incentive compensation attributable with improving operating performance for the comparative periods, by 10% headcount growth and by increases in ARCC Part I Fees compensation of $3.1 million and $14.8 million for the three and nine month comparative periods, respectively. We continue to hire investment professionals to support our growing U.S. and European direct lending AUM, which increased by 19% for the comparative periods.

General, Administrative and Other Expenses.  General, administrative and other expenses increased by $1.9 million, or 17%, for the three months ended September 30, 2019 compared to the three months ended September 30, 2018 and by $7.6 million, or 24%, for the nine months ended September 30, 2019 compared to the nine months ended September 30, 2018 primarily driven by higher occupancy and overhead costs from headcount growth. Beginning in the second quarter of 2018, we also began to incur certain expenses that were previously incurred by ARCC. These expenses resulted in approximately $0.9 million and $4.4 million in recurring occupancy and marketing related expenses for the three and nine months ended September 30, 2019, respectively. Additionally, we continue to invest in expanding our retail distribution footprint through a joint venture, which pays a third party broker for retail distribution services and resulted in higher fees of $0.6 million and $1.6 million for the three and nine month comparative periods, respectively.

Realized Income:

The following table presents the components of the Credit Group's RI and the changes for the comparative periods ($ in thousands):

	Three Months Ended September 30,						Favorable (Unfavorable)					Nine Months Ended September 30,						Favorable (Unfavorable)
	2019			2018			$ Change			% Change		2019			2018			$ Change			% Change
Fee Related Earnings	$	103,062		$	82,910		$	20,152		24	%	$	293,181		$	239,018		$	54,163		23	%
Performance income-realized	1,037			1,729			(692		)	(40	)%	38,921			48,472			(9,551		)	(20	)%
Performance related compensation-realized	(630		)	(1,113		)	483			43	%	(22,857		)	(27,778		)	4,921			18	%
Realized net performance income	407			616			(209		)	(34	)%	16,064			20,694			(4,630		)	(22	)%
Investment income-realized	114			1,063			(949		)	(89	)%	662			2,429			(1,767		)	(73	)%
Interest and other investment income-realized	6,964			1,604			5,360			NM		14,500			7,828			6,672			85	%
Interest expense	(1,561		)	(1,527		)	(34		)	(2	)%	(5,368		)	(9,796		)	4,428			45	%
Realized net investment income	5,517			1,140			4,377			NM		9,794			461			9,333			NM
Realized Income	$	108,986		$	84,666		24,320			29	%	$	319,039		$	260,173		58,866			23	%

NM - Not meaningful

Realized income for the periods presented was composed of FRE, as explained above, realized net performance income and realized net investment income for the respective periods.

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Realized net performance income decreased by $4.6 million, or 22%, for the nine months ended September 30, 2019 compared to the nine months ended September 30, 2018. Realized net performance income for the nine months ended September 30, 2019 and September 30, 2018 was principally composed of incentive fees from certain direct lending funds that are generating returns in excess of their hurdle rate while the nine months ended September 30, 2018 also included tax distributions received from ACE III and certain other direct lending funds.

Realized net investment income increased by $4.4 million to $5.5 million for the three months ended September 30, 2019 compared to the three months ended September 30, 2018, and by $9.3 million for the nine months ended September 30, 2019 compared to the nine months ended September 30, 2018. The increases were primarily driven by interest and dividend income on our syndicated loan investments and to a certain U.S. direct lending fund. The increase for the nine month comparative period was further driven by lower interest expense for the comparative periods as a result of decreases in the cost basis of investments on which interest expense is allocated.

Credit Group— Carried Interest and Incentive Fees

The following table presents the accrued carried interest and incentive fee receivables for the Credit Group (in thousands):

	As of September 30,		As of December 31,
	2019		2018
ACE III	$	81,361	$	63,338
ACE IV	41,081		8,517
CSF III	12,837		9,962
ARCC	—		50,246
PCS	44,931		21,009
Other credit funds	69,899		57,583
Total Credit Group	$	250,109	$	210,655

The change in accrued carried interest and incentive fee receivable for the comparative periods was primarily composed of the following: (i) a $91.7 million increase in unrealized carried interest allocation for nine months ended September 30, 2019; (ii) offset by $50.2 million of incentive fees realized in 2018 and not received until the first quarter of 2019; and (iii) offset by foreign currency translation and other adjustments. The following tables presents the components of incentive fees and carried interest allocation for the Credit Group for the three and nine months ended September 30, 2019 and 2018 (in thousands):

	Three Months Ended September 30, 2019								Three Months Ended September 30, 2018
	Realized		Unrealized			Net			Realized		Unrealized		Net
ACE III	$	—	$	5,482		$	5,482		$	—	$	9,777	$	9,777
ACE IV	—		14,030			14,030			—		4,456		4,456
CSF III	—		(219		)	(219		)	—		1,966		1,966
PCS	—		7,166			7,166			—		3,773		3,773
Other credit funds	1,037		(1,282		)	(245		)	1,729		6,895		8,624
Total Credit Group	$	1,037	$	25,177		$	26,214		$	1,729	$	26,867	$	28,596

	Nine Months Ended September 30, 2019						Nine Months Ended September 30, 2018
	Realized		Unrealized		Net		Realized		Unrealized		Net
ACE III	$	4,706	$	20,738	$	25,444	$	15,361	$	17,246	$	32,607
ACE IV	—		33,731		33,731		—		4,456		4,456
CSF III	—		2,876		2,876		—		1,691		1,691
PCS	—		23,565		23,565		—		14,447		14,447
Other credit funds	34,215		10,803		45,018		33,111		551		33,662
Total Credit Group	$	38,921	$	91,713	$	130,634	$	48,472	$	38,391	$	86,863

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Credit Group—Assets Under Management

The tables below provide rollforwards of AUM for the Credit Group for the three months ended September 30, 2019 and 2018 (in millions):

	Syndicated Loans			High Yield			Credit Opportunities			Alternative Credit			U.S. Direct Lending			European Direct Lending			Total Credit Group
Balance at 6/30/2019	$	20,924		$	3,494		$	2,497		$	7,339		$	46,292		$	24,959		$	105,505
Net new par/equity commitments	95			49			4			81			146			218			593
Net new debt commitments	472			—			—			—			1,232			—			1,704
Distributions	(127		)	(201		)	(14		)	(88		)	(564		)	(179		)	(1,173		)
Change in fund value	(89		)	70			25			(61		)	297			(569		)	(327		)
Balance at 9/30/2019	$	21,275		$	3,412		$	2,512		$	7,271		$	47,403		$	24,429		$	106,302
Average AUM(1)	$	21,100		$	3,453		$	2,505		$	7,305		$	46,848		$	24,694		$	105,905

	Syndicated Loans			High Yield			Credit Opportunities			Alternative Credit			U.S. Direct Lending			European Direct Lending			Total Credit Group
Balance at 6/30/2018	$	17,627		$	4,381		$	2,931		$	5,753		$	36,838		$	19,328		$	86,858
Net new par/equity commitments	65			68			1			(626		)	2,284			1,826			3,618
Net new debt commitments	1,082			—			—			—			532			290			1,904
Distributions	(126		)	(76		)	(132		)	(75		)	(775		)	(350		)	(1,534		)
Change in fund value	39			76			42			46			352			100			655
Balance at 9/30/2018	$	18,687		$	4,449		$	2,842		$	5,098		$	39,231		$	21,194		$	91,501
Average AUM(1)	$	18,157		$	4,415		$	2,887		$	5,426		$	38,035		$	20,261		$	89,181

(1) Represents the quarterly average of beginning and ending balances.

The tables below provide rollforwards of AUM for the Credit Group for the nine months ended September 30, 2019 and 2018 (in millions):

	Syndicated Loans			High Yield			Credit Opportunities			Alternative Credit			U.S. Direct Lending			European Direct Lending			Total Credit Group
Balance at 12/31/2018	$	18,880		$	4,024		$	2,761		$	5,448		$	40,668		$	24,055		$	95,836
Net new par/equity commitments	929			124			(70		)	2,047			1,736			741			5,507
Net new debt commitments	2,435			—			—			75			5,160			339			8,009
Distributions	(1,093		)	(1,180		)	(385		)	(414		)	(1,307		)	(516		)	(4,895		)
Change in fund value	124			444			206			115			1,146			(190		)	1,845
Balance at 9/30/2019	$	21,275		$	3,412		$	2,512		$	7,271		$	47,403		$	24,429		$	106,302
Average AUM(1)	$	20,580		$	3,794		$	2,558		$	6,659		$	44,090		$	24,499		$	102,180

	Syndicated Loans			High Yield			Credit Opportunities			Alternative Credit			U.S. Direct Lending			European Direct Lending			Total Credit Group
Balance at 12/31/2017	$	16,530		$	4,630		$	3,333		$	4,791		$	30,640		$	11,808		$	71,732
Net new par/equity commitments	195			268			40			348			6,065			9,161			16,077
Net new debt commitments	2,656			—			—			—			3,457			536			6,649
Distributions	(706		)	(530		)	(604		)	(152		)	(2,105		)	(573		)	(4,670		)
Change in fund value	12			81			73			111			1,174			262			1,713
Balance at 9/30/2018	$	18,687		$	4,449		$	2,842		$	5,098		$	39,231		$	21,194		$	91,501
Average AUM(1)	$	17,564		$	4,511		$	3,067		$	5,137		$	35,317		$	16,255		$	81,851

(1) Represents the quarterly average of beginning and ending balances.

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Credit Group—Fee Paying AUM

The tables below provide rollforwards of fee paying AUM for the Credit Group for the three months ended September 30, 2019 and 2018 (in millions):

	Syndicated Loans			High Yield			Credit Opportunities			Alternative Credit			U.S. Direct Lending			European Direct Lending			Total Credit Group
FPAUM Balance at 6/30/2019	$	20,195		$	3,496		$	2,092		$	3,828		$	24,365		$	10,787		$	64,763
Commitments	551			46			3			80			10			—			690
Subscriptions/deployment/increase in leverage	338			3			8			274			2,711			1,435			4,769
Redemptions/distributions/decrease in leverage	(115		)	(110		)	(30		)	(131		)	(418		)	(167		)	(971		)
Change in fund value	(119		)	(21		)	25			(79		)	155			(231		)	(270		)
FPAUM Balance at 9/30/2019	$	20,850		$	3,414		$	2,098		$	3,972		$	26,823		$	11,824		$	68,981
Average FPAUM(1)	$	20,523		$	3,455		$	2,095		$	3,900		$	25,594		$	11,306		$	66,873

	Syndicated Loans			High Yield			Credit Opportunities			Alternative Credit			U.S. Direct Lending			European Direct Lending			Total Credit Group
FPAUM Balance at 6/30/2018	$	17,144		$	4,380		$	2,369		$	3,432		$	18,633		$	7,378		$	53,336
Commitments	1,177			68			1			—			21			—			1,267
Subscriptions/deployment/increase in leverage	—			—			16			283			739			1,772			2,810
Redemptions/distributions/decrease in leverage	(121		)	(76		)	(55		)	(175		)	(615		)	(562		)	(1,604		)
Change in fund value	51			76			38			35			(162		)	59			97
FPAUM Balance at 9/30/2018	$	18,251		$	4,448		$	2,369		$	3,575		$	18,616		$	8,647		$	55,906
Average FPAUM(1)	$	17,698		$	4,414		$	2,369		$	3,504		$	18,625		$	8,013		$	54,623

(1) Represents the quarterly average of beginning and ending balances.

The tables below provide rollforwards of fee paying AUM for the Credit Group for the nine months ended September 30, 2019 and 2018 (in millions):

	Syndicated Loans			High Yield			Credit Opportunities			Alternative Credit			U.S. Direct Lending			European Direct Lending			Total Credit Group
FPAUM Balance at 12/31/2018	$	18,328		$	4,025		$	2,196		$	2,826		$	21,657		$	8,815		$	57,847
Commitments	3,179			121			105			663			30			—			4,098
Subscriptions/deployment/increase in leverage	354			3			31			889			6,158			3,961			11,396
Redemptions/distributions/decrease in leverage	(1,014		)	(1,088		)	(433		)	(449		)	(1,656		)	(786		)	(5,426		)
Change in fund value	3			353			199			43			634			(32		)	1,200
Change in fee basis	—			—			—			—			—			(134		)	(134		)
FPAUM Balance at 9/30/2019	$	20,850		$	3,414		$	2,098		$	3,972		$	26,823		$	11,824		$	68,981
Average FPAUM(1)	$	19,760		$	3,796		$	2,112		$	3,454		$	24,132		$	10,377		$	63,631

	Syndicated Loans			High Yield			Credit Opportunities			Alternative Credit			U.S. Direct Lending			European Direct Lending			Total Credit Group
FPAUM Balance at 12/31/2017	$	15,251		$	4,629		$	2,809		$	3,434		$	16,869		$	6,458		$	49,450
Commitments	3,602			256			4			95			95			30			4,082
Subscriptions/deployment/increase in leverage	—			12			41			432			3,113			3,128			6,726
Redemptions/distributions/decrease in leverage	(687		)	(527		)	(554		)	(464		)	(1,751		)	(955		)	(4,938		)
Change in fund value	89			81			69			78			290			(14		)	593
Change in fee basis	(4		)	(3		)	—			—			—			—			(7		)
FPAUM Balance at 9/30/2018	$	18,251		$	4,448		$	2,369		$	3,575		$	18,616		$	8,647		$	55,906
Average FPAUM(1)	$	16,560		$	4,509		$	2,542		$	3,489		$	18,069		$	7,390		$	52,559

(1) Represents the quarterly average of beginning and ending balances.

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The components of our AUM, including the portion that is FPAUM, for the Credit Group are presented below as of September 30, 2019 and 2018 (in millions):

AUM: $106,302 AUM: $91,501

FPAUM AUM not yet earning fees Non-fee paying(1) General partner and affiliates

(1) Includes $7.6 billion and $6.7 billion of AUM of funds for which we indirectly earn management fees as of September 30, 2019 and 2018, respectively.

Credit Group—Fund Performance Metrics as of September 30, 2019

The Credit Group managed 173 funds and accounts as of September 30, 2019. ARCC contributed approximately 51% of the Credit Group’s total management fees for the nine months ended September 30, 2019. In addition to ARCC, five significant funds, ACE III, ACE IV, PCS, Ares Credit Strategies Fund III L.P. (“CSF III”) and Ares Senior Direct Lending Fund L.P. ("SDL"), contributed approximately 16% of the Credit Group’s management fees for the nine months ended September 30, 2019. ACE III and ACE IV focus on direct lending to European middle market companies, and PCS targets junior capital needs of upper middle market companies in North America. CSF III focuses on European and U.S. direct lending strategies. SDL focuses on investing predominantly in directly originated senior secured loans in North America.

We do not present fund performance metrics for significant funds with less than two years of investment performance, which begins from the date of the fund's first investment, except for those significant funds that 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) such time that the fund has invested at least 50% of its capital. The following table presents the performance data for our significant non-drawdown fund in the Credit Group as of September 30, 2019 ($ in millions):

				Returns(%)(1)
	Year of Inception	AUM		Current Quarter		Year-To-Date		Since Inception(2)		Primary Investment Strategy
Fund				Gross	Net	Gross	Net	Gross	Net
ARCC(3)	2004	$	16,977	N/A	2.4	N/A	8.4	N/A	11.8	U.S. Direct Lending

(1) Returns are time-weighted rates of return and include the reinvestment of income and other earnings from securities or other investments and reflect the deduction of all trading expenses.

(2) Since inception returns are annualized.

(3) Net returns are calculated using the fund's NAV and assume dividends are reinvested at the closest quarter-end NAV to the relevant quarterly ex-dividend dates. Additional information related to ARCC can be found in its financial statements filed with the SEC, which are not part of this report.

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The following table presents the performance data of our significant drawdown funds as of September 30, 2019 ($ in millions):

	Year of Inception	AUM		Original Capital Commitments		Cumulative Invested Capital		Realized Proceeds(1)		Unrealized Value(2)		Total Value		MoIC		IRR(%)		Primary Investment Strategy
Fund														Gross(3)	Net(4)	Gross(5)	Net(6)
CSF III	2010	$	1,152	$	1,135	$	1,209	$	617	$	1,128	$	1,745	1.5x	1.4x	9.1	7.8	European & U.S. Direct Lending
ACE III(7)	2015	4,859		2,822		2,428		535		2,501		3,036		1.3x	1.2x	13.7	10.1	European Direct Lending
PCS	2017	3,592		3,365		1,678		130		1,776		1,906		1.2x	1.1x	13.6	9.5	U.S. Direct Lending
ACE IV Unlevered(8)	2018	8,745		2,851		1,190		20		1,234		1,254		1.1x	1.1x	13.3	9.7	European Direct Lending
ACE IV Levered(8)				4,819		2,007		50		2,127		2,177		1.1x	1.1x	20.3	15.1
SDL Unlevered(9)	2018	4,202		922		170		3		175		178		1.1x	1.0x	N/A	N/A	U.S. Direct Lending
SDL Levered(9)				2,045		377		7		398		405		1.1x	1.1x	N/A	N/A

(1) 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.

(2) 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.

(3) 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 carried interest. The gross MoIC is before giving effect to management fees, carried interest, other expenses and taxes, as applicable.

(4) 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 carried interest. 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 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 carried interest. The cash flow dates used in the gross IRR calculation are based on the actual dates of the cash flows. The gross IRRs are calculated before giving effect to management fees, carried interest, other expenses and taxes, as applicable.

(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 which does not pay management fees or carried interest. 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, carried interest, 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.

(7) ACE III is made up of two feeder funds, one denominated in U.S. dollars and one denominated in Euros. The gross and net IRR and 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 15.1% and 11.4%, respectively. The gross and net MoIC for the U.S. dollar denominated feeder fund are 1.4x and 1.3x, respectively. Original capital commitments are converted to U.S. dollars at the prevailing exchange rate at the time of the fund's closing. All other values for ACE III are for the combined fund and are converted to U.S. dollars at the prevailing quarter-end exchange rate.

(8) ACE IV is made up of four parallel funds, two denominated in Euros and two denominated in pound sterling: ACE IV (E) Unlevered, ACE IV (G) Unlevered, ACE IV (E) Levered, and ACE IV (G) Levered. The gross and net IRR and 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 IRR for ACE IV (G) Unlevered are 16.6% and 11.0%, respectively. The gross and net MoIC for ACE IV (G) Unlevered are 1.1x and 1.1.x, respectively. The gross and net IRR for ACE IV (G) Levered are 22.0% and 15.7%, 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.

(9) Given the limited amount of time that has elapsed from the date of the first capital call, gross and net fund-level IRRs for SDL Unlevered and SDL Levered have been omitted as such information would not currently be meaningful for investors.

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Private Equity Group—Three and Nine Months Ended September 30, 2019 Compared to Three and Nine Months Ended September 30, 2018

Fee Related Earnings:

The following table presents the components of the Private Equity Group's FRE and the changes for the comparative periods ($ in thousands):

	Three Months Ended September 30,						Favorable (Unfavorable)					Nine Months Ended September 30,						Favorable (Unfavorable)
	2019			2018			$ Change			% Change		2019			2018			$ Change			% Change
Management fees	$	54,543		$	48,287		$	6,256		13	%	$	158,101		$	147,492		$	10,609		7	%
Other fees	141			206			(65		)	(32	)%	141			883			(742		)	(84	)%
Compensation and benefits	(19,226		)	(17,443		)	(1,783		)	(10	)%	(61,713		)	(55,314		)	(6,399		)	(12	)%
General, administrative and other expenses	(5,532		)	(5,866		)	334			6	%	(14,501		)	(14,082		)	(419		)	(3	)%
Fee Related Earnings	$	29,926		$	25,184		4,742			19	%	$	82,028		$	78,979		3,049			4	%

Management Fees

The chart below present Private Equity Group management fees and effective management fee rates for the three and nine months ended September 30, 2019 and 2018 ($ in millions):

Our first energy opportunities fund, which launched in the fourth quarter of 2018, generated management fees of $4.8 million and $10.0 million for the three and nine months ended September 30, 2019, respectively, of which $1.5 million and $0.5 million was attributable to one-time catch-up fees for the three and nine month comparative periods, respectively.

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Compensation and Benefits. Compensation and benefits expenses increased by $1.8 million, or 10%, for the three months ended September 30, 2019 compared to the three months ended September 30, 2018 and by $6.4 million, or 12%, for the nine months ended September 30, 2019 compared to the nine months ended September 30, 2018. The increases were primarily driven by higher incentive compensation attributable with improving operating performance and an increase in headcount of 14% for the comparative periods.

Realized Income:

The following table presents the components of the Private Equity Group's RI and the changes for the comparative periods ($ in thousands):

	Three Months Ended September 30,						Favorable (Unfavorable)					Nine Months Ended September 30,						Favorable (Unfavorable)
	2019			2018			$ Change			% Change		2019			2018			$ Change			% Change
Fee Related Earnings	$	29,926		$	25,184		$	4,742		19	%	$	82,028		$	78,979		$	3,049		4	%
Performance income-realized	—			52,729			(52,729		)	(100	)%	62,492			137,542			(75,050		)	(55	)%
Performance related compensation-realized	—			(42,045		)	42,045			100	%	(49,993		)	(109,916		)	59,923			55	%
Realized net performance income	—			10,684			(10,684		)	(100	)%	12,499			27,626			(15,127		)	(55	)%
Investment income-realized	47			8,104			(8,057		)	(99	)%	12,013			17,791			(5,778		)	(32	)%
Interest and other investment income-realized	435			1,032			(597		)	(58	)%	4,047			4,011			36			1	%
Interest expense	(1,628		)	(1,577		)	(51		)	(3	)%	(6,239		)	(4,245		)	(1,994		)	(47	)%
Realized net investment income (loss)	(1,146		)	7,559			(8,705		)	NM		9,821			17,557			(7,736		)	(44	)%
Realized Income	$	28,780		$	43,427		(14,647		)	(34	)%	$	104,348		$	124,162		(19,814		)	(16	)%

NM - Not meaningful

Realized income for the periods presented was composed of FRE, as explained above, realized net performance income and realized net investment income for the respective periods.

Realized net performance income and realized net investment income for the nine months ended September 30, 2019 were primarily attributable to realizations from ACOF III's partial sales of its positions in Floor & Decor and a real estate development portfolio company and to a dividend from an ACOF III professional service portfolio company.

Realized net performance income and realized net investment income for the three and nine months ended September 30, 2018 were primarily attributable to realizations from the partial monetization of multiple investments held within ACOF III.

Private Equity Group—Carried Interest

The following table presents the accrued carried interest for the Private Equity Group (in thousands):

	As of September 30,		As of December 31,
	2019		2018
ACOF III	$	380,164	$	316,377
ACOF IV	285,547		183,595
ACOF V	85,774		—
EIF V	14,573		—
First flagship energy opportunities fund	25,996		—
Other funds	7,697		6,900
Total Private Equity Group	$	799,751	$	506,872

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The following table presents the components of carried interest allocation for the Private Equity Group for the three and nine months ended September 30, 2019 and 2018 (in thousands):

	Three Months Ended September 30, 2019								Three Months Ended September 30, 2018
	Realized		Unrealized			Net			Realized		Unrealized			Net
ACOF III	$	—	$	45,693		$	45,693		$	52,729	$	(145,262	)	$	(92,533	)
ACOF IV	—		(1,746		)	(1,746		)	—		35,507			35,507
ACOF V	—		85,774			85,774			—		—			—
EIF V	—		(1,121		)	(1,121		)	—		—			—
First flagship energy opportunities fund	—		14,963			14,963			—		—			—
Other funds	—		2,780			2,780			—		731			731
Total Private Equity Group	$	—	$	146,343		$	146,343		$	52,729	$	(109,024	)	$	(56,295	)

	Nine Months Ended September 30, 2019								Nine Months Ended September 30, 2018
	Realized			Unrealized		Net			Realized		Unrealized			Net
ACOF III	$	64,665		$	63,787	$	128,452		$	135,938	$	(204,846	)	$	(68,908	)
ACOF IV	—			101,952		101,952			1,604		2,357			3,961
ACOF V	—			85,774		85,774			—		—			—
EIF V	—			14,573		14,573			—		(16,215		)	(16,215		)
First flagship energy opportunities fund	—			25,996		25,996			—		—			—
Other funds	(2,173		)	877		(1,296		)	—		(2,859		)	(2,859		)
Total Private Equity Group	$	62,492		$	292,959	$	355,451		$	137,542	$	(221,563	)	$	(84,021	)

Private Equity Group—Assets Under Management

The tables below provide rollforwards of AUM for the Private Equity Group for the three months ended September 30, 2019 and 2018 (in millions):

	Corporate Private Equity			Infrastructure & Power			Special Opportunities		Energy Opportunities		Total Private Equity Group
Balance at 6/30/2019	$	17,421		$	3,557		$	2,872	$	885	$	24,735
Net new equity commitments	100			—			4		163		267
Net new debt commitments	—			—			25		—		25
Distributions	(38		)	(42		)	—		—		(80		)
Change in fund value	466			3			23		76		568
Balance at 9/30/2019	$	17,949		$	3,518		$	2,924	$	1,124	$	25,515
Average AUM(1)	$	17,685		$	3,538		$	2,898	$	1,005	$	25,126

	Corporate Private Equity			Infrastructure & Power			Special Opportunities			Total Private Equity Group
Balance at 6/30/2018	$	18,086		$	3,983		$	1,533		$	23,602
Net new debt commitments	—			—			100			100
Distributions	(312		)	(204		)	(7		)	(523		)
Change in fund value	(291		)	75			28			(188		)
Balance at 9/30/2018	$	17,483		$	3,854		$	1,654		$	22,991
Average AUM(1)	$	17,785		$	3,919		$	1,594		$	23,298

(1) Represents the quarterly average of beginning and ending balances.

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The tables below provide rollforwards of AUM for the Private Equity Group for the nine months ended September 30, 2019 and 2018 (in millions):

	Corporate Private Equity			Infrastructure & Power			Special Opportunities			Energy Opportunities			Total Private Equity Group
Balance at 12/31/2018	$	17,159		$	3,842		$	1,733		$	753		$	23,487
Net new equity commitments	(25		)	—			1,076			244			1,295
Net new debt commitments	—			—			25			—			25
Distributions	(986		)	(250		)	(43		)	(1		)	(1,280		)
Change in fund value	1,801			(74		)	133			128			1,988
Balance at 9/30/2019	$	17,949		$	3,518		$	2,924		$	1,124		$	25,515
Average AUM(1)	$	17,512		$	3,627		$	2,334		$	906		$	24,379

	Corporate Private Equity			Infrastructure & Power			Special Opportunities			Total Private Equity Group
Balance at 12/31/2017	$	18,557		$	4,423		$	1,550		$	24,530
Net new equity commitments	13			350			—			363
Net new debt commitments	—			—			100			100
Distributions	(821		)	(966		)	(56		)	(1,843		)
Change in fund value	(266		)	47			60			(159		)
Balance at 9/30/2018	$	17,483		$	3,854		$	1,654		$	22,991
Average AUM(1)	$	18,214		$	4,080		$	1,563		$	23,857

(1) Represents the quarterly average of beginning and ending balances

Private Equity Group—Fee Paying AUM

The tables below provide rollforwards of fee paying AUM for the Private Equity Group for the three months ended September 30, 2019 and 2018 (in millions):

	Corporate Private Equity			Infrastructure & Power		Special Opportunities			Energy Opportunities		Total Private Equity Group
FPAUM Balance at 6/30/2019	$	11,570		$	3,409	$	1,446		$	763	$	17,188
Commitments	—			—		—			161		161
Subscriptions/deployment/increase in leverage	27			23		124			—		174
Change in fund value	(4		)	—		—			—		(4		)
Change in fee basis	(526		)	—		(73		)	—		(599		)
FPAUM Balance at 9/30/2019	$	11,067		$	3,432	$	1,497		$	924	$	16,920
Average FPAUM(1)	$	11,319		$	3,421	$	1,472		$	844	$	17,056

	Corporate Private Equity			Infrastructure & Power			Special Opportunities			Total Private Equity Group
FPAUM Balance at 6/30/2018	$	12,127		$	3,517		$	945		$	16,589
Subscriptions/deployment/increase in leverage	—			—			215			215
Redemptions/distributions/decrease in leverage	(13		)	(53		)	(4		)	(70		)
Change in fund value	(4		)	—			—			(4		)
Change in fee basis	—			—			(106		)	(106		)
FPAUM Balance at 9/30/2018	$	12,110		$	3,464		$	1,050		$	16,624
Average FPAUM(1)	$	12,119		$	3,491		$	998		$	16,608

(1) Represents the quarterly average of beginning and ending balances.

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The tables below provide rollforwards of fee paying AUM for the Private Equity Group for the nine months ended September 30, 2019 and 2018 (in millions):

	Corporate Private Equity			Infrastructure & Power			Special Opportunities			Energy Opportunities		Total Private Equity Group
FPAUM Balance at 12/31/2018	$	11,716		$	3,472		$	1,201		$	682	$	17,071
Commitments	—			—			—			242		$	242
Subscriptions/deployment/increase in leverage	227			70			378			—		$	675
Redemptions/distributions/decrease in leverage	(351		)	(110		)	(9		)	—		$	(470	)
Change in fund value	1			—			—			—		$	1
Change in fee basis	(526		)	—			(73		)	—		$	(599	)
FPAUM Balance at 9/30/2019	$	11,067		$	3,432		$	1,497		$	924	$	16,920
Average FPAUM(1)	$	11,500		$	3,432		$	1,370		$	823	$	17,125

	Corporate Private Equity			Infrastructure & Power			Special Opportunities			Total Private Equity Group
FPAUM Balance at 12/31/2017	$	12,073		$	4,019		$	766		$	16,858
Commitments	13			350			—			363
Subscriptions/deployment/increase in leverage	123			34			432			589
Redemptions/distributions/decrease in leverage	(93		)	(939		)	(54		)	(1,086		)
Change in fund value	(6		)	—			12			6
Change in fee basis	—			—			(106		)	(106		)
FPAUM Balance at 9/30/2018	$	12,110		$	3,464		$	1,050		$	16,624
Average FPAUM(1)	$	12,104		$	3,659		$	922		$	16,685

(1) Represents the quarterly average of beginning and ending balances.

The components of our AUM, including the portion that is FPAUM, for the Private Equity Group are presented below as of September 30, 2019 and 2018 (in millions):

AUM: $25,515 AUM: $22,991

FPAUM Non-fee paying AUM not yet earning fees General partner and affiliates

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Private Equity Group—Fund Performance Metrics as of September 30, 2019

The Private Equity Group managed 23 commingled funds and related co-investment vehicles as of September 30, 2019. Our significant funds combined for approximately 94% of the Private Equity Group’s management fees for the nine months ended September 30, 2019. Our Corporate Private Equity funds focus on majority or shared-control investments, principally in under-capitalized companies in North America, Europe and Asia. Our special opportunities funds invest opportunistically across a broad spectrum of distressed or mispriced investments. Our infrastructure and power funds focus on generating long-term, stable cash-flowing investments in the power generation, transmission and midstream energy sector. Our energy opportunities fund targets investments in the energy industry where its flexible capital can provide attractive risk-adjusted returns while mitigating commodity risk. ACOF III, ACOF IV, U.S. Power Fund IV ("USPF IV") and Ares Special Situations Fund IV, L.P. ("SSF IV") are in harvest mode, meaning they are generally not seeking to deploy capital into new investment opportunities, while ACOF V, EIF V and the first flagship energy opportunities fund are in deployment mode.

We do not present fund performance metrics for significant funds with less than two years of investment performance, which begins from the date of the fund's first investment, except for those significant funds that 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) such time that the fund has invested at least 50% of its capital.

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The following table presents the performance data as of September 30, 2019 for our significant funds in the Private Equity Group, all of which are drawdown funds ($ in millions):

	Year of Inception	AUM		Original Capital Commitments		Cumulative Invested Capital		Realized Proceeds(1)		Unrealized Value(2)		Total Value		MoIC		IRR(%)				Primary Investment Strategy
Fund														Gross(3)	Net(4)	Gross(5)		Net(6)
ACOF III	2008	$	3,155	$	3,510	$	3,908	$	7,659	$	2,893	$	10,552	2.7x	2.3x	29.1		20.9		Corporate Private Equity
USPF IV	2010	1,618		1,688		2,120		1,227		1,581		2,808		1.3x	1.2x	8.4		5.0		Infrastructure and Power
ACOF IV	2012	5,625		4,700		4,180		2,709		4,882		7,591		1.8x	1.6x	18.3		11.8		Corporate Private Equity
EIF V	2015	855		801		794		275		690		965		1.2x	1.1x	14.3		8.0		Infrastructure and Power
SSF IV(7)	2015	1,545		1,515		3,050		1,676		1,341		3,017		1.0x	0.9x	(1.0	)	(2.9	)	Special Opportunities
ACOF V	2017	8,420		7,850		5,669		186		6,481		6,667		1.2x	1.1x	15.8		8.0		Corporate Private Equity
First flagship energy opportunities fund	2018	1,125		1,000		733		6		902		908		1.2x	1.1x	N/A		N/A		Energy Opportunities

(1) Realized proceeds represent the sum of all cash dividends, interest income, other fees and cash proceeds from realizations of interests in portfolio investments. Realized proceeds exclude any proceeds related to bridge financings.

(2) Unrealized value represents the fair market value of remaining investments. Unrealized value does not take into account any bridge financings. 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, other expenses and taxes, as applicable. The gross MoIC for the corporate private equity funds is also calculated before giving effect to any bridge financings. Inclusive of bridge financings, gross MoIC would be 1.7x for ACOF IV and 1.2x for ACOF V.

(4) The net MoIC for the infrastructure and power and SSF IV 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 which 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 SSF 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, other expenses and taxes, as applicable. The gross IRR for the corporate private equity funds is also calculated before giving effect to any bridge financings. Inclusive of bridge financings, the gross IRR would be 18.2% for ACOF IV and 15.3% for ACOF V.

(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 which 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) In January 2017, a new team assumed portfolio management of SSF IV. In addition to presenting the cumulative performance measure for SSF IV, we have also adopted a new performance measurement called “SSF IV 2.0”. SSF IV 2.0 is a subset of SSF IV positions and is intended to provide insight into the new team’s cumulative investment performance. 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 SSF IV portfolio was evaluated and a determination was made whether to continue to hold such investment in the SSF IV portfolio or dispose of such investment. At the same time, legacy illiquid investments have been excluded from the 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 10.8% and 7.1% through September 30, 2019, respectively. 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, carried interest, other expenses and taxes, as applicable. The net IRRs are calculated after giving effect to estimated management fees, carried interest and other expenses.

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Real Estate Group—Three and Nine Months Ended September 30, 2019 Compared to Three and Nine Months Ended September 30, 2018

Fee Related Earnings:

The following table presents the components of the Real Estate Group's FRE and the changes for the comparative periods ($ in thousands):

	Three Months Ended September 30,						Favorable (Unfavorable)					Nine Months Ended September 30,						Favorable (Unfavorable)
	2019			2018			$ Change			% Change		2019			2018			$ Change			% Change
Management fees	$	26,988		$	19,961		$	7,027		35	%	$	67,408		$	52,272		$	15,136		29	%
Other fees	28			10			18			180	%	709			20			689			NM
Compensation and benefits	(14,523		)	(10,733		)	(3,790		)	(35	)%	(35,735		)	(27,140		)	(8,595		)	(32	)%
General, administrative and other expenses	(3,341		)	(2,856		)	(485		)	(17	)%	(9,996		)	(7,679		)	(2,317		)	(30	)%
Fee Related Earnings	$	9,152		$	6,382		2,770			43	%	$	22,386		$	17,473		4,913			28	%

NM - Not meaningful

Management Fees

The chart below present Real Estate Group management fees and effective management fee rates for the three and nine months ended September 30, 2019 and 2018 ($ in millions):

Ares European Real Estate Fund V SCSp (“EF V”), which launched in the first quarter of 2018, generated additional management fees of $8.4 million and $19.3 million for the three and nine month comparative periods, respectively, of which $7.0 million and $8.2 million were attributable to one-time catch up fees for the three and nine month comparative periods, respectively,

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from additional capital commitments to the fund during the three and nine months ended September 30, 2019. Conversely, multiple property sales held within several of our real estate equity funds resulted in decreases in management fees of $2.3 million and $6.2 million for the three and nine month comparative periods, respectively.

The increases in effective management fee rates between periods were primarily due to deployment of capital within the most recent vintages of our real estate equity funds. Our latest U.S. and European real estate equity funds pay a fixed fee on committed capital and then an additional fee on invested capital. As a result, our effective fee rate decreases temporarily immediately following capital raising and increases as capital is subsequently deployed.

Compensation and Benefits.  Compensation and benefits expenses increased by $3.8 million, or 35%, for the three months ended September 30, 2019 compared to the three months ended September 30, 2018 and by $8.6 million, or 32%, for the nine months ended September 30, 2019 compared to the nine months ended September 30, 2018. The increases were primarily driven by higher incentive compensation attributable with improving operating performance for the comparative periods.

General, Administrative and Other Expenses. General, administrative and other expenses increased by $2.3 million, or 30%, for the nine months ended September 30, 2019 compared to the nine months ended September 30, 2018. General, administrative and other expenses will generally fluctuate with the volume of new fund launches which increased during the comparative periods.

Realized Income:

The following table presents the components of the Real Estate Group's RI and the changes for the comparative periods ($ in thousands):

	Three Months Ended September 30,						Favorable (Unfavorable)					Nine Months Ended September 30,						Favorable (Unfavorable)
	2019			2018			$ Change			% Change		2019			2018			$ Change			% Change
Fee Related Earnings	$	9,152		$	6,382		$	2,770		43	%	$	22,386		$	17,473		$	4,913		28	%
Performance income-realized	6,277			17,110			(10,833		)	(63	)%	10,468			31,269			(20,801		)	(67	)%
Performance related compensation-realized	(1,412		)	(16,865		)	15,453			92	%	(3,638		)	(25,079		)	21,441			85	%
Realized net performance income	4,865			245			4,620			NM		6,830			6,190			640			10	%
Investment income-realized	2,015			6,846			(4,831		)	(71	)%	7,041			9,946			(2,905		)	(29	)%
Interest and other investment income-realized	1,588			486			1,102			227	%	4,812			1,370			3,442			251	%
Interest expense	(967		)	(417		)	(550		)	(132	)%	(3,136		)	(1,289		)	(1,847		)	(143	)%
Realized net investment income	2,636			6,915			(4,279		)	(62	)%	8,717			10,027			(1,310		)	(13	)%
Realized Income	$	16,653		$	13,542		3,111			23	%	$	37,933		$	33,690		4,243			13	%

NM - Not Meaningful

Realized income for the periods presented was composed of FRE, as explained above, realized net performance income and realized net investment income for the respective periods.

Realized net performance income for the three months ended September 30, 2019 was primarily attributable to the monetization of a property held within a certain U.S. equity real estate fund. Realized net performance income for the nine months ended September 30, 2019 was primarily attributable to tax distributions received from a certain U.S. equity real estate fund and from the monetization of several properties held within a certain European equity real estate fund and two U.S. equity real estate funds. Realized net performance income for the nine months ended September 30, 2018 was primarily attributable to tax distributions received from EF IV.

Realized net investment income for the three and nine months ended September 30, 2019 was primarily attributable to sales of multiple properties held within various U.S. real estate equity funds resulting in realized gains from our investments in these funds and to interest income from our investment in a U.S. real estate equity fund that was made in the fourth quarter of 2018. Realized net investment income for the three and nine months ended September 30, 2018 was primarily attributable to sales of multiple properties held within Ares US Real Estate Fund VIII, L.P. ("US VIII") and within various other U.S. real estate equity funds resulting in net realized gains from our investments in these funds.

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Real Estate Group— Carried Interest and Incentive Fees

The following table presents the accrued carried interest and incentive fee receivables for the Real Estate Group (in thousands):

	As of September 30,		As of December 31,
	2019		2018
US VIII	$	61,123	$	50,847
US IX	144		—
EF IV	72,760		65,166
Other real estate funds	66,304		57,236
Subtotal	200,331		173,249
Other fee generating funds(1)	8,325		12,197
Total Real Estate Group	$	208,656	$	185,446

 

(1) Relates to investment income from AREA Sponsor Holdings LLC that is reclassified for segment reporting to align with the character of the underlying income generated.

The change in accrued carried interest and incentive fee receivable for the comparative periods was composed of the following: (i) a $41.7 million increase in unrealized carried interest allocation for the nine months ended September 30, 2019; (ii) offset by $16.9 million of carried interest allocation realized in 2018 and not received until the first quarter of 2019; and (iii) offset by foreign currency translation and other adjustments.

The following table presents the components of incentive fees and carried interest allocation for the Real Estate Group for the three and nine months ended September 30, 2019 and 2018 (in thousands):

	Three Months Ended September 30, 2019								Three Months Ended September 30, 2018
	Realized		Unrealized			Net			Realized		Unrealized		Net
US VIII	$	—	$	3,069		$	3,069		$	—	$	5,545	$	5,545
US IX	—		144			144			—		—		—
EF IV	—		6,953			6,953			—		12,520		12,520
Other real estate funds	2,318		3,473			5,791			17,110		25,299		42,409
Subtotal	2,318		13,639			15,957			17,110		43,364		60,474
Other fee generating funds(1)	3,959		(3,985		)	(26		)	—		794		794
Total Real Estate Group	$	6,277	$	9,654		$	15,931		$	17,110	$	44,158	$	61,268

	Nine Months Ended September 30, 2019							Nine Months Ended September 30, 2018
	Realized		Unrealized			Net		Realized		Unrealized			Net
US VIII	$	—	$	10,276		$	10,276	$	—	$	10,310		$	10,310
US IX	—		144			144		—		—			—
EF IV	—		8,025			8,025		12,396		13,624			26,020
Other real estate funds	6,042		27,166			33,208		18,352		32,746			51,098
Subtotal	6,042		45,611			51,653		30,748		56,680			87,428
Other fee generating funds(1)	4,426		(3,872		)	554		521		(732		)	(211		)
Total Real Estate Group	$	10,468	$	41,739		$	52,207	$	31,269	$	55,948		$	87,217

(1) Relates to investment income from AREA Sponsor Holdings LLC that is reclassified for segment reporting to align with the character of the underlying income generated.

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Real Estate Group—Assets Under Management

The tables below provide rollforwards of AUM for the Real Estate Group for the three months ended September 30, 2019 and 2018 (in millions):

	Real Estate Equity - U.S.			Real Estate Equity - Europe			Real Estate Debt			Total Real Estate Group
Balance at 6/30/2019	$	3,504		$	4,182		$	4,182		$	11,868
Net new equity commitments	8			496			449			953
Distributions	(207		)	(112		)	(12		)	(331		)
Change in fund value	50			(71		)	12			(9		)
Balance at 9/30/2019	$	3,355		$	4,495		$	4,631		$	12,481
Average AUM(1)	$	3,430		$	4,339		$	4,407		$	12,176

	Real Estate Equity - U.S.			Real Estate Equity - Europe			Real Estate Debt			Total Real Estate Group
Balance at 6/30/2018	$	4,554		$	3,351		$	3,005		$	10,910
Net new equity commitments	55			315			—			370
Distributions	(832		)	(26		)	(8		)	(866		)
Change in fund value	131			32			10			173
Balance at 9/30/2018	$	3,908		$	3,672		$	3,007		$	10,587
Average AUM(1)	$	4,231		$	3,512		$	3,006		$	10,749

(1) Represents the quarterly average of beginning and ending balances.

The tables below provide rollforwards of AUM for the Real Estate Group for the nine months ended September 30, 2019 and 2018 (in millions):

	Real Estate Equity - U.S.			Real Estate Equity - Europe			Real Estate Debt			Total Real Estate Group
Balance at 12/31/2018	$	4,163		$	3,711		$	3,466		$	11,340
Net new equity commitments	(64		)	966			667			1,569
Net new debt commitments	—			—			583			583
Distributions	(995		)	(204		)	(120		)	(1,319		)
Change in fund value	251			22			35			308
Balance at 9/30/2019	$	3,355		$	4,495		$	4,631		$	12,481
Average AUM(1)	$	3,729		$	4,071		$	4,075		$	11,875

	Real Estate Equity - U.S.			Real Estate Equity - Europe			Real Estate Debt			Total Real Estate Group
Balance at 12/31/2017	$	4,578		$	2,704		$	2,947		$	10,229
Net new equity commitments	198			1,280			55			1,533
Distributions	(1,098		)	(275		)	(24		)	(1,397		)
Change in fund value	230			(37		)	29			222
Balance at 9/30/2018	$	3,908		$	3,672		$	3,007		$	10,587
Average AUM(1)	$	4,386		$	3,279		$	2,991		$	10,656

(1) Represents the quarterly average of beginning and ending balances.

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Real Estate Group—Fee Paying AUM

The tables below provide rollforwards of fee paying AUM for the Real Estate Group for the three months ended September 30, 2019 and 2018 (in millions):

	Real Estate Equity - U.S.			Real Estate Equity - Europe			Real Estate Debt			Total Real Estate Group
FPAUM Balance at 6/30/2019	$	2,628		$	3,638		$	1,197		$	7,463
Commitments	—			426			—			426
Subscriptions/deployment/increase in leverage	31			99			145			275
Redemptions/distributions/decrease in leverage	(95		)	(53		)	(86		)	(234		)
Change in fund value	(3		)	(102		)	9			(96		)
Change in fee basis	(221		)	(197		)	—			(418		)
FPAUM Balance at 9/30/2019	$	2,340		$	3,811		$	1,265		$	7,416
Average FPAUM(1)	$	2,484		$	3,725		$	1,231		$	7,440

	Real Estate Equity - U.S.			Real Estate Equity - Europe			Real Estate Debt			Total Real Estate Group
FPAUM Balance at 6/30/2018	$	3,059		$	2,862		$	1,042		$	6,963
Commitments	54			315			—			369
Subscriptions/deployment/increase in leverage	10			14			—			24
Redemptions/distributions/decrease in leverage	(349		)	—			(111		)	(460		)
Change in fund value	—			(6		)	10			4
Change in fee basis	(66		)	—			—			(66		)
FPAUM Balance at 9/30/2018	$	2,708		$	3,185		$	941		$	6,834
Average FPAUM(1)	$	2,884		$	3,024		$	992		$	6,900

(1) Represents the quarterly average of beginning and ending balances.

The tables below provide rollforwards of fee paying AUM for the Real Estate Group for the nine months ended September 30, 2019 and 2018 (in millions):

	Real Estate Equity - U.S.			Real Estate Equity - Europe			Real Estate Debt			Total Real Estate Group
FPAUM Balance at 12/31/2018	$	2,739		$	3,269		$	944		$	6,952
Commitments	—			790			—			790
Subscriptions/deployment/increase in leverage	186			187			462			835
Redemptions/distributions/decrease in leverage	(361		)	(111		)	(173		)	(645		)
Change in fund value	(3		)	(127		)	32			(98		)
Change in fee basis	(221		)	(197		)	—			(418		)
FPAUM Balance at 9/30/2019	$	2,340		$	3,811		$	1,265		$	7,416
Average FPAUM(1)	$	2,583		$	3,509		$	1,110		$	7,202

	Real Estate Equity - U.S.			Real Estate Equity - Europe			Real Estate Debt			Total Real Estate Group
FPAUM Balance at 12/31/2017	$	3,062		$	2,064		$	1,063		$	6,189
Commitments	180			1,052			—			1,232
Subscriptions/deployment/increase in leverage	61			353			26			440
Redemptions/distributions/decrease in leverage	(497		)	(83		)	(178		)	(758		)
Change in fund value	4			(34		)	30			—
Change in fee basis	(102		)	(167		)	—			(269		)
FPAUM Balance at 9/30/2018	$	2,708		$	3,185		$	941		$	6,834
Average FPAUM(1)	$	2,959		$	2,710		$	1,015		$	6,684

(1) Represents the quarterly average of beginning and ending balances.

