Ares Management · 10-Q · Item 2 MD&A

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Ares Management Corporation is a Delaware corporation. Unless the context otherwise requires, references to “Ares,” “we,” “us,” “our,” and the “Company” are intended to mean the business and operations of Ares Management Corporation and its consolidated subsidiaries. The following discussion analyzes the financial condition and results of operations of the Company. “Consolidated Funds” refers collectively to certain Ares funds, co-investment vehicles, CLOs and SPACs that are required under U.S. GAAP to be consolidated in our unaudited condensed consolidated financial statements included in this Quarterly Report on Form 10-Q. Additional terms used by the Company are defined in the Glossary and throughout the Management’s Discussion and Analysis in this Quarterly Report on Form 10-Q.

The following discussion and analysis should be read in conjunction with the unaudited condensed consolidated financial statements of Ares Management Corporation and the related notes included in this Quarterly Report on Form 10-Q and the audited financial statements and the related notes included in the 2025 Annual Report on Form 10-K of Ares Management Corporation.

Amounts and percentages presented throughout our discussion and analysis of financial condition and results of operations may reflect rounded results in thousands (unless otherwise indicated) and consequently, totals may not appear to sum. In addition, illustrative charts may not be presented at scale.

The changes from current year compared to prior year may be deemed to be not meaningful and are designated as “NM” within the discussion and analysis of financial condition and results of operations.

Trends Affecting Our Business

We believe that our disciplined investment philosophy across our distinct but complementary investment groups contributes to the stability of our performance throughout market cycles. For the three months ended June 30, 2026, 94% of our management fees were derived from perpetual capital vehicles or long-dated funds. Our funds have a stable base of committed capital enabling us to invest in assets with a long-term focus over different points in a market cycle and to take advantage of market volatility. However, our results from operations, including the fair value of our AUM, are affected by a variety of factors. Conditions in the global financial markets and economic and political environments may impact our business, particularly in the U.S., Europe and Asia-Pacific (“APAC”).

The following table presents returns of selected market indices:-

Returns (%)

Type of Index

Name of Index

Region

High yield bonds

ICE BAML High Yield Master II Index

U.S.

High yield bonds

ICE BAML European Currency High Yield Index

Europe

Leveraged loans

S&P UBS Leveraged Loan Index

U.S.

Leveraged loans

S&P UBS Western European Leveraged Loan Index

Europe

Equities

U.S.

Equities

MSCI All Country World Ex-U.S. Index

Non-U.S.

Infrastructure equities

S&P Global Infrastructure Index

Global

Real estate equities

FTSE NAREIT All Equity REITs Index

U.S.

Real estate equities

FTSE EPRA/NAREIT Developed Europe Index

Europe

Real estate equities

Tokyo Stock Exchange REIT Index

APAC

During the second quarter of 2026, global markets continued to experience heightened volatility amid geopolitical tension in the Middle East and evolving expectations regarding monetary and U.S. trade policies. However, the possibility of a ceasefire between the U.S. and Iran eased energy market pressures, and resilient macroeconomic conditions supported positive returns across U.S. and European high yield bonds and leveraged loans. U.S. and international equity markets were also supported by first quarter corporate earnings growth and improving investor sentiment.

Despite elevated uncertainty stemming from disruptions in energy markets, global commercial real estate markets continued to improve in the second quarter of 2026. Transaction volumes continued to increase, debt availability improved and property values appreciated across markets. Rising Japanese government bond yields pressured REIT performance during the quarter, however, we do not believe this reflects deterioration in our portfolio’s underlying fundamentals. While performance varies by sector and geography, we believe constrained new supply will be a meaningful tailwind for commercial real estate markets. Infrastructure investment remained robust, particularly across the digital infrastructure, energy and utilities sectors.

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Renewable energy deployment also continued at a meaningful scale, underpinned by stable demand for clean energy and an expanding development pipeline. While performance varies by sector and geography, we believe increasing power demand, continued renewable energy deployment and the expansion of digital infrastructure will provide meaningful opportunities for infrastructure investment in coming periods.

Private equity activity moderated during the quarter with the concentration in a smaller number of large transactions. Dealmaking and exit activity continued to reflect market selectivity and elevated uncertainty in private credit markets. Sponsors continued to prioritize businesses with resilient fundamentals and clear paths to value creation, including differentiated technology and artificial intelligence capabilities. We believe a renewed focus on value creation strategies that emphasize operational improvements, selective deployment, talent optimization and digital transformation are essential to support long-term momentum.

We believe our portfolios across all strategies remain well positioned for a fluctuating interest rate environment. On a market value basis, approximately 82% of our debt assets and 51% of our total assets were floating rate instruments as of June 30, 2026.

Managing Business Performance

Operating Metrics

We measure our business performance using certain operating metrics that are common to the alternative investment management industry and are discussed below.

Assets Under Management

AUM refers to the assets we manage and is viewed as a metric to measure our investment and fundraising performance as it reflects assets generally at fair value plus available uncalled capital.

