Ares Management reported $104 billion in assets under management as of June 30, up 4% from March 31 and up 9.2% from a year earlier, the alternative investment firm's earnings report, released Friday, shows.
Ares attributed the increase to new gross commitments and an increase in market value of its investments, especially in its private equity and real estate funds. Ares collected gross commitments of about $5.5 billion in the second quarter and roughly $15 billion for the 12 months ended June 30. The increases were partially offset by distributions and redemptions of $1.8 billion primarily in funds past their reinvestment periods in private equity and reduction of leverage by $2.5 billion.
In an earnings call also on Friday, Michael Arougheti, Ares co-founder and a director and president of Ares Management GP, noted the firm crossed the $100 billion AUM milestone for the first time in the second quarter.
However, he cautioned the current market is "challenging due to the liquidity in many of our markets." Ares has been "more measured" in investing capital, but taking advantage of the market liquidity by "harvesting gains, launching new strategies, raising ever-larger new funds" to give the firm significant dry powder as the cycle evolves, Mr. Arougheti said.
Capital raising during the period was weighted toward credit, both in liquid and illiquid strategies, including $957 million for U.S. direct lending separately managed accounts from four institutional investors, he added.
Indeed, Ares' largest business unit continues to be credit, with $67.4 billion in AUM as of June 30, up 3% from March 31 and up 12% from June 30, 2016. Ares' private equity business reported $25.8 billion in AUM as of June 30, up 4% from three months earlier and up 4% from the year prior. Ares real estate AUM was $10.8 billion, up 9% and up 7%, respectively.
GAAP net income for the quarter was $49.9 million compared to a $41 million net loss under GAAP in the previous quarter and net income of $39.6 million in the year-over-year quarter.
Management fees were $180.8 million in the second quarter, up from $172 million in the first quarter and $158.5 million in the quarter ended June 30, 2016. Performance fees were $338 million in the quarter ended June 30, up from $55.2 million in the first quarter and $203.2 million in the year earlier quarter. Administrative and other fees were $15.1 million, up from $14.4 million in the quarter ended March 31 and $7.9 million in the year-earlier quarter.