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The components of our AUM, including the portion that is FPAUM, for the Real Estate Group are presented below as of September 30, 2019 and 2018 (in millions):

AUM: $12,481 AUM: $10,587

FPAUM Non-fee paying AUM not yet earning fees General partner and affiliates

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Real Estate Group—Fund Performance Metrics as of September 30, 2019

The Real Estate Group managed 46 funds as of September 30, 2019. Our significant funds in the Real Estate Group combined for approximately 68% of the Real Estate Group’s management fees for the nine months ended September 30, 2019. EF IV and EF V are commingled funds focused on real estate assets located in Europe, primarily in the United Kingdom, France and Germany. Ares US Real Estate Fund IX, L.P. ("US IX") is a commingled equity fund focused on real estate assets located in United States. EF IV is in harvest mode, meaning it is generally not seeking to deploy capital into new investment opportunities, while US IX and EF V are in deployment mode.

We do not present fund performance metrics for significant funds with less than two years of investment performance, which begins from the date of the fund's first investment, except for those significant funds that 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) such time that the fund has invested at least 50% of its capital.

The following table presents the performance data as of September 30, 2019 for our significant funds in the Real Estate Group, all of which are drawdown funds ($ in millions):

	Year of Inception	AUM		Original Capital Commitments		Cumulative Invested Capital		Realized Proceeds(1)		Unrealized Value(2)		Total Value		MoIC		IRR(%)		Primary Investment Strategy
Fund														Gross(3)	Net(4)	Gross(5)	Net(6)
EF IV(7)	2014	$	1,029	$	1,302	$	1,087	$	821	$	881	$	1,702	1.6x	1.3x	19.2	13.5	European Real Estate Equity
US IX	2017	1,035		1,040		687		26		680		706		1.1x	1.0x	N/A	N/A	U.S. Real Estate Equity
EF V(8)	2018	1,921		1,968		339		41		336		377		1.1x	1.0x	N/A	N/A	European Real Estate Equity

(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, carried interest, other expenses and taxes, as applicable.

(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 which does not pay management fees, carried interest or has such fees rebated outside of the fund. The net MoIC is after giving effect to management fees, carried interest 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, carried interest, other expenses and taxes, as applicable.

(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, exclude interests attributable to the non fee-paying partners and/or the general partner which does not pay management fees or carried interest 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, carried interest 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 18.8% and 13.5%, respectively. The gross and net MoIC for the U.S. dollar denominated parallel fund are 1.6x 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) EF V 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 EF V are for the combined fund and are converted to U.S. dollars at the prevailing quarter-end exchange rate.

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Operations Management Group—Three and Nine Months Ended September 30, 2019 Compared to Three and Nine Months Ended September 30, 2018

Fee Related Earnings:

The following table presents the components of the OMG's FRE and the changes for the comparative periods ($ in thousands):

	Three Months Ended September 30,						Favorable (Unfavorable)					Nine Months Ended September 30,						Favorable (Unfavorable)
	2019			2018			$ Change			% Change		2019			2018			$ Change			% Change
Compensation and benefits	$	(34,061	)	$	(31,957	)	$	(2,104	)	(7	)%	$	(100,716	)	$	(92,829	)	$	(7,887	)	(8	)%
General, administrative and other expenses	(21,405		)	(18,102		)	(3,303		)	(18	)%	(61,911		)	(55,729		)	(6,182		)	(11	)%
Fee Related Earnings	$	(55,466	)	$	(50,059	)	(5,407		)	(11	)%	$	(162,627	)	$	(148,558	)	(14,069		)	(9	)%

Compensation and Benefits.  Compensation and benefits expenses increased by $2.1 million, or 7%, for the three months ended September 30, 2019 compared to the three months ended September 30, 2018 and by $7.9 million, or 8%, for the nine months ended September 30, 2019 compared to the nine months ended September 30, 2018. The increases were primarily driven by higher incentive compensation attributable to improving operating performance and by headcount growth for the comparative periods. Significant headcount growth was principally due to the expansion of our business operations teams as we have launched a new office in India to internalize certain business functions that will reduce expenses of professional service providers reflected within general, administrative and other expenses.

General, Administrative and Other Expenses. General, administrative and other expenses increased by $3.3 million, or 18%, for the three months ended September 30, 2019 compared to the three months ended September 30, 2018 and by $6.2 million, or 11%, for the nine months ended September 30, 2019 compared to the nine months ended September 30, 2018. The increases were primarily driven by higher occupancy and overhead costs from headcount growth and by initiatives focused on improving the scalability and efficiency of our business support functions through automation and centralization of certain activities.

Realized Income:

The following table presents the components of the OMG's RI and the changes for the comparative periods ($ in thousands):

	Three Months Ended September 30,						Favorable (Unfavorable)					Nine Months Ended September 30,						Favorable (Unfavorable)
	2019			2018			$ Change			% Change		2019			2018			$ Change			% Change
Fee Related Earnings	$	(55,466	)	$	(50,059	)	$	(5,407	)	(11	)%	$	(162,627	)	$	(148,558	)	$	(14,069	)	(9	)%
Investment income-realized	—			22			(22		)	(100	)%	—			1,658			(1,658		)	(100	)%
Interest and other investment income (loss)-realized	(11		)	442			(453		)	NM		(13		)	2,178			(2,191		)	NM
Interest expense	(535		)	(622		)	87			14	%	(1,330		)	(1,758		)	428			24	%
Realized net investment income (loss)	(546		)	(158		)	(388		)	NM		(1,343		)	2,078			(3,421		)	NM
Realized Income	$	(56,012	)	$	(50,217	)	(5,795		)	(12	)%	$	(163,970	)	$	(146,480	)	(17,490		)	(12	)%

NM - Not Meaningful

Realized income for the periods presented was composed of FRE, as explained above, and realized net investment income for the respective periods.

Realized net investment income decreased from $2.1 million for the nine months ended September 30, 2018 to realized net investment loss of $1.3 million for the nine months ended September 30, 2019. We recorded realized gains from our non–core energy investments in the prior year period that did not recur as the investments were sold in the fourth quarter of 2018.

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Liquidity and Capital Resources

Sources and Uses of Liquidity

Our sources of liquidity are (1) cash on hand, (2) net working capital, (3) cash from operations, including management fees, which are collected monthly, quarterly or semi-annually, and net realized performance income, which is unpredictable as to amount and timing, (4) fund distributions related to our investments that are also unpredictable as to amount and timing and (5) net borrowing from the Credit Facility. As of September 30, 2019, our cash and cash equivalents were $152.2 million and we had no borrowings outstanding under our Credit Facility. Our ability to draw from the Credit Facility is subject to a leverage covenant. We believe that these sources of liquidity will be sufficient to fund our working capital requirements and to meet our commitments in the ordinary course of business for the foreseeable future.

We expect that our primary liquidity needs will continue to be (1) provide capital to facilitate the growth of our existing investment management businesses, (2) fund our investment commitments, (3) provide capital to facilitate our expansion into businesses that are complementary to our existing investment management businesses as well as other strategic growth initiatives, (4) pay operating expenses, including cash compensation to our employees and payments under the tax receivable agreement (“TRA”), (5) fund capital expenditures, (6) service our debt, (7) pay income taxes and (8) make dividend payments to our Class A common stockholders and the Series A Preferred stockholders in accordance with our dividend policy.

In the normal course of business, we intend to pay dividends based on our expected fee related earnings. If cash flow from operations were insufficient to fund dividends over a sustained period of time, we expect that we would suspend or reduce paying such dividends. Unless quarterly dividends have been declared and paid (or declared and set apart for payment) on the Series A Preferred Stock, we may not declare or pay or set apart payment for dividends on any shares of our Class A common stock during the period. Dividends on Series A Preferred Stock are not cumulative and the Series A Preferred Stock is not convertible into our Class A common stock or any other security.

In February 2019, our board of directors authorized the repurchase of up to $150 million of shares of our Class A common stock. Under this stock repurchase program, shares may be repurchased from time to time in open market purchases, privately negotiated transactions or otherwise, including in reliance on Rule 10b5-1 of the Securities Act. The program is scheduled to expire in February 2020. Repurchases under the program depend on the prevailing market conditions and other factors.

During the three months ended September 30, 2019, we did not repurchase any shares as part of the stock repurchase program. During the nine months ended September 30, 2019, we repurchased 0.4 million shares at a total cost of $10.4 million. As of September 30, 2019, the amount remaining available for repurchases under the program was $139.6 million.

On September 20, 2019, we sold 7,000,000 shares of our Class A common stock in an underwritten public offering from which we received $207.3 million in gross proceeds. We incurred approximately $0.6 million of expenses in connection with this offering transaction. The expenses have been treated as a reduction of the proceeds received from the offering and are presented on a net basis together with the proceeds from the offering in shareholders' equity in the Condensed Consolidated Statements of Changes in Equity.

Our accrued carried interest and incentive fee receivable by segment as of September 30, 2019 is set forth below (in thousands):

	Accrued Carried Interest & Incentive Fee Receivable
Credit Group	$	250,109
Private Equity Group	799,751
Real Estate Group	200,331
Total	$	1,250,191

Our condensed consolidated financial statements reflect the cash flows of our operating businesses as well as those of our Consolidated Funds. The assets of our Consolidated Funds, on a gross basis, are significantly larger than the assets of our operating businesses and therefore have a substantial effect on our reported cash flows. The primary cash flow activities of our Consolidated Funds include: (1) raising capital from third-party investors, which is reflected as non-controlling interests of our Consolidated Funds, (2) financing certain investments by issuing debt, (3) purchasing and selling investment securities, (4) generating cash through the realization of certain investments, (5) collecting interest and dividend income and (6) distributing

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cash to investors. Our Consolidated Funds are treated as investment companies for financial accounting purposes under GAAP; therefore, the character and classification of all Consolidated Fund transactions are presented as cash flows from operations. Liquidity available at our Consolidated Funds is typically not available for corporate liquidity needs, and debt of the Consolidated Funds is non–recourse to the Company except to the extent of the Company's investment in the fund.

Cash Flows

The table below summarizes our condensed consolidated statements of cash flows by activity attributable to the Company and to our Consolidated Funds. Negative amounts represent a net outflow or use of cash (in thousands).

	For the Nine Months Ended September 30,
	2019			2018
Net cash provided by the Company's operating activities	$	325,225		$	471,053
Net cash used in the Consolidated Funds' operating activities	(2,005,309		)	(2,194,267		)
Net cash used in operating activities	(1,680,084		)	(1,723,214		)
Net cash used in the Company's investing activities	(12,073		)	(14,437		)
Net cash used in the Company's financing activities	(245,492		)	(439,915		)
Net cash provided by the Consolidated Funds' financing activities	1,996,160			2,172,917
Net cash provided by financing activities	1,750,668			1,733,002
Effect of exchange rate changes	(16,555		)	7,912
Net change in cash and cash equivalents	$	41,956		$	3,263

Operating Activities

Net cash flows used in operating activities was $1.7 billion for both the nine months ended September 30, 2019 and September 30, 2018. Net cash flows provided by the Company's operating activities were $325.2 million for the nine months ended September 30, 2019 compared to $471.1 million for the nine months ended September 30, 2018. The cash provided by the Company's operating activities was lower in the current year period primarily due to the sale of $206.0 million of CLO securities in the prior year period following the removal of U.S. risk retention requirements related to open market CLO managers. This was partially offset by the increase in net income for the comparative periods.

Net cash used in the Consolidated Funds' operating activities was $2.0 billion for the nine months ended September 30, 2019 compared to $2.2 billion for the nine months ended September 30, 2018. Net cash used in the Consolidated Funds' operating activities were principally attributable to the consolidation of recently launched funds' investment purchases during the comparative periods, which correlates with the change in cash provided by financing activities.

Our increasing working capital needs reflect the growth of our business, while the capital requirements needed to support fund-related activities vary based upon the specific investment activities being conducted during such period. The movements within our Consolidated Funds do not adversely impact our liquidity or earnings trends. We believe that our ability to generate cash from operations, as well as the capacity under the Credit Facility, provides us with the necessary liquidity to manage short-term fluctuations in working capital and to meet our short-term commitments.

Investing Activities

Our investing activities generally reflect cash used for certain acquisitions and purchases of fixed assets. Net cash used in the Company's investing activities was principally composed of furniture, fixtures, equipment and leasehold improvements purchased during the comparative periods to support the growth in our staffing levels and our expanding global presence.

Financing Activities

Net cash used in the Company's financing activities was $245.5 million for the nine months ended September 30, 2019 compared to $439.9 million for the nine months ended September 30, 2018. Net cash used in the Company's financing activities for the nine months ended September 30, 2019 was principally composed of $254.6 million of distributions to AOG unitholders and dividends to our Class A common stockholders and Series A Preferred stockholders, $235.0 million of net repayments on the Company's Credit Facility and $10.4 million of stock repurchases, offset by $206.7 million of net proceeds from our Class A common stock offering and $83.1 million of net cash proceeds from exercises of stock options.

Net cash used in the Company's financing activities for the nine months ended September 30, 2018 was principally composed of $247.2 million of distributions to AOG unitholders, common and preferred shareholders and $267.0 million of net

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repayments on the Company's debt facilities, offset by $105.3 million of net proceeds from our common share offering. The decrease in distributions and dividends was primarily due to a change in the timing of dividend payments to our Class A common stockholders to match the related income in the current quarter, as a result of our election to be treated as a corporation for U.S. federal income tax purposes. Dividends paid during the nine months ended September 30, 2019 were related to income for that period, while distributions paid during the nine months ended September 30, 2018 were related to income for the one year period ended September 30, 2018.

Net cash provided by Consolidated Funds' financing activities was $2.0 billion for the nine months ended September 30, 2019 compared to $2.2 billion for the nine months ended September 30, 2018. Net cash provided by Consolidated Funds' financing activities was principally attributable to the consolidation of newly launched funds for both comparative periods. Net borrowings of our Consolidated Funds was $1.9 billion for the nine months ended September 30, 2019 compared to net borrowings of $2.1 billion for the nine months ended September 30, 2018. Net contributions of our Consolidated Funds were $99.3 million and $24.2 million for the nine months ended September 30, 2019 and 2018, respectively.

Capital Resources

The following table summarizes the Company's debt obligations ($ in thousands):

					As of September 30, 2019			December 31, 2018
	Debt Origination Date	Maturity	Original Borrowing Amount		Carrying Value		Interest Rate	Carrying Value		Interest Rate
Credit Facility(1)	Revolver	3/21/2024	N/A		$	—	N/A	$	235,000	4.00%
Senior Notes(2)	10/8/2014	10/8/2024	$	250,000	246,442		4.21%	245,952		4.21%
Total debt obligations					$	246,442		$	480,952

(1) The AOG entities are borrowers under the Credit Facility, which provides a $1.065 billion revolving line of credit. It has a variable interest rate based on LIBOR or a base rate plus an applicable margin with an unused commitment fee paid quarterly, which is subject to change with the Company’s underlying credit agency rating. On March 21, 2019, the Company amended the Credit Facility to, among other things, extend the maturity date from February 2022 to March 2024 and to reduce borrowing costs on the drawn and undrawn amounts. As of September 30, 2019, base rate loans bear interest calculated based on the base rate plus 0.25% and the LIBOR rate loans bear interest calculated based on LIBOR plus 1.25%. The unused commitment fee is 0.15% per annum. There is a base rate and LIBOR floor of zero.

(2) The Senior Notes were issued in October 2014 by Ares Finance Co. LLC, a subsidiary of the Company, at 98.268% of the face amount with interest paid semi-annually. The Company may redeem the Senior Notes prior to maturity, subject to the terms of the indenture.

As of September 30, 2019, we were in compliance with all covenants under our debt obligations.

We intend to use a portion of our available liquidity to pay cash dividends to our Series A Preferred stockholders and our Class A common stockholders on a quarterly basis in accordance with our dividend policies. Our ability to make cash dividends to the Series A Preferred stockholders and our Class A common stockholders is dependent on a myriad of factors, including among others: general economic and business conditions; our strategic plans and prospects; our business and investment opportunities; timing of capital calls by our funds in support of our commitments; our financial condition and operating results; working capital requirements and other anticipated cash needs; contractual restrictions and obligations; legal, tax and regulatory restrictions; restrictions on the payment of distributions by our subsidiaries to us and other relevant factors. We expect dividend payments for the remainder of the fiscal year to be consistent with dividends paid during the nine months ended September 30, 2019.

We are required to maintain minimum net capital balances for regulatory purposes for our United Kingdom subsidiary and for our broker-dealer subsidiary. These net capital requirements are met in part by retaining cash, cash equivalents and investment securities. As a result, we may be restricted in our ability to transfer cash between different operating entities and jurisdictions. As of September 30, 2019, we were required to maintain approximately $28.8 million in liquid net assets within these subsidiaries to meet regulatory net capital and capital adequacy requirements. We remain in compliance with all regulatory requirements.

Holders of AOG Units, subject to the terms of the exchange agreement, may exchange their AOG Units for shares of our Class A common stock on a one-for-one basis. These exchanges are expected to result in increases in the tax basis of the tangible and intangible assets of Ares Management Corporation that otherwise would not have been available. These increases in tax basis may increase depreciation and amortization for U.S. federal income tax purposes and thereby reduce the amount of tax that we would otherwise be required to pay in the future. We entered into the tax receivable agreement (“TRA”) with the TRA recipients

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that provides payment to the TRA recipients of 85% of the amount of actual cash savings, if any, in U.S. federal, state, local and foreign income tax or franchise tax that we actually realize as a result of these increases in tax basis and of certain other tax benefits related to entering into the TRA, including tax benefits attributable to payments under the TRA and interest accrued thereon. Future payments under the TRA in respect of subsequent exchanges are expected to be substantial. As of September 30, 2019, the TRA liability balance was $24.9 million. In 2018, there were exchanges of approximately 13.1 million of AOG Units for shares of our Class A common stock. In connection with these conversions, we recognized deferred tax benefits of $25.2 million, which increased additional paid in capital by $3.8 million and our TRA liability by $21.4 million. An immaterial number of AOG Units were exchanged prior to 2018 and during the nine months ended September 30, 2019.

Series A Preferred Stock

As of September 30, 2019 and December 31, 2018, the Company had 12,400,000 shares of Series A Preferred Stock, $0.01 par value per share, designated as “7.00% Series A Preferred Stock” outstanding. When, as and if declared by the Company’s board of directors, dividends on the Series A Preferred Stock are paid quarterly at a rate per annum equal to 7.00%. The Series A Preferred Stock may be redeemed at our option, in whole or in part, at any time on or after June 30, 2021, at a price of $25.00 per share.

Critical Accounting Estimates

We prepare our consolidated financial statements in accordance with GAAP. In applying many of these accounting principles, we need to make assumptions, estimates or judgments that affect the reported amounts of assets, liabilities, revenues and expenses in our condensed consolidated financial statements. We base our estimates and judgments on historical experience and other assumptions that we believe are reasonable under the circumstances. These assumptions, estimates or judgments, however, are both subjective and subject to change, and actual results may differ from our assumptions and estimates. If actual amounts are ultimately different from our estimates, the revisions are included in our results of operations for the period in which the actual amounts become known. For a summary of our significant accounting policies, see Note 2, “Summary of Significant Accounting Policies,” to our condensed consolidated financial statements included in this Quarterly Report on Form 10‑Q and in our Annual Report on Form 10-K. For a summary of our critical accounting estimates, please see "Management's Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Estimates" in our Annual Report on Form 10-K.

Recent Accounting Pronouncements

Information regarding recent accounting pronouncements and their impact on the Company can be found in Note 2, “Summary of Significant Accounting Policies,” in the “Notes to the Condensed Consolidated Financial Statements” included in this Quarterly Report on Form 10‑Q and in our Annual Report on Form 10-K.

Off‑Balance Sheet Arrangements

In the normal course of business, we engage in off‑balance sheet arrangements, including transactions in derivatives, guarantees, commitments, indemnifications and potential contingent repayment obligations. See Note 8, “Commitments and Contingencies,” to our condensed consolidated financial statements included in this Quarterly Report on Form 10-Q.

Commitments and Contingencies

Capital Commitments

As of September 30, 2019 and December 31, 2018, we had aggregate unfunded commitments to invest in funds managed by us and to support certain strategic initiatives of $303.9 million and $267.6 million, respectively.

Indemnification Arrangements

Consistent with standard business practices in the normal course of business, we enter into contracts that contain indemnities for our affiliates, persons acting on our behalf or such affiliates and third parties. The terms of the indemnities vary from contract to contract and the maximum exposure under these arrangements, if any, cannot be determined and has not been recorded in our condensed consolidated financial statements. As of September 30, 2019, we have not had prior claims or losses pursuant to these contracts and expect the risk of loss to be remote.

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Contingent Obligations

Generally, if at the termination of a fund (and increasingly at interim points in the life of a fund), the fund has not achieved investment returns that (in most cases) exceed the preferred return threshold or (in all cases) the general partner receives net profits over the life of the fund in excess of its allocable share under the applicable partnership agreement, the Company will be obligated to repay carried interest that was received by the Company in excess of the amounts to which the Company is entitled. This contingent obligation is normally reduced by income taxes paid by the Company related to its carried interest. 

The partnership documents governing our funds generally include a contingent repayment provision that, if triggered, may give rise to a contingent obligation that may require the general partner to return amounts to the fund for distribution to investors. Therefore, carried interest, a component of performance income, generally, is subject to reversal in the event that the funds incur future losses. These losses are limited to the extent of the cumulative performance income recognized to date.

Due in part to our investment performance and the fact that our performance income is generally determined on a liquidation basis, if the funds were liquidated at their fair values as of September 30, 2019 and December 31, 2018, there would have been $0.4 million of repayment obligations for both periods. There can be no assurance that we will not incur additional contingent repayment obligation in the future. If all of the existing investments were deemed worthless, the amount of cumulative revenues that have been recognized would be reversed. As of September 30, 2019 and December 31, 2018, had we assumed all existing investments were worthless, the amount of carried interest, net of tax, subject to contingent repayment would have been approximately $405.6 million and $469.0 million, respectively, of which approximately $301.2 million and $351.9 million, respectively, would be reimbursable to us by certain professionals who are the recipients of such carried interest. We believe that the possibility of all of the existing investments becoming worthless is remote.

Performance income is also affected by changes in the fair values of the underlying investments in the funds that we advise. Valuations, on an unrealized basis, can be significantly affected by a variety of external factors including, but not limited to, public equity market volatility, industry trading multiples and interest rates.

Our senior professionals who have received carried interest distributions are responsible for funding their proportionate share of any contingent repayment obligations. However, the governing agreements of certain of our funds provide that if a current or former professional does not fund his or her respective share for such fund, then we may have to fund additional amounts beyond what we received in carried interest, although we will generally retain the right to pursue any remedies that we have under such governing agreements against those carried interest recipients who fail to fund their obligations.

Additionally, at the end of the life of the funds there could be a payment due to a fund by us if we have recognized more performance income than was ultimately earned. The general partner obligation amount, if any, will depend on final realized values of investments at the end of the life of the fund.

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Item 3.  Quantitative and Qualitative Disclosures About Market Risk

Our primary exposure to market risk is related to our role as general partner or investment adviser to our investment funds and the sensitivity to movements in the fair value of their investments, including the effect on management fees, performance income and investment income.

The market price of investments may significantly fluctuate during the period of investment. Investments may decline in value due to factors affecting securities markets generally or particular industries represented in the securities markets. The value of an investment may decline due to general market conditions, which are not specifically related to such investment, such as real or perceived adverse economic conditions, changes in the general outlook for corporate earnings, changes in interest or currency rates or adverse investor sentiment generally. It may also decline due to factors that affect a particular industry or industries, such as labor shortages or increased production costs and competitive conditions within an industry.

Our credit orientation has been a central tenet of our business across our debt and equity investment strategies. Our investment professionals benefit from our independent research and relationship networks and insights from our portfolio of active investments. We believe the combination of high-quality proprietary information flow and a consistent, rigorous approach to managing investments across our strategies has been, and we believe will continue to be, a major driver of our strong risk-adjusted returns and the stability and predictability of our income.

There have been no material changes in our market risks for the nine months ended September 30, 2019. For additional information on our market risks, refer to our Annual Report on Form 10-K for the year ended December 31, 2018, which is accessible on the SEC's website at sec.gov.

Item 4.  Controls and Procedures

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures (as that term is defined in Rules 13a‑15(e) and 15d‑15(e) under the Exchange Act) that are designed to ensure that information required to be disclosed in our reports under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our co-principal executive officers and principal financial officer, as appropriate, to allow timely decisions regarding required disclosures. Any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. Our management, with the participation of our principal executive officer and principal financial officer, has evaluated the effectiveness of the design and operation of our disclosure controls and procedures as of September 30, 2019. Based upon that evaluation and subject to the foregoing, our principal executive officers and principal financial officer concluded that, as of September 30, 2019, the design and operation of our disclosure controls and procedures were effective to accomplish their objectives at the reasonable assurance level.

Changes in Internal Control over Financial Reporting

There have been no changes in our internal control over financial reporting (as defined in Rule 13a‑15(f) and 15d‑15(f) under the Exchange Act) during the quarter ended September 30, 2019 that have materially affected, or that are reasonably likely to materially affect, our internal control over financial reporting.

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PART II.

Item 1.  Legal Proceedings

From time to time we are involved in various legal proceedings, lawsuits and claims incidental to the conduct of our business, some of which may be material. As of September 30, 2019 and December 31, 2018, we were not subject to any material pending legal proceedings. Our businesses are also subject to extensive regulation, which may result in regulatory proceedings against us.

Item 1A.  Risk Factors

For a discussion of our other potential risks and uncertainties, see the information under “Item 1A. Risk Factors” in our Annual Report on Form 10‑K for the year ended December 31, 2018, which is accessible on the SEC’s website at www.sec.gov. There have been no material changes to the risk factors disclosed in our 2018 Form 10‑K.

Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds

We did not sell any equity securities during the period covered in this report that were not registered under the Securities Act of 1933.

Except as set forth below, all unregistered sales of equity securities during the period covered by this Quarterly Report were previously disclosed in our current reports on Form 8-K or quarterly reports on Form 10-Q ($ in thousands; except share data):

Period	Total Number of Shares Purchased	Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Approximate Dollar Value of Shares That May Yet be Purchased Under the Plans or Programs (1)
July 1, 2019 - July 31, 2019	—	$	—	—	$	139,551
August 1, 2019 - August 31, 2019	—	—		—	139,551
September 1, 2019 - September 30, 2019	—	—		—	139,551
Total	—			—

(1) In February 2019, our board of directors authorized the repurchase of up to $150 million of shares of our Class A common stock. Under this stock repurchase program, shares may be repurchased from time to time in open market purchases, privately negotiated transactions or otherwise, including in reliance on Rule 10b5-1 of the Securities Act. The program is scheduled to expire in February 2020. Repurchases under the program depend on the prevailing market conditions and other factors.

As permitted by our policies and procedures governing transactions in our securities by our directors, executive officers and other employees, from time to time some of these persons may establish plans or arrangements complying with Rule 10b5‐1 under the Exchange Act, and similar plans and arrangements relating to our Class A common stock.

Item 3.  Defaults Upon Senior Securities

None.

Item 4.  Mine Safety Disclosures

Not applicable.

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Item 5.  Other Information

Disclosure Pursuant to Section 219 of the Iran Threat Reduction and Syria Human Rights Act

Section 219 of the Iran Threat Reduction and Syria Human Rights Act of 2012 (“ITRA”) and Section 13(r) of the Exchange Act, require an issuer to disclose in its annual and quarterly reports whether it or any of its affiliates have knowingly engaged in specified activities or transactions relating to Iran. On June 20, 2019, certain investment funds managed or advised by U.K.-based affiliates of Ares (the “Ares Entities”) acquired approximately 28.7% of the ordinary shares and 54.3% of the preferred shares of AgriBriefing 1364 Limited (“AgriBriefing”), a company based in London that provides price reporting data on a subscription basis to participants in the agricultural industry. Although the Ares Entities do not hold the largest voting position in AgriBriefing, their holdings of ordinary and preferred shares represent a majority of the outstanding equity interests in AgriBriefing. In addition, the Ares Entities hold certain contractual veto rights and the right to appoint a director to the board of directors of AgriBriefing. As a result, under applicable SEC definitions, the Ares Entities may be deemed to control AgriBriefing; however, this statement is not meant to be an admission that common control exists.

Subsequent to completion of the Ares Entities’ investment in AgriBriefing, in connection with Ares’ routine quarterly survey of its investment funds’ portfolio companies, AgriBriefing informed the Ares Entities that it had subscription contracts with five customers whose billing addresses were based in Iran. We have not been able to verify the identity or affiliations of these customers. As a result, it appears that we are required to provide this disclosure under ITRA and Section 13(r) of the Exchange Act.

These subscriptions generated annual gross revenues of less than €25,000 (less than 1% of AgriBriefing’s revenues) and de minimus net profits.

AgriBriefing confirmed that each of the subscriptions commenced prior to the investment in AgriBriefing by the Ares Entities, and that it terminated these subscriptions in July 2019 and does not intend to engage in any further dealings or transactions with these customers.

Based on currently available information, we and the Ares Entities have no reason to believe that any of the five customers are listed on the U.S. Treasury Department Office of Foreign Assets Control list of Specially Designated Nationals or that AgriBriefing has conducted any dealings in violation ITRA.

This disclosure does not relate to any activities conducted by Ares and does not involve Ares. This disclosure relates solely to activities conducted by AgriBriefing and its consolidated subsidiaries.

96

Item 6.  Exhibits, Financial Statement Schedules

(a)Exhibits.

The following is a list of all exhibits filed or furnished as part of this report.

Exhibit No.	Description
3.1	Certificate of Incorporation of Ares Management Corporation (incorporated by reference to Exhibit 99.3 to the Registrant’s Current Report on Form 8-K (File No. 001-36429) filed with the SEC on November 15, 2018).
3.2	Bylaws of Ares Management Corporation (incorporated by reference to Exhibit 99.4 to the Registrant’s Current Report on Form 8-K (File No. 001-36429) filed with the SEC on November 15, 2018).
10.1	Stock Purchase Agreement, dated July 9, 2019, between Aspida Holdco, LLC and GBIG Holdings, Inc. (incorporated by reference to Exhibit 2.1 to the Registrant's Current Report on Form 8-K (File 001-36429) filed with the SEC on July 9, 2019).
10.2**	Second Amended and Restated Investment Advisory and Management Agreement, dated June 6, 2019, between Ares Capital Corporation and Ares Capital Management LLC
31.1*	Certification of the Chief Executive Officer pursuant to Rule 13a‑14(a).
31.2*	Certification of the Chief Financial Officer pursuant to Rule 13a‑14(a).
32.1*	Certification of the Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350.
101.INS*	XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH*	Inline XBRL Taxonomy Extension Schema Document.
101.CAL*	Inline XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF*	Inline XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB*	Inline XBRL Taxonomy Extension Label Linkbase Document.
101.PRE*	Inline XBRL Taxonomy Extension Presentation Linkbase Document.
104*	Cover Page Interactive Data File - the cover page interactive data file does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

* These certifications are not deemed filed by the SEC and are not to be incorporated by reference in any filing we make under the Securities Act of 1933 or the Securities Exchange Act of 1934, irrespective of any general incorporation language in any filings.

** Filed herewith

97

SIGNATURES

	ARES MANAGEMENT CORPORATION
Dated: November 6, 2019	By:		/s/ Michael J Arougheti
		Name:	Michael J Arougheti
		Title:	Co‑Founder, Chief Executive Officer & President (Principal Executive Officer)
Dated: November 6, 2019	By:		/s/ Michael R. McFerran
		Name:	Michael R. McFerran
		Title:	Chief Financial Officer & Chief Operating Officer (Principal Financial and Accounting Officer)

98

EX-10.2

EXECUTION VERSION

SECOND AMENDED AND RESTATED INVESTMENT ADVISORY AND
MANAGEMENT AGREEMENT
BETWEEN
ARES CAPITAL CORPORATION
AND
ARES CAPITAL MANAGEMENT LLC

Second Amended and Restated Agreement (this “Agreement”) effective as of June 6, 2019, between ARES CAPITAL CORPORATION, a Maryland corporation (the “Corporation”), and ARES CAPITAL MANAGEMENT LLC, a Delaware limited liability company (the “Adviser”).

WHEREAS, the Corporation is a closed-end management company that has elected to be treated as a business development company under the Investment Company Act of 1940, as amended (the “Investment Company Act”);

WHEREAS, the Adviser is an investment adviser that has registered under the Investment Advisers Act of 1940, as amended (the “Advisers Act”);

WHEREAS, on September 30, 2004, the Corporation and the Adviser entered into an Investment Advisory and Management Agreement, pursuant to which the Adviser agreed to furnish investment advisory services to the Corporation (the “Initial Agreement”);

WHEREAS, the Corporation and the Adviser, with the approval of the Corporation’s stockholders, agreed to amend and restate the Initial Agreement in its entirety on June 1, 2006 (as amended and restated, the “Original Agreement”);

WHEREAS, the Corporation and the Adviser, with the approval of the Corporation’s stockholders, agreed to amend and restate the Original Agreement in its entirety on June 6, 2011 (as amended and restated, the “Restated Agreement”); and

WHEREAS, the Corporation and the Adviser desire to amend and restate the Restated Agreement in its entirety.

NOW, THEREFORE, in consideration of the premises and for other good and valuable consideration, the parties hereby agree that the Restated Agreement is hereby further amended and restated in its entirety to read as follows (and that the Restated Agreement shall be of no further force and effect whatsoever after the date hereof):

1.    Duties of the Adviser.

(a)    The Corporation hereby employs the Adviser to act as the investment adviser to the Corporation and to manage the investment and reinvestment of the assets of the Corporation, subject to the supervision of the Board of Directors of the Corporation (the “Board”), for the period and upon the terms herein set forth, in accordance with,

(i)    the investment objectives, policies and restrictions that are determined by the Corporation’s Board of Directors from time to time and disclosed to the Adviser, which objectives, policies and restrictions, as of the date of effectiveness of this Agreement, shall be those set forth in the Corporation’s Annual Report on Form 10-K, filed with the Securities and Exchange Commission (the “SEC”) on February 12, 2019;

(ii)    the Investment Company Act and

(iii)    all other applicable federal and state laws, rules and regulations, and the Corporation’s charter and by‑laws.

Without limiting the generality of the foregoing, the Adviser shall, during the term and subject to the provisions of this Agreement,

(i)    determine the composition of the portfolio of the Corporation, the nature and timing of the changes therein and the manner of implementing such changes;

(ii)    identify, evaluate and negotiate the structure of the investments made by the Corporation;

(iii)    close and monitor the Corporation’s investments;

(iv)    determine the securities and other assets that the Corporation will purchase, retain, or sell;

(v)    perform due diligence on prospective portfolio companies; and

(vi)    provide the Corporation with such other investment advisory, research and related services as the Corporation may, from time to time, reasonably require for the investment of its funds.

The Adviser shall have the power and authority on behalf of the Corporation to effectuate its investment decisions for the Corporation, including the execution and delivery of all documents relating to the Corporation’s investments and the placing of orders for other purchase or sale transactions on behalf of the Corporation. In the event that the Corporation determines to incur debt financing, the Adviser will arrange for such financing on the Corporation’s behalf, subject to the oversight and approval of the Board. If it is necessary for the Adviser to make investments on behalf of the Corporation through a special purpose vehicle, the Adviser shall have authority to create or arrange for the creation of such special purpose vehicle and to make such investments through such special purpose vehicle in accordance with the Investment Company Act.

(b)    The Adviser hereby accepts such employment and agrees during the term hereof to render the services described herein for the compensation provided herein.

(c)    Subject to the requirements of the Investment Company Act, the Adviser is hereby authorized to enter into one or more sub-advisory agreements with other investment advisers (each, a “Sub-Adviser”) pursuant to which the Adviser may obtain the services of the Sub-Adviser(s) to assist the Adviser in providing the investment advisory services required to be provided by the Adviser under Section 1(a) hereof. Specifically, the Adviser may retain a Sub-Adviser to recommend specific securities or other investments based upon the Corporation’s investment objectives and policies, and work, along with the Adviser, in structuring, negotiating, arranging or effecting the acquisition or disposition of such investments and monitoring investments on behalf of the Corporation, subject to the oversight of the Adviser and the Corporation. The Adviser, and not the Corporation, shall be responsible for any compensation payable to any Sub-Adviser. Any sub-advisory agreement entered into by the Adviser shall be in accordance with the requirements of the Investment Company Act and other applicable federal and state law. Nothing in this subsection (c) will obligate the Adviser to pay any expenses that are the expenses of the Corporation under Section 2 hereof.

(d)    The Adviser, and any Sub-Adviser, shall for all purposes herein provided each be deemed to be an independent contractor and, except as expressly provided or authorized herein, shall have no authority to act for or represent the Corporation in any way or otherwise be deemed an agent of the Corporation.

(e)    The Adviser shall keep and preserve for the period required by the Investment Company Act any books and records relevant to the provision of its investment advisory services to the Corporation and shall specifically maintain all books and records with respect to the Corporation’s portfolio transactions and shall render to the Board such periodic and special reports as the Board may reasonably request. The Adviser agrees that all records that it maintains for the Corporation are the property of the Corporation and will surrender promptly to the Corporation any such records upon the Corporation’s request, provided that the Adviser may retain a copy of such records.

2.    Corporation’s Responsibilities and Expenses Payable by the Corporation. All investment professionals of the Adviser and its staff, when and to the extent engaged in providing investment advisory services required to be provided by the Adviser under Section 1(a) hereof, and the compensation and routine overhead expenses of such personnel allocable to such services, will be provided and paid for by the Adviser and not by the Corporation. The Corporation will bear all costs and expenses of its operations and transactions, including those relating to:

• organization;

• calculating the Corporation’s net asset value (including the cost and expenses of any independent valuation firm);

• expenses incurred by the Adviser payable to third parties, including agents, consultants or other advisors, in monitoring financial and legal affairs for the Corporation and in monitoring the Corporation’s investments (including the cost of consultants hired to develop information technology systems designed to monitor the Corporation’s investments) and performing due diligence on its prospective portfolio companies;

• interest payable on debt, if any, incurred to finance the Corporation’s investments;

• offerings of the Corporation’s common stock and other securities;

• investment advisory and management fees;

• administration fees, if any, payable under the Amended and Restated Administration Agreement (the “Administration Agreement”) between the Corporation and Ares Operations LLC or any successor thereto (the “Administrator”), the Corporation’s administrator;

• fees payable to third parties, including agents, consultants or other advisors, relating to, or associated with, evaluating and making investments (including payments to third party vendors for financial information services);

• transfer agent and custodial fees;

• federal and state registration fees;

• all costs of registration and listing the Corporation’s shares on any securities exchange;

• federal, state and local taxes;

• independent directors’ fees and expenses;

• costs of preparing and filing reports or other documents required by governmental bodies (including the SEC);

• costs of any reports, proxy statements or other notices to stockholders, including printing costs;

• the Corporation’s allocable portion of the fidelity bond, directors and officers/errors and omissions liability insurance, and any other insurance premiums;

• direct costs and expenses of administration, including printing, mailing, long distance telephone, cellular phone and data service, copying, secretarial and other staff, independent auditors and outside legal costs; and

• all other expenses incurred by the Corporation or the Administrator in connection with administering the Corporation’s business (including payments under the Administration Agreement between the Corporation and the Administrator based upon the Corporation’s allocable portion of the Administrator’s overhead in performing its obligations under the Administration Agreement, including rent and the allocable portion of the cost of the Corporation’s officers and their respective staffs (including travel expenses)).

3.    Compensation of the Adviser. The Corporation agrees to pay, and the Adviser agrees to accept, as compensation for the services provided by the Adviser hereunder, a base management fee (“Base Management Fee”) and an incentive fee (“Incentive Fee”) as hereinafter set forth. The Corporation shall make any payments due hereunder to the Adviser or to the Adviser’s designee as the Adviser may otherwise direct. To the extent permitted by applicable law, the Adviser may elect, or the Corporation may adopt a deferred compensation plan pursuant to which the Adviser may elect, to defer all or a portion of its fees hereunder for a specified period of time.

(a)    The Base Management Fee shall be 1.50% per annum of the average value of the Corporation’s total assets (other than cash or cash equivalents but including assets purchased with borrowed funds) at the end of each of the two most recently completed calendar quarters; provided, however, the Base Management Fee shall be 1.00% per annum of the average value of the Corporation’s total assets (other than cash or cash equivalents but including assets purchased with borrowed funds) at the end of each of the two most recently completed calendar quarters that exceeds an amount equal to the product of (i) 200% and (ii) the Corporation’s net asset value at the end of the most recently completed calendar quarter. The Base Management Fee will be payable quarterly in arrears and appropriately adjusted for any share issuances or repurchases during the current calendar quarter. Base Management Fees for any partial month or quarter will be appropriately pro rated.

(b)    The Incentive Fee shall consist of two parts, as follows:

(i)    One part will be calculated and payable quarterly in arrears based on the Pre-Incentive Fee net investment income for the quarter. “Pre-Incentive Fee net investment income” means interest income, dividend income and any other income (including any other fees (other than fees for providing managerial assistance), such as commitment, origination, structuring, diligence and consulting fees or other fees that the Corporation receives from portfolio companies) accrued by the Corporation during the calendar quarter, minus the Corporation’s operating expenses for the quarter (including the Base Management Fee, expenses payable under the Administration Agreement, and any interest expense and dividends paid on any issued and outstanding preferred stock, but excluding the Incentive Fee).

Pre-Incentive Fee net investment income includes, in the case of investments with a deferred interest feature (such as market discount, debt instruments with payment-in-kind interest, preferred stock with payment-in-kind dividends and zero coupon securities), accrued income that we have not yet received in cash. Pre-Incentive Fee net investment income does not include any realized capital gains, realized and unrealized capital losses or unrealized capital appreciation or depreciation.

Pre-Incentive Fee net investment income, expressed as a rate of return on the value of the Corporation’s net assets (defined as total assets less indebtedness) at the end of the immediately preceding calendar quarter, will be compared to a “hurdle rate” of 1.75% per quarter (7% annualized). The Corporation will pay the Adviser an Incentive Fee with respect to the Corporation’s Pre-Incentive Fee net investment income in each calendar quarter as follows:

(A)    no Incentive Fee in any calendar quarter in which the Corporation’s Pre-Incentive Fee net investment income does not exceed the hurdle rate;

(B)    100% of the Corporation’s Pre-Incentive Fee net investment income with respect to that portion of such Pre-Incentive Fee net investment income, if any, that exceeds the hurdle rate but is less than 2.1875% in any calendar quarter (8.75% annualized); and

(C)    20% of the amount of the Corporation’s Pre-Incentive Fee net investment income, if any, that exceeds 2.1875% in any calendar quarter (8.75% annualized).

These calculations will be appropriately pro rated for any period of less than three months and adjusted for any share issuances or repurchases during the current quarter.

(ii)    The second part of the Incentive Fee (the “Capital Gains Fee”) will be determined and payable in arrears as of the end of each calendar year (or upon termination of this Agreement as set forth below), commencing with the calendar year ending on December 31, 2004, and is calculated at the end of each applicable year by subtracting (1) the sum of the Corporation’s cumulative aggregate realized capital losses and aggregate unrealized capital depreciation from (2) the Corporation’s cumulative aggregate realized capital gains, in each case calculated from October 8, 2004. If such amount is positive at the end of such year, then the Capital Gains Fee for such year is equal to 20.0% of such amount, less the aggregate amount of Capital Gains Fees paid in all prior years. If such amount is negative, then there is no Capital Gains Fee for such year. If this Agreement shall terminate as of a date that is not a calendar year end, the termination date shall be treated as though it were a calendar year end for purposes of calculating and paying a Capital Gains Fee. This amendment and restatement of the Restated Agreement shall not be treated as such a termination.

For purposes of this Section 3(b)(ii):

The cumulative aggregate realized capital gains are calculated as the sum of the differences, if positive, between (a) the net sales price of each investment in the Corporation’s portfolio when sold and (b) the accreted or amortized cost basis of such investment.

The cumulative aggregate realized capital losses are calculated as the sum of the amounts by which (a) the net sales price of each investment in the Corporation’s portfolio when sold is less than (b) the accreted or amortized cost basis of such investment.

The aggregate unrealized capital depreciation is calculated as the sum of the differences, if negative, between (a) the valuation of each investment in the Corporation’s portfolio as of the applicable Capital Gains Fee calculation date and (b) the accreted or amortized cost basis of such investment.

Notwithstanding the foregoing, if the Corporation is required by United States generally accepted accounting principles (“GAAP”) to record an investment at its fair value as of the time of acquisition instead of at the actual amount paid for such investment (including, for example, as a result of the application of the acquisition method of accounting), then solely for the purposes of calculating the Capital Gains Fee, the “accreted or amortized cost basis” of an investment shall be an amount (the “Contractual Cost Basis”) equal to (1) (x) the actual amount paid by the Corporation for such investment plus (y) any amounts recorded in the Corporation’s financial statements as required by GAAP that are attributable to the accretion of such investment plus (z) any other adjustments made to the cost basis included in the Corporation’s financial statements, including payment-in-kind interest or additional amounts funded (net of repayments) minus (2) any amounts recorded in the Corporation’s financial statements as required by GAAP that are attributable to the amortization of such investment. For the avoidance of doubt, the Contractual Cost Basis as determined pursuant to the foregoing sentence may be higher or lower than the fair value of such investment (as determined in accordance with GAAP) at the time of acquisition. In connection with the foregoing, in the event investments are purchased in a single transaction or series of related transactions for an aggregate purchase price without the Corporation allocating such purchase price to specific investments, the Corporation may assign a Contractual Cost Basis to a specific investment equal to such investment’s Pro Rata Share of such aggregate purchase price paid. “Pro Rata Share” means the resulting percentage determined using the amount at which a specific investment acquired in a single transaction or series of related transactions is recorded in the Corporation’s financial statements at the time of acquisition according to GAAP divided by the total amount at which all investments acquired in the same transaction or series of related transactions are recorded in the Corporation’s financial statements at the time of acquisition according to GAAP.

(iii)    Payment of any Incentive Fee otherwise earned by the Adviser shall be deferred (“Deferred Incentive Fees”) if, during the most recent four full calendar quarter period ending on or prior to the date such payment is to be made, the sum of (a) the Corporation’s aggregate distributions to its stockholders and (b) the change in the Corporation’s net assets (before taking into account any incentive fees payable during that period) is less than 7.0% of the Corporation’s net assets at the beginning of such period. These calculations will be appropriately adjusted for any share issuances or repurchases during the relevant period. Any Deferred Incentive Fees shall be carried over for payment in subsequent calculation periods by the Corporation, to the extent such payment could be otherwise be made under this Agreement.

4.    Covenants of the Adviser. The Adviser covenants that it is registered as an investment adviser under the Advisers Act. The Adviser agrees that its activities will at all times be in compliance in all material respects with all applicable federal and state laws governing its operations and investments.

5.    Excess Brokerage Commissions. The Adviser is hereby authorized, to the fullest extent now or hereafter permitted by law, to cause the Corporation to pay a member of a national securities exchange, broker or dealer an amount of commission for effecting a securities transaction in excess of the amount of commission another member of such exchange, broker or dealer would have charged for effecting that transaction, if the Adviser determines in good faith, taking into account such factors as price (including the applicable brokerage commission or dealer spread), size of order, difficulty of execution, and operational facilities of the firm and the firm’s risk and skill in positioning blocks of securities, that such amount of commission is reasonable in relation to the value of the brokerage and/or research services provided by such member, broker or dealer, viewed in terms of either that particular transaction or its overall responsibilities with respect to the Corporation’s portfolio, and constitutes the best net results for the Corporation.