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The tables below present rollforwards of our total AUM by segment ($ in millions):

Credit

Group

Real Assets

Group

Secondaries

Group

Private Equity

Group

Other

Businesses

Total AUM

$

$

$

$

$

$

New par/equity commitments

—

New debt commitments

—

—

Capital reductions

—

—

—

Distributions

Redemptions

—

—

Net allocations among investment strategies

—

—

Change in fund value

$

$

$

$

$

$

Credit

Group

Real Assets

Group

Secondaries

Group

Private Equity

Group

Other

Businesses

Total AUM

$

$

$

$

$

$

New par/equity commitments

—

New debt commitments

—

—

—

Capital reductions

—

—

Distributions

Redemptions

—

(7)

Net allocations among investment strategies

—

—

Change in fund value

$

$

$

$

$

$

Credit

Group

Real Assets

Group

Secondaries

Group

Private Equity

Group

Other

Businesses

Total AUM

$

$

$

$

$

$

Acquisitions

—

—

—

—

New par/equity commitments

New debt commitments

—

—

Capital reductions

—

—

Distributions

Redemptions

—

—

Net allocations among investment strategies

—

—

Change in fund value

$

$

$

$

$

$

Credit

Group

Real Assets

Group

Secondaries

Group

Private Equity

Group

Other

Businesses

Total AUM

$

$

$

$

$

$

Acquisitions

—

—

—

—

New par/equity commitments

New debt commitments

—

—

—

Capital reductions

—

Distributions

Redemptions

—

(7)

Net allocations among investment strategies

—

—

Change in fund value

9

$

$

$

$

$

$

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The components of our AUM are presented below ($ in billions):

FPAUM

Non-fee paying(1)

AUM not yet paying fees

(1) Includes $6.1 billion and $5.6 billion of non-fee paying AUM from our general partner and employee commitments as of June 30, 2026 and 2025, respectively.

Please refer to “— Results of Operations by Segment” for a more detailed presentation of AUM by segment for each of the periods presented.

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Fee Paying Assets Under Management

FPAUM refers to AUM from which we directly earn management fees and is equal to the sum of all the individual fee bases of our funds that directly contribute to our management fees.

The tables below present rollforwards of our total FPAUM by segment ($ in millions):

Credit

Group

Real Assets

Group

Secondaries

Group

Private Equity

Group

Other

Businesses

Total

$

$

$

$

$

$

Commitments

—

Deployment/increase in leverage

Capital reductions

—

—

—

Distributions

Redemptions

—

—

Net allocations among investment strategies

—

—

Change in fund value

Change in fee basis

—

$

$

$

$

$

$

Credit

Group

Real Assets

Group

Secondaries

Group

Private Equity

Group

Other

Businesses

Total

$

$

$

$

$

$

Commitments

—

Deployment/increase in leverage

—

Capital reductions

—

—

Distributions

—

Redemptions

—

—

Net allocations among investment strategies

—

—

Change in fund value

2

Change in fee basis

—

—

—

$

$

$

$

$

$

Credit

Group

Real Assets

Group

Secondaries

Group

Private Equity

Group

Other

Businesses

Total

$

$

$

$

$

$

Acquisitions

—

—

—

—

Commitments

—

Deployment/increase in leverage

Capital reductions

—

—

Distributions

Redemptions

—

—

Net allocations among investment strategies

—

—

Change in fund value

Change in fee basis

—

$

$

$

$

$

$

Credit

Group

Real Assets

Group

Secondaries

Group

Private Equity

Group

Other

Businesses

Total

$

$

$

$

$

$

Acquisitions

—

—

—

—

Commitments

—

Deployment/increase in leverage

Capital reductions

—

—

Distributions

—

Redemptions

—

—

Net allocations among investment strategies

—

—

Change in fund value

2

Change in fee basis

—

—

$

$

$

$

$

$

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The charts below present FPAUM by its fee bases ($ in billions):

Invested capital

NAV/fair value/reported value(1)

Capital commitments

Collateral balances (at par)

GAV

(1)Includes $99.9 billion and $81.2 billion from funds that primarily invest in illiquid strategies as of June 30, 2026 and 2025, respectively. The underlying investments held in these funds are generally subject to less market volatility than investments held in liquid strategies.

Please refer to “— Results of Operations by Segment” for detailed information by segment of the activity affecting total FPAUM for each of the periods presented.

Perpetual Capital Assets Under Management

The chart below presents our perpetual capital AUM by segment and type ($ in billions):

Credit

Real Assets

Secondaries

Other Businesses

Perpetual Wealth Funds

Private Commingled Funds

Publicly-Traded

Funds

Managed Accounts

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Management Fees By Type

We view the duration of funds we manage as a metric to measure the stability of our future management fees. For the three months ended June 30, 2026 and 2025, 94% and 91%, respectively, of management fees were earned from perpetual capital or long-dated funds.

The charts below present the composition of our segment management fees by fund type:

Perpetual Capital - Perpetual Wealth Funds

Perpetual Capital - Publicly-Traded

Funds

Perpetual Capital - Private Commingled Funds

Perpetual Capital - Managed Accounts

Long-Dated Funds(1)

Other

(1) Long-dated funds generally have a contractual life of five years or more at inception.

Available Capital and Assets Under Management Not Yet Paying Fees

The charts below present our available capital and AUM not yet paying fees by segment ($ in billions):

Credit

Real Assets

Secondaries

Private Equity

Other Businesses

As of June 30, 2026, AUM not yet paying fees includes $92.6 billion of AUM available for future deployment and $4.1 billion of development assets not yet stabilized that could collectively generate approximately $828.2 million in potential incremental annual management fees, representing a 24% embedded growth rate in our base management fees from the last twelve month period.

