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Ares Management records 7.9% rise in AUM on strength of credit business

Michael Arougheti, president and CEO, Ares Management

Ares Management reported $121.4 billion of assets under management as of June 30, a 7.9% increase from March 31 and 16.7% rise from a year earlier, according to the alternative investment firm's second-quarter earnings released Thursday.

Ares attributed its increase in AUM in the second quarter to $12.1 billion in gross new capital commitments, consisting of $10 billion in equity commitments, $500 million of collateralized loan obligation commitments and $1.6 billion in debt commitments. AUM growth was partially offset by $2.5 billion in distributions and redemptions, primarily in funds that are past their reinvestment periods in private equity and credit, and $600 million in reduced leverage, mostly due to CLO paydowns.

Ares' credit business AUM was $86.9 billion, up 12.4% from March 31 and up 28.9% from the end of the second quarter of 2017. Private equity AUM was $23.6 billion, down 2.9% from three months earlier and 8.5% lower from June 30, 2017. Real estate AUM was $10.9 billion, flat from the end of the first quarter and a 1% dip from June 30, 2017.

Management fees were $194 million for the second quarter, up 2.4% from the first quarter and up 7.3% quarter-over-quarter. Incentive fees were $7.7 million in quarter, up from $5.1 million in the prior quarter and $4.2 million in the second quarter of 2017. Principal investment income was $1.9 million, down from $4.9 million in the first quarter and $38.3 million in the year-ago quarter. Administrative, transaction and other fees were $14 million, up from $12.5 million in the first quarter but down from $15.1 million in the second quarter of 2017.

Ares had a GAAP net loss of $11.8 million in the quarter, compared to GAAP net income of $40.9 million in the first quarter and net income of $49.9 million in the year-earlier quarter.

Ares reported it has $33.3 billion in available capital as of June 30.