6.    Limitations on the Employment of the Adviser. The services of the Adviser to the Corporation are not exclusive, and the Adviser may engage in any other business or render similar or different services to others including, without limitation, the direct or indirect sponsorship or management of other investment based accounts or commingled pools of capital, however structured, having investment objectives similar to those of the Corporation, and nothing in this Agreement shall limit or restrict the right of any member, manager, partner, officer or employee of the Adviser to engage in any other business or to devote his or her time and attention in part to any other business, whether of a similar or dissimilar nature, or to receive any fees or compensation in connection therewith (including fees for serving as a director of, or providing consulting services to, one or more of the Corporation’s portfolio companies, subject to applicable law). So long as this Agreement or any extension, renewal or amendment remains in effect, the Adviser shall be the only investment adviser for the Corporation, subject to the Adviser’s right to enter into sub-advisory agreements. The Adviser assumes no responsibility under this Agreement other than to render the services called for hereunder. It is understood that directors, officers, employees and stockholders of the Corporation are or may become interested in the Adviser and its affiliates, as directors, officers, employees, partners, stockholders, members, managers or otherwise, and that the Adviser and directors, officers, employees, partners, stockholders, members and managers of the Adviser and its affiliates are or may become similarly interested in the Corporation as stockholders or otherwise.

7.    Responsibility of Dual Directors, Officers and/or Employees. If any person who is a member, manager, partner, officer or employee of the Adviser or the Administrator is or becomes a director, officer and/or employee of the Corporation and acts as such in any business of the Corporation, then such member, manager, partner, officer and/or employee of the Adviser or the Administrator shall be deemed to be acting in such capacity solely for the Corporation, and not as a member, manager, partner, officer or employee of the Adviser or the Administrator or under the control or direction of the Adviser or the Administrator, even if paid by the Adviser or the Administrator.

8.    Limitation of Liability of the Adviser; Indemnification. The Adviser, its members and their respective officers, managers, partners, agents, employees, controlling persons, members and any other person affiliated with any of them (collectively, the “Indemnified Parties”), shall not be liable to the Corporation for any action taken or omitted to be taken by the Adviser in connection with the performance of any of its duties or obligations under this Agreement or otherwise as an investment adviser of the Corporation, except to the extent specified in Section 36(b) of the Investment Company Act concerning loss resulting from a breach of fiduciary duty (as the same is finally determined by judicial proceedings) with respect to the receipt of compensation for services. The Corporation shall indemnify, defend and protect the Indemnified Parties (each of whom shall be deemed a third party beneficiary hereof) and hold them harmless from and against all damages, liabilities, costs and expenses (including reasonable attorneys’ fees and amounts reasonably paid in settlement) incurred by the Indemnified Parties in or by reason of any pending, threatened or completed action, suit, investigation or other proceeding (including an action or suit by or in the right of the Corporation or its security holders) arising out of or otherwise based upon the performance of any of the Adviser’s duties or obligations under this Agreement or otherwise as an investment adviser of the Corporation. Notwithstanding the foregoing provisions of this Section 8 to the contrary, nothing contained herein shall protect or be deemed to protect the Indemnified Parties against or entitle or be deemed to entitle the Indemnified Parties to indemnification in respect of, any liability to the Corporation or its security holders to which the Indemnified Parties would otherwise be subject by reason of willful misfeasance, bad faith or gross negligence in the performance of any Indemnified Party’s duties or by reason of the reckless disregard of the Adviser’s duties and obligations under this Agreement (as the same shall be determined in accordance with the Investment Company Act and any interpretations or guidance by the SEC or its staff thereunder).

9.    Duration and Termination of Agreement. This Agreement shall remain in effect for one year after the date hereof, and thereafter shall continue automatically for successive annual periods, provided that such continuance is specifically approved at least annually by

(a)    the vote of the Board, or by the vote of stockholders holding a majority of the outstanding voting securities of the Corporation and

(b)    the vote of a majority of the Corporation’s Directors who are not parties to this Agreement or “interested persons” (as such term is defined in Section 2(a)(19) of the Investment Company Act) of any party to this Agreement, in accordance with the requirements of the Investment Company Act.

This Agreement may be terminated at any time, without the payment of any penalty, upon 60 days’ written notice, by the vote of stockholders holding a majority of the outstanding voting securities of the Corporation, or by the vote of the Corporation’s Directors or by the Adviser. This Agreement will automatically terminate in the event of its “assignment” (as such term is defined for purposes of Section 15(a)(4) of the Investment Company Act). The provisions of Section 8 hereof shall remain in full force and effect, and the Adviser shall remain entitled to the benefits thereof, notwithstanding any termination of this Agreement. Further, notwithstanding the termination or expiration of this Agreement as aforesaid, the Adviser shall be entitled to any amounts owed under Section 3 hereof through the date of termination or expiration and Section 8 hereof shall continue in full force and effect and apply to the Adviser and its representatives as and to the extent applicable.

10.    Amendments of this Agreement. This Agreement may not be amended or modified except by an instrument in writing signed by all parties hereto, but the consent of the Corporation must be obtained in conformity with the requirements of the Investment Company Act.

11.    Governing Law. This Agreement shall be governed by, and construed in accordance with, the laws of the State of New York, including without limitation Sections 5‑1401 and 5‑1402 of the New York General Obligations Law and New York Civil Practice Laws and Rules 327(b), and the applicable provisions of the Investment Company Act, if any. To the extent that the applicable laws of the State of New York, or any of the provisions herein, conflict with the applicable provisions of the Investment Company Act, if any, the latter shall control. The parties unconditionally and irrevocably consent to the exclusive jurisdiction of the courts located in the State of New York and waive any objection with respect thereto, for the purpose of any action, suit or proceeding arising out of or relating to this Agreement or the transactions contemplated hereby.

12.    No Waiver. The failure of either party to enforce at any time for any period the provisions of or any rights deriving from this Agreement shall not be construed to be a waiver of such provisions or rights or the right of such party thereafter to enforce such provisions, and no waiver shall be binding unless executed in writing by all parties hereto.

13.    Severability. If any term or other provision of this Agreement is invalid, illegal or incapable of being enforced by any law or public policy, all other terms and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to any party.

14.    Headings. The descriptive headings contained in this Agreement are for convenience of reference only and shall not affect in any way the meaning or interpretation of this Agreement.

15.    Counterparts. This Agreement may be executed in one or more counterparts, each of which when executed shall be deemed to be an original instrument and all of which taken together shall constitute one and the same agreement.

16.    Notices. All notices, requests, claims, demands and other communications hereunder shall be in writing and shall be given or made (and shall be deemed to have been duly given or made upon receipt) by delivery in person, by overnight courier service (with signature required), by facsimile, or by registered or certified mail (postage prepaid, return receipt requested) to the respective parties at their respective principal executive office addresses.

17.    Entire Agreement. This Agreement constitutes the entire agreement of the parties with respect to the subject matter hereof and supersedes all prior agreements and undertakings (including the Restated Agreement), both written and oral, between the parties with respect to such subject matter.

18.    Certain Matters of Construction.

(a)    The words “hereof”, “herein”, “hereunder” and words of similar import shall refer to this Agreement as a whole and not to any particular Section or provision of this Agreement, and reference to a particular Section hereof shall include all subsections thereof.

(b)    Definitions shall be equally applicable to both the singular and plural forms of the terms defined, and references to the masculine, feminine or neuter gender shall include each other gender.

(c)    The word “including” shall mean including without limitation.

[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed on the date above written.

ARES CAPITAL CORPORATION

By: /s/ Penni F. Roll    
Name:    Penni F. Roll
Title:    Chief Financial Officer

ARES CAPITAL MANAGEMENT LLC

By: /s/ Joshua M. Bloomstein    
Name:    Joshua M. Bloomstein
Title:    Vice President and Assistant          Secretary

EX-31.1

Exhibit 31.1

Certification of Chief Executive Officer

of Periodic Report Pursuant to Rule 13a-14(a) and Rule 15d- 14(a)

I, Michael J Arougheti, certify that:

1.I have reviewed this Quarterly Report on Form 10-Q of Ares Management Corporation;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation;

(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 6, 2019

/s/ Michael J Arougheti
Name:	Michael J Arougheti
Title:	Co‑Founder, Chief Executive Officer & President (Principal Executive Officer)

EX-31.2

Exhibit 31.2

Certification of Chief Financial Officer

of Periodic Report Pursuant to Rule 13a-14(a) and Rule 15d-14(a)

I, Michael R. McFerran, certify that:

1.I have reviewed this Quarterly Report on Form 10-Q of Ares Management Corporation;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation;

(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 6, 2019

/s/ Michael R. McFerran
Name:	Michael R. McFerran
Title:	Chief Financial Officer & Chief Operating Officer (Principal Financial and Accounting Officer)

EX-32.1

Exhibit 32.1

Certification of Chief Executive Officer and Chief Financial Officer

Pursuant to

18 U.S.C. Section 1350

In connection with the Quarterly Report on Form 10-Q of Ares Management Corporation (the “Company”) for the quarter ended September 30, 2019 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), Michael J Arougheti, as Chief Executive Officer of the Company, and Michael R. McFerran, as Chief Financial Officer of the Company, each hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge:

1.The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2.The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: November 6, 2019

/s/ Michael J Arougheti
Name:	Michael J Arougheti
Title:	Co‑Founder, Chief Executive Officer & President (Principal Executive Officer)
/s/ Michael R. McFerran
Name:	Michael R. McFerran
Title:	Chief Financial Officer & Chief Operating Officer (Principal Financial and Accounting Officer)

A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to Ares Management Corporation and will be retained by Ares Management Corporation and furnished to the Securities and Exchange Commission or its staff upon request.

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CONSOLIDATION (Variable Interest Entities) (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018	Dec. 31, 2018
Variable Interest Entity [Line Items]
Assets of consolidated VIEs	$ 11,596,756		$ 11,596,756		$ 10,154,692
Liabilities of consolidated VIEs	9,753,974		9,753,974		8,760,351
Consolidated Funds
Variable Interest Entity [Line Items]
Net income attributable to non-controlling interests related to consolidated VIEs	15,908	$ 13,169	41,878	$ 23,418
Non-Consolidated Variable Interest Entities
Variable Interest Entity [Line Items]
Maximum exposure to loss attributable to the Company's investment in VIEs	270,980		270,980		222,477
Consolidated VIEs
Variable Interest Entity [Line Items]
Maximum exposure to loss attributable to the Company's investment in VIEs	196,198		196,198		186,455
Consolidated VIEs | Consolidated Funds
Variable Interest Entity [Line Items]
Assets of consolidated VIEs	8,974,941		8,974,941		8,141,280
Liabilities of consolidated VIEs	$ 8,160,607		$ 8,160,607		$ 7,479,383

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SEGMENT REPORTING (Revenue Reconciliation) (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Revenue adjustment
Total segment revenue	$ 272,635	$ 289,102	$ 864,179	$ 847,241
Ares Management L.P
Revenue adjustment
Total revenues	466,490	240,777	1,328,509	711,029
Operating segment | Ares Management L.P
Revenue adjustment
Performance (income) loss-unrealized	(181,174)	37,999	(426,411)	127,224
Total segment revenue	272,635	289,102	864,179	847,241
Reconciling items
Revenue adjustment
Principal investment income	(13,865)	7,886	(45,336)	(9,544)
Total segment revenue	(193,855)	48,325	(464,330)	136,212
Reconciling items | Non-Controlling interest | Subsidiaries
Revenue adjustment
Total segment revenue	(396)	13	(739)	60
Reconciling items | Performance income reclass
Revenue adjustment
Performance fee reclass	(27)	795	553	(211)
Management fees | Ares Management L.P
Revenue adjustment
Total revenues	251,591	204,524	714,096	588,071
Management fees | Operating segment | Ares Management L.P
Revenue adjustment
Total revenues	259,978	213,662	739,269	612,792
Management fees | Consolidated Funds | Eliminations
Revenue adjustment
Total segment revenue	8,780	9,138	25,928	24,721
Incentive fees | Ares Management L.P
Revenue adjustment
Total revenues	1,712	872	28,747	13,683
Incentive fees | Consolidated Funds | Eliminations
Revenue adjustment
Total revenues	0	0	5,184	4,000
Principal investment income (loss) | Ares Management L.P
Revenue adjustment
Total revenues	11,389	(7,464)	45,992	(684)
Principal investment income (loss) | Consolidated Funds | Eliminations
Revenue adjustment
Total revenues	2,476	(422)	(656)	10,228
Administrative, transaction and other fees
Revenue adjustment
Total revenues	0	0	0	0
Administrative, transaction and other fees | Ares Management L.P
Revenue adjustment
Total revenues	14,995	10,943	35,866	37,372
Administrative, transaction and other fees | Reconciling items
Revenue adjustment
Total revenues	$ (9,649)	$ (7,084)	$ (22,853)	$ (20,266)

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EQUITY (Preferred Stock) (Details) - $ / shares	12 Months Ended
	Dec. 31, 2018	Sep. 30, 2019
Class of Stock [Line Items]
Dividend rate, percentage	7.00%
Preferred stock, par value (in dollars per share)	$ 0.01	$ 0.01
Redemption price (in dollars per share)	$ 25.00
Preferred Equity
Class of Stock [Line Items]
Partners' capital (in shares)	12,400,000	12,400,000

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CONSOLIDATION (Income Statement) (Details) - USD ($) $ in Thousands	3 Months Ended							9 Months Ended
	Sep. 30, 2019	Jun. 30, 2019	Mar. 31, 2019	Dec. 31, 2018	Sep. 30, 2018	Jun. 30, 2018	Mar. 31, 2018	Sep. 30, 2019	Sep. 30, 2018
Expenses
Total expenses	$ 395,701				$ 227,188			$ 1,100,509	$ 654,488
Other income (expense)
Total other income	32,787				38,754			95,919	108,920
Income before taxes	103,576				52,343			323,919	165,461
Income tax expense (benefit)	11,701				5,131			35,590	29,659
Net income	91,875	$ 74,878	$ 121,576	$ 16,337	47,212	$ 14,169	$ 74,421	288,329	135,802
Net income attributable to Ares Management Corporation	33,331				15,910			110,419	45,083
Less: Series A Preferred Stock dividends paid	5,425				5,425			16,275	16,275
Net income attributable to Ares Management Corporation Class A common stockholders	27,906				10,485			94,144	28,808
Eliminations
Revenues
Total revenues	(11,256)				(8,716)			(30,456)	(38,949)
Expenses
Compensation and benefits	0				0			0	0
Performance related compensation	0				0			0	0
General, administrative and other expenses	0				0			0	0
Total expenses	(8,780)				(9,138)			(31,112)	(28,721)
Other income (expense)
Net realized and unrealized gains on investments	2,044				(998)			690	(1,830)
Interest and dividend income	(770)				(93)			(1,922)	(93)
Interest expense					0
Other income (expense), net	1,124				86			1,214	619
Total other income	1,124				86			1,214	620
Income before taxes	(1,352)				508			1,870	(9,608)
Income tax expense (benefit)	0				0			0	0
Net income	(1,352)				508			1,870	(9,608)
Net income attributable to Ares Management Corporation					0
Less: Series A Preferred Stock dividends paid	0				0			0	0
Net income attributable to Ares Management Corporation Class A common stockholders	0				0			0	0
Consolidated Funds
Expenses
Expenses of Consolidated Funds	10,884				12,833			30,865	49,261
Other income (expense)
Net realized and unrealized gains on investments	(992)				5,437			3,256	26,839
Interest expense	(71,134)				(62,763)			(204,051)	(163,942)
Interest and other income of Consolidated Funds	107,922				93,062			303,312	250,117
Net income attributable to non-controlling interests related to consolidated VIEs	15,908				13,169			41,878	23,418
Consolidated Funds | Reportable legal entity
Expenses
Expenses of Consolidated Funds	19,664				21,971			61,977	77,982
Total expenses	19,664				21,971			61,977	77,982
Other income (expense)
Net realized and unrealized gains on investments	1,399				4,686			4,661	26,053
Interest expense	(72,251)				(63,103)			(206,688)	(165,080)
Interest and other income of Consolidated Funds	107,922				93,062			303,312	250,117
Total other income	37,070				34,645			101,285	111,090
Income before taxes	17,406				12,674			39,308	33,108
Income tax expense (benefit)	146				13			(700)	82
Net income	17,260				12,661			40,008	33,026
Net income attributable to non-controlling interests related to consolidated VIEs	17,260				12,661			40,008	33,026
Consolidated Funds | Eliminations
Expenses
Expenses of Consolidated Funds	(8,780)				(9,138)			(31,112)	(28,721)
Other income (expense)
Net realized and unrealized gains on investments	(2,391)				751			(1,405)	786
Interest expense	1,117				340			2,637	1,138
Interest and other income of Consolidated Funds	0				0			0	0
Net income attributable to non-controlling interests related to consolidated VIEs	(1,352)				508			1,870	(9,608)
AOG
Other income (expense)
Net income attributable to non-controlling interests related to consolidated VIEs	42,636				18,133			136,032	67,301
AOG | Reportable legal entity
Other income (expense)
Net income attributable to non-controlling interests related to consolidated VIEs	42,636				18,133			136,032	67,301
AOG | Eliminations
Other income (expense)
Net income attributable to non-controlling interests related to consolidated VIEs	0				0			0	0
Ares Management L.P
Revenues
Total revenues	466,490				240,777			1,328,509	711,029
Expenses
Compensation and benefits	166,216				145,594			485,232	419,225
Performance related compensation	139,216				17,606			388,424	30,479
General, administrative and other expenses	79,385				51,155			195,988	155,523
Other income (expense)
Net realized and unrealized gains on investments	1,522				5,542			5,519	7,970
Interest and dividend income	2,030				808			5,526	6,511
Interest expense	(4,691)				(4,143)			(16,073)	(17,088)
Other income (expense), net	(1,870)				811			(1,570)	(1,487)
Ares Management L.P | Affiliated entity | ARCC
Other income (expense)
Management fees, part I fees	38,786				33,377			116,336	91,660
Ares Management L.P | Reportable legal entity
Revenues
Total revenues	477,746				249,493			1,358,965	749,978
Expenses
Compensation and benefits	166,216				145,594			485,232	419,225
Performance related compensation	139,216				17,606			388,424	30,479
General, administrative and other expenses	79,385				51,155			195,988	155,523
Total expenses	384,817				214,355			1,069,644	605,227
Other income (expense)
Net realized and unrealized gains on investments	(522)				6,540			4,829	9,800
Interest and dividend income	2,800				901			7,448	6,604
Interest expense	(4,691)				(4,143)			(16,073)	(17,088)
Other income (expense), net	(2,994)				725			(2,784)	(2,106)
Total other income	(5,407)				4,023			(6,580)	(2,790)
Income before taxes	87,522				39,161			282,741	141,961
Income tax expense (benefit)	11,555				5,118			36,290	29,577
Net income	75,967				34,043			246,451	112,384
Net income attributable to Ares Management Corporation	33,331				15,910			110,419	45,083
Less: Series A Preferred Stock dividends paid	5,425				5,425			16,275	16,275
Net income attributable to Ares Management Corporation Class A common stockholders	27,906				10,485			94,144	28,808
Management fees | Eliminations
Revenues
Total revenues	(8,780)				(9,138)			(25,928)	(24,721)
Management fees | Ares Management L.P
Revenues
Total revenues	251,591				204,524			714,096	588,071
Management fees | Ares Management L.P | Reportable legal entity
Revenues
Total revenues	260,371				213,662			740,024	612,792
Carried interest allocation
Revenues
Total revenues								503,808
Carried interest allocation | Eliminations
Revenues
Total revenues	0				0			0	0
Carried interest allocation | Ares Management L.P
Revenues
Total revenues	186,803				31,902			503,808	72,587
Carried interest allocation | Ares Management L.P | Reportable legal entity
Revenues
Total revenues	186,803				31,902			503,808	72,587
Incentive fees | Eliminations
Revenues
Total revenues	0				0			(5,184)	(4,000)
Incentive fees | Ares Management L.P
Revenues
Total revenues	1,712				872			28,747	13,683
Incentive fees | Ares Management L.P | Reportable legal entity
Revenues
Total revenues	1,712				872			33,931	17,683
Principal investment income (loss) | Eliminations
Revenues
Total revenues	(2,476)				422			656	(10,228)
Principal investment income (loss) | Ares Management L.P
Revenues
Total revenues	11,389				(7,464)			45,992	(684)
Principal investment income (loss) | Ares Management L.P | Reportable legal entity
Revenues
Total revenues	13,865				(7,886)			45,336	9,544
Administrative, transaction and other fees
Revenues
Total revenues	0				0			0	0
Administrative, transaction and other fees | Eliminations
Revenues
Total revenues	0				0			0	0
Administrative, transaction and other fees | Ares Management L.P
Revenues
Total revenues	14,995				10,943			35,866	37,372
Administrative, transaction and other fees | Ares Management L.P | Reportable legal entity
Revenues
Total revenues	$ 14,995				$ 10,943			$ 35,866	$ 37,372

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COMMITMENTS AND CONTINGENCIES (Narrative) (Details) - USD ($) $ in Millions	Sep. 30, 2019	Dec. 31, 2018
COMMITMENTS AND CONTINGENCIES
Unfunded capital commitments	$ 303.9	$ 267.6
Performance Income
Performance Income
Performance income subject to potential clawback provision	405.6	469.0
Performance income subject to potential claw back provision that are reimbursable by professionals	301.2	351.9
Performance income subject to potential claw back provision, repayment obligation	$ 0.4	$ 0.4

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COMMITMENTS AND CONTINGENCIES (Leases: Lease Term and Discount Rate) (Details)	Sep. 30, 2019
Commitments and Contingencies Disclosure [Abstract]
Weighted-average remaining lease terms, operating lease	6 years 8 months 12 days
Weighted-average remaining lease terms, finance lease	2 years 6 months
Weighted-average discount rate, operating lease	4.00%
Weighted-average discount rate, finance lease	3.44%

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SEGMENT REPORTING (Tables)

9 Months Ended

Sep. 30, 2019

Segment Reporting [Abstract]

Schedule of financial results for Company's operating segments, as well as the OMG

The following table presents the financial results for the Company’s operating segments, as well as the OMG, for the three months ended September 30, 2019:

	Credit Group			Private Equity Group			Real Estate Group			Total Segments			OMG			Total
Management fees (Credit Group includes ARCC Part I Fees of $38,786)	$	178,447		$	54,543		$	26,988		$	259,978		$	—		$	259,978
Other fees	5,174			141			28			5,343			—			5,343
Compensation and benefits	(67,770		)	(19,226		)	(14,523		)	(101,519		)	(34,061		)	(135,580		)
General, administrative and other expenses	(12,789		)	(5,532		)	(3,341		)	(21,662		)	(21,405		)	(43,067		)
Fee related earnings	103,062			29,926			9,152			142,140			(55,466		)	86,674
Performance income—realized	1,037			—			6,277			7,314			—			7,314
Performance related compensation—realized	(630		)	—			(1,412		)	(2,042		)	—			(2,042		)
Realized net performance income	407			—			4,865			5,272			—			5,272
Investment income—realized	114			47			2,015			2,176			—			2,176
Interest and other investment income (expense) —realized	6,964			435			1,588			8,987			(11		)	8,976
Interest expense	(1,561		)	(1,628		)	(967		)	(4,156		)	(535		)	(4,691		)
Realized net investment income (loss)	5,517			(1,146		)	2,636			7,007			(546		)	6,461
Realized income	$	108,986		$	28,780		$	16,653		$	154,419		$	(56,012	)	$	98,407

The following table presents the financial results for the Company’s operating segments, as well as the OMG, for the three months ended September 30, 2018:

	Credit Group			Private Equity Group			Real Estate Group			Total Segments			OMG			Total
Management fees (Credit Group includes ARCC Part I Fees of $33,377)	$	145,414		$	48,287		$	19,961		$	213,662		$	—		$	213,662
Other fees	3,656			206			10			3,872			—			3,872
Compensation and benefits	(55,239		)	(17,443		)	(10,733		)	(83,415		)	(31,957		)	(115,372		)
General, administrative and other expenses	(10,921		)	(5,866		)	(2,856		)	(19,643		)	(18,102		)	(37,745		)
Fee related earnings	82,910			25,184			6,382			114,476			(50,059		)	64,417
Performance income—realized	1,729			52,729			17,110			71,568			—			71,568
Performance related compensation—realized	(1,113		)	(42,045		)	(16,865		)	(60,023		)	—			(60,023		)
Realized net performance income	616			10,684			245			11,545			—			11,545
Investment income—realized	1,063			8,104			6,846			16,013			22			16,035
Interest and other investment income—realized	1,604			1,032			486			3,122			442			3,564
Interest expense	(1,527		)	(1,577		)	(417		)	(3,521		)	(622		)	(4,143		)
Realized net investment income (loss)	1,140			7,559			6,915			15,614			(158		)	15,456
Realized income	$	84,666		$	43,427		$	13,542		$	141,635		$	(50,217	)	$	91,418

The following table presents the financial results for the Company’s operating segments, as well as the OMG, for the nine months ended September 30, 2019:

	Credit Group			Private Equity Group			Real Estate Group			Total Segments			OMG			Total
Management fees (Credit Group includes ARCC Part I Fees of $116,336)	$	513,760		$	158,101		$	67,408		$	739,269		$	—		$	739,269
Other fees	12,179			141			709			13,029			—			13,029
Compensation and benefits	(193,083		)	(61,713		)	(35,735		)	(290,531		)	(100,716		)	(391,247		)
General, administrative and other expenses	(39,675		)	(14,501		)	(9,996		)	(64,172		)	(61,911		)	(126,083		)
Fee related earnings	293,181			82,028			22,386			397,595			(162,627		)	234,968
Performance income—realized	38,921			62,492			10,468			111,881			—			111,881
Performance related compensation—realized	(22,857		)	(49,993		)	(3,638		)	(76,488		)	—			(76,488		)
Realized net performance income	16,064			12,499			6,830			35,393			—			35,393
Investment income—realized	662			12,013			7,041			19,716			—			19,716
Interest and other investment income (expense) —realized	14,500			4,047			4,812			23,359			(13		)	23,346
Interest expense	(5,368		)	(6,239		)	(3,136		)	(14,743		)	(1,330		)	(16,073		)
Realized net investment income (loss)	9,794			9,821			8,717			28,332			(1,343		)	26,989
Realized income	$	319,039		$	104,348		$	37,933		$	461,320		$	(163,970	)	$	297,350

The following table presents the financial results for the Company’s operating segments, as well as the OMG, for the nine months ended September 30, 2018:

	Credit Group			Private Equity Group			Real Estate Group			Total Segments			OMG			Total
Management fees (Credit Group includes ARCC Part I Fees of $91,660)	$	413,028		$	147,492		$	52,272		$	612,792		$	—		$	612,792
Other fees	16,263			883			20			17,166			—			17,166
Compensation and benefits	(158,204		)	(55,314		)	(27,140		)	(240,658		)	(92,829		)	(333,487		)
General, administrative and other expenses	(32,069		)	(14,082		)	(7,679		)	(53,830		)	(55,729		)	(109,559		)
Fee related earnings	239,018			78,979			17,473			335,470			(148,558		)	186,912
Performance income—realized	48,472			137,542			31,269			217,283			—			217,283
Performance related compensation—realized	(27,778		)	(109,916		)	(25,079		)	(162,773		)	—			(162,773		)
Realized net performance income	20,694			27,626			6,190			54,510			—			54,510
Investment income—realized	2,429			17,791			9,946			30,166			1,658			31,824
Interest and other investment income—realized	7,828			4,011			1,370			13,209			2,178			15,387
Interest expense	(9,796		)	(4,245		)	(1,289		)	(15,330		)	(1,758		)	(17,088		)
Realized net investment income	461			17,557			10,027			28,045			2,078			30,123
Realized income	$	260,173		$	124,162		$	33,690		$	418,025		$	(146,480	)	$	271,545

Schedule of segment’ revenue, expenses and other income (expense)

The following table presents the components of the Company’s operating segments’ revenue, expenses and realized net investment income:

	For the Three Months Ended September 30,						For the Nine Months Ended September 30,
	2019			2018			2019			2018
Segment revenues
Management fees (includes ARCC Part I Fees of $38,786, $116,336 and $33,377, $91,660 for the three and nine months ended September 30, 2019 and 2018, respectively)	$	259,978		$	213,662		$	739,269		$	612,792
Other fees	5,343			3,872			13,029			17,166
Performance income—realized	7,314			71,568			111,881			217,283
Total segment revenues	$	272,635		$	289,102		$	864,179		$	847,241
Segment expenses
Compensation and benefits	$	101,519		$	83,415		$	290,531		$	240,658
General, administrative and other expenses	21,662			19,643			64,172			53,830
Performance related compensation—realized	2,042			60,023			76,488			162,773
Total segment expenses	$	125,223		$	163,081		$	431,191		$	457,261
Segment realized net investment income
Investment income—realized	$	2,176		$	16,013		$	19,716		$	30,166
Interest and other investment income- realized	8,987			3,122			23,359			13,209
Interest expense	(4,156		)	(3,521		)	(14,743		)	(15,330		)
Total segment realized net investment income	$	7,007		$	15,614		$	28,332		$	28,045

Schedule of segment revenues components

The following table reconciles the Company's consolidated revenues to segment revenue:

	For the Three Months Ended September 30,						For the Nine Months Ended September 30,
	2019			2018			2019			2018
Total consolidated revenue	$	466,490		$	240,777		$	1,328,509		$	711,029
Performance (income) loss-unrealized	(181,174		)	37,999			(426,411		)	127,224
Management fees of Consolidated Funds eliminated in consolidation	8,780			9,138			25,928			24,721
Incentive fees of Consolidated Funds eliminated in consolidation	—			—			5,184			4,000
Principal investment (income) loss of Consolidated Funds eliminated in consolidation	2,476			(422		)	(656		)	10,228
Administrative fees(1)	(9,649		)	(7,084		)	(22,853		)	(20,266		)
Performance income (loss) reclass(2)	(27		)	795			553			(211		)
Principal investment (income) loss	(13,865		)	7,886			(45,336		)	(9,544		)
Net (revenue) expense of non-controlling interests in consolidated subsidiaries	(396		)	13			(739		)	60
Total consolidation adjustments and reconciling items	(193,855		)	48,325			(464,330		)	136,212
Total segment revenue	$	272,635		$	289,102		$	864,179		$	847,241

(1) Represents administrative fees that are presented in administrative, transaction and other fees in the Company’s Condensed Consolidated Statements of Operations and are netted against the respective expenses for segment reporting.

(2)

Related to performance income for AREA Sponsor Holdings LLC, an investment pool. Changes in value of this investment are reflected within net realized and unrealized gains (losses) on investments in the Company’s Condensed Consolidated Statements of Operations.

Schedule of segment expenses components

The following table reconciles the Company's consolidated expenses to segment expenses:

	For the Three Months Ended September 30,						For the Nine Months Ended September 30,
	2019			2018			2019			2018
Total consolidated expenses	$	395,701		$	227,188		$	1,100,509		$	654,488
Performance related compensation-unrealized	(137,174		)	42,417			(311,936		)	132,294
Expenses of Consolidated Funds added in consolidation	(19,664		)	(21,971		)	(61,977		)	(77,982		)
Expenses of Consolidated Funds eliminated in consolidation	8,780			9,138			31,112			28,721
Administrative fees(1)	(9,649		)	(7,084		)	(22,853		)	(20,266		)
OMG expenses	(55,466		)	(50,059		)	(162,627		)	(148,558		)
Acquisition and merger-related expense	(4,777		)	(253		)	(10,757		)	19
Equity compensation expense	(22,393		)	(23,940		)	(73,974		)	(67,534		)
Unamortized placement fees	(4,366		)	(6,194		)	(17,319		)	(9,710		)
Depreciation and amortization expense(2)	(24,564		)	(5,347		)	(35,609		)	(20,234		)
Other expense(3)	—			—			—			(11,836		)
Expense of non-controlling interests in consolidated subsidiaries	(1,205		)	(814		)	(3,378		)	(2,141		)
Total consolidation adjustments and reconciling items	(270,478		)	(64,107		)	(669,318		)	(197,227		)
Total segment expenses	$	125,223		$	163,081		$	431,191		$	457,261

(1) Represents administrative fees that are presented in administrative, transaction and other fees in the Company’s Condensed Consolidated Statements of Operations and are netted against the respective expenses for segment reporting.

(2) 2019 period includes a $20.0 million non-cash impairment charge on certain intangible assets

(3) 2018 period includes $11.8 million payment to ARCC for rent and utilities for the years ended 2017, 2016, 2015 and 2014, and the first quarter of 2018.

Schedule of segment other income (expense) components

The following table reconciles the Company's consolidated other income to segment realized net investment income:

	For the Three Months Ended September 30,						For the Nine Months Ended September 30,
	2019			2018			2019			2018
Total consolidated other income	$	32,787		$	38,754		$	95,919		$	108,920
Investment (income) loss - unrealized	(4,138		)	26,121			(12,703		)	30,390
Interest and other investment (income) loss - unrealized	3,044			(765		)	3,394			531
Other expense from Consolidated Funds added in consolidation, net	(37,070		)	(34,645		)	(101,285		)	(111,090		)
Other income from Consolidated Funds eliminated in consolidation, net	(1,124		)	(86		)	(1,214		)	(620		)
OMG other (income) expense	87			(5,079		)	(71		)	(11,546		)
Performance (income) loss reclass(1)	27			(795		)	(553		)	211
Principal investment income (loss)	13,865			(7,886		)	45,336			9,544
Other (income) expense, net	(461		)	3			(460		)	1,728
Other income of non-controlling interests in consolidated subsidiaries	(10		)	(8		)	(31		)	(23		)
Total consolidation adjustments and reconciling items	(25,780		)	(23,140		)	(67,587		)	(80,875		)
Total segment realized net investment income	$	7,007		$	15,614		$	28,332		$	28,045

(1) Related to performance income for AREA Sponsor Holdings LLC. Changes in value of this investment are reflected within net realized and unrealized gains (losses) on investments in the Company’s Condensed Consolidated Statements of Operations.

Reconciliation of segment results to the Company's income before taxes and total assets

The following table presents the reconciliation of income before taxes as reported in the Condensed Consolidated Statements of Operations to segment results of RI and FRE:

	For the Three Months Ended September 30,						For the Nine Months Ended September 30,
	2019			2018			2019			2018
Income before taxes	$	103,576		$	52,343		$	323,919		$	165,461
Adjustments:
Depreciation and amortization expense(1)	24,564			5,347			35,609			20,234
Equity compensation expense	22,393			23,940			73,974			67,534
Acquisition and merger-related expense	4,777			253			10,757			(19		)
Unamortized placement fees	4,366			6,194			17,319			9,710
OMG expense, net	55,553			44,980			162,556			137,012
Other (income) expense, net(2)	(461		)	3			(460		)	13,564
Net expense of non-controlling interests in consolidated subsidiaries	799			819			2,608			2,178
Income before taxes of non-controlling interests in Consolidated Funds, net of eliminations	(16,054		)	(13,182		)	(41,178		)	(23,500		)
Total performance (income) loss - unrealized	(181,174		)	37,999			(426,411		)	127,224
Total performance related compensation - unrealized	137,174			(42,417		)	311,936			(132,294		)
Total investment (income) loss - unrealized	(1,094		)	25,356			(9,309		)	30,921
Realized income	154,419			141,635			461,320			418,025
Total performance income - realized	(7,314		)	(71,568		)	(111,881		)	(217,283		)
Total performance related compensation - realized	2,042			60,023			76,488			162,773
Total investment income - realized	(7,007		)	(15,614		)	(28,332		)	(28,045		)
Fee related earnings	$	142,140		$	114,476		$	397,595		$	335,470

(1) 2019 period includes a $20.0 million non-cash impairment charge on certain intangible assets

(2)

2018 period includes $11.8 million payment to ARCC for rent and utilities for the years ended 2017, 2016, 2015 and 2014, and the first quarter of 2018.

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RELATED PARTY TRANSACTIONS (Tables)

9 Months Ended

Sep. 30, 2019

Related Party Transactions [Abstract]

Schedule of amounts due from and to affiliates

The Company considers its professionals and non-consolidated funds to be affiliates. Amounts due from and to affiliates were composed of the following:

	As of September 30,		As of December 31,
	2019		2018
Due from affiliates:
Management fees receivable from non-consolidated funds	$	184,262	$	151,455
Payments made on behalf of and amounts due from non-consolidated funds and employees	61,014		47,922
Due from affiliates—Company	$	245,276	$	199,377
Amounts due from portfolio companies and non-consolidated funds	$	14,978	$	17,609
Due from affiliates—Consolidated Funds	$	14,978	$	17,609
Due to affiliates:
Management fee rebate payable to non-consolidated funds	$	2,225	$	2,105
Management fees received in advance	4,096		5,491
Tax receivable agreement liability	24,927		24,927
Undistributed carried interest and incentive fees	18,366		31,162
Payments made by non-consolidated funds on behalf of and payable by the Company	7,937		18,726
Due to affiliates—Company	$	57,551	$	82,411

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GOODWILL AND INTANGIBLE ASSETS

9 Months Ended

Sep. 30, 2019

Goodwill and Intangible Assets Disclosure [Abstract]

GOODWILL AND INTANGIBLE ASSETS

GOODWILL AND INTANGIBLE ASSETS

Finite Lived Intangible Assets, Net

The following table summarizes the carrying value, net of accumulated amortization, for the Company's intangible assets, included within other assets in the Condensed Consolidated Statements of Financial Condition:

	Weighted Average Amortization Period as of September 30, 2019	As of September 30,			As of December 31,
		2019			2018
Management contracts	2.4 years	$	12,498		$	42,335
Client relationships	8.8 years	6,341			38,600
Trade name	2.8 years	378			3,200
Intangible assets		19,217			84,135
Less: accumulated amortization		(10,837		)	(52,701		)
Intangible assets, net		$	8,380		$	31,434

Amortization expense associated with intangible assets, excluding impairment charges, was $0.6 million and $1.2 million for the three months ended September 30, 2019 and 2018, respectively, and $3.0 million and $7.8 million for the nine months ended September 30, 2019 and 2018, respectively, and is presented within general, administrative and other expenses within the Condensed Consolidated Statements of Operations. During the first quarter of 2019, the Company removed $29.8 million of intangible assets that were fully amortized.

During the three months ended September 30, 2019, the Company recorded a non-cash impairment charge of $20.0 million

to general, administrative and other expenses within the Condensed Consolidated Statements of Operations related to certain intangible assets recorded in connection with the Company’s acquisition of Energy Investors Funds (“EIF”).  The EIF funds are a component of the Private Equity Group operating segment. The primary indicator of impairment was lower legacy EIF investor commitments into successor funds from the Company’s original projections and the Company’s decision to no longer introduce successor funds under its EIF trade name. As a result, the Company expects a decrease in the future expected cash flows from management fees generated by EIF’s existing client relationships and a decrease in royalties attributed to EIF’s trade name.  The Company determined that the carrying value of these intangible assets exceeded the expected undiscounted future cash flows and recorded an impairment charge equal to the difference between its carrying value of each asset and the asset’s estimated fair value, as calculated using a discounted cash flow methodology. Following the recognition of the impairment charge, the Company removed $35.1 million of the client relationships and trade name intangible assets to reflect the adjusted carrying value to be amortized over the remaining useful life.

Goodwill

The following table summarizes the carrying value of the Company's goodwill assets, included within other assets in the Condensed Consolidated Statements of Financial Condition:

	Credit		Private Equity		Real Estate			Total
Balance as of December 31, 2018	$	32,196	$	58,600	$	52,990		$	143,786
Foreign currency translation	—		—		(65		)	(65		)
Balance as of September 30, 2019	$	32,196	$	58,600	$	52,925		$	143,721

There was no impairment of goodwill recorded during the nine months ended September 30, 2019 and 2018. The impact of foreign currency translation is reflected within other comprehensive income.

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DEBT

9 Months Ended

Sep. 30, 2019

Debt Disclosure [Abstract]

DEBT

DEBT

The following table summarizes the Company’s and its subsidiaries’ debt obligations:

					As of September 30, 2019			As of December 31, 2018
	Debt Origination Date	Maturity	Original Borrowing Amount		Carrying Value		Interest Rate	Carrying Value		Interest Rate
Credit Facility(1)	Revolver	3/21/2024	N/A		$	—	N/A	$	235,000	4.00%
Senior Notes(2)	10/8/2014	10/8/2024	$	250,000	246,442		4.21%	245,952		4.21%
Total debt obligations					$	246,442		$	480,952

(1) The AOG entities are borrowers under the Credit Facility, which provides a $1.065 billion revolving line of credit. It has a variable interest rate based on LIBOR or a base rate plus an applicable margin with an unused commitment fee paid quarterly, which is subject to change with the Company’s underlying credit agency rating. On March 21, 2019, the Company amended the Credit Facility to, among other things, extend the maturity date from February 2022 to March 2024 and to reduce borrowing costs on the drawn and undrawn amounts. As of September 30, 2019, base rate loans bear interest calculated based on the base rate plus 0.25% and the LIBOR rate loans bear interest calculated based on LIBOR plus 1.25%. The unused commitment fee is 0.15% per annum. There is a base rate and LIBOR floor of zero.

(2) The Senior Notes were issued in October 2014 by Ares Finance Co. LLC, a subsidiary of the Company, at 98.268% of the face amount with interest paid semi-annually. The Company may redeem the Senior Notes prior to maturity, subject to the terms of the indenture.

As of September 30, 2019, the Company and its subsidiaries were in compliance with all covenants under the debt obligations. 

The Company typically incurs and pays debt issuance costs when entering into a new debt obligation or when amending an existing debt agreement. Debt issuance costs related to the Company's Senior Notes are recorded as a reduction of the corresponding debt obligation, and debt issuance costs related to the Credit Facility are included in other assets in the Condensed Consolidated Statements of Financial Condition. All debt issuance costs are amortized over the remaining term of the related obligation.

The following table presents the activity of the Company's debt issuance costs:

	Credit Facility			Senior Notes
Unamortized debt issuance costs as of December 31, 2018	$	4,972		$	1,334
Debt issuance costs incurred	1,547			—
Amortization of debt issuance costs	(991		)	(174		)
Unamortized debt issuance costs as of September 30, 2019	$	5,528		$	1,160

Loan Obligations of the Consolidated CLOs

Loan obligations of the Consolidated Funds that are CLOs ("Consolidated CLOs") represent amounts due to holders of debt securities issued by the Consolidated CLOs. The Company measures the loan obligations of the Consolidated CLOs using the fair value of the financial assets of its Consolidated CLOs.

As of September 30, 2019 and December 31, 2018, the following loan obligations were outstanding and classified as liabilities of the Consolidated CLOs:

	As of September 30, 2019					As of December 31, 2018
	Loan Obligations		Fair Value of Loan Obligations		Weighted  Average Remaining Maturity  In Years	Loan Obligations		Fair Value of Loan Obligations		Weighted Average Remaining Maturity  In Years
Senior secured notes(1)	$	7,225,041	$	7,162,677	10.99	$	6,642,616	$	6,391,643	10.94
Subordinated notes(2)	393,308		245,043		11.08	455,333		286,448		11.21
Total loan obligations of Consolidated CLOs	$	7,618,349	$	7,407,720		$	7,097,949	$	6,678,091

(1) Original borrowings under the senior secured notes totaled $7.2 billion, with various maturity dates ranging from July 2028 to April 2032. The weighted average interest rate as of September 30, 2019 was 3.06%.

(2) Original borrowings under the subordinated notes totaled $393.3 million, with various maturity dates ranging from July 2028 to April 2032. The notes do not have contractual interest rates, instead holders of the notes receive distributions from the excess cash flows generated by each Consolidated CLO.

Loan obligations of the Consolidated CLOs are collateralized by the assets held by the Consolidated CLOs, consisting of cash and cash equivalents, corporate loans, corporate bonds and other securities. The assets of one Consolidated CLO may not be used to satisfy the liabilities of another Consolidated CLO. Loan obligations of the Consolidated CLOs include floating rate notes, deferrable floating rate notes, revolving lines of credit and subordinated notes. Amounts borrowed under the notes are repaid based on available cash flows subject to priority of payments under each Consolidated CLO’s governing documents. Based on the terms of these facilities, the creditors of the facilities have no recourse to the Company.

Credit Facilities of the Consolidated Funds

Certain Consolidated Funds maintain credit facilities to fund investments between capital drawdowns. These facilities generally are collateralized by the unfunded capital commitments of the Consolidated Funds’ limited partners, bear an annual commitment fee based on unfunded commitments and contain various affirmative and negative covenants and reporting obligations, including restrictions on additional indebtedness, liens, margin stock, affiliate transactions, dividends and distributions, release of capital commitments and portfolio asset dispositions. The creditors of these facilities have no recourse to the Company and only have recourse to a subsidiary of the Company to the extent the debt is guaranteed by such subsidiary. Credit facilities of the Consolidated Funds are reflected at cost in the Condensed Consolidated Statements of Financial Condition. As of September 30, 2019 and December 31, 2018, the Consolidated Funds were in compliance with all covenants under such credit facilities.

The Consolidated Funds had the following revolving bank credit facilities and term loan outstanding as of September 30, 2019 and December 31, 2018:

				As of September 30, 2019				As of December 31, 2018
Consolidated Funds' Debt Facilities	Maturity Date	Total Capacity		Outstanding Loan(1)		Effective Rate		Outstanding Loan(1)		Effective Rate
Credit Facilities:
	1/1/2023	$	18,000	$	17,550	3.69%		$	14,953	3.98%
	12/29/2019(2)	—		—		—%		43,624		1.55%	(3)
	3/7/2020	71,500		71,500		3.47%		71,500		3.47%
	6/30/2021	190,785		11,818		1.00%	(3)	38,844		1.00%	(3)
	7/15/2028	75,000		22,000		4.75%		39,000		4.75%
Revolving Term Loan	1/31/2022	1,900		1,335		8.07%		1,363		8.07%
Total borrowings of Consolidated Funds				$	124,203			$	209,284

(1) The fair values of the borrowings approximate the carrying value as the interest rate on the borrowings is a floating rate.

(2) On August 27, 2019, the facility was terminated at the Consolidated Fund's discretion.

(3)

The effective rate is based on the three month EURIBOR or zero, whichever is higher, plus a spread of 1.00% or 1.55%.

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ORGANIZATION

9 Months Ended

Sep. 30, 2019

Organization, Consolidation and Presentation of Financial Statements [Abstract]

ORGANIZATION

ORGANIZATION 

Ares Management Corporation (the "Company"), a Delaware corporation, together with its subsidiaries, is a leading global alternative investment manager operating three integrated businesses across Credit, Private Equity and Real Estate. Information about segments should be read together with Note 14, “Segment Reporting.” Subsidiaries of the Company serve as the general partners and/or investment managers to various investment funds and managed accounts within each investment group (the “Ares Funds”). Such subsidiaries provide investment advisory services to the Ares Funds in exchange for management fees. Ares is managed and operated by its Board of Directors and Executive Management Committee. Unless the context requires otherwise, references to “Ares” or the “Company” refer to Ares Management, L.P., together with its subsidiaries prior to November 26, 2018 and thereafter to Ares Management Corporation, together with its subsidiaries.

The accompanying unaudited financial statements include the condensed consolidated results of the Company and its subsidiaries. The Company is a holding company, and the Company’s sole assets are equity interests in Ares Holdings Inc. (“AHI”), Ares Offshore Holdings, Ltd., and Ares AI Holdings L.P. In this quarterly report, the following of the Company’s subsidiaries are collectively referred to as the “Ares Operating Group”: Ares Offshore Holdings L.P. (“Ares Offshore”), Ares Holdings L.P. (“Ares Holdings”), and Ares Investments L.P. (“Ares Investments”). The Company, indirectly through its wholly owned subsidiaries, is the general partner of each of the Ares Operating Group entities. The Company operates and controls all of the businesses and affairs of and conducts all of its material business activities through the Ares Operating Group.