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Incentive Eligible Assets Under Management and Incentive Generating Assets Under Management

The charts below present our IEAUM and IGAUM by segment ($ in billions):

Credit

Real Assets

Secondaries

Private Equity

Other Businesses

As of June 30, 2026 and 2025, IGAUM included $75.7 billion and $56.2 billion, respectively, of AUM from funds generating unrealized incentive fees that are not recognized by us until such fees are crystallized or no longer subject to reversal. As of June 30, 2026, perpetual capital IGAUM that could potentially result in crystallized fee related performance revenues totaled $44.3 billion, composed of $24.0 billion within the Credit Group, $14.4 billion within the Real Assets Group and $5.9 billion within the Secondaries Group. As of June 30, 2025, perpetual capital IGAUM that could potentially result in crystallized fee related performance revenues totaled $30.2 billion, composed of $19.8 billion within the Credit Group, $7.3 billion within the Real Assets Group and $3.1 billion within the Secondaries Group.

Fund Performance Metrics

Fund performance information for our funds considered to be “significant funds” is included throughout this discussion with analysis to facilitate an understanding of our results of operations for the periods presented. Our significant funds are commingled funds that either contributed at least 1% of our total management fees or comprised at least 1% of our total FPAUM for each of the last two consecutive quarters. In addition to management fees, each of our significant funds may generate carried interest or incentive fees upon the achievement of performance hurdles. The fund performance information reflected in this discussion and analysis is not indicative of our overall performance. An investment in Ares is not an investment in any of our funds.

Past performance is not indicative of future results. As with any investment, there is always the potential for gains as well as the possibility of losses. There can be no assurance that any of these funds or our other existing and future funds will achieve similar returns.

Fund performance metrics for significant funds may be marked as “NM” as they may not be considered meaningful due to the limited time since the initial investment and/or early stage of capital deployment.

To further facilitate an understanding of the impact a significant fund may have on our results, we present our drawdown funds as either harvesting investments or deploying capital to indicate the fund’s stage in its life cycle. A fund harvesting investments is past its investment period and opportunistically seeking to monetize investments, while a fund deploying capital is generally seeking new investment opportunities.

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Consolidation and Deconsolidation of Ares Funds

We consolidate (i) entities that we have both the power to direct significant activities of the entity and a significant economic interest; and (ii) entities in which we hold a majority voting interest or have majority ownership and control over the operational, financial and investing decisions of that entity. Certain funds that have historically been consolidated in the financial statements may no longer be consolidated because: (i) such funds have been liquidated or dissolved; or (ii) we are no longer deemed to have a controlling interest in the entity. Consolidated Funds represented approximately 4% of our AUM as of June 30, 2026 and 4% of total revenues for the six months ended June 30, 2026.

The activity of the Consolidated Funds is reflected within the unaudited condensed consolidated financial statement line items indicated by reference thereto. The impact of consolidation also typically will decrease revenues reported under GAAP to the extent these amounts are eliminated upon consolidation.

The assets and liabilities of our Consolidated Funds are held within separate legal entities and, as a result, the liabilities of our Consolidated Funds are typically non-recourse to us. Generally, the consolidation of our Consolidated Funds has a significant gross-up effect on our assets, liabilities and cash flows but has no net effect on the net income attributable to us or our stockholders’ equity, except where accounting for a redemption or liquidation preference requires the reallocation of ownership based on specific terms of a profit sharing agreement. The net economic ownership interests of our Consolidated Funds, to which we have no economic rights, are reflected as redeemable and non-controlling interests in the Consolidated Funds within our unaudited condensed consolidated financial statements.

We have transferred certain financial interests to structured financing vehicles that we manage, including but not limited to collateralized fund obligations, rated note feeders and private asset-backed notes, among other secondary solutions. These financial interests include our capital interests and rights to performance income in funds that we manage. The purpose of these transferred interests is to provide collateral or other forms of similar credit-enhancement, including subordination and liquidity support, to the structured financing vehicles. These structured financing vehicles are typically designed to meet investors’ risk-return, liquidity, diversification and risk-based capital treatment objectives and to support capital raising efforts across our platform. The transfer of these financial interests does not subject us to the additional risk of loss; instead, our maximum risk of loss equals the value of our transferred interest in the event that the returns generated by the structured financing vehicles do not meet stated performance thresholds.

These structured financing vehicles typically represent variable interest entities that are consolidated with our results. As a result, the financial interests that we transfer will typically be reclassified from investments in the funds that we manage and/or from accrued performance income to investments of the Consolidated Funds upon consolidation. Any future investment income and performance income resulting from these financial interests is typically presented within the results of operations of our Consolidated Funds as a result of consolidation.

The performance of our Consolidated Funds is not necessarily consistent with, or representative of, the combined performance trends of all of our funds.

For the actual impact that consolidation had on our results and further discussion on consolidation and deconsolidation of funds, see “Note 14. Consolidation” within our unaudited condensed consolidated financial statements included herein.

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Results of Operations

Consolidated Results of Operations

Although the consolidated results presented below include the results of our operations together with those of the Consolidated Funds and other joint ventures, we separate our analysis of those items primarily impacting the Company from those of the Consolidated Funds.

In connection with the acquisition of the international business of GLP Capital Partners Limited excluding its operations in Greater China (“GCP International”) (the “GCP Acquisition”), the activities of GCP International are reflected within our results of operations beginning on March 1, 2025. Since the activities of GCP International contributed four months of results during the six months ended June 30, 2025, our year-over-year analysis of the six months ended June 30, 2026 will lack comparability.

