Ares AUM dips in quarter, but up 8.7% for year

Ares Management had $148.6 billion in assets under management as of March 31, down 0.2% from three months earlier but up 8.7% from a year earlier, the alternative investment firm announced in its earnings report Wednesday.

Ares attributed the increase over the 12-month period to fundraising, primarily in the areas of U.S. direct lending and syndicated loans.

Ares' largest business by AUM is credit with $112.5 billion in assets as of March 31, up 1.8% from Dec. 31 and up 11.3% from March 31, 2019. Private equity AUM totaled $22 billion, down 12.7% from three months earlier and down 8.8% from a year earlier. Real estate AUM was $14.1 billion, up 6.8% from Dec. 31 and up 19.5% year-over-year.

GAAP management fees were $263.8 million in the first quarter, compared with $265.3 million in the fourth quarter and $224.7 million in the first quarter of 2019. Administrative, transaction and other fees were $10.4 million for the first quarter, up from $2.5 million for the prior quarter and $9.7 million in the year-earlier quarter.

"The unprecedented market volatility and disruption caused by the COVID-19 pandemic has tested us all during these challenging times, but we are very proud to say that our entire workforce at Ares has responded well and is operating highly effectively," said Michael Arougheti, president and CEO, in a news release.

"Despite the economic disruption, we generated another record level of fee-related earnings with growth of 31% vs. the prior-year period and our fee-paying AUM exceeded $100 billion for the first time," Mr. Arougheti said. "We believe our results reflect our resilient, management fee-centric business model that is well-suited for navigating volatility."

Incentive fees were -$3.2 million in the first quarter, compared with incentive fee revenue of $40.5 million in the fourth quarter and $16.8 million in the first quarter of 2019. Principal investment losses totaled $26.7 million in the quarter, compared with principal investment income of $10.6 million in the fourth quarter and $28.8 million in the first quarter of 2019.

Ares had a GAAP net loss of $276 million in the first quarter, compared with net income of $84.5 million in the quarter ended Dec. 31 and $121.6 million in the year-over-year quarter.