Non-Controlling Interests in Ares Operating Group Entities

The non-controlling interests in Ares Operating Group (“AOG”) entities represent a component of equity and net income attributable to the owners of the Ares Operating Group Units (“AOG Units”) that are not held directly or indirectly by the Company. These interests are adjusted for contributions to and distributions from AOG during the reporting period and are allocated income from the AOG entities based on their historical ownership percentage for the proportional number of days in the reporting period.

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Document And Entity Information - shares	9 Months Ended
	Sep. 30, 2019	Oct. 31, 2019
Entity Information [Line Items]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Sep. 30, 2019
Document Transition Report	false
Entity File Number	001-36429
Entity Registrant Name	ARES MANAGEMENT CORPORATION
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	80-0962035
Entity Address, Address Line One	2000 Avenue of the Stars
Entity Address, Address Line Two	12th Floor
Entity Address, City or Town	Los Angeles
Entity Address, State or Province	CA
Entity Address, Postal Zip Code	90067
City Area Code	310
Local Phone Number	201‑4100
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Central Index Key	0001176948
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2019
Document Fiscal Period Focus	Q3
Amendment Flag	false
Class A common stock
Entity Information [Line Items]
Title of 12(b) Security	Class A common stock, par value $0.01 per share
Trading Symbol	ARES
Security Exchange Name	NYSE
Entity Common Stock, Shares Outstanding		114,745,595
Series A Preferred Stock [Member]
Entity Information [Line Items]
Title of 12(b) Security	7.00% Series A Preferred Stock, par value $0.01 per share
Trading Symbol	ARES.PRA
Security Exchange Name	NYSE
Class B common stock
Entity Information [Line Items]
Entity Common Stock, Shares Outstanding		1,000
Class C common stock
Entity Information [Line Items]
Entity Common Stock, Shares Outstanding		1

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EARNINGS PER SHARE

9 Months Ended

Sep. 30, 2019

Earnings Per Share [Abstract]

EARNINGS PER SHARE

EARNINGS PER SHARE

Basic earnings per share of Class A common stock is computed by using the two-class method. Diluted earnings per share of Class A common stock is computed using the more dilutive method of either the two-class method or the treasury stock method. For the three and nine months ended September 30, 2019, the treasury stock method was the more dilutive method. For the three and nine months ended September 30, 2018, the two-class method was the more dilutive method.

The computation of diluted earnings per share for the three and nine months ended September 30, 2019 and 2018 excludes the following options, restricted units and AOG Units, as their effect would have been anti-dilutive:

	For the Three Months Ended September 30,		For the Nine Months Ended September 30,
	2019	2018	2019	2018
Options	9,132,017	19,102,583	10,085,774	19,345,651
Restricted units	7,922,322	15,635,997	9,504,741	15,874,847
AOG Units	116,707,849	119,822,657	116,844,099	122,732,149

The following table presents the computation of basic and diluted earnings per share:

	For the Three Months Ended September 30,						For the Nine Months Ended September 30,
	2019			2018			2019			2018
Net income attributable to Ares Management Corporation Class A common stockholders	$	27,906		$	10,485		$	94,144		$	28,808
Distributions on participating unvested restricted units	(1,927		)	(1,567		)	(5,630		)	(5,667		)
Net income available to Class A common stockholders	$	25,979		$	8,918		$	88,514		$	23,141
Basic weighted-average shares of Class A common stock	108,481,929			98,706,419			105,546,219			94,168,582
Basic earnings per share of Class A common stock	$	0.24		$	0.09		$	0.84		$	0.25
Net income attributable to Ares Management Corporation Class A common stockholders	$	27,906		$	10,485		$	94,144		$	28,808
Distributions on unvested restricted units	—			(1,567		)	—			(5,667		)
Net income available to Class A common stockholders	$	27,906		$	8,918		$	94,144		$	23,141
Effect of dilutive shares:
Restricted units	8,722,690			—			7,140,271			—
Options	4,685,403			—			3,731,646			—
Diluted weighted-average shares of Class A common stock	121,890,022			98,706,419			116,418,136			94,168,582
Diluted earnings per share of Class A common stock	$	0.23		$	0.09		$	0.81		$	0.25
Dividends declared and paid per Class A common stock	$	0.32		$	0.28		$	0.96		$	1.05

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Condensed Consolidated Statements of Operations (Parenthetical) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Ares Management L.P | Affiliated entity | ARCC
Management fees, part I fees	$ 38,786	$ 33,377	$ 116,336	$ 91,660

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CONSOLIDATION

9 Months Ended

Sep. 30, 2019

Condensed Financial Information Disclosure [Abstract]

CONSOLIDATION

CONSOLIDATION

Investments in Consolidated Variable Interest Entities  

The Company consolidates entities in which the Company has a variable interest and as the general partner or investment manager, has both the power to direct the most significant activities and a potentially significant economic interest. Investments in the consolidated VIEs are reported at fair value and represent the Company’s maximum exposure to loss.

Investments in Non-Consolidated Variable Interest Entities

The Company holds interests in certain VIEs that are not consolidated as the Company is not the primary beneficiary. The Company's interest in such entities generally is in the form of direct equity interests, fixed fee arrangements or both. The maximum exposure to loss represents the potential loss of assets by the Company relating to these non-consolidated entities. Investments in the non-consolidated VIEs are carried at fair value.

The Company's interests in consolidated and non-consolidated VIEs, as presented in the Condensed Consolidated Statements of Financial Condition, and its respective maximum exposure to loss relating to non-consolidated VIEs are as follows:

	As of September 30,		As of December 31,
	2019		2018
Maximum exposure to loss attributable to the Company's investment in non-consolidated VIEs	$	270,980	$	222,477
Maximum exposure to loss attributable to the Company's investment in consolidated VIEs	196,198		186,455
Assets of consolidated VIEs	8,974,941		8,141,280
Liabilities of consolidated VIEs	8,160,607		7,479,383

	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
	2019		2018		2019		2018
Net income attributable to non-controlling interests related to consolidated VIEs	$	15,908	$	13,169	$	41,878	$	23,418

Consolidating Schedules

The following supplemental financial information illustrates the consolidating effects of the Consolidated Funds on the Company's financial condition as of September 30, 2019 and December 31, 2018 and results from operations for the three and nine months ended September 30, 2019 and 2018.  

	As of September 30, 2019
	Consolidated Company  Entities			Consolidated Funds		Eliminations			Consolidated
Assets
Cash and cash equivalents	$	152,203		$	—	$	—		$	152,203
Investments (includes $1,250,191 of accrued carried interest)	1,976,062			—		(196,198		)	1,779,864
Due from affiliates	254,005			—		(8,729		)	245,276
Other assets	296,302			—		—			296,302
Right-of-use operating lease assets	148,170			—		—			148,170
Assets of Consolidated Funds
Cash and cash equivalents	—			575,621		—			575,621
Investments, at fair value	—			8,271,481		—			8,271,481
Due from affiliates	—			14,978		—			14,978
Receivable for securities sold	—			85,701		—			85,701
Other assets	—			27,160		—			27,160
Total assets	$	2,826,742		$	8,974,941	$	(204,927	)	$	11,596,756
Liabilities
Accounts payable, accrued expenses and other liabilities	$	71,077		$	—	$	—		$	71,077
Accrued compensation	168,539			—		—			168,539
Due to affiliates	57,551			—		—			57,551
Performance related compensation payable	905,949			—		—			905,949
Debt obligations	246,442			—		—			246,442
Right-of-use operating lease liabilities	174,078			—		—			174,078
Liabilities of Consolidated Funds
Accounts payable, accrued expenses and other liabilities	—			83,698		—			83,698
Due to affiliates	—			8,729		(8,729		)	—
Payable for securities purchased	—			514,717		—			514,717
CLO loan obligations, at fair value	—			7,429,260		(21,540		)	7,407,720
Fund borrowings	—			124,203		—			124,203
Total liabilities	1,623,636			8,160,607		(30,269		)	9,753,974
Commitments and contingencies
Non-controlling interest in Consolidated Funds	—			814,334		(174,658		)	639,676
Non-controlling interest in Ares Operating Group entities	450,985			—		—			450,985
Stockholders' Equity
Series A Preferred Stock, $0.01 par value, 1,000,000,000 shares authorized (12,400,000 shares issued and outstanding)	298,761			—		—			298,761
Class A common stock, $0.01 par value, 1,500,000,000 shares authorized (114,719,768 shares issued and outstanding)	1,147			—		—			1,147
Class B common stock, $0.01 par value, 1,000 shares authorized (1,000 shares issued and outstanding)	—			—		—			—
Class C common stock, $0.01 par value, 499,999,000 shares authorized (1 share issued and outstanding)	—			—		—			—
Additional paid-in-capital	507,531			—		—			507,531
Retained earnings	(44,308		)	—		—			(44,308		)
Accumulated other comprehensive loss, net of tax	(11,010		)	—		—			(11,010		)
Total stockholders' equity	752,121			—		—			752,121
Total equity	1,203,106			814,334		(174,658		)	1,842,782
Total liabilities, non-controlling interests and equity	$	2,826,742		$	8,974,941	$	(204,927	)	$	11,596,756

	As of December 31, 2018
	Consolidated Company  Entities			Consolidated Funds		Eliminations			Consolidated
Assets
Cash and cash equivalents	$	110,247		$	—	$	—		$	110,247
Investments (includes $841,079 of accrued carried interest)	1,512,592			—		(186,455		)	1,326,137
Due from affiliates	207,924			—		(8,547		)	199,377
Other assets	377,651			—		—			377,651
Assets of Consolidated Funds
Cash and cash equivalents	—			384,644		—			384,644
Investments, at fair value	—			7,673,165		—			7,673,165
Due from affiliates	—			17,609		—			17,609
Receivable for securities sold	—			42,076		—			42,076
Other assets	—			23,786		—			23,786
Total assets	$	2,208,414		$	8,141,280	$	(195,002	)	$	10,154,692
Liabilities
Accounts payable, accrued expenses and other liabilities	$	83,221		$	—	$	—		$	83,221
Accrued compensation	29,389			—		—			29,389
Due to affiliates	82,411			—		—			82,411
Performance related compensation payable	641,737			—		—			641,737
Debt obligations	480,952			—		—			480,952
Liabilities of Consolidated Funds
Accounts payable, accrued expenses and other liabilities	—			83,876		—			83,876
Due to affiliates	—			8,547		(8,547		)	—
Payable for securities purchased	—			471,390		—			471,390
CLO loan obligations	—			6,706,286		(28,195		)	6,678,091
Fund borrowings	—			209,284		—			209,284
Total liabilities	1,317,710			7,479,383		(36,742		)	8,760,351
Commitments and contingencies
Non-controlling interest in Consolidated Funds	—			661,897		(158,260		)	503,637
Non-controlling interest in Ares Operating Group entities	302,780			—		—			302,780
Stockholders' Equity
Series A Preferred Stock, $0.01 par value, 1,000,000,000 shares authorized (12,400,000 units issued and outstanding)	298,761			—		—			298,761
Class A common stock, $0.01 par value, 1,500,000,000 shares authorized (101,594,095 shares issued and outstanding)	1,016			—		—			1,016
Class B common stock, $0.01 par value, 1,000 shares authorized (1,000 shares issued and outstanding)	—			—		—			—
Class C common stock, $0.01 par value, 499,999,000 shares authorized (1 share issued and outstanding)	—			—		—			—
Additional paid-in-capital	326,007			—		—			326,007
Retained earnings	(29,336		)	—		—			(29,336		)
Accumulated other comprehensive loss, net of taxes	(8,524		)	—		—			(8,524		)
Total stockholders' equity	587,924			—		—			587,924
Total equity	890,704			661,897		(158,260		)	1,394,341
Total liabilities, non-controlling interests and equity	$	2,208,414		$	8,141,280	$	(195,002	)	$	10,154,692

	For the Three Months Ended September 30, 2019
	Consolidated Company  Entities			Consolidated Funds			Eliminations			Consolidated
Revenues
Management fees (includes ARCC Part I Fees of $38,786)	$	260,371		$	—		$	(8,780	)	$	251,591
Carried interest allocation	186,803			—			—			186,803
Incentive fees	1,712			—			—			1,712
Principal investment income	13,865			—			(2,476		)	11,389
Administrative, transaction and other fees	14,995			—			—			14,995
Total revenues	477,746			—			(11,256		)	466,490
Expenses
Compensation and benefits	166,216			—			—			166,216
Performance related compensation	139,216			—			—			139,216
General, administrative and other expense	79,385			—			—			79,385
Expenses of the Consolidated Funds	—			19,664			(8,780		)	10,884
Total expenses	384,817			19,664			(8,780		)	395,701
Other income (expense)
Net realized and unrealized gains (losses) on investments	(522		)	—			2,044			1,522
Interest and dividend income	2,800			—			(770		)	2,030
Interest expense	(4,691		)	—			—			(4,691		)
Other expense, net	(2,994		)	—			1,124			(1,870		)
Net realized and unrealized gains (losses) on investments of the Consolidated Funds	—			1,399			(2,391		)	(992		)
Interest and other income of the Consolidated Funds	—			107,922			—			107,922
Interest expense of the Consolidated Funds	—			(72,251		)	1,117			(71,134		)
Total other income (expense)	(5,407		)	37,070			1,124			32,787
Income before taxes	87,522			17,406			(1,352		)	103,576
Income tax expense	11,555			146			—			11,701
Net income	75,967			17,260			(1,352		)	91,875
Less: Net income attributable to non-controlling interests in Consolidated Funds	—			17,260			(1,352		)	15,908
Less: Net income attributable to non-controlling interests in Ares Operating Group entities	42,636			—			—			42,636
Net income attributable to Ares Management Corporation	33,331			—			—			33,331
Less: Series A Preferred Stock dividends paid	5,425			—			—			5,425
Net income attributable to Ares Management Corporation Class A common stockholders	$	27,906		$	—		$	—		$	27,906

	For the Three Months Ended September 30, 2018
	Consolidated Company  Entities			Consolidated Funds			Eliminations			Consolidated
Revenues
Management fees (includes ARCC Part I Fees of $33,377)	$	213,662		$	—		$	(9,138	)	$	204,524
Carried interest allocation	31,902						—			31,902
Incentive fees	872						—			872
Principal investment loss	(7,886		)	—			422			(7,464		)
Administrative, transaction and other fees	10,943			—			—			10,943
Total revenues	249,493			—			(8,716		)	240,777
Expenses
Compensation and benefits	145,594			—			—			145,594
Performance related compensation	17,606			—			—			17,606
General, administrative and other expense	51,155			—			—			51,155
Expenses of the Consolidated Funds	—			21,971			(9,138		)	12,833
Total expenses	214,355			21,971			(9,138		)	227,188
Other income (expense)
Net realized and unrealized gains on investments	6,540			—			(998		)	5,542
Interest and dividend income	901			—			(93		)	808
Interest expense	(4,143		)	—			—			(4,143		)
Other income, net	725			—			86			811
Net realized and unrealized gains on investments of the Consolidated Funds	—			4,686			751			5,437
Interest and other income of the Consolidated Funds	—			93,062			—			93,062
Interest expense of the Consolidated Funds	—			(63,103		)	340			(62,763		)
Total other income	4,023			34,645			86			38,754
Income before taxes	39,161			12,674			508			52,343
Income tax expense	5,118			13			—			5,131
Net income	34,043			12,661			508			47,212
Less: Net income attributable to non-controlling interests in Consolidated Funds	—			12,661			508			13,169
Less: Net income attributable to non-controlling interests in Ares Operating Group entities	18,133			—			—			18,133
Net income attributable to Ares Management L.P.	15,910			—			—			15,910
Less: Preferred equity dividends paid	5,425			—			—			5,425
Net income attributable to Ares Management L.P. common shareholders	$	10,485		$	—		$	—		$	10,485

	For the Nine Months Ended September 30, 2019
	Consolidated Company  Entities			Consolidated Funds			Eliminations			Consolidated
Revenues
Management fees (includes ARCC Part I Fees of $116,336)	$	740,024		$	—		$	(25,928	)	$	714,096
Carried interest allocation	503,808			—			—			503,808
Incentive fees	33,931			—			(5,184		)	28,747
Principal investment income	45,336			—			656			45,992
Administrative, transaction and other fees	35,866			—			—			35,866
Total revenues	1,358,965			—			(30,456		)	1,328,509
Expenses
Compensation and benefits	485,232			—			—			485,232
Performance related compensation	388,424			—			—			388,424
General, administrative and other expense	195,988			—			—			195,988
Expenses of the Consolidated Funds	—			61,977			(31,112		)	30,865
Total expenses	1,069,644			61,977			(31,112		)	1,100,509
Other income (expense)
Net realized and unrealized gains on investments	4,829			—			690			5,519
Interest and dividend income	7,448			—			(1,922		)	5,526
Interest expense	(16,073		)	—			—			(16,073		)
Other expense, net	(2,784		)	—			1,214			(1,570		)
Net realized and unrealized gains on investments of the Consolidated Funds	—			4,661			(1,405		)	3,256
Interest and other income of the Consolidated Funds	—			303,312			—			303,312
Interest expense of the Consolidated Funds	—			(206,688		)	2,637			(204,051		)
Total other income (expense)	(6,580		)	101,285			1,214			95,919
Income before taxes	282,741			39,308			1,870			323,919
Income tax expense (benefit)	36,290			(700		)	—			35,590
Net income	246,451			40,008			1,870			288,329
Less: Net income attributable to non-controlling interests in Consolidated Funds	—			40,008			1,870			41,878
Less: Net income attributable to non-controlling interests in Ares Operating Group entities	136,032			—			—			136,032
Net income attributable to Ares Management Corporation	110,419			—			—			110,419
Less: Series A Preferred Stock dividends paid	16,275			—			—			16,275
Net income attributable to Ares Management Corporation Class A common stockholders	$	94,144		$	—		$	—		$	94,144

	For the Nine Months Ended September 30, 2018
	Consolidated Company  Entities			Consolidated Funds			Eliminations			Consolidated
Revenues
Management fees (includes ARCC Part I Fees of $91,660)	$	612,792		$	—		$	(24,721	)	$	588,071
Carried interest allocation	72,587			—			—			72,587
Incentive fees	17,683			—			(4,000		)	13,683
Principal investment income (loss)	9,544			—			(10,228		)	(684		)
Administrative, transaction and other fees	37,372			—			—			37,372
Total revenues	749,978			—			(38,949		)	711,029
Expenses
Compensation and benefits	419,225			—			—			419,225
Performance related compensation	30,479			—			—			30,479
General, administrative and other expense	155,523			—			—			155,523
Expenses of the Consolidated Funds	—			77,982			(28,721		)	49,261
Total expenses	605,227			77,982			(28,721		)	654,488
Other income (expense)
Net realized and unrealized gains on investments	9,800			—			(1,830		)	7,970
Interest and dividend income	6,604			—			(93		)	6,511
Interest expense	(17,088		)	—			—			(17,088		)
Other expense, net	(2,106		)	—			619			(1,487		)
Net realized and unrealized gains on investments of the Consolidated Funds	—			26,053			786			26,839
Interest and other income of the Consolidated Funds	—			250,117			—			250,117
Interest expense of the Consolidated Funds	—			(165,080		)	1,138			(163,942		)
Total other income (expense)	(2,790		)	111,090			620			108,920
Income before taxes	141,961			33,108			(9,608		)	165,461
Income tax expense	29,577			82			—			29,659
Net income	112,384			33,026			(9,608		)	135,802
Less: Net income attributable to non-controlling interests in Consolidated Funds	—			33,026			(9,608		)	23,418
Less: Net income attributable to non-controlling interests in Ares Operating Group entities	67,301			—			—			67,301
Net income attributable to Ares Management L.P.	45,083			—			—			45,083
Less: Preferred equity dividends paid	16,275			—			—			16,275
Net income attributable to Ares Management L.P. common shareholders	$	28,808		$	—		$	—		$	28,808

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INVESTMENTS (Tables)

9 Months Ended

Sep. 30, 2019

Investments in and Advances to Affiliates [Abstract]

Summary of investments held

Investments held in the Consolidated Funds are summarized below:

	Fair value at				Fair value as a percentage of total investments as of
	September 30,		December 31,		September 30,		December 31,
	2019		2018		2019		2018
Fixed income investments:
Bonds	$	205,727	$	318,499	2.5	%	4.3	%
Loans	7,614,571		6,886,749		92.1	%	89.8	%
Total fixed income investments	7,820,298		7,205,248		94.6	%	94.1	%
Equity securities	152,026		196,470		1.8	%	2.4	%
Partnership interests	299,157		271,447		3.6	%	3.5	%
Total investments, at fair value	$	8,271,481	$	7,673,165

The Company’s investments are comprised of the following:

					Percentage of total investments as of
	September 30,		December 31,		September 30,		December 31,
	2019		2018		2019		2018
Private Investment Partnership Interests and Other:
Equity method private investment partnership interests - principal (1)	$	379,338	$	357,655	21.3	%	27.0	%
Equity method - carried interest (1)	1,250,191		841,079		70.2	%	63.4	%
Equity method private investment partnership interests and other (held at fair value)	49,162		46,450		2.8	%	3.5	%
Equity method private investment partnership interests and other	17,497		18,845		1.0	%	1.4	%
Total private investment partnership interests and other	1,696,188		1,264,029		95.3	%	95.3	%
Collateralized loan obligations	23,417		20,824		1.3	%	1.6	%
Other fixed income	59,096		40,000		3.3	%	3.0	%
Collateralized loan obligations and other fixed income, at fair value	82,513		60,824		4.6	%	4.6	%
Common stock, at fair value	1,163		1,284		0.1	%	0.1	%
Total investments	$	1,779,864	$	1,326,137

(1)

Investment or portion of the investment is denominated in foreign currency and is translated into U.S. dollars at each reporting date.

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EARNINGS PER SHARE (Antidilutive) (Details) - shares	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
AOG
Earnings per common unit
Antidilutive securities excluded from calculation of earnings per common unit (in units)	116,707,849	119,822,657	116,844,099	122,732,149
Options
Earnings per common unit
Antidilutive securities excluded from calculation of earnings per common unit (in units)	9,132,017	19,102,583	10,085,774	19,345,651
Restricted units
Earnings per common unit
Antidilutive securities excluded from calculation of earnings per common unit (in units)	7,922,322	15,635,997	9,504,741	15,874,847

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EQUITY COMPENSATION (Restricted Units Awards with a Market Condition) (Details) $ / shares in Units, $ in Millions	9 Months Ended
	Sep. 30, 2019 USD ($) $ / shares shares
Weighted Average Grant Date Fair Value
Unrecognized compensation expenses | $	$ 83.1
Restricted units with a market condition
Units
Balance at the beginning of the period (in units or shares) | shares	1,333,334
Granted (in units) | shares	0
Vested (in units) | shares	0
Forfeited (in units) | shares	0
Balance at the end of the period (in units or shares) | shares	1,333,334
Weighted Average Grant Date Fair Value
Balance at the beginning of the period (in dollars per share) | $ / shares	$ 9.30
Granted (in dollars per share) | $ / shares	0
Vested (in dollars per share) | $ / shares	0
Forfeited (in dollars per share) | $ / shares	0
Balance at the end of the period (in dollars per share) | $ / shares	$ 9.30
Unrecognized compensation expenses | $	$ 8.2
Weighted average period of compensation expense expected to be recognized	2 years 5 months 4 days

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EQUITY (Common Stock Offering) (Details) - USD ($) $ in Millions		3 Months Ended		9 Months Ended
	Sep. 20, 2019	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018	Dec. 31, 2018
Class of Stock [Line Items]
Proceeds from sale of shares	$ 207.3
Fees related to stock issuance	$ 0.6
AOG Units (in units)		231,427,617		231,427,617		218,613,369
AOG
Class of Stock [Line Items]
Direct Ownership Interest		100.00%		100.00%		100.00%
Ares Owners Holdings, L.P.
Class of Stock [Line Items]
AOG Units (in units)		116,707,849		116,707,849		117,019,274
Daily Average Ownership		51.83%	53.67%	52.54%	54.14%
Ares Owners Holdings, L.P. | AOG
Class of Stock [Line Items]
Direct Ownership Interest		50.43%		50.43%		53.53%
Affiliate of Alleghany Corporation
Class of Stock [Line Items]
AOG Units (in units)		0		0		0
Daily Average Ownership		0.00%	1.16%	0.00%	2.44%
Affiliate of Alleghany Corporation | AOG
Class of Stock [Line Items]
Direct Ownership Interest		0.00%		0.00%		0.00%
AOG
Class of Stock [Line Items]
AOG Units (in units)		114,719,768		114,719,768		101,594,095
Daily Average Ownership		48.17%	45.17%	47.46%	43.42%
AOG | AOG
Class of Stock [Line Items]
Direct Ownership Interest		49.57%		49.57%		46.47%
Class A common stock | Underwritten
Class of Stock [Line Items]
Number of shares sold (in shares)	7,000,000

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FAIR VALUE (Valuation Techniques) (Details) $ in Thousands	Sep. 30, 2019 USD ($)	Dec. 31, 2018 USD ($)
Consolidated Funds
Assets
Equity securities	$ 152,026	$ 196,470
Partnership interests	299,157	271,447
Collateralized loan obligations	7,407,720	6,678,091
Other fixed income	7,820,298	7,205,248
Derivative instruments		3,209
Total assets	8,272,759	7,676,374
Liabilities
Liabilities, at fair value	(7,411,533)	(6,680,603)
Consolidated Funds | Level III
Assets
Equity securities	114,841	150,752
Partnership interests	299,157	271,447
Collateralized loan obligations	0	0
Other fixed income	285,160	547,958
Derivative instruments		1,328
Total assets	699,394	971,485
Liabilities
Liabilities, at fair value	(2,788)	(648)
Consolidated Funds | Level III | Transaction price
Assets
Equity securities	43,066	85,319
Consolidated Funds | Level III | Discounted cash flow
Assets
Equity securities		$ 271,447
Partnership interests	$ 299,157
Consolidated Funds | Level III | Discounted cash flow | Discount rate
Unobservable Input
Equity securities		0.208
Partnership interest	0.207
Consolidated Funds | Level III | Discounted cash flow | Discount rate | Weighted Average
Unobservable Input
Equity securities		0.208
Partnership interest	0.207
Consolidated Funds | Level III | Broker quotes and/or 3rd party pricing services
Assets
Other fixed income	$ 210,969	$ 441,368
Derivative instruments	236	1,328
Liabilities
Derivatives instruments	(2,788)	(648)
Consolidated Funds | Level III | Other
Assets
Equity securities	$ 71,056	$ 41,562
Consolidated Funds | Level III | Other | Net income multiple
Unobservable Input
Equity securities		38.8
Consolidated Funds | Level III | Other | Net income multiple | Minimum
Unobservable Input
Equity securities	35.7
Consolidated Funds | Level III | Other | Net income multiple | Maximum
Unobservable Input
Equity securities	39.0
Consolidated Funds | Level III | Other | Net income multiple | Weighted Average
Unobservable Input
Equity securities	37.1	38.8
Consolidated Funds | Level III | Other | Illiquidity discount
Unobservable Input
Equity securities	0.250	0.250
Consolidated Funds | Level III | Other | Illiquidity discount | Weighted Average
Unobservable Input
Equity securities	0.250	0.250
Consolidated Funds | Level III | Enterprise value market multiple analysis
Assets
Equity securities	$ 719	$ 23,871
Consolidated Funds | Level III | Enterprise value market multiple analysis | EBITDA multiple | Minimum
Unobservable Input
Equity securities	9.0	7.2
Consolidated Funds | Level III | Enterprise value market multiple analysis | EBITDA multiple | Maximum
Unobservable Input
Equity securities	21.0	22.9
Consolidated Funds | Level III | Enterprise value market multiple analysis | EBITDA multiple | Weighted Average
Unobservable Input
Equity securities	14.6	7.7
Consolidated Funds | Level III | Income approach
Assets
Other fixed income	$ 74,191	$ 106,590
Consolidated Funds | Level III | Income approach | Yield | Minimum
Unobservable Input
Fixed income securities	0.049	0.010
Consolidated Funds | Level III | Income approach | Yield | Maximum
Unobservable Input
Fixed income securities	0.131	0.148
Consolidated Funds | Level III | Income approach | Yield | Weighted Average
Unobservable Input
Fixed income securities	0.097	0.096
Ares Management L.P
Assets
Equity securities	$ 13,560	$ 11,681
Partnership interests	36,765	36,053
Total assets	137,039	109,624
Liabilities
Liabilities, at fair value	(163)	(869)
Ares Management L.P | Level III
Assets
Equity securities	12,397	10,397
Partnership interests	35,192	35,192
Total assets	130,102	106,413
Liabilities
Liabilities, at fair value	0	0
Ares Management L.P | Level III | Transaction price
Assets
Equity securities	12,397	10,397
Ares Management L.P | Level III | Discounted cash flow
Assets
Partnership interests	$ 35,192	$ 35,192
Ares Management L.P | Level III | Discounted cash flow | Discount rate
Unobservable Input
Partnership interest	0.080	0.080
Ares Management L.P | Level III | Broker quotes and/or 3rd party pricing services
Assets
Collateralized loan obligations	$ 23,417	$ 20,824
Ares Management L.P | Level III | Other
Assets
Other fixed income	$ 59,096	$ 40,000

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INVESTMENTS (Equity Method Investments) (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Investments in and Advances to Affiliates [Abstract]
Equity method investments gain (loss)	$ 11.1	$ (3.8)	$ 45.6	$ 3.5

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SEGMENT REPORTING

9 Months Ended

Sep. 30, 2019

Segment Reporting [Abstract]

SEGMENT REPORTING

SEGMENT REPORTING

The Company operates through its three distinct operating segments. During the nine months ended September 30, 2019, the Company reclassified certain expenses from OMG to its operating segments. The Company has modified historical results to conform with its current presentation.

The Company’s three operating segments are:

Credit Group: The Company’s Credit Group is a leading manager of credit strategies across the non-investment grade credit universe in the U.S. and Europe, with approximately $106.3 billion of AUM and 173 funds as of September 30, 2019. The Credit Group offers a range of credit strategies across the liquid and illiquid spectrum, including syndicated loans, high yield bonds, credit opportunities, alternative credit investments and U.S. and European direct lending. The Credit Group provides solutions for traditional fixed income investors seeking to access the syndicated loans and high yield bond markets and capitalizes on opportunities across traded corporate credit. It additionally provides investors access to directly originated fixed and floating rate credit assets and the ability to capitalize on illiquidity premiums across the credit spectrum. The Credit Group’s syndicated loans strategy focuses on liquid, traded non-investment grade secured loans to corporate borrowers. The high yield bond strategy seeks to deliver a diversified portfolio of liquid, traded non-investment grade corporate bonds, including secured, unsecured and subordinated debt instruments. Credit opportunities is a “go anywhere” strategy seeking to capitalize on market inefficiencies and relative value opportunities across the capital structure. The alternative credit strategy seeks investment opportunities that fall outside of traditional, well-defined markets such as corporate debt, real estate and private equity. Alternative credit investments include certain structural features designed to protect value and minimize loss such as asset security, seniority, covenants, and cash flow prioritization. These investments include asset-backed securities, specialty assets, real assets, and structured credit. The Company has one of the largest self-originating direct lending platforms in the U.S. and European middle markets, providing one-stop financing solutions for small-to-medium sized companies, which the Company believes are increasingly underserved by traditional lenders. The Company provides investors access to these capabilities through several vehicles, including commingled funds, separately managed accounts and a publicly traded vehicle. The Credit Group conducts its U.S. direct lending activities primarily through ARCC, the largest business development company as of September 30, 2019, by both market capitalization and total assets. The Credit Group’s European direct lending platform is one of the most significant participants in the European middle-market, focusing on self-originated investments in illiquid middle-market credits. In addition, the Credit Group manages a commercial finance business that provides asset-based and cash flow loans to small and middle-market companies, as well as asset-based facilities to specialty finance companies.

Private Equity Group:  The Company’s Private Equity Group has approximately $25.5 billion of AUM as of September 30, 2019, broadly categorizing its investment strategies as corporate private equity, infrastructure and power, special opportunities and energy opportunities. As of September 30, 2019 the group managed five corporate private equity commingled funds focused on North America and Europe and three focused on greater China, five commingled funds and six related co-investment vehicles focused on infrastructure and power, three commingled special opportunities funds and the Company's first energy opportunities fund. In its North American and European flexible capital corporate private equity strategy, the Company targets opportunistic majority or shared-control investments in businesses with strong franchises and attractive growth opportunities in North America and Europe. The infrastructure and power strategy targets infrastructure-related assets across the power generation, transmission, midstream sectors and renewables seeking attractive risk-adjusted equity returns with current cash flow and capital appreciation. The special opportunities strategy seeks to invest opportunistically across a broad spectrum of distressed or mispriced investments, including corporate debt, rescue capital, private asset-backed investments, post-reorganization securities and non-performing portfolios. The energy opportunities strategy targets investments in the energy industry where its flexible capital can provide attractive risk-adjusted returns while mitigating commodity risk.

Real Estate Group:  The Company’s Real Estate Group manages comprehensive equity and debt strategies, with approximately $12.5 billion of AUM across 46 funds as of September 30, 2019. Real Estate equity strategies focus on applying hands-on value creation initiatives to mismanaged and capital-starved assets, as well as new development, ultimately selling stabilized assets back into the market. The Real Estate Group manages both a value-add strategy and an opportunistic strategy. The value-add strategy seeks to create value by buying assets at attractive valuations and through active asset management of income-producing properties across the U.S. and Western Europe. The opportunistic strategy focuses on manufacturing core assets through development, redevelopment and fixing distressed capital structures across major properties in the U.S. and Europe. The Company’s debt strategies leverage the Real Estate Group’s diverse sources of capital to directly originate and manage commercial mortgage investments on properties that range from stabilized to requiring hands-on value creation.  In addition to managing private debt funds, the Real Estate Group makes debt investments through a publicly traded commercial mortgage REIT, ACRE. 

The Company has an OMG that consists of shared resource groups to support the Company’s operating segments by providing infrastructure and administrative support in the areas of accounting/finance, operations, information technology, strategy and relationship management, legal, compliance and human resources. Additionally, the OMG provides services to certain of the Company’s investment companies and partnerships, which reimburse the OMG for expenses equal to the costs of services provided. The OMG’s expenses are not allocated to the Company’s three reportable segments but the Company does consider the cost structure of the OMG when evaluating its financial performance.

Segment Profit Measures: These measures supplement and should be considered in addition to, and not in lieu of, the Condensed Consolidated Statements of Operations prepared in accordance with GAAP.

Fee related earnings (“FRE”) 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 the Consolidated Funds and non-consolidated funds and certain other items that the Company believes are not indicative of its core operating performance.

Realized income (“RI”) 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 the 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 the Company believes are not indicative of 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 from RI but are amortized to match the period over which management fees are recognized. Management believes RI is a more appropriate metric to evaluate the Company's current business operations.

Management makes operating decisions and assesses the performance of each of the Company’s business segments based on financial and operating metrics and other data that is presented before giving effect to the consolidation of any of the Consolidated Funds. Consequently, all segment data excludes the assets, liabilities and operating results related to the Consolidated Funds and non‑consolidated funds.

The following table presents the financial results for the Company’s operating segments, as well as the OMG, for the three months ended September 30, 2019:

	Credit Group			Private Equity Group			Real Estate Group			Total Segments			OMG			Total
Management fees (Credit Group includes ARCC Part I Fees of $38,786)	$	178,447		$	54,543		$	26,988		$	259,978		$	—		$	259,978
Other fees	5,174			141			28			5,343			—			5,343
Compensation and benefits	(67,770		)	(19,226		)	(14,523		)	(101,519		)	(34,061		)	(135,580		)
General, administrative and other expenses	(12,789		)	(5,532		)	(3,341		)	(21,662		)	(21,405		)	(43,067		)
Fee related earnings	103,062			29,926			9,152			142,140			(55,466		)	86,674
Performance income—realized	1,037			—			6,277			7,314			—			7,314
Performance related compensation—realized	(630		)	—			(1,412		)	(2,042		)	—			(2,042		)
Realized net performance income	407			—			4,865			5,272			—			5,272
Investment income—realized	114			47			2,015			2,176			—			2,176
Interest and other investment income (expense) —realized	6,964			435			1,588			8,987			(11		)	8,976
Interest expense	(1,561		)	(1,628		)	(967		)	(4,156		)	(535		)	(4,691		)
Realized net investment income (loss)	5,517			(1,146		)	2,636			7,007			(546		)	6,461
Realized income	$	108,986		$	28,780		$	16,653		$	154,419		$	(56,012	)	$	98,407

The following table presents the financial results for the Company’s operating segments, as well as the OMG, for the three months ended September 30, 2018:

	Credit Group			Private Equity Group			Real Estate Group			Total Segments			OMG			Total
Management fees (Credit Group includes ARCC Part I Fees of $33,377)	$	145,414		$	48,287		$	19,961		$	213,662		$	—		$	213,662
Other fees	3,656			206			10			3,872			—			3,872
Compensation and benefits	(55,239		)	(17,443		)	(10,733		)	(83,415		)	(31,957		)	(115,372		)
General, administrative and other expenses	(10,921		)	(5,866		)	(2,856		)	(19,643		)	(18,102		)	(37,745		)
Fee related earnings	82,910			25,184			6,382			114,476			(50,059		)	64,417
Performance income—realized	1,729			52,729			17,110			71,568			—			71,568
Performance related compensation—realized	(1,113		)	(42,045		)	(16,865		)	(60,023		)	—			(60,023		)
Realized net performance income	616			10,684			245			11,545			—			11,545
Investment income—realized	1,063			8,104			6,846			16,013			22			16,035
Interest and other investment income—realized	1,604			1,032			486			3,122			442			3,564
Interest expense	(1,527		)	(1,577		)	(417		)	(3,521		)	(622		)	(4,143		)
Realized net investment income (loss)	1,140			7,559			6,915			15,614			(158		)	15,456
Realized income	$	84,666		$	43,427		$	13,542		$	141,635		$	(50,217	)	$	91,418

The following table presents the financial results for the Company’s operating segments, as well as the OMG, for the nine months ended September 30, 2019:

	Credit Group			Private Equity Group			Real Estate Group			Total Segments			OMG			Total
Management fees (Credit Group includes ARCC Part I Fees of $116,336)	$	513,760		$	158,101		$	67,408		$	739,269		$	—		$	739,269
Other fees	12,179			141			709			13,029			—			13,029
Compensation and benefits	(193,083		)	(61,713		)	(35,735		)	(290,531		)	(100,716		)	(391,247		)
General, administrative and other expenses	(39,675		)	(14,501		)	(9,996		)	(64,172		)	(61,911		)	(126,083		)
Fee related earnings	293,181			82,028			22,386			397,595			(162,627		)	234,968
Performance income—realized	38,921			62,492			10,468			111,881			—			111,881
Performance related compensation—realized	(22,857		)	(49,993		)	(3,638		)	(76,488		)	—			(76,488		)
Realized net performance income	16,064			12,499			6,830			35,393			—			35,393
Investment income—realized	662			12,013			7,041			19,716			—			19,716
Interest and other investment income (expense) —realized	14,500			4,047			4,812			23,359			(13		)	23,346
Interest expense	(5,368		)	(6,239		)	(3,136		)	(14,743		)	(1,330		)	(16,073		)
Realized net investment income (loss)	9,794			9,821			8,717			28,332			(1,343		)	26,989
Realized income	$	319,039		$	104,348		$	37,933		$	461,320		$	(163,970	)	$	297,350

The following table presents the financial results for the Company’s operating segments, as well as the OMG, for the nine months ended September 30, 2018:

	Credit Group			Private Equity Group			Real Estate Group			Total Segments			OMG			Total
Management fees (Credit Group includes ARCC Part I Fees of $91,660)	$	413,028		$	147,492		$	52,272		$	612,792		$	—		$	612,792
Other fees	16,263			883			20			17,166			—			17,166
Compensation and benefits	(158,204		)	(55,314		)	(27,140		)	(240,658		)	(92,829		)	(333,487		)
General, administrative and other expenses	(32,069		)	(14,082		)	(7,679		)	(53,830		)	(55,729		)	(109,559		)
Fee related earnings	239,018			78,979			17,473			335,470			(148,558		)	186,912
Performance income—realized	48,472			137,542			31,269			217,283			—			217,283
Performance related compensation—realized	(27,778		)	(109,916		)	(25,079		)	(162,773		)	—			(162,773		)
Realized net performance income	20,694			27,626			6,190			54,510			—			54,510
Investment income—realized	2,429			17,791			9,946			30,166			1,658			31,824
Interest and other investment income—realized	7,828			4,011			1,370			13,209			2,178			15,387
Interest expense	(9,796		)	(4,245		)	(1,289		)	(15,330		)	(1,758		)	(17,088		)
Realized net investment income	461			17,557			10,027			28,045			2,078			30,123
Realized income	$	260,173		$	124,162		$	33,690		$	418,025		$	(146,480	)	$	271,545

The following table presents the components of the Company’s operating segments’ revenue, expenses and realized net investment income:

	For the Three Months Ended September 30,						For the Nine Months Ended September 30,
	2019			2018			2019			2018
Segment revenues
Management fees (includes ARCC Part I Fees of $38,786, $116,336 and $33,377, $91,660 for the three and nine months ended September 30, 2019 and 2018, respectively)	$	259,978		$	213,662		$	739,269		$	612,792
Other fees	5,343			3,872			13,029			17,166
Performance income—realized	7,314			71,568			111,881			217,283
Total segment revenues	$	272,635		$	289,102		$	864,179		$	847,241
Segment expenses
Compensation and benefits	$	101,519		$	83,415		$	290,531		$	240,658
General, administrative and other expenses	21,662			19,643			64,172			53,830
Performance related compensation—realized	2,042			60,023			76,488			162,773
Total segment expenses	$	125,223		$	163,081		$	431,191		$	457,261
Segment realized net investment income
Investment income—realized	$	2,176		$	16,013		$	19,716		$	30,166
Interest and other investment income- realized	8,987			3,122			23,359			13,209
Interest expense	(4,156		)	(3,521		)	(14,743		)	(15,330		)
Total segment realized net investment income	$	7,007		$	15,614		$	28,332		$	28,045

The following table reconciles the Company's consolidated revenues to segment revenue:

	For the Three Months Ended September 30,						For the Nine Months Ended September 30,
	2019			2018			2019			2018
Total consolidated revenue	$	466,490		$	240,777		$	1,328,509		$	711,029
Performance (income) loss-unrealized	(181,174		)	37,999			(426,411		)	127,224
Management fees of Consolidated Funds eliminated in consolidation	8,780			9,138			25,928			24,721
Incentive fees of Consolidated Funds eliminated in consolidation	—			—			5,184			4,000
Principal investment (income) loss of Consolidated Funds eliminated in consolidation	2,476			(422		)	(656		)	10,228
Administrative fees(1)	(9,649		)	(7,084		)	(22,853		)	(20,266		)
Performance income (loss) reclass(2)	(27		)	795			553			(211		)
Principal investment (income) loss	(13,865		)	7,886			(45,336		)	(9,544		)
Net (revenue) expense of non-controlling interests in consolidated subsidiaries	(396		)	13			(739		)	60
Total consolidation adjustments and reconciling items	(193,855		)	48,325			(464,330		)	136,212
Total segment revenue	$	272,635		$	289,102		$	864,179		$	847,241

(1) Represents administrative fees that are presented in administrative, transaction and other fees in the Company’s Condensed Consolidated Statements of Operations and are netted against the respective expenses for segment reporting.

(2) Related to performance income for AREA Sponsor Holdings LLC, an investment pool. Changes in value of this investment are reflected within net realized and unrealized gains (losses) on investments in the Company’s Condensed Consolidated Statements of Operations.

The following table reconciles the Company's consolidated expenses to segment expenses:

	For the Three Months Ended September 30,						For the Nine Months Ended September 30,
	2019			2018			2019			2018
Total consolidated expenses	$	395,701		$	227,188		$	1,100,509		$	654,488
Performance related compensation-unrealized	(137,174		)	42,417			(311,936		)	132,294
Expenses of Consolidated Funds added in consolidation	(19,664		)	(21,971		)	(61,977		)	(77,982		)
Expenses of Consolidated Funds eliminated in consolidation	8,780			9,138			31,112			28,721
Administrative fees(1)	(9,649		)	(7,084		)	(22,853		)	(20,266		)
OMG expenses	(55,466		)	(50,059		)	(162,627		)	(148,558		)
Acquisition and merger-related expense	(4,777		)	(253		)	(10,757		)	19
Equity compensation expense	(22,393		)	(23,940		)	(73,974		)	(67,534		)
Unamortized placement fees	(4,366		)	(6,194		)	(17,319		)	(9,710		)
Depreciation and amortization expense(2)	(24,564		)	(5,347		)	(35,609		)	(20,234		)
Other expense(3)	—			—			—			(11,836		)
Expense of non-controlling interests in consolidated subsidiaries	(1,205		)	(814		)	(3,378		)	(2,141		)
Total consolidation adjustments and reconciling items	(270,478		)	(64,107		)	(669,318		)	(197,227		)
Total segment expenses	$	125,223		$	163,081		$	431,191		$	457,261

(1) Represents administrative fees that are presented in administrative, transaction and other fees in the Company’s Condensed Consolidated Statements of Operations and are netted against the respective expenses for segment reporting.

(2) 2019 period includes a $20.0 million non-cash impairment charge on certain intangible assets

(3) 2018 period includes $11.8 million payment to ARCC for rent and utilities for the years ended 2017, 2016, 2015 and 2014, and the first quarter of 2018.

The following table reconciles the Company's consolidated other income to segment realized net investment income:

	For the Three Months Ended September 30,						For the Nine Months Ended September 30,
	2019			2018			2019			2018
Total consolidated other income	$	32,787		$	38,754		$	95,919		$	108,920
Investment (income) loss - unrealized	(4,138		)	26,121			(12,703		)	30,390
Interest and other investment (income) loss - unrealized	3,044			(765		)	3,394			531
Other expense from Consolidated Funds added in consolidation, net	(37,070		)	(34,645		)	(101,285		)	(111,090		)
Other income from Consolidated Funds eliminated in consolidation, net	(1,124		)	(86		)	(1,214		)	(620		)
OMG other (income) expense	87			(5,079		)	(71		)	(11,546		)
Performance (income) loss reclass(1)	27			(795		)	(553		)	211
Principal investment income (loss)	13,865			(7,886		)	45,336			9,544
Other (income) expense, net	(461		)	3			(460		)	1,728
Other income of non-controlling interests in consolidated subsidiaries	(10		)	(8		)	(31		)	(23		)
Total consolidation adjustments and reconciling items	(25,780		)	(23,140		)	(67,587		)	(80,875		)
Total segment realized net investment income	$	7,007		$	15,614		$	28,332		$	28,045

(1) Related to performance income for AREA Sponsor Holdings LLC. Changes in value of this investment are reflected within net realized and unrealized gains (losses) on investments in the Company’s Condensed Consolidated Statements of Operations.

The following table presents the reconciliation of income before taxes as reported in the Condensed Consolidated Statements of Operations to segment results of RI and FRE:

	For the Three Months Ended September 30,						For the Nine Months Ended September 30,
	2019			2018			2019			2018
Income before taxes	$	103,576		$	52,343		$	323,919		$	165,461
Adjustments:
Depreciation and amortization expense(1)	24,564			5,347			35,609			20,234
Equity compensation expense	22,393			23,940			73,974			67,534
Acquisition and merger-related expense	4,777			253			10,757			(19		)
Unamortized placement fees	4,366			6,194			17,319			9,710
OMG expense, net	55,553			44,980			162,556			137,012
Other (income) expense, net(2)	(461		)	3			(460		)	13,564
Net expense of non-controlling interests in consolidated subsidiaries	799			819			2,608			2,178
Income before taxes of non-controlling interests in Consolidated Funds, net of eliminations	(16,054		)	(13,182		)	(41,178		)	(23,500		)
Total performance (income) loss - unrealized	(181,174		)	37,999			(426,411		)	127,224
Total performance related compensation - unrealized	137,174			(42,417		)	311,936			(132,294		)
Total investment (income) loss - unrealized	(1,094		)	25,356			(9,309		)	30,921
Realized income	154,419			141,635			461,320			418,025
Total performance income - realized	(7,314		)	(71,568		)	(111,881		)	(217,283		)
Total performance related compensation - realized	2,042			60,023			76,488			162,773
Total investment income - realized	(7,007		)	(15,614		)	(28,332		)	(28,045		)
Fee related earnings	$	142,140		$	114,476		$	397,595		$	335,470

(1) 2019 period includes a $20.0 million non-cash impairment charge on certain intangible assets

(2)

2018 period includes $11.8 million payment to ARCC for rent and utilities for the years ended 2017, 2016, 2015 and 2014, and the first quarter of 2018.