The following table presents our summarized consolidated results of operations ($ in thousands):

Three months ended June 30,

Favorable (Unfavorable)

Six months ended June 30,

Favorable (Unfavorable)

$ Change

% Change

$ Change

% Change

Total revenues

$

$

$

6%

$

$

$

Total expenses

(4)

(9)

Total other income, net

Less: Income tax expense

Net income

Less: Net income attributable to non-controlling interests in Consolidated Funds

NM

Net income attributable to Ares Operating Group entities

9

Less: Net income (loss) attributable to redeemable interest in Ares Operating Group entities

NM

NM

Less: Net income attributable to non-controlling interests in Ares Operating Group entities

5

Net income attributable to Ares Management Corporation

Less: Series B mandatory convertible preferred stock dividends declared

—

—

—

—

Net income attributable to Ares Management Corporation Class A and non-voting common stockholders

$

$

$

$

Three and Six Months Ended June 30, 2026 Compared to Three and Six Months Ended June 30, 2025

Consolidated Results of Operations of the Company

The following discussion sets forth information regarding our consolidated results of operations:

Revenues

Three months ended June 30,

Favorable (Unfavorable)

Six months ended June 30,

Favorable (Unfavorable)

$ Change

% Change

$ Change

% Change

Revenues

Management fees

$

$

$

$

$

$

Carried interest allocation

Incentive fees

Principal investment income

Administrative, transaction and other fees

Total revenues

$

$

6

$

$

Management Fees. Within the Credit Group, our publicly-traded and our perpetual wealth funds contributed $29.4 million and $66.8 million of the increases in management fees for the three and six months ended June 30, 2026, respectively, compared to the same periods in 2025, primarily driven by increases in FPAUM associated with fundraising. Capital deployment in private funds within our direct lending and alternative credit strategies led to a rise in FPAUM, contributing $27.0 million and $56.6 million of the increase in management fees for the three and six months ended June 30, 2026,

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respectively, compared to the same periods in 2025. Within the Real Assets Group, T1funds that we manage as a result of the GCP Acquisition contributed $30.8 million of the increase in management fees for the six months ended June 30, 2026 compared to the same period in 2025, driven by fees generated for two additional months in the current year period.

In addition, Part I Fees increased by $25.9 million and $55.1 million for the three and six months ended June 30, 2026, respectively, compared to the same periods in 2025. The increases in Part I Fees were primarily attributable to ASIF, to our open-ended European direct lending fund and to our open-ended core infrastructure fund, driven by increases in net investment income from their growing portfolios of investments.

For detail regarding the fluctuations of management fees within each of our segments, see “—Results of Operations by Segment.”

Carried Interest Allocation. The following table sets forth carried interest allocation by segment ($ in millions):

Three months ended June 30,

Six months ended June 30,

Credit funds

$

$

$

$

Real Assets funds

Secondaries funds

Private Equity funds

Other businesses

Elimination of carried interest from Consolidated Funds

Carried interest of non-controlling interests in consolidated subsidiaries

—

Carried interest allocation

$

$

$

$

The activity was principally composed of the following:

Credit funds

•Primarily from one alternative credit fund, one direct lending fund and three opportunistic credit funds with $24.6 billion of IGAUM generating returns in excess of their hurdle rates:

◦Within alternative credit, Pathfinder II generated carried interest allocation of $44.8 million, driven by the appreciation of certain investments that primarily operate in the utilities and transportation industries

◦Within direct lending, ACE VI generated carried interest allocation of $32.5 million, driven by net investment income during the period

◦Within opportunistic credit, SSF IV and ASOF I generated carried interest allocation of $20.9 million and $20.7 million respectively, primarily driven by the increase in market value of their investment in Savers Value Village, Inc. (“SVV”), due to its higher stock price. ASOF II generated carried interest allocation of $16.8 million primarily driven by improved profitability of portfolio companies that operate in the consumer service industry

•Primarily from four direct lending funds, two opportunistic credit funds and two alternative credit funds with $42.4 billion of IGAUM generating returns in excess of their hurdle rates:

◦Within our direct lending funds, ACE V, ACE VI and PCS II generated carried interest allocation of $46.7 million, $32.7 million and $31.8 million, respectively, driven by net investment income on an increasing invested capital base. ACE IV generated carried interest allocation of $20.8 million, driven by net investment income during the period

◦Within our opportunistic credit funds, ASOF II generated carried interest allocation of $53.6 million, driven by improved profitability of portfolio companies that operate in the healthcare and services industries. ASOF I generated carried interest allocation of $24.6 million, driven by the increase in market value of its investment in SVV, due to its higher stock price

◦Within our alternative credit funds, Pathfinder I and Pathfinder II generated carried interest allocation of $21.4 million and $9.8 million, respectively, driven by the market appreciation of certain investments and net investment income during the period

Real Assets funds

•JDC I generated carried interest allocation of $54.3 million, driven by the appreciation of a data center investment

•AREOF IV generated carried interest allocation of $21.2 million, driven by the appreciation of certain investments within the industrial and multifamily sector

•ACIP II and ACIP I generated carried interest allocation of $14.3 million and $7.7 million, respectively, driven by the appreciation of a data center investment

•IDF V generated carried interest allocation of $12.6 million, driven by net investment income during the period

•ACIP II generated carried interest allocation of $10.0 million, driven by the appreciation of certain investments

•IDF V generated carried interest allocation of $4.6 million, driven by net investment income during the period

•US IX and US X generated carried interest allocation of $4.1 million and $3.6 million, respectively, due to increasing operating income and higher property valuations primarily from industrial property investments

•AREOF III and EF IV generated carried interest allocation of $4.1 million and $3.1 million, respectively, driven by the appreciation of certain investments

