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01/10 05:05
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call highlights strong financial performance, optimistic guidance, and strategic growth initiatives, including increased dividends, robust fundraising, and expansion in real estate and private credit. The Q&A section reinforces positive sentiment, with management addressing concerns effectively and emphasizing growth opportunities. The positive outlook for real estate and private credit, coupled with strategic acquisitions and increased dividends, suggests a strong positive impact on stock price.
Management Fees $971 million, representing a 28% year-over-year increase. Reasons for change: Strong net deployment and a 21% annualized run rate increase in FPAUM during the quarter.
Fee-Related Earnings (FRE) $471 million for the quarter, increased 39% year-over-year. Reasons for change: Broad-based positive momentum across businesses and significant capital attraction in institutional and wealth channels.
After-Tax Realized Income Per Share of Class A Stock 25% year-over-year growth. Reasons for change: Robust management fee and FRE growth.
Realized Income $456 million for the quarter, a 34% year-over-year increase. Reasons for change: Strong market appreciation and net accrued performance income.
Assets Under Management (AUM) Increased to more than $595 billion, up 28% year-over-year. Reasons for change: Significant growth across nearly every major investment strategy and increased demand from institutional and individual investors.
Fee-Paying AUM (FPAUM) Increased to $368 billion, up 28% year-over-year. Reasons for change: Strong net deployment and elevated investment pipeline.
New Capital Raised More than $30 billion in the quarter, highest quarter on record. Year-to-date raised over $77 billion, and over the last 12 months raised over $105 billion, up 24% from $85 billion in the comparable prior year period. Reasons for change: Strong fund performance and breadth of fundraising channels.
Gross Deployment Over $41 billion invested in the quarter, 55% higher than the second quarter and 30% above the previous high in the fourth quarter of last year. Reasons for change: Rebounding transaction market and elevated investment pipeline.
Dividend Declared a quarterly dividend of $1.12 per share, representing an increase of 20% over the dividend from the same quarter a year ago. Reasons for change: Strong financial performance.
Infrastructure Secondaries Fund: Closed at $3.3 billion in equity commitments, exceeding the hard cap due to investor demand. Including related vehicles, the total pool of capital is $5.3 billion, making it one of the largest in the infrastructure secondaries market.
Specialty Healthcare Fund: Held the final close with $1.5 billion in total available capital, including anticipated leverage.
Alternative Credit Fund: Raised over $1 billion in its semi-annual subscription, bringing total AUM to over $7.4 billion, making it the largest non-rated asset-based finance fund in the market.
Global Wealth Platform Expansion: Achieved record quarterly equity inflows of $5.4 billion, with 40% of inflows from outside the U.S., including strong demand from Japan, Canada, the Middle East, and Asia Pacific.
1031 Exchange Program: Maintained market leadership with over 20% market share and closed the largest transaction in history, approaching $100 million.
Management Fees: Increased by 28% year-over-year to a record $971 million, driven by strong net deployment and fundraising.
Fee-Related Earnings (FRE): Grew by 39% year-over-year to $471 million, with FRE margins at 41.4%.
Promote Giving Initiative: Launched a program with 8 other managers to donate a portion of fund performance fees to charitable causes, with Ares' funds pledging over $45 million to date.
Credit Market Positioning: Positioned to benefit from potential credit cycles with $150 billion in dry powder and a strong historical track record of outperformance during downturns.
Market Conditions: Potential risks from high-profile bankruptcies or instances of fraud in the credit market, though these are described as idiosyncratic and isolated.
Regulatory Hurdles: No explicit mention of regulatory challenges, but forward-looking statements are subject to risks and uncertainties as per SEC filings.
Economic Uncertainties: Potential for a credit cycle to occur, which could impact credit markets and investor behavior.
Strategic Execution Risks: Challenges in maintaining strong fundraising momentum and deploying significant dry powder effectively in a competitive market.
Supply Chain Disruptions: No explicit mention of supply chain disruptions.
Competitive Pressures: Pressure to maintain leadership in private credit and other investment strategies amidst growing competition.
Fundraising and Deployment: Ares expects to exceed last year's $93 billion in fundraising, driven by strong demand for private credit strategies and other investment areas. The firm has nearly $150 billion in dry powder for new deployment opportunities, with a robust investment pipeline near record levels.
Infrastructure Investments: The third infrastructure secondaries fund closed with $3.3 billion in equity commitments, exceeding its hard cap. Ares anticipates 35% of the fund could be committed by year-end. Additionally, the sixth infrastructure debt fund is expected to close with $5.3 billion in capital, with $2 billion raised post-quarter end.
Real Estate and Credit Strategies: The fifth Japan industrial development fund targets a significant first close in Q1 2026. The 11th U.S. value-add real estate fund is expected to hit its $2.6 billion hard cap in early 2026. Ares plans to launch its third alternative credit fund in January 2026.
Wealth Management Growth: Ares raised its 2028 AUM target for semi-liquid wealth products from $100 billion to $125 billion, reflecting strong advisor demand and geographic expansion. The firm sees significant opportunities for private markets adoption in wealth portfolios.
Market Outlook: Ares anticipates strong M&A volumes in Q4 2025 and into 2026, supported by improving credit markets, narrowing bid-ask spreads, and lower financing costs. Real estate valuations and transaction activity are expected to improve, particularly in logistics and multifamily sectors.
Credit Market Resilience: Ares believes the credit markets remain healthy and expects to benefit from potential credit cycles, leveraging its significant dry powder and historical outperformance during downturns. The firm anticipates strong growth in management fees and deployment activity if a credit cycle occurs.
Quarterly Dividend Announcement: A quarterly dividend of $1.12 per share on Class A and nonvoting common stock was declared, representing a 20% increase over the same quarter a year ago. The dividend will be paid on December 31, 2025, to holders of record as of December 17.
Future Dividend Plans: The company expects to announce an increase in its quarterly dividend level beginning with the first quarter of next year.
The earnings call highlights strong financial performance, optimistic guidance, and strategic growth initiatives, including increased dividends, robust fundraising, and expansion in real estate and private credit. The Q&A section reinforces positive sentiment, with management addressing concerns effectively and emphasizing growth opportunities. The positive outlook for real estate and private credit, coupled with strategic acquisitions and increased dividends, suggests a strong positive impact on stock price.
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