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GOODWILL AND INTANGIBLE ASSETS (Tables)

9 Months Ended

Sep. 30, 2019

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of carrying value for the Company's intangible assets

The following table summarizes the carrying value, net of accumulated amortization, for the Company's intangible assets, included within other assets in the Condensed Consolidated Statements of Financial Condition:

	Weighted Average Amortization Period as of September 30, 2019	As of September 30,			As of December 31,
		2019			2018
Management contracts	2.4 years	$	12,498		$	42,335
Client relationships	8.8 years	6,341			38,600
Trade name	2.8 years	378			3,200
Intangible assets		19,217			84,135
Less: accumulated amortization		(10,837		)	(52,701		)
Intangible assets, net		$	8,380		$	31,434

Schedule of goodwill rollforward

The following table summarizes the carrying value of the Company's goodwill assets, included within other assets in the Condensed Consolidated Statements of Financial Condition:

	Credit		Private Equity		Real Estate			Total
Balance as of December 31, 2018	$	32,196	$	58,600	$	52,990		$	143,786
Foreign currency translation	—		—		(65		)	(65		)
Balance as of September 30, 2019	$	32,196	$	58,600	$	52,925		$	143,721

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EQUITY (Common Stock) (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Jun. 30, 2019	Sep. 30, 2019	Feb. 28, 2019	Dec. 31, 2018	Nov. 26, 2018
Class of Stock [Line Items]
Repurchase program cost	$ 0	$ 10,449,000
Increase (Decrease) in Stockholders' Equity
Balance - January 1, 2019			101,595,096
Issuance of stock			7,000,000
Stock option exercises			4,422,644
Repurchases of stock			(400,000)
Vesting of restricted stock awards			2,005,536
Balance Outstanding - September 30, 2019	114,720,769		114,720,769
AOG
Increase (Decrease) in Stockholders' Equity
Exchanges of AOG Units			97,493
Class A common stock
Class of Stock [Line Items]
Common stock, par value (in dollars per share)	$ 0.01		$ 0.01		$ 0.01	$ 0.01
Common stock, shares issued (in shares)	114,719,768		114,719,768		101,594,095
Authorized amount				$ 150,000,000
Repurchase program cost			$ 10,400,000
Remaining available for repurchases of common stock	$ 139,600,000		$ 139,600,000
Increase (Decrease) in Stockholders' Equity
Balance - January 1, 2019			101,594,095
Issuance of stock			7,000,000
Stock option exercises			4,422,644
Repurchases of stock			(400,000)
Vesting of restricted stock awards			2,005,536
Balance Outstanding - September 30, 2019	114,719,768		114,719,768
Class A common stock | AOG
Increase (Decrease) in Stockholders' Equity
Exchanges of AOG Units			97,493
Class B common stock
Class of Stock [Line Items]
Common stock, par value (in dollars per share)	$ 0.01		$ 0.01		$ 0.01	$ 0.01
Common stock, shares issued (in shares)	1,000		1,000		1,000	1,000
Increase (Decrease) in Stockholders' Equity
Balance - January 1, 2019			1,000
Issuance of stock			0
Stock option exercises			0
Repurchases of stock			0
Vesting of restricted stock awards			0
Balance Outstanding - September 30, 2019	1,000		1,000
Class B common stock | AOG
Increase (Decrease) in Stockholders' Equity
Exchanges of AOG Units			0
Class C common stock
Class of Stock [Line Items]
Common stock, par value (in dollars per share)	$ 0.01		$ 0.01		$ 0.01	$ 0.01
Common stock, shares issued (in shares)	1		1		1
Increase (Decrease) in Stockholders' Equity
Balance - January 1, 2019			1
Issuance of stock			0
Stock option exercises			0
Repurchases of stock			0
Vesting of restricted stock awards			0
Balance Outstanding - September 30, 2019	1		1
Class C common stock | AOG
Increase (Decrease) in Stockholders' Equity
Exchanges of AOG Units			0

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INCOME TAXES (Narrative) (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018	Dec. 31, 2018
Income Tax Disclosure [Abstract]
Income tax expense	$ 11,701	$ 5,131	$ 35,590	$ 29,659
Deferred tax asset, net	$ 39,200		$ 39,200		$ 42,100

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EQUITY COMPENSATION (Restricted Units) (Details) - USD ($) $ / shares in Units, $ in Millions				3 Months Ended		9 Months Ended
	Sep. 16, 2019	Jun. 14, 2019	Mar. 15, 2019	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Equity compensation
Dividend declared and paid per share of Class A common stock (in dollar per share)	$ 0.32	$ 0.32	$ 0.32	$ 0.32	$ 0.28	$ 0.96	$ 1.05
Distribution equivalents made to holders						$ 16.1
Weighted Average Grant Date Fair Value
Unrecognized compensation expenses				$ 83.1		$ 83.1
Restricted units
Equity compensation
Distribution equivalents made to holders				$ 5.3
Units
Balance at the beginning of the period (in units or shares)						16,255,475
Granted (in units)						4,202,622
Vested (in units)						(3,579,050)
Forfeited (in units)						(234,035)
Balance at the end of the period (in units or shares)				16,645,012		16,645,012
Weighted Average Grant Date Fair Value
Balance at the beginning of the period (in dollars per share)						$ 19.21
Granted (in dollars per share)						20.61
Vested (in dollars per share)						17.95
Forfeited (in dollars per share)						19.33
Balance at the end of the period (in dollars per share)				$ 19.83		$ 19.83
Unrecognized compensation expenses				$ 216.2		$ 216.2
Weighted average period of compensation expense expected to be recognized						2 years 11 months 4 days
Restricted units with a market condition
Units
Balance at the beginning of the period (in units or shares)						1,333,334
Granted (in units)						0
Vested (in units)						0
Forfeited (in units)						0
Balance at the end of the period (in units or shares)				1,333,334		1,333,334
Weighted Average Grant Date Fair Value
Balance at the beginning of the period (in dollars per share)						$ 9.30
Granted (in dollars per share)						0
Vested (in dollars per share)						0
Forfeited (in dollars per share)						0
Balance at the end of the period (in dollars per share)				$ 9.30		$ 9.30
Unrecognized compensation expenses				$ 8.2		$ 8.2
Weighted average period of compensation expense expected to be recognized						2 years 5 months 4 days
Third Anniversary of Grant Date | Restricted units
Equity compensation
Annual award vesting percentage						33.33%
First Anniversary of Grant Date | Restricted units
Equity compensation
Annual award vesting percentage						25.00%

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FAIR VALUE (Investments Using NAV per Share) (Details) - Non-core investments - USD ($)	Sep. 30, 2019	Dec. 31, 2018
FAIR VALUE
Unfunded Commitments	$ 0
Investments Measured at NAV
FAIR VALUE
Fair Value	$ 1,600,000	$ 800,000

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INVESTMENTS (Investments of the Consolidated Funds) (Details) - Consolidated Funds - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
Investments
Total investments	$ 8,271,481	$ 7,673,165
Fixed Income
Investments
Total investments	$ 7,820,298	$ 7,205,248
Percentage of total investments as of	94.60%	94.10%
Fixed Income | Bonds
Investments
Total investments	$ 205,727	$ 318,499
Percentage of total investments as of	2.50%	4.30%
Fixed Income | Loans
Investments
Total investments	$ 7,614,571	$ 6,886,749
Percentage of total investments as of	92.10%	89.80%
Equity securities
Investments
Total investments	$ 152,026	$ 196,470
Percentage of total investments as of	1.80%	2.40%
Partnership Interests
Investments
Total investments	$ 299,157	$ 271,447
Percentage of total investments as of	3.60%	3.50%

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SEGMENT REPORTING (Expenses) (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018	Dec. 31, 2018	Mar. 31, 2018	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Segment Reporting, Other Significant Reconciling Item [Line Items]
Expenses	$ 395,701	$ 227,188	$ 1,100,509	$ 654,488
Equity compensation expense	22,393	23,940	73,974	67,534
Depreciation and amortization expense				7,800
Non-cash impairment charge	20,000
Ares Management L.P
Segment Reporting, Other Significant Reconciling Item [Line Items]
Due to affiliates	57,551		57,551		$ 82,411
Ares Management L.P | Affiliated entity | Rent and other occupancy expenses | ARCC
Segment Reporting, Other Significant Reconciling Item [Line Items]
Due to affiliates	11,800		11,800		11,800	$ 600	$ 2,200	$ 3,000	$ 3,200	$ 2,900
Consolidated Funds
Segment Reporting, Other Significant Reconciling Item [Line Items]
Due to affiliates	0		0		$ 0
Operating segment
Segment Reporting, Other Significant Reconciling Item [Line Items]
Acquisition and merger-related expense	4,777	253	10,757	(19)
Equity compensation expense	22,393	23,940	73,974	67,534
Unamortized placement fees	4,366	6,194	17,319	9,710
Depreciation and amortization expense	24,564	5,347	35,609	20,234
Operating segment | Ares Management L.P
Segment Reporting, Other Significant Reconciling Item [Line Items]
Expenses	125,223	163,081	431,191	457,261
Performance related compensation-unrealized	(137,174)	42,417	(311,936)	132,294
Operating segment | Consolidated Funds
Segment Reporting, Other Significant Reconciling Item [Line Items]
Expenses	395,701	227,188	1,100,509	654,488
Reconciling items
Segment Reporting, Other Significant Reconciling Item [Line Items]
Expenses	(270,478)	(64,107)	(669,318)	(197,227)
Administrative fees	(9,649)	(7,084)	(22,853)	(20,266)
Acquisition and merger-related expense	(4,777)	(253)	(10,757)	19
Equity compensation expense	(22,393)	(23,940)	(73,974)	(67,534)
Unamortized placement fees	(4,366)	(6,194)	(17,319)	(9,710)
Depreciation and amortization expense	(24,564)	(5,347)	(35,609)	(20,234)
Other expenses	0	0	0	(11,836)
Reconciling items | Non-Controlling interest | Subsidiaries
Segment Reporting, Other Significant Reconciling Item [Line Items]
Expenses	(1,205)	(814)	(3,378)	(2,141)
Reconciling items | Consolidated Funds
Segment Reporting, Other Significant Reconciling Item [Line Items]
Expenses of Consolidated Funds added in consolidation	(19,664)	(21,971)	(61,977)	(77,982)
Expenses of Consolidated Funds eliminated in consolidation	8,780	9,138	31,112	28,721
OMG
Segment Reporting, Other Significant Reconciling Item [Line Items]
Expenses	$ 55,466	$ 50,059	$ 162,627	$ 148,558

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SEGMENT REPORTING (Narrative) (Details) $ in Billions	9 Months Ended
	Sep. 30, 2019 USD ($) segment fund
Segment reporting
Number operating segments | segment	3
Credit Group | Ares Management L.P
Segment reporting
Assets under management | $	$ 106.3
Number of funds managed	173
Private Equity | Ares Management L.P
Segment reporting
Assets under management | $	$ 25.5
Number of private equity commingled funds focus North America and Europe	5
Number of commingled funds	5
Number of co-investment vehicles focused on U.S. energy and power assets	6
Number of special situation funds	3
Private Equity | Greater China | Ares Management L.P
Segment reporting
Number of commingled funds	3
Real Estate | Ares Management L.P
Segment reporting
Assets under management | $	$ 12.5
Number of funds managed	46

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SUBSEQUENT EVENTS (Details) - Subsequent event	1 Months Ended
	Oct. 31, 2019 $ / shares
Subsequent events
Quarterly distribution declared (in dollars per unit)	$ 0.32
Preferred equity quarterly distribution (in dollars per unit)	$ 0.4375

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CONSOLIDATION (Balance Sheet) (Details) - USD ($) $ / shares in Units, $ in Thousands	Sep. 30, 2019	Jun. 30, 2019	Mar. 31, 2019	Dec. 31, 2018	Nov. 26, 2018	Sep. 30, 2018	Jun. 30, 2018	Mar. 31, 2018	Dec. 31, 2017
Assets
Cash and cash equivalents	$ 152,203			$ 110,247		$ 122,192			$ 118,929
Total assets	11,596,756			10,154,692
Liabilities
Right-of-use operating lease liabilities	174,078
Total liabilities	9,753,974			8,760,351
Commitments and contingencies
Stockholders' Equity
Series A Preferred Stock, $0.01 par value, 1,000,000,000 shares authorized (12,400,000 shares issued and outstanding at September 30, 2019 and December 31, 2018)	298,761			298,761
Additional paid-in-capital	507,531			326,007
Retained earnings	(44,308)			(29,336)
Accumulated other comprehensive loss, net of tax	(11,010)			(8,524)
Total stockholders' equity	752,121			587,924
Total equity	1,842,782	$ 1,602,324	$ 1,479,824	1,394,341		$ 1,491,319	$ 1,535,249	$ 1,565,195	$ 1,460,292
Total liabilities, non-controlling interests and equity	$ 11,596,756			$ 10,154,692
Preferred stock, par value (in dollars per share)	$ 0.01			$ 0.01
Preferred stock, shares authorized (in shares)	1,000,000,000			1,000,000,000
Preferred stock, shares issued (in shares)	12,400,000			12,400,000
Preferred stock, shares outstanding (in shares)	12,400,000			12,400,000
Common stock, shares outstanding (in shares)	114,720,769			101,595,096
Class A common stock
Stockholders' Equity
Class common stock	$ 1,147			$ 1,016
Common stock, par value (in dollars per share)	$ 0.01			$ 0.01	$ 0.01
Common stock, shares authorized (in shares)	1,500,000,000			1,500,000,000
Common stock, shares issued (in shares)	114,719,768			101,594,095
Common stock, shares outstanding (in shares)	114,719,768			101,594,095
Class B common stock
Stockholders' Equity
Class common stock	$ 0			$ 0
Common stock, par value (in dollars per share)	$ 0.01			$ 0.01	$ 0.01
Common stock, shares authorized (in shares)	1,000			1,000
Common stock, shares issued (in shares)	1,000			1,000	1,000
Common stock, shares outstanding (in shares)	1,000			1,000
Class C common stock
Stockholders' Equity
Class common stock	$ 0			$ 0
Common stock, par value (in dollars per share)	$ 0.01			$ 0.01	$ 0.01
Common stock, shares authorized (in shares)	499,999,000			499,999,000
Common stock, shares issued (in shares)	1			1
Common stock, shares outstanding (in shares)	1			1
Reportable legal entity
Liabilities
Right-of-use operating lease liabilities	$ 174,078
Stockholders' Equity
Series A Preferred Stock, $0.01 par value, 1,000,000,000 shares authorized (12,400,000 shares issued and outstanding at September 30, 2019 and December 31, 2018)	298,761			$ 298,761
Eliminations
Assets
Total assets	(204,927)			(195,002)
Liabilities
Total liabilities	(30,269)			(36,742)
Commitments and contingencies
Stockholders' Equity
Series A Preferred Stock, $0.01 par value, 1,000,000,000 shares authorized (12,400,000 shares issued and outstanding at September 30, 2019 and December 31, 2018)	0			0
Total equity	(174,658)			(158,260)
Total liabilities, non-controlling interests and equity	(204,927)			(195,002)
Consolidated Funds
Assets
Cash and cash equivalents	575,621			384,644
Investments, at fair value	8,271,481			7,673,165
Due from affiliates	14,978			17,609
Other assets	27,160			23,786
Receivable for securities sold	85,701			42,076
Liabilities
Accounts payable, accrued expenses and other liabilities	83,698			83,876
Due to affiliates	0			0
Payable for securities purchased	514,717			471,390
CLO loan obligations, at fair value	7,407,720			6,678,091
Fund borrowings	124,203			209,284
Non-controlling interest in Consolidated Funds	639,676			503,637
Consolidated Funds | Reportable legal entity
Assets
Cash and cash equivalents	575,621			384,644
Investments, at fair value	8,271,481			7,673,165
Due from affiliates	14,978			17,609
Other assets	27,160			23,786
Receivable for securities sold	85,701			42,076
Total assets	8,974,941			8,141,280
Liabilities
Accounts payable, accrued expenses and other liabilities	83,698			83,876
Due to affiliates	8,729			8,547
Payable for securities purchased	514,717			471,390
CLO loan obligations, at fair value	7,429,260			6,706,286
Fund borrowings	124,203			209,284
Total liabilities	8,160,607			7,479,383
Commitments and contingencies
Non-controlling interest in Consolidated Funds	814,334			661,897
Stockholders' Equity
Total equity	814,334			661,897
Total liabilities, non-controlling interests and equity	8,974,941			8,141,280
Consolidated Funds | Eliminations
Assets
Cash and cash equivalents	0			0
Investments, at fair value	0			0
Due from affiliates	0			0
Other assets	0			0
Receivable for securities sold	0			0
Liabilities
Accounts payable, accrued expenses and other liabilities	0			0
Due to affiliates	(8,729)			(8,547)
Payable for securities purchased	0			0
CLO loan obligations, at fair value	(21,540)			(28,195)
Fund borrowings	0			0
Non-controlling interest in Consolidated Funds	(174,658)			(158,260)
AOG
Liabilities
Non-controlling interest in Ares Operating Group entities	450,985			302,780
AOG | Reportable legal entity
Liabilities
Non-controlling interest in Ares Operating Group entities	450,985			302,780
AOG | Eliminations
Liabilities
Non-controlling interest in Ares Operating Group entities	0			0
Ares Management L.P
Assets
Cash and cash equivalents	152,203			110,247
Investments, at fair value	1,779,864			1,326,137
Due from affiliates	245,276			199,377
Other assets	296,302			377,651
Right-of-use operating lease assets	148,170			0
Liabilities
Accounts payable, accrued expenses and other liabilities	71,077			83,221
Accrued compensation	168,539			29,389
Due to affiliates	57,551			82,411
Performance related compensation payable	905,949			641,737
Debt obligations	246,442			480,952
Right-of-use operating lease liabilities	174,078			0
Stockholders' Equity
Additional paid-in-capital	507,531			326,007
Retained earnings	(44,308)			(29,336)
Accumulated other comprehensive loss, net of tax	(11,010)			(8,524)
Total stockholders' equity	752,121			587,924
Ares Management L.P | Class A common stock
Stockholders' Equity
Class common stock	1,147			1,016
Ares Management L.P | Class B common stock
Stockholders' Equity
Class common stock	0			0
Ares Management L.P | Class C common stock
Stockholders' Equity
Class common stock	0			0
Ares Management L.P | Accrued Interest
Assets
Investments, at fair value	1,250,191			841,079
Ares Management L.P | Reportable legal entity
Assets
Cash and cash equivalents	152,203			110,247
Investments, at fair value	1,976,062			1,512,592
Due from affiliates	254,005			207,924
Other assets	296,302			377,651
Right-of-use operating lease assets	148,170
Total assets	2,826,742			2,208,414
Liabilities
Accounts payable, accrued expenses and other liabilities	71,077			83,221
Accrued compensation	168,539			29,389
Due to affiliates	57,551			82,411
Performance related compensation payable	905,949			641,737
Debt obligations	246,442			480,952
Total liabilities	1,623,636			1,317,710
Commitments and contingencies
Stockholders' Equity
Additional paid-in-capital	507,531			326,007
Retained earnings	(44,308)			(29,336)
Accumulated other comprehensive loss, net of tax	(11,010)			(8,524)
Total stockholders' equity	752,121			587,924
Total equity	1,203,106			890,704
Total liabilities, non-controlling interests and equity	2,826,742			2,208,414
Ares Management L.P | Reportable legal entity | Class A common stock
Stockholders' Equity
Class common stock	1,147			1,016
Ares Management L.P | Reportable legal entity | Class B common stock
Stockholders' Equity
Class common stock				0
Ares Management L.P | Reportable legal entity | Class C common stock
Stockholders' Equity
Class common stock				0
Ares Management L.P | Eliminations
Assets
Cash and cash equivalents	0			0
Investments, at fair value	(196,198)			(186,455)
Due from affiliates	(8,729)			(8,547)
Other assets	0			0
Liabilities
Accounts payable, accrued expenses and other liabilities	0			0
Accrued compensation	0			0
Due to affiliates	0			0
Performance related compensation payable	0			0
Debt obligations	0			0
Stockholders' Equity
Accumulated other comprehensive loss, net of tax	0			0
Total stockholders' equity	0			0
Ares Management L.P | Eliminations | Class A common stock
Stockholders' Equity
Class common stock	$ 0			$ 0

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DEBT (Credit Facilities of the Consolidated Funds) (Details) - Consolidated Funds - USD ($) $ in Thousands	9 Months Ended	12 Months Ended
	Sep. 30, 2019	Dec. 31, 2018
DEBT
Total borrowings of Consolidated Funds	$ 124,203	$ 209,284
Credit Facility Maturing 1/1/2023
DEBT
Total Capacity	18,000
Outstanding Loan	$ 17,550	$ 14,953
Effective Rate	3.69%	3.98%
Credit Facility Maturing 6/29/2019
DEBT
Total Capacity	$ 0
Outstanding Loan	$ 0	$ 43,624
Effective Rate	0.00%	1.55%
Interest rate	0.00%	0.00%
Credit Facility Maturing 6/29/2019 | EURIBOR | Minimum
DEBT
Interest rate spread	1.00%	1.00%
Credit Facility Maturing 6/29/2019 | EURIBOR | Maximum
DEBT
Interest rate spread	1.55%	1.55%
Credit Facility Maturing 3/7/2019
DEBT
Total Capacity	$ 71,500
Outstanding Loan	$ 71,500	$ 71,500
Effective Rate	3.47%	3.47%
Credit Facility Maturing 6/30/2021
DEBT
Total Capacity	$ 190,785
Outstanding Loan	$ 11,818	$ 38,844
Effective Rate	1.00%	1.00%
Credit Facility Maturing 7/15/2028
DEBT
Total Capacity	$ 75,000
Outstanding Loan	$ 22,000	$ 39,000
Effective Rate	4.75%	4.75%
Revolving Term Loan
DEBT
Total Capacity	$ 1,900
Outstanding Loan	$ 1,335	$ 1,363
Effective Rate	8.07%	8.07%

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COMMITMENTS AND CONTINGENCIES (Leases: Maturity of Lease Liabilities) (Details) $ in Thousands	Sep. 30, 2019 USD ($)
Operating Leases
2019	$ 8,150
2020	30,008
2021	29,132
2022	30,307
2023	26,760
After 2023	74,469
Total future payments	198,826
Less: interest	24,748
Operating lease liabilities	174,078
Finance Leases
2019	10
2020	358
2021	358
2022	329
2023	3
After 2023	2
Total future payments	1,060
Less: interest	51
Finance lease obligations	$ 1,009

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CONSOLIDATION (Tables)

9 Months Ended

Sep. 30, 2019

Condensed Financial Information Disclosure [Abstract]

Schedule of interest in VIEs

The Company's interests in consolidated and non-consolidated VIEs, as presented in the Condensed Consolidated Statements of Financial Condition, and its respective maximum exposure to loss relating to non-consolidated VIEs are as follows:

	As of September 30,		As of December 31,
	2019		2018
Maximum exposure to loss attributable to the Company's investment in non-consolidated VIEs	$	270,980	$	222,477
Maximum exposure to loss attributable to the Company's investment in consolidated VIEs	196,198		186,455
Assets of consolidated VIEs	8,974,941		8,141,280
Liabilities of consolidated VIEs	8,160,607		7,479,383

	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
	2019		2018		2019		2018
Net income attributable to non-controlling interests related to consolidated VIEs	$	15,908	$	13,169	$	41,878	$	23,418

Schedule of consolidating effects of the Consolidated Funds on the Company's financial condition

The following supplemental financial information illustrates the consolidating effects of the Consolidated Funds on the Company's financial condition as of September 30, 2019 and December 31, 2018 and results from operations for the three and nine months ended September 30, 2019 and 2018.  

	As of September 30, 2019
	Consolidated Company  Entities			Consolidated Funds		Eliminations			Consolidated
Assets
Cash and cash equivalents	$	152,203		$	—	$	—		$	152,203
Investments (includes $1,250,191 of accrued carried interest)	1,976,062			—		(196,198		)	1,779,864
Due from affiliates	254,005			—		(8,729		)	245,276
Other assets	296,302			—		—			296,302
Right-of-use operating lease assets	148,170			—		—			148,170
Assets of Consolidated Funds
Cash and cash equivalents	—			575,621		—			575,621
Investments, at fair value	—			8,271,481		—			8,271,481
Due from affiliates	—			14,978		—			14,978
Receivable for securities sold	—			85,701		—			85,701
Other assets	—			27,160		—			27,160
Total assets	$	2,826,742		$	8,974,941	$	(204,927	)	$	11,596,756
Liabilities
Accounts payable, accrued expenses and other liabilities	$	71,077		$	—	$	—		$	71,077
Accrued compensation	168,539			—		—			168,539
Due to affiliates	57,551			—		—			57,551
Performance related compensation payable	905,949			—		—			905,949
Debt obligations	246,442			—		—			246,442
Right-of-use operating lease liabilities	174,078			—		—			174,078
Liabilities of Consolidated Funds
Accounts payable, accrued expenses and other liabilities	—			83,698		—			83,698
Due to affiliates	—			8,729		(8,729		)	—
Payable for securities purchased	—			514,717		—			514,717
CLO loan obligations, at fair value	—			7,429,260		(21,540		)	7,407,720
Fund borrowings	—			124,203		—			124,203
Total liabilities	1,623,636			8,160,607		(30,269		)	9,753,974
Commitments and contingencies
Non-controlling interest in Consolidated Funds	—			814,334		(174,658		)	639,676
Non-controlling interest in Ares Operating Group entities	450,985			—		—			450,985
Stockholders' Equity
Series A Preferred Stock, $0.01 par value, 1,000,000,000 shares authorized (12,400,000 shares issued and outstanding)	298,761			—		—			298,761
Class A common stock, $0.01 par value, 1,500,000,000 shares authorized (114,719,768 shares issued and outstanding)	1,147			—		—			1,147
Class B common stock, $0.01 par value, 1,000 shares authorized (1,000 shares issued and outstanding)	—			—		—			—
Class C common stock, $0.01 par value, 499,999,000 shares authorized (1 share issued and outstanding)	—			—		—			—
Additional paid-in-capital	507,531			—		—			507,531
Retained earnings	(44,308		)	—		—			(44,308		)
Accumulated other comprehensive loss, net of tax	(11,010		)	—		—			(11,010		)
Total stockholders' equity	752,121			—		—			752,121
Total equity	1,203,106			814,334		(174,658		)	1,842,782
Total liabilities, non-controlling interests and equity	$	2,826,742		$	8,974,941	$	(204,927	)	$	11,596,756

	As of December 31, 2018
	Consolidated Company  Entities			Consolidated Funds		Eliminations			Consolidated
Assets
Cash and cash equivalents	$	110,247		$	—	$	—		$	110,247
Investments (includes $841,079 of accrued carried interest)	1,512,592			—		(186,455		)	1,326,137
Due from affiliates	207,924			—		(8,547		)	199,377
Other assets	377,651			—		—			377,651
Assets of Consolidated Funds
Cash and cash equivalents	—			384,644		—			384,644
Investments, at fair value	—			7,673,165		—			7,673,165
Due from affiliates	—			17,609		—			17,609
Receivable for securities sold	—			42,076		—			42,076
Other assets	—			23,786		—			23,786
Total assets	$	2,208,414		$	8,141,280	$	(195,002	)	$	10,154,692
Liabilities
Accounts payable, accrued expenses and other liabilities	$	83,221		$	—	$	—		$	83,221
Accrued compensation	29,389			—		—			29,389
Due to affiliates	82,411			—		—			82,411
Performance related compensation payable	641,737			—		—			641,737
Debt obligations	480,952			—		—			480,952
Liabilities of Consolidated Funds
Accounts payable, accrued expenses and other liabilities	—			83,876		—			83,876
Due to affiliates	—			8,547		(8,547		)	—
Payable for securities purchased	—			471,390		—			471,390
CLO loan obligations	—			6,706,286		(28,195		)	6,678,091
Fund borrowings	—			209,284		—			209,284
Total liabilities	1,317,710			7,479,383		(36,742		)	8,760,351
Commitments and contingencies
Non-controlling interest in Consolidated Funds	—			661,897		(158,260		)	503,637
Non-controlling interest in Ares Operating Group entities	302,780			—		—			302,780
Stockholders' Equity
Series A Preferred Stock, $0.01 par value, 1,000,000,000 shares authorized (12,400,000 units issued and outstanding)	298,761			—		—			298,761
Class A common stock, $0.01 par value, 1,500,000,000 shares authorized (101,594,095 shares issued and outstanding)	1,016			—		—			1,016
Class B common stock, $0.01 par value, 1,000 shares authorized (1,000 shares issued and outstanding)	—			—		—			—
Class C common stock, $0.01 par value, 499,999,000 shares authorized (1 share issued and outstanding)	—			—		—			—
Additional paid-in-capital	326,007			—		—			326,007
Retained earnings	(29,336		)	—		—			(29,336		)
Accumulated other comprehensive loss, net of taxes	(8,524		)	—		—			(8,524		)
Total stockholders' equity	587,924			—		—			587,924
Total equity	890,704			661,897		(158,260		)	1,394,341
Total liabilities, non-controlling interests and equity	$	2,208,414		$	8,141,280	$	(195,002	)	$	10,154,692

Schedule of results from operations

	For the Three Months Ended September 30, 2019
	Consolidated Company  Entities			Consolidated Funds			Eliminations			Consolidated
Revenues
Management fees (includes ARCC Part I Fees of $38,786)	$	260,371		$	—		$	(8,780	)	$	251,591
Carried interest allocation	186,803			—			—			186,803
Incentive fees	1,712			—			—			1,712
Principal investment income	13,865			—			(2,476		)	11,389
Administrative, transaction and other fees	14,995			—			—			14,995
Total revenues	477,746			—			(11,256		)	466,490
Expenses
Compensation and benefits	166,216			—			—			166,216
Performance related compensation	139,216			—			—			139,216
General, administrative and other expense	79,385			—			—			79,385
Expenses of the Consolidated Funds	—			19,664			(8,780		)	10,884
Total expenses	384,817			19,664			(8,780		)	395,701
Other income (expense)
Net realized and unrealized gains (losses) on investments	(522		)	—			2,044			1,522
Interest and dividend income	2,800			—			(770		)	2,030
Interest expense	(4,691		)	—			—			(4,691		)
Other expense, net	(2,994		)	—			1,124			(1,870		)
Net realized and unrealized gains (losses) on investments of the Consolidated Funds	—			1,399			(2,391		)	(992		)
Interest and other income of the Consolidated Funds	—			107,922			—			107,922
Interest expense of the Consolidated Funds	—			(72,251		)	1,117			(71,134		)
Total other income (expense)	(5,407		)	37,070			1,124			32,787
Income before taxes	87,522			17,406			(1,352		)	103,576
Income tax expense	11,555			146			—			11,701
Net income	75,967			17,260			(1,352		)	91,875
Less: Net income attributable to non-controlling interests in Consolidated Funds	—			17,260			(1,352		)	15,908
Less: Net income attributable to non-controlling interests in Ares Operating Group entities	42,636			—			—			42,636
Net income attributable to Ares Management Corporation	33,331			—			—			33,331
Less: Series A Preferred Stock dividends paid	5,425			—			—			5,425
Net income attributable to Ares Management Corporation Class A common stockholders	$	27,906		$	—		$	—		$	27,906

	For the Three Months Ended September 30, 2018
	Consolidated Company  Entities			Consolidated Funds			Eliminations			Consolidated
Revenues
Management fees (includes ARCC Part I Fees of $33,377)	$	213,662		$	—		$	(9,138	)	$	204,524
Carried interest allocation	31,902						—			31,902
Incentive fees	872						—			872
Principal investment loss	(7,886		)	—			422			(7,464		)
Administrative, transaction and other fees	10,943			—			—			10,943
Total revenues	249,493			—			(8,716		)	240,777
Expenses
Compensation and benefits	145,594			—			—			145,594
Performance related compensation	17,606			—			—			17,606
General, administrative and other expense	51,155			—			—			51,155
Expenses of the Consolidated Funds	—			21,971			(9,138		)	12,833
Total expenses	214,355			21,971			(9,138		)	227,188
Other income (expense)
Net realized and unrealized gains on investments	6,540			—			(998		)	5,542
Interest and dividend income	901			—			(93		)	808
Interest expense	(4,143		)	—			—			(4,143		)
Other income, net	725			—			86			811
Net realized and unrealized gains on investments of the Consolidated Funds	—			4,686			751			5,437
Interest and other income of the Consolidated Funds	—			93,062			—			93,062
Interest expense of the Consolidated Funds	—			(63,103		)	340			(62,763		)
Total other income	4,023			34,645			86			38,754
Income before taxes	39,161			12,674			508			52,343
Income tax expense	5,118			13			—			5,131
Net income	34,043			12,661			508			47,212
Less: Net income attributable to non-controlling interests in Consolidated Funds	—			12,661			508			13,169
Less: Net income attributable to non-controlling interests in Ares Operating Group entities	18,133			—			—			18,133
Net income attributable to Ares Management L.P.	15,910			—			—			15,910
Less: Preferred equity dividends paid	5,425			—			—			5,425
Net income attributable to Ares Management L.P. common shareholders	$	10,485		$	—		$	—		$	10,485

	For the Nine Months Ended September 30, 2019
	Consolidated Company  Entities			Consolidated Funds			Eliminations			Consolidated
Revenues
Management fees (includes ARCC Part I Fees of $116,336)	$	740,024		$	—		$	(25,928	)	$	714,096
Carried interest allocation	503,808			—			—			503,808
Incentive fees	33,931			—			(5,184		)	28,747
Principal investment income	45,336			—			656			45,992
Administrative, transaction and other fees	35,866			—			—			35,866
Total revenues	1,358,965			—			(30,456		)	1,328,509
Expenses
Compensation and benefits	485,232			—			—			485,232
Performance related compensation	388,424			—			—			388,424
General, administrative and other expense	195,988			—			—			195,988
Expenses of the Consolidated Funds	—			61,977			(31,112		)	30,865
Total expenses	1,069,644			61,977			(31,112		)	1,100,509
Other income (expense)
Net realized and unrealized gains on investments	4,829			—			690			5,519
Interest and dividend income	7,448			—			(1,922		)	5,526
Interest expense	(16,073		)	—			—			(16,073		)
Other expense, net	(2,784		)	—			1,214			(1,570		)
Net realized and unrealized gains on investments of the Consolidated Funds	—			4,661			(1,405		)	3,256
Interest and other income of the Consolidated Funds	—			303,312			—			303,312
Interest expense of the Consolidated Funds	—			(206,688		)	2,637			(204,051		)
Total other income (expense)	(6,580		)	101,285			1,214			95,919
Income before taxes	282,741			39,308			1,870			323,919
Income tax expense (benefit)	36,290			(700		)	—			35,590
Net income	246,451			40,008			1,870			288,329
Less: Net income attributable to non-controlling interests in Consolidated Funds	—			40,008			1,870			41,878
Less: Net income attributable to non-controlling interests in Ares Operating Group entities	136,032			—			—			136,032
Net income attributable to Ares Management Corporation	110,419			—			—			110,419
Less: Series A Preferred Stock dividends paid	16,275			—			—			16,275
Net income attributable to Ares Management Corporation Class A common stockholders	$	94,144		$	—		$	—		$	94,144

	For the Nine Months Ended September 30, 2018
	Consolidated Company  Entities			Consolidated Funds			Eliminations			Consolidated
Revenues
Management fees (includes ARCC Part I Fees of $91,660)	$	612,792		$	—		$	(24,721	)	$	588,071
Carried interest allocation	72,587			—			—			72,587
Incentive fees	17,683			—			(4,000		)	13,683
Principal investment income (loss)	9,544			—			(10,228		)	(684		)
Administrative, transaction and other fees	37,372			—			—			37,372
Total revenues	749,978			—			(38,949		)	711,029
Expenses
Compensation and benefits	419,225			—			—			419,225
Performance related compensation	30,479			—			—			30,479
General, administrative and other expense	155,523			—			—			155,523
Expenses of the Consolidated Funds	—			77,982			(28,721		)	49,261
Total expenses	605,227			77,982			(28,721		)	654,488
Other income (expense)
Net realized and unrealized gains on investments	9,800			—			(1,830		)	7,970
Interest and dividend income	6,604			—			(93		)	6,511
Interest expense	(17,088		)	—			—			(17,088		)
Other expense, net	(2,106		)	—			619			(1,487		)
Net realized and unrealized gains on investments of the Consolidated Funds	—			26,053			786			26,839
Interest and other income of the Consolidated Funds	—			250,117			—			250,117
Interest expense of the Consolidated Funds	—			(165,080		)	1,138			(163,942		)
Total other income (expense)	(2,790		)	111,090			620			108,920
Income before taxes	141,961			33,108			(9,608		)	165,461
Income tax expense	29,577			82			—			29,659
Net income	112,384			33,026			(9,608		)	135,802
Less: Net income attributable to non-controlling interests in Consolidated Funds	—			33,026			(9,608		)	23,418
Less: Net income attributable to non-controlling interests in Ares Operating Group entities	67,301			—			—			67,301
Net income attributable to Ares Management L.P.	45,083			—			—			45,083
Less: Preferred equity dividends paid	16,275			—			—			16,275
Net income attributable to Ares Management L.P. common shareholders	$	28,808		$	—		$	—		$	28,808

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EARNINGS PER SHARE (Tables)

9 Months Ended

Sep. 30, 2019

Earnings Per Share [Abstract]

Schedule of antidilutive securities excluded from earnings per common unit

The computation of diluted earnings per share for the three and nine months ended September 30, 2019 and 2018 excludes the following options, restricted units and AOG Units, as their effect would have been anti-dilutive:

	For the Three Months Ended September 30,		For the Nine Months Ended September 30,
	2019	2018	2019	2018
Options	9,132,017	19,102,583	10,085,774	19,345,651
Restricted units	7,922,322	15,635,997	9,504,741	15,874,847
AOG Units	116,707,849	119,822,657	116,844,099	122,732,149

Schedule of the computation of basic and diluted earnings per common unit

The following table presents the computation of basic and diluted earnings per share:

	For the Three Months Ended September 30,						For the Nine Months Ended September 30,
	2019			2018			2019			2018
Net income attributable to Ares Management Corporation Class A common stockholders	$	27,906		$	10,485		$	94,144		$	28,808
Distributions on participating unvested restricted units	(1,927		)	(1,567		)	(5,630		)	(5,667		)
Net income available to Class A common stockholders	$	25,979		$	8,918		$	88,514		$	23,141
Basic weighted-average shares of Class A common stock	108,481,929			98,706,419			105,546,219			94,168,582
Basic earnings per share of Class A common stock	$	0.24		$	0.09		$	0.84		$	0.25
Net income attributable to Ares Management Corporation Class A common stockholders	$	27,906		$	10,485		$	94,144		$	28,808
Distributions on unvested restricted units	—			(1,567		)	—			(5,667		)
Net income available to Class A common stockholders	$	27,906		$	8,918		$	94,144		$	23,141
Effect of dilutive shares:
Restricted units	8,722,690			—			7,140,271			—
Options	4,685,403			—			3,731,646			—
Diluted weighted-average shares of Class A common stock	121,890,022			98,706,419			116,418,136			94,168,582
Diluted earnings per share of Class A common stock	$	0.23		$	0.09		$	0.81		$	0.25
Dividends declared and paid per Class A common stock	$	0.32		$	0.28		$	0.96		$	1.05

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Condensed Consolidated Statements of Operations - USD ($) $ in Thousands		3 Months Ended							9 Months Ended
		Sep. 30, 2019	Jun. 30, 2019	Mar. 31, 2019	Dec. 31, 2018	Sep. 30, 2018	Jun. 30, 2018	Mar. 31, 2018	Sep. 30, 2019	Sep. 30, 2018
Expenses
Total expenses		$ 395,701				$ 227,188			$ 1,100,509	$ 654,488
Other income (expense)
Total other income		32,787				38,754			95,919	108,920
Income before taxes		103,576				52,343			323,919	165,461
Income tax expense		11,701				5,131			35,590	29,659
Net income		91,875	$ 74,878	$ 121,576	$ 16,337	47,212	$ 14,169	$ 74,421	288,329	135,802
Net income attributable to Ares Management Corporation		33,331				15,910			110,419	45,083
Less: Series A Preferred Stock dividends paid		5,425				5,425			16,275	16,275
Net income attributable to Ares Management Corporation Class A common stockholders		$ 27,906				$ 10,485			$ 94,144	$ 28,808
Net income attributable to Ares Management Corporation per share of Class A common stock
Basic (in dollars per share)		$ 0.24				$ 0.09			$ 0.84	$ 0.25
Diluted (in dollars per share)		$ 0.23				$ 0.09			$ 0.81	$ 0.25
Weighted-average shares of Class A common stock:
Basic (in shares)	[1]	108,481,929				98,706,419			105,546,219	94,168,582
Diluted (in shares)	[1]	121,890,022				98,706,419			116,418,136	94,168,582
Consolidated Funds
Expenses
Expenses of Consolidated Funds		$ 10,884				$ 12,833			$ 30,865	$ 49,261
Other income (expense)
Net realized and unrealized gains on investments		(992)				5,437			3,256	26,839
Interest expense		(71,134)				(62,763)			(204,051)	(163,942)
Interest and other income of Consolidated Funds		107,922				93,062			303,312	250,117
Net income attributable to non-controlling interests related to consolidated VIEs		15,908				13,169			41,878	23,418
AOG
Other income (expense)
Net income attributable to non-controlling interests related to consolidated VIEs		42,636				18,133			136,032	67,301
Ares Management L.P
Revenues
Total revenues		466,490				240,777			1,328,509	711,029
Expenses
Compensation and benefits		166,216				145,594			485,232	419,225
Performance related compensation		139,216				17,606			388,424	30,479
General, administrative and other expenses		79,385				51,155			195,988	155,523
Other income (expense)
Net realized and unrealized gains on investments		1,522				5,542			5,519	7,970
Interest and dividend income		2,030				808			5,526	6,511
Interest expense		(4,691)				(4,143)			(16,073)	(17,088)
Other income (expense), net		(1,870)				811			(1,570)	(1,487)
Management fees | Ares Management L.P
Revenues
Total revenues		251,591				204,524			714,096	588,071
Carried interest allocation
Revenues
Total revenues									503,808
Carried interest allocation | Ares Management L.P
Revenues
Total revenues		186,803				31,902			503,808	72,587
Incentive fees | Ares Management L.P
Revenues
Total revenues		1,712				872			28,747	13,683
Principal investment income (loss) | Ares Management L.P
Revenues
Total revenues		11,389				(7,464)			45,992	(684)
Administrative, transaction and other fees
Revenues
Total revenues		0				0			0	0
Administrative, transaction and other fees | Ares Management L.P
Revenues
Total revenues		$ 14,995				$ 10,943			$ 35,866	$ 37,372

[1] Three and nine months ended September 30, 2018 represents common units.

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INCOME TAXES

9 Months Ended

Sep. 30, 2019

Income Tax Disclosure [Abstract]

INCOME TAXES

INCOME TAXES

Effective March 1, 2018, the Company elected to be treated as a corporation for U.S. federal and state income tax purposes (the “Tax Election”). Upon the effectiveness of this election, all earnings are subject to U.S. federal, state and local income taxes and certain of its foreign subsidiaries are subject to foreign income taxes (for which a foreign tax credit can generally offset U.S. corporate taxes imposed on the same income). Prior to March 1, 2018, a substantial portion of the Company's share of carried interest and investment income flowed through to investors without being subject to corporate level income taxes. Consequently, the Company did not reflect a provision for income taxes on such income except those for foreign, state and local income taxes incurred at the entity level. Beginning March 1, 2018, the Company's share of unrealized gains and income items became subject to U.S. corporate tax.

The Company’s income tax provision includes corporate income taxes and other entity level income taxes, as well as income taxes incurred by certain affiliated funds that are consolidated in these financial statements. For the three and nine months ended September 30, 2019, the Company recorded income tax expense of $11.7 million and $35.6 million, respectively. For the three and nine months ended September 30, 2018, the Company recorded income tax expense of $5.1 million and $29.7 million, respectively. In connection with its election to be taxed as a corporation effective March 1, 2018, the Company recorded a significant one-time deferred tax liability arising from the embedded net unrealized gains of both carried interest and the investment portfolio that were not previously subject to corporate taxes.

The Company’s effective income tax rate is dependent on many factors, including the estimated nature and amounts of income and expenses allocated to the non-controlling interests without being subject to federal, state and local income taxes at the corporate level. Additionally, the Company’s effective tax rate is influenced by the amount of income tax provision recorded for any affiliated funds and co-investment entities that are consolidated in the Company's condensed consolidated financial statements. For the three and nine months ended September 30, 2019, the Company recorded its interim income tax provision utilizing the estimated annual effective tax rate. In 2018, the Company utilized the discrete effective tax rate method to calculate its interim income tax provision since the conversion to a U.S. corporation for tax purposes occurred in an interim period.

The income tax effects of temporary differences give rise to significant portions of deferred tax assets and liabilities, which are presented on a net basis. As of September 30, 2019 and December 31, 2018, the Company recorded a net deferred tax asset of $39.2 million and $42.1 million, respectively, within other assets in the Condensed Consolidated Statements of Financial Condition.

The Company files its tax returns as prescribed by the tax laws of the jurisdictions in which it operates. In the normal course of business, the Company is subject to examination by U.S. federal, state, local and foreign tax authorities. With limited exceptions, the Company is no longer subject to income tax audits by taxing authorities for any years prior to 2015. Although the outcome of tax audits is always uncertain, the Company does not believe the outcome of any future audit will have a material adverse effect on the Company’s condensed consolidated financial statements.

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

9 Months Ended

Sep. 30, 2019

Accounting Policies [Abstract]

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying condensed consolidated financial statements are prepared in accordance with the generally accepted accounting principles in the United States (“GAAP”) for interim financial information and instructions to the Quarterly Report on Form 10-Q. The condensed consolidated financial statements, including these notes, are unaudited and exclude some of the disclosures required in annual financial statements. Management believes it has made all necessary adjustments so that the condensed consolidated financial statements are presented fairly and that estimates made in preparing its condensed consolidated financial statements are reasonable and prudent, and that all such adjustments are of a normal recurring nature. The operating results presented for interim periods are not necessarily indicative of the results that may be expected for any other interim period or for the entire year. These condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements included in the Annual Report on Form 10-K for the year ended December 31, 2018 filed with the Securities and Exchange Commission ("SEC").

The condensed consolidated financial statements include the accounts and activities of the AOG entities, their consolidated subsidiaries and certain Consolidated Funds. All intercompany balances and transactions have been eliminated upon consolidation.

The Company has reclassified certain prior period amounts to conform to the current year presentation.

Adoption of ASC 842

Effective January 1, 2019, the Company adopted the Financial Accounting Standards Board (“FASB”) Topic 842 (“ASC 842”), Leases. The Company adopted ASC 842 under the modified retrospective approach using the practical expedient provided for within paragraph 842-10-65-1; therefore, the presentation of prior year periods has not been adjusted. No cumulative effect of initially adopting ASC 842 as an adjustment to the opening balance of components of equity as of January 1, 2019 was necessary as the recognition of the right-of-use operating lease assets equaled the corresponding lease liabilities. The amount established in conjunction with the implementation was consistent with the amount previously disclosed.