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Secondaries funds

•Reversal of unrealized carried interest of $30.4 million from LREF VIII, primarily driven by the lower valuation of certain multifamily portfolio investments

•ASIS III and LREF IX generated carried interest of $12.2 million and $4.2 million, respectively, primarily driven by the appreciation of certain portfolio investments

•LREF VIII generated carried interest allocation of $6.7 million, primarily driven by the appreciation of certain portfolio investments

Private Equity funds

•ACOF VI and ACOF VII generated carried interest allocation of $14.8 million and $11.4 million, respectively, primarily driven by improved profitability from portfolio companies that primarily operate in the retail, healthcare and service industries

•ACOF VI generated carried interest allocation of $36.1 million primarily driven by improved profitability from portfolio companies that primarily operate in the service and industrial industries

•Reversal of unrealized carried interest allocation of $7.6 million from ACOF IV, driven by lower profitability of portfolio companies that primarily operate in the energy and healthcare industries

Other businesses

•Reversal of unrealized carried interest of $20.9 million attributable to the decrease in market value of our investment in Kodiak AI, Inc. (Nasdaq: KDK), driven by its lower stock price

•Reversal of carried interest allocation of $4.4 million from an insurance fund that is eliminated upon consolidation

•Carried interest allocation from an insurance fund that is eliminated upon consolidation

Credit funds

•Primarily from one alternative credit fund, three direct lending funds and two opportunistic credit funds with $36.2 billion of IGAUM generating returns in excess of their hurdle rates:

◦Within alternative credit, Pathfinder II generated carried interest allocation of $86.9 million, driven by the market appreciation of certain investments that primarily operate in the utilities and transportation industries

◦Within direct lending, ACE VI, ACE V and PCS II generated carried interest allocation of $64.0 million, $24.5 million and $15.2 million, respectively, driven by net investment income during the period

◦Within opportunistic credit, SSF IV generated carried interest allocation of $38.1 million primarily driven by improved profitability of portfolio companies that operate in utilities, energy and retail industries. ASOF II generated $24.7 million, respectively, driven by improved profitability of portfolio companies that operate in the consumer services industry

•Primarily from four direct lending funds, one opportunistic credit fund and two alternative credit funds with $40.2 billion of IGAUM generating returns in excess of their hurdle rates:

◦Within our direct lending funds, ACE V, ACE VI and PCS II generated carried interest allocation of $93.0 million, $59.2 million and $44.8 million, respectively, driven by net investment income on an increasing invested capital base. ACE IV generated carried interest allocation of $34.1 million, driven by net investment income during the period

◦Within our opportunistic credit funds, ASOF II generated carried interest allocation of $74.7 million, driven by improved profitability of portfolio companies that operate in the services, healthcare and industrial industries

◦Within our alternative credit funds, Pathfinder I and Pathfinder II generated carried interest allocation of $31.5 million and $31.4 million, respectively, driven by the market appreciation of certain investments and net investment income during the period

•Reversal of unrealized carried interest allocation of $27.0 million from SSF IV, primarily due to the market depreciation of its investment in SVV, driven by its lower stock price

Real Assets funds

•JDC I generated carried interest allocation of $60.3 million, driven by the appreciation of a data center investment

•ACIP II and ACIP I generated carried interest allocation of $25.6 million and $16.8 million, respectively, driven by the appreciation of a data center investment

•IDF V generated carried interest allocation of $27.3 million, driven by net investment income during the period

•AREOF IV generated carried interest allocation of $17.3 million, driven by the appreciation of certain investments within the industrial and multifamily sector

•IDF V generated carried interest allocation of $14.9 million, driven by net investment income during the period

•ACIP II generated carried interest allocation of $10.0 million, driven by the appreciation of certain portfolio investments

•US X and US IX generated carried interest allocation of $6.7 million and $6.1 million, respectively, primarily due to the market appreciation and increasing operating income primarily from industrial property investments

•AREOF III and EF IV generated carried interest allocation of $4.7 million and $3.6 million, respectively, primarily due to the appreciation of certain investments

Secondaries funds

•Reversal of unrealized carried interest of $35.8 million from LREF VIII, primarily driven by the lower valuation of certain multifamily portfolio investments

•ASIS III, LREF IX and LEP XVII generated carried interest of $13.7 million, $7.6 million and $6.1 million, respectively, primarily driven by the appreciation of certain portfolio investments

•Reversal of unrealized carried interest from LEP XVI and LREF VIII of $11.4 million and $4.3 million, respectively, driven by the lower valuation of certain investments

•LEP XVII and two private equity secondaries funds generated carried interest allocation of $10.7 million, driven by improved operating performance and the appreciation of certain investments

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Private Equity funds

•ACOF VI and ACOF VII generated carried interest allocation of $37.3 million and $12.1 million, respectively, primarily driven by improved profitability from portfolio companies that primarily operate in the retail, healthcare and service industries

•Reversal of unrealized carried interest of $15.8 million from ACOF IV, driven by lower operating performance from a portfolio company that operates in the healthcare industry and driven by the lower public share price of a portfolio company that operates in the consumer services industry

•ACOF VI generated carried interest allocation of $78.8 million, primarily driven by improved profitability of portfolio companies that primarily operate in the healthcare, services, industrial and retail industries

•Reversal of unrealized carried interest allocation of $13.1 million from a private equity fund, driven by lower operating performance from portfolio companies that primarily operate in the industrial and service industries

Other businesses

•T2Reversal of unrealized carried interest of $74.9 million attributable to the decrease in market value of our investment in Kodiak AI, Inc. (Nasdaq: KDK), driven by its lower stock price

