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Ares AUM rises 3% in quarter, up 18.4% for year

Ares Management reported $125.1 billion in assets under management as of Sept. 30, up 3% from the end of the prior quarter and up 18.4% year-over-year, according to the alternative investment firm's earnings reports released Thursday.

Ares attributed the quarter's growth to new capital raised, amounting to $6.8 billion in commitments, which was partially offset by $2.4 billion in redemptions and distributions, primarily from real estate and credit funds that were past their reinvestment periods.

"Our assets under management crossed over $125 billion as we have experienced record fundraising with approximately $26 billion of gross capital raised through the first nine months," said Michael Arougheti, Ares CEO and president, in a news release "The benefits from our AUM growth and expanded investment capabilities are being reflected in record management fee income and fee related earnings for the third quarter, both of which have experienced double-digit growth compared to the same period in 2017."

Credit assets under management, Ares largest business, grew 5% to $91.5 billion as of June 30 from the end of the prior quarter and up 30% year-over-year as of Sept 30. Private equity AUM dipped 2.5% in the quarter to $23 billion, a drop of 6.5% from Sept. 30, 2017. Real estate AUM dropped by 2.8% to $10.6 billion in the three months through Sept. 30; that's a slip of 1% from the end of the year-earlier quarter.

Management fees were $204.5 million in the third quarter, up 5.4% from the second quarter and up 11.6% from Sept. 30, 2017. Administrative, transaction and other fees were $10.9 million, down 22% from the June 30 figure and down 19% year over year.

Incentive fees were $872,000 in the third quarter, down 89% from the prior quarter and down 80.6% the Sept. 30, 2017, report. Principal investment loss was $7.5 million, down from a principal investment gain of $1.9 million in the quarter ended June 30 and down from a $4.7 million gain in the year-prior quarter.

Ares had a GAAP net income of $15.9 million in the quarter, compared to a net loss of $11.8 million in the second quarter and net income of $27.8 million in the year-earlier quarter.