The Company has entered into operating and finance leases for corporate offices and certain equipment and makes the determination if an arrangement constitutes a lease at inception. Operating leases are included in right-of-use operating lease assets and right-of-use operating lease liabilities in the Company's Condensed Consolidated Statements of Financial Condition. Finance leases are included in accounts payable, accrued expenses and other liabilities in the Condensed Consolidated Statements of Financial Condition. Leases with an initial term of 12 months or less are not recorded on the Condensed Consolidated Statements of Financial Condition.

Right-of-use leases assets represent the Company's right to use an underlying asset for the lease term and right-of-use lease liabilities represent the Company's obligation to make lease payments arising from the lease. Operating lease right-of-use assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. As most of the Company's leases do not provide an implicit rate, the Company uses the its incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. The Company uses the implicit rate when readily determinable. The right-of-use operating lease asset also includes any lease prepayments and excludes lease incentives. Lease terms may include options to extend or terminate the lease when it is reasonably certain that the company will exercise that option. Lease expense is primarily recognized on a straight-line basis over the lease term. The Company has lease agreements with lease and non-lease components, which are generally accounted for separately. However, for certain equipment leases where the non-lease components are not material, the Company account for the lease and non-lease components as a single lease component.

Recent Accounting Pronouncements

The Company considers the applicability and impact of all accounting standard updates ("ASU") issued. ASUs not listed below were assessed and either determined to be not applicable or expected to have minimal impact on its condensed consolidated financial statements.

In May 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. The objective of the guidance in ASU 2016-13 is to allow entities to recognize estimated credit losses in the period that the change in valuation occurs. ASU 2016-13 requires an entity to present financial assets measured on an amortized cost basis on the balance sheet net of an allowance for credit losses. Available for sale and held to maturity debt securities are also required to be held net of an allowance for credit losses. The guidance should be applied using a modified retrospective approach. ASU 2016-13 is effective for public entities for annual reporting periods beginning after December 15, 2019 and interim periods within those reporting periods. Early adoption is permitted for annual and quarterly reporting periods beginning after December 15, 2018. In April and May 2019, ASU 2019-04, Codification Improvements to Topic 326, Financial Instruments-Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments and ASU 2019-05, Financial Instruments-Credit Losses (Topic 326): Targeted Transition Relief, were issued to provide clarification to previously issued credit losses guidance (ASU 2016-13) that has not yet been implemented. These updates are required to be adopted with ASU 2016-13. The Company is currently evaluating the impact of these pronouncements on its condensed consolidated financial statements.

In August 2018, the FASB issued ASU 2018-15, Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract (a consensus of the FASB Emerging Issues Task Force). ASU 2018-15 amends ASC 350-40 to address a customer’s accounting for implementation costs incurred in a cloud computing arrangement that is a service contract. This ASU aligns the accounting for costs incurred to implement a cloud computing arrangement that is a service arrangement with the guidance on capitalizing costs associated with developing or obtaining internal-use software. Specifically, ASU 2018-15 amends ASC 350 to include in its scope implementation costs of a cloud computing arrangement that is a service contract and clarifies that a customer should apply ASC 350-40 to determine which implementation costs should be capitalized in a cloud computing arrangement that is considered a service contract. The accounting for the service element of a hosting arrangement that is a service contract is not affected by these amendments. In addition, this ASU states that a cloud computing arrangement that is a service contract does not give rise to a recognizable intangible asset because it is an executory service contract. Consequently, any costs incurred to implement a cloud computing arrangement that is a service contract would not be capitalized as an intangible asset since they do not form part of an intangible asset but instead would be characterized in the financial statements in the same manner as other service costs and assets related to service contracts such as prepaid expense. That is, these costs would be capitalized as part of the service contract and the related amortization would be consistent with the ongoing periodic costs of the underlying cloud computing arrangement. ASU 2018-15 is effective for public entities for annual reporting periods beginning after December 15, 2019 and interim periods within those reporting periods, with early adoption permitted. The guidance may be applied either prospectively or retrospectively. The Company is currently evaluating the impact of this guidance on its condensed consolidated financial statements.

In October 2018, the FASB issued ASU 2018-17, Consolidation (Topic 810): Targeted Improvements to Related Party Guidance for Variable Interest Entities. ASU 2018-17, amends ASC 810 to address whether indirect interests held through related parties in common control arrangements should be considered on a proportional basis for determining whether fees paid to decision makers and service providers are variable interests. This is consistent with how indirect interests held through related parties under common control are considered for determining whether a reporting entity must consolidate a VIE. For example, if a decision maker or service provider owns a 20 percent interest in a related party and that related party owns a 40 percent interest in the legal entity being evaluated, the decision maker’s or service provider’s indirect interest in the VIE held through the related party under common control should be considered the equivalent of an eight percent direct interest for determining whether its fees are variable interests. ASU 2018-17 is effective for public entities for annual reporting periods beginning after December 15, 2019 and interim periods within those reporting periods, with early adoption permitted. The guidance should be applied retrospectively. The Company is currently evaluating the impact of this guidance on its condensed consolidated financial statements.

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Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018
Cash flows from operating activities:
Net income	$ 288,329	$ 135,802
Adjustments to reconcile net income to net cash used in operating activities	59,736	268,526
Cash flows due to changes in operating assets and liabilities	19,038	90,140
Net cash used in operating activities	(1,680,084)	(1,723,214)
Cash flows from investing activities:
Purchase of furniture, equipment and leasehold improvements, net	(12,073)	(14,437)
Net cash used in investing activities	(12,073)	(14,437)
Allocable to non-controlling interests in Consolidated Funds:
Net cash provided by financing activities	1,750,668	1,733,002
Effect of exchange rate changes	(16,555)	7,912
Net change in cash and cash equivalents	41,956	3,263
Cash and cash equivalents, beginning of period	110,247	118,929
Cash and cash equivalents, end of period	152,203	122,192
Ares Management L.P
Cash flows from financing activities:
Proceeds from issuance of Class A common stock	206,705	105,333
Proceeds from credit facility	265,000	410,000
Proceeds from term notes	0	44,050
Repayments of credit facility	(500,000)	(515,000)
Repayments of term loans	0	(206,089)
Dividends and distributions	(238,301)	(247,189)
Series A Preferred Stock dividends and distributions	(16,275)	(16,275)
Repurchases of Class A common stock	(10,449)	0
Stock option exercises	83,090	950
Taxes paid related to net share settlement of equity awards	(32,022)	(17,376)
Other financing activities	(3,240)	1,681
Allocable to non-controlling interests in Consolidated Funds:
Cash and cash equivalents, beginning of period	110,247
Cash and cash equivalents, end of period	152,203
Consolidated Funds
Cash flows from operating activities:
Adjustments to reconcile net income to net cash used in operating activities	(1,826,610)	(2,181,999)
Cash flows due to changes in operating assets and liabilities	(220,577)	(35,683)
Allocable to non-controlling interests in Consolidated Funds:
Contributions from non-controlling interests in Consolidated Funds	164,890	70,990
Distributions to non-controlling interests in Consolidated Funds	(65,575)	(46,795)
Borrowings under loan obligations by Consolidated Funds	2,482,341	3,135,421
Repayments under loan obligations by Consolidated Funds	(585,496)	$ (986,699)
Cash and cash equivalents, beginning of period	384,644
Cash and cash equivalents, end of period	$ 575,621

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DERIVATIVE FINANCIAL INSTRUMENTS

9 Months Ended

Sep. 30, 2019

Derivative Instruments and Hedging Activities Disclosure [Abstract]

DERIVATIVE FINANCIAL INSTRUMENTS

DERIVATIVE FINANCIAL INSTRUMENTS

In the normal course of business, the Company and the Consolidated Funds are exposed to certain risks relating to their ongoing operations and use various types of derivative instruments primarily to mitigate against credit and foreign exchange risk. The derivative instruments are not designated as hedging instruments under the accounting standards for derivatives and hedging. The Company recognizes all of its derivative instruments at fair value as either assets or liabilities in the Condensed Consolidated Statements of Financial Condition within other assets or accounts payable, accrued expenses and other liabilities, respectively. These amounts may be offset to the extent that there is a legal right to offset and if elected by management.

The following tables identify the fair value and notional amounts of derivative contracts by major product type on a gross basis for the Company and the Consolidated Funds as of September 30, 2019 and December 31, 2018:

	As of September 30, 2019								As of December 31, 2018
	Assets				Liabilities				Assets				Liabilities
The Company	Notional(1)		Fair Value		Notional(1)		Fair Value		Notional(1)		Fair Value		Notional(1)		Fair Value
Foreign exchange contracts	$	102,524	$	4,201	$	5,065	$	163	$	33,026	$	1,066	$	27,140	$	869
Total derivatives, at fair value(2)	$	102,524	$	4,201	$	5,065	$	163	$	33,026	$	1,066	$	27,140	$	869

	As of September 30, 2019								As of December 31, 2018
	Assets				Liabilities				Assets				Liabilities
Consolidated Funds	Notional(1)		Fair Value		Notional(1)		Fair Value		Notional(1)		Fair Value		Notional(1)		Fair Value
Foreign exchange contracts	$	1,042	$	1,042	$	1,042	$	1,025	$	1,881	$	1,881	$	1,881	$	1,864
Asset swap - other	2,466		236		4,668		2,788		5,226		1,328		2,605		648
Total derivatives, at fair value(3)	$	3,508	$	1,278	$	5,710	$	3,813	$	7,107	$	3,209	$	4,486	$	2,512

(1) Represents the total contractual amount of derivative assets and liabilities outstanding.

(2) As of September 30, 2019 and December 31, 2018, the Company had the right to, but elected not to, offset $0.2 million and $0.9 million of its derivative liabilities, respectively.

(3)

As of September 30, 2019 and December 31, 2018, the Consolidated Funds offset $1.8 million and $5.7 million of their derivative assets and liabilities, respectively.

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EQUITY COMPENSATION

9 Months Ended

Sep. 30, 2019

Share-based Payment Arrangement [Abstract]

EQUITY COMPENSATION

EQUITY COMPENSATION

Equity Incentive Plan

In 2014, the Company adopted the 2014 Equity Incentive Plan, as amended and restated on March 1, 2018 and as further amended and restated effective November 26, 2018 (the “Equity Incentive Plan”). Based on a formula as defined in the Equity Incentive Plan, the total number of shares available to be issued under the Equity Incentive Plan resets and may increase on January 1 each year. Accordingly, on January 1, 2019, the total number of shares available for issuance under the Equity Incentive Plan reset to 32,792,005 shares, and as of September 30, 2019, 29,232,054 shares remain available for issuance.

Generally, unvested phantom shares, restricted units and options are forfeited upon termination of employment in accordance with the Equity Incentive Plan. The Company recognizes forfeitures as a reversal of previously recognized compensation expense in the period the forfeiture occurs.

Equity-based compensation expense, net of forfeitures is included in the following table:

	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
	2019		2018		2019		2018
Restricted units	$	21,430	$	19,251	$	66,226	$	55,798
Restricted units with a market condition	911		614		2,702		614
Options	52		3,660		4,310		9,953
Phantom shares	—		415		736		1,169
Equity-based compensation expense	$	22,393	$	23,940	$	73,974	$	67,534

Restricted Units

Each restricted unit represents an unfunded, unsecured right of the holder to receive a share of the Company's Class A common stock on a specific date. The restricted units generally vest and are settled in shares of Class A common stock either (i) at a rate of one‑third per year, beginning on the third anniversary of the grant date, (ii) in their entirety on the fifth anniversary of the grant date, (iii) at a rate of one quarter per year, beginning on either the first or second anniversary of the grant date or the holder's employment commencement date, or (iv) at a rate of one third per year, beginning on the first anniversary of the grant date in each case generally subject to the holder’s continued employment as of the applicable vesting date (subject to accelerated vesting upon certain qualifying terminations of employment). Compensation expense associated with restricted units is recognized on a straight-line basis over the requisite service period of the award.

The holders of restricted units other than the market condition awards described below generally have the right to receive as current compensation an amount in cash equal to (i) the amount of any dividend paid with respect to a share of Class A common stock multiplied by (ii) the number of restricted units held at the time such dividends are declared (“Dividend Equivalent”). During the nine months ended September 30, 2019, the Company declared dividends of $0.32, $0.32 and $0.32 per share to Class A common stockholders at the close of business on March 15, 2019, June 14, 2019 and September 16, 2019, respectively. For the three and nine months ended September 30, 2019, Dividend Equivalents were made to the holders of restricted units in the aggregate amount of $5.3 million and $16.1 million, respectively, which are presented as dividends within the Condensed Consolidated Statements of Changes in Equity. When units are forfeited, the cumulative amount of dividend equivalents previously paid is reclassified to compensation and benefits expense in the Condensed Consolidated Statements of Operations.

The following table presents unvested restricted units' activity during the nine months ended September 30, 2019:

	Restricted Units		Weighted Average Grant Date Fair Value Per Unit
Balance - January 1, 2019	16,255,475		$	19.21
Granted	4,202,622		20.61
Vested	(3,579,050	)	17.95
Forfeited	(234,035	)	19.33
Balance - September 30, 2019	16,645,012		$	19.83

The total compensation expense expected to be recognized in all future periods associated with the restricted units is approximately $216.2 million as of September 30, 2019 and is expected to be recognized over the remaining weighted average period of 2.93 years.

Restricted Unit Awards with a Market Condition

The following table presents the unvested market condition awards' activity during the nine months ended September 30, 2019:

	Market Condition Awards Units	Weighted Average Grant Date Fair Value Per Unit
Balance - January 1, 2019	1,333,334	$	9.30
Granted	—	—
Vested	—	—
Forfeited	—	—
Balance - September 30, 2019	1,333,334	$	9.30

The total compensation expense expected to be recognized in all future periods associated with the market condition awards is approximately $8.2 million as of September 30, 2019 and is expected to be recognized over the remaining weighted average period of 2.43 years.

Options

A summary of options activity during the nine months ended September 30, 2019 is presented below:

	Options		Weighted Average Exercise Price		Weighted Average Remaining Life (in years)	Aggregate Intrinsic Value
Balance - January 1, 2019	18,741,504		$	18.99	4.88	$	—
Exercised	(4,515,448	)	19.00		—	—
Expired	(366,366	)	19.00		—	—
Forfeited	(42,270	)	19.00		—	—
Balance - September 30, 2019	13,817,420		$	18.99	4.50	$	108,079
Exercisable at September 30, 2019	13,707,603		$	18.99	4.49	$	107,167

Net cash proceeds from exercises of stock options were $83.1 million for the nine months ended September 30, 2019. The Company realized tax benefits of approximately $3.6 million from those exercises.

Phantom Shares

A summary of unvested phantom shares' activity during the nine months ended September 30, 2019 is presented below:

	Phantom Shares		Weighted Average Grant Date Fair Value Per Share
Balance - January 1, 2019	66,287		$	19.00
Vested	(61,502	)	19.00
Forfeited	(4,785	)	19.00
Balance - September 30, 2019	—		$	—

During the nine months ended September 30, 2019 the Company paid $1.5 million to settle vested phantom shares.

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SUBSEQUENT EVENTS

9 Months Ended

Sep. 30, 2019

Subsequent Events [Abstract]

SUBSEQUENT EVENTS

SUBSEQUENT EVENTS

The Company evaluated all events or transactions that occurred after September 30, 2019 through the date the condensed consolidated financial statements were issued. During this period, the Company had the following material subsequent events that require disclosure:

In October 2019, the Company's board of directors declared a quarterly dividend of $0.32 per share of Class A common stock payable on December 31, 2019 to common stockholders of record at the close of business on December 17, 2019.

In October 2019, the Company's board of directors declared a quarterly dividend of $0.4375 per share of Series A Preferred Stock payable on December 31, 2019 to preferred stockholders of record at the close of business on December 15, 2019. As December 15, 2019 falls on a Sunday, the effective record date for the dividend will be Friday, December 13, 2019.

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FAIR VALUE (Tables)

9 Months Ended

Sep. 30, 2019

Fair Value Disclosures [Abstract]

Summary of valuation of investments and other financial instruments by fair value hierarchy levels

The tables below summarize the financial assets and financial liabilities measured at fair value for the Company and the Consolidated Funds as of September 30, 2019:

Financial Instruments of the Company	Level I		Level II			Level III		Investments Measured at NAV		Total
Assets, at fair value
Investments:
Collateralized loan obligations and other fixed income	$	—	$	—		$	82,513	$	—	$	82,513
Common stock and other equity securities	128		1,035			12,397		—		13,560
Partnership interests	—		—			35,192		1,573		36,765
Total investments, at fair value	128		1,035			130,102		1,573		132,838
Derivatives—foreign exchange contracts	—		4,201			—		—		4,201
Total assets, at fair value	$	128	$	5,236		$	130,102	$	1,573	$	137,039
Liabilities, at fair value
Derivatives—foreign exchange contracts	$	—	$	(163	)	$	—	$	—	$	(163	)
Total liabilities, at fair value	$	—	$	(163	)	$	—	$	—	$	(163	)

Financial Instruments of the Consolidated Funds	Level I		Level II			Level III			Total
Assets, at fair value
Investments:
Fixed income investments:
Bonds	$	—	$	197,204		$	8,523		$	205,727
Loans	—		7,337,934			276,637			7,614,571
Total fixed income investments	—		7,535,138			285,160			7,820,298
Equity securities	37,185		—			114,841			152,026
Partnership interests	—		—			299,157			299,157
Total investments, at fair value	37,185		7,535,138			699,158			8,271,481
Derivatives:
Foreign exchange contracts	—		1,042			—			1,042
Asset swaps - other	—		—			236			236
Total assets, at fair value	$	37,185	$	7,536,180		$	699,394		$	8,272,759
Liabilities, at fair value
Foreign exchange contracts	$	—	$	(1,025	)	$	—		$	(1,025	)
Asset swaps - other	—		—			(2,788		)	(2,788		)
Loan obligations of CLOs	—		(7,407,720		)	—			(7,407,720		)
Total liabilities, at fair value	$	—	$	(7,408,745	)	$	(2,788	)	$	(7,411,533	)

The tables below summarize the financial assets and financial liabilities measured at fair value for the Company and the Consolidated Funds as of December 31, 2018:

Financial Instruments of the Company	Level I		Level II			Level III		Investments Measured at NAV		Total
Assets, at fair value
Investments:
Collateralized loan obligations and other fixed income	$	—	$	—		$	60,824	$	—	$	60,824
Common stock and other equity securities	280		1,004			10,397		—		11,681
Partnership interests	—		—			35,192		861		36,053
Total investments, at fair value	280		1,004			106,413		861		108,558
Derivatives-foreign exchange contracts	—		1,066			—		—		1,066
Total assets, at fair value	$	280	$	2,070		$	106,413	$	861	$	109,624
Liabilities, at fair value
Derivatives—foreign exchange contracts	$	—	$	(869	)	$	—	$	—	$	(869	)
Total liabilities, at fair value	$	—	$	(869	)	$	—	$	—	$	(869	)

Financial Instruments of the Consolidated Funds	Level I		Level II			Level III			Total
Assets, at fair value
Investments:
Fixed income investments:
Bonds	$	—	$	316,850		$	1,649		$	318,499
Loans	—		6,340,440			546,309			6,886,749
Total fixed income investments	—		6,657,290			547,958			7,205,248
Equity securities	45,718		—			150,752			196,470
Partnership interests	—		—			271,447			271,447
Total investments, at fair value	45,718		6,657,290			970,157			7,673,165
Derivatives:
Foreign exchange contracts	—		1,881			—			1,881
Asset swaps - other	—		—			1,328			1,328
Total derivative assets, at fair value	—		1,881			1,328			3,209
Total assets, at fair value	$	45,718	$	6,659,171		$	971,485		$	7,676,374
Liabilities, at fair value
Foreign exchange contracts	$	—	$	(1,864	)	$	—		(1,864		)
Asset swaps - other	—		—			(648		)	(648		)
Loan obligations of CLOs	—		(6,678,091		)	—			(6,678,091		)
Total liabilities, at fair value	$	—	$	(6,679,955	)	$	(648	)	$	(6,680,603	)

Summary of changes in the fair value of the Level III investments

The following tables set forth a summary of changes in the fair value of the Level III measurements for the three months ended September 30, 2019:

	Level III Assets
Level III Assets of the Company	Equity  Securities		Fixed Income			Partnership  Interests		Total
Balance, beginning of period	$	12,397	$	64,051		$	35,192	$	111,640
Purchases(1)	—		25,010			—		25,010
Sales/settlements(2)	—		(5,243		)	—		(5,243		)
Realized and unrealized depreciation, net	—		(1,305		)	—		(1,305		)
Balance, end of period	$	12,397	$	82,513		$	35,192	$	130,102
Increase in net unrealized depreciation included in earnings related to financial assets still held at the reporting date	$	—	$	(1,357	)	$	—	$	(1,357	)

Level III Assets of Consolidated Funds	Equity  Securities			Fixed  Income			Partnership Interests			Derivatives, Net			Total
Balance, beginning of period	$	131,732		$	274,412		$	293,857		$	58		$	700,059
Transfer in	—			122,554			—			—			122,554
Transfer out	—			(103,148		)	—			—			(103,148		)
Purchases(1)	710			95,011			2,000			—			97,721
Sales/settlements(2)	(13,597		)	(102,198		)	(5,000		)	(1,848		)	(122,643		)
Amortized discounts/premiums	—			107			—			(17		)	90
Realized and unrealized appreciation (depreciation), net	(4,004		)	(1,578		)	8,300			(745		)	1,973
Balance, end of period	$	114,841		$	285,160		$	299,157		$	(2,552	)	$	696,606
Increase (decrease) in net unrealized appreciation/depreciation included in earnings related to financial assets still held at the reporting date	$	(3,582	)	$	(765	)	$	8,300		$	(1,023	)	$	2,930

(1) Purchases include paid‑in‑kind interest and securities received in connection with restructurings.

(2) Sales/settlements include distributions, principal redemptions and securities disposed of in connection with restructurings.

The following tables set forth a summary of changes in the fair value of the Level III measurements for the nine months ended September 30, 2019:

	Level III Assets
Level III Assets of the Company	Equity  Securities		Fixed Income			Partnership  Interests		Total
Balance, beginning of period	$	10,397	$	60,824		$	35,192	$	106,413
Deconsolidation of fund	—		10,021			—		10,021
Purchases(1)	2,000		27,157			—		29,157
Sales/settlements(2)	—		(16,413		)	—		(16,413		)
Realized and unrealized appreciation, net	—		924			—		924
Balance, end of period	$	12,397	$	82,513		$	35,192	$	130,102
Increase in net unrealized appreciation included in earnings related to financial assets still held at the reporting date	$	—	$	1,121		$	—	$	1,121

Level III Assets of Consolidated Funds	Equity  Securities			Fixed  Income			Partnership Interests			Derivatives, Net			Total
Balance, beginning of period	$	150,752		$	547,958		$	271,447		$	680		$	970,837
Deconsolidation of fund	(10,325		)	(174,593		)	—			—			(184,918		)
Transfer in	—			85,179			—			—			85,179
Transfer out	—			(199,498		)	—			—			(199,498		)
Purchases(1)	11,595			282,190			10,000			—			303,785
Sales/settlements(2)	(18,734		)	(260,422		)	(7,000		)	(2,424		)	(288,580		)
Amortized discounts/premiums	—			17			—			4			21
Realized and unrealized appreciation (depreciation), net	(18,447		)	4,329			24,710			(812		)	9,780
Balance, end of period	$	114,841		$	285,160		$	299,157		$	(2,552	)	$	696,606
Increase (decrease) in net unrealized appreciation/depreciation included in earnings related to financial assets still held at the reporting date	$	(18,018	)	$	1,017		$	24,710		$	(1,031	)	$	6,678

(1) Purchases include paid‑in‑kind interest and securities received in connection with restructurings.

(2) Sales/settlements include distributions, principal redemptions and securities disposed of in connection with restructurings.

The following tables set forth a summary of changes in the fair value of the Level III measurements for the three months ended September 30, 2018:

	Level III Assets
Level III Assets of the Company	Equity  Securities		Fixed Income			Partnership  Interests			Total
Balance, beginning of period	$	—	$	22,125		$	47,219		$	69,344
Transfer in	500		—			—			500
Purchases(1)	750		2,314			—			3,064
Sales/settlements(2)	—		(1,976		)	—			(1,976		)
Realized and unrealized appreciation (depreciation), net	9,147		185			(5,390		)	3,942
Balance, end of period	$	10,397	$	22,648		$	41,829		$	74,874
Increase (decrease) in net unrealized appreciation/depreciation included in earnings related to financial assets still held at the reporting date	$	9,147	$	220		$	(5,390	)	$	3,977

Level III Assets of Consolidated Funds	Equity  Securities			Fixed  Income			Partnership Interests		Derivatives, Net			Total
Balance, beginning of period	$	184,583		$	482,375		$	251,608	$	230		$	918,796
Transfer in	—			118,624			—		124			118,748
Transfer out	—			(264,659		)	—		—			(264,659		)
Purchases(1)	—			124,784			9,000		—			133,784
Sales/settlements(2)	—			(78,395		)	—		799			(77,596		)
Amortized discounts/premiums	—			(46		)	—		4			(42		)
Realized and unrealized appreciation (depreciation), net	(4,224		)	1,350			9,174		(336		)	5,964
Balance, end of period	$	180,359		$	384,033		$	269,782	$	821		$	834,995
Increase (decrease) in net unrealized appreciation/depreciation included in earnings related to financial assets still held at the reporting date	$	(13,164	)	$	3,468		$	—	$	125		$	(9,571	)

(1) Purchases include paid‑in‑kind interest and securities received in connection with restructurings.

(2) Sales/settlements include distributions, principal redemptions and securities disposed of in connection with restructurings.

The following tables set forth a summary of changes in the fair value of the Level III measurements for the nine months ended September 30, 2018:

	Level III Assets
Level III Assets of the Company	Equity  Securities		Fixed Income			Partnership  Interests			Total
Balance, beginning of period	$	—	$	195,158		$	44,769		$	239,927
Deconsolidation of fund	—		78			—			78
Transfer in	250								250
Purchases(1)	1,000		51,045			—			52,045
Sales/settlements(2)	—		(222,546		)	—			(222,546		)
Realized and unrealized appreciation (depreciation), net	9,147		(1,087		)	(2,940		)	5,120
Balance, end of period	$	10,397	$	22,648		$	41,829		$	74,874
Increase (decrease) in net unrealized appreciation/depreciation included in earnings related to financial assets still held at the reporting date	$	9,147	$	(648	)	$	(2,940	)	$	5,559

Level III Assets of Consolidated Funds	Equity  Securities		Fixed  Income			Partnership Interests		Derivatives, Net			Total
Balance, beginning of period	$	162,577	$	267,889		$	232,332	$	904		$	663,702
Deconsolidation of fund	—		(233		)	—		—			(233		)
Transfer in	—		68,665			—		—			68,665
Transfer out	—		(49,463		)	—		—			(49,463		)
Purchases(1)	—		262,278			25,000		—			287,278
Sales/settlements(2)	—		(163,559		)	—		606			(162,953		)
Amortized discounts/premiums	—		(62		)	—		(10		)	(72		)
Realized and unrealized appreciation (depreciation), net	17,782		(1,482		)	12,450		(679		)	28,071
Balance, end of period	$	180,359	$	384,033		$	269,782	$	821		$	834,995
Increase (decrease) in net unrealized appreciation/depreciation included in earnings related to financial assets still held at the reporting date	$	17,782	$	593		$	12,450	$	(863	)	$	29,962

(1) Purchases include paid‑in‑kind interest and securities received in connection with restructurings.

(2)

Sales/settlements include distributions, principal redemptions and securities disposed of in connection with restructurings.

Summary of quantitative inputs and assumptions used for Level III inputs

The following table summarizes the quantitative inputs and assumptions used for the Company’s and the Consolidated Funds' Level III measurements as of September 30, 2019:

Level III Measurements of the Company	Fair Value		Valuation Technique(s)	Significant Unobservable Input(s)	Range
Assets
Equity securities	$	12,397	Transaction price(1)	N/A	N/A
Partnership interests	35,192		Discounted cash flow	Discount rate	8.0%
Collateralized loan obligations	23,417		Broker quotes and/or 3rd party pricing services	N/A	N/A
Other fixed income	59,096		Other	N/A	N/A
Total	$	130,102

Level III Measurements of the Consolidated Funds	Fair Value			Valuation Technique(s)	Significant Unobservable Input(s)	Range	Weighted Average
Assets
Equity securities
	$	719		Enterprise value market multiple analysis	EBITDA multiple(2)	9.0x - 21.0x	14.6x
	71,056			Other	Net income multiple	35.7x - 39.0x	37.1x
					Illiquidity discount	25.0%	25.0%
	43,066			Transaction price(1)	N/A	N/A	N/A
Partnership interest	299,157			Discounted cash flow	Discount rate	20.7%	20.7%
Fixed income securities
	210,969			Broker quotes and/or 3rd party pricing services	N/A	N/A	N/A
	74,191			Income approach	Yield	4.9% - 13.1%	9.7%
Derivative instruments	236			Broker quotes and/or 3rd party pricing services	N/A	N/A	N/A
Total assets	$	699,394
Liabilities
Derivatives instruments	$	(2,788	)	Broker quotes and/or 3rd party pricing services	N/A	N/A	N/A
Total liabilities	$	(2,788	)

(1) Transaction price consists of securities recently purchased or restructured. The Company determined that there was no change to the valuation based on the underlying assumptions used at the closing of such transactions.

(2) “EBITDA” in the table above is a non-GAAP financial measure and refers to earnings before interest, tax, depreciation and amortization.

The following table summarizes the quantitative inputs and assumptions used for the Company’s and the Consolidated Funds' Level III measurements as of December 31, 2018:

Level III Measurements of the Company	Fair Value		Valuation Technique(s)	Significant Unobservable Input(s)	Range
Assets
Equity securities	$	10,397	Transaction price(1)	N/A	N/A
Partnership interests	35,192		Discounted cash flow	Discount rate	8.0%
Collateralized loan obligations	20,824		Broker quotes and/or 3rd party pricing services	N/A	N/A
Other fixed income	40,000		Other	N/A	N/A
Total	$	106,413

Level III Measurements of the Consolidated Funds	Fair Value			Valuation Technique(s)	Significant Unobservable Input(s)	Range	Weighted Average
Assets
Equity securities
	$	23,871		Enterprise value market multiple analysis	EBITDA multiple(2)	7.2x - 22.9x	7.7x
	41,562			Other	Net income multiple	38.8x	38.8x
					Illiquidity discount	25.0%	25.0%
	271,447			Discounted cash flow	Discount rate	20.8%	20.8%
	85,319			Transaction price(1)	N/A	N/A	N/A
Fixed income securities
	441,368			Broker quotes and/or 3rd party pricing services	N/A	N/A	N/A
	106,590			Income approach	Yield	1.0% - 14.8%	9.6%
Derivative instruments	1,328			Broker quotes and/or 3rd party pricing services	N/A	N/A	N/A
Total assets	$	971,485
Liabilities
Derivatives instruments	$	(648	)	Broker quotes and/or 3rd party pricing services	N/A	N/A	N/A
Total liabilities	$	(648	)

(1) Transaction price consists of securities purchased or restructured. The Company determined that there has been no change to the valuation based on the underlying assumptions used at the closing of such transactions.

(2) “EBITDA” in the table above is a non-GAAP financial measure and refers to earnings before interest, tax, depreciation and amortization.

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DEBT (Debt Obligations) (Details) - Ares Management L.P - USD ($)	1 Months Ended	9 Months Ended
	Oct. 31, 2014	Sep. 30, 2019	Dec. 31, 2018
DEBT
Carrying Value		$ 246,442,000	$ 480,952,000
Credit Facility
DEBT
Carrying Value		0	$ 235,000,000
Interest Rate			4.00%
Maximum borrowing capacity		$ 1,065,000,000.000
Unused commitment fees		0.15%
Interest rate		0.00%
Credit Facility | Base rate
DEBT
Interest rate spread		0.25%
Credit Facility | LIBOR
DEBT
Interest rate spread		1.25%
Senior Notes
DEBT
Original Borrowing Amount		$ 250,000,000
Carrying Value		$ 246,442,000	$ 245,952,000
Interest Rate		4.21%	4.21%
AFC Notes
DEBT
Debt issuance rate	98.268%

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FAIR VALUE (Changes in Fair Value of Level III Measurements) (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Consolidated Funds
Changes in the fair value of the Level III investments
Balance, beginning of period	$ 700,059	$ 918,796	$ 970,837	$ 663,702
Deconsolidation of fund			(184,918)	(233)
Transfer in	122,554	118,748	85,179	68,665
Transfer out	(103,148)	(264,659)	(199,498)	(49,463)
Purchases	97,721	133,784	303,785	287,278
Sales/settlements	(122,643)	(77,596)	(288,580)	(162,953)
Amortized discounts/premiums	90	(42)	21	(72)
Realized and unrealized appreciation (depreciation), net	1,973	5,964	9,780	28,071
Balance, end of period	696,606	834,995	696,606	834,995
Increase (decrease) in net unrealized appreciation/depreciation included in earnings related to financial assets still held at the reporting date	2,930	(9,571)	6,678	29,962
Consolidated Funds | Equity securities
Changes in the fair value of the Level III investments
Balance, beginning of period	131,732	184,583	150,752	162,577
Deconsolidation of fund			(10,325)	0
Transfer in	0	0	0	0
Transfer out	0	0	0	0
Purchases	710	0	11,595	0
Sales/settlements	(13,597)	0	(18,734)	0
Amortized discounts/premiums	0	0	0	0
Realized and unrealized appreciation (depreciation), net	(4,004)	(4,224)	(18,447)	17,782
Balance, end of period	114,841	180,359	114,841	180,359
Increase (decrease) in net unrealized appreciation/depreciation included in earnings related to financial assets still held at the reporting date	(3,582)	(13,164)	(18,018)	17,782
Consolidated Funds | Fixed Income
Changes in the fair value of the Level III investments
Balance, beginning of period	274,412	482,375	547,958	267,889
Deconsolidation of fund			(174,593)	(233)
Transfer in	122,554	118,624	85,179	68,665
Transfer out	(103,148)	(264,659)	(199,498)	(49,463)
Purchases	95,011	124,784	282,190	262,278
Sales/settlements	(102,198)	(78,395)	(260,422)	(163,559)
Amortized discounts/premiums	107	(46)	17	(62)
Realized and unrealized appreciation (depreciation), net	(1,578)	1,350	4,329	(1,482)
Balance, end of period	285,160	384,033	285,160	384,033
Increase (decrease) in net unrealized appreciation/depreciation included in earnings related to financial assets still held at the reporting date	(765)	3,468	1,017	593
Consolidated Funds | Partnership interests
Changes in the fair value of the Level III investments
Balance, beginning of period	293,857	251,608	271,447	232,332
Deconsolidation of fund			0	0
Transfer in	0	0	0	0
Transfer out	0	0	0	0
Purchases	2,000	9,000	10,000	25,000
Sales/settlements	(5,000)	0	(7,000)	0
Amortized discounts/premiums	0	0	0	0
Realized and unrealized appreciation (depreciation), net	8,300	9,174	24,710	12,450
Balance, end of period	299,157	269,782	299,157	269,782
Increase (decrease) in net unrealized appreciation/depreciation included in earnings related to financial assets still held at the reporting date	8,300	0	24,710	12,450
Consolidated Funds | Derivatives, Net
Changes in the fair value of the Level III investments
Balance, beginning of period	58	230	680	904
Deconsolidation of fund			0	0
Transfer in	0	124	0	0
Transfer out	0	0	0	0
Purchases	0	0	0	0
Sales/settlements	(1,848)	799	(2,424)	606
Amortized discounts/premiums	(17)	4	4	(10)
Realized and unrealized appreciation (depreciation), net	(745)	(336)	(812)	(679)
Balance, end of period	(2,552)	821	(2,552)	821
Increase (decrease) in net unrealized appreciation/depreciation included in earnings related to financial assets still held at the reporting date	(1,023)	125	(1,031)	(863)
Ares Management L.P
Changes in the fair value of the Level III investments
Balance, beginning of period	111,640	69,344	106,413	239,927
Deconsolidation of fund			10,021	78
Transfer in		500		250
Purchases	25,010	3,064	29,157	52,045
Sales/settlements	(5,243)	(1,976)	(16,413)	(222,546)
Realized and unrealized appreciation (depreciation), net	(1,305)	3,942	924	5,120
Balance, end of period	130,102	74,874	130,102	74,874
Increase (decrease) in net unrealized appreciation/depreciation included in earnings related to financial assets still held at the reporting date	(1,357)	3,977	1,121	5,559
Ares Management L.P | Equity securities
Changes in the fair value of the Level III investments
Balance, beginning of period	12,397	0	10,397	0
Deconsolidation of fund			0	0
Transfer in		500		250
Purchases	0	750	2,000	1,000
Sales/settlements	0	0	0	0
Realized and unrealized appreciation (depreciation), net	0	9,147	0	9,147
Balance, end of period	12,397	10,397	12,397	10,397
Increase (decrease) in net unrealized appreciation/depreciation included in earnings related to financial assets still held at the reporting date	0	9,147	0	9,147
Ares Management L.P | Fixed Income
Changes in the fair value of the Level III investments
Balance, beginning of period	64,051	22,125	60,824	195,158
Deconsolidation of fund			10,021	78
Transfer in		0
Purchases	25,010	2,314	27,157	51,045
Sales/settlements	(5,243)	(1,976)	(16,413)	(222,546)
Realized and unrealized appreciation (depreciation), net	(1,305)	185	924	(1,087)
Balance, end of period	82,513	22,648	82,513	22,648
Increase (decrease) in net unrealized appreciation/depreciation included in earnings related to financial assets still held at the reporting date	(1,357)	220	1,121	(648)
Ares Management L.P | Partnership interests
Changes in the fair value of the Level III investments
Balance, beginning of period	35,192	47,219	35,192	44,769
Deconsolidation of fund			0	0
Transfer in		0
Purchases	0	0	0	0
Sales/settlements	0	0	0	0
Realized and unrealized appreciation (depreciation), net	0	(5,390)	0	(2,940)
Balance, end of period	35,192	41,829	35,192	41,829
Increase (decrease) in net unrealized appreciation/depreciation included in earnings related to financial assets still held at the reporting date	$ 0	$ (5,390)	$ 0	$ (2,940)

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INVESTMENTS (Fair Value Investments, excluding Equity Method Investments Held at Fair Value) (Details) - Ares Management L.P - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
Investments
Equity method investments	$ 1,779,864	$ 1,326,137
Partnership interests	36,765	36,053
Total private investment partnership interests and other	132,838	108,558
Collateralized loan obligations	23,417	20,824
Equity securities	$ 13,560	$ 11,681
Percentage of total investments as of	1.30%	1.60%
Partnership interests
Investments
Total private investment partnership interests and other	$ 1,696,188	$ 1,264,029
Percentage of total investments as of	95.30%	95.30%
Other fixed income
Investments
Total private investment partnership interests and other	$ 59,096	$ 40,000
Percentage of total investments as of	3.30%	3.00%
Collateralized loan obligations
Investments
Collateralized loan obligations	$ 82,513	$ 60,824
Percentage of total investments as of	4.60%	4.60%
Common Stock
Investments
Equity securities	$ 1,163	$ 1,284
Percentage of total investments as of	0.10%	0.10%
Partnership interests
Investments
Equity method investments	$ 379,338	$ 357,655
Percentage of total investments as of	21.30%	27.00%
Carried interest allocation
Investments
Equity method investments	$ 1,250,191	$ 841,079
Percentage of total investments as of	70.20%	63.40%
Equity method private investment partnership interests and other (held at fair value)
Investments
Equity method investments	$ 49,162	$ 46,450
Percentage of total investments as of	2.80%	3.50%
Equity method private investment partnership interests and other
Investments
Partnership interests	$ 17,497	$ 18,845
Percentage of total investments as of	1.00%	1.40%

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EARNINGS PER SHARE (Computation of Basic and Diluted Earnings Per Share) (Details) - USD ($) $ / shares in Units, $ in Thousands					3 Months Ended		9 Months Ended
		Sep. 16, 2019	Jun. 14, 2019	Mar. 15, 2019	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Basic
Net income attributable to Ares Management Corporation Class A common stockholders					$ 27,906	$ 10,485	$ 94,144	$ 28,808
Distributions on participating unvested restricted units					(1,927)	(1,567)	(5,630)	(5,667)
Net income available to Class A common stockholders					$ 25,979	$ 8,918	$ 88,514	$ 23,141
Basic weighted-average shares of Class A common stock (in shares)	[1]				108,481,929	98,706,419	105,546,219	94,168,582
Basic earnings per share of Class A common stock (in dollars per share)					$ 0.24	$ 0.09	$ 0.84	$ 0.25
Distributions on unvested restricted units					$ 0	$ (1,567)	$ 0	$ (5,667)
Net income available to Class A common stockholders					$ 27,906	$ 8,918	$ 94,144	$ 23,141
Diluted
Diluted weighted-average shares of Class A common stock (in shares)	[1]				121,890,022	98,706,419	116,418,136	94,168,582
Diluted earnings per share of Class A common stock (in dollars per share)					$ 0.23	$ 0.09	$ 0.81	$ 0.25
Dividend declared and paid per Class A common stock (in dollar per share)		$ 0.32	$ 0.32	$ 0.32	$ 0.32	$ 0.28	$ 0.96	$ 1.05
Restricted units
Diluted
Effect of dilutive shares (in shares)					8,722,690	0	7,140,271	0
Options
Diluted
Effect of dilutive shares (in shares)					4,685,403	0	3,731,646	0

[1] Three and nine months ended September 30, 2018 represents common units.