•Carried interest allocation of $7.6 million from an insurance fund that is eliminated upon consolidation

•Carried interest allocation from an insurance fund that is eliminated upon consolidation

Incentive Fees. The following table sets forth incentive fees by segment ($ in millions):

Three months ended June 30,

Six months ended June 30,

Credit funds

$

$

$

$

Real Assets funds

Secondaries funds

Incentive fees

$

$

$

$

The increase in incentive fees for the three months ended June 30, 2026 compared to the same period in 2025 was primarily due to higher fees generated from APMF due to NAV appreciation. The increase in incentive fees for the six months ended June 30, 2026 compared to the same period in 2025 was mostly driven by fees of $138.5 million generated by SDL I in connection with the sale of its remaining assets to a continuation vehicle during the first quarter of 2026. For further detail regarding the incentive fees within each of our segments, see discussion of fee related performance revenues and realized net performance income within “—Results of Operations by Segment.”

Principal Investment Income. The activity for the three and six months ended June 30, 2026 was primarily attributable to:

•Dividend income of $3.3 million and $8.8 million, respectively, primarily generated from our investments in various real estate secondaries, real estate debt and U.S. direct lending funds, as well as $1.7 million for the six months ended June 30, 2026 from our Japanese open-ended industrial real estate fund, which distributes dividends semi-annually. We have contributed certain capital interests to structured financing vehicles that are presented as Consolidated Funds; therefore, any income earned after our contribution of these capital interests is presented as net realized and unrealized gains on investments of Consolidated Funds within our Condensed Consolidated Statements of Operations, contributing to the reduction in principal investment income when comparing to prior period results.

•Unrealized losses of $5.3 million and $4.3 million, respectively, from our investments in various European real estate equity and real estate secondaries funds, as well as $10.6 million from our investment in a U.S. real estate equity fund for the six months ended June 30, 2026, partially offset by unrealized gains of $5.1 million and $5.7 million, respectively, from our investments in various digital infrastructure and Japanese real estate equity funds

The activity for the three and six months ended June 30, 2025 was primarily attributable to:

•Dividend income of $7.8 million and $16.4 million, respectively, primarily generated from our investments in various real estate debt and infrastructure debt funds

•The activity for the six months ended June 30, 2025 also included (i) interest income of $7.7 million from newly admitted investors in an insurance fund, where capital account balances are reallocated from existing investors in exchange for interest to compensate for carrying costs; and (ii) net realized gains of $3.1 million generated from our investments in various U.S. real estate equity funds

Administrative, Transaction and Other Fees. The increases for the three and six months ended June 30, 2026 compared to the same periods in 2025 were driven by: (i) $8.7 million and $29.9 million, respectively, of property-related fees and administrative service fees earned from funds acquired in the GCP Acquisition; (ii) $5.1 million and $11.7 million, respectively, of additional administrative service fees earned from new and existing private funds within our Credit Group and from our perpetual wealth funds; and (iii) $5.0 million and $9.7 million, respectively, of higher property management fees

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earned as we expand these services across more properties and earn the fees for services that were previously provided by third-parties.

Expenses

Three months ended June 30,

Favorable (Unfavorable)

Six months ended June 30,

Favorable (Unfavorable)

$ Change

% Change

$ Change

% Change

Expenses of the Company

Compensation and benefits

$

$

$

(7)%

$

$

$

(6)%

Performance related compensation

1

General, administrative and other expenses

(8)

Total

$

$

4

$

$

(9)

Compensation and Benefits. The following table presents the components of change in compensation and benefits for the three and six months ended June 30, 2026 compared to the same periods in 2025 ($ in millions):

Three month change

Six month change

Compensation and benefits

Cash-based compensation and benefits

$

$

Part I Fee compensation

Acquisition-related compensation expense

Equity compensation expense

Acquisition-related equity compensation expense

Total

$

$

The increases in cash-based compensation and benefits reflected the continued growth in salary and benefits for our increased headcount. The six months ended June 30, 2026 included $30.8 million of incremental expense, reflecting two additional months of activities from the operations that we acquired in connection with the GCP Acquisition.

In addition, Part I Fee compensation increased over the comparative periods, corresponding to the increases in Part I Fees. We reduced Part I Fee compensation by $5.7 million and $4.9 million for the three months ended June 30, 2026 and 2025, respectively, and $13.2 million and $9.7 million for the six months ended June 30, 2026 and 2025, respectively, to reclaim a portion of the supplemental distribution fees we paid.

For the three and six months ended June 30, 2025, acquisition-related compensation expense included cash-based compensation costs of $20.8 million and $29.6 million, respectively, in connection with the GCP Acquisition.

Equity compensation increased over the comparative periods as a result of newly issued discretionary and bonus-related awards granted during the first quarter of 2026 at higher stock prices relative to previously granted awards that have since fully vested. Acquisition-related equity compensation expense decreased for the six months ended June 30, 2026 compared to the same period in 2025, as the prior year period included $108.8 million of expense from the portion of these awards associated with the purchase price of the GCP Acquisition that immediately vested in the first quarter of 2025.

T3Full-time equivalent headcount increased by 15% to 4,343 professionals for the year-to-date period in 2026 from 3,776 professionals in 2025.

For detail regarding the fluctuations of compensation and benefits within each of our segments see “—Results of Operations by Segment.”

Performance Related Compensation. The majority of the changes in performance related compensation are directly associated with the changes in carried interest allocation and incentive fees as described above.