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EQUITY COMPENSATION (Options) (Details) - USD ($) $ / shares in Units, $ in Thousands	9 Months Ended	12 Months Ended
	Sep. 30, 2019	Dec. 31, 2018
Options
Exercised (in units)	(4,422,644)
Aggregate Intrinsic Value
Unrecognized compensation expenses	$ 83,100
Stock Options
Options
Balance at the beginning of the period (in units)	18,741,504
Exercised (in units)	(4,515,448)
Expired (in units)	(366,366)
Forfeited (in units)	(42,270)
Balance at the end of the period (in units)	13,817,420	18,741,504
Exercisable at the end of the period (in units)	13,707,603
Weighted Average Exercise Price
Balance at the beginning of the period (in dollars per unit)	$ 18.99
Exercised (in dollars per unit)	19.00
Expired (in dollars per unit)	19.00
Forfeited (in dollars per unit)	19.00
Balance at the end of the period (in dollars per unit)	18.99	$ 18.99
Exercisable at the end of the period (in dollars per unit)	$ 18.99
Weighted Average Remaining Life
Weighted average remaining life		4 years 10 months 17 days
Expected to vest at the end of the period	4 years 6 months
Exercisable at the end of the period	4 years 5 months 26 days
Aggregate Intrinsic Value
Beginning balance	$ 0
Exercised	0
Ending balance	108,079	$ 0
Exercisable	107,167
Tax benefits of exercises	$ 3,600

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DEBT (Debt Issuance Costs) (Details) - Ares Management L.P $ in Thousands	9 Months Ended
	Sep. 30, 2019 USD ($)
Credit Facility
Debt Issuance Costs
Unamortized debt issuance costs as of December 31, 2018	$ 4,972
Debt issuance costs incurred	1,547
Amortization of debt issuance costs	(991)
Unamortized debt issuance costs as of June 30, 2019	5,528
Senior Notes
Debt Issuance Costs
Unamortized debt issuance costs as of December 31, 2018	1,334
Debt issuance costs incurred	0
Amortization of debt issuance costs	(174)
Unamortized debt issuance costs as of June 30, 2019	$ 1,160

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COMMITMENTS AND CONTINGENCIES (Leases: Assets and Liabilities) (Details) - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
Lessee, Lease, Description [Line Items]
Operating lease liabilities	$ 174,078
Finance lease obligations	1,009
Accumulated amortization	500
Ares Management L.P
Lessee, Lease, Description [Line Items]
Operating lease assets	148,170	$ 0
Finance lease assets	1,231
Total lease assets	149,401
Operating lease liabilities	174,078	$ 0
Finance lease obligations	1,009
Total lease liabilities	$ 175,087
Minimum
Lessee, Lease, Description [Line Items]
Lease term	1 year
Maximum
Lessee, Lease, Description [Line Items]
Lease term	11 years

XML

COMMITMENTS AND CONTINGENCIES (Leases: Other Information) (Details) $ in Thousands	9 Months Ended
	Sep. 30, 2019 USD ($)
Commitments and Contingencies Disclosure [Abstract]
Operating cash flows from operating leases	$ 23,273
Operating cash flows from finance leases	54
Financing cash flows from finance leases	283
Leased assets obtained in exchange for new finance lease liabilities	128
Leased assets obtained in exchange for new operating lease liabilities	$ 49,833

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SEGMENT REPORTING (Reconciliation of Income Before Taxes) (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018	Dec. 31, 2018	Mar. 31, 2018	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Economic net income
Income before taxes	$ 103,576	$ 52,343	$ 323,919	$ 165,461
Adjustments:
Depreciation and amortization expense				7,800
Equity compensation expense	22,393	23,940	73,974	67,534
Non-cash impairment charge	20,000
Consolidated Funds
Adjustments:
Income before taxes of non-controlling interests in Consolidated Funds, net of eliminations	15,908	13,169	41,878	23,418
Total investment income - realized	(107,922)	(93,062)	(303,312)	(250,117)
Due to affiliates	0		0		$ 0
Operating segment
Economic net income
Income before taxes	103,576	52,343	323,919	165,461
Adjustments:
Depreciation and amortization expense	24,564	5,347	35,609	20,234
Equity compensation expense	22,393	23,940	73,974	67,534
Acquisition and merger-related expense	4,777	253	10,757	(19)
Unamortized placement fees	4,366	6,194	17,319	9,710
Other expense	(461)	3	(460)	13,564
Total performance (income) loss - unrealized	(181,174)	37,999	(426,411)	127,224
Total performance related compensation - unrealized	137,174	(42,417)	311,936	(132,294)
Total investment (income) loss - unrealized	(1,094)	25,356	(9,309)	30,921
Realized income	154,419	141,635	461,320	418,025
Total performance income - realized	(7,314)	(71,568)	(111,881)	(217,283)
Total performance related compensation - realized	2,042	60,023	76,488	162,773
Total investment income - realized	(7,007)	(15,614)	(28,332)	(28,045)
Fee related earnings	142,140	114,476	397,595	335,470
Operating segment | Consolidated Funds
Adjustments:
Income before taxes of non-controlling interests in Consolidated Funds, net of eliminations	(16,054)	(13,182)	(41,178)	(23,500)
OMG
Adjustments:
OMG expense, net	55,553	44,980	162,556	137,012
Realized income	56,012	50,217	163,970	146,480
Total performance income - realized	0	0	0	0
Total performance related compensation - realized	0	0	0	0
Total investment income - realized	546	158	1,343	(2,078)
Fee related earnings	(55,466)	(50,059)	(162,627)	(148,558)
Subsidiaries | Operating segment
Adjustments:
Income before taxes of non-controlling interests in Consolidated Funds, net of eliminations	799	819	2,608	2,178
Ares Management L.P
Adjustments:
Due to affiliates	57,551		57,551		82,411
Ares Management L.P | Rent and other occupancy expenses | Affiliated entity | ARCC
Adjustments:
Due to affiliates	11,800		11,800		$ 11,800	$ 600	$ 2,200	$ 3,000	$ 3,200	$ 2,900
Ares Management L.P | Operating segment
Adjustments:
Total investment (income) loss - unrealized	4,138	(26,121)	12,703	(30,390)
Realized income	(154,419)	(141,635)	(461,320)	(418,025)
Total performance income - realized	(7,314)	(71,568)	(111,881)	(217,283)
Total performance related compensation - realized	2,042	60,023	76,488	162,773
Total investment income - realized	(7,007)	(15,614)	(28,332)	(28,045)
Fee related earnings	$ 142,140	$ 114,476	$ 397,595	$ 335,470

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SEGMENT REPORTING (Revenue, Expenses and Other Income (Expense) (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Segment revenues
Total segment revenues	$ 272,635	$ 289,102	$ 864,179	$ 847,241
Segment expenses
Total expenses	395,701	227,188	1,100,509	654,488
Segment other income
Total other income	32,787	38,754	95,919	108,920
Operating segment
Segment revenues
Performance income—realized	7,314	71,568	111,881	217,283
Segment expenses
Total performance related compensation - realized	2,042	60,023	76,488	162,773
Ares Management L.P
Segment revenues
Total revenues	466,490	240,777	1,328,509	711,029
Segment expenses
Compensation and benefits	166,216	145,594	485,232	419,225
General, administrative and other expenses	79,385	51,155	195,988	155,523
Ares Management L.P | Management fees
Segment revenues
Total revenues	251,591	204,524	714,096	588,071
Ares Management L.P | Operating segment
Segment revenues
Performance income—realized	7,314	71,568	111,881	217,283
Total segment revenues	272,635	289,102	864,179	847,241
Segment expenses
Compensation and benefits	101,519	83,415	290,531	240,658
General, administrative and other expenses	21,662	19,643	64,172	53,830
Total performance related compensation - realized	2,042	60,023	76,488	162,773
Total expenses	125,223	163,081	431,191	457,261
Segment other income
Investment income—realized	2,176	16,013	19,716	30,166
Interest and other investment income—realized	8,987	3,122	23,359	13,209
Interest expense	(4,156)	(3,521)	(14,743)	(15,330)
Total other income	7,007	15,614	28,332	28,045
Ares Management L.P | Operating segment | Management fees
Segment revenues
Total revenues	259,978	213,662	739,269	612,792
Ares Management L.P | Operating segment | Other fees
Segment revenues
Total revenues	$ 5,343	$ 3,872	$ 13,029	$ 17,166

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Condensed Consolidated Statements of Financial Condition - USD ($) $ in Thousands	Sep. 30, 2019	Jun. 30, 2019	Mar. 31, 2019	Dec. 31, 2018	Sep. 30, 2018	Jun. 30, 2018	Mar. 31, 2018	Dec. 31, 2017
Assets
Cash and cash equivalents	$ 152,203			$ 110,247	$ 122,192			$ 118,929
Total assets	11,596,756			10,154,692
Liabilities
Right-of-use operating lease liabilities	174,078
Total liabilities	9,753,974			8,760,351
Commitments and contingencies
Stockholders' Equity
Series A Preferred Stock, $0.01 par value, 1,000,000,000 shares authorized (12,400,000 shares issued and outstanding at September 30, 2019 and December 31, 2018)	298,761			298,761
Additional paid-in-capital	507,531			326,007
Retained earnings	(44,308)			(29,336)
Accumulated other comprehensive loss, net of tax	(11,010)			(8,524)
Total stockholders' equity	752,121			587,924
Total equity	1,842,782	$ 1,602,324	$ 1,479,824	1,394,341	$ 1,491,319	$ 1,535,249	$ 1,565,195	$ 1,460,292
Total liabilities, non-controlling interests and equity	11,596,756			10,154,692
Class A common stock
Stockholders' Equity
Class common stock	1,147			1,016
Class B common stock
Stockholders' Equity
Class common stock	0			0
Class C common stock
Stockholders' Equity
Class common stock	0			0
Consolidated Funds
Assets
Cash and cash equivalents	575,621			384,644
Investments, at fair value	8,271,481			7,673,165
Due from affiliates	14,978			17,609
Other assets	27,160			23,786
Receivable for securities sold	85,701			42,076
Liabilities
Accounts payable, accrued expenses and other liabilities	83,698			83,876
Due to affiliates	0			0
Payable for securities purchased	514,717			471,390
CLO loan obligations, at fair value	7,407,720			6,678,091
Fund borrowings	124,203			209,284
Non-controlling interest in Consolidated Funds	639,676			503,637
AOG
Liabilities
Non-controlling interest in Ares Operating Group entities	450,985			302,780
Ares Management L.P
Assets
Cash and cash equivalents	152,203			110,247
Investments, at fair value	1,779,864			1,326,137
Due from affiliates	245,276			199,377
Other assets	296,302			377,651
Right-of-use operating lease assets	148,170			0
Liabilities
Accounts payable, accrued expenses and other liabilities	71,077			83,221
Accrued compensation	168,539			29,389
Due to affiliates	57,551			82,411
Performance related compensation payable	905,949			641,737
Debt obligations	246,442			480,952
Right-of-use operating lease liabilities	174,078			0
Stockholders' Equity
Additional paid-in-capital	507,531			326,007
Retained earnings	(44,308)			(29,336)
Accumulated other comprehensive loss, net of tax	(11,010)			(8,524)
Total stockholders' equity	752,121			587,924
Ares Management L.P | Class A common stock
Stockholders' Equity
Class common stock	1,147			1,016
Ares Management L.P | Class B common stock
Stockholders' Equity
Class common stock	0			0
Ares Management L.P | Class C common stock
Stockholders' Equity
Class common stock	$ 0			$ 0

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Condensed Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Net income	$ 91,875	$ 47,212	$ 288,329	$ 135,802
Consolidated Funds
Other comprehensive income:
Less: Comprehensive income (loss) attributable to non-controlling interests	10,962	12,669	36,779	20,404
AOG
Other comprehensive income:
Less: Comprehensive income (loss) attributable to non-controlling interests	40,284	17,359	133,281	64,699
Ares Management L.P
Other comprehensive income:
Foreign currency translation adjustments, net of tax	(9,429)	(1,919)	(10,336)	(8,811)
Total comprehensive income	82,446	45,293	277,993	126,991
Comprehensive income attributable to Ares Management Corporation	$ 31,200	$ 15,265	$ 107,933	$ 41,888

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INVESTMENTS

9 Months Ended

Sep. 30, 2019

Investments in and Advances to Affiliates [Abstract]

INVESTMENTS

INVESTMENTS

The Company’s investments are comprised of the following:

					Percentage of total investments as of
	September 30,		December 31,		September 30,		December 31,
	2019		2018		2019		2018
Private Investment Partnership Interests and Other:
Equity method private investment partnership interests - principal (1)	$	379,338	$	357,655	21.3	%	27.0	%
Equity method - carried interest (1)	1,250,191		841,079		70.2	%	63.4	%
Equity method private investment partnership interests and other (held at fair value)	49,162		46,450		2.8	%	3.5	%
Equity method private investment partnership interests and other	17,497		18,845		1.0	%	1.4	%
Total private investment partnership interests and other	1,696,188		1,264,029		95.3	%	95.3	%
Collateralized loan obligations	23,417		20,824		1.3	%	1.6	%
Other fixed income	59,096		40,000		3.3	%	3.0	%
Collateralized loan obligations and other fixed income, at fair value	82,513		60,824		4.6	%	4.6	%
Common stock, at fair value	1,163		1,284		0.1	%	0.1	%
Total investments	$	1,779,864	$	1,326,137

(1) Investment or portion of the investment is denominated in foreign currency and is translated into U.S. dollars at each reporting date.

Equity Method Investments

The Company’s equity method investments include investments that are not consolidated but over which the Company exerts significant influence. The Company evaluates each of its equity method investments to determine if any were significant as defined by guidance from the SEC. As of and for the three and nine months ended September 30, 2019 and 2018, no individual equity method investment held by the Company met the significance criteria.

The Company recognized net gains related to its equity method investments of $11.1 million for the three months ended September 30, 2019, and $45.6 million and $3.5 million for the nine months ended September 30, 2019 and 2018, respectively. The Company recognized a net loss related to its equity method investments of $3.8 million for the three months ended September 30, 2018. The net gains and losses were included within principal investment income, net realized and unrealized gains on investments, and interest and dividend income within the Condensed Consolidated Statements of Operations.

With respect to the Company's equity method investments, the material assets are expected to generate either long-term capital appreciation and or interest income, the material liabilities are debt instruments collateralized by, or related to, the financing of the assets and net income is materially comprised of the changes in fair value of these net assets.

Investments of the Consolidated Funds

Investments held in the Consolidated Funds are summarized below:

	Fair value at				Fair value as a percentage of total investments as of
	September 30,		December 31,		September 30,		December 31,
	2019		2018		2019		2018
Fixed income investments:
Bonds	$	205,727	$	318,499	2.5	%	4.3	%
Loans	7,614,571		6,886,749		92.1	%	89.8	%
Total fixed income investments	7,820,298		7,205,248		94.6	%	94.1	%
Equity securities	152,026		196,470		1.8	%	2.4	%
Partnership interests	299,157		271,447		3.6	%	3.5	%
Total investments, at fair value	$	8,271,481	$	7,673,165

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COMMITMENTS AND CONTINGENCIES

9 Months Ended

Sep. 30, 2019

Commitments and Contingencies Disclosure [Abstract]

COMMITMENTS AND CONTINGENCIES

COMMITMENTS AND CONTINGENCIES

Indemnification Arrangements

Consistent with standard business practices in the normal course of business, the Company enters into contracts that contain indemnities for affiliates of the Company, persons acting on behalf of the Company or such affiliates and third parties. The terms of the indemnities vary from contract to contract and the Company’s maximum exposure under these arrangements cannot be determined and has not been recorded in the Condensed Consolidated Statements of Financial Condition. As of September 30, 2019, the Company has not had prior claims or losses pursuant to these contracts and expects the risk of loss to be remote.

Commitments

As of September 30, 2019 and December 31, 2018, the Company had aggregate unfunded commitments to invest in funds it manages or to support certain strategic initiatives of $303.9 million and $267.6 million, respectively.

Performance Income

Generally, if at the termination of a fund (and increasingly at interim points in the life of a fund), the fund has not achieved investment returns that (in most cases) exceed the preferred return threshold or (in all cases) the general partner receives net profits over the life of the fund in excess of its allocable share under the applicable partnership agreement, the Company will be obligated to repay carried interest that was received by the Company in excess of the amounts to which the Company is entitled. This contingent obligation is normally reduced by income taxes paid by the Company related to its carried interest. 

At September 30, 2019 and December 31, 2018, if the Company assumed all existing investments were worthless, the amount of performance income subject to potential repayment, net of tax, which may differ from the recognition of revenue, would have been approximately $405.6 million and $469.0 million, respectively, of which approximately $301.2 million and $351.9 million, respectively, is reimbursable to the Company by certain professionals who are the recipients of such performance income. Management believes the possibility of all of the investments becoming worthless is remote. As of September 30, 2019 and December 31, 2018, if the funds were liquidated at their fair values, there would be $0.4 million of repayment obligations for both periods, so the Company recorded a contingent repayment liability as of each respective period that is presented on a gross basis within accrued carried interest within investments and performance related compensation payable on the Company's Condensed Consolidated Statements of Financial Condition.

Litigation

From time to time, the Company is named as a defendant in legal actions relating to transactions conducted in the ordinary course of business. Although there can be no assurance of the outcome of such legal actions, in the opinion of management, the Company does not have a potential liability related to any current legal proceeding or claim that would individually or in the aggregate materially affect its results of operations, financial condition or cash flows.

Leases

The Company leases office space and certain office equipment. The Company's leases have remaining lease terms of one to 11 years. The tables below present certain supplemental quantitative disclosures regarding the Company's leases as of and for the period ending September 30, 2019:

	Classification	As of September 30, 2019
Operating lease assets	Right-of-use operating lease assets	$	148,170
Finance lease assets	Other assets(1)	1,231
Total lease assets		$	149,401
Operating lease liabilities	Right-of-use operating lease liabilities	$	174,078
Finance lease obligations	Accounts payable, accrued expenses and other liabilities	1,009
Total lease liabilities		$	175,087

(1) Finance lease assets are recorded net of accumulated amortization of $0.5 million as of September 30, 2019.

	Classification	Three months ended September 30, 2019		Nine months ended September 30, 2019
Operating lease expense	General, administrative and other expenses	$	7,314	$	21,463
Finance lease expense:
Amortization of finance lease assets	General, administrative and other expenses	89		194
Interest on finance lease liabilities	Interest expense	9		30
Total lease expense		$	7,412	$	21,687

Maturity of lease liabilities	Operating Leases		Finance Leases
2019	$	8,150	$	10
2020	30,008		358
2021	29,132		358
2022	30,307		329
2023	26,760		3
After 2023	74,469		2
Total future payments	198,826		1,060
Less: interest	24,748		51
Total lease liabilities	$	174,078	$	1,009

Lease term and discount rate	As of September 30, 2019
Weighted-average remaining lease terms (in years):
Operating leases	6.7
Finance leases	2.5
Weighted-average discount rate:
Operating leases	4.00	%
Finance leases	3.44	%

Other information	Nine months ended September 30, 2019
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases	$	23,273
Operating cash flows from finance leases	54
Financing cash flows from finance leases	283
Leased assets obtained in exchange for new finance lease liabilities	128
Leased assets obtained in exchange for new operating lease liabilities	49,833

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GOODWILL AND INTANGIBLE ASSETS (Carrying Value of Intangible Assets) (Details) - USD ($) $ in Thousands	3 Months Ended			9 Months Ended
	Sep. 30, 2019	Mar. 31, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018	Dec. 31, 2018
Finite-lived intangible assets, net
Intangible assets	$ 19,217			$ 19,217		$ 84,135
Less: accumulated amortization	(10,837)			(10,837)		(52,701)
Intangible assets, net	8,380			8,380		31,434
Amortization expense					$ 7,800
Fully-amortized intangibles, amount removed during the period		$ 29,800
Non-cash impairment charge	20,000
Removal of intangible assets	35,100
General, administrative and other expense
Finite-lived intangible assets, net
Amortization expense	600		$ 1,200	$ 3,000
Management contracts
Finite-lived intangible assets, net
Weighted average amortization period (less than for other)				2 years 4 months 24 days
Intangible assets	12,498			$ 12,498		42,335
Client relationships
Finite-lived intangible assets, net
Weighted average amortization period (less than for other)				8 years 9 months 18 days
Intangible assets	6,341			$ 6,341		38,600
Trade name
Finite-lived intangible assets, net
Weighted average amortization period (less than for other)				2 years 9 months 18 days
Intangible assets	$ 378			$ 378		$ 3,200

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EQUITY (Tables)

9 Months Ended

Sep. 30, 2019

Stockholders' Equity Note [Abstract]

Schedule of Stock by Class

The following table presents the changes in each class of common stock for the nine months ended September 30, 2019:

	Class A Common Stock		Class B Common Stock	Class C Common Stock	Total
Balance - January 1, 2019	101,594,095		1,000	1	101,595,096
Issuance of stock	7,000,000		—	—	7,000,000
Exchanges of AOG Units	97,493		—	—	97,493
Stock option exercises	4,422,644		—	—	4,422,644
Repurchases of stock	(400,000	)	—	—	(400,000	)
Vesting of restricted stock awards	2,005,536		—	—	2,005,536
Balance Outstanding - September 30, 2019	114,719,768		1,000	1	114,720,769

Schedule of Ownership Interests

The following table presents each partner's AOG Units and corresponding ownership interest in each of the Ares Operating Group entities as of September 30, 2019 and December 31, 2018, as well as its daily average ownership of AOG Units in each of the Ares Operating Group entities for the three and nine months ended September 30, 2019 and 2018.

							Daily Average Ownership
	As of September 30, 2019			As of December 31, 2018			For the Three Months Ended September 30,				For the Nine Months Ended September 30,
	AOG Units	Direct Ownership Interest		AOG Units	Direct Ownership Interest		2019		2018		2019		2018
Ares Management Corporation	114,719,768	49.57	%	101,594,095	46.47	%	48.17	%	45.17	%	47.46	%	43.42	%
Ares Owners Holding L.P.	116,707,849	50.43	%	117,019,274	53.53	%	51.83	%	53.67	%	52.54	%	54.14	%
Affiliate of Alleghany Corporation	—	—	%	—	—	%	—	%	1.16	%	—	%	2.44	%
Total	231,427,617	100.00	%	218,613,369	100.00	%

XML

Label	Element	Value
Accounting Standards Update 2018-02 [Member]
Cumulative Effect of New Accounting Principle in Period of Adoption	us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption	$ 0
Accounting Standards Update 2018-02 [Member] | Parent Company [Member] | Partners Capital [Member]
Cumulative Effect of New Accounting Principle in Period of Adoption	us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption	1,202,000
Accounting Standards Update 2018-02 [Member] | Parent Company [Member] | AOCI Attributable to Parent [Member]
Cumulative Effect of New Accounting Principle in Period of Adoption	us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption	(1,202,000)
Accounting Standards Update 2014-09 [Member]
Cumulative Effect of New Accounting Principle in Period of Adoption	us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption	(22,611,000)
Accounting Standards Update 2014-09 [Member] | Noncontrolling Interest [Member] | Ares Operating Group [Member]
Cumulative Effect of New Accounting Principle in Period of Adoption	us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption	(17,117,000)
Accounting Standards Update 2014-09 [Member] | Noncontrolling Interest [Member] | Consolidated Funds [Member]
Cumulative Effect of New Accounting Principle in Period of Adoption	us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption	5,333,000
Accounting Standards Update 2014-09 [Member] | Parent Company [Member] | Partners Capital [Member]
Cumulative Effect of New Accounting Principle in Period of Adoption	us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption	$ (10,827,000)

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COMMITMENTS AND CONTINGENCIES (Tables)

9 Months Ended

Sep. 30, 2019

Commitments and Contingencies Disclosure [Abstract]

Schedule of Lease

Lease term and discount rate	As of September 30, 2019
Weighted-average remaining lease terms (in years):
Operating leases	6.7
Finance leases	2.5
Weighted-average discount rate:
Operating leases	4.00	%
Finance leases	3.44	%

Other information	Nine months ended September 30, 2019
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases	$	23,273
Operating cash flows from finance leases	54
Financing cash flows from finance leases	283
Leased assets obtained in exchange for new finance lease liabilities	128
Leased assets obtained in exchange for new operating lease liabilities	49,833

The tables below present certain supplemental quantitative disclosures regarding the Company's leases as of and for the period ending September 30, 2019:

	Classification	As of September 30, 2019
Operating lease assets	Right-of-use operating lease assets	$	148,170
Finance lease assets	Other assets(1)	1,231
Total lease assets		$	149,401
Operating lease liabilities	Right-of-use operating lease liabilities	$	174,078
Finance lease obligations	Accounts payable, accrued expenses and other liabilities	1,009
Total lease liabilities		$	175,087

(1) Finance lease assets are recorded net of accumulated amortization of $0.5 million as of September 30, 2019.

	Classification	Three months ended September 30, 2019		Nine months ended September 30, 2019
Operating lease expense	General, administrative and other expenses	$	7,314	$	21,463
Finance lease expense:
Amortization of finance lease assets	General, administrative and other expenses	89		194
Interest on finance lease liabilities	Interest expense	9		30
Total lease expense		$	7,412	$	21,687

Operating Lease, Liability, Maturity

Maturity of lease liabilities	Operating Leases		Finance Leases
2019	$	8,150	$	10
2020	30,008		358
2021	29,132		358
2022	30,307		329
2023	26,760		3
After 2023	74,469		2
Total future payments	198,826		1,060
Less: interest	24,748		51
Total lease liabilities	$	174,078	$	1,009

Finance Lease, Liability, Maturity

Maturity of lease liabilities	Operating Leases		Finance Leases
2019	$	8,150	$	10
2020	30,008		358
2021	29,132		358
2022	30,307		329
2023	26,760		3
After 2023	74,469		2
Total future payments	198,826		1,060
Less: interest	24,748		51
Total lease liabilities	$	174,078	$	1,009

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RELATED PARTY TRANSACTIONS (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Jun. 30, 2017	Sep. 30, 2019	Jun. 21, 2019	Dec. 31, 2018	Mar. 31, 2018	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
ARCC | American Capital Ltd.
Due to affiliates:
Maximum fees waived	$ 10,000,000.0	$ 10,000,000	$ 30,000,000.0
Consolidated Funds
Due from affiliates:
Due from affiliates	14,978,000		14,978,000		$ 17,609,000
Due to affiliates:
Due to affiliates	0		0		0
Consolidated Funds | Affiliated entity
Due from affiliates:
Due from affiliates	14,978,000		14,978,000		17,609,000
Ares Management L.P
Due from affiliates:
Due from affiliates	245,276,000		245,276,000		199,377,000
Due to affiliates:
Due to affiliates	57,551,000		57,551,000		82,411,000
Ares Management L.P | Affiliated entity
Due from affiliates:
Management fees receivable from non-consolidated funds	184,262,000		184,262,000		151,455,000
Payments made on behalf of and amounts due from non-consolidated funds and employees	61,014,000		61,014,000		47,922,000
Due to affiliates:
Management fee rebate payable to non-consolidated funds	2,225,000		2,225,000		2,105,000
Management fees received in advance	4,096,000		4,096,000		5,491,000
Tax receivable agreement liability	24,927,000		24,927,000		24,927,000
Undistributed carried interest and incentive fees	18,366,000		18,366,000		31,162,000
Payments made by non-consolidated funds on behalf of and payable by the Company	$ 7,937,000		$ 7,937,000		18,726,000
Ares Management L.P | Affiliated entity | ARCC
Due to affiliates:
Asset coverage percentage	200.00%		200.00%	150.00%
Annual base management fee percentage	1.50%		1.50%	1.00%
Debt to equity ratio				1.0
Ares Management L.P | Affiliated entity | ARCC | Rent and other occupancy expenses
Due to affiliates:
Due to affiliates	$ 11,800,000		$ 11,800,000		$ 11,800,000	$ 600,000	$ 2,200,000	$ 3,000,000.0	$ 3,200,000	$ 2,900,000

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DEBT (Loan Obligations of the Consolidated CLOs) (Details) - Consolidated Funds - USD ($) $ in Thousands	9 Months Ended	12 Months Ended
	Sep. 30, 2019	Dec. 31, 2018
DEBT
Fair Value of Loan Obligations	$ 7,407,720	$ 6,678,091
Collateralized loan obligations
DEBT
Loan Obligations	7,618,349	7,097,949
Fair Value of Loan Obligations	7,407,720	6,678,091
Senior secured notes | Collateralized loan obligations
DEBT
Loan Obligations	7,225,041	6,642,616
Fair Value of Loan Obligations	$ 7,162,677	$ 6,391,643
Weighted Average Remaining Maturity In Years	10 years 11 months 26 days	10 years 11 months 8 days
Debt instrument face amount	$ 7,200,000
Weighted average interest rate (as a percent)	3.06%
Subordinated notes / preferred shares | Collateralized loan obligations
DEBT
Loan Obligations	$ 393,308	$ 455,333
Fair Value of Loan Obligations	$ 245,043	$ 286,448
Weighted Average Remaining Maturity In Years	11 years 29 days	11 years 2 months 15 days
Debt instrument face amount	$ 393,300

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COMMITMENTS AND CONTINGENCIES (Leases: Lease Expense) (Details) - USD ($) $ in Thousands	3 Months Ended	9 Months Ended
	Sep. 30, 2019	Sep. 30, 2019
Commitments and Contingencies Disclosure [Abstract]
Operating lease expense	$ 7,314	$ 21,463
Amortization of finance lease assets	89	194
Interest on finance lease liabilities	9	30
Total lease expense	$ 7,412	$ 21,687

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SEGMENT REPORTING (Other Income (Expense)) (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Segment Reporting, Other Significant Reconciling Item [Line Items]
Total segment realized net investment income	$ 32,787	$ 38,754	$ 95,919	$ 108,920
Ares Management L.P
Segment Reporting, Other Significant Reconciling Item [Line Items]
Other income from Consolidated Funds eliminated in consolidation, net	(1,870)	811	(1,570)	(1,487)
Operating segment
Segment Reporting, Other Significant Reconciling Item [Line Items]
Investment (income) loss - unrealized	1,094	(25,356)	9,309	(30,921)
Other (income) expense, net	461	(3)	460	(13,564)
Operating segment | Ares Management L.P
Segment Reporting, Other Significant Reconciling Item [Line Items]
Total segment realized net investment income	7,007	15,614	28,332	28,045
Investment (income) loss - unrealized	(4,138)	26,121	(12,703)	30,390
Interest and other investment (income) loss - unrealized	3,044	(765)	3,394	531
Operating segment | Consolidated Funds
Segment Reporting, Other Significant Reconciling Item [Line Items]
Total segment realized net investment income	32,787	38,754	95,919	108,920
Reconciling items
Segment Reporting, Other Significant Reconciling Item [Line Items]
Total segment realized net investment income	(25,780)	(23,140)	(67,587)	(80,875)
Principal investment income	(13,865)	7,886	(45,336)	(9,544)
Other (income) expense, net	(461)	3	(460)	1,728
Reconciling items | Subsidiaries | Non-Controlling interest
Segment Reporting, Other Significant Reconciling Item [Line Items]
Total segment realized net investment income	(10)	(8)	(31)	(23)
Reconciling items | Performance income reclass
Segment Reporting, Other Significant Reconciling Item [Line Items]
Performance fee reclass	27	(795)	(553)	211
Reconciling items | Consolidated Funds
Segment Reporting, Other Significant Reconciling Item [Line Items]
Other expense from Consolidated Funds added in consolidation, net	(37,070)	(34,645)	(101,285)	(111,090)
Eliminations | Consolidated Funds
Segment Reporting, Other Significant Reconciling Item [Line Items]
Other income from Consolidated Funds eliminated in consolidation, net	(1,124)	(86)	(1,214)	(620)
OMG
Segment Reporting, Other Significant Reconciling Item [Line Items]
Total segment realized net investment income	$ 87	$ (5,079)	$ (71)	$ (11,546)

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SEGMENT REPORTING (Operating Segments) (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Operating segment
Segment reporting
Fee related earnings	$ 142,140	$ 114,476	$ 397,595	$ 335,470
Performance income—realized	7,314	71,568	111,881	217,283
Performance related compensation—realized	(2,042)	(60,023)	(76,488)	(162,773)
Realized net investment income (loss)	7,007	15,614	28,332	28,045
Realized income	(154,419)	(141,635)	(461,320)	(418,025)
OMG
Segment reporting
Compensation and benefits	(34,061)	(31,957)	(100,716)	(92,829)
General, administrative and other expenses	(21,405)	(18,102)	(61,911)	(55,729)
Fee related earnings	(55,466)	(50,059)	(162,627)	(148,558)
Performance income—realized	0	0	0	0
Performance related compensation—realized	0	0	0	0
Realized net performance income	0	0	0	0
Investment income—realized	0	22	0	1,658
Interest and other investment income (expense) —realized	(11)	442	(13)	2,178
Interest expense	(535)	(622)	(1,330)	(1,758)
Realized net investment income (loss)	(546)	(158)	(1,343)	2,078
Realized income	(56,012)	(50,217)	(163,970)	(146,480)
Total
Segment reporting
Compensation and benefits	(135,580)	(115,372)	(391,247)	(333,487)
General, administrative and other expenses	(43,067)	(37,745)	(126,083)	(109,559)
Fee related earnings	86,674	64,417	234,968	186,912
Performance income—realized	7,314	71,568	111,881	217,283
Performance related compensation—realized	(2,042)	(60,023)	(76,488)	(162,773)
Realized net performance income	5,272	11,545	35,393	54,510
Investment income—realized	2,176	16,035	19,716	31,824
Interest and other investment income (expense) —realized	8,976	3,564	23,346	15,387
Interest expense	(4,691)	(4,143)	(16,073)	(17,088)
Realized net investment income (loss)	6,461	15,456	26,989	30,123
Realized income	98,407	91,418	297,350	271,545
Ares Management L.P
Segment reporting
Total revenues	466,490	240,777	1,328,509	711,029
Compensation and benefits	(166,216)	(145,594)	(485,232)	(419,225)
General, administrative and other expenses	(79,385)	(51,155)	(195,988)	(155,523)
Ares Management L.P | Affiliated entity | ARCC
Segment reporting
Management fees, part I fees	38,786	33,377	116,336	91,660
Ares Management L.P | Operating segment
Segment reporting
Compensation and benefits	(101,519)	(83,415)	(290,531)	(240,658)
General, administrative and other expenses	(21,662)	(19,643)	(64,172)	(53,830)
Fee related earnings	142,140	114,476	397,595	335,470
Performance income—realized	7,314	71,568	111,881	217,283
Performance related compensation—realized	(2,042)	(60,023)	(76,488)	(162,773)
Realized net performance income	5,272	11,545	35,393	54,510
Investment income—realized	2,176	16,013	19,716	30,166
Interest and other investment income (expense) —realized	8,987	3,122	23,359	13,209
Interest expense	(4,156)	(3,521)	(14,743)	(15,330)
Realized net investment income (loss)	7,007	15,614	28,332	28,045
Realized income	154,419	141,635	461,320	418,025
Ares Management L.P | Operating segment | Credit Group
Segment reporting
Compensation and benefits	(67,770)	(55,239)	(193,083)	(158,204)
General, administrative and other expenses	(12,789)	(10,921)	(39,675)	(32,069)
Fee related earnings	103,062	82,910	293,181	239,018
Performance income—realized	1,037	1,729	38,921	48,472
Performance related compensation—realized	(630)	(1,113)	(22,857)	(27,778)
Realized net performance income	407	616	16,064	20,694
Investment income—realized	114	1,063	662	2,429
Interest and other investment income (expense) —realized	6,964	1,604	14,500	7,828
Interest expense	(1,561)	(1,527)	(5,368)	(9,796)
Realized net investment income (loss)	5,517	1,140	9,794	461
Realized income	108,986	84,666	319,039	260,173
Ares Management L.P | Operating segment | Private Equity
Segment reporting
Compensation and benefits	(19,226)	(17,443)	(61,713)	(55,314)
General, administrative and other expenses	(5,532)	(5,866)	(14,501)	(14,082)
Fee related earnings	29,926	25,184	82,028	78,979
Performance income—realized	0	52,729	62,492	137,542
Performance related compensation—realized	0	(42,045)	(49,993)	(109,916)
Realized net performance income	0	10,684	12,499	27,626
Investment income—realized	47	8,104	12,013	17,791
Interest and other investment income (expense) —realized	435	1,032	4,047	4,011
Interest expense	(1,628)	(1,577)	(6,239)	(4,245)
Realized net investment income (loss)	(1,146)	7,559	9,821	17,557
Realized income	28,780	43,427	104,348	124,162
Ares Management L.P | Operating segment | Real Estate
Segment reporting
Compensation and benefits	(14,523)	(10,733)	(35,735)	(27,140)
General, administrative and other expenses	(3,341)	(2,856)	(9,996)	(7,679)
Fee related earnings	9,152	6,382	22,386	17,473
Performance income—realized	6,277	17,110	10,468	31,269
Performance related compensation—realized	(1,412)	(16,865)	(3,638)	(25,079)
Realized net performance income	4,865	245	6,830	6,190
Investment income—realized	2,015	6,846	7,041	9,946
Interest and other investment income (expense) —realized	1,588	486	4,812	1,370
Interest expense	(967)	(417)	(3,136)	(1,289)
Realized net investment income (loss)	2,636	6,915	8,717	10,027
Realized income	16,653	13,542	37,933	33,690
Management fees | OMG
Segment reporting
Total revenues	0	0	0	0
Management fees | Total
Segment reporting
Total revenues	259,978	213,662	739,269	612,792
Management fees | Ares Management L.P
Segment reporting
Total revenues	251,591	204,524	714,096	588,071
Management fees | Ares Management L.P | Operating segment
Segment reporting
Total revenues	259,978	213,662	739,269	612,792
Management fees | Ares Management L.P | Operating segment | Credit Group
Segment reporting
Total revenues	178,447	145,414	513,760	413,028
Management fees | Ares Management L.P | Operating segment | Private Equity
Segment reporting
Total revenues	54,543	48,287	158,101	147,492
Management fees | Ares Management L.P | Operating segment | Real Estate
Segment reporting
Total revenues	26,988	19,961	67,408	52,272
Other fees | OMG
Segment reporting
Total revenues	0	0	0	0
Other fees | Total
Segment reporting
Total revenues	5,343	3,872	13,029	17,166
Other fees | Ares Management L.P | Operating segment
Segment reporting
Total revenues	5,343	3,872	13,029	17,166
Other fees | Ares Management L.P | Operating segment | Credit Group
Segment reporting
Total revenues	5,174	3,656	12,179	16,263
Other fees | Ares Management L.P | Operating segment | Private Equity
Segment reporting
Total revenues	141	206	141	883
Other fees | Ares Management L.P | Operating segment | Real Estate
Segment reporting
Total revenues	$ 28	$ 10	$ 709	$ 20

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FAIR VALUE

9 Months Ended

Sep. 30, 2019

Fair Value Disclosures [Abstract]

FAIR VALUE

FAIR VALUE

Fair Value Measurements

GAAP establishes a hierarchal disclosure framework that prioritizes the inputs used in measuring financial instruments at fair value into three levels based on their market price observability. Market price observability is affected by a number of factors, including the type of instrument and the characteristics specific to the instrument. Financial instruments with readily available quoted prices from an active market or for which fair value can be measured based on actively quoted prices generally have a higher degree of market price observability and a lesser degree of judgment inherent in measuring fair value.

Financial assets and liabilities measured and reported at fair value are classified as follows:

• Level I—Quoted prices in active markets for identical instruments.

• Level II—Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in inactive markets; and model‑derived valuations with directly or indirectly observable significant inputs. Level II inputs include prices in markets with few transactions, non-current prices, prices for which little public information exists or prices that vary substantially over time or among brokered market makers. Other inputs include interest rates, yield curves, volatilities, prepayment risks, loss severities, credit risks and default rates.

• Level III—Valuations that rely on one or more significant unobservable inputs. These inputs reflect the Company’s assessment of the assumptions that market participants would use to value the instrument based on the best information available.

In some instances, an instrument may fall into more than one level of the fair value hierarchy. In such instances, the instrument’s level within the fair value hierarchy is based on the lowest of the three levels (with Level III being the lowest) that is significant to the fair value measurement. The Company’s assessment of the significance of an input requires judgment and considers factors specific to the instrument. The Company accounts for the transfer of assets into or out of each fair value hierarchy level as of the beginning of the reporting period.

Fair Value of Financial Instruments Held by the Company and Consolidated Funds

The tables below summarize the financial assets and financial liabilities measured at fair value for the Company and the Consolidated Funds as of September 30, 2019:

Financial Instruments of the Company	Level I		Level II			Level III		Investments Measured at NAV		Total
Assets, at fair value
Investments:
Collateralized loan obligations and other fixed income	$	—	$	—		$	82,513	$	—	$	82,513
Common stock and other equity securities	128		1,035			12,397		—		13,560
Partnership interests	—		—			35,192		1,573		36,765
Total investments, at fair value	128		1,035			130,102		1,573		132,838
Derivatives—foreign exchange contracts	—		4,201			—		—		4,201
Total assets, at fair value	$	128	$	5,236		$	130,102	$	1,573	$	137,039
Liabilities, at fair value
Derivatives—foreign exchange contracts	$	—	$	(163	)	$	—	$	—	$	(163	)
Total liabilities, at fair value	$	—	$	(163	)	$	—	$	—	$	(163	)

Financial Instruments of the Consolidated Funds	Level I		Level II			Level III			Total
Assets, at fair value
Investments:
Fixed income investments:
Bonds	$	—	$	197,204		$	8,523		$	205,727
Loans	—		7,337,934			276,637			7,614,571
Total fixed income investments	—		7,535,138			285,160			7,820,298
Equity securities	37,185		—			114,841			152,026
Partnership interests	—		—			299,157			299,157
Total investments, at fair value	37,185		7,535,138			699,158			8,271,481
Derivatives:
Foreign exchange contracts	—		1,042			—			1,042
Asset swaps - other	—		—			236			236
Total assets, at fair value	$	37,185	$	7,536,180		$	699,394		$	8,272,759
Liabilities, at fair value
Foreign exchange contracts	$	—	$	(1,025	)	$	—		$	(1,025	)
Asset swaps - other	—		—			(2,788		)	(2,788		)
Loan obligations of CLOs	—		(7,407,720		)	—			(7,407,720		)
Total liabilities, at fair value	$	—	$	(7,408,745	)	$	(2,788	)	$	(7,411,533	)

The tables below summarize the financial assets and financial liabilities measured at fair value for the Company and the Consolidated Funds as of December 31, 2018:

Financial Instruments of the Company	Level I		Level II			Level III		Investments Measured at NAV		Total
Assets, at fair value
Investments:
Collateralized loan obligations and other fixed income	$	—	$	—		$	60,824	$	—	$	60,824
Common stock and other equity securities	280		1,004			10,397		—		11,681
Partnership interests	—		—			35,192		861		36,053
Total investments, at fair value	280		1,004			106,413		861		108,558
Derivatives-foreign exchange contracts	—		1,066			—		—		1,066
Total assets, at fair value	$	280	$	2,070		$	106,413	$	861	$	109,624
Liabilities, at fair value
Derivatives—foreign exchange contracts	$	—	$	(869	)	$	—	$	—	$	(869	)
Total liabilities, at fair value	$	—	$	(869	)	$	—	$	—	$	(869	)

Financial Instruments of the Consolidated Funds	Level I		Level II			Level III			Total
Assets, at fair value
Investments:
Fixed income investments:
Bonds	$	—	$	316,850		$	1,649		$	318,499
Loans	—		6,340,440			546,309			6,886,749
Total fixed income investments	—		6,657,290			547,958			7,205,248
Equity securities	45,718		—			150,752			196,470
Partnership interests	—		—			271,447			271,447
Total investments, at fair value	45,718		6,657,290			970,157			7,673,165
Derivatives:
Foreign exchange contracts	—		1,881			—			1,881
Asset swaps - other	—		—			1,328			1,328
Total derivative assets, at fair value	—		1,881			1,328			3,209
Total assets, at fair value	$	45,718	$	6,659,171		$	971,485		$	7,676,374
Liabilities, at fair value
Foreign exchange contracts	$	—	$	(1,864	)	$	—		(1,864		)
Asset swaps - other	—		—			(648		)	(648		)
Loan obligations of CLOs	—		(6,678,091		)	—			(6,678,091		)
Total liabilities, at fair value	$	—	$	(6,679,955	)	$	(648	)	$	(6,680,603	)

The following tables set forth a summary of changes in the fair value of the Level III measurements for the three months ended September 30, 2019:

	Level III Assets
Level III Assets of the Company	Equity  Securities		Fixed Income			Partnership  Interests		Total
Balance, beginning of period	$	12,397	$	64,051		$	35,192	$	111,640
Purchases(1)	—		25,010			—		25,010
Sales/settlements(2)	—		(5,243		)	—		(5,243		)
Realized and unrealized depreciation, net	—		(1,305		)	—		(1,305		)
Balance, end of period	$	12,397	$	82,513		$	35,192	$	130,102
Increase in net unrealized depreciation included in earnings related to financial assets still held at the reporting date	$	—	$	(1,357	)	$	—	$	(1,357	)

Level III Assets of Consolidated Funds	Equity  Securities			Fixed  Income			Partnership Interests			Derivatives, Net			Total
Balance, beginning of period	$	131,732		$	274,412		$	293,857		$	58		$	700,059
Transfer in	—			122,554			—			—			122,554
Transfer out	—			(103,148		)	—			—			(103,148		)
Purchases(1)	710			95,011			2,000			—			97,721
Sales/settlements(2)	(13,597		)	(102,198		)	(5,000		)	(1,848		)	(122,643		)
Amortized discounts/premiums	—			107			—			(17		)	90
Realized and unrealized appreciation (depreciation), net	(4,004		)	(1,578		)	8,300			(745		)	1,973
Balance, end of period	$	114,841		$	285,160		$	299,157		$	(2,552	)	$	696,606
Increase (decrease) in net unrealized appreciation/depreciation included in earnings related to financial assets still held at the reporting date	$	(3,582	)	$	(765	)	$	8,300		$	(1,023	)	$	2,930

(1) Purchases include paid‑in‑kind interest and securities received in connection with restructurings.

(2) Sales/settlements include distributions, principal redemptions and securities disposed of in connection with restructurings.

The following tables set forth a summary of changes in the fair value of the Level III measurements for the nine months ended September 30, 2019:

	Level III Assets
Level III Assets of the Company	Equity  Securities		Fixed Income			Partnership  Interests		Total
Balance, beginning of period	$	10,397	$	60,824		$	35,192	$	106,413
Deconsolidation of fund	—		10,021			—		10,021
Purchases(1)	2,000		27,157			—		29,157
Sales/settlements(2)	—		(16,413		)	—		(16,413		)
Realized and unrealized appreciation, net	—		924			—		924
Balance, end of period	$	12,397	$	82,513		$	35,192	$	130,102
Increase in net unrealized appreciation included in earnings related to financial assets still held at the reporting date	$	—	$	1,121		$	—	$	1,121

Level III Assets of Consolidated Funds	Equity  Securities			Fixed  Income			Partnership Interests			Derivatives, Net			Total
Balance, beginning of period	$	150,752		$	547,958		$	271,447		$	680		$	970,837
Deconsolidation of fund	(10,325		)	(174,593		)	—			—			(184,918		)
Transfer in	—			85,179			—			—			85,179
Transfer out	—			(199,498		)	—			—			(199,498		)
Purchases(1)	11,595			282,190			10,000			—			303,785
Sales/settlements(2)	(18,734		)	(260,422		)	(7,000		)	(2,424		)	(288,580		)
Amortized discounts/premiums	—			17			—			4			21
Realized and unrealized appreciation (depreciation), net	(18,447		)	4,329			24,710			(812		)	9,780
Balance, end of period	$	114,841		$	285,160		$	299,157		$	(2,552	)	$	696,606
Increase (decrease) in net unrealized appreciation/depreciation included in earnings related to financial assets still held at the reporting date	$	(18,018	)	$	1,017		$	24,710		$	(1,031	)	$	6,678

(1) Purchases include paid‑in‑kind interest and securities received in connection with restructurings.

(2) Sales/settlements include distributions, principal redemptions and securities disposed of in connection with restructurings.

The following tables set forth a summary of changes in the fair value of the Level III measurements for the three months ended September 30, 2018:

	Level III Assets
Level III Assets of the Company	Equity  Securities		Fixed Income			Partnership  Interests			Total
Balance, beginning of period	$	—	$	22,125		$	47,219		$	69,344
Transfer in	500		—			—			500
Purchases(1)	750		2,314			—			3,064
Sales/settlements(2)	—		(1,976		)	—			(1,976		)
Realized and unrealized appreciation (depreciation), net	9,147		185			(5,390		)	3,942
Balance, end of period	$	10,397	$	22,648		$	41,829		$	74,874
Increase (decrease) in net unrealized appreciation/depreciation included in earnings related to financial assets still held at the reporting date	$	9,147	$	220		$	(5,390	)	$	3,977

Level III Assets of Consolidated Funds	Equity  Securities			Fixed  Income			Partnership Interests		Derivatives, Net			Total
Balance, beginning of period	$	184,583		$	482,375		$	251,608	$	230		$	918,796
Transfer in	—			118,624			—		124			118,748
Transfer out	—			(264,659		)	—		—			(264,659		)
Purchases(1)	—			124,784			9,000		—			133,784
Sales/settlements(2)	—			(78,395		)	—		799			(77,596		)
Amortized discounts/premiums	—			(46		)	—		4			(42		)
Realized and unrealized appreciation (depreciation), net	(4,224		)	1,350			9,174		(336		)	5,964
Balance, end of period	$	180,359		$	384,033		$	269,782	$	821		$	834,995
Increase (decrease) in net unrealized appreciation/depreciation included in earnings related to financial assets still held at the reporting date	$	(13,164	)	$	3,468		$	—	$	125		$	(9,571	)

(1) Purchases include paid‑in‑kind interest and securities received in connection with restructurings.

(2) Sales/settlements include distributions, principal redemptions and securities disposed of in connection with restructurings.

The following tables set forth a summary of changes in the fair value of the Level III measurements for the nine months ended September 30, 2018:

	Level III Assets
Level III Assets of the Company	Equity  Securities		Fixed Income			Partnership  Interests			Total
Balance, beginning of period	$	—	$	195,158		$	44,769		$	239,927
Deconsolidation of fund	—		78			—			78
Transfer in	250								250
Purchases(1)	1,000		51,045			—			52,045
Sales/settlements(2)	—		(222,546		)	—			(222,546		)
Realized and unrealized appreciation (depreciation), net	9,147		(1,087		)	(2,940		)	5,120
Balance, end of period	$	10,397	$	22,648		$	41,829		$	74,874
Increase (decrease) in net unrealized appreciation/depreciation included in earnings related to financial assets still held at the reporting date	$	9,147	$	(648	)	$	(2,940	)	$	5,559

Level III Assets of Consolidated Funds	Equity  Securities		Fixed  Income			Partnership Interests		Derivatives, Net			Total
Balance, beginning of period	$	162,577	$	267,889		$	232,332	$	904		$	663,702
Deconsolidation of fund	—		(233		)	—		—			(233		)
Transfer in	—		68,665			—		—			68,665
Transfer out	—		(49,463		)	—		—			(49,463		)
Purchases(1)	—		262,278			25,000		—			287,278
Sales/settlements(2)	—		(163,559		)	—		606			(162,953		)
Amortized discounts/premiums	—		(62		)	—		(10		)	(72		)
Realized and unrealized appreciation (depreciation), net	17,782		(1,482		)	12,450		(679		)	28,071
Balance, end of period	$	180,359	$	384,033		$	269,782	$	821		$	834,995
Increase (decrease) in net unrealized appreciation/depreciation included in earnings related to financial assets still held at the reporting date	$	17,782	$	593		$	12,450	$	(863	)	$	29,962

(1) Purchases include paid‑in‑kind interest and securities received in connection with restructurings.

(2) Sales/settlements include distributions, principal redemptions and securities disposed of in connection with restructurings.

The Company recognizes transfers between the levels as of the beginning of the period. Transfers out of Level III were generally attributable to certain investments that experienced a more significant level of market activity during the period and thus were valued using observable inputs either from independent pricing services or multiple brokers. Transfers into Level III were generally attributable to certain investments that experienced a less significant level of market activity during the period and thus were only able to obtain one or fewer quotes from a broker or independent pricing service.

The following table summarizes the quantitative inputs and assumptions used for the Company’s and the Consolidated Funds' Level III measurements as of September 30, 2019:

Level III Measurements of the Company	Fair Value		Valuation Technique(s)	Significant Unobservable Input(s)	Range
Assets
Equity securities	$	12,397	Transaction price(1)	N/A	N/A
Partnership interests	35,192		Discounted cash flow	Discount rate	8.0%
Collateralized loan obligations	23,417		Broker quotes and/or 3rd party pricing services	N/A	N/A
Other fixed income	59,096		Other	N/A	N/A
Total	$	130,102

Level III Measurements of the Consolidated Funds	Fair Value			Valuation Technique(s)	Significant Unobservable Input(s)	Range	Weighted Average
Assets
Equity securities
	$	719		Enterprise value market multiple analysis	EBITDA multiple(2)	9.0x - 21.0x	14.6x
	71,056			Other	Net income multiple	35.7x - 39.0x	37.1x
					Illiquidity discount	25.0%	25.0%
	43,066			Transaction price(1)	N/A	N/A	N/A
Partnership interest	299,157			Discounted cash flow	Discount rate	20.7%	20.7%
Fixed income securities
	210,969			Broker quotes and/or 3rd party pricing services	N/A	N/A	N/A
	74,191			Income approach	Yield	4.9% - 13.1%	9.7%
Derivative instruments	236			Broker quotes and/or 3rd party pricing services	N/A	N/A	N/A
Total assets	$	699,394
Liabilities
Derivatives instruments	$	(2,788	)	Broker quotes and/or 3rd party pricing services	N/A	N/A	N/A
Total liabilities	$	(2,788	)

(1) Transaction price consists of securities recently purchased or restructured. The Company determined that there was no change to the valuation based on the underlying assumptions used at the closing of such transactions.

(2) “EBITDA” in the table above is a non-GAAP financial measure and refers to earnings before interest, tax, depreciation and amortization.

The following table summarizes the quantitative inputs and assumptions used for the Company’s and the Consolidated Funds' Level III measurements as of December 31, 2018:

Level III Measurements of the Company	Fair Value		Valuation Technique(s)	Significant Unobservable Input(s)	Range
Assets
Equity securities	$	10,397	Transaction price(1)	N/A	N/A
Partnership interests	35,192		Discounted cash flow	Discount rate	8.0%
Collateralized loan obligations	20,824		Broker quotes and/or 3rd party pricing services	N/A	N/A
Other fixed income	40,000		Other	N/A	N/A
Total	$	106,413

Level III Measurements of the Consolidated Funds	Fair Value			Valuation Technique(s)	Significant Unobservable Input(s)	Range	Weighted Average
Assets
Equity securities
	$	23,871		Enterprise value market multiple analysis	EBITDA multiple(2)	7.2x - 22.9x	7.7x
	41,562			Other	Net income multiple	38.8x	38.8x
					Illiquidity discount	25.0%	25.0%
	271,447			Discounted cash flow	Discount rate	20.8%	20.8%
	85,319			Transaction price(1)	N/A	N/A	N/A
Fixed income securities
	441,368			Broker quotes and/or 3rd party pricing services	N/A	N/A	N/A
	106,590			Income approach	Yield	1.0% - 14.8%	9.6%
Derivative instruments	1,328			Broker quotes and/or 3rd party pricing services	N/A	N/A	N/A
Total assets	$	971,485
Liabilities
Derivatives instruments	$	(648	)	Broker quotes and/or 3rd party pricing services	N/A	N/A	N/A
Total liabilities	$	(648	)

(1) Transaction price consists of securities purchased or restructured. The Company determined that there has been no change to the valuation based on the underlying assumptions used at the closing of such transactions.

(2) “EBITDA” in the table above is a non-GAAP financial measure and refers to earnings before interest, tax, depreciation and amortization.

The Company has an insurance-related investment in a private fund managed by a third party that is valued using net asset value (“NAV”) per share. The terms and conditions of this fund do not allow for redemptions without certain events or approvals that are outside the Company's control. This investment had a fair value of $1.6 million and $0.8 million as of September 30, 2019 and December 31, 2018, respectively. The Company has no unfunded commitments for this investment.

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RELATED PARTY TRANSACTIONS

9 Months Ended

Sep. 30, 2019

Related Party Transactions [Abstract]

RELATED PARTY TRANSACTIONS

RELATED PARTY TRANSACTIONS

Substantially all of the Company’s revenue is earned from its affiliates, including management fees, carried interest allocation, incentive fees, principal investment income and administrative expense reimbursements. The related accounts receivable are included within due from affiliates within the Condensed Consolidated Statements of Financial Condition, except that accrued carried interest allocations and incentive fees receivable, which are predominantly due from affiliated funds, are presented separately within investments and other assets, respectively, within the Condensed Consolidated Statements of Financial Condition.

The Company has investment management agreements with Ares Funds that it manages. In accordance with these agreements, these Ares Funds may bear certain operating costs and expenses which are initially paid by the Company and subsequently reimbursed by the Ares Funds.

The Company also has entered into agreements to be reimbursed for its expenses incurred for providing administrative services to certain related parties, including ARCC, ACRE, ARDC, Ivy Hill Asset Management, L.P., ACF FinCo I L.P. and CION Ares Diversified Credit Fund.

Employees and other related parties may be permitted to participate in co-investment vehicles that generally invest in Ares funds alongside fund investors. Participation is limited by law to individuals who qualify under applicable securities laws. These co-investment vehicles generally do not require these individuals to pay management or performance income.

Performance income the Company earns from the funds can be distributed to professionals or their related entities on a current basis, subject to repayment by the subsidiary of the Company that acts as general partner of the relevant fund in the event that certain specified return thresholds are not ultimately achieved. The professionals have personally guaranteed, subject to certain limitations, the obligations of these subsidiaries in respect of this general partner obligation. Such guarantees are several, and not joint, and are limited to distributions received by the relevant recipient.

The Company considers its professionals and non-consolidated funds to be affiliates. Amounts due from and to affiliates were composed of the following:

	As of September 30,		As of December 31,
	2019		2018
Due from affiliates:
Management fees receivable from non-consolidated funds	$	184,262	$	151,455
Payments made on behalf of and amounts due from non-consolidated funds and employees	61,014		47,922
Due from affiliates—Company	$	245,276	$	199,377
Amounts due from portfolio companies and non-consolidated funds	$	14,978	$	17,609
Due from affiliates—Consolidated Funds	$	14,978	$	17,609
Due to affiliates:
Management fee rebate payable to non-consolidated funds	$	2,225	$	2,105
Management fees received in advance	4,096		5,491
Tax receivable agreement liability	24,927		24,927
Undistributed carried interest and incentive fees	18,366		31,162
Payments made by non-consolidated funds on behalf of and payable by the Company	7,937		18,726
Due to affiliates—Company	$	57,551	$	82,411

Due from Ares Funds and Portfolio Companies

In the normal course of business, the Company pays certain expenses on behalf of Consolidated Funds and non-consolidated funds for which it is reimbursed. Amounts advanced on behalf of Consolidated Funds are eliminated in consolidation. Certain expenses initially paid by the Company, primarily professional services, travel and other costs associated with particular portfolio company holdings, are subject to reimbursement by the portfolio companies. The Company reimbursed ARCC approximately $0.6 million for certain recurring rent and utilities incurred by ARCC during the first quarter of 2018. In addition, in the second quarter ended June 30, 2018, the Company reimbursed ARCC approximately $2.2 million, $3.0 million, $3.2 million and $2.9 million of rent and utilities for the years ended 2017, 2016, 2015 and 2014, respectively, for an aggregate reimbursement to ARCC of $11.8 million. Beginning April 1, 2018, the Company directly incurs these expenses.

ARCC Investment Advisory and Management Agreement    

In connection with ARCC's board approval of the modification of the asset coverage requirement applicable to senior securities from 200% to 150% effective on June 21, 2019, the investment advisory and management agreement was amended effective June 6, 2019 to reduce the annual base management fee paid to the Company from 1.5% to 1.0% on all assets financed using leverage over 1.0 times debt to equity.

ARCC Fee Waiver

In conjunction with ARCC's acquisition of American Capital, Ltd. (“ACAS”), the Company agreed to waive up to $10 million per quarter of ARCC's Part I Fees for ten calendar quarters, which began with the second quarter of 2017 and ended with the third quarter of 2019. ARCC Part I Fees are reported net of the fee waiver. For the three and nine months ended September 30, 2019 and 2018, the Company waived $10.0 million and $30.0 million, respectively.

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Condensed Consolidated Statements of Financial Condition (Parenthetical) - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018	Nov. 26, 2018
Preferred stock, par value (in dollars per share)	$ 0.01	$ 0.01
Preferred stock, shares authorized (in shares)	1,000,000,000	1,000,000,000
Preferred stock, shares issued (in shares)	12,400,000	12,400,000
Preferred stock, shares outstanding (in shares)	12,400,000	12,400,000
Common stock, shares outstanding (in shares)	114,720,769	101,595,096
Class A common stock
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01	$ 0.01
Common stock, shares authorized (in shares)	1,500,000,000	1,500,000,000
Common stock, shares issued (in shares)	114,719,768	101,594,095
Common stock, shares outstanding (in shares)	114,719,768	101,594,095
Class B common stock
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01	$ 0.01
Common stock, shares authorized (in shares)	1,000	1,000
Common stock, shares issued (in shares)	1,000	1,000	1,000
Common stock, shares outstanding (in shares)	1,000	1,000
Class C common stock
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01	$ 0.01
Common stock, shares authorized (in shares)	499,999,000	499,999,000
Common stock, shares issued (in shares)	1	1
Common stock, shares outstanding (in shares)	1	1
Ares Management L.P
Investments	$ 1,779,864	$ 1,326,137
Ares Management L.P | Accrued Interest
Investments	$ 1,250,191	$ 841,079

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Condensed Consolidated Statements of Changes in Equity - USD ($) $ in Thousands	Total	Partners' Capital Ares Management L.P	Partners' Capital Preferred Partner	AOG Non-Controlling interest	Series A Preferred Stock	Class A common stock	Common Stock Class A common stock Ares Management L.P	Additional Paid-in-Capital Ares Management L.P	Retained Earnings Ares Management L.P	Accumulated Other Comprehensive Income (loss) Ares Management L.P	Non-Controlling interest AOG	Non-Controlling interest Consolidated Funds
Increase (Decrease) in Stockholders' Equity
As adjusted balance at January 1, 2018	$ 1,437,681	$ 268,238	$ 298,761							$ (4,208)	$ 341,069	$ 533,821
Balance at Dec. 31, 2017	1,460,292	279,065	298,761							(4,208)	358,186	528,488
Increase (Decrease) in Stockholders' Equity
Changes in ownership interests and related tax benefits	10,459	(8,351)									18,810
Contributions	113,441	105,441		$ 0								8,000
Dividends/Distributions	(98,188)	(33,103)	(5,425)								(58,677)	(983)
Net income	74,421	35,523	5,425							0	33,106	367
Currency translation adjustment	6,687									1,409	2,103	3,175
Equity compensation	20,694	8,285									12,409	0
Balance at Mar. 31, 2018	1,565,195	377,235	298,761							(4,001)	348,820	544,380
Balance at Dec. 31, 2017	1,460,292	279,065	298,761							(4,208)	358,186	528,488
Increase (Decrease) in Stockholders' Equity
Net income	135,802
Balance at Sep. 30, 2018	1,491,319	301,721	298,761							(7,403)	319,820	578,420
Balance at Mar. 31, 2018	1,565,195	377,235	298,761							(4,001)	348,820	544,380
Increase (Decrease) in Stockholders' Equity
Changes in ownership interests and related tax benefits	11,105	15,816									(4,711)
Contributions	64,596	842		764								62,990
Dividends/Distributions	(129,585)	(36,640)	(5,425)								(53,174)	(34,346)
Net income	14,169	(17,200)	5,425							0	16,062	9,882
Currency translation adjustment	(12,377)									(2,757)	(3,931)	(5,689)
Equity compensation	22,146	9,928									12,218	0
Balance at Jun. 30, 2018	1,535,249	349,981	298,761							(6,758)	316,048	577,217
Increase (Decrease) in Stockholders' Equity
Changes in ownership interests and related tax benefits	(31,179)	(34,678)									3,499
Contributions	917			917								0
Dividends/Distributions	(82,486)	(34,667)	(5,425)								(30,928)	(11,466)
Net income	47,212	10,485	5,425							0	18,133	13,169
Currency translation adjustment	(1,919)									(645)	(774)	(500)
Equity compensation	23,525	10,600									12,925	0
Balance at Sep. 30, 2018	1,491,319	301,721	298,761							(7,403)	319,820	578,420
Increase (Decrease) in Stockholders' Equity
Consolidation of a new fund	42,942											42,942
Changes in ownership interests and related tax benefits	8,404	501						$ 9,140			(1,237)
Contributions	1,466			$ 1,447								19
Dividends/Distributions	(183,797)	(91)			$ (5,425)				$ (30,348)		(35,018)	(112,915)
Net income	16,337	5,500			5,425				1,012		7,306	(2,906)
Currency translation adjustment	(4,379)								0	(1,121)	(1,335)	(1,923)
Equity compensation	22,049	7,432						2,820		0	11,797	0
Reclassifications resulting from conversion to a corporation	0	(315,063)	(298,761)		298,761		$ 1,016	314,047
Balance at Dec. 31, 2018	1,394,341	0	0		298,761		1,016	326,007	(29,336)	(8,524)	302,780	503,637
Increase (Decrease) in Stockholders' Equity
Relinquished with deconsolidation of funds	(55)											(55)
Changes in ownership interests and related tax benefits	(18,397)						15	(6,339)			(12,073)
Contributions	55,911										1,876	54,035
Dividends/Distributions	(101,640)				(5,425)				(35,367)		(40,112)	(20,736)
Net income	121,576				5,425				39,524		59,003	17,624
Currency translation adjustment	1,084									1,284	1,459	(1,659)
Equity compensation	27,004							12,637			14,367
Balance at Mar. 31, 2019	1,479,824				298,761		1,031	332,305	(25,179)	(7,240)	327,300	552,846
Balance at Dec. 31, 2018	1,394,341	$ 0	$ 0		298,761		1,016	326,007	(29,336)	(8,524)	302,780	503,637
Increase (Decrease) in Stockholders' Equity
Repurchases of Class A common stock						$ (10,400)
Net income	288,329
Balance at Sep. 30, 2019	1,842,782				298,761		1,147	507,531	(44,308)	(11,010)	450,985	639,676
Balance at Mar. 31, 2019	1,479,824				298,761		1,031	332,305	(25,179)	(7,240)	327,300	552,846
Increase (Decrease) in Stockholders' Equity
Changes in ownership interests and related tax benefits	(11,508)						5	(32,128)			20,615
Repurchases of Class A common stock	(10,449)						4	10,445
Contributions	61,464							0			0	61,464
Dividends/Distributions	(92,529)				(5,425)				(36,782)		(40,103)	(10,219)
Net income	74,878				5,425				26,714		34,393	8,346
Currency translation adjustment	(1,991)									(1,639)	(1,858)	1,506
Equity compensation	23,841							11,306			12,535
Stock option exercises	78,794						43	78,751
Balance at Jun. 30, 2019	1,602,324				298,761		1,075	379,789	(35,247)	(8,879)	352,882	613,943
Increase (Decrease) in Stockholders' Equity
Changes in ownership interests and related tax benefits	1,209						1	(94,004)			95,212
Repurchases of Class A common stock	0						0	0
Contributions	256,096							206,635			0	49,391
Dividends/Distributions	(125,982)				(5,425)				(36,967)		(48,970)	(34,620)
Net income	91,875				5,425				27,906		42,636	15,908
Currency translation adjustment	(9,429)									(2,131)	(2,352)	(4,946)
Equity compensation	22,393							10,816			11,577
Stock option exercises	4,296						1	4,295
Balance at Sep. 30, 2019	$ 1,842,782				$ 298,761		$ 1,147	$ 507,531	$ (44,308)	$ (11,010)	$ 450,985	$ 639,676

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EQUITY COMPENSATION (Tables)

9 Months Ended

Sep. 30, 2019

Share-based Payment Arrangement [Abstract]

Schedule of equity-based compensation expense, net of assumed forfeitures

Equity-based compensation expense, net of forfeitures is included in the following table:

	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
	2019		2018		2019		2018
Restricted units	$	21,430	$	19,251	$	66,226	$	55,798
Restricted units with a market condition	911		614		2,702		614
Options	52		3,660		4,310		9,953
Phantom shares	—		415		736		1,169
Equity-based compensation expense	$	22,393	$	23,940	$	73,974	$	67,534

Summary of unvested restricted units' activity

The following table presents unvested restricted units' activity during the nine months ended September 30, 2019:

	Restricted Units		Weighted Average Grant Date Fair Value Per Unit
Balance - January 1, 2019	16,255,475		$	19.21
Granted	4,202,622		20.61
Vested	(3,579,050	)	17.95
Forfeited	(234,035	)	19.33
Balance - September 30, 2019	16,645,012		$	19.83

The following table presents the unvested market condition awards' activity during the nine months ended September 30, 2019:

	Market Condition Awards Units	Weighted Average Grant Date Fair Value Per Unit
Balance - January 1, 2019	1,333,334	$	9.30
Granted	—	—
Vested	—	—
Forfeited	—	—
Balance - September 30, 2019	1,333,334	$	9.30

Summary of unvested options activity

A summary of options activity during the nine months ended September 30, 2019 is presented below:

	Options		Weighted Average Exercise Price		Weighted Average Remaining Life (in years)	Aggregate Intrinsic Value
Balance - January 1, 2019	18,741,504		$	18.99	4.88	$	—
Exercised	(4,515,448	)	19.00		—	—
Expired	(366,366	)	19.00		—	—
Forfeited	(42,270	)	19.00		—	—
Balance - September 30, 2019	13,817,420		$	18.99	4.50	$	108,079
Exercisable at September 30, 2019	13,707,603		$	18.99	4.49	$	107,167

Summary of unvested phantom units activity

A summary of unvested phantom shares' activity during the nine months ended September 30, 2019 is presented below:

	Phantom Shares		Weighted Average Grant Date Fair Value Per Share
Balance - January 1, 2019	66,287		$	19.00
Vested	(61,502	)	19.00
Forfeited	(4,785	)	19.00
Balance - September 30, 2019	—		$	—

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DEBT (Tables)

9 Months Ended

Sep. 30, 2019

Debt Disclosure [Abstract]

Schedule of borrowings outstanding

As of September 30, 2019 and December 31, 2018, the following loan obligations were outstanding and classified as liabilities of the Consolidated CLOs:

	As of September 30, 2019					As of December 31, 2018
	Loan Obligations		Fair Value of Loan Obligations		Weighted  Average Remaining Maturity  In Years	Loan Obligations		Fair Value of Loan Obligations		Weighted Average Remaining Maturity  In Years
Senior secured notes(1)	$	7,225,041	$	7,162,677	10.99	$	6,642,616	$	6,391,643	10.94
Subordinated notes(2)	393,308		245,043		11.08	455,333		286,448		11.21
Total loan obligations of Consolidated CLOs	$	7,618,349	$	7,407,720		$	7,097,949	$	6,678,091

(1) Original borrowings under the senior secured notes totaled $7.2 billion, with various maturity dates ranging from July 2028 to April 2032. The weighted average interest rate as of September 30, 2019 was 3.06%.

(2) Original borrowings under the subordinated notes totaled $393.3 million, with various maturity dates ranging from July 2028 to April 2032. The notes do not have contractual interest rates, instead holders of the notes receive distributions from the excess cash flows generated by each Consolidated CLO.

The Consolidated Funds had the following revolving bank credit facilities and term loan outstanding as of September 30, 2019 and December 31, 2018:

				As of September 30, 2019				As of December 31, 2018
Consolidated Funds' Debt Facilities	Maturity Date	Total Capacity		Outstanding Loan(1)		Effective Rate		Outstanding Loan(1)		Effective Rate
Credit Facilities:
	1/1/2023	$	18,000	$	17,550	3.69%		$	14,953	3.98%
	12/29/2019(2)	—		—		—%		43,624		1.55%	(3)
	3/7/2020	71,500		71,500		3.47%		71,500		3.47%
	6/30/2021	190,785		11,818		1.00%	(3)	38,844		1.00%	(3)
	7/15/2028	75,000		22,000		4.75%		39,000		4.75%
Revolving Term Loan	1/31/2022	1,900		1,335		8.07%		1,363		8.07%
Total borrowings of Consolidated Funds				$	124,203			$	209,284

(1) The fair values of the borrowings approximate the carrying value as the interest rate on the borrowings is a floating rate.

(2) On August 27, 2019, the facility was terminated at the Consolidated Fund's discretion.

(3)

The effective rate is based on the three month EURIBOR or zero, whichever is higher, plus a spread of 1.00% or 1.55%.

The following table presents the activity of the Company's debt issuance costs:

	Credit Facility			Senior Notes
Unamortized debt issuance costs as of December 31, 2018	$	4,972		$	1,334
Debt issuance costs incurred	1,547			—
Amortization of debt issuance costs	(991		)	(174		)
Unamortized debt issuance costs as of September 30, 2019	$	5,528		$	1,160

The following table summarizes the Company’s and its subsidiaries’ debt obligations:

					As of September 30, 2019			As of December 31, 2018
	Debt Origination Date	Maturity	Original Borrowing Amount		Carrying Value		Interest Rate	Carrying Value		Interest Rate
Credit Facility(1)	Revolver	3/21/2024	N/A		$	—	N/A	$	235,000	4.00%
Senior Notes(2)	10/8/2014	10/8/2024	$	250,000	246,442		4.21%	245,952		4.21%
Total debt obligations					$	246,442		$	480,952

(1) The AOG entities are borrowers under the Credit Facility, which provides a $1.065 billion revolving line of credit. It has a variable interest rate based on LIBOR or a base rate plus an applicable margin with an unused commitment fee paid quarterly, which is subject to change with the Company’s underlying credit agency rating. On March 21, 2019, the Company amended the Credit Facility to, among other things, extend the maturity date from February 2022 to March 2024 and to reduce borrowing costs on the drawn and undrawn amounts. As of September 30, 2019, base rate loans bear interest calculated based on the base rate plus 0.25% and the LIBOR rate loans bear interest calculated based on LIBOR plus 1.25%. The unused commitment fee is 0.15% per annum. There is a base rate and LIBOR floor of zero.

(2) The Senior Notes were issued in October 2014 by Ares Finance Co. LLC, a subsidiary of the Company, at 98.268% of the face amount with interest paid semi-annually. The Company may redeem the Senior Notes prior to maturity, subject to the terms of the indenture.

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ORGANIZATION (Details)	9 Months Ended
	Sep. 30, 2019 segment
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Number of investing groups	3

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DERIVATIVE FINANCIAL INSTRUMENTS (Tables)

9 Months Ended

Sep. 30, 2019

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Schedule of fair value and notional amounts of derivative contracts by major product type on a gross basis

The following tables identify the fair value and notional amounts of derivative contracts by major product type on a gross basis for the Company and the Consolidated Funds as of September 30, 2019 and December 31, 2018:

	As of September 30, 2019								As of December 31, 2018
	Assets				Liabilities				Assets				Liabilities
The Company	Notional(1)		Fair Value		Notional(1)		Fair Value		Notional(1)		Fair Value		Notional(1)		Fair Value
Foreign exchange contracts	$	102,524	$	4,201	$	5,065	$	163	$	33,026	$	1,066	$	27,140	$	869
Total derivatives, at fair value(2)	$	102,524	$	4,201	$	5,065	$	163	$	33,026	$	1,066	$	27,140	$	869

	As of September 30, 2019								As of December 31, 2018
	Assets				Liabilities				Assets				Liabilities
Consolidated Funds	Notional(1)		Fair Value		Notional(1)		Fair Value		Notional(1)		Fair Value		Notional(1)		Fair Value
Foreign exchange contracts	$	1,042	$	1,042	$	1,042	$	1,025	$	1,881	$	1,881	$	1,881	$	1,864
Asset swap - other	2,466		236		4,668		2,788		5,226		1,328		2,605		648
Total derivatives, at fair value(3)	$	3,508	$	1,278	$	5,710	$	3,813	$	7,107	$	3,209	$	4,486	$	2,512

(1) Represents the total contractual amount of derivative assets and liabilities outstanding.

(2) As of September 30, 2019 and December 31, 2018, the Company had the right to, but elected not to, offset $0.2 million and $0.9 million of its derivative liabilities, respectively.

(3)

As of September 30, 2019 and December 31, 2018, the Consolidated Funds offset $1.8 million and $5.7 million of their derivative assets and liabilities, respectively.

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EQUITY

9 Months Ended

Sep. 30, 2019

Stockholders' Equity Note [Abstract]

EQUITY

EQUITY

Common Stock

The Company completed its conversion from a Delaware limited partnership to a Delaware corporation (the "Conversion") effective on November 26, 2018. Prior to the Conversion, common shares represented limited partnership interests in the Company. The holders of common shares were entitled to participate pro rata in distributions from the Company and to exercise the rights or privileges that were available to common shareholders under the Company’s limited partnership agreement. The common shareholders had limited voting rights and had no right to remove the Company’s general partner, Ares Management GP LLC, or, except in limited circumstances, to elect the directors of the general partner.     

Since the Conversion on November 26, 2018, the Company's common stock consists of Class A, Class B and Class C common stock. As a result of the Conversion on November 26, 2018, (i) each outstanding common share representing limited partner interests in the Company before the Conversion converted into one issued and outstanding, fully paid and nonassessable share of Class A common stock, $0.01 par value per share, of the Company, (ii) the general partner share of the Company before the Conversion converted into 1,000 issued and outstanding, fully paid and nonassessable shares of Class B common stock, $0.01 par value per share, of the Company and (iii) the special voting share of the Company before the Conversion converted into one issued and outstanding, fully paid and nonassessable share, of Class C common stock, $0.01 par value per share, of the Company.

The Class B common stock and Class C common stock are non-economic and holders are not entitled to (i) dividends from the Company or (ii) receive any assets of the Company in the event of any dissolution, liquidation or winding up of the Company. Ares Management GP LLC is the sole holder of the Class B common stock and Ares Voting LLC is the sole holder of the Class C common stock.

In February 2019, the Company's board of directors authorized the repurchase of up to $150 million of shares of Class

A common stock. Under this stock repurchase program, shares may be repurchased from time to time in open market purchases,

privately negotiated transactions or otherwise, including in reliance on Rule 10b5-1 of the Securities Act. The program is scheduled to expire in February 2020. Repurchases under the program, if any, will depend on the prevailing market conditions and other factors. During the three months ended September 30, 2019, the Company did not repurchase any shares as part of the stock repurchase program. During the nine months ended September 30, 2019, the Company repurchased 0.4 million shares at a total cost of $10.4 million. As of September 30, 2019, the amount remaining available for repurchases under the program was $139.6 million.

On September 20, 2019, the Company sold 7,000,000 shares of its Class A common stock in an underwritten public offering (the "Offering") from which it received $207.3 million in gross proceeds. The Company incurred approximately $0.6 million of expenses in connection with the Offering. The expenses have been recorded as a reduction in the proceeds received and are presented on a net basis together with contributions in additional paid-in-capital within the Condensed Consolidated Statements of Changes in Equity.

The following table presents the changes in each class of common stock for the nine months ended September 30, 2019:

	Class A Common Stock		Class B Common Stock	Class C Common Stock	Total
Balance - January 1, 2019	101,594,095		1,000	1	101,595,096
Issuance of stock	7,000,000		—	—	7,000,000
Exchanges of AOG Units	97,493		—	—	97,493
Stock option exercises	4,422,644		—	—	4,422,644
Repurchases of stock	(400,000	)	—	—	(400,000	)
Vesting of restricted stock awards	2,005,536		—	—	2,005,536
Balance Outstanding - September 30, 2019	114,719,768		1,000	1	114,720,769

The following table presents each partner's AOG Units and corresponding ownership interest in each of the Ares Operating Group entities as of September 30, 2019 and December 31, 2018, as well as its daily average ownership of AOG Units in each of the Ares Operating Group entities for the three and nine months ended September 30, 2019 and 2018.

							Daily Average Ownership
	As of September 30, 2019			As of December 31, 2018			For the Three Months Ended September 30,				For the Nine Months Ended September 30,
	AOG Units	Direct Ownership Interest		AOG Units	Direct Ownership Interest		2019		2018		2019		2018
Ares Management Corporation	114,719,768	49.57	%	101,594,095	46.47	%	48.17	%	45.17	%	47.46	%	43.42	%
Ares Owners Holding L.P.	116,707,849	50.43	%	117,019,274	53.53	%	51.83	%	53.67	%	52.54	%	54.14	%
Affiliate of Alleghany Corporation	—	—	%	—	—	%	—	%	1.16	%	—	%	2.44	%
Total	231,427,617	100.00	%	218,613,369	100.00	%

Preferred Stock

In connection with the Conversion on November 26, 2018, each 7.00% Series A preferred share of the Company before the Conversion was converted into one share of 7.00% Series A Preferred Stock, $0.01 par value per share of the Company. As of September 30, 2019 and December 31, 2018, the Company had 12,400,000 shares of the Series A Preferred Stock outstanding. When, as and if declared by the Company’s board of directors, dividends on the Series A Preferred Stock are payable quarterly at a rate per annum equal to 7.00%. The Series A Preferred Stock may be redeemed at the Company’s option, in whole or in part, at any time on or after June 30, 2021, at a price per share of $25.00.

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)

9 Months Ended

Sep. 30, 2019

Accounting Policies [Abstract]

Basis of Accounting

Basis of Presentation

The accompanying condensed consolidated financial statements are prepared in accordance with the generally accepted accounting principles in the United States (“GAAP”) for interim financial information and instructions to the Quarterly Report on Form 10-Q. The condensed consolidated financial statements, including these notes, are unaudited and exclude some of the disclosures required in annual financial statements. Management believes it has made all necessary adjustments so that the condensed consolidated financial statements are presented fairly and that estimates made in preparing its condensed consolidated financial statements are reasonable and prudent, and that all such adjustments are of a normal recurring nature. The operating results presented for interim periods are not necessarily indicative of the results that may be expected for any other interim period or for the entire year. These condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements included in the Annual Report on Form 10-K for the year ended December 31, 2018 filed with the Securities and Exchange Commission ("SEC").

The condensed consolidated financial statements include the accounts and activities of the AOG entities, their consolidated subsidiaries and certain Consolidated Funds. All intercompany balances and transactions have been eliminated upon consolidation.

Reclassifications

The Company has reclassified certain prior period amounts to conform to the current year presentation.

Adoption of ASC 842 and Recent Accounting Pronouncements

Adoption of ASC 842

Effective January 1, 2019, the Company adopted the Financial Accounting Standards Board (“FASB”) Topic 842 (“ASC 842”), Leases. The Company adopted ASC 842 under the modified retrospective approach using the practical expedient provided for within paragraph 842-10-65-1; therefore, the presentation of prior year periods has not been adjusted. No cumulative effect of initially adopting ASC 842 as an adjustment to the opening balance of components of equity as of January 1, 2019 was necessary as the recognition of the right-of-use operating lease assets equaled the corresponding lease liabilities. The amount established in conjunction with the implementation was consistent with the amount previously disclosed.

The Company has entered into operating and finance leases for corporate offices and certain equipment and makes the determination if an arrangement constitutes a lease at inception. Operating leases are included in right-of-use operating lease assets and right-of-use operating lease liabilities in the Company's Condensed Consolidated Statements of Financial Condition. Finance leases are included in accounts payable, accrued expenses and other liabilities in the Condensed Consolidated Statements of Financial Condition. Leases with an initial term of 12 months or less are not recorded on the Condensed Consolidated Statements of Financial Condition.

Right-of-use leases assets represent the Company's right to use an underlying asset for the lease term and right-of-use lease liabilities represent the Company's obligation to make lease payments arising from the lease. Operating lease right-of-use assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. As most of the Company's leases do not provide an implicit rate, the Company uses the its incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. The Company uses the implicit rate when readily determinable. The right-of-use operating lease asset also includes any lease prepayments and excludes lease incentives. Lease terms may include options to extend or terminate the lease when it is reasonably certain that the company will exercise that option. Lease expense is primarily recognized on a straight-line basis over the lease term. The Company has lease agreements with lease and non-lease components, which are generally accounted for separately. However, for certain equipment leases where the non-lease components are not material, the Company account for the lease and non-lease components as a single lease component.

Recent Accounting Pronouncements

The Company considers the applicability and impact of all accounting standard updates ("ASU") issued. ASUs not listed below were assessed and either determined to be not applicable or expected to have minimal impact on its condensed consolidated financial statements.

In May 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. The objective of the guidance in ASU 2016-13 is to allow entities to recognize estimated credit losses in the period that the change in valuation occurs. ASU 2016-13 requires an entity to present financial assets measured on an amortized cost basis on the balance sheet net of an allowance for credit losses. Available for sale and held to maturity debt securities are also required to be held net of an allowance for credit losses. The guidance should be applied using a modified retrospective approach. ASU 2016-13 is effective for public entities for annual reporting periods beginning after December 15, 2019 and interim periods within those reporting periods. Early adoption is permitted for annual and quarterly reporting periods beginning after December 15, 2018. In April and May 2019, ASU 2019-04, Codification Improvements to Topic 326, Financial Instruments-Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments and ASU 2019-05, Financial Instruments-Credit Losses (Topic 326): Targeted Transition Relief, were issued to provide clarification to previously issued credit losses guidance (ASU 2016-13) that has not yet been implemented. These updates are required to be adopted with ASU 2016-13. The Company is currently evaluating the impact of these pronouncements on its condensed consolidated financial statements.

In August 2018, the FASB issued ASU 2018-15, Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract (a consensus of the FASB Emerging Issues Task Force). ASU 2018-15 amends ASC 350-40 to address a customer’s accounting for implementation costs incurred in a cloud computing arrangement that is a service contract. This ASU aligns the accounting for costs incurred to implement a cloud computing arrangement that is a service arrangement with the guidance on capitalizing costs associated with developing or obtaining internal-use software. Specifically, ASU 2018-15 amends ASC 350 to include in its scope implementation costs of a cloud computing arrangement that is a service contract and clarifies that a customer should apply ASC 350-40 to determine which implementation costs should be capitalized in a cloud computing arrangement that is considered a service contract. The accounting for the service element of a hosting arrangement that is a service contract is not affected by these amendments. In addition, this ASU states that a cloud computing arrangement that is a service contract does not give rise to a recognizable intangible asset because it is an executory service contract. Consequently, any costs incurred to implement a cloud computing arrangement that is a service contract would not be capitalized as an intangible asset since they do not form part of an intangible asset but instead would be characterized in the financial statements in the same manner as other service costs and assets related to service contracts such as prepaid expense. That is, these costs would be capitalized as part of the service contract and the related amortization would be consistent with the ongoing periodic costs of the underlying cloud computing arrangement. ASU 2018-15 is effective for public entities for annual reporting periods beginning after December 15, 2019 and interim periods within those reporting periods, with early adoption permitted. The guidance may be applied either prospectively or retrospectively. The Company is currently evaluating the impact of this guidance on its condensed consolidated financial statements.

In October 2018, the FASB issued ASU 2018-17, Consolidation (Topic 810): Targeted Improvements to Related Party Guidance for Variable Interest Entities. ASU 2018-17, amends ASC 810 to address whether indirect interests held through related parties in common control arrangements should be considered on a proportional basis for determining whether fees paid to decision makers and service providers are variable interests. This is consistent with how indirect interests held through related parties under common control are considered for determining whether a reporting entity must consolidate a VIE. For example, if a decision maker or service provider owns a 20 percent interest in a related party and that related party owns a 40 percent interest in the legal entity being evaluated, the decision maker’s or service provider’s indirect interest in the VIE held through the related party under common control should be considered the equivalent of an eight percent direct interest for determining whether its fees are variable interests. ASU 2018-17 is effective for public entities for annual reporting periods beginning after December 15, 2019 and interim periods within those reporting periods, with early adoption permitted. The guidance should be applied retrospectively. The Company is currently evaluating the impact of this guidance on its condensed consolidated financial statements.

Fair Value Measurements

Fair Value Measurements

GAAP establishes a hierarchal disclosure framework that prioritizes the inputs used in measuring financial instruments at fair value into three levels based on their market price observability. Market price observability is affected by a number of factors, including the type of instrument and the characteristics specific to the instrument. Financial instruments with readily available quoted prices from an active market or for which fair value can be measured based on actively quoted prices generally have a higher degree of market price observability and a lesser degree of judgment inherent in measuring fair value.

Financial assets and liabilities measured and reported at fair value are classified as follows:

• Level I—Quoted prices in active markets for identical instruments.

• Level II—Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in inactive markets; and model‑derived valuations with directly or indirectly observable significant inputs. Level II inputs include prices in markets with few transactions, non-current prices, prices for which little public information exists or prices that vary substantially over time or among brokered market makers. Other inputs include interest rates, yield curves, volatilities, prepayment risks, loss severities, credit risks and default rates.

• Level III—Valuations that rely on one or more significant unobservable inputs. These inputs reflect the Company’s assessment of the assumptions that market participants would use to value the instrument based on the best information available.

In some instances, an instrument may fall into more than one level of the fair value hierarchy. In such instances, the instrument’s level within the fair value hierarchy is based on the lowest of the three levels (with Level III being the lowest) that is significant to the fair value measurement. The Company’s assessment of the significance of an input requires judgment and considers factors specific to the instrument. The Company accounts for the transfer of assets into or out of each fair value hierarchy level as of the beginning of the reporting period.

Derivative Financial Instruments

In the normal course of business, the Company and the Consolidated Funds are exposed to certain risks relating to their ongoing operations and use various types of derivative instruments primarily to mitigate against credit and foreign exchange risk. The derivative instruments are not designated as hedging instruments under the accounting standards for derivatives and hedging. The Company recognizes all of its derivative instruments at fair value as either assets or liabilities in the Condensed Consolidated Statements of Financial Condition within other assets or accounts payable, accrued expenses and other liabilities, respectively. These amounts may be offset to the extent that there is a legal right to offset and if elected by management.

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FAIR VALUE (Assets and Liabilities Measured at Fair Value) (Details) - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
Consolidated Funds
Assets, at fair value
Collateralized loan obligations and other fixed income	$ 7,820,298	$ 7,205,248
Common stock and other equity securities	152,026	196,470
Partnership interests	299,157	271,447
Total investments, at fair value	8,271,481	7,673,165
Total derivative assets, at fair value		3,209
Total assets, at fair value	8,272,759	7,676,374
Liabilities, at fair value
Loan obligations of CLOs	(7,407,720)	(6,678,091)
Total liabilities, at fair value	(7,411,533)	(6,680,603)
Consolidated Funds | Foreign exchange contracts
Assets, at fair value
Total derivative assets, at fair value	1,042	1,881
Liabilities, at fair value
Derivative liabilities	(1,025)
Derivatives—foreign exchange contracts		(1,864)
Consolidated Funds | Asset swaps - other
Assets, at fair value
Total derivative assets, at fair value	236	1,328
Liabilities, at fair value
Derivative liabilities	(2,788)	(648)
Consolidated Funds | Bonds
Assets, at fair value
Collateralized loan obligations and other fixed income	205,727	318,499
Consolidated Funds | Loans
Assets, at fair value
Collateralized loan obligations and other fixed income	7,614,571	6,886,749
Consolidated Funds | Level I
Assets, at fair value
Collateralized loan obligations and other fixed income	0	0
Common stock and other equity securities	37,185	45,718
Partnership interests	0	0
Total investments, at fair value	37,185	45,718
Total derivative assets, at fair value		0
Total assets, at fair value	37,185	45,718
Liabilities, at fair value
Loan obligations of CLOs	0	0
Total liabilities, at fair value	0	0
Consolidated Funds | Level I | Foreign exchange contracts
Assets, at fair value
Total derivative assets, at fair value	0	0
Liabilities, at fair value
Derivative liabilities	0
Derivatives—foreign exchange contracts		0
Consolidated Funds | Level I | Asset swaps - other
Assets, at fair value
Total derivative assets, at fair value	0	0
Liabilities, at fair value
Derivative liabilities	0	0
Consolidated Funds | Level I | Bonds
Assets, at fair value
Collateralized loan obligations and other fixed income	0	0
Consolidated Funds | Level I | Loans
Assets, at fair value
Collateralized loan obligations and other fixed income	0	0
Consolidated Funds | Level II
Assets, at fair value
Collateralized loan obligations and other fixed income	7,535,138	6,657,290
Common stock and other equity securities	0	0
Partnership interests	0	0
Total investments, at fair value	7,535,138	6,657,290
Total derivative assets, at fair value		1,881
Total assets, at fair value	7,536,180	6,659,171
Liabilities, at fair value
Loan obligations of CLOs	(7,407,720)	(6,678,091)
Total liabilities, at fair value	(7,408,745)	(6,679,955)
Consolidated Funds | Level II | Foreign exchange contracts
Assets, at fair value
Total derivative assets, at fair value	1,042	1,881
Liabilities, at fair value
Derivative liabilities	(1,025)
Derivatives—foreign exchange contracts		(1,864)
Consolidated Funds | Level II | Asset swaps - other
Assets, at fair value
Total derivative assets, at fair value	0	0
Liabilities, at fair value
Derivative liabilities	0	0
Consolidated Funds | Level II | Bonds
Assets, at fair value
Collateralized loan obligations and other fixed income	197,204	316,850
Consolidated Funds | Level II | Loans
Assets, at fair value
Collateralized loan obligations and other fixed income	7,337,934	6,340,440
Consolidated Funds | Level III
Assets, at fair value
Collateralized loan obligations and other fixed income	285,160	547,958
Common stock and other equity securities	114,841	150,752
Partnership interests	299,157	271,447
Total investments, at fair value	699,158	970,157
Total derivative assets, at fair value		1,328
Total assets, at fair value	699,394	971,485
Liabilities, at fair value
Loan obligations of CLOs	0	0
Total liabilities, at fair value	(2,788)	(648)
Consolidated Funds | Level III | Foreign exchange contracts
Assets, at fair value
Total derivative assets, at fair value	0	0
Liabilities, at fair value
Derivative liabilities	0
Derivatives—foreign exchange contracts		0
Consolidated Funds | Level III | Asset swaps - other
Assets, at fair value
Total derivative assets, at fair value	236	1,328
Liabilities, at fair value
Derivative liabilities	(2,788)	(648)
Consolidated Funds | Level III | Bonds
Assets, at fair value
Collateralized loan obligations and other fixed income	8,523	1,649
Consolidated Funds | Level III | Loans
Assets, at fair value
Collateralized loan obligations and other fixed income	276,637	546,309
Ares Management L.P
Assets, at fair value
Common stock and other equity securities	13,560	11,681
Partnership interests	36,765	36,053
Total investments, at fair value	132,838	108,558
Total assets, at fair value	137,039	109,624
Liabilities, at fair value
Derivatives—foreign exchange contracts		(869)
Total liabilities, at fair value	(163)	(869)
Ares Management L.P | Foreign exchange contracts
Assets, at fair value
Total derivative assets, at fair value	4,201	1,066
Liabilities, at fair value
Derivative liabilities	(163)
Ares Management L.P | Collateralized loan obligations
Assets, at fair value
Collateralized loan obligations and other fixed income	82,513	60,824
Ares Management L.P | Level I
Assets, at fair value
Common stock and other equity securities	128	280
Partnership interests	0	0
Total investments, at fair value	128	280
Total assets, at fair value	128	280
Liabilities, at fair value
Derivatives—foreign exchange contracts		0
Total liabilities, at fair value	0	0
Ares Management L.P | Level I | Foreign exchange contracts
Assets, at fair value
Total derivative assets, at fair value	0	0
Liabilities, at fair value
Derivative liabilities	0
Ares Management L.P | Level I | Collateralized loan obligations
Assets, at fair value
Collateralized loan obligations and other fixed income	0	0
Ares Management L.P | Level II
Assets, at fair value
Common stock and other equity securities	1,035	1,004
Partnership interests	0	0
Total investments, at fair value	1,035	1,004
Total assets, at fair value	5,236	2,070
Liabilities, at fair value
Derivatives—foreign exchange contracts		(869)
Total liabilities, at fair value	(163)	(869)
Ares Management L.P | Level II | Foreign exchange contracts
Assets, at fair value
Total derivative assets, at fair value	4,201	1,066
Liabilities, at fair value
Derivative liabilities	(163)
Ares Management L.P | Level II | Collateralized loan obligations
Assets, at fair value
Collateralized loan obligations and other fixed income	0	0
Ares Management L.P | Level III
Assets, at fair value
Common stock and other equity securities	12,397	10,397
Partnership interests	35,192	35,192
Total investments, at fair value	130,102	106,413
Total assets, at fair value	130,102	106,413
Liabilities, at fair value
Derivatives—foreign exchange contracts		0
Total liabilities, at fair value	0	0
Ares Management L.P | Level III | Foreign exchange contracts
Assets, at fair value
Total derivative assets, at fair value	0	0
Liabilities, at fair value
Derivative liabilities	0
Ares Management L.P | Level III | Collateralized loan obligations
Assets, at fair value
Collateralized loan obligations and other fixed income	82,513	60,824
Ares Management L.P | Investments Measured at NAV
Assets, at fair value
Partnership interests	1,573	861
Total investments, at fair value	1,573	861
Total assets, at fair value	$ 1,573	$ 861

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GOODWILL AND INTANGIBLE ASSETS (Goodwill) (Details) - USD ($)	9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018
Goodwill [Roll Forward]
Goodwill, beginning balance	$ 143,786,000
Foreign currency translation	(65,000)
Goodwill, ending balance	143,721,000
Goodwill impairment	0	$ 0
Credit
Goodwill [Roll Forward]
Goodwill, beginning balance	32,196,000
Foreign currency translation	0
Goodwill, ending balance	32,196,000
Private Equity
Goodwill [Roll Forward]
Goodwill, beginning balance	58,600,000
Foreign currency translation	0
Goodwill, ending balance	58,600,000
Real Estate
Goodwill [Roll Forward]
Goodwill, beginning balance	52,990,000
Foreign currency translation	(65,000)
Goodwill, ending balance	$ 52,925,000

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DERIVATIVE FINANCIAL INSTRUMENTS (Details) - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
Consolidated Funds
Assets
Notional amount, Assets	$ 3,508	$ 7,107
Fair Value, Assets	1,278	3,209
Liabilities
Notional amount, Liabilities	5,710	4,486
Fair Value, Liabilities	3,813	2,512
Derivative asset, amount offset	1,800	1,800
Derivative liability, amount offset	5,700	5,700
Consolidated Funds | Foreign exchange contracts
Assets
Notional amount, Assets	1,042	1,881
Fair Value, Assets	1,042	1,881
Liabilities
Notional amount, Liabilities	1,042	1,881
Fair Value, Liabilities	1,025	1,864
Consolidated Funds | Asset swap - other
Assets
Notional amount, Assets	2,466	5,226
Fair Value, Assets	236	1,328
Liabilities
Notional amount, Liabilities	4,668	2,605
Fair Value, Liabilities	2,788	648
Ares Management L.P
Assets
Notional amount, Assets	102,524	33,026
Fair Value, Assets	4,201	1,066
Liabilities
Notional amount, Liabilities	5,065	27,140
Fair Value, Liabilities	163	869
Derivative liability, amount not offset	(200)	(900)
Ares Management L.P | Foreign exchange contracts
Assets
Notional amount, Assets	102,524	33,026
Fair Value, Assets	4,201	1,066
Liabilities
Notional amount, Liabilities	5,065	27,140
Fair Value, Liabilities	$ 163	$ 869

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EQUITY COMPENSATION (Equity Incentive Plan) (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018	Jan. 01, 2019
Equity compensation
Equity compensation expenses	$ 22,393	$ 23,940	$ 73,974	$ 67,534
Restricted units
Equity compensation
Equity compensation expenses	21,430	19,251	66,226	55,798
Restricted units with a market condition
Equity compensation
Equity compensation expenses	911	614	2,702	614
Options
Equity compensation
Equity compensation expenses	52	3,660	4,310	9,953
Phantom shares
Equity compensation
Equity compensation expenses	$ 0	$ 415	$ 736	$ 1,169
Ares Management L.P
Equity compensation
Total number of shares available for grant under the Equity Incentive Plan (in shares)	29,232,054		29,232,054		32,792,005

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EQUITY COMPENSATION (Phantom Shares) (Details) $ / shares in Units, $ in Millions	9 Months Ended
	Sep. 30, 2019 USD ($) $ / shares shares
Weighted Average Grant Date Fair Value
Unrecognized compensation expenses | $	$ 83.1
Phantom Shares
Units
Balance at the beginning of the period (in units or shares) | shares	66,287
Vested (in units) | shares	(61,502)
Forfeited (in units) | shares	(4,785)
Balance at the end of the period (in units or shares) | shares	0
Weighted Average Grant Date Fair Value
Balance at the beginning of the period (in dollars per share) | $ / shares	$ 19.00
Vested (in dollars per share) | $ / shares	19.00
Forfeited (in dollars per share) | $ / shares	19.00
Balance at the end of the period (in dollars per share) | $ / shares	$ 0
Settle vested phantom shares | $	$ 1.5