General, Administrative and Other Expenses. The increases in general, administrative and other expenses over the comparative periods reflect growing headcount and fundraising activities and were driven by: (i) higher marketing costs of $14.4 million and $17.1 million, respectively, associated with costs related to our firmwide annual general meeting with investors (“AGM”), as well as program sponsorships and fund formation costs; (ii) higher professional service fees of $8.0 million and $15.0 million, respectively, primarily from consulting fees to support various ongoing technology initiatives to enhance our operations; (iii) information technology of $4.8 million and $10.5 million, respectively, driven by higher internally developed software costs and our growing headcount; and (iv) occupancy costs of $3.2 million and $5.1 million, respectively, to support our growing business, including the expansion of our New York headquarters; partially offset by (v) lower placement fees of $4.6 million and $10.6 million, respectively, primarily due to commitments to an opportunistic credit fund in the prior year periods.

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In addition, the increase in general, administrative and other expenses for the six months ended June 30, 2026 included two additional months of activities from the operations that we acquired in connection with the GCP Acquisition, including (i) operating costs of $13.2 million; and (ii) amortization expense of $17.1 million related to the intangible assets recorded in connection with the GCP Acquisition.

Acquisition-related costs generally precede a business combination, vary with the complexity of the transaction and may occur even when acquisitions are not successfully completed. Acquisition-related costs decreased by $35.5 million for the six months ended June 30, 2026 compared to the same period in 2025. We incurred $34.7 million during the six months ended June 30, 2025 related to the GCP Acquisition.

Other Income (Expense)

Three months ended June 30,

Favorable (Unfavorable)

Six months ended June 30,

Favorable (Unfavorable)

$ Change

% Change

$ Change

% Change

Other income (expense) of the Company

Net realized and unrealized gains on investments

$

$

$

NM

$

$

$

NM

Interest and dividend income

Interest expense

Other income (expense), net

NM

Total

$

$

$

$

Net Realized and Unrealized Gains on Investments; Interest and Dividend Income. The activity for the three and six months ended June 30, 2026 was primarily attributable to:

•Unrealized gains of $67.2 million and $109.9 million, respectively, from our investments in X‑Energy, Inc., which completed its initial public offering in the second quarter of 2026 (Nasdaq: XE), partially offset by unrealized losses of $12.8 million and $38.2 million, respectively, from our investments in KDK

•Net gains of $5.9 million and $12.0 million, respectively, from the settlement of foreign currency hedges, primarily related to capital interests we hold in Japanese real estate equity funds

•Interest and dividend income primarily included: (i) dividend income of $2.0 million and $4.0 million, respectively, from our strategic investment in a Brazilian alternative asset manager; and (ii) income of $1.5 million and $2.6 million, respectively, from our investments in CLOs and CLO-based investments. We have contributed certain capital interests to structured financing vehicles that are presented as Consolidated Funds; therefore, any income earned after our contribution of these capital interests is presented as net realized and unrealized gains on investments of Consolidated Funds within our Condensed Consolidated Statements of Operations, contributing to the reduction in interest and dividend income when comparing to prior period results.

•The six months ended June 30, 2026 also included dividend income of $1.9 million from J-REIT, which distributes dividends semi-annually

The activity for the three and six months ended June 30, 2025 was primarily attributable to:

•Unrealized gains of $14.0 million and $12.4 million, respectively, from our investments in J-REIT and APMF

•Interest and dividend income primarily included: (i) income of $2.0 million and $4.2 million, respectively, from our investments in CLOs and CLO-based investments; and (ii) dividend income of $2.0 million and $4.0 million, respectively, from our strategic investment in a Brazilian alternative asset manager. The six months ended June 30, 2025 also included $11.9 million of interest income earned from treasury-backed securities. These treasury-backed securities were sold in the first quarter of 2025 and the proceeds from the sale were used to fund the GCP Acquisition.

Interest Expense. Interest expense increased for the three and six months ended June 30, 2026 compared to the same periods in 2025 due to (i) higher interest expense from our Credit Facility due to its higher average outstanding balance; and (ii) the full quarter impact of interest expense from the Term Loan that was executed in March 2026.

Other Income (Expense), Net. Other income (expense), net included non-cash expense of $13.6 million and $27.9 million for the three and six months ended June 30, 2026, respectively, and $25.5 million for both the three and six months ended June 30, 2025, attributable to increases in fair value of contingent consideration that reflect our progress toward achieving the earnouts established in connection with the GCP Acquisition. These earnouts are based on revenue targets of certain digital infrastructure funds and fundraising targets of certain Japanese real estate funds. See “Note 7. Commitments and

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Contingencies” within our unaudited condensed consolidated financial statements for a further description of these contingent earnout arrangements.

Other income (expense), net during the six months ended June 30, 2026 also included a $37.3 million bargain purchase gain from the BlueCove Acquisition. A bargain purchase gain resulted from the fair value of the identifiable tangible and intangible assets acquired exceeding the purchase consideration. A portion of the purchase price payable to certain senior professionals is dependent upon the achievement of revenue targets and has been excluded from purchase consideration as it is subject to continued and future service.

Income Tax Expense

The majority of our Consolidated Funds are not subject to income tax as the funds’ investors are responsible for reporting their share of income or loss on a pass-through basis. Accordingly, the following discussion focuses on the change in income tax expense attributable to the Company:

Three months ended June 30,

Favorable (Unfavorable)

Six months ended June 30,

Favorable (Unfavorable)

$ Change

% Change

$ Change

% Change

Consolidated Company Entities

Income before taxes

$

$

$

$

$

$

Less: Income tax expense

Net income

$

$

9

$

$

The increases in income tax expense were primarily attributable to higher pre-tax income allocable to AMC and higher entity level taxes in foreign and local jurisdictions, with both increasing the effective tax rate for the three and six months ended June 30, 2026 compared to the same periods in 2025.

The allocation of taxable income is also sensitive to any changes in weighted average daily ownership as the income attributed to redeemable and non-controlling interests is generally passed through to partners and not subject to corporate income taxes. The following table summarizes weighted average daily ownership:

Three months ended June 30,

Six months ended June 30,

AMC common stockholders

%

%

%

%

Non-controlling AOG unitholders

The changes in ownership compared to the prior year periods were primarily driven by the issuances of shares of Class A common stock in connection with the vesting of restricted unit awards and with exchanges of AOG Units.

Redeemable and Non-Controlling Interests

Three months ended June 30,

Favorable (Unfavorable)

Six months ended June 30,

Favorable (Unfavorable)

$ Change

% Change

$ Change

% Change

Net income

$

$

$

$

$

$

Less: Net income attributable to non-controlling interests in Consolidated Funds

NM

Net income attributable to Ares Operating Group entities

9

Less: Net income (loss) attributable to redeemable interest in Ares Operating Group entities

NM

NM

Less: Net income attributable to non-controlling interests in Ares Operating Group entities

5

Net income attributable to Ares Management Corporation

Less: Series B mandatory convertible preferred stock dividends declared

—

—

—

—

Net income attributable to Ares Management Corporation Class A and non-voting common stockholders

$

$

$

$

The changes in net income attributable to non-controlling interests in AOG entities compared to the prior year periods were primarily a result of the respective changes in ownership and in income before taxes of the Company, as presented above.

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Consolidated Results of Operations of the Consolidated Funds

The following table presents the results of operations of the Consolidated Funds ($ in thousands):

Three months ended June 30,

Favorable (Unfavorable)

Six months ended June 30,

Favorable (Unfavorable)

$ Change

% Change

$ Change

% Change

Expenses of the Consolidated Funds

$

$

$

$

$

$

Net realized and unrealized gains on investments of Consolidated Funds

Interest and other income of Consolidated Funds

Interest expense of Consolidated Funds

Income before taxes

9

7

Less: Income tax expense of Consolidated Funds

NM

Net income

7

5

Less: Revenues attributable to Ares Management Corporation eliminated upon consolidation

(3)

Other expense (income), net attributable to Ares Management Corporation eliminated upon consolidation

NM

Net income attributable to non-controlling interests in Consolidated Funds

$

$

NM

$

$

The results of operations of the Consolidated Funds primarily represent activities from certain funds that we are deemed to control. When a fund is consolidated, we reflect the revenues and expenses of the entity on a gross basis, subject to eliminations from consolidation. A substantial portion of our results of operations related to the Consolidated Funds are attributable to ownership interests that third parties hold in those funds. The Consolidated Funds are not necessarily the same funds in each year presented due to changes in ownership, changes in limited partners’ or investor rights, and the creation or termination of funds and entities. Accordingly, such amounts may not be comparable for the periods presented, and in any event have no material impact on net income attributable to Ares Management Corporation.

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Segment Analysis

For segment reporting purposes, revenues and expenses are presented before giving effect to the results of our Consolidated Funds and the results attributable to non-controlling interests of joint ventures that we consolidate. As a result, segment revenues are different than those presented on a consolidated basis in accordance with GAAP. Revenues recognized from Consolidated Funds are eliminated in consolidation and those attributable to the non-controlling interests of joint ventures have been excluded by us. Furthermore, expenses and the effects of other income (expense) are different than related amounts presented on a consolidated basis in accordance with GAAP due to the exclusion of the results of Consolidated Funds and the non-controlling interests of joint ventures.

Non-GAAP Financial Measures

We use Realized Income (“RI”) as a non-GAAP profit measure in making operating decisions, assessing performance and allocating resources. Fee Related Earnings (“FRE”) is a component of RI that excludes realized activities associated with investment income and performance income.

FRE and RI should be considered in addition to and not in lieu of, the results of operations, which are discussed further under “—Consolidated Results of Operations of the Company” and are prepared in accordance with GAAP.

The following table sets forth FRE and RI by reportable segment and the OMG ($ in thousands):

Three months ended June 30,

Favorable (Unfavorable)

Six months ended June 30,

Favorable (Unfavorable)

$ Change

% Change

$ Change

% Change

Fee Related Earnings

Credit Group

$

$

$

$

$

$

Real Assets Group

Secondaries Group

Private Equity Group

Other

Operations Management Group

Fee Related Earnings

$

$

$

$

Realized Income

Credit Group

$

$

$

$

$

$

Real Assets Group

Secondaries Group

Private Equity Group

(6)

Other

NM

Operations Management Group

Realized Income

$

$

$

$

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Income before provision for income taxes is the GAAP financial measure most comparable to RI. The following table presents the reconciliation of income before taxes as reported within the Condensed Consolidated Statements of Operations to RI and FRE of the reportable segments and the OMG ($ in thousands):

Three months ended June 30,

Six months ended June 30,

Income before taxes

$

$

$

$

Adjustments:

Depreciation and amortization expense

Equity compensation expense

Acquisition-related compensation expense(1)

Acquisition and merger-related expense

Placement fee adjustment

Other (